Annual Financial Report

RNS Number : 9333A

Martin Currie Global Portfolio Tst

26 March 2013

 



Martin Currie Global Portfolio Trust plc

Annual Financial Results

Year to 31 January 2013

The financial information set out below does not constitute the company's statutory accounts for the years ended 31 January 2013 or 2012 but is derived from those accounts.  Statutory accounts for 2012 have been delivered to the Registrar of Companies and those for 2013 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 21 May 2013 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 2013, which require to be published are set out on the following pages.

Financial Summary

Key data

	As at 31 January 2013	As at 31 January 2012
Net asset value per share (cum income)	152.6p	139.2p
Net asset value per share (ex income)	149.6p	136.3p
FTSE World index (capital)	382.4	341.4
Share price	147.4p	129.0p
Discount*	3.4%	7.3%

* Figures shown are inclusive of income as per AIC guidance. The discount calculated, exclusive of income, was 1.5% (31 January 2012: 5.3%)

Total returns+

	For the year ended 31 January 2013	For the year ended 31 January 2012
Net asset value per share ~	13.0%	4.3%
Benchmark #	15.3%	0.3%
Share price	17.8%	6.3%

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

~The net asset value is exclusive of income with dividends reinvested.

#Prior to 1 June 2011, the benchmark was the FTSE All-Share index and the FTSE World index thereafter.

Income

	For the year ended January 2013	For the year ended 31 January 2012
Revenue per share**	4.23p	3.9p
Dividend per share	3.9p	3.7p

**For details of calculation, refer to note 2

Ongoing Charges***

	For the year ended January 2013	For the year ended January 2013
Ongoing charges	0.8%	0.9%
Performance Fee	-	0.7%
Ongoing charges plus performance fee	0.8%	1.6%

***Ongoing charges have replaced the total expense ratio. They are calculated as a percentage of shareholders' funds using average net assets over the year. The ongoing charges figure has been calculated in line with the AIC's recommended methodology.

Chairman's Statement

Welcome to your annual report, covering the 12 months to 31 January 2013. In May 2012, I became chairman of the trust and I am pleased to report that the company has enjoyed another successful year building on the global equity mandate adopted in mid 2011.

During the year, returns from stock markets have been stronger than we had expected, with the FTSE World index returning a healthy 15.3%. In his review, Tom Walker describes a year of continuing macroeconomic uncertainty but also sustained monetary expansion from the central banks in an effort to stimulate growth and, against this backdrop, markets while rising were  volatile. The net asset value (NAV) per share total return was 13.0%, a slight underperformance reflecting the manager's modestly conservative portfolio. This means that no performance fee will be payable this year. In contrast, the company's share price returned 17.8%, outperforming the benchmark by 2.5%.

Putting this into perspective, since shareholders overwhelmingly approved the move to a global mandate in May 2011, the trust has strongly outperformed the benchmark on both a share price and NAV per share basis.. Meanwhile, shareholder demand for the trust has been strong and the discount has narrowed significantly over the period, with the average discount during the last quarter of the financial year standing at 3.4%

Revenues and dividends

The company's primary objective is capital growth, and the board does not constrain the

manager's freedom to select the best investments by specifically seeking dividend yield. Nevertheless, the company's earnings per share were 4.23p, compared with 3.88p last year. This increase of 9.0% reflects healthy growth in many companies' dividend payments and a first dividend from Apple. We know that dividends are valued by shareholders and they are an important discipline for management. The trust has maintained or increased its dividend every year since it launched in 1999. Your board is committed to a progressive dividend policy over the longer term, and recommends a final dividend of 2.70p per share (making 3.90p for the year - an increase of 5.4%), which will be paid on 21 June 2013 to shareholders on the register as at 31 May 2013.

Retail Distribution Review (RDR)

In January 2013, the Financial Services Authority implemented RDR, its review of the investment advice given to consumers by independent financial advisers (IFAs). From an investment trust perspective, two important aspects of the review are that IFAs will be paid on a fee rather than commission basis, and that if they wish to be classified as 'independent', they must consider the whole funds market when making recommendations to their clients. This levels the playing field between investment trusts and open ended funds. Your board welcomes the opportunities RDR offers, particularly given the preponderance of retail investors on our shareholder register.

AIFMD

The government is in the process of finalising the regulations for implementing the European Directive on Alternative Funds Management which will apply to your company with effect from July 2013. This will provide for a strengthened system of regulatory oversight of the investment fund industry and, while we welcome this in principle, it is currently too early for the board to determine how the company will implement its regulations.

The board

Ben Thomson has served as a director on the board since 2001. Over this period, Ben has made the interests of shareholders his priority, always looking for ways in which to improve your company's service to them, including being a strong supporter of the move to the new truly global mandate. After 12 years on the board, Ben believes it is the right time to stand down. I would like to thank him for his significant contribution to the company during his tenure.

