Annual Financial Report

RNS Number : 6357A

Martin Currie Global Portfolio Tst

27 March 2017

 

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

Annual Financial Results

Year to 31 January 2017

The financial information set out below does not constitute the Company's statutory accounts for the years ended 31 January 2017 or 2016 but is derived from those accounts.  Statutory accounts for 2016 have been delivered to the Registrar of Companies and those for 2017 will be delivered following the Company's annual general meeting. 

The auditor has 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 Investment Management Limited on 6 June 2017 at 12.30pm.  The full notice of the meeting can be found on the Company's website (www.martincurrieglobal.com).

The unedited full text of those parts of the annual report and accounts for the year ended 31 January 2017, which require to be published are set out on the following pages.

Financial Summary

Total returns*

	For the year ended 31 January 2016	For the year ended 31 January 2016
Net asset value per share**	29.7%	0.9%
Benchmark	33.6%	(0.1%)
Share price	32.1%	(1.4%)

Source: Martin Currie Investment Management Limited

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

**       The net asset value per share total return is calculated using the cum income NAV with dividends reinvested.

Chairman's Statement

Welcome to your annual report, covering the 12 months to 31 January 2017. The year has seen major economic and political surprises including both Brexit and the Trump election. Despite this, global stock markets have delivered a very good total return in the year of 33.6%, partly due to the post Brexit depreciation of sterling. The Company produced a NAV total return of 29.7% and a total share price return, slightly below the benchmark, of 32.1%. The share price total return has been achieved with lower volatility than almost all investment trusts in the peer group and with an active, high conviction style of investing. This is the fifth full year since the portfolio was restructured from a UK biased to a global equity mandate. During this five year period the Company's annualised share price total return has been 14.6% p.a. versus 14.8% p.a. for the global equity benchmark, compared with 9.4% p.a for the previous FTSE All share benchmark. Your Company's global portfolio has a much wider spread of investments in large international businesses than is offered by the UK market and this year has shown the welcome resilience this brings to surprises such as Brexit.

More detail of the portfolio performance and holdings is given in Tom Walker's report.

Income and dividends

The net asset value of the Company grew by £38m during the year to over £216m. Income per share has also increased and costs have been controlled, allowing the Board to recommend an increase of 0.05p in the fourth interim dividend to 1.5p which will be paid on 28 April 2017 to shareholders on the register on 7 April 2017. The total dividend for the year rises to 4.2p per share giving a yield on the year end share price of 1.9%. The Company has steadily grown its dividend over the years and this level maintains its above-average dividend yield in the Association of Investment Companies' ('AIC') global sector.

Developing the Company

Your Board has kept the possibility of introducing long-term gearing under regular review during the year but in view of both the strength of the markets and backdrop of heightened financial uncertainty, market conditions have not so far been appropriate. The Board has also maintained its goal of controlling costs. The result for the year of 0.74% achieves the Company's ongoing charges ratio target of 0.75% and includes around 0.02% costs to prepare for gearing and to recruit our two new directors.

Environmental, Social & Corporate Governance ('ESG')

Your Board believes companies that exhibit positive Environment, Social and Governance behaviours contribute to increasing value over the longer term. The Board has published on the Company's website a compliance statement with the FRC Stewardship Code which incorporates its policies on socially responsible investing and works closely with our investment manager, Martin Currie, to ensure the appropriate active engagement with the companies in which the Company invests. Martin Currie has retained the highest A+ rating from the United Nations Principles for Responsible Investment ('UNPRI') for its approach to ESG. Martin Currie is also a 'tier 1' signatory of the UK Stewardship Code which aims to enhance the quality of engagement between investors and companies to help improve long-term risk-adjusted returns to shareholders.

Board

I am delighted that Marian Glen and Gary Le Sueur were appointed to the Board on 1 December 2016. Both have strong financial and investment backgrounds and bring a wealth of diverse experience and specialist knowledge from their respective fields. As previously announced, David Kidd will be stepping down from the Board following the annual general meeting ('AGM') in June 2017. I would like to take this opportunity to thank David for his service over the past 11 years during which the Company has grown and delivered strong returns for shareholders. Mike Balfour will take over the role of Senior Independent Director, following conclusion of the AGM.

Delivering long term shareholder value 

The Board is committed to delivering long term shareholder value making this Company a very attractive proposition as recognised in the national press during the year. The key benefits are:

·     Consistently good long-term returns delivering an outperformance against the benchmark over each rolling 10 year period since its formation;

·      A high conviction portfolio of the best stocks drawn from the global universe which has delivered both a far better return than the UK market in isolation and a less volatile performance than most of its AIC global sector peers since the change of mandate 5 years ago;

·      A commitment to socially responsible investing as a path to sustainable investment performance;

·      A balance of sustained capital gain and steadily rising dividends since the Company's formation; and  

·      A policy of maintaining a 'zero discount' allowing shareholders to buy and sell their shares at or around NAV when they choose.

Outlook

The macro economic and political outlook is unusually uncertain across many countries and sectors. The pace at which the different major economies move away from extremely easy monetary policies will be an important but unpredictable influence on the markets. This background represents an opportunity for the portfolio manager to continue to 'pick winners, avoid losers' across the global markets based on a judgement of the individual strengths of the companies in which to invest the portfolio. In these conditions the Board is confident that our strong long term performance will continue to deliver outstanding value to our shareholders.

