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Murray Intnl Trust (MYI)

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Friday 05 August, 2011

Murray Intnl Trust

Half Yearly Report Announcement

RNS Number : 7959L
Murray International Trust PLC
05 August 2011
 



MURRAY INTERNATIONAL TRUST PLC

 

HALF YEARLY REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2011

 

The Directors of Murray International Trust PLC report the unaudited results of the Company for the six months ended 30 June 2011.

 

INTERIM BOARD REPORT

Background

Financial markets experienced one of the most difficult investment backdrops for many years during the period under review, as geological and political shocks dominated the global financial landscape. Severe flooding in Australia, a sizeable earthquake in New Zealand and the devastating earthquake then tsunami in Japan caused catastrophic physical destruction, enormous loss of life and widespread human suffering. Escalating civil unrest spread throughout the Middle East, while oil prices surged through $100/barrel, Greece and other European states teetered on the brink of bankruptcy, and the United States struggled to control its own unsustainable debt burden.  In spite of these developments, markets in general remained relatively calm over the period, appearing to take the financial implications of these events in their stride.

 

Performance

The net asset value total return, with net income reinvested, for the six months to 30 June 2011 was 3.6% compared with a total return of 2.7% on the Trust's benchmark (40% the FTSE World UK and 60% FTSE World ex UK). Over the six month period the share price rose by 4.9% (capital return), reflecting the move to a slightly wider premium to net asset value on which the shares trade.

 

Absolute and relative performance was attributable to a mix of asset allocation and individual stock contributions.  The large underweight positions to North America and the UK proved negative on an asset allocation basis but this was more than offset by strong stock selection.  Being overweight Asia proved negative both in terms of asset allocation and stock selection whilst Japanese exposure had little influence.  Strong stock selection in Latin America more than offset negative market returns, whilst European exposure also contributed positively albeit less than the broader indices.

 

Income showed a solid increase in the six months compared to that received in the equivalent period last year, primarily due to increased dividends paid by many of our companies.  On 28 April 2011 the Directors announced a first interim dividend of 8.0p per Ordinary share for the current year compared with 6.8p per share last year. Since the end of June a second interim dividend also of 8.0p has been announced and will be paid to shareholders on 15 November 2011.

 

Investment Changes

During the period transaction activity was very muted.  Periods of market strength were used to selectively exit positions in industrial companies which had performed well. Holdings in Rio Tinto, Schlumberger and Amada were sold outright. The proceeds, along with new capital raised through ongoing share issuance, were used to add to existing holdings in Taiwan Mobile, Singapore Telecom, China Mobile and QBE Insurance of Australia, plus Kimberly Clark de Mexico, Vale, Wilson and Petrobras throughout Latin America. As of period end, the proportion of net assets of the Trust invested in equities was 103%, compared to 106% as at 31 December 2010.

 

Directorate

Following the retirement of Mr John Trott at the AGM in April, I am very pleased to advise you of the appointment of Mr Peter Dunscombe as an independent non-executive Director of the Company with effect from 29 April 2011. Mr Dunscombe was appointed following the culmination of a detailed and thorough search process using an external recruitment company. Mr Dunscombe has had a very successful career in the investment world and will bring valuable expertise to the Board. Ms Ella Brown had also been appointed to the Board in April 2011 but tendered her resignation in June 2011 having accepted an executive role abroad.

 

Issue of New Shares

During the period under review the Company issued 3,243,473 new Ordinary shares at a premium to the prevailing net asset value per Ordinary share at the time of each issue. Subsequent to the period end, a further 417,500 new Ordinary shares have been issued. Since the start of the issuance programme, over £153 million of new funds has been raised through the issue of new shares and, by issuing these shares at a premium, the Company is able to enhance slightly the net asset value per share whilst improving the liquidity of its shares.  As previously stated, such issuance is also important for Share Plan Participants and other regular purchasers of the Company's shares because it ensures that the premium is managed and does not become too large. At the AGM of the Company held on 28 April 2011, shareholders authorised the Company to issue new Ordinary shares for cash representing up to 10 per cent. of the issued share capital. The Board will continue to authorise the issue of new shares, at a premium, as and when there is unfulfilled demand in the market and subject to the overriding Listing Rule requirement not to issue more than 10 per cent. of the outstanding equity in any rolling 12 month period.

