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Murray Income Tst. (MUT)

  Print      Mail a friend       Annual reports

Thursday 06 February, 2003

Murray Income Tst.

Interim Results

Murray Income Trust PLC
06 February 2003

Murray Income Trust PLC

Results for the six months ended 31 December 2002

The Directors of Murray Income Trust PLC report the unaudited interim results
for the six months ended 31 December 2002.

Key Facts

  • Murray Income's total return, on a Net Asset Value basis, was -19.8%,
    which compares with the benchmark return of -16.2% and the return on the
    FTSE All Share Index of

  • Second interim dividend of 4.25p.


The UK stockmarket performed very poorly during the six month period ending on
31 December 2002 and the benchmark FTSE 350 Higher Yield Index fell 16.2%. The
Net Asset Value Total Return of Murray Income (including net dividends) fell
19.8%. The major element of underperformance was accounted for by the impact of
the Company's gearing.


Consumer spending continued to grow in the second half of 2002, as the strong
housing market supported retail sales. The increase in public expenditure is
also sustaining economic activity although output from the manufacturing sector
continued to struggle. Short-term interest rates have now remained unchanged at
4.0% for over a year. The higher yielding shares of the FTSE 350 Higher Yield
Index modestly underperformed the broader market indices over the latest six
month period. This follows a period of strong performance relative to the FTSE
All-Share Index, which lasted for over two years.


During the period, turnover was at a relatively low level with modest net
purchases of approximately £5m. Most of this activity involved adding to
existing holdings, across a range of sectors including oil & gas, banks, life
assurance and chemicals. There was an overall reduction in the number of
holdings within the portfolio, as certain smaller holdings were sold.


The level of borrowings was increased from £31 million to £40 million during the
period, representing gearing of 13.4% of net assets at 31 December 2002. This
reflected the Manager's confidence in the medium term outlook for the UK equity

The Board has currently set a gearing limit of 15% of net assets. All the
borrowings are short-term and may be repaid without penalty within one month and
have a cost of 4.45%.


The first interim dividend of 4.25p per share has already been paid and the
second will be paid on 16 April 2003 to holders of Ordinary shares on the
register at close of business on 21 March 2003. It is anticipated that the third
interim dividend will also be at the rate of 4.25p per share. This is in line
with the intention of the Directors to change the balance between the three
interim and final dividend payments. The interim payments for the current year
are therefore significantly greater than the equivalent payments of 3.15p last
year. There will however be a corresponding reduction in the final dividend. The
revenue flow from the Company's portfolio remains secure and the Directors
expect to be able to recommend an increase in the total dividend payment from
last year's level of 17.0p. This level of dividend is expected to be fully
covered by earnings and the Company's revenue reserves remain substantial.


Economic growth in the UK is forecast to be around its trend level of 2.5% in
2003, supported by the increasing level of public expenditure. The consumer
sector has enjoyed a long period of growth and this is expected to ease, and the
more subdued levels of sales for retailers over Christmas may be the start of a
trend. The current level of short term interest rates, 4%, look likely to be
maintained for several more months.

Elsewhere, the US economic recovery continues, but the outlook for some European
economies, particularly Germany, is difficult. In the short term stockmarkets
are concerned about the impact of a possible war in Iraq, but beyond this the
current low valuation of the UK equity market offers attractive opportunities
for investors to benefit from income and capital growth.

for the six months ended 31 December 2002 (unaudited)
                                                            Six months to 31 December 2002
                                                              Revenue      Capital        Total
                                                                £'000        £'000        £'000
(Losses)/ gains on investments                                      -     (19,054)     (19,054)
Unrealised losses                                                   -     (60,191)     (60,191)
Losses on investments                                               -     (79,245)     (79,245)
Income from investments                                         7,265            -        7,265
Other income                                                       80            -           80
Investment management fees                                      (618)        (618)      (1,236)
Currency losses                                                     -            -            -
Other expenses                                                  (419)            -        (419)
Net return before finance costs and taxation                    6,308     (79,863)     (73,555)
Finance costs of borrowing                                      (448)        (448)        (896)
Return attributable to equity shareholders                      5,860     (80,311)     (74,451)
Ordinary dividends on equity shares                           (5,967)            -      (5,967)
Transfer (from) /to reserves                                    (107)     (80,311)     (80,418)
Return per ordinary share (pence)                                 8.4      (114.4)      (106.0)
Return per ordinary share assuming
conversion of the 'B' ordinary shares (pence)                       -            -            -