In his place, Gillian Watson, who stands for election at the annual general meeting ('AGM'), will become a director of the company with effect from 1 April 2013. Gillian is an experienced corporate director with diverse experience. Having begun her career at Morgan Stanley and then Standard Chartered Asia, she held a variety of senior posts within the utilities industry across Europe before becoming CEO of Giltech Ltd in 2008, a company specialising in biodegradable and controlled release technologies.

I am confident that Gillian will be a valuable addition to the board, and extend a warm welcome to her.

Looking ahead

The board and manager are aware of the current challenges within global economies. Although there are grounds for optimism for another year of rising markets, it is likely to be against a backdrop of continuing economic uncertainty. The manager will remain focused on investing in companies with strong fundamentals in which he has high conviction of the potential for outperformance.

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 commentary and associated news.

I would like to invite you to attend the company's AGM, which takes place at 12:30pm on Tuesday 21 May 2013 at the offices of Martin Currie, Saltire Court, 20 Castle Terrace, Edinburgh.

Neil Gaskell

Chairman

26 March 2013

MANAGER'S REVIEW

Most investors, myself included, have been pleasantly surprised by the strong returns global equity markets have achieved over the last 12 months. The FTSE World index delivered a 15.3% total return, which would be substantial in any conditions but, when set against the paltry nominal returns obtainable in a bank savings account, is very pleasing indeed. So, despite the daily barrage of bad news, both political and economic, it has been a very good year in this respect.

The main reason that markets have performed so well in the face of poor economic prospects is that central banks around the world have done their level best to promote growth. The US Federal Reserve boosted its quantitative easing measures as the year progressed and recently pledged to keep interest rates at zero until unemployment falls below 6.5%. With US unemployment still close to 8% in early 2013, this seems a distant prospect. Meanwhile, the European Central Bank, the Bank of Japan and others are assisting the Federal Reserve by printing money. With economic confidence low, these funds are accumulating on the balance sheets of companies and individual savers alike. But what to do with that cash? After a strong move in global bond markets over the last 30 years, it may be the turn of equities to be the principal beneficiary, at least as long as these easy monetary conditions continue.

As shareholders in this company, your return for the year of 17.8% is slightly ahead of the benchmark. This has come from a combination of the return on the assets at 13.0%, and the narrowing of the discount to those assets at which the share is priced. As your investment manager, it is my responsibility to generate the return on assets, and over the last 12 months that return has fallen slightly short of the benchmark. In short, I have positioned the portfolio slightly conservatively and so missed out on the rally in share prices of higher-risk companies, notably in Europe, where the portfolio has limited exposure. For example, we have no exposure to continental European banks which rallied especially strongly over the year.

Some of our best performing stocks over the last year were quoted in Europe, although their earnings profile is more global in nature. These included global life assurance company Prudential (UK), north European media distributor ProSiebenSat (Germany), industrial engineer and construction company Tecnicas Reunidas (Spain) and leading global brewer Anheuser Busch Inbev (Belgium). As far as our main underperformers are concerned, emerging markets exposure has been a common theme. NII Holdings is a mobile- phone operator in South America, PT Astra International an Indonesian car and motorbike manufacturer, Petrobras is Brazil's national oil company and Gazprom Russia's principal gas producer and distributor.

The main change in portfolio positioning during the year has been an increase in exposure to financial stocks. We added new names in North America - American International Group, the global insurance company, and Bank of Montreal, the large Canadian banking group. The US banking system is now much more secure, but we remain underweight in the sector globally because we are concerned that European banks have further pain in store. Otherwise, most changes to the portfolio were stock specific. I should comment on Apple. We have reduced the size of our investment, but Apple remains a top holding in the portfolio. In recent weeks, Apple's shares have been sold too heavily by the market; the long term prospects for the company and its suite of hardware and software are still good. Apple's rate of growth must diminish, but it should continue to be among the higher growth companies in what is still a low-growth world. Of our new investments during the year, LyondellBasell, the chemicals company, has done exceptionally well as low gas prices in the US reduce its costs and enhance its margins. We expect these low prices to persist - LyondellBasell is one of our 10 largest holdings.

OUTLOOK

Looking ahead, I believe the US economy has turned a corner and that it should avoid slipping back into recession. Many emerging economies also appear to have bottomed out (at 7.8% GDP growth rate for 2012 in China's case). Japan is now addressing its deflationary economy with greater urgency and may have more success this time, though I would not take Japan's recovery for granted. Lastly, Europe remains challenged. Recent bond and equity market moves suggest that the worst is over for European countries. But closer to home we can see that growth is still hard to come by as high unemployment and reduced public spending in the UK lead to disappointing data. Meanwhile, many continental European countries are in an even worse position to stimulate growth from a platform of over-indebtedness and unemployment (in excess of 25% in Greece and Spain). Taking all these expectations together, we believe the global economy will grow again in 2013, perhaps at a slightly higher rate than in 2012. But there will certainly be news flow that challenges this prediction from time to time.

