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

Legal Entity Identifier: 549300RKB85NFVSTBM94

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ANNUAL FINANCIAL RESULTS - YEAR TO 31 JANUARY 2024

The financial information set out below does not constitute the Company's statutory accounts for the years ended 31 January 2024 or 2023 but is derived from those accounts.  Statutory accounts for 2023 have been delivered to the Registrar of Companies and those for 2024 will be delivered following the Company's annual general meeting. 

The auditor has reported on those accounts; their report was unqualified.

The unedited full text of those parts of the annual report and accounts for the year ended 31 January 2024 which are required to be published are set out on the following pages.

The annual general meeting of the Company will be held on 20 June 2024.  The notice of meeting will shortly be issued to shareholders and a copy can be downloaded on the Company's website (www.martincurrieglobal.com).

A copy of the full annual report and accounts will be submitted to the National Storage Mechanism and will be available for inspection.

FINANCIAL HIGHLIGHTS

Highlights

·      Strong performance in the financial year

·      Ongoing focus on the quality growth strategy of the Company

·      Maintained annual dividends

Key data

Past performance is not a guide to future returns.  All returns are total returns unless otherwise stated.

Source: Martin Currie Investment Management.

^{1 1}The net asset value per share total return is calculated using the cum income net asset value with dividends reinvested on the ex-dividend date. This is an Alternative Performance Measure, see the annual report and accounts for more details.

²Total return is the combined effect of the rise and fall in the share price, net asset value or benchmark together with any dividend paid.  See the annual report and accounts for more details on Alternative Performance Measures.

³ 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.

⁴ Ongoing charges (as a percentage of shareholders' funds) are calculated using average net assets over the period.  The ongoing charges figure has been calculated in line with the Association of Investment Companies ('AIC') recommended methodology.  This is an Alternative Performance Measure, see the annual report and accounts for more details.

⁵ For details of calculation, refer to note 5 in the annual report and accounts.

Performance

·      +11.2% Net Asset Value total return for the year.

·      +11.1% Share price total return for the year.

·      +10.9% Benchmark total return for the year.

CHAIR'S STATEMENT

Dear Shareholder

Investment performance

I am pleased to report that over the year to 31 January 2024 your Company's NAV total return was +11.2%, which compares favourably with the return of the benchmark index of +10.9% and was ahead of the average return of our peer group. Our investment manager focuses on investment in companies with robust earnings and prospects of superior long-term growth by understanding fundamental changes and trends in economies and businesses. In 2023 one such change was that the world started to realise the potential of Artificial Intelligence ("AI").  Some of the companies in our portfolio - including our largest holding Nvidia - were selected for their potential to benefit from advances in computing and have been major beneficiaries of the focus on AI.  The returns over the last year illustrate the benefits of a focus on companies that can take advantage of emerging opportunities for growth.

Income and dividends

Net revenue earnings per share for the period amounted to 2.37 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 26 April 2024 to shareholders on the register on 5 April 2024.  The total dividends with respect to the year to 31 January 2024 will be 4.2 pence per share, maintaining the same total dividend as the previous year.

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 previous levels. The Company's Articles of Association permit the distribution of realised capital gains and the Company has substantial distributable reserves. 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.

Gearing

The Board carried out a detailed review of gearing during the year under review as we approached the maturity date of the Company's three-year fixed loan. On 23 November 2023, the Company entered into an unsecured three-year £10 million sterling revolving loan facility agreement with The Royal Bank of Scotland International Limited ("RBSI"). The Company's existing loan of £30m from RBSI matured on the same date and was repaid in full. We agreed to draw down the full amount available under the new £10 million facility on 23 November and for an initial period of six months. The Company's debt therefore reduced from £30m to £10m and gearing was 3.9% as at 31 January 2024.

Promoting the shares

Franklin Templeton Investment Trust Management Limited, the Alternative Investment Fund Manager ('AIFM') is very active in promoting the Company, including regular meetings with major shareholders, a wide variety of online marketing designed to encourage investors to go to our interesting and informative website, and regular press coverage of the portfolio manager's distinctive investment style. The Company is recognised as a long-term leader in ESG investing and continues to maintain the highest possible 'Five Globes' from Morningstar. It is also rated in the top 2% of over 8,000 funds in Morningstar's global large cap category for ESG. The Board believes that the Company's distinctive approach to investing is important in stimulating demand for shares in a crowded market and against a background of continuing focus on the environment, and in particular climate change, and on social and governance issues.

While over the past two years demand for investment trusts in general has reduced, the Board and investment manager continue to believe that making investors aware of the attractions of investing in the Company is an essential part of our role and we will continue actively and energetically to market the Company as part of our long-term strategy.

We also continue to operate 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 materially different from the NAV.

