Interim Results
Murray International Trust PLC
07 August 2003
MURRAY INTERNATIONAL TRUST PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2003
The Directors of Murray International Trust PLC report the unaudited results of
the company for the six months ended 30 June 2003.
• Net Asset Value Total Return, with net income reinvested, for the six
months ended 30 June 2003 was +9.8% compared with a return of +7.5% on the
composite benchmark.
• The discount at which the shares traded to their Net Asset Value improved
steadily during the six months from 15.9% to 8.9%.
• The Board intends to recommend a maintained final dividend of 5.95p in
respect of the year ending 31 December 2003, payable in May 2004.
Background
In the early part of the year global stockmarkets remained extremely depressed.
Some European markets for example declined more than 20%, due partly to
uncertainties surrounding the impending war with Iraq but also to
disappointments on the corporate earnings front and on the signals from a
variety of leading economic indicators. Rumours of forced selling by a number of
market participants applied further pressure, particularly in the European and
UK markets. The turning point for the markets, perhaps conditioned by their
experience of the 1990 Gulf war, came a few days before the opening of
hostilities in Iraq. Additional encouragement for the markets came from the
highly proactive stance adopted by the US fiscal and monetary authorities,
supported albeit to a significantly lesser extent by authorities in other major
economies, giving rise to expectations of a powerful economic recovery in the
second half of 2003. Market returns, as ever, were influenced by currency
movements, most notably the strength of the euro, although the pound gained some
3% and 4% against the dollar and the yen respectively. In sterling terms the US
market returned +9.0%, the UK +5.0%, Europe +11.1%, the Pacific-ex Japan +10.0%
and Japan +1.1%. On a sectoral basis there was a somewhat cyclical bias with
information technology, general industrials and cyclical services all
outperforming. The picture was by no means uniform, however, with resources and
basic industries underperforming whilst utilities and financials both
outperformed.
Performance
The Net Asset Value Total Return, with net income reinvested, for the six months
to 30 June 2003 was + 9.8% compared with a return of +7.5% on the composite
benchmark (40% of the FTSE World-UK and 60% of the FTSE World ex-UK indices).
Asset allocation was broadly neutral for the portfolio over the period with the
negative effects of being overweight the Japanese markets and underweight the US
market largely offset by overweight positions in the Pacific region and Latin
America and by a slightly underweight position in the UK market. Stock selection
overall was favourable, particularly in the Pacific - (ex Japan) region, whilst
both the European and US portfolios contributed positively. The portfolio also
benefited materially from the large holding in Atrium Underwriting, where an
improvement in the Insurance market should lead to substantial profit increases
in 2003 and 2004. In the early part of the year, continuing weakness in stock
markets favoured the more defensive sectors but this changed dramatically as
markets rebounded from their lows in March. In this connection it was pleasing
to note that stock selection remained positive in the second quarter of the
year.
Share Buy-backs
During the six months ended 30 June 2003, the Company did not repurchase any
Ordinary shares, although it retains the authority to do so. The discount at
which the shares traded to their Net Asset Value improved steadily during the
six months from 15.9% to 8.9%.
Activity
In the opinion of the Board, prospective returns from equities are likely to be
more in line with their long term historical averages, and thus well below the
perceived 'norm' of the 1980's and 1990's. Portfolio activity during the period
was largely directed towards capturing relative price movements within regions
or sectors.
On a geographic basis exposure to the UK market was reduced whilst additional
investments were made in the Pacific region, Emerging markets and Europe. On a
sectoral basis exposure to pharmaceuticals was increased whilst sales were
effected in the banking sector. The already over-weight position in the energy
sector was retained as the oil price stayed well above the levels expected post
the Iraqi conflict, whilst the sector continues to offer strong balance sheets
and an attractive dividend yield.
Dividends
For the current year the Board has already declared that three interim dividends
of 3.45p per share be paid on 15 August and 17 November 2003 and 16 February
2004. The Board continues to believe that, given the conservative nature of the
equity portfolio and the high quality characteristics of the fixed interest
portfolio, the revenue stream of your Company is relatively strong. The outlook
for next year is obviously dependent on the outlook for corporate profits.
Consensus forecasts envisage a substantial improvement in corporate profits,
which are dependent on an easier global policy stance achieving a recovery which
has so far eluded the relevant authorities. Against this, however, there appears
to be a growing awareness amongst companies of the importance of income to
investors and this should operate to the benefit of the revenue account. In view
of all the circumstances, the Board intends to recommend a maintained final
dividend of 5.95p in respect of the year ended 31 December 2003, payable in May
2004.
