TIDMMUT
RNS Number : 9834M
Murray Income Trust PLC
20 September 2023
Murray Income Trust PLC
Annual Report 30 June 2023
Investment Objective
The Company aims for a high and growing income combined with
capital growth through investment in a portfolio principally of UK
equities.
Performance Highlights
Net asset value total return(ABC) Share price total return(AB)
+8.8% +4.9%
2022: (3.5)% 2022: (0.7)%
Benchmark total return(AD) Ongoing charges(B)
+7.9% 0.50%
2022: +1.6% 2022: 0.48%
Earnings per share (revenue) Dividend per share
38.7p 37.50p
2022: 40.5p 2022: 36.00p
Discount to net asset value(BC) Dividend yield(B)
8.2% 4.5%
2022: 4.5% 2022: 4.3%
(A) Total return.
(B) Considered to be an Alternative Performance Measure.
(C) With debt at fair value.
(D) The Company's benchmark is the FTSE All-Share Index.
Chair's Statement
Highlights
-- We are celebrating both Murray Income's centenary and our
record of 50 consecutive years of dividend growth
-- Our objective is to achieve a high and growing income
combined with capital growth from a portfolio principally of UK
equities
-- The dividend yield is 4.5%, based on the year end share price
of 837p
-- Total dividends per share increased by 4.2% to 37.5p, the
50th consecutive year of dividend growth
-- NAV per share total return (AB) was +8.8%, ahead of the FTSE
All-Share Index at +7.9% but the share price total return was +4.9%
as the discount widened
(A) Total return
(B) With debt at fair value
Introduction
Welcome to the 100th annual report of Murray Income Trust. In my
last year as Chair, it is a pleasure to be able to report that the
Company is in good health and has had a good year. In this report
we will review the year just ended, look back over our 100-year
history, look forward to our centenary events and assess the
long-term outlook.
First, the headline numbers for the year to 30 June 2023. Helped
by a strong second half, NAV (net asset value per share, with debt
at fair value) total return was 8.8% over the year, outperforming
the FTSE All-Share Index total return of 7.9%. Your share price
total return at 4.9% lagged the NAV as the discount (based on NAV
with debt at fair value) widened from 4.5% to 8.2% over the year.
We announced on 2 August 2023 a fourth interim dividend of 12.75p
which takes the full year dividend up 4.2% to 37.5p per share,
marking the 50(th) consecutive year of dividend increases, and
representing a dividend yield of 4.5% at the 30 June 2023 share
price.
Centenary and History
Your Company was founded in Glasgow on 8 June 1923 as The Second
Scottish Western Investment Company, Limited with an initial share
capital of GBP500,000. The Company's NAV at 30 June 2023 was nearly
GBP1bn. That's quite some appreciation over 100 years although we
don't know the exact figures for shares issued and cancelled over
the early years so we cannot calculate a reliable annual return.
Back in 1923, the Company's objective was to invest in shares,
stocks, debentures, bonds, mortgages, obligations and securities of
any kind, issued or generated by any company, corporation or
undertaking of whatever nature, constituted or carrying on business
in the United Kingdom or in any colony or dependency or province
thereof, or in the United States of America or in any other foreign
country. That investment remit was exceptionally broad and similar
to many other generalist investment trusts of the era. The
portfolio was mainly invested into bonds and preference shares. The
move into equities or ordinary shares appears to have started in
the 1930s, probably prompted by rising defaults on bond holdings
during the 1930s depression.
The Company changed its name to The Caledonian Trust Company
Limited in 1960 and was administered by Brown, Fleming and Murray,
Glasgow chartered accountants, until the formation of Murray
Johnstone in 1968. In 1979 the Company added its Manager's name to
become Murray Caledonian Investment Trust Limited but remained a
generalist equity trust. With discounts wide and reflecting a
shareholder desire for investment trusts to specialise, in 1984 it
changed to its current name of Murray Income Trust PLC and to its
remit of investing for a high and growing income from a portfolio
predominantly of UK equities. Murray Johnstone was taken over by
Aberdeen Asset Management in 2000 and Murray Income has been part
of the abrdn stable ever since. Most of the older records were
destroyed by a serious flood in Murray Johnstone's offices in the
late 1970s. Facsimile records at Companies' House are in many cases
illegible so, sadly, it is not possible to construct any long term
performance records with a sufficient level of confidence.
One thing that we can confirm is the now fifty-year record of
consecutive dividend increases. It was the autumn of 1973 when your
Company last did not raise its dividend; the year of the miners'
strike and three-day week, the Arab-Israeli war and the oil price
shock. The Company's dividend per share has grown from 0.47p then
to 37.5p in 2023, representing a compound annual growth rate of
9.2%. A more realistic comparison is the 6.0% compound annual
growth rate since the change to a UK equity income remit in
1984.
The Association of Investment Companies (the "AIC") accords
Dividend Hero status to investment trusts which have raised their
annual dividend consecutively for twenty years or more. Maintaining
that Dividend Hero status and with a starting dividend yield level
of over 4% is both a source of pride for the Board and a priority
for the future.
Dividend
As outlined above, the Board announced on 2 August 2023 its
50(th) consecutive increase in the annual dividend to 37.5p.
Revenue per share for the year was 38.7p, down 4.4% from the
previous year's 40.5p. However, the 37.5p dividend was 103% covered
by net income earned during the year and the Company was able to
transfer the excess to bolster its revenue reserves, taking them
from 17.5p per share to 20.2p, equivalent to 54% (2022: 48%) of the
current annual dividend of 37.5p (2022: 36.0p). The Board gave
extensive consideration to how much to grow the dividend and how
much to add to reserves. Two factors influenced us in our decision.
First is that we prefer revenue reserves per share to be in the
range of one-half to a full year's dividend per share. Second is
that although our Manager projects that revenue per share may fall
for another year, dividend cover for UK companies has already
recovered to a very healthy 2.0x for calendar 2023 from 1.5x in
calendar 2021.
Investment Performance
Over the twelve months ended 30 June 2023, the Company's NAV per
share (with debt at fair value) rose 8.8% in total return terms, as
compared to the FTSE All-Share Index (the "Benchmark") return of
7.9%. The share price total return was 4.9% reflecting the discount
widening from 4.5% to 8.2% (measured based on NAV with debt at fair
value).
Positive contributors over the year included the Company's
long-term borrowings, sector allocation and individual holdings
such as Aveva and Sage. The largest positive contributor was the
favourable movement in the fair (or market) value of the Company's
long-term gearing: as interest rates rose, the market value of this
liability fell. The main negative contributors over the year were
stock-specific; Watkin Jones, Marshalls and Direct Line. Charles
Luke and Iain Pyle discuss performance in more detail in the
Investment Manager's Report.
Looking over longer periods ended 30 June 2023, the annualised
NAV (debt at fair value) performance is behind the Benchmark over
three years but ahead over five and ten years.
3 years ended 5 years ended 10 years ended
30 June 2023 30 June 2023 30 June 2023
(annualised) (annualised)
(annualised)
=============================== =============== =============== ================
Performance (total return) % % %
=============================== =============== =============== ================
Share price(A) (B) 7.3 5.6 5.7
=============================== =============== =============== ================
Net asset value per Ordinary
share(A) (BC) 8.3 5.3 6.4
=============================== =============== =============== ================
FTSE All-Share 10.0 3.1 5.9
=============================== =============== =============== ================
Source: abrdn & Morningstar
(A) Total return..
(B) Considered to be an Alternative Performance Measure..
(C) With debt at fair value.
Investment Process
Our Manager's investment process is best summarised as a search
for good quality companies at attractive valuations. The Manager
defines a quality company as one capable of strong and predictable
cash generation, sustainably high returns on capital and with
attractive growth opportunities. These typically result from a
sound business model, a robust balance sheet, good management and
strong environmental, social and governance characteristics. These
qualities helped avoid the worst of the dividend shocks during the
pandemic.
Investment People
abrdn is our appointed investment management company. Charles
Luke has been our lead portfolio manager since 2006 and works
alongside Rhona Millar and Co-Manager Iain Pyle, as members of
abrdn's 43-strong Developed Markets Equities team.
Driving Environmental, Social and Governance ("ESG") Change
ESG considerations are deeply embedded into the company analysis
carried out by our Manager which is able to draw on the expertise
of more than 60 in-house ESG specialists. The aim is to mitigate
risk and enhance returns and this results in frequent dialogue with
investee companies and helps to ensure that the companies in the
portfolio are acting in the best long-term interests of their
shareholders and society at large. The objective is to drive ESG
change.
It is important to note that the policy pursued by our Manager
on our behalf is dynamic rather than static. ESG conclusions change
if the inputs change: For example, one might look at Russia's
invasion of Ukraine and conclude that the social factor of security
and safety is more important now than previously considered.
Similarly, one might consider energy security be given a higher
weight relative to carbon dioxide emissions and come to a different
conclusion on holding an oil or gas stock.
The Investment Manager's Report contains further information on
how ESG factors are incorporated into the Managers' investment
approach. For more detailed information we would refer you to the
Sustainable Investment Report on our website at:
murray-income.co.uk .
Share Buybacks and Discount
Discounts across the investment trust sector have widened in the
past twelve months, including within the UK equity income sector.
The Board has thus decided to make more extensive use of its
buyback capability. Over the year, the discount widened from 4.5%
to 8.2% while the average discount was 7.4% and the range was
between 4.5% and 12.2% (all based on NAV with debt at fair value).
The Company bought back 5.0m shares during the year, representing
4.3% of shares in issue at the start of the year. No shares were
issued or sold from treasury.
The Board monitors the discount level closely and will again be
requesting shareholders' approval at the AGM to renew the Company's
buyback and issuance powers. As at 30 June 2023, there were
111,720,001 (2022: 116,690,472) Ordinary 25p shares in issue with
voting rights and 7,809,531 (2022: 2,839,060) shares held in
Treasury.
Ongoing Charges
Our largest cost is the investment management fee payable to
abrdn which is calculated on a sliding scale with a marginal rate
of 0.25% on assets over GBP450m. The effect of expanding the
Company in 2020 and keeping tight control of costs generally has
resulted in an overall ongoing charges rate of 0.50%, which the
Board considers good value compared to past history and also to
other funds in the closed- and open-ended industry.
Gearing
The Company has GBP100m of long-term borrowings with GBP40m due
in 2027 and GBP60m due in 2029 at a blended cost of 3.6%. Together
with a GBP50m short-term multicurrency facility with Bank of Nova
Scotia Limited, the Company has up to GBP150m of borrowing
facilities available representing 15.0% of net asset value. With
the beta of the investment portfolio (its sensitivity to changes in
the Benchmark) currently running at 0.9 (typical of the Investment
Manager's style), the Board believes that the appropriate neutral
gearing rate is 10%. At the year end the actual gearing rate was
10.4% (2022: 9.4%). The annualised cost of the Company's current
borrowings was 0.26% of NAV (2022: 0.23%).
Board Composition
As previously announced and after completing nearly ten full
years of service, I shall be retiring from the Board at the
conclusion of the centenary Annual General Meeting ("AGM"). Peter
Tait, currently Senior Independent Director, will take over as
Chair. Alan Giles will replace Peter as Senior Independent
Director. The other senior board position is Audit Committee Chair,
a post held by Stephanie Eastment since 2018.
Merryn Somerset Webb has informed us that she does not wish to
stand for re-election as a Director and so will retire from the
Board at the end of the AGM. This is to allow her to be able to
pursue conference hosting roles with interactive investor and
others. We will miss her knowledge of private investors and
marketing and markets in general. She leaves with our thanks and
best wishes.
The remaining Board members have started a recruitment exercise.
Sadly, I have to report that Jean Park passed away in May - Jean
was a much loved colleague and a former Director of this Company
until 2021.
Online Shareholder Presentation
The Company will hold an online shareholder presentation for
shareholders and other interested parties at 11.00am on 3 November
2023. This will feature your Chair and Investment Manager
discussing the outlook for the Company and answering your questions
live. Please submit questions in advance to murray.income@abrdn.com
or on the day via the event page which is also where you may
register:
https://www.workcast.com/register?cpak=6223673361069891
Centenary Annual General Meeting
The Company will hold its centenary AGM in the city of our
incorporation, at 12.30pm on Tuesday 7 November 2023 in The Glasgow
Royal Concert Hall. We hope to mark our centenary in style. One of
the advantages of investing via investment trusts is that all
shareholders have the opportunity to meet their Manager and the
Directors at the AGM. This year's meeting will commence with a
presentation on the Company and market outlook from Charles Luke.
There will then be the formal part of the AGM where shareholders
get to ask questions about the AGM resolutions and thereafter cast
their votes via a poll. After this will be a centenary lunch at
which shareholders will be able to chat to the Manager and
Directors. Shareholders may bring a guest with them to the
meeting.
Action to be Taken
If you wish to attend and are unsure how to register, please
send an email to: murray.income@abrdn.com .
Shareholders will find enclosed with this Annual Report an
Invitation Card and Form of Proxy for use in relation to the AGM.
Whether or not you propose to attend the AGM, you are encouraged to
complete the Form of Proxy in accordance with the instructions
printed on it and return it, with the Invitation Card if you wish,
in the prepaid envelope as soon as possible but in any event so as
to be received no later than 12.30pm on 3 November 2023. Completion
of a Form of Proxy does not prevent you from attending and voting
in person at the AGM if you wish to do so.
If you hold your shares in the Company via a share plan or a
platform and would like to attend and/or vote at the AGM, then you
will need to make arrangements with the administrator of your share
plan or platform. For this purpose, investors who hold their shares
in the Company via the abrdn Investments Plan for Children, the
abrdn Share Plan and/or the abrdn Investments Trust ISA will find a
Letter of Direction and Invitation Card enclosed. Shareholders are
encouraged to complete and return both the Letter of Direction and
Invitation Card in accordance with the instructions printed
thereon.
Further details on how to attend and vote at company meetings
for holders of shares via share plans and platforms can be found
at: www.theaic.co.uk/aic/how-to-vote-your-shares
I always welcome questions from our shareholders at the AGM.
Alternatively, shareholders may submit questions to the Board prior
to the meeting by sending an email to: murray.income@abrdn.com
.
Update
From 30 June 2023 to 15 September 2023, being the latest
practicable date prior to approval of this Report, the NAV per
share (with debt at fair value) returned 2.6% underperforming the
FTSE All-Share Index which returned 3.3%, both figures on a total
return basis.
A personal outlook
Over my term as a Director, I have invested around the same
amount buying Murray Income shares as I have been paid in
Directors' remuneration. I intend to keep the shares for the
long-term. Why? Firstly, the starting yield is important to me. My
long-term financial planning targets an overall compound annual
growth rate of 4%-5%. If I can achieve most of that from the
starting yield of 4.5% then the rest of the decision-making becomes
easier. If the dividend payments grow every year, that's even
better. How about inflation protection? If inflation remains high,
the value of my future income will be eroded. That's one reason I
favour Murray Income over long-term bonds. Bonds, by definition, do
not increase their dividend payments. Equities can, and abrdn's
quality bias means that I would expect Murray Income's holdings to
be more resilient in such a scenario. Not total protection, but
enough to keep me from worrying.
What about the outlook for capital growth? Obviously, this is
harder to predict given the number and scale of known and unknown
scenarios. But as Charles and Iain argue in their Investment
Manager's Report, UK equity valuations currently look unusually
cheap in absolute terms and relative to both their own history and
to world markets. The factors that have depressed UK valuations
(take your pick from politics, Covid, Brexit, productivity,
austerity, banks, quantitative easing and inflation) are not
necessarily permanent. The quality companies within the UK market
are to some extent insulated from these factors and have, in
certain cases, been going from strength to strength, helping
explain why so many have been taken over by foreign companies. If
these quality companies in the portfolio can keep on achieving
revenue growth, the outlook for capital growth is much
improved.
In closing I'll just focus on the investment numbers: the Murray
Income portfolio is presently trading on a price to earnings
multiple of 13.9x current year earnings. Average dividend cover for
those holdings is 2.0x. The current dividend yield for the Company
is 4.5% with that dividend having increased every year for the past
50 years. All this for an annual ongoing charges rate of around
0.50%.
May I thank you all for your support to me as Chair and for your
loyalty to the Company. It has been a great pleasure and privilege
to serve the Company. Murray Income will be in good hands under
Peter's leadership and I trust that you will share in its ongoing
success.
Neil Rogan
Chair
19 September 2023
Investment Manager's Report
Background
For the UK economy, the year to 30 June 2023 ("the Year") has
been characterised by high levels of inflation, monetary policy
tightening and concerns around a potential recession. Equity
markets have generally been more robust than might have been
expected against this backdrop. The UK equity market ended the year
+7.9% higher on a total return basis, although with the path to
that level less than smooth. In September 2022, it was UK politics
that influenced domestic market performance. The new Chancellor
Kwarteng's "mini budget" sparked a wave of selling of UK gilts and
a substantial weakening of the pound which led to the Bank of
England ("BoE") stepping in with emergency measures to stabilise
markets. UK government bond prices rose and the pound recovered
somewhat as first Chancellor Kwarteng and then Prime Minister Truss
resigned and many of their previously announced tax cut proposals
were reversed. Then, in March 2023, the banking sector created
volatility, first in the US when Silicon Valley Bank collapsed and
later in the month when concerns grew over the viability of Credit
Suisse which was ultimately acquired by UBS.
Less transitory than these events have been the persistently
high level of inflation and the ongoing response from central
banks. UK inflation, as measured by the Consumer Prices Index,
reached 11.1% in October, the highest level in more than four
decades. Annual inflation fell below 10% for the first time since
the summer of 2022 in April when the reading was 8.7%, but data for
May showed that core inflation, which excludes volatile fuel and
unprocessed food costs, continued to rise. The BoE acted to control
inflation by raising interest rates multiple times over the period,
with the policy rate increasing from 1.25% at the start of the Year
to 4.5% by the end of June 2023. After the year end, the BoE
subsequently surprised markets by hiking a further 0.5% in July,
and then again by an additional 0.25% in August, as inflation
exceeded expectations, although maintaining their forecast that
inflation will fall rapidly in the second half of 2023.
Despite rising interest rates, the UK has so far avoided a
technical recession (defined as two consecutive quarters of
negative growth in real GDP) and updated forecasts at the start of
the calendar year from the UK's Office for Budget Responsibility
showed they now expect the country to avoid a recession in 2023.
Economic data for the UK has been mixed over the period. GDP fell
by -0.3% in the quarter to September, followed by 0.1% increases in
the subsequent quarters to December and March. Purchasing Managers'
Index data continued to show the Services sector performing better
than Manufacturing. Labour markets have remained tight and there
was widespread strike action across multiple sectors. Consumer
confidence was reported to be at its lowest level since records
began in 1974, albeit retail sales remained relatively robust.
This picture of high inflation and interest rate rises is
generally consistent across other developed markets. Compared to
the UK, inflation has softened more in the US and the Eurozone in
recent months and our view is that we are nearing the end of hiking
cycles in those economies. In the US, although growth has so far
fared better than anticipated in the face of rate tightening and
banking sector concerns, we continue to forecast negative GDP
growth in 2024. China moved away from their zero-covid policy in
the final quarter of 2022. The policy change initially led to a
rise in covid cases which weighed on growth, followed by a benefit
to activity from the reopening of the economy. However, the
reopening tailwind faded quicker than had been widely expected,
which prompted the government in Beijing to introduce new measures
intended to stimulate the economy. Oil and other commodity prices
declined over the Year over fears of weakening demand. European gas
prices fell sharply from the mid-2022 highs reached following the
Russian invasion of Ukraine.
Global equity markets performed well over the Year, with the
MSCI World Index returning 19.2% over the period on a total return
basis in US dollar terms. In the UK, the FTSE All-Share index (the
Company's "Benchmark") lagged global markets, rising by 7.9% with
the FTSE 100 Index which has more international exposure increasing
by 8.9% and outperforming the 3.0% rise in the FTSE 250 Index which
has more domestic exposure. From a factor perspective,
broadly-speaking 'Value' and 'Momentum' outperformed while
'Quality' and 'Growth' stocks underperformed on a relative
basis.
Although a relatively small sector, the technology sector
performed strongly over the year mostly for individual stock
specific reasons. On the other hand the weakest performance was
seen in the telecoms sector as its main constituents BT and
Vodafone struggled operationally. In a broad reversal of the prior
year's performance, some of the more defensive areas of the market
such as healthcare and consumer staples underperformed while
perhaps surprisingly a number of the more cyclical,
economically-sensitive areas of the market such as consumer
discretionary and industrials outperformed.
Performance
The Company generated a positive Net Asset Value per share total
return of 8.8% for the Year (based on debt at fair value)
outperforming the benchmark FTSE All-Share Index which returned
7.9% over the Year. Changes in the fair value of the Company's long
term debt aided performance by approximately 1.3% reflecting the
favourable movement in the fair (or market) value of the Company's
long-term gearing; as interest rates rose, the market value of this
liability fell. On a total return basis, the Company's share price
increased by 4.9% which reflected a widening of the discount to Net
Asset Value (debt at fair value) at which the shares traded from
4.5% to 8.2%.
Our investment process encompasses a patient buy and hold
approach and longer term returns also remain very positive compared
to the Benchmark. For example, over five years, the share price and
Net Asset Value per share (based on debt at fair value) have
outperformed the FTSE All-Share Index by approximately 15% and 13%
respectively on a total return basis.
In absolute terms, taking account of the GBP60m of senior
secured fixed rate notes 2029, GBP40m of senior secured fixed rate
notes 2027, as well as GBP6.4m drawn down from an unsecured
multi-currency revolving credit loan facility agreement with The
Bank of Nova Scotia Limited, debt was GBP106.5m at the end of the
Year. The net gearing was 10.4% at the end of the Year as compared
to 9.4% at the end of the prior year.
