Murray Income Trust PLC (MUT) – Half Yearly Financial Report

MURRAY INCOME TRUST PLC

LEGAL ENTITY IDENTIFIER (LEI): 549300IRNFGVQIQHUI

Half-Yearly Report for the six months ended 31 December 2021

The Directors of Murray Income Trust PLC report the unaudited results for the six months ended 31 December 2021.

PERFORMANCE HIGHLIGHTS

Dividends

CHAIRMAN'S STATEMENT

“The really interesting story is one of dividend recovery.”   Neil Rogan, Chairman

Performance was ahead of the FTSE All-Share Index (the Company's “Benchmark”), over the six months ended 31 December 2021. Shareholders continue to benefit from the enlarged scale of the Company following the merger with Perpetual Income & Growth Investment Trust (the “Merger”) with net assets now £1.15bn, a lower blended annualised management fee rate of 0.33%, a lower forecast ongoing charges ratio of 0.48% (based on the Company's net asset value (“NAV”) as at 31 December 2021) plus additional liquidity and lower bid-offer spreads when trading.

This is all good news. However, the really interesting story is one of dividend recovery.

The UK Equity Income sector was already out of favour when Covid-19 hit and caused many companies to slash or suspend their dividends. There have been net redemptions of over £2bn from the open-ended funds in the sector in each of the last two years, partly in response to Covid-19 but also due to a preference for growth and technology stocks elsewhere, particularly in the United States, although this has started to reverse in early 2022.

Link reports that calendar year 2020 dividends for the UK market as a whole fell 44% on 2019 levels while 2021 dividends (on an underlying basis) were up 22% on 2020. Link forecast dividends to fall 7% in 2022, which would leave them still 21% below 2019 levels. The Company's focus on quality companies has produced a very different experience and outlook: our Manager reported a 13% reduction in our portfolio income in 2020, followed by an 11% recovery in 2021, and now projects portfolio income levels to reach new highs later in 2022. This is not necessarily repeatable, but places us well ahead of our original forecasts.

We are not allowed to give dividend forecasts but it does look as if later this year the Board will be once again in the fortunate position of having to decide how much of this year's income to pay out as a higher dividend and how much to put into revenue reserves for future rainy days. That is from a starting point whereby our full year dividend per share of 34.50p for the year to 30 June 2021 represented a yield of 3.8% on the 31 December 2021 share price of 918.0p. By comparison the Benchmark's dividend yield at the same date was 3.2%.

Performance

Over the six months ended 31 December 2021, the Company's NAV per share rose 7.2% in total return terms, ahead of 6.5% for the Benchmark. The share price total return was 7.5% with the discount closing the period at 6.7%, almost the same level at which it started. For the full calendar year 2021, the NAV total return was 18.4%, the Benchmark returned 18.3% and the share price total return was 14.1%.

Looking over longer periods to the end of 31 December 2021, performance is also significantly ahead of the Benchmark over three, five and ten years. At the same time, we continue to grow our dividend with an increase chalked up in every one of the past 48 years. This puts us into the top ten on the AIC's list of 'Dividend Heroes' (the investment trusts with the longest records of consecutive annual dividend growth) as measured by the number of years of dividend growth.

{A} Considered to be an Alternative Performance Measure

Source: abrdn, Morningstar & Lipper