REG - Murray Intnl Trust - Half-year Report
11/08/2023 07:00
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RNS Number : 9983I Murray International Trust PLC 11 August 2023
MURRAY INTERNATIONAL TRUST PLC (the "Company")
Legal Entity Identifier (LEI): 549300BP77JO5Y8LM553
HALF-YEARLY REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2023
The Directors of Murray International Trust PLC report the unaudited results
of the Company for the six months ended 30 June 2023.
Performance Highlights
Net asset value total return(A) Share price total return(A)
Six months ended 30 June 2023 Six months ended 30 June 2023
+2.2% -2.5%
Year ended 31 December 2022 +8.8% Year ended 31 December 2022 +20.6%
Reference index total return(B) (Discount)/premium to net asset value(A)
Six months ended 30 June 2023 As at 30 June 2023
+7.9% -1.5%
Year ended 31 December 2022 -7.3% As at 31 December 2022 +3.1%
Ongoing charges ratio(A) Net gearing(A)
As at 30 June 2023 As at 30 June 2023
0.52% 8.3%
As at 31 December 2022 0.52% As at 31 December 2022 11.2%
(A) Alternative Performance Measure (see below)
(B) FTSE All World TR Index.
Financial Calendar and Highlights
Payment dates of quarterly dividends 16 August 2023
17 November 2023
16 February 2024
17 May 2024
Financial year end 31 December
Expected announcement of results for March 2024
year ending 31 December 2023
Annual General Meeting (London) 19 April 2024
Financial Highlights
30 June 2023 31 December 2022 % change
Total assets less current liabilities (before deducting prior charges) £1,754.7m £1,816.6m -3.4
Net assets £1,614.8m £1,616.8m -0.1
Share price per Ordinary share (mid market)(A) 254.0p 266.8p -4.8(B)
Net Asset Value per Ordinary share(A) 257.9p 258.7p -0.3(B)
(Discount)/premium to Net Asset Value per Ordinary share(C) -1.5% 3.1%
Net gearing(C) 8.3% 11.2%
Ongoing charges ratio(C) 0.52% 0.52%
(A) Comparative figures for the year ended 31 December 2022 have been restated
to reflect the sub-division of each existing Ordinary share of 25p into five
Ordinary shares of 5p each on 24 April 2023.
(B) The movement relates to capital only and does not take account of the
reinvestment of dividends.
(C) Considered to be an Alternative Performance Measure. Further details can
be found below.
Interim Board Report - Chairman's Statement
Background
During this review period, there was little respite from the inflationary
concerns and interest rate hikes that have dominated the financial backdrop
for over eighteen months now. Despite energy and commodity prices
significantly declining from this time last year, most consumer-driven
economies in the Developed World continue to be squeezed by higher food
prices, rising mortgage rates and dwindling disposable incomes. With the
impact of higher bond yields translating into higher debt servicing costs,
genuine fears over future asset quality are beginning to emerge, with all
areas of bank lending attracting scrutiny. For financial markets, the
divergence between the performance of bonds and equities proved extremely
pronounced: the former constantly fretting over wage inflation and the erosion
of real incomes; and the latter apparently ignoring the reality of rising
recession risks and downward revisions to growth and corporate profitability.
For individual investors and savers, the holy grail remains capital
appreciation and real returns; the quandary - where to find them.
Performance and Dividends
The net asset value (NAV) total return, with net income reinvested, for the
six months to 30 June 2023 was 2.2% compared with 7.9% for the Company's
Reference Index (the FTSE All World TR Index). Over the six-month period, the
share price total return was -2.5%, reflecting a move to trading at a small
discount to the NAV. The Manager's Review contains more information about both
the drivers of performance in the period and the portfolio changes effected.
Two interim dividends of 2.4p (2022: 2.4p - restated for share sub-division
referred to below) have been declared in respect of the six months to 30 June
2023. The first interim dividend is payable on 16 August 2023 to shareholders
on the register on 7 July 2023 and the second interim dividend will be paid on
17 November 2023 to shareholders on the register on 6 October 2023.
As stated previously, the Board intends to maintain a progressive dividend
policy given the Company's investment objective. This means that, in some
years, revenue will be added to reserves while, in others, revenue may be
taken from reserves to supplement earned revenue for that year to pay the
annual dividend. Shareholders should not be surprised or concerned by either
outcome as, over time, the Company will aim to pay out what the underlying
portfolio earns. The Board currently intends in 2023 at least to match the
dividend payout of 11.2p (56.0p per share restated for share sub-division
referred to below) in 2022. At the end of June 2023 the Balance Sheet revenue
reserves amounted to £70.5m.
Manager Succession
As many Shareholders will be aware, Bruce Stout has been the Company's lead
investment manager since 2004. During that time, he has been assisted by
Martin Connaghan and Samantha Fitzpatrick. In fact, both have worked with
Bruce since 2001, when they joined what was then Aberdeen Asset Management
from Murray Johnstone. Over recent years, Martin and Samantha's input into
the management of the portfolio, and the Company itself, has increased and
many of you may have met or heard from them at meetings or presentations,
including AGMs and online webinars. Bruce has now advised us of his
intention to retire at the end of June 2024. I am delighted to announce that
Martin and Samantha will take on co-managerial responsibility for the
Company's investments alongside Bruce with immediate effect, thereby ensuring
the smoothest of handovers and no change in abrdn's approach to the investment
management of the Company going forward. It is premature of me to thank Bruce
for all his efforts on behalf of the Company and I am sure that many of you
will have the opportunity to do so personally in the run-up to his departure
in just under a year's time.
Management of Premium and Discount
The Board aims to ensure that neither an excessive discount nor premium to NAV
arises. Subject to existing shareholder permissions (given at the last AGM)
and prevailing market conditions at the time, the Board intends to continue to
buy back shares and issue new shares (or sell shares from Treasury) if shares
trade at a persistent significant discount to NAV (excluding income) or
premium to NAV (including income). The Board believes that this process is in
the interests of all shareholders.
