Annual Financial Report

RNS Number : 7936Z

Murray Income Trust PLC

23 September 2020

 

MURRAY INCOME TRUST PLC

Legal Entity Identifier (LEI):  549300IRNFGVQIQHUI13

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2020

FINANCIAL HIGHLIGHTS

Net asset value total return   ​			Share price total return ​			Benchmark total return ​			Ongoing charges ​
2020	-5.3%		2020	-5.8%		2020	-13.0%		2020	0.64%
2019	+7.9%		2019	+13.2%		2019	+0.6%		2019	0.65%
Earnings per share (revenue) ​			Dividend per share ​			Discount to net asset value ​			Dividend yield ​
2020	30.5p		2020	34.25p		2020	-5.0%		2020	4.5%
2019	34.9p		2019	34.00p		2019	-4.3%		2019	4.0%

FINANCIAL CALENDAR

Payment months of quarterly dividends	December, March, June, September
Financial year end	30 June
Annual General Meeting	November
Expected announcement of results for year ended 30 June 2021	September

CHAIRMAN'S STATEMENT

Highlights

· Total dividends per share increased by 0.7% to 34.25p, the 47th year of consecutive increase.

· Dividend yield of 4.5%, based on the year end share price of 768.0p.

· Share Price Total Return of -5.8% and Net Asset Value Total Return -5.3% both well ahead of the FTSE All-Share Index Total Return of -13.0%.

·   Our Manager, Aberdeen Standard Investments, has a strong, long-established ESG process. The Company has been awarded a Morningstar Sustainability Rating of four out of five globes.

Review of the Year

I am pleased to report another very strong year of relative performance for the Company and a 47^th consecutive year of dividend increases.

Net Asset Value ("NAV") per share fell by 5.3% over the year in total return terms. While it is always disappointing to record short term losses, we are reassured by the fact that our relative performance was well ahead of the benchmark index (FTSE All-Share) return of -13.0%, on a total return basis. With the discount of share price to NAV widening slightly from 4.3% to 5.0% over the year, the share price total return was -5.8%. Performance is explained in more detail in the Investment Manager's Report but the main contributing factor is Aberdeen Standard Investments' relentless focus on quality. Among the key characteristics for a "quality" company for Aberdeen Standard Investments are the strength of the business model, management and balance sheet. This has helped avoid the worst of the dividend shocks.

The Board declared, on 5 August 2020, a fourth interim dividend per share of 9.50p which makes a total for the year of 34.25p, an increase of 0.7% on the 34.00p per share paid in the previous year. This will represent 47 consecutive years of dividend growth and allows us to retain our place on the AIC's list of Dividend Heroes, the investment trusts that have successfully increased their dividend each year for at least 20 years. Shareholders may recall that approval was given at the last AGM for the Company to pay four interim dividends, evenly spaced throughout the year, thus avoiding the considerable delay resulting from the final dividend not being paid until after the relevant resolution was passed at the AGM.

Relative to our NAV per share, our share price moved between a 3.4% premium and a 6.9% discount over the year. The average discount was 3.6%. Discounts widened across the UK Equity Income sector as the impact of the Covid-19 pandemic ("Covid-19") on dividends became clearer.

The people and process behind the Company are unchanged over the year. Charles Luke has been our lead manager since 2006 and is supported as deputy by Iain Pyle. They form part of the six-strong UK Equity Income Team at Aberdeen Standard Investments which in turn is part of the sixteen-strong UK Equities team headed by Andrew Millington. It is worth repeating that the 2017 merger between Aberdeen Asset Management PLC and Standard Life plc has resulted in a much-strengthened UK Equities team. Years of rehearsing for disaster recovery proved invaluable when the decision was made at Aberdeen Standard Investments to move to home working in March: the switch surprised everyone by proceeding without a hitch.

Environmental, Social and Governance ("ESG")

ESG is one of the key components of Aberdeen Standard Investments' philosophy as it seeks to mitigate risk and enhance returns. The Company benefits from the significant amount of time and resource that the Manager dedicates to focusing on the ESG characteristics of the companies in which they invest.  ESG considerations are deeply embedded in the company analysis carried out by the Manager who is also able to draw on the expertise of more than 30 in-house ESG specialists.  This results in frequent dialogue with investee companies and helps to ensure that the companies in the portfolio are acting in the best long term interests of their shareholders and society at large. The Company has been awarded a Morningstar Sustainability Rating of four out of five.

Proposed Combination with Perpetual Income & Growth Investment Trust plc

We are thrilled to have won a highly competitive tender run by the board of Perpetual Income and Growth Investment Trust plc ("PLI"). It is a recognition of the strength of the people, process and performance of our management team led by Charles Luke, supported by Iain Pyle and the rest of their UK team at Aberdeen Standard Investments. Combined with a projected 0.38% blended management fee, which compares to pre-combination blended fee rates of 0.48% for the Company and 0.55% for PLI, our proposal proved compelling.  The two companies have very similar objectives, delivering high and growing income combined with capital growth. If approved by shareholders, the proposed combination with PLI will create a company with gross assets in excess of £1 billion.

And while we are not allowed to forecast dividends, we can say that we are proud of our Dividend Hero status that comes from our record of increasing our dividend payments in each of the past 47 years and the Board intends to retain this hard-earned record of growing dividends.

We hope that most PLI shareholders will choose to take up their new shares in our Company and look forward to welcoming them. We expect to be announcing details of the combination, including convening the shareholder meeting that the Company will be required to hold, shortly.

The Company will celebrate its centenary in 2023. With a strong management team and an excellent performance track record and with its larger size leading to greater liquidity and lower costs, subject to the successful completion of the combination with PLI, we can look forward with confidence to continuing to meet our shareholders' objectives.

 

Board

One of the reasons that there are not as many investment trust transactions as there should be is the inability of Boards to agree on who should move on to the combined Board.  Directors of both trusts do not want to vote to lose their jobs and directors of the surviving trust do not want to increase the number of directors. So trusts stay independent longer than they should. This is despite it usually being in both sets of shareholders' interests that the proposed combination proceeds and despite it being good for the reputation of the industry that weaker trusts merge into the stronger ones.

PLI's chairman Richard Laing together with Alan Giles and Georgina Field have been invited to join the Board of the Company subject to approval by shareholders of the combination and we are delighted to welcome them.  The three Directors who will each have completed nine years' cumulative service on either or both of the companies' boards - namely Richard Laing, Jean Park and Donald Cameron - will then retire by the close of the 2021 AGM when the Board will reduce back from nine to six Directors.  The five and one years' respective service for Alan and Georgina, as directors of PLI, will count towards their maximum nine-year terms.  The extra salary costs in the first year are within the shareholder approved ceiling on Directors' fees and are substantially offset by not needing to pay two sets of recruitment costs to find replacements for Jean and Donald.  We thank Victoria Cochrane, Bob Yerbury and Mike Balfour, the PLI directors who are not joining the Board, for their contributions to the combination and wish them every success in the future.

Income and Dividend Policy

Covid-19 has led to a sudden, large and unexpected cut in dividend payments from many UK companies. Hit hard by declining revenues, companies have chosen to conserve cash or followed guidance to suspend dividends whilst in receipt of government furlough funding or other assistance. Calendar year 2020 dividends, for the market, are currently expected to be 40% below 2019 levels. Our Manager is currently forecasting a 14% reduction in our portfolio income in 2020. The purpose of building our revenue reserves over the years is to give us the ability to smooth dividend payments to shareholders in times such as these. So we are able to increase our full year dividend per share for the year ended 30 June 2020 to 34.25p by paying out 30.50p as this year's revenue supplemented by 3.75p from revenue reserves, which represents the 47^th year of consecutive dividend increases. This reduces our revenue reserves per share from 27.8p to 24.1p, the latter representing 70.3% of the full year dividend.

We are not allowed to bring over the revenue reserves of PLI due to the technicalities of the Section 110 restructuring process. In light of the likely reduction in the Company's income in the near term, combined with the Company's planned combination with PLI (and the corresponding dilution to the Company's revenue reserves that any issue of new shares would bring), the Board is keen to ensure that it can make dividend increases in the future during any period of uncertainty. Left unchecked, depleted revenue reserves may mean lower future dividend growth for shareholders if the Company sought to rebuild the revenue reserves to provide a sufficient cushion against future shocks. Your Board is therefore of the view that the ability to pay a portion of future dividends judiciously out of capital reserves provides a valuable degree of flexibility and offsets any potential drawback of the planned combination with PLI.  Your Board also believes that having this additional weapon in its armoury should improve the Company's appeal to investors, given the additional capability that the Company would have to maintain its dividend in a variety of circumstances. As a consequence, your approval is therefore being sought at the forthcoming AGM to a change in the Company's Articles of Association to permit such payments, which is now commonplace in the sector. Further details are set out in the Directors' Report.

Ongoing Charges

The figure for ongoing charges represents the total charges to shareholders for managing and administering the Company. The management fee payable to Aberdeen Standard Investments for their management of the investment portfolio is the largest component of this. Since 1 January 2018, the management fee has been calculated on net assets as follows: at 0.55% up to £350m, 0.45% between £350m and £450m and 0.25% over £450m. At 30 June 2020, based on net assets of £534.4m, our blended management fee is therefore 0.48%.

In addition to the management fee, there is an annual marketing fee of £407,000 and a secretarial fee of £90,000, both including applicable VAT. The total ongoing charges figure aggregates all charges and as a percentage of NAV was 0.64% for the year ended 30 June 2020. There is one further cost to shareholders on top of the ongoing charges figure which is the transaction costs of changes in the investment portfolio. Because of the low portfolio turnover stemming from the Manager's long-term investment process, total transaction costs amounted to only 0.14% of NAV for this financial year.

Gearing

The Board continues to believe that sensible use of modest and flexible borrowings (otherwise known as gearing) should enhance returns of both capital and income to shareholders over the longer term. It is indeed an advantage of investment trusts that they are able to borrow money in order to enhance returns to shareholders. Net gearing increased from 3.1% to 5.3% over the year. The Company has £60m of short and long-term borrowings split between £40m of 10-year loan notes with an annual coupon of 2.51% expiring in 2027 and a £20m multi-currency three-year bank borrowing facility from Scotiabank, committed until November 2020.

Part of the combination with PLI involves bringing together the long term borrowings of the two companies. This would result in a blended cost of long term borrowing of 3.63% with £40m due in 2027 and £60m due in 2029. Together with our rolling short-term borrowing facility of £20m this would take the full borrowing potential to £120m, which is 10.8% of the aggregated net assets of the Company and PLI, as at 30 June 2020. With the beta of the investment portfolio currently running at 0.89 (meaning that statistically the portfolio is expected to capture 89% of any market movement) the Board presently believes that the appropriate neutral gearing rate is 10%. The annualised cost of the Company's current borrowings is 0.21% of NAV.

Annual General Meeting

At the time of writing, various guidance has been issued by the UK, Scottish and Welsh Governments, respectively, regarding measures to reduce the transmission of Covid-19 in the UK. These measures are, and will continue to be, subject to periodic amendment and currently impose rules on social distancing and limitations on, among other things, public gatherings. It is unclear how long these measures will be in place. The safety, security and health of the Company's shareholders, their guests and our advisers, including the Manager's personnel, is of paramount importance to the Board. Accordingly, in view of this guidance, the Board is changing the format of the AGM this year.

The AGM will be held in London at 12.30pm on Friday 27 November 2020 at the offices of Aberdeen Standard Investments in Bow Bells House, 1 Bread Street, London EC4M 9HH, but will follow the minimum legal requirements for an AGM.  Only the formal business set out in the Notice will be considered, with no presentation by the Investment Manager and no refreshments nor shareholder buffet lunch. In line with this guidance, shareholders are strongly discouraged from attending the meeting and indeed entry will be refused if current UK Government guidance is unchanged. Arrangements will be made by the Company to ensure that a minimum number of shareholders required to form a quorum will attend the meeting in order that the meeting may proceed. The presentation that would normally be given at the AGM will be uploaded to the Company's website on 27 November 2020.

