Company Announcements

MITON UK MICROCAP TRUST PLC

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 APRIL 2021

The Directors present the Annual Financial Report of Miton UK MicroCap Trust plc ("the Company") for the year ended 30 April 2021. The full Report and Accounts will be available via the Company's website, www.mitonukmicrocaptrust.com, or by contacting the Company Secretary on 01392 477500.

Miton UK MicroCap Trust plc is an investment trust quoted on the London Stock Exchange ("LSE") under the ticker code MINI. It is referred to as the Company, MINI or the Trust in the text of this Report. The Board, which consists of five independent Directors, appoints the Investment Manager and is responsible for monitoring the Trust's performance.

STRATEGIC REPORT

RESULTS FOR THE YEAR TO 30 APRIL 2021

·      Over the year, the Ordinary share NAV moved from 51.33p on 30 April 2020 to 104.83p on 30 April 2021, a total return including dividends reinvested of 104.4%.

·      The Ordinary share price moved from 43.35p at 30 April 2020 to 104.50p at 30 April 2021, a total return including dividend reinvested of 141.5%. As at close of business on 2 July 2021, the closest date to this Report, the Ordinary share NAV was 103.20p and the share price was 94.00p.

·      The net Revenue return was a loss of £169,000 this year (0.14p) per share as costs were greater than the revenue received. This compares to a positive revenue return of £81,000 last year, or 0.06p per share.

·      The Company offers all investors the opportunity to redeem their shareholding each year, which has the advantage of clearing any overhanging sellers and is designed to ensure that the market price of the Company does not deviate too far from the underlying NAV. Redemption requests in relation to 2,671,198 ordinary shares, or 2.4% of the Company's share capital, at 30 April 2021, were received for the 30 June 2021 Redemption Point and are not reflected in the summary below. The redemption mechanism is explained further below.

·      The Company does not have a formal benchmark but, for comparison, it is intended that the return on the FTSE AIM All Share Index and the Morningstar Investment Trust UK Smaller Companies sector will be published on the monthly factsheet and in the Company's annual and interim reports. Returns may diverge from any of these indices for a significant period.

SUMMARY OF RESULTS

* Alternative Performance Measure (APM) Details are provided in the Glossary below.

# The ongoing charges are calculated in accordance with AIC guidelines.

CHAIRMAN'S STATEMENT

This report covers the sixth year of the Trust ending 30 April 2021, which was a period of robust stock market recovery as central banks and governments

flooded their economies with plentiful liquidity to offset the effects of the Covid pandemic.

Returns over the year

In May 2020, many UK-quoted microcaps started the Trust's year standing at very overlooked valuations as many investors had steered clear of UK domestic stocks during the uncertain period leading up to the Brexit Agreement. Furthermore, most UK quoted microcap share prices had fallen yet further at the start of the global pandemic.

Over the year to April 2021, global stock markets appreciated robustly. UK smallcap indices performed particularly strongly with the FTSE SmallCap Index (excluding Investment Companies) up 69.5% in total return terms, and the FTSE AIM All Share Index up 59.8%. The Net Asset Value ("NAV") total return on the same basis of the Trust was 104.6% over the same period, which includes last year's final dividend payment approved by shareholders at the AGM. This was the best annual performance of the Trust in its six year life.

A proportion of the Trust's annual running costs are set against revenue (principally dividend income). In the past, these figures have been quite similar in magnitude and it has always been anticipated that capital appreciation would be the principal driver of the Trust's return. During the year under review, numerous UK quoted companies reduced or ceased paying dividends, so this year the costs were greater than the dividend revenue received. The NAV total

return outlined above includes a revenue deficit per share of 0.20p for the year, which compares to a revenue surplus of 0.06p per share last year.

Returns since the Trust was first listed in April 2015

In six years since the Trust was first listed, the UK stock market has been through a fairly turbulent period. From June 2016 onwards, the UK decision to leave the EU initiated a long period of uncertainty. The weakness of UK-quoted microcap share prices was further compounded by the added impact of the global pandemic.

Over the six year period, in capital terms, the FTSE All Share Index has only appreciated 6.0% despite the Brexit agreement in December, although with six years of dividend income its total return over the period was 32.0%. Quoted smallcaps have outperformed this Index, with the total return of the FTSE SmallCap Index (excluding Investment Trusts) being 71.3% and that of the FTSE AIM All Share Index being 84.1% despite the uncertainties over the six year period. The Trust's NAV total return including dividend income paid to shareholders over the same period was 118.0%.