During the period under review, the Company's share price has traded at a
level that has been close to the NAV per share and no shares have been
purchased for Treasury. However, at times the share price has traded at a
premium to the NAV per share and, as a result, 1,050,000 shares have been sold
from Treasury during the period raising £2.8m for the Company. Subsequent
to the period end 536,157 shares have been purchased for Treasury at a
discount to NAV.
At the latest practicable date, the NAV (excluding income) per share was
249.47p and the share price was 244.5p equating to a discount of 2.0% per
Ordinary share.
Completion of Share Sub-division
On 24 April 2023, the Company announced the completion of the sub-division of
the Ordinary shares of 25 pence each into five new Ordinary shares of 5 pence
each ("New Ordinary Shares") which had been approved by shareholders at the
Company's Annual General Meeting held on 21 April 2023. The New Ordinary
Shares are listed and trading on the London Stock Exchange under a new ISIN
and SEDOL, as follows:
• New ISIN: GB00BQZCCB79
• New SEDOL: BQZCCB7
The ticker for the New Ordinary Shares remains the same (MYI).
Migration of abrdn Savings Plans to interactive investor ("ii")
The Company's Manager, abrdn, has been reviewing its current service provider
for its investment trust share plans (abrdn Savings Plan, Children's Plan and
ISA). In May 2022, abrdn completed the acquisition of ii, the UK's second
largest, award-winning investment platform for self-directing private
investors. Having considered the various options, abrdn has concluded its
review and has decided to migrate its share plan customers to ii in December
2023, given the strength of the ii offering, its understanding of and
enthusiasm for investment trusts and the strong representation of investment
trusts in its customer portfolios. Plan participants who have queries in
respect of the migration should raise them directly with abrdn's investor
services team by email at inv.trusts@abrdn.com or by telephone on 0808 500
4000 or 00 44 1268 448 222 (Monday to Friday 9am to 5pm - call charges will
vary).
Gearing
In May 2023, the Company repaid its maturing £60 million 5 year fixed rate
loan with The Royal Bank of Scotland International Limited, London Branch.
Following the repayment of this loan, the Company's borrowings are £140m
which represents a net gearing level of 8.3% based on the Company's NAV at 30
June 2023 (2022: 11.2%).
The Board considered options to replace this loan but acceptable commercial
terms were not available.
Ongoing Charges Ratio ("OCR")
During the review period, the OCR remained flat, ending the six months at
0.52% (31 December 2022: 0.52%). The Board remains focused on controlling
costs and delivering value to shareholders. A full breakdown of the OCR
calculation is provided below.
Directorate
As part of the Board's long-term succession planning, the Directors welcomed
Mr Gregory Eckersley to the Board as an independent non-executive Director on
1 May 2023. Greg is an experienced equity investor with a professional
executive career in a mix of leadership and asset management roles. Having
begun his investment career at Cigna International Investment Limited, he
gained international experience at Draycott Partners, Alliance Capital and
Alliance Bernstein, managing and overseeing teams investing in emerging market
and global portfolios and, until 2019, was the global head of internal
equities at the Abu Dhabi Investment Authority.
In addition, the Company has announced the appointment of Ms Wendy Colquhoun
as an independent non-executive Director with effect from 1 September 2023.
Wendy is a qualified solicitor and was, until May 2020, a partner at
international law firm CMS Cameron McKenna Nabarro Olswang LLP. She has
advised investment trust boards for over 25 years on advisory and
transactional matters and has a thorough understanding of investment trusts
and the regulatory and other challenges they face. She is a non-executive
director of Capital Gearing Trust p.l.c and Schroder UK Mid Cap Fund plc, and
chair of Henderson Opportunities Trust plc.
As previously announced, I shall be retiring from the Board with effect from
31 December 2023 at which point Ms Virginia Holmes has agreed to chair the
Company.
Outlook
Despite an increasingly hostile backdrop of higher interest rates and rising
recession risk, our Manager's focus continues to be on quality and
diversification; seeking to deliver the Company's investment objective through
portfolio holdings with robust corporate profitability, strong free cash
flows, low debt-servicing costs, under-leveraged balance sheets and affordable
dividend distributions and a focus on capital intensive businesses that offer
relative protection from wage hikes which are run by experienced managements
that have negotiated difficult operating environments in the past. Our Manager
avoids discretionary spending businesses exposed to increasingly financially
stretched consumers. This disciplined and focused approach should enhance
longer-term prospects. The environment of deteriorating credit and asset
quality plus increasing restrictions on debt funding is now a fact of
investment life. Against such a backdrop, great caution is warranted and is
being exercised.
Shareholders' views are very important to the Board and I encourage you to
email me if you have feedback on the Company at
DavidHardie.Chairman@abrdn.com.
David Hardie
Chairman
10 August 2023
Interim Board Report - Manager's Review
Background
Continuation of the sharpest reactionary monetary tightening witnessed in
living memory featured prominently throughout the first six months of 2023. As
interest rates were relentlessly raised and the cost of borrowing soared, most
of the debt-dependent Developed World teetered on the brink of recession. Yet
any objective assessment of what has actually been achieved by such draconian
policy action remains arguably subjective to say the least. Identifiable
inflationary pressures associated with commodity price inflation have
"behaved" pretty much in textbook fashion. With oil and gas prices down over
50% from twelve months ago, most hard commodity prices have succumbed to the
free-market equilibrium associated with lower demand and expanding supply. Yet
inflation in many countries persists. For those familiar with the economic
vandalism inherent in Central Banks printing money and the consequences of
such irresponsible pandering to financial markets, this will come as no
surprise. After all, inflation is an "always and everywhere" monetary
phenomenon. Until such time that bond markets can accurately price the reality
of debt servicing obligations, deteriorating creditworthiness of sovereign
states, future interest rate volatility and political incompetence, then
inflationary pressures are likely to persist. Against this backdrop,
increasingly ineffectual policymakers are coming under intense political
pressure to "do more" despite the reality of being "unable to do much",
thereby prolonging the economic uncertainty and negative consequences that
unconstrained inflation has on currencies, wealth and prosperity. For
individual savers, the reality of negative real returns has increasingly
become the all-consuming focus of investment strategies.
