2024-07-12 08:00:00
Miton UK MicroCap Trust plc
Report and Accounts for the
year ended 30 April 2024
A Trust accessing the inherent
vibrancy of the UK’s quoted
microcaps
Contents
Strategic Report
i Financial Performance
Indicators
ii Results for the Year to 30April
2024
6 Chairman’s Statement
10 Investment Manager’s Report
15 Business Model
16 Costs of Managing theTrust
17 Portfolio Information
19 Performance and Risks
24 Share Capital
25 s172 statement
28 Management and OtherMatters
Governance
30 Directors
31 Report of the Directors
34 Corporate Governance
Statement
41 Audit Committee Report
44 Directors’ Remuneration Report
48 Statement of Directors’
Responsibilities
49 Independent Auditor’s Report
Company Accounts
56 Income Statement
57 Statement of Changes inEquity
58 Balance Sheet
59 Statement of Cash Flows
60 Notes to the Financial
Statements
Shareholder Information
80
Redemption of Ordinary Shares
81
Shareholder Information
84
AIFMD Disclosures
85 Notice of Annual General
Meeting
92 Glossary
95 Contact Details of the Advisers
The Trust’s strategy intentionally
focuses on UK-quoted microcaps…
One of the better indicators of an asset’s future return potential is the
valuation at the time of investment. Academics highlight that, on
average, assets starting at low valuations tend to deliver better returns
than those starting on relatively high valuations.
The Price to Book ratio* is a popular measure of stock market valuation,
with low metrics implying low expectations. In the scatter chart below,
the horizontal axis denotes the Price to Book ratio of each individual
UK-quoted company, with its market capitalisation shown on the vertical
axis. A logarithmic scale has been used on the vertical axis so that the vast
numbers of quoted microcaps can be appreciated.
The following scatter chart of the UK stock market details the range of
market capitalisations versus their Price to Book ratio, as a measure of
investors’ expectations.
UK-quoted microcaps have been overlooked for many years, and many
were already standing on undemanding valuations when the Trust
was first launched in April 2015. Over recent years, their valuations have
moved to even lower levels. The chart above underlines the extremely
low levels of UK-quoted microcaps valuations at present; this implies that
UK-quoted microcaps should be set to deliver unusually strong returns
infuture.
Irrespective of valuation, UK-quoted microcaps tend to outperform all
other quoted companies, due to the ‘small company effect’. Hence,
UK-quoted microcaps are currently set to outperform for two reasons:
their unusually low valuations, and the smaller company effect that is
amplified within microcaps.
Source: Morningstar
UK listed companies: valuation versus size
0 5 10 15
Market Cap (£ million)
Price to Book ratio (x)
£1tn
£100bn
£10bn
£1bn
£100m
£10m
£1m
Investment universe for the Miton UK MicroCap Trust
Miton UK MicroCap Trust plc | Annual Report 2024
* Price to Book ratio defined in full in the Glossary on page 93.
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Three charts that help set the full year returns in the context of the longer term returns of the Trust. Throughout
this report we refer to Adjusted Net Assets (“Adjusted NAV”) which is the Statutory Net Assets (“Statutory NAV”)
presented in the financial statements adjusted to exclude the fair value of the warrants held by the Trust. The fair
value of warrants is calculated by Black Scholes. See Note 12 Fair Value Hierarchy Level 3 investments on page 72.
Source: Morningstar
This chart details the Adjusted NAV and the daily
closing share price of the Company. Prior to the Brexit
referendum, the share prices of microcaps generally
appreciated and the Adjusted NAV of the Trust rose.
Since then, many asset allocators have scaled back
their UK weightings, given the continuing uncertainties
after Brexit, and this has led to fewer buyers of small cap
stocks. This trend has been more pronounced amongst
microcap stocks, although the prospects for quoted
microcaps are often less dependent on global growth
than larger quotedcompanies.
Revenue and dividend per share
Adjusted NAV versus share price versus Deutsche Numis Smaller Companies 1000 Index
Source: Company from 30/04/2016 to 30/04/2024
The revenue per share of the Trust was relatively
strong in the early years due to some higher yielding
holdings. After these companies were taken over, and
reflecting portfolio changes, the underlying dividend
income of the portfolio has been at a lower level and
often similar to the revenue costs each year.
Overall, it has always been anticipated that the major
part of the Trust’s longer term returns would come via
capital gain rather than through dividendincome.
Average unweighted market capitalisation comparison: MINI versus Deutsche Numis Large Cap Index,
Deutsche Numis Smaller Companies ex ICs Index and Deutsche Numis 1000 ex ICs Index
Source: Premier Miton, Deutsche Numis, based on a logarithmic scale
The Trust pursues a clearly differentiated strategy,
illustrated by the fact that the average unweighted
market capitalisation of the holdings within its
portfolio is £53m, which compares to an average of
£23.7bn for the Deutsche Numis Large Cap Index,
£415m for the Deutsche Numis Smaller Companies
ex Investment Companies Index and £179m for the
Deutsche Numis 1000 ex Investment Companies
Index. The Trust’s portfolio may therefore produce
different returns from those of the mainstream stock
market indices.
Deutsche Numis
Large Cap
Index
(£23.7bn)
Deutsche Numis
Smaller Companies
Index
(£415m)
Deutsche
Numis SC 1000
Index
(£179m)
MINI
(£53m)
£1m
£10m
£100m
£10bn
£1bn
£100bn
Period from
26 March 2015
to 30 April 2016
Year to
30 April 2017
Year to
30 April 2018
Year to
30 April 2019
Year to
30 April 2020
Year to
30 April 2021
Year to
30 April 2022
Year to
30 April 2023
Year to
30 April 2024
Revenue per share (H1)
Revenue per share (H2)
Final dividend per share
0.6
0.5
0.4
0.3
0.2
0.1
0
-0.1
-0.2
Deutsche Numis
SC 1000 Index
0
50
100
150
200
250
MINI Share price
MINI Adjusted NAV
Apr-15
Oct-15
Apr-16
Oct-16
Apr-17
Oct-17
Apr-18
Oct-18
Apr-19
Oct-19
Apr-20
Oct-20
Apr-21
Oct-21
Apr-22
Oct-22
Apr-23
Oct-23
Apr-24
Percent
i | Miton UK MicroCap Trust plc | Annual Report 2024
Financial Performance Indicators
ii | Miton UK MicroCap Trust plc | Annual Report 2024
•
Over the year, the Adjusted Net Asset Value (“Adjusted NAV”) fell from 64.20p on 30 April 2023 to 55.79p on
30 April 2024, a negative total return, including dividends reinvested, of 12.9%.
•
The Ordinary Share price fell from 59.50p at 30 April 2023 to 50.50p at 30 April 2024, a negative return of
14.9%. As at close of business on 10 July 2024, the closest date to this Report, the Adjusted NAV was 54.84p
and the share price was 51.75p.
•
The net Revenue return was a positive return of £74,000 this year, or 0.09p per share. This compares to a
positive return of £32,000 last year, or 0.03p per share.
•
The Company does not have a formal benchmark but, for comparison, it is intended that the returns on
the Deutsche Numis Smaller Companies 1000 Index and the Morningstar Investment Trust UK Smaller
Companies sector will be published in the monthly factsheet and in the Company’s annual and interim
reports. Its returns, however, may diverge from these comparators for a significant period.
Results for the Year
to 30 April 2024
Summary of Results
Year to
30 April
2024
Year to
30 April
2023
Total net assets attributable to equity shareholders including fair value of warrants (£000) 43,297 60,754
Statutory NAV including fair value of warrants* 56.29p 64.20p
Adjusted NAV per Ordinary Share* 55.79p 64.20p
Share price 50.50p 59.50p
Discount to Adjusted NAV* (9.48)% (7.32)%
Investment income £0.9m £0.8m
Revenue return per Ordinary Share* 0.09p 0.03p
Total return per Ordinary Share including value of warrants (9.17) (28.93)p
Ongoing charges
#
* 1.99% 1.72%
Ordinary Shares in issue 76,923,603 94,638,561
* Alternative Performance Measure (“APM”). Details are provided in the Glossary on page 92.
# The ongoing charges are calculated in accordance with AIC guidelines.
Annual Report 2024 | Miton UK MicroCap Trust plc | 01
Our objective
The Trust invests principally in a portfolio of smaller UK quoted companies, generally with market
capitalisations of less than £150m. The primary objective is to generate capital growth through selecting
stocks that are expected to generate plentiful surplus cash in the short to medium-term. As this comes
through and their share prices appreciate sharply, the Investment Manager tends to take profits, with the
capital reinvested in other promising microcaps standing on overlooked valuations. Given that a major part
of the Trust’s return is expected to comprise capital appreciation, the Trust’s annual dividend (if any) will be a
modest contributor to long-term returns.
The Miton UK Microcap Trust plc is an investment trust quoted on the London Stock Exchange under the
ticker code MINI. The Board, which consists of four independent Directors, appoints the Investment Manager
and oversees all aspects of the Trust.
The Board oversees the Trust’s strategy to ensure it has the potential to deliver an attractive investment return
for shareholders over the longer term. The Trust’s portfolio is distinct from others in that it principally invests in
UK-quoted microcap companies, which are defined as those with market capitalisations of less than £150m.
Over recent years, enthusiasm for passive indexation strategies has enhanced returns at the larger end of
the market capitalisation range. This pattern has overwhelmed the usual ‘smallcap effect’ and, unusually,
microcaps have underperformed since the Trust’s launch. Whilst there have been some periods when large
caps have outperformed in the past, the more consistent trend since 1955 has been the smaller the market
capitalisation, the greater the return. Hence, when the stock market pattern normalises again, there is scope
for the Trust to deliver very strong uncorrelated returns.
In the year to April 2024 the Trust’s microcap holdings have underperformed, and its returns as detailed in the
bar charts below have been outpaced by larger companies within the comparative indices. Over the year, the
Trust’s Adjusted NAV total return (including dividend income) fell by 12.9%, which compares with a total return
on the Deutsche Numis Smaller Companies 1000 Index (the aggregate return of the smallest 2% of the UK
stock market) of 7.2%. Between April 2015 when the Trust was launched, and April 2024, its NAV total return
was 16.2%, which compares with a Deutsche Numis Smaller Companies 1000 Index total return of 55.3%.
Miton UK MicroCap Trust plc
Reportand Accounts for the year ended 30 April 2024
Source: Morningstar
Total returns 12 months to 30 April 2024 Total returns since launch in April 2015
Percent
Deutsche
Numis
All Share
Index
Deutsche
Numis
SC 1000
Index
Deutsche
Numis
Alternative
Markets
Index
MINI
Adjusted NAV
Deutsche
Numis
Smaller
Companies
Index
-20
-10
0
10
20
30
40
50
60
70
7.5
2.0
7.2
-6.2
-12.9
-10
0
10
20
30
Percent
40
50
60
70
60.8
45.4
55.3
12.0
16.2
Deutsche
Numis
All Share
Index
Deutsche
Numis
SC 1000
Index
Deutsche
Numis
Alternative
Markets
Index
MINI
Adjusted NAV
Deutsche
Numis
Smaller
Companies
Index
-20
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Recently, the UK stock market has broken
out on the upside, which may signal a new
stock market trend…
Since 1999, the UK stock market has largely missed out on the rise in global stock markets.
For the past 25 years, stock market trends have principally been driven by globalisation. Specifically, the surge
of low-cost imports has offset local inflation, and hence recent decades were characterised by lower interest
rates and higher asset valuations.
These trends favoured companies with rapid growth ambitions, especially those which were relatively large.
As both are widely represented within the US stock market, it has greatly outperformed. Meanwhile the UK
stock market, characterised by slower-moving, capital-intensive businesses, along with numerous mid and
smallcaps, has not performed so well.
Now that the UK stock market has broken out on the upside, this may presage a new period of
higherreturns.
Over recent years, the political climate has driven a fragmentation of international relationships, which has
been a hindrance to global franchises.
More recently still, asset valuations have come under pressure, with the cost of capital and debt now being
more costly. In these conditions, capital intensive businesses with tangible assets will tend to be subject
to less competition. These trends favour many UK mainstream stock market-quoted businesses, and it is
noteworthy that, since 2000, the market itself has recently broken out of its trading range, on the upside.
Given that the UK stock market is at a low point in valuation terms, this new trend of UK outperformance
could be dramatic and perhaps persist for many years.
02 | Miton UK MicroCap Trust plc | Annual Report 2024
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Annual Report 2024 | Miton UK MicroCap Trust plc | 03
UK quoted microcaps tend to outperform and, given their recent period of weakness we believe they are
overdue a major performance catch-up.
Academic studies of past stock market data have found a consistent pattern where, on average, the smaller a
quoted company, the better its long-term returns. Generally, quoted microcaps typically deliver the best long-
term returns.
There are intervening periods when mainstream stocks have a phase of performance catch-up or are subject
to a series of high-profile takeovers. But, as these pass, the pattern typically reverts to the norm. Thus, given
the ubiquitous nature of the smallcap effect, after their recent underperformance, microcaps appear overdue
a major period of performance catch-up.
Whilst microcaps generally outperform, there are always a few that deliver exceptional returns several
years in a row.
Whilst most quoted companies generate yearly returns that are crowded around the median, there are
always a few that conspicuously disappoint, together with some standout winners that rise by a multiple of
their share price over a couple of years. Whilst there are some isolated large cap examples that appreciate by
a multiple of their share price over a year, these are rare. By contrast, there is normally a short list of microcaps
that achieve this level of return eachyear.
As the share prices of successful microcap businesses appreciate by multiples, the companies themselves
come to the attention of a wider range of institutional investors. Hence these exceptional returns can
sometimes persist for several years, as an increasingly wider range of investors include them in portfolios.
Overall, if the UK stock market has broken out on the upside, then in time it should be matched by a similar
break out of UK-quoted microcaps.
…then, in time, it should be matched by a
smiliar break out of UK-quoted microcaps.
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Any organisation that knowingly operates contrary to the interests of the wider public will, in time, find that
its social licence to operate suffers. Hence, well managed investment portfolios need to invest in companies
with an authentic sense of purpose, as well as those employing a successful commercial strategy.
Mainstream stocks have vast numbers of shareholders, so typically their executive directors only meet a
small proportion of them. Alongside their long list of shareholders, they are offered an extraordinarily wide
range of advice regarding their stance on corporate strategy and environmental, social and governance
issues. The bottom line is that institutional investors have little opportunity to gauge the authenticity of the
management team’s sense of purpose or to influence their corporate agenda significantly.
In contrast, there are far fewer institutional microcap investors, so most microcap management teams
are keen to meet them, even when they are not shareholders. Microcap investors, therefore, have a much
greater opportunity to gauge a company’s culture, even prior to investing. In addition, institutional holders
typically account for a substantial proportion of their equity, so when these holders express opinions they
often have a meaningful influence on how the management teams address issues, including those related to
environmental, social and governance policy.
Furthermore, when addressing
environmental, social and governance
issues…
04 | Miton UK MicroCap Trust plc | Annual Report 2024
Annual Report 2024 | Miton UK MicroCap Trust plc | 05
AIM-listed companies do issue formal reports covering non-financial metrics such as climate data or
gender diversity, although these are typically less comprehensive than the majors. Your Manager does
not find this a major handicap as many microcaps operate across a relatively specialist business area. In
addition, your Manager can compare the content of the sustainability reports with the detail of the senior
management’s actions gathered through one-to-one meetings. When variance is identified, it can imply a
lack ofauthenticity. As one example, your Manager meets many mining management teams who say they
start every meeting withsafety. And yet, in far too many cases, their safety data is not covered by the first slide
in their corporate presentation, nor is safety the first matter of substance in their annual report.
Generally, microcap leadership teams are smaller, and often more agile than the majors. Typically, this is
reflected in a stronger sense of corporate purpose and greater sense of motivation than in some larger
companies. For these reasons, when addressing environmental, social and governance issues, the Manager of
a portfolio of microcaps can stand at an advantage when compared to those investing in themajors.
…a UK microcap portfolio
has numerous advantages.
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Ashe Windham
Chairman
The report covers the full year to 30 April 2024, a
period which was, in football parlance, a game of two
halves. In the first half to end of October 2023, the
Trust’s Adjusted Net Asset Value (“Adjusted NAV”) fell
by 15.5%, from 64.20p to 54.10p. The second half saw
a tentative recovery with the Adjusted NAV rising by
3.1% to 55.79p. This somewhat anaemic return was
greatly outpaced by other indices, as local selling
was offset hardly at all by few corporate buybacks
within microcaps, and which led to UK-quoted
microcap valuations declining even further. Over
the period as a whole, therefore, the Trust’s Adjusted
NAV fell 12.9%, compared to a rise in the Deutsche
Numis Smaller Companies 1000 Index of 7.2%. The
vast majority of UK microcaps were already standing
on unusually low valuations even prior to their share
price weakness over this past year. The low average
Price to Book of holdings in the portfolio highlights
the value to be found in owning shares in the Trust.
Earnings and Dividends
Earnings for the year, after costs, were 0.09p
per share (2023: 0.03p) on the revenue account.
Earnings on the capital account consisted of
a loss of 9.26p per share (2023: loss of 28.96p).
Earnings on the revenue account remain
depressed as microcap companies seek to retain
cash rather than paying it out in dividends to
shareholders. As far as setting the dividend is
concerned, the Directors have always given the
Manager maximum flexibility to follow which
ever course is believed to lead to the best results
for our shareholders. As Directors, we regard
the dividend as a useful by-product of the
investment process but not a target in itself.
This year, your Board is recommending a final
dividend of 0.09p per ordinary share, reflecting
the revenue for the year. Subject to approval by
shareholders at the AGM, this will be paid on
25October 2024 to shareholders on the register
on27September2024.
Performance
With the dearth of buying interest in UK
microcaps over the last three years, marginal
sellers have dominated the direction of share
prices. Every excuse in the book has been rolled
out for why institutions and individuals should
not buy UK equities – a close Scottish referendum,
Brexit, four Prime Ministers in five years, the
UK’s lack of exposure to technology stocks, an
egregious 0.5% stamp duty on the purchase of
equities not paid by investors in other first world
stock markets, the sudden imposition of an
additional tax on North Sea oil producers, a major
land war in Europe and the ongoing conflict in the
Middle East. To add insult to injury, the investment
trust sector has been discriminated against by
the iniquitous double counting of fees such that
wealth managers find real difficulties explaining
why they should be buying closed end vehicles
for their clients, given the apparently high level
offees.
“ …it is hard to overstate the scale
of the current upside potential for
the Miton UK Microcap Trust in
absolute terms…”
Chairman’s Statement
06 | Miton UK MicroCap Trust plc | Annual Report 2024
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Annual Report 2024 | Miton UK MicroCap Trust plc | 07
Given the continuing mergers of wealth managers,
the barriers to liquidity are now so high that in
order to attract the selector’s eye, investment
trusts need to have market capitalisations of
£1bn+. There are precious few of those around.
The Association of Investment Companies (AIC)
is trying to get the Financial Conduct Authority
(FCA) to reverse the cost disclosure position but the
latter does not appear to grasp the urgency, whilst
the government seems unable to appreciate the
seriousness resulting from the UK falling from its
position as the premier global centre for finance.
Many large companies are voting with their feet,
seeking listings in the US, where valuations are far
higher and the climate more benign – even the
mighty Shell is contemplating such a move.
At the end of April, for example, it was reported that
Coutts & Co. was cutting its UK equity allocation by
almost £2bn from 33% to 2%, even below the UK’s
now feeble 3% weighting in global equity indices.
The consequence is that UK equities are almost
wholly unloved and, as at the end of April 2024, were
trading on 12x forward price earnings ratio vs the
world on 17x and the US on 21x, (source: Bloomberg).
The Price to Book ratios are even more extreme with
the UK on 1.6x, the world on 2.7x and the US on a
lofty 4.4x, whilst the UK also offers a meaningfully
higher dividend yield at 3.8% than both the US (1.4%)
and world markets (2.1%). I thought that the nadir
of selling of UK equities was reached a year ago but
I was sadly mistaken; as the chart below shows the
rate of selling has in fact accelerated. Capitalism
abhors a vacuum and the recent high and rising
level of corporate take overs of listed companies
demonstrates the value to be found in the UK. Canny
contrarians are buying UK equities at what appear to
be knock down prices.
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Net retail sales of UK Equity Funds
Source: The Investment Association
-15
-10
-5
0
5
10
£4.9bn
£2.7bn
(£5.4bn)
(£2.8bn)
(£4.8bn)
(£2.2bn)
(£3.2bn)
(£5.3bn)
(£11.9bn)
(£13.6bn)
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Investment £billion
(£2.7bn)
2013
Prospects
The last three years have been incredibly frustrating
for the management teams of numerous UK quoted
companies and for our shareholders. UK microcap
share prices have steadily declined, even whilst the
underlying companies have often continued to
deliver results in line with expectations.
Whilst this is disappointing, the Trust was set up
because quoted microcaps possess extraordinary
upside potential. When microcaps succeed,
sometimes their share prices can appreciate very
dramatically. We liken this to an option-value upside,
where the term of the option is open-ended, and its
cost comes almost for free, embedded within the
quoted microcap share price.
Currently the media is marvelling because Nvidia
has delivered an annualised return of 86% in sterling
terms over the last four years. And yet, the Trust’s
holding in Yü Group (a microcap exemplar), has
appreciated at an annualised rate over the same
period of 130%. In short, Yü Group’s share price has
risen some 27-fold, compared with Nvidia which has
risen 11-fold.
Chairman’s Statement continued
Furthermore, after Nvidia’s rise, it has moved up to
a high-expectation valuation (Price to Book of 51.8x),
whereas Yü Group is still on a modest valuation
– even now its Price to Book is only 6.2x. Thus, Yü
Group still retains bags more upside potential, even
in the short-term.
Microcap share prices generally have been
severely repressed over the last three years, so
these abnormally large upsides have been more
infrequent. To catch the discerning investor’s eye,
small stocks have to be exceptional. Yü Group is a
good example and is currently one of the multi-
baggers in the Company’s portfolio.
Hopefully, by the time that you read this, the green
shoots in UK equities which started emerging in
mid-April, will have blossomed into something more
substantial. The UK is now officially out of recession
and ‘animal spirits’ are evident. After largely flatlining
since 2000, the UK stock market has recently broken
out on the upside. Rather similar to the Japanese
stock market, we believe this is the start of a new
longer-term trend. In our view, the mainstream UK
stocks are now set to enter a period when they will
outperform their international comparators.
But the greatest upside potential has always lain
within UK-quoted microcaps – and they now are
starting from shockingly low valuations. Those that
succeed from here have the potential to perform so
much better than large caps. The old stock exchange
adage that ‘Elephants don’t gallop’ is normally the
rule. If the UK stock market itself may be starting
a long-term trend of outperformance, and if UK
microcaps outperform the UK majors as they have
done historically, then they are set to outperform
international comparatives.
In conclusion, it is hard to overstate the scale of the
current upside potential for the Miton UK Microcap
Trust in absolute terms, as well in the context of
other equities internationally.
Share Issuance
As the shares did not trade at a premium to the
prevailing Adjusted NAV during the year under
report, there were no opportunities to issue
shares. We will be seeking approval at the AGM
in September 2024 to renew this useful facility.
Issuing shares at a premium to Adjusted NAV is to
the benefit of all shareholders as it dilutes the fixed
charges which the Company bears and thus lowers
the Ongoing Charges Figure (“OCF”).
Share Redemption
Each year your Directors offer the facility for
shareholders to redeem their holdings in part or
whole, at or close to the prevailing Adjusted Net
Asset Value. The Directors are offering this facility
again this year and the timetable is laid out on
page 80 of this report. Should the redemption
be substantial, then the Directors may take the
decision to form a separate redemption pool, as we
did last year, and it may take a number of weeks, if
not months, to liquidate the pool carefully without
disadvantaging the remaining shareholders, or
indeed the exiting ones. Thanks to microcaps having
been out of favour for almost three years, the Trust
has suffered heavy redemptions over each of the
last two years, being 13.4% in 2022 and 18.7% in 2023.
We have in place an agreement with the Trust’s
managers, Premier Miton, that they will rebate their
ongoing management fee to the extent required
for the Trust to maintain an ongoing charges ratio
of no more than 2%. The Trust thus has the facility to
remain viable at a lower level of market capitalisation
than most investors would believe possible. It is also
worth noting that Premier Miton’s fee is based on
the Trust’s market capitalisation and not its Adjusted
NAV, which, when it is trading at a significant
discount, is of material benefit to shareholders.
Board Refreshment
Your Directors have a policy that a non-executive
Director should serve for no more than nine years,
from the date of first election. A well-structured
waterfall of directors’ retirements is always difficult
when coming after a company has been launched,
08 | Miton UK MicroCap Trust plc | Annual Report 2024
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Annual Report 2024 | Miton UK MicroCap Trust plc | 09
as directors should retire nine years after the first
election by shareholders. Davina Walter took over
from Peter Dicks as Senior Independent Director
on 1 May 2024. Louise Bonham will take over from
Peter on 1 September 2024 as Chair of the Audit
Committee, whilst Peter will be on hand to help with
the redemption process and with the interim results
until he retires from the Company at the end of
December 2024.
Environmental, Social and Governance (ESG) issues
Your Manager follows Premier Miton’s responsible
investing policy, which is to consider Environmental,
Social and Governance issues and actively to
engage in the investment process with investee
companies, in order to deliver improved outcomes
for all stakeholders and to take an active approach
to voting on company resolutions at annual general
meetings of investee companies. Premier Miton has
been a signatory of the UN Principles for Responsible
Investment since January 2020, an organisation
which encourages and supports its signatories
to incorporate ESG factors into investment and
ownership decisions. Premier Miton also adopts a
banned weapons exclusion and utilises third party
data to maintain a list of suchcompanies.
Change of Service Providers
As reported in the interim report, following due
process, evidenced by extensive due diligence and
interviews, on 4 March 2024, the Trust appointed
subsidiaries of Northern Trust as company secretary
and registered office, fund administrator and
depositary, resulting in considerable savings
forshareholders.
Annual General Meeting
The Annual General Meeting of the Trust will be
held at 11.30am on Tuesday 24 September 2024
at the offices of Stephenson Harwood, 1 Finsbury
Circus, London EC2M 7SH. Your Directors look
forward to this opportunity to meet shareholders
and especially retail investors, as there are few other
opportunities to engage with the latter. Aside from
the formal business of the AGM, Gervais Williams
and Martin Turner will give a presentation on the
Trust’s prospects and at the end of proceedings we
will be offering a sandwich lunch. We hope that as
many shareholders as possible will be able to attend
and would encourage those wishing to do so to
register their interest via a link that will be available
on the Trust’s website, www.mitonukmicrocaptrust.
com, in the preceding six weeks. There you will also
find additional details regarding the Trust including
factsheets and a range of regularly updated videos,
podcasts and articles.
In conclusion, as I wrote in my last report, the
Directors are grateful for your tolerance in holding
the Trust’s shares over what has been a fairly dismal
period and we are hopeful that your patience will be
amply rewarded in the not-too-distant future. Two
of your Directors added materially to their holdings
over the year, demonstrating their confidence in the
long term prospects for the Company.
Ashe Windham
Chairman
11 July 2024
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Which fund managers have day-to-day
responsibility for the Trust’s portfolio?
Since the launch of the Trust in April 2015, the day-
to-day management of the Trust’s portfolio has
consistently been carried out by Gervais Williams
and Martin Turner.
Gervais Williams
Gervais joined Miton in March 2011 and is Head of
Equities at Premier Miton. He has been an equity
fund manager since 1985, including 17 years at
Gartmore. He was named Fund Manager of the Year
by What Investment? in 2014. Gervais is President of
the Quoted Companies Alliance and a member of
the AIM Advisory Council.
Martin Turner
Martin joined Miton in May 2011. He and Gervais have
had a close working relationship since 2004, with
complementary expertise that led them to back a
series of successful companies. Martin qualified as
a Chartered Accountant with Arthur Anderson and
had senior roles and extensive experience at Merrill
Lynch and Collins Stewart.
What were the principal stock contributors and
detractors in the portfolio over the year to April 2024?
Over the last three years, including throughout the
year to April 2024, institutional investors have sought
to reduce their holdings of UK equities, so that
capital could be invested elsewhere. Hence, there
have been persistent sellers of microcap shares that
have often outnumbered the buyers, such that most
microcap share prices have fallen, even when their
prospects remained unchanged.
