Annual Financial Report

RNS Number : 0166E

Martin Currie Global Portfolio Tst

03 April 2014

 



Martin Currie Global Portfolio Trust plc (the "Company")

Annual Financial Results

Year to 31 January 2014

The financial information set out below does not constitute the Company's statutory accounts for the years ended 31 January 2014 or 2013 but is derived from those accounts.  Statutory accounts for 2013 have been delivered to the Registrar of Companies and those for 2014 will be delivered following the Company's annual general meeting. 

The auditor's have reported on those accounts; their report was unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under s498(2) or (3) Companies Act 2006.

A copy of the annual report and accounts has also been submitted to the National Storage Mechanism and will shortly be available for inspection at: www.Hemscott.com/nsm.do

The annual general meeting of the Company will be held at the offices of Martin Currie, Saltire Court, 20 Castle Terrace, Edinburgh, EH1 2ES on 18 June 2014 at 12.30pm.  Full notice of the meeting can be found within the annual report and accounts.

The unedited full text of those parts of the annual report and accounts for the year ended 31 January 2014, which require to be published are set out on the following pages.

Financial Summary

Key data

	As at 31 January 2014	As at 31 January 2013
Net asset value per share (cum income)	157.4p	152.6p
Net asset value per share (ex income)	156.4p	149.6p
FTSE World index (capital)	411.9	382.4
Share price	156.5p	147.4p
Discount*	0.6%	3.4%

* Figures shown are inclusive of income as per AIC guidance. The discount calculated, exclusive of income, was 0.1% (31 January 2013: 1.5%)

Total returns+

	For the year ended 31 January 2014	For the year ended 31 January 2013
Net asset value per share ~	8.1%	13.0%
Benchmark	10.5%	15.3%
Share price	9.8%	17.8%

+The combined effect of the rise or fall in the net asset value ('NAV'), or share price, or benchmark together with any dividend paid

~The NAV is exclusive of income with dividends reinvested.

Income

	For the year ended January 2014	For the year ended 31 January 2013
Revenue per share**	3.76p	4.23p
Dividend per share	4.00p	3.90p

**For details of calculation, refer to note 2

Ongoing Charges***

	For the year ended January 2014	For the year ended January 2013
Ongoing charges	0.75%	0.84%
Performance Fee	-	-
Ongoing charges plus performance fee	0.75%	0.84%

***Ongoing charges (as a percentage of shareholders' funds) are calculated as a percentage of shareholders' funds using average net assets over the year. The ongoing charges figure has been calculated in accordance with the AIC's recommended methodology.

Chairman's Statement

Welcome to your annual report, covering the 12 months to 31 January 2014. It has been a year of steady progress for your Company, one highlight of which has been the virtual elimination of the share price discount. The number of shares bought back by the Company has also reduced and most of the shares which were previously bought back by the Company and held in treasury were re-issued. 

The global stockmarkets have had both ups and downs during the year, ending with a 10.5% total return in the FTSE World index. Against this backdrop, the Company's NAV per share total return was 8.1%, which fell short of the target and means no performance fee will be paid to the Company's investment manager. The share price returned 9.8%, thanks to the reduced discount over the year. The investment underperformance for the year should be seen in the context of the manager's longer term results, which are significantly ahead over 10 years. In his manager's review, Tom Walker describes in more detail the portfolio performance for the year against the background of a volatile investment environment.

The results against the other key performance indicators were good. The share price total return over three years was in the top quartile of the Company's peers and ongoing charges reduced from 0.84% last year to 0.75% and met the target for the year of less than 0.80%. The board has set a target for ongoing charges in the next year of less than 0.75%.

Share issuance and buybacks

In July, the board announced that it would use its share buyback powers with the objective of ensuring that the Company's shares trade at, or around, NAV, in normal market conditions. This 'zero-discount' policy provides shareholders with effectively unlimited liquidity for the Company's shares, permitting anyone who wishes to buy or sell their shares to do so at or around NAV in normal market conditions. The zero-discount policy represents a significant advantage for your Company's shareholders and the board is committed to this policy and the benefits it brings, both for existing shareholders and for attracting new investors. Because the policy allows shareholders to sell their shares at or around NAV whenever they wish, rather than only on a fixed date once every five years, the board proposed the removal of the redemption rights contained in article 47 with immediate effect. This was approved by shareholders by an overwhelming majority at a general meeting held on 17 February 2014, eliminating the need to organise the next fixed five year redemption due in June 2014.

Revenues and dividends

In May 2013, the Company's board announced that dividends would be paid to shareholders on a quarterly basis, rather than twice per year. An interim dividend of 0.90p was paid in July, October and January and the board has declared a fourth interim dividend of 1.30p which will be paid on 25 April 2014. This will bring total dividend payments for the period to 4.00p per share, a 2.6% increase from the previous year and slightly more than the net revenue return per share for the year which fell by 11.1%, impacted, in part, by the strengthening of sterling.

The board

In April 2013, Gillian Watson was appointed to the board as a non-executive director. Gillian is an experienced corporate director with diverse experience. Having begun her career at Morgan Stanley and then Standard Chartered Asia in Hong Kong, she held a variety of senior posts within the utilities industry across Europe.

Gill Nott will be retiring with effect from the annual general meeting ('AGM'), having served over 11 years on the board. Gill will not immediately be replaced and so the number of directors will be reduced to four. David Kidd will replace Gill as senior independent director. The board would like to thank Gill for her enormous contribution to the board.

Regulatory changes

The directors' report contains a statement of the regulatory changes which will affect the Company in the future, the most notable of which being the implementation of the European Alternative Investment Funds Managers Directive.

Looking ahead

The investment outlook for the year ahead is broadly a continuation of recent conditions in which market sentiment will be dominated by political and macroeconomic events. In his manager's report, Tom Walker describes his views of the likely direction for markets and the opportunities for the Company's investments. The board believes that the manager's policy of a careful and balanced selection of the best growth stocks from the world's larger companies will provide a sound basis for the ongoing long-term outperformance of the Company.

I thank you for your continued support. Please contact me if you have any questions regarding your Company. Contact details can be found at the back of this report. I would also encourage you to visit the Company's website at www.martincurrieglobal.com, which is a comprehensive source of information. You can also register online to receive regular updates of the Company's performance, manager commentaries and associated news.

