Martin Currie Global Portfolio Trust plc (the
"Company")
Legal Entity Identifier:
549300RKB85NFVSTBM94
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ANNUAL FINANCIAL RESULTS - YEAR TO 31 JANUARY
2024
The financial information set out
below does not constitute the Company's statutory accounts for the
years ended 31 January 2024 or 2023 but is derived from those
accounts. Statutory accounts for 2023 have been delivered to
the Registrar of Companies and those for 2024 will be delivered
following the Company's annual general meeting.
The auditor has reported on those
accounts; their report was unqualified.
The unedited full text of those
parts of the annual report and accounts for the year ended 31
January 2024 which are required to be published are set out on the
following pages.
The annual general meeting of the
Company will be held on 20 June 2024. The notice of meeting
will shortly be issued to shareholders and a copy can be downloaded
on the Company's website (www.martincurrieglobal.com).
A copy of the full annual report
and accounts will be submitted to the National Storage Mechanism
and will be available for inspection.
FINANCIAL HIGHLIGHTS
Highlights
· Strong performance in the financial year
· Ongoing focus on the quality growth strategy of the
Company
· Maintained annual dividends
Key data
|
Year
ended
31
January 2024
|
Year
ended
31
January 2023
|
Net asset value per share ('NAV')
(pence)1
|
360.5p
|
382.2p
|
NAV total
return2
|
11.2%
|
-8.8%
|
MSCI All Country World index
(benchmark) total return2,3
|
10.9%
|
0.3%
|
Share price (pence)
|
350.0p
|
319.0p
|
Share price total
return2
|
11.1%
|
-9.3%
|
Ongoing charges (as a percentage of
shareholders' funds)4
|
0.64%
|
0.61%
|
Revenue return per
share5
|
2.37p
|
2.16p
|
Dividend per share
|
4.20p
|
4.20p
|
Past performance is not a guide to future returns. All
returns are total returns unless otherwise
stated.
Source: Martin Currie Investment
Management.
1
1The net
asset value per share total return is calculated using the cum
income net asset value with dividends reinvested on the ex-dividend
date. This is an Alternative Performance Measure, see the annual
report and accounts for more details.
2Total return is the combined effect of the rise and fall in
the share price, net asset value or benchmark together with any
dividend paid. See the annual report and accounts for more
details on Alternative Performance Measures.
3 The benchmark with effect from 1 February 2020 is the MSCI
All Country World index. Prior to this, the benchmark was the FTSE
World index to 31 January 2020. Prior to this, the benchmark was
the FTSE All-Share to 31 May 2011.
4 Ongoing charges (as a percentage of shareholders' funds) are
calculated using average net assets over the period. The
ongoing charges figure has been calculated in line with the
Association of Investment Companies ('AIC') recommended
methodology. This is an Alternative Performance Measure, see
the annual report and accounts for more details.
5 For details of calculation, refer to note 5 in the annual
report and accounts.
Performance
· +11.2% Net Asset Value total return for the year.
· +11.1% Share price total return for the year.
· +10.9% Benchmark total return for the year.
CHAIR'S STATEMENT
Dear Shareholder
Investment performance
I am pleased to report that over
the year to 31 January 2024 your Company's NAV total return was
+11.2%, which compares favourably with the return of the benchmark
index of +10.9% and was ahead of the average return of our peer
group. Our investment manager focuses on investment in companies
with robust earnings and prospects of superior long-term growth by
understanding fundamental changes and trends in economies and
businesses. In 2023 one such change was that the world started to
realise the potential of Artificial Intelligence ("AI"). Some
of the companies in our portfolio - including our largest holding
Nvidia - were selected for their potential to benefit from advances
in computing and have been major beneficiaries of the focus on
AI. The returns over the last year illustrate the benefits of
a focus on companies that can take advantage of emerging
opportunities for growth.
Income and dividends
Net revenue earnings per share for
the period amounted to 2.37 pence. The Company has paid three
interim dividends of 0.9 pence per share and will pay a fourth
interim dividend of 1.5 pence per share on 26 April 2024 to
shareholders on the register on 5 April 2024. The total
dividends with respect to the year to 31 January 2024 will be 4.2
pence per share, maintaining the same total dividend as the
previous year.
Capital growth is the primary
focus of the investment manager and the investment strategy is not
constrained by any income target. Nevertheless, the Board
recognises that dividends are important for many shareholders and
hence continues to maintain its dividend in line with previous
levels. The Company's Articles of Association permit the
distribution of realised capital gains and the Company has
substantial distributable reserves. The Board has again used these
alongside revenue earnings to maintain the dividend, while not
impinging on the investment manager's approach to managing the
portfolio.
Gearing
The Board carried out a detailed
review of gearing during the year under review as we approached the
maturity date of the Company's three-year fixed loan. On 23
November 2023, the Company entered into an unsecured three-year £10
million sterling revolving loan facility agreement with The Royal
Bank of Scotland International Limited ("RBSI"). The Company's
existing loan of £30m from RBSI matured on the same date and was
repaid in full. We agreed to draw down the full amount available
under the new £10 million facility on 23 November and for an
initial period of six months. The Company's debt therefore reduced
from £30m to £10m and gearing was 3.9% as at 31 January
2024.
Promoting the shares
Franklin Templeton Investment
Trust Management Limited, the Alternative Investment Fund Manager
('AIFM') is very active in promoting the Company, including regular
meetings with major shareholders, a wide variety of online
marketing designed to encourage investors to go to our interesting
and informative website, and regular press coverage of the
portfolio manager's distinctive investment style. The Company is
recognised as a long-term leader in ESG investing and continues to
maintain the highest possible 'Five Globes' from Morningstar. It is
also rated in the top 2% of over 8,000 funds in Morningstar's
global large cap category for ESG. The Board believes that the
Company's distinctive approach to investing is important in
stimulating demand for shares in a crowded market and against a
background of continuing focus on the environment, and in
particular climate change, and on social and governance
issues.
While over the past two years
demand for investment trusts in general has reduced, the Board and
investment manager continue to believe that making investors aware
of the attractions of investing in the Company is an essential part
of our role and we will continue actively and energetically to
market the Company as part of our long-term strategy.
We also continue to operate our
zero discount policy under which the Company buys back and issues
shares with the objective of providing shareholders, in normal
market conditions, with:
• assurance that the share price is aligned with the prevailing
NAV per share; and
• liquidity so that investors can buy or sell as many shares as
they wish at a price which is not materially different from the
NAV.
The Board believes that this
policy is instrumental in making the Company attractive to
investors. During the year under review, the Company bought back
5,551,747 shares which were placed in Treasury and issued 675,000
shares from Treasury. Shares were bought back in February and March
2023, were issued in April and May 2023 and then were bought back
in the following eight months. The activity reflects levels of
market demand both for the Company's shares and more widely for
investment trusts. We continued to be successful in achieving
the aims of the zero discount policy, with the share price
generally remaining close to NAV. Shares which are bought
back are held in Treasury rather than cancelled as they can be
reissued from Treasury at lower cost than issuing new
shares.
The Board
My predecessor as Chair, Gillian
Watson, retired after the Annual General Meeting on 1 June last
year. My fellow Directors and I would like to repeat our thanks
Gillian for her commitment and diligence over the ten years that
she on the Board and wish her every success in her future
endeavours. For the first time this year we are required to report
on both the gender and ethnic diversity of the Board and note that,
while meeting the recommended gender diversity, we do not meet the
target for ethnic diversity. We will take this into account when we
next recruit a director but, being mindful of costs, have decided
that we will continue to operate with four directors at least for
the time being.
AGM
I am pleased to be able to invite
all shareholders to attend our AGM in person at the offices of
Franklin Templeton, 5 Morrison Street, Edinburgh EH3 8BH on
Thursday 20 June 2024 at 11.30am.
We do recognise that some
shareholders may be unable to come to the AGM and if you have any
questions about the annual report, the investment portfolio or any
other matter relevant to the Company, please write to me either via
email at ftcosec@franklintempleton.com or by
post to The Company Secretary, Martin Currie Global Portfolio Trust
plc, 5 Morrison Street Edinburgh EH3 8BH. If you are unable to
attend, I urge you to submit your proxy votes in good time for the
meeting, following the instructions enclosed with the proxy
form.
Keep in touch
The Company's website at
www.martincurrieglobal.com is a comprehensive source of information and includes regular
portfolio manager updates and outlook videos, monthly performance
factsheets and independent research reports. I recommend that you
subscribe for regular email updates that will keep you abreast of
the news on your Company, if you have not already done
so.
The Board is always interested to
hear shareholders' views. Please contact me if you have any
questions or points regarding your Company by email at:
ftcosec@franklintempleton.com.
Outlook
The world continues to face a
number of serious challenges, both economic and political.
Inflation which started to take hold as a result of shortages
resulting from lockdowns to prevent the spread of Covid-19 was then
exacerbated by the Russian war on Ukraine and by tension between
the USA and China. Geopolitical issues were also further
highlighted in October 2023 by the attack by Hamas on Israel and
the resulting conflict in Gaza. Against this difficult background
it was encouraging to see progress in major economies in 2023, with
GDP in the USA growing despite predictions of a recession and China
also growing, albeit at a significantly lower pace than
pre-Covid. Governments and central banks around the world are
continuing to tread a fine line in aiming to contain inflation
while not causing a destructive recession. It is apparent that both
inflation and interest rates will remain higher than we were used
to before 2020 for some time and it is highly unlikely that we will
again see the exceptionally low interest rates that were prevalent
in the years before the Covid-19 crisis.
It is encouraging to be able to
report the strong returns that our investment manager produced over
the year under review. Looking forward, against the current
geopolitical and macroeconomic background, the type of companies in
which we invest with resilient earnings growth, exposed to
long-term structural growth themes, that have pricing power and
solid balance sheets should be well placed to produce superior
returns for shareholders. There will inevitably be challenges along
the way and equity markets will always be prone to volatility in
the face of bad news but we remain confident in our investment
manager's ability to select a portfolio of high quality, growing
companies that will produce long-term performance for the Company's
shareholders.
Christopher Metcalfe
Chair
23 April 2024
MANAGER'S REVIEW
Review of financial year ended 31
January 2024
Over the year to 31 January 2024
markets remained volatile and interspersed by geopolitical and
macroeconomic risks. It was, however, pleasing to see that
fundamentals re-established themselves, after an unprecedented year
in 2022 when both bonds and equities had fallen. That was only the
third time in the past 100 years that there was significant
underperformance of both asset classes at the same time. A lot
happened in 2023, including some seismic shifts such as the
confirmation that Artificial Intelligence ('AI') will be a major
source of innovation and disruption and from which the Company's
focus on mega-trends and a long-term time horizon should
benefit. At the same time, a lot of potential problems were
averted in 2023, notably the possibility of (i) systemic bank risk
and contagion from US regional bank failures, (ii) a hard landing
in the US economy, and (iii) a US government debt default.
Geopolitical risks rose further during the year, with the
Russia-Ukraine war, the emergence of the Israel-Gaza conflict, the
proxy war in the Straight of Hormuz between Iran and the US, the
ongoing agitations by North Korea and the gradually escalating
China-US-Europe tensions related to Taiwan and the strategic
dimension of the semi-conductor industry.
