Ann: Annual Report to shareholders, page-2

Outlook for 2019-2020

As highlighted recently by the Investment Manager, “... what appears to be a cautiously positioned portfolio masks enthusiasm for the medium-term prospects for what we own, and concern about both market-level risks and extreme valuations. One might say we are taking a divergent view on a divergent market.”

“The longpositions in the Company’s portfolio were trading on an averageprice-to-earnings (P/E) multiple of 10.7x and a price-to-book (P/B) multiple of1.3x. These valuations of the long positions in PMC’s portfolio compare favourablywith market averages and our quantitative indicators lead us to believe thatour portfolio is both more profitable and faster growing than our global universeof stocks. Further, our qualitative assessment is that the valuations of ourindividual holdings are not just attractive relative to the averages, butattractive on an absolute basis.

It isthese factors, which we judge our assessment of likely future returns, andresult in us being optimistic about the Company’s returns over the medium to long-term.However, significant risks remain in the macroeconomicand market environment in the short-term; in particular, US trade policy andthe impact on global growth. Valuations in the crowded sectors of equitymarkets: the safe havens and the high growth stocks are also cause for cautionon broader markets.”