Registered in Scotland, no SC192761
MARTIN CURRIE GLOBAL PORTFOLIO TRUST PLC
Annual report – year to 31 January 2023
1
Welcome to the annual report for Martin Currie Global Portfolio Trust plc (the 'Company').
Our objective
The objective is to produce long-term returns in excess of the total return from the MSCI All Country World index.
Morningstar Sustainability Rating:
Source: ©September 2022 Morningstar, Inc. All rights reserved. The information herein is not represented or warranted to be acc
urate, complete or timely.
Past performance is no guarantee of future results
.
PRI – Principles for Responsible Investment. A copy of the PRI's assessment of Martin Currie and its methodology is available
on request.
Martin Currie is a signatory of
Net Zero Asset Managers Initiative
(NZAMI), 2021.
Martin Currie has been a UNPRI
signatory since July 2009
Ranking vs peers
across all three pillars
1
Top quartile
Investment &
Stewardship Policy
Incorporation
Voting
A unique blend of features and benefits enjoyed by our shareholders.
Global opportunity:
A global investment remit
provides the widest possible
opportunity to invest in the world’s
best companies, irrespective of
the country which they are listed
in. Shareholders benefit from a
ready-made global equity portfolio
which is diversified across
different geographic markets and
a range of economic sectors.
High conviction and high quality:
As active investors handpicking
25-40 companies for the
portfolio, we can concentrate
on businesses or sectors we
believe offer the most sustainable
growth over the long term. A
concentrated portfolio means
we have meaningful allocations
in each stock and we believe that
gives us the best opportunity to
outperform the markets.
Leading ESG characteristics:
You don’t have to compromise your
investment goals and desire to
invest in sustainable companies. Our
Environmental, Social and Governance
('ESG') credentials are exceptional and
we have been awarded the highest
possible Morningstar Sustainability
Rating™ of 'Five Globes'. We undertake
over 50 ESG risk assessments on every
company we research and engage with
companies to ensure they trend towards
best practice.
Established track record:
Established in 1999, shareholders
have enjoyed share price growth
ahead of the benchmark over
that period.
Shareholder-friendly benefits:
Investment trusts are listed on
the London Stock Exchange and
their company structure offers
many distinct features that
can enhance performance and
benefits for shareholders.
Low charges:
With low ongoing charges and no
performance fees, more of your
money is invested in the markets.
Strategic report
Chairman’s statement 6
Manager’s review 9
Our investment manager's process 17
ESG & our investment manager's process 19
Portfolio summary 20
Largest 10 holdings 23
Business review 28
Governance
Board of directors 37
Corporate governance statement 38
Report of the directors 43
Audit committee report 50
Directors’ remuneration statement 52
Financial review
Independent auditors’ report 56
Statement of comprehensive income 62
Statement of financial position 63
Statement of changes in equity 64
Statement of cash flow 65
Notes to the financial statements 67
Investor information
Directors and advisers 81
Alternative performance measures 82
Glossary of terms 84
Ways to invest in the Company 86
Notice of annual general meeting 87
Our website 91
2CONTENTS
1
2
3
4
FINANCIAL HIGHLIGHTS 3
Key data
1
Year ended
31 January 2023
Year ended
31 January 2022
Net asset value per share (pence)
2
328.2p 364.6p
Net asset value per share ('NAV')
total return
2
-8.8% 2.9%
MSCI All Country World index (benchmark) total return
3
0.3% 15.9%
Share price (pence) 319.0p 365.5p
Share price total return -9.3% -2.6%
Ongoing charges (as a percentage of shareholders’ funds)
4
0.61% 0.68%
Revenue return per share
5
2.16p 1.36p
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.
Total 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 page 82 for more details on
Alternative Performance Measures.
The 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 page 82 for more details.
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.
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 page 83 for more details.
For details of calculation, refer to note 5 on page 70.
Three year performance
Net Asset Value total
return over the three
year period.
Share price total return
over the three year
period.
Benchmark total return
over the three year
period.
12.8% 6.5% 30.5%
Highlights
• Strong performance in the final quarter of the financial year
• Reduction in management fees
• Ongoing focus on the quality growth strategy of the Company
• Maintained annual dividend
4
As at 31 January
Revenue return
per share
Dividend
per share
Net asset
value per
share
9
(Discount)/
premium
Investments
£000
Net assets
£000
2014 3.76p 4.00p 157.4p (0.6%) 163,755 164,201
2015 3.92p 4.10p 178.5p 0.6% 181,798 183,951
2016 4.15p 4.15p 176.3p (1.9%) 174,976 178,107
2017 4.21p 4.20p 223.9p (0.0%) 215,619 216,497
2018 3.72p 4.20p 246.1p 0.4% 223,192 227,186
2019 3.47p 4.20p 245.5p (1.4%) 203,818 205,575
2020 2.52p 4.20p 301.9p 3.0% 251,714 251,695
2021 1.97p 4.20p 358.2p 3.3% 327,988 303,571
2022 1.36p 4.20p 364.6p (2.2%) 339,535 315,834
2023 2.16p 4.20p 328.2p (2.8%) 277,606 249,768
10 year performance
6, 7, 8
Jan 2015Jan 2014 Jan 2016 Jan 2017 Jan 2018 Jan 2019 Jan 2020 Jan 2021 Jan 2022
Jan 2023
(%)
150
200
250
300
100
50
0
Jan 2013
Share price total return 161.2%
NAV total return 159.2%
Benchmark 201.0%
10 year record
Past performance is not a guide to future returns. All returns are total returns unless otherwise stated.
Source: Martin Currie Investment Management.
Total 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 page 82 for more details on
Alternative Performance Measures.
The 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 page 82 for more details.
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.
Cum-income.
1: STRATEGIC REPORT
Dear Shareholder
Investment performance
The 12 months covered by our financial year to 31 January 2023 were
turbulent. We started February 2022 with concern about the fallout
from the pandemic, its effect on trade and inflation along with a legacy
of high debt. This was rapidly overtaken by the Russian invasion of
Ukraine, which affected the prices of energy and other commodities.
The prospect of a period of high and prolonged inflation led central
banks in most parts of the world to increase interest rates which had
hitherto generally been kept at a very low level to counter the aer-
effects of the global financial crisis a decade previously. The approach
to setting interest rates in the current environment is a delicate
balancing act between controlling inflation while not unnecessarily
choking economic growth. The high level of uncertainty led to volatile
equity markets. This was a difficult period for our portfolio manager’s
investment style in particular and, as a result, your Company’s NAV
total return was –8.8%.
Negative returns are naturally disappointing. The portfolio manager
has remained true to an investment philosophy focused on companies
selected for their potential for long-term growth, backed by a firm
focus on ESG credentials and which we believe will generate strong
returns over the long term.
Income and dividends
Net revenue earnings per share for the period amounted to 2.16 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
28 April 2023 to shareholders on the register on 11 April 2023. The
total dividends with respect to the year to 31 January 2023 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 historic levels. In 2022 shareholders approved changes to
the Company’s Articles of Association to permit the distribution of
realised capital gains and it 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.
6CHAIRMAN’S STATEMENT
Gillian Watson, Chairman
“The manager has remained
true to his investment
process and philosophy and
we remain confident that
this will lead to superior
returns in the long term.”
At each Annual General Meeting (‘AGM’) since 2019,
shareholders have been asked to approve the Company’s
dividend policy. The primary purpose of adopting a formal
dividend policy was to allow the Company to continue to pay
four quarterly interim dividends each year. Following a review
by the Board we have expanded the dividend policy this
year, principally to reaffirm our commitment to pay quarterly
dividends and to confirm an intention at least to maintain the
level of dividend each year, subject to market conditions and the
Company's financial position and outlook. A detailed explanation
of the revised dividend policy is set out in the description of
AGM resolutions on page 46.
ESG leadership and promoting the Company’s
shares
Martin Currie Global Portfolio Trust is recognised as a leader
in ESG investing and has been awarded the highest possible
'Five Globes' from Morningstar. It is also rated in the top 1% of
over 7,000 funds in Morningstar’s global large cap category
for ESG
1
. The portfolio manager's focus remains on investing in
the highest quality companies that are expected to generate
sustainable returns over the long term and, as described in this
report, ESG analysis is at the core of the investment strategy. We
believe that this distinctive approach to investing is important in
stimulating demand for shares in a crowded market and against
a background of increasing focus on the environment and on
social and governance issues. The manager has remained very
active in promoting the Company, including regular meetings
with major shareholders, a wide variety of online activity
designed to encourage investors to go to our website and
regular press coverage of the portfolio manager’s distinctive
investment style.
Our 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.
A key element of our approach to making the Company
attractive to investors is 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 significantly different from
the NAV.
During the year under review, the Company bought back
10,510,850 shares which were placed in Treasury. No shares were
issued, reflecting the difficult market conditions which we have
experienced over the last year. While the Company has quite
a high proportion of shares in Treasury, market sentiment can
change rapidly and the Board believes that it is appropriate to
be able to reissue shares in response to demand quickly and at
low cost, subject to shareholders' annual approval to disapply
pre-emption rights. Shares would only be issued when we
believe this to be in the best interests of existing shareholders
and at a premium to the prevailing NAV at the time of issue.
The Board remains committed to our zero discount policy and
it continues to achieve its aims, with the share price generally
remaining close to NAV.
7
“Martin Currie Global Portfolio Trust is recognised as a
leader in ESG investing and has been awarded the highest
possible 'Five Globes' from Morningstar.”
Morningstar, 31 December 2021 ©2021 Morningstar, Inc. All rights reserved. The information herein is not represented or warranted to be accurate, complete or timely.
Past performance is no guarantee of future results.
The Board
I joined the Board in April 2013 and, having served ten years
as a director, will stand down aer this year’s AGM. My fellow
directors have decided to appoint Christopher Metcalfe to
take the chair when I stand down. Christopher has extensive
experience in global equity fund management and I am
confident that I leave the Board in highly capable hands.
Mindful of the size of the Company and its cost base, the Board
has decided not to recruit a further director for the time being
and will continue with four non-executive directors.
Reduced management fees
As reported at the half-year stage, the reduction in NAV as a
result of market movements and share buybacks led the Board
to be concerned that the ongoing charges ratio was increasing.
We agreed with the manager that, with effect from 1 July 2022,
the investment management fee would be amended to 0.45% of
net assets
2
per annum. Previously, the investment management
fee was 0.5% per annum for the first £300m of the Company's
net assets
2
and 0.35% for net assets
2
in excess of £300m.
Furthermore, with effect from 1 July 2022, there will no longer
be a separate company secretarial fee
2
. At the financial year-
end net assets
2
of circa £250m, the combined effect of the cut
in ad valorem fee and removing the company secretarial fee
amounts to a reduction of approximately 14% in annual fees and
results in a simpler cost structure. The Board is confident that
the new structure provides a competitive ongoing charge and
contributes positively to increasing shareholder value. We would
like to thank the AIFM for a helpful and constructive approach to
this change.
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 EH BH on Thursday 1 June 2023 at 11.00 am.
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
cosec@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.
Outlook
The outlook for economies around the world remains very
difficult, with inflation at levels not seen for a generation.
Uncertainty is also driven by geopolitical events, in particular the
continuing Ukraine-Russia conflict and tension between China
and the USA. Against this challenging background, there are
some tentative signs of recovery. At the time of writing, inflation
has fallen back from the very high levels triggered by the initial
reaction to the conflict in Ukraine while China has apparently
abandoned its zero-Covid policy. The crucial point will be
governments’ and central banks’ ability to negotiate the balance
of trying to control inflation by raising interest rates while not
triggering a prolonged recession.
Continued volatility in share prices remains inevitable. While
markets seek to anticipate future circumstances, current events
in the news are likely to trigger sharp moves in share prices, as
witnessed by the recent reaction to problems in the banking
sector.
This year we did not achieve our KPIs relating to investment
returns but it was reassuring to note a marked improvement
in performance towards the end of our financial year and into
the first quarter of 2023. Successful investment relies on taking
a long-term view and it is important to look beyond volatility
and remain consistent to our objective. Our portfolio manager
will continue to concentrate on a focused list of investments,
researched in depth and selected for their long-term growth
prospects and sustainable credentials. We remain of the view
that over the longer term our portfolio manager’s consistent
approach and strategy will deliver attractive returns to investors.
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.
I thank you for your continued support. Please contact me if
you have any questions regarding your Company by email at:
cosec@franklintempleton.com.
8
Gillian Watson
Chairman
6 April 2023
For the purposes of calculating management fees, current period net income is excluded from the calculation of net assets. The Company secretarial fee for the year to 31 January 2022 was
£56,000 plus VAT.
9MANAGER'S REVIEW
Review of financial year ended 31 January 2023
2022 was a significant year for financial markets, with large movements
both in equities and bond markets, and poor performance in both
of these asset classes. There were many extreme developments in
geopolitics, inflation, monetary policies, and financial markets.
The financial year to the end of January 2023 was a disappointing year
for us, with marked underperformance by some of the stocks that we
held and of the portfolio as a whole.
During the year, inflation increased significantly as demand for
goods and services accelerated post the pandemic lockdowns,
whilst shortages and production bottlenecks kept the supply-
side constrained. This led to a flare up in frictional inflation, which
was exacerbated by the Russian invasion of Ukraine. In these
circumstances it was very difficult for central banks, economists,
strategists, and market participants to predict inflation accurately.
Consumer Price Indices moved to above 10% in many regions across
developed markets. This is a level that has not been seen since the
early 1980’s or 1970’s in some instances, and a level significantly above
the c.2% targeted by main central banks such as the US Federal
Reserve (the ‘Fed’) and the European Central Bank (’ECB’). Central
banks went into a rapid series of interest rate hikes to try to tackle the
inflation flare up, with the Fed moving from rates of 0.25% at the start
of our financial year, to 4.75% on 1 February 2023, the day aer the
end of the year. This was a rapid 450bps increase in 12 months, with
increments of 75bps on four consecutive occasions throughout the
year. The significant shi in monetary policies was unexpected, and led
to a significant sell-off in both equities and bond markets, with rapid
negative returns of a magnitude not seen since the early part of the
20th century.
In periods of rising interest rates markets can deviate from
fundamentals for some time, selling off companies with long duration
of growth and compounding cash flows, such as the companies that
we hold in our portfolio. In periods of rising interest rates, the market
tends to favour short-duration assets, such as Value stocks to which
the Company has no exposure. This therefore led to a style-leadership
shi that was detrimental to the portfolio, contributing to the
underperformance during the year.
In the early part of 2022, we also had the tragic invasion of Ukraine by
Russia. The resultant inflation led by energy and commodity prices,
caused a flight towards defence-exposed stocks, and “defensive”
parts of the market. The Company holds no energy and no defence
stocks, has little exposure to commodities-related stocks, and has
an underweight to defensive sectors such as food producers and
pharmaceuticals companies.
“2022 was a significant
year for financial markets,
with large movements
both in equities and
bond markets, and poor
performance in both of
these asset classes.”
Zehrid Osmani, Portfolio Manager
10
During 2022, China went into periodic lockdowns to tackle the
risk of the Omicron variant of Covid-19. This led to a negative
impact on China’s economic activity, and further amplified
bottlenecks in supply chains and production around the world.
This exacerbated the frictional inflation that we mention above.
The Company has, directly or indirectly, exposure to the
Chinese economic cycle through companies in the Industrials,
Construction, Technology and Consumer space; this also
contributed further to the underperformance of the portfolio.
The NAV total return for the financial year was -8.8%, compared
with a return of +2.9% for the benchmark index.
Some of the headwinds to performance in 2022 have been
rapidly turning into tailwinds for the Company’s performance
in the past 2-3 months, as China suddenly and unexpectedly
u-turned on its zero-Covid policy, and reopened its economy.
This provided support to stocks exposed to China, notably in
the Luxury Goods and Industrials sectors. With China being the
second largest economy globally, a reopening has the potential
to support global economic momentum, and therefore could
reduce the fears of recession that the market has been focusing
on in the latter part of 2022. As a result, more cyclical ends of
the market, including the Technology sector, experienced a
significant rebound in the last 3 months of our financial year.
With the Company being sizeably exposed to China-related
stocks and to the Technology sector, the performance has been
very strongly positive, with the NAV total return being up by
12.9% in the 3 months to the end of January, compared with a
benchmark return of 3.7%.
The elevated market volatility that we have seen in 2022, and
so far in 2023, highlights the difficulty in timing the market,
and therefore the importance for investors to remain invested
in stock markets for the long term. The (in our view) over
amplified fears of recession during 2022 would have also led
to some investors missing the significant market rally seen in
late 2022 and early 2023, as China will likely provide a more
supportive backdrop for the global economic cycle than many
were predicting for 2023. This also highlights why we manage
our shareholders’ assets on a long-term time horizon of 5-10
years, and position the portfolio in companies that can perform
through the economic cycle rather than trying to time the
cycle, which experience has shown is very difficult to achieve
consistently.
Despite the underperformance experienced in 2022, we
have continued to focus on companies with strong long-term
fundamentals. We have maintained our conviction in most of
the stocks which we have held, and so have made only limited
changes to the list of stocks in the portfolio.
We continue to focus on companies that are exposed to
industries with high barriers to entry, that have:
• dominant market positions
• strong pricing power
• low disruption risk
• exposure to structural growth opportunities
• high returns on invested capital with strong cash flows and
solid balance sheets
• quality management
• sustainable business models
• good valuation support
Valuation discipline remains core to our approach, and with the
use of a high discount rate in our valuation methodology, we
have been anticipating interest rates returning to more normal
levels all along, even when rates were close to 0%, or at times
below zero. This makes us confident that we have been using a
conservative interest rate assumption when valuing companies
in the portfolio. Valuation discipline is important during all
phases of an economic cycle, but even more important when
we are going through a period of rising interest rates. We wish
to highlight to shareholders that our disciplined, consistent and
conservative approach to valuing investment opportunities in
stock markets should reassure them.
Key stock contributors and detractors
Linde performed well in the uncertain economic environment as
their ability to increase prices to offset and even exceed inflationary
pressures came to the fore. The new CEO also elaborated more on
the company's strategy, notably seizing opportunities from changing
legislation in the US, describing the Inflation Reduction Act as
“accelerating the clean energy transition”. Linde sees around $30bn
of incremental investment opportunities in decarbonising and in
new markets such as blue and green hydrogen, nitrogen, oxygen,
hydrogen storage, CO2 capture and transportation.
CSL, the Australian blood-plasma biotech company, performed
strongly in 2022. Through the second half of the year, news flow on
collections and therefore plasma supply has turned incrementally
positive. This has resulted in not only revenue growth but also
margin expansion as the collection centres, which have a high
proportion fixed costs, are better utilised. The good news is
compounded by early indications that new collection centre
soware can dramatically increase yield by up to 30%.
Ferrari performed well in the year. In June the luxury sportscar
maker hosted investors in Maranello at its first Capital Markets Day
since 2018. New CEO Benedetto Vigna used the occasion to set
out its strategy, sustainability and financial targets for the next five
years. Investors seemed to be satisfied with the company's focus on
the electrification agenda.
Portfolio additions
Additions this year included Croda, the British speciality chemical company; Nike, the US sportswear giant; and
Zoetis, a leading US producer of animal medicines.
11
Ferrari plans to shi the mix of models from 0% to 40% EV by
2030 with the first EV model to be unveiled in 2025. Further, in
September, Ferrari launched the Purosangue, the company's first
foray into the SUV market, a particularly important segment of the
Chinese market. Orders of the Purosangue to date have been well
beyond management's initial expectations.
Adidas underperformed materially in 2022, with a mixture of
transitory external factors causing problems, compounded with
some poor execution. The transparency on the underlying health of
the brand has been complicated by Covid, supply chain disruption
and Vietnamese factory closures which have proved difficult for
management to navigate. Adidas was then forced to terminate its
contract with the artist Ye in October. Whilst we believe this was the
proper course of action, the Yeezy issues were compounded by the
company's failure to disclose the highly profitable nature of those
sales, which leaves a significant gap in expected profitability of the
group. On this basis and with the CEO resigning prior to this news,
we exited the stock.
Conviction in Tencent weakened throughout 2022, due to a lack of
visibility on the regulatory front, and an ever-growing geopolitical
risk. Despite the crackdown easing towards the end of the year, we
do not see the regulatory uncertainty substantially lied over the
longer term. In a bear case, one could foresee an ongoing request
by the Chinese political establishment for tech giants including
Tencent to fund the common prosperity initiative that President
Xi Jinping has made one of his primary policy focuses. As it was
difficult to quantify the downside risk, we exited the stock.
Farfetch performed very poorly throughout 2022 with exposure to
a number of negative themes. The company held a Capital Markets
Day in December, where they laid out the profitability of a recent
deal and other recently announced new business, disclosing for the
first time a significantly lower level of profitability than had been
anticipated and greater dependence on the brand platform. With
real challenges to reach profitable growth, we exited the stock.
Portfolio Activity
In March we exited the position in JD.com, which came into the
portfolio as a result of Tencent’s divestment being distributed
in shares. In April we exited the position in TSMC, in favour of
ASML. We believe that ASML is better positioned to benefit
from the onshoring trend that we are seeing and are likely to
continue to see in semiconductor production sites, with plants
under construction in the US, approved for construction in
Japan, and the EU being likely to follow suit in the next few
years.
In October we entered into a position in Croda, while exiting
positions in Adidas and Tencent as described above. Croda is
a stock where we have growing conviction, as the company has
continued to reposition its portfolio, disposing of their PTIC
business, and making two important acquisitions, Avanti Lipid
Systems and Iberchem. These changes make the company more
focused, with stronger growth potential going forward.
12
In November we entered positions in Nike and Zoetis. We
acquired shares in Nike following an update to our forecasts
following weak trading. We assess the stock as having a positive
risk-reward profile, despite headwinds related to inventory
overhangs in the US and China in the sports apparel segment.
With the company having issued a profit warning with third
quarter results, we took advantage of the share price weakness.
We believe that the company has the potential to recover
beyond 2023 and to get back on track with its growth and ROIC.
We continue to like Nike's market share dominance in the US
and globally and its strategic push to the direct to consumer
channel, into key categories like womenswear where they are
under-represented and Jordan where they are able to create
more choice for the consumer.
