Interim Results
Murray Income Trust PLC
14 February 2007
Murray Income Trust PLC
Results for the six months ended 31 December 2006
The Directors of Murray Income Trust PLC report the unaudited interim results
for the six months ended 31 December 2006.
Key Facts
• Murray Income's Net Asset Value total return for the six months to 31
December 2006 was 11.4%.
• Shareholder total return for the period was 12.5%.
• Second and third interim dividends of 5p each will be paid on 15 April
2007 and 13 July 2007 respectively.
Performance
The UK equity market performed well over the six-month period to 31 December
2006, with a Net Asset Value total return for the Company of 11.4%. This
compares favourably against the benchmark, the FTSE All-Share Index, which rose
by 10.0%.
Background
The market recovered strongly from the setback during May, helped by robust
corporate earnings, further merger and acquisition activity and a supportive
global economic backdrop. In addition, the geopolitical environment was
generally more benign, helping to explain a fall in oil prices and easing US
inflation expectations.
UK macroeconomic newsflow reflected a robust environment, with GDP growth at the
end of the period running on a year-on-year basis at 2.9%. Consumer spending,
although volatile, has maintained an upward path, and business investment has
exceeded expectations, helped in part by the growth of the world economy and the
prospect for increased exports.
The Monetary Policy Committee of the Bank of England unexpectedly raised
interest rates in August by 0.25% to 4.75%, and again in November, to 5.0%.
Particular concern was cited over the uncertainty of assessing spare capacity in
the economy, and the impact of the strong migration trends over the past year,
at a time when inflation was running above target levels. CPI inflation has
risen from 2.2% in July to 3.0% in December, though the reduction in energy
prices should help to ameliorate inflationary pressures going forward.
An interesting feature of the market has been the continued outperformance of
the more domestically-oriented Mid Cap and Small Cap Indices, despite the rise
in interest rates. This can largely be attributed to the continued high level
of merger and acquisition activity that has been centred lower down the market
capitalisation scale. However, the lower reaches of the FTSE 100 have not been
immune, with the Company itself benefiting from bids for Scottish Power and
Gallaher from Iberdrola and Japan Tobacco respectively. Broadly, the market
rotated into more defensive areas over the period, with Food Retailers,
Utilities and Telecoms outperforming. Conversely, sectors exposed to a
potential slowdown in global growth, in particular the domestic market in the
United States, underperformed.
Activity
During the period, a number of new holdings were added to the portfolio. We
introduced a position in Wolseley, the plumbing, heating and building materials
distributor, following share price weakness caused by concerns of the market
over the company's exposure to the United States. Although exposed to a US
housing slowdown, costs are largely variable and the longer term prospects
remain appealing. Similar market concerns also provided the opportunity to
acquire Tomkins, the manufacturing company, on a pleasing valuation and a yield
of over 5%. In addition, a small holding in Venture Production, a North
Sea-focused oil production company concentrating primarily on undeveloped
discoveries, was also introduced given its low risk business model and
attractive valuation. Finally, a new position in Premier Foods was acquired, in
view of its valuation and strong track record in brand regeneration. Shortly
after completing the purchase, Premier Foods announced the acquisition of RHM,
providing extended scope for further cost synergies and systems' harmonisation.
A number of holdings were sold following strong performances, and where
valuations looked stretched, including shares in Persimmon and Diageo. In
addition, the holding in BAA was sold following the recommended offer from
Ferrovial. There were also reductions in a variety of holdings in order to
recycle capital into companies that had performed less well over the period.
Reductions in Weir, Slough Estates and Barclays provided the opportunity to add
to Friends Provident, Mothercare, EMI and AMEC.
Gearing
At the end of the interim period the Company's gearing stood at 5%, broadly
unchanged from the level at the end of the last financial year.
Treasury Shares
At the Annual General Meeting held in October 2006, Shareholders renewed the
authority for the Company to hold shares bought back by it as Treasury shares
rather than cancel them immediately. During the period, 70,000 Ordinary shares
were bought back and held in Treasury. As of 14 February 2007, the total number
of Ordinary shares bought back and held in Treasury was 1,213,500. To date, no
shares have been re-issued from Treasury.
Dividend
A first interim dividend of 5p was paid on 19 January 2007 to Shareholders on
the register at the close of business on 15 December 2006. A second interim
dividend of 5p will be paid on 15 April 2007 to Shareholders on the register at
the close of business on 16 March 2007. The third interim dividend of 5p will
be paid on 13 July 2007 to Shareholders on the register at the close of business
on 15 June 2007.