However, occasionally, the prospects of a quoted
microcap improve so significantly that even though
its share price might appreciate by many multiples,
its valuation still remains relatively modest. With
the overhang of quoted microcaps sellers, this
outcome has been somewhat more frequent than
usual this year. The best example in this period
was Yü Group, which appreciated three-fold over
the year to April 2024 and yet still stands on an
overlooked valuation. Whilst the Trust’s holding in
Yü Group was trimmed to keep its percentage of
the portfolio below 10%, it still appears to have an
unusually attractive risk/reward ratio at its current
share price. Serabi Gold, a gold mining company in
Brazil, was somewhat similar, having appreciated
by 130% over the year.
Given the generally unfavourable background,
the share prices of portfolio holdings that chose
to raise additional capital were often particularly
weak. A good example is CyanConnode, a market
leader in Indian smart meters. The Trust held this
in its portfolio because the Indian government is
tendering to install 250 million meters over the
coming years. In November 2023, the company
raised £2.5m to increase its component inventory,
anticipating that this would help it to win a larger
proportion of its tenders. Even though CyanConnode
has continued to meet market expectations, with the
additional share issuance, its share price fell 53% over
the year to April 2024. Whilst corporate prospects
may have been enhanced by raising additional
capital, the holding was the worst detractor in terms
of the Trust’s Adjusted NAV return this year.
Alongside, there are always a number of portfolio
holdings where prospects deteriorate, and which
are therefore sold from the portfolio, typically
crystalising losses. This year the most significant of
these were Cap-XX, Ethernity Networks, FireAngel,
Graft Polymer, MusicMagpie, Saietta and Velocys. In
addition, the management team of Accrol Group
recommended a takeover offer, even though it was
only at a modest premium to its share price. They
feared global competition setting up in the UK
would degrade their profitability.
In a normal year, when buyers and sellers of
microcap holdings are in balance, there will
always be a number of microcap share prices
that appreciate significantly. With microcap
transactions being out of balance, however, these
were comparatively scarce in the year under review.
In addition, even microcaps that excelled did not
necessarily appreciate in valuation as much as might
be expected. Even so, where valuations of individual
holdings moved well above others, these were sold,
Investment Manager’s Report
10 | Miton UK MicroCap Trust plc | Annual Report 2024
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giving the potential to reinvest capital in other stocks
standing on extremely overlooked valuations. For
this reason, positions in Corero Network Securities,
DX Group, Journeo, Oxford BioDyanmics, React
Group and Sureserve were sold during the year.
In summary, with the persistent sellers of microcap
shares over the year to April 2024, their share prices
have been unusually weak even when their prospects
remained unchanged. This is the principal reason why
the Adjusted NAV of the Trust fell 12.9% over theyear.
What are the main factors that have driven the
Trust’s returns since it first listed in April 2015?
As highlighted in previous annual reports, the best
performing part of the UK stock market since 1955
(the start of the relevant data series) has been the
microcap sector.
When the investment universe is narrowed
further, solely to include microcaps standing on
undemanding valuations (typically determined
by low Price to Book ratios), the scale of their
outperformance is even more marked. With this
background in mind, the Trust’s portfolio principally
invests in UK-quoted microcaps standing on what
we consider to be overlooked valuations at the time
of purchase. When these microcaps succeed, their
share prices can appreciate by many multiples of the
purchase price.
The globalisation trend was already declining when
the Trust was set up in April 2015, and we anticipated
that it would gradually fade. Whilst economic trends
have indeed evolved as expected, governments
and central banks have been fearful of unwinding
the debt burden, so have adopted unconventional
policies to keep the prior stock market status quo in
place. This has led to perverse outcomes. Whereas
the smaller company effect is near-ubiquitous,
recent policy gymnastics have boosted megacap
outperformance dramatically. Although this pattern
is likely to prove unsustainable over time, it has
had the unwelcome side effect of making market
conditions for quoted microcaps increasingly hostile
since the Trust’s listing in April 2015.
Over recent years, the cost of raising additional
microcap capital has typically become far more
onerous, as investors have become increasingly
cautious about committing additional capital to
assets that continue to underperform. Thus, quoted
microcaps seeking to raise additional capital
have either contemplated issuing new shares at a
discount to their subnormal valuations or chosen
to live without additional capital. While issuing
additional capital typically enhances prospects,
many microcaps have preferred to grow at a slower
pace over recent years rather than issue heavily
dilutive new capital. Microcaps that have run out
of cash meanwhile have often been obliged to
raise new capital irrespective of its dilutive effect.
In these cases, the prospective returns for existing
shareholders will have been downgraded, other
than for those that invested additional capital and
therefore maintained their percentage ownership.
For these reasons, over the nine years since issue, the
share prices of many UK-quoted microcaps in the
Trust’s portfolio have suffered a valuation headwind,
even amongst those that were successful. Those that
disappointed have typically delivered poorer returns
than normal.
In spite of these severe microcap headwinds, the
Adjusted NAV of the Trust has nevertheless modestly
risen since inception in April 2015, and outperformed
the return of the Deutsche Numis Alternative Markets
Index. Whilst the portfolio does include a list of
holdings that have delivered poor returns, there are
many others that have generated excellent returns
despite the adverse microcap conditions. Further
up the market capitalisation scale, conditions have
typically been less hostile, which explains why the
returns of the comparative indices are generally
better than that of the Trust’s Adjusted NAV total
return. In addition, the returns of larger market
capitalisations stocks by definition have larger index
weightings, and hence skew the overall return of
the comparative indices further upwards when
theyoutperform.
Investment Manager’s Report continued
In the light of the substantial decline in the Trust’s
Adjusted NAV over the last three years, have its
longer-term prospects deteriorated?
The period of globalisation can be characterised
as favouring ‘bigness’, which may explain why the
US stock market has greatly outpaced others over
recent decades. During globalisation, the valuations
of other exchanges such as the UK have trailed
behind the US comparatives. This position is even
more extreme within UK-quoted microcaps, where
over the last three years valuations have fallen to
what we consider to be absurdly low levels.
Over the last decade or so however, the electorate
has come to distrust the compromises that come
with globalisation. This was evident as long ago as
2016 with the Brexit and Trump votes. Thereafter, the
logistics nightmares of the pandemic have made the
compromises that come with globalisation all the
more prominent, and electoral pressure for change
has become more persistent.
Beyond globalisation, policies such as reshoring
manufacturing, which tend to boost inflation, are
expected to lead to a much more challenging
economic outlook. Interestingly, we believe changes
like this favour companies funded with risk capital,
such as those listed on stock markets, over those
principally funded by debt, like private equities.
Total returns of the Trust and various comparative
indices since launch in April 2015
Quoted companies generating cash surpluses
(such as those that dominate the UK mainstream
stock market) now have the potential to outperform
greatly. In this context, we are not surprised that
this is the moment when the mainstream UK
stock market has broken out of its trading range
on the upside. This is all the more significant given
that it has done so at a time when numerous local
investors have been aggressively reducing their UK
equity weightings. Breakouts such as that of the
UK tend to bring in new participants from overseas,
boosting the outperformance trend further. As local
selling moderates and in time ceases, we anticipate
the new UK outperformance trend will accelerate
further and become persistent.
Furthermore, we also anticipate that market trends
will start to favour small cap stocks over large ones,
in which the UK exchange is better represented
than most other markets. Hence, far from being
worried about the Trust’s prospects deteriorating
after its recent underperformance, we believe its
upside potential is now even greater than before,
and more immediate. In part, this is due to UK-
quoted microcaps standing on absurdly low
valuations, but also because we anticipate that the
current political and geopolitical trends will favour
UK-quoted equities, and most particularly UK-
quoted microcaps in future.
Will institutional investors ever return to the UK
quoted microcap investment universe?
Inflationary pressures were benign during the period
of globalisation, and asset valuations in general
rose considerably. In addition, the opening up of
international trade also enhanced world growth,
so most businesses expanded. Overall, the returns
of many assets have been unusually strong during
globalisation.
As the favourable pattern persisted over decades,
stock market returns were routinely well above
inflation, and additional returns from smallcap
portfolios became apparently optional for
institutions. Indeed, institutions progressively
favoured concentrating capital in large and
Source: Morningstar
0
10
20
30
Percent
40
50
60
70
60.8
45.4
55.3
12.0
16.2
Deutsche
Numis
All Share
Index
Deutsche
Numis
SC 1000
Index
Deutsche
Numis
Alternative
Markets
Index
MINI
Adjusted NAV
Deutsche
Numis
Smaller
Companies
Index
12 | Miton UK MicroCap Trust plc | Annual Report 2024
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megacap equities because they came with
abundant market liquidity. Hence, although quoted
smallcaps may have outperformed the majors
during globalisation, the commercial returns from
all sorts of mainstream assets were so copious
that most institutional investors steadily reduced
their smallcap participation. The adverse pattern
has been most pronounced within the UK-quoted
microcap investment universe, where the vast
majority of capital is now provided by private
investors. Amongst institutional investors, even
those with dedicated UK smallcap strategies now
routinely disregard quoted companies below a
minimum market capitalisation, say, of £150m.
Recent elections have led to a Balkanisation of
international relationships, and globalisation is
now in retreat. There are fewer opportunities to sell
goods across all international geographies, which
constrains opportunity for many global businesses.
Furthermore, the reshoring of manufactured goods,
and greater immigration controls add to inflationary
pressures, and hence are also expected to reduce
asset valuations. The return on mainstream stock
markets by implication may be much poorer in
the future. Given that many quoted megacaps are
currently standing on incredibly high valuations,
many stock markets around the world may fail to
deliver a commercial return for many years.
Even if UK-quoted microcaps were to start
outperforming very substantially over the
coming quarters, we doubt that institutions
would immediately crowd into them. However,
if the mainstream indices were to fail to deliver a
commercial return for a long period, in time we do
expect institutional capital to be reallocated into
areas that are outperforming.
The smallcap investment universe is typically
defined as comprising the bottom ten percent of
market capitalisations of the overall stock market,
so an allocation from the large cap ninety percent,
into the smallcap ten percent tends to amplify
its performance. Furthermore, as microcaps are
typically defined as being the bottom two percent,
Number of quoted companies in the UK below and
above £150m market capitalisation
an allocation from the large and smallcap ninety-
eight percent into the microcap two percent can
be expected to have an even greater amplification
impact on performance. Alongside, as UK
mainstream companies have fallen to undemanding
valuations during globalisation, and UK-quoted
microcaps have fallen to absurdly low valuations, the
new outperformance trends have the potential to
persist in scale for years.
For all these reasons, we expect UK-quoted
microcaps to outperform greatly global large and
megacaps, in a new trend that is boosted further
by institutional capital being allocated increasingly
further down the market capitalisation range.
Even a tiny incremental allocation of institutional
capital would have a major impact on UK-quoted
microcap returns. And as the cost of microcap
capital becomes less onerous, we foresee they
will enhance their returns yet further through
share issuance. Over time, the more that quoted
microcaps outperform, the greater will be the
willingness of institutional capital to participate. We
anticipate something of a virtuous spiral from here,
with additional institutional capital allocations being
matched by an accelerating pattern of UK-quoted
microcap outperformance in a new trend that could
last for decades!
Number of companies
Below £150m Above £150m
0
100
200
300
400
500
600
£2,296bn
combined
market
capitalisation
£14bn
combined
market
capitalisation
Source: Premier Miton
What are the prospects for the Trust?
In the sections above, we outline why we believe
the current political and geopolitical trends are
now set to favour quoted equities and specifically
UK-quoted equities from here. In addition, we also
outline why we believe market trends will now start
to favour smallness over bigness. When these factors
are set in the context of UK-quoted microcaps that
are currently standing on unusually low valuations,
the reasoning for being upbeat about the Trust’s
prospects should beobvious.
Even after setting out these arguments however,
we believe that the full upside potential of the
Trust’s strategy is still not fully captured. The issue
is that investors’ expectations are currently framed
in the context of a stock market that has become
increasingly hostile towards UK-quoted microcaps.
Investors may gauge the ultimate upside potential of
the Trust with reference to the return from a holding
such as Yü Group, whose share price has appreciated
21-fold between first purchase in May/June 2020 and
the end of April 2024. This is twice as fast as that of
Nvidia for example (by far the best performing US-
listed member of the Magnificent Seven over that
period) and hence may be assumed to represent a
UK-quoted microcap at its best.
And yet, when UK-quoted microcap market
conditions are less hostile, microcaps like Yü Group
may have even greater upside potential. To repeat,
many UK-quoted microcaps currently stand on very
overlooked valuations. So, even after Yü Group’s
astronomical returns, for example, its Price to Book
ratio is still only 6.2x, whereas that of Nvidia is over
50x (even though it has delivered lesser, though still
stellar, returns). In short, without wishing to debate
the relative investment merits of Yü Group versus
Nvidia, we believe that if Yü Group’s share price were
to rise to a valuation that fairly reflects its prospects,
it would offer plenty of upside potential from here. As
it is, following its recent deal with Shell, YüGroup no
longer needs to commit tens of millions of pounds
in cash collateral when it hedges the energy price for
its customers. With Yü Group’s collateral constraints
now lifted, it can now take the brakes off its full
growth potential and hence a potential valuation
that fairly reflects its prospects may now be even
greater than it was a few monthsago.
The bottom line is that when UK-quoted market
conditions become less hostile, we anticipate that
the Trust’s returns have considerable potential. There
was a glimpse of its scale when, over only a fourteen-
month period, the Trust’s Adjusted NAV rose from
37.28p on 19March 2020 to 107.5p on 10 May 2021.
Now that the mainstream UK stock market has
broken out of its historic trading range on the
upside, we believe that local market conditions
are improving. Stock market breakouts tend to
bring in new participants from overseas, boosting
the outperformance trend further and help it
become embedded. When institutional capital
starts to be allocated further down the market
capitalisation range, market conditions within
UK-quoted microcaps will normalise again and
investors should start to recognise the full potential
of the Trust’s strategy. The key point is that even tiny
increments of institutional capital have the potential
to make a giant difference to UK-quoted microcaps
market conditions, and hence the scale of their
returnpotential.
In summary, the Trust’s strategy seeks to pick out
stocks that have the potential to appreciate by many
multiples of the original share price, and in our view
the prospects for the Trust’s UK-quoted microcap
strategy are now the best they have been for over
thirty years. Enough said.
Gervais Williams and Martin Turner
11 July 2024
Investment Manager’s Report continued
14 | Miton UK MicroCap Trust plc | Annual Report 2024
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Business Model
Business and status the Company
MINI was incorporated on 26 March 2015 and its
Ordinary Shares were listed at 50p on the London
Stock Exchange on 30 April 2015. It is registered
in England as a public limited company and is
an investment company in accordance with the
provisions of Sections 832 and 833 of the Companies
Act 2006.
The principal activity of the Company is to carry
on business as an investment trust. The Company
intends at all times to conduct its affairs so as to
enable it to qualify as an investment trust for the
purposes of Sections 1158/1159 of the Corporation Tax
Act 2010 (“S1158/1159”). The Directors do not envisage
any change in this activity for the foreseeable future.
The Company has been granted approval from HM
Revenue & Customs (“HMRC”) as an investment trust
under S1158/1159 and will continue to be treated as an
investment trust company, subject to there being no
serious breaches of the conditions for approval.
The principal conditions that must be met for
continuing approval by HMRC as an investment trust
are that the Company’s business should consist of
“investing in shares, land or other assets with the aim
of spreading investment risk and giving members
of the company the benefit of the results” and the
Company may only retain 15% of its investment
income. The Company must also not be a close
company. The Directors are of the opinion that
the Company has conducted its affairs for the year
ended 30 April 2024 so as to be able to continue to
qualify as an investment trust.
The Company’s status as an investment trust allows
it to obtain an exemption from paying taxes on the
profits made from the sale of its investments and
all other net capital gains. Investment trusts offer
a number of advantages for investors, including
access to investment opportunities that might not
be open to private investors and to professional stock
selection skills at lower cost, and the ability to hold
illiquid positions in uncertain market conditions.
Investment Policy
The Company’s full investment policy is set out on
page 81 and contains information on the policies
which the Company follows relating to asset
allocation, risk diversification and gearing, and
includes maximum exposures, where relevant.
The Company invests in a portfolio of UK quoted
companies with the objective of achieving capital
growth by investing in a portfolio of stocks that are
well placed to generate an attractive cash payback
from productivity improvements.
Investment trusts differ from some other forms
of collective funds in that they are set up as
independent corporations with their operations
overseen by a board which is separate from and
independent of the fund management group that
manages the capital.
In addition, they are listed, with their shares traded
on regulated exchanges – which, in our case, is the
London Stock Exchange.
The Company is a closed-ended company with
no day-to-day redemptions impacting the size
of the fund (excluding the annual redemption).
Shareholders are able to invest or exit the Company
through their broker/platform provider.
Running costs are deducted from the total assets
of the Company on a pro-forma basis so the
Adjusted NAV published each day is expressed
after costs. The figures below are the costs paid by
the Company over the year under review and are
expressed as a percentage of the average asset value
of the Company over the year to 30 April 2024 of
£49,077,000 (2023: £69,083,000).
The Investment Manager has agreed that, for so long
as it remains the Company’s investment manager,
it will rebate such part of any management fee
payable to it so as to help the Company maintain
an ongoing charges ratio of 2% or lower. In addition,
the Company also pays transaction charges
3
that
are levied when shares are bought or sold in the
portfolio. These are dealing commissions paid to
stockbrokers and stamp duty, a Government tax paid
on transactions (which is zero when dealing on the
AIM/Aquis exchanges).
The overall costs of the Company for the period were
2.07% This compares with the Company’s average
NAV total return since issue of 16.2% (after deduction
ofcosts).
A Summary of the Total Costs
Involved in Managing the Trust
1 The basic management fee payable to the AIFM is calculated at the rate of one-twelfth of 0.9% (1% prior to 1 September 2020) of the average market
capitalisation of the Company up to £100m, 0.8% per annum on the average market capitalisation above £100m, on the last business day of each calendar
month. The basic management fee accrues daily and is payable in arrears in respect of each calendar month. For the purpose of calculating the basic fee,
the‘adjusted market capitalisation’ of the Company is defined as the average daily mid-market price for an Ordinary Share and C share (when in issue),
multiplied by the number of relevant shares in issue, excluding those held by the Company in treasury, on the last business day of the relevant month. In
addition to the basic management fee, and when the Redemption Pool is in existence, the AIFM is entitled to receive from the Company a fee calculated at the
rate of 0.9% (1% prior to 1 September 2020) of the NAV of the Redemption Pool on the last business day of the relevant calendar month.
2 The change in service providers, which took effect from 4 March 2024, will mean future expenses will fall in absolute terms.
3 Transactions conducted by the Company also involve some loss of value due to the dealing spread in stock exchange prices. Spreads range from less than 1%
in the most actively traded large cap stocks to more than 10% in the smallest, most infrequently traded stocks. The exact loss of value is difficult to determine
precisely, but is normally less than half of the dealing spread at the time of the transaction. In a large percentage of the transactions, especially in the smallest
stocks, the stock is passed through from sizeable seller to sizeable buyer on a ‘put through’ basis with potentially no loss of value through the spread. During the
year under review, this cost is believed to be very modest in comparison to the Adjusted NAV.
2024
%
2023
%
Fund management fees
1
0.80 0.86
Administration costs, including
Company Secretarial fees
2
0.46 0.30
Directors/Auditor/Depositary/
Registrar/Custodian and
Stockbroker fees 0.53 0.38
All other direct costs, including
VAT on the fees above, plus
marketing, legal 0.20 0.18
Ongoing charges 1.99 1.72
16 | Miton UK MicroCap Trust plc | Annual Report 2024
2024
%
2023
%
Costs paid in
dealing commissions 0.08 0.05
Stamp duty, a Government tax
on transactions 0.01
Overall costs including
transaction charges 2.07 1.78
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Portfolio Information
as at 30 April 2024
Rank Company
Sector &
main activity
Valuation
£000
% of
net assets
1 Yü Group Utilities 3,967 9.2
2 MTI Wireless Edge Telecommunications 1,267 2.9
3 TruFin Financials 1,238 2.9
4 Serabi Gold Basic Materials 1,023 2.3
5 CyanConnode Holdings (including warrants) Telecommunications 889 2.0
6 Zephyr Energy (including warrants) Energy 859 2.0
7 Supreme Consumer Staples 834 1.9
8 Braemar Industrials 774 1.8
9 Concurrent Technologies Technology 743 1.7
10 UP Global Sourcing Holdings Consumer Discretionary 732 1.7
Top 10 investments 12,326 28.4
11 Frontier IP Group Industrials 705 1.6
12 Ingenta Technology 694 1.6
13 Zoo Digital Group Technology 691 1.6
14 STM Group Financials 659 1.5
15 Zinc Media Group Consumer Discretionary 645 1.5
16 Beeks Financial Cloud Technology 645 1.5
17 Amaroq Minerals Basic Materials 645 1.5
18 Andrada Mining Basic Materials 620 1.4
19 Marwyn Value Investors Financials 600 1.4
20 Capital Basic Materials 596 1.4
Top 20 investments 18,826 43.4
21 Savannah Resources Basic Materials 591 1.4
22 Record Financial Group Financials 570 1.3
23 Elemental Altus Royalties Basic Materials 508 1.2
24 Xeros Technology Industrials
507 1.2
25 CT Automotive Group Consumer Discretionary 506 1.2
26 Zotefoams Basic Materials 476 1.1
27 Van Elle Holdings Industrials 476 1.1
28 Mercia Asset Management Financials 467 1.1
29 Enteq Technologies Energy 465 1.1
30 Feedback Health Care 465 1.1
Top 30 investments 23,857 55.2
Balance held in equity instruments (including warrants) 17,435 40.3
Total equity investments 41,292 95.5
Listed Put Option
UKX – June 2024 5,900 Put 2 0.0
Other net current assets 2,003 4.5
Net assets 43,297 100.0
* Source: Refinitiv. Based on historical yields and therefore not representative of future yields. Includes special dividends where known.
18 | Miton UK MicroCap Trust plc | Annual Report 2024
Portfolio exposure by sector (%)
10.2 10.0 4.5 4.0
2.8
1.9
5.9
Actual annual income by sector (%)
£43.30 million
£0.64 million
Net asset by asset allocation (%)
AIM/AQUIS
Exchanges
Main Market
Cash and
cash equivalents
International
Equities
FTSE 100 Option
Basic Materials
Technology
Financial Services
Industrials
Utilities
Energy
Consumer
Discretionary
Telecomms
Cash and cash
equivalents
Health Care
Consumer Staples
Real Estate
Financial Services
Industrials
Telecomms
Basic Materials
Consumer
Discretionary
Technology
Real Estate
Energy
Consumer Staples
Utilities
Health Care
£43.30 million
Source: Refinitiv.
Portfolio as at 30 April 2024
The tables above set out how the portfolio’s capital
was deployed as at 30 April 2024. The data is shown
in terms of the classifications or the stock markets
on which the holdings are listed. UK smaller quoted
companies that are not listed on the Main Market
of the London Stock Exchange are normally quoted
on AIM. The AIM market is set up to meet the
requirements of smaller listed companies providing
them with the ability to raise funds. This also
provides liquidity for the acquisition and disposal
of shares. The Company additionally holds certain
shares on the Aquis Exchange, a regulated exchange.
The cash position provides the Company with £2.1m
of cash resources. This enables the Company to take
advantage of investments at opportune times.
The investment income above comprises the
income from the portfolio as included in the
Income Statement for the year ended 30 April 2024
attributable to the various sectors. The returns
of the Company are from Capital and Revenue.
Investments for the Company’s portfolio are
principally selected on their individual merits. As the
portfolio evolves, the Manager continuously reviews
the portfolio’s overall sector and index balance to
ensure that it remains in line with the underlying
conviction of the Investment Manager. The
Investment Policy is set out on page 81, and details
regarding risk factors and diversification, whilst other
policies are set out each year in the Annual Report.
17.4 15.6 12.5 9.1 6.1
10.2 9.1 4.6 4.3
3.8
1.3
4.832.9 16.2 7.2 5.6
15.6
4.5
1.2
0.0
78.7
Portfolio Information continued
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Annual Report 2024 | Miton UK MicroCap Trust plc | 19
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Performance and Risks
Key Performance Indicators
The Board reviews the Company’s performance by reference to a number of key performance indicators
(“KPIs”) and considers that the most relevant KPIs are those that communicate the financial performance and
strength of the Company as a whole. The Board and the Investment Manager monitor the following KPIs:
•
Adjusted NAV performance
Whilst the Trust does not have a formal
benchmark, its returns are routinely compared
with the performance of the peer group and the
Deutsche Numis Smaller Companies 1000 Index
to provide context. Over the year, the Adjusted
NAV total return of the Trust was (12.9)%, which
compares to 9.3% for the peer group and 7.2% for
the Deutsche Numis Smaller Companies 1000
Index. Since the Company’s listing in April 2015,
the Adjusted NAV total return was 16.2%, which
compares to 82.5% for the peer group and 55.3%
for the Deutsche Numis Smaller Companies 1000
Index. The Board believes that a UK investment
strategy that delivers returns that are not
especially closely correlated with the mainstream
UK indices offers diversification benefits to
shareholders.
•
Daily stock market trading volumes of the Trust
Over the year, the average daily volume of
the Company’s shares traded each day was
approximately 94,000 and, since IPO, an average
of approximately 234,000 shares have been traded
daily. This indicator tends to be elevated when
the Trust is outperforming, although it may be
assisted by clearing all the overhanging sellers in
the Trust each year at the time of the redemption.
Generally, new buyers like to know there aren’t
any major sellers that are potentially overhanging,
waiting toexit.
•
The discount/premium of the share price in
relation to the Adjusted NAV
At times, the number of shareholders looking to
transact in the Trust’s shares exceeds the market’s
daily liquidity. Imbalances like this are normally
cleared through stock market transactions over
a few weeks, but on occasion these imbalances
can become persistent leading the Trust’s share
price to diverge from the daily Adjusted NAV.
The Board believes that the existence of the
Trust’s redemption facility assists in keeping
this divergence to a minimum over the long
term. Although during the year under review
the Trust’s share price has traded 9.2% below its
daily Adjusted NAV on average, since launch this
discount has been maintained below 5%. The
Trust has an objective to keep this divergence to a
minimum. Over the year under review, the Trust’s
share price has traded on average 9.48% below its
dailyAdjusted NAV.
•
Ongoing charges
The ongoing charges on the Ordinary Shares
for the year to 30 April 2024 amounted to 1.99%
(30 April 2023: 1.72%) of total assets. Further
details are set out on page 93.
20 | Miton UK MicroCap Trust plc | Annual Report 2024
Performance and Risks continued
Principal Risks and Uncertainties
The Company is exposed to a variety of risks and uncertainties that could cause its asset price or the
income from the investment portfolio to reduce, possibly by a sizeable percentage in the most adverse
circumstances. The principal financial risks and the Company’s policies for managing these risks and the
policy and practice with regard to the portfolio are summarised in note 18 to the financial statements.
The Board, through delegation to the Audit and Management Engagement Committees, undertakes a
robust annual assessment and review of the principal risks facing the Company, together with a review of
any new and emerging risks which may have arisen during the year, including those that would threaten its
business model, future performance, solvency or liquidity. These risks are formalised within the Company’s
risk matrix. Information regarding the Company’s internal control and risk management procedures can be
found in the Corporate Governance Statement on pages 34 to 40.
Listed below is a summary of the principal and emerging risks identified by the Board and actions taken to
mitigate those risks.
Risk Mitigation
Investment and strategy
There can be no guarantee that the investment
objective of the Company will be achieved.
The Company will invest primarily in small
UK quoted or traded companies by market
capitalisation. Smaller companies can be expected,
in comparison to larger companies, to have less
mature businesses, a more restricted depth of
management and a higher risk profile.
These companies are normally traded less
frequently on the stock exchanges and, when
aggregated with holdings in other client funds
of the Investment Manager, the combined funds
may have a significant percentage ownership of
investee companies.
Many businesses are facing additional financial
challenges due to demand fluctuations, and/ or
additional cost of supply currently, due to the effects
of the Ukrainian war.