Neil Gaskell

Chairman

3 April 2014

Manager's review

Market review

The FTSE World index rose 10.5% in the 12 months under review. After a strong first half it actually fell in the last 6 months. In an era of low interest rates, that level of return is respectable and compares favourably with bank deposits and other asset classes such as gold and fixed income. 

The fortunes of world equity markets were divided over the year. The chart below shows total returns from different asset classes for the year. Developed market returns were strong, led by the USA, Japan and Continental Europe. The UK market rose less, held back by its large commodity and banking stocks, but it still appreciated by 7.5%. In stark contrast, there were significant declines in emerging markets. The MSCI Global Emerging Market Index fell 13.0% during the year, with particular weakness in South America, South Africa and a number of South East Asian markets. Speculation about the reduction of the US Federal Reserve's quantitative easing (QE) programme took a severe toll on emerging markets as capital flowed out of those areas - a process that appears to have accelerated in the early months of 2014.

In fact, emerging markets have actually underperformed for a number of years. Corporate profits have struggled as cost inflation has coincided with revenue declines. Weak commodity prices and political unrest have impacted several developing countries, while concerns about the 'tapering' of QE have been more pronounced in countries with large current account deficits. To combat inflation and counter weakness in their currencies, a number of emerging countries have raised interest rates. As a result, it seems likely that growth is going to be quite challenged in many of these economies. China's economy grew 7.7% in 2013, but that growth comes off the back of an exponential credit expansion in the last ten years and the risks of a credit crisis are surely increasing.

The US - the world's largest economy - is improving, but is a long way from being described as robust. Weak emerging economies and a still fragile Europe mean that external opportunities are limited and the US must drive the recovery domestically. Companies in the US have, on average, seen only modest revenue growth in the past year and earnings growth has been considerably lower than share price gains.

Investment performance and portfolio activity

The Company's investment performance has lagged the benchmark during the year, with the NAV total return up 8.1%. The substantial correction in emerging markets impacted our performance. It hit our investment in Indonesian conglomerate PT Astra International especially hard, with much of the damage being to the Indonesian currency rather than the share price. We had reduced exposure earlier in the year, but feel the current share price has fallen too far so we continue to hold the company. Asia ex-Japan has not performed well and Taiwan Semiconductor Manufacturing Company (TSMC), Samsung Electronics and a number of China related holdings were among our weakest performers, generally driven down by macro concerns. Philip Morris International, the US listed tobacco company suffered due to its exposure to the Philippines and Russia and this impacted its earnings and share price.

British oil and gas multinational BG Group has warned that production growth is going to be slower than expected and its share price tumbled late in the year. I have added to our holding in BG Group as I believe that its long-term outlook and asset growth remain attractive. More positively, the strong cashflow generated by US defence giant Lockheed Martin has been rewarded in share price performance and two UK holdings, Prudential and Johnson Matthey, were strong contributors, as were software manufacturer Check Point Software Technologies and US regional bank PNC Financial. 

I have continued to increase the weighting to financials and we are now slightly overweight in that sector: Norwegian bank DNB and Japanese financial group Orix are new holdings this year. I reduced our position in Apple and sold out of IBM altogether as, in both cases, earnings growth is slowing. However, I added eBay, whose share price has lagged other high growth internet companies quite dramatically. Although stockpicking is the focus of our investment process, Japan is a market that is less correlated to others and I have increased exposure there. At the same time, I have marginally reduced emerging market exposure, but it is worth emphasising that many companies quoted in Europe or America earn a large and increasing portion of their revenues in emerging market countries. It would therefore be wise not to become too fixated by the geographic weightings of the portfolio.

Outlook

The US Federal Reserve has started to reduce monetary stimulus, but actual monetary tightening is, in my view, unlikely in the next 12 months. While monetary policy remains supportive, asset prices can keep rising. Compared with interest rates, developed market equities remain inexpensive, so the higher valuation over the last year is no bar to further gains. However, as equity valuations become more stretched relative to their own history, the risk that markets will suffer a set back when the interest rate cycle turns is enhanced. 

Although the earnings yield on equities has fallen, it continues to offer a higher yield than US Treasuries, albeit the gap is narrowing. The valuation of US equities (as captured by the ratio of earnings to share price, known as the price earnings ratio) has risen considerably but could rise higher, history would suggest.

Emerging market equities, in contrast, appear inexpensive relative to their history and relative to developed markets. But we have seen the dramatic impact that money flows have had already on emerging markets. Until their economies are more robust, money flows - driven by the anticipation of less supportive US monetary policy - may continue to dictate market direction.

Over the last five years, equity markets have nearly doubled. It is hard to argue that this is solely based on the fundamentals of economic and corporate earnings growth. Instead, the world is awash with money thanks to the benevolence of central banks and their printing presses. Until this reverses, cash has to find a home and global equities are likely to continue to benefit.

Elevated economic uncertainty has been a fact of life for a number of years now. While not wishing to belittle it, the world often finds a way to muddle through. So we will endeavour to construct a portfolio of companies whose earnings, assets and share prices can best prosper through all the uncertainty.

Since our year end, the situation in the Ukraine has deteriorated and Russia has annexed Crimea. Thus far, the ensuing war of words and visa travel bans has had limited impact on the major markets. However, the isolation of Russia has potentially alarming consequences given its importance as a supplier of energy and as a military superpower. We will continue to monitor the situation as it develops.