Neil Gaskell

Chairman

27 March 2017

Manager's review

Market review

The year to 31 January 2017 started inauspiciously, as global equities collapsed in early February 2016. However, the weakness was short-lived and while interest rates and economic growth rates are still at low levels relative to history, stock market returns were extremely strong over the year. This was despite the fact that there were some notable surprises along the way, in particular the outcomes from the UK referendum on EU membership and the US presidential election. After a very brief downturn, equity markets disregarded the Brexit outcome and later rallied following Donald Trump's election victory. In sterling terms, the FTSE World index returned almost 34%. Nearly half of this return (about 16%) flowed from translating the value of overseas assets and their earnings back into weak sterling. Two particular macroeconomic themes drove widely dispersed returns from different parts of world equity markets. First, commodity prices staged a significant recovery in the year. The oil price (Brent Crude) rose from US$30 per barrel in early February 2016, to nearly US$56 by the end of January 2017. Secondly, long-term interest rates in the most important global economy, the US, rose dramatically from their abnormally low levels. The ten-year treasury yield rose from 1.92% at the start to 2.46% by the end of our fiscal year; but it fell as low as 1.36% on the way. As a result of these two factors, the basic materials sector (sensitive to commodity prices) rose 64% and financials (sensitive to interest rates) rose 40%. At the other end of the scale, the healthcare sector was the worst performer, albeit still up 17%. 

While healthcare is generally less economically sensitive, it is highly sensitive to political rhetoric and pricing of healthcare was targeted by both parties in the US presidential election. After several years when performance has lagged the rest of the world, emerging markets were strong. Some regions were boosted by recovering commodity prices, others by the fact that their economies appear to have stabilised. As a result, valuations, which had become more appealing as a result of long-term underperformance, once again attracted investors' attention. The US led the major markets and Europe lagged. Although the UK is perceived by many as the likely loser in the Brexit process, the UK stock market was by no means the weakest in Europe as others - including Italy, Greece and Portugal - rose considerably less. 

Investment performance and activity

The Company's net asset value delivered a total return of 29.7% in the year, behind the total return of the FTSE World index of 33.6%. This underperformance is largely explained by stock selection, though the portfolio was not positioned for the dramatic and unexpected recovery in economically sensitive stocks and sectors. At the stock level, JP Morgan contributed most positively to performance, riding the strong bounce in banks. ARM Holdings, which was acquired by Softbank in the summer and miner BHP Billiton, a beneficiary of recovering commodity prices, were also notable positives. In contrast, retailer L Brands (whose brands are Victoria's Secret and Bath & Body Works) was the worst contributor to performance. Sluggish demand and a reorganisation of management and merchandise meant that near-term earnings expectations have fallen. We had reduced our position on valuation grounds but, having been highly rated, the share price fell significantly giving back the prior two years outperformance. Another long-term holding, CVS Health, struggled in the face of the political backlash against drug pricing in the US.

During the year, share price volatility has created opportunities to add a number of stocks to the portfolio at attractive valuations. Two Chinese stocks purchased after periods of share price weakness were Alibaba, the online retailer, and AIA, the life assurance company. Both of these stocks have strong, long-term earnings prospects. In a similar way, we purchased payment processor, Visa and auto-component manufacturer, Delphi Automotive, after their respective share prices had experienced some unjustifiable weakness. Finally, towards the end of the year, after some months of underperformance, we added Reckitt Benckiser. Other new holdings in the portfolio this year are: UK media company Sky, which is currently the subject of a takeover bid by its major shareholder Fox Communications; Pioneer Natural Resources, the US oil and gas exploration company with among the lowest-cost assets in the US; Unilever the Anglo-Dutch consumer products group; and Shire, the pharmaceutical company specialising in the treatment of haemophilia and rare diseases. We strongly believe in constructing a portfolio that is focused on relatively few, high-conviction investments. During the year we reduced the number of holdings from around 60 to nearer 50 to emphasise this approach. A number of stocks were sold both to fund new ideas and to increase the focus within the fund. The largest of these sales were French industrial group, Schneider Electric; US pharmaceutical company, AbbVie; oil and gas multi-national, Royal Dutch Shell; Asian conglomerate, Jardine Matheson; Japanese financial, Orix Corporation and global bank, HSBC Holdings. 

Outlook

Political uncertainty in the world's largest economy is more heightened than it has been for many years. Yet, thus far, stock markets have largely taken it in their stride, buoyed by pro-cyclical sectors which have been boosted by President Trump's electoral promises of fiscal largess. Policy-wise, however, this much-talked about economic stimulus may be harder to do than to say. We suspect the enthusiasm for reflation in the US has taken the share prices of some of the most economically sensitive stocks too far. And as stock pickers, we see little point in speculating on which of the many policy initiatives enunciated by President Trump may come to fruition. So currently, the portfolio is positioned for continued tepid economic growth and only very modest increases in interest rates. That does not suggest that we are especially bearish on the outlook for the year ahead. However, after a strong upward move in equity markets, a consolidation phase is possible in the near-term. We continue to find companies that appear undervalued and favour stocks, wherever they are in the world, that do not rely on a 'rising tide', or a strong economic recovery, to boost their sales or profit growth. 

Tom Walker

27 March 2017

 

Portfolio Summary

Portfolio distribution   

By region	31 January 2017 Company %	31 January 2017 FTSE World index %	31 January 2016 Company %	31 January 2016 FTSE World index %
North America	56.9	58.5	54.1	57.7
Developed Europe	21.0	21.6	22.9	23.2
Japan	7.5	8.9	8.6	9.0
Developed Asia Pacific ex Japan	6.7	6.2	9.5	5.8
Global Emerging Markets	5.9	4.6	3.1	4.0
Middle East	2.0	0.2	1.8	0.3
	100.0	100.0	100.0	100.0

By sector	31 January 2017 Company %	31 January 2017 FTSE World index %	31 January 2016 Company %	31 January 2016 FTSE World index %
Financials	23.8	22.1	22.7	20.9
Consumer services	14.8	11.0	14.5	11.8
Technology	12.7	12.1	12.8	11.5
Healthcare	11.6	10.6	11.4	11.9
Consumer goods	11.0	13.4	5.3	14.6
Industrials	9.0	12.8	13.7	12.1
Telecommunications	5.6	3.2	7.2	3.6
Basic materials	5.0	5.0	4.0	4.1
Oil and gas	4.8	6.6	6.7	6.1
Utilities	1.7	3.2	1.7	3.4
	100.0 00	100.0	100.0	100.0