This modest economic outlook is not intended to suggest that markets have got it wrong, nor that they are in for an imminent collapse. Rather, we have seen that if money supply is plentiful, asset prices can rise despite the economic challenges, and we believe that money supply will remain abundant for at least the year ahead.

We will continue to focus on companies that are either well equipped to weather these uncertain times, or that appear to us to be incorrectly valued in some way. Strong cash flow is a corporate characteristic that we continue to value highly.

.

Tom Walker

26 March 2013  

Portfolio Summary

Portfolio distribution   

	31 January 2013 Company	31 January 2013 FTSE World Index	31 January 2012 Company	31 January 2012 FTSE World Index
North America	49.8%	50.9%	47.3%	51.0%
United Kingdom	17.7%	8.8%	19.7%	8.8%
Developed Europe ex UK	11.9%	17.4%	9.6%	16.6%
Developed Asia Pacific ex Japan	10.3%	8.7%	11.4%	8.4%
Global emerging markets	5.1%	6.6%	7.7%	7.0%
Japan	3.6%	7.4%	4.3%	7.9%
Middle East	1.6%	0.2%	-	0.3%
	100%	100%	100%	100.0%

By Sector (excluding cash)	31 January 2013 Company	31 January 2013 FTSE World Index	31 January 2013 Company	31 January 2013 FTSE World Index
Financials	18.4%	21.6%	10.4%	19.4%
Industrials	16.6%	12.0%	16.1%	12.1%
Oil and gas	13.5%	9.7%	12.9%	10.8%
Technology	12.5%	9.5%	11.7%	10.7%
Consumer services	10.6%	10.2%	9.2%	9.8%
Basic materials	9.0%	7.0%	9.4%	7.9%
Healthcare	7.0%	9.0%	9.7%	8.6%
Consumer goods	6.3%	13.7%	8.7%	12.7%
Telecommunications	4.2%	3.9%	8.4%	4.2%
Utilities	1.9%	3.4%	3.5%	3.8%
	100.0%	100.0%	100.0%	100.0%

By Asset Class (including cash and borrowings)	31 January 2013	31 January 2012
Equities	99.9%	97.5%
Cash	0.1%	2.5%
	100.0%	100.0%

Largest 10 Holdings	31 January 2013 Market Value £000	31 January 2013 % of total portfolio	31 January 2012 Market Value £000	31 January 2012 % of total portfolio
Apple	5,807	3.7	7,033	4.9
Phillip Morris International	4,812	3.0	4,860	3.4
Royal Dutch Shell	4,678	2.9	4,708	3.3
Pfizer	4,074	2.6	3,214	2.2
LyondellBasell Industries	3,981	2.5	-	-
United Technologies	3,973	2.5	3,559	2.5
McDonalds	3,850	2.4	4,636	3.3
Seadrill	3,831	2.4	2,435	1.7
Taiwan Semiconductor	3,735	2.3	2,982	2.1
Mitsubishi UFJ Financial Group	3,660	2.3	-	-

	Sector	Market value £	% of total portfolio
North America		79,265,343	49.8
Apple	Technology	5,807,362	3.7
Phillip Morris International	Consumer goods	4,811,529	3.0
Pfizer	Healthcare	4,074,266	2.6
LyondellBasell Industries	Basic Materials	3,980,755	2.5
United Technologies	Industrials	3,973,360	2.5
McDonalds	Consumer services	3,850,488	2.4
J P Morgan Chase	Financials	3,196,947	2.0
Bank of Montreal	Financials	3,137,813	2.0
PNC Financial	Financials	3,048,689	1.9
Sempra Energy	Utilities	3,038,209	1.9
Wal-Mart	Consumer services	2,999,144	1.9
Kinder Morgan	Oil and gas	2,924,475	1.8
IBM	Technology	2,842,513	1.8
Emerson Electric	Industrials	2,702,888	1.7
Microsoft	Technology	2,627,446	1.7
AT&T	Telecommunications	2,608,363	1.6
American International Group	Financials	2,547,654	1.6
Union Pacific	Industrials	2,537,825	1.6
AbbVie	Healthcare	2,494,798	1.6
Limited Brands	Consumer services	2,395,776	1.5
Chevron	Oil and gas	2,313,344	1.5
Lockheed Martin	Industrials	2,252,212	1.4
Cognizant Technology Solutions	Technology	2,071,059	1.3
Wellpoint	Healthcare	1,958,620	1.2
Watsco	Industrials	1,916,567	1.2
Praxair	Basic materials	1,502,988	0.9
Ultra Petroleum	Oil and gas	1,148,364	0.7
NLL Holdings	Telecommunications	501,889	0.3
United Kingdom		28,117,082	17.7
Royal Dutch Shell	Oil and gas	4,678,384	2.9
BHP Billiton	Basic materials	3,493,305	2.2
Prudential	Financials	3,303,002	2.1
BG Group	Oil and gas	3,287,658	2.1
HSBC Holdings	Financials	3,179,920	2.0
Rio Tinto	Basic materials	2,685,486	1.7
Johnson Matthey	Basic materials	2,409,779	1.5
Tesco	Consumer services	1,933,131	1.2
Babcock International	Industrials	1,268,270	0.8
F & C Private Equity 'Ordinary'	Private equity	990,765	0.6
Candover Investments	Private equity	887,382	0.6