We had some localised regional
bank failures in the US in the first few months of 2023, which led
to market concerns of systemic risk and fears of contagion into the
broader global banking sector. In contrast, we believed that the
risk would be limited and failures would be localised. This so far
has proven accurate, even if Credit Suisse ended up in a
regulator-imposed takeover by UBS. The market sighed in relief as
these systemic concerns dissipated. This highlighted the
fundamental reasons why we do not hold banks in the portfolio.
Readers can gain more insight on a feature article in the News
& Views section of our website www.martincurrieglobal.com.
We then had the fear of a US
government debt default, which would have been the first in
history, as the debt ceiling negotiations between Democrats and
Republicans threatened to be unproductive in May and June. We
believed that a resolution would be found, perhaps not so much at
the eleventh hour as at a few minutes prior to midnight, which
ultimately restored some calm and confidence to the
market.
At the same time, we had a market
that started 2023 with a quasi-certain prediction of a recession
during the year, which went against our central scenario of a sharp
slowdown rather than a recession, both at the Global and the US
levels. We were proved right.
The year 2023 was also marked by
ongoing interest rate hikes by the major Western central banks, as
inflation remained elevated during the first half of the year with
the US Federal Funds Rate increasing by 1% to 5.25%-5.5%, the
European Central Bank increasing rates by 2% to 4.5% and the Bank
of England increasing rates by 1.75% to 5.25%.
In the financial year to 31
January 2024, the portfolio performed positively, with the NAV
total return being +11.2%, vs a benchmark index return of +10.9%.
Pleasingly, this strong outperformance came on the back of no
changes to our investment approach, as our shareholders would have
expected, and little change in terms of stock and sector exposures.
We kept our exposure to our high conviction holdings, with many of
them coming through strongly during the period, notably some of our
top 10 holdings such as Nvidia, Ferrari, Microsoft,
Atlas
Copco, Moncler, Kingspan, and
Linde.
The strongest performing sectors
during the financial year were Technology (+36.4%),
Telecommunications (+21.2%), Industrials (+10.8%) - all three
performing ahead or in line with the MSCI ACWI index. All other
sectors underperformed the market, notably Real Estate (-8.3%),
Materials (-6.7%), Consumer Staples (-2.2%).
Stock Contributors during the
year
• Nvidia (6.6% contribution to relative performance for the year ended
31 January 2024)- Nvidia outperformed as
ChatGPT radically increased the projected level of demand for its
products, bringing 'the iPhone moment in the AI industry'.
Revenue/EPS for FY24 ended 108/199% higher respectively than
expected by analysts' consensus at the start of 2023. We believe
that we are at the start of a multi-year migration of datacentre
infrastructure to accelerated computing. We think that Nvidia has
the potential to claim a high share of overall IT infrastructure
spending. Nvidia is the Company's top holding, see largest 10
holdings in the annual report and accounts for more
information.
• Adobe (1.2% contribution to
relative performance for the year ended 31 January 2024) -
Adobe's share price benefited from a continued
rollout of generative AI products as well as a positive read across
from the pricing of these products from other parts of the
industry. In the period Adobe's attempted defensive
acquisition of Figma was cancelled, which raises question marks
over Adobe's competitive offering. In addition we are seeing
competitors develop more advanced solutions that may encroach on
Adobe's designer space going forward (e.g. Sora - Open AI's
text-to-video generative AI solution). The opportunity and threats
from AI technologies therefore remain uncertain. Adobe enjoyed a
strong rally through 2023 so we concluded to sell the position and
lock in profits after the end of the reporting period.
• Microsoft (1.0% contribution to relative performance for the year ended
31 January 2024) - The share price was
strong in the period, as wider adoption of AI has brought to the
fore the company's advantages as a platform with a large installed
customer base. The company released CoPilot, an AI-powered
virtual assistant and this is in the early stages of adoption.
Second quarter 2023 results were strong with revenue and EPS ahead
of market expectations. The crucial performance indicator of growth
of the Azure cloud platform was also ahead of expectations at +28%,
vs 25-26% guidance. Within that AI contributed 6%, above the
previous quarter's level of 3%, driven by Open-AI and
CoPilot. We continue to believe in Microsoft's potential to
become the platform of choice for AI, with a first mover advantage
especially in the enterprise setting. Microsoft is the
Company's second largest holding, see largest 10 holdings in the
annual report and accounts for more information.
Stock Detractors during the
year
• Masimo (-2.0% contribution to
relative performance for the year ended 31 January 2024) -
Masimo's share price started the period strongly,
rebounding by 15% between February and April 2023. However, it was
negatively impacted by the activist investor Politan Capital
gaining board seats at the AGM in late June. On the operational
side, the company's healthcare division was challenged by delays to
orders, weak hospital demand and budget constraints. We engaged
with the company and were reassured that the management understands
the need to return to a level of performance akin to their
historical track record, especially after a large acquisition in
2022. However, given the low visibility into the improvement of
consumer sentiment, we decided to exit the position in October
2023.
• Wuxi Biologics (-1.9%
contribution to relative performance for the year ended 31 January
2024) - A confluence of several factors
contributed to the weakness in Wuxi shares. In the period from
February to June the share price declined by 46% in line with
weakness in the Chinese equity market. This was despite a solid set
of pre-released results, albeit with some compression in the
overall profit margin due to investments to expand capacity. While
we believe that execution has been strong relative to the market,
reflected by continuous market share gains, we think that Wuxi now
needs to rebuild credibility with investors. Whilst we still favour
the underlying exposures and thematics of Wuxi, namely innovation,
drug complexity, outsourcing, we saw a clearer pathway to realise
the upside elsewhere and exited our position in Wuxi in December
2023.
• ResMed (-1.4% contribution to
relative performance for the year ended 31 January 2024) -
Having broadly traded flat in the first 6 months
of the year, ResMed shares were under pressure in August amid
concerns surrounding the second order impacts of GLP-1 drugs which
stimulate insulin production in the body. Specifically, with
obesity as a comorbidity of many diseases including sleep apnea,
ResMed's key market, investors were concerned that any impact on
obese patients could lower volumes and addressable markets for
businesses serving these comorbidities. This remains to be proven
as access, adherence and drug stay time have historically proven
material barriers to gathering evidence to demonstrate this point.
In late October, ResMed reported a positive quarterly result, while
reiterating the point that higher diagnoses of obesity could in
fact result in simultaneous sleep apnea diagnoses, increasing
patient flow. This drove 2-4% earnings upgrades and
alleviated the concerns around the stock with the share price
rebounding c.41% in the last 3 months of the period. This was
accompanied by a positive competitive backdrop as Philips, the main
competitor, agreed on the broad terms of a consent decree under
which it will not sell new sleep therapy devices in the US. We see
Eli Lilly's trial of GLP-1's in sleep apnea, due to be reported in
in the second quarter of 2024, as an important next
step.
Portfolio Activity
In the year under review we
purchased Pernod Ricard and
Estée
Lauder in the consumer
sector, Mettler Toledo,
Idexx, and Sartorius Stedim in
Healthcare, and Adyen
in the Financials sector. We sold out of
Dr.
Martens and Kerry Group
in Consumer, Masimo
and Wuxi Biologics
in Healthcare, and AIA
in the Financials sector. We replaced
VISA with Mastercard
and replaced Ansys
with Cadence Design
Systems.
New positions
• Idexx - Idexx
is the leading pure play on the structural growth in animal
diagnostics, a market that is more attractive for investors than
human health (with longer product cycles, lower competition and
lower customer power). Idexx boasts structural growth, pricing
power, high barriers to entry and sticky customers with 90%
recurring revenues.
• Sartorius Stedim - We sold Wuxi Biologics in the period
to fund a purchase in Sartorius
Stedim. While we like the
underlying exposures and thematics of both stocks, namely
innovation, drug complexity, outsourcing and single-use efficiency,
we see a clearer pathway to realise the upside of our thesis in
Stedim. Stedim is a single-use biologic manufacturing equipment
company.
• Cadence Design Systems
- Cadence Design Systems, a US software company,
operating in the oligopolistic Exploratory Data Analysis ("EDA")
market and moving into the adjacent Simulation sector, was a new
purchase during the year under review. We believe that the upside
to growth due to the development of AI is underappreciated by the
market, while in our assessment it is poised to bring a secular
shift in EDA akin to the productivity benefits from IT last seen in
the 1980s. Generally, we are buying into long-term growth.
The purchase was funded by the sale of Ansys, a leader in simulation
software. We have greater conviction in Cadence's business
model and duration of value-accretive growth. Meanwhile, both
stocks are trading close to fair value, per our recent reviews.
Therefore, we are using today's valuations as an opportunity to
make changes in our concentrated portfolio in line with our
investment conviction.
•
Adyen - Adyen is a leading global payment company whose growth is supported
by multiple structural trends in payment such as frictionless
payments, omni-channel e-commerce, and the platform economy. A
combination of a high net revenue CAGR, high medium-term EBITDA
margin and a projected 100%+ ROIC profile made it a strong
candidate for the portfolio. We took the opportunity of a sharp
pullback in the share price in April as a result of higher costs
incurred for their international expansion as an attractive entry
point.
•
Mettler Toledo - Mettler Toledo is a leading provider
of precision instruments and analytical tools across the
laboratory, industrial and food segments with a legacy business in
scales and balances. The company's sales are growing at 7% per
year, ROIC is currently 40% and forecast to move to 60% over five
years. The stock has been impacted by a period of underperformance
based on risks of earnings downgrades, which gave us the
opportunity in July to initiate a position. We have held the stock
in the past, and believe that the earnings projections are near
their low point.
• Pernod Ricard - We initiated a position in Pernod Ricard
in February, following a period of
underperformance of the share price. We believe that Pernod has a
supportive mix of growth and returns profile in consumer staples,
with expected growth over 5 years in sales, earnings, and free cash
flow. Anticipated ROIC improvement and robust earnings results
support the potential for upgrades to analysts' consensus views of
future earnings. Trading at a 17% discount to its 5-year average
PE, the stock has an attractive valuation and in our view is poised
to capitalise on premiumisation trends with strong pricing
power.
• Estée Lauder -
In June, we initiated a new position in Estée Lauder, following significant
underperformance of the stock and a profit warning in May. We have
a high conviction in the company's leadership within prestige
beauty in the medium and long term, despite the market concerns in
the short term. Whilst we acknowledge that near term trading is
challenged we see inventory issues in China as transitory. With a
strong brand portfolio and mid-teens market share, Estée Lauder's
luxury segment growth aligns with high margin channels,
particularly in China. This led to the decision to sell
AIA in favour of Estée
Lauder.
• Mastercard - Both VISA and Mastercard are leaders in the payment technology industry, both operate
a capital light model with >60% EBITDA margin and deliver low to
mid-teens revenue growth, underpinned by a secular shift to
cashless payments. We replaced VISA
with Mastercard
due to the higher ROIC support from Mastercard
(>70%, vs VISA's >40%, with both expanding over time). In
addition, Mastercard offers a slightly better growth outlook due to
its higher exposure to international payments and
credits.
Additions to an existing
position
• Illumina -
Illumina is the global leader in next generation sequencing ('NGS')
with a 90% market share at the high-end. It sells instruments and
consumables enabling research and clinical applications at the
leading edge of therapeutics, diagnostics and applied
fields.
Exits
• Dr. Martens -
We sold our very small position in Dr. Martens.
