Performance

I am pleased to report that, despite the well-reported and widespread turbulence of global financial markets during 2022, the Company’s net asset value (“NAV”) posted a total return for the year ended 31 December 2022 (i.e. with net income reinvested) of +8.8%. The Company has no benchmark but this performance compares favourably with a total return for the Reference Index, the FSTE ALL World TR Index, of -7.3%. However, the Company’s performance could not match an abnormal rise over the same period of +13.4% for the UK Retail Price Index (RPI). The share price posted a higher total return of +20.6%. Increased income per share amounted to 60.1p for the year (2021: 51.7p), enabling an ongoing improvement in the level of dividend and a return to a fully covered dividend. Over three years, RPI has increased +23.5%, the Reference Index has returned +19.0% and the Company’s NAV total return stands at +25.3% It is also satisfying to note that the longer-term picture has improved. Over three years, RPI has increased +23.5%, the Reference Index has returned +19.0% and the Company’s NAV total return stands at +25.3%. The Manager’s investment focus continues to emphasise both geographical and sector diversification across a broad range of quality companies as we continue to seek both long-term income and capital growth. Such characteristics tend not to be represented in the more concentrated Reference Index where a small number of growth stocks have tended to dominate in recent years. For this reason, relative performance in any shorter time period can, and does, deviate significantly on a comparative basis. 

Dividends

Three interim dividends of 12.0p per share (2021: three interims of 12.0p) have been declared during the year. Your Board is now recommending an increased final dividend of 20.0p per Ordinary 25p share (2021: final dividend of 19.0p). If approved at the Annual General Meeting, this final dividend will be paid on 5 May 2023 to holders of Ordinary 25p shares on the register on 11 April 2023 (ex dividend 6 April 2023). If the final dividend is approved, total Ordinary dividends for the year will amount to 56.0p (2021: 55.0p), an increase over the previous year of 1.8%. The level of increase reflects the fact that the Company already pays a competitively high dividend yield which stood at 4.2% at year end. This represents the 18th year of dividend increases for the Company, which remains an AIC ‘Next Generation Dividend Hero’. If the final dividend is approved, total Ordinary dividends for the year will amount to 56.0p (2021: 55.0p), an increase over the previous year of 1.8% As a long-established investment trust, the Company had the benefit of £69.2 million of distributable reserves on its balance sheet at 31 December 2022, which have been accumulated by the Company over many years from retained earnings. The payment of the final dividend, if approved, will result in the movement of £5.2 million to the revenue reserves to strengthen them for the future. The dividend cover at year end was 1.07x (2021: 0.94x). The replenishment of reserves this year is in line with the policy that we have highlighted to shareholders in previous years. The Board intends to maintain the Company’s progressive dividend policy. This means that, in some years, revenue will be added to reserves while, in others, some revenue may be taken from reserves to supplement revenue earned during that year, in order to pay the annual dividend. Shareholders should not be surprised or concerned by either outcome as, over time, the Company will aim to pay out what the underlying portfolio earns in sterling terms. Currency fluctuations may also have an impact on income and therefore the level of dividend. 

The Board, however, is maintaining the present policy not to hedge the sterling translation risk of revenue arising from non-UK assets. 8 Murray International Trust PLC Gearing At the year end, total borrowings amounted to £200 million, representing net gearing (calculated by dividing the total borrowings less cash by shareholders’ funds) of 11.2% (2021: 12.2%), all of which is drawn in sterling. In May 2022, the Company utilised part of its £200m Loan Note Shelf Facility, of which £50m had already been drawn down, through the issuance of a £60 million 15-year Senior Unsecured Loan Note at an all-in-rate of 2.83%. The proceeds of the issue were used to repay the Company’s £60 million fixed rate loan that matured at that time. Under the terms of the Loan Note Agreement, dated May 2021, up to an additional £90 million will also be available for drawdown by the Company until May 2026. The Board’s current intention is to only use this additional amount to repay the Company’s existing debt as it falls due over the coming years. The Company is now considering options to replace the next fixed rate loan which amounts to £60m and is due to expire in May 2023. The Company will update shareholders in due course. Ongoing Charges Ratio (“OCR”) The Board remains focused on controlling costs and on delivering value to shareholders. The OCR for 2022 has continued to trend downwards ending the year on 0.52% (2021: 0.59%). The continued improvement reflects the benefit of the reduction in management fee agreed with effect from 1 January 2022. The OCR for 2022 has continued to trend downwards ending the year on 0.52% (2021: 0.59%)

Online Presentation and Annual General Meeting (“AGM”)

 In 2022 the Board for the second time held an online shareholder presentation in advance of the AGM. It was very well attended again and we hope that shareholders found it informative. It also provided a useful opportunity for the Board to receive feedback and views from shareholders and to answer your questions. Given the success of the online event, the Board has decided to repeat the exercise again in 2023. We will hold another interactive online shareholder presentation at 11.00 a.m. on Monday 3 April 2023. This is in addition to the in-person AGM. 

