Last checked at 
15 Aug 2019 07:00
MURRAY INTERNATIONAL TRUST PLC (the "Company")
Legal Entity Identifier (LEI): 549300BP77JO5Y8LM553
HALF YEARLY REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2019
The Directors of Murray International Trust PLC report the unaudited results of the Company for the six months ended 30 June 2019.
HIGHLIGHTS
| 30 June 2019 | 31 December 2018 | % change |
Total assets less current liabilities (before deducting prior charges) | £1,739.5m | £1,604.3m | +8.4 |
Equity shareholders' funds (Net Assets) | £1,539.9m | £1,419.6m | +8.5 |
Share price - Ordinary share (mid market) | 1,152.0p | 1,132.0p | +1.8{A} |
Net Asset Value per Ordinary share | 1,195.1p | 1,107.8p | +7.9{A} |
(Discount)/premium to Net Asset Value per Ordinary share{B} | (3.6%) | 2.2% |
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Net gearing{B} | 11.5% | 12.5% |
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Ongoing charges ratio{B} | 0.61% | 0.69% |
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{A} The movement relates to capital only and does not take account of the reinvestment of dividends. |
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{B} Considered to be an Alternative Performance Measure. Further details below. | |||
PERFORMANCE (TOTAL RETURN) {A}
| Six months ended | Year ended |
| 30 June 2019 | 31 December 2018 |
Share price{AB} | +4.3% | -6.8% |
Net asset value per Ordinary share{A} | +10.6% | -7.5% |
Benchmark | +15.5% | -5.2% |
{A} Considered to be an Alternative Performance Measure. Further details below. | ||
{B} Mid to mid. | ||
Source: Aberdeen Standard Fund Managers Limited, Morningstar & Lipper. | ||
INTERIM BOARD REPORT
Background
The period under review proved positive for the Company in terms of absolute returns. Relative stability returned to financial markets following last year's fourth quarter collapse, with global central banks being credited for restoring investor confidence. Beneath this veneer of apparent tranquility, reasons for concern continued to weigh on the global economic backdrop. The unresolved US trade war with much of the rest of the world intensified as sanctions, taxes and tariffs increasingly inhibited trade flows. These concerns, and signs of geopolitical instability, further affected domestic economic policy agendas, causing global growth forecasts repeatedly to be revised downwards. The consequential divergence between buoyant financial markets and deteriorating fundamentals posed a serious dilemma for investors. The Company's very diversified investment exposure was unable to match the returns recorded in narrower, regional benchmark indices, but nevertheless solid capital and income growth was achieved in line with desired long term investment objectives.
Performance and Dividends
The net asset value (NAV) total return, with net income reinvested, for the six months to 30 June 2019 increased by 10.6% compared with a total return of +15.5% for the Company's benchmark (40% FTSE World UK and 60% FTSE World ex UK). Over the six month period, the share price total return increased by 4.3%, reflecting a move from trading at a premium to trading at a discount.
Two interim dividends of 12.0p (2018: 11.5p) have been declared in respect of the period to 30 June 2019. The first interim dividend is payable on 16 August 2019 to shareholders on the register on 5 July 2019 and the second interim dividend will be paid on 19 November 2019 to shareholders on the register on 4 October 2019. As I have stated previously, the Board intends to maintain a progressive dividend policy given the Company's investment objective. This means that in some years revenue will be added to reserves while, in others, revenue may be taken from reserves to supplement earned revenue for that year to pay the annual dividend. Shareholders should not be surprised or concerned by either outcome as, over time, the Company will aim to pay out what the underlying portfolio earns.
Following widespread financial market weakness and negative portfolio returns in calendar year 2018, the Company benefitted from improving investor sentiment over the six month period. The US Federal Reserve's surprising decision to suddenly reverse policy direction in favour of more accommodative interest rates unsurprisingly proved rather popular with global equity markets. The Company's large exposure to Asia prospered from a combination of solid stock selection and a more favourable environment for financial and other interest-rate sensitive businesses. Local currency strength against Sterling in Thailand, Indonesia and Singapore further bolstered performance of both capital and income returns. The one exception to highlight in Asia was Japan, where stock selection was challenging and where there was an overall reduction in the position during the period.
The portfolio's defensive exposure to North America also delivered respectable double digit total returns in Sterling terms, much in line with expectations. However, with the technology-heavy regional North American benchmark rebounding strongly from depressed year-end levels, relative performance noticeably lagged, accounting for close to forty percent of overall portfolio relative underperformance. Historically very low exposure augmented by strong stock selection in UK equities positively impacted both absolute and relative performance, whilst concentration of assets into only a select few high-quality European holdings proved very supportive against a difficult, deflationary environment evolving in Europe. Despite improving economic fundamentals and attractive underlying earnings and dividend growth, Latin American portfolio holdings struggled to make much progress in an environment of hostile protectionism (against Mexico) and threatened supply chain disruption (against Brazil). Low single digit returns during the period from aggregate Latin American exposure were disappointing under the circumstances.
