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Martin Currie GblPrt (MNP)

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Tuesday 24 September, 2019

Martin Currie GblPrt

Half-year Report

RNS Number : 4649N
Martin Currie Global Portfolio Tst
24 September 2019
 

Martin Currie Global Portfolio Trust plc

Legal Entity Identifier: 549300RKB85NFVSTBM94

 

Half-year financial report

Six months to 31 July 2019

 

A copy of the half-year report for the six months ended 31 July 2019 has been submitted to the National Storage Mechanism.  This will be available for inspection at  http://www.morningstar.co.uk/uk/NSM.

 

A copy of this half-year report can be downloaded at www.martincurrieglobal.com.

 

Financial Highlights

 

Total returns*

 


Six months ended 31 July 2019

Six months ended

31 July 2018

Net asset value per share**

22.7%

7.0%

Benchmark

16.7%

6.1%

Share price

28.6%

4.3%

 

Income

 


Six months ended

31 July 2019

Six months ended

31 July 2018

Revenue per share***

1.67p

2.32p

Dividend per share

1.80p

1.80p

 

Ongoing Charges**** (as a percentage of shareholders' funds)

 


Six months ended

31 July 2019

Six months ended

31 July 2018

Ongoing charges

0.65%

0.62%

Performance fee*****

0.92%

0.17%

Ongoing charges plus performance fee

1.57%

0.79%

 

*        The combined effect of the rise and fall in the share price, net asset value (cum income) or benchmark together with any dividend paid.

**       The net asset value per share total return is calculated using the cum income net asset value with dividends reinvested.  This is an Alternative Performance Measure.

***      For details of calculation, refer to note 2 below.

****     Ongoing charges (as a percentage of shareholders' funds) are calculated using average net assets over the period. The ongoing charges figure has been calculated in line with the Association of Investment Companies ('AIC') recommended methodology.

*****   For details of calculation refer to note 8 below. The performance fee has been provided for based on the performance during the period. This is an estimate of the amount which, if this outperformance continues, would be payable in February 2020.

 

 

Chairman's Statement

 

Global equity markets staged a recovery from a low point in December last year and delivered a total return during the period of 16.7% despite ongoing concerns about trade disputes and slowing global economic growth. At the half year the Company delivered a very strong performance of 22.7% NAV total return reflecting the underlying quality of the portfolio holdings.

More details of the markets, portfolio development and outlook are given in the manager's review.  The Company has enjoyed a good performance in the year, since the appointment of Zehrid Osmani as portfolio manager, which places it second in the AIC Global rankings. This has resulted in a buoyant share price giving a share price total return of 28.6% over the half year with a modest and welcome, net issuance of treasury shares over the period.

 

Income and Dividends

 

Revenue per share has reduced compared with the same period last year largely because of changes in the portfolio which now has a lower dividend income than in previous years. Ongoing charges remain a key focus for the Board, with a KPI target of less than 0.7% of NAV. This KPI was exceeded for the period, at 0.65% and, because of the strong performance, the provision for the performance fee increased to £2.5m (approximately 1.0% of NAV). This would be payable if the current outperformance is maintained until the end of the financial year. Full details of the performance fee are given in note 8 to the financial statements. The next quarterly dividend of 0.9p will be paid on 25 October to shareholders on the register at 4 October 2019. The ex-dividend date will be 3 October 2019. This follows the first interim payment of 0.9p paid on 26 July 2019 and brings the total dividend for the period to 1.8p.

 

The Board

 

Mike Balfour retired at the AGM in July after nine years on the Board and is replaced by Christopher Metcalfe who was appointed on 19 September 2019. The Board wishes to thank Mike for his service, providing in depth knowledge of investment management and wise guidance both as Chair of the Audit Committee and Senior Independent Director.  The Board also welcomes Christopher who brings over 30 years' investment management experience to the Board.

 

Environmental Social and Corporate Governance

 

The manager continues to incorporate ESG performance in its evaluation of all stocks in the portfolio and, where improvement is needed, actively engages with company managements. Martin Currie has retained its triple A+ ratings for Strategy and Governance, Incorporation and Active Ownership, the three categories ranked by the United Nations supported Principles for Responsible Investment and has also been shortlisted for the International Corporate Governance Network Global Stewardship awards. More details are available in their Stewardship Report at www. martincurrie.com/corporate/about-us/stewardship.