At the online presentation, shareholders will receive updates from me, as Chairman, and the Investment Manager, and there will be an interactive question and answer session. Full details on how to join the online shareholder presentation can be found in my accompanying letter and further information on how to register for the event can be found at https://www.workcast.com/register?cpak= 4678784364872362. We will hold another interactive online shareholder presentation at 11.00 a.m. on Monday 3 April 2023 Following the online presentation, shareholders will still have almost three weeks during which to submit their proxy votes prior to the AGM and I would encourage all shareholders (whether or not they intend to attend the AGM in person) to lodge their votes in advance in this manner. 

The AGM has been convened for 12:30 p.m. on 21 April 2023, at the Glasgow Royal Concert Hall, and will be followed by light refreshments and an opportunity to meet the Board and the investment management team. Ahead of the online presentation and AGM, I would encourage shareholders to send in any questions that they may have for either forum to: murray-intl@abrdn.com

Management of Discount and Premium

At the AGM held in April 2022, shareholders renewed the annual authorities to issue up to 10% of the Company’s issued share capital for cash at a premium and to buy back up to 14.99% of the issued share capital at a discount to the prevailing NAV. During the year, 848,963 Ordinary shares were purchased for Treasury, representing 0.7% of the issued share capital. The Board will be seeking approval from shareholders to renew the buyback authority together with the authority to allot new shares or sell shares from Treasury at the AGM in 2023. As in previous years, new or Treasury shares will only be issued or sold at a premium to NAV and shares will only be bought back at a discount to NAV. Resolutions to this effect will be proposed at the AGM and the Directors strongly encourage shareholders to support these proposals.

Your Board continues to believe that it is appropriate to seek to address temporary imbalances of supply and demand for the Company's shares which might otherwise result in a recurring material discount or premium. The Board believes that this process is in all shareholders’ interests as it seeks to reduce volatility in the discount or premium to underlying NAV whilst also making a small positive contribution to the NAV. 

At the latest practicable date, the NAV (excluding income) per share was 1339.9p and the share price was 1339.0p, equating to a discount of 0.1% per Ordinary share compared to a premium of 3.1% per Ordinary share at the year end. Proposed Sub-division of Ordinary Shares The market price of the Company’s existing Ordinary shares ("existing Ordinary shares") has increased in recent years to the point where the Ordinary shares regularly trade at a market price of over 1300 pence. In order to assist monthly savers, those who reinvest their dividends and those who are looking to invest smaller amounts such as younger investors, the Directors believe that it is appropriate to propose the sub-division of each of the existing Ordinary shares of 25 pence each into five new Ordinary shares of 5 pence each (the ‘new Ordinary shares’) (the "Sub-division"), thereby resulting in a lower market price per Ordinary share. The Sub-division will not itself affect the overall value of any shareholder’s holding in the Company. 

The Directors believe the Sub-division may also improve the liquidity in and marketability of the Company’s Ordinary shares, which will benefit all shareholders. There will be no interruption to trading in the Ordinary shares on the London Stock Exchange when the Subdivision takes place. The new Ordinary shares will rank equally with each other and will carry the same rights and be subject to the same restrictions (save as to nominal value) as the existing Ordinary shares, including the same rights to participate in dividends paid by the Company. The Sub-division requires the approval of shareholders and, accordingly, Resolution 12 in the Notice of AGM seeks this approval. The Sub-division is conditional on the new Ordinary shares being admitted to the Official List of the Financial Conduct Authority and to trading on the London Stock Exchange’s main market for listed securities. If Resolution 12 is passed, the Sub-division will become effective on admission. Further details of the proposed Sub-division are set out in the Directors’ Report on pages 61 and 62 of the published Annual Report and financial statements for the year ended 31 December 2022.

