REG - Murray Inc Trust PLC - Annual Financial Report
20/09/2023 07:00
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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
£500,000. The Company's NAV at 30 June 2023 was nearly £1bn. 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 (annualised) 30 June 2023 (annualised) 30 June 2023
(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
£450m. 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 £100m of long-term borrowings with £40m due in 2027 and
£60m due in 2029 at a blended cost of 3.6%. Together with a £50m short-term
multicurrency facility with Bank of Nova Scotia Limited, the Company has up to
£150m 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 £60m of senior secured fixed rate
notes 2029, £40m of senior secured fixed rate notes 2027, as well as £6.4m
drawn down from an unsecured multi-currency revolving credit loan facility
agreement with The Bank of Nova Scotia Limited, debt was £106.5m 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'Oréal 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 £2.8m 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 £2.2m 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 (£'000) 23,926 25,476 24,838 26,667 25,987 25,597 22,804 35,979 51,018 48,879
Shareholders' funds (£'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 (£'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 (£'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 (£'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) * relative to the Company's benchmark The Board considers the Company's NAV (total return), relative to the FTSE
All-Share Index, to be the 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 return) * The Board monitors share price performance relative 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 to NAV * The discount/premium at which the Company's share 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 per share The Board aims to meet the 'high and growing' element 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 and policy are no longer meeting investors' The Company's investment objective and policy ("IOP") are reviewed regularly
requirements (unchanged) by the Board to ensure they remain appropriate and effective. The Board
holds an annual strategy meeting at which strategy and approach is reviewed;
Lack of a robust strategic review, failure to understand the market/investor this includes consideration of distributions; both dividends and share buy
demand. Failure to analyse and react to changes or uncertainty, unclear backs.
dividend policy.
Discount control risk (unchanged) The Board monitors the discount at which the Company's shares trade and will
buy back or issue shares to try to minimise the impact of any discount or
Investment trust shares tend to trade at discounts to their underlying NAVs, premium volatility. Whilst these measures seek to reduce volatility, they
although they can also trade at premium. Discounts and premiums can fluctuate are not guaranteed to do this.
considerably leading to more volatile returns for shareholders.
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 and its approach to risk diversification may
be found above, both of which serve to mitigate the effect of market risk on
Market risk arises from the volatility in prices of the Company's investments the portfolio. The Board considers the diversification of the portfolio,
and the potential loss the Company could suffer through realising investments asset allocation, stock selection and levels of gearing on a regular basis.
following negative market movements. The Board also monitors the Company's relative performance as compared to
peers and the Company's benchmark.
Changes in general geopolitical, economic or market conditions, such as
interest rates, exchange rates and rates of inflation, as well as global The Board assesses climate change as an emerging risk in terms of how it
political events and trends could substantially and adversely affect the develops, including how investor sentiment is evolving towards climate change
prices of securities and, as a consequence, the value of the Company's within investment portfolios, and will consider how the Company may mitigate
investment portfolio, its prospects and share price. this risk, any other emerging risks, if and when they become material.
Current geopolitical risks include the ongoing Russian invasion of Ukraine, The Board engages with the Manager, at each Board meeting, as part of its ESG
rising tension between China and Taiwan. oversight, to understand how climate change, and environmental factors are
being assessed . Both are key considerations within the Manager's investment
The longer term emergence of the effects on investee companies of climate process.
change, and the regulatory environment around this present a further risk.
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 restrictions on borrowings are imposed:
gearing continues to operate within pre-agreed limits so as not to exceed 25%
The Company uses credit facilities. These arrangements increase the funds of NAV at the time of draw down.
available for investment. While this has the potential to enhance investment
returns in rising markets, in falling markets the impact could be detrimental. The Board and the Manager monitors the lending market and will address at a
germane time to enable the availability of appropriate facility(ies) if
Credit facilities may not be available at an acceptable rate, term or required.
amount. The Company's three year £50 million facility matures on 27 October
2024.
INVESTMENT MANAGEMENT
Underperformance risk (unchanged) The Board evaluates performance at each board meeting on both an absolute and
relative basis, against the Company's benchmark and peers, and across various
Consistent underperformance by the Investment Manager over short, medium and periods: short, medium and long term. Performance is also reviewed at the
long term. annual strategy meeting.
The Investment Manager's style may result in the portfolio being significantly The Company has a set of investment limits and Board guidelines which ensure
over or under weight positions in stocks and sectors compared to the benchmark diversification of the portfolio.
and the Company's performance may deviate significantly from that of the
benchmark and peers, possibly for extended periods.
