Company Announcements

 

PROMOTING THE SUCCESS OF THE COMPANY

 

The Board is required to report how it has discharged its duties and responsibilities under section 172 of the Companies Act 2006 during the year under review. Under this requirement, the Directors have a duty to promote the success of the Company for the benefit of its members (shareholders) as a whole, taking into account the likely long term consequences of decisions, the need to foster relationships with the Company's stakeholders, and the impact of the Company's operations on the environment. In addition the Directors must act fairly between shareholders and be cognisant of maintaining the reputation of the Company.

 

The Purpose of the Company and Role of the Board

The Company has been established as an investment vehicle for the purpose of delivering its investment objective which is set out on the inside front cover of this Report. Investment trusts, such as the Company, are long-term investment vehicles that are typically externally-managed, have no employees, and are overseen by an independent non-executive board of directors.

 

The Board is responsible for all decisions relating to the Company's investment objective and policy, gearing, corporate governance and strategy, and for monitoring the performance of the Company's third party service providers, including the Manager. 

 

The Board's philosophy is that the Company should foster a culture where all parties are treated with respect. The Directors provide mutual support combined with constructive challenge.  Integrity, openness and diligence are defining characteristics of the Board's culture. The Company has a number of policies and procedures in place to aid a culture of good governance, such as those relating to Director's conflicts of interests and dealings in the Company's shares, annual evaluation of Directors, anti-bribery and anti-tax evasion. At its regular meetings, the Board engages with the Manager to understand its culture and receives regular reporting and feedback from the other key service providers.

 

The Company's primary stakeholders have been identified as its shareholders, the Manager, other key third party service providers, lenders and investee companies and the following table sets out details of the Company's engagement.

 

Stakeholder

How We Engage

 

Shareholders	The Directors place great importance on communication with shareholders. Further details on the Company's relations with Shareholders, including its approach to the Annual General Meeting and investor relations can be found in the Directors' Report.
Manager	The Investment Manager's Report details the key investment decisions taken during the year. The Board engages with the Manager at every Board meeting and receives presentations from the Investment Manager to help it to exercise effective oversight of the Investment Manager and delivery of the Company's strategy. The Board also receives regular updates from the Manager outside of these meetings.   The Management Engagement Committee's monitoring of the performance of the Manager over the year is detailed in the Directors' Report.
Other Key Third Party Service Providers	The Board ensures that it promotes the success of the Company by engaging specialist third party suppliers with the resources, controls and performance records to deliver the service required. The Board seeks to maintain constructive relationships with its key service providers (the Company's registrar, the Depositary and Broker) either directly, or through the Manager, with ongoing dialogue and formal regular meetings. The Audit Committee conducts an annual assessment of key service providers as set out in the Committee's report. In addition, as a result of Covid-19, the Board sought regular assurance that key third party service providers had in place appropriate business continuity plans and had, and will, be able to maintain service levels despite the ongoing impact of Covid-19.
Investee Companies	The Board is committed to investing in a responsible manner and actively monitors the activities of investee companies through its delegation to the Manager. In order to achieve this, the Manager has discretionary powers to exercise voting rights on resolutions proposed by the investee companies and reports quarterly to the Board on stewardship issues, including voting.  The Board monitors investments made and divested and questions the rationale for exposures taken and voting decisions made.   Information on how the Investment Manager engages with investee companies may be found below.
Lenders to the Company	On behalf of the Board, the Manager maintains a positive working relationship with the provider of the Company's multi-currency loan facility and the holders of the Company's Senior Loan Notes, assuring compliance with lenders' covenants and providing regular updates on business activity.

 

Specific Examples of Stakeholder Consideration During the Year

While the importance of giving due consideration to the Company's stakeholders is not a new requirement, and is considered as part of every Board decision, the Directors were particularly mindful of stakeholder considerations during the following decisions reached during the year ended 30 June 2021.

 

Combination with Perpetual Income and Growth Investment Trust plc ("PLI")

The Board devoted significant time to evaluating the benefit to the Company, its shareholders and other stakeholders, of the proposed combination with PLI. The Board considered the best interests of shareholders in assessing the costs and benefits which would result from the proposed combination with PLI, including taking advice from the Company's independent stockbroker and lawyer.

The Board also considered the impact on other stakeholders, particularly PLI shareholders, of the proposed combination. Shareholders approved the combination at a general meeting held on 9 November 2020, with 98.4% votes in favour.

 

Dividends Paid to Shareholders

The level, frequency and timing of dividends paid are key considerations for the Board, taking into account net earnings for the year and the Company's objective of providing shareholders with a high and growing income combined with the Company's Dividend Hero status.  The total dividend of 34.50p in respect of the year and the Company's dividend policy to pay four interim dividends reflects this.

 

In addition, as a one-off arising from the PLI combination, the Board resolved to pay different rates for the first three interim dividends for the year ended 30 June 2021 to ensure that shareholders were equitably treated.

 

Lastly, to provide flexibility should it be required, the Board concluded that a resolution to enable payment of dividends from capital should be put to shareholders. The amendment to the Articles of Association removed the prohibition on payment of dividends from capital and this was approved by shareholders at the AGM on 27 November 2020.

 

Management of the Portfolio

In response to Covid-19, the Board met more frequently, earlier in the year, to oversee the Company's operations during periods of stock market volatility when the portfolio value had been subject to significant fluctuations and there had been greater uncertainty over the income level that the Company might receive in the future.

 

Board Succession

The Board, via the Nomination Committee, has considered the succession of Directors in light of the planned retirement of Jean Park and Donald Cameron at the conclusion of the AGM on 2 November 2021. The Board has undertaken a review of three search companies following which Trust Associates has been engaged to assist the Board in recruiting a new Director.

 

DIRECTORS' REPORT

 

Status

The Company, which was incorporated in 1923, is registered as a public limited company in Scotland under company number SC012725 and is an investment company within the meaning of Section 833 of the Companies Act 2006.

 

The Company has been accepted by HM Revenue & Customs as an investment trust subject to the Company continuing to meet the relevant eligibility conditions of Section 1158 of the Corporation Tax Act 2010 and the ongoing requirements of Part 2 Chapter 3 Statutory Instrument 2011/2999 for all financial years commencing on or after 1 July 2012.  The Directors are of the opinion that the Company has conducted its affairs during the year ended 30 June 2021 so as to enable it to comply with the ongoing requirements for investment trust status.

 

The Company has conducted its affairs so as to satisfy the requirements as a qualifying security for Individual Savings Accounts. The Directors intend that the Company will continue to conduct its affairs in this manner.

 

Capital Structure

At 30 June 2021, the Company had 117,046,487 (2020 - 66,110,413) fully paid Ordinary shares of 25p each with voting rights in issue and an additional 2,483,045 (2020 - 2,483,045) shares in treasury. On 17 November 2020, the Company allotted 50,936,074 shares to former shareholders of Perpetual Income and Growth Investment Trust plc ("PLI") as part of the combination. During the year no shares were bought back into treasury (2020 - nil).

 

Ordinary shareholders are entitled to vote on all resolutions which are proposed at general meetings of the Company. The Ordinary shares, excluding treasury shares, carry a right to receive dividends.  On a winding up, after meeting the liabilities of the Company, the surplus assets will be paid to Ordinary shareholders in proportion to their shareholdings. There are no restrictions on the transfer of Ordinary shares in the Company other than certain restrictions which may be applied from time to time by law (for example, insider trading law).

 

Results and Dividend Policy

The financial statements for the year ended 30 June 2021 indicate a total gain attributable to equity shareholders for the year of £161,217,000 (2020 - loss of £29,816,000).

 

At the AGM on 27 November 2020, shareholders approved a dividend policy to pay four quarterly interim dividends per year. Every October the Company announces its first, second and third interim dividends for the financial year.  On 12 October 2020, the Company announced a first interim dividend of 12.55p per share to be paid on 17 December 2020, a second interim dividend of 3.95p per share to be paid on 18 March 2021 and a third interim dividend of 8.25p per share to be paid on 17 June 2021. The aggregate of the three interim dividends is 24.75p per share which is the same as that paid for the three interim dividends in respect of the previous year ended 30 June 2020.

 

The interim dividend paid on 17 December 2020 was received by those shareholders on the register on 30 October 2020, that is, before the combination with PLI. Shareholders of PLI received a dividend of 13.0p per PLI share on 13 November 2020, representing the pay out of the PLI revenue reserves.

 

The Company announced, on 4 August 2021, the payment to shareholders on 16 September 2021 of a fourth interim dividend for the year of 9.75p per share (2020 - 9.50p) with an ex-dividend date of 19 August 2021 and a record date of 20 August 2021.  This resulted in total dividends of 34.50p per share for the year ended 30 June 2021.

 

The Board is proposing to maintain the dividend policy of paying four interim dividends each year. In line with good corporate governance, the Board therefore proposes to put the Company's dividend policy to Shareholders for approval at the AGM as resolution 3.

 

Manager and Company Secretary

Aberdeen Standard Fund Managers Limited ("ASFML") has been appointed by the Company, under a management agreement ("MA"), to provide investment management, risk management, administration and company secretarial services as well as promotional activities.  The Company's portfolio is managed by Aberdeen Asset Managers Limited ("AAML") by way of a group delegation agreement in place between ASFML and AAML.  In addition, ASFML has sub-delegated promotional activities to AAML and administrative and secretarial services to Aberdeen Asset Management PLC.

 

Under the MA, ASFML is entitled to a monthly fee of one-twelfth of: 0.55% pa on the first £350 million of net assets, 0.45% pa on net assets between £350 million and £450 million and 0.25% pa on any net assets in excess of £450 million.

 

The value of any investments in unit trusts, open ended and closed ended investment companies and investment trusts of which the Manager, or another company within abrdn, is the operator, manager or investment adviser, is deducted from net assets when calculating the fee.

 

An annual secretarial fee of £75,000 (plus applicable VAT) is payable to Aberdeen Asset Management PLC, which is chargeable 100% to revenue.  An annual fee equivalent to up to 0.05% of gross assets (calculated at 30 September each year) is paid to AAML to cover promotional activities undertaken on behalf of the Company.

 

The finance costs and investment management fees are charged 70% to capital and 30% to revenue in line with the Board's expectation of the split of future investment returns.

 

The management, secretarial and promotional activity fees paid to subsidiaries of abrdn during the year are shown in notes 4 and 5 to the financial statements.

 

Directors

As at the date of this Report, the Board consisted of a non-executive Chairman and six non-executive Directors. Neil Rogan, Jean Park, Stephanie Eastment, Donald Cameron, Peter Tait and Merryn Somerset Webb were Directors throughout the year.

 

Georgina Field, Alan Giles and Richard Laing were appointed Directors on 17 November 2020 following the Company's combination with PLI.

 

Georgina Field resigned as a Director on 10 February 2021. While Georgina had hoped to serve as a Director in an ongoing capacity, she believed that she would be unable to dedicate her efforts both to the Company and to White Marble Marketing Limited, her marketing consultancy, without undue compromise or at the risk of her independence.  In compliance with AIC Code (February 2019) provision 13 and UK Corporate Governance Code (July 2018) provision 10 Georgina Field was considered non-independent for the duration of her tenure as a Director.

 

Richard Laing resigned as a Director on 1 April 2021 when abrdn completed its acquisition of 60% of Tritax Management LLP on 1 April 2021. Richard was a non-executive Director of Tritax Big Box REIT plc and so found himself inadvertently on the boards of two investment companies managed by two separate managers who were in the same management group. As this caused Richard to cease to be regarded as independent under the UKLA Listing Rules, he chose to tender his resignation.

 

Jean Park is Senior Independent Director and Stephanie Eastment is Chairman of the Audit Committee.

 

Directors' Insurance and Indemnities

The Company's Articles of Association indemnify each of the Directors out of the assets of the Company against any liabilities incurred by them as a Director of the Company in defending proceedings, or in connection with any application to the Court in which relief is granted. In addition, the Directors have been granted qualifying indemnity provisions by the Company which are currently in force. Directors' and Officers' liability insurance cover has been maintained throughout the year at the expense of the Company.

 

Corporate Governance

The Company is committed to high standards of corporate governance and its Statement of Corporate Governance may be found below.

 

Board Committees

The Board has appointed a number of Committees as set out below. Copies of their terms of reference, which define the responsibilities and duties of each Committee, are available on the Company's website and from the Company Secretaries on request.

 

The Role of the Chairman and Senior Independent Director

The Chairman is responsible for providing effective leadership to the Board, by setting the tone of the Company, demonstrating objective judgement and promoting a culture of openness and debate. The Chairman facilitates the effective contribution of, and encourages active engagement by, each Director. In conjunction with the Company Secretary, the Chairman ensures that Directors receive accurate, timely and clear information to assist them with effective decision-making. The Chairman acts upon the results of the Board evaluation process by recognising strengths and addressing any weaknesses and also ensures that the Board engages with major shareholders and that all Directors understand shareholder views.

 

The Senior Independent Director acts as a sounding board for the Chairman and acts as an intermediary for other directors, when necessary. The Senior Independent Director takes responsibility for an orderly succession process for the Chairman and leads the annual appraisal of the Chairman's performance. The Senior Independent Director is also available to shareholders to discuss any concerns they may have.

 

Audit Committee

The Audit Committee's Report may be found in the Annual Report.

