REG - Murray Intnl Trust - Half-year Report
09/08/2024 07:00
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RNS Number : 8110Z Murray International Trust PLC 09 August 2024
MURRAY INTERNATIONAL TRUST PLC (the "Company")
Legal Entity Identifier (LEI): 549300BP77JO5Y8LM553
HALF-YEARLY REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2024
The Directors of Murray International Trust PLC report the unaudited results
of the Company for the six months ended 30 June 2024.
Performance Highlights
Net asset value total return(A) Share price total return(A)
Six months ended 30 June 2024 Six months ended 30 June 2024
+5.5% +0.5%
Year ended 31 December 2023 +8.6% Year ended 31 December 2023 +1.1%
Reference index total return(B) Discount to net asset value(A)
Six months ended 30 June 2024 As at 30 June 2024
+12.2% -8.7%
Year ended 31 December 2023 +15.7% As at 31 December 2023 -4.0%
Ongoing charges ratio(A) Net gearing(A)
As at 30 June 2024 As at 30 June 2024
0.52% 6.0%
As at 31 December 2023 0.53% As at 31 December 2023 8.0%
(A) Alternative Performance Measure (see below).
(B) FTSE All World TR Index.
Financial Calendar and Highlights
Financial Highlights
Payment dates of quarterly dividends 16 August 2024
18 November 2024
17 February 2025
16 May 2025
Financial year end 31 December
Expected announcement of results for March 2025
year ending 31 December 2024
Annual General Meeting 24 April 2025
Financial Highlights
30 June 2024 31 December 2023 % change
Total assets less current liabilities (before deducting bank loans and loan £1,807.3m £1,808.8m -0.1
notes)
Net assets £1,697.4m £1,668.9m +1.7
Share price per Ordinary share (mid market)(A) 252.5p 258.0p -2.1(A)
Net Asset Value per Ordinary share 276.7p 268.8p +2.9(A)
Discount to Net Asset Value per Ordinary share(B) -8.7% -4.0%
Net gearing(B) 6.0% 8.0%
Ongoing charges ratio(B) 0.52% 0.53%
(A) The movement relates to capital only and does not take account of the
reinvestment of dividends.
(B) Considered to be an Alternative Performance Measure. Further details can
be found below.
Interim Board Report - Chair's Statement
Background
If a primary driver of solid equity market returns in 2023 was the expectation
of easing inflationary pressures and central banks cutting interest rates, one
could be forgiven for being slightly surprised at the strength of equity
market returns, particularly in developed markets, in the first half of this
year. Inflation has eased in some areas, proved stubborn in others and the six
or seven interest rate cuts expected in the United States at the end of last
year have yet to come to pass. The first half of 2024 has been a period of
significant developments and transitions in global capital markets. Factors
including robust earnings, resilient developed market economies, and
technological advancements support the present positive environment and
opportunities. Risks such as conflict, geopolitical tensions, inflation,
interest rates and a shifting political picture are equally relevant and have
the potential to derail the current picture.
Performance and Dividends
The net asset value (NAV) total return, with dividends reinvested, for the six
months to 30 June 2024 was 5.5% compared with 12.2% for the Company's
Reference Index (the FTSE All World TR Index in GBP). Over the six month
period, the share price total return was 0.5%, as the discount to the NAV
widened from -4.0% at 31 December 2023 to -8.7% at 30 June 2024. The Manager's
Review contains more information about both the drivers of performance in the
period and activity within the portfolio.
The first interim dividend of 2.5p per share (2023: 2.4p) in respect of the
six months to 30 June 2024 is payable on 16 August 2024. Today, the Board is
declaring a second interim dividend of 2.5p per share (2023: 2.4p) for the
current year. This will be paid on 18 November 2024 to shareholders on the
register on 4 October 2024.
The Company has increased its dividend in each of the last nineteen years and
the Board remains optimistic that this progressive dividend policy can be
maintained. As a long-established investment trust, the Company has the
benefit of over £72.9 million of distributable revenue reserves on its
balance sheet at 30 June 2024. 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 support 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.
Manager Succession
During the period we bade farewell to Bruce Stout who has been the Company's
lead investment manager since 2004. Martin Connaghan and Samantha
Fitzpatrick who have worked with Bruce for over 20 years have now taken joint
responsibility for the management of the portfolio. On behalf of the Board and
shareholders I would like to reiterate our sincere thanks to Bruce for all his
efforts, enterprise and expertise.
