Murray Income Trust PLC

Annual Report • Oct 5, 2023

murray-income.co.uk Murray Income Trust PLC Annual Report 30 June 2023 An investment trust founded in 1923 aiming for high and growing income with capital growth For more information visit murray-income.co.uk abrdn.com Murray Income Trust PLC 113 Directors Neil Rogan (Chair) Peter Tait (Senior Independent Director) Stephanie Eastment (Audit Committee Chair) Alan Giles Merryn Somerset Webb Nandita Sahgal Tully Company Secretaries, Registered Office and Company Number abrdn Holdings Limited (formerly Aberdeen Asset Management PLC) 1 George Street Edinburgh EH2 2LL Registered in Scotland under company number SC012725 Website murray-income.co.uk Legal Entity Identifier 549300IRNFGVQIQHUI13 United States Internal Revenue Service FATCA Registration Number (“GIIN”) 8Q8ZFE.99999.SL.826 Points of Contact The Chair or Company Secretaries at the Registered Office of the Company Email: murray.income@abrdn.com Customer Services Department and Enquiries for the abrdn Children’s Plan, Share Plan and ISA abrdn Investment Trusts PO Box 11020 Chelmsford Essex CM99 2DB Freephone: 0808 500 0040 (open Monday to Friday from 9.00am to 5.00pm, excluding public holidays) Email: inv.trusts@abrdn.com Please see page 99 for information on the closure of the abrdn Children’s Plan, Share Plan and ISA in December 2023. Alternative Investment Fund Manager abrdn Fund Managers Limited Authorised and regulated by the Financial Conduct Authority Investment Manager abrdn Investments Limited (formerly Aberdeen Asset Managers Limited) Authorised and regulated by the Financial Conduct Authority Registrar (for direct shareholders) The Share Portal, operated by Link Group, is a secure online website where shareholdings can be managed quickly and easily, including changing address or arranging to pay dividends directly into a bank account, or to receive electronic communications. To register, shareholders will need their Investor Code which may be found on their share certificate or by contacting the Registrar at: signalshares.com Alternatively, please contact the Registrar – By email, via the above website By phone, Tel: 0371 664 0300 (UK calls cost 10p per minute plus network extras) From overseas: +44 208 639 3399 (open Monday to Friday, from 9.00am to 5.30pm, excluding public holidays) By post - Link Group PXS 1 Central Square 29 Wellington Street Leeds LS1 4DL Independent Auditor PricewaterhouseCoopers LLP Depositary BNP Paribas Trust Corporation UK Limited Solicitors Dickson Minto W.S. Stockbroker Investec Bank plc Additional Shareholder Information Murray Income Trust PLC 1 Neil Rogan, Chair Charles Luke and Iain Pyle, Investment Manager Investment Objective The Company aims for a high and growing income combined with capital growth through investment in a portfolio principally of UK equities. Overview Performance Highlights 2 Strategic Report Chair’s Statement 4 Investment Manager’s Report 9 Performance 14 Financial Highlights and Dividends 16 Overview of Strategy 17 Promoting the Success of the Company 24 Portfolio Ten Largest Investments 27 Portfolio 28 Sector Comparison with the Benchmark 30 Summary of Investment Changes During the Year 31 Governance Board of Directors 34 Directors’ Report 37 Statement of Corporate Governance 46 Directors’ Remuneration Report 47 Audit Committee Report 51 Statement of Directors’ Responsibilities 54 Independent Auditors’ Report to the Members of Murray Income Trust PLC 55 Financial Statements Statement of Comprehensive Income 64 Statement of Financial Position 65 Statement of Changes in Equity 66 Statement of Cash Flows 67 Notes to the Financial Statements 68 Corporate Information Information about the Manager including Investment Process 90 How the Investment Manager approaches ESG 93 Investor Information 98 AIFMD Disclosures (Unaudited) 101 General Alternative Performance Measures 103 Glossary of Terms 107 Notice of Annual General Meeting 108 Additional Shareholder Information 113 Contents 2 Murray Income Trust PLC Net asset value total return ABC Share price total return AB +8.8% +4.9% 2022: (3.5)% 2022: (0.7)% Benchmark total return AD Ongoing charges B +7.9% 0.50% 2022: +1.6% 2022: 0.48% Earnings per share (revenue) Dividend per share 38.7 p 37.50 p 2022: 40.5p 2022: 36.00p Discount to net asset value BC Dividend yield B 8.2% 4.5% 2022: 4.5% 2022: 4.3% A Total return as defined on page 105. B Considered to be an Alternative Performance Measure. Further details can be found on pages 103 and 106. C With debt at fair value. D The Company’s benchmark is the FTSE All-Share Index. Net Asset Value per share c Dividends per share Mid-market price per share At 30 June – pence Year ended 30 June – pence At 30 June – pence 887.8 807.7 935.7 871.0 911.7 19 20 21 22 23 34.00 34.25 34.50 36.00 37.50 19 20 21 22 23 850.0 768.0 871.0 832.0 837.0 19 20 21 22 23 Performance Hi g hli g hts Murray Income Trust PLC 3 Strategic Report Research & development undertaken by Genus (a portfolio company purchased this year) combines biology and genetics to deliver ground-breaking innovation technologies in DNA to support a more sustainable food system. 4 Murray Income Trust PLC 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 (see page 105) B With debt at fair value (see page 107) 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 50 th 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. Chair’s Statement Murray Income Trust PLC 5 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements 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 50 th 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 on pages 9 to 13. 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. 3 years ended 5 years ended 10 years ended 30 June 2023 ( annualised ) 30 June 2023 ( annualised ) 30 June 2023 ( annualised ) Performance (total return) % % % Share price AB 7.3 5.6 5.7 Net asset value per Ordinary share ABC 8.3 5.3 6.4 FTSE All-Share 10.0 3.1 5.9 Source: abrdn & Morningstar A Total return as defined on page 105. B Considered to be an Alternative Performance Measure. Further details may be found in pages 103 and 106. C With debt at fair value. 6 Murray Income Trust PLC 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%). Chair’s Statement Continued Murray Income Trust PLC 7 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements 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. 8 Murray Income Trust PLC 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 (see page 13), 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 Rogan Chair 19 September 2023 Chair’s Statement Continued Murray Income Trust PLC 9 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements 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. Investment Mana g er’s Report 10 Murray Income Trust PLC 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 % Net Asset Value total return for year per Ordinary share (fair value) +8.8 FTSE All Share Index total return +7.9 Relative return +0.9 Relative return Stock selection Energy +0.1 Basic Materials -0.5 Industrials -1.5 Health Care +0.2 Consumer Staples +1.1 Consumer Discretionary -0.9 Telecommunications +0.5 Utilities +0.1 Technology +0.9 Financials -0.7 Real Estate +0.1 Total stock selection (equities) -0.6 Asset allocation (equities) Energy -0.4 Industrials +0.5 Health Care +0.1 Consumer Staples +0.1 Telecommunications +0.1 Technology +0.5 Financials -0.1 Real Estate -0.2 Total asset allocation (equities) 0.6 Management fees -0.4 Administrative expenses -0.1 Tax -0.1 Cash & options -0.5 Gearing – finance costs +0.5 Gearing - difference between fair value and par value returns +1.3 Share buybacks +0.3 Residual effect -0.1 Total +0.9 Notes: Stock Selection - measures the effect of equity selection relative to the benchmark. Asset allocation – measures the impact of over or underweighting each industry basket in the equity portfolio, relative to the benchmark weights. Cash & options effect – measures the impact on relative returns of these categories. Gearing – measures the impact on relative returns of net borrowings. Management fees, administrative expenses and tax – these reduce total assets and therefore reduce performance. Source - abrdn. Investment Mana g er’s Report Continued Murray Income Trust PLC 11 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements 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. 12 Murray Income Trust PLC 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. Investment Mana g er’s Report Continued Murray Income Trust PLC 13 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements 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 Pyle Investment Manager 19 September 2023 14 Murray Income Trust PLC Performance (total return, including reinvested dividends) 1 year return 3 year return 5 year return 10 year return % % % % Share price A +4.9 +23.4 +31.6 +73.2 Net asset value per Ordinary share (debt at fair value) A +8.8 +26.9 +29.7 +85.7 Net asset value per Ordinary share (debt at par value) A +7.5 +24.5 +27.2 +82.3 Benchmark B +7.9 +33.2 +16.5 +78.0 A Considered to be an Alternative Performance Measure. Further details can be found on pages 105 and 106. B FTSE All-Share Index. Source: abrdn & Morningstar Ten Year Financial Record Year end 30 June 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Income (£’000) 23,926 25,476 24,838 26,667 25,987 25,597 22,804 35,979 51,018 48,879 Shareholders’ funds (£’000) 547,652 515,888 515,036 576,462 570,929 587,150 534,361 1,093,859 1,009,255 999,184 Per Ordinary share (p) Net revenue return 30.5 33.1 32.0 34.9 33.6 34.9 30.5 33.7 40.5 38.7 Dividends A 31.25 32.00 32.25 32.75 33.25 34.00 34.25 34.50 36.00 37.50 Net asset value (capital only) 805.2 757.1 766.5 860.1 856.3 888.1 808.3 934.6 864.9 894.4 A The figures for dividends per share reflect the years to which their declaration relates and not the years they were paid. Performance Murray Income Trust PLC 15 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements Total Return of NAV with debt at fair value and Share Price vs FTSE All-Share Index Five years ended 30 June 2023 (rebased to 100 at 30 June 2018) 70 80 90 100 110 120 130 140 30/06/18 30/06/19 30/06/20 30/06/21 30/06/22 30/06/23 Source: Morningstar & Lipper Share Pri ce NAV (debt at fair value) NAV (debt at par) FTSE All Share Share Price Discount to NAV with debt at fair value Five years ended 30 June 2023 -12% -10% -8% -6% -4% -2% 0% 30/06/2018 30/06/2019 30/06/2020 30/06/2021 30/06/2022 30/06/2023 Sou rce: abrdn & Lipper 16 Murray Income Trust PLC Financial Highlights 30 June 2023 30 June 2022 % change Shareholders’ funds (£’000) 999,184 1,009,255 –1.0 Net asset value (“NAV”) per Ordinary share – debt at fair value 911.7p 871.0p +4.7 NAV per Ordinary share – debt at par 894.4p 864.9p +3.4 Market capitalisation (£’000) 935,096 970,865 –3.7 Share price of Ordinary share 837.0p 832.0p +0.6 Discount to NAV on Ordinary shares – debt at fair value A 8.2% 4.5% Discount to NAV on Ordinary shares – debt at par A 6.4% 3.8% Gearing (ratio of borrowing to shareholders’ funds) Net gearing A 10.4% 9.4% Dividends and earnings Revenue return per share 38.7p 40.5p –4.4 Dividends per share B 37.50p 36.00p +4.2 Dividend cover A 1.03 times 1.13 times Dividend yield A 4.5% 4.3% Revenue reserves (£’000) Prior to payment of fourth interim dividend C 36,664 33,491 After payment of fourth interim dividend 22,576 20,363 Operating costs Ongoing charges ratio A 0.50% 0.48% A Considered to be an Alternative Performance Measure. Further details can be found on pages 103 and 105. B The figures for dividends per share reflect the years in which they were earned (see note 7). C Per the Statement of Financial Position on page 65. Dividends Rate XD date Record date Payment date First interim 8.25p 17 Nov 2022 18 Nov 2022 15 Dec 2022 Second interim 8.25p 16 Feb 2023 17 Feb 2023 16 Mar 2023 Third interim 8.25p 18 May 2023 19 May 2023 15 Jun 2023 Fourth interim 12.75p 17 Aug 2023 18 Aug 2023 14 Sep 2023 Total dividends 37.50p Financial Hi g hli g hts and Dividends Murray Income Trust PLC 17 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements 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 (see ‘Manager’ in Glossary on page 107) 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. Overview of Strate g y 18 Murray Income Trust PLC 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 (see also pages 103 to 106): KPI Description NAV (total return) * relative to the Company’s benchmark The Board considers the Company’s NAV (total return), relative to the FTSE All-Share Index, to be the best indicator of performance over different time periods. A graph showing NAV total return performance against the FTSE All-Share Index over the past five years is shown on page 15. Share price (total return) * The Board monitors share price performance relative to open-ended and closed-ended competitor products, taking account of differing investment objectives and policies pursued by those products. The figures for share price (total return) for the Year and for the past three, five and ten years, as well as for the NAV (total return) per share, are shown on page 14. A graph showing share price total return performance against the FTSE All-Share Index over the past five years is shown on page 15. Discount/premium to NAV * The discount/premium at which the Company’s share price trades relative to the NAV per share is closely monitored by the Board. A graph showing the discount/premium over the last five years is shown on page 15. Earnings and dividends per share The Board aims to meet the ‘high and growing’ element of the Company’s investment objective by developing revenue reserves sufficient to support the payment of a growing dividend; figures may be found in Financial Highlights and Dividends on page 16 in respect of earnings and dividends per share, together with the level of revenue reserves, for the Year and previous year. Ongoing charges The Board monitors the Company’s operating costs and their composition with a view to limiting increases wherever possible. Ongoing charges are disclosed on page 16 for the Year and the previous year and include look through costs. The increase in ongoing charges from 0.48% to 0.50% reflects the lower average net assets over the Year, as compared to the prior year. 