 

Management Engagement Committee

The terms and conditions of the Company's agreement with the Manager are considered by the Management Engagement Committee which comprises the whole Board and is chaired by Neil Rogan.

 

In monitoring the performance of the Manager, the Committee considers the investment record of the Company over the short and long term, taking into account its performance against the benchmark index, peer group investment trusts and open-ended funds, and against its delivery of the investment objective to shareholders. The Committee also reviews the management processes, risk control mechanisms and promotional activities of the Manager. As a result of these reviews, the Directors consider the continuing appointment of the Manager to be in the interests of shareholders because they believe that the Manager has the investment management, promotional and associated secretarial and administrative skills required for the effective operation of the Company.

 

Nomination Committee

The Board has established a Nomination Committee, comprising all of the Directors, with Neil Rogan as Chairman. The Committee is responsible for: determining the overall size and composition of the Board; longer term succession planning, including setting a policy on tenure of individual Directors and the Chairman; undertaking an annual evaluation of the Directors; and, oversight of appointments to the Board, including engagement of independent search consultants.

 

The Committee's overriding priority in appointing new Directors is to identify the candidate with the optimal range of skills and experience to complement the existing Directors. The Board also recognises the benefits, and is supportive, of the principle of diversity in its recruitment of new Directors.

 

The Committee has adopted a policy whereby Directors will stand for re-election at each AGM. In addition Directors, including the Chairman, will not stand for re-election as a Director of the Company later than the AGM following the ninth anniversary of their appointment to the Board unless in relation to exceptional circumstances. Accordingly, Jean Park and Donald Cameron will not seek re-election as Directors of the Company at the AGM on 2 November 2021 and will therefore resign from the Board at the conclusion of the AGM. Peter Tait will succeed Jean Park as Senior Independent Director following the AGM.

 

Stephanie Eastment, Alan Giles, Merryn Somerset Webb, Peter Tait and Neil Rogan, each being eligible, offer themselves for re-election as Directors of the Company. The Board as a whole believes that each Director remains independent of the AIFM and free of any relationship which could materially interfere with the exercise of his or her independent judgement on issues of strategy, performance, resources and standards of conduct and confirms that, following formal performance evaluations, the individuals' performance continues to be effective and demonstrates commitment to the role.

 

The biographies of each of the Directors seeking re-election are shown in the Annual Report and include their experience, length of service and the contribution that each Director makes to the Board. Each Director has the requisite high level and range of business and financial experience which enables the Board to provide clear and effective leadership and proper stewardship of the Company.

 

The Directors attended meetings during the year ended 30 June 2021 as follows (with their eligibility to attend the relevant meetings in brackets). This includes a Directors' strategy session as well as five Committee meetings relating to the Company's combination with PLI, which were convened at short notice when not all Directors were required.

 

	Board Meetings (including strategy and Board Committees)	Audit Committee  Meetings	Management  Engagement  Committee Meetings	Nomination and Remuneration Committee Meetings
Neil Rogan A	14 (14)	- (-)	2 (2)	3 (3)
Jean Park	14 (14)	3 (3)	2 (2)	3 (3)
Stephanie Eastment	14 (14)	3 (3)	2 (2)	3 (3)
Donald Cameron	12 (14)	3 (3)	2 (2)	3 (3)
Peter Tait	14 (14)	3 (3)	2 (2)	3 (3)
Merryn Somerset Webb	14 (14)	3 (3)	2 (2)	3 (3)
Georgina Field B	- (-)	- (-)	- (-)	- (-)
Alan Giles C	4 (4)	2 (2)	1 (1)	3 (3)
Richard Laing D	4 (4)	1 (1)	- (-)	1 (1)

 

^A  Not a member of the Audit Committee but attends at the invitation of the Committee Chairman.

^B  Appointed as a Director on 17 November 2020 and resigned on 10 February 2021; attended all meetings for which she was eligible.

^C  Appointed as a Director on 17 November 2020 and attended all meetings for which he was eligible.

^D  Appointed as a Director on 17 November 2020 and resigned on 1 April 2021; attended all meetings for which he was eligible.

In view of the retirement of two of the seven Directors of the Company at the forthcoming AGM, the Committee has undertaken succession planning and has determined that a new Director should be appointed, which will return the Board to six members, as the number considered most appropriate for the Company's size and complexity. The Chairman and Senior Independent Director assessed submissions from, and met with, three search firms. Thereafter, the Committee evaluated the submissions as well as track record and experience of each firm.

 

Trust Associates, an independent search firm with no other connection with the Company, was subsequently engaged.

 

Remuneration Committee

The Board has established a Remuneration Committee, comprising all of the Directors, with Jean Park as Chairman. The Directors' Remuneration Report sets out the responsibilities of the Committee.

 

Accountability and Audit

The responsibilities of the Directors and the Auditor in connection with the financial statements appear on in the Annual Report.

 

The Directors who held office at the date of this Report each confirm that, so far as they are aware, there is no relevant audit information of which the Company's Auditor is unaware and that they have taken all the steps that they could reasonably be expected to have taken as a Director in order to make themselves aware of any relevant audit information and to establish that the Company's Auditor is aware of that information. Further, there have been no important, additional events since the year end which warrant disclosure.

 

The Directors confirm that no non-audit services were provided by the Auditor during the year and, after reviewing the Auditor's procedures in connection with the provision of any such services, remain satisfied that the Auditor's objectivity and independence is being safeguarded.

 

Management of Conflicts of Interest, Anti-Bribery Policy and Tax Evasion Policy

The Board has a procedure in place to deal with a situation where a Director has a conflict of interest. As part of this process, the Directors prepare a list of other positions held and all other conflict situations that may need to be authorised either in relation to the Director concerned or his/her connected persons. The Board considers each Director's situation and decides whether to approve any conflict, taking into consideration what is in the best interests of the Company and whether the Director's ability to act in accordance with his/her wider duties is affected. Each Director is required to notify the Company Secretaries of any potential, or actual, conflict situations which will need authorising by the Board. Authorisations given by the Board are reviewed at each Board meeting.

 

The Board takes a zero-tolerance approach to bribery and has adopted appropriate procedures designed to prevent bribery. abrdn also takes a zero-tolerance approach and has its own detailed policy and procedures in place to prevent bribery and corruption.

 

It is the Company's policy to conduct all of its business in an honest and ethical manner. The Company takes a zero-tolerance approach to facilitation of tax evasion, whether under UK law or under the law of any foreign country and its full policy on tax evasion may be found on its website.

 

Going Concern

The Directors have undertaken a rigorous review and consider both that there are no material uncertainties and that the adoption of the going concern basis of accounting is appropriate.  This conclusion is consistent with the longer term Viability Statement.

 

The Company's assets consist primarily of a diverse portfolio of listed equity shares nearly all of which, in most circumstances, are realisable within a short timescale. The Board has set limits for borrowing and regularly reviews the level of any gearing, cash flow projections and compliance with banking and loan note covenants.

 

The Directors are mindful of the principal risks and uncertainties disclosed, including the major disruption caused by Covid-19, and have reviewed forecasts detailing revenue and liabilities. The Directors are satisfied that: the Company has adequate resources to continue in operational existence for the foreseeable future and at least 12 months from the date of approval of this Annual Report; the Company is financially sound; and the Company's key third party service providers had in place appropriate business continuity plans and had, and will, be able to maintain service levels despite the ongoing impact of the pandemic.

 

Substantial Interests

As at 30 June 2021 and 31 August 2021 the following interests over 3% in the issued Ordinary share capital of the Company had been disclosed in accordance with the requirements of the UK Listing Authority's Disclosure Guidance and Transparency Rules:

 

	30 June 2021		31 August 2021
Shareholder	Number of shares held	% held	Number of shares held	% held
Interactive Investor	16,524,334	14.1	16,510,284	14.1
Hargreaves Lansdown	13,390,053	11.4	13,529,994	11.6
Rathbones	12,917,195	11.0	12,687,660	10.8
abrdn retail plans	12,655,286	10.8	12,038,193	10.3
Charles Stanley	3,840,049	3.3	3,833,229	3.3

 

The above interests as at 31 August 2021 were unchanged as at the date of approval of this Report.

 

Environmental, Social and Governance ("ESG") Policy

The Board has a duty to act in the best interests of the Company. As an investment trust, the Company has no direct environmental, social or governance responsibilities. However, the Board recognises that to be sustainable over the long term the Company and the Manager must have regard to ethical and environmental issues that impact society at large, and has encouraged and welcomed the Manager's integration and ongoing evolving of ESG into its investment process, which is explained in more detail below.

 

The Board acknowledges that there are risks associated with investment in companies which fail to conduct business in a responsible manner and therefore ensures that the Manager takes regular account of ESG factors which may affect the performance or value of the Company's investments.

 

UK Stewardship Code and Proxy Voting as an Institutional Shareholder

Responsibility for actively monitoring the activities of portfolio companies, including assessing ESG factors, has been delegated by the Board to the AIFM which has sub-delegated that authority to the Investment Manager.

 

Further information, including how the Investment Manager discharges its obligations under the 2020 Stewardship Code, may be found at: https://www.aberdeenstandard.com/en/uk/institutional/responsible-investing 

 

Relations with Shareholders

The Directors place great importance on communication with shareholders. The Company's shareholder register is retail-dominated and the Manager, together with the Company's broker, regularly meets with current and prospective shareholders to discuss performance. The Board receives investor relations updates from the Manager on at least a quarterly basis. Any changes in the shareholder register as well as shareholder feedback is discussed by the Directors at each Board meeting.

 

Regular updates are provided to shareholders through the Annual Report, Half Yearly Report, monthly factsheets, company announcements, including daily net asset value announcements, all of which are available through the Company's website at: murray-income.co.uk. The Annual Report is also widely distributed to other parties who have an interest in the Company's performance. Shareholders and investors may obtain up-to-date information on the Company through its website or via Aberdeen Standard Investments' Customer Services Department.

 

The Board's policy is to communicate directly with shareholders and their representative bodies without the involvement of the management group (either the Company Secretary or Aberdeen Standard Investments) in situations where direct communication is required and representatives from the Board offer to meet with major shareholders on an annual basis in order to gauge their views. The Company Secretary acts on behalf of the Board, not the Manager, and there is no filtering of communication. At each Board meeting the Board receives full details of any communication from shareholders to which the Chairman responds, as appropriate, on behalf of the Board.

 

In addition, in relation to institutional shareholders, members of the Board may either accompany the Manager or conduct meetings in the absence of the Manager.

 

The Company's Annual General Meeting ordinarily provides a forum, both formal and informal, for shareholders to meet and discuss issues with the Directors and Investment Manager. The Notice of AGM included within the Annual Report is normally sent out at least 20 working days in advance of the meeting.

 

Global Greenhouse Gas Emissions and Streamlined Energy and Carbon Reporting ("SECR")

All of the Company's activities are outsourced to third parties. The Company therefore has no greenhouse gas emissions to report from the operations of its business, nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013.  For the same reason as set out above, the Company considers itself to be a low energy user under the SECR regulations and therefore is not required to disclose energy and carbon information.

 

Disclosures Required by FCA Listing Rule 9.8.4

This rule requires listed companies to report certain information in a single identifiable section of their annual financial reports. None of the prescribed information is applicable to the Company in the year under review except for details of the changes in the Company's share capital resulting from the combination with PLI on 17 November 2020 which are included in "Capital Structure" in the Directors' Report.

 

Future Developments of the Company

Disclosures relating to the future developments of the Company may be found in the Chairman's Statement.

 

Annual General Meeting ("AGM")

Among the special business being put at the AGM of the Company to be held on 2 November 2021, the following resolutions will be proposed:

 

Authority to allot shares and disapply pre-emption rights (Resolutions 11 and 12)

 

Ordinary resolution No. 11 will renew the authority to allot the unissued share capital up to an aggregate nominal amount of £1.5m (equivalent to approximately 5.9m Ordinary shares, or, if less, 5% of the Company's existing issued share capital (excluding treasury shares) on the date of passing of this resolution). Such authority will expire on the date of the AGM in 2022 or on 31 December 2022, whichever is earlier. This means that the authority will require to be renewed at the next AGM.

 

When shares are to be allotted for cash, Section 561 of the Companies Act 2006 (the "Act") provides that existing shareholders have pre-emption rights and that the new shares to be issued, or sold from treasury, must be offered first to such shareholders in proportion to their existing holding of shares. However, shareholders can, by special resolution, authorise the Directors to allot shares or sell from treasury otherwise than by a pro rata issue to existing shareholders. Special resolution No. 12 will, if passed, give the Directors power to allot for cash or sell from treasury equity securities up to an aggregate nominal amount of £2.9m (equivalent to approximately 11.7m Ordinary shares, or, if less, 10% of the Company's existing issued share capital (excluding treasury shares) on the date of passing of this resolution, as if Section 561 of the Act does not apply). This authority will also expire on the date of the AGM in 2022 or on 31 December 2022, whichever is earlier. This authority will not be used in connection with a rights issue by the Company.

 

The Directors intend to use the authorities given by resolutions 11 and 12 to allot shares or sell shares from treasury and disapply pre-emption rights only in circumstances where this will be clearly beneficial to shareholders as a whole. The issue proceeds would be available for investment in line with the Company's investment policy. No issue of shares will be made which would effectively alter the control of the Company without the prior approval of shareholders in general meeting. It is the intention of the Board that any issue of shares or any re-sale of treasury shares would only take place at a price not less than 0.5% above the NAV per share prevailing at the date of sale. It is also the intention of the Board that sales from treasury would only take place when the Board believes that to do so would assist in the provision of liquidity to the market.