We entered into a position in Zoetis following a 12% fall in the
share price on release of the financial results. We believe that
this was an over-reaction to results where there will be limited
change to consensus estimates, at c.2% and mostly related
to currency exchange rates in our view. Zoetis is the market
leading pure-play on the structural growth in animal medicines.
The industry enjoys relatively high barriers to entry and a sticky
customer base of veterinarians and livestock farmers. Zoetis has
market leading breadth in its portfolio and geographic reach in
its sales force. It is also a R&D leader in the animal health space.
This gives the firm the ability to gain market share through
developing superior drugs in markets that are too small and
fragmented for larger players to be interested.
ESG engagements
Engagement has continued to be an important ongoing
focal point for us throughout the year. We are pleased that
the Company has retained its top-rating of five Morningstar
Globes for Sustainability even under the new, more stringent,
methodology that they have applied.
Ahead of COP27 which took place in Egypt at the end of last
year UNEP, the UN Environmental Programme, produced its
seventeenth edition of the Emissions Gap report
(www.unep.org/resources/emissions-gap-report-2022). This
set out the continuing gap between current commitments from
governments (nationally determined contributions or NDCs),
pointing to a temperature rise of 2.6°C and the goals of the
Paris Agreement to limit the rise to well below 2°C. As such this
framed a renewed call for additional policy measures to support
the transition to a lower carbon economy.
We continue to engage with companies to understand how they
are managing and mitigating potential risks as well as embracing
some of the opportunities presented by this transition. There is
an increasing focus from regulators for companies to provide
clarity to investors on their transition plans – notably in Europe
and the UK – but we are also seeing moves for the SEC in the
US to enhance climate disclosures. Our expectation is for
companies to set targets based on science and we continue to
see progress in this with just over 50% of your portfolio having
set science-based targets by the year end and a further 16%
committed to do so in the next two years.
Carbon data (as at Jan 31 2023):
Weighted average
carbon intensity
Coverage
Portfolio 84.0 100%
Benchmark 155.3 99.9%
Notes: Data as at 31 January 2023.
Source: MSCI.
Scope 1 are direct emissions from energy sources owned/controlled by a company.
Scope 2 are indirect emissions from the generation of energy purchased by a company.
Weighted average carbon intensity: tons CO2e/$M sales.
Coverage: Proportion of companies for which data is available.
Engagement topics split for 2022:
Governance 45
%
Social 26
%
Environmental 23
%
Disclosure 6%
13
Outlook
Key risks to watch out for in 2023
The challenges that we face as investment managers are summarised in the ten key risks that we have identified:
Monetary policies risk – over-tightening in interest rates creates a higher potential risk of policy mistakes for markets and
economies.
Fiscal policies risk – lack of follow-through in stated infrastructure spending programs could put more downside risk to
economic momentum.
Persistence in inflation – given the difficulty of predicting frictional inflation, risk of stronger and longer lasting inflation could
fuel a need for more tightening in monetary policies.
Pandemic relapse risk – localised lockdowns could create further disruptions in supply chains and bottlenecks, which
could create shortages and further fuel the frictional inflation.
Corporate margin pressure – more persistent and more elevated inflation could lead to more corporate margins pressure 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 style leadership between Growth and Value styles.
Lower long-term growth – growing indebtedness is likely to lead to ongoing low long-term growth in our view, with more
scarcity in growth opportunities.
Higher taxation – given higher indebtedness, there is a high likelihood of higher tax rates, both for households and for
corporates.
Geopolitical risks flare ups – the Russia-Ukraine conflict will be an ongoing risk, with the risk of the conflict escalating or
broadening. Other geopolitical hotspots to watch out for are China-Taiwan, North Korea, Iran-Israel, and China-rest of the
world. Some of these geopolitical risks will be military, others will materialise into technological conflicts, such as China-US.
Climate disasters risk – climate change related disasters are likely to continue to take their toll on various regions, with risk
of negative impact on societies, but also on corporates in terms of risk to productive capacities and to assets in general.
$
$
$$
$$
$$
$$
$$
$
$
$
$
$
$
$
$
$$
$$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
Geopolitical risks will continue to contribute to volatility
The Russia-Ukraine conflict shows no sign of an early resolution
and there is the risk of further escalation. The ongoing energy
supply risk for Europe and the effects on commodity prices
are likely to continue to have ramifications for inflation and
economies around the world. On the other hand, a resolution
to this conflict could be an important driver of a risk-on rally -
particularly in European equities.
The China-Taiwan geopolitical risk is likely to remain for years
to come. This is also spilling over into technological conflicts
with the US administration. This will clearly have implications for
corporates exposed to these regulatory changes. North Korea
also continues to have the potential to destabilise its region and
the wider world, as does Iran.
There is a tendency to rising nationalism in periods of economic
challenge. In particular we are concerned about tensions
between the US and Europe leading to increased protectionism
which would damage economic growth.
All eyes to remain on inflation
Equity investors’ focus in 2023 is likely to remain on inflation and
its impact on monetary policy. Whilst we have started to see some
undershooting in inflation numbers compared with expectations
recently, there is a risk that current elevated inflation levels will
persist. With current pressure largely related to supply chain
disruptions and production bottlenecks, there is a good
likelihood that inflation rates could be in the process of peaking.
However, this could be derailed by high wage inflation, which
is a particular challenge in the US. This could lead to a risk of
inflation turning more structural in the US, with a knock-on effect
to other markets.
Extraneous risks to the inflation outlook include (i) further
partial lockdowns in China disrupting supply chains and (ii) the
continuing effect of the Ukraine/Russia conflict on energy and
food supplies. In summary, inflation remains difficult to forecast.
14
“Equity investors’ focus in
2023 is likely to remain on
inflation and its impact on
monetary policy. ”
(%)
(2)
0
2
4
6
8
10
Headline CPI inflation on a monthly basis (%)
12
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
US UK France Germany
(%)
0
(1)
1
2
3
4
5
Global 10-year bond yields (%)
US 10yr bond yields UK 10yr bond yields 10yr bund yields
Source: FactSet as at 31 January 2023. CPI data is shown to 31 December 2022.
“This ongoing increased
investment in climate solutions
is likely to continue to drive
the positive momentum in
innovation.”
15
Macro-economic outlook pointing to sharp slowdown
particularly in Europe
With leading indicators continuing to deteriorate, we believe
that 2023 will be a year of low economic growth at the global
level and in particular in the US. A key determinant of the global
economic cycle will be the Chinese economy, which is now
the second largest in the world. The sudden and unexpected
u-turn by China on its zero-Covid policy and the reopening
of its economy could lead to a rapid improvement in the
Chinese leading indicators in the months to come. Europe is
particularly challenged and we maintain a high probability of
stagflation. Europe’s economic momentum will in significant part
be influenced by China. There could therefore be a chance of
improvement as China reopens. However, any renewed risk of
energy rationing as we approach the winter of 2023/24 could put
further downward pressure on economic activity in the second
half of the year.
Central banks will be playing a game of chicken in 2023
Central banks were clear in 2022 that they were focused on
inflation – they effectively moved from whatever it takes to prop
up growth to whatever it takes to reduce inflation. During the
course of 2023, if inflation overshoots expectations interest
rates will likely need to further adjust upwards. Conversely, if
inflation undershoots and concerns of a recession increase then
monetary policy expectations will adjust downwards. The recent
turmoil in the banking sector could also result in lower interest
rates than would have been the case. We could therefore have a
scenario in 2023 where central banks tolerate somewhat higher
inflation in order not to push economies into recession. One sure
prediction for 2023 is that the word “pivot” will be used aplenty.
Anticipation of monetary policies pivoting will drive volatility and
will generate a healthy bull-bear debate in markets. We expect
policy expectations to continue to be the dominant driver of
share price returns in 2023.
Earnings growth lacklustre
Earnings momentum turned negative from early 2022, driven by
the tragic Russian invasion of Ukraine and the Chinese regional
lockdowns. Economic leading indicators have been deteriorating
since then, which in turn led to earnings momentum shiing
negative rapidly. We believe that earnings revisions are likely
to remain negative in the current year. Our top down growth
estimates imply -1% for MSCI World, 0% for MSCI North
America, and -5% for MSCI Europe, with MSCI Asia at +2%, all
of which are noticeably lower than consensus forecasts. We
therefore expect downward revisions in consensus estimates
and downgrades in the cyclical parts of the market. In this
environment it is critical to continue to focus on companies
with resilient earnings and pricing power that can protect their
margins from the ongoing higher inflationary pressures.
Valuation levels are more supportive
With equity markets having sold off significantly during 2022,
equity valuations are now more supportive across the US, EU
and Global equity markets in our view. On a relative basis for
developed markets, we see more valuation support in European
vs US equity markets but against this the risks are higher for
Europe. Asian equity valuations also show good support in our
view, although there are again also some geopolitical risks in that
region.
(%)
(2)
0
2
4
6
8
10
Headline CPI inflation on a monthly basis (%)
12
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
US UK France Germany
(%)
0
(1)
1
2
3
4
5
Global 10-year bond yields (%)
US 10yr bond yields UK 10yr bond yields 10yr bund yields
Source: FactSet as at 31 January 2023.
P/E
0
5
10
15
20
25
Forward P/E (FY1) of given equity markets
30
2012
2013
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
ACWI USA Europe
Global USA Europe
P/E
0
10
5
15
20
25
30
35
Schiller P/E
40
2023
Source: FactSet as at 31 January 2023.
The Shiller Price / Earnings ratio is a measure of market
valuations based on long-term earnings trends. See Glossary for
more information.
A more detailed review of the outlook can be obtained from our
website.
Green &
Alternative Energy
Energy Efficient
Infrastructure
Electric transportation –
High Speed Railways
& Electric Vehicles
Cloud Computing
& Cyber Security
Metaverse &
Quantum Computing
Robotics
& Automation
5G Telephony
Healthcare
Infrastructure
Mid-term opportunities still abound for long-term investors
Despite the many uncertainties that we highlight in the market
outlook, we find opportunities as long-term investors to be
exposed to businesses that generate high returns and have
attractive structural growth opportunities. These businesses are
likely to be able to navigate the difficult near term economic
cycle headwinds, and should be able to come out of any market
slowdown in a stronger position than many of their competitors.
In particular, we highlight that in a market where growth will be
scarce, or indeed at risk of being negative for some areas such
as Europe, we believe that there are good opportunities for
structural growth across the three mega-trends that we have
identified:
As long-term investors, we believe that there are opportunities
to capture some secular trends and structural growth
opportunities, through exposures to themes that have
supportive trends.
Specifically, the eight mid-term thematic opportunities that we
have identified previously still represent an important source of
structural growth in our view. These eight opportunities are:
(i) Green and alternative energy investment is an
important focal point as more governments focus on
decarbonising their economies, whilst the alternative
energy sources have been an important geopolitical
imperative for Europe since the Russian invasion of
Ukraine. We see this as a long-term structural theme.
(ii) Greener infrastructure is an area of focus on
decarbonisation, notably focusing on reducing the
carbon footprint of buildings, which are an important
source of carbon emissions.
(iii) Electric transportation is an important thematic
opportunity as part of the drive to reduce carbon
emissions. In this field, we see opportunities both
in high-speed railway infrastructure, and in the
development of infrastructure for electric vehicles.
(iv) Healthcare infrastructure is an important field
of infrastructure-related thematic opportunity, as
governments focus on the need to upgrade post the
pandemic crisis. At the same time, with an ageing
population in many regions the need for more
bespoke healthcare and targeted therapies, and the
use of genomics to achieve such developments, are
interesting areas of opportunity.
(v) The upgrade cycle in 5G telephony is an
important opportunity, as countries focus to make
their economies more productive, with an upgrade
in telecommunications infrastructure being a way to
achieve this.
(vi) Cloud computing trends in the mid-term are also
very supportive, as more businesses migrate their
presence online, creating more demand for cloud
services. Related to this theme, as more corporates
migrate their presence online, there is an increased
need to invest in cyber security.
(vii) Robotics and automation, and in particular
Artificial Intelligence, is an important area of structural
growth opportunity. Following the pandemic
corporates are realising the need to make their
production lines more robust, and their supply chains
more resilient. Increased investment in robotics
and automation is the way to do so. Trends towards
onshoring or nearshoring of production bases will also
accelerate this thematic trend.
(viii) Finally, nascent but promising and fast growing
opportunities exist in the metaverse and quantum
computing fields. Notably, we believe that, given
the sizable investments that big tech companies are
channelling into this area, there are opportunities in
the enablers of the metaverse.
All in all, there are sizeable infrastructure and capital expenditure
drivers across these eight areas, which bring some interesting
opportunities to capture areas of structural growth through
companies exposed to these themes.
An ever more disruptive decade continues to affirm itself in 2023
and beyond
With the ongoing focus on investing for a transitioning world
towards net-zero, innovation rates are likely to continue to
increase and, with this, disruption risk to traditional businesses
is likely to continue to rise. For long-term investors, this opens
up interesting areas of opportunity. However, it also highlights
the need to be vigilant in terms of disruption risk on established
business models, and to ensure that disruption risk is assessed in
a detailed and structured analytical approach. Equally important
is the ability for companies to remain innovative, both to fend off
competitive pressures and to stay ahead of the disruptive trends
that could challenge their market positioning.
Overall, we continue to focus on companies:
• with resilient earnings growth profiles, given the ongoing risks
of earnings downgrades,
• exposed to structural growth themes, given the lower growth
environment,
• with strong pricing power, given the ongoing elevated
inflationary pressures weighing on corporate margins,
• with solid balance sheets, to withstand the potential risk of an
economic hard landing.
Zehrid Osmani
Portfolio Manager, Martin Currie Global Portfolio Trust plc
Head of Global Long-Term Unconstrained Equities, Martin Currie
6 April 2023
Future of
Technology
Demographic
Changes
Resource
Scarcity
Green &
Alternative Energy
Energy Efficient
Infrastructure
Electric transportation –
High Speed Railways
& Electric Vehicles
Cloud Computing
& Cyber Security
Metaverse &
Quantum Computing
Robotics
& Automation
5G Telephony
Healthcare
Infrastructure
Green &
Alternative Energy
Energy Efficient
Infrastructure
Electric transportation –
High Speed Railways
& Electric Vehicles
Cloud Computing
& Cyber Security
Metaverse &
Quantum Computing
Robotics
& Automation
5G Telephony
Healthcare
Infrastructure
Green &
Alternative Energy
Energy Efficient
Infrastructure
Electric transportation –
High Speed Railways
& Electric Vehicles
Cloud Computing
& Cyber Security
Metaverse &
Quantum Computing
Robotics
& Automation
5G Telephony
Healthcare
Infrastructure
Green &
Alternative Energy
Energy Efficient
Infrastructure
Electric transportation –
High Speed Railways
& Electric Vehicles
Cloud Computing
& Cyber Security
Metaverse &
Quantum Computing
Robotics
& Automation
5G Telephony
Healthcare
Infrastructure
Green &
Alternative Energy
Energy Efficient
Infrastructure
Electric transportation –
High Speed Railways
& Electric Vehicles
Cloud Computing
& Cyber Security
Metaverse &
Quantum Computing
Robotics
& Automation
5G Telephony
Healthcare
Infrastructure
Green &
Alternative Energy
Energy Efficient
Infrastructure
Electric transportation –
High Speed Railways
& Electric Vehicles
Cloud Computing
& Cyber Security
Metaverse &
Quantum Computing
Robotics
& Automation
5G Telephony
Healthcare
Infrastructure
Green &
Alternative Energy
Energy Efficient
Infrastructure
Electric transportation –
High Speed Railways
& Electric Vehicles
Cloud Computing
& Cyber Security
Metaverse &
Quantum Computing
Robotics
& Automation
5G Telephony
Healthcare
Infrastructure
16
Valuation
ESG
$
Returns
Corporate
ethos
$
Financial
strength
Growth
drivers
Does the company generate sustained profits?
Does the company have a healthy balance sheet?
Does the company have strong track record of capital
allocation?
Does the company excel in the eight criteria below?
Assess company against four core risk categories
Assess company against 50+ ESG criteria
Assess company against mega-trend thematic analysis
Accounting
diagnostics
Industry
analysis
Industry
risks
Company
risks
Governance &
sustainability
risks
Environmental Social Governance
Portfolio
risks
2. In-depth fundamental
research
Future of
technology
Resource
scarcity
Demographic
change
1. IDEA GENERATION
4. PORTFOLIO
Analyse the customers of the
potential holding
End-user markets
3. Portfolio
construction
Analyse the maturity of the business
Industry lifecycle
Evaluate in terms of business
model diversity
Company classification
Evaluate with thematic mega-trend
framework
Evaluate exposure to the world’s
growth markets
Geographic revenue & profit
Long-term thematics
Our investment universe consists of companies with a
combination of sustainable growth and quality
We identify quality growth ideas by looking for
companies that can generate sustained profits,
demonstrated by an ability to consistently generate a
Return on Invested Capital (ROIC) in excess of their
Weighted Average Cost of Capital (WACC). On the
quality side we want those with healthy balance
sheets, identified by low gearing and the level of
goodwill.
Our investment manager's process
We establish the quality and sustainability of the
business model
We aim to be highly efficient in our research, so we use
eight criteria to examine the quality and sustainability
of the business model – of these, valuation is
considered the most important. This allows us to focus
on the strongest ideas when conducting our in-depth
fundamental research.
The proprietary research platform generates
maximum insight without compromising on quality
Our research templates systematically risk assess a
company against four categories – industry dynamics,
company risks, governance & sustainability and
portfolio risks. This allows for effective comparisons
across different companies and provides a framework
for the team to build their conviction.
ESG is integrated throughout the process
Our proprietary ESG risk assessment on Governance
and on Sustainability consistently assesses over 50
underlying criteria to capture the complexity of the
ESG risks facing a company’s long-term outlook and
sustainability – each criterion reflecting what we
believe are the most universal material ESG factors.
We drill down into a further 20 criteria to analyse
social exploitation risk.
Thematic analysis is used to identify long-term growth
We want to identify multi-decade returns so we
incorporate thematic analysis on three mega-trends:
Demographic change, Future of technology and
Resource scarcity. Demographic change encapsulates
areas such as growth in the emerging markets' middle
class, healthy living, or ageing populations. In Future of
technology, we capture themes such as outsourcing,
artificial intelligence and cyber security, while in
Resource scarcity, we see opportunities emerging in
electric vehicles, climate change, and energy.
17
Valuation
ESG
$
Returns
Corporate
ethos
$
Financial
strength
Growth
drivers
Does the company generate sustained profits?
Does the company have a healthy balance sheet?
Does the company have strong track record of capital
allocation?
Does the company excel in the eight criteria below?
Assess company against four core risk categories
Assess company against 50+ ESG criteria
Assess company against mega-trend thematic analysis
Accounting
diagnostics
Industry
analysis
Industry
risks
Company
risks
Governance &
sustainability
risks
Environmental Social Governance
Portfolio
risks
2. In-depth fundamental
research
Future of
technology
Resource
scarcity
Demographic
change
1. IDEA GENERATION
4. PORTFOLIO
Analyse the customers of the
potential holding
End-user markets
3. Portfolio
construction
Analyse the maturity of the business
Industry lifecycle
Evaluate in terms of business
model diversity
Company classification
Evaluate with thematic mega-trend
framework
Evaluate exposure to the world’s
growth markets
Geographic revenue & profit
Long-term thematics
18
Built for long-term returns
We consider portfolio construction of equal importance to the
research process. The same high-quality proprietary data that
we generate in our research platform is used in the portfolio
analytics, risk assessments and the portfolio construction.
This aids our understanding of the portfolio’s diversity and
allows us, through appropriate stock weightings, to effectively
manage risk and ensure we are positioned to capture long-
term growth.
Geographic revenue and profit – exposure to the world’s
growth markets
Breaking down the portfolio by the geographic source of
revenue provides greater insight than constructing the
portfolio based on a stock’s country of listing. In an increasingly
globalised and connected world, companies are more
dependent on overseas revenues.
Long-term thematics – investing in the drivers of corporate
growth
Within our three mega-trends of Demographic change, Future
of technology and Resource scarcity, we have approximately
35 specific sub-themes, some of which overlap between two
or three of the mega-trends. By using our thematic framework
we can build a picture of each company and therefore the
portfolio’s overall exposure to these growth drivers.
Company classification – ensuring a diversity of business
models
We invest in quality growth companies, but our classifications
allow us to maintain a diversity of business models that can
either offer more defensive or outright growth characteristics
to deliver a more consistent return profile.
Industry lifecycles – understanding business maturity
We assess where a company is in its industry lifecycle through
six key stages from early stage and accelerating growth
through to decline and renewal. This is important in terms of
balancing growth drivers and risk management.
End-user markets – seeking profitable sectors and industries
An aggregation of our portfolio holdings’ end-customers.
As with our analysis of geographic revenues and profit, this
provides a more intuitive breakdown than a company’s sector
listing. We can understand if companies are operating in
potential profitable sectors or areas where we see future
growth potential.
A portfolio of 25-40 hand-picked stocks from
some of the world's leading companies.
The investment manager's depth of Environmental, Social and Governance (‘ESG’) research is an
integral part of its investment process. We are continually enhancing our assessments to reflect
new issues and to ensure our market-leading approach continues to evolve.
Source: Morningstar, December 2022. ©2021 Morningstar, Inc. All rights reserved.
PRI – Principles for Responsible Investment. A copy of the PRI's assessment of Martin Currie and its methodology is available on request.
Holder of highest Morningstar
Sustainability Rating
The only company in the AIC
global sector to be awarded the
highest Morningstar
Sustainability Rating – 5 globes
1
.
This recognises our commitment
to mitigate the risks our investors
face in the ESG space.
Top 1% worldwide
The Company is in the top 1% of
all the 7,784 products categorised
by Morningstar as Global Equity
Large Cap.
1
This world-class
rating acknowledges the high
standards and pioneering
in-depth analysis undertaken as
part of our stock selection
process.
Over 50 ESG assessments on
every company
We evaluate, measure and score
over 50 individual criteria for
every company that we research.
