REG - TempletonEmerg.Mkt. - Statement of Annual Results to 31 March 2025
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RNS Number : 8722L Templeton Emerging Markets IT PLC 06 June 2025
Stock Exchange Announcement
Statement of Annual Results
TEMPLETON EMERGING MARKETS INVESTMENT TRUST PLC
("TEMIT" or the "Company")
Legal Entity Identifier 5493002NMTB70RZBXO96
Annual Report and Accounts to 31 March 2025
Introducing TEMIT
Launched in June 1989, Templeton Emerging Markets Investment Trust plc
('TEMIT' or the 'Company') is an investment trust that invests principally in
emerging markets companies with the aim of delivering capital growth to
shareholders over the long term. While the majority of the Company's
shareholders are based in the UK, shares are traded on both the London and New
Zealand stock exchanges. From its launch to 31 March 2025, TEMIT's net asset
value ('NAV') total return was +4,528.5% compared to the benchmark total
return of +1,781.1%.
The Company is governed by a Board of Directors who are committed to ensuring
that shareholders' best interests, considering the wider community of
stakeholders, are at the forefront of all decisions. Under the guidance of the
Chairman, the Board of Directors is responsible for the overall strategy of
the Company and monitoring its performance.
Financial highlights
2025 2024 3 Years Cumulative 5 Years Cumulative 10 Years Cumulative
Net Assets Value 8.8% 7.9% 18.3% 51.1% 88.0%
Total Return
(cum-income)((a))
Share Price Total 13.3% 4.9% 19.5% 50.1% 95.7%
Return((a))
MSCI Emerging 5.8% 5.9% 6.5% 40.8% 65.5%
Markets Index((a)(b))
Proposed Total 5.25p 5.00p 14.80p 24.40p 37.07p
Ordinary Dividend((c))
(a) A glossary of alternative performance measures is included in the full
Annual Report.
(b) Source: MSCI. The Company's benchmark is the MSCI Emerging Markets
(Net Dividends) Index.
(c) An annual ordinary dividend of 5.25 pence per share for the year ended
31 March 2025 has been proposed. This comprises the interim dividend of 2.00
pence per share paid by the Company on 31 January 2025 and the proposed final
dividend of 3.25 pence per share.
Strategic report
The Directors present the Strategic Report for the year ended 31 March 2025,
which incorporates the Chairman's Statement, and has been prepared in
accordance with the Companies Act 2006.
The aim of the Strategic Report is to provide shareholders with the ability to
assess how the Directors have performed in their duty to promote the success
of the Company for shareholders' collective benefit, and having regard for the
interests of all stakeholders, by bringing together in one place key
information about the Company's strategy, the risks it faces, how it is
performing and the outlook.
Financial Summary
2024-2025
Year Ended Year Ended
31 March 2025 31 March 2024
Net Asset Value Total Return (Cum-Income)((a)) 8.8% 7.9%
Share Price Total Return((a)) 13.3% 4.9%
MSCI Emerging Markets (Net Dividends) Index Total Return((a)) 5.8% 5.9%
Total Net Assets (£ millions) 1,985.4 2,034.9
Net Asset Value (Pence per Share) 193.7 182.5
Share Price (Pence per Share) 169.6 154.4
Share Price Discount to Net Asset Value at Year End((a)) 12.4% 15.4%
Average Share Price Discount to Net Asset Value Over the Year((a)) 13.8% 13.9%
Ordinary Dividend((b)) (Pence per Share) 5.25 5.00
Revenue Earnings((c)) (Pence per Share) 5.41 5.18
Net Gearing((a)) 0.2% 0.0%
Ongoing Charges Ratio((a)) 0.95% 0.97%
Source: Franklin Templeton and FactSet.
(a) A glossary of alternative performance measures is included in the full
Annual Report.
(b) An annual ordinary dividend of 5.25 pence per share for the year ended
31 March 2025 has been proposed. This comprises the interim dividend of 2.00
pence per share (2024: 2.00 pence per share) paid by the Company on 31 January
2025 and a proposed final dividend of 3.25 pence per share (2024: 3.00 pence
per share).
(c) The revenue earnings per share figures are shown in the Statement of
Comprehensive Income and Note 7 of the Notes to the Financial Statements.
10 year record
2015-2025
Year Ended Total Net Annual Buy backs NAV((a)) Share Price((a)) Year-End Annual Ongoing
Assets (£m) Dividend (£m) (Pence (Pence Discount((b)) (%) Dividend((a)) Charges
(£m) per Share) per Share) (Pence
Ratio((b)) (%)
per Share)
31 March 2015 2,045.0 26.1 24.7 128.2 111.2 13.3 1.65 1.20
31 March 2016 1,562.3 24.1 93.6 104.8 90.8 13.4 1.65 1.22
31 March 2017 2,148.1 23.1 89.4 152.6 132.3 13.3 1.65 1.20
31 March 2018 2,300.8 40.0 72.5 169.2 148.6 12.2 3.00 1.12
31 March 2019 2,118.2 40.2 147.5 168.5 153.2 9.1 3.20 1.02
31 March 2020 1,775.7 45.9((c)) 69.9 146.5 131.4 10.3 3.80((c)) 1.02
31 March 2021 2,591.3 44.9((c)) 49.6 219.4 202.4 7.7 3.80((c)) 0.97
31 March 2022 2,100.4 44.8 3.6 178.2 156.4 12.2 3.80 0.97
31 March 2023 2,017.5 57.8 29.2 174.1 152.2 12.6 5.00 0.98
31 March 2024 2,034.9 55.4 65.9 182.5 154.4 15.4 5.00 0.97
31 March 2025 1,985.4 54.0((d)) 149.2 193.7 169.6 12.4 5.25((d)) 0.95
Source: Franklin Templeton and FactSet.
(a) Comparative figures for financial years 2015 to 2021 have been
retrospectively adjusted following the sub-division of each existing ordinary
share of 25 pence into five ordinary shares of 5 pence each on 26 July 2021.
(b) A glossary of alternative performance measures is included in the full
Annual Report.
(c) Excludes the special dividend of 0.52 pence per share for the year
ended 31 March 2020 and the special dividend of 2.00 pence per share for the
year ended 31 March 2021.
(d) Based on a proposed annual ordinary dividend of 5.25 pence per share
for the year ended 31 March 2025. This comprises a proposed final dividend of
3.25 pence per share calculated using shares in issue as at 16 May 2025 and
the interim dividend of 2.00 pence per share paid 31 January 2025.
Chairman's statement
'The net asset value ('NAV') total return over the 12 months to 31 March 2025
was +8.8%. The investment managers deserve congratulation for this
performance.'
Angus Macpherson
Chairman
Performance((a))
In the financial year under review, the performance of the TEMIT portfolio was
excellent. The net asset value ('NAV') total return over the 12 months to 31
March 2025 was +8.8%, while the share price total return was +13.3%. By
contrast, the benchmark's total return was +5.8%. The investment managers
deserve congratulation for this performance.
It would be remiss not to comment on the impact of President Trump's
"Liberation Day", declared two days after the financial year end. The
announcement of the intention to impose widespread tariffs on imports into the
United States from most countries was an unwelcome event creating considerable
investor anxiety as a wider range of countries were affected by the proposed
tariffs than had been expected, particularly in Asia.
Subsequently it became clear that China, the largest weighting in the Emerging
Markets benchmark, was being singled out in particular. In last year's letter
I wrote "the Board and Investment Managers believe that China is probably too
integrated into the global economy for economic sanctions to profit any
party". The temporary truce in place at the time of writing supports this
premise.
Both the NAV of the Company and its share price initially fell sharply but
have now recovered to similar levels to the year end.
The truce is temporary and tariffs appear to be part of a broader reset of the
relationship between the United States and the rest of the world. This outlook
for the portfolio against this backdrop is discussed in greater detail at the
end of this letter and in the manager's report.
(a) See Glossary of Alternative Performance Measures in the full Annual
Report.
Communication with investors
Over the last twelve months, I have spoken with holders of more than half of
the Company's shares and our brokers have also conducted interviews to solicit
views on TEMIT, while the managers have worked to share their actions and
insights through written articles, videos and seminars to ensure existing and
prospective investors are fully informed.
The Board continues to explore ways in which demand for TEMIT's shares could
be improved and, to this end, we commissioned research from independent third
parties to obtain the views of both private and professional investors in May
2025. The shareholders who were interviewed were broadly supportive of the
Company in its current form and recognised the very good investment
performance relative to the benchmark. We received a lot of positive feedback
on the investment managers' strategy. Some shareholders expressed a preference
for higher - but still moderate - levels of gearing. Finally, the general lack
of demand for investment trust shares remains an issue and there was
widespread support for our efforts to manage the balance of demand through
share buybacks, which is discussed further below.
Share price rating
The Board was very clear in last year's report that it found the persistence
and scale of the discount that the Company's shares trade to their underlying
NAV unsatisfactory.
We believe that there are three important factors which can narrow the
discount: renewed investor enthusiasm for emerging market equities; a company
structure with investment performance that makes it attractive relative to
other investment vehicles; and an enhanced profile through marketing that
increases awareness amongst new investors.
In June 2024 we announced a series of measures with the intention of improving
liquidity and returns for holders of TEMIT's shares. In summary, these were
commitments to:
• At least maintain the current level of annual dividend;
• Repurchase up to £200m of shares over the next 12 to 24 months;
• A conditional tender offer, under which TEMIT will tender for up to 25%
of its shares if it underperforms its benchmark index over five years to March
2029; and
• A phased reduction in AIFM fees.
These measures were intended to make the value proposition of the shares more
evident to shareholders and to improve liquidity for shareholders wishing to
buy or sell. The Board's premise is that whilst there are significant benefits
to a closed ended vehicle, the fact that we are not required to return capital
to shareholders does not mean that we may not do so, provided that it does not
compromise the ability of the company to meet its objectives.
Following this announcement, we stepped up the rate of share buybacks and over
the year under review around 90 million shares were bought back, returning
£149.2 million to shareholders and in line with the commitment set out
above. These buybacks represented 8.1% of shares in issue on 31 March 2024
and, as all buybacks were at a discount to the prevailing NAV, resulted in an
uplift of 1.16% of NAV per share for remaining shareholders.
As I commented last year, the board does not believe share buybacks narrow
discounts other than in the short term; their more measurable impact is to
improve liquidity and to enhance earnings per share. Indeed, the discount
remained largely driven by market forces and there were times when it widened
due to very limited demand. I am pleased to report that the share price
discount narrowed from 15.4% at the start to 12.4% at the end of the year
under review.
The board is seeking approval from shareholders for the authority to
repurchase up to 14.99% of the issued shares over the year following the AGM
and intends to purchase a further £100m-£200m of shares over the next 12 to
24 months, subject of course to market conditions.
Revenue and dividends
The net revenue profit for the year was 5.41 pence per share. The Company
paid an interim dividend of 2.00 pence per share at the half year stage and
the Board is recommending an increased final dividend of 3.25 pence per share,
making a total dividend for the year of 5.25 pence; an increase of 5% compared
with the prior year.
Gearing
TEMIT's previous £100 million fixed rate loan matured and was repaid on 31
January 2025. On that date, the Company entered into a £122 million
multi-currency revolving loan facility with The Bank of Nova Scotia, London
branch. The loan facility is available for 364 days, to 30 January 2026.
The facility provides flexible debt. Drawings may be in sterling, US dollars
and offshore renminbi (Chinese Yuan, CNH). The Company initially drew down
£80 million on 31 January 2025. Subsequently, when a £40 million tranche of
debt matured at the end of April this was partly replaced by borrowing
CNH300million, equivalent to £30.8 million at the time.
Stewardship and Governance
Since TEMIT was launched over 35 years ago, our Investment Managers have
always focused on the corporate governance of investee companies, which we
believe has helped many companies to understand and attract international
investors. Over the years, the level of investor attention on sustainability
has grown and investment managers' broader approach to the stewardship of
investors' capital and the companies in which they invest has come under
increasing scrutiny. The report on this subject is included in the full Annual
Report. For those interested in exploring the subject in more depth, our
Investment Managers have in recent years produced a comprehensive, dedicated
Stewardship Report for TEMIT. This year's report is published simultaneously
with this Annual Report and is available to download at www.temit.co.uk.
As part of an exercise of good corporate governance the Board has undertaken
an extensive programme of shareholder tracing which has reunited a number of
shareholders with their holdings. The process has also saved the Company the
registration and serving costs of shareholders who remain unidentified and
enabled legal forfeiture and disposal of these shares with the proceeds
donated to a number of charitable institutions.
The Board
Sarika Patel was appointed as a non-executive Director of the Company with
effect from 1 January 2025. Simon Jeffreys, the current Chair of the Audit and
Risk Committee, will retire from the Board following the conclusion of the
Annual General meeting in July. Following Simon's retirement, Sarika will take
over the role of Chair of the Committee having worked closely with Simon since
her appointment.
Sarika is a Chartered Accountant and has widespread experience in both
investment trusts and trading companies. She is Chair of abrdn Equity Income
Trust and chairs the Trust and she is also Chair of Action for Children.
I would like to record thanks on behalf of myself, the Board and the managers
for Simon's exemplary contribution to TEMIT and his leadership of the audit
and risk management function over the last nine years. We wish him well in his
current and future endeavours.
Annual General Meeting
I am pleased to extend an invitation to all shareholders to join us for our
AGM on 10 July 2025 at Franklin Templeton's offices at 78 Cannon Street in
London. The meeting will include a presentation by the Investment Managers. We
look forward to welcoming those shareholders who are able to come to the
meeting.
Whether or not you intend to attend the meeting in person, you are strongly
encouraged to submit your votes on the AGM resolutions in advance of the
meeting. Submitting votes by proxy does not preclude you attending the meeting
or changing your vote if you do subsequently decide to attend the AGM. If you
have any questions, please send these by email to
temitcosec@franklintempleton.com or via www.temit.co.uk/investor/contact-us in
advance of the meeting. You are also welcome to use these contact details
should you have a question at any other time. Any questions that we receive
will be considered and, if appropriate, responses will be provided on our
website www.temit.co.uk.
Outlook
The announcements on "Liberation Day" were shaped long before this year. Some
retreat from globalisation and decoupling of the United States from China was
likely whichever party formed the administration after the last election.
Those disadvantaged by the deflationary forces of trade and immigration
represent a significant political bloc which cannot be ignored in a democratic
state.
The imposition on the American people of a significant import tax burden,
higher consumer goods prices and their consequent inflationary impact is
unlikely to be electorally compelling in the US mid-term elections without
some evidence of compensatory economic benefit. Even if the current
propositions prove sustainable, their impact on the US is likely to be much
greater than on their targets' economies. China's exports to the United
States, for example, are estimated to be less than 3% of its GDP.
We maintain a positive outlook on emerging markets, supported by a combination
of improving macro conditions, structural growth trends, and a shifting
geopolitical landscape. The backdrop of lower U.S. interest rates and a weaker
dollar creates a more favourable environment for capital flows and local
currency strength across many emerging economies.
It should be borne in mind that the imposition of punitive tariffs on China
and other emerging markets is a sign of the economic strength, not the
weakness, of these high growth countries. Having continued investment exposure
to them may well turn out to be even more important than before.
Angus Macpherson
Chairman
6 June 2025
The investment managers
TEMIT's investment management is delegated to Franklin Templeton Investment
Management Limited ('FTIML') and Templeton Asset Management Ltd ('TAML')
(together, the 'Investment Managers'). Portfolio Managers from FTIML and TAML
form part of the wider Franklin Templeton Emerging Markets Equity group
('FTEME'). FTEME have managed the portfolio since TEMIT's inception and are
pioneers in emerging markets equity investing. They bring more than 35 years
of experience along with local knowledge from over 70 investment
professionals, based in 13 countries around the world.
The team has a collaborative investment process where all analysts and
portfolio managers work together to contribute to investment returns. They
meet regularly, both formally and informally, to debate and exchange ideas,
investment themes and enrich their understanding of the markets by drawing on
local insights to build a global perspective and context to their thinking.
They also benefit from the broader resources available throughout Franklin
Templeton.
The Portfolio Managers for TEMIT, Chetan Sehgal (lead) and Andrew Ness, are
senior executives in FTEME.
Portfolio Managers
Chetan Sehgal
CFA
Chetan is the lead Portfolio Manager of TEMIT and is based in Singapore.
As part of his broader responsibilities within FTEME, Chetan is also the
director of portfolio management. In this capacity, he is responsible for the
overall Global Emerging Markets strategies, providing guidance and thought
leadership, co-ordinating appropriate resources and coverage, and leveraging
the group's expertise to add value across products within the strategies.
Chetan joined Franklin Templeton in 1995 from Credit Rating Information
Services of India Ltd, where he was a senior analyst.
Chetan holds a B.E. Mechanical (Hons) from the University of Bombay and a
postgraduate diploma in Management from the Indian Institute of Management in
Bangalore, where he specialised in finance and business policy and graduated
as an institute scholar. Chetan speaks English and Hindi and is a Chartered
Financial Analyst ('CFA') Charterholder.
Andrew Ness
ASIP
Andrew Ness is a Portfolio Manager of TEMIT and is based in Edinburgh.
Prior to joining Franklin Templeton in September 2018, Andrew was a Portfolio
Manager at Martin Currie. He began his career at Murray Johnstone in 1994 and
worked with Deutsche Asset Management in both London and New York before
joining Scottish Widows Investment Partnership in 2007.
Andrew holds a B.A. (Hons) in Economics and an MSc in Business Economics from
the University of Strathclyde in the UK. He is an Associate Member of the UK
Society of Investment Professionals and a member of the CFA Institute.
The investment managers' report
Outlook for emerging markets
In our Half-Yearly Report to 30 September 2024, we wrote that we have emerged
from a volatile period in which worries about economic recession dominated
investor sentiment. With the benefit of hindsight, what we experienced were
ebbs and flows in what was perceived as volatility, and there will be more
uncertainty for the foreseeable future.
Following US President Trump's 'Liberation Day' announcement of tariffs in
April 2025, global equity markets have faced considerable turbulence.
We believe that the United States has three key objectives: to raise money to
fund its deficit and restore the credibility of its financial systems, to add
critical manufacturing capacity in the United States and to contain China.
Whilst most countries are likely to negotiate and help the United States to
achieve some of these objectives, there remains significant uncertainty on how
this incipient trade war will pan out.