 

Purchase of the Company's own Ordinary shares (Resolution 13)

 

At the AGM held on 27 November 2020, shareholders approved the renewal of the authority permitting the Company to repurchase its Ordinary shares. The Directors wish to renew the authority given by shareholders at the previous AGM. A share buy-back facility enhances shareholder value by acquiring shares at a discount to NAV as and when the Directors consider this to be appropriate. The purchase of shares, when they are trading at a discount to NAV per share, should result in an increase in the NAV per share for the remaining shareholders. This authority, if conferred, will only be exercised if to do so would result in an increase in the NAV per share for the remaining shareholders and if it is in the best interests of shareholders generally. Any purchase of shares will be made within guidelines established from time to time by the Board. It is proposed to seek shareholder authority to renew this facility for another year at the AGM.

 

Under the FCA's Listing Rules, the maximum price that may be paid on the exercise of this authority must not exceed the higher of (i) 105% of the average of the middle market quotations for the shares over the five business days immediately preceding the date of purchase and (ii) the higher of the last independent trade and the highest current independent bid on the trading venue where the purchase is carried out. The minimum price which may be paid is 25p per share. Shares which are purchased under this authority will either be cancelled or held as treasury shares. Special resolution No. 13 will renew the authority to purchase in the market a maximum of 14.99% of shares in issue at the date of passing of the resolution (amounting to approximately 17.5m Ordinary shares). Such authority will expire on the date of the AGM in 2022, or on 31 December 2022, whichever is earlier. This means in effect that the authority will have to be renewed at the next AGM, or earlier, if the authority has been exhausted. No dividends may be paid on any shares held in treasury and no voting rights will attach to such shares. The benefit of the ability to hold treasury shares is that such shares may be sold at short notice. This should give the Company greater flexibility in managing its share capital, and improve liquidity in its shares.

 

Recommendation

The Directors believe that the resolutions to be proposed at the AGM are in the best interests of the Company and its shareholders as a whole, and recommend that shareholders vote in favour of the resolutions, as the Directors intend to do in respect of their own beneficial shareholdings.

On behalf of the Board

 

Neil Rogan

Chairman

20 September 2021

 

STATEMENT OF CORPORATE GOVERNANCE

 

Murray Income Trust PLC (the "Company") is committed to high standards of corporate governance. The Board is accountable to the Company's shareholders for good governance and this statement describes how the Company has applied the principles identified in the UK Corporate Governance Code as published in July 2018 (the "UK Code"), which is available on the Financial Reporting Council's (the "FRC") website: frc.org.uk, and is applicable for the Company's year ended 30 June 2021.

 

The Board has also considered the principles and provisions of the AIC Code of Corporate Governance as published in February 2019 (the "AIC Code").  The AIC Code addresses the principles and provisions set out in the UK Code, as well as setting out additional provisions on issues that are of specific relevance to the Company. The AIC Code is available on the AIC's website: theaic.co.uk.

The Board considers that reporting against the principles and provisions of the AIC Code, which has been endorsed by the FRC, provides more relevant information to shareholders.

 

The Board confirms that, during the year, the Company has complied with the principles and provisions of the AIC Code and the relevant provisions of the UK Code, except for those provisions relating to:

 

·             the role and responsibility of the chief executive;

·             executive directors' remuneration; and

·             the requirement for an internal audit function.

 

The Board considers that these provisions are not relevant to the position of the Company being an externally managed investment company. In particular, all of the Company's day-to-day management and administrative functions are outsourced to third parties. As a result, the Company has no executive directors, employees or internal operations. The Company has therefore not reported further in respect of these provisions.

 

Information on how the Company has applied the AIC Code, the UK Code, the Companies Act 2006 and the FCA's DTR 7.2.6 is provided in the Directors' Report and Audit Committee's Report as follows:

 

·           the composition and operation of the Board and its Committees are detailed in the Directors' Report and in the Audit Committee's Report;

·           the Board's policy on diversity is in the Strategic Report;

·           the Company's approach to internal control and risk management is detailed in the Audit Committee's Report;

·           the contractual arrangements with, and annual assessment of, the Manager are set out in the Directors' Report;

·           the Company's capital structure and voting rights are summarised in the Directors' Report;

·           the substantial interests disclosed in the Company's shares are listed in the Directors' Report;

·           the rules concerning the appointment and replacement of Directors are contained in the Company's Articles of Association and are summarised in the Directors' Remuneration Report. There are no agreements between the Company and its Directors concerning compensation for loss of office;

·           the powers to issue or buy back the Company's ordinary shares, which are sought annually, and any amendments to the Company's Articles of Association require a special resolution (75% majority) to be passed by shareholders and information on these resolutions may be found in the Directors' Report.

 

By order of the Board

Aberdeen Asset Management PLC

Secretaries
1 George Street

Edinburgh
EH2 2LL

 

20 September 2021

 

 

STATEMENT OF DIRECTORS' RESPONSIBILITIES

 

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

 

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law) including FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

 

In preparing these financial statements, the Directors are required to:

 

·      select suitable accounting policies and then apply them consistently;

·      make judgments and accounting estimates that are reasonable and prudent;

·      state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

·      adopt a going concern basis of accounting for the financial statements unless it is inappropriate to assume that the Company will continue in business.

 

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

Under applicable law and regulations, the Directors are also responsible for preparing a Directors' Report, Directors' Remuneration Report, Strategic Report and Statement of Corporate Governance that comply with that law and those regulations.

 

The financial statements are published on murray-income.co.uk which is a website maintained by the Company's Manager. The work carried out by the auditor does not involve consideration of the maintenance and integrity of the website and, accordingly, the auditor accepts no responsibility for any changes that have occurred to the financial statements since being initially presented on the website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

 

Each of the Directors confirms to the best of his or her knowledge that:

 

·      the financial statements, prepared in accordance with the applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of
the Company;

·      the Annual Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that the Company faces;

·      in the opinion of the Board, the Annual Report and financial statements taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy; and

·      the financial statements are prepared on an ongoing concern basis.

 

For and on behalf of the Board of Murray Income Trust PLC

 

Neil Rogan

Chairman

20 September 2021

 

 

MURRAY INCOME TRUST PLC

 

Information about the Manager including the Investment Process

 

Investment Philosophy and Style

The Investment Manager believes that company fundamentals ultimately drive stock prices but are often priced inefficiently. It believes that in-depth company research delivers insights that can be used to exploit these market inefficiencies. It focuses on investing in high quality companies, with the market often underestimating the sustainability of their returns. Quality companies tend to produce more resilient earnings streams with fewer tail risks, allowing them to better navigate challenging market conditions whilst also capitalising on opportunities to create value. This makes the approach well suited to identifying companies with sustainable and growing income generation. Investment insights are generated by the extensive equity research platform at Aberdeen Standard Investments. Ideas are generated through frequent direct company contact, deep fundamental analysis and integrated ESG analysis with rigorous team debate strengthening analytical conclusions. The Investment Manager has a long-term approach, aiming to buy and hold companies for a multi-year time horizon although it has the ability to react quickly if necessary. It is willing to take sizeable deviations to the benchmark based on the companies where it finds the highest quality and most attractive valuations.

 

Investment Process

The investment process has three stages:

 

1)   Idea Generation and Research. Comprehensive coverage of the UK equity market with a team of analysts generating investment ideas from company meetings, combined with corroborating evidence from competitors, suppliers and customers. External secondary research is also generated to gain insight on the consensus view and supplement proprietary research.

2)   Stock Selection. Buy ideas are peer reviewed by the whole UK equity team, evaluating the level of conviction and the materiality, corroboration and correlation of those investment opportunities. For the Company specifically, the Investment Manager aims to select high quality stocks. Quality is defined by reference to management, business focus, balance sheet and corporate governance.

3)   Portfolio Construction and Risk Management. Portfolio construction is undertaken in a disciplined way, prioritising the taking of company specific risk with a rigorous sell discipline. Non-proprietary and proprietary quantitative tools are used to identify and control risk factor exposures, including sector and geographic weights.

 

 

The Investment Manager believes that good investment decision making requires clarity of responsibility for those decisions. Every stock has a named analyst responsible for its coverage, and every portfolio has a named fund manager responsible for its management. The individual portfolio managers make those decisions supported and challenged by the team, but accountability for the final decision is clear.

 

ESG integration means identifying and including all ESG analysis in each investment decision and the Investment Manager is regarded as a leader in this area. A central ESG team supports investment teams across different asset classes with its thematic work on areas such as remuneration and climate change, as well as taking responsibility for voting policies. The Investment Manager's Approach to ESG is set out below.

 

The investment process also leverages a wealth of knowledge, insight and expertise across asset classes and regions within Aberdeen Standard Investments. This allows the Investment Manager to take advantage of equity colleagues across the globe who are meeting companies and conducting research and sharing their insights using one common global research platform. This is invaluable when investing in the UK equity market, which is one of the most global markets in the world. Corporate level insights are shared with the credit team which enriches the equity view through an understanding of the full capital structure of the businesses invested in. Members of the Investment Manager's multi-asset and economics teams regularly attend the equity team's daily meeting to share macro level insights.

 

Risk Management

The Investment Manager utilises a number of quantitative risk tools to ensure it is fully aware of and understand all the risks prevalent in portfolios it manages. These risk management systems monitor and analyse active risk, the composition of portfolio positions, as well as contribution to risk and marginal contribution to risk of the portfolio's holdings. The systems break down the risk within the portfolio by industry and country factors, and highlight the stocks with the highest marginal contribution to risk and the largest diversification benefit. Sector, thematic and geographical positions are a residual of stock selection decisions, but are monitored to ensure excessive risk is not taken in any one area. The Investment Manager also makes use of pre-trade analytics to assess the impact of any trades on the portfolio risk metrics.

 

The Investment Manager's Approach to ESG

 

The Manager does not judge the suitability of an investment from an ESG perspective on a purely binary basis. Instead, a dynamic approach is taken, investing in companies where the greatest alignment to mitigating the risks can be seen or pursued further through their commitment to improving their ESG profile.  The Manager believes in active engagement with our investments and potential investments: from providing initial guidance on suitable metrics through to holding the company to account for delivering on its promises. It is through this filter that the Manager is comfortable investing in, for example, sectors such as mining and oil & gas, subject to the belief that a company is taking the necessary action to address the energy transition. The Manager has high expectations for these companies given that many commodities are necessary for the transition to a low carbon future.

 

Core beliefs: Assessing Risk, Enhancing Value

There are three core principles which underpin the Investment Manager's integrated ESG approach. Firstly, ESG factors can materially impact financial returns and the long term success of the investment strategy. Secondly, by integrating ESG factors into investment decisions the Investment Manager generates a better understanding of how well companies are managing ESG risks and opportunities and this insight supports better decision making. Finally, active engagement with company management teams is central to enhancing value and a standard part of the Investment Manager's ongoing stewardship programme.

 

Responsible Investing - Integration of ESG into the Investment Manager's Process

"By embedding ESG factors into our active equity investment process, we aim to reduce risk, enhance potential value for our investors and foster companies that can contribute positively to the world." Aberdeen Standard Investments

 

Financial Returns	ESG factors can be financially material - the level of consideration they are given in a company will ultimately have an impact on corporate performance, either positively or negatively. Those companies that take their ESG responsibilities seriously tend to outperform those that do not.
Fuller Insight	Systematically assessing a company's ESG risks and opportunities alongside other financial metrics allows the Investment Manager to make better investment decisions.
Corporate Advancement	Informed and constructive engagement helps foster better companies, protecting and enhancing the value of the Company's investments.

 

"We believe that the market systematically undervalues the importance of ESG factors. We believe that in-depth ESG analysis is part of both fundamental company research and portfolio construction and will lead to better client outcomes." Aberdeen Standard Investments

 

Researching Companies: Deeper Company Insights for Better Investor Outcomes

The Investment Manager's portfolio managers, sector analysts, ESG equity analysts and central ESG Investment Team collaborate to generate a deep understanding of the ESG risks and opportunities associated with each company. The central ESG team also produces research into specific themes (e.g. labour relations or climate change), sectors (e.g. forestry) and ESG topics to understand and highlight best practice.

 

Global Networks: Working Together on Climate Change

The Investment Manager is a signatory to the UN Principles for Responsible Investment and actively collaborates on ESG issues with global asset managers and asset owners. Climate change is a particular area of focus because the physical and transition risks related to climate change have the potential to be financially material for many companies. The Investment Manager has been actively involved in initiatives such as Climate Action100+ and Institutional Investors Group on Climate Change ("IIGCC") Net Zero Framework and also supports the Task Force on Climate Related Disclosures ("TCFD") which aims to strengthen climate related reporting globally. 

