GOT Global Opportunities Trust Plc

Global Opportunities Trust plc

Legal Entity Identifier: 2138005T5CT5ITZ7ZX58

Half-Yearly Results for the six months to 30 June 2022 (unaudited)

Financial Highlights

* Alternative Performance Measure.

CHAIRMAN’S STATEMENT

I am pleased to present the Company’s interim report for the six months to 30 June 2022.

Transition to a self-managed investment trust

The six months to 30 June 2022 saw a number of significant developments for the Company. Following receipt of approval from the Financial Conduct Authority on 8 June 2022, the Company successfully transitioned to become a self-managed investment trust.

As a result of the transition, the management agreement with the Company’s Alternative Investment Fund Manager, Franklin Templeton Investment Trust Management Limited was terminated. As a self-managed investment trust, the Board is now fully responsible for the management of the Company and all required reporting to the FCA in respect of the safeguarding of the Company’s assets. The Depositary Agreement between Northern Trust Global Services Limited and the Company was also terminated, and the Company’s custodian has been changed to JP Morgan Chase Bank, NA.

Our Executive Director, Dr Sandy Nairn, has overall responsibility for the day-to-day management of the investment portfolio with Franklin Templeton Investment Management Limited assisting with the management of the Company’s direct equity holdings.

As part of the transition, the Board has also appointed Juniper Partners Limited (‘Juniper’) as the Company’s administrator and company secretary. This appointment and the other changes described above took effect from 8 June.

Change of name

On 9 June 2022, the Company changed its name from EP Global Opportunities Trust plc to Global Opportunities Trust plc. The Company’s stock exchange ticker code was subsequently changed from EPG to GOT.

Change of registered office

Following the appointment of Juniper, the registered office of the Company has changed to 28 Walker Street, Edinburgh EH3 7HR.

2022 Annual General Meeting

The Annual General Meeting of the Company was held on 27 April 2022 (‘the AGM’). On behalf of the Board, I would like to thank all those shareholders who attended the meeting in person or voted by way of proxy. I was pleased to note that all resolutions were formally passed by the requisite majority.

Director changes

Tom Walker retired as a Non-Executive Director of the Company at the conclusion of the AGM and Dr Sandy Nairn was formally appointed as an Executive Director of the Company. I would like to thank Tom for his contribution to the Company during his tenure and welcome Sandy to the Board.

Tender Offer

As previously noted in the Annual Report for the year ended 31 December 2021, during the period under review, the Company completed the Tender Offer to repurchase up to 20% of its issued share capital. On 28 February 2022, the Company announced that a total of 7,305,545 Ordinary Shares (20% of the Company’s issued share capital) were repurchased by the Company to be held in treasury. The Ordinary shares were repurchased at 313.2501 pence per share which represented a discount of approximately 3.5% to the NAV per Share as at 24 February 2022. The result of which being that the number of Ordinary Shares in issue reduced to 29,222,180, with the number of Ordinary shares held in treasury increasing to 35,287,462. As at 16 August 2022, no further buybacks or issuances have been undertaken by the Company.

Investment performance

As at 30 June 2022 the Company had net assets of £100.9 million, the net asset value (NAV) per share was 345.3p and the middle market price per share on the London Stock Exchange was 280.0p, representing an 18.9% discount to NAV.

During the six months to 30 June 2022 the total return on the NAV per share of the Company was 10.7%. and the total return on the middle market price of the Company’s shares was (2.1)%.

Outlook

For some considerable time, our Executive Director has expressed concerns about valuation levels. It was not simply that there were pockets of over-valuation within equities, or that equities were generally over-valued, but rather that after near 15 years of interest rate suppression all asset prices were overvalued and accompanied by debt levels at unprecedented levels. This concern was one of the reasons why the Board sought permission from shareholders to increase the flexibility embedded in the investment policy. Shareholders were kind enough to support these changes which in turn allowed the Company’s assets to be redeployed in a manner which we believed would provide greater protection should the excess valuations begin to unravel.