• Kerry Group -
During the period, we exited Kerry Group, as our review indicated
better alternatives in the sector. Despite believing that Kerry
Group's thesis remains intact, its projected rate of growth is not
sufficiently attractive for us.
• Masimo - We
sold out of Masimo and used the proceeds to top up
Illumina.
• Wuxi Biologics - We sold Wuxi Biologics in the period to fund a purchase in
Sartorius Stedim.
• AIA - We sold
AIA in favour of Estée Lauder.
• Ansys - The
sale of Ansys, a leader in simulation software, funded the purchase
of Cadence Design Systems.
• VISA - As
noted we replaced VISA with Mastercard.
Our outlook for 2024
As we look ahead, we highlight
that the market should be supported by the expected shift in
monetary policies globally towards rate cuts in the second half of
2024, which should favour the quality growth style of the
portfolio. The key predictions from our 2024 outlook are as
follows:
Key predictions:
• Inflation could be more elevated and
longer lasting in 2024, despite general easing in pressures coming
through.
• Wage
inflation, deglobalisation, technological and geopolitical
fragmentation, and energy transition have
the potential to keep inflation structurally more elevated in the
medium term.
• Western
central bank interest rates have peaked,
but we do not expect any pivot towards cuts in rates until the
second half of 2024.
• Central
banks have become heavily dependent on key data in making decisions
on interest rates, which
will likely fuel volatility in equity markets in the lead up to
inflation reports
• Macroeconomic momentum is at risk of
weakening, potentially
leading to ongoing stagflation in EU and the UK in 2024, and
slowdowns in the US and Chinese economies.
• The
rapid interest rate hikes in 2022-23 could lead to a rising risk of
recession, although this is still not our
central scenario for the US, and recent economic data has remained
very strong for the US economy.
• China
is facing a slowdown and structural headwinds, absent additional government policy
initiatives to stimulate the economy.
• We
forecast aggregate corporate earnings growth to remain
pedestrian and weak in 2024, (Global +4%,
US +5%, EU +3%, Asia +5%, Japan +6%).
• There
is an ongoing risk of downgrades to analysts' consensus on
earnings, given
optimistic current estimates (World +9%, US +10%, EU +4%, Asia +16%
and Japan +9%).
• Monetary policies shifting towards cuts in the second half of 2024 should be supportive for equity
markets, and for the quality growth style leadership within
that.
• Equity
valuations remain more supportive in Europe and
Asia, although a
selective approach remains key, given specific geographic and
geopolitical risks.
• The
equity market is likely to favour companies with resilient earnings
growth, exposed to
long-term structural growth themes, that have pricing power and
solid balance sheets, given the uncertain macro and inflation
environment and the low overall economic growth
prospects.
• Thematic opportunities for long-term investors still
abound, notably in the areas of energy
transition, ageing population and artificial
intelligence.
• Disruption rates for corporates are likely to
accelerate given the seismic shift brought
by AI across all areas of the economy and all sectors.
• An ever
more disruptive decade is accelerating in 2024 and
beyond.
Key investment risks
The challenges that we face as
investment managers are summarised in the ten key risks that we
have identified:
Monetary policies risk -
the risk of over-tightening in interest rates
creates a higher potential risk of policy mistakes for markets and
economies
Fiscal policies risk -
the risk of lack of follow-through in stated
infrastructure spending programmes could put more downside risk to
economic momentum
Persistence in inflation -
due to higher wage inflation, the risk of
stronger and longer lasting inflation could fuel a need for more
tightening or a delay in loosening monetary policies
Corporate margin pressure -
more persistent and more elevated inflation could
lead to more pressure on margins for companies lacking pricing
power
Market volatility and Style
leadership volatility - shifting
expectations in monetary policies could lead to ongoing volatility
in markets, and in leadership between the Value and Growth
styles
Lower long-term growth -
growing indebtedness is likely to reduce
long-term growth in our view, and make individual growth
opportunities more scarce
Higher taxation -
due to higher indebtedness, there is a likelihood
of higher tax rates, both for households and for
corporates
Geopolitical risks flare ups
- The Israel/Hamas conflict adds to global
tension already heightened by the Russia/Ukraine war.
Escalation and broadening of these conflicts are key to areas to
monitor. Other geopolitical hotspots are Taiwan/China, North Korea,
Iran-Israel, and China/USA. Some of these geopolitical risks will
be military, others will materialise into ongoing technological
conflicts, such as that between China and the USA. Cyber attacks
are also a part of that risk.
US presidential elections -
at this stage, the outcome of the US presidential
elections remains highly unclear. This will bring an element of
uncertainty as the market focus shifts to that event in the second
half of 2024.
Climate disasters -
climate change related disasters are likely to
continue to take their toll on various regions, with the risk of
impact on societies, but also on corporates in terms of risk to
productive capacities and to assets in general.
Mid-term opportunities - energy
transition, geopolitical & technological fragmentation, and AI
are the key themes to focus on
We continue to see opportunities
in the eight mid-term thematic opportunities that we have described
in recent years and which are listed below:
· Green and alternative energy
· Energy efficient infrastructure
· Electric transportation - both EV and high speed
railways
· Healthcare infrastructure
· Technological and geopolitical fragmentation
· Cloud computing and cyber security
· AI,
robotics and automation
· Metaverse and quantum computing
All of these themes benefit from
significant investment support, from the private and/or public
sectors, with some of these investments being very long duration,
making them attractive over the long-term time horizon that we
focus on.
Three particular themes that we
believe are important for investors to focus on currently, amongst
the eight listed above, are energy transition, AI, and ageing
population.
Energy transition captures the
first three themes on our list, namely green and alternative
energy, energy efficient infrastructure, and electric
transportation.
AI received a significant boost in
2023, both from the excitement triggered by ChatGPT, an app that
reached 100m users at the fastest pace ever achieved by any app,
and from the outsized earnings achieved by Nvidia in the first
quarter of 2023. Nvidia then continued to beat analysts' consensus
expectations in each of its subsequent quarterly reports, leading
the market to realise that the demand for AI has been significantly
under-appreciated. We believe that the focus on AI will remain
significant going forward. We also believe that the potential for
AI remains under-appreciated by the market fundamentally, but are
also cognisant that themes such as this can generate outsized
excitement, which can lead to valuations becoming disconnected from
fundamentals. It is therefore critical, as always, to ensure that
investors maintain valuation discipline, based on detailed
fundamental assessments.
The AI mega-theme captures the
last four themes that we highlight above, namely technological and
geopolitical fragmentation, cloud computing and cyber security,
robotics, automation and AI, and metaverse and quantum
computing.
The final mega-theme, ageing
population, encompasses and highlights the need for increased
healthcare infrastructure, as the need for more healthcare
grows.
These three mega-themes are
bringing seismic changes to the economy, and have the potential to
bring more innovation and disruption. They are captured in our
mega-trends framework, which is illustrated in the annual report
and accounts, along with the themes that run through the
portfolio.
Quality growth style should
continue to be more supported in 2024 and beyond
We believe that in uncertain
macroeconomic conditions such as the ones which we face, the
quality growth style should be supported in 2024 and beyond. There
is a lot of uncertainty due to the broad range of possible outcomes
in inflation, monetary policies, the economic cycle and the
corporate profits cycle, as we detail above. Quality growth stocks,
ie profitable growth stocks, generating high returns on invested
capital and with strong balance sheets, should fare well in such an
uncertain environment, in our view.
All in all, we believe that it
remains important in such an uncertain environment to continue to
focus on companies with (i) earnings resilience, given the risk of
ongoing earnings downgrades, (ii) pricing power, in order to
protect margins in this stickier inflation environment, (iii) solid
balance sheets, to give better protection in case of recession, and
(iv) structural growth opportunities.
Zehrid Osmani
Portfolio Manager, Martin Currie
Global Portfolio Trust plc
Head of Global Long-Term
Unconstrained Equities,
Martin Currie
23 April 2024
PORTFOLIO SUMMARY
By sector
|
31
January 2024
Company
%
|
31
January 2024
MSCI All
Country World index %
|
31
January 2023
Company
%
|
31
January 2023 MSCI All Country World index %
|
Information Technology
|
30.8
|
23.5
|
31.5
|
20.6
|
Health Care
|
22.8
|
11.4
|
26.5
|
12.5
|
Industrials
|
12.2
|
10.6
|
9.7
|
10.0
|
Consumer Discretionary
|
12.0
|
10.8
|
15.3
|
11.1
|
Materials
|
7.7
|
4.2
|
7.4
|
5.1
|
Consumer Staples
|
7.3
|
6.7
|
5.9
|
7.3
|
Financials
|
7.2
|
16.0
|
3.7
|
15.3
|
Communication Services
|
-
|
7.5
|
-
|
7.1
|
Energy
|
-
|
4.5
|
-
|
5.4
|
Utilities
|
-
|
2.5
|
-
|
3.0
|
Real Estate
|
-
|
2.3
|
-
|
2.6
|
|
100.0
|
100.0
|
100.0
|
100.0
|
By asset class
|
31
January 2024 %
|
31
January 2023 %
|
Equities
|
103.1
|
111.1
|
Cash
|
0.8
|
0.9
|
Less borrowings
|
(3.9)
|
(12.0)
|
|
100.0
|
100.0
|
Portfolio distribution by
region
|
31
January 2024
Company
%
|
31
January 2024
MSCI All
Country World index %
|
31
January 2023
Company
%
|
31
January 2023 MSCI All Country World index %
|
North America
|
52.2
|
66.0
|
47.1
|
63.1
|
Developed Europe
|
44.4
|
15.6
|
41.9
|
16.6
|
Developed Asia Pacific ex
Japan
|
3.4
|
2.6
|
7.7
|
3.3
|
Global Emerging Markets
|
-
|
10.0
|
3.3
|
11.3
|
Japan
|
-
|
5.6
|
-
|
5.5
|
Middle East
|
-
|
0.2
|
-
|
0.2
|
|
100.0
|
100.0
|
100.0
|
100.0
|
Portfolio holdings as at 31
January 2024
|
Sector
|
Country
|
Market
value
£000
|
% of
total
portfolio
|
North America
|
|
|
138,361
|
52.2
|
Nvidia
|
Information Technology
|
United
States
|
24,357
|
9.2
|
Microsoft
|
Information Technology
|
United
States
|
17,136
|
6.5
|
Linde
|
Materials
|
United
States
|
13,818
|
5.2
|
Mastercard
|
Financials
|
United
States
|
11,341
|
4.3
|
Illumina
|
Health
Care
|
United
States
|
11,035
|
4.2
|
ResMed
|
Health
Care
|
United
States
|
8,925
|
3.4
|
Zoetis
|
Health
Care
|
United
States
|
6,437
|
2.4
|
Cadence Design Systems
|
Information Technology
|
United
States
|
6,364
|
2.4
|
Mettler Toledo
|
Industrials
|
United
States
|
6,280
|
2.4
|
Autodesk
|
Information Technology
|
United
States
|
6,188
|
2.3
|
Adobe
|
Information Technology
|
United
States
|
6,109
|
2.3
|
Veeva Systems
|
Health
Care
|
United
States
|
5,918
|
2.2
|
Nike
|
Consumer
Discretionary
|
United
States
|
5,107
|
1.9
|
IDEXX Laboratories
|
Health
Care
|
United
States
|
4,858
|
1.8
|
Estee Lauder
|
Consumer
Staples
|
United
States
|
4,488
|
1.7
|
|
|
|
|
|
Developed Europe
|
|
|
117,527
|
44.4
|
ASML Holding
|
Information Technology
|
Netherlands
|
14,074
|
5.3
|
Ferrari
|
Consumer
Discretionary
|
Italy
|
11,792
|
4.5
|
Atlas Copco
|
Industrials
|
Sweden
|
10,576
|
4.0
|
Moncler
|
Consumer
Discretionary
|
Italy
|
10,341
|
3.9
|
L'Oreal
|
Consumer
Staples
|
France
|
10,212
|
3.9
|
Kingspan Group
|
Industrials
|
Ireland
|
9,073
|
3.4
|
Adyen
|
Financials
|
Netherlands
|
7,794
|
2.9
|
Sartorius Stedim
Biotech
|
Health
Care
|
France
|
7,645
|
2.9
|
Hexagon
|
Information Technology
|
Sweden
|
7,454
|
2.8
|
Coloplast B
|
Health
Care
|
Denmark
|
6,645
|
2.5
|
Croda International
|
Materials
|
United
Kingdom
|
6,644
|
2.5
|
Assa Abloy
|
Industrials
|
Sweden
|
6,325
|
2.4
|
Pernod Ricard
|
Consumer
Staples
|
France
|
4,589
|
1.7
|
Kering
|
Consumer
Discretionary
|
France
|
4,363
|
1.7
|
|
|
|
|
|
Developed Asia Pacific ex
Japan
|
|
|
8,899
|
3.4
|
CSL
|
Health
Care
|
Australia
|
8,899
|
3.4
|
|
|
|
|
|
Total portfolio
holdings
|
|
|
264,787
|
100.0
|
LARGEST 10 HOLDINGS
|
|
|
|
|
|
31
January 2024
|
31
January 2024
|
31
January 2023
|
31
January 2023
|
|
Market
value
|
% of
total
|
Market
value
|
% of
total
|
|
£000
|
portfolio
|
£000
|
portfolio
|
Nvidia
|
24,357
|
9.2
|
12,745
|
4.6
|
Microsoft
|
17,136
|
6.5
|
14,228
|
5.1
|
ASML Holding
|
14,074
|
5.3
|
14,223
|
5.1
|
Linde
|
13,818
|
5.2
|
15,041
|
5.4
|
Ferrari
|
11,792
|
4.5
|
11,164
|
4.0
|
Mastercard
|
11,341
|
4.3
|
-
|
-
|
Illumina
|
11,035
|
4.2
|
5,991
|
2.2
|
Atlas Copco
|
10,576
|
4.0
|
10,325
|
3.7
|
Moncler
|
10,341
|
3.9
|
13,190
|
4.8
|
L'Oreal
|
10,212
|
3.9
|
11,623
|
4.2
|
As at 31 January 2024 the largest 10
holdings accounted for 51.0% of the portfolio (46.4% as at 31
January 2023).