This provides a consistent and
systematic analysis across
sectors and countries, helps
identify the most material risks
and gives us an insight into a
company’s ESG credentials.
Social factors – rated one of the
best in sector
We are already rated one of the
best by Morningstar in the sector
for Social factors
1
but this is an
area we have recently been
focusing on – and is of major
importance to our team. We have
introduced a second layer of 20
measures to underpin our
analysis into exploitation risk,
looking at issues relating to:
labour rights, human rights,
working conditions, age & gender
exploitation.
Consistently high PRI rating
2
We have a distinct and
recognised competitive edge in
this area having been a signatory
of the UN-supported Principles
for Responsible Investment (PRI)
since 2009 and we have been
consistently rated highly by the
PRI.
Low-carbon footprint
The portfolio has been awarded a
low-carbon designation by
Morningstar and accounts for a
fraction of the emissions of the
benchmark index (MSCI ACWI).
An index tends to include
companies based on their size so
can include high polluters or
companies judged to have a
detrimental impact on society.
Our active management
approach is more selective.
19ESG & our investment manager's process
PORTFOLIO SUMMARY 20
By asset class
31 January 2023 % 31 January 2022 %
Equities 111.1 107.5
Cash 0.9 2.0
Less borrowings (12.0) (9.5)
100.0 100.0
By sector
31 January 2023
Company %
31 January 2023
MSCI All Country
World index %
31 January 2022
Company %
31 January 2022
MSCI All Country
World index %
Information Technology 31.5 20.6 33.7 22.8
Healthcare 26.5 12.5 23.4 11.4
Consumer Discretionary 15.3 11.1 15.2 12.0
Industrials 9.7 10.0 11.3 9.5
Materials 7.4 5.1 4.7 4.7
Consumer Staples 5.9 7.3 5.8 6.9
Financials 3.7 15.3 3.0 14.8
Communication Services — 7.1 2.9 8.5
Energy — 5.4 — 4.0
Utilities — 3.0 — 2.7
Real Estate — 2.6 — 2.7
100.0 100.0 100.0 100.0
21
North America
47.1%
Developed Europe
41.9%
7.7%
Developed Asia ex Japa
n
Global Emerging Markets
3.3%
Portfolio distribution by region
31 January 2023
Company %
31 January 2023
MSCI All Country
World index %
31 January 2022
Company %
31 January 2022
MSCI All Country
World index %
North America 47.1 63.1 43.9 63.9
Developed Europe 41.9 16.6 39.1 16.1
Developed Asia Pacific ex Japan 7.7 3.3 6.1 2.8
Global Emerging Markets 3.3 11.3 10.9 11.5
Middle East — 0.2 — 0.2
Japan — 5.5 — 5.5
100.0 100.0 100.0 100.0
Sector Country
Market value
£000
% of total
portfolio
North America 130,556 47.1
Linde Materials United States 15,041 5.4
ResMed Healthcare United States 14,270 5.1
Microso Information Technology United States 14,228 5.1
Nvidia Information Technology United States 12,745 4.6
VISA Information Technology United States 12,633 4.6
Masimo Healthcare United States 9,879 3.6
Nike Consumer Discretionary United States 8,528 3.1
Ansys Information Technology United States 8,302 3.0
Adobe Information Technology United States 7,929 2.9
Zoetis Healthcare United States 7,553 2.7
Autodesk Information Technology United States 6,981 2.5
Veeva Systems Healthcare United States 6,476 2.3
Illumina Healthcare United States 5,991 2.2
Portfolio holdings as at 31 January 2023
22
Sector Country
Market value
£000
% of total
portfolio
Developed Europe 116,482 41.9
ASML Holding Information Technology Netherlands 14,223 5.1
Moncler Consumer Discretionary Italy
13,190
4.8
L'Oreal Consumer Staples France 11,623 4.2
Ferrari Consumer Discretionary Italy 11,164 4.0
Atlas Copco Industrials Sweden 10,325 3.7
Hexagon Information Technology Sweden 10,301 3.7
Kingspan Group Industrials Ireland 9,457 3.4
Coloplast B Healthcare Denmark 9,212 3.3
Kering Consumer Discretionary France 8,697 3.1
Assa Abloy Industrials Sweden 7,192 2.6
Croda International Materials United Kingdom 5,562 2.0
Kerry Group Consumer Staples Ireland 4,802 1.7
Dr. Martens Consumer Discretionary United Kingdom 734 0.3
Total portfolio holdings
277,606
100.0
Global Emerging Markets 9,198 3.3
WuXi Biologics Healthcare China 9,198 3.3
Developed Asia Pacific ex Japan 21,370 7.7
CSL Healthcare Australia 11,078
4.0
AIA Group Financials Hong Kong 10,292 3.7
ResMed
Healthcare, United States
The company is a global leader in the development of medical
devices and cloud-based software applications that diagnose,
treat, and manage respiratory disorders including sleep
disordered breathing (more commonly known as sleep apnea),
asthma and chronic obstructive pulmonary disorder (COPD).
The company has a very attractive long-term revenue growth
outlook. It is estimated that more than 424 million individuals
globally have moderate to severe sleep apnea, with the
percentage diagnosed below 15% and the percentage treated
by ResMed below 3%, despite the company being market
leader. The combined potential patient base including asthma
and COPD numbers is in excess of 1 billion globally.
23
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 has accelerated a strategy of focusing on less
economically sensitive customers in the healthcare and food and
beverage sectors.
Largest 10 holdings
31 January 2023
Market value
£000
31 January 2023
% of total
portfolio
31 January 2022
Market value
£000
31 January 2022
% of total
portfolio
Linde 15,041 5.4 15,820 4.7
ResMed 14,270 5.1 15,600 4.6
Microso 14,228 5.1 19,489 5.7
ASML Holding 14,223 5.1 — —
Moncler 13,190 4.8 14,267 4.2
Nvidia 12,745 4.6 17,440 5.1
VISA 12,633 4.6 13,545 4.0
L'Oreal 11,623 4.2 12,624 3.7
Ferrari 11,164 4.0 10,786 3.2
CSL 11,078 4.0 10,509 3.1
Largest 10 holdings in detail
LARGEST 10 HOLDINGS
Sector
Portfolio %
Market
value £000
5.4
15,041
Sector
Portfolio %
Market
value £000
5.1
14,270
As at January 2023 the largest 10 holdings accounted for 46.9% of the portfolio (46.4% as at January 2022).
Microso
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.
Sector
Portfolio %
Market
value £000
5.1
14,228
24
ASML Holding
Information Technology, Netherlands
The 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 Dutch 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.
Sector
Portfolio %
Market
value £000
5.1
14,223
Moncler
Consumer Discretionary, Italy
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.
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. The growth is driven by the long-term
structural trends in gaming and more importantly in data centres.
25
Sector
Portfolio %
Market
value £000
4.8
13,190
Sector
Portfolio %
Market
value £000
4.6
12,74 5
Sector
Portfolio %
Market
value £000
4.2
11,623
L’Oreal
Consumer Staples, France
Based in France, L'Oreal is number one in global beauty (in 2021
by revenue
*
), 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
under-utilised, giving significant opportunity to further beat
expectations.
*Source company reports, August 2022. Based on 2021 beauty sales from the 10 leading
global beauty companies.
VISA
Information Technology, United States
VISA is a classic compounder, boosted by the secular shift away
from cash/physical sales towards digital/online commerce. The
company's ROIC is highly attractive as the network model
provides structural operating leverage, but with low requirements
for capital expenditures. The electronic payments space is seeing
ongoing disruption, but VISA's prime competitive position
ensures that they can face these challenges from a position of
strength.
26
Sector
Portfolio %
Market
value £000
4.6
12,633
CSL
Healthcare, Australia
The Australian blood-plasma company has a long history of high
and sustainable returns, driven by cost efficiency in a largely
consolidated market with high barriers to entry. Persistent
industry supply/demand tightness is allowing CSL to capture an
outsized share of growth through its superior collection
infrastructure. Meanwhile, visibility of the next phase of growth
and sustained returns appear promising, as waste products from
the core operations are successfully re-purposed into specialty
drugs, for example, Haegarda for hereditary angioedema.
Existing molecules are also turned to new treatment areas such
as Transplant, all at substantial incremental margins.
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.
Sector
Portfolio %
Market
value £000
4.0
11,164
27
Sector
Portfolio %
Market
value £000
4.0
11,078
This report provides shareholders with details of the Company’s
business model and strategy as well as the principal and
emerging risks and challenges that it faces.
Business model
The Company has no employees and outsources its entire
operational infrastructure to third-party organisations. The
Board has appointed Franklin Templeton Investment Trust
Management Limited as its Alternative Investment Fund
Manager (‘AIFM’), which in turn has appointed Martin Currie
Investment Management Limited (the ‘investment manager’ or
the ‘manager’) to manage the portfolio. Under the leadership
of portfolio manager, Zehrid Osmani, a specialist team analyses
the world’s stocks to find the very best ideas. The Board sets
the Company’s strategy, decides the appropriate financial
policies to manage the assets and liabilities of the Company,
ensures compliance with tax, legal and regulatory requirements
and reports regularly to shareholders on the Company’s
performance. Further information on the role and operation of
the Board is set out under Corporate Governance on page 38.
For more information on investment trusts in general please visit
www.theaic.co.uk.
Investment Objective
The investment objective is to produce long-term returns in
excess of the total return from the MSCI All Country World
index.
Purpose
In line with the objective outlined above, the Company's purpose
is to deliver a sustainable long-term total return to shareholders
by implementing the investment policy through the Company's
investment manager.
Investment Policy
The investment policy is:
• To invest predominantly in listed global equities of quality
growth companies with superior share price appreciation
potential, based on projected ROIC (return on invested
capital), balance sheet strength and sustainable business
models.
• To manage a high conviction portfolio with typically 25-40
holdings, with a view to holding stocks over a long-term
investment horizon.
• To achieve risk spreading through a portfolio of holdings
diversified by types of company and sources of revenue.
No more than 10% of total assets will be invested in a single
stock.
• To fully integrate Environmental, Social and Governance
('ESG') criteria into fundamental analysis when assessing
business models.
• To exclude investments identified through the investment
manager’s proprietary ESG risk assessment as having a high
level of Sustainability or Governance risk.
• To potentially use debt to enhance returns to shareholders.
Gearing will not exceed 20% of net assets at the time of
drawdown.
• To not invest in other listed closed-end funds.
A description of the investment manager’s process, which
includes a fully integrated approach to ESG matters, is set out
on pages 17 to 19 of this annual report.
Strategies
Investment
In order to achieve its investment objective, the Company has
adopted a distinctive philosophy in implementing its investment
policy. This clearly focuses on using the investment manager’s
ability to combine investment performance with socially
responsible investment. This is done through their leading global
research capabilities in identifying high-quality companies that
will benefit from exposure to growth megatrends worldwide and
their leading performance in engaging with these companies on
ESG issues. The Company invests predominantly in blue chip
equities with a market capitalisation in excess of $3 billion and
selects quality growth companies which are market leaders in
their industries with superior share price appreciation potential
based on attractive return on invested capital (ROIC), balance
sheet strength and ESG credentials.
The resulting diversified portfolio of between 25 and 40
international quoted companies as listed on pages 21 and 22 is
actively managed and concentrated, focusing on high conviction
stocks selected on the basis of detailed research analysis.
This active portfolio management policy will inevitably involve
some periods when the Company’s portfolio outperforms or
underperforms the Company’s benchmark.
The Board does not impose any limits on the investment
manager’s discretion to select individual stocks in compliance
with the investment policy. The investment manager ensures that
investment risk is dominated by the high conviction stocks in
the portfolio within the guidelines set by the Board and that the
combination of stocks held does not lead to unintended reliance
on a particular macroeconomic factor (for example, a higher oil
price or higher interest rates).
Current asset allocation and actual holdings are discussed in the
Manager’s review on pages 10 to 12 and details are contained in
the portfolio summary and portfolio holdings on pages 20 to 27.
BUSINESS REVIEW 28
Environmental, Social and Governance ('ESG')
The Company and investment manager believe that good
ESG practices are a fundamental component of a high-quality
company and hence rigorously reviews its ESG practices. This
will typically include analysis of shareholder rights, accounting
standards, remuneration, board structure, supply chain, data
protection, pollution/hazardous waste policies, water usage and
climate change policies. The investment manager’s ESG analysis
may influence key financial assumptions such as cost of capital,
revenues or costs and thus the estimate of a company’s intrinsic
value. These are discussed in greater detail on pages 12 and 19.
A poor governance, environmental or social track record for
a company can indicate wider sustainability issues and could
lessen the attractiveness of the investment.
ESG issues are integral to the Company’s investment philosophy.
The investment manager has been a signatory to the Principles
for Responsible Investment ('PRI') since 2009. In September
2022, under the new and revised reporting framework the
investment manager was awarded the highest possible 5 stars
for investment & stewardship policy and for incorporation and
4 stars for voting. Copies of the investment manager's 2021
Assessment Report and Transparency report from the PRI are
available on their website www.martincurrie.com/uk/media-
centre/martin-currie-stewardship-leadership-pri-2021. The
investment manager was accepted as a signatory to the revised
Financial Reporting Council ('FRC') Stewardship Code (2020)
in 2022. Please see the Section 172 Report on pages 31 and 32
for information on engagement with investee companies.
The investment manager’s proprietary ESG risk assessment
makes a risk assessment and consistently assesses over 50
underlying criteria to capture the complexity of the ESG risks
facing a company’s long-term outlook and sustainability – each
criterion reflecting what they believe are the most universal
material ESG factors. Each risk is rated on a scale 1 (lowest risk)
to 5 (highest risk). These risks are analysed under the following
headings:
• Board quality
• Management quality
• Remuneration
• Culture
• Environmental
• Social
• Understanding and integration
• Common factors
• Sustainability momentum
Under the ‘Social’ heading the investment manager drills down
into a further 20 criteria to analyse social exploitation risk.
Each risk is rated on a scale 1 (lowest risk) to 5 (highest risk). A
company with an overall Sustainability or Governance risk rating
of 4.0 or higher will not be included in the portfolio.
Marketing
The marketing strategy seeks to expand the shareholder base
through increased engagement with key audiences, using the
most appropriate promotional techniques. This drive to deepen
demand for the Company’s shares should enable growth over
time in the number of shares in issue, improve the efficiency of
the Company and increase liquidity in its shares.
This is supported by a commitment to provide clear, transparent
and regular communication to shareholders delivered primarily
through the Franklin Templeton UK Distribution team and the
Company’s website which contains information relating to
performance, outlook and significant developments as they
occur as well as interviews with the portfolio manager, Zehrid
Osmani.
In addition, the Company utilises marketing tools such as
advertising, social media, public relations and research. The
portfolio manager also meets regularly with existing and
potential institutional shareholders, including private wealth
managers.
Financial
The Company's main financial strategic goals are:
• the management of shareholder capital; and
• the management of the Company's financial risks.
The Board’s principal aim for the management of shareholder
capital is the achievement of long-term total return in line with
the investment objective. Growth should incorporate both the
investment manager’s investment performance and the issuance
of shares when sufficient demand exists to do this without
diluting the value of existing shareholder capital. At the same
time, the Board has also maintained or increased dividends each
year since the Company’s launch in 1999 and remains committed
to delivering strong long-term total returns on shareholder
capital.
29
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 12.8% and the benchmark 30.5% for the three years
to 31 January 2023.
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 6.5% over the
three years to 31 January 2023 which ranked 10 out of 14 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 0.61%.
The ongoing charges figure has been calculated in line with the
Association of Investment Companies ('AIC') recommended
methodology.
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 2023 Achieved 2022 Achieved
1. Net asset value performance relative
to benchmark (over 3 years)
Outperform
-17.72% No
1.62% Yes
2. Performance against Company’s
peers (over 3 years)
Top third performance 10 out of 14
No
5 out of 17 Yes
3. Ongoing charges Less than 0.70% 0.61%
Yes
0.68% Ye s
30
Discount management
The Company operates a zero discount policy with the objective
of providing shareholders, in normal market conditions, with
assurance that the Company’s share price is in continuing
alignment with the prevailing net asset value per share ('NAV')
and liquidity so that investors can buy or sell as many shares as
they wish at a price which is not significantly different from the
NAV. This involves the Company both buying back shares and
reissuing shares from Treasury or issuing new shares. Shares
bought back as part of this policy are held in Treasury and
reissued when demand exists which the market cannot supply.
Discount is an Alternative Performance Measure, see page 82
for more details.
Gearing
The Board sets the Company’s policy on the use of gearing
as part of the process of delivering returns to shareholders.
The Company has an unsecured £30 million sterling term loan
facility agreement with The Royal Bank of Scotland International
Limited which was drawn down in full on 24 November 2020 at
a fixed interest rate of 1.181% and for a fixed term of three years.
The Company has no other borrowings.
The Board reviews the Company's borrowings to ensure that
gearing levels are appropriate. The total borrowings will not
exceed 20% of the net assets of the Company at the time of
drawdown. The Board monitors the Company’s gearing closely
and takes a prudent approach. Further disclosure on leverage
as required under AIFM regulations is set out on page 46.
Gearing is an Alternative Performance Measure, see page 82
for more details.
Section 172 Report – Duty to promote the success of the Company
The Company is required to provide a statement which describes how the Directors have had regard to the matters set out in Section 172
of the Companies Act 2006 when performing their duty to promote the success of the Company, including:
Section 172 Scope Board's Statement
The likely consequences of any decision in the
long term.
The Board is focused on promoting the long-term success of the Company and
regularly reviews the Company’s long-term strategic objectives, including
consideration of the impact of the investment manager’s actions on the
marketability and reputation of the Company and the likely impact on the
Company’s stakeholders of the Company’s principal strategies.
The interests of the Company’s employees. The Company has no direct employees.
The need to foster the Company’s business
relationships with suppliers, customers and
others.
The Board’s approach to its key stakeholders is set out under 'Stakeholders' below.
The impact of the Company’s operations on the
community and the environment.
The Board’s approach is set out in the section on ESG in 'Strategies' on page 29.
The desirability of the Company maintaining a
reputation for high standards of business
conduct.
The Board’s approach is set out in 'Culture and Values' on page 33.
The need to act fairly between members of the
Company.
The Board’s approach is set out under 'Stakeholders' below.
31
Stakeholders Why they are important Board Engagement
Shareholders The Company, as an investment trust, does not
have any employees and its customers are also
its shareholders. The primary purpose of the
Company is to deliver long-term returns for
shareholders from a portfolio of investments.
Continued shareholder support and engagement
are critical to the existence of the Company and
the delivery of its long-term strategy.
The Board and the investment manager recognise the
importance of engaging with shareholders on a
regular basis in order to maintain a high level of
transparency and accountability and to inform the
Company’s decision making and future strategy. The
Board receives regular reports from the investment
manager on shareholder engagement, with the
investment manager tasked with maintaining regular
and open dialogue with larger shareholders. Directors,
primarily through the Chairman, are also available to
meet major shareholders to understand their views
and to help inform the Board’s decision making
process. The Company maintains an award-winning
website which hosts copies of the annual and half
yearly reports along with factsheets and other relevant
materials. Shareholders are also invited to attend the
AGM at which they have the opportunity to speak
directly with Directors. The investment manager has a
dedicated client services team which maintains regular
contact with the Company’s shareholders and reports
regularly to the Board. Shareholders can also contact
the Directors throughout the year via the company
secretary or the broker.
Stakeholders Why they are important Board Engagement
Lenders Alongside shareholders’ equity, the Company
has, since November 2020, been partly funded
by debt. Although the Company is not
dependent on debt financing, continued support
from lenders is important to maintain the
financial stability of the Company and flexibility
in managing the portfolio.
The Company’s debt is subject to contractual terms
and restrictions. The Company has a procedure in
place to report regularly to its lender on compliance
with debt terms.
The investment
manager
The performance of the investment manager is
critical for the Company to deliver its investment
strategy and meet its objective.
The management engagement committee is tasked
with reviewing the performance of the investment
manager. Representatives of the investment manager
including the portfolio manager, Zehrid Osmani, attend
each regular Board meeting and provide an update on
the investment portfolio along with presenting on
macroeconomic issues.
Other service
providers
The Company has a number of other key service
providers, each of which provides a vital service
to the Company and to its shareholders.
The audit committee receives reports from and
reviews the service, quality and value for money
provided by other third party suppliers. The
investment manager is tasked with maintaining a
constructive relationship with such other third-party
suppliers on behalf of the Company. It is the Board’s
policy that all payments due to suppliers will be made
in full and on time.
32
During the year, the Board made a number of key decisions which
fall under the Section 172 scope set out above:
• The reduction in NAV as a result of market movements and
share buybacks led the Board to be concerned that the
ongoing charges ratio was increasing. The Board agreed
with the manager that, with effect from 1 July 2022, the AIFM
fee would be amended to 0.45% of net assets per annum.
Furthermore, with effect from 1 July 2022, there will no longer
be a separate company secretarial fee. The effects of these
changes are described in the Chairman’s statement on page 8.
• The Board decided to maintain the total dividend for the year,
which will result in an uncovered dividend. The reasons for this
are set out in the Chairman’s statement.
Culture and Values
The Board considers that its culture of openness of debate
combined with strong governance and the benefits of a diverse
Board are central to delivering against its purpose, values and
strategies that are discussed in this report. The Board monitors
and reviews its culture as part of its annual evaluation process
and monitors the culture within the investment manager to
ensure that it is closely aligned with that of the Company. The
key values of the Board are:
Independence: To act independently in the interests of
shareholders.
Sustainability: To ensure that the companies in which the
Company invests and the Company's key suppliers are
supportive of good environmental, social and governance
practices and that its investment manager encourages
continuous improvement in these areas.
Transparency: To report transparently and accurately to
shareholders on the condition, performance and prospects of
the Company.
The Board works closely with the investment manager to
develop and monitor its investment strategy and activities, not
only to achieve its investment objective, but also to deliver
the Company’s values of Independence, Sustainability and
Transparency.
