Final Results

Martin Currie Portfolio Inv Tst PLC 12 March 2002 Martin Currie Portfolio Investment Trust plc Annual results - year to 31 January 2002 Chairman's statement Following the strong performance that we reported in the company's first two annual reports, the last 12 months have proved disappointing. Including the events of 11 September, it has been a turbulent period for stockmarkets worldwide. Since inception in March 1999, the company's net asset value per share ('NAV') has fallen by 11.4%, modestly outperforming the FTSE All-Share index's loss of 12.2%. However, in the 12 months to 31 January 2002, the trust's NAV fell by 22.3%, whereas the index lost 17.6%. The share price over the 12 months fell by 20.3%. The discount has thus narrowed from 12.7% to 10.4%. This underperformance was a result of our portfolio not being sufficiently defensive. We were positioned, albeit modestly, for economic recovery. However, the downturn in the US economy was deeper and lasted longer than we anticipated. This had a strong impact on European markets and corporate earnings. Additionally, our performance was held back by having holdings in overseas markets, which underperformed the UK market, and by the effect of the trust's gearing in falling markets. Your board has declared a final dividend of 1.00p. This makes a total of 1.50p for the year and is up by 2.0% from last year. At 1.47p, earnings per share were little changed. We expect some revenue recovery from the portfolio and thus feel able to draw marginally on revenue reserves this year. Calum MacLeod, our deputy Chairman, will stand down at this year's AGM. He has been on the board since inception and, before that, was a director of Scottish Eastern Investment Trust. We will miss his wise counsel. The manager's review summarises developments in the investment world over the last 12 months and suggests reasons for cautious optimism for the immediate future. Tentative signs of global economic recovery, most notably in the US, have begun to raise investors' confidence. We expect modest returns overall from equities this year, and so have positioned the company to benefit. Manager's Report The events of 2001 will be remembered more than most in the history of financial markets. Above all, the terrorist attacks on the US, the biggest bankruptcy in history and an economic slowdown that prompted eleven successive cuts in US interest rates had repercussions around the world and continue to do so. Although the FTSE All-Share index fell by 17.6% over the period, the UK was one of the best performing markets. By comparison, continental European markets fell by 24.5% and the Japanese market by 31.9% (FTSE World indices). Despite the extent of their falls in 2000, technology stocks fell even further last year. In the year to 31 January 2002, the technology sector in the FTSE All-Share index fell 70.1% (it fell 37.4% in the previous year). At the other end of the range, the tobacco sector rose 35.2% (up 69% in the previous year). So for two years, the same two sectors, prime examples of aggressive cyclical and defensive stable industries, have performed very differently. What's more, the divergence was over 100 percentage points in both years. There are a number of reasons for the company's underperformance over the year. The principal reason is that we expected economic recovery in 2001, positioned the portfolio accordingly and suffered from the extreme diversity in sectoral performance, illustrated by the technology and tobacco sectors. In the UK it has been a tough time for manufacturing. Recently, the service sector has suffered too. Despite this, the UK economy has been relatively resilient to the global slowdown. Low interest rates, low unemployment and strong property prices have buoyed consumer confidence. Generous increases in public spending have been announced. So the UK has not seen the economic contraction experienced by the US. That said, unemployment has started to rise, government finances are deteriorating and consumer borrowing is at record levels. The Bank of England's dilemma is that these are early warning signs of inflationary pressure, but the near term concern remains economic slowdown. So, despite a recent rise in inflation, they may prefer to wait and see before raising interest rates. We expect inflation to fall through the spring and summer and we believe our expectations for modest recovery in the economy in 2002 are consistent with non-inflationary growth. Many of the above comments about the UK economy also apply to the US. Consumer confidence fell sharply, but remains stronger than the industrial recession would suggest. US economic growth at the end of the 1990's was greater than the UK's, and so had further to fall. We believe that the US economy will recover although quite modestly in 2002. Since the US economy remains the major influence on Europe and Asia's economic growth, this is the key forecast for the year ahead. As political indecision continues, Japan has again been the worst performing market. Dire as Japan's economic situation is, it still seems likely that, since Mr. Koizumi has failed to administer the necessary reforms, it will get worse before it gets better. We have reduced our total exposure to Japan and have hedged the currency risk by borrowing in yen at very low rates of interest. Because of the high level of uncertainty, we are maintaining a balance in the portfolio. We favour those companies that should benefit from of a cyclical recovery. We believe well-financed market leaders in the technology sector will benefit from even a mild recovery. That is because of the extent to which their customers will have to rebuild inventories. Through specific growth oriented stocks, we are overweight financials. We also like industrials but remain