Outlook
UK equity market returns over the period have been strong, building on the
progress made over the last three years. Possible clouds on the horizon include
the impact of tightening monetary policy, particularly in the UK, heightened
geopolitical risk and potentially higher energy prices. However, we remain
cautiously optimistic about the long-term outlook.
Valuations remain relatively attractive on both an absolute basis and compared
to alternative investments. Corporate earnings should remain robust and the
potential for further merger and acquisition activity should help to underpin
the market.
MURRAY INCOME TRUST PLC
INCOME STATEMENT
Six months ended
31 December 2006
(unaudited)
Revenue Capital Total
Notes £'000 £'000 £'000
Realised gains on investments - 12,526 12,526
Unrealised gains on investments - 31,325 31,325
Investment income 7,448 - 7,448
Interest receivable 43 - 43
Investment management fees (741) (741) (1,482)
Administrative expenses (400) - (400)
Net return before finance costs 6,350 43,110 49,460
and taxation
Finance costs (345) (345) (690)
Revenue on ordinary activities before and 6,005 42,765 48,770
after taxation
Return per Ordinary share (pence) 9.2 65.6 74.8
The total column of this statement represents the profit and loss
account of the Company.
The Company had no recognised gains or losses other than those recognised in
the Income Statement.
All revenue and capital items in the above statement derive from
continuing operations.
Ordinary dividends on equity 2 7,956 - 7,956
shares
MURRAY INCOME TRUST PLC
INCOME STATEMENT
Six months ended
31 December 2005
(unaudited)
Revenue Capital Total
£'000 £'000 £'000
Realised gains on investments - 14,882 14,882
Unrealised gains on investments - 30,643 30,643
Investment income 6,662 - 6,662
Interest receivable 54 - 54
Investment management fees (672) (672) (1,344)
Administrative expenses (433) - (433)
Net return before finance costs and 5,611 44,853 50,464
taxation
Finance costs (279) (278) (557)
Revenue on ordinary activities before and 5,332 44,575 49,907
after taxation
Return per Ordinary share (pence) 8.0 67.1 75.1
Ordinary dividends on equity shares 6,797 - 6,797
MURRAY INCOME TRUST PLC
INCOME STATEMENT
Year ended
30 June 2006
(audited)
Revenue Capital Total
£'000 £'000 £'000
Realised gains on investments - 34,502 34,502
Unrealised gains on investments - 29,141 29,141
Investment income 17,140 - 17,140
Interest receivable 97 - 97
Investment management fees (1,402) (1,402) (2,804)
Administrative expenses (804) - (804)
Net return before finance costs and 15,031 62,241 77,272
taxation
Finance costs (606) (606) (1,212)
Revenue on ordinary activities before and 14,425 61,635 76,060
after taxation
Return per Ordinary share (pence) 21.8 93.1 114.9
Ordinary dividends on equity shares 13,028 - 13,028
MURRAY INCOME TRUST PLC
BALANCE SHEET
As at As at As at
31 December 31 December 30 June
2006 2005 2006
(unaudited) (unaudited) (audited)
Notes £'000 £'000 £'000
Non-current assets
Investments at fair value 519,445 462,453 480,711
through profit or loss
Current assets
Debtors 1,672 1,162 1,862
Cash and short-term deposits 1,299 3,639 100
2,971 4,801 1,962
Creditors: amounts falling (333) (402) (959)
due within one year
Net current assets 2,638 4,399 1,003
Total assets less current 522,083 466,852 481,714
liabilities
Creditors: amounts falling
due after more than one year
Bank loan (25,000) (23,000) (25,000)
Net assets 497,083 443,852 456,714
Capital and reserves
Called-up share capital 16,300 16,593 16,318
Share premium account 7,955 7,955 7,955
Capital redemption reserve 5,301 5,008 5,283
Capital reserve - realised 295,025 272,528 284,030
Capital reserve - unrealised 153,187 123,364 121,862
Revenue reserve 19,315 18,404 21,266
Equity Shareholders' funds 497,083 443,852 456,714