Largest 10 holdings in
detail
Nvidia
Information Technology, United
States
The company designs graphics
processing units for gaming and professional markets. We see
long-term upside optionality in several secular growth areas,
including Gaming, Cloud, AI and Autonomous Vehicles. We believe the
market is missing the longevity of growth at Nvidia - specifically
from referencing and Edge AI.
Microsoft
Information Technology, United
States
US software company Microsoft,
best known for its Windows operating system, the Xbox gaming
console and cloud computing service Azure, is in a prime position
to benefit from a new 'golden era' of investment in technology. IT
investment is becoming crucial for every aspect of corporate life -
infrastructure, marketing, sales and commerce - and Microsoft
stands to capture a significant share of this double-digit-growing
expenditure. Furthermore, a progressive move towards a
subscription-based model is improving the company's pricing power
and its competitive position in the market.
ASML Holding
Information Technology,
Netherlands
This semiconductor equipment
company enjoys a very strong market position and close
relationships with customers. In addition the company is benefiting
from the trend of on-shoring of semiconductor production. The
company is critical in enabling innovation and development in the
semiconductor industry. This backdrop, coupled with strong
structural growth in semiconductor volume, gives the company a very
attractive long-term growth and profitability outlook.
Linde
Materials, United
States
A resilient and geographically
diverse business, it has high exposure to fast-growing emerging
markets, combined with a solid base in the Americas. Linde exerts
strong pricing power from its leading positions in the regions in
which it operates. Although revenue growth is correlated to global
industrial production, the structure of client contracts using
'take-or-pay' and 'facility fees' means that revenues are
relatively cushioned during economic downturns. Further, the
merger with Praxair has accelerated a strategy of focusing on less
economically sensitive customers in the healthcare and food and
beverage sectors.
Ferrari
Consumer Discretionary,
Italy
The Italian sports car
manufacturer provides a unique play on the global growth of
high-net-worth individuals and their passion for speed. It has
enviable pricing power, with huge scope for average selling prices
to increase through greater use of the Special Series and Icona
platforms - already a sizeable premium to other luxury car
manufacturers. Growth potential is further enhanced by
electrification as they launch new hybrid and electric
models.
Mastercard
Financials, United
States
The migration from cash and cheque
to electronic payment is a multi-year secular trend that is still
far from mature. While this is a seemingly consensual proposition,
the market tends to underestimate this trend. The company's
ROIC is highly attractive, even though the electronic payment space
is competitive, its transition from a pure card network to a
multi-rail provider of payment solutions proves how the company can
face these challenges from a position of strength.
Illumina
Healthcare, United
States
This company has developed a
near-monopoly in next-generation sequencing (NGS). Lower costs,
time and complexity of the historically high-end characterisation
methodology means that Illumina's product should become not only
sought after, but ubiquitous in new multi-sector applications that
were historically out of reach.
Atlas Copco
Industrials, Sweden
The Swedish industrial tools and
equipment manufacturer is very well-run and has one of the best -
and most consistent - return
profiles among European capital
goods stocks. Atlas' value proposition in air compressors is a
compelling one, which will allow it to maintain a high market share
and a pricing premium. The stock is also underpinned by an
accommodative cash distribution policy, which is highly attractive
in Sweden's low interest-rate environment.
Moncler
Consumer Discretionary,
Italy
Moncler is the undisputed global
leader in super premium down jackets and has a rich heritage and
strategic focus on long-term sustainable and responsible growth.
The market is aware that the business is still expanding its
distribution and that the total available market is very large
relative to its current revenues (20% of total luxury and personal
goods is apparel). However, the market seems focused on short-term
concerns around trade and a slowdown in China, and seems to be
missing the attractive long-term growth opportunity and the
management's exemplary execution within the category. We believe
that the structural growth potential of the company is compelling,
and its ability to continue to innovate remains strong.
L'Oreal
Consumer Staples,
France
Based in France, L'Oreal is number
one in global beauty, outgrowing a market which grows 3-5%
annually. The company's R&D, marketing capability, logistics
platform and global expertise in the space gives us conviction in
the sustainability of this outperformance. Thanks to sensible
capital allocation, L'Oreal has a long history of value creation
through bolt-on acquisitions. Further to this, the balance sheet is
highly underutilised, giving significant opportunity to further
beat expectations.
Key Performance Indicators and
Performance
The Board uses certain key
performance indicators ('KPIs') to monitor and assess its
performance in achieving the Company's objectives. The Board
have made no changes to the KPI targets in the financial year to 31
January 2023.
KPI
|
Target
|
2024
|
Achieved
|
2023
|
Achieved
|
1. Net asset value
performance
relative to benchmark
(over 3 years)
|
Outperform
|
-24.41%
|
No
|
-17.72%
|
No
|
2. Performance against
Company's peers (over 3 years)
|
Top third performance
|
9 out of
13
|
No
|
10 out
of 14
|
No
|
3. Ongoing charges
|
Less
than 0.70%
|
0.64%
|
Yes
|
0.61%
|
Yes
|
1. Net asset value performance
relative to benchmark
The Board assessed the net asset
value total return compared to the benchmark. It is measured on a
financial year basis and assessed over a rolling three year period.
The benchmark with effect from 1 February 2020 is the MSCI All
Country World index. Prior to this, the benchmark was the FTSE
World index.
The KPI was not achieved for the
period. The return of the Company was 4.4% and the benchmark 28.8%
for the three years to 31
January 2024.
2. Performance against the
Company's peers
The Board monitors the share price
total return performance versus all competitor funds within the AIC
Global sector over a rolling three year period.
The share price total return for
the Company was -1.9% over the three years to 31 January 2023 which
ranked 9 out of 13 in the AIC Global sector.
3. Ongoing charges
The Board monitors ongoing charges
on a regular basis to ensure that it meets its target by
maintaining cost discipline and its focus on value adding
activities. The KPI was met for the year at 0.64%. The
ongoing charges figure has been calculated in line with the
Association of Investment Companies ('AIC') recommended
methodology.
Principal and emerging risks and
uncertainties
Risk and mitigation
The Company's business model is
longstanding and resilient to most of the short-term operational
uncertainties that it faces. The Board believes that these are
effectively mitigated by the internal controls established by the
Board and by the AIFM, Franklin Templeton Investment Trust
Management Limited, and their combined oversight of the investment
manager, as described in the table below. Its principal risks and
uncertainties are therefore largely driven by the inherent
uncertainties of investing in global equity markets. The Board's
process seeks to mitigate known risks and to identify new risks as
they emerge.
However, it is recognised that the
likelihood and timing of crystallisation of some risks, known and
unknown, cannot be predicted and the Board then relies on
professional management, effective systems and communication to
mitigate and respond to them as and when they arise.
Operational and management risks
are regularly monitored by the AIFM and by the Board at Board
meetings. As part of its annual strategy meeting the Board carries
out a robust assessment of the principal and emerging risks facing
the Company, including those that would threaten its business
model, future performance, solvency or liquidity.
The Board's planned mitigation
measures for the principal and emerging risks are described
below.
The Board notes that the dominant
global macroeconomic risks are geo-political tensions, inflation,
and climate transition. These are however considered to be
risks that have an impact on the identified principal and emerging
risks and are therefore considered and managed in that context and
the investment manager takes full account of these risks in
assembling and monitoring the portfolio of investments.
Principal Risk
|
Mitigation
|
Sustained investment
underperformance
|
The Board oversees the
implementation of the investment strategy and monitors the
performance of the
investment portfolio. The
portfolio manager attends all Board meetings and reviews the
portfolio with the Board together with data that shows statistical
measures of the Company's risk and return profile. Should there be
sustained investment underperformance despite reasonable mitigation
measures taken by the investment manager, the Board would assess
the cause and take appropriate action to manage this risk. The
investment strategy is index ignorant and will not track indices;
it will therefore underperform in certain market conditions and the
Board will assess whether underperformance is due to market
conditions, poor manager performance or whether the strategy itself
is unsustainable.
There is increasing awareness of
the challenges and emerging risks posed by climate change. The
investment process incorporates detailed analysis of ESG issues
and, as set out in the Manager's review, this includes an
assessment of the potential impact of climate change. Overall, the
specific potential effects of climate change are difficult, if not
impossible, to predict and to measure and the Board and investment
manager will continue to monitor developments in this important
risk area.