Risk of loss of key staff (increased) Charles Luke has been the lead portfolio manager for the Company since 2006.
His co-manager is Iain Pyle who has been with the Manager since 2015, and
Loss of key staff though natural loss, or Manager reorganisation and/or Rhona Millar, with five years' experience, also works alongside them. All work
redundancy. Loss of investor confidence if lead within the Manager's 43-strong Developed Markets Equities team.
manager lost.
MARKETING
General marketing risk (increased) The Manager's investor relations team works closely with the Board on
institutional shareholder contact. In addition, quarterly updates are provided
Failure to implement the Board's marketing policy. Failure to address to the Board by the broker. All correspondence addressed to the Board is
shareholder concerns or complaints, including of abrdn Investment Trust Saving circulated to Directors while any complaints relating to the Company's savings
plans holders. plans are reviewed by the Board quarterly.
Issues could arise from the lack of process ownership, poor procedures or the
failure to appropriately manage distribution, concerns or complaints of
shareholders.
OPERATIONAL
Service provider risk (unchanged) Contracts with third party providers are entered into after appropriate due
diligence. Thereafter the performance of each provider is subject to an annual
In common with most other investment companies, the Company relies on the review by the Audit Committee. The Depositary reports to the Audit Committee
services provided by third parties and is dependent on the control systems of at least annually, including on the Company's compliance with AIFMD. The
the Manager (who acts as investment manager, company secretary and maintains Manager also regularly reviews the performance of the Depositary.
the Company's assets, dealing procedures and accounting records); BNP Paribas
Trust Corporation UK Limited (who acts as Depositary and Custodian); and the Global assurance reports are obtained from the Manager, BNP Paribas Trust
registrar. The security of Corporation UK Limited and the registrar. These are reviewed by the Audit
the Company's assets, dealing procedures, accounting records and adherence to Committee. The reports include an independent assessment of the effectiveness
regulatory and legal requirements depend of risks and internal controls at the service providers including their
on the effective operation of the systems of these third party service planning for business continuity and disaster recovery scenarios, together
providers. with their policies and procedures designed to address the risks posed to the
Company's operations by cyber-crime. The Audit Committee receives an annual
Failure by any service provider to carry out its obligations could have a update on the Manager's IT resilience.
material adverse effect on the Company's performance. Disruption, including
that caused by information technology breakdown or a cyber-related issue, The Company's assets are subject to a strict liability regime and, in the
could prevent, for example, the functioning of the Company; accurate reporting event of a loss of assets, the Depositary must return assets of an identical
to the Board or shareholders; or payment of dividends in accordance with the type or the corresponding amount, unless able to demonstrate the loss was a
announced timetable. 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 income and expenditure prepared by the
Manager.
There is a risk that the Company fails to generate sufficient income from its
investment portfolio to meet the Company's dividend requirements. The Company's level of revenue reserves is monitored and can be added to in
years of surplus, or used to support the dividend in years where there is a
A cut in the dividend of the Company would likely cause a revenue deficit. Dividends can also be paid from capital, though use of
drop in the share price and would end the Company's capital reserves for dividends is expected to be rare.
"Dividend Hero" status.
Financial risk Details of these risks and the policies and procedures for their monitoring
and mitigation are disclosed earlier in this section and in note 18.
The Company's investment activities expose it to a variety of financial risks
which include market risk (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 of existing rules and regulation The Manager provides investment, company secretarial, administration and
accounting services through qualified third
The Company is required to comply with relevant rules and regulations. Failure
to do so could result in loss of investment trust status, fines, suspension of party professional providers.
the Company's shares, criminal proceedings or financial or reputational
damage. The Board receives regular reports from its broker, depositary, registrar and
Manager as well as the industry 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 risks to the Company, including emerging
risks, which are identified by a variety of means, including advice from AIC,
Failure to have in place procedures that assist in identifying emerging the Company's professional advisors, Directors' knowledge of markets, changes
risks. This may cause reactive actions rather than being pro-active and, in and events.
the worst case, could cause the Company to become unviable or otherwise 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 £40m senior loan notes and £60m 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 £50 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 £50 million bank loan, £40
million of senior loan notes due for repayment in 2027 and £60 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 Party Service Providers The Board ensures that it promotes the success of the Company by engaging
specialist third party suppliers 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 Company On behalf of the Board, the Manager maintains a positive 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
RELX AstraZeneca
RELX is a global provider of information and analytics for professionals and AstraZeneca researches, develops, produces and markets pharmaceutical
businesses across a number of industries including scientific, technical, products. With a significant focus on oncology and rare diseases, the company
medical and law. The company offers resilient earnings combined with long term offers appealing growth potential over the medium term.
structural growth opportunities.