Engagement with investee companies
The Board also expects good governance standards to be
maintained at the companies in which the Company is invested
and reviews the engagement and voting activities which are
undertaken by the investment manager. The ESG strategy
followed by the Company and the investment manager is
detailed on pages 19 and 29. The Board receives regular reports
of both voting and other engagements by the investment
manager with the management teams of companies in the
portfolio. Details of Martin Currie’s ESG related policies and
activities can be found on its website at www.martincurrie.com.
The Board believes that companies which exhibit positive ESG
behaviours contribute to increasing value over the long term.
Voting policy and the UK Stewardship Code
The Company has delegated responsibility for voting at investee
company shareholder meetings to Martin Currie, which votes
in accordance with its corporate governance and responsible
investing policy. Martin Currie has gained a 5-star rating for both
Investment & Stewardship Policy and Incorporation (for Direct -
Listed equity - Active fundamental), and a 4-star rating for Voting
(Direct - Listed equity - Active fundamental) under the PRI's
Reporting Framework for 2021. Martin Currie is a signatory of
the FRC UK Stewardship Code 2021. A copy of Martin Currie's
stewardship report can be found at
https://www.martincurrie.com/insights/2022-stewardship-
annual-report
The Board has published a compliance statement with the
UK Stewardship Code on the Company’s website, which
incorporates its policies on socially responsible investing and
engagement with the companies in which it invests.
Anti-bribery and tax evasion
The Board has a zero tolerance policy towards bribery and looks
to ensure that its service providers and associated persons have
effective policies and procedures designed to actively prevent
bribery which are high level, proportionate and risk based.
In relation to the corporate offence of failing to prevent tax
evasion, it is the Company’s policy to conduct all business in an
honest and ethical manner. The Company takes a zero tolerance
approach to any facilitation of tax evasion whether under UK law
or under the law of any foreign country and is committed to acting
professionally, fairly and with integrity in all of its business dealings
and relationships.
33
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
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 as
well as continuing fallout from the Covid-19 pandemic. 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. With regard to
Covid-19, in most of the world restrictions on social contact and
travel have been reduced or removed completely. While there
remains a risk of further outbreaks, the Board has concluded that
the recent pandemic no longer represents a principal risk for the
Company. Nevertheless, the recent pandemic has highlighted
the ability of virulent diseases to travel rapidly around the world
and the Board and AIFM will manage the risk by continuing to
ensure that the Company and its key suppliers have effective
contingency plans in place.
34
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 will 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.
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.
As previously stated, the Board’s main focus is the achievement of
a competitive total annual return. The future of the Company is
dependent upon the success of the investment strategy in light of
economic factors and developments in equity markets. The
outlook and future prospects for the Company are discussed in
both the Chairman’s statement on page 8 and in the Manager’s
review on pages 13 to 16.
Gillian Watson
Chairman
6 April 2023
35
Principal risk Mitigation
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.
2: GOVERNANCE
Gillian Watson, Non-executive director, Chairman
Gillian is currently Senior Managing Director at Noble & Co., the Edinburgh based
boutique investment bank. She is Chair of Vietnam DC25 Limited and of Char.gy Ltd and
holds non-executive director positions in Vidrala S.A. and Meallmore Limited. Gillian has
worked in corporate finance, strategy and business development across various industry
sectors in a range of geographies. She sits on the University of Strathclyde’s Enterprise and
Investment Committee and is a Trustee of The Boswell Trust. Gillian was appointed to the
Board on 1 April 2013 and appointed as Chairman on 1 February 2021. Gillian will retire as
Chairman and as a director of the Company at the conclusion of the AGM in June 2023.
Gary Le Sueur, Non-executive director, Senior Independent Director
Gary is a founding partner of clean energy investment firm, Corran Capital, and a
former partner of venture capital firm, Scottish Equity Partners, where he is now Senior
Adviser. He has significant investment experience in the clean energy, sustainability
and environmental sectors. Prior to venture capital, Gary worked in corporate law with
Shepherd & Wedderburn (Solicitors), before moving to Deutsche Morgan Grenfell and
then National Australia Bank. Gary is also a non-executive director of venture philanthropy
organisation Inspiring Scotland. Gary was appointed to the Board on 1 December 2016.
BOARD OF DIRECTORS 37
Marian Glen, Non-executive director
Marian is a non-executive director of The Medical and Dental Defence Union of Scotland.
She was formerly the General Counsel of AEGON UK and prior to that was a corporate
partner and Head of Funds and Financial Services at Shepherd & Wedderburn (Solicitors).
She was previously a non-executive director of Shires Income plc, Financial Services
Compensation Scheme, Friends Life Group Limited and certain of its subsidiaries and
Murray Income Trust plc. Marian was appointed to the Board on 1 December 2016.
Christopher Metcalfe, Non-executive director
Christopher is senior independent non-executive director of JPMorgan US Smaller
Companies Investment Trust plc and a non-executive director of abrdn Smaller
Companies Income Trust plc. He has extensive global equity fund management and
investment trust experience, with a deep understanding of UK investors having previously
worked in senior positions at Newton, Schroder Investment Management and Henderson.
Christopher was appointed to the Board on 19 September 2019. Christopher will be
appointed as Chairman of the Company at the conclusion of the AGM in June 2023.
Lindsay Dodsworth, Non-executive director, Chair of the audit committee
Lindsay Dodsworth is a trustee and member of the finance and investment committee at
Goodenough College, a non-executive director of Moebus Income & Growth 4 VCT and
chair of governors at St. John’s College School. She was previously chair of a family office
and its investment oversight committees which she helped the family to set up following
the sale of their business.
She trained as a chartered accountant and a chartered tax adviser with Price Waterhouse
(now PwC) before becoming a partner at Ernst & Young (now EY).
Corporate governance
Corporate governance is the process by which the Board seeks
to look aer stakeholders’ interests and to protect and enhance
shareholder value.
This report explains how the Board addresses its responsibility,
authority and accountability.
Compliance with the Principles of the AIC Code
The Board of the Company has considered the Principles and
Provisions of the 2019 AIC Code of Corporate Governance (‘AIC
Code’). The AIC Code addresses the principles and provisions set
out in the 2018 UK Corporate Governance Code (the ‘UK Code’), as
well as setting out additional principles on issues that are of specific
relevance to the Company as an investment company. The Board
considers that reporting against the principles and provisions of the
AIC Code, which has been endorsed by the Financial Reporting
Council, provides more relevant information to shareholders than
reporting only with respect to the UK Code. The AIC Code is
available on the AIC website (www.theaic.co.uk).
It includes an explanation of how the AIC Code adapts the Principles
and Provisions set out in the UK Code to make them relevant for
investment companies.
The UK Code includes provisions relating to the role of the chief
executive, executive directors’ remuneration and the need for an
internal audit function. For the reasons set out in the AIC Code,
and as explained in the UK Corporate Governance Code, the Board
considers that these provisions are not relevant to the position of
the Company, being an externally managed investment company.
The Company has therefore not reported further in respect of these
provisions.
Details of the AIC principles and how the Company complies with
them can be found on the Company’s website at
www.martincurrieglobal.com.
Role of the Board
As an investment company, the Company has a Board of Directors
whose duty it is to govern the Company within the framework set
out in the Company’s Articles of Association – in other words, to
look aer the interests of shareholders and also of the Company’s
stakeholders as a whole.
The Board sets the Company’s values and objectives and ensures
that its obligations to its shareholders and other stakeholders
are met. It has formally adopted a schedule of matters which are
required to be brought to it for decision, thus ensuring that it
maintains full and effective control over appropriate strategic,
financial, operational and compliance issues.
The Board undertakes a regular review of the AIFM's and investment
manager’s culture, policies and practices to ensure that they are
aligned with the Company’s values. It also reviews its service
providers to satisfy itself that they maintain policies and practices
consistent with good risk management, compliance with regulatory
frameworks and deliver a value for money service to the Company.
The Board met six times during the year under review on a formal
basis (as well as on an ad-hoc basis when required), to consider the
Company’s strategy and monitor the Company’s performance.
An investment trust board provides a very specific and proactive
form of direct oversight of the investment of the shareholders’ funds.
The primary focus at regular Board meetings is a review of
investment performance of the investment manager and associated
matters including asset allocation, promotion and investor relations,
peer group information and industry issues.
To enable the Board to function effectively and to allow Directors to
discharge their responsibilities, full and timely access is given to all
relevant information. In the case of Board meetings, this consists of
a comprehensive set of papers, including the investment manager’s
review, performance reports and discussion documents regarding
specific matters. Directors make further enquiries where necessary.
CORPORATE GOVERNANCE STATEMENT 38
39
Committee structure
The Board has established a number of committees whose remit is to oversee specific aspects of management of the Company. During
the year the Board decided to streamline the committees and combined the Nominations and Remuneration committees. The Board also
agreed to merge the activities of the Marketing and Communications committee into the Board meetings.
Management engagement committee Nominations and remuneration committee Audit committee
Chair:
Gillian Watson
Chair:
Gary Le Sueur
Chair:
Lindsay Dodsworth
• reviews the continuing appointment of
the AIFM and the investment manager;
• reviews the performance of the AIFM
and the investment manager in terms
of investment performance and the
company secretarial and administrative
services provided;
• reviews the performance of the
personnel employed by the AIFM and
the investment manager in relation to the
provision of such services; and
• reviews the terms of the AIFM
agreement to ensure that it remains
competitive and in the best interests of
shareholders.
• assesses the skills, knowledge,
experience and diversity required on the
Board and the extent to which each is
represented;
• establishes processes for the review
of the performance of the Board
committees and the Board as a whole;
• establishes processes for the
identification of suitable candidates for
appointment to the Board;
• oversees succession planning for the
Board;
• sets the remuneration policy for all
Directors; and
• reviews and sets Directors' remuneration
levels.
Further information can be found in the
Directors' remuneration report.
The role and responsibilities of this
committee are set out in its report on
pages 50 and 51.
Directors’ meetings
The following table shows the number of formal Board and committee meetings held during the year and the number attended by each
Director or committee member. There were also two strategy meetings held during the year.
Formal Board meetings
(6 meetings)
Management
engagement committee
(1 meeting)
Audit committee
(2 meetings)
Nominations and
remuneration committee
(2 meetings)
Lindsay Dodsworth 6 1 2 2
Marian Glen 6 1 2 2
Christopher Metcalfe 6 1 2 2
Gary Le Sueur 6 1 2 2
Gillian Watson 6 1 2 2
Directors’ independence
All of the Directors are considered under the AIC Code to be
independent of the AIFM, Franklin Templeton Investment Trust
Management Limited and of the investment manager, Martin
Currie Investment Management Limited.
The Directors are free of any relationship which could materially
interfere with the exercise of their independent judgement on
issues of strategy, performance, resources and standards of
conduct and demonstrate a breadth of investment knowledge,
business and financial skills which enable them to provide effective
strategic leadership and proper governance of the Company.
Directors are initially appointed until the general meeting
following their initial appointment when, under the Company’s
Articles of Association, it is required that they be elected by
shareholders.
None of the Directors has a service contract with the Company.
The terms of their appointment are detailed in a letter sent to
them when they join the Board. These letters are available for
inspection at the registered office of the Company.
Conflicts of interest
The Board has approved a policy on Directors’ conflicts of interest.
Under this policy Directors are required to disclose all actual
and potential conflicts of interest to the Board as they arise for
consideration and approval. The Board may impose restrictions or
refuse to authorise such conflicts if deemed appropriate.
A register of Directors’ interests, including potential conflicts of
interest, is maintained by the Company and is regularly monitored.
Directors who have potential conflicts of interest will not take
part in any discussions which relate to that particular conflict.
The Board considers that the framework has worked effectively
throughout the year under review.
40
Tenure
The Board has adopted a Tenure Policy for all Directors, including
the Chairman, which states that the Board believes that it is an
advantage to have the continuous contribution of Directors over
a period of time during which they are able to develop awareness
of and insight into the Company and thereby are able to make a
valuable contribution to the Board as a whole. The Board believes
that it is appropriate for a Director to serve for up to nine years
following their initial election and it is expected that Directors
will stand down from the Board at the AGM following the ninth
anniversary of their initial appointment. However, a flexible
approach to tenure has been adopted and that period may be
extended for a limited time to facilitate effective succession
planning whilst still ensuring regular refreshment and diversity
on the Board. This flexibility has been applied to Gillian Watson
who was due to step down at the annual general meeting in June
2022. In order to provide continuity and allow for appropriate
succession planning, the other Directors agreed with Gillian
Watson that she will remain on the Board until the conclusion of
the annual general meeting in 2023 at which point she will retire
from the Board. The Board has decided that all Directors who
wish to remain on the Board will be required to stand for annual
re-election in line with best practice.
Succession planning
The Board plans for its own succession with the assistance of the
nominations and remuneration committee. This process ordinarily
involves the identification of the need for a new appointment and
the preparation of a brief including a description of the role and
specification of the capabilities required. The nominations and
remuneration committee seeks assistance in identifying suitable
candidates by appointing an external recruitment firm each time
that there is a vacancy. During the year the Company did not
engage with any external recruitment firms. The nominations and
remuneration committee considers candidates from a wide range
of backgrounds, having consideration for the diversity of the
Board as a whole including, but not limited to, gender.
During the year the nominations and remuneration committee
discussed the composition of the Board and agreed that following
Gillian Watson stepping down at the conclusion of the AGM on
1 June 2023 Christopher Metcalfe will be appointed Chairman of
the Board. The Board have agreed that following a review of the
directors' balance of skills, knowledge, gender and experience it
will not recruit another non-executive director at present.
Board diversity
The nominations and remuneration committee considers diversity,
including the balance of skills, knowledge, gender and experience,
amongst other factors, when reviewing the composition of the
Board. It does not consider that it is appropriate to establish
targets or quotas in this regard.
The Board has made a commitment to consider diversity when
reviewing the composition of the Board and notes the upcoming
requirement to have an individual on the Board who is from
a minority ethnic background. The Board will be considering
this requirement when the next Board appointment is made.
Reporting against the upcoming diversity targets at present
60% of individuals on the Board are women and a woman
(Lindsay Dodsworth) is chair of the audit committee. Following
the conclusion of the AGM on 1 June 2023, when Gillian Watson
retires from the Board, 50% of the individuals on the Board will be
women.
The Board currently consists of five directors, three female and
two male. Following Gillian Watson's planned retirement at the
conclusion of the AGM, the Board will consist of four directors,
two female and two male.
Induction and training
The company secretary provides all Directors with induction
training on appointment, tailored to the needs of individual
appointees. The induction programme is designed to familiarise
the appointee with the Company, its operations and obligations
and regular ongoing briefings are provided on changes in
regulatory requirements that affect the Company and Directors.
Performance evaluation
A formal, annual appraisal system has been agreed for the
evaluation of the Board, its committees and the individual
Directors, including the Chairman. Board and committee
evaluation questionnaires are completed by each Director with
responses collated and discussed. The Chairman leads the
evaluation of the Board, committees and individual Directors,
including consideration of the time commitment, skills and
experience of the Directors, while the Senior Independent
Director leads the evaluation of the Chairman’s performance.
There were no significant actions arising from the evaluation
process conducted during the year and it concluded that the
Board as a whole, the individual Directors and its committees
were functioning effectively. As a result of the Board’s evaluation
process the Chairman confirms that all remaining Directors
continue to be effective and their election and re-election is
recommended. The Board has given consideration to appointing
an external board evaluator, however, it does not believe it is
necessary at this time.
The Board also regularly reviews the performance of the AIFM
and the investment manager. The management engagement
committee meets to review the continuing appointment of the
AIFM and the investment manager and reviews the terms of the
relevant agreement to ensure that it remains competitive and in
the best interest of shareholders. The management engagement
committee regularly reviews the continuing appointment of other
key service providers.
41
Company secretary
The Board has direct access to the company secretarial
service provided by the AIFM which, through its nominated
representative, is responsible for ensuring that applicable
regulations are complied with and that Board and committee
procedures are followed.
Terms of reference for each of the committees are available via the
company secretary.
As the Company has only five Directors (and four following the
AGM), all of whom are non-executive, it is the Board’s policy that all
Directors will sit on all Board Committees.
Internal control
The AIC Code and the Disclosure Guidance and Transparency
Rules require Directors, at least annually, to review the
effectiveness of the Company's system of internal control
and include a description of the main features relating to the
financial reporting process.
The Company has appointed Franklin Templeton Investment
Trust Management Limited as its AIFM. With the Company’s
permission, the AIFM has delegated the portfolio management
function to Martin Currie Investment Management Limited,
while retaining responsibility for certain risk management
and administrative functions. Since investment management
and administrative services are provided to the Company by
members of the Franklin Templeton group, the Company's
system of internal control mainly comprises monitoring the
services provided by members of that group, including the
operating controls established by them, to ensure that they meet
the Company's business objectives. The Company does not have
a risk or an internal audit function of its own but relies on the risk
and compliance department of the Franklin Templeton group
and the group's internal audit function. This arrangement is kept
under review. The Company, and with the Board’s permission
the AIFM, have also delegated certain depositary/custodial
and administrative functions, including fund accounting, to
JPMorgan. Franklin Templeton also carries out a review of the
depositary/custodial and administration activities performed by
JPMorgan.
The Board, either directly or through committees, reviews the
effectiveness of the Company’s system of internal control by
monitoring the operation of the key controls of the AIFM and
Martin Currie and:
• reviews an internal controls report, as provided to the Board
twice yearly by the AIFM. This report details significant risks,
regulatory issues, error management and complaint handling;
• reviews the terms of the AIFM agreement;
• reviews reports on the internal controls and the operations of
the AIFM, of Martin Currie, and of JPMorgan; and
• reviews the risk profile of the Company and considers
investment risk at every Board meeting.
There is an ongoing process for identifying, evaluating and
managing the significant risks faced by the Company as outlined
on pages 34 and 35. This process accords with the FRC’s
‘Guidance on Risk Management, Internal Control and Related
Financial and Business Reporting’.
During the course of its review of internal controls the Board
has not identified or been advised of any failings or weaknesses
which it has determined to be significant and is satisfied with the
arrangements.
Internal control and risk management systems in relation to
the financial reporting process
The Directors are responsible for the Company’s system of
internal control, designed to safeguard the Company’s assets,
maintain proper accounting records and ensure that financial
information used within the business, or published, is reliable.
The AIFM and Martin Currie have in place stringent controls
that monitor the following activities within the financial reporting
process:
• investment and related cash transactions are completely and
accurately recorded and settled in a timely manner;
• corporate actions and proxy voting instructions are identified
and generated, and then processed and recorded accurately
and in a timely manner;
• investment income is accurately recorded in the proper
period;
• investments are valued using current prices obtained from
independent external pricing sources;
• cash and securities positions are completely and accurately
recorded and reconciled to third-party data;
• amounts due to lenders are calculated accurately and paid
according to the relevant contractual terms; and
• the investment management fee and the Company’s other
operating expenses, are accurately calculated and recorded.
The system of internal control can only be designed to manage
rather than eliminate the risk of failure to achieve business
objectives and therefore can provide only reasonable, but not
absolute, assurance against fraud, material mis-statement or loss.
By means of the procedures set out above, the Board confirms
that it has reviewed the effectiveness of the Company's systems
of internal control for the year ended 31 January 2023 and to the
date of approval of this annual report.
On behalf of the Board
Gillian Watson
Chairman
6 April 2023
42
Status
The Company is registered as a public limited company in
Scotland under number SC192761 and is an investment company
as defined by Section 833 of the Companies Act 2006. It is a
member of the Association of Investment Companies (the ‘AIC’).
The Company has been accepted by HM Revenue & Customs
as an investment trust subject to it continuing to meet the
relevant eligibility conditions of Section 1158 of the Corporation
Tax Act 2010 and the ongoing requirements of Part 2 Chapter
3 Statutory Instrument 2011/2999 for all financial years
commencing on or aer 1 April 2012.
The Directors are of the opinion that the Company has
conducted its affairs for the year ended 31 January 2023 so
as to enable it to comply with the ongoing requirements for
investment trust status.
Business model review
The AIFM and investment manager
The Company has appointed Franklin Templeton Investment
Trust Management Limited as its AIFM. The AIFM has been
authorised by the FCA to act as an AIFM.
The AIFM has delegated the function of managing the
Company’s investment portfolio to the investment manager,
Martin Currie Fund Management Limited, the manager of the
Company’s assets since its launch in 1999. Martin Currie is an
international equity specialist based in Edinburgh, managing
money for a wide range of global clients. Its investment process
is focused on selecting stocks through fundamental proprietary
research and constructing well balanced high conviction
portfolios. The Board closely monitors investment performance
and Zehrid Osmani, the portfolio manager, attends each Board
meeting to present a detailed update to the Board. The Board
uses this opportunity to challenge the portfolio manager on any
aspect of the portfolio’s management.
The ultimate parent company of the AIFM is Franklin Resources
Inc ('Franklin'). The AIFM has delegated certain administration
and support functions to other Franklin entities.
Continued appointment of the AIFM
Following the annual appraisal carried out by the management
engagement committee in January 2023, the Board considers
that it is in the best interests of shareholders to continue
with the appointment of Franklin Templeton Investment Trust
Management Limited as AIFM, with investment management
delegated to the investment manager and the Board remains
content with this arrangement.
Main features of the contractual arrangement with the AIFM
(the 'AIFM agreement'):
The Company entered into the agreement with the AIFM on 2
August 2021. The AIFM agreement includes:
• Six month notice period;
• Immediate termination if the AIFM ceases to be capable of
acting as an AIFM; and
• In the event that the Company terminates the agreement
otherwise than as set out above, the AIFM is entitled to
receive compensation equivalent to the fees paid in the
previous annual period.
Company secretarial and certain administrative services are
provided to the Company by the AIFM pursuant to the AIFM
agreement.
With effect from 1 July 2022, the investment management
fee was amended to 0.45% of the Company's net asset value
(excluding income) and the AIFM will no longer charge a
separate company secretarial fee.
Until the change noted above, the investment management fee
was 0.5% per annum for the first £300 million of the Company's
net asset value (excluding income) and 0.35% for net assets
(excluding income) in excess of £300 million and the secretarial
fee charged during the year ended 31 January 2023 was £25,000
including VAT (31 January 2022: £67,000).