 

Outlook

Conflict and catastrophe may have dominated the recent financial landscape, but the central issue determining our investment outlook has not changed. The crisis of public sector indebtedness in the developed world remains, in the Board's opinion, the single most powerful factor likely to influence the immediate future. The willingness of many governments to indulge in perpetual bailouts in pursuit of "too big to fail" objectives has left a debt legacy that will last for years. Reduced credit, higher bank deposits and strong liquidity flows into commodities suggest that quantitative easing in the United States and the UK has not so far been successful. This should come as no surprise since economic history clearly shows that debt repayment and deleveraging drives consumer behaviour when deflationary forces begin to bite. This suggests that an economic environment of anaemic growth, declining real incomes and depressed confidence will likely prevail for some considerable time in the developed world until progress on debt reduction becomes evident. However, the picture in many of the developing countries to which the portfolio is significantly exposed continues to be benign by comparison. While positive capital returns could prove difficult to achieve this year given the fragility of sentiment, longer term solid corporate fundamentals combined with decent dividend growth suggest sufficient global investment opportunities exist to fulfil the investment mandate of the portfolio.

 

 

Kevin Carter

Chairman

4 August 2011



Principal Risks and Uncertainties

 

General

An investment in the shares is only suitable for investors who are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses which may arise therefrom (which may be equal to the whole amount invested). Such an investment should be seen as long term in nature and complementary to existing investments in a range of other financial assets.

 

Changes in economic conditions (including, for example, interest rates and rates of inflation), industry conditions, competition, changes in the law, political and diplomatic events and trends, tax laws and other factors can substantially and adversely affect the value of investments and therefore the Company's performance and prospects.

 

Past performance of the Company, and of investments managed by the Manager, are not necessarily indicative of future performance.

 

The Shares

The market value of, and the income derived from, the shares can fluctuate and, notwithstanding the Board's discount and premium control policy, may not always reflect the Net Asset Value per share. There can be no guarantee that any appreciation in the value of the Company's investments will occur and investors may not get back the full value of their investment. No assurance can be given that any sale of the Company's investments would realise proceeds which would be sufficient to repay any borrowings or provide funds for any capital repayment to shareholders. Shareholders will bear the rewards and risks of the success or otherwise of the Company's investments.

 

The market value of the shares, as well as being affected by their Net Asset Value, also takes into account their dividend yield and prevailing interest rates, supply and demand for the shares, market conditions and general investor sentiment.

 

Borrowings

The Company may incur borrowings for investment purposes. Whilst the use of borrowings should enhance the total return on the shares where the return on the Company's underlying assets is rising and exceeds the cost of borrowing, it will have the opposite effect where the underlying return is falling, further reducing the total return on the shares. As a result, the use of borrowings by the Company may increase the volatility of the Net Asset Value and market price per share.

 

There is no guarantee that any borrowings of the Company would be refinanced on their maturity either at all or on terms that are acceptable to the Company.

 

Dividends

The Company will only pay dividends on the Ordinary shares (and a capitalisation issue for B Ordinary shares) to the extent that it has profits (including available reserves) available for that purpose, which will largely depend on the amount of income which the Company receives on its investments and the timing of such receipt. The amount of dividends payable by the Company may fluctuate.

 

If under UK law or accounting rules and standards applicable to the Company, there were to be a change to the basis on which dividends could be paid by companies, this could have a negative effect on the Company's ability to pay dividends.

 

Investment Objective and Strategy

There is no guarantee that the Company's investment objective will be achieved.

 

The Company may from time to time invest in other listed investment companies. As a consequence of these investments, the Company may itself be indirectly exposed to gearing through the borrowings from time to time of these other investment companies. The Company has a policy of not investing more than 15 per cent of its gross assets in other listed investment companies. The Net Asset Value, which is a factor in determining the market value of the shares, will be linked to the underlying share price performance of any such other investment companies.

 

Debt Instruments

The Company invests in fixed interest investments issued by corporate bodies and sovereign issuers. Bonds are subject to credit, liquidity and interest rate risks and in the event of a default there is a risk that the Net Asset Value may be adversely affected. Adverse changes in the financial position of an issuer of bonds or in general economic conditions may impair the ability of the issuer to make payments of principal and interest or may cause the liquidation or insolvency of an issuer. There can be no assurance as to the levels of default and/or recoveries that may be experienced with respect to bonds. Debt instruments held by the Company may be affected by changes in market sentiment or changes in interest rates that will, in turn, result in increases and decreases in the market value of those instruments. When interest rates decline, the value of the Company's investments in fixed rate debt obligations can be expected to rise and, when interest rates rise or are expected to rise, the value of those investments can be expected to decline.