The first half of 2022 has seen a shattering of the sanguine view that asset prices can only rise. All asset classes have suffered to a greater or lesser degree in response to rising inflation and the, still muted, reaction of interest rates. Our Executive Director believes we remain in the early stages of this correction and whilst there have been portfolio changes in response to individual security price movements, the general defensive thrust of the portfolio has largely remained unchanged. Thus far the defensive orientation has served the Company well with the NAV rising by 10.7% (with dividends reinvested) in the first half of the year.

Periodic market rallies should be expected as individual economic data releases allow a benign economic outlook to be portrayed. However, these are likely to prove outliers and the economic evidence of forthcoming recession will mount and replace the inflation fears. As the recession unfolds the hidden excesses in markets promoted by the suppressed interest rate era will be progressively revealed. Until this point, we believe it is appropriate to maintain the defensive positioning of the asset mix. Patience will be required to wait until the opportunities appear. No doubt this will coincide with a period of economic and political turmoil. At this point we would expect the Company to take advantage of its liquidity reserves and aggressively reinvest. In the meantime, the Company will continue to monitor potential future investments to ensure we are ready to take advantage when valuations permit.

Keep up to date

Shareholders can keep up to date on the performance of the portfolio through the Company’s factsheet which can be accessed via the website at www.epgot.com.

As always, the Board welcomes communication from shareholders and I can be contacted directly through the Company Secretary at cosec@junipartners.com.

Cahal Dowds

Chairman

17 August 2022

EXECUTIVE DIRECTOR’S REPORT

This is the first formal report since the changes to the Company’s Investment Policy were approved in December 2021. The request to increase the flexibility of the Investment Policy was driven by our view on the levels of overvaluation prevalent across all asset classes. Although we have discussed this many times before, it bears repeating; in our view there is no modern-day precedent for the level of debt the world has accumulated post the Global Financial Crisis in 2007-2008, nor the duration or magnitude of the global interest rate suppression. This created an ‘abnormal’ bull market, the so called ‘everything bubble’ and it is likely to be followed by an equally ‘abnormal’ bear market.

The first six months of 2022 have given a flavour of the unfolding bear market. For sterling investors, the 10% decline of the pound has masked somewhat the magnitude of falls such that global equities are down by just 10% to the end of June. Similarly, global bonds are down, even in sterling terms in the first half. Against this backdrop it is encouraging that the net asset value (‘NAV’) total return (including dividends reinvested) is up 10.7%. Again, it must be noted that the decline in sterling was a major contributor to the NAV uplift given the distribution of Company’s assets. However, this was a conscious decision with the majority of cash being held in US dollars. The importance of changing the Company’s investment policy can be seen from the contributions of two holdings that were added to the portfolio during 2021.

The first of these was the Templeton European Long-Short Equity fund (‘TELS’). The manager is an experienced short seller and ideally positioned to take advantage of the opportunities presented by the inflated valuations attached to companies with fundamental business issues. Whilst TELS produced some positive returns when markets remained bullish and rising, its significance to the Company’s asset risk profile was apparent when markets began to take a much more detached and cooler look at valuations. TELS has provided strong returns during periods when equity market indices were meaningfully negative. In the world of an ‘everything bubble’ this is an extremely valuable risk management tool.

The second investment was the private equity fund, Volunteer Park Capital Fund (‘VPC’). Again, one of the roles of this investment was to provide a degree of counter cyclicality. This is not immediately obvious for a private equity investment. VPC operates at the smaller end of the market helping fund expansion for investment partnerships who are launching additional funds on the back of successful vehicles. Often these partnerships require to co-invest as general partners but lack sufficient liquidity to do so. As a consequence, they are willing to assign preference rights on existing cash-flows to a third party in return for funding. Such opportunities exist but require extensive due diligence and historic knowledge/relationships and the Company would only invest through a third party with these attributes. After undertaking the necessary due diligence, we concluded that VPC fulfilled these requirements, and that the investment would greatly assist the risk: reward profile of the Company’s assets. There has been small uplift in value of VPC during the first half of the year, this augurs well for the future.