Tom Walker

3 April 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

Portfolio Summary

Portfolio distribution   

By region	31 January 2014 Company	31 January 2014 FTSE World index	31 January 2013 Company	31 January 2013 FTSE World Index
North America	52.2%	53.8%	49.8%	50.9%
Developed Europe ex UK	15.3%	17.1%	11.9%	17.4%
United Kingdom	12.6%	8.6%	17.7%	8.8%
Developed Asia Pacific ex Japan	9.5%	6.7%	10.3%	8.7%
Japan	6.7%	8.8%	3.6%	7.4%
Global emerging Markets	2.0%	4.8%	5.1%	6.6%
Middle East	1.7%	0.2%	1.6%	0.2%
	100.0%	100.0%	100.0%	100.0%

By Sector (excluding cash)	31 January 2014 Company	31 January 2014 FTSE World index	31 January 2013 Company	31 January 2013 FTSE World index
Financials	22.3%	21.8%	18.4%	21.6%
Industrials	14.0%	12.8%	16.6%	12.0%
Consumer services	12.8%	10.7%	10.6%	10.2%
Healthcare	10.4%	10.1%	7.0%	9.0%
Oil and gas	10.3%	8.5%	13.5%	9.7%
Technology	9.9%	10.0%	12.5%	9.5%
Basic materials	8.1%	5.9%	9.0%	7.0%
Consumer goods	6.4%	13.2%	6.3%	13.7%
Telecommunications	3.8%	3.7%	4.2%	3.9%
Utilities	2.0%	3.3%	1.9%	3.4%
	100.0%	100.0%	100.0%	100.0%

By asset class (including cash and borrowings	31 January 2014	31 January 2013
Equities	99.7%	99.9%
Cash	0.3%	0.1%
	100.0%	100.0%

Largest 10 Holdings	31 January 2014 Market value £000	31 January 2014 % of total portfolio	31 January 2013 Market value £000	31 January 2013 % of total portfolio
JP Morgan Chase	6,279	3.8	3,197	2.0
LyondellBasell Industries	5,543	3.4	3,981	2.5
United Technologies	5,042	3.1	3,973	2.5
Prudential	4,886	3.0	3,303	2.1
AbbVie	4,846	3.0	2,495	1.6
Apple	4,484	2.7	5,807	3.7
Pfizer	4,440	2.7	4,074	2.6
Roche	4,236	2.6	-	-
BG Group	4,212	2.6	3,288	2.1
Phillip Morris International	4,175	2.5	4,812	3.0

	Sector	Country	Market value £	% of total portfolio
North America			85,483,374	52.2
JP Morgan Chase	Financials		6,279,096	3.8
LyondellBasell Industries	Basic materials		5,543,349	3.4
United Technologies	Industrials		5,041,600	3.1
AbbVie	Healthcare		4,845,779	3.0
Apple	Technology		4,484,277	2.7
Pfizer	Healthcare		4,439,830	2.7
Phillip Morris International	Consumer goods		4,174,566	2.5
eBay	Consumer services		4,013,240	2.4
Lockheed Martin	Industrials		3,828,346	2.3
Microsoft	Technology		3,543,506	2.2
Sempra Energy	Utilities		3,270,826	2.0
American International Group	Financials		3,160,466	1.9
McDonalds	Consumer services		3,051,828	1.9
Bank of Montreal	Financials		2,969,278	1.8
PNC Financial	Financials		2,964,909	1.8
Pentair	Industrials		2,865,528	1.8
L Brands	Consumer services		2,554,180	1.6
AT&T	Telecommunications		2,442,334	1.5
Kinder Morgan	Oil and gas		2,441,336	1.5
Twenty First Century Fox	Consumer services		2,331,882	1.4
CVS Caremark	Consumer services		2,274,571	1.4
Chevron	Oil and gas		2,186,571	1.3
Wellpoint	Healthcare		1,769,488	1.1
Cognizant Technology Solutions	Technology		1,727,745	1.1
Praxair	Basic materials		1,661,972	1.0
Wal-Mart	Consumer services		1,616,871	1.0
Developed Europe ex UK			25,018,965	15.3
Roche	Healthcare	Switzerland	4,235,904	2.6
Schneider Electric	Industrials	France	3,246,341	2.0
Seadrill	Oil and gas	Norway	2,709,220	1.7
ProSiebenSat.1 Media	Consumer services	Germany	2,585,510	1.6
SCOR	Financials	France	1,838,123	1.1
Safran	Industrials	France	1,776,841	1.1
ENI	Oil and gas	Italy	1,767,173	1.1
DNB	Financials	Norway	1,752,367	1.1
Anheuser-Busch Inbev	Consumer goods	Belgium	1,725,866	1.0
Novartis	Healthcare	Switzerland	1,713,353	1.0
Total	Oil and gas	France	1,668,267	1.0

	Sector	Country	Market value £	% of total portfolio
United Kingdom			20,578,004	12.6
Prudential	Financials		4,886,429	3.0
BG Group	Oil and gas		4,211,621	2.6
HSBC Holdings	Financials		2,822,660	1.7
BHP Billiton	Basic materials		2,559,132	1.6
Rio Tinto	Basic materials		2,481,453	1.5
Royal Dutch Shell	Oil and gas		1,736,178	1.1
Candover Investments	Private equity		970,811	0.6
Johnson Matthey	Basic materials		909,720	0.5
Developed Asia Pacific ex Japan			15,615,120	9.5
M1	Telecommunications	Singapore	3,036,858	1.9
Jardine Matheson Holdings	Industrials	Singapore	2,399,951	1.5
Woolworths	Consumer services	Australia	2,393,506	1.4
Samsung Electronics	Technology	Korea	1,947,212	1.2
China Merchants Holdings	Industrials	Hong Kong	1,791,575	1.1
China Construction Bank	Financials	Hong Kong	1,715,470	1.0
United Overseas Bank	Financials	Singapore	1,646,279	1.0
China Mobile	Telecommunications	Hong Kong	684,269	0.4
Japan			11,053,085	6.7
Mitsubishi UFJ Financial Group	Financials		3,505,524	2.1
Toyota	Consumer goods		2,966,435	1.8
Orix	Financials		2,742,707	1.7
Mitsui & Company	Industrials		1,838,419	1.1
Global emerging markets			3,232,366	2.0
Taiwan Semiconductor Manufacturing Company	Technology	Taiwan	1,665,897	1.0
PT Astra International	Consumer goods	Indonesia	1,566,469	1.0
Middle East			2,774,089	1.7
Check Point Software Technologies	Technology	Israel	2,774,089	1.7
Total portfolio			163,755,003	100.0

Principal risks and uncertainties

Risk and mitigation

The Company's business model is longstanding and resilient to most of the short term uncertainties that it faces, which the board believes are largely effectively mitigated by its internal controls and the oversight of the investment manager, as described below. Its principal risks and uncertainties are therefore largely longer term and driven by the inherent uncertainties of investing in global equity markets. The board believes that it is able to respond to these longer term risks and uncertainties with effective mitigation so that both the potential impact and the likelihood of these seriously affecting shareholders' interests are materially reduced.