Geopolitical risks have always
been an input into the investment process. This risk area continues
to be highlighted as a result of the Russian invasion of Ukraine,
with the resultant effects on global trade posed by
supply shocks, higher levels of
inflation, and higher interest rates as central banks seek to
contain inflation and volatility in asset prices. Further
information on geopolitical risks is set out in the Outlook section
of the
Manager's review.
|
Material decline in market
capitalisation of the Company
|
The Board recognises that the zero
discount policy allows new shareholders to purchase shares and
current shareholders to sell their shares at close to NAV, in
normal market conditions. Although this level of
liquidity
encourages investment in the
Company, it could also increase the risk of a material decline in
the size of the
Company. The Board monitors the
performance and pace of share buybacks and the Company's
shareholder profile. Decline could also come as a consequence of
the Company's failure to meet its investment objective. The Board
believes that good long-term performance will mitigate this
likelihood, increase demand for the Company's shares and, subject
to overall market stability, permit the market capitalisation of
the Company to increase.
|
Loss of s1158-9 tax
status
|
Loss of s1158-9 tax status would
have serious consequences for the attractiveness of the Company's
shares.
The Board considers that, given
the regular oversight of this risk by the audit committee, the AIFM
and the
investment manager, the likelihood
of this risk occurring is minimal but as the consequence of loss of
the tax status would be very damaging it is highlighted as a
principal risk. The audit committee regularly reviews the
eligibility conditions and the Company's compliance against each,
including the minimum dividend requirements and shareholder
composition for close company status.
|
On the basis of its continual and
ongoing assessment of the principal and emerging risks facing the
Company, and given its current position, the Board is confident
that the Company will be able to continue in operation and meet its
liabilities as they fall due. The Board believes that the processes
of internal control that the Company has adopted and oversight by
the AIFM continue to be effective.
Going concern status
The Company's business activities,
together with the factors likely to affect its future development,
performance and position are set out in the Chairman's statement,
Manager's review, Strategic report and the Report of the directors.
The financial position of the Company as at 31 January 2024 is
shown in the statement of financial position. The statement of cash
flow of the Company is included in this announcement. Note 15 sets
out the Company's risk management policies, including those
covering market risk, liquidity risk and credit risk. In accordance
with the 2019 AIC Code of Corporate Governance and the 2018 UK
Corporate Governance Code, the Directors have undertaken a rigorous
review of the Company's ability to continue as a going concern. The
Company's assets consist of a diverse portfolio of listed equity
shares which, in most circumstances, are realisable within a very
short timescale. The Directors are mindful of the principal
and emerging risks and uncertainties.
They have reviewed revenue
forecasts for the next two financial years, including liabilities
arising from the loan facility, and believe that the Company has
adequate financial resources to continue its operational existence
for the period to 31 January 2026, which is at least 12 months from
the date on which the financial statements are authorised for
issue. Accordingly, the Directors continue to adopt the going
concern basis in preparing these financial statements.
Viability statement
The Company's business model is
designed to deliver long-term returns to its shareholders through
investment in large and liquid stocks in global equity markets. Its
plans are therefore based on having no fixed or limited life
provided that global equity markets continue to operate normally.
The Board has assessed the Company's viability over a three year
period in accordance with provision 31 of the UK Corporate
Governance Code as it believes that this is an appropriate period
over which it does not expect there to be any significant change to
the principal risks and adequacy of the mitigating controls in
place. The Board considers that this reflects the minimum period
which should be considered in the context of the Company's
long-term objective but one which is limited by the inherent and
increasing uncertainties involved in assessment over a longer
period.
In making this assessment the
Directors have considered the following factors:
•
the principal and emerging risks and
uncertainties and the mitigating actions, including specifically
the current geopolitical and economic environment;
•
the mitigation measures which key service
providers including the AIFM have in place to maintain operational
resilience;
•
the challenges posed by climate
change;
•
the ongoing relevance of the Company's investment
objective in the current environment;
•
the level of income forecast to be generated by
the Company and the liquidity of the Company's
portfolio;
•
the low level of fixed costs relative to the
Company's liquid assets;
•
the expectation that in normal markets more than
98% of the current portfolio could be liquidated within two trading
days; and
•
the quantity of debt and the ability of the
Company to make payments of interest and repayments of principal on
its debt on their due dates.
Based on the results of their
analysis and the Company's processes for monitoring each of the
factors set out above, the Directors have a reasonable expectation
that the Company will be able to continue in operation and meet its
liabilities as they fall due over at least the next three
years.
Responsibility
statement
Each of the Directors confirms
that to the best of their knowledge:
· the
financial statements, which have been prepared in accordance with
United Kingdom Generally Accepted Accounting Practice, give a true
and fair view of the assets, liabilities, financial position and
profit of the Company; and
· the
Report of the directors, Strategic report and Manager's review
include a fair, balanced and understandable review of the
development and performance of the business and the position of the
Company, together with a description of the principal risks and the
uncertainties that it faces; and
· the
annual report and financial statements, taken as a whole, are fair,
balanced and understandable and provide the information necessary
for shareholders to assess the Company's performance, business
model and strategy.
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 prepared the financial statements in
accordance with United Kingdom Generally Accepted Accounting
Practice (and applicable law).
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 Company and of the profit or loss of 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 applicable UK Accounting Standards have been followed,
subject to any material departures disclosed and explained in the
financial statements respectively; and
· prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
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 and the
Directors' remuneration report 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 financial statements are published on the
Company's website (www.martincurrieglobal.com) which is
maintained by the investment manager. The Directors are responsible
for the maintenance and integrity of the Company's website.
Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
This responsibility statement was
approved by the Board of Directors on 23 April 2024 and is signed
on its behalf by the Chair, Christopher Metcalfe.
STATEMENT OF COMPREHENSIVE
INCOME
|
|
Year to
31 January 2024
|
Year to
31 January 2023
|
|
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
|
Note
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
Net gains/(losses) on investments
|
7
|
-
|
25,631
|
25,631
|
-
|
(30,277)
|
(30,277)
|
Net currency losses
|
|
-
|
-
|
-
|
-
|
(43)
|
(43)
|
Revenue
|
2
|
2,832
|
-
|
2,832
|
2,889
|
-
|
2,889
|
Investment management
fee1
|
|
(226)
|
(904)
|
(1,130)
|
(244)
|
(978)
|
(1,222)
|
Other expenses
|
3
|
(468)
|
-
|
(468)
|
(493)
|
-
|
(493)
|
Net return/(loss) on ordinary
activities before finance costs and taxation
|
|
2,138
|
24,727
|
26,865
|
2,152
|
(31,248)
|
(29,096)
|
Finance costs
|
1(d)
|
(101)
|
(400)
|
(501)
|
(71)
|
(284)
|
(355)
|
Net return/(loss) on ordinary
activities before taxation
|
|
2,037
|
24,327
|
26,364
|
2,081
|
(31,532)
|
(29,451)
|
Taxation on
ordinary activities
|
4
|
(287)
|
-
|
(287)
|
(300)
|
-
|
(300)
|
Net return/(loss) attributable to
shareholders
|
|
1,750
|
24,327
|
26,077
|
1,781
|
(31,532)
|
(29,751)
|
Net return/(loss) per Ordinary
share
|
5
|
2.37p
|
32.87p
|
35.24p
|
2.16p
|
(38.20p)
|
(36.04p)
|
The total columns of this statement
are the profit and loss accounts of the Company.
The revenue and capital items are
presented in accordance with the Association of Investment
Companies ('AIC') Statement of Recommended Practice
2022.
All revenue and capital items in
the above statement derive from continuing operations.
No operations were acquired or
discontinued in the year.
The notes below form part of these
financial statements.
There is no other comprehensive
income and therefore the return attributable to shareholders is
also the total comprehensive income for the period.
1The details of the investment management fee are provided in
the Report of the directors in the annual report and
accounts.
STATEMENT OF FINANCIAL
POSITION
|
|
As at 31
January 2024
|
As at 31
January 2023
|
|
|
Note
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
Non-current assets
|
|
|
|
|
|
|
|
Investments at fair value through
profit or loss
|
7
|
|
|
264,787
|
|
|
277,606
|
Current assets
|
|
|
|
|
|
|
|
Trade receivables
|
8
|
|
1,029
|
|
|
1,771
|
|
Cash and cash equivalents
|
9
|
|
1,922
|
|
|
1,256
|
|
|
|
|
|
2,951
|
|
|
3,027
|
Current liabilities
|
|
|
|
|
|
|
|
Trade payables
|
10
|
|
(961)
|
|
|
(865)
|
|
Bank loan
|
10
|
|
(10,000)
|
|
|
(30,000)
|
|
|
|
|
|
(10,961)
|
|
|
(30,865)
|
Total net assets
|
|
|
|
256,777
|
|
|
249,768
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
Called up Ordinary share
capital
|
11
|
|
4,934
|
|
|
4,934
|
|
Share premium account
|
|
|
11,823
|
|
|
11,424
|
|
Capital redemption
reserve
|
|
|
11,083
|
|
|
11,083
|
|
Capital reserve, of
which:
|
12
|
|
228,307
|
|
|
221,463
|
|
Realised capital reserve
(distributable)
|
|
156,688
|
|
|
154,191
|
|
|
Unrealised gains on investments
(undistributable)
|
|
71,619
|
|
|
67,272
|
|
|
Revenue reserve
|
|
|
630
|
|
|
864
|
|
Total shareholders' funds
|
|
|
|
256,777
|
|
|
249,768
|
Net asset value per Ordinary
share
|
13
|
|
|
360.5p
|
|
|
328.2p
|
|
|
|
|
|
|
|
|
|
|
|
The notes below form part of these
financial statements.
Martin Currie Global Portfolio Trust
plc is registered in Scotland, company number SC192761.
The financial statements were
approved by the Board of directors on 23 April 2024
and signed on its behalf by Christopher Metcalfe,
Chair.
STATEMENT OF CHANGES IN
EQUITY
|
|
Called
up
|
Share
|
Capital
|
Special
|
|
|
|
|
|
Ordinary
|
premium
|
redemption
|
distributable
|
Capital
|
Revenue
|
|
|
|
share
capital
|
account
|
reserve
|
reserve
|
reserve
|
reserve
|
Total
|
|
Note
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
As at 31 January 2023
|
|
4,934
|
11,424
|
11,083
|
-
|
221,463
|
864
|
249,768
|
Net return attributable to
shareholders
|
|
-
|
-
|
-
|
-
|
24,327
|
1,750
|
26,077
|
Ordinary shares issued
|
12
|
-
|
399
|
-
|
-
|
1,940
|
-
|
2,339
|
Ordinary shares bought
back
|
12
|
-
|
-
|
-
|
-
|
(18,305)
|
-
|
(18,305)
|
Dividends paid
|
6
|
-
|
-
|
-
|
-
|
(1,118)
|
(1,984)
|
(3,102)
|
As at 31 January 2024
|
|
4,934
|
11,823
|
11,083
|
-
|
228,307
|
630
|
256,777
|
|
|
Called
up
|
Share
|
Capital
|
Special
|
|
|
|
|
|
Ordinary
|
premium
|
redemption
|
distributable
|
Capital
|
Revenue
|
|
|
|
share
capital
|
account
|
reserve
|
reserve
|
reserve
|
reserve
|
Total
|
|
Note
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
£000
|
As at 31 January 2022
|
|
4,934
|
11,424
|
11,083
|
76,297
|
211,583
|
513
|
315,834
|
Net (loss)/return attributable to
shareholders
|
|
-
|
-
|
-
|
-
|
(31,532)
|
1,781
|
(29,751)
|
Ordinary shares bought
back
|
12
|
-
|
-
|
-
|
-
|
(32,848)
|
-
|
(32,848)
|
Dividends paid
|
6
|
-
|
-
|
-
|
(2,037)
|
-
|
(1,430)
|
(3,467)
|
Transfers between
reserves
|
1
(j)
|
-
|
-
|
-
|
(74,260)
|
74,260
|
-
|
-
|
As at 31 January 2023
|
|
4,934
|
11,424
|
11,083
|
-
|
221,463
|
864
|
249,768
|
The notes below form part of these
financial statements.
