Coronavirus Update

Murray International Trust- Annual Financial Report 2020

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Financial Highlights


Net asset value total return{AB}

Share price total return{AB}

Reference Index total return{BC}

(Discount)/Premium to net asset value {AD}

























Dividends per share {BE}

Revenue return per share {B}

Net gearing {AD}

Ongoing charges ratio {AD}


















{A}  Alternative Performance Measure

{B}  For the year to 31 December.

{C}  Reference Index comprising 60% FTSE World ex UK Index/40% FTSE World UK Index up to April 2020 and 100% FTSE All World TR Index from May 2020.

{D}  As at 31 December.

{E}  Dividends declared for the year in which they were earned.






2020 will long be remembered as an extraordinary chapter in the history of the world and financial markets. Against a backdrop of a global pandemic affecting over 200 countries and claiming the lives of over two million people, the general population, companies and policy makers found themselves operating in very unfamiliar territory. It was hardly surprising that equity and bond markets experienced widespread periodic volatility as the news flow continually reflected the unfolding circumstances. In an environment of evaporating demand and disrupted supply, numerous companies had no choice but to suspend or cut dividends in order to preserve cash and remain solvent. Over the year, the Company's total return on net assets ended marginally positive with quarterly dividend payments maintained despite the market disruption. During the darkest days of 2020, even such a relatively subdued outcome appeared overly optimistic.


The Company's net asset value ("NAV") posted a total return (i.e. with net income reinvested) of 0.9%. For comparative purposes, the total return for the Reference Index (comprising 60% FTSE World ex UK Index/40% FTSE World UK Index up to April 2020 and 100% FTSE All World TR Index from May 2020) was 7.0%. The share price posted a total return of -5.3%, reflecting a move from trading at a premium to NAV of 5.9% at the start of the year to a discount of 0.7% at the year end. Income per share generated from the Company's portfolio amounted to 46.6p for the year.


The Investment Manager's Review gives further details of performance including an attribution analysis. Rapidly changing social and work practices had a significant impact on corporate profitability and balance sheets. Regional equity markets highly weighted with companies exposed to technology and beneficiaries of social isolation, such as the NASDAQ in the United States, performed very well. Those with more of an income focus, such as the UK, tended to struggle. Whilst the Company's geographically diversified portfolio held up well relative to previous dividend recessions, negotiating the toughest income environment for close to twenty years proved very difficult. Yet, encouragingly, with adversity came numerous attractive opportunities to rebalance the portfolio and capitalise on the prevailing volatility, the outcomes of which are discussed further in the Investment Manager's Review.


Dividends and Dividend Policy

Three interim dividends of 12.0p per share (2019: three interims of 12.0p) have been declared during the year. Your Board is now recommending a final dividend of 18.5p per share (2019: fourth interim dividend of 17.5p) which is subject to shareholder approval. If approved at the Annual General Meeting, this final dividend will be paid on 18 May 2021 to shareholders on the register on 6 April 2021. Subject to this approval, total Ordinary dividends for the year will amount to 54.5p (2019: 53.5p), an increase of 1.9% which compares favourably with the 1.2% increase in the Retail Prices Index in 2020. This represents the 16th year of dividend increases for the Company and cements its position as an AIC 'Next Generation Dividend Hero'. The payment of the final dividend will use approximately £10.2 million from the Company's accumulated revenue reserves, amounting to approximately 15% of these reserves. This use of reserves is in line with the policy that I have highlighted to shareholders in previous years. I can confirm that the Board intends to maintain its progressive dividend policy, given the Company's investment objective. This means that, 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, in order to pay 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 in sterling terms. We are also maintaining our present policy not to hedge the sterling translation risk of revenue arising from non-UK assets.


Investment Strategy Review

During the year, the Board conducted a strategic review of the Company's investment strategy in conjunction with the Manager and other advisers with the focus on dividend policy, ongoing charges and the promotion of the Company. In line with the Company's investment objective, the Board has encouraged the Manager to continue to seek out stocks that offer balanced yield and growth potential. It is pleasing to note that the management team remains positive about the availability of higher yielding investment opportunities that also have attractive growth prospects. As part of the review and consistent with the Company's stated investment objective, the Board has authorised the Manager to implement a limited strategy to write covered put and call options on the underlying portfolio investments from 2021 onwards with the aim of generating small additions to revenue. The Manager will also initiate modest stock lending on the portfolio and this is expected to provide a further small enhancement to the Company's revenue streams. The Investment Manager's Review provides further detail about these strategies. The Board also continues to recognise the need to promote the Company and supports the Manager's continuing efforts to market the Company to a wider investor base.



