Annual Financial Report

RNS Number : 2178A

Murray Income Trust PLC

22 September 2022

 

MURRAY INCOME TRUST PLC

Legal Entity Identifier (LEI):  549300IRNFGVQIQHUI13

 

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2022

An investment trust founded in 1923 aiming for high and growing income with capital growth

Investment Objective

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

 

Financial Calendar

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

Performance Highlights

Net asset value total returnAB			Share price total returnAB
(4.0)%			(0.7)%
2021: +20.6%			2021: +18.5%
Benchmark total returnAC			Ongoing chargesB
+1.6%			0.48%
2021: +21.4%			2021: 0.46%
Earnings per share (revenue)			Dividend per share
40.5p			36.00p
2021: 33.7p			2021: 34.50p
Discount to net asset valueB			Dividend yieldB
3.8%			4.3%
2021: 6.8%			2021: 4.0%
A Total return.
B Considered to be an Alternative Performance Measure.
C The Company's benchmark is the FTSE All-Share Index.

Chairman's Statement

 

Highlights

· a poor second half resulted in full year performance behind the FTSE All-Share Index

· total dividends per share increased by 4.3% to 36.00p, the 49^th year of consecutive increase

· the dividend yield was 4.3% based on the year end share price of 832.0p

Review of the Year ended 30 June 2022
(the "Year")

Having been a little ahead of the FTSE All-Share Index (the "Benchmark") at the interim stage, it is disappointing to report that the total return numbers for the Year show your NAV decreasing by 4.0% and your share price falling marginally by 0.7%. Your Company has underperformed the Benchmark which has seen a total return of 1.6%. The pain was clearly taken in the second half and performance attribution analysis shows that the underperformance can be pinned in broadly equal parts on style rotation and stock selection.  Although your Manager's investment style does not lead to a technology or an internet bias, its search for "quality" means it will typically be underweight the "value" sectors of the market. Additionally, like many other managers, their ESG work has led them to have a low exposure to oil and gas stocks. Prompted by the Nasdaq sell off that began in January, and accelerated by the Russian invasion of Ukraine that led to commodity prices rising dramatically, what were deemed low-quality resource and bank stocks have performed very strongly. Compounding this unfriendly style rotation were some stock specific issues, as ever, easier to see with hindsight. Coca Cola Hellenic, Inchcape and Mondi (representing 5.7% of NAV, in aggregate) were hit by their Russian exposure. Countryside Partnerships had problems all of its own making. The Investment Manager explains performance in further detail in the Investment Manager's Review.

The Board has declared a fourth interim dividend per share of 11.25p, payable on 15 September 2022, which makes a total for the Year of 36.0p, an increase of 4.3% on the 34.5p per share paid in the previous year. This marks the 49^th consecutive year of dividend increases, securing our continued place on the AIC's list of Dividend Heroes.

Revenue per share for the year grew to an all-time high of 40.5p, up 20.2% from the previous year's 33.7p, and the 36.00p dividend was 112% covered by net income received during the Year. As a consequence, we were able to use the excess to bolster revenue reserves per share from 12.9p to 17.5p, equivalent to 48% of the current annual dividend of 36.00p, up from 37% coverage at the previous year end. The Board gave extensive consideration as to how much to grow the dividend, recognising the impact that inflation is having on shareholders' real income, and how much to add to reserves. Two factors influenced us in our decision. First, the Board's aim is that revenue reserves per share be in the range of a half to a full year's dividend per share.  Second is our Investment Manager's projection that revenue per share is expected to fall next year before rising again thereafter, affected by the absence of some companies' post-Covid-19 bumper dividends and the effects of continued supply chain disruption, as well as increasing inflation.

Environmental, Social and Governance ("ESG")

ESG considerations are deeply embedded into the company analysis carried out by our Investment Manager, which is able to draw on the expertise of more than 40 in-house ESG specialists. This aims to mitigate risk and enhance returns, 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. It is important to note that the policy pursued by our Investment Manager on our behalf is dynamic rather than static. ESG conclusions can change if the inputs change: for example, one might look at Russia's invasion of Ukraine and conclude that the social factor of security and safety is more important now than previously considered. Similarly, one might consider energy security be given a higher weight relative to absolute CO₂ emissions and come to a different conclusion on holding an oil or gas stock.

Discount

From the start to the end of the Company's year, the discount at which the Company's share traded relative to the NAV, narrowed from 6.8% to 3.8%. The average discount over the year was 6.1% and the range was 3.1% to 8.2%. The Board monitors the discount level closely and requests permission from shareholders at each AGM to renew the buyback and issuance policy.

Share Capital

The Company bought back 356,015 shares into Treasury during the Year, equivalent to 0.3% of share capital. No shares were issued or sold from Treasury. As at 30 June 2022, there were 116,690,472 Ordinary 25p shares in issue with voting rights and 2,839,060 shares held in Treasury.

Ongoing Charges

The 2020 merger with Perpetual Income & Growth Investment Trust has enabled us to reduce substantially the level of ongoing charges to shareholders. The largest cost is the investment management fee payable to abrdn which is calculated on a sliding scale with a marginal rate of 0.25% per annum on assets over £450m. The effect of expanding the Company has produced a blended management fee rate of 0.40% for the Year.

With most of the other ongoing charges being fixed costs, the Company's overall ongoing charges rate has risen marginally to 0.48%, from 0.46%, as the NAV has fallen.

Borrowing and Gearing

The Board reviews on a regular basis both the Company's borrowings and the use of those borrowings to gear the portfolio. The Company has £100m of long-term borrowings with £40m due in 2027 and £60m due in 2029 at a blended annual interest rate of 3.6%. During the Year, the short-term multicurrency facility with The Bank of Nova Scotia Limited  was increased by £30m to £50m. Consequently, at the year end, the Company had £150m of borrowing facilities available representing 14.9% of net asset value. With the beta of the investment portfolio currently running at 0.9 (typical of the Investment Manager's style), the Board believes that the appropriate neutral gearing rate is 10%. At the year end the actual gearing rate was 9.4% (2021: 10.3%). The annual cost of the Company's current borrowings was 0.23% of the year end NAV.

Board Composition

As previously announced, Jean Park and Donald Cameron retired from the Board at the conclusion of the November 2021 AGM, both having served their full nine-year terms. We were pleased to announce that Nandita Sahgal Tully joined us shortly thereafter, bringing with her more than 25 years' experience in financial services, including ESG and impact investing in both the UK and emerging markets,. These changes take the Board back to its normal complement of six Directors.

Shareholder Presentation on 2 November 2022

After welcoming shareholders to our Annual General Meeting in London on 1 November 2022 we will also hold an online presentation for existing and potential shareholders at 2pm on 2 November 2022. This will include the opportunity to pose questions to your Chairman and Investment Manager.

Please register for this event at: https://events.abrdn.com/zo7Yk3 or via the Company's website. Questions may also be submitted in advance to [e-mail] .

Annual General Meeting

The Company expects to hold the Annual General Meeting ("AGM") in its traditional format, without any restrictions imposed by measures to restrict the transmission of Covid-19. The Company will update shareholders as to any changes to the proposed arrangements for the AGM through its website at murray-income.co.uk and, where appropriate, through announcement on the London Stock Exchange.

The AGM will be held at 12.30pm on 1 November 2022 at The Mermaid Conference Centre, Puddle Dock, Blackfriars, London EC4V 3DB. One of the advantages of investing via investment trusts is that all shareholders have the opportunity to meet their Investment Manager and the Directors at the AGM. This year's meeting will commence with a presentation on the Company and market outlook from our Investment Manager, Charles Luke. There will then be the formal part of the meeting where shareholders get to ask questions about, and vote on, the AGM resolutions. After this will be an informal lunch at which shareholders will be able to chat to the Investment Manager and Directors. Shareholders may bring a guest with them to the meeting.

I always welcome questions from our shareholders at the AGM. Shareholders are asked to submit their questions prior to the meeting (and in any event by no later than 18 October 2022) by email to [e-mail] in relation to the Annual Report, the Notice of AGM or the Company more generally. This is also the email address if you wish to attend the AGM and are unsure how to register. The Board and/or the Investment Manager will endeavour to respond to all such questions received.

Update

From 30 June 2022 to 16 September 2022, being the latest practicable date prior to approval of this Report, the share price total return and NAV per share total return were -2.8% and 1.5%, respectively, as compared to the Benchmark total return of 1.9%.

Outlook

The Outlook section of the Chairman's Statement is always the most difficult to write. It obviously has to be a considered and realistic reflection on the outlook for the Company. But there is also an expectation for a wider commentary and opinion on the outlook for markets. Plus there's scope for a personal touch. I'm still surprised at how many Chairman's statements appear to be written by the Manager instead of the Chairman. I start writing in July once the preliminary performance numbers come in and I've been briefed about our Investment Manager's review. After a couple of drafts, it is submitted to the Company Secretary who distributes it to the rest of the Board for review in late August. My fellow Directors then provide a welcome, and sometimes robust, number of edits and often a section has to be completely rewritten because it has been overtaken by events. Eventually, by the time of our September Board meeting, we agree the final wording for inclusion in the Annual Report for issue to shareholders.

We find ourselves in a scarcely credible era of uncertainty and without strong political, economic or social leadership. Domestic politics, geopolitical tensions and war, inflation, labour shortages, recession, strikes, energy shortages; all these factors have the capacity to heavily affect the outlook for the companies in which we invest. Every one of them is impossible to predict with confidence at the moment. So what is the outlook? In truth, we can't be sure.

All the issues are fixable but not without strong leadership. That's the most concerning thing this time around. After similar issues in the 1970s, the 1980s saw Margaret Thatcher, Ronald Reagan, Mikhail Gorbachev and, perhaps most importantly, Paul Volcker (chairman of the US Federal Reserve from 1979 to 1987) provide very strong leadership and guide their countries to recovery. I'm a naturally optimistic person so I scour the TV news and politics programmes for the world's new generation of strong leaders which will take us towards recovery. I'm still looking. Full recovery may take a long time.

What will happen to the companies in our portfolio while we wait? Based on trailing earnings, the PER (price to earnings ratio, the most popular stock valuation measure) of our current portfolio is 13x. That is down from 16x six months ago and is the lowest I have seen it in the eight years I have been a Director. It has been as high as 20x. To me that means that a lot of the bad news is priced in. If you think about the headlines we've been reading these past six months, it is possible to make a case that much of the bad news is behind us. But note that this is a valuation measure based on the previous 12 months of earnings. If corporate earnings are about to tumble, then stock markets could move down in parallel and still give the same valuation. That's the real danger, so not surprisingly our Investment Manager is analysing our holdings' earnings prospects with extra vigilance. One of the main reasons behind our Investment Manager's quality philosophy is that the companies selected should be sufficiently robust and well managed to withstand turbulent times like these. We have great faith in our Investment Manager's long-term investment approach.

In theory, it should be a good moment for quality. In reality, we will have to wait and see.

Neil Rogan
Chairman
21 September 2022

Investment Manager's Review

Background

For the UK equity market, the year ended 30 June 2022 (the "Year") started with continued good progress aided by robust earnings delivery and supportive oil prices. This was despite concerns around Covid-19 (in particular the Delta variant in July 2021 and the Omicron variant from November 2021). While the stockmarket recognised rising prospects for inflation and higher interest rates, these were not yet seen as a risk. As the Year progressed these two factors were increasingly in focus and have largely driven stockmarket direction in the second half of the Year. Early in 2022, the rising stockmarket stalled, as higher interest rates led to a sharp market rotation away from growth stocks and towards more value sectors. This rotation was exacerbated as tensions escalated in eastern Europe with the sharpest fall on 24 February 2022 when Russian troops invaded and launched attacks on airports and military sites in Ukraine. The impact of the Russian invasion on commodity prices increased inflationary pressures globally. Markets recovered somewhat soon after but ongoing fears of higher inflation and the risk of a global recession fuelled a fresh wave of selling in June 2022.

Domestic economic data published across the Year reflected the circuitous return to more normal economic conditions. Growth was initially aided by the lifting of the remaining legal restrictions to control Covid-19 in late February 2022. However, the rebound in activity levels combined with tight supply in many areas and higher commodity prices meant that levels of inflation have repeatedly been higher than expected. The last reading of 9.9% in August (as measured by the Consumer Prices Index) marked another 40-year high, down slightly from 10.1% for July. Energy prices, as well as clothing, food and second-hand car prices, have been major factors, compounded by ongoing global supply chain issues.

The Bank of England ("BoE") raised interest rates to 0.25% at its December meeting, which was the first movement for over three years, before an additional four increases resulted in a rate of 1.25% by 30 June 2022.  In early August 2022, the BoE revised its forecasts for peak inflation of 13% in late 2022, driven by higher household energy prices. A predicted contraction in  GDP for up to five quarters signalled that the UK would enter a recession. At the same time the BoE announced a further 0.5% increase in interest rates, to 1.75%, the largest single rise in 27 years.

Overseas, the global economy is expected to slow in 2022 as remaining outbreaks of Covid-19 variants, supply bottlenecks and the Russian invasion of Ukraine all weigh on activity. At each of their June 2022 and July 2022 meetings, the US Federal Reserve raised rates by 0.75% as it sought to control inflation. China continues to operate a zero-Covid-19 policy which has led to renewed lockdowns and weak GDP data.  Oil and other commodity prices have increased over the Year driven by the Russian invasion of Ukraine and concerns over supply disruptions. Risks of sustained higher prices are greater due to a period of under investment compounded by supply disruption. The International Monetary Fund expects the global economy to grow by only 3.6% in each of 2022 and 2023, as compared to growth of 6.1% in 2021.

Equities were stable over the Year, although that masks the underlying volatility experienced by markets. The Benchmark ended the Year 1.6% higher on a total return basis (that is, with dividends reinvested), but that came as a result of a 6.5% rise in the second half of calendar 2021, followed by a 4.6% fall in the first six months of 2022. The energy sector performed exceptionally strongly in the Year as oil and gas prices spiked. On the other hand the weakest performance was seen in the technology sector where valuations of long-dated cash flows were impacted by the significant rise in base rates. In a broad reversal of the prior year's performance, the more defensive areas of the market such as healthcare, utilities and telecommunications performed well while more cyclical, economically-sensitive areas of the market such as consumer discretionary and industrials underperformed.

From a size perspective, reversing the pattern of the previous year, the FTSE 100 Index significantly outperformed both the Mid 250 and Small Cap Index, with the divergence in performance most prevalent in the first half of 2022.