North America
The epicentre of the gigantic monetary overhang that presents so many
insurmountable problems for orthodox monetary policy throughout the so-called
Developed World remains firmly rooted in the United States. With credit
quality already creaking under the weight of higher interest rates, economic
fundamentals in North America continued to deteriorate. The credit boom of the
past extended business cycle stayed well on course to become the credit bust
of the current post-bubble cycle. A significant "run" on regional bank
deposits early in the year was dismissed by the eternally optimistic consensus
as mere localised lending dislocations. In truth, where the most extensive and
problematic financial skeletons lie after a decade of decadent misallocation
of cheap money is as yet unknown. Undoubtably this issue of asset quality will
remain key for bond and equity markets as the year progresses, yet
year-to-date such realities proved insufficient to dampen "animal spirits" in
the capitalism capital of the western world. The latest market "distraction"
to exercise the minds and buying behaviour of an equity market devoid of
fundamental support from bond yields, interest rates or policy rhetoric, was a
wave of exuberant enthusiasm towards the perceived exponential growth
possibilities for Artificial Intelligence networks. Embellished by such
sentiment, technology holdings in Broadcom and Cisco Systems were standout
performers but, elsewhere, portfolio returns proved more modest as the
diversified and defensive emphasis for delivering solid earnings and dividends
went largely unrewarded. Stronger performing sectors from last year, such as
Healthcare, Energy and Basic Materials, fell out of favour given the
prevailing, short-term sentiment. High quality Healthcare holdings, such as
AbbVie, Bristol Myers and Johnson & Johnson, drifted lower and asset rich
Canadian pipeline operators TC Energy and Enbridge delivered dividend growth
but little else. There were no new portfolio investments nor divestments in
the region over the period in what proved a particularly concerning six months
of unjustified equity price inflation.
Europe and the UK
Clear evidence of weakening credit growth and tighter liquidity conditions
prevailed throughout Europe over the first six months of the year. Loss of
growth momentum inevitably proved more pronounced in countries exposed to the
largest debt burdens but, in general, most of the continent witnessed an
easing of inflationary pressures. Headline Euro Zone inflation, which peaked
at low double digits towards year end 2022, was trending around mid-single
digits by period end with further improvement possible over the coming months.
Conversely, whilst growth continued to decelerate in the UK, stubbornly high
food and services inflation persisted. Combined with rising wages and blatant
corporate profiteering, the pressure for further monetary tightening escalated
against a backdrop of an already punitive cost of living crisis. The
beleaguered Bank of England remained impotent to exert much influence on a
toxic cocktail of macroeconomic incompatibilities that threatens to
destabilise a financial system increasingly dependent on foreign capital for
living beyond its means. With lagging mortgage refinancing about to bite, the
most relevant question now pertaining to the UK economy is for how long and
how deep the inevitable economic recession will be.
Performance from European portfolio holdings was exceptionally strong over the
period, with total exposure up +8.6%. Diversification continued to deliver
superior capital and income performance, with recently established BE
Semiconductor the standout performer. Well above average positive total
returns were also forthcoming from Industrials such as Atlas Copco and
Siemens, the Utility company Enel, French Pharmaceutical and Consumer Staples
companies Sanofi and Danone, plus Norwegian Telecoms provider Telenor.
Negative returns were few and far between within a European portfolio context,
with only Roche, TotalEnergies and Danish Insurance company Tryg deleting any
value. The outright sale of Swedish financial Nordea was the only meaningful
transaction in the region over the period. Whilst UK holdings struggled to
contribute much to performance, the portfolio's historically low weighting in
UK equities (primarily due to more interesting opportunities elsewhere in the
world) resulted in only a marginal constraint on returns at the overall
aggregate level.
Asia and Latin America
Nowhere were the increasingly divergent trends in global economic growth,
interest rates and inflation more pronounced than in Emerging Markets. Well
anchored in fundamental economic orthodoxy, the rate of price increases
throughout most of Asia and Latin America continued to slow, vindication of
prudent, proactive policy responses enacted long before inflation was allowed
to develop roots. With inflation "behaving" much better in the Developing
World compared to the Developed World, companies operating in these regions
were less restricted by interest rate uncertainty. Bond yields remained higher
than necessary throughout but, with the next move in interest rates likely to
be lower, there was rational scope for optimism. Widespread global euphoria
towards Artificial Intelligence was reflected in very strong performance from
Asian portfolio holdings in Taiwan Semiconductor, GlobalWafers and Samsung
Electronics. Elsewhere in the region, Taiwan Industrial Hon Hai provided
strong total returns, as did telecommunication service providers Telekom
Indonesia and Taiwan Mobile. The only noticeable area of weakness within Asia
exposures continued to be the Chinese holdings, where ongoing economic
weakness, policy inertia and geo-political concerns kept most international
investors sceptical on near term prospects. The outright sale of Lotus
Retail in Thailand was the only notable transaction in Asia over the period.
Exposure to Latin America remained constant at around 13% of gross assets in
six high quality companies, all of which delivered robust earnings and
dividend growth over the period although this was not uniformly recognised by
the markets. The total aggregate portfolio return of 6.8% was derived from
strong positive contributions from Grupo Asur and Kimberly Clark in Mexico,
and very strong performance from Bradesco and Telefonica in Brazil. Strength
in Grupo Asur prompted periodic profit taking from the large position.