The Board believes that this policy is instrumental in making the Company attractive to investors. During the year under review, the Company bought back 5,551,747 shares which were placed in Treasury and issued 675,000 shares from Treasury. Shares were bought back in February and March 2023, were issued in April and May 2023 and then were bought back in the following eight months. The activity reflects levels of market demand both for the Company's shares and more widely for investment trusts.  We continued to be successful in achieving the aims of the zero discount policy, with the share price generally remaining close to NAV.  Shares which are bought back are held in Treasury rather than cancelled as they can be reissued from Treasury at lower cost than issuing new shares.

The Board

My predecessor as Chair, Gillian Watson, retired after the Annual General Meeting on 1 June last year. My fellow Directors and I would like to repeat our thanks Gillian for her commitment and diligence over the ten years that she on the Board and wish her every success in her future endeavours. For the first time this year we are required to report on both the gender and ethnic diversity of the Board and note that, while meeting the recommended gender diversity, we do not meet the target for ethnic diversity. We will take this into account when we next recruit a director but, being mindful of costs, have decided that we will continue to operate with four directors at least for the time being.

AGM

I am pleased to be able to invite all shareholders to attend our AGM in person at the offices of Franklin Templeton, 5 Morrison Street, Edinburgh EH3 8BH on Thursday 20 June 2024 at 11.30am.

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 ftcosec@franklintempleton.com or by post to The Company Secretary, Martin Currie Global Portfolio Trust plc, 5 Morrison Street Edinburgh EH3 8BH. 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.

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, if you have not already done so.

The Board is always interested to hear shareholders' views.  Please contact me if you have any questions or points regarding your Company by email at: ftcosec@franklintempleton.com.

Outlook

The world continues to face a number of serious challenges, both economic and political. Inflation which started to take hold as a result of shortages resulting from lockdowns to prevent the spread of Covid-19 was then exacerbated by the Russian war on Ukraine and by tension between the USA and China.  Geopolitical issues were also further highlighted in October 2023 by the attack by Hamas on Israel and the resulting conflict in Gaza. Against this difficult background it was encouraging to see progress in major economies in 2023, with GDP in the USA growing despite predictions of a recession and China also growing, albeit at a significantly lower pace than pre-Covid.  Governments and central banks around the world are continuing to tread a fine line in aiming to contain inflation while not causing a destructive recession. It is apparent that both inflation and interest rates will remain higher than we were used to before 2020 for some time and it is highly unlikely that we will again see the exceptionally low interest rates that were prevalent in the years before the Covid-19 crisis.

It is encouraging to be able to report the strong returns that our investment manager produced over the year under review. Looking forward, against the current geopolitical and macroeconomic background, the type of companies in which we invest with resilient earnings growth, exposed to long-term structural growth themes, that have pricing power and solid balance sheets should be well placed to produce superior returns for shareholders. There will inevitably be challenges along the way and equity markets will always be prone to volatility in the face of bad news but we remain confident in our investment manager's ability to select a portfolio of high quality, growing companies that will produce long-term performance for the Company's shareholders.

Christopher Metcalfe

Chair

23 April 2024

MANAGER'S REVIEW

Review of financial year ended 31 January 2024

Over the year to 31 January 2024 markets remained volatile and interspersed by geopolitical and macroeconomic risks. It was, however, pleasing to see that fundamentals re-established themselves, after an unprecedented year in 2022 when both bonds and equities had fallen. That was only the third time in the past 100 years that there was significant underperformance of both asset classes at the same time. A lot happened in 2023, including some seismic shifts such as the confirmation that Artificial Intelligence ('AI') will be a major source of innovation and disruption and from which the Company's focus on mega-trends and a long-term time horizon should benefit.  At the same time, a lot of potential problems were averted in 2023, notably the possibility of (i) systemic bank risk and contagion from US regional bank failures, (ii) a hard landing in the US economy, and (iii) a US government debt default. Geopolitical risks rose further during the year, with the Russia-Ukraine war, the emergence of the Israel-Gaza conflict, the proxy war in the Straight of Hormuz between Iran and the US, the ongoing agitations by North Korea and the gradually escalating China-US-Europe tensions related to Taiwan and the strategic dimension of the semi-conductor industry.

We had some localised regional bank failures in the US in the first few months of 2023, which led to market concerns of systemic risk and fears of contagion into the broader global banking sector. In contrast, we believed that the risk would be limited and failures would be localised. This so far has proven accurate, even if Credit Suisse ended up in a regulator-imposed takeover by UBS. The market sighed in relief as these systemic concerns dissipated. This highlighted the fundamental reasons why we do not hold banks in the portfolio. Readers can gain more insight on a feature article in the News & Views section of our website www.martincurrieglobal.com.

We then had the fear of a US government debt default, which would have been the first in history, as the debt ceiling negotiations between Democrats and Republicans threatened to be unproductive in May and June. We believed that a resolution would be found, perhaps not so much at the eleventh hour as at a few minutes prior to midnight, which ultimately restored some calm and confidence to the market.

At the same time, we had a market that started 2023 with a quasi-certain prediction of a recession during the year, which went against our central scenario of a sharp slowdown rather than a recession, both at the Global and the US levels. We were proved right.