Share Redemptions

Since the Trust's share price reflects the balance of buyers and sellers, when there is an imbalance, the Trust's share price can diverge from its NAV.

Over the year to April 2021 the Trust's share price discount to its daily NAV averaged 9.5%. As investors became more upbeat about the Trust's prospects and the Brexit uncertainties fell away, the Trust's share price discount narrowed, and the Trust finished the year with its share price much in line with its NAV.

In order to help to address any persistent imbalances between buyers and sellers, the Trust offers all shareholders the option to redeem their shares each year.

This year, redemption requests were made over 2,671,198 shares at the closing date of 2 June 2021. As announced on 30 June, the Board resolved that these shares would be redeemed for cash at a value of 102.38 pence per share, to be settled on or around 14 July 2021.

Board changes

As announced with the half year results, Bridget Guerin was appointed to the Board from 1 December 2020.

Prospects

The yield on government debt has progressively fallen over the decades, which has been a tailwind for the share prices of major technology stocks,

growth equities and other long duration assets. Yet over recent months, the prior trend appears to have been breaking down. Whilst global stock markets

have continued to rise this year, the share prices of UK microcaps have tended to outperform ahead of most others.

The recent trend aligns with those of earlier decades, when the mainstream UK indices outperformed the US exchange for an extended period, and the share prices of UK microcaps outperformed substantially. Whilst we shouldn't necessarily expect UK microcaps to outperform every year, this sector appears well-placed for a period of premium returns.

Andy Pomfret

Chairman

5 July 2021

INVESTMENT MANAGER'S REPORT

Who are the fund managers of the Trust?

Premier Miton Group plc is an independent, listed fund management company, formed from the merger of Premier Asset Management and Miton Group in November 2019, with a well established reputation for successfully managing UK-quoted smaller company portfolios over the longer term. The Trust's board appointed Miton Group as Investment Manager when it was listed in April 2015.

The day-to-day management of the Trust's portfolio continues to be carried out by Gervais Williams and Martin Turner, who came together as a team in April 2011.

Gervais Williams

Gervais joined Miton in March 2011 and is now 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 also a board member of the Quoted Companies Alliance and a member of the AIM Advisory Council.

Martin Turner

Martin joined Miton in May 2011. Martin 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 main contributors to the Trust's outperformance over the year?

The year to April 2021 was a period when numerous share prices around the world recovered from the pandemic setback, and often moved to new highs. The total return on the FTSE SmallCap Index (excluding investment companies) index was 69.5% and the FTSE AIM All Share Index was 59.8%.

Whilst economic conditions were challenging for some companies during the global pandemic, for others the nature of change offered them much greater potential than before. In the case of Avacta for example, they found their affimer technology which may significantly reduce the side effects of chemotherapy in time, was also potentially very suited to use in lateral flow tests for Covid. Synairgen found that their treatments that helped asthmatics combat the cold virus, turned out to be very helpful to lessen the disease for those with shortness of breath due to Covid.

The abrupt reduction in demand during the pandemic-induced recession, followed by an equally abrupt renewed surge of demand with the economic stimulus, has led to shortage of certain materials, such as copper, leading to a very strong share price appreciation of Jubilee Metals in the year. The appreciation of asset prices was particularly evident amongst cryptocurrencies, and this led to a very substantial rise in the share price of Argo Blockchain.

One of the features of quoted microcaps, is that they start with modest market capitalisations. The potential upside from the changes in their markets can drive up their share prices by multiples of the price at purchase. The four stocks above, contributed over 27% of the Trust's total returns of 104.4% during the year to April.

Clearly there were some holdings that detracted from the Trust's return during the year. The most disappointing was Kromek Group, a company which is improving the images of medical scanners, and also identifies radioactive substances for the security forces. In the case of Kromek, they were unable to deliver a major order due to the pandemic travel restrictions, so the potential cash payback has been deferred. The Trust has largely exited from the holding, although it still detracted 0.9% in the year. There were not many other significant detractors, although collectively 7 Digital, Tekmar Group, Microsaic Systems and TP Group detracted 1.0% from the Trust's return in the year.

Why was the Trust's revenue per share negative over the year?

