Final Results
Murray International Trust PLC
24 February 2006
MURRAY INTERNATIONAL TRUST PLC
Preliminary results for the Year to 31 December 2005
Highlights
• Net Asset Value total return of 31.0% compared with benchmark return of
23.4%
• Share Price total return of 33.5%
• Increase of 11.8% in 2005 final dividend making a total of 17.3p for the
year which is fully covered.
• Increase of 7% in each of the 2006 interim dividends
The Directors announce the preliminary results of Murray International Trust PLC
for the year ended 31 December 2005 which was approved by the Board on 23
February 2006.
Background
Global Equity markets strengthened over the review period despite some fairly
challenging economic fundamentals. The continuing rise in US interest rates,
albeit from a very low base, threatened at times to restrict funds available for
investment, but in the event did not. The prospect of rising inflation was also
a concern causing periodic anxiety in bond markets. Above all, consumers were
forced to face the reality of dwindling purchasing power. What served to
override such economic gloom was the strength of corporate earnings and
expectations that this trend would continue. A sharp increase in company
mergers and acquisitions merely enhanced prevailing positive market sentiment.
The net result was the third consecutive year of double digit returns for most
global equity markets in sterling terms. Against any historical benchmark,
these were well-above average financial returns.
Performance
The total return on Net Asset Value was 31.0% considerably ahead of the return
on the benchmark index of 23.4%, whilst the Share Price total return of 33.5%
reflected a slight reduction over the year in the level of discount at which the
shares trade in the stock market. The key positive influences were significant
overweights in Japan, Asia and Latin America. Both the UK and US markets
struggled to match the Global average but the Company's large underweightings in
each also contributed positively to relative outperformance.
The Managers again received the maximum performance fee as a result of their
strong outperformance of the benchmark.
Dividends
The shortfall between earnings and the proposed dividend for the year has been
eliminated and following the increase of 2.9% in the three interims for the year
to 3.55p per Ordinary Share, the Board is pleased to recommend a final dividend
of 6.65p per share payable on 19 May 2006 to shareholders on the register at the
close of business on 21 April 2006 This would bring the total distribution for
the year to 17.3p per share compared with 16.3p last year, a rise of 6.1%. The
board also proposes that three interim dividends of 3.8p per Ordinary share, an
increase of 7%, be paid for the year to 31 December 2006, payable on 14 August
2006, 15 November 2006 and 14 February 2007. The proposed increase reflects the
Board's expectation of continuing rising revenue but also is intended to reduce
the disparity between the interim and final dividends. It is also the Board's
intention that the final dividend for the year to 31 December 2006 of 6.65p will
be at least maintained.
B Ordinary Shareholders will receive a capitalisation in B Ordinary shares on 19
May 2006 amounting to 3.02225 Ordinary shares for every hundred held at the
close of business on 21 April 2006, which is equivalent in Net Asset Value to
the recommended final dividend and three interim dividends for the current year.
Circular
A Circular will be sent to shareholders with the Annual Report which will give
details of a change proposed by the Board to the Articles of the Company in
respect of the B Ordinary Shares. The Articles currently provide for the scrip
dividend on B Ordinary Shares to be paid once a year, at mid-year, whilst
Ordinary shareholders receive dividends four times a year. This means that the
interim dividends for the coming financial year have to be announced at the same
time as the final dividend for the latest financial year. This is well before
the revenue out of which these dividends have to be paid, is received by the
Company. The Board believes that it is unsatisfactory to declare dividends on
the basis of estimated as opposed to actual earnings. Assuming the proposals are
approved by shareholders at this year's Annual General Meeting, the change will
take effect for the declaration of the final dividend for the year ending 31
December 2006. A bonus issue of B Ordinary shares will be calculated at the same
time that any dividend is declared on the Ordinary shares. All other rights
attached to the 'B' shareholders would remain the same.
Issue of New Shares
The Board is also proposing a change relating to the issue of new shares. Each
year the Board puts a resolution to the Annual General Meeting requesting
permission to allocate a maximum of 5% of the issued share capital of the
Company to shareholders at a premium of not less than 2.5% to the underlying
asset value. This percentage was fixed some time ago in order to avoid diluting
existing shareholder value. This power has never been used partly because
investors would be unlikely to accept new shares at such a premium when the
existing shares sell at a discount in the market. Should an opportunity arise
to exercise this power, existing shareholders would benefit by spreading the
fixed costs of the Company over a larger asset base. Any issue should, of
course, involve no dilution for existing shareholders but a margin of 2.5% is no
longer necessary to achieve that objective. The Board proposes that the 2.5%
premium should be replaced with a lower premium of 0.5%.