Exceptionally strong contributors from previous years, lithium producer
Sociedad Quimica Y Minera in Chile and iron ore giant Vale in Brazil both
declined against a global backdrop of weaker commodity prices but the
long-term outlook for these businesses, and indeed the region as a whole,
remains very attractive indeed.
Outlook
Cracking a nut with a sledgehammer seldom delivers the desired results. The
shell usually breaks but the kernel invariably gets pulverised in the
process. Faced with stubbornly high inflation in the Developed World,
discredited and detached Central Banks continue to follow a similar Pavlovian
practice which, in their world, involves hiking interest rates until demand
subsides. This is theoretically logical if it is assumed that excessive
consumer demand is the root of all price inflation. However, it is woefully
misguided if rigidity of labour markets, deglobalisation, rising global
protectionism or "doing whatever it takes" through printing money are
structurally influencing the overall cost of living. Against such a backdrop,
religiously following such a one-dimensional dogma appears at best foolhardy,
at worst downright destructive.
In the meantime, the lagged effects of the monetary tightening implemented so
far are beginning to emerge. For the G7 nations, drowning in a deluge of
self-inflicted debt dynamics, servicing existing borrowings at higher interest
rates has become the daily priority. The tougher and more politically
unpopular conditions become for the indebted world, the greater the pressure
to "bend" will mount on policymakers accustomed and conditioned to "choosing"
the popular way out. However, the days of bailing out all and sundry through
the public purse and supporting the ill-disciplined and indebted at the
expense of the responsible saver are over. The re-emergence of inflation,
tighter liquidity and acute competition for available funds has seen to that.
For the Developed World's Monetary Authorities, what they might want to do
versus what they can actually do this time around appears profoundly
different.
Against such a backdrop great caution is warranted. Investment focus will
continue to emphasise quality companies, maintain a diversified portfolio of
both income and growth opportunities, and seek to avoid sectors, businesses
and geographical areas where both secular and cyclical headwinds are deemed to
be most hostile. The medium-term outlook poses numerous unfamiliar challenges
for policymakers, politicians and investors alike, with uncertainty likely to
be a constant companion. For many, the process of getting comfortable with
feeling uncomfortable has only just begun.
Bruce Stout
Senior Investment Director
Martin Connaghan
Investment Director
Samantha Fitzpatrick
Investment Director
abrdn Investments Limited
10 August 2023
Interim Board Report - Directors' Disclosures
Principal Risks and Uncertainties
The Board has approved a matrix of the key risks that, in its assessment,
affect the business. The major financial risks associated with the Company are
detailed in note 18 of the 2022 Annual Report and the other principal risks
are summarised below. These risks represent the principal risks anticipated
for the remaining six months of the year. They can be summarised into the
following categories:
· Investment Strategy and Objectives;
· Investment Portfolio Performance Risk;
· Operational and Governance Risks;
· Financial Risks; and
· Macro and Geo-Political Risks.
Details of the management of the risks and the Company's internal controls are
disclosed on pages 35 and 36 of the 2022 Annual Report.
The Board also has a process in place to identify emerging risks. If any of
these are deemed to be significant, these risks are categorised, rated and
added to the Company's risk matrix.
The Board monitors emerging risks and has reviewed the principal risks and
uncertainties including prevailing geo-political concerns. The Board notes the
Manager's robust and disciplined investment process which continues to focus
on long-term company fundamentals including balance sheet strength and
deliverability of sustainable earnings growth. The Board, aided by the
Manager, closely monitors all third party service arrangements.
Related Party Transactions
Details of the transactions with the Manager including the fees payable to
abrdn plc group companies are disclosed in note 11 of this Half Yearly Report.
Going Concern
In accordance with the Financial Reporting Council's Guidance on Risk
Management, Internal Control and Related Financial and Business Reporting, the
Directors have undertaken a rigorous review and consider that there are no
material uncertainties and that the adoption of the going concern basis of
accounting is appropriate. This review included the additional risks
relating to geo-political events such as the on-going war in Ukraine.
The Company's assets consist of a diverse portfolio of listed equities and
bonds and the portfolio in most circumstances is realisable within a very
short timescale. The Directors believe that the Company has adequate financial
resources to continue its operational existence for the foreseeable future and
for 12 months from the date of this Half Yearly Report. Accordingly, the
Directors continue to adopt the going concern basis in preparing these
financial statements.
Directors' Responsibility Statement
The Directors are responsible for preparing the Half Yearly Financial Report
in accordance with applicable law and regulations. The Directors confirm that
to the best of
their knowledge:
· the condensed set of Financial Statements has been prepared in
accordance with Financial Reporting Standard 104 (Interim Financial
Reporting);
· the Half Yearly Board Report includes a fair review of the
information required by rule 4.2.7R of the Disclosure and Transparency Rules
(being an indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed set of
Financial Statements and a description of the principal risks and
uncertainties for the remaining six months of the financial year); and
· the Half Yearly Board Report includes a fair review of the
information required by rule 4.2.8R (being related party transactions that
have taken place during the first six months of the financial year and that
have materially affected the financial position of the Company during that
period; and any changes in the related party transactions described in the
last Annual Report that could do so).
The Half Yearly Financial Report for the six months ended 30 June 2023
comprises the Half Yearly Board Report, the Directors' Responsibility
Statement and the condensed set of Financial Statements.
