Registered in Scotland, no SC192761
MARTIN CURRIE GLOBAL PORTFOLIO TRUST PLC
Annual report – year to 31 January 2022
The sustainable growth trust
1The sustainable growth trust
Welcome to the annual report for Martin Currie Global Portfolio Trust plc (the 'Company'),
the sustainable growth trust.
Our objective
The objective is to produce long-term returns in excess of the total return from the MSCI All Country World index.
Sustainability Rating:
© 2021 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers;
(2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are
responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.
PRI – Principles for Responsible Investment. A copy of the PRI's assessment of Martin Currie and its methodology is available on request.
Highest possible ratings by PRI
(triple A+) 2017, 2018, 2019, 2020
1
UNPRI signatory since July 2009
A unique blend of features and benefits enjoyed by our shareholders.
Global opportunity:
A global investment remit
provides the widest possible
opportunity to invest in the world’s
best companies, irrespective
of the country they are listed
in. Shareholders benefit from a
ready-made global equity portfolio
which is diversified across
different geographic markets and
a range of economic sectors.
High conviction and high quality:
As active investors handpicking
25-40 companies for the
portfolio, we can concentrate
on businesses or sectors we
believe offer the most sustainable
growth over the long term. A
concentrated portfolio means
we have meaningful allocations
in each stock and we believe that
gives us the best opportunity to
outperform the markets.
World-class ESG characteristics:
You don’t have to compromise your
investment goals and desire to
invest in sustainable companies. Our
Environmental, Social and Governance
('ESG') credentials are exceptional and
we are the only investment trust in the
AIC Global sector to have 5 globes from
Morningstar. We undertake over 50 ESG
risk assessments on every company we
research and engage with companies to
ensure they trend towards best practice.
Established track record:
Established in 1999, shareholders
have enjoyed investment returns
and share price growth ahead of
the benchmark over that period.
Shareholder-friendly benefits:
Investment trusts are listed on
the London Stock Exchange and
their company structure offers
many distinct features that
can enhance performance and
benefits for shareholders.
Low charges:
With low ongoing charges and no
performance fees, more of your
money is invested in the markets.
Sustainability Rating:
© 2021 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers;
(2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are
responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.
PRI – Principles for Responsible Investment. A copy of the PRI's assessment of Martin Currie and its methodology is available on request.
Highest possible ratings by PRI
(triple A+) 2017, 2018, 2019, 2020
1
UNPRI signatory since July 2009
Strategic report
Chairman’s statement 6
Manager’s review 10
Our investment manager's process 17
ESG & our investment manager's process 19
Portfolio summary 20
Largest 10 holdings 23
Business review 28
Governance
Board of directors 37
Corporate governance statement 38
Report of the directors 43
Audit committee report 50
Directors’ remuneration statement 52
Financial review
Independent auditors’ report 56
Statement of comprehensive income 62
Statement of financial position 63
Statement of changes in equity 64
Statement of cash flow 65
Notes to the financial statements 66
Investor information
Directors and advisers 79
Stock lending disclosure 80
Alternative performance measures 81
Glossary of terms 83
Ways to invest in the Company 85
Notice of annual general meeting 86
2CONTENTS
1
2
3
4
Performance
1,2
Strong long-term performance
1
Three year performance
1
20042002 2006 2008 2010 2012 2014 2016 2018 2020 2022
(%)
300
400
500
600
700
800
200
100
0
2000
(100)
Share price total return 613.6%
NAV total return 481.2%
Benchmark 439.4%
Net Asset Value total
return for the year.
Share price total return
for the year.
Benchmark total
return for the year.
Net Asset Value total
return over the three
year period.
Share price total return
over the three year
period.
Benchmark total return
over the three year
period.
FINANCIAL HIGHLIGHTS
Past performance is not a guide to future returns. All returns are total returns unless otherwise stated.
Source: Martin Currie Investment Management.
The benchmark with effect from 1 February 2020 is the MSCI All Country World index. Prior to this, the benchmark was the FTSE World index to 31 January 2020. Prior to this,
the benchmark was the FTSE All-Share to 31 May 2011. Total return is the combined effect of the rise and fall in the share price, net asset value or benchmark together with any
dividend paid.
The one year figures for net asset value total return and share price total return are Alternative Performance Measures, see page 81 for more details on the calculations.
3
10 year record
Key data
Year ended 31 January 2022
Year ended 31 January 2021
Net asset value per share (pence)
364.6p
358.2p
Share price (pence)
356.5p
370.0p
Ongoing charges as a percentage of shareholders’ funds
0.68%
0.58%
3
4
As at 31 January
Revenue return
per share
Dividend
per share
Net asset
value per
share
4
(Discount)/
premium
Investments
£000
Net assets
£000
2013 4.23p 3.90p 152.6p (3.4%) 158,894 159,399
2014 3.76p 4.00p 157.4p (0.6%) 163,755 164,201
2015 3.92p 4.10p 178.5p 0.6% 181,798 183,951
2016 4.15p 4.15p 176.3p (1.9%) 174 ,976 178,107
2017 4.21p 4.20p 223.9p (0.0%) 215,619 216,497
2018 3.72p 4.20p 246.1p 0.4% 223,192 227,186
2019 3.47p 4.20p 245.5p (1.4%) 203,818 205,575
2020 2.52p 4.20p 301.9p 3.0% 251,714 251,695
2021 1.97p 4.20p 358.2p 3.3% 327,988 303,571
2022 1.36p 4.20p 364.6p 2.2% 339,535 315,834
Ongoing charges plus the performance fee for the year ended 31 January 2021 were 1.62%. With effect from 1 February 2021, the performance fee arrangement was
discontinued. See note 3 on page 68.
Cum-income.
1: STRATEGIC REPORT
Dear Shareholder
In these sad and difficult times, I would like to start by expressing our
sympathy for all of the victims of the Russian invasion of Ukraine. The
human cost is horrific and the unified response to Russia’s aggression
is the only positive consequence. The potential longer-term effects of
the invasion are many and varied and these, and the impact they may
have on your Company, are discussed under Outlook below and in the
Manager’s review.
Against this destabilising background, we can at least bring you a
positive report on your Company. The lead portfolio manager, Zehrid
Osmani, has now been managing the portfolio for over three years
and his very clear investment style continues to bring benefits to
shareholders. This is reflected in strong results: for the three years
to the end of January 2022, the net asset value (‘NAV’) total return
was 54.1% and exceeded the return of the benchmark (52.5%). This
performance has been achieved by investing in companies that meet
the very stringent investment strategy of the manager, including
robust ESG criteria on which the team will not compromise, ensuring
a strong focus on improvements in sustainability and the impacts of
climate change.
Before discussing key developments at your Company, I would like
to draw your attention to the layout of this report. Annual reports of
listed companies tend to grow in length each year as regulators and
other agencies seek ever more information. While the Board fully
supports moves to increase transparency, we also believe that the
annual report should be easy to read and, where possible, free from
unnecessary duplication and volume. This year we have set out the
Strategic report and Report of the directors in a different way, to make
the structure more logical and accessible for all readers. We hope
that these changes make the annual report easier to read and would
welcome any feedback. If you have any comments please write to me
at the address on page 90 or send an email to
cosec@franklintempleton.com.
Investment performance
Whilst investment performance over the year under review was
disappointing, with a NAV total return of 2.9% and share price total
return of -2.6%, compared with the 15.9% return of the benchmark,
this was the first year of underperformance since Zehrid Osmani was
appointed as portfolio manager in 2018. As described in the Manager’s
review, most of the underperformance occurred in January 2022 at
the end of what was a year of high volatility in stock markets when at
times more cheaply rated value stocks have at times led the market.
In contrast, our investment manager focuses on investments with the
prospects of superior longer-term growth and has not been distracted
by market gyrations. This consistent approach to growth reflects our
stated investment policy and the expectations of shareholders.
6CHAIRMAN’S STATEMENT
Gillian Watson, Chairman
“Our investment manager
focuses on investments with
the prospects of superior
longer-term growth and
has not been distracted by
market gyrations.”
Income and dividends
Capital growth is the primary focus of the investment manager
and the investment strategy is not constrained by any income
target. Nevertheless, the Board recognises that dividends
are important for many shareholders and hence continues to
maintain its dividend in line with historic levels. The Company
has substantial distributable reserves and the Board has again
used these alongside revenue earnings to maintain the dividend,
while not impinging on the investment manager’s approach to
managing the portfolio.
Net revenue earnings per share for the period amounted to
1.36 pence. The Company has paid three interim dividends of
0.9 pence per share and will pay a fourth interim dividend of 1.5
pence per share on 29 April 2022 to shareholders on the register
on 8 April 2022. The total dividends with respect to the year
to 31 January 2022 will be 4.2 pence per share, maintaining the
same total dividend as the previous year.
At this year’s annual general meeting, shareholders will be
requested to approve amendments to the Company’s Articles of
Association which will allow the distribution of realised capital
profits by way of dividend. The Company is already permitted
to distribute realised capital profits in buying back its shares.
The tax regulations governing investment trusts removed the
requirement for the Articles of Association of an investment
trust to prohibit the distribution of realised capital profits by
way of buyback, and subsequently dividend, some years ago
and a number of other investment trusts have taken advantage
of the additional flexibility this provides. The Board believes
that removing the remaining restriction offers the Company
more options in its use of reserves for the payment of dividends.
However, there is no intention to change the current dividend
policy. Further information about the other proposed changes to
the Articles of Association is set out below.
Investment Policy – Enhancing our ESG leadership
Your Company is recognised as a leader in ESG investing and is the
only global investment trust to be awarded the highest possible
'Five Globes' from Morningstar, which also rates it in the top 1%
globally for ESG. The manager's focus is on investing in the highest
quality companies that will generate sustainable returns over the
long term and the systematic analysis of ESG factors is essential to
this stock selection.
To reflect our approach more explicitly and to highlight our
conviction in sustainability, the Board is recommending an update
to the investment policy. While the proposed changes will not
result in any change in the manager's approach to investing, they
will state more clearly the importance of ESG to our Company.
For example, in practice, the portfolio is managed such that if
the Company was a European open-ended fund then it would
comply with Article 8 of the EU’s Sustainable Finance Disclosure
Regulation. It is the investment manager’s intention that the
Company’s rigorous ESG process will mean that it should comply
with any similar criteria as and when, in due course, the UK
introduces its own sustainability disclosure regulations and indeed
with any other key reporting frameworks. The Board is of the view
that providing this clarity on the focus on ESG as a key investment
driver further cements our leadership in this important area. The
Board believes this differentiates us further from other investment
trusts and funds. In addition the proposed new investment policy
sets out more clearly the approach to risk spreading and to
gearing.
The proposed new investment policy is set out in detail on page 28.
7
“Your Company is recognised as a leader in ESG investing
and is the only global investment trust to be awarded the
highest possible 'Five Globes' from Morningstar
.”
Operations
I reported last year that the Covid-19 pandemic had had a profound
effect on the way that our investment manager and other suppliers
operated. The world experienced continued disruption for much
of the year under review and, as with last year, the Board took a
close interest in ensuring that the investment manager and all of
our other key suppliers were able to maintain business as usual.
Again we would like to record our thanks to all involved and, as we
look forward, we hope to return to more normal ways of working.
Increased demand
We continue to see increased demand for shares from a wide
range of investors and improved ratings from agencies and
brokers. Pleasingly, this has led to net issuance of shares under
our zero discount policy for the second consecutive year.
Our manager actively markets the Company with the aim of
growing the number of shares in issue over time. A larger
company has advantages in providing a higher level of liquidity
for shareholders and in spreading its fixed costs more widely.
The Company is promoted through a range of media, advertising
and investment research. Our positioning it as ‘The Sustainable
Growth Trust’ continues to gather momentum. During the year,
our marketing efforts were rewarded in the Association of
Investment Companies Annual Investor Communication Awards,
in which we were placed first in three categories: Best ESG
Communication, Best Use Of Social Media and Best Website.
The Company’s website 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. The
number of users of our website has almost doubled over the last
year and, if you have not already done so, I strongly recommend
that you subscribe for email updates that will alert you to new
information on the website and keep you abreast of the news on
your Company.
A key element of our approach to making the Company
attractive to investors is our zero discount policy under which
the Company buys back and issues shares with the objective of
providing shareholders, in normal market conditions, with:
• assurance that the share price is aligned with the prevailing
NAV per share; and
• liquidity so that investors can buy or sell as many shares as
they wish at a price which is not significantly different from
the NAV.
During the year to 31 January 2022, the Company:
• bought back 1.6 million shares which were held in Treasury;
and
• reissued 3.4 million shares from Treasury.
The advantage of holding shares in Treasury is that they can be
reissued efficiently and at low cost. Shares will only be bought
back at a price which is below the prevailing NAV per share and
will only be issued at a price which is above the prevailing NAV
per share, so that the assets of existing shareholders are not
diluted and when the Board considers buying back or issuing
shares to be in the best interests of existing shareholders. The
successful execution of this strategy continues, with the share
price generally remaining close to NAV.
The Board
Neil Gaskell stepped down from the role of Chairman on 1
February 2021 and retired as a Director on 30 April 2021. I would
like to reiterate the Board’s thanks to Neil for his leadership,
guidance and support during his tenure.
Lindsay Dodsworth joined the Board on 1 November 2021 and
will stand for election at this year’s annual general meeting
(‘AGM’). Lindsay is chair of a family office and of its investment
oversight committees which she helped the family to set up
following the sale of its business. She trained as a chartered
accountant and a chartered tax adviser with Price Waterhouse
(now PwC) before becoming a partner at Ernst & Young (now
EY). She is a governor, member of the advisory council and
member of the investment committee at Goodenough College
and chair of governors at St. John's College School.
Articles of Association
As noted above the Board is recommending that the Company
adopt new Articles of Association (the ‘New Articles’).
A description of the proposed amendments being introduced in
the New Articles is set out on pages 47 and 48. The key points
include removing the current prohibition on using realised
capital reserves to pay dividends, permitting more flexibility
around notice of meetings, execution of documents and holding
of meetings in light of the Covid-19 pandemic and minor updates
to reflect best practice. The New Articles are consistent with
those used across the investment trust sector.
AGM Arrangements
Having been obliged to hold the last two years’ AGMs behind closed
doors, I am pleased to be able to invite all shareholders to attend
our AGM in person at the Waldorf Astoria The Caledonian, Princes
Street, Edinburgh EH AB on Thursday 16 June 2022 at 11.00 am.
While we hope that shareholders will be able to attend, the Directors
are aware that Government guidance and regulation relating to the
Covid-19 pandemic may change. If we are obliged to change the
arrangements for the AGM aer publishing this document, details
will be published via a Stock Exchange announcement and our
website. Shareholders who plan to attend the AGM are encouraged
to check the website before travelling.
8
9
We do recognise that some shareholders may be unable to come
to the AGM and if you have any questions about the Annual
Report, the investment portfolio or any other matter relevant to
the Company, please write to me either via email at
cosec@franklintempleton.com or by post to The Company
Secretary, Martin Currie Global Portfolio Trust plc, Saltire Court,
20 Castle Terrace, Edinburgh EH ES.
If you are unable to attend, I urge you to submit your proxy votes in
good time for the meeting, following the instructions enclosed with
the proxy form.
Outlook
At the time of writing this statement the news is dominated
by the Russian invasion of Ukraine. The invasion led to a sharp
increase in the price of energy and some basic foodstuffs, which
in turn is producing an increase in general inflation around the
world. This is set against the background of already heightened
inflation resulting from supply chain difficulties triggered by
the Covid-19 pandemic. Governments and central bankers
in developed countries will have to draw a fine line between
stimulating growth and attempting to control inflation. The effect
on markets has – as might be expected – been a fall, followed by
continuing volatility, as investors seek to digest the ramifications
both of the military action and its consequences over the longer
term. While we hope that the fighting in Ukraine will stop soon,
absent a change of regime in Moscow it is likely that sanctions
will remain in place for some time and the consequences of a
prolonged economic struggle are difficult to predict, given in
particular Europe’s dependence on Russian energy supplies.
While our manager is predicting that the world economy will
continue its recovery from the effects of the pandemic, that
recovery is now likely to be slower and more protracted. Share
prices are likely to continue to be volatile as they are affected by
the geopolitical news flow and periods of risk aversion.
Our investment strategy is based on identifying, and seeking to
take advantage of, long-term trends. Our investment manager
will continue to concentrate on a focused list of investments,
researched in depth and selected for their long-term growth
prospects and sustainable credentials. Notwithstanding the
current situation, we continue to believe that this approach will
produce attractive returns for patient investors.
Keep in touch
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 that
will keep you abreast of the news on your Company.
I thank you for your continued support. Please contact me if
you have any questions regarding your Company by email at:
cosec@franklintempleton.com.
Gillian Watson
Chairman
12 April 2022
“Our investment manager will continue to concentrate on a
focused list of investments, researched in depth and selected
for their long-term growth prospects.”
10MANAGER'S REVIEW
Review of financial year ended 31 January 2022
The Company’s financial year ended 31 January 2022 was overall a
strong period for equity markets with the MSCI All Country World
index rising by +15.9%, in GBP terms. Equity market recovery post the
Covid-19 crisis of 2020 was much sharper than many expected. The
reporting period also experienced a number of changes in market
leadership between Growth and Value stocks. This leadership volatility
challenged the Company’s performance during the latter part of the
financial year as Value stocks, to which the portfolio does not have
exposure, outperformed. We expand on this later in this section.
In our view the most important factors affecting financial markets in
2021 and into the early part of 2022 were:
(i) a sharp recovery in corporate earnings driving positive earnings
momentum,
(ii) an uncertain backdrop in China contributing to underperformance
by Emerging Markets,
(iii) stronger and longer-lasting inflationary pressure than had been
expected,
(iv) pandemic relapse risk materialising with the emergence of the
Omicron variant, and
(v) monetary policies shiing towards more rapid and more sizeable
rate hikes as a result of the stronger inflation.
We comment on each of these in more detail below.
Earnings recovery was much stronger than expected in calendar year
2021, with earnings growth over the year likely to be c.+48%, compared
to our initial estimate of +26% and consensus at c.+23% at the start
of that year. Projections were gradually revised upwards throughout
the year as information became available. The supportive earnings
momentum and revisions to earnings growth estimates were a key
driver of the equity market performance.
2021 was also marked by China shiing its regulatory stance towards
big tech companies, with authorities:
• clamping down on monopolistic behaviours and pushing
companies to open up their platforms to competition,
• pressurising them to improve employment contracts, and
• inviting them to contribute to funds to help the common prosperity
agenda of the Chinese Communist Party.
In addition, China’s zero tolerance policy on Covid-19 kept (and
is still keeping) parts of the country in lockdown for longer than
expected, which also weighed on economic momentum. Both of these
contributed to significant underperformance of some of the Chinese
big tech companies and, as a result, of Emerging Markets equities
during the year.
“Earnings recovery was
much stronger than
expected in calendar year
2021.”
Zehrid Osmani, Portfolio Manager
Inflation remained a big focus point for the market in 2021 and
into 2022. Inflationary trends continued to rise throughout
the year as a result of the disruptions to production lines,
bottlenecks in supply chains, and logistical issues. These all
contributed to the frictional inflation that we had predicted,
although these pressures were both more significant and longer
lasting than we had predicted. As at mid-March, the year-on-year
increase in inflation figures (CPI) stand at +7.5% for the US, +5.5%
for the UK, +5.1% for the Eurozone, and +1.5% in China. These are
levels not experienced since the early 90’s for some geographies
such as the UK or some of the Eurozone countries, or since the
early 80’s for the US.
The emergence of the Omicron variant of Covid-19 in the second
half of the year led to the materialisation of one of the risks that
we highlighted last year. This resulted in many regions going
back into partial lockdown which further exacerbated production
and supply chain disruptions, fuelling the frictional inflation that
is described above.
As economies shi from recovery into the expansion phase of
an economic cycle, monetary policies typically change from
being accommodative, with low interest rates, to more 'normal'
levels. The move to more normal interest rates started to be
implemented in the latter part of 2021. As monetary policies go
through such a transition, volatility in financial markets typically
increases. We also experience unpredictable moves in the types
of stock leading the market, between 'Quality/Growth' and
'Value' stocks. There were a number of changes in leadership
between Growth and Value during 2021. This started in the first
quarter 2021 when Value outperformed, before shiing around
again in the second quarter and during the summer months,
before another leg of Value outperformance came in briefly in
September and dissipated again during the subsequent two
months. A renewed bounce of Value since December has been
more pronounced, as a result of the significant shi in monetary
policy. Expectations of US interest rates moved rapidly from
predictions of no change to the market now expecting 5-6
increases by the Federal Reserve during the course of 2022. The
US 10 year Treasury bond yield was getting close to 2.0% in mid-
March 2022, compared to a level of c.1.1% in January 2021, and
c.1.4% in early December 2021, highlighting the magnitude and
speed of shi in yield expectations.
With the leadership volatility, and the periodic bounce of Value
stocks to which the portfolio is not exposed, performance was
challenged during the latter part of the financial year. This was
particularly pronounced during the months of December 2021
and January 2022, when the NAV was down by -12.1%, in a market
as measured by the MSCI All Country World index down by
-2.5%. As a result, for the financial year 2021/22, the Company
produced a net asset value total return of +2.9% while the
benchmark MSCI All Country World index was up by +15.9%.
Performance was particularly weak in the Technology and
Medical Technology parts of the portfolio in the latter months
of the financial year whilst Energy and Financials, two sectors
where we have large underweights, performed strongly, as
would be expected in typical periods of rising bond yields. Over
the financial year as a whole, the Energy sector, in which we have
no exposure, was up +54.7%, whilst Financials were up +31.2%.
Portfolio additions
Additions this year included Nvidia, the Californian Graphic Process Unit designers; Autodesk, specialists in
construction soware; and Farfetch, the luxury online retail platform.
11
In periods of such increased volatility, and of sharp sell-offs in
some of the stocks that we hold, we constantly assess whether
the sell-off is driven by changes in fundamental expectations or
deteriorating operational trends. We believe that the businesses
which the portfolio holds continue to deliver solid operational
performance and face supportive fundamentals, with superior
structural growth prospects and return profiles over our forecast
period. We reaffirmed our conviction and we did not change
the portfolio during the volatile months of December 2021 and
January 2022.
Ongoing Engagements and COP26 increasing
focus on energy transition
The year has been busy with our ongoing engagements with
investee companies on Governance, Remuneration, Environmental
and Social aspects. On the Governance and Remuneration side,
we have been notably continuing our engagement to convey
our stance on remuneration policy in a year of recovery from the
challenging 2020 environment for corporate profits.
On the Environmental and Social sides, we have continued to
engage with companies as part of our assessment of Social
Exploitation risks, and have been assessing companies’ carbon
emissions in more detail, notably building a map of Net Zero
emissions targets. Summary information on voting at investee
companies’ shareholder meetings is available on Martin Currie’s
website at: www.martincurrie.com/about-us/stewardship-and-ESG.
Engagement topics split for 2021
The COP26 summit was an important highlight in the second
half of the year, with an extensive range of events during the
conference, and a growing number of countries announcing Net
Zero targets. The private sector, and corporates in particular,
have been increasingly mobilised on this topic. Many companies
have increased their focus on reducing their carbon emissions
and brought in more targets within their corporate agendas.
There is strong evidence of the level of ownership of such
targets rising to the Executive and Board levels.
We continue to develop metrics for our carbon footprint, guided
by the recommendations of the Task Force on Climate-related
Financial Disclosures (TCFD). While the available data is not yet
complete, an indication of the portfolio’s carbon footprint is set
out in the table below, highlighting the significantly lower carbon
footprint of the Company compared to the market index:
Scope 1 and 2
Weighted average
carbon intensity Coverage
Investment
Portfolio
91.3 98.3%
MSCI World Index 157.5 99.9%
Notes:
Data as at 31 January 2022.
Source: MSCI.
Scope 1 are direct emissions from energy sources owned/controlled by a
company.
Scope 2 are indirect emissions from the generation of energy purchased by
a company.
Weighted average carbon intensity: tons COe/$M sales.
Coverage: Proportion of companies for which data is available.
Portfolio Activity
In the Technology sector we purchased Nvidia in March. The
company posted results that were well ahead of expectations,
leading to earnings upgrades that were supportive. We believe
that Nvidia offers strong growth and high and improving returns,
arising from positioning itself to capture structural growth
opportunities in gaming and data centres. It is now the third
largest holding in the portfolio. We funded the purchase by
exiting Accenture, which performed well over our long-term
holding period, at a share price close to our target.
12
Governance
48.6%
Social
25.0%
Environmental
20.9%
Disclosure only 4.1%
Other 1.4%
“The year has been busy with our ongoing engagements
with investee companies on Governance, Remuneration,
Environmental and Social aspects.”