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 on pages 51 and 52. 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. Overview of Strate g y Continued Murray Income Trust PLC 19 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements Principal Risk Mitigating Action STRATEGIC AND MARKET The Company’s investment objective and policy are no longer meeting investors’ requirements (unchanged) Lack of a robust strategic review, failure to understand the market/investor demand. Failure to analyse and react to changes or uncertainty, unclear dividend policy. The Company's investment objective and policy (“IOP”) are reviewed regularly by the Board to ensure they remain appropriate and effective. The Board holds an annual strategy meeting at which strategy and approach is reviewed; this includes consideration of distributions; both dividends and share buy backs. Discount control risk (unchanged) Investment trust shares tend to trade at discounts to their underlying NAVs, although they can also trade at premium. Discounts and premiums can fluctuate considerably leading to more volatile returns for shareholders. The Board monitors the discount at which the Company’s shares trade and will buy back or issue shares to try to minimise the impact of any discount or premium volatility. Whilst these measures seek to reduce volatility, they are not guaranteed to do this. As was the case in the prior year, the Board has assessed the discount control risk as elevated due to the discount at which the Company’s shares are trading as compared to their underlying NAV. Market risk (increased) Market risk arises from the volatility in prices of the Company’s investments and the potential loss the Company could suffer through realising investments following negative market movements. Changes in general geopolitical, economic or market conditions, such as interest rates, exchange rates and rates of inflation, as well as global political events and trends could substantially and adversely affect the prices of securities and, as a consequence, the value of the Company’s investment portfolio, its prospects and share price. Current geopolitical risks include the ongoing Russian invasion of Ukraine, rising tension between China and Taiwan. The longer term emergence of the effects on investee companies of climate change, and the regulatory environment around this present a further risk. The Company’s investment policy and its approach to risk diversification may be found on page 17, both of which serve to mitigate the effect of market risk on the portfolio. The Board considers the diversification of the portfolio, asset allocation, stock selection and levels of gearing on a regular basis. The Board also monitors the Company’s relative performance as compared to peers and the Company’s benchmark. The Board assesses climate change as an emerging risk in terms of how it develops, including how investor sentiment is evolving towards climate change within investment portfolios, and will consider how the Company may mitigate this risk, any other emerging risks, if and when they become material. The Board engages with the Manager, at each Board meeting, as part of its ESG oversight, to understand how climate change, and environmental factors are being assessed . Both are key considerations within the Manager’s investment process (see also pages 93 to 97 for further information on the Manager’s approach to ESG). During the Year, the Board evaluated market risk as elevated due to the limit on the Company’s ability to mitigate the effect of external factors such as the uncertainty caused by geopolitical factors, rising inflation and cost pressures. 20 Murray Income Trust PLC Overview of Strate g y Continued Gearing risk (increased) The Company uses credit facilities. These arrangements increase the funds available for investment. While this has the potential to enhance investment returns in rising markets, in falling markets the impact could be detrimental. Credit facilities may not be available at an acceptable rate, term or amount. The Company’s three year £50 million facility matures on 27 October 2024. Gearing is monitored and strict restrictions on borrowings are imposed: gearing continues to operate within pre-agreed limits so as not to exceed 25% of NAV at the time of draw down. The Board and the Manager monitors the lending market and will address at a germane time to enable the availability of appropriate facilities if required. INVESTMENT MANAGEMENT Underperformance risk (unchanged) Consistent underperformance by the Investment Manager over short, medium and long term. The Investment Manager’s style may result in the portfolio being significantly over or under weight positions in stocks and sectors compared to the benchmark and the Company’s performance may deviate significantly from that of the benchmark and peers, possibly for extended periods. The Board evaluates performance at each board meeting on both an absolute and relative basis, against the Company’s benchmark and peers, and across various periods: short, medium and long term. Performance is also reviewed at the annual strategy meeting. The Company has a set of investment limits and Board guidelines which ensure diversification of the portfolio. Risk of loss of key staff (increased) Loss of key staff though natural loss, or Manager reorganisation and/or redundancy. Loss of investor confidence if lead manager lost. Charles Luke has been the lead portfolio manager for the Company since 2006. His co-manager is Iain Pyle who has been with the Manager since 2015, and Rhona Millar, with five years’ experience, also works alongside them. All work within the Manager’s 43-strong Developed Markets Equities team. MARKETING General marketing risk (increased) Failure to implement the Board’s marketing policy. Failure to address shareholder concerns or complaints, including of abrdn Investment Trust Saving plans holders. Issues could arise from the lack of process ownership, poor procedures or the failure to appropriately manage distribution, concerns or complaints of shareholders. The Manager’s investor relations team works closely with the Board on institutional shareholder contact. In addition, quarterly updates are provided to the Board by the broker. All correspondence addressed to the Board is circulated to Directors while any complaints relating to the Company’s savings plans are reviewed by the Board quarterly. OPERATIONAL Service provider risk (unchanged) In common with most other investment companies, the Company relies on the services provided by third parties and is dependent on the control systems of the Manager (who acts as investment manager, company secretary and maintains the Company’s assets, dealing procedures and accounting records); BNP Paribas Trust Corporation UK Limited (who acts as Depositary and Custodian); and the registrar. The security of the Company’s assets, dealing procedures, accounting records and adherence to regulatory and legal requirements depend on the effective operation of the systems of these third party service providers. Contracts with third party providers are entered into after appropriate due diligence. Thereafter the performance of each provider is subject to an annual review by the Audit Committee. The Depositary reports to the Audit Committee at least annually, including on the Company’s compliance with AIFMD. The Manager also regularly reviews the performance of the Depositary. Global assurance reports are obtained from the Manager, BNP Paribas Trust Corporation UK Limited and the registrar. These are reviewed by the Audit Committee. The reports include an independent assessment of the effectiveness of risks and Murray Income Trust PLC 21 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements Failure by any service provider to carry out its obligations could have a material adverse effect on the Company’s performance. Disruption, including that caused by information technology breakdown or a cyber-related issue, could prevent, for example, the functioning of the Company; accurate reporting to the Board or shareholders; or payment of dividends in accordance with the announced timetable. internal controls at the service providers including their planning for business continuity and disaster recovery scenarios, together with their policies and procedures designed to address the risks posed to the Company’s operations by cyber-crime. The Audit Committee receives an annual update on the Manager’s IT resilience. The Company’s assets are subject to a strict liability regime and, in the event of a loss of assets, the Depositary must return assets of an identical type or the corresponding amount, unless able to demonstrate the loss was a result of an event beyond its reasonable control. The Board has assessed the risk posed by cyber-crime as elevated, despite the available mitigation, reflecting the potential disruption which might be caused to the Company’s operations by a cyber-attack. 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: Other Risks Mitigating Action Dividend risk There is a risk that the Company fails to generate sufficient income from its investment portfolio to meet the Company’s dividend requirements. A cut in the dividend of the Company would likely cause a drop in the share price and would end the Company’s “Dividend Hero” status. The Board reviews estimates of revenue income and expenditure prepared by the Manager. The Company’s level of revenue reserves is monitored and can be added to in years of surplus, or used to support the dividend in years where there is a revenue deficit. Dividends can also be paid from capital, though use of capital reserves for dividends is expected to be rare. Financial risk The Company’s investment activities expose it to a variety of financial risks which include market risk (which is identified as a principal risk and is covered earlier in this section on page 19), liquidity risk and credit risk (including counterparty risk). Details of these risks and the policies and procedures for their monitoring and mitigation are disclosed earlier in this section and in note 18 on pages 81 to 87. Regulatory risk, including change of existing rules and regulation The Company is required to comply with relevant rules and regulations. Failure to do so could result in loss of investment trust status, fines, suspension of the Company’s shares, criminal proceedings or financial or reputational damage. The Manager provides investment, company secretarial, administration and accounting services through qualified third party professional providers. The Board receives regular reports from its broker, depositary, registrar and Manager as well as the industry trade body (the Association of Investment Companies (“AIC”) on changes to regulations which could impact the Company and its industry. Emerging risk Failure to have in place procedures that assist in identifying emerging risks. This may cause reactive actions rather than being pro-active and, in the worst case, could cause the Company to become unviable or otherwise fail. The Board regularly reviews all risks to the Company, including emerging risks, which are identified by a variety of means, including advice from AIC, the Company’s professional advisors, Directors’ knowledge of markets, changes and events. 22 Murray Income Trust PLC Overview of Strate g y Continued 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 and additional information may be found on page 97. 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 on page 96. 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 on pages 18 to 22; · 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; Overview of Strate g y Continued Murray Income Trust PLC 23 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements · 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 on pages 27 to 31 while the full portfolio of investments is published monthly on the Company’s website. The Company’s Statement of Financial Position on page 65 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 and further information may be found on pages 93 to 97. 