The Trust's strategy particularly seeks to identify quoted microcaps that are well positioned to generate a plentiful surplus of cash in the short to medium-term. As these stocks mature, their cash surpluses put them in a position to either step up reinvestment in their business, or to start paying initial and growing dividends to investors. When the Trust's holdings succeed and they are in a position to start paying significant dividends to investors, their share prices have normally also risen substantially. In many cases, they have grown to beyond being microcaps, and may have lesser prospects for substantial share price appreciation. Therefore, it is usual for these holdings with dividend income to be sold from the Trust's portfolio, so the capital can be reinvested in a number of other immature microcaps with much greater potential upside.

Since dividend income contributes the bulk of Trust's revenue each year, and as the Trust normally takes profits on these stocks, the overall annual revenue is relatively modest. During the global recession, numerous companies opted either to hold back from paying dividends, or in some cases cut their prior distributions, so the Trust's revenue fell during the year under review.

The Trust's principal cost is the management fee, with one quarter of this figure expensed against the Trust's revenue, and three quarters expensed against

the Trust's NAV each year. Since the Trust's revenue per share is relatively modest, it was slightly smaller than its revenue expenses to the extent that the revenue deficit per share for the year under review was 0.2p, which compares with a revenue surplus of 0.06p last year. The Directors have determined that the remaining revenue reserves should paid as a dividend to shareholders this year. The Directors have determined that a final dividend of 0.01p should be recommended to shareholders for approval at this year's AGM. As the revenue per share is in deficit this year, this dividend has been funded from past revenue reserves.

It has always been envisaged that the bulk of the Trust's return would be via capital appreciation. Over the six years since the Trust was first listed, the aggregate appreciation of the NAV has been 56p, whilst the net revenue per share that funds the Trust's dividend in aggregate has been just 2p.

What are the main factors that have driven the Trust's returns since it first listed in April 2015?

In the UK, an analysis of stock market data since 1955 reveals that the best performing group of stocks has been quoted microcaps, and, most especially, when combined with a bias towards those standing on low, overlooked valuations. Whilst stocks with these characteristics have not outperformed continuously, their strong performance has been a persistent trend through a variety of economic and stock market conditions. For this reason, the Trust's strategy focuses on quoted microcaps that are standing on overlooked valuations. When these succeed, their share prices can rise by much greater percentages than most mainstream stocks, as they did in the year under review.

In the past, the rise of the share prices of overlooked microcaps have often lagged the returns of higher profile, more volatile stocks at times of abundant market liquidity. Yet eventually, the share prices of stocks that are forecast to grow strongly tend to be more vulnerable when economic conditions change. The dot.com boom prior to the millennium is a good example of how much the share prices of stocks that are forecast to grow rapidly can appreciate, but it is also a good example of how quickly and hard they can subsequently fall.

Over the six years since the Trust's IPO, the share prices of stocks that are forecast to grow rapidly have often been the best performers, although many of the stocks in the Trust's portfolio on lower valuations have also performed well in the year under review as their prospects greatly improved with the changing economic and market trends of the pandemic. Furthermore, to some degree, as the open-ended nature of the Brexit uncertainty has come to an end, investors are more willing to contemplate investing in UK quoted microcaps.

Overall, we believe that the true potential of the Miton UK Micro Cap Trust strategy has not yet been fully evident. Even so, the Trust's NAV total return over the six years to April 2021 was 118.0% which equates to an annualised total return of 13.9% per annum. This compares favourably with the returns on the various UK smaller company indices.

Although the Trust has delivered a major increase in NAV over the last year, we continue to believe that the prospects for a strategy seeking to participate in the outperformance of UK quoted microcaps standing on overlooked valuations, is still overdue a period of performance catch-up compared to stocks that are already standing on elevated valuations because they are forecast to grow strongly.

How is the climate change agenda reflected in the Trust's portfolio?

Whilst some fund strategies are dedicated to investing solely in low-carbon companies that are already close to meeting the climate change agenda, the interconnected nature of the corporate world means that many of these still have a reliance on others that are less well aligned. Specifically, we believe that the financial markets have a major role in actively engaging with the less-aligned companies. Specifically, each needs to make an assessment of their current carbon footprints and then plan to steadily reduce it in future. Normally, evolving a business towards a zero carbon future, will involve very substantial investment, so access to capital will be an important component of these plans.