Performance benefited from good stock selection in the
technology and consumer staples sectors offset by the underweight
exposure to energy and poor stock selection in the consumer
discretionary and industrials sectors.
Turning to the individual holdings, there were numerous
companies that demonstrated strong share price increases. The share
prices of VAT Group and Sage both increased by over 45% during the
Year. Non-held companies British American Tobacco and Vodafone, and
the holdings in technology companies Sage and Aveva generated the
greatest stock level outperformance. As we mentioned last year, we
believed the portfolio was vulnerable to corporate and takeover
activity and during the year bids were forthcoming for Euromoney,
Aveva, Industrials REIT, Dechra Pharmaceuticals and Countryside
Properties in aggregate benefiting relative performance.
The poorest share price performances were from domestic
companies exposed to higher inflation and/or rising interest rates
including Watkin Jones , Marshalls and Direct Line . Marshalls ,
Direct Line and non-held HSBC and Flutter provided the most
significant negative relative return over the Year.
Performance Attribution for the year ended 30 June 2023
%
======== ================================= =====
Net Asset Value total return
for year per Ordinary share
(fair value) +8.8
============================================ ====
FTSE All Share Index total return +7.9
============================================ ====
Relative return +0.9
------------------------------------------- -----
Relative return
=========================================== =====
Stock selection
================================== ====
Energy +0.1
=========================================== ====
Basic Materials -0.5
=========================================== ====
Industrials -1.5
=========================================== ====
Health Care +0.2
=========================================== ====
Consumer Staples +1.1
=========================================== ====
Consumer Discretionary -0.9
=========================================== ====
Telecommunications +0.5
=========================================== ====
Utilities +0.1
=========================================== ====
Technology +0.9
=========================================== ====
Financials -0.7
=========================================== ====
Real Estate +0.1
------------------------------------------- ----
Total stock selection (equities) -0.6
------------------------------------------- ----
Asset allocation (equities)
================================== ====
Energy -0.4
=========================================== ====
Industrials +0.5
=========================================== ====
Health Care +0.1
=========================================== ====
Consumer Staples +0.1
=========================================== ====
Telecommunications +0.1
=========================================== ====
Technology +0.5
=========================================== ====
Financials -0.1
=========================================== ====
Real Estate -0.2
------------------------------------------- ----
Total asset allocation (equities) 0.6
------------------------------------------- ----
Management fees -0.4
=========================================== ====
Administrative expenses -0.1
=========================================== ====
Tax -0.1
=========================================== ====
Cash & Options -0.5
=========================================== ====
Gearing - finance costs +0.5
=========================================== ====
Gearing - difference between
fair value and par value
returns +1.3
=========================================== ====
Share buybacks +0.3
=========================================== ====
Residual effect -0.1
=========================================== ====
Total +0.9
------------------------------------------- ----
Notes: Stock Selection - measures
the effect of equity selection relative
to the benchmark. Asset Allocation
- measures the impact of over or
underweighting each industry basket
in the equity portfolio, relative
to the benchmark weights. Cash &
options effect - measures the impact
on relative returns of these categories.
Gearing - measures the impact on
relative returns of net borrowings.
Management fees, administrative
expenses and tax - these reduce
total assets and therefore reduce
performance. Source - abrdn.
Portfolio Activity and Structure
Turnover of approximately 18% was the same as the prior year.
The pattern of trades reflected the ongoing desire to improve,
where possible, the quality of the portfolio and maintaining the
focus on attractive capital and dividend growth. Active share (the
proportion of the portfolio that differs from the benchmark)
remained stable at approximately 70%.
The portfolio added five new holdings in the Year. Two of these,
Games Workshop and Genus , were UK mid-cap company introductions.
Games Workshop is a hobby miniatures company which we see as a
unique asset with strong quality credentials and an attractive
dividend yield. Genus is a global leader in genetics and breeding,
contributing to improving sustainable food production. We see Genus
as having an attractive market position and long-term growth
potential from the development of virus-resistant pigs.
The Company can invest up to 20% of gross assets in overseas
listed companies. This has three main benefits: firstly, to provide
access to industries not available to UK-only investors; secondly,
to diversify risk in concentrated sectors in the UK market; and
thirdly, to enable investment in better quality proxies of UK
listed companies. During the year, three overseas holdings were
added to the portfolio. The first was Swiss-listed pharmaceutical
company, Roche , which has a healthy balance sheet and a pipeline
which we believe to be undervalued. The second was LVMH , the
luxury goods company listed in Paris which offers strong long-term
growth potential through its portfolio of well-known brands. The
final new overseas holding added to the portfolio was Paris-listed
cosmetics and skincare company L'Oréa l which we see as having
strong quality characteristics, in particular: well-known brands,
appealing market growth dynamics and attractive financial
characteristics.
We increased exposure to several of our existing holdings which
we believe have high quality characteristics with attractive growth
prospects at appealing valuations including Howden Joinery , Kone ,
Nestlé, Oversea-Chinese Banking Corp , Oxford Instruments , London
Stock Exchange Group , RELX , Sage , and Unilever .
Fifteen holdings were sold during the Year, of which five stocks
were exited following takeover bids: Aveva , Dechra Pharmaceuticals
, Euromoney , Industrials REIT and Countryside Partnerships (where
we continue to have a holding in the acquirer, Vistry ). In the
second half of 2022 we reduced the portfolio's exposure to the real
estate sector. Watkin Jones was sold following a profit warning
which led to a change in confidence in the company's business model
and concern about the risk of further downgrades. Concern around
high levels of leverage and potential risk to dividends given
rising discount rates and higher interest charges also resulted in
the sales of small holdings in Assura , Sirius Real Estate , and
Unite Group . The residual position in Haleon , the consumer
healthcare business which was spun-out from GSK, was exited. XP
Power was exited as the outlook appeared increasingly uncertain and
the company has high leverage. The small holding in Mowi was sold
as call options written over the holding were assigned. Finally,
the small positions in Ashmore , Bodycote and Weir were sold given
more attractive opportunities elsewhere.
In addition, we reduced the exposure to a number of holdings
where we have higher conviction in other names in their respective
sectors or to manage position sizes in the portfolio. Positions in
stocks including AstraZeneca , Novo Nordisk , BHP , M&G ,
Standard Chartered and TotalEnergies were trimmed.
Overall, the net effect of the purchases and sales has been to
reduce the number of holdings from 61 down to 52, providing a
sharper focus to the portfolio.
We continued our measured option-writing programme which is
based on our fundamental analysis of the holdings in the portfolio.
The option-writing strategy has been of benefit to the Company by
diversifying and increasing the level of income generated. It also
provides headroom to invest in companies with lower starting yields
but better dividend and capital growth prospects. Income from
writing options of GBP2.8m represented 5.6% of total income earned
in the Year.
Our aspiration in terms of portfolio construction is simple: to
invest in good quality companies with attractive growth prospects
through a sensibly diversified portfolio with appealing dividend
characteristics. Furthermore, the ability to invest up to 20% of
gross assets overseas is helpful in achieving these aims with 13
overseas-listed companies in the portfolio at the period end
representing approximately 18% of gross assets.
Environmental, Social and Governance
In line with our longer-term investment horizon, we continue to
put significant effort into engagement with the companies in the
portfolio to ensure that they are run in shareholders' best
interests. Examples of the subjects of our engagement during the
Year have included topics such as board composition, capital
allocation, mergers and acquisitions activity, and risk management
(including issues such as climate change, regulatory risk, and
management succession planning). We pursue these issues through
meetings with the executive management of the companies as well as
with the non-executives, particularly the chairs of the board and
remuneration committees. MSCI independently rate the portfolio as
AA for its ESG characteristics and further detailed information can
be found in the Sustainable Investment Report on the Company's
website at; murray-income.co.uk .
A small selection of examples include our engagements with Games
Workshop , Safestore and Hiscox outlined below.
Having relatively recently initiated a position in Games
Workshop we chose to engage with the company more actively on
ESG-related matters. Of particular note, we have flagged to the
company that we believe that enhancing diversity across the
business should help Games Workshop achieve a number of its goals,
including the sustaining of its strong culture and ambitions to
further develop their intellectual property and grow the customer
base through expanding geographically. We have written to the
company outlining our views and provided examples of practices to
support diversity we have observed among our investee
companies.
For a number of years we have voted against approval of
Safestore's Remuneration Report owing to concerns about a very
generous incentive scheme introduced in 2017. However, we are
supportive of the current board and therefore, as one of
Safestore's largest shareholders, this year we have engaged
actively with the board on the structure of a new remuneration
policy. We have provided feedback on multiple aspects of the policy
proposal, including striking a more balanced approach to base
salary and long-term incentives, incentivising and retaining
management of this high-performing company and avoiding base salary
growth for executive directors ahead of the wider workforce.
We engaged with Hiscox in order to gain additional insight into
the company's approach to ESG. The principal focus of our
engagement was the integration of climate-related risks into
underwriting. We were encouraged by the company's open dialogue on
the areas of strength and weakness in current datasets and
modelling with respect to climate-related risks and Hiscox's
approach to enhancing its capabilities and generating opportunities
for new products. We have asked the company to enhance disclosures
with regards to social indicators, in particular on human capital,
and suggested that Hiscox consider including social considerations
into its Exclusions Policy and set group sustainability targets
beyond Greenhouse Gas emissions reductions.
Income
For the Year, the Company witnessed a decrease in the level of
income due to lower dividends from the mining sector holdings and a
smaller amount of special dividends, partly offset by higher
interest income. Two special dividends (paid by TotalEnergies and
OSB Group ) were included in income from investments and were
treated as revenue items. We believe that this recognition is
appropriate given that, in each case, the return of cash was from a
build-up of profits generated by ongoing operations rather than
from a sale of assets.
The Company's earnings per share decreased by 4.4% from 40.5p to
38.7p. Paying a full year dividend of 37.5p per share has allowed
GBP2.2m to supplement the revenue reserves which now represent 54%
of the full year dividend. We view the portfolio's exposure to
attractive and enduring earnings trends as providing the potential
for appealing income growth over the long term.
Outlook
Recent data points provide a less than clear picture around
current conditions and future direction. However, in most developed
economies growth appears to be more robust than might be expected
in light of the meaningful monetary policy tightening over the past
12 months. On the other hand, the momentum of China's reopening has
faded and more stimulus is likely to feature. Underlying price
pressures have been sticky reflecting excess demand across various
sectors and economies prompting central banks to remain hawkish. We
believe that the current tightening cycle will ultimately restrict
economic growth with the resulting downturn in demand helping to
engineer a relatively rapid fall in inflationary pressures allowing
significant interest rate cuts over the next 18 months.
The portfolio is jam-packed with high quality, predominantly
global businesses capable of delivering appealing long term
earnings and dividend growth at a modest aggregate valuation. Our
focus on quality companies should provide protection through a
downturn: those companies with pricing power, high margins and
strong balance sheets are better placed to navigate a more
challenging economic environment and emerge in a strong position.
Furthermore, these quality characteristics are helpful in
underpinning the portfolio's income generation.
The valuations of UK-listed companies remain attractive on a
relative and absolute basis. Apart from the global financial
crisis, the UK's market multiple is nearing its lowest point for 30
years. It is cheap in absolute terms, relative to history and also
relative to global equities. Investors are benefitting from global
income at a knock-down price. Moreover, the dividend yield of the
UK market remains at an appealing premium to other regional equity
markets. In summary, we feel optimistic that our long-term focus on
investments in high quality companies with robust competitive
positions and strong balance sheets, which are led by experienced
management teams will be capable of delivering premium earnings and
dividend growth.
Charles Luke and Iain Pyle
Investment Manager
19 September 2023
Performance
Performance (total return, including reinvested dividends)
1 year return 3 year return 5 year return 10 year return
% % % %
=============================== ============== ============= ============= ==============
Share price(A) +4.9 +23.4 +31.6 +73.2
=============================== ============== ============= ============= ==============
Net asset value per Ordinary
share (debt at fair value)(A) +8.8 +26.9 +29.7 +85.7
=============================== ============== ============= ============= ==============
Net asset value per Ordinary
share (debt at par value)(A) +7.5 +24.5 +27.2 +82.3
=============================== ============== ============= ============= ==============
Benchmark(B) +7.9 +33.2 +16.5 +78.0
------------------------------- -------------- ------------- ------------- --------------
(A) Considered to be an Alternative Performance Measure.
(B) FTSE All-Share Index.
Source: abrdn & Morningstar
Ten Year Financial Record
Year end 30 June 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
======================== ======= ======= ======= ======= ======= ======= ======= ========= ========= =======
Income (GBP'000) 23,926 25,476 24,838 26,667 25,987 25,597 22,804 35,979 51,018 48,879
======================== ======= ======= ======= ======= ======= ======= ======= ========= ========= =======
Shareholders' funds
(GBP'000) 547,652 515,888 515,036 576,462 570,929 587,150 534,361 1,093,859 1,009,255 999,184
======================== ======= ======= ======= ======= ======= ======= ======= ========= ========= =======
Per Ordinary share
(p)
======================== ======= ======= ======= ======= ======= ======= ======= ========= ========= =======
Net revenue return 30.5 33.1 32.0 34.9 33.6 34.9 30.5 33.7 40.5 38.7
======================== ======= ======= ======= ======= ======= ======= ======= ========= ========= =======
Dividends(A) 31.25 32.00 32.25 32.75 33.25 34.00 34.25 34.50 36.00 37.50
======================== ======= ======= ======= ======= ======= ======= ======= ========= ========= =======
Net asset value (capital
only) 805.2 757.1 766.5 860.1 856.3 888.1 808.3 934.6 864.9 894.4
======================== ======= ======= ======= ======= ======= ======= ======= ========= ========= =======
(A) The figures for dividends per share reflect the years to which
their declaration relates and not the years they were paid.
Financial Highlights and Dividends
Financial Highlights
30 June 2023 30 June 2022 % change
===================================== ============ ============ ========
Shareholders' funds (GBP'000) 999,184 1,009,255 -1.0
===================================== ============ ============ ========
Net asset value ("NAV") per Ordinary
share - debt at fair value 911.7p 871.0p +4.7
===================================== ============ ============ ========
NAV per Ordinary share - debt at
par 894.4p 864.9p +3.4
===================================== ============ ============ ========
Market capitalisation (GBP'000) 935,096 970,865 -3.7
===================================== ============ ============ ========
Share price of Ordinary share 837.0p 832.0p +0.6
===================================== ============ ============ ========
Discount to NAV on Ordinary shares
- debt at fair value(A) 8.2% 4.5%
===================================== ============ ============ ========
Discount to NAV on Ordinary shares
- debt at par(A) 6.4% 3.8%
===================================== ============ ============ ========
Gearing (ratio of borrowing to
shareholders' funds)
===================================== ============ ============ ========
Net gearing(A) 10.4% 9.4%
===================================== ============ ============ ========
Dividends and earnings
===================================== ============ ============ ========
Revenue return per share 38.7p 40.5p -4.4
===================================== ============ ============ ========
Dividends per share(B) 37.50p 36.00p +4.2
===================================== ============ ============ ========
Dividend cover(A) 1.03 times 1.13 times
===================================== ============ ============ ========
Dividend yield(A) 4.5% 4.3%
===================================== ============ ============ ========
Revenue reserves (GBP'000)
===================================== ============ ============ ========
Prior to payment of fourth interim
dividend(C) 36,664 33,491
===================================== ============ ============ ========
After payment of fourth interim
dividend 22,576 20,363
===================================== ============ ============ ========
Operating costs
===================================== ============ ============ ========
Ongoing charges ratio(A) 0.50% 0.48%
===================================== ============ ============ ========
(A) Considered to be an Alternative Performance Measure.
(B) The figures for dividends per share reflect the years in which
they were earned (see note 7).
(C) Per the Statement of Financial Position.
Dividends
Rate XD date Record date Payment date
================ ====== =========== =========== ============
First interim 8.25p 17 Nov 2022 18 Nov 2022 15 Dec 2022
================ ====== =========== =========== ============
Second interim 8.25p 16 Feb 2023 17 Feb 2023 16 Mar 2023
================ ====== =========== =========== ============
Third interim 8.25p 18 May 2023 19 May 2023 15 Jun 2023
================ ====== =========== =========== ============
Fourth interim 12.75p 17 Aug 2023 18 Aug 2023 14 Sep 2023
---------------- ------ ----------- ----------- ------------
Total dividends 37.50p
---------------- ------ ----------- ----------- ------------
Overview of Strategy
Business Model
Murray Income Trust PLC (the "Company") is an investment trust
whose Ordinary shares are listed on the premium segment of the
London Stock Exchange.
The Company is governed by a Board of Directors (the "Board"),
all of whom are non-executive, and has no employees. The Board is
responsible for determining the Company's investment objective and
investment policy. Like other investment companies, the day-to-day
investment management and administration of the Company is
outsourced by the Board to an investment management group, abrdn,
and other third party providers. The Company has appointed abrdn
Fund Managers Limited (the "Manager") as its alternative investment
fund manager, which has in turn delegated certain functions,
including administration of the investment policy, to abrdn
Investments Limited (formerly Aberdeen Asset Managers Limited). The
Manager has delegated the company secretarial function to abrdn
Holdings Limited (formerly Aberdeen Asset Management PLC).
The Company complies with Section 1158 of the Corporation Tax
Act 2010 which permits the Company to operate as an investment
trust.
Investment Objective
The Company aims for a high and growing income combined with
capital growth through investment in a portfolio principally of UK
equities.
Investment Policy
In pursuit of the Company's investment objective, the Company's
investment policy is to invest in the shares of companies that have
potential for real earnings and dividend growth, while at the same
time providing an above-average portfolio yield. The emphasis is on
the management of risk and on the absolute return and yield from
the portfolio as a whole rather than the individual companies which
the Company invests in, which is achieved by ensuring an
appropriate diversification of stocks and sectors within the
portfolio, with a high proportion of assets in strong,
well-researched companies. The Company makes use of borrowing
facilities to enhance shareholder returns when appropriate.
Delivering the Investment Policy
The Company maintains a diversified portfolio of the equity
securities of UK and overseas companies with an emphasis on
investing in quality companies with good management, strong cash
flow, a sound balance sheet and which are generating a reliable
earnings stream.
The Investment Manager follows a bottom-up investment process
based on a disciplined evaluation of companies, including through
direct visits by its fund managers. Stock selection is the major
source of added value, concentrating on quality first, then price.
Top-down investment factors are secondary in the Investment
Manager's portfolio construction with diversification rather than
formal controls guiding stock and sector weights.
Board Investment Limits
The Board sets additional investment guidelines within which the
Investment Manager must operate :
-- the portfolio typically comprises between 40 and 70 holdings
(but without restricting the Company from holding a more or less
concentrated portfolio from time to time);
-- the Company may invest up to 100% of its gross assets in
UK-listed equities and other securities and is permitted to invest
up to 20% of its gross assets in other overseas-listed equities and
securities;
-- the Investment Manager may invest in any market sector,
however, the top five holdings may not exceed 40% of the total
value of the portfolio and the top three sectors represented in the
portfolio may not exceed 50%; and
-- the Company may invest no more than 15% of its gross assets
in other listed investment companies (including investment
trusts).
The Company may use derivatives for the purpose of enhancing
portfolio returns and for hedging purposes in a manner consistent
with the Company's broader investment policy. The Investment
Manager is permitted to invest in options and in structured
products, provided that any structured product issued in the form
of a note or bond has a minimum credit rating of "A".
Gearing
The Board is responsible for setting the gearing policy of the
Company and for the limits on gearing. The Manager is responsible
for gearing within the limits set by the Board. The Board has set
its gearing limit at a maximum of 25% of NAV at the time of draw
down. Gearing - borrowing money - is used selectively to leverage
the Company's portfolio in order to enhance returns where this is
considered appropriate. Particular care is taken to ensure that any
financial covenants permit maximum flexibility of investment
policy. Significant changes to gearing levels are communicated to
shareholders.
Key Performance Indicators
At each Board meeting, the Directors consider a number of Key
Performance Indicators ("KPIs") to assess the Company's success in
achieving its objectives, and these are described below, with those
also categorised as Alternative Performance Measures marked with an
asterisk:
KPI Description
======================= ==============================================================
NAV (total return) The Board considers the Company's NAV (total return),
* relative to the relative to the FTSE All-Share Index, to be the
Company's benchmark best indicator of performance over different time
periods. A graph showing NAV total return performance
against the FTSE All-Share Index over the past five
years is included in the published Annual Report.
======================= ==============================================================
Share price (total The Board monitors share price performance relative
return) * to open-ended and closed-ended competitor products,
taking account of differing investment objectives
and policies pursued by those products.
The figures for share price (total return) for the
Year and for the past three, five and ten years,
as well as for the NAV (total return) per share,
are shown above. A graph showing share price total
return performance against the FTSE All-Share Index
over the past five years is included in the published
Annual Report.
======================= ==============================================================
Discount/premium The discount/premium at which the Company's share
to NAV * price trades relative to the NAV per share is closely
monitored by the Board. A graph showing the discount/premium
over the last five years is included in the published
Annual Report.
======================= ==============================================================
Earnings and dividends The Board aims to meet the 'high and growing' element
per share of the Company's investment objective by developing
revenue reserves sufficient to support the payment
of a growing dividend; figures may be found in Financial
Highlights and Dividends, above, in respect of earnings
and dividends per share, together with the level
of revenue reserves, for the Year and previous year.
======================= ==============================================================
Ongoing charges* The Board monitors the Company's operating costs
and their composition with a view to limiting increases
wherever possible. Ongoing charges are disclosed
above, for the Year and the previous year and include
look through costs. The increase in ongoing charges
from 0.48% to 0.50% reflects the lower average net
assets over the Year, as compared to the prior year.