However, the Board is keen to ensure shareholders have an opportunity to interact with the Board and the Manager later in the year when it is hoped that the measures have been relaxed further. Therefore, in due course, we intend to publish on the Company's website details of a webcast during which the Chairman and Investment Manager will be available to present and answer your questions. As it is likely that Shareholders may not be able to attend the AGM in person, where possible, I would encourage you, in advance of the AGM, to lodge your vote either electronically via the registrar's online portal or by completion and return of a proxy (for direct shareholders) or a letter of direction (for Aberdeen Standard Investment Plan Participants).

I always welcome questions from our shareholders at the AGM but this year, given the format and the prevailing circumstances, I would ask shareholders to submit their questions to the Board prior to the meeting (and in any event by no later than 13 November 2020). The Board and/or the Investment Manager will respond to all such questions received either before or after the AGM. You may submit questions on the Company, the Annual Report or Notice of AGM in advance by email to the Board and Manager by sending such questions to [e-mail] .

The situation in relation to Covid-19 continues to evolve and the Company will update shareholders as to any changes to the above arrangements for the AGM through its website at www.murray-income.co.uk and, where appropriate, through announcement on the London Stock Exchange. I trust that shareholders will be understanding and supportive of this format. The proposed resolutions are set out in the Notice of AGM in the published Annual Report and explained in the Directors' Report.

Update

From 30 June 2020 to 21 September 2020, being the latest practicable date prior to approval of this Report, the NAV per share fell by 2.3% outperforming the FTSE All-Share Index which fell by 5.0%, both figures on a total return basis.

Outlook

It is a tough time to write an outlook section. There are too many variables that are difficult to predict, so any residual forecast would necessarily have a very low level of confidence. It is simply not a time for big predictions nor for taking large risks.

Aggregate UK company dividends are currently forecast to be down 40% in 2020 versus 2019. Holders of unit trusts or OEICs will experience sharp falls in their income payments in many cases. Investment trusts have the structure and ability to smooth income payments by using their accumulated reserves, thus most investment trusts will be able to at least maintain dividends.

Quality companies with attractive dividend yields, sound growth prospects and strong balance sheets are likely to be prized more than ever. The Company's focus on quality should mean that it is particularly well placed to serve shareholders who are searching for a reliable, diversified and growing income stream.

Neil Rogan
Chairman

22 September 2020

STRATEGIC REPORT - RESULTS

Financial Highlights

	30 June 2020	30 June 2019			% change
Shareholders' funds (£'000)	534,361	587,150			-9.0
Net asset value per Ordinary share - debt at par	808.3p	888.1p			-9.0
Market capitalisation (£'000)	507,728	561,939			-9.6
Share price of Ordinary share	768.0p	850.0p			-9.6
Discount to net asset value on Ordinary shares - debt at par{A}	(5.0%)	(4.3%)
Gearing (ratio of borrowing to shareholders' funds)
Net gearing{A}	5.3%	3.1%
Dividends and earnings
Revenue return per share	30.5p	34.9p			-12.6
Dividends per share{B}	34.25p	34.00p			+0.7
Dividend cover{A}	0.89 times	1.03 times
Dividend yield{A}	4.5%	4.0%
Revenue reserves (£'000)
Prior to payment of fourth interim dividend/final dividend{C}	22,195	25,004
After payment of fourth interim dividend/final dividend{D}	15,915	18,393
Operating costs
Ongoing charges ratio{A}	0.64%	0.65%
{A} Considered to be an Alternative Performance Measure.
{B} The figures for dividends per share reflect the years in which they were earned (see note 7).
{C} Per the Statement of Financial Position.
{D} Fourth interim dividend for the year ended 30 June 2020 of £6,280,000 (9.50p per Ordinary share). Final dividend for the year ended 30 June 2019 of £6,611,000 (10.00p per Ordinary share).

Performance (total return)

	1 year return	3 year return	5 year return	10 year return
	%	%	%	%
Share price{A}	-5.8	+10.1	+36.1	+124.4
Net asset value per Ordinary share{A}	-5.3	+6.2	+31.3	+125.9
Benchmark{B}	-13.0	-4.6	+15.2	+91.8
{A} Considered to be an Alternative Performance Measure.
{B} FTSE All-Share Index.
Source: Aberdeen Standard Investments/Morningstar

Dividends

	Rate	XD date	Record date	Payment date
First interim 2020	8.25p	21 Nov 2019	22 Nov 2019	20 Dec 2019
Second interim 2020	8.25p	20 Feb 2020	21 Feb 2020	20 Mar 2020
Third interim 2020	8.25p	21 May 2020	22 May 2020	19 Jun 2020
Fourth interim 2020	9.50p	20 Aug 2020	21 Aug 2020	18 Sep 2020
Total dividends 2020	34.25p

Ten Year Financial Record

Year end 30 June	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020
Income (£'000)	21,844	22,688	23,566	23,926	25,476	24,838	26,667	25,987	25,597	22,804
Shareholders' funds (£'000)	434,406	425,458	492,878	547,652	515,888	515,036	576,462	570,929	587,150	534,361
Per Ordinary share (p)
Net revenue return	30.9	30.6	31.1	30.5	33.1	32.0	34.9	33.6	34.9	30.5
Dividends{A}	28.75	29.75	30.75	31.25	32.00	32.25	32.75	33.25	34.00	34.25
Net asset value	671.5	649.6	734.6	805.2	757.1	766.5	860.1	856.3	888.1	808.3
{A} The figures for dividends per share reflect the years to which their declaration relates and not the years they were paid.

STRATEGIC REPORT - INVESTMENT MANAGER'S REPORT

Background

For the majority of the 12 months to 30 June 2020 it looked like the salient issues affecting the UK equity market would be domestic politics, Brexit and the circumstances surrounding US-China trade relations, but it was what came to pass at the start of Spring, namely the impact of the Covid-19 pandemic ("Covid-19"), that will frame the period under review for a long time to come.  During March the market took significant fright at the potential for Covid-19 to deliver an unprecedented threat to global growth through a combination of a supply and demand shock, leading to elevated credit and liquidity concerns. This manifested itself in a collapse in share prices representing one of the fastest bear markets in history and precipitated a similarly sharp fall in oil prices.  Towards the end of the period concerns over the spread of Covid-19 started to ameliorate as containment efforts began to take effect and governments' policies helped to ease the situation with market volatility abating and share prices in aggregate recouping some of their losses.  The FTSE All-Share Index, having increased by 5.5% during the first 6 months of the period subsequently fell by 17.5% in the second half of the financial year and ended the 12 month period 13.0% lower (all figures on a total return basis, that is with dividends reinvested).

The first six months of the period witnessed equity markets progress gently higher with the domestic and global economies performing anaemically despite a backdrop of very modest levels of unemployment and low interest rates with the latter in particular boosting investor sentiment. In the UK, concerns regarding Brexit and the potential market-unfriendly nature of a Labour government were important factors in prompting Sterling to weaken and consequently helped to buoy those companies with overseas earnings. The failure of Parliament to agree on a withdrawal agreement resulted in the resignation of Theresa May as Prime Minister. Her successor, Boris Johnson, was more successful and with the prospect that the most negative Brexit scenarios would be removed, domestic assets responded positively.  The Conservative Party majority in the General Election provided a further fillip to domestically exposed UK companies.  Although we entered 2020 with valuations at high levels, investors took comfort from the prospect of easier fiscal and monetary policy, an improving trade backdrop and an environment in the UK seemingly set fair for domestically-focused companies to benefit. Internationally, the ongoing trade dispute between the US and China provided the main area of focus with signs of progress and delay affecting sentiment. Concerns over the impact on the global economy, and in particular manufacturing, led the US Federal Reserve and the European Central Bank to reduce interest rates. Towards the end of the calendar year, a sense that a lasting trade agreement would be possible buoyed markets.

It was impossible to predict Covid-19 and its impact on the global economy. The slow realisation of the potential impact on health and economies caused some weakness in markets during late January and early February, but as the virus spread outside China to South Korea, Iran and to Italy in particular, the dawning of the consequences resulted in a collapse in share prices in the last week of February and first three weeks of March.  Volatility soared together with safe-haven assets such as US Treasury bonds and gold while shares and the price of oil plummeted, the latter compounded by the initial inability of Saudi Arabia and Russia to reach an agreement to cut production.  There is an apophthegm that 'markets stop panicking when governments start panicking' and we have seen a very significant fiscal and monetary response from governments and central banks around the world including a reduction by the Bank of England of the base rate to 0.1% and further UK government and sterling corporate bond purchases. This, together with an acknowledgement that social distancing can halt the spread of the virus, has brought some calm to markets but the longer term effect of the virus on the global economy is as yet unknown.

Economic data for the year prior to the virus is effectively redundant and the severe economic impact of the immediate aftermath of the virus is only now becoming clear. In the UK, GDP for the second quarter of 2020 is estimated to have fallen by a record 20.4% following a 2.2% fall in the first quarter. Bank of England forecasts suggest that GDP is not likely to exceed its level in the final quarter of 2019 until the end of 2021 yet this might well be optimistic. Domestic unemployment has increased but the true picture will only become clear once the support from temporary government furlough schemes (which have benefitted close to 10m workers) is removed with estimates pointing to a 7.5% unemployment rate by the end of the calendar year. CPI inflation was 1.0% in July and is likely to trend lower in the short term given the impact of the virus together with lower energy and VAT rates.

Overseas, the economic landscape paints a broadly similar picture, albeit not quite so bad. Global GDP is estimated to have fallen 9% in the second quarter of 2020, considerably worse than during the global financial crisis. In the second quarter of calendar 2020, Euro area GDP is estimated to have fallen by 12.1% and US GDP by 9.5%. A significant outlier has been the performance of the Chinese economy, which having been the first country to suffer and together with robust enforcement actions and stimulus, emerged more quickly with a strong recovery exhibiting GDP growth of 11.5% in the second quarter. 

Performance

The Company generated a negative net asset value per share total return of 5.3% in the year to 30 June 2020, which represents a short term loss in absolute terms but compares to a larger fall in the benchmark FTSE All-Share Index of 13.0%. Outperformance relative to the benchmark was evenly distributed across both halves of the year as stock selection proved to be strong in an environment where the focus on quality companies proved its worth again.  As we saw during the period, these high quality companies provided the ability to participate when the equity market performed well given the structural growth characteristics of the holdings yet outperformed a falling market as their strong balance sheets and robust business models demonstrated defensive attributes.

On a total return basis, the Company's share price fell by 5.8%, which reflected a marginal widening of the discount to Net Asset Value at which the shares traded compared to the previous year end. During the period the Company did not buy back any shares. On a gross assets basis, the equity portfolio outperformed the benchmark by 8.5%. Gearing reduced returns by 0.6%. The Company maintained the level of debt at a steady rate of around £46m for the period, split between £40m of Senior Secured Fixed Rate Notes at a coupon of 2.51% and £6 million drawn down from an unsecured multi-currency revolving credit loan facility agreement with Scotia Bank Europe PLC. The notes are denominated in sterling however the bank debt has been drawn down in a mixture of US dollars, euros and Swiss francs, and Danish and Norwegian krone, broadly matching the mix of non-UK-listed portfolio holdings.