The Investment Manager has long experience of
managing portfolios of this nature, including dealing
in smaller capitalisation companies, and deploying
an approach that is designed to maximise the
chances of the investment objective being achieved
over longer-term time horizons. The Company is
reliant on its Investment Manager’s investment
process. The Board reviews and discusses the
investment approach at each Board meeting, and
if it isn’t satisfied, in extremis, it can appoint another
Investment Manager.
The Manager looks to mitigate the higher risk
profile of individual quoted smaller companies by
ensuring that the Company holds a well-diversified
portfolio, both by number of companies and areas of
operation. The Company’s diversified portfolio holds
some stocks where prospects have improved that
offset some others where they have deteriorated.
The Company is structured as a closed-ended fund,
which means that it is not subject to daily inflows
andoutflows of capital.
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Annual Report 2024 | Miton UK MicroCap Trust plc | 21
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Risk Mitigation
Reliance on third parties
The Company has no employees and is reliant on
the performance of third-party service providers.
Failure by the Investment Manager or any other
third-party service provider to perform in accordance
with the terms of their appointment could have
a material detrimental impact on the operation
of the Company. This could include failure of a
counterparty on whom the Company is reliant.
The Board monitors and receives reports on the
performance of its key service providers. In relation
to the risk of counterparty failure, the Board reviews
the controls report of the Depositary.
The Board may, in any event, terminate all key
contracts on normal commercial terms.
Loss of key personnel/fund managers
The Company depends on the diligence, skill,
judgement and business contacts of the Investment
Manager’s investment professionals and its future
success could depend on the continued service of
these individuals, particularly GervaisWilliams and
Martin Turner.
The Company may decide to terminate the
Management Agreement should both Gervais
Williams and Martin Turner cease to be employees of
the Management group and if they are not replaced
by a person/s who the Company considers to be of
equal or satisfactory standing within three months
of one or both of their departures.
Share price volatility and liquidity/marketability risk
The market price of the Ordinary Shares, as with
shares in all investment trusts, may fluctuate
independently of their underlying Adjusted NAV
and may trade at a discount or premium at different
times, depending on factors such as supply and
demand for the Ordinary Shares, market conditions
and general investor sentiment.
The Company may become too small to be attractive
to a wide audience, with lesser stock market liquidity
and a wider share price discount.
The consequences of the UK’s vote to leave the
EU continues to cause uncertainties for financial
markets, together with the Russia-Ukraine war and
the ongoing conflict in the Middle East.
The Company has in place an annual redemption
facility whereby shareholders can voluntarily tender
their shares. The Board monitors the relationship
between the share price and the Adjusted NAV. The
Company has powers to repurchase shares should
there be an imbalance in the supply and demand
leading to a persistent and excessive discount. The
Investment Manager and, on occasion, the Directors
maintain dialogue with shareholders through
regular face-to-face meetings.
22 | Miton UK MicroCap Trust plc | Annual Report 2024
Performance and Risks continued
Risk Mitigation
Costs of operation
As stated, the Company relies on external service
providers. Many of these are paid on a basis where
their fees are related to the size of the Company
(an“ad valorem” basis). Others are for fixed monetary
amounts. Therefore, if the Company were to
shrink, through redemptions, buybacks or asset
performance, the cost per share of running the
Company would increase. This could make it harder
to achieve the investment objective.
The Board monitors the costs of all service
providers. The Board is also committed to the
controlled growth of the Company which would
spread the fixed costs over a larger asset base. In
the event that the Company was to decrease in size
from its current level, the Board has capped the
total costs at no more than 2% of the aggregate
market capitalisation. The ongoing charges for the
year to 30 April 2024 amounted to 1.99% (30 April
2023: 1.72%).
Regulatory risk/change in tax status
The Company is subject to laws and regulations
enacted by national and local governments. Any
change in the law and regulation affecting the
Company may have a material adverse effect on the
ability of the Company to carry on its business and
successfully pursue its investment policy.
The Board receives regular updates from its
Secretary, Broker, industry representatives and
its Investment Manager on significant regulatory
changes that may impact the Company. The
Company’s ability to determine the shape of
regulatory or tax changes is limited and therefore
the Board aims to ensure that it is well informed and
prepared to respond to changes as they emerge.
Cyber Risk/IT Security
Errors, fraud or control failures by the Company’s key
service providers or loss of data through increasing
cyber threats or business continuity failure could
damage the Company’s reputation or investors’
interests or result in losses.
The Board receives regular control reports and cyber/
IT policies from all material service providers to
ensure that controls are in place including business
continuity and disaster recoveryarrangements.
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Risk Mitigation
The Company may be subject to legal action by others
The investment portfolio comprises the principal
assets of the Company, and is valued on their market
bid price along with its cash balances. One way to
realise a return for investors is to accept a takeover
offer, often at a premium to the market price. When
these transactions occur, the Company may be in
receipt of cash proceeds, that are then reinvested
in other equities. When the acquirers are US
companies, the Company is at risk that an acquirer
subsequently discovers that the commercial value of
the business acquired is not as anticipated, and may
try to reclaim some or all of the proceeds paid for the
acquisition from the vendors – which in our case is
the Company.
The Company would normally expect acquirers
to carry out their own due diligence on the
assets being acquired, and if there is subsequent
disappointment then to seek redress from
theiradvisers.
Major market event, climate change or geo-political risk
The Company is exposed to stock market volatility or
illiquidity as a result of a major market shock due to
a national or global crisis, geo-political developments
or the effects of climate change.
The impact of such risks, associated with the
portfolio or the Company itself, could result in
disruption to the operations of the Company
andlosses.
External risks over which the Company has no
control are always a risk. The Board is cognisant
of its reliance on the operations of the third-party
suppliers, including the Manager, to mitigate
risks arising from market events, climate change
and geo-political developments, such as a global
pandemic, Russia’s invasion of Ukraine and the
ongoing conflict in the Middle East.
The climate risk exposure is monitored by the
Manager and is not currently considered to be
financially material to the valuation of the Trust.
More information is available in the TCFD product
report which was published on 27 June 2024.
24 | Miton UK MicroCap Trust plc | Annual Report 2024
Share Capital
Share Issues
At the Annual General Meeting held on 26 September
2023, the Directors were granted the authority to allot
up to 9,464,000 Ordinary Shares (up to an aggregate
nominal amount of £9,464) on a non pre-emptive
basis. The Company put a new blocklisting facility into
place towards the end of the financial year ended 30
April 2020 and, during the year, issued no Ordinary
Shares under this blocklisting facility.
The Directors’ current authority to allot Ordinary
Shares is due to expire at the Company’s Annual
General Meeting to be held on 24 September
2024. Proposals for the renewal of the authority are
included within the Notice of AGM on page 85. Any
Ordinary Shares allotted under this authority will not
be issued at less than NAV.
Share Redemptions
Valid redemption requests were received under the
Company’s redemption facility for the 2November
2023 Redemption Point in relation to 17,714,958
Ordinary Shares, representing 18.7% of the
Company’s issued share capital.
Purchase of Own Shares
At the Annual General Meeting of the Company held
on 26 September 2023, the Directors were granted
the authority to buy back up to 14,186,320 Ordinary
Shares. No Ordinary Shares have been bought back
under this authority during the year under report.
The authority will expire at the forthcoming Annual
General Meeting, when a resolution for its renewal
will be proposed.
Treasury Shares
Shares bought back by the Company may, at the
Board’s discretion, be held in treasury, from where
they could be re-issued at a premium to Adjusted
NAV quickly and cost effectively. This provides
the Company with additional flexibility in the
management of its capital base. No shares were
purchased for, or held in, treasury during the year or
since the year end.
Issued Share Capital
As at the year end, there were 76,923,603 Ordinary
Shares and 50,000 Management shares in issue.
Further details of the Company’s share capital are set
out in note 4 to the financial statements on page66.
The rights attached to each share class are set out on
page 81.
There are no restrictions concerning the transfer
of securities in the Company or on voting rights;
no special rights with regard to control attached
to securities; no agreements between holders of
securities regarding their transfer known to the
Company; and no agreements which the Company
is party to that might affect its control following a
successful takeover bid.
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S.172(1) Statement
Background
Directors have a duty (under section 172 of the
Companies Act 2006) to promote the success of
a company for the benefit of shareholders as a
whole. In doing so, a company must have regard
to other broader matters including the likely long
term consequences of any decision, and the need to
foster a company’s relationships with its employees,
suppliers, customers and others and to have
regard to their interests, the impact of a company
on the community and the environment, and the
desirability of maintaining a reputation for high
standards of business conduct.
Stakeholders
The Board seeks to understand the needs and
priorities of the Company’s stakeholders and these
are taken into account during all its discussions and
as part of its decision-making. In considering the
Company’s stakeholders, the Board has concluded
that, as the Company is an externally managed
investment trust and does not have any employees
or customers in the traditional sense, its key
stakeholders comprise its shareholders, suppliers
(comprising mainly its Investment Manager, third
party service providers and advisers), but they also
take account of the Company’s responsibilities to
regulators and to the environment and the wider
community. The section below discusses the actions
taken by the Company to ensure that the interests of
stakeholders are taken into account.
Shareholders
The Board is committed to maintaining open
channels of communication and to engage with
shareholders in a manner which they find most
meaningful, in order to gain an understanding of the
views of shareholders. These include:
Annual General Meeting – The Company
encourages the attendance of shareholders at
the Annual General Meeting. Shareholders have
the opportunity to meet the Directors and the
Investment Manager and to address questions to
them directly. There is typically a presentation on
the Company’s performance and on the future
outlook by the Investment Manager.
Publications – The Annual Report and Half-Year
results are made available on the Company’s
website and are circulated to those shareholders
requesting hard copies. These reports provide
shareholders with a clear understanding of the
Company’s portfolio and financial position. This
information is supplemented by a monthly
factsheet, which is available on the website.
Feedback and/or questions which the Company
receives from shareholders help the Company
evolve its reporting, aiming to render the reports
and updates transparent and understandable.
Shareholder concerns – In the event that
shareholders wish to raise issues or concerns with
the Directors, they are welcome to do so at any time
by writing to the Chairman at the registered office
or by emailing at mitonukmicrocap@ntrs.com. The
Senior Independent Director and other members
of the Board are also available to shareholders if
they have concerns that have not been addressed
through the normal channels.
Investor relations updates – At every Board
meeting, the Directors receive updates from the
Broker, Peel Hunt LLP, and from the Company
Secretary on the share trading activity, share price
performance, the Company’s share register and
investor relations.
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26 | Miton UK MicroCap Trust plc | Annual Report 2024
S.172(1) Statement continued
Other stakeholders
Investment Manager
Maintaining a close and constructive working
relationship with the Investment Manager (Premier
Miton) is crucial to the Board. The Investment
Manager’s performance is critical for the Company to
successfully achieve consistent, long-term returns in
line with its investment objective. The Board meets
with the Investment Manager on a regular basis,
both within and outside formal Board meetings, and
receives and discusses monthly reports and updates
with the Investment Manager when appropriate.
Further details on the relationship with the
Investment Manager can be found on page 35.
Suppliers
The Company relies on a diverse range of reputable
advisors for support in meeting its obligations.
The Board maintains regular contact with its key
external providers, namely the Administrator, the
Company Secretary, the Registrar, the Custodian
and the Broker, and receives regular reporting from
them, both through the Board and committee
meetings, as well as outside the regular meeting
cycle. Their advice, as well as their needs and views,
are regularly taken into account. The Management
Engagement Committee formally assesses the
performance of third party suppliers, their fees and
continuing appointment on an annual basis to
ensure that the key service providers continue to
function at an acceptable level and are appropriately
remunerated to deliver the expected level of service.
The Management Engagement Committee also
receives reports on the financial reporting control
environments in place at each service provider.
Regulators
The Company can only operate with the approval
of its regulators, who have a legitimate interest
in how the Company operates in the market and
treats its investors and shareholders. The Company
regularly considers the control environment in
place to ensure that it meets various regulatory and
statutory obligations.
Environment and Community
In light of the out-sourced nature of the Company’s
operations, the Company has very little direct impact
on the community or the environment. However, the
Investment Manager recognises that it can influence
an investee company’s approach to Environmental,
Social and Governance (“ESG”) matters and discusses
ESG matters with investee companies on a regular
basis. Further information about the Company’s
approach to environmental, human rights, social and
community issues are set out on page 29.
The above mechanisms for engaging with
stakeholders are kept under review by the Directors
and are discussed on a regular basis at Board
meetings to ensure that they remain effective.
Should shareholders or other stakeholders of the
Company wish to contact the Chairman, they can
do so by contacting the registered office of the
Company or by sending an email for the attention of
the Chairman at mitonukmicrocap@ntrs.com.
Decision-making
The Board considers the impact that any material
decision will have on all relevant stakeholders to
ensure that it is making a decision that promotes
the long-term success of the Company. By way of
illustration, decisions taken during the course of
the financial year related to the recommendation
of payment of a final dividend, the renewal of the
annual redemption facility and, after review, a
change in key service providers.
Annual Report 2024 | Miton UK MicroCap Trust plc | 27
Culture
The Company’s defined purpose is relatively
simple: it is to deliver our investment objective. The
culture of the Board promotes a desire for strong
governance and long-term investment, mindful of
the interests of all stakeholders. The Board believes
that, as an investment company with no employees,
this is best achieved by working in partnership with
its appointed Investment Manager.
The Directors agree that establishing and
maintaining a healthy corporate culture among the
Board and in its interaction with the Investment
Manager, shareholders and other stakeholders
will support the delivery of its purpose, values and
strategy. The Board seeks to promote a culture of
openness, debate and integrity through on-going
dialogue and engagement with its service providers,
principally the Investment Manager.
The Board strives to ensure that its culture is in
line with the Company’s purpose, values and
strategy. The Company has a number of policies
and procedures in place to assist with maintaining
a culture of good governance including those
relating to Diversity, Directors’ conflicts of interest
and Directors’ dealings in the Company’s shares. The
Board assesses and monitors compliance with these
policies as well as the general culture of the Board
through Board meetings and in particular during
the annual evaluation process which is undertaken
by each Director (for more information see the
performance evaluation section on page 37).
The Board seeks to appoint the appropriate service
providers and evaluates their remit, performance
and cost effectiveness on a regular basis as described
on page 26. The Board considers the culture of the
Investment Manager and other service providers,
including their policies, practices and behaviour,
through regular reporting from these stakeholders
and in particular during the annual review of
performance and the continuing appointment of all
service providers.
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Management, Social, Environmental
andDiversity Matters
continued
Management Arrangements
The Company’s investment manager is Premier
Portfolio Managers Limited (the “Investment
Manager”). The Investment Manager is responsible
for the management of the Company’s portfolio in
accordance with the Company’s investment policy
and the terms of the Management Agreement
dated 8 April 2015 and restated 20 October 2020.
The Board has appointed Premier Portfolio
Managers Limited as the alternative investment fund
manager (“AIFM”) of the Company.
Under the terms of the Management Agreement,
the Investment Manager is entitled to a
management fee together with reimbursement
of reasonable expenses incurred by it in the
performance of its duties. The management fee is
payable monthly in arrears and is at the rate of 0.9%
per annum where the market capitalisation is at or
below £100,000,000 and 0.8% thereafter, calculated
in respect of each calendar month, of the market
capitalisation at the relevant calculation date. In
addition to the basic management fee, and for so
long as a Redemption Pool (see page 80 for details)
is in existence, the Investment Manager is entitled
to receive from the Company a fee calculated at the
rate of 0.9% per annum of the net asset value of the
Redemption Pool on the last Business Day of the
relevant calendar month.
The Investment Manager has agreed that, for so long
as it remains the Company’s investment manager,
it will rebate such part of any management fee
payable to it so as to help the Company maintain an
ongoing charges ratio of 2% or lower.
In accordance with the Directors’ policy on the
allocation of expenses between income and capital,
in each financial year 75% of the management fee
payable is expected to be charged to capital and the
remaining 25% to income.
The Management Agreement is terminable by either
the Investment Manager or the Company giving to
the other not less than 12 months’ written notice.
The Management Agreement may be terminated
earlier by the Company with immediate effect on the
occurrence of certain events, including insolvency or
in the event of a material breach by the Investment
Manager of the Management Agreement which
is not remedied within thirty days of the receipt
of notice. The Company has given certain market
standard indemnities in favour of the Investment
Manager in respect of the Investment Manager’s
potential losses in carrying on its responsibilities
under the Management Agreement.
The Board appointed Northern Trust Investor
Services Limited as Depositary. The annual fee
(based on Adjusted NAV) for depositary services due
to Northern Trust Investor Services Limited is 0.01%
up to £500m and 0.008% above £500m, subject to a
minimum fee of £7,500.
Administrative Services are delegated by Premier
Portfolio Managers Limited (PPM) to Northern Trust
under an agreement dated 22 November 2023,
which may be terminated by either party on at least
six months’ prior written notice.
Annual Report 2024 | Miton UK MicroCap Trust plc | 29
Continuing Appointment of the InvestmentManager
The Board, through the Management Engagement
Committee, keeps the performance of the
Investment Manager under continual review and the
Management Engagement Committee conducts
an annual appraisal of the Investment Manager’s
performance, and makes a recommendation to the
Board about the continuing appointment of the
Investment Manager. It is the opinion of the Board
that the continuing appointment of the Investment
Manager is in the interests of shareholders as a
whole. The Board believes that the Investment
Manager has executed the investment strategy in
line with the Prospectus. The Directors also believe
that by paying the management fee calculated on a
market capitalisation basis, rather than a percentage
of assets basis, the interests of the Investment
Manager are more closely aligned with those
ofshareholders.
Environmental, Human Rights, Employee, Social
and Community Issues
The Company does not have any employees and the
Board consists entirely of non-executive Directors.
The day-to-day management of the business
is delegated to the Investment Manager. As an
investment trust. As such, the Company has no
environmental, human rights, social or community
policies. However, in carrying out its investment
activities and in relationships with suppliers, the
Company aims to conduct itself responsibly and
ethically. The Company has a zero tolerance policy
towards bribery and corruption and as such is
committed to carrying out its business fairly,
honestly and openly. Further information about the
Company’s relationships with its stakeholders is set
out in the s.172 Statement on pages 25 to 27.
Diversity
The Board of Directors of the Company comprises
two female and two male Directors. The Company’s
Diversity Policy acknowledges the benefits of all
aspects of increased diversity, including gender
and ethnic diversity, as well as diversity of thought
and perspective. The Board remains committed
to ensuring that the Company’s Directors bring a
wide range of skills, knowledge, experience and
backgrounds. The Board will always appoint the best
person for the job and will not discriminate on any
grounds including gender, race, ethnicity, religion,
sexual orientation, age or physical ability.
Approval
The Strategic Report has been approved by the
Board of Directors.
On behalf of the Board
Ashe Windham
Chairman
11 July 2024
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Directors
All the Directors are non-executive and are independent of the Investment Manager.
Ashe Windham, CVO – Chairman
Elected 29 September 2016
Following 11 years’ service in the British Army, Ashe joined Barclays de Zoete
Wedd (“BZW”) in 1987 as an institutional equities salesman and was appointed
a Director of BZW’s Equities Division in 1991. He joined Credit Suisse First Boston
in 1997 when they acquired BZW’s equities business. In 2004, he joined Man
Investments as Head of Internal Communications and in 2007 became Man
Group’s Global Head of Internal Communications. In June 2009 he resigned
from Man Group plc to set up a private family office, which he continues
to run. Ashe is the chairman of the Cancer & Pisces Trust and of The Kyle of
Sutherland Fisheries Trust, whilst he is also a non-executive director of EFG Asset
Management (UK) Limited and Chair of the Remuneration Committee.
Peter Dicks – Chairman of the
Audit Committee
Elected 29 September 2016
Peter was a founder director of
Abingworth plc in 1973, a venture
capital investment company,
mainly investing in the USA but
also in the UK, where he worked
from 1973 to 1991. Since then he
has been a non-executive director
or chairman of a number of
companies. He is on the Board
of Mercia Fund 1 General Partner
Limited and Averon Park Limited
and currently the chairman of
SVM Emerging Fund and Unicorn
Asset Management Limited.
Louise Bonham
Elected 26 September 2023
Louise has considerable
experience in the property,
banking and professional services
industries. Louise is CEO of MAPP,
a property services company and
has held a wide range of senior
appointments including at CBRE
and Cushman & Wakefield where
she was a member of the UK &
Ireland Executive Committee.
Previously, Louise held positions
at Deloitte and as an equities
analyst at Deutsche Bank. Louise
is a Chartered Accountant
and a Fellow of the Institute
of Chartered Accountants in
England and Wales.
Davina Walter
Elected 22 September 2021
Davina Walter is an experienced
investment professional. She
started her career at Cazenove &
Co where she spent more than
11years, ending up as the Head of
US equity research.
She then spent over 16 years as
an investment manager of both
large and small cap US equities,
most recently as a Managing
Director at Deutsche Asset
Management. She has been
actively involved with investment
trusts since 1985 and is Chairman
of abrdn Diversified Income and
Growth plc.
Annual Report 2024 | Miton UK MicroCap Trust plc | 31
Report of the Directors
The Directors present their report and the financial statements for the year ended 30 April 2024.
Directors
The Directors in office at the date of this Report and
the dates of their election are shown on page 30. In
accordance with the policy adopted by the Board, all
the Directors will retire and stand for re-election at
the Company’s forthcoming Annual General Meeting
(“AGM”).
Following consideration of the results of the
performance evaluation, the Board was assured that
the performance of all Directors continues to be
effective, that they bring extensive knowledge and
commercial experience to the Board, demonstrate a
range of valuable business, financial and investment
trust skills, that they continue to be effective and
their contribution supports the long-term success
of the Company and that they remain wholly
independent. The Board therefore recommends
that shareholders vote in favour of each Director’s
proposed election.
None of the Directors or any persons connected
with them had a material interest in the transactions
and arrangements of, or the agreement with, the
Investment Manager during the year.
Substantial Shareholdings
So far as is known to the Company by virtue of
notifications made to it pursuant to the Disclosure
Guidance and Transparency Rules, the following
persons held notifiable interests in the Company’s
voting rights as at 30 April 2024:
The Company has been informed of the following
notifiable interests between 30 April 2024 and the
date of this report.
It should be noted that these holdings may have
changed since notified to the Company and may
not therefore be wholly accurate statements of
actual holdings. However, notification of any change
is not required until the next applicable threshold
iscrossed.
Dividends
The Directors have recommended the payment of
a final dividend in respect of the year of 0.09 pence
per Ordinary Share, payable on 25 October 2024
to shareholders who appear on the register on
27September 2024. The ex-dividend date will be
26September 2024.
Future Developments
A review of the year and the outlook for the next year
are set out in the Investment Manager’s Report on
pages 10 to 14
Financial Risk Management
The principal financial risks and the Company’s
policies for managing these risks are set out in note
18 to the financial statements.
Corporate Governance
The Corporate Governance Statement on pages
34 to 40 forms part of the Report of the Directors.
It includes details of the qualifying third party
indemnity provisions and Directors’ and Officers’
liability insurance on page 36.
Number of
Ordinary
Shares
% of
voting rights
Rathbone Investment
Management Limited 15,219,330 19.79
Investec Wealth &
Investment Limited 9, 380,474 9.91
City of Bradford - Pension Fund 6,118,600 7.95
Wesleyan Assurance Society 4,448,200 5.78
CG Asset Management Ltd 3,878,927 5.04
Brewin Dolphin Limited 2,766,380 3.60
Charles Stanley Group plc 2,138,049 2.78
Number of
Ordinary
Shares
% of
voting rights
Rathbone Investment
Management Limited 13,841,714 17.99
The
Company
Strategic
Report Governance
Company
Accounts
Shareholder
Information
32 | Miton UK MicroCap Trust plc | Annual Report 2024
Report of the Directors continued
Post Balance Sheet Events
Disclosures relating to post balance sheet events can
be found in the notes on page 79.
Going Concern
The Directors consider that it is appropriate to adopt
the going concern basis. Cashflow projections have
been reviewed and show that the Company has
sufficient funds to meet its contracted expenditure.
On the basis of the review and, as the majority of net
assets are securities which are traded on recognised
stock exchanges, after making enquiries, and bearing
in mind the nature of the Company’s business and
assets, the Directors consider that the Company
has adequate resources to continue in operational
existence for the foreseeable future. In arriving at this
conclusion, the Directors have carried out a robust
assessment of the principal and emerging risks set
out on pages 20 to 23 of this report, including the risks
arising from market volatility, the Russia-Ukraine war
and the ongoing conflict in the Middle East and their
impact on the liquidity of the portfolio and resultant
cashflow, along with the Company’s ability to meet
obligations as they fall due, its ability to raise finance
in the short and longer term and future prospects
and results. The Directors will assess the impact of
the Company’s annual redemption facility on its cash
reserves. Accordingly, the Directors have a reasonable
expectation that the Company has adequate
resources to continue in operational existence for a
period of at least 12 months from the date that these
financial statements were approved.
Viability Statement
In accordance with the AIC Code of Corporate
Governance, the Board has considered the prospects
for the Company.
The period assessed is the three years to April
2027. The Company is intended to be a long-term
investment vehicle. It was launched in 2015, and
due to the limitations and uncertainties inherent
in predicting market and political conditions,
the Directors have determined that three years
is the appropriate period over which to make
thisassessment.
As part of its assessment of the viability of the
Company, the Board has considered the principal
risks and uncertainties and the impact on the
Company’s portfolio of a significant fall in UK markets.
To provide this assessment, the Board has considered
the Company’s financial position and its ability to
liquidate its portfolio to meet its expenses or other
liabilities as they fall due:
•
the Company invests largely in companies listed
and traded on stock exchanges. These are actively
traded and, whilst perhaps less liquid than larger
quoted companies, the portfolio is well diversified
by both number of holdings and industry sector;
•
the expenses of the Company are predictable
and modest in comparison with the assets in the
portfolio. There are no commitments that would
change that position;
•
the Company has no employees; and
•
the Company has an annual redemption facility
whereby shareholders may request that their
shares are redeemed at NAV. The Board has
considered the possibility that shareholders
holding a significant percentage of the
Company’s shares request redemption. Firstly,
the Board has flexibility over the method and
date of redemption so can avoid disruption to the
overall operation of the Company in this situation.
Secondly, the Company has an arrangement
with the Investment Manager to rebate fees
should total costs exceed 2% of aggregate
market capitalisation, such that were there to be
significant redemption, or a significant fall in the
value of the portfolio, the expenses of operation
would be manageable. In addition, some of the
expenses vary in line with the size of the Company.
.
Annual Report 2024 | Miton UK MicroCap Trust plc | 33
In addition to considering the principal risks on
pages 20 to 23 and the financial position of the
Company as described above, the Board has also
considered the following further factors:
•
the continuing relevance of the Company’s
investment objective in the current environment
and the continued satisfactory performance of
theCompany;
•
the level of demand for the Company’s shares and
that since launch the Company has been able to
issue further shares;
•
the gearing policy of the Company; and
•
that regulation will not increase to such an extent
that the costs of running the Company become
uneconomic.
Accordingly, the Directors have formed the
reasonable expectation that the Company will be
able to continue in operation and meet its liabilities
as they fall due over the next three years, from the
balance sheet date.
Greenhouse Gas Emissions and Task Force on
Climate-related Financial Disclosures (TCFD)
The Company has no greenhouse gas emissions
to report from its operations, nor does it have
responsibility for any other emissions producing
sources under the Companies Act 2006 (Strategic
Report and Directors’ Report) Regulations 2013,
including those within its underlying investment
portfolio. There is no requirement for disclosures
under The Companies (Directors’ Report) and
Limited Liability Partnerships (Energy and Carbon
Report) Regulations 2018, implementing the UK
government’s policy on Streamlined Energy and
Carbon Reporting. Under Listing Rule 15.4.29(R), the
Company, as a closed-ended investment fund, is
currently exempt from complying with the TCFD.
However, as a regulated entity, PPM produces firm
and product level TCFD reports, including for this
Trust, which are published to its website and can be
found at https://www.mitonukmicrocaptrust.com/
documents/
Requirements of the Listing Rules
Listing Rule 9.8.4 requires the Company to include
specified information in a single identifiable section
of the Annual Report or a cross reference table
indicating where the information is set out. There
are no disclosures required in relation to Listing Rule
9.8.4.
