Murray Income Trust Regulatory News (MUT)

Murray Income Trust PLC

Annual Report 30 June 2023

Investment Objective

The Company aims for a high and growing income combined with capital growth through investment in a portfolio principally of UK equities.

Performance Highlights

Chair's Statement

Highlights

·  We are celebrating both Murray Income's centenary and our record of 50 consecutive years of dividend growth

·  Our objective is to achieve a high and growing income combined with capital growth from a portfolio principally of UK equities

·  The dividend yield is 4.5%, based on the year end share price of 837p

·  Total dividends per share increased by 4.2% to 37.5p, the 50th consecutive year of dividend growth

·  NAV per share total return AB was +8.8%, ahead of the FTSE All-Share Index at +7.9% but the share price total return was +4.9% as the discount widened

A Total return

B With debt at fair value

Introduction

Welcome to the 100th annual report of Murray Income Trust. In my last year as Chair, it is a pleasure to be able to report that the Company is in good health and has had a good year. In this report we will review the year just ended, look back over our 100-year history, look forward to our centenary events and assess the long-term outlook.

First, the headline numbers for the year to 30 June 2023. Helped by a strong second half, NAV (net asset value per share, with debt at fair value) total return was 8.8% over the year, outperforming the FTSE All-Share Index total return of 7.9%. Your share price total return at 4.9% lagged the NAV as the discount (based on NAV with debt at fair value) widened from 4.5% to 8.2% over the year. We announced on 2 August 2023 a fourth interim dividend of 12.75p which takes the full year dividend up 4.2% to 37.5p per share, marking the 50th consecutive year of dividend increases, and representing a dividend yield of 4.5% at the 30 June 2023 share price.

Centenary and History

Your Company was founded in Glasgow on 8 June 1923 as The Second Scottish Western Investment Company, Limited with an initial share capital of £500,000. The Company's NAV at 30 June 2023 was nearly £1bn. That's quite some appreciation over 100 years although we don't know the exact figures for shares issued and cancelled over the early years so we cannot calculate a reliable annual return. Back in 1923, the Company's objective was to invest in shares, stocks, debentures, bonds, mortgages, obligations and securities of any kind, issued or generated by any company, corporation or undertaking of whatever nature, constituted or carrying on business in the United Kingdom or in any colony or dependency or province thereof, or in the United States of America or in any other foreign country. That investment remit was exceptionally broad and similar to many other generalist investment trusts of the era. The portfolio was mainly invested into bonds and preference shares. The move into equities or ordinary shares appears to have started in the 1930s, probably prompted by rising defaults on bond holdings during the 1930s depression.

The Company changed its name to The Caledonian Trust Company Limited in 1960 and was administered by Brown, Fleming and Murray, Glasgow chartered accountants, until the formation of Murray Johnstone in 1968. In 1979 the Company added its Manager's name to become Murray Caledonian Investment Trust Limited but remained a generalist equity trust. With discounts wide and reflecting a shareholder desire for investment trusts to specialise, in 1984 it changed to its current name of Murray Income Trust PLC and to its remit of investing for a high and growing income from a portfolio predominantly of UK equities. Murray Johnstone was taken over by Aberdeen Asset Management in 2000 and Murray Income has been part of the abrdn stable ever since. Most of the older records were destroyed by a serious flood in Murray Johnstone's offices in the late 1970s. Facsimile records at Companies' House are in many cases illegible so, sadly, it is not possible to construct any long term performance records with a sufficient level of confidence.

One thing that we can confirm is the now fifty-year record of consecutive dividend increases. It was the autumn of 1973 when your Company last did not raise its dividend; the year of the miners' strike and three-day week, the Arab-Israeli war and the oil price shock. The Company's dividend per share has grown from 0.47p then to 37.5p in 2023, representing a compound annual growth rate of 9.2%. A more realistic comparison is the 6.0% compound annual growth rate since the change to a UK equity income remit in 1984.

The Association of Investment Companies (the "AIC") accords Dividend Hero status to investment trusts which have raised their annual dividend consecutively for twenty years or more. Maintaining that Dividend Hero status and with a starting dividend yield level of over 4% is both a source of pride for the Board and a priority for the future.

Dividend

As outlined above, the Board announced on 2 August 2023 its 50th consecutive increase in the annual dividend to 37.5p. Revenue per share for the year was 38.7p, down 4.4% from the previous year's 40.5p. However, the 37.5p dividend was 103% covered by net income earned during the year and the Company was able to transfer the excess to bolster its revenue reserves, taking them from 17.5p per share to 20.2p, equivalent to 54% (2022: 48%) of the current annual dividend of 37.5p (2022: 36.0p). The Board gave extensive consideration to how much to grow the dividend and how much to add to reserves. Two factors influenced us in our decision. First is that we prefer revenue reserves per share to be in the range of one-half to a full year's dividend per share. Second is that although our Manager projects that revenue per share may fall for another year, dividend cover for UK companies has already recovered to a very healthy 2.0x for calendar 2023 from 1.5x in calendar 2021.

Investment Performance

Over the twelve months ended 30 June 2023, the Company's NAV per share (with debt at fair value) rose 8.8% in total return terms, as compared to the FTSE All-Share Index (the "Benchmark") return of 7.9%. The share price total return was 4.9% reflecting the discount widening from 4.5% to 8.2% (measured based on NAV with debt at fair value).

Positive contributors over the year included the Company's long-term borrowings, sector allocation and individual holdings such as Aveva and Sage. The largest positive contributor was the favourable movement in the fair (or market) value of the Company's long-term gearing: as interest rates rose, the market value of this liability fell. The main negative contributors over the year were stock-specific; Watkin Jones, Marshalls and Direct Line. Charles Luke and Iain Pyle discuss performance in more detail in the Investment Manager's Report.

Looking over longer periods ended 30 June 2023, the annualised NAV (debt at fair value) performance is behind the Benchmark over three years but ahead over five and ten years.

Investment Process

Our Manager's investment process is best summarised as a search for good quality companies at attractive valuations. The Manager defines a quality company as one capable of strong and predictable cash generation, sustainably high returns on capital and with attractive growth opportunities. These typically result from a sound business model, a robust balance sheet, good management and strong environmental, social and governance characteristics. These qualities helped avoid the worst of the dividend shocks during the pandemic.

Investment People

abrdn is our appointed investment management company. Charles Luke has been our lead portfolio manager since 2006 and works alongside Rhona Millar and Co-Manager Iain Pyle, as members of abrdn's 43-strong Developed Markets Equities team.

Driving Environmental, Social and Governance ("ESG") Change

ESG considerations are deeply embedded into the company analysis carried out by our Manager which is able to draw on the expertise of more than 60 in-house ESG specialists. The aim is to mitigate risk and enhance returns and this results in frequent dialogue with investee companies and helps to ensure that the companies in the portfolio are acting in the best long-term interests of their shareholders and society at large. The objective is to drive ESG change.

It is important to note that the policy pursued by our Manager on our behalf is dynamic rather than static. ESG conclusions change if the inputs change: For example, one might look at Russia's invasion of Ukraine and conclude that the social factor of security and safety is more important now than previously considered. Similarly, one might consider energy security be given a higher weight relative to carbon dioxide emissions and come to a different conclusion on holding an oil or gas stock.

The Investment Manager's Report contains further information on how ESG factors are incorporated into the Managers' investment approach. For more detailed information we would refer you to the Sustainable Investment Report on our website at: murray-income.co.uk.

Share Buybacks and Discount

Discounts across the investment trust sector have widened in the past twelve months, including within the UK equity income sector. The Board has thus decided to make more extensive use of its buyback capability. Over the year, the discount widened from 4.5% to 8.2% while the average discount was 7.4% and the range was between 4.5% and 12.2% (all based on NAV with debt at fair value). The Company bought back 5.0m shares during the year, representing 4.3% of shares in issue at the start of the year. No shares were issued or sold from treasury.

The Board monitors the discount level closely and will again be requesting shareholders' approval at the AGM to renew the Company's buyback and issuance powers. As at 30 June 2023, there were 111,720,001 (2022: 116,690,472) Ordinary 25p shares in issue with voting rights and 7,809,531 (2022: 2,839,060) shares held in Treasury.

Ongoing Charges

Our largest cost is the investment management fee payable to abrdn which is calculated on a sliding scale with a marginal rate of 0.25% on assets over £450m. The effect of expanding the Company in 2020 and keeping tight control of costs generally has resulted in an overall ongoing charges rate of 0.50%, which the Board considers good value compared to past history and also to other funds in the closed- and open-ended industry.