Management of Discount
Your Board continues to believe that, in normal market conditions, it is
appropriate to seek to address temporary imbalances in the supply and demand
for the Company's shares which might otherwise result in a recurring material
discount or premium. The Board believes that this process is in all
shareholders' interests as it seeks to reduce volatility in the discount or
premium to underlying NAV whilst also making a small positive contribution to
the NAV. In line with most of the investment trust sector, in the first six
months of the year the Company's shares have continued to trade at a discount
level that is wider than its long-term average. Consequently, in order to
reduce any volatility as well as enhance NAV for ongoing shareholders, the
Company bought back 7,385,252 Ordinary Shares of 5p for Treasury at a total
cost of £18.1 million and at a weighted average discount of -9.9%,
representing 1.2% of the issued share capital.
At the latest practicable date, the NAV (including income) per share was
269.7p and the share price was 249.5p equating to a discount of 7.5% per
Ordinary share.
Gearing
In May 2024, the Company repaid its maturing £30 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 now consist of
£110m unsecured loan notes which are fully drawn and will not be repayable
until 2031. The weighted costs of borrowing of these fixed-rate loan notes is
a very cost-effective 2.56%. The borrowings represent a net gearing level of
6.0% based on the Company's NAV at 30 June 2024 (31 December 2023: 8.0%). The
Board considered options to replace the maturing loan but concluded that the
proposed terms were not appropriate at present, but, working with the Manager,
will keep the position under review.
Ongoing Charges Ratio ("OCR")
During the review period, the OCR remained flat, ending the six months at
0.52% (31 December 2023: 0.53%). The Board continues to be firmly focused on
controlling costs and delivering value to shareholders. A full breakdown of
the OCR calculation is provided below.
The Board fully supports the industry-led efforts to reform the rules
governing investment trust cost disclosures for retail shareholders by
abolishing the Packaged Retail and Insurance-based Investment Products
(PRIIPS) Regulation and empowering the Financial Conduct Authority to
introduce a replacement regime.
Change of Corporate Broker
During the period the Board, led by the Management Engagement Committee,
undertook a review of the corporate brokers serving the investment trust
sector. Stifel Nicolaus Europe Limited has been the Company's broker since
2009 and the Board decided that it was appropriate to test the market. The
exercise attracted strong interest and after a competitive process the Board
concluded that the Company would be best served by appointing JPMorgan
Cazenove to act as the Company's Corporate Broker with effect from 18 July
2024.
Outlook
As we look forward, macroeconomic difficulties are likely to continue
impacting the direction of financial markets. The geopolitical environment,
currently at its most polarised, fragile, and uncertain state in a very long
time, demands our attention and caution. Even when interest rates begin to
decrease, the cadence and scale of their decline could leave market
participants disappointed. Numerous heavily indebted nations will still be
confronted with fewer and fewer options to stimulate future growth. While
Central Banks may have won the battle with inflation and walked the tightrope
between recovery and recession, for now, the geopolitical environment could
easily alter that in the blink of an eye. Notwithstanding the economic
backdrop, our Manager focuses squarely on delivering the investment objective
and looking for opportunities that offer proper diversification.
Shareholder Engagement
The Board was pleased to note that almost 280 investors joined the webinar we
hosted in April before our AGM and a further 500 people have subsequently
viewed the recording of the webinar on the Company's website. The Board sees
this as a useful means of connecting with shareholders and addressing their
questions. We expect that this process will be repeated ahead of the Annual
General Meeting next April.
Shareholders' views are very important to the Board and I encourage you to
email me if you have feedback on the Company at
VirginiaHolmes.Chair@abrdn.com.
Virginia Holmes
Chair
8 August 2024
Interim Board Report - Manager's Review
Background
Global equity markets performed strongly in the first half of 2024. They
started the year in fine fettle as inflation trends towards the end of 2023
led to optimism about future interest rate cuts. However, equities weakened in
April as higher than expected inflation in the first quarter led to renewed
fears of interest rates staying higher for longer. Equities rebounded in May
and June due to fresh hopes of those elusive interest rate cuts by the end of
the year, as well as a solid first quarter corporate earnings season.