Tariffs, if implemented for an extended period would lead to slower economic
growth and inefficiencies globally. Tariffs have also put into question the
United States' exceptionalism. Investors may look to diversify away from the
US which would also put pressure on the dollar. Valuations in EMs are also
generally supportive. In tandem, valuations, currency and fund inflows should
act as tailwinds for EMs.
In our view as long-term investors, we balance uncertainty with optimism in
pockets of our investable universe. We continue to remain overweight on
equities in Latin America; and in particular, Mexico and Brazil, as the region
has been spared from the harshest tariffs. Mexico will also benefit due to its
geographical proximity to the United States. The outlook for Brazilian
equities looks to be on the mend as we expect Brazil to eventually reduce
interest rates.
Slower global growth from tariffs and increased oil output from OPEC+ would
likely result in an easing of energy prices. We remain underweight on the
Middle East, due to its reliance on oil prices for economic growth.
Emerging Asia has its own strengths, which could help to buffer the negative
impacts of tariffs. AI remains a strong growth area despite concerns on the
monetisation of AI. This should be beneficial for South Korea and Taiwan,
which are home to several large semiconductor companies which are key to
driving the development of AI. This has flowed through to Chinese internet
companies, which have benefitted as they progress with AI.
China is attempting to minimise the risks inherent in geopolitical tensions by
keeping up with its policy support for its economy. While tariffs could
further impact growth, valuations are supportive. Our approach towards Chinese
equities is selective and our key holdings in internet companies give us a
degree of comfort through their cash flows and shareholder returns,
notwithstanding their growth potential resulting from AI developments.
India is probably better relatively positioned because of its large domestic
market and limited dependence on trade exports. In addition, there no tariffs
on services including the information technology sector. However, the recent
escalation in tension between India and Pakistan has further added to global
geopolitical uncertainty. Balancing what seems like a positive view on India
is our selective approach as we maintain a watchful eye on valuations.
Reciprocal tariffs have been deferred and this provides a window of
opportunity for trade negotiations. Most countries should be able to negotiate
a trade deal, balancing between their national objectives and the demands of
the United States.
Conclusion
While we do not know the exact impact of tariffs thus far, the portfolio is
well positioned geographically, with an overweight positioning in Latin
America and underweight positioning in the Middle East. The impact of tariffs
on individual portfolio holdings will be clear only after the final tariff
rates are announced.
The macroeconomic environment has been, and remains, decidedly tricky and
intertwined with a multitude of headwinds and risks.
We have built considerable expertise in the emerging market equity asset
class, which has guided us to outperform in a complex environment; and we hope
that we have shown this throughout the course of this report. We continue to
abide by our investment approach and seek opportunities across equity markets,
focusing on companies that, in our assessment, have long-term earnings power.
We find that this is especially crucial in the current circumstances.
Review of performance((a))
Emerging markets ('EMs') advanced over the 12 months ended 31 March 2025.
While this may be interpreted positively, the year was marked by volatility
and was a challenging period for equity investing. We credit our investment
approach to steering the performance of TEMIT to deliver returns that were
superior to the benchmark. Our investment philosophy is anchored in a
bottom-up process to finding companies that our analysis indicates have
sustainable earnings power and whose shares trade at a discount relative to
their intrinsic worth. The MSCI Emerging Markets (Net Dividends) Index
returned 5.8% in the 12-month period under review, while TEMIT delivered a net
asset value total return of 8.8% (all performance figures are net total return
in sterling terms)((b)). Full details of TEMIT's performance can be found in
the full Annual Report.
Three macro themes have triggered price movements:
Elections: Several EM countries such as India, Indonesia, Mexico, South Africa
and Thailand held elections. Equities in India and Mexico fluctuated around
the times of their elections. While Indian equities benefited as the incumbent
prime minister won the elections and gave rise to expectations of policy
continuity, elections in Mexico posed a drag on the prices of Mexican equities
as the strong victory of its ruling party caught investors by surprise. This
led to concerns over the potential for anti-market reforms. As the new United
States President came into power concerns were raised over the potential
imposition of import tariffs and the move by the United States government to
become more isolationist and protectionist, which caused broad-based declines
across markets. Volatility increased sharply immediately after our financial
year-end and is discussed under Outlook below.
Artificial intelligence ('AI'); this investment theme was disrupted by
concerns over the ability of companies to convert potential into profitable
business over the long term and then by the emergence of lower cost
alternative approaches in China. These factors led to increased volatility in
the share prices of companies which had been seen to be beneficiaries of AI.
Geopolitics; these concerns remained a mainstay, where the conflict between
Israel and Hamas militants and that between Russia and Ukraine continued
unabated. EM equities could not escape pressures from concerns over a
recession in the United States. However, the US Federal Reserve's eventual
interest rate cut infused a bout of optimism globally, including in EMs.
By region as measured by the MSCI Emerging Markets Index, all regions advanced
save for Latin America. The reasons behind each country's equity market
performance are detailed below for TEMIT's largest-weighted country exposures.
(a) All benchmark performance as per the MSCI Emerging Markets (Net
Dividends) Index.
(b) See Glossary of Alternative Performance Measures in the full Annual
Report.
China/Hong Kong
TEMIT's largest market exposure, although the portfolio remained underweight
relative to the benchmark. Chinese equities rose by over 37% in sterling terms
over the 12-month period. This outperformance was supported by the
government's policies to boost the country's economic growth and equity
market. The government announced measures that encompassed a programme for
share buybacks and a swap facility to shore up the equity market. The release
of Chinese startup DeepSeek's AI models, which have been reported to be on a
par with or better and cheaper than other AI models, sparked a wave of
interest in Chinese equities. Investors were impressed by China's ability to
innovate despite efforts by the US to limit the development of sophisticated
technology in the country. The Chinese government's renewed focus on
technology as tabled in its government work plan announced in March 2025 and
the President's high-profile meeting with some of the biggest names in China's
technology sector were viewed as signs of support for the sector and sent
technology stock prices even higher. Our approach towards Chinese equities
continues to be selective. Whilst policy support has resulted in a return of
investor interest, we are sceptical of the benefits of these policies in the
longer term. Reviewing the macroeconomic background, we have not yet observed
any meaningful change in demand; and the declining and ageing population
remains a key structural challenge. Our Chinese exposure is largely to
internet companies. Notwithstanding their growth potential from AI
developments, Chinese internet companies give us an additional degree of
comfort through their cash flows and shareholder returns.
Taiwan
TEMIT's second-largest market exposure, where the portfolio was weighted on
par versus the benchmark. The Taiwanese equity market performed satisfactorily
and ended the 12-month period with a gain of over 2% in sterling terms.
Expectations of higher earnings growth bolstered by AI lifted performance
earlier in the period. This optimism was offset to an extent by uncertainties
around monetisation of AI investments. Investment sentiment soured thereafter
as investors braced for US tariffs. The portfolio's exposure to the country is
concentrated in the island's semiconductor industry and TEMIT's largest
portfolio holding, which is in Taiwan Semiconductor Manufacturing Company
('TSMC'). TSMC, despite its dominance in the semiconductor industry, is not
immune to trade uncertainties. The company announced plans to increase its
investment in the US amid tariff concerns. Using a longer-term lens, we remain
positive on the semiconductor industry and believe that AI will continue to
experience strong growth, which should benefit semiconductor companies as they
make up a key component of the AI supply chain. Beyond AI, semiconductors are
essential components used in a myriad of industries. We maintain a positive
long-term view on both Taiwan's semiconductor industry and TSMC.
South Korea
TEMIT's third-largest market exposure, where the portfolio was overweight
versus the benchmark. South Korean equities lost just under 23% in sterling
terms during the reporting period, as the technology-heavy market struggled
with near-term oversupply in the electronic memory market. Investor confidence
in South Korean equites eroded over domestic political uncertainties,
following declaration and subsequent lifting of Martial Law by the President
in December 2024. The Korean won devalued. The market struggled as optimism on
AI, which should benefit memory chips, was dampened by slowing demand growth
for legacy memory products. The market decline was driven by the country's
most valuable company, Samsung Electronics, as its share price was pressured
over concerns of the company's perceived loss of technological leadership. We
expect the supply-demand imbalance for memory chips to improve driven by
supply tightness and demand for chips for the development of AI applications.
Our overweight position in South Korea includes companies that are positioned
to capture longer-term structural growth drivers in the form of semiconductors
and artificial intelligence (Samsung Electronics and SK Hynix), the green
transition (Samsung SDI and LG Corp) and dominant internet search platform
integrating e-commerce, payments and digital content (NAVER).
India
TEMIT's fourth-largest market exposure. This was an equity market which saw
tides change repeatedly in a relatively short period. First half gains were
offset by second half losses to end the period flat. Indian equities started
the first half of the period with an advance of more than 11% (in sterling
terms), benefitting from positive economic data and expectations of policy
continuity from the incumbent prime minister Narendra Modi's coalition party.
The positive backdrop did not last for long and investment sentiment soured in
the second half of the period with returns flat over the full 12-month period.
Corporate earnings for the second and third quarters of the 2025 fiscal year
were below investor expectations and gave rise to concerns on a probable
growth slowdown. A slowdown in consumption was also experienced. While
valuations are still a concern for us, recalling that our investment approach
hinges on finding companies whose shares according to our analysis trade at a
discount relative to their intrinsic worth, we continue to see attractive
opportunities in India. While the country is one of TEMIT's largest absolute
weighting allocations, it is still underweight relative to the benchmark.
Brazil
TEMIT's fifth-largest market exposure with equities in Brazil finishing the
reporting period with losses of more than 15%. Defying the trajectory of most
other central banks, Brazil started to raise interest rates to control the
country's level of inflation as well as to protect its currency. We believe
that the interest rate hikes should be a short-term phenomenon and rates
should converge with the global interest rate cycle in due course.
Other Emerging Markets
There were initial signs of abatement in geopolitical conflicts which proved
positive for emerging EMEA equities, but as of end of March 2025, these
negotiations had stalled. South Africa's equity market experienced a rally
following the country's elections. President Cyril Ramaphosa won a second
successive term and formed a coalition government.
The Mexican equity market declined following the country's elections. Concerns
regarding anti-market reforms and the signing of a controversial judicial
reform into law pressured Mexican equities. Uncertainties on US tariffs also
led to some market volatility towards the end of the period.
Investment strategy, portfolio changes and performance attribution
The following sections show how different investment factors (stocks, sectors
and countries) accounted for TEMIT's performance over the 12-month period. We
continue to emphasise our investment process that selects companies based on
their individual attributes and ability to generate risk- adjusted returns for
investors, rather than taking a high-level view of sectors, countries or
geographic regions to determine our investment allocations.
Full details of our investment process, philosophy and approach are detailed
in the full Annual Report.
Our well-resourced, locally based, teams remain a key competitive advantage
and it has been particularly helpful having teams on the ground, in the
benchmark-heavyweight countries of China, India and Brazil, to help us better
understand these markets. This local presence allows us to understand business
models, competitive dynamics and supply-chain issues. We have also managed to
get insights into regulatory conversations and management capabilities, which
are factored into our analysis. We view our locally based teams, which are
armed with vast knowledge of the respective countries' macroeconomic issues
and views on the ground, as vital sources of input into the investment
process. This complements our global presence, which allows us to analyse
short-term uncertainties and determine if these are reflective of cyclical or
structural trends.
In the portfolio, we remain positioned in long-term themes including
consumption premiumisation, digitalisation, health care and technology. We
focus on companies reflecting our philosophy of owning good quality
businesses, with long-term sustainable earnings power and share prices at a
discount to intrinsic worth. We see high levels of leverage as a risk and
continue to avoid companies with weak balance sheets.
Performance Attribution Analysis %
Year to 31 March
2025 2024 2023 2022 2021
Net Asset Value Total Return((a)) 8.8 7.9 0.8 (17.3) 54.5
Expenses Incurred 0.9 1.0 1.0 1.0 1.0
Gross Total Return((a)) 9.7 8.9 1.8 (16.3) 55.5
Benchmark Total Return((a)) 5.8 5.9 (4.9) (7.1) 42.3
Excess return((a)) 3.9 3.0 6.7 (9.2) 13.2
Stock Selection 2.7 0.3 7.3 (10.2) 6.0
Sector Allocation 1.6 2.1 (0.4) 0.8 6.5
Currency (0.7) 0.3 (0.2) 0.2 0.6
Share Buyback Impact 1.2 0.5 0.2 0.0 0.3
Residual Return((a)) (0.9) (0.2) (0.2) - (0.2)
Total Contribution 3.9 3.0 6.7 (9.2) 13.2
Source: FactSet and Franklin Templeton.
(a) A glossary of alternative performance measures is
included in the full Annual Report.
This table sets out the results of a detailed analysis of the returns produced
by the TEMIT portfolio, how this compares with the theoretical returns
available from the benchmark index and factors affecting the comparison with
the returns of the benchmark index.
Top 10 Contributors and Detractors to Relative Performance by Security
(%)((a))
Top Contributors Contribution to Top Detractors Contribution to
portfolio relative
portfolio relative
to MSCI Emerging
to MSCI Emerging
Markets Index
Markets Index
Overweight Prosus 1.3 Samsung SDI (1.2)
(TEMIT holds more than the index weight)
Alibaba 1.3 LG Corp (0.8)
Genpact 0.9 Samsung Electronics (0.7)
China Merchants Bank 0.7 Grupo Financiero Banorte (0.7)
Discovery 0.7 Samsung Life Insurance (0.4)
Kasikornbank 0.5 Soulbrain (0.4)
Uni-President China 0.4 Banco Bradesco (0.4)
ICICI Bank 0.4
WuXi Biologics 0.4
Underweight Reliance Industries 0.5 Xiaomi (0.9)
(TEMIT has no holding or a holding smaller than the index weight)
China Construction Bank (0.4)
BYD (0.4)
(a) For the period 31 March 2024 to 31 March 2025.
This table sets out the results of a detailed analysis of the returns produced
by individual securities in the TEMIT portfolio, and how this has affected the
overall returns produced by the portfolio compared with theoretical returns
available from the benchmark index.
An off benchmark holding in Prosus served the portfolio well. Prosus is a
leading global investment company and the largest shareholder of Tencent (also
held directly by TEMIT), a Chinese technology company. The company also has
investments in several food delivery platforms in different parts of the
world. Its share price tracked that of Tencent's stock, which rose on the
company's release of its earnings results for several quarters, a slew of
stimulus measures in China and investor enthusiasm for China's technology
companies after breakthroughs in China's AI capabilities. Regular buybacks
also aided the performance of Prosus in the period.
Also finishing higher over the 12-month period were shares of Chinese
e-commerce company Alibaba. Its share price received support from investor
expectations that the company could be included in the Hong Kong Stock Connect
in late 2024 (which eventually happened), and that the company's new strategy
to charge merchant service fees could potentially boost its revenue. China's
stimulus measures to boost the country's economy and equity market, Alibaba's
strong December quarter results announcement and the company's optimism and
commitment to invest in AI boosted share price returns as well. Alibaba
remains a key holding in the portfolio's China exposure. The company continues
to generate strong cash flows, in our assessment, and we expect share-price
appreciation to be supported by corporate actions, including share buybacks.
Another stock that the portfolio held outside of the index is Genpact, a
US-listed technology services company that derives much of its earnings from
services provided from India. Its share price rose on consistently strong
earnings results for the last three quarters of 2024. The fourth-quarter
results showed improved execution and progress on its strategic initiatives.
South Korea-based Samsung SDI is a leading manufacturer of lithium-ion
batteries for electric vehicles ('EVs'), energy storage, power tools and
information technology products. Its share price declined due to its weak
quarterly results. Utilisation of its key plants has been impacted by weak
demand as well as loss of market share with its key clients. Concerns of a
reduction in US tax credits under the new US Government also pressured its
share price. The company also announced a rights issue to fund its capital
expenditure plan. Fundamentals deteriorated significantly and the share price
reacted accordingly. While the near term looks challenging, the company also
owns a meaningful stake in Samsung Display, a manufacturer of OLED (organic
light emitting diode) panels, and any monetisation there should help to
crystallise value.
LG Corp is a South Korean holding company and owns stakes in several companies
across various industries including electronics, chemicals, electric vehicle
('EV') batteries and household products. LG Corp's share performance has been
impacted by weak earnings for its key holdings. By way of example, LG Chem, an
associate of LG Corp, reported weak results due to a sluggish petrochemical
sector, as well as slower-than-expected growth for the EV sector. Its share
price continues to trade at significant discount to its net asset value (NAV).
The company has been buying back shares, which should help narrow the discount
to its NAV.
Samsung Electronics is one of the largest semiconductor memory manufacturers
in the world. It also manufactures a wide range of consumer and industrial
electronics and equipment. The company reported tepid results, which were
impacted by a weaker memory cycle as well as a low share in high-margin high
bandwidth memory ('HBM'). The company seems to have lost its technological
leadership in the memory segment and is lagging in the advanced chips being
used for AI servers. Nonetheless, it remains one of the key companies in the
highly consolidated memory market and should benefit from the rise in demand
for memory products which has been further accentuated by growth in AI models.
Contributors and Detractors to Relative Performance by Sector (%)((a))
Top Contributors Contribution to Top Detractors Contribution to
portfolio relative
portfolio relative
to MSCI Emerging
to MSCI Emerging
Markets Index
Markets Index
Overweight Consumer Discretionary 1.7 Information Technology (1.7)
(TEMIT holds more than the index weight)
Financials 0.6
Industrials 0.3
Underweight Consumer Staples 1.1 Communication Services (0.4)
(TEMIT has no holding or
a holding smaller than the index weight)
Energy 0.8
Health Care 0.4
Materials 0.4
Utilities 0.2
Real Estate 0.1
(a) For the period 31 March 2024 to 31 March 2025.
The table above shows the contribution of the overall portfolio returns of the
different sectors within the TEMIT portfolio relative to the MSCI Emerging
Markets Index.
Stock selection in the consumer discretionary, consumer staples and energy
sectors were key drivers of these sectors' relative contribution, but
allocations played a supporting role in boosting TEMIT's performance relative
to the benchmark index during the 12-month period under review. Our bottom-up
stock-picking process led to a slight overweight in consumer discretionary,
and underweight exposures to consumer staples and energy. Within the consumer
discretionary sector, Alibaba and Prosus (both described above) are examples
of companies that aided relative returns. The contribution from the consumer
staples sector was partially driven by our holding in Uni-President China, a
manufacturer and retailer of beverages and instant noodles. Its share price
received several boosts in the year, including from its full-year 2024 results
where earnings growth proved steady.