Yet even while Latin American equities languished, Latin American bonds flourished. As developed market bond yields collapsed worldwide, the spotlight fell on the relative attractiveness of higher yielding fixed income securities in the Emerging world. Portfolio Sovereign bond holdings in Uruguay, Ecuador, Mexico, Brazil and the Dominican Republic all delivered above average capital and income returns as prices rose and yields declined across the asset class. Improving structural dynamics, based on superior savings and long term investment horizons in the emerging world, make this exposure attractive for portfolio diversification.
Management of Premium and Discount
The Board continues to believe that it is appropriate to seek to address temporary imbalances of supply and demand for the Company's shares which might otherwise result in a recurring material discount or premium. Subject to existing shareholder permissions (given at the last AGM) and prevailing market conditions over time, the Board intends to continue to buy back shares and issue new shares (or sell shares from Treasury) if shares trade at a persistent significant discount to NAV (excluding income) or premium to NAV (including income). The Board believes that this process is in all shareholders' interests as it seeks to reduce volatility in the premium or discount to underlying NAV whilst also making a small positive contribution to the NAV. During the period under review the Company has sold 406,531 Ordinary shares from Treasury and issued 297,500 new Ordinary shares under the Company's blocklisting, all at a premium to the underlying inclusive of income NAV. At the latest practicable date, the NAV (excluding income) per share was 1173.4p and the share price was 1152.0p equating to a discount of 1.8% per Ordinary share.
Gearing
In May 2019 the Company agreed a new £30 million loan facility with The Royal Bank of Scotland International Limited ("RBSI") to replace an expiring facility of £15m. The new facility was drawn in full on 16 May 2019 and fixed for five years at an all-in rate of 2.25%. At the period end the Company had net gearing of 11.5%.
Ongoing Charges Ratio
I am pleased to report that the Company's Ongoing Charges Ratio has reduced from 0.69% (as at 31 December 2018) to 0.61% (as at 30 June 2019). This is principally due to the impact of the new management fee arrangements which I outlined in my Chairman's Statement in the Annual Report and Financial Statements for the year ended 31 December 2018 (the "2018 Annual Report").
Electronic Communications
The Board is proposing to move to more electronic based forms of communication with shareholders. Increased use of electronic communications should be a more cost effective, as well as faster and more environmentally friendly way of providing information to shareholders. You will therefore find enclosed with this Half Yearly Report, a letter containing our electronic communications proposals and an opportunity to supply an email address to the Registrars. Shareholders who wish to continue to receive hard copies of documents and communications by post are encouraged to send back their replies as soon as possible but in any event by 30 September 2019.
Outlook
The pivot undertaken by global policy makers since December last year has clearly provided real support to global equity markets. For many investors, the default path of least resistance is usually viewed as being up, so the prospects of continuing monetary stimulus, notwithstanding clear signs of economic challenges ahead, will likely promote continued confidence. However, the path ahead is likely to become increasingly difficult for the global monetary authorities as they navigate the late cycle nature of this economic expansion. Re-establishing some form of economic orthodoxy in an environment of rising political and market pressure will not be straightforward. The extraordinary monetary policies over the past decade have created an enormous legacy of indebtedness that remains the Achilles heel for whatever comes next.
The sharp decline in global bond yields suggests that weaker global growth is likely to be on the horizon. At this stage of the cycle, not only will interest rate policy become increasingly ineffectual, but also the importance of faltering earnings growth will become progressively more influential. Valuation support, through solid earnings, strong balance sheets and well-covered dividends has been noticeably absent from investor considerations of late, but remains the fundamental prerequisite for capital preservation and growth over the long term. Your Manager and Company will remain focused and unwavering in the implementation of such principles in negotiating what may prove to be a testing time for financial markets.
Kevin Carter
Chairman
14 August 2019
Directors' Disclosures
Principal Risks and Uncertainties
The Board has adopted a matrix of the key risks that affect the business. The major financial risks associated with the Company are detailed in note 17 of the 2018 Annual Report and the other principal risks are summarised below. These risks represent the principal risks for the remaining six months of the year.
Details of the management of the risks and the Company's internal controls are disclosed on pages 16 and 17 of the 2018 Annual Report. They can be summarised as follows:
·; Investment strategy and objectives;
·; Investment portfolio, investment management;
·; Financial obligations;
·; Financial and Regulatory; and
·; Operational.
In addition to these risks, the outcome and potential impact of the UK Government's Brexit discussions with the European Union are still unclear at the time of writing. Therefore economic risks remain, relating to the potential for significant resultant currency volatility and/or uncertainty relating to the Company's ability to reclaim withholding taxes paid in overseas jurisdictions.
Related Party Transactions
ASFML acts as Alternative Investment Fund Manager, AAM acts as Investment Manager and Aberdeen Asset Management PLC acts as Company Secretary to the Company; details of the service and fee arrangements can be found in the 2018 Annual Report, a copy of which is available on the Company's website. Details of the transactions with the Manager including the fees payable to Aberdeen group companies are disclosed in note 11 of this Half Yearly Report.