Capital market participants are currently navigating a complex landscape
characterised by several conflicting factors. On the one hand, the recent
economic and corporate environment for many developed markets has been robust,
with equity markets in Japan and the United States reaching record highs. On
the other hand, there has been no significant reduction to key interest rates,
except for some activity by the European Central Bank. Additionally, a dynamic
political climate and ongoing geopolitical tensions are introducing
substantial uncertainties that could disrupt the market outlook. This
dichotomy creates a challenging environment for investors as they balance
optimism stemming from solid economic performance, against the risks posed by
stubbornly high interest rates and geopolitical instability.
North America
Share prices in the United States rose over the period. The technology sector
performed particularly well, especially artificial intelligence (AI)-related
stocks. Faced with a relatively robust economy, the US Federal Reserve has, to
date, kept the target range for the Fed funds rate at its highest level since
2001. The much discussed "Magnificent Seven" account for a potentially
alarming proportion of the earnings growth and index price moves that we have
seen thus far. Market participants are rightly becoming more concerned about
concentration risk, potentially exuberant expectations for these stocks and
the broader market's underlying health.
The Company's holding in Broadcom is one of the opportunities within the AI
space. It offers a reasonable dividend yield and has benefitted from the
shifting technology landscape. Broadcom is unique among its peers, with a
combination of semiconductor and infrastructure software businesses generating
predictable and profitable growth, and industry leading gross and free cash
flow margins. Its AI chip segment is poised for accelerated growth, driven by
gains in Application Specific Integrated Circuits (ASICs) and AI connectivity.
The Company's health care exposure in the United States has been mixed in
terms of performance. Prominent pharmaceutical names, including AbbVie and
Merck & Co, have enjoyed a solid first half. Other exposures to
Bristol-Myers Squibb and Johnson & Johnson have delivered little other
than positive dividend growth. Communication services investments have also
had differing fortunes. Verizon, the largest and highest quality provider in
wireless communications, is more of a defensive stock with solid free cash
flow generation and a well covered dividend. However, year to date, it has
delivered an attractive level of total return. Telus on the other hand,
dividend aside, has been disappointing on competition concerns.
Europe & the UK
The Eurozone and the UK emerged from mild recessions, with growth returning in
the first quarter of 2024. The European Central Bank kept its base rate on
hold for much of the period, as it strove to bring the annual inflation rate
down to its target level, before cutting it to 4.25% in June. Meanwhile,
French President Emmanuel Macron called for a snap general election after his
centrist alliance suffered a shock defeat to the far-right National Rally in
the European Parliament elections in June. The resulting political
uncertainty, coupled with concerns about France's future fiscal position and
the stability of the EU, led to a sell-off in French equities. Prime Minister
Rishi Sunak also called a General Election in the UK in which the Conservative
Party lost power after 14 years to the Labour Party.
In terms of holdings, BE Semiconductor, a Dutch-based designer and
manufacturer of semiconductor assembly equipment, has seen its shares buoyed
by the excitement surrounding AI. Consumer staple stocks British American
Tobacco and Unilever also performed reasonably well. Investments in industrial
stocks Siemens AG and Atlas Copco AB added value, and both companies continue
to report solid demand for their products. The main disappointment in this
region came from the alcoholic beverage manufacturers Diageo and Pernod
Ricard. Both firms are still suffering from a post-pandemic hangover as the
market has had to contend with falling volumes, high inventories and consumers
trading down to cheaper brands.
Asia & Latin America
These regions had differing fortunes in the first half of 2024. Both had
unexpected election outcomes to digest. In Asia, while Prime Minister Narendra
Modi claimed a historic third win in a row in India, his ruling alliance
failed to secure as large a majority as predicted. The opposite was true in
Mexico, where Claudia Sheinbaum was elected as the first female president in
an historic, landslide victory. Overall, the Asia Pacific region performed
well over the period, with the notable exception of China. This was due to
growing risks in the country's property sector and weak domestic investor
sentiment. As a result, the Chinese authorities announced various stimulus
measures aimed at boosting sentiment; however, these have yet to have the
desired impact. In contrast, the Taiwanese and, to a lesser degree, South
Korean stock markets both recorded solid gains, helped by their relatively
high exposure to the technology sector.
Investments in TSMC, the world's leading semiconductor foundry, and Hon Hai
Precision Industry, another Taiwanese holding involved in electronic
manufacturing services, both performed well. While dividends remained robust,
capital returns in Latin America were weaker. In Chile, Lithium producer
Sociedad Quimica Y Minera was disappointing in the weaker lithium price
environment. The softening commodity price environment also weighed on
Brazilian iron ore producer Vale.