Net asset value per Ordinary 5 762.4 668.7 699.7
share (pence)
Reconciliation of Movement in Shareholders' Funds
Six months ended 31 December
2006 (unaudited)
Share Capital Capital Capital
Share premium redemption reserve reserve Revenue
capital account reserve -realised -unrealised reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 30 June 2006 16,318 7,955 5,283 284,030 121,862 21,266 456,714
Repurchase of own shares (18) - 18 (445) - (445)
-
Return on ordinary - - - 11,440 31,325 6,005 48,770
activities after
taxation
Dividends paid - - - - - (7,956) (7,956)
Balance at 31 December 16,300 7,955 5,301 295,025 153,187 19,315 497,083
2006
Six months ended 31 December
2005 (unaudited)
Share Capital Capital Capital
Share premium redemption reserve reserve Revenue
capital account reserve -realised -unrealised reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 30 June 2005 16,765 7,955 4,836 262,455 92,721 19,869 404,601
Repurchase of own shares (172) - 172 (3,859) - - (3,859)
Return on ordinary - - - 13,932 30,643 5,332 49,907
activities after
taxation
Dividends paid - - - - - (6,797) (6,797)
Balance at 31 December 16,593 7,955 5,008 272,528 123,364 18,404 443,852
2005
Year ended 30 June 2006
(audited)
Share Capital Capital Capital
Share premium redemption reserve reserve Revenue
capital account reserve -realised -unrealised reserve Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 30 June 2005 16,765 7,955 4,836 262,455 92,721 19,869 404,601
Repurchase of own shares (447) - 447 (10,919) - - (10,919)
Return on ordinary - - - 32,494 29,141 14,425 76,060
activities after
taxation
Dividends paid - - - - - (13,028) (13,028)
Balance at 30 June 2006 16,318 7,955 5,283 284,030 121,862 21,266 456,714
MURRAY INCOME TRUST PLC
CASH FLOW STATEMENT
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2006 2005 2006
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Net return before finance costs and 49,460 50,464 77,272
taxation
Adjustments for:
Realised gains on investments (12,526) (14,882) (34,502)
Unrealised gains on investments (31,325) (30,643) (29,141)
Decrease/(increase) in accrued 225 308 (405)
income
Increase in prepayments (35) (14) (2)
(Decrease)/increase in accruals (297) 48 278
Net cash inflow from operating 5,502 5,281 13,500
activities
Servicing of finance
Interest paid (678) (552) (1,218)
Net cash outflow from servicing of (678) (552) (1,218)
finance
Financial investment
Purchases of investments (37,797) (54,024) (95,275)
Sales of investments 42,573 54,293 95,744
Net cash inflow from financial 4,776 269 469
investment
Equity dividends paid (7,956) (6,797) (13,028)
Management of liquid resources
Cash placed on short-term deposit - - 310
Net cash inflow/(outflow) before 1,644 (1,799) 33
financing
Financing
Drawdown of loans - 7,000 9,000
Repurchase of own shares (445) (4,262) (11,323)
Net cash (outflow)/inflow from (445) 2,738 (2,323)
financing
Net increase/(decrease) in cash 1,199 939 (2,290)
Notes to the Financial Statements
Note 1 Accounting policies
(a) Basis of accounting
The financial statements have been prepared under the historical cost
convention, as modified to include the revaluation of investments and in
accordance with applicable UK Accounting Standards and consistent with the
Statement of Recommended Practice for 'Financial Statements of Investment Trust
Companies' (December 2005). They have also been prepared on the assumption that
approval as an investment trust will continue to be granted.
The financial statements and the net asset value per share figures have been
prepared in accordance with UK Generally Accepted Accounting Practice (UK GAAP).
The interim accounts have been prepared using the same accounting policies as
the preceding annual accounts.
(b) Dividends Payable
Dividends are recognised in the period in which they are paid.