The year 2023 was also marked by ongoing interest rate hikes by the major Western central banks, as inflation remained elevated during the first half of the year with the US Federal Funds Rate increasing by 1% to 5.25%-5.5%, the European Central Bank increasing rates by 2% to 4.5% and the Bank of England increasing rates by 1.75% to 5.25%.

In the financial year to 31 January 2024, the portfolio performed positively, with the NAV total return being +11.2%, vs a benchmark index return of +10.9%. Pleasingly, this strong outperformance came on the back of no changes to our investment approach, as our shareholders would have expected, and little change in terms of stock and sector exposures. We kept our exposure to our high conviction holdings, with many of them coming through strongly during the period, notably some of our top 10 holdings such as Nvidia, Ferrari, Microsoft, Atlas Copco, Moncler, Kingspan, and Linde.

The strongest performing sectors during the financial year were Technology (+36.4%), Telecommunications (+21.2%), Industrials (+10.8%) - all three performing ahead or in line with the MSCI ACWI index. All other sectors underperformed the market, notably Real Estate (-8.3%), Materials (-6.7%), Consumer Staples (-2.2%).

Stock Contributors during the year

• Nvidia (6.6% contribution to relative performance for the year ended 31 January 2024)- Nvidia outperformed as ChatGPT radically increased the projected level of demand for its products, bringing 'the iPhone moment in the AI industry'.  Revenue/EPS for FY24 ended 108/199% higher respectively than expected by analysts' consensus at the start of 2023. We believe that we are at the start of a multi-year migration of datacentre infrastructure to accelerated computing. We think that Nvidia has the potential to claim a high share of overall IT infrastructure spending.  Nvidia is the Company's top holding, see largest 10 holdings in the annual report and accounts for more information.

• Adobe (1.2% contribution to relative performance for the year ended 31 January 2024) - Adobe's share price benefited from a continued rollout of generative AI products as well as a positive read across from the pricing of these products from other parts of the industry.  In the period Adobe's attempted defensive acquisition of Figma was cancelled, which raises question marks over Adobe's competitive offering. In addition we are seeing competitors develop more advanced solutions that may encroach on Adobe's designer space going forward (e.g. Sora - Open AI's text-to-video generative AI solution). The opportunity and threats from AI technologies therefore remain uncertain. Adobe enjoyed a strong rally through 2023 so we concluded to sell the position and lock in profits after the end of the reporting period.

• Microsoft (1.0% contribution to relative performance for the year ended 31 January 2024) - The share price was strong in the period, as wider adoption of AI has brought to the fore the company's advantages as a platform with a large installed customer base.  The company released CoPilot, an AI-powered virtual assistant and this is in the early stages of adoption. Second quarter 2023 results were strong with revenue and EPS ahead of market expectations. The crucial performance indicator of growth of the Azure cloud platform was also ahead of expectations at +28%, vs 25-26% guidance. Within that AI contributed 6%, above the previous quarter's level of 3%, driven by Open-AI and CoPilot.  We continue to believe in Microsoft's potential to become the platform of choice for AI, with a first mover advantage especially in the enterprise setting.  Microsoft is the Company's second largest holding, see largest 10 holdings in the annual report and accounts for more information.

Stock Detractors during the year

• Masimo (-2.0% contribution to relative performance for the year ended 31 January 2024) - Masimo's share price started the period strongly, rebounding by 15% between February and April 2023. However, it was negatively impacted by the activist investor Politan Capital gaining board seats at the AGM in late June. On the operational side, the company's healthcare division was challenged by delays to orders, weak hospital demand and budget constraints. We engaged with the company and were reassured that the management understands the need to return to a level of performance akin to their historical track record, especially after a large acquisition in 2022. However, given the low visibility into the improvement of consumer sentiment, we decided to exit the position in October 2023.

• Wuxi Biologics (-1.9% contribution to relative performance for the year ended 31 January 2024) - A confluence of several factors contributed to the weakness in Wuxi shares. In the period from February to June the share price declined by 46% in line with weakness in the Chinese equity market. This was despite a solid set of pre-released results, albeit with some compression in the overall profit margin due to investments to expand capacity. While we believe that execution has been strong relative to the market, reflected by continuous market share gains, we think that Wuxi now needs to rebuild credibility with investors. Whilst we still favour the underlying exposures and thematics of Wuxi, namely innovation, drug complexity, outsourcing, we saw a clearer pathway to realise the upside elsewhere and exited our position in Wuxi in December 2023.

• ResMed (-1.4% contribution to relative performance for the year ended 31 January 2024) - Having broadly traded flat in the first 6 months of the year, ResMed shares were under pressure in August amid concerns surrounding the second order impacts of GLP-1 drugs which stimulate insulin production in the body.  Specifically, with obesity as a comorbidity of many diseases including sleep apnea, ResMed's key market, investors were concerned that any impact on obese patients could lower volumes and addressable markets for businesses serving these comorbidities. This remains to be proven as access, adherence and drug stay time have historically proven material barriers to gathering evidence to demonstrate this point. In late October, ResMed reported a positive quarterly result, while reiterating the point that higher diagnoses of obesity could in fact result in simultaneous sleep apnea diagnoses, increasing patient flow.  This drove 2-4% earnings upgrades and alleviated the concerns around the stock with the share price rebounding c.41% in the last 3 months of the period. This was accompanied by a positive competitive backdrop as Philips, the main competitor, agreed on the broad terms of a consent decree under which it will not sell new sleep therapy devices in the US. We see Eli Lilly's trial of GLP-1's in sleep apnea, due to be reported in in the second quarter of 2024, as an important next step.