The one new short term uncertainty is the potential impact on the Company of Scottish independence which the board is closely monitoring. Contingency plans have been prepared and the board will act to protect shareholders' interests if necessary.

Risks are regularly monitored at board meetings and the board's planned mitigation measures are described below. The board also carries out a risk workshop as part of its annual strategy meeting. The board has identified the following principal risks to the Company:

Loss of s1158-1159 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 carried out by the investment manager and reviewed by them, the likelihood of this risk occurring is minimal.

Long term investment underperformance - The board monitors the implementation and results of the investment process with the manager, who attends all board meetings and reviews data that show statistical measures of the Company's risk profile. Were long-term investment underperformance to emerge despite the mitigation measures taken by the investment manager, the board would be able to take appropriate action to manage this risk.

Decline in the overall size of the Company - The board recognises that the zero discount policy allows shareholders to sell their stock in any volume at close to NAV. Although this improved liquidity encourages investment in the Company, it could also increase the risk of a significant decline in the size of the Company. The Company has a clear marketing strategy which is set by the board and delivered by a well-resourced marketing function within the investment manager.  The board also regularly monitors key indicators for any change in the Company's reputational risk profile.

Failure to manager shareholder relations - The board recognises the importance of managing shareholder relations. At each meeting, the board reviews the list of key shareholders. The board also receives feedback from the investment manager based on the outcome of its meetings with shareholders. Shareholders are encouraged to give their views by using the email address provided in the annual report and accounts.

Discount management policy - The board adopted a zero discount policy in July 2013 which is operated by the investment manager and the broker, using parameters clearly set out by the board. There could be a serious impact on the reputation of the Company if the parameters were not followed, but the board believes that this will not happen in normal market conditions.

The investment manager ceases to effectively manage investment trusts or its reputation fails - The board reviews the performance and continued appointment of the investment manager on a regular basis, via the management engagement committee.  The board is independent of the investment manager and so, if the continued appointment of the investment manager was not in the best interest of shareholders, a new investment manager would be appointed.

Index liquidity test - The zero discount policy provides shareholders with increased liquidity, but also produces a lower level of turnover in the Company's shares. This could result in the Company failing to satisfy the measurement test of liquidity that the Company must meet in order to retain its place in the FTSE All-Share index.  The liquidity of the Company is monitored by the board, the investment manager and the Company's broker with a report being reviewed at every board meeting. The board also regularly considers ways to improve the liquidity position of the Company were the likelihood of the risk to increase.

Directors' Responsibilities

Statement of directors' responsibilities

The directors are responsible for preparingthe annual report, the directors' remuneration report and the financialstatements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financialyear. Under that law the directors have prepared the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfiedthat they give a true and fair viewof the state of affairs of the Companyand 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 apply them consistently;

·      make judgements and accounting estimates that are reasonable and prudent;

·      state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements respectively;

·      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 adequateaccounting records that are sufficient to show and explain the Company's transactions and disclose with reasonableaccuracy at any time the financial position of the Company and enable them to ensure that the financialstatements and the directors' remuneration report comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The financial statements are publishedon 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.

Each of the directors confirms that, to the best of theirknowledge:

·      the financial statements, which have been prepares in accordance with the United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), give a true and fair view of the assets, liabilities, financial position and profit of the Company); and

·      the Report of the directors and manager's review include a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

Going concern status

The Company's businessactivities, 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 positionof the Company as at 31 January2014 is shown on the balance sheet.

Note 15 sets out the Company's risk management policies, includingthose covering market risk, liquidity risk and 
credit risk.

In accordance with the Financial Reporting Council's guidance on going concern and liquidityrisk issued in October 
2009, 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 principalrisks and uncertainties (as detailed above) and have reviewed revenue forecasts and they believe that the Company has adequate financial resources to 
continue its operational existence for the foreseeable future and for at least one year from the date of signing of 
these financial statements. Accordingly, the directors continue to adopt the going concern basis in preparing these financial statements.

Neil Gaskell

Chairman

3 April 2014

Income Statement

		Year to 31 January 2014			Year to 31 January 2013
		Revenue	Capital	Total	Revenue	Capital	Total
		£000	£000	£000	£000	£000	£000
Net gains on investments	7	-	7,193	7,193	-	14,232	14,232
Net currency losses	12	-	(14)	(14)	-	(70)	(70)
Income	3	5,108	-	5,108	5,674	-	5,674
Investment management fee		(279)	(558)	(837)	(247)	(493)	(740)
Other expenses	5	(429)	-	(429)	(513)	-	(513)
Net return on ordinary activities before taxation		4,400	6,621	11,021	4,914	13,669	18,583
Taxation on ordinary activities	6	(490)	-	(490)	(492)	-	(492)
Net return attributable to shareholders		3,910	6,621	10,531	4,422	13,669	18,091
Net returns per ordinary share	2	3.76p	6.37p	10.13p	4.23p	13.08p	17.31p

The total columns of the above 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.

All revenue and capital items in the above statement derive from continuing operations.

No operations were acquired or discontinued in the year.

A statement of total recognised gains and losses is not required as all gains and losses of the Company have been reflected in the above statement.

There is no material difference between the net return on ordinary activities before taxation and the net return attributable to shareholders stated above and their historical cost equivalents.

 

Balance Sheet

		As at 31 January 2014		As at 31 January 2013
	Note	£000	£000	£000	£000
Fixed assets
Investments at fair value through profit or loss
Listed on the London Stock Exchange			20,578		28,117
Listed on exchanges abroad			143,177		130,777
	7		163,755		158,894
Current Assets
Debtors	8	271		4,425
Cash at bank and in hand	9	458		63
		729		4,488
Creditors
Amounts falling due within one year	10	(283)		(3,983)
Net current assets			446		505
Total assets less current liabilities			164,201		159,399
Capitals and reserves
Called-up share capital	11	5,224		5,227
Capital redemption reserve		10,793		10,790
Special distributable reserve		116,249		116,378
Capital reserve	11	26,228		19,607
Revenue reserve		5,707		7,397
Total shareholders' fund			164,201		159,399
Net Asset Value per ordinary share of 5p	2		157.4p		152.6p

Martin Currie Global Portfolio Trust plc is registered in Scotland, company number 192761.