Developed Europe ex UK			18,777,163	11.9
Seadrill	Oil and gas	Norway	3,831,438	2.4
Novartis	Healthcare	Switzerland	2,525,695	1.6
Tecnicas Reunidas	Industrials	Spain	2,525,235	1.6
SCOR	Financials	France	2,382,902	1.5
ProSiebenSat. 1 Media	Consumer services	Germany	2,016,892	1.3
ENI	Oil and gas	Italy	1,995,565	1.3
Safran	Industrials	France	1,903,040	1.2
Anheuser Busch Inbev	Consumer goods	Belgium	1,596,396	1.0
	Sector	Country	Market value £	% of total portfolio
Developed Asia Pacific ex Japan			16,277,424	10.3
Woolworths	Consumer services	Australia	3,941,217	2.2
Jardine Matheson Holdings	Industrials	Singapore	2,975,918	1.9
M1	Telecommunications	Singapore	2,667,425	1.7
United Overseas Bank	Financials	Singapore	2,264,433	1.4
China Construction Bank	Financials	Hong Kong	2,179,049	1.4
China Merchants Holdings	Industrials	Hong Kong	1,892,615	1.2
China Mobile	Telecommunications	Hong Kong	806,767	0.5
Global Emerging Markets			8,219,195	5.1
Taiwan Semiconductor	Technology	Taiwan	3,735,262	2.3
PT Astra International	Consumer goods	Indonesia	3,493,591	2.2
Petroleo Brasileiro	Oil and gas	Brazil	990,342	0.6
Japan			5,753,399	3.6
Mitsubishi UFJ Group	Financials		3,660,425	2.3
Mitsui & Company	Industrials		2,092,974	1.3
Middle East			2,484,106	1.6
Check Point Software Technologies	Technology	Israel	2,484,106	1.6
Total Portfolio			158,893,712	100.0

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 and the Report of the directors.

The financial position of the company as at 31 January 2013 is shown on the balance sheet.

Note 15 sets out the company's risk management policies, including those covering market risk, liquidity risk and credit risk.

In accordance with the Financial Reporting Council's guidance on going concern and liquidity risk 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 principal risks and uncertainties 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 this annual report. Accordingly, the directors continue to adopt the going concern basis in preparing these accounts.

Risks and Uncertainties

Risk and mitigation

The board closely monitors the risks of the company at regular board meetings and carries out a risk workshop as part of its annual strategy meeting. With the assistance of the manager, the board has drawn up a risk matrix, which identifies the key risks to the company. The board has also implemented specific mitigating measures to reduce the probability and impact of each risk to the greatest extent possible. The board recognises that risks to the company are not static. The board reconsiders and assesses each risk at the annual strategy meeting. Below are the principal risks along with details of the latest board assessment.

Regulatory change - The board has identified a number of developments that will potentially increase operational and regulatory risk for the company, of which it draws investors' attention to the following:

AIFM Directive (EU regulation) - The Alternative Investment Fund Managers (AIFM) Directive is European legislation which is designed to regulate any fund which is not a UCITS fund and which is managed and/or marketed in the EU. The Directive aims to improve regulation, transparency and investor protection for funds that fall within the remit of the new regulations.  The board has been working closely with the manager and its professional advisers to ensure it is fully prepared for the implementation of the AIFM Directive.

FATCA (US regulation) - The Foreign Account Tax Compliance Act (FATCA) creates a new tax information reporting and withholding regime for payments made to certain foreign financial institutions and other foreign persons. FATCA is intended to increase transparency for the Internal Revenue Service (IRS) with respect to US persons that may be investing and earning income through non-US institutions. The intergovernmental agreement which the UK signed in September 2012 should reduce the regulatory burden of FATCA for investment companies.

The company is working with its advisers and the investment trust industry as appropriate to ensure compliance.

Loss of s1158-1159 status - In order to qualify as an investment trust, the company must comply with s1158-1159 of the Corporation Taxes Act 2010.

