Final Results

Murray Income Trust PLC 31 July 2000 MURRAY INCOME TRUST PLC ----------------------- PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2000 --------------------------------------------------- The board of directors of Murray Income Trust PLC announces the unaudited results for the year to 30 June 2000. Highlights ---------- - Net asset value total return of 7.6% against 0.3% for the benchmark index FTSE 350 Higher Yield - Top quartile over one year and first over three months (in net asset value terms) Performance ----------- Following the appointment of Doug Thomson and the decision to rebalance the portfolio so that it was more closely aligned to our benchmark index there has been a significant improvement in performance during the past year, the agreed target of beating the benchmark return by at least one percentage point once the rebalancing of the portfolio was completed has been surpassed. Murray Income's ordinary shares moved steadily ahead during the second half of the year producing for the year to 30 June 2000 a total return (with net dividends reinvested) of 6.1% compared with a return of 0.3% on the benchmark, the FTSE 350 Higher Yield Index. It was also ahead of the All-Share return of 5.2% which enjoyed the benefit of an advance in UK small capitalisation stocks. Your company's performance was particularly strong over the three months to end June 2000 over which period it was the top performing stock of all the 19 UK Income Growth investment trusts. In part this was due to market reaction to the news of Chase Manhattan's takeover offer for Robert Fleming in which Murray Income has a long-standing major investment. Additionally, during that period investors sold off highly valued technology stocks and companies with solid growth and earnings potential (which are represented in our portfolio) returned to favour. In net asset value per share terms the performance was equally encouraging with a total return of 7.6%. Discount -------- At the last annual general meeting in October 1999 shareholders renewed the authorisation of the company to buy back up to 14.99% of its own shares in the market. Since then and to date the company has repurchased 7,849,500 shares (9.23% of the issued ordinary share capital at 25 October 1999) at an average price of 431.47p per share. The buyback of 7,619,500 shares to 30 June 2000 contributed 8.8p per share to the net asset value. The authorisation will expire at the conclusion of the next annual general meeting at which point shareholders will be asked to renew it. At 30 June 2000 the discount stood at 15.5%, a level in line with that of comparable trusts in the UK Income Growth sub-sector. Although the discount has not significantly increased during the year, we are concerned with the level and believe that the continued use of the buy back facility and the more disciplined approach being adopted by the manager leading to an extended period of consistent outperformance will produce the reductions in discount that we are determined to achieve. Dividend -------- For the year under review three interim dividends of 3.15 pence per share have already been paid on 14 January, 14 April, and 14 July. The board now recommends a final dividend of 6.3 pence per share making a total of 15.75 pence. This is equivalent to an increase of 2.6% on the dividend for the year ending 30 June 1999 after allowing for the special component of the second interim payment for that year. Shareholders are reminded that 0.75p of that second interim dividend was to compensate for the lack of a tax credit on the first interim, which had been paid as a Foreign Income Dividend. For the current year the board has already forecast and now recommends three interim dividends of 3.15p a share to be paid on 15 January, 16 April and 16 July 2001. 