MURRAY INTERNATIONAL TRUST PLC (the "Company")

Legal Entity Identifier (LEI):  549300BP77JO5Y8LM553

HALF-YEARLY REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2024

The Directors of Murray International Trust PLC report the unaudited results of the Company for the six months ended 30 June 2024.

Performance Highlights

Financial Calendar and Highlights

Financial Highlights

Financial Highlights

Interim Board Report - Chair's Statement

Background

If a primary driver of solid equity market returns in 2023 was the expectation of easing inflationary pressures and central banks cutting interest rates, one could be forgiven for being slightly surprised at the strength of equity market returns, particularly in developed markets, in the first half of this year. Inflation has eased in some areas, proved stubborn in others and the six or seven interest rate cuts expected in the United States at the end of last year have yet to come to pass. The first half of 2024 has been a period of significant developments and transitions in global capital markets. Factors including robust earnings, resilient developed market economies, and technological advancements support the present positive environment and opportunities. Risks such as conflict, geopolitical tensions, inflation, interest rates and a shifting political picture are equally relevant and have the potential to derail the current picture.

Performance and Dividends

The net asset value (NAV) total return, with dividends reinvested, for the six months to 30 June 2024 was 5.5% compared with 12.2% for the Company's Reference Index (the FTSE All World TR Index in GBP). Over the six month period, the share price total return was 0.5%, as the discount to the NAV widened from -4.0% at 31 December 2023 to -8.7% at 30 June 2024. The Manager's Review contains more information about both the drivers of performance in the period and activity within the portfolio.

The first interim dividend of 2.5p per share (2023: 2.4p) in respect of the six months to 30 June 2024 is payable on 16 August 2024. Today, the Board is declaring a second interim dividend of 2.5p per share (2023: 2.4p) for the current year. This will be paid on 18 November 2024 to shareholders on the register on 4 October 2024.

The Company has increased its dividend in each of the last nineteen years and the Board remains optimistic that this progressive dividend policy can be maintained. As a long-established investment trust, the Company has the benefit of over £72.9 million of distributable revenue reserves on its balance sheet at 30 June 2024. In some years, revenue will be added to reserves while, in others, revenue may be taken from reserves to supplement earned revenue for that year to support the annual dividend.  Shareholders should not be surprised or concerned by either outcome as, over time, the Company will aim to pay out what the underlying portfolio earns.

Manager Succession

During the period we bade farewell to Bruce Stout who has been the Company's lead investment manager since 2004.  Martin Connaghan and Samantha Fitzpatrick who have worked with Bruce for over 20 years have now taken joint responsibility for the management of the portfolio. On behalf of the Board and shareholders I would like to reiterate our sincere thanks to Bruce for all his efforts, enterprise and expertise.

Management of Discount

Your Board continues to believe that, in normal market conditions, it is appropriate to seek to address temporary imbalances in the supply and demand for the Company's shares which might otherwise result in a recurring material discount or premium. The Board believes that this process is in all shareholders' interests as it seeks to reduce volatility in the discount or premium to underlying NAV whilst also making a small positive contribution to the NAV.  In line with most of the investment trust sector, in the first six months of the year the Company's shares have continued to trade at a discount level that is wider than its long-term average.  Consequently, in order to reduce any volatility as well as enhance NAV for ongoing shareholders, the Company bought back 7,385,252 Ordinary Shares of 5p for Treasury at a total cost of £18.1 million and at a weighted average discount of -9.9%, representing 1.2% of the issued share capital.

At the latest practicable date, the NAV (including income) per share was 269.7p and the share price was 249.5p equating to a discount of 7.5% per Ordinary share.

Gearing

In May 2024, the Company repaid its maturing £30 million 5-year fixed-rate loan with The Royal Bank of Scotland International Limited, London Branch. Following the repayment of this loan, the Company's borrowings now consist of £110m unsecured loan notes which are fully drawn and will not be repayable until 2031. The weighted costs of borrowing of these fixed-rate loan notes is a very cost-effective 2.56%. The borrowings represent a net gearing level of 6.0% based on the Company's NAV at 30 June 2024 (31 December 2023: 8.0%). The Board considered options to replace the maturing loan but concluded that the proposed terms were not appropriate at present, but, working with the Manager, will keep the position under review.

Ongoing Charges Ratio ("OCR")

During the review period, the OCR remained flat, ending the six months at 0.52% (31 December 2023: 0.53%). The Board continues to be firmly focused on controlling costs and delivering value to shareholders. A full breakdown of the OCR calculation is provided below.