The board is comfortable that the mitigating measures in place reduces the risk to the greatest extent possible. The Investment Trust tax rules have changed for companies with financial year-ends beginning on or after 1 January 2012. The board believes that due to the more favourable nature of the new rules, the risk of losing investment trust status will be greatly reduced. The company was granted for investment trust status under the new regime in February 2013. s1158-1159 qualification criteria are continually monitored.

Operational disruption at the manager's premises - Martin Currie has in place a full disaster recovery and business continuity plan which facilitates continued operation of the business should their premises be subject to operational disruption. The plan was last tested in October 2012 with successful results. Martin Currie maintains a fully operational off-site disaster recovery centre for use by key staff during any disruption.

Regulatory, accounting/internal control breach - The company must comply with the Companies Act 2006 and the UKLA Rules. The board relies on it's oversight of the services of its company secretary and its professional advisers to ensure compliance.

Loss of investment team or portfolio manager - Martin Currie takes steps to reduce the likelihood of such an event by ensuring appropriate succession planning and the adoption of a team based approach, as well as special efforts to retain key personnel.

Failure to manage the discount - The board regularly discusses discount policy and has set parameters for the manager and the company's broker to follow.

Investment underperformance - The board manages the risk of investment underperformance by relying on good manager stock selection skills within a framework of diversification and other investment restrictions and guidelines.

The board monitors the implementation and results of the investment process with the portfolio manager, who attends all board meetings, and reviews data that show statistical measures of the company's risk profile.

Counterparty and operational risk (including operational oversight of Alliance Trust Savings) - 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 third party organisation is of a sufficiently professional and technically high standard. Periodically the board requests that representatives from other third party service providers (such as the auditor and custodian) attend board meetings to give the board the opportunity to ensure service standards continue to meet the company's requirements.

Lack of clear strategy - The board holds an annual meeting which deals specially with the company's strategy. The board also discusses the overall strategy of the company regularly at board meetings.

The manager ceases to effectively manage investment trusts or its reputation fails - The board reviews the performance and continued appointment of the manager on a regular basis, via the management engagement committee.

The board is independent to the manager and so if the continued appointment of the manager was not in the best interest of shareholders, then a new manager would be appointed.

Maintaining market liquidity - In order to retain its place in the FTSE All-Share, the company must satisfy the liquidity test criteria set by the FTSE at each annual review.

The liquidity of the company is monitored by the board, the manager and the company's broker with a report being reviewed at every board meeting. The board also considers ways to improve the liquidity position of the company at the annual strategy meeting.

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.

Directors' Responsibilities

Statement of directors' responsibilities

The directors are responsible for preparing the annual report, the Directors' remuneration 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 (United Kingdom Accounting Standards 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 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 adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements and the Directors' remuneration report comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The financial statements are published on thewww.martincurrieglobal.com website, which is maintained by the 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

On behalf of the board

Neil Gaskell

Chairman

26 March 2013

 Income Statement

		Year to 31 January 2013			Year to 31 January 2012
	Note	Revenue £000	Capital £000	Total £000	Revenue £000	Capital £000	Total £000
Net gains on investments	7	-	14,232	14,232	-	4,681	4,681
Net currency losses	12	-	(70)	(70)	-	(307)	(307)
Income	3	5,674	-	5,674	5,198	-	5,198
Investment management fee		(247)	(493)	(740)	(239)	(477)	(716)
Performance fee		-	-	-	-	(960)	(960)
Other expenses	5	(513)	-	(513)	(515)	-	(515)
Net return on ordinary activities before taxation		4,914	13,669	18,583	4,444	2,937	7,381
Taxation on ordinary activities	6	(492)	-	(492)	(314)	-	(314)
Net return attributable to shareholders		4,422	13,669	18,091	4,130	2,937	7,067
Net return per ordinary share	2	4.23p	13.08p	17.31p	3.88p	2.76p	6.64p

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) SORP 2009. 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 2013		As at 31 January 2012
	Note	£000	£000	£000	£000
Fixed assets
Investments at fair value through profit or loss
Listed on the London Stock Exchange			28,117		28,228
Listed on exchanges abroad			130,777		114,658
	7		159,894		142,886
Current Assets
Debtors	8	4,425		182
Cash at bank	9	63		3,728
		4,488		3,910
Creditors
Amounts falling due within one year	10	(3,983)		(1,259)
Net current assets			505		2,651
Total assets less current liabilities			159,399		145,537
Capitals and reserves
Called-up share capital	11	5,227		5,227
Special distributable reserve		116,378		116,530
Capital redemption reserve		10,790		10,790
Capital reserve	11	19,607		5,938
Revenue reserve		7,397		7,052
Total shareholders' fund			159,399		145,537
Net Asset Value per ordinary share	2		152.6p		139.2p

The notes form part of these financial statements.