In contrast, stock selection and allocations in the information technology
(overweight) and communication services (underweight) sectors proved slightly
detrimental for TEMIT's relative performance. The information technology
sector was driven lower by holdings in Samsung SDI and Samsung Electronics
(both described above). A lack of exposure to China-based consumer
electronics, software and hardware designer Xiaomi weighed on TEMIT's
performance relative to the sector. The weakness in the communication services
sector was partially due to TEMIT's holding in NAVER, a South Korean internet
search and advertising company with additional business interests in
e-commerce, financial services and entertainment content. The share price
weakened as a result of a combination of factors including weaker growth in
the market, competition for both its advertisement and e-commerce business, an
underwhelming response to its generative AI technology and uncertainty around
benefits from AI investments. The company suffered a data leak in its
messaging application Line in Japan and the potential implications of this
also pressured the share price. While the company's share price recovered on
the back of its third- and fourth-quarter 2024 earnings results, which marked
better growth in advertising revenue and an improvement in cost controls, the
stock still ended with a decline for the period.
Contributors and Detractors to Relative Performance by Country (%)((a))
Top Contributors Contribution to portfolio relative to MSCI Emerging Markets Index Top Detractors Contribution to portfolio relative to MSCI Emerging Markets Index
Overweight Taiwan 1.5 South Korea (3.1)
(TEMIT holds more than the index weight)
United States 0.8 Brazil (0.2)
Hungary (0.1)
Underweight India 2.6 United Arab Emirates (0.2)
(TEMIT has no holding or a holding smaller than the index weight)
China/Hong Kong 0.7 Poland (0.1)
Indonesia 0.5
(a) For the period 31 March 2024 to 31 March 2025.
The table above shows the contribution of the overall portfolio returns by
country relative to the MSCI Emerging Markets Index.
By markets, stock selection and allocations in India (underweight) and Taiwan
(overweight) added to a positive contribution from stock selection in China.
Our selective approach in India resulted in TEMIT owning several holdings in
the financials sector that proved accretive, namely private sector banks ICICI
Bank and HDFC Bank, and investment holding company Bajaj Holdings &
Investment. Once again, TSMC aided relative returns in Taiwan. In China,
Prosus and Alibaba were leading contributors.
Conversely, overweight allocations in both South Korea and Brazil led these
markets to be among the top detractors from relative returns. Stock selection
in South Korea also pressured the portfolio's relative performance. Samsung
Electronics, LG Corp and Samsung SDI were key drivers of the portfolio's
lacklustre performance in South Korea. In Brazil, the share prices of TEMIT's
holdings in banks Banco Bradesco and Itaú Unibanco led detractions as they
moved in tandem with the performance of the general Brazilian equity market.
The United Arab Emirates was also a relative detractor, largely due to stock
selection.
Top 10 Holdings
As at 31 March 2025
Portfolio Benchmark Over/(Under)
%
weight %
Holding £'000 %
TSMC 229,057 11.4 8.6 2.8
The world's largest semiconductor foundry company, which is based in Taiwan.
Optimism regarding the growth potential from AI and a recovery in the demand
for technology products have been moderated by uncertainty about US policies,
reports that TSMC might have to take a stake in Intel's factories, and its
increased investment in the United States. TSMC still remains a key portfolio
holding. Encouraged by the structural growth in demand for computing and the
company's technology leadership, we remain confident in the resilience of the
TSMC business model.
ICICI Bank 105,274 5.3 1.1 4.2
A leading India-based private sector bank and the portfolio's second-largest
holding. Its share price has seen sustained appreciation over the past years
and the bank has been a key contributor to overall fund performance. This
highlights the value of our longer-term, fundamentally driven investment
process, which we continue to employ. We believe that the bank, with its
strong franchise, remains well positioned to benefit from the India growth
story.
Prosus 98,029 4.9 - 4.9
A leading global investment company and the largest shareholder of Tencent, a
Chinese technology company. We see Prosus as a good proxy for Tencent exposure
and is available at a discount to its NAV. Besides Tencent, Prosus has a
diversified portfolio of internet assets in areas such as food delivery,
payment, education technology, e-commerce. Management's efforts to narrow the
share price discount to NAV via share buybacks should also support returns.
Alibaba 93,128 4.7 3.4 1.3
The leading e-commerce company in China. While intensified competition and a
weak economy have impacted the growth outlook for its e-commerce business, its
other businesses such as cloud, fintech, local commerce and international
e-commerce have significant potential, in our view. We believe that these
could offer either growth opportunities or the possibility for improvements in
profitability. The share price had experienced a significant derating over the
past couple of years, but its initial success in AI and plans for large
investments in AI has sparked investor optimism. While this should drive
growth, cash flows could be weaker in the near term. The company has a strong
share buyback policy. We expect returns from here to be supported by such
corporate actions.
Samsung Electronics 75,492 3.8 2.4 1.4
One of the largest memory semiconductor manufacturers in the world, based in
South Korea. It also manufactures a wide range of consumer and industrial
electronics and equipment. The relatively weak share price reflects concerns
around the company's loss of technology leadership. Nonetheless, it remains
one of the key companies in the highly consolidated memory market, and should
benefit from the rise in demand for memory products which has been further
accentuated by growth in AI models.
SK Hynix 66,433 3.3 0.9 2.4
A South Korean semiconductor company and a maker of memory chips used globally
across a wide range of solutions. The company is the industry leader in HBM
chips, which are expected to see strong demand growth for AI applications. We
continue to maintain our conviction, largely due to its leadership position in
the latest generation of the HBM market.
Tencent 64,692 3.2 5.3 (2.1)
The largest gaming, communication and social entertainment platform in China.
It has a major presence in online games, digital advertising, video, music and
live-streaming, fintech, and other businesses such as cloud computing. We
believe that the company should be a key beneficiary of AI across its business
segments. Tencent also has significant public and private investments in China
and globally. Trading at an attractive valuation, the company has been
proactively undertaking share buybacks, which further enhances its earnings
per share.
HDFC Bank 58,225 2.9 1.5 1.4
India's leading private sector bank. It offers a wide range of banking
services across retail banking, home loans and mortgages, and
wholesale/corporate banking. HDFC Bank is a clear leader among Indian private
sector banks with a strong liability franchise, market leadership across
multiple retail asset categories and a comprehensive approach to
digitalisation. It is well-positioned to benefit from the anticipated
acceleration in credit growth and the increasing share of financial assets in
household savings in India.
MediaTek 56,951 2.9 0.8 2.1
MediaTek is a Taiwan-based chip designer for smartphones and other technology
devices. These devices include televisions, wireless communications and
optical storage. MediaTek has a solid position in mobile computing chips and
we believe that it should benefit from growth in demand for chips from IoT
('Internet of Things'), automotive, industrial, and wi-fi applications. Its
partnership with Nvidia (not a portfolio holding) to provide advanced
automotive chips integrating Nvidia's graphic processors as well as
opportunities in enterprise application specific chips should drive additional
growth.
Petrobras 50,502 2.5 0.4 2.1
Petrobras is a Brazilian energy company engaged in the exploration,
production, and distribution of oil and gas. The company is recognised
worldwide for its oil exploration technology in ultra-deep waters. With the
unpredictability in oil prices, our investment in Petrobras hinges on its
proactive policy of returning cash to shareholders. It remains our top pick in
the oil and gas industry, given its large cash generation and high dividend
yield.
Portfolio Changes by Country
Total Return in Sterling
Country 31 March 2024 Purchase £m Sales £m Market 31 March 2025 TEMIT % MSCI Emerging
Market Value £m
Movement £m
Market Value £m
Markets Index %
China/Hong Kong 490 129 (243) 173 549 42.3 37.2
Taiwan 358 8 (63) 32 335 9.5 2.3
South Korea 426 110 (88) (116) 332 (25.0) (22.6)
India 247 76 (70) 40 293 14.8 (0.4)
Brazil 186 23 (1) (36) 172 (10.8) (15.4)
United States 62 4 (12) 18 72 28.3 -
Thailand 49 11 (1) 5 64 14.2 (6.8)
South Africa 20 13 (3) 16 46 49.8 25.8
Mexico 48 13 - (18) 43 (30.7) (22.4)
Hungary 30 1 (5) - 26 1.4 31.0
Others 79 11 (21) 2 71 - -
Total Investments 1,995 399 (507) 116 2,003
Portfolio by Fair Value
Holding Sector Fair Value £'000 % of Portfolio
Brazil
Petrobras((a)) Energy 50,502 2.5
Itaú Unibanco((a)(b)) Financials 38,030 1.9
Banco Bradesco((a)(b)) Financials 26,910 1.4
Vale Materials 20,720 1.0
TOTVS Information Technology 10,414 0.5
XP Financials 9,657 0.5
Hypera Health Care 8,577 0.4
Oncoclinicas do Brasil Servicos Medicos Health Care 7,141 0.4
171,951 8.6
Cambodia
NagaCorp Consumer Discretionary 3,684 0.2
3,684 0.2
Chile
Banco Santander Chile((b)) Financials 20,319 1.0
20,319 1.0
China/Hong Kong
Prosus Consumer Discretionary 98,029 4.9
Alibaba((c)) Consumer Discretionary 93,128 4.7
Tencent Communication Services 64,692 3.2
China Merchants Bank Financials 38,371 1.9
Techtronic Industries Industrials 35,988 1.8
Budweiser Brewing Company APAC Consumer Staples 31,587 1.6
Baidu Communication Services 24,136 1.2
Ping An Insurance Financials 22,603 1.1
Kuaishou Technology Communication Services 20,228 1.0
WuXi Biologics Health Care 19,525 1.0
NetEase Communication Services 18,274 0.9
Weichai Power Industrials 17,728 0.9
Uni-President China Consumer Staples 15,472 0.8
Haier Smart Home Consumer Discretionary 12,858 0.6
JD.com Consumer Discretionary 8,240 0.4
Daqo New Energy((b)) Information Technology 7,501 0.4
COSCO SHIPPING Ports Industrials 6,193 0.3
H&H Group Consumer Staples 5,042 0.2
Beijing Oriental Yuhong Waterproof Technology Materials 3,780 0.2
Greentown Service Group Real Estate 3,360 0.2
Weifu High-Technology Consumer Discretionary 2,229 0.1
China Resources Building Materials Technology Materials 331 0.0
549,295 27.4
Hungary
Gedeon Richter Health Care 23,706 1.2
Wizz Air Holdings Industrials 2,043 0.1
25,749 1.3
India
ICICI Bank Financials 105,274 5.3
HDFC Bank Financials 58,225 2.9
Swiggy Consumer Discretionary 37,873 1.9
Infosys Information Technology 18,179 0.9
Federal Bank Financials 15,595 0.8
Zomato Consumer Discretionary 13,862 0.7
ReNew Energy Global Utilities 12,307 0.6
Bajaj Holdings & Investment Financials 11,343 0.5
ACC Materials 9,155 0.4
Brigade Enterprises Real Estate 5,758 0.3
Niva Bupa Health Insurance Financials 3,851 0.2
NATCO Pharma Health Care 1,425 0.1
Hexaware Technologies Information Technology 297 0.0
293,144 14.6
Indonesia
Astra International Industrials 11,460 0.6
11,460 0.6
Mexico
Grupo Financiero Banorte Financials 41,228 2.1
Nemak Consumer Discretionary 2,034 0.1
43,262 2.2
Peru
Intercorp Financial Services Financials 9,855 0.5
9,855 0.5
Philippines
BDO Unibank Financials 9,750 0.5
9,750 0.5
Russia
LUKOIL((d)) Energy 0.0 0.0
Sberbank of Russia((d)) Financials 0.0 0.0
0.0 0.0
South Africa
Discovery Financials 31,049 1.6
Netcare Health Care 14,901 0.7
45,950 2.3
South Korea
Samsung Electronics Information Technology 75,492 3.8
SK Hynix Information Technology 66,433 3.3
NAVER Communication Services 35,036 1.7
Samsung Life Insurance Financials 31,215 1.6
LG Corp Industrials 27,221 1.4
Delivery Hero Consumer Discretionary 21,993 1.1
Doosan Bobcat Industrials 20,961 1.0
Hyundai Motor Consumer Discretionary 20,053 1.0
Samsung SDI Information Technology 10,662 0.5
Fila Consumer Discretionary 9,858 0.5
Soulbrain Materials 5,654 0.3
LigaChem Biosciences((e)) Health Care 3,373 0.2
Hankook Tire Consumer Discretionary 3,154 0.2
KT Skylife Communication Services 1,031 0.0
332,136 16.6
Taiwan
TSMC Information Technology 229,057 11.4
MediaTek Information Technology 56,951 2.9
Hon Hai Precision Industry Information Technology 36,522 1.8
Yageo Information Technology 6,738 0.3
Lite-On Technology Information Technology 5,865 0.3
335,133 16.7
Thailand
Kasikornbank Financials 33,692 1.7
Minor International Consumer Discretionary 12,418 0.6
Kiatnakin Phatra Bank Financials 6,836 0.3
Thai Beverage Consumer Staples 6,624 0.3
Star Petroleum Refining Energy 4,009 0.2
63,579 3.1
United Arab Emirates
Emirates Central Cooling Systems Utilities 10,007 0.5
Spinneys Consumer Staples 5,319 0.3
15,326 0.8
United States
Genpact((f)) Industrials 40,378 2.0
Cognizant Technology Solutions((f)) Information Technology 31,646 1.6
72,024 3.6
Total Investments 2,002,617 100.0
(a) Preferred shareholders are entitled to dividends before ordinary
shareholders.
(b) US listed American Depository Receipt.
(c) TEMIT holds in this company shares listed on the Hong Kong stock
exchange and American Depository Receipts listed on the New York stock
exchange.
(d) This company is fair valued at zero as a result of its trading being
suspended on international stock exchanges.
(e) This company changed its name from LegoChem Biosciences.
(f) This company, listed on a stock exchange in a developed market, has
significant exposure to operations from emerging markets.
Market Capitalisation Breakdown % Less than £1.5bn to £5bn to Greater than
£1.5bn
£5bn
£25bn
£25bn
31 March 2025 3.6 9.2 27.7 59.5
31 March 2024 4.6 12.6 23.3 59.5
Split Between Markets %((a)) 31 March 2025 31 March 2024
Emerging Markets 96.2 95.8
Developed Markets((b)) 3.6 4.0
Frontier Markets 0.2 0.2
Source: FactSet Research System, Inc.
(a) Geographic split between 'Emerging markets', 'Frontier markets',
'Developed markets' are as per MSCI index classifications.
(b) Developed market exposure represented by companies listed in United
States which have significant exposure to operations in emerging markets.
In investment terminology, a developed market is a country that is most
developed in terms of its economy and capital markets. To be classified as a
developed market, the country must have a high average level of personal
income, but this also includes openness to foreign ownership, ease of capital
movement, and efficiency of market institutions. An emerging market is a
market that has some characteristics of a developed market but does not fully
meet its standards. This includes markets that may become developed markets in
the future or were in the past. The term 'frontier market' is used for
developing countries with smaller, riskier, or more illiquid capital markets
than 'emerging'.
Chetan Sehgal
Lead Portfolio Manager
6 June 2025
The investment managers' process
Investment philosophy and approach
FTEME's long-term approach is driven by the 3 S's, seeking Structural growth
opportunities in emerging markets, investing in businesses with Sustainable
earnings power at a discount to intrinsic worth, and believing in responsible
Stewardship of client capital. FTEME seeks to capture the growth potential of
emerging market companies and believes that this is best achieved by employing
a bottom-up and fundamental security selection process. FTEME conducts
in-depth proprietary company research with a long-term and independent
perspective. FTEME believes in the responsible stewardship of clients' capital
and that governance and sustainability issues create risks and opportunities
for companies. ESG analysis is therefore integrated as a key element of
fundamental bottom-up analysis.
TEMIT's performance in different market environments
FTEME's approach aims for outperformance over the long term. The investment
strategy tends to produce stronger performance when company fundamentals are
the primary driver for stock returns, where a focus on stock selection should
produce superior results. Performance may be less strong in highly
sentiment-driven market environments, when investors focus more on the overall
economic picture rather than company fundamentals.
This can also be the case when the market is overly short-term oriented, and
rewards companies driven by what FTEME views as unsustainable factors such as
short-term demand/supply imbalances or inorganic growth.
Investment process
The three broad stages of FTEME's investment process comprise: idea
generation, stock research, and portfolio construction and management; with
governance and sustainability considerations and risk management fully
integrated at all stages.
1 Idea generation
The key source of idea generation is FTEME's team of over 70 analysts and
portfolio managers located around the globe. Their experience and expertise
allow them to identify trends which they may want to explore further through
company research. In addition, FTEME's local presence, network and
understanding of local dynamics may help to identify trends and opportunities
that other market participants may filter out through standard quantitative
screens. FTEME analysts speak the local language and are part of the local
culture and fabric of the countries where they conduct research.
2 Stock research
FTEME analysts conduct rigorous analysis to assess whether a company has
sustainable earnings power, and to establish a proprietary estimate of its
intrinsic worth. By integrating ESG analysis with traditional business and
financial analysis, FTEME seeks to gain insights into the quality and risks of
companies. FTEME's research platform currently has coverage of over 700
companies across emerging markets using a proprietary and rigorous bottom-up
research approach, along with extensive knowledge of the wider investment
universe.
FTEME's research analysts form detailed views of companies by collecting and
analysing a variety of information. The team conducts detailed quantitative
financial analysis by building in-depth company models to evaluate financial
strength and profitability, and to project future earnings and cash flow.
Industry demand and supply models are incorporated in the analysis, as well as
country and currency macro considerations. FTEME has a strong emphasis on
qualitative assessment.
The assessment of ability to sustain stable or growing economic profits over
time is typically driven by a combination of factors, including (i) sound
business models; (ii) sustainable competitive advantages; (iii) management
foresight; and (iv) low debt levels. Earnings power is the demonstrable
ability to generate sustainable economic profit into the future in areas which
could be beyond the current scope of operations. The analysts look for real
earnings growth by focusing on economic earnings and cash flows rather than
reported earnings and differentiating between operational earnings and
financial earnings. They evaluate internal versus external drivers to earnings
and prefer companies with earnings which can be affected through management
action.
A key element of earnings power is therefore quality, as signified by (i)
products and services with low regulatory and macro risk; (ii) financial
strength; and (iii) management strength.