Gearing

The Company has £100m of long-term borrowings with £40m due in 2027 and £60m due in 2029 at a blended cost of 3.6%. Together with a £50m short-term multicurrency facility with Bank of Nova Scotia Limited, the Company has up to £150m of borrowing facilities available representing 15.0% of net asset value. With the beta of the investment portfolio (its sensitivity to changes in the Benchmark) currently running at 0.9 (typical of the Investment Manager's style), the Board believes that the appropriate neutral gearing rate is 10%. At the year end the actual gearing rate was 10.4% (2022: 9.4%). The annualised cost of the Company's current borrowings was 0.26% of NAV (2022: 0.23%).

Board Composition

As previously announced and after completing nearly ten full years of service, I shall be retiring from the Board at the conclusion of the centenary Annual General Meeting ("AGM"). Peter Tait, currently Senior Independent Director, will take over as Chair. Alan Giles will replace Peter as Senior Independent Director. The other senior board position is Audit Committee Chair, a post held by Stephanie Eastment since 2018.

Merryn Somerset Webb has informed us that she does not wish to stand for re-election as a Director and so will retire from the Board at the end of the AGM. This is to allow her to be able to pursue conference hosting roles with interactive investor and others. We will miss her knowledge of private investors and marketing and markets in general. She leaves with our thanks and best wishes.

The remaining Board members have started a recruitment exercise. Sadly, I have to report that Jean Park passed away in May - Jean was a much loved colleague and a former Director of this Company until 2021.

Online Shareholder Presentation

The Company will hold an online shareholder presentation for shareholders and other interested parties at 11.00am on 3 November 2023. This will feature your Chair and Investment Manager discussing the outlook for the Company and answering your questions live. Please submit questions in advance to murray.income@abrdn.com or on the day via the event page which is also where you may register:

https://www.workcast.com/register?cpak=6223673361069891

Centenary Annual General Meeting

The Company will hold its centenary AGM in the city of our incorporation, at 12.30pm on Tuesday 7 November 2023 in The Glasgow Royal Concert Hall. We hope to mark our centenary in style. One of the advantages of investing via investment trusts is that all shareholders have the opportunity to meet their Manager and the Directors at the AGM. This year's meeting will commence with a presentation on the Company and market outlook from Charles Luke. There will then be the formal part of the AGM where shareholders get to ask questions about the AGM resolutions and thereafter cast their votes via a poll. After this will be a centenary lunch at which shareholders will be able to chat to the Manager and Directors. Shareholders may bring a guest with them to the meeting.

Action to be Taken

If you wish to attend and are unsure how to register, please send an email to: murray.income@abrdn.com.

Shareholders will find enclosed with this Annual Report an Invitation Card and Form of Proxy for use in relation to the AGM. Whether or not you propose to attend the AGM, you are encouraged to complete the Form of Proxy in accordance with the instructions printed on it and return it, with the Invitation Card if you wish, in the prepaid envelope as soon as possible but in any event so as to be received no later than 12.30pm on 3 November 2023. Completion of a Form of Proxy does not prevent you from attending and voting in person at the AGM if you wish to do so.

If you hold your shares in the Company via a share plan or a platform and would like to attend and/or vote at the AGM, then you will need to make arrangements with the administrator of your share plan or platform. For this purpose, investors who hold their shares in the Company via the abrdn Investments Plan for Children, the abrdn Share Plan and/or the abrdn Investments Trust ISA will find a Letter of Direction and Invitation Card enclosed. Shareholders are encouraged to complete and return both the Letter of Direction and Invitation Card in accordance with the instructions printed thereon.

Further details on how to attend and vote at company meetings for holders of shares via share plans and platforms can be found at: www.theaic.co.uk/aic/how-to-vote-your-shares

I always welcome questions from our shareholders at the AGM. Alternatively, shareholders may submit questions to the Board prior to the meeting by sending an email to: murray.income@abrdn.com.

Update

From 30 June 2023 to 15 September 2023, being the latest practicable date prior to approval of this Report, the NAV per share (with debt at fair value) returned 2.6% underperforming the FTSE All-Share Index which returned 3.3%, both figures on a total return basis.

A personal outlook

Over my term as a Director, I have invested around the same amount buying Murray Income shares as I have been paid in Directors' remuneration. I intend to keep the shares for the long-term. Why? Firstly, the starting yield is important to me. My long-term financial planning targets an overall compound annual growth rate of 4%-5%. If I can achieve most of that from the starting yield of 4.5% then the rest of the decision-making becomes easier. If the dividend payments grow every year, that's even better. How about inflation protection? If inflation remains high, the value of my future income will be eroded. That's one reason I favour Murray Income over long-term bonds. Bonds, by definition, do not increase their dividend payments. Equities can, and abrdn's quality bias means that I would expect Murray Income's holdings to be more resilient in such a scenario. Not total protection, but enough to keep me from worrying.

What about the outlook for capital growth? Obviously, this is harder to predict given the number and scale of known and unknown scenarios. But as Charles and Iain argue in their Investment Manager's Report, UK equity valuations currently look unusually cheap in absolute terms and relative to both their own history and to world markets. The factors that have depressed UK valuations (take your pick from politics, Covid, Brexit, productivity, austerity, banks, quantitative easing and inflation) are not necessarily permanent. The quality companies within the UK market are to some extent insulated from these factors and have, in certain cases, been going from strength to strength, helping explain why so many have been taken over by foreign companies. If these quality companies in the portfolio can keep on achieving revenue growth, the outlook for capital growth is much improved.

In closing I'll just focus on the investment numbers: the Murray Income portfolio is presently trading on a price to earnings multiple of 13.9x current year earnings. Average dividend cover for those holdings is 2.0x. The current dividend yield for the Company is 4.5% with that dividend having increased every year for the past 50 years. All this for an annual ongoing charges rate of around 0.50%.

May I thank you all for your support to me as Chair and for your loyalty to the Company. It has been a great pleasure and privilege to serve the Company. Murray Income will be in good hands under Peter's leadership and I trust that you will share in its ongoing success.

Neil RoganChair19 September 2023

Investment Manager's Report

Background

For the UK economy, the year to 30 June 2023 ("the Year") has been characterised by high levels of inflation, monetary policy tightening and concerns around a potential recession. Equity markets have generally been more robust than might have been expected against this backdrop. The UK equity market ended the year +7.9% higher on a total return basis, although with the path to that level less than smooth. In September 2022, it was UK politics that influenced domestic market performance. The new Chancellor Kwarteng's "mini budget" sparked a wave of selling of UK gilts and a substantial weakening of the pound which led to the Bank of England ("BoE") stepping in with emergency measures to stabilise markets. UK government bond prices rose and the pound recovered somewhat as first Chancellor Kwarteng and then Prime Minister Truss resigned and many of their previously announced tax cut proposals were reversed. Then, in March 2023, the banking sector created volatility, first in the US when Silicon Valley Bank collapsed and later in the month when concerns grew over the viability of Credit Suisse which was ultimately acquired by UBS.

Less transitory than these events have been the persistently high level of inflation and the ongoing response from central banks. UK inflation, as measured by the Consumer Prices Index, reached 11.1% in October, the highest level in more than four decades. Annual inflation fell below 10% for the first time since the summer of 2022 in April when the reading was 8.7%, but data for May showed that core inflation, which excludes volatile fuel and unprocessed food costs, continued to rise. The BoE acted to control inflation by raising interest rates multiple times over the period, with the policy rate increasing from 1.25% at the start of the Year to 4.5% by the end of June 2023. After the year end, the BoE subsequently surprised markets by hiking a further 0.5% in July, and then again by an additional 0.25% in August, as inflation exceeded expectations, although maintaining their forecast that inflation will fall rapidly in the second half of 2023.

Despite rising interest rates, the UK has so far avoided a technical recession (defined as two consecutive quarters of negative growth in real GDP) and updated forecasts at the start of the calendar year from the UK's Office for Budget Responsibility showed they now expect the country to avoid a recession in 2023. Economic data for the UK has been mixed over the period. GDP fell by -0.3% in the quarter to September, followed by 0.1% increases in the subsequent quarters to December and March. Purchasing Managers' Index data continued to show the Services sector performing better than Manufacturing. Labour markets have remained tight and there was widespread strike action across multiple sectors. Consumer confidence was reported to be at its lowest level since records began in 1974, albeit retail sales remained relatively robust.

This picture of high inflation and interest rate rises is generally consistent across other developed markets. Compared to the UK, inflation has softened more in the US and the Eurozone in recent months and our view is that we are nearing the end of hiking cycles in those economies. In the US, although growth has so far fared better than anticipated in the face of rate tightening and banking sector concerns, we continue to forecast negative GDP growth in 2024. China moved away from their zero-covid policy in the final quarter of 2022. The policy change initially led to a rise in covid cases which weighed on growth, followed by a benefit to activity from the reopening of the economy. However, the reopening tailwind faded quicker than had been widely expected, which prompted the government in Beijing to introduce new measures intended to stimulate the economy. Oil and other commodity prices declined over the Year over fears of weakening demand. European gas prices fell sharply from the mid-2022 highs reached following the Russian invasion of Ukraine.