Going Concern
In accordance with the Financial Reporting Council's Guidance on Risk Management, Internal Control and Related Financial and Business Reporting, 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. The Company's assets consist of a diverse portfolio of listed equities and bonds which in most circumstances are realisable within a very short timescale. The Directors believe that the Company has adequate financial resources to continue its operational existence for the foreseeable future and at least 12 months from the date of this Half Yearly Report. Accordingly, the Directors continue to adopt the going concern basis in preparing these financial statements.
Directors' Responsibility Statement
The Directors are responsible for preparing the Half Yearly Financial Report in accordance with applicable law and regulations. The Directors confirm that to the best of their knowledge:
·; the condensed set of Financial Statements has been prepared in accordance with Financial Reporting Standard 104 (Interim Financial Reporting);
·; the Half Yearly Board Report includes a fair review of the information required by rule 4.2.7R of the Disclosure and Transparency Rules (being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of Financial Statements and a description of the principal risks and uncertainties for the remaining six months of the financial year); and
·; the Half Yearly Board Report includes a fair review of the information required by 4.2.8R (being related party transactions that have taken place during the first six months of the financial year and that have materially affected the financial position of the Company during that period; and any changes in the related party transactions described in the last Annual Report that could do so).
The Half Yearly Financial Report for the six months ended 30 June 2019 comprises the Half Yearly Board Report, the Directors' Responsibility Statement and a condensed set of Financial Statements.
For and on behalf of the Board of Murray International Trust PLC
Kevin Carter
Chairman
14 August 2019
CONDENSED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
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| Six months ended | Six months ended | ||||
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| 30 June 2019 | 30 June 2018 | ||||
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| Revenue | Capital | Total | Revenue | Capital | Total |
| Note | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
Gains/(losses) on investments |
| - | 117,407 | 117,407 | - | (148,913) | (148,913) |
Income | 2 | 41,235 | - | 41,235 | 39,485 | - | 39,485 |
Investment management fees | 11 | (1,064) | (2,484) | (3,548) | (1,254) | (2,927) | (4,181) |
Other expenses |
| (1,098) | - | (1,098) | (956) | (18) | (974) |
Currency (losses)/gains |
| - | (3) | (3) | - | 305 | 305 |
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| _______ | _______ | _______ | _______ | _______ | _______ |
Net return before finance costs and taxation |
| 39,073 | 114,920 | 153,993 | 37,275 | (151,553) | (114,278) |
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Finance costs |
| (610) | (1,424) | (2,034) | (608) | (1,417) | (2,025) |
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| _______ | _______ | _______ | _______ | _______ | _______ |
Return before taxation |
| 38,463 | 113,496 | 151,959 | 36,667 | (152,970) | (116,303) |
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Taxation | 3 | (4,076) | 742 | (3,334) | (3,824) | 800 | (3,024) |
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| _______ | _______ | _______ | _______ | _______ | _______ |
Return attributable to equity shareholders |
| 34,387 | 114,238 | 148,625 | 32,843 | (152,170) | (119,327) |
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| _______ | _______ | _______ | _______ | _______ | _______ |
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Return per Ordinary share (pence) | 5 | 26.72 | 88.75 | 115.47 | 25.67 | (118.94) | (93.27) |
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| _______ | _______ | _______ | _______ | _______ | _______ |
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The total column of the Condensed Statement of Comprehensive Income is the profit and loss account of the Company. | |||||||
All revenue and capital items in the above statement derive from continuing operations. | |||||||
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The accompanying notes are an integral part of these financial statements. | |||||||
CONDENSED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
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| As at | As at |
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| 30 June 2019 | 31 December 2018 |
| Notes | £'000 | £'000 |
Non-current assets |
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Investments at fair value through profit or loss |
| 1,703,076 | 1,585,166 |
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| _______ | _______ |
Current assets |
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Debtors |
| 17,015 | 14,519 |
Cash and short-term deposits |
| 22,673 | 7,627 |
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| _______ | _______ |
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| 39,688 | 22,146 |
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| _______ | _______ |
Creditors: amounts falling due within one year |
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Bank loans |
| (50,000) | (15,000) |
Other creditors |
| (3,226) | (3,048) |
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| _______ | _______ |
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| (53,226) | (18,048) |