Two large sectors that were particularly weak over the period were the oil and gas producers and the banks sectors. For the former, weaker oil prices, concerns around the energy transition and a greater focus on ESG proved to be a challenging series of headwinds. For the banks sector, low interest rates, impairment concerns and the deferral of dividends were barriers to performance. Conversely, the pharmaceutical and utilities sectors performed relatively strongly as investors sought to invest capital in cash-generative defensive areas of the market able to maintain their dividend payments.

Performance Attribution for the year ended 30 June 2020

		%
Net Asset Value total return for year per Ordinary share ​		-5.3
FTSE All Share Index total return ​		-13.0
Relative return ​		7.7
Relative return ​		%
Stock selection (equities) ​
	Oil & Gas	0.4
	Basic Materials	0.4
	Industrials	1.3
	Consumer Goods	-0.1
	Health Care	0.8
	Consumer Services	-1.8
	Telecommunications	0.3
	Utilities	0.2
	Technology	1.8
	Financials	1.8
Total stock selection (equities) ​		5.1
Asset allocation (equities) ​
	Oil & Gas	2.5
	Basic Materials	0.2
	Industrials	-0.2
	Consumer Goods	-0.6
	Health Care	0.7
	Consumer Services	0.2
	Telecommunications	-0.2
	Utilities	0.6
	Technology	-0.2
	Financials	0.4
Total asset allocation (equities) ​		3.4
Cash & Options		0.4
Gearing effect		-0.6
Administrative expenses		-0.2
Management fees		-0.4
Tax charge		-0.1
Residual effect		0.1
Total		7.7
Sources : Aberdeen Standard Investments and BNP Securities Services ​ ​
Notes: Stock Selection - measures the effect of equity selection relative to the benchmark. Asset Allocation - measures the impact of over or underweighting each industry basket in the equity portfolio, relative to the benchmark weights.  Gearing effect - measures the impact on relative returns of net borrowings. Administrative expenses, Management fees and Tax charge - these reduce total assets and therefore reduce performance. Share buybacks - this measures the enhancement to net asset value of buying shares at a discount to the net asset value per Ordinary share. Residual effect - this arises as a result of the different methodologies of calculating performance between the NAV total return, the benchmark provider Lipper and the performance attribution system. ​ ​

From a size perspective, the FTSE 100 Index underperformed both the Mid 250 and Small Cap Index. The FTSE 350 High Yield Index significantly underperformed the FTSE 350 Low Yield index during the period.

Looking specifically at the Company's portfolio, stock selection and asset allocation were both positive, the former in particular. Stock selection was positive in all sectors apart from Consumer Goods and Consumer Services. Asset Allocation was significantly beneficial in Oil & Gas. 

Turning to the individual holdings, there were a number of companies that demonstrated strong share price increases. Roche performed well given its defensive growth status aided by a series of new products and a diminished threat from generic competition that led to earnings upgrades over the year. Strong demand for its cloud products helped Microsoft to perform very robustly. Assura benefited from the quasi-government rental income for its GP surgeries helping it to perform strongly.

On the other hand, there were a series of disappointments mostly related to the impact of Covid-19: the lack of travel affected National Express and WH Smith, and the shutdown severely limited Euromoney's exhibition division's revenues (albeit a relatively modest part of the company's operations).

Portfolio Activity and Structure

Turnover of 26% was a little higher than the prior year although the number of name changes was more substantial with an increased emphasis away from the largest companies in the market and a desire to increase the active share of the portfolio which is now approximately 67%. Where possible we sought to further improve the quality of the portfolio and maintain the focus on capital and dividend growth with the period of increased volatility caused by Covid-19 providing a catalyst for many of the changes that follow.

We added fourteen new holdings to the portfolio of which nine were mid cap companies. The first was Convatec, a medical devices company with a strong position in wound and ostomy care. The company has suffered from mostly self-inflicted issues which we believe the management can cure allowing the potential for the company to take greater advantage of its attractive end-markets. The second mid cap purchase was Polypipe, a piping systems company where we believe the competitive position of the business and the regulatory growth drivers are under-appreciated. A holding in National Express was introduced to the portfolio. The company was purchased on the basis that it looked attractively valued given a number of interesting growth drivers and opportunities to increase returns.

A weak trading update provided an opportunity to purchase a holding in John Laing which through its investment and management of infrastructure and renewables projects has generated a long history of strong returns. A modest holding in Sanne, an alternatives fund administrator with attractive exposure to the growth of alternatives investments as an asset class, outsourcing and regulation with high levels of recurring revenues, high switching cost and attractive margins, was also added to the portfolio. We also purchased shares in Fever-Tree, the high quality premium tonic company which has a strong brand, an attractive capital-light business model, a strong balance sheet and exciting growth opportunity in the United States. Another mid cap new holding was Diversified Gas & Oil, a conventional natural gas producer focused on mature assets in the Appalachian region of the United States. The company has a very attractive dividend yield and benefits from low oil prices given the reduction in production of associated gas. The penultimate new mid cap was Unite, the leading student accommodation provider which benefits from strong relationships with universities with significant scope for purpose-built student accommodation to take market share from more traditional student 'digs'. Finally, in the mid cap space, we started a position in Dechra Pharmaceuticals, an international veterinary pharmaceutical company which enjoys strong fundamentals driven by growing pet ownership in emerging markets and increasing per capita spend on pets in developed markets.

There were five large cap company introductions. The first of these was Telenor, a good quality Scandinavian telecoms company with attractive emerging markets assets. A modest holding in Mowi, a Norwegian supplier of sustainable salmon was added to the portfolio. The company benefits from strong demand growth, diversified supply and an attractive dividend yield. We also purchased a holding in Mondi, a high quality cyclical paper company with a strong balance sheet, a conservative management team and with some interesting growth prospects. A holding in Total the French oil major was added to the portfolio. The company offers a relatively defensive profile given its high quality portfolio with its low oil price breakeven and long cycle upstream assets coupled with an attractive dividend yield.  Finally we purchased shares in Coca Cola Hellenic, the second largest soft drink bottler of Coca-Cola product focused on Eastern Europe, Italy, Nigeria and Russia which offers good growth potential from higher volumes, premiumisation, innovation and pricing.

Furthermore, we increased exposure to a number of our existing holdings which we believe have high quality characteristics with attractive long term growth prospects including: Diageo; Croda; Euromoney; Standard Chartered and Relx. 

We sold seventeen holdings during the period. Firstly, InterContinental Hotels Group which was sold given concerns over its relatively high gearing following the Six Senses acquisition and the special dividend payment, potential cyclical pressures and the relatively low dividend yield. Nordea was sold due to our lack of confidence in the sustainability of its dividend and the pressure on earnings from weak macroeconomic conditions and low interest rates. Hiscox was sold given concerns around weak trading and a more challenging competitive environment.  Given a deterioration in quality and our lack of confidence in the company's strategy and its ability to maintain its dividend, the holding in Imperial Brands was sold. The holding in St James's Place was sold due to our concerns around a more challenging regulatory environment.  The position in London Stock Exchange was sold following a period of very strong share price performance that had left the valuation somewhat stretched and the balance sheet relatively highly geared assuming the potential acquisition of Refinitiv is completed. The holding in HSBC was sold given concern that the company would need to reduce its dividend due to the impact of Covid-19 and more generally very challenging trading conditions not least due to low interest rates. The small holding in Signature Aviation was sold given concerns about the company's operational and financial leverage given that Covid-19 would likely lead to a sharp fall in business jet activity.  The holding in Compass was sold given concern around the impact of Covid-19 on the company's operations not least the cancellation of sporting events and the likelihood of a greater proportion of the workforce working from home, coupled with the company's weak balance sheet. We sold the small holding in Diploma given the full valuation and some concern about the cyclicality of the business given the impact of Covid-19. The impact of Covid-19 and a lack of scale led to the sale of the small holding in Hostelworld. We also sold our shares in Scandinavian Tobacco Group as we saw more attractive opportunities elsewhere. The holding in WH Smith was sold on the basis that the investment thesis had changed considerably following Covid-19 such that the company's ability to benefit from the growth of its travel assets had been curtailed and the valuation less attractive than before.  Concern around the impact of higher unemployment coupled with a relatively unattractive valuation and a low dividend yield provided the basis for selling the holding in Experian. We exited the small holding in Workspace as we believe that the outlook for flexible workspace in London has deteriorated considerably given the impact of Covid-19 and it will be difficult for the company to maintain pricing and attract new clients in the medium term. Our small residual holding in Vodafone was sold given our preference for Telenor which has a more attractive geographic exposure, better growth potential and a stronger balance sheet. Finally, we sold the position in Shell given the less attractive dividend and a more challenging outlook particularly as the company negotiates the energy transition.

In addition, we took profits in a number of holdings that had performed strongly and where the valuation had started to look less attractive such as Howden Joinery, Kone, Rentokil, Novo Nordisk, Roche and Microsoft.

We continued our judicious option-writing programme with a significant bias during the period before the advent of Covid-19 towards call options. Now more than ever we feel that the option writing strategy has been of benefit to the Company by diversifying and increasing the level of income generated and providing a good discipline for optimising our exposure to individual holdings. The income from writing options increased in absolute and percentage terms accounting for approximately 10% of total income compared to 7% during the prior year.

With our longer term investment horizon, we continue to put significant effort into engagement with the companies in the portfolio to ensure that they are run in shareholders' best interests. Examples of the subjects of our engagement during the year have included issues such as board composition, diversity, experience and expertise; capital allocation and M&A activity; risk management including issues such as cyber security and data protection; and dividend and balance sheet policies; remuneration; climate change, sustainability and environmental issues; child labour; and accounting policies. These issues have been pursued through meetings with the executive management of the companies as well as the non-executives: particularly the chairs of the board, remuneration, and audit committees and other company representatives.

Our aspiration in terms of portfolio construction is simple: to invest in good quality companies with attractive growth prospects through a sensibly diversified portfolio with appealing dividend characteristics. The ability to invest up to 20% of gross assets overseas is helpful in achieving these aims and at the year end, the portfolio comprised 56 holdings with the overseas exposure representing 14.0% of gross assets.

Income

For the financial year ended 30 June 2020, the Company witnessed a fall in the level of income generated due mostly to the impact of Covid-19 in the final quarter of the financial year but part of this reduction also incorporated our desire to focus more on companies with better capital and dividend growth characteristics rather than just a high headline yield. The income from investments reduced by approximately 14% partly offset by an increase in option income leading to a fall in income generated of 11%. Included in income from investments were three special dividends (from John Laing, M&G and Rio Tinto) that were recognised as revenue items. We believe that this recognition is appropriate given that the return of cash was from a build-up of profits generated by ongoing operations rather than a sale of assets. On a per share basis, taking account of expenses and taxation, the earnings per share reduced from 34.93p to 30.50p.  In a number of cases related to the impact of Covid-19, although there was an ability to pay dividends, intervention by authorities or a very prudent view on the outlook led to dividend reductions or cancellations. Given our focus on robust business models and strong balance sheets we would expect the majority of those companies in the portfolio that have cancelled or suspended their dividends to return quickly to the dividend list and in some cases to pay the suspended dividends at a later date. Forecasts suggest that for calendar year 2020 the level of dividend income paid out will fall by at least 40% across the UK market, our analysis suggests that the portfolio will materially outperform that reduction in income. We believe that for the market as a whole the outlook for dividends is likely to remain challenging given that for some companies pay-out ratios were arguably too high beforehand and Covid-19 provides the cover to reduce distributions while for other companies the primary focus will be on reducing debt rather than returning dividend payments to prior levels.