The financial statements were approved by the board of directors on 3 April 2014 and signed on its behalf by Neil Gaskell, Chairman

Reconciliation of Movements in Shareholders' Fund

 

	Note	Called up ordinary share capital £000	Capital redemption reserve £000	Special distributable reserve £000	Capital reserve £000	Revenue reserve £000	Total
Reconciliation of movements in shareholders' funds for the year to 31 January 2014
At 1 February 2013		5,227	10,790	116,378	19,607	7,397	159,399
Ordinary shares bought back during the year		-	-	(2,538)	-	-	(2,538)
Ordinary shares issued during the year		-	-	2,409	-	-	2,409
Ordinary shares cancelled during the year		(3)	3	-	-	-	-
Gains on realisation of investments at fair value	7	-	--	-	8,964	-	8,964
Movement in currency gains/(losses)		-	-	-	(14)	-	(14)
Movement in fair value gains/(losses)	7	-	-	-	(2,094)	-	(2,094)
Capitalised expenses		-	-	-	(558)	-	(558)
Capital dividends received	3	-	-	-	323	-	323
Net revenue		-	-	-	-	3,910	3,910
Dividends paid	4	-	-	-	-	(5,600)	(5,600)
At 31 January 2014		5,224	10,793	116,249	26,228	5,707	164,201

	Note	Called up ordinary share capital £000	Capital redemption reserve £000	Special distributable reserve £000	Capital reserve £000	Revenue reserve £000	Total
Reconciliation of movements in shareholders' funds for the year to 31 January 2013
At 1 February 2012		5,227	10,790	116,530	5,938	7,052	145,537
Ordinary shares bought back during the year		-	-	(152)	-	-	(152)
Gains on realisation of investments at fair value	7	-	-	-	424	-	424
Movement in currency gains/(losses)		-	-	-	(70)	-	(70)
Movement in fair value gains/(losses)	7	-	-	-	13,753	-	13,753
Capitalised expenses		-	-	-	(493)	-	(493)
Capital dividends received	3	-	-	-	55	-	55
Net revenue		-	-	-	-	4,422	4,422
Dividends paid	4	-	-	-	-	(4,077)	(4,077)
At 31 January 2013		5,227	10,790	116,378	19,607	7,397	159,399

 

The notes to the accounts form part of these financial statements.

 

Cash Flow Statement

	Note	Year ended 31 January 2014		Year ended 31 January 2013
		£000	£000	£000	£000
Net cash inflow from operating activities	12		3,297		2,912
Taxation
Taxation recovered			-		7
Capital expenditure and financial investment
Capital distributions	3	323		55
Payment to acquire investments		(44,012)		(39,022)
Proceeds from sales of investments		46,530		36,682
Net Cash inflow/(outflow) from capital expenditure and financial investment			2,841		(2,285)
Equity dividends paid	4		(5,600)		(4,077)
Net Cash inflow/(outflow) before financing			538		(3,433)
Financing
Repurchase of ordinary share capital		(2,538)		(152)
Shares issued for cash		2,409		-
Net cash (outflow)/inflow from financing	11		(129)		(152)
Increase / (decrease) in cash	13		409		(3,595)

The notes form part of these financial statements

Notes to the Financial Statements

1    Accounting policies

a)   Basis of preparation - the financial statements have been prepared under the historical cost convention (modified to include investments at fair value through profit or loss) on a going concern basis and in accordance with applicable UK Accounting Standards and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued in January 2009. They have also been prepared on the assumption that approval as an investment trust will continue to be granted. The Company is a UK listed company with a predominantly UK shareholder base. The results and the financial position of the Company are expressed in sterling, which is the functional and presentational currency of the Company. The accounting policies have been disclosed consistently and in line with Companies Act 2006.

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. Scrip 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 income statement. Income from underwriting commission is recognised as earned.

c)   Interest receivable and payable, management fees, performance fees and other expenses are recognised on an accruals basis.

d)   The management fee and finance costs in relation to debt are recognised two-thirds as a capital item and one-third as a revenue item in the income statement in accordance with the board's expected long-term split of returns in the form of capital gains and income, respectively. The performance fee is recognised 100% as a capital item in the income statement as it relates entirely to the capital performance of the Company. All expenses are charged to revenue except where they directly relate to the acquisition or disposal of an investment, in which case, they are added to the cost of the investment or deducted from the sale proceeds.

e)   Investments - investments have been designated upon initial recognition as fair value through profit or loss. Investments are recognised and de-recognised 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 as 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 income statement and are ultimately recognised in the capital reserve.

In accordance with FRS29, all investments have been categorised as Level 1 - quoted in an active market.

f)    Transaction costs incurred on the purchase and disposal of investments are recognised as a capital item in the income statements.

g)   Monetary assets and liabilities expressed in foreign currencies are translated into sterling at rates of exchange ruling at the date of the balance sheet or at the related forward contract rate. Transactions in foreign currency are converted to sterling at the rate ruling at the date of the transaction or, where forward foreign currency contracts have been taken out, at contractual rates and included as an exchange gain or loss in the capital reserve or the revenue account depending on whether the gain or loss is of a capital or revenue nature.

h)   Cash at bank comprises cash and demand deposits which are readily convertible to a known amount of cash and are subject to insignificant risk of changes in value.

Other debtors and creditors (excluding borrowings) do not carry any interest, are short-term in nature and are accordingly stated at nominal value as reduced by appropriate allowances for estimated irrecoverable amounts.

i)    Dividend payable - under FRS21 final dividends should not be accrued in the financial statements unless they have been approved by shareholders before the Balance Sheet date. Interim dividends are only recognised when they have been paid. Dividends payable to equity shareholders are recognised in the Reconciliation of Movements in Shareholders' Funds when they have been approved by shareholders in the case of a final dividend, or paid in the case of an interim dividend and become a liability of the Company.

j)    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 management fee and relevant finance costs are charged to this reserve. Any associated tax relief is also credited to this reserve.