By asset class	31 January 2017 %	31 January 2016 %
Equities	99.6	98.1
Cash	0.4	1.9
	100.0	100.0

Largest 10 holdings	31 January 2017 Market value £000	31 January 2017  % of total portfolio	31 January 2016 Market value £000	31 January 2016  % of total portfolio
JP Morgan Chase	10,239	4.8	6,853	3.9
Facebook	7,758	3.6	5,921	3.4
VISA	7,417	3.5	-	-
Apple	7,371	3.5	5,234	3.0
Verizon Communications	6,182	2.9	5,586	3.2
Prudential	5,906	2.7	5,513	3.2
KDDI	5,734	2.7	4,694	2.7
Lockheed Martin	5,712	2.6	5,873	3.4
Alibaba Group	5,710	2.6	-	-
American International Group	5,601	2.6	4,365	2.5

 

 

Portfolio Holdings

	Sector	Country	Market value £000	% of total portfolio
North America			112,610	56.9
JP Morgan Chase	Financials	United States	10,239	4.8
Facebook	Technology	United States	7,758	3.6
VISA	Financials	United States	7,417	3.5
Apple	Technology	United States	7,371	3.5
Verizon Communications	Telecommunications	United States	6,182	2.9
Lockheed Martin	Industrials	United States	5,712	2.6
American International Group	Financials	United States	5,601	2.6
Delphi Automotive	Consumer goods	United States	5,228	2.4
Philip Morris International	Consumer goods	United States	4,821	2.2
Comcast	Consumer services	United States	4,736	2.2
TJX Companies	Consumer services	United States	4,521	2.1
L Brands	Consumer services	United States	4,365	2.0
CVS Health	Consumer services	United States	4,354	2.0
Cognizant Technology Solutions	Technology	United States	4,336	2.0
LyondellBasell Industries	Basic materials	United States	4,138	1.9
Bank of Montreal	Financials	Canada	3,922	1.8
Pfizer	Healthcare	United States	3,883	1.8
United Parcel Service	Industrials	United States	3,833	1.8
Sempra Energy	Utilities	United States	3,703	1.7
Pioneer Natural Resources	Oil and gas	United States	3,510	1.6
Crown Castle	Financials	United States	3,409	1.6
Celgene	Healthcare	United States	3,379	1.6
Cooper Companies	Healthcare	United States	3,228	1.5
Voya	Financials	United States	2,672	1.2
Mylan	Healthcare	United States	2,202	1.0
Praxair	Basic materials	United States	2,090	1.0

	Sector	Country	Market value £000	% of total portfolio
Developed Europe			45,326	21.0
Prudential	Financials	United Kingdom	5,906	2.7
BHP Billiton	Basic materials	United Kingdom	4,543	2.1
Airbus	Industrials	Netherlands	4,184	1.9
Sky	Consumer services	United Kingdom	3,943	1.8
Reckitt Benckiser	Consumer goods	United Kingdom	3,930	1.8
Shire	Healthcare	United Kingdom	3,707	1.8
Roche	Healthcare	Switzerland	3,658	1.7
Unilever	Consumer goods	Netherlands	3,599	1.7
ProSiebenSat.1 Media	Consumer services	Germany	3,247	1.5
Ashtead Group	Industrials	United Kingdom	3,130	1.5
Total	Oil and gas	France	2,995	1.4
ENI	Oil and gas	Italy	2,248	1.0
Candover Investments	Private equity	United Kingdom	236	0.1

		Sector	Country	Market value £000	% of total portfolio
Japan				16,024	7.5 .5
	KDDI	Telecommunications		5,734	2.7
	Toyota	Consumer goods		3,955	1.8
	Mitsubishi UFJ Financial Group	Financials		3,764	1.8
	Komatsu	Industrials		2,571	1.2

	Sector	Country	Market value £000	% of total portfolio
Developed Asia Pacific ex Japan			14,351	6.7
CSL	Healthcare	Australia	4,723	2.2
AIA Group	Financials	Hong Kong	3,407	1.6
China Construction Bank	Financials	Hong Kong	2,448	1.1
United Overseas Bank	Financials	Singapore	2,064	1.0
CNOOC	Oil and gas	Hong Kong	1,709	0.8

	Sector	Country	Market value £000	% of total portfolio
Global Emerging Markets			12,912	5.9
Alibaba Group	Consumer services	China	5,710	2.6
Taiwan Semiconductor Manufacturing Company	Technology	Taiwan	3,530	1.6
PT Astra International	Consumer goods	Indonesia	2,355	1.1
PT Matahari Department Store	Consumer services	Indonesia	1,317	0.6

	Sector	Country	Market value £000	% of total portfolio
Middle East			4,396	2.0
Check Point Software Technologies	Technology	Israel	4,396	2.0

Total portfolio holdings

215,619

100.0

Principal risks and uncertainties

Risk and mitigation

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

Risks are regularly monitored at board meetings and the Board's planned mitigation measures are described below. As part of its annual strategy meeting, the Board carried out a robust assessment of the principal risks facing the Company.

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

Loss of s1158-1159 status - Loss of s1158-9 tax status would have serious consequences for the attractiveness of the Company's shares. The Board considers that, given the regular oversight of this risk by the audit committee and the investment manager, the likelihood of this risk occurring is minimal. The audit committee regularly reviews the eligibility conditions and the Company's compliance against each, including the minimum dividend requirements and shareholder composition for close company status.