Outlook

Uncertainties abound. Although the trajectory of an economic recovery will be dependent on a range of factors including further government support, the magnitude of any second wave of the virus, the timing and availability of a vaccine, and behavioural changes, it seems likely that the post-coronavirus environment will be characterised by a long period of sub-par growth, limited inflation, low interest rates and high corporate debt. In addition, the end of the transition period for Brexit adds a further layer of ambiguity regarding our future relationship with the EU and as a consequence of those negotiations, the rest of the world.  Furthermore, the outcome of the upcoming US election is too close to call. In these difficult circumstances we believe that companies with attractive dividend yields, sound growth prospects and strong balance sheets are likely to be prized more highly than ever. Therefore it seems eminently sensible to maintain our careful and measured approach to these high quality companies that should be able to thrive in this challenging environment and emerge in a stronger competitive position.

Charles Luke and Iain Pyle ,

Aberdeen Asset Managers Limited

Investment Manage r

22 September 2020

MANAGER'S ESG ENGAGEMENT

Environmental, Social and Governance ("ESG") Engagement

Whilst the management of the Company's investments is not undertaken with any specific instructions to exclude certain asset types or classes, the Manager embeds ESG into the research of each asset class as part of the investment process.  ESG investment is about active engagement with the goal of improving the performance of assets held around the world.

The Manager aims to make the best possible investments for the Company by understanding the whole picture of the investments - before, during and after an investment is made. That includes understanding the environmental, social and governance risks and opportunities they present - and how these could affect longer-term performance.  ESG considerations underpin all investment activities. With 1,000+ investment professionals, the Manager is able to take account of ESG factors in its company research, stock selection and portfolio construction - supported by more than 50 ESG specialists around the world.

Active Engagement

Through engagement and exercising voting rights, the Manager, on behalf of the Company, actively works with companies to improve corporate standards, transparency and accountability. By making ESG central to its investment capabilities, the Manager looks to deliver improved financial performance in the longer term as well as actively contributing to a fairer, more sustainable world.

The primary goal is to generate the best long-term outcomes for the Company in order to fulfil fiduciary responsibilities to the Company. The Manager sees ESG factors as being financially material and impacting corporate performance. ESG factors put the 'long-term' in long-term investing. The Manager focuses on understanding the ESG risks and opportunities of investments alongside other financial metrics to make better investment decisions.  The Manager aims for better risk-adjusted returns by actively undertaking informed and constructive engagement and asset management to generate better performance from the investments. This helps to enhance the value of clients' assets. Comprehensive assessment of ESG factors, combined with constructive company engagement, should lead to better long term performance for clients.

Investment Case Studies

 

LondonMetric Property

LondonMetric Property is a property company formed following the merger of London & Stamford and Metric Property in 2013.  Since then the company has moved away from retail parks and offices and focused on distribution (particularly urban and regional logistics) and 'long income' which, for example, comprises convenience stores. Urban and regional logistics has benefited from the rise of ecommerce with e-tailing requiring three times the space of store based sales. The purchase of A&J Mucklow in 2019 has further enhanced the company's property portfolio. Strong occupier and property relationships shape portfolio decisions with the management team keeping close to their tenants in order to anticipate changing needs.  Supply is relatively constrained as the most favourable logistics sites are already occupied. Furthermore, customers tend to be loyal as restructuring supply chains carries significant risk. The company benefits from an experienced management team who are aligned with shareholders. It has modest gearing, a long average lease length and its REIT status provides tax-exemption on profits.  It aims to deliver attractive and dependable income returns and enhance capital for which it has generated a strong track record.

Croda International

Croda International is a specialty chemicals company focused on natural ingredients and technologies that improve people's lives by enhancing everyday products.  The company operates globally selling primarily into three sectors: Personal Care, Life Sciences and Performance Technologies.  Most of the end-markets are defensive but offer exposure to attractive long term growth trends such as beauty, health, wellbeing and sustainability. The company's pricing power allows an attractive margin given its intellectual property and the relatively low cost yet high importance of its products. Croda's business model is further enhanced by its strong customer intimacy, preferring direct sales rather than distributors as well as its capital light model.  It benefits from a diverse product portfolio and a broad and extensive range of customers. The company has a low operating leverage given its low fixed cost base. The earnings resilience, strong cashflow and low financial leverage are also appealing attributes.

STRATEGIC REPORT - OVERVIEW OF STRATEGY

Murray Income Trust PLC (the "Company") is an investment trust whose Ordinary shares are listed on the premium segment of the London Stock Exchange.

Business Model

The Company is governed by a Board of Directors (the "Board"), all of whom are non-executive, and has no employees. The Board is responsible for determining the Company's investment objective and investment policy. Like other investment companies, the day-to-day investment management and administration of the Company is outsourced by the Board to an investment management group, the Standard Life Aberdeen Group, and other third party providers. The Company has appointed Aberdeen Standard Fund Managers Limited ("ASFML", the "Manager", or "AIFM") as its alternative investment fund manager, which has in turn delegated certain responsibilities, including investment management, to Aberdeen Asset Management Limited ("AAML" or the "Investment Manager"). The Company complies with the investment policy test in Section 1158 of the Corporation Tax Act 2010 which permits the Company to operate as an investment trust.

Investment Objective

The Company aims for a high and growing income combined with capital growth through investment in a portfolio principally of UK equities.

Investment Policy

In pursuit of the Company's investment objective, the Company's investment policy is to invest in the shares of companies that have potential for real earnings and dividend growth, while at the same time providing an above-average portfolio yield. The emphasis is on the management of risk and on the absolute return and yield from the portfolio as a whole rather than the individual companies which the Company invests in, which is achieved by ensuring an appropriate diversification of stocks and sectors within the portfolio, with a high proportion of assets in strong, well-researched companies. The Company makes use of borrowing facilities to enhance shareholder returns when appropriate.

Delivering the Investment Policy

The Company maintains a diversified portfolio of the equity securities of UK and overseas companies with an emphasis on investing in quality companies with good management, strong cash flow, a sound balance sheet and which are generating a reliable earnings stream.

The Investment Manager follows a bottom-up investment process based on a disciplined evaluation of companies through direct visits by its fund managers. Stock selection is the major source of added value, concentrating on quality first, then price.  Top-down investment factors are secondary in the Investment Manager's portfolio construction with diversification rather than formal controls guiding stock and sector weights.

Investment Limits

The Board sets investment guidelines within which the Investment Manager must operate. The portfolio typically comprises between 30 and 70 holdings (but without restricting the Company from holding a more or less concentrated portfolio from time to time).  The Company may invest up to 100% of its gross assets in UK-listed equities and other securities and is permitted to invest up to 20% of its gross assets in other overseas-listed equities and securities. The Investment Manager may invest in any market sector, however, the top five holdings may not exceed 40% of the total value of the portfolio and the top three sectors represented in the portfolio may not exceed 50%. The Company may invest no more than 15% of its gross assets in other listed investment companies (including investment trusts).

The Company may use derivatives for the purpose of enhancing portfolio returns and for hedging purposes in a manner consistent with the Company's broader investment policy. The Investment Manager is permitted to invest in options and in structured products, provided that any structured product issued in the form of a note or bond has a minimum credit rating of "A".

Gearing

The Board is responsible for setting the gearing policy of the Company and for the limits on gearing. The Manager is responsible for gearing within the limits set by the Board. The Board has set its gearing limit at a maximum of 25% of NAV at the time of draw down. Gearing - borrowing money - is used selectively to leverage the Company's portfolio in order to enhance returns where this is considered appropriate. Particular care is taken to ensure that any financial covenants permit maximum flexibility of investment policy. Significant changes to gearing levels are communicated to shareholders.

Key Performance Indicators

At each Board meeting, the Directors consider a number of Key Performance Indicators ("KPIs") to assess the Company's success in achieving its objectives, and these are described below, with those also categorised as Alternative Performance Measures marked with an asterisk:

KPI	Description
NAV (total return) * relative to the Company's benchmark	The Board considers the Company's NAV (total return), relative to the FTSE All-Share Index, to be the best indicator of performance over different time periods. A graph showing NAV total return performance against the FTSE All-Share Index over the past five years is shown in the published Annual Report.
Share price (total return)*	The figures for share price (total return) for this year and for the past three, five and ten years, as well as for the NAV (total return) per share, are shown in the published Annual Report. A graph showing share price total return performance against the FTSE All-Share Index over the past five years is shown in the published Annual Report. The Board also monitors share price performance relative to open-ended and closed-ended competitor products, taking account of differing investment objectives and policies pursued by those products.
Discount/premium to NAV*	The discount/premium at which the Company's share price trades relative to the NAV per share is closely monitored by the Board. A graph showing the discount/premium over the last five years is shown in the published Annual Report.
Earnings and dividends per share	The Board aims to meet the 'high and growing' element of the Company's investment objective by developing revenue reserves sufficient to support the payment of a growing dividend; figures may be found in Results in respect of earnings and dividends per share, together with the level of revenue reserves, for the current year and previous year.
Ongoing charges*	The Board regularly monitors the Company's operating costs and their composition with a view to limiting increases wherever possible. Ongoing charges for this year and the previous year are disclosed in Results.

Principal Risks and Uncertainties

There are a number of principal risks and uncertainties which, if realised, could have a material adverse effect on the Company's business model, future performance, solvency and liquidity. The Board, through the Audit Committee, has put in place a robust process to identify, assess and monitor the principal risks, including emerging risks, and uncertainties.  This is described in the Audit Committee's report in the published Annual Report. As part of this, the Committee uses a Risk Control Self-Assessment and Risk Heat Map to identify the Company's principal risks and uncertainties. These, together with potential effects, controls and mitigating factors, are summarised below.

The key, principal uncertainty for the Company emerging during the second half of the Company's financial year was the outbreak of the Covid-19 pandemic ("Covid-19") which caused significant economic disruption and contributed to global stock market volatility. The longer term effects of Covid-19 are as yet unknown. The Manager, on behalf of the Board, sought assurances from the Company's key service providers, as well as from its own operations, that they had invoked business continuity procedures and appropriate contingency arrangements to ensure that they remain able to meet their contractual obligations to the Company.

In carrying out the assessment, the Board also considered the uncertainty arising from the end of the transition period on 31 December 2020 for the UK leaving the EU ("Brexit"). Overall, the Board does not expect the Company's business model, over the longer term, to be materially affected by Brexit.