The cost of share buybacks include the amount of consideration paid, including directly attributable costs and are deducted from the special distributable reserve until the shares are cancelled.

The special distributable reserve was created through the cancellation and reclassification of the share premium account in 1999 and 2004, and thereafter the cost of share buy backs are deducted from this reserve.

k)   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 tax 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 balance sheet 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 balance sheet date measured on an undiscounted basis and based on enacted tax rates. This is subject to deferred tax assets only being recognised 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 company, and the intention to continue meeting the conditions required to obtain approval 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)  The Company can use derivative financial instruments to manage risk associated with foreign currency fluctuations arising on the investments in currencies other than sterling. This is achieved by the use of forward foreign currency contracts. Derivative financial instruments are recognised initially at fair value on the contract date and subsequently remeasured to the fair value at each reporting date. The fair values of the derivative financial instruments are included within non-current assets or within current assets or current liabilities depending on the nature and motive of each derivative transaction.

2. 

	Year ended 31 January 2014	Year ended       31 January 2013
Returns and net asset value
The return and net asset value per ordinary share are calculated with reference to the following figures:
Revenue return
Revenue return attributable to ordinary shareholders	£3,910,000	£4,422,000
Weighted average number of shares in issue during year	103,917,881	104,508,168
Return per ordinary share	3.76p	4.23p
Capital return
Capital return attributable to ordinary shareholders	£6,621,000	£13,669,000
Weighted average number of shares in issue during year	103,917,881	104,508,168
Return per ordinary share	6.37p	13.08p
Total return
Total return per ordinary share	10.13p	17.31p
Net asset value per share	As at 31 January 2014	As at 31 January 2013
Net assets attributable to shareholders	£164,201,000	£159,399,000
Number of shares in issue at the year end	104,293,171	104,439,548
Net asset value per share	157.4p	152.6p

There are no dilutive or potentially dilutive shares in issue.

Between 1 February and 1 April 2014, 818,000 ordinary shares of 5p were bought back to Treasury.

3. 

	Year ended 31 January 2014 £000	Year ended 31 January 2013 £000
Income from investments
From listed investment
UK equities	792	1,302
International equities	4,312	4,366
Other income
Interest on deposits	4	6
	5,108	5,674

During the year ended 31 January 2014, the Company received a capital dividend of £323,000 from proSiebenSat 1 Media, as shown in note 7.  During the year ended 31 January 2013, the Company received capital dividends of £55,000 (£8,000, £15,000 and £32,000 from GlaxoSmithKline, Seadrill and F&C Private Equity Trust respectively).

4.

	Year ended 31 January 2014			Year ended 31 January 2013
	Revenue £000	Capital £000	Total £000	Revenue £000	Capital £000	Total £000
Dividends
Year ended 31 January 2012 - final dividend of 2.70p	-	-	-	2,823	-	2,823
Year ended 31 January 2013 - interim dividend of 1.20p	-	-	-	1,254	-	1,254
Year ended 31 January 2013 - final dividend of 2.70p	2,801	-	2,801	-	-	-
Year ended 31 January 2014 - first interim dividend of 0.90p	932	-	932	-	-	-
Year ended 31 January 2014 - second interim dividend of 0.90p	928	-	928	-	-	-
Year ended 31 January 2014 - third interim dividend of 0.90p	939	-	939	-	-	-
	5,600	-	5,600	4,077	-	4,077

Set out below are the total dividends payable in respect of the financial year which forms the basis on which the requirements of s1158-9 of the Corporation Taxes Act 2010 are considered.

	Year ended 31 January 2014 £000	Year ended 31 January 2013 £000
First interim dividend of 0.90p for the year ended 31 January 2014 (2013: nil)*	932	-
Second interim dividend of 0.90p for the year ended 31 January 2014 (2013: 1.20p)	928	1,254
Third interim dividend of 0.90p for the year ended 31 January 2014 (2013: nil)*	939	-
Fourth interim dividend of 1.30p for the year ended 31 January 2014 (2013: 2.70p)	1,356	2,820
	4,155	4,074

* On 21 May 2013 the Company announced that dividends will now be paid to shareholders on a quarterly basis rather than twice per year.

5.

Other expenses	Year ended 31 January 2014 £000	Year ended 31 January 2013 £000
Advertising and public relations	31	51
Bank charges (including custody fees)	18	14
Directors' fees	128	129
Directors' and officers' liability insurance	15	16
Irrecoverable VAT	11	43
Legal fees	7	3
Marketing	22	21
Printing and postage	26	16
Registration fees	49	38
Retainer paid to company broker	-	18
Secretarial fee	50	74
Other	50	68
Auditors' remuneration
Payable to PricewaterhouseCoopers LLP for the audit of the Company's annual financial statements	22	22
	429	513

Performance Fee

The performance fee for the year ended 31 January 2014 was £nil (2013: £nil).  Details of the management and secretarial agreements are provided in the full annual report.

6.

	Year ended 31 January 2014			Year ended 31 January 2013
	Revenue £000	Capital £000	Total £000	Revenue £000	Capital £000	Total £000
Taxation on ordinary activities
Foreign Tax	490	-	490	492	-	492

The effective corporation tax rate was 23.16% (2013: 24.33%). The tax charge for the year differs from the charge resulting from applying the standard rate of corporation tax in the UK for an investment trust company. The differences are explained below.

	Year ended 31 January 2014 £000	Year ended 31 January 2013 £000
Net return before taxation	11,021	18,583
Corporation tax at effective rate of 23.16% (2013: 24.33%)	2,552	4,521
Effects of:
Non taxable UK dividend income	(183)	(317)
Currency losses not taxable	3	17
Gains on investments not taxable	(1,666)	(3,462)
Overseas dividends non taxable	(999)	(1,062)
Overseas tax suffered	490	492
Increase in excess management and loan expenses	293	303
Total current year tax charge	490	492

As of 1 April 2013, the UK Corporation rate fell from 24% to 23%.