For and on behalf of the Board of Murray International Trust PLC
David Hardie
Chairman
10 August 2023
Condensed Statement of Comprehensive Income (unaudited)
Six months ended Six months ended
30 June 2023 30 June 2022
Revenue Capital Total Revenue Capital Total
Note £'000 £'000 £'000 £'000 £'000 £'000
(Losses)/gains on investments - (1,977) (1,977) - 23,162 23,162
Income 2 47,826 145 47,971 45,465 - 45,465
Investment management fees 11 (1,039) (2,425) (3,464) (1,005) (2,346) (3,351)
Other expenses (921) - (921) (888) - (888)
Currency (losses)/gains - (590) (590) - 339 339
Net return before finance costs and taxation 45,866 (4,847) 41,019 43,572 21,155 64,727
Finance costs (707) (1,650) (2,357) (619) (1,445) (2,064)
Return before taxation 45,159 (6,497) 38,662 42,953 19,710 62,663
Taxation 3 (3,878) 470 (3,408) (3,717) 542 (3,175)
Return attributable to equity shareholders 41,281 (6,027) 35,254 39,236 20,252 59,488
Return per Ordinary share (pence)(A) 5 6.60 (0.96) 5.64 6.26 3.23 9.49
(A)Comparative figures for the six months ended 30 June 2022 have been
restated to reflect the sub-division of each existing Ordinary share of 25p
into five Ordinary shares of 5p each on 24 April 2023.
The total column of the Condensed Statement of Comprehensive Income is the
profit and loss account of the Company.
All revenue and capital items in the above statement derive from continuing
operations.
The accompanying notes are an integral part of these financial statements.
Condensed Statement of Financial Position (unaudited)
As at As at
30 June 2023 31 December 2022
Note £'000 £'000
Non-current assets
Investments at fair value through profit or loss 1,730,552 1,784,820
Current assets
Prepayments and accrued income 9,920 7,195
Other debtors 10,934 9,306
Cash and short-term deposits 6,043 18,131
26,897 34,632
Creditors: amounts falling due within one year
Bank loans (29,989) (59,989)
Other creditors (2,771) (2,836)
(32,760) (62,825)
Net current liabilities (5,863) (28,193)
Total assets less current liabilities 1,724,689 1,756,627
Creditors: amounts falling due after more than one year
Bank loans - (29,982)
2.24% Senior Unsecured Loan Note 2031 (49,923) (49,918)
2.83% Senior Unsecured Loan Note 2037 (59,977) (59,977)
Net assets 1,614,789 1,616,750
Capital and reserves
Called-up share capital 32,353 32,353
Share premium account 363,461 362,967
Capital redemption reserve 8,230 8,230
Capital reserve 1,140,229 1,143,961
Revenue reserve 70,516 69,239
Equity shareholders' funds 1,614,789 1,616,750
Net asset value per Ordinary share (pence)(A) 6 257.9 258.7
(A) Comparative figures for the year ended 31 December 2022 have been restated
to reflect the sub-division of each existing Ordinary share of 25p into five
Ordinary shares of 5p each on 24 April 2023.
The accompanying notes are an integral part of these financial statements.
Condensed Statement of Changes in Equity (unaudited)
Six months ended 30 June 2023
Share Capital
Share premium redemption Capital Revenue
capital account reserve reserve reserve Total
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 December 2022 32,353 362,967 8,230 1,143,961 69,239 1,616,750
Return after taxation - - - (6,027) 41,281 35,254
Dividends paid (see note 4) - - - - (40,004) (40,004)
Sale of Treasury shares - 494 - 2,295 - 2,789
Balance at 30 June 2023 32,353 363,461 8,230 1,140,229 70,516 1,614,789
Six months ended 30 June 2022
Share Capital
Share premium redemption Capital Revenue
capital account reserve reserve reserve Total
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 December 2021 32,353 362,967 8,230 1,094,549 62,967 1,561,066
Return after taxation - - - 20,252 39,236 59,488
Dividends paid (see note 4) - - - - (38,917) (38,917)
Buyback of shares to Treasury - - - (6,225) - (6,225)
Balance at 30 June 2022 32,353 362,967 8,230 1,108,576 63,286 1,575,412
The accompanying notes are an integral part of these financial statements.
Condensed Statement of Cash Flows
(unaudited)
Six months ended Six months ended
30 June 2023 30 June 2022
Notes £'000 £'000
Net return before finance costs and taxation 41,019 64,727
Increase in accrued expenses 58 19
Overseas withholding tax (4,852) (6,064)
Increase in accrued income (3,233) (869)
Interest paid (2,457) (2,106)
Losses/(gains) on investments 1,977 (23,162)
Overseas dividends - capital (145) -
Currency losses/(gains) 590 (339)
Increase in other debtors (1) (60)
Corporation tax paid 136 -
Return of capital included in investment income 316 -
Net cash from operating activities 33,408 32,146
Investing activities
Purchases of investments - (116,708)
Sales of investments 52,309 146,008
Net cash from investing activities 52,309 29,300
Financing activities
Equity dividends paid 4 (40,004) (38,917)
Issue of Ordinary shares from Treasury 2,789 -
Buyback of Ordinary shares to Treasury - (6,225)
Loan repayment (60,000) (60,000)
Issue of 2.83% Senior Unsecured Loan Note 2037 - 59,976
Net cash used in financing activities (97,215) (45,166)
(Decrease)/increase in cash (11,498) 16,280
Analysis of changes in cash during the period
Opening balance 18,131 8,705
Effect of exchange rate fluctuations on cash held (590) 339
(Decrease)/increase in cash as above 8 (11,498) 16,280
Closing balance 6,043 25,324
The accompanying notes are an integral part of these financial statements.
Notes to the Financial Statements (unaudited)
For the six months ended 30 June 2023
1. Accounting policies - Basis of preparation
The condensed financial statements have been prepared in accordance with
Financial Reporting Standard 104 (Interim Financial Reporting) and with the
Statement of Recommended Practice for 'Financial Statements of Investment
Trust Companies and Venture Capital Trusts'. They have also been prepared on a
going concern basis and on the assumption that approval as an investment trust
will continue to be granted. Annual financial statements are prepared under
Financial Reporting Standard 102.
The condensed interim financial statements have been prepared using the same
accounting policies as the preceding annual financial statements.