 

Outlook

 

The macro economic outlook is particularly uncertain at the moment and not helped by trade wars, the conflicts in the Middle East and political tensions elsewhere, not least in the UK and Europe. Against this background, the manager's focus on high conviction stocks with strong financials and growth prospects provides the Company with a liquid and high quality portfolio well positioned for the outlook of slowing global growth and continuing volatility in the markets.

 

Subscribe for regular updates

 

The Company's website at www.martincurrieglobal.com is a comprehensive source of information and includes regular portfolio manager updates and outlook videos, monthly performance factsheets and independent research reports. I recommend that you subscribe for regular email updates which will keep you abreast of the key information. I thank you for your continued support. Please contact me if you have any questions regarding your Company at my email, [email protected]

 

Neil Gaskell

Chairman,

Martin Currie Global Portfolio Trust plc

24 September 2019

 

 

Manager's Review

 

The six months to the end of July 2019 have been strong for both the market and the Company, with global equities (FTSE World Index) returning 16.7% in sterling terms while the Company's NAV rose by 22.7% (total return). North America was the strongest performing region in the world whilst emerging markets - perhaps the biggest potential victims should trade wars intensify - lagged, with Europe in between. By sector, technology, consumer and utilities fared best, while financials, materials and energy suffered.

 

The Company outperformed the benchmark index by 6.0% over the six-month period. Sportswear giant Adidas was the top performer, buoyed by relief that first-quarter sales were in-line with expectations after an unforseen supply constraint issue was previously flagged. The margin performance was also ahead of expectations leading to earnings per share upgrades in the low single digits, while shares in payment platform Visa and coffee chain, Starbucks also performed well. Cosmetic dentistry specialist Align was the largest drag on performance, due to weak guidance for revenue growth for the year in China and the US which harmed sentiment. We still believe that there is a long runway of growth in cosmetic dentistry and that the company is years ahead of competition in terms of product offering. Waters, the life sciences company and leader in liquid chromatography, was particularly weak due to a slowdown in the Chinese drugs market as a result of regulatory changes and global pharmaceutical companies delaying spending.

 

We continue to focus our research effort on identifying attractive quality growth companies with a sustainable business model, leadership positions, strong pricing power and operating in industries with high barriers to entry. A recent purchase was Masimo, the non-invasive patient monitoring company. The company's market boasts high barriers to entry and 50% market share with strong recurring revenues growing at double digits. Importantly, Philips will also be integrating technologies into its devices as of H2 2019 which will greatly improve access to half of Masimo's end market. Another recent addition has been Adobe, a pure play on the proliferation of digital content. We believe its products are crucial in the creation, curation and distribution of content and it offers investors a unique combination of revenue growth and margin/return expansion. We see Adobe as a leader in its sector, gaining market share and improving Return On Invested Capital (ROIC).

 

We funded these purchases from stocks where we see less upside potential, such as Check Point Software, given its lower growth profile and concerns around the risk of market share loss. As far as Mettler is concerned, the stock performed well, and the valuation became stretched in our view, which led us to take profits. We have pushed further towards greater portfolio concentration focusing our exposure on our highest conviction stock ideas, leading to the number of holdings in the portfolio reducing from 37 to 33 in the half year period. Additions to the portfolio over the period include Ferrari, ResMed, Microsoft, Beazley, Hexagon, Adobe and Masimo. We sold Aptiv, Cooper, Lockheed Martin, Cognizant, 3M, Apple, Reckitt Benckiser, Compass, Rockwell, Check Point and Mettler-Toledo. Some of the additions, such as Ferrari and Beazley are a result of a more forward-looking approach to screening for attractive quality growth ideas.

 

Through the year, we have continued to focus a material portion of our research work on Governance and Sustainability as part of our fundamental analysis. We find this approach to be an important competitive advantage, given that it further increases our understanding of the companies we invest in, whilst ensuring we engage with them regularly on a broad range of topics. During the period we engaged with all companies in the portfolio, covering topics such as remuneration and cyber security.

 

Outlook

 

On the macroeconomic front, since the publication of our 2019 outlook, the situation has become more uncertain on the outcome of trade tensions between the US and some of its trading partners (not just China, but also Europe, Mexico, Vietnam and others). We believe the outcome of such trade tensions are more difficult to gauge than we initially predicted, notably in relation to the US-China tensions, which have taken on more than just a trade dimension, now becoming political and strategic, with the issues surrounding Huawei, the Chinese telecommunications company, at the heart of the escalation.