Performance

The Company generated a negative net asset value per share total return of 4.0% for the Year which compares to a strong 20.6% rise in the prior year. The benchmark FTSE All-Share Index increased by 1.6% over the Year. The portfolio modestly outperformed in the first and second quarters of the Year but underperformed during the third and final quarters. This relative underperformance since the start of 2022 reflects a market style rotation from growth and quality to value, initially benefitting the energy and financial sectors, with the outperformance of energy sustained following the Russian invasion of Ukraine. Interest rate increases, as central banks look to control rising inflation, have meant growth companies with long-dated cash flows underperformed. Given the portfolio's focus on high quality companies, underweight position in energy and tobacco stocks, and  its above Benchmark exposure to mid-cap companies, it is unsurprising that the portfolio underperformed in these circumstances.

Long term returns remain positive compared to the Benchmark and it is also important to consider risk-adjusted returns or, in other words, how much performance is being generated for each unit of risk. One measure of this is the 'information ratio' and it was pleasing that the Company, for the second consecutive year, was awarded the Citywire UK Equity Income Investment Trust of the Year for a three year information ratio considerably ahead of all of its peers.

On a total return basis, the Company's share price decreased by 0.7% which reflected a narrowing of the discount to Net Asset Value at which the shares traded from 6.8% to 3.8%.

In absolute terms, taking account of the £60m of senior secured fixed rate notes 2029, £40m of senior secured fixed rate notes 2027, as well as £6.5m drawn down from an unsecured multi-currency revolving credit loan facility agreement with The Bank of Nova Scotia Limited, debt was £106.5m at the end of the Year. The net gearing was 9.4% at the end of the Year as compared to 10.3% at the end of the prior year.

Looking specifically at the Company's portfolio, asset allocation and stock selection both held back performance over the Year with asset allocation being a more significant contributor to underperformance than stock selection where the impact was more modest. Negative asset allocation in the Year primarily reflected the portfolio's lower exposure to the energy sector and higher exposure to the industrials and financials sectors.

Turning to the individual holdings, there were numerous companies that demonstrated strong share price increases. The share prices of Novo Nordisk , Drax , and Total Energies all increased by over 40% during the Year. However, the two poorest share price performances were from Countryside Partnerships and Ashmore whose share prices both fell by 52%. Countryside Partnerships underperformed as the company announced the CEO would be stepping down following poor execution and a failure to meet build targets. In our view the issues the company faced are fixable and partnership housing remains an attractive segment of the market given structural demand growth and high returns. The shares of Ashmore have been weak as emerging market debt has been out of favour leading to fund outflows. The holdings in Coca Cola Hellenic , Inchcape and Mondi also contributed negatively to performance, with each of these companies having exposure to Russia and/or Ukraine .

Performance Attribution for the year ended 30 June 2022

		%
Net Asset Value total return for year per Ordinary share			-4.0
FTSE All Share Index total return			1.6
Relative return		-5.6
Relative return
	Stock selection
	Energy		-0.2
	Basic Materials		-0.5
	Industrials		0.1
	Health Care		0.3
	Consumer Staples		-0.6
	Consumer Discretionary		0.4
	Telecommunications		-0.3
	Utilities		0.3
	Technology		0.2
	Financials		-1.0
	Real Estate		0.5
	Total stock selection (equities)		-0.8
	Asset allocation (equities)
	Energy		-1.6
	Basic Materials		-0.1
	Industrials		-1.7
	Health Care		-0.6
	Consumer Staples		-0.8
	Consumer Discretionary		0.5
	Telecommunications		-0.1
	Utilities		0.4
	Technology		-0.8
	Financials		0.9
	Real Estate		-0.3
	Total asset allocation (equities)		-4.2
	Cash & options		0.4
	Gearing		-0.4
	Administrative expenses		-0.2
	Management fees		-0.4
Total			-5.6
Sources : abrdn, BNP
Notes: Stock Selection - measures the effect of equity selection relative to the benchmark. Asset Allocation - measures the impact of over or underweighting each industry basket in the equity portfolio, relative to the benchmark weights. Cash & options effect - measures the impact on relative returns of the two asset categories. Gearing effect - measures the impact on relative returns of net borrowings. Administrative expenses and management fees - these reduce total assets and therefore reduce performance.

Portfolio Activity and Structure

Turnover of approximately 18% was lower than in the prior year. The pattern of trades reflects reduced exposure to several of the largest companies in the market and a willingness to increase the active share of the portfolio (being its similarity to the constituents of the Benchmark), which is now approximately 70%, while further both improving the quality of the portfolio and maintaining the focus on capital and dividend growth.

Eleven new holdings, of which three were large cap companies, were added to the portfolio. The first of these was Experian , the global information services company, which has high margins and strong pricing power, meaning this winning business should prove resilient to higher inflationary pressures. We also started a position in London Stock Exchange Group , the global financial markets infrastructure and data provider, where there are long-term structural drivers and signs of good operational progress as it integrates the Refinitiv business. The sale of Rio Tinto (see below) allowed the purchase of Anglo American given its strong ESG characteristics and greater exposure to future-facing commodities.

There were five mid-cap company introductions. The first was Drax , the renewable energy company working with waste wood products, where we see upside potential from BECCS (bioenergy with carbon capture and storage) which now has robust political backing, support from higher UK power prices and an attractive dividend yield. The second mid-cap new entrant was insurer Hiscox where we believe the strength of the retail business is underappreciated and the company should benefit from a stronger rate environment. We participated in the IPO of private equity firm Bridgepoint , which has an experienced management team and good client relationships. The fourth purchase was HomeServe , the home emergency and repair services provider, where we saw the valuation as attractive given the good growth potential in the US as well as a generous dividend yield. The final mid-cap new entrant was a position in the high quality, high end scientific instruments business, Oxford Instruments . The business is exposed to high growth markets and the management team have a good track record. The valuation became particularly attractive in light of the withdrawal of the bid from Spectris.

Two overseas holdings were added to the portfolio. The first was Nordea which we view as a higher returning bank operating in the Nordic region with an attractive dividend yield. The return of positive interest rates will have a material positive impact on bank profitability, and with a strong capital position this should translate into appealing shareholder distributions. We also started a new position in Singapore-listed Oversea-Chinese Banking Corp which provides attractive exposure to Asian banking, wealth management and insurance markets and should be a beneficiary of rising rates. Also, one small cap company was introduced, Watkin Jones , a developer with a
market-leading position which provides exposure to the attractive build to rent and purpose built student accommodation markets

In addition, we increased exposure to a number of our existing holdings which we believe have high quality characteristics with attractive long term growth prospects including: Aveva , RS Group , BP , Intermediate Capital , Moonpig , Rentokil , Sage , and Unilever .

We sold fourteen holdings during the Year. Firstly, LondonMetric , as we believed that after a period of strong performance, the valuation and dividend yield of the company was no longer compelling.  Secondly, the small holding in Telecom Plus was exited given the uncertain industry backdrop. Thirdly, the very small holding in Jackson Financial shares that were received when the business was demerged from Prudential were sold. In the first half of the Year both John Laing and Sanne were sold at a pleasing profit following bids. The position in beverage company Fever-Tree was exited as persistent earnings downgrades weakened our conviction while the stock was also still valued at a premium rating. The holding of mining company Rio Tinto was sold with the proceeds used to purchase a holding in Anglo American . Similarly, later in the Year, the position in private equity firm Bridgepoint was sold with proceeds reinvested into Intermediate Capital . Following the firm offer from Brookfield the position in HomeServe was sold, providing an excellent return over a relatively short timeframe. Four holdings with some cyclical exposure, which had become smaller positions in the portfolio after profit taking during the Year, were sold, namely Bodycote , DS Smith , Prudential and Sirius Real Estate . Finally, the small position in Woodside Energy that was received through the BHP spin-off was sold.

In addition, we took profits in a number of holdings that had performed strongly and where the valuation had started to look less attractive including AstraZeneca , Dechra Pharmaceuticals , VAT Group and National Grid .

We continued our measured option-writing programme which is based on our fundamental analysis of the holdings in the portfolio.  We believe that the option-writing strategy has been of benefit to the Company by diversifying and increasing the level of income generated. It also provides headroom to invest in companies with lower starting yields but better dividend and capital growth prospects. Income from writing options of £2.8m represented 5.5% of total income earned in the 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, capital allocation and M&A activity, and risk management (including issues such as labour management, diversity & inclusion, climate change and environmental issues). 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 and remuneration committees.  The portfolio continues to be independently rated as 'AAA' (the highest level) by MSCI for its ESG characteristics.

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 61 holdings with the overseas exposure representing 14.2% of gross assets.

Income

For the Year, the Company witnessed a significant increase in the level of income due to the addition of new dividend-paying holdings, growth in the dividends of existing portfolio companies and a number of special dividends. Six special dividends (from Kone , Rio Tinto , Mowi , Fever-Tree , Anglo American and VAT Group ) were included in income from investments and were treated as revenue items. We believe that this recognition is appropriate given that, in each case, the return of cash was from a build-up of profits generated by ongoing operations rather than from a sale of assets.

According to Link Group's most recent UK Dividend Monitor report, UK plc dividends are expected to rise by 2.4% for calendar 2022 (following the 12.5% increase for calendar 2021), with a record pay-out in the second quarter, signalling a swifter recovery from the difficult times experienced during Covid-19. The Company's earnings per share increased by 20.2% from 33.7p to 40.5p. Helped by bumper dividends from mining holdings Rio Tinto and BHP , earnings per share for the Company surpassed pre-pandemic levels in the Year.  We remain confident about the long term income growth potential of the portfolio but income for the year ended 30 June 2023 is unlikely to match the exceptional income for the Year.

Outlook

Looking forward, the outlook is becoming more difficult with a tightening policy backdrop and inflationary challenges coupled with the implications of the Russian invasion of Ukraine, all leading to slower global growth. Despite that there are reasons to be confident in the outlook for the Company. Our focus on quality companies provides protection through a downturn: those companies with pricing power, high margins and strong balance sheets are better placed to navigate a more challenging economic environment and emerge in a strong position. Furthermore, these quality characteristics are helpful in underpinning the portfolio's income generation.

The valuations of UK-listed companies remain attractive on a relative and absolute basis. Moreover, the dividend yield of the UK market remains at an appealing premium both to other regional equity markets and to other asset classes. Indeed, we believe that in many cases the attractiveness of our holdings is not reflected in their share prices, particularly given the underlying strengths of the businesses. This view is reflected in the bids for holdings including HomeServe and Euromoney . We think a fair proportion of the portfolio may be vulnerable to corporate activity and it is noteworthy that private equity purchasers often look for attractive quality characteristics in potential acquisitions that dovetail with our investment criteria. Furthermore, international investors remain underweight the UK; this provides an additional underpin.

In summary, we feel comfortable maintaining our long term focus on investments in high quality companies with robust competitive positions and strong balance sheets,  which are led by experienced management teams and are capable of delivering sustainable earnings and dividend growth.

Charles Luke and Iain Pyle
Investment Manager
21 September 2022

Investment Case Studies

London Stock Exchange Group

With a market capitalisation of approximately £46bn, London Stock Exchange Group was purchased for the portfolio during the year. With the acquisition of Refinitiv in 2021 the company has continued its transformation from a traditional exchange towards being a global financial markets infrastructure and data provider. Approximately 70% of revenues now come from providing Data & Analytics services, exposing the group to the structural growth in demand for financial data. A similar portion of group revenues are recurring, subscription-based in nature which provides resilience. We see some areas of the business, for example the clearing house LCH, as having very high barriers to entry. The cash generative nature of the group means that the balance sheet has strengthened quickly following the Refinitiv acquisition. We think that accelerating revenue growth and delivery of revenue and cost synergies will lead to the company being valued as a leading information services company with clear quality characteristics.

Oxford Instruments

Oxford Instruments, the provider of high technology instrumentation products and services to industrial and scientific research communities, was added to the portfolio in the year. The company has an approximate market capitalisation of £1.1bn. Oxford Instruments is a technological leader in the products it provides and strong commercial leadership has ensured strong customer relationships and high barriers to entry. The company is well diversified by end market, customer type and geographically which helps mitigate volatility and we think its strong pricing power will be helpful in the current environment. The financials of the company are on an improving trajectory with revenue growth aligned to the long-term growth in research and development budgets and expanding margins. The company has a net cash balance sheet and high returns. We added the stock to the portfolio following the withdrawal of a bid for the company from Spectris which created a particularly attractive entry point for the valuation of a company with strong fundamentals and good prospects over the medium to long term.

Performance

Performance (total return, including reinvested dividends)

	1 year return	3 year return	5 year return	10 year return
	%	%	%	%
Share priceA	-0.7	+10.8	+29.6	+100.7
Net asset value per Ordinary shareA	-4.0	+9.6	+22.9	+101.3
BenchmarkB	+1.6	+7.4	+17.8	+94.6
A Considered to be an Alternative Performance Measure.
B FTSE All-Share Index.
Source: abrdn & Morningstar

Ten Year Financial Record

Year end 30 June	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022
Income (£'000)	23,566	23,926	25,476	24,838	26,667	25,987	25,597	22,804	35,979	51,018
Shareholders' funds (£'000)	492,878	547,652	515,888	515,036	576,462	570,929	587,150	534,361	1,093,859	1,009,255
Per Ordinary share (p)
Net revenue return	31.1	30.5	33.1	32.0	34.9	33.6	34.9	30.5	33.7	40.5
DividendsA	30.75	31.25	32.00	32.25	32.75	33.25	34.00	34.25	34.50	36.00
Net asset value (capital only)	734.6	805.2	757.1	766.5	860.1	856.3	888.1	808.3	934.6	864.9
A The figures for dividends per share reflect the years to which their declaration relates and not the years they were paid.

Financial Highlights and Dividends

	30 June 2022	30 June 2021	% change
Shareholders' funds (£'000)	1,009,255	1,093,859	-7.7
Net asset value per Ordinary share - debt at par	864.9p	934.6p	-7.5
Market capitalisation (£'000)	970,865	1,019,475	-4.8
Share price of Ordinary share	832.0p	871.0p	-4.5
Discount to net asset value on Ordinary shares - debt at parA	3.8%	6.8%
Gearing (ratio of borrowing to shareholders' funds)
Net gearingA	9.4%	10.3%
Dividends and earnings
Revenue return per share	40.5p	33.7p	+20.2
Dividends per shareB	36.00p	34.50p	+4.3
Dividend coverA	1.13 times	0.98 times
Dividend yieldA	4.3%	4.0%
Revenue reserves (£'000)
Prior to payment of fourth interim dividendC	33,491	26,485
After payment of fourth interim dividend	20,363	15,073
Operating costs
Ongoing charges ratioA	0.48%	0.46%
A Considered to be an Alternative Performance Measure.
B The figures for dividends per share reflect the years in which they were earned (see note 7).
C Per the Statement of Financial Position.