STATEMENT OF CASH
FLOW
|
|
Year to
31 January 2024
|
Year to
31 January 2023
|
|
Note
|
£000
|
£000
|
£000
|
£000
|
Cash flows from operating
activities
|
|
|
|
|
|
Net return/(loss) on ordinary
activities before taxation
|
|
|
26,364
|
|
(29,451)
|
Adjustments for:
|
|
|
|
|
|
(Gains)/losses on
investments
|
7
|
(25,631)
|
|
30,227
|
|
Finance costs
|
|
501
|
|
355
|
|
Dividend income
recognised
|
2
|
(2,790)
|
|
(2,885)
|
|
Interest income
recognised
|
2
|
(42)
|
|
(4)
|
|
Decrease/(increase) in
receivables
|
|
17
|
|
(18)
|
|
Decrease in payables
|
|
(26)
|
|
(75)
|
|
Overseas withholding tax
suffered
|
4
|
(287)
|
|
(300)
|
|
|
|
|
(28,258)
|
|
27,300
|
Net cash flows from
operations
|
|
|
(1,894)
|
|
(2,151)
|
Interest received
|
|
42
|
|
4
|
|
Dividends received
|
|
2,732
|
|
2,730
|
|
|
|
|
2,774
|
|
2,734
|
Net cash flows from operating
activities
|
|
|
880
|
|
583
|
Cash flows for investing
activities
|
|
|
|
|
|
Purchases of investments
|
|
(80,424)
|
|
(39,765)
|
|
Sales of investments
|
|
119,657
|
|
70,029
|
|
Net cash flows from investing
activities
|
|
|
39,233
|
|
30,264
|
|
|
|
|
|
|
Cash flows from financing
activities
|
|
|
|
|
|
Repurchase of Ordinary share
capital
|
|
(18,246)
|
|
(32,358)
|
|
Shares issued for cash
|
|
2,339
|
|
-
|
|
Equity dividends paid
|
6
|
(3,102)
|
|
(3,467)
|
|
Draw down of bank loan
|
|
10,000
|
|
-
|
|
Repayment of bank loan
|
|
(30,000)
|
|
-
|
|
Interest and fees paid on bank
loan
|
|
(438)
|
|
(355)
|
|
Net cash flows from financing
activities
|
|
|
(39,447)
|
|
(36,180)
|
Net increase/(decrease) in cash and
cash equivalents
|
|
|
666
|
|
(5,333)
|
Cash and cash equivalents at the
start of the year
|
|
|
1,256
|
|
6,589
|
Cash and cash equivalents at the end
of the year
|
|
|
1,922
|
|
1,256
|
Analysis of debt
|
Note
|
Year
to
31
January 2023
£000
|
Cash
flows
£000
|
Exchange
movements
£000
|
Year
to
31
January 2024
£000
|
Cash at bank
|
9
|
1,256
|
666
|
-
|
1,922
|
Bank loan
|
10
|
(30,000)
|
20,000
|
-
|
(10,000)
|
Net debt
|
|
(28,744)
|
20,666
|
-
|
(8,078)
|
|
Note
|
Year
to
31
January 2022
£000
|
Cash
flows
£000
|
Exchange
movements
£000
|
Year
to
31
January 2023
£000
|
Cash at bank
|
9
|
6,589
|
(5,333)
|
-
|
1,256
|
Bank loan
|
10
|
(30,000)
|
-
|
-
|
(30,000)
|
Net debt
|
|
(23,411)
|
(5,333)
|
-
|
(28,744)
|
The notes below form part of these
financial statements.
NOTES TO THE FINANCIAL
STATEMENTS
Note 1: Accounting
policies
a) For the
reporting period, the Company is applying FRS 102 Financial
Reporting Standard applicable in the UK and Republic of Ireland
(FRS 102), which forms part of the Generally Accepted Accounting
Practice ('UK GAAP') issued by the Financial Reporting Council
('FRC').
The Company's assets consist of a
diverse portfolio of listed equity shares which, in most
circumstances, are realisable within a very short timescale. The
Directors are mindful of the principal and emerging risks and
uncertainties including those related to geopolitical risks and
climate considerations.
They have reviewed revenue
forecasts for the next two financial years, including liabilities
arising from the loan facility, and believe that the Company has
adequate financial resources to continue its operational existence
for the period to 31 January 2026, which is at least 12 months from
the date the financial statements are authorised for issue.
Accordingly, the Directors continue to adopt the going concern
basis in preparing these financial statements.
These financial statements have
been prepared in accordance with the Disclosure Guidance and
Transparency Rules of the Financial Conduct Authority, FRS102
issued by the FRC and the revised Statement of Recommended Practice
'Financial Statements of Investment Trust Companies and Venture
Capital Trusts' (SORP) issued by the AIC in July 2022.
Functional currency - the Company
is required to identify a functional currency, being the currency
in which the Company predominately operates. The Board has
determined that sterling is the Company's functional currency,
which is also the currency in which these financial statements are
prepared. This is also the currency in which all expenses and
dividends are paid.
The Directors have considered the
impact of climate change on the value of the listed investments
that the Company holds. In the view of the Directors, as the
portfolio consists of listed equities, their market prices should
reflect the impact, if any, of climate change and accordingly no
adjustment has been made to take account of climate change in the
valuation of the portfolio in these financial
statements.
b) Income from
investments (other than capital dividends), including taxes
deducted at source, is included in revenue by reference to the date
on which the investment is quoted ex-dividend, or where no
ex-dividend date is quoted, when the Company's right to receive
payment is established. UK investment income is stated net of
the relevant tax credit. Overseas dividends include any taxes
deducted at source. Special dividends are credited to capital or
revenue, according to the circumstances. Stock dividends are
treated as unfranked investment income; any excess in value of the
shares received over the amount of the cash dividend is recognised
as a capital item in the statement of comprehensive
income.
c)
Interest receivable and payable,
investment management fees and other expenses are measured on an
accruals basis.
d)
The investment management fee and finance costs in
relation to debt are recognised four-fifths as a capital item and
one-fifth as a revenue item in the statement of comprehensive
income in accordance with the Board's expected long-term split of
returns in the form of capital gains and revenue, respectively.
Finance costs relate to interest and fees on bank loans and
overdrafts. All other expenses are charged to revenue except where
they directly relate to the acquisition or disposal of an
investment, in which case they are treated as described in (f)
below. Full details of the investment management fee are included
in the Report of the directors in the annual report and
accounts.
e) Investments -
investments have been classified upon initial recognition at fair
value through profit or loss. Investments are recognised and
derecognised at trade date where a purchase or sale is under a
contract whose terms require delivery within the time frame
established by the market concerned, and are initially measured at
fair value. After initial recognition, investments are valued
at fair value. For listed investments, this is deemed to be bid
market prices. Gains and losses arising from changes in fair value
are included in net profit or loss for the year as a capital item
in the statement of comprehensive income and are ultimately
recognised in the capital reserve.
f)
Transaction costs incurred on the purchase and
disposal of investments are recognised as a capital item in the
statement of comprehensive income.
g)
Monetary assets and liabilities expressed in foreign currencies are
translated into sterling at rates of exchange ruling at the date of
the statement of financial position.
Non-monetary items expressed in
foreign currencies held at fair value are translated into sterling
at rates of exchange ruling at the date the fair value is measured.
Transactions in foreign currency are converted to sterling at the
rate ruling at the date of the transaction. Exchange gains and
losses are taken to the income statement as a capital or revenue
item depending on the nature of the underlying item.
h)
Cash and cash equivalents comprise cash and demand
deposits which are readily convertible to a known amount of cash
and are subject to insignificant risk of changes in
value.
i) Dividends payable - under FRS102 dividends should not be
accrued in the financial statements unless they have been approved
by shareholders before the statement of financial position date.
Dividends to equity shareholders are recognised in the statement of
changes in equity when the shareholder's right to receive the
payment is established. In the case of the fourth interim dividend,
this would be the ex-dividend date of 4 April 2024.
j) Called up ordinary share capital - represents the nominal
value of the issued share capital including shares held in
Treasury. This reserve is non-distributable.
The share premium account - when
shares held in Treasury are reissued, the excess of the sales
proceeds over the weighted average price of repurchase is allocated
to the share premium account. This reserve is
non-distributable.
The capital redemption reserve -
represents the nominal value of the shares bought back and
cancelled. This reserve is non-distributable.
The special distributable reserve
- created through the cancellation and reclassification of the
share premium account in 1999 and 2004. Prior to 1 February 2021,
the costs of share buybacks and the proceeds of shares re-issued
from Treasury up to the original cost of repurchase, calculated by
applying the weighted average price of shares held in Treasury,
were allocated to the special distributable reserve.
Following the Board's decision in the prior year to simplify the
Company's reserves, the balance of the special distributable
reserve of £74,260,000 was transferred in full to the realised
capital reserve on 16 June 2022 (see Statement of changes in equity
for more details on the movement in reserves). Thus, the balance of
this reserve as at 31 January 2024 is nil.
The capital reserve - gains or
losses on realisation of investments and changes in fair values of
investments are transferred to the realised capital reserve. Any
changes in fair values of investments that are not readily
convertible to cash are treated as unrealised gains or losses
within the capital reserve. The capital element of the investment
management fee and relevant finance costs are charged to this
reserve. Any associated tax relief is also credited to this
reserve.
With effect from 16 June 2022, the
accounting policy has been updated following the passing of
Resolution 18 at the Company's AGM, whereby the new Articles of
Association were adopted which allow the realised portion of the
capital reserve to be distributable by way of dividend in addition
to continuing to be available for distribution by way of share
buybacks.
The consolidation of the special
distributable reserve and the capital reserve has had no impact on
the Company's cash or net assets.
The revenue reserve - represents
net revenue earned that has not been distributed to shareholders.
This reserve is fully
distributable.
k)
Taxation - the charge for taxation is
based upon the revenue for the year and is allocated according to
the marginal basis between revenue and capital using the Company's
effective rate of corporation tax for the accounting
period.
l)
Deferred taxation - deferred taxation is recognised in respect of
all timing differences that have originated but not reversed at the
statement of financial position date where transactions or events
that result in an obligation to pay more or a right to pay less tax
in future have occurred at the statement of financial position date
measured on an undiscounted basis and based on enacted tax rates.
