Half Yearly Report

RNS Number : 7769V

Murray International Trust PLC

12 August 2022

 

MURRAY INTERNATIONAL TRUST PLC (the "Company")

Legal Entity Identifier (LEI):  549300BP77JO5Y8LM553

HALF YEARLY REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2022

The Directors of Murray International Trust PLC report the unaudited results of the Company for the six months ended 30 June 2021.

Performance Highlights

Net asset value total returnA			Share price total returnA
Six months ended 30 June 2022			Six months ended 30 June 2022
+3.8%			+9.5%
Year ended 31 December 2021	+14.1%		Year ended 31 December 2021	+7.2%
Reference index total returnB			Discount to net asset valueA
Six months ended 30 June 2022			As at 30 June 2022
-10.5%			-1.8%
Year ended 31 December 2021	+20.0%		As at 31 December 2021	-6.8%
Ongoing charges ratioA			Net gearingA
As at 30 June 2022			As at 30 June 2022
0.55%			11.1%
As at 31 December 2021	0.59%		As at 31 December 2021	12.2%
A Alternative Performance Measure (see definition below).
B FTSE All World TR Index.

Financial Calendar and Highlights

Payment dates of quarterly dividends	16 August 2022 18 November 2022 17 February 2023 18 May 2023
Financial year end	31 December
Expected announcement of results for year ending 31 December 2022	March 2023
Annual General Meeting (Glasgow)	21 April 2023

Financial Highlights 30 June 2022 31 December 2021 % change Total assets less current liabilities (before deducting prior charges) £1,775.3m £1,760.9m +0.8 Equity shareholders' funds (Net Assets) £1,575.4m £1,561.1m +0.9 Share price - Ordinary share (mid market) 1,234.0p 1,156.0p +6.7A Net Asset Value per Ordinary share 1,257.0p 1,240.3p +1.3A Discount to Net Asset Value per Ordinary shareB -1.8% -6.8% Net gearingB 11.1% 12.2% Ongoing charges ratioB 0.55% 0.59% A The movement relates to capital only and does not take account of the reinvestment of dividends. B Considered to be an Alternative Performance Measure. See definition below.

Interim Board Report - Chairman's Statement

Background

Inflation and interest rates dominated the financial backdrop over the period under review. A further surge in energy and food prices as a consequence of the conflict in Ukraine exacerbated inflationary pressures worldwide, leaving Central Banks the unenviable task of having to raise interest rates at a time of slowing growth and rising living costs. Bond yields spiked sharply higher in response to aggressive monetary tightening in the United States as policymakers came under intense scrutiny and political pressure to be seen to be doing something about the highest levels of consumer price inflation for over forty years. Against such an economic backdrop, the investment landscape changed markedly from that which had prevailed for over a decade. The impact of rising bond yields rapidly translated into higher debt servicing costs for consumers and businesses alike. Higher interest rates squeezed liquidity out of financial markets as investors fled from higher risk assets. Escalating input costs and higher wages negatively impacted corporate margins across most industries, with few businesses able to exert pricing power in fiercely competitive markets. The period proved exceedingly challenging for investors with virtually all broad asset classes declining in value over the six months.

Performance and Dividends

I am pleased to report that, in this challenging environment, the net asset value (NAV) total return, with net income reinvested, for the six months to 30 June 2022 increased by 3.8% compared with a decline of -10.5% for the Company's Reference Index (The FTSE All World TR Index). Over the six month period, the share price total return increased by 9.5%, reflecting a narrowing of the discount at which the shares traded to the NAV. The Manager's Review contains more information about both the drivers of performance in the period and the portfolio changes effected.

Two interim dividends of 12.0p (2021: 12.0p) have been declared in respect of the period to 30 June 2022. The first interim dividend is payable on 16 August 2022 to shareholders on the register on 8 July 2022 and the second interim dividend will be paid on 18 November 2022 to shareholders on the register on 7 October 2022.  As stated previously, the Board intends to maintain a progressive dividend policy given the Company's investment objective. This means that in some years revenue will be added to reserves while, in others, revenue may be taken from reserves to supplement earned revenue for that year to pay the annual dividend.  Shareholders should not be surprised or concerned by either outcome as, over time, the Company will aim to pay out what the underlying portfolio earns. The Board currently intends to pay a dividend for 2022 of no less than the 55.0p per share dividend paid for 2021. If necessary, the Board will again consider using some of the significant revenue reserves built up over prior years for occasions such as the current pandemic.  The earnings from portfolio companies have continued to recover and, at the end of June 2022, the Balance Sheet revenue reserves amounted to £63.3m (June 2021: £58.2m).

Annual General Meeting

At the Annual General Meeting held on 22 April 2022, all resolutions were duly passed by shareholders. Following two years of closed AGMs necessitated by the Covid-19 pandemic, it was pleasing to see such a good turnout and for the Board finally to be able, once again, to meet, to speak to and to hear from shareholders in person. During the period, we were also able to communicate with a significant number of existing and prospective shareholders via an Online Shareholder Presentation held in April 2022.  Given the significant turnout at the online event and excellent level of interaction, this is something that the Board will aim to repeat again in 2023. 