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| _______ | _______ |
Net current (liabilities)/assets |
| (13,538) | 4,098 |
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| _______ | _______ |
Total assets less current liabilities |
| 1,689,538 | 1,589,264 |
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Creditors: amounts falling due after more than one year |
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Bank loans |
| (149,654) | (169,676) |
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| _______ | _______ |
Net assets |
| 1,539,884 | 1,419,588 |
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| _______ | _______ |
Capital and reserves |
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Called-up share capital |
| 32,212 | 32,137 |
Share premium account |
| 356,188 | 351,666 |
Capital redemption reserve |
| 8,230 | 8,230 |
Capital reserve | 6 | 1,071,945 | 953,992 |
Revenue reserve |
| 71,309 | 73,563 |
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| _______ | _______ |
Equity shareholders' funds |
| 1,539,884 | 1,419,588 |
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| _______ | _______ |
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Net asset value per Ordinary share (pence) | 7 | 1,195.12 | 1,107.81 |
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| _______ | _______ |
CONDENSED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
Six months ended 30 June 2019 |
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| Share | Capital |
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| Share | premium | redemption | Capital | Revenue |
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| capital | account | reserve | reserve | reserve | Total |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
Balance at 31 December 2018 | 32,137 | 351,666 | 8,230 | 953,992 | 73,563 | 1,419,588 |
Return after taxation | - | - | - | 114,238 | 34,387 | 148,625 |
Dividends paid (see note 4) | - | - | - | - | (36,641) | (36,641) |
Issue of shares from Treasury | - | 1,046 | - | 3,715 | - | 4,761 |
Issue of new shares | 75 | 3,476 | - | - | - | 3,551 |
| _______ | _______ | _______ | _______ | _______ | _______ |
Balance at 30 June 2019 | 32,212 | 356,188 | 8,230 | 1,071,945 | 71,309 | 1,539,884 |
| _______ | _______ | _______ | _______ | _______ | _______ |
Six months ended 30 June 2018 |
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| Share | Capital |
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| Share | premium | redemption | Capital | Revenue |
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| capital | account | reserve | reserve | reserve | Total |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
Balance at 31 December 2017 | 32,137 | 350,681 | 8,230 | 1,132,829 | 75,252 | 1,599,129 |
Return after taxation | - | - | - | (152,170) | 32,843 | (119,327) |
Dividends paid (see note 4) | - | - | - | - | (35,785) | (35,785) |
Issue of shares from Treasury | - | 985 | - | 3,268 | - | 4,253 |
| _______ | _______ | _______ | _______ | _______ | _______ |
Balance at 30 June 2018 | 32,137 | 351,666 | 8,230 | 983,927 | 72,310 | 1,448,270 |
| _______ | _______ | _______ | _______ | _______ | _______ |
CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
| Six months ended | Six months ended |
| 30 June 2019 | 30 June 2018 |
| £'000 | £'000 |
Net return before finance costs and taxation | 153,993 | (114,278) |
Decrease in accrued expenses | (298) | (38) |
Overseas withholding tax | (3,001) | (2,774) |
Interest income | (21) | (3) |
Dividend income | (30,398) | (29,043) |
Fixed interest income | (10,816) | (10,439) |
Fixed interest income received | 9,500 | 11,648 |
Dividends received | 28,612 | 27,047 |
Interest received | 2 | 3 |
Interest paid | (2,007) | (2,151) |
(Gains)/losses on investments | (117,407) | 148,913 |
Increase in other debtors | (21) | (21) |
Corporation tax paid | (4) | (323) |
| _______ | _______ |
Net cash from operating activities | 28,134 | 28,541 |
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Investing activities |
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Purchases of investments | (87,217) | (51,759) |
Sales of investments | 87,458 | 71,729 |
| _______ | _______ |
Net cash from investing activities | 241 | 19,970 |
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Financing activities |
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Equity dividends paid | (36,641) | (35,785) |
Issue of Ordinary shares | 3,551 | - |
Issue of Ordinary shares from Treasury | 4,761 | 4,253 |
Loan repayment | (15,000) | (60,000) |
Loan drawdown | 30,000 | 60,000 |
| _______ | _______ |
Net cash used in financing activities | (13,329) | (31,532) |
| _______ | _______ |
Increase in cash | 15,046 | 16,979 |
| _______ | _______ |
Analysis of changes in cash during the period |
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Opening balance | 7,627 | 4,296 |
Increase in cash as above | 15,046 | 16,979 |
| _______ | _______ |
Closing balance | 22,673 | 21,275 |
| _______ | _______ |
NOTES TO THE FINANCIAL STATEMENTS
1. | Accounting policies - Basis of preparation |
| The condensed financial statements have been prepared in accordance with Financial Reporting Standard 104 (Interim Financial Reporting) and with the Statement of Recommended Practice for 'Financial Statements of Investment Trust Companies and Venture Capital Trusts'. They have also been prepared on a going concern basis and on the assumption that approval as an investment trust will continue to be granted. Annual financial statements are prepared under Financial Reporting Standard 102. |
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| The condensed interim financial statements have been prepared using the same accounting policies as the preceding annual financial statements. |