As managers of the Miton UK Microcap Trust we have a long history of actively highlighting areas of potential hazard with the management teams of quoted companies, so that they can be considered, and, if they agree with us, the risks moderated. In that regard, we actively quiz management teams as to how they are planning to address the climate change agenda, and often give best practice examples of others' actions. This strategy does involve investing and engaging with some companies that currently have poor metrics, on the basis that reductions in the carbon footprints of these kinds of companies are essential for the UK economy as a whole to meet its zero carbon commitment.

In our opinion, progressively over time, many of the current activities of businesses will either become unviable as the cost of carbon emissions becomes prohibitive, or customer preferences result in a vertiginous decline in demand. Thus, all companies will need to embrace change and step up investment, so they remain sustainable in all senses of the word. For some, moving ahead of others may well offer commercial advantage, and hence enhanced returns. Conversely, some may misjudge how quickly others respond, and carry the associated downside risks. The bottom line is that the Trust's portfolio still has shareholdings in all sorts of businesses that we genuinely believe embrace the need for change and, in our view, will be successful at addressing the climate change agenda. If they succeed and progressively lower their carbon footprints, then we believe this progress will not only actively assist the UK to become a low carbon economy, but also deliver premium returns for shareholders as well.

What impact would a sustained pick up in global inflation have on the Trust?

Following the surge of economic stimulus during the global pandemic, it is evident that there are all sorts of industry constrictions that are now leading to renewed inflationary pressures. At this stage, it is unknown whether these bottlenecks will prove to be temporary or long-term in nature.

If inflation does prove to be more embedded, then the yields of long-dated bonds will probably rise, which could weigh on the valuations of all asset prices, including stock markets. At the margin, a rise in long-dated bonds might make it harder for some companies with major debt burdens, or those that operate at a loss over many years, to access borrowings when their current facilities expire. Most of the stocks in the Trust's portfolio would be largely unaffected, as they tend to have strong balance sheets with little debt and are not expected to be persistently loss making.

If inflation does become entrenched, then at the time of an economic downturn it might reduce the scope for central banks or governments to inject economic stimulus in future. Such a change might put more companies at risk of insolvency. One of the advantages of being listed, is that companies can raise external capital and acquire previously overborrowed, but otherwise viable businesses from the receiver. These kinds of acquisitions often bring in additional skilled staff and generate attractive returns on investment, greatly enhancing the prospect of generating plentiful cash in the future. Sometimes these transactions can be potentially transformative for quoted microcaps, because they can be substantial relative to their diminutive size.

Overall, whilst a sustained increase in inflation would, to some degree, make it harder for nearly all businesses, generally we believe that quoted microcaps have some offsetting factors that could greatly enhance their prospects.

How unusual is the UK quoted microcap investment universe?

Prior to a sustained period of globalisation, returns on mainstream stock markets were not very different from that of underlying inflation. During these decades, institutions actively chose to allocate capital to the UK-quoted small and microcaps universe because they needed to access the premium returns they offered.

During the period of globalisation, however, asset returns of all kinds have been unusually plentiful, so institutional interest for quoted small and microcap stocks was crowded out by larger weightings in long-duration assets such as US technology growth stocks. Over recent decades, many small and microcap stock markets around the world have closed for lack of institutional interest.

In contrast to others, the UK government has sustained the support for a quoted small and microcap exchange via dedicated tax exemptions, because they generate both more skilled employment and increased productivity than mainstream companies, and ultimately contribute additional tax take. Hence, as the ultra-low yields on bonds depress the prospective returns on most mainstream assets, the premium returns on quoted small and microcaps is likely to lead to renewed interest from institutional investors.

Generally, we believe that the prospects for the UK economy may not differ much from others, but the vibrant universe of UK quoted small and microcaps imply its prospective returns could be very different. Almost half of all the companies listed in the UK have a market capitalisation of less than £150m which is a major point of difference for the UK market compared with most others.

What are the prospects for the Trust?

The valuation of government debt around the world has risen considerably, in a trend that has persisted for decades. The valuation of the full range of assets has also increased, with the valuations of numerous technology companies and unicorn stocks probably rising the most. Since the US has so many quoted businesses with rapid growth expectations like these, the valuation of the US stock market as a whole has risen more than others, and it has delivered outstanding returns over recent decades.

The UK stock market mainly comprises companies that tend to grow less rapidly. Hence, the valuation of the UK stock market has not risen as much as the US. Furthermore, the uncertainties of the Brexit over the last five years has also suppressed investor enthusiasm, and so the valuation of all sorts of UK quoted microcaps are still undemanding, even after the recent period of performance catch-up.