Sustained investment underperformance - 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. Should investment underperformance be sustained despite the mitigation measures taken by the investment manager, the Board would be able to take appropriate action to manage this risk.

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

Deterioration of shareholder sentiment - The Board recognises the importance of managing shareholder relations. The Board regularly monitors the list of major shareholders and the shareholder profile. The directors meet, from time to time, with major shareholders and the investment manager maintains regular contact with the Company's institutional shareholders. The Company's website, which is independent of the investment manager's website, provides all shareholders with relevant information about the Company including its daily NAV, monthly updates and annual and half-yearly reports. In addition to this all shareholders have the opportunity, and are encouraged, to attend the Company's annual general meeting ('AGM') and to give their views to the Company using the email address noted on the back page of the annual report.

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.

Directors' Responsibilities

Statement of directors' responsibilities

The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (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 then 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; and

·      prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements and the directors' remuneration 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 the Company's website (www.martincurrieglobal.com) which is maintained by the investment manager. The directors are responsible for the maintenance and integrity of the Company's website.

Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the directors confirms that to the best of their knowledge:

·      the financial statements, which have been prepared in accordance with 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, balanced and understandable review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

Viability Statement

The Company's business model is designed to deliver long term capital growth to its shareholders through investment in large and liquid stocks in global equity markets. Its plans are therefore based on having no fixed or limited life provided global equity markets continue to operate normally. The Board has assessed its viability over a 3 year period in accordance with provision C.2.2 of the 2016 UK Corporate Governance Code. The Board considers that this reflects the minimum period which should be considered in the context of its long term objective but one which is limited by the inherent and increasing uncertainties involved in assessment over a longer period.

In making this assessment the directors have considered the following risks to its ongoing viability:

·      the principal risks and uncertainties and the mitigating actions set out above;

·      the ongoing relevance of the Company's investment objective in the current environment and evidenced by feedback from major shareholders;

·      the level of income forecast to be generated by the Company and the liquidity of the Company's portfolio;

·      the low level of fixed costs relative to its liquid assets; and

·      the expectation is that in normal markets more than 99% of the current portfolio could be liquidated within one trading day.

Based on the results of their analysis and the Company's processes for monitoring each of the factors set out above, the directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over at least the next 3 years.

Going concern status

The Company's business activities, together with the factors likely to affect its future development, performance and position are set out in the chairman's statement, manager's review, strategic report and the report of the directors.

The financial position of the Company as at 31 January 2017 is shown on the statement of financial position below. The cash flows of the Company are also set out below.

Note 13 below 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 and C1.3 of 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 and uncertainties 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 at least one year from the date of this annual report.  Accordingly, the directors continue to adopt the going concern basis in preparing these financial statements.

Neil Gaskell

Chairman

27 March 2017

Statement of Comprehensive Income

		Year to 31 January 2017			Year to 31 January 2016
		Revenue	Capital	Total	Revenue	Capital	Total
	Note	£000	£000	£000	£000	£000	£000
Net gains/(losses) on investments	7	-	47,347	47,347	-	(1,606)	(1,606)
Net currency (losses)/gains		116	(120)	(4)	-	111	111
Revenue	3	5,382	-	5,382	5,423	-	5,423
Investment management fee	5	(334)	(668)	(1,002)	(302)	(604)	(906)
Other expenses	5	(454)	-	(454)	(401)	-	(401)
Net return on ordinary activities before taxation		4,710	46,559	51,269	4,720	(2,099)	2,621
Taxation on ordinary activities	6	(572)	-	(572)	(509)	-	(509)
Net return attributable to shareholders		4,138	46,559	50,697	4,211	(2,099)	2,112
Net returns per ordinary share	2	4.21p	47.41p	51.62p	4.15p	(2.07p)	2.08p

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 2014.

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

No operations were acquired or discontinued in the year.

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

Statement of Financial Position

		As at 31 January 2017		As at 31 January 2016
	Note	£000	£000	£000	£000
Fixed assets
Investments at fair value through profit or loss
Listed on the London Stock Exchange			25,395		20,883
List on exchanges abroad			190,224		154,093
	7		215,619		174,976
Current assets
Trade receivables	8	252		320
Cash and cash equivalents	9	974		3,403
			1,226		3,723
Current liabilities
Trade payables	10	(348)		(592)
			(348)		(592)
Total assets less current liabilities			216,497		178,107
Equity
Called-up share capital	11	5,179		5,179
Capital redemption reserve		10,838		10,838
Special reserve distributable*		102,349		110,581
Capital reserve	11	92,392		45,833
Revenue reserve*		5,739		5,676
Total shareholders' fund			216,497		178,107
Net Asset Value per ordinary share	2		223.9p		176.3p

* These reserves are distributable.

The notes to the accounts 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 27 March 2017 and signed on its behalf by Neil Gaskell, Chairman

Statement of Changes in Equity

 

	Note	Called up Ordinary share capital £000	Capital redemption reserve £000	Special distributable reserve*   £000	Capital reserve     £000	Revenue reserve*     £000	Total       £000
Statement of changes in equity for the year to 31 January 2017
As at 31 January 2016		5,179	10,838	110,581	45,833	5,676	178,107
Net return attributable to shareholders**		--	-	-	46,559	4,138	50,697
Ordinary shares issued during the year		--	--	--	--	--	--
Ordinary shares cancelled during the year		--	--	--	--	--	--
Ordinary shares bought back during the year		-	-	(8,232)	-	-	(8,232)
Dividends paid	4	-	-	-	-	(4,075)	(4,075)
As at 31 January 2017		5,179	10,838	102,349	92,392	5,739	216,497

	Note	Called up Ordinary share capital £000	Capital redemption reserve   £000	Special distributable reserve*   £000	Capital reserve     £000	Revenue reserve*     £000	Total       £000
Statement of changes in equity for the year to 31 January 2016
As at 31 January 2015		5,224	10,793	114,383	47,932	5,619	183,951
Net return attributable to shareholders**					(2,099)	4,211	2,112
Ordinary shares issued during the year		-	-	4,867	-	-	4,867
Ordinary shares cancelled during the year		(45)	45	-	-	-	-
Ordinary shares bought back during the year		-	-	(8,669)	-	-	(8,669)
Dividends paid	4	-	-	-	-	(4,154)	(4,154)
As at 31 January 2016		5,179	10,838	110,581	45,833	5,676	178,107

* These reserves are distributable.