2. Income
Six months ended Six months ended
30 June 2023 30 June 2022
£'000 £'000
Income from investments
UK dividends 4,334 3,732
Overseas dividends - revenue 38,908 35,810
Overseas dividends - capital 145 -
Overseas interest 4,396 5,921
47,783 45,463
Other income
Deposit interest 163 2
Stocklending 23 -
Interest on corporation tax reclaim 2 -
188 2
Total income 47,971 45,465
3. Taxation
The taxation expense reflected in the Condensed Statement of Comprehensive
Income is based on the estimated annual tax rate expected for the full
financial year. The estimated annual corporation tax rate used for the year to
31 December 2023 is an effective rate of 23.5%.
The tax expense 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 return as reported in the Condensed 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.
4. Ordinary dividends on equity shares
Six months ended Six months ended
30 June 2023 30 June 2022
£'000 £'000
Third interim dividend 2022 of 2.4p (2021 - 2.4p)(A) 15,001 15,104
Final dividend 2022 of 4.0p (2021 - 3.8p)(A) 25,003 23,813
40,004 38,917
(A) Rates have been restated to reflect the sub-division of each existing
Ordinary share of 25p into five Ordinary shares of 5p each on 24 April 2023.
A first interim dividend for 2023 of 2.4p (2022 - restated 2.4p) will be paid
on 16 August 2023 to shareholders on the register on 7 July 2023. The
ex-dividend date was 6 July 2023.
A second interim dividend for 2023 of 2.4p (2022 - restated 2.4p) will be paid
on 17 November 2023 to shareholders on the register on 6 October 2023. The
ex-dividend date is 5 October 2023.
5. Return per Ordinary share (pence)
Six months ended Six months ended
30 June 2023 30 June 2022
£'000 Per Ordinary share (p) £'000 Per Ordinary share (p)(A)
Returns are based on the following figures:
Revenue return 41,281 6.60 39,236 6.26
Capital return (6,027) (0.96) 20,252 3.23
Total return 35,254 5.64 59,488 9.49
Weighted average number of Ordinary shares(A) 625,365,570 627,159,435
(A) Comparative figures for the six months ended 30 June 2022 have been
restated to reflect the sub-division of each existing Ordinary share of 25p
into five Ordinary shares of 5p each on 24 April 2023.
6. Net asset value
The net asset value per share and the net asset value attributable to the
Ordinary shares at the period end calculated in accordance with the Articles
of Association were as follows:
As at As at
30 June 2023 31 December 2022
Attributable net assets (£'000) 1,614,789 1,616,750
Number of Ordinary shares in issue (excluding Treasury)(A) 626,114,465 625,064,465
Net asset value per share (pence)(A) 257.9 258.7
(A)Comparative figures for the year ended 31 December 2022 have been restated
to reflect the sub-division of each existing Ordinary share of 25p into five
Ordinary shares of 5p each on 24 April 2023.
7. Transaction costs
During the period expenses were incurred in acquiring or disposing of
investments classified as fair value through profit or loss. These have been
expensed through capital and are included within (losses)/gains on investments
in the Condensed Statement of Comprehensive Income. The total costs were as
follows:
Six months ended Six months ended
30 June 2023 30 June 2022
£'000 £'000
Purchases - 137
Sales 39 126
39 263
8. Analysis of changes in net debt
At At
31 December Currency Cash Non-cash 30 June
2022 differences flows movements 2023
£'000 £'000 £'000 £'000 £'000
Cash and short term deposits 18,131 (590) (11,498) - 6,043
Debt due within one year (59,989) - 60,000 (30,000) (29,989)
Debt due after more than one year (139,877) - - 29,977 (109,900)
(181,735) (590) 48,502 (23) (133,846)
At At
31 December Currency Cash Non-cash 30 June
2021 differences flows movements 2022
£'000 £'000 £'000 £'000 £'000
Cash and short term deposits 8,705 339 16,280 - 25,324
Debt due within one year (59,975) - 60,000 (60,000) (59,975)
Debt due after more than one year (139,839) - (59,976) 59,949 (139,866)
(191,109) 339 16,304 (51) (174,517)
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.
9. 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. The fair value hierarchy has the following classifications:
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.
Level 3: Inputs are unobservable (ie for which market data is unavailable) for the
asset or liability.
The financial assets and liabilities measured at fair value in the Condensed
Statement of Financial Position are grouped into the fair value hierarchy at
the reporting date as follows:
Level 1 Level 2 Level 3 Total
As at 30 June 2023 Note £'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
Quoted equities a) 1,617,676 - - 1,617,676
Quoted preference shares b) - 5,766 - 5,766
Quoted bonds b) - 107,110 - 107,110
Total 1,617,676 112,876 - 1,730,552
Level 1 Level 2 Level 3 Total
As at 31 December 2022 Note £'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
Quoted equities a) 1,661,132 - - 1,661,132
Quoted preference shares b) - 6,269 - 6,269
Quoted bonds b) - 117,419 - 117,419
Total 1,661,132 123,688 - 1,784,820
a) Quoted equities. The fair value of the Company's investments in quoted
equities has been determined by reference to their quoted bid prices at the
reporting date. Quoted equities included in Fair Value Level 1 are actively
traded on recognised stock exchanges.
b) Quoted preference shares and bonds. The fair value of the Company's
investments in quoted preference shares and bonds has been determined by
reference to their quoted bid prices at the reporting date. Investments
categorised as Level 2 are not considered to trade in active markets.
10. Share capital
On 24 April 2023 there was a sub-division of each existing Ordinary 25p share
into five Ordinary shares of 5p each. During the period 1,050,000 Ordinary
shares were released from Treasury for proceeds of £2,794,000.
As at 30 June 2023 there were 626,114,465 (31 December 2022 - restated
625,064,465) Ordinary shares of 5p each in issue. Ordinary shares held in
Treasury were 20,945,550 (31 December 2022 - restated 21,995,550). Subsequent
to the period end 536,157 Ordinary shares were bought back to be held in
Treasury at a cost of £1,322,000.