Income Generation
The portfolio's total income in the period under review fell by £1.8 million,
or 3.7%, to £46.0 million. Given the relative strength of Sterling against
most global currencies in the first half and the Company's reduction in
gearing by £90 million since May 2023, this is not surprising. Selling
positions in an equity portfolio yielding 4.5% to repay the debt that would
have cost shareholders 6% to renew was deemed the correct course of action by
both the Board and Manager while also considering the potential impact on
income generation.
The portfolio's underlying dividend picture remains strong. Of the
twenty-eight companies that have declared full-year dividend intentions, only
two reductions have been made. China Vanke, the Chinese property developer,
cancelled its dividend, and the position was subsequently sold. The other
reduction came from BE Semiconductor, which cut its dividend by 25%. Of the
twenty-six dividend increases we have seen, five have been double-digit in
size and have come from the portfolio's industrial and technology exposures.
European industrial stocks Siemens, Epiroc and Atlas Copco increased their
dividends by 11%, 12% and 22% respectively. Semiconductor-related
investments in GlobalWafers and TSMC, both listed in Taiwan, increased their
payouts by 19% and 30%, respectively, showing their impressive cash-generating
capability.
The portfolio tends to generate more than half of its revenue in the first
half of the year. This is due to several European investments paying annual
dividends, as opposed to semi-annual or quarterly dividends that we see in
other geographies. We remain confident in the sustainability of the income
picture as it relates to the portfolio and wait to see what happens in the
second half of the year. One important factor to highlight here is the
potential impact of currency. This is most apparent over the shorter term and
less marked over the long term. Being a Sterling-denominated fund, but with
over 90% of assets invested, unhedged, in overseas securities denominated in a
basket of over fifteen different currencies, it is essential to keep currency
in mind when it comes to shorter-term impacts, which can be both positive and
negative in nature.
Portfolio Changes
Trading activity was at a similar level to prior years, and, as with 2023, the
first half has seen some disposals from the portfolio to repay debt, of which
the cost to renew was going to be unattractive given the interest rate
picture.
The Swedish industrial Epiroc AB, which manufactures construction and mining
machinery, was sold. The stock has performed well since Atlas Copco spun off
the business back in 2018. Roche AG, the Swiss listed developer and
manufacturer of pharmaceuticals and diagnostic products, was also divested.
Roche AG remains a solid business; there was simply higher conviction in the
other healthcare names in the portfolio. Chinese property developer China
Vanke proved to be a disappointment, with the investment thesis not playing
out as intended; therefore, it was another low conviction holding and an easy
candidate to exit in order to reduce gearing. The portfolio exposure to North
American midstream companies was consolidated into one position. TC Energy was
sold, and the capital recycled into Enbridge. The belief is that Enbridge
carries less balance sheet and execution risk than its Canadian peer. The only
new addition to the portfolio in the first half of the year was German luxury
car brand Mercedes Benz Group. The company is looking to structurally improve
its profitability by increasing the proportion of higher priced vehicles it
sells, thereby improving margins and shareholder returns via dividends and
share buybacks.
Outlook
While the first half of 2024 showed signs of economic resilience and recovery
in places, several factors contribute to a cautious outlook for the global
economy. The recovery has been uneven, with significant disparities between
regions and sectors. Corporate earnings have been strong, particularly in the
technology sector, which has benefited from advances in AI and increased
productivity. However, the reliance on a few key industries and companies
raises concerns about market concentration and the sustainability of growth.
Any setbacks in these sectors could lead to broader market corrections.
Inflation remains a concern. Although inflation rates have moderated in some
regions, they are still above the targets set by central banks, which are
trying to navigate the delicate balance between controlling inflation and
supporting growth. The inflationary environment of the last few years has
eroded purchasing power in many regions, affecting consumer spending. Although
labour markets have stabilised, wage growth has not kept pace with inflation
in many areas, potentially limiting consumer driven economic growth.
Geopolitical tensions are another significant risk. The ongoing war in
Ukraine, the conflict between Israel and Palestine, and broader political
tensions between East and West have the potential to disrupt trade, impact
inflation, destabilise the global economy and severely weaken investor
sentiment. The political landscape in the United States remains highly charged
as the presidential election approaches. The division between Democrats and
Republicans is deepening, and if this political turmoil deteriorates further,
it could worryingly test American democracy and impact its international
standing.