======================= ==============================================================
Principal Risks and Uncertainties
There are a number of risks and uncertainties which, if
realised, could have a material adverse effect on the Company's
business model, future performance and solvency. The Board, through
the Audit Committee, has put in place a robust process to identify,
assess and monitor these by means of a risk assessment and internal
controls system. This system was reviewed during the year, as
explained in the Audit Committee Report in the published Annual
Report. As noted therein, the committee has a risk register and
uses a post-mitigation heat risk map to identify principal, and
emerging, risks.
Macroeconomic uncertainty has again been a significant risk
during the year due to rising interest rates and higher inflation.
The Board does not consider that the principal risks and
uncertainties identified have changed during the Year.
The Audit Committee and the Board both consider emerging risks
as part of their normal review of factors which could affect the
Company, both in the short and longer term. For example, the
emergence of negative climate change impacts, high inflation and
interest rates, and potential conflicts (China and Taiwan tension)
form a part of Directors' discussions with input from the Manager
and broker.
The following table sets out the Company's principal risks and
uncertainties and the Company's mitigating actions and comments if
the post-mitigation risk assessment has changed, together with the
reason why.
Principal Risk Mitigating Action
-------------------------------------------- ------------------------------------------
STRATEGIC AND MARKET
-------------------------------------------- ------------------------------------------
The Company's investment objective The Company's investment objective
and policy are no longer meeting and policy ("IOP") are reviewed
investors' requirements (unchanged) regularly by the Board to ensure
Lack of a robust strategic review, they remain appropriate and effective.
failure to understand the market/investor The Board holds an annual strategy
demand. Failure to analyse and react meeting at which strategy and approach
to changes or uncertainty, unclear is reviewed; this includes consideration
dividend policy. of distributions; both dividends
and share buy backs.
============================================ ==========================================
Discount control risk (unchanged) The Board monitors the discount
Investment trust shares tend to at which the Company's shares trade
trade at discounts to their underlying and will buy back or issue shares
NAVs, although they can also trade to try to minimise the impact of
at premium. Discounts and premiums any discount or premium volatility.
can fluctuate considerably leading Whilst these measures seek to reduce
to more volatile returns for shareholders. volatility, they are not guaranteed
to do this.
As was the case in the prior year,
the Board has assessed the discount
control risk as elevated due to
the discount at which the Company's
shares are trading as compared to
their underlying NAV.
============================================ ==========================================
Market risk (increased) The Company's investment policy
Market risk arises from the volatility and its approach to risk diversification
in prices of the Company's investments may be found above, both of which
and the potential loss the Company serve to mitigate the effect of
could suffer through realising investments market risk on the portfolio. The
following negative market movements. Board considers the diversification
Changes in general geopolitical, of the portfolio, asset allocation,
economic or market conditions, such stock selection and levels of gearing
as interest rates, exchange rates on a regular basis. The Board also
and rates of inflation, as well monitors the Company's relative
as global political events and trends performance as compared to peers
could substantially and adversely and the Company's benchmark.
affect the prices of securities The Board assesses climate change
and, as a consequence, the value as an emerging risk in terms of
of the Company's investment portfolio, how it develops, including how investor
its prospects and share price. sentiment is evolving towards climate
Current geopolitical risks include change within investment portfolios,
the ongoing Russian invasion of and will consider how the Company
Ukraine, rising tension between may mitigate this risk, any other
China and Taiwan. emerging risks, if and when they
The longer term emergence of the become material.
effects on investee companies of The Board engages with the Manager,
climate change, and the regulatory at each Board meeting, as part of
environment around this present its ESG oversight, to understand
a further risk. how climate change, and environmental
factors are being assessed . Both
are key considerations within the
Manager's investment process.
During the Year, the Board evaluated
market risk as elevated due to the
limit on the Company's ability to
mitigate the effect of external
factors such as the uncertainty
caused by geopolitical factors,
rising inflation and cost pressures.
============================================ ==========================================
Gearing risk (increased) Gearing is monitored and strict
The Company uses credit facilities. restrictions on borrowings are imposed:
These arrangements increase the gearing continues to operate within
funds available for investment. pre-agreed limits so as not to exceed
While this has the potential to 25% of NAV at the time of draw down.
enhance investment returns in rising The Board and the Manager monitors
markets, in falling markets the the lending market and will address
impact could be detrimental. at a germane time to enable the
Credit facilities may not be available availability of appropriate facility(ies)
at an acceptable rate, term or amount. if required.
The Company's three year GBP50 million
facility matures on 27 October 2024.
--------------------------------------------- ---------------------------------------------
INVESTMENT MANAGEMENT
--------------------------------------------- ---------------------------------------------
Underperformance risk (unchanged) The Board evaluates performance
Consistent underperformance by the at each board meeting on both an
Investment Manager over short, medium absolute and relative basis, against
and long term. the Company's benchmark and peers,
The Investment Manager's style may and across various periods: short,
result in the portfolio being significantly medium and long term. Performance
over or under weight positions in is also reviewed at the annual strategy
stocks and sectors compared to the meeting.
benchmark and the Company's performance The Company has a set of investment
may deviate significantly from that limits and Board guidelines which
of the benchmark and peers, possibly ensure diversification of the portfolio.
for extended periods.
============================================= =============================================
Risk of loss of key staff (increased) Charles Luke has been the lead portfolio
Loss of key staff though natural manager for the Company since 2006.
loss, or Manager reorganisation His co-manager is Iain Pyle who
and/or redundancy. Loss of investor has been with the Manager since
confidence if lead 2015, and Rhona Millar, with five
manager lost. years' experience, also works alongside
them. All work within the Manager's
43-strong Developed Markets Equities
team.
--------------------------------------------- ---------------------------------------------
MARKETING
--------------------------------------------- ---------------------------------------------
General marketing risk (increased) The Manager's investor relations
Failure to implement the Board's team works closely with the Board
marketing policy. Failure to address on institutional shareholder contact.
shareholder concerns or complaints, In addition, quarterly updates are
including of abrdn Investment Trust provided to the Board by the broker.
Saving plans holders. All correspondence addressed to
Issues could arise from the lack the Board is circulated to Directors
of process ownership, poor procedures while any complaints relating to
or the failure to appropriately the Company's savings plans are
manage distribution, concerns or reviewed by the Board quarterly.
complaints of shareholders.
--------------------------------------------- ---------------------------------------------
OPERATIONAL
--------------------------------------------- ---------------------------------------------
Service provider risk (unchanged) Contracts with third party providers
In common with most other investment are entered into after appropriate
companies, the Company relies on due diligence. Thereafter the performance
the services provided by third parties of each provider is subject to an
and is dependent on the control annual review by the Audit Committee.
systems of the Manager (who acts The Depositary reports to the Audit
as investment manager, company secretary Committee at least annually, including
and maintains the Company's assets, on the Company's compliance with
dealing procedures and accounting AIFMD. The Manager also regularly
records); BNP Paribas Trust Corporation reviews the performance of the Depositary.
UK Limited (who acts as Depositary Global assurance reports are obtained
and Custodian); and the registrar. from the Manager, BNP Paribas Trust
The security of Corporation UK Limited and the registrar.
the Company's assets, dealing procedures, These are reviewed by the Audit
accounting records and adherence Committee. The reports include an
to regulatory and legal requirements independent assessment of the effectiveness
depend of risks and internal controls at
on the effective operation of the the service providers including
systems of these third party service their planning for business continuity
providers. and disaster recovery scenarios,
Failure by any service provider together with their policies and
to carry out its obligations could procedures designed to address the
have a material adverse effect on risks posed to the Company's operations
the Company's performance. Disruption, by cyber-crime. The Audit Committee
including that caused by information receives an annual update on the
technology breakdown or a cyber-related Manager's IT resilience.
issue, could prevent, for example, The Company's assets are subject
the functioning of the Company; to a strict liability regime and,
accurate reporting to the Board in the event of a loss of assets,
or shareholders; or payment of dividends the Depositary must return assets
in accordance with the announced of an identical type or the corresponding
timetable. amount, unless able to demonstrate
the loss was a result of an event
beyond its reasonable control.
The Board has assessed the risk
posed by cyber-crime as elevated,
despite the available mitigation,
reflecting the potential disruption
which might be caused to the Company's
operations by a cyber-attack.
--------------------------------------------- ---------------------------------------------
The following are other risks identified by the Board which
could have a major impact on the Company, but due to mitigation are
not deemed to be principal risks:
Other Risks Mitigating Action
=========================================== =============================================
Dividend risk The Board reviews estimates of revenue
There is a risk that the Company income and expenditure prepared
fails to generate sufficient income by the Manager.
from its investment portfolio to The Company's level of revenue reserves
meet the Company's dividend requirements. is monitored and can be added to
A cut in the dividend of the Company in years of surplus, or used to
would likely cause a support the dividend in years where
drop in the share price and would there is a revenue deficit. Dividends
end the Company's can also be paid from capital, though
"Dividend Hero" status. use of capital reserves for dividends
is expected to be rare.
=========================================== =============================================
Financial risk Details of these risks and the policies
The Company's investment activities and procedures for their monitoring
expose it to a variety of financial and mitigation are disclosed earlier
risks which include market risk in this section and in note 18.
(which is identified as a principal
risk and is covered earlier in this
section), liquidity risk and credit
risk (including counterparty risk).
=========================================== =============================================
Regulatory risk, including change The Manager provides investment,
of existing rules and regulation company secretarial, administration
The Company is required to comply and accounting services through
with relevant rules and regulations. qualified third
Failure to do so could result in party professional providers.
loss of investment trust status, The Board receives regular reports
fines, suspension of the Company's from its broker, depositary, registrar
shares, criminal proceedings or and Manager as well as the industry
financial or reputational damage. trade body (the Association of Investment
Companies ("AIC") on changes to
regulations which could impact the
Company and its industry.
=========================================== =============================================
Emerging risk The Board regularly reviews all
Failure to have in place procedures risks to the Company, including
that assist in identifying emerging emerging risks, which are identified
risks. This may cause reactive actions by a variety of means, including
rather than being pro-active and, advice from AIC, the Company's professional
in the worst case, could cause the advisors, Directors' knowledge of
Company to become unviable or otherwise markets, changes and events.
fail.
=========================================== =============================================
The principal risks associated with an investment in the
Company's shares can be found in the pre-investment disclosure
document ("PIDD") published by the Manager, which is available from
the Company's website: murray-income.co.uk .
Promotional Activities
The Board recognises the importance of promoting the Company to
existing and prospective investors both for improving liquidity and
enhancing the rating of the Company's shares. The Board believes
one effective way to achieve this is through subscription to, and
participation in, the promotional programme run by the Manager on
behalf of a number of investment trusts under its management. The
Company also supports the Manager's investor relations programme
which involves regional roadshows, promotional and public relations
campaigns. The Manager's promotional and investor relations teams
report to the Board on a quarterly basis giving analysis of their
activities as well as updates on the shareholder register and any
changes in the make-up of that register.
Communicating the long-term attractions of the Company is key.
The promotional programme includes commissioning independent paid
for research on the Company, most recently from Edison Investment
Research Limited; a copy may be found on the Company's website.
The UK Stewardship Code and Proxy Voting
The Company supports the UK Stewardship Code 2020, and seeks to
play its role in supporting good stewardship of the companies in
which it invests. Responsibility for actively monitoring the
activities of portfolio companies has been delegated by the Board
to the Manager which has sub-delegated that authority to the
Investment Manager.
The Manager is a tier 1 signatory of the UK Stewardship Code
2020 which aims to enhance the quality of engagement by investors
with investee companies in order to improve their socially
responsible performance and the long term investment return to
shareholders. The Manager's Annual Stewardship Report 2022 may be
found at abrdn.com . While delivery of stewardship activities has
been delegated to the Manager, the Board acknowledges its role in
setting the tone for the effective delivery of stewardship on the
Company's behalf.
The Board has also given discretionary powers to the Manager to
exercise voting rights on resolutions proposed by the investee
companies within the Company's portfolio. The Manager reports to
the Board on a six monthly basis on stewardship (including voting)
issues.
Global Greenhouse Gas Emissions and Streamlined Energy and
Carbon Reporting ("SECR")
All of the Company's activities are outsourced to third parties.
The Company therefore has no greenhouse gas emissions to report
from the operations of its business, nor does it have
responsibility for any other emissions producing sources under the
Companies Act 2006 (Strategic Report and Directors' Reports)
Regulations 2013. For the same reason as set out above, the Company
considers itself to be a low energy user under the SECR regulations
and therefore is not required to disclose energy and carbon
information. Further information on the Manager's obligatory
disclosures under the Taskforce on Climate-related Financial
Disclosures ("TCFD") may be found later in this section.
Viability Statement
The Company does not have a fixed period strategic plan but the
Board does formally consider risks and strategy on at least an
annual basis. The Board regards the Company, with no fixed life, as
a long term investment vehicle but for the purposes of this
viability statement has decided that a period of five years (the
"Review Period") is an appropriate timeframe over which to report.
The Board considers that this Review Period reflects a balance
between looking out over a long term horizon and the inherent
uncertainties of looking out further than five years.
In assessing the viability of the Company over the Review Period
the Directors have focused upon the following factors:
-- the Company's principal risks and uncertainties as set out in
the Strategic Report;
-- the relevance of the Company's investment objective;
-- the demand for the Company's shares as indicated by the level
of premium and/or discount;
-- the level of income generated by the Company's portfolio as
compared to its expenses;
-- the overall liquidity of the Company's investment
portfolio;
-- the likelihood of the Company being able to continue to meet
the covenants under its current borrowing arrangements, and the
covenants attaching to any replacement borrowing arrangements, over
the next five years;
-- the GBP40m senior loan notes and GBP60m senior loan notes,
which are repayable in 2027 and in 2029, respectively; and
-- any requirement for the Company to repay or refinance the
drawn-down element of its three year GBP50 million bank loan
facility prior to, or at, its maturity in October 2024.
In making this assessment, the Board has considered in
particular a large economic shock, such as a further global
pandemic, a period of increased stock market volatility and/or
markets at depressed levels, a significant reduction in the
liquidity of the portfolio, or persistent inflationary pressures,
or changes in investor sentiment or regulation, and how these
factors might affect the Company's prospects and viability in the
future. The Board undertook scenario analysis, incorporating income
forecasting, in reaching its conclusions, but recognising that the
Company's expenses are significantly lower than its total
income.
Taking into account the Company's current position and the
potential impact of its principal risks and uncertainties, the
Directors have a reasonable expectation that the Company will be
able to continue in operation and meet its liabilities as they fall
due for a period of five years from the date of this Report.
Performance, Financial Position and Outlook
A review of the Company's activities and performance during the
Year, including future developments, is set out in the Chair's
Statement and in the Investment Manager's Report. These cover
market background, investment activity, portfolio strategy,
dividend policy, gearing and investment outlook. A comprehensive
analysis of the portfolio is provided below while the full
portfolio of investments is published monthly on the Company's
website. The Company's Statement of Financial Position shows the
assets and liabilities at the year end. Borrowing facilities at the
year end comprised a mix of fixed and floating debt: a three year
GBP50 million bank loan, GBP40 million of senior loan notes due for
repayment in 2027 and GBP60 million of senior loan notes due for
repayment in 2029. Details of these are shown in notes 13 and 14
respectively.
The future strategic direction and development of the Company is
regularly discussed as part of Board meeting agendas. The Board
also considers the Manager's promotional strategy for the Company,
including effective communications with shareholders. The Board
intends to maintain, for the year ending 30 June 2024, the strategy
set out in the Strategic Report as it believes that this is in the
best interests of shareholders.
Environmental, Community, Social and Human Rights Issues
The Company has no employees and, accordingly, there are no
disclosures to be made in respect of employees. In relation to the
investment portfolio, the Board has delegated assessment of these
issues to the Investment Manager, responsibility.
Modern Slavery Act
Due to the nature of its business, being a company that does not
offer goods and services to customers, the Board considers that the
Company is not within the scope of the Modern Slavery Act 2015
because it has no turnover. The Company is therefore not required
to make a slavery and human trafficking statement. The Board
considers the Company's supply chains, dealing predominantly with
professional advisers and service providers in the financial
services industry, to be low risk in relation to this matter.
Board Diversity
At 30 June 2023, there were three male Directors and three
female Directors (2022 - three male Directors and three female
Directors). Further information on Board diversity may be found in
the Directors' Report.
The Strategic Report has been approved by the Board and signed
on its behalf by:
Neil Rogan
Chair
19 September 2023
Promoting the Success of the Company
The Board is required to report how it has discharged its duties
and responsibilities under section 172 of the Companies Act 2006
during the Year. Under this requirement, the Directors have a duty
to promote the success of the Company for the benefit of its
members (shareholders) as a whole, taking into account the likely
long term consequences of decisions, the need to foster
relationships with the Company's stakeholders, and the impact of
the Company's operations on the environment. In addition the
Directors must act fairly between shareholders and be cognisant of
maintaining the reputation of the Company.
The Purpose of the Company and Roleof the Board
The Company has been established as an investment vehicle for
the purpose of delivering its investment objective which is set out
on the inside front cover of this Report. Investment trusts, such
as the Company, are long-term investment vehicles that are
typically externally-managed, have no employees, and are overseen
by an independent non-executive board of directors.
The Board is responsible for all decisions relating to the
Company's investment objective and policy, gearing, corporate
governance and strategy, and for monitoring the performance of the
Company's third party service providers, including the Manager.
The Board's philosophy is that the Company should foster a
culture where all parties are treated with respect. The Directors
provide mutual support combined with constructive challenge.
Integrity, openness and diligence are defining characteristics of
the Board's culture. The Company has a number of policies and
procedures in place to aid a culture of good governance, such as
those relating to Director's conflicts of interests and dealings in
the Company's shares, annual evaluation of Directors, anti-bribery
and anti-tax evasion. At its regular meetings, the Board engages
with the Manager to understand its culture and receives regular
reporting and feedback from the other key service providers.
The Company's primary stakeholders have been identified as its
shareholders, the Manager, other key
third party service providers, lenders and investee companies
and the following table sets out details of
the Company's engagement.
Shareholders The Directors place great importance on communication
with shareholders. Further details on the Company's
relations with Shareholders, including its approach
to the Annual General Meeting, and investor relations
can be found in the Directors' Report.
In addition, the Chair and Investment Manager are holding
an online shareholder presentation on 3 November 2023,
further details of which may be found in the Chair's
Statement.
=================== ==============================================================
Manager The Investment Manager's Report details the key investment
decisions taken during the Year. The Board engages
with the Investment Manager at every Board meeting
and receives presentations from the Investment Manager
to help it to exercise effective oversight of the Investment
Manager and delivery of the Company's strategy. The
Board also receives regular updates from the Manager
outside of these meetings.
The Management Engagement Committee's monitoring of
the performance of the Manager over the Year is detailed
in the Directors' Report.
=================== ==============================================================
Other Key Third The Board ensures that it promotes the success of the
Party Service Company by engaging specialist third party suppliers
Providers with the resources, controls and performance records
to deliver the service required. The Board seeks to
maintain constructive relationships with its key service
providers (the Company's registrar, depositary and
broker) either directly, or through the Manager, with
ongoing dialogue and formal regular meetings. The Audit
Committee conducts an annual assessment of key service
providers as set out in the Committee's report. The
Board seeks regular assurance that key third party
service providers have in place appropriate business
continuity plans and which are expected to allow them
to maintain service levels in the face of disruption.
=================== ==============================================================
Investee Companies The Board is committed to investing in a responsible
manner and actively monitors the activities of investee
companies through its delegation to the Investment
Manager. In order to achieve this, the Investment Manager
has discretionary powers to exercise voting rights
on resolutions proposed by the investee companies and
reports quarterly to the Board on stewardship issues,
including voting. The Board monitors investments made
and divested and questions the rationale for exposures
taken and voting decisions made.
=================== ==============================================================
Lenders to the On behalf of the Board, the Manager maintains a positive
Company working relationship with the provider of the Company's
multi-currency loan facility and the holders of the
Company's Senior Loan Notes, assuring compliance with
lenders' covenants and providing regular updates on
business activity.
=================== ==============================================================
Specific Examples of Stakeholder Consideration During the
Year
While the importance of giving due consideration to the
Company's stakeholders is not a new requirement, and is considered
as part of every Board decision, the Directors were particularly
mindful of stakeholder considerations during the following
decisions reached during the Year.
Dividends Paid to Shareholders
The level, frequency and timing of dividends paid are key
considerations for the Board, taking into account net earnings for
the year and the Company's objective of providing shareholders with
a high and growing income, combined with the Company's Dividend
Hero status.
The total dividend per share of 37.5p in respect of the Year,
representing an increase of 4.2% on the prior year, and the
Company's dividend policy to make four equally-spaced payments to
shareholders throughout the Year, reflects these
considerations.
Share Buy Backs
During the Year the Company bought back 4,970,471 Ordinary
shares to be held in treasury, representing a significant increase
on the 356,015 Ordinary shares bought back in the previous year,
providing a small accretion to the NAV and a degree of liquidity to
the market at times when the discount to the NAV per share had
widened during normal market conditions. It is the view of the
Board that this policy remains in the best interests of all
shareholders.
Board Succession
The Board, via the Nomination Committee, reviewed its succession
plan in light of Directors' retirement at the AGM on 7 November
2023. Further information may be found in the Directors'
Report.
Shareholder Communication
The Chair hosted an online event for shareholders on 2 November
2022. This event was arranged to allow those shareholders who may
have been unable to attend the AGM in person on 1 November 2022 to
pose questions to both the Chair and the Investment Manager. A
similar event will be held on 3 November 2023, as described in the
Chair's Statement.
Ten Largest Investments
As at 30 June 2023
R ELX AstraZeneca
RELX is a global provider of information AstraZeneca researches, develops,
and analytics for professionals produces and markets pharmaceutical
and businesses across a number products. With a significant focus
of industries including scientific, on oncology and rare diseases, the
technical, medical and law. The company offers appealing growth
company offers resilient earnings potential over the medium term.
combined with long term structural
growth opportunities.