At the year end, total borrowings amounted to £200 million, representing net gearing (calculated by dividing the total assets less cash by shareholders' funds) of 13.4% (2019: 11.3%), all of which is drawn in sterling. On 14 May 2020, the Company agreed a new one year £50 million revolving credit facility ("RCF") with The Royal Bank of Scotland International Limited ("RBSI") which was drawn in full and used to repay a maturing £50 million fixed rate loan with RBSI. The Company is in the process of reviewing options for the RCF which expires in May 2021 and will update the market as soon as a decision has been taken.


Annual General Meeting ("AGM")

The Board has been monitoring closely the ongoing impact of the Covid-19 pandemic upon the arrangements for the Company's upcoming AGM on 23 April 2021. At the time of writing, elements of the National Lockdown remain in place and shareholder attendance at AGMs is not legally permissible. It is very difficult to predict the extent, if any, to which further Stay at Home regulations will be relaxed in the near future. Therefore, in order to provide certainty, whilst encouraging and promoting interaction and engagement with our shareholders, the Board has decided to hold an interactive Online Shareholder Presentation which will be held at 11.00 a.m. on Tuesday 13 April 2021.  At the presentation, shareholders will receive updates from the Chairman and Manager and there will be the opportunity for an interactive question and answer session. Following the online presentation, shareholders will still have almost two weeks during which to submit their proxy votes prior to the AGM and I would encourage all shareholders to lodge their votes in advance in this manner.  Full details on how to join the Online Shareholder Presentation can be found in my accompanying letter and further information on how to register for the event can be found on .


The AGM on 23 April 2021 will, by necessity, be a functional only AGM, and it will be held at 3.00 p.m. at the offices of Dickson Minto WS at 17 Charlotte Square, Edinburgh EH2 4DF. In the light of the Government guidance and social distancing measures, including the restrictions on public gatherings, and the possibility that these measures will remain in place in April, the AGM will follow the minimum legal requirements for an AGM. Arrangements will be made by the Company to ensure that the minimum number of shareholders required to form a quorum will attend the meeting in order that the meeting may proceed and the business be concluded. The Board considers these arrangements to be in the best interests of shareholders given the current circumstances.


The Board strongly discourages shareholders from attending the AGM and entry will be refused if Government guidance so requires or if the Chairman considers it to be necessary. Instead, shareholders are encouraged to exercise their votes in respect of the meeting in advance. Any questions from shareholders who are unable to join the Online Shareholder Presentation may be submitted to the company secretary at: The Board and/or the Manager will seek to respond to all such questions received either before, or after the AGM. Given the constantly evolving nature of the situation, should circumstances change significantly before the time of the AGM, we want to ensure that we are able to adapt arrangements and to welcome shareholders to the AGM, within safety constraints and in accordance with government guidelines. In the unlikely event that we consider that it has become possible to do so, we will notify shareholders of the changes by updating the Company's website at and through an RIS announcement, where appropriate, as early as is possible before the date of the meeting.


On behalf of the Board I should like to thank shareholders in advance for their co-operation and understanding and I very much look forward to presenting to as many shareholders as possible at the Online Shareholder Presentation.


Management of Premium and Discount

At the AGM held in April 2020, shareholders renewed the annual authorities to issue up to 10% of the Company's issued share capital for cash at a premium and to buy back up to 14.99% of the issued share capital at a discount, to the prevailing net asset value. During the year, 973,341 Ordinary shares were purchased for Treasury and 80,000 new Ordinary shares were allotted at a premium to NAV under the Company's blocklisting facility. The Board will be seeking approval from shareholders to renew both authorities at the AGM in 2021. As in previous years, new or Treasury shares will only be issued at a premium to NAV (excluding income) and will only be bought back at a discount to NAV (including income). Resolutions to this effect will be proposed at the AGM and the Directors strongly encourage shareholders to support these proposals.


The Board continues to believe that it is appropriate to seek to address temporary imbalances of 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 premium or discount to underlying NAV whilst also making a small positive contribution to the NAV. Since the year end up to 4 March 2021, the Company has bought back a further 69,709 Ordinary shares for Treasury. At the latest practicable date, the NAV (excluding income) per share was 1133.4p and the share price was 1119.0p equating to a discount of 1.3% per Ordinary share.


