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Murray Income Tst. (MUT)

  Print      Mail a friend       Annual reports

Wednesday 10 September, 2003

Murray Income Tst.

Final Results

Murray Income Trust PLC
10 September 2003



The Directors of Murray Income Trust PLC announce the results, subject to final
audit, for the year ended 30 June 2003.


The UK equity market has enjoyed a good recovery since March, but the last year
as a whole was difficult and disappointing for UK equities. The Net Asset Value
total return for the year ended 30 June 2003 was -15.9%. This compares with the
benchmark FTSE 350 Higher Yield Index return of -11.2% and the FTSE All-Share
Index of -9.7%. At the year end, Murray Income was ranked 15 out of 17 within
the UK Growth and Income sector of Investment Trusts. Attribution analysis shows
that gearing cost 1.6% and stock selection 2.2%. The Manager is confident that
the policy of selecting value companies outside the benchmark will be


In last year's Annual Report, the Board stated its intention to change the
balance between the interim and final dividend payments, by increasing the size
of the first three interim dividends and proposing a corresponding reduction in
the final dividend. Subsequently, the first and second interim dividend were
paid on 17 January 2003 and 16 April 2003, each at the rate of 4.25p per
Ordinary share, with the third interim dividend being paid on 16 July 2003 at
the rate of 4.5p.

The revenue flow from the portfolio continues to remain secure and consequently
the Directors propose a final dividend payment of 4.75p, payable on 31 October
2003 to holders of Ordinary Shares on the register on 3 October 2003, making a
total dividend for the year ended 30 June 2003 of 17.75p. This represents an
increase of 4.4% on the total dividends paid in the previous year. It is worth
noting that dividends have been increased every year for more than 20 years. At
30 June 2003, Murray Income shares yielded 4.3%, which at that time was more
than the redemption yield available on government bonds and much more than the
yield available on cash deposits.

Share Buy Backs

During the year ended 30 June 2003, the Company did not repurchase any Ordinary
shares. The discount, at which the shares traded to their Net Asset Value,
steadily improved from 11.1% to 4.1% and showed few significant fluctuations. At
the Annual General Meeting on 29 October 2003, Shareholders will be asked to
renew the authority to buy back shares for the following twelve months.

At present, any shares that are repurchased have to be immediately cancelled. In
December 2003 regulations are expected to come into force, permitting investment
trusts to buy and hold shares in the Company, with a view to reselling them on
more favourable terms. The Directors are carefully considering this new and
interesting opportunity.

Strategy and Borrowing

Although the portfolio continues to be managed with regard to the structure and
weightings of the benchmark FTSE 350 Higher Yield Index, approximately 20% of
holdings have been in stocks and sectors outside this benchmark. In particular,
the Manager has included shares in the telecommunications, pharmaceuticals, food
producers and beverage sectors which are believed to offer the prospect of good
returns, while also reducing the volatility and risk of a portfolio which tracks
the index.

Bank borrowings, all of which are flexible and short-term, began the year at £31
million, peaked at £40 million and ended the year at £35 million. No costs,
other than interest and commitment commission, were incurred in either drawing
down or repaying any of this debt. Total committed facilities available to the
Company currently amount to £60 million, although the Board has decided to
reduce this to £45 million in October 2003.

Your Board

This year has seen the publication of various reviews that seek to improve
corporate governance and reporting in quoted companies, the most visible of
which has been Derek Higgs' review. Other reviews are ongoing; in July, the AITC
published its Code of Corporate Governance and the FSA's proposed changes to the
listing rules for investment companies are expected shortly.

The Board is determined to remain at the forefront of best practice in looking
after Shareholder interests. It believes that a strong, experienced independent
Board, with the right balance of skills, is a fundamental part of good corporate

Following the sad death of Roger Adams, the Board appointed an independent firm
of consultants to help find a new non-executive Director. Having assessed the
mix of skills within the Board, the consultant was specifically briefed to
identify candidates with a strong legal background. The Board is therefore
delighted to have attracted Marian Glen, Head of Funds and Financial Services at
Edinburgh-based lawyers Shepherd + Wedderburn. Her contribution is greatly
valued and the Board considers that her knowledge and experience of the
financial services industry enhances its combined experience.