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

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

 

Statement of Cash Flow

	Note	Year ended 31 January 2017		Year ended 31 January 2016
		£000	£000	£000	£000
Cash flows from operating activities
Profit before tax			51,269		2,621
Adjustments for:
(Gains)/losses on investments	7	(47,347)		1,606
Capital distribution received*	7	1,568		-
Purchases of investments**		(48,515)		(35,167)
Sales of investments**		53,660		39,735
Dividend income		(5,278)		(5,378)
Stock dividend income		(9)		-
Interest income		(1)		(5)
Stocklending income		(94)		(40)
Dividend received		5,336		5,351
Stock dividend received		9		-
Interest received		1		6
Stocklending income received		96		34
(Increase)/decrease in receivables		(1)		1
(Decrease)/increase in payables		(244)		291
Overseas withholding tax suffered		(572)		(509)
			(41,391)		5,925
Net cash flows from operating activities			9,878		8,546
Cash flows from financing activities
Repurchase of ordinary share capital		(8,232)		(8,669)
Shares issued for cash		-		4,867
Equity dividends paid	4	(4,075)		(4,154)
Net cash flows from financing activities			(12,307)		(7,956)
Net (decrease)/increase in cash and cash equivalents			(2,429)		590
Cash and cash equivalents at the start of the year			3,403		2,183
Cash and cash equivalents at the end of the year	9		974		3,403

*This relates to the proceeds from the Exchange offer between BG Group and Royal Dutch Shell.

**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 form part of these financial statements

 

Notes to the Financial Statements

Note 1: Accounting policies

(a)      For the year ended 31 January 2017, the Company is applying Financial Reporting Standard 102 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 financial statements have been prepared on a going concern basis in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority, FRS102 issued by the FRC in September 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.

Functional currency - the Company is required to nominate a functional currency, being the currency in which the Company predominately operates. The Board has determined that sterling is the Company's functional currency, which is also the currency in which these financial statements are prepared.

(b)      Income from investments (other than capital dividends), including taxes deducted at source, is included in revenue by reference to the date on which the investment is quoted ex-dividend, or where no ex- dividend date is quoted, when the Company's right to receive payment is established. UK investment income is stated net of the relevant tax credit. Overseas dividends include any taxes deducted at source. Special dividends are credited to capital or revenue, according to the circumstances. Stock dividends are treated as unfranked investment income; any excess in value of the shares received over the amount of the cash dividend is recognised as a capital item in the statement of comprehensive income.

(c)      Interest receivable and payable, management fees, performance fees and other expenses are treated 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 statement of comprehensive income in accordance with the Board's expected long-term split of returns in the form of capital gains and revenue, respectively. The performance fee is recognised 100% as a capital item in the statement of comprehensive income as it relates entirely to the capital performance of the Company. All other expenses are charged to revenue except where they directly relate to the acquisition or disposal of an investment, in which case, they are treated as described in (f) below.

(e)      Investments - investments have been designated upon initial recognition as fair value through profit or loss. Investments are recognised and derecognised at trade date where a purchase or sale is under a contract whose terms require delivery within the time frame established by the market concerned, and are initially measured 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 statement of comprehensive income and are ultimately recognised in the capital reserve.

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

(g)      Monetary assets and liabilities expressed in foreign currencies are translated into sterling at rates of exchange ruling at the date of the statement of financial position.  Non-monetary items expressed in foreign currencies held at fair value are translated into sterling at rates of exchange ruling at the date the fair value is measured. Transactions in foreign currency are converted to sterling at the rate ruling at the date of the transaction. Exchange gains and losses are taken to the income statement as a capital or revenue item depending on the nature of the underlying item.

(h)      Cash and cash equivalents 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.

(i)       Dividend payable - under FRS102 dividends should not be accrued in the financial statements unless they have been approved by shareholders before the statement of financial position date.  Dividends payable to equity shareholders are recognised in the statement of changes in equity when they have been paid 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 buy backs 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 the share buy backs are deducted from this reserve.

The revenue reserve - the net revenue for the year is added to the revenue reserve and dividends paid are deducted from the revenue reserve.

Capital redemption reserve - the nominal value of the shares bought back and cancelled are transferred to the capital redemption reserve.

(k)      Taxation - the charge for taxation is based upon the revenue for the year and is allocated according to the marginal basis between revenue and capital using the Company's effective rate of corporation tax for the accounting period.

(l)       Deferred taxation - deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the statement of financial position date where transactions or events that result in an obligation to pay more or a right to pay less tax in future have occurred at the statement of financial position date measured on an undiscounted basis and based on enacted tax rates. This is subject to deferred tax assets being recognised only if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying temporary differences can be deducted. Timing differences are differences arising between the Company's taxable profits and its results as stated in the accounts which are capable of reversal in one or more subsequent periods. Due to the Company's status as an investment trust 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 re-measured to the fair value at each reporting date. The resulting gain or loss is recognised as revenue or capital in the statement of comprehensive income depending on the nature and motive of each derivative transaction. 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. There were nil derivative instruments held as at 31 January 2017 (2016: Nil).

(n)      Stocklending income is received net of associated costs and recognised in revenue as earned.