In the Consumer sector, we purchased online luxury retail
platform Farfetch in May 2021. Benefiting from a significant
weakness in the share price ahead of results. The stock had
posted strong results and bounced from the recent lows. The
weak performance over the past six months has been related
to the stock being impacted by the market rotation away from
growth stocks and the broader sell-off of online platform stocks
across markets. Longer term, we continue to believe that Farfetch
is in a unique position to commercialise the structural growth in
online luxury. We see significant opportunities in its commerce
and media solutions along with luxury new retail. The company has
continued to see increased sales growth through both new added
customers and a high retention rate. The recently announced joint
venture with Alibaba in China also puts it in a good position in
the biggest luxury market in the world. We funded this purchase
from selling out of Starbucks, which has recovered well from the
pandemic crisis lows of last year, and which reached our price
target as a result. In November, we took the decision to sell out of
our holding in Alibaba itself based on a review of the stock, and
a reassessment of the regulatory risk that the company is facing
in its home market, China. We mentioned in our 2021 review that
the tightening Chinese regulatory landscape for large technology
companies was one important highlight of the year. The regulatory
pressures have been related to opening up big tech platforms to
more competition, reducing fees and pushing these companies to
contribute to the common prosperity policies that the government
is focusing on. We assessed the risks to Alibaba, and in particular
estimated potential downside risk from a further worsening of
the regulatory pressures. We took the view that the regulatory
uncertainty makes it difficult to have conviction on the stock, given
the wide range of implications on our estimated fair value from
the different scenarios that we considered. We therefore took the
decision to exit the holding.
We also purchased construction soware specialist Autodesk,
which we believe to be well positioned to capture what we see
as supportive trends in the construction sector as a result of the
infrastructure spending being deployed across many of the major
economies globally. It is also likely to benefit from the growing
regulatory requirements for the construction sector to increase
its soware usage in order to contain project cost overruns, which
are costly not only in terms of budget spent, but also in terms of
unnecessary wastage and therefore in terms of carbon footprint,
an important ESG consideration. We funded this purchase from
selling out of CyberArk, given the challenging earnings backdrop
that the company is facing.
Finally, with medical precision instruments and services firm
Mettler-Toledo performing very strongly, we exited the stock in
June and redeployed the proceeds into increasing our positions in
Nvidia and Veeva Systems.
This year we have redesigned the annual report and included short
summaries of each of the top ten holdings, which are on pages
23 to 27. For a more in-depth look at some of the stocks in the
portfolio please follow this link to our web site:
www.martincurrie.com/uk/global-pws/inside-story.
Outlook for 2022
The Russian invasion of Ukraine is leading to tragic loss of human
life and devastating consequences for many innocent people.
We send our moral support to the Ukrainian people and our
thoughts are with all the people affected.
We recently published a report on the effects of the invasion and
we summarise this, alongside our wider thoughts on the outlook,
below. In a changing situation we encourage you to check our
website regularly for further information.
There are no holdings in Russian companies, nor Eastern
European companies, in the portfolio.
Geopolitical risks now at the forefront of investors’ minds
The Russian invasion of Ukraine was unexpected by the market
and has led to an increased focus on geopolitics. NATO’s
resolve has been tested but is more unified and stronger than
before. Vladimir Putin is unpredictable, leading to the risk of a
broader conflict. Expansionist territorial claims by Russia have
the potential to increase the market’s attention on China and its
territorial claims in the South China Sea, a risk that we believe
the market has not been addressing properly. At the same time,
China might hold the key to a de-escalation of the conflict in
Ukraine, through the potential role as a mediator or through
diplomatic pressure on Putin.
The situation is highly unpredictable at this stage, and ongoing
de-risking action by investors is likely in the near term which is
likely to increase the volatility of share prices.
Macroeconomic momentum could be impacted negatively
The Ukraine conflict is likely to negatively impact consumer and
business confidence in the near term. We believe that this could
spill over into weaker economic momentum in Europe, and to
a lesser extent globally. We believe that we are more likely to
be moving into the Slowdown phase of the economic cycle as
a result. Additionally, energy supply disruption could add to
near-term downward pressure to economies in Europe, whilst at
the same time contributing to yet higher inflationary pressures.
13
Given the relatively low weight of Russia in international trade,
we do not believe that this short-term negative impact on
confidence will have a lasting impact. This is providing that the
conflict does not spread into other territories.
Whilst we continue to see stagflation as a low probability event,
we are increasing that probability to 10-15%. This risk is increased
from less than 5% which was our view in early December last
year. Stagflation risk is clearly higher in Europe than other
geographies at this stage.
In our view, armed conflict brings an increased risk of the
economic cycle shiing from expansion to slow down. This would
typically favour Quality and Growth styles, away from Value,
whilst earnings momentum will remain an important contributor
to style leadership in this environment.
Inflationary pressures could further increase, and last for
longer
The Ukraine-Russia armed conflict has the potential to fuel
more inflation globally, as a result of the higher oil prices and
disruptions to energy supplies, but also in so commodities
given Ukraine’s and Russia’s sizeable agricultural production.
So commodities price increases risk leading to pronounced
increases in food prices, which have the potential to impact
countries where food is a high proportion of consumer baskets,
notably in emerging markets. This could lead to increased social
tensions.
This increased inflationary pressure will further add to the
elevated and longer lasting inflation that we have been going
through. With the US dollar seen as a safe haven, relatively
weaker currencies could also add to inflationary pressures for
the European region.
Monetary policies likely to continue to normalise despite the
uncertain geopolitical backdrop
We expect the US Federal Reserve to keep on its path towards
normalisation of monetary policies by increasing interest rates,
although the rate of change may be slower. The European
Central Bank is also likely to continue to normalise, although
it might delay its first interest rate hikes given the proximity
of the crisis. We expect rate hikes in the EU to be weighted to
the second-half of 2022. Given ongoing elevated inflationary
pressures, and the potential for more inflation from spiking
energy prices near term, it will be more difficult for central banks
to hold back from tightening, despite the growing geopolitical
uncertainties.
Volatility likely to remain elevated for some time
Unfortunately, it is difficult to foresee a rapid resolution to
the Ukraine-Russia conflict, or indeed to the broader tensions
between Russia, NATO and the EU. As such, volatility in equity
prices and exchange rates are likely to be the conditions that
investors will need to accept for the time being.
Earnings momentum likely to be even more critical for
investors, given the lower earnings growth outlook
Before the Ukraine-Russia conflict earnings growth expectations
for this year were pedestrian, aer a sharp recovery year in 2021.
Current geopolitical developments are leading to downside risk
in economic momentum, and therefore will put more downside
risk to earnings growth expectations. In such an environment
of higher inflation, lower economic growth, and lower earnings
growth, there will be an even higher emphasis in the market
on companies with consistent growth, higher structural growth
profiles, and that have pricing power to protect their margins
from the higher inflationary pressures.
14
“The Ukraine-Russia armed
conflict has the potential to
fuel more inflation globally,
as a result of the higher oil
prices and disruptions to
energy supplies”
We believe that Quality and Growth companies are likely to
come back in focus for investors.
The Ukraine-Russia conflict carries more risk of negative
impact on economic momentum in Europe, and is leading
to an increased risk premium attached to European equities
relative to other regions. This crisis is likely to further widen the
valuation spread between US and EU equities in the near term,
whilst there is uncertainty about the potential developments
in the conflict. Selective exposure to companies with a lower
risk of negative impact on their earnings from the spill overs
of the conflict is, in our view, likely to be an important focus for
investors.
Our thoughts on current market opportunities
• Armed conflicts are highly unpredictable and increase risk
premia in markets, which investors will need to capture into
their expectations
• The risk of conflict escalation is not negligible and such
a scenario would lead to a bleak downside risk to equity
markets
• Ultimately, elevated risk premia and risk aversion, at a
time when equity markets have had a sizeable pullback,
can present good entry points for longer term investors,
providing that there is no conflict escalation
• Less monetary tightening as a result of the risk of weaker
economic momentum is likely to be supportive for quality
growth stocks
It is not easy at this stage to see a rapid resolution to this
conflict, with potential risk of escalation leading to a worsening
impact on markets in the near term. It will be critical to be highly
selective in choosing investments, focusing on fundamental
analysis, and assessing the risk of deterioration in any company,
based on their:
• specific industry exposures
• end-markets, and;
• geographic presence of operations and production bases.
Sustainability focus post pandemic recovery to remain high
(Higher focus, higher costs, higher investments)
Looking beyond the current geopolitical news, in the same
way that we predicted an increased focus on Sustainability in
2021, we believe that 2022, coming on the heels of the COP26
summit, will see an ongoing trend towards more sustainability.
This will include action by corporates, investors, policy makers
and society as a whole, given the ongoing need to deliver on
the ambitious and necessary net zero targets. As the focus on
sustainability continues to increase, it will bring with it:
• a higher cost of operating for corporates,
• a higher regulatory burden in some industries, notably the
most polluting and high carbon emitting areas,
• potentially some higher tax structures related to carbon
emissions,
• higher levels of investment into green initiatives and
solutions.
This ongoing increased investment in climate solutions is likely
to continue to drive the positive momentum in innovation, which
is likely to open up some opportunities for long-term investors.
At the same time, it will be important to stay disciplined as
investors, in order to avoid over-inflated thematic bubbles that
could form in these periods of increased investment in specific
areas.
“This ongoing increased
investment in climate solutions
is likely to continue to drive
the positive momentum in
innovation.”
15
“We believe that Quality and
Growth companies are likely
to come back in focus for
investors.”
16
Thematic opportunities remain plentiful in a world
transitioning towards sustainability
As long-term investors, we believe that we are facing an exciting
period of investment opportunities and strong innovation rates,
in a world transitioning towards a more sustainable approach to
operating. This brings opportunities notably in:
Of these areas, those related to infrastructure are supported by
the sizeable spending initiatives that have been unveiled since
the pandemic crisis, some of which are still to be deployed in any
meaningful way. As ever, a structured and disciplined valuation
approach to assessing these thematic areas is key to finding
attractive opportunities.
An ever more disruptive decade continues to affirm itself
With the ongoing focus on investing for a world transitioning
towards net-zero, innovation rates are likely to continue to
increase and, with this, disruption risk to traditional businesses
is likely to continue to rise. For long-term investors, this opens
up attractive opportunities, but it also highlights the need to be
vigilant to the risks posed by the disruption of existing business
models, and to ensure that these risks are assessed in a detailed
and structured analytical approach. Equally important is the
ability for companies to remain innovative, both to fend off
competitive pressures and to stay ahead of the disruptive trends
that could challenge their market positioning.
Our focus on the three mega-trends of Demographic Changes,
Future of Technology and Resource Scarcity gives us the
ability to position the Company to take advantage of long-
term structural growth, whilst ensuring that we harness the
opportunities of Sustainable Living, Decarbonisation and
Climate Change.
“As long-term investors, we believe that we are facing an
exciting period of investment opportunities and strong
innovation rates, in a world transitioning towards a more
sustainable approach to operating.”
Green &
Alternative Energy
Energy Efficient
Infrastructure
Electric transportation –
High Speed Railways
& Electric Vehicles
Cloud Computing
& Cyber Security
Metaverse &
Quantum Computing
Robotics
& Automation
5G Telephony
Healthcare
Infrastructure
Zehrid Osmani
Portfolio Manager, Martin Currie Global Portfolio Trust plc
Head of Global Long-Term Unconstrained Equities,
Martin Currie
12 April 2022
Valuation
ESG
$
Returns
Corporate
ethos
$
Financial
strength
Growth
drivers
Does the company generate sustained profits?
Does the company have a healthy balance sheet?
Does the company have strong track record of capital
allocation?
Does the company excel in the eight criteria below?
Assess company against four core risk categories
Assess company against 50+ ESG criteria
Assess company against mega-trend thematic analysis
Accounting
diagnostics
Industry
analysis
Industry
risks
Company
risks
Governance &
sustainability
risks
Environmental Social Governance
Portfolio
risks
2. In-depth fundamental
research
Future of
technology
Resource
scarcity
Demographic
change
1. IDEA GENERATION
4. PORTFOLIO
Analyse the customers of the
potential holding
End-user markets
3. Portfolio
construction
Analyse the maturity of the business
Industry lifecycle
Evaluate in terms of business
model diversity
Company classification
Evaluate with thematic mega-trend
framework
Evaluate exposure to the world’s
growth markets
Geographic revenue & profit
Long-term thematics
Our investment universe consists of companies with a
combination of sustainable growth and quality
We identify quality growth ideas by looking for
companies that can generate sustained profits,
demonstrated by an ability to consistently generate a
Return on Invested Capital (ROIC) in excess of their
Weighted Average Cost of Capital (WACC). On the
quality side we want those with healthy balance
sheets, identified by low gearing and the level of
goodwill.
Our investment manager's process
We establish the quality and sustainability of the
business model
We aim to be highly efficient in our research, so we use
eight criteria to examine the quality and sustainability
of the business model – of these, valuation is
considered the most important. This allows us to focus
on the strongest ideas when conducting our in-depth
fundamental research.
The proprietary research platform generates
maximum insight without compromising on quality
Our research templates systematically risk assess a
company against four categories – industry dynamics,
company risks, governance & sustainability and
portfolio risks. This allows for effective comparisons
across different companies and provides a framework
for the team to build their conviction.
ESG is integrated throughout the process
Our proprietary ESG risk assessment on Governance
and on Sustainability consistently assesses over 50
underlying criteria to capture the complexity of the
ESG risks facing a company’s long-term outlook and
sustainability – each criterion reflecting what we
believe are the most universal material ESG factors.
We drill down into a further 22 criteria to analyse social
exploitation risk.
Thematic analysis is used to identify long-term growth
We want to identify multi-decade returns so we
incorporate thematic analysis on three mega-trends:
Demographic change, Future of technology and
Resource scarcity. Demographic change encapsulates
areas such as growth in the emerging markets' middle
class, healthy living, or ageing populations. In Future of
technology, we capture themes such as outsourcing,
artificial intelligence and cyber security, while in
Resource scarcity, we see opportunities emerging in
electric vehicles, climate change, and energy.
17
Valuation
ESG
$
Returns
Corporate
ethos
$
Financial
strength
Growth
drivers
Does the company generate sustained profits?
Does the company have a healthy balance sheet?
Does the company have strong track record of capital
allocation?
Does the company excel in the eight criteria below?
Assess company against four core risk categories
Assess company against 50+ ESG criteria
Assess company against mega-trend thematic analysis
Accounting
diagnostics
Industry
analysis
Industry
risks
Company
risks
Governance &
sustainability
risks
Environmental Social Governance
Portfolio
risks
2. In-depth fundamental
research
Future of
technology
Resource
scarcity
Demographic
change
1. IDEA GENERATION
4. PORTFOLIO
Analyse the customers of the
potential holding
End-user markets
3. Portfolio
construction
Analyse the maturity of the business
Industry lifecycle
Evaluate in terms of business
model diversity
Company classification
Evaluate with thematic mega-trend
framework
Evaluate exposure to the world’s
growth markets
Geographic revenue & profit
Long-term thematics
18
Built for long-term returns
We consider portfolio construction of equal importance to the
research process. The same high-quality proprietary data that
we generate in our research platform is used in the portfolio
analytics, risk assessments and the portfolio construction.
This aids our understanding of the portfolio’s diversity and
allows us, through appropriate stock weightings, to effectively
manage risk and ensure we are positioned to capture long-
term growth.
Geographic revenue and profit – exposure to the world’s
growth markets
Breaking down the portfolio by the geographic source of
revenue provides greater insight than constructing the
portfolio based on a stock’s country of listing. In an increasingly
globalised and connected world, companies are more
dependent on overseas revenues.
Long-term thematics – investing in the drivers of corporate
growth
Within our three mega-trends of Demographic change, Future
of technology and Resource scarcity, we have approximately
35 specific sub-themes, some of which overlap between two
or three of the mega-trends. By using our thematic framework
we can build a picture of each company and therefore the
portfolio’s overall exposure to these growth drivers.
Company classification – ensuring a diversity of business
models
We invest in quality growth companies, but our classifications
allow us to maintain a diversity of business models that can
either offer more defensive or outright growth characteristics
to deliver a more consistent return profile.
Industry lifecycles – understanding business maturity
We assess where a company is in its industry lifecycle through
six key stages from early stage and accelerating growth
through to decline and renewal. This is important in terms of
balancing growth drivers and risk management.
End-user markets – seeking profitable sectors and industries
An aggregation of our portfolio holdings’ end-customers.
As with our analysis of geographic revenues and profit, this
provides a more intuitive breakdown than a company’s sector
listing. We can understand if companies are operating in
potential profitable sectors or areas where we see future
growth potential.
A portfolio of 25-40 hand-picked stocks from
some of the world's leading companies.
The investment manager's depth of Environmental, Social and Governance (‘ESG’) research is an
integral part of its investment process. We are continually enhancing our assessments to reflect
new issues and to ensure our market-leading approach continues to evolve.
Source: Morningstar 31 December 2021. ©2021 Morningstar, Inc. All rights reserved.
PRI – Principles for Responsible Investment. A copy of the PRI's assessment of Martin Currie and its methodology is available on request.
Holder of highest Morningstar
Sustainability Rating
The only company in the AIC
global sector to be awarded the
highest Morningstar
Sustainability Rating – 5 globes
1
.
This recognises our commitment
to mitigate the risks our investors
face in the ESG space.
Top 1% worldwide
The Company is in the top 1% of
all the 7,206 products
categorised by Morningstar as
Global Equity Large Cap.
1
This
world-class rating acknowledges
the high standards and
pioneering in-depth analysis
undertaken as part of our stock
selection process.
Over 50 ESG assessments on
every company
We evaluate, measure and score
over 50 individual criteria for
every company that we research.
This provides a consistent and
systematic analysis across
sectors and countries, helps
identify the most material risks
and gives us an insight into a
company’s ESG credentials.
Social factors – rated one of the
best in sector
We are already rated one of the
best by Morningstar in the sector
for Social factors
1
but this is an
area we have recently been
focusing on – and is of major
importance to our team. We have
introduced a second layer of 22
measures to underpin our
analysis into exploitation risk,
looking at issues relating to:
labour rights, human rights,
working conditions, age & gender
exploitation.
PRI rating (triple A+) for 4 years
in a row
We have been awarded the
highest level PRI rating (triple A+)
for four years in a row and we
rank in the top 9% PRI signatories
investing in listed equities for the
standards of active ownership
2
–
meaning the way ESG is
embedded into our process is
amongst the best in the world.
Low-carbon footprint
The portfolio has been awarded a
low-carbon designation by
Morningstar and accounts for a
fraction of the emissions of the
benchmark index (MSCI ACWI).
An index tends to include
companies based on their size so
can include high polluters or
companies judged to have a
detrimental impact on society.
Our active management
approach is more selective.
19ESG & our investment manager's process
PORTFOLIO SUMMARY 20
By asset class
31 January 2022 % 31 January 2021 %
Equities
107.5
108.0
Cash 2.0 1.9
Less borrowings
(9.5)
(9.9)
100.0
100.0
By sector
31 January 2022
Company %
31 January 2022
MSCI All Country
World index %
31 January 2021
Company %
31 January 2021
MSCI All Country
World index %
Information Technology
33.7 22.8
28.1 22.0
Healthcare
23.4 11.4
28.2 12.0
Consumer Discretionary
15.2
12.0
18.0 13.2
Industrials
11.3 9.5
9.2 9.5
Consumer Staples
5.8 6.9
5.3 7.1
Materials
4.7 4.7
3.6 4.9
Financials
3.0 14.8
3.5 13.3
Communication Services
2.9 8.5
4.1 9.3
Energy —
4.0
— 3.1
Utilities —
2.7
— 3.0
Real Estate —
2.7
— 2.6
100.0 100.0
100.0 100.0
21
North America
43.9%
Developed Europe
39.1%
6.1%
Developed Asia ex Japa
n
Global Emerging Markets
10.9%
Portfolio distribution by region
31 January 2022
Company %
31 January 2022
MSCI All Country
World index %
31 January 2021
Company %
31 January 2021
MSCI All Country
World index %
North America
43.9 63.9
39.8 59.8
Developed Europe
39.1 16.1
34.4 16.5
Global Emerging Markets
10.9
11.5
16.3 13.7
Developed Asia Pacific ex Japan
6.1 2.8
6.8 3.1
Middle East
— 0.2
2.7 0.2
Japan —
5.5
— 6.7
100.0 100.0 100.0 100.0
Sector Country
Market value
£000
% of total
portfolio
North America 149,048 43.9
Microso Information Technology United States 19,489 5.7
Nvidia Information Technology United States 17,440 5.1
Linde Materials United States 15,820 4.7
ResMed Healthcare United States 15,600 4.6
Masimo Healthcare United States 13,952 4.1
VISA Information Technology United States 13,545 4.0
Adobe Information Technology United States 12,493 3.7
Ansys Information Technology United States 11,561 3.4
Illumina Healthcare United States 10,569 3.1
Veeva Systems Healthcare United States 9,734 2.9
Autodesk Information Technology United States 8,845 2.6
Portfolio holdings as at 31 January 2022
22
Company in members' voluntary liquidation.
Sector Country
Market value
£000
% of total
portfolio
Developed Europe 132,768 39.1
Kingspan Group Industrials Ireland 15,431 4.5
Moncler Consumer Discretionary Italy
14,267
4.2
Atlas Copco Industrials Sweden 13,956 4.1
Hexagon Information Technology Sweden 13,202 3.9
L'Oreal Consumer Staples France 12,624 3.7
Kering Consumer Discretionary France 10,983 3.2
Ferrari Consumer Discretionary Italy 10,786 3.2
Coloplast B Healthcare Denmark 10,135 3.0
Assa Abloy Industrials Sweden 9,046 2.7
Adidas Consumer Discretionary Germany 7,697 2.3
Kerry Group Consumer Staples Ireland 7,007 2.1
Farfetch Consumer Discretionary United Kingdom 5,926 1.7
Dr. Martens Consumer Discretionary United Kingdom 1,708 0.5
Candover Investments
1
Financials United Kingdom — —
Total portfolio holdings
339,535
100.0
Global Emerging Markets 36,930 10.9
Taiwan Semiconductor
Manufacturing
Information Technology Taiwan 18,007 5.3
Tencent Holdings Communication Services China 9,691 2.9
WuXi Biologics Healthcare China 8,959 2.6
JD.com Consumer Discretionary China 273 0.1
Developed Asia Pacific ex Japan 20,789 6.1
CSL Healthcare Australia 10,509
3.1
AIA Group Financials Hong Kong 10,280 3.0
Taiwan Semiconductor Manufacturing ('TSMC')
Information Technology, Taiwan
The growth of fabless semiconductor design has been a major
tailwind and Taiwan-listed TSMC has been taking an increasing
share at each new technology node. The competitive landscape
has changed substantially and TSMC is now in a position to
price products so that it can maintain its current ROIC. Large
capex requirements have led analysts to undervalue the stock as
they assume returns will fade meaningfully in the next few years,
despite historical evidence to the contrary.
Through our proprietary ESG risk assessment, TSMC
demonstrates good transparency on overall operations with
strong reporting practices. More broadly, the extent to which
artificial intelligence is rapidly being adopted to answer many
sustainability issues will be beneficial to TSMC as a leading chip
manufacturer. We continue to monitor the firm’s risk from water
scarcity issues due to the volumes of water required in the
production process.
Sector
Portfolio %
Market
value £000
5.3
18,007
23
Microso
Information Technology, United States
Microsoft, known for its Windows operating system, the Xbox
gaming console and cloud computing service Azure, is in a prime
position to benefit from a new ‘golden era’ of investment in
technology. IT investment is becoming crucial for every aspect of
corporate life – infrastructure, marketing, sales and commerce – and
Microsoft stands to capture a significant share of this double-digit-
growing expenditure. Furthermore, a progressive move towards a
subscription-based model is improving the company’s pricing power
and its competitive position in the market.
Microsoft’s Environmental, Social and Governance strengths, in our
view, are strong management and a relatively diverse board. We
note Microsoft’s positive contribution to tackling climate change and
social issues with such initiatives as ‘AI for Earth’ and various
educational programmes.
31 January 2022
Market value
£000
31 January 2022
% of total
portfolio
31 January 2021
Market value
£000
31 January 2021
% of total
portfolio
Microso 19,489 5.7 14,045 4.3
Taiwan Semiconductor Manufacturing 18,007 5.3 17,239 5.3
Nvidia 17,440 5.1 — —
Linde 15,820 4.7 11,764 3.6
ResMed 15,600 4.6 13,274 4.0
Kingspan Group 15,431 4.5 9,111 2.8
Moncler 14,267 4.2 12,347 3.8
Atlas Copco 13,956 4.1 12,652 3.9
Masimo 13,952 4.1 15,658 4.8
VISA 13,545 4.0 11,198 3.4
Largest 10 holdings in detail
Sector
Portfolio %
Market
value £000
5.7
19,489
LARGEST 10 HOLDINGS
Nvidia
Information Technology, United States
The company designs graphics processing units for gaming and
professional markets. We see long-term upside optionality in
several secular growth areas, including Gaming, the Metaverse,
Cloud, AI and Autonomous Vehicles.