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| Six months ended | Six months ended |
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| 30 June 2019 | 30 June 2018 |
2. | Income | £'000 | £'000 |
| Income from investments |
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| UK dividends | 4,955 | 5,191 |
| Overseas dividends | 25,443 | 23,852 |
| Overseas interest | 10,816 | 10,439 |
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| _______ | _______ |
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| 41,214 | 39,482 |
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| _______ | _______ |
| Other income |
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| Deposit interest | 21 | 3 |
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| _______ | _______ |
| Total income | 41,235 | 39,485 |
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| _______ | _______ |
3. | Taxation |
| The taxation expense reflected in the Condensed Statement of Comprehensive Income is based on the estimated annual tax rate expected for the full financial year. The estimated annual corporation tax rate used for the year to 31 December 2019 is 19%. This is in line with the current corporation tax rate. |
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| The tax expense represents the sum of tax currently payable and deferred tax. Any tax payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the Condensed Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. |
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| Six months ended | Six months ended |
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| 30 June 2019 | 30 June 2018 |
4. | Ordinary dividends on equity shares | £'000 | £'000 |
| Third interim dividend 2018 of 11.5p (2017 - 11.0p) | 14,737 | 14,056 |
| Final dividend 2018 of 17.0p (2017 - 17.0p) | 21,904 | 21,729 |
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| _______ | _______ |
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| 36,641 | 35,785 |
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| _______ | _______ |
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| A first interim dividend for 2019 of 12.0p (2018 - 11.5p) will be paid on 16 August 2019 to shareholders on the register on 5 July 2019. The ex-dividend date was 4 July 2019. | ||
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| A second interim dividend for 2019 of 12.0p (2018 - 11.5p) will be paid on 19 November 2019 to shareholders on the register on 4 October 2019. The ex-dividend date is 3 October 2019. | ||
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| Six months ended | Six months ended |
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| 30 June 2019 | 30 June 2018 |
5. | Return per Ordinary share | £'000 | £'000 |
| Based on the following figures: |
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| Revenue return | 34,387 | 32,843 |
| Capital return | 114,238 | (152,170) |
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| _______ | _______ |
| Total return | 148,625 | (119,327) |
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| _______ | _______ |
| Weighted average number of Ordinary shares | 128,709,440 | 127,933,000 |
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| __________ | __________ |
6. | Capital reserves |
| The capital reserve reflected in the Condensed Statement of Financial Position at 30 June 2019 includes gains of £438,253,000 (31 December 2018 - gains of £359,436,000) which relate to the revaluation of investments held at the reporting date. |
7. | Net asset value | ||
| The net asset value per share and the net asset value attributable to the Ordinary shares at the period end calculated in accordance with the Articles of Association were as follows: | ||
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| As at | As at |
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| 30 June2019 | 31 December 2018 |
| Attributable net assets (£'000) | 1,539,884 | 1,419,588 |
| Number of Ordinary shares in issue | 128,847,576 | 128,143,545 |
| Net asset value per share (pence) | 1,195.12 | 1,107.81 |
8. | Transaction costs | ||
| During the period expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss. These have been expensed through capital and are included within gains/(losses) on investments in the Condensed Statement of Comprehensive Income. The total costs were as follows: | ||
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| Six months ended | Six months ended |
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| 30 June 2019 | 30 June 2018 |
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| £'000 | £'000 |
| Purchases | 94 | 63 |
| Sales | 61 | 72 |
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| _______ | _______ |
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| 155 | 135 |
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| _______ | _______ |
9. | Fair value hierarchy | |||||||
| FRS 102 requires an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following classifications: | |||||||
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| Level 1: | Unadjusted quoted prices in an active market for identical assets or liabilities that the entity can access at the measurement date. | ||||||
| Level 2: | Inputs other than quoted prices included within Level 1 that are observable (ie developed using market data) for the asset or liability, either directly or indirectly. | ||||||
| Level 3: | Inputs are unobservable (ie for which market data is unavailable) for the asset or liability. | ||||||