Audit Information
Each of the Directors who held office at the date
of approval of the Report of the Directors confirms
that, so far as he/she is aware, there is no relevant
audit information of which the Company’s Auditor
is unaware; and that he/she has taken all the steps
that he/she ought to have taken as a Director to
make himself/herself aware of any relevant audit
information and to establish that the Company’s
Auditor is aware of that information.
Auditor
The Company’s auditor is BDO LLP. BDO LLP
has confirmed its willingness to continue to act
as the Company’s Auditor and resolutions for its
re-appointment and for the Audit Committee to
determine its remuneration will be proposed at the
forthcoming Annual General Meeting.
Annual General Meeting
The Company’s Annual General Meeting (AGM)
will be held on 24 September 2024 and the formal
Notice of the AGM can be found on page 85.
Assessment and Approval
The Board is of the opinion that this Annual
Report, taken as a whole, is fair, balanced and
understandable and provides the information
necessary for shareholders to assess the Company’s
position and performance, business model
andstrategy.
The Report of the Directors has been approved by
the Board.
By order of the Board.
Northern Trust Secretarial Services (UK) Limited
Company Secretary
11 July 2024
The
Company
Strategic
Report Governance
Company
Accounts
Shareholder
Information
34 | Miton UK MicroCap Trust plc | Annual Report 2024
Statement of Compliance
The Company is committed to maintaining high
standards of corporate governance. The Board of
the Company has considered the principles and
recommendations of the AIC Code of Corporate
Governance for Investment Companies (“AIC Code”)
by reference to the AIC Corporate Governance Guide
for Investment Companies (“AIC Guide”), both as
published in February 2019. The AIC Code, as explained
by the AIC Guide, addresses all the principles set
out in the UK Corporate Governance Code (“UK
Code”), as well as setting out additional principles
and recommendations on issues that are of specific
relevance to the Company as an investment company.
The Financial Reporting Council (“FRC”), the UK’s
independent regulator for corporate reporting
and governance responsible for the UK Code, has
endorsed the AIC Code and the AIC Guide. The terms
of the FRC’s endorsement mean that AIC members
who report against the AIC Code and the AIC Guide
meet fully their obligations under the UK Code and
the related disclosure requirements contained in the
Listing Rules.
In January 2024, the FRC published a revised
version of the UK Corporate Governance Code and
associated Corporate Governance Code Guidance.
The scope of the changes in the revised version has
been significantly scaled back from the proposals on
which the FRC originally consulted in 2023. The most
significant changes in this version of the Corporate
Governance Code are to the reporting requirements
in relation to internal controls in section 4, though
changes are being made throughout, including in
section 1 on outcomes-based reporting; section 3 on
diversity, inclusion and equality of opportunity; and
to the provisions on remuneration in section 5. The
revised Corporate Governance Code will apply to
financial years beginning on or after 1 January 2025.
However, companies will have an extra year to comply
with the new disclosure requirements in relation to
internal controls, with the revised Provision 29 applying
to financial years beginning on or after 1 January 2026.
The Board will review the changes to the Corporate
Governance Code and any corresponding changes
to the AIC Code (which have not yet been published)
during 2024 with a view to ensuring that it can report
on its compliance with effect from 1 January 2025 or
explain any areas of non-compliance.
The Company complies with the recommendations
of the AIC Code and the relevant provisions of the UK
Code, except as set out below.
The UK Code includes provisions relating to: the
role of the chief executive; executive directors’
remuneration; and the need for an internal audit
function. For the reasons set out in the AIC Guide
and as explained in the UK Code, the Board
considers these provisions are not relevant to
the position of the Company, being an externally
managed investment company. The Company does
not therefore comply with these provisions and has
not reported further in respect of them.
A copy of the AIC Code and the AIC Guide can be
obtained via the AIC website, www.theaic.co.uk.
A copy of the UK Code can be obtained at www.frc.
org.uk
The Board of Directors
The Board consists entirely of non-executive
Directors, who are independent of the Investment
Manager. The Company has no employees. No one
individual has unfettered powers of decisions made
by the Board.
The Board is accountable to shareholders for the
direction and control of all aspects of the Company’s
affairs, notwithstanding any delegation of
responsibilities to third parties. A detailed description
of the role of the Board and its relationship with the
Investment Manager are set out further below.
The names and responsibilities of the Directors,
together with their biographies and details of their
significant commitments, are set out on page 30.
The Directors possess a wide range of business and
financial expertise relevant to the leadership of the
Company, including the ability and willingness to
provide robust and objective challenge to the views
and assumptions of the Investment Manager and
other Directors. All of the Directors consider that
Corporate Governance Statement
This Corporate Governance Statement forms part of the Report of the Directors.
Annual Report 2024 | Miton UK MicroCap Trust plc | 35
they have sufficient time to devote to the Company’s
affairs and that they carry out their duties effectively.
No Director has a service contract with the Company,
nor are any such contracts proposed, each Director
having been appointed pursuant to a letter of
appointment entered into with the Company.
The Directors have chosen to follow the practice
of annual re-election by shareholders at the AGM.
The Directors’ appointments can be terminated
in accordance with the Articles and without
compensation. The Directors’ letters of appointment
are available for inspection at the Company’s
registered office and will be available at the Annual
General Meeting.
The appointment of any new Director will be made
on the basis of assessing the candidate’s merits,
measuring his or her skills and experience against
the criteria identified by the Board as being desirable
to complement the composition and qualification of
the Board. In accordance with the Board’s Diversity
Policy, the Board will consider all elements of
diversity when evaluating the skills, knowledge and
experience necessary to fill any Board vacancy. The
Board has established the following measurable
objectives for achieving diversity on the Board:
•
all Board appointments will be made on merit, in
the context of the skills, knowledge and experience
that are needed for the Board to be effective;
•
long lists of potential non-executive directors
should include diverse candidates of appropriate
merit; and
•
only executive search firms who have signed up to
the voluntary Code of Conduct on gender diversity
and best practice will be engaged.
The policy is reviewed on an annual basis.
The Board, or the Investment Manager upon
request of the Board, shall offer induction training
to new Directors about the Company, its key service
providers, the Director’s duties and obligations and
other matters as may be relevant from time to time.
Board Responsibilities and Relationship with the
Investment Manager
The main roles of the Board are to create value for
shareholders, provide leadership to the Company
and approve the Company’s strategic objectives.
Specific responsibilities in relation to investments
and the Investment Manager include:
Determining the Company’s investment policy
and strategy, promoting the long-term success of
the Company, generating value for shareholders
and contributing to wider society; determining the
Company’s gearing policy; monitoring the controls
of the Investment Manager, and reviewing the
investment activity, performance and contractual
arrangements with the Investment Manager. The
Board is also responsible for maintaining proper
internal controls and monitoring shareholders’
opinions and engaging with them effectively. The
Board has adopted a schedule of matters reserved
for decision by the Board reflecting the above
responsibilities and reviews this scheduleregularly.
The Company’s day-to-day functions have been
sub-contracted to a number of service providers,
each engaged under a separate legal agreement.
The management of the Company’s assets has been
delegated to the Investment Manager, Premier
Fund Managers Limited. The Investment Manager
has discretion to manage the Company’s assets in
accordance with the Company’s investment policy,
subject to the overall control and supervision of
theDirectors.
Premier Portfolio Managers Limited is appointed
as the Company’s AIFM for the purposes of the
Alternative Investment Fund Manager Directive
(“AIFMD”).
Premier Portfolio Managers Limited is appointed as
fund administrator. Fund administration services
have been delegated by Premier Portfolio Managers
Limited to Northern Trust Global Services SE.
The
Company
Strategic
Report Governance
Company
Accounts
Shareholder
Information
36 | Miton UK MicroCap Trust plc | Annual Report 2024
Corporate Governance Statement continued
Chairman and Senior Independent Director
The Chairman, Ashe Windham, is responsible
for leadership of the Board and ensuring its
effectiveness. The Chairman sets the Board’s agenda,
ensuring a particular focus on the overall strategy
of the Company, and allows adequate time for
discussion of all agenda items. Ashe Windham was
considered to be independent on appointment
and is deemed by his fellow Board members (all
who are independent themselves) to continue
to be independent and to have no conflicting
relationships, in accordance with the criteria set out
in the AIC Code.
Davina Walter, was appointed as the Senior
Independent Director of the Company effective
1May 2024, replacing Peter Dicks. Davina provides
a channel for any shareholder concerns regarding
the Chairman and takes the lead in the annual
evaluation of the Chairman by the independent
Directors. The full responsibility of the Chairman and
Senior Independent Director as agreed by the Board
is set out on the Company’s website.
Board Operation
The Board holds regular Board meetings at least four
times a year, with additional meetings arranged as
necessary. The table below sets out the attendance
record of individual Directors at the scheduled Board
and Committee meetings held during the year
ended 30 April 2024.
This table provides details of scheduled meetings
held in the financial year and the attendance at
each meeting of each Director. From time to time,
the Board is required to hold meetings outside of
its planned schedule to consider topics that require
immediate attention or to approve ad-hoc matters
and transactions. There were additional ad-hoc Board
meetings held during the financial year related to
approval of the half year report andaccounts.
At each scheduled Board meeting, the Chairman
follows a formal agenda, circulated to the Directors
in advance by the Secretary. The Secretary and
Investment Manager regularly provide the Board
with relevant financial information, briefing notes
and papers in relation to changes in the Company’s
economic and financial environment, statutory
and regulatory changes and corporate governance
best practice. At each Board meeting, one or more
representatives from the Investment Manager
are in attendance to present verbal and written
reports covering the Company’s activity, portfolio
and investment performance over the preceding
period. Communication between the Board and the
Investment Manager and other service providers
is maintained between formal meetings. The
Board endeavours to provide support, robust and
objective challenge and a different perspective
to the Investment Manager, to help optimise the
performance of the Company. The Board and the
Investment Manager operate in a fully co-operative
and open environment. The Board has formalised
arrangements under which the Directors, in the
furtherance of their duties, may take independent
professional advice at the Company’s expense.
As permitted by its Articles of Association and
subject to the provisions of UK legislation, the
Company has granted a third-party indemnity to
each Director in respect of liabilities which they may
sustain or incur in connection with the discharge
of their duties as a Director. The indemnity also
Scheduled
Board meetings
Scheduled Audit
Committee meetings
Scheduled
Management
Engagement
Committee meetings
Scheduled
Nomination and
Remuneration
Committee meetings
Number
entitled to
attend
Number
attended
Number
entitled to
attend
Number
attended
Number
entitled to
attend
Number
attended
Number
entitled to
attend
Number
attended
Peter Dicks 4 4 2 2 1 1 1 1
Louise Bonham 4 4 2 2 1 1 1 1
Davina Walter 4 4 2 2 1 1 1 1
Ashe Windham 4 4 2 2 1 1 1 1
Annual Report 2024 | Miton UK MicroCap Trust plc | 37
covers reasonable legal and other defence expenses,
although these would have to be repaid in the event
of a conviction. Deeds of indemnity in favour of each
of the Directors were executed on behalf of the
Company on their appointment and remain in force
as at the date of signing of this Report. There are no
other qualifying third party indemnity provisions in
place. In addition, Directors are covered by Directors
and Officers’ liability insurance.
Board Committees
In order to enable the Directors to discharge their
duties, there are three Board committees, each with
written terms of reference. Committee membership
is set out on page 30 of this Report. Attendance at
meetings of the committees is restricted to members
and persons expressly invited to attend. The Chairman
of the Board acts as Chairman for the committees,
with the exception of the Audit Committee, which is
currently chaired by PeterDicks.
The Company Secretary acts as the Secretary to
eachcommittee.
The Terms of Reference of each committee are
available on the Company’s website at www.
mitonukmicrocaptrust.com/documents/.
Further details on the composition and role of
the Audit Committee and its activities during the
financial year can be found on pages 41 to 43.
Board Evaluation
The Directors recognise the value of continually
monitoring and enhancing the performance of
the Board and view the regular evaluation of the
Board, its Committees and individual Directors as
a means of obtaining valuable feedback on areas
fordevelopment.
In the year ended 30 April 2024, the Board
conducted an annual review of its performance
and that of the Chairman and individual Directors
by way of questionnaires, which addressed the
areas indicated by the AIC Code. In particular,
the questionnaires were designed to assess the
qualifications, independence, composition, diversity,
and performance of the Board, and the performance
of the Board’s Committee, the Chairman and
individual Directors. The questionnaires were
also intended to assess whether the focus of
Board meetings and the information provided
were appropriate and to identify any training and
development needs for individual Directors.
The Board concluded that the Board has effective
oversight of the management of the Company and
has the appropriate diversity of skills and experience
to safeguard shareholders’ interests. The review did
not identify any areas of concern.
Independence of Directors
In accordance with the AIC Code, the Board
evaluation included a review of the independence of
each individual Director and the Board as a whole.
Mr Dicks holds less than 0.5% of the issued share
capital of Premier Miton Group Plc, the parent
company of the Investment Manager. The Board
considers the holding to be immaterial and of no
impact to his independence.
None of the Directors has any significant
shareholdings in companies where the Company
has a notifiable stake or a holding which amounts to
more than 1% of the Company’s portfolio.
The Board is of the view that, having reviewed all
required factors, all Directors met, and continue
to meet, the independence criteria set out in the
AICCode.
The Board’s policy on diversity is to ensure that
the Directors on the Board have a broad range of
experience, skills and knowledge, with diversity of
thinking, background and perspective. Appointments
to the Board are made on merit against objective
criteria, having regard to the benefits of diversity and
the current and future needs of the business and the
other factors set out in the AIC Code.
Diversity, including, but not limited to, gender,
social background, ethnicity, age, sexual orientation,
disability and professional and industry specific
knowledge, is an important consideration in
ensuring that the Board and its committees have
the right balance of skills, experience, independence
The
Company
Strategic
Report Governance
Company
Accounts
Shareholder
Information
38 | Miton UK MicroCap Trust plc | Annual Report 2024
Corporate Governance Statement continued
and knowledge necessary to discharge their
responsibilities. The Board notes the new FCA rules on
diversity and inclusion on company boards, namely,
that from accounting periods starting on or after
1April 2023:
a) At least 40% of individuals on the Board to
bewomen;
b)
At least one senior Board position to be held by a
woman; and
c)
At least one individual on the Board to be from a
minority ethnic background.
In accordance with Listing Rule 9 Annex 2.1, the
below tables, in prescribed format, show the gender
and ethnic background of the Directors at the date
of this Report.
The data in the above tables was collected through
self-reporting by the Directors.
As at 30 April 2024 the Board comprised of four
members. The gender breakdown is as follows:
2 (50% female); 2 (50% male). The ethnic diversity
target (that at least one individual on the Board is
from a minority ethnic background) has not been
met. Whilst the Board does not feel that it would
be appropriate to set targets as all appointments
must be made on merit, the Board supports the
recommendations for senior positions to be held
by female directors and ethnic representation
on the Board, and both of these factors are key
considerations in succession planning.
Election/Re-election of Directors
Under the Company’s Articles of Association,
Directors are required to retire at the first Annual
General Meeting following their appointment and
offer themselves for election.
Thereafter, Directors are required to retire from
office and stand for re-election at intervals of not
more than three years. The AIC Code and UK Code
recommend that all Directors should be subject to
annual re-election by shareholders. The Company
recognises this to be good corporate governance
and has therefore chosen to follow this practice. The
maximum length of service for any Director will be
nine years from first election. Exceptions could be
made in unusual circumstances, for example if the
Company were in the middle of a corporate action.
Conflicts of Interest
Under the Articles of Association of the Company,
the Board must consider and, if it sees fit, may
authorise situations where a Director has an interest
that conflicts, or may possibly conflict, with the
interests of the Company.
In line with the AIC code 2019, the Board has
established a formal system to consider authorising
such conflicts, whereby the Directors who have no
interest in the matter decide whether to authorise
the conflict and any conditions to be attached to
such authorisations.
Diversity Table
Number
Board
members
Percentage
on the Board
Number
senior
positions on
the Board
Men
2
50% 1
Women*
2
50% 1
Not specified/
prefer not to say — — —
* Davina Walter was appointed Senior Independent Director on 1 May 2024,
making one woman in a senior position.
Diversity Table
Number
Board
members
Percentage
on the Board
Number
senior
positions on
the Board
White British
or other White
(including
minority white
groups) 4
100% 2
Mixed/Multiple
Ethnic Groups — — —
Asian/Asian
British — — —
Black/African/
Caribbean/Black
British — — —
Other ethnic
group, including
Arab — — —
Not specified/
prefer not to say — — —
Annual Report 2024 | Miton UK MicroCap Trust plc | 39
Stewardship Responsibilities and the use of
VotingRights
As an externally-managed investment company,
the majority of the responsibilities of the Board in
relation to engagement with investee companies are
delegated to the Investment Manager.
The Board retains oversight of the investor
stewardship exercised on its behalf by reviewing
the Investment Manager’s stewardship and voting
policies, considering the regular updates on
engagement provided by the Investment Manager
and holding the Investment Manager to account.
The Investment Manager has published a statement
of compliance with the UK Stewardship Code, which
is available on its website at www.premiermiton.
com. The Board reviews this statement of
complianceannually.
Company Secretary
The Board has direct access to the advice and
services of the Secretary, Northern Trust Secretarial
Services (UK) Limited. The Secretary is responsible
for ensuring that Board and Committee procedures
are followed and that information and reports
are delivered to the Board on a timely basis. The
Secretary is also responsible for ensuring that
applicable regulations are complied with and the
statutory obligations of the Company are met.
Internal Controls and Risk Management Systems
The Board has overall responsibility for establishing
and maintaining the Company’s systems of internal
controls and risk management and the reliability
of the financial reporting process and for reviewing
their effectiveness.
The Directors have reviewed and considered the
guidance supplied by the FRC on Risk Management,
Internal Control, and Related Finance and
Business Reporting and an ongoing process has
been established for identifying, evaluating and
managing the risks faced by the Company. The
Board maintains a risk matrix, which consists of a
detailed risk and internal control assessment and
provides the basis for the Committee and the Board
to regularly monitor the effective operation of the
controls and to update the risk matrix when new
risks are identified. This process, together with key
procedures established with a view to providing
effective financial control, was in place during the
year under review and was in place at the date of
the signing of this Report. The risk management
process and Company’s systems of internal control
are designed to assist the Board in making better,
more informed decisions with a view to creating and
protecting shareholder value.
The internal control systems are designed to ensure
that proper accounting records are maintained,
that the financial information on which business
decisions are made and which are issued for
publication is reliable and that the assets of the
Company are safeguarded. The purpose of risk
management is to manage rather than eliminate
the risk of failure in achieving the Company’s
objectives and involves Directors exercising
judgement. It should be recognised that such
systems can only provide reasonable, not absolute,
assurance against material misstatement or loss.
Internal Controls Assessment
Regular risk assessments and reviews of internal
controls will be undertaken in the context of the
Company’s overall investment objective. The
Board, through the Committee, has identified risk
management controls in four key areas: corporate
strategy; compliance with laws and regulations and
disclosure; relationships with service providers; and
investment and business activities. In arriving at
its judgment of what risks the Company faces, the
Board has considered the Company’s operations in
the light of the following factors:
•
the nature and extent of risks which it regards
as acceptable for the Company to bear within its
overall business objective;
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•
the threat of such risks becoming reality;
•
the Company’s ability to reduce the incidence and
impact of risk on its performance; and
•
the cost to the Company and benefits related
to the Company and third parties operating the
relevant controls.
The risk matrix, established and maintained by the
Company, is structured so as to allow the Board
to assess the risks against how those risks are
managed. The risks are assessed on the basis of the
likelihood of occurrence, the impact on the business
if they were to occur and the effectiveness of the
controls in place to mitigate them. The risk register is
reviewed at meetings of the Audit Committee and at
other times as necessary.
The Board also reviews information provided by
the Investment Manager and the Secretary on a
regularbasis.
Most functions for the day-to-day management of
the Company are sub-contracted to appropriately
qualified third parties, and the Board therefore
obtains regular assurances and information from
key third party suppliers, including the Investment
Manager, the Administrator and the Depositary,
regarding the internal systems and controls operated
in their organisations. In addition, each of the third
parties is requested to provide a copy of its report on
internal controls each year, which is reviewed by the
Management Engagement Committee.
The Board has carried out a review of the
effectiveness of the risk management and systems
of internal control as they have operated over the
year under review and up to the date of approval
of this Report. No significant failings or weaknesses
were identified from that review and there were no
matters arising which required further investigation.
.
Shareholder Relations
The Board is committed to ensuring there is open
and effective communication with the Company’s
shareholders and in order that the Directors
understand the views of major shareholders
on matters such as governance, strategy and
performance. Accordingly, both the Board and
the Investment Manager give a high priority to
shareholder engagement and the Chairman and
other Directors are available to enter into dialogue
with shareholders. The Investment Manager and the
Company’s Stockbroker, Peel Hunt LLP, maintain a
regular dialogue with major investors and provide
the Board with regular reports on feedback from
shareholders.
All shareholders are encouraged to attend, ask
questions and vote at the Company’s AGM to be held
on 24 September 2024. A presentation by the fund
managers of the Trust will be delivered following the
formal business of the AGM and will also be available
on the Company’s website following the meeting.
The Annual and Half-Yearly Reports of the Company
are prepared by the Board and its advisers to present
a full and readily understandable review of the
Company’s performance. Copies are released to the
London Stock Exchange, and the Annual Report is
dispatched to shareholders by mail. They are also
available from the Secretary or on the Company’s
website, www.mitonukmicrocaptrust. com/
documents/.
Corporate Governance Statement continued
Annual Report 2024 | Miton UK MicroCap Trust plc | 41
Audit Committee Report
I am pleased to present the Audit Committee (the ‘Committee’) Report for the financial year ended 30 April 2024.
Composition and Operation of the Committee
Given the small size of the Board, it is deemed
both proportionate and practical for all Directors
to be on the Committee, including the Chairman
of the Company who is considered independent.
The Board considers that the members of the
Committee have the requisite skills and experience,
relevant to the sector, as a result of their involvement
in financial services, to fulfil the responsibilities of
theCommittee.
Under its terms of reference, the Committee
is required to meet twice a year to discuss the
publication of the Company’s financial statements.
Additional meetings are convened as necessary and
the Committee held one additional meeting during
the year for the purpose of receiving a presentation
from BDO on their report on the annual financial
report and reviewing the annual financial report.
Role of the Committee
The primary responsibilities of the Committee are:
•
to monitor the integrity of the financial
statements of the Company and review the
content of the Company’s half-year and annual
reports and any formal announcements regarding
its financial reporting issues and areas of
judgement contained within them;
•
to advise the Board on whether the content of the
annual report and accounts, taken as whole, is fair,
balanced and understandable and provides the
information necessary for shareholders to assess
the Company’s performance, business model and
strategy;
•
to monitor and keep under review the adequacy
and effectiveness of the Company’s internal
financial controls and risk management and
internal control systems;
•
to make recommendations to the Board in relation
to the selection, appointment, re-appointment or
removal of the external auditor, following a review
of their independence, objectivity, qualifications,
expertise and resources;
•
to approve the remuneration and terms of
engagement of the external auditor for audit and
non-audit services; and
•
to review the scope, findings and effectiveness of
the external audit process.
The Committee has direct access to the Company’s
external auditor, BDO LLP, and provides a forum
through which the external auditor reports to the
Board. Representatives of the external auditor attend
meetings of the Committee at least annually.
Principal Activities of the Committee during the Year
The Committee met three times during the year
under review and during those meetings it has:
•
reviewed the Company’s Annual Report for the
financial year ended 30 April 2023 and the related
results announcements and the Half-Yearly
Report to 31 October 2023;
•
received and discussed with the Auditor their
findings from the audit of the financial year
ended 30 April 2023 and the effectiveness of the
external audit process;
•
reviewed the effectiveness of the risk management
systems and internal controls of the Company and
related reports from the Investment Manager and
other third party providers; and
•
agreed the Auditor’s fees.
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Audit Committee Report continued
The Committee also met once post the year end to
review the Company’s Annual Report for the year
ended 30 April 2024.
Other matters reviewed by the Committees include:
•
The Committee’s terms of reference;
•
The Company’s risk matrix;
•
The Company’s policy on the supply of non-audit
services by external auditor; and
•
The whistleblowing policy of Premier Portfolio
Managers Limited.
The Committee receives a report on internal control
and compliance from the Investment Manager’s
Compliance officer on a six-monthly basis and
discusses this with the Investment Manager. The
Investment Manager has in place a compliance
monitoring plan for testing of controls as an
alternative to establishing a separate internal
auditfunction.
The Committee monitors and reviews the
effectiveness of the external audit process for
the Annual Report, including a detailed review
of the audit plan and the audit results report,
and makes recommendations to the Board on
the re-appointment, remuneration and terms of
engagement of the Auditor. Any concerns with the
effectiveness of the external audit process would be
reported to the Board. No concerns were raised in
respect of the year ended 30 April 2024.
Audit Fees and Non-Audit Services
An audit fee of £59,350 (exclusive of VAT) has been
agreed in respect of the audit for the financial year
ended 30 April 2024 (2023: £53,500 exclusive of VAT).
No non-audit services were provided in the financial
year ended 30 April 2024. The Committee has a
policy on the engagement of the Auditor to supply
non-audit services. All requests for services to be
provided by the external auditor are submitted to
the Committee in order to ensure that the scope
and nature of the proposed work does not affect the
Auditor’s independence or objectivity.
Independence and Objectivity of the Auditor
Following its review of the independence and
objectivity of the Auditor, the Committee has been
reassured that no conflicts have arisen during the
year. The Committee will, however, continue to
monitor the position.
Re-appointment of the Auditor
BDO LLP was appointed as Auditor in April 2020.
Following consideration of the performance of BDO
LLP, the service provided during the year and a
review of their value for money, the Committee has
recommended to the Board their re-appointment
as Auditor to the Company at the Company’s
forthcoming AGM.
BDO LLP has been Auditor to the Company since
April 2020 and Vanessa-Jayne Bradley has been the
audit partner since that time. Rotation of the audit
partner will take place every five years in accordance
with the FRC revised Ethical Standard 2016. Under
the FRC transitional arrangements, the Company
is required to re-tender, at the latest, by 2030. The
Company intends to re-tender within the timeframe
set by the FRC. Due to the short period of time
since the Auditor was appointed, it is not considered
appropriate to review the Auditor’s succession at
this point in time. The Committee will regularly
consider the level of fees and the independence and
objectivity of the Auditor.
Annual Report 2024 | Miton UK MicroCap Trust plc | 43
Significant Audit Issues considered by theCommittee
Following discussion with the Investment Manager and Auditor, the Committee determined that the key
risks in relation to the Company’s financial statements and how they were addressed were:
Risk Mitigation
Incomplete or inaccurate revenue recognition
The recognition of income is undertaken in
accordance with the stated accounting policies of
the Company.
The Directors review the Company’s income,
revenue forecasts and the sensitivity of the revenue
account to falls in income. Particular attention is
paid to any special dividends that the Company
mayreceive.
The valuation and ownership of the investment portfolio
The Company’s investments have been valued
in accordance with the accounting policies, as
disclosed in note 11 to the financial statements.
The great majority of investments are in quoted
securities in active markets, are considered to be
liquid and have been categorised as Level 1 and 2
within the IFRS 13 fair value hierarchy. These are
disclosed in note 12 to the financial statements.
The portfolio holdings and their pricing is reviewed
and verified by the Investment Manager on a
regular basis and management accounts, including
a full portfolio listing, are prepared for each Board
meeting. The Company uses the services of an
independent Depositary (Northern Trust Investor
Services Limited) to hold the assets of the Company.
The Depositary checks the consistency of its records
with those of the Investment Manager on a monthly
basis and reports to the Board on an annual basis.
Maintenance of investment trust status
There is a risk of failure to maintain investment trust
status in accordance with s1158/1159 which would
have a significant impact on the Company as a
result of the potential capital gains tax payable.
The Investment Manager and Administrator have
reported to the Audit Committee to confirm
continuing compliance with the requirements for
maintaining investment trust status.
Peter Dicks
Audit Committee Chairman
11 July 2024
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Directors’ Remuneration Report
The Board has prepared this report in accordance
with the requirements of the Large and Medium-
Sized Companies and Groups (Accounts and
Reports) (Amendment) Regulations 2013. An
ordinary resolution for the approval of the Directors’
Remuneration Report will be put to shareholders
at the forthcoming AGM. The law requires the
Company’s Auditor to audit certain of the disclosures
provided. Where disclosures have been audited,
they are indicated as such. The Auditor’s opinion is
included in the Independent Auditor’s Report on
pages 49 to 55.
