MURRAY INTERNATIONAL TRUST PLC (the “Company”)
Legal Entity Identifier (LEI): 549300BP77JO5Y8LM553
HALF-YEARLY REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2024
The Directors of Murray International Trust PLC report the unaudited results of the Company for the six months ended 30 June 2024.
Performance Highlights
| Net asset value total returnA | | Share price total returnA | |||
| Six months ended 30 June 2024 | +5.5% | | Six months ended 30 June 2024 | +0.5% | |
| Year ended 31 December 2023 | +8.6% | | Year ended 31 December 2023 | +1.1% | |
| | | | | | |
| Reference index total returnB | | Discount to net asset valueA | |||
| Six months ended 30 June 2024 | +12.2% | | As at 30 June 2024 | -8.7% | |
| Year ended 31 December 2023 | +15.7% | | As at 31 December 2023 | -4.0% | |
| | | | | | |
| Ongoing charges ratioA | | | Net gearingA | | |
| As at 30 June 2024 | 0.52% | | As at 30 June 2024 | 6.0% | |
| As at 31 December 2023 | 0.53% | | As at 31 December 2023 | 8.0% | |
| A Alternative Performance Measure (see below). | | | | | |
| B FTSE All World TR Index. | | | | | |
Financial Calendar and Highlights
Financial Highlights
| Payment dates of quarterly dividends | 16 August 2024 18 November 2024 17 February 2025 16 May 2025 |
| Financial year end | 31 December |
| Expected announcement of results for year ending 31 December 2024 | March 2025 |
| Annual General Meeting | 24 April 2025 |
Financial Highlights
| | 30 June 2024 | 31 December 2023 | % change |
| Total assets less current liabilities (before deducting bank loans and loan notes) | £1,807.3m | £1,808.8m | -0.1 |
| Net assets | £1,697.4m | £1,668.9m | +1.7 |
| Share price per Ordinary share (mid market)A | 252.5p | 258.0p | -2.1A |
| Net Asset Value per Ordinary share | 276.7p | 268.8p | +2.9A |
| Discount to Net Asset Value per Ordinary shareB | -8.7% | -4.0% | |
| Net gearingB | 6.0% | 8.0% | |
| Ongoing charges ratioB | 0.52% | 0.53% | |
| A The movement relates to capital only and does not take account of the reinvestment of dividends. | |||
| B Considered to be an Alternative Performance Measure. Further details can be found below. | |||
Interim Board Report – Chair’s Statement
Background
If a primary driver of solid equity market returns in 2023 was the expectation of easing inflationary pressures and central banks cutting interest rates, one could be forgiven for being slightly surprised at the strength of equity market returns, particularly in developed markets, in the first half of this year. Inflation has eased in some areas, proved stubborn in others and the six or seven interest rate cuts expected in the United States at the end of last year have yet to come to pass. The first half of 2024 has been a period of significant developments and transitions in global capital markets. Factors including robust earnings, resilient developed market economies, and technological advancements support the present positive environment and opportunities. Risks such as conflict, geopolitical tensions, inflation, interest rates and a shifting political picture are equally relevant and have the potential to derail the current picture.
Performance and Dividends
The net asset value (NAV) total return, with dividends reinvested, for the six months to 30 June 2024 was 5.5% compared with 12.2% for the Company’s Reference Index (the FTSE All World TR Index in GBP). Over the six month period, the share price total return was 0.5%, as the discount to the NAV widened from -4.0% at 31 December 2023 to -8.7% at 30 June 2024. The Manager’s Review contains more information about both the drivers of performance in the period and activity within the portfolio.
The first interim dividend of 2.5p per share (2023: 2.4p) in respect of the six months to 30 June 2024 is payable on 16 August 2024. Today, the Board is declaring a second interim dividend of 2.5p per share (2023: 2.4p) for the current year. This will be paid on 18 November 2024 to shareholders on the register on 4 October 2024.