Each research recommendation may incorporate several valuation methods
extending typically over a three to five-year horizon. FTEME aims to clarify
the risk/reward balance of a company by conducting sensitivity analysis,
stress-testing, and scenario analysis. It seeks to identify what the market
consensus expectations are for a stock and how the team's fundamental views
may differ.
3 Portfolio construction
FTEME seeks to build a high-conviction stock-centric portfolio that is
primarily driven by company-specific factors and focused on the long term. A
bottom-up approach to stock selection is used, with country and sector
allocations a residual of this process.
Portfolio style and characteristics
The strategy typically displays the following characteristics:
Core style
The strategy aims to deliver outperformance irrespective of market direction.
The portfolio construction process leads to the majority of active risk being
focused on stock selection, not style or currency factors.
Quality and growth but not at excessive valuation levels
The philosophy typically leads to a portfolio with higher quality and growth
than the aggregate of the benchmark index.
High conviction portfolio
The top 10 holdings typically account for over 40% of the portfolio which
overall is well-diversified across the market cap spectrum.
Low turnover
FTEME's high conviction and long-term approach means that the typical annual
portfolio turnover is less than 20%.
Buy and sell discipline
FTEME's buy discipline is primarily designed to ensure that the portfolio
managers buy when they have both conviction in a business and it is trading
below its intrinsic value; FTEME's sell discipline is designed to capture the
opposite. All holdings are regularly reviewed to ensure that analyst
recommendations are up to date and accurately reflect any changes in company
fundamentals. In this way, ongoing fundamental research drives all buy and
sell decisions.
Investment risk management
Investment in emerging markets equities inevitably involves risk in a volatile
asset class. Franklin Templeton uses a comprehensive approach to managing
risks within its portfolios and this approach is inherent in all aspects of
the investment process. Investment risks are to be identified and intentional,
not minimised. Risk management is embedded through all stages of the
investment process, in collaboration with dedicated resources from Franklin
Templeton's Investment Risk Management Group, which is independent from the
portfolio management team. Various risk management tools are used to predict
and decompose the portfolio's active risk in order to understand and manage
the portfolio's active risk profile.
For additional information with respect to the AIFM risk management framework,
please read the Investor Disclosure Document on our website (www.temit.co.uk).
Stewardship
Templeton Emerging Markets Investment Trust ('TEMIT') seeks to capture the
growth potential of emerging markets companies by employing a bottom-up
security selection process with a long-term perspective. We aim to be a
responsible steward of our clients' capital-that is why we integrate
Environmental, Social and Governance ('ESG') factors into our investment
research process to understand the financial risks and opportunities that stem
from governance and sustainability issues.
Whilst governance and sustainability issues are analysed in our research, the
findings are not binding on the stock selection process. TEMIT does not pursue
any particular sustainable targets (e.g., carbon reduction) or objectives.
Being responsible stewards of our clients' capital is reflected in:
How we act as investors
• ESG integration
• Company engagement
• Policy advocacy
How we treat our clients
• Putting clients first
• Being responsible fiduciaries of our clients' capital
How we behave as a business
• Building relationships
• Achieving quality results
• Working with integrity
Integrating ESG factors
As part of TEMIT's stock research process, ESG factors are researched
alongside other important factors, such as company earnings power, competitive
positioning and management quality. These factors are likely to impact
materially on the operating performance or financial conditions of a company.
This deepens our understanding of the companies we research; it also guides us
in our engagement activities over a range of issues, better informing our
research insights, as we strive to protect shareholder value.
Our proprietary three-pillar ESG research framework is an assessment tool that
has further enhanced our ability to identify financial risk and opportunities.
Intentionality
Assessing companies' intentionality toward managing material ESG risks and
their long term growth prospects and considering ESG factors in our valuation
models.
Alignment
Assessing the alignment of companies' products and services to positive social
and environmental outcomes.
Transition
Identifying companies' transition potential and monitoring their incremental
progress, using our on-the-ground capabilities and experience as active owners
to foster positive change.
Please find below a case study of a company's intentionality to manage the ESG
footprint of its operating model from the full TEMIT Stewardship Report 2025
to give shareholders a snapshot of the typical intentionality analysis
undertaken. Case studies of alignment and transition can also be found in the
full TEMIT Stewardship Report 2025 at www.temit.co.uk.
Thai Beverage (ThaiBev)
One of Southeast Asia's largest beverage companies and the largest in
Thailand.
ESG Topic: Water management
Materiality and Risk:
Companies in the Alcoholic Beverages industry require a large amount of clean
water for production. They are potentially exposed to water supply disruptions
that could significantly impact operations and increase costs. These risks can
be managed by improving water management through increased efficiency and
recycling, particularly in regions with baseline water stress
ESG Thesis:
ThaiBev places strong emphasis on sustainable water management. Recognising
water as a critical resource, ThaiBev has implemented several initiatives to
ensure efficient and responsible water use.
• ThaiBev aims to replenish 100% of water used in its Thai beverage
products by 2040 and reduce water intensity by 7% by 2030, with a 5.33%
reduction achieved as of 2024.((a))
• In 2024, ThaiBev reduced water usage by 8.8%, reused 2.7%, and
recycled 4.7% of the total water withdrawn.((b))
• All ThaiBev production facilities are certified with the ISO 14001
environmental management standard.
• ThaiBev collaborates with suppliers in water-stressed areas to
minimise water consumption, identifying 46% of key suppliers in high-stress
regions.
Business Thesis:
ThaiBev holds a 90% share in Thailand's low-end spirits market and 40% in the
beer market, benefiting from strong brand awareness and robust distribution.
Despite limited pricing power, it maintains higher margins due to lower
advertising and promotional (A&P) spending. ThaiBev controls 40% of
Thailand's beer market but faces intense competition here, while significant
A&P spending keeps margins relatively low. Overall, ThaiBev's strategic
positioning and efficient operations underscore its market dominance and
growth prospects.
((a) ) Source: Sustainability Report 2024, ThaiBev
((b) ) Ibid
TEMIT's research process includes a structured analysis of governance and
sustainability issues. Whilst governance and sustainability issues are
analysed in our research, the findings are not binding on the stock selection
process. TEMIT does not pursue any sustainable targets (e.g., carbon
reduction) or objectives.
Climate Change
Emerging market (EM) governments will need to adopt growth-enhancing fiscal
and structural reforms that promote low-emission resilient investments, backed
by productive and cost-effective climate policies, to achieve
climate-compatible development. Against this backdrop, our objective to
understand the climate commitments of our investee companies for company
research incorporates both local and global perspectives, recognizing that the
pace of decarbonization and the associated strategies will differ globally.
Our investment process incorporates top-down policy and industry studies,
bottom-up company research and comprehensive ESG analysis including climate
considerations, all of which help to deepen our research insights. Factoring
material environmental issues into our company forecasts can lead to
adjustments in growth projections, margin expectations or discount rates. In
addition, as active stewards of our clients' capital, engagement is a key tool
that enables us to understand and facilitate a company's sustainability
journey, where financially material, which is supported by a local footprint
and access to management.
We do not rule out investing in companies in carbon intensive sectors, such as
cement, steel, industrials and extractive industries. As a material
sustainability issue, carbon emissions management can impact a company's
business model in various ways, including carbon taxes, technology upgrades
and compliance costs.
Climate Risk
Weichai Power
Specialising in the production and sales of diesel engines, automobiles, and
automobile components.
ESG Observations and Analysis:
• Weichai Power has launched several initiatives to enhance its
environmental profile:
• Weichai Power invests in R&D to enhance engine technology, develop
new energy industries, and optimize its industrial structure.
• In partnership with Bosch, Weichai launched the "Giving Everything to
Protect the Blue Sky" campaign to reduce emissions and promote green
development.
• Weichai is building a "National-Level Green Factory" to advance green
and low-carbon transformation and implement sustainable practices.
• KION, Weichai's European subsidiary, targets a 4.2% annual reduction
in Scope 1 and 2 GHG emissions and a 2.5% reduction in Scope 3 emissions by
2030, aiming for zero carbon emissions by 2050.
ESG Thesis:
Weichai Power is committed to achieving carbon peaking by 2030 and carbon
neutrality by 2060. As its ESG initiatives continue, we believe that Weichai
Power is progressing well in achieving its emissions goals. The same
commitment extends across the group. Subsidiaries of Weichai, such as Shaanxi
Heavy Duty Automobile and KION Group, also have specific targets for reducing
energy consumption and emissions.
Business Thesis:
Weichai Power, a leader in diesel and LNG engines, is diversifying into
construction machinery, agricultural equipment, generator, and vessel engines,
while pioneering hydrogen technology with fuel cell products and trucks. It
plans to build an electric powertrain supply chain and launch electric and
hybrid trucks. Synergies with its European subsidiary KION, a key player in
forklifts and supply chain solutions, will enhance growth and efficiency in
both markets.
Active ownership
As investors with a significant presence in emerging markets, FTEME's active
ownership efforts are a key part of the overall approach to stewardship and
sustainability. FTEME analysts conduct almost 2,000 company meetings a year
across the investment platform using its industry-leading research footprint
across emerging markets, where FTEME seek to gain a number of fundamental and
sustainability insights. We believe that our engagement efforts are key to
developing a detailed understanding of companies and improving outcomes for
shareholders as well as stakeholders more broadly.
Effective engagement
In 2024, we redefined what we mean by engagement, distinguishing between
seeking change at a company and a discussion with a company when it related to
sustainability and governance issues. Our proprietary Emerging Markets
Research Database (EMDB), where we document our research and record our
company interactions, was adjusted accordingly. This enabled us to enhance our
practice and outcomes; build more consistency and transparency; and improve
reporting to our clients.
With this updated framework, we had 340 company meetings this past year,
comprising discussions and engagement with management across a range of
topics. This allowed us to better understand the businesses' intentions and
initiatives. We also shared our views on the risks and opportunities that may
affect the companies' long-term success. The following section details our
discussions and engagement activities involving ESG topics over the year.
ESG Discussion ESG Engagement
Clarifying View Seeking Change or Improved Disclosure
This is a targeted interaction to gather material ESG information through a This is a targeted interaction to influence change related to material ESG
company call, meeting or a one-time short-term discussion. topics and risks, including improved ESG disclosures. Each ESG engagement must
have a specific and clearly defined objective to measure progress against.
This interaction entails a sustained, medium-to long-term dialogue.
To coordinate and oversee the engagement efforts of our platform of 70+
investment professionals across 13 countries, we also created the FTEME
Engagement Group comprising seven regional coordinators from the research
analyst team. This group includes a representative from each key region that
will bring cross-border perspectives and provide guidance on best practices.
Engagement statistics
We focus our time and efforts on material issues that affect the
sustainability of earnings, and a company's operating model, including
strategy. Our analysts are in continual dialogue with companies on a range of
topics, including operational performance, competition landscape, business
outlook and company financials, to name a few. There are also companies which
we identify where we believe that dedicated discussions and engagements on ESG
topics can impact long-term performance. A full report on the nature and
outcome of these meetings, where relevant is available in the Stewardship
Report available at www.temit.co.uk. Given our long-term outlook, we build
strong relationships with our investee companies as co-owners on our clients'
behalf.
For the 12 months ended 31 March 2025, of the 340 company engagements, there
were 60 tagged ESG interactions, 22 ESG discussions and 38 ESG engagements,
where detailed interactions were conducted with an investee company.
This table records the independent milestones to measure our process to an
objective set in our ESG engagements.
Below is an ESG engagement example with an investee company in China.
Company: Objectives:
WuXi Biologics We wrote to the board of WuXi Biologics to express our concern about the
A global leader in open-access biologics technology potential implications of the Biosecure Act in the US, which aims to prohibit
contracting with certain biotechnology firms deemed national security risks,
including WuXi AppTec and its subsidiaries such as WuXi Biologics. We urged
the board to take proactive steps to alleviate the impact and put in place a
suitable plan to safeguard stakeholder interests.
ESG engagement topic: Outcome: Plan formulated
Corporate Governance - Strategic risk and communication Our letter was followed by a call with WuXi Biologics' management, which
shared plans to ensure normal business operation and protect shareholders'
rights. This may entail changing its corporate governance structure to clear
its association with WuXi AppTec and become a more global entity. Our
engagement continued throughout 2024 as we monitored the steps taken to
mitigate the potential impact.
Proxy voting
In the year ended 31 March 2025, FTEME voted on over 1,000 management
proposals at annual and special general meetings for TEMIT.
Of the voteable management proposals, we voted "For" proposals 91% of the time
and "Against" in another 9%. By proposal category, as a percentage of votes
within each category and where we had a total of 10 votes or more, our votes
against were largely concentrated on capital structure, management
compensation, company articles and strategic transactions.
FTEME view votes against proposals as a formal way to communicate our views to
management, and we undertake them based on our investment team's assessment of
each motion, in line with our clients' best interests.
The number of resolutions proposed by shareholders (as distinct from a
company's governing board) is increasing around the world, particularly on
environmental and social issues, although they remain relatively uncommon in
emerging markets. We encountered several governance-related shareholder
proposals over the year. For TEMIT's portfolio, we voted "For" on 15
governance related shareholder proposals. These were across several
categories, such as director elections and audit related. We will continue to
closely examine the merits of views raised by fellow shareholders and vote
accordingly.
We encourage you to download the full TEMIT Stewardship Report 2025 from
www.temit.co.uk for further, detailed information.
Business review
Strategy and business model
Company purpose and objective
TEMIT's purpose is to provide both private and institutional investors with
the opportunity for capital appreciation via a professionally managed vehicle
focused on listed equity investments in emerging markets.
The objective of TEMIT is to provide long-term capital appreciation via
exposure to global emerging markets, supported by a culture of both strong
customer service and corporate governance.
Investment policy
The Company seeks long-term capital appreciation through investment in
companies listed in emerging markets or companies which earn a significant
amount of their revenues in emerging markets but are domiciled in, or listed
on, stock exchanges in developed countries ('Emerging Markets Companies').
It is expected that the majority of investments will be in listed equities.
However, up to 10% of the Company's assets may be invested in unlisted
securities. In addition, while it is intended that the Company will normally
invest in equity instruments, the Investment Managers may invest in
equity-related investments (such as convertibles or derivatives) where they
believe that it is advantageous to do so.
The portfolio may frequently be overweight or underweight in certain
investments compared with the MSCI Emerging Markets (Net Dividends) Index (the
'Benchmark') and may be concentrated in a more limited number of sectors or
geographical areas than the Benchmark. Investments may be made in Emerging
Markets Companies outside the Benchmark that meet the investment criteria.
Whilst there are no specific restrictions on investment in any one sector or
geographic area, the portfolio will be managed in a way which aims to spread
investment risk. The portfolio may contain between 50 and 100 individual
stocks but may, at times, contain fewer or more than this range. No more than
12% of the Company's assets will be invested in the securities of any one
issuer at the time of investment, save that any investment in unlisted
securities of any one issuer will be limited to no more than 2% of the
Company's assets, measured at the time of investment.
The maximum borrowing will be limited to 20% of the Company's net assets,
measured at the time of borrowing.
No more than 10%, in aggregate, of the value of the Company's assets will be
invested in other listed closed-ended investment funds.
In accordance with the UK Listing Rules, the Company will not make any
material change to its published investment policy without the prior approval
of the UK's Financial Conduct Authority ('FCA') and the approval of its
shareholders by ordinary resolution. Any material change would be announced by
the Company through the London Stock Exchange.
Distribution policy
The Company will ensure that its total annual dividends will be paid out of
the profits available for distribution under the provisions of the relevant
laws and regulations and will be at least sufficient to enable it to qualify
as an investment trust under the Corporation Tax Act 2010 and the ongoing
requirements of The Investment Trust (Approved Company) (Tax) Regulations
2011. If the Company has received an exceptional level of income in any
accounting year, the Board may elect to pay a special dividend. The primary
focus of the investment policy is on generating capital returns, the Company
does not target a particular level of income and there is no guarantee that
dividend levels will be maintained from one year to the next.
The Company will normally pay two dividends per year, an interim dividend
declared at the time when the half yearly results are announced, and a final
dividend proposed at the time when the annual results are announced. The final
dividend will be subject to shareholder approval at the AGM each year.
The Company may also distribute capital by means of share buybacks when the
Board believes that it is in the best interests of shareholders to do so. The
share buyback programme will be subject to shareholder approval at each AGM.
Business model
The Company has no employees and all of its Directors are non-executive. The
Company delegates its day-to-day activities to third parties.
Since 1 October 2021, Franklin Templeton Investment Trust Management Limited
('FTITML', 'AIFM' or the 'Manager') has been the Company's AIFM and Company
Secretary.
The Board is responsible for all aspects of the Company's affairs, including
the setting of parameters for the monitoring of the investment strategy and
the review of investment performance and policy. It also has responsibility
for overseeing all strategic policy issues, namely dividend, gearing, share
issuance and buybacks, share price and discount/premium monitoring, corporate
governance matters and engagement with all the Company's stakeholders.
Strategy
The Company seeks to achieve its objective by following a strategy focused on
the following:
Performance
At the heart of the strategy is the appointment and retention of capable
investment management professionals, whose aim is to identify value and
achieve superior long-term growth for shareholders. FTEME, under the
leadership of Chetan Sehgal, continues to apply the same core investment
philosophy that has driven TEMIT's performance since the Company's launch. The
investment team aims to achieve long-term capital appreciation for
shareholders seeking exposure to global emerging markets by investing in
companies that they believe offer long-term sustainable growth and good value,
combined with strong management and sound governance.
Investment Process and Environmental, Social and Governance ('ESG')
Considerations
As part of TEMIT's stock research process, ESG factors are researched
alongside other important factors, such as company earnings power, competitive
positioning and management quality. These factors are likely to materially
impact the operating performance or financial conditions of a company. This
deepens our understanding of the companies we research; it also guides us in
our engagement activities over a range of issues, better informing our
research insights, as we strive to protect shareholder value.
As TEMIT is an investment trust, the key ESG consideration is the stewardship
of its portfolio of investments. The Board has reviewed and fully supports
FTEME's approach to stewardship, which is described under 'TEMIT's approach to
stewardship' in the full Annual Report. It receives regular reports on
Franklin Templeton's policies and controls.
TEMIT has no greenhouse gas emissions to report from the operations of the
Company, as all of its activities are outsourced to third parties. While as an
investment trust TEMIT is exempt from disclosures recommended by the Task
Force on Climate-related Financial Disclosures ('TCFD'), Franklin Templeton
continues to develop metrics for our carbon footprint. Further information on
our approach to climate change can be found under 'TEMIT's approach to
stewardship' above and in more detail in the full Stewardship Report,
available on our website (www.temit.co.uk).