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 on pages 38 and 39. The Strategic Report has been approved by the Board and signed on its behalf by: Neil Rogan Chair 19 September 2023 24 Murray Income Trust PLC 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 Role of 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 key third party service providers, lenders and investee companies and the following table sets out details of the Company’s engagement. Shareholders The Directors place great importance on communication with shareholders. Further details on the Company’s relations with Shareholders, including its approach to the Annual General Meeting, and investor relations can be found in the Directors’ Report on page 43. In addition, the Chair and Investment Manager are holding an online shareholder presentation on 3 November 2023, further details of which may be found in the Chair’s Statement on page 7. Manager The Investment Manager’s Report on pages 9 to 13 details the key investment decisions taken during the Year. The Board engages with the Investment Manager at every Board meeting and receives presentations from the Investment Manager to help it to exercise effective oversight of the Investment Manager and delivery of the Company’s strategy. The Board also receives regular updates from the Manager outside of these meetings. The Management Engagement Committee’s monitoring of the performance of the Manager over the Year is detailed on pages 40 and 41. Other Key Third Party Service Providers The Board ensures that it promotes the success of the Company by engaging specialist third party suppliers with the resources, controls and performance records to deliver the service required. The Board seeks to maintain constructive relationships with its key service providers (the Company’s registrar, depositary and broker) either directly, or through the Manager, with ongoing dialogue and formal regular meetings. The Audit Committee conducts an annual assessment of key service providers as set out in the Committee’s report on page 52. The Board seeks regular assurance that key third party service providers have in place appropriate business continuity plans and which are expected to allow them to maintain service levels in the face of disruption. Promotin g the Success of the Company Murray Income Trust PLC 25 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements Investee Companies The Board is committed to investing in a responsible manner and actively monitors the activities of investee companies through its delegation to the Investment Manager. In order to achieve this, the Investment Manager has discretionary powers to exercise voting rights on resolutions proposed by the investee companies and reports quarterly to the Board on stewardship issues, including voting. The Board monitors investments made and divested and questions the rationale for exposures taken and voting decisions made. Information on how the Investment Manager engages with investee companies may be found on pages 12 and 97. Lenders to the Company On behalf of the Board, the Manager maintains a positive working relationship with the provider of the Company’s multi-currency loan facility and the holders of the Company’s Senior Loan Notes, assuring compliance with lenders’ covenants and providing regular updates on business activity. 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 on page 41. 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 on page 7. 26 Murray Income Trust PLC Portfolio A world leader in luxury, LVMH (a portfolio company purchased this year) drives long-term momentum to develop its 75 brands, including Moet Chandon, respecting their distinctive identities. Murray Income Trust PLC 27 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements As at 30 June 2023 RELX AstraZeneca RELX is a global provider of information and analytics for professionals and businesses across a number of industries including scientific, technical, medical and law. The company offers resilient earnings combined with long term structural growth opportunities. AstraZeneca researches, develops, produces and markets pharmaceutical products. With a significant focus on oncology and rare diseases, the company offers appealing growth potential over the medium term. Unilever Diageo Unilever is a global consumer goods company supplying food, home and personal care products. The company has a portfolio of strong brands including: Dove, Knorr, Axe and Persil. Over half of the company’s sales are to developing and emerging markets. Diageo produces, distills and markets alcoholic beverages including vodkas, whiskies, tequilas, gins and beer. The company should benefit from attractive long term drivers such as population and income growth, and premiumisation. The company has a variety of very strong brands and faces limited private label competition. SSE TotalEnergies SSE is a utility company mostly focused on networks and renewables. The path to net zero will require significant investment in distribution networks and the company should also benefit from its strong position in offshore wind generation. TotalEnergies is a broad energy company that produces and markets fuels, natural gas and electricity. It is a leader in the sector’s energy transition with an attractive pipeline of renewable assets BHP Group London Stock Exchange BHP Group (formerly BHP Billiton) is a diversified resources group with a global portfolio of high quality assets particularly iron ore and copper. The company provides an appealing dividend yield combined with a strong balance sheet. London Stock Exchange is a diversified global financial markets infrastructure and data business. The company is highly cash generative and very well placed to benefit from increased spend on data services. BP Sage Group BP is a fully integrated energy company involved in exploration, production, refining, transportation and marketing of oil and natural gas. We believe the industry is currently in a sweetspot with robust prices and benign costs. The company provides an attractive dividend yield and is well placed for the energy transition. Sage Group is a market leading software business focused on accounting, payroll and payments. The company has a strong product suite and is well placed to benefit from the software automation of its small and mid-sized customers over the medium term. Ten Lar g est Investments 28 Murray Income Trust PLC Portfolio As at 30 June 2023 Valuation Total Valuation 2023 investments 2022 Investment FTSE All-Share Sector Country £’000 % £’000 RELX Media UK 61,856 5.6 45,388 AstraZeneca Pharmaceuticals and Biotechnology UK 60,904 5.6 69,318 Unilever Personal Care, Drug and Grocery Stores UK 56,200 5.1 34,656 Diageo Beverages UK 52,951 4.8 55,310 SSE Electricity UK 37,940 3.5 35,431 TotalEnergies Oil, Gas and Coal France 34,369 3.1 37,496 BHP Group Industrial Metals and Mining UK 33,932 3.1 36,349 London Stock Exchange Finance and Credit Services UK 33,912 3.1 17,862 BP Oil, Gas and Coal UK 32,387 3.0 27,437 Sage Group Software and Computer Services UK 30,020 2.7 13,676 Top ten investments 434,471 39.6 Coca-Cola HBC Beverages UK 29,787 2.7 23,144 Experian Industrial Support Services UK 29,324 2.7 20,282 Rentokil Initial Industrial Support Services UK 26,708 2.4 20,624 Close Brothers Banks UK 26,700 2.4 21,839 Inchcape Industrial Support Services UK 25,899 2.4 23,151 Anglo American Industrial Metals and Mining UK 25,065 2.3 26,093 National Grid Gas, Water and Multi-utilities UK 24,156 2.2 24,423 Novo-Nordisk Pharmaceuticals and Biotechnology Denmark 22,239 2.0 20,888 Safestore Real Estate Investment Trusts UK 21,600 2.0 23,659 Oversea-Chinese Banking Banks Singapore 21,124 1.9 14,833 Top twenty investments 687,073 62.6 Intermediate Capital Investment Banking and Brokerage Services UK 20,793 1.9 10,929 Howden Joinery Retailers UK 20,155 1.8 15,780 Microsoft Software and Computer Services United States 17,865 1.6 11,452 Oxford Instruments Electronic and Electrical Equipment UK 17,179 1.6 7,962 Nordea Bank Banks Sweden 16,694 1.5 14,075 Genus Pharmaceuticals and Biotechnology UK 16,314 1.5 – Croda International Chemicals UK 15,982 1.5 18,387 Games Workshop Leisure Goods UK 15,579 1.4 – Convatec Medical Equipment and Services UK 15,569 1.4 17,025 Vistry Household Goods and Home Construction UK 15,219 1.4 12,639 Top thirty investments 858,422 78.2 Portfolio Murray Income Trust PLC 29 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements As at 30 June 2023 Valuation Total Valuation 2023 investments 2022 Investment FTSE All-Share Sector Country £’000 % £’000 M&G Investment Banking and Brokerage Services UK 14,862 1.4 17,707 OSB Finance and Credit Services UK 14,469 1.3 14,469 Smith & Nephew Medical Equipment and Services UK 14,091 1.3 8,946 Hiscox Non-life Insurance UK 13,985 1.3 8,922 Nestlé Food Producers Switzerland 13,694 1.3 15,523 Kone Industrial Engineering Finland 13,653 1.2 9,047 GSK Pharmaceuticals and Biotechnology UK 12,630 1.1 20,068 Drax Electricity UK 12,568 1.1 13,933 VAT Group Electronic and Electrical Equipment Switzerland 12,447 1.1 7,486 LVMH Personal Goods France 12,325 1.1 – Top forty investments 993,146 90.4 Standard Chartered Banks UK 12,085 1.1 29,465 Roche Pharmaceuticals and Biotechnology Switzerland 9,919 0.9 – Direct Line Insurance Non-life Insurance UK 9,445 0.9 17,493 Telenor Telecommunications Service Providers Norway 9,323 0.9 12,742 Mondi General Industrials UK 9,251 0.8 11,227 L’Oréal Personal Goods France 9,181 0.8 – Marshalls Construction and Materials UK 8,779 0.8 16,346 RS Group Industrial Support Services UK 8,771 0.8 10,027 Genuit Construction and Materials UK 8,519 0.8 10,162 Chesnara Life Insurance UK 7,138 0.6 7,389 Top fifty investments 1,085,557 98.8 Accton Technology Telecommunications Equipment Taiwan 7,051 0.7 5,273 Moonpig Retailers UK 5,703 0.5 7,278 Total investments 1,098,311 100.0 Ordinary shares unless otherwise stated. 30 Murray Income Trust PLC Investments held at 30 June 2023 (percentage of portfolio) 0% 5% 10% 15% 20% 25% Basic Materials Consumer Discretionary Consumer Staples En e rgy Financials Health Care In dus trials Real Estate Technology Telecomm unications Utilities Company FTSE All-Share Investments held at 30 June 2022 (percentage of portfolio) 0% 5% 10% 15 % 20% 25% Basic Materials Consumer Discretionary Consu mer Staples Ene rgy Financials Health Care In dus trials Real Estate Technology Telecomm unications Utilities Company FTSE All-Share Sector Comparison with the Benchmark Murray Income Trust PLC 31 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements Valuation Valuation 30 June 2022 Transactions Gains/(losses) 30 June 2023 £’000 % £’000 £’000 £’000 % Equities UK 942,138 85.7 (56,917) 13,206 898,427 81.8 Denmark 20,888 1.9 (5,434) 6,785 22,239 2.0 Finland 9,047 0.8 3,581 1,025 13,653 1.3 France 37,496 3.4 12,068 6,311 55,875 5.1 Norway 20,582 1.9 (5,491) (5,768) 9,323 0.9 Singapore 14,833 1.4 5,718 573 21,124 1.9 Switzerland 23,009 2.1 10,892 2,159 36,060 3.3 Sweden 14,075 1.3 – 2,619 16,694 1.5 Taiwan 5,273 0.5 – 1,778 7,051 0.6 United States 11,452 1.0 2,499 3,914 17,865 1.6 Total investments 1,098,793 100.0 (33,084) 32,602 1,098,311 100.0 Summary of Investment Chan g es Durin g the Year 32 Murray Income Trust PLC Governance Murray Income Trust PLC 33 Games Workshop was introduced to the portfolio in the year under review. This unique mid-cap company owns strong intellectual property through its fantasy wargame ‘Warhammer’ series. The Manager’s engagement with the company is described on page 12. 