Dividends

	Rate	XD date	Record date	Payment date
First interim	8.25p	25 Nov 2021	26 Nov 2021	22 Dec 2021
Second interim	8.25p	17 Feb 2022	18 Feb 2022	17 Mar 2022
Third interim	8.25p	19 May 2022	20 May 2022	16 Jun 2022
Fourth interim	11.25p	18 Aug 2022	19 Aug 2022	15 Sep 2022
Total dividends	36.00p

Overview of Strategy

Business Model

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

The Company is governed by a Board of Directors (the "Board"), all of whom are non-executive, and has no employees. The Board is responsible for determining the Company's investment objective and investment policy. Like other investment companies, the day-to-day investment management and administration of the Company is outsourced by the Board to an investment management group, abrdn, and other third party providers. The Company has appointed abrdn Fund Managers Limited as its alternative investment fund manager, which has in turn delegated certain responsibilities, including investment management, to the Investment Manager.

The Company complies with Section 1158 of the Corporation Tax Act 2010 which permits the Company to operate as an investment trust.

Investment Objective

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

Investment Policy

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

Delivering the Investment Policy

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

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

Board Investment Limits

The Board sets additional investment guidelines within which the Investment Manager must operate :

· the portfolio typically comprises between 50 and 70 holdings (but without restricting the Company from holding a more or less concentrated portfolio from time to time);

· the Company may invest up to 100% of its gross assets in UK-listed equities and other securities and is permitted to invest up to 20% of its gross assets in other overseas-listed equities and securities;

· the Investment Manager may invest in any market sector, however, the top five holdings may not exceed 40% of the total value of the portfolio and the top three sectors represented in the portfolio may not exceed 50%; and

· the Company may invest no more than 15% of its gross assets in other listed investment companies (including investment trusts).

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

Gearing

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

Key Performance Indicators

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

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

Principal Risks and Uncertainties

There are a number of risks and uncertainties which, if realised, could have a material adverse effect on the Company's business model, future performance and solvency. The Board, through the Audit Committee, has put in place a robust process to identify, assess and monitor these by means of a risk assessment and internal controls system. This system was reviewed during the year and enhanced, as explained in the Audit Committee Report in the Annual Report. As noted therein, the committee has a risk register and uses a post-mitigation heat risk map to identify principal, and emerging, risks.

Macroeconomic uncertainty has been a significant risk with the second half of the Year particularly affected by the geopolitical uncertainty caused by the Russian invasion of Ukraine. By contrast, the economic and market instability due to Covid-19 gradually receded during the Year although secondary impacts are ongoing. Other than these changes, the Audit Committee does not consider that the principal risks and uncertainties identified have changed during the Year, although impacts and probabilities thereof have changed.

In addition the Board has identified, as an emerging risk which it considers is likely to become more relevant for the Company in the future, the implications for the Company's investment portfolio of climate change; further details may be found under 'Market Risk'.

The following table sets out the Company's principal risks and the Company's mitigating actions and comments if the post-mitigation risk assessment has changed, together with the reason why.

Principal Risk	Mitigating Action
STRATEGIC
Discount control risk (increased) 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 are not guaranteed to do this. The Board has assessed the discount control risk as elevated due to the discount at which the Company's shares trade widening as compared to the Company's peer group.
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 (increased) 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 geopolitical, economic or market conditions, such as interest rates, exchange rates and rates of inflation, as well as global political events and trends could substantially and adversely affect the prices of securities and, as a consequence, the value of the Company's investment portfolio, its prospects and share price. Current geopolitical risks include the global increase in inflation, the Russian invasion of Ukraine, and the longer term emergence of the effects on investee companies of climate change, and the regulatory environment around this.	The Company's investment policy and its approach to risk diversification may be found in the Strategic Report , both of which serve to mitigate the effect of market risk on the portfolio.  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 as compared to peers and the Company's benchmark. The Board assesses climate change as an emerging risk in terms of how it develops, including how investor sentiment is evolving towards climate change within investment portfolios, and will consider how the Company may mitigate this risk, any other emerging risks, if and when they become material. The Board engages with the Manager, at each Board meeting, as part of its ESG oversight, to understand how climate change, and environmental factors are being assessed . Both are key considerations within the Manager's investment process. During the Year, the Board evaluated market risk as elevated due to the limit on the Company's ability to mitigate the effect of external factors such as the uncertainty caused by the Russian invasion of Ukraine and rising global inflation.
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 Investment 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 Investment Manager and, if required, challenges the Investment 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.  In addition, at the AGM in 2020, shareholders approved a change to the Company's Articles of Association to allow dividends to be paid from capital, which provides additional 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 (increased) In common with most other investment 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 breakdown or another cyber-related issue, could prevent, for example, the functioning of the Company; accurate reporting to the Board or shareholders; or payment of dividends in accordance with the announced timetable.	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 annual 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 Board has assessed the risk posed by cyber-crime as elevated, despite the available mitigation, reflecting the potential disruption which might be caused to the Company's operations by a cyber-attack.

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

Other Risks	Mitigating Action
Financial risk The Company's investment activities expose it to a variety of financial risks which include market risk (which is identified as a principal risk and is covered earlier in this section, liquidity risk and credit risk (including counterparty risk).	Details of these risks and the policies and procedures for their monitoring and mitigation are disclosed earlier in this section and in note 18.
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 Manager, which is available from the Company's website: murray-income.co.uk . 

Promotional Activities

The Board recognises the importance of promoting the Company to existing and prospective investors both for improving liquidity and enhancing the rating of the Company's shares. The Board believes one effective way to achieve this is through subscription to, and participation in, the promotional programme run by the Manager on behalf of a number of investment trusts under its management. The Company also supports the Manager's investor relations programme which involves regional roadshows, promotional and public relations campaigns. The Manager's promotional and investor relations teams report to the Board on a quarterly basis giving analysis of their activities as well as updates on the shareholder register and any changes in the make-up of that register.

Communicating the long-term attractions of the Company is key. The promotional programme includes commissioning independent paid for research on the Company, most recently from Edison Investment Research Limited; a copy may be found on the Company's website.

The UK Stewardship Code and Proxy Voting

The Company supports the UK Stewardship Code 2020, and seeks to play its role in supporting good stewardship of the companies in which it invests. Responsibility for actively monitoring the activities of portfolio companies has been delegated by the Board to the Manager which has sub-delegated that authority to the Investment Manager.

abrdn is a tier 1 signatory of the UK Stewardship Code 2020 which aims to enhance the quality of engagement by investors with investee companies in order to improve their socially responsible performance and the long term investment return to shareholders. While delivery of stewardship activities has been delegated to the Manager, the Board acknowledges its role in setting the tone for the effective delivery of stewardship on the Company's behalf.

The Board has also given discretionary powers to the Manager to exercise voting rights on resolutions proposed by the investee companies within the Company's portfolio. The Manager reports to the Board on a six monthly basis on stewardship (including voting) issues.

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

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

Viability Statement

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

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

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

· the relevance of the Company's investment objective;

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

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

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

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

· the £40m senior loan notes and £60m senior loan notes, which are repayable in 2027 and in 2029, respectively ; and

· any requirement for the Company to repay or refinance the drawn-down element of its three year £50 million bank loan facility prior to, or at, its maturity in October 2024.

In making this assessment, the Board has considered in particular a large economic shock, such as a further global pandemic, a period of increased stock market volatility and/or markets at depressed levels, a significant reduction in the liquidity of the portfolio, or persistent inflationary pressures, or changes in investor sentiment or regulation, and how these factors might affect the Company's prospects and viability in the future. The Board undertook scenario analysis, incorporating income forecasting, in reaching its conclusions, but recognising that the Company's expenses are significantly lower than its total income.

Taking into account the Company's current position and the potential impact of its principal risks and uncertainties, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due for a period of five years from the date of this Report.

Performance, Financial Position and Outlook

A review of the Company's activities and performance during the Year, including future developments, is set out in the Chairman's Statement and in the Investment Manager's Review. These cover market background, investment activity, portfolio strategy, dividend policy, gearing and investment outlook.  A comprehensive analysis of the portfolio is provided above while the full portfolio of investments is published monthly on the Company's website. The Company's Statement of Financial Position shows the assets and liabilities at the year end. Borrowing facilities at the year end comprised a mix of fixed and floating debt: a three year £50 million bank loan, the £40 million of senior loan notes due for repayment in 2027 and £60 million of senior loan notes due for repayment in 2029. Details of these are shown in notes 13 and 14 respectively.

The future strategic direction and development of the Company is regularly discussed as part of Board meeting agendas. The Board also considers the Manager's promotional strategy for the Company, including effective communications with shareholders.  The Board intends to maintain, for the year ending 30 June 2023, the strategy set out in the Strategic Report as it believes that this is in the best interests of shareholders.

Environmental, Community, Social and Human Rights Issues

The Company has no employees and, accordingly, there are no disclosures to be made in respect of employees. In relation to the investment portfolio, the Board has delegated assessment of these issues to the Investment Manager.

Modern Slavery Act

Due to the nature of its business, being a company that does not offer goods and services to customers, the Board considers that the Company is not within the scope of the Modern Slavery Act 2015 because it has no turnover. The Company is therefore not required to make a slavery and human trafficking statement. The Board considers the Company's supply chains, dealing predominantly with professional advisers and service providers in the financial services industry, to be low risk in relation to this matter.

Board diversity

At 30 June 2022, there were three male Directors and three female Directors (2021 - four male Directors and three female Directors). Further information on Board diversity may be found in the Directors' Report.

The Strategic Report has been approved by the Board and signed on its behalf by:

Neil Rogan
Chairman
21 September 2022

Promoting the Success of the Company

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

The Purpose of the Company and Role
of the Board

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

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

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

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

Shareholders	The Directors place great importance on communication with shareholders. Further details on the Company's relations with Shareholders, including its approach to the Annual General Meeting and investor relations can be found in the Directors' Report. In addition, the Chairman and Manager are holding an online shareholder presentation on 2 November 2022, further details of which may be found in the Chairman's Statement.
Manager	The Investment Manager's Review 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.
Other Key Third Party Service Providers	The Board ensures that it promotes the success of the Company by engaging specialist third party suppliers with the resources, controls and performance records to deliver the service required. The Board seeks to maintain constructive relationships with its key service providers (the Company's registrar, the Depositary and Broker) either directly, or through the Manager, with ongoing dialogue and formal regular meetings. The Audit Committee conducts an annual assessment of key service providers as set out in the Committee's report in the Annual Report. The Board seeks regular assurance that key third party service providers have in place appropriate business continuity plans and which are expected to allow them to maintain service levels in the face of disruption.
Investee Companies	The Board is committed to investing in a responsible manner and actively monitors the activities of investee companies through its delegation to the 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.
Lenders to the Company	On behalf of the Board, the Manager maintains a positive working relationship with the provider of the Company's multi-currency loan facility and the holders of the Company's Senior Loan Notes, assuring compliance with lenders' covenants and providing regular updates on business activity.

Specific Examples of Stakeholder Consideration During the Year

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

Dividends Paid to Shareholders

The level, frequency and timing of dividends paid are key considerations for the Board, taking into account net earnings for the year and the Company's objective of providing shareholders with a high and growing income, combined with the Company's Dividend Hero status. 

The total dividend per share of 36.0p in respect of the Year, representing an increase of 4.3% on the prior year, and the Company's dividend policy to make four equally-spaced  payments to shareholders throughout the Year, reflects this.

Share Buy Backs

During the Year the Company bought back 356,015 Ordinary shares to be held in treasury, providing a small accretion to the NAV and a degree of liquidity to the market at times when the discount to the NAV per share had widened during normal market conditions. It is the view of the Board that this policy remains in the best interests of all shareholders. 

Renewal of the Bank Loan

The Company's one year £20 million multi-currency unsecured revolving bank credit facility with Scotiabank Europe expired in November 2021.

The Directors considered that it would be beneficial for the Company to be able to access a larger short term borrowing facility following the substantial increase in its size. Accordingly, the Company entered into a new three year £50 million multi-currency unsecured revolving bank credit facility with Bank of Nova Scotia Limited. Alongside the Company's 2027 and 2029 Senior Loan Notes, the Directors consider that this provides the Company with flexible gearing, in the form of shorter and longer term facilities, to enhance long-term total returns to shareholders, where appropriate.

Board Composition

In accordance with the succession plan of the Company for the orderly refreshment of the Board, the Company engaged a search consultant during the Year, which resulted in the appointment of Nandita Sahgal Tully. Further information about the search process and Board diversity may be found in the Directors' Report.

PORTFOLIO

Ten Largest Investments

As at 30 June 2022

	AstraZeneca			Diageo
	AstraZeneca researches, develops, produces and markets pharmaceutical products. With a significant focus on oncology and rare diseases, the company offers appealing growth potential over the medium term..			Diageo produces, distills and markets alcoholic beverages including vodkas, whiskies, tequilas, gins and beer. The company should benefit from attractive long term drivers such as population and income growth, and premiumisation. The company has a variety of very strong brands and faces very limited private label competition.
	Relx			TotalEnergies
	Relx is a global provider of information and analytics for professionals and businesses across a number of industries including scientific, technical, medical and law. The company offers resilient earnings combined with long term structural growth opportunities.			TotalEnergies is a broad energy company that produces and markets fuels, natural gas and electricity. It is a leader in the sector's energy transition with an attractive pipeline of renewable assets
	BHP Group			SSE
	BHP Group (formerly BHP Billiton) is a diversified resources group with a global portfolio of high quality assets particularly iron ore and copper. The company provides an appealing dividend yield combined with a strong balance sheet.			SSE is a utility company mostly focused on networks and renewables. The path to net zero will require significant investment in distribution networks and the company should also benefit from its strong position in offshore wind generation.
	Unilever			Standard Chartered
	Unilever is a global consumer goods company supplying food, home and personal care products. The company has a portfolio of strong brands including: Dove, Knorr, Axe and Persil. Over half of the company's sales are to developing and emerging markets.			Standard Chartered is an international banking group offering a broad mix of services, primarily in emerging markets. The strategy is focused on creating a higher quality business, growing with end markets while controlling costs leading to improving returns.
	Euromoney Institutional Investor			BP
	Euromoney is a global information services provider with services including commodity price benchmarks and analysis, independent research and people intelligence. Revenues are primarily subscription-based. We believe that the company is materially mis-priced for the quality of its assets.			BP is a fully integrated energy company involved in exploration, production, refining, transportation and marketing of oil and natural gas. We believe the industry is currently in a sweetspot with rising prices and benign costs. The company provides an attractive dividend yield and is well placed for the energy transition.