Management of Premium and Discount

The Board continues to believe that it is appropriate to seek to address temporary imbalances of supply and demand for the Company's shares which might otherwise result in a recurring material discount or premium. Subject to existing shareholder permissions (given at the last AGM) and prevailing market conditions over time, the Board intends to continue to buy back shares and issue new shares (or sell shares from Treasury) if shares trade at a persistent significant discount to NAV (excluding income) or premium to NAV (including income). The Board believes that this process is in all shareholders' interests as it seeks to reduce volatility in the premium or discount to underlying NAV whilst also making a small positive contribution to the NAV.  During the period under review, the Company has purchased for Treasury 528,233 Ordinary shares at a discount to the underlying exclusive of income NAV. At the latest practicable date, the NAV (excluding income) per share was 1238.5p and the share price was 1239.0p equating to a premium of 0.04% per Ordinary share.

Gearing

In May 2022, the Company utilised part of its £200m Shelf Facility, of which £50m had already been drawn down, through the issue of a £60 million 15 year Senior Unsecured Loan Note (the "Loan Note") at an annualised fixed interest rate of 2.83%. The Loan Note is unsecured, unlisted and denominated in sterling. The Loan Note ranks pari passu with the Company's other unsecured and unsubordinated financial indebtedness. The Company used the proceeds of the Loan Note to repay, and cancel in full, the Company's £60 million Fixed Rate Loan with The Royal Bank of Scotland International Limited, which matured on 31 May 2022. Following the drawdown and repayment, the Company's total borrowings remain at £200m, which represents a net gearing level of 11.1% based on the Company's NAV at 30 June 2022.

Ongoing Charges Ratio ("OCR")

The Board continues to focus upon delivering value to shareholders.  During the review period the OCR has again fallen, from 0.59% to 0.55%, reflecting a modest increase in net assets over the period combined with the impact of the Board's continuing focus on reducing administrative expenses. A full breakdown of the OCR calculation is provided below.

Directorate

As part of the Board's succession planning, on 22 June 2022 we welcomed Ms Virginia Holmes to the Board as an independent non-executive Director.  Virginia is the former CEO of AXA Investment Management Limited and brings significant listed company experience and investment expertise to the Board. She is currently Chair of Trustees at the Unilever Pension Fund, Senior Independent Director at Syncona plc and European Opportunities Trust plc and a non executive director of Intermediate Capital Group plc.

Outlook

The world is in flux, with more unanswered questions shaping the future than for many a year. Will the trend of globalisation be reversed in an increasingly fractious political world, how long will inflation persist and how high will interest rates rise, will energy start being rationed, how deep will economic recessions be, how long before credit quality deteriorates? Negotiating the unchartered and unpredictable path through such a turbulent financial landscape is unlikely to be smooth. However, the strategy of owning quality businesses, real assets and a diversified portfolio has served shareholders well in the past and remains the preferred option for
the present.

Shareholders' views are very important to the Board and I encourage you to email me if you have feedback on the Company at [e-mail].

David Hardie
Chairman
11 August 2022

Interim Board Report - Manager's Review

Background

Seldom have economic and financial conditions deteriorated as rapidly as those that evolved over the first six months of 2022. The barbaric Russian invasion of Ukraine dominated the headlines, adding additional humanitarian, economic and political challenges to a world still plagued by problems from a global pandemic.

Continuing lockdowns, supply chain disruptions and widespread shortages combined with upward pressure on wages created a seismic shift in global inflationary dynamics. Central Banks belatedly began to aggressively raise interest rates, their delusional expectations for just "temporary" then "transitory" inflation exposed as woefully inadequate for the negative emerging environment. As numerous global equity and bond markets succumbed to the general liquidity squeeze, identifying pressure points of distress proved painfully straightforward. Growth, inflation, interest rates, corporate profits, incomes and living standards all meaningfully deteriorated in terms of being supportive of prosperity. Yet perhaps most corrosive of all was the tangible change in sentiment. What became crystal clear throughout this turbulent period was an increasingly grudging realisation that there are no easy solutions to issues such as wage inflation, war in Ukraine, wanton interest rate policy, recession risks and the cost of living crisis. For the first time in well over a decade, certainly as regards financial markets, such prevailing pessimism manifested itself in selling into strength rather than buying into weakness. Against such a backdrop, capital destruction was likely to be ubiquitous, and
so it proved.

Asia

The enforcement of zero Covid policy in China proved problematic beyond just the domestic boundaries of Asia's largest economy. Manufacturing integration throughout the region was periodically crippled by complete lockdowns in cities such as Shanghai, aggravating global shortages in numerous electronic components and constraining corporate profitability of several companies dependent on Asia for sourcing.

Financial markets constantly fretted over the stop-start growth trajectory of Asia's pandemic recovery path, a prevailing concern that constrained the region's equity market returns over the period. Widespread selling of global technology was reflected in weakness in portfolio holdings such as Taiwan Semiconductor, GlobalWafers and Samsung Electronics, where, despite very attractive longer term fundamentals, fears over global recession impacted short term performance. Greater resilience was witnessed in defensive Telecommunication holdings such as Singapore Telecom, Telekom Indonesia and Taiwan Mobile where strong cash flow dynamics and above average dividend yields became increasingly attractive to global investors. Notable areas of strength tended to be stock specific, with BHP Billiton in Australia , Hon  Hai Precision in Taiwan and China Resources Land all delivering positive capital and dividend growth. Profit taking at the beginning of the period from large positions in Global Wafers and Taiwan Semiconductor meant no additional investment was added to Asia over the six months but, with strong balance sheets, the prospects of solid dividend growth and attractive absolute valuations, the current weighting to the region will be maintained.