Global equity markets performed well over the Year, with the MSCI World Index returning 19.2% over the period on a total return basis in US dollar terms. In the UK, the FTSE All-Share index (the Company's "Benchmark") lagged global markets, rising by 7.9% with the FTSE 100 Index which has more international exposure increasing by 8.9% and outperforming the 3.0% rise in the FTSE 250 Index which has more domestic exposure. From a factor perspective, broadly-speaking 'Value' and 'Momentum' outperformed while 'Quality' and 'Growth' stocks underperformed on a relative basis.

Although a relatively small sector, the technology sector performed strongly over the year mostly for individual stock specific reasons. On the other hand the weakest performance was seen in the telecoms sector as its main constituents BT and Vodafone struggled operationally. In a broad reversal of the prior year's performance, some of the more defensive areas of the market such as healthcare and consumer staples underperformed while perhaps surprisingly a number of the more cyclical, economically-sensitive areas of the market such as consumer discretionary and industrials outperformed.

Performance

The Company generated a positive Net Asset Value per share total return of 8.8% for the Year (based on debt at fair value) outperforming the benchmark FTSE All-Share Index which returned 7.9% over the Year. Changes in the fair value of the Company's long term debt aided performance by approximately 1.3% reflecting the favourable movement in the fair (or market) value of the Company's long-term gearing; as interest rates rose, the market value of this liability fell.  On a total return basis, the Company's share price increased by 4.9% which reflected a widening of the discount to Net Asset Value (debt at fair value) at which the shares traded from 4.5% to 8.2%.

Our investment process encompasses a patient buy and hold approach and longer term returns also remain very positive compared to the Benchmark. For example, over five years, the share price and Net Asset Value per share (based on debt at fair value) have outperformed the FTSE All-Share Index by approximately 15% and 13% respectively on a total return basis.

In absolute terms, taking account of the £60m of senior secured fixed rate notes 2029, £40m of senior secured fixed rate notes 2027, as well as £6.4m drawn down from an unsecured multi-currency revolving credit loan facility agreement with The Bank of Nova Scotia Limited, debt was £106.5m at the end of the Year. The net gearing was 10.4% at the end of the Year as compared to 9.4% at the end of the prior year.

Performance benefited from good stock selection in the technology and consumer staples sectors offset by the underweight exposure to energy and poor stock selection in the consumer discretionary and industrials sectors.

Turning to the individual holdings, there were numerous companies that demonstrated strong share price increases. The share prices of VAT Group and Sage both increased by over 45% during the Year. Non-held companies British American Tobacco and Vodafone, and the holdings in technology companies Sage and Aveva generated the greatest stock level outperformance. As we mentioned last year, we believed the portfolio was vulnerable to corporate and takeover activity and during the year bids were forthcoming for Euromoney, Aveva, Industrials REIT, Dechra Pharmaceuticals and Countryside Properties in aggregate benefiting relative performance.

The poorest share price performances were from domestic companies exposed to higher inflation and/or rising interest rates including Watkin Jones, Marshalls and Direct Line. Marshalls, Direct Line and non-held HSBC and Flutter provided the most significant negative relative return over the Year.

Performance Attribution for the year ended 30 June 2023

Portfolio Activity and Structure

Turnover of approximately 18% was the same as the prior year. The pattern of trades reflected the ongoing desire to improve, where possible, the quality of the portfolio and maintaining the focus on attractive capital and dividend growth. Active share (the proportion of the portfolio that differs from the benchmark) remained stable at approximately 70%.

The portfolio added five new holdings in the Year. Two of these, Games Workshop and Genus, were UK mid-cap company introductions. Games Workshop is a hobby miniatures company which we see as a unique asset with strong quality credentials and an attractive dividend yield. Genus is a global leader in genetics and breeding, contributing to improving sustainable food production. We see Genus as having an attractive market position and long-term growth potential from the development of virus-resistant pigs.

The Company can invest up to 20% of gross assets in overseas listed companies. This has three main benefits: firstly, to provide access to industries not available to UK-only investors; secondly, to diversify risk in concentrated sectors in the UK market; and thirdly, to enable investment in better quality proxies of UK listed companies. During the year, three overseas holdings were added to the portfolio. The first was Swiss-listed pharmaceutical company, Roche, which has a healthy balance sheet and a pipeline which we believe to be undervalued. The second was LVMH, the luxury goods company listed in Paris which offers strong long-term growth potential through its portfolio of well-known brands. The final new overseas holding added to the portfolio was Paris-listed cosmetics and skincare company L'Oréal which we see as having strong quality characteristics, in particular: well-known brands, appealing market growth dynamics and attractive financial characteristics.

We increased exposure to several of our existing holdings which we believe have high quality characteristics with attractive growth prospects at appealing valuations including Howden Joinery, Kone, Nestlé, Oversea-Chinese Banking Corp, Oxford Instruments, London Stock Exchange Group, RELX, Sage, and Unilever.

Fifteen holdings were sold during the Year, of which five stocks were exited following takeover bids: Aveva, Dechra Pharmaceuticals, Euromoney, Industrials REIT and Countryside Partnerships (where we continue to have a holding in the acquirer, Vistry). In the second half of 2022 we reduced the portfolio's exposure to the real estate sector. Watkin Jones was sold following a profit warning which led to a change in confidence in the company's business model and concern about the risk of further downgrades. Concern around high levels of leverage and potential risk to dividends given rising discount rates and higher interest charges also resulted in the sales of small holdings in Assura, Sirius Real Estate, and Unite Group. The residual position in Haleon, the consumer healthcare business which was spun-out from GSK, was exited. XP Power was exited as the outlook appeared increasingly uncertain and the company has high leverage. The small holding in Mowi was sold as call options written over the holding were assigned. Finally, the small positions in Ashmore, Bodycote and Weir were sold given more attractive opportunities elsewhere.

In addition, we reduced the exposure to a number of holdings where we have higher conviction in other names in their respective sectors or to manage position sizes in the portfolio. Positions in stocks including AstraZeneca, Novo Nordisk, BHP, M&G, Standard Chartered and TotalEnergies were trimmed.

Overall, the net effect of the purchases and sales has been to reduce the number of holdings from 61 down to 52, providing a sharper focus to the portfolio.

We continued our measured option-writing programme which is based on our fundamental analysis of the holdings in the portfolio. The option-writing strategy has been of benefit to the Company by diversifying and increasing the level of income generated. It also provides headroom to invest in companies with lower starting yields but better dividend and capital growth prospects. Income from writing options of £2.8m represented 5.6% of total income earned in the Year.

Our aspiration in terms of portfolio construction is simple: to invest in good quality companies with attractive growth prospects through a sensibly diversified portfolio with appealing dividend characteristics. Furthermore, the ability to invest up to 20% of gross assets overseas is helpful in achieving these aims with 13 overseas-listed companies in the portfolio at the period end representing approximately 18% of gross assets.

Environmental, Social and Governance

In line with our longer-term investment horizon, we continue to put significant effort into engagement with the companies in the portfolio to ensure that they are run in shareholders' best interests. Examples of the subjects of our engagement during the Year have included topics such as board composition, capital allocation, mergers and acquisitions activity, and risk management (including issues such as climate change, regulatory risk, and management succession planning). We pursue these issues through meetings with the executive management of the companies as well as with the non-executives, particularly the chairs of the board and remuneration committees. MSCI independently rate the portfolio as AA for its ESG characteristics and further detailed information can be found in the Sustainable Investment Report on the Company's website at; murray-income.co.uk.

A small selection of examples include our engagements with Games Workshop, Safestore and Hiscox outlined below.

Having relatively recently initiated a position in Games Workshop we chose to engage with the company more actively on ESG-related matters. Of particular note, we have flagged to the company that we believe that enhancing diversity across the business should help Games Workshop achieve a number of its goals, including the sustaining of its strong culture and ambitions to further develop their intellectual property and grow the customer base through expanding geographically. We have written to the company outlining our views and provided examples of practices to support diversity we have observed among our investee companies.

For a number of years we have voted against approval of Safestore's Remuneration Report owing to concerns about a very generous incentive scheme introduced in 2017. However, we are supportive of the current board and therefore, as one of Safestore's largest shareholders, this year we have engaged actively with the board on the structure of a new remuneration policy. We have provided feedback on multiple aspects of the policy proposal, including striking a more balanced approach to base salary and long-term incentives, incentivising and retaining management of this high-performing company and avoiding base salary growth for executive directors ahead of the wider workforce.