'B' ordinary shareholders will receive a capitalisation issue in 'B' ordinary share on 27 October 2000 based on their holding at the close of business on 6 October 2000 and equivalent in net asset value to the recommended final dividend and the interim dividends for the current year. As a share repurchase scheme is in progress the number of shares to be received by each 'B' ordinary shareholder will be announced by 31 August 2000. Shareholders will have noted the increasing tendency of UK companies to engage in share buy-backs rather than to increase their dividends. For an income growth investment trust this is a concern, and we shall be monitoring this development closely. Outlook ------- Economic growth in the UK should proceed at a modest pace and the manufacturing sector will benefit as we anticipate that sterling will continue to decline. Consensus is for 2.8% growth for 2000 but this could be over-optimistic if there are further interest rate rises and consumers continue to baulk at retail price rises. There remains a risk of imported inflation should sterling fall back too far or too fast. The March/April shake-out in world technology markets may have run its course but it is clear that investors will now prove much more discriminating in terms of what constitutes real profit potential within the sector. Growth stocks will continue to be favoured though, now that the peak in interest rates looks to be close if not already reached in the UK, selective cyclical shares may win support. The primary risk is that recent signs of slowing growth in the US will prove illusory and prompt further dollar interest rate rises and a consequent retreat by equities worldwide. However, that particular risk may be receding and we remain fairly confident that the UK market will provide good returns for the rest of this year once current volatility dies down and markets revive after the summer lull. With the proceeds due from the sale of Robert Fleming in August we will be well positioned to take advantage of opportunities as they arise. By order of the Board Murray Johnstone Limited 31 July 2000 MURRAY INCOME TRUST PLC STATEMENT OF TOTAL RETURN (INCORPORATING THE REVENUE ACCOUNT) for the year ended 30 June 2000 1999 2000 (Restated) Revenue Capital Total Revenue Capital Total £000 £000 £000 £000 £000 £000 Gains (losses) on investments - 12,678 12,678 - (6,629) (6,629) Income Income from investments 15,117 - 15,117 16,243 - 16,243 Other income 93 - 93 147 - 147 Investment management fees (1,358) (1,358) (2,716)(1,307) (1,307) (2,614) Other expenses (1,001) (263) (1,264) (753) (84) (837) ------------------------------------------------ Net return before finance costs and taxation 12,851 11,057 23,908 14,330 (8,020) 6,310 Finance costs of borrowing (700) (700) (1,400) (829) (829) (1,658) ------------------------------------------------ Return on ordinary activities before tax 12,151 10,357 22,508 13,501 (8,849) 4,652 Tax on ordinary activities - - - - 337 337 ------------------------------------------------ Return on ordinary activities after tax for financial year 12,151 10,357 22,508 13,501 (8,512) 4,989 Preference dividends (8) - (8) (44) - (44) Return attributable to ----------------------------------------------- equity shareholders 12,143 10,357 22,500 13,457 (8,512) 4,945 Ordinary dividends on equity shares (12,453) - (12,453)(13,803) - (13,803) Transfer (from) to reserves (after aggregate dividends paid and proposed of £12,461,000 - 1999 £13,847,000) ----------------------------------------------- (310) 10,357 10,047 (346) (8,512) (8,858) =============================================== Return per ordinary share 14.7p 12.6p 27.3p 15.7p (9.9p) 5.8p Return per ordinary share assuming conversion of the 'B' ordinary shares 14.6p 12.5p 27.1p 15.6p (9.9p) 5.7p MURRAY INCOME TRUST PLC BALANCE SHEET as at 30 June 2000 2000 2000 1999 1999 £000 £000 £000 £000 Fixed assets Investments 505,811 482,975 Current assets Debtors 2,043 29,217 Cash and short term deposits 727 5,052 ------- ------- 2,770 34,269 Creditors Amounts falling due within one year 16,250 23,529 ------- ------- Net current (liabilities) assets (13,480) 10,740 ------- ------- Total assets less current liabilities 492,331 493,715 Creditors Amounts falling due after more than one year 50,049 24,254 ------- ------- 442,282 469,461 ======= ======= Capital and reserves Non-equity shareholders' interest: preference called up share capital - 1,040 Equity shareholders' interest: ordinary called up share capital 19,502 21,590 share premium 7,955 7,955 capital redemption reserve 3,132 - realised capital gains 275,893 277,001 unrealised capital gains 127,238 153,003 