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

The financial statements were approved by the board of directors on 26 March 2013 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 to 31 January 2013
At 31 January 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)		-	-	-	13,753	-	13,753
Capitalised expenses		-	-	-	(493)	-	(493)
Capital dividends received		-	-	-	55	-	55
Net revenue		-	-	-	-	4,422	4,422
Dividends paid	4	-	-	-	-	(4,077)	(4,077)
As at 31 January 2013		5,227	10,790	116,378	19,607	7,397	159,399

 

 

	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 to 31 January 2012
At 31 January 2011		5,449	10,568	122,062	3,001	6,651	147,731
Ordinary shares bought back during the year		(222)	222	(5,532)	-	-	(5,532)
Gains on realisation of investments at fair value	7	-	-	-	16,117	-	16,117
Gain on realisation of forward foreign exchange contracts		-	-	-	611	-	611
Movement in currency gains/(losses)		-	-	-	(307)	-	(307)
Movement in fair value gains/(losses)		-	-	-	(12,047)	-	(12,047)
Capitalised expenses		-	-	-	(1,437)	-	(1,437)
Net revenue		-	-	-	-	4,130	4,130
Dividends paid	4	-	-	-	-	(3,729)	(3,729)
As at 31 January 2012		5,227	10,790	116,530	5,938	7,052	145,537

 

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

 

Statement of Cash Flow

	Note	Year ended 31 January 2013		Year ended 31 January 2012
		£000	£000	£000	£000
Net cash inflow from operating activities	12		2,912		3,648
Taxation
Taxation recovered			7		13
Capital Expenditure and Financial Investment
Capital distributions		55		-
Payment to acquire investments		(39,022)		(100,808)
Proceeds from sales of investments		36,682		108,327
Net gain from forward foreign currency exchange contracts		-		1,226
Net Cash (outflow)/inflow from capital expenditure and financial investment			(2,285)		8,745
Equity dividends paid			(4,077)		(3,729)
Net Cash (outflow)/inflow before financing			(3,443)		8,677
Financing
Repurchase of ordinary share capital	11		(152)		(5,532)
(Decrease)/increase in cash	13		(3,595		3,145

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 2013	Year ended       31 January 2012
Returns and net asset value
The return and net asset value per ordinary share are calculated with reference to the following figures:
Revenue return	£4,422,000	£4,130,000
Revenue return attributable to ordinary shareholders
Weighted average number of shares in issue during year	104,508,168	106,432,137
Return per ordinary share	4.23p	3.88p
Capital return
Capital return attributable to ordinary shareholders	£13,669,000	£2,937,000
Weighted average number of shares in issue during year	104,508,168	106,432,137
Return per ordinary share	13.08p	2.76p
Total return
Total return per ordinary share	17.31p	6.64p
Net asset value per share	As at 31 January 2013	As at 31 January 2012
Net assets attributable to shareholders	£159,399,000	£145,537,000
Number of shares in issue at the year end	104,439,548	104,553,171
Net asset value per share	152.6p	139.2p

There are no dilutive or potentially dilutive shares in issue.

Between 1 February and 25 March 2013 226,000 ordinary shares of 5p were bought back to Treasury.

3. 

	Year ended 31 January 2013 £000	Year ended 31 January 2012 £000
Income from investments
From listed investment
UK equities	1,302	2,303
International equities	4,366	2,888
Other income
Interest on deposits	6	7
	5,674	5,198

During the year ended 31 January 2013, the company received capital dividends of £8,000, £15,000 and £32,000 from GlaxoSmithKline, Seadrill and F&C Private Equity Trust respectively, as shown in note 7. There were no capital dividends received during the year to 31 January 2012.

4. 

	Year ended 31 January 2013			Year ended 31 January 2012
	Revenue £000	Capital £000	Total £000	Revenue £000	Capital £000	Total £000
Dividends
Year ended 31 January 2011 - final dividend of 2.50p	-	-	-	2,670	-	2,670
Year ended 31 January 2012 - interim dividend of 1.00p	-	-	-	1,059	-	1,059
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	-	-	-
	4,077	-	4,077	3,729	-	3,729

Set out below are the total dividends 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 2013 £000	Year ended 31 January 2012 £000
Interim dividend of 1.20p for the year ended 31 January 2013 (2012: 1.00p)	1,254	1,059
Proposed final dividend of 2.7p for the year ended 31 January 2013 (2012: 2.70p)	2,820	2,823
	4,074	3,882

5.

Other expenses	Year ended 31 January 2013 £000	Year ended 31 January 2012 £000
Advertising and public relations	51	44
Bank charges (including custody fees)	14	17
Directors' fees	129	122
Directors and officers liability insurance	16	17
Irrecoverable VAT	43	34
Legal fees	3	6
Marketing	21	22
Printing and postage	16	23
Registration fees	38	42
Retainer paid to company broker	18	30
Secretarial fee	74	71
Other	68	68
	491	496
Auditors' remuneration
Payable to PricewaterhouseCoopers LLP for the audit of the company's annual financial statements	22	19
	513	515

Performance Fee

The performance fee for the year ended 31 January 2013 was £nil (2012: £960,000).  Details of the management and secretarial agreements are provided in the full annual report.