TEMIT has no employees and is not an organisation that provides goods or
services as defined in the Modern Slavery Act 2015 and thus the Company
considers that the Act does not apply. The Company's own supply chain consists
predominantly of professional services advisers.
Culture and Values
The Board believes in a culture of openness and constructive challenge in its
interactions with the Manager and other service providers. The Board aims to
maintain open and regular communication with shareholders, as set out under
Communication in the full Annual Report.
The Company is committed to acting professionally, fairly and with integrity
in all of its business dealings and relationships. 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 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. The Board notes
that the Manager has a robust whistleblowing policy in place.
Information on the Company's approach to Diversity is set out in the
Directors' Report in the full Annual Report.
Liquidity
The shares issued by the Company are traded on the London and New Zealand
stock exchanges. The Company has engaged Winterflood Securities and JP Morgan
as joint financial advisers and stockbrokers.
Gearing
Fixed Term Loan
On 31 January 2020, the Company entered into a five-year £100 million loan at
a fixed rate of 2.089% with Scotiabank Europe plc. The loan was repaid in full
at its maturity on 31 January 2025. The fixed term loan was denominated in
pounds sterling. Full details of the loan are set out in Note 10 of the Notes
to the Financial Statements.
Revolving Credit Facility
On 31 January 2025, the Company entered into a one-year £122 million
multi-currency revolving loan facility with The Bank of Nova Scotia, London
Branch. Drawings may be in sterling, US dollars or Chinese renminbi ('CNH').
As at 31 March 2025, £80 million was drawn down from this facility in
sterling. Further details of the facility are set out in Note 10 of the Notes
to the Financial Statements.
The Company has no other debt as at 31 March 2025. The net gearing position
was 0.2% (net of cash in the portfolio) at the year-end (2024: 0.0%)((a).)
The Board continues to monitor the level of gearing and currently considers
borrowing of up to 20% of net assets to be appropriate, measured at the time
of borrowing.
(a) A glossary of alternative performance measures is included in the full
Annual Report.
Affirmation of Shareholder Mandate
In accordance with the Company's Articles of Association, the Board must seek
shareholders' approval every five years for TEMIT to continue as an investment
trust. This allows shareholders the opportunity to decide on the long-term
future of the Company. The last continuation vote took place at the AGM on 11
July 2024, when 99.30% of the votes cast were registered as votes in favour.
The next continuation vote will take place at the 2029 AGM.
Stability - Share Buybacks and Conditional Tender Offer
The Company has powers to buy back its shares as a discount control mechanism
and when this is in the best interests of the Company's shareholders and has a
Conditional Tender Offer. The share price discount to net asset value is
discussed under Key Performance Indicators in the full Annual Report.
Under the Conditional Tender Offer, if over the five-year period from 31 March
2024 to 31 March 2029 the Company's net asset value total return fails to
exceed the benchmark total return, the Board will put forward proposals to
shareholders to undertake a tender offer for up to 25 per cent of the issued
share capital of the Company, at the discretion of the Board.
Any such tender offer will be at a price equal to the then prevailing net
asset value less two per cent (and less the costs of the tender offer). There
will be no tender offer if the Company's net asset value total return exceeds
the benchmark total return (MSCI Emerging Markets (Net Dividends) Index) over
the five-year period. Any tender offer would take place following the
Company's 2029 AGM and will also be conditional on shareholders approving the
continuation vote in 2029 which is described under 'Affirmation of Shareholder
Mandate' above.
A key point in the Investment Managers' mandate is to take a long-term view of
investments and one of the advantages of a closed-end fund is that the
portfolio structure is not disrupted by large inflows or outflows of cash.
However, the Board and the Investment Managers recognise that the returns
experienced by shareholders are in the form of movements in the share price,
which are not directly linked to NAV movements, and the shares may trade at
varying discounts or premiums to NAV. Many shareholders, both professional and
private investors, have expressed a view that a high level of volatility in
the discount is undesirable and that the Company should continue its active
share buyback programme. A less volatile discount, and hence share price, is
seen as important to investors. For this reason, TEMIT uses share buybacks
selectively with the intention of limiting volatility in the share price.
Details of the share buybacks are included in the following table. All shares
bought back in the year were cancelled, with none being placed in treasury. In
addition, the Company cancelled 43,825,895 shares which were previously held
in treasury, and as at 31 March 2025, the Company held 60,000,000 shares in
treasury (2024: 103,825,895 shares in treasury). Company cancelled 43,825,895
shares which were previously held in treasury, and as at 31 March 2025, the
Company held 60,000,000 shares in treasury (2024: 103,825,895 shares in
treasury).
Discount management is reviewed regularly by the Board to ensure that it
remains effective in the light of prevailing market conditions. The
Conditional Tender Offer will not affect the Board's current approach to
discount management. The Board will continue to exercise the Company's right
to buy back shares when it believes this to be in shareholders' interests and
with the aim of reducing volatility in the discount.
2025 2024
Shares Bought Back and Cancelled During the Year 89,989,892 44,319,755
Proportion of Share Capital Bought Back and Cancelled 8.1% 3.8%
Total Cost of Share Buybacks £149.2m £65.9m
The Benefit to NAV £23.7m £10.6m
The Percentage Benefit to NAV 1.16% 0.54%
Communication
The Board and Manager aim to ensure that investors are kept updated regularly
about the performance of TEMIT and of emerging markets through clear
communication and updates as detailed in this section. The Board is fully
committed to TEMIT's marketing and communications programme. There is a
substantial annual marketing and communication budget, and expenditure by
TEMIT is matched by a contribution to costs from the Manager.
TEMIT has received AIC Shareholder Communication awards for its 'Your Future
is Emerging' campaigns in 2022, 2023 and 2024. Through innovative use of
broadcast media and direct marketing, TEMIT's profile has been elevated,
showcasing the Company's benefits and conveying the dynamic growth story of
emerging markets to a wider audience. This follows a rebrand in January 2022,
when TEMIT unveiled a fresh corporate identity, establishing a unique brand
for the Company for the first time.
TEMIT seeks to keep shareholders updated on performance and investment
strategy through its Annual and Half Yearly Reports, along with monthly
factsheets and manager commentaries, which are available on the Company's
website - temit.co.uk - offering a wealth of updates, stock story videos,
articles, portfolio details, and essential documents. Connect with @TEMIT on
Twitter / X for ongoing updates and announcements as we expand our social
media presence.
The Board encourages registration to our monthly email that keeps subscribers
appraised of the latest performance, insights and announcements.
In addition, TEMIT has an active communications programme. Our Investment
Managers provide topical and informative comments to journalists, host media
briefings and events and publish articles on issues relevant to investing in
emerging markets. The Investment Managers meet regularly with professional
investors and analysts and host interactive webinars. At each AGM the
Investment Managers make a presentation with the opportunity for all
shareholders to ask questions.
The Chairman regularly meets major shareholders to discuss investment
performance and developments in corporate governance. We try to engage with a
wide spectrum of our shareholders and aim to address their concerns as far as
practically possible. Shareholders are welcome to contact the Chairman or the
Senior Independent Director at any time via temitcosec@franklintempleton.com.
Section 172 Report - Promoting the success of the Company
The Companies (Miscellaneous Reporting) Regulations 2018 require directors to
explain how they have discharged their duties under Section 172(1) of the
Companies Act 2006 in promoting the success of their companies for the benefit
of 'members as a whole' and having regard for all stakeholders.
Section 172 Matter 1. The likely consequences of any decision in the long term.
2. The interests of the Company's employees.
3. The need to foster the Company's business relationships with suppliers,
customers and others.
4. The impact of the Company's operations on the community and the
environment.
5. The desirability of the Company maintaining a reputation for high standards
of business conduct.
6. The need to act fairly between members of the Company.
Board's Statement 1. 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 Managers' actions on the
marketability and reputation of the Company and the likely impact on the
Company's stakeholders of the Company's strategy.
2. The Company has no direct employees.
3. The Board's approach to its key stakeholders is set out below.
4. The Board's approach is set out in the section on Investment Process and
ESG Considerations under Strategy and Business Model in the full Annual
Report.
5. The Board's approach is set out in 'Culture and Values' in the full Annual
Report.
6. The Board's approach to its key stakeholders is set out below.
In addition to the primary focus of the Board, and with due regard to its
obligations under Section 172 of the Companies Act 2006, the following
important matters were considered at Board meetings during the year:
• Recruitment of Sarika Patel as a non-executive Director;
• Changes to the risk matrix, monitoring such changes carefully and
introducing alternative mitigating controls where necessary and practicable to
support the operation of an effective control environment;
• Review of the marketing plan with the Manager;
• Review of the share buyback programme;
• Review of the dividend policy; and
• Review of the gearing facility and in particular the decision to enter
into a new revolving credit facility.
The Board considers the main stakeholders in the Company to be its
shareholders and its service providers, the principal one of which is its
Manager, along with its investee companies. A summary of the key areas of
engagement undertaken by the Board with its main stakeholders in the year
under review and how Directors have acted upon this to promote the long-term
success of the Company are set out in the following table.
Stakeholders Area of Engagement Consideration Engagement Outcome
Shareholders and Potential Investors Company Objective Delivering on the Company's objective to shareholders over the long term. The Company's objective and investment policy are set out in the full Annual The Investment Managers' commentary in the full Annual Report gives a full
Report. commentary on the Company's portfolio as well as on the approach and
considerations undertaken by the Investment Managers for stock selection
within the portfolio.
The Company's performance against its objective is regularly reviewed by the
Board, taking account of views expressed by shareholders.
A continuation vote took place at the 2024 AGM, with 99.30% of votes cast in
favour. The next continuation vote is scheduled to take place at the 2029 AGM.
The Company holds a continuation vote every five years to allow shareholders
to decide on the long-term future of the Company.
Shareholders and Potential Investors Dividend The objective of the Company is to provide long term capital appreciation, The Board reviews regularly the level of dividends, taking account of the Dividend payments are discussed in the Chairman's Statement in the full Annual
however, the Board recognises the importance of dividend income to many income generated by the Company's portfolio and the availability of reserves. Report.
shareholders.
In considering the sustainability of the dividend and of the Company, the
Board reviews the models supporting the going concern assessment and viability
statement.
Shareholders and Potential Investors Communication with Shareholders The Board understands the importance of communication with its shareholders Working closely with the Manager, the Board ensures that there is a variety of Full details of all Board and Manager communication are included in the full
and maintains open channels of communication with shareholders. regular communication with shareholders. Annual Report.
Shareholders are invited to submit questions for the Board to address at the
Company's AGM.
Shareholders and Potential Investors Discount Management To smooth the volatility in the discount. The Board monitors the discount closely and discusses discount strategy with TEMIT continues to adopt an active buy back policy and has a Conditional
the Investment Managers and the Company's joint stockbrokers at every regular Tender Offer. Details of these can be found under 'Stability - Share Buybacks
Board meeting. The stockbrokers provide a summary of the discount and market and Conditional Tender Offer' in the full Annual Report.
conditions to the Board and Investment Managers at the close of each trading
day in London. The Board also meets
Further details of the current discount and discount management are detailed
in the Chairman's Statement
with the Investment Managers to discuss the Company's marketing strategy to under 'Share price rating' in the full Annual Report.
ensure effective communication with existing shareholders and to consider
strategies to create additional demand for the Company's shares.
Manager Communication Between the Board and the Manager The Board's oversight of the Manager is very important. The Manager attends all regular Board meetings where it reviews and discusses The Board operates in a supportive and open manner, challenging the activity
performance reports, changes in the portfolio composition and risk matrix. The of the Manager and its results. The Board believes that the Company is well
Board receives timely and accurate information from the Manager and engages managed and the Board places great value on the experience of the Investment
with the Investment Managers and the Company Secretary between meetings as Managers to deliver superior long-term returns from investments and on the
well as with other representatives of the Manager as and when it is deemed other functions of the Manager to fulfil their roles effectively.
necessary.
Third-party Service Providers Engagement with Service Providers The Board acknowledges the importance of ensuring that the Company's service As an investment company all services are outsourced to third-party providers. The Manager maintains the overall day-to-day relationship with the service
providers are delivering a suitable level of service, that the service level The Board considers the support delivered by service providers including the providers and the Board undertakes an annual review of the performance of the
is sustainable and that they are fairly remunerated for their service. quality of the service, succession planning and any potential interruption of Company's service providers. This review also includes the level of fees paid.
service or other potential risks. The Board meets with service providers as and when considered necessary.
Investee Companies Engagement with Investee Companies The relationship between the Company and the investee companies is very On behalf of the Company the Investment Managers engage with investee The Investment Managers have a dedicated research team that is employed in
important. companies implementing corporate governance principles and discuss the making investment decisions and when voting at shareholder meetings of
portfolio with the Board on a quarterly basis. investee companies.
Key performance indicators
The Board considers the following to be the key performance indicators
('KPIs') for the Company:
• Net asset value and share price total return over various
periods, compared to its benchmark;
• Share price discount to net asset value;
• Dividend and revenue earnings; and
• Ongoing charges ratio.
The 10 Year Record of the KPIs is shown in the full Annual Report.
Net asset value and share price total return((a))
Net asset value and share price total return data is presented within the
Financial Highlights along with the 10 Year Record in the full Annual Report.
The Chairman's Statement and the Investment Managers' Report in the full
Annual Report include further commentary on the Company's performance.
Performance of the Company's portfolio is measured in pounds sterling (GBP)
against the MSCI Emerging Markets (Net Dividends) Index.
(a) A glossary of alternative performance measures is included in the full
Annual Report.
Share price discount to net asset value((a))
Details of the Company's share price discount to net asset value are presented
within the Financial Summary in the full Annual Report. On 16 May 2025, the
latest practicable date for which information was available, the discount was
15.7%.
The Company has powers to buy back its shares as a discount control mechanism
when it is in the best interests of the Company's shareholders and has a
Conditional Tender Offer mechanism. These are described under 'Stability -
Share Buybacks and Conditional Tender Offer' in the full Annual Report.
(a) A glossary of alternative performance measures is included in the full
Annual Report.
Dividend and revenue earnings
Total income earned in the year was £70.4 million (2024: £71.9 million)
which translates into net revenue earnings of 5.41 pence per share (2024: 5.18
pence per share), an increase of 4.4% over the prior year.
The Company paid an interim dividend of 2.00 pence per share on 31 January
2025. The Board is proposing a final dividend of 3.25 pence per share, making
total ordinary dividends for the year of 5.25 pence per share.
Ongoing charges ratio((a)) ('OCR')
The OCR reduced to 0.95% for the year ended 31 March 2025, compared to 0.97%
in the prior year. This was largely driven by the AIFM fee reduction as
detailed within the Chairman's Statement in the full Annual Report and an
uplift in the average net assets over the year. The OCR has been calculated in
line with the Association of Investment Companies ('AIC') recommended
methodology.
Costs associated with the purchase and sale of investments are taken to
capital and are not included in the OCR. Transaction costs are disclosed in
Note 8 of the Notes to the Financial Statements.
(a) A glossary of alternative performance measures is included in the full
Annual Report.
Principal and emerging risks
At least quarterly, the Board reviews with the AIFM and the Investment
Managers a wide range of risk factors that may impact the Company. A full
review of risks and internal controls is held every September by the Audit and
Risk Committee. These reviews include 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. These are
summarised in the table below.
Further explanation of the monitoring of risk and uncertainties is covered
within the Report of the Audit and Risk Committee in the full Annual Report.
Information on the risks that TEMIT is subject to, including additional
financial and valuation risks, are also detailed in Note 15 of the Notes to
the Financial Statements.
Due to the nature of the Company's business, investment risk is a key focus
and is reviewed on an ongoing basis by the Investment Managers as part of
every investment decision. Further information on this process is detailed in
the full Annual Report.
Principal Risk Mitigation
Market, Geopolitical and Investment Market risk arises from volatility in the prices of the Company's investments, The Board reviews regularly and discusses with the Investment Managers the
from the risk of volatility in global markets arising from macroeconomic and portfolio, the Company's investment performance and the execution of the
geopolitical circumstances and conditions. Many of the companies in which investment policy against the long-term objectives of the Company. The
TEMIT invests are, by reason of the locations in which they operate, exposed Manager's independent risk team performs systematic risk analysis, including
to the risk of political or economic change. In addition, sanctions, exchange country and industry specific risk monitoring, as well as stress testing of
controls, tax or other regulations introduced in any country in which TEMIT the portfolio's resilience to geopolitical shocks. The Manager's legal and
invests may affect its income and the value and the marketability of its compliance team monitors sanctions. Where TEMIT is affected, adherence to all
investments. Emerging markets can be subject to greater price volatility than sanctions and restrictions is ensured by this team. The Board also regularly
developed markets. reviews reports from the Manager's risk, legal and compliance teams.
Geopolitical risk was highlighted by moves by the United States to impose
widespread tariffs on imports, the continuing Russian war on Ukraine, the
escalating trade war between the United States and China and military tensions
over the Taiwan Strait, the continuing conflict between Israel and Hamas and
the recent spike in tension between India and Pakistan. All of these factors
have depressed investor sentiment and the Russian
invasion of Ukraine has impacted global trade posed by supply shocks,
sanctions, higher levels of inflation and volatility in asset prices.
Investment risk refers to the possibility that an investment's actual returns
may differ from the expected returns, potentially resulting in financial loss.
As well as market and geopolitical risk, this risk is impacted by the
decisions made by portfolio managers regarding sector, country allocation, and
stock selection.
Technology Failure or breach of the security of information technology systems of the The Company benefits from Franklin Templeton's technology framework designed
Company's service providers may entail risk of financial loss, disruption to to mitigate the risk of a cyber security breach.
operations or damage to the reputation of the Company.
For key third-party providers, the Audit and Risk Committee receives regular
independent reports on their technology control environment.
Concentration Concentration risk arises from investing in relatively few holdings, few The Board reviews regularly the portfolio composition/ asset allocation and
sectors or a restricted geographic area. NAV performance may be more volatile discusses related developments with the Investment Managers and the
and dividend payment less predictable, than with a greater number of independent risk management team. The Investment Compliance team of the
securities. Investment Managers monitors concentration limits and highlights any concerns
to portfolio management for remedial action.