34 Murray Income Trust PLC Neil Rogan Independent Chair Length of service 9 years; appointed Chair on 6 November 2017 Experience and other public company directorships: Neil Rogan, who was appointed a Director on 26 November 2013, is former Head of the Global Equities Teams at both Gartmore and Henderson and former Head of International Equities as well as a former member of the Investment Division Executive Committee at Gartmore. He previously managed Fleming Far Eastern Investment Trust. He is non-executive chairman of Invesco Asia Trust plc and a non-executive director of JPMorgan Global Growth & Income plc. Committee Membership: Management Engagement Committee (Chair), Nomination Committee (Chair) and Remuneration Committee. Contribution: The Nomination Committee has reviewed the contribution of Neil Rogan and has concluded that he continues to chair the Company expertly, fostering a collaborative spirit between the Board and Manager while ensuring that meetings remain focussed on the key areas of stakeholder relevance. Neil Rogan will retire as a Director at the conclusion of the AGM on 7 November 2023. Peter Tait Senior Independent Non-Executive Director and Chair of the Remuneration Committee Length of service 5 years; appointed Senior Independent Director on 2 November 2021 Experience and other public company directorships: Peter Tait, who was appointed a Director on 7 November 2017, retired from the Nestlé Group where he was initially Head of Investments for the Nestlé UK Pension Fund and then CEO & CIO of Nestlé Capital Management. Prior to Nestlé he worked for many years in the investment management industry managing portfolios for investment trusts, pension funds and charitable foundations. During that time he was a managing director at BlackRock International and, before that, a director of Dunedin Fund Managers and a portfolio analyst at Scottish Widows Life Assurance Fund. Committee Membership: Audit Committee, Management Engagement Committee, Nomination Committee and Remuneration Committee (Chair). Contribution: The Nomination Committee has reviewed the contribution of Peter Tait in light of his proposed re-election as a Director, and his appointment as Chair of the Company at the conclusion of the forthcoming AGM, and considers that he continues to bring to the Board his knowledge of investment management as well as experience of investment companies. Board of Directors Murray Income Trust PLC 35 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements Stephanie Eastment Independent Non-Executive Director and Chair of the Audit Committee Length of service 5 years; appointed Chair of the Audit Committee on 5 November 2018 Experience and other public company directorships: Stephanie Eastment, appointed a Director on 2 August 2018, was formerly Head of Specialist Fund Accounts and Corporate Secretariat at Invesco Perpetual. Her career spans over 35 years working in financial services including roles at UBS, Wardley Investment Services International and KPMG. She qualified while at KPMG and is a Fellow of the Institute of Chartered Accountants in England and Wales and a Fellow of the Institute of Chartered Secretaries and Administrators. She is an independent non-executive director and audit chair of Herald Investment Trust plc, Impax Environmental Markets plc and Alternative Income REIT plc. She is an independent non-executive director of RBS Collective Investment Funds Limited. Committee Membership: Audit Committee (Chair), Management Engagement Committee, Nomination Committee and Remuneration Committee. Contribution: The Nomination Committee has reviewed the contribution of Stephanie Eastment in light of her proposed re-election at the forthcoming AGM and has concluded that she continues to chair the Audit Committee expertly as well as bringing to the Board her extensive knowledge of the governance of investment companies . Merryn Somerset Webb Independent Non-Executive Director Length of service 4 years Experience and other public company directorships: Merryn Somerset Webb, who was appointed a Director on 7 August 2019. She is a senior columnist for Bloomberg Opinion covering personal finance and investment. Previously, she was editor-in-chief of MoneyWeek and a contributing editor at the Financial Times. She is a non- executive director of BlackRock Throgmorton Trust plc. Committee Membership: Audit Committee, Nomination Committee and Remuneration Committee. Contribution: The Nomination Committee has reviewed the contribution of Merryn Somerset Webb and has concluded that she continued to bring to the Board her expertise relating to the promotion of investment companies in addition to her wider experience in the sphere of personal finance. Merryn Somerset Webb is not seeking re-election as a Director at the forthcoming AGM. 36 Murray Income Trust PLC Alan Giles Independent Non-Executive Director Length of service 2 years Experience and other public company directorships: Alan Giles was appointed a Director on 17 November 2020 after serving as a director of Perpetual Income and Growth Investment Trust plc from 6 November 2015. He is Chairman of The Remuneration Consultants Group, an Associate Fellow at Saïd Business School, University of Oxford, and an honorary visiting professor at Bayes Business School, City, University of London. He was formerly Chairman of Fat Face Group Limited, Chief Executive of HMV Group plc, Managing Director of Waterstones, and an executive director of WH Smith plc. He previously held non-executive directorships at Foxtons Group plc, The Competition & Markets Authority, Rentokil Initial plc, The Office of Fair Trading, Somerfield plc and Wilson Bowden Plc. Committee Membership: Audit Committee, Management Engagement Committee, Nomination Committee and Remuneration Committee. Contribution: The Nomination Committee has reviewed the contribution of Alan Giles in light of his proposed re-election at the forthcoming AGM, and his appointment as Senior Independent Director at the conclusion of the forthcoming AGM. and considers that his extensive boardroom experience, particularly in the retail and other commercial sectors, broadens the Board’s overall expertise. Nandita Sahgal Tully Independent Non-Executive Director Length of service 1 year, 10 months Experience and other public company directorships: Nandita Sahgal Tully, who was appointed a Director on 3 November 2021, is a Fellow of the Institute of Chartered Accountants in England and Wales and a Member of the Chartered Institute for Securities and Investment. She was a Managing Director at ThomasLloyd, an impact investor focusing on clean energy and ESG, from 2017 to 2023. Committee Membership: Audit Committee, Management Engagement Committee, Nomination Committee and Remuneration Committee. Contribution: The Nomination Committee has reviewed the contribution of Nandita Sahgal Tully in light of her proposed re-election at the forthcoming AGM and has concluded that she brings to the Board investment management expertise with a particular focus on ESG. Board of Directors Continued Murray Income Trust PLC 37 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements 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 pages 4 to 8. 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 50 th 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. Directors’ Report 38 Murray Income Trust PLC 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 Number of board members Percentage of the board Number of senior positions on the board (CEO, CFO, Chair and SID) Number in executive management Percentage of executive management Men 3 50% n/a (note 3) n/a (note 3) n/a (note 3) Women 3 50% (note 1) Not specified/prefer not to say - - Directors’ Report Continued Murray Income Trust PLC 39 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements Table for reporting on ethnic background as at 30 June 2023 Number of board members Percentage of the board Number of senior positions on the board (CEO, CFO, Chair and SID) Number in executive management Percentage of executive management White British or other White (including minority-white groups) 5 83.3% n/a (note 3) n/a (note 3) n/a (note 3) Asian/Asian British 1 16.7% (note 2) Not specified/prefer not to say - - 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. 40 Murray Income Trust PLC 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 set out on page 46. 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 on pages 51 to 53. Management Engagement Committee · The terms and conditions of the Company’s agreement with the Manager, set out on pages 37 and 38, 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: Directors’ Report Continued Murray Income Trust PLC 41 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements · monitoring and evaluating the performance of the Manager; · reviewing, at least annually, the continued retention of the Manager; and · 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 (see pages 37 and 38), 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 at the forthcoming AGM. 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: 42 Murray Income Trust PLC Board Meetings (6) Audit Committee Meetings (3) Management Engagement Committee Meetings (2) Nomination Committee Meetings (2) Remuneration Committee Meetings (1) Neil Rogan A 6 - 2 2 1 Stephanie Eastment 6 3 2 2 1 Peter Tait 6 3 2 2 1 Merryn Somerset Webb 6 3 2 2 1 Alan Giles 6 3 2 2 1 Nandita Sahgal Tully 6 3 2 2 1 A Not a member of the Audit Committee but attended all of the meetings at the invitation of the Committee Chair. 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 pages 34 to 36 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 on pages 47 to 50 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 on pages 54, 60 and 61. 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 on pages 22 and 23. Directors’ Report Continued Murray Income Trust PLC 43 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements 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 disclosed on pages 18 to 22, 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 and company announcements, including daily net asset values, 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 (see page 113 for details). 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 on page 7. 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 on pages 24 and 25. 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: 30 June 2023 31 August 2023 Shareholder Number of shares held % held Number of shares held % held Interactive Investor (execution only) 16,674,055 14.9 16,565,575 15.0 Hargreaves Lansdown (execution only) 15,057,918 13.5 15,195,318 13.8 abrdn retail plans 12,644,557 11.3 11,888,778 10.8 Rathbones 11,956,024 10.7 11,842,207 10.7 A J Bell (execution only) 4,042,047 3.6 4,044,782 3.7 Charles Stanley 3,500,629 3.1 3,312,094 3.0 The above interests, as at 31 August 2023, were unchanged as at the date of approval of this Report. 44 Murray Income Trust PLC Future Developments of the Company Disclosures relating to the future developments of the Company may be found in the Chair’s Statement on page 8. Disclosures Required by FCA Listing Rule 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 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 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. Directors’ Report Continued Murray Income Trust PLC 45 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements 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 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 Board Neil Rogan Chair 19 September 2023 46 Murray Income Trust PLC Murray Income Trust PLC (the “Company”) is committed to high standards of corporate governance. The Board is accountable to the Company’s shareholders for good governance and this statement describes how the Company has applied the principles identified in the UK Corporate Governance Code as published in July 2018 (the “UK Code”), which is available on the Financial Reporting Council’s (the “FRC”) website: frc.org.uk, and is applicable for the Company’s Year. The Board has also considered the principles and provisions of the AIC Code of Corporate Governance as published in February 2019 (the “AIC Code”). The AIC Code addresses the principles and provisions set out in the UK Code, as well as setting out additional provisions on issues that are of specific relevance to the Company. The AIC Code is available on the AIC’s website: theaic.co.uk. The Board considers that reporting against the principles and provisions of the AIC Code, which has been endorsed by the FRC, provides more relevant information to shareholders. The Board confirms that, during the Year, the Company has complied with the principles and provisions of the AIC Code and the relevant provisions of the UK Code, except for those provisions relating to: · the role and responsibility of the chief executive; · executive directors’ remuneration; and · the requirement for an internal audit function. The Board considers that these provisions are not relevant to the position of the Company being an externally managed investment company. In particular, all of the Company’s day-to-day management and administrative functions are outsourced to third parties. As a result, the Company has no executive directors, employees or internal operations. The Company has therefore not reported further in respect of these provisions. Information on how the Company has applied the AIC Code, the UK Code, the Companies Act 2006 and the FCA’s DTR 7.2.6 can be found in the Annual Report as follows: · the composition and operation of the Board and its Committees are detailed on pages 38 to 42, and on pages 51 to 53 in respect of the Audit Committee; · the Board’s policy on diversity is on page 38 while information on Board diversity is on pages 38 and 39; · the Company’s approach to internal control and risk management is detailed on pages 51 and 52; · the contractual arrangements with the Manager are set out on page 37 while details of the annual assessment of the Manager may be found on page37 and 38; · the Company’s capital structure and voting rights are summarised on page 37; · the substantial interests disclosed in the Company’s shares are listed on page 44; · the rules concerning the appointment and replacement of Directors are contained in the Company’s Articles of Association and are summarised on page 47. There are no agreements between the Company and its Directors concerning compensation for loss of office; and · the powers to issue or buy back the Company’s ordinary shares, which are sought annually, and any amendments to the Company’s Articles of Association require a special resolution (75% majority) to be passed by shareholders and information on these resolutions may be found on pages 44 and 45. By order of the Board abrdn Holdings Limited, Secretaries 1 George Street Edinburgh EH2 2LL 19 September 2023 Statement of Corporate Governance Murray Income Trust PLC 47 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements The Remuneration Committee, established by the Board, has prepared this Directors’ Remuneration Report which consists of