In summary, while there are positive signs of economic recovery and growth in
specific sectors, the global economy faces several significant risks and
uncertainties. Inflation, geopolitical tensions, market concentration and
consumer confidence are all factors that could derail equity markets trading
at lofty levels and lead to increased volatility. Policymakers and businesses
must navigate these challenges carefully to sustain growth and stability in
the coming months. The investment focus will remain on quality companies,
ensuring the portfolio is well diversified on a regional and sectoral basis
and exposed to income and capital growth opportunities. We continue to seek
companies robust enough to preserve capital in periods of market weakness,
with attractive, growing, and sustainable dividends, exposed to strong
structural drivers for long-term growth.
Martin Connaghan and Samantha Fitzpatrick
Senior Investment Directors
abrdn Investments Limited
8 August 2024
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 2023 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 Geopolitical Risks.
Details of the management of the risks and the Company's internal controls are
disclosed on pages 35 and 36 of the 2023 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 encompassed the global geopolitical
environment which is increasingly destabilised by conflicts, tensions and
other uncertainties, including the upcoming US election amongst others. 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 2024
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
Virginia Holmes
Chair
8 August 2024
Condensed Statement of Comprehensive Income (unaudited)
Six months ended Six months ended
30 June 2024 30 June 2023
Revenue Capital Total Revenue Capital Total
Note £'000 £'000 £'000 £'000 £'000 £'000
Gains/(losses) on investments - 53,304 53,304 - (1,977) (1,977)
Income 2 46,079 - 46,079 47,826 145 47,971
Investment management fees 11 (1,063) (2,479) (3,542) (1,039) (2,425) (3,464)
Administrative expenses (799) - (799) (921) - (921)
Currency losses - (962) (962) - (590) (590)
Net return before finance costs and taxation 44,217 49,863 94,080 45,866 (4,847) 41,019
Finance costs (502) (1,171) (1,673) (707) (1,650) (2,357)
Return before taxation 43,715 48,692 92,407 45,159 (6,497) 38,662
Taxation 3 (4,577) 320 (4,257) (3,878) 470 (3,408)
Return attributable to equity shareholders 39,138 49,012 88,150 41,281 (6,027) 35,254
Return per Ordinary share (pence) 5 6.35 7.95 14.30 6.60 (0.96) 5.64
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 2024 31 December 2023
Note £'000 £'000
Fixed assets
Investments at fair value through profit or loss 1,782,587 1,787,863
Current assets
Prepayments and accrued income 9,268 8,069
Other debtors 10,780 10,151
Cash at bank and in hand 7,047 5,878
27,095 24,098
Creditors: amounts falling due within one year
Bank loans - (29,996)
Other creditors (2,386) (3,198)
(2,386) (33,194)
Net current assets/(liabilities) 24,709 (9,096)
Total assets less current liabilities 1,807,296 1,778,767
Creditors: amounts falling due after more than one year
2.24% Senior Unsecured Loan Note 2031 (49,931) (49,927)
2.83% Senior Unsecured Loan Note 2037 (59,979) (59,978)
Net assets 1,697,386 1,668,862
Capital and reserves
Called-up share capital 32,353 32,353
Share premium account 363,461 363,461
Capital redemption reserve 8,230 8,230
Capital reserve 1,220,370 1,189,686
Revenue reserve 72,972 75,132
Equity shareholders' funds 1,697,386 1,668,862
Net asset value per Ordinary share (pence) 6 276.7 268.8
The accompanying notes are an integral part of these financial statements.