The company is targeting 65% usage of renewable energy by
2025, with 17 of locations now fully powered by renewable
energy. Nvidia’s products also address the issues of energy
efficiency and lower consumption, for example the NVIDIA
‘DGX SuperPOD’ is the most energy efficient system on the
TOP500 list of supercomputers, and 26 out of 30 greenest
supercomputers use NVIDIA components.
Sector
Portfolio %
Market
value £000
5.1
17,440
24
Linde
Materials, United States
Linde is the global leader in the manufacture and distribution of
industrial gases. Due to a resilient industrials-facing business
model based on long-term contracts, fixed 'take-or-pay' fees with
increasing exposure to healthcare and food & beverage markets,
Linde is well placed to deliver a GDP+ top-line growth rate
through the cycle. In addition, there is significant scope for a
profitability uplift in Europe and Asia to the levels already
achieved by the Group in the Americas. This is a business with
significant pricing power in most market environments. As a
dominant player across the industrial gases value chain, Linde is
also in a privileged position to profit from hydrogen emerging as
a key energy source for a decarbonised global economy.
Linde provides energy solutions to its customers through its
onsite industrial gas plants, which help its customers to reduce
their own carbon emissions and is targeting a 35% cut in absolute
emissions by 2035.
Sector
Portfolio %
Market
value £000
4.7
15,820
ResMed
Healthcare, United States
The company is a global leader in the development of medical
devices and cloud-based software applications that diagnose,
treat and manage respiratory disorders including sleep
disordered breathing (more commonly known as sleep apnea).
The company has a very attractive long-term revenue growth
outlook. It is estimated that more than 424 million globally have
moderate to severe sleep apnea, with the percentage diagnosed
below 15% and the percentage treated by ResMed below 3%,
despite the company being market leader.
One ongoing point of focus for us is the use of plastics in
disposable components contributing to an increased
environmental footprint and in 2021 ResMed established their
'Green Team'. They are dedicated to identifying, testing, and
implementing new ways to minimize the company’s environmental
footprint by reducing, reusing, and recycling as much material as
possible.
Sector
Portfolio %
Market
value £000
4.6
15,600
Kingspan Group
Industrials, Ireland
The Irish-based company provides insulating building materials to
the construction industry. It is a global leader in insulation and
building envelope solutions and we believe it is poised to benefit
from tighter energy efficiency regulations. The stock fits well into
greener buildings initiatives, as a leader in insulation materials for
the construction industry. We engaged extensively with
Kingspan’s senior management after the inquiry into the Grenfell
tragedy and highlighted some control and monitoring issues
related to the UK business. The company has taken rapid and
decisive steps to further strengthen its governance and internal
compliance monitoring, to prevent a repeat of such events in
future, with full traceability of products, and management change
at the UK and executive levels.
Sector
Portfolio %
Market
value £000
4.5
15,431
25
Sector
Portfolio %
Market
value £000
4.1
13,956
Atlas Copco
Industrials, Sweden
The Swedish industrial tools and equipment manufacturer is very
well-run and has one of the best – and most consistent – return
profiles among European capital goods stocks. Atlas’ value
proposition is in air compressors, known as the ‘fifth utility’ critical
in powering certain industries, which will allow it to maintain a
high market share and a pricing premium. It has both direct and
indirect exposure to green building construction, renewable
energy and infrastructure developments for electric
transportation, 5G and healthcare.
Atlas Copco has a very high-quality management team backed by
strong talent development, they maintain strong oversight of their
subsidiaries' environmental management programmes, and they
have since 2018 established a programme of goals and targets
covering areas from CO reduction to ethics.
Sector
Portfolio %
Market
value £000
4.2
14,267
Moncler
Consumer Discretionary, Italy
Is a global leader in super premium down jackets and has a rich
heritage and strategic focus on long-term sustainable and
responsible growth. It has a history of high ROIC generation, one
of the highest in the industry and is highly cash generative due to
high margin products and sales density. The firm is driven by
organic growth from pricing power and geographic expansion –
with strong emerging market potential. We believe that the
structural growth potential of the company is compelling, and its
ability to continue to innovate remains strong.
Moncler with its origins in mountain sports clothing, has being
close to nature in its DNA, and the firm has created a fully
carbon neutral jacket, the ‘Grenoble’. This is made from
significant recycled materials and offsetting the emissions as a
result. The company is also channelling efforts in R&D to meet a
target of 50% recycled nylon by 2025, in addition to running a
project to repair and refresh consumers' jackets rather than
disposing of them.
26
VISA
Information Technology, United States
VISA is a classic compounding company boosted by the secular
shift away from cash and physical sales towards digital and
online commerce. The company has a highly attractive ROIC
profile as the network model provides structural operating
leverage but low requirements for capital expenditures. The
electronic payments space is seeing ongoing disruption, but
VISA's prime competitive position ensures that they can face
these challenges from a position of strength.
The company aligns its ESG efforts to the UN Sustainable
Development Goals, in particular, those addressing poverty and
inequality via facilitating access to finance and the financial
system. This also includes women’s economic advancement and
financial education.
Sector
Portfolio %
Market
value £000
4.0
13,545
Masimo
Healthcare, United States
A manufacturer of non-invasive patient monitoring technologies
boasts high barriers to entry and 50% market share with strong
recurring revenues. It has attractive growth prospects, driven by
supportive long-term structural trends, related to ageing
populations, improved healthcare infrastructure, and the future
of technology related to intelligent patient monitoring. In
addition, the business has good-quality management and,
importantly, a sustainable business model.
In response to the Covid-19 pandemic, the company launched
Masimo SafetyNet, personal wearable remote monitoring
devices linked to a secure, cloud-based patient surveillance
platform to help clinicians provide remote care for patients. This
allowed patients to remain at home and in turn clinicians could
devote medical attention and hospital beds to patients in a
more critical condition.
Sector
Portfolio %
Market
value £000
4.1
13,952
27
This report provides shareholders with details of the Company’s
business model and strategy as well as the principal and emerging
risks and challenges that it faces.
Business model
The Company has no employees and outsources its entire
operational infrastructure to third-party organisations. The Board
has appointed Franklin Templeton Investment Trust Management
Limited as its Alternative Investment Fund Manager (‘AIFM’), which
in turn has appointed Martin Currie Investment Management
Limited (the ‘investment manager’ or the ‘manager’) to manage
the portfolio. Under the leadership of portfolio manager, Zehrid
Osmani, a specialist team analyses the world’s stocks to find the
very best ideas. The Board sets the Company’s strategy, decides
the appropriate financial policies to manage the assets and
liabilities of the Company, ensures compliance with tax, legal and
regulatory requirements and reports regularly to shareholders on
the Company’s performance. Further information on the role and
operation of the Board is set out under Corporate Governance on
page 38.
For more information on investment trusts in general please visit
www.theaic.co.uk.
The investment objective is to produce long-term returns in excess
of the total return from the MSCI All Country World index.
Investment Policy
The current investment policy is:
• Investing in predominantly blue chip equities with market
capitalisation in excess of $3 billion.
• Investing predominantly in quality growth companies with
superior share price appreciation potential based on attractive
ROIC (return on invested capital), balance sheet strength
and Environmental, Social and Corporate Governance ('ESG')
credentials.
• A high conviction portfolio typically with 25-40 stocks, with a view
to holding stocks over a long time horizon.
• Debt may be used to enhance returns to shareholders.
Proposed new investment policy:
At this year's annual general meeting ('AGM'), the Directors
are recommending that the Company adopts a proposed new
investment policy. As described in the Chairman's statement on
page 6 there will be no change in the way that the portfolio is
managed but the Directors are recommending an investment policy
which sets out clearly the Company's strategic commitment to ESG
investing. A description of the investment manager’s process, which
includes a fully integrated approach to ESG matters, is set out on
pages 17 to 19 of this annual report.
The portfolio is currently managed such that if the Company was
a European open-ended fund then it would comply with Article
8 of the EU’s Sustainable Finance Disclosure Regulation. It is the
investment manager’s intention that the rigorous ESG process will
mean that it should comply with any similar criteria as and when,
in due course, the UK introduces its own sustainability disclosure
regulations and with any other key reporting frameworks.
The investment manager’s proprietary ESG risk assessment
makes a risk assessment on Governance and on Sustainability and
consistently assesses over 50 underlying criteria to capture the
complexity of the ESG risks facing a company’s long-term outlook
and sustainability – each criterion reflecting what they believe are
the most universal material ESG factors. Each risk is rated on a scale
1 (lowest risk) to 5 (highest risk). These risks are analysed under the
following headings:
Governance
• Board quality
• Management quality
• Remuneration
• Culture
Sustainability
• Environmental
• Social
• Understanding and integration
• Common factors
• Sustainability momentum
Under the ‘Social’ heading the investment manager drills down into a
further 22 criteria to analyse social exploitation risk. Each risk is rated
on a scale 1 (lowest risk) to 5 (highest risk). A company with an overall
Sustainability or Governance risk rating of 4.0 or higher will not be
included in the portfolio.
In addition, the proposed new investment policy sets out more
clearly the approach to risk spreading, to gearing and excludes
investment in other listed closed-end funds.
The proposed new investment policy as set out below has been
reviewed and approved by the UK Financial Conduct Authority
('FCA').
The proposed new investment policy is:
• To invest predominantly in listed global equities of quality growth
companies with superior share price appreciation potential,
based on projected ROIC (return on invested capital), balance
sheet strength and sustainable business models.
• To manage a high conviction portfolio with typically 25-40
holdings, with a view to holding stocks over a long-term
investment horizon.
• To achieve risk spreading through a portfolio of holdings
diversified by types of company and sources of revenue. No more
than 10% of total assets will be invested in a single stock.
• To fully integrate Environmental, Social and Governance ('ESG')
criteria into fundamental analysis when assessing business
models.
• To exclude investments identified through the investment
manager’s proprietary ESG risk assessment as having a high level
of Sustainability or Governance risk.
BUSINESS REVIEW 28
• To potentially use debt to enhance returns to shareholders.
Gearing will not exceed 20% of net assets at the time of
drawdown.
• To not invest in other listed closed-end funds.
Purpose
In line with the objective outlined above, the Company's purpose
is to deliver a sustainable long-term total return to shareholders
by implementing the investment policy through the Company's
investment manager.
Strategies
Investment
In order to achieve its investment objective, the Company has
adopted a distinctive philosophy in implementing its investment
policy. This clearly focuses on using the investment manager’s
ability to combine investment performance with socially responsible
investment. This is done through their leading global research
capabilities in identifying high-quality companies that will benefit
from exposure to growth megatrends worldwide and their leading
performance in engaging with these companies on ESG issues. The
Company invests predominantly in blue chip equities with a market
capitalisation in excess of $3 billion and selects quality growth
companies which are market leaders in their industries with superior
share price appreciation potential based on attractive return
on invested capital (ROIC), balance sheet strength and ESG
credentials.
The resulting diversified portfolio of between 25 and 40
international quoted companies as listed on pages 21 and 22 is
actively managed and concentrated, focusing on high conviction
stocks selected on the basis of detailed research analysis. This active
portfolio management policy will inevitably involve some periods
when the Company’s portfolio outperforms or underperforms the
Company’s benchmark.
The Board does not impose any limits on the investment manager’s
discretion to select individual stocks in compliance with the
investment policy. The investment manager ensures that investment
risk is dominated by the high conviction stocks in the portfolio
within the guidelines set by the Board and that the combination of
stocks held does not lead to unintended reliance on a particular
macroeconomic factor (for example, a higher oil price or lower
interest rates).
Current asset allocation and actual holdings are discussed in the
Manager’s review on pages 12 and 13 and details are contained in the
portfolio summary and portfolio holdings on pages 20 to 22.
Environmental, Social and Governance ('ESG')
The Company and investment manager believe that good ESG
practices are a fundamental component of a high-quality company
and hence rigorously reviews its ESG practices. This will typically
include analysis of shareholder rights, accounting standards,
remuneration, board structure, supply chain, data protection,
pollution/hazardous waste policies, water usage and climate change
policies. The investment manager’s ESG analysis may influence key
financial assumptions such as cost of capital, revenues or costs and
thus the estimate of a company’s intrinsic value. These are discussed
in greater detail on pages 17 to 19. A poor governance, environmental
or social track record for a company can indicate wider sustainability
issues and could lessen the attractiveness of the investment.
ESG issues are integral to the Company’s investment philosophy and
the approach taken by the investment manager has been rewarded
with the highest possible rating (A+) from the UNPRI across its
three key criteria and is a ‘tier 1‘ signatory of the UK Stewardship
Code 2012 issued by the UK Financial Reporting Council ('FRC').
Please see the Section 172 Report on page 31 for information on
engagement with investee companies.
Marketing
The marketing strategy seeks to expand the shareholder base
through increased engagement with key audiences, using the
most appropriate promotional techniques. This drive to deepen
demand for the Company’s shares should enable growth over
time in the number of shares in issue, improve the efficiency of the
Company and increase liquidity in its shares.
This is supported by a commitment to provide clear, transparent
and regular communication to shareholders delivered primarily
through the Franklin Templeton UK Distribution team and the
Company’s website which contains information relating to
performance, outlook and significant developments as they occur
as well as interviews with the portfolio manager, Zehrid Osmani.
In addition, the Company utilises marketing tools such as
advertising, social media, public relations and research. The
portfolio manager also meets regularly with existing and potential
institutional shareholders, including private wealth managers.
Financial
The Company's main financial strategic goals are:
• the management of shareholder capital; and
• the management of the Company's financial risks.
The Board’s principal aim for the management of shareholder
capital is the achievement of long-term total return in line with
the investment objective. Growth should incorporate both the
investment manager’s investment performance and the issuance
of shares when sufficient demand exists to do this without diluting
the value of existing shareholder capital. At the same time, the
Board has also maintained or increased dividends each year since
the Company’s launch in 1999 and remains committed to delivering
strong long-term total returns on shareholder capital.
29
1. Net asset value performance relative to benchmark
The Board assessed the net asset value total return compared
to the benchmark. It is measured on a financial year basis and
assessed over a rolling three year period. The benchmark with
effect from 1 February 2020 is the MSCI All Country World index.
Prior to this, the benchmark was the FTSE World index to 31
January 2020.
The KPI was achieved for the period. The return of the Company
was 54.12% and the benchmark 52.50% for the three years to 31
January 2022.
2. Performance against the Company’s peers
The Board monitors the share price total return performance
versus all competitor funds within the AIC Global sector over a
rolling three year period.
The share price total return for the Company was 53.11% over the
three years to 31 January 2022 which ranked 5th out of 17 in the
AIC Global sector.
3. Ongoing charges
The Board monitors ongoing charges on a regular basis to ensure
that it meets its target by maintaining cost discipline and its focus
on value adding activities. The KPI was met for the year at 0.68%.
Ongoing charges plus the performance fee for the year ended
31 January 2021 was 1.62%. With effect from 1 February 2021, the
performance fee arrangement was discontinued. See note 3 on
page 68.
Key Performance Indicators and Performance
The Board uses certain key performance indicators (‘KPIs’) to monitor and assess its performance in achieving the Company’s
objectives. The Board have made no changes to the KPI targets in the financial year to 31 January 2022.
KPI Target 2022 Achieved 2021 Achieved
1. Net asset value performance relative
to benchmark (over 3 years)
Outperform 1.62% Yes 19.43% Yes
2. Performance against Company’s
peers (over 3 years)
Top third performance 5 out of 17 Yes 4 out of 15 Yes
3. Ongoing charges Less than 0.70% 0.68% Yes 0.58% Yes
30
Discount management
The Company operates a zero discount policy with the objective
of providing shareholders, in normal market conditions, with
assurance that the Company’s share price is in continuing
alignment with the prevailing net asset value per share ('NAV') and
liquidity so that investors can buy or sell as many shares as they
wish at a price which is not significantly different from the NAV.
This involves the Company both buying back shares and reissuing
shares from Treasury or issuing new shares. Shares bought back as
part of this policy are held in Treasury and reissued when demand
exists which the market cannot supply.
Discount is an Alternative Performance Measure, see page 81 for
more details.
Gearing
The Board sets the Company’s policy on the use of gearing as part
of the process of delivering returns to shareholders. The Company
has an unsecured £30 million sterling term loan facility agreement
with The Royal Bank of Scotland International Limited which was
drawn down in full on 24 November 2020 at a fixed interest rate of
1.181% and for a fixed term of three years. The Company has no other
borrowings.
The Board reviews the Company's borrowings to ensure that
gearing levels are appropriate. The total borrowings will not exceed
20% of the net assets of the Company at the time of drawdown. The
Board monitors the Company’s gearing closely and takes a prudent
approach. Further disclosure on leverage as required under AIFM
regulations is set out on page 46.
Gearing is an Alternative Performance Measure, see page 81 for
more details.
Section 172 Report – Duty to promote the success of the Company
The Company is required to provide a statement which describes how the Directors have had regard to the matters set out in Section 172
of the Companies Act 2006 when performing their duty to promote the success of the Company, including:
Section 172 Scope Board's Statement
The likely consequences of any decision in the
long term.
The Board is focused on promoting the long-term success of the Company and
regularly reviews the Company’s long-term strategic objectives, including
consideration of the impact of the investment manager’s actions on the
marketability and reputation of the Company and the likely impact on the
Company’s stakeholders of the Company’s principal strategies.
The interests of the Company’s employees. The Company has no direct employees.
The need to foster the Company’s business
relationships with suppliers, customers and
others.
The Board’s approach to its key stakeholders is set out under 'Stakeholders' below.
The impact of the Company’s operations on the
community and the environment.
The Board’s approach is set out in the section on ESG in 'Strategies' on page 29.
The desirability of the Company maintaining a
reputation for high standards of business
conduct.
The Board’s approach is set out in 'Culture and Values' on page 33.
The need to act fairly between members of the
Company.
The Board’s approach is set out under 'Stakeholders' below.
31
Stakeholders Why they are important Board Engagement
Shareholders The Company, as an investment trust, does not
have any employees and its customers are also
its shareholders. The primary purpose of the
Company is to deliver long-term returns for
shareholders from a portfolio of investments.
Continued shareholder support and engagement
are critical to the existence of the Company and
the delivery of its long-term strategy.
The Board and the investment manager recognise the
importance of engaging with shareholders on a
regular basis in order to maintain a high level of
transparency and accountability and to inform the
Company’s decision making and future strategy. The
Board receives regular reports from the investment
manager on shareholder engagement, with the
investment manager tasked with maintaining regular
and open dialogue with larger shareholders. Directors,
primarily through the Chairman, are also available to
meet major shareholders to understand their views
and to help inform the Board’s decision making
process. The Company maintains an award-winning
website which hosts copies of the annual and half
yearly reports along with factsheets and other relevant
materials. Shareholders are, where possible, also
invited to attend the AGM at which they have the
opportunity to speak directly with Directors. The
investment manager has a dedicated client services
team which maintains regular contact with the
Company’s shareholders and reports regularly to the
Board. Shareholders can also contact the Directors
throughout the year via the company secretary or the
broker.
Stakeholders Why they are important Board Engagement
Lenders Alongside shareholders’ equity, the Company
has, since November 2020, been partly funded
by debt. Although the Company is not
dependent on debt financing, continued support
from lenders is important to maintain the
financial stability of the Company and flexibility
in managing the portfolio.
The Company’s debt is subject to contractual terms
and restrictions. The Company has a procedure in
place to report regularly to its lender on compliance
with debt terms.
The investment
manager
The performance of the investment manager is
critical for the Company to deliver its investment
strategy and meet its objective.
The management engagement committee is tasked
with reviewing the performance of the investment
manager. Representatives of the investment manager
including the portfolio manager, Zehrid Osmani, attend
each quarterly Board meeting and provide an update
on the investment portfolio along with presenting on
macroeconomic issues.
Other service
providers
The Company has a number of other key service
providers, each of which provides a vital service
to the Company and to its shareholders.
The audit committee receives reports from and
reviews the service, quality and value for money
provided by other third party suppliers. The
investment manager is tasked with maintaining a
constructive relationship with such other third-party
suppliers on behalf of the Company. It is the Board’s
policy that all payments due to suppliers will be made
in full and on time.
32
During the year, the Board took a number of key decisions which
fall under the Section 172 scope set out above:
• The Board decided to propose a new investment policy to
shareholders for approval at this year’s AGM. The reasons
for making this proposal are described in the Chairman’s
statement and the proposed revised investment policy is set
out on page 28 and, in particular, recognises investors' growing
interest in ESG matters.
• As part of its continuing succession plan, the Board appointed
Lindsay Dodsworth as a non-executive Director on 1 November
2021.
• On 2 August 2021, the Company appointed Franklin Templeton
Investment Trust Management Limited as its AIFM, replacing
Martin Currie Fund Management Limited in this role. On
the same day, JP Morgan Europe Limited was appointed as
the Company's depositary and JP Morgan Chase Bank N.A.
London Branch was appointed as the Company's custodian.
These changes were effected at the request of Franklin
Templeton so that both of the London-listed investment
trusts managed by Franklin Templeton have the same AIFM,
depositary and custodian which brings benefits of efficiency to
the Company and to Franklin Templeton.
• The Directors decided to maintain the total dividend for the
year, which will result in an uncovered dividend. The reasons
for this are set out in the Chairman’s statement. In considering
its approach to maintaining the dividend the Board, advised by
the audit committee, agreed to maximise the reserves available
for the payment of dividends, as described in the Audit
committee report.
• The Directors decided to propose that the Company adopts
revised Articles of Association which include, inter alia, the
ability to provide flexibility to pay dividends out of realised
capital profits. The reasons for making this proposal are
described in the Chairman’s statement and the key changes to
the Articles of Association are described on pages 47 and 48.
Culture and Values
The Board considers that its culture of openness of debate
combined with strong governance and the benefits of a diverse
Board are central to delivering against its purpose, values and
strategies that are discussed in this report. The Board monitors
and reviews its culture as part of its annual evaluation process
and monitors the culture within the investment manager to
ensure that it is closely aligned with that of the Company. The
key values of the Board are:
Independence: To act independently in the interests of
shareholders.
Sustainability: To ensure that the companies in which the
Company invests and the Company's key suppliers are
supportive of good environmental, social and governance
practices and that its investment manager encourages
continuous improvement in these areas.
Transparency: To report transparently and accurately to
shareholders on the condition, performance and prospects of
the Company.
The Board works closely with the investment manager to
develop and monitor its investment strategy and activities, not
only to achieve its investment objective, but also to deliver
the Company’s values of Independence, Sustainability and
Transparency.
Engagement with investee companies
The Board also expects good governance standards to be
maintained at the companies in which the Company is invested
and reviews the engagement and voting activities which are
undertaken by the investment manager. The ESG strategy
followed by the Company and the investment manager is
detailed on pages 17 to 19. The Board receives regular reports of
both voting and other engagements by the investment manager
with the management teams of companies in the portfolio.
Details of Martin Currie’s ESG related policies and activities can
be found on its website at www.martincurrie.com. The Board
believes that companies which exhibit positive ESG behaviours
contribute to increasing value over the long term.
Voting policy and the UK Stewardship Code
The Company has delegated responsibility for voting at investee
company shareholder meetings to Martin Currie, which votes
in accordance with its corporate governance and responsible
investing policy. Martin Currie has gained the highest A+ rating
from UNPRI across its three key criteria and is a ‘tier 1’ signatory
of the UK Stewardship Code 2012. In 2019, the FRC published
a new version of the code, the UK Stewardship Code 2020, to
which Martin Currie Investment Management Limited
is a signatory. A copy of Martin Currie's stewardship report
and voting records can be found at
www.martincurrie.com/h_us/our_policies.
The Board has published a compliance statement with the
UK Stewardship Code on the Company’s website, which
incorporates its policies on socially responsible investing and
engagement with the companies in which it invests.
Anti-bribery and tax evasion
The Board has a zero tolerance policy towards bribery and looks
to ensure that its service providers and associated persons have
effective policies and procedures designed to actively prevent
bribery which are high level, proportionate and risk based.
In relation to the corporate offence of failing to prevent tax
evasion, it is the Company’s policy to conduct all business in an
honest and ethical manner. The Company takes a zero tolerance
approach to any facilitation of tax evasion whether under UK law
or under the law of any foreign country and is committed to acting
professionally, fairly and with integrity in all of its business dealings
and relationships.