North America

As broad measures of inflation moved towards double figures for the first time in over forty years, the US Monetary Authorities arguably faced the greatest chasm between perceptions and reality that has existed for many a year. The grotesque distortion created by quantitative easing (printing money) in response to each and every financial crisis over the past twenty years caused prevailing artificially low bond yields and inflated equity prices ill-equipped to deal with the economic disequilibrium that invariably accompanies inflation. The Pavlovian collapse in financial asset prices to the inevitable interest rate hikes was as predictable as it was destructive. Such overall market carnage was not reflected in portfolio returns, a +13.6% positive total return from the 25% exposure a product of defensive and diversified positioning. Canadian pipeline operators TC Energy and Enbridge were standout performers against a backdrop of rising energy prices and relatively inelastic gas demand. Exposures to global healthcare companies Johnson & Johnson, Abbvie and Bristol Myers also delivered solid double digit aggregate total returns, accompanied by strong dividend growth underlining their respective strengths in cash flows and balance sheets. Stable total-returning Telecommunication holdings in Verizon and Telus justified their portfolio inclusions, as did CME Group from which profits were top sliced during the period. The only meaningful weakness was recorded from Technology holdings in Cisco Systems and Broadcom where there was no hiding from the general global revulsion towards the sector. During the period under review, three holdings were sold outright on extended valuation grounds:  divestment of Pepsico reflected increasing concerns over margin sustainability as input costs surged higher; the position in Nutrien was sold outright as potash supply constraints from sanctions were deemed to be more than discounted in the company's rich valuation; and Schlumberger was fully divested as its stock price also detached from near term realities within the energy service sector.

Europe and the UK

As the epicentre of Russian hostilities towards Ukraine and in closest proximity to sanction-induced energy supply shocks, Europe felt the full brunt of surging commodity prices. The gravity of ongoing unfolding events should not be over-emphasised, with numerous as yet unquantifiable consequences for the European economic and political landscape. During what proved a turbulent time for the region's financial markets, numerous periods of heightened market volatility provided opportunity to add to existing European holdings plus initiate exposures in quality businesses that were being monitored. Consequently, the largest change to overall net exposure (+4%) proved to be in Europe. Using funds from cash and some Emerging Bond sales, existing positions in Zurich Financial and Nordea were increased, whilst new positions in Dutch semi-conductor assembly equipment manufacturer BE Semiconductor, leading German industrial Siemens and French food processor Danone were all initiated.

Performance from exposure to the region was not unexpectedly muted, with weakness in high quality industrial holdings Atlas Copco and Epiroc reflecting growing recessionary fears rather than any specific company issues. Not surprisingly given the diversification inherent in current European exposure, stronger performance came from eclectic sources, notably French energy stalwart TotalEnergies, Danish insurance company Tryg, French pharmaceutical Sanofi, and the aforementioned Zurich Financial recovered strongly to end the period with positive total returns.

Latin America

As befits one of the world's most overlooked equity regions, the 12% exposure to six high quality Latin American companies delivered way in excess of what conventional wisdom might have expected. Perhaps pre-emptive interest rate hikes last year and the region's inflationary heritage may have dampened global investors' enthusiasm, but the +24.1% total return from portfolio holdings yet again emphasised the benefits of true diversification. Performance from leading global lithium producer Soquimich proved exceptional, prompting further profit taking in what still remains a meaningful position. Mexican airport operator Grupo Asur continued to benefit from record passenger volumes through its airports in Cancun, Cozumel and Colombia, prompting higher than expected cash flows and larger than expected dividends. In Brazil, Telefonica and Banco Bradesco embraced the prevailing 13% interest rate to pass through price increases and fatten lending margins respectively, displaying operational dexterity honed from years of practice managing businesses during periods of higher inflation. Such skills may prove increasingly "transferrable" to the Developed World should current economic circumstances prevail. Existing exposure in Latin America is likely to be maintained around existing levels, with the prospects of improving profits, robust dividends and potential interest rate cuts on the horizon. 

Outlook

The schizophrenic nature of supposedly rational financial markets is nothing new to seasoned investors. History is littered with protracted periods where financial markets unreservedly "believe" in something right up until the point where "perception" changes and then suddenly they don't. Perception becomes reality regardless of what the reality actually is. The current interpretation of inflation is reflective of such a subjective change.

Over the past fifteen to twenty years, "inflation" has been omnipresent in financial markets yet consistently viewed positively by consensus, up until now. Inflating liquidity through quantitative easing was welcomed by markets as a policy option to deal with economic crisis. Inflating government balance sheets of the Developed World from $5 trillion fifteen years ago to $35 trillion today was embraced as a necessary consequence. Inflating Government Bond prices to levels that produced "irrational" negative bond yields was generally viewed as acceptable, despite clear concerns over financial repression. Inflating equity market multiples of unprofitable, cash burning companies was positively argued as evidence of superior, future growth. Inflating property prices to unsustainably high ratios of income affordability in all but a zero interest rate environment, was generally viewed as positive "wealth" creation.  Inflating expectations to the point where markets became totally dependent on such a toxic cocktail of distorted reality was probably the most dangerous "inflation" of all.  Yet, throughout this long period of inflation, those responsible for managing "price stability" were complicit in managing "market prices" and, thereby, in stoking the flames of future price instability once perceptions inevitably changed. The recent emergence of rampant price and wage inflation leaves those Central Banks responsible for such broader inflation of the past twenty years devoid of any credibility whatsoever. With only limited policy options now at their disposal, the world waits to see if they tighten too much and cause recession or tighten too little and watch inflation spiral out of control.