Principal Risk	Mitigating Action
STRATEGIC
Discount control risk Investment trust shares tend to trade at discounts to their underlying NAVs, although they can also trade at premium. Discounts and premiums can fluctuate considerably leading to more volatile returns for shareholders.	The Board monitors the discount at which the Company's shares trade and will buy back or issue shares to try to minimise the impact of any discount or premium volatility.  Whilst these measures seek to reduce volatility, they cannot guarantee to do this.
Gearing risk The Company uses credit facilities. These arrangements increase the funds available for investment.  While this has the potential to enhance investment returns in rising markets, in falling markets the impact could be detrimental.	Gearing is monitored and strict restrictions on borrowings are imposed: gearing continues to operate within pre-agreed limits so as not to exceed 25% of NAV at the time of draw down.
MARKET
Market risk Market risk arises from the volatility in prices of the Company's investments and the potential loss the Company could suffer through realising investments following negative market movements. Changes in general economic and market conditions, such as interest rates, exchange rates and rates of inflation, as well as political events and trends could substantially and adversely affect the prices of securities and, as a consequence, the Company's prospects and share price. The risk posed by Covid-19, in driving stock market volatility and uncertainty, is currently considered to be particularly heightened. This emerged in the second half of the year under review and is likely to remain for the foreseeable future.	The Company's investment policy and risk diversification may be found above.  The Board considers the diversification of the portfolio, asset allocation, stock selection and levels of gearing on a regular basis.  The Board also monitors the Company's relative performance to peers and the Company's benchmark. It is not possible to predict fully the impact that Brexit would have on the Company as regards stockmarkets and exchange rate risks, however, the Board and Manager continue to monitor external events to try to ensure that the Company is prepared for any aftermath of a deal not being reached between the UK and European Union.
INVESTMENT MANAGEMENT
Investment management risk The Company relies on the Manager, to whom responsibility for the management of the Company has been delegated under a management agreement (further details of which are set out in the Directors' Report).	The Board has set investment limits and guidelines. The Board reviews the compliance with these limits. The Company reviews the performance of the Manager informally at each Board meeting and a formal annual review is undertaken by the Management Engagement Committee.
Dividend risk There is a risk that the Company fails to generate sufficient income from its investment portfolio to meet the Company's dividend requirements. A cut in the dividend of the Company would likely cause a drop in the share price and would end the Company's "Dividend Hero" status.	The Board reviews monthly detailed estimates of revenue income and expenditure prepared by the Manager and, if required, challenges the Manager as to the underlying assumptions made in individual securities' earnings and the Company's expenditure. The Company's level of revenue reserves is monitored and can be added to in years of surplus, or used to support the dividend in years where there is a revenue deficit.  As set out in the Directors' Report, the Board is seeking approval from shareholders at the forthcoming AGM to permit dividends to be paid from capital in order to provide flexibility.
REGULATORY
Regulatory risk, including change of existing rules and regulation The Company is required to comply with relevant rules and regulations. Failure to do so could result in loss of investment trust status, fines, suspension of the Company's shares, criminal proceedings or financial or reputational damage. This risk would be exacerbated by inadequate resources or insufficient training within the Company's third party providers to properly manage compliance with current and future requirements. The Company's business model could become non-viable as a result of new or revised rules or regulations arising from, for example, policy change or financial monitoring pressure.	The Manager provides investment, company secretarial, administration and accounting services through qualified third party professional providers. The Board receives regular reports from them in respect of their compliance with all applicable rules and regulations.  The Board receives regular reports from its broker, depositary, registrar and Manager as well as the industry trade body (the Association of Investment Companies) on changes to regulations which could impact the Company and its industry.  The Company monitors events and relies on the Manager and its other key third party providers to manage this risk by preparing for any changes, adverse or otherwise.
OPERATIONAL
Service provider risk In common with most other investment trust companies, the Company relies on the services provided by third parties and is dependent on the control systems of the Manager (who acts as investment manager, company secretary and maintains the Company's assets, dealing procedures and accounting records); BNP Paribas Securities Services (who acts as Depositary and Custodian); and the registrar. The security of the Company's assets, dealing procedures, accounting records and adherence to regulatory and legal requirements depend on the effective operation of the systems of these third party service providers. Failure by any service provider to carry out its obligations could have a material adverse effect on the Company's performance. Disruption, including that caused by information technology ("IT") breakdown or other cyber-related issue, could prevent the functioning of the Company or the accurate reporting and monitoring of the Company's financial position.	Contracts with third party providers are entered into after appropriate due diligence. Thereafter the performance of each provider is subject to an annual review by the Audit Committee.  The Depositary reports to the Audit Committee at least annually, including on the Company's compliance with AIFMD.  The Manager also regularly reviews the performance of the Depositary. Global assurance reports are obtained from the Manager, BNP Paribas Securities Services and the registrar. These are reviewed by the Audit Committee. The reports include an independent assessment of the effectiveness of risks and internal controls at the service providers including their planning for business continuity and disaster recovery scenarios, together with their policies and procedures designed to address the risks posed to the Company's operations by cyber-crime. The Audit Committee receives an update on the Manager's IT resilience. The Company's assets are subject to a strict liability regime and, in the event of a loss of assets, the Depositary must return assets of an identical type or the corresponding amount, unless able to demonstrate the loss was a result of an event beyond its reasonable control.

The following are other risks identified by the Board which could have a major impact on the Company, but due to mitigation are not deemed to be principal risks:

Other Risks	Mitigating Action
Financial risk The Company's investment activities expose it to a variety of financial risks which include market risk (covering interest rate, foreign currency and other price risk), liquidity risk and credit risk (including counterparty risk).	Details of these risks are disclosed in note 17 together with the policies and procedures for mitigating and monitoring these risks.
Emerging risk Failure to have in place procedures that assist in identifying emerging risks.  This may cause reactive actions rather than being pro-active and, in the worst case, could cause the Company to become unviable or otherwise fail.	The Board regularly reviews all risks to the Company, including emerging risks, which are identified by a variety of means, including advice from the Company's professional advisors, the AIC, and Directors' knowledge of markets, changes and events.

The principal risks associated with an investment in the Company's shares can be found in the pre-investment disclosure document ("PIDD") published by the AIFM, which is available from the Company's website murray-income.co.uk

Viability Statement

The Company does not have a fixed period strategic plan but the Board does formally consider risks and strategy on at least an annual basis. The Board regards the Company, with no fixed life, as a long term investment vehicle, but for the purposes of this viability statement has decided that a period of five years (the "Review Period") is an appropriate timeframe over which to report. The Board considers that this Review Period reflects a balance between looking out over a long term horizon and the inherent uncertainties of looking out further than five years.

In assessing the viability of the Company over the Review Period the Directors have focused upon the following factors:

· the Company's principal risks and uncertainties as set out in the Strategic Report;

· the relevance of the Company's investment objective, particularly in light of the present lower yield environment;

· the demand for the Company's shares indicated by the level of premium and/or discount;

· the level of income generated by the Company's portfolio as compared to its expenses;

· the overall liquidity of the Company's investment portfolio;

· the likelihood of the Company being able to continue to meet the covenants under its current borrowing arrangements, and the covenants attaching to any replacement borrowing arrangements, over the next five years;

· the £40m senior loan notes, which are repayable in November 2027; and

· any requirement for the Company to repay or refinance the drawn-down element of its £20 million bank loan facility prior to, or at, its maturity in November 2020.

In making this assessment, the Board has considered in particular the potential short and longer term impact of Covid-19, in the form of a large economic shock, a period of increased stock market volatility and/or markets at depressed levels, a significant reduction in the liquidity of the portfolio or changes in investor sentiment or regulation, and how these factors might affect the Company's prospects and viability in the future. The Board undertook scenario analysis in reaching its conclusions, including the potential for lower dividend income in the future as companies suspended or cancelled dividends, but recognising that the Company's expenses are significantly lower than its total income.

The Directors have considered the Company's future with or without the proposed combination with Perpetual Income and Growth Investment Trust plc ("PLI") and do not consider that either outcome would affect their conclusions as to the Company's viability and going concern. Accordingly, taking into account the Company's current position and the potential impact of its principal risks and uncertainties, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due for a period of five years from the date of this Report.

Performance, Financial Position and Outlook

A review of the Company's activities and performance during the year ended 30 June 2020, including future developments, is set out in the Chairman's Statement and in the Investment Manager's Report. These cover market background, investment activity, portfolio strategy, dividend policy, gearing and investment outlook.  A comprehensive analysis of the portfolio is provided below while the full portfolio of investments is published monthly on the Company's website. The Company's Statement of Financial Position shows the assets and liabilities at the year end. Borrowing facilities at the year end comprised a mix of fixed and floating debt: a three year £20 million bank loan and the £40 million of 10 year senior loan notes. Details of these are shown in notes 12 and 13 respectively.

The future strategic direction and development of the Company is regularly discussed as part of Board meeting agendas. The Board also considers the Manager's promotional strategy for the Company, including effective communications with shareholders. As set out in the Chairman's Statement, the proposed combination with PLI, if approved by shareholders, will be the key corporate development during the Company's year ended 30 June 2021.

Environmental, Social and Human Rights Issues

The Company has no employees and, accordingly, there are no disclosures to be made in respect of employees. The Company's environmental, social and governance policy is outlined in the Directors' Report. Due to the nature of the Company's business, being a company that does not offer goods and services to customers, the Board considers that it is not within the scope of the Modern Slavery Act 2015 because it has no turnover. The Company is therefore not required to make a slavery and human trafficking statement.

Board Diversity

The Board recognises the importance of having a range of skilled, experienced individuals with the right knowledge represented on the Board in order to allow the Board to fulfil its obligations. The Board also recognises the benefits, and is supportive, of the principle of diversity in its recruitment of new Board members.  The Board will not display any bias for age, gender, race, sexual orientation, religion, ethnic or national origins, or disability in considering the appointment of its Directors. The Board will continue to ensure that all appointments are made on the basis of merit against the specification prepared for each appointment and therefore the Company does not consider it appropriate to set diversity targets.  At 30 June 2020, there were three male Directors and three female Directors. Further information regarding the three Directors who would join the Board as a result of the proposed combination with PLI may be found in the published Annual Report.

Neil Rogan

Chairman
22 September 2020

PROMOTING THE SUCCESS OF THE COMPANY

For years ended on or after 30 June 2020, the Board has a new requirement 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.  Included within this assessment is the impact on the Company of the emergence of Covid-19 since March 2020 and the need for the Directors to protect, where possible, stakeholders' interests in the face of this significant societal, economic and financial threat.

 

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 above. 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. F urther 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. 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 above.
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 holder 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 2020.

Management of the Portfolio

During the height of Covid-19, between March and June 2020, the Board met more frequently 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.

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 34.25p in respect of the year and the Company's dividend policy to enable earlier payment of the fourth interim dividend reflects this and approval of the latter was proposed to shareholders for the first time at last year's AGM. In addition, 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 at the forthcoming AGM. The proposed amendment to the Articles of Association would remove the current prohibition of payment of dividends from capital.

Audit tender

The Directors undertook an audit tender in August 2019, after which it was agreed to recommend to shareholders that PricewaterhouseCoopers LLP be appointed auditor, in succession to EY.

Directorate

The Board has continued to progress its succession plans during the year resulting in the decision to appoint Merryn Somerset Webb as an independent non-executive director on 7 August 2019. Further details are included in the Chairman's statement. Shareholder interests are best served by ensuring a smooth and orderly succession for the Board which serves to provide continuity and maintain the Board's open and collegiate style as well as a range of diversity and experience.

Long Term Investment

The investment Manager's investment process seeks to outperform over the longer term. The Board has in place the necessary procedures and processes to continue to promote the long term success of the Company. The Board will continue to monitor, evaluate and seek to improve these processes as the Company continues to grow over time, to ensure that the investment proposition is delivered to shareholders and other stakeholders in line with their expectations.

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

The Board devoted significant time to evaluating the benefit to the Company, and its shareholders, of the proposed combination with PLI. As set out in the Chairman's Statement, 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 advisers Investec Bank plc and Dentons UK and Middle East LLP.

 

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 2020 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 2020, the Company had 66,110,413 (2019 - 66,110,413) fully paid Ordinary shares of 25p each with voting rights in issue and an additional 2,483,045 (2019 - 2,483,045) shares in treasury. During the year no shares were bought back into treasury (2019 - 561,900).

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 2020 indicate a total loss attributable to equity shareholders for the year of £29,816,000 (2019 - gain of £42,574,000).

At the AGM on 5 November 2019, shareholders approved a dividend policy to pay four quarterly interim dividends per year. The first, second and third interim dividends, each of 8.25p per Ordinary share, for the year ended 30 June 2020, were paid to shareholders on 20 December 2019, 20 March 2020 and 19 June 2020, respectively.

The Company announced on 5 August 2020 the payment to shareholders on 18 September 2020 of a fourth interim dividend for the year of 9.50p per share with an ex-dividend date of 20 August 2020 and a record date of 21 August 2020. The Board is proposing renewal of the dividend policy introduced in 2019. In line with good corporate governance, the Board therefore proposes to put the Company's dividend policy to Shareholders for approval at the AGM as resolution 4.

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 the Standard Life Aberdeen Group, 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 Standard Life Aberdeen Group companies 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 five non-executive Directors. Neil Rogan, Jean Park, Stephanie Eastment, Donald Cameron and Peter Tait were Directors throughout the year while Merryn Somerset Webb was appointed a Director on 7 August 2019. Jean Park is Senior Independent Director and Stephanie Eastment is Chairman of the Audit Committee.