three parts: a) a Remuneration Policy, which is subject to a binding shareholder vote every three years - most recently voted on at the AGM on 27 November 2020 where the proxy votes on the relevant resolution were: For - 38,821,360 votes (99.36%); Discretionary - 40,287 votes (0.10%); Against - 210,997 votes (0.54%); and Withheld - 155,239 votes. The Remuneration Policy will be put to a shareholder vote, as resolution 3, at the AGM on 7 November 2023; b) an annual Implementation Report, which is subject to an advisory vote; and c) an Annual Statement. The law requires the Company’s auditor to audit certain of the disclosures provided in this report. Where disclosures have been audited, they are indicated as such. The independent auditor’s opinion is included on pages 55 to 62. There have been no changes to the Remuneration Policy (the “Policy”) during the Year. This has been determined after reviewing the impact of the previous Policy, taking account of discussions with shareholders, and noting that each year’s Directors’ Remuneration Report describes how the Policy has been implemented over the Year and how it will be implemented in the following Year. As stated above, the Policy will be put to shareholder vote at the forthcoming AGM. The Policy to be voted on is shown below. There have been several minor changes to the layout and wording within the Policy but these are not material and the principles remain the same as for previous years. Remuneration Policy This part of the Report provides details of the Company’s Policy for Directors of the Company, which takes into consideration corporate governance principles. The Board considers, where raised, shareholders’ views on Directors’ remuneration. Fees for Directors are determined by the Board within the limit stated in the Company's Articles of Association (the "Articles"). The Articles limit aggregate fees to £250,000 per annum. The limit can be amended by shareholder resolution and was last increased at the AGM in 2017. The remuneration of Directors should be reviewed annually, although such review may not necessarily result in any change. The annual review should ensure remuneration supports the strategic objectives of the Company, reflects Directors’ duties and responsibilities, expected time commitment, the level of skills and experience required, and the need for Directors to maintain on an ongoing basis an appropriate level of knowledge of regulatory and compliance requirements in an industry environment of increasing complexity. Remuneration should be fair and comparable to that of similar investment trusts. The Policy will apply to any new Directors who will be paid the appropriate fee based on the Directors’ fees level in place at the date of appointment. · The Company has no employees and consequently has no policy on the remuneration of employees. · All the Directors are non-executive appointed under the terms of letters of appointment. · Directors do not have service contracts. · No incentive or introductory fees will be paid to encourage a directorship. · Directors’ remuneration is not subject to any performance-related fee. · Directors are not eligible for bonuses, pension benefits, share options, long term incentive schemes or other benefits. · Directors are not entitled to exit payments or any compensation for loss of office. · Directors are entitled to be reimbursed for any reasonable expenses properly incurred in the performance of their duties. · Directors can be paid additional discretionary payments for services which , in the opinion of the Directors, are outside of the scope of the ordinary duties of a Director. · The terms of appointment provide that a Director may be removed subject to three months’ written notice. · Directors must retire and be subject to re-election at the first AGM after their appointment; the Company has also determined that every Director will stand for re- election at each AGM. · No Director will 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. Directors’ Remuneration Report 48 Murray Income Trust PLC · The Company indemnifies its Directors for all costs, charges, losses together with certain expenses and liabilities which may be incurred in the discharge of duties, as a Director of the Company. Directors’ & Officers’ liability insurance cover is maintained by the Company on behalf of the Directors. Implementation Report Directors’ Fees The level of fees for the Year and the preceding year are set out in the table below. There are no further fees to disclose as the Company has no employees, Chief Executive or Executive Directors. 30 June 2023 £ 30 June 2022 £ Chair 41,200 40,200 Audit Committee Chair 34,300 33,500 Senior Independent Director 30,200 29,500 Director 27,500 26,800 Directors’ fees were last revised on 1 July 2022. The Board carried out a review of Directors’ annual fees during the Year by reference to inflation, measured by the increase in the Consumer Prices Index since 1 July 2022, and taking account of peer group comparisons by sector and by market capitalisation. Following this review, it was decided that the Directors’ base fee of £27,500 would be increased by approximately 4.5%, with similar increases for other positions. With effect from 1 July 2023, Directors’ fees are £43,125 for the Chair, £35,950 for the Audit Committee Chair, £31,625 for the Senior Independent Director and £28,750 for the other Directors. These increased fees are considered to reflect increases in inflation and to be commensurate with the time commitment required of Directors of the Company to adequately discharge their responsibilities, taking into account increasingly complex and onerous regulatory requirements. Company Performance The graph shows the share price total return (assuming all dividends are reinvested) to Ordinary shareholders compared to the total return from the FTSE All-Share Index for the ten year period ended 30 June 2023 (rebased to 100 at 30 June 2013). This index was chosen for comparison purposes, as it is the benchmark used for investment performance measurement purposes. 100 110 120 130 140 150 160 170 180 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Share Price FTSE All-Share Statement of Proxy Voting at Annual General Meeting At the Company’s latest AGM, held on 1 November 2022, shareholders approved the Directors’ Remuneration Report (other than the Directors’ Remuneration Policy) in respect of the year ended 30 June 2022 and the following proxy votes received on the relevant resolution were: For – 40,256,956 (99.1%); Discretionary – 35,239 votes (0.1%); Against – 338,104 votes (0.8%); and Withheld – 145,173 votes. Directors’ Remuneration Report Continued Murray Income Trust PLC 49 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements Audited Information Directors’ Remuneration The Directors received the following remuneration in the form of fees and taxable expenses: Year ended 30 June 2023 Year ended 30 June 2022 Fees £ Taxable Expenses £ Total £ Fees £ Taxable Expenses £ Total £ Neil Rogan 41,200 502 41,702 40,200 1,245 41,445 Stephanie Eastment 34,300 188 34,488 33,500 452 33,952 Peter Tait (appointed SID on 2 November 2021) 30,200 907 31,107 28,592 763 29,355 Merryn Somerset Webb 27,500 1,312 28,812 26,800 463 27,263 Alan Giles (appointed on 17 November 2020) 27,500 91 27,591 26,800 576 27,376 Nandita Sahgal Tully (appointed on 3 November 2021) 27,500 204 27,704 17,718 - 17,718 Jean Park (retired on 2 November 2021) n/a n/a n/a 9,997 128 10,125 Donald Cameron (retired on 2 November 2021) n/a n/a n/a 9,082 484 9,566 Total 188,200 3,204 191,404 192,689 4,111 196,800 The above amounts exclude any employers’ national insurance contributions, if applicable. All fees are at a fixed rate and there is no variable remuneration. Fees are pro-rated where a change takes place during a financial year. No payments were made to third parties. There are no other fees to disclose as the Company has no employees, chief executive or executive directors. Taxable expenses refer to amounts claimed by Directors for travelling to attend meetings. Annual Percentage Change in Directors’ Remuneration The table below sets out, for the Directors who served during the Year, the annual percentage change in Directors’ fees for the past four years. Year ended 30 June 2023 Year ended 30 June 2022 Year ended 30 June 2021 Year ended 30 June 2020 Fees % Fees % Fees % Fees % Neil Rogan 2.5 7.2 0.0 0.0 Stephanie Eastment 2.4 11.7 0.0 14.3 Peter Tait (appointed SID on 2 November 2021) 5.6 12.1 0.0 0.0 Merryn Somerset Webb (appointed on 7 August 2019) 2.6 5.1 11.0 B See note A Alan Giles (appointed on 17 November 2020) 2.6 68.9 B See note A n/a Nandita Sahgal Tully (appointed on 3 November 2021) 55.2 B See note A n/a n/a A Percentage change figure cannot be calculated in the year of appointment. B If the Director had been appointed for the whole of the previous year, the annual change figure would have been nil for Merryn Somerset Webb, 5.1% for Alan Giles and 2.6% for Nandita Sahgal Tully. 50 Murray Income Trust PLC Spend on Pay As the Company has no employees, the Directors do not consider it appropriate to present a table comparing remuneration paid to Directors with distributions to shareholders. However, for ease of reference, the total fees paid to Directors are shown in the table on page 49 while dividends paid to shareholders are set out in note 7 and share buybacks are detailed in note 15. Directors’ Interests in the Company The Directors are not required to have a shareholding in the Company. The Directors (including their persons closely associated) at 30 June 2023, and 30 June 2022, had no interest in the share capital of the Company other than those interests shown below, all of which are beneficial interests, unless indicated otherwise: 30 June 2023 30 June 2022 Director Ord 25p Ord 25p Neil Rogan 44,719 37,157 Stephanie Eastment 4,500 A 4,500 A Peter Tait 7,000 5,000 Merryn Somerset Webb 3,449 3,449 Alan Giles 5,000 5,000 Nandita Sahgal Tully 560 560 Jean Park n/a 5,575 B Donald Cameron n/a 1,691 B A Of which 1,700 shares were held non-beneficially B As at date of resignation on 2 November 2021 There have been no changes to the Directors’ interests in the share capital of the Company since the year end up to the date of approval of this Report. Annual Statement On behalf of the Board and in accordance with Part 2 of Schedule 8 of the Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013, I confirm that the above Report on Remuneration Policy and Remuneration Implementation summarises, as applicable, for the Year: · the major decisions on Directors’ remuneration; · any substantial changes relating to Directors’ remuneration made during the Year; and · the context in which the changes occurred and in which decisions have been taken. On behalf of the Board Peter Tait Chair of the Remuneration Committee 19 September 2023 Directors’ Remuneration Report Continued Murray Income Trust PLC 51 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements Stephanie Eastment is Chair of the audit committee, membership of which comprises all of the Directors of the Company with the exception of Neil Rogan. In compliance with the July 2018 UK Code on Corporate Governance (the “Code”), the Chair of the Board is not a member of the committee but attends the committee by invitation of the committee Chair. The Directors have satisfied themselves that at least two of the committee’s members have recent and relevant financial experience – Stephanie Eastment and Nandita Sahgal Tully are both Fellows of the Institute of Chartered Accountants in England & Wales – and that, collectively, the committee possesses competence relevant to investment trusts. The committee meets at least twice each year, in line with the cycle of annual and half-yearly reports, which is considered by the Directors to be a frequency appropriate to the size and complexity of the Company. Role of the Audit Committee In summary, the committee’s main audit review functions are: · to review and monitor the internal control systems and risk management systems (including review of non- financial risks) on which the Company is reliant (see “Internal Controls and Risk Management”, below); · to consider annually whether there is a need for the Company to have its own internal audit function; · to monitor the integrity of the half-yearly and annual financial statements of the Company by reviewing, and challenging where necessary, the actions and judgements of the Manager; · to review, and report to the Board on, the significant financial reporting issues and judgements made in connection with the preparation of the Company’s financial statements, half-yearly reports, announcements and related formal statements; · to review the content of the Annual Report and financial statements and advise the Board on whether, taken as a whole, it is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s position and performance, business model and strategy; · to meet with the external auditor to review their proposed audit programme of work and the findings as auditor; · to develop and implement a policy on the engagement of the auditor to supply non-audit services; · to review a statement from the Manager detailing the arrangements in place for the Manager’s staff, in confidence, to