Unilever Diageo
Unilever is a global consumer Diageo produces, distills and markets
goods company supplying food, alcoholic beverages including vodkas,
home and personal care products. whiskies, tequilas, gins and beer.
The company has a portfolio of The company should benefit from
strong brands including: Dove, attractive long term drivers such
Knorr, Axe and Persil. Over half as population and income growth,
of the company's sales are to and premiumisation. The company
developing and emerging markets. has a variety of very strong brands
and faces limited private label
competition.
SSE TotalEnergies
SSE is a utility company mostly TotalEnergies is a broad energy
focused on networks and renewables. company that produces and markets
The path to net zero will require fuels, natural gas and electricity.
significant investment in distribution It is a leader in the sector's energy
networks and the company should transition with an attractive pipeline
also benefit from its strong position of renewable assets
in offshore wind generation.
BHP Group London Stock Exchange
BHP Group (formerly BHP Billiton) London Stock Exchange is a diversified
is a diversified resources group global financial markets infrastructure
with a global portfolio of high and data business. The company is
quality assets particularly iron highly cash generative and very
ore and copper. The company provides well placed to benefit from increased
an appealing dividend yield combined spend on data services.
with a strong balance sheet.
BP Sage Group
BP is a fully integrated energy Sage Group is a market leading software
company involved in exploration, business focused on accounting,
production, refining, transportation payroll and payments. The company
and marketing of oil and natural has a strong product suite and is
gas. We believe the industry is well placed to benefit from the
currently in a sweetspot with software automation of its small
robust prices and benign costs. and mid-sized customers over the
The company provides an attractive medium term.
dividend yield and is well placed
for the energy transition.
Portfolio
As at 30 June 2023
============================================================================================================
Valuation Total Valuation
2023 investments 2022
Investment FTSE All-Share Sector Country GBP'000 % GBP'000
======================= ================================== ============ ========= =========== =========
RELX Media UK 61,856 5.6 45,388
======================= ================================== ============ ========= =========== =========
AstraZeneca Pharmaceuticals and Biotechnology UK 60,904 5.6 69,318
======================= ================================== ============ ========= =========== =========
Personal Care, Drug and Grocery
Unilever Stores UK 56,200 5.1 34,656
======================= ================================== ============ ========= =========== =========
Diageo Beverages UK 52,951 4.8 55,310
======================= ================================== ============ ========= =========== =========
SSE Electricity UK 37,940 3.5 35,431
======================= ================================== ============ ========= =========== =========
TotalEnergies Oil, Gas and Coal France 34,369 3.1 37,496
======================= ================================== ============ ========= =========== =========
BHP Group Industrial Metals and Mining UK 33,932 3.1 36,349
======================= ================================== ============ ========= =========== =========
London Stock Exchange Finance and Credit Services UK 33,912 3.1 17,862
======================= ================================== ============ ========= =========== =========
BP Oil, Gas and Coal UK 32,387 3.0 27,437
======================= ================================== ============ ========= =========== =========
Sage Group Software and Computer Services UK 30,020 2.7 13,676
----------------------- ---------------------------------- ------------ --------- ----------- ---------
Top ten investments 434,471 39.6
------------------------------------------------------------------------- --------- ----------- ---------
Coca-Cola HBC Beverages UK 29,787 2.7 23,144
======================= ================================== ============ ========= =========== =========
Experian Industrial Support Services UK 29,324 2.7 20,282
======================= ================================== ============ ========= =========== =========
Rentokil Initial Industrial Support Services UK 26,708 2.4 20,624
======================= ================================== ============ ========= =========== =========
Close Brothers Banks UK 26,700 2.4 21,839
======================= ================================== ============ ========= =========== =========
Inchcape Industrial Support Services UK 25,899 2.4 23,151
======================= ================================== ============ ========= =========== =========
Anglo American Industrial Metals and Mining UK 25,065 2.3 26,093
======================= ================================== ============ ========= =========== =========
National Grid Gas, Water and Multi-utilities UK 24,156 2.2 24,423
======================= ================================== ============ ========= =========== =========
Novo-Nordisk Pharmaceuticals and Biotechnology Denmark 22,239 2.0 20,888
======================= ================================== ============ ========= =========== =========
Safestore Real Estate Investment Trusts UK 21,600 2.0 23,659
======================= ================================== ============ ========= =========== =========
Oversea-Chinese
Banking Banks Singapore 21,124 1.9 14,833
----------------------- ---------------------------------- ------------ --------- ----------- ---------
Top twenty investments 687,073 62.6
------------------------------------------------------------------------- --------- ----------- ---------
Investment Banking and Brokerage
Intermediate Capital Services UK 20,793 1.9 10,929
======================= ================================== ============ ========= =========== =========
Howden Joinery Retailers UK 20,155 1.8 15,780
======================= ================================== ============ ========= =========== =========
United
Microsoft Software and Computer Services States 17,865 1.6 11,452
======================= ================================== ============ ========= =========== =========
Electronic and Electrical
Oxford Instruments Equipment UK 17,179 1.6 7,962
======================= ================================== ============ ========= =========== =========
Nordea Bank Banks Sweden 16,694 1.5 14,075
======================= ================================== ============ ========= =========== =========
Genus Pharmaceuticals and Biotechnology UK 16,314 1.5 -
======================= ================================== ============ ========= =========== =========
Croda International Chemicals UK 15,982 1.5 18,387
======================= ================================== ============ ========= =========== =========
Games Workshop Leisure Goods UK 15,579 1.4 -
======================= ================================== ============ ========= =========== =========
Convatec Medical Equipment and Services UK 15,569 1.4 17,025
======================= ================================== ============ ========= =========== =========
Household Goods and Home
Vistry Construction UK 15,219 1.4 12,639
----------------------- ---------------------------------- ------------ --------- ----------- ---------
Top thirty investments 858,422 78.2
------------------------------------------------------------------------- --------- ----------- ---------
Investment Banking and Brokerage
M&G Services UK 14,862 1.4 17,707
======================= ================================== ============ ========= =========== =========
OSB Finance and Credit Services UK 14,469 1.3 14,469
======================= ================================== ============ ========= =========== =========
Smith & Nephew Medical Equipment and Services UK 14,091 1.3 8,946
======================= ================================== ============ ========= =========== =========
Hiscox Non-life Insurance UK 13,985 1.3 8,922
======================= ================================== ============ ========= =========== =========
Nestlé Food Producers Switzerland 13,694 1.3 15,523
======================= ================================== ============ ========= =========== =========
Kone Industrial Engineering Finland 13,653 1.2 9,047
======================= ================================== ============ ========= =========== =========
GSK Pharmaceuticals and Biotechnology UK 12,630 1.1 20,068
======================= ================================== ============ ========= =========== =========
Drax Electricity UK 12,568 1.1 13,933
======================= ================================== ============ ========= =========== =========
Electronic and Electrical
VAT Group Equipment Switzerland 12,447 1.1 7,486
======================= ================================== ============ ========= =========== =========
LVMH Personal Goods France 12,325 1.1 -
----------------------- ---------------------------------- ------------ --------- ----------- ---------
Top forty investments 993,146 90.4
------------------------------------------------------------------------- --------- ----------- ---------
Standard Chartered Banks UK 12,085 1.1 29,465
======================= ================================== ============ ========= =========== =========
Roche Pharmaceuticals and Biotechnology Switzerland 9,919 0.9 -
======================= ================================== ============ ========= =========== =========
Direct Line Insurance Non-life Insurance UK 9,445 0.9 17,493
======================= ================================== ============ ========= =========== =========
Telecommunications Service
Telenor Providers Norway 9,323 0.9 12,742
======================= ================================== ============ ========= =========== =========
Mondi General Industrials UK 9,251 0.8 11,227
======================= ================================== ============ ========= =========== =========
L'Oréal Personal Goods France 9,181 0.8 -
======================= ================================== ============ ========= =========== =========
Marshalls Construction and Materials UK 8,779 0.8 16,346
======================= ================================== ============ ========= =========== =========
RS Group Industrial Support Services UK 8,771 0.8 10,027
======================= ================================== ============ ========= =========== =========
Genuit Construction and Materials UK 8,519 0.8 10,162
======================= ================================== ============ ========= =========== =========
Chesnara Life Insurance UK 7,138 0.6 7,389
----------------------- ---------------------------------- ------------ --------- ----------- ---------
Top fifty investments 1,085,557 98.8
------------------------------------------------------------------------- --------- ----------- ---------
Accton Technology Telecommunications Equipment Taiwan 7,051 0.7 5,273
======================= ================================== ============ ========= =========== =========
Moonpig Retailers UK 5,703 0.5 7,278
----------------------- ---------------------------------- ------------ --------- ----------- ---------
Total investments 1,098,311 100.0
------------------------------------------------------------------------- --------- ----------- ---------
Ordinary shares unless otherwise stated.
Summary of Investment Changes During the Year
Valuation Valuation
30 June 2022 Transactions Gains/(losses) 30 June 2023
GBP'000 % GBP'000 GBP'000 GBP'000 %
================== ========= ===== ============ ============== ========= =====
Equities
================== ========= ===== ============ ============== ========= =====
UK 942,138 85.7 (56,917) 13,206 898,427 81.8
================== ========= ===== ============ ============== ========= =====
Denmark 20,888 1.9 (5,434) 6,785 22,239 2.0
================== ========= ===== ============ ============== ========= =====
Finland 9,047 0.8 3,581 1,025 13,653 1.3
================== ========= ===== ============ ============== ========= =====
France 37,496 3.4 12,068 6,311 55,875 5.1
================== ========= ===== ============ ============== ========= =====
Norway 20,582 1.9 (5,491) (5,768) 9,323 0.9
================== ========= ===== ============ ============== ========= =====
Singapore 14,833 1.4 5,718 573 21,124 1.9
================== ========= ===== ============ ============== ========= =====
Switzerland 23,009 2.1 10,892 2,159 36,060 3.3
================== ========= ===== ============ ============== ========= =====
Sweden 14,075 1.3 - 2,619 16,694 1.5
================== ========= ===== ============ ============== ========= =====
Taiwan 5,273 0.5 - 1,778 7,051 0.6
================== ========= ===== ============ ============== ========= =====
United States 11,452 1.0 2,499 3,914 17,865 1.6
------------------ --------- ----- ------------ -------------- --------- -----
Total investments 1,098,793 100.0 (33,084) 32,602 1,098,311 100.0
------------------ --------- ----- ------------ -------------- --------- -----
Directors' Report
The Directors present their report and the audited financial
statements for the year ended 30 June 2023.
Results and Dividend Policy
The financial statements for the Year indicate a total return
attributable to equity shareholders for the year of GBP73,486,000
(2022 - loss of GBP41,101,000) and an explanation for the Company's
financial performance may be found in the Chair's Statement..
On 1 November 2022, the Company declared a first interim
dividend of 8.25p per share to be paid on 15 December 2022, a
second interim dividend of 8.25p per share to be paid on 16 March
2023 and a third interim dividend of 8.25p per share to be paid on
15 June 2023.
The Company further announced, on 1 August 2023, the payment to
shareholders on 14 September 2023 of a fourth interim dividend for
the year of 12.75p per share (2022 - 11.25p) with an ex-dividend
date of 18 August 2022 and a record date of 17 August 2023. This
resulted in total dividends of 37.5p per share for the year ended
30 June 2023, an increase of 4.2% on the 36.0p per share paid for
the prior year, which represented the 50(th) year of consecutive
growth in the Company's annual dividend.
The Board is proposing to maintain the dividend policy of paying
four interim dividends each year. In line with good corporate
governance, the Board therefore proposes to put the Company's
dividend policy to Shareholders for approval at the AGM as
resolution 4. At the AGM on 1 November 2022, shareholders approved
a dividend policy to pay four quarterly interim dividends per
year.
Principal Activity and Status
The Company, which was incorporated in 1923, is registered as a
public limited company in Scotland under company number SC012725
and is an investment company within the meaning of Section 833 of
the Companies Act 2006.
The Company has been accepted by HM Revenue & Customs as an
investment trust subject to the Company continuing to meet the
relevant eligibility conditions of Section 1158 of the Corporation
Tax Act 2010 and the ongoing requirements of Part 2 Chapter 3
Statutory Instrument 2011/2999 for all financial years commencing
on or after 1 July 2012. The Directors are of the opinion that the
Company has conducted its affairs during the Year so as to enable
it to comply with the ongoing requirements for investment trust
status.
The Company has conducted its affairs so as to satisfy the
requirements as a qualifying security for Individual Savings
Accounts. The Directors intend that the Company will continue to
conduct its affairs in this manner.
Capital Structure and Voting Rights
At 30 June 2023, the Company had 111,720,001 (2022 -
116,690,472) fully paid Ordinary shares of 25p each with voting
rights in issue and an additional 7,809,531 (2022 - 2,839,060)
shares in Treasury. During the Year, 4,970,471 Ordinary shares were
bought back into Treasury (2022 - 356,015).
Since the year end, the Company has bought back a further
1,788,000 Ordinary shares into treasury. Accordingly, as at the
date of this Report, the Company's issued share capital consisted
of 109,932,001 Ordinary shares of 25 pence each and 9,597,531
Ordinary shares held in treasury.
Ordinary shareholders are entitled to vote on all resolutions
which are proposed at general meetings of the Company. The Ordinary
shares, excluding shares in Treasury, carry a right to receive
dividends. On a winding up, after meeting the liabilities of the
Company, the surplus assets will be paid to Ordinary shareholders
in proportion to their shareholdings. There are no restrictions on
the transfer of Ordinary shares in the Company other than certain
restrictions which may be applied from time to time by law (for
example, laws prohibiting insider trading).
Manager and Company Secretary
The Manager has been appointed by the Company, under a
management agreement, to provide investment management, risk
management, administration and company secretarial services as well
as promotional activities. The Company's portfolio is managed by
the Investment Manager by way of a group delegation in place with
the Manager. In addition, the Manager has sub-delegated promotional
activities to the Investment Manager and administrative and
secretarial services to abrdn Holdings Limited.
Under the management agreement, the Manager is entitled to a
monthly fee of one-twelfth of: 0.55% pa on the first GBP350 million
of net assets, 0.45% pa on net assets between GBP350 million and
GBP450 million and 0.25% pa on any net assets in excess of GBP450
million.
The value of any investments in unit trusts, open ended and
closed ended investment companies and investment trusts of which
the Manager, or another company within abrdn, is the operator,
manager or investment adviser, is deducted from net assets when
calculating the fee.
The management agreement is terminable on not less than three
months' notice. In the event of termination by the Company on less
than the agreed notice period, compensation is payable to the
Manager in lieu of the unexpired notice period.
An annual secretarial fee of GBP75,000 (plus applicable VAT) is
payable to abrdn Holdings Limited, which is chargeable 100% to
revenue. An annual fee equivalent to up to 0.05% of gross assets
(calculated at 30 September each year) is paid to the Investment
Manager to cover promotional activities undertaken on behalf of the
Company.
The finance costs and investment management fees are charged 70%
to capital and 30% to revenue in line with the Board's expectation
of the split of future investment returns.
The management, secretarial and promotional activity fees paid
to subsidiaries of abrdn during the Year are shown in notes 4 and 5
to the financial statements.
External Agencies
The Board has contractually delegated to external agencies,
including the Manager and other service providers, certain services
including: the management of the investment portfolio, the
day-to-day accounting and company secretarial requirements, the
depositary services (which include cash monitoring, the custody and
safeguarding of the Company's financial instruments and monitoring
the Company's compliance with investment limits and leverage
requirements) and the share registration services. Each of these
contracts was entered into after full and proper consideration by
the Board of the quality and cost of services offered in so far as
they relate to the affairs of the Company. In addition, ad hoc
reports and information are supplied to the Board as requested.
Directors
As at the date of this Report, the Board consisted of a
non-executive Chair and five non-executive Directors.
Neil Rogan, Stephanie Eastment, Peter Tait, Merryn Somerset
Webb, Alan Giles and Nandita Sahgal Tully were Directors throughout
the Year. Peter Tait is the Senior Independent Director.
Board Diversity
The Board recognises the importance of having a range of
skilled, experienced individuals with the right knowledge
represented on the Board in order to allow it to fulfil its
obligations. The Board also recognises the benefits and is
supportive of, and will give due regard to, the principle of
diversity in its recruitment of new Board members. The Board will
not display any bias for age, gender, race, sexual orientation,
socio-economic background, religion, ethnic or national origins or
disability in considering the appointment of Directors. The Board
will continue to ensure that all appointments are made on the basis
of merit against the specification prepared for each appointment.
The Board will take account of the targets set out in the FCA's
Listing Rules, which are set out below.
The Board has resolved that the Company's year end date is the
most appropriate date for disclosure purposes. The following
information has been provided by each Director through the
completion of questionnaires.
Table for reporting on sex as at 30 June 2023
Number Percentage Number of senior Number in Percentage
of board of the positions executive of executive
members board on the board management management
(CEO, CFO,
Chair and SID)
===================== ========= ========== ================ ============ ==============
n/a n/a n/a
Men 3 50% (note 3) (note 3) (note 3)
===================== ========= ========== ================ ============ ==============
Women 3 50%
(note 1)
===================== ========= ========== ================ ============ ==============
Not specified/prefer - -
not to say
===================== ========= ========== ================ ============ ==============
Table for reporting on e thnic background as at 30 June 2023
Number Percentage Number of senior Number Percentage
of board of the positions in executive of executive
members board on the board management management
(CEO, CFO,
Chair and SID)
=========================== ========= ========== ================ ============== ==============
White British or other
White n/a
(including minority-white n/a (note n/a
groups) 5 83.3% (note 3) 3) (note 3)
=========================== ========= ========== ================ ============== ==============
Asian/Asian British 1 16.7%
(note 2)
=========================== ========= ========== ================ ============== ==============
Not specified/prefer - -
not to say
=========================== ========= ========== ================ ============== ==============
Notes:
1. Meets target that at least 40% of Directors are women as set out in LR 9.8.6R (9)(a)(i)
2. Meets target that at least one Director is from a minority
ethnic background as set out in LR 9.8.6R (9)(a)(iii)
3. This column is not applicable as the Company is externally
managed and does not have any executive staff, specifically it does
not have either a CEO or CFO. The Company considers that the roles
of Chair of the Board, Senior Independent Director and Chair of the
Audit Committee are senior board positions and accordingly that the
Company meets in spirit the requirement that at least one of the
senior board positions is held by a woman.
The Role of the Chair and Senior Independent Director
The Chair is responsible for providing effective leadership to
the Board, by setting the tone of the Company, demonstrating
objective judgement and promoting a culture of openness and debate.
The Chair facilitates the effective contribution of, and encourages
active engagement by, each Director. In conjunction with the
Company Secretary, the Chair ensures that Directors receive
accurate, timely and clear information to assist them with
effective decision-making. The Chair acts upon the results of the
Board evaluation process by recognising strengths and addressing
any weaknesses and also ensures that the Board engages with major
shareholders and that all Directors understand shareholder
views.
The Senior Independent Director ("SID") acts as a sounding board
for the Chair and acts as an intermediary for other directors, when
necessary. The SID takes responsibility for an orderly succession
process for the Chair and leads the annual appraisal of the Chair's
performance. The SID is also available to shareholders to discuss
any concerns they may have.
Management of Conflicts of Interest, Anti-Bribery Policy and Tax
Evasion Policy
The Board has a procedure in place to deal with a situation
where a Director has a conflict of interest. As part of this
process, the Directors prepare a list of other positions held and
all other conflict situations that may need to be authorised either
in relation to the Director concerned or his/her connected persons.
The Board considers each Director's situation and decides whether
to approve any conflict, taking into consideration what is in the
best interests of the Company and whether the Director's ability to
act in accordance with his/her wider duties is affected. Each
Director is required to notify the Company Secretaries of any
potential, or actual, conflict situations which will need
authorising by the Board. Authorisations given by the Board are
reviewed at each Board meeting.
The Board takes a zero-tolerance approach to bribery and has
adopted appropriate procedures designed to prevent bribery. abrdn
also takes a zero-tolerance approach and has its own detailed
policy and procedures in place to prevent bribery and corruption.
It is the Company's policy to conduct all of its business in an
honest and ethical manner. The Company takes a zero-tolerance
approach to facilitation of tax evasion, whether under UK law or
under the law of any foreign country and its full policy on tax
evasion may be found on its website.
Directors' Insurance and Indemnities
The Company's Articles of Association indemnify each of the
Directors out of the assets of the Company against any liabilities
incurred by them as a Director of the Company in defending
proceedings, or in connection with any application to the Court in
which relief is granted. In addition, the Directors have been
granted qualifying indemnity provisions by the Company which are
currently in force. Directors' and Officers' liability insurance
cover has been maintained throughout the Year at the expense of the
Company.
Corporate Governance
The Company is committed to high standards of corporate
governance and its Statement of Corporate Governance is included in
the published Annual Report.
Matters Reserved for the Board
The Board sets the Company's objectives and ensures that its
obligations to its shareholders are met. It has formally adopted a
schedule of matters which are required to be brought to it for
decision, thus ensuring that it maintains full and effective
control over appropriate strategic, financial, operational and
compliance issues.
These matters include:
-- the maintenance of clear investment objectives and risk
management policies;
-- the monitoring of the business activities of the Company
ranging from analysis of investment performance through to review
of quarterly management accounts;
-- monitoring requirements such as approval of the Half-Yearly
Report and Annual Report and financial statements and approval and
recommendation of any dividends;
-- setting the range of gearing in which the Manager may
operate;
-- major changes relating to the Company's structure including
share buy-backs and share issuance;
-- Board appointments and removals and the related terms;
-- authorisation of Directors' conflicts or possible conflicts
of interest;
-- terms of reference and membership of Board Committees;
-- appointment and removal of the Manager and the terms and
conditions of the Management Agreement relating thereto; and
-- London Stock Exchange/Financial Conduct Authority -
responsibility for approval of all circulars, listing particulars
and other releases concerning matters decided by the Board.