 

To the extent that the Company invests in sub-investment grade securities, the Company may realise a higher yield than the yield offered by investment grade securities, but investment in such securities involves a greater volatility of price and a greater risk of default by the issuers of such securities, with potential loss of interest payment and principal. Sub-investment grade securities will be subject, in the judgment of a ratings agency, to uncertainties in terms of their performance in adverse conditions and will be speculative with respect to an issuer's capacity to meet interest payments and repay principal in accordance with its obligations. There can be no assurance that an issuer will not default or that the Company will be able to recover its investments in defaulted fixed interest debt instruments.

 

As bond investments of the Company mature, it may be difficult for the Company to obtain replacement investments having similar financial characteristics.

 

Market Price Risk

The fair value of equity and other financial securities held in the Company's portfolio fluctuates with changes in market prices. Prices are themselves affected by movements in currencies and interest rates and by other financial issues including the market perception of future risks.

 

Foreign Currency Risks

The Company's investments are principally in overseas securities. The Company accounts for its activities and reports its results in pounds sterling. The Company currently hedges most of the foreign currency exposure in respect of the liabilities attached to its borrowings. Where the Company does not hedge its currency exposure, which is currently the case with the investment portfolio, the movement of exchange rates may have a favourable or unfavourable effect on the gains and losses experienced on investments which are made or realised in currencies other than pounds sterling.

 

Charges to Capital

The Company currently deducts part of the management charge from capital. This increases distributable income at the expense of capital growth, which will either be eroded or constrained. The maintenance of a high level of dividend may also diminish capital values.

 

Discount and Premium Control Policy

The Company operates a discount and premium control policy. The operation of the discount control element of this policy could lead to a significant reduction in the size of the Company over time, which would increase the Company's total expense ratio and prejudice the ability of the Company to pay satisfactory levels of dividend to shareholders. While the Company intends to issue new shares and to resell shares held in treasury at a small premium to the Net Asset Value per share where demand exceeds supply, this will be dependent upon the Company being able to issue new shares and to resell shares held in treasury at a premium, on market conditions generally at the relevant time, upon shareholders in general meeting conferring appropriate authorities on the Board to issue further shares and, where required under the Prospectus Rules, upon a prospectus having been approved by the Financial Services Authority and published. The ability of the Company to operate a discount control policy will depend on the Company being able to purchase its own shares, which will be dependent upon shareholders in general meeting conferring authority on the Board to purchase its own shares. The Directors will seek renewal of this authority from shareholders annually and at other times should this prove necessary. However, there can be no guarantee that requisite shareholder approvals will be obtained.

 

In accordance with the Listing Rules, the extent of each buyback authority which will be sought by the Company from shareholders in general meeting will be limited to 14.99 per cent, of the Company's issued share capital as at the date on which such authority is granted. In order to continue purchasing its own shares once any such authority has been exhausted, the Company would be required to seek a renewal of such authority from shareholders in general meeting.

 

The ability of the Company to purchase its own shares will be subject to the Act and all other applicable legislation, rules and regulations of any government, regulatory body or market applicable to the Directors or the Company and, in particular, will be dependent on the availability of distributable reserves.

 

Cessation of Investment Trust Status

The Company attempts to conduct its business so as to satisfy the conditions for approval as an investment trust under Part 24 Chapter 4 of the Corporation Tax Act 2010. In respect of each accounting period for which approval is granted, the Company will be exempt from United Kingdom taxation on its capital gains. Any breach of the tests that a company must meet to obtain approval as an investment trust company could lead to the Company being subject to tax on capital gains.

 

Tax and Accounting

Any change in the Company's tax status or in taxation legislation or accounting practice could affect the value of the investments held by the Company, affect the Company's ability to provide returns to shareholders or alter the post-tax returns to shareholders. Representations in this Report concerning the taxation of investors are based upon current tax law and practice which are subject to change. Any change in accounting standards may adversely affect the value of the Company's assets in its books of account or restrict the ability of the Company to pay dividends.

 

Regulatory

It is expected that the recently agreed Alternative Investment Fund Managers Directive will enter into force in 2013. The Directive may have significant consequences for the Company (and all similar investment companies) which might materially increase compliance and regulatory costs. The Directive is subject to further implementation measures, and the Board will continue to monitor the progress and likely implications of the Directive.

 

The performance of the Company is dependent upon the Manager's expertise in pursuing the investment policy and upon the Manager's key personnel

The ability of the Company to successfully pursue its investment policy is significantly dependent upon the expertise of the Manager and the principal members of its management team. The Company does not currently have employees or own any facilities and depends on the Manager for the day to day management and operation of its business. The loss of any of the Manager's management team could reduce the Company's ability to pursue successfully its planned investment policy.