escalate concerns about possible improprieties in matters of financial reporting or other matters (“whistleblowing”); · to oversee and manage audit tenders and selection processes, to make recommendations to the Board in relation to the appointment of the auditor and removal of the auditor and to approve the remuneration and terms of engagement of the auditor; · to monitor and review annually the auditor’s independence, objectivity, effectiveness, resources and qualification; and · to investigate the reasons giving rise to any resignation of the auditor and consider whether any action is required. The committee fulfilled all the above required roles and responsibilities during the Year. Internal Controls and Risk Management Through the committee, the Board is ultimately responsible for the Company’s system of internal control and risk management and for reviewing its effectiveness. The committee confirms that there is a robust process for identifying, evaluating and managing the Company’s significant business and operational risks, that it has been in place for the Year and up to the date of approval of the Annual Report and Financial Statements, and that it is regularly reviewed by the Board and accords with the risk management and internal control guidance for directors in the Code. The design, implementation and maintenance of controls and procedures to safeguard the assets of the Company and to manage its affairs extends to operational and compliance controls and risk management. The Directors have delegated the investment management of the Company’s assets to the Manager within overall guidelines and this embraces implementation of the system of internal control, including financial, operational and compliance controls and risk management. Internal control systems are monitored and supported by the Manager’s Internal Audit department which undertakes periodic examination of business processes and ensures that recommendations to improve controls are implemented. Audit Committee Report 52 Murray Income Trust PLC Risks are identified and documented through a risk management framework by each function within the Manager’s activities. Risk is considered in the context of the FRC and AIC Code guidance, and includes financial, regulatory, market, operational and reputational risks. This helps the internal audit risk assessment model identify those functions for review. Any weaknesses identified are reported to the Board, and timetables are agreed for implementing improvements to systems. The implementation of any remedial action required is monitored and feedback provided to the Board. The principal risks and uncertainties facing the Company are identified on pages 18 to 22 of this Report. The key components designed to provide effective internal control are outlined below: · the Manager prepares forecasts and management accounts which allow the Board to assess the Company’s activities and review its performance; the emphasis is on obtaining the relevant degree of assurance and not merely reporting by exception; · the Board and Manager have agreed clearly-defined investment criteria, specified levels of authority and exposure limits. Reports on these, including performance statistics and investment valuations, are regularly submitted to the Board and there are meetings with the Manager as appropriate; · as a matter of course, the Manager’s compliance department continually reviews the Manager’s operations; · written agreements are in place which specifically define the roles and responsibilities of the Manager and other third-party service providers and the committee reviews, where relevant, ISAE3402 Reports, a global assurance standard for reporting on internal controls for service organisations; in particular, the Board receives equivalent assurance from Link Group, the Company’s Registrar; and · at its September 2023 meeting, the committee carried out its annual assessment of internal controls for the Year including the internal audit and compliance functions, and taking account of events since 30 June 2023. In addition, the Manager ensures that clearly documented contractual arrangements exist in respect of any activities that have been delegated to external professional organisations. A senior member of the Manager’s Internal Audit department reports six-monthly to the committee and has direct access to the Directors at any time. Internal control systems are designed to meet the Company’s particular needs and the risks to which it is exposed. Accordingly, the internal control systems are designed to manage, rather than eliminate, the risk of failure to achieve business objectives and, by their nature, can only provide reasonable, and not absolute, assurance against misstatement and loss. Significant Risks for the Audit Committee During its review of the Company’s financial statements for the Year, the committee considered the following significant risks including, in particular, those communicated by the auditor as key areas of audit emphasis during their planning and reporting of the year end audit: Valuation and Existence of Investments How the risk was addressed The valuation of investments is undertaken in accordance with the accounting policies, disclosed in note 2(e) to the financial statements. All investments are considered liquid and quoted in active markets and have been categorised as Level 1 within the FRS 102 fair value hierarchy and can be verified against daily market prices. The portfolio is reviewed and verified by the Manager on a regular basis and management accounts, including a full portfolio listing, are prepared each month and circulated to the Board. The portfolio is also reviewed annually by the auditor. The Company used the services of an independent depositary (BNP Paribas Trust Corporation UK Limited) during the Year through whom the assets of the Company were held. The depositary confirmed that the accounting records correctly reflected all investee holdings and that these agreed to custodian records. Income Recognition How the risk was addressed The recognition of investment income is undertaken in accordance with accounting policy note 2(b) to the financial statements. Special dividends are allocated to the capital or revenue accounts according to the nature of the payment and the intention of the underlying company. The Directors also review, at each meeting, the Company’s income, including income received, revenue forecasts and dividend comparisons. Internal Auditor The Board has considered the need for an internal audit function but, because the Company is externally- managed, the Board has decided to place reliance on the Manager’s risk management/internal controls systems and internal audit procedures. Audit Committee Report Continued Murray Income Trust PLC 53 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements External Auditor Review of the Auditor The committee has reviewed the effectiveness of the auditor including: · independence - the auditor discusses with the committee, at least annually, the steps it takes to ensure its independence and objectivity, including the level of non-audit fees it has received from the Company, and makes the committee aware of any potential issues, explaining all relevant safeguards; · quality of audit work including the ability to resolve issues in a timely manner - identified issues are satisfactorily and promptly resolved; · its communications/presentation of outputs - the explanation of the audit plan, any deviations from it and the subsequent audit findings are comprehensive and comprehensible, and working relationship with management - the auditor has a constructive working relationship with the Manager; and · quality of people and service including continuity and succession plans - the audit team is made up of sufficient, suitably experienced staff with provision made for knowledge of the investment trust sector and retention of that knowledge on rotation of the partner. For the Year, the committee was satisfied with the auditor’s effectiveness, independence and the objectivity of the audit process. Re-appointment of the Auditor This year’s audit of the Company’s Annual Report is the fourth performed by PricewaterhouseCoopers LLP since their appointment following an audit tender process held by the Company in 2019. Shareholders will have the opportunity to vote on the re- appointment of PricewaterhouseCoopers LLP as auditor and to authorise the committee to approve the auditor’s remuneration, as Ordinary Resolutions 9 and 10, at the AGM on 7 November 2023. Provision of Non-Audit Services The committee has put in place a policy on the supply of non-audit services provided by the auditor. Such services are considered on a case-by-case basis and may only be provided if the service is at a reasonable and competitive cost and does not constitute a conflict of interest or potential conflict of interest or prevent the auditor from remaining objective and independent. All non-audit services require the pre-approval of the committee. No non-audit fees were paid to the auditor during the Year (2022 - nil). The committee confirms that it has complied with Part 5.1 of the Competitions and Market Authority’s Order 2014. Stephanie Eastment, Chair of the Audit Committee 19 September 2023 54 Murray Income Trust PLC 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 apply them 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 Chair 19 September 2023 Statement of Directors’ Responsibilities Murray Income Trust PLC 55 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements Report on the audit of the financial statements Opinion In our opinion, Murray Income Trust PLC’s financial statements: · give a true and fair view of the state of the Company’s affairs as at 30 June 2023 and of its net return and cash flows for the year then ended; · have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, and applicable law); and · have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the financial statements, included within the Annual Report, which comprise: the Statement of Financial Position as at 30 June 2023; the Statement of Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the year then ended; and the Notes to the Financial Statements, which include a description of the significant accounting policies. Our opinion is consistent with our reporting to the Audit Committee. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We remained independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided. We have provided no non-audit services to the Company in the period under audit. Our audit approach Context The Company is a standalone Investment Trust Company and engages abrdn Fund Managers Limited (the “AIFM”) to manage its assets. Overview Audit Scope · We conducted our audit of the financial statements using information from the AIFM to whom the Directors have delegated the provision of all administrative functions. · We tailored the scope of our audit taking into account the types of investments within the Company, the involvement of the AIFM referred to above, the accounting processes and controls, and the industry in which the Company operates. · We obtained an understanding of the control environment in place at the AIFM and adopted a fully substantive testing approach using reports obtained from the AIFM. Independent Auditors’ Report to the Members of Murray Income Trust PLC 56 Murray Income Trust PLC Key audit matters · Income from investments. · Valuation and existence of listed investments. Materiality · Overall materiality: £9,990,000 (2022: £10,092,000) based on approximately 1% of Net assets. · Performance materiality: £7,492,500 (2022: £7,569,000). The scope of our audit As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. Key audit matters Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit. The key audit matters below are consistent with last year. Key audit matter How our audit addressed the key audit matter Income from investments Refer to page 52 (Audit Committee’s Report), page 68 (Accounting Policies) and page 71 (Notes to the Financial Statements). Income from investments comprised dividend income. Within income from investments there is a risk of incomplete or inaccurate recognition of income through the failure to recognise proper income entitlements or to apply an inappropriate accounting treatment. In addition, the Directors are required to exercise judgement in determining whether income in the form of special dividends should be classified as ‘revenue’ or ‘capital’ in the Statement of Comprehensive Income. As such, we focused on the accuracy, completeness and occurrence of income from investments recognition and its presentation in the Statement of Comprehensive Income as set out in the requirements of The Association of Investment Companies’ Statement of Recommended Practice (the “AIC SORP”). We assessed the accounting policy for income recognition for compliance with accounting standards and the AIC SORP and performed testing to confirm that income had been accounted for in accordance with this stated accounting policy. We found that the accounting policies implemented were in accordance with accounting standards and the AIC SORP, and that income has been accounted for in accordance with the stated accounting