 

The Brexit issue continues to languish, fuelling more uncertainty and continuing to impact the UK economy negatively. The change in political leadership further increases the risks of a disorderly Brexit. We ran a Brexit stress-test on our portfolios at the start of the year and remain comfortable with our current positioning. The situation is fluid and the final outcome highly uncertain both in terms of shape and timing (despite the 31 October 2019 deadline) and is being monitored for further developments. To add to the geopolitical uncertainty of Brexit, conflict between Iran and the US escalated towards the end of the first half of 2019, and again needs careful monitoring.

 

Global macroeconomic momentum has been weakening, leading central banks to either back-track on their hawkish intentions from late last year (witness the US Federal Reserve turning more dovish at the start of 2019), or to reiterate their dovish stance (as per the European Central Bank or the Bank of Japan). Looking at leading indicators generally, the trends remain mixed and direction of travel uncertain in aggregate. Whilst central bank support is a welcome confirmation for equity markets, it highlights the fact that the economic recovery globally remains fragile and the strong deflationary undercurrents we discussed in previous Manager's reviews remain an important risk for investors. Government bond yields remain very low as a result.

 

The yield curves have inverted across key developed markets which, as we have written in previous reports, has typically been a good lead predictor of a pending recession in the past, which has increased the market fears around the macroeconomic picture. It is important to highlight two things on this topic: (i) equity markets can continue to perform for some time after an initial yield curve inversion, and (ii) there are potentially more technical currents at play pushing yields down into negative territory, which could somewhat muddy the ability of such indicators to predict a recession this time around. In any case, this is something that the market will be spending a lot of time focusing and commenting on.

 

From our point of view, we believe that we are heading into a slowdown rather than a recession for the time being. In any case, our portfolio is well positioned to weather a recession if one were to happen. The weaker economic backdrop is likely to put pressure on consensus earnings estimates globally, which some short-term investors will be particularly sensitive to. We think the downward revisions to earnings could actually be quite substantial in some more cyclically exposed companies.

 

Overall, there are plenty of uncertainties for the market to worry about on the geopolitical, macroeconomic and microeconomic fronts. In this context, careful assessment of risk-reward in choosing stocks, considered portfolio construction and constant risk monitoring are the important components of the investment philosophy for the Company. We continue to believe that attractively priced companies with good returns and growth profiles, strong balance sheets, pricing power and sustainable business models are the way to position the Global Portfolio Trust in this uncertain market environment.

 

Zehrid Osmani

24 September 2019

 

Risk and mitigation

 

The Company's business model is longstanding and resilient to most of the short-term operational uncertainties that it faces. The Board believes these uncertainties are effectively mitigated by the Company's internal controls and its oversight of the investment manager, as described in the latest annual report.

 

The Company's principal risks and uncertainties are therefore considered to be more long-term in nature 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.

 

Operational and management risks are regularly monitored at Board meetings and the Board's planned mitigation measures are described in the latest annual report. As part of its annual strategy meeting, the Board carries out a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity.

 

Following the ongoing assessment of the principal risks facing the Company, and its current position, the Board is confident that the Company will be able to continue in operation and meet its liabilities as they fall due. The Board believes that the processes of internal control that the Company has adopted and oversight by the investment manager continue to be effective.

 

The Board has identified the following principal risks to the Company:

Sustained investment underperformance

Material decline in market capitalisation of the Company

Loss of s1158-9 tax status

 

Statement of directors' responsibilities

 

In accordance with Chapter 4 of the Disclosure and Transparency Rules and to the best of their knowledge, each director of the Company confirms that the financial statements have been prepared in accordance with the United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law) and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued in November 2014 and updated in February 2018.

 

The directors are satisfied that the financial statements give a true and fair view of the assets, liabilities, financial position and profit of the Company. Furthermore, each director certifies that the interim management report includes an indication of important events that have occurred during the first six months of the financial year and their impact on the financial statements together with a description of the principal risks and uncertainties that the Company faces. In addition, each director of the Company confirms that, with the exception of management and secretarial fees, directors' fees and directors' shareholdings, there have been no related party transactions during the first six months of the financial year.

 

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 and Manager's review.

 

The financial position of the Company as at 31 July 2019 is shown on the unaudited condensed statement of financial position and the unaudited statement of cash flow of the Company. In accordance with the 2016 UK Corporate Governance Code, the directors have undertaken a rigorous review of the Company's ability to continue as a going concern. The Company's assets consist of a diverse portfolio of listed equity shares which, in most circumstances, are realisable within a very short timescale. The directors are mindful of the principal risks disclosed above. They have reviewed revenue forecasts and 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.