Against such a backdrop, the investment environment is likely to remain extremely challenging. In addition to "traditional" inflation of prices and wages, the Covid pandemic, war in Ukraine and climate change is prompting companies and governments to scrutinise global linkages for resilience, security and sustainability. The halcyon days of globalisation may well be over, suggesting a return to increasing market rigidity with less focus on just sourcing the cheapest possible price. The portfolio remains focused on geographical and sector diversification, real assets and quality balance sheets for an increasingly opaque outlook where financial risk remains fraught with uncertainty.

Bruce Stout
Senior Investment Director

Martin Connaghan, Investment Director

Samantha Fitzpatrick , Investment Director

Aberdeen Asset Managers Limited
11 August 2022

Interim Board Report - Directors' Disclosures

Principal Risks and Uncertainties

The Board has approved a matrix of the key risks that, in its assessment, affect the business. The major financial risks associated with the Company are detailed in note 18 of the 2021 Annual Report and the other principal risks are summarised below. These risks represent the principal risks anticipated for the remaining six months of the year. They can be summarised into the following categories:

-  Investment Strategy and Objectives;

-  Investment Portfolio Performance Risk;

-  Operational Risks; and

-  Financial Risks.

Details of the management of the risks and the Company's internal controls are disclosed on pages 37 to 39 of the 2021 Annual Report.

The Board also has a process in place to identify emerging risks.  If any of these are deemed to be significant, these risks are categorised, rated and added to the Company's risk matrix. 

The Board has reviewed the risks related to the Covid-19 pandemic and the on-going War in Ukraine and the resultant disruption to world markets and increased geo-political uncertainty. However, the Board notes the Manager's robust and disciplined investment process which continues to focus on long-term company fundamentals including balance sheet strength and deliverability of sustainable earnings growth.  The Board, through the Manager, closely monitors all third party service arrangements and has not suffered any interruption to service. The Board therefore believes that the Manager and all other key third party service providers have in place appropriate business interruption plans and are able to maintain their service levels to the Company.

Related Party Transactions

abrdn Fund Managers Limited (aFML) (formerly Aberdeen Standard Fund Managers Limited), a wholly owned subsidiary of abrdn plc  acts as Alternative Investment Fund Manager, AAM acts as Investment Manager and Aberdeen Asset Management PLC acts as Company Secretary to the Company; details of the service and fee arrangements can be found in the 2021 Annual Report, a copy of which is available on the Company's website. Details of the transactions with the Manager including the fees payable to abrdn plc group companies are disclosed in note 11 of this Half Yearly Report.

Going Concern

In accordance with the Financial Reporting Council's Guidance on Risk Management, Internal Control and Related Financial and Business Reporting, the Directors have undertaken a rigorous review and consider that there are no material uncertainties and that the adoption of the going concern basis of accounting is appropriate.  This review included the additional risks relating to the ongoing Covid-19 pandemic and the on-going War in Ukraine. The Company's assets consist of a diverse portfolio of listed equities and bonds and the portfolio in most circumstances is realisable within a very short timescale. The Directors believe that the Company has adequate financial resources to continue its operational existence for the foreseeable future and at least 12 months from the date of this Half Yearly Report. Accordingly, the Directors continue to adopt the going concern basis in preparing these financial statements.

Directors' Responsibility Statement

The Directors are responsible for preparing the Half Yearly Financial Report in accordance with applicable law and regulations. The Directors confirm that to the best of their knowledge:

-  the condensed set of Financial Statements has been prepared in accordance with Financial Reporting Standard 104 (Interim Financial Reporting);

-  the Half Yearly Board Report includes a fair review of the information required by rule 4.2.7R of the Disclosure and Transparency Rules (being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of Financial Statements and a description of the principal risks and uncertainties for the remaining six months of the financial year); and

-  the Half Yearly Board Report includes a fair review of the information required by 4.2.8R (being related party transactions that have taken place during the first six months of the financial year and that have materially affected the financial position of the Company during that period; and any changes in the related party transactions described in the last Annual Report that could do so).

The Half Yearly Financial Report for the six months ended 30 June 2022 comprises the Half Yearly Board Report, the Directors' Responsibility Statement and a condensed set of Financial Statements.

For and on behalf of the Board of Murray International Trust PLC

David Hardie
Chairman
11 August 2022

Condensed Statement of Comprehensive Income (unaudited)

		Six months ended			Six months ended
		30 June 2022			30 June 2021
		Revenue	Capital	Total	Revenue	Capital	Total
	Note	£'000	£'000	£'000	£'000	£'000	£'000
Gains on investments		-	23,162	23,162	-	98,820	98,820
Income	2	45,465	-	45,465	36,906	-	36,906
Investment management fees	11	(1,005)	(2,346)	(3,351)	(1,020)	(2,379)	(3,399)
Other expenses		(888)	-	(888)	(892)	-	(892)
Currency gains/(losses)		-	339	339	-	(831)	(831)
Net return before finance costs and taxation		43,572	21,155	64,727	34,994	95,610	130,604
Finance costs		(619)	(1,445)	(2,064)	(562)	(1,313)	(1,875)
Return before taxation		42,953	19,710	62,663	34,432	94,297	128,729
Taxation	3	(3,717)	542	(3,175)	(3,868)	427	(3,441)
Return attributable to equity shareholders		39,236	20,252	59,488	30,564	94,724	125,288
Return per Ordinary share (pence)	5	31.28	16.15	47.43	23.81	73.78	97.59
The total column of the Condensed Statement of Comprehensive Income is the profit and loss account of the Company.
All revenue and capital items in the above statement derive from continuing operations.
The accompanying notes are an integral part of these financial statements.