Following the global pandemic, the whipsaw in global demand has led to shortages of supply in a wide range of individual products. This has initiated a period of inflation, and the valuation of government debt has peaked out somewhat. The recent reversal in bond valuations tends to favour profitable companies that generate surplus cash, as they have greater resilience than technology companies that often need plentiful capital to fund their growth. The recent period has also favoured younger businesses, as many of these operate in immature sectors, where prospects are less reliant on ongoing global growth. The Trust's portfolio includes numerous younger businesses that are anticipated to generate substantial surplus cash, and hence the recent economic and market trends have been reflected in a period of substantial outperformance. Specifically, it is reassuring to note just how well the Miton UK Microcap Trust's strategy can perform at a time of disappointing global growth and rising inflationary pressures.

Inflationary pressures may fluctuate over the coming quarters, and the stock exchanges themselves might oscillate as the market trend of recent decades runs out. In time, we expect the forthcoming market trends to resemble those of the decades prior to globalisation, when UK quoted microcaps substantially outperformed. The Miton UK Microcap Trust's strategy was set up in anticipation of this potential. If the economic and market patterns are fundamentally changing, then the Trust's strategy is well-set to deliver a long period of premium returns.

Gervais Williams and Martin Turner

5 July 2021

BUSINESS MODEL

Business and Status of the Company

MINI was incorporated on 26 March 2015 and its Ordinary shares were listed 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 2021 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 in the full report 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.

PORTFOLIO INFORMATION

AS AT 30 APRIL 2021

^* Source: Thomson Reuters. Dividend Yield based on historic dividends and therefore not representative of future yield.

Actual annual income by sector (%)

The London Stock Exchange ("LSE") assigns all UK quoted companies to an industrial sector and frequently to a stock market index. The LSE also assigns industrial sectors to many international quoted equities as well, and those that have not been classified by the LSE have been assigned as though they had. The portfolio as at 30 April 2021 is set out in some detail in the full report, in line with that included in the Balance Sheet. The investment income above comprises all of the income from the portfolio as included in the Income Statement for the year ended 30 April 2021. The AIM and Aquis markets are both UK exchanges specifically set up to meet the requirements of smaller listed companies.

The first two tables above illustrate the overall sector weightings of the Company's capital at the end of the year, and the income received by the Company over the year. The second pair of tables illustrates the LSE stock market index within which portfolio companies sit, and the source of the income received by the Company over the year. Investments for the Company's portfolio are principally selected on their individual merits. As the portfolio evolves, the Investment 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 below, and details regarding risk diversification and other policies are set out each year in the Annual Report.

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:

·      The discount/premium of the share price in relation to the NAV

At times, the number of shareholders looking to transact in the Company'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 and the Company's share price diverges from the daily NAV. The Company has an objective to keep this divergence to a minimum.

Over the year under review, the Company's share price has traded on average [9.4%] below its daily NAV. However, towards the year end as performance improved markedly, the share price traded close to NAV and following the year end, at a premium to NAV which allowed the Company to issue a small amount of stock to meet demand.

·      Ongoing charges

The ongoing charges on the Ordinary shares for the year to 30 April 2021 amounted to 1.6% (30 April 2020: 1.6%) of total assets. Further details are set out in the glossary in the full report.

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 Committee, 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 in the Annual Report.

Listed below is a summary of the principal risks identified by the Board and actions taken to mitigate those risks.

SHARE CAPITAL

Share Issues

At the Annual General Meeting held on 22 September 2020, the Directors were granted the authority to allot Ordinary shares up to an aggregate nominal amount of £13,838 (representing 13,838,000 Ordinary shares) on a non pre-emptive basis. The Company put a new blocklisting facility into place towards the end of the financial year and following the year end the Company issued 650,000 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 22 September 2021. Proposals for the renewal of the authority will be included within the Notice of AGM, to be issued in due course.

Share Redemptions

Valid redemption requests were received under the Company's redemption facility for the 30 June 2020 Redemption Point in relation to 27,061,157 Ordinary shares, representing 19.56% of the Company's issued share capital. This was carried out by way of a Redemption Pool at a price of 55.31 pence per Ordinary share. The number of valid redemption requests received under the redemption facility for the 30 June 2021 Redemption Point was announced via a regulatory announcement on 3 June 2021, namely in relation to 2,671,198 Ordinary shares, representing 2.4% of the issued share capital.