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| The financial assets and liabilities measured at fair value in the Condensed Statement of Financial Position are grouped into the fair value hierarchy at the reporting date as follows: | |||||||
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| Level 1 | Level 2 | Level 3 | Total | ||
| As at 30 June 2019 | Note | £'000 | £'000 | £'000 | £'000 | ||
| Financial assets at fair value through profit or loss |
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| Quoted equities | a) | 1,426,097 | - | - | 1,426,097 | ||
| Quoted preference shares | b) | - | 7,155 | - | 7,155 | ||
| Quoted bonds | b) | - | 269,824 | - | 269,824 | ||
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| _______ | _______ | _______ | _______ | ||
| Total |
| 1,426,097 | 276,979 | - | 1,703,076 | ||
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| _______ | _______ | _______ | _______ | ||
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| Level 1 | Level 2 | Level 3 | Total | ||
| As at 31 December 2018 | Note | £'000 | £'000 | £'000 | £'000 | ||
| Financial assets at fair value through profit or loss |
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| Quoted equities | a) | 1,321,685 | - | - | 1,321,685 | ||
| Quoted preference shares | b) | - | 6,721 | - | 6,721 | ||
| Quoted bonds | b) | - | 256,760 | - | 256,760 | ||
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| _______ | _______ | _______ | _______ | ||
| Total |
| 1,321,685 | 263,481 | - | 1,585,166 | ||
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| _______ | _______ | _______ | _______ | ||
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| a) | Quoted equities | ||||||
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| The fair value of the Company's investments in quoted equities has been determined by reference to their quoted bid prices at the reporting date. Quoted equities included in Fair Value Level 1 are actively traded on recognised stock exchanges. | ||||||
| b) | Quoted preference shares and bonds | ||||||
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| The fair value of the Company's investments in quoted preference shares and bonds has been determined by reference to their quoted bid prices at the reporting date. Investments categorised as Level 2 are not considered to trade in active markets. | ||||||
10. | Share capital |
| As at 30 June 2019 there were 128,847,576 (31 December 2018 - 128,143,545) Ordinary shares of 25p each in issue excluding those held in treasury. |
11. | Transactions with the Manager |
| The Company has agreements with Aberdeen Standard Fund Managers Limited ('ASFML' or the 'Manager') for the provision of investment management, secretarial, accounting and administration and promotional activity services. |
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| The management fee is charged on net assets (i.e. excluding borrowings for investment purposes) averaged over the six previous quarters ('Net Assets'), on a tiered basis. With effect from 1 January 2019 the annual management fee is charged at 0.5% of Net Assets up to £1,200 million, and 0.425% of Net Assets above £1,200 million. A fee of 1.5% per annum remains chargeable on the value of any unlisted investments. The investment management fee is chargeable 30% against revenue and 70% against realised capital reserves. During the period £3,548,000 (30 June 2018 - £4,181,000) of investment management fees was payable to the Manager, with a balance of £1,769,000 (30 June 2018 - £2,091,000) being payable to ASFML at the period end. |
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| Included within the management fee arrangements is a secretarial fee of £100,000 per annum which is chargeable 100% to revenue. During the period £50,000 (30 June 2018 - £50,000) of secretarial fees was payable to the Manager, with a balance of £25,000 (30 June 2018 - £25,000) being payable to ASFML at the period end. |
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| No fees are charged in the case of investments managed or advised by the Standard Life Aberdeen Group. The management agreement may be terminated by either party on the expiry of six months' written notice. On termination the Manager is entitled to receive fees which would otherwise have been due up to that date. |
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| The promotional activities fee is based on a current annual amount of £400,000 (30 June 2018 - £425,000), payable quarterly in arrears. During the period £194,000 (30 June 2018 - £213,000) of fees was payable, with a balance of £100,000 (30 June 2018 - £106,000) being payable to ASFML at the period end. |
12. | Segmental information |
| The Company is engaged in a single segment of business, which is to invest in equity securities and debt instruments. All of the Company's activities are interrelated, and each activity is dependent on the others. Accordingly, all significant operating decisions are based on the Company as one segment. |
13. | Half-Yearly Report |
| The financial information in this Report does not comprise statutory accounts within the meaning of Section 434 - 436 of the Companies Act 2006. The financial information for the year ended 31 December 2018 has been extracted from published accounts that have been delivered to the Registrar of Companies and on which the report of the Company's auditor was unqualified and contained no statement under Section 498 (2), (3) or (4) of the Companies Act 2006. The condensed interim financial statements have been prepared using the same accounting policies as contained within the preceding annual financial statements. |