We engaged with Hiscox in order to gain additional insight into the company's approach to ESG. The principal focus of our engagement was the integration of climate-related risks into underwriting. We were encouraged by the company's open dialogue on the areas of strength and weakness in current datasets and modelling with respect to climate-related risks and Hiscox's approach to enhancing its capabilities and generating opportunities for new products. We have asked the company to enhance disclosures with regards to social indicators, in particular on human capital, and suggested that Hiscox consider including social considerations into its Exclusions Policy and set group sustainability targets beyond Greenhouse Gas emissions reductions.

Income

For the Year, the Company witnessed a decrease in the level of income due to lower dividends from the mining sector holdings and a smaller amount of special dividends, partly offset by higher interest income. Two special dividends (paid by TotalEnergies and OSB Group) were included in income from investments and were treated as revenue items. We believe that this recognition is appropriate given that, in each case, the return of cash was from a build-up of profits generated by ongoing operations rather than from a sale of assets.

The Company's earnings per share decreased by 4.4% from 40.5p to 38.7p. Paying a full year dividend of 37.5p per share has allowed £2.2m to supplement the revenue reserves which now represent 54% of the full year dividend. We view the portfolio's exposure to attractive and enduring earnings trends as providing the potential for appealing income growth over the long term.

Outlook

Recent data points provide a less than clear picture around current conditions and future direction. However, in most developed economies growth appears to be more robust than might be expected in light of the meaningful monetary policy tightening over the past 12 months. On the other hand, the momentum of China's reopening has faded and more stimulus is likely to feature. Underlying price pressures have been sticky reflecting excess demand across various sectors and economies prompting central banks to remain hawkish. We believe that the current tightening cycle will ultimately restrict economic growth with the resulting downturn in demand helping to engineer a relatively rapid fall in inflationary pressures allowing significant interest rate cuts over the next 18 months.

The portfolio is jam-packed with high quality, predominantly global businesses capable of delivering appealing long term earnings and dividend growth at a modest aggregate valuation. Our focus on quality companies should provide protection through a downturn: those companies with pricing power, high margins and strong balance sheets are better placed to navigate a more challenging economic environment and emerge in a strong position. Furthermore, these quality characteristics are helpful in underpinning the portfolio's income generation.

The valuations of UK-listed companies remain attractive on a relative and absolute basis. Apart from the global financial crisis, the UK's market multiple is nearing its lowest point for 30 years. It is cheap in absolute terms, relative to history and also relative to global equities. Investors are benefitting from global income at a knock-down price. Moreover, the dividend yield of the UK market remains at an appealing premium to other regional equity markets. In summary, we feel optimistic that our long-term focus on investments in high quality companies with robust competitive positions and strong balance sheets, which are led by experienced management teams will be capable of delivering premium earnings and dividend growth.

Charles Luke and Iain PyleInvestment Manager19 September 2023

Performance

Performance (total return, including reinvested dividends)

Ten Year Financial Record

Financial Highlights and Dividends

Financial Highlights

Dividends

Overview of Strategy

Business Model

Murray Income Trust PLC (the "Company") is an investment trust whose Ordinary shares are listed on the premium segment of the London Stock Exchange.

The Company is governed by a Board of Directors (the "Board"), all of whom are non-executive, and has no employees. The Board is responsible for determining the Company's investment objective and investment policy. Like other investment companies, the day-to-day investment management and administration of the Company is outsourced by the Board to an investment management group, abrdn, and other third party providers. The Company has appointed abrdn Fund Managers Limited (the "Manager") as its alternative investment fund manager, which has in turn delegated certain functions, including administration of the investment policy, to abrdn Investments Limited (formerly Aberdeen Asset Managers Limited). The Manager has delegated the company secretarial function to abrdn Holdings Limited (formerly Aberdeen Asset Management PLC).

The Company complies with Section 1158 of the Corporation Tax Act 2010 which permits the Company to operate as an investment trust.

Investment Objective

The Company aims for a high and growing income combined with capital growth through investment in a portfolio principally of UK equities.

Investment Policy

In pursuit of the Company's investment objective, the Company's investment policy is to invest in the shares of companies that have potential for real earnings and dividend growth, while at the same time providing an above-average portfolio yield. The emphasis is on the management of risk and on the absolute return and yield from the portfolio as a whole rather than the individual companies which the Company invests in, which is achieved by ensuring an appropriate diversification of stocks and sectors within the portfolio, with a high proportion of assets in strong, well-researched companies. The Company makes use of borrowing facilities to enhance shareholder returns when appropriate.

Delivering the Investment Policy

The Company maintains a diversified portfolio of the equity securities of UK and overseas companies with an emphasis on investing in quality companies with good management, strong cash flow, a sound balance sheet and which are generating a reliable earnings stream.

The Investment Manager follows a bottom-up investment process based on a disciplined evaluation of companies, including through direct visits by its fund managers. Stock selection is the major source of added value, concentrating on quality first, then price. Top-down investment factors are secondary in the Investment Manager's portfolio construction with diversification rather than formal controls guiding stock and sector weights.

Board Investment Limits

The Board sets additional investment guidelines within which the Investment Manager must operate :

·  the portfolio typically comprises between 40 and 70 holdings (but without restricting the Company from holding a more or less concentrated portfolio from time to time);

·  the Company may invest up to 100% of its gross assets in UK-listed equities and other securities and is permitted to invest up to 20% of its gross assets in other overseas-listed equities and securities;

·  the Investment Manager may invest in any market sector, however, the top five holdings may not exceed 40% of the total value of the portfolio and the top three sectors represented in the portfolio may not exceed 50%; and

·  the Company may invest no more than 15% of its gross assets in other listed investment companies (including investment trusts).

The Company may use derivatives for the purpose of enhancing portfolio returns and for hedging purposes in a manner consistent with the Company's broader investment policy. The Investment Manager is permitted to invest in options and in structured products, provided that any structured product issued in the form of a note or bond has a minimum credit rating of "A".

Gearing

The Board is responsible for setting the gearing policy of the Company and for the limits on gearing. The Manager is responsible for gearing within the limits set by the Board. The Board has set its gearing limit at a maximum of 25% of NAV at the time of draw down. Gearing - borrowing money - is used selectively to leverage the Company's portfolio in order to enhance returns where this is considered appropriate. Particular care is taken to ensure that any financial covenants permit maximum flexibility of investment policy. Significant changes to gearing levels are communicated to shareholders.

Key Performance Indicators

At each Board meeting, the Directors consider a number of Key Performance Indicators ("KPIs") to assess the Company's success in achieving its objectives, and these are described below, with those also categorised as Alternative Performance Measures marked with an asterisk:

Principal Risks and Uncertainties

There are a number of risks and uncertainties which, if realised, could have a material adverse effect on the Company's business model, future performance and solvency. The Board, through the Audit Committee, has put in place a robust process to identify, assess and monitor these by means of a risk assessment and internal controls system. This system was reviewed during the year, as explained in the Audit Committee Report in the published Annual Report. As noted therein, the committee has a risk register and uses a post-mitigation heat risk map to identify principal, and emerging, risks.

Macroeconomic uncertainty has again been a significant risk during the year due to rising interest rates and higher inflation. The Board does not consider that the principal risks and uncertainties identified have changed during the Year.

The Audit Committee and the Board both consider emerging risks as part of their normal review of factors which could affect the Company, both in the short and longer term. For example, the emergence of negative climate change impacts, high inflation and interest rates, and potential conflicts (China and Taiwan tension) form a part of Directors' discussions with input from the Manager and broker.

The following table sets out the Company's principal risks and uncertainties and the Company's mitigating actions and comments if the post-mitigation risk assessment has changed, together with the reason why.

The following are other risks identified by the Board which could have a major impact on the Company, but due to mitigation are not deemed to be principal risks:

The principal risks associated with an investment in the Company's shares can be found in the pre-investment disclosure document ("PIDD") published by the Manager, which is available from the Company's website: murray-income.co.uk. 

Promotional Activities

The Board recognises the importance of promoting the Company to existing and prospective investors both for improving liquidity and enhancing the rating of the Company's shares. The Board believes one effective way to achieve this is through subscription to, and participation in, the promotional programme run by the Manager on behalf of a number of investment trusts under its management. The Company also supports the Manager's investor relations programme which involves regional roadshows, promotional and public relations campaigns. The Manager's promotional and investor relations teams report to the Board on a quarterly basis giving analysis of their activities as well as updates on the shareholder register and any changes in the make-up of that register.

Communicating the long-term attractions of the Company is key. The promotional programme includes commissioning independent paid for research on the Company, most recently from Edison Investment Research Limited; a copy may be found on the Company's website.