The Board fully supports the industry-led efforts to reform the rules governing investment trust cost disclosures for retail shareholders by abolishing the Packaged Retail and Insurance-based Investment Products (PRIIPS) Regulation and empowering the Financial Conduct Authority to introduce a replacement regime.

Change of Corporate Broker

During the period the Board, led by the Management Engagement Committee, undertook a review of the corporate brokers serving the investment trust sector. Stifel Nicolaus Europe Limited has been the Company's broker since 2009 and the Board decided that it was appropriate to test the market. The exercise attracted strong interest and after a competitive process the Board concluded that the Company would be best served by appointing JPMorgan Cazenove to act as the Company's Corporate Broker with effect from 18 July 2024.

Outlook

As we look forward, macroeconomic difficulties are likely to continue impacting the direction of financial markets. The geopolitical environment, currently at its most polarised, fragile, and uncertain state in a very long time, demands our attention and caution. Even when interest rates begin to decrease, the cadence and scale of their decline could leave market participants disappointed. Numerous heavily indebted nations will still be confronted with fewer and fewer options to stimulate future growth. While Central Banks may have won the battle with inflation and walked the tightrope between recovery and recession, for now, the geopolitical environment could easily alter that in the blink of an eye. Notwithstanding the economic backdrop, our Manager focuses squarely on delivering the investment objective and looking for opportunities that offer proper diversification.

Shareholder Engagement

The Board was pleased to note that almost 280 investors joined the webinar we hosted in April before our AGM and a further 500 people have subsequently viewed the recording of the webinar on the Company's website. The Board sees this as a useful means of connecting with shareholders and addressing their questions. We expect that this process will be repeated ahead of the Annual General Meeting next April.

Shareholders' views are very important to the Board and I encourage you to email me if you have feedback on the Company at VirginiaHolmes.Chair@abrdn.com.

Virginia Holmes
Chair
8 August 2024

Interim Board Report - Manager's Review

Background

Global equity markets performed strongly in the first half of 2024. They started the year in fine fettle as inflation trends towards the end of 2023 led to optimism about future interest rate cuts. However, equities weakened in April as higher than expected inflation in the first quarter led to renewed fears of interest rates staying higher for longer. Equities rebounded in May and June due to fresh hopes of those elusive interest rate cuts by the end of the year, as well as a solid first quarter corporate earnings season.

Capital market participants are currently navigating a complex landscape characterised by several conflicting factors. On the one hand, the recent economic and corporate environment for many developed markets has been robust, with equity markets in Japan and the United States reaching record highs. On the other hand, there has been no significant reduction to key interest rates, except for some activity by the European Central Bank. Additionally, a dynamic political climate and ongoing geopolitical tensions are introducing substantial uncertainties that could disrupt the market outlook. This dichotomy creates a challenging environment for investors as they balance optimism stemming from solid economic performance, against the risks posed by stubbornly high interest rates and geopolitical instability.

North America

Share prices in the United States rose over the period. The technology sector performed particularly well, especially artificial intelligence (AI)-related stocks. Faced with a relatively robust economy, the US Federal Reserve has, to date, kept the target range for the Fed funds rate at its highest level since 2001. The much discussed "Magnificent Seven" account for a potentially alarming proportion of the earnings growth and index price moves that we have seen thus far. Market participants are rightly becoming more concerned about concentration risk, potentially exuberant expectations for these stocks and the broader market's underlying health.

The Company's holding in Broadcom is one of the opportunities within the AI space. It offers a reasonable dividend yield and has benefitted from the shifting technology landscape. Broadcom is unique among its peers, with a combination of semiconductor and infrastructure software businesses generating predictable and profitable growth, and industry leading gross and free cash flow margins. Its AI chip segment is poised for accelerated growth, driven by gains in Application Specific Integrated Circuits (ASICs) and AI connectivity. The Company's health care exposure in the United States has been mixed in terms of performance. Prominent pharmaceutical names, including AbbVie and Merck & Co, have enjoyed a solid first half. Other exposures to Bristol-Myers Squibb and Johnson & Johnson have delivered little other than positive dividend growth. Communication services investments have also had differing fortunes. Verizon, the largest and highest quality provider in wireless communications, is more of a defensive stock with solid free cash flow generation and a well covered dividend. However, year to date, it has delivered an attractive level of total return. Telus on the other hand, dividend aside, has been disappointing on competition concerns.

Europe & the UK

The Eurozone and the UK emerged from mild recessions, with growth returning in the first quarter of 2024. The European Central Bank kept its base rate on hold for much of the period, as it strove to bring the annual inflation rate down to its target level, before cutting it to 4.25% in June. Meanwhile, French President Emmanuel Macron called for a snap general election after his centrist alliance suffered a shock defeat to the far-right National Rally in the European Parliament elections in June. The resulting political uncertainty, coupled with concerns about France's future fiscal position and the stability of the EU, led to a sell-off in French equities. Prime Minister Rishi Sunak also called a General Election in the UK in which the Conservative Party lost power after 14 years to the Labour Party.