 

Portfolio Managers & Sector Analysts	All of the Investment Manager's equity portfolio managers and sector analysts seek to engage actively with companies to gain insight into their specific risks and provide a positive ongoing influence on their corporate strategy for governance, environmental and social impact.
ESG Equity Analysts	The Investment Manager has dedicated and highly experienced ESG equity analysts located across the UK, US, Asia and Australia. Working as part of individual investment teams, rather than as a separate department, these specialists are integral to pre-investment due diligence and post-investment ongoing company engagement. They are also responsible for taking thematic research produced by the central ESG Investment Team, interpreting and translating it into actionable insights and engagement programmes for its regional investment strategies.
ESG Investment Team	This central team of more than 20 experienced specialists based in Edinburgh and London provides ESG consultancy and insight for all asset classes. Taking a global approach both identifies regions, industries and sectors that are most vulnerable to ESG risks and identifies those that can take advantage of the opportunities presented. Working with portfolio managers, the team is key to the Investment Manager's active stewardship approach of using shareholder voting and corporate engagement to drive positive change.

 

ESG Research Process: Introduction

The Investment Manager employs around 150 equity professionals globally. A systematic and globally-applied approach to evaluating stocks allows the Investment Manager to compare companies consistently on their ESG credentials - both regionally and against their peer group.  The Investment Manager uses a combination of external and proprietary in-house quantitative scoring techniques to complement and cross-check analyst-driven ESG assessments. ESG analysis is peer-reviewed within the equities team, and ESG factors impacting both sectors and stocks are discussed as part of the formal sector reviews.

 

ESG House Score

The ESG House Score is produced by the ESG Equity Analysts. The ESG House Score framework has two main pillars which include detailed operational and governance metrics. The underlying key performance indicators are weighted according to how material they are for each sector and country and populated from proprietary and external data sources such as MSCI and Trucost. The scores are standardised to allow the Investment Manager to see how individual companies rank in a global context.  These scores complement the fundamental analysis of the equity analysts and the ranking of companies from Laggards to Best in Class. 

 

Equity ESG Quality Score

The Investment Manager's equity sector analysts have a fully integrated approach to ESG analysis. Within the equity investment process, every company is given a proprietary Quality Rating which has five components: industry analysis, business model analysis, analysis of the company's moat or competitive advantage, consideration of ESG factors, assessment of management and analysis of financials. In considering the ESG Quality Score the analyst considers these key questions:

 

·      Which ESG issues are relevant for this company, how material are they, and how are they being addressed?

·      What is the assessment of the quality of this company's governance, ownership structure and management?

·      Are incentives and key performance indicators aligned with the company's strategy and the interests of shareholders?

 

Having considered the regional universe and peer group in which the company operates, the Investment Manager's equity team then allocates it an ESG Quality rating between one and five (see below). This is applied across every stock that the Investment Manager covers globally. To be considered 'best in class', the management of ESG factors must be a material part of the company's core business strategy; management must provide excellent disclosure of data on key risk; management must also have clear policies and strong governance structures, among other criteria.

 

Working with Companies: Staying Engaged, Driving Change

The Investment Manager continuously monitors and actively engages with the companies in which it invests to maintain ESG focus and improvement. This stewardship of client's assets consists of four interconnected and equally important activities by the Investment Manager to monitor, contact, engage and act. 

 

The Investment Manager actively and regularly engages with the management teams of companies in which they are invested in order to share examples of best practice seen in other companies and to effect positive change. The Investment Manager also actively engages with management teams to explain voting decisions at company annual general meetings.

 

The Investment Manager's engagement extends beyond the company's management team and can include many other stakeholders such as non-government agencies, industry and regulatory bodies, as well as activists and the company's clients.

 

Priorities for engagement are established by the use of the ESG House Score, in combination with bottom-up research insights from investment teams across asset classes, and areas of thematic focus from our company-level stewardship activities. What gets measured gets managed, so the Investment Manager strongly encourages companies to set clear targets or key performance indicators on all material ESG risks.

 

Monitor	Contact	Engage	Act
Ongoing due diligence . Business performance . Company financials . Corporate governance . Company's key risks and opportunities	Frequent dialogue . Senior executives . Board members . Heads of departments and specialists . Site visits	Exercise rights . Attend AGM/EGMs . Always vote . Explain voting decisions . Maximise influence to drive positive outcomes	Consider all options . Increase or decrease shareholding . Collaborate with other investors . Take legal action if necessary

 

 

 

 

 

 

 

MURRAY INCOME TRUST PLC

 

Statement of Comprehensive Income

 

		Year ended 30 June 2021				Year ended 30 June 2020
		Revenue	Capital	Total		Revenue		Capital	Total
	Notes	£'000	£'000	£'000		£'000		£'000	£'000
Gains/(losses) on investments	10	-	131,260	131,260		-		(47,204)	(47,204)
Currency gains/(losses)		-	62	62		-		(115)	(115)
Income	3	35,979	-	35,979		22,804		-	22,804
Investment management fees	4	(753)	(1,759)	(2,512)		(798)		(1,861)	(2,659)
Administrative expenses	5	(1,443)	-	(1,443)		(1,105)		-	(1,105)
Net return before finance costs and tax		33,783	129,563	163,346		20,901		(49,180)	(28,279)
Finance costs	6	(560)	(1,282)	(1,842)		(342)		(800)	(1,142)
Net return before tax		33,223	128,281	161,504		20,559		(49,980)	(29,421)
Taxation	8	(287)	-	(287)		(395)		-	(395)
Net return after tax		32,936	128,281	161,217		20,164		(49,980)	(29,816)
Return per Ordinary share	9	33.7p	131.4p	165.1p		30.5p		(75.6)p	(45.1)p
The total column of this statement represents the profit and loss account of the Company prepared in accordance with FRS 102. The 'Revenue' and 'Capital' columns represent supplementary information prepared under guidance issued by the Association of Investment Companies.
All revenue and capital items in the above statement derive from continuing operations.
No operations were acquired or discontinued in the year.
The accompanying notes are an integral part of the financial statements.

 

MURRAY INCOME TRUST PLC

 

Statement of Financial Position

 

		As at	As at
		30 June 2021	30 June 2020
	Notes	£'000	£'000
Fixed assets
Investments at fair value through profit or loss	10	1,202,290	561,207
Current assets
Other debtors and receivables	11	8,345	4,854
Cash and cash equivalents		4,493	16,365
		12,838	21,219
Creditors: amounts falling due within one year
Other payables		(2,749)	(1,494)
Bank loans		(6,241)	(6,667)
	12	(8,990)	(8,161)
Net current assets		3,848	13,058
Total assets less current liabilities		1,206,138	574,265
Creditors: amounts falling due after more than one year
2.51% Senior Loan Notes		(39,918)	(39,904)
4.37% Senior Loan Notes		(72,361)	-
	13	(112,279)	(39,904)
Net assets		1,093,859	534,361
Capital and reserves
Share capital	14	29,882	17,148
Share premium account		438,213	24,020
Capital redemption reserve		4,997	4,997
Capital reserve		594,282	466,001
Revenue reserve		26,485	22,195
Total Shareholders' funds		1,093,859	534,361
Net asset value per Ordinary share	15
Debt at par value		934.6p	808.3p
The financial statements were approved by the Board of Directors and authorised for issue on 20 September 2021 and were signed on its behalf by:
Neil Rogan
Chairman
The accompanying notes are an integral part of the financial statements.

 

MURRAY INCOME TRUST PLC

 

Statement of Changes in Equity

 

For the year ended 30 June 2021
			Share	Capital
		Share	premium	redemption	Capital	Revenue
		capital	account	reserve	reserve	reserve	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 July 2020		17,148	24,020	4,997	466,001	22,195	534,361
Net return after tax		-	-	-	128,281	32,936	161,217
Issue of shares on combination	19	12,734	414,486	-	-	-	427,220
Cost of shares issued in respect of the combination		-	(293)	-	-	-	(293)
Dividends paid	7	-	-	-	-	(28,646)	(28,646)
Balance at 30 June 2021		29,882	438,213	4,997	594,282	26,485	1,093,859
For the year ended 30 June 2020
			Share	Capital
		Share	premium	redemption	Capital	Revenue
		capital	account	reserve	reserve	reserve	Total
		£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 July 2019		17,148	24,020	4,997	515,981	25,004	587,150
Net return after tax		-	-	-	(49,980)	20,164	(29,816)
Dividends paid	7	-	-	-	-	(22,973)	(22,973)
Balance at 30 June 2020		17,148	24,020	4,997	466,001	22,195	534,361
The accompanying notes are an integral part of the financial statements.

 

MURRAY INCOME TRUST PLC

 

Statement of Cash Flows

 

		Year ended	Year ended
		30 June 2021	30 June 2020
	Notes	£'000	£'000
Operating activities
Net return before finance costs and taxation		163,346	(28,279)
Increase in accrued expenses		209	146
Overseas withholding tax		(943)	(380)
Dividend income	3	(33,368)	(20,220)
Dividends received		31,894	21,418
Interest income	3	(1)	(100)
Interest received		1	112
Interest paid		(1,455)	(1,144)
(Gains)/losses on investments	10	(131,260)	47,204
Amortisation on Loan Notes	6	(969)	8
Foreign exchange (gains)/losses		(62)	115
Increase  in other debtors		(100)	(2)
Stock dividends included in investment income	3	(1,699)	(1,209)
Net cash inflow from operating activities		25,593	17,669
Investing activities
Purchases of investments		(199,801)	(177,178)
Sales of investments		153,910	171,725
Net cash acquired and received following the combination	19	40,248	-
Costs associated with the combination		(2,519)	-
Net cash outflow from investing activities		(8,162)	(5,453)
Financing activities
Dividends paid	7	(28,646)	(22,973)
Cost of shares issued in respect of the combination		(293)	-
Repayment of bank loans		(513)	(3,265)
Draw down of bank loans		507	3,093
Net cash outflow from financing activities		(28,945)	(23,145)
Decrease in cash		(11,514)	(10,929)
Analysis of changes in cash during the year
Opening balance		16,365	27,171
Effect of exchange rate fluctuations on cash held		(358)	123
Decrease in cash as above		(11,514)	(10,929)
Closing balance		4,493	16,365
The accompanying notes are an integral part of these financial statements.

 

MURRAY INCOME TRUST PLC

 

Notes to the Financial Statements

Year Ended 30 June 2021

 

1.	Principal activity. The Company is a closed-end investment company, registered in Scotland No SC012725, with its Ordinary shares being listed on the London Stock Exchange.

 

 