Note 2 Ordinary dividends
Ordinary dividends paid on equity shares deducted from reserves:
Six months ended Six months ended Year ended
31 December 2006 31 December 30 June
2005 2006
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
2005 third interim dividend - - 3,038 3,038
4.50p
2005 final dividend - 5.65p - 3,759 3,759
2006 first interim dividend - - - 3,121
4.70p
2006 second interim dividend - - 3,110
- 4.70p
2006 third interim dividend - 3,066 - -
4.70p
2006 final dividend - 7.50p 4,890 - -
7,956 6,797 13,028
Note 3 Investment income
Six months ended Six months ended Year ended
31 December 2006 31 December 2005 30 June
2006
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
UK dividend income 7,295 6,662 16,995
Bond interest 153 - 145
7,448 6,662 17,140
Note 4 Return per share
Six months ended Six months Year ended
ended
31 December 2006 31 December 30 June
2005 2006
(unaudited) (unaudited) (audited)
p p p
Revenue return 9.2 8.0 21.8
Capital return 65.6 67.1 93.1
Total return 74.8 75.1 114.9
The figures are based on the following attributable assets:
Six months ended Six months Year ended
ended
31 December 2006 31 December 30 June
2005 2006
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Revenue return 6,005 5,332 14,425
Capital return 42,765 44,575 61,635
Total return 48,770 49,907 76,060
Weighted average number of 65,205,621 66,468,871 66,222,372
Ordinary shares in issue
Note 5 Net asset value per share
As at As at As at
31 December 31 December 30 June
2006 2005 2006
(unaudited) (unaudited) (audited)
Attributable net assets 497,083 443,852 456,714
(£'000)
Number of Ordinary shares in 65,202,958 66,371,458 65,272,958
issue
NAV per Ordinary share (p) 762.4 668.7 699.7
Note 6 Transaction costs
During the period, expenses were incurred in acquiring or disposing of investments
classified as fair value through profit or loss. These have been expensed through
capital and are included within gains on investment in the Income Statement. The
total costs were as follows:
Six months ended Six months ended Year ended
31 December 2006 31 December 2005 30 June 2006
£'000 £'000 £'000
Purchases 222 346 561
Sales 57 96 138
279 442 699
Note 7
The financial information in this report comprises non-statutory accounts within
the meaning of Section 240 of the Companies Act 1985. The financial information
for the year ended 30 June 2006 has been extracted from published accounts that
have been delivered to the Registrar of Companies and on which the report of the
auditors was unqualified under Section 235 of the Companies Act 1985.
By order of the Board
ABERDEEN ASSET MANAGEMENT PLC, SECRETARY
14 February 2007
Copies of this announcement will be printed and issued to shareholders and will
be available to the public at the registered office of the Company, 123 St
Vincent Street, Glasgow.
MURRAY INCOME TRUST PLC
SUMMARY OF INVESTMENT CHANGES
FOR THE SIX MONTHS ENDED 31 DECEMBER 2006
Valuation Appreciation/ Valuation
30 June 2006 Transactions (depreciation) 31 December 2006
£'000 % £'000 £'000 £'000 %
United Kingdom
Equities 473,774 98.4 (5,117) 45,585 514,242 98.5
Fixed interest 4,497 0.9 - 421 4,918 0.9
FTSE options 2,440 0.5 - (2,155) 285 0.1
________ ______ _______ ______ ________ ______
Total 480,711 99.8 (5,117) 43,851 519,445 99.5
Investments
Other net assets 1,003 0.2 1,635 - 2 ,638 0.5
________ ______ _______ ______ ________ ______
Total assets 481,714 100.0 (3,482) 43,851 522,083 100.0
________ ______ _______ ______ ________ ______
SUMMARY OF NET ASSETS
As at 31 December 2006
Valuation
31 December 2006
£'000 %
Equities 514,242 103.4
Fixed interest 4,918 1.0
FTSE options 285 0.1
Other net assets 2,638 0.5
Borrowings (25,000) (5.0)
________ ______
Equity Shareholders' 497,083 100.0
interest
________ ______
SHARE CAPITAL
As at 31 December 2006
Ordinary shares of 25p each 65,202,958
Treasury shares of 25p each 1,213,500
TWENTY LARGEST INVESTMENTS
AS AT 31 DECEMBER 2006
Valuation Total
assets
Investment Sector £'000 %
Royal Dutch Shell ('B' Oil & Gas Producers 27,101 5.2
shares)
BP Oil & Gas Producers 26,814 5.2
HSBC Banks 25,370 4.9
Barclays Banks 22,922 4.4
Royal Bank of Scotland Banks 22,003 4.2
Group
British American Tobacco 16,373 3.1
Tobacco
GlaxoSmithKline Pharmaceuticals & 16,285 3.1
Biotechnology
Aviva Life Assurance 15,988 3.1
BT Fixed Line 15,219 2.9
Telecommunications
Centrica Gas, Water and 14,942 2.9
Multi-utilities
Lloyds TSB Banks 14,459 2.8
Slough Estates Real Estate 13,118 2.5
Anglo American Mining 13,054 2.5
Vodafone Mobile 10,648 2.0
Telecommunications
Friends Provident Life Insurance 10,525 2.0
Land Securities Real Estate 10,514 2.0
Rio Tinto Mining 9,785 1.9
Unilever Food Producer 9,513 1.8
Resolution Life Insurance 8,981 1.7
National Grid Gas, Water and 8,866 1.7
Multi-utilities
Top twenty investments 312,480 59.8
END
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