Full and timely information is provided to the Board to enable
it to function effectively and to allow the Directors to discharge
their responsibilities.
Consumer Duty
The FCA's Consumer Duty rules were published in July 2022. The
rules comprise a fundamental component of the FCA's consumer
protection strategy and aim to improve outcomes for retail
customers across the entire financial services industry through the
assessment of various outcomes, one of which is an assessment of
whether a product provides value. Under the Consumer Duty, the
Manager is the product 'manufacturer' of the Company and therefore
the Manager was required to publish its assessment of value from
April 2023. Using a newly developed assessment methodology, the
Manager assessed the Company as 'expected to provide fair value for
the reasonably foreseeable future'. As this was the first year of
assessment, the Board gained an understanding of the Manager's
basis of assessment and no concerns were identified with either the
assessment method or the outcome of the assessment. In future years
the Management Engagement Committee will monitor the assessment
method as well as the outcome and is amending its terms of
reference accordingly.
Board Committees
The Board has appointed a number of Committees as set out below.
Copies of their terms of reference, which define the
responsibilities and duties of each Committee, are available on the
Company's website.
Audit Committee
The Audit Committee Report is included in the published Annual
Report.
Management Engagement Committee
The terms and conditions of the Company's agreement with the
Manager, set out above, are considered by the Management Engagement
Committee which comprises the whole Board and is chaired by Neil
Rogan. The key responsibilities of the Management Engagement
Committee include:
-- monitoring and evaluating the performance of the Manager;
-- reviewing, at least annually, the continued retention of the
Manager;
-- reviewing, at least annually, the terms of appointment of the
Manager including, but not limited to, the level and methodology of
the management fees as well as the notice period of the
Manager.
In monitoring the performance of the Manager, the Committee
considers the investment record of the Company over the short and
long term, taking into account its performance against the
Benchmark, peer group investment trusts and open-ended funds, and
against its delivery of the investment objective to shareholders.
The Committee also reviews the management processes, risk control
mechanisms and promotional activities of the Manager.
At its meeting in May 2023, the Committee undertook a review
covering all of the services provided to the Company by the Manager
including investment management, risk management and internal
controls, marketing and investor relations, company secretarial and
administration services, and also included consideration as to the
appropriateness of the management fee arrangements. In light of the
outcome of the review, the Directors consider the continuing
appointment of the Manager, on the current terms, to be in the best
interests of shareholders because they believe that the Manager has
the investment management, promotional and associated secretarial
and administrative skills required for the effective operation of
the Company.
Nomination Committee
The Board has established a Nomination Committee, comprising all
of the Directors, with Neil Rogan as Chair. The Committee is
responsible for:
-- determining the overall size and composition of the Board
(including the skills, knowledge, experience and diversity);
-- undertaking longer term succession planning, including
setting a policy on tenure for Directors;
-- undertaking an annual evaluation of the Directors, including
establishing that each Director possesses the capacity to commit
sufficient time to discharge their responsibilities;
-- oversight of appointments to the Board, including open
advertising or engagement of independent search consultants, with a
view to attracting candidates from a wide range of backgrounds and
with different experience, with due regard to the benefits of
diversity on the Board;
-- assessing, annually, the effectiveness and independence of
each Director; and
-- making recommendations for the election or re-election of any
Director, having evaluated their individual performance, capacity
and contribution.
The Committee's overriding priority in appointing new Directors
is to identify the candidate with the optimal range of skills and
experience to complement the existing Directors. The Board also
recognises the benefits, and is supportive, of the principle of
diversity in its recruitment of new Directors.
During the Year, through the work of the Nomination Committee,
the Directors undertook a review of the Board, its Committees and
the performance of individual Directors. The process involved the
completion of questionnaires by each Director with the results
discussed by the Board thereafter, with appropriate action points
agreed. Following the evaluation process, the Board concluded that
it operates effectively to promote the success of the Company and
that each Director makes a significant contribution to the
collective Board. The review of the Chair was undertaken by the
Senior Independent Director.
The Directors, excluding the Chair and Peter Tait, undertook an
exercise to review the chair of the Company on the retirement of
the current Chair. Being a candidate, Peter Tait recused himself
from this discussion, which was led by the Chair of the Audit
Committee. Further to the decision to appoint Peter Tait to the
role, the Committee considered, in the absence of Alan Giles, the
latter's appointment as Senior Independent Director, as successor
to Peter Tait. Following these changes, the Committee reviewed the
Board succession plan and, with the aim of restoring the Board to
six members, intends to undertake recruitment of new Directors in
due course.
Re-election of Directors
The Directors attended scheduled meetings, including a strategy
session during the Year, as follows (with their eligibility to
attend the relevant meetings in brackets). The Board meets more
frequently when business needs require:
Management
Audit Engagement Nomination Remuneration
Board Committee Committee Committee Committee
Meetings Meetings Meetings Meetings Meetings
(6) (3) (2) (2) (1)
========== ========= ========== =========== ============= ==============
Neil
Rogan(A) 6 - 2 2 1
========== ========= ========== =========== ============= ==============
Stephanie
Eastment 6 3 2 2 1
========== ========= ========== =========== ============= ==============
Peter
Tait 6 3 2 2 1
========== ========= ========== =========== ============= ==============
Merryn
Somerset
Webb 6 3 2 2 1
========== ========= ========== =========== ============= ==============
Alan
Giles 6 3 2 2 1
========== ========= ========== =========== ============= ==============
Nandita
Sahgal
Tully 6 3 2 2 1
========== ========= ========== =========== ============= ==============
(A) Not a member of the Audit
Committee but attended all of the
meetings at the invitation of the
Committee Chair.
The Board as a whole believes that Neil Rogan, Peter Tait,
Stephanie Eastment, Alan Giles, Merryn Somerset Webb and Nandita
Sahgal Tully each remains independent of the Manager and free of
any relationship which could materially interfere with the exercise
of his or her independent judgement on issues of strategy,
performance, resources and standards of conduct and confirms that,
following formal performance evaluations, the individuals'
performance continues to be effective and demonstrates commitment
to the role.
The biographies of each of the Directors seeking re-election are
shown on the Company's website and include their experience, length
of service and the contribution that each Director makes to the
Board. Each Director has the requisite high level and range of
business and financial experience which enables the Board to
provide clear and effective leadership and proper stewardship of
the Company.
Neil Rogan is not standing for re-election as a Director and
will retire as a Director at the conclusion of the AGM. Merryn
Somerset Webb has decided to not seek re-election as a Director and
will retire from the Board at the conclusion of the AGM; this is in
order that she is able to pursue conference hosting opportunities
with interactive investor and other organisations without any risk
of compromising her independence.
Stephanie Eastment, Alan Giles, Peter Tait and Nandita Sahgal
Tully, each being eligible, offer themselves for re-election as
Directors of the Company at the AGM on 7 November 2023.
Policy on Tenure
The Committee has adopted a policy whereby all Directors will
stand for re-election at each AGM. In addition Directors, including
the Chair, will not stand for re-election as a Director of the
Company later than the AGM following the ninth anniversary of their
appointment to the Board unless in relation to exceptional
circumstances.
Led by Peter Tait as Senior Independent Director, the other
Directors, in the absence of Neil Rogan, had determined in 2022
that it was in the best interests of shareholders that Neil Rogan
continue as Chair in order to oversee the Company's centenary in
2023.
Remuneration Committee
The Board has established a Remuneration Committee, comprising
all of the Directors, whose Chair is Peter Tait. The Directors'
Remuneration Report in the published Annual Report sets out the
responsibilities of the Committee and the work undertaken by the
Committee during the Year.
Accountability and Audit
The responsibilities of the Directors and the auditor in
connection with the financial statements appear below and in the
published Annual Report.
The Directors who held office at the date of this Report each
confirm that, so far as they are aware, there is no relevant audit
information of which the Company's auditor is unaware and that they
have taken all the steps that they could reasonably be expected to
have taken as a Director in order to make themselves aware of any
relevant audit information and to establish that the Company's
auditor is aware of that information. Further, there have been no
important, additional events since the year end which warrant
disclosure. The Directors confirm that no non-audit services were
provided by the auditor during the Year and, after reviewing the
auditor's procedures in connection with the provision of any such
services, remain satisfied that the auditor's objectivity and
independence is being safeguarded.
Going Concern
The Directors have undertaken a rigorous review and consider
both that there are no material uncertainties and that the adoption
of the going concern basis of accounting is appropriate. This
conclusion is consistent with the longer term Viability Statement
set out in the Strategic Report.
The Company's assets consist primarily of a diverse portfolio of
listed equity shares nearly all of which, in most circumstances,
are realisable within a short timescale. The Board has set limits
for borrowing and regularly reviews the level of any gearing, cash
flow projections and compliance with banking and loan note
covenants.
The Directors are mindful of the principal risks and
uncertainties and have reviewed forecasts detailing revenue and
liabilities. The Directors are satisfied that the Company has
adequate resources to continue in operational existence for the
foreseeable future, being at least 12 months from the date of
approval of this Annual Report.
Relations with Shareholders
The Directors place great importance on communication with
shareholders. The Company's shareholder register is
retail-dominated and the Manager, together with the Company's
broker, regularly meets with current and prospective shareholders
to discuss performance. The Board receives investor relations
updates from the Manager on at least a quarterly basis. Any changes
in the shareholder register as well as shareholder feedback is
discussed by the Directors at each Board meeting.
Regular updates are provided to shareholders through the Annual
Report, Half Yearly Report, monthly factsheets, company
announcements, including daily net asset value announcements, all
of which are available through the Company's website at:
murray-income.co.uk . The Annual Report is also widely distributed
to other parties who have an interest in the Company's performance.
Shareholders and investors may obtain up-to-date information on the
Company through its website or via abrdn's Customer Services
Department.
The Board's policy is to communicate directly with shareholders
and their representative bodies without the involvement of the
management group (either the Company Secretary or abrdn) in
situations where direct communication is required and
representatives from the Board offer to meet with major
shareholders on an annual basis in order to gauge their views. The
Company Secretary acts on behalf of the Board, not the Manager, and
there is no filtering of communication. At each Board meeting the
Board receives full details of any communication from shareholders
to which the Chair responds, as appropriate, on behalf of the
Board.
In addition, in relation to institutional shareholders, members
of the Board may be either accompanied by the Manager or conduct
meetings in the absence of the Manager.
The Company's Annual General Meeting ordinarily provides a
forum, both formal and informal, for shareholders to meet and
discuss issues with the Directors and Investment Manager. The
Notice of AGM included within the Annual Report is normally sent
out at least 20 working days in advance of the meeting.
The Company will also hold an online presentation for existing
and potential shareholders on 3 November 2023. Further information
on how to register may be found in the Chair's Statement.
Relations with Suppliers, Customers and Others
The Directors have regard to the need to foster the Company's
business relationships with suppliers, customers and others, and
the effect of that regard, including on the principal decisions
taken by the Company during the financial year; further information
on the Company's responsibilities under Section 172 of Companies
Act 2006 may be found above.
Independent Auditor
Shareholders approved the re-appointment of
PricewaterhouseCoopers LLP as the Company's auditor at the AGM on 1
November 2022 and resolutions to approve its re-appointment for the
year to 30 June 2024, and to authorise the Audit Committee to
determine its remuneration, will be proposed at the forthcoming
AGM.
Substantial Interests
As at 30 June 2023 and 31 August 2023 the following interests
over 3% in the issued Ordinary share capital of the Company
(excluding treasury shares) had been disclosed in accordance with
the requirements of the FCA's Guidance and Transparency Disclosure
Rules:
30 June 2023 31 August
2023
================ ================= =================
Shareholder Number Number
of shares % of shares %
held held held held
================ ========== ===== ========== =====
Interactive
Investor
(execution
only) 16,674,055 14.9 16,565,575 15.0
================ ========== ===== ========== =====
Hargreaves
Lansdown
(execution
only) 15,057,918 13.5 15,195,318 13.8
================ ========== ===== ========== =====
abrdn retail
plans 12,644,557 11.3 11,888,778 10.8
================ ========== ===== ========== =====
Rathbones 11,956,024 10.7 11,842,207 10.7
================ ========== ===== ========== =====
A J Bell
(execution
only) 4,042,047 3.6 4,044,782 3.7
================ ========== ===== ========== =====
Charles Stanley 3,500,629 3.1 3,312,094 3.0
================ ========== ===== ========== =====
The above interests, as at 31 August 2023, were unchanged as at
the date of approval of this Report.
Future Developments of the Company
Disclosures relating to the future developments of the Company
may be found in the Chair's Statement.
Disclosures Required by FCA Listing
Rule 9.8.4
This rule requires listed companies to report certain
information in a single identifiable section of their annual
financial reports. None of the prescribed information is applicable
to the Company in the Year.
Financial Instruments
The financial risk management objectives and policies arising
from financial instruments and the exposure of the Company to risk
are disclosed in note 18 to the financial statements.
Annual General Meeting ("AGM")
Among the special business being put at the AGM of the Company
to be held on 7 November 2023, the following resolutions will be
proposed:
Authority to allot shares and disapply pre-emption rights
(Resolutions 11 and 12)
Ordinary resolution No. 11 will renew the authority to allot the
unissued share capital up to an aggregate nominal amount of GBP1.4m
(equivalent to approximately 5.5m Ordinary shares, or, if less, 5%
of the Company's existing issued share capital (excluding treasury
shares) on the date of passing of this resolution). Such authority
will expire on the date of the AGM in 2024 or on 31 December 2024,
whichever is earlier. This means that the authority will require to
be renewed at the next AGM.
When shares are to be allotted for cash, Section 561 of the
Companies Act 2006 (the "Act") provides that existing shareholders
have pre-emption rights and that the new shares to be issued, or
sold from treasury, must be offered first to such shareholders in
proportion to their existing holding of shares. However,
shareholders can, by special resolution, authorise the Directors to
allot shares or sell from treasury otherwise than by a pro rata
issue to existing shareholders. Special resolution No. 12 will, if
passed, give the Directors power to allot for cash or sell from
treasury equity securities up to an aggregate nominal amount of
GBP2.8m (equivalent to approximately 11.0m Ordinary shares, or, if
less, 10% of the Company's existing issued share capital (excluding
treasury shares) on the date of passing of this resolution, as if
Section 561 of the Act does not apply). This authority will also
expire on the date of the AGM in 2024 or on 31 December 2024,
whichever is earlier. This authority will not be used in connection
with a rights issue by the Company.
The Directors intend to use the authorities given by resolutions
11 and 12 to allot shares or sell shares from treasury and disapply
pre-emption rights only in circumstances where this will be clearly
beneficial to shareholders as a whole. The issue proceeds would be
available for investment in line with the Company's investment
policy. No issue of shares will be made which would effectively
alter the control of the Company without the prior approval of
shareholders in general meeting. It is the intention of the Board
that any issue of shares or any re-sale of treasury shares would
only take place at a price not less than 0.5% above the NAV per
share prevailing at the date of sale. It is also the intention of
the Board that sales from treasury would only take place when the
Board believes that to do so would assist in the provision of
liquidity to the market.
Purchase of the Company's own Ordinary shares (Resolution
13)
At the AGM held on 1 November 2022, shareholders approved the
renewal of the authority permitting the Company to repurchase its
Ordinary shares. The Directors wish to renew the authority given by
shareholders at the previous AGM. A share buy-back facility
enhances shareholder value by acquiring shares at a discount to NAV
as and when the Directors consider this to be appropriate. The
purchase of shares, when they are trading at a discount to NAV per
share, should result in an increase in the NAV per share for the
remaining shareholders. This authority, if conferred, will only be
exercised if to do so would result in an increase in the NAV per
share for the remaining shareholders and if it is in the best
interests of shareholders generally. Any purchase of shares will be
made within guidelines established from time to time by the Board.
It is proposed to seek shareholder authority to renew this facility
for another year at the AGM.
Under the FCA's Listing Rules, the maximum price that may be
paid on the exercise of this authority must not exceed the higher
of (i) 105% of the average of the middle market quotations for the
shares over the five business days immediately preceding the date
of purchase and (ii) the higher of the last independent trade and
the highest current independent bid on the trading venue where the
purchase is carried out. The minimum price which may be paid is 25p
per share. Shares which are purchased under this authority will
either be cancelled or held as treasury shares. Special resolution
No. 13 will renew the authority to purchase in the market a maximum
of 14.99% of shares in issue at the date of passing of the
resolution (amounting to approximately 16.5m Ordinary shares). Such
authority will expire on the date of the AGM in 2024, or on 31
December 2024, whichever is earlier. This means in effect that the
authority will have to be renewed at the next AGM, or earlier, if
the authority has been exhausted. No dividends may be paid on any
shares held in treasury and no voting rights will attach to such
shares. The benefit of the ability to hold treasury shares is that
such shares may be sold at short notice. This should give the
Company greater flexibility in managing its share capital, and
improve liquidity in its shares.
Recommendation
The Directors believe that the resolutions to be proposed at the
AGM are in the best interests of the Company and its shareholders
as a whole, and recommend that shareholders vote in favour of the
resolutions, as the Directors intend to do in respect of their own
beneficial shareholdings, amounting to 65,228 Ordinary shares,
representing 0.04% of the Company's issued share capital (excluding
treasury shares) at 30 June 2023.
On behalf of the Board
Neil Rogan
Chair
19 September 2023
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have elected to prepare the financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law) including FRS 102
'The Financial Reporting Standard applicable in the UK and Republic
of Ireland'. Under company law the Directors must not approve the
financial statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Company and of
the profit or loss of the Company for that period.
In preparing these financial statements, the Directors are
required to:
-- select suitable accounting policies and then apply
them consistently;
-- make judgments and accounting estimates that are reasonable
and prudent;
-- state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and
explained in the financial statements; and
-- adopt a going concern basis of accounting for the financial
statements unless it is inappropriate to assume that the Company
will continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements 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.
Under applicable law and regulations, the Directors are also
responsible for preparing a Directors' Report, Directors'
Remuneration Report, Strategic Report and Statement of Corporate
Governance that comply with that law and those regulations.
The financial statements are published on murray-income.co.uk
which is a website maintained by the Company's Manager. The work
carried out by the auditor does not involve consideration of the
maintenance and integrity of the website and, accordingly, the
auditor accepts no responsibility for any changes that have
occurred to the financial statements since being initially
presented on the website. Legislation in the UK governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
Each of the Directors confirms to the best of his or her
knowledge that:
-- the financial statements, prepared in accordance with the
applicable accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit of the
Company;
-- the Annual Report includes a fair review of the development
and performance of the business and the position of the Company,
together with a description of the principal risks and
uncertainties that the Company faces;
-- in the opinion of the Board, the Annual Report and financial
statements taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders to assess
the Company's position and performance, business model and
strategy; and
-- the financial statements are prepared on an ongoing concern
basis.
For and on behalf of the Board of Murray Income Trust PLC
Neil Rogan
Chair
19 September 2023
Statement of Comprehensive Income
Year ended 30 June Year ended 30 June
2023 2022
============================== ===== ========================= ===========================
Revenue Capital Total Revenue Capital Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============================== ===== ======= ======= ======= ======= ======== ========
Gains/(losses) on investments 10 - 32,602 32,602 - (83,786) (83,786)
============================== ===== ======= ======= ======= ======= ======== ========
Currency gains/(losses) - 733 733 - (216) (216)
============================== ===== ======= ======= ======= ======= ======== ========
Income 3 48,879 - 48,879 51,018 - 51,018
============================== ===== ======= ======= ======= ======= ======== ========
Investment management fees 4 (1,141) (2,663) (3,804) (1,199) (2,798) (3,997)
============================== ===== ======= ======= ======= ======= ======== ========
Administrative expenses 5 (1,390) - (1,390) (1,350) - (1,350)
============================== ===== ======= ======= ======= ======= ======== ========
Net return before finance
costs and tax 46,348 30,672 77,020 48,469 (86,800) (38,331)
============================== ===== ======= ======= ======= ======= ======== ========
Finance costs 6 (735) (1,714) (2,449) (692) (1,615) (2,307)
============================== ===== ======= ======= ======= ======= ======== ========
Net return before tax 45,613 28,958 74,571 47,777 (88,415) (40,638)
============================== ===== ======= ======= ======= ======= ======== ========
Taxation 8 (1,085) - (1,085) (463) - (463)
============================== ===== ======= ======= ======= ======= ======== ========
Net return after tax 44,528 28,958 73,486 47,314 (88,415) (41,101)
============================== ===== ======= ======= ======= ======= ======== ========
Return per Ordinary share 9 38.7p 25.2p 63.9p 40.5p (75.7)p (35.2)p
============================== ===== ======= ======= ======= ======= ======== ========
The total column of this statement represents the profit and loss account
of the Company prepared in accordance with FRS 102. The 'Revenue' and
'Capital' columns represent supplementary information prepared under
guidance issued by the Association of Investment Companies.
All revenue and capital items in the above statement derive from continuing
operations.
No operations were acquired or discontinued in the year.
The accompanying notes are an integral part of the financial statements.