6.

	Year ended 31 January 2013			Year ended 31 January 2012
	Revenue £000	Capital £000	Total £000	Revenue £000	Capital £000	Total £000
Taxation on ordinary activities
Foreign Tax	492	-	492	314	-	314

The effective corporation tax rate was 24.33% (2012: 26.32%). 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 2013 £000	Year ended 31 January 2012 £000
Net return before taxation	18,583	7,381
Corporation tax at effective rate of 24.33% (2012: 26.32%)	4,521	1,943
Effects of:
Non taxable UK dividend income	(317)	(606)
Currency losses/(gains) not taxable	17	80
Gains on investments not taxable	(3,462)	(1,232)
Overseas dividends non taxable	(1,062)	(760)
Overseas tax suffered	492	314
Increase in excess management and loan expenses	303	575
Total current year tax charge	492	314

As of 1 April 2012, the UK Corporation rate fell from 26% to 24%.

As at 31 January 2013, the company had unutilised management expenses of £21.6 million (2012: £20.3 million) and non-trading loan relationship deficit of £4.8 million (2012: £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 24% to 23%, that was enacted on 17 July 2012 and that will be effective from 1 April 2013, the unrecognised deferred tax asset has been remeasured to 23%.

Further reductions to the main rate are proposed to reduce the rate by 2% to 21% by 1 April 2014 and by a further 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	As at 31 January 2013 £000	As at 31 January 2012 £000
Opening valuation	142,886	146,260
Opening unrealised investment holding gains	(13,645)	(25,692)
Opening cost	129,241	120,568
Purchases at cost	42,694	100,808
Disposal proceeds	(40,863)	(108,252)
Net profit on disposal of investments	424	16,117
Disposal at cost	(40,439)	(92,135)
Closing cost	131,496	129,241
Closing unrealised investment holding gains	27,398	13,645
Valuation as at 31 January	158,894	142,886

Gains on investments	As at 31 January 2013 £000	As at 31 January 2012 £000
Net profit on disposal of investments	424	16,117
Net gain/(loss) on revaluation of investments	13,753	(12,047)
Net gain on realisation of forward foreign exchange contracts	-	1,226
Net loss on revaluation of forward foreign exchange contracts	-	(615)
Capital distributions	55	-
	14,232	4,681

The transaction cost of acquiring investments during the year was £110,000 (2012: £108,000). For disposals, transaction costs were £68,000 (2012: £67,000).

8. 

	As at 31 January 2013 £000	As at 31 January 2012 £000
Debtors: amounts falling due within one year
Amount due from brokers	4,181	-
Taxation recoverable	70	37
Other debtors	15	30
Dividends receivable	159	114
Interest accrued	-	1
	4,425	182

9.

	As at 31 January 2013 £000	As at 31 January 2012 £000
Cash at bank
Sterling bank account	42	3,698
Non-sterling bank account	21	30
	63	3,728

10.

Creditors	As at 31 January 2013 £000	As at 31 January 2012 £000
Amounts falling due within one year:
Amount due to brokers	3,672	-
Due to Martin Currie	195	1,156
Other creditors	116	103
	3,983	1,259

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

11. 

Called up share capital and analysis of capital reserves

Called up share capital	Number of shares	As at 31 January 2013 £000	Number of shares	As at 31 January 2012 £000
Ordinary shares 5p
Ordinary shares in issue at beginning of the year	104,553,171	5,227	108,989,411	5,449
Ordinary shares bought back to Treasury during the year	(113,623)	(152)
Ordinary shares bought back during the year			(4,436,240)	(222)
Ordinary shares in issue at end of the year	104,439,548	5,075	104,553,171	5,227

Treasury shares (Ordinary shares 5p)	Number of shares	As at 31 January 2013 £000	Number of shares	As at 31 January 2012 £000
Treasury shares in issue at the beginning of the year	-	-	-	-
Ordinary shares bought back to Treasury during the year	113,623	(152)	-	-
Treasury shares in issue at end of the year	113,623	(152)	-	-

The total cost of the share buy backs to Treasury for the year to 31 January 2013 was £152,000 (2012: shares bought back and cancelled £5,532,000). The analysis of the capital reserve is as follows:

	Realised capital reserve £000	Unrealised investment holding gains £000	Total capital reserve £000
At 31 January 2012	(7,707)	13,645	5,938
Gains on realisation of investments at fair value	424	-	424
Movement in fair value gains of investments	-	13,753	13,753
Movement in currency losses	(70)	-	(70)
Capitalised expenses	(493)	-	(493)
Capital distributions	55	-	55
At 31 January 2013	(7,791)	27,398	19,607

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 2013 £000	Year ended 31 January 2012 £000
Reconciliation of net return on ordinary activities before finance costs and taxation to net cash inflow from operating activities
Return on ordinary activities before finance costs and taxation	18,583	7,381
Adjustments for:
Net gains on investments	(14,232)	(4,681)
Effect of foreign exchange rates	70	307
Increase in dividends receivable, interest accrued and other debtors	(29)	(6)
(Decrease) / Increase in other creditors and amounts due to Martin Currie	(948)	982
Overseas withholding tax suffered	(532)	(335)
Net cash inflow from operating activities	2,912	3,648

13.