As at 31 January 2014, the Company had unutilised management expenses of £22.8 million (2013: £21.6 million) and non-trading loan relationship deficit of £4.7 million (2013: £4.8 million) carried forward. A deferred tax asset in respect of this has not been recognised and these expenses will only be utilised if the Company has profits chargeable to corporation tax in the future. Due to the Company's status as an investment trust and the intention to continue to meet the conditions required to obtain approval in the foreseeable future, the Company has not provided deferred tax on capital gains and losses arising on the revaluation or disposal of investments.

During the year, as a result of the change in UK corporation tax from 23% to 21% and subsequent provisions in the Finance Act 2013 to reduce the main rate of corporation tax to 20% for the financial year 2015, which was substantively enacted on 2 July 2013 and will be effective from 1 April 2015, the unrecognised deferred tax asset has been remeasured to 20%.

Further reductions to the main rate are proposed to reduce the rate by 1% to 20% by 1 April 2015. These changes had not been substantively enacted at the balance sheet date and, therefore, are not included in these financial statements.

7.

Investments at fair value through profit and loss	As at 31 January 2014 £000	As at 31 January 2013 £000
Opening valuation	158,894	142,886
Opening unrealised investment holding gains	(27,398)	(13,645)
Opening cost	131,496	129,241
Purchases at cost	40,340	42,694
Disposal proceeds	(42,349)	(40,863)
Net profit on disposal of investments	8,964	424
Disposal at cost	(33,385)	(40,439)
Closing cost	138,451	131,496
Closing unrealised investment holding gains	25,304	27,398
Valuation as at 31 January	163,755	158,894

Gains on investments	As at 31 January 2014 £000	As at 31 January 2013 £000
Net profit on disposal of investments	8,964	424
Net (loss)/gain on revaluation of investments	(2,094)	13,753
Capital distributions	323	55
	7,193	14,232

The transaction cost of acquiring investments during the year was £85,000 (2013: £110,000). For disposals, transaction costs were £67,000 (2013: £68,000).

8. 

	As at 31 January 2014 £000	As at 31 January 2013 £000
Debtors
Dividends receivable	160	159
Amount due from brokers	-	4,181
Taxation recoverable	106	70
Other debtors	5	15
	271	4,425

9.

	As at 31 January 2014 £000	As at 31 January 2013 £000
Cash at bank and in hand
Sterling bank account	421	42
Non-sterling bank account	37	21
	458	63

10.

Creditors	As at 31 January 2014 £000	As at 31 January 2013 £000
Amounts falling due within one year:
Amount due to brokers	-	3,672
Due to Martin Currie	204	195
Other creditors	79	116
	283	3,983

With the exception of management and secretarial fees, directors' fee and directors' shareholdings there were no related party transactions through the year, or in the prior year.

11. 

Called up share capital and analysis of capital reserves

Called up share capital	Number of shares	As at 31 January 2014 £000	Number of shares	As at 31 January 2013 £000
Ordinary shares 5p
Ordinary shares in issue at beginning of the year	104,439,548	5,222	104,553,171	5,227
Ordinary issued from Treasury during the year	1,466,623	73	-	-
Ordinary shares bought back to treasury during the year	(1,613,000)	(81)	(113,623)	(5)
Ordinary shares in issue at end of the year	104,293,171	5,214	104,439,548	5,222

Treasury shares (Ordinary shares 5p)	Number of shares	As at 31 January 2014 £000	Number of shares	As at 31 January 2013 £000
Treasury shares in issue at the beginning of the year	113,623	6	-	-
Ordinary shares issued from Treasury during the year	(1,466,623)	(73)	-	-
Ordinary shares cancelled from Treasury during the year*	(60,000)	(3)	-	-
Ordinary shares bought back to Treasury during the year	1,613,000	81	113,623	5
Treasury shares in issue at end of the year	200,000	10	113,623	5
Total ordinary shares in issue and in Treasury at the end of the year	104,493,171	5,224	104,553,171	5,227

The net cost of the share issues from and buybacks to treasury for the year to 31 January 2014 was £129,000 (2013: shares bought back to treasury £152,000).

*In the year to 31 January 2014 60,000 shares, with a nominal value of 5p each were cancelled from treasury.  This had the effect of reducing the Company's share capital by £3,000.

The analysis of the capital reserve is as follows:

	Realised capital reserve £000	Unrealised investment holding gains £000	Total capital reserve £000
At 1 February 2013	(7,791)	27,398	19,607
Gains on realisation of investments at fair value	8,964	-	8,964
Movement in fair value gains of investments	-	(2,094)	(2,094)
Movement in currency losses	(14)	-	(14)
Capitalised expenses	(558)	-	(558)
Capital distributions	323	-	323
At 31 January 2014	924	25,304	26,228

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'.

12. 

	Year ended 31 January 2014 £000	Year ended 31 January 2013 £000
Reconciliation of net return on ordinary activities before taxation to net cash inflow from operating activities
Return on ordinary activities before taxation	11,021	18,583
Adjustments for:
Net gains on investments	(7,193)	(14,232)
Effect of foreign exchange rates	14	70
Decrease/(Increase) in dividends receivable and other debtors	9	(29)
Decrease in other creditors and amounts due to Martin Currie	(28)	(948)
Overseas withholding tax suffered	(526)	(532)
Net cash inflow from operating activities	3,297	2,912

13.

Analysis of changes in net funds	As at 31 January 2013 £000	Cash Flow £000	Exchange Movement £000	As at 31 2014 January £000
Cash at bank and in hand	63	409	(14)	458

Analysis of changes in net funds	As at 31 2012 January £000	Cash Flow £000	Exchange Movement £000	As at 31 2013 January £000
Cash at bank and in hand	3,728	(3,595)	(70)	63

14. Related Party Transactions

With the exceptionof the management and secretarial fees, directors' fees and directors' shareholdings, there have been no related party transactions during the year, or in the prior year.

15. Derivatives and other financial instruments

The Company's financial instruments comprise securities, cash balances, debtors and creditors that arise directly from its operations; for example, in respect of sales and purchases awaiting settlement, and debtors 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 (i) market price risk (comprising interest rate risk, currency risk and other price risk), (ii) liquidity risk and (iii) credit risk.