As at 30 June 2022
			Valuation	Total	Valuation
			2022	investments	2021
Investment	FTSE All-Share Sector	Country	£'000	%	£'000
AstraZeneca	Pharmaceuticals and Biotechnology	UK	69,318	6.3	63,191
Diageo	Beverages	UK	55,310	5.0	58,387
Relx	Media	UK	45,388	4.1	41,956
TotalEnergies	Oil Gas and Coal	France	37,496	3.4	28,330
BHP Group	Industrial Metals and Mining	UK	36,349	3.3	43,653
SSE	Electricity	UK	35,431	3.2	31,672
Unilever	Personal Care Drug and Grocery Stores	UK	34,656	3.2	41,830
Standard Chartered	Banks	UK	29,465	2.7	30,991
Euromoney Institutional Investor	Media	UK	28,356	2.6	21,510
BP	Oil Gas and Coal	UK	27,437	2.5	18,350
Top ten investments			399,206	36.3
Anglo American	Industrial Metals and Mining	UK	26,093	2.4	-
National Grid	Gas Water and Multi-utilities	UK	24,423	2.2	32,760
Safestore Holdings	Real Estate Investment Trusts	UK	23,659	2.2	23,467
Inchcape	Industrial Support Services	UK	23,151	2.1	25,599
Coca-Cola HBC	Beverages	UK	23,144	2.1	33,204
Close Brothers	Banks	UK	21,839	2.0	32,310
Novo-Nordisk	Pharmaceuticals and Biotechnology	Denmark	20,888	1.9	16,757
Rentokil Initial	Industrial Support Services	UK	20,624	1.9	18,709
Experian	Industrial Support Services	UK	20,282	1.8	-
GSK	Pharmaceuticals and Biotechnology	UK	20,068	1.8	18,591
Top twenty investments			623,377	56.7
Aveva	Software and Computer Services	UK	19,733	1.8	28,093
Croda International	Chemicals	UK	18,387	1.7	23,643
London Stock Exchange	Finance and Credit Services	UK	17,862	1.6	-
M&G	Life Insurance	UK	17,707	1.6	20,819
Direct Line Insurance	Non-life Insurance	UK	17,493	1.6	19,807
Convatec	Medical Equipment and Services	UK	17,025	1.6	17,990
Marshalls	Construction and Materials	UK	16,346	1.5	19,096
Howden Joinery	Retailers	UK	15,780	1.4	21,383
Nestlé	Food Producers	Switzerland	15,523	1.4	17,011
Oversea-Chinese Banking Corporation	Banks	Singapore	14,833	1.4	-
Top thirty investments			794,066	72.3
OSB	Finance and Credit Services	UK	14,469	1.3	11,718
Nordea Bank	Banks	Sweden	14,075	1.3	-
Drax	Electricity	UK	13,933	1.3	-
Sage Group	Software and Computer Services	UK	13,676	1.2	9,186
Weir Group	Industrial Engineering	UK	13,416	1.2	18,214
Telenor	Telecommunications Service Providers	Norway	12,742	1.2	15,491
Vistry	Household Goods and Home Construction	UK	12,639	1.2	9,943
Microsoft	Software and Computer Services	United States	11,452	1.0	13,310
Unite Group	Real Estate Investment Trusts	UK	11,310	1.0	8,239
Mondi	General Industrials	UK	11,227	1.0	17,801
Top forty investments			923,005	84.0
Countryside Partnerships	Household Goods and Home Construction	UK	11,116	1.0	18,897
Intermediate Capital	Investment Banking and Brokerage Services	UK	10,929	1.0	10,326
Ashmore Group	Investment Banking and Brokerage Services	UK	10,649	1.0	18,485
Assura	Real Estate Investment Trusts	UK	10,467	1.0	14,230
Genuit	Construction and Materials	UK	10,162	0.9	16,280
RS Group	Industrial Support Services	UK	10,027	0.9	-
Kone	Industrial Engineering	Finland	9,047	0.8	13,693
Smith & Nephew	Medical Equipment and Services	UK	8,946	0.8	15,931
Hiscox	Non-life Insurance	UK	8,922	0.8	-
Dechra Pharmaceuticals	Pharmaceuticals and Biotechnology	UK	8,461	0.8	13,229
Top fifty investments			1,021,731	93.0
Industrials REIT	Real Estate Investment Trusts	UK	8,098	0.7	6,096
Oxford Instruments	Electronic and Electrical Equipment	UK	7,962	0.7	-
Mowi	Food Producers	Norway	7,840	0.7	7,730
XP Power	Electronic and Electrical Equipment	UK	7,806	0.7	15,283
Watkin Jones	Household Goods and Home Construction	UK	7,733	0.7	-
VAT Group	Electronic and Electrical Equipment	Switzerland	7,486	0.7	13,947
Chesnara	Life Insurance	UK	7,389	0.7	6,993
Moonpig	Retailers	UK	7,278	0.7	6,246
Sirius Real Estate	Real Estate Investment and Services	UK	7,239	0.6	14,380
Accton Technology	Telecommunications Equipment	Taiwan	5,273	0.5	6,859
Top sixty investments			1,095,835	99.7
Bodycote	Industrial Metals and Mining	UK	2,958	0.3	14,083
Total investments			1,098,793	100.0

Summary of Investment Changes During the Year

	Valuation				Valuation
	30 June 2021		Transactions	Gains / (losses)	30 June 2022
	£'000	%	£'000	£'000	£'000	%
Equities
UK	1,069,162	88.9	(37,211)	(89,813)	942,138	85.7
Denmark	16,757	1.4	(3,109)	7,240	20,888	1.9
Finland	13,693	1.1	-	(4,646)	9,047	0.8
France	28,330	2.4	-	9,166	37,496	3.4
Norway	23,221	1.9	(1,222)	(1,417)	20,582	1.9
Singapore	-	-	15,178	(345)	14,833	1.4
Switzerland	30,958	2.6	(8,692)	743	23,009	2.1
Sweden	-	-	18,288	(4,213)	14,075	1.3
Taiwan	6,859	0.6	-	(1,586)	5,273	0.5
United States	13,310	1.1	(2,943)	1,085	11,452	1.0
Total investments	1,202,290	100.0	(19,711)	(83,786)	1,098,793	100.0

Directors' Report

The Directors present their report and the audited financial statements for the Year.

Results and Dividend Policy

The financial statements for the Year indicate a total loss attributable to equity shareholders for the year of £41,0101,000 (2021 - gain of £161,217,000) and an explanation for the Company's financial performance may be found in the Chairman's Statement.

At the AGM on 2 November 2021, shareholders approved a dividend policy to pay four quarterly interim dividends per year.  On 4 November 2021, the Company announced a first interim dividend of 8.25p per share to be paid on 22 December 2021, a second interim dividend of 8.25p per share to be paid on 17 March 2022 and a third interim dividend of 8.25p per share to be paid on 16 June 2022.

The Company announced, on 2 August 2022, the payment to shareholders on 15 September 2022 of a fourth interim dividend for the year of 11.25p per share (2021 - 9.75p) with an ex-dividend date of 18 August 2022 and a record date of 19 August 2022.  This resulted in total dividends of 36.0 per share for the year ended 30 June 2022, an increase of 4.3% on the 34.5p paid for the prior year, which represented the 49^th year of consecutive growth in the Company's annual dividend.

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

Principal Activity and Status

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

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

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

Capital Structure and Voting Rights

At 30 June 2022, the Company had 116,690,472 (2021 - 117,046,487) fully paid Ordinary shares of 25p each with voting rights in issue and an additional 2,839,060 (2021 - 2,483,045) shares in Treasury.  During the Year, 356,015 Ordinary shares were bought back into Treasury (2021 - nil).

Since the year end, the Company has bought back a further 230,000 Ordinary shares into treasury. Accordingly, as at the date of this Report, the Company's issued share capital consisted of 116,460,472 Ordinary shares of 25 pence each and 3,069,060 Ordinary shares held in treasury.

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

Manager and Company Secretary

The Manager has been appointed by the Company, under a management agreement, to provide investment management, risk management, administration and company secretarial services as well as promotional activities.  The Company's portfolio is managed by the Investment Manager by way of a group delegation in place with the Manager.  In addition, the Manager has sub-delegated promotional activities to the Investment Manager and administrative and secretarial services to Aberdeen Asset Management PLC.

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

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

The management agreement is terminable on not less than three months' notice. In the event of termination by the Company on less than the agreed notice period, compensation is payable to the Manager in lieu of the unexpired notice period.

An annual secretarial fee of £75,000 (plus applicable VAT) is payable to 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 the Investment Manager to cover promotional activities undertaken on behalf of the Company.

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

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

External Agencies

The Board has contractually delegated to external agencies, including the Manager and other service providers, certain services including: the management of the investment portfolio, the day-to-day accounting and company secretarial requirements, the depositary services (which include cash monitoring, the custody and safeguarding of the Company's financial instruments and monitoring the Company's compliance with investment limits and leverage requirements) and the share registration services. Each of these contracts was entered into after full and proper consideration by the Board of the quality and cost of services offered in so far as they relate to the affairs of the Company. In addition, ad hoc reports and information are supplied to the Board as requested.

Directors

As at the date of this Report, the Board consisted of a non-executive Chairman and five non-executive Directors.

Neil Rogan, Stephanie Eastment, Peter Tait, Merryn Somerset Webb and Alan Giles were Directors throughout the Year. Nandita Sahgal Tully was appointed a Director on 3 November 2021. Jean Park and Donald Cameron retired as Directors on 2 November 2021.

Jean Park was Senior Independent Director, and Chairman of the Remuneration Committee until her retirement, following which Peter Tait was appointed as her successor. Stephanie Eastment is Chairman of the Audit Committee.

Board Diversity

The Board recognises the importance of having a range of skilled, experienced individuals with the right knowledge represented on the Board in order to allow it to fulfil its obligations. The Board also recognises the benefits and is supportive of, and will give due regard to, the principle of diversity in its recruitment of new Board members. The Board will not display any bias for age, gender, race, sexual orientation, socio-economic background, religion, ethnic or national origins or disability in considering the appointment of Directors. The Board will continue to ensure that all appointments are made on the basis of merit against the specification prepared for each appointment. The Board will take account of the targets set out in the FCA's Listing Rules, which are set out below.

The Board voluntarily discloses the following information in relation to its diversity.

As an externally managed investment company, the Board employs no executive staff, and therefore does not have a chief executive officer (CEO) or a chief financial officer (CFO)- both of which are deemed senior board positions by the FCA.  However, the Board considers the Chair of the Audit Committee to be a senior board position and the following disclosure is made on this basis.  Other senior board positions recognised by the FCA are chair of the board and senior independent director (SID).  In addition, the Board has resolved that the Company's year end date be the most appropriate date for disclosure purposes ( the "Reference Date").

As at the Reference Date, and as at the date of approval of the Annual Report, the Company met the targets that at least 40% of its Directors are women; that at least one Director is from a minority ethnic background; and that at least one senior position on the Board is held by a woman. The following information has been provided by each Director. There have been no changes since 30 June 2022.

Board as at 30 June 2022

	Number of board members	Percentage of the board	Number of senior positions on the board
Men	3	50%	2
Women	3	50%	1
Prefer not to say	-	-	-

	Number of board members	Percentage of the board	Number of senior positions on the board
White British or other White (including minority-white groups)	5	83.3%	3
Asian/Asian British	1	16.7%	0
Prefer not to say	-	-	-

The Role of the Chairman and Senior Independent Director ("SID")

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

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

The Board has a procedure in place to deal with a situation where a Director has a conflict of interest. As part of this process, the Directors prepare a list of other positions held and all other conflict situations that may need to be authorised either in relation to the Director

concerned or his/her connected persons. The Board considers each Director's situation and decides whether to approve any conflict, taking into consideration what is in the best interests of the Company and whether the Director's ability to act in accordance with his/her wider duties is affected. Each Director is required to notify the Company Secretaries of any potential, or actual, conflict situations which will need authorising by the Board. Authorisations given by the Board are reviewed at each Board meeting.

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

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

Directors' Insurance and Indemnities

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

Corporate Governance

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

Matters Reserved for the Board

The Board sets the Company's objectives and ensures that its obligations to its shareholders are met. It has formally adopted a schedule of matters which are required to be brought to it for decision, thus ensuring that it maintains full and effective control over appropriate strategic, financial, operational and compliance issues.

These matters include:

· the maintenance of clear investment objectives and risk management policies;

· the monitoring of the business activities of the Company ranging from analysis of investment performance through to review of quarterly management accounts;

· monitoring requirements such as approval of the Half-Yearly Report and Annual Report and financial statements and approval and recommendation of any dividends;

· setting the range of gearing in which the Manager may operate;

· major changes relating to the Company's structure including share buy-backs and share issuance;

· Board appointments and removals and the related terms;

· authorisation of Directors' conflicts or possible conflicts of interest;

· terms of reference and membership of Board Committees;

· appointment and removal of the Manager and the terms and conditions of the Management Agreement relating thereto; and

· London Stock Exchange/Financial Conduct Authority - responsibility for approval of all circulars, listing particulars and other releases concerning matters decided by the Board.

Full and timely information is provided to the Board to enable it to function effectively and to allow the Directors to discharge their responsibilities.

Board Committees

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

Audit Committee

The Audit Committee's Report is included in the Annual Report.

Management Engagement Committee

The terms and conditions of the Company's agreement with the Manager, set out in the Directors' Report, are considered by the Management Engagement Committee which comprises the whole Board and is chaired by Neil Rogan. The key responsibilities of the Management Engagement Committee include:

· monitoring and evaluating the performance of the Manager;

· reviewing, at least annually, the continued retention of the Manager;

· reviewing, at least annually, the terms of appointment of the Manager including, but not limited to, the level and methodology of the management fees as well as the notice period of the Manager.

In monitoring the performance of the Manager, the Committee considers the investment record of the Company over the short and long term, taking into account its performance against the Benchmark, peer group investment trusts and open-ended funds, and against its delivery of the investment objective to shareholders. The Committee also reviews the management processes, risk control mechanisms and promotional activities of the Manager.

In support of the work undertaken by the Management Engagement Committee, the Board engaged Lintstock Limited, an independent firm, to facilitate a review of the Manager. This involved the completion of questionnaires by each Director and the subsequent discussion by the Management Engagement Committee of a summary, prepared by Lintstock Limited, of the key findings. The review covered all services provided to the Company by the Manager including investment management, risk management and internal controls, marketing and investor relations, company secretarial and administration services, and also included consideration as to the appropriateness of the management fee arrangements.