Unilever Diageo
Unilever is a global consumer goods company supplying food, home and personal Diageo produces, distills and markets alcoholic beverages including vodkas,
care products. The company has a portfolio of strong brands including: Dove, whiskies, tequilas, gins and beer. The company should benefit from attractive
Knorr, Axe and Persil. Over half of the company's sales are to developing and long term drivers such as population and income growth, and premiumisation.
emerging markets. The company has a variety of very strong brands and faces limited private
label competition.
SSE TotalEnergies
SSE is a utility company mostly focused on networks and renewables. The path TotalEnergies is a broad energy company that produces and markets fuels,
to net zero will require significant investment in distribution networks and natural gas and electricity. It is a leader in the sector's energy transition
the company should also benefit from its strong position in offshore wind with an attractive pipeline of renewable assets
generation.
BHP Group London Stock Exchange
BHP Group (formerly BHP Billiton) is a diversified resources group with a London Stock Exchange is a diversified global financial markets infrastructure
global portfolio of high quality assets particularly iron ore and copper. The and data business. The company is highly cash generative and very well placed
company provides an appealing dividend yield combined with a strong balance to benefit from increased spend on data services.
sheet.
BP Sage Group
BP is a fully integrated energy company involved in exploration, production, Sage Group is a market leading software business focused on accounting,
refining, transportation and marketing of oil and natural gas. We believe the payroll and payments. The company has a strong product suite and is well
industry is currently in a sweetspot with robust prices and benign costs. The placed to benefit from the software automation of its small and mid-sized
company provides an attractive dividend yield and is well placed for the customers over the medium term.
energy transition.
Portfolio
As at 30 June 2023
Valuation Total Valuation
2023 investments 2022
Investment FTSE All-Share Sector Country £'000 % £'000
RELX Media UK 61,856 5.6 45,388
AstraZeneca Pharmaceuticals and Biotechnology UK 60,904 5.6 69,318
Unilever Personal Care, Drug and Grocery 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
Intermediate Capital Investment Banking and Brokerage Services UK 20,793 1.9 10,929
Howden Joinery Retailers UK 20,155 1.8 15,780
Microsoft Software and Computer Services United States 17,865 1.6 11,452
Oxford Instruments Electronic and Electrical 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
Vistry Household Goods and Home Construction UK 15,219 1.4 12,639
Top thirty investments 858,422 78.2
M&G Investment Banking and Brokerage 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
VAT Group Electronic and Electrical 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
Telenor Telecommunications Service 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
£'000 % £'000 £'000 £'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 £73,486,000 (2022 - loss of £41,101,000)
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 £350 million of net assets, 0.45% pa on
net assets between £350 million and £450 million and 0.25% pa on any net
assets in excess of £450 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 £75,000 (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 of board members Percentage of the board Number of senior positions Number in executive management Percentage of executive management
on the board
(CEO, CFO, Chair and SID)
Men 3 50% n/a n/a n/a
(note 3) (note 3) (note 3)
Women 3 50%
(note 1)
Not specified/prefer not to say - -
Table for reporting on ethnic background as at 30 June 2023
Number of board members Percentage of the board Number of senior positions Number in executive management Percentage of executive management
on the board
(CEO, CFO, Chair and SID)
White British or other White 5 83.3% n/a n/a n/a
(including minority-white groups)
(note 3) (note 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:
Board Meetings Audit Committee Management Remuneration Committee Meetings
(6) Meetings Engagement Nomination Committee Meetings (1)
(3) Committee (2)
Meetings
(2)
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 of shares held % Number of shares held %
held
held
Interactive Investor 16,674,055 14.9 16,565,575 15.0
(execution only)
Hargreaves Lansdown 15,057,918 13.5 15,195,318 13.8
(execution only)
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 4,042,047 3.6 4,044,782 3.7
(execution only)
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 £1.4m (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 £2.8m (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 2023 Year ended 30 June 2022
Revenue Capital Total Revenue Capital Total
Notes £'000 £'000 £'000 £'000 £'000 £'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 £'000 £'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 £'000 £'000 £'000 £'000 £'000 £'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 £'000 £'000 £'000 £'000 £'000 £'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 £'000 £'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 £'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 £73,344,000 and are amortised over the remaining life of the loan
towards their redemption value of £60,000,000. 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
£489,428,000 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
£'000 £'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 £1,109,000 (2022 - £1,836,000) have
been recognised as being revenue in nature.