revenue reserve 8,562 8,872 ------- ------- 442,282 468,421 ------- ------- 442,282 469,461 ======= ======= Net asset value per ordinary and 'B' ordinary share 567.0p 542.4p MURRAY INCOME TRUST PLC YEAR ENDED 30 JUNE 2000 2000 1999 ---- ---- EQUITY SHAREHOLDERS' INTEREST £442,282,000 £468,421,000 NET ASSET VALUE PER ORDINARY AND 'B' ORDINARY SHARE OF 25p 567.0p 542.4p Dividends on ordinary shares 2000 1999 £000 £000 Interim of 9.45p (1999 - 10.2p) 3.15p paid 14 January 2000 2,617 2,700 3.15p paid 14 April 2000 2,532 3,343 3.15p payable 14 July 2000 2,456 2,700 Proposed final of 6.30p (1999 - 5.90p) 4,880 5,060 Over accrual of previous years proposed final dividend due to share buybacks (32) - ------ ------ 12,453 13,803 ====== ====== The results stated above for the year ended 30 June 1999 are abridged from the full accounts for that year, which received an unqualified report from the auditors and has been filed with the Registrar of Companies. These results have been restated to comply with Financial Reporting Standard 16 'Current Tax'. The effect of the restatement is as follows: Year to 30 June 1999 Income from listed dividends (2451) Tax on ordinary activities - imputed tax credits 2451 ------ - ------ A summary of investment changes during the year and the twenty largest investments as at 30 June 2000 are attached. The next date for conversion of 'B' ordinary shares to ordinary shares is 31 December 2000. The last date for receipt of certificates with the conversion notice signed on the reverse is 23 December 2000. If approved, (1) the final dividend will be paid on 27 October 2000 to holders of Ordinary shares on the register at the close of business on 6 October 2000, (2) in respect of the year ending 30 June 2001, three interim dividends of 3.15p per share each on the Ordinary shares of the Company in issue on 15 December 2000 will be paid on 15 January 2001, 16 April 2001, and 16 July 2001 respectively to the persons who at the close of business on 15 December 2000, 16 March 2001, and 15 June 2001 respectively, are the holders of such shares, and (3) definitive certificates in respect of the B Ordinary capitalisation issue will be posted on 27 October 2000 to B Ordinary shareholders on the register at the close of business on 6 October 2000. Copies of this announcement will be available to the public at the registered office of the Company at 7 West Nile Street, Glasgow. The annual general meeting will be held on 25 October 2000 at 12.30 p.m. MURRAY JOHNSTONE LIMITED Secretary 31 July 2000 MURRAY INCOME TRUST PLC SUMMARY OF INVESTMENT CHANGES DURING THE YEAR Appreciation Valuation Trans- (Deprec- Valuation 30/6/99 actions iation) 30/6/00 £000 % £000 £000 £000 % United Kingdom Equities 471,439 100.6 11,075 13,325 495,839 112.1 Fixed Income 11,536 2.5 (917) (647) 9,972 2.2 ------- ------ ------ ------ ------- ------ Total investments 482,975 103.1 10,158 12,678 505,811 114.3 ------- ------ ------ ------ ------- ------ Other net assets/ (liabilities) 10,740 2.3 (24,426) 206 (13,480) (3.0) Prior capital & borrowings (25,294) (5.4) (24,755) - (50,049) (11.3) Equity shareholders'------- ------ ------ ------ ------- ------ interest 468,421 100.0 (39,023) 12,884 442,282 100.0 ======= ====== ====== ====== ======= ====== Note: In the above summary convertible securities are classified as equities and preference shares issued by the company are included at nominal value as prior capital. MURRAY INCOME TRUST PLC TWENTY LARGEST INVESTMENTS AS AT 30 JUNE 2000 Valuation % of Security £000 Fund BP Amoco 70,239 15.9 *Robert Fleming Holdings 52,700 11.9 HSBC Holdings 36,264 8.2 Shell Transport & Trading 27,575 6.2 Barclays 20,953 4.7 Royal Bank of Scotland Group 18,802 4.3 CGNU 16,794 3.8 Anglo American 12,680 2.9 Abbey National 11,850 2.7 Lloyds TSB 11,035 2.5 Diageo 8,895 2.0 Rio Tinto 7,560 1.7 Sainsbury (J) 7,500 1.7 Autonomy 7,499 1.7 Vodafone AirTouch 6,640 1.5 SMG 6,274 1.4 P & O 6,225 1.4 Pearson 5,775 1.3 British American Tobacco 5,479 1.2 Standard Chartered 5,410 1.2 ------- ---- 346,149 78.3 ======= ==== Note: All investments are in ordinary shares unless otherwise stated. * Unlisted investment at latest directors' valuation.

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