The board regularly reviewsand agrees policies for managing each of these risks. The investment manager's policiesfor managing these risks are summarised below and have been applied throughout the year. The numericaldisclosures exclude short-term debtors and creditors, other than for currency disclosures.

(i) 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.

Interest rate risk

Interest rate movements may affect:

·      the fair value of the investments in fixed interest rate securities; and

·      the level of income receivable on cash deposits.

The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment and borrowing decisions.

The board imposes borrowing limits to ensure gearing levels are appropriate to market conditions 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 total assets of the Company. The Company does not currently have any gearing.

Interest risk profile

The interest rate risk profile of the portfolio of financial assets (comprising cash balances only) at the balance sheet date was as follows:

At 31 January 2014	Rate %	Local currency '000	Foreign Exchange Rate	Sterling equivalent £000
Assets:
Sterling	-	421	1.000	421
US dollar	-	61	1.643	37
				458
At 31 January 2013
Assets
Sterling	-	42	1.000	42
US Dollar	-	33	1.585	21
				63

Interest rate sensitivity

The sensitivity analyses below have been determined based on the exposure to interest rates for both derivative and non-derivative instruments at the balance sheet 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 50 basis points higher or lower and all other variables were held constant, the Company's profit for the year ended 31 January 2014 would increase/decrease by £2,000 (2013: increase/decrease by £nil). This is mainly attributable to the Company's exposure to interest rates on its floating rate cash balances.

As at 31 January 2014 a decrease in interest rates of 0.5% is the maximum possible, given the prevailing base rate of 0.5%. This level is considered possible based on observations of market conditions and historic trends.

Foreign currency risk

A significant proportion of the Company's investment portfolio is invested in overseas securities and the balance sheet can be significantly affected by movements in foreign exchange rates. It is not the Company's policy to hedge this risk on a continuing basis but the Company may, from time to time, match specific overseas investment with foreign currency borrowings.

The revenue account is subject to currency fluctuation arising on overseas income.

Foreign currency risk exposure by currency of denomination:

	As at 31 January 2014
	Non - monetary exposure £000	Monetary exposure £000	Total currency exposure £000
US dollar	91,301	161	91,462
Euro	14,608	65	14,673
Japanese yen	11,053	-	11,053
Swiss franc	5,949	36	5,985
Singapore dollar	4,683	-	4,683
Norwegian krone	4,462	-	4,462
Hong Kong dollar	4,191	-	4,191
Canadian dollar	2,969	28	2,997
Australian dollar	2,394	-	2,394
Indonesian rupiah	1,567	(1)	1,566
Total overseas investments	143,177	289	143,466
Sterling	20,578	157	20,735
Total	163,755	446	164,201

	As at 31 January 2013
	Non - monetary exposure £000	Monetary exposure £000	Total currency exposure £000
US dollar	86,313	(865)	85,448
Euro	12,420	2,178	14,598
Japanese yen	5,753	-	5,753
Swiss franc	2,526	18	2,544
Singapore dollar	4,932	-	4,932
Norwegian krone	3,832	-	3,832
Hong Kong dollar	4,878	-	4,878
Canadian dollar	3,138	30	3,168
Australian dollar	3,491	-	3,491
Indonesian rupiah	3,494	2	3,496
Total overseas investments	130,777	1,363	132,140
Sterling	28,117	(858)	27,259
Total	158,894	505	159,399

The asset allocation between specific markets can vary from time to time based on the manager's opinion of the attractiveness of the individual markets.

Foreign currency sensitivity

There were minimal foreign currency denominated items at the year end.

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 and the stock selection process both act to reduce market risk. The manager actively monitors market prices throughout the year and reports to the board, which meets regularly in order to review investment strategy. The investments held by the Company are listed on various stock exchanges worldwide.

Other price risk sensitivity

If market prices at the balance sheet date had been 15% higher or lower while all other variables remained constant, the return attributable to ordinary shareholders at the year ended 31 January 2014 would have increased/decreased by £24,563,000 (2013: increase/decrease of £23,834,000) and equity 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.

(ii) 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 consist of a diverse portfolio of listed equity shares which in most circumstances are realisable within a very short timescale and therefore can be sold to meet funding commitments if necessary.

(iii) 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 rating is reviewed periodically by the 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.

None of the Company's financial assets are secured by collateral.

Fair values of financial assets and financial liabilities

All financial assets and liabilities of the Company are included in the balance sheet at fair value or a reasonable approximation of fair value with no material difference in the carrying amount.

16 Capital management policies and procedures

The Company's capital management objectives are:

·      to ensure that the Company will be able to continue as a going concern;

·      to maximise the return to its equity shareholders through an appropriate balance of equity capital and debt; and

·      to limit gearing to 20% of total assets.

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 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 analysis of shareholders' funds is as follows:

	As at 31 January 2014 £000	As at 31 January 2013 £000
Called up ordinary share capital	5,224	5,227
Capital redemption reserve	10,793	10,790
Special distributable reserve	116,249	116,378
Capital reserve	26,228	19,607
Revenue reserve	5,707	7,397
Total shareholders' funds	164,201	159,399

17 Fair value hierarchy

Under FRS 29 'Financial Instruments: Disclosures' an entity 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: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (ie as prices) or indirectly (ie derived from prices); and

·      Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

As at 31 January 2014 financial assets in the form of quoted equities held at fair value through profit or loss to the value of £163,755,000 were classified as Level 1 in the fair value hierarchy (31 January 2013: quoted equities to the value of £158,894,000 classified as Level 1) with no assets classified as Level 2 or 3 (31 January 2013: no assets classified as Level 2 or 3).

Quoted equities

The fair value of the Company's investments in quoted equities has been determined by reference to their quoted bid prices at the reporting date. Quoted equities included in Fair Value Level 1 are actively traded on recognised stock exchanges.

18 Post balance sheet events

 

Between 1 February and 1 April 2014, a further 818,000 ordinary shares of 5p each have been bought back to Treasury for a consideration of £1,318,104.

 

Website

The Company has its own dedicated website at www.martincurrieglobal.com.  This offers shareholders, prospective investors and their advisors a wealth of information about the Company.  Updated daily it includes the following: latest prices, latest monthly update, performance data, research, portfolio information, press releases and articles, the manager's latest views and annual and half yearly reports.

 

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