 

The Company has no employees and is reliant on the performance of third party service providers

The Company has no employees and the Directors have all been appointed on a non executive basis. The Company is therefore reliant upon the performance of third party service providers for its executive function. In particular, the Manager and the Secretary will be performing services which are integral to the operation of the Company. The failure by any service provider to carry out its obligations to the Company in accordance with the terms of its appointment could have a materially detrimental impact on the operation of the Company and could affect the ability of the Company to pursue successfully its investment policy.

 

The Company may experience fluctuations in its operating results

The Company may experience fluctuations in its operating results from period to period due to a number of factors, including changes in the values of investments made by the Company, changes in the amount of distributions, dividends or interest paid in respect of investments in the portfolio, changes in the Company's operating expenses, and general economic and market conditions. Such variability may lead to volatility in the market price of the shares and cause the Company's results for a particular period not to be indicative of its performance in a future period.

 

Related Party Transactions

Aberdeen Asset Managers Limited acts as 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 Annual Report for 2010 a copy of which is available on the Company's website.

 

Going Concern

The Company's assets consist of a diverse portfolio of listed equities and bonds which in most circumstances, are realisable within a very short timescale. The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

 

Directors' Responsibility Statement

The Directors are responsible for preparing this 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 contained within the Half-Yearly Financial Report has been prepared in accordance with the Accounting Standards Board's Statement "Half Yearly Financial Reports"; and,

 

· the Interim Board Report (constituting the interim management report) includes a fair review of the information required by rule 4.2.7R of the UK Listing Authority 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 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 so do).

 

The Half-Yearly Report for the six months to 30 June 2011 comprises the Interim Board Report and a condensed set of financial statements, and has not been audited or reviewed by the auditors pursuant to the Auditing Practices Board guidance on Review of Interim Financial Information.

 

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

 

 

Kevin Carter

Chairman

4 August 2011



INCOME STATEMENT

 



Six months ended



30 June 2011




 (unaudited)




Revenue

Capital

Total


Note

£'000

£'000

£'000

Gains on investments


                  -

              11,781

             11,781






Income

3

        32,020

                        -

             32,020

Investment management fees


            (771)

               (1,798)

              (2,569)

Performance fees


                  -

                  (777)

                 (777)

VAT recoverable on investment management and performance fees


                  -

                        -

                       -

Other expenses


            (893)

                        -

                 (893)

Currency losses


                  -

                  (145)

                 (145)

Net return before finance costs and taxation


        30,356

                9,061

             39,417






Finance costs


            (605)

               (1,410)

              (2,015)

Return on ordinary activities before tax


        29,751

                7,651

             37,402






Tax on ordinary activities


         (2,555)

                   461

              (2,094)

Return attributable to equity shareholders


        27,196

                8,112

             35,308











Return per Ordinary share (pence)

5

26.0

                    7.7

                 33.7

Return per Ordinary share assuming full conversion of the B Ordinary shares (pence)

5

25.8

                    7.7

                 33.5






The total column of the Income Statement is the profit and loss account of the Company.

A Statement of Total Recognised Gains and Losses has not been prepared as all gains or losses are recognised in the Income Statement.

All revenue and capital items in the above statement derive from continuing operations.






Ordinary dividends on equity shares (£'000)

4

        21,778

                        -

             21,778

 

The above dividend information does not form part of the Income Statement.

 



INCOME STATEMENT (Cont'd)

 



Six months ended



30 June 2010




 (unaudited)




Revenue

Capital

Total


Note

£'000

£'000

£'000

Gains on investments


                -

        12,702

        12,702






Income

3

      24,895

                 -

        24,895

Investment management fees


          (601)

        (1,401)

        (2,002)

Performance fees


                -

        (3,546)

        (3,546)

VAT recoverable on investment management and performance fees


           108

             252

             360

Other expenses


          (785)

                 -

           (785)

Currency losses


                -

        (1,142)

        (1,142)

Net return before finance costs and taxation


      23,617

          6,865

        30,482






Finance costs


          (668)

        (1,558)

        (2,226)

Return on ordinary activities before tax


      22,949

          5,307

        28,256






Tax on ordinary activities


       (2,610)

             929

        (1,681)

Return attributable to equity shareholders


      20,339

          6,236

        26,575











Return per Ordinary share (pence)

5

20.9

              6.4

            27.3

Return per Ordinary share assuming full conversion of the B Ordinary shares (pence)

5

20.6

              6.3

            26.9






The total column of the Income Statement is the profit and loss account of the Company.

A Statement of Total Recognised Gains and Losses has not been prepared as all gains or losses are recognised in the Income Statement.