33
Principal and emerging 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. The
Board believes that these are effectively mitigated by the internal
controls established by the Board and by the AIFM and their
combined oversight of the investment manager, as described in
the table below. Its principal risks and uncertainties are therefore
largely long-term and driven by the inherent uncertainties of
investing in global equity markets. The Board’s process seeks to
mitigate known risks and to identify new risks as they emerge.
However, it is recognised that the likelihood and timing of
crystallisation of some risks cannot be predicted in advance and
the Board then relies on professional management, effective
systems and communication to mitigate these risks as and when
they arise.
Operational and management risks are regularly monitored by
the AIFM and additionally by the Board at Board meetings and as
part of its annual strategy meeting where the Board carries out a
robust assessment of the principal and emerging risks facing the
Company, including those that would threaten its business model,
future performance, solvency or liquidity.
The Board's planned mitigation measures for the principal and
emerging risks are described below.
34
Principal risk Mitigation
Pandemic risk In 2020 Covid-19 delivered an abrupt, exogenous shock to the global economy of considerable magnitude, the
aftereffects of which continued in 2021 and into 2022. The Company was exposed to market volatility, while the
operational resilience of service providers to the Company could have been reduced. The Board receives regular
reporting on the ability of Franklin Templeton, Martin Currie and other key service providers to operate in the
working environment created by Covid-19. Business continuity plans continue to operate satisfactorily, with
operational resilience preserved. In large parts of the world restrictions on social contact and travel have been
reduced or removed completely but this is not universally the case and there remains a risk of further outbreaks.
The investment manager continues to monitor the portfolio and the income deriving from it in light of the potential
risks arising from the pandemic.
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 shows 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 assess the cause and take appropriate action to manage this risk.
There is increasing awareness of the challenges and emerging risks posed by climate change. The investment
process is focused on ESG issues and, as set out in the Manager’s review, this includes an assessment of the
potential impact of climate change. Overall, the specific potential effects of climate change are difficult, if not
impossible, to predict and the Board and investment manager will continue to monitor developments in this
important risk area.
Geopolitical risks have always been an input into the investment process. This risk area is now highlighted as a
result of the Russian invasion of Ukraine, with the resultant effects on global trade posed by supply shocks,
higher levels of inflation and volatility in asset prices. Further information on geopolitical risks is set out in the
Outlook section of the Manager’s review.
Material decline in
market
capitalisation of the
Company
The Board recognises that the zero discount policy allows new shareholders to purchase shares and current
shareholders to sell their shares at close to NAV, in normal market conditions. Although this level of liquidity
encourages investment in the Company, it could also increase the risk of a material decline in the size of the
Company. The Board monitors the performance and pace of share buybacks and the Company's shareholder
profile. Decline could also come as a consequence of the Company's failure to meet its investment objective. The
Board believes that good long-term performance will mitigate this likelihood, increase demand for the Company's
shares and, subject to overall market stability, permit the market capitalisation of the Company to increase.
Loss of s1158-9 tax
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, the AIFM and the
investment manager, the likelihood of this risk occurring is minimal but as the consequence of loss of the tax
status would be very damaging it is highlighted as a principal risk. 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.
On the basis of its continual and ongoing assessment of the
principal and emerging risks facing the Company, and given 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 AIFM
continue to be effective.
As previously stated, the Board’s main focus is the achievement of
a competitive total annual return. The future of the Company is
dependent upon the success of the investment strategy in light of
economic factors and developments in equity markets. The
outlook and future prospects for the Company are discussed in
both the Chairman’s statement on page 9 and in the Manager’s
review on pages 13 to 16.
Gillian Watson
Chairman
12 April 2022
35
2: GOVERNANCE
Gillian Watson, Non-executive director, Chairman
Gillian is currently Senior Managing Director at Noble & Co., the Edinburgh
based boutique investment bank. She is Chair of Vietnam DC25 Limited and of
Char.gy Ltd and holds a non-executive director position in Meallmore Limited.
Gillian has worked in corporate finance, strategy and business development
across various industry sectors in a range of geographies. She sits on the
University of Strathclyde’s Enterprise and Investment Committee and is a Trustee
of The Boswell Trust. Gillian was appointed to the Board on 1 April 2013 and
appointed as Chairman on 1 February 2021.
Gary Le Sueur, Non-executive director, Senior Independent Director
Gary is a founding partner of clean energy investment firm, Corran Capital, and
a former partner of venture capital firm, Scottish Equity Partners, where he is
now Senior Adviser. He has significant investment experience in the clean energy,
sustainability and environmental sectors. Prior to venture capital, Gary worked in
corporate law with Shepherd & Wedderburn (Solicitors), before moving to Deutsche
Morgan Grenfell and then National Australia Bank. Gary is also a non-executive
director of venture philanthropy organisation Inspiring Scotland. Gary was appointed
to the Board on 1 December 2016.
BOARD OF DIRECTORS 37
Marian Glen, Non-executive director, Chairman of the audit committee
Marian is a non-executive director of Shires Income plc and The Medical and Dental
Defence Union of Scotland. She was formerly the General Counsel of AEGON UK
and prior to that was a corporate partner and Head of Funds and Financial Services
at Shepherd & Wedderburn (Solicitors). She was previously a non-executive director
of Financial Services Compensation Scheme, Friends Life Group Limited and certain
of its subsidiaries and Murray Income Trust plc. Marian was appointed to the Board
on 1 December 2016.
Christopher Metcalfe, Non-executive director, Chairman of the
marketing and communications committee
Christopher is a non-executive director of JPMorgan US Smaller Companies
Investment Trust plc and of Aberdeen Smaller Companies Income Trust plc. He has
extensive global equity fund management and investment trust experience, with a
deep understanding of UK investors having previously worked in senior positions
at Newton, Schroder Investment Management and Henderson. Christopher was
appointed to the Board on 19 September 2019.
Lindsay Dodsworth, Non-executive director
Lindsay is chair of a family office and its investment oversight committees which
she helped the family to set up following the sale of their business. She trained as a
chartered accountant and a chartered tax adviser with Price Waterhouse (now PwC)
before becoming a partner at Ernst & Young (now EY). She is a governor, member
of the advisory council and member of the investment committee at Goodenough
College and chair of governors at St. John’s College School. Lindsay was appointed
to the Board on 1 November 2021.
Neil Gaskell stepped down from the role of Chairman and was replaced in that role
by Gillian Watson on 1 February 2021. He retired as a Director on 30 April 2021.
Corporate governance
Corporate governance is the process by which the Board seeks
to look aer stakeholders’ interests and to protect and enhance
shareholder value.
This report explains how the Board addresses its responsibility,
authority and accountability.
Compliance with the Principles of the AIC Code
The Board of the Company has considered the Principles and
Provisions of the 2019 AIC Code of Corporate Governance (‘AIC
Code’). The AIC Code addresses the principles and provisions set
out in the 2018 UK Corporate Governance Code (the ‘UK Code’), as
well as setting out additional principles on issues that are of specific
relevance to the Company as an investment company. The Board
considers that reporting against the principles and provisions of the
AIC Code, which has been endorsed by the Financial Reporting
Council, provides more relevant information to shareholders than
reporting only with respect to the UK Code. The AIC Code is
available on the AIC website (www.theaic.co.uk).
It includes an explanation of how the AIC Code adapts the Principles
and Provisions set out in the UK Code to make them relevant for
investment companies.
The UK Code includes provisions relating to the role of the chief
executive, executive directors’ remuneration and the need for an
internal audit function. For the reasons set out in the AIC Code,
and as explained in the UK Corporate Governance Code, the Board
considers that these provisions are not relevant to the position of
the Company, being an externally managed investment company.
The Company has therefore not reported further in respect of these
provisions.
Details of the AIC principles and how the Company complies with
them can be found on the Company’s website at
www.martincurrieglobal.com.
Role of the Board
As an investment company, the Company has a Board of Directors
whose duty it is to govern the Company within the framework set
out in the Company’s Articles of Association – in other words, to
look aer the interests of shareholders and also of the Company’s
stakeholders as a whole.
The Board sets the Company’s values and objectives and ensures
that its obligations to its shareholders and other stakeholders
are met. It has formally adopted a schedule of matters which are
required to be brought to it for decision, thus ensuring that it
maintains full and effective control over appropriate strategic,
financial, operational and compliance issues.
The Board undertakes a regular review of the investment manager’s
culture, policies and practices to ensure that they are aligned with
the Company’s values. It also reviews its service providers to satisfy
itself that they maintain policies and practices consistent with good
risk management, compliance with regulatory frameworks and
deliver a value for money service to the Company.
The Board met six times during the year under review on a formal
basis (as well as on an ad-hoc basis when required), to consider the
Company’s strategy and monitor the Company’s performance.
An investment trust board provides a very specific and proactive
form of direct oversight of the investment of the shareholders’ funds.
The primary focus at regular Board meetings is a review of
investment performance of the investment manager and associated
matters including asset allocation, promotion and investor relations,
peer group information and industry issues.
To enable the Board to function effectively and to allow Directors to
discharge their responsibilities, full and timely access is given to all
relevant information. In the case of Board meetings, this consists of
a comprehensive set of papers, including the investment manager’s
review, performance reports and discussion documents regarding
specific matters. Directors make further enquiries where necessary.
CORPORATE GOVERNANCE STATEMENT 38
Terms of reference for each of the committees are available via the company secretary.
As the Company has only five Directors, all of whom are non-executive, it is the Board’s policy that all Directors will sit on all Board Committees.
39
Committee structure
The Board has established a number of committees whose remit is to oversee specific aspects of management of the Company.
Management
engagement committee
Nominations and
governance committee
Marketing and
communications
committee Audit committee
Remuneration
committee
Chair:
Gillian Watson
Chair:
Gillian Watson
Chair:
Christopher Metcalfe
Chair:
Marian Glen
Chair:
Gary Le Sueur
• reviews the continuing
appointment of
the AIFM and the
investment manager;
• reviews the
performance of
the AIFM and the
investment manager
in terms of investment
performance and the
company secretarial
and administrative
services provided;
• reviews the
performance of the
personnel employed
by the investment
manager in relation to
the provision of such
services; and
• reviews the terms
of the AIFM
agreement to ensure
that it remains
competitive and in
the best interests of
shareholders.
• assesses the skills,
knowledge, experience
and diversity required
on the Board and the
extent to which each is
represented;
• establishes processes
for the review of the
performance of the
Board committees and
the Board as a whole;
• establishes processes
for the identification
of suitable candidates
for appointment to the
Board;
• oversees succession
planning for the Board;
and
• in relation to any
Director retiring and
who is proposing to
stand for re-election,
reviews the retiring
Director’s performance
during the period
in which they have
been a member of the
Board.
• considers the
marketing strategy for
the Company;
• reviews the Company’s
communications with
its shareholders;
• reviews the Company’s
marketing budget; and
• reviews the design
and contents of the
Company’s financial
statements.
The role and
responsibilities of this
committee are set out
in its report on pages
50 and 51.
• sets the remuneration
policy for all Directors;
and
• reviews and
sets Directors’
remuneration levels.
Further information can
be found in the Directors’
remuneration report on
pages 52 and 53.
Directors’ meetings
The following table shows the number of formal Board and committee meetings held during the year and the number attended by each Director
or committee member.
Formal Board
meetings
(6 meetings)
Management
engagement
committee
(1 meeting)
Audit committee
(2 meetings)
Nominations
and governance
committee
(2 meetings)
Marketing and
communications
committee
(2 meetings)
Remuneration
committee
(1 meeting)
Lindsay Dodsworth
1
2 1 n/a 1 1 1
Neil Gaskell
2
1 n/a n /a n/a n/a n/a
Marian Glen 6 1 2 2 2 1
Christopher Metcalfe 6 1 2 2 2 1
Gary Le Sueur 6 1 2 2 2 1
Gillian Watson 6 1 2 2 2 1
Directors’ independence
All of the Directors are considered under the AIC Code to be
independent of the AIFM, Franklin Templeton Investment Trust
Management Limited and of the investment manager, Martin
Currie Investment Management Limited.
The Directors are free of any relationship which could materially
interfere with the exercise of their independent judgement on
issues of strategy, performance, resources and standards of
conduct and demonstrate a breadth of investment knowledge,
business and financial skills which enable them to provide effective
strategic leadership and proper governance of the Company.
Directors are initially appointed until the general meeting
following their initial appointment when, under the Company’s
Articles of Association, it is required that they be elected by
shareholders.
None of the Directors has a service contract with the Company.
The terms of their appointment are detailed in a letter sent to
them when they join the Board. These letters are available for
inspection at the registered office of the Company.
Conflicts of interest
The Board has approved a policy on Directors’ conflicts of interest.
Under this policy Directors are required to disclose all actual
and potential conflicts of interest to the Board as they arise for
consideration and approval. The Board may impose restrictions or
refuse to authorise such conflicts if deemed appropriate.
A register of Directors’ interests, including potential conflicts of
interest, is maintained by the Company and is regularly monitored.
Directors who have potential conflicts of interest will not take
part in any discussions which relate to that particular conflict.
The Board considers that the framework has worked effectively
throughout the year under review.
40
Lindsay was appointed to the Board on 1 November 2021.
Neil retired from the Board on 30 April 2021.
Tenure
The Board has adopted a Tenure Policy for all Directors, including
the Chairman, which states that the Board believes that it is an
advantage to have the continuous contribution of Directors over
a period of time during which they are able to develop awareness
of and insight into the Company and thereby are able to make a
valuable contribution to the Board as a whole. The Board believes
that it is appropriate for a Director to serve for up to nine years
following their initial election and it is expected that Directors
will stand down from the Board at the AGM following the ninth
anniversary of their initial appointment. However, a flexible
approach to tenure has been adopted and that period may be
extended for a limited time to facilitate effective succession
planning whilst still ensuring regular refreshment and diversity
on the Board. This flexibility has been applied to Gillian Watson
who was due to step down at the annual general meeting in June
2022. In order to provide continuity and allow for appropriate
succession planning, the other Directors agreed with Gillian
Watson that she will remain on the Board until the annual general
meeting in 2023. The Board has decided that all Directors who
wish to remain on the Board will be required to stand for annual
re-election in line with best practice.
Succession planning
The Board plans for its own succession with the assistance of the
nominations and governance committee. This process ordinarily
involves the identification of the need for a new appointment and
the preparation of a brief including a description of the role and
specification of the capabilities required. The nominations and
governance committee seeks assistance in identifying suitable
candidates by appointing an external recruitment firm each time
that there is a vacancy. During the year the Company engaged
Fletcher Jones Ltd as its external recruitment firm for the process
which resulted in the recruitment of Lindsay Dodsworth. Fletcher
Jones Ltd does not have any other connections with the Company.
The nominations and governance committee considers candidates
from a wide range of backgrounds, having consideration for the
diversity of the Board as a whole including, but not limited to,
gender.
Board diversity
The nominations and governance committee considers diversity,
including the balance of skills, knowledge, gender and experience,
amongst other factors, when reviewing the composition of the
Board. It does not consider that it is appropriate to establish
targets or quotas in this regard.
The Board currently consists of five directors, three female and
two male.
Induction and training
The company secretary provides all Directors with induction
training on appointment, tailored to the needs of individual
appointees. The induction programme is designed to familiarise
the appointee with the Company, its operations and obligations
and regular ongoing briefings are provided on changes in
regulatory requirements that affect the Company and Directors.
Performance evaluation
A formal, annual appraisal system has been agreed for the
evaluation of the Board, its committees and the individual
Directors, including the Chairman. Board and committee
evaluation questionnaires are completed by each Director with
responses collated and discussed. The Chairman leads the
evaluation of the Board, committees and individual Directors,
including consideration of the time commitment, skills and
experience of the Directors, while the Senior Independent
Director leads the evaluation of the Chairman’s performance.
There were no significant actions arising from the evaluation
process conducted during the year and it concluded that the
Board as a whole, the individual Directors and its committees
were functioning effectively. As a result of the Board’s evaluation
process the Chairman confirms that all remaining Directors
continue to be effective and their election and re-election is
recommended. The Board has given consideration to appointing
an external board evaluator, however, it does not believe it is
necessary at this time.
The Board also regularly reviews the performance of the AIFM
and the investment manager. The management engagement
committee meets to review the continuing appointment of the
AIFM and the investment manager and reviews the terms of the
relevant agreement to ensure that it remains competitive and in
the best interest of shareholders. The management engagement
committee regularly reviews the continuing appointment of other
key service providers.
Company secretary
The Board has direct access to the company secretarial
service provided by the AIFM which, through its nominated
representative, is responsible for ensuring that applicable
regulations are complied with and that Board and committee
procedures are followed.
41
Internal control
The AIC Code and the Disclosure Guidance and Transparency
Rules require Directors, at least annually, to review the
effectiveness of the Company's system of internal control
and include a description of the main features relating to the
financial reporting process.
The Company has appointed Franklin Templeton Investment
Trust Management Limited as its AIFM. With the Company’s
permission, the AIFM has delegated the portfolio management
function to the Martin Currie Investment Management Limited,
while retaining responsibility for certain risk management
and administrative functions. Since investment management
and administrative services are provided to the Company by
members of the Franklin Templeton group, the Company's
system of internal control mainly comprises monitoring the
services provided by members of that group, including the
operating controls established by them, to ensure that they meet
the Company's business objectives. The Company does not
have an internal audit function of its own but relies on the risk
and compliance department of the Franklin Templeton group
and the group's internal audit function. This arrangement is kept
under review. The Company, and with the Board’s permission
the AIFM, have also delegated certain depositary/custodial
and administrative functions, including fund accounting, to
JPMorgan, which replaced State Street in these roles on 2
August 2021. Franklin Templeton also carries out a review of the
depositary/custodial and administration activities performed by
JPMorgan.
The Board, either directly or through committees, reviews the
effectiveness of the Company’s system of internal control by
monitoring the operation of the key controls of the AIFM and
Martin Currie and:
• reviews an internal controls report, as provided to the Board
twice yearly by the AIFM. This report details significant risks,
regulatory issues, error management and complaint handling;
• reviews the terms of the AIFM agreement;
• reviews reports on the internal controls and the operations
of the AIFM, of Martin Currie, of State Street (in post until
August 2021) and of JPMorgan (in post from August 2021); and
• reviews the risk profile of the Company and considers
investment risk at every Board meeting.
There is an ongoing process for identifying, evaluating and
managing the significant risks faced by the Company as outlined
on page 34. This process accords with the FRC’s ‘Guidance on
Risk Management, Internal Control and Related Financial and
Business Reporting’.
During the course of its review of internal controls the Board
has not identified or been advised of any failings or weaknesses
which it has determined to be significant and is satisfied with the
arrangements.
Internal control and risk management systems in relation to
the financial reporting process
The Directors are responsible for the Company’s system of
internal control, designed to safeguard the Company’s assets,
maintain proper accounting records and ensure that financial
information used within the business, or published, is reliable.
The AIFM and Martin Currie have in place stringent controls
that monitor the following activities within the financial reporting
process:
• investment and related cash transactions are completely and
accurately recorded and settled in a timely manner;
• corporate actions and proxy voting instructions are identified
and generated, and then processed and recorded accurately
and in a timely manner;
• investment income is accurately recorded in the proper
period;
• investments are valued using current prices obtained from
independent external pricing sources;
• cash and securities positions are completely and accurately
recorded and reconciled to third-party data;
• amounts due to lenders are calculated accurately and paid
according to the relevant contractual terms; and
• the investment management fee and the Company’s other
operating expenses, are accurately calculated and recorded.
The system of internal control can only be designed to manage
rather than eliminate the risk of failure to achieve business
objectives and therefore can provide only reasonable, but not
absolute, assurance against fraud, material mis-statement or loss.
By means of the procedures set out above, the Board confirms
that it has reviewed the effectiveness of the Company's systems
of internal control for the year ended 31 January 2022 and to the
date of approval of this annual report.
On behalf of the Board
Gillian Watson
Chairman
12 April 2022
42
Status
The Company is registered as a public limited company in
Scotland under number SC192761 and is an investment company
as defined by Section 833 of the Companies Act 2006. It is a
member of the Association of Investment Companies (the ‘AIC’).
The Company has been accepted by HM Revenue & Customs
as an investment trust subject to it continuing to meet the
relevant eligibility conditions of Section 1158 of the Corporation
Tax Act 2010 and the ongoing requirements of Part 2 Chapter
3 Statutory Instrument 2011/2999 for all financial years
commencing on or aer 1 April 2012.
The Directors are of the opinion that the Company has
conducted its affairs for the year ended 31 January 2022 so
as to enable it to comply with the ongoing requirements for
investment trust status.
Business model review
The AIFM and investment manager
On 2 August 2021, the Company appointed Franklin Templeton
Investment Trust Management Limited as its AIFM, replacing
Martin Currie Fund Management Limited in this role. The
appointment of the new AIFM was in substitution for, and
on materially the same commercial terms as, the Company’s
previous AIFM agreement. The AIFM has been authorised by
the FCA to act as an AIFM.
The AIFM has delegated the function of managing the
Company’s investment portfolio to the investment manager,
Martin Currie Fund Management Limited, the manager of the
Company’s assets since its launch in 1999. There have therefore
been no changes to the individuals managing the assets of
the Company, nor to the way in which the Company’s assets
are invested. Martin Currie is an international equity specialist
based in Edinburgh, managing money for a wide range of global
clients. Its investment process is focused on selecting stocks
through fundamental proprietary research and constructing
well balanced high conviction portfolios. The Board closely
monitors investment performance and Zehrid Osmani, the
portfolio manager, attends each Board meeting to present a
detailed update to the Board. The Board uses this opportunity to
challenge the portfolio manager on any aspect of the portfolio’s
management.
The ultimate parent company of the AIFM is Franklin Resources
Inc ('Franklin'). The AIFM has delegated certain administration
and support functions to other Franklin entities.
Continued appointment of the AIFM
Following the annual appraisal carried out by the management
engagement committee in January 2022, the Board considers
that it is in the best interests of shareholders to continue
with the appointment of Franklin Templeton Investment Trust
Management Limited as AIFM, with investment management
delegated to the investment manager and the Board remains
content with this arrangement.
Main features of the contractual arrangement with the AIFM
(the 'AIFM agreement'):
The Company entered into a new agreement with the AIFM
on 2 August 2021. The AIFM agreement contains materially the
same commercial terms as the Company’s previous agreement,
including:
• Six month notice period;
• Immediate termination if the AIFM ceases to be capable of
acting as an AIFM; and
• In the event that the Company terminates the agreement
otherwise than as set out above, the AIFM is entitled to
receive compensation equivalent to the fees paid in the
previous annual period.
Company secretarial and certain administrative services are
provided to the Company by the AIFM pursuant to the AIFM
agreement.
With effect from 1 February 2021, the investment management
fee was 0.5% per annum for the first £300 million of the
Company's net asset value (excluding income) and 0.35% for net
assets (excluding income) in excess of £300 million.
In addition, the investment manager receives an annual
secretarial fee which for the year ended 31 January 2022 was
£56,000 plus VAT. The secretarial fee is subject to an annual
increase based on the UK Consumer Price Index.
For a detailed description of the fee arrangements prior to 1
February 2021, please refer to the Company’s Annual Report and
Accounts for the year to 31 January 2021.
The Directors present their report and the audited financial statements of the Company for the year ended
31 January 2022.
REPORT OF THE DIRECTORS 43
Appointment of depositary
With effect from 2 August 2021, JPMorgan Europe Limited
was appointed as the Company's depositary, replacing State
Street Trustees Limited. The depositary is responsible for the
safekeeping of the Company’s assets, monitoring the cash
flows of the Company and must ensure that certain processes
carried out by the AIFM are performed in accordance with
the applicable rules and constitutive documents of the
Company. Also on 2 August 2021 JPMorgan Chase Bank N.A.
London Branch was appointed as the Company's custodian.
The custodian may from time to time delegate safe keeping/
custody of the Company’s assets to local custody providers. The
depositary and custodian are entitled to a fee payable out of the
assets of the Company.
Further contractual arrangements
The Company has outsourced its operational infrastructure
to third-party organisations. Contracts and service level
agreements have been defined to ensure that the service
provided by each of the third-party organisations is of a
sufficiently professional and technically high standard. The
Board actively monitors the performance of service providers.
The counterparty risk of dealing with each service provider is
analysed with the Board monitoring any identified risks. Further
details of the Company’s main service providers can be found in
the investor information section on page 79.
Directors
The Board currently consists of five non-executive Directors.
The names and biographies of the current Directors are on
page 37, indicating their range of experience as well as length
of service.