Statement from the Chairman
Given the size of the Board, it is not considered
appropriate for the Company to have a separate
remuneration committee and the functions of
this committee are therefore delegated to a joint
Nomination and Remuneration Committee. All
Directors are members of this Committee which is
chaired by the Chairman, Ashe Windham. The Board
consists entirely of independent non-executive
Directors and the Company has no employees. We
have not, therefore, reported on those aspects of
remuneration that relate to executive directors.
Directors’ fees for the year ended 30 April 2024 are
set out on page 45.
Directors’ Remuneration Policy
This Remuneration policy was last approved
by shareholders at the Company’s AGM held in
September 2022. As a binding vote on the policy is
necessary every three years, an ordinary resolution
to approve the policy will be put to shareholders at
the AGM in 2025. The Remuneration policy is set
outbelow.
The level of remuneration has been set in order to
attract individuals of a calibre appropriate to the
future development of the Company and to reflect
the specific circumstances of the Company, the
duties and responsibilities of the Directors and
the value and amount of time committed to the
Company’s affairs.
The fees for the Directors are determined within the
limits (not to exceed £500,000 per year in aggregate)
set out in the Company’s Articles of Association,
or any greater sum that may be determined by an
ordinary resolution of the Company. The Chairman
does not participate in any discussions relating to his
own fee, which is determined by the independent
Directors. Directors are not eligible for bonuses,
share options or long- term incentive schemes or
other performance related benefits as the Board
does not believe that this is appropriate for non-
executivedirectors.
The fees for the Directors will be increased annually,
effective from the first day of the Company’s
financial year, by the rate of the Consumer Price
Index prevailing at that time.
Under the Company’s Remuneration Policy, the fees
for the Directors increase annually, effective from
the first day of the Company’s financial year, by the
rate of the Consumer Price Index prevailing at that
time. For FY2024, with March 2023 CPI reaching
10.1%, the Directors unanimously agreed not to
accept an increase in fees. However, it is not practical
to forego pay increases each year as the Company
would fall behind peers and be unable to attract
sufficiently skilled and experienced new directors, and
accordingly for the financial year 2025, the Directors’
fees will increase in line with the Remuneration Policy.
Under the Company’s Articles of Association, if
any Director is called upon to perform extra or
special services of any kind, he/she shall be entitled
to receive such sum as the Board may think fit
for expenses, and also such remuneration as the
Board may think fit, either as a fixed sum or as
a percentage of profits or otherwise, and such
remuneration may, as the Board shall determine, be
either in addition to or in substitution for any other
remuneration he may be entitled toreceive.
Directors are entitled to be paid all reasonable
expenses properly incurred in attending Board,
Committee or shareholder meetings or otherwise
in or with a view to the performance of their duties.
There are no amounts set aside or accrued by the
Company to provide pension, retirement or similar
benefits to the Directors.
Annual Report 2024 | Miton UK MicroCap Trust plc | 45
Component Director
Rate as at
1 May 2024
Rate as at
1 May 2023
Purpose of
Remuneration
Annual Fee Chairman £39,800 £38,400 Commitment as Chairman
1
Annual Fee Non-executive Directors £28,500 £27,500 Commitment as a non-executive Director
2
Additional Fee Audit Committee Chairman £4,200 £5,500 For additional responsibilities and time commitment
3
Additional Fee Senior Independent Director £1,500
Included as
part of Audit
Chair fees
in2023
For additional responsibilities and time commitment
3
Additional Fee All Directors N/A N/A
For extra or special services performed in their role
as a Director
4
Expenses All Directors N/A N/A
No fixed rate. Reimbursement of expenses incurred
in the performance of duties as a Director
Year ended
30 April 2024
Year ended
30 April 2023
Fixed fees
£
Expenses
£
Total
£
Fixed fees
£
Expenses
£
Total
£
Louise Bonham
1
27, 500 — 27,500 10,436 — 10,436
Peter Dicks 33,000 — 33,000 33,000 — 33,000
Jan Etherden
2
— — — 17,205 — 17,205
Davina Walter 27,500 — 27.500 27,500 — 27.500
Ashe Windham 38,400 — 38,400 38,400 — 38,400
126,400 — 126,400 126,541 — 126,541
Appointed on 15 December 2022
2
Resigned on 15 December 2022
1
The Company’s policy is for the Chairman of the Board to be paid a higher fee than the other Directors to reflect the more onerous role
2
The Company’s Articles of Association limit the total aggregate annual fees that can be paid to £500,000
3
The Company’s policy is for the Senior Independent Director and Chairman of the Audit Committee to be paid a higher fee than other Directors to reflect the
more onerous role
4
Additional fees would only be paid in exceptional circumstances in relation to the performance of extra or special services
Fees for any new Director appointed will be on the above basis. Fees payable in respect of subsequent periods
will be determined following an annual review. Any views expressed by shareholders on the fees being paid to
Directors will be taken into consideration by the Board.
It is the Board’s policy that Directors do not have service contracts, but Directors are provided with a letter of
appointment as a non-executive Director. The terms of their appointment provide that Directors shall retire
and be subject to election at the first Annual General Meeting after their appointment. Compensation will not
be made upon early termination of appointment.
Directors’ Fees for the Year (audited)
The remuneration paid to the Directors for the years ending 30 April 2024 and 30 April 2023 is set out in the
single total figure table below:
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Directors’ Remuneration Report continued
Annual Percentage Change in Directors’ Remuneration
The following table sets out the annual percentage change in Directors’ fees for the previous three years to
30 April 2024.
Percentage
change from
2023 to 2024
Percentage
change from
2022 to 2023
Percentage
change from
2021 to 2022
Louise Bonham
1
0% N/A N/A
Peter Dicks 0% 4.6% 1.5%
Jan Etherden
2
— N/A 1.5%
Davina Walter 0% 30.5% 100.0%
Ashe Windham 0% 22.6% 13.1%
Appointed on 15 December 2022
2
Resigned on 15 December 2022
Company Performance
The Company does not have a specific benchmark
against which performance is measured. The graph
opposite compares the total return (assuming all
dividends are reinvested) to holders of Ordinary
Shares since they were first admitted to the Official
List of the Financial Conduct Authority, compared
to the total shareholder return of the Deutsche
Numis Smaller Companies 1000 Index, which is the
closest broad index against which to measure the
Company’s performance.
Adjusted NAV versus Deutsche Numis SC 1000 Index
Source: Morningstar
Deutsche Numis SC 1000 Index
0
50
100
150
200
250
Apr-15
Oct-15
Apr-16
Oct-16
Apr-17
Oct-17
Apr-18
Oct-18
Apr-19
Oct-19
Apr-20
Oct-20
Apr-21
Oct-21
Apr-22
Oct-22
Apr-23
Oct-23
Apr-24
Percent
MINI Adjusted NAV
Annual Report 2024 | Miton UK MicroCap Trust plc | 47
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The table below shows the proportion of the
Company’s income spent on pay.
30 April
2024
£000
30 April
2023
£000
Change
%
Total remuneration paid
to Directors 126 127 (0.8)
Investment Management fee 392 597 (34.3)
Distribution to shareholders:
– dividends 142 142 —
– share buyback/
redemption 9,439 10,507 (10.2)
Note: The items listed in the table above are as required by the Large and
Medium-sized Companies and Groups (Accounts and Reports) (Amendment)
Regulations 2073 ss.20 with the exception of the investment management
fee, which has been included because the Directors believe it will help
shareholders’ understanding of the relative importance of the spend on
pay The figures for this measure are the same as those shown in note 6 to
the financial statements. The amounts spent on the redemption of shares
are included in line with the GC700 and Investor Group guidance, as this
is considered a significant payment. The figures for this measure are the
same as those shown in the Statement of Changes in Equity and Cash
FlowStatement.
Directors’ Beneficial and Family Interests (audited)
There is no requirement under the Company’s
Articles of Association or the terms of their
appointment for Directors to hold shares in the
Company. The interests of the Directors and their
families in the Ordinary Shares of the Company as
at 30 April 2024 are set out below:
Number of
Ordinary
Shares as at
30 April 2024
Number of
Ordinary
Shares as at
30 April 2023
Peter Dicks
1, 067,928
468,150
Louise Bonham
50,400
48,800
Ashe Windham
310,000
225,000
Davina Walter
33,228
33,228
There have been no further changes to the
Directors’ share interests between 30 April 2024 and
the date of this Report.
Voting at the Annual General Meeting
The Directors’ Remuneration Report for the year
ended 30 April 2023 was approved by shareholders at
the AGM held on 26 September 2023. The Directors
Remuneration Policy was approved by shareholders
at the 2022 AGM. The votes cast for each were
asfollows:
Directors’
Remuneration Report
(2023 AGM results)
Directors’
Remuneration Policy
(2022 AGM results)
Number
of votes
% of
votes
cast
Number
of votes
% of
votes
cast
For 39,726,218 99.58 38,324,504 99.61
Against 167,153 0.42 150,778 0.39
Total votes cast 39,893,371 38,475,282
Number of votes
withheld 107,930 78,354
Approval
The Directors’ Remuneration Report was approved
by the Board on 11 July 2024.
On behalf of the Board
Ashe Windham
Chairman
11 July 2024
48 | Miton UK MicroCap Trust plc | Annual Report 2024
The Directors are responsible for preparing the
annual report and the financial statements in
accordance with applicable law and regulations.
Company law and UK adopted international
accounting standards require the Directors to
prepare financial statements for each financial year.
Under that law the Directors have elected to prepare
the Company’s financial statements in accordance
with UK adopted international accounting standards.
Under company law the Directors must not approve
the financial statements unless they are satisfied
that they give a true and fair view of the state of
affairs of the group and company and of the profit or
loss for the company for that period.
In preparing these financial statements, the
Directors are required to:
•
Select suitable accounting policies and then apply
them consistently;
•
Make judgments and accounting estimates that
are reasonable and prudent;
•
State whether they have been prepared in
accordance with UK adopted international
accounting standards, subject to any material
departures disclosed and explained in the
financial statements;
•
Prepare the financial statements on the going
concern basis unless it is inappropriate to
presume that the company will continue in
business;
•
Prepare a Director’s report, a Strategic report and
a Director’s remuneration report which comply
with the requirements of the Companies Act
2006.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Company’s transactions and disclose
with reasonable accuracy at any time the financial
position of the Company and enable them to ensure
that the financial statements comply with the
Companies Act 2006.
They are also responsible for safeguarding the assets
of the Company and hence for taking reasonable
steps for the prevention and detection of fraud and
other irregularities.
The Directors are responsible for ensuring that the
annual report and accounts, taken as a whole, are
fair, balanced, and understandable and provide the
information necessary for shareholders to assess the
group’s performance, business model and strategy.
Website publication
The Directors are responsible for ensuring the
annual report and the financial statements are made
available on its website. Financial statements are
published on the Company’s website in accordance
with legislation in the United Kingdom governing
the preparation and dissemination of financial
statements, which may vary from legislation in
other jurisdictions. The maintenance and integrity
of the Company’s website is the responsibility of the
Directors. The Directors’ responsibility also extends
to the ongoing integrity of the financial statements
contained therein.
The Directors confirm to the best of their knowledge:
•
The financial statements have been prepared
in accordance with UK adopted international
accounting standards in conformity with the
requirements of the Companies Act 2006 and
give a true and fair view of the assets, liabilities,
financial position and profit and loss of the group.
•
The annual report includes a fair review of the
development and performance of the business
and the financial position of the Company,
together with a description of the principal risks
and uncertainties that they face.
On behalf of the Board
Ashe Windham
Chairman
11 July 2024
Statement of Directors’ Responsibilities
Annual Report 2024 | Miton UK MicroCap Trust plc | 49
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Opinion on the financial statements
In our opinion the financial statements:
•
give a true and fair view of the state of the
Company’s affairs as at 30 April 2024 and of its loss
for the year then ended;
•
have been properly prepared in accordance with
UK adopted international accounting standards;
and
•
have been prepared in accordance with the
requirements of the Companies Act 2006.
We have audited the financial statements of Miton
UK Microcap Trust plc (the “Company”) for the year
ended 30 April 2024 which comprise the Income
Statement, the Statement of Changes in Equity, the
Balance Sheet, the Statement of Cash Flows and
the notes to the financial statements, including
a summary of material accounting policies. The
financial reporting framework that has been
applied in their preparation is applicable law and UK
adopted international accounting standards.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities
under those standards are further described in the
Auditor’s responsibilities for the audit of the financial
statements section of our report. We believe that the
audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion. Our
audit opinion is consistent with the additional report
to the audit committee.
Independence
Following the recommendation of the audit
committee, we were appointed formally by the
members at the Annual General Meeting on
on 22 September 2020 to audit the financial
statements for the year ended 30 April 2020 and
subsequent financial periods. The period of total
uninterrupted engagement including retenders
and reappointments is 5 years, covering the years
ended 30 April 2020 to 30 April 2024. We remain
independent of the Company in accordance with
the ethical requirements that are relevant to our
audit of the financial statements in the UK, including
the FRC’s Ethical Standard as applied to listed public
interest entities, and we have fulfilled our other
ethical responsibilities in accordance with these
requirements. The non-audit services prohibited by
that standard were not provided to the Company.
Conclusions relating to going concern
In auditing the financial statements, we have
concluded that the Directors’ use of the going
concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation
of the Directors’ assessment of the Company’s ability
to continue to adopt the going concern basis of
accounting included:
•
Evaluating the appropriateness of the Directors’
method of assessing the going concern in light of
economic and market conditions by reviewing the
information used by the Directors in completing
their assessment;
•
Assessing the appropriateness of the Directors’
assumptions and judgements made by
comparing the prior year forecasted costs to the
actual costs incurred to check that the projected
costs are reasonable;
•
Assessing the projected management fees for
the year to check that they are in line with the
current assets under management levels and
the projected market growth forecasts for the
following year;
•
Assessing the appropriateness of the Directors’
assumptions and judgements made in
their base case and stress tested forecasts
including consideration of the available cash
resources relative to forecast expenditure and
commitments; and
•
Challenging the Directors’ assumptions and
judgements made in their forecasts including
performing an independent analysis of the
liquidity of the portfolio.
Independent Auditor’s Report to the members of
Miton UK Microcap Trust plc
50 | Miton UK MicroCap Trust plc | Annual Report 2024
Independent Auditor’s Report to the members of
Miton UK Microcap Trust plc
continued
Based on the work we have performed, we have not identified any material uncertainties relating to
events or conditions that, individually or collectively, may cast significant doubt on the Company’s ability to
continue as a going concern for a period of at least twelve months from when the financial statements are
authorised for issue.
In relation to the Company’s reporting on how it has applied the UK Corporate Governance Code, we
have nothing material to add or draw attention to in relation to the Directors’ statement in the financial
statements about whether the Directors considered it appropriate to adopt the going concern basis of
accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in
the relevant sections of this report.
Overview 2024 2023
Key audit matters
Valuation and ownership of investments
Materiality Company financial statements as a whole
£0.4m (2023: £0.6m) based on 1% (2023: 1%) of net assets
An overview of the scope of our audit
Our audit was scoped by obtaining an understanding of the Company and its environment, including
the Company’s system of internal control, and assessing the risks of material misstatement in the
financial statements. We also addressed the risk of management override of internal controls, including
assessing whether there was evidence of bias by the Directors that may have represented a risk of material
misstatement.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our
audit of the financial statements of the current period and include the most significant assessed risks of
material misstatement (whether or not due to fraud) that we identified, including those which had the
greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the
efforts of the engagement team. These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
Annual Report 2024 | Miton UK MicroCap Trust plc | 51
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Key audit matter How the scope of our audit addressed the key auditmatter
Valuation and ownership of investments
(Notes 1, 11 and 12)
The investment portfolio at the year-end comprised of quoted
equity investments and a small number of unquoted investments
(warrants).
We considered the valuation and ownership of investments to be a
significant audit area as investments represent the most significant
balance in the financial statements and underpin the principal
activity of the entity.
There is a risk that the bid price used as a proxy for fair value of
investments held at the reporting date is inappropriate. Given the
nature of the portfolio is such that it comprises mostly of listed
level 1 investments, we do not consider the use of bid price to be
subject to significant estimation uncertainty. There is however an
element of subjectivity in relation to the valuation of the unquoted
investments (warrants).
There is also a risk of error in the recording of investment holdings
such that those recordings do not appropriately reflect the property
of the Company.
For these reasons and the materiality to the financial statements
as a whole, they are considered to be a key area of our overall
audit strategy and allocation of our resources and hence a Key
Audit Matter.
We responded to this matter by testing the valuation and
ownership of the whole portfolio of quoted investments. We
performed the following procedures:
•
Confirmed the year-end bid price was used by agreeing to
externally quoted prices;
•
Assessed if there were contra indicators, such as liquidity
considerations, to suggest bid price is not the most appropriate
indication of fair value by considering the realisation period for
individual holdings;
•
Recalculated the valuation by multiplying the number of shares
held per the statement obtained from the custodian by the
valuation per share; and
•
Obtained direct confirmation of the number of shares held per
equity investment from the custodian regarding all investments
held at the balance sheet date.
For all warrants held at the year end, we performed the following
procedures:
•
Considered the appropriateness of the valuation methodology
against the International Private Equity and Venture Capital
Valuation (“IPEV”) Guidelines and applicable accounting
standards;
•
Re-performed the calculation of the investment valuation
using a valuation model and compared to the Investment
Managers valuation;
•
Where appropriate, performed a sensitivity analysis where
reasonable alternative assumptions could exist; and
•
Obtained direct confirmation of the number of warrants held
from the custodian.
Key observations:
Based on our procedures performed we did not identify any
matters to suggest the valuation or ownership of the investments
was not appropriate.
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the
effect of misstatements. We consider materiality to be the magnitude by which misstatements, including
omissions, could influence the economic decisions of reasonable users that are taken on the basis of the
financial statements.
52 | Miton UK MicroCap Trust plc | Annual Report 2024
Independent Auditor’s Report to the members of
Miton UK Microcap Trust plc
continued
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality,
we use a lower materiality level, performance materiality, to determine the extent of testing needed.
Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take
account of the nature of identified misstatements, and the particular circumstances of their occurrence,
when evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole
and performance materiality as follows:
Company financial statements
2024
£m
2023
£m
Materiality 0.4 0.6
Basis for determining materiality 1% of net assets
Rationale for the benchmark applied
As an investment trust, the net asset value is the key measure of
performance for users of the financial statements.
Performance materiality 0.3 0.5
Basis for determining performance materiality 75% of materiality
Rationale for the percentage applied for
performancemateriality
The level of performance materiality applied was set after having
considered a number of factors including the expected total value of
known and likely misstatements and the level of transactions in the year.
Reporting threshold
We agreed with the Audit Committee that we would
report to them all individual audit differences in
excess of £21,000 (2023: £30,000). We also agreed to
report differences below this threshold that, in our
view, warranted reporting on qualitative grounds.
Other information
The Directors are responsible for the other
information. The other information comprises
the information included in the Report and
Accounts other than the financial statements
and our auditor’s report thereon. Our opinion on
the financial statements does not cover the other
information and, except to the extent otherwise
explicitly stated in our report, we do not express
any form of assurance conclusion thereon. Our
responsibility is to read the other information
and, in doing so, consider whether the other
information is materially inconsistent with the
financial statements, or our knowledge obtained
in the course of the audit, or otherwise appears to
be materially misstated. If we identify such material
inconsistencies or apparent material misstatements,
we are required to determine whether this gives
rise to a material misstatement in the financial
statements themselves. If, based on the work we
have performed, we conclude that there is a material
misstatement of this other information, we are
required to report that fact.
We have nothing to report in this regard.
Annual Report 2024 | Miton UK MicroCap Trust plc | 53
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Corporate governance statement
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term
viability and that part of the Corporate Governance Statement relating to the Company’s compliance with
the provisions of the UK Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements
of the Corporate Governance Statement is materially consistent with the financial statements, or our
knowledge obtained during the audit.
Going concern and longer-term viability
•
The Directors’ statement with regards to the appropriateness of
adopting the going concern basis of accounting and any material
uncertainties identified; and
•
The Directors’ explanation as to their assessment of the Company’s
prospects, the period this assessment covers and why the period is
appropriate.
Other Code provisions
•
Directors’ statement on fair, balanced and understandable;
•
Board’s confirmation that it has carried out a robust assessment of the
emerging and principal risks;
•
The section of the annual report that describes the review of
effectiveness of risk management and internal control systems; and
•
The section describing the work of the Audit Committee.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are
required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report and Directors’ report In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the Strategic report and the Directors’ report
for the financial year for which the financial statements are prepared is
consistent with the financial statements; and
•
the Strategic report and the Directors’ report have been prepared in
accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Company and its
environment obtained in the course of the audit, we have not identified
material misstatements in the strategic report or the Directors’ report.
Directors’ remuneration In our opinion, the part of the Directors’ remuneration report to be audited
has been properly prepared in accordance with the Companies Act 2006.
Matters on which we are required to report by exception We have nothing to report in respect of the following matters in relation
to which the Companies Act 2006 requires us to report to you if, in our
opinion:
•
adequate accounting records have not been kept, or returns adequate
for our audit have not been received from branches not visited by us;
or
•
the financial statements and the part of the Directors’ remuneration
report to be audited are not in agreement with the accounting
records and returns; or
•
certain disclosures of Directors’ remuneration specified by law are not
made; or
•
we have not received all the information and explanations we require
for our audit.
54 | Miton UK MicroCap Trust plc | Annual Report 2024
Independent Auditor’s Report to the members of
Miton UK Microcap Trust plc
continued
Responsibilities of Directors
As explained more fully in the Statement of Directors
Responsibilities, the Directors are responsible for
the preparation of the financial statements and
for being satisfied that they give a true and fair
view, and for such internal control as the Directors
determine is necessary to enable the preparation
of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors
are responsible for assessing the Company’s ability
to continue as a going concern, disclosing, as
applicable, matters related to going concern and
using the going concern basis of accounting unless
the Directors either intend to liquidate the Company
or to cease operations, or have no realistic alternative
but to do so.
Auditor’s responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance
about whether the financial statements as a whole
are free from material misstatement, whether due
to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is
a high level of assurance but is not a guarantee that
an audit conducted in accordance with ISAs (UK)
will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the
aggregate, they could reasonably be expected to
influence the economic decisions of users taken on
the basis of these financial statements.
Extent to which the audit was capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of
non-compliance with laws and regulations. We
design procedures in line with our responsibilities,
outlined above, to detect material misstatements in
respect of irregularities, including fraud. The extent
to which our procedures are capable of detecting
irregularities, including fraud is detailed below:
Non-compliance with laws and regulations
Based on:
•
Our understanding of the Company and the
industry in which it operates;
•
Discussion with the Investment Manager,
the Administrator and those charged with
governance; and
•
Obtaining and understanding of the Company’s
policies and procedures regarding compliance
with laws and regulations.
We considered the significant laws and regulations
to be Companies Act 2006, the FCA listing and DTR
rules, the principles of the AIC Code of Corporate
Governance, industry practice represented by the
AIC SORP, the applicable accounting framework,
and qualification as an Investment Trust under UK
tax legislation as any non-compliance of this would
lead to the Company losing various deductions and
exemptions from corporation tax.
Our procedures in respect of the above included:
•
Agreement of the financial statement disclosures
to underlying supporting documentation;
•
Enquiries of management and those charged
with governance relating to the existence of any
non-compliance with laws and regulations;
•
Reviewing minutes of meeting of those charged
with governance throughout the period for
instances of non-compliance with laws and
regulations; and
•
Reviewing the calculation in relation to
Investment Trust compliance to check that the
Company was meeting its requirements to retain
their Investment Trust Status. This included a
review of other qualitative factors and ensuring
compliance with these.
Annual Report 2024 | Miton UK MicroCap Trust plc | 55
Fraud
We assessed the susceptibility of the financial
statement to material misstatement including fraud.
Our risk assessment procedures included:
•
Enquiry with the Investment Manager, the
Administrator and those charged with governance
regarding any known or suspected instances of
fraud;
•
Review of minutes of meetings of those charged
with governance for any known or suspected
instances of fraud; and
•
Discussion amongst the engagement team as to
how and where fraud might occur in the financial
statements.
Based on our risk assessment, we considered the
areas most susceptible to be management override
of controls.
Our procedures in respect of the above included:
•
In addressing the risk of management override of
control, we:
•
Performed a review of estimates and
judgements applied by management in
the financial statements to assess their
appropriateness and the existence of any
systematic bias;
•
Considered the opportunity and incentive to
manipulate accounting entries and target
tested relevant adjustments made in the period
end financial reporting process;
•
Reviewed for significant transactions outside
the normal course of business; and
•
Performed a review of unadjusted audit
differences, if any, for indications of bias or
deliberate misstatement.
We also communicated relevant identified laws
and regulations and potential fraud risks to all
engagement team members, who were deemed to
have the appropriate competence and capabilities
and remained alert to any indications of fraud
or non-compliance with laws and regulations
throughout the audit.
Our audit procedures were designed to
respond to risks of material misstatement in the
financial statements, recognising that the risk
of not detecting a material misstatement due
to fraud is higher than the risk of not detecting
one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery,
misrepresentations or through collusion. There
are inherent limitations in the audit procedures
performed and the further removed non-compliance
with laws and regulations is from the events and
transactions reflected in the financial statements,
the less likely we are to become aware of it.
A further description of our responsibilities is
available on the Financial Reporting Council’s
website at: www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Company’s
members, as a body, in accordance with Chapter
3 of Part 16 of the Companies Act 2006. Our audit
work has been undertaken so that we might state
to the Company’s members those matters we are
required to state to them in an auditor’s report and
for no other purpose. To the fullest extent permitted
by law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s
members as a body, for our audit work, for this
report, or for the opinions we have formed.
Vanessa-Jayne Bradley
Senior Statutory Auditor
For and on behalf of BDO LLP, Statutory Auditor
London, UK
11 July 2024
BDO LLP is a limited liability partnership registered
in England and Wales (with registered number
OC305127).
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56 | Miton UK MicroCap Trust plc | Annual Report 2024
Income Statement
of the Company for the year ended 30 April 2024
Year ended
30 April 2024
Year ended
30 April 2023
Company Notes
Revenue
return
£000
Capital
return
£000
Total
£000
Revenue
return
£000
Capital
return
£000
Total
£000
Losses on investments held at fair value through profit or loss 11 — (7,272) (7,272) — (26,765) (26,765)
Losses on derivatives held at fair value through profit or loss 13 — (351) (351) — (852) (852)
(Losses)/gains on foreign exchange — (11) (11) 2 — 2
Income 2 855 — 855 873 — 873
Management fee 6 (97) (295) (392) (149) (448) (597)
Other expenses 7 (672) — (672) (676) — (676)
Return/(loss) on ordinary activities before finance costs
and taxation
86 (7,929) (7,843) 50 (28,065) (28,015)
Finance costs 8 — (21) (21) — (39) (39)
Return/(loss) on ordinary activities before taxation 86 (7,950) (7,864) 50 (28,104) (28,054)
Taxation 9 (12) — (12) (18) — (18)
Return/(loss) on ordinary activities after taxation 74 (7,950) (7,876) 32 (28,104) (28,072)
Return/(loss) per Ordinary Share – basic and diluted (pence) 3 0.09 (9.26) (9.17) 0.03 (28.96) (28.93)
The total column of this statement is the Income Statement of the Company prepared in accordance
with UK International Accounting Standards in conformity with the requirements of UK IFRS. The
supplementary revenue return and capital return columns are presented in accordance with the Statement
of Recommended Practice issued by the Association of Investment Companies (“AIC SORP”).
All revenue and capital items in the above statement derive from continuing operations. No operations were
acquired or discontinued during the year.
There is no other comprehensive income and, therefore, the return on ordinary activities after taxation is both
the profit and the total comprehensive income.
The notes on pages 60 to 79 form part of these financial statements.