The names and biographies of each of the Directors are shown on the Company's website and include their experience, length of service and the contribution that each Director makes to the Board. Each Director has the requisite high level and range of business and financial experience which enables the Board to provide clear and effective leadership and proper stewardship of the Company.

Subject to approval by shareholders of the proposed combination with PLI at a general meeting of the Company to be held on 27 October 2020, prospective Directors Georgina Field, Alan Giles and Richard Laing will join the Board on that date, as set out in the Chairman's Statement. Thereafter, Georgina Field, Alan Giles and Richard Laing will each retire and seek election as Directors at the AGM under resolutions 11, 12 and 13. These resolutions will be withdrawn if the votes to combine the two companies are not passed by their respective shareholders. The prospective Directors' experience, skills and expected contribution to the Board is set out in the published Annual Report.

Directors' Insurance and Indemnities

The Company maintains insurance in respect of Directors' and Officers' liabilities in relation to their acts on behalf of the Company. Furthermore, each Director of the Company is entitled to be indemnified out of the assets of the Company to the extent permitted by law against all costs, charges, losses, expenses and liabilities incurred by them in the actual or purported execution and/or discharge of their duties and/or the exercise or purported exercise of their powers and/or otherwise in relation to or in connection with their duties, powers or office. These rights are included in the Articles of Association of the Company and the Company has granted indemnities to each Director on this basis.

 

Corporate Governance

The Company is committed to high standards of corporate governance and its Statement of Corporate Governance is set out in the published Annual Report.

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 published 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 has adopted a policy whereby 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.

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 Directors attended meetings during the year ended 30 June 2020 as follows (with their eligibility to attend the relevant meeting in brackets). In addition, Directors attended several ad-hoc meetings during the year.

	Scheduled Board Meetings (including strategy and Board Committee)	Audit Committee  Meetings	Management  Engagement  Committee Meetings	Nomination and Remuneration Committee Meetings
Neil Rogan	9 (9)	- (-)	2 (2)	3 (3)
Jean Park	9 (9)	4 (4)	2 (2)	3 (3)
Stephanie Eastment	9 (9)	4 (4)	2 (2)	3 (3)
Donald Cameron	9 (9)	4 (4)	2 (2)	3 (3)
Peter Tait	9 (9)	4 (4)	2 (2)	3 (3)
Merryn Somerset Webb A	7 (7)	3 (3)	1 (1)	2 (2)

^A  Appointed as a Director on 7 August 2019 and attended all meetings for which she was eligible.

Remuneration Committee

Directors' remuneration is considered by the Remuneration Committee which comprises the whole Board and is chaired by Jean Park. Further information may be found in the Directors' Remuneration Report in the published Annual Report.

Accountability and Audit

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

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

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

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. Standard Life Aberdeen plc 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 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, including the major disruption caused by the Covid-19 pandemic ("Covid-19"), 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 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 2020 and 31 August 2020 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 2020		31 August 2020
Shareholder	Number of shares held	% held	Number of shares held	% held
Aberdeen Asset Managers Limited Retail Plans	12,398,564	18.8	12,314,143	18.6
Rathbones	10,590,872	16.0	10,579,249	16.0
Hargreaves Lansdown	5,831,179	8.8	5,999,906	9.1
Interactive Investor	4,426,541	6.7	4,513,447	6.8

The above interests as at 31 August 2020 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.

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: www.aberdeenstandard.com/en/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

The Company has no greenhouse gas emissions to report from its operations, nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013.

Disclosures Required by FCA Listing Rule 9.8.4

The above 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.

Future Developments of the Company

Disclosures relating to the future developments of the Company may be found in the Overview of Strategy.

Annual General Meeting ("AGM")

Among the special business being put at the AGM of the Company to be held on 27 November 2020, the following resolutions will be proposed:

Authority to allot shares and disapply pre-emption rights (Resolutions 16 and 17)

Ordinary resolution No. 16 will renew the authority to allot the unissued share capital up to an aggregate nominal amount of £0.8m (equivalent to approximately 3.3m 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 2021 or on 31 December 2021, whichever is earlier. This means that the authority will require to be renewed at the next AGM. This authority will not substitute or revoke the authority granted at the shareholders' meeting to issue new shares to the PLI shareholders in connection with the combination with PLI.

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. 17 will, if passed, give the Directors power to allot for cash or sell from treasury equity securities up to an aggregate nominal amount of £1.65m (equivalent to approximately 6.6m 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 2021 or on 31 December 2021, 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 16 and 17 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 18)

At the AGM held on 5 November 2019, 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. 18 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 9.9m Ordinary shares). Such authority will expire on the date of the AGM in 2021, or on 31 December 2021, 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.

Adoption of new Articles of Association (Resolution 19)

Resolution 19, which will be proposed as a special resolution, seeks shareholder approval to adopt new Articles of Association (the "New Articles") in order to update the Company's current Articles of Association (the "Existing Articles"). The changes include (i) allowing the Company to pay dividends from the Company's realised capital profits, (ii) enabling the Company to hold virtual and hybrid general meetings (including annual general meetings) in the future, (iii) enabling the Company to postpone annual and general meetings where it becomes impossible or impractical to hold any meeting on the scheduled date, (iv) explicitly stating the Board's powers in relation to controlling the conduct of any annual or general meeting, (v) changes in response to the requirements of the Alternative Investment Fund Managers Directive (2011/61/EU) ("AIFMD") , (vi) changes in response to the introduction of international tax regimes requiring the exchange of information and (vii) in response to developments in mental health legislation and to reflect the position in the model articles for public companies as set out in the Companies (Model Articles) Regulations 2008/3229, updating the provision relating to termination of a director's appointment on mental health grounds.

Nothing in the New Articles will prevent the Company from holding physical general meetings. The changes under (ii) are being sought in response to challenges posed by government restrictions on social interactions as a result of Covid-19, which have made it impossible for shareholders to attend physical general meetings.  In the Chairman's Statement, the Board recognises that the AGM is an important occasion where shareholders can meet and ask questions of the Board and the Manager. 

The Board is committed to ensuring that future general meetings (including AGMs) incorporate a physical meeting when law and regulation permits and where shareholders can meet with the Board face to face.  The potential to hold a general meeting through wholly electronic means is intended as a solution to be adopted as a contingency to ensure the continued smooth operation of the Company in extreme operating circumstances where physical meetings are prohibited. The Company has no present intention of holding a wholly electronic general meeting but wants to be prepared for the future.

While the New Articles will permit the Company to pay dividends from realised capital profits, the Investment Manager remains positive about the dividend generation from the investments and the Board does not presently intend to change its approach to the payment of dividends by utilising this new power to pay dividends out of capital. However, the Board may seek to use this power in the future where it considers it is in the best interests of shareholders to do so.

The material changes introduced in the New Articles are summarised in the appendix to the Notice of AGM in the published Annual Report. Other changes, which are of a minor, technical or clarifying nature, have not been noted in the appendix.

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
 

22 September 2020

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 www.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

22 September 2020

MURRAY INCOME TRUST PLC

Statement of Comprehensive Income

		Year ended 30 June 2020				Year ended 30 June 2019
		Revenue	Capital	Total		Revenue		Capital		Total
	Notes	£'000	£'000	£'000		£'000		£'000		£'000
(Losses)/gains on investments	10	-	(47,204)	(47,204)		-		22,073		22,073
Currency (losses)/gains		-	(115)	(115)		-		18		18
Income	3	22,804	-	22,804		25,597		-		25,597
Investment management fees	4	(798)	(1,861)	(2,659)		(787)		(1,837)		(2,624)
Administrative expenses	5	(1,105)	-	(1,105)		(1,013)		-		(1,013)
Net return before finance costs and tax		20,901	(49,180)	(28,279)		23,797		20,254		44,051
Finance costs	6	(342)	(800)	(1,142)		(345)		(805)		(1,150)
Net return before tax		20,559	(49,980)	(29,421)		23,452		19,449		42,901
Taxation	8	(395)	-	(395)		(327)		-		(327)
Net return after tax		20,164	(49,980)	(29,816)		23,125		19,449		42,574
Return per Ordinary share	9	30.5p	(75.6)p	(45.1)p		34.9p		29.4p		64.3p
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 2020	30 June 2019
	Notes	£'000	£'000
Non-current assets
Investments at fair value through profit or loss	10	561,207	602,636
Current assets
Other debtors and receivables	11	4,854	7,982
Cash and cash equivalents		16,365	27,171
		21,219	35,153
Creditors: amounts falling due within one year
Other payables		(1,494)	(4,142)
Bank loans		(6,667)	(6,601)
	12	(8,161)	(10,743)
Net current assets		13,058	24,410
Total assets less current liabilities		574,265	627,046
Creditors: amounts falling due after more than one year
2.51% Senior Loan Notes	13	(39,904)	(39,896)
Net assets		534,361	587,150
Capital and reserves
Share capital	14	17,148	17,148
Share premium account		24,020	24,020
Capital redemption reserve		4,997	4,997
Capital reserve		466,001	515,981
Revenue reserve		22,195	25,004
Total Shareholders' funds		534,361	587,150
Net asset value per Ordinary share	15
Debt at par value		808.3p	888.1p
The financial statements were approved by the Board of Directors and authorised for issue on 22 September 2020 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 2020
			Share	Capital
		Share	premium	redemption	Capital	Revenue
		capital	account	reserve	reserve	reserve	Total
	Notes	£'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
For the year ended 30 June 2019
			Share	Capital
		Share	premium	redemption	Capital	Revenue
		capital	account	reserve	reserve	reserve	Total
		£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 July 2018		17,148	24,020	4,997	500,887	23,877	570,929
Net return after tax		-	-	-	19,449	23,125	42,574
Buyback of Ordinary shares for treasury	14	-	-	-	(4,355)	-	(4,355)
Dividends paid	7	-	-	-	-	(21,998)	(21,998)
Balance at 30 June 2019		17,148	24,020	4,997	515,981	25,004	587,150
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 2020	30 June 2019
	Notes	£'000	£'000
Operating activities
Net return before finance costs and taxation		(28,279)	44,051
Increase in accrued expenses		146	36
Overseas withholding tax		(380)	(819)
Dividend income	3	(20,220)	(23,603)
Dividends received		21,418	23,928
Interest income	3	(100)	(104)
Interest received		112	97
Interest paid		(1,144)	(1,151)
Losses/(gains) on investments	10	47,204	(22,073)
Amortisation on Loan Notes	6	8	12
Foreign exchange losses on loans		115	(18)
(Increase)/decrease  in other debtors		(2)	16
Stock dividends included in investment income	3	(1,209)	(341)
Net cash inflow from operating activities		17,669	20,031
Investing activities
Purchases of investments		(177,178)	(132,687)
Sales of investments		171,725	144,100
Net cash (outflow)/inflow from investing activities		(5,453)	11,413
Financing activities
Dividends paid	7	(22,973)	(21,998)
Buyback of Ordinary shares for treasury		-	(4,551)
Repayment of bank loans		(3,265)	(1,034)
Draw down of bank loans		3,093	1,409
Net cash outflow from financing activities		(23,145)	(26,174)
(Decrease)/increase in cash		(10,929)	5,270
Analysis of changes in cash during the year
Opening balance		27,171	22,008
Effect of exchange rate fluctuations on cash held		123	(107)
(Decrease)/increase in cash as above		(10,929)	5,270
Closing balance		16,365	27,171
The accompanying notes are an integral part of these financial statements.