In line with best practice all of the Directors who have been on
the Board for more than a year will stand for re-election at the
AGM. Lindsay Dodsworth, who was appointed after the last
AGM, will stand for election at the AGM to be held on 16 June
2022. The role of the Board and its governance arrangements
are set out in the Company’s corporate governance statement
on pages 38 to 42 which forms part of this Report of the
directors.
Directors’ insurance and indemnities
The Directors have the benefit of the indemnity provisions
contained in the Company’s Articles of Association, and the
Company has maintained throughout the year Directors' and
Officers’ liability insurance for the benefit of the Company
and the Directors. The Company has entered into qualifying
third party indemnity arrangements for the benefit of all
of its Directors in a form and scope which comply with the
requirements of the Companies Act 2006 and which were in
force throughout the year and remain in force.
Environmental matters
As an externally managed investment company with no
employees, the Company’s direct greenhouse gas emissions are
negligible, being emissions resulting from Directors' travel to
meetings in Edinburgh or London. The Company encourages and
actively oversees Martin Currie’s application of its ESG policies in
the investment processes as set out in the Strategic Report.
44
Share capital
As at 31 January 2022 the Company had 86,616,404 Ordinary shares of 5p ('Ordinary shares') in issue (2021: 84,759,499) and a further
12,059,503 Ordinary shares held in Treasury (2021: 13,916,408). The following table summarises transactions made by the Company in its
shares. Further details of the Company's transactions involving Treasury shares can be found within accounting policy Note 1(j) on page 67.
Allocation of issue proceeds
Number of shares (Cost)/proceeds
Special
distributable
reserve
Share premium
account Capital reserve
Shares repurchased into Treasury 1,558,095 (£5,579,000) n/a n/a (£5,579,000)
Shares issued from Treasury 3,415,000 £13,586,000 £7,833,000 £5,203,000 £550,000
Shareholder analysis as at 31 January 2022
% of
shareholders
% of
equity capital
Individuals and trustees 67.6 11.2
Banks and nominee companies 29.2 75.8
Insurance and investment companies 0.1 0.0
Other holders
3.1 13.0
100.0 100.0
Shareholder and voting rights
Each Ordinary shareholder is entitled to one vote on a show
of hands and, on a poll, to one vote for every share held. The
Ordinary shares carry a right to receive dividends which are
declared from time to time by the Company. On a winding-up,
aer meeting the liabilities of the Company, any surplus assets
would be paid to Ordinary shareholders in proportion to their
shareholdings.
There are no restrictions on the transfer of Ordinary shares in
the Company other than certain restrictions which may from
time to time be imposed by law (for example, insider trading law)
and there are no special rights attached to any of the Ordinary
shares. The Company is not aware of any agreements between
shareholders which may result in restrictions on the transfer of
Ordinary shares or the voting rights attached to them.
Substantial interests
As at 31 January 2022, the Company had received notification
in accordance with the FCA’s Disclosure Guidance and
Transparency Rule 5.1.2R of the following interests in 3% or more
of the voting rights attaching to the Company’s issued share
capital.
As at 31 January 2022
Number of
Shares
Percentage of
Voting Rights
DC Thomson & Company Limited 5,775,000 6.8%
Schroders plc 4,887,861 5.8%
Rathbone Investment Management 4,193,681 4.9%
As at 7 April 2022 the Company had not received notification of
any changes to these interests.
Related party transactions
With the exception of the investment management and
secretarial fees (disclosed on page 43), Directors’ fees (disclosed
on page 53), and Directors’ shareholdings (disclosed on page 52),
there were no related party transactions through the financial
year.
Corporate governance statement
The Company’s corporate governance statement is set out on
pages 38 to 42 and forms part of this Report of the directors.
45
Revenue and dividends
2022 2021
Tot a l Pence
per share
Tot a l Pence
per share
Net revenue return for the year aer expenses, interest and taxation £1,161,000 1.36 £1,635,000 1.97
Dividends paid and declared for the year
1
£3,603,000
2
4.20 £3,499,000 4.20
Revenue reserve at end of year £513,000 0.59 £1,387,000 1.64
Special distributable reserve at end of year
3
£76,297,000 88.09 £70,017,000 82.61
Includes interim dividends paid throughout the year and final interim dividend announced/paid after the financial year end.
Based on the number of shares in issue on the ex-dividend date of 7 April 2022.
Distributable by way of dividend.
Performance, outlook and trends likely to affect
future performance
Please refer to the Chairman’s statement on pages 6 to 9 and
the Manager’s review on pages 10 to 16 for an update on the
performance of the Company over the year and outlook for
2022, together with information on the trends likely to affect the
future performance of the Company in the Strategic report on
pages 34 and 35.
Regulatory
The Alternative Investment Fund Managers Regulations
2013 ('AIFM Regulations')
AIFM remuneration
In accordance with the AIFM Regulations, details of the
remuneration policy of the AIFM, including remuneration
disclosures in respect of the AIFM’s ‘code staff’, are available
at www.martincurrie.com and otherwise upon request at the
registered office of the Company.
Leverage
Under the AIFM regulations, the maximum leverage which the
AIFM is entitled to employ on behalf of the Company is 250%
under the gross method and 200% under the commitment
method. This indicates the highest level that exposure could
reach using these calculations if all available instruments
introducing leverage were used to the maximum permitted level
at the same time. Any changes to these limits will be agreed in
advance between the AIFM and the Company. At 31 January
2022, the Company’s gross ratio was 107% and its commitment
ratio was 109%.
Audit information
As required by Section 418 of the Companies Act 2006 each
of the Directors who held office at the date of approval of this
Report of the directors confirms that, so far as they are aware,
there is no relevant audit information of which the Company’s
auditors are unaware and each Director has taken all of the steps
that they ought to have taken as a Director to make themselves
aware of any relevant audit information and to establish that the
Company’s auditors are aware of that information.
Listing Rule 9.8.4R
Listing Rule 9.8.4R requires the Company to include certain
information in a single identifiable section of the annual report
or a cross-reference table indicating where the information
is set out. The information covers areas such as long-term
incentive schemes, allotment of shares, investment in subsidiary
companies and agreements with controlling shareholders. The
Directors confirm that there are no disclosures to be made in
this regard.
Annual general meeting
The annual general meeting (‘AGM’) of the Company will be
held at the Waldorf Astoria The Caledonian, Princes Street,
Edinburgh EH AB at 11.00am on 16 June 2022. Further
information is contained in the Notice of AGM which is included
on pages 86 to 89. Resolutions relating to the following items of
business will be proposed:
Dividend policy – ordinary resolution
As a result of the timing of the payment of the Company’s
quarterly dividends in January, April, July and October, the
Company’s shareholders are unable to approve a final dividend
each year. As an alternative, the Board will put the Company’s
dividend policy to shareholders for approval on an annual basis.
Resolution 4, which is an ordinary resolution, relates to the
approval of the Company’s dividend policy which is as follows:
Dividends on the Ordinary shares are payable quarterly in
January, April, July and October. The payment of dividends in
accordance with this dividend policy is subject always to market
conditions and the Company's financial position and outlook.
Allotment of shares – ordinary resolution
Section 551 of the Companies Act 2006 provides that the
Directors may not allot new shares without shareholder
approval. Resolution 12 seeks to renew the Directors' authority
to allot new shares up to a maximum aggregate nominal amount
of £1,427,173 (being an amount equal to one third of the issued
share capital of the Company (excluding Treasury shares) as at
7 April 2022, being the last practicable date before the date of
this document). The Board intends to exercise this power only
once the number of shares held by the Company in Treasury
is not sufficient to support share issuance by the Company.
This resolution in isolation only allows the Directors to allot
new shares to existing shareholders pro rata to their existing
holdings. Resolutions 15 and 16 will, if approved, then disapply
pre-emption rights allowing the Company to issue up to
17,126,085 shares for cash on a non-pre-emptive basis.
As at 7 April 2022, being the last practicable date prior to the
publication of this document, the Company held 13,045,478
Ordinary shares in Treasury, representing approximately 13.2% of
the Company's issued share capital (including Treasury shares).
The authority contained in resolution 12 will expire on 30 July
2023 or, if earlier, at the AGM of the Company to be held in
2023 unless previously cancelled or varied by the Company in a
general meeting.
46
Proposed new investment policy – ordinary resolution
Resolution 13, proposed as an ordinary resolution, seeks
shareholder approval for the Company to adopt a proposed
new investment policy. As described in the Chairman's
statement on page 7 there will be no change in the way that
the portfolio manager manages the portfolio but the directors
are recommending an investment policy which sets out clearly
the Company's strategic commitment to ESG investing. In
addition the proposed new investment policy sets out more
clearly the approach to risk spreading, to gearing and to exclude
investment in other listed closed-end funds.
Disapplication of statutory pre-emption rights – special
resolutions
s561 of the Companies Act 2006 requires, when shares are to be
allotted for cash or sold from Treasury, such shares first must be
offered to existing shareholders in proportion to their existing
holdings of shares. Resolutions 15 and 16 proposed as special
resolutions would, if passed, give the Directors authority under
s570 and s573 of the Companies Act 2006, to allot new shares
or sell shares from Treasury for cash in certain circumstances as
if s561 of the Companies Act 2006 did not apply. This authority
would enable the Directors to issue shares for cash to take
advantage of demand in the market that may arise in order to
increase the amount of the Company’s issued share capital. The
purpose of such an increase would be to improve the liquidity of
the market in the Company’s shares and to spread the fixed cost
of administering the Company over a wider base. If resolutions
15 and 16 are approved by shareholders, the Board will only use
the authority to disapply pre-emption rights and issue shares:
(i) at a premium to the prevailing NAV at the time of issue; and
(ii) when the Board believes that it is in the best interests of the
Company and its existing shareholders to do so. As shares will
only be issued at a sufficient premium to cover issue costs to the
prevailing NAV at the time of issue, the value of the underlying
assets attributable to the shares will not be diluted as a result of
issuing further shares.
The Directors believe that this would increase the investment
attractions of the Company to the benefit of existing
shareholders. The resolutions, if both are passed, will give
the Directors power to issue for cash equity securities of the
Company up to a maximum of £856,304 (being an amount equal
to 20% of the issued share capital of the Company (excluding
Treasury shares) as at 7 April 2022, the latest practicable date
prior to this document) without the application of pre-emption
rights described above. The authority contained in resolutions 15
and 16 will continue until 30 July 2023 or, if earlier, the AGM of
the Company in 2023.
Purchase of own shares – special resolution
Each year the Directors seek authority from shareholders to
purchase the Company’s own shares. The Directors recommend
that shareholders renew this authority as detailed in resolution
14. Any shares purchased pursuant to the authority will be held
in Treasury or cancelled. The authority will lapse at the earlier
of the Company’s next AGM or 15 months after the date of the
resolution.
The purpose of holding shares in Treasury is to allow the
Company to reissue those shares quickly and cost effectively in
accordance with resolutions 15 and 16. If passed, resolution 14
gives authority for the Company to purchase up to 12,836,001 of
the Company’s own shares or, if less, 14.99% of the Company’s
issued share capital (excluding Treasury shares) as at the date
of the passing of the resolution. The Directors will only exercise
this authority to purchase shares where they consider that
such purchases will be in the best interests of shareholders
generally and only at a discount to the prevailing NAV per share.
The Directors currently intend to hold in Treasury the shares
purchased under this authority.
Notice of general meeting – special resolution
Resolution 17, proposed as a special resolution, would give the
Directors authority to call a general meeting, other than the
AGM, on 14 days’ clear notice. The Directors believe that it is in
the best interests of shareholders to have the flexibility to call
a general meeting at short notice, although it is intended that
this flexibility will only be used for non-routine business and
when it is deemed in the interests of shareholders as a whole. If
approved, the authority contained in resolution 17 will continue
until the AGM of the Company in 2023.
New Articles – special resolution
Resolution 18, proposed as a special resolution, seeks
shareholder approval to adopt new Articles of Association
(the 'New Articles') in order to update the Company's current
Articles of Association (the 'Existing Articles'). The proposed
amendments being introduced in the New Articles are listed
below:
• To remove the current prohibition on using the capital
reserve to pay dividends in order to provide flexibility to pay
dividends out of realised capital profits (further information
contained in the Audit committee report (page 50) of this
report).
47
• In light of the Covid-19 pandemic and any future like events,
to permit:
• the Company to issue notice of general meetings in hard
copy, electronic copy, or by way of website (but subject
always to Companies Act 2006 requirements on consent);
• execution of documents by electronic means, where the
situation allows;
• concurrent general meetings (general meeting attendance
at various locations – with options for online attendance),
in light also of the widespread shareholder base of the
Company. For the avoidance of doubt, the Company
intends to hold physical meetings except in such a future
event;
• Directors to adjust general meeting arrangements in
interests of safety and security.
• To update in other minor ways in order to reflect best
practice (the last such update having happened in 2014). Such
updates include, but are not limited to, amendments:
• in response to the requirements of the AIFM Regulations,
other such applicable rules and regulations, and all
associated provisions of the FCA's Handbook of rules and
guidance (such amendments do not change the Company's
current processes, rather they narrate the minimum
requirements of the aforementioned regulation, guidance
etc.);
• in response to the introduction of international tax regimes
requiring the exchange of information, including sections
1471 to 1474 of the US Tax Code, known as the Foreign
Account Tax Compliance Act, and the Organisation for
Economic Co-operation and Development Common
Reporting Standard including, without limitation, the UK
International Tax Compliance Regulations 2015;
• to general meeting requirements: to be held per latest
statutory requirement (every 15 months) rather than every
calendar year;
• removing the requirement to advertise in leading
newspapers when dealing with untraced shareholders; and
• removing obligations on the Company to provide notice,
amongst other things, to shareholders living outside
the UK who have not provided a UK address. Where
appropriate, there shall be no obligation on Directors to
consider the laws of any jurisdiction outside the UK in
making decisions related to interactions with, and duties
to, shareholders outside the UK.
A copy of the New Articles will be available for inspection on the
Company’s website at www.martincurrieglobal.com and on the
national storage mechanism, from the date of the AGM Notice
until the close of the AGM and at the venue of the AGM, being
the Waldorf Astoria The Caledonian, Princes Street, Edinburgh
EH AB from 15 minutes before and until the close of the AGM.
Inspection of the New Articles at the venue of the AGM may
only take place in accordance with any measures imposed in
connection with the Covid-19 pandemic.
Recommendation
The Directors believe that all of the resolutions proposed are in
the best interests of the Company and shareholders as a whole.
The Directors unanimously recommend that all shareholders
vote in favour of all of the resolutions. The results of the votes on
the resolutions at the AGM will be published on the Company’s
website (www.martincurrieglobal.com).
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 2022 is shown in
the statement of financial position on page 63. The statement
of cash flow of the Company is set out on page 65. Note 17
on pages 74 to 76 sets out the Company’s risk management
policies, including those covering market risk, liquidity risk and
credit risk. In accordance with the 2019 AIC Code of Corporate
Governance and the 2018 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 and emerging risks
and uncertainties disclosed on page 34.
They have reviewed revenue forecasts for the next two financial
years, including liabilities arising from the loan facility, and
believe that the Company has adequate financial resources to
continue its operational existence for the period to 31 January
2024, which is at least 12 months from the date on which the
financial statements are authorised for issue. Accordingly, the
Directors continue to adopt the going concern basis in preparing
these financial statements.
Viability statement
The Company’s business model is designed to deliver long-term
returns 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 that global equity
markets continue to operate normally. The Board has assessed
the Company’s viability over a three year period in accordance
with provision 31 of the UK Corporate Governance Code as it
believes that this is an appropriate period over which it does
not expect there to be any significant change to the principal
risks and adequacy of the mitigating controls in place. The
Board considers that this reflects the minimum period which
should be considered in the context of the Company’s long-term
objective but one which is limited by the inherent and increasing
uncertainties involved in assessment over a longer period.
48
In making this assessment the Directors have considered the
following factors:
• the principal and emerging risks and uncertainties and the
mitigating actions set out on page 34;
• the mitigation measures which key service providers including
the manager have in place to maintain operational resilience
particularly in light of Covid-19;
• the challenges posed by climate change;
• the ongoing relevance of the Company’s investment objective
in the current environment as 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;
• the expectation that in normal markets more than 94% of the
current portfolio could be liquidated within two trading days;
and
• the ability of the Company to make payments of interest and
repayments of principal on its debt on their due dates.
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 three years.
Responsibility statement
Each of the Directors, whose names and functions are listed in
the Board of Directors on page 37, confirms that to the best of
their knowledge:
• the financial statements, which have been prepared in
accordance with United Kingdom Generally Accepted
Accounting Practice, give a true and fair view of the assets,
liabilities, financial position and profit of the Company; and
• the Report of the directors, Strategic report 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 the uncertainties that it faces; and
• the annual report and financial statements, taken as a
whole, are fair, balanced and understandable and provide
the information necessary for shareholders to assess the
Company’s performance, business model and strategy.
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 (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.
This responsibility statement was approved by the Board of
Directors on 12 April 2022 and is signed on its behalf by:
Gillian Watson
Chairman
12 April 2022
49
AUDIT COMMITTEE REPORT
The audit committee is chaired by Marian Glen and, during the year
under review comprised all of the Directors except the previous
Chairman of the Board, Neil Gaskell. Lindsay Dodsworth joined the
audit committee on the date of her appointment to the Board. The
Board notes that the AIC Code permits the Chairman of the Board
to be a member of the audit committee of an investment trust. In
light of the fact that the Board consists of only five members and
recognising Gillian Watson’s relevant experience, the audit committee
resolved to continue her appointment to the committee following her
appointment as Chairman of the Company. The Board reviews the
relevant skills and experience of the audit committee as part of the
annual Board review and believes that the members of the committee
have the appropriate skills and experience. Biographies of the
members of the committee are on page 37.
The audit committee reviews the scope and results of the audit and,
during the year, considered and approved the external auditors’ plan
for the audit of the financial statements for the year ended 31 January
2022. The audit committee’s responsibilities include:
• Monitoring and reviewing the integrity of the financial statements
and ensuring, in particular, that, taken as a whole, they are fair,
balanced and understandable;
• Internal financial controls;
• The independence, objectivity and effectiveness of the external
auditors;
• Making recommendations to the Board in relation to the
appointment, evaluation and dismissal of the external auditors,
their remuneration, terms of their engagement and reviewing their
independence and objectivity;
• Developing and implementing policy on the engagement of the
external auditors to supply non-audit services; and
• Reporting to the Board, identifying any matter in respect of which
it considers that action or improvement is needed and making
recommendations as to the steps to be taken.
The audit committee takes account of the most significant issues and
risks, both operational and financial, likely to impact the Company’s
financial statements.
Having reviewed the annual report and financial statements, the
committee recommended to the Board that the annual report and
financial statements are fair, balanced and understandable.
Activities during the year
The committee met twice during the year when it reviewed the annual
and half-yearly financial reports. During the year the committee
considered the appropriateness of the expense allocations between
capital and revenue, concluding that the current allocation for the
AIFM fee and finance costs was appropriate. It also considered the
fee level, independence, effectiveness and re-appointment of the
auditors.
The committee also received a report from the AIFM on oversight of
the service providers. Particular attention was paid to the change of
depositary, custodian and sub-contracted administrator as described
on page 32 and the committee was satisfied that appropriate controls
and safeguards are in place.
During the year, and as part of its function to monitor the
effectiveness of the Company’s internal controls and risk
management systems the committee challenged the manager and
key service providers on their business continuity arrangements,
continued to receive detailed reports and satisfied itself that there
were no adverse effects on operations resulting from Covid-19.
In addition, the committee reviewed the recording and reporting for
the term loan facility including the calculations to confirm compliance
with the debt covenants. The committee concluded that the
covenants are being assessed and reported in line with the terms of
the term loan facility agreement.
The committee reviewed the uses of its available reserves and agreed
to maximise the reserves available for the payment of dividends.
It was decided that, with effect from 1 February 2021, the cost of
share buybacks would be deducted from the realised portion of the
capital reserve (which is currently only distributable by way of share
buybacks) rather than from the special distributable reserve (which
is fully distributable, including by way of dividend), hence preserving
reserves distributable by way of dividend. Following this decision, as
a related matter the committee adopted the approach to accounting
for the issue of shares from Treasury as set out in Note 1(j) to the
accounts. The committee also reviewed the advantages of distribution
by way of dividend of realised capital profits, which resulted in one of
the proposed changes to the Company's Articles of Association which
will be considered by shareholders at this year's AGM. If this change
is made to the Articles of Association, this will permit the realised
portion of the capital reserve to be available for the payment of
dividends alongside the revenue reserve and the special distributable
reserve. Please refer to Note 1(j) on page 67 for further information
and Note 14 on page 73 for the balance of the realised capital reserve
as at 31 January 2022.
There were no non-audit fees for the year ended 31 January 2022
(2021: none).
Auditors’ independence
The Company has in place a policy governing and controlling the
provision of non-audit services by the external auditors, in order to
help safeguard the auditors' independence and objectivity. This is
achieved by prohibiting non-audit work where independence may be
compromised or conflicts arise. Any non-audit work requires specific
approval of the audit committee in each case.
The audit fee amounts to £45,000 plus VAT for the year ended 31
January 2022 (2021: £38,000 plus VAT). In relation to the 2021 annual
audit fee, State Street Bank, acting as the administrators, paid overrun
fees of £5,000 plus VAT to the Company's auditors on behalf of the
Company. During the year to 31 January 2022, the Company changed
administrators and Martin Currie Investment Management paid the
additional audit fees of £3,000 plus VAT to the auditors on behalf of
the Company in relation to this change. These extra audit fees are in
addition to the audit fees noted above.
Following review, the committee is satisfied that the Company’s
auditors, Ernst & Young LLP (‘EY’), remain independent.
50
Matter Action
Accuracy of portfolio
valuation
Actively traded listed investments are valued using stock exchange prices provided by third-party service
providers. The AIFM reviews and summarises the SOC 1 reports, prepared bi-annually by JPMorgan Chase Bank
N.A. and State Street covering Global Fund Accounting and Custody and the audit committee reviews this
summarised report annually. The SOC 1 report is reported on by independent external accountants and includes
details of the systems, processes and controls around the daily pricing of equity securities, including the
application of exchange rate movements. Stale prices are monitored monthly by the AIFM's pricing team and
would be reported to the audit committee.
Allocation of
expenses between
revenue and capital
The allocation is reviewed by the audit committee annually considering the long-term split of returns from the
portfolio, both historic and projected, the objectives of the Company and current, historical and prospective
yields.
Accuracy of revenue
recognition
The audit committee reviews a summary of JPMorgan Chase Bank N.A.’s SOC 1 report bi-annually. The SOC 1
report includes details of the systems, processes and controls around the recording of investment income. The
Board also reviews revenue forecasts at each Board meeting. The investment manager and the Board review all
special dividends to make sure that they are correctly treated in accordance with the Company's accounting
policy.
Going concern and
viability statement
The committee reviewed evidence provided by the manager to support the Going Concern and Viability
Statements on page 48 and was satisfied that it could recommend to the Board the relevant statements.
Auditors’ rotation
A competitive tender for the audit of the Company was last held in May 2015, following which EY were selected as the Company’s auditors.
Under EU rotation guidance, the Company’s audit engagement partner will rotate every five years. The current audit engagement partner,
Sue Dawe, took over the role in 2021.
Auditors’ report
At the conclusion of the audit, EY did not highlight any issues to the audit committee which would cause it to qualify its audit report nor did
it highlight any fundamental internal control weaknesses. EY issued an unqualified audit report which is included on pages 56 to 61.
The following significant issues were considered by the audit committee in relation to the financial statements:
Effectiveness of the external audit process
The audit committee evaluated the effectiveness of the external
auditors and the external audit that they undertook prior to
making a recommendation on the re-appointment of EY at the
forthcoming AGM. This evaluation involved an assessment of
the effectiveness of the auditors’ performance against criteria
including qualification, expertise and resources, independence
and effectiveness of the audit process. The committee reviewed
and agreed the audit plan including the level of audit materiality
and discussed the key risk areas with the auditors and deemed
these appropriate. The committee also discussed with the
auditors any significant areas where they challenged the AIFM's
assumptions in connection with the preparation of the financial
statements, noting that there were no disagreements with the
AIFM.
Having reviewed the performance of the external auditors as
described above, the audit committee considered it appropriate
to recommend the re-appointment of EY as external auditors.
EY have expressed their willingness to be re-appointed to office
and a resolution to re-appoint them as auditors to the Company
and to authorise the Directors to determine the remuneration
payable will be proposed at the forthcoming AGM.
Disclosure of information to the auditors
In the case of each of the Directors of the Company at the time
when this report was approved:
• so far as each of the Directors is aware, there is no relevant
audit information of which the Company’s auditors are
unaware; and
• each of the Directors has taken all of the steps that they
ought to have taken as a Director in order to make themselves
aware of any relevant audit information and to establish that
the Company’s auditors are aware of that information.