In light of the above, the Directors consider the continuing appointment of the Manager, on the current terms, to be in the best interests of shareholders because they believe that the Manager has the investment management, promotional and associated secretarial and administrative skills required for the effective operation of the Company.

Nomination Committee

The Board has established a Nomination Committee, comprising all of the Directors, with Neil Rogan as Chairman. The Committee is responsible for:

· determining the overall size and composition of the Board (including the skills, knowledge, experience and diversity);

· undertaking longer term succession planning, including setting a policy on tenure for Directors;

· undertaking an annual evaluation of the Directors, including establishing that each Director possesses the capacity to commit sufficient time to discharge their responsibilities;

· oversight of appointments to the Board, including open advertising or engagement of independent search consultants, with a view to attracting candidates from a wide range of backgrounds and with different experience, with due regard to the benefits of diversity on the Board;

· assessing, annually, the effectiveness and independence of each Director; and

· making recommendations for the election or re-election of any Director, having evaluated their individual performance, capacity and contribution.

The Committee's overriding priority in appointing new Directors is to identify the candidate with the optimal range of skills and experience to complement the existing Directors. The Board also recognises the benefits, and is supportive, of the principle of diversity in its recruitment of new Directors. Trust Associates, an independent search firm with no connection with the Company, was engaged in the search which resulted in the appointment of Nandita Sahgal Tully as a Director during the Year.

During the Year, through the work of the Nomination Committee, the Board engaged an independent firm, Lintstock Limited, to facilitate a review of the Board, its Committees and the performance of individual Directors. The process involved the completion of questionnaires by each Director and the production of a report to the Board by Lintstock Limited summarising the findings of the review. The results of the process were discussed by the Board following its completion, with appropriate action points agreed.

The review of the Chairman was undertaken by the Senior Independent Director.

Following the evaluation process, Lintstock Limited concluded that the Board operates effectively to promote the success of the Company and that each Director makes a significant contribution to the collective Board.

All six Directors will retire, and each being eligible, will seek election or re-election, as applicable, at the AGM on 1 November 2022.

The Directors attended meetings, including a strategy session during the Year as follows (with their eligibility to attend the relevant meetings in brackets). The Board meets more frequently when business needs require;

	Board Meetings (including strategy and Board Committees)	Audit Committee Meetings	Management Engagement Committee Meetings	Nomination Committee Meetings	Remuneration Committee Meetings
Neil RoganA	11 (11)	- (-)	2 (2)	4 (4)	2 (2)
Jean ParkB	6 (6)	1 (1)	1 (1)	2 (2)	1 (1)
Stephanie Eastment	10 (10)	3 (3)	2 (2)	4 (4)	2 (2)
Donald CameronB	5 (5)	1 (1)	1 (1)	2 (2)	1 (1)
Peter Tait	11 (11)	3 (3)	2 (2)	4 (4)	2 (2)
Merryn Somerset Webb	10 (10)	3 (3)	2 (2)	4 (4)	2 (2)
Alan Giles	9 (9)	3 (3)	2 (2)	4 (4)	2 (2)
Nandita Sahgal TullyC	2 (2)	1 (1)	1 (1)	1 (1)	1 (1)
A   Not a member of the Audit Committee but attends at the invitation of the Committee Chairman.
B   Resigned as a Director on 2 November 2021.
C Appointed as a Director on 3 November 2021.

Policy on Tenure

The Committee has adopted a policy whereby all Directors will stand for re-election at each AGM. In addition Directors, including the Chairman, will not stand for re-election as a Director of the Company later than the AGM following the ninth anniversary of their appointment to the Board unless in relation to exceptional circumstances.

The ninth anniversary of Neil Rogan's appointment as a Director is 26 November 2022.  The other Directors, led by Peter Tait as Senior Independent Director, have determined that it is in the best interests of shareholders that Neil Rogan continue as Chairman in order to oversee the Company's centenary in 2023.  Neil Rogan will retire at the conclusion of the Company's AGM in November 2023.

The Board as a whole believes that each Director remains independent of the Manager and free of any relationship which could materially interfere with the exercise of his or her independent judgement on issues of strategy, performance, resources and standards of conduct and confirms that, following formal performance evaluations, the individuals' performance continues to be effective and demonstrates commitment to the role.

The biographies of each of the Directors seeking election or re-election 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.

Accordingly, Stephanie Eastment, Alan Giles, Merryn Somerset Webb, Peter Tait and Neil Rogan, each being eligible, offer themselves for re-election as Directors of the Company. Nandita Sahgal Tully, being eligible, offers herself for election as a Director of the Company.

Remuneration Committee

The Board has established a Remuneration Committee, comprising all of the Directors, whose Chairman was Jean Park until 2 November 2021 and Peter Tait thereafter. The Directors' Remuneration Report sets out the responsibilities of the Committee and the work undertaken by the Committee during the Year.

Accountability and Audit

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

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

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

Going Concern

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

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

The Directors are mindful of the principal risks and uncertainties disclosed above and have reviewed forecasts detailing revenue and liabilities. The Directors are satisfied that the Company has adequate resources to continue in operational existence for the foreseeable future, being at least 12 months from the date of approval of this Annual Report.

Independent Auditor

Shareholders approved the re-appointment of PricewaterhouseCoopers LLP as the Company's auditor at the AGM on 2 November 2021 and resolutions to approve its re-appointment for the Year to 30 June 2023, and to authorise the Directors to determine its remuneration, will be proposed at the forthcoming AGM.

Financial Instruments

The financial risk management objectives and policies arising from financial instruments and the exposure of the Company to risk are disclosed in note 18 to the financial statements.

Relations with suppliers, customers and others

The Directors have regard to the need to foster the Company's business relationships with suppliers, customers and others, and the effect of that regard, including on the principal decisions taken by the Company during the financial year; further information on the Company's responsibilities under Section 172 of Companies Act 2006 may be found above.

Substantial Interests

As at 30 June 2022 and 31 August 2022 the following interests over 3% in the issued Ordinary share capital of the Company (excluding treasury shares) had been disclosed in accordance with the requirements of the FCA's Guidance and Transparency Disclosure Rules:

	30 June 2022		31 August 2022
Shareholder	Number of shares held	% held	Number of shares held	% held
Interactive Investor	16,600,467	14.2	16,580,891	14.2
Hargreaves Lansdown	14,031,919	12.0	14,127,176	12.1
abrdn retail plans	12,844,446	11.0	12,825,752	11.0
Rathbones	12,359,696	11.0	12,367,387	10.6
Charles Stanley	3,728,254	3.2	3,673,886	3.2
A J  Bell	3,521,980	3.0	3,547,821	3.0

The above interests, as at 31 August 2022, were unchanged as at the date of approval of this Report.

Relations with Shareholders

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

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

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

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

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

The Company will also hold an online presentation for existing and potential shareholders on 2 November 2022. Further information on how to register may be found in the Chairman's Statement.

Future Developments of the Company

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

Disclosures Required by FCA Listing Rule 9.8.4

This rule requires listed companies to report certain information in a single identifiable section of their annual financial reports. None of the prescribed information is applicable to the Company in the Year.

Annual General Meeting ("AGM")

Among the special business being put at the AGM of the Company to be held on 1 November 2022, the following resolutions will be proposed:

Authority to allot shares and disapply pre-emption rights (Resolutions 12 and 13)

Ordinary resolution No. 12 will renew the authority to allot the unissued share capital up to an aggregate nominal amount of £1.5m (equivalent to approximately 5.8m 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 2023 or on 31 December 2023, whichever is earlier. This means that the authority will require to be renewed at the next AGM.

When shares are to be allotted for cash, Section 561 of the Companies Act 2006 (the "Act") provides that existing shareholders have pre-emption rights and that the new shares to be issued, or sold from treasury, must be offered first to such shareholders in proportion to their existing holding of shares. However, shareholders can, by special resolution, authorise the Directors to allot shares or sell from treasury otherwise than by a pro rata issue to existing shareholders. Special resolution No. 13 will, if passed, give the Directors power to allot for cash or sell from treasury equity securities up to an aggregate nominal amount of £2.9m (equivalent to approximately 11.7m Ordinary shares, or, if less, 10% of the Company's existing issued share capital (excluding treasury shares) on the date of passing of this resolution, as if Section 561 of the Act does not apply). This authority will also expire on the date of the AGM in 2023 or on 31 December 2023, 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 12 and 13 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 14)

At the AGM held on 2 November 2021, 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. 14 will renew the authority to purchase in the market a maximum of 14.99% of shares in issue at the date of passing of the resolution (amounting to approximately 17.5m Ordinary shares). Such authority will expire on the date of the AGM in 2023, or on 31 December 2023, whichever is earlier. This means in effect that the authority will have to be renewed at the next AGM, or earlier, if the authority has been exhausted. No dividends may be paid on any shares held in treasury and no voting rights will attach to such shares. The benefit of the ability to hold treasury shares is that such shares may be sold at short notice. This should give the Company greater flexibility in managing its share capital, and improve liquidity in its shares.

Recommendation

The Directors believe that the resolutions to be proposed at the AGM are in the best interests of the Company and its shareholders as a whole, and recommend that shareholders vote in favour of the resolutions, as the Directors intend to do in respect of their own beneficial shareholdings, amounting to 51,166 Ordinary shares, representing 0.04% of the Company's issued share capital (excluding treasury shares) at 30 June 2022.

On behalf of the Board
Neil Rogan
Chairman
21 September 2022

Statement of Directors' Responsibilities

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

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

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

· select suitable accounting policies and then apply
them consistently;

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

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

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

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

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

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

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

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

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

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

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

For and on behalf of the Board of Murray
Income Trust PLC
Neil Rogan
Chairman
21 September 2022

Statement of Comprehensive Income

		Year ended 30 June 2022			Year ended 30 June 2021
		Revenue	Capital	Total	Revenue	Capital	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
(Losses)/gains on investments	10	-	(83,786)	(83,786)	-	131,260	131,260
Currency (losses)/gains		-	(216)	(216)	-	62	62
Income	3	51,018	-	51,018	35,979	-	35,979
Investment management fees	4	(1,199)	(2,798)	(3,997)	(753)	(1,759)	(2,512)
Administrative expenses	5	(1,350)	-	(1,350)	(1,443)	-	(1,443)
Net return before finance costs and tax		48,469	(86,800)	(38,331)	33,783	129,563	163,346
Finance costs	6	(692)	(1,615)	(2,307)	(560)	(1,282)	(1,842)
Net return before tax		47,777	(88,415)	(40,638)	33,223	128,281	161,504
Taxation	8	(463)	-	(463)	(287)	-	(287)
Net return after tax		47,314	(88,415)	(41,101)	32,936	128,281	161,217
Return per Ordinary share	9	40.5p	(75.7)p	(35.2)p	33.7p	131.4p	165.1p
The total column of this statement represents the profit and loss account of the Company prepared in accordance with FRS 102. The 'Revenue' and 'Capital' columns represent supplementary information prepared under guidance issued by the Association of Investment Companies.
All revenue and capital items in the above statement derive from continuing operations.
No operations were acquired or discontinued in the year.
The accompanying notes are an integral part of the financial statements.

Statement of Financial Position

		As at	As at
		30 June 2022	30 June 2021
	Notes	£'000	£'000
Fixed assets
Investments at fair value through profit or loss	10	1,098,793	1,202,290
Current assets
Other debtors and receivables	11	9,061	8,345
Cash and cash equivalents	12	20,131	4,493
		29,192	12,838
Creditors: amounts falling due within one year
Other payables		(1,513)	(2,749)
Bank loans		(6,507)	(6,241)
	13	(8,020)	(8,990)
Net current assets		21,172	3,848
Total assets less current liabilities		1,119,965	1,206,138
Creditors: amounts falling due after more than one year
2.51% Senior Loan Notes		(39,930)	(39,918)
4.37% Senior Loan Notes		(70,780)	(72,361)
	14	(110,710)	(112,279)
Net assets		1,009,255	1,093,859
Capital and reserves
Share capital	15	29,882	29,882
Share premium account		438,213	438,213
Capital redemption reserve		4,997	4,997
Capital reserve		502,672	594,282
Revenue reserve		33,491	26,485
Total Shareholders' funds		1,009,255	1,093,859
Net asset value per Ordinary share	16
Debt at par value		864.9p	934.6p
The financial statements were approved by the Board of Directors and authorised for issue on 21 September 2022 and were signed on its behalf by:
Neil Rogan
Chairman
The accompanying notes are an integral part of the financial statements.

Statement of Changes in Equity

For the year ended 30 June 2022
			Share	Capital
		Share	premium	redemption	Capital	Revenue
		capital	account	reserve	reserve	reserve	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 July 2021		29,882	438,213	4,997	594,282	26,485	1,093,859
Net (loss)/return after tax		-	-	-	(88,415)	47,314	(41,101)
Buyback of Ordinary shares for treasury	15	-	-	-	(3,195)	-	(3,195)
Dividends paid	7	-	-	-	-	(40,308)	(40,308)
Balance at 30 June 2022		29,882	438,213	4,997	502,672	33,491	1,009,255
For the year ended 30 June 2021
			Share	Capital
		Share	premium	redemption	Capital	Revenue
		capital	account	reserve	reserve	reserve	Total
	Notes	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 July 2020		17,148	24,020	4,997	466,001	22,195	534,361
Net return after tax		-	-	-	128,281	32,936	161,217
Issue of shares on combination		12,734	414,486	-	-	-	427,220
Cost of shares issued in respect of the PLI transaction		-	(293)	-	-	-	(293)
Dividends paid	7	-	-	-	-	(28,646)	(28,646)
Balance at 30 June 2021		29,882	438,213	4,997	594,282	26,485	1,093,859
The accompanying notes are an integral part of the financial statements.