11. Transactions with the Manager
The Company has agreements with abrdn Fund Managers Limited ('aFML' or the
'Manager') for the provision of investment management, secretarial, accounting
and administration and promotional activity services.
The management fee has been charged on net assets (i.e. excluding borrowings
for investment purposes) averaged over the six previous quarters at a rate of
0.5% per annum up to £500 million, and 0.4% per annum thereafter. A fee of
1.5% per annum is chargeable on the value of any unlisted investments. The
investment management fee is chargeable 30% against revenue and 70% against
realised capital reserves. During the period £3,464,000 (30 June 2022 -
£3,351,000) of investment management fees was payable to the Manager, with an
amount of £1,737,000 (30 June 2022 - £1,685,000) being payable to aFML at
the period end.
No fees are charged in the case of investments managed or advised by the abrdn
Group. The management agreement may be terminated by either party on the
expiry of six months' written notice. On termination the Manager is entitled
to receive fees which would otherwise have been due up to that date.
The promotional activities fee is based on a current annual amount of
£400,000 (30 June 2022 - £400,000), payable quarterly in arrears. During the
period £200,000 (30 June 2022 - £200,000) of fees was payable, with an
amount of £100,000 (30 June 2022 - £100,000) being payable to aFML at the
period end.
12. Segmental information
The Company is engaged in a single segment of business, which is to invest in
equity securities and debt instruments. All of the Company's activities are
interrelated, and each activity is dependent on the others. Accordingly, all
significant operating decisions are based on the Company as one segment.
13. Half-Yearly Report
The financial information in this Report does not comprise statutory accounts
within the meaning of Section 434 - 436 of the Companies Act 2006. The
financial information for the year ended 31 December 2022 has been extracted
from published accounts that have been delivered to the Registrar of Companies
and on which the report of the Company's auditor was unqualified and contained
no statement under Section 498 (2), (3) or (4) of the Companies Act 2006. The
condensed interim financial statements have been prepared using the same
accounting policies as contained within the preceding annual financial
statements.
The financial information for the six months ended 30 June 2023 and 30 June
2022 has not been audited or reviewed by the Company's auditor.
14. This Half-Yearly Financial Report was approved by the Board on 10 August 2023.
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)/premium to net asset value per Ordinary share
The (discount)/premium is the amount by which the share price is lower or
higher than the net asset value per share, expressed as a percentage of the
net asset value.
30 June 2023 31 December 2022
(*Restated)
NAV per Ordinary share (p) a 257.9 258.7
Share price (p) b 254.0 266.8
(Discount)/premium (b-a)/a -1.5% 3.1%
* Restated to reflect the sub-division of each existing Ordinary share of 25p
into five Ordinary shares of 5p each on 24 April 2023.
Net gearing
Net gearing measures the total borrowings less cash and cash equivalents
dividend by shareholders' funds, expressed as a percentage. Under AIC
reporting guidance cash and cash equivalents includes amounts due to and from
brokers at the period end as well as cash and cash equivalents.
30 June 2023 31 December 2022
Borrowings (£'000) a 139,889 199,866
Cash (£'000) b 6,043 18,131
Amounts due from brokers (£'000) c - (173)
Shareholders' funds (£'000) d 1,614,789 1,616,750
Net gearing (a-b+c)/d 8.3% 11.2%
Ongoing charges
The ongoing charges ratio has been calculated in accordance with guidance
issued by the AIC as the total of investment management fees and
administrative expenses and expressed as a percentage of the average published
daily net asset values with debt at fair value throughout the year. The ratio
for 30 June 2023 is based on forecast ongoing charges for the year ending 31
December 2023.
30 June 2023 31 December 2022
Investment management fees (£'000) 6,930 6,748
Administrative expenses (£'000) 1,692 1,651
Less: non-recurring charges(A) (£'000) (64) (72)
Ongoing charges (£'000) 8,558 8,327
Average net assets (£'000) 1,653,541 1,604,867
Ongoing charges ratio (excluding look-through costs) 0.52% 0.52%
Look-through costs(B) - -
Ongoing charges ratio (including look-through costs) 0.52% 0.52%
(A) Professional services comprising new Director recruitment costs and legal
fees considered unlikely to recur.
(B) Calculated in accordance with AIC guidance issued in October 2020 to
include the Company's share of costs of holdings in investment companies on a
look-through basis.
The ongoing charges ratio provided in the Company's Key Information Document
is calculated in line with the PRIIPs regulations, which includes amongst
other things, the cost of borrowings and transaction costs.
Total return
NAV and share price 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
Reference Index, respectively.
Share
Six months ended 30 June 2023 NAV price
Opening at 1 January 2023 a 258.7p 266.8p
Closing at 30 June 2023 b 257.9p 254.0p
Price movements c=(b/a)-1 -0.3% -4.8%
Dividend reinvestment(A) d 2.5% 2.3%
Total return c+d +2.2% -2.5%
Share
Year ended 31 December 2022 (*Restated) NAV price
Opening at 1 January 2022 a 248.1p 231.2p
Closing at 31 December 2022 b 258.7p 266.8p
Price movements c=(b/a)-1 4.3% 15.4%
Dividend reinvestment(A) d 4.5% 5.2%
Total return c+d +8.8% +20.6%
* Restated to reflect the sub-division of each existing Ordinary share of 25p
into five Ordinary shares of 5p each on 24 April 2023.
(A) 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. 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.
Summary of Net Assets
Valuation Valuation
30 June 2023 31 December 2022
£'000 % £'000 %
Equities 1,617,676 100.2 1,661,132 102.7
Preference shares 5,766 0.4 6,269 0.4
Bonds 107,110 6.6 117,419 7.3
Total investments 1,730,552 107.2 1,784,820 110.4
Net current assets 24,126 1.5 31,796 2.0
Total assets 1,754,678 108.7 1,816,616 112.4
Prior charges(A) (139,889) (8.7) (199,866) (12.4)
Net assets 1,614,789 100.0 1,616,750 100.0
(A) All short-term and long-term bank loans and loan notes.