This is subject to deferred tax assets being recognised only if it
is considered more likely than not that there will be suitable
profits from which the future reversal of the underlying temporary
differences can be deducted. Timing differences are differences
arising between the Company's taxable profits and its results as
stated in the accounts which are capable of reversal in one or more
subsequent periods. Due to the Company's status as an investment
trust, and the intention to continue meeting the conditions
required to obtain approval as an investment trust in the
foreseeable future, the Company has not provided deferred tax on
any capital gains and losses arising on the revaluation or disposal
of investments.
m) Estimates - estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimates are revised and in
any future periods affected. There have been no significant
judgements, estimates or assumptions for the year.
n)
Bank loans are classified as financial liabilities
at amortised cost. Interest and fees payable on the bank loan are
accounted for on an accrual basis in the statement of comprehensive
income.
Note 2: Revenue from
investments
|
Year
ended
|
Year ended
|
|
31
January 2024
£000
|
31
January 2023
£000
|
Dividends from listed
investments
|
|
|
UK equities
|
122
|
275
|
International equities
|
2,668
|
2,610
|
Other revenue
|
|
|
Interest on deposits
|
42
|
4
|
|
2,832
|
2,889
|
There were no capital dividends
received during the year ended 31 January 2024 (2023:
£nil).
Note 3: Other expenses
|
Year
ended 31 January 2024
£000
|
Year
ended 31 January 2023
£000
|
Directors' fees
|
147
|
158
|
Audit fees
|
66
|
56
|
Advertising and public
relations
|
63
|
122
|
Professional, regulatory and listing
fees
|
55
|
41
|
Registration fees
|
43
|
38
|
Depositary fees
|
29
|
19
|
Printing and postage
|
14
|
19
|
Directors' and officers' liability
insurance
|
12
|
12
|
Custody fees
|
11
|
7
|
Legal fees
|
1
|
26
|
Secretarial
fee1
|
-
|
25
|
VAT recovered
|
(19)
|
(56)
|
Other
|
46
|
26
|
|
468
|
493
|
All expenses detailed above include
VAT where applicable.
1With effect from 1 July 2022, the AIFM ceased charging a
separate company secretarial fee.
Note 4: Taxation on ordinary
activities
|
Year
ended 31 July 2024
|
Year ended 31 January 2023
|
|
Revenue
£000
|
Capital
£000
|
Total
£000
|
Revenue
£000
|
Capital
£000
|
Total
£000
|
Overseas tax suffered
|
287
|
-
|
287
|
300
|
-
|
300
|
The corporation tax rate for the
year ended 31 January 2024 was 24.03% (2023: 19.00%). The tax
charge for the year differs from the charge resulting from applying
the standard rate of corporation tax in the UK. The
differences are explained below.
|
Year
ended 31 January 2024
£000
|
Year
ended 31 January 2023
£000
|
Net return before
taxation
|
26,364
|
(29,451)
|
Corporation tax at rate of 24.03%
(2023: 19.00%)
|
6,335
|
(5,596)
|
Effects of:
|
|
|
UK dividends not
taxable
|
(29)
|
(52)
|
(Gains)/losses on investments not
taxable
|
(6,159)
|
5,751
|
Overseas dividends not
taxable
|
(641)
|
(496)
|
Overseas tax suffered
|
287
|
300
|
Increase in excess management and
loan expenses
|
494
|
393
|
Total tax charge for the
year
|
287
|
300
|
As at 31 January 2024, the Company
had unutilised management expenses of £46 million (2023: £44
million) carried forward. Due to the Company's status as an
investment trust and the intention to continue to meet the
conditions required to obtain approval for that status in the
foreseeable future, the Company has not provided deferred tax on
capital gains and losses arising on the revaluation or disposal of
investments.
Note 5: Returns per
share
|
Year
ended 31 January 2024
|
Year
ended 31 January 2023
|
The returns and net asset value
per Ordinary share are calculated with reference to the following
figures:
|
|
|
Revenue return £000
|
1,750
|
1,781
|
Capital return £000
|
24,327
|
(31,532)
|
Total return £000
|
26,077
|
(29,751)
|
Weighted average number of shares
in issue during the year
|
73,994,270
|
82,551,425
|
|
|
|
Revenue return per
share
|
2.37p
|
2.16p
|
Capital return per
share
|
32.87p
|
(38.20p)
|
Total return per share
|
35.24p
|
(36.04p)
|
Note 6: Dividends
|
Year
ended
31
January 2024
£000
|
Year
ended
31
January 2023
£000
|
Year ended 31 January 2022 - fourth
interim dividend of 1.50p
|
-
|
1,285
|
Year ended 31 January 2023 - fourth
interim dividend of 1.50p
|
1,118
|
-
|
Year ended 31 January 2024 - first
interim dividend of 0.90p (2023: 0.90p)
|
675
|
752
|
Year ended 31 January 2024 - second
interim dividend of 0.90p (2023: 0.90p)
|
662
|
728
|
Year ended 31 January 2024 - third
interim dividend of 0.90p (2023: 0.90p)
|
647
|
702
|
|
3,102
|
3,467
|
Revenue return per share for the
year ended 31 January 2024 is 2.37p (2023: 2.16p), refer to note 5
for details of calculation.
The fourth interim dividend for
the year ended 31 January 2023 has been allocated to the realised
capital reserve. The first, second and third interim dividends for
the year ended 31 January 2024 have been allocated to the revenue
reserve. The fourth interim dividend for the year ended 31 January
2022 and the first interim dividend for the year ended 31 January
2023 were allocated to the special distributable
reserve.
Set out below are the total
dividends paid/payable in respect of the financial year which forms
the basis on which the requirements of s1158-1159 of the
Corporation Taxes Act 2010 are considered.
|
Year
ended
31
January 2024
£000
|
Year
ended
31
January 2023
£000
|
First interim dividend of 0.90p for
the year ended 31 January 2024 (2023: 0.90p)
|
675
|
752
|
Second interim dividend of 0.90p for
the year ended 31 January 2024 (2023: 0.90p)
|
662
|
728
|
Third interim dividend of 0.90p for
the year ended 31 January 2024 (2022: 0.90p)
|
647
|
702
|
Proposed fourth interim dividend of
1.50p for the year ended 31 January 2024 (2023: 1.50p)
|
1,041
|
1,115
|
|
3,025
|
3,297
|
Note 7: Investments at fair value
through profit or loss
|
Year
ended 31 January 2024
£000
|
Year
ended 31 January 2023
£000
|
Opening book cost
|
210,334
|
238,463
|
Opening investment holding
gains
|
67,272
|
101,072
|
Opening market value
|
277,606
|
339,535
|
Additions at cost
|
80,424
|
39,765
|
Disposals proceeds
received
|
(118,874)
|
(71,467)
|
Gains/(losses) on
investments
|
25,631
|
(30,227)
|
Market value of investments held
at 31 January
|
264,787
|
277,606
|
Closing book cost
|
193,168
|
210,334
|
Closing investment holding
gains
|
71,619
|
67,272
|
Closing market value
|
264,787
|
277,606
|
|
|
|
The Company received £118,874,000
(2023: £71,467,000) from investments sold in the year. The book
cost of these investments when they were purchased was £97,590,000
(2023: £67,894,000).
The transaction costs in acquiring
investments during the year were £105,000 (2023: £52,000). For
disposals, transaction costs were £62,000 (2023:
£37,000).
|
Year
ended 31 January 2024
£000
|
Year
ended 31 January 2023
£000
|
Net realised gain on
investments
|
21,284
|
3,573
|
Net change in unrealised
gains/(losses) on investments
|
4,347
|
(33,800)
|
Total capital
gains/(losses)
|
25,631
|
(30,227)
|
Note 8: Trade
receivables
|
As at 31
January 2024
£000
|
As at 31
January 2023
£000
|
Sales awaiting
settlement
|
655
|
1,438
|
Taxation recoverable
|
296
|
243
|
VAT recoverable
|
11
|
49
|
Dividends receivable
|
27
|
22
|
Other debtors
|
40
|
19
|
|
1,029
|
1,771
|
Note 9: Cash and cash
equivalents
|
As at 31
January 2024
£000
|
As at 31
January 2023
£000
|
Sterling bank account
|
1,922
|
1,256
|
|
1,922
|
1,256
|
Note 10: Trade payables
|
As at 31
January 2024
£000
|
As at 31
January 2023
£000
|
Amounts falling due within one
year:
|
|
|
Ordinary shares bought back
awaiting settlement
|
584
|
525
|
Interest accrued on bank
loan
|
130
|
67
|
Investment management and
secretarial fees
|
85
|
83
|
Other payables
|
162
|
190
|
|
961
|
865
|
Bank loan1
|
10,000
|
30,000
|
1On 23 November 2020, the Company entered into an unsecured
three year £30 million sterling term loan facility agreement with
The Royal Bank of Scotland International Limited ('RBSI') at a
fixed interest rate of 1.181%. This facility was fully drawn down
on 24 November 2020 and matured on 23 November 2023. On 22 November
2023, the Company entered into a three year £10m revolving credit
facility agreement with RBSI. The existing facility was repaid on
its maturity and £10m was drawn down under the replacement facility
on the same date and for an initial period of six months. Interest
is payable on drawings under the revolving credit facility at an
annual rate of 1.55% over the Sterling Overnight Index Average
('SONIA'). Due to its maturity in less than one year, the drawing
under the revolving credit facility has been classified as a
current liability.
The revolving credit facility
agreement contains covenants that the adjusted investment portfolio
value at each month end should not be less than £120 million, the
gross borrowings should not exceed 30% of the Company's adjusted
investment portfolio value and the portfolio must contain at least
22 eligible investments. The facility is shown at amortised
cost.
Finance costs are charged to
capital (80%) and revenue (20%) in accordance with the Company's
accounting policies.
Note 11: Ordinary shares of
5p
|
Number
of shares
|
As
at
31
January 2024
£000
|
Number
of shares
|
As
at
31
January 2023
£000
|
Ordinary shares of 5p
|
|
|
|
|
Ordinary shares in issue at the
beginning of the year
|
76,105,554
|
3,804
|
86,614,404
|
4,330
|
Ordinary shares issued from Treasury
during the year
|
675,000
|
34
|
-
|
-
|
Ordinary shares bought back to
Treasury during the year
|
(5,551,747)
|
(278)
|
(10,510,850)
|
(526)
|
Ordinary shares in issue at end of
the year
|
71,228,807
|
3,560
|
76,105,554
|
3,804
|
|
Number
of shares
|
As
at
31
January 2024
£000
|
Number
of shares
|
As
at
31
January 2023
£000
|
Treasury shares (Ordinary shares of
5p)
|
|
|
|
|
Treasury shares in issue at the
beginning of the year
|
22,570,353
|
1,130
|
12,059,503
|
604
|
Ordinary shares issued from Treasury
during the year
|
(675,000)
|
(34)
|
-
|
-
|
Ordinary shares bought back to
Treasury during the year
|
5,551,747
|
278
|
10,510,850
|
526
|
Treasury shares in issue at end of
the year
|
27,447,100
|
1,374
|
22,570,353
|
1,130
|
Total Ordinary shares in issue and
in Treasury at the end of the year
|
98,675,907
|
4,934
|
98,675,907
|
4,934
|
For the financial year to 31
January 2024, the payments made for shares bought back to Treasury
less proceeds received for shares issued from Treasury was
£15,966,000 (2023: the payments made for shares bought back to
Treasury less proceeds received for shares issued from Treasury was
£32,848,000).