In terms of holdings, BE Semiconductor, a Dutch-based designer and manufacturer of semiconductor assembly equipment, has seen its shares buoyed by the excitement surrounding AI. Consumer staple stocks British American Tobacco and Unilever also performed reasonably well. Investments in industrial stocks Siemens AG and Atlas Copco AB added value, and both companies continue to report solid demand for their products. The main disappointment in this region came from the alcoholic beverage manufacturers Diageo and Pernod Ricard. Both firms are still suffering from a post-pandemic hangover as the market has had to contend with falling volumes, high inventories and consumers trading down to cheaper brands.

Asia & Latin America

These regions had differing fortunes in the first half of 2024. Both had unexpected election outcomes to digest. In Asia, while Prime Minister Narendra Modi claimed a historic third win in a row in India, his ruling alliance failed to secure as large a majority as predicted. The opposite was true in Mexico, where Claudia Sheinbaum was elected as the first female president in an historic, landslide victory. Overall, the Asia Pacific region performed well over the period, with the notable exception of China. This was due to growing risks in the country's property sector and weak domestic investor sentiment. As a result, the Chinese authorities announced various stimulus measures aimed at boosting sentiment; however, these have yet to have the desired impact. In contrast, the Taiwanese and, to a lesser degree, South Korean stock markets both recorded solid gains, helped by their relatively high exposure to the technology sector.

Investments in TSMC, the world's leading semiconductor foundry, and Hon Hai Precision Industry, another Taiwanese holding involved in electronic manufacturing services, both performed well. While dividends remained robust, capital returns in Latin America were weaker. In Chile, Lithium producer Sociedad Quimica Y Minera was disappointing in the weaker lithium price environment. The softening commodity price environment also weighed on Brazilian iron ore producer Vale.

Income Generation

The portfolio's total income in the period under review fell by £1.8 million, or 3.7%, to £46.0 million. Given the relative strength of Sterling against most global currencies in the first half and the Company's reduction in gearing by £90 million since May 2023, this is not surprising. Selling positions in an equity portfolio yielding 4.5% to repay the debt that would have cost shareholders 6% to renew was deemed the correct course of action by both the Board and Manager while also considering the potential impact on income generation.

The portfolio's underlying dividend picture remains strong. Of the twenty-eight companies that have declared full-year dividend intentions, only two reductions have been made. China Vanke, the Chinese property developer, cancelled its dividend, and the position was subsequently sold. The other reduction came from BE Semiconductor, which cut its dividend by 25%. Of the twenty-six dividend increases we have seen, five have been double-digit in size and have come from the portfolio's industrial and technology exposures. European industrial stocks Siemens, Epiroc and Atlas Copco increased their dividends by 11%, 12% and 22% respectively.  Semiconductor-related investments in GlobalWafers and TSMC, both listed in Taiwan, increased their payouts by 19% and 30%, respectively, showing their impressive cash-generating capability.

The portfolio tends to generate more than half of its revenue in the first half of the year. This is due to several European investments paying annual dividends, as opposed to semi-annual or quarterly dividends that we see in other geographies. We remain confident in the sustainability of the income picture as it relates to the portfolio and wait to see what happens in the second half of the year. One important factor to highlight here is the potential impact of currency. This is most apparent over the shorter term and less marked over the long term. Being a Sterling-denominated fund, but with over 90% of assets invested, unhedged, in overseas securities denominated in a basket of over fifteen different currencies, it is essential to keep currency in mind when it comes to shorter-term impacts, which can be both positive and negative in nature.

Portfolio Changes

Trading activity was at a similar level to prior years, and, as with 2023, the first half has seen some disposals from the portfolio to repay debt, of which the cost to renew was going to be unattractive given the interest rate picture.

The Swedish industrial Epiroc AB, which manufactures construction and mining machinery, was sold. The stock has performed well since Atlas Copco spun off the business back in 2018. Roche AG, the Swiss listed developer and manufacturer of pharmaceuticals and diagnostic products, was also divested. Roche AG remains a solid business; there was simply higher conviction in the other healthcare names in the portfolio. Chinese property developer China Vanke proved to be a disappointment, with the investment thesis not playing out as intended; therefore, it was another low conviction holding and an easy candidate to exit in order to reduce gearing. The portfolio exposure to North American midstream companies was consolidated into one position. TC Energy was sold, and the capital recycled into Enbridge. The belief is that Enbridge carries less balance sheet and execution risk than its Canadian peer. The only new addition to the portfolio in the first half of the year was German luxury car brand Mercedes Benz Group. The company is looking to structurally improve its profitability by increasing the proportion of higher priced vehicles it sells, thereby improving margins and shareholder returns via dividends and share buybacks.