All revenue and capital items in the above statement derive from continuing operations.






Ordinary dividends on equity shares (£'000)

4

      15,296

                  -

        15,296

 

The above dividend information does not form part of the Income Statement.

 

 

 

INCOME STATEMENT (Cont'd)

 



Year ended



31 December 2010




 (audited)




Revenue

Capital

Total


Note

£'000

£'000

£'000

Gains on investments


                -

        157,813

       157,813






Income

3

      46,607

 -

         46,607

Investment management fees


       (1,294)

           (3,018)

         (4,312)

Performance fees


                -

           (3,945)

         (3,945)

VAT recoverable on investment management and performance fees


        1,007

            1,458

           2,465

Other expenses


       (1,645)

 -

         (1,645)

Currency losses


                -

           (1,681)

         (1,681)

Net return before finance costs and taxation


      44,675

        150,627

       195,302






Finance costs


       (1,286)

           (3,002)

         (4,288)

Return on ordinary activities before tax


      43,389

        147,625

       191,014






Tax on ordinary activities


       (4,881)

            2,019

         (2,862)

Return attributable to equity shareholders


      38,508

        149,644

       188,152











Return per Ordinary share (pence)

5

38.6

            150.0

           188.6

Return per Ordinary share assuming full conversion of the B Ordinary shares (pence)

5

38.2

            148.5

           186.7






The total column of the Income Statement is the profit and loss account of the Company.

A Statement of Total Recognised Gains and Losses has not been prepared as all gains or losses are recognised in the Income Statement.

All revenue and capital items in the above statement derive from continuing operations.






Ordinary dividends on equity shares (£'000)

4

      29,062

                    -

         29,062

 

The above dividend information does not form part of the Income Statement.

 

 



BALANCE SHEET

 



As at

As at



30 June 2011

31 December 2010



(unaudited)

(audited)


Notes

£'000

£'000

£'000

Non-current assets




Investments at fair value through profit or loss


1,150,625

928,798

1,119,500





Current assets




Debtors


10,546

10,659

Cash and short-term deposits


17,650

29,102

10,765



28,196

34,602

21,424





Creditors: amounts falling due within one year




Other creditors


(5,938)

(6,577)

Net current assets


22,258

27,595

14,847

Total assets less current liabilities


1,172,883

1,134,347





Creditors: amounts falling due after more than one year




Bank loans and debentures


(158,459)

(161,792)

Other creditors


(3,232)

(4,879)



(161,691)

(159,769)

(166,671)

Net assets


1,011,192

796,624

967,676





Capital and reserves




Called-up share capital


26,815

25,999

Share premium account


144,647

115,472

Capital redemption reserve


8,230

8,230

Capital reserve

6

771,138

763,031

Revenue reserve


60,362

54,944

Equity shareholders' funds


1,011,192

796,624

967,676









Net asset value per Ordinary and B Ordinary share (pence)

7

942.7

930.5



RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

 

Six months ended 30 June 2011 (unaudited)

 











Share

Capital





Share

premium

redemption

Capital

Revenue



capital

account

reserve

reserve

reserve

Total


£'000

£'000

£'000

£'000

£'000

£'000

Balance at 31 December 2010

25,999

115,472

8,230

763,031

54,944

967,676

Return on ordinary activities after taxation

-

-

-

8,112

27,196

35,308

Dividends paid (see note 4)

-

-

-

-

(21,778)

(21,778)

Issue of new shares

816

29,175

-

(5)

-

29,986

Balance at 30 June 2011

26,815

144,647

8,230

771,138

60,362

1,011,192








Six months ended 30 June 2010 (unaudited)











Share

Capital





Share

premium

redemption

Capital

Revenue



capital

account

reserve

reserve

reserve

Total


£'000

£'000

£'000

£'000

£'000

£'000

Balance at 31 December 2009

23,996

50,693

8,230

613,396

45,498

741,813

Return on ordinary activities after taxation

-

-

-

6,236

20,339

26,575

Dividends paid (see note 4)

-

-

-

-

(15,296)

(15,296)

Issue of new shares

1,326

42,212

-

(6)

-

43,532

Balance at 30 June 2010

25,322

92,905

8,230

619,626

50,541

796,624








Year ended 31 December 2010 (audited)












Share

Capital





Share

premium

redemption

Capital

Revenue



capital

account

reserve

reserve

reserve

Total


£'000

£'000

£'000

£'000

£'000

£'000

Balance at 31 December 2009

23,996

50,693

8,230

613,396

45,498

741,813

Return on ordinary activities after taxation

-

-

-

149,644

38,508

188,152

Dividends paid (see note 4)