The Company’s direct equity exposure also contributed to positive returns due to its defensive nature. Markets have recently rotated away from companies whose valuations were conditioned on a mixture of a long horizon and a degree of optimism over prospects towards those on lower valuations with greater certainty. In this respect both the telecoms and healthcare holdings have contributed to portfolio performance. The more recent additions in energy and the new exposure in defence (Dassault and Raytheon) have also helped portfolio performance. These holdings were added partly because their underlying valuations supported purchase in their own right, but also because the shift towards a more turbulent geopolitical environment was clearly unfolding.

Finally, the portfolio maintained a high cash-balance, predominantly denominated in US dollars. This cash reserve will be deployed when valuations allow. The timing is partly dependent upon the anticipated economic outlook. Inflationary pressures continue to undermine a market valuation structure which depended upon the lowest interest rates in history. The reaction in asset prices has removed much of the complacency but it has left a dilemma for investors. Much of the inflation may prove transitory as energy price rises wash through the system and production/logistics bottlenecks ease. However, there does appear likely to be a residual inflation rate which may remain stubbornly above central bank prescribed targets. This will continue to exert upward pressure on interest rates. Against a backdrop of slowing growth this creates a very uncomfortable backdrop. Markets are not yet pricing in a meaningful recession, but it is hard to see how this can be avoided. The trigger point for reinvesting the liquidity reserve will be when a meaningful recession is embedded in valuations. We will continue to monitor the portfolio and will look to switch to better opportunities as they arise rather than wholesale reinvestment. It will undoubtedly feel uncomfortable, particularly during the periodic rallies but we believe that patience will be rewarded in the end.

Dr Sandy Nairn

Executive Director

17 August 2022

PORTFOLIO OF INVESTMENTS

as at 30 June 2022

¹ Luxembourg Specialised Investment Fund

² Luxembourg Special Limited Partnership

³ The investment is in non-voting shares

DISTRIBUTION OF INVESTMENTS

as at 30 June 2022 (% net assets)

The figures detailed in the geographical distribution above represent the Company’s exposure to these countries or regional areas.

The geographical distribution is based on each investment’s principal stock exchange listing, except in instances where this would not give a proper indication of where its activities predominate.

*The geographic distribution of cash at bank and short-term deposits is detailed in Note 6 to the Financial Statements.

DIRECTORS’ STATEMENT OF PRINCIPAL RISKS AND UNCERTAINTIES

The important events that have occurred during the period under review and the key factors influencing the Financial Statements are set out in the Chairman’s Statement and Executive Director’s Report. The principal factors that could impact the remaining six months of the financial year are also detailed in the Chairman’s Statement and Executive Director’s Report.

Principle Risks and Uncertainties

In advance of the Board’s decision to become a self-managed investment company, including the proposed change of various service providers, a detailed strategic review was undertaken. As part of the review, the Board considered the principal and emerging risks facing the Company. The Board concluded that there were no significant additional risks facing the Company other than those detailed below and in the Annual Report and Financial Statements for the year ended 31 December 2021.

The Board considers that the following risks remain the principal risks associated with investing in the Company: investment and strategy risk, key manager risk, discount volatility risk, price risk, foreign currency risk, liquidity risk, and regulatory risk. Other risks associated with investing in the Company include, but are not limited to, credit risk, interest rate risk, gearing risk, operational risk and other financial risks. These risks, and the way in which they are managed, are described in more detail under the heading “Principal risks and uncertainties” within the Strategic Report in the Company’s Annual Report and Financial Statements for the year ended 31 December 2021.