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| The financial information for the six months ended 30 June 2019 and 30 June 2018 has not been audited or reviewed by the Company's auditor. |
14. | This Half-Yearly Financial Report was approved by the Board on 14 August 2019. |
The Half Yearly Report will be printed and issued to shareholders and further copies will be available to the public at the registered office of the Company, 1 George Street, Edinburgh EH2 2LL and on the Company's web site murray-intl.co.uk*.
* Neither the Company's website nor the content of any website accessible from hyperlinks on it (or any other website) is (or is deemed to be) incorporated into, or forms (or is deemed to form) part of this announcement.
By order of the Board
ABERDEEN ASSET MANAGEMENT PLC, SECRETARY
14 August 2019
ALTERNATIAVE PERFORMANCE MEASURES
Alternative performance measures are numerical measures of the Company's current, historical or future performance, financial position or cash flows, other than financial measures defined or specified in the applicable financial framework. The Company's applicable financial framework includes FRS 102 and the AIC SORP. The Directors assess the Company's performance against a range of criteria which are viewed as particularly relevant for closed-end investment companies. | ||||||
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Total return | ||||||
Total return is considered to be an alternative performance measure. NAV and share price total returns show how the NAV and share price has performed over a period of time in percentage terms, taking into account both capital returns and dividends paid to shareholders. NAV total return involves investing the net dividend in the NAV of the Company with debt at fair value on the date on which that dividend goes ex-dividend. Share price total return involves reinvesting the net dividend in the share price of the Company on the date on which that dividend goes ex-dividend. | ||||||
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The tables below provide information relating to the NAV and share price of the Company on the dividend reinvestment dates during the six months ended 30 June 2019 and the year ended 31 December 2018. | ||||||
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| Dividend |
| Share | |||
Six months ended 30 June 2019 | rate | NAV | price | |||
31 December 2018 | N/A | 1,107.81p | 1,132.00p | |||
3 January 2019 | 11.50p | 1,104.62p | 1,120.00p | |||
4 April 2019 | 17.00p | 1,151.42p | 1,172.00p | |||
30 June 2019 | N/A | 1,195.12p | 1,152.00p | |||
Total return |
| +10.6% | +4.3% | |||
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| Dividend |
| Share | |||
Year ended 31 December 2018 | rate | NAV | price | |||
31 December 2017 | N/A | 1,251.41p | 1,268.00p | |||
4 January 2018 | 11.00p | 1,260.30p | 1,284.00p | |||
5 April 2018 | 17.00p | 1,142.88p | 1,190.00p | |||
5 July 2018 | 11.50p | 1,122.32p | 1,134.00p | |||
4 October 2018 | 11.50p | 1,140.61p | 1,110.00p | |||
31 December 2018 | N/A | 1,107.81p | 1,132.00p | |||
Total return |
| -7.5% | -6.8% | |||
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Net gearing |
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Net gearing measures the total borrowings of £199,654,000 (31 December 2018 - £184,676,000) less cash and cash equivalents of £22,673,000 (31 December 2018 - £7,627,000) divided by shareholders' funds of £1,539,884,000 (31 December 2018 - £1,419,588,000), expressed as a percentage. Under AIC reporting guidance cash and cash equivalents includes amounts due to and from brokers at the year end as well as cash and cash equivalents. | ||||||
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Premium to net asset value per Ordinary share | ||||||
The difference between the share price of 1,152.00p (31 December 2018 - 1,132.00p) and the net asset value per Ordinary share of 1,195.12p (31 December 2018 - 1,107.81p) expressed as a percentage of the net asset value per Ordinary share. | ||||||
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Ongoing charges | ||||||
Ongoing charges is considered to be an alternative performance measure. The ongoing charges ratio has been calculated in accordance with guidance issued by the AIC as the total of investment management fees and administrative expenses and expressed as a percentage of the average net asset values with debt at fair value throughout the year. The ratio for 30 June 2019 is based on forecast ongoing charges for the year ending 31 December 2019. | ||||||
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| 30 June2019 | 31 December 2018 | |||
Investment management fees (£'000) |
| 7,127 | 8,315 | |||
Administrative expenses (£'000) |
| 2,070 | 1,981 | |||
Less: non-recurring charges (£'000) |
| (41) | (65) | |||
|
| _______ | _______ | |||
Ongoing charges (£'000) |
| 9,156 | 10,231 | |||
|
| _______ | _______ | |||
Average net assets (£'000) |
| 1,504,757 | 1,475,433 | |||
|
| _______ | _______ | |||
Ongoing charges ratio |
| 0.61% | 0.69% | |||
|
| _______ | _______ | |||
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The ongoing charges ratio provided in the Company's Key Information Document is calculated in line with the PRIIPs regulations, which is different to the AIC methodology above. | ||||||
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SUMMARY OF INVESTMENT CHANGES
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| Appreciation/ |
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| Valuation30 June 2019 | (depreciation){A} | Transactions{B} | Valuation31 December 2018 | ||
| £'000 | % | £'000 | £'000 | £'000 | % |
Equities |
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United Kingdom | 161,825 | 9.3 | 11,748 | (11,604) | 161,681 | 10.1 |