Statement of Cash Flows

			*Restated
		Year ended	Year ended
		30 June 2022	30 June 2021
	Notes	£'000	£'000
Operating activities
Net (loss)/return before finance costs and taxation		(38,331)	163,346
(Decrease)/increase in accrued expenses		(80)	209
Overseas withholding tax		(1,360)	(943)
Dividend income	3	(48,158)	(33,368)
Dividends received		47,888	31,894
Interest income	3	(39)	(1)
Interest received		20	1
Interest paid		(2,272)	(1,455)
Losses/(gains) on investments	10	83,786	(131,260)
Amortisation on Loan Notes	6	(1,569)	(969)
Foreign exchange losses/(gains)		216	(62)
Decrease/(increase)  in other debtors		46	(100)
Stock dividends included in investment income	3	(3,728)	(1,699)
Net cash inflow from operating activities		36,419	25,593
Investing activities
Purchases of investments		(238,613)	(199,801)
Sales of investments		261,285	153,910
Costs associated with the PLI transaction		-	(2,519)
Net cash inflow/(outflow) from investing activities		22,672	(48,410)
Financing activities
Dividends paid	7	(40,308)	(28,646)
Buyback of Ordinary shares for treasury		(3,195)	-
Cost of shares issued in respect of the PLI transaction		-	(293)
Net cash acquired and received following the PLI transaction	20	-	40,248
Repayment of bank loans		(6,290)	(513)
Draw down of bank loans		6,258	507
Net cash (outflow)/inflow from financing activities		(43,535)	11,303
Increase/(decrease) in cash		15,556	(11,514)
Analysis of changes in cash during the year
Opening balance		4,493	16,365
Effect of exchange rate fluctuations on cash held		82	(358)
Increase/(decrease) in cash as above		15,556	(11,514)
Closing balance		20,131	4,493
Represented by:
Cash at bank and in hand		1,503	4,493
Money market funds		18,628	-
		20,131	4,493
* 2021 restated to move a £40,248,000 cash inflow from investing activities to financing activities; further details are set out in Note 2(b) on page 68.
The accompanying notes are an integral part of these financial statements.

Notes to the Financial Statements

For the year ended 30 June 2022

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

2.	Accounting policies
	(a)	Basis of preparation . The financial statements have been prepared in accordance with Financial Reporting Standard 102, the Companies Act 2006 and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued in April 2021. The financial statements are prepared in Sterling which is the functional currency of the Company and rounded to the nearest £'000. They have also been prepared on the assumption that approval as an investment trust will continue to be granted. The accounting policies applied are unchanged from the prior year and have been applied consistently.
		The Company's assets consist primarily of a diverse portfolio of listed equity shares nearly all of which, in most circumstances, are realisable within a very short timescale. The Board has set limits for borrowing and regularly reviews the level of any gearing, cash flow projections and compliance with banking and loan note covenants. The Directors are mindful of the principal risks and uncertainties disclosed in the Directors' Report, including the Russian invasion of Ukraine, the ongoing disruption caused by the pandemic and macroeconomic pressures, and have reviewed forecasts detailing revenue and liabilities. Notwithstanding the continuing uncertain economic outlook, the Directors are satisfied that: the Company has adequate resources to continue in operational existence for the foreseeable future being 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)	Restatement of 2021 Statement of Cash Flows
		In February 2022, correspondence was received from the FRC's Corporate Reporting Review Team which had reviewed the Company's annual report for the year ended 30 June 2021. The FRC asked for further information in relation to the cash inflows associated with the purchase of assets, including cash and cash equivalents, from Perpetual Income and Growth Investment Trust plc ("PLI").  The FRC queried the basis for classifying the cash inflow of £40,248,000 associated with the PLI transaction as an investing activity rather than as a financing activity.
		The Board originally assessed the classification of the cash received in the context of the wider PLI transaction and determined that the substance of the transaction was the purchase of a pool of investment assets in exchange for non-cash consideration. The cash inflow was therefore classified as an investing activity within the Statement of Cash Flows.
		The Board considers that there are merits in disclosing the £40,248,000 cash inflow as either an investing activity or as a financing activity based on the nature of the PLI transaction.  However, after consideration, on balance the Board has judged that the cash inflow will be restated as a financing activity pursuant to the issuance of shares and the assumption of debt in the Statement of Cash Flows in the Company's annual report for the year ended 30 June 2022. Consequently, for the year ended 30 June 2021 the Company's net cash outflow from investing activities has been restated from £8,162,000 to £48,410,000 while net cash outflow from financing activities of £28,945,000 has been restated to net cash inflow from financing activities of £11,303,000. This change in presentation has no impact on the Company's net assets or Statement of Comprehensive Income.
	(c)	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.
	(d)	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.

	(e)	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.
	(f)	Valuation of investments. The Company has chosen to apply the recognition and measurement provisions of IAS 39 Financial Instruments: Recognition and Measurement. All investments have been designated upon initial recognition at fair value through profit or loss. This is done because all investments are considered to form part of a group of financial assets which is evaluated on a fair value basis, in accordance with the Company's documented investment strategy, and information about the grouping is provided internally on that basis. Investments are recognised and de-recognised at trade date where a purchase or sale is under a contract whose terms require delivery within the timeframe established by the market concerned, and are measured initially at fair value. Subsequent to initial recognition, investments are valued at fair value through profit or loss. For listed investments, this is deemed to be bid market prices or closing prices for SETS (London Stock Exchange's electronic trading service) stocks sourced from the London Stock Exchange. Gains and losses arising from changes in fair value are included in the net return for the period as a capital item in the Statement of Comprehensive Income and are ultimately recognised in the capital reserve.
	(g)	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.
	(h)	Borrowings and finance costs. Borrowings of interest bearing bank loans and 2.51% Senior Loan Notes are recognised initially at the fair value of the consideration received, net of any issue expenses, and subsequently at amortised cost using the effective interest method. Borrowings of 4.37% Senior Loan Notes, which were novated to the Company on the merger with Perpetual Income and Growth Investment Trust plc, were recorded initially at their fair value of £73,344,000 and are amortised over the remaining life of the loan towards their redemption value of £60,000,000. The amortisation adjustment is presented as a finance cost. Finance costs accrue using the effective interest rate over the life of the borrowings and are allocated 30% to revenue and 70% to capital.

	(i)	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.
	(j)	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.
	(k)	Nature and purpose of reserves
		Share capital. The Ordinary share capital on the Statement of Financial Position relates to the number of shares in issue and in treasury. Only when the shares are cancelled, either from treasury or directly, is a transfer made to the capital redemption reserve. This is a non-distributable reserve.
		Share premium account. The balance classified as share premium includes the premium above nominal value from the proceeds on issue of any equity share capital comprising Ordinary shares of 25p and includes the premium arising following  the issue of shares on the combination with Perpetual Income and Growth Investment Trust plc on 17 November 2020. This is a non-distributable reserve.
		Capital redemption reserve. The capital redemption reserve reflects the cancellation of Ordinary shares, when an amount equal to the par value of the Ordinary share capital is transferred from the share capital reserve to the capital redemption reserve. This is a non-distributable reserve.
		Capital reserve. This reserve reflects any gains or losses on investments realised in the period along with any movements in the fair value of investments held that have been recognised in the Statement of Comprehensive Income. These include gains and losses from foreign currency exchange differences. Additionally, expenses, including finance costs, are charged to this reserve in accordance with (c) and (g) above. When making a distribution to shareholders, the Directors determine profits available for distribution by reference to 'Guidance on realised and distributable profits under the Companies Act 2006' issued by the Institute of Chartered Accountants in England  and Wales and the Institute of Chartered Accountants of Scotland in April 2017. The availability of distributable reserves in the Company is dependent on those distributions meeting the definition of qualifying consideration within the guidance and on available cash resources of the Company and other accessible sources of funds. The distributable reserves are therefore subject to any future restrictions or limitations at the time such distribution is made.
		The capital reserve, to the extent it constitutes realised profits, is distributable. This may include unrealised (losses)/gains on investments where these are readily convertible to cash. The amount of the capital reserve that is distributable is complex to determine and is not necessarily the full amount of the reserve as disclosed within these financial statements of £502,672,000 as at 30 June 2022 as this is subject to fair value movements and may not be readily realisable at short notice.
		Revenue reserve. This reserve reflects all income and costs which are recognised in the revenue column of the Statement of Comprehensive Income. The revenue reserve is distributable by way of dividend.

	(l)	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.
	(m)	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.
	(n)	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.
	(o)	Significant estimates and judgements . The Directors do not believe that any accounting estimates or judgements have been applied to these financial statements that have a significant risk of causing material adjustment to the carrying amount of assets and liabilities. However the Directors made a judgement in the prior year that the acquisition of assets and liabilities from Perpetual Income and Growth Investment Trust plc outlined in Note 20 does not meet the definition of a business combination under FRS 102 and accordingly have not accounted for it as such in these financial statements.

3.	Income
		2022	2021
		'000	'000
	Income from investments
	UK dividends (all listed):
	- ordinary	32,710	24,539
	- special	1,676	1,251
	Property income dividends	1,153	1,007
	Overseas dividends (all listed)
	- ordinary	8,731	4,773
	- special	160	99
	Stock dividends	3,728	1,699
		48,158	33,368
	Other income
	Deposit interest	7	1
	Money Market interest	32	-
	Traded option premiums	2,820	2,504
	Compensation payments	1	106
		2,860	2,611
	Total income	51,018	35,979
	All special dividends for the year of £1,836,000 (2021 - £1,350,000) have been recognised as being revenue in nature.
	During the year, the Company received premiums totalling £2,820,000 (2021 - £2,504,000) in exchange for entering into derivative transactions. At the year end there were no open positions (2021 - none).
	Other income in the year ended 30 June 2021 includes an amount of £101,000 for compensation received from the Manager. This receipt offset an HMRC penalty of £91,000 and related interest of £10,000 which arose due to the Manager's late payment of stamp duty to HMRC on the Company's behalf. A further £5,000 was received from the Manager in respect of a trading error which occurred during the year.

4.	Investment management fees
		2022			2021
		Revenue	Capital	Total	Revenue	Capital	Total
		£'000	£'000	£'000	£'000	£'000	£'000
	Management fee	1,199	2,798	3,997	753	1,759	2,512
	The management fee is based on 0.55% per annum for net assets up to £350 million, 0.45% per annum on the next £100 million of net assets and 0.25% per annum for net assets over £450 million, calculated and payable monthly. The fee has been allocated 30% to revenue and 70% to capital. The management agreement is terminable on three months' notice. The fee payable to the Manager at the year end was £642,000 (2021 - £584,000).
	In the prior year, the Manager agreed to waive the management fee payable by the Company in respect of the net assets transferred to the Company for a period of 182 days following completion of the merger on 17 November 2020. This amounted to approximately £804,000.
	Under the terms of the management agreement, the value of the Company's investments in commonly managed funds is excluded from the calculation of the management fee. The Company held no such commonly managed funds at the year end (2021 - none).

5.	Administrative expenses
		2022	2021
		£'000	£'000
	Shareholders' servicesA,D	400	507
	Directors' remunerationB	193	201
	Secretarial feesC,D	75	90
	Registrars feesD	110	128
	Depositary feesD	96	100
	HMRC penaltyE	-	91
	Custody fees	60	49
	Printing and postage	34	60
	Auditors' remunerationD:
	- fees payable to the Company's auditors for the audit of the Company's annual financial statements	42	38
	Legal and professional fees D	51	59
	Irrecoverable VAT for the current yearD	98	-
	Irrecoverable VAT for the previous yearD	28	-
	Other expensesD	163	120
		1,350	1,443
	AIncludes savings scheme and other wrapper administration and promotion expenses, paid to the Manager under a delegation agreement with the Manager to cover promotional activities during the year. There was £100,000 (2021 - £120,000) due to the Manager in respect of these promotional activities at the year end.
	B Refer to the Directors' Remuneration section of the Directors' Remuneration Report for further details.
	C Payable to the Manager, balance outstanding of £19,000 (2021 - £23,000) at the year end.
	D The Company was granted VAT registered status on 18 March 2022, backdated to 1 January 2021. As a result the above current year expenses, where applicable, are disclosed net of VAT. All of the prior year expenses above includes irrecoverable VAT where applicable with the exception of Auditors' remuneration for the statutory audit.
	E Relating to the late payment of stamp duty arising on the transfer of assets from Perpetual Income and Growth Investment Trust plc to the Company during the year ended 30 June 2021.

6.	Finance costs
		2022			2021
		Revenue	Capital	Total	Revenue	Capital	Total
		'000	'000	'000	'000	'000	'000
	Bank loans and overdraft interest	75	175	250	43	98	141
	2.51% Senior Loan Note	301	703	1,004	301	703	1,004
	4.37% Senior Loan Note	787	1,835	2,622	497	1,159	1,656
	Interest payable to HMRC	-	-	-	10	-	10
	Amortisation of 2.51% Senior Loan Note issue expenses	3	9	12	4	10	14
	Amortisation of 4.37% Senior Loan Note	(474)	(1,107)	(1,581)	(295)	(688)	(983)
		692	1,615	2,307	560	1,282	1,842
	The 4.37% Senior Loan Notes, with a par value £60,000,000, were novated to the Company following the transaction with Perpetual Income and Growth Investment Trust plc (note 20) during the year ended 30 June 2021. They were novated at fair value of £73,344,000 and are being amortised over the remaining life of the loan.
	Interest payable includes an amount of £10,000 relating to the late payment of stamp duty to HMRC arising on the transfer of assets from Perpetual Income and Growth Investment Trust plc to the Company during the year ended 30 June 2021.
	With the exception of the interest payable to HMRC, which is allocated wholly to revenue, finance costs are allocated 30% to revenue and 70% to capital.

7.	Ordinary dividends on equity shares
		2022		2021
		Rate	£'000	Rate	£'000
	Fourth interim dividend previous year	9.75p	11,412	9.50p	6,280
	First interim dividend current year	8.25p	9,641	12.55p	8,297
	Second interim dividend current year	8.25p	9,628	3.95p	4,623
	Third interim dividend current year	8.25p	9,627	8.25p	9,656
	Return of unclaimed dividends		-		(210)
			40,308		28,646
	The fourth interim dividend for 2022 of 11.25p per Ordinary share has not been included as a liability in these financial statements as it was not paid until after the reporting date (15 September 2022).
	The following table sets out the total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of Section 1158-1159 of the Corporation Tax Act 2010 are considered. The revenue available for distribution by way of dividend for the year is £47,316,000 (2021 - £32,936,000).
		2022		2021
		Rate	£'000	Rate	£'000
	Three interim dividends of 8.25p each (2021: 12.55p, 3.95p and 8.25p)	24.75p	28,896	24.75p	22,576
	Fourth interim dividend	11.25p	13,128	9.75p	11,412
		36.00p	42,024	34.50p	33,988

8.	Taxation
			2022			2021
			Revenue	Capital	Total	Revenue	Capital	Total
			£'000	£'000	£'000	£'000	£'000	£'000
	(a)	Analysis of charge for the year
		Overseas tax incurred	1,961	-	1,961	1,102	-	1,102
		Overseas tax reclaimable	(1,498)	-	(1,498)	(815)	-	(815)
		Total tax charge for the year	463	-	463	287	-	287
	(b)	Factors affecting the tax charge for the year. The UK corporation tax rate is 19% (2021 - 19%). The tax charge for the year is lower than the corporation tax rate (2021 - lower). The differences are explained below:
			2022			2021
			Revenue	Capital	Total	Revenue	Capital	Total
			£'000	£'000	£'000	£'000	£'000	£'000
		Net return before taxation	47,777	(88,415)	(40,638)	33,223	128,281	161,504
		Net return multiplied by the standard rate of corporation tax of 19% (2021 - 19%)	9,078	(16,799)	(7,721)	6,312	24,373	30,685
		Effects of:
		Non-taxable UK dividends	(6,305)	-	(6,305)	(5,091)	-	(5,091)
		Non-taxable overseas dividends	(2,553)	-	(2,553)	(1,011)	-	(1,011)
		Expenses not deductible for tax purposes	56	-	56	19	-	19
		Movement in unutilised management expenses	(276)	839	563	(229)	578	349
		Realised and unrealised losses/(gains) on investments held	-	15,919	15,919	-	(24,939)	(24,939)
		Currency movements not taxable	-	41	41	-	(12)	(12)
		Overseas tax payable	463	-	463	287	-	287
		Total tax charge	463	-	463	287	-	287
	(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 £71,665,000 (2021 - £68,702,000). A deferred tax asset at the standard rate of corporation of 25% (2021 - 25%) of £17,916,000 (2021 - £17,176,000) has not been recognised and these expenses will only be utilised if the Company has profits chargeable to corporation tax in the future. It is considered too uncertain that the Company will generate such profits and therefore no deferred tax asset has been recognised. The Finance Act 2021 received Royal Assent on 10 June 2021 and the rate of Corporation Tax of 25% effective from 1 April 2023 has been used to calculate the potential deferred tax asset of £17,916,000.