Annual General Meeting
This year the Annual General Meeting will be held in London. It is some years
since this was done and the Board feels that it is important to give
shareholders based in London, an opportunity to meet the Directors and Manager
from time to time. Next year, it is the Board's intention to hold the Annual
General Meeting in Scotland.
The Board
In last year's report, it was reported that Sir Raymond Johnstone would be
retiring at the AGM in 2005. The Board were very pleased to welcome Jim Best to
the Board on 30 June 2005. Jim is a partner of Arkios Ltd, a London merchant
bank. He was formerly a Managing Director with UBS and was responsible for UBS
Wealth Management in Scotland until 2004.
Outlook
Looking forward there is no denying that the prospects for Global Equity markets
this year will be greatly influenced by whether the Federal Reserve in the
United States can successfully engineer a soft landing for the US economy. The
fact it is considering an end to raising interest rates before a slow down in
economic activity has materialised suggests it is already worried about being
over-restrictive. Historically high levels of consumer indebtness have made
management of monetary policy particularly difficult. Both the US and UK
markets still appear unattractive relative to deteriorating underlying
fundamentals, but stronger economic growth and corporate profitability in Asia
and Emerging markets continue to provide interesting opportunities for diverse
international investment.
Murray International Trust PLC
Income Statement (Unaudited)
For the year ended 31 December 2005
Year ended Year ended
31 December 2005 31 December 2004
(restated)
Revenue Capital Total Revenue Capital Total*
£'000 £'000 £'000 £'000 £'000 £'000
Gains on investments - 116,018 116,018 - 45,340 45,340
Income 21,922 - 21,922 19,366 - 19,366
Investment management fees (771) (1,798) (2,569) (690) (1,610) (2,300)
Performance fees - (2,374) (2,374) - (1,925) (1,925)
Currency losses - (3,562) (3,562) - (4,039) (4,039)
Other expenses (1,097) - (1,097) (1,184) - (1,184)
________ ________ ________ ________ ________ ________
Net return before finance costs 20,054 108,284 128,338 17,492 37,766 55,258
and taxation
Finance costs of borrowing (744) (1,735) (2,479) (774) (2,214) (2,988)
________ ________ ________ ________ ________ ________
Return on ordinary activities 19,310 106,549 125,859 16,718 35,552 52,270
before tax
Tax on ordinary activities (4,035) 2,844 (1,191) (3,070) 2,264 (806)
________ ________ ________ ________ ________ ________
Return attributable to equity 15,275 109,393 124,668 13,648 37,816 51,464
Shareholders
________ ________ ________ ________ ________ ________
Return per Ordinary share (pence) 17.7 126.4 144.1 15.8 43.7 59.5
________ ________ ________ ________ ________ ________
Return per Ordinary share 17.4 142.2 15.6 43.2 58.8
assuming full conversion of the B 124.8
Ordinary shares (pence)
________ ________ ________ ________ ________ ________
The total column of this statement represents the Profit and Loss Account of the
Company
The financial statements for the year ended 31 December 2004 have been restated
to reflect changes to accounting practices as set out in the accompanying notes.
All revenue and capital items in the above statement derive from continuing
operations.
No operations were acquired or discontinued in the year.
A Statement of Total Recognised Gains and Losses is not required as all gains
and losses of the Company have been reflected in the above statement.