Portfolio Activity

In the year under review we purchased Pernod Ricard and Estée Lauder in the consumer sector, Mettler Toledo, Idexx, and Sartorius Stedim in Healthcare, and Adyen in the Financials sector. We sold out of Dr. Martens and Kerry Group in Consumer, Masimo and Wuxi Biologics in Healthcare, and AIA in the Financials sector. We replaced VISA with Mastercard and replaced Ansys with Cadence Design Systems.

New positions

• Idexx - Idexx is the leading pure play on the structural growth in animal diagnostics, a market that is more attractive for investors than human health (with longer product cycles, lower competition and lower customer power). Idexx boasts structural growth, pricing power, high barriers to entry and sticky customers with 90% recurring revenues.

• Sartorius Stedim - We sold Wuxi Biologics in the period to fund a purchase in Sartorius Stedim. While we like the underlying exposures and thematics of both stocks, namely innovation, drug complexity, outsourcing and single-use efficiency, we see a clearer pathway to realise the upside of our thesis in Stedim. Stedim is a single-use biologic manufacturing equipment company.

• Cadence Design Systems - Cadence Design Systems, a US software company, operating in the oligopolistic Exploratory Data Analysis ("EDA") market and moving into the adjacent Simulation sector, was a new purchase during the year under review. We believe that the upside to growth due to the development of AI is underappreciated by the market, while in our assessment it is poised to bring a secular shift in EDA akin to the productivity benefits from IT last seen in the 1980s.  Generally, we are buying into long-term growth. The purchase was funded by the sale of Ansys, a leader in simulation software.  We have greater conviction in Cadence's business model and duration of value-accretive growth. Meanwhile, both stocks are trading close to fair value, per our recent reviews. Therefore, we are using today's valuations as an opportunity to make changes in our concentrated portfolio in line with our investment conviction.

• Adyen - Adyen is a leading global payment company whose growth is supported by multiple structural trends in payment such as frictionless payments, omni-channel e-commerce, and the platform economy. A combination of a high net revenue CAGR, high medium-term EBITDA margin and a projected 100%+ ROIC profile made it a strong candidate for the portfolio. We took the opportunity of a sharp pullback in the share price in April as a result of higher costs incurred for their international expansion as an attractive entry point.

• Mettler Toledo - Mettler Toledo is a leading provider of precision instruments and analytical tools across the laboratory, industrial and food segments with a legacy business in scales and balances. The company's sales are growing at 7% per year, ROIC is currently 40% and forecast to move to 60% over five years. The stock has been impacted by a period of underperformance based on risks of earnings downgrades, which gave us the opportunity in July to initiate a position. We have held the stock in the past, and believe that the earnings projections are near their low point.

• Pernod Ricard - We initiated a position in Pernod Ricard in February, following a period of underperformance of the share price. We believe that Pernod has a supportive mix of growth and returns profile in consumer staples, with expected growth over 5 years in sales, earnings, and free cash flow. Anticipated ROIC improvement and robust earnings results support the potential for upgrades to analysts' consensus views of future earnings. Trading at a 17% discount to its 5-year average PE, the stock has an attractive valuation and in our view is poised to capitalise on premiumisation trends with strong pricing power.

• Estée Lauder - In June, we initiated a new position in Estée Lauder, following significant underperformance of the stock and a profit warning in May. We have a high conviction in the company's leadership within prestige beauty in the medium and long term, despite the market concerns in the short term. Whilst we acknowledge that near term trading is challenged we see inventory issues in China as transitory. With a strong brand portfolio and mid-teens market share, Estée Lauder's luxury segment growth aligns with high margin channels, particularly in China. This led to the decision to sell AIA in favour of Estée Lauder.

• Mastercard - Both VISA and Mastercard are leaders in the payment technology industry, both operate a capital light model with >60% EBITDA margin and deliver low to mid-teens revenue growth, underpinned by a secular shift to cashless payments. We replaced VISA with Mastercard due to the higher ROIC support from Mastercard (>70%, vs VISA's >40%, with both expanding over time). In addition, Mastercard offers a slightly better growth outlook due to its higher exposure to international payments and credits.

Additions to an existing position

• Illumina - Illumina is the global leader in next generation sequencing ('NGS') with a 90% market share at the high-end. It sells instruments and consumables enabling research and clinical applications at the leading edge of therapeutics, diagnostics and applied fields.

Exits

• Dr. Martens - We sold our very small position in Dr. Martens.