The Directors present their report and the audited financial statements of the Company for the year ended
31 January 2023.
REPORT OF THE DIRECTORS 43
Depositary arrangements
JPMorgan Europe Limited has been appointed as the
Company's depositary. The depositary is responsible for the
safekeeping of the Company’s assets, monitoring the cash
flows of the Company and must ensure that certain processes
carried out by the AIFM are performed in accordance with the
applicable rules and constitutive documents of the Company.
JPMorgan Chase Bank N.A. London Branch is the Company's
custodian. The custodian may from time to time delegate safe
keeping/custody of the Company’s assets to local custody
providers. The depositary and custodian are entitled to a fee
payable out of the assets of the Company.
Further contractual arrangements
The Company has outsourced its operational infrastructure
to third-party organisations. Contracts and service level
agreements have been defined to ensure that the service
provided by each of the third-party organisations is of a
sufficiently professional and technically high standard. The
Board actively monitors the performance of service providers.
The counterparty risk of dealing with each service provider is
analysed with the Board monitoring any identified risks. Further
details of the Company’s main service providers can be found in
the investor information section on page 81.
Directors
The Board currently consists of five non-executive Directors.
The names and biographies of the current Directors are on
page 37, indicating their range of experience as well as length
of service.
In line with best practice all of the Directors who have been on
the Board for more than a year will stand for re-election at the
AGM. Gillian Watson will retire following the conclusion of the
AGM and will not stand for re-election. The role of the Board
and its governance arrangements are set out in the Company’s
corporate governance statement on pages 38 to 42 which forms
part of this Report of the directors.
Directors’ insurance and indemnities
The Directors have the benefit of the indemnity provisions
contained in the Company’s Articles of Association, and the
Company has maintained throughout the year Directors' and
Officers’ liability insurance for the benefit of the Company
and the Directors. The Company has entered into qualifying
third party indemnity arrangements for the benefit of all
of its Directors in a form and scope which comply with the
requirements of the Companies Act 2006 and which were in
force throughout the year and remain in force.
Environmental matters
As an externally managed investment company with no
employees, the Company’s direct greenhouse gas emissions are
negligible, being emissions resulting from Directors' travel to
meetings in Edinburgh or London. The Company encourages and
actively oversees Martin Currie’s application of its ESG policies in
the investment processes as set out in the Strategic Report.
44
Share capital
As at 31 January 2023 the Company had 76,105,554 Ordinary shares of 5p ('Ordinary shares') in issue (2022: 86,616,404) and a further
22,570,353 Ordinary shares held in Treasury (2022: 12,059,503). The following table summarises transactions made by the Company in its
shares. Further details of the Company's transactions involving Treasury shares can be found within accounting policy Note 1(j) on page 67.
Allocation of (cost)/proceeds
Number of shares (Cost)/proceeds
Special
distributable
reserve
Share premium
account Capital reserve
Shares repurchased into Treasury 10,510,850 (£32,848,000) n/a n /a (£32,848,000)
Shares issued from Treasury — — — — —
Shareholder analysis as at 31 January 2023
% of
shareholders
% of
equity capital
Individuals and trustees
80.4 10.4
Banks and nominee companies
15.5 65.8
Insurance and investment companies
1.1 0.2
Other holders
3.0 23.6
100.0 100.0
Shareholder and voting rights
Each Ordinary shareholder is entitled to one vote on a show of hands and, on a poll, to one vote for every share held. The Ordinary
shares carry a right to receive dividends which are declared from time to time by the Company. On a winding-up, aer meeting the
liabilities of the Company, any surplus assets would be paid to Ordinary shareholders in proportion to their shareholdings.
There are no restrictions on the transfer of Ordinary shares in the Company other than certain restrictions which may from time to
time be imposed by law (for example, insider trading law) and there are no special rights attached to any of the Ordinary shares. The
Company is not aware of any agreements between shareholders which may result in restrictions on the transfer of Ordinary shares or the
voting rights attached to them.
Substantial interests
As at 31 January 2023, the Company had received notification in accordance with the FCA’s Disclosure Guidance and Transparency Rule
5.1.2R of the following interests in 3% or more of the voting rights attaching to the Company’s issued share capital.
As at 31 January 2023 Date of announcement Number of shares
in announcement
Percentage of voting rights
as at 31 January 2023
1
DC Thomson & Company Limited 4 February 2019 5,880,000
2
7.7%
Rathbone Investment Management 8 August 2019 4,193,681 5.5%
Based on the shares included in the announcement.
On 1 February 2023 the Company received notification that DC Thomson & Company Limited's shareholding was 5,420,000 shares.
Related party transactions
With the exception of the investment management and secretarial fees (disclosed on page 43), Directors’ fees (disclosed on page 53),
and Directors’ shareholdings (disclosed on page 52), there were no related party transactions through the financial year.
45
Revenue and dividends
2023 2022
Tota l Pence
per share
Tota l Pence
per share
Net revenue return for the year aer expenses, interest and taxation £1,781,000 2.16p £1,161,000 1.36
Dividends paid and declared for the year
1
£3,297,000
2
4.20p £3,603,000 4.20
Revenue reserve at end of year £864,000 1.14p £513,000 0.59
Special distributable reserve at end of year
3
— — £76,297,000 88.09
Realised capital reserve at end of year
3
£154,191,000 202.60p £110,511,000 127.59p
Includes interim dividends paid throughout the year and final interim dividend announced/paid after the financial year end.
The total fourth interim dividend was calculated based on the number of shares in issue on 31 March 2023.
Fully distributable including by way of dividend. Following the Board decision to simplify the Company's reserves, the balance of the special distributable reserve was transferred in full to
the capital reserve on 16 June 2022.
Corporate governance statement
The Company’s corporate governance statement is set out on
pages 38 to 42 and forms part of this Report of the directors.
Performance, outlook and trends likely to affect
future performance
Please refer to the Chairman’s statement on pages 6 to 8 and
the Manager’s review on pages 9 to 16 for an update on the
performance of the Company over the year and outlook for
2023, together with information on the trends likely to affect the
future performance of the Company.
Regulatory
The Alternative Investment Fund Managers Regulations
2013 ('AIFM Regulations')
AIFM remuneration
In accordance with the AIFM Regulations, details of the
remuneration policy of the AIFM and amounts attributable to the
Company are available to existing shareholders upon request at
the registered office of the Company.
Leverage
Under the AIFM regulations, the maximum leverage which the
AIFM is entitled to employ on behalf of the Company is 250%
under the gross method and 200% under the commitment
method. This indicates the highest level that exposure could reach
using these calculations if all available instruments introducing
leverage were used to the maximum permitted level at the same
time. In practice, the maximum level of leverage is restricted by
the Company's investment policy to 20%. Any changes to these
limits will be agreed in advance between the AIFM and the
Company. At 31 January 2023, the Company’s gross ratio was 112%
and its commitment ratio was 112%.
Audit information
As required by Section 418 of the Companies Act 2006 each of
the Directors who held office at the date of approval of this Report
of the directors confirms that, so far as they are aware, there is no
relevant audit information of which the Company’s auditors are
unaware and each Director has taken all of the steps that they
ought to have taken as a Director to make themselves aware of
any relevant audit information and to establish that the Company’s
auditors are aware of that information.
Listing Rule 9.8.4R
Listing Rule 9.8.4R requires the Company to include certain
information in a single identifiable section of the annual report
or a cross-reference table indicating where the information is set
out. The information covers areas such as long-term incentive
schemes, allotment of shares, investment in subsidiary companies
and agreements with controlling shareholders. The Directors
confirm that there are no disclosures to be made in this regard.
Annual general meeting
The annual general meeting (‘AGM’) of the Company will be held
at the offices of Franklin Templeton, 5 Morrison Street, Edinburgh
EH BH at 11.00am on 1 June 2023. Further information is
contained in the Notice of AGM which is included on pages
87 to 90. Resolutions relating to the following items of business
will be proposed:
Dividend policy – ordinary resolution
As a result of the timing of the payment of the Company’s
quarterly dividends in January, April, July and October, the
Company’s shareholders are unable to approve a final dividend
each year. As an alternative, the Board will put the Company’s
dividend policy to shareholders for approval on an annual basis.
Resolution 4, which is an ordinary resolution, relates to the
approval of the Company’s dividend policy which is as follows:
The Company’s policy is to pay regular dividends on the Ordinary
Shares which are currently paid quarterly in January, April,
July and October. The Company intends to at least maintain in
absolute terms the total ordinary dividends paid in respect of
each financial year compared with the preceding financial year.
The total annual dividend in respect of each financial year will
be at least at a level that ensures that the Company continues to
qualify as an investment trust. The Board does not set an income
target for the manager and dividends may be funded from current
period earnings and/or from distributable reserves. The payment
of dividends in accordance with this dividend policy is subject
to market conditions and the Company's financial position and
outlook. The dividend policy is subject to shareholder approval at
each annual general meeting.
Allotment of shares – ordinary resolution
Section 551 of the Companies Act 2006 provides that the
Directors may not allot new shares without shareholder approval.
Resolution 11 seeks to renew the Directors' authority to allot new
shares up to a maximum aggregate nominal amount of £1,239,443
(being an amount equal to one third of the issued share capital
of the Company (excluding Treasury shares) as at 31 March 2023,
being the last practicable date before the date of this document).
The Board intends to exercise this power only once the number
of shares held by the Company in Treasury is not sufficient to
support share issuance by the Company.
This resolution in isolation only allows the Directors to allot new
shares to existing shareholders pro rata to their existing holdings.
Resolutions 13 and 14 will, if approved, then disapply pre-emption
rights allowing the Company to issue up to 14,873,324 shares for
cash on a non-pre-emptive basis.
As at 31 March 2023, being the last practicable date prior to
the publication of this document, the Company held 24,309,281
Ordinary shares in Treasury, representing approximately 24.6% of
the Company's issued share capital (including Treasury shares).
46
The authority contained in resolution 11 will expire on 31 July
2024 or, if earlier, at the AGM of the Company to be held in 2024
unless previously cancelled or varied by the Company in a general
meeting.
Disapplication of statutory pre-emption rights – special
resolutions
Under s561 of the Companies Act 2006, when shares are to be
allotted for cash or sold from Treasury, such shares first must be
offered to existing shareholders in proportion to their existing
holdings of shares. Resolutions 13 and 14 proposed as special
resolutions would, if passed, then disapply pre-emption rights
allowing the Company to issue shares for cash on a non-pre-
emptive basis.
This authority would enable the Directors to issue shares for
cash to take advantage of demand in the market that may arise
in order to increase the amount of the Company’s issued share
capital. The purpose of such an increase would be to improve
the liquidity of the market in the Company’s shares and to
spread the fixed cost of administering the Company over a
wider base. The Directors believe that the issue of further shares
would increase the investment attractions of the Company to
the benefit of existing shareholders. If resolutions 13 and 14 are
approved by shareholders, the Board will only use the authority
to disapply pre-emption rights and issue shares: (i) at a premium
to the prevailing NAV at the time of issue; and (ii) when the
Board believes that it is in the best interests of the Company and
its existing shareholders to do so. As shares will only be issued
at a sufficient premium to cover issue costs to the prevailing
NAV at the time of issue, the value of the underlying assets
attributable to the shares will not be diluted as a result of issuing
further shares.
The resolutions, if both are passed, will give the Directors
power to issue for cash equity securities of the Company up
to a maximum of £743,666 (being an amount equal to 20% of
the issued share capital of the Company (excluding Treasury
shares) as at 31 March 2023, the latest practicable date prior to
this document) without the application of pre-emption rights
described above. The authority contained in resolutions 13 and
14 will continue until 31 July 2024 or, if earlier, the AGM of the
Company in 2024.
Purchase of own shares – special resolution
Each year the Directors seek authority from shareholders to
purchase the Company’s own shares. The Directors recommend
that shareholders renew this authority as detailed in resolution
12. Any shares purchased pursuant to the authority will be held
in Treasury or cancelled. The Directors currently intend to hold
in Treasury the shares purchased under this authority. The
authority will lapse at the earlier of the Company’s next AGM or
15 months after the date of the resolution.
The purpose of holding shares in Treasury is to allow the
Company to reissue those shares quickly and cost effectively in
accordance with resolutions 13 and 14. If passed, resolution 12
gives authority for the Company to purchase up to 11,147,557 of
the Company’s own shares or, if less, 14.99% of the Company’s
issued share capital (excluding Treasury shares) as at the date
of the passing of the resolution. The Directors will only exercise
this authority to purchase shares where they consider that such
purchases will be in the best interests of shareholders generally
and only at a discount to the prevailing NAV per share.
Notice of general meeting – special resolution
Resolution 15, proposed as a special resolution, would give the
Directors authority to call a general meeting, other than the
AGM, on 14 days’ clear notice. The Directors believe that it is in
the best interests of shareholders to have the flexibility to call
a general meeting at short notice, although it is intended that
this flexibility will only be used for non-routine business and
when it is deemed in the interests of shareholders as a whole. If
approved, the authority contained in resolution 15 will continue
until the AGM of the Company or, if earlier, 31 July 2024.
Recommendation
The Directors believe that all of the resolutions proposed are in
the best interests of the Company and shareholders as a whole.
The Directors unanimously recommend that all shareholders
vote in favour of all of the resolutions. The results of the votes on
the resolutions at the AGM will be published on the Company’s
website (www.martincurrieglobal.com).
47
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 2023 is shown in
the statement of financial position on page 63. The statement
of cash flow of the Company is set out on page 65. Note 16
on pages 76 to 78 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 disclosed on page 34.
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
2025, 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 set out on page 34, including specifically
the current geopolitical and economic environment;
• the mitigation measures which key service providers including
the manager 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 94% of the
current portfolio could be liquidated within two trading days;
and
• the quantity of debt, the fixed interest rate on the 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.
48
Responsibility statement
Each of the Directors, whose names and functions are listed in
the Board of Directors on page 37, confirms that to the best of
their knowledge:
• the financial statements which have been prepared in
accordance with United Kingdom Generally Accepted
Accounting Practice, including the Financial Reporting
Standard applicable in the UK and Republic of Ireland (‘FRS
102’), 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, including the Financial Reporting Standard
applicable in the UK and Republic of Ireland (‘FRS 102’),
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
statement 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 6 April 2023 and is signed on its behalf by:
Gillian Watson
Chairman
6 April 2023
49
AUDIT COMMITTEE REPORT
The audit committee is chaired by Lindsay Dodsworth and,
during the year under review comprised all of the Directors.
Lindsay Dodsworth joined the audit committee on the date of her
appointment to the Board and was appointed chair of the audit
committee following the conclusion of the AGM on 16 June 2022.
The Board notes that the AIC Code permits the Chairman of the
Board to be a member of the audit committee of an investment
trust. In light of the fact that the Board consists of only five
members and recognising Gillian Watson’s relevant experience,
the audit committee resolved to continue her appointment to
the committee following her appointment as Chairman of the
Company.
At the AGM on 1 June 2023 Gillian Watson will retire from the
Board, Christopher Metcalfe will be appointed Chairman. The
audit committee has resolved that Christopher will also continue
to be a member of the audit committee following his appointment
as Chairman.
The Board reviews the relevant skills and experience of the audit
committee as part of the annual Board review and believes that
the members of the committee have the appropriate skills and
experience. Biographies of the members of the committee are on
page 37.
Audit committee responsibilities and activities
during the year
The audit committee met twice during the year and reviewed the
scope and results of the audit and considered and approved the
external auditors’ plan for the audit of the financial statements
for the year ended 31 January 2023. The audit committee’s
responsibilities and activities during the year included:
• Monitoring and reviewing the integrity of the financial
statements of the Company and ensuring, in particular, that,
taken as a whole, they are fair, balanced and understandable;
• Reviewing the appropriateness and consistency of the
Company's accounting policies;
• Reviewing and challenging the Company's going concern and
viability statements;
• Oversight of the effectiveness of internal financial controls
and reporting, risk management systems and internal control
policies and procedures for the identification, assessment and
reporting of risks;
• Monitoring and reviewing the independence, objectivity and
effectiveness of the external auditors;
• Making recommendations to the Board in relation to the
appointment, evaluation and dismissal of the external auditors,
their remuneration, terms of their engagement and reviewing
their independence and objectivity;
• Developing and implementing policy on the engagement of
the external auditors to supply non-audit services;
• Monitoring the impact of any accounting or regulatory
changes impacting the Company; and
• Reporting to the Board, identifying any matter in respect of
which it considers that action or improvement is needed and
making recommendations as to the steps to be taken.
The audit committee takes account of the most significant issues
and risks, both operational and financial, likely to impact the
Company’s financial statements.
Having reviewed the annual report and financial statements, the
committee recommended to the Board that the annual report
and financial statements are fair, balanced and understandable
and provide the information necessary for shareholders to assess
the Company's position and performance, business model and
strategy.
During the year the committee considered the appropriateness of
the expense allocations between capital and revenue, concluding
that the current allocation for the AIFM fee and finance costs
was appropriate. It also considered the fee level, independence,
effectiveness and re-appointment of the auditors.
The committee also received a report from the AIFM on oversight
of the service providers.
There were no non-audit fees for the year ended 31 January 2023
(2022: none).
Auditors’ independence
The Company has in place a policy governing and controlling the
provision of non-audit services by the external auditors, in order
to help safeguard the auditors' independence and objectivity. This
is achieved by prohibiting non-audit work where independence
may be compromised or conflicts arise. Any non-audit work
requires specific approval of the audit committee in each case.
The audit fee amounts to £49,500 plus VAT for the year ended
31 January 2023 (2022: £45,000 plus VAT).
Following review, the committee is satisfied that the Company’s
auditors, Ernst & Young LLP (‘EY’), remain independent.
Auditors’ rotation
A competitive tender for the audit of the Company was last held
in May 2015, following which EY were selected as the Company’s
auditors. Under UK rotation guidance, the Company’s audit
engagement partner will rotate every five years. The current audit
engagement partner, Ahmer Huda, took over the role in 2022.
Auditors’ report
At the conclusion of the audit, EY did not highlight any issues
to the audit committee which would cause it to qualify its audit
report nor did it highlight any fundamental internal control
weaknesses. EY issued an unqualified audit report which is
included on pages 56 to 61.
50
Matter Action
Accuracy of portfolio
valuation
Actively traded listed investments are valued using stock exchange prices provided by third-party service
providers. The AIFM reviews and summarises the internal controls reports, prepared annually by JPMorgan Chase
Bank N.A. covering Global Fund Accounting and Custody and the audit committee reviews this summarised
report annually. The internal controls report is reported on by independent external accountants and includes
details of the systems, processes and controls around the daily pricing of equity securities, including the
application of exchange rate movements. Stale prices are monitored monthly by the AIFM's pricing team and
would be reported to the audit committee.
Accuracy of revenue
recognition
The audit committee reviews a summary of JPMorgan Chase Bank N.A.’s internal controls report annually. The
internal controls report includes details of the systems, processes and controls around the recording of
investment income. The Board also reviews revenue forecasts at each Board meeting. The investment manager
and the Board review all special dividends to make sure that they are correctly treated in accordance with the
Company's accounting policy.
Allocation of
expenses between
revenue and capital
The allocation is reviewed by the audit committee annually considering the long-term split of returns from the
portfolio, both historic and projected, the objectives of the Company and current, historical and prospective
yields.
Going concern and
viability statement
The committee reviewed evidence provided by the manager to support the Going Concern and Viability
Statements on page 48 and was satisfied that it could recommend to the Board the relevant statements.
The following significant issues were considered by the audit committee in relation to the financial statements:
Effectiveness of the external audit process
The audit committee evaluated the effectiveness of the external
auditors and the external audit that they undertook prior to
making a recommendation on the re-appointment of EY at the
forthcoming AGM. This evaluation involved an assessment of
the effectiveness of the auditors’ performance against criteria
including qualification, expertise and resources, independence
and effectiveness of the audit process. The committee reviewed
and agreed the audit plan including the level of audit materiality
and discussed the key risk areas with the auditors and deemed
these appropriate. The committee also discussed with the
auditors any significant areas where they challenged the AIFM's
assumptions in connection with the preparation of the financial
statements, noting that there were no disagreements with the
AIFM.
Having reviewed the performance of the external auditors as
described above, the audit committee considered it appropriate
to recommend the re-appointment of EY as external auditors.
EY have expressed their willingness to be re-appointed to office
and a resolution to re-appoint them as auditors to the Company
and to authorise the Directors to determine the remuneration
payable will be proposed at the forthcoming AGM.
On behalf of the Board
Lindsay Dodsworth
Chair of the Audit Committee
6 April 2023
51
Nominations and remuneration committee
The nominations and remuneration committee has responsibility for
setting the remuneration policy for Directors, taking into account
factors such as time commitment and responsibilities, with the
objective to attract and retain Directors of the quality required to run
the Company successfully, without paying more than necessary. The
committee is also responsible for reviewing and setting Directors’
remuneration levels.
Remuneration statement
The Board has prepared this report in accordance with the
requirements of the Large and Medium-sized Companies and
Groups (Accounts and Reports) (Amendment) Regulations 2013. An
ordinary resolution to approve this report will be put to shareholders
at the AGM.
Company law requires the Company’s auditors to audit certain
disclosures provided in this report. Where disclosures have been
audited, they are indicated as such. The auditors’ opinion is included
in their report on pages 56 to 61.
Directors’ remuneration policy
The Board’s policy is that the remuneration of non-executive
Directors should reflect the experience of the Board as a whole,
be fair and comparable to that of other investment companies that
are similar in size, have a similar capital structure and have similar
investment objectives. It is intended that this policy will continue
for the year ended 31 January 2024 and subsequent years. The
fees for the Directors are determined within the limits set out in
the Company’s Articles of Association. Each Director abstains from
voting on their own remuneration.
The Directors’ remuneration policy will be put to a shareholders’ vote
annually.
Directors are entitled to be reimbursed for any reasonable expenses
properly incurred by them in connection with the performance of
their duties. Directors are not eligible for bonuses, pension benefits,
share options, long-term incentive schemes or other benefits.
Additional fees may be payable where (i) a Director is required
to perform services outside the ordinary duties of a Director; or
(ii) where the work performed is outside the ordinary course of
Company business and in each case where the time commitment is
exceptional.