Condensed Statement of Changes in Equity (unaudited)
Six months ended 30 June 2024
Share Capital
Share premium redemption Capital Revenue
capital account reserve reserve reserve Total
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 December 2023 32,353 363,461 8,230 1,189,686 75,132 1,668,862
Return after taxation - - - 49,012 39,138 88,150
Dividends paid (see note 4) - - - - (41,298) (41,298)
Buy back of shares to Treasury - - - (18,328) - (18,328)
Balance at 30 June 2024 32,353 363,461 8,230 1,220,370 72,972 1,697,386
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
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 2024 30 June 2023
Notes £'000 £'000
Net return before finance costs and taxation 94,080 41,019
(Decrease)/increase in accrued expenses (553) 58
Overseas withholding tax (4,386) (4,852)
Increase in accrued income (1,389) (3,233)
Interest paid (1,749) (2,457)
(Gains)/losses on investments (53,304) 1,977
Overseas dividends - capital - (145)
Currency losses 962 590
Increase in other debtors (147) (1)
Corporation tax paid - 136
Return of capital included in investment income - 316
Net cash from operating activities 33,514 33,408
Investing activities
Purchases of investments (115,389) -
Sales of investments 173,806 52,309
Net cash from investing activities 58,417 52,309
Financing activities
Equity dividends paid 4 (41,298) (40,004)
Ordinary shares issued from Treasury - 2,789
Ordinary shares bought back to Treasury (18,502) -
Loan repayment (30,000) (60,000)
Net cash used in financing activities (89,800) (97,215)
Increase/(decrease) in cash 2,131 (11,498)
Analysis of changes in cash during the period
Opening balance 5,878 18,131
Effect of exchange rate fluctuations on cash held (962) (590)
Increase/(decrease) in cash as above 8 2,131 (11,498)
Closing balance 7,047 6,043
Represented by:
Cash at bank and in hand 7,047 6,043
The accompanying notes are an integral part of these financial statements.
Notes to the Financial Statements (unaudited)
For the six months ended 30 June 2024
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 2024 30 June 2023
£'000 £'000
Income from investments
UK dividends 3,615 4,334
Overseas dividends - revenue 37,921 38,908
Overseas dividends - capital - 145
Overseas interest 4,207 4,396
45,743 47,783
Other income
Deposit interest 61 163
Stocklending 275 23
Interest on corporation tax reclaim - 2
336 188
Total income 46,079 47,971
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 2024 is the current standard rate of 25% (2023 - 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 2024 30 June 2023
£'000 £'000
Third interim dividend 2023 of 2.4p (2022 - 2.4p) 14,898 15,001
Final dividend 2023 of 4.3p (2022 - 4.0p) 26,400 25,003
41,298 40,004
A first interim dividend for 2024 of 2.5p (2023 - 2.4p) will be paid on 16
August 2024 to shareholders on the register on 5 July 2024. The ex-dividend
date was 4 July 2024.
A second interim dividend for 2024 of 2.5p (2023 - 2.4p) will be paid on 18
November 2024 to shareholders on the register on 4 October 2024. The
ex-dividend date is 3 October 2024.
5. Return per Ordinary share (pence)
Six months ended Six months ended
30 June 2024 30 June 2023
£'000 Per Ordinary share (p) £'000 Per Ordinary share (p)
Returns are based on the following figures:
Revenue return 39,138 6.35 41,281 6.60
Capital return 49,012 7.95 (6,027) (0.96)
Total return 88,150 14.30 35,254 5.64
Weighted average number of Ordinary shares 616,408,026 625,365,570
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 2024 31 December 2023
Attributable net assets (£'000) 1,697,386 1,668,862
Number of Ordinary shares in issue (excluding Treasury) 613,481,080 620,866,332
Net asset value per share (pence) 276.7 268.8
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 gains/(losses) on investments
in the Condensed Statement of Comprehensive Income. The total costs were as
follows:
Six months ended Six months ended
30 June 2024 30 June 2023
£'000 £'000
Purchases 182 -
Sales 168 39
350 39
8. Analysis of changes in net debt
At At
31 December Currency Cash Non-cash 30 June
2023 differences flows movements(A) 2024
£'000 £'000 £'000 £'000 £'000
Cash at bank and in hand 5,878 (962) 2,131 - 7,047
Debt due within one year (29,996) - 30,000 (4) -
Debt due after more than one year (109,905) - - (5) (109,910)
(134,023) (962) 32,131 (9) (102,863)
At At
31 December Currency Cash Non-cash 30 June
2022 differences flows movements(A) 2023
£'000 £'000 £'000 £'000 £'000
Cash at bank and in hand 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)
(A) Figures reflect amortisation of finance costs and a movement in maturity
dates.
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 2024 Note £'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
Quoted equities a) 1,671,262 - - 1,671,262
Quoted preference shares b) - 6,794 - 6,794
Quoted bonds b) - 104,531 - 104,531
Total 1,671,262 111,325 - 1,782,587
Level 1 Level 2 Level 3 Total
As at 31 December 2023 Note £'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
Quoted equities a) 1,674,147 - - 1,674,147
Quoted preference shares b) - 6,417 - 6,417
Quoted bonds b) - 107,299 - 107,299
Total 1,674,147 113,716 - 1,787,863
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
As at 30 June 2024 there were 613,481,080 (31 December 2023 - 620,866,332)
Ordinary shares of 5p each in issue. Ordinary shares held in Treasury were
33,578,935 (31 December 2023 - 26,193,683). Subsequent to the period end
21,550 Ordinary shares were bought back to be held in Treasury at a cost of
£55,000.