 

By order of the Board

 

Neil Gaskell

Chairman

24 September 2019

 

 

Portfolio Summary

 

Portfolio distribution by region

 

 

31 July 2019

Company %

31 July 2019 FTSE World index %

 

31 January 2019

Company %

 

31 January 2019 FTSE World index %

Developed Europe

51.5

20.1

43.7

20.5

North America  

              32.7

61.3

36.7

59.9

Developed Asia Pacific ex Japan

13.2

5.8

13.4

6.0

Global Emerging Markets

2.6

4.4

2.6

4.7

Middle East

-

0.2

3.6

0.2

Japan

-

8.2

-

8.7


100.0

100.0

100.0

100.0

 

By sector

 

31 July 2019

Company %

31 July 2019 FTSE World index %

 

31 January 2019

Company %

 

31 January 2019 FTSE World index %

Healthcare

20.2

11.0

14.4

11.7

Industrials

19.6

13.3

27.1

13.1

Consumer goods

18.5

11.6

18.7

11.4

Technology

15.6

16.3

15.5

14.8

Financials  

14.1

20.8

10.5

21.0

Consumer services

8.0

11.4

10.0

11.5

Basic materials

4.0

4.1

3.8

4.4

Telecommunications

-

2.8

-

2.8

Oil and gas

-

5.4

-

6.0

Utilities  

-

3.3

-

3.3


100.0

100.0

100.0

100.0

 

By asset class

31 July 2019 %

31 January 2019%

Equities

98.6

98.7

Cash

1.4

1.3


100.0

100.0

 

Largest 10 holdings

31 July 2019

Market value

£000

31 July 2019

% of total

portfolio

31 January 2019

Market value

£000

31 January 2019

% of total

portfolio

VISA

11,119

4.4

7,705

3.8

Automatic Data Processing

10,886

4.4

8,355

4.1

AIA Group

10,693

4.3

8,497

4.2

Linde  

9,897

4.0

7,708

3.8

Microsoft

9,697

3.9

-

-

Straumann Holding

Adidas  

9,541

9,182

3.8

3.7

7,711

6,206

3.8

3.0

Res Med

9,156

3.7

-

-

Masimo  

9,152

3.7

-

-

CSL

8,936

3.6

7,328

3.6

 

Unaudited Condensed Statement of Comprehensive Income

 



(Unaudited)

Six months ended 31 July 2019

(Unaudited)

Six months ended 31 July 2018


 

Note

Revenue £000

Capital £000

Total

£000

Revenue

£000

Capital

£000

Total

£000

Net gains on investments

5

-

 

47,512

47,512

-

 

13,542

13,542

Net currency gains/ (losses)


50

(66)

(16)

51

23

74

Revenue

3

        1,976

-

1,976

2,715

-

2,715

Investment management fee


(159)

(318)

(477)

(148)

(296)

(444)

Performance fee


-

(2,106)

(2,106)

-

(385)

(385)

Other expenses


(264)

-

(264)

(238)

-

(238)

Net return on ordinary activities before taxation


 

1,603

 

45,022

 

46,625

 

2,380

 

12,884

 

15,264

Taxation on ordinary activities

4

(213)

-

 

(213)

(286)

-

(286)

Net return attributable to shareholders


 

1,390

 

45,022

 

46,412

 

2,094

 

       12,884

 

14,978

 

Net returns per ordinary share

2

1.67p

54.16p

55.83p

2.32p

14.27p

16.59p

 

The total columns of this statement are the profit and loss accounts of the Company.

The revenue and capital items are presented in accordance with the Association of Investment Companies ('AIC') Statement of Recommended Practice 2018.

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

No operations were acquired or discontinued in the six months.

The notes below form part of these financial statements. 