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

Analysis of changes in net funds	As at 31 Jan 2011 £000	Cash Flow £000	Exchange Movement £000	As at 31 Jan 2012 £000
Cash at bank and in hand	890	3,145	(307)	3,728

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 and other investments, cash balances, loans and 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 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 2013	Rate %	Local currency 000	Foreign Exchange Rate	Sterling equivalent £000
Assets:
Sterling	-	42	1.000	42
US dollar	-	33	1,585	21
				63
At 31 January 2012
Assets
Sterling	-	3,698	1.000	3,698
US Dollar	-	48	1.578	30
				3,728

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 2013 would increase/decrease by £nil (2012: increase/decrease by £19,000). This is mainly attributable to the company's exposure to interest rates on its floating rate cash balances.

As at 31 January 2013 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 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
Singapore dollar	4,932	-	4,932
Hong Kong dollar	4,878	-	4,878
Norwegian krone	3,832	-	3,832
Indonesian rupiah	3,494	2	3,496
Australian dollar	3,491	-	3,491
Canadian dollar	3,138	30	3,168
Swiss franc	2,526	18	2,544
Total overseas investments	130,777	1,363	132,140
Sterling	28,117	(858)	27,259
Total	158,894	505	159,399

	As at 31 January 2012
	Non - monetary exposure £000	Monetary exposure £000	Total currency exposure £000
US Dollar	76,721	108	76,829
Euro	9,367	25	9,392
Japanese yen	6,047	-	6,047
Singapore Dollar	4,363	-	4,363
Hong Kong dollar	6,502	-	6,500
Norwegian krone	2,435	-	2,435
Indonesian rupiah	4,369	2	4,371
Australian Dollar	2,836	-	2,836
Canadian Dollar	-	-	-
Swiss franc	2,018	-	2,018
Total overseas investments	114,658	135	114,793
Sterling	28,228	2,516	30,744
Total	142,886	2,651	145,537

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 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 2013 would have increased/decreased by £23,834,000 (2012: increase/decrease of £21,433,000) 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 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.

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 2013 £000	As at 31 January 2012 £000
Called up ordinary share capital	5,227	5,227
Special distributable reserve	116,378	116,530
Capital redemption reserve	10,790	10,790
Capital reserve	19,607	5,938
Revenue reserve	7,397	7,052
Total shareholders' funds	159,399	145,537

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).

The financial assets and liabilities measured at fair value in the balance sheet are grouped into the fair value hierarchy as follows:

		As at 31 January 2013
Financial assets at fair value through profit or loss	Note	Level 1 £000	Level 2 £000	Level 3 £000	Total £000
Quoted equities	(a)	158,894	-	-	158,894
Net fair value		158,894	-	-	158,894

	Note	As at 31 January 2012
Financial assets at fair value through profit or loss		Level 1 £000	Level 2 £000	Level 3 £000	Total £000
Quoted equities	(a)	142,886	-	-	142,886
Net fair value		142,886	-	-	142,886

a)         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

 

Since the year end a further 226,000 ordinary shares of 5p each have been bought back to Treasury for a consideration of £346,000.

 

From 1 April 2012 the main rate of corporation tax reduced from 26% to 24%. Furthermore the main rate of corporation tax will reduce from 24% to 23% from 1 April 2013. There is no impact on the financial statements following this change in rate of corporation tax.

Further reductions to the main rate are proposed to reduce the rate by 2% to 21% by 1 April 2014 and by a further 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.

On 28 January 2013 the board announced that Gillian Watson would become a director with effect from 1 April 2013.

The company has reviewed and updated its investment management agreement and secretarial agreement to ensure that they accurately reflect the activities currently carried by Martin Currie. The amended secretarial agreement also reflects the reduction of the secretarial fee from £74,000 to £50,000 per annum with effect from 1 February 2013. The revised investment management agreement and secretarial agreements were signed on 21 March 2013.

Website

At www.martincurrieglobal.com we maintain a website specifically for shareholders in the trust and their advisers. It includes price and performance statistics, monthly update, webcasts, online versions of the trust's annual and interim reports and information on how to invest.

 

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