Outlook
Clearly after such a substantial rally predicated on a significant economic
recovery in response to fiscal and monetary policy easing, as well as the
possible release of pent-up demand due to geo-political uncertainties, markets
will need to see a realisation of these expectations. It has to be said that, so
far at any rate, the important US economy has exhibited a degree of
unresponsiveness to policy easing relative to previous economic cycles which
shows up in investment, industrial production, consumer spending (to a lesser
degree) and the employment numbers. Most of the recently announced leading
economic indicators remain mixed at best but there is cause for greater optimism
for the third quarter when household incomes will feel the greatest benefit from
tax cuts. The US employment data will probably be the single most important
indicator going forward if the expected economic recovery is to be sustained.
On an asset allocation basis, valuation factors favour an overweighting of both
the European and (particularly) the Asian and Emerging markets over the United
States. Whilst it is obviously the case that the US authorities have adopted by
far the most pro-active stance in terms of fiscal and monetary policy and
articulated a clear determination to avoid the pitfalls of deflation, the
manager considers that there are powerful macro-economic forces constraining the
ability of the US economy to act as an engine of growth, which it did so
effectively in the 1990's. Thus it may be that there will be more convergence in
global growth patterns than is the current consensus expectation.
A relatively subdued outlook for growth is not necessarily harmful to equity
valuations. The issue is really more to do with a reasonable level of
expectations. The manager therefore remains of the view that it is strict
adherence to the basic principles of valuation that will be paramount in
today's markets and that undue obsession with style factors (such as large vs
smallcapitalisation stocks, or value vs growth) or with chasing momentum (a very
popular game in the late 1990's) is essentially a distraction. The portfolio
will retain an emphasis on sound balance sheets, reasonable yields, achievable
implied returns and will continue to be screened for accounting 'deftness' on
issues such as pensions, options and exceptional charges.
MURRAY INTERNATIONAL TRUST PLC
STATEMENT OF TOTAL RETURN (INCORPORATING THE REVENUE ACCOUNT)
Six months ended June 2003
(unaudited)
Revenue Capital Total
£'000 £'000 £'000
Losses on sales - (15,178) (15,178)
Unrealised gains/(losses) - 39,391 39,391
-------- -------- --------
Gains/(losses) on investments - 24,213 24,213
Income
Income from investments 9,708 - 9,708
Other income 124 - 124
Management fees (454) (1,059) (1,513)
Currency gains/(losses) - 571 571
Other expenses (408) - (408)
-------- -------- --------
Net return before finance costs and 8,970 23,725 32,695
taxation
Finance costs of borrowing (462) (1,078) (1,540)
-------- -------- --------
Return on ordinary activities before 8,508 22,647 31,155
taxation
Taxation on ordinary activities (1,330) 944 (386)
-------- -------- --------
Return attributable to equity 7,178 23,591 30,769
shareholders
Ordinary dividends on equity shares (8,939) - (8,939)
-------- -------- --------
Transfer (from)/to reserves (1,761) 23,591 21,830
-------- -------- --------
Return per Ordinary share (pence) 8.3 27.3 35.6
Return per Ordinary share assuming full
Conversion of the B Ordinary shares 8.2 26.9 35.1
(pence)
Notes
1. The revenue column of this statement is the profit and loss account of the
Company.
2. The results for the year to 31 December 2002 are abridged from the full
accounts for that year, which received an unqualified report from the
auditors and have been filed with the Registrar of Companies.