Key Personnel The ability of the Company to achieve its objective is significantly dependent The Manager endeavours to ensure that the principal members of its management
upon the expertise of the Investment Managers and their ability to attract and teams are suitably incentivised, participate in strategic leader programmes
retain suitable staff. and monitor key succession planning metrics. The Board meets privately with
the key personnel at least twice a year. The Board discusses this risk
regularly with the Manager.
Foreign Currency Currency exchange rate movements may affect TEMIT's performance. In general, The Board monitors currency risk as part of the regular portfolio and risk
if the value of sterling increases compared with a foreign currency, an management oversight. TEMIT does not hedge currency risk.
investment traded in that foreign currency will be worth less in sterling
terms. This can have a negative effect on the Company's performance.
Discount Risk The discount/premium at which the Company's shares trade relative to its net The Board monitors the level of discount/premium at which the shares trade and
asset value can change. The risk of a widening discount, and/or related has an active investor relations programme. The Company has authority to buy
volatility, could reduce shareholder returns and confidence in the Company. back its existing shares when deemed by the Board to be in the best interests
of the Company and its shareholders.
Regulatory The Company is an Alternative Investment Fund ('AIF') and is listed on both The Board, with the assistance of the Manager, ensures that the Company
the London and New Zealand stock exchanges. The Company operates in an complies with all applicable laws and regulation and its internal risk and
increasingly complex regulatory environment and faces numerous regulatory control framework reduces the likelihood of breaches happening.
risks. Breaches of regulations could lead to a number of detrimental outcomes
and reputational damage.
Sustainability and Climate Change The Company's portfolio, and also the Company's service providers and the The Investment Managers consider that sustainability risks are relevant to the
Investment Managers, are exposed to risks arising from governance and returns of the Company. The Manager has implemented a policy in respect of the
sustainability issues, including climate change. To the extent that such a integration of sustainability and climate change risks in its investment
risk occurs, or occurs in a manner that is not anticipated by the Investment decision making process. The Board receives regular reports on the policies
Managers, there may be a sudden, material negative impact on the value of an and controls in place on ESG considerations. The Board has reviewed and fully
investment, and the operations or reputation of the Investment Managers. supports the Franklin Templeton Stewardship Statement and its Sustainable
Investing Principles and Policies.
Operational and Custody Like many other investment trust companies, TEMIT has no employees. The The Manager's systems are regularly tested and monitored and an internal
Company therefore relies upon the services provided by third parties and is controls report, which includes an assessment of risks together with an
dependent upon the control systems of the Investment Managers and of the overview of procedures to mitigate such risks, is prepared by the Manager and
Company's other service providers. The security, for example, of the Company's reviewed by the Audit and Risk Committee.
assets, dealing procedures, accounting records and maintenance of regulatory
and legal requirements depends on the effective operation of these systems.
J.P. Morgan Europe Limited is the Company's depositary. Its responsibilities
include cash monitoring, safe keeping of the Company's financial instruments,
verifying ownership and maintaining a record of other assets and monitoring
the Company's compliance with investment limits and borrowing requirements.
The depositary is liable for any loss of financial instruments held in custody
and will ensure that the custodian and any sub-custodians segregate the assets
of the Company. The depositary oversees the custody function performed by
JPMorgan Chase Bank. The custodian provides a report on its key controls and
safeguards (SOC 1/ SSAE 16/ ISAE 3402) that is independently reported on by
its auditor, PwC.
The Board reviews regular operational risk management reporting provided by
the Investment Managers.
Emerging risks
The key emerging risk faced by the Company during the year under review was
the possible effects of the United States moving to a more protectionist and
isolationist stance in its relations with the rest of the world. The Board and
Investment Managers continue to monitor the investment strategy response,
along with the continuing ramifications of the Russian invasion of Ukraine,
and tensions between the United States and China, as noted under the market
and geopolitical risk above. The Board also continues to monitor the potential
risks on the portfolio and investee companies posed by the dramatic progress
of Artificial Intelligence ('AI').
Viability statement
The Board considers viability as part of its continuing programme of
monitoring risk. In preparing the Viability Statement, in accordance with the
UK Corporate Governance Code and the AIC Corporate Governance Code, the
Directors have assessed the prospects of the Company over a longer period than
the 12 months required by the 'Going Concern' provision.
The Board has considered the Company's business and investment cycles and is
of the view that five years is a suitable time horizon to consider the
continuing viability of the Company, balancing the uncertainties of investing
in emerging markets securities against having due regard to viability over the
longer term.
In assessing the Company's viability, the Board has performed a robust
assessment of controls over the principal risks. The Board considers, on an
ongoing basis, each of the principal and emerging risks as noted above and set
out in Note 15 of the Notes to the Financial Statements. The Board evaluated
various scenarios of possible future circumstances including a material
increase in expenses and a continued significant and prolonged fall in
emerging equity markets. The Board also considered the latest assessment of
the portfolio's liquidity. The Board monitors income and expense projections
for the Company, with the majority of the expenses being predictable and
modest in comparison with the assets of the Company.
The Company foresees no issues with meeting interest payments and current
liabilities relating to the £122 million multi-currency revolving credit
facility which matures on 30 January 2026. A significant proportion of the
Company's expenses is the ad valorem AIFM fee, which would naturally reduce if
the market value of the Company's assets were to fall.
Considering the above, and with careful consideration given to the current
market situation, the ramifications of continuing geopolitical tensions and
the challenges posed by climate change, the Board has concluded that there is
a reasonable expectation that, assuming that there will be a successful
continuation vote at the 2029 AGM, the Company will be able to continue to
operate and meet its liabilities as they fall due over the next five years.
Future strategy
The Company was founded, and continues to be managed, based on a long-term
investment strategy that seeks to generate superior returns from investments,
principally in the shares of carefully selected companies in emerging markets.
The Company's results will be affected by many factors including political
decisions, economic factors, the performance of investee companies and the
ability of the Investment Managers to choose investments successfully as well
as the current challenges.
The Board and the Investment Managers continue to believe in investment with a
long-term horizon in companies that are undervalued by stock markets, but
which are fundamentally strong and growing. It is recognised that, at times,
extraneous political, economic and company-specific and other factors will
affect the performance of investments, but the Company will continue to take a
long-term view in the belief that patience will be rewarded.
By order of the Board
Angus Macpherson
6 June 2025
Statement of directors' responsibilities
In respect of the Annual Report and the Financial Statements
The Directors are responsible for preparing the Annual Report and the
Financial Statements in accordance with applicable law and regulations.
Details of the Directors and members of the committees are reported in the
full Annual Report.
Company law requires the Directors to prepare Financial Statements for each
financial year. Under that law the Directors are required to prepare the
Financial Statements in accordance with UK adopted International Accounting
Standards.
Under company law the Directors must be satisfied that the Financial
Statements give a true and fair view of the state of affairs of the Company
and of the profit or loss of the Company for the period.
In preparing these Financial Statements, International Accounting Standard 1
requires that Directors:
• Properly select and apply accounting policies;
• Present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and understandable information;
• Provide additional disclosures when compliance with the specific
requirements of UK adopted International Accounting Standards are insufficient
to enable users to understand the impact of particular transactions, other
events and conditions on the entity's financial position and financial
performance; and
• Assess the Company's ability to continue as a going concern.
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 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 Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website
(www.temit.co.uk). Legislation in the United Kingdom governing the preparation
and dissemination of Financial Statements may differ from legislation in other
jurisdictions.
Responsibility statement
Each of the Directors, who are listed in the full Annual Report, confirms that
to the best of their knowledge:
• The Financial Statements, which have been prepared in accordance
with UK adopted International Accounting Standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss of the
Company for the year ended 31 March 2025; and
• The Chairman's Statement, Strategic Report and the Report of the
Directors include a fair review of the information required by 4.1.8R to
4.1.11R of the FCA's Disclosure Guidance and Transparency Rules; and
• The Annual Report and Audited Financial Statements, taken as a
whole, are fair, balanced and understandable and provide the information
necessary for shareholders to assess the Company's position and performance,
business model and strategy, and include a description of the principal risks
and uncertainties.
By order of the Board
Angus Macpherson
6 June 2025
Financial Statements
Statement of comprehensive income
For the year ended 31 March 2025
Year Ended 31 March 2025 Year Ended 31 March 2024
Note Revenue Capital Total Revenue Capital Total
£'000
£'000
£'000
£'000
£'000
£'000
Net Gains/(Losses) on Investments and Foreign Exchange
Net Gains on Investments at Fair Value 8 - 115,856 115,856 - 94,636 94,636
Net Losses on Foreign Exchange - (403) (403) - (817) (817)
Income
Dividends 2 65,353 3,944 69,297 65,350 6,560 71,910
Other Income 2 5,038 - 5,038 6,536 - 6,536
70,391 119,397 189,788 71,886 100,379 172,265
Expenses
AIFM Fee 3 (4,792) (12,620) (17,412) (5,130) (11,970) (17,100)
Other Expenses 4 (2,294) - (2,294) (1,774) - (1,774)
(7,086) (12,620) (19,706) (6,904) (11,970) (18,874)
Profit Before Finance Costs and Taxation 63,305 106,777 170,082 64,982 88,409 153,391
Finance Costs 5 (700) (1,885) (2,585) (751) (1,747) (2,498)
Profit Before Taxation 62,605 104,892 167,497 64,231 86,662 150,893
Tax Expense 6 (4,682) (9,119) (13,801) (5,366) (5,201) (10,567)
Profit for the Year 57,923 95,773 153,696 58,865 81,461 140,326
Profit Attributable to Equity Holders of the Company 57,923 95,773 153,696 58,865 81,461 140,326
Earnings per Share 7 5.41p 8.95p 14.36p 5.18p 7.17p 12.35p
• Under the Company's Articles of Association, the capital element
of return is not distributable.
• The total column of this statement represents the profit and
loss account of the Company.
• The accompanying notes are an integral part of the Financial
Statements.
Statement of financial position
As at 31 March 2025
Note As at 31 March 2025 As at 31 March 2024
£'000 £'000
Non-Current Assets
Investments at Fair Value Through Profit or Loss 8 2,002,617 1,995,232
Current Assets
Trade and Other Receivables 9 8,374 10,759
Cash and Cash Equivalents 75,549 145,736
Total Current Assets 83,923 156,495
Current Liabilities
Bank Loan 10 (80,000) (100,000)
Other Payables 10 (4,406) (6,401)
Provisions 11 (416) -
Total Current Liabilities (84,822) (106,401)
Net Current (Liabilities)/Assets (899) 50,094
Non-Current Liabilities
Capital Gains Tax Provision 6 (16,276) (10,463)
Total Assets Less Liabilities 1,985,442 2,034,863
Share Capital and Reserves
Equity Share Capital 12, 54,241 60,932
1(j)
Capital Redemption Reserve 1(j) 28,428 21,737
Capital Reserve 1(j) 1,334,729 1,388,186
Special Distributable Reserve 1(j) 433,546 433,546
Revenue Reserve 1(j) 134,498 130,462
Equity Shareholders' Funds 1,985,442 2,034,863
Net Asset Value Pence per Share((a)) 193.7 182.5
(a) Based on shares in issue excluding shares held in treasury.
The accompanying notes are an integral part of the Financial Statements.
The Financial Statements of Templeton Emerging Markets Investment Trust plc
(company registration number SC118022) were approved for issue by the Board
and signed on 6 June 2025.
Angus Macpherson Simon Jeffreys
Chairman Director
Statement of changes in equity
For the year ended 31 March 2025
Note Equity Share Capital Capital Special Revenue Total
Capital Redemption Reserve Distributable Reserve £'000
£'000 Reserve £'000 Reserve £'000
£'000 £'000
Balance at 31 March 2023 63,148 19,521 1,372,654 433,546 128,634 2,017,503
Profit for the Year - - 81,461 - 58,865 140,326
Equity Dividends 13 - - - - (57,037) (57,037)
Purchase and Cancellation of Own Shares 12 (2,216) 2,216 (65,929) - - (65,929)
Balance at 31 March 2024 60,932 21,737 1,388,186 433,546 130,462 2,034,863
(Loss)/Profit for the Year - - 95,773 - 57,923 153,696
Equity Dividends 13 - - - - (53,887) (53,887)
Purchase and Cancellation of Own Shares 12 (4,500) 4,500 (149,230) - - (149,230)
Cancellation of Treasury Shares 12 (2,191) 2,191 - - - -
Balance at 31 March 2025 54,241 28,428 1,334,729 433,546 134,498 1,985,442
The accompanying notes are an integral part of the Financial Statements.
Statement of cash flows
For the year ended 31 March 2025
Note For the Year to 31 March 2025 For the Year to 31 March 2024
£'000 £'000
Cash Flows From Operating Activities
Profit Before Taxation 167,497 150,893
Adjustments to Reconcile Profit Before Taxation to Cash Used in Operations:
Bank and Deposit Interest Income Recognised (5,015) (6,518)
Dividend Income Recognised (69,297) (71,910)
Finance Costs 2,585 2,498
Net Gains on Investments at Fair Value 8 (115,856) (94,636)
Net Losses on Foreign Exchange 403 817
Decrease/(Increase) in Debtors 85 (23)
Increase/(Decrease) in Creditors 10 (29)
Cash Used in Operations (19,588) (18,908)
Bank and Deposit Interest Received 5,089 6,434
Dividends Received 69,421 71,024
Bank Overdraft Interest Paid (2) (2)
Tax Paid (7,614) (9,945)
Net Realised Losses on Foreign Currency (82) (435)
Net Cash Inflow From Operating Activities 47,224 48,168
Cash Flows From Investing Activities
Purchases of Non-Current Financial Assets (402,009) (463,750)
Sales of Non-Current Financial Assets 509,268 553,641
Net Cash Inflow From Investing Activities 107,259 89,891
Cash Flows From Financing Activities
Equity Dividends Paid 13 (53,887) (57,037)
Purchase and Cancellation of Own Shares (149,034) (65,784)
Repayment of Fixed Term Loan (100,000) -
Drawdown of Revolving Credit Facility 80,000 -
Interest and Fees Paid on Bank Loans (2,165) (2,490)
Proceeds from Share Forfeiture 821 -
Refund of Unclaimed Dividends 220 -
Charity Donations (625) -
Net Cash Outflow From Financing Activities (224,670) (125,311)
Net (Decrease)/Increase in Cash (70,187) 12,748
Cash at the Start of the Year 145,736 132,988
Net Unrealised Gains/(Losses) on Foreign Currency Cash and Cash Equivalents 0 0
Cash at the End of the Year 75,549 145,736
The accompanying notes are an integral part of the Financial Statements.
Reconciliation of Liabilities Arising From Bank Loans
Liabilities as Cash Flows Profit & Loss Liabilities as
at 31 March 2024 £'000 £'000 at 31 March 2025
£'000 £'000
Revolving Credit Facility - 80,000 - 80,000
- Interest and Fees Payable - (71) 838 767
Fixed Term Loan 100,000 (100,000) - -
- Interest and Fees Payable 349 (2,094) 1,745 -
Total Liabilities From Bank Loans 100,349 (22,165) 2,583 80,767
Liabilities as Cash Flows Profit & Loss Liabilities as
at 31 March 2023 £'000 £'000 at 31 March 2024
£'000 £'000
Revolving Credit Facility - - - -
- Fees Payable - (401) 401 -
Fixed Term Loan 100,000 - - 100,000
- Interest and Fees Payable 343 (2,089) 2,095 349
Total Liabilities From Bank Loans 100,343 (2,490) 2,496 100,349
Notes to the financial statements
As at 31 March 2025
1 Accounting Policies
(a) Basis of preparation
The Financial Statements of the Company have been prepared in accordance with
UK adopted International Accounting Standards. The Financial Statements have
also been prepared in accordance with the Statement of Recommended Practice
('SORP') for investment trusts issued by the Association of Investment
Companies ('AIC') and updated in July 2022 insofar as the SORP is compatible
with International Accounting Standards.
The Financial Statements have been prepared on the historical cost basis,
except for the measurement at fair value of certain financial instruments. All
financial assets and financial liabilities are recognised (or derecognised) on
the date of the transaction using 'trade date accounting'. The principal
accounting policies adopted are set out below.
Adoption of new and revised Accounting Standards
At the date of authorisation of these Financial Statements, the following
standards were assessed to be relevant and are effective for annual periods
beginning on or after 1 January 2024:
• IAS 1 Amendments: Classification of Liabilities as Current or
Non-Current. This amendment is designed to help preparers determine whether
debt and other liabilities in the statement of financial position with an
uncertain settlement date should be classified as current or non-current.
The amendments listed above did not have any impact on the amounts recognised
in the current reporting period.
At the date of authorisation of these Financial Statements, the following
standards and interpretations which have not been applied in these Financial
Statements were in issue but not yet applicable:
Accounting Standards Effective Date for Annual Periods Beginning On or After
IAS 21 Amendments: Lack of Exchangeability 1 January 2025
The Directors expect that the amendments listed above will have either no
impact or that any impact will not be material to the Financial Statements of
the Company in the next reporting periods.
Going concern
The Directors have a reasonable expectation that the Company has sufficient
resources to continue in operational existence for the period to 31 March
2027, which is at least 12 months from the date of the approval of these
Financial Statements. The Directors reviewed income forecasts covering the
next two financial years, including interest and fees arising from the
revolving credit loan facility. The Directors considered the principal and
emerging risks and uncertainties disclosed in the full Annual Report.
At 31 March 2025, the Company had net current liabilities of £899,000 (31
March 2024: net current assets of £50,094,000). In addition, the Company
holds a portfolio of largely liquid assets that, if required, can be sold to
maintain adequate cash balances to meet its expected cash flows, including
current liabilities relating to the loans under the £122 million
multi-currency revolving credit facility which will mature on 30 January 2026.
The Directors also reviewed scenarios of a significant drop in value of the
assets and noted that in those scenarios they would still be significantly
higher than the Company's liabilities. They have also confirmed the resiliency
of the Company's key service providers and are satisfied that their
contingency plans and working arrangements are sustainable.
The Board has established a framework of prudent and effective controls
performed periodically by the Audit and Risk Committee, which enable risks to
be assessed and managed. Therefore, the going concern basis has been adopted
in preparing the Company's Financial Statements. The Going Concern statement
is set out in the full Annual Report.
Functional currency
As the Company is a UK investment trust, whose share capital is issued in the
UK and denominated in sterling, the Directors consider that the functional
currency of the Company is sterling.
Estimates, assumptions and judgements
There have been no significant estimates, assumptions or judgements for the
year.