Between 1 February 2024 and 12
April 2024, 1,960,058 Ordinary shares of 5p were bought back to
Treasury and no Ordinary shares of 5p were issued from
Treasury.
Note 12: Capital
reserves
|
Realised
capital reserve
£000
|
Unrealised investment holding gains
£000
|
Total
capital reserve
£000
|
As at 31 January 2023
|
154,191
|
67,272
|
221,463
|
Gains on realisation of investments
at fair value
|
21,284
|
-
|
21,284
|
Movement in fair value gains of
investments
|
-
|
4,347
|
4,347
|
Proceeds from the issue of shares
from Treasury
|
1,940
|
-
|
1,940
|
Cost of shares bought back into
Treasury
|
(18,305)
|
-
|
(18,305)
|
Capital expenses
|
(1,304)
|
-
|
(1,304)
|
Dividends paid
|
(1,118)
|
-
|
(1,118)
|
As at 31 January 2024
|
156,688
|
71,619
|
228,307
|
|
Realised
capital reserve
£000
|
Unrealised investment holding gains
£000
|
Total
capital reserve
£000
|
As at 31 January 2022
|
110,511
|
101,072
|
211,583
|
Gains on realisation of investments
at fair value
|
3,573
|
-
|
3,573
|
Movement in fair value gains of
investments
|
-
|
(33,800)
|
(33,800)
|
Realised currency losses during the
year
|
(43)
|
-
|
(43)
|
Cost of shares bought back into
Treasury
|
(32,848)
|
-
|
(32,848)
|
Capital expenses
|
(1,262)
|
-
|
(1,262)
|
Transfer of
reserves1
|
74,260
|
-
|
74,260
|
As at 31 January 2023
|
154,191
|
67,272
|
221,463
|
1Refer to Note 1(j): Accounting policies for details on the
consolidation of reserves. Prior to the consolidation, the balance
of the special distributable reserve was reduced by £2,037,000, the
amount of the dividends paid during the period. The realised
capital reserve is distributable by way of dividend and by way of
share buybacks. The unrealised investment holding gains is
non-distributable.
The above split in capital reserve
is shown in accordance with provisions of the Statement of
Recommended Practice 'Financial Statements of Investment Trust
Companies and Venture Capital Trusts 2022'.
Note 13: Net asset value per
share
|
As at 31
January 2024
£000
|
As at 31
January 2023
£000
|
Net assets attributable to
shareholders
|
£256,777,000
|
£249,768,000
|
Number of shares in issue at the
year end
|
71,228,807
|
76,105,554
|
Net asset value per
share
|
360.5p
|
328.2p
|
Note 14: Related party
transactions
With the exception of the
investment management fees (as set out in the annual report and
accounts), secretarial fees up to 1 July 2022 (as set out in the
annual report and accounts), Directors' fees (disclosed in the
annual report and accounts) and Directors' shareholdings (as set
out in the annual report and accounts), there have been no related
party transactions during the year, or in the prior
year.
The amounts payable for Directors'
fees as at 31 January 2024 are £37,864 (2023: £14,478).
Note 15: Financial
instruments
The Company's financial
instruments comprise securities and other investments, cash
balances, receivables and payables that arise directly from its
operations; for example, in respect of sales and purchases awaiting
settlement, and receivables for accrued income.
The Company also has the ability
to enter into derivative transactions in the form of forward
foreign currency contracts, futures and options, for the purpose of
managing currency and market risks arising from the Company's
activities.
The main risks the Company faces
from its financial instruments are (a) market price risk
(comprising (i) interest rate risk, (ii) currency risk and (iii)
other price risk), (b) liquidity risk and (c) credit
risk.
The Board regularly reviews and
agrees policies for managing each of these risks. The AIFM's
policies for managing these risks are summarised below and have
been applied throughout the year. The numerical disclosures exclude
short-term receivables and payables, other than for currency
disclosures.
(a) Market price risk
The fair value or future cash
flows of a financial instrument held by the Company may fluctuate
because of changes in market prices. This market risk comprises
three elements - interest rate risk, currency risk and other price
risk.
(i) Market risk arising from
interest rate risk
Interest rate movements may affect
the level of income receivable on cash deposits.
The possible effects on fair value
and cash flows that could arise as a result of changes in interest
rates are taken into account when making investment and borrowing
decisions. The Board imposes
borrowing limits to ensure gearing levels are appropriate and
reviews these on a regular basis. Borrowings may comprise fixed
rate, revolving, and uncommitted facilities. Current
guidelines state that the total borrowings will not exceed 20% of
the net assets of the Company at the time of drawdown. On 22
November 2023, the Company entered into a £10 million sterling
revolving credit facility agreement. The facility was fully drawn
down on 23 November 2023 and the loan is shown at amortised
cost.
Interest risk profile
The interest rate risk profile of
the Company at the reporting date was as follows:
|
As at 31
January 2024
|
As at 31
January 2023
|
Cash and cash
equivalents
|
1,922
|
1,256
|
Bank loan - revolving credit
facility
|
(10,000)
|
-
|
Total net exposure to interest
rate risk
|
(8,078)
|
1,256
|
Interest rate
sensitivity
The sensitivity analysis below has
been determined based on the exposure to interest rates for
non-derivative instruments at the statement of financial position
date and the stipulated change taking place at the beginning of the
financial year and held constant throughout the reporting period in
the case of instruments that have floating rates.
If interest rates had been 1%
(2023: 2%) higher or lower and all other variables were held
constant, the Company's profit for the year ended 31 January 2024
would increase/decrease by £81,000 (2023: increase/decrease by
£25,000).
This is mainly attributable to the
Company's exposure to interest rates on its floating rate cash
balances and revolving credit facility.
(ii) Market risk arising from
foreign currency risk
A significant proportion of the
Company's investment portfolio is invested in overseas securities
and the statement of financial position can be significantly
affected by movements in foreign exchange rates. It is not
currently the Company's policy to hedge this risk.
The revenue account is subject to
currency fluctuation arising on overseas income.
Foreign currency risk
profile
Foreign currency risk exposure by
currency of denomination:
|
Year
ended 31 January 2024
|
Year
ended 31 January 2023
|
|
Total
currency exposure
£000
|
Total
currency exposure
£000
|
US dollar
|
138,389
|
131,244
|
Euro
|
80,481
|
73,668
|
Swedish kroner
|
24,521
|
28,004
|
Australian dollar
|
8,945
|
11,136
|
Danish krone
|
6,752
|
9,330
|
Hong Kong dollar
|
-
|
19,590
|
Total overseas
investments
|
259,088
|
272,972
|
Sterling
|
(2,311)
|
(23,204)
|
Total
|
256,777
|
249,768
|
The asset allocation between
specific markets can vary from time to time based on the portfolio
manager's opinion of the attractiveness of individual
stocks.
Foreign currency
sensitivity
At 31 January 2024, if sterling
had strengthened by 5% in relation to all currencies, with all
other variables held constant, total net assets and total return on
ordinary activities would have decreased by the amounts shown
below. A 5% weakening of sterling against all currencies, with all
other variables held constant, would have had an equal but opposite
effect on the financial statement amounts. The level of
change is considered to be a reasonable illustration based on the
volatility of exchange rates during the year.
|
Year
ended 31 January 2024
£000
|
Year
ended 31 January 2023
£000
|
Total net sensitivity to foreign
currencies
|
12,954
|
13,649
|
(iii) Market risk arising from
other price risk
Other price risks (i.e. changes in
market prices other than those arising from interest rate or
currency risk) may affect the value of the quoted
investments.
It is the Board's policy to hold
an appropriate spread of investments in the portfolio in order to
reduce the risk arising from factors specific to a particular
country or sector. The allocation of assets to international
markets as detailed above, and the stock selection process both act
to reduce market risk. The investment manager actively monitors
market prices throughout the year and reports to the Board, which
meets regularly in order to review investment strategy. All
investments held by the Company are listed on various stock
exchanges worldwide.
Other price risk
sensitivity
If market prices at the statement
of financial position date had been 30% (2023: 30%) higher or lower
while all other variables remained constant, the return
attributable to Ordinary shareholders at the year ended 31 January
2024 would have increased/decreased by £79,400,000 (2023:
increase/decrease of £83,300,000) and capital reserves would have
increased/decreased by the same amount. This level of change is
considered to be reasonably possible based on observation of market
conditions and historic trends.
(b) Liquidity risk
This is the risk that the Company
will encounter difficulty in meeting obligations associated with
financial liabilities.
Liquidity risk is not considered
to be significant as the Company's assets comprise mainly readily
realisable securities, which can be sold to meet funding
commitments if necessary.
(c) Credit risk
This is the risk of failure of the
counterparty to a transaction to discharge its obligations under
that transaction that could result in the Company suffering a
loss.
The risk is managed as
follows:
• investment transactions are carried out with a large number
of brokers, whose credit ratings are reviewed periodically by the
portfolio manager, and limits are set on the amount that may be due
from any one broker; and
• cash is
held only with reputable banks with high-quality external credit
ratings.
The maximum credit risk exposure
as at 31 January 2024 was £2,951,000 (2023: £3,027,000). This was
due to trade receivables and cash as per notes 8 and 9.
Fair values of financial assets
and financial liabilities
All financial assets and
liabilities of the Company are included in the statement of
financial position at fair value or a reasonable approximation of
fair value with no material difference in the carrying
amount.
Note 16: Capital management
policies and procedures
The Company's capital management
objectives are:
• to
ensure that the Company will be able to continue as a going
concern;
• to
maximise the return to its equity shareholders through an
appropriate balance of equity capital and debt; and
• to limit
gearing to 20% of net assets at time of drawdown.
The Board monitors and reviews the
broad structure of the Company's capital on an ongoing basis. This
review includes the nature and planned level of gearing, which
takes account of the portfolio manager's views on the market and
the extent to which revenue in excess of that which is required to
be distributed under the investment trust rules should be
retained.
The capital of the Company
consists of the equity reserves as shown on the equity section of
the statement of financial position and the bank loan as disclosed
in the liabilities section.
Note 17: Fair value
hierarchy
Under FRS 102, the Company is
required to classify fair value measurements using a fair value
hierarchy that reflects the significance of the inputs used in
making the measurements. The fair value hierarchy shall have the
following levels:
• Level 1:
quoted prices (unadjusted) in active markets for identical assets
or liabilities;
• Level 2:
other significant observable inputs (including quoted prices for
similar investments, interest rates, prepayments, credit risk,
etc);
• Level 3:
significant unobservable input (including the Company's own
assumptions in determining the fair value of
investments).
The financial assets measured at
fair value through profit and loss are grouped into the fair value
hierarchy as follows:
|
Year
ended 31 January 2024
|
Year
ended 31 January 2023
|
|
£000
|
£000
|
Level 1
|
264,787
|
277,606
|
Net fair value
|
264,787
|
277,606
|
Note 18: Post balance sheet
events
On 27 March 2024, the Board
declared a fourth interim dividend of 1.50p per share.
As at 12 April 2024, the Company
had bought back a further 1,960,058 ordinary shares at an average
price of 372.9p per share.
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Martin Currie Global Portfolio Trust
has an award winning website at www.martincurrieglobal.com.
This offers a wealth of information about the Company.
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following:
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