Purchase of Own Shares

At the Annual General Meeting of the Company held on 22 September 2020, the Directors were granted the authority to buy back up to 20,736,553 Ordinary shares. No Ordinary shares have been bought back under this authority. 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 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.

Current Share Capital

As at the year end, there were 111,274,758 Ordinary shares and 50,000 Management shares (see note 4 to the financial statements) in issue. Further details of the Company's share capital are set out in note 4 to the financial statements in the full report. This includes details of the 2021 redemption of Ordinary shares.

The rights attached to each share class are set out in the full report.

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.

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. Unfortunately, due to the restrictions which were in place in September 2020 as a result of the Covid-19 pandemic, it was not possible to welcome shareholders in person at last year's AGM. The Board hopes that, Government restrictions permitting, shareholder will be able to attend the 2021 AGM;

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 the Company received from shareholders help the Company evolve its reporting, aiming to render the reports and updates transparent and understandable;

Shareholder concerns - In the event 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. 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.

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 in the full report.

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 Custodians and the Brokers, and receives regular reporting from them, both through the Board and committee meetings, as well as outside of the regular meeting cycle. Their advice, as well as their needs and views, are regularly taken into account. The Audit and 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 Audit and 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 below.

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@linkgroup.co.uk

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 renewal and mechanics of the annual redemption facility, the recruitment of an additional Non-executive Director, and the decision to work with the Investment Manager to reduce the annual management fee from 1.0% to 0.9% where the market capitalisation of the trust is below £100m, and from 0.9% to 0.8% above that level.

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 set out in the full report

The Board seeks to appoint the appropriate service providers and evaluates their remit, performance and cost effectiveness on a regular basis as described in the full report. 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.

MANAGEMENT, SOCIAL, ENVIRONMENTAL AND DIVERSITY MATTERS

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 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 the full report 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 Bank of New York Mellon (International) Limited ("Bank of New York Mellon") as its Depositary and Custodian under an agreement dated 8 April 2015. The annual fee for depositary services due to Bank of New York Mellon is 0.025% per annum of gross assets, subject to a minimum fee of £15,000.

Administrative Services are provided by Link Alternative Fund Administrators Limited under an agreement dated 8 April 2015. The Administration Agreement may be terminated by either party on at least six months' prior written notice.

Continuing Appointment of the Investment Manager

The Board, through the Audit and Management Engagement Committee, keeps the performance of the Investment Manager under continual review, and the Audit and 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 of shareholders.

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, the Company has no direct impact on the community or the environment, and as such has no environmental, human rights, social or community policies.  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 within the full report.

Gender Diversity

The Board of Directors of the Company comprises one female and three male Directors.  The Company's Diversity Policy acknowledges the benefits of greater diversity, including gender diversity, and remains committed to ensuring that the Company's Directors bring a wide range of skills, knowledge, experience, backgrounds and perspectives. 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

Andy Pomfret

Chairman

5 July 2021

Directors

Andrew (Andy) Pomfret - Chairman

Peter Dicks - Chairman of the Audit and Management Engagement Committee and Senior Independent Director

Jeannette (Jan) Etherden

Bridget Guerin

Ashe Windham, CVO

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 above, including the risks arising from COVID-19 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. In addition, the Directors have assessed the impact of the Company's annual redemption facility on its cash reserves. The Directors are satisfied that the impact of the 2021 redemption amounting to 2,671,198 shares, and which will be settled in cash, does not constitute a risk to the Company's going concern status. 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 June 2024. 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 this assessment.

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, many of the expenses vary in line with the size of the Company. In addition to considering the principal risks above 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 the Company;

• 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.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations. Company law requires 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 international accounting standards in conformity with the requirements of the Companies Act 2006. 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 judgements and accounting estimates that are reasonable and prudent;

• state whether they have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006, 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 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 provides 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 a 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 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

Andy Pomfret

Chairman

5 July 2021

NON-STATUTORY ACCOUNTS

The financial information set out below does not constitute the Company's statutory accounts for the year ended 30 April 2020 or the year ended 30 April 2021 but is derived from those accounts. Statutory accounts for the year ended 30 April 2020 have been delivered to the Registrar of Companies and those for the year ended 30 April 2021 will be delivered in due course. The Auditor has reported on those accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the Auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The text of the Auditor's report can be found in the Company's full Annual Report at:. www.mitongroup.com/private/fund/miton-uk-microcap-trust-plc/

INCOME STATEMENT

of the Company for the year ended 30 April 2021

STATEMENT OF CHANGES IN EQUITY

of the Company for the year ended 30 April 2021

The notes within the full Report form part of these financial statements.