Note 2: Returns and net asset value    

	Year ended 31 January 2017	Year ended 31 January 2016
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	£4,138,000	£4,211,000
Weighted average number of shares in issue during year	98,207,595	101,410,238
Return per ordinary share	4.21p	4.15p
Capital return
Capital return attributable to ordinary shareholders	£46,559,000	(£2,099,000)
Weighted average number of shares in issue during year	98,207,595	101,410,238
Return per ordinary share	47.41p	(2.07p)
Total return
Total return per ordinary share	51.62p	2.08p

There are no dilutive or potentially dilutive shares in issue.

	As at 31 January 2017	As at 31 January 2016
Net asset value per share
Net assets attributable to shareholders	£216,497,000	£178,107,000
Number of shares in issue at the year end	96,713,730	101,044,956
Net asset value per share	223.9p	176.3p

Between 1 February and 23 March 2017, 762,704 ordinary shares of 5p were bought back into Treasury.

Note 3: Revenue from investments 

	Year ended 31 January 2017 £000	Year ended 31 January 2016 £000
From listed investment
UK equities	903	888
International equities	4,375	4,490
Stock dividend	9	-
Other revenue
Interest on deposits	1	5
Stocklending	94	40
	5,382	5,423

There were no capital dividends received during the year ended 31 January 2017 (2016: £nil).

Note 4: Dividends 

	Year ended 31 January 2017 £000	Year ended 31 January 2016 £000
Year ended 31 January 2015 - fourth interim dividend of 1.40p	-	1,429
Year ended 31 January 2016 - fourth interim dividend of 1.45p	1,445	-
Year ended 31 January 2017 - first interim dividend of 0.90p (2016: 0.90p)	885	916
Year ended 31 January 2017 - second interim dividend of 0.90p (2016: 0.90p)	874	909
Year ended 31 January 2017 - third interim dividend of 0.90p (2016: 0.90p)	871	900
	4,075	4,154

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

	Year ended 31 January 2017 £000	Year ended 31 January 2016 £000
First interim dividend of 0.90p for the year ended 31 January 2017 (2016: 0.90p)	885	916
Second interim dividend of 0.90p for the year ended 31 January 2017 (2016: 0.90p)	874	909
Third interim dividend of 0.90p for the year ended 31 January 2017 (2016: 0.90p)	871	900
Proposed fourth interim dividend of 1.50p for the year ended 31 January 2017 (2016: 1.45p)	1,451	1,465
	4,081	4,190

Note 5:  Other expenses

	Year ended 31 January 2017 £000	Year ended 31 January 2016 £000
Advertising and public relations	77	68
Bank charges (including custody fees)	20	19
Directors' fees	114	106
Directors' and officers' liability insurance	12	12
Irrecoverable VAT	17	15
Legal fees	2	-
Marketing	27	26
Printing and postage	9	8
Registration fees	37	33
Secretarial fee	51	51
Other	67	41
	433	379

Auditors' remuneration
Payable to Ernst & Young for the audit of the Company's annual financial statements	19	19
Payable to Ernst & Young for non-audit fees	2	3
	454	401

Performance Fee

The performance fee for the year ended 31 January 2017 was £nil (2016: £nil).  Details of the management and secretarial agreements are provided in the Company's annual report and accounts.

	Year ended 31 January 2017			Year ended 31 January 2016
	Revenue £000	Capital £000	Total £000	Revenue £000	Capital £000	Total £000
Ongoing charges are calculated with reference to the following figures:
Investment management fee	(334)	(668)	(1,002)	(302)	(604)	(906)
Other expenses	(454)	-	(454)	(401)	-	(401)
Total expenses	(788)	(668)	(1,456)	(703)	(604)	(1,307)
Average net assets over the year			196,884			183,190
Ongoing charges			0.74%			0.71%

Full details of the investment management fee and directors' fees are included in the Company's annual report and accounts.

Note 6:  Taxation on ordinary activities

	Year ended 31 January 2017			Year ended 31 January 2016
	Revenue £000	Capital £000	Total £000	Revenue £000	Capital £000	Total £000
Overseas tax suffered	572	-	572	509	-	509

The effective corporation tax rate was 20.00% (2016: 20.16%). 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 2017 £000	Year ended 31 January 2016 £000
Net return before taxation	51,269	2,621
Corporation tax at effective rate of 20.16% (2016: 20.16%)	10,254	528
Effects of:
Non taxable UK dividend income	(181)	(179)
Currency losses/(gains) not taxable	24	(22)
(Gains)/losses on investments not taxable	(9,470)	324
Overseas dividends non taxable	(864)	(897)
Overseas tax suffered	572	509
Overseas tax expenses	(4)	-
Increase in excess management and loan expenses	241	246
Tax charge for the year	572	509

As at 31 January 2017, the Company had unutilised management expenses of £26.6 million (2016: £25.3 million) carried forward. Due to the Company's status as an investment trust and the intention to continue to meet the conditions required to obtain approval in the foreseeable future, the Company has not provided deferred tax on capital gains and losses arising on the revaluation or disposal of investments.

Note 7:  Investments at fair value through profit and loss

	As at 31 January 2017 £000	As at 31 January 2016 £000
Opening valuation	174,976	181,798
Opening unrealised gains	(27,657)	(39,584)
Opening cost	147,319	142,214
Purchases at cost	48,515	34,519
Disposal proceeds	(53,660)	(39,735)
Net profit on disposal of investments	5,304	10,321
Disposal at cost	(48,356)	(29,414)
Closing cost	147,478	147,319
Stock dividend	9	-
Closing unrealised gains	68,132	27,657
Valuation as at 31 January	215,619	174,976

	As at 31 January 2017 £000	As at 31 January 2016 £000
Gain/(loss) on investments
Net profit on disposal of investments	5,304	10,321
Net gain/(loss) on revaluation of investments	40,475	(11,927)
Capital distribution received*	1,568	-
	47,347	(1,606)

* This relates to the proceeds from the Exchange offer between BG Group and Royal Dutch Shell.