On behalf of the Board
Marian Glen
Chairman of the Audit Committee
12 April 2022
51
Remuneration committee
The remuneration committee has responsibility for setting the
remuneration policy for all Directors, taking into account factors
such as time commitment and responsibilities of the role, with the
objective to attract and retain Directors of the quality required to run
the Company successfully, without paying more than is necessary.
The committee is also responsible for reviewing and setting
individual Directors’ remuneration levels.
Remuneration statement
The Board has prepared this report in accordance with the
requirements of the Large and Medium-sized Companies and
Groups (Accounts and Reports) (Amendment) Regulations 2013. An
ordinary resolution to approve this report will be put to shareholders
at the AGM.
Company law requires the Company’s auditors to audit certain
disclosures provided in this report. Where disclosures have been
audited, they are indicated as such. The auditors’ opinion is included
in their report on pages 56 to 61.
Directors’ remuneration policy
The Board’s policy is that the remuneration of non-executive
Directors should reflect the experience of the Board as a whole,
be fair and comparable to that of other investment companies that
are similar in size, have a similar capital structure and have similar
investment objectives. It is intended that this policy will continue
for the year ended 31 January 2023 and subsequent years. The
fees for the Directors are determined within the limits set out in
the Company’s Articles of Association. Each Director abstains from
voting on their own remuneration.
The Directors’ remuneration policy will be put to a shareholders’ vote
annually.
Directors are entitled to be reimbursed for any reasonable expenses
properly incurred by them in connection with the performance of
their duties. Directors are not eligible for bonuses, pension benefits,
share options, long-term incentive schemes or other benefits.
Directors do not have service contracts but are provided with
letters of appointment. All Directors are appointed for an initial
term covering the period from the date of that appointment until
the first AGM at which they are requested to stand for election in
accordance with the Company’s Articles of Association.
Thereafter, in line with best practice, all Directors will stand for
annual re-election at the AGM. There is no notice period and no
provision for compensation upon early termination of appointment.
Additional fees may be payable where (i) a Director is required
to perform services outside the ordinary duties of a Director; or
(ii) where the work performed is outside the ordinary course of
Company business and in each case where the time commitment is
exceptional.
The Company’s Articles of Association provide for a maximum level
of total remuneration of £200,000 per annum in aggregate.
Annual report on remuneration
For the year to 31 January 2022, the non-executive Directors
received a fee of £26,500 per annum, the audit committee Chairman
received a fee of £33,000 and the Chairman received a fee of
£40,000 per annum.
During the year, the remuneration committee considered the
Directors’ fees in the context of the benchmark data from its peer
group. Following a review of the benchmark data and taking into
account the time commitment required of the Board, it was agreed
that all Directors' fees would be increased by £1,000 per annum, with
effect from 1 February 2022.
Directors’ shareholdings (audited)
The shareholdings detailed above have not changed between 31
January 2022 and 12 April 2022, the date of signing the accounts.
The Company confirms that it has not set out any formal
requirements or guidelines for a Director to own shares in the
Company.
Approval
Ordinary resolutions for the approval of the Directors’ remuneration
policy and annual report on remuneration will be put to shareholders
at the forthcoming AGM. At the AGM on 9 June 2021, 99.74% of
proxy votes were cast in favour of the Directors’ remuneration report
for the year ended 31 January 2021 and 99.81% of proxy votes were
cast in favour of the Directors' remuneration policy.
As at 31 January 2022 2021
Lindsay Dodsworth 2,542 n/a
Neil Gaskell n/a 60,500
Marian Glen — —
Gary Le Sueur 31,735 31,735
Christopher Metcalfe 8,600 8,600
Gillian Watson 3,329 3,329
DIRECTORS’ REMUNERATION STATEMENT 52
Total return (ten financial years)
Source: Martin Currie Investment Management Limited.
The benchmark with effect from 1 February 2020 is the MSCI All Country World index. Prior to this, the benchmark was the FTSE World index to 31 January 2020.
Directors’ emoluments for the year (audited)
Year ended
31 January 2022
£
Year ended
31 January 2021
£
Lindsay Dodsworth
1
6,625 —
Neil Gaskell
2
6,625 38,000
Marian Glen 33,000 30,000
Gary Le Sueur 26,500 25,500
Christopher Metcalfe 26,500 25,500
Gillian Watson 40,000 25,500
139,250 144,500
Appointed on 1 November 2021.
Retired on 30 April 2021.
Benchmark 246.0%
1
%
300
250
200
150
100
50
0
Jan 2012 Jan 2013 Jan 2014 Jan 2015 Jan 2016 Jan 2017 Jan 2018 Jan 2019 Jan 2020 Jan 2021 Jan 2022
Share price total return 239.2%
The graph below compares, for the ten financial years ended 31 January 2022, the total return (assuming all dividends were reinvested) to
Ordinary shareholders compared to the total return of the benchmark.
53
On behalf of the Board
Gary Le Sueur
Chairman of the Remuneration Committee
12 April 2022
Relative importance of spend on Directors’ remuneration
To enable shareholders to assess the relative importance of spend on remuneration, the Directors’ total remuneration has been shown
in a table below compared with the Company’s distributions.
Year ended
31 January 2022
Year ended
31 January 2021 Change
Directors’ total remuneration (£000) 139 145 (6)
Dividends paid and payable (£000)
3,603
3,499
104
Share buybacks (£000)
5,579 7,500 (1,921)
Dividend per share (p)
4.20
4.20 —
NAV total return
1
2.9%
20.2% —
The net asset value per share total return is an Alternative Performance Measure, see page 81 for more details on the calculation.
Percentage change in annual remuneration of Directors
Year Lindsay Dodsworth Marian Glen Gary Le Sueur Christopher Metcalfe Gillian Watson
2021-2022 n/a
2
10% 4%
4% 57%
3
Lindsay Dodsworth was appointed on 1 November 2021.
Gillian Watson was appointed as Chairman on 1 February 2021.
54
3: FINANCIAL REVIEW
Independent auditors’ report to the members of
Martin Currie Global Portfolio Trust plc
Opinion
We have audited the financial statements of Martin Currie Global
Portfolio Trust plc (the ‘Company’) for the year ended 31 January
2022 which comprise the Statement of Comprehensive Income,
the Statement of Financial Position, the Statement of Changes in
Equity, the Statement of Cash Flow and the related notes 1 to 21,
including a summary of significant accounting policies. The
financial reporting framework that has been applied in their
preparation is applicable law and United Kingdom Accounting
Standards including FRS 102 ’The Financial Reporting Standard
applicable in the UK and Republic of Ireland’ (United Kingdom
Generally Accepted Accounting Practice).
In our opinion, the financial statements:
• give a true and fair view of the Company’s affairs as at
31 January 2022 and of its profit for the year then ended;
• have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice; and
• have been prepared in accordance with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the
Auditors’ responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
Independence
We are independent of the Company in accordance with the
ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as
applied to public interest entities, and we have fulfilled our other
ethical responsibilities in accordance with these requirements.
The non-audit services prohibited by the FRC’s Ethical Standard
were not provided to the Company and we remain independent
of Company in conducting the audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the
Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate. Our evaluation
of the Directors’ assessment of the Company’s ability to continue to
adopt the going concern basis of accounting included:
• We confirmed our understanding of the Company’s going
concern assessment process and engaged with the Directors
and the company secretary to determine if all key factors that we
have become aware of during our audit were considered in their
assessment.
• We inspected the Directors’ assessment of going concern,
including the revenue forecast, for the period to 31 January
2024 which is at least twelve months from the date the financial
statements were authorised for issue. In preparing the revenue
forecast, the Company has concluded that it is able to continue to
meet its ongoing costs as they fall due.
• We reviewed the factors and assumptions, including the impact
of the Covid-19 pandemic, as applied to the revenue forecast and
the liquidity assessment of the investments. We considered the
appropriateness of the methods used to calculate the revenue
forecast and the liquidity assessment and determined, through
testing of the methodology and calculations, that the methods,
inputs and assumptions utilised were appropriate to be able to
make an assessment for the Company.
• In relation to the Company’s borrowing arrangements, we
assessed the risk of breaching the debt covenants as a result of a
reduction in the value of the Company’s portfolio. We calculated
the Company’s compliance with debt covenants and performed
reverse stress testing in order to identify what factors would lead
to the Company breaching the financial covenants.
• We considered the mitigating factors included in the revenue
forecasts and covenant calculations that are within the control
of the Company. We reviewed the Company’s assessment of
the liquidity of investments held and evaluated the Company’s
ability to sell those investments in order to cover working capital
requirements should revenue decline significantly.
• We reviewed the Company’s going concern disclosures included
in the annual report in order to assess that the disclosures were
appropriate and in conformity with the reporting standards.
Based on the work we have performed, we have not identified any
material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Company’s ability to
continue as a going concern for a period to 31 January 2024.
In relation to the Company’s reporting on how they have applied the
UK Corporate Governance Code, we have nothing material to add or
draw attention to in relation to the Directors’ statement in the financial
statements about whether the Directors considered it appropriate to
adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with
respect to going concern are described in the relevant sections of
this report. However, because not all future events or conditions can
be predicted, this statement is not a guarantee as to the Company’s
ability to continue as a going concern.
INDEPENDENT AUDITORS’ REPORT 56
Overview of our audit approach
Key audit matters • Risk of incomplete or inaccurate revenue recognition, including the classification of special dividends
as revenue or capital items in the Statement of Comprehensive Income
• Risk of incorrect valuation or ownership of the investment portfolio
Materiality • Overall materiality of £3.16m which represents 1% of total shareholders’ funds.
An overview of the scope of our audit
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for
the Company. This enables us to form an opinion on the financial statements. We take into account size, risk profile, the organisation of
the Company and effectiveness of controls, including controls and changes in the business environment when assessing the level of work
to be performed.
Climate change
There has been increasing interest from stakeholders as to how climate change will impact companies. The Company has determined
that the impact of climate change could affect the Company’s investments and the overall investment process. This is explained on
page 34 in the principal and emerging risks section, which form part of the “Other information,” rather than the audited financial
statements. Our procedures on these disclosures therefore consisted solely of considering whether they are materially inconsistent with
the financial statements or our knowledge obtained in the course of the audit or otherwise appear to be materially misstated.
Our audit effort in considering climate change was focused on the adequacy of the Company’s disclosures in the financial statements
as set out in Note 1a and conclusion that there was no further impact of climate change to be taken into account as the investments
are valued based on market pricing as required by FRS102. We also challenged the Directors’ considerations of climate change in their
assessment of viability and associated disclosures.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements
of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we
identified. These matters included those which had the greatest effect on the overall audit strategy, the allocation of resources in the
audit and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial
statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.
57
58
Risk Our response to the risk
Key observations communicated
to the Audit Committee
Incomplete or inaccurate revenue
recognition, including the classification of
special dividends as revenue or capital in
the Statement of Comprehensive Income
(as described on page 51 in the Audit
committee’s report and as per the
accounting policy set out on page 66).
The total revenue for the year to 31 January
2022 was £2.50m (2021: £2.63m), consisting
primarily of dividend income from listed
equity investments.
There is a risk of incomplete or inaccurate
recognition of revenue through the failure
to recognise proper income entitlements or
to apply an appropriate accounting
treatment.
In addition to the above, the Directors may
be required to exercise judgment in
determining whether income receivable in
the form of special dividends should be
classified as ‘revenue’ or ‘capital’ in the
Statement of Comprehensive Income.
We have performed the following procedures:
We obtained an understanding of the processes and
controls surrounding revenue recognition by performing
walkthrough procedures.
For all dividends received and accrued, we recalculated
the dividend income by multiplying the investment
holdings at the ex-dividend date, traced from the
accounting records, by the dividend per share, which was
agreed to an independent data vendor. For all dividends
received and all dividends accrued we agreed amounts to
bank statements and, where applicable, we also agreed
the exchange rates to an external source.
For all dividends accrued, we also reviewed the investee
company announcements to assess whether the dividend
obligations arose prior to 31 January 2022.
To test completeness of recorded income, we verified
that expected dividends for each investee company
held during the year had been recorded as income with
reference to investee company announcements obtained
from an independent data vendor.
For all investments held during the year, we reviewed the
type of dividends paid with reference to an external data
source and confirmed that no special dividends were
received.
The results of our procedures
identified no material
misstatement in relation to
incomplete or inaccurate revenue
recognition, including incorrect
classification of special dividends
as revenue or capital items in the
Statement of Comprehensive
Income.
Incorrect valuation or ownership of the
investment portfolio (as described on page
51 in the Audit committee report and as per
the accounting policy set out on page 66).
The valuation of the investment portfolio at
31 January 2022 was £339.54m (2021:
£327.99m) consisting primarily of listed
investments.
The valuation of the assets held in the
investment portfolio is the primary driver of
the Company’s net asset value and total
return. Incorrect investment pricing, or a
failure to maintain proper legal title of the
assets held by the Company could have a
significant impact on the portfolio valuation
and the return generated for shareholders.
The fair value of listed investments is
determined by reference to stock exchange
quoted market bid prices at the close of
business on the reporting date.
We have performed the following procedures:
We obtained an understanding of the processes and
controls surrounding investment title and pricing of listed
investments by performing walkthrough procedures.
For all investments in the portfolio, we compared
the market prices and exchange rates applied to an
independent pricing vendor and recalculated the
investment valuations as at the year-end.
We confirmed with the Administrator that there were
no investments with stale prices as at the year-end and
therefore no stale pricing report produced.
We compared the Company’s investment holdings at
31 January 2022 to independent confirmations received
directly from the Company’s Custodian and Depositary.
The results of our procedures
identified no material
misstatement in relation to the
risk of incorrect valuation or
ownership of the investment
portfolio.
There have been no changes to the areas of audit focus raised in the above risk table from the prior year.
Our application of materiality
We apply the concept of materiality in planning and performing
the audit, in evaluating the effect of identified misstatements on
the audit and in forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually
or in the aggregate, could reasonably be expected to influence
the economic decisions of the users of the financial statements.
Materiality provides a basis for determining the nature and
extent of our audit procedures.
We determined materiality for the Company to be £3.16m (2021:
£3.04m), which is 1% (2021: 1%) of shareholders’ funds. We
believe that shareholders’ funds provide us with a materiality
aligned to the key measure of the Company’s performance.
Performance materiality
The application of materiality at the individual account
or balance level. It is set at an amount to reduce to an
appropriately low level the probability that the aggregate of
uncorrected and undetected misstatements exceeds materiality.
On the basis of our risk assessments, together with our
assessment of the Company’s overall control environment, our
judgement was that performance materiality was 75% (2021: 75%)
of our planning materiality, namely £2.37m (2021: £2.28m).
Given the importance of the distinction between revenue and
capital for investment trusts, we have also applied a separate
testing threshold for the revenue column of the Statement of
Comprehensive Income of £0.16m (2021: £0.15m), being our
reporting threshold.
Reporting threshold
An amount below which identified misstatements are considered
as being clearly trivial.
We agreed with the audit committee that we would report to
them all uncorrected audit differences in excess of £0.16m (2021:
£0.15m), which is set at 5% of planning materiality, as well as
differences below that threshold that, in our view, warranted
reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the
quantitative measures of materiality discussed above and in
light of other relevant qualitative considerations in forming our
opinion.
Other information
The other information comprises the information included in
the annual report, other than the financial statements and our
auditors’ report thereon. The Directors are responsible for the
other information contained within the annual report.
Our opinion on the financial statements does not cover the
other information and, except to the extent otherwise explicitly
stated in this report, we do not express any form of assurance
conclusion thereon.
Our responsibility is to read the other information and, in
doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge
obtained in the course of the audit or otherwise appears to be
materially misstated. If we identify such material inconsistencies
or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement
in the financial statements themselves. If, based on the work
we have performed, we conclude that there is a material
misstatement of the other information, we are required to report
that fact.
We have nothing to report in this regard.
Opinion on other matters prescribed by the
Companies Act 2006
In our opinion the part of the Directors’ remuneration report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of
the audit:
• the information given in the Strategic report and the Report
of the directors for the financial year for which the financial
statements are prepared is consistent with the financial
statements; and
• the Strategic report and the Report of the directors
have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by
exception
In the light of the knowledge and understanding of the
Company and its environment obtained in the course of the
audit, we have not identified material misstatements in the
Strategic report or the Report of the directors.
We have nothing to report in respect of the following matters in
relation to which the Companies Act 2006 requires us to report
to you if, in our opinion:
• adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches
not visited by us; or
• the financial statements and the part of the Directors’
remuneration report to be audited are not in agreement with
the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by
law are not made; or
• we have not received all the information and explanations we
require for our audit.
59
Corporate Governance Statement
We have reviewed the Directors’ statement in relation to going
concern, longer-term viability and that part of the Corporate
Governance Statement relating to the Company’s compliance
with the provisions of the UK Corporate Governance Code
specified for our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the Corporate
Governance Statement is materially consistent with the financial
statements or our knowledge obtained during the audit:
• Directors’ statement with regards to the appropriateness
of adopting the going concern basis of accounting and any
material uncertainties identified set out on page 48;
• Directors’ explanation as to its assessment of the Company’s
prospects, the period this assessment covers and why the
period is appropriate set out on page 48;
• Director’s statement on whether it has a reasonable
expectation that the Company will be able to continue in
operation and meets its liabilities set out on page 48;
• Directors’ statement on fair, balanced and understandable set
out on page 49;
• Board’s confirmation that it has carried out a robust
assessment of the emerging and principal risks set out on
page 34;
• The section of the annual report that describes the review
of effectiveness of risk management and internal control
systems set out on page 42; and;
• The section describing the work of the audit committee set
out on page 50.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities
statement set out on page 49, the Directors are responsible
for the preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such internal
control as the Directors determine is necessary to enable the
preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are
responsible for assessing the Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless
the Directors either intend to liquidate the Company or to cease
operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the
financial statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditors’ report that includes our opinion. Reasonable assurance
is a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these
financial statements.
Explanation as to what extent the audit was
considered capable of detecting irregularities,
including fraud
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect irregularities, including
fraud. The risk of not detecting a material misstatement due
to fraud is higher than the risk of not detecting one resulting
from error, as fraud may involve deliberate concealment by, for
example, forgery or intentional misrepresentations, or through
collusion. The extent to which our procedures are capable of
detecting irregularities, including fraud, is detailed below.
However, the primary responsibility for the prevention
and detection of fraud rests with both those charged with
governance of the Company and management.
• We obtained an understanding of the legal and regulatory
frameworks that are applicable to the Company and
determined that the most significant are FRS 102, the
Companies Act 2006, the Listing Rules, UK Corporate
Governance Code, the Association of Investment Companies’
Code and Statement of Recommended Practice, Section
1158 of the Corporation Tax Act 2010 and The Companies
(Miscellaneous Reporting) Regulations 2018.
• We understood how the Company is complying with those
frameworks through discussions with the audit committee
and company secretary and review of Board minutes and the
Company’s documented policies and procedures.
• We assessed the susceptibility of the Company’s financial
statements to material misstatement, including how fraud
might occur by considering the key risks impacting the
financial statements. We identified a fraud risk with respect
to the incomplete or inaccurate revenue recognition through
the incorrect classification of special dividends as revenue or
capital items. Further discussion of our approach is set out in
the section on key audit matters above.
60
• Based on this understanding we designed our audit
procedures to identify non-compliance with such laws and
regulations. Our procedures involved review of the company
secretary’s reporting to the Directors with respect to the
application of the documented policies and procedures and
review of the financial statements to ensure compliance with
the reporting requirements of the Company.
A further description of our responsibilities for the audit of
the financial statements is located on the Financial Reporting
Council’s website at www.frc.org.uk/auditorsresponsibilities.
This description forms part of our auditors' report.
Other matters we are required to address
• Following the recommendation from the audit committee, we
were appointed by the Company and signed an engagement
letter on 13 August 2015 to audit the financial statements of the
Company for the year ending 31 January 2016 and subsequent
financial periods.
The period of total uninterrupted engagement including
previous renewals and reappointments is 7 years, covering the
years ending 31 January 2016 to 31 January 2022.
• The non-audit services prohibited by the FRC’s Ethical
Standard were not provided to the Company and we remain
independent of the Company in conducting the audit.
• The audit opinion is consistent with the additional report to the
audit committee.
Use of our report
This report is made solely to the Company’s members, as a
body, in accordance with Chapter 3 of Part 16 of the Companies
Act 2006. Our audit work has been undertaken so that we
might state to the Company’s members those matters we are
required to state to them in an auditors’ report and for no other
purpose. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the
Company and the Company’s members as a body, for our audit
work, for this report, or for the opinions we have formed.
Susan J Dawe
(Senior Statutory Auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
Edinburgh
12 April 2022
61
Year to 31 January 2022 Year to 31 January 2021
Note
Revenue
£000
Capital
£000
Tot a l
£000
Revenue
£000
Capital
£000
Tot a l
£000
Net gains on investments 7 — 8,224 8,224 — 51,440 51,440
Net currency gains/(losses) — 55 55 (3) (47) (50)
Revenue 2 2,502 — 2,502 2,634 — 2,634
Investment management fee
1
(328) (1,312) (1,640) (216) (864) (1,080)
Performance fee 3 — — — — (2,819) (2,819)
Other expenses 3 (629) — (629) (486) — (486)
Net return on ordinary activities before
finance costs and taxation
1,545 6,967 8,512 1,929 47,710 49,639
Finance costs 1(d) (71) (284) (355) (30) (121) (151)
Net return on ordinary activities before
taxation
1,474 6,683 8,157 1,899 47,589 49,488
Taxation on ordinary activities 4 (313) — (313) (264) — (264)
Net return attributable to shareholders 1,161 6,683 7,844 1,635 47,589 49,224
Net returns per Ordinary share 5 1.36p 7.81p 9.17p 1.97p 57.39p 59.36p
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 2021.
All revenue and capital items in the above statement derive from continuing operations.
No operations were acquired or discontinued in the year.
The notes on pages 66 to 77 form part of these financial statements.
There is no other comprehensive income and therefore the return attributable to shareholders is also the total comprehensive income for the period.
The details of the investment management fee are provided in the Report of the directors on page 43.
STATEMENT OF COMPREHENSIVE INCOME 62
The notes on pages 66 to 77 form part of these financial statements.
Martin Currie Global Portfolio Trust plc is registered in Scotland, company number SC192761.
The financial statements on pages 62 to 77 were approved by the Board of Directors on 12 April 2022 and signed on its behalf by
As at 31 January 2022 As at 31 January 2021
Note £000 £000 £000 £000
Fixed assets
Investments at fair value through profit or loss 7 339,535 327,988
Current assets
Trade receivables 8 160 1,076
Cash and cash equivalents 9 6,589 10,043
6,749 11,119
Current liabilities
Bank overdras 9 — (16)
Performance fee payable 10 — (2,819)
Trade payables 11 (450) (2,701)
(450) (5,536)
Total assets less current liabilities
345,834
333,571
Amounts falling due aer more than one year
Bank loan 12 (30,000) (30,000)
Total net assets 315,834 303,571
Equity
Called up Ordinary share capital 13 4,934 4,934
Share premium account 11,424 6,221
Capital redemption reserve 11,083 11,083
Special distributable reserve 76,297 70,017
Capital reserve 14 211,583 209,929
Revenue reserve 513 1,387
Total shareholders' funds 315,834 303,571
Net asset value per Ordinary share 15 364.6p 358.2p
STATEMENT OF FINANCIAL POSITION
On behalf of the Board
Gillian Watson
Chairman
12 April 2022
63
STATEMENT OF CHANGES IN EQUITY
Note
Called up
Ordinary share
capital
£000
Share
premium
account
£000
Capital
redemption
reserve
£000
Special
distributable
reserve
£000
Capital
reserve
£000
Revenue
reserve
£000
Total
£000
As at 31 January 2021 4,934 6,221 11,083 70,017 209,929 1,387 303,571
Net return attributable
to shareholders
— — — — 6,683 1,161 7,844
Ordinary shares issued 1(j), 13 — 5,203 — 7,833 550 — 13,586
Ordinary shares
bought back
1(j), 13 — — — — (5,579) — (5,579)
Dividends paid 6 — — — (1,553) — (2,035) (3,588)
As at 31 January 2022 4,934 11,424 11,083 76,297 211,583 513 315,834
Transfer from the special distributable reserve to the new share premium account of the premium over the weighted average price of shares issued from
Treasury in prior years. Refer to accounting policy Note 1(j).
The notes on pages 66 to 77 form part of these financial statements.