9.	Return per Ordinary share
		2022		2021
		£'000	p	£'000	p
	Returns are based on the following figures:
	Revenue return	47,314	40.5	32,936	33.7
	Capital return	(88,415)	(75.7)	128,281	131.4
	Total return	(41,101)	(35.2)	161,217	165.1
	Weighted average number of Ordinary shares in issue		116,831,407		97,648,914

10.	Investments at fair value through profit or loss
		2022	2021
		'000	'000
	Opening book cost	995,661	461,306
	Opening investment holdings gains	206,629	99,901
	Opening fair value	1,202,290	561,207
	Analysis of transactions made during the year
	Assets acquired in respect of PLI transaction	-	459,361
	Costs associated with the PLI transaction	-	2,519
	Purchases at cost	241,150	202,157
	Sales proceeds received	(260,861)	(154,214)
	(Losses)/gains on investments	(83,786)	131,260
	Closing fair value	1,098,793	1,202,290
		2022	2021
		£'000	£'000
	Closing book cost	1,017,087	995,661
	Closing investment gains	81,706	206,629
	Closing fair value	1,098,793	1,202,290
		2022	2021
	Losses/(gains) on investments	£'000	£'000
	Costs associated with the PLI transaction	-	(2,519)
	Realised gains on sale of investments at fair valueA	41,137	27,051
	Net movement in investment holdings gains	(124,923)	106,728
		(83,786)	131,260
	A Includes losses on the exercise of £nil (2021 - £78,000).
	The Company received £260,861,000 (2021 - £154,214,000) from investments sold in the year. The book cost of these investments when they were purchased was £219,724,000 (2021 - £127,085,000). 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 2022 there were no shares pledged as part of the option underwriting programme (30 June 2021 - none). The liability of collateral held at the year end was £nil as no open positions existed (30 June 2021 - £nil).
	Transaction costs. During the year expenses were incurred in acquiring or disposing of investments classified at fair value through profit or loss. These have been expensed through capital and are included within gains on investments in the Statement of Comprehensive Income. The total costs were as follows:
		2022	2021
		£'000	£'000
	Purchases	885	909
	Costs associated with the PLI transaction	-	2,519
	Sales	146	77
		1,031	3,505
	The above transaction costs are calculated in line with the AIC SORP. The transaction costs in the Company's Key Information Document are calculated on a different basis and in line with the PRIIPs regulations.

11.	Other debtors and receivables
		2022	2021
		'000	'000
	Amounts due from brokers	2,490	2,914
	Accrued income	2,685	2,415
	Taxation recoverable	3,844	2,899
	Prepayments	42	117
		9,061	8,345

12.	Cash and cash equivalents
		2022	2021
		'000	'000
	Cash at bank and in hand	1,503	4,493
	Money market funds	18,628	-
		20,131	4,493
	The Company holds £18,628,000 (2021 - £nil) in Aberdeen Standard Liquidity Fund (Lux) - Sterling Fund which is managed and administered by abrdn.

13.	Creditors: amounts falling due within one year
					2022			2021
					'000			'000
	Other creditors				1,513			1,558
	Amounts due to brokers				-			1,191
	Bank loans				6,507			6,241
					8,020			8,990
	The Company's one year £20 million multi-currency unsecured revolving bank credit facility with Scotiabank Europe expired on 3 November 2021. The Company entered into a new three year £50 million multi-currency unsecured revolving bank credit facility with Bank of Nova Scotia Limited, committed until 27 October 2024. Under the terms of the agreement, advances from the facility may be made for periods of up to six months or for such longer periods agreed by the lender.
	As at 30 June 2022, the Company had drawn down the following amounts from the facility, all with a maturity date of 27 July 2022 (2021 - 7 July 2021):
				2022			2021
				Currency		£'000	Currency		£'000
	Swiss Franc at an all-in rate of 1.35% (2021: 0.95%)			2,500,000		2,150	2,500,000		1,958
	Euro at an all-in rate of 1.15% (2021: 0.95%)			2,326,000		2,002	2,326,000		1,997
	Norwegian Krone at an all-in rate of 2.59% (2021: 1.13%)			13,145,000		1,096	13,145,000		1,106
	Danish Krona at an all-in rate of 1.15% (2021: 0.95%)			5,410,000		626	5,410,000		624
	US Dollar at an all-in rate of 2.70% (2021: 1.03%)			768,000		633	768,000		556
						6,507			6,241
	At the date this Report was approved, the Company had drawn down the following amounts from the facility, all with a maturity date of 26 September 2022:
	- Swiss Franc 2,500,000 at an all-in rate of 1.35%, equivalent to £2,271,000.
	- Euro 2,326,000 at an all-in rate of 1.229%, equivalent to £2,042,000.
	- Norwegian Krone 13,145,000 at an all-in rate of 3.1%, equivalent to £1,123,000.
	- Danish Krona 5,410,000 at an all-in rate of 1.533%, equivalent to £639,000.
	- US Dollar 768,000 at an all-in rate of 3.544%, equivalent to £673,000.
	Financial covenants contained within the facility agreement provide, inter alia, that the ratio of net assets to borrowings must be greater than 3.5:1 and that net assets must exceed £550 million. All financial covenants were met during the year and also during the period from the year end to the date of this report.

14.	Creditors: amounts falling due after more than one year
		2022	2021
		'000	'000
	2.51% Senior Loan Note	40,000	40,000
	Unamortised 2.51% Senior Loan Note issue expenses	(70)	(82)
	4.37% Senior Loan Note at fair value	73,344	73,344
	Amortisation of 4.37% Senior Loan Note	(2,564)	(983)
		110,710	112,279
	On 8 November 2017 the Company issued £40,000,000 of 10 year Senior Loan Notes at a fixed rate of 2.51%. Interest is payable in half yearly instalments in May and November and the Loan Notes are due to be redeemed at par on 8 November 2027. The Loan Notes are secured by a floating charge over the whole of the assets of the Company. The Company has complied with the Senior Loan Note Purchase Agreement covenant throughout the year that the ratio of net assets to gross borrowings must be greater than 3.5:1, and that net assets will not be less than £550,000,000.
	As a result of the transaction with Perpetual Income and Growth Investment Trust plc on 17 November 2020, £60,000,000 of 15 year Senior Loan Notes at a fixed rate of 4.37% issued on 8 May 2014 were novated to the Company. Under FRS 102 the loan notes are required to be recorded initially at their fair value of £73,344,000 in the Company's Financial Statements and are then amortised over the remaining life of the loan towards their redemption value of £60,000,000. The amortisation adjustment is presented as a finance cost, split 70% to capital and 30% to revenue. Interest is payable in half yearly instalments in May and November and the Loan Notes are due to be redeemed at par on 8 May 2029. The Loan Notes are secured by a floating charge over the whole of the assets of the Company. The Company has complied with the Note Purchase Agreement that the ratio of net assets to gross borrowings must be greater than 3.5:1, and that net assets will not be less than £550,000,000 throughout the year.

15.	Share capital
		2022		2021
		Shares	'000	Shares	'000
	Allotted, called-up and fully-paid:
	Ordinary shares of 25p each: publicly held	116,690,472	29,172	117,046,487	29,261
	Ordinary shares of 25p each: held in treasury	2,839,060	710	2,483,045	621
		119,529,532	29,882	119,529,532	29,882
	During the year 356,015 Ordinary shares were bought back (2021 - nil) to be held in treasury by the Company at a total cost of £3,195,000 (2021 - £nil) representing 0.3% (2021 - 0.0%) of called-up share capital.

16.	Net asset value per Ordinary share
	The net asset value per Ordinary share and the net asset value attributable to the Ordinary shares at the year end follow. These were calculated using 116,690,472 (2021 - 117,046,487) Ordinary shares in issue at the year end (excluding treasury shares).
		2022		2021
		Net Asset Value Attributable		Net Asset Value Attributable
		'000	pence	'000	pence
	Net asset value - debt at par	1,009,255	864.9	1,093,859	934.6
	Add: amortised cost of 2.51% Senior Loan Notes	39,930	34.1	39,918	34.1
	Less: fair value of 2.51% Senior Loan Notes	(39,725)	(33.9)	(40,000)	(34.2)
	Add: amortised cost of 4.37% Senior Loan Notes	70,780	60.5	72,361	61.8
	Less: fair value of 4.37% Senior Loan Notes	(63,905)	(54.6)	(70,893)	(60.6)
	Net asset value - debt at fair value	1,016,335	871.0	1,095,245	935.7

17.	Analysis of changes in net debt
		At	Currency		Non-cash	At
		1 July 2021	differences	Cash flows	movements	30 June 2022
		'000	'000	'000	'000	'000
	Cash and cash equivalents*	4,493	82	15,556	-	20,131
	Debt due within one year	(6,241)	(298)	32	-	(6,507)
	Debt due after more than one year	(112,279)	-	-	1,569	(110,710)
		(114,027)	(216)	15,588	1,569	(97,086)
		At	Currency		Non-cash	At
		1 July 2020	differences	Cash flows	movements	30 June 2021
		'000	'000	'000	'000	'000
	Cash and cash equivalents*	16,365	(358)	(11,514)	-	4,493
	Debt due within one year	(6,667)	420	6	-	(6,241)
	Debt due after more than one year	(39,904)	-	-	(72,375)	(112,279)
		(30,206)	62	(11,508)	(72,375)	(114,027)
	* An analysis of cash and cash equivalents between cash at bank and in hand and money market funds is provided in note 12.
	A statement reconciling the movement in net funds to the net cash flow has not been presented as there are no differences from the above analysis.

18.	Financial instruments
	This note summarises the risks deriving from the financial instruments that comprise the Company's assets and liabilities.
	The Company's investment activities expose it to various types of financial risk associated with the financial instruments and markets in which it invests. The Company's financial instruments, other than derivatives, comprise securities and other investments, cash balances, liquid resources, loans and debtors and creditors that arise directly from its operations; for example, in respect of sales and purchases awaiting settlement, and debtors for accrued income. The Company also has the ability to enter into derivative transactions in the form of forward foreign currency contracts, futures and options, subject to Board approval, for the purpose of enhancing portfolio returns and for hedging purposes in a manner consistent with the Company's broader investment policy. As at 30 June 2022 there were no open positions in derivatives transactions (2021 - same).
	Risk management framework . The directors of abrdn Fund Managers Limited collectively assume responsibility for the Manager's obligations under the AIFMD including reviewing investment performance and monitoring the Company's risk profile during the year.
	The Manager is a wholly owned subsidiary of the abrdn Group ("the Group"), which provides a variety of services and support to the Manager in the conduct of its business activities, including in the oversight of the risk management framework for the Company. The Manager has delegated the day to day administration of the investment policy to 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). The Manager has retained responsibility for monitoring and oversight of investment performance, product risk and regulatory and operational risk for the Company.
	The Manager conducts its risk oversight function through the operation of the Group's risk management processes and systems which are embedded within the Group's operations. The Group's Risk Division ("the 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 Chief Risk Officer, who reports to the Chief Executive Officer ("CEO") of the Group. The Risk Division achieves its objective through embedding the Risk Management Framework throughout the organisation using the Group's operational risk management system ("SHIELD").
	The Group's Internal Audit Department is independent of the Risk Division and reports directly to the Group CEO and to the Audit Committee of the Group's Board of Directors. The Internal Audit Department is responsible for providing an independent assessment of the Group's control environment.
	The Group's corporate governance structure is supported by several committees to assist the board of directors, its subsidiaries and the Company to fulfil their roles and responsibilities. The Group's Risk Division is represented on all committees, with the exception of those committees that deal with investment recommendations. The specific goals and guidelines on the functioning of those committees are described in the committees' terms of reference.
	Risk management of the financial instruments. The main risks the Company faces from these financial instruments are (a) market risk (comprising (i) interest rate, (ii) foreign currency and (iii) other price risk), (b) liquidity risk and (c) credit risk.
	In order to mitigate risk, the investment strategy is to select investments for their fundamental value. Stock selection is therefore based on disciplined accounting, market and sector analysis. It is the Board's policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from factors specific to a particular sector. The Attribution Analysis, detailing the allocation of assets and the stock selection, is shown in the Performance Attribution table in the Investment Manager's Review. 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 9.4% of net assets as at 30 June 2022 (2021 - 10.3%). The Manager's policies for managing these risks are summarised below and have been applied throughout the current and previous year. The numerical disclosures in the tables listed below exclude short-term debtors and creditors.
	18 (a) Market risk . The Company's investment portfolio is exposed to market price fluctuations, which are monitored by the Manager in pursuance of the investment objective. Adherence to investment guidelines and to investment and borrowing powers set out in the management agreement mitigates the risk of exposure to any particular security or issuer. Further information on the investment portfolio is set out in the Investment Manager's Report.
	Market price risk arises mainly from uncertainty about future prices of financial instruments used in the Company's operations. It represents the potential loss the Company might suffer through holding market positions as a consequence of price movements. It is the Board's policy to hold equity investments in the portfolio in a broad spread of sectors in order to reduce the risk arising from factors specific to a particular sector. A summary of investment changes during the year under review is shown above, along side an analysis of the equity portfolio by sector.