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

2.     The results for the year to 30 June 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.

for the six months ended 31 December 2002 (unaudited)
                                                                     Six months to 31 December 2001
                                                                      Revenue        Capital         Total
                                                                        £'000          £'000         £'000
(Losses)/ gains on investments                                              -          9,864         9,864
Unrealised losses                                                           -       (42,494)      (42,494)
Losses on investments                                                       -       (32,630)      (32,630)
Income from investments                                                 6,420              -         6,420
Other income                                                              115              -           115
Investment management fees                                              (671)          (671)       (1,342)
Currency losses                                                             -            (4)           (4)
Other expenses                                                          (406)              -         (406)
Net return before finance costs and taxation                            5,458       (33,305)      (27,847)
Finance costs of borrowing                                              (248)          (247)         (495)
Return attributable to equity shareholders                              5,210       (33,552)      (28,342)
Ordinary dividends on equity shares                                   (6,568)              -       (6,568)
Transfer (from) /to reserves                                          (1,358)       (33,552)      (34,910)
Return per ordinary share (pence)                                         7.4         (47.8)        (40.4)
Return per ordinary share assuming conversion of the 'B'
ordinary shares (pence)                                                   7.4         (47.5)        (40.1)

for the six months ended 31 December 2002 (unaudited)
                                                                        Year ended 30 June 2002
                                                                      Revenue       Capital         Total
                                                                        £'000         £'000         £'000
(Losses)/ gains on investments                                              -         1,574         1,574
Unrealised losses                                                           -      (51,265)      (51,265)
Losses on investments                                                       -      (49,691)      (49,691)
Income from investments                                                15,207             -        15,207
Other income                                                              177             -           177
Investment management fees                                            (1,324)       (1,324)       (2,648)
Currency losses                                                             -           (4)           (4)
Other expenses                                                          (924)          (12)         (936)
Net return before finance costs and taxation                           13,136      (51,031)      (37,895)
Finance costs of borrowing                                              (497)         (497)         (994)
Return attributable to equity shareholders                             12,639      (51,528)      (38,889)
Ordinary dividends on equity shares                                  (11,862)             -      (11,862)
Transfer (from) /to reserves                                              777      (51,528)      (50,751)
Return per ordinary share (pence)                                        18.0        (73.5)        (55.5)
Return per ordinary share assuming conversion of the 'B'
ordinary shares (pence)                                                  17.9        (73.2)        (55.3)

as at 31 December 2002 (unaudited)
                                                        31 December 31 December              30 June
                                                               2002            2001             2002
                                                              £'000           £'000            £'000
Fixed assets
Investments                                                 340,955         411,800          415,757
Current assets
Debtors                                                       1,624             962            1,708
Cash and short term deposits                                  3,853             896            3,394
                                                              5,477           1,858            5,102
Amounts falling due within one year                          16,815           7,270            9,824
Net current liabilities                                    (11,338)         (5,412)          (4,722)
Total assets less current liabilities                       329,617         406,388          411,035
Amounts falling due after more than one year                 30,000          10,000           31,000
                                                            299,617 396,388                  380,035
Capital and reserves
Equity shareholders' interest:
ordinary called up share capital                             17,551          17,576           17,551
share premium account                                         7,955           7,955            7,955
redemption reserve                                            4,050           4,025            4,050
capital reserve - realised                                  283,912         313,749          304,032
capital reserve - unrealised                               (24,385)          44,577           35,806
revenue reserve                                              10,534           8,506           10,641
                                                            299,617         396,388          380,035
Net asset value per ordinary and
'B' ordinary share (pence) *                                  426.8           563.8            541.3

* The comparative figure for 2001 includes B ordinary shares in issue at 31

2001. At 30 June 2002 and 31 December 2002 there where no B ordinary shares in

following the conversion during the year.