 

 

Unaudited Condensed Statement of Financial Position

 



(Unaudited)

As at 31 July 2019

(Unaudited)

As at 31 July 2018

(Audited)

As at 31 January 2019


Note

£000

£000

£000

£000

£000

£000

Fixed assets








Listed on the Stock Exchange



19,772


33,293


21,107

Listed on exchanges abroad



229,813


194,756


182,711

Investments at fair value through profit or loss

 

5

 

   

 

249,585


 

    228,049


 

203,818

Current assets








Trade Receivables

6

112


272


174


Cash and cash equivalents


 

3,629


 

2,595


 

2,671





3,741


2,867


2,845

Current liabilities








Trade payables

7

(2,864)


(562)


(682)





(2,864)


(562)


(682)

Total assets less current liabilities



250,462


230,354


205,981

Amounts falling due after more than one year

8


-


(385)


(406)

Net assets



250,462


229,969


205,575

Equity








Called up share capital


4,934


5,179


4,934


Capital redemption reserve


11,083


10,838


11,083


Special distributable reserve*


71,139


81,825


70,673


Capital reserve


159,271


126,916


114,249


Revenue reserve*


4,035


5,211


4,636


Total shareholders' funds



250,462


229,969


205,575

Net asset value per ordinary share

2


299.0p


260.8p


245.5p

 

* These reserves are distributable.

The notes below form part of these financial statements. 

Martin Currie Global Portfolio Trust plc is registered in Scotland, company number SC192761.

 

The financial statements were approved by the Board of directors on 24 September 2019 and signed on its behalf by Neil Gaskell, Chairman.

 

 

Unaudited Statement of Changes in Equity

 

 

Statement of changes in equity for the period to 31 July 2019

Called up ordinary share capital

£000

Capital redemption reserve

£000

Special distributable reserve*

£000

 

Capital reserve

£000

 

Revenue reserve*

£000

 

 

Total

£000

As at 31 January 2019

4,934

11,083

70,673

114,249

4,636

205,575

Net return attributable to shareholders**

-

 

-

 

-

 

45,022

1,390

46,412

Ordinary shares issued during the period

-

 

-

 

2,862

-

 

-

 

2,862

Ordinary shares bought back during the period

-

 

-

 

(2,396)

-

 

-

 

(2,396)

Dividends paid

 

-

 

-

 

-

 

-

 

(1,991)

(1,991)

As at 31 July 2019

4,934

11,083

71,139

159,271

4,035

250,462

 

 

Statement of changes in equity for the period to 31 July 2018

Called up ordinary share capital

£000

Capital redemption reserve

£000

Special distributable reserve*

£000

 

Capital reserve

£000

 

Revenue reserve*

£000

 

 

Total

£000

As at 31 January 2018

5,179

10,838

91,853

114,032

5,284

227,186

Net return attributable to shareholders**

-

-

-

12,884

2,094

14,978

Ordinary shares bought back during the period

-

-

(10,028)

-

-

(10,028)

Dividends paid

 

-

-

-

-

(2,167)

(2,167)

As at 31 July 2018

5,179

10,838

81,825

126,916

5,211

229,969

 

 

Statement of changes in equity for the period to 31 January 2019

Called up ordinary share capital

£000

Capital redemption reserve

£000

Special distributable reserve*

£000

 

Capital reserve

£000

 

Revenue reserve*

£000

 

 

Total

£000

As at 31 January 2018

5,179

10,838

91,853

114,032

5,284

227,186

Net return attributable to shareholders**

-

-

-

217

3,059

3,276

Ordinary shares cancelled during the year

(245)

245

-

-

-

-

Ordinary shares bought back during the year

-

-

(21,180)

-

-

(21,180)

Dividends paid

 

-

-

-

-

(3,707)

(3,707)

As at 31 January 2019

4,934

11,083

70,673

114,249

4,636

205,575

 

* These reserves are distributable.

** The Company does not have any other income or expenses that are included in the 'Net return attributable to shareholders' as disclosed in the Condensed Statement of Comprehensive Income above and therefore is also the 'Total comprehensive income for the period'. 

The notes below form part of these financial statements. 

 

 

Unaudited Statement of Cash Flow

 


 

 

 

(Unaudited)

Six months ended

31 July 2019

(Unaudited)

Six months ended

31 July 2018

(Audited)

Year ended

31 January 2019


Note

£000

£000

£000

£000

£000

£000

Cash flows from operating activities








Profit before tax

 



46,625


15,264


3,691

Adjustments for:








Gains on investments

5

(47,512)


(13,542)


(1,202)


Purchases of investments*

5

(64,706)


(67,606)


(147,050)


Sales of investments*

5

66,451


76,291


167,626


Dividend income


(1,963)


(2,696)


(4,182)


Interest income


(1)


-


(1)


Stock lending income


(12)


(19)


(28)