Condensed Statement of Financial Position (unaudited)

		As at	As at
		30 June 2022	31 December 2021
	Note	£'000	£'000
Non-current assets
Investments at fair value through profit or loss		1,733,783	1,739,312
Current assets
Debtors		18,587	15,377
Cash and short-term deposits		25,324	8,705
		43,911	24,082
Creditors: amounts falling due within one year
Bank loans		(59,975)	(59,975)
Other creditors		(2,441)	(2,514)
		(62,416)	(62,489)
Net current liabilities		(18,505)	(38,407)
Total assets less current liabilities		1,715,278	1,700,905
Creditors: amounts falling due after more than one year
Bank loans		(29,976)	(89,930)
2.24% Senior Unsecured Loan Note 2031		(49,914)	(49,909)
2.83% Senior Unsecured Loan Note 2037		(59,976)	-
Net assets		1,575,412	1,561,066
Capital and reserves
Called-up share capital		32,353	32,353
Share premium account		362,967	362,967
Capital redemption reserve		8,230	8,230
Capital reserve		1,108,576	1,094,549
Revenue reserve		63,286	62,967
Equity shareholders' funds		1,575,412	1,561,066
Net asset value per Ordinary share (pence)	6	1,257.0	1,240.3
The accompanying notes are an integral part of these financial statements.

Condensed Statement of Changes in Equity (unaudited)

Six months ended 30 June 2022
		Share	Capital
	Share	premium	redemption	Capital	Revenue
	capital	account	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 December 2021	32,353	362,967	8,230	1,094,549	62,967	1,561,066
Return after taxation	-	-	-	20,252	39,236	59,488
Dividends paid (see note 4)	-	-	-	-	(38,917)	(38,917)
Buyback of Ordinary shares to Treasury	-	-	-	(6,225)	-	(6,225)
Balance at 30 June 2022	32,353	362,967	8,230	1,108,576	63,286	1,575,412
Six months ended 30 June 2021
		Share	Capital
	Share	premium	redemption	Capital	Revenue
	capital	account	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 December 2020	32,353	362,967	8,230	991,513	66,764	1,461,827
Return after taxation	-	-	-	94,724	30,564	125,288
Dividends paid (see note 4)	-	-	-	-	(39,161)	(39,161)
Issue of new shares	-	-	-	(768)	-	(768)
Balance at 30 June 2021	32,353	362,967	8,230	1,085,469	58,167	1,547,186
The accompanying notes are an integral part of these financial statements.

Condensed Statement of Cash Flows

(unaudited)

		Six months ended	Six months ended
		30 June 2022	30 June 2021
	Notes	£'000	£'000
Net return before finance costs and taxation		64,727	130,604
Increase in accrued expenses		19	8
Overseas withholding tax		(6,064)	(4,815)
Increase in accrued income		(869)	(1,110)
Interest paid		(2,106)	(1,676)
Gains on investments		(23,162)	(98,820)
Currency (gains)/losses		(339)	831
(Increase)/decrease in other debtors		(60)	22
Corporation tax paid		-	(43)
Net cash from operating activities		32,146	25,001
Investing activities
Purchases of investments		(116,708)	(124,760)
Sales of investments		146,008	144,078
Net cash from investing activities		29,300	19,318
Financing activities
Equity dividends paid	4	(38,917)	(39,161)
Buyback of Ordinary shares to Treasury		(6,225)	(768)
Loan repayment		(60,000)	(50,000)
Issue of 2.24% Senior Unsecured Loan Note 2031		-	49,894
Issue of 2.83% Senior Unsecured Loan Note 2037		59,976	-
Net cash used in financing activities		(45,166)	(40,035)
Increase in cash		16,280	4,284
Analysis of changes in cash during the period
Opening balance		8,705	3,208
Effect of exchange rate fluctuations on cash held		339	(831)
Increase in cash as above	8	16,280	4,284
Closing balance		25,324	6,661
The accompanying notes are an integral part of these financial statements.

Notes to the Financial Statements (unaudited)

For the year ended 30 June 2022

1.	Accounting policies - Basis of preparation
	The condensed financial statements have been prepared in accordance with Financial Reporting Standard 104 (Interim Financial Reporting) and with the Statement of Recommended Practice for 'Financial Statements of Investment Trust Companies and Venture Capital Trusts'. They have also been prepared on a going concern basis and on the assumption that approval as an investment trust will continue to be granted. Annual financial statements are prepared under Financial Reporting Standard 102.
	The condensed interim financial statements have been prepared using the same accounting policies as the preceding annual financial statements.

2.	Income
		Six months ended	Six months ended
		30 June 2022	30 June 2021
		£'000	£'000
	Income from investments
	UK dividends	3,732	3,186
	Overseas dividends	35,810	27,568
	Overseas interest	5,921	6,149
		45,463	36,903
	Other income
	Deposit interest	2	1
	Interest on corporation tax reclaim	-	2
		2	3
	Total income	45,465	36,906

3.	Taxation
	The taxation expense reflected in the Condensed Statement of Comprehensive Income is based on the estimated annual tax rate expected for the full financial year. The estimated annual corporation tax rate used for the year to 31 December 2022 is 19%. This is in line with the current corporation tax rate.
	The tax expense 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 return as reported in the Condensed 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.

4.	Ordinary dividends on equity shares
		Six months ended	Six months ended
		30 June 2022	30 June 2021
		£'000	£'000
	Third interim dividend 2021 of 12.0p (2020 - 12.0p)	15,104	15,413
	Final dividend 2021 of 19.0p (2020 - 18.5p)	23,813	23,748
		38,917	39,161
	A first interim dividend for 2022 of 12.0p (2021 - 12.0p) will be paid on 16 August 2022 to shareholders on the register on 8 July 2022. The ex-dividend date was 7 July 2022.
	A second interim dividend for 2022 of 12.0p (2021 - 12.0p) will be paid on 18 November 2022 to shareholders on the register on 7 October 2022. The ex-dividend date is 6 October 2022.