For the six months ended 31 December 2002 (unaudited)
                                                                        Six months to     Six months to       Year ended
                                                                     31 December 2002  31 December 2001          30 June

                                                                                £'000             £'000            £'000
Operating activities
Investment income received                                                      7,341             7,134           15,566
Deposit interest received                                                          56               133              168
Underwriting commission received                                                   27                 -               26
Investment management fees paid                                               (1,669)             (912)          (1,692)
Secretarial fees paid                                                            (42)              (19)             (37)
Cash paid to and on behalf of directors                                          (27)              (31)             (56)
Other cash payments                                                             (694)             (322)            (370)
Net cash inflow from operating activities                                       4,992             5,983           13,605
Returns on investment and servicing of finance
Interest paid                                                                   (911)             (613)          (1,097)
Financial investment
Purchase of investments                                                      (20,244)          (20,909)         (75,440)
Sale of investments                                                            15,117            57,634           91,422
Net cash (outflow)/inflow from financial investment                           (5,127)            36,725           15,982
Equity dividends paid                                                         (7,495)           (6,961)         (11,356)
Net cash (outflow)/inflow before use of financing                             (8,541)            35,134           17,134
Repurchase of shares                                                                -           (3,857)          (4,359)
Loans drawn/(repaid)                                                            9,000          (38,000)         (17,000)
Net cash inflow/(outflow) from financing                                        9,000          (41,857)         (21,359)
Increase/(decrease) in cash                                                       459           (6,723)          (4,225)

Note 1

The allotted ordinary share capital as of 31 December 2002 was 70,205,458
Ordinary Shares of 25p each.

Note 2

                                                             6 months to               Year to
                                                      31/12/02        31/12/01         30/06/02
Dividends on ordinary shares
Interims of
First Interim-4.25p paid on 17.01.03                         2,984           2,199            2,199

(2002 - 3.15p)
Second Interim-4.25p payable on 16.04.03 (2002 -             2,983           2,199            2,195
Third Interim (2002 - 3.15p)                                     -           2,198            2,195
Final dividend (2002 - 7.55p)                                    -               -            5,301
(Over)/under accrual of previous year's dividends                -            (28)             (28)
                                                             5,967           6,568           11,862

Note 3

A summary of investment changes during the period and twenty largest investments
at 31 December 2002 are attached.

By order of the Board


6 February 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.

                                         Valuation                           Appreciation       31 December 2002
                                        30 June 2002                        (depreciation)
                                       £'000       %          £'000             £'000           £'000        %
United Kingdom
Equities                                415,757    101.1            4,441           (79,243)     340,955      100.4
Total Investments                       415,757    101.1            4,441           (79,243)     340,955      100.4
Other net (liabilities) assets          (4,722)    (1.1)            3,384                  -     (1,338)      (0.4)
Total Assets*                           411,035    100.0            7,825           (79,243)     339,617      100.0
* represents total assets less current liabilities (excluding short-term loans of £10 million)

Summary of net assets                                                                           31 December 2002
                                                                                                   £'000          %
Equities                                                                                         340,955      113.8
Other net assets                                                                                 (1,338)      (0.4)
Borrowings                                                                                      (40,000)     (13.4)
Equity shareholders' interest                                                                    299,617      100.0

as at 31 December 2002

                                                                                                       % of
Investment                               Sector                                     Valuation  Total Assets

                                         Description                                    £'000
BP Amoco                                 Oil & Gas                                     47,306          13.9
HSBC Holdings                            Banks                                         28,833           8.5
Shell Transport & Trading                Oil & Gas                                     22,904           6.7
Lloyds TSB                               Banks                                         16,636           4.9
Barclays                                 Banks                                         12,089           3.6
Diageo                                   Beverages                                     10,125           3.0
Rio Tinto                                Mining                                         8,928           2.6
Anglo American                           Mining                                         8,589           2.5
HBOS                                     Banks                                          8,515           2.5
Six Continents                           Leisure, Entertainment & Hotels                7,775           2.3
Prudential                               Life Assurance                                 7,683           2.3
Sainsbury (J)                            Food & Drug Retailers                          7,344           2.2
Standard Chartered                       Banks                                          7,342           2.2
GlaxoSmithKline                          Pharmaceuticals                                7,339           2.2
Abbey National                           Banks                                          6,993           2.0
National Grid                            Electricity                                    6,848           2.0
Aviva                                    Life Assurance                                 6,778           2.0
Unilever                                 Food Producers & Processors                    6,621           1.9
Scottish Power                           Electricity                                    5,800           1.7
British American Tobacco                 Tobacco                                        5,740           1.7
                                                                                      240,188          70.7

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

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