-

-

-

-

(29,062)

(29,062)

Issue of new shares

2,003

64,779

-

(9)

-

66,773

Balance at 31 December 2010

25,999

115,472

8,230

763,031

54,944

967,676



CASH FLOW STATEMENT

 


Six months ended

Six months ended

Year ended


30 June
 2011

30 June 2010

31 December 2010


(unaudited)

(unaudited)

(audited)


£'000

£'000

£'000

Net return before finance costs and taxation

39,417

30,482

195,302

Adjustments for:




Gains on investments

(11,781)

(12,702)

(157,813)

Effect of foreign exchange losses

145

1,142

1,681

Amortisation of fixed income book cost

(429)

(656)

(1,078)

Increase in accrued income

(1,297)

(1,406)

(2,819)

(Increase)/decrease in other debtors

(2,040)

1,057

1,419

Increase in accruals

204

13

239

Tax on unfranked income - overseas

(2,639)

(2,053)

(2,963)

Net cash inflow from operating activities

21,580

15,877

33,968





Returns on investment and servicing of finance




Interest paid

(2,035)

(2,462)

(4,506)

Net cash outflow from servicing of finance

(2,035)

(2,462)

(4,506)





Corporation tax paid

                                 -

                           (714)

(712)





Financial investment




Purchases of investments

(104,298)

(118,604)

(211,140)

Sales of investments

                        85,384

                        63,270

110,637

Net cash outflow from financial investment

(18,914)

(55,334)

(100,503)





Equity dividends paid

(21,778)

(15,296)

(29,062)

Net cash outflow before financing

(21,147)

(57,929)

(100,815)





Financing




Share issue

29,986

                        43,532

                      66,773

Net cash inflow from financing

                        29,986

                        43,532

                      66,773

Increase/(decrease) in cash   

8,839

(14,397)

(34,042)









Analysis of changes in cash during the period




Opening balance

10,765

28,255

28,255

Increase/(decrease) in cash as above

8,839

(14,397)

(34,042)

Currency differences

(1,954)

15,244

16,552

Closing balances

17,650

29,102

10,765



NOTES TO THE ACCOUNTS

 

1.

Accounting policies

(a)

Basis of accounting

The financial statements have been prepared in accordance with applicable UK Accounting Standards, with pronouncements on Half-Yearly Reporting issued by the Accounting Standards Board 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.

The financial statements and the net asset value per share figures have been prepared in accordance with UK Generally Accepted Accounting Practice (UK GAAP).

The interim accounts have been prepared using the same accounting policies as the preceding annual accounts.

(b)

Dividends payable

Dividends are recognised in the period in which they are paid.

 

 

2.

Taxation

The taxation expense reflected in the Income Statement 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 2011 is an effective rate of 26.5%. This is above the corporation tax rate of 26% due to the change in the corporation tax rate from 28% to 26% on 1 April 2011.

 

 

Six months ended

Six months ended

Year ended

30 June 2011

30 June 2010

31 December 2010

3.

Income

£'000

£'000

£'000

Income from investments

UK dividends

4,597

3,641

5,990

UK unfranked investment income

672

661

1,351

Overseas dividends

23,827

17,272

31,525

Overseas interest

2,916

3,313

6,115

32,012

24,887

44,981

Interest

Deposit interest

4

8

13

Interest from HMRC (see note 9)

4

-

1,613

8

8

1,626

Total income

32,020

24,895

46,607

 

 

Six months ended

Six months ended

Year ended

30 June 2011

30 June 2010

31 December 2010

4.

Ordinary dividends on equity shares

£'000

£'000

£'000

Third interim dividend 2010 of 6.80p (2009 - 5.60p)

7,015

5,314

5,314

Final dividend 2010 of 11.60p (2009 - 10.20p)

12,145

9,990

9,990

Special dividend 2010 of 2.50p (2009 - nil)

2,618

-

-

First interim dividend 2010 of 6.80p

-

-

6,832

Second interim dividend 2010 of 6.80p

-

-

6,934

Return of unclaimed dividends from previous periods

-

(8)

(8)

21,778

15,296

29,062

A first interim dividend for 2011 of 8.00p (2010 - 6.80p) will be paid on 16 August 2011 to shareholders on the register on 15 July 2011. The ex-dividend date was 13 July 2011.

A second interim dividend for 2011 of 8.00p (2010 - 6.80p) will be paid on 15 November 2011 to shareholders on the register on 14 October 2011. The ex-dividend date is 12 October 2011.