Environmental, Social and Governance (“ESG”) and Climate Change

The Company is not an ESG fund. However, as part of its responsible stewardship of shareholders’ assets, your Board continues to engage actively with the Manager with regard to the ongoing assessment and further integration of ESG factors into the Manager’s investment process. 

The Board receives regular assessments of the Company’s holdings and portfolio, including a MSCI fund ratings report which currently gives the Company’s portfolio a rating of ‘AA’ (2021: ‘AA’). Further information on the important work undertaken on ESG and climate change by the Manager is provided in the ‘Information About the Manager’ section on pages 113 to 115. Without becoming prescriptive on specific investment criteria, the Board’s desire is for the Manager to continue to incrementally improve the portfolio’s ESG credentials and to seek to exploit opportunities arising from a net zero economy, in so far as this is consistent with the Company’s investment objective. A key ingredient in building such a portfolio is meaningful, regular and continuing dialogue between the Manager and investee companies, with a view not only to understanding the risk exposure and evolving business models better but also to influencing corporate behaviour.

Succession Planning

In June 2022, we welcomed Virginia Holmes to the Board as an independent non-executive Director following the culmination of an extensive search process using the services of an independent recruitment consultant. Virginia is the former CEO of AXA Investment Managers Limited and has brought significant senior asset management expertise and experience to the Board. She is currently Chair of Trustees at the Unilever UK Pension Fund, Senior Independent Director at both Syncona and European Opportunities Trust and Chair of the Remuneration Committee at Intermediate Capital Group plc. She was previously Chair of USS Investment Management and of BA Pension Trustees, a founder Director of the Investor Forum, Non Executive Director of Standard Life Investments plc and Chair of the Investment Committee at Alberta Investment Management Corporation.

This year marks the completion of my period of tenure on the Board following my appointment as a Director in 2014 and subsequent selection as Chairman in 2021, after the sad and untimely death of Simon Fraser. At the time of the AGM, I will have been on the Board of the Company for almost 9 years and the Board has asked me to remain as Chairman for a short while in order to complete the Board’s succession planning exercise.

Excellent progress has been made and we expect to announce two new appointments to the Board over the coming months. I shall be standing down from the Board on 31 December 2023 and I am delighted to report that Virginia Holmes will take on the Chair role from that date. Following these changes, the Board is expected to return to its previous complement of six and is expected to be in compliance with the recommendations of the Parker Review on diversity in the UK boardroom.

abrdn Name Changes

In line with the Manager’s ongoing rebranding exercise, during the year our Alternative Investment Fund Manager changed its name from Aberdeen Standard Fund Managers Limited to abrdn Fund Managers Limited, our Investment Manager became abrdn Investments Limited (from Aberdeen Asset Managers Limited) and our Company Secretary changed its name from Aberdeen Asset Management PLC to abrdn Holdings Limited. There is no intention to change the name of the Company.

Outlook

Looking forward, deep-rooted macroeconomic difficulties are likely to continue to impact the direction of financial markets. Seldom has the economic outlook seemed so uncertain. Numerous heavily indebted nations and corporates are confronted with significantly higher borrowing costs that will ultimately constrain future growth. The task of controlling inflation may exert significant damage on already fragile economies, suggesting that policymakers negotiating the treacherous tightrope between recovery and recession have little room for error. Whilst prices of goods and services should moderate as supply / demand dynamics normalise, wage inflation may prove more problematic. Meanwhile, businesses must quickly adapt to the unfolding backdrop of higher input, labour and capital costs occurring simultaneously with softening consumer demand and changes to global supply chains. 

From a portfolio perspective, the Company’s unconstrained global mandate continues to enable great investment flexibility under constantly changing circumstances. The past twelve months bears testimony to that. The re-emergence of inflation that unleashed a raft of negative surprises on so many unprepared companies in the West is not so unfamiliar elsewhere in the world. Inevitably attractive investment opportunities will emerge as asset prices readjust. Identifying companies that can exert some degree of pricing power, have favourable industry dynamics and seasoned management familiar with evolving realities will be key. Strict adherence to tried and trusted investment principles as always gives a degree of comfort during periods of such investment flux. The Manager believes strongly in its disciplined investment process as a means by which to identify appropriate opportunities to deliver the capital and income strategies of our mandate. Current portfolio positioning reflects this, with high conviction, diversified exposures designed to deliver the Company’s long-term objectives. Finally, as I wrote last year, your views matter. Your Board greatly values shareholder comments and I encourage you to email me with your views at: DavidHardie.Chairman@abrdn.com.