Outlook

While the first half of 2024 showed signs of economic resilience and recovery in places, several factors contribute to a cautious outlook for the global economy. The recovery has been uneven, with significant disparities between regions and sectors. Corporate earnings have been strong, particularly in the technology sector, which has benefited from advances in AI and increased productivity. However, the reliance on a few key industries and companies raises concerns about market concentration and the sustainability of growth. Any setbacks in these sectors could lead to broader market corrections.

Inflation remains a concern. Although inflation rates have moderated in some regions, they are still above the targets set by central banks, which are trying to navigate the delicate balance between controlling inflation and supporting growth. The inflationary environment of the last few years has eroded purchasing power in many regions, affecting consumer spending. Although labour markets have stabilised, wage growth has not kept pace with inflation in many areas, potentially limiting consumer driven economic growth.

Geopolitical tensions are another significant risk. The ongoing war in Ukraine, the conflict between Israel and Palestine, and broader political tensions between East and West have the potential to disrupt trade, impact inflation, destabilise the global economy and severely weaken investor sentiment. The political landscape in the United States remains highly charged as the presidential election approaches. The division between Democrats and Republicans is deepening, and if this political turmoil deteriorates further, it could worryingly test American democracy and impact its international standing.

In summary, while there are positive signs of economic recovery and growth in specific sectors, the global economy faces several significant risks and uncertainties. Inflation, geopolitical tensions, market concentration and consumer confidence are all factors that could derail equity markets trading at lofty levels and lead to increased volatility. Policymakers and businesses must navigate these challenges carefully to sustain growth and stability in the coming months. The investment focus will remain on quality companies, ensuring the portfolio is well diversified on a regional and sectoral basis and exposed to income and capital growth opportunities. We continue to seek companies robust enough to preserve capital in periods of market weakness, with attractive, growing, and sustainable dividends, exposed to strong structural drivers for long-term growth.

Martin Connaghan and Samantha Fitzpatrick
Senior Investment Directors
abrdn Investments Limited
8 August 2024

Interim Board Report - Directors' Disclosures

Principal Risks and Uncertainties

The Board has approved a matrix of the key risks that, in its assessment, affect the business. The major financial risks associated with the Company are detailed in note 18 of the 2023 Annual Report and the other principal risks are summarised below. These risks represent the principal risks anticipated for the remaining six months of the year. They can be summarised into the following categories:

-       Investment Strategy and Objectives;

-       Investment Portfolio Performance Risk;

-       Operational and Governance Risks;

-       Financial Risks; and

-       Macro and Geopolitical Risks.

Details of the management of the risks and the Company's internal controls are disclosed on pages 35 and 36 of the 2023 Annual Report.

The Board also has a process in place to identify emerging risks.  If any of these are deemed to be significant, these risks are categorised, rated and added to the Company's risk matrix. 

The Board monitors emerging risks and has reviewed the principal risks and uncertainties including prevailing geo-political concerns. The Board notes the Manager's robust and disciplined investment process which continues to focus on long-term company fundamentals including balance sheet strength and deliverability of sustainable earnings growth.  The Board, aided by the Manager, closely monitors all third party service arrangements.

Related Party Transactions

Details of the transactions with the Manager including the fees payable to abrdn plc 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 that there are no material uncertainties and that the adoption of the going concern basis of accounting is appropriate.  This review encompassed the global geopolitical environment which is increasingly destabilised by conflicts, tensions and other uncertainties, including the upcoming US election amongst others. The Company's assets consist of a diverse portfolio of listed equities and bonds and the portfolio in most circumstances is 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 for 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 rule 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 2024 comprises the Half Yearly Board Report, the Directors' Responsibility Statement and the condensed set of Financial Statements.

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

Virginia Holmes
Chair
8 August 2024

Condensed Statement of Comprehensive Income (unaudited)

Condensed Statement of Financial Position (unaudited)

Condensed Statement of Changes in Equity (unaudited)

Condensed Statement of Cash Flows

(unaudited)

Notes to the Financial Statements (unaudited)

For the six months ended 30 June 2024

Alternative Performance Measures

Summary of Net Assets

Summary of Investment Changes

Investment Portfolio

The Half Yearly Report will be printed and issued to shareholders in late August and further copies will be available 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

ABRDN HOLDINGS LIMITED, SECRETARY

8 August 2024