Annual Report 2024 | Miton UK MicroCap Trust plc | 57
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Statement of Changes in Equity
of the Company for the year ended 30 April 2024
For the year ended 30 April 2024 Notes
Share
capital
£000
Capital
redemption
reserve
£000
Share
premium
account
£000
Special
reserve
£000
Capital
reserve
£000
Revenue
reserve
£000
Total
£000
As at 30 April 2023 145 79 672 51,039 8,697 122 60,754
Total comprehensive income:
(Loss)/return on ordinary activities after taxation — — — — (7,950) 74 (7,876)
Transactions with shareholders recorded
directly to equity
Redemption of Ordinary Shares — — — (9,439) — — (9,439)
Cancellation of shares 4 (18) 18 — — — — —
Equity dividends paid 10 — — — (20) — (122) (142)
As at 30 April 2024 127 97 672 41,580 747 74 43,297
For the year ended 30 April 2023 Notes
Share
capital
£000
Capital
redemption
reserve
£000
Share
premium
account
£000
Special
reserve
£000
Capital
reserve
£000
Revenue
reserve
£000
Total
£000
As at 30 April 2022 160 64 672 61,546 36,801 232 99,475
Total comprehensive income:
(Loss)/return on ordinary activities after
taxation
— — — — (28,104) 32 (28,072)
Transactions with shareholders recorded
directly to equity
Redemption of Ordinary Shares — — — (10,507) — — (10,507)
Cancellation of shares 4 (15) 15 —
— — — —
Equity dividends paid 10 — — — — — (142) (142)
As at 30 April 2023 145 79 672 51,039 8,697 122 60,754
The notes on pages 60 to 79 form part of these financial statements.
58 | Miton UK MicroCap Trust plc | Annual Report 2024
Balance Sheet
of the Company as at 30 April 2024
Notes
30 April
2024
£000
30 April
2023
£000
Non-current assets:
Investments held at fair value through profit or loss 12 41,292 56,068
Current assets:
Derivative instruments 13 2 169
Trade and other receivables 14 77 217
Cash at bank and cash equivalents 2,099 4,590
2,178 4,976
Liabilities:
Trade and other payables 15 173 290
Net current assets 2,005 4,686
Net assets 43,297 60,754
Capital and reserves
Share capital 4 127 145
Capital redemption reserve 97 79
Share premium account 672 672
Special reserve 41,580 51,039
Capital reserve 747 8,697
Revenue reserve 74 122
Shareholders’ funds 43,297 60,754
pence pence
Net asset value per Ordinary Share – basic and diluted 5 56.29 64.20
These financial statements were approved and authorised for issue by the Board of Miton UK MicroCap
Trustplc on 11 July 2024 and were signed on its behalf by:
Ashe Windham
Chairman
11 July 2024
Company No: 09511015
The notes on pages 60 to 79 form part of these financial statements.
Annual Report 2024 | Miton UK MicroCap Trust plc | 59
Statement of Cash Flows
of the Company for the year ended 30 April 2024
30 April
2024
£000
30 April
2023
£000
Operating activities:
Net loss before taxation (7,864) (28,054)
Loss on investments and derivatives held at fair value through profit or loss 7,623 27,617
Decrease in trade and other receivables 23 39
Increase/(decrease) in trade and other payables 11 (13)
Amortisation of finance costs 21 33
Withholding tax paid (12) (18)
Net cash outflow from operating activities (198) (396)
Investing activities:
Purchase of investments (16,464) (15,404)
Purchase of derivative investments (195) (911)
Sale of investments 23,957 27,498
Sale of derivative instruments 11 691
Net cash inflow from investing activities 7,309 11,874
Financing activities:
Redemption/repurchase of Ordinary Shares (9,439) (10,507)
Equity dividends paid (142) (142)
Finance costs paid (21) (33)
Net cash outflow from financing activities (9,602) (10,682)
(Decrease)/increase in cash and cash equivalents (2,491) 796
Reconciliation of net cash flow movement in funds:
Cash and cash equivalents at the start of the year 4,590 3,794
Net cash (outflow)/inflow from cash and cash equivalents (2,491) 796
Cash at the end of the year 2,099 4,590
Cash and cash equivalents
Comprise the following:
Cash at bank 2,099 4,590
2,099 4,590
The notes on pages 60 to 79 form part of these financial statements.
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60 | Miton UK MicroCap Trust plc | Annual Report 2024
Notes to the Financial Statements continued
1. Accounting Policies
Miton UK MicroCap Trust plc is a company
incorporated and registered in England and Wales.
The principal activity of the Company is that of an
investment trust company within the meaning of
Sections 1158/1159 of the Corporation Tax Act 2010.
The financial statements of the Company have
been prepared in accordance with UK International
Accounting Standards. The financial statements
have also been prepared in accordance with the AIC
SORP for the financial statements of investment
trust companies and venture capital trusts.
Basis of Preparation
In order to better reflect the activities of an
investment trust company and in accordance
with guidance issued by the AIC, supplementary
information which analyses the Income Statement
between items of a revenue and capital nature has
been prepared alongside the Income Statement.
The financial statements are presented in Sterling,
which is the Company’s functional currency as the
UK is the primary environment in which it operates,
rounded to the nearest £1,000, except where
otherwise indicated.
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 based on detailed profit & loss and cash
flow forecasts. These forecasts have been ‘stressed’
for inflation, as well as a severe but plausible and
sudden downturn in market conditions under which
it is assumed that the investment portfolio will lose
50% of its value. Even under this extreme ‘stress’
scenario, 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. The Directors
also regularly assess the resilience of key third-party
service providers, most notably the Investment
Manager and Fund Administrator. The Directors do
not have any concerns about the financial viability
of the Company’s third-party service providers.
In making their assessment, the Directors have
considered the likely impacts of international and
economic uncertainties on the Company, operations
and the investment portfolio. These include, but are
not limited to, another global event similar to the
COVID-19 pandemic, the war in Ukraine, political
and economic instability in the UK, supply shortages
and inflationary pressures. The Directors noted that
the Company, with the current cash balance and
holding a portfolio of liquid listed investments, is
able to meet the obligations of the Company as they
falldue.
The Investment Manager assesses the exposure to
risk when making each investment decision and the
performance of the portfolio on a daily basis.
The current cash balance enables the Company
to meet any funding requirements and finance
future additional investments. The Company is a
closed-ended fund, where assets are not required
to be liquidated to meet day-to-day redemptions.
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 (of which there are none of
significance). Therefore, the financial statements
have been prepared on a going concern basis.
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 companies listed in the UK.
Annual Report 2024 | Miton UK MicroCap Trust plc | 61
Accounting Developments
In the year under review, the Company has applied
amendments to IFRS issued by the IASB adopted
in conformity with UK IFRS. These include annual
improvements to IFRS, changes in standards,
legislative and regulatory amendments, changes
in disclosure and presentation requirements. This
incorporated:
•
Disclosure of Accounting Policies (Amendments
to IAS 1 and IFRS Practice Statement 2);
•
Initial application of IFRS 17 and IFRS 9 –
Comparative Information (Amendments to IFRS17);
•
Definition of Accounting Estimates (Amendments
to IAS 8); and
•
Deferred Tax Related to Assets and Liabilities
Arising from a Single Transaction –Amendments
to IAS 12 Income Taxes; and
•
Classification of liabilities as current or non-
current (Amendments to IAS 1)
The adoption of the changes to accounting standards
has had no material impact on these or prior years’
financial statements. There are amendments to IAS/
IFRS that will apply from 1 May 2024 as follows:
•
Non-current liabilities with Covenants
(Amendments to IAS 1).
•
Supplier Finance Arrangements (Amendments to
IAS 7 and IFRS 7)
•
Lease Liability in a Sale and Leaseback
(Amendments to IFRS 16)
Amendments to IAS/IFRS applicable from 1 May 2025
are:
•
Presentation and Disclosures in Financial
Statements (IFRS 18)
•
Subsidiaries without Public Accountability:
Disclosures (IFRS 19)
The Directors do not anticipate the adoption of
these will have a material impact on the financial
statements in current or future years.
Critical Accounting Judgments and Key Sources
of Estimation Uncertainty
The preparation of financial statements in
conformity with UK International Accounting
Standards requires management to make
judgements, estimates and assumptions that
affect the application of policies and the reported
amounts in the Balance Sheet, the Income
Statement and the disclosure of contingent
assets and liabilities at the date of the financial
statements. The estimates and associated
assumptions are based on historical experience
and various other factors that are believed to be
reasonable under the circumstances, the results of
which form the basis of making judgements about
carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results
may differ from these estimates.
The areas requiring judgement and estimation in
the preparation of the financial statements are:
recognising and classifying unusual or special
dividends received as either revenue or capital in
nature; the valuation of warrants; and allocation of
expenses between capital and income and setting of
the level of dividends paid and proposed.
The estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period
in which the estimate is revised if the revision affects
only that period, or in the period of the revision and
future period if the revision affects both current and
future periods.
Investments
The Company’s business is investing in financial
assets with a view to profiting from their total
return in the form of income and capital growth.
This portfolio of investments is managed and its
performance evaluated on a fair value basis, in
accordance with a documented investment strategy,
and information about the portfolio is provided
internally on that basis to the Company’s Board
ofDirectors.
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Notes to the Financial Statements continued
62 | Miton UK MicroCap Trust plc | Annual Report 2024
Notes to the Financial Statements continued
Upon initial recognition the Company designates
the investments ‘at fair value through profit or
loss’. They are included initially at fair value, which
is taken to be their cost (excluding expenses
incidental to the acquisition which are written off
in the Income Statement, and allocated to ‘capital’
at the time of acquisition). When a purchase or
sale is made under a contract, the terms of which
require delivery within the time-frame of the
relevant market, the investments concerned are
recognised or derecognised on the trade date.
Subsequent to initial recognition, investments are
valued at fair value through profit or loss. For listed
and quoted investments this is deemed to be bid
market prices or closing prices for Stock Exchange
Electronic Trading Service – quotes and crosses
(“SETSqx”). Changes in fair value of investments
are recognised in the income Statement as a
capital item. On disposal, realised gains and losses
are also recognised in the income Statement as
capitalitems.
Warrants give the Company the right, but not the
obligation, to buy common ordinary shares in an
investee company at a fixed price for a predefined
time period. The fair value is determined by the
Manager through use of models including Black
Scholes and discounted cashflows, using available
observable inputs of the warrant: the exercise share
price of the investee company, the expiration period
plus other factors including the prevailing interest
rate and associated risks.
All investments for which fair value is measured or
disclosed in the financial statements are categorised
within the fair value hierarchy in note 12.
Foreign Currency
Transactions denominated in foreign currencies
are converted to Sterling at the actual exchange
rate as at the date of the transaction. Monetary
assets and liabilities and assets carried at fair value
denominated in foreign currencies at the year end
are reported at the rate of exchange at the Balance
Sheet date. Any gain or loss arising from a change
in exchange rate subsequent to the date of the
transaction is included as an exchange gain or
loss in the capital reserve or the revenue account
depending on whether the gain or loss is of a capital
or revenue nature.
Derivatives
Derivatives, including Index Put Options, which
are listed investments, are classified as financial
instruments at fair value through profit or loss.
Derivatives are initially recorded at cost (being
premium paid to purchase the option) and
subsequently valued at fair value and included in
current assets/liabilities. Derivatives are derecognised
when the contract expires or on the trade date when
the contract is sold.
Changes in the fair value of derivative instruments
are recognised as they arise in the capital column of
the Income Statement. The fair value is calculated
by a broker using models with inputs from market
prices. On disposal or expiration, realised gains and
losses are also recognised in the income statement
as capital items.
Cash and Cash Equivalents
For the purposes of the Balance Sheet, cash
comprises cash in hand. Cash equivalents are short-
term, highly liquid investments that are readily
convertible to known amounts of cash and which are
subject to insignificant risk of changes in value.
For the purpose of the Statement of Cash Flows,
cash and cash equivalents consist of cash and cash
equivalents as defined above.
Annual Report 2024 | Miton UK MicroCap Trust plc | 63
Trade and Other Receivables
Trade and other receivables are measured, where
applicable, at amortised cost and as reduced by
appropriate allowance for expected irrecoverable
amounts.
Trade Payables and Short-term Borrowings
Trade payables and short-term borrowings are
measured at amortised costs.
Income
Dividends receivable on quoted equity shares are
taken to revenue on an ex-dividend basis. Dividends
receivable on equity shares where no ex-dividend
date is quoted are brought into account when the
Company’s right to receive payment is established.
Fixed returns on non-equity shares are recognised
on a time-apportioned basis.
Dividends from overseas companies are shown gross
of any non-recoverable withholding taxes, which are
presented separately in the Income Statement.
Special dividends are taken to revenue or capital
account depending on their nature.
When the Company has elected to receive scrip
dividends in the form of additional shares rather
than in cash, the amount of the cash dividend
forgone is recognised as income. Any excess in
the value of the cash dividend is recognised in the
capital column.
All other income is allocated on a time-apportioned
accruals basis.
Expenses and Finance Costs
All expenses and finance costs are accounted for
on an accruals basis. On the basis of the Board’s
expected long-term split of total returns the Company
charges 75% (2023: 75%) of its management fee and
100% (2023: 100%) of finance costs to capital.
Expenses incurred directly in relation to arranging
debt finance are amortised over the term of the
finance. Finance charges incurred and amortised are
charged to capital (2023: 100%) and included in the
capital column of the Income Statement. Expenses
incurred directly in relation to issuance of shares are
charged to share premium.
Expenses incurred in the maintenance of capital,
redemption and cancellation of shares are charged
to the special reserve through the Statement of
Changes in Equity.
Taxation
Deferred tax is provided using the liability method on
temporary differences between the tax bases of assets
and liabilities and their carrying amounts for financial
reporting purposes at the reporting date based on tax
rates that are expected to apply in the period when
the liability is settled or the asset is realised. Deferred
tax assets are only recognised if it is considered more
likely than not that there will be suitable profits from
which the future reversal of temporary differences
can be deducted. In line with the recommendations
of the AIC SORP, the allocation method used to
calculate the tax relief on expenses charged to capital
is the “marginal” basis. Under this basis, if taxable
income is capable of being offset entirely by expenses
charged through the revenue account, then no tax
relief is transferred to the capital account.
The charge for taxation is based on the net revenue
for the year and takes into account taxation deferred
or accelerated because of temporary differences
between the treatment of certain items for
accounting and taxation purposes. The actual charge
for taxation in the Income Statement relates to
irrecoverable withholding tax on overseas dividends
received during the year.
The
Company
Strategic
Report Governance
Company
Accounts
Shareholder
Information
Notes to the Financial Statements continued
64 | Miton UK MicroCap Trust plc | Annual Report 2024
Notes to the Financial Statements continued
Dividends Payable to Shareholders
Dividends to shareholders are recognised as a
liability in the period in which they are paid or
approved in general meetings and are taken to the
Statement of Changes in Equity. Dividends declared
and approved by the Company after the Balance
Sheet date have not been recognised as a liability of
the Company at the Balance Sheet date.
Share Capital
The Company is a closed-ended investment
company with an unlimited life. As defined in the
Articles of Association, redemption of Ordinary
Shares is at the sole discretion of the Directors,
therefore the Ordinary Shares have been classified as
equity.
The issuance, acquisition and resale of Ordinary
Shares are accounted for as equity transactions
and no gain or loss is recognised in the Income
Statement. This is a reserve forming part of the non-
distributable reserves.
Share Premium
The share premium account represents the
accumulated premium paid for shares issued in
previous periods above their nominal value less issue
expenses. This is a reserve forming part of the non-
distributable reserves. The following items are taken
to this reserve:
•
Costs associated with the issue of shares; and
•
Premium on the issue of shares.
Special reserve
The special reserve was created by the cancellation
of the share premium account and is distributable.
This reserve may be used for:
•
Redemption of shares by way of the annual
redemption facility;
•
Costs relating to the capital structure of the
Company;
•
Cancellation of shares; and
•
Share buy backs and dividends.
Capital Reserve
The following are taken to the capital reserve
through the capital column in the statement of
comprehensive income:
•
Gains and losses on the disposal of investments
and derivatives;
•
Increase and decrease in the valuation of
investments held at the year end;
•
Exchange differences of a capital nature; and
•
Expenses, together with the related taxation
effect, allocated to this reserve in accordance with
the above accounting policies.
Capital Redemption Reserve
The capital redemption reserve represents non-
distributable reserves that arise from the purchase
and cancellation of shares.
Revenue Reserve
The revenue reserve represents the surplus of
accumulated profits and is distributable by the way
of dividends.
Annual Report 2024 | Miton UK MicroCap Trust plc | 65
2. Income
Year ended
30 April
2024
£000
Year ended
30 April
2023
£000
Income from investments:
UK Dividends 412 490
Non-UK dividend income 199 281
UK REIT dividends 29 33
640 804
Other income:
Bank deposit interest 214 66
Exchange gains — 2
Other income 1 3
Total 855 875
3. Return per Ordinary Share
Returns per Ordinary Share are based on the weighted average number of shares in issue during the year.
Basic and diluted return per share are the same as there are no dilutive elements on share capital.
Year ended
30 April 2024
Year ended
30 April 2023
Net profit (£000) Revenue Capital Total Revenue Capital Total
Continuation shareholders (£000) 69 (2,993) (2,924) 54 (27,365) (27,311)
Redemption shareholders (£000) 5 (4,957) (4,952) (22) (739) (761)
74 (7,950) (7,876) 32 (28,104) (28,072)
Weighted average number of shares
in issue
85,902,417 97,041,026
Return per share (pence) 0.09 (9.26) (9.17) 0.03 (28.96) (28.93)
During the prior year the allocation of the return per Ordinary Share is allocated as follows:
Return per Ordinary Share
pence pence pence Weighted average
Continuation shareholders 0.08 (3.48) (3.40) 85,902,417
Redemption shareholders 0.01 (5.77) (5.76) 17,714,958
The 50,000 Management shares do not participate in the returns of the Company.
The
Company
Strategic
Report Governance
Company
Accounts
Shareholder
Information
Notes to the Financial Statements continued
66 | Miton UK MicroCap Trust plc | Annual Report 2024
Notes to the Financial Statements continued
4. Share Capital
Year ended
30 April 2024
Year ended
30 April 2023
Number £000 £000 £000
Ordinary Shares of £0.001 each
Opening balance 94,638,561 95 109,253,560 110
Redemptions (17,714,958) (18) (14,614,999) (15)
76,923,603 77 94,638,561 95
Year ended
30 April 2024
Year ended
30 April 2023
Number £000 Number £000
Management shares of £1 each 50,000 50 50,000 50
The rights attached to each share class are set out on page 81 of this report.
Shares Issued
There were no shares issued during the year (2023: no shares were issued during the year).
Redemption of Ordinary Shares
The Company has a redemption facility through which shareholders are entitled to request the redemption
of all or part of their holding of Ordinary Shares on an annual basis. As set out in the Articles of Association, the
Board may, at its absolute discretion, elect not to operate the annual redemption facility in whole or in part. It
is anticipated that the next redemption point for shareholders will be in November 2024. The Board retains the
discretion to further amend this timetable. Accordingly, the Ordinary Shares have been classified as equity.
2023 Redemption
The total number of Ordinary Shares in respect of which valid redemption requests were received for the
2 November 2023 Redemption Point was 17,714,958 Ordinary Shares (representing 18.7185% of the issued
share capital (the “Redemption”)). The Board resolved to effect the Redemption using the redemption pool
method set out in the Company’s Articles, pursuant to which the Company notionally divided its assets and
liabilities into two pools, the Redemption Pool and the Continuing Pool, with the returns attributable to
the respective Redemption and Continuing shareholders. The 17,714,958 Ordinary Shares over which valid
redemption requests were made have been cancelled with effect from 2 November 2023; former holders of
the Redemption Shares are now creditors of the Company.
The assets of the Redemption Pool have been realised. The Redemption Price per Ordinary Share equals the
aggregate cash received by the Company upon the realisation of the Redemption Pool, after deducting the
costs of the redemption, and a pro-rata share of the costs and expenses of the Company not attributable
to a particular pool, divided by the number of Redemption Shares. On that basis, the Redemption Price for
the 2 November 2023 Redemption Point is 53.28 pence per redeemed Ordinary Share with a total payment
of £9,439,000. The capital losses and expenses associated with the operation of the Redemption Pool (the
“redemption loss”) are a component of the Return of the Company as stated in the Income Statement. The
Redemption shareholders received the value of the Redemption Pool upon liquidation. The redemption loss
to Redemption shareholders from the performance of the Redemption Pool amounted to £4,952,000.
Annual Report 2024 | Miton UK MicroCap Trust plc | 67
Management Shares
50,000 Management shares with a nominal value of £1 each were allotted to Miton Trust Managers Limited
on the date of incorporation. These shares have been fully paid up. The Management shares are non-voting
and non-redeemable and, upon a winding-up or on a return of capital of the Company, shall only receive the
fixed amount of capital paid up on such shares and shall confer no right to any surplus capital or assets of
theCompany.
5. Net Asset Values
The NAVs per Ordinary Share and the net assets attributable at the year end were as follows:
Year ended
30 April 2024
Year ended
30 April 2023
NAV per
share
pence
Net assets
attributable
£000
NAV per
share
pence
Net assets
attributable
£000
Basic and diluted 56.29 43,297 64.20 60,754
NAV per Ordinary Share is based on net assets at the year end and 76,923,603 Ordinary Shares (2023:
94,638,561), being the number of Ordinary Shares in issue at the year end.
NAV of £1.00 per Management share is based on net assets at the year end of £50,000 (2023: £50,000) and
attributable to 50,000 Management shares at the year end. The shareholders have no right to any surplus
capital or assets of the Company.
6. Management Fee
The basic management fee payable to the AIFM is calculated at the rate of one-twelfth of 0.9% (2023:
0.9%) of the average market capitalisation of the Company up to £100m, 0.8% per annum on the average
market capitalisation above £100m (2023: 0.8%), on the last business day of each calendar month. The
basic management fee accrues daily and is payable in arrears in respect of each calendar month. For the
purpose of calculating the basic fee, the ‘adjusted market capitalisation’ of the Company is defined as the
average daily midmarket price for an Ordinary Share and C share (when in issue), multiplied by the number
of relevant shares in issue, excluding those held by the Company in treasury, on the last business day of the
relevantmonth.
In addition to the basic management fee, and when the Redemption Pool is in existence, the AIFM is entitled
to receive from the Company a fee calculated at the rate of 0.9% (1% prior to 1 September 2020) of the net
asset value of the Redemption Pool on the last Business Day of the relevant calendar month.
The AIFM has agreed that, for so long as it remains the Company’s Investment Manager, it will not charge
such part of any management fee payable to it so that the Company can maintain an ongoing charges ratio
of 2% or lower. The ongoing charges ratio for the year is 1.99% (2023: 1.72%) for the Ordinary Shares, and as
such is below 2%. In accordance with the Directors’ policy on the allocation of expenses between income and
capital, in each financial year 75% of the management fee payable is expected to be charged to capital and
the remaining 25% to income.
The
Company
Strategic
Report Governance
Company
Accounts
Shareholder
Information
Notes to the Financial Statements continued
68 | Miton UK MicroCap Trust plc | Annual Report 2024
Notes to the Financial Statements continued
6. Management Fee continued
Year ended
30 April 2024
Year ended
30 April 2023
Revenue
£000
Capital
£000
Total
£000
Revenue
£000
Capital
£000
Total
£000
Basic and diluted 97 295 392 149 448 597
At 30 April 2024, an amount of £63,000 (2023: £41,000) was outstanding and due to Premier Portfolio
Managers Limited in respect of management fees.
7. Other Expenses
Year ended
30 April
2024
£000
Year ended
30 April
2023
£000
Directors’ fees 126 127
Audit remuneration 59 56
Secretarial services 83 69
Administrator services 141 136
Registrar’s fees 18 17
Custodian fees 13 19
Depository fees 13 18
Advisory and professional fees 104 115
Printing and postage 6 10
Research fee
1
12 11
Directors’ insurance 9 15
Other expenses 13 14
Irrecoverable VAT 58 56
Miscellaneous 17 13
Total 672 676
1
Contribution to Investment Manager’s research budget
During the years ended 30 April 2024 and 30 April 2023, the Auditor’s remuneration related to audit
servicesonly.
8. Finance Costs
Year ended
30 April 2024
Year ended
30 April 2023
Revenue
£000
Capital
£000
Total
£000
Revenue
£000
Capital
£000
Total
£000
Revolving credit facility
£5m revolving loan facility arrangement fee — 5 5 — 6 6
£5m revolving loan facility non-utilisation fee — 16 16 — 33 33
— 21 21 — 39 39
Annual Report 2024 | Miton UK MicroCap Trust plc | 69
Revolving credit facility
The Company entered into a revolving credit facility (the “facility”) on 25 February 2021 for £5m arranged by
NatWest Markets Plc (previously known as The Royal Bank of Scotland plc), and the lender The Royal Bank of
Scotland International Limited, London branch.
The Company cancelled the facility on 23 October 2023 without penalty. No amounts had been drawn on the
facility. A commitment fee of 0.65% on undrawn balances was chargeable.
9. Taxation
a) Analysis of tax charge in the year:
Year to
30 April 2024
Year to
30 April 2023
Revenue
£000
Capital
£000
Total
£000
Revenue
£000
Capital
£000
Total
£000
UK corporation tax — — — — — —
Overseas tax not recoverable* 12 — 12 18 — 18
12 — 12 18 — 18
* Tax deducted on payment of overseas dividends by local tax authorities.
b) The tax assessed for the year is the standard rate of corporation tax in the United Kingdom aggregated
for the financial year of 25.0% (2023: 19.5%). The differences are explained below:
Year to
30 April 2024
Year to
30 April 2023
Revenue
£000
Capital
£000
Total
£000
Revenue
£000
Capital
£000
Total
£000
Net return before taxation 86 (7,950) (7,864) 50 (28,104) (28,054)
Theoretical tax at UK corporation tax rate of
25.0% (2023: 19.5%)
22 (1,988) (1,966) 10 (5,480) (5,470)
Effects of:
UK dividends that are not taxable (103) — (103) (96) – (96)
Overseas dividends that are not taxable (50) — (50) (55) – (55)
Non-taxable investment losses — 1,906 1,906 – 5,385 5,385
Overseas taxation suffered 12 — 12 18 – 18
Unrelieved excess expenses 131 82 213 141 95 236
Actual current tax charge 12 — 12 18 — 18
The
Company
Strategic
Report Governance
Company
Accounts
Shareholder
Information
Notes to the Financial Statements continued
70 | Miton UK MicroCap Trust plc | Annual Report 2024
9. Taxation continued
Factors that may affect future tax charges
As at 30 April 2024, based on current estimates and including the accumulation of net allowable losses, the
Company had unrelieved losses of £11,488,758 (2023: £10,648,712) that are available to offset future taxable
revenue. A deferred tax asset of £2,872,190 (2023: £2,662,178), based on the effective tax rate of 25%, has not
been recognised because the Company is not expected to generate sufficient taxable income in future
periods in excess of the available deductible expenses and accordingly, the Company is unlikely to be able to
reduce future tax liabilities through the use of existing surplus losses.
10. Dividends
30 April 2024 30 April 2023
Amounts recognised as distributions to equity holders in the year. £000 pence £000 pence
In respect of the previous year:
Final dividend 142 0.15 142 0.15
142 0.15 142 0.15
The Directors have recommended a final dividend in respect of the year ended 30 April 2024 of 0.09p (2023:
0.15p) per Ordinary Share payable on 25 October 2024 to all shareholders on the register at close of business
on 27 September 2024. The ex-dividend date will be 26 September 2024.
11. Investments
30 April
2024
£000
30 April
2023
£000
Investment portfolio summary:
Opening book cost 75,539 91,876
Opening unrealised (losses)/gains (19,471) 2,946
Analysis of transactions made in the year
Opening fair value 56,068 94,822
Movements in the year:
Purchases at cost 16,336 15,532
Sales – proceeds (23,840) (27,521)
Movement in investment holding losses (7,272) (26,765)
Closing fair value 41,292 56,068
Closing book cost 60,283 75,539
Closing unrealised losses (18,991) (19,471)
Closing fair value 41,292 56,068
Transaction costs:
Costs on acquisitions 15 10
Costs on disposals 22 30
37 40
Notes to the Financial Statements continued
Annual Report 2024 | Miton UK MicroCap Trust plc | 71
The Company received £23,840,000 (2023: £27,521,000) from investments sold in the year. The book cost of
these investments when they were purchased was £31,592,000 (2023: £31,869,000). These investments have
been revalued over time and until they were sold any unrealised gains or losses were included in the fair value
of the investments.