• Kerry Group - During the period, we exited Kerry Group, as our review indicated better alternatives in the sector. Despite believing that Kerry Group's thesis remains intact, its projected rate of growth is not sufficiently attractive for us.

• Masimo - We sold out of Masimo and used the proceeds to top up Illumina.

• Wuxi Biologics - We sold Wuxi Biologics in the period to fund a purchase in Sartorius Stedim.

• AIA - We sold AIA in favour of Estée Lauder.

• Ansys - The sale of Ansys, a leader in simulation software, funded the purchase of Cadence Design Systems.

• VISA - As noted we replaced VISA with Mastercard.

Our outlook for 2024

As we look ahead, we highlight that the market should be supported by the expected shift in monetary policies globally towards rate cuts in the second half of 2024, which should favour the quality growth style of the portfolio. The key predictions from our 2024 outlook are as follows:

Key predictions:

• Inflation could be more elevated and longer lasting in 2024, despite general easing in pressures coming through.

• Wage inflation, deglobalisation, technological and geopolitical fragmentation, and energy transition have the potential to keep inflation structurally more elevated in the medium term.

• Western central bank interest rates have peaked, but we do not expect any pivot towards cuts in rates until the second half of 2024.

• Central banks have become heavily dependent on key data in making decisions on interest rates, which will likely fuel volatility in equity markets in the lead up to inflation reports

• Macroeconomic momentum is at risk of weakening, potentially leading to ongoing stagflation in EU and the UK in 2024, and slowdowns in the US and Chinese economies.

• The rapid interest rate hikes in 2022-23 could lead to a rising risk of recession, although this is still not our central scenario for the US, and recent economic data has remained very strong for the US economy.

• China is facing a slowdown and structural headwinds, absent additional government policy initiatives to stimulate the economy.

• We forecast aggregate corporate earnings growth to remain pedestrian and weak in 2024, (Global +4%, US +5%, EU +3%, Asia +5%, Japan +6%).

• There is an ongoing risk of downgrades to analysts' consensus on earnings, given optimistic current estimates (World +9%, US +10%, EU +4%, Asia +16% and Japan +9%).

• Monetary policies shifting towards cuts in the second half of 2024 should be supportive for equity markets, and for the quality growth style leadership within that.

• Equity valuations remain more supportive in Europe and Asia, although a selective approach remains key, given specific geographic and geopolitical risks.

• The equity market is likely to favour companies with resilient earnings growth, exposed to long-term structural growth themes, that have pricing power and solid balance sheets, given the uncertain macro and inflation environment and the low overall economic growth prospects.

• Thematic opportunities for long-term investors still abound, notably in the areas of energy transition, ageing population and artificial intelligence.

• Disruption rates for corporates are likely to accelerate given the seismic shift brought by AI across all areas of the economy and all sectors.

• An ever more disruptive decade is accelerating in 2024 and beyond.

Key investment risks

The challenges that we face as investment managers are summarised in the ten key risks that we have identified:

Monetary policies risk - the risk of over-tightening in interest rates creates a higher potential risk of policy mistakes for markets and economies

Fiscal policies risk - the risk of lack of follow-through in stated infrastructure spending programmes could put more downside risk to economic momentum

Persistence in inflation - due to higher wage inflation, the risk of stronger and longer lasting inflation could fuel a need for more tightening or a delay in loosening monetary policies

Corporate margin pressure - more persistent and more elevated inflation could lead to more pressure on margins for companies lacking pricing power

Market volatility and Style leadership volatility - shifting expectations in monetary policies could lead to ongoing volatility in markets, and in leadership between the Value and Growth styles

Lower long-term growth - growing indebtedness is likely to reduce long-term growth in our view, and make individual growth opportunities more scarce

Higher taxation - due to higher indebtedness, there is a likelihood of higher tax rates, both for households and for corporates

Geopolitical risks flare ups - The Israel/Hamas conflict adds to global tension already heightened by the Russia/Ukraine war.  Escalation and broadening of these conflicts are key to areas to monitor. Other geopolitical hotspots are Taiwan/China, North Korea, Iran-Israel, and China/USA. Some of these geopolitical risks will be military, others will materialise into ongoing technological conflicts, such as that between China and the USA. Cyber attacks are also a part of that risk.

US presidential elections - at this stage, the outcome of the US presidential elections remains highly unclear. This will bring an element of uncertainty as the market focus shifts to that event in the second half of 2024.

Climate disasters - climate change related disasters are likely to continue to take their toll on various regions, with the risk of impact on societies, but also on corporates in terms of risk to productive capacities and to assets in general.

Mid-term opportunities - energy transition, geopolitical & technological fragmentation, and AI are the key themes to focus on

We continue to see opportunities in the eight mid-term thematic opportunities that we have described in recent years and which are listed below:

·      Green and alternative energy

·      Energy efficient infrastructure

·      Electric transportation - both EV and high speed railways

·      Healthcare infrastructure

·      Technological and geopolitical fragmentation

·      Cloud computing and cyber security

·      AI, robotics and automation

·      Metaverse and quantum computing

All of these themes benefit from significant investment support, from the private and/or public sectors, with some of these investments being very long duration, making them attractive over the long-term time horizon that we focus on.