Note
Called up
Ordinary share
capital
£000
Share
premium
account
£000
Capital
redemption
reserve
£000
Special
distributable
reserve
£000
Capital
reserve
£000
Revenue
reserve
£000
Total
£000
As at 31 January 2020 4,934 — 11,083 70,100 162,340 3,238 251,695
Net return attributable
to shareholders
— — — — 47,589 1,635 49,224
Ordinary shares issued 13 — 4,630 — 9,008 — — 13,638
Ordinary shares
bought back
13 — — — (7,500) — — (7,500)
Transfer between
reserves
1
— 1,591 — (1,591) — — —
Dividends paid 6 — — — — — (3,486) (3,486)
As at 31 January 2021 4,934 6,221 11,083 70,017 209,929 1,387 303,571
64
The notes on pages 66 to 77 form part of these financial statements.
STATEMENT OF CASH FLOW
Year to 31 January 2022 Year to 31 January 2021
Note £000 £000 £000 £000
Cash flows from operating activities
Net return on ordinary activities before taxation 8,157 49,488
Adjustments for:
Gains on investments 7 (8,224) (51,440)
Finance costs 355 151
Dividend income
2 (2,493) (2,593)
Interest income 2 — (28)
Stock lending income 2 (9) (13)
Dividends received 2,489 2,621
Interest received — 28
Stock lending income received
9 13
Decrease in receivables 2 —
(Decrease)/increase in payables (2,885) 300
Overseas withholding tax suffered 4 (313) (264)
(11,069)
(51,225)
Net cash flows from operating activities (2,912) (1,737)
Cash flows for investing activities
Purchases of investments (45,791) (86,285)
Sales of investments 7 40,248 63,671
Net cash flows from investing activities (5,543) (22,614)
Cash flows from financing activities
Repurchase of Ordinary share capital
(5,544) (7,500)
Shares issued for cash
14,504 12,720
Equity dividends paid
6 (3,588) (3,486)
Cash inflow from bank loan
— 30,000
Interest and fees paid on bank loan (355) (84)
Net cash flows from financing activities 5,017 31,650
Net (decrease)/increase in cash and cash equivalents (3,438) 7,299
Cash and cash equivalents at the start of the year 10,027 2,728
Cash and cash equivalents at the end of the year 6,589 10,027
Analysis of debt
Year to
31 January 2021 Cash flows
Exchange
movements
Year to
31 January 2022
Note £000 £000 £000 £000
Cash at bank 9 10,027 (3,438) — 6,589
Bank loan 12 (30,000) — — (30,000)
Net debt (19,973) (3,438) — (23,411)
65
Note 1: Accounting policies
(a) For the reporting period, the Company is applying FRS
102 Financial Reporting Standard applicable in the UK
and Republic of Ireland (FRS 102), which forms part of the
Generally Accepted Accounting Practice ('UK GAAP') issued
by the Financial Reporting Council ('FRC').
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 and emerging risks and uncertainties disclosed on
page 34 including those related to Covid-19, geopolitical risks
and climate considerations.
They have reviewed revenue forecasts for the next two
financial years, including liabilities arising from the loan
facility, and believe that the Company has adequate financial
resources to continue its operational existence for the period
to 31 January 2024, which is at least 12 months from the date
the financial statements are authorised for issue. Accordingly,
the Directors continue to adopt the going concern basis in
preparing these financial statements.
These financial statements have been prepared in accordance
with the Disclosure Guidance and Transparency Rules of the
Financial Conduct Authority, FRS102 issued by the FRC and
the revised Statement of Recommended Practice 'Financial
Statements of Investment Trust Companies and Venture
Capital Trusts' (SORP) issued by the AIC in April 2021.
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. This is also the currency in which all expenses and
dividends are paid.
The Directors have considered the impact of climate change
on the value of the listed investments that the Company
holds. In the view of the Directors, as the portfolio consists of
listed equities, their market prices should reflect the impact,
if any, of climate change and accordingly no adjustment has
been made to take account of climate change in the valuation
of the portfolio in these financial statements.
(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, investment management
fees, performance fee (now discontinued) and other
expenses are measured on an accrual basis.
(d) The investment management fee and finance costs in relation
to debt are recognised four-fihs as a capital item and one-
fih 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. Finance costs relate to interest and fees on
bank loans and overdras. 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. The performance fee
(now discontinued) is recognised 100% as a capital item in
the statement of comprehensive income as it relates to the
capital performance of Company.
(e) Investments – investments have been classified 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 comprise 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) Dividends 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 to equity shareholders are
recognised in the statement of changes in equity when the
shareholder's right to receive the payment is established. In
the case of the fourth interim dividend, this would be the ex-
dividend date of 7 April 2022.
NOTES TO THE FINANCIAL STATEMENTS 66
(j) Called up ordinary share capital – represents the nominal
value of the issued share capital including shares held in
Treasury. This reserve is non-distributable.
The share premium account – when shares held in Treasury
are reissued, the excess of the sales proceeds over the
weighted average price of repurchase is allocated to the
share premium account. This reserve is non-distributable.
The capital redemption reserve – represents the nominal
value of the shares bought back and cancelled. This reserve is
non-distributable.
The special distributable reserve – created through the
cancellation and reclassification of the share premium
account in 1999 and 2004. Prior to 1 February 2021, the costs
of share buybacks and the proceeds of shares re-issued from
Treasury up to the original cost of repurchase, calculated
by applying the weighted average price of shares held in
Treasury, were allocated to the special distributable reserve.
This reserve is fully distributable.
The 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 investment management
fee and relevant finance costs are charged to this reserve.
Any associated tax relief is also credited to this reserve.
Following a review of the Company’s uses of its available
reserves and in order to maximise the reserves available for
payments of dividends, effective 1 February 2021, the Board
elected to deduct the costs of share buybacks from the
realised portion of the capital reserve (which is distributable
for this purpose) rather than the special distributable
reserve. In addition, where any shares held in Treasury are
re-issued, the proceeds up to the original cost of repurchase,
calculated by applying the weighted average price of shares
held in Treasury, are allocated to the realised portion of
the capital reserve and to the special distributable reserve
on a proportionate basis based on the number of shares in
Treasury funded from each reserve.
The above change resulted in the capital reserve being
£5,029,000 lower and the special distributable reserve being
£5,029,000 higher at 31 January 2022 than if the change in
accounting policy had not been made.
The revenue reserve – represents net revenue earned that
has not been distributed to shareholders. This reserve is fully
distributable.
(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, and the intention to continue meeting the
conditions required to obtain approval as an investment trust
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) Stock lending income (now discontinued) is received net of
associated costs and recognised in revenue as earned.
(n) There have been no significant judgements, estimates or
assumptions for the year.
(o) Bank loans are classified as financial liabilities at amortised
cost. Interest payable on the bank loan is accounted for on an
accrual basis in the statement of comprehensive income.
67
Note 2: Revenue from investments
Year ended 31 January 2022
£000
Year ended 31 January 2021
£000
Dividends from listed investments
UK equities 210 166
International equities 2,283 2,427
Other revenue
Interest on deposits — 28
Stock lending 9 13
2,502 2,634
There were no capital dividends received during the year ended 31 January 2022 (2021: £nil).
68
Note 3: Other expenses
Year ended 31 January 2022
£000
Year ended 31 January 2021
£000
Directors' fees 139 145
Advertising and public relations 96 95
Secretarial fee 67 66
Depositary fees 66 10
Audit fees
1
58 46
Registration fees 41 36
Regulatory and listing fees 64 41
Custody fees 31 28
Legal fees 31 44
Printing and postage 25 13
Directors' and officers' liability insurance 10 7
VAT recovered (44) (69)
Other 45 24
629 486
All expenses detailed above include VAT where applicable.
In addition to the annual audit fee paid by the Company to EY the following were also paid to EY on behalf of the Company:
• In relation to the 2021 annual audit, State Street Bank acting as the administrators paid overrun fees of £5,000 plus VAT; and
• During the year to 31 January 2022 the Company changed administrators and Martin Currie Investment Management paid the additional audit fee in relation
to this change, which was £3,000 plus VAT.
Performance fee
With effect from 1 February 2021, the performance fee arrangement was discontinued and the investment management fee amended from
0.4% to 0.5% per annum for the first £300 million of the Company's net asset value (excluding income) and from 0.4% to 0.35% for net
assets (excluding income) in excess of £300 million. The performance fee earned in the year ended 31 January 2021 was £2,819,000, this
amount was paid in May 2021.
69
Note 4: Taxation on ordinary activities
Year ended 31 January 2022 Year ended 31 January 2021
Revenue
£000
Capital
£000
Total
£000
Revenue
£000
Capital
£000
Total
£000
Overseas tax suffered 313 — 313 264 — 264
Year ended 31 January 2022
£000
Year ended 31 January 2021
£000
Net return before taxation 8,157 49,488
Corporation tax at rate of 19.00% (2021: 19.00%) 1,550 9,403
Effects of:
UK dividends not taxable (40) (32)
Currency losses not taxable — 9
Gains on investments not taxable (1,573) (9,773)
Overseas dividends not taxable (434) (464)
Overseas tax suffered 313 264
Increase in excess management and loan expenses 497 857
Total tax charge for the year 313 264
The corporation tax rate was 19.00% (2021: 19.00%). 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.
As at 31 January 2022, the Company had unutilised management expenses of £42 million (2021: £40 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 for that status 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 5: Returns per share
Year ended 31 January 2022 Year ended 31 January 2021
The returns and net asset value per Ordinary share are calculated
with reference to the following figures:
Revenue return £000 1,161 1,635
Capital return £000 6,683 47,589
Total return £000 7,844 49,224
Weighted average number of shares in issue during the year 85,587,856 82,918,070
Revenue return per share 1.36p 1.97p
Capital return per share
7.81p 57.39p
Total return per share 9.17p 59.36p
70
Revenue return per share for the year ended 31 January 2022 is 1.36p (2021: 1.97p), refer to note 5 on page 69 for details of calculation.
The fourth interim dividend for the year ended 31 January 2021 and the first interim dividend for the year ended 31 January 2022 have been allocated to the revenue
reserve. The second and third interim dividends for the year ended 31 January 2022 have been allocated to the special distributable reserve. All dividends paid in the
year ended 31 January 2021 were allocated to the revenue reserve.
Set out below are the total dividends paid/payable in respect of the financial year which forms the basis on which the requirements of s1158-1159 of the Corporation
Taxes Act 2010 are considered.
Year ended 31 January 2022
£000
Year ended 31 January 2021
£000
First interim dividend of 0.90p for the year ended 31 January
2022 (2021: 0.90p)
765 739
Second interim dividend of 0.90p for the year ended 31 January
2022 (2021: 0.90p)
774 736
Third interim dividend of 0.90p for the year ended 31 January
2022 (2021: 0.90p)
779 754
Proposed fourth interim dividend of 1.50p for the year ended 31
January 2022 (2021: 1.50p)
1,285 1,270
3,603 3,499
Note 6: Dividends
Year ended 31 January 2022
£000
Year ended 31 January 2021
£000
Year ended 31 January 2020 – fourth interim dividend of 1.50p — 1,257
Year ended 31 January 2021 – fourth interim dividend of 1.50p 1,270 —
Year ended 31 January 2022 – first interim dividend of 0.90p
(2021: 0.90p)
765 739
Year ended 31 January 2022 – second interim dividend of 0.90p
(2021:0.90p)
774 736
Year ended 31 January 2022 – third interim dividend of 0.90p
(2021: 0.90p)
779 754
3,588 3,486
71
Note 7: Investments at fair value
through profit or loss
Year ended 31 January 2022
£000
Year ended 31 January 2021
£000
Opening book cost 225,072 191,768
Opening investment holding gains 102,916 59,946
Opening market value 327,988 251,714
Additions at cost 43,571 88,505
Disposals proceeds received (40,248) (63,671)
Gains on investments 8,224 51,440
Market value of investments held at 31 January 339,535 327,988
Closing book cost 238,463 225,072
Closing investment holding gains 101,072 102,916
Closing market value 339,535 327,988
The Company received £40,248,000 (2021: £63,671,000) from investments sold in the year. The book cost of these investments when they were purchased was
£30,180,000 (2021: £55,201,000).
The transaction costs in acquiring investments during the year were £52,000 (2021: £193,000). For disposals, transaction costs were £20,000 (2021: £32,000).
Note 8: Trade receivables
As at 31 January 2022
£000
As at 31 January 2021
£000
Taxation recoverable 103 134
VAT recoverable 49 —
Dividends receivable 7 24
Amount receivable for Ordinary shares issued — 918
Other debtors 1 —
160 1,076
Note 9: Cash and cash equivalents
As at 31 January 2022
£000
As at 31 January 2021
£000
Sterling bank account 6,589 10,043
Non-sterling bank account — (16)
6,589 10,027
Year ended 31 January 2022
£000
Year ended 31 January 2021
£000
Net realised gains on investments 10,068 8,470
Net change in unrealised (losses) and gains on investments (1,844) 42,970
Total capital gains and losses 8,224 51,440
72
Note 10: Payables – performance fee
As at 31 January 2022
£000
As at 31 January 2021
£000
Performance fee payable — 2,819
With effect from 1 February 2021, the performance fee arrangement was discontinued and the investment management fee amended from 0.4% to 0.5% per annum for
the first £300 million of the Company's net asset value (excluding income) and from 0.4% to 0.35% for net assets (excluding income) in excess of £300 million.
Note 11: Trade payables
As at 31 January 2022
£000
As at 31 January 2021
£000
Amounts falling due within one year:
Investment management and secretarial fees 134 323
Interest accrued on bank loan 67 67
Purchases awaiting settlement 35 2,220
Other payables 214 91
450 2,701
Note 12: Payables – amounts falling due
after more than one year
As at 31 January 2022
£000
As at 31 January 2021
£000
Bank loan 30,000 30,000
30,000 30,000
On 23 November 2020, the Company entered into an unsecured three year £30 million sterling term loan facility agreement with The Royal Bank of Scotland
International Limited at a fixed interest rate of 1.181%. This facility was fully drawn down on 24 November 2020.
The facility agreement contains covenants that the adjusted investment portfolio value at each month end should not be less than £120 million, the gross
borrowings should not exceed 30% of the Company’s adjusted investment portfolio value and the portfolio must contain at least 22 eligible investments.
The facility is shown at amortised cost.
Finance costs are charged to capital (80%) and revenue (20%) in accordance with the Company’s accounting policies.
73
Note 13: Ordinary shares of 5p
Number of
shares
As at
31 January 2022
£000
Number of
shares
As at
31 January 2021
£000
Ordinary shares of 5p
Ordinary shares in issue at the beginning of the year 84,759,499 4,237 83,364,105 4,167
Ordinary shares issued from Treasury during the year 3,415,000 171 3,815,000 191
Ordinary shares bought back to Treasury during the year (1,558,095) (78) (2,419,606) (121)
Ordinary shares in issue at end of the year 86,616,404 4,330 84,759,499 4,237
Number of
shares
As at
31 January 2022
£000
Number of
shares
As at
31 January 2021
£000
Treasury shares (Ordinary shares of 5p)
Treasury shares in issue at the beginning of the year 13,916,408 697 15,311,802 767
Ordinary shares issued from Treasury during the year (3,415,000) (171) (3,815,000) (191)
Ordinary shares bought back to Treasury during the year 1,558,095 78 2,419,606 121
Treasury shares in issue at end of the year
12,059,503 604 13,916,408 697
Total Ordinary shares in issue and in Treasury at the end of
the year
98,675,907 4,934 98,675,907 4,934
For the financial year to 31 January 2022, the proceeds received for shares issued from Treasury less payments made for shares bought back to Treasury was
£8,007,000 (2021: the proceeds received for shares issued from Treasury less payments made for shares bought back to Treasury was £6,138,000).
Between 1 February 2022 and 7 April 2022, 985,975 Ordinary shares of 5p were bought back to Treasury and no Ordinary shares of 5p were issued from Treasury.
Note 14: Capital reserve
Realised
capital reserve
£000
Unrealised
investment
holding gains
£000
Total
capital reserve
£000
As at 31 January 2021 107,013 102,916 209,929
Gains on realisation of investments at fair value 10,068 — 10,068
Movement in fair value gains of investments — (1,844) (1,844)
Realised currency gains during the year 55 — 55
Cost of shares bought back into Treasury (5,579) — (5,579)
Proceeds from the issue of Shares from Treasury
1
550 — 550
Capital expenses (1,596) — (1,596)
As at 31 January 2022 110,511 101,072 211,583
Refer to accounting policy 1(j) for details on the calculation of the proceeds.
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 2021’.
74
Note 15: Net asset value per share
As at 31 January 2022 As at 31 January 2021
Net assets attributable to shareholders £315,834,000 £303,571,000
Number of shares in issue at the year end 86,616,404 84,759,499
Net asset value per share 364.6p 358.2p
Note 16: Related party transactions
With the exception of the investment management and secretarial
fees (as disclosed on page 43), performance fee paid in the year
relating to the prior financial year (as disclosed on page 68),
Directors’ fees (disclosed on page 53), and Directors’ shareholdings
(disclosed on page 52), there have been no related party transactions
during the year, or in the prior year.
The amounts payable for Directors' fees as at 31 January 2022 are
£14,000 (2021: £12,000).
Note 17: 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 (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 AIFM'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 and reviews these on a regular basis. Borrowings
may comprise fixed rate, revolving, and uncommitted facilities.
The total borrowings will not exceed 20% of the net assets of
the Company at time of drawdown. On 23 November 2020, the
Company entered into a £30 million sterling term loan facility
agreement. The facility was fully drawn down on 24 November
2020 and the term loan is shown at amortised cost.
Interest risk profile
The interest rate risk profile of the Company at the reporting
date was as follows:
As at 31 January 2022 As at 31 January 2021
Cash and cash equivalents 6,589 10,027
Total net exposure to interest rate risk 6,589 10,027
75
Year ended 31 January 2022
Total currency exposure
£000
Year ended 31 January 2021
Total currency exposure
£000
US dollar 172,981 167,201
Euro 78,826 66,818
Swedish krona 36,204 32,717
Hong Kong dollar 29,203 37,725
Australian dollar 10,510 10,917
Danish krone 10,195 10,198
Swiss franc 12 25
Canadian dollar — (16)
Total overseas investments 337,931 325,585
Sterling (22,096) (22,014)
Tot a l 315,835 303,571
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 75 (2021: 75) basis points higher or lower
and all other variables were held constant, the Company’s profit for
the year ended 31 January 2022 would increase/decrease by £49,000
(2021: increase/decrease by £75,000).
This is mainly attributable to the Company’s exposure to interest rates
on its floating rate cash balances.
As at 31 January 2022 an interest rate of 0.75% is used, given that the
prevailing base rate is 0.50%. 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:
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.
Year ended 31 January 2022
£000
Year ended 31 January 2021
£000
Total net sensitivity to foreign currencies 16,897 16,279
Foreign currency sensitivity
At 31 January 2022, 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 level of change is considered to be
a reasonable illustration based on the volatility of exchange rates during the year.
76
(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 on page 75, 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
30% (2021: 30%) higher or lower while all other variables remained
constant, the return attributable to Ordinary shareholders at the
year ended 31 January 2022 would have increased/decreased by
£101,900,000 (2021: increase/decrease of £98,400,000) 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 ratings are 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 2022 was
£6,749,000 (2021: £11,103,000). This was due to trade receivables and
cash as per notes 8 and 9.
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 18: 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 at time of drawdown.
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 capital of the Company consists of the equity reserves as shown
on the equity section of the Statement of Financial Position.
77
At 31 January 2022
Level 1
£000
Level 2
£000
Level 3
£000
Tot a l
£000
Financial assets at fair value through
profit or loss
Quoted equities 339,535 — — 339,535
Net fair value 339,535 — — 339,535
At 31 January 2021
Level 1
£000
Level 2
£000
Level 3
£000
Tot a l
£000
Financial assets at fair value through
profit or loss
Quoted equities 327,988 — — 327,988
Net fair value 327,988 — — 327,988
Note 19: 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:
Note 20: Stock lending
Up until 31 July 2021 the Company had a Securities Lending
Authorisation Agreement with State Street Bank & Trust
Company. From 1 August 2021 the Company no longer
undertakes any stock lending activity.
At the reporting date the Company was no longer involved in
securities financing transactions (SFTs) as defined in Article 3
of Regulation (EU) 2015/2365. As a result of this there are no
outstanding balances, collateral, or SFTR counterparties at the
reporting date.
As at 31 January 2021 £11,475,000 of investments were subject to
stock lending agreements and £12,220,000 was held in collateral.
The prior year end 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 value of collateral in respect of the securities on loan was
not less than the value of the securities lent during the period to
31 July 2021.
The maximum aggregate value of securities on loan at any time
during the accounting period was £21,309,000.
The gross earnings and the fees paid for the year are £11,000
(2021: £16,000) and £2,000 (2021: £3,000) respectively.
Note 21: Post balance sheet events
On 24 March 2022, the Board declared a fourth interim dividend
of 1.50p per share.
As at 7 April 2022, the Company had bought back a further
985,975 ordinary shares at an average price of 333.2p per share.
4: INVESTOR INFORMATION
Directors and Advisers
Financial calendar – key dates 2022/23
Directors
Gillian Watson (Chairman)
Lindsay Dodsworth
Marian Glen
Gary Le Sueur
Christopher Metcalfe
Alternative Investment Fund Manager
and Company Secretary
Franklin Templeton Investment Trust
Management Limited
5 Morrison Street
Edinburgh EH3 8BH
Investment Manager
Martin Currie Investment Management
Limited
Saltire Court
20 Castle Terrace
Edinburgh EHES
www.martincurrie.com
Martin Currie Investment Management Limited
is authorised and regulated by the Financial
Conduct Authority.
Registered office
Martin Currie Global Portfolio Trust plc
Saltire Court
20 Castle Terrace
Edinburgh EHES
Registered in Scotland, registered
number SC192761
Independent Auditors
Ernst & Young LLP
Atria One
144 Morrison Street
Edinburgh EHEX
Broker
JPMorgan Cazenove Limited
25 Bank Street
Canary Wharf
London ESP
Registrar
Link Group
10th Floor
Central Square
29 Wellington Street
Leeds LS DL
www.linkgroup.eu
Bankers
The Royal Bank of Scotland International
Limited
London Branch, 1 Princes Street
London ECR BP
Depositary
JPMorgan Europe Limited
25 Bank Street
Canary Wharf
London EJP
Custodian
JPMorgan Chase Bank N.A.
25 Bank Street
Canary Wharf
London EJP
Association of Investment Companies
9th Floor
24 Chiswell Street
London ECYYY
www.theaic.co.uk
Martin Currie Global Portfolio Trust is a member of the
AIC (the trade body of the investment company
industry).
INVESTOR INFORMATION
Half-yearly results
announced
Fourth interim
dividend payment
Annual results
announced
Second interim
dividend payment
October
Third interim
dividend payment
JanuarySeptemberApril
First interim
dividend payment
Annual general
meeting
June
79
At the reporting date the Company was no longer involved in
securities financing transactions (SFTs) as defined in Article 3
of Regulation (EU) 2015/2365. As a result of this there are no
outstanding balances, collateral, or SFTR counterparties at the
reporting date.
During the reporting year the Company was engaged in
securities lending, the net securities lending income is disclosed
in note 2 to the financial statements.
STOCK LENDING DISCLOSURE 80
The European Securities and Markets Authority ('ESMA') has
published guidelines on Alternative Performance Measures
('APMs'). APMs are defined as being a ‘financial measure of
historical or future financial performance, financial position, or
cash flows, other than a financial measure defined or specified
in the applicable accounting framework.’ The guidelines aim to
improve comparability, reliability and/or comprehensibility of
APMs. The Company uses the following APMs throughout the
annual report, financial statements and notes to the financial
statements:
Benchmark total return
A measure showing how the benchmark has performed over a
period of time, considering both capital returns and dividends
paid to shareholders.
Discount/Premium
Discount
The amount, expressed as a percentage, by which the share
price is less than the net asset value per share.
Premium
The amount, expressed as a percentage, by which the share
price is more than the net asset value per share.
As at 31 January 2022 the share price was 356.5p and the net
asset value per share (cum-income) was 364.6p, the discount was
therefore 2.2% (2021: 3.3%).
Gearing
Gearing means borrowing money to buy more assets in the hope
that the company makes enough profit to pay back the debt and
interest and leave something extra for shareholders. However,
if the investment portfolio does not perform well, gearing can
increase losses. The more an investment company gears, the
higher the risk.
The gearing on 31 January 2022 was 9.5% (2021: 9.9%). The
calculation of gearing is provided below.
2022
£000
2021
£000
Borrowing (a) 30,000 30,000
Net assets (b)
315,834
303,571
Gearing % (a)/(b) 9.5% 9.9%
NAV per share
A common measure of the underlying value of a share in an
investment company.