In accordance with the terms of the Articles of Association of the Company the Directors will resolve to make bonus issues of B Ordinary shares to B Ordinary shareholders which correspond to the first and second interim dividends.

 

 

Six months ended

Six months ended

Year ended

30 June 2011

30 June 2010

31 December 2010

5.

Returns per share

£'000

£'000

£'000

Based on the following figures:

Revenue return

27,196

20,339

38,508

Capital return

8,112

6,236

149,644

Total return

35,308

26,575

188,152

Weighted average number of Ordinary shares

104,636,880

97,524,193

99,783,138

Weighted average number of B Ordinary shares

842,019

1,097,431

967,842

Weighted average number of Ordinary shares assuming conversion of B Ordinary shares

105,478,899

98,621,624

100,750,980

 

 

6.

Capital reserves

The capital reserve reflected in the Balance Sheet at 30 June 2011 includes gains of £374,616,000 (30 June 2010 - gains of £248,606,000; 31 December 2010 - gains of £384,102,000) which relate to the revaluation of investments held at the reporting date.

 

 

7.

Diluted net asset value

The diluted net asset value per share and the net asset value attributable to the Ordinary shares (including conversion of the B Ordinary shares) at the period end calculated in accordance with the Articles of Association were as follows:

As at

As at

As at

30 June 2011

30 June 2010

31 December 2010

Attributable net assets (£'000)

1,011,192

796,624

967,676

Number of shares in issue:

Ordinary shares

106,408,326

100,188,235

103,162,856

B Ordinary shares

851,743

1,098,997

833,912

107,260,069

101,287,232

103,996,768

 

 

8.

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 Income Statement. The total costs were as follows:   

 

Six months ended

Six months ended

Year ended

30 June 2011

30 June 2010

31 December 2010

£'000

£'000

£'000

Purchases

249

443

358

Sales

133

65

112

382

508

470

 

 

9.

VAT on management and performance fees

On 5 November 2007, the European Court of Justice ruled that management fees should be exempt from VAT. HMRC announced its intention not to appeal against this case to the UK VAT Tribunal and therefore protective claims which have been made in relation to the Company have now been processed by HMRC.

The VAT charged on the investment management fees has been refunded in stages. An amount of £1,337,000 relating to the period 1 January 2004 to 30 September 2007 was recognised in the financial statements for the year to 31 December 2008. Further amounts of £1,643,000 and £822,000, were recognised in the financial statements for the year to 31 December 2010 which represented VAT charged on investment management fees for the periods 1 January 1990 to 3 December 1996 and 1 January 2001 to 31 December 2003, respectively. These repayments were allocated to revenue and capital in line with the accounting policy of the Company for the periods in which the VAT was charged.

An interest debtor of £1,613,000 relating to these reclaims was recognised in the financial statements for the year ended 31 December 2010, with £1,617,000 being received in the current year.

 

 

10.

The financial information in this report comprises non-statutory accounts as defined in Sections 434-436 of the Companies Act 2006. The financial information for the year ended 31 December 2010 has been extracted from published accounts that have been delivered to the Registrar of Companies and on which the report of the auditors was unqualified under Section 498 (2), (3) and (4) of the Companies Act 2006.

 

 

11.

This Half-Yearly Report was approved by the Board on 4 August 2011.

 

 

A summary of investment changes for the six months to 30 June 2011, a summary of net assets as at 30 June 2011 and a schedule of the fifty largest investments as at 30 June 2011 are attached.

 

 

The Half Yearly Report will be printed and issued to shareholders and further copies will be available to the public at the registered office of the Company, 40 Princes Street, Edinburgh EH2 2BY and on the Company's web site www.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

4 August 2011

 

 

SUMMARY OF INVESTMENT CHANGES

 

               Valuation

Appreciation/

         Valuation

            30 June 2011

(depreciation)

Transactions

    31 December 2010

£'000

%

£'000

£'000

£'000

%

Equities

United Kingdom

170,991

14.6

5,515

5,456

160,020

14.1

North America

78,988

6.7

7,314

(12,206)

83,880

7.4

Europe ex UK

193,630

16.5

1,389

(8,098)

200,339

17.6

Japan

61,411

5.2

(1,208)

(5,486)

68,105

5.9

Asia Pacific ex Japan

307,803

26.2

(3,018)

5,342

305,479

27.1

Latin America

228,115

19.5

3,251

14,369

210,495

18.6

1,040,938

88.7

13,243

(623)

1,028,318

90.7

Fixed income

United Kingdom

37,827

3.2

(201)

195

37,833

3.3

Europe ex UK

11,352

1.0

(1,349)