Three particular themes that we believe are important for investors to focus on currently, amongst the eight listed above, are energy transition, AI, and ageing population.

Energy transition captures the first three themes on our list, namely green and alternative energy, energy efficient infrastructure, and electric transportation.

AI received a significant boost in 2023, both from the excitement triggered by ChatGPT, an app that reached 100m users at the fastest pace ever achieved by any app, and from the outsized earnings achieved by Nvidia in the first quarter of 2023. Nvidia then continued to beat analysts' consensus expectations in each of its subsequent quarterly reports, leading the market to realise that the demand for AI has been significantly under-appreciated. We believe that the focus on AI will remain significant going forward. We also believe that the potential for AI remains under-appreciated by the market fundamentally, but are also cognisant that themes such as this can generate outsized excitement, which can lead to valuations becoming disconnected from fundamentals. It is therefore critical, as always, to ensure that investors maintain valuation discipline, based on detailed fundamental assessments.

The AI mega-theme captures the last four themes that we highlight above, namely technological and geopolitical fragmentation, cloud computing and cyber security, robotics, automation and AI, and metaverse and quantum computing.

The final mega-theme, ageing population, encompasses and highlights the need for increased healthcare infrastructure, as the need for more healthcare grows.

These three mega-themes are bringing seismic changes to the economy, and have the potential to bring more innovation and disruption. They are captured in our mega-trends framework, which is illustrated in the annual report and accounts, along with the themes that run through the portfolio.

Quality growth style should continue to be more supported in 2024 and beyond

We believe that in uncertain macroeconomic conditions such as the ones which we face, the quality growth style should be supported in 2024 and beyond. There is a lot of uncertainty due to the broad range of possible outcomes in inflation, monetary policies, the economic cycle and the corporate profits cycle, as we detail above. Quality growth stocks, ie profitable growth stocks, generating high returns on invested capital and with strong balance sheets, should fare well in such an uncertain environment, in our view.

All in all, we believe that it remains important in such an uncertain environment to continue to focus on companies with (i) earnings resilience, given the risk of ongoing earnings downgrades, (ii) pricing power, in order to protect margins in this stickier inflation environment, (iii) solid balance sheets, to give better protection in case of recession, and (iv) structural growth opportunities.

Zehrid Osmani

Portfolio Manager, Martin Currie Global Portfolio Trust plc

Head of Global Long-Term Unconstrained Equities,

Martin Currie

23 April 2024

PORTFOLIO SUMMARY

By sector

By asset class

Portfolio distribution by region

Portfolio holdings as at 31 January 2024

As at 31 January 2024 the largest 10 holdings accounted for 51.0% of the portfolio (46.4% as at 31 January 2023).

Largest 10 holdings in detail

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, Cloud, AI and Autonomous Vehicles. We believe the market is missing the longevity of growth at Nvidia - specifically from referencing and Edge AI.

Microsoft

Information Technology, United States

US software company Microsoft, best 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.

ASML Holding

Information Technology, Netherlands

This semiconductor equipment company enjoys a very strong market position and close relationships with customers. In addition the company is benefiting from the trend of on-shoring of semiconductor production. The company is critical in enabling innovation and development in the semiconductor industry. This backdrop, coupled with strong structural growth in semiconductor volume, gives the company a very attractive long-term growth and profitability outlook.

Linde

Materials, United States

A resilient and geographically diverse business, it has high exposure to fast-growing emerging markets, combined with a solid base in the Americas. Linde exerts strong pricing power from its leading positions in the regions in which it operates. Although revenue growth is correlated to global industrial production, the structure of client contracts using 'take-or-pay' and 'facility fees' means that revenues are relatively cushioned during economic downturns.  Further, the merger with Praxair has accelerated a strategy of focusing on less economically sensitive customers in the healthcare and food and beverage sectors.

Ferrari

Consumer Discretionary, Italy

The Italian sports car manufacturer provides a unique play on the global growth of high-net-worth individuals and their passion for speed. It has enviable pricing power, with huge scope for average selling prices to increase through greater use of the Special Series and Icona platforms - already a sizeable premium to other luxury car manufacturers. Growth potential is further enhanced by electrification as they launch new hybrid and electric models.

Mastercard

Financials, United States

The migration from cash and cheque to electronic payment is a multi-year secular trend that is still far from mature. While this is a seemingly consensual proposition, the market tends to underestimate this trend.  The company's ROIC is highly attractive, even though the electronic payment space is competitive, its transition from a pure card network to a multi-rail provider of payment solutions proves how the company can face these challenges from a position of strength.

Illumina

Healthcare, United States

This company has developed a near-monopoly in next-generation sequencing (NGS). Lower costs, time and complexity of the historically high-end characterisation methodology means that Illumina's product should become not only sought after, but ubiquitous in new multi-sector applications that were historically out of reach.