The UK Stewardship Code and Proxy Voting

The Company supports the UK Stewardship Code 2020, and seeks to play its role in supporting good stewardship of the companies in which it invests. Responsibility for actively monitoring the activities of portfolio companies has been delegated by the Board to the Manager which has sub-delegated that authority to the Investment Manager.

The Manager is a tier 1 signatory of the UK Stewardship Code 2020 which aims to enhance the quality of engagement by investors with investee companies in order to improve their socially responsible performance and the long term investment return to shareholders. The Manager's Annual Stewardship Report 2022 may be found at abrdn.com. While delivery of stewardship activities has been delegated to the Manager, the Board acknowledges its role in setting the tone for the effective delivery of stewardship on the Company's behalf.

The Board has also given discretionary powers to the Manager to exercise voting rights on resolutions proposed by the investee companies within the Company's portfolio. The Manager reports to the Board on a six monthly basis on stewardship (including voting) issues.

Global Greenhouse Gas Emissions and Streamlined Energy and Carbon Reporting ("SECR")

All of the Company's activities are outsourced to third parties. The Company therefore has no greenhouse gas emissions to report from the operations of its business, nor does it have responsibility for any other emissions producing sources under the Companies Act 2006 (Strategic Report and Directors' Reports) Regulations 2013. For the same reason as set out above, the Company considers itself to be a low energy user under the SECR regulations and therefore is not required to disclose energy and carbon information. Further information on the Manager's obligatory disclosures under the Taskforce on Climate-related Financial Disclosures ("TCFD") may be found later in this section.

Viability Statement

The Company does not have a fixed period strategic plan but the Board does formally consider risks and strategy on at least an annual basis. The Board regards the Company, with no fixed life, as a long term investment vehicle but for the purposes of this viability statement has decided that a period of five years (the "Review Period") is an appropriate timeframe over which to report. The Board considers that this Review Period reflects a balance between looking out over a long term horizon and the inherent uncertainties of looking out further than five years.

In assessing the viability of the Company over the Review Period the Directors have focused upon the following factors:

·  the Company's principal risks and uncertainties as set out in the Strategic Report;

·  the relevance of the Company's investment objective;

·  the demand for the Company's shares as indicated by the level of premium and/or discount;

·  the level of income generated by the Company's portfolio as compared to its expenses;

·  the overall liquidity of the Company's investment portfolio;

·  the likelihood of the Company being able to continue to meet the covenants under its current borrowing arrangements, and the covenants attaching to any replacement borrowing arrangements, over the next five years;

·  the £40m senior loan notes and £60m senior loan notes, which are repayable in 2027 and in 2029, respectively; and

·  any requirement for the Company to repay or refinance the drawn-down element of its three year £50 million bank loan facility prior to, or at, its maturity in October 2024.

In making this assessment, the Board has considered in particular a large economic shock, such as a further global pandemic, a period of increased stock market volatility and/or markets at depressed levels, a significant reduction in the liquidity of the portfolio, or persistent inflationary pressures, or changes in investor sentiment or regulation, and how these factors might affect the Company's prospects and viability in the future. The Board undertook scenario analysis, incorporating income forecasting, in reaching its conclusions, but recognising that the Company's expenses are significantly lower than its total income.

Taking into account the Company's current position and the potential impact of its principal risks and uncertainties, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due for a period of five years from the date of this Report.

Performance, Financial Position and Outlook

A review of the Company's activities and performance during the Year, including future developments, is set out in the Chair's Statement and in the Investment Manager's Report. These cover market background, investment activity, portfolio strategy, dividend policy, gearing and investment outlook. A comprehensive analysis of the portfolio is provided below while the full portfolio of investments is published monthly on the Company's website. The Company's Statement of Financial Position shows the assets and liabilities at the year end. Borrowing facilities at the year end comprised a mix of fixed and floating debt: a three year £50 million bank loan, £40 million of senior loan notes due for repayment in 2027 and £60 million of senior loan notes due for repayment in 2029. Details of these are shown in notes 13 and 14 respectively.

The future strategic direction and development of the Company is regularly discussed as part of Board meeting agendas. The Board also considers the Manager's promotional strategy for the Company, including effective communications with shareholders. The Board intends to maintain, for the year ending 30 June 2024, the strategy set out in the Strategic Report as it believes that this is in the best interests of shareholders.

Environmental, Community, Social and Human Rights Issues

The Company has no employees and, accordingly, there are no disclosures to be made in respect of employees. In relation to the investment portfolio, the Board has delegated assessment of these issues to the Investment Manager, responsibility.

Modern Slavery Act

Due to the nature of its business, being a company that does not offer goods and services to customers, the Board considers that the Company is not within the scope of the Modern Slavery Act 2015 because it has no turnover. The Company is therefore not required to make a slavery and human trafficking statement. The Board considers the Company's supply chains, dealing predominantly with professional advisers and service providers in the financial services industry, to be low risk in relation to this matter.

Board Diversity

At 30 June 2023, there were three male Directors and three female Directors (2022 - three male Directors and three female Directors). Further information on Board diversity may be found in the Directors' Report.

The Strategic Report has been approved by the Board and signed on its behalf by:

Neil RoganChair19 September 2023

Promoting the Success of the Company

The Board is required to report how it has discharged its duties and responsibilities under section 172 of the Companies Act 2006 during the Year. Under this requirement, the Directors have a duty to promote the success of the Company for the benefit of its members (shareholders) as a whole, taking into account the likely long term consequences of decisions, the need to foster relationships with the Company's stakeholders, and the impact of the Company's operations on the environment. In addition the Directors must act fairly between shareholders and be cognisant of maintaining the reputation of the Company.

The Purpose of the Company and Roleof the Board

The Company has been established as an investment vehicle for the purpose of delivering its investment objective which is set out on the inside front cover of this Report. Investment trusts, such as the Company, are long-term investment vehicles that are typically externally-managed, have no employees, and are overseen by an independent non-executive board of directors.

The Board is responsible for all decisions relating to the Company's investment objective and policy, gearing, corporate governance and strategy, and for monitoring the performance of the Company's third party service providers, including the Manager. 

The Board's philosophy is that the Company should foster a culture where all parties are treated with respect. The Directors provide mutual support combined with constructive challenge. Integrity, openness and diligence are defining characteristics of the Board's culture. The Company has a number of policies and procedures in place to aid a culture of good governance, such as those relating to Director's conflicts of interests and dealings in the Company's shares, annual evaluation of Directors, anti-bribery and anti-tax evasion. At its regular meetings, the Board engages with the Manager to understand its culture and receives regular reporting and feedback from the other key service providers.

The Company's primary stakeholders have been identified as its shareholders, the Manager, other keythird party service providers, lenders and investee companies and the following table sets out details ofthe Company's engagement.

Specific Examples of Stakeholder Consideration During the Year

While the importance of giving due consideration to the Company's stakeholders is not a new requirement, and is considered as part of every Board decision, the Directors were particularly mindful of stakeholder considerations during the following decisions reached during the Year.

Dividends Paid to Shareholders

The level, frequency and timing of dividends paid are key considerations for the Board, taking into account net earnings for the year and the Company's objective of providing shareholders with a high and growing income, combined with the Company's Dividend Hero status. 

The total dividend per share of 37.5p in respect of the Year, representing an increase of 4.2% on the prior year, and the Company's dividend policy to make four equally-spaced payments to shareholders throughout the Year, reflects these considerations.

Share Buy Backs

During the Year the Company bought back 4,970,471 Ordinary shares to be held in treasury, representing a significant increase on the 356,015 Ordinary shares bought back in the previous year, providing a small accretion to the NAV and a degree of liquidity to the market at times when the discount to the NAV per share had widened during normal market conditions. It is the view of the Board that this policy remains in the best interests of all shareholders. 

Board Succession

The Board, via the Nomination Committee, reviewed its succession plan in light of Directors' retirement at the AGM on 7 November 2023. Further information may be found in the Directors' Report.

Shareholder Communication

The Chair hosted an online event for shareholders on 2 November 2022. This event was arranged to allow those shareholders who may have been unable to attend the AGM in person on 1 November 2022 to pose questions to both the Chair and the Investment Manager. A similar event will be held on 3 November 2023, as described in the Chair's Statement.

Ten Largest Investments

As at 30 June 2023

Portfolio

Summary of Investment Changes During the Year

Directors' Report

The Directors present their report and the audited financial statements for the year ended 30 June 2023.

Results and Dividend Policy

The financial statements for the Year indicate a total return attributable to equity shareholders for the year of £73,486,000 (2022 - loss of £41,101,000) and an explanation for the Company's financial performance may be found in the Chair's Statement..

On 1 November 2022, the Company declared a first interim dividend of 8.25p per share to be paid on 15 December 2022, a second interim dividend of 8.25p per share to be paid on 16 March 2023 and a third interim dividend of 8.25p per share to be paid on 15 June 2023.