Directors do not have service contracts but are provided with
letters of appointment. All Directors are appointed for an initial term
covering the period from the date of that appointment until the first
AGM at which they are required to stand for election in accordance
with the Company’s Articles of Association.
Thereafter, in line with best practice, all Directors will stand for
re-election at the AGM each year. There is no notice period and no
provision for compensation upon early termination of appointment.
The Company’s Articles of Association provide for a maximum level
of total remuneration of £200,000 per annum for the Directors in
aggregate.
Annual report on remuneration
For the year to 31 January 2023, the non-executive Directors
received a fee of £27,500 per annum, the audit committee Chair
received a fee of £34,000 and the Chairman received a fee of
£41,000 per annum.
During the year, the nominations and remuneration committee
considered the Directors’ fees in the context of the benchmark data
from its peer group. Following a review of this and considering the
increasing regulatory responsibilities on directors, it was agreed
that the Chairman's fee would be increased to £43,500, the audit
committee Chair to £36,000 and the other Directors' fees to
£29,000 per annum, with effect from 1 February 2023.
Directors’ shareholdings (audited)
The shareholdings detailed above have not changed between
31 January 2023 and 6 April 2023, the date of signing the
accounts.
The Company confirms that it has not set out any formal
requirements or guidelines for a Director to own shares in the
Company.
Approval
Ordinary resolutions for the approval of the Directors’
remuneration policy and annual report on remuneration will be
put to shareholders at the forthcoming AGM. At the AGM on
16 June 2022, 99.81% of proxy votes were cast in favour of the
Directors’ remuneration report for the year ended 31 January
2022 and 99.79% of proxy votes were cast in favour of the
Directors' remuneration policy.
As at 31 January 2023 2022
Lindsay Dodsworth 2,542 2,542
Marian Glen — —
Gary Le Sueur 31,735 31,735
Christopher Metcalfe 8,600 8,600
Gillian Watson 3,329 3,329
DIRECTORS’ REMUNERATION STATEMENT 52
Total return (ten financial years)
Source: Martin Currie Investment Management Limited.
The benchmark is the MSCI All Country World index.
Directors’ emoluments for the year (audited)
Year ended
31 January 2023
£
Year ended
31 January 2022
£
Lindsay Dodsworth
1
31,562 6,625
Neil Gaskell
2
— 6,625
Marian Glen
3
29,938 33,000
Gary Le Sueur 27,500 26,500
Christopher Metcalfe 27,500 26,500
Gillian Watson 41,000 40,000
157,500 139,250
Benchmark 201.0%
1
%
250
200
150
100
50
0
Jan 2013 Jan 2014 Jan 2015 Jan 2016 Jan 2017 Jan 2018 Jan 2019 Jan 2020 Jan 2021 Jan 2022 Jan 2023
Share price total return 161.2%
The graph below compares, for the ten financial years ended 31 January 2023, the total return (assuming all dividends were reinvested) to
Ordinary shareholders compared to the total return of the benchmark.
53
Appointed on 1 November 2021 and became chair of the audit committee on 16 June 2022.
Retired on 30 April 2021.
Stepped down from her position as chair of the audit committee on 16 June 2022.
On behalf of the Board
Gary Le Sueur
Chairman of the Nominations and Remuneration Committee
6 April 2023
Relative importance of spend on Directors’ remuneration
To enable shareholders to assess the relative importance of spend on remuneration, the Directors’ total remuneration has been shown
in a table below compared with the Company’s distributions.
Year ended
31 January 2023
Year ended
31 January 2022 % change
Directors’ total remuneration (£000) 158 139 13.7
Dividends paid and payable (£000) 3,297 3,603 (8.5)
Share buybacks (£000) 32,848 5,579 488.8
Dividend per share (p) 4.20 4.20 —
Percentage change in annual remuneration of Directors
Yea r Lindsay Dodsworth Marian Glen Gary Le Sueur Christopher Metcalfe Gillian Watson
2022-2023 28%
1
-17%
2
4% 4% 3%
2021-2022 n/a
1
10% 4% 4% 57%
3
Lindsay Dodsworth was appointed on 1 November 2021 and became chair of the audit committee on 16 June 2022.
Marian Glen stepped down from her position as chair of the audit committee on 16 June 2022.
Gillian Watson was appointed as Chairman on 1 February 2021.
54
3: FINANCIAL REVIEW
Independent auditors’ report to the members of
Martin Currie Global Portfolio Trust plc
Opinion
We have audited the financial statements of Martin Currie Global
Portfolio Trust plc (the ‘Company’) for the year ended 31 January
2023 which comprise the Statement of Comprehensive Income,
the Statement of Financial Position, the Statement of Changes in
Equity, the Statement of Cash Flow and the related notes 1 to 20,
including a summary of significant accounting policies. The
financial reporting framework that has been applied in their
preparation is applicable law and United Kingdom Accounting
Standards including FRS 102 ‘The Financial Reporting Standard
applicable in the UK and Republic of Ireland’ (United Kingdom
Generally Accepted Accounting Practice).
In our opinion, the financial statements:
• give a true and fair view of the Company’s affairs as at 31 January
2023 and of its loss for the year then ended;
• have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditors’ responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
Independence
We are independent of the Company in accordance with the
ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as
applied to public interest entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
The non-audit services prohibited by the FRC’s Ethical Standard
were not provided to the Company and we remain independent
of Company in conducting the audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation
of the directors’ assessment of the Company’s ability to continue to
adopt the going concern basis of accounting included:
• Confirmation of our understanding of the Company’s going
concern assessment process and engaged with the Directors
and the company secretary to determine if all key factors that we
have become aware of during our audit were considered in their
assessment.
• Inspection of the Directors’ assessment of going concern, including
the revenue forecast, for the period to 31 January 2025 which
is at least twelve months from the date the financial statements
were authorised for issue. In preparing the revenue forecast, the
Company has concluded that it is able to continue to meet its
ongoing costs as they fall due.
• Review of the factors and assumptions, including the impact of the
current economic environment, as applied to the revenue forecast
and the liquidity assessment of the investments. We considered
the appropriateness of the methods used to calculate the revenue
forecast and the liquidity assessment and determined, through
testing of the methodology and calculations, that the methods,
inputs and assumptions utilised were appropriate to be able to
make an assessment for the Company.
• Assessment of the risk of breaching the debt covenants as a
result of a reduction in the value of the Company’s portfolio. We
calculated the Company’s compliance with debt covenants, and we
performed reverse stress testing in order to identify what factors
would lead to the Company breaching the financial covenants.
• Consideration of the mitigating factors included in the revenue
forecasts and covenant calculations that are within the control
of the Company. We reviewed the Company’s assessment of
the liquidity of investments held and evaluated the Company’s
ability to sell those investments in order to cover working capital
requirements should revenue decline significantly.
• Review of the Company’s going concern disclosures included
in the annual report in order to assess that the disclosures were
appropriate and in conformity with the reporting standards.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Company’s ability to
continue as a going concern for a period to 31 January 2025
In relation to the Company’s reporting on how they have applied the
UK Corporate Governance Code, we have nothing material to add or
draw attention to in relation to the directors’ statement in the financial
statements about whether the directors considered it appropriate to
adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with
respect to going concern are described in the relevant sections of
this report. However, because not all future events or conditions can
be predicted, this statement is not a guarantee as to the Company’s
ability to continue as a going concern.
INDEPENDENT AUDITORS’ REPORT 56
Overview of our audit approach
Key audit matters • Risk of incomplete or inaccurate revenue recognition, including the classification of special dividends
as revenue or capital items in the Statement of Comprehensive Income
• Risk of incorrect valuation or ownership of the investment portfolio
Materiality • Overall materiality of £2.50m (2022: £3.16m) which represents 1% (2022: 1%) of total shareholders’
funds.
An overview of the scope of our audit
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for
the Company. This enables us to form an opinion on the financial statements. We take into account size, risk profile, the organisation
of the Company and effectiveness of controls, the potential impact of climate change and changes in the business environment when
assessing the level of work to be performed.
Climate change
Stakeholders are increasingly interested in how climate change will impact the Company. The Company has determined that the impact
of climate change could affect the Company’s investments and the overall investment process. This is explained on page 34 in the
principal risks and uncertainties. This disclosure forms part of the “Other information,” rather than the audited financial statements. Our
procedures on these unaudited disclosures therefore consisted solely of considering whether they are materially inconsistent with the
financial statements, or our knowledge obtained in the course of the audit or otherwise appear to be materially misstated, in line with our
responsibilities on “Other information”.
Our audit effort in considering climate change was focused on the adequacy of the Company’s disclosures in the financial statements
as set out in Note 1a and conclusion that there was no further impact of climate change to be taken into account as the investments
are valued based on market pricing as required by FRS102. We also challenged the Directors’ considerations of climate change in their
assessment of viability and associated disclosures.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements
of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we
identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial
statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.
57
58
Risk Our response to the risk
Key observations
communicated to
the Audit
Committee
Incomplete or inaccurate revenue recognition,
including the classification of special dividends
as revenue or capital in the Statement of
Comprehensive Income (as described on
page 51 in the audit committee’s report and as
per the accounting policy set out on page 67).
The total revenue for the year to 31 January
2023 was £2.89m (2022: £2.50m), consisting
primarily of dividend income from listed equity
investments.
There is a risk of incomplete or inaccurate
recognition of revenue through the failure to
recognise proper income entitlements or to
apply an appropriate accounting treatment.
In addition to the above, the Directors may be
required to exercise judgment in determining
whether income receivable in the form of
special dividends should be classified as
‘revenue’ or ‘capital’ in the Statement of
Comprehensive. Income.
We have performed the following procedures:
We obtained an understanding of the processes and controls
surrounding revenue recognition, including the classification of
special dividends, by performing walkthrough procedures.
For all dividends received, we recalculated the dividend income by
multiplying the investment holdings at the ex-dividend date, traced
from the accounting records, by the dividend per share, which was
agreed to an independent data vendor. For a sample of dividends
received, we agreed amounts to bank statements and agreed the
exchange rates used to an external source.
For all accrued dividends, we reviewed the investee company
announcements to assess whether the dividend entitlements
arose prior to 31 January 2023. We agreed the dividend rate to
corresponding announcements made by the investee Company,
recalculated the dividend amount receivable by multiplying the
investment holdings at the ex-dividend date, traced from the
accounting records, and confirmed this was consistent with cash
received as shown on post year end bank statements, for a sample of
dividends where paid.
To test completeness of recorded income, we verified that expected
dividends for each investee Company held during the year had
been recorded as income with reference to investee company
announcements obtained from an independent data vendor.
For all investments held during the year, we reviewed the type
of dividends paid with reference to an external data source and
confirmed that we did not identify any special dividends in the year.
The results of
our procedures
identified no material
misstatement
in relation to
incomplete or
inaccurate revenue
recognition,
including incorrect
classification of
special dividends
as revenue or
capital items in
the Statement of
Comprehensive
Income.
Incorrect valuation or ownership of the
investment portfolio (as described on page 51
in the Report of the audit committee and as
per the accounting policy set out on page 67).
The valuation of the investment portfolio at 31
January 2023 was £277.61m (2022: £339.54m)
consisting primarily of listed investments.
The valuation of the assets held in the
investment portfolio is the primary driver of
the Company’s net asset value and total
return. Incorrect investment pricing, or a
failure to maintain proper legal title of the
assets held by the Company could have a
significant impact on the portfolio valuation
and the return generated for shareholders.
The fair value of listed investments is
determined by reference to stock exchange
quoted market bid prices at the close of
business on the reporting date.
We have performed the following procedures:
We obtained an understanding of the processes and controls
surrounding investment pricing and legal title of listed investments by
performing walkthrough procedures.
For all investments in the portfolio, we compared the market prices
and exchange rates applied to an independent pricing vendor and
recalculated the investment valuations as at the year-end.
We confirmed with the Administrator that there were no investments
with stale prices as at the year-end and therefore no stale pricing
report produced. We obtained the market prices, from an
independent pricing vendor, for five business days pre and post
the year end date and calculated the day-on-day movement and
confirmed there are no stale prices.
We compared the Company’s investment holdings at 31 January 2023
to independent confirmations received directly from the Company’s
Custodian and Depositary.
The results of
our procedures
identified no material
misstatement in
relation to the risk of
incorrect valuation
or ownership of the
investment portfolio.
There have been no changes to the areas of audit focus raised in the above risk table from the prior year.
Our application of materiality
We apply the concept of materiality in planning and performing
the audit, in evaluating the effect of identified misstatements on
the audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually
or in the aggregate, could reasonably be expected to influence
the economic decisions of the users of the financial statements.
Materiality provides a basis for determining the nature and
extent of our audit procedures.
We determined materiality for the Company to be £2.50 million
(2022: £3.16 million), which is 1% (2022: 1%) of shareholders’
funds. We believe that shareholder’s funds provide us with
a materiality aligned to the key measure of the Company’s
performance.
Performance materiality
The application of materiality at the individual account or balance
level. It is set at an amount to reduce to an appropriately low level
the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality.
On the basis of our risk assessments, together with our
assessment of the Company’s overall control environment, our
judgement was that performance materiality was 75% (2022: 75%)
of our planning materiality, namely £1.87m (2022: £2.37m). We
have set performance materiality at this percentage due to the
fact there has been no misstatements in prior periods.
Given the importance of the distinction between revenue and
capital for investment trusts, we have also applied a separate
testing threshold for the revenue column of the Statement of
Comprehensive Income of £0.12m (2022: £0.16m), being our
reporting threshold.
Reporting threshold
An amount below which identified misstatements are considered
as being clearly trivial.
We agreed with the audit committee that we would report to
them all uncorrected audit differences in excess of £0.16m (2021:
£0.15m), which is set at 5% of planning materiality, as well as
differences below that threshold that, in our view, warranted
reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the
quantitative measures of materiality discussed above and in
light of other relevant qualitative considerations in forming our
opinion.
Other information
The other information comprises the information included in
the annual report other than the financial statements and our
auditors’ report thereon. The Directors are responsible for the
other information contained within the annual report.
Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly
stated in this report, we do not express any form of assurance
conclusion thereon.
Our responsibility is to read the other information and, in
doing so, consider whether the other information is materially
inconsistent with the financial statements, or our knowledge
obtained in the course of the audit or otherwise appears to be
materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement
in the financial statements themselves. If, based on the work
we have performed, we conclude that there is a material
misstatement of the other information, we are required to report
that fact.
We have nothing to report in this regard.
Opinion on other matters prescribed by the
Companies Act 2006
In our opinion the part of the directors’ remuneration report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of
the audit:
• the information given in the Strategic report and the Report
of the directors for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
• the Strategic report and the Report of the directors
have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by
exception
In the light of the knowledge and understanding of the
Company and its environment obtained in the course of the
audit, we have not identified material misstatements in the
strategic report or Directors’ report.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report
to you if, in our opinion:
• adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches
not visited by us; or
• the financial statements and the part of the Directors’
Remuneration Report to be audited are not in agreement
with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by
law are not made; or
• we have not received all the information and explanations we
require for our audit
59
Corporate Governance Statement
We have reviewed the Directors’ statement in relation to going
concern, longer-term viability and that part of the Corporate
Governance Statement relating to the Company’s compliance
with the provisions of the UK Corporate Governance Code
specified for our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial
statements or our knowledge obtained during the audit:
• Directors’ statement with regards to the appropriateness
of adopting the going concern basis of accounting and any
material uncertainties identified set out on page 48;
• Directors’ explanation as to its assessment of the Company’s
prospects, the period this assessment covers and why the
period is appropriate set out on page 48;
• Director’s statement on whether it has a reasonable
expectation that the group will be able to continue in
operation and meets its liabilities set out on page 48;
• Directors’ statement on fair, balanced and understandable set
out on page 49;
• Board’s confirmation that it has carried out a robust
assessment of the emerging and principal risks set out on
page 34;
• The section of the annual report that describes the review
of effectiveness of risk management and internal control
systems set out on page 42; and
• The section describing the work of the audit committee set
out on page 50.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities
statement set out on page 49, the Directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such internal
control as the Directors determine is necessary to enable the
preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless
the Directors either intend to liquidate the Company or to cease
operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditors’ report that includes our opinion. Reasonable assurance
is a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these
financial statements.
Explanation as to what extent the audit was
considered capable of detecting irregularities,
including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect irregularities, including
fraud. The risk of not detecting a material misstatement due
to fraud is higher than the risk of not detecting one resulting
from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through
collusion. The extent to which our procedures are capable of
detecting irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention
and detection of fraud rests with both those charged with
governance of the Company and management.
• We obtained an understanding of the legal and regulatory
frameworks that are applicable to the Company and
determined that the most significant are FRS 102, the
Companies Act 2006, the Listing Rules, UK Corporate
Governance Code, the Association of Investment Companies’
Code and Statement of Recommended Practice, Section
1158 of the Corporation Tax Act 2010 and The Companies
(Miscellaneous Reporting) Regulations 2018.
• We understood how the Company is complying with those
frameworks through discussions with the audit committee
and company secretary and review of Board minutes and the
Company’s documented policies and procedures.
• We assessed the susceptibility of the Company’s financial
statements to material misstatement, including how fraud
might occur by considering the key risks impacting the
financial statements. We identified a fraud risk with respect
to the incomplete or inaccurate revenue recognition through
incorrect the classification of special dividends as revenue or
capital items. Further discussion of our approach is set out in
the section on key audit matters above.
60
• Based on this understanding we designed our audit
procedures to identify non-compliance with such laws and
regulations. Our procedures involved review of the company
secretary’s reporting to the Directors with respect to the
application of the documented policies and procedures and
review of the financial statements to ensure compliance with
the reporting requirements of the Company.
A further description of our responsibilities for the audit
of the financial statements is located on the Financial Reporting
Council’s website at
https://www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditors’ report.
Other matters we are required to address
• Following the recommendation from the audit committee, we
were appointed by the Company and signed an engagement
letter on 13 August 2015 to audit the financial statements of the
Company for the year ending 31 January 2016 and subsequent
financial periods.
The period of total uninterrupted engagement including
previous renewals and reappointments is 8 years, covering the
years ending 31 January 2016 to 31 January 2023.
• The audit opinion is consistent with the additional report to the
audit committee.
Use of our report
This report is made solely to the Company’s members, as a
body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we
might state to the Company’s members those matters we are
required to state to them in an auditors’ report and for no other
purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the
Company and the Company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
Ahmer Huda
(Senior Statutory Auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
6 April 2023
61
Year to 31 January 2023 Year to 31 January 2022
Note
Revenue
£000
Capital
£000
Tota l
£000
Revenue
£000
Capital
£000
Tota l
£000
Net (losses)/gains on investments 7 — (30,227) (30,227) — 8,224 8,224
Net currency (losses)/gains — (43) (43) — 55 55
Revenue 2 2,889 — 2,889 2,502 — 2,502
Investment management fee
1
(244) (978) (1,222) (328) (1,312) (1,640)
Other expenses 3 (493) — (493) (629) — (629)
Net (loss)/return on ordinary activities
before finance costs and taxation
2,152 (31,248) (29,096) 1,545 6,967 8,512
Finance costs 1(d) (71) (284) (355) (71) (284) (355)
Net (loss)/return on ordinary activities
before taxation
2,081 (31,532) (29,451) 1, 474 6,683 8,157
Taxation on ordinary activities 4 (300) — (300) (313) — (313)
Net (loss)/return attributable to
shareholders
1,781 (31,532) (29,751) 1,161 6,683 7,844
Net (loss)/return per Ordinary share 5 2.16p (38.20)p (36.04)p 1.36p 7.81p 9.17p
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 on pages 67 to 79 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 year.
The details of the investment management fee are provided in the Report of the directors on page 43.
STATEMENT OF COMPREHENSIVE INCOME 62
The notes on pages 67 to 79 form part of these financial statements.
Martin Currie Global Portfolio Trust plc is registered in Scotland, company number SC192761.
The financial statements on pages 62 to 79 were approved by the Board of Directors on 6 April 2023 and signed on its behalf by
As at 31 January 2023 As at 31 January 2022
Note £000 £000 £000 £000 £000 £000
Non-current assets
Investments at fair value through profit or loss 7 277,606 339,535
Current assets
Trade receivables 8 1,771 160
Cash and cash equivalents 9 1,256 6,589
3,027 6,749
Current liabilities
Trade payables 10 (865) (450)
Bank loan 10 (30,000) —
(30,865) (450)
Total assets less current liabilities 249,768 345,834
Amounts falling due aer more than one year
Bank loan 11 — (30,000)
Total net assets 249,768 315,834
Equity
Called up Ordinary share capital 12 4,934 4,934
Share premium account 11,424 11,424
Capital redemption reserve 11,083 11,083
Special distributable reserve 1(j) — 76,297
Capital reserve, of which: 13 221,463 211,583
Realised capital reserve (distributable) 154,191 110,511
Unrealised gains on investments (undistributable) 67,272 101,072
Revenue reserve 864 513
Total shareholders' funds 249,768 315,834
Net asset value per Ordinary share 14 328.2p 364.6p
STATEMENT OF FINANCIAL POSITION
On behalf of the Board
Gillian Watson
Chairman
6 April 2023
63
STATEMENT OF CHANGES IN EQUITY
Note
Called up
Ordinary share
capital
£000
Share
premium
account
£000
Capital
redemption
reserve
£000
Special
distributable
reserve
£000
Capital
reserve
£000
Revenue
reserve
£000
Total
£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 — —
Year to 31 January 2023 4,934 11,424 11,083 — 221,463 864 249,768
The notes on pages 67 to 79 form part of these financial statements.