5.	Return per Ordinary share (pence)
		Six months ended		Six months ended
		30 June 2022		30 June 2021
		£'000	Per Ordinary share (p)	£'000	Per Ordinary share (p)
	Returns are based on the following figures:
	Revenue return	39,236	31.28	30,564	23.81
	Capital return	20,252	16.15	94,724	73.78
	Total return	59,488	47.43	125,288	97.59
	Weighted average number of Ordinary shares		125,431,887		128,384,846

6.	Net asset value
	The net asset value per share and the net asset value attributable to the Ordinary shares at the period end calculated in accordance with the Articles of Association were as follows:
		As at	As at
		30 June 2022	31 December 2021
	Attributable net assets (£'000)	1,575,412	1,561,066
	Number of Ordinary shares in issue (excluding Treasury)	125,333,623	125,861,856
	Net asset value per share (pence)	1,257.0	1,240.3

7.	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 investments in the Condensed Statement of Comprehensive Income. The total costs were as follows:
		Six months ended	Six months ended
		30 June 2022	30 June 2021
		£'000	£'000
	Purchases	137	280
	Sales	126	154
		263	434

8.	Analysis of changes in net debt
		At				At
		31 December	Currency	Cash	Non-cash	30 June
		2021	differences	flows	movements	2022
		'000	'000	'000	'000	'000
	Cash and short term deposits	8,705	339	16,280	-	25,324
	Debt due within one year	(59,975)	-	60,000	(60,000)	(59,975)
	Debt due after more than one year	(139,839)	-	(59,976)	59,949	(139,866)
		(191,109)	339	16,304	(51)	(174,517)
		At				At
		31 December	Currency	Cash	Non-cash	30 June
		2020	differences	flows	movements	2021
		'000	'000	'000	'000	'000
	Cash and short term deposits	3,208	(831)	4,284	-	6,661
	Debt due within one year	(50,000)	-	50,000	(59,945)	(59,945)
	Debt due after more than one year	(149,805)	-	(49,894)	59,894	(139,805)
		(196,597)	(831)	4,390	(51)	(193,089)
	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.

9.	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. The fair value hierarchy has the following classifications:
	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.
	Level 3:		Inputs are unobservable (ie for which market data is unavailable) for the asset or liability.
	The financial assets and liabilities measured at fair value in the Condensed Statement of Financial Position are grouped into the fair value hierarchy at the reporting date as follows:
						Level 1	Level 2	Level 3	Total
	As at 30 June 2022				Note	£'000	£'000	£'000	£'000
	Financial assets at fair value through profit or loss
	Quoted equities				a)	1,595,839	-	-	1,595,839
	Quoted preference shares				b)	-	6,456	-	6,456
	Quoted bonds				b)	-	131,488	-	131,488
	Total					1,595,839	137,944	-	1,733,783
						Level 1	Level 2	Level 3	Total
	As at 31 December 2021				Note	£'000	£'000	£'000	£'000
	Financial assets at fair value through profit or loss
	Quoted equities				a)	1,590,833	-	-	1,590,833
	Quoted preference shares				b)	-	7,637	-	7,637
	Quoted bonds				b)	-	140,842	-	140,842
	Total					1,590,833	148,479	-	1,739,312
	a)	Quoted equities . The fair value of the Company's investments in quoted equities has been determined by reference to their quoted bid prices at the reporting date. Quoted equities included in Fair Value Level 1 are actively traded on recognised stock exchanges.
	b)	Quoted preference shares and bonds. The fair value of the Company's investments in quoted preference shares and bonds has been determined by reference to their quoted bid prices at the reporting date. Investments categorised as Level 2 are not considered to trade in active markets.

10.	Share capital
	As at 30 June 2022 there were 125,333,623 (31 December 2021 - 125,861,856) Ordinary shares of 25p each in issue.  Ordinary shares held in Treasury were 4,078,380 (31 December 2021 3,550,147).

11.	Transactions with the Manager
	The Company has agreements with abrdn Fund Managers Limited ('aFML' or the 'Manager') for the provision of investment management, secretarial, accounting and administration and promotional activity services.
	With effect from 1 January 2022. the management fee has been charged on net assets (i.e. excluding borrowings for investment purposes) averaged over the six previous quarters at a rate of 0.5% per annum up to £500 million, and 0.4% per annum thereafter. Prior to this, the management fee was charged at a rate of 0.5% per annum on net assets up to £1,200 million and 0.425% per annum thereafter. A fee of 1.5% per annum is chargeable on the value of any unlisted investments. The investment management fee is chargeable 30% against revenue and 70% against realised capital reserves. During the period £3,351,000 (30 June 2021 - £3,399,000) of investment management fees was payable to the Manager, with an amount of £1,685,000 (30 June 2021 - £1,700,000) being payable to aFML at the period end.
	No fees are charged in the case of investments managed or advised by the abrdn Group. The management agreement may be terminated by either party on the expiry of six months' written notice. On termination the Manager is entitled to receive fees which would otherwise have been due up to that date.
	The promotional activities fee is based on a current annual amount of £400,000 (30 June 2021 - £400,000), payable quarterly in arrears. During the period £200,000 (30 June 2021 - £200,000) of fees was payable, with an amount of £100,000 (30 June 2021 - £100,000) being payable to aFML at the period end.