A list of the largest portfolio holdings by their fair value is shown on page 17.
12. Fair Value Hierarchy
Financial assets of the Company are carried in the Balance Sheet at their fair value or approximation of
fair value. The fair value is the amount at which the asset could be sold in an ordinary transaction between
market participants, at the measurement date, other than a forced or liquidation sale. The Company
measures fair values using the following hierarchy that reflects the significance of the inputs used in making
the measurements.
Categorisation within the hierarchy has been determined on the basis of the lowest level input that is
significant to the fair value measurement of the relevant asset as follows:
Level 1 – valued using quoted prices, unadjusted in active markets for identical assets and liabilities
Level 2
– valued by reference to valuation techniques using observable inputs for the asset or liability other
than quoted prices included in level 1
Level 3
– valued by reference to valuation techniques using inputs that are not based on observable market
data for the asset or liability
Assessing the significance of a particular input requires judgement, considering factors specific to the asset or
liability. Financial assets are transferred at the point in which a change of circumstances occur.
The table below sets out the fair value measurement of financial assets and liabilities in accordance with the
fair value hierarchy.
Level 1
£000
Level 2
£000
Level 3
£000
Total
£000
Financial assets at fair value through profit or loss at 30 April 2024
Equity investments 40,911 — 381 41,292
Derivative contracts — 2 — 2
40,911 2 381 41,294
Level 1
£000
Level 2
£000
Level 3
£000
Total
£000
Financial assets at fair value through profit or loss at 30 April 2023
Equity investments 55,801 128 139 56,068
Derivative contracts — 169 — 169
55,801 297 139 56,237
The
Company
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Company
Accounts
Shareholder
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Notes to the Financial Statements continued
72 | Miton UK MicroCap Trust plc | Annual Report 2024
12. Fair Value Hierarchy continued
The Level 2 investments are at values calculated using observable inputs. The fair value of warrants is
determined by the Manager through use of models using available observable inputs of the warrant: the
exercise share price of the investee company, the expiration period plus other factors including the prevailing
interest rate and associated risks.
Fair value of level 3 movements – financial assets
As at
30 April
2024
Level 3
£000
As at
30 April
2023
Level 3
£000
Opening fair value investments 139 479
Transfer from Level 1 to Level 3 90 58
Transfer from Level 2 to Level 3 — 86
Transfer from Level 3 to Level 1 (94) (557)
Movement in unrealised 246 73
Closing fair value of Level 3 investments 381 139
Investments classified within Level 3 consist of equities, warrants and options. As observable prices are
not available for these investments, the Manager has used valuation techniques to derive the fair value.
The Level3 valuations are reviewed on a regular basis by the Manager. The Manager considers the
appropriateness of the valuation model inputs, as well as the valuation result using various valuation methods
and techniques generally recognised as standard. In selecting the most appropriate valuation model the
Manager performs back testing and considers which model’s results have historically aligned most closely to
actual market transactions. The fair value of Level 3 investments is based on discounted anticipated future
cash returns, taking account of available information, the consideration of liquidity, credit and market risk
factors, and adjusts the valuation model as deemed necessary.
The transfers between Level 3 and Level 1 consist of equities that have been suspended and/or readmitted
after suspension on the relevant stock exchange. Where the stock is readmitted, it is fair valued using quoted
prices, unadjusted in an active market and transferred to Level 1. Where it is suspended, it is transferred to
Level 3 with the appropriate valuation technique applied with consideration of the rationale for suspension
and other relevant information.
Other Financial Assets and Liabilities
For all other financial assets and liabilities, the carrying value is an approximation of fair value, including: trade
and other receivables; cash and cash equivalents and trade and other payables.
Notes to the Financial Statements continued
Annual Report 2024 | Miton UK MicroCap Trust plc | 73
13. Derivative Contracts
Listed Put Options at fair value through profit or loss at 30 April 2024
As at
30 April
2024
£000
As at
30 April
2023
£000
Opening book cost 911 2,070
Opening option holding losses (742) (1,269)
Total options designated at fair value 169 801
Listed Put Options at fair value through profit or loss at 30 April 2024
30 April
2024
£000
30 April
2023
£000
Analysis of option movements
Opening fair value 169 801
Movements in the period:
Purchases at cost 195 911
Sales – proceeds (11) (691)
Movement in holding losses (351) (852)
Closing fair value 2 169
Closing book cost 158 911
Closing unrealised losses (156) (742)
Closing fair value 2 169
Year ended
30 April
2024
£000
Year ended
30 April
2023
£000
Transaction costs:
Costs on acquisitions 1 1
Costs on disposals — 2
1 3
The
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Company
Accounts
Shareholder
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Notes to the Financial Statements continued
74 | Miton UK MicroCap Trust plc | Annual Report 2024
13. Derivative Contracts continued
Derivative contracts serve as components of the Company’s investment strategy and are utilised primarily to
structure and hedge investments to enhance performance and reduce risk of the Company (the Company
does not designate any derivative as hedging instrument for hedge accounting purposes). The derivative
contracts that the Company may hold from time to time or issue include: index-linked notes, contracts for
differences, covered options and other equity-related instruments.
The Company’s investment objective set limits on investments in derivatives. The Investment Manager
closely monitors the Company’s exposure under derivative contracts and any use of derivatives for
investment purposes will be made on the basis of the same principles of risk spreading and diversification
that apply to the Company’s direct investments. The Company will not enter into uncovered short positions.
14. Trade and Other Receivables
30 April
2024
£000
30 April
2023
£000
Amount due from brokers — 117
Dividends receivable 42 48
Prepayment and other debtors 30 50
Taxation recoverable 5 2
77 217
15. Trade and Other Payables
30 April
2024
£000
30 April
2023
£000
Amount due to brokers — 128
Other creditors 173 162
173 290
Notes to the Financial Statements continued
Annual Report 2024 | Miton UK MicroCap Trust plc | 75
16. Capital Management Policies
The Company’s capital management objectives are:
•
To ensure that it will be able to continue as a going concern; and
•
To maximise the income and capital return over the long term to its equity shareholders through an
appropriate balance of equity capital and debt.
As stated in the investment policy, the Company has authority to borrow up to 15% of net asset value through
a mixture of bank facilities and certain derivative instruments. There were no borrowings as at 30 April 2024
or throughout the year (2023: nil). Also, as a public company, the minimum share capital is £50,000.
The Company’s capital at 30 April 2024 comprised:
30 April
2024
£000
30 April
2023
£000
Current liabilities:
Trade and other payables 173 290
Equity:
Equity share capital 127 145
Retained earnings and other reserves 43,170 60,609
Total shareholders’ funds 43,297 60,754
Debt as a % of net assets 0.00% 0.00%
The Board, with the assistance of the Investment Manager, monitors and reviews the broad structure of the
Company’s capital on an ongoing basis. This review includes:
•
the planned level of gearing, which takes into account the Investment Manager’s view of the market;
•
the buy back of shares for cancellations or treasury, which takes account of the difference between the
NAV per share and the share price (i.e the level of share price discount or premium);
•
new issues of equity shares; and
•
the extent to which revenue in excess of that which is required to be distributed should be retained.
The Company’s objectives, policies and processes for managing capital have remained unchanged since
itslaunch.
The
Company
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Company
Accounts
Shareholder
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Notes to the Financial Statements continued
76 | Miton UK MicroCap Trust plc | Annual Report 2024
17. Reserves
Ordinary Shares to 30 April 2024
Capital
redemption
reserve
£000
Share
premium
account
£000
Special
reserve*
£000
Capital
reserve
realised*
£000
Capital
reserve
unrealised*
£000
Revenue
reserve*
£000
Opening balance 79 672 51,039 28,907 (20,210) 122
Redemption of Ordinary Shares — — (9,439) — — —
Cancellation of shares 18 — — — — —
Net loss on realisation of investments and derivatives — — — (8,700) — —
Unrealised gain realised in the year — — — — 1,066 —
Management fee charged to capital — — — (295) — —
Finance costs charged to capital — — — (21) — —
Equity dividends paid — — (20) — — (122)
Revenue return on ordinary activities after tax — — — — — 74
Closing balance 97 672 41,580 19,891 (19,144) 74
* At 30 April 2024, the distributable reserves of the Company comprised of £42,022,000 (2023: £59,858,000).
Ordinary Shares to 30 April 2023
Capital
redemption
reserve
£000
Share
premium
account
£000
Special
reserve*
£000
Capital
reserve
realised*
£000
Capital
reserve
unrealised*
£000
Revenue
reserve*
£000
Opening balance 64 672 61,546 35,121 1,680 232
Redemption of Ordinary Shares — — (10,507) — — —
Cancellation of shares 15 —
— — — —
Net loss on realisation of investments and derivatives — — — (5,727) — —
Unrealised losses realised in the year — — — — (21,890) —
Management fee charged to capital — — — (448) — —
Finance costs charged to capital — — — (39) — —
Equity dividends paid — — — — — (142)
Revenue return on ordinary activities after tax — — — — — 32
Closing balance 79 672 51,039 28,907 (20,210) 122
Notes to the Financial Statements continued
Annual Report 2024 | Miton UK MicroCap Trust plc | 77
18. Analysis of Financial Assets and Liabilities
Investment Objective and Policy
The Company’s investment objective and policy are detailed on pages 81 and 82.
The Company’s financial instruments can comprise:
•
Shares and debt securities held in accordance with the Company’s investment objective and policies;
•
Derivative instruments for efficient portfolio management, gearing and investment purposes; and
•
Cash, liquid resources and short-term debtors and creditors that arise from its operations.
The risks identified arising from the Company’s financial instruments are market risk (which comprises
market price risk, interest rate risk and foreign currency exposure risk), liquidity risk and credit and
counterparty risk. The Company may enter into derivative contracts to manage risk. The Board reviews and
agrees on policies for managing each of these risks, which are summarised below.
These policies have remained unchanged since the beginning of the accounting period.
Market Risk
Market risk arises mainly from uncertainty about future prices of financial instruments used in the
Company’s business. It represents the potential loss the Company might suffer through holding market
positions by way of price movements, interest rate movements and exchange rate movements. The
Investment Manager assesses the exposure to market risk when making each investment decision and these
risks are monitored by the Investment Manager on a regular basis and the Board at quarterly meetings with
the InvestmentManager.
Market price risk
Market price risk (i.e. changes in market prices other than those arising from currency risk or interest rate risk)
may affect the value of investments.
The Board manages the risks inherent in the investment portfolio by ensuring full and timely reporting of
relevant information from the Investment Manager. Investment performance and exposure are reviewed at
each Board meeting.
The Company’s exposure to changes in market prices as at 30 April 2024 on its equity and listed Put index
option investments held at fair value through profit or loss was £41,294,000 (30 April 2023: £56,237,000).
The portfolio is managed with an awareness of the effects of adverse price movements through detailed and
continuing analysis with the objective of maximising overall returns to Shareholders. If the fair value of the
Company’s investments at the year end increased or decreased by 10%, then it would have had an impact on
the Company’s capital return through (losses)/gains on investments held at fair value, impacting profit/(loss)
and the NAV, by £4,129,000 (2023: £5,624,000).
The
Company
Strategic
Report Governance
Company
Accounts
Shareholder
Information
Notes to the Financial Statements continued
78 | Miton UK MicroCap Trust plc | Annual Report 2024
18. Analysis of Financial Assets and Liabilities continued
Interest rate risk
Interest rate movements may affect the level of income receivable on cash deposits. The Company’s financial
assets and liabilities, excluding short-term debtors and creditors, may include investment in fixed interest
securities, such as UK corporate debt stock, whose fair value may be affected by movements in interest rates.
The majority of the Company’s financial assets and liabilities, however, are non-interest bearing. As a result,
the Company’s financial assets and liabilities are not subject to significant amounts of risk due to fluctuations
in the prevailing levels of market interest rates. There was no exposure to interest bearing liabilities during
the year ended 30 April 2024 (2023: nil).
The possible effects on the fair value and cash flows that could arise as a result of changes in interest rates
are taken into account when making investment decisions. The Board imposes borrowing limits to ensure
gearing levels are appropriate to market conditions.
The interest rate profile of the Company (excluding short-term debtors and creditors) was as follows:
30 April
2024
Floating rate
£000
30 April
2023
Floating rate
£000
Assets and liabilities:
Cash and cash equivalents 2,099 4,590
2,099 4,590
If the above level of cash was maintained for a year, a 1% increase in interest rates would increase the revenue
return and net assets by £21,000 (2023: £46,000). If there was a fall of 1% in interest rates, it would potentially
impact the Company by reducing interest and turning positive interest to negative interest. The total effect
would be a revenue reduction/cost increase and decrease in net assets of £21,000 (2023: £46,000).
Foreign currency risk
Although the Company’s performance is measured in Sterling, a proportion of the Company’s assets may be
either denominated in other currencies or in investments with currency exposure. Any income denominated
in a foreign currency is converted into Sterling upon receipt. At the Balance Sheet date, all the Company’s
assets were denominated in Sterling and accordingly the only currency exposure the Company has is through
the trading activities of its investee companies.
Liquidity Risk
The Company’s liquidity risk is managed on a daily basis by the Investment Manager in accordance with
established policies and procedures in place. The Investment Manager reviews daily forward-looking cash
reports which project cash obligations. These reports allow it to manage its obligations. A maturity analysis is
not presented as the Investment Manager does not consider this to be a material risk.
Notes to the Financial Statements continued
Annual Report 2024 | Miton UK MicroCap Trust plc | 79
Credit and Counterparty Risk
Credit risk is the risk of financial loss to the Company if the contractual party to a financial instrument fails to
meet its contractual obligations.
The maximum exposure to credit risk as at 30 April 2024 was £2,178,000 (2023: £4,976,000). The calculation is
based on the Company’s credit risk exposure as at 30 April 2024 and this may not be representative for the
whole year.
The Company’s quoted investments are held on its behalf by The Northern Trust (“NT”), acting as the
Company’s custodian. Bankruptcy or insolvency of the custodian may cause the Company’s rights with
respect to securities held by the custodian to be delayed. The Board monitors the Company’s risk by
reviewing the custodian’s internal controls report.
Where the Investment Manager makes an investment in a bond, corporate or otherwise, the credit rating of
the issuer is taken into account so as to minimise the risk to the Company of default.
The Company’s cash balances are held on its behalf by NT. The Board monitor the credit worthiness of NT,
currently rated at AA- (Standard & Poors), Aa2 (Moody’s and AA (Fitch Ratings) for Long Term Deposit/Debt.
The exposure of cash held at Northern Trust as at 30 April 2024 was £2,099,000 (2023: £4,590,00). The cash
balances will fluctuate throughout the year and the Board will monitor theexposure.
Investment transactions are carried out with a number of brokers whose creditworthiness is reviewed by the
Investment Manager. Transactions are ordinarily undertaken on a delivery versus payment basis whereby the
Company’s custodian bank ensures that the counterparty to any transaction entered into by the Company
has delivered on its obligations before any transfer of cash or securities away from the Company is completed.
Cash is only held at banks that have been identified by the Board as reputable and of high credit quality.
None of the Company’s assets are past due or impaired.
19. Related Parties
Fees paid to the Company’s Directors are disclosed in the Report on Directors Remuneration on page 45. At
the year end, £nil was outstanding due to Directors (2023: £nil).
Details of the Management fee payable to Premier Portfolio Managers Limited pursuant to the Investment
Management Agreement are set out in the Strategic Report on page 28. Amounts paid and payable are set
out in Note 6.
20. Post Balance Sheet Events
There were no Post Balance Sheet Events.
The
Company
Strategic
Report Governance
Company
Accounts
Shareholder
Information
Notes to the Financial Statements continued
80 | Miton UK MicroCap Trust plc | Annual Report 2024
Redemption of Ordinary Shares
The Company has a voluntary redemption facility
through which shareholders are entitled to request
the redemption of all or part of their holding of
Ordinary Shares on an annual basis. For the year
ended 30 April 2024 the Redemption Point for
Ordinary Shares will be in accordance with the
adjacent timetable.
Shareholders submitting valid requests for the
redemption of Ordinary Shares will have their
shares redeemed at the Redemption Price. The
Directors may elect, at their absolute discretion, to
calculate the Redemption Price applying on any
redemption point by reference to the Dealing Value
per Ordinary Share or by reference to a separate
RedemptionPool*.
The Board may, at its absolute discretion, elect not to
operate the annual redemption facility on any given
Redemption Point, or to decline in whole or part any
redemption request, although the Board does not
generally expect to exercise this discretion, save in
the interests of shareholders as a whole.
A redemption of Ordinary Shares may be subject
to either income tax and/or capital gains tax. In
particular, private shareholders that sell their shares
via the redemption mechanism could find they
are subject to income tax on the gains made on
the redeemed shares rather than the more usual
capital gains tax on the sale of their shares in the
market. However, individual circumstances do
vary, so shareholders who are in any doubt about
the redemption or the action that should be taken
should consult their stockbroker, accountant, tax
adviser or other independent financial adviser.
The relevant dates for the November 2024
Redemption Point are:
1 October 2024 Latest date for receipt
of redemption requests
and certificates for
certificated shares
3.00pm on
1 October 2024
Latest date and time for
receipt of redemption
requests and settled
TFE (Transfer to
Escrow) instructions for
uncertificated shares via
CREST
5.00pm on
5 November 2024
Redemption Point
By 5 November 2024 Company to notify
Redemption Price and
dispatch redemption
monies; or
If the redemption is
funded by way of a
Redemption Pool, the
Company will notify the
Redemption Price and
dispatch of redemption
monies as soon as
practicable.
Full details of the redemption facility are set out in
the Company’s Articles of Association or are available
from the Secretary.
* The pool of cash, assets and liabilities to be created by the Directors in respect
of a particular redemption point and allocated to the Ordinary Shares which
are the subject of redemption requests for that redemption point. The assets
of the Redemption Pool will be liquidated and the Redemption Price per
Ordinary Share will equal the aggregate cash received by the Company
upon the realisation of the Redemption Pool, after deducting the costs of
the redemption, which will be borne by the relevant pool, an adjustment for
any attributable unsettled liabilities and a pro-rata share of the costs and
expenses of the Company not attributable to a particular pool, divided by the
number of Redemption Shares, as set out in the Articles.
Annual Report 2024 | Miton UK MicroCap Trust plc | 81
Miton UK MicroCap Trust plc was incorporated on
26March 2015 and its Ordinary Shares were admitted
to the premium segment of the Official List and
to trading on the London Stock Exchange’s main
market for listed securities on 30 April 2015.
Capital Structure
At the year end, the Company’s share capital
consisted of Ordinary Shares of £0.001 each
(“Ordinary Shares”) and non-voting management
shares of £1 each (“Management shares”). From time
to time, the Company may issue C shares of £0.01
each (“C shares”).
The Company’s shares have the following rights:
Voting: Ordinary Shares and C shares have equal
voting rights. At shareholder meetings, members
present in person or by proxy have one vote on a
show of hands and on a poll have one vote for each
share held.
Management shares are non-voting unless no other
shares are in issue at that time.
Dividends: the assets of the Ordinary Shares and
C shares are separate and each class is entitled to
dividends declared on their respective asset pool.
The management shares are entitled to receive, in
priority to the holders of any other class of shares, a
fixed cumulative dividend equal to 0.01% per annum
on the nominal value.
Capital: if there are any C shares in issue, the
surplus capital and assets of the Company shall on
a winding-up or on a return of capital, be applied
amongst the existing Ordinary Shareholders and the
Management shareholders pro rata according to the
nominal capital paid up on their holdings, having
first deducted therefrom an amount equivalent to
the assets and liabilities relating to the C shares,
which amount shall be applied amongst the C
shareholders pro rata according to the nominal
capital paid up on their holdings of C shares.
When there are no C shares in issue, any surplus
shall be divided amongst the Ordinary Shareholders
and Management shareholders pro rata according
to the nominal capital paid up on their holdings of
Ordinary Shares and Management shares.
In each instance, the holders of the Management
shares shall only receive an amount up to the
capital paid up on such Management shares and
the Management shares shall not confer the right
to participate in any surplus remaining following
payment of such amount.
As at the date of this Report, there are 76,923,603
Ordinary Shares in issue, none of which are held in
treasury, and 50,000 Management shares.
The Company has a redemption facility through
which shareholders are entitled to request the
redemption of all or part of their holding of
Ordinary Shares on an annual basis. The Board
may, at its absolute discretion, elect not to operate
the annual redemption facility in whole or in part,
although it has indicated that it is minded to
approve all requests.
Details of the redemption facility are set out on
page 80.
Investment Objective
The investment objective of the Company is to
provide shareholders with capital growth over the
long-term.
Investment Policy
The Company invests primarily in the smallest
companies, measured by their market capitalisation,
quoted or traded on an exchange in the United
Kingdom at the time of investment. It is likely that
the majority of the microcap companies held in the
Company’s portfolio will be quoted on AIM and will
typically have a market capitalisation of less than
£150 million at the time of investment. The Company
may also invest in debt, warrants or convertible
instruments issued by such companies and may
invest in, or underwrite, future equity issues by
suchcompanies.
Shareholder Information
The
Company
Strategic
Report Governance
Company
Accounts
Shareholder
Information
82 | Miton UK MicroCap Trust plc | Annual Report 2024
The Company may utilise derivative instruments
including index-linked notes, contracts for
differences, covered options and other equity
related derivative instruments for efficient portfolio
management, gearing and investment purposes.
Any use of derivatives for investment purposes
will be made on the basis of the same principles
of risk spreading and diversification that apply to
the Company’s direct investments, as described
below. The Company will not enter into uncovered
shortpositions.
If companies in the portfolio achieve organic
growth or grow through corporate activity such
as acquisitions, and consequently have a market
capitalisation that would place them outside the
investable universe, the Investment Manager will not
be obliged to sell those holdings, but the proportion
of the portfolio in such companies will be carefully
monitored by the Investment Manager and the
Board so that the overall investment policy to invest
in the smallest quoted or traded companies is not
materially altered.
The Company’s portfolio is expected to be diversified
by industry and market of activity. No single holding
will represent more than 15% of Gross Assets at
the time of investment and, when fully invested,
the portfolio is expected to have over 120 holding
although there is no guarantee that will be the case
and it may contain a lesser number of holdings at
any time.
The Company will have the flexibility to invest up
to 10% of its Gross Assets at the time of investment
in unquoted or untraded companies, or in any one
unquoted or untraded company.
The Company will invest no more than 10% of
Gross Assets at the time of investment in other
investment funds.
Borrowing
The Company may deploy borrowing to enhance
long-term capital growth. Gearing will be deployed
flexibly up to 15% of the Net Asset Value, at the time
of borrowing. In the event this limit is breached
as a result of market movements, and the Board
considers that borrowing should be reduced, the
Investment Manager shall be permitted to realise
investments in an orderly manner so as not to
prejudice shareholders.
No material change will be made to the investment
policy without the approval of shareholders by
ordinary resolution.
Share Dealing
Shares can be traded through a stockbroker or share
trading platform.
Share Prices
The Company’s shares are listed on the London
Stock Exchange.
Share Register Enquiries
The register for the Ordinary Shares is maintained
by Link Group. In the event of queries regarding
your holding, please contact the Registrar on
0371 664 0300. Calls are charged at the standard
geographic rate and will vary by provider. Calls
outside the United Kingdom will be charged at
the applicable international rate. Email Link at
enquiries@linkgroup.co.uk. Changes of name and/or
address must be notified in writing to the Registrar:
Link Group, The Registry, 10th Floor, Central Square,
29WellingtonStreet, Leeds LS1 4DL.
Current Share Capital and Net Asset Value
Information
Ordinary £0.001 shares: 76,923,603
SEDOL Number: BWFGQ08
ISIN Number: GB00BWFGQ085
The Company releases its net asset value per share to
the London Stock Exchange daily.
Shareholder Information continued
Annual Report 2024 | Miton UK MicroCap Trust plc | 83
Annual and Half-Yearly Reports
Copies of the Annual and Half-Yearly Reports are
available from the Secretary on telephone number
0207 982 1073 and are available on the Company’s
website:
www.mitonukmicrocaptrust.com
Investment Manager: Premier Portfolio
ManagersLimited
The Company’s Investment Manager is Premier
Portfolio Managers Limited, a wholly-owned
subsidiary of Premier Miton Group plc (“Premier
Miton”). Premier Miton is quoted on the AIM market
for smaller and growing companies.
As at 31 March 2024, Premier Miton had total funds
under management of approximately £10.7 billion.
Members of the fund management team invest in
their own funds and are significant shareholders
in Premier Miton. Investor updates in the form
of monthly factsheets are available from the
Investment Manager’s website:
www.premiermiton.com
Association of Investment Companies
The Company is a member of the Association of
Investment Companies.
Financial Calendar
30 April 2024 Year end
July 2024 Announcement of 2024
annual results
24 September 2024 Annual General Meeting
31 October 2024 Half-year end
5 November 2024 Redemption Point
December 2024 Announcement of 2024
half-yearly results
30 April 2025 Year end
The
Company
Strategic
Report Governance
Company
Accounts
Shareholder
Information
Retail Investors advised by IFAs
The Company currently conducts its affairs so
that the shares issued by the Company can be
recommended by IFAs to ordinary retail investors
in accordance with the Financial Conduct Authority
(“FCA”) rules in relation to non-mainstream
investment products and intends to continue to do
so for the foreseeable future. The shares are excluded
from the FCA’s restrictions which apply to non-
mainstream investment products because they are
shares in an investment trust.
84 | Miton UK MicroCap Trust plc | Annual Report 2024
Alternative Investment Fund Managers’ Directive
Disclosures
The provisions of the Alternative Investment Fund
Managers Directive (“AIFMD”) took effect on 22 July
2014. That legislation requires the AIFM to establish
and maintain remuneration policies for its staff
which are consistent with and promote sound and
effective risk management.
Pre-Investment Disclosures
The AIFM is required to make certain disclosures
available to investors in accordance with the AIFMD.
Those disclosures that are required to be made pre-
investment can be found at:
www.mitonukmicrocaptrust.com/documents.
AIFMD Leverage Limits
The maximum level of leverage which the
Investment Manager may employ on behalf of the
Company and the levels as at 30 April 2024 are set
out below. A figure of 100% means that the exposure
is equal to the net asset value and the AIF has no
leverage.
Leverage exposure
Maximum
gross
leverage
Maximum
commitment
Maximum level 200% 200%
Actual level 100% 100%
Remuneration Disclosure
Premier Portfolio Managers Limited (the ‘AIFM’) is
part of a larger group of companies within which
remuneration policies are the responsibility of a
Remuneration Committee comprised entirely
of non-executive Directors. That committee has
established a remuneration policy which sets out
a framework for determining the level of fixed
and variable remuneration of staff, including
maintaining an appropriate balance between
thetwo.
Arrangements for variable remuneration within the
group are calculated primarily by reference to the
performance of each individual and the profitability
of the relevant business unit. The policies are
designed to reward long-term performance and
long term profitability.
Within the group, all staff are employed by the
parent company with none employed directly by
the AIFM. The costs of a number of individuals are
allocated between the entities within the group
based on the expected amount of time devoted
toeach.
The total remuneration of those individuals who are
fully or partly involved in the activities of the AIFM in
relation to Alternative Investment Funds, including
the Company (“AIFs”), including those whose time
is allocated between group entities, for the financial
year ending 30 September 2023, is analysed below:
Fixed Remuneration £5,021,933
Variable Remuneration £2,298,473
Total £7,320,406
Weighted FTE Headcount 53
The table below provides an alternative analysis of
the remuneration data.
Aggregate remuneration of:
Significant Influence Functions £2,588,863
Senior Management Functions £223,783
Other staff £4,507,759
Total £7,320,405
The staff members included in the above analysis
support all the funds managed by the AIFM. It is
not considered feasible or useful to attempt to
apportion these figures to individual AIFs.
The AIFM’s management has reviewed the general
principles of the remuneration policy and its
application in the last year which has resulted in no
material changes to the policy.
Alternative Investment Fund Managers’
Directive Disclosures
Annual Report 2024 | Miton UK MicroCap Trust plc | 85
NOTICE IS HEREBY GIVEN that the ninth ANNUAL GENERAL MEETING of Miton UK MicroCap Trust plc
(the “Company”) will be held on 24 September 2024 at 11.30am at the offices of Stephenson Harwood LLP,
1Finsbury Circus, London EC2M 7SH to consider and vote on the Resolutions below.