Ordinary dividends on equity 14,357 - 14,357 14,085 - 14,085
shares (£'000)
________ ________ ________ ________ ________ ________
Balance Sheet (unaudited)
As at 31 December 2005
As at As at
31 December 2005 31 December 2004
(restated)
£'000 £'000 £'000 £'000
Fixed assets
Investments 603,103 508,492
Current assets
Debtors 4,270 3,348
Cash and short term deposits 6,816 9,591
_______ _______
11,086 12,939
_______ _______
Creditors: amounts falling due within one
year
Bank loans (7,896) -
Other creditors (5,007) (21,429)
_______ _______
(12,903) (21,429)
_______ _______ _______ _______
Net current liabilities (1,817) (8,490)
_______ _______
Total assets less current liabilities 601,286 500,002
Creditors: amounts falling due after more
than one year
Loans (74,907) (85,236)
Other creditors (2,746) (1,444)
_______ _______ _______ _______
(77,653) (86,680)
_______ _______
Net assets 523,633 413,322
_______ _______
Capital and reserves
Equity Shareholders' interests:
Called-up share capital 21,911 21,901
Share premium account 23 23
Capital redemption reserve 8,230 8,230
Capital reserve - realised 286,597 284,112
Capital reserve - unrealised 174,727 67,829
Revenue reserve 32,145 31,227
_______ _______
Equity Shareholders' funds 523,633 413,322
_______ _______
Net Asset Value per Ordinary and B Ordinary 597.5 471.8
share (pence)
_______ _______
Reconciliation of Movements in Shareholders' Funds (unaudited)
For the year ended 31 December 2005 ADDIN Statement of Changes in Equity
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 31 December 2004 21,901 23 8,230 284,112 68,474 26,080 408,820
as originally reported
Restatements (see note 2) - - - - (645) 5,147 4,502
________ ________ ________ ________ ________ ________ _______
Balance at 31 December 2004 21,901 23 8,230 284,112 67,829 31,227 413,322
(restated)
Return on ordinary activities - - - 2,495 106,898 15,275 124,668
after taxation
Dividends on Ordinary shares - - - - - (14,357) (14,357)
Issue of new shares 10 - - (10) - - -
________ ________ ________ ________ ________ ________ _______
Balance at 31 December 2005 21,911 23 8,230 286,597 174,727 32,145 523,633
________ ________ ________ ________ ________ ________ _______
For the year ended 31 December 2004
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 31 December 2003 21,890 23 8,230 286,358 28,369 26,522 371,392
as originally reported
Restatements (see note 2) - - - - (591) 5,142 4,551
________ ________ ________ ________ ________ ________ _______
Balance at 31 December 2003 21,890 23 8,230 286,358 27,778 31,664 375,943
(restated)
Return on ordinary activities - - - (2,235) 40,051 13,648 51,464
after taxation
Dividends on Ordinary shares - - - - - (14,085) (14,085)
Issue of new shares 11 - - (11) - - -
________ ________ ________ ________ ________ ________ _______
Balance at 31 December 2004 21,901 23 8,230 284,112 67,829 31,227 413,322
(restated)
________ ________ ________ ________ ________ ________ _______
* The revenue reserve represents the amount of the Company's reserves
distributable by way of dividend.
Cash Flow Statement (unaudited)
For the year ended 31 December 2005
Year ended Year ended
31 December 2005 31 December 2004
£'000 £'000 £'000 £'000
Operating activities
Investment income received 21,290 18,400
Deposit interest received 125 275
Investment management fees paid (2,563) (2,275)
Performance fee paid (472) -
Secretarial fees paid (100) (99)
Cash paid to and on behalf of Directors (88) (78)
Other cash movements (866) (989)
_______ _______
Net cash inflow from operating activities 17,326 15,234
Returns on investments and servicing of finance
Interest paid (2,421) (2,656)
Break costs on repayment of loan - (407)
_______ _______
Net cash outflow from servicing of finance (2,421) (3,063)
Financial investment
Purchases of investments (105,819) (148,740)
Movement in Futures (15,501) 5,204
Sales of investments 126,614 140,329
_______ _______
Net cash inflow/(outflow) from financial 5,294 (3,207)
investment
Equity dividends paid (14,268) (14,083)
_______ _______
Net cash inflow/(outflow) before financing 5,931 (5,119)
Financing
Loans repaid - (11,545)
Loans drawn down - 11,545
_______ _______
Net cash flow from financing - -
_______ _______
Increase/(decrease) in cash 5,931 (5,119)
_______ _______
Notes:
1. Accounting policies
The financial statements are prepared in accordance with applicable
Accounting Standards and with the Statement of Recommended Practice for
'Financial Statements of Investment Trust Companies' issued in December
2005.
For the accounting period beginning on 1 January 2005 the Company had the
option to prepare its financial statements in accordance with International
Financial Reporting Standards ('IFRS'), as adopted by the International
Accounting Standards Board ('IASB'). The Board has elected to continue to
adopt UK Generally Accepted Accounting Principles ('UK GAAP') and therefore
with the new Financial Reporting Standards issued as part of the programme
to converge UK GAAP with IFRS. Figures for the year ended 31 December 2004
have been restated accordingly.