	18 (a)(i) Interest rate risk. Interest rate movements may affect:
	- the level of income receivable on cash deposits;
	- interest payable on the Company's variable rate borrowings; and
	- the fair value of any investments in fixed interest rate securities.
	Management of the risk . The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment and borrowing decisions. Details of the bank loan and interest rates applicable can be found in note 13.
	The Board imposes borrowing limits to ensure gearing levels are appropriate to market conditions and reviews these on a regular basis. Interest rate risk is the risk of movements in the value of financial instruments as a result of fluctuations in interest rates.
	Financial assets . The interest rate risk of the portfolio of financial assets at the reporting date was as follows:
		Floating rate		Non-interest bearing
		2022	2021	2022	2021
		'000	'000	'000	'000
	Danish Krona	93	-	20,888	16,757
	Euro	268	-	46,543	42,023
	Norwegian Krone	66	-	20,582	23,221
	Singapore Dollars	-	-	14,833	-
	Sterling	19,704	3,809	942,138	1,069,162
	Swedish Krone	-	-	14,075	-
	Swiss Francs	-	684	23,009	30,958
	Taiwan Dollars	-	-	5,273	6,859
	US Dollars	-	-	11,452	13,310
	Total	20,131	4,493	1,098,793	1,202,290
	The floating rate assets consist of cash deposits on call earning interest at prevailing market rates.
	The non-interest bearing assets represent the equity element of the portfolio.
	Financial liabilities. The Company has floating rate borrowings by way of its loan facility and fixed rate senior loan note issues, details of which are in notes 13 and 14.

	Interest rate sensitivity. The sensitivity analysis below has been determined based on the exposure to interest rates for both derivative and non-derivative instruments at the reporting date and the stipulated change taking place at the beginning of the financial year and held constant in the case of instruments that have floating rates.
	If interest rates had been 1% higher or lower and all other variables were held constant, the Company's profit before tax for the year ended 30 June 2022 and net assets would increase/decrease by £161,000 (2021 - £12,000) respectively. This is mainly attributable to the Company's exposure to interest rates on its floating rate cash balances and borrowings.
	18 (a)(ii) Foreign currency risk. A proportion of the Company's investment portfolio is invested in overseas securities whose values are subject to fluctuation due to changes in foreign exchange rates. In addition, the impact of changes in foreign exchange rates upon the profits of investee companies can result, indirectly, in changes in their valuations. Consequently, the Statement of Financial Position can be affected by movements in exchange rates.
	Management of the risk. The revenue account is subject to currency fluctuations arising on dividends receivable in foreign currencies and, indirectly, due to the impact of foreign exchange rates upon the profits of investee companies. It is not the Company's policy to hedge this currency risk but the Board keeps under review the currency returns in both capital and income.
	Foreign currency risk exposure by currency of denomination falling due within one year is set out in the table below. Net monetary assets/(liabilities) comprise cash and loan balances and exclude other debtors and receivables and other payables.
		30 June 2022			30 June 2021
			Net			Net
			monetary	Total		monetary	Total
			assets/	currency		assets/	currency
		Investments	(liabilities)	exposure	Investments	(liabilities)	exposure
		£'000	£'000	£'000	£'000	£'000	£'000
	Danish Krona	20,888	(533)	20,355	16,757	(624)	16,133
	Euro	46,543	(1,734)	44,809	42,023	(1,580)	40,443
	Norwegian Krone	20,582	(1,030)	19,552	23,221	(1,106)	22,115
	Singapore Dollars	14,833	-	14,833	-	-	-
	Swedish Krone	14,075	-	14,075	-	-	-
	Swiss Francs	23,009	(2,150)	20,859	30,958	(1,274)	29,684
	Taiwan Dollars	5,273	-	5,273	6,859	-	6,859
	US Dollars	11,452	(633)	10,819	13,310	(556)	12,754
	Total	156,655	(6,080)	150,575	133,128	(5,140)	127,988
	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.
						2022	2021
						£'000	£'000
	Danish Krona					2,036	1,613
	Euro					4,481	4,044
	Norwegian Krone					1,955	2,212
	Singapore Dollars					1,483	-
	Swedish Krone					1,408	-
	Swiss Francs					2,086	2,968
	Taiwan Dollars					527	686
	US Dollars					1,082	1,275
	Total					15,058	12,798

	18(a)(iii) Other price risk . Other price risks (ie changes in market prices other than those arising from interest rate or currency risk) may affect the value of the quoted investments.
	Management of the risk . It is the Board's policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from factors specific to a particular sector. The allocation of assets to international markets and the stock selection process, as detailed in the section "Delivering the Investment Policy", both act to reduce market risk. The Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy.
	Other price risk sensitivity. If market prices at the reporting date had been 10% higher or lower while all other variables remained constant, the return attributable to Ordinary shareholders and equity for the year ended 30 June 2022 would have increased/decreased by £109,879,000 (2021 - £120,229,000).
	18 (b) Liquidity risk . This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities as they fall due in line with the maturity profile analysed as follows:
				Within	Within	Within	More than
				1 year	1-3 years	3-5 years	5 years	Total
	At 30 June 2022			£000	£000	£000	£000	£000
	Bank loans			6,507	-	-	-	6,507
	2.51% Senior Loan Note			-	-	-	40,000	40,000
	4.37% Senior Loan Note			-	-	-	60,000	60,000
	Interest cash flows on bank loans			1	-	-	-	1
	Interest cash flows on 2.51% Senior Loan Note			1,004	2,008	2,008	502	5,522
	Interest cash flows 4.37% Senior Loan Note			2,622	5,244	5,244	5,244	18,354
	Cash flows on other creditors			1,513	-	-	-	1,513
				11,647	7,252	7,252	105,746	131,897
				Within	Within	Within	More than
				1 year	1-3 years	3-5 years	5 years	Total
	At 30 June 2021			£000	£000	£000	£000	£000
	Bank loans			6,241	-	-	-	6,241
	2.51% Senior Loan Note			-	-	-	40,000	40,000
	4.37% Senior Loan Note			-	-	-	60,000	60,000
	Interest cash flows on bank loans			5	-	-	-	5
	Interest cash flows on 2.51% Senior Loan Note			1,004	2,008	2,008	1,506	6,526
	Interest cash flows 4.37% Senior Loan Note			2,622	5,244	5,244	7,866	20,976
	Cash flows on other creditors			2,749	-	-	-	2,749
				12,621	7,252	7,252	109,372	136,497
	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 2022 the Company utilised £6,507,000 (2021 - £6,241,000) of a £50,000,000 multi-currency revolving bank credit facility, which is committed until 27 October 2024 (2021 - of a £20,000,000 multi-currency revolving bank credit facility committed until 3 November 2021). Details of maturity dates and interest charges can be found in note 13. The aggregate of all future interest payments at the rate ruling at 30 June 2022 and the redemption of the loan amounted to £6,508,000 (2021 - £6,246,000).
	18 (c) Credit risk . This is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss.
	Management of the risk . The risk is mitigated by the 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 2022 is £25,306,000 (30 June 2021 - £9,822,000) consisting of £2,685,000 (2021 - £2,415,000) of dividends receivable from equity shares, £2,490,000 (2021 - £2,914,000) receivable from brokers and £20,131,000 (2021 - £4,493,000) in cash and cash equivalents.
	None of the Company's financial assets are past due or impaired (2021 - none).

19.	Fair value hierarchy
	FRS 102 requires an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Categorisation within the hierarchy is determined on the basis of the lowest level input that is significant to the fair value measurement of each relevant asset or liability. The fair value hierarchy has the following levels:
	Level 1: unadjusted quoted prices in an active market for identical assets or liabilities that the entity can access at the measurement date;
	Level 2: inputs other than quoted prices included within Level 1 that are observable (ie developed using market data) for the asset or liability, either directly or indirectly; and
	Level 3: inputs are unobservable (ie for which market data is unavailable) for the asset or liability.
	The valuation techniques used by the Company are explained in the accounting policies note 2(f). The Company's portfolio consists wholly of quoted equities, all of which are Level 1.
	The fair value of the 2.51% Senior Loan Notes have been calculated 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. The fair value and amortised cost amounts can be found in note 16.
	The fair value of the 4.37% Senior Loan Notes have been calculated based on a comparable debt security. The fair value and amortised cost amounts can be found in note 16.
	All other financial assets and liabilities of the Company are included in the Statement of Financial Position at their book value which in the opinion of the Directors is not materially different from their fair value.

20.	Transaction with Perpetual Income and Growth Investment Trust plc ("PLI")
	On 17 November 2020, the Company announced that it had acquired £427 million of net assets from PLI in consideration for the issue of 50,936,074 new Ordinary shares based on the respective formula asset values of the two entities on 12 November 2020.
	Net assets acquired	£'000
	Investments	459,361
	Cash	40,248
	Debtors	1,003
	Current liabilities	(48)
	Long term liabilities - 4.37% Senior Loan Notes 2029	(73,344)
	Net assets	427,220
	Satisfied by the value of new Ordinary shares issued	427,220
	There were no fair value adjustments on completion of the combination made to the above figures.

21.	Related party transactions and transactions with the Manager
	Fees payable during the year to the Directors and their interests in shares of the Company are considered to be related party transactions and are disclosed within the Directors' Remuneration section of the Directors' Remuneration Report.
	The Company has agreements with the Manager for the provision of management, secretarial, accounting and administration services and promotional activities. Details of transactions during the year and balances outstanding at the year end are disclosed in notes 4 and 5.

22.	Capital management policies and procedures
	The investment objective of the Company is to achieve a high and growing income combined with capital growth through investment in a portfolio principally of UK equities.
	The capital of the Company consists of debt (comprising loan notes and bank loans) and equity (comprising issued capital, reserves and retained earnings). The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance.
	The Board monitors and reviews the broad structure of the Company's capital on an ongoing basis. This review includes:
	- the level of equity shares in issue;
	- the planned level of gearing which takes into account the Investment Manager's views on the market (net gearing figures can be found in Alternative Performance Measures; and
	- the extent to which revenue in excess of that which is required to be distributed should be retained.
	The Company's objectives, policies and processes for managing capital are unchanged from the preceding accounting period.
	Notes 13 and 14 give details of the Company's bank facility agreement and loan notes respectively.

Alternative Performance Measures
Alternative performance measures are numerical measures of the Company's current, historical or future performance, financial position or cash flows, other than financial measures defined or specified in the applicable financial framework. The Company's applicable financial framework includes FRS 102 and the AIC SORP. The Directors assess the Company's performance against a range of criteria which are viewed as particularly relevant for closed-end investment companies.
Discount to net asset value per Ordinary share
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.
		2022	2021
NAV per Ordinary share (p)	a	864.9	934.6
Share price (p)	b	832.0	871.0
Discount	(b-a)/a	-3.8%	-6.8%
Dividend cover
Dividend cover is the revenue return per share divided by dividends per share expressed as a ratio.
		2022	2021
Revenue return per share	a	40.50p	33.73p
Dividends per share	b	36.00p	34.50p
Dividend cover	a/b	1.13	0.98
Dividend yield
The annual dividend per Ordinary share divided by the share price, expressed as a percentage.
		2022	2021
Dividends per share	a	36.00p	34.50p
Share price	b	832.00p	871.00p
Dividend yield	a/b	4.3%	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.
		2022	2021
Borrowings (£'000)	a	117,217	118,520
Cash (£'000)	b	20,131	4,493
Amounts due to brokers (£'000)	c	-	1,191
Amounts due from brokers (£'000)	d	2,490	2,914
Shareholders' funds (£'000)	e	1,009,255	1,093,859
Net gearing	(a-b+c-d)/e	9.4%	10.3%
Ongoing charges ratio
The ongoing charges ratio has been calculated based on the total of investment management fees and administrative expenses less non-recurring charges and expressed as a percentage of the average daily net asset values with debt at fair value published throughout the year.
		2022	2021
Investment management fees (£'000)	a	3,997	2,512
Administrative expenses (£'000)	b	1,350	1,443
Less: non-recurring chargesA (£'000)	c	(30)	(115)
Ongoing charges (£'000)	a+b+c	5,317	3,840
Average net assets (£'000)	d	1,102,862	841,850
Ongoing charges ratio	e=(a+b+c)/d	0.48%	0.46%
A 2022 comprises £20,000 director recruitment fee, £8,000 legal fees relating to the private placement notes and £2,000 professional fees for Taiwan tax work. 2021 comprises £18,000 for legal fees and £6,000 for audit fees relating to the merger and £91,000 relating to HMRC penalty for late payment of stamp duty associated with the merger.
The ongoing charges ratio provided in the Company's Key Information Document is calculated in line with the PRIIPs regulations, which includes financing and transaction costs.
Total return
Share price and NAV total returns show how the NAV and share price has performed over a period of time in percentage terms, taking into account both capital returns and dividends paid to shareholders. Share price and NAV total returns are monitored against open-ended and closed-ended competitors, and the FTSE All-Share Index, respectively.
		Share
Year ended 30 June 2022		Price	NAV
Opening at 1 July 2021	a	871.0p	934.6p
Closing at 30 June 2022	b	832.0p	864.9p
Price movements	c=(b/a)-1	-4.5%	-7.5%
Dividend reinvestmentA	d	3.8%	3.5%
Total return	c+d	-0.7%	-4.0%
		Share
Year ended 30 June 2021		Price	NAV
Opening at 1 July 2020	a	768.0p	808.3p
Closing at 30 June 2021	b	871.0p	934.6p
Price movements	c=(b/a)-1	13.4%	15.6%
Dividend reinvestmentA	d	5.1%	5.0%
Total return	c+d	18.5%	20.6%
A Share price total return involves reinvesting the net dividend in the share price of the Company on the date on which that dividend goes ex-dividend. NAV total return involves investing the net dividend in the NAV of the Company with debt at fair value on the date on which that dividend goes ex-dividend.

The financial information set out above does not constitute the Company's statutory accounts for the years ended 30 June 2022 or 2021 but is derived from those accounts. Statutory accounts for 2021 have been delivered to the registrar of companies.

The statutory accounts for the year ended 30 June 2022 have been approved by the Board and audited and will be filed with the Registrar of Companies. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The Company's Annual General Meeting will be held at 12.30pm on 1 November 2022 at The Mermaid Conference Centre, Puddledock, Blackfriars, London EC4V 3DB.

The Annual Report will be posted to shareholders in October 2022 and will available shortly from the Company's website at: www.murray-income.co.uk .

By Order of the Board

ABERDEEN ASSET MANAGEMENT PLC

Secretaries

21 September 2022

END

 

END

 

 

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