Statement of Financial Position
As at As at
30 June 2023 30 June 2022
Notes GBP'000 GBP'000
=========================================== ====== ============ ============
Fixed assets
=========================================== ====== ============ ============
Investments at fair value through profit
or loss 10 1,098,311 1,098,793
------------------------------------------- ------ ------------ ------------
Current assets
=========================================== ====== ============ ============
Other debtors and receivables 11 7,274 9,061
=========================================== ====== ============ ============
Cash and cash equivalents 12 15,115 20,131
------------------------------------------- ------ ------------ ------------
22,389 29,192
------------------------------------------- ------ ------------ ------------
Creditors: amounts falling due within
one year
=========================================== ====== ============ ============
Other payables (5,997) (1,513)
=========================================== ====== ============ ============
Bank loans (6,378) (6,507)
=========================================== ====== ============ ============
13 (12,375) (8,020)
------------------------------------------- ------ ------------ ------------
Net current assets 10,014 21,172
------------------------------------------- ------ ------------ ------------
Total assets less current liabilities 1,108,325 1,119,965
------------------------------------------- ------ ------------ ------------
Creditors: amounts falling due after
more than one year
=========================================== ====== ============ ============
2.51% Senior Loan Notes (39,941) (39,930)
=========================================== ====== ============ ============
4.37% Senior Loan Notes (69,200) (70,780)
=========================================== ====== ============ ============
14 (109,141) (110,710)
------------------------------------------- ------ ------------ ------------
Net assets 999,184 1,009,255
=========================================== ====== ============ ============
Capital and reserves
=========================================== ====== ============ ============
Share capital 15 29,882 29,882
=========================================== ====== ============ ============
Share premium account 438,213 438,213
=========================================== ====== ============ ============
Capital redemption reserve 4,997 4,997
=========================================== ====== ============ ============
Capital reserve 489,428 502,672
=========================================== ====== ============ ============
Revenue reserve 36,664 33,491
------------------------------------------- ------ ------------ ------------
Total Shareholders' funds 999,184 1,009,255
------------------------------------------- ------ ------------ ------------
Net asset value per Ordinary share 16
=========================================== ====== ============ ============
Debt at fair value 911.7p 871.0p
------------------------------------------- ------ ------------ ------------
Debt at par value 894.4p 864.9p
------------------------------------------- ------ ------------ ------------
The financial statements were approved by the Board of Directors and
authorised for issue on 19 September 2023 and were signed on its behalf
by:
Neil Rogan
Chair
The accompanying notes are an integral part of the financial statements.
Statement of Changes in Equity
For the year ended 30 June 2023
Share Capital
Share premium redemption Capital Revenue
capital account reserve reserve reserve Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=========================== ===== ======= ======= ========== ======== ======== =========
Balance at 1 July 2022 29,882 438,213 4,997 502,672 33,491 1,009,255
=========================== ===== ======= ======= ========== ======== ======== =========
Net return after tax - - - 28,958 44,528 73,486
=========================== ===== ======= ======= ========== ======== ======== =========
Buyback of Ordinary shares
for treasury 15 - - - (42,202) - (42,202)
=========================== ===== ======= ======= ========== ======== ======== =========
Dividends paid 7 - - - - (41,355) (41,355)
--------------------------- ----- ------- ------- ---------- -------- -------- ---------
Balance at 30 June 2023 29,882 438,213 4,997 489,428 36,664 999,184
--------------------------- ----- ------- ------- ---------- -------- -------- ---------
For the year ended 30 June 2022
===============================================================================================
Share Capital
Share premium redemption Capital Revenue
capital account reserve reserve reserve Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=========================== ===== ======= ======= ========== ======== ======== =========
Balance at 1 July 2021 29,882 438,213 4,997 594,282 26,485 1,093,859
=========================== ===== ======= ======= ========== ======== ======== =========
Net (loss)/return after
tax - - - (88,415) 47,314 (41,101)
=========================== ===== ======= ======= ========== ======== ======== =========
Buyback of Ordinary shares
for treasury 15 - - - (3,195) - (3,195)
=========================== ===== ======= ======= ========== ======== ======== =========
Dividends paid 7 - - - - (40,308) (40,308)
--------------------------- ----- ------- ------- ---------- -------- -------- ---------
Balance at 30 June 2022 29,882 438,213 4,997 502,672 33,491 1,009,255
--------------------------- ----- ------- ------- ---------- -------- -------- ---------
The accompanying notes are an integral part of the financial statements.
Statement of Cash Flows
Year ended Year ended
30 June 2023 30 June 2022
Notes GBP'000 GBP'000
============================================= ====== ============ ============
Operating activities
============================================= ====== ============ ============
Net return/(loss) before finance costs
and taxation 77,020 (38,331)
============================================= ====== ============ ============
Adjustments for
============================================= ====== ============ ============
Increase/(decrease) in accrued expenses 783 (80)
============================================= ====== ============ ============
Overseas withholding tax (1,458) (1,360)
============================================= ====== ============ ============
Increase in dividend income receivable (324) (270)
============================================= ====== ============ ============
Increase in interest income receivable (54) (19)
============================================= ====== ============ ============
Interest paid (2,196) (2,272)
============================================= ====== ============ ============
(Gains)/losses on investments 10 (32,602) 83,786
============================================= ====== ============ ============
Amortisation on loan notes 6 12 12
============================================= ====== ============ ============
Accretion of loan note book cost 6 (1,581) (1,581)
============================================= ====== ============ ============
Foreign exchange (gains)/losses (733) 216
============================================= ====== ============ ============
Decrease in other debtors 47 46
============================================= ====== ============ ============
Stock dividends included in investment
income 3 (1,006) (3,728)
--------------------------------------------- ------ ------------ ------------
Net cash inflow from operating activities 37,908 36,419
--------------------------------------------- ------ ------------ ------------
Investing activities
============================================= ====== ============ ============
Purchases of investments (180,130) (238,613)
============================================= ====== ============ ============
Sales of investments 218,912 261,285
--------------------------------------------- ------ ------------ ------------
Net cash inflow from investing activities 38,782 22,672
--------------------------------------------- ------ ------------ ------------
Financing activities
============================================= ====== ============ ============
Dividends paid 7 (41,355) (40,308)
============================================= ====== ============ ============
Buyback of Ordinary shares for treasury (40,955) (3,195)
============================================= ====== ============ ============
Repayment of bank loans (6,755) (6,290)
============================================= ====== ============ ============
Draw down of bank loans 6,664 6,258
--------------------------------------------- ------ ------------ ------------
Net cash outflow from financing activities (82,401) (43,535)
--------------------------------------------- ------ ------------ ------------
(Decrease)/increase in cash (5,711) 15,556
--------------------------------------------- ------ ------------ ------------
Analysis of changes in cash during the
year
============================================= ====== ============ ============
Opening balance 20,131 4,493
============================================= ====== ============ ============
Effect of exchange rate fluctuations
on cash held 695 82
============================================= ====== ============ ============
(Decrease)/increase in cash as above (5,711) 15,556
--------------------------------------------- ------ ------------ ------------
Closing balance 15,115 20,131
--------------------------------------------- ------ ------------ ------------
Represented by:
============================================= ====== ============ ============
Cash at bank and in hand 12 1,227 1,503
============================================= ====== ============ ============
Money market funds 12 13,888 18,628
--------------------------------------------- ------ ------------ ------------
15,115 20,131
--------------------------------------------- ------ ------------ ------------
The accompanying notes are an integral part of these financial statements.
Notes to the Financial Statements
For the year ended 30 June 2023
1. Principal activity
The Company is a closed-end investment company, registered in Scotland
No SC012725, with its Ordinary shares being listed on the London
Stock Exchange.
2. Accounting policies
(a) Basis of preparation . The financial statements have been prepared
in accordance with Financial Reporting Standard 102, the Companies
Act 2006 and with the Statement of Recommended Practice 'Financial
Statements of Investment Trust Companies and Venture Capital
Trusts' issued in July 2022. The financial statements are prepared
in Sterling which is the functional currency of the Company
and rounded to the nearest GBP'000. They have also been prepared
on the assumption that approval as an investment trust will
continue to be granted. The accounting policies applied are
unchanged from the prior year and have been applied consistently.
The Directors have undertaken a rigorous review and consider
both that there are no material uncertainties and that the adoption
of the going concern basis of accounting is appropriate. This
conclusion is consistent with the longer term Viability Statement.
The Company's assets consist primarily of a diverse portfolio
of listed equity shares nearly all of which, in most circumstances,
are realisable within a short timescale. The Board has set limits
for borrowing and regularly reviews the level of any gearing,
cash flow projections and compliance with banking and loan note
covenants.
The Directors are mindful of the principal risks and uncertainties
and have reviewed forecasts detailing revenue and liabilities.
The Directors are satisfied that the Company has adequate resources
to continue in operational existence for the foreseeable future,
being at least 12 months from the date of approval of this Annual
Report.
(b) 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 receivable on or before the year
end are treated as revenue for the year. Where the Company has
elected to receive dividends in the form of additional shares
rather than cash, the amount of the cash dividend foregone is
recognised as revenue and any residual amount is recognised
as capital. Provision is made for any dividends not expected
to be received. Special dividends are credited to capital or
revenue, according to the circumstances. Dividend revenue is
presented gross of any non-recoverable withholding taxes, which
are disclosed separately within the Statement of Comprehensive
Income.
Interest receivable from cash and short-term deposits and stock
lending income is recognised on an accruals basis.
(c) Expenses . All expenses are accounted for on an accruals basis.
All expenses are charged through the revenue column of the Statement
of Comprehensive Income except as follows:
- transaction costs on the acquisition or disposal of investments
are recognised as a capital item in the Statement of Comprehensive
Income.
- expenses are charged as a capital item in the Statement of
Comprehensive Income where a connection with the maintenance
or enhancement of the value of the investments can be demonstrated.
In this respect the investment management fee has been allocated
30% to revenue and 70% to capital to reflect the Company's investment
policy and prospective income and capital growth.
(d) Taxation. Taxation represents the sum of tax currently payable
and deferred tax. Any tax payable is based on the taxable profit
for the year. Taxable profit differs from net profit as reported
in the Statement of Comprehensive Income because it excludes
items of income or expense that are taxable or deductible in
other years and it further excludes items that are never taxable
or deductible. The Company's liability for current tax is calculated
using tax rates that were applicable at the Statement of Financial
Position date.
Deferred taxation is recognised in respect of all timing differences
that have originated but not reversed at the Statement of Financial
Position date, where transactions or events that result in an
obligation to pay more tax in the future or right to pay less
tax in the future have occurred at the Statement of Financial
Position date. This is subject to deferred tax assets only being
recognised if it is considered more likely than not that there
will be suitable profits from which the future reversal of the
underlying timing differences can be deducted. Timing differences
are differences arising between the Company's taxable profits
and its results as stated in the financial statements which
are capable of reversal in one or more subsequent periods. Deferred
tax is measured on a non-discounted basis at the tax rates that
are expected to apply in the periods in which timing differences
are expected to reverse, based on tax rates and laws enacted
or substantively enacted at the Statement of Financial Position
date.
Due to the Company's status as an investment trust company and
the intention to continue meeting the conditions required to
obtain approval in the foreseeable future, the Company has not
provided deferred tax on any capital gains and losses arising
on the revaluation or disposal of investments.
The tax effect of different items of income/gain and expenditure/loss
is allocated between capital and revenue within the Statement
of Comprehensive Income on the same basis as the particular
item to which it relates using the Company's effective rate
of tax for the year, based on the marginal basis.
(e) Valuation of investments. The Company has chosen to apply the
recognition and measurement provisions of IAS 39 Financial Instruments:
Recognition and Measurement. All investments have been designated
upon initial recognition at fair value through profit or loss.
This is done because all investments are considered to form
part of a group of financial assets which is evaluated on a
fair value basis, in accordance with the Company's documented
investment strategy, and information about the grouping is provided
internally on that basis. Investments are recognised and de-recognised
at trade date where a purchase or sale is under a contract whose
terms require delivery within the timeframe established by the
market concerned, and are measured initially at fair value.
Subsequent to initial recognition, investments are valued at
fair value through profit or loss. For listed investments, this
is deemed to be bid market prices or closing prices for SETS
(London Stock Exchange's electronic trading service) stocks
sourced from the London Stock Exchange. Gains and losses arising
from changes in fair value are included in the net return for
the period as a capital item in the Statement of Comprehensive
Income and are ultimately recognised in the capital reserve.
(f) Cash and cash equivalents. 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 and that
are subject to insignificant risk of change in value.
(g) Borrowings and finance costs. Borrowings of interest bearing
bank loans and 2.51% Senior Loan Notes are recognised initially
at the fair value of the consideration received, net of any
issue expenses, and subsequently at amortised cost using the
effective interest method. Borrowings of 4.37% Senior Loan Notes,
which were novated to the Company on the merger with Perpetual
Income and Growth Investment Trust plc, were recorded initially
at their fair value of GBP73,344,000 and are amortised over
the remaining life of the loan towards their redemption value
of GBP60,000,000. The amortisation adjustment is presented as
a finance cost. Finance costs accrue using the effective interest
rate over the life of the borrowings and are allocated 30% to
revenue and 70% to capital.
(h) Traded options. The Company may enter into certain derivative
contracts (eg options) to gain exposure to the market. The option
contracts are classified as fair value through profit or loss,
held for trading, and accounted for as separate derivative contracts
and are therefore shown in other assets or other liabilities
at their fair value ie market value. The premium on the option
(as with written options generally) is treated as the option's
initial fair value and is recognised over the life of the option
in the revenue column of the Statement of Comprehensive Income
along with fair value changes in the open position which occur
due to the movement in underlying securities. Losses realised
on the exercise of the contracts are recorded in the capital
column of the Statement of Comprehensive Income as they arise.
Where the Company enters into derivative contracts to manage
market risk, gains or losses arising on such contracts are recorded
in the capital column of the Statement of Comprehensive Income.
(i) Segmental reporting. The Directors are of the opinion that the
Company is engaged in a single segment of business activity,
being investment business. Consequently, no business segmental
analysis is provided.
(j) Nature and purpose of reserves
Share capital. The Ordinary share capital on the Statement of
Financial Position relates to the number of shares in issue
and in treasury. Only when the shares are cancelled, either
from treasury or directly, is a transfer made to the capital
redemption reserve. This is a non-distributable reserve.
Share premium account. The balance classified as share premium
includes the premium above nominal value from the proceeds on
issue of any equity share capital comprising Ordinary shares
of 25p and includes the premium arising following the issue
of shares on the combination with Perpetual Income and Growth
Investment Trust plc on 17 November 2020. This is a non-distributable
reserve.
Capital redemption reserve. The capital redemption reserve reflects
the cancellation of Ordinary shares, when an amount equal to
the par value of the Ordinary share capital is transferred from
the share capital reserve to the capital redemption reserve.
This is a non-distributable reserve.
Capital reserve. This reserve reflects any gains or losses on
investments realised in the period along with any movements
in the fair value of investments held that have been recognised
in the Statement of Comprehensive Income. These include gains
and losses from foreign currency exchange differences. Additionally,
expenses, including finance costs, are charged to this reserve
in accordance with (b) and (f) above. When making a distribution
to shareholders, the Directors determine profits available for
distribution by reference to 'Guidance on realised and distributable
profits under the Companies Act 2006' issued by the Institute
of Chartered Accountants in England and Wales and the Institute
of Chartered Accountants of Scotland in April 2017. The availability
of distributable reserves in the Company is dependent on those
distributions meeting the definition of qualifying consideration
within the guidance and on available cash resources of the Company
and other accessible sources of funds. The distributable reserves
are therefore subject to any future restrictions or limitations
at the time such distribution is made.
The capital reserve, to the extent it constitutes realised profits,
is distributable. This may include unrealised (losses)/gains
on investments where these are readily convertible to cash.
The amount of the capital reserve that is distributable is complex
to determine and is not necessarily the full amount of the reserve
as disclosed within these financial statements of GBP489,428,000
as at 30 June 2023 as this is subject to fair value movements
and may not be readily realisable at short notice.
Revenue reserve. This reserve reflects all income and costs
which are recognised in the revenue column of the Statement
of Comprehensive Income. The revenue reserve is distributable
by way of dividend.
(k) Treasury shares. When the Company buys back the Company's equity
share capital as treasury shares, the amount of the consideration
paid, including directly attributable costs and any tax effects,
is recognised as a deduction from equity. When these shares
are sold or reissued subsequently, the net amount received is
recognised as an increase in equity, and the resulting surplus
or deficit on the transaction is transferred to or from the
capital reserve.
(l) Dividends payable. Final dividends are recognised from the date
on which they are approved by Shareholders. Interim dividends
are recognised when paid. Dividends are shown in the Statement
of Changes in Equity.
(m) Foreign currency. Transactions in foreign currencies are converted
to Sterling at the exchange rate ruling at the date of the transaction.
Monetary assets and liabilities and non-monetary assets held
at fair value denominated in foreign currencies are translated
into Sterling at rates of exchange ruling at the Statement of
Financial Position date. Exchange gains and losses are taken
to the Statement of Comprehensive Income as a capital or revenue
item depending on the nature of the underlying item.
(n) Significant estimates and judgements. The Directors do not believe
that any accounting estimates or judgements have been applied
to these financial statements that have a significant risk of
causing material adjustment to the carrying amount of assets
and liabilities.
3. Income
============================================ =============== ==============
2023 2022
GBP'000 GBP'000
============================================ =============== ==============
Income from investments
============================================ =============== ==============
UK dividends (all listed):
============================================ =============== ==============
- ordinary 32,132 32,710
================================================ =============== ==============
- special 353 1,676
================================================ =============== ==============
Property income dividends 814 1,153
================================================ =============== ==============
Overseas dividends (all listed)
============================================ =============== ==============
- ordinary 10,343 8,731
================================================ =============== ==============
- special 756 160
================================================ =============== ==============
Stock dividends 1,006 3,728
------------------------------------------------ --------------- --------------
45,404 48,158
------------------------------------------------ --------------- --------------
Other income
============================================ =============== ==============
Deposit interest 34 7
================================================ =============== ==============
Money Market interest 682 32
================================================ =============== ==============
Traded option premiums 2,759 2,820
================================================ =============== ==============
Compensation payments - 1
================================================ =============== ==============
3,475 2,860
------------------------------------------------ --------------- --------------
Total income 48,879 51,018
================================================ =============== ==============
All special dividends for the year of GBP1,109,000 (2022 - GBP1,836,000)
have been recognised as being revenue in nature.
During the year, the Company received premiums totalling GBP2,759,000
(2022 - GBP2,820,000) in exchange for entering into derivative
transactions. At the year end there were no open positions (2022
- none).
4. Investment management fees
2023 2022
=================== =============================== ==============================
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- --------- --------- --------- --------- --------- --------
Management fee 1,141 2,663 3,804 1,199 2,798 3,997
----------------------- --------- --------- --------- --------- --------- --------
The management fee is based on 0.55% per annum for net assets up
to GBP350 million, 0.45% per annum on the next GBP100 million of
net assets and 0.25% per annum for net assets over GBP450 million,
calculated and payable monthly. The fee has been allocated 30%
to revenue and 70% to capital. The management agreement is terminable
on three months' notice. The fee payable to the Manager at the
year end was GBP1,273,000 (2022 - GBP642,000).
Under the terms of the management agreement, the value of the Company's
investments in commonly managed funds is excluded from the calculation
of the management fee. The Company held no such commonly managed
funds at the year end (2022 - none).
5. Administrative expenses
====================================================== ============ ===========
2023 2022
GBP'000 GBP'000
====================================================== ============ ===========
Shareholders' services(A) 418 400
========================================================== ============ ===========
Directors' remuneration(B) 188 193
========================================================== ============ ===========
Secretarial fees(C) 75 75
========================================================== ============ ===========
Registrars fees 76 110
========================================================== ============ ===========
Depositary fees 90 96
========================================================== ============ ===========
Custody fees 68 60
========================================================== ============ ===========
Printing and postage 61 34
========================================================== ============ ===========
Auditor's remuneration:
====================================================== ============ ===========
- fees payable to the Company's auditor
for the audit of the Company's annual financial
statements 42 42
========================================================== ============ ===========
Legal and professional fees 38 51
========================================================== ============ ===========
Irrecoverable VAT (D) 164 126
========================================================== ============ ===========
Other expenses 170 163
---------------------------------------------------------- ------------ -----------
1,390 1,350
========================================================== ============ ===========
(A) Includes savings scheme and other wrapper administration and
promotion expenses, paid to the Manager under a delegation agreement
with the Manager to cover promotional activities during the year.
There was GBP106,000 (2022 - GBP100,000) due to the Manager in
respect of these promotional activities at the year end.
(B) Refer to the Directors' Remuneration section of the Directors'
Remuneration Report in the published Annual Report for further
details.
(C) Payable to the Manager, balance outstanding of GBP19,000 (2022
- GBP19,000) at the year end.
(D) The Company was granted VAT registered status on 18 March
2022, backdated to 1 January 2021. As a result the prior year irrecoverable
VAT includes backdated VAT of GBP28,000.
6. Finance costs
================================== ======= ======= ======= ======= ======= =======
2023 2022
================================== ========================= =========================
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
================================== ======= ======= ======= ======= ======= =======
Bank loans and overdraft interest 118 274 392 75 175 250
====================================== ======= ======= ======= ======= ======= =======
2.51% Senior Loan Note 301 703 1,004 301 703 1,004
====================================== ======= ======= ======= ======= ======= =======
4.37% Senior Loan Note 787 1,835 2,622 787 1,835 2,622
====================================== ======= ======= ======= ======= ======= =======
Amortisation of 2.51% Senior
Loan Note issue expenses 3 9 12 3 9 12
====================================== ======= ======= ======= ======= ======= =======
Amortisation of 4.37% Senior
Loan Note (474) (1,107) (1,581) (474) (1,107) (1,581)
-------------------------------------- ------- ------- ------- ------- ------- -------
735 1,714 2,449 692 1,615 2,307
-------------------------------------- ------- ------- ------- ------- ------- -------
Details of the Loan Notes and their amortisation are set out in
note 14. Finance costs are allocated 30% to revenue and 70% to
capital.