The Company further announced, on 1 August 2023, the payment to shareholders on 14 September 2023 of a fourth interim dividend for the year of 12.75p per share (2022 - 11.25p) with an ex-dividend date of 18 August 2022 and a record date of 17 August 2023. This resulted in total dividends of 37.5p per share for the year ended 30 June 2023, an increase of 4.2% on the 36.0p per share paid for the prior year, which represented the 50th year of consecutive growth in the Company's annual dividend.

The Board is proposing to maintain the dividend policy of paying four interim dividends each year. In line with good corporate governance, the Board therefore proposes to put the Company's dividend policy to Shareholders for approval at the AGM as resolution 4. At the AGM on 1 November 2022, shareholders approved a dividend policy to pay four quarterly interim dividends per year. 

Principal Activity and Status

The Company, which was incorporated in 1923, is registered as a public limited company in Scotland under company number SC012725 and is an investment company within the meaning of Section 833 of the Companies Act 2006.

The Company has been accepted by HM Revenue & Customs as an investment trust subject to the Company continuing to meet the relevant eligibility conditions of Section 1158 of the Corporation Tax Act 2010 and the ongoing requirements of Part 2 Chapter 3 Statutory Instrument 2011/2999 for all financial years commencing on or after 1 July 2012. The Directors are of the opinion that the Company has conducted its affairs during the Year so as to enable it to comply with the ongoing requirements for investment trust status.

The Company has conducted its affairs so as to satisfy the requirements as a qualifying security for Individual Savings Accounts. The Directors intend that the Company will continue to conduct its affairs in this manner.

Capital Structure and Voting Rights

At 30 June 2023, the Company had 111,720,001 (2022 - 116,690,472) fully paid Ordinary shares of 25p each with voting rights in issue and an additional 7,809,531 (2022 - 2,839,060) shares in Treasury. During the Year, 4,970,471 Ordinary shares were bought back into Treasury (2022 - 356,015).

Since the year end, the Company has bought back a further 1,788,000 Ordinary shares into treasury. Accordingly, as at the date of this Report, the Company's issued share capital consisted of 109,932,001 Ordinary shares of 25 pence each and 9,597,531 Ordinary shares held in treasury.

Ordinary shareholders are entitled to vote on all resolutions which are proposed at general meetings of the Company. The Ordinary shares, excluding shares in Treasury, carry a right to receive dividends. On a winding up, after meeting the liabilities of the Company, the surplus assets will be paid to Ordinary shareholders in proportion to their shareholdings. There are no restrictions on the transfer of Ordinary shares in the Company other than certain restrictions which may be applied from time to time by law (for example, laws prohibiting insider trading).

Manager and Company Secretary

The Manager has been appointed by the Company, under a management agreement, to provide investment management, risk management, administration and company secretarial services as well as promotional activities. The Company's portfolio is managed by the Investment Manager by way of a group delegation in place with the Manager. In addition, the Manager has sub-delegated promotional activities to the Investment Manager and administrative and secretarial services to abrdn Holdings Limited.

Under the management agreement, the Manager is entitled to a monthly fee of one-twelfth of: 0.55% pa on the first £350 million of net assets, 0.45% pa on net assets between £350 million and £450 million and 0.25% pa on any net assets in excess of £450 million.

The value of any investments in unit trusts, open ended and closed ended investment companies and investment trusts of which the Manager, or another company within abrdn, is the operator, manager or investment adviser, is deducted from net assets when calculating the fee.

The management agreement is terminable on not less than three months' notice. In the event of termination by the Company on less than the agreed notice period, compensation is payable to the Manager in lieu of the unexpired notice period.

An annual secretarial fee of £75,000 (plus applicable VAT) is payable to abrdn Holdings Limited, which is chargeable 100% to revenue. An annual fee equivalent to up to 0.05% of gross assets (calculated at 30 September each year) is paid to the Investment Manager to cover promotional activities undertaken on behalf of the Company.

The finance costs and investment management fees are charged 70% to capital and 30% to revenue in line with the Board's expectation of the split of future investment returns.

The management, secretarial and promotional activity fees paid to subsidiaries of abrdn during the Year are shown in notes 4 and 5 to the financial statements.

External Agencies

The Board has contractually delegated to external agencies, including the Manager and other service providers, certain services including: the management of the investment portfolio, the day-to-day accounting and company secretarial requirements, the depositary services (which include cash monitoring, the custody and safeguarding of the Company's financial instruments and monitoring the Company's compliance with investment limits and leverage requirements) and the share registration services. Each of these contracts was entered into after full and proper consideration by the Board of the quality and cost of services offered in so far as they relate to the affairs of the Company. In addition, ad hoc reports and information are supplied to the Board as requested.

Directors

As at the date of this Report, the Board consisted of a non-executive Chair and five non-executive Directors.

Neil Rogan, Stephanie Eastment, Peter Tait, Merryn Somerset Webb, Alan Giles and Nandita Sahgal Tully were Directors throughout the Year. Peter Tait is the Senior Independent Director.

Board Diversity

The Board recognises the importance of having a range of skilled, experienced individuals with the right knowledge represented on the Board in order to allow it to fulfil its obligations. The Board also recognises the benefits and is supportive of, and will give due regard to, the principle of diversity in its recruitment of new Board members. The Board will not display any bias for age, gender, race, sexual orientation, socio-economic background, religion, ethnic or national origins or disability in considering the appointment of Directors. The Board will continue to ensure that all appointments are made on the basis of merit against the specification prepared for each appointment. The Board will take account of the targets set out in the FCA's Listing Rules, which are set out below.

The Board has resolved that the Company's year end date is the most appropriate date for disclosure purposes. The following information has been provided by each Director through the completion of questionnaires.

Table for reporting on sex as at 30 June 2023

Table for reporting on ethnic background as at 30 June 2023

Notes:

1. Meets target that at least 40% of Directors are women as set out in LR 9.8.6R (9)(a)(i)

2. Meets target that at least one Director is from a minority ethnic background as set out in LR 9.8.6R (9)(a)(iii)

3. This column is not applicable as the Company is externally managed and does not have any executive staff, specifically it does not have either a CEO or CFO. The Company considers that the roles of Chair of the Board, Senior Independent Director and Chair of the Audit Committee are senior board positions and accordingly that the Company meets in spirit the requirement that at least one of the senior board positions is held by a woman.

The Role of the Chair and Senior Independent Director

The Chair is responsible for providing effective leadership to the Board, by setting the tone of the Company, demonstrating objective judgement and promoting a culture of openness and debate. The Chair facilitates the effective contribution of, and encourages active engagement by, each Director. In conjunction with the Company Secretary, the Chair ensures that Directors receive accurate, timely and clear information to assist them with effective decision-making. The Chair acts upon the results of the Board evaluation process by recognising strengths and addressing any weaknesses and also ensures that the Board engages with major shareholders and that all Directors understand shareholder views.

The Senior Independent Director ("SID") acts as a sounding board for the Chair and acts as an intermediary for other directors, when necessary. The SID takes responsibility for an orderly succession process for the Chair and leads the annual appraisal of the Chair's performance. The SID is also available to shareholders to discuss any concerns they may have.

Management of Conflicts of Interest, Anti-Bribery Policy and Tax Evasion Policy

The Board has a procedure in place to deal with a situation where a Director has a conflict of interest. As part of this process, the Directors prepare a list of other positions held and all other conflict situations that may need to be authorised either in relation to the Director concerned or his/her connected persons. The Board considers each Director's situation and decides whether to approve any conflict, taking into consideration what is in the best interests of the Company and whether the Director's ability to act in accordance with his/her wider duties is affected. Each Director is required to notify the Company Secretaries of any potential, or actual, conflict situations which will need authorising by the Board. Authorisations given by the Board are reviewed at each Board meeting.

The Board takes a zero-tolerance approach to bribery and has adopted appropriate procedures designed to prevent bribery. abrdn also takes a zero-tolerance approach and has its own detailed policy and procedures in place to prevent bribery and corruption. It is the Company's policy to conduct all of its business in an honest and ethical manner. The Company takes a zero-tolerance approach to facilitation of tax evasion, whether under UK law or under the law of any foreign country and its full policy on tax evasion may be found on its website.

Directors' Insurance and Indemnities

The Company's Articles of Association indemnify each of the Directors out of the assets of the Company against any liabilities incurred by them as a Director of the Company in defending proceedings, or in connection with any application to the Court in which relief is granted. In addition, the Directors have been granted qualifying indemnity provisions by the Company which are currently in force. Directors' and Officers' liability insurance cover has been maintained throughout the Year at the expense of the Company.