The transaction cost of acquiring investments during the year was £111,000 (2016: £65,000). For disposals, transaction costs were £63,000 (2016: £54,000).

As at 31 January 2017 there were no unlisted securities (2016: Anheuser-Busch Inbev was an unlisted security).

Note 8:  Receivables: amounts falling due within one year

	As at 31 January 2017 £000	As at 31 January 2016 £000
Dividends receivable	125	186
Taxation recoverable	117	123
Other receivables	6	5
Stocklending income receivable	4	6
	252	320

Note 9:  Cash and cash equivalents

	As at 31 January 2017 £000	As at 31 January 2016 £000
Sterling bank account	901	3,403
Non-sterling bank account	73	-
	974	3,403

Note 10: Trade payables

	As at 31 January 2017 £000	As at 31 January 2016 £000
Amounts falling due within one year:
Due to Martin Currie	269	221
Other payables	79	371
	348	592

Note 11:  Ordinary shares of 5p and capital reserves

	Number of shares	As at 31 January 2017 £000	Number of shares	As at 31 January 2016 £000
Ordinary shares in issue at beginning of the year	101,044,956	5,052	103,063,375	5,153
Ordinary shares issued from Treasury during the year	-	-	2,845,017	142
Ordinary shares bought back into Treasury during the year	(4,331,226)	(217)	(4,863,436)	(243)
Ordinary shares in issue at end of the year	96,713,730	4,835	101,044,956	5,052

	Number of shares	As at 31 January 2017 £000	Number of shares	As at 31 January 2016 £000
Treasury shares (Ordinary shares 5p)
Treasury shares in issue at the beginning of the year	2,583,246	127	1,429,796	71
Ordinary shares issued from Treasury during the year	-	-	(2,845,017)	(142)
Ordinary shares cancelled from Treasury during the year	-	-	(909,969)	(45)
Ordinary shares bought back into Treasury during the year	4,331,226	217	4,863,436	243
Treasury shares in issue at end of the year	6,869,472	344	2,538,246	127
Total ordinary shares in issue and in Treasury at the end of the year	103,583,202	5,179	103,583,202	5,179

The net cost of share issues from and buy backs into Treasury for the year to 31 January 2017 was £8,232,000 (2016: £3,802,000).

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 2016	18,176	27,657	45,833
Gains on realisation of investments at fair value	5,304	-	5,304
Movement in fair value gains of investments	-	40,475	40,475
Realised currency losses during the year	(120)	-	(120)
Capitalised expenses	(668)	-	(668)
Capital distributions*	1,568	-	1,568
At 31 January 2017	24,260	68,132	92,392

*This relates to the proceeds from the Exchange offer between BG Group and Royal Dutch Shell.

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'.

Note 12:  Related Party Transactions

With the exception of the management and secretarial fees, directors' fees and directors' shareholdings, there have been no related party transactions during the year. During the financial year to 31 January 2016, the Company issued 2,626,433 treasury shares to Legg Mason, Inc., the ultimate parent company of the Company's investment manager. Legg Mason, Inc. also purchased an additional 90,000 ordinary shares through the market taking its holding in the Company to 2,716,433 ordinary shares. The Martin Currie Retirement & Death Benefit Plan also purchased 281,230 shares ordinary shares during the financial year to 31 January 2016.

Note 13:  Financial instruments

The Company's financial instruments comprise securities and other investments, cash balances, receivables and payables that arise directly from its operations; for example, in respect of sales and purchases awaiting settlement, and receivables for accrued income.

The Company also has the ability to enter into derivative transactions in the form of forward foreign currency contracts, futures and options, for the purpose of managing currency and market risks arising from the Company's activities.

The main risks the Company faces from its financial instruments are (a) market price risk (comprising of (i) interest rate risk, (ii) currency risk and (iii) other price risk), (b) liquidity risk and (c) credit risk.

The Board regularly reviews and agrees policies for managing each of these risks. The investment manager's policies for managing these risks are summarised below and have been applied throughout the year. The numerical disclosures exclude short-term receivables and payables, other than for currency disclosures.

(a) Market price risk

The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices. This market risk comprises three elements - interest rate risk, currency risk and other price risk.

(i) Market risk arising from interest rate risk

Interest rate movements may affect the level of income receivable on cash deposits.

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

The Board imposes borrowing limits to ensure 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 statement of financial position date was as follows:

At 31 January 2017	Interest rate %	Local currency '000	Foreign exchange rate	Sterling equivalent £000
Assets
Sterling	0.01	901	1.000	901
Euro	(0.60)	28	1.164	24
US Dollar	0.01	62	1.258	49
				974
At 31 January 2016
Assets
Sterling	0.25	3,403	1.000	3,403

Interest rate sensitivity

The sensitivity analysis below has been determined based on the exposure to interest rates for non-derivative instruments at the statement of financial position date and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates.

If interest rates had been 25 (2016: 50) basis points higher or lower and all other variables were held constant, the Company's profit for the year ended 31 January 2017 would increase/decrease by £2,000 (2016: increase/decrease by £17,000). This is mainly attributable to the Company's exposure to interest rates on its floating rate cash balances.

As at 31 January 2017 an interest rate of 0.25% is used, given the prevailing base rate is 0.25%. This level is considered possible based on observations of market conditions and historic trends.

(ii) Market risk arising from foreign currency risk

A significant proportion of the Company's investment portfolio is invested in overseas securities and the statement of financial position can be significantly affected by movements in foreign exchange rates. It is not currently the Company's policy to hedge this risk.