The Chairman of the Board, Blaise Hardman, has been a Director of Murray Income
since 1988 and has decided to retire from the Board immediately after the AGM
next year. Early in 2004 the Board will, therefore, again appoint consultants to
help identify a new Director. The Board has also evaluated its options for his
replacement as Chairman. The other non-executives were particularly aware of the
need for continuity, independence from the Manager, and experience and
understanding of the investment trust sector. Patrick Gifford was the Board's
unanimous choice and the Board is pleased to report that he has agreed to
succeed Blaise Hardman as Chairman. Also Adrian Coats agreed to become Chairman
of the Audit Committee from 1 July 2003.


The economy is experiencing modest growth, low interest rates and high levels of
government borrowing. However, the stock market has recovered from the low
levels reached earlier this year, and further gains are likely given the better
background for corporate profits in 2004.

In addition, the relatively high yield of Murray Income shares and the spread of
investments in quality companies offer Shareholders some protection against a
downturn in the market. In the longer term, the Directors firmly believe that a
managed portfolio, based on the chosen benchmark index, will prove to be a
rewarding investment.



for the year ended 30 June 2003

                       Year ended                    Year ended
                      30 June 2003                  30 June 2002
               Revenue   Capital     Total   Revenue   Capital     Total
                 £'000     £'000     £'000     £'000     £'000     £'000

Losses on            -   (74,111)  (74,111)        -   (49,691)  (49,691)
Income from     15,854         -    15,854    15,207         -    15,207
Other income       187         -       187       177         -       177
Investment      (1,210)   (1,210)   (2,420)   (1,324)   (1,324)   (2,648)
Currency             -         -         -         -        (4)       (4)
Other             (865)        -      (865)     (924)      (12)     (936)
expenses        ---------------------------------------------------------

Net return
before finance
costs and       13,966   (75,321)  (61,355)   13,136   (51,031)  (37,895)
Finance costs     (845)     (845)   (1,690)     (497)     (497)     (994)
of borrowing    ---------------------------------------------------------

to equity
Shareholders    13,121   (76,166)  (63,045)   12,639   (51,528)  (38,889)

Ordinary       (12,461)        -   (12,461)  (11,862)        -   (11,862)
dividends on   ---------------------------------------------------------

Transfer to/       660   (76,166)  (75,506)      777   (51,528)  (50,751)
(from)         ---------------------------------------------------------

Return per        18.7    (108.5)    (89.8)     18.0     (73.5)    (55.5)
Ordinary share

Return per
Ordinary share
assuming full
conversion of
the B Ordinary
shares (pence)    18.7    (108.5)    (89.8)     17.9     (73.2)    (55.3)

* The revenue column of this statement is the profit and loss account of
the Company.



as at 30 June 2003

                                         As at              As at
                                      30 June 2003      30 June 2002
                                     £'000     £'000   £'000     £'000

Fixed assets
Investments                                  340,789           415,757

Current assets
Debtors                              1,049             1,708
Cash and overnight deposits          4,652             3,394
                                   -------           -------
                                     5,701             5,102
Amounts falling due within one      36,961             9,824
year                               -------           -------

Net current liabilities                      (31,260)           (4,722)
                                             -------           -------
Total assets less current                    309,529           411,035

Amounts falling due after more than            5,000            31,000
one year                                     -------           -------
                                             304,529           380,035
                                             -------           -------
Capital and reserves
Equity Shareholders' interest:

Ordinary called up share capital              17,551            17,551
Share premium                                  7,955             7,955
Capital redemption reserve                     4,050             4,050
Capital reserve - realised                   266,475           304,032
Capital reserve - unrealised                  (2,803)           35,806
Revenue reserve                               11,301            10,641
                                             -------           -------
                                             304,529           380,035
                                             -------           -------

Net Asset Value per Ordinary share            433.8p            541.3p


for the year ended 30 June 2003

                                    Year ended          Year ended
                                   30 June 2003        30 June 2002

                                 £'000     £'000     £'000     £'000

Operating activities
Investment income received      16,061              15,566
Deposit interest received          164                 168
Underwriting commission             26                  26
Investment management fees      (3,206)             (1,692)