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 in air compressors is a compelling one, which will allow it to maintain a high market share and a pricing premium.  The stock is also underpinned by an accommodative cash distribution policy, which is highly attractive in Sweden's low interest-rate environment.

Moncler

Consumer Discretionary, Italy

Moncler is the undisputed global leader in super premium down jackets and has a rich heritage and strategic focus on long-term sustainable and responsible growth. The market is aware that the business is still expanding its distribution and that the total available market is very large relative to its current revenues (20% of total luxury and personal goods is apparel). However, the market seems focused on short-term concerns around trade and a slowdown in China, and seems to be missing the attractive long-term growth opportunity and the management's exemplary execution within the category. We believe that the structural growth potential of the company is compelling, and its ability to continue to innovate remains strong.

L'Oreal

Consumer Staples, France

Based in France, L'Oreal is number one in global beauty, outgrowing a market which grows 3-5% annually. The company's R&D, marketing capability, logistics platform and global expertise in the space gives us conviction in the sustainability of this outperformance. Thanks to sensible capital allocation, L'Oreal has a long history of value creation through bolt-on acquisitions. Further to this, the balance sheet is highly underutilised, giving significant opportunity to further beat expectations.

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 2023.

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.

The KPI was not achieved for the period. The return of the Company was 4.4% and the benchmark 28.8% for the three years to 31

January 2024.

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 -1.9% over the three years to 31 January 2023 which ranked 9 out of 13 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 0.64%.  The ongoing charges figure has been calculated in line with the Association of Investment Companies ('AIC') recommended methodology.

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, Franklin Templeton Investment Trust Management Limited, and their combined oversight of the investment manager, as described in the table below. Its principal risks and uncertainties are therefore largely 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, known and unknown, cannot be predicted and the Board then relies on professional management, effective systems and communication to mitigate and respond to them as and when they arise.

Operational and management risks are regularly monitored by the AIFM and by the Board at Board meetings. As part of its annual strategy meeting 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.

The Board notes that the dominant global macroeconomic risks are geo-political tensions, inflation, and climate transition.  These are however considered to be risks that have an impact on the identified principal and emerging risks and are therefore considered and managed in that context and the investment manager takes full account of these risks in assembling and monitoring the portfolio of investments.

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.

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 2024 is shown in the statement of financial position. The statement of cash flow of the Company is included in this announcement. Note 15 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.

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 2026, 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.

In making this assessment the Directors have considered the following factors:

•              the principal and emerging risks and uncertainties and the mitigating actions, including specifically the current geopolitical and economic environment;

•              the mitigation measures which key service providers including the AIFM have in place to maintain operational resilience;

•              the challenges posed by climate change;

•              the ongoing relevance of the Company's investment objective in the current environment;

•              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 the Company's liquid assets;

•              the expectation that in normal markets more than 98% of the current portfolio could be liquidated within two trading days; and

•              the quantity of debt 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 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 23 April 2024 and is signed on its behalf by the Chair, Christopher Metcalfe.

STATEMENT OF COMPREHENSIVE INCOME

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 2022.

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

No operations were acquired or discontinued in the year.

The notes below 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.   

¹The details of the investment management fee are provided in the Report of the directors in the annual report and accounts.

STATEMENT OF FINANCIAL POSITION

The notes below form part of these financial statements. 

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

The financial statements were approved by the Board of directors on 23 April 2024 and signed on its behalf by Christopher Metcalfe, Chair.

STATEMENT OF CHANGES IN EQUITY

The notes below form part of these financial statements. 

STATEMENT OF CASH FLOW

Analysis of debt

The notes below form part of these financial statements. 

NOTES TO THE FINANCIAL STATEMENTS

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 including those related to 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 2026, 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 July 2022.

Functional currency - the Company is required to identify 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 and other expenses are measured on an accruals basis.

d)    The investment management fee and finance costs in relation to debt are recognised four-fifths as a capital item and one-fifth 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 overdrafts. 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. Full details of the investment management fee are included in the Report of the directors in the annual report and accounts.

e)    Investments - investments have been classified upon initial recognition at 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 at fair value.  After 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 4 April 2024.

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.  Following the Board's decision in the prior year to simplify the Company's reserves, the balance of the special distributable reserve of £74,260,000 was transferred in full to the realised capital reserve on 16 June 2022 (see Statement of changes in equity for more details on the movement in reserves). Thus, the balance of this reserve as at 31 January 2024 is nil.

The capital reserve - gains or losses on realisation of investments and changes in fair values of investments are transferred to the realised 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.

With effect from 16 June 2022, the accounting policy has been updated following the passing of Resolution 18 at the Company's AGM, whereby the new Articles of Association were adopted which allow the realised portion of the capital reserve to be distributable by way of dividend in addition to continuing to be available for distribution by way of share buybacks.

The consolidation of the special distributable reserve and the capital reserve has had no impact on the Company's cash or net assets.