Dividend received


2,024


2,666


4,247


Interest received


1


-


1


Stock lending income received


13


19


31


Decrease in receivables


-


1


1


Increase in payables


2,151


321


366


Overseas withholding tax suffered


(213)

(286)


(415)





(43,767)


(4,851)


19,394

Net cash flows from operating activities



2,858


10,413


23,085

Cash flows from financing activities








Repurchase of ordinary share capital


(2,771)


(9,851)


(20,907)


Shares issued for cash


2,862


-


-


Equity dividends paid


(1,991)


(2,167)


(3,707)


Net cash flows from financing activities



(1,900)


(12,018)


(24,614)

Net (decrease)/ increase in cash and cash equivalents



958


(1,605)


(1,529)

Cash and cash equivalents at the start of the period



2,671


4,200


4,200

Cash and cash equivalents at the start of the period



3,629


2,595


2,671

 

*Receipts from the sale of, and payments to acquire, investment securities have been classified as components of cash flows from operating activities because they form part of the Company's dealing operations.

The notes below form part of these financial statements. 

 

 

Notes to the Condensed Financial Statements

 

Note 1: Accounting policies

 

For the period ended 31 July 2019 (and the year ended 31 January 2019), the Company is applying Financial Reporting Standard applicable in the UK and Republic of Ireland ('FRS 102'), which forms part of the revised Generally Accepted Accounting Practice ('UK GAAP') issued by the Financial Reporting Council (FRC) in 2012 and 2013.

 

These condensed financial statements have been prepared on a going concern basis in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority, FRS 102 issued by the FRC in September 2015, FRS 104 Interim Financial Reporting issued by the FRC in March 2015 and the revised Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" ('SORP') issued by the AIC in November 2014 and updated in January 2017.

 

The accounting policies applied for the condensed set of financial statements are set out in the Company's annual report for the year ended 31 January 2019.

 

Note 2: Returns and net asset value

 


(Unaudited)

Six months ended 31 July 2019

(Unaudited)

Six months ended 31 July 2018

(Audited)

Year ended 31 January 2019

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

£1,390,000

£2,094,000

£3,059,000

Weighted average number of shares in issue during the period

83,122,464

90,292,230

      88,034,756

Revenue return per share

1.67p

2.32p

3.47p

Capital return




Capital return attributable to ordinary shareholders

£45,022,000

£12,884,000

£217,000

Weighted average number of shares in issue during the period

83,122,464

90,292,230

88,034,756

Return per ordinary share

54.16p

14.27p

0.25p

Total return




Total return per ordinary share

55.83p

16.59p

3.72p

 

There are no dilutive or potentially dilutive shares in issue.

 


(Unaudited)

As at 31 July 2019

(Unaudited)

As at 31 July 2018

(Audited)

As at 31 January 2019

Net asset value per share




Net assets attributable to shareholders

£250,462,000

£229,969,000

£205,575,000

Number of shares in issue at the period end

83,762,494

88,182,859

83,724,832

Net asset value per share

299.0p

260.8p

245.5p





 

Total return

 

The total return per share for the Company is the combined effect of the rise and fall in the share price or NAV together with the reinvestment of the quarterly dividends paid.

The tables below provide the NAVs and share prices of the Company on the dividend reinvestment dates for the period ended 31 July 2019 and 31 July 2018.

 

 

 

 

 

2019

 

 

 

Dividend rate

 

 

 

NAV

 

 

 

Share price





31 January 2019

n/a

245.5p

242.0p

12 April 2019

1.5p

273.5p

270.0p

05 July 2019

0.9p

298.0p

301.0p

31 July 2019

n/a

299.0p

308.5p

Total return


22.7%

28.6%





2018




31 January 2018

n/a

246.1p

247.0p

5 April 2018

1.5p

234.4p

230.0p

28 June 2018

0.9p

251.1p

248.0p

31 July 2018

n/a

260.8p

255.0p

Total return


7.0%

4.3%

 

 

During the six months ended 31 July 2019 there were 927,338 shares bought back into treasury at a cost of £2,396,000. (Six months ended 31 July 2018 4,119,250 shares bought back into treasury at a cost of £10,028,000, twelve months ended 31 January 2019 8,577,277 shares bought back into treasury at a cost of £21,180,000). Between 1 August and 19 September 60,214 ordinary shares of 5p each were bought back into treasury at a cost of £101,565. There have been 965,000 shares issued from treasury during the six months ended 31 July 2019. (Six months ended 31 July 2018 no shares were issued from treasury, twelve months ended 31 January 2019 no shares were issued from treasury.) There have been no shares cancelled from treasury during the six months ended 31 July 2019. (Six months ended 31 July 2018 no shares were cancelled from treasury, twelve months ended 31 January 2019 4,907,295 shares were cancelled from treasury).