The Directors continue to review and monitor the operational risks that COVID-19 poses to the Company and its service providers, details of which were set out in the Financial Statements for the year ended 31 December 2021.

The risks identified by the Board as detailed above are not exhaustive and various other risks may apply to an investment in the Company. Potential investors may wish to obtain independent financial advice as to the suitability of investing in the Company.

Going concern

The Half-Yearly Report has been prepared on a going concern basis. The Directors consider that this is the appropriate basis as they have a reasonable expectation that the Company has adequate resources to continue in operational existence and meet its financial commitments as they fall due for a period of at least twelve months from the date of approval of the unaudited financial statements.

DIRECTORS’ STATEMENT OF RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS

The Directors confirm that to the best of their knowledge:

• The condensed set of Financial Statements, prepared in accordance with Financial Reporting Standard (“FRS”) 104: “Interim Financial Reporting”, gives a true and fair view of the assets, liabilities, financial position and profit of the Company; and

• This Half-Yearly Report includes a fair review of the information required by:

(a) Disclosure Guidance and Transparency Rule 4.2.7R, being an indication of important events that have occurred during the first six months of the financial year, and their impact on the condensed set of Financial Statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b) Disclosure Guidance and Transparency Rule 4.2.8R, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Company during that period; and any changes in the related party transactions described in the last Annual Report that could do so.

This Half-Yearly Report has not been audited or reviewed by the Company’s auditor.

This Half-Yearly Report was approved by the Board of Directors and the above responsibility statement was signed on its behalf by:

Cahal Dowds

Chairman

17 August 2022

INCOME STATEMENT

for the six months to 30 June 2022 (unaudited)

All revenue and capital items in the above statement derive from continuing operations.

The total column of this statement is the profit and loss account of the Company.

The revenue and capital columns are prepared in accordance with guidance issued by the Association of Investment Companies (“AIC”).

A separate Statement of Comprehensive Income has not been prepared as all gains and losses are included in the Income Statement.

BALANCE SHEET

as at 30 June 2022

STATEMENT OF CHANGES IN EQUITY

for the six months to 30 June 2022

NOTES TO THE FINANCIAL STATEMENTS

for the six months to 30 June 2022

1. Accounting policies

Basis of accounting

The Company applies Financial Reporting Standard (“FRS”) 102: “The Financial Reporting Standard applicable in the UK and Republic of Ireland” and the Statement of Recommended Practice as issued by the AIC. The Company has prepared the Financial Statements for the six months to 30 June 2022 in accordance with FRS 104: “Interim Financial Reporting”. The Company has elected to remove the Cash Flow Statement from the Half-Yearly Report, as permitted by FRS 102 section 7.1A.

The accounting policies are set out in the Company’s Annual Report and Financial Statements for the year ended 31 December 2021 and remain unchanged. From 1 January 2021, 70% of management fees and finance costs relating to borrowings are charged to capital, with 30% of these costs charged to revenue, as detailed in the Income Statement. Prior to that date, management fees and finance costs relating to borrowings were all charged to revenue.

Going concern

The Financial Statements have been prepared on a going concern basis and on the basis that approval as an investment trust company will continue to be met.

The Directors have made an assessment of the Company’s ability to continue as a going concern and are satisfied that the Company has adequate resources to continue in operational existence for a period of at least 12 months from the date when these Financial Statements were approved.

In making this assessment, the Directors have considered, in particular, the continuing economic impact of the COVID-19 pandemic on the Company’s operations and the investment portfolio.

The Directors have noted that the Company, holding a portfolio consisting principally of liquid listed investments and cash balances, is able to meet the obligations of the Company as they fall due, any future funding requirements and finance future additional investments. The Company is a closed end fund, where assets are not required to be liquidated to meet day-to-day redemptions.