In preparing these Financial Statements, the Directors have considered the
impact of climate change as a principal risk as set out in the full Annual
Report and have concluded that there was no further impact of climate change
to be considered as the investments are valued based on market pricing. In
line with UK adopted International Accounting Standards the investments are
valued at fair value, which for the Company are the bid prices quoted on the
relevant stock exchange at the date of the Statement of Financial Position and
therefore reflect market participants' views of climate change risk on the
investments held.
(b) Presentation of statement of comprehensive income
To reflect accurately the activities of an investment trust company and in
accordance with guidance issued by the AIC, supplementary information which
analyses the Statement of Comprehensive Income between items of a revenue and
capital nature has been presented within the Statement of Comprehensive
Income. In accordance with the Company's Articles of Association, net capital
profits may not be distributed by way of dividend. Additionally, the net
revenue is the measure that the Directors believe appropriate in assessing the
Company's compliance with certain requirements set out in Section 1158 of the
Corporation Tax Act 2010.
(c) Income
Dividends receivable on equity shares are treated as revenue for the year on
an ex-dividend basis. Where no ex-dividend date is available, dividends are
recognised on their due date. Provision is made for any dividends not expected
to be received.
Where the Company has elected to receive its dividends in the form of
additional shares rather than in cash, the amount of the cash dividend is
recognised in the revenue column of the Statement of Comprehensive Income. Any
excess in the value of the shares received over the amount of the cash
dividend forgone is recognised in the capital column of the Statement of
Comprehensive Income.
Special dividends receivable are treated as repayment of capital or as revenue
depending on the facts of each particular case. Interest on bank deposits is
recognised on an accrual basis.
Stock lending income is shown gross of associated costs and recognised in
revenue as earned.
(d) Expenses
All expenses are accounted for on an accrual basis and are charged through the
revenue and capital sections of the Statement of Comprehensive Income
according to the Directors' expectation of future returns except as follows:
• Expenses relating to the purchase or disposal of an investment
are treated as capital. Details of transaction costs on purchases and sales of
investments are disclosed in Note 8; and
• Expenses are treated as capital where a connection with the
maintenance or enhancement of the value of the investments can be
demonstrated. From 1 October 2024, the allocation of the annual AIFM fee to
the capital account was changed from 70% to 75%, with the remainder being
allocated to revenue. The Board believes that this is more reflective of the
expected long-term split of returns between capital and revenue.
(e) Finance costs
Finance costs relating to bank loans are accounted for on an accrual basis
using the effective interest method in the Statement of Comprehensive Income
according to the Directors' expectations of future returns. Finance costs
relate to interest and fees on bank loans and overdrafts. From 1 October 2024,
the allocation of finance costs to the capital account, except for interest
and fees on overdrafts, was changed from 70% to 75%. The Board believes that
this is more reflective of the expected long-term split of returns between
capital and revenue.
(f) Taxation
The tax expense represents the sum of current and deferred tax. Tax
receivables will be recognised when it is probable that the benefit will flow
to the entity and the benefit can be reliably measured. In line with the
recommendations of the SORP, the allocation method used to calculate tax
relief on expenses presented against capital returns in the supplementary
information in the Statement of Comprehensive Income is the 'marginal basis'.
Under this basis, if taxable income is capable of being offset entirely by
expenses presented in the revenue return column of the Statement of
Comprehensive Income, then no tax relief is transferred to the capital return
column.
Deferred taxation is recognised in respect of all taxable temporary
differences that have originated but not reversed at the year-end date, where
transactions or events that result in an obligation to pay more tax in the
future or rights to pay less tax in the future have occurred at the year-end
date.
This is subject to deferred tax assets only being recognised to the extent
that it is probable that taxable profit will be available against which the
deductible temporary difference can be utilised. Deferred tax assets and
liabilities are measured at the rates applicable to the legal jurisdictions in
which they arise.
Due to the Company's status as an investment trust company, and its intention
to continue to meet the eligibility conditions of Section 1158 of the
Corporation Tax Act 2010 and the ongoing requirements of The Investment Trust
(Approved Company) (Tax) Regulations 2011, the Company has not provided
deferred tax in respect of UK corporation tax on any capital gains and losses
arising on the revaluation or disposal of investments. Where appropriate, the
Company provides for deferred tax in respect of overseas taxes on any capital
gains arising on the revaluation of investments.
The carrying amount of deferred tax assets is reviewed at each year-end date
and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
(g) Investments held at fair value through profit or loss
The Company classifies its equity investments based on their contractual cash
flow characteristics and the Company's business model for managing the assets.
The Company's business is investing in financial assets with a view to
profiting from their total return in the form of revenue and capital growth.
This portfolio of financial assets is managed, and its performance evaluated
on a fair value basis, in accordance with a documented investment strategy,
and information about the portfolio is provided internally on that basis to
the Company's Directors and other key management personnel. Equity investments
do not meet the contractual cash flows test so are measured at fair value.
Accordingly, upon initial recognition, all the Company's non-current asset
investments are held at 'fair value through profit or loss'. They are included
initially at fair value, which is taken to be their cost excluding expenses
incidental to the acquisition.
Subsequently, the investments are valued at 'fair value', which is measured as
follows:
The fair value of financial instruments at the year-end date is, ordinarily,
based on the latest quoted bid price at, or before, the US market close
(without deduction for any of the estimated future selling costs), if the
instrument is held in active markets. This represents a Level 1 classification
under IFRS 13. For all financial instruments not traded in an active market or
where market price is not deemed representative of fair value, valuation
techniques are employed to determine fair value. Valuation techniques include
the market approach (i.e. using recent arm's length market transactions
adjusted as necessary and reference to the market value of another instrument
that is substantially the same) and the income approach (i.e., discounted cash
flow analysis making use of available and supportable market data as
possible).
Gains and losses arising from changes in fair value are included in the net
profit or loss for the period as a capital item in the Statement of
Comprehensive Income.
(h) Foreign currencies
Transactions involving foreign currencies are translated to sterling (the
Company's functional currency) at the spot exchange rates ruling on the date
of the transactions. Assets and liabilities in foreign currencies are
translated at the rates of exchange at the year-end date. Foreign currency
gains and losses are included in the Statement of Comprehensive Income and
allocated as capital or income depending on the nature of the transaction
giving rise to the gain or loss.
(i) Financial instruments
Cash comprises cash in hand and demand deposits. Cash equivalents are
short-term, highly liquid investments that are readily convertible to known
amounts of cash that are subject to an insignificant risk of changes in value.
Bank loans are classified as financial liabilities at amortised cost. They are
initially measured as the proceeds net of direct issue costs and subsequently
measured at amortised cost. Interest payable on the bank loan is accounted for
on an accrual basis in the Statement of Comprehensive Income. The amortisation
of direct issue costs is accounted for on an accrual basis in the Statement of
Comprehensive Income using the effective interest method.
(j) Share capital and reserves
Equity Share Capital - represents the nominal value of the issued share
capital. This reserve is not distributable.
Capital Redemption Reserve - represents the nominal value of shares
repurchased and cancelled. This reserve is not distributable.
Capital Reserve - gains and losses on realisation of investments; changes in
fair value of investments which are readily convertible to cash, without
accepting adverse terms; realised exchange differences of a capital nature;
changes in the fair value of investments that are not readily convertible to
cash, without accepting adverse terms; and the amounts by which other assets
and liabilities valued at fair value differ from their book value are within
this reserve. Additionally, from 1 October 2024 75% (prior to 1 October 2024:
70%) of the annual AIFM fee and finance costs are charged to this reserve in
accordance with accounting policies 1(d) and 1(e). Purchases of the Company's
own shares are funded from the realised component of the Capital Reserve. The
Company's Articles of Association preclude it from making any distribution of
capital profits by way of dividend. If treasury shares are subsequently
cancelled, the nominal value is transferred out of Equity Share Capital and
into the Capital Redemption Reserve.
Special Distributable Reserve - reserve created upon the transfer of the
balances of the Share Premium Account and of the Capital Redemption Reserve in
December 2008. This reserve is fully distributable.
Revenue Reserve - represents net income earned that has not been distributed
to shareholders. This reserve is fully distributable.
Income recognised in the Statement of Comprehensive Income is allocated to
applicable reserves in the Statement of Changes in Equity.
2 Income
2025 2024
Revenue Capital Total Revenue Capital Total
£'000
£'000
£'000
£'000
£'000
£'000
Dividends((a))
International Dividends 65,234 3,944 69,178 64,489 6,560 71,049
UK Dividends 119 - 119 861 - 861
65,353 3,944 69,297 65,350 6,560 71,910
Other Income
Bank and Deposit Interest 5,015 - 5,015 6,518 - 6,518
Stock Lending Income 23 - 23 18 - 18
5,038 - 5,038 6,536 - 6,536
Total 70,391 3,944 74,335 71,886 6,560 78,446
(a) The Company received special dividends amounting to £8.6 million
(2024: £8.2 million) of which £3.9 million (2024: £6.6 million) was
classified as capital and £4.7 million (2024: £1.6 million) was classified
as revenue.
3 AIFM Fee
2025 2024
Revenue Capital Total Revenue Capital Total
£'000
£'000
£'000
£'000
£'000
£'000
AIFM Fee 4,792 12,620 17,412 5,130 11,970 17,100
The AIFM fee is paid monthly and based on the month end total net assets of
the Company. From 1 July 2024, the AIFM fee was reduced to 1% of the first £1
billion of net assets, 0.70% of net assets between £1 billion and £2
billion, and 0.50% of net assets over £2 billion. The previous fee structure
was 1% of the first £1 billion of net assets, 0.75% of net assets between £1
billion and £2 billion, and 0.50% of net assets over £2 billion.
From 1 October 2024, 75% of the annual AIFM fee has been allocated to the
capital account, with the remainder being allocated to revenue. The previous
allocation was 70%.
4 Other Expenses
2025 2024
£'000
£'000
Custody Fees 502 432
Marketing Fees 352 344
Directors' Remuneration 344 333
Membership Fees 205 171
Tax Advisory Fees/(Tax Advisory Fees Net of Refund) 175 (98)
Registrar Fees 172 117
Depository Fees 169 166
Auditor's Remuneration
- Audit of the Annual Financial Statements 56 55
- Review of the Half Yearly Report 11 10
Broker Fees 43 40
Printing and Postage Fees 23 17
Other Expenses 242 187
Total 2,294 1,774
5 Finance Costs
2025 2024
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Fixed Term Loan 488 1,257 1,745 629 1,466 2,095
Revolving Credit Facility 210 628 838 120 281 401
Bank Overdraft Interest 2 - 2 2 - 2
Total 700 1,885 2,585 751 1,747 2,498
6 Tax on Ordinary Activities
2025 2024
Revenue Capital Total Revenue Capital Total
£'000
£'000
£'000
£'000
£'000
£'000
Irrecoverable Overseas Withholding Tax 4,682 - 4,682 5,366 - 5,366
Capital Gains Tax Paid - 3,306 3,306 - 4,482 4,482
Total Current Tax 4,682 3,306 7,988 5,366 4,482 9,848
Capital Gains Tax Provision - 5,813 5,813 - 719 719
Total 4,682 9,119 13,801 5,366 5,201 10,567
2025 2024
£'000
£'000
Profit Before Taxation 167,497 150,893
Theoretical Tax at UK Corporation Tax Rate of 25% 41,874 37,723
Effects of:
- Capital Element of (Profit)/Loss (29,849) (25,095)
- Irrecoverable Overseas Withholding Tax 4,682 5,366
- Excess Management Expenses 2,733 2,224
- Overseas Capital Gains Tax Paid 3,306 4,482
- Dividends Not Subject to Corporation Tax (14,543) (14,421)
- Movement in Overseas Capital Gains Tax Liability 5,813 719
- UK Dividends (30) (215)
- Overseas Tax Expensed (185) (216)
Actual Tax Charge 13,801 10,567
As at 31 March 2025 the Company had unutilised management expenses and
non-trade deficits of £315.3 million carried forward (2024: £304.4 million).
These balances have been generated because a large part of the Company's
income is derived from dividends which are not taxed. Based on current UK tax
law, the Company is not expected to generate taxable income in a future period
in excess of deductible expenses for that period and, accordingly, is unlikely
to be able to reduce future tax liabilities by offsetting these excess
management expenses. These excess management expenses are therefore not
recognised as a deferred tax asset of £78.8 million (2024: £76.1 million)
based on a prospective corporation tax rate of 25% (2024: 25%). The UK
corporation tax rate is currently 25%.
Movement in Provision for Capital Gains Tax((a))
2025 2024
£'000
£'000
Balance Brought Forward 10,463 9,744
Charge For the Year 9,119 5,201
Capital Gains Tax Paid (3,306) (4,482)
Balance Carried Forward 16,276 10,463
(a) A provision for deferred capital gains tax has been recognised in
relation to unrealised gains for holdings in India.
7 Earnings per Share
2025 2024
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Earnings 57,923 95,773 153,696 58,865 81,461 140,326
2025 2024
Revenue Capital Total Revenue Capital Total
pence
pence
pence
pence
pence
pence
Earnings per Share 5.41 8.95 14.36 5.18 7.17 12.35
The earnings per share is based on the profit attributable to equity holders
and on the weighted average number of shares in issue, excluding shares held
in treasury, during the year of 1,070,018,105 (year to 31 March 2024:
1,136,517,365).
8 Financial Assets - Investments
2025 2024
£'000
£'000
Opening Investments
Book Cost 1,740,112 1,705,635
Net Unrealised Gains 255,120 287,140
Opening Fair Value 1,995,232 1,992,775
Movements in the Year
Additions at Cost 399,390 463,628
Disposals Proceeds (507,861) (555,807)
Net Gains on Investments at Fair Value 115,856 94,636
2,002,617 1,995,232
Closing Investments
Book Cost 1,710,894 1,740,112
Net Unrealised Gains 291,723 255,120
Closing Investments 2,002,617 1,995,232
All investments have been recognised at fair value with gains and losses
recorded through the Statement of Comprehensive Income. Transaction costs for
the year on purchases were £404,000 (2024: £546,000) and transaction costs
for the year on sales were £978,000 (2024: £1,210,000). The aggregate
transaction costs for the year were £1,382,000 (2024: £1,756,000).
2025 2024
£'000
£'000
Net Gains/(Losses) on Investments at Fair Value Comprise:
Net Realised Gains on Sale of Investments at Fair Value 79,253 126,656
Net Movement in Unrealised Gains/(Losses) 36,603 (32,020)
Net Gains on Investments at Fair Value 115,856 94,636
9 Trade and Other Receivables
2025 2024
£'000
£'000
Dividends Receivable 8,153 8,277
Overseas Tax Recoverable 142 516
Sales Awaiting Settlement 55 1,783
Other Debtors 24 183
Total 8,374 10,759
10 Current Payables
2025 2024
£'000
£'000
Revolving Credit Facility Payable 80,000 -
AIFM Fee 1,446 1,369
Purchase of Investments for Future Settlement 1,048 3,667
Interest and Fees on Revolving Credit Facility 767 -
Amounts Owed for Share Buybacks 658 462
Accrued Expenses 487 554
Fixed Term Loan - 100,000
Interest and Fees on Fixed Term Loan - 349
Total 84,406 106,401
Fixed term loan
On 31 January 2020, the Company entered into a term loan (the 'term loan') for
a period of five years with Scotiabank Europe plc for £100 million. With
effect from 28 September 2022, the term loan was transferred by novation from
Scotiabank Europe plc to The Bank of Nova Scotia, London Branch. All other
contractual terms and conditions remained the same. The term loan was fully
repaid upon its maturity on 31 January 2025.
The term loan incurred interest at the fixed rate of 2.089%. Under the
conditions of the term loan, the net assets were not to be less than £1,015
million and the adjusted net asset coverage to all borrowings was not to be
less than 3.5:1.
The facility was shown at amortised cost. From 1 October 2024, interest costs
were charged to capital (75%) and revenue (25%). This is in accordance with
the Company's revised accounting policies. Previously, interest costs were
charged to capital (70%) and revenue (30%). The Board believes that this is
more reflective of the expected long-term split of returns between capital and
revenue.
Revolving credit facility
On 31 January 2025, the Company entered into a £122 million multi-currency
unsecured revolving credit facility (the 'facility') for a period of one year
with The Bank of Nova Scotia, London Branch.
The fee on unutilised commitments is a flat fee of 0.40% per annum.
Under the facility balances can be drawn down in GBP, USD or CNH. The interest
margin is 1.10% as follows: USD drawdowns incur interest at 1.10% per annum
over the daily secured overnight financing rate ('SOFR') administered by the
Federal Reserve Bank of New York, GBP drawdowns incur interest at 1.10% per
annum over the daily sterling overnight index average ('SONIA') published by
the Bank of England and CNH drawdowns incur interest at 1.10% per annum over
the Hong Kong Interbank Offered Rate ('HIBOR') as quoted by the Hongkong and
Shanghai Banking Corporation Limited.
Under the terms of the facility, the net assets cannot be less than £1,015
million and the adjusted net asset coverage to all borrowings cannot be less
than 3.5:1.
On 31 January 2025, the Company drew down £80 million in GBP from the
revolving credit facility, of which £40 million is repayable within three
months. The remaining £40 million is repayable within six months. Facility
drawdowns are shown at amortised cost and revalued for exchange rate
movements. Any gain or loss arising from changes in exchange rates is included
in the capital reserves and shown in the capital column of the Statement of
Comprehensive Income. Interest costs are charged to capital (75%) and revenue
(25%) in accordance with the Company's accounting policies.
11 Provisions
2025 2024
£'000
£'000
Provision for claims arising from share forfeitures 416 -
Total 416 -
The Company completed a shareholder tracing exercise for unidentified
shareholdings and completed a legal forfeiture and disposal exercise. This
resulted in £821,000 and £220,000 being returned to the Company for
forfeited shares and unclaimed dividends, respectively. A donation of
£625,000 was subsequently made by the Company to four charities selected by
the Board. The remaining £416,000 will be kept for a period of 3 years in the
case that verified ownership is established. Further details can be found in
the full Annual Report.