During the year, the Company received premiums totalling £2,759,000 (2022 -
£2,820,000) 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
£'000 £'000 £'000 £'000 £'000 £'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 £350
million, 0.45% per annum on the next £100 million of net assets and 0.25% per
annum for net assets over £450 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 £1,273,000 (2022 - £642,000).
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
£'000 £'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 42 42
financial statements
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 £106,000 (2022 -
£100,000) 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 £19,000 (2022 - £19,000)
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 £28,000.
6. Finance costs
2023 2022
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'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 £'000 Rate £'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 £44,528,000
(2022 - £47,314,000).
2023 2022
Rate £'000 Rate £'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
£'000 £'000 £'000 £'000 £'000 £'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
£'000 £'000 £'000 £'000 £'000 £'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 9,351 5,936 15,287 9,078 (16,799) (7,721)
- 19%)
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 £74,422,000
(2022 - £71,665,000). A deferred tax asset at the standard rate of
corporation of 25% (2022 - 25%) of £18,606,000 (2022 - £17,916,000) 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
£18,606,000.
9. Return per Ordinary share
2023 2022
£'000 p £'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
£'000 £'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
£'000 £'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 £'000 £'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 £216,422,000 (2022 - £260,861,000) from investments
sold in the year. The book cost of these investments when they were purchased
was £210,434,000 (2022 - £219,724,000). 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 £nil as no open
positions existed (30 June 2022 - £nil).
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
£'000 £'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
£'000 £'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
£'000 £'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 £13,888,000 (2022 - £18,628,000) 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
£'000 £'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 £50 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 £'000 Currency £'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
£1,079,000.
- Euro 3,300,000 at an all-in rate of 4.792%, equivalent to £2,840,000.
- Norwegian Krone 6,360,000 at an all-in rate of 5.41%, equivalent to
£477,000.
- Danish Krona 6,850,000 at an all-in rate of 4.84%, equivalent to £790,000.
- US Dollar 1,570,000 at an all-in rate of 6.564%, equivalent to £1,267,000.
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 £550 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
£'000 £'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 £40,000,000 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, £60,000,000 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 £73,344,000 in the Company's Financial Statements and are then
amortised over the remaining life of the loan towards their redemption value
of £60,000,000. 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 £550,000,000.
15. Share capital
2023 2022
Shares £'000 Shares £'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 £42,202,000 (2022-
£3,195,000) 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 Attributable Net Asset Value Attributable
£'000 pence £'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 2022 differences Cash flows movements 30 June 2023
£'000 £'000 £'000 £'000 £'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 2021 differences Cash flows movements 30 June 2022
£'000 £'000 £'000 £'000 £'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
£'000 £'000 £'000 £'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 £53,000 (2022 - £161,000)
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
£'000 £'000 £'000 £'000 £'000 £'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
£'000 £'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 £109,831,000 (2022 - £109,879,000).
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 2023 £000 £000 £000 £000 £000
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 2022 £000 £000 £000 £000 £000
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 £6,378,000 (2022 - £6,507,000) of a
£50,000,000 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 £6,381,000
(2022 - £6,508,000).
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 £18,123,000 (30 June 2022 - £25,306,000) consisting of £3,080,000
(2022 - £2,685,000) of dividends receivable from equity shares, £nil (2022 -
£2,490,000) receivable from brokers and £15,115,000 (2022 - £20,131,000) 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 (£'000) a (6,378) (6,507)
Senior Loan Notes (£'000) b (109,141) (110,710)
Total borrowings (£'000) c=a+b (115,519) (117,217)
Cash (£'000) d 15,115 20,131
Amounts due to brokers (£'000) e (3,449) -
Amounts due from brokers (£'000) f - 2,490
Shareholders' funds (£'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 (£'000) a 3,804 3,997
Administrative expenses (£'000) b 1,390 1,350
Less: non-recurring charges(A) (£'000) c (8) (30)
Ongoing charges (£'000) a+b+c 5,186 5,317
Average net assets (£'000) d 1,036,020 1,102,862
Ongoing charges ratio e=(a+b+c)/d 0.50% 0.48%
(A) 2023 comprises £7,000 professional fees relating to discussions with the
registrar and £1,000 quick turnaround fee on ESEF filing. 2022 comprises
£20,000 director recruitment fee, £8,000 legal fees relating to the private
placement notes and £2,000 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 June 2023 Price (debt at fair value) (debt at par)
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 June 2022 Price (debt at fair value) (debt at par)
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
(http://www.murray-income.co.uk) .
By Order of the Board
abrdn Holdings Limited
Secretaries
19 September 2023
END
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