 

Note 3: Revenue from investments

 


(Unaudited)

Six months to

31 July 2019

£000

(Unaudited)

Six months to

31 July 2018

£000

(Audited)

Year ended  

31 January 2019

£000

From listed investments




UK equities

166

501

810

International equities

1,797

2,195

3,372





Other revenue




Interest on deposits

1

-

1

Stock lending

12

19

28


1,976

2,715

4,211

 

There were no capital dividends received during the six months ended 31 July 2019 (six months ended 31 July 2018 no capital dividends, year ended 31 January 2019 no capital dividends).

 

Note 4: Taxation on ordinary activities

 


(Unaudited)

Six months ended 31 July 2019

(Unaudited)

Six months ended 31 July 2018

(Audited)

    Year ended 31 January 2019


Revenue

£000

Capital

£000

Total

£000

Revenue

£000

Capital

£000

Total

£000

Revenue

£000

Capital

£000

Total

£000

Overseas tax suffered

213

-

213

286

-

286

415

-

415

 

Note 5: Investments at fair value through profit or loss

 


(Unaudited)

Six months ended

31 July 2019

£000

(Unaudited)

Six months ended

31 July 2018

£000

(Audited)

Six months ended

31 January 2019

£000

Opening valuation

203,818

223,192

223,192

Opening unrealised gains

(37,404)

(80,941)

(80,941)

Opening cost

166,414

142,251

142,251

 

Purchases at cost

 

64,706

 

67,606

 

147,050

Disposal proceeds

(66,451)

(76,291)

(167,626)

Net profit on disposal of investments

23,821

23,707

44,739

Disposal at cost

(42,630)

(52,584)

(122,887)

 

Closing cost

 

188,490

 

157,273

 

166,414

Closing unrealised gains

61,095

70,776

37,404

Valuation as at 31 July

249,585

228,049

203,818






(Unaudited)

As at

31 July 2019

£000

(Unaudited)

As at

31 July 2018

£000

(Audited)

As at

31 January 2019

£000

Gains on investments




Net profit on disposal of investments

23,821

23,707

44,739

Net (loss)/gain on revaluation of investments

23,691

(10,165)

(43,537)


47,512

13,542

1,202

 

The transaction cost in acquiring investments for the six months ended 31 July 2019 was £84,000 (six months ended 31 July 2018: £157,000, twelve months ended 31 January 2019: £247,000). For disposals, transaction costs were £27,000 for the six months ended 31 July 2019 (six months ended 31 July 2018: £37,000, twelve months ended 31 January 2019: £70,000).

 

Note 6: Receivables: amounts falling due within one year

 


(Unaudited)

As at 31 July 2019

£000

(Unaudited)

As at 31 July 2018

£000

(Audited)

As at 31 January 2019

£000

Dividends receivable

-

169

71

Taxation recoverable

107

94

97

Other receivables

5

5

5

Stock lending income receivable

-

4

1


112

272

174

 

Note 7: Payables: amounts falling due within one year

 


(Unaudited)

As at 31 July 2019

£000

(Unaudited)

As at 31 July 2018

£000

(Audited)

As at 31 January 2019

£000

Due to Martin Currie

266

242

218

Amount due for ordinary shares bought back

-

279

375

Other payables

86

41

89

Performance fee provision

2,512

-

-


2,864

562

682

 

Note 8: Payables: amounts falling due after more than one year

 


(Unaudited)

As at 31 July 2019

£000

(Unaudited)

As at 31 July 2018

£000

(Audited)

As at 31 January 2019

£000

Performance fee provision

-

385

406


-

385

406

 

 

The Investment Manager is entitled to a performance fee with effect from 1 February 2018 should certain criteria be met. The key terms and related definitions of the calculation of the performance fee are summarised below.

•     If the cumulative performance over the relevant period is less than or equal to 1 per cent. then no performance fee is payable.

•     If the cumulative performance over the relevant period is greater than 1 per cent., a performance fee is payable which is based on 12.5 per cent. of the cumulative performance during the period from 1 February 2018 to 31 January 2020 and, thereafter, during the final year of any subsequent relevant period. This fee rate replaces the previous rates of 15 per cent. if the Company's net asset value increased and 7.5 per cent. if it reduced over the final year.