MURRAY INTERNATIONAL TRUST PLC
STATEMENT OF TOTAL RETURN (INCORPORATING THE REVENUE ACCOUNT)
Six months ended 30 June 2002
(unaudited)
Revenue Capital Total
£'000 £'000 £'000
Losses on sales - (23,586) (23,586)
Unrealised gains/(losses) - (30,032) (30,032)
-------- -------- --------
Gains/(losses) on investments - (53,618) (53,618)
Income
Income from investments 10,343 - 10,343
Other income 50 - 50
Management fees (540) (1,260) (1,800)
Currency gains/(losses) - (4,424) (4,424)
Other expenses (574) - (574)
-------- -------- --------
Net return before finance costs and 9,279 (59,302) (50,023)
taxation
Finance costs of borrowing (555) (1,296) (1,851)
-------- -------- --------
Return on ordinary activities before 8,724 (60,598) (51,874)
taxation
Taxation on ordinary activities (1,377) 860 (517)
-------- -------- --------
Return attributable to equity 7,347 (59,738) (52,391)
shareholders
Ordinary dividends on equity shares (8,944) - (8,944)
-------- -------- --------
Transfer (from)/to reserves (1,597) (59,738) (61,335)
-------- -------- --------
Return per Ordinary share (pence) 8.4 (68.2) (59.8)
Return per Ordinary share assuming full
conversion of the B Ordinary shares 8.3 (67.3) (59.0)
(pence)
MURRAY INTERNATIONAL TRUST PLC
STATEMENT OF TOTAL RETURN (INCORPORATING THE REVENUE ACCOUNT)
Year ended 31 December 2002
(audited)
Revenue Capital Total
£'000 £'000 £'000
Losses on sales - (57,943) (57,943)
Unrealised gains/(losses) - (34,460) (34,460)
-------- -------- --------
Gains/(losses) on investments - (92,403) (92,403)
Income
Income from investments 17,310 - 17,310
Other income 208 - 208
Management fees (1,033) (2,410) (3,443)
Currency gains/(losses) - (4,847) (4,847)
Other expenses (1,226) - (1,226)
-------- -------- --------
Net return before finance costs and 15,259 (99,660) (84,401)
taxation
Finance costs of borrowing (1,067) (2,490) (3,557)
-------- -------- --------
Return on ordinary activities before 14,192 (102,150) (87,958)
taxation
Taxation on ordinary activities (2,141) 1,444 (697)
-------- -------- --------
Return attributable to equity 12,051 (100,706) (88,655)
shareholders
Ordinary dividends on equity (14,052) - (14,052)
shares -------- -------- --------
Transfer (from)/to reserves (2,001) (100,706) (102,707)
-------- -------- --------
Return per Ordinary share (pence) 13.8 (115.5) (101.7)
Return per Ordinary share assuming
full
Conversion of the B Ordinary shares 13.6 (114.0) (100.4)
(pence)
MURRAY INTERNATIONAL TRUST PLC
BALANCE SHEET
At 30 June At 30 June 31 December
2003 2002 2002
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Fixed assets
Investments 402,946 478,681 406,040
--------- --------- ---------
Current assets
Debtors 3,645 3,555 4,374
Cash and short-term 29,530 19,302 4,298
deposits
--------- --------- ---------
33,175 22,857 8,672
Creditors
Amounts falling due within (20,901) (22,596) (18,239)
one year
--------- --------- ---------
Net current assets/ 12,274 261 (9,567)
(liabilities) --------- --------- ---------
Total assets less current 415,220 478,942 396,473
liabilities
Creditors
Amounts falling due after (84,641) (106,660) (87,725)
more than one year
--------- --------- ---------
330,579 372,282 308,748
--------- --------- ---------
Capital and reserves
Equity shareholders interest:
Ordinary called up share 21,890 22,041 21,876
capital
Share premium account 23 23 23
Capital redemption reserve 8,230 8,066 8,230
Capital reserve - realised 283,847 342,684 300,788
Capital reserve - unrealised (10,746) (30,032) (51,265)
Revenue reserve 27,335 29,500 29,096
--------- --------- ---------
330,579 372,282 308,748
--------- --------- ---------
Net asset value per Ordinary
and 'B' Ordinary share (pence) 377.5 422.3 352.8
MURRAY INTERNATIONAL TRUST PLC
CASH FLOW STATEMENT
Six months Six months Year ended 31
ended ended December 2002
30 June 2003 30 June 2002 (audited)
(unaudited) (unaudited)
£'000 £'000 £'000
Operating activities
Investment income 9,408 10,392 17,594
received
Deposit interest 124 43 193
received
Underwriting commission - 10 17
received
Investment management (1,452) (1,267) (3,698)
fees paid
Secretarial fees paid (48) (33) (106)
Cash paid to and on (23) (26) (55)
behalf of Directors
Other cash payments (510) (80) (1,013)
--------- --------- ---------
Net cash inflow from 7,499 9,039 12,932
operating activities
Returns on investment and
servicing of finance
Interest paid (1,545) (1,828) (3,582)
Financial investment
Purchases of (33,411) (48,996) (101,289)
investments
Sales of investments 61,368 81,441 146,178
--------- --------- ---------
Net cash inflow from 27,957 32,445 44,889
financial investment
Equity dividends paid (8,119) (8,311) (14,244)
Net cash inflow before
use of liquid resources --------- --------- ---------
and financing 25,792 31,345 39,995
Financing
Loans repaid - (53,000) (78,000)
Loans received - 50,000 60,000
Repurchase of ordinary (2) (6,548) (8,021)
shares --------- --------- ---------
Net cash outflow from (2) (9,548) (26,021)
financing
--------- --------- ---------
Increase in cash 25,790 21,797 13,974
--------- --------- ---------
MURRAY INTERNATIONAL TRUST PLC
6 months to Year to
30 June 30 June 31 December
2003 2002 2002
Equity shareholders' £330,579,000 £372,282,000 £308,748,000
interest*
Net asset value per 377.5p 422.3p 352.8p
Ordinary share and 'B'
Ordinary share
Cost of Share Buy - £6,004,000 £8,023,000
Backs
* The reduction in Equity Shareholders interests includes the effect of the
share buybacks undertaken during the relevant periods.