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

Foreign currency risk profile

Foreign currency risk exposure by currency of denomination:

	Year ended 31 January 2017			Year ended 31 January 2016
	Investment exposure £000	Net monetary exposure £000	Total currency exposure £000	Investment exposure £000	Net monetary exposure £000	Total currency exposure £000
US dollar	132,322	135	132,457	100,650	148	100,798
Euro	16,274	60	16,334	14,333	123	14,456
Japanese yen	16,025	-	16,025	15,119	-	15,119
Hong Kong dollar	7,564	-	7,564	4,664	-	4,664
Australian dollar	4,723	-	4,723	5,240	-	5,240
Canadian dollar	3,922	30	3,952	2,453	23	2,476
Swiss franc	3,658	81	3,739	3,537	-	3,537
Indonesian rupiah	3,671	-	3,671	2,862	-	2,862
Singapore dollar	2,064	-	2,064	3,780	-	3,780
Norwegian krone	-	-	-	1,454	-	1,454
Total overseas investments	190,223	306	190,529	154,092	294	154,386
Sterling	25,396	572	25,968	20,884	2,837	23,721
Total	215,619	878	216,497	174,976	3,131	178,107

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

Foreign currency sensitivity

At 31 January 2017, if sterling had strengthened by 5% in relation to all currencies, with all other variables held constant, total net assets and total return on ordinary activities would have decreased by the amounts shown below. A 5% weakening of sterling against all currencies, with all other variables held constant, would have had an equal but opposite effect on the financial statement amounts. The analysis is performed on the same basis for 2016.

	2017 £000	2016 £000
US dollar	6,616	5,033
Euro	814	717
Japanese yen	801	756
Hong Kong dollar	378	233
Australian dollar	236	262
Canadian dollar	196	123
Swiss franc	183	177
Indonesian rupiah	184	143
Singapore dollar	103	189
Norwegian krone	-	73

(iii) Market risk arising from other price risk

Other price risks (i.e. changes in market prices other than those arising from interest rate or currency risk) may affect the value of the quoted investments.

It is the Board's policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from factors specific to a particular country or sector. The allocation of assets to international markets as detailed above, and the stock selection process both act to reduce market risk. The investment manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy. All investments held by the Company are listed on various stock exchanges worldwide.

Other price risk sensitivity

If market prices at the statement of financial position date had been 15% higher or lower while all other variables remained constant, the return attributable to ordinary shareholders at the year ended 31 January 2017 would have increased/decreased by £32,340,000 (2016: increase/decrease of £26,250,000) and capital reserves would have increased/decreased by the same amount. This level of change is considered to be reasonably possible based on observation of market conditions and historic trends.

(b) Liquidity risk

This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities.

Liquidity risk is not considered to be significant as the Company's assets comprise mainly readily realisable securities, which can be sold to meet funding commitments if necessary.

(c) Credit risk

This is the risk of failure of the counterparty to a transaction to discharge its obligations under that transaction that could result in the Company suffering a loss.

The risk is managed as follows:

·      investment transactions are carried out with a large number of brokers, whose credit 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.

The maximum credit risk exposure as at 31 January 2017 was £1,226,000 (2016: £3,723,000). This was due to trade receivables and cash as per notes 8 and 9 above.

Please refer to note 16 below and Stocklending disclosure in the Company's annual report and accounts for details of the Company's stocklending and related collateral.

Fair values of financial assets and financial liabilities

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

Note 14:   Capital management policies and procedures

The Company's capital management objectives are:

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

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

·      to limit gearing to 20% of net assets.

The Board monitors and reviews the broad structure of the Company's capital on an ongoing basis. This review includes the nature and planned level of gearing, which takes account of the portfolio manager's views on the market and the extent to which revenue in excess of that which is required to be distributed under the investment trust rules should be retained.

The analysis of shareholders' funds is as follows:

	As at 31 January 2017 £000	As at 31 January 2016 £000
Called up ordinary share capital	5,179	5,179
Capital redemption reserve	10,838	10,838
Special distributable reserve	102,349	110,581
Capital reserve	92,392	45,833
Revenue reserve	5,739	5,676
Total shareholders' funds	216,497	178,107

Note 15:  Fair value hierarchy

The Company has early adopted the amendments to FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', where 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: 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:

At 31 January 2017	Level 1 £000	Level 2 £000	Level 3 £000	Total £000
Financial assets at fair value through profit or loss
Quoted equities	215,619	-	-	215,619
Net fair value	215,619	-	-	215,619

At 31 January 2016*	Level 1 £000	Level 2 £000	Level 3 £000	Total £000
Financial assets at fair value through profit or loss
Quoted equities	174,976	-	-	174,976
Net fair value	174,976	-	-	174,976

* As at 31 January 2016, Level 1 financial assets were designated 'Level a' due to classifications based on the following:

·      Level a: Quoted prices for identical instruments in active markets;

·      Level b: Prices of a recent transaction for identical instruments.

·      Level c: Valuation techniques that use:

o  (i): Observable market data; and:

o  (ii): Non-observable market data.

 

Note 16:  Stocklending

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

 

As at 31 January 2017 £21,549,000 (2016: £36,606,000) of investments were subject to stocklending agreements and £23,104,000 (2016: £37,723,000) was held as collateral. This collateral was held in the form of cash (in GBP, 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 gross earnings and the fees paid for the year are £125,000 (2016: £53,000) and £31,000 (2016: £13,000).

Note 17:  Post balance sheet events

 

On 27 March 2017 the Board declared a fourth interim dividend of 1.50p per share. As at 23 March 2017, the Company had bought back a further 762,704 ordinary shares at the cost of £1,789,352 resulting in a further reduction of £1,789,352 to the special distributable reserve.

Website

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

 

END

 

 

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