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 to 30 June 2023
1,050,000 Ordinary shares were released from Treasury for proceeds of
£2,794,000.
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. No fees
are chargeable in the case of investments managed or advised by the abrdn
Group. The investment management fee is chargeable 30% against revenue and 70%
against realised capital reserves. During the period £3,542,000 (30 June 2023
- £3,464,000) of investment management fees was payable to the Manager, with
an amount of £1,778,000 (30 June 2023 - £1,737,000) 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 2023 - £400,000), payable quarterly in arrears. During the
period £200,000 (30 June 2023 - £200,000) of fees was payable, with an
amount of £100,000 (30 June 2023 - £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 2023 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 2024 and 30 June
2023 has not been audited or reviewed by the Company's auditor.
14. This Half Yearly Financial Report was approved by the Board on 8 August 2024.
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
The discount 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 2024 31 December 2023
NAV per Ordinary share (p) a 276.7 268.8
Share price (p) b 252.5 258.0
Discount (b-a)/a -8.7% -4.0%
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 2024 is based on forecast ongoing charges for the year ending 31
December 2024.
30 June 2024 31 December 2023
Investment management fees (£'000) 7,127 6,929
Administrative expenses (£'000) 1,692 1,790
Less: non-recurring charges{A} (£'000) (32) (64)
Ongoing charges (£'000) 8,787 8,655
Average net assets (£'000) 1,705,104 1,638,136
Ongoing charges ratio (excluding look-through costs) 0.52% 0.53%
Look-through costs{B} - -
Ongoing charges ratio (including look-through costs) 0.52% 0.53%
{A} Professional services comprising legal and advisory fees unlikely to
recur. Prior year also includes new Director recruitment costs.
{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.
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 2024 31 December 2023
Borrowings (£'000) a 109,910 139,901
Cash (£'000) b 7,047 5,878
Amounts due (from)/to brokers (£'000) c (327) 174
Shareholders' funds (£'000) d 1,697,386 1,668,862
Net gearing (a-b+c)/d 6.0% 8.0%
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 2024 NAV price
Opening at 1 January 2024 a 268.8p 258.0p
Closing at 30 June 2024 b 276.7p 252.5p
Price movements c=(b/a)-1 2.9% -2.1%
Dividend reinvestment(A) d 2.6% 2.6%
Total return c+d +5.5% +0.5%
Share
Year ended 31 December 2023 NAV price
Opening at 1 January 2023 a 258.7p 266.8p
Closing at 31 December 2023 b 268.8p 258.0p
Price movements c=(b/a)-1 3.9% -3.3%
Dividend reinvestment(A) d 4.7% 4.4%
Total return c+d +8.6% +1.1%
(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 2024 31 December 2023
£'000 % £'000 %
Equities 1,671,262 98.4 1,674,147 100.3
Preference shares 6,794 0.4 6,417 0.4
Bonds 104,531 6.2 107,299 6.4
Total investments 1,782,587 105.0 1,787,863 107.1
Net current assets 24,709 1.5 20,900 1.3
Total assets 1,807,296 106.5 1,808,763 108.4
Borrowings(A) (109,910) (6.5) (139,901) (8.4)
Net assets 1,697,386 100.0 1,668,862 100.0
(A) All short-term and long-term bank loans and loan notes.