Corporate Governance

The Company is committed to high standards of corporate governance and its Statement of Corporate Governance is included in the published Annual Report.

Matters Reserved for the Board

The Board sets the Company's objectives and ensures that its obligations to its shareholders are met. It has formally adopted a schedule of matters which are required to be brought to it for decision, thus ensuring that it maintains full and effective control over appropriate strategic, financial, operational and compliance issues.

These matters include:

·  the maintenance of clear investment objectives and risk management policies;

·  the monitoring of the business activities of the Company ranging from analysis of investment performance through to review of quarterly management accounts;

·  monitoring requirements such as approval of the Half-Yearly Report and Annual Report and financial statements and approval and recommendation of any dividends;

·  setting the range of gearing in which the Manager may operate;

·  major changes relating to the Company's structure including share buy-backs and share issuance;

·  Board appointments and removals and the related terms;

·  authorisation of Directors' conflicts or possible conflicts of interest;

·  terms of reference and membership of Board Committees;

·  appointment and removal of the Manager and the terms and conditions of the Management Agreement relating thereto; and

·  London Stock Exchange/Financial Conduct Authority - responsibility for approval of all circulars, listing particulars and other releases concerning matters decided by the Board.

Full and timely information is provided to the Board to enable it to function effectively and to allow the Directors to discharge their responsibilities.

Consumer Duty

The FCA's Consumer Duty rules were published in July 2022. The rules comprise a fundamental component of the FCA's consumer protection strategy and aim to improve outcomes for retail customers across the entire financial services industry through the assessment of various outcomes, one of which is an assessment of whether a product provides value. Under the Consumer Duty, the Manager is the product 'manufacturer' of the Company and therefore the Manager was required to publish its assessment of value from April 2023. Using a newly developed assessment methodology, the Manager assessed the Company as 'expected to provide fair value for the reasonably foreseeable future'. As this was the first year of assessment, the Board gained an understanding of the Manager's basis of assessment and no concerns were identified with either the assessment method or the outcome of the assessment. In future years the Management Engagement Committee will monitor the assessment method as well as the outcome and is amending its terms of reference accordingly.

Board Committees

The Board has appointed a number of Committees as set out below. Copies of their terms of reference, which define the responsibilities and duties of each Committee, are available on the Company's website.

Audit Committee

The Audit Committee Report is included in the published Annual Report.

Management Engagement Committee

The terms and conditions of the Company's agreement with the Manager, set out above, are considered by the Management Engagement Committee which comprises the whole Board and is chaired by Neil Rogan. The key responsibilities of the Management Engagement Committee include:

·  monitoring and evaluating the performance of the Manager;

·  reviewing, at least annually, the continued retention of the Manager;

·  reviewing, at least annually, the terms of appointment of the Manager including, but not limited to, the level and methodology of the management fees as well as the notice period of the Manager.

In monitoring the performance of the Manager, the Committee considers the investment record of the Company over the short and long term, taking into account its performance against the Benchmark, peer group investment trusts and open-ended funds, and against its delivery of the investment objective to shareholders. The Committee also reviews the management processes, risk control mechanisms and promotional activities of the Manager.

At its meeting in May 2023, the Committee undertook a review covering all of the services provided to the Company by the Manager including investment management, risk management and internal controls, marketing and investor relations, company secretarial and administration services, and also included consideration as to the appropriateness of the management fee arrangements. In light of the outcome of the review, the Directors consider the continuing appointment of the Manager, on the current terms, to be in the best interests of shareholders because they believe that the Manager has the investment management, promotional and associated secretarial and administrative skills required for the effective operation of the Company.

Nomination Committee

The Board has established a Nomination Committee, comprising all of the Directors, with Neil Rogan as Chair. The Committee is responsible for:

·  determining the overall size and composition of the Board (including the skills, knowledge, experience and diversity);

·  undertaking longer term succession planning, including setting a policy on tenure for Directors;

·  undertaking an annual evaluation of the Directors, including establishing that each Director possesses the capacity to commit sufficient time to discharge their responsibilities;

·  oversight of appointments to the Board, including open advertising or engagement of independent search consultants, with a view to attracting candidates from a wide range of backgrounds and with different experience, with due regard to the benefits of diversity on the Board;

·  assessing, annually, the effectiveness and independence of each Director; and

·  making recommendations for the election or re-election of any Director, having evaluated their individual performance, capacity and contribution.

The Committee's overriding priority in appointing new Directors is to identify the candidate with the optimal range of skills and experience to complement the existing Directors. The Board also recognises the benefits, and is supportive, of the principle of diversity in its recruitment of new Directors.

During the Year, through the work of the Nomination Committee, the Directors undertook a review of the Board, its Committees and the performance of individual Directors. The process involved the completion of questionnaires by each Director with the results discussed by the Board thereafter, with appropriate action points agreed. Following the evaluation process, the Board concluded that it operates effectively to promote the success of the Company and that each Director makes a significant contribution to the collective Board. The review of the Chair was undertaken by the Senior Independent Director.

The Directors, excluding the Chair and Peter Tait, undertook an exercise to review the chair of the Company on the retirement of the current Chair. Being a candidate, Peter Tait recused himself from this discussion, which was led by the Chair of the Audit Committee. Further to the decision to appoint Peter Tait to the role, the Committee considered, in the absence of Alan Giles, the latter's appointment as Senior Independent Director, as successor to Peter Tait. Following these changes, the Committee reviewed the Board succession plan and, with the aim of restoring the Board to six members, intends to undertake recruitment of new Directors in due course.

Re-election of Directors

The Directors attended scheduled meetings, including a strategy session during the Year, as follows (with their eligibility to attend the relevant meetings in brackets). The Board meets more frequently when business needs require:

The Board as a whole believes that Neil Rogan, Peter Tait, Stephanie Eastment, Alan Giles, Merryn Somerset Webb and Nandita Sahgal Tully each remains independent of the Manager and free of any relationship which could materially interfere with the exercise of his or her independent judgement on issues of strategy, performance, resources and standards of conduct and confirms that, following formal performance evaluations, the individuals' performance continues to be effective and demonstrates commitment to the role.

The biographies of each of the Directors seeking re-election are shown on the Company's website and include their experience, length of service and the contribution that each Director makes to the Board. Each Director has the requisite high level and range of business and financial experience which enables the Board to provide clear and effective leadership and proper stewardship of the Company.

Neil Rogan is not standing for re-election as a Director and will retire as a Director at the conclusion of the AGM. Merryn Somerset Webb has decided to not seek re-election as a Director and will retire from the Board at the conclusion of the AGM; this is in order that she is able to pursue conference hosting opportunities with interactive investor and other organisations without any risk of compromising her independence.

Stephanie Eastment, Alan Giles, Peter Tait and Nandita Sahgal Tully, each being eligible, offer themselves for re-election as Directors of the Company at the AGM on 7 November 2023.

Policy on Tenure

The Committee has adopted a policy whereby all Directors will stand for re-election at each AGM. In addition Directors, including the Chair, will not stand for re-election as a Director of the Company later than the AGM following the ninth anniversary of their appointment to the Board unless in relation to exceptional circumstances.

Led by Peter Tait as Senior Independent Director, the other Directors, in the absence of Neil Rogan, had determined in 2022 that it was in the best interests of shareholders that Neil Rogan continue as Chair in order to oversee the Company's centenary in 2023.

Remuneration Committee

The Board has established a Remuneration Committee, comprising all of the Directors, whose Chair is Peter Tait. The Directors' Remuneration Report in the published Annual Report sets out the responsibilities of the Committee and the work undertaken by the Committee during the Year.

Accountability and Audit

The responsibilities of the Directors and the auditor in connection with the financial statements appear below and in the published Annual Report.

The Directors who held office at the date of this Report each confirm that, so far as they are aware, there is no relevant audit information of which the Company's auditor is unaware and that they have taken all the steps that they could reasonably be expected to have taken as a Director in order to make themselves aware of any relevant audit information and to establish that the Company's auditor is aware of that information. Further, there have been no important, additional events since the year end which warrant disclosure. The Directors confirm that no non-audit services were provided by the auditor during the Year and, after reviewing the auditor's procedures in connection with the provision of any such services, remain satisfied that the auditor's objectivity and independence is being safeguarded.

Going Concern

The Directors have undertaken a rigorous review and consider both that there are no material uncertainties and that the adoption of the going concern basis of accounting is appropriate. This conclusion is consistent with the longer term Viability Statement set out in the Strategic Report.

The Company's assets consist primarily of a diverse portfolio of listed equity shares nearly all of which, in most circumstances, are realisable within a short timescale. The Board has set limits for borrowing and regularly reviews the level of any gearing, cash flow projections and compliance with banking and loan note covenants.