Resolutions 1 to 10 (inclusive) will be proposed as Ordinary Resolutions and Resolutions 11 to 13 (inclusive) will
be proposed as Special Resolutions.
Ordinary Resolutions
1. To receive and adopt the Strategic Report, Reports of the Directors and Auditor and the audited
financial statements for the year ended 30 April 2024.
2. To receive and approve the Directors’ Remuneration Report for the year ended 30 April 2024.
3. To re-elect Louise Bonham as a Director of the Company.
4. To re-elect Peter Dicks as a Director of the Company.
5. To re-elect Davina Walter as a Director of the Company.
6. To re-elect Ashe Windham as a Director of the Company.
7. To re-appoint BDO LLP as Auditor of the Company to hold office from the conclusion of the meeting
until the conclusion of the next meeting at which financial statements are laid before the Company.
8. To authorise the Audit Committee to determine the remuneration of the Auditor of the Company.
9. To declare a final dividend of 0.09p pence per Ordinary Share for the year ended 30 April 2024.
10. THAT: The Directors be and are hereby generally and unconditionally authorised in accordance with
Section 551 of the Companies Act 2006 (“the Act”) to exercise all the powers of the Company to allot
Ordinary Shares in the capital of the Company up to an aggregate nominal value of £7,692 (being
approximately 10% of the issued Ordinary Share capital of the Company at the date of this Notice), such
authority to expire at the conclusion of the Annual General Meeting of the Company to be held in 2025
(unless previously renewed, varied or revoked by the Company in general meeting) (the “Section 551
period”), but so that the Company may, at any time prior to the expiry of the Section 551 period, make
offers or agreements which would or might require the allotment of shares in pursuance of such offers
or agreements as if the authority had not expired.
Notice of Annual General Meeting
The
Company
Strategic
Report Governance
Company
Accounts
Shareholder
Information
86 | Miton UK MicroCap Trust plc | Annual Report 2024
Notice of Annual General Meeting continued
Special Resolutions
11. THAT: Subject to the passing of Resolution 10, the Directors be and they are hereby empowered,
in accordance with Sections 570 and 573 of the Act, to allot Ordinary Shares and to sell Ordinary
Shares from treasury for cash pursuant to the authority referred to in Resolution 10 as if
Section 561(1) of the Act did not apply to any such allotment or sale, such power to expire at the
conclusion of the Annual General Meeting of the Company to be held in 2025 (unless previously
renewed, varied or revoked by the Company in general meeting) save that the Company may,
at any time prior to the expiry of such power, make an offer or enter into an agreement which
would or might require Ordinary Shares to be allotted or sold from treasury equity securities in
pursuance of such an offer or agreement as if such power had not expired.
12. THAT: The Company is hereby generally and unconditionally authorised in accordance with
Section 701 of the Act to make market purchases (within the meaning of Section 693(4) of
the Act) of Ordinary Shares of £0.001 each in the capital of the Company (“Ordinary Shares”)
providedthat:
(i) the maximum number of Ordinary Shares hereby authorised to be purchased is 11,530,848
(representing 14.99% of the Ordinary Shares in issue at the date of this Notice);
(ii) the minimum price which may be paid for each Ordinary Share is £0.001;
(iii) the maximum price which may be paid for each Ordinary Share shall not be more than the
higher of: (i) an amount equal to 105% of the average of the middle market quotations of Ordinary
Shares taken from the Daily Official List of the London Stock Exchange for the five business days
immediately preceding the day on which the contract of purchase is made; and (ii) the higher
of the price of the last independent trade in the Ordinary Shares and the highest then current
independent bid for the Ordinary Shares on the London Stock Exchange;
(iv) this authority will (unless previously renewed, varied or revoked by the Company in general
meeting) expire at the conclusion of the Annual General Meeting of the Company to be held
in2025;
(v) the Company may make a contract of purchase for Ordinary Shares under this authority before
this authority expires which will or may be executed wholly or partly after its expiration; and
(vi) any Ordinary Shares bought back under the authority hereby granted may, at the discretion of
the Directors, be cancelled or held in treasury and if held in treasury may be resold from treasury
or cancelled at the discretion of the Directors.
13. THAT: A general meeting other than an annual general meeting may be called on not less than
14clear days’ notice.
By order of the Board
Northern Trust Secretarial Services (UK) Limited
Registered Office: 50 Bank Street, London E14 5NT
11 July 2024
Annual Report 2024 | Miton UK MicroCap Trust plc | 87
Administrative Notes in Connection with the Annual General Meeting
1. Attending the Annual General Meeting in person
If you wish to attend the Annual General Meeting in person, you should arrive at the venue for the
Annual General Meeting in good time to allow your attendance to be registered. It is advisable to have
some form of identification with you as you may be asked to provide evidence of your identity to the
Company’s registrar, Link Group (the “Registrar”), prior to being admitted to the Annual General Meeting.
2. Appointment of proxies
Members are entitled to appoint one or more proxies to exercise all or any of their rights to attend,
speak and vote at the Annual General Meeting. A proxy need not be a member of the Company but
must attend the Annual General Meeting to represent a member. To be validly appointed, a proxy
must be appointed using the procedures set out in these notes. If members wish their proxy to speak
on their behalf at the meeting, members will need to appoint their own choice of proxy (not the
Chairman of the Annual General Meeting) and give their instructions directly to them.
Members can only appoint more than one proxy where each proxy is appointed to exercise rights
attached to different shares. Members cannot appoint more than one proxy to exercise the rights
attached to the same share(s). If a member wishes to appoint more than one proxy, they should
log on to https://investorcentre.linkgroup.co.uk/Login/Login or contact the Registrar by email at
shareholderenquiries@linkgroup.co.uk or by telephone on 0371 664 0300. Calls are charged at the
standard geographic rate and will vary by provider. Calls outside the United Kingdom will be charged
at the applicable international rate. Lines are open between 09:00 – 17:30, Monday to Friday excluding
public holidays in England and Wales.
A member may instruct their proxy to abstain from voting on any resolution to be considered at the
Annual General Meeting by marking the ‘Vote Withheld’ option when appointing their proxy. It should
be noted that a vote withheld is not a vote in law and will not be counted in the calculation of the
proportion of votes ‘For’ or ‘Against’ the resolution.
The appointment of a proxy will not prevent a member from attending the Annual General Meeting
and voting in person if they wish. A member present in person or by proxy shall have one vote on a
show of hands and on a poll every member present in person or by proxy shall have one vote for every
share of which he/she is the holder.
A person who is not a member of the Company but who has been nominated by a member to enjoy
information rights does not have a right to appoint any proxies under the procedures set out in these
notes and should read note 9 below.
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Administrative Notes in Connection with the Annual General Meeting continued
3. Appointment of a proxy online
Members can appoint a proxy online via the Link Investor Centre app or at: https://investorcentre.
linkgroup.co.uk/Login/Login. In order to appoint a proxy using this website, members will need their
Investor Code, which they can find on their share certificate. If you need help with voting online, please
contact our Registrar, Link Group, on 0371 664 0300, or email Link at shareholderenquiries@linkgroup.
co.uk. Calls are charged at the standard geographic rate and will vary by provider. Calls outside the
United Kingdom will be charged at the applicable international rate. Lines are open between 09:00
– 17:30, Monday to Friday excluding public holidays in England and Wales. Members must appoint a
proxy using the website no later than 48 hours before the time of the Annual General Meeting or any
adjournment of that meeting.
Link Investor Centre is a free app for smartphone and tablet provided by Link Group (the Company’s
registrar). It allows you to securely manage and monitor your shareholdings in real time, take part in
online voting, keep your details up to date, access a range of information including payment history
and much more. The app is available to download on both the Apple App Store and Google Play, or by
scanning the relevant QR code below. Alternatively, you may access the Link Investor Centre via a web
browser at: https://investorcentre.linkgroup.co.uk/Login/Login.
4. Appointment of proxy using Proxymity
If you are an institutional investor you may also be able to appoint a proxy electronically via the
Proxymity platform, a process which has been agreed by the Company and approved by the
Registrar. For further information regarding Proxymity, please go to www.proxymity.io. Your proxy
must be lodged by 11:30am on 20 September 2024 in order to be considered valid or, if the meeting
is adjourned, by the time which is 48 hours before the time of the adjourned meeting. Before you
can appoint a proxy via this process you will need to have agreed to Proxymity’s associated terms and
conditions. It is important that you read these carefully as you will be bound by them and they will
govern the electronic appointment of your proxy. An electronic proxy appointment via the Proxymity
platform may be revoked completely by sending an authenticated message via the platform
instructing the removal of your proxy vote.
5. Appointment of a proxy using a Form of Proxy
You may request a hard copy form of proxy directly from the Registrar by emailing at
shareholderenquiries@linkgroup.co.uk or by telephone on 0371 664 0300. To be valid, a Form of Proxy
or other instrument appointing a proxy, together with any power of attorney or other authority under
which it is signed or a certified copy thereof, must be received by post or (during normal business
hours only) by hand by the Registrar at Link Group, PXS 1, Central Square, 29 Wellington Street, Leeds,
LS1 4DL no later than 48 hours before the time of the Annual General Meeting or any adjournment of
that meeting.
Notice of Annual General Meeting continued
Annual Report 2024 | Miton UK MicroCap Trust plc | 89
Administrative Notes in Connection with the Annual General Meeting continued
6. Appointment of a proxy through CREST
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy
appointment service may do so by using the procedures described in the CREST Manual and by
logging on to the following website: www.euroclear.com. CREST personal members or other CREST
sponsored members, and those CREST members who have appointed (a) voting service provider(s),
should refer to their CREST sponsor or voting service provider(s) who will be able to take the
appropriate action on their behalf.
In order for a proxy appointment or instruction made using the CREST service to be valid, the
appropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated in
accordance with Euroclear UK & International Limited’s specifications and must contain the
information required for such instruction, as described in the CREST Manual. The message, regardless
of whether it constitutes the appointment of a proxy or is an amendment to the instruction given
to a previously appointed proxy, must, in order to be valid, be transmitted so as to be received by the
Registrar Link Group (ID RA10) no later than 48 hours before the time of the Annual General Meeting
or any adjournment of that meeting. For this purpose, the time of receipt will be taken to be the
time (as determined by the timestamp applied to the message by the CREST Application Host) from
which the Registrar is able to retrieve the message by enquiry to CREST in the manner prescribed
by CREST. After this time, any change of instructions to proxies appointed through CREST should be
communicated to the appointee through other means.
CREST members and, where applicable, their CREST sponsors or voting service provider(s) should note
that Euroclear UK & International Limited does not make available special procedures in CREST for any
particular message. Normal system timings and limitations will, therefore, apply in relation to the input
of CREST Proxy instructions.
It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST
personal member, or sponsored member, or has appointed (a) voting service provider(s), to procure
that their CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to
ensure that a message is transmitted by means of the CREST system by any particular time. In this
connection, CREST members and, where applicable, their CREST sponsors or voting system providers
are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the
CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in
Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001 (as amended).
Unless otherwise indicated on the Form of Proxy, CREST, Proxymity or any other electronic voting
instruction, the proxy will vote as they think fit or, at their discretion, withhold from voting.
7. Appointment of proxy by joint holders
In the case of joint holders, where more than one of the joint holders purports to appoint one or
more proxies, only the purported appointment submitted by the most senior holder will be accepted.
Seniority shall be determined by the order in which the names of the joint holders stand in the
Company’s register of members in respect of the joint holding.
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Administrative Notes in Connection with the Annual General Meeting continued
8. Corporate representatives
Any corporation which is a member can appoint one or more corporate representatives. Members
can only appoint more than one corporate representative where each corporate representative is
appointed to exercise rights attached to different shares. Members cannot appoint more than one
corporate representative to exercise the rights attached to the same share(s).
9. Entitlement to attend and vote
To be entitled to attend and vote at the Annual General Meeting (and for the purpose of determining
the votes they may cast), members must be registered in the Company’s register of members at close
of business on 20 September 2024 (or, if the Annual General Meeting is adjourned, at close of business
on the day two days prior to the adjourned meeting). Changes to the register of members after the
relevant deadline will be disregarded in determining the rights of any person to attend and vote at the
Annual General Meeting.
10. Nominated persons
Any person to whom this notice is sent who is a person nominated under section 146 of the Companies
Act 2006 (the “Act”) to enjoy information rights (a “Nominated Person”) may, under an agreement
between them and the member by whom they were nominated, have a right to be appointed (or to
have someone else appointed) as a proxy for the Annual General Meeting. If a Nominated Person has no
such proxy appointment right or does not wish to exercise it, they may, under any such agreement, have
a right to give instructions to the member as to the exercise of voting rights.
11. Website giving information regarding the Annual General Meeting
Information regarding the Annual General Meeting, including information required by section 311A of
the Act, and a copy of this Notice of Annual General Meeting is available from the Company’s website
at www.mitonukmicrocaptrust.com/
12. Audit concerns
Members should note that it is possible that, pursuant to requests made by members of the Company
under section 527 of the Act, the Company may be required to publish on a website a statement
setting out any matter relating to: (a) the audit of the Company’s accounts (including the auditors’
report and the conduct of the audit) that are to be laid before the Annual General Meeting; or (b) any
circumstance connected with the auditors of the Company ceasing to hold office since the previous
meeting at which annual accounts and reports were laid in accordance with section 437 of the Act.
The Company may not require the members requesting any such website publication to pay its
expenses in complying with sections 527 or 528 of the Act. Where the Company is required to place a
statement on a website under section 527 of the Act, it must forward the statement to the Company’s
auditors not later than the time when it makes the statement available on the website. The business
which may be dealt with at the Annual General Meeting includes any statement that the Company
has been required under section 527 of the Act to publish on a website.
Notice of Annual General Meeting continued
Annual Report 2024 | Miton UK MicroCap Trust plc | 91
Administrative Notes in Connection with the Annual General Meeting continued
13. Voting rights
As at 10 July 2024 (being the latest practicable date prior to the publication of this Notice) the
Company’s issued share capital consisted of 76,923,603 Ordinary Shares, carrying one vote each, and
50,000 management shares of £1 each. The total number of voting rights in the Company is 76,923,603.
14. Notification of shareholdings
Any person holding 3% or more of the total voting rights of the Company who appoints a person other
than the Chairman of the Annual General Meeting as their proxy will need to ensure that both they,
and their proxy, comply with their respective disclosure obligations under the Disclosure Guidance and
Transparency Rules.
15. Members’ right to require circulation of resolution
To be proposed at the Annual General Meeting Members meeting the threshold requirements set
out in the Act have the right to: (a) require the Company to give notice of any resolution which can
properly be, and is to be, moved at the Annual General Meeting pursuant to section 338 of the Act;
and/or (b) include a matter in the business to be dealt with at the Annual General Meeting, pursuant to
section 338A of the Act.
16. Further questions and communication
Under section 319A of the Act, the Company must cause to be answered any question relating to the
business being dealt with at the Annual General Meeting put by a member attending the meeting
unless answering the question would interfere unduly with the preparation for the meeting or involve
the disclosure of confidential information, or the answer has already been given on a website in the
form of an answer to a question, or it is undesirable in the interests of the Company or the good order
of the meeting that the question be answered.
Members may not use any electronic address or fax number provided in this Notice or in any related
documents to communicate with the Company for any purpose other than those expressly stated.
17. Documents available for inspection
Copies of the Letters of Appointment of the Non-Executive Directors of the Company will be available
for inspection at the registered office of the Company during normal business hours on any weekday
(Saturdays, Sundays and English public holidays excepted) from the date of this Notice until the
conclusion of the Annual General Meeting and on the date of the Annual General Meeting at the
location of the meeting from 11.15am until the conclusion of the Annual General Meeting.
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at a discount. The size of the discount is calculated
by subtracting the share price from the Adjusted
NAV per share and is usually expressed as a
percentage of the Adjusted NAV per share. If the
share price is higher than the Adjusted NAV per
share, this situation is called apremium.
Discount Calculation Page
30 April
2024
30 April
2023
Closing Adjusted NAV
per share (pence) ii 55.79 64.20 (a)
Closing share price
(pence) ii 50.50 59.50 (b)
Discount
(c=((a-b)/a)*100) (9.48%) (7.32%) (c)
Dividend Yield
The annual dividend expressed as a percentage of
the mid-market share price.
Financial Conduct Authority (“FCA”)
This regulator oversees the fund management
industry, including the operation of the Company.
Financial Reporting Council (“FRC”)
The FRC regulates UK auditors and provides
guidance to accountants with the aim of promoting
better transparency and integrity in the annual
reports of quoted businesses.
FTSE 100 Put Option
A FTSE 100 Put Option is a type of derivative contract
in which the underlying value is based on the level of
the FTSE 100 index.
Gearing
Gearing refers the ratio of the Company’s debt to its
equity capital. The Company may borrow money to
invest in additional investments for its portfolio. If
the Company’s assets grow, the shareholders’ assets
grow proportionately because the debt remains the
same. If the value of the Company’s assets falls, the
situation is reversed. Gearing can therefore enhance
performance in rising markets but can adversely
impact performance in falling markets.
Growth Stock
A stock where the earnings are expected to grow
at an above-average rate, leading to a faster than
average growing share price. Growth stocks do not
usually pay a significant dividend.
Glossary
Alternative Investment Market (“AIM”)
MINI’s shares are traded on the London Stock
Exchange, although most the stocks held in
the Company’s portfolio are quoted on the AIM
exchange. AIM is owned by the London Stock
Exchange and was principally set up to meet the
funding needs of smaller, growing companies.
Alternative Performance Measure (“APM”)
An APM is a numerical measure of the Company’s
current, historical or future financial performance,
financial position or cash flows, other than a financial
measure defined or specified in the applicable
financial framework.
Annual General Meeting (“AGM”)
All public companies have an AGM every year,
and this is the opportunity for the shareholders
to confirm their approval of the annual accounts,
the annual dividend and the appointment of the
Directors and Auditors. It is also a good time for
shareholders to meet the non-executive Directors.
The Company’s AGM is on 24 September 2024. The
Notice of Meeting can be found on pages 85 to 91.
Deutsche Numis Indices
Deutsche Numis provides a range of indices covering
the entire UK equity market.
The Deutsche Numis Smaller Companies Index
or DNSCI targets the bottom 10% of the main UK
market by value.
The Deutsche Numis Smaller Companies 1000 Index
targets the bottom 2% of the main UK market (XIC)
by value.
The Deutsche Numis Large Cap Index targets the
top 80% of the UK main list by value.
The Deutsche Numis Alternative Markets Index covers
all companies listed on qualifying alternative markets.
The Deutsche Numis All Share Index contains all fully
listed stocks plus all stocks listed on AIM.
Discount/Premium
If the share price of an investment trust is lower than
the NAV or Adjusted NAV per share, the shares are
said to be trading
Annual Report 2024 | Miton UK MicroCap Trust plc | 93
Key Performance Indicators (“KPIs”)
KPIs are a short list of corporate attributes that are
used to assess general progress of the business and
are outlined in this Report on page 19.
Investment Association (“IA”)
The IA is the trade body that represents UK
investment managers. Premier Miton Group plc is
amember.
Northern Trust Secretarial Services (UK) Limited
(“NTSSL”)
NTSSL is the Company Secretary for the Company.
Net Asset Value per Ordinary Share or Statutory
NAV (“NAV”) or Adjusted Net Asset Value per
Ordinary Share (“Adjusted NAV”)
The NAV is shareholders’ funds expressed as an
amount per individual share. Shareholders’ funds are
the total value of all of the Company’s assets, at their
current market value, having deducted all liabilities
and prior charges at their par value, or at their asset
value as appropriate. The NAV per share is calculated
by dividing the shareholders’ funds by the number
of Ordinary Shares in issue excluding treasury shares.
The Adjusted NAV is the Statutory NAV presented in
the financial statements adjusted to exclude the fair
value of warrants held by the Trust. The fair value of
warrants is calculated by Black Scholes. See Note 12
Fair Value Hierarchy Level 3 investments on page 72.
Ongoing Charges
As recommended by the AIC in its guidance,
ongoing charges are the Company’s annualised
revenue and capital expenses (excluding finance
costs and certain non-recurring items) expressed as
a percentage of the average monthly net assets of
the Company during the year.
Ongoing Charges
Calculation Page
30 April
2024
30 April
2023
Management fee 67 392 597
Other administrative expenses 68 672 676
Less non recurring fees (87) (86)
Total management fee and
other administrative expenses
(annualised) 977 1,187 (a)
Average net assets in the year 49,079 69,083 (b)
Ongoing charges (c=a/b)*100 1.99% 1.72% (c)
Peer Group
The Company is part of the AIC’s UK Smaller
Companies sector whose members invest at least
80% of their assets in UK Smaller Companies.
As at 30 June 2024, the following were constituents
of this peer group:
•
Aberforth Smaller Companies Ord
•
Aberforth Split Level Income Ord
•
abrdn UK Smaller Companies Growth Ord
•
Athelney Trust Ord
•
BlackRock Smaller Companies Ord
•
BlackRock Throgmorton Trust Ord
•
Crystal Amber Ord
•
Downing Strategic Micro-Cap Inv. Ord
•
Henderson Smaller Companies Ord
•
Invesco Perpetual UK Smaller Ord
•
JPMorgan UK Small Cap Growth & Income
•
Marwyn Value Investors Ord
•
Miton UK Microcap Ord
•
Montanaro UK Smaller Companies Ord
•
Odyssean Investment Trust Ord
•
Onward Opportunities Ord
•
Oryx International Growth Ord
•
Rights & Issues Investment Trust Ord
•
River and Mercantile UK Micro Cap Ord
•
Rockwood Strategic Ord
•
Strategic Equity Capital Ord
•
SVM UK Emerging Ord
•
Worsley Investors Ord
Price to Book Ratio
The price to book ratio is a valuation measure which
divides a company’s share price by its asset value
per share. Lower values can imply that a company
is either an overlooked opportunity or a poorly
performing business, Higher values may suggest
a company is overvalued, unless its returns are
sustainably high.
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Redemption Pool
In the event that the Board elects to calculate the
Redemption Price through the use of a Redemption
Pool, the pool of cash, assets and liabilities to be
created by the Directors in respect of a particular
Redemption Point and allocated to the Ordinary
Shares which are the subject of Redemption
Requests for that Redemption Point.
Senior Independent Director (“SID”)
The SID is a non-executive director who can be
contacted by investors to discuss a matter of
governance when it concerns the Chairman and the
normal practice cannot be followed. The Company’s
SID is Davina Walter.
Tap Issue
A tap issue is a procedure that allows the Company
to issue new shares at the current market value
when the share price is at a premium to NAV. The
Company is authorised to issue up to 10% of its
share capital without the need for an open offer.
This enables the Company to invest in attractive
investment opportunities and to issue new shares on
a flexible and cost-effective basis.
Total Assets
Total assets include investments, cash, current
assets and all other assets. An asset is an economic
resource, being anything tangible or intangible that
can be owned or controlled to produce value and to
produce positive economic value. Assets represent
the value of ownership that can be converted
into cash. The total assets less all liabilities will be
equivalent to total shareholders’ funds.
Total Return – NAV and Share Price Returns
Total return statistics enable the investor to make
performance comparisons between investment
trusts with different dividend policies. The Total
Return measures the combined effect of any
dividends paid, together with the rise or fall in the
share price or NAV or Adjusted NAV.
Glossary continued
This is calculated by the movement in the share
price or NAV plus the dividends paid by the
Company assuming these are re-invested in the
Company at the prevailing NAV.
Adjusted NAV
Total Return Page
30 April
2024
30 April
2023
Closing Adjusted NAV per
share (pence) ii 55.79 64.20
Add back final dividend
for the year ended 30April
2023 (2022) (pence) 70 0.15 0.15
Closing Adjusted NAV
(pence) 55.94 64.35 (a)
Opening Adjusted NAV per
share (pence) ii 64.20 91.05 (b)
NAV total return
(c = (a-b)/b) (%) (12.9%) (29.3%) (c)
Share Price
Total Return Page
30 April
2024
30 April
2023
Closing share price (pence) ii 50.50 59.50
Add back final dividend
for the year ended 30April
2023 (2022) (pence) 70 0.15 0.15
Adjusted closing
share price (pence) 50.65 59.65 (a)
Opening share price
(pence) ii 59.50 86.50 (b)
Share price total
return unadjusted
(c = (a-b)/b) (%) (15.1%) (31.0%) (c)
Share price total return
adjusted (%) (14.9%) (31.1%)*
* Based on NAV/share price movements and dividends being reinvested at
the relevant cum dividend NAV/share price during the period. Where the
dividend is invested and the NAV/share price falls, this will further reduce the
return or, if it rises, any increase will be greater. The source is Morningstar who
have calculated the return on an industry comparative basis.
Yield Stock
Yield stocks pay above-average dividends to
shareholders. If the dividend grows, and the yield
on the share remains constant, the share price will
increase. Companies which grow their dividends
faster than average are capable of delivering faster
share price growth.
Annual Report 2024 | Miton UK MicroCap Trust plc | 95
Investment Manager
Premier Fund Managers Limited
Eastgate Court
High Street
Guildford
Surrey GU1 3DE
Telephone: 01483 306 090
www.premiermiton.com
Authorised and regulated by the Financial Conduct
Authority
Alternative Investment Fund Manager
Premier Portfolio Managers Limited
Eastgate Court
High Street
Guildford
Surrey GU1 3DE
Telephone: 01483 306 090
www.premiermiton.com
Authorised and regulated by the Financial Conduct
Authority
Company website
www.mitonukmicrocaptrust.com
Secretary and Registered Office
Northern Trust Secretarial Services (UK) Limited
50 Bank Street
Canary Wharf
London E14 5NT
Telephone: +44 (0) 207 982 2000
Depositary and Custodian
Northern Trust Investor Services Limited
50 Bank Street
Canary Wharf
London E14 5NT
Authorised by the Prudential Regulation Authority
(“PRA”) and regulated by the FCA and PRA
Company Administrator*
Northern Trust Global Services SE
50 Bank Street
Canary Wharf
London E14 5NT
* Certain administrative functions have been delegated to Northern Trust
Global Services SE by Premier Portfolio Managers Limited.
Registrar and Transfer Office
Link Group
The Registry
Central Square
29 Wellington Street
Leeds LS1 4DL
Telephone: 0371 664 0300
(Calls are charged at the standard geographic
rate and will vary by provider. Calls outside the
United Kingdom will be charged at the applicable
international rate)
Email: enquiries@linkgroup.co.uk
Website: www.linkassetservices.com
Auditor
BDO LLP
55 Baker Street
London W1U 7EU
Solicitor
Stephenson Harwood LLP
1 Finsbury Circus
London EC2M 7SH
Stockbroker
Peel Hunt LLP
100 Liverpool Street
London EC2M 2AT
Contact Details of Advisers
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Notes
Shareholder warning
Many companies are aware that their shareholders have received unsolicited phone calls or
correspondence concerning investment matters. These calls typically come from fraudsters operating in
‘boiler rooms’ offering investors shares that often turn out to be worthless or non-existent, or an inflated
price for shares they own. While high profits are promised, those who buy or sell shares in this way usually
lose their money. These fraudsters can be very persistent and extremely persuasive. Shareholders are
therefore advised to be very wary of any unsolicited advice, offers to buy shares at a discount or offers of
free company reports.
It is very unlikely that either the Company or the Company’s Registrar would make unsolicited telephone
calls to shareholders and that any such calls would relate only to official documentation already circulated
to shareholders and never in respect of investment ‘advice’.
If you have been contacted by an unauthorised firm regarding your shares, you can report this using the
FCA helpline on 0800 111 6768 or by using the share fraud reporting form at:
www.fca.org.uk/consumers/scams.
Eastgate Court
High Street
Guildford GU1 3DE
Source: Morningstar from 30/04/2015 to 30/04/2024.
Company performance since launch on 30 April 2015
0
50
100
150
200
250
Apr-15
Oct-15
Apr-16
Oct-16
Apr-17
Oct-17
Apr-18
Oct-18
Apr-19
Oct-19
Apr-20
Oct-20
Apr-21
Oct-21
Apr-22
Oct-22
Apr-23
Oct-23
Apr-24
Percent
Deutsche Numis
SC 1000 Index
MINI Share price
MINI Adjusted NAV