64
Note
Called up
Ordinary share
capital
£000
Share
premium
account
£000
Capital
redemption
reserve
£000
Special
distributable
reserve
£000
Capital
reserve
£000
Revenue
reserve
£000
Total
£000
As at 31 January 2021 4,934 6,221 11,083 70,017 209,929 1,387 303,571
Net return attributable
to shareholders
— — — — 6,683 1,161 7,844
Ordinary shares issued 12 — 5,203 — 7,833 550 — 13,586
Ordinary shares
bought back
12 — — — — (5,579) — (5,579)
Dividends paid 6 — — — (1,553) — (2,035) (3,588)
As at 31 January 2022 4,934 11,424 11,083 76,297 211,583 513 315,834
STATEMENT OF CASH FLOW
Year to 31 January 2023 Year to 31 January 2022
Note £000 £000 £000 £000
Cash flows from operating activities
Net (loss)/return on ordinary activities before
taxation
(29,451) 8,157
Adjustments for:
Losses/(gains) on investments 7 30,227 (8,224)
Finance costs
355 355
Dividend income recognised 2 (2,885) (2,493)
Interest income recognised 2 (4) —
Stock lending income recognised 2 — (9)
(Increase)/decrease in receivables (18) 2
Decrease in payables (75) (2,885)
Overseas withholding tax suffered 4 (300) (313)
27,300 (13,567)
Net cash flows from operations (2,151) (5,410)
Interest received 4 —
Stock lending income received
— 9
Dividends received
2,730 2,489
2,734 2,498
Net cash flows from operating activities 583 (2,912)
Cash flows for investing activities
Purchases of investments
(39,765) (45,791)
Sales of investments 70,029 40,248
Net cash flows from investing activities 30,264 (5,543)
Cash flows from financing activities
Repurchase of Ordinary share capital
(32,358) (5,544)
Shares issued for cash
— 14,504
Equity dividends paid
6 (3,467) (3,588)
Interest and fees paid on bank loan (355) (355)
Net cash flows from financing activities (36,180) 5,017
Net decrease in cash and cash equivalents (5,333) (3,438)
Cash and cash equivalents at the start of the year 6,589 10,027
Cash and cash equivalents at the end of the year 1,256 6,589
65
The notes on pages 67 to 79 form part of these financial statements.
Analysis of debt
Year to
31 January 2022 Cash flows
Exchange
movements
Year to
31 January 2023
Note £000 £000 £000 £000
Cash at bank 9 6,589 (5,333) — 1,256
Bank loan 10, 11 (30,000) — — (30,000)
Net debt (23,411) (5,333) — (28,744)
Year to
31 January 2021 Cash flows
Exchange
movements
Year to
31 January 2022
Note £000 £000 £000 £000
Cash at bank 9 10,027 (3,438) —
6,589
Bank loan 11 (30,000) — —
(30,000)
Net debt (19,973) (3,438) —
(23,411)
66
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 disclosed
on page 34 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 2025, 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 accrual basis.
(d) The investment management fee and finance costs in relation
to debt are recognised four-fihs as a capital item and one-
fih 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 overdras. 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
on page 43.
(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.
Subsequent to 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 6 April 2023.
(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.
NOTES TO THE FINANCIAL STATEMENTS 67
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 to simplify the Company's
reserves, the balance of the special distributable reserve of
£74,260,000 was transferred in full to the 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 2023 is nil.
The capital reserve – gains or losses on realisation of
investments and changes in fair values of investments are
transferred to the 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) Stock lending income (now discontinued) is received net of
associated costs and recognised in revenue as earned.
(n) 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.
(o) Bank loans are classified as financial liabilities at amortised
cost. Interest payable on the bank loan is accounted for on an
accrual basis in the statement of comprehensive income.
68
Note 2: Revenue from investments
Year ended 31 January 2023
£000
Year ended 31 January 2022
£000
Dividends from listed investments
UK equities 275 210
International equities 2,610 2,283
Other revenue
Interest on deposits 4 —
Stock lending — 9
2,889 2,502
There were no capital dividends received during the year ended 31 January 2023 (2022: £nil).
69
Note 3: Other expenses
Year ended 31 January 2023
£000
Year ended 31 January 2022
£000
Directors' fees 158 139
Advertising and public relations 122 96
Audit fees
1
56 58
Registration fees 38 41
Regulatory and listing fees 35 64
Legal fees 26 31
Secretarial fee
2
25 67
Depositary fees 19 66
Printing and postage 19 25
Directors' and officers' liability insurance 12 10
Custody fees 7 31
VAT recovered (56) (44)
Other 32 45
493 629
All expenses detailed above include VAT where applicable.
During the year to 31 January 2022 the Company changed administrators and Martin Currie Investment Management paid an additional audit fee in relation to
this change of £3,000 plus VAT. During the year to 31 January 2023 the audit fee has been adjusted for inflation and an additional £2,500 plus VAT to reflect the
change in scope as a result of the revised ISA 315 requirements.
With effect from 1 July 2022, the AIFM ceased charging a separate company secretarial fee.
70
Note 4: Taxation on ordinary activities
Year ended 31 January 2023 Year ended 31 January 2022
Revenue
£000
Capital
£000
Total
£000
Revenue
£000
Capital
£000
Total
£000
Overseas tax suffered
300
—
300
313 — 313
Year ended 31 January 2023
£000
Year ended 31 January 2022
£000
Net (loss)/return before taxation (29,451) 8,157
Corporation tax at rate of 19.00% (2022: 19.00%) (5,596) 1,550
Effects of:
UK dividends not taxable (52) (40)
Gains/(losses) on investments not taxable 5,751 (1,573)
Overseas dividends not taxable (496) (434)
Overseas tax suffered 300 313
Increase in excess management and loan expenses 393 497
Total tax charge for the year 300 313
The corporation tax rate was 19.00% (2022: 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.
As at 31 January 2023, the Company had unutilised management expenses of £44 million (2022: £42 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 2023 Year ended 31 January 2022
The returns and net asset value per Ordinary share are calculated
with reference to the following figures:
Revenue return £000 1,781 1,161
Capital return £000 (31,532) 6,683
Total return £000 (29,751) 7,844
Weighted average number of shares in issue during the year 82,551,425 85,587,856
Revenue return per share 2.16p 1.36p
Capital return per share
(38.20p) 7.81p
Total return per share (36.04p) 9.17p
71
Revenue return per share for the year ended 31 January 2023 is 2.16p (2022: 1.36p), refer to note 5 on page 70 for details of calculation.
The fourth interim dividend for the year ended 31 January 2022 and the first interim dividend for the year ended 31 January 2023 have been allocated to the special
distributable reserve. The second and third interim dividends for the year ended 31 January 2023 have been allocated to the revenue reserve. (2022: The fourth
interim dividend for the year ended 31 January 2021 and the first interim dividend for the year ended 31 January 2022 were allocated to the revenue reserve.
The second and third interim dividends for the year ended 31 January 2022 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 2023
£000
Year ended 31 January 2022
£000
First interim dividend of 0.90p for the year ended
31 January 2023 (2022: 0.90p)
752 765
Second interim dividend of 0.90p for the year ended
31 January 2023 (2022: 0.90p)
728 774
Third interim dividend of 0.90p for the year ended
31 January 2023 (2022: 0.90p)
702 779
Proposed fourth interim dividend of 1.50p for the year ended
31 January 2023 (2022: 1.50p)
1,115 1,285
3,297 3,603
Note 6: Dividends
Year ended 31 January 2023
£000
Year ended 31 January 2022
£000
Year ended 31 January 2021 - fourth interim dividend of 1.50p — 1,270
Year ended 31 January 2022 - fourth interim dividend of 1.50p 1,285 —
Year ended 31 January 2023 - first interim dividend of 0.90p
(2022: 0.90p)
752 765
Year ended 31 January 2023 - second interim dividend of 0.90p
(2022: 0.90p)
728 774
Year ended 31 January 2023 - third interim dividend of 0.90p
(2022: 0.90p)
702 779
3,467 3,588
72
Note 7: Investments at fair value through profit or loss
Year ended 31 January 2023
£000
Year ended 31 January 2022
£000
Opening book cost 238,463 225,072
Opening investment holding gains 101,072 102,916
Opening market value 339,535 327,988
Additions at cost 39,765 43,571
Disposals proceeds received (71,467) (40,248)
(Losses)/gains on investments (30,227) 8,224
Market value of investments held at 31 January 277,606 339,535
Closing book cost 210,334 238,463
Closing investment holding gains 67,272 101,072
Closing market value 277,606 339,535
The Company received £71,467,000 (2022: £40,248,000) from investments sold in the year. The book cost of these investments when they were purchased was
£67,894,000 (2022: £30,180,000).
The transaction costs in acquiring investments during the year were £52,000 (2022: £52,000). For disposals, transaction costs were £37,000 (2022: £20,000).
Note 8: Trade receivables
As at 31 January 2023
£000
As at 31 January 2022
£000
Sales awaiting settlement 1,438 —
Taxation recoverable 243 103
VAT recoverable 49 49
Dividends receivable 22 7
Other debtors 19 1
1,771 160
Note 9: Cash and cash equivalents
As at 31 January 2023
£000
As at 31 January 2022
£000
Sterling bank account 1,256 6,589
1,256 6,589
Year ended 31 January 2023
£000
Year ended 31 January 2022
£000
Net realised gains on investments
3,573
10,068
Net change in unrealised losses on investments
(33,800)
(1,844)
Total capital gains/(losses)
(30,227)
8,224
73
Note 10: Trade payables
As at 31 January 2023
£000
As at 31 January 2022
£000
Amounts falling due within one year:
Ordinary shares bought back awaiting settlement 525 35
Investment management and secretarial fees 83 134
Interest accrued on bank loan 67 67
Other payables 190 214
865 450
Bank loan
1
30,000 —
For details please see narrative below Note 11.
Note 11: Payables – amounts falling due after more than one year
As at 31 January 2023
£000
As at 31 January 2022
£000
Bank loan
—
30,000
—
30,000
On 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 at a fixed interest rate of 1.181%. This facility was fully drawn down on 24 November 2020 and matures on 24 November 2023. Due to its
maturity in less than one year, this credit facility has been reclassified as a current liability.
The 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.
74
Note 12: Ordinary shares of 5p
Number of
shares
As at
31 January 2023
£000
Number of
shares
As at
31 January 2022
£000
Ordinary shares of 5p
Ordinary shares in issue at the beginning of the year 86,616,404 4,330 84,759,499 4,237
Ordinary shares issued from Treasury during the year — — 3,415,000 171
Ordinary shares bought back to Treasury during the year (10,510,850) (526) (1,558,095) (78)
Ordinary shares in issue at end of the year 76,105,554 3,804 86,616,404 4,330
Number of
shares
As at
31 January 2023
£000
Number of
shares
As at
31 January 2022
£000
Treasury shares (Ordinary shares 5p)
Treasury shares in issue at the beginning of the year 12,059,503 604 13,916,408 697
Ordinary shares issued from Treasury during the year — — (3,415,000) (171)
Ordinary shares bought back to Treasury during the year 10,510,850 526 1,558,095 78
Treasury shares in issue at end of the year
22,570,353 1,130 12,059,503 604
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 2023, the net proceeds received for shares issued from Treasury less payments made for shares bought back to Treasury was
-£32,848,000 (2022: the net proceeds received for shares issued from Treasury less payments made for shares bought back to Treasury was £8,007,000).
Between 1 February 2023 and 31 March 2023, 1,738,928 Ordinary shares of 5p were bought back to Treasury and no Ordinary shares of 5p were issued from Treasury.
Note 13: Capital reserves
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 reserves
1
74,260 — 74,260
As at 31 January 2023 154,191 67,272 221,463
Refer 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’.
75
Realised
capital reserve
£000
Unrealised
investment
holding gains
£000
Total
capital reserve
£000
As at 31 January 2021 107,013 102,916 209,929
Gains on realisation of investments at fair value 10,068 — 10,068
Movement in fair value gains of investments — (1,844) (1,844)
Realised currency gains during the year 55 — 55
Cost of shares bought back into Treasury 550 — 550
Proceeds from the issue of Shares from Treasury (5,579) — (5,579)
Capital expenses (1,596) — (1,596)
As at 31 January 2022 110,511 101,072 211,583
76
Note 14: Net asset value per share
As at 31 January 2023 As at 31 January 2022
Net assets attributable to shareholders £249,768,000 £315,834,000
Number of shares in issue at the year end 76,105,554 86,616,404
Net asset value per share 328.2p 364.6p
Note 15: Related party transactions
With the exception of the investment management and
secretarial fees (as disclosed on page 43), and Directors’
shareholdings (disclosed on page 52), 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 2023
are £14,478 (2022: £14,000).
Note 16: 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 of (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 that 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 23 November 2020, the Company entered into
a £30 million sterling fixed rate term loan facility agreement.
The facility was fully drawn down on 24 November 2020 and the
term 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 2023 As at 31 January 2022
Cash and cash equivalents 1,256 6,589
Total net exposure to interest rate risk 1,256 6,589
77
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 2% (2022: 0.75%) higher or lower and all
other variables were held constant, the Company’s profit for the
year ended 31 January 2023 would increase/ decrease by £25,000
(2022: increase/decrease by £49,000).
This is mainly attributable to the Company’s exposure to interest
rates on its floating rate cash balances.
An interest rate variation of 2% is used at 31 January 2023 as the
Bank of England has increased the Bank Rate to 3.5% as of the
year-end date, while market expectations are that this will reach to
5% during the second half of 2023.
(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:
The asset allocation between specific markets can vary from time to time based on the portfolio manager’s opinion of the attractiveness
of the individual stocks.
Year ended 31 January 2023
£000
Year ended 31 January 2022
£000
Total net sensitivity to foreign currencies 13,649 16,897
Foreign currency sensitivity
At 31 January 2023, 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 2023
Total currency exposure
£000
Year ended 31 January 2022
Total currency exposure
£000
US dollar 131,244 172,981
Euro 73,668 78,826
Swedish krona 28,004 36,204
Hong Kong dollar 19,590 29,203
Australian dollar 11,136 10,509
Danish krone 9,330 10,195
Swiss franc — 12
Total overseas investments 272,972 337,930
Sterling (23,204) (22,096)
Tota l 249,768 315,834
78
(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 on page
77, 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% (2022: 30%) higher or lower while all other
variables remained constant, the return attributable to Ordinary
shareholders at the year ended 31 January 2023 would have
increased/decreased by £83,300,000 (2022: increase/decrease
of £101,900,000) 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 2023
was £3,027,000 (2022: £6,749,000). 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 17: 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.
79
Note 18: 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:
Note 19: Stock lending
During the financial year ended 31 January 2023, the Company
was not involved in securities financing transactions (SFTs) as
defined in Article 3 of UK version of Regulation (EU) 2015/2365,
as a result there are no outstanding balances, collateral, or SFTs
reportable counterparties at the reporting date.
During the prior financial year, the Company was engaged in
securities lending, the net securities lending income is disclosed
in note 2 to the financial statements.
Note 20: Post balance sheet events
On 22 March 2023, the Board declared a fourth interim dividend
of 1.50p per share.
As at 31 March 2023, the Company had bought back a further
1,738,928 ordinary shares at an average price of 328.0p per share.
At 31 January 2023
£000
At 31 January 2022
£000
Level 1 277,606 339,535
Net fair value 277,606 339,535
4: INVESTOR INFORMATION
Directors and Advisers
Financial calendar – key dates 2023/24
Directors
Gillian Watson (Chairman)
Lindsay Dodsworth
Marian Glen
Gary Le Sueur
Christopher Metcalfe
Alternative Investment Fund Manager
and Company Secretary
Franklin Templeton Investment Trust
Management Limited
5 Morrison Street
Edinburgh EH3 8BH
Investment Manager
Martin Currie Investment Management
Limited
5 Morrison Street
Edinburgh
EH BH
www.martincurrie.com
Martin Currie Investment Management Limited
is authorised and regulated by the Financial
Conduct Authority.
Registered office
Martin Currie Global Portfolio Trust plc
5 Morrison Street
Edinburgh
EH BH
Registered in Scotland, registered
number SC192761
Independent Auditors
Ernst & Young LLP
25 Churchill Place
Canary Wharf
London E EY
Broker
JPMorgan Cazenove Limited
25 Bank Street
Canary Wharf
London ESP
Registrar
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds LS DL
www.linkgroup.eu
Bankers
The Royal Bank of Scotland International
Limited
London Branch, 1 Princes Street
London ECR BP
Depositary
JPMorgan Europe Limited
25 Bank Street
Canary Wharf
London EJP
Custodian
JPMorgan Chase Bank N.A.
25 Bank Street
Canary Wharf
London EJP
Association of Investment Companies
9th Floor
24 Chiswell Street
London ECYYY
www.theaic.co.uk
Martin Currie Global Portfolio Trust is a member of the
AIC (the trade body of the investment company
industry).
INVESTOR INFORMATION
Half-yearly results
announced
Fourth interim
dividend payment
Annual results
announced
Second interim
dividend payment
October
Third interim
dividend payment
JanuarySeptemberApril
First interim
dividend payment
Annual general
meeting
June
81
The European Securities and Markets Authority ('ESMA') has
published guidelines on Alternative Performance Measures
('APMs'). APMs are defined as being a ‘financial measure of
historical or future financial performance, financial position, or
cash flows, other than a financial measure defined or specified
in the applicable accounting framework.’ The guidelines aim to
improve comparability, reliability and/or comprehensibility of
APMs. The Company uses the following APMs throughout the
annual report, financial statements and notes to the financial
statements:
Benchmark total return
A measure showing how the benchmark has performed over a
period of time, considering both capital returns and dividends
paid to shareholders.
Discount/Premium
Discount
The amount, expressed as a percentage, by which the share
price is less than the net asset value per share.
Premium
The amount, expressed as a percentage, by which the share
price is more than the net asset value per share.
As at 31 January 2023 the share price was 319.0p and the net
asset value per share (cum-income) was 328.2p, the discount was
therefore 2.8% (2022: 2.2%).
Gearing
Gearing means borrowing money to buy more assets in the hope
that the company makes enough profit to pay back the debt and
interest and leave something extra for shareholders. However,
if the investment portfolio does not perform well, gearing can
increase losses. The more an investment company gears, the
higher the risk.
The gearing on 31 January 2023 was 12.0% (2022: 9.5%). The
calculation of gearing is provided below.
2023
£000
2022
£000
(a) Borrowing (Note 10/Note 11) 30,000 30,000
(b) Net assets per the Statement
of Financial Position
249,768 315,834
Gearing % (a)/(b) 12.0% 9.5%
NAV per share
A common measure of the underlying value of a share in an
investment company.
The net asset value (‘NAV’) is the value of the investment
company’s assets, less any liabilities that it has. The NAV per
share is the NAV divided by the number of shares in issue. This
will very often be different to the share price. The difference is
known as the discount or premium.
The NAV per share quoted is the cum-income NAV per share
unless otherwise noted.
As shown in note 14 the NAV per share was 328.2p as at 31
January 2023 (2022: 364.6p).
NAV total return
A measure showing how the net asset value (‘NAV’) per share
has performed over a period of time, considering both capital
returns and dividends paid to shareholders.
NAV total return shows performance which is not affected by
movements in discounts and premiums. It also considers the fact
that different investment companies pay out different levels of
dividends.
The NAV total return, calculated using the cum-income NAV, for
the year end 31 January 2023 was -8.8%.
2023 2022
NAV at start of financial year per
the Statement of Financial Position
364.6p 358.2p
NAV at end of financial year per the
Statement of Financial Position
328.2p 364.6p
Effect of dividend reinvestment
1
4.3p 4.0p
NAV at the end of the financial year
including effect of dividends
332.5p 368.6p
NAV Total Return -8.8% 2.9%
Dividend assumed to be reinvested on ex-date (see table of ex-dates
overleaf).
Share price total return
A measure showing how the share price has performed over a
period of time, considering both capital returns and dividends
paid to shareholders. The share price total return for the year
end 31 January 2023 was -9.3%.
2023 2022
Share price at start of financial year 356.5p 370.0p
Share price at end of financial year 319.0p 356.5p
Effect of dividend reinvestment
1
4.3p 3.9p
Share price at the end of the year
including effect of dividends
323.3p 360.4p
Share price total return -9.3% -2.6%
Dividend assumed to be reinvested on ex-date (see table of ex-dates
overleaf).
ALTERNATIVE PERFORMANCE MEASURES 82
31 January 2023 Dividend rate NAV Share price
31 January 2022 (prior-year end) n/a 364.6p 356.5p
7 April 2022 (ex dividend) 1.5p 344.0p 341.0p
7 July 2022 (ex dividend) 0.9p 308.8p 303.0p
6 October 2022 (ex dividend) 0.9p 305.0p 302.0p
5 January 2023 (ex dividend) 0.9p 306.5p 303.0p
31 January 2023 (year end) n/a 328.2p 319.0p
31 January 2022
31 January 2021 (prior-year end) n/a 358.2p 370.0p
8 April 2021 (ex dividend) 1.5p 373.4p 369.0p
8 July 2021 (ex dividend) 0.9p 402.6p 402.0p
7 October 2021 (ex dividend) 0.9p 389.0p 386.0p
6 January 2022 (ex dividend) 0.9p 396.5p 402.0p
31 January 2022 (year end) n /a 364.6p 356.5p
Year ended 31 January 2023 Year ended 31 January 2022
Revenue
£000
Capital
£000
Total
£000
Revenue
£000
Capital
£000
Total
£000
Investment management fee (223) (894) (1,117) (328) (1,312) (1,640)
Other expenses (493) — (493) (629) — (629)
Total expenses (716) (894) (1,610) (957) (1,312) (2,269)
Average net assets over the year 262,321 335,858
Ongoing charges 0.61% 0.68%
Full details of the investment management fee are included in the Report of the directors on page 43, details of the Directors’ fees are included in the Directors’
remuneration statement on pages 52 to 54.
Ongoing charges are calculated with reference to the following figures:
Ongoing charges
Ongoing charges are the total of the Company’s expenses, including both the investment management fee and other costs expressed
as a percentage of NAV. The calculation of the ongoing charges is carried out in accordance with the AIC's methodology. The figure as
at 31 January 2023 is an estimated annualised figure. In accordance with the AIC's guidance, the change in management fee effective
from 1 July 2022 is considered to be a material change, therefore for the purposes of the ongoing charges calculation, the latest
management fee rate has been used to more accurately reflect the expected future ongoing charges of the Company.
The calculation of the ongoing charges is provided below.
83
Assets
Anything owned or controlled that has value. For investment
companies, this might include shares and securities, property,
cash etc.