MURRAY INCOME TRUST PLC

Notes to the Financial Statements

Year Ended 30 June 2020

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 October 2019. 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 (as adopted for use in the EU). 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, which comprise 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. The finance costs, being the difference between the net proceeds of borrowings and the total amount of payments that require to be made in respect of those borrowings, 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. 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 movement 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) above. This reserve is distributable by way of share buybacks; it is not distributable by way of dividend. 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 £466,001,000 as at 30 June 2020.
		Revenue reserve. This reserve reflects all income and costs which are recognised in the revenue column of the Statement of Comprehensive Income. The revenue reserve is distributable by way of dividend.
	(k)	Treasury shares. When the Company buys back the Company's equity share capital as treasury shares, the amount of the consideration paid, including directly attributable costs and any tax effects, is recognised as a deduction from equity. When these shares are sold or reissued subsequently, the net amount received is recognised as an increase in equity, and the resulting surplus or deficit on the transaction is transferred to or from the capital reserve.
	(l)	Dividends payable. Final dividends are recognised from the date on which they are approved by Shareholders. Interim dividends are recognised when paid. Dividends are shown in the Statement of Changes in Equity.
	(m)	Foreign currency. Transactions in foreign currencies are converted to Sterling at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities and non-monetary assets held at fair value denominated in foreign currencies are translated into Sterling at rates of exchange ruling at the Statement of Financial Position date. Exchange gains and losses are taken to the Statement of Comprehensive Income as a capital or revenue item depending on the nature of the underlying item.
	(n)	Significant estimates and judgements. The Directors do not believe that any accounting estimates or judgements have been applied to these financial statements that have a significant risk of causing material adjustment to the carrying amount of assets and liabilities.

3.	Income
		2020	2019
		'000	'000
	Income from investments
	UK dividends (all listed):
	- ordinary	14,903	17,693
	- special	434	848
	Property income dividends	675	792
	Overseas dividends (all listed)	2,999	3,929
	Stock dividends	1,209	341
		20,220	23,603
	Other income
	Deposit interest	100	104
	Stock lending income	12	22
	Traded option premiums	2,472	1,868
		2,584	1,994
	Total income	22,804	25,597
	Special dividends of £1,331,000 (2019 - £1,654,000) have also been recognised in capital, making a total of £1,765,000 (2019 - £2,501,000) special dividends for the year.
	During the year, the Company received premiums totalling £2,472,000 (2019 - £1,868,000) in exchange for entering into derivative transactions. At the year end there were no open positions (2019 - same).

4.	Investment management fee
		2020			2019
		Revenue	Capital	Total	Revenue	Capital	Total
		'000	'000	'000	'000	'000	'000
	Management fee	798	1,861	2,659	787	1,837	2,624
	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 £427,000 (2019 - £446,000).
	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 one such commonly managed fund, Standard Life UK Smaller Companies Trust PLC, at the year end which was valued at £4,950,000 (2019 - £5,048,000).

5.	Administrative expenses
		2020	2019
		£'000	£'000
	Shareholders' services{A}	490	424
	Directors' remuneration{B}	167	151
	Secretarial fees{C}	90	90
	Auditor's remuneration:
	- fees payable to the Company's auditor for the audit of the Company's annual accounts	29	24
	Other expenses	329	324
		1,105	1,013
	{A} Includes registration, savings scheme and other wrapper administration and promotion expenses, of which £407,000 (2019 - £349,000) was paid to Aberdeen Standard Fund Managers Limited ("ASFML") under a delegation agreement with ASFML to cover promotional activities during the year. There was £229,000 (2019 - £76,000) due to ASFML in respect of these promotional activities at the year end.
	{B} Refer to Directors' Remuneration Report in the published Annual Report.
	{C} Payable to ASFML, balance outstanding of £23,000 (2019 - £23,000) at the year end.
	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 £6,000 (2019 - £5,000).

6.	Finance costs
		2020			2019
		Revenue	Capital	Total	Revenue	Capital	Total
		'000	'000	'000	'000	'000	'000
	Bank loans and overdraft interest	39	91	130	40	94	134
	Senior Loan Notes	301	703	1,004	301	703	1,004
	Amortised Senior Loan Note issue expenses	2	6	8	4	8	12
		342	800	1,142	345	805	1,150
	Finance costs are allocated 30% to revenue and 70% to capital.

7.	Ordinary dividends on equity shares
		2020		2019
		Rate	£'000	Rate	£'000
	Final previous year	10.00p	6,611	9.25p	6,131
	First interim current year	8.25p	5,454	8.00p	5,289
	Second interim current year	8.25p	5,454	8.00p	5,289
	Third interim 2020 current year	8.25p	5,454	8.00p	5,289
			22,973		21,998
	The fourth interim dividend for 2020 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 £20,164,000 (2019 - £23,125,000).
		2020		2019
		Rate	£'000	Rate	£'000
	Three interim dividends of 8.25p each (2019: 8.00p)	24.75p	16,362	24.00p	15,867
	Fourth interim dividend	9.50p	6,280	10.00p	6,611
		34.25p	22,642	34.00p	22,478
	The amount reflected above for the cost of the fourth interim dividend for 2020 is based on 66,110,413 Ordinary shares, being the number of Ordinary shares in issue at the date of this Report.

8.	Taxation
				2020				2019
			Revenue	Capital	Total	Revenue		Capital		Total
			£'000	£'000	£'000	£'000		£'000		£'000
	(a)	Analysis of charge for the year
		Overseas tax incurred	709	-	709	823		-		823
		Overseas tax reclaimable	(314)	-	(314)	(496)		-		(496)
		Total tax charge for the year	395	-	395	327		-		327
	(b)	Factors affecting the tax charge for the year. The UK corporation tax rate is 19% (2019 - 19%). The tax charge for the year is lower than the corporation tax rate (2019 - same). The differences are explained below:
				2020				2019
			Revenue	Capital	Total		Revenue	Capital	Total
			£'000	£'000	£'000		£'000	£'000	£'000
		Net return before taxation	20,559	(49,980)	(29,421)		23,452	19,449	42,901
		Net return multiplied by the standard rate of corporation tax of 19% (2019 - 19%)	3,906	(9,496)	(5,590)		4,456	3,695	8,151
		Effects of:
		Non-taxable UK dividends	(2,914)	-	(2,914)		(3,523)	-	(3,523)
		Non-taxable stock dividends	(154)	-	(154)		(39)	-	(39)
		Non-taxable overseas dividends	(597)	-	(597)		(747)	-	(747)
		Expenses not deductible for tax purposes	1	-	1		2	-	2
		Movement in unutilised management expenses	(242)	505	263		(149)	502	353
		Realised and unrealised losses / (gains) on investments held	-	8,969	8,969		-	(4,194)	(4,194)
		Currency movements not taxable	-	22	22		-	(3)	(3)
		Overseas tax payable	395	-	395		327	-	327
		Total tax charge	395	-	395		327	-	327
	(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 £66,866,000 (2019 - £65,478,000). A deferred tax asset at the standard rate of corporation of 19% (2019 - 19%) of £12,705,000 (2019 - £12,441,000) 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.

9.	Return per Ordinary share
		2020		2019
		£'000	p	£'000	p
	Returns are based on the following figures:
	Revenue return	20,164	30.5	23,125	34.9
	Capital return	(49,980)	(75.6)	19,449	29.4
	Total return	(29,816)	(45.1)	42,574	64.3
	Weighted average number of Ordinary shares in issue		66,110,413		66,207,141

10.	Investments at fair value through profit or loss
			2020		2019
			'000		'000
	Opening book cost		447,473		415,334
	Opening investment holdings gains		155,163		174,318
	Opening fair value		602,636		589,652
	Analysis of transactions made during the year
	Purchases at cost		175,595		134,698
	Sales proceeds received		(169,820)		(143,787)
	(Losses)/gains on investments		(47,204)		22,073
	Closing fair value		561,207		602,636
	Closing book cost		461,306		447,473
	Closing investment gains		99,901		155,163
	Closing fair value		561,207		602,636
			2020		2019
	(Losses)/gains on investments		£'000		£'000
	Realised gains on sale of investments at fair value		8,058		41,228
	Net movement in investment holdings gains		(55,262)		(19,155)
			(47,204)		22,073
	The Company received £169,820,000 (2019 - £143,787,000) from investments sold in the year. The book cost of these investments when they were purchased was £161,761,000 (2019 - £102,221,000). 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 2020, financial assets comprising shares were pledged with Credit Suisse as part of the option writing programme. The liability of collateral held at the year end was £nil as no open positions existed (2019 - nil). The collateral position is monitored on a daily basis, which then determines if further assets are required to be pledged over and above those already pledged.
	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:
		2020		2019
		£'000		£'000
	Purchases	680		704
	Sales	82		45
		762		749
	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.
		2020		2019
	Stock lending	£'000		£'000
	Aggregate value of securities on loan at the year end	-		10,301
	Maximum aggregate value of securities on loan during the year	26,479		49,867
	Fee income from stock lending	12		22
	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 2020 was £nil (2019 - £11,319,000).

11.	Other debtors and receivables
		2020	2019
		'000	'000
	Amounts due from brokers	2,610	4,514
	Prepayments and accrued income	2,244	3,468
		4,854	7,982

12.	Creditors: amounts falling due within one year
							2020				2019
							£'000				£'000
	Other creditors						960				816
	Amounts due to brokers						534				3,326
	Bank loans						6,667				6,601
							8,161				10,743
	On 8 November 2017 the Company entered into a three year £20,000,000 multi-currency unsecured revolving bank credit facility agreement with Scotiabank Europe PLC, committed until 6 November 2020. 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 2020, the Company had drawn down the following amounts from the facility, all with a maturity date of 15 July 2020:
			2020				2019
			Currency		£'000		Currency				£'000
	Swiss Franc at an all-in rate of 0.85%		3,000,000		2,562		3,360,000				2,708
	Euro at an all-in rate of 0.85%		1,800,000		1,636		3,200,000				2,863
	Norwegian Krone at an all-in rate of 1.01%		12,500,000		1,049		-				-
	Danish Krona at an all-in rate of 0.85%		6,000,000		732		-				-
	US Dollar at an all-in rate of 1.03475%		850,000		688		1,311,000				1,030
					6,667						6,601
	At the date this Report was approved, the Company had drawn down the following amounts from the facility, all with a maturity date of 14 October 2020:
	- Swiss Franc 3,000,000 at an all-in rate of 0.85%, equivalent to £2,545,000.
	- Euro 1,800,000 at an all-in rate of 0.85%, equivalent to £1,647,000.
	- Norwegian Krone 12,500,000 at an all-in rate of 0.98%, equivalent to £1,063,000.
	- Danish Krona 6,000,000 at an all-in rate of 0.85%, equivalent to £738,000.
	- US Dollar 850,000 at an all-in rate of 1.00113%, equivalent to £656,000.
	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 £275 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
						2020			2019
						£'000			£'000
	2.51% Senior Loan Notes					40,000			40,000
	Unamortised Loan Note issue expenses					(96)			(104)
						39,904			39,896
	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 £275,000,000.

14.	Called-up share capital
		2020		2019
		Shares	'000	Shares	'000
	Allotted, called-up and fully-paid:
	Ordinary shares of 25p each: publicly held	66,110,413	16,527	66,110,413	16,527
	Ordinary shares of 25p each: held in treasury	2,483,045	621	2,483,045	621
		68,593,458	17,148	68,593,458	17,148
	During the year no Ordinary shares were bought back (2019 - 561,900) to be held in treasury by the Company at a total cost of £nil (2019 - £4,355,000) representing 0.0% (2019 - 0.8%) of called-up share capital. The Company's policy relating to the purchase of its own Ordinary shares is detailed in the Directors' Report.