12.	Segmental information
	The Company is engaged in a single segment of business, which is to invest in equity securities and debt instruments. All of the Company's activities are interrelated, and each activity is dependent on the others. Accordingly, all significant operating decisions are based on the Company as one segment.

13.	Half-Yearly Report
	The financial information in this Report does not comprise statutory accounts within the meaning of Section 434 - 436 of the Companies Act 2006. The financial information for the year ended 31 December 2021 has been extracted from published accounts that have been delivered to the Registrar of Companies and on which the report of the Company's auditor was unqualified and contained no statement under Section 498 (2), (3) or (4) of the Companies Act 2006. The condensed interim financial statements have been prepared using the same accounting policies as contained within the preceding annual financial statements.
	The financial information for the six months ended 30 June 2022 and 30 June 2021 has not been audited or reviewed by the Company's auditor.

14.	This Half-Yearly Financial Report was approved by the Board on 11 August 2022.

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.
		30 June 2022	31 December 2021
NAV per Ordinary share (p)	a	1,257.0	1,240.3
Share price (p)	b	1,234.0	1,156.0
Discount	(b-a)/a	-1.8%	-6.8%
Net gearing
Net gearing measures the total borrowings less cash and cash equivalents dividend by shareholders' funds, expressed as a percentage. Under AIC reporting guidance cash and cash equivalents includes amounts due to and from brokers at the period end as well as cash and cash equivalents.
		30 June 2022	31 December 2021
Borrowings (£'000)	a	199,841	199,814
Cash (£'000)	b	25,324	8,705
Amounts due to brokers (£'000)	c	-	-
Amounts due from brokers (£'000)	d	-	-
Shareholders' funds (£'000)	e	1,575,412	1,561,066
Net gearing	(a-b+c-d)/e	11.1%	12.2%
Ongoing charges
The ongoing charges ratio has been calculated in accordance with guidance issued by the AIC as the total of investment management fees and administrative expenses and expressed as a percentage of the average published daily net asset values with debt at fair value throughout the year. The ratio for 30 June 2022 is based on forecast ongoing charges for the year ending 31 December 2022.
		30 June 2022	31 December 2021
Investment management fees (£'000)		6,748	6,953
Administrative expenses (£'000)		1,844	1,752
Less: non-recurring chargesA (£'000)		(27)	(74)
Ongoing charges (£'000)		8,565	8,631
Average net assets (£'000)		1,587,054	1,510,301
Ongoing charges ratio (excluding look-through costs)		0.54%	0.57%
Look-through costsB		0.01%	0.02%
Ongoing charges ratio (including look-through costs)		0.55%	0.59%
A Professional services comprising new Director recruitment costs and legal fees considered unlikely to recur.
BCalculated in accordance with AIC guidance issued in October 2020 to include the Company's share of costs of holdings in investment companies on a look-through basis.
The ongoing charges ratio provided in the Company's Key Information Document is calculated in line with the PRIIPs regulations, which includes amongst other things, the cost of borrowings and transaction costs.
Total return
NAV and share price 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 Reference Index, respectively.
			Share
Six months ended 30 June 2022		NAV	price
Opening at 1 January 2022	a	1,240.3p	1,156.0p
Closing at 30 June 2022	b	1,257.0p	1,234.0p
Price movements	c=(b/a)-1	1.3%	6.7%
Dividend reinvestmentA	d	2.5%	2.8%
Total return	c+d	+3.8%	+9.5%
			Share
Year ended 31 December 2021		NAV	price
Opening at 1 January 2021	a	1,138.2p	1,130.0p
Closing at 31 December 2021	b	1,240.3p	1,156.0p
Price movements	c=(b/a)-1	9.0%	2.3%
Dividend reinvestmentA	d	5.1%	4.9%
Total return	c+d	+14.1%	+7.2%
A 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. 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.

Summary of Net Assets

	Valuation		Valuation
	30 June 2022		31 December 2021
	£'000	%	£'000	%
Equities	1,595,839	101.3	1,590,833	101.9
Preference shares	6,456	0.4	7,637	0.5
Bonds	131,488	8.4	140,842	9.0
Total investments	1,733,783	110.1	1,739,312	111.4
Net current assets	41,470	2.6	21,568	1.4
Total assets	1,775,253	112.7	1,760,880	112.8
Prior chargesA	(199,841)	(12.7)	(199,814)	(12.8)
Net assets	1,575,412	100.0	1,561,066	100.0
A All short-term and long-term bank loans and loan notes.

Summary of Investment Changes

	Valuation		Appreciation/	Net purchases/	Valuation
	31 December 2021		(depreciation)	(sales)	30 June 2022
	£'000	%	£'000	£'000	£'000	%
Equities
UK	85,872	5.0	15,588	-	101,460	5.8
North America	496,896	28.6	54,342	(106,129)	445,109	25.7
Europe ex UK	304,887	17.5	(40,688)	83,756	347,955	20.1
Asia Pacific ex Japan	503,319	28.9	(34,906)	9,957	478,370	27.6
Latin America	184,065	10.6	38,020	(12,413)	209,672	12.1
Africa	15,794	0.9	(2,521)	-	13,273	0.7
	1,590,833	91.5	29,835	(24,829)	1,595,839	92.0
Preference shares
UK	7,637	0.4	(1,181)	-	6,456	0.4
	7,637	0.4	(1,181)	-	6,456	0.4
Bonds
Europe ex UK	6,023	0.4	(264)	4	5,763	0.3
Asia Pacific ex Japan	52,526	3.0	191	(4,343)	48,374	2.8
Latin America	66,703	3.8	(5,501)	345	61,547	3.6
Africa	15,590	0.9	82	132	15,804	0.9
	140,842	8.1	(5,492)	(3,862)	131,488	7.6
Total investments	1,739,312	100.0	23,162	(28,691)	1,733,783	100.0