2.	Accounting policies
	(a)	Basis of preparation. The financial statements have been prepared in accordance with Financial Reporting Standard 102, the Companies Act 2006 and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued in April 2021. The financial statements are prepared in Sterling which is the functional currency of the Company and rounded to the nearest £'000. They have also been prepared on the assumption that approval as an investment trust will continue to be granted. The accounting policies applied are unchanged from the prior year and have been applied consistently.
		The Company's assets consist primarily of a diverse portfolio of listed equity shares nearly all of which, in most circumstances, are realisable within a very short timescale. The Board has set limits for borrowing and regularly reviews the level of any gearing, cash flow projections and compliance with banking and loan note covenants. The Directors are mindful of the principal risks and uncertainties disclosed, including the major disruption caused by the Covid-19 pandemic, and have reviewed forecasts detailing revenue and liabilities. Notwithstanding the continuing uncertain economic outlook caused by Covid-19, the Directors are satisfied that: the Company has adequate resources to continue in operational existence for the foreseeable future and at least twelve months from the date of approval of this Annual Report; the Company is financially sound; and the Company's key third party service providers had in place appropriate business continuity plans and had, and will, be able to maintain service levels despite the ongoing impact of the pandemic. Accordingly, the Board continues to adopt the going concern basis of accounting in preparing the financial statements.
	(b)	Income. Dividends receivable on equity shares are treated as revenue for the year on an ex-dividend basis. Where no ex-dividend date is available dividends receivable on or before the year end are treated as revenue for the year. Where the Company has elected to receive dividends in the form of additional shares rather than cash, the amount of the cash dividend foregone is recognised as revenue and any residual amount is recognised as capital. Provision is made for any dividends not expected to be received. Special dividends are credited to capital or revenue, according to the circumstances. Dividend revenue is presented gross of any non-recoverable withholding taxes, which are disclosed separately within the Statement of Comprehensive Income.
		Interest receivable from cash and short-term deposits and stock lending income is recognised on an accruals basis.
	(c)	Expenses. All expenses are accounted for on an accruals basis. All expenses are charged through the revenue column of the Statement of Comprehensive Income except as follows:
		- transaction costs on the acquisition or disposal of investments are recognised as a capital item in the Statement of Comprehensive Income.
		- expenses are charged as a capital item in the Statement of Comprehensive Income where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. In this respect the investment management fee has been allocated 30% to revenue and 70% to capital to reflect the Company's investment policy and prospective income and capital growth.
	(d)	Taxation. Taxation represents the sum of tax currently payable and deferred tax. Any tax payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates that were applicable at the Statement of Financial Position date.
		Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the Statement of Financial Position date, where transactions or events that result in an obligation to pay more tax in the future or right to pay less tax in the future have occurred at the Statement of Financial Position date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing differences are differences arising between the Company's taxable profits and its results as stated in the financial statements which are capable of reversal in one or more subsequent periods. Deferred tax is measured on a non-discounted basis at the tax rates that are expected to apply in the periods in which timing differences are expected to reverse, based on tax rates and laws enacted or substantively enacted at the Statement of Financial Position date.
		Due to the Company's status as an investment trust company and the intention to continue meeting the conditions required to obtain approval in the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.
		The tax effect of different items of income/gain and expenditure/loss is allocated between capital and revenue within the Statement of Comprehensive Income on the same basis as the particular item to which it relates using the Company's effective rate of tax for the year, based on the marginal basis.
	(e)	Valuation of investments. The Company has chosen to apply the recognition and measurement provisions of IAS 39 Financial Instruments: Recognition and Measurement. All investments have been designated upon initial recognition at fair value through profit or loss. This is done because all investments are considered to form part of a group of financial assets which is evaluated on a fair value basis, in accordance with the Company's documented investment strategy, and information about the grouping is provided internally on that basis. Investments are recognised and de-recognised at trade date where a purchase or sale is under a contract whose terms require delivery within the timeframe established by the market concerned, and are measured initially at fair value. Subsequent to initial recognition, investments are valued at fair value through profit or loss. For listed investments, this is deemed to be bid market prices or closing prices for SETS (London Stock Exchange's electronic trading service) stocks sourced from the London Stock Exchange. Gains and losses arising from changes in fair value are included in the net return for the period as a capital item in the Statement of Comprehensive Income and are ultimately recognised in the capital reserve.
	(f)	Cash and cash equivalents. Cash comprises cash in hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to insignificant risk of change in value.
	(g)	Borrowings and finance costs. Borrowings of interest bearing bank loans and 2.51% Senior Loan Notes are recognised initially at the fair value of the consideration received, net of any issue expenses, and subsequently at amortised cost using the effective interest method. Borrowings of 4.37% Senior Loan Notes, which were novated to the Company on the merger with Perpetual Income and Growth Investment Trust plc, were recorded initially at their fair value of £73,344,000 and are amortised over the remaining life of the loan towards their redemption value of £60,000,000. The amortisation adjustment is presented as a finance cost. Finance costs accrue using the effective interest rate over the life of the borrowings and are allocated 30% to revenue and 70% to capital.
	(h)	Traded options. The Company may enter into certain derivative contracts (eg options) to gain exposure to the market. The option contracts are classified as fair value through profit or loss, held for trading, and accounted for as separate derivative contracts and are therefore shown in other assets or other liabilities at their fair value ie market value. The premium on the option (as with written options generally) is treated as the option's initial fair value and is recognised over the life of the option in the revenue column of the Statement of Comprehensive Income along with fair value changes in the open position which occur due to the movement in underlying securities. Losses realised on the exercise of the contracts are recorded in the capital column of the Statement of Comprehensive Income as they arise. Where the Company enters into derivative contracts to manage market risk, gains or losses arising on such contracts are recorded in the capital column of the Statement of Comprehensive Income.
	(i)	Segmental reporting. The Directors are of the opinion that the Company is engaged in a single segment of business activity, being investment business. Consequently, no business segmental analysis is provided.
	(j)	Nature and purpose of reserves
		Share capital. The Ordinary share capital on the Statement of Financial Position relates to the number of shares in issue and in treasury. Only when the shares are cancelled, either from treasury or directly, is a transfer made to the capital redemption reserve. This is a non-distributable reserve.
		Share premium account. The balance classified as share premium includes the premium above nominal value from the proceeds on issue of any equity share capital comprising Ordinary shares of 25p and includes the premium arising following the issue of shares on the combination with Perpetual Income and Growth Investment Trust plc on 17 November 2020. This is a non-distributable reserve.
		Capital redemption reserve. The capital redemption reserve reflects the cancellation of Ordinary shares, when an amount equal to the par value of the Ordinary share capital is transferred from the share capital reserve to the capital redemption reserve. This is a non-distributable reserve.
		Capital reserve. This reserve reflects any gains or losses on investments realised in the period along with any movements in the fair value of investments held that have been recognised in the Statement of Comprehensive Income. These include gains and losses from foreign currency exchange differences. Additionally, expenses, including finance costs, are charged to this reserve in accordance with (c) and (g) above. When making a distribution to shareholders, the Directors determine profits available for distribution by reference to 'Guidance on realised and distributable profits under the Companies Act 2006' issued by the Institute of Chartered Accountants in England  and Wales and the Institute of Chartered Accountants of Scotland in April 2017. The availability of distributable reserves in the Company is dependent on those distributions meeting the definition of qualifying consideration within the guidance and on available cash resources of the Company and other accessible sources of funds. The distributable reserves are therefore subject to any future restrictions or limitations at the time such distribution is made.
		The capital reserve, to the extent it constitutes realised profits, is distributable. This may include unrealised gains/(losses) on investments where these are readily convertible to cash. The amount of the capital reserve that is distributable is complex to determine and is not necessarily the full amount of the reserve as disclosed within these financial statements of £594,282,000 as at 30 June 2021 as this is subject to fair value movements and may not be readily realisable at short notice.
		Revenue reserve. This reserve reflects all income and costs which are recognised in the revenue column of the Statement of Comprehensive Income. The revenue reserve is distributable by way of dividend.
	(k)	Treasury shares. When the Company buys back the Company's equity share capital as treasury shares, the amount of the consideration paid, including directly attributable costs and any tax effects, is recognised as a deduction from equity. When these shares are sold or reissued subsequently, the net amount received is recognised as an increase in equity, and the resulting surplus or deficit on the transaction is transferred to or from the capital reserve.
	(l)	Dividends payable. Final dividends are recognised from the date on which they are approved by Shareholders. Interim dividends are recognised when paid. Dividends are shown in the Statement of Changes in Equity.
	(m)	Foreign currency. Transactions in foreign currencies are converted to Sterling at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities and non-monetary assets held at fair value denominated in foreign currencies are translated into Sterling at rates of exchange ruling at the Statement of Financial Position date. Exchange gains and losses are taken to the Statement of Comprehensive Income as a capital or revenue item depending on the nature of the underlying item.
	(n)	Significant estimates and judgements. The Directors do not believe that any accounting estimates or judgements have been applied to these financial statements that have a significant risk of causing material adjustment to the carrying amount of assets and liabilities. However the Directors have made a judgement that the acquisition of assets and liabilities from Perpetual Income and Growth Investment Trust plc outlined in Note 19 does not meet the definition of a business combination under FRS 102 and accordingly have not accounted for it as such in these financial statements.

 

 

3.	Income
		2021	2020
		£'000	£'000
	Income from investments
	UK dividends (all listed):
	- ordinary	24,539	14,903
	- special	1,251	434
	Property income dividends	1,007	675
	Overseas dividends (all listed)
	- ordinary	4,773	2,999
	- special	99	-
	Stock dividends	1,699	1,209
		33,368	20,220
	Other income
	Deposit interest	1	100
	Stock lending income	-	12
	Traded option premiums	2,504	2,472
	Compensation payments	106	-
		2,611	2,584
	Total income	35,979	22,804
	Special dividends of £nil (2020 - £1,331,000) have also been recognised in capital, making a total of £1,350,000 (2020 - £1,765,000) special dividends for the year.
	During the year, the Company received premiums totalling £2,504,000 (2020 - £2,472,000) in exchange for entering into derivative transactions. At the year end there were no open positions (2020 - same).
	Other income includes an amount of £101,000 for compensation received from the Manager. This receipt offset an HMRC penalty of £91,000 and related interest of £10,000 which arose due to the Manager's late payment of stamp duty to HMRC on the Company's behalf. A further £5,000 was received from the Manager in respect of a trading error which occurred during the year.

 

 

4.	Investment management fee
		2021			2020
		Revenue	Capital	Total	Revenue	Capital	Total
		£'000	£'000	£'000	£'000	£'000	£'000
	Management fee	753	1,759	2,512	798	1,861	2,659
	The management fee is based on 0.55% per annum for net assets up to £350 million, 0.45% per annum on the next £100 million of net assets and 0.25% per annum for net assets over £450 million, calculated and paid monthly. The fee has been allocated 30% to revenue and 70% to capital. The management agreement is terminable on three months' notice. The fee payable to ASFML at the year end was £584,000 (2020 - £427,000).
	ASFML agreed to waive the management fee payable by the Company in respect of the net assets transferred to the Company for a period of 182 days following completion of the merger on 17 November 2020. This amounted to approximately £804,000.
	Under the terms of the management agreement, the value of the Company's investments in commonly managed funds is excluded from the calculation of the management fee. The Company held no such commonly managed funds at the year end (2020 - Standard Life UK Smaller Companies Trust PLC valued at £4,950,000).

 

 

5.	Administrative expenses
		2021	2020
		£'000	£'000
	Shareholders' services{A}	507	407
	Directors' remuneration{B}	201	167
	Secretarial fees{C}	90	90
	Registrars fees	128	83
	Depositary fees	100	78
	HMRC penalty{D}	91	-
	Custody fees	49	35
	Printing and postage	60	53
	Auditor's remuneration:
	- fees payable to the Company's auditor for the audit of the Company's annual accounts	38	29
	Legal and professional fees	59	41
	Other expenses	120	122
		1,443	1,105
	{A} Includes savings scheme and other wrapper administration and promotion expenses, paid to ASFML under a delegation agreement with ASFML to cover promotional activities during the year. There was £120,000 (2020 - £229,000) due to ASFML in respect of these promotional activities at the year end.
	{B} Refer to the Fees Payable section of the Directors' Remuneration Report for further details.
	{C} Payable to ASFML, balance outstanding of £23,000 (2020 - £23,000) at the year end.
	{D} Relating to the late payment of stamp duty arising on the transfer of assets from Perpetual Income and Growth Investment Trust plc to the Company during the year.
	With the exception of Auditor's remuneration for the statutory audit, all of the expenses above include irrecoverable VAT where applicable. The Auditor's remuneration for the statutory audit excludes VAT amounting to £7,000 (2020 - £6,000).

 

 

6.	Finance costs
		2021			2020
		Revenue	Capital	Total	Revenue	Capital	Total
		£'000	£'000	£'000	£'000	£'000	£'000
	Bank loans and overdraft interest	43	98	141	39	91	130
	Senior Loan Notes	798	1,862	2,660	301	703	1,004
	Interest payable to HMRC	10	-	10	-	-	-
	Amortisation of 2.51% Senior Loan Note issue expenses	4	10	14	2	6	8
	Amortisation of 4.37% Senior Loan Note	(295)	(688)	(983)	-	-	-
		560	1,282	1,842	342	800	1,142
	The 4.37% Senior Loan Notes, with a par value £60,000,000, were novated to the Company following the combination with Perpetual Income and Growth Investment Trust plc (note 19). They were novated at fair value of £73,344,000 and will be amortised over the remaining life of the loan.
	Interest payable includes an amount of £10,000 relating to the late payment of stamp duty to HMRC arising on the transfer of assets from Perpetual Income and Growth Investment Trust plc to the Company during the year.
	With the exception of the interest payable to HMRC, which is allocated wholly to revenue, finance costs are allocated 30% to revenue and 70% to capital.

 

 

7.	Ordinary dividends on equity shares
		2021				2020
		Rate		£'000		Rate	£'000
	Fourth interim dividend previous year	9.50p		6,280		10.00p	6,611
	First interim dividend current year	12.55p		8,297		8.25p	5,454
	Second interim dividend current year	3.95p		4,623		8.25p	5,454
	Third interim dividend current year	8.25p		9,656		8.25p	5,454
	Return of unclaimed dividends			(210)			-
				28,646			22,973
	The fourth interim dividend for 2021 has not been included as a liability in these financial statements as it was not paid until after the reporting date.
	Set out below are the total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of Section 1158-1159 of the Corporation Tax Act 2010 are considered. The revenue available for distribution by way of dividend for the year is £32,936,000 (2020 - £20,164,000).
			2021			2020
			Rate		£'000	Rate	£'000
	Three interim dividends of 12.55p, 3.95p and 8.25p (2020: 8.25p each)		24.75p		22,576	24.75p	16,362
	Fourth interim dividend		9.75p		11,412	9.50p	6,280
			34.50p		33,988	34.25p	22,642

 

 

8.	Taxation
				2021			2020
			Revenue	Capital	Total	Revenue	Capital	Total
			£'000	£'000	£'000	£'000	£'000	£'000
	(a)	Analysis of charge for the year
		Overseas tax incurred	1,102	-	1,102	709	-	709
		Overseas tax reclaimable	(815)	-	(815)	(314)	-	(314)
		Total tax charge for the year	287	-	287	395	-	395
	(b)	Factors affecting the tax charge for the year. The UK corporation tax rate is 19% (2020 - 19%). The tax charge for the year is lower than the corporation tax rate (2020 - same). The differences are explained below:
				2021			2020
			Revenue	Capital	Total	Revenue	Capital	Total
			£'000	£'000	£'000	£'000	£'000	£'000
		Net return before taxation	33,223	128,281	161,504	20,559	(49,980)	(29,421)
		Net return multiplied by the standard rate of corporation tax of 19% (2020 - 19%)	6,312	24,373	30,685	3,906	(9,496)	(5,590)
		Effects of:
		Non-taxable UK dividends	(5,091)	-	(5,091)	(2,914)	-	(2,914)
		Non-taxable stock dividends	-	-	-	(154)	-	(154)
		Non-taxable overseas dividends	(1,011)	-	(1,011)	(597)	-	(597)
		Expenses not deductible for tax purposes	19	-	19	1	-	1
		Movement in unutilised management expenses	(229)	578	349	(242)	505	263
		Realised and unrealised (gains) / losses on investments held	-	(24,939)	(24,939)	-	8,969	8,969
		Currency movements not taxable	-	(12)	(12)	-	22	22
		Overseas tax payable	287	-	287	395	-	395
		Total tax charge	287	-	287	395	-	395
	(c)	Factors that may affect future tax charges. No provision for deferred tax has been made in the current or prior accounting period.
		The Company has not provided for deferred tax on capital gains or losses arising on the revaluation or disposal of investments as it is exempt from tax on these items because of its status as an investment trust company.
		At the year end, the Company has, for taxation purposes only, accumulated unrelieved management expenses and loan relationship deficits of £68,702,000 (2020 - £66,866,000). A deferred tax asset at the standard rate of corporation of 25% (2020 - 19%) of £17,176,000 (2020 - £12,705,000) has not been recognised and these expenses will only be utilised if the Company has profits chargeable to corporation tax in the future. It is considered too uncertain that the Company will generate such profits and therefore no deferred tax asset has been recognised. The Finance Act 2021 received Royal Assent on 10 June 2021 and the rate of Corporation Tax of 25% effective from 1 April 2023 has been used to calculate the potential deferred tax asset of £17,176,000.