Summary of Investment Changes
Valuation Appreciation/ Net purchases/ Valuation
31 December 2022 (depreciation) (sales) 30 June 2023
£'000 % £'000 £'000 £'000 %
Equities
UK 68,771 3.9 (8,847) - 59,924 3.4
North America 468,484 26.2 (8,246) (138) 460,100 26.6
Europe ex UK 448,335 25.1 21,230 (27,666) 441,899 25.5
Asia Pacific ex Japan 444,303 24.9 (7,004) (8,685) 428,614 24.8
Latin America 218,800 12.3 8,553 (11,716) 215,637 12.5
Africa 12,439 0.7 (937) - 11,502 0.7
1,661,132 93.1 4,749 (48,205) 1,617,676 93.5
Preference shares
UK 6,269 0.3 (503) - 5,766 0.3
6,269 0.3 (503) - 5,766 0.3
Bonds
Europe ex UK 6,771 0.4 (2,343) (117) 4,311 0.2
Asia Pacific ex Japan 47,079 2.6 (353) 98 46,824 2.7
Latin America 47,790 2.7 (1,145) (4,001) 42,644 2.5
Africa 15,779 0.9 (2,382) (66) 13,331 0.8
117,419 6.6 (6,223) (4,086) 107,110 6.2
Total investments 1,784,820 100.0 (1,977) (52,291) 1,730,552 100.0
Investment Portfolio
As at 30 June 2023
Valuation Valuation
Security Country £'000 %
Broadcom Corporation USA 81,811 4.7
Aeroporto del Sureste Mexico 78,615 4.5
Taiwan Semiconductor Manufacturing Taiwan 65,348 3.8
Philip Morris International USA 53,738 3.1
BE Semiconductor Netherlands 52,652 3.0
AbbVie USA 47,667 2.9
Unilever(A) UK & Netherlands 47,103 2.7
TotalEnergies France 45,096 2.6
CME Group USA 43,718 2.5
Samsung Electronics Korea 43,706 2.5
Top ten investments 559,454 32.3
Oversea-Chinese Bank Singapore 42,822 2.5
Zurich Insurance Switzerland 37,348 2.2
Siemens Germany 36,298 2.1
Kimberly Clark de Mexico Mexico 34,874 1.9
Sociedad Quimica Y Minera De Chile Chile 34,268 2.0
Hon Hai Precision Industry Taiwan 34,095 2.0
Tryg Denmark 33,216 1.9
BHP Group Australia 32,760 1.9
Bristol-Myers Squibb USA 32,690 1.9
Cisco Systems USA 32,539 1.9
Top twenty investments 910,364 52.6
Johnson & Johnson USA 32,136 1.9
Danone France 32,086 1.8
Shell Netherlands 31,858 1.8
Merck USA 31,750 1.8
GlobalWafers Taiwan 31,380 1.8
Enel Italy 30,809 1.8
Telus Canada 30,613 1.8
Sanofi France 29,495 1.7
Verizon Communications USA 29,252 1.7
Atlas Copco Sweden 29,110 1.7
Top thirty investments 1,218,853 70.4
British American Tobacco UK 28,683 1.7
Vale do Rio Doce Brazil 28,083 1.6
Taiwan Mobile Taiwan 27,766 1.6
Singapore Telecommunications Singapore 26,154 1.5
Epiroc Sweden 25,385 1.5
Woodside Energy Australia 25,223 1.5
Telkom Indonesia Indonesia 25,183 1.4
Roche Holdings Switzerland 24,046 1.4
Banco Bradesco Brazil 23,477 1.4
China Resources Land China 23,326 1.3
Top forty investments 1,476,179 85.3
TC Energy Canada 22,261 1.3
Enbridge Canada 21,925 1.3
SCB X Thailand 21,264 1.2
Ping An Insurance China 17,994 1.0
United Mexican States 5.75% 05/03/26 Mexico 16,717 1.0
Telefonica Brasil Brazil 16,320 0.9
Republic of Indonesia 6.125% 15/05/28 Indonesia 15,808 0.9
Republic of South Africa 7% 28/02/31 South Africa 13,331 0.8
Republic of Indonesia 8.375% 15/03/34 Indonesia 12,062 0.7
Telenor Norway 11,982 0.7
Top fifty investments 1,645,843 95.1
China Vanke China 11,593 0.7
MTN South Africa 11,502 0.7
Republic of Dominica 6.85% 27/01/45 Dominican Republic 10,681 0.5
Petroleos Mexicanos 6.75% 21/09/47 Mexico 9,830 0.6
HDFC Bank 7.95% 21/09/26 India 7,222 0.4
Power Finance Corp 7.63% 14/08/26 India 7,179 0.4
Vodafone Group UK 6,656 0.4
Petroleos Mexicanos 5.5% 27/06/44 Mexico 5,416 0.3
Republic of Indonesia 10% 15/02/28 Indonesia 4,553 0.3
Santander 10.375% Non Cum Pref UK 2,910 0.2
Top sixty investments 1,723,385 99.6
General Accident 7.875% Cum Irred Pref UK 2,856 0.2
Republic of Turkey 8% 12/03/25 Turkey 2,172 0.1
Republic of Turkey 9% 24/07/24 Turkey 2,139 0.1
Total investments 1,730,552 100.0
(A)Holding comprises UK and Netherlands securities, split £24,585,000 and
£22,518,000 respectively.
The Half Yearly Report will be printed and issued to shareholders and further
copies will be available on the Company's web site murray-intl.co.uk*.
* Neither the Company's website nor the content of any website accessible from
hyperlinks on it (or any other website) is (or is deemed to be) incorporated
into, or forms (or is deemed to form) part of this announcement.
By order of the Board
ABRDN HOLDINGS LIMITED, SECRETARY
10 August 2023
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