•     The maximum performance fee payable in any relevant period is 1 per cent of the Company's net asset value as at the last day of the relevant period.

 

Definitions for performance fee

 

·      "relevant period" means from 1 February 2018 to the later of 31 January 2020 and the end of the first financial year in respect of which a performance fee is payable and, thereafter, from 1 February following the last financial year in respect of which a performance fee was paid, to the end of the current financial year.

·      "cumulative performance" means the percentage change in the Company's net asset value per share adjusted for the impact of share buy backs and issues of ordinary shares out of treasury, less the percentage change in the capital performance of the FTSE World Index, the Company's benchmark over the relevant period.

 

The Company's net asset value for this purpose is the Company's total assets (excluding income) less any liabilities it has, before any provision for performance fee and adjusted for the impact of share buy backs and issues of ordinary shares out of treasury.

 

For the six months ended 31 July 2019, the cumulative performance for the relevant period is 9.79%.

 

As at 31 July 2019 a performance fee of £2,512,000 has been provided for based on the performance during the period from 1 February 2018. This is an estimate of the amount which, if this outperformance continues, would be payable in February 2020. At the Annual General Meeting on 11 June 2019 shareholders approved a resolution to amend the investment objective and therefore the calculation of the performance fee will be updated with effect from 1 February 2020.

 

Note 9: Stock lending

 

The Company has a Securities Lending Authorisation Agreement with State Street Bank & Trust Company.

 

As at 31 July 2019 £14,583,000 of investments were subject to stock lending agreements (six months ended 31 July 2018: £9,292,000, twelve months ended 31 January 2019: £7,513,000) and £15,722,000 was held in collateral (six months ended 31 July 2018: £10,007,000, twelve months ended 31 January 2019: £8,300,000). The collateral was held in the form of cash (in USD or EUR), government securities issued by any of the OECD countries or equity securities listed and/or traded on an exchange in the following countries:

 

Australia, Canada, Hong Kong, Japan, New Zealand, Singapore, Switzerland and USA.

 

The value of collateral in respect of the securities on loan was not less than the value of the securities lent at the balance sheet date or during the period.

 

The maximum aggregate value of securities on loan at any time during the accounting period was £32,540,000.

 

The gross earnings and the fees paid for the six months are £15,000 (six months ended 31 July 2018: £25,000, twelve months ended 31 January 2019: £36,000) and £4,000 (six months ended 31 July 2018: £6,000, twelve months ended 31 January 2019: £9,000).

 

Note 10: Interim report

 

The financial information contained in this half-yearly financial report does not constitute statutory accounts as defined in s434 - 6 of the Companies Act 2006. The financial information for the six months ended 31 July 2019 has not been audited or reviewed. The information for the year ended 31 January 2019 has been extracted from the latest published audited financial statements which have been filed with the Registrar of Companies. The report of the auditors on those accounts contained no qualification or statement under s498 (2), (3) or (4) of the Companies Act 2006.

 

Note 11: Fair value hierarchy

 

Under FRS 102, the Company is required to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy shall have the following levels:

- Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

- Level 2: other significant observable inputs (including quoted prices for similar investments, interest rates, prepayments, credit risk, etc);

- Level 3: significant unobservable input (including the Company's own assumptions in determining the fair value of investments).

 

The financial assets measured at fair value through profit and loss are grouped into the fair value hierarchy as follows:

 


As at 31 July 2019 (Unaudited)


Level 1

Level 2

Level 3

Total


£000

£000

£000

£000

Financial assets at fair value through profit or loss





Quoted equities

249,585

-

-

249,585

Net fair value

249,585

-

-

249,585


As at 31 July 2018 (Unaudited)


Level 1

Level 2

Level 3

Total


£000

£000

£000

£000

Financial assets at fair value through profit or loss





Quoted equities

228,049

-

-

228,049

Net fair value

228,049

-

-

228,049


As at 31 January 2019 (Audited)


Level 1

Level 2

Level 3

Total


£000

£000

£000

£000

Financial assets at fair value through profit or loss





Quoted equities

203,818

-

-

203,818

Net fair value

203,818

-

-

203,818

 

Note 12: Post balance sheet event

 

Since 1 August 2019, a further 60,214 ordinary shares of 5p each have been bought back to be held in treasury at a cost of £101,565.


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
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