721

11,980

1.1

Asia Pacific ex Japan

12,382

1.1

724

7

11,651

1.0

Latin America

48,126

4.1

(636)

19,044

29,718

2.6

109,687

9.4

(1,462)

19,967

91,182

8.0

Other net assets

22,258

1.9

7,411

-

14,847

1.3

Total assets

1,172,883

100.0

19,192

19,344

1,134,347

100.0

 

 

SUMMARY OF NET ASSETS

                         Valuation

                         Valuation

                         30 June 2011

                         30 June 2010

£'000

%

£'000

%

Equities

1,040,938

102.9

830,735

104.3

Fixed income

109,687

10.9

98,063

12.3

Other net assets

22,258

2.2

27,595

3.5

Prior charges

(158,459)

(15.7)

(155,189)

(19.5)

Other long term liabilities

(3,232)

(0.3)

(4,580)

(0.6)

Equity shareholders' funds

1,011,192

100.0

796,624

100.0



INVESTMENT PORTFOLIO

AS AT 30 JUNE 2011

 

Valuation

Total assets

Security

Country

£'000

%

British American Tobacco [A]

UK & Malaysia

48,298

4.1

Souza Cruz

Brazil

44,343

3.8

Unilever Indonesia

Indonesia

34,632

3.0

Vale [B]

Brazil & USA

33,984

2.9

Petrobras ADR [C]

Brazil

28,698

2.5

Aeroportuario del Sureste ADS

Mexico

27,534

2.4

Taiwan Mobile

Taiwan

26,960

2.3

Standard Chartered

UK

26,208

2.2

Weir Group

UK

26,038

2.2

Banco Bradesco [D]

Brazil

25,910

2.2

Top ten investments

322,605

27.6

Tenaris ADR

Mexico

25,608

2.2

QBE Insurance Group

Australia

25,062

2.1

Kimberly Clark de Mexico

Mexico

24,948

2.1

PTT Exploration and Production

Thailand

24,195

2.1

Philip Morris International

USA

23,280

2.0

Nordea

Sweden

22,135

1.9

PetroChina

China

21,786

1.9

Telus

Canada

21,575

1.8

Taiwan Semiconductor Manufacturing

Taiwan

21,543

1.8

Telecomunicacoes de Sao Paulo

Brazil

21,423

1.8

Top twenty investments

554,160

47.3

Singapore Telecommunications

Singapore

21,417

1.8

Wing Hang Bank

Hong Kong

19,369

1.7

Royal Dutch Shell

UK

19,238

1.6

Public Bank

Malaysia

19,147

1.6

China Mobile

China

19,006

1.6

Casino

France

18,005

1.5

Kraft Foods

USA

17,989

1.5

Roche Holdings

Switzerland

17,669

1.5

Canon

Japan

17,608

1.5

Zurich Financial Services

Switzerland

17,135

1.5

Top thirty investments

740,743

63.1

Centrica

UK

16,812

1.4

Daito Trust Construction

Japan

16,783

1.4

Total

France

16,728

1.4

Hindustan Unilever

India

16,628

1.4

Nestlé

Switzerland

16,218

1.4

Johnson & Johnson

USA

16,145

1.4

Swire Pacific B

Hong Kong

15,994

1.4

ENI

Italy

15,732

1.3

Novartis

Switzerland

15,605

1.3

Mapfre

Spain

15,229

1.3

Top forty investments

902,617

76.8

Wilson & Sons

Brazil

14,952

1.3

Takeda Pharmaceutical

Japan

14,307

1.2

Belgacom

Belgium

14,102

1.2

Vodafone Group

UK

13,885

1.2

AstraZeneca

UK

13,675

1.2

HSBC

UK

12,844

1.1

Astellas Pharmaceutical

Japan

12,713

1.1

Metro

Germany

12,540

1.1

GDF Suez

France

12,534

1.1

Republic of Indonesia [E]

Indonesia

12,383

1.1

Top fifty investments

1,036,552

88.4

Other investments

114,073

9.7

Total investments

1,150,625

98.1

Net current assets

22,258

1.9

Total assets

1,172,883

100.0





A Holding comprises equity holdings in both UK and Malaysia split £30,041,000 and £18,257,000 respectively.

B Holding comprises equity and fixed income securities, split £24,516,000 and £9,468,000 respectively.

C Holding comprises equity and fixed income securities, split £24,859,000 and £3,839,000 respectively.

D Holding comprises equity and fixed income securities, split £17,102,000 and £8,808,000 respectively.

E Holding comprises two fixed income securities, split £6,273,000 (9.5% 15/07/23) and £6,110,000 (10% 15/02/28).

 


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