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 66,110,413 (2019 - 66,110,413) Ordinary shares in issue at the year end (excluding treasury shares).
		2020		2019
		Net Asset Value Attributable		Net Asset Value Attributable
		'000	pence	'000		pence
	Net asset value - debt at par	534,361	808.3	587,150		888.1
	Add: amortised cost of 2.51% Senior Loan Notes	39,904	60.4	39,896		60.4
	Less: fair value of 2.51% Senior Loan Notes	(40,266)	(61.0)	(40,138)		(60.7)
	Net asset value - debt at fair value	533,999	807.7	586,908		887.8

16.	Analysis of changes in net debt
		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)
		At	Currency		Non-cash	At
		1 July 2018	differences	Cash flows	movements	30 June 2019
		'000	'000	'000	'000	'000
	Cash and cash equivalents	22,008	(107)	5,270	-	27,171
	Debt due within one year	(6,351)	125	(375)	-	(6,601)
	Debt due after more than one year	(39,884)	-	-	(12)	(39,896)
		(24,227)	18	4,895	(12)	(19,326)
	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 2020 there were no open positions in derivatives transactions (2019 - 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 Standard Life Aberdeen 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 CFO 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 5.3% of net assets as at 30 June 2020 (2019- 3.1%). 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 is included above.

	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
						2020		2019				2020			2019
						£'000		£'000				£'000			£'000
	Danish Krone					-		70				7,606			12,350
	Euro					-		-				20,590			12,361
	Norwegian Krone					-		-				12,517			-
	Sterling					16,365		26,900				480,762			530,930
	Swedish Krona					-		-				-			3,826
	Swiss Francs					-		127				31,845			30,069
	US Dollars					-		74				7,887			13,100
	Total					16,365		27,171				561,207			602,636
	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 a fixed rate senior loan note issue, 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 2020 and net assets would increase/decrease by £97,000 (2019 - £206,000) 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 excluding other debtors and receivables and other payables falling due within one year:
			30 June 2020										30 June 2019
							Net								Net
							monetary			Total					monetary	Total
							assets/			currency					assets/	currency
			Investments				(liabilities)			exposure			Investments		(liabilities)	exposure
			£'000				£'000			£'000			£'000		£'000	£'000
	Danish Krone		7,606				(732)			6,874			12,350		70	12,420
	Euro		20,590				(1,636)			18,954			12,361		(2,863)	9,498
	Norwegian Krone		12,517				(1,049)			11,468			-		-	-
	Swedish Krona		-				-			-			3,826		-	3,826
	Swiss Francs		31,845				(2,562)			29,283			30,069		(2,581)	27,488
	US Dollars		7,887				(688)			7,199			13,100		(956)	12,144
	Total		80,445				(6,667)			73,778			71,706		(6,330)	65,376
	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.
															2020	2019
															£'000	£'000
	Danish Krone														687	1,242
	Euro														1,895	950
	Norwegian Krone														1,147	-
	Swedish Krona														-	383
	Swiss Francs														2,928	2,749
	US Dollars														720	1,214
	Total														7,377	6,538

	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", 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 2020 would have increased/decreased by £56,120,000 (2019 - £60,264,000).
	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 2020			£000	£000	£000	£000	£000
	Bank loans			6,667	-	-	-	6,667
	Loan Notes			-	-	-	40,000	40,000
	Interest cash flows on bank loans and loan notes			1,006	2,008	2,008	2,510	7,532
	Cash flows on other creditors			1,494	-	-	-	1,494
				9,167	2,008	2,008	42,510	55,693
				Within	Within	Within	More than
				1 year	1-3 years	3-5 years	5 years	Total
	At 30 June 2019			£000	£000	£000	£000	£000
	Bank loans			6,601	-	-	-	6,601
	Loan Notes			-	-	-	40,000	40,000
	Interest cash flows on bank loans and loan notes			1,008	2,008	2,008	3,514	8,538
	Cash flows on other creditors			4,142	-	-	-	4,142
				11,751	2,008	2,008	43,514	59,281
	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 2020 the Company utilised £6,667,000 (2019 - £6,601,000) of a £20,000,000 (2019 - £20,000,000) multi-currency revolving bank credit facility, which is 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 2020 and the redemption of the loan amounted to £6,669,000 (2019 - £6,605,000).
	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 2020 is £19,916,000 (30 June 2019 - £33,824,000) consisting of £941,000 (2019 - £2,139,000) of dividends receivable from equity shares, £2,610,000 (2019 - £4,514,000) receivable from brokers and £16,365,000 (2019 - £27,171,000) in cash held. The Company considers the credit risk relating to its stocklending activities to have been immaterial in the year under review.
	None of the Company's financial assets are past due or impaired (2019 - 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 senior loan note has been calculated as £40,266,000 (2019 - £40,138,000), 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 £39,904,000 (2019 - £39,896,000).
		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.		Related party transactions and transactions with the Manager. Fees payable during the year to the Directors and their interests in shares of the Company are considered to be related party transactions and are disclosed within the Directors' Remuneration Report in the published 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.
20.		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 above); 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.

21.	Subsequent events. The Company announced, on 29 July 2020, that heads of terms had been agreed for a combination of the Company with Perpetual Income and Growth Investment Trust plc, which is subject to approval by each company's shareholders and obtaining the requisite consents from each company's noteholders.
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 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%
		Share
Year ended 30 June 2019		Price		NAV
Opening at 1 July 2018	a	784.0p		856.3p
Closing at 30 June 2019	b	850.0p		888.1p
Price movements	c=(b/a)-1	8.4%		3.7%
Dividend reinvestment{A}	d	4.8%		4.2%
Total return	c+d	13.2%		7.9%
{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.
			2020		2019
NAV per Ordinary share (p)	a		808.3		888.1
Share price (p)	b		768.0		850.0
Discount	(b-a)/a		-5.0%		-4.3%
Dividend cover. Dividend cover is the revenue return per share divided by dividends per share expressed as a ratio.
			2020		2019
Revenue return per share	a		30.50p		34.93p
Dividends per share	b		34.25p		34.00p
Dividend cover	a/b		0.89		1.03
Dividend yield. The annual dividend of 34.25p per Ordinary share (30 June 2019 - 34.00p) divided by the share price of 768.00p (30 June 2019 - 850.00p), expressed as a percentage.
			2020		2019
Dividends per share	a		34.25p		34.00p
Share price	b		768.00p		850.00p
Dividend yield	a/b		4.5%		4.0%
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.
			2020		2019
Borrowings (£'000)	a		46,571		46,497
Cash (£'000)	b		16,365		27,171
Amounts due to brokers (£'000)	c		534		3,326
Amounts due from brokers (£'000)	d		2,610		4,514
Shareholders' funds (£'000)	e		534,361		587,150
Net gearing	(a-b+c-d)/e		5.3%		3.1%
Ongoing charges. The ongoing charges ratio has been calculated in accordance with guidance issued by the AIC as the total of investment management fees and administrative expenses and expressed as a percentage of the average net asset values with debt at fair value throughout the year.
			2020		2019
Investment management fees (£'000)	a		2,660		2,624
Administrative expenses (£'000)	b		1,105		1,013
Less: non-recurring charges{A} (£'000)	c		(105)		(20)
Ongoing charges (£'000)	a+b+c		3,660		3,617
Average net assets (£'000)	d		570,683		553,095
Ongoing charges ratio	(a+b+c)/d		0.64%		0.65%
{A} 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

Investment Portfolio

As at 30 June 2020
	Valuation	Total	Valuation
	2020	investments	2019
Investment	£'000	%	£'000
AstraZeneca	26,164	4.7	16,153
GlaxoSmithKline	22,537	4.0	16,892
Relx	21,597	3.9	18,152
Unilever	20,577	3.7	19,916
Diageo	20,393	3.6	23,526
BHP Group	20,037	3.6	22,145
Rio Tinto	19,815	3.5	15,576
British American Tobacco	17,634	3.1	10,056
National Grid	17,056	3.0	13,391
Aveva	16,420	2.9	17,796
Top ten investments	202,230	36.0
Roche Holdings	14,859	2.6	15,797
Assura	14,641	2.6	11,541
Close Brothers	13,514	2.4	12,344
Prudential	13,355	2.4	20,609
SSE	12,735	2.3	7,872
Total	12,256	2.2	-
Mondi	11,650	2.1	-
Coca-Cola HBC	10,700	1.9	-
Inchcape	10,674	1.9	12,593
Rentokil Initial	10,389	1.9	9,563
Top twenty investments	327,003	58.3
Standard Chartered	10,059	1.8	13,951
Croda International	10,032	1.8	9,981
Nestlé	9,536	1.7	8,680
LondonMetric Property	9,475	1.7	7,558
M&G	9,316	1.7	-
Euromoney Institutional Investor	9,310	1.6	9,999
Ashmore Group	8,874	1.6	9,478
BP	8,682	1.5	20,355
Telenor	8,555	1.5	-
Telecom Plus	8,521	1.5	8,449
Top thirty investments	419,363	74.7
Smith & Nephew	8,470	1.5	7,985
Kone	8,334	1.5	9,614
Microsoft	7,887	1.4	13,101
Countryside Properties	7,653	1.4	12,061
Novo-Nordisk	7,606	1.3	8,213
VAT Group	7,449	1.3	5,591
Howden Joinery	6,744	1.2	8,682
Convatec	6,478	1.2	-
Sirius Real Estate	6,325	1.1	1,104
XP Power	5,985	1.1	3,779
Top forty investments	492,294	87.7
Bodycote	5,980	1.1	7,895
Weir Group	5,839	1.0	6,575
John Laing	5,824	1.0	-
Marshalls	5,569	1.0	7,550
Big Yellow Group	5,317	0.9	8,183
Polypipe	5,257	0.9	-
Standard Life UK Smaller Companies Trust	4,950	0.9	5,048
Dechra Pharmaceuticals	4,579	0.8	-
Fever-Tree	4,225	0.8	-
Chesnara	4,215	0.8	4,888
Top fifty investments	544,049	96.9
Mowi	3,962	0.7	-
National Express	3,295	0.6	-
Unite Group	3,135	0.6	-
Associated British Foods	2,892	0.5	11,453
Sanne	2,804	0.5	-
Diversified Gas & Oil	1,070	0.2	-
Total investments	561,207	100.0

MURRAY INCOME TRUST PLC

Summary of Investment Changes during the year

	Valuation				Valuation
	30 June 2019		Transactions	(Losses)/gains	30 June 2020
	£'000	%	£'000	£'000	£'000	%
Equities
UK	530,930	88.1	(4,395)	(56,472)	470,063	83.8
Denmark	12,350	2.0	(6,636)	1,892	7,606	1.3
Finland	13,440	2.2	(6,536)	1,430	8,334	1.5
France	-	-	11,703	553	12,256	2.2
Ireland	2,747	0.5	(733)	(2,014)	-	0.0
Norway	-	-	15,530	(3,013)	12,517	2.2
Switzerland	30,069	5.0	6,797	5,678	42,544	7.6
United States	13,100	2.2	(9,955)	4,742	7,887	1.4
Total investments	602,636	100.0	5,775	(47,204)	561,207	100.0

The financial information set out above does not constitute the Company's statutory accounts for the years ended 30 June 2020 or 2019 but is derived from those accounts. Statutory accounts for 2019 have been delivered to the registrar of companies and those for 2020 will be delivered in due course. The statutory accounts for the financial year ended 30 June 2020 have been approved by the Board. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The Company's Annual General Meeting will be held at 12.30pm on 27 November 2020 at Bow Bells House, 1 Bread Street, London EC4M 9HH.

The Annual Report will be posted to shareholders in October 2020 and will  be available shortly from the Company's website at: www.murray-income.co.uk.

By Order of the Board

ABERDEEN ASSET MANAGEMENT PLC

Secretaries

22 September 2020

END

 

END

 

 

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