The net asset value (‘NAV’) is the value of the investment
company’s assets, less any liabilities that it has. The NAV per
share is the NAV divided by the number of shares in issue. This
will very often be different to the share price. The difference is
known as the discount or premium.
The NAV per share quoted is the cum-income NAV per share
unless otherwise noted.
As shown in note 15 the NAV per share was 364.6p as at
31 January 2022 (2021: 358.2p).
NAV total return
A measure showing how the net asset value (‘NAV’) per share
has performed over a period of time, considering both capital
returns and dividends paid to shareholders.
NAV total return shows performance which is not affected by
movements in discounts and premiums. It also considers the fact
that different investment companies pay out different levels of
dividends.
The NAV total return performance, calculated using the cum-
income NAV, for the year end 31 January 2022 was 2.9%.
2022 2021
NAV at start of financial year 358.2p 301.9p
NAV at end of financial year 364.6p 358.2p
Effect of dividend reinvestment
1
4.0p 4.7p
NAV at the end of the financial
year including effect of dividends
368.6p 362.9p
NAV total return 2.9% 20.2%
Dividend assumed to be reinvested on ex-date (see table of ex-dates
overleaf).
Share price total return
A measure showing how the share price has performed over a
period of time, considering both capital returns and dividends
paid to shareholders. The share price total return for the year
end 31 January 2022 was -2.6%.
2022 2021
Share price at start of financial year 370.0p 311.0p
Share price at end of financial year 356.5p 370.0p
Effect of dividend reinvestment
1
3.9p 4.7p
Share price at the end of the year
including effect of dividends
360.4p 374.7p
Share price total return -2.6% 20.5%
Dividend assumed to be reinvested on ex-date (see table of ex-dates
overleaf).
ALTERNATIVE PERFORMANCE MEASURES 81
31 January 2022 Dividend rate N AV Share price
31 January 2021 n/a 358.2p 370.0p
8 April 2021 1.5p 373.4p 369.0p
8 July 2021 0.9p 402.6p 402.0p
7 October 2021 0.9p 389.0p 386.0p
6 January 2022 0.9p 396.5p 402.0p
31 January 2022 n /a 364.6p 356.5p
31 January 2021
31 January 2020 n/a 301.9p 311.0p
9 April 2020 1.5p 283.0p 283.0p
2 July 2020 0.9p 326.4p 322.0p
1 October 2020 0.9p 342.4p 339.5p
7 January 2021 0.9p 371.2p 374.0p
31 January 2021 n/a 358.2p 370.0p
Year ended 31 January 2022 Year ended 31 January 2021
Revenue
£000
Capital
£000
Total
£000
Revenue
£000
Capital
£000
Total
£000
Investment management fee (328) (1,312) (1,640) (216) (864) (1,080)
Other expenses
(629)
—
(629)
(486) — (486)
Total expenses
(957)
(1,312)
(2,269)
(702) (864) (1,566)
Average net assets over the year 335,858 270,168
Ongoing charges 0.68% 0.58%
Ongoing charges plus performance fee
1
0.68% 1.62%
With effect from 1 February 2021, the performance fee arrangement was discontinued.
Full details of the investment management fee are included in the Report of the directors on page 43, details of the Directors’ fees are included in the Directors’
remuneration statement on pages 52 and 53.
Ongoing charges are calculated with reference to the following figures:
Ongoing charges
Ongoing charges are the total of the Company’s expenses including both the investment management fee (excluding performance fees, if any)
and other costs expressed as a percentage of NAV.
The calculation of the ongoing charges is provided below.
82
Assets
Anything owned or controlled that has value. For investment
companies, this might include shares and securities, property,
cash etc.
Basis Points
A common unit of measure for interest rates and other
percentages in finance. One basis point is equal to 1/100th of
1%, or 0.01%, or 0.0001, and is used to denote the percentage
change in a financial instrument.
Benchmark
An index or other measure against which the performance of an
investment company is compared or its objectives are set.
The financial statements will include an explanation of how a
company has performed against its benchmark over the year and
the reasons for any under or over performance.
Bid price
The price at which you sell your shares when two prices are
quoted. This is sometimes shown as the ‘sell’ price and will be
the lower of the two prices shown.
Dividend
Income from an investment in shares. Dividends are usually paid
twice a year but can also be paid quarterly or monthly. Not all
investment companies pay dividends. Dividend income is not
guaranteed and may fall as well as rise.
Environmental, social and corporate governance (ESG)
Assessment of material environmental, social and corporate
governance (ESG) factors and the potential impact on that
company’s cash flows, statement of financial position, reputation
and, ultimately, corporate value in the long term.
Leverage
Leverage is defined in the AIFM Regulations as any method by
which the Company increases its exposure, whether through
borrowing of cash or securities, or leverage embedded
in derivative positions or by any other means. Leverage is
measured in terms of the Company’s exposure and is expressed
as a percentage of net asset value. Pursuant to the AIFM
Regulations, it can be calculated using a gross and a commitment
method. Under the gross method, exposure represents the sum
of the Company’s positions aer the deduction of sterling cash
balances, without taking into account any hedging and netting
arrangements. Under the commitment method, exposure is
calculated without the deduction of sterling cash balances and
aer certain hedging and netting positions are offset against
each other.
Internal and external AIFM
Under the AIFM Regulations, the AIFM of a company may
be either (a) another person appointed by or on behalf the
company and which, through that appointment, is responsible
for managing the company (an ‘external AIFM’); or (b) where the
legal form of the company permits internal management and the
board chooses not to appoint an external AIFM, the company
itself (an ‘internal AIFM’). Franklin Templeton Investment Trust
Management Limited is the external AIFM of the Company.
Investment company
A closed-ended fund which invests in a diversified portfolio
of assets. Investors buy and sell their shares in the investment
company on a stock exchange.
Investment trust
An investment company which is based in the UK and which
meets certain tax conditions so that it does not pay tax on gains
made within the portfolio.
Net assets – cum-income
A measure of the size of an investment company. The total value
of all assets held, less liabilities and prior charges, including
income for the current year.
Net assets – excluding income
A measure of the size of an investment company. The total value
of all assets held, less liabilities and prior charges, excluding
income for the current year.
Offer price
The price at which you can buy shares when two prices are
quoted. This is also shown as the ‘buy’ price and will be the
higher of the two prices.
Peer group
The Board monitors performance against the Company's peer
group, the AIC Global Sector.
Share buybacks
Describes an investment company buying its own shares and
reducing the number of shares held in the market.
Share buybacks can be used to return money to shareholders
but are also oen used to tackle a company’s discount. Discounts
may reflect an imbalance between the demand for shares and
the number of shares held in the market. The hope is that, by
reducing the number of shares held in the market, the buyback
will help to prevent the discount widening or even reduce it. See
also under Treasury shares below.
GLOSSARY OF TERMS 83
Share price
The price of a share as determined by the stock market.
If you see a single share price shown, it is likely that this is
the mid-market price. This is different to the price at which
you buy and sell the shares, which are known as the bid
price (sell) and offer price (buy).
Stock lending
The act of loaning a stock or security to a third party for a
fee.
Treasury shares
Shares in a company’s own share capital which the
company itself owns and which can be sold to investors to
raise new funds.
Treasury shares come into existence only when a company
buys back shares. Instead of cancelling the shares (i.e. they
cease to exist) they are held ‘in Treasury’ by the company
and can be sold at a later date to raise new funds.
Volatility
A measure of how much a share moves up and down in
price over a period of time.
Zero discount policy
A mechanism that aims to ensure that, in normal market
conditions, the share price trades close to NAV.
84
WAYS TO INVEST IN THE COMPANY
The Company’s shares qualify for tax efficient wrapper products like
individual savings accounts (‘ISAs’) and self-invested personal
pensions (‘SIPPs’) as well as many other investment wrappers that
can be used, including those designed for children.
Platforms, fund supermarkets and online
stockbrokers
You can invest using a number of fund platforms and fund
supermarkets. Many offer wrapper products like ISAs and SIPPs and
children’s savings products. A number of real-time execution only
stockbroking services also allow you to trade online, manage your
portfolio and buy UK listed shares. These services do not offer
financial advice and if you are unsure about investing, we
recommend that you speak to a qualified financial adviser.
Independent financial advisers
An increasing number of independent financial advisers are
including investment trusts within their investment
recommendations for clients. To find an adviser who advises on
investment trusts, visit www.unbiased.co.uk.
Private client stockbrokers
If you have a large sum to invest, you may want to contact a
private client stockbroker. They can manage your entire
portfolio of shares and will advise you on your investments. To
find a private client stockbroker visit the Personal Investment
Management & Financial Advice Association: www.pimfa.co.uk.
Link Group
You can buy and sell shares directly by visiting
www.linkgroup.eu/share-deal or by calling the Link dealing team
on 0371 664 0454. To change your address, request tax
vouchers or obtain an up to date valuation of your shareholding
please visit www.signalshares.com.
Alternatively, contact Link Group on 0371 664 0300 calls are
charged at the standard geographical rate and will vary by
provider. Calls outside the United Kingdom are charged at the
applicable international rate. Lines are open 9:00am – 5:30pm
Mon-Fri).
Trading codes
(You may be asked for these when investing)
TIDM code: MNP Sedol: 0537241
Reuters code: MNP.L ISIN: GB0005372411
Shareholder services
The registrars of the Company are Link Group. You can buy and sell shares directly by calling the Link dealing team on 0371 664 0454.
For other services you can contact Link by telephone, online or by email to shareholderenquiries@linkgroup.co.uk.
Online Telephone
Contact details www.linkgroup.eu 0371 664 0300
Opening times 24 hours 9:00am - 5:30pm Monday to Friday
Change your address
Request dividend confirmations —
Valuation
Online proxy voting
—
Dividend payment records
Register and change bank mandate instructions
for receipt of dividends
Elect to receive shareholder communication electronically
Request/download shareholder forms
Checking the share price
The share price is available through many sources including www.londonstockexchange.com and www.martincurrieglobal.com.
85
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the annual general meeting ('AGM') of
Martin Currie Global Portfolio Trust plc (the ‘Company’) will be held
at the Waldorf Astoria The Caledonian, Princes Street, Edinburgh
EH AB on Thursday, 16 June 2022 at 11.00 am, to consider and, if
thought fit, pass the resolutions below.
The resolutions numbered 1 to 13 are proposed as ordinary
resolutions and must receive more than 50% of the votes cast in
favour in order to be passed. The resolutions numbered 14 to 18 are
proposed as special resolutions and must receive at least 75% of the
votes cast in in favour in order to be passed.
Ordinary business
To consider and, if thought fit, pass the following resolutions as
ordinary resolutions:
1. That the Report of the directors and auditors and the financial
statements for the year ended 31 January 2022 be received;
2. That the Directors’ annual remuneration report for the year
ended 31 January 2022 be approved;
3. That the Directors’ remuneration policy be approved;
4. That the dividend policy be approved;
5. That Marian Glen be re-elected as a Director;
6. That Gary Le Sueur be re-elected as a Director;
7. That Christopher Metcalfe be re-elected as a Director;
8. That Gillian Watson be re-elected as a Director;
9. That Lindsay Dodsworth be elected as a Director;
10. That Ernst & Young LLP be re-appointed as auditors of the
Company to hold office from the conclusion of this meeting
until the conclusion of the next general meeting at which
accounts are laid before the Company;
11. That the Directors be authorised to fix the remuneration of
the auditors for the year ending 31 January 2023; and
12. That, in substitution for any existing authority, the
directors of the Company be and are hereby generally and
unconditionally authorised pursuant to s551 of the Companies
Act 2006 (the ‘Act’) to allot equity securities (as defined
in s560 of the Act) up to a maximum nominal amount of
£1,427,173 (being approximately one third of the issued share
capital of the Company (excluding Treasury shares) as at
7 April 2022, being the latest practicable date before the
date of this notice) provided that the authority hereby given
shall expire on 30 July 2023 or, if earlier, the conclusion of
the annual general meeting of the Company in 2023 save
that the Company may, at any time before the expiry of such
authority, make an offer or enter into an agreement which
would or might require equity securities to be allotted aer
the expiry of such authority and the directors may allot equity
securities in pursuance of such an offer or agreement as if
such authority had not expired.
Special business
To consider and, if thought fit, pass the following resolution as an
ordinary resolution:
13. That the proposed new investment policy, as detailed in the
Annual Report and Financial Statements and a copy of which
is initialled by the Chairman for the purpose of identification
and production at the annual general meeting, be and is
hereby approved and adopted with effect from 16 June 2022
as the Company’s investment policy in place of its existing
investment policy.
To consider and, if thought fit, pass the following resolutions as
special resolutions:
14. That, pursuant to Article 12 of the Articles of Association of
the Company and in accordance with s701 of the Companies
Act 2006 (the ‘Act’) and in substitution for any existing
authority, the Company be and is hereby generally and
unconditionally authorised to make market purchases (within
the meaning of s693(4) of the Act) of Ordinary shares of 5
pence each in the capital of the Company provided that:
(a) the maximum aggregate number of Ordinary shares
hereby authorised to be purchased is 12,836,001
(or, if less, 14.99% of the number of Ordinary shares in
issue (excluding Treasury shares) immediately prior to the
passing of this resolution);
(b) the minimum price which may be paid for an Ordinary
share is 5 pence (exclusive of expenses);
(c) the maximum price (exclusive of expenses) which may
be paid for an Ordinary share shall be not more than the
higher of
(i) 5% above the average of the mid-market quotations
for an Ordinary share of the Company as derived from
the Daily Official List of the London Stock Exchange
for the five business days immediately preceding the
date of purchase; and
(ii) the higher of the last independent trade and the
highest current independent bid on the London Stock
Exchange;
(d) the authority hereby conferred shall expire 15 months
after the date of passing of this resolution or, if earlier,
at the conclusion of the AGM of the Company in 2023,
unless such authority is renewed, issued or revoked prior
to such time; and
(e) the Company may conclude a contract to purchase
Ordinary shares under the authority hereby conferred
prior to the expiry of such authority which will or may
be executed wholly or partly after the expiry of such
authority and may make a purchase of Ordinary shares in
pursuance of any such contract as if the authority hereby
confirmed had not expired.
86
15. That the Directors be and they are hereby empowered in
accordance with s570 and s573 of the Companies Act 2006
(the ‘Act’) to allot equity securities (as defined in s560 of
the Act), where they are generally authorised pursuant to
the authority to allot equity securities conferred upon them
by resolution 11 and/or to sell Ordinary shares held by the
Company as Treasury shares, for cash, as if s561 of the Act did
not apply provided that the power conferred by this resolution
shall be limited to the allotment of equity securities having a
nominal amount not exceeding in aggregate £428,152 (being an
amount equal to 10% of issued equity share capital (excluding
Treasury shares) as at 7 April 2022 being the latest practicable
date before the date of this notice). Unless previously varied,
revoked or renewed, the authority hereby conferred shall
expire on 30 July 2023 or, if earlier at the conclusion of the
annual general meeting of the Company in 2023, save that the
Company may, before the expiry of any power contained in this
resolution, make an offer or agreement which would or might
require equity securities to be allotted after such expiry and
the directors may allot equity securities in pursuance of such
an offer or agreement as if the power conferred hereby had
not expired.
16. That, in addition to any authority granted under resolution
15, the Directors be and they are hereby empowered in
accordance with s570 and s573 of the Companies Act 2006
(the ‘Act’) to allot equity securities (as defined in s560 of
the Act), where they are generally authorised pursuant to
the authority to allot equity securities conferred upon them
by resolution 11 and/or to sell Ordinary shares held by the
Company as Treasury shares, for cash, as if s561 of the Act did
not apply provided that the power conferred by this resolution
shall be limited to the further allotment of equity securities
having a nominal amount not exceeding in aggregate £428,152
(being an amount equal to 10% of issued equity share capital
(excluding Treasury shares) as at 7 April 2022 being the latest
practicable date before the date of this notice).
Unless previously varied, revoked or renewed, the authority
hereby conferred shall expire on 30 July 2023 or, if earlier, at
the conclusion of the annual general meeting of the Company
in 2023, save that the Company may, before the expiry of any
power contained in this resolution, make an offer or agreement
which would or might require equity securities to be allotted
after such expiry and the directors may allot equity securities
in pursuance of such an offer or agreement as if the power
conferred hereby had not expired.
17. That a general meeting, other than an annual general meeting,
may be called on not less than 14 clear days’ notice. Unless
previously varied, revoked or renewed, the authority hereby
conferred shall expire on 30 July 2023 or, if earlier, at the
conclusion of the annual general meeting of the Company in
2023.
18. That the Articles of Association produced to the Meeting
and signed by the chairman of the Meeting for the purposes
of identification be approved and adopted as the Articles of
Association of the Company in substitution for, and to the
exclusion of, the existing Articles of Association with effect
from the conclusion of the Meeting.
By order of the Board
Franklin Templeton Investment Trust Management Limited
Secretary
12 April 2022
Registered office: Saltire Court, 20 Castle Terrace,
Edinburgh EH ES
87
1. All shareholders are entitled to attend or vote at the meeting.
Shareholders are strongly encouraged to appoint a proxy in
accordance with note 3.
While we hope that shareholders will be able to attend, the
Directors are aware that Government guidance and regulation
relating to the Covid-19 pandemic may change. If we are
obliged to change the arrangements for the AGM after
publishing this document, details will be published via a Stock
Exchange announcement and on our website. Shareholders
who plan to attend the AGM are encouraged to check the
website before travelling.
2. The Company has specified that to be entitled to attend and
vote at the meeting (and for the purpose of determining the
number of votes they may cast), members must be entered on
the register of members 48 hours before the time fixed for
the meeting.
3. A member entitled to attend, speak and vote may appoint a
proxy or proxies to attend and, on a poll, vote instead of him.
A proxy need not be a member of the Company.
A shareholder may appoint more than one proxy provided
that each proxy is appointed to exercise the rights attached to
a different share or shares held by that shareholder. To be
valid, proxies must be lodged at the office of the registrars of
the Company not less than 48 hours (excluding non-working
days) before the time of the meeting. A form of proxy is
enclosed. In usual circumstances, appointment of a proxy will
not preclude a member from attending and voting in person.
4. A corporation which is a member can appoint one or more
corporate representatives who may exercise, on its behalf, all
of its powers as a member provided that no more than one
corporate representative exercises powers over the same
share.
5. Any person to whom this notice is sent who is a person
nominated under s146 of the Companies Act 2006 to enjoy
information rights (a ‘Nominated Person’) may, under an
agreement between him/her and the shareholder by whom
he/she was nominated, have a right to be appointed (or to
have someone else appointed) as a proxy for the annual
general meeting. If a Nominated Person has no such proxy
appointment right or does not wish to exercise it, he/she may,
under any such agreement, have a right to give instructions to
the shareholder as to the exercise of voting rights.
6. There are no contracts between the Company and the
directors, other than their letters of appointment and deeds of
indemnity.
7. As at 7 April 2022 (being the latest practicable date prior to
the publication of this Notice) the Company’s issued voting
share capital consisted of 85,630,429 Ordinary shares
(carrying one vote each). Therefore, the total voting rights in
the Company as at 7 April 2022 were 85,630,429 votes, in
respect of the Ordinary shares only.
8. CREST members who wish to appoint a proxy or proxies
through the CREST electronic proxy appointment service may
do so for the meeting and any adjournment(s) thereof by
using the procedures described in the CREST Manual. CREST
personal members or other CREST sponsored members and
those CREST members who have appointed a voting service
provider(s) should refer to their CREST sponsors or voting
service provider(s), who will be able to take the appropriate
action on their behalf. In order for a proxy appointment or
instruction made by means of CREST to be valid, the
appropriate CREST message (a ‘CREST Proxy Instruction’)
must be properly authenticated in accordance with Euroclear
UK & Ireland Limited’s specifications and must contain the
information required for such instructions, as described in the
CREST Manual. The message must be transmitted so as to be
received by the Company’s agent, Link Group (CREST
Participant ID: RA10), no later than 48 hours (excluding non-
working days) before the time appointed for the meeting. For
this purpose, the time of receipt will be taken to be the time
(as determined by the time stamp applied to the message by
the CREST Application Host) form which the Company’s
agent is able to retrieve the message by enquiry to CREST in
the manner prescribed by CREST.
CREST members and, where applicable, their CREST
sponsors or voting service provider(s) should note that
Euroclear UK & Ireland Limited does not make available
special procedures in CREST for any particular messages.
Normal system timings and limitations will therefore apply in
relation to the input of CREST Proxy Instructions. It is the
responsibility of the CREST member concerned to take (or, if
the CREST member is a CREST personal member or
sponsored member or has appointed a voting service
provider(s), to procure that his CREST sponsor or voting
service provider(s) take(s)) such action as shall be necessary to
ensure that a message is transmitted by means of the CREST
system by any particular time. In this connection, CREST
members and, where applicable, their CREST sponsors or
voting service provider(s) are referred in particular to those
sections of the CREST Manual concerning practical limitations
of the CREST system and timings. The Company may treat as
invalid a CREST Proxy Instruction in the circumstances set out
in Regulation 35(5) (a) of the Uncertificated Securities
Regulations 2001.
9. Pursuant to s319A of the Companies Act 2006, the Company
must provide an answer to any question which is put by a
member attending the annual general meeting relating to the
business being considered, except if a response would not be
in the interest of the Company or for the good order of the
meeting or if to do so would involve the disclosure of
confidential information.
NOTES 88
10. Members may require the Company to place on its website a
statement, made available also to the Company’s auditors,
setting out any matter relating to the audit of the Company’s
financial statements, including the independent auditors’
report and the conduct of the audit, which members intend to
raise at the annual general meeting. The Company becomes
required to place such a statement on the website once a)
members with at least 5% of the total voting rights of the
Company or b) at least 100 members who are entitled to vote
and on whose shares an average sum per member of at least
£100 has been paid have submitted such a request to the
Company. Members seeking to do this should write to the
Company providing their full name and address or email the
Company at ftcosec@franklintempleton.com providing their
full name and address, stating ‘AGM’ in the subject line of the
email.
11. In accordance with s338 of the Companies Act 2006,
shareholders may require the Company to give members
notice of a resolution which may properly be moved and is
intended to be moved at the annual general meeting. The
request must be received by the Company at least six weeks
before the AGM and not later than 5 May 2022. The resolution
must not, if passed, be ineffective (whether by reason of
inconsistency with any enactment or the Company’s
constitution or otherwise). The resolution must not be
defamatory of any person, frivolous or vexatious. The request
must identify the resolution of which notice is to be given by
either setting out the resolution in full or, if supporting a
resolution sent by another member, clearly identifying the
resolution which is being supported. The Company becomes
required to give members notice of a resolution to be moved
at the annual general meeting once a) members with at least
5% of the total voting rights of the Company or b) at least 100
members who are entitled to vote and on whose shares an
average sum per member of at least £100 has been paid have
submitted a request to the Company in accordance with the
provisions of this paragraph. Members seeking to do this
should write to the Company providing their full name and
address or email the Company at
ftcosec@franklintempleton.com providing their full name and
address, stating ‘AGM’ in the subject line of the email.
12. In accordance with s338A of the Companies Act 2006,
shareholders may require the Company to include in the
business to be dealt with at the meeting a matter (other than
a proposed resolution) which may properly be included in the
business (a matter of business).
The request must be received by the Company at least six
weeks before the AGM and not later than 5 May 2022.
The matter of business must not be defamatory of any person,
frivolous or vexatious. The request must identify the matter of
business by either setting it out in full or, if supporting a
statement sent by another member, clearly identify the matter
of business which is being supported.
The request must be accompanied by a statement setting out
the grounds for the request. The Company becomes required
to give members notice of a resolution to be moved at the
annual general meeting once a) members with at least 5% of
the total voting rights of the Company or b) at least 100
members who are entitled to vote and on whose shares an
average sum per member of at least £100 has been paid
have submitted such a request to the Company in
accordance with the provisions of this paragraph. Members
seeking to do this should write to the Company providing
their full name and address or email the Company at
ftcosec@franklintempleton.com providing their full name
and address, stating ‘AGM’ in the subject line of the email.
13. Information regarding the annual general meeting, including
the information required by s311A of the Companies Act
2006, is available from: www.martincurrieglobal.com.
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If you have an enquiry about Martin Currie Global Portfolio Trust, please get in touch.
0131 229 5252
II ftcosec@franklintempleton.com
Mail: The Chairman
c/o Company secretary
Martin Currie Global Portfolio Trust plc
Saltire Court
20 Castle Terrace
Edinburgh
EHES
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information on the following:
90
The Chairman
c/o Company secretary
Martin Currie Global Portfolio Trust plc
Saltire Court
20 Castle Terrace
Edinburgh
EHES
Tel: 0131 229 5252
Fax: 0131 228 5959
Email:
ftcosec@franklintempleton.com
www.martincurrieglobal.com
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