 

 

9.	Return per Ordinary share
		2021		2020
		£'000	p	£'000	p
	Returns are based on the following figures:
	Revenue return	32,936	33.7	20,164	30.5
	Capital return	128,281	131.4	(49,980)	(75.6)
	Total return	161,217	165.1	(29,816)	(45.1)
	Weighted average number of Ordinary shares in issue		97,648,914		66,110,413

 

 

10.	Investments at fair value through profit or loss
		2021		2020
		£'000		£'000
	Opening book cost	461,306		447,473
	Opening investment holdings gains	99,901		155,163
	Opening fair value	561,207		602,636
	Analysis of transactions made during the year
	Assets acquired on combination with Perpetual Income and Growth Investment Trust plc	459,361		-
	Costs associated with the combination{A}	2,519		-
	Purchases at cost	202,157		175,595
	Sales proceeds received	(154,214)		(169,820)
	Gains/(losses) on investments	131,260		(47,204)
	Closing fair value	1,202,290		561,207
	Closing book cost	995,661		461,306
	Closing investment gains	206,629		99,901
	Closing fair value	1,202,290		561,207
		2021		2020
	Gains/(losses) on investments	£'000		£'000
	Costs associated with the combination{A}	(2,519)		-
	Realised gains on sale of investments at fair value	27,051		8,058
	Net movement in investment holdings gains	106,728		(55,262)
		131,260		(47,204)
	{A} Costs associated with the acquisition of assets from Perpetual Income and Growth Investment Trust plc, comprising £1,863,000 relating to stamp duty and financial transaction taxes and £656,000 relating to professional fees. These costs have been included, together with the gains/(losses) on investments of £133,779,000 above, in the gains/(losses) on investments of £131,260,000 in the Statement of Comprehensive Income.
	The Company received £154,214,000 (2020 - £169,820,000) from investments sold in the year. The book cost of these investments when they were purchased was £127,085,000 (2020 - £161,761,000). These investments have been revalued over time and until they were sold any unrealised gains/(losses) were included in the fair value of the investments.
	The Company may write and purchase both exchange traded and over the counter derivative contracts as part of its investment policy. The Company pledges collateral greater than the market value of the traded options in accordance with standard commercial practice. At 30 June 2021 there were no shares pledged as part of the option underwriting programme (30 June 2020, financial assets comprising shares were pledged with Credit Suisse). The liability of collateral held at the year end was £nil as no open positions existed (2020 - nil).
	Transaction costs. During the year expenses were incurred in acquiring or disposing of investments classified at fair value through profit or loss. These have been expensed through capital and are included within gains on investments in the Statement of Comprehensive Income. The total costs were as follows:
		2021			2020
		£'000			£'000
	Purchases	909			680
	Costs associated with the combination	2,519			-
	Sales	77			82
		3,505			762
	The above transaction costs are calculated in line with the AIC SORP. The transaction costs in the Company's Key Information Document are calculated on a different basis and in line with the PRIIPs regulations.
		2021			2020
	Stock lending	£'000			£'000
	Aggregate value of securities on loan at the year end	-			-
	Maximum aggregate value of securities on loan during the year	-			26,479
	Fee income from stock lending	-			12
	Stock lending is the temporary transfer of securities by a lender to a borrower, with an agreement by the borrower to return equivalent securities to the lender at an agreed date. Fee income is received for making the investments available to the borrower. The principal risks and rewards of holding the investments, namely the market movements in share prices and dividend income, are retained by the Company. In all cases the securities lent continue to be recognised on the Statement of Financial Position.
	All stocks lent under these arrangements are fully secured by collateral. The value of the collateral held at 30 June 2021 was £nil (2020 - £nil).

 

11.	Other debtors and receivables
		2021	2020
		£'000	£'000
	Amounts due from brokers	2,914	2,610
	Accrued income	2,415	941
	Taxation recoverable	2,899	1,287
	Prepayments	117	16
		8,345	4,854

 

 

12.	Creditors: amounts falling due within one year
					2021			2020
					£'000			£'000
	Other creditors				1,558			960
	Amounts due to brokers				1,191			534
	Bank loans				6,241			6,667
					8,990			8,161
	The Company's three year £20 million multi-currency unsecured revolving bank credit facility with Scotiabank (Ireland) expired on 6 November 2020. The Company entered into a new one year £20 million multi-currency unsecured revolving bank credit facility with Scotiabank Europe, committed until 3 November 2021. Under the terms of the agreement, advances from the facility may be made for periods of up to six months or for such longer periods agreed by the lender.
	As at 30 June 2021, the Company had drawn down the following amounts from the facility, all with a maturity date of 7 July 2021:
		2021		2020
		Currency	£'000	Currency				£'000
	Swiss Franc at an all-in rate of 0.95% (2020: 0.85%)	2,500,000	1,958	3,000,000				2,562
	Euro at an all-in rate of 0.95% (2020: 0.85%)	2,326,000	1,997	1,800,000				1,636
	Norwegian Krone at an all-in rate of 1.13% (2020: 1.01%)	13,145,000	1,106	12,500,000				1,049
	Danish Krona at an all-in rate of 0.95% (2020: 0.85%)	5,410,000	624	6,000,000				732
	US Dollar at an all-in rate of 1.03% (2020: 1.03475%)	768,000	556	850,000				688
			6,241					6,667
	At the date this Report was approved, the Company had drawn down the following amounts from the facility, all with a maturity date of 30 September 2021:
	- Swiss Franc 2,500,000 at an all-in rate of 0.95%, equivalent to £1,953,000.
	- Euro 2,326,000 at an all-in rate of 0.95%, equivalent to £1,986,000.
	- Norwegian Krone 13,145,000 at an all-in rate of 1.16%, equivalent to £1,101,000.
	- Danish Krona 5,410,000 at an all-in rate of 0.95%, equivalent to £621,000.
	- US Dollar 768,000 at an all-in rate of 1.03086%, equivalent to £559,000.
	Financial covenants contained within the loan agreement provide, inter alia, that the ratio of net assets to borrowings must be greater than 3.5:1 and that net assets must exceed £550 million. All financial covenants were met during the year and also during the period from the year end to the date of this report.

 

 

13.	Creditors: amounts falling due after more than one year
		2021	2020
		£'000	£'000
	2.51% Senior Loan Notes	40,000	40,000
	Unamortised 2.51% Senior Loan Notes issue expenses	(82)	(96)
	4.37% Senior Loan Notes at fair value	73,344	-
	Amortisation of 4.37% Senior Loan Note	(983)	-
		112,279	39,904
	On 8 November 2017 the Company issued £40,000,000 of 10 year Senior Loan Notes at a fixed rate of 2.51%. Interest is payable in half yearly instalments in May and November and the Loan Notes are due to be redeemed at par on 8 November 2027. The Loan Notes are secured by a floating charge over the whole of the assets of the Company. The Company has complied with the Senior Loan Note Purchase Agreement covenant throughout the year that the ratio of net assets to gross borrowings must be greater than 3.5:1, and that net assets will not be less than £550,000,000.
	As a result of the combination with Perpetual Income and Growth Investment Trust plc on 17 November 2020, £60,000,000 of 15 year Senior Loan Notes at a fixed rate of 4.37% issued on 8 May 2014 were novated to the Company. Under FRS 102 the loan notes are required to be recorded initially at their fair value of £73,344,000 in the Company's Financial Statements and are then amortised over the remaining life of the loan towards their redemption value of £60,000,000. The amortisation adjustment is presented as a finance cost, split 70% to capital and 30% to revenue. Interest is payable in half yearly instalments in May and November and the Loan Notes are due to be redeemed at par on 8 May 2029. The Loan Notes are secured by a floating charge over the whole of the assets of the Company. The Company has complied with the Note Purchase Agreement that the ratio of net assets to gross borrowings must be greater than 3.5:1, and that net assets will not be less than £550,000,000 throughout the year.

 

 

 

14.	Share capital
		2021		2020
		Shares	£'000	Shares	£'000
	Allotted, called-up and fully-paid:
	Ordinary shares of 25p each: publicly held	117,046,487	29,261	66,110,413	16,527
	Ordinary shares of 25p each: held in treasury	2,483,045	621	2,483,045	621
		119,529,532	29,882	68,593,458	17,148
	During the year no Ordinary shares were bought back (2020 - nil) by the Company. The Company's policy relating to the purchase of its own Ordinary shares is detailed in the Directors' Report.
	During the year 50,936,074 Ordinary shares were issued in exchange for £427.2 million of net assets from Perpetual Income and Growth Investment Trust plc (note 19).

 

 

15.	Net asset value per Ordinary share. The net asset value per Ordinary share and the net asset value attributable to the Ordinary shares at the year end follow. These were calculated using 117,046,487 (2020 - 66,110,413) Ordinary shares in issue at the year end (excluding treasury shares).
		2021		2020
		Net Asset Value Attributable		Net Asset Value Attributable
		£'000	pence	£'000	pence
	Net asset value - debt at par	1,093,859	934.6	534,361	808.3
	Add: amortised cost of 2.51% Senior Loan Notes	39,918	34.1	39,904	60.4
	Less: fair value of 2.51% Senior Loan Notes	(40,000)	(34.2)	(40,266)	(61.0)
	Add: amortised cost of 4.37% Senior Loan Notes	72,361	61.8	-	-
	Less: fair value of 4.37% Senior Loan Notes	(70,893)	(60.6)	-	-
	Net asset value - debt at fair value	1,095,245	935.7	533,999	807.7

 

 

16.	Analysis of changes in net debt
		At 1 July 2020	Currency   differences	Cash flows	Non-cash movements	At 30 June 2021
		£'000	£'000	£'000	£'000	£'000
	Cash and cash equivalents	16,365	(358)	(11,514)	-	4,493
	Debt due within one year	(6,667)	420	6	-	(6,241)
	Debt due after more than one year	(39,904)	-	-	(72,375)	(112,279)
		(30,206)	62	(11,508)	(72,375)	(114,027)
		At	Currency		Non-cash	At
		1 July 2019	differences	Cash flows	movements	30 June 2020
		£'000	£'000	£'000	£'000	£'000
	Cash and cash equivalents	27,171	123	(10,929)	-	16,365
	Debt due within one year	(6,601)	(238)	172	-	(6,667)
	Debt due after more than one year	(39,896)	-	-	(8)	(39,904)
		(19,326)	(115)	(10,757)	(8)	(30,206)
	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.