Proposed Changes to Articles of Association

At the forthcoming AGM, a resolution is being proposed that relates to the adoption of new Articles of Association ("the Articles"). If passed, as well as a general updating of the Articles, new provisions will enable the Company to hold virtual and hybrid general meetings (including AGMs) in the future. This is in response to the challenges posed by Government restrictions on social interactions as a result of the Covid-19 pandemic. Notwithstanding this proposed change, the Board remains fully committed to ensuring that future general meetings (including AGMs) incorporate a physical meeting whenever law and regulation permits in order to fulfil the Board's commitment to enable shareholders to meet and interact with the Board on a face-to-face basis. The potential to hold a general meeting through wholly electronic means is intended as a solution to be adopted as a last resort to ensure the continued smooth operation of the Company. Your Board would only use virtual meetings in extreme operating circumstances where physical meetings are prohibited or not practicable.


Ongoing Charges Ratio

The Board remains focused on delivering value to shareholders and regularly reviews the ongoing charges ratio ("OCR"). The OCR for 2020 increased very slightly to 0.68% (2019: 0.65%) which in part reflects the small decline in net assets over the year. During the year, the Board conducted a detailed review of all costs with the aim of ensuring that all service providers' fees remained competitive and I should like to thank our service providers for their input into this process. This difficult, virus-impacted year has necessitated a significant increase in the level of operational scrutiny from the Board and Manager alike and I am pleased with the diligence, assistance and uninterrupted support that has been provided to the Company by all stakeholders.


Environmental, Social and Governance ("ESG") Matters

As part of its responsible stewardship of shareholders' assets, the Board continues to engage actively with the Manager with regard to the assessment and integration of ESG factors in the Manager's investment process. During the past year, ESG reporting by the Manager to the Board has been enhanced, including regular assessments of the Company's holdings and portfolio against industry benchmarks. Further information on the important work undertaken in this area by the Manager is provided in the Strategic Report.


Climate Change

Your Board supports the principle of further regulation to promote climate change disclosures and considers that the related physical, transition and litigation risks are becoming increasingly likely and financially material. The Board's desire is, therefore, for the Manager to build an increasingly resilient portfolio and to seek to exploit opportunities arising from a net zero economy so far as this is consistent with the Company's investment objective, without becoming prescriptive on specific investment exclusion criteria. A key ingredient in building such a portfolio is seen as meaningful, regular and continuing dialogue with high emitting investee companies with a view not only to understanding better risk exposure and evolving business models but also to influence corporate behaviour in regard to climate change.



As   reported last year, in accordance with the Board's on-going succession planning, Simon Fraser joined the Board on 1 May 2020 and will succeed me as Chairman after my retirement at the AGM in April. Our Audit and Risk Committee Chair, Marcia Campbell, will also be retiring at the conclusion of the forthcoming AGM after completing nine years as a Board member. On behalf of the Board, I should like to take this opportunity to convey our sincere thanks to Marcia for her skilful leadership of the Audit and Risk Committee and significant contribution to the smooth and effective running of the Company. Claire Binyon will succeed Marcia as Chair of the Audit and Risk Committee at the conclusion of the forthcoming AGM.  I should also like to wish Simon, and the entire Board, well when he assumes the role of Chairman upon my retirement. Finally, I have had the great privilege of serving in total with 10 fellow Directors, past and present, and would like to express my heartfelt thanks to each of them for the insight and service that they have delivered to shareholders and to me during my tenure as Chairman. It has also been a pleasure working with Bruce Stout, William Hemmings and Charles Mearns from the Manager. They have been a constant during my whole time on the Board and have unwaveringly cooperated with the Board to promote the best interests of shareholders.


The Company is in the process of recruiting a new independent non-executive Director using the services of an independent recruitment consultant. Shareholders will be updated when a candidate has been appointed.



From an economic perspective, recovering from the Covid-19 induced worldwide recession presents numerous challenges. Virtually all sectors and businesses have experienced some degree of disruption, suggesting the landscape of the future is unlikely to return to the prior normality. The discovery and rollout of a number of effective vaccines against the virus hold out the prospect of emergence from the pandemic. However, the lasting legacy of enormous debt obligations accrued by some nations in response to Covid will linger for years to come. Clearly, the path ahead is not likely to be smooth.


From an investment perspective, the Company's unconstrained global mandate offers great flexibility. Whilst the developed world's pandemic debt legacy may be long-lasting, numerous other parts of the world appear less constrained. Recent evidence already shows growth rebounding and business recovering in a number of Asian and developing countries that quickly contained infection rates last year. There is the prospect of improving corporate profits and above average dividend and capital growth from many high-quality companies exposed to these markets. Portfolio exposures will continue to focus on such businesses in pursuit of the Company's long-term investment objective.