BALANCE SHEET

of the Company as at 30 April 2021

These financial statements were approved and authorised for issue by the Board of Miton UK MicroCap Trust plc on July 2021 and were signed on its behalf by:

Andy Pomfret

Chairman

5 July 2021

Company No: 09511015

The notes on the pages below form part of these financial statements.

STATEMENT OF CASH FLOWS

for the Company for the year ended 30 April 2021

The notes on the pages below form part of these financial statements.

NOTES TO CONDENSED FINANCIAL STATEMENTS

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 Company's financial statements have been prepared in conformity with international accounting standards in conformity with the requirements of the Companies Act 2006. 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 and are satisfied that the Company has adequate re-sources to continue in operational existence for a period of at least 12 months from the date when these financial statements were approved.

In making the assessment, the Directors have considered the likely impacts of the current COVID-19 pandemic on the Company, operations and the investment portfolio.

The Directors noted that the Company, with the current cash balance and holding a portfolio of listed investments, is able to meet the obligations of the Company as they fall due. The current cash balance plus available additional borrowing, through the revolving credit facility, enables the Company to meet any funding requirements and finance future additional investments. The Company is a closed-end fund, where assets are not required to be liquidated to meet day to day redemptions.

The Directors have completed stress tests assessing the impact of changes in market value and income with associated cash flows. In making this assessment, they have considered plausible downside scenarios. These tests were driven by the possible effects of continuation of the COVID-19 pandemic but, as an arithmetic exercise, apply equally to any other set of circumstances in which asset value and income are significantly impaired. The conclusion was that in a plausible downside scenario the Company could continue to meet its liabilities. Whilst the economic future is uncertain, and the Directors believe that it is possible the Company could experience further reductions in income and/or market value, the opinion of the Directors is that this should not be to a level which would threaten the Company's ability to continue as a going concern.

The Directors, the Investment Manager and other service providers have put in place contingency plans to minimise disruption. Furthermore, the Directors are not aware of any material uncertainties that may cast significant doubt on the Company's ability to continue as a going concern, having taken into account the liquidity of the Company's investment portfolio and the Company's financial position in respect of its cash flows, borrowing facilities and investment commitments (of which there are none of significance). Therefore, the financial statements have been prepared on the 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.

Accounting Developments

Accounting developments in the year under review, the Company has applied amendments to IFRS issued by the IASB. These include annual improvements to IFRS, changes in standards, legislative and regulatory amendments, changes in disclosure and presentation requirements. 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 2021 as follows:

·      Interest Rate Benchmark Reform - IBOR 'phase 2' (Amendments to IFRS 9,IAS 39 and IFRS 7);

·      IAS1 Presentation of Financial Statements and IAS 8 Accounting Policies, changes in Accounting Estimate and Errors (Amendment- Disclosure Initiative - Definition of Material); and

·      Revisions to the Conceptual Framework for financial Reporting.

The adoption of the changes to accounting standards has had no material impact on these or prior years' financial statements.

Standards issued but not yet effective.

There are no standards or amendments not yet effective which are relevant or have a material impact on the Company.

Critical Accounting Judgements and Key Sources of Estimation Uncertainty

The preparation of financial statements in conformity with IFRS 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 the most significant 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 recognition of expenses between capital and income.

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. There were no significant accounting estimates or judgements that had a significant impact on the financial statements in the current period.

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 of Directors.

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 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 capital items.

Warrants gives the Company the right, but not the obligation, to buy common ordinary shares in an investee company at a fixed price for a pre-defined time period. The fair value 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.

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. They are initially recorded at cost (being premium paid to purchase the option) and are subsequently valued at fair value at the close of business at the year end 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 terms.

Cash and Cash Equivalents

For the purposes of the Balance Sheet, cash comprises cash in hand and demand deposits. 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.

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 cost.

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 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% of its management fee and 100% (2020: 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 (2020:100%) and included in the capital column of the Income Statement.

Expenses incurred directly in relation to issue of shares are charged to share premium.

Expenses incurred in the maintenance of capital, redemption the 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 timing 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.

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 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. 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. 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

-     share buy backs

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.

2. Income

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.

The 50,000 Management shares do not participate in the returns of the Company.

4. Share Capital

The rights attaching to each share class are set out within the full Report.