7. Ordinary dividends on equity shares
===============================================================================
2023 2022
============================================= =============== ===============
Rate GBP'000 Rate GBP'000
============================================= ====== ======= ====== =======
Fourth interim dividend previous year 11.25p 13,128 9.75p 11,412
================================================= ====== ======= ====== =======
First interim dividend current year 8.25p 9,556 8.25p 9,641
================================================= ====== ======= ====== =======
Second interim dividend current year 8.25p 9,431 8.25p 9,628
================================================= ====== ======= ====== =======
Third interim dividend current year 8.25p 9,337 8.25p 9,627
================================================= ====== ======= ====== =======
Return of unclaimed dividends (97) -
------------------------------------------------- ------ ------- ------ -------
41,355 40,308
------------------------------------------------- ------ ------- ------ -------
The fourth interim dividend for 2023 of 12.75p per Ordinary share
has not been included as a liability in these financial statements
as it was not paid until after the reporting date (14 September
2023).
The following table sets out the total dividends paid and proposed
in respect of the financial year, which is the basis on which the
requirements of Section 1158-1159 of the Corporation Tax Act 2010
are considered. The revenue available for distribution by way of
dividend for the year is GBP44,528,000 (2022 - GBP47,314,000).
2023 2022
============================================= =============== ===============
Rate GBP'000 Rate GBP'000
============================================= ====== ======= ====== =======
Three interim dividends of 8.25p each (2022:
same) 24.75p 28,324 24.75p 28,896
================================================= ====== ======= ====== =======
Fourth interim dividend 12.75p 14,088 11.25p 13,128
------------------------------------------------- ------ ------- ------ -------
37.50p 42,412 36.00p 42,024
------------------------------------------------- ------ ------- ------ -------
8. Taxation
2023 2022
=================================== ========================= ===========================
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=================================== ======= ======= ======= ======= ======== ========
(a) Analysis of charge for the
year
=================================== ======= ======= ======= ======= ======== ========
Overseas tax incurred 2,244 - 2,244 1,961 - 1,961
============================================= ======= ======= ======= ======= ======== ========
Overseas tax reclaimable (1,159) - (1,159) (1,498) - (1,498)
--------------------------------------------- ------- ------- ------- ------- -------- --------
Total tax charge for the
year 1,085 - 1,085 463 - 463
--------------------------------------------- ------- ------- ------- ------- -------- --------
(b) Factors affecting the tax charge for the year . The UK corporation
tax rate is 25% (2022 - 19%). The tax charge for the year is
lower than the corporation tax rate (2022 - lower). The differences
are explained below:
2023 2022
=================================== ========================= ===========================
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=================================== ======= ======= ======= ======= ======== ========
Net return before taxation 45,613 28,958 74,571 47,777 (88,415) (40,638)
============================================= ======= ======= ======= ======= ======== ========
Net return multiplied by
the effective rate of corporation
tax of 20.5% (2022 - 19%) 9,351 5,936 15,287 9,078 (16,799) (7,721)
============================================= ======= ======= ======= ======= ======== ========
Effects of:
=================================== ======= ======= ======= ======= ======== ========
Non-taxable UK dividends (6,057) - (6,057) (6,305) - (6,305)
============================================= ======= ======= ======= ======= ======== ========
Non-taxable overseas dividends (3,008) - (3,008) (2,553) - (2,553)
============================================= ======= ======= ======= ======= ======== ========
Expenses not deductible
for tax purposes 2 - 2 56 - 56
============================================= ======= ======= ======= ======= ======== ========
Movement in unutilised management
expenses (288) 897 609 (276) 839 563
============================================= ======= ======= ======= ======= ======== ========
Realised and unrealised
losses/(gains) on investments
held - (6,683) (6,683) - 15,919 15,919
============================================= ======= ======= ======= ======= ======== ========
Currency movements not taxable - (150) (150) - 41 41
============================================= ======= ======= ======= ======= ======== ========
Overseas tax payable 1,085 - 1,085 463 - 463
--------------------------------------------- ------- ------- ------- ------- -------- --------
Total tax charge 1,085 - 1,085 463 - 463
--------------------------------------------- ------- ------- ------- ------- -------- --------
(c) Factors that may affect future tax charges . No provision for
deferred tax has been made in the current or prior accounting
period.
The Company has not provided for deferred tax on capital gains
or losses arising on the revaluation or disposal of investments
as it is exempt from tax on these items because of its status
as an investment trust company.
At the year end, the Company has, for taxation purposes only,
accumulated unrelieved management expenses and loan relationship
deficits of GBP74,422,000 (2022 - GBP71,665,000). A deferred
tax asset at the standard rate of corporation of 25% (2022 -
25%) of GBP18,606,000 (2022 - GBP17,916,000) has not been recognised
and these expenses will only be utilised if the Company has
profits chargeable to corporation tax in the future. It is considered
highly unlikely that the Company will generate such profits
and therefore no deferred tax asset has been recognised. The
Finance Act 2021 received Royal Assent on 10 June 2021 and the
rate of Corporation Tax of 25% effective from 1 April 2023 has
been used to calculate the potential deferred tax asset of GBP18,606,000.
9. Return per Ordinary share
=================================================================================
2023 2022
==================================== ==================== =====================
GBP'000 p GBP'000 p
==================================== ======= =========== ======== ===========
Returns are based on the following
figures:
==================================== ======= =========== ======== ===========
Revenue return 44,528 38.70 47,314 40.5
======================================== ======= =========== ======== ===========
Capital return 28,958 25.2 (88,415) (75.7)
---------------------------------------- ------- ----------- -------- -----------
Total return 73,486 63.9 (41,101) (35.2)
---------------------------------------- ------- ----------- -------- -----------
Weighted average number of Ordinary
shares in issue 114,958,339 116,831,407
---------------------------------------- ------- ----------- -------- -----------
10. Investments at fair value through profit or loss
===========================================================================
2023 2022
GBP'000 GBP'000
================================================== =========== ==========
Opening book cost 1,017,087 995,661
======================================================= =========== ==========
Opening investment holdings gains 81,706 206,629
------------------------------------------------------- ----------- ----------
Opening fair value 1,098,793 1,202,290
======================================================= =========== ==========
Analysis of transactions made during the
year
================================================== =========== ==========
Purchases at cost 183,338 241,150
======================================================= =========== ==========
Sales proceeds received (216,422) (260,861)
======================================================= =========== ==========
Gains/(losses) on investments 32,602 (83,786)
------------------------------------------------------- ----------- ----------
Closing fair value 1,098,311 1,098,793
------------------------------------------------------- ----------- ----------
2023 2022
GBP'000 GBP'000
================================================== =========== ==========
Closing book cost 989,936 1,017,087
======================================================= =========== ==========
Closing investment gains 108,375 81,706
------------------------------------------------------- ----------- ----------
Closing fair value 1,098,311 1,098,793
------------------------------------------------------- ----------- ----------
2023 2022
Gains/(losses) on investments GBP'000 GBP'000
================================================== =========== ==========
Realised gains on sale of investments
at fair value 5,988 41,137
======================================================= =========== ==========
Realised loss on exercise of put options (55) -
======================================================= =========== ==========
Net movement in investment holdings gains 26,669 (124,923)
------------------------------------------------------- ----------- ----------
32,602 (83,786)
------------------------------------------------------- ----------- ----------
The Company received GBP216,422,000 (2022 - GBP260,861,000) from
investments sold in the year. The book cost of these investments
when they were purchased was GBP210,434,000 (2022 - GBP219,724,000).
These investments have been revalued over time and until they were
sold any unrealised gains/(losses) were included in the fair value
of the investments.
The Company may write and purchase both exchange traded and over
the counter derivative contracts as part of its investment policy.
The Company pledges collateral greater than the market value of
the traded options in accordance with standard commercial practice.
At 30 June 2023 there were no shares pledged as part of the option
underwriting programme (30 June 2022 - none). The liability of
collateral held at the year end was GBPnil as no open positions
existed (30 June 2022 - GBPnil).
Transaction costs. During the year expenses were incurred in acquiring
or disposing of investments classified at fair value through profit
or loss. These have been expensed through capital and are included
within gains on investments in the Statement of Comprehensive Income.
The total costs were as follows:
2023 2022
GBP'000 GBP'000
================================================== =========== ==========
Purchases 797 885
======================================================= =========== ==========
Sales 144 146
------------------------------------------------------- ----------- ----------
941 1,031
------------------------------------------------------- ----------- ----------
The above transaction costs are calculated in line with the AIC
SORP. The transaction costs in the Company's Key Information Document
are calculated on a different basis and in line with the PRIIPs
regulations.
11. Other debtors and receivables
============================== =========== ===========
2023 2022
GBP'000 GBP'000
============================== =========== ===========
Amounts due from brokers - 2,490
=================================== =========== ===========
Accrued income 3,080 2,685
=================================== =========== ===========
Taxation recoverable 4,170 3,844
=================================== =========== ===========
Prepayments 24 42
----------------------------------- ----------- -----------
7,274 9,061
----------------------------------- ----------- -----------
12. Cash and cash equivalents
============================================ ============ ===========
2023 2022
GBP'000 GBP'000
============================================ ============ ===========
Cash at bank and in hand 1,227 1,503
================================================= ============ ===========
Money market funds 13,888 18,628
------------------------------------------------- ------------ -----------
15,115 20,131
------------------------------------------------- ------------ -----------
The Company holds GBP13,888,000 (2022 - GBP18,628,000) in Aberdeen
Standard Liquidity Fund (Lux) - Sterling Fund which is managed
and administered by abrdn.
13. Creditors: amounts falling due within one year
2023 2022
GBP'000 GBP'000
=========================================== ================== ===================
Other creditors 2,548 1,513
============================================= ================== ===================
Amounts due to brokers for purchases of
investments 2,202 -
============================================= ================== ===================
Amounts due to brokers for buyback of
Ordinary shares for treasury 1,247 -
============================================= ================== ===================
Bank loans 6,378 6,507
--------------------------------------------- ------------------ -------------------
12,375 8,020
------------------------------------------------ ------------------ -------------------
The Company has a three year GBP50 million multi-currency unsecured
revolving bank credit facility with Bank of Nova Scotia Limited,
committed until 27 October 2024. Under the terms of the agreement,
advances from the facility may be made for periods of up to six
months or for such longer periods agreed by the lender.
As at 30 June 2023, the Company had drawn down the following amounts
from the facility, all with a maturity date of 26 July 2023 (2022
- 27 July 2022):
2023 2022
============================================= ================== ===================
Currency GBP'000 Currency GBP'000
============================================= ========= ======= ========== =======
Swiss Franc at an all-in rate of 2.798%
(2022: 1.35%) 1,200,000 1,055 2,500,000 2,150
============================================= ========= ======= ========== =======
Euro at an all-in rate of 4.563% (2022:
1.15%) 3,300,000 2,832 2,326,000 2,002
============================================= ========= ======= ========== =======
Norwegian Krone at an all-in rate of 5.11%
(2022: 2.59%) 6,360,000 467 13,145,000 1,096
============================================= ========= ======= ========== =======
Danish Krona at an all-in rate of 4.56%
(2022: 1.15%) 6,850,000 789 5,410,000 626
============================================= ========= ======= ========== =======
US Dollar at an all-in rate of 6.314%
(2022: 2.70%) 1,570,000 1,235 768,000 633
--------------------------------------------- --------- ------- ---------- -------
6,378 6,507
--------------------------------------------- --------- ------- ---------- -------
At the date this Report was approved, the Company had drawn down
the following amounts from the facility, all with a maturity date
of 25 September 2023:
- Swiss Franc 1,200,000 at an all-in rate of 3.056%, equivalent
to GBP1,079,000.
- Euro 3,300,000 at an all-in rate of 4.792%, equivalent to GBP2,840,000.
- Norwegian Krone 6,360,000 at an all-in rate of 5.41%, equivalent
to GBP477,000.
- Danish Krona 6,850,000 at an all-in rate of 4.84%, equivalent
to GBP790,000.
- US Dollar 1,570,000 at an all-in rate of 6.564%, equivalent to
GBP1,267,000.
Financial covenants contained within the facility agreement provide,
inter alia, that the ratio of net assets to borrowings must be
greater than 3.5:1 and that net assets must exceed GBP550 million.
All financial covenants were met during the year and also during
the period from the year end to the date of this report.
14. Creditors: amounts falling due after more than one year
============================================================================
2023 2022
GBP'000 GBP'000
====================================================== ========= =========
2.51% Senior Loan Note 40,000 40,000
=========================================================== ========= =========
Unamortised 2.51% Senior Loan Note issue
expenses (59) (70)
----------------------------------------------------------- --------- ---------
39,941 39,930
----------------------------------------------------------- --------- ---------
4.37% Senior Loan Note at fair value 73,344 73,344
=========================================================== ========= =========
Amortisation of 4.37% Senior Loan Note (4,144) (2,564)
----------------------------------------------------------- --------- ---------
69,200 70,780
----------------------------------------------------------- --------- ---------
109,141 110,710
----------------------------------------------------------- --------- ---------
On 8 November 2017 the Company issued GBP40,000,000 of 10 year
Senior Loan Notes at a fixed rate of 2.51%. Interest is payable
in half yearly instalments in May and November and the Loan Notes
are due to be redeemed at par on 8 November 2027.
As a result of the transaction with Perpetual Income and Growth
Investment Trust plc on 17 November 2020, GBP60,000,000 of 15 year
Senior Loan Notes at a fixed rate of 4.37% issued on 8 May 2014
were novated to the Company. Under FRS 102 the loan notes are required
to be recorded initially at their fair value of GBP73,344,000 in
the Company's Financial Statements and are then amortised over
the remaining life of the loan towards their redemption value of
GBP60,000,000. The amortisation adjustment is presented as a finance
cost, split 70% to capital and 30% to revenue. Interest is payable
in half yearly instalments in May and November and the Loan Notes
are due to be redeemed at par on 8 May 2029.
Both the Loan Notes are secured by a floating charge over the whole
of the assets of the Company and rank pari passu. The Company has
complied with the Senior Loan Note Purchase Agreements covenants
throughout the year that the ratio of net assets to gross borrowings
must be greater than 3.5:1, and that net assets will not be less
than GBP550,000,000.
15. Share capital
====================================== =========== ======= =========== =======
2023 2022
====================================== ==================== ====================
Shares GBP'000 Shares GBP'000
====================================== =========== ======= =========== =======
Allotted, called-up and fully-paid:
====================================== =========== ======= =========== =======
Ordinary shares of 25p each: publicly
held 111,720,001 27,930 116,690,472 29,172
=========================================== =========== ======= =========== =======
Ordinary shares of 25p each: held
in treasury 7,809,531 1,952 2,839,060 710
------------------------------------------- ----------- ------- ----------- -------
119,529,532 29,882 119,529,532 29,882
------------------------------------------- ----------- ------- ----------- -------
During the year 4,970,471 Ordinary shares were bought back (2022
- 356,015) to be held in treasury by the Company at a total cost
of GBP42,202,000 (2022- GBP3,195,000) representing 4.3% (2022 -
0.3%) of called-up share capital excluding Ordinary shares held
in treasury at the start of the year.
16. Net asset value per Ordinary share
The net asset value per Ordinary share and the net asset value
attributable to the Ordinary shares at the year end follow. These
were calculated using 111,720,001 (2022 - 116,690,472) Ordinary
shares in issue at the year end (excluding treasury shares).
2023 2022
Net Asset Value Net Asset Value
Attributable Attributable
===================================== ================= =================
GBP'000 pence GBP'000 pence
===================================== ========= ====== ========= ======
Net asset value - debt at par 999,184 894.4 1,009,255 864.9
========================================== ========= ====== ========= ======
Add: amortised cost of 2.51% Senior
Loan Notes 39,941 35.8 39,930 34.1
========================================== ========= ====== ========= ======
Less: fair value of 2.51% Senior
Loan Notes (34,928) (31.3) (39,725) (33.9)
========================================== ========= ====== ========= ======
Add: amortised cost of 4.37% Senior
Loan Notes 69,200 61.9 70,780 60.5
========================================== ========= ====== ========= ======
Less: fair value of 4.37% Senior
Loan Notes (54,900) (49.1) (63,905) (54.6)
------------------------------------------ --------- ------ --------- ------
Net asset value - debt at fair
value 1,018,497 911.7 1,016,335 871.0
------------------------------------------ --------- ------ --------- ------
Note 19 sets out the basis used to estimate the fair value of the
Loan Notes.
17. Analysis of changes in net debt
At Currency Non-cash At
01 July differences Cash flows movements 30 June
2022 2023
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=========================== ========= =========== ========== ========= =========
Cash and cash equivalents* 20,131 695 (5,711) - 15,115
================================ ========= =========== ========== ========= =========
Debt due within one year (6,507) 38 91 - (6,378)
================================ ========= =========== ========== ========= =========
Debt due after more than
one year (110,710) - - 1,569 (109,141)
-------------------------------- --------- ----------- ---------- --------- ---------
(97,086) 733 (5,620) 1,569 (100,404)
-------------------------------- --------- ----------- ---------- --------- ---------
At Currency Non-cash At
01 July differences Cash flows movements 30 June
2021 2022
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=========================== ========= =========== ========== ========= =========
Cash and cash equivalents* 4,493 82 15,556 - 20,131
================================ ========= =========== ========== ========= =========
Debt due within one year (6,241) (298) 32 - (6,507)
================================ ========= =========== ========== ========= =========
Debt due after more than
one year (112,279) - - 1,569 (110,710)
-------------------------------- --------- ----------- ---------- --------- ---------
(114,027) (216) 15,588 1,569 (97,086)
-------------------------------- --------- ----------- ---------- --------- ---------
* An analysis of cash and cash equivalents between cash at bank
and in hand and money market funds is provided in note 12.
A statement reconciling the movement in net funds to the net cash
flow has not been presented as there are no differences from the
above analysis.
18. Financial instruments
This note summarises the risks deriving from the financial instruments
that comprise the Company's assets and liabilities.
The Company's investment activities expose it to various types
of financial risk associated with the financial instruments and
markets in which it invests. The Company's financial instruments,
other than derivatives, comprise securities and other investments,
cash balances, liquid resources, loans and debtors and creditors
that arise directly from its operations; for example, in respect
of sales and purchases awaiting settlement, and debtors for accrued
income. The Company also has the ability to enter into derivative
transactions in the form of forward foreign currency contracts,
futures and options, subject to Board approval, for the purpose
of enhancing portfolio returns and for hedging purposes in a manner
consistent with the Company's broader investment policy. As at
30 June 2023 there were no open positions in derivatives transactions
(2022 - same).
Risk management framework. The directors of abrdn Fund Managers
Limited collectively assume responsibility for the Manager's obligations
under the AIFMD including reviewing investment performance and
monitoring the Company's risk profile during the year.
The Manager is a wholly owned subsidiary of the abrdn Group ("the
Group"), which provides a variety of services and support to the
Manager in the conduct of its business activities, including in
the oversight of the risk management framework for the Company.
The Manager has delegated the day to day administration of the
investment policy to abrdn Investments Limited, which is responsible
for ensuring that the Company is managed within the terms of its
investment guidelines and the limits set out in its pre-investment
disclosures to investors (details of which can be found on the
Company's website). The Manager has retained responsibility for
monitoring and oversight of investment performance, product risk
and regulatory and operational risk for the Company.
The Manager conducts its risk oversight function through the operation
of the Group's risk management processes and systems which are
embedded within the Group's operations. The Group's Risk Division
("the Risk Division") supports management in the identification
and mitigation of risks and provides independent monitoring of
the business. The Risk Division includes Compliance, Business Risk,
Market Risk, Risk Management and Legal. The team is headed up by
the Group's Chief Risk Officer, who reports to the Chief Executive
Officer ("CEO") of the Group. The Risk Division achieves its objective
through embedding the Risk Management Framework throughout the
organisation using the Group's operational risk management system
("SHIELD").
The Group's Internal Audit Department is independent of the Risk
Division and reports directly to the Group CEO and to the Audit
Committee of the Group's Board of Directors. The Internal Audit
Department is responsible for providing an independent assessment
of the Group's control environment.
The Group's corporate governance structure is supported by several
committees to assist the board of directors, its subsidiaries and
the Company to fulfil their roles and responsibilities. The Group's
Risk Division is represented on all committees, with the exception
of those committees that deal with investment recommendations.
The specific goals and guidelines on the functioning of those committees
are described in the committees' terms of reference.
Risk management of the financial instruments . The main risks the
Company faces from these financial instruments are (a) market risk
(comprising (i) interest rate, (ii) foreign currency and (iii)
other price risk), (b) liquidity risk and (c) credit risk.
In order to mitigate risk, the investment strategy is to select
investments for their fundamental value. Stock selection is therefore
based on disciplined accounting, market and sector analysis. It
is the Board's policy to hold an appropriate spread of investments
in the portfolio in order to reduce the risk arising from factors
specific to a particular sector. The Attribution Analysis, detailing
the allocation of assets and the stock selection, is shown in the
Performance Attribution table in the Investment Manager's Report.
The Investment Manager actively monitors market prices throughout
the year and reports to the Board, which meets regularly in order
to consider investment strategy. The Company's strategy is detailed
in the Chair's Statement , in the Investment Manager's Report and
in Overview of Strategy.
The Board has agreed the parameters for net gearing, which was
10.4% of net assets as at 30 June 2023 (2022 - 9.4%). The Manager's
policies for managing these risks are summarised below and have
been applied throughout the current and previous year. The numerical
disclosures in the tables listed below exclude short-term debtors
and creditors.
18 (a) Market risk. The Company's investment portfolio is exposed
to market price fluctuations, which are monitored by the Manager
in pursuance of the investment objective. Adherence to investment
guidelines and to investment and borrowing powers set out in the
management agreement mitigates the risk of exposure to any particular
security or issuer. Further information on the investment portfolio
is set out in the Investment Manager's Report.