Summary of Investment Changes
Valuation Appreciation/ Net purchases/ Valuation
31 December 2023 (depreciation) (sales) 30 June 2024
£'000 % £'000 £'000 £'000 %
Equities
UK 56,605 3.2 2,466 14,879 73,950 4.1
North America 470,606 26.3 35,581 (2,940) 503,247 28.2
Europe ex UK 496,419 27.8 7,194 (28,254) 475,359 26.7
Asia Pacific ex Japan 426,426 23.8 46,611 (28,217) 444,820 24.9
Latin America 224,091 12.5 (35,992) (14,213) 173,886 9.8
1,674,147 93.6 55,860 (58,745) 1,671,262 93.7
Preference shares
UK 6,417 0.4 377 - 6,794 0.4
6,417 0.4 377 - 6,794 0.4
Bonds
Europe ex UK 3,292 0.2 46 1 3,339 0.2
Asia Pacific ex Japan 44,799 2.5 (1,988) 43 42,854 2.4
Latin America 44,839 2.5 (1,065) 39 43,813 2.5
Africa 14,369 0.8 74 82 14,525 0.8
107,299 6.0 (2,933) 165 104,531 5.9
Total investments 1,787,863 100.0 53,304 (58,580) 1,782,587 100.0
Investment Portfolio
As at 30 June 2024
Valuation Valuation
Security Country £'000 %
Broadcom Corporation USA 84,461 4.7
Taiwan Semiconductor Manufacturing Taiwan 80,089 4.5
BE Semiconductor Netherlands 72,629 4.1
Aeroporto del Sureste Mexico 71,452 4.0
Hon Hai Precision Industry Taiwan 62,620 3.5
AbbVie USA 60,998 3.4
Philip Morris International USA 56,101 3.2
TotalEnergies France 52,847 3.0
Oversea-Chinese Bank Singapore 50,537 2.8
Unilever(A) UK & Netherlands 49,977 2.8
Top ten investments 641,711 36.0
CME Group USA 46,641 2.6
Telus Canada 45,497 2.5
Samsung Electronics Korea 44,732 2.5
Merck USA 44,049 2.5
Zurich Insurance Switzerland 42,176 2.4
Enbridge Canada 42,145 2.4
Shell Netherlands 38,536 2.1
Siemens Germany 36,907 2.1
Cisco Systems USA 35,494 2.0
Johnson & Johnson USA 33,866 1.9
Top twenty investments 1,051,754 59.0
Tryg Denmark 33,764 1.9
GlobalWafers Taiwan 32,797 1.9
Verizon Communications USA 32,640 1.8
Enel Italy 31,981 1.8
BHP Group Australia 31,682 1.8
Walmart de Mexico Mexico 29,605 1.7
Danone France 29,037 1.6
Singapore Telecommunications Singapore 28,893 1.6
Mercedes-Benz Germany 27,314 1.5
Pernod-Ricard France 26,824 1.5
Top thirty investments 1,356,291 76.1
British American Tobacco UK 26,730 1.5
Sanofi France 26,690 1.5
Vale do Rio Doce Brazil 23,505 1.3
Hong Kong Exchanges Hong Kong 22,816 1.3
Bristol-Myers Squibb USA 21,355 1.2
Diageo UK 21,156 1.2
Woodside Energy Australia 20,858 1.1
SCB X Thailand 19,983 1.1
Sociedad Quimica Y Minera de Chile Chile 19,337 1.1
Atlas Copco Sweden 19,200 1.1
Top forty investments 1,577,921 88.5
China Resources Land China 18,831 1.1
Telkom Indonesia Indonesia 18,087 1.0
United Mexican States 5.75% 05/03/26 Mexico 16,011 0.9
Banco Bradesco Brazil 15,262 0.9
Telefonica Brasil Brazil 14,725 0.8
Republic of South Africa 7% 28/02/31 South Africa 14,525 0.8
Republic of Indonesia 6.125% 15/05/28 Indonesia 14,164 0.8
Telenor Norway 13,541 0.8
Ping An Insurance China 12,895 0.7
Republic of Dominica 6.85% 27/01/45 Dominican Republic 11,647 0.6
Top fifty investments 1,727,609 96.9
Republic of Indonesia 8.375% 15/03/34 Indonesia 10,538 0.6
Petroleos Mexicanos 6.75% 21/09/47 Mexico 10,424 0.6
Power Finance Corp 7.63% 14/08/26 India 7,085 0.4
HDFC Bank 7.95% 21/09/26 India 7,080 0.4
Petroleos Mexicanos 5.5% 27/06/44 Mexico 5,731 0.3
Republic of Indonesia 10% 15/02/28 Indonesia 3,987 0.2
Santander 10.375% Non Cum Pref UK 3,434 0.2
General Accident 7.875% Cum Irred Pref UK 3,360 0.2
Republic of Turkey 8% 12/03/25 Turkey 1,766 0.1
Republic of Turkey 9% 24/07/24 Turkey 1,573 0.1
Total investments 1,782,587 100.0
(A)Holding comprises UK and Netherlands securities, split £26,064,000 and
£23,913,000 respectively.
The Half Yearly Report will be printed and issued to shareholders in late
August 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
8 August 2024
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