 

17.	Financial instruments
	This note summarises the risks deriving from the financial instruments that comprise the Company's assets and liabilities
	The Company's investment activities expose it to various types of financial risk associated with the financial instruments and markets in which it invests. The Company's financial instruments, other than derivatives, comprise securities and other investments, cash balances, liquid resources, loans and debtors and creditors that arise directly from its operations; for example, in respect of sales and purchases awaiting settlement, and debtors for accrued income. The Company also has the ability to enter into derivative transactions in the form of forward foreign currency contracts, futures and options, subject to Board approval, for the purpose of enhancing portfolio returns and for hedging purposes in a manner consistent with the Company's broader investment policy. As at 30 June 2021 there were no open positions in derivatives transactions (2020 - same).
	Risk management framework. The directors of Aberdeen Standard Fund Managers Limited collectively assume responsibility for ASFML's obligations under the AIFMD including reviewing investment performance and monitoring the Company's risk profile during the year.
	ASFML is a wholly owned subsidiary of the abrdn Group ("the Group"), which provides a variety of services and support to ASFML in the conduct of its business activities, including in the oversight of the risk management framework for the Company. ASFML has delegated the day to day administration of the investment policy to Aberdeen Asset Managers Limited, which is responsible for ensuring that the Company is managed within the terms of its investment guidelines and the limits set out in its pre-investment disclosures to investors (details of which can be found on the Company's website). ASFML has retained responsibility for monitoring and oversight of investment performance, product risk and regulatory and operational risk for the Company.
	The Manager conducts its risk oversight function through the operation of the Group's risk management processes and systems which are embedded within the Group's operations. The Group's Risk Division ("the Division") supports management in the identification and mitigation of risks and provides independent monitoring of the business. The Division includes Compliance, Business Risk, Market Risk, Risk Management and Legal. The team is headed up by the Group's Head of Risk, who reports to the CEO of the Group. The Risk Division achieves its objective through embedding the Risk Management Framework throughout the organisation using the Group's operational risk management system ("SHIELD").
	The Group's Internal Audit Department is independent of the Risk Division and reports directly to the Group CEO and to the Audit Committee of the Group's Board of Directors. The Internal Audit Department is responsible for providing an independent assessment of the Group's control environment.
	The Group's corporate governance structure is supported by several committees to assist the board of directors, its subsidiaries and the Company to fulfil their roles and responsibilities. The Group's Risk Division is represented on all committees, with the exception of those committees that deal with investment recommendations. The specific goals and guidelines on the functioning of those committees are described in the committees' terms of reference.
	Risk management of the financial instruments. The main risks the Company faces from these financial instruments are (a) market risk (comprising (i) interest rate, (ii) foreign currency and (iii) other price risk), (b) liquidity risk and (c) credit risk.
	In order to mitigate risk, the investment strategy is to select investments for their fundamental value. Stock selection is therefore based on disciplined accounting, market and sector analysis. It is the Board's policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from factors specific to a particular sector. The Attribution Analysis, detailing the allocation of assets and the stock selection, is shown in the Performance Attribution table in the Investment Manager's Report. The Investment Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to consider investment strategy. Current strategy is detailed in the Chairman's Statement, in the Investment Manager's Report and in Overview of Strategy.
	The Board has agreed the parameters for net gearing, which was 10.3% of net assets as at 30 June 2021 (2020 - 5.3%). The Manager's policies for managing these risks are summarised below and have been applied throughout the current and previous year. The numerical disclosures in the tables listed below exclude short-term debtors and creditors.
	17 (a) Market risk. The Company's investment portfolio is exposed to market price fluctuations, which are monitored by the Manager in pursuance of the investment objective. Adherence to investment guidelines and to investment and borrowing powers set out in the management agreement mitigates the risk of exposure to any particular security or issuer. Further information on the investment portfolio is set out in the Investment Manager's Report.
	Market price risk arises mainly from uncertainty about future prices of financial instruments used in the Company's operations. It represents the potential loss the Company might suffer through holding market positions as a consequence of price movements. It is the Board's policy to hold equity investments in the portfolio in a broad spread of sectors in order to reduce the risk arising from factors specific to a particular sector. A summary of investment changes during the year under review and an analysis of the equity portfolio by sector may be found in the Annual Report.

 

 

	17 (a)(i) Interest rate risk. Interest rate movements may affect:
	- the level of income receivable on cash deposits;
	- interest payable on the Company's variable rate borrowings; and
	- the fair value of any investments in fixed interest rate securities.
	Management of the risk. The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment and borrowing decisions. Details of the bank loan and interest rates applicable can be found in note 12.
	The Board imposes borrowing limits to ensure gearing levels are appropriate to market conditions and reviews these on a regular basis. Interest rate risk is the risk of movements in the value of financial instruments as a result of fluctuations in interest rates.
	Financial assets. The interest rate risk of the portfolio of financial assets at the reporting date was as follows:
		Floating rate		Non-interest bearing
		2021	2020	2021			2020
		£'000	£'000	£'000			£'000
	Danish Krone	-	-	16,757			7,606
	Euro	-	-	42,023			20,590
	Norwegian Krone	-	-	23,221			12,517
	Sterling	3,809	16,365	1,069,162			480,762
	Swiss Francs	684	-	30,958			31,845
	Taiwan Dollars	-	-	6,859			-
	US Dollars	-	-	13,310			7,887
	Total	4,493	16,365	1,202,290			561,207
	The floating rate assets consist of cash deposits on call earning interest at prevailing market rates.
	The non-interest bearing assets represent the equity element of the portfolio.
	Financial liabilities. The Company has floating rate borrowings by way of its loan facility and fixed rate senior loan note issues, details of which are in notes 12 and 13.

 

 

	Interest rate sensitivity. The sensitivity analysis below has been determined based on the exposure to interest rates for both derivative and non-derivative instruments at the reporting date and the stipulated change taking place at the beginning of the financial year and held constant in the case of instruments that have floating rates.
	If interest rates had been 1% higher or lower and all other variables were held constant, the Company's profit before tax for the year ended 30 June 2021 and net assets would increase/decrease by £12,000 (2020 - £97,000) respectively. This is mainly attributable to the Company's exposure to interest rates on its floating rate cash balances and borrowings.
	17 (a)(ii) Foreign currency risk. A proportion of the Company's investment portfolio is invested in overseas securities whose values are subject to fluctuation due to changes in foreign exchange rates. In addition, the impact of changes in foreign exchange rates upon the profits of investee companies can result, indirectly, in changes in their valuations. Consequently, the Statement of Financial Position can be affected by movements in exchange rates.
	Management of the risk. The revenue account is subject to currency fluctuations arising on dividends receivable in foreign currencies and, indirectly, due to the impact of foreign exchange rates upon the profits of investee companies. It is not the Company's policy to hedge this currency risk but the Board keeps under review the currency returns in both capital and income.
	Foreign currency risk exposure by currency of denomination falling due within one year is set out in the table below. Net monetary assets/(liabilities) comprise cash and loan balances and exclude other debtors and receivables and other payables.
		30 June 2021			30 June 2020
			Net			Net
			monetary	Total		monetary	Total
			assets/	currency		assets/	currency
		Investments	(liabilities)	exposure	Investments	(liabilities)	exposure
		£'000	£'000	£'000	£'000	£'000	£'000
	Danish Krone	16,757	(624)	16,133	7,606	(732)	6,874
	Euro	42,023	(1,580)	40,443	20,590	(1,636)	18,954
	Norwegian Krone	23,221	(1,106)	22,115	12,517	(1,049)	11,468
	Swiss Francs	30,958	(1,274)	29,684	31,845	(2,562)	29,283
	Taiwan Dollars	6,859	-	6,859	-	-	-
	US Dollars	13,310	(556)	12,754	7,887	(688)	7,199
	Total	133,128	(5,140)	127,988	80,445	(6,667)	73,778
	Foreign currency sensitivity. The following table details the impact on the Company's net assets to a 10% decrease (in the context of a 10% increase the figures below should all be read as negative) in Sterling against the foreign currencies in which the Company has exposure. The sensitivity analysis includes foreign currency denominated monetary and non-monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates.
						2021	2020
						£'000	£'000
	Danish Krone					1,613	687
	Euro					4,044	1,895
	Norwegian Krone					2,212	1,147
	Swiss Francs					2,968	2,928
	Taiwan Dollars					686	-
	US Dollars					1,275	720
	Total					12,798	7,377

 

 

	17 (a)(iii) Other price risk. Other price risks (ie changes in market prices other than those arising from interest rate or currency risk) may affect the value of the quoted investments.
	Management of the risk. It is the Board's policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from factors specific to a particular sector. The allocation of assets to international markets and the stock selection process, as detailed in the section "Delivering the Investment Policy" (in the Strategic Report, both act to reduce market risk. The Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy.
	Other price risk sensitivity. If market prices at the reporting date had been 10% higher or lower while all other variables remained constant, the return attributable to Ordinary shareholders and equity for the year ended 30 June 2021 would have increased/decreased by £120,229,000 (2020 - £56,120,000).
	17 (b) Liquidity risk. This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities as they fall due in line with the maturity profile analysed as follows:
				Within	Within	Within	More than
				1 year	1-3 years	3-5 years	5 years	Total
	At 30 June 2021			£000	£000	£000	£000	£000
	Bank loans			6,241	-	-	-	6,241
	2.51% Loan Notes			-	-	-	40,000	40,000
	4.37% Loan Notes			-	-	-	60,000	60,000
	Interest cash flows on bank loans			5	-	-	-	5
	Interest cash flows on 2.51% Senior Loan Notes			1,004	2,008	2,008	1,506	6,526
	Interest cash flows 4.37% Senior Loan Notes			2,622	5,244	5,244	7,866	20,976
	Cash flows on other creditors			2,749	-	-	-	2,749
				12,621	7,252	7,252	109,372	136,497
				Within	Within	Within	More than
				1 year	1-3 years	3-5 years	5 years	Total
	At 30 June 2020			£000	£000	£000	£000	£000
	Bank loans			6,667	-	-	-	6,667
	2.51% Senior Loan Notes			-	-	-	40,000	40,000
	Interest cash flows on bank loans			2	-	-	-	2
	Interest cash flows on 2.51% Senior Loan Notes			1,004	2,008	2,008	2,510	7,530
	Cash flows on other creditors			1,494	-	-	-	1,494
				9,167	2,008	2,008	42,510	55,693
	Management of the risk. The Company's assets comprise readily realisable securities which can be sold to meet funding commitments if necessary. Short-term flexibility is achieved through the use of committed loan and overdraft facilities.
	As at 30 June 2021 the Company utilised £6,241,000 (2020 - £6,667,000) of a £20,000,000 multi-currency revolving bank credit facility, which is committed until 3 November 2021 (2020 - of a £20,000,000 multi-currency revolving bank credit facility committed until 6 November 2020). Details of maturity dates and interest charges can be found in note 12. The aggregate of all future interest payments at the rate ruling at 30 June 2021 and the redemption of the loan amounted to £6,246,000 (2020 - £6,669,000).
	17 (c) Credit risk. This is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss.
	Management of the risk. The risk is mitigated by the Investment Manager reviewing the credit ratings of counterparties. The risk attached to dividend flows is mitigated by the Investment Manager's research of potential investee companies. The Company's custodian bank is responsible for the collection of income on behalf of the Company and its performance is reviewed by the Depositary (on an ongoing basis) and by the Board on a regular basis. It is the Manager's policy to trade only with A- and above (Long Term rated) and A-1/P-1 (Short Term rated) counterparties. The maximum credit risk at 30 June 2021 is £9,822,000 (30 June 2020 - £19,916,000) consisting of £2,415,000 (2020 - £941,000) of dividends receivable from equity shares, £2,914,000 (2020 - £2,610,000) receivable from brokers and £4,493,000 (2020 - £16,365,000) in cash held.
	None of the Company's financial assets are past due or impaired (2020 - none).

 

 

18.		Fair value hierarchy. FRS 102 requires an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Categorisation within the hierarchy is determined on the basis of the lowest level input that is significant to the fair value measurement of each relevant asset or liability. The fair value hierarchy has the following levels:
		Level 1: unadjusted quoted prices in an active market for identical assets or liabilities that the entity can access at the measurement date;
		Level 2: inputs other than quoted prices included within Level 1 that are observable (ie developed using market data) for the asset or liability, either directly or indirectly; and
		Level 3: inputs are unobservable (ie for which market data is unavailable) for the asset or liability.
		The valuation techniques used by the Company are explained in the accounting policies note 2(e). The Company's portfolio consists wholly of quoted equities, all of which are Level 1.
		The fair value of the 2.51% Senior Loan Notes have been calculated as £40,000,000 (2020 - £40,266,000), determined by aggregating the expected future cash flows for that loan discounted at a rate comprising the borrower's margin plus an average of market rates applicable to loans of a similar period of time, compared to carrying amortised cost of £39,918,000 (2020 - £39,904,000).
		The fair value of the 4.37% Senior Loan Notes, acquired as a result of the combination with Perpetual Income and Growth Investment Trust plc (note 19), have been calculated as £70,893,000, the value being based on a comparable debt security, compared to carrying amortised cost of £72,361,000.
		All other financial assets and liabilities of the Company are included in the Statement of Financial Position at their book value which in the opinion of the Directors is not materially different from their fair value.
19.	Transaction with Perpetual Income and Growth Investment Trust plc ("PLI"). On 17 November 2020, the Company announced that it had acquired £427 million of net assets from PLI in consideration for the issue of 50,936,074 new Ordinary shares based on the respective formula asset values of the two entities on 12 November 2020.
	Net assets acquired		£'000
	Investments		459,361
	Cash		40,248
	Debtors		1,003
	Current liabilities		(48)
	Long term liabilities - 4.37% Senior Loan Notes 2029		(73,344)
	Net assets		427,220
	Satisfied by the value of new Ordinary shares issued		427,220
	There were no fair value adjustments on completion of the combination made to the above figures.

 

 

20.	Related party transactions and transactions with the Manager. Fees payable during the year to the Directors and their interests in shares of the Company are considered to be related party transactions and are disclosed within the Fees Payable section of the Directors' Remuneration Report, in the Annual Report.
	The Company has agreements with ASFML for the provision of management, secretarial, accounting and administration services and promotional activities. Details of transactions during the year and balances outstanding at the year end are disclosed in notes 4 and 5.
21.	Capital management policies and procedures. The investment objective of the Company is to achieve a high and growing income combined with capital growth through investment in a portfolio principally of UK equities.
	The capital of the Company consists of debt (comprising loan notes and bank loans) and equity (comprising issued capital, reserves and retained earnings). The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance.
	The Board monitors and reviews the broad structure of the Company's capital on an ongoing basis. This review includes:
	- the level of equity shares in issue;
	- the planned level of gearing which takes into account the Investment Manager's views on the market (net gearing figures can be found in Results); and
	- the extent to which revenue in excess of that which is required to be distributed should be retained.
	The Company's objectives, policies and processes for managing capital are unchanged from the preceding accounting period.
	Notes 12 and 13 give details of the Company's bank facility agreement and loan notes respectively.