Basis Points
A common unit of measure for interest rates and other
percentages in finance. One basis point is equal to 1/100th of
1%, or 0.01%, or 0.0001, and is used to denote the percentage
change in a financial instrument.
Benchmark
An index or other measure against which the performance of an
investment company is compared or its objectives are set.
The financial statements will include an explanation of how a
company has performed against its benchmark over the year and
the reasons for any under or over performance.
Bid price
The price at which you sell your shares when two prices are
quoted. This is sometimes shown as the ‘sell’ price and will be
the lower of the two prices shown.
Dividend
Income from an investment in shares. Dividends are usually paid
twice a year but can also be paid quarterly or monthly. Not all
investment companies pay dividends. Dividend income is not
guaranteed and may fall as well as rise.
Environmental, social and corporate governance (ESG)
Assessment of material environmental, social and corporate
governance (ESG) factors and the potential impact on that
company’s cash flows, statement of financial position, reputation
and, ultimately, corporate value in the long term.
Leverage
Leverage is defined in the AIFM Regulations as any method by
which the Company increases its exposure, whether through
borrowing of cash or securities, or leverage embedded
in derivative positions or by any other means. Leverage is
measured in terms of the Company’s exposure and is expressed
as a percentage of net asset value. Pursuant to the AIFM
Regulations, it can be calculated using a gross and a commitment
method. Under the gross method, exposure represents the sum
of the Company’s positions aer the deduction of sterling cash
balances, without taking into account any hedging and netting
arrangements. Under the commitment method, exposure is
calculated without the deduction of sterling cash balances and
aer certain hedging and netting positions are offset against
each other.
Internal and external AIFM
Under the AIFM Regulations, the AIFM of a company may
be either (a) another person appointed by or on behalf the
company and which, through that appointment, is responsible
for managing the company (an ‘external AIFM’); or (b) where the
legal form of the company permits internal management and the
board chooses not to appoint an external AIFM, the company
itself (an ‘internal AIFM’). Franklin Templeton Investment Trust
Management Limited is the external AIFM of the Company.
Investment company
A closed-ended fund which invests in a diversified portfolio
of assets. Investors buy and sell their shares in the investment
company on a stock exchange.
Investment trust
An investment company which is based in the UK and which
meets certain tax conditions so that it does not pay tax on gains
made within the portfolio.
Net assets – cum-income
A measure of the size of an investment company. The total value
of all assets held, less liabilities and prior charges, including
income for the current year.
Net assets – excluding income
A measure of the size of an investment company. The total value
of all assets held, less liabilities and prior charges, excluding
income for the current year.
Offer price
The price at which you can buy shares when two prices are
quoted. This is also shown as the ‘buy’ price and will be the
higher of the two prices.
Peer group
The Board monitors performance against the Company's peer
group, the AIC Global Sector.
Share buybacks
Describes an investment company buying its own shares and
reducing the number of shares held in the market.
Share buybacks can be used to return money to shareholders
but are also oen used to tackle a company’s discount. Discounts
may reflect an imbalance between the demand for shares and
the number of shares held in the market. The hope is that, by
reducing the number of shares held in the market, the buyback
will help to prevent the discount widening or even reduce it. See
also under Treasury shares below.
GLOSSARY OF TERMS 84
Share price
The price of a share as determined by the stock market.
If you see a single share price shown, it is likely that this is
the mid-market price. This is different to the price at which
you buy and sell the shares, which are known as the bid
price (sell) and offer price (buy).
Shiller P/E
The cyclically adjusted price-to-earnings ratio, commonly
known as CAPE or Shiller P/E is a valuation measure
applied to equity prices. The ratio is used to gauge whether
a stock, or equity index, is undervalued or overvalued by
comparing its current market price to its inflation-adjusted
historical earnings record.
It is defined as price divided by the average of ten years of
earnings (moving average), adjusted for inflation. As such,
it is principally used to assess likely future returns from
equities over timescales of 10 to 20 years, with higher than
average CAPE values implying lower than average future
long-term annual average returns and lower CAPE implying
higher returns. The ratio was invented by American
economist Robert J. Shiller.
Stock lending
The act of loaning a stock or security to a third party for a
fee.
Treasury shares
Shares in a company’s own share capital which the
company itself owns and which can be sold to investors to
raise new funds.
Treasury shares come into existence only when a company
buys back shares. Instead of cancelling the shares (i.e. they
cease to exist) they are held ‘in Treasury’ by the company
and can be sold at a later date to raise new funds.
Volatility
A measure of how much a share moves up and down in
price over a period of time.
Zero discount policy
A mechanism that aims to ensure that, in normal market
conditions, the share price trades close to NAV.
85
WAYS TO INVEST IN THE COMPANY
The Company’s shares qualify for tax efficient wrapper products like
individual savings accounts (‘ISAs’) and self-invested personal
pensions (‘SIPPs’) as well as many other investment wrappers that
can be used, including those designed for children.
Platforms, fund supermarkets and online
stockbrokers
You can invest using a number of fund platforms and fund
supermarkets. Many offer wrapper products like ISAs and SIPPs and
children’s savings products. A number of real-time execution only
stockbroking services also allow you to trade online, manage your
portfolio and buy UK listed shares. These services do not offer
financial advice and if you are unsure about investing, we
recommend that you speak to a qualified financial adviser.
Independent financial advisers
An increasing number of independent financial advisers are
including investment trusts within their investment
recommendations for clients. To find an adviser who advises on
investment trusts, visit www.unbiased.co.uk.
Private client stockbrokers
If you have a large sum to invest, you may want to contact a
private client stockbroker. They can manage your entire
portfolio of shares and will advise you on your investments. To
find a private client stockbroker visit the Personal Investment
Management & Financial Advice Association: www.pimfa.co.uk.
Link Group
You can buy and sell shares directly by visiting
www.linkgroup.eu/share-deal or by calling the Link dealing team
on 0371 664 0454. To change your address, request tax
vouchers or obtain an up to date valuation of your shareholding
please visit www.signalshares.com.
Alternatively, contact Link Group on 0371 664 0300 calls are
charged at the standard geographical rate and will vary by
provider. Calls outside the United Kingdom are charged at the
applicable international rate. Lines are open 9:00am – 5:30pm
Mon-Fri).
Trading codes
(You may be asked for these when investing)
TIDM code: MNP Sedol: 0537241
Reuters code: MNP.L ISIN: GB0005372411
Shareholder services
The registrars of the Company are Link Group. You can buy and sell shares directly by calling the Link dealing team on 0371 664 0454.
For other services you can contact Link by telephone, online or by email to shareholderenquiries@linkgroup.co.uk.
Online Telephone
Contact details www.linkgroup.eu 0371 664 0300
Opening times 24 hours 9:00am - 5:30pm Monday to Friday
Change your address
Request dividend confirmations —
Valuation
Online proxy voting
—
Dividend payment records
Register and change bank mandate instructions
for receipt of dividends
Elect to receive shareholder communication electronically
Request/download shareholder forms
Checking the share price
The share price is available through many sources including www.londonstockexchange.com and www.martincurrieglobal.com.
86
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the annual general meeting ('AGM') of
Martin Currie Global Portfolio Trust plc (the ‘Company’) will be held
at the offices of Franklin Templeton, 5 Morrison Street, Edinburgh
EH BH on Thursday, 1 June 2023 at 11.00 am, to consider and, if
thought fit, pass the resolutions below.
The resolutions numbered 1 to 11 are proposed as ordinary
resolutions and must receive more than 50% of the votes cast in
favour in order to be passed. The resolutions numbered 12 to 15 are
proposed as special resolutions and must receive at least 75% of the
votes cast in in favour in order to be passed.
Ordinary business
To consider and, if thought fit, pass the following resolutions as
ordinary resolutions:
1. That the Report of the directors and auditors and the financial
statements for the year ended 31 January 2023 be received;
2. That the Directors’ annual remuneration report for the year
ended 31 January 2023 be approved;
3. That the Directors’ remuneration policy be approved;
4. That the dividend policy be approved;
5. That Marian Glen be re-elected as a Director;
6. That Gary Le Sueur be re-elected as a Director;
7. That Christopher Metcalfe be re-elected as a Director;
8. That Lindsay Dodsworth be re-elected as a Director;
9. That Ernst & Young LLP be re-appointed as auditors of the
Company to hold office from the conclusion of this meeting
until the conclusion of the next general meeting at which
accounts are laid before the Company;
10. That the Directors be authorised to fix the remuneration of
the auditors for the year ending 31 January 2024; and
11. That, in substitution for any existing authority, the
directors of the Company be and are hereby generally and
unconditionally authorised pursuant to s551 of the Companies
Act 2006 (the ‘Act’) to allot equity securities (as defined
in s560 of the Act) up to a maximum nominal amount of
£1,239,443 (being approximately one third of the issued share
capital of the Company (excluding Treasury shares) as at
31 March 2023, being the latest practicable date before the
date of this notice) provided that the authority hereby given
shall expire on 31 July 2024 or, if earlier, the conclusion of
the annual general meeting of the Company in 2024 save
that the Company may, at any time before the expiry of such
authority, make an offer or enter into an agreement which
would or might require equity securities to be allotted aer
the expiry of such authority and the directors may allot equity
securities in pursuance of such an offer or agreement as if
such authority had not expired.
Special business
To consider and, if thought fit, pass the following resolutions as
special resolutions:
12. That, pursuant to Article 12 of the Articles of Association of
the Company and in accordance with s701 of the Companies
Act 2006 (the ‘Act’) and in substitution for any existing
authority, the Company be and is hereby generally and
unconditionally authorised to make market purchases (within
the meaning of s693(4) of the Act) of Ordinary shares of 5
pence each in the capital of the Company provided that:
(a) the maximum aggregate number of Ordinary shares
hereby authorised to be purchased is 11,147,557
(or, if less, 14.99% of the number of Ordinary shares in
issue (excluding Treasury shares) immediately prior to the
passing of this resolution);
(b) the minimum price which may be paid for an Ordinary
share is 5 pence (exclusive of expenses);
(c) the maximum price (exclusive of expenses) which may
be paid for an Ordinary share shall be not more than the
higher of
(i) 5% above the average of the mid-market quotations
for an Ordinary share of the Company as derived from
the Daily Official List of the London Stock Exchange
for the five business days immediately preceding the
date of purchase; and
(ii) the higher of the last independent trade and the
highest current independent bid on the London Stock
Exchange;
(d) the authority hereby conferred shall expire 15 months
after the date of passing of this resolution or, if earlier,
at the conclusion of the AGM of the Company in 2024,
unless such authority is renewed, issued or revoked prior
to such time; and
(e) the Company may conclude a contract to purchase
Ordinary shares under the authority hereby conferred
prior to the expiry of such authority which will or may
be executed wholly or partly after the expiry of such
authority and may make a purchase of Ordinary shares in
pursuance of any such contract as if the authority hereby
confirmed had not expired.
87
13. That the Directors be and they are hereby empowered in
accordance with s570 and s573 of the Companies Act 2006
(the ‘Act’) to allot equity securities (as defined in s560 of
the Act), where they are generally authorised pursuant to
the authority to allot equity securities conferred upon them
by resolution 11 and/or to sell Ordinary shares held by the
Company as Treasury shares, for cash, as if s561 of the Act
did not apply provided that the power conferred by this
resolution shall be limited to the allotment of equity securities
having a nominal amount not exceeding in aggregate £371,833
(being an amount equal to 10% of issued equity share capital
(excluding Treasury shares) as at 31 March 2023 being the
latest practicable date before the date of this notice). Unless
previously varied, revoked or renewed, the authority hereby
conferred shall expire on 31 July 2024 or, if earlier at the
conclusion of the annual general meeting of the Company in
2024, save that the Company may, before the expiry of any
power contained in this resolution, make an offer or agreement
which would or might require equity securities to be allotted
after such expiry and the directors may allot equity securities
in pursuance of such an offer or agreement as if the power
conferred hereby had not expired.
14. That, in addition to any authority granted under resolution
13, the Directors be and they are hereby empowered in
accordance with s570 and s573 of the Companies Act 2006
(the ‘Act’) to allot equity securities (as defined in s560 of
the Act), where they are generally authorised pursuant to
the authority to allot equity securities conferred upon them
by resolution 11 and/or to sell Ordinary shares held by the
Company as Treasury shares, for cash, as if s561 of the Act did
not apply provided that the power conferred by this resolution
shall be limited to the further allotment of equity securities
having a nominal amount not exceeding in aggregate £371,833
(being an amount equal to 10% of issued equity share capital
(excluding Treasury shares) as at 31 March 2023 being the latest
practicable date before the date of this notice).
Unless previously varied, revoked or renewed, the authority
hereby conferred shall expire on 31 July 2024 or, if earlier, at
the conclusion of the annual general meeting of the Company
in 2024, save that the Company may, before the expiry of any
power contained in this resolution, make an offer or agreement
which would or might require equity securities to be allotted
after such expiry and the directors may allot equity securities
in pursuance of such an offer or agreement as if the power
conferred hereby had not expired.
15. That a general meeting, other than an annual general meeting,
may be called on not less than 14 clear days’ notice. Unless
previously varied, revoked or renewed, the authority hereby
conferred shall expire on 31 July 2024 or, if earlier, at the
conclusion of the annual general meeting of the Company in
2024.
By order of the Board
Franklin Templeton Investment Trust Management Limited
Secretary
6 April 2023
Registered office: 5 Morrison Street, Edinburgh EH BH
88
1. All shareholders are entitled to attend or vote at the meeting.
Shareholders are strongly encouraged to appoint a proxy in
accordance with note 3.
2. The Company has specified that to be entitled to attend and
vote at the meeting (and for the purpose of determining the
number of votes they may cast), members must be entered on
the register of members 48 hours before the time fixed for
the meeting.
3. A member entitled to attend, speak and vote may appoint a
proxy or proxies to attend and, on a poll, vote instead of them.
A proxy need not be a member of the Company.
A shareholder may appoint more than one proxy provided
that each proxy is appointed to exercise the rights attached to
a different share or shares held by that shareholder. To be
valid, proxies must be lodged at the office of the registrars of
the Company not less than 48 hours (excluding non-working
days) before the time of the meeting. A form of proxy is
enclosed. In usual circumstances, appointment of a proxy will
not preclude a member from attending and voting in person.
4. A corporation which is a member can appoint one or more
corporate representatives who may exercise, on its behalf, all
of its powers as a member provided that no more than one
corporate representative exercises powers over the same
share.
5. Any person to whom this notice is sent who is a person
nominated under s146 of the Companies Act 2006 to enjoy
information rights (a ‘Nominated Person’) may, under an
agreement between him/her and the shareholder by whom
he/she was nominated, have a right to be appointed (or to
have someone else appointed) as a proxy for the annual
general meeting. If a Nominated Person has no such proxy
appointment right or does not wish to exercise it, he/she may,
under any such agreement, have a right to give instructions to
the shareholder as to the exercise of voting rights.
6. There are no contracts between the Company and the
directors, other than their letters of appointment and deeds of
indemnity.
7. As at 31 March 2023 (being the latest practicable date prior to
the publication of this Notice) the Company’s issued voting
share capital consisted of 74,366,626 Ordinary shares (carrying
one vote each). Therefore, the total voting rights in the
Company as at 31 March 2023 were 74,366,626 votes,
in respect of the Ordinary shares only.
8. CREST members who wish to appoint a proxy or proxies
through the CREST electronic proxy appointment service may
do so for the meeting and any adjournment(s) thereof by
using the procedures described in the CREST Manual. CREST
personal members or other CREST sponsored members and
those CREST members who have appointed a voting service
provider(s) should refer to their CREST sponsors or voting
service provider(s), who will be able to take the appropriate
action on their behalf. In order for a proxy appointment or
instruction made by means of CREST to be valid, the
appropriate CREST message (a ‘CREST Proxy Instruction’)
must be properly authenticated in accordance with Euroclear
UK & International Limited’s specifications and must contain
the information required for such instructions, as described in
the CREST Manual. The message must be transmitted so as to
be received by the Company’s agent, Link Group (CREST
Participant ID: RA10), no later than 48 hours (excluding non-
working days) before the time appointed for the meeting. For
this purpose, the time of receipt will be taken to be the time
(as determined by the time stamp applied to the message by
the CREST Application Host) form which the Company’s
agent is able to retrieve the message by enquiry to CREST in
the manner prescribed by CREST.
CREST members and, where applicable, their CREST
sponsors or voting service provider(s) should note that
Euroclear UK & International Limited does not make available
special procedures in CREST for any particular messages.
Normal system timings and limitations will therefore apply in
relation to the input of CREST Proxy Instructions. It is the
responsibility of the CREST member concerned to take (or, if
the CREST member is a CREST personal member or
sponsored member or has appointed a voting service
provider(s), to procure that his CREST sponsor or voting
service provider(s) take(s)) such action as shall be necessary to
ensure that a message is transmitted by means of the CREST
system by any particular time. In this connection, CREST
members and, where applicable, their CREST sponsors or
voting service provider(s) are referred in particular to those
sections of the CREST Manual concerning practical limitations
of the CREST system and timings. The Company may treat as
invalid a CREST Proxy Instruction in the circumstances set out
in Regulation 35(5) (a) of the Uncertificated Securities
Regulations 2001.
9. Proxymity Voting – if you are an institutional investor you may
also be able to appoint a proxy electronically via the Proxymity
platform, a process which has been agreed by the Company
and approved by the Registrar. For further information
regarding Proxymity, please go to www.proxymity.io. Your
proxy must be lodged not less than 48 hours (excluding non-
working days) before the meeting in order to be considered
valid or, if the meeting is adjourned, by the time which is 48
hours before the time of the adjourned meeting.
NOTES 89
Before you can appoint a proxy via this process you will need
to have agreed to Proxymity’s associated terms and
conditions. It is important that you read these carefully as you
will be bound by them and they will govern the electronic
appointment of your proxy. An electronic proxy appointment
via the Proxymity platform may be revoked completely by
sending an authenticated message via the platform instructing
the removal of your proxy vote.
10. Unless otherwise indicated on the Form of Proxy, CREST
voting or any other electronic voting channel instruction, the
proxy will vote as they think fit or, at their discretion, withhold
from voting.
11. Pursuant to s319A of the Companies Act 2006, the Company
must provide an answer to any question which is put by a
member attending the annual general meeting relating to the
business being considered, except if a response would not be
in the interest of the Company or for the good order of the
meeting or if to do so would involve the disclosure of
confidential information.
12. Members may require the Company to place on its website a
statement, made available also to the Company’s auditors,
setting out any matter relating to the audit of the Company’s
financial statements, including the independent auditors’
report and the conduct of the audit, which members intend to
raise at the annual general meeting. The Company becomes
required to place such a statement on the website once a)
members with at least 5% of the total voting rights of the
Company or b) at least 100 members who are entitled to vote
and on whose shares an average sum per member of at least
£100 has been paid have submitted such a request to the
Company. Members seeking to do this should write to the
Company providing their full name and address or email the
Company at ftcosec@franklintempleton.com providing their
full name and address, stating ‘AGM’ in the subject line of the
email.
13. In accordance with s338 of the Companies Act 2006,
shareholders may require the Company to give members
notice of a resolution which may properly be moved and is
intended to be moved at the annual general meeting. The
request must be received by the Company at least six weeks
before the AGM and not later than 20 April 2023. The
resolution must not, if passed, be ineffective (whether by
reason of inconsistency with any enactment or the Company’s
constitution or otherwise). The resolution must not be
defamatory of any person, frivolous or vexatious.
The request must identify the resolution of which notice is to
be given by either setting out the resolution in full or, if
supporting a resolution sent by another member, clearly
identifying the resolution which is being supported. The
Company becomes required to give members notice of a
resolution to be moved at the annual general meeting once a)
members with at least 5% of the total voting rights of the
Company or b) at least 100 members who are entitled to vote
and on whose shares an average sum per member of at least
£100 has been paid have submitted a request to the Company
in accordance with the provisions of this paragraph. Members
seeking to do this should write to the Company providing
their full name and address or email the Company at
ftcosec@franklintempleton.com providing their full name and
address, stating ‘AGM’ in the subject line of the email.
14. In accordance with s338A of the Companies Act 2006,
shareholders may require the Company to include in the
business to be dealt with at the meeting a matter (other than
a proposed resolution) which may properly be included in the
business (a matter of business).
The request must be received by the Company at least six
weeks before the AGM and not later than 20 April 2023.
The matter of business must not be defamatory of any person,
frivolous or vexatious. The request must identify the matter of
business by either setting it out in full or, if supporting a
statement sent by another member, clearly identify the matter
of business which is being supported.
The request must be accompanied by a statement setting out
the grounds for the request. The Company becomes required
to give members notice of a resolution to be moved at the
annual general meeting once a) members with at least 5% of
the total voting rights of the Company or b) at least 100
members who are entitled to vote and on whose shares an
average sum per member of at least £100 has been paid
have submitted such a request to the Company in
accordance with the provisions of this paragraph. Members
seeking to do this should write to the Company providing
their full name and address or email the Company at
ftcosec@franklintempleton.com providing their full name
and address, stating ‘AGM’ in the subject line of the email.
15. Information regarding the annual general meeting, including
the information required by s311A of the Companies Act
2006, is available from: www.martincurrieglobal.com.
90
OUR WEBSITE
• latest prices
•
manager videos
•
performance data
•
portfolio information
•
latest factsheet
•
research
Enquiries
If you have an enquiry about Martin Currie Global Portfolio Trust, please get in touch.
0131 229 5252
II ftcosec@franklintempleton.com
Mail: The Chairman
c/o Company secretary
Martin Currie Global Portfolio Trust plc
5 Morrison Street
Edinburgh
EH BH
• press releases and articles
•
annual and half-yearly reports
Martin Currie Global Portfolio Trust has an award
winning website at martincurrieglobal.com.
This offers a wealth of information about the Company.
Register for monthly updates
Subscribe to monthly email updates that offer
information on the following:
91
The Chairman
c/o Company secretary
Martin Currie Global Portfolio Trust plc
5 Morrison Street
Edinburgh
EH BH
Tel: 0131 229 5252
Email:
ftcosec@franklintempleton.com
www.martincurrieglobal.com
Calls to the above may be recorded.
How to contact us