The Directors are mindful of the principal risks and uncertainties and have reviewed forecasts detailing revenue and liabilities. The Directors are satisfied that the Company has adequate resources to continue in operational existence for the foreseeable future, being at least 12 months from the date of approval of this Annual Report.

Relations with Shareholders

The Directors place great importance on communication with shareholders. The Company's shareholder register is retail-dominated and the Manager, together with the Company's broker, regularly meets with current and prospective shareholders to discuss performance. The Board receives investor relations updates from the Manager on at least a quarterly basis. Any changes in the shareholder register as well as shareholder feedback is discussed by the Directors at each Board meeting.

Regular updates are provided to shareholders through the Annual Report, Half Yearly Report, monthly factsheets, company announcements, including daily net asset value announcements, all of which are available through the Company's website at: murray-income.co.uk. The Annual Report is also widely distributed to other parties who have an interest in the Company's performance. Shareholders and investors may obtain up-to-date information on the Company through its website or via abrdn's Customer Services Department.

The Board's policy is to communicate directly with shareholders and their representative bodies without the involvement of the management group (either the Company Secretary or abrdn) in situations where direct communication is required and representatives from the Board offer to meet with major shareholders on an annual basis in order to gauge their views. The Company Secretary acts on behalf of the Board, not the Manager, and there is no filtering of communication. At each Board meeting the Board receives full details of any communication from shareholders to which the Chair responds, as appropriate, on behalf of the Board.

In addition, in relation to institutional shareholders, members of the Board may be either accompanied by the Manager or conduct meetings in the absence of the Manager.

The Company's Annual General Meeting ordinarily provides a forum, both formal and informal, for shareholders to meet and discuss issues with the Directors and Investment Manager. The Notice of AGM included within the Annual Report is normally sent out at least 20 working days in advance of the meeting.

The Company will also hold an online presentation for existing and potential shareholders on 3 November 2023. Further information on how to register may be found in the Chair's Statement.

Relations with Suppliers, Customers and Others

The Directors have regard to the need to foster the Company's business relationships with suppliers, customers and others, and the effect of that regard, including on the principal decisions taken by the Company during the financial year; further information on the Company's responsibilities under Section 172 of Companies Act 2006 may be found above.

Independent Auditor

Shareholders approved the re-appointment of PricewaterhouseCoopers LLP as the Company's auditor at the AGM on 1 November 2022 and resolutions to approve its re-appointment for the year to 30 June 2024, and to authorise the Audit Committee to determine its remuneration, will be proposed at the forthcoming AGM.

Substantial Interests

As at 30 June 2023 and 31 August 2023 the following interests over 3% in the issued Ordinary share capital of the Company (excluding treasury shares) had been disclosed in accordance with the requirements of the FCA's Guidance and Transparency Disclosure Rules:

The above interests, as at 31 August 2023, were unchanged as at the date of approval of this Report.

Future Developments of the Company

Disclosures relating to the future developments of the Company may be found in the Chair's Statement.

Disclosures Required by FCA ListingRule 9.8.4

This rule requires listed companies to report certain information in a single identifiable section of their annual financial reports. None of the prescribed information is applicable to the Company in the Year.

Financial Instruments

The financial risk management objectives and policies arising from financial instruments and the exposure of the Company to risk are disclosed in note 18 to the financial statements.

Annual General Meeting ("AGM")

Among the special business being put at the AGM of the Company to be held on 7 November 2023, the following resolutions will be proposed:

Authority to allot shares and disapply pre-emption rights (Resolutions 11 and 12)

Ordinary resolution No. 11 will renew the authority to allot the unissued share capital up to an aggregate nominal amount of £1.4m (equivalent to approximately 5.5m Ordinary shares, or, if less, 5% of the Company's existing issued share capital (excluding treasury shares) on the date of passing of this resolution). Such authority will expire on the date of the AGM in 2024 or on 31 December 2024, whichever is earlier. This means that the authority will require to be renewed at the next AGM.

When shares are to be allotted for cash, Section 561 of the Companies Act 2006 (the "Act") provides that existing shareholders have pre-emption rights and that the new shares to be issued, or sold from treasury, must be offered first to such shareholders in proportion to their existing holding of shares. However, shareholders can, by special resolution, authorise the Directors to allot shares or sell from treasury otherwise than by a pro rata issue to existing shareholders. Special resolution No. 12 will, if passed, give the Directors power to allot for cash or sell from treasury equity securities up to an aggregate nominal amount of £2.8m (equivalent to approximately 11.0m Ordinary shares, or, if less, 10% of the Company's existing issued share capital (excluding treasury shares) on the date of passing of this resolution, as if Section 561 of the Act does not apply). This authority will also expire on the date of the AGM in 2024 or on 31 December 2024, whichever is earlier. This authority will not be used in connection with a rights issue by the Company.

The Directors intend to use the authorities given by resolutions 11 and 12 to allot shares or sell shares from treasury and disapply pre-emption rights only in circumstances where this will be clearly beneficial to shareholders as a whole. The issue proceeds would be available for investment in line with the Company's investment policy. No issue of shares will be made which would effectively alter the control of the Company without the prior approval of shareholders in general meeting. It is the intention of the Board that any issue of shares or any re-sale of treasury shares would only take place at a price not less than 0.5% above the NAV per share prevailing at the date of sale. It is also the intention of the Board that sales from treasury would only take place when the Board believes that to do so would assist in the provision of liquidity to the market.

Purchase of the Company's own Ordinary shares (Resolution 13)

At the AGM held on 1 November 2022, shareholders approved the renewal of the authority permitting the Company to repurchase its Ordinary shares. The Directors wish to renew the authority given by shareholders at the previous AGM. A share buy-back facility enhances shareholder value by acquiring shares at a discount to NAV as and when the Directors consider this to be appropriate. The purchase of shares, when they are trading at a discount to NAV per share, should result in an increase in the NAV per share for the remaining shareholders. This authority, if conferred, will only be exercised if to do so would result in an increase in the NAV per share for the remaining shareholders and if it is in the best interests of shareholders generally. Any purchase of shares will be made within guidelines established from time to time by the Board. It is proposed to seek shareholder authority to renew this facility for another year at the AGM.

Under the FCA's Listing Rules, the maximum price that may be paid on the exercise of this authority must not exceed the higher of (i) 105% of the average of the middle market quotations for the shares over the five business days immediately preceding the date of purchase and (ii) the higher of the last independent trade and the highest current independent bid on the trading venue where the purchase is carried out. The minimum price which may be paid is 25p per share. Shares which are purchased under this authority will either be cancelled or held as treasury shares. Special resolution No. 13 will renew the authority to purchase in the market a maximum of 14.99% of shares in issue at the date of passing of the resolution (amounting to approximately 16.5m Ordinary shares). Such authority will expire on the date of the AGM in 2024, or on 31 December 2024, whichever is earlier. This means in effect that the authority will have to be renewed at the next AGM, or earlier, if the authority has been exhausted. No dividends may be paid on any shares held in treasury and no voting rights will attach to such shares. The benefit of the ability to hold treasury shares is that such shares may be sold at short notice. This should give the Company greater flexibility in managing its share capital, and improve liquidity in its shares.

Recommendation

The Directors believe that the resolutions to be proposed at the AGM are in the best interests of the Company and its shareholders as a whole, and recommend that shareholders vote in favour of the resolutions, as the Directors intend to do in respect of their own beneficial shareholdings, amounting to 65,228 Ordinary shares, representing 0.04% of the Company's issued share capital (excluding treasury shares) at 30 June 2023.

On behalf of the BoardNeil RoganChair19 September 2023

Statement of Directors' Responsibilities

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law) including FRS 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for that period.

In preparing these financial statements, the Directors are required to:

·  select suitable accounting policies and then applythem consistently;

·  make judgments and accounting estimates that are reasonable and prudent;

·  state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

·  adopt a going concern basis of accounting for the financial statements unless it is inappropriate to assume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Directors' Report, Directors' Remuneration Report, Strategic Report and Statement of Corporate Governance that comply with that law and those regulations.

The financial statements are published on murray-income.co.uk which is a website maintained by the Company's Manager. The work carried out by the auditor does not involve consideration of the maintenance and integrity of the website and, accordingly, the auditor accepts no responsibility for any changes that have occurred to the financial statements since being initially presented on the website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the Directors confirms to the best of his or her knowledge that:

·  the financial statements, prepared in accordance with the applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the Company;

·  the Annual Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that the Company faces;

·  in the opinion of the Board, the Annual Report and financial statements taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy; and

·  the financial statements are prepared on an ongoing concern basis.

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

Neil Rogan Chair19 September 2023

Statement of Comprehensive Income

Statement of Financial Position

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial Statements

For the year ended 30 June 2023