Secretarial fees paid              (63)                (37)

Cash paid to and on behalf of      (51)                (56)

Other cash payments             (1,190)               (370)
Net cash inflow from operating            11,741              13,605

Servicing of finance

Interest paid                   (1,705)             (1,097)
Net cash outflow from servicing           (1,705)             (1,097)
of finance

Financial investment

Purchase of investments        (50,471)            (75,440)

Sale of investments             51,157              91,422

Net cash inflow from financial               686              15,982

Equity dividends paid                    (13,464)            (11,356)

Management of liquid resources

Cash placed on short-term      (3,684)                  -
deposit                        -------------------------------------

Net cash outflow from
of liquid resources                       (3,684)                  -

Net cash (outflow)/inflow                 (6,426)             17,134
before financing


Repurchase of shares                -              (4,359)

Loans drawn down/(repaid)       4,000             (17,000)

Net cash inflow/(outflow) from             4,000             (21,359)
financing                      -------------------------------------

Decrease in cash                          (2,426)             (4,225)



Dividends on Ordinary shares                        2003        2002
                                                   £'000       £'000

First interim of 4.25p (2002 - 3.15p)              2,984         2,199
Second interim of 4.25p (2002 - 3.15p)             2,984         2,195
Third interim of 4.50p (2002 - 3.15p)              3,159         2,195
Proposed final dividend of 4.75p (2002 -           3,334         5,301
Over accrual of previous year's proposed               -           (28)
final dividend due to share buy-backs          ------------------------
                                                  12,461        11,862

The results stated above for the year ended 30 June 2002 are abridged from the
full accounts for that year, which have received an unqualified report from the
Auditors and were filed with the Registrar of Companies.

A summary of investment changes during the year and the twenty largest
investments as at 30 June 2003 are attached.

Copies of this announcement will be available to the public at the registered
office of the Company at 123 St Vincent Street, Glasgow.

The Annual General Meeting will be held on 29 October 2003 at 12.30 p.m.



10 September 2003




                     Valuation                     Appreciation      Valuation
                   30 June 2002     Transactions   (depreciation)  30 June 2003
                 £'000       %          £'000          £'000     £'000       %

United Kingdom
Equities       415,757   101.1           (857)       (74,111)  340,789   100.4
investments    415,757   101.1           (857)       (74,111)  340,789   100.4
Other net 
liabilities     (4,722)   (1.1)         3,462              -    (1,260)   (0.4)
Total assets*  411,035   100.0          2,605        (74,111)  339,529   100.0

* represents total assets less current liabilities after excluding short-term
 loans of £30,000,000 as at 30 June 2003

Summary of net assets                               30 June 2003
                                                   £'000       %
Equities                                         340,789   111.9
Other net liabilities                             (1,260)   (0.4)
Borrowings                                       (35,000)  (11.5)
Equity Shareholders' interest                    304,529   100.0


as at 30 June 2003

                       Sector                 Valuation           % of
Investment             Description                £'000   Total Assets

BP Amoco               Oil & Gas                 42,025           12.4
HSBC Holdings          Banks                     30,072            8.9
Shell Transport &      Oil & Gas                 27,280            8.0
Lloyds TSB             Banks                     16,048            4.7
Barclays               Banks                     14,130            4.2
Royal Bank of          Banks                     13,630            4.0
Aviva                  Life Assurance            10,224            3.0
Diageo                 Beverages                  9,705            2.9
Anglo American         Mining                     8,612            2.5
Rio Tinto              Mining                     8,208            2.4
GlaxoSmithKline        Pharmaceuticals            8,153            2.4
Standard Chartered     Banks                      7,654            2.2
Imperial Tobacco       Tobacco                    6,715            2.0
J Sainsbury            Food & Drug                6,692            2.0
Abbey National         Banks                      6,352            1.9
British American       Tobacco                    6,359            1.9
National Grid          Electricity                6,165            1.8
Scottish & Southern    Electricity                6,077            1.8
Unilever               Food Producers &           5,406            1.6
Great Universal        General Retailers          5,152            1.5
                                                244,659           72.1

                      This information is provided by RNS
            The company news service from the London Stock Exchange