12 Equity Share Capital
2025 2024
Ordinary Shares In Issue £'000 Number £'000 Number
Opening Ordinary Shares of 5 Pence 55,741 1,114,818,617 57,957 1,159,138,372
Purchase and Cancellation of Own Shares (4,500) (89,989,892) (2,216) (44,319,755)
Closing Ordinary Shares of 5 Pence 51,241 1,024,828,725 55,741 1,114,818,617
2025 2024
Ordinary Shares Held In Treasury £'000 Number £'000 Number
Opening Ordinary Shares of 5 Pence 5,191 103,825,895 5,191 103,825,895
Cancellation of Shares (2,191) (43,825,895) - -
Closing Ordinary Shares of 5 Pence 3,000 60,000,000 5,191 103,825,895
Total Ordinary Shares In Issue and Held In Treasury at the End of the Year 54,241 1,084,828,725 60,932 1,218,644,512
The Company's shares (except those held in treasury) have unrestricted voting
rights at all general meetings, are entitled to all of the profits available
for distribution by way of dividend and are entitled to repayment of all of
the Company's capital on winding up.
During the year, 89,989,892 shares were bought back for cancellation at a cost
of £149,230,200 (2024: 44,319,755 shares were bought back for cancellation at
a cost of £65,929,000). All shares bought back in the year were cancelled,
with none being placed in treasury (2024: no shares were placed into
treasury).
On 25 March 2025, 43,825,895 shares held in Treasury were cancelled. Following
cancellation, 60,000,000 shares remained in Treasury.
13 Dividends
2025 2024
Rate (pence) £'000 Rate (pence) £'000
Declared and Paid in the Financial Year
Dividend on Shares:
Final Dividends for the Years Ended 31 March 2024 and 31 March 2023 3.00 32,906 3.00 34,562
Interim Dividends for the Six-Month Periods Ended 30 September 2024 and 30 2.00 20,981 2.00 22,475
September 2023
Total 5.00 53,887 5.00 57,037
Proposed for Approval at the Company's AGM
Dividend on Shares:
Final Dividend for the Year Ended 31 March 2025 3.25 33,046 3.00 33,138
Dividends are recognised when the shareholders' right to receive the payment
is established. In the case of the final dividend, this means that it is not
recognised until approval is received from shareholders at the AGM. The
proposed final dividend of 3.25 pence per share will be funded from the
revenue reserve and the payment of this dividend will not threaten the going
concern or viability of the Company.
14 Related Party Transactions
There were no transactions with related parties, other than the fees paid to
the Directors and the AIFM during the financial years ended 31 March 2025 and
31 March 2024 respectively, which have a material effect on the results or the
financial position of the Company. Details of fees paid to the Directors and
details of the fee paid to the AIFM are included in the full Annual Report.
15 Risk Management
In pursuing the Company's objective, as set out in the full Annual Report, the
Company holds a number of financial instruments which are exposed to a variety
of risks that could result in either a reduction in the Company's net assets
or a reduction in the profits available for dividends.
The main risks arising from the Company's financial instruments are investment
and concentration risk, market risk (which comprises market price risk,
foreign currency risk and interest rate risk), liquidity risk and counterparty
and credit risk.
The objectives, policies and processes for managing these risks, and the
methods used to measure the risks, are set out below. These policies have
remained unchanged since the beginning of the year to which these Financial
Statements relate.
Investment and concentration risk
The Company may invest a greater portion of its assets than the benchmark in
the securities of one issuer, securities of a particular country, or
securities within one sector. As a result, there is the potential for an
increased concentration of exposure to economic, business, political or other
changes affecting similar issues or securities, which may result in greater
fluctuation in the value of the portfolio. Investment risk and a certain
degree of concentration risk is a known and necessary effect of the stated
investment approach in line with the investment policy. The Directors
regularly review the portfolio composition and asset allocation and discuss
related developments with the Investment Managers. Security, country, and
sector concentrations are monitored by the Manager's risk and compliance teams
on a regular basis and any concerns are highlighted to the Investment Managers
for remedial action and brought to the attention of the Directors.
Market price risk
Market risk arises mainly from uncertainties about future prices of financial
instruments held. It represents the potential loss that the Company might
suffer through holding market positions in the face of price movements.
The Directors meet quarterly to consider the asset allocation of the portfolio
and to discuss the risks associated with particular securities, countries or
sectors. The Investment Managers select securities in the portfolio in
accordance with the investment policy, and the overall asset allocation
parameters described above, and seek to ensure that individual stocks also
meet the intended risk/reward profile.
The Company does not use derivative instruments to hedge the investment
portfolio against market price risk.
100% (2024: 100%) of the Company's investment portfolio is listed on stock
exchanges. If share prices as at 31 March 2025 had decreased by 30% (2024: 30%
decrease) with all other variables remaining constant, the Statement of
Comprehensive Income capital return and the net assets attributable to equity
shareholders would have decreased by £600,785,000 (2024: £598,570,000). A
30% increase (2024: 30% increase) in share prices would have resulted in a
proportionate equal and opposite effect on the above amounts, on the basis
that all other variables remain constant.
Foreign currency risk
Currency translation movements can significantly affect the income and capital
value of the Company's investments, as the majority of the Company's assets
and income are denominated in currencies other than sterling, which is the
Company's functional currency.
The Investment Managers have identified three principal areas where foreign
currency risk could affect the Company:
• Movements in rates affect the value of investments;
• Movements in rates affect short-term timing differences; and
• Movements in rates affect the income received.
The Company does not hedge the sterling value of investments that are priced
in other currencies. The Company may be subject to short-term exposure to
exchange rate movements, for instance where there is a difference between the
date on which an investment purchase or sale is entered into and the date on
which it is settled.
The Company receives income in currencies other than sterling and the sterling
values of this income can be affected by movements in exchange rates. The
Company converts all receipts of income into sterling on or near the date of
receipt. However, it does not hedge or otherwise seek to avoid rate movement
risk on income accrued but not received.
The fair value of the Company's items denominated in a foreign currency as at
31 March are shown below:
2025
Currency Trade and Cash at Bank Trade, Bank Loans, Total Net Foreign Investments at
Other Receivables £'000 and Other Payables Currency Exposure Fair Value Through
£'000 £'000 £'000 Profit or Loss
£'000
Hong Kong dollar 51 - - 51 390,136
Taiwan dollar 1,165 - (406) 759 335,133
Korean won 5,373 - - 5,373 310,143
Indian rupee - - (16,312) (16,312) 280,837
US dollar 889 - (609) 280 198,907
Euro - - - - 132,880
Other 872 48 (1) 919 352,538
2024
Currency Trade and Cash at Bank Trade, Bank Loans, Total Net Foreign Investments at
Other Receivables £'000 and Other Payables Currency Exposure Fair Value Through
£'000 £'000 £'000 Profit or Loss
£'000
Korean won - - - - 426,407
Hong Kong dollar 1,783 1 - 1,784 371,454
Taiwan dollar 516 - - 516 358,245
Indian rupee - - - - 246,587
US dollar - - - - 183,034
Other - 99 (3,667) (3,568) 382,705
The above tables are based on the currencies of the country where shares are
listed rather than the underlying currencies of the countries where the
companies earn revenue.
As at 31 March 2025, 70.2% (2024: 69.3%) of investments denominated in US
dollar, Hong Kong dollar and Euro are Chinese companies with exposure to the
Chinese yuan. The total exposure to Chinese yuan was £549.3 million (2024:
£490.3 million), out of which £42.2 million (2024: £33.0 million) were
investments denominated in Chinese yuan.
Foreign currency sensitivity
The following table illustrates the foreign currency sensitivity on the
revenue and capital return. The revenue return impact represents the impact on
total income (which is mainly comprised of dividend income) had sterling
strengthened relative to all currencies by 10% throughout the year.
The capital return impact represents the impact of the financial assets and
liabilities of the Company if sterling had strengthened by 10% relative to all
currencies on the reporting date. With all other variables held constant, the
revenue and capital return would have decreased by the below amounts.
2025 2024
Revenue Return Capital Return Revenue Return Capital Return
£'000 £'000 £'000 £'000
Hong Kong Dollar 72 39,013 655 37,324
Taiwan Dollar 888 33,589 1,253 35,876
Korean Won 789 31,552 853 42,641
Indian Rupee 243 26,452 237 24,659
US Dollar 54 19,979 789 18,303
Other 4,482 48,633 2,663 37,914
Total 6,528 199,218 6,450 196,717
A 10% weakening of sterling against all currencies would have resulted in an
equal and opposite effect on the above amounts.
Interest rate risk
The Company is permitted to invest in interest bearing securities. Any change
to the interest rates relevant to particular securities may result in income
either increasing or decreasing, or the Investment Managers being unable to
secure similar returns on the expiry of contracts or the sale of securities.
In addition, changes to prevailing rates or changes in expectations of future
rates may result in an increase or decrease in the value of the securities
held and the interest payable on bank loans when interest rates are reset.
The fixed term loan incurred a fixed rate of interest and was carried at
amortised cost rather than fair value. Hence, movements in interest rates
would not affect net asset values, as reported under the Company's accounting
policies.
Interest rate risk profile
The exposure of the financial assets and liabilities to floating interest rate
risks at 31 March is shown below:
2025 2024
£'000 £'000
Cash 75,549 145,736
Bank loans - Revolving Credit Facility (80,000) -
Net Exposure at Year End (4,451) 145,736
Exposures vary throughout the year as a consequence of changes in the make-up
of the net assets of the Company. Cash balances are held on call deposit and
earn interest at the bank's daily rate. The Company's net assets are sensitive
to changes in interest rates on borrowings. There was no exposure to fixed
interest investment securities during the year or at the year end.
Interest rate sensitivity
If the above level of cash and revolving credit facility were maintained for a
year and interest rates were 100 basis points higher or lower, the net profit
after taxation would be impacted by the following amounts:
2025 2024
100 Basis Points 100 Basis Points 100 Basis Points 100 Basis Points
Increase in Rate Decrease in Rate Increase in Rate Decrease in Rate
£'000 £'000 £'000 £'000
Revenue 555 (555) 1,457 (1,457)
Capital (600) 600 - -
Total (45) 45 1,457 (1,457)
Liquidity risk
The Company's assets comprise mainly securities listed on the stock exchanges
of emerging economies. Liquidity can vary from market to market and some
securities may take a significant period to sell. As a closed ended investment
trust, liquidity risks attributable to the Company are less significant than
for an open-ended fund.
The risk of the Company not having sufficient liquidity at any time to meet
its obligations associated with financial liabilities is considered by the
Board to be mitigated, given the large number of quoted investments held in
the portfolio and the liquid nature of the portfolio of investments.
The Investment Managers review liquidity at the time of making each investment
decision and monitor the evolving liquidity profile of the portfolio
regularly.
The below table details the maturity profile of the Company's financial
liabilities as at 31 March 2025, based on the earliest date on which payment
can be required and current exchange rates as at the balance sheet date:
As at 31 March 2025 In One Year More Than One Year More Than Two Years More Than Total £'000
or Less £'000 and Not Later Than and Not Later Than Three Years £'000
Two Years £'000 Three Years £'000
Revolving Credit Facility 84,596 - - - 84,596
Fixed Term Loan - - - - -
Other Payables 4,055 - - - 4,055
Total 88,651 - - - 88,651
As at 31 March 2024 In One Year More Than One Year More Than Two Years More Than Total £'000
or Less £'000 and Not Later Than and Not Later Than Three Years £'000
Two Years £'000 Three Years £'000
Revolving Credit Facility - - - - -
Fixed Term Loan 102,095 - - - 102,095
Other Payables 6,052 - - - 6,052
Total 108,147 - - - 108,147
Counterparty and credit risk
Certain transactions in securities that the Company enters into expose it to
the risk that the counterparty will not deliver the investment (purchase) or
cash (in relation to sale or declared dividend) after the Company has
fulfilled its responsibilities. The Company only buys and sells through
brokers which have been approved by the Investment Managers as an acceptable
counterparty. Limits are set as to the maximum exposure to any individual
broker that may exist at any time. Total exposure is compared to monetary
limits that vary based on the size and creditworthiness of the counterparty.
Counterparty spreads and capital ratios are reviewed periodically. The amounts
under trade and other receivables and cash and cash equivalents shown in the
Statement of Financial Position represent the maximum credit risk exposure at
the year end.
The Company has an ongoing contract with its custodian (JPMorgan Chase Bank)
for the provision of custody services.
As part of the annual risk and custody review, the Company reviewed the
custody services provided by JPMorgan Chase Bank and concluded that, while
there are inherent custody risks in investing in emerging markets, the custody
network employed by TEMIT has appropriate controls in place to mitigate those
risks, and that these controls are consistent with recommended industry
practices and standards.
Securities held in custody are held in the Company's name or to its accounts.
Details of holdings are received and reconciled monthly. Cash is actively
managed by Franklin Templeton and is typically invested in overnight time
deposits in the name of TEMIT with an approved list of counterparties. Any
excess cash not invested will remain in a JPMorgan Chase interest bearing
account. There is no significant risk on debtors and accrued income or tax at
the year end.
During the year, the Company participated in a securities lending programme
through JPMorgan as the lending agents. All securities on loan are Level 1
financial instruments, and their value is determined by reference to the
trading prices on the stock market. As at 31 March 2025, the market value of
the securities on loan and the corresponding collateral received were as
follows:
31 March 2025 31 March 2024
Counterparty Market Value of Market Value of Market Value of Market Value of
Securities on Collateral Securities on Collateral
Loan £'000 Received £'000 Loan £'000 Received £'000
Merrill Lynch International - - 3,831 5,082
UBS - - 211 276
Total - - 4,042 5,358
The maximum aggregate value of securities on loan at any time during the year
was £3,887,541 (2024: £5,892,895). Full details of the collateral received
is noted in the full Annual Report.
Fair value
Fair values are derived as follows:
• Where assets are denominated in a foreign currency, they are
converted into the sterling amount using period-end rates of exchange;
• Investments held by the Company on the basis set out in the
accounting policies included in Note 1; and
• Other financial assets and liabilities at the carrying value
which is a reasonable approximation of the fair value.
The tables below analyse financial instruments carried at fair value by
valuation method. The different levels have been defined as follows:
Level 1. Quoted prices (unadjusted) in active markets for identical assets
and liabilities;
Level 2. Inputs other than quoted prices included with level 1 that are
observable for the asset or liability, either directly (prices) or indirectly
(derived from prices); and
Level 3. Inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
The hierarchy valuation of listed investments through profit and loss is shown
below:
31 March 2025 31 March 2024
Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Listed Investments 2,002,617 - - ((a)) 2,002,617 1,995,232 - -((a)) 1,995,232
(a) As at 31 March 2025 investments in Russian securities, LUKOIL and
Sberbank of Russia, continue to be fair valued at zero and classified as Level
3 due to the inability of the Company to access the local Moscow equity
markets and the very limited access to the over-the-counter market. The fair
value of these investments is based on a liquidity discount of 100% to the
last traded price for an exit price of zero.
The following table presents the movement in Level 3 investments for the year
ended:
31 March 2025 31 March 2024
£'000 £'000
Opening Balance - -
Additions at Cost - Purchase of Level 3 Assets 37,952((a)) -
Transfers From Level 3 Into Level 1 (55,095)((a)) -
Disposal Proceeds - Sale of Level 3 Assets - (7,766)((b))
Net Gains on Investments at Fair Value 18,122 7,766
Net Losses on Foreign Exchange (979) -
Level 3 Closing Balance - -
(a) Represents the investment in Swiggy which was acquired during the year
and initially classified as Level 3 due to its unlisted status. Following an
initial public offering and its subsequent listing on 13 November 2024, the
holding in Swiggy was transferred from Level 3 to Level 1.
(b) Represents the sale of the holding in Yandex on 23 May 2023 for
£7,766,000.
The fixed term loan was shown at amortised cost within the Statement of
Financial Position. If the fixed term loan was shown at fair value the impact
would be:
31 March 2025 31 March 2024
£'000 £'000
Fixed Term Loan at Amortised Cost - 100,000
Fixed Term Loan at Fair Value - 96,770
Increase in Net Assets - 3,230
The fair value of the fixed term loan included in the table above was
calculated by aggregating the expected future cash flows which was discounted
at a rate comprising the sum of the SONIA rate plus a spread. The fixed term
loan at fair value was classed as Level 2. The fixed term loan matured on 31
January 2025.
16 Significant Holdings in Investee Undertakings
As at 31 March 2025, TEMIT had no significant holdings of 3% or more of the
issued class of security within the portfolio whose shares are admitted to
trading. As at 31 March 2024, TEMIT held 3% or more of the issued class of
security in the following portfolio holding whose shares are admitted to
trading:
31 March 2025 31 March 2024
Holding % of Issued Fair Value % of Issued Fair Value
Security Class £'000 Security Class £'000
Held by TEMIT Held by TEMIT
Haier Smart Home - - 3.0 9,072
17 Contingent Liabilities
No contingent liabilities existed as at 31 March 2025 or 31 March 2024.
18 Contingent Assets
No contingent assets existed as at 31 March 2025 or 31 March 2024.
19 Financial Commitments
No financial commitments existed as at 31 March 2025 or 31 March 2024.
20 Capital Management Policies and Procedures
The Company's objective is to provide long-term capital appreciation for
private and institutional investors seeking exposure to global emerging
markets, supported by a culture of both strong customer service and corporate
governance.
The Board monitors and regularly reviews the structure of the Company's
capital on an ongoing basis. This review includes the investment performance
and outlook, discount management mechanisms including share buybacks, gearing
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 Company's investment policy allows borrowing of up to 20% of net assets,
measured at the time of borrowing.
As at 31 March 2025, the Company had share capital and reserves of
£1,985,442,000 (31 March 2024: £2,034,863,000). The Company's policies and
procedures for managing capital are consistent with the previous year.
21 Events After the Reporting Period
The £40m tranche of debt matured on 30 April 2025, this was partly replaced
by borrowing CNH 300million, equivalent to £30.9 million at the time of
drawdown.
The proposed final dividend, which is disclosed in Note 13.
The statutory accounts for the period ended 31 March 2025 received an audit
report which was unqualified, did not include a reference to any matters to
which the Auditors drew attention by way of emphasis without qualifying the
report, and did not contain statements under section 498(2) and (3) of the
Companies Act 2006, and will be delivered to the Registrar of Companies.
The Annual Report and Accounts will be sent to Shareholders shortly. Copies
will be uploaded and available for viewing on the National Storage Mechanism,
copies will also be posted to the website www.temit.co.uk
(http://www.temit.co.uk/) and may also be requested during normal business
hours from Client Dealer Services at Franklin Templeton Investment Management
Limited on freephone 0800 305 306.
For further information please e-mail temitcosec@franklintempleton.com
(mailto:CompanySecretarialEdinburgh@franklintempleton.com)
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