Market price risk arises mainly from uncertainty about future prices
of financial instruments used in the Company's operations. It represents
the potential loss the Company might suffer through holding market
positions as a consequence of price movements. It is the Board's
policy to hold equity investments in the portfolio in a broad spread
of sectors in order to reduce the risk arising from factors specific
to a particular sector. An analysis of the equity portfolio by
sector and a summary of investment changes during the year is shown
above.
18 (a)(i) Interest rate risk
Interest rate movements may affect:
- the level of income receivable on cash deposits;
- interest payable on the Company's variable rate borrowings; and
- the fair value of any investments in fixed interest rate securities.
Management of the risk . The possible effects on fair value and
cash flows that could arise as a result of changes in interest
rates are taken into account when making investment and borrowing
decisions. Details of the bank loan and interest rates applicable
can be found in note 13.
The Board imposes borrowing limits to ensure gearing levels are
appropriate to market conditions and reviews these on a regular
basis. Interest rate risk is the risk of movements in the value
of financial instruments as a result of fluctuations in interest
rates.
Financial assets. The interest rate risk of the portfolio of financial
assets at the reporting date was as follows:
Floating rate Non-interest bearing
========================== ======================= ==========================
2023 2022 2023 2022
GBP'000 GBP'000 GBP'000 GBP'000
========================== =========== ========== ============ ============
Danish Krona - 93 22,239 20,888
========================== =========== ========== ============ ============
Euro - 268 69,528 46,543
========================== =========== ========== ============ ============
Norwegian Krone - 66 9,323 20,582
========================== =========== ========== ============ ============
Singapore Dollars - - 21,124 14,833
========================== =========== ========== ============ ============
Sterling 15,115 19,704 898,427 942,138
========================== =========== ========== ============ ============
Swedish Krone - - 16,694 14,075
========================== =========== ========== ============ ============
Swiss Francs - - 36,060 23,009
========================== =========== ========== ============ ============
Taiwan Dollars - - 7,051 5,273
========================== =========== ========== ============ ============
US Dollars - - 17,865 11,452
-------------------------- ----------- ---------- ------------ ------------
Total 15,115 20,131 1,098,311 1,098,793
-------------------------- ----------- ---------- ------------ ------------
The floating rate assets of cash at bank and in hand and cash held
in money market funds earn interest at the prevailing market rates.
The non-interest bearing assets represent the equity element of
the portfolio.
Financial liabilities . The Company has floating rate borrowings
by way of its loan facility and fixed rate senior loan note issues,
details of which are in notes 13 and 14.
Interest rate sensitivity. The sensitivity analysis below has been
determined based on the exposure to interest rates for both derivative
and non-derivative instruments at the reporting date and the stipulated
change taking place at the beginning of the financial year and
held constant in the case of instruments that have floating rates.
If interest rates had been 1% higher or lower and all other variables
were held constant, the Company's profit before tax for the year
ended 30 June 2023 and net assets would increase/decrease by GBP53,000
(2022 - GBP161,000) respectively. This is mainly attributable to
the Company's exposure to interest rates on its floating rate cash
balances and borrowings.
18 (a)(ii) Foreign currency risk . A proportion of the Company's
investment portfolio is invested in overseas securities whose values
are subject to fluctuation due to changes in foreign exchange rates.
In addition, the impact of changes in foreign exchange rates upon
the profits of investee companies can result, indirectly, in changes
in their valuations. Consequently, the Statement of Financial Position
can be affected by movements in exchange rates.
Management of the risk . The revenue account is subject to currency
fluctuations arising on dividends receivable in foreign currencies
and, indirectly, due to the impact of foreign exchange rates upon
the profits of investee companies. It is not the Company's policy
to hedge this currency risk but the Board keeps under review the
currency returns in both capital and income.
Foreign currency risk exposure by currency of denomination falling
due within one year is set out in the table below. Net monetary
assets/(liabilities) comprise cash and loan balances and exclude
other debtors and receivables and other payables (including amounts
due to or from brokers).
30 June 2023 30 June 2022
================== ==================================== ====================================
Net Net
monetary Total monetary Total
assets/ currency assets/ currency
Investments (liabilities) exposure Investments (liabilities) exposure
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
================== =========== ============= ======== =========== ============= ========
Danish Krona 22,239 (789) 21,450 20,888 (533) 20,355
================== =========== ============= ======== =========== ============= ========
Euro 69,528 (2,832) 66,696 46,543 (1,734) 44,809
================== =========== ============= ======== =========== ============= ========
Norwegian Krone 9,323 (467) 8,856 20,582 (1,030) 19,552
================== =========== ============= ======== =========== ============= ========
Singapore Dollars 21,124 - 21,124 14,833 - 14,833
================== =========== ============= ======== =========== ============= ========
Swedish Krone 16,694 - 16,694 14,075 - 14,075
================== =========== ============= ======== =========== ============= ========
Swiss Francs 36,060 (1,055) 35,005 23,009 (2,150) 20,859
================== =========== ============= ======== =========== ============= ========
Taiwan Dollars 7,051 - 7,051 5,273 - 5,273
================== =========== ============= ======== =========== ============= ========
US Dollars 17,865 (1,235) 16,630 11,452 (633) 10,819
------------------ ----------- ------------- -------- ----------- ------------- --------
Total 199,884 (6,378) 193,506 156,655 (6,080) 150,575
------------------ ----------- ------------- -------- ----------- ------------- --------
Foreign currency sensitivity . The following table details the
impact on the Company's net assets to a 10% decrease (in the context
of a 10% increase the figures below should all be read as negative)
in Sterling against the foreign currencies in which the Company
has exposure. The sensitivity analysis includes foreign currency
denominated monetary and non-monetary items and adjusts their translation
at the period end for a 10% change in foreign currency rates.
2023 2022
================== =========== ============= ======== =========== ============= ========
GBP'000 GBP'000
================== =========== ============= ======== =========== ============= ========
Danish Krona 2,145 2,036
================== =========== ============= ======== =========== ============= ========
Euro 6,670 4,481
================== =========== ============= ======== =========== ============= ========
Norwegian Krone 886 1,955
================== =========== ============= ======== =========== ============= ========
Singapore Dollars 2,112 1,483
================== =========== ============= ======== =========== ============= ========
Swedish Krone 1,669 1,408
================== =========== ============= ======== =========== ============= ========
Swiss Francs 3,501 2,086
================== =========== ============= ======== =========== ============= ========
Taiwan Dollars 705 527
================== =========== ============= ======== =========== ============= ========
US Dollars 1,663 1,082
------------------ ----------- ------------- -------- ----------- ------------- --------
Total 19,351 15,058
------------------ ----------- ------------- -------- ----------- ------------- --------
18(a)(iii) Other price risk. Other price risks (ie changes in market
prices other than those arising from interest rate or currency
risk) may affect the value of the quoted investments.
Management of the risk . It is the Board's policy to hold an appropriate
spread of investments in the portfolio in order to reduce the risk
arising from factors specific to a particular sector. The allocation
of assets to international markets and the stock selection process,
as detailed in the section "Delivering the Investment Policy" ,
both act to reduce market risk. The Manager actively monitors market
prices throughout the year and reports to the Board, which meets
regularly in order to review investment strategy.
Other price risk sensitivity . If market prices at the reporting
date had been 10% higher or lower while all other variables remained
constant, the return attributable to Ordinary shareholders and
equity for the year ended 30 June 2023 would have increased/decreased
by GBP109,831,000 (2022 - GBP109,879,000).
18 (b) Liquidity risk . This is the risk that the Company will
encounter difficulty in meeting obligations associated with financial
liabilities as they fall due in line with the maturity profile
analysed as follows:
Within Within Within More than
1 year 1-3 years 3-5 years 5 years Total
At 30 June GBP000 GBP000 GBP000 GBP000 GBP000
2023
================================ ======= ========== ========== ========= =======
Bank loans 6,378 - - - 6,378
================================== ======= ========== ========== ========= =======
2.51% Senior Loan Note 8/11/27 - - 40,000 - 40,000
================================== ======= ========== ========== ========= =======
4.37% Senior Loan Note 8/5/29 - - - 60,000 60,000
================================== ======= ========== ========== ========= =======
Interest cash flows on bank
loans 3 - - - 3
================================== ======= ========== ========== ========= =======
Interest cash flows on 2.51%
Senior Loan Note 1,004 2,008 1,506 - 4,518
================================== ======= ========== ========== ========= =======
Interest cash flows 4.37%
Senior Loan Note 2,622 5,244 5,244 2,622 15,732
================================== ======= ========== ========== ========= =======
Cash flows on other creditors 5,997 - - - 5,997
---------------------------------- ------- ---------- ---------- --------- -------
16,004 7,252 46,750 62,622 132,628
-------------------------------- ------- ---------- ---------- --------- -------
Within Within Within More than
1 year 1-3 years 3-5 years 5 years Total
At 30 June GBP000 GBP000 GBP000 GBP000 GBP000
2022
================================ ======= ========== ========== ========= =======
Bank loans 6,507 - - - 6,507
================================== ======= ========== ========== ========= =======
2.51% Senior Loan Note 8/11/27 - - - 40,000 40,000
================================== ======= ========== ========== ========= =======
4.37% Senior Loan Note 8/5/29 - - - 60,000 60,000
================================== ======= ========== ========== ========= =======
Interest cash flows on bank
loans 1 - - - 1
================================== ======= ========== ========== ========= =======
Interest cash flows on 2.51%
Senior Loan Note 1,004 2,008 2,008 502 5,522
================================== ======= ========== ========== ========= =======
Interest cash flows 4.37%
Senior Loan Note 2,622 5,244 5,244 5,244 18,354
================================== ======= ========== ========== ========= =======
Cash flows on other creditors 1,513 - - - 1,513
---------------------------------- ------- ---------- ---------- --------- -------
11,647 7,252 7,252 105,746 131,897
-------------------------------- ------- ---------- ---------- --------- -------
Management of the risk . The Company's assets comprise readily
realisable securities which can be sold to meet funding commitments
if necessary. Short-term flexibility is achieved through the use
of committed loan and overdraft facilities.
As at 30 June 2023 the Company utilised GBP6,378,000 (2022 - GBP6,507,000)
of a GBP50,000,000 multi-currency revolving bank credit facility,
which is committed until 27 October 2024. Details of maturity dates
and interest charges can be found in note 13. The aggregate of
all future interest payments at the rate ruling at 30 June 2023
and the redemption of the loan amounted to GBP6,381,000 (2022 -
GBP6,508,000).
18 (c) Credit risk. This is the risk that one party to a financial
instrument will fail to discharge an obligation and cause the other
party to incur a financial loss.
Management of the risk . The risk is mitigated by the Manager reviewing
the credit ratings of counterparties. The risk attached to dividend
flows is mitigated by the Investment Manager's research of potential
investee companies. The Company's custodian bank is responsible
for the collection of income on behalf of the Company and its performance
is reviewed by the Depositary (on an ongoing basis) and by the
Board on a regular basis. It is the Manager's policy to trade only
with A- and above (Long Term rated) and A-1/P-1 (Short Term rated)
counterparties. The maximum credit risk at 30 June 2023 is GBP18,123,000
(30 June 2022 - GBP25,306,000) consisting of GBP3,080,000 (2022
- GBP2,685,000) of dividends receivable from equity shares, GBPnil
(2022 - GBP2,490,000) receivable from brokers and GBP15,115,000
(2022 - GBP20,131,000) in cash and cash equivalents.
None of the Company's financial assets are past due or impaired
(2022 - none).
19. Fair value hierarchy
FRS 102 requires an entity to classify fair value measurements
using a fair value hierarchy that reflects the significance of
the inputs used in making the measurements. Categorisation within
the hierarchy is determined on the basis of the lowest level input
that is significant to the fair value measurement of each relevant
asset or liability. The fair value hierarchy has the following
levels:
Level 1: unadjusted quoted prices in an active market for identical
assets or liabilities that the entity can access at the measurement
date;
Level 2: inputs other than quoted prices included within Level
1 that are observable (ie developed using market data) for the
asset or liability, either directly or indirectly; and
Level 3: inputs are unobservable (ie for which market data is unavailable)
for the asset or liability.
The valuation techniques used by the Company are explained in the
accounting policies note 2(e). The Company's portfolio consists
wholly of quoted equities, all of which are Level 1.
The fair value of both the 2.51% Senior Loan Note and 4.37% Senior
Loan Note have been calculated by aggregating the expected future
cash flows for the loans discounted at a rate based on UK gilts
issued with comparable coupon rates and maturity dates plus a margin
representing the credit for Investment Grade A bonds (2022 - the
fair value of the 4.37% Senior Loan Notes have been calculated
based on a comparable debt security). The fair value and amortised
cost amounts can be found in note 16.
All other financial assets and liabilities of the Company are included
in the Statement of Financial Position at their book value which
in the opinion of the Directors is not materially different from
their fair value.
20. Related party transactions and transactions with the Manager
Fees payable during the year to the Directors and their interests
in shares of the Company are considered to be related party transactions
and are disclosed within the Directors' Remuneration section of
the Directors' Remuneration Report in the published Annual Report.
The Company has agreements with the Manager for the provision of
management, secretarial, accounting and administration services
and promotional activities. Details of transactions during the
year and balances outstanding at the year end are disclosed in
notes 4 and 5.
21. Capital management policies and procedures
The investment objective of the Company is to achieve a high and
growing income combined with capital growth through investment
in a portfolio principally of UK equities.
The capital of the Company consists of debt (comprising loan notes
and bank loans) and equity (comprising issued capital, reserves
and retained earnings). The Company manages its capital to ensure
that it will be able to continue as a going concern while maximising
the return to shareholders through the optimisation of the debt
and equity balance.
The Board monitors and reviews the broad structure of the Company's
capital on an ongoing basis. This review includes:
- the level of equity shares in issue;
- the planned level of gearing which takes into account the Investment
Manager's views on the market (net gearing figures can be found
in Alternative Performance Measures); and
- the extent to which revenue in excess of that which is required
to be distributed should be retained.
The Company's objectives, policies and processes for managing capital
are unchanged from the preceding accounting year.
Notes 13 and 14 give details of the Company's bank facility agreement
and loan notes respectively.
Alternative Performance Measures
Alternative performance measures are numerical measures of the Company's
current, historical or future performance, financial position or cash
flows, other than financial measures defined or specified in the applicable
financial framework. The Company's applicable financial framework includes
FRS 102 and the AIC SORP. The Directors assess the Company's performance
against a range of criteria which are viewed as particularly relevant
for closed-end investment companies.
Discount to net asset value per Ordinary share with debt
at fair value
The discount is the amount by which the share price is lower than the
net asset value per share with debt at fair value, expressed as a percentage
of the net asset value.
2023 2022
=========================== ============== ============= ============= =============
NAV per Ordinary
share a 911.7p 871.0p
=========================================== ============= ============= =============
Share price b 837.0p 832.0p
=========================================== ============= ============= =============
Discount (b-a)/a -8.2% -4.5%
------------------------------------------- ------------- ------------- -------------
Discount to net asset value per Ordinary share with debt at par value
The discount is the amount by which the share price is lower than the
net asset value per share with debt at par value, expressed as a percentage
of the net asset value.
=========================== ============== ============= ============= =============
2023 2022
=========================== ============== ============= ============= =============
NAV per Ordinary
share a 894.4p 864.9p
=========================================== ============= ============= =============
Share price b 837.0p 832.0p
=========================================== ============= ============= =============
Discount (b-a)/a -6.4% -3.8%
------------------------------------------- ------------- ------------- -------------
Dividend cover
Dividend cover is the revenue return per share divided by dividends
per share expressed as a ratio.
2023 2022
=========================== ============== ============= ============= =============
Revenue return
per share a 38.73p 40.50p
=========================================== ============= ============= =============
Dividends per
share b 37.50p 36.00p
=========================================== ============= ============= =============
Dividend cover a/b 1.03 1.13
------------------------------------------- ------------- ------------- -------------
Dividend yield
The annual dividend per Ordinary share divided by the share price,
expressed as a percentage.
2023 2022
=========================== ============== ============= ============= =============
Dividends per
share a 37.50p 36.00p
=========================================== ============= ============= =============
Share price b 837.00p 832.00p
------------------------------------------- ------------- ------------- -------------
Dividend yield a/b 4.5% 4.3%
------------------------------------------- ------------- ------------- -------------
Net asset value per Ordinary share with debt at fair value
The calculation of the Company's net asset value per Ordinary share
with debt at fair value is set out in note 16.
Net gearing
Net gearing measures the total borrowings less cash and cash equivalents
divided by shareholders' funds, expressed as a percentage. Under AIC
reporting guidance cash and cash equivalents includes amounts due to
and from brokers at the year end as well as cash and cash equivalents.
2023 2022
=========================== ============== ============= ============= =============
Bank loans (GBP'000) a (6,378) (6,507)
=========================================== ============= ============= =============
Senior Loan Notes (GBP'000) b (109,141) (110,710)
=========================================== ============= ============= =============
Total borrowings (GBP'000) c=a+b (115,519) (117,217)
=========================================== ============= ============= =============
Cash (GBP'000) d 15,115 20,131
=========================================== ============= ============= =============
Amounts due to brokers (GBP'000) e (3,449) -
=========================================== ============= ============= =============
Amounts due from brokers (GBP'000) f - 2,490
=========================================== ============= ============= =============
Shareholders' funds (GBP'000) g 999,184 1,009,255
------------------------------------------- ------------- ------------- -------------
Net gearing -(c+d+e+f)/g 10.4% 9.4%
------------------------------------------- ------------- ------------- -------------
Ongoing charges ratio
The ongoing charges ratio has been calculated based on the total of
investment management fees and administrative expenses less non-recurring
charges and expressed as a percentage of the average daily net asset
values with debt at fair value published throughout the year.
2023 2022
=========================== ============== ============= ============= =============
Investment management fees
(GBP'000) a 3,804 3,997
=========================================== ============= ============= =============
Administrative expenses (GBP'000) b 1,390 1,350
=========================================== ============= ============= =============
Less: non-recurring charges(A)
(GBP'000) c (8) (30)
------------------------------------------- ------------- ------------- -------------
Ongoing charges
(GBP'000) a+b+c 5,186 5,317
------------------------------------------- ------------- ------------- -------------
Average net assets (GBP'000) d 1,036,020 1,102,862
------------------------------------------- ------------- ------------- -------------
Ongoing charges
ratio e=(a+b+c)/d 0.50% 0.48%
------------------------------------------- ------------- ------------- -------------
(A) 2023 comprises GBP7,000 professional fees relating to discussions
with the registrar and GBP1,000 quick turnaround fee on ESEF filing.
2022 comprises GBP20,000 director recruitment fee, GBP8,000 legal fees
relating to the private placement notes and GBP2,000 professional fees
for Taiwan tax work.
The ongoing charges ratio provided in the Company's Key Information
Document is calculated in line with the PRIIPs regulations, which includes
financing and transaction costs.
Total return
Share price and NAV total returns show how the NAV and share price
has performed over a period of time in percentage terms, taking into
account both capital returns and dividends paid to shareholders. Share
price and NAV total returns are monitored against open-ended and closed-ended
competitors, and the FTSE All-Share Index, respectively.
Share NAV NAV
Year ended 30 Price (debt at fair (debt at par)
June 2023 value)
=========================== ============== ============= ============= =============
Opening at 1
July 2022 a 832.0p 871.0p 864.9p
=========================== ============== ============= ============= =============
Closing at 30
June 2023 b 837.0p 911.7p 894.4p
=========================== ============== ============= ============= =============
Price movements c=(b/a)-1 0.6% 4.7% 3.4%
=========================== ============== ============= ============= =============
Dividend reinvestment(A) d 4.3% 4.1% 4.1%
--------------------------- -------------- ------------- ------------- -------------
Total return c+d 4.9% 8.8% 7.5%
--------------------------- -------------- ------------- ------------- -------------
Share NAV NAV
Year ended 30 Price (debt at fair (debt at par)
June 2022 value)
=========================== ============== ============= ============= =============
Opening at 1
July 2021 a 871.0p 935.7p 934.6p
=========================== ============== ============= ============= =============
Closing at 30
June 2022 b 832.0p 871.0p 864.9p
=========================== ============== ============= ============= =============
Price movements c=(b/a)-1 -4.5% -6.9% -7.5%
=========================== ============== ============= ============= =============
Dividend reinvestment(A) d 3.8% 3.4% 3.5%
--------------------------- -------------- ------------- ------------- -------------
Total return c+d -0.7% -3.5% -4.0%
--------------------------- -------------- ------------- ------------- -------------
(A) Share price total return involves reinvesting the net dividend
in the share price of the Company on the date on which that dividend
goes ex-dividend. NAV total return involves investing the net dividend
in the NAV of the Company with debt at fair value on the date on which
that dividend goes ex-dividend.
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 30 June 2023 or
2022 but is derived from those accounts. Statutory accounts for
2022 have been delivered to the registrar of companies.
The statutory accounts for the year ended 30 June 2023 have been
approved by the Board and audited and will be filed with the
Registrar of Companies. The auditor has reported on those accounts;
their reports were (i) unqualified, (ii) did not include a
reference to any matters to which the auditor drew attention by way
of emphasis without qualifying their report and (iii) did not
contain a statement under section 498 (2) or (3) of the Companies
Act 2006.
The Company's Annual General Meeting will be held at 12.30pm on
7 November 2023 in the Strathclyde Suite, The Glasgow Royal Concert
Hall, 2 Sauchiehall Street, Glasgow G2 3NY.
The Annual Report will be posted to shareholders in October 2023
and will be available shortly from the Company's website at:
www.murray-income.co.uk .
By Order of the Board
abrdn Holdings Limited
Secretaries
19 September 2023
END
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(END) Dow Jones Newswires
September 20, 2023 02:00 ET (06:00 GMT)
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