The same accounting policies used for the year ended 31 December 2004 have
been applied with the exceptions detailed in Note 2.
2. Restatement for first time adoption of revised UK GAAP
As stated in the accounting policies, the Board has elected to continue to
adopt UK Generally Accepted Accounting Principles (UK GAAP) and therefore
complies with the new Financial Reporting Standards issued as part of the
programme to converge UK GAAP with IFRS. Figures as at 31 December 2003
and 2004 have been restated and the impact is shown below. The effect of
this change is an increase in the net assets at 31 December 2004 of
£4,502,000 (2003 - increase of £4,551,000).
Under FRS 26 - 'Financial Instruments: Recognition and Measurement' -
investments should be valued at their fair value which is deemed to be bid
market price. Previously, listed investments were valued at mid market
prices. The financial statements for the years ended 31 December 2003 and
2004 have been restated to reflect investments at their fair value.
Under FRS 21 - 'Events after the Balance Sheet Date' - dividends should
only be accrued in the accounts if they are a liability at the Balance
Sheet date, therefore they are now recognised in the period in which they
are declared and authorised, not in the period in which they are proposed.
No provision has therefore been made for the final dividend on Ordinary
shares for the years ended 31 December 2004 and 2005. The financial
statements for the years ended 31 December 2003 and 2004 have been
restated to remove the final dividends that were accrued at those dates.
Dividends are no longer recognised through the income statement, instead
these are taken to the statement of movements in shareholders' funds as an
appropriation of equity.
As at As at
31 December 2004 31 December 2003
(audited) (audited)
Reconciliation of Balance Sheets £'000 £'000
Net assets as previously reported 408,820 371,392
Restatement of investments at bid value (645) (591)
Reversal of provision of final dividend 5,147 5,142
________ ________
Restated net assets 413,322 375,943
________ ________
Year ended Year ended
31 December 2004 31 December 2003
(audited) (audited)
Reconciliation of the Income Statements £'000 £'000
Total transfer to reserves per original reported Statement of 37,428 62,644
Total Return
Add 2003 Final dividend on Ordinary shares - 5,142
Add 2004 Final dividend on Ordinary shares 14,090 -
Change from mid to bid basis at 31 December 2003 591 (591)
Change from mid to bid basis at 31 December 2004 (645) -
________ ________
51,464 67,195
________ ________
3. A summary of the investment changes during the year and a list of the
twenty largest investments at 31 December 2005 are attached.
4. The issued share capital at 31 December 2005 was 86,556,123 Ordinary shares
of 25p each and, 1,087,799 B Ordinary shares of 25p each.
5 Returns per share have been based on the following weighted average number
of ordinary shares in issue during each year.
Weighted average number of Ordinary shares 86,524,129
Weighted average number of B Ordinary shares 1,104,278
6. The net asset value per Ordinary and B Ordinary share has been calculated
after deducting prior charges at nominal values.
7. The next date for conversion of the B Ordinary shares to Ordinary shares
is 30 June 2006. The last date for receipt of certificates with the
conversion notice signed on the reverse is 23 June 2006.
8. If approved: (1) the proposed final dividend of 6.65p per share will be
paid on 19 May 2006 to holders of Ordinary shares on the register at the
close of business on 21 April 2006; (2) in respect of the year ending 31
December 2006, three interim dividends of 3.80p per share on the Ordinary
shares of the company in issue on 23 June 2006 will be paid on 14 August
2006, 15 November 2006, and 14 February 2007 to the persons who, at the
close of business on 21 July 2006, 20 October 2006, and 19 January 2007
respectively, are the holders of such shares; and (3) definitive
certificates in respect of the B ordinary capitalisation issue will be
posted on 19 May 2006 to B Ordinary shareholders on the register at the
close of business on 21 April 2006.
9. The financial information contained within this Preliminary Announcement
does not constitute the company's statutory financial statements as defined
in Section 240 of the Companies Act 1985. The statutory financial
statements for the year ended 31 December 2004 have been delivered to the
Registrar of Companies and contained an audit report which was unqualified
and did not constitute statements under Sections 237(2) or (3) of the
Companies Act 1985.
The annual results will be circulated to shareholders in the form of an
Annual Report, copies of which will be available at the Company's
registered office, 123 St Vincent Street, Glasgow and which will be filed
with the Registrar of Companies.