 

ALTERNATIVE PERFORMANCE MEASURES

 

Alternative performance measures are numerical measures of the Company's current, historical or future performance, financial position or cash flows, other than financial measures defined or specified in the applicable financial framework. The Company's applicable financial framework includes FRS 102 and the AIC SORP. The Directors assess the Company's performance against a range of criteria which are viewed as particularly relevant for closed-end investment companies.
Total return. Share price and NAV total returns show how the NAV and share price has performed over a period of time in percentage terms, taking into account both capital returns and dividends paid to shareholders. Share price and NAV total returns are monitored against open-ended and closed-ended competitors, and the FTSE All-Share Index, respectively.
		Share
Year ended 30 June 2021		Price	NAV
Opening at 1 July 2020	a	768.0p	808.3p
Closing at 30 June 2021	b	871.0p	934.6p
Price movements	c=(b/a)-1	13.4%	15.6%
Dividend reinvestment{A}	d	5.1%	5.0%
Total return	c+d	18.5%	20.6%
		Share
Year ended 30 June 2020		Price	NAV
Opening at 1 July 2019	a	850.0p	888.1p
Closing at 30 June 2020	b	768.0p	808.3p
Price movements	c=(b/a)-1	-9.6%	-9.0%
Dividend reinvestment{A}	d	3.8%	3.7%
Total return	c+d	-5.8%	-5.3%
{A} Share price total return involves reinvesting the net dividend in the share price of the Company on the date on which that dividend goes ex-dividend. NAV total return involves investing the net dividend in the NAV of the Company with debt at fair value on the date on which that dividend goes ex-dividend.
Discount to net asset value per Ordinary share. The discount is the amount by which the share price is lower than the net asset value per share, expressed as a percentage of the net asset value.
		2021	2020
NAV per Ordinary share (p)	a	934.6	808.3
Share price (p)	b	871.0	768.0
Discount	(b-a)/a	-6.8%	-5.0%
Dividend cover. Dividend cover is the revenue return per share divided by dividends per share expressed as a ratio.
		2021	2020
Revenue return per share	a	33.73p	30.50p
Dividends per share	b	34.50p	34.25p
Dividend cover	a/b	0.98	0.89
Dividend yield. The annual dividend of 34.50p per Ordinary share (30 June 2020 - 34.25p) divided by the share price of 871.00p (30 June 2020 - 768.00p), expressed as a percentage.
		2021	2020
Dividends per share	a	34.50p	34.25p
Share price	b	871.00p	768.00p
Dividend yield	a/b	4.0%	4.5%
Net gearing. Net gearing measures the total borrowings less cash and cash equivalents divided by shareholders' funds, expressed as a percentage. Under AIC reporting guidance cash and cash equivalents includes amounts due to and from brokers at the year end as well as cash and cash equivalents.
		2021		2020
Borrowings (£'000)	a	118,520		46,571
Cash (£'000)	b	4,493		16,365
Amounts due to brokers (£'000)	c	1,191		534
Amounts due from brokers (£'000)	d	2,914		2,610
Shareholders' funds (£'000)	e	1,093,859		534,361
Net gearing	(a-b+c-d)/e	10.3%		5.3%
Ongoing charges. The ongoing charges ratio has been calculated based on the total of investment management fees and administrative expenses less non-recurring charges and expressed as a percentage of the average net asset values with debt at fair value throughout the year.
		2021	2020
Investment management fees (£'000)	a	2,512	2,660
Administrative expenses (£'000)	b	1,443	1,105
Less: non-recurring charges{A} (£'000)	c	(115)	(105)
Ongoing charges (£'000)	a+b+c	3,840	3,660
Average net assets (£'000)	d	841,850	570,683
Ongoing charges ratio	e=(a+b+c)/d	0.46%	0.64%
{A} 2021 comprises £18,000 for legal fees and £6,000 for audit fees relating to the merger and £91,000 relating to HMRC penalty for late payment of stamp duty associated with the merger. 2020 comprises £3,000 for legal fees and £102,000 for advertising campaign costs.
The ongoing charges ratio provided in the Company's Key Information Document is calculated in line with the PRIIPs regulations, which includes financing and transaction costs.

 

MURRAY INCOME TRUST PLC

 

PORTFOLIO

 

10 Largest Investments - as at 30 June 2021

 

AstraZeneca		Diageo
AstraZeneca researches, develops, produces and markets pharmaceutical products. The company has a significant focus on oncology and rare diseases which offer appealing growth potential over the medium term.		Diageo produces, distills and markets alcoholic beverages including vodkas, whiskies, tequilas, gins and beer. The company should benefit from attractive long term drivers such as population and income growth, and premiumisation. The company has a variety of very strong brands and faces very limited private label competition.
Rio Tinto		BHP Group
Rio Tinto is an international mining company and has interests in mining for a variety of different metals and minerals. It has a strong balance sheet and pays an attractive dividend yield.		BHP Group (formerly BHP Billiton) is a diversified resources group with a global portfolio of high quality assets particularly iron ore and copper. The company provides an appealing dividend yield combined with a strong balance sheet.
Relx		Unilever
Relx is a global provider of information and analytics for professionals and businesses across a number of industries including scientific, technical, medical and law. The company offers resilient earnings combined with long term structural growth opportunities.		Unilever is a global consumer goods company supplying food, home and personal care products. The company has a portfolio of strong brands including: Dove, Knorr, Axe and Persil. Over half of the company's sales are to developing and emerging markets.
Coca-Cola HBC		National Grid
Coca-Cola HBC is a soft drink bottler of Coca-Cola product operating mostly in Eastern Europe, Nigeria and Russia. The company offers attractive earnings growth driven by higher volumes, premiumisation, innovation and pricing.		National Grid is a utility company which owns and operates part of the electricity and gas transmission network in Great Britain and part of the electricity transmission network in the Northeastern United States. The company offers resilient earnings and an attractive dividend yield.
Close Brothers		SSE
Close Brothers is a specialist financial services group which provides loans, trades securities and provides advice and investment management solutions to a wide range of clients. It has a conservative, tried and tested model with high barriers to entry.		SSE is a utility company mostly focused on networks and renewables. The path to net zero will require significant investment in distribution networks and the company should also benefit from its strong position in offshore wind generation.

 

 

Investment Portfolio

 

As at 30 June 2021
			Valuation	Total	Valuation
	FTSE All-Share		2021	investments	2020
Investment	Index sector	Country	£'000	%	£'000
AstraZeneca	Pharmaceuticals and Biotechnology	UK	63,191	5.3	26,164
Diageo	Beverages	UK	58,387	4.9	20,393
Rio Tinto	Industrial Metals and Mining	UK	46,203	3.8	19,815
BHP Group	Industrial Metals and Mining	UK	43,653	3.6	20,037
Relx	Media	UK	41,956	3.5	21,597
Unilever	Personal Care Drug and Grocery Stores	UK	41,830	3.5	20,577
Coca-Cola HBC	Beverages	UK	33,204	2.8	10,700
National Grid	Gas Water and Multi-utilities	UK	32,760	2.7	17,056
Close Brothers	Banks	UK	32,310	2.7	13,514
SSE	Electricity	UK	31,672	2.6	12,735
Top ten investments			425,166	35.4
Standard Chartered	Banks	UK	30,991	2.6	10,059
TotalEnergies	Oil Gas and Coal	France	28,330	2.4	12,256
Aveva	Software and Computer Services	UK	28,093	2.3	16,420
Inchcape	Industrial Support Services	UK	25,599	2.1	10,674
Croda International	Chemicals	UK	23,643	2.0	10,032
Safestore Holdings	Real Estate Investment Trusts	UK	23,467	1.9	-
Euromoney Institutional Investor	Industrial Support Services	UK	21,510	1.8	9,310
Howden Joinery	Retailers	UK	21,383	1.8	6,744
M&G	Investment Banking and Brokerage Services	UK	20,819	1.7	9,316
Prudential	Life Insurance	UK	20,737	1.7	13,355
Top twenty investments			669,738	55.7
Direct Line Insurance	Non-life Insurance	UK	19,807	1.6	-
Marshalls	Construction and Materials	UK	19,096	1.6	5,569
Countryside Properties	Household Goods and Home Construction	UK	18,897	1.6	7,653
Rentokil Initial	Industrial Support Services	UK	18,709	1.6	10,389
GlaxoSmithKline	Pharmaceuticals and Biotechnology	UK	18,591	1.6	22,537
Ashmore Group	Investment Banking and Brokerage Services	UK	18,485	1.5	8,874
BP	Oil Gas and Coal	UK	18,350	1.5	8,682
Weir Group	Industrial Engineering	UK	18,214	1.5	5,839
Convatec	Medical Equipment and Services	UK	17,990	1.5	6,478
Mondi	General Industrials	UK	17,801	1.5	11,650
Top thirty investments			855,678	71.2
Nestlé	Food Producers	Switzerland	17,011	1.4	9,536
Novo-Nordisk	Pharmaceuticals and Biotechnology	Denmark	16,757	1.4	7,606
Genuit (formerly Polypipe)	Construction and Materials	UK	16,280	1.3	5,257
Smith & Nephew	Medical Equipment and Services	UK	15,931	1.3	8,470
Telenor	Telecommunications Service Providers	Norway	15,491	1.3	8,555
XP Power	Electronic and Electrical Equipment	UK	15,283	1.3	5,985
Sirius Real Estate	Real Estate Investment and Services	UK	14,380	1.2	6,325
Assura	Real Estate Investment Trusts	UK	14,230	1.2	14,641
Bodycote	Industrial Metals and Mining	UK	14,083	1.2	5,980
VAT Group	Electronic and Electrical Equipment	Switzerland	13,947	1.1	7,449
Top forty investments			1,009,071	83.9
Kone	Industrial Engineering	Finland	13,693	1.1	8,334
Microsoft	Software and Computer Services	United States	13,310	1.1	7,887
Dechra Pharmaceuticals	Pharmaceuticals and Biotechnology	UK	13,229	1.1	4,579
Smith (DS)	General Industrials	UK	11,870	1.0	-
OSB	Finance and Credit Services	UK	11,718	1.0	-
Sanne	Investment Banking and Brokerage Services	UK	11,008	0.9	2,804
Fevertree	Beverages	UK	10,990	0.9	4,225
Telecom Plus	Telecommunications Service Providers	UK	10,800	0.9	8,521
Intermediate Capital	Investment Banking and Brokerage Services	UK	10,326	0.9	-
Vistry	Household Goods and Home Construction	UK	9,943	0.8	-
Top fifty investments			1,125,958	93.6
Sage Group	Software and Computer Services	UK	9,186	0.8	-
Electrocomponents	Industrial Support Services	UK	9,002	0.8	-
John Laing	Investment Banking and Brokerage Services	UK	8,650	0.7	5,824
Unite Group	Real Estate Investment Trusts	UK	8,239	0.7	3,135
Mowi	Food Producers	Norway	7,730	0.6	3,962
LondonMetric Property	Real Estate Investment Trusts	UK	7,331	0.6	9,475
Chesnara	Life Insurance	UK	6,993	0.6	4,215
Accton Technology	Telecommunications Equipment	Taiwan	6,859	0.6	-
Moonpig	Retailers	UK	6,246	0.5	-
Stenprop	Real Estate Investment Trusts	UK	6,096	0.5	-
Total investments			1,202,290	100.0

 

Summary of Investment Changes During the Year

 

	Valuation		Additions on		Gains /	Valuation
	30 June 2020		Combination{A}	Transactions	(losses)	30 June 2021
	£'000	%	£'000	£'000	£'000	£'000	%
Equities
UK{B}	480,762	85.6	391,825	66,573	130,002	1,069,162	88.9
Denmark	7,606	1.4	6,766	-	2,385	16,757	1.4
Finland	8,334	1.5	6,880	(1,494)	(27)	13,693	1.1
France	12,256	2.2	11,323	2,418	2,333	28,330	2.4
Norway	12,517	2.2	9,406	-	1,298	23,221	1.9
Switzerland{B}	31,845	5.7	27,309	(21,159)	(7,037)	30,958	2.6
Taiwan	-	-	-	5,326	1,533	6,859	0.6
United States	7,887	1.4	5,852	(3,721)	3,292	13,310	1.1
Total investments	561,207	100.0	459,361	47,943	133,779	1,202,290	100.0
{A} Investments transferred into the Company formed part of the consideration received for shares issued under the combination with Perpetual Income and Growth Investment Trust plc
{B} 30 June 2020 values reflect a reclassification of the investment in Coca-Cola HBC from Switzerland to UK compared to last year's annual report.

The financial information set out above does not constitute the Company's statutory accounts for the years ended 30 June 2021 or 2020 but is derived from those accounts. Statutory accounts for 2020 have been delivered to the registrar of companies, and those for 2021 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

 

The statutory accounts for the financial year ended 30 June 2021 have been approved by the Board and audited and will be filed with the Registrar of Companies following the Company's Annual General Meeting which will be held at 12.30pm on 2 November 2021 at The Mermaid Conference Centre, Puddledock, Blackfriars, London EC4V 3DB.

 

The Annual Report will be posted to shareholders in October 2021 and will available shortly from the Company's website at: www.murray-income.co.uk.

 

By Order of the Board

 

ABERDEEN ASSET MANAGEMENT PLC

Secretaries

 

20 September 2021

 

END