Note 1
The number of 'B' ordinary shares converted into ordinary shares on 30 June
2003 was 41,615. The allotted ordinary share capital as of 30 June 2003 was:
£000
86,412,599 Ordinary shares of 25p 21,603
1,147,599 'B' Ordinary shares of 25p 287
Note 2
6 months 6 months
to to Year to
30 June 30 June 31 December
2003 2002 2002
Dividends on ordinary shares £'000 £'000 £'000
Interims of
- 3.45p payable 15.8.03 (2002 - 2,980 3,002 3,002
3.45p)
- 3.45p payable 17.11.03 (2002 - 2,980 3,002 2,992
3.45p)
- 3.45p payable 16.2.04 (2002 - 2,980 3,001 2,980
3.45p)
Final dividend (2002 - 5.95p) - - 5,139
Under/(over) accrual of previous (1) (61) (61)
year's dividends due to share
buybacks
----------- ----------- -----------
8,939 8,944 14,052
----------- ----------- -----------
Note 3
A summary of investment changes during the period and a schedule of the twenty
largest equity investments at 30 June 2003 are attached.
By order of the Board
ABERDEEN ASSET MANAGEMENT PLC, SECRETARY
7 August 2003
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 INTERNATIONAL TRUST PLC
SUMMARY OF INVESTMENT CHANGES
For the six months ended 30 June 2003
Valuation Appreciation Valuation
31 December Transactions (depreciation) 30 June 2003
2002
£'000 % £'000 £'000 £'000 %
Equities
United Kingdom 126,088 31.8 (7,002) 5,002 124,088 29.9
Americas 64,061 16.2 3,185 5,127 72,373 17.4
Europe & Africa 57,043 14.4 851 5,150 63,044 15.2
Japan 31,773 8.0 (103) (177) 31,493 7.6
Middle East,
Far East & 23,914 6.0 734 4,147 28,795 6.9
Australasia -------- ------ --------- --------- ------- -------
302,879 76.4 (2,335) 19,249 319,793 77.0
-------- ------ --------- --------- ------- -------
Fixed income
United Kingdom 64,142 16.2 (22,315) 1,409 43,236 10.4
Europe & Africa 39,019 9.8 (2,658) 3,556 39,917 9.6
-------- ------ --------- --------- ------- -------
103,161 26.0 (24,973) 4,965 83,153 20.0
-------- ------ --------- --------- ------- -------
Other net
assets (9,567) (2.4) 31,079 (9,238) 12,274 3.0
-------- ------ --------- --------- ------- -------
Total Assets* 396,473 100.0 3,771 14,976 415,220 100.0
-------- ------ --------- --------- ------- -------
* Represents total assets less current liabilities
Summary of Net Assets
-----------------------
As at 30 June 2003 Valuation
£000 %
Equities 319,793 96.7
Fixed Income 83,153 25.2
Other Net Assets 12,274 3.7
Borrowings and prior (84,641) (25.6)
capital ------- -------
Equity shareholders' interest 330,579 100.0
======= =======
MURRAY INTERNATIONAL TRUST PLC
TWENTY LARGEST INVESTMENTS
as at 30 June 2003
Investment Valuation % of
Investment Area £'000 Total Assets**
Atrium Underwriting UK 14,106 3.4
GlaxoSmithKline UK 10,946 2.6
BP Amoco UK 10,506 2.5
Shell Transport & Trading UK 10,228 2.5
September 2003 S & P Future USA 9,880 2.4
*Vodafone Group UK 9,097 2.2
*Royal Bank of Scotland UK 7,717 1.9
Group
AstraZeneca UK 6,075 1.5
*Abbey National UK 5,890 1.4
*Barclays UK 5,672 1.4
*Volvo Sweden 5,214 1.3
Petrobras ADR Brazil 4,310 1.0
British American Tobacco UK 3,781 0.9
Sunamerica Inst Funding UK 3,681 0.9
5.375% 7/12/2009
Petrochina China 3,633 0.9
Aviva UK 3,526 0.8
*Daily Mail & General Trust UK 3,485 0.8
HSBC Holdings UK 3,408 0.8
Tenaris Spon ADR Mexico 3,265 0.8
J Sainsbury UK 3,200 0.8
--------- ---------
127,620 30.7
--------- ---------
NOTES
* Holding comprises equity and fixed income securities.
** Represents total assets less current liabilities.
This information is provided by RNS
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