North America | 302,570 | 17.4 | 22,538 | 24,432 | 255,600 | 15.9 |
Europe ex UK | 178,956 | 10.3 | 17,135 | (2,672) | 164,493 | 10.3 |
Japan | 16,135 | 0.9 | (31,078) | (13,154) | 60,367 | 3.8 |
Asia Pacific ex Japan | 495,881 | 28.5 | 34,130 | 40,889 | 420,862 | 26.2 |
Latin America | 258,834 | 14.9 | 4,458 | 5,406 | 248,970 | 15.5 |
Africa | 11,896 | 0.7 | 2,184 | - | 9,712 | 0.6 |
| ________ | ________ | ________ | ________ | ________ | ________ |
| 1,426,097 | 82.0 | 61,115 | 43,297 | 1,321,685 | 82.4 |
| ________ | ________ | ________ | ________ | ________ | ________ |
Preference shares |
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United Kingdom | 7,155 | 0.4 | 434 | - | 6,721 | 0.4 |
| ________ | ________ | ________ | ________ | ________ | ________ |
| 7,155 | 0.4 | 434 | - | 6,721 | 0.4 |
| ________ | ________ | ________ | ________ | ________ | ________ |
Fixed income |
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Europe ex UK | 14,819 | 0.9 | (1,434) | 84 | 16,169 | 1.0 |
Asia Pacific ex Japan | 89,349 | 5.1 | 3,569 | 185 | 85,595 | 5.3 |
Latin America | 146,574 | 8.4 | 11,457 | (1,940) | 137,057 | 8.6 |
Africa | 19,082 | 1.1 | 1,072 | 71 | 17,939 | 1.1 |
| ________ | ________ | ________ | ________ | ________ | ________ |
| 269,824 | 15.5 | 14,664 | (1,600) | 256,760 | 16.0 |
| ________ | ________ | ________ | ________ | ________ | ________ |
Other net current assets | 36,462 | 2.1 | 17,364 | - | 19,098 | 1.2 |
| ________ | ________ | ________ | ________ | ________ | ________ |
Total assets{C} | 1,739,538 | 100.0 | 93,577 | 41,697 | 1,604,264 | 100.0 |
| ________ | ________ | ________ | ________ | ________ | ________ |
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{A} Movement in unrealised gains/(losses on investments. | ||||||
{B} At book cost. | ||||||
{C} Figure for 30 June 2019 excludes bank loan of £50,000,000 (31 December 2018 - £15,000,000) which is shown as a current liability in the Condensed Statement of Financial Position. | ||||||
SUMMARY OF NET ASSETS | ||||
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| Valuation | Valuation | ||
| 30 June 2019 | 31 December 2018 | ||
| £'000 | % | £'000 | % |
Equities | 1,426,097 | 92.6 | 1,321,685 | 93.1 |
Preference shares | 7,155 | 0.5 | 6,721 | 0.5 |
Fixed income | 269,824 | 17.5 | 256,760 | 18.1 |
Other net assets{A} | 36,462 | 2.4 | 19,098 | 1.3 |
Bank loans | (199,654) | (13.0) | (184,676) | (13.0) |
| ________ | ________ | ________ | ________ |
| 1,539,884 | 100.0 | 1,419,588 | 100.0 |
| ________ | ________ | ________ | ________ |
{A} Excluding bank loans. |
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INVESTMENT PORTFOLIO
AS AT 30 JUNE 2019
|
| Valuation | Total assets |
Security | Country | £'000 | % |
Taiwan Semiconductor Manufacturing | Taiwan | 72,402 | 4.2 |
Aeroporto del Sureste ADS | Mexico | 69,881 | 4.0 |
Taiwan Mobile | Taiwan | 61,726 | 3.6 |
CME Group | USA | 51,851 | 3.0 |
Vale do Rio Doce{A} | Brazil & USA | 48,881 | 2.8 |
Verizon Communications | USA | 44,881 | 2.6 |
Roche Holdings | Switzerland | 44,250 | 2.5 |
Total | France | 44,090 | 2.5 |
Unilever Indonesia | Indonesia | 43,798 | 2.5 |
British American Tobacco{B} | UK & Malaysia | 43,381 | 2.5 |
Top ten investments |
| 525,141 | 30.2 |
Philip Morris International | USA | 43,181 | 2.5 |
Sociedad Quimica Y Minera De Chile | Chile | 42,750 | 2.5 |
Banco Bradesco | Brazil | 41,716 | 2.4 |
Oversea-Chinese Bank | Singapore | 39,723 | 2.3 |
Singapore Telecommunications | Singapore | 36,483 | 2.1 |
Royal Dutch Shell | UK | 35,102 | 2.0 |
Siam Commercial Bank | Thailand | 32,167 | 1.8 |
Auckland International Airport | New Zealand | 30,872 | 1.8 |
Public Bank | Malaysia | 30,559 | 1.7 |
Kimberly Clark de Mexico | Mexico | 29,161 | 1.7 |
Top twenty investments |
| 886,855 | 51.0 |
Tesco Lotus Retail Growth | Thailand | 29,080 | 1.7 |
Telus | Canada | 29,024 | 1.7 |
BHP Group | Australia | 28,210 | 1.6 |
Intel Corporation | USA | 26,329 | 1.5 |
Samsung Electronic | Korea | 25,992 | 1.5 |
Pepsico | USA | 25,740 | 1.5 |
Schlumberger | USA | 24,974 | 1.4 |
Standard Chartered | UK | 23,875 | 1.4 |
Epiroc | Sweden | 23,287 | 1.3 |
Telefonica Brasil | Brazil | 23,223 | 1.3 |
Top thirty investments |
| 1,146,589 | 65.9 |
Atlas Copco | Sweden | 22,492 | 1.3 |
Indocement Tunggal Prakarsa | Indonesia | 22,247 | 1.3 |
Johnson & Johnson | USA | 21,854 | 1.3 |
Castrol India | India | 21,115 | 1.2 |
Swire Pacific 'B' | Hong Kong | 20,783 | 1.2 |
Nutrien | Canada | 19,149 | 1.1 |
Republic of South Africa 7% 28/02/31 | South Africa | 19,082 | 1.1 |
Novartis | Switzerland | 17,967 | 1.0 |
Bank Pekao | Poland | 16,460 | 1.0 |
HSBC | UK | 16,422 | 0.9 |
Top forty investments |
| 1,344,160 | 77.3 |
Inmarsat | UK | 16,338 | 0.9 |
Japan Tobacco | Japan | 16,135 | 0.9 |
Coca-Cola Amatil | Australia | 15,792 | 0.9 |
Wilson & Sons | Brazil | 15,754 | 0.9 |
TC Energy | Canada | 15,585 | 0.9 |
Republic of Indonesia 6.125% 15/05/28 | Indonesia | 15,364 | 0.9 |
United Mexican States 5.75% 05/03/26 | Mexico | 14,907 | 0.9 |
Republic of Indonesia 7.0% 15/05/22 | Indonesia | 14,519 | 0.8 |
Petroleos Mexicanos 6.75% 21/09/47 | Mexico | 13,994 | 0.8 |
Federal Republic of Brazil 10% 01/01/23 | Brazil | 13,532 | 0.8 |
Top fifty investments |
| 1,496,080 | 86.0 |
Other investments |
| 206,996 | 11.9 |
Total investments |
| 1,703,076 | 97.9 |
Other net current assets{C} |
| 36,462 | 2.1 |
Total assets |
| 1,739,538 | 100.0 |
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{A} Holding comprises equity and fixed income securities, split £28,116,000 and £20,765,000 respectively. | |||
{B} Holding comprises equity holdings in both UK and Malaysia, split £30,239,000 and £13,142,000 respectively. | |||
{C} Excluding bank loans. | |||