10. The Annual General Meeting will be held on 27 April 2006 at the London
Chamber of Commerce, 33 Queen Street, London, EC4R 1AP.
ABERDEEN ASSET MANAGEMENT PLC
SECRETARY
24 February 2006
MURRAY INTERNATIONAL TRUST PLC
SUMMARY OF INVESTMENT CHANGES
£'000 Valuation Transactions Appreciation £'000 Valuation
31 December £'000 (depreciation) 31 December
2004 £'000 2005
% %
Equities
United Kingdom 143,469 28.7 (22,418) 27,157 148,208 24.3
Americas 87,905 17.6 (13,128) 29,343 104,120 17.1
Europe & Africa 85,542 17.1 3,157 15,442 104,141 17.1
Japan 38,639 7.7 16,629 16,742 72,010 11.8
Middle East, Far East 55,690 11.1 10,252 23,383 89,325 14.7
& Australasia
________ ________ ________ ________ _______ ________
411,245 82.2 (5,508) 112,067 517,804 85.0
________ ________ ________ ________ _______ ________
Fixed income
United Kingdom 61,809 12.4 (6,210) 1,399 56,998 9.4
Europe & Africa 25,341 5.1 (16,460) (126) 8,755 1.4
Americas 5,140 1.0 6,671 2,287 14,098 2.3
Middle East, Far East 4,957 1.0 100 391 5,448 0.9
& Australasia
________ ________ ________ ________ _______ ________
97,247 19.5 (15,899) 3,951 85,299 14.0
________ ________ ________ ________ _______ ________
Other net assets (8,490) (1.7) 20,564 (5,995) 6,079 1.0
________ ________ ________ ________ _______ ________
Total Assets 500,002 100.00 (843) 110,023 609,182 100.0
________ ________ ________ ________ _______ ________
Note: 2004 opening position has been restated to reflect change in accounting
practices.
Summary of Net Assets £000 Valuation
31 December
2005
%
Equities 517,804 98.9
Fixed Income 85,299 16.2
Other Net Assets 6,079 1.2
Borrowings (82,803) (15.9)
Other long term (2,746) (0.5)
creditors
_______ ________
Equity shareholders' 523,633 100.0
funds
_______ ________
Twenty Largest Equity Investments
As at 31 December 2005
Valuation Total
Security Investment Area £'000 assets %
Atrium Underwriting UK 17,991 3.0
Resolution UK 16,584 2.7
Petrobras ADR Brazil 14,996 2.5
Tenaris ADR Mexico 14,016 2.3
GlaxoSmithKline UK 13,148 2.2
British American Tobacco UK + Malaysia 10,232 1.7
Hyundai Motor 2nd Pref South Korea 9,623 1.6
Vodafone Group UK 8,032 1.3
Royal Dutch Shell UK + Netherlands 7,959 1.3
ICICI Bank India 7,535 1.2
AstraZeneca UK 7,073 1.2
Samsung Electronics Pref South Korea 7,066 1.1
Banco Bradesco (Pref) ADR Brazil 6,790 1.1
Aeropuertos del Sureste ADS Mexico 6,771 1.1
Orix Corporation Japan 6,654 1.1
Petrochina China 6,153 1.0
Parco Japan 5,996 1.0
PTT Exploration Thailand 5,984 1.0
Mitusbishi Tokyo Financial Japan 5,922 1.0
Aviva UK 5,908 1.0
Top twenty equity investments 184,433 30.4
Ten Largest Fixed Interest Investments
As at 31 December 2005
Security Investment Area Valuation Total
£'000 assets %
Govt. of Mexico 10.5% 14/07/2011 Mexico 4,577 0.7
Govt. of Hungary 6.5% 12/8/2008 Europe 3,897 0.6
General Accident 7.875% Cum Irrd Pref UK 3,634 0.6
Sunamerica Institutional Fund 5.375% 07/12/2009 International 3,587 0.6
Abbey National 10.375% Non Cum Pref UK 3,520 0.6
Govt. of Poland 8.5% 12/11/2006 Europe 3,509 0.6
PEMEX 7.75% 29/09/2049 Mexico 3,284 0.6
Petrobas Project Funding Master 8.375% 10/12/2018 Brazil 3,233 0.5
UK Treasury 5% 07/03/2012 UK 3,140 0.5
UK Treasury 9% 12/07/2011 UK 3,092 0.5
Top ten fixed interest investments 35,473 5.8
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