The Company has increased its dividend in each of the last nineteen years and the Board remains optimistic that this progressive dividend policy can be maintained. As a long-established investment trust, the Company has the benefit of over £72.9 million of distributable revenue reserves on its balance sheet at 30 June 2024. In some years, revenue will be added to reserves while, in others, revenue may be taken from reserves to supplement earned revenue for that year to support the annual dividend. Shareholders should not be surprised or concerned by either outcome as, over time, the Company will aim to pay out what the underlying portfolio earns.
Manager Succession
During the period we bade farewell to Bruce Stout who has been the Company’s lead investment manager since 2004. Martin Connaghan and Samantha Fitzpatrick who have worked with Bruce for over 20 years have now taken joint responsibility for the management of the portfolio. On behalf of the Board and shareholders I would like to reiterate our sincere thanks to Bruce for all his efforts, enterprise and expertise.
Management of Discount
Your Board continues to believe that, in normal market conditions, it is appropriate to seek to address temporary imbalances in the supply and demand for the Company’s shares which might otherwise result in a recurring material discount or premium. The Board believes that this process is in all shareholders’ interests as it seeks to reduce volatility in the discount or premium to underlying NAV whilst also making a small positive contribution to the NAV. In line with most of the investment trust sector, in the first six months of the year the Company’s shares have continued to trade at a discount level that is wider than its long-term average. Consequently, in order to reduce any volatility as well as enhance NAV for ongoing shareholders, the Company bought back 7,385,252 Ordinary Shares of 5p for Treasury at a total cost of £18.1 million and at a weighted average discount of -9.9%, representing 1.2% of the issued share capital.
At the latest practicable date, the NAV (including income) per share was 269.7p and the share price was 249.5p equating to a discount of 7.5% per Ordinary share.
Gearing
In May 2024, the Company repaid its maturing £30 million 5-year fixed-rate loan with The Royal Bank of Scotland International Limited, London Branch. Following the repayment of this loan, the Company’s borrowings now consist of £110m unsecured loan notes which are fully drawn and will not be repayable until 2031. The weighted costs of borrowing of these fixed-rate loan notes is a very cost-effective 2.56%. The borrowings represent a net gearing level of 6.0% based on the Company’s NAV at 30 June 2024 (31 December 2023: 8.0%). The Board considered options to replace the maturing loan but concluded that the proposed terms were not appropriate at present, but, working with the Manager, will keep the position under review.
Ongoing Charges Ratio (“OCR”)
During the review period, the OCR remained flat, ending the six months at 0.52% (31 December 2023: 0.53%). The Board continues to be firmly focused on controlling costs and delivering value to shareholders. A full breakdown of the OCR calculation is provided below.
The Board fully supports the industry-led efforts to reform the rules governing investment trust cost disclosures for retail shareholders by abolishing the Packaged Retail and Insurance-based Investment Products (PRIIPS) Regulation and empowering the Financial Conduct Authority to introduce a replacement regime.
Change of Corporate Broker
During the period the Board, led by the Management Engagement Committee, undertook a review of the corporate brokers serving the investment trust sector. Stifel Nicolaus Europe Limited has been the Company’s broker since 2009 and the Board decided that it was appropriate to test the market. The exercise attracted strong interest and after a competitive process the Board concluded that the Company would be best served by appointing JPMorgan Cazenove to act as the Company’s Corporate Broker with effect from 18 July 2024.
Outlook
As we look forward, macroeconomic difficulties are likely to continue impacting the direction of financial markets. The geopolitical environment, currently at its most polarised, fragile, and uncertain state in a very long time, demands our attention and caution. Even when interest rates begin to decrease, the cadence and scale of their decline could leave market participants disappointed. Numerous heavily indebted nations will still be confronted with fewer and fewer options to stimulate future growth. While Central Banks may have won the battle with inflation and walked the tightrope between recovery and recession, for now, the geopolitical environment could easily alter that in the blink of an eye. Notwithstanding the economic backdrop, our Manager focuses squarely on delivering the investment objective and looking for opportunities that offer proper diversification.
Virginia Holmes
Chair
8 August 2024