Investment Portfolio

As at 30 June 2022
			Valuation		Valuation
Security	Country		£'000		%
Aeroporto del Sureste	Mexico		74,100		4.3
Taiwan Semiconductor Manufacturing	Taiwan		59,319		3.4
Philip Morris International	USA		56,936		3.3
AbbVie	USA		56,866		3.3
CME Group	USA		50,566		2.9
Broadcom Corporation	USA		48,027		2.7
TotalEnergies	France		43,352		2.5
UnileverA	UK & Netherlands		42,832		2.5
Verizon Communications	USA		41,797		2.4
Sociedad Quimica Y Minera De Chile	Chile		41,258		2.4
Top ten investments			515,053		29.7
Bristol-Myers Squibb	USA		41,250		2.4
Oversea-Chinese Bank	Singapore		40,434		2.3
British American Tobacco	UK		38,714		2.2
Telus	Canada		36,589		2.1
Hon Hai Precision Industry	Taiwan		36,223		2.1
Tryg	Denmark		35,969		2.1
Zurich Insurance	Switzerland		35,703		2.1
Taiwan Mobile	Taiwan		34,395		2.0
Samsung Electronics	Korea		33,134		1.9
BHP Group	Australia		32,158		1.8
Top twenty investments			879,622		50.7
Vale do Rio Doce	Brazil		32,074		1.8
GlobalWafers	Taiwan		31,363		1.8
TC Energy	Canada		29,701		1.7
Johnson & Johnson	USA		29,291		1.7
Sanofi	France		29,027		1.7
Shell	UK		29,022		1.7
Cisco Systems	USA		28,095		1.6
Roche Holdings	Switzerland		27,394		1.6
Singapore Telecommunications	Singapore		26,944		1.6
China Resources Land	China		26,884		1.5
Top thirty investments			1,169,417		67.4
AHolding comprises UK and Netherlands securities, split £22,326,000 and £20,506,000 respectively.
Telkom Indonesia	Indonesia		26,531		1.5
Enbridge	Canada		25,991		1.5
Woodside Energy	Australia		25,224		1.5
Banco Bradesco	Brazil		23,081		1.3
Danone	France		22,916		1.3
China Vanke	China		22,739		1.3
Kimberly Clark de Mexico	Mexico		22,243		1.3
Epiroc	Sweden		22,073		1.3
Nordea Bank	Sweden		21,638		1.3
SCB	Thailand		21,485		1.2
Top forty investments			1,403,338		80.9
Atlas Copco	Sweden		20,512		1.2
Ping An Insurance	China		20,154		1.2
Enel	Italy		17,974		1.0
BE Semiconductor	Netherlands		17,765		1.0
Telefonica Brasil	Brazil		16,916		1.0
Siemens	Germany		16,749		1.0
Telenor	Norway		16,377		1.0
Republic of Indonesia 6.125% 15/05/28	Indonesia		16,158		0.9
America Movil Sab De 6.45% 05/12/22	Mexico		16,058		0.9
Lotus Retail Growth	Thailand		15,837		0.9
Top fifty investments			1,577,838		91.0
Republic of South Africa 7% 28/02/31	South Africa		15,803		0.9
Castrol India	India		15,072		0.9
United Mexican States 5.75% 05/03/26	Mexico		14,509		0.8
MTN	South Africa		13,273		0.7
Republic of Indonesia 8.375% 15/03/34	Indonesia		11,763		0.7
Vodafone Group	UK		11,398		0.7
Indocement Tunggal Prakarsa	Indonesia		10,474		0.6
Petroleos Mexicanos 6.75% 21/09/47	Mexico		10,087		0.6
Republic of Dominica 6.85% 27/01/45	Dominican Republic		9,818		0.5
HDFC Bank 7.95% 21/09/26	India		7,881		0.5
Top sixty investments			1,697,916		97.9
Power Finance Corp 7.63% 14/08/26	India	7,836		0.4
Petroleos Mexicanos 5.5% 27/06/44	Mexico	5,617		0.3
Republic of Indonesia 10% 15/02/28	Indonesia	4,736		0.3
Santander 10.375% Non Cum Pref	UK	3,404		0.2
General Accident 7.875% Cum Irred Pref	UK	3,052		0.2
Republic of Turkey 9% 24/07/24	Turkey	2,918		0.2
Republic of Turkey 8% 12/03/25	Turkey	2,845		0.2
Republic of Ecuador 0.5% 31/07/35	Ecuador	2,619		0.2
Republic of Ecuador 0.5% 31/07/30	Ecuador	2,103		0.1
Republic of Ecuador 0.5% 31/07/40	Ecuador	528		-
Top seventy investments		1,733,574		100.0
Republic of Ecuador 0.0% 31/07/30	Ecuador	209		-
Total investments		1,733,783		100.0

The Half Yearly Report will be printed and issued to shareholders and further copies will be available on the Company's web site murray-intl.co.uk*.

* Neither the Company's website nor the content of any website accessible from hyperlinks on it (or any other website) is (or is deemed to be) incorporated into, or forms (or is deemed to form) part of this announcement.

By order of the Board

ABERDEEN ASSET MANAGEMENT PLC, SECRETARY

11 August 2022

 

END

 

 

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