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)   Estimates - estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. There have been no significant judgements, estimates or assumptions for the year.

n)    Bank loans are classified as financial liabilities at amortised cost. Interest and fees payable on the bank loan are accounted for on an accrual basis in the statement of comprehensive income.

There were no capital dividends received during the year ended 31 January 2024 (2023: £nil).

Note 3: Other expenses

All expenses detailed above include VAT where applicable.

¹With effect from 1 July 2022, the AIFM ceased charging a separate company secretarial fee.

Note 4: Taxation on ordinary activities

The corporation tax rate for the year ended 31 January 2024 was 24.03% (2023: 19.00%).  The tax charge for the year differs from the charge resulting from applying the standard rate of corporation tax in the UK.  The differences are explained below.

As at 31 January 2024, the Company had unutilised management expenses of £46 million (2023: £44 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

Note 6: Dividends

Revenue return per share for the year ended 31 January 2024 is 2.37p (2023: 2.16p), refer to note 5 for details of calculation.

The fourth interim dividend for the year ended 31 January 2023 has been allocated to the realised capital reserve. The first, second and third interim dividends for the year ended 31 January 2024 have been allocated to the revenue reserve. The fourth interim dividend for the year ended 31 January 2022 and the first interim dividend for the year ended 31 January 2023 were allocated to the special distributable 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.

Note 7: Investments at fair value through profit or loss

The Company received £118,874,000 (2023: £71,467,000) from investments sold in the year. The book cost of these investments when they were purchased was £97,590,000 (2023: £67,894,000).

The transaction costs in acquiring investments during the year were £105,000 (2023: £52,000). For disposals, transaction costs were £62,000 (2023: £37,000).

Note 8: Trade receivables

Note 9: Cash and cash equivalents

Note 10: Trade payables

¹On 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 ('RBSI') at a fixed interest rate of 1.181%. This facility was fully drawn down on 24 November 2020 and matured on 23 November 2023. On 22 November 2023, the Company entered into a three year £10m revolving credit facility agreement with RBSI. The existing facility was repaid on its maturity and £10m was drawn down under the replacement facility on the same date and for an initial period of six months. Interest is payable on drawings under the revolving credit facility at an annual rate of 1.55% over the Sterling Overnight Index Average ('SONIA'). Due to its maturity in less than one year, the drawing under the revolving credit facility has been classified as a current liability.

The revolving credit 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.

Note 11: Ordinary shares of 5p

For the financial year to 31 January 2024, the payments made for shares bought back to Treasury less proceeds received for shares issued from Treasury was £15,966,000 (2023: the payments made for shares bought back to Treasury less proceeds received for shares issued from Treasury was £32,848,000).

Between 1 February 2024 and 12 April 2024, 1,960,058 Ordinary shares of 5p were bought back to Treasury and no Ordinary shares of 5p were issued from Treasury.

Note 12: Capital reserves

¹Refer to Note 1(j): Accounting policies for details on the consolidation of reserves. Prior to the consolidation, the balance of the special distributable reserve was reduced by £2,037,000, the amount of the dividends paid during the period. The realised capital reserve is distributable by way of dividend and by way of share buybacks. The unrealised investment holding gains is non-distributable.

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 2022'.

Note 14: Related party transactions

With the exception of the investment management fees (as set out in the annual report and accounts), secretarial fees up to 1 July 2022 (as set out in the annual report and accounts), Directors' fees (disclosed in the annual report and accounts) and Directors' shareholdings (as set out in the annual report and accounts), 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 2024 are £37,864 (2023: £14,478).

Note 15: 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.  Current guidelines state that the total borrowings will not exceed 20% of the net assets of the Company at the time of drawdown. On 22 November 2023, the Company entered into a £10 million sterling revolving credit facility agreement. The facility was fully drawn down on 23 November 2023 and the loan is shown at amortised cost.

Interest risk profile

The interest rate risk profile of the Company at the reporting date was as follows:

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 1% (2023: 2%) higher or lower and all other variables were held constant, the Company's profit for the year ended 31 January 2024 would increase/decrease by £81,000 (2023: increase/decrease by £25,000).

This is mainly attributable to the Company's exposure to interest rates on its floating rate cash balances and revolving credit facility.

(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 individual stocks.

Foreign currency sensitivity

At 31 January 2024, 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.

(iii) Market risk arising from other price risk

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

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

Other price risk sensitivity

If market prices at the statement of financial position date had been 30% (2023: 30%) higher or lower while all other variables remained constant, the return attributable to Ordinary shareholders at the year ended 31 January 2024 would have increased/decreased by £79,400,000 (2023: increase/decrease of £83,300,000) 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 2024 was £2,951,000 (2023: £3,027,000). 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 16: Capital management policies and procedures

The Company's capital management objectives are:

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

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

• to limit gearing to 20% of 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 and the bank loan as disclosed in the liabilities section.

Note 17: 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 18: Post balance sheet events

On 27 March 2024, the Board declared a fourth interim dividend of 1.50p per share.

As at 12 April 2024, the Company had bought back a further 1,960,058 ordinary shares at an average price of 372.9p per share.

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