The Directors have reviewed stress testing and scenario analysis to assist them in determination of going concern. In making this assessment, the Directors have considered plausible downside scenarios that have been financially modelled. These tests included the possible further effects of the continuation of the COVID-19 pandemic but, as an arithmetic exercise, apply equally to any other set of circumstances in which asset value and income are significantly impaired. The conclusion was that in a plausible downside scenario, the Company could continue to meet its liabilities. Whilst the economic future is uncertain, and the Directors believe that it is possible the Company could experience further reductions in income and/or market value, the opinion of the Directors is that this should not be to a level which would threaten the Company’s ability to continue as a going concern.

All of the Company’s service providers have put in place contingency plans to minimise disruption. Furthermore, the Directors are not aware of any material uncertainties that may cast significant doubt on the Company’s ability to continue as a going concern, having taken into account the liquidity of the Company’s

investment portfolio and the Company’s financial position in respect of its cash flows, borrowing facilities and investment commitments. Therefore, the Financial Statements have been prepared on the going concern basis.

Comparative information

The financial information for the six months to 30 June 2022 and for the six months to 30 June 2021 have not been audited or reviewed by the Company’s Auditor pursuant to the Auditing Practices Board guidance on such reviews. The financial information contained in this report does not constitute statutory accounts as defined in the Companies Act 2006.

The latest published audited Financial Statements which have been delivered to the Registrar of Companies are the Annual Report and Financial Statements for the year ended 31 December 2021; the report of the independent Auditor thereon was unqualified and did not contain a statement under Section 498 of the Companies Act 2006. Information shown for the year ended 31 December 2021 is extracted from that Annual Report and Financial Statements.

Segmental reporting

The Directors are of the opinion that the Company is engaged in a single segment of business, being investment business. The Company primarily invests in listed companies.

2. Income

3. Dividends

4. Return per share

The returns per share for the six months to 30 June 2022 are based on 31,563,185 shares (six months to 30 June 2021: 37,605,845 shares), being the weighted average number of shares, excluding shares held in treasury, in circulation during the period.

5. Net asset value per share and share capital

The NAV is based on net assets at 30 June 2022 of £100,897,000 (31 December 2021: £116,123,000) and on 29,222,180 shares (31 December 2021: 36,527,725 shares), being the number of shares, excluding shares held in treasury, in circulation at the period end.

During the six months to 30 June 2022, 7,305,545 shares were purchased for treasury at a total cost of £23,201,000.

No shares were issued from treasury during the six months to 30 June 2022.

As a result of the transactions detailed above, there were 64,509,642 ordinary shares in issue as at 30 June 2022, of which 35,287,462 shares were held in treasury, resulting in there being 29,222,180 shares in circulation.

6. Cash at bank and short-term deposits

7. Related party transactions

Dr Sandy Nairn was appointed as an Executive Director of the Company on 27 April 2022. He is also lead portfolio manager and holds a substantial interest in the shares of the Company.

The Company has invested in Volunteer Park Capital Fund (“VPC”). The Alternative Investment Fund Manager of VPC is Goodhart Partners LLP (“Goodhart”). Goodhart Partners S.a.r.l. is the general partner of VPC which is 100% owned by Goodhart. Dr Nairn is the sole controller of a company which holds a significant shareholding (25.83%) in Goodhart and will be a beneficiary of the management fees and carried interest payable to Goodhart related companies.

8. Post balance sheet events

There were no post balance sheet events subsequent to the half-year end and up to 17 August 2022, the date of this report.

9. Availability of Half-Yearly Report

The Half-Yearly Report will shortly be available to view on the Company's website at www.epgot.com where up to date information on the Company, including daily NAV and share prices, factsheets and portfolio information can also be found.

A copy of the Half-Yearly Report will shortly be submitted to the Financial Conduct Authority’s National Storage Mechanism and will be available for inspection at https://data.fca.org.uk/#/nsm/nationalstoragemechanism

For further information please contact:

Juniper Partners Limited

Company Secretary

e-mail: cosec@junipartners.com

17 August 2022

[END]