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. Accordingly, the Ordinary shares have been classified as equity.

2021 Redemption

The total number of Ordinary Shares in respect of which valid redemption requests were received for the 30 June 2021 Redemption Point was 2,671,198 Ordinary Shares (representing 2.40% of the issued share capital) at 30 April 2021.

2020 Redemption

The total number of Ordinary Shares in respect of which valid redemption requests were received for the 30 June 2020 Redemption Point was 27,061,157 Ordinary Shares (representing 19.56% 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. Both shareholders have the same rights apart from the attribution of returns determined by the Redemption Pool and Continuing Pools. 

The assets of the Redemption Pool have been liquidated. The Redemption Price per Ordinary Share for the 30 June 2020 Redemption Point was 55.31p per Ordinary Share. The 27,061,157 Ordinary Shares over which valid redemption requests were made have been cancelled with effect from 18 September 2020. The total payment excluding dividends was £14,968,000. 

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 £513,000.

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 the Company.

5. Net Asset Values

The NAVs per Ordinary share and the net assets attributable at the year end were as follows:

NAV per Ordinary share is based on net assets at the year end and 111,274,758 Ordinary shares (2020: 138,335,915), 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 (2020: £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% (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 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 relevant month.

In addition to the basic management fee, and when the a 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 1.6% (2020: 1.68%) 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.

At 30 April 2021, an amount of £79,000 (30 April 2020: £42,000) was outstanding and due to Premier Portfolio Managers Limited in respect of management fees.

7. Other Expenses

During the years ended 30 April 2021 and 30 April 2020, the Auditor's remuneration related to audit services only.

1

¹ Contribution to Investment Manager's research budget

² The Company reached a final settlement with respect to the proceedings concerning Orion Healthcorp Inc. Both the settlement and the associated legal costs are included within the figures above.

8. Finance Costs

Revolving credit facility

The Company entered into a revolving credit facility (the "facility") on 25 February 2021 for £5m. The facility has been 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 has not drawn down this facility during the year (2020: nil) and no amounts have been drawn down at the date of signing this report.

The Company during the year held a revolving credit facility for £5m with Natwest Markets Plc that expired on 12 February 2021.

The terms of the facility are set out below:

·      Interest at 1.35% above LIBOR on any drawn down balance.

·      Commitment fee of 0.65% on any undrawn balance where less than 25% of the facility is drawn down or 0.55% on any undrawn balance where more than 25% of the facility is drawn down.

·      The covenants require that borrowings will not at any time exceed 15% of the adjusted portfolio value, being the total portfolio value less the gross market value of each investment which is not a quoted equity freely traded on a recognised investment exchange, and that the net asset value shall at all times be greater than £50m.

The arrangement fee of £18,000 was paid and amortised over the 3-year period of the facility.

The Company has not drawn down this facility during the year.

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 £513,000.

9. Taxation

The current tax charge is explained below:

Factors that may affect future tax charges

At 30 April 2021, the Company had no unprovided deferred tax liabilities (2020: £nil). At that date, based on current estimates and including the accumulation of net allowable losses, the Company had unrelieved losses of £7,951,558 (2020: £6,643,273) that are available to offset future taxable revenue. A deferred tax asset at a rate of 19% (2020:195) of £1,510,796 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

Deferred tax is not provided on capital gains and losses arising on the revaluation or disposal of investments because the Trust meets (and intends to continue for the foreseeable future to meet) the conditions for approval as an Investment Trust company.

10. Dividends

The Directors have recommended a final dividend in respect of the year ended 30 April 2021 of 0.01p (2020: 0.10p) per Ordinary share payable on 9 September 2021 to all shareholders on the register at close of business on 3 September 2021. The ex-dividend date will be 2 September 2021.

11. Investments

The Company received £64,188,000 (2020: £20,579,000) from investments sold in the year. The book cost of these investments when they were purchased was £41,571,000 (2020: £20,188,000). 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 set out above.

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.

The Level 2 investments are at values calculated using observable inputs.

The fair value of Level 3 investments are based on discounted anticipated future cash returns.

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.

13. Derivative Contracts

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.

During the year the Company held no derivative contracts or transactions.

14. Trade and Other Receivables

15. Trade and Other Payables

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 2021 or throughout the year (2020: nil). Also, as a public company, the minimum share capital is £50,000.

The Company's capital at 30 April 2021 comprised:

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 cancellation 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.