underweight in consumer staples and retailers. During the last year, we reduced our exposure to the telecom sector. We believe that now would be the wrong time to reverse our strategy of cautious positioning for market growth. The pessimism that currently prevails reflects the uncertain environment at present. However, the world economy is likely to recover in 2002, and when it does we expect that pessimism to dissipate and equity markets to move higher. Our bias towards growth and cyclical stocks, that counted so harshly against us last year, should be rewarded in that recovery. For further information please contact: Tom Walker/Mike Woodward Martin Currie Investment Management Ltd 0131 229 5252 twalker@martincurrie.com/mwoodward@martincurrie.com MARTIN CURRIE PORTFOLIO INVESTMENT TRUST plc Statement of total return (incorporating the revenue account) for the year ended 31 January 2002 2002 (unaudited) Revenue Capital Total £'000 £'000 £'000 Net losses on investments - realised - (35,031) (35,031) - unrealised - (43,357) (43,357) Net currency gains - 612 612 Income - franked 5,333 185 5,518 - unfranked 1,681 - 1,681 Investment management fee (769) (1,538) (2,307) Performance bonus - - - Other expenses (599) - (599) Net return before finance costs and taxation 5,646 (79,129) (73,483) Interest payable and similar charges (841) (1,682) (2,523) Return on ordinary activities before taxation 4,805 (80,811) (76,006) Taxation on ordinary activities (213) 86 (127) Return on ordinary activities after taxation for the financial 4,592 (80,725) (76,133) year Dividends in respect of equity shares: 1.50p per share (4,689) - (4,689) Transfer from reserves (97) (80,725) (80,822) Return per ordinary share 1.47p (25.83p) (24.36p) Subject to approval at the forthcoming Annual General Meeting, the directors have declared a final dividend on the ordinary shares of the company for the year ending 31 January 2002 of 1.00p per share to be paid on 31 May 2002 to shareholders on the register on 2 April 2002. The annual results will be circulated to shareholders in the form of an annual report, copies of which will be available at the company's registered office, Saltire Court, 20 Castle Terrace, Edinburgh EH1 2ES. MARTIN CURRIE PORTFOLIO INVESTMENT TRUST plc Statement of total return (incorporating the revenue account) for the year ended 31 January 2001 2001 (audited) Revenue Capital Total £'000 £'000 £'000 Net gains on investments - realised - 9,557 9,557 - unrealised - 10,850 10,850 Net currency losses - (184) (184) Income - franked 5,917 - 5,917 - unfranked 1,964 - 1,964 Investment management fee (741) (1,482) (2,223) Performance bonus - (906) (906) Other expenses (860) (46) (906) Net return before finance costs and taxation 6,280 17,789 24,069 Interest payable and similar charges (778) (1,556) (2,334) Return on ordinary activities before taxation 5,502 16,233 21,735 Taxation on ordinary activities (275) 168 (107) Return on ordinary activities after taxation for the financial 5,227 16,401 21,628 year Dividends in respect of equity shares: 1.47p per share (4,570) - (4,570) Transfer to reserves 657 16,401 17,058 Return per ordinary share 1.67p 5.24p 6.91p MARTIN CURRIE PORTFOLIO INVESTMENT TRUST PLC BALANCE SHEET As at 31 January 2002 As at 31 January (unaudited) 2001 (audited) Investments at market value £000 £000 £000 £000 Listed on The Stock Exchange in the UK 246,235 302,791 Listed on stock exchanges abroad 58,986 92,103 _______ _______ 305,221 394,894 Current assets: Debtors 4,845 4,966 Cash in bank and on deposit 21,622 18,687 _______ _______ 26,467 23,653 Creditors: Amounts falling due within one year (15,166) (31,227) _______ _______ Net current assets/(liabilities) 11,301 (7,574) _______ _______ Total assets less current liabilities 316,522 387,320 Creditors: Amounts falling due after one year (35,575) (25,551) _______ _______ Total assets 280,947 361,769 _______ _______ Capital and reserves Called-up ordinary capital 15,629 15,629 Share premium 159,208 159,208 Capital redemption reserve 388 388 Special distributable reserve 142,979 142,979 Capital reserve (38,625) 42,100 Revenue reserve 1,368 1,465 _______ _______ 280,947 361,769 _______ _______ Net asset value per ordinary share 89.88p 115.74p _______ _______ MARTIN CURRIE PORTFOLIO INVESTMENT TRUST plc STATEMENT OF CASH FLOW Year ended 31 Year ended 31 January 2002 January 2001 (unaudited) (audited) £000 £000 £000 £000 Operating activities Net dividends and interest received from investments 6,756 6,934 Underwriting commission received - 24 Interest received from deposits 735 1,146 Investment management fee (2,558) (3,466) Cash paid to and on behalf of directors (162) (138) Bank charges (53) (46) Other cash payments (499) (662) _______ _______ Net cash inflow from operating activities 4,219 3,792 Servicing of finance Interest paid (2,196) (2,266) _______ _______ Net cash outflow from servicing of finance (2,196) (2,266) Taxation Net taxation recovered 22 - Taxation received 22 - Capital expenditure and financial investment Payments to acquire investments (119,964) (175,627) Receipts from disposal of investments 128,088 172,943 Exchange differences (161) (43) _______ ________ Net cash inflow/(outflow) from capital expenditure and financial investment 7,963 (2,727) Equity dividends paid (4,595) (4,460) Net cash inflow/(outflow) before financing 5,413 (5,661) Financing Repurchase of ordinary share capital - (5,638) Movement in short-term borrowings (12,478) 12,943 Movement in long-term borrowings 10,000 5,000 ______ ______ Net cash (outflow)/inflow from financing (2,478) 12,305 _______ _______ Increase in cash for the year 2,935 6,644 _______ _______ This information is provided by RNS The company news service from the London Stock Exchange

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