policy. We understood and assessed the design and implementation of key controls surrounding income recognition. We tested the accuracy of all dividend receipts by agreeing the dividend rates from investments to independent market data. We tested occurrence by testing that all dividends recorded in the year had been declared in the market by investment holdings, and we traced a sample of dividends received to bank statements. We tested the allocation and presentation of dividend income between the revenue and capital return columns of the Statement of Comprehensive Income in line with the requirements set out in the AIC SORP by determining the reasons behind dividend distributions. Independent Auditors’ Report to the Members of Murray Income Trust PLC Continued Murray Income Trust PLC 57 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements Key audit matter How our audit addressed the key audit matter Based on the audit procedures performed and evidence obtained, we concluded that income from investments was not materially misstated. Valuation and existence of listed investments Refer to page 52 (Audit Committee’s Report), page 69 (Accounting Policies) and pages 76 and 77 (Notes to the Financial Statements). The investment portfolio at 30 June 2023 comprised listed equity investments of £1,098 million. We focused on the valuation and existence of investments because investments represent the principal element of the net asset value as disclosed in the Statement of Financial Position in the financial statements. We tested the valuation of all the listed investments by agreeing the prices used in the valuation to independent third party sources. We tested the existence of listed investments by agreeing the holdings to an independent confirmation from the Depositary, BNP Paribas Trust Corporation UK Limited, as at 30 June 2023. No material misstatements were identified from this testing. How we tailored the audit scope We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole, taking into account the structure of the Company, the accounting processes and controls, and the industry in which it operates. As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. The impact of climate risk on our audit In planning our audit, we made enquiries of the Directors to understand the extent of the potential impact of climate change risk on the Company’s financial statements. The Directors concluded that the impact on the measurement and disclosures within the financial statements is not material because the Company's investment portfolio is made up of level 1 quoted securities which are valued at fair value based on market prices. We found this to be consistent with our understanding of the Company's investment activities. We also considered the consistency of the climate change disclosures included in the Principal Risks and Uncertainties with the financial statements and our knowledge from our audit. Materiality The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole. Based on our professional judgement, we determined materiality for the financial statements as a whole as follows: Overall Company materiality £9,990,000 (2022: £10,092,000). How we determined it Approximately 1% of Net assets. Rationale for benchmark applied We believe that net assets is the primary measure used by the shareholders in assessing the performance of the entity, and is a generally accepted auditing benchmark. This benchmark provides an appropriate and consistent year on year basis for our audit. 58 Murray Income Trust PLC We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance materiality was 75% (2022: 75%) of overall materiality, amounting to £7,492,500 (2022: £7,569,000 for the Company’s financial statements. In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of our normal range was appropriate. We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £499,500 (2022: £504,600 as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons. Conclusions relating to going concern Our evaluation of the Directors’ assessment of the Company’s ability to continue to adopt the going concern basis of accounting included: · evaluating the Directors' updated risk assessment and considering whether it addressed relevant threats, including Russia’s invasion of Ukraine, the rise of inflation and the wider macroeconomic uncertainty; · evaluating the Directors' assessment of potential operational impacts, considering their consistency with other available information and our understanding of the business and assessed the potential impact on the financial statements; · reviewing the Directors' assessment of the Company's financial position in the context of its ability to meet future expected operating expenses and debt repayments, their assessment of liquidity as well as their review of the operational resilience of the Company and oversight of key third-party service providers; and · assessing the implication of significant reductions in Net Asset Value (NAV) as a result of market performance on the ongoing ability of the Company to operate. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Company's ability to continue as a going concern. In relation to the Directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. Independent Auditors’ Report to the Members of Murray Income Trust PLC Continued Murray Income Trust PLC 59 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements Reporting on other information The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon. The Directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on these responsibilities. With respect to the Strategic report and Directors’ Report, we also considered whether the disclosures required by the UK Companies Act 2006 have been included. Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as described below. Strategic report and Directors’ Report In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Directors’ Report for the year ended 30 June 2023 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements. In light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we did not identify any material misstatements in the Strategic report and Directors’ Report. Directors’ Remuneration In our opinion, the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006. Corporate governance statement The Listing Rules require us to review the Directors’ statements in relation to going concern, longer-term viability and that part of the corporate governance statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review. Our additional responsibilities with respect to the corporate governance statement as other information are described in the Reporting on other information section of this report. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is materially consistent with the financial statements and our knowledge obtained during the audit, and we have nothing material to add or draw attention to in relation to: · The Directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks; · The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks and an explanation of how these are being managed or mitigated; · The Directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis of accounting in preparing them, and their identification of any material uncertainties to the Company’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements; · The Directors’ explanation as to their assessment of the Company’s prospects, the period this assessment covers and why the period is appropriate; and 60 Murray Income Trust PLC · The Directors’ statement as to whether they have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions. Our review of the Directors’ statement regarding the longer-term viability of the Company was substantially less in scope than an audit and only consisted of making inquiries and considering the Directors’ process supporting their statement; checking that the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the statement is consistent with the financial statements and our knowledge and understanding of the Company and its environment obtained in the course of the audit. In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is materially consistent with the financial statements and our knowledge obtained during the audit: · The Directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides the information necessary for the members to assess the Company's position, performance, business model and strategy; · The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and · The section of the Annual Report describing the work of the Audit Committee. We have nothing to report in respect of our responsibility to report when the Directors’ statement relating to the Company’s compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review by the auditors. Responsibilities for the financial statements and the audit Responsibilities of the Directors for the financial statements As explained more fully in the Statement of Directors' Responsibilities, the Directors are responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The Directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. Auditors’ responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below. Independent Auditors’ Report to the Members of Murray Income Trust PLC Continued Murray Income Trust PLC 61 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements Based on our understanding of the Company and industry, we identified that the principal risks of non-compliance with laws and regulations related to breaches of section 1158 of the Corporation Tax Act 2010, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the financial statements such as the Companies Act 2006. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to increase revenue (investment income and capital gains) or to increase net asset value. Audit procedures performed by the engagement team included: · discussions with the AIFM and the audit committee, including specific enquiry of known or suspected instances of non- compliance with laws and regulation and fraud where applicable; · reviewing relevant meeting minutes, including those of the Audit Committee; · assessment of the Company’s compliance with the requirements of section 1158 of the Corporation Tax Act 2010, including recalculation of numerical aspects of the eligibility conditions; · identifying and testing journal entries, in particular any material or revenue-impacting manual journal entries posted as part of the Annual Report preparation process; and · designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing. There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected. A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report. Use of this report This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Other required reporting Companies Act 2006 exception reporting Under the Companies Act 2006 we are required to report to you if, in our opinion: · we have not obtained all the information and explanations we require for our audit; or · adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or · certain disclosures of directors’ remuneration specified by law are not made; or · the financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns. We have no exceptions to report arising from this responsibility. 62 Murray Income Trust PLC Appointment Following the recommendation of the Audit Committee, we were appointed by the members on 5 November 2019 to audit the financial statements for the year ended 30 June 2020 and subsequent financial periods. The period of total uninterrupted engagement is four years, covering the years ended 30 June 2020 to 30 June 2023. Gillian Alexander (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors Edinburgh 19 September 2023 Independent Auditors’ Report to the Members of Murray Income Trust PLC Continued Murray Income Trust PLC 63 Financial Statements L’Oréal , a portfolio company purchased this year, owns a number of globally recognised consumer and professional brands including Lancôme, Yves Saint Laurent, Ralph Lauren, Garnier, Maybelline and L’Oréal Professional Paris. 64 Murray Income Trust PLC Year ended 30 June 2023 Year ended 30 June 2022 Revenue Capital Total Revenue Capital Total Notes £’000 £’000 £’000 £’000 £’000 £’000 Gains/(losses) on investments 10 - 32,602 32,602 - (83,786) (83,786) Currency gains/(losses) - 733 733 - (216) (216) Income 3 48,879 - 48,879 51,018 - 51,018 Investment management fees 4 (1,141) (2,663) (3,804) (1,199) (2,798) (3,997) Administrative expenses 5 (1,390) - (1,390) (1,350) - (1,350) Net return before finance costs and tax 46,348 30,672 77,020 48,469 (86,800) (38,331) Finance costs 6 (735) (1,714) (2,449) (692) (1,615) (2,307) Net return before tax 45,613 28,958 74,571 47,777 (88,415) (40,638) Taxation 8 (1,085) - (1,085) (463) - (463) Net return after tax 44,528 28,958 73,486 47,314 (88,415) (41,101) Return per Ordinary share 9 38.7p 25.2p 63.9p 40.5p (75.7)p (35.2)p The total column of this statement represents the profit and loss account of the Company prepared in accordance with FRS 102. The ‘Revenue’ and ‘Capital’ columns represent supplementary information prepared under guidance issued by the Association of Investment Companies. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in the year. The accompanying notes are an integral part of the financial statements. Statement of Comprehensive Income Murray Income Trust PLC 65 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements As at As at 30 June 2023 30 June 2022 Notes £’000 £’000 Fixed assets Investments at fair value through profit or loss 10 1,098,311 1,098,793 Current assets Other debtors and receivables 11 7,274 9,061 Cash and cash equivalents 12 15,115 20,131 22,389 29,192 Creditors: amounts falling due within one year Other payables (5,997) (1,513) Bank loans (6,378) (6,507) 13 (12,375) (8,020) Net current assets 10,014 21,172 Total assets less current liabilities 1,108,325 1,119,965 Creditors: amounts falling due after more than one year 2.51% Senior Loan Notes (39,941) (39,930) 4.37% Senior Loan Notes (69,200) (70,780) 14 (109,141) (110,710) Net assets 999,184 1,009,255 Capital and reserves Share capital 15 29,882 29,882 Share premium account 438,213 438,213 Capital redemption reserve 4,997 4,997 Capital reserve 489,428 502,672 Revenue reserve 36,664 33,491 Total Shareholders’ funds 999,184 1,009,255 Net asset value per Ordinary share 16 Debt at fair value 911.7p 871.0p Debt at par value 894.4p 864.9p The financial statements on pages 64 to 88 were approved by the Board of Directors and authorised for issue on 19 September 2023 and were signed on its behalf by: Neil Rogan Chair The accompanying notes are an integral part of the financial statements. Statement of Financial Position 66 Murray Income Trust PLC For the year ended 30 June 2023 Share Capital Share premium redemption Capital Revenue capital account reserve reserve reserve Total Notes £’000 £’000 £’000 £’000 £’000 £’000 Balance at 1 July 2022 29,882 438,213 4,997 502,672 33,491 1,009,255 Net return after tax - - - 28,958 44,528 73,486 Buyback of Ordinary shares for treasury 15 - - - (42,202) - (42,202) Dividends paid 7 - - - - (41,355) (41,355) Balance at 30 June 2023 29,882 438,213 4,997 489,428 36,664 999,184 For the year ended 30 June 2022 Share Capital Share premium redemption Capital Revenue capital account reserve reserve reserve Total Notes £’000 £’000 £’000 £’000 £’000 £’000 Balance at 1 July 2021 29,882 438,213 4,997 594,282 26,485 1,093,859 Net (loss)/return after tax - - - (88,415) 47,314 (41,101) Buyback of Ordinary shares for treasury 15 - - - (3,195) - (3,195) Dividends paid 7 - - - - (40,308) (40,308) Balance at 30 June 2022 29,882 438,213 4,997 502,672 33,491 1,009,255 The accompanying notes are an integral part of the financial statements. Statement of Chan g es in Equity Murray Income Trust PLC 67 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements Year ended Year ended 30 June 2023 30 June 2022 Notes £’000 £’000 Operating activities Net return/(loss) before finance costs and taxation 77,020 (38,331) Adjustments for Increase/(decrease) in accrued expenses 783 (80) Overseas withholding tax (1,458) (1,360) Increase in dividend income receivable (324) (270) Increase in interest income receivable (54) (19) Interest paid (2,196) (2,272) (Gains)/losses on investments 10 (32,602) 83,786 Amortisation on loan notes 6 12 12 Accretion of loan note book cost 6 (1,581) (1,581) Foreign exchange (gains)/losses (733) 216 Decrease in other debtors 47 46 Stock dividends included in investment income 3 (1,006) (3,728) Net cash inflow from operating activities 37,908 36,419 Investing activities Purchases of investments (180,130) (238,613) Sales of investments 218,912 261,285 Net cash inflow from investing activities 38,782 22,672 Financing activities Dividends paid 7 (41,355) (40,308) Buyback of Ordinary shares for treasury (40,955) (3,195) Repayment of bank loans (6,755) (6,290) Draw down of bank loans 6,664 6,258 Net cash outflow from financing activities (82,401) (43,535) (Decrease)/increase in cash (5,711) 15,556 Analysis of changes in cash during the year Opening balance 20,131 4,493 Effect of exchange rate fluctuations on cash held 695 82 (Decrease)/increase in cash as above (5,711) 15,556 Closing balance 15,115 20,131 Represented by: Cash at bank and in hand 12 1,227 1,503 Money market funds 12 13,888 18,628 15,115 20,131 The accompanying notes are an integral part of these financial statements. Statement of Cash Flows 68 Murray Income Trust PLC 1. Principal activity The Company is a closed-end investment company, registered in Scotland No SC012725, with its Ordinary shares being listed on the London Stock Exchange. 2. Accountin g p olicies (a) Basis of preparation. The financial statements have been prepared in accordance with Financial Reporting Standard 102, the Companies Act 2006 and with the Statement of Recommended Practice ‘Financial Statements of Investment Trust Companies and Venture Capital Trusts’ issued in July 2022. The financial statements are prepared in Sterling which is the functional currency of the Company and rounded to the nearest £’000. They have also been prepared on the assumption that approval as an investment trust will continue to be granted. The accounting policies applied are unchanged from the prior year and have been applied consistently. 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 on pages 22 and 23. 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 disclosed on pages 18 to 22, 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. (b) Income. Dividends receivable on equity shares are treated as revenue for the year on an ex-dividend basis. Where no ex- dividend date is available dividends receivable on or before the year end are treated as revenue for the year. Where the Company has elected to receive dividends in the form of additional shares rather than cash, the amount of the cash dividend foregone is recognised as revenue and any residual amount is recognised as capital. Provision is made for any dividends not expected to be received. Special dividends are credited to capital or revenue, according to the circumstances. Dividend revenue is presented gross of any non-recoverable withholding taxes, which are disclosed separately within the Statement of Comprehensive Income. Interest receivable from cash and short-term deposits and stock lending income is recognised on an accruals basis. (c) Expenses. All expenses are accounted for on an accruals basis. All expenses are charged through the revenue column of the Statement of Comprehensive Income except as follows: – transaction costs on the acquisition or disposal of investments are recognised as a capital item in the Statement of Comprehensive Income. – expenses are charged as a capital item in the Statement of Comprehensive Income where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. In this respect the investment management fee has been allocated 30% to revenue and 70% to capital to reflect the Company’s investment policy and prospective income and capital growth. (d) Taxation. Taxation 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 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. The Company’s liability for current tax is calculated using tax rates that were applicable at the Statement of Financial Position date. Notes to the Financial Statements For the year ended 30 June 2023 Murray Income Trust PLC 69 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements Deferred taxation is recognised in respect of all timing differences that have originated but not reversed at the Statement of Financial Position date, where transactions or events that result in an obligation to pay more tax in the future or right to pay less tax in the future have occurred at the Statement of Financial Position date. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing differences are differences arising between the Company’s taxable profits and its results as stated in the financial statements which are capable of reversal in one or more subsequent periods. Deferred tax is measured on a non-discounted basis at the tax rates that are expected to apply in the periods in which timing differences are expected to reverse, based on tax rates and laws enacted or substantively enacted at the Statement of Financial Position date. Due to the Company’s status as an investment trust company and the intention to continue meeting the conditions required to obtain approval in the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments. The tax effect of different items of income/gain and expenditure/loss is allocated between capital and revenue within the Statement of Comprehensive Income on the same basis as the particular item to which it relates using the Company’s effective rate of tax for the year, based on the marginal basis. (e) Valuation of investments. The Company has chosen to apply the recognition and measurement provisions of IAS 39 Financial Instruments: Recognition and Measurement. All investments have been designated upon initial recognition at fair value through profit or loss. This is done because all investments are considered to form part of a group of financial assets which is evaluated on a fair value basis, in accordance with the Company’s documented investment strategy, and information about the grouping is provided internally on that basis. Investments are recognised and de-recognised at trade date where a purchase or sale is under a contract whose terms require delivery within the timeframe established by the market concerned, and are measured initially at fair value. Subsequent to initial recognition, investments are valued at fair value through profit or loss. For listed investments, this is deemed to be bid market prices or closing prices for SETS (London Stock Exchange’s electronic trading service) stocks sourced from the London Stock Exchange. Gains and losses arising from changes in fair value are included in the net return for the period as a capital item in the Statement of Comprehensive Income and are ultimately recognised in the capital reserve. (f) Cash and cash equivalents. Cash comprises cash in hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to insignificant risk of change in value. (g) Borrowings and finance costs. Borrowings of interest bearing bank loans and 2.51% Senior Loan Notes are recognised initially at the fair value of the consideration received, net of any issue expenses, and subsequently at amortised cost using the effective interest method. Borrowings of 4.37% Senior Loan Notes, which were novated to the Company on the merger with Perpetual Income and Growth Investment Trust plc, were recorded initially at their fair value of £73,344,000 and are amortised over the remaining life of the loan towards their redemption value of £60,000,000. The amortisation adjustment is presented as a finance cost. Finance costs accrue using the effective interest rate over the life of the borrowings and are allocated 30% to revenue and 70% to capital. (h) Traded options. The Company may enter into certain derivative contracts (eg options) to gain exposure to the market. The option contracts are classified as fair value through profit or loss, held for trading, and accounted for as separate derivative contracts and are therefore shown in other assets or other liabilities at their fair value ie market value. The premium on the option (as with written options generally) is treated as the option’s initial fair value and is recognised over the life of the option in the revenue column of the Statement of Comprehensive Income along with fair value changes in the open position which occur due to the movement in underlying securities. Losses realised on the exercise of the contracts are recorded in the capital column of the Statement of Comprehensive Income as they arise. Where the Company enters into derivative contracts to manage market risk, gains or losses arising on such contracts are recorded in the capital column of the Statement of Comprehensive Income. 70 Murray Income Trust PLC (i) Segmental reporting. The Directors are of the opinion that the Company is engaged in a single segment of business activity, being investment business. Consequently, no business segmental analysis is provided. (j) Nature and purpose of reserves Share capital. The Ordinary share capital on the Statement of Financial Position relates to the number of shares in issue and in treasury. Only when the shares are cancelled, either from treasury or directly, is a transfer made to the capital redemption reserve. This is a non-distributable reserve. Share premium account. The balance classified as share premium includes the premium above nominal value from the proceeds on issue of any equity share capital comprising Ordinary shares of 25p and includes the premium arising following the issue of shares on the combination with Perpetual Income and Growth Investment Trust plc on 17 November 2020. This is a non-distributable reserve. Capital redemption reserve. The capital redemption reserve reflects the cancellation of Ordinary shares, when an amount equal to the par value of the Ordinary share capital is transferred from the share capital reserve to the capital redemption reserve. This is a non-distributable reserve. Capital reserve. This reserve reflects any gains or losses on investments realised in the period along with any movements in the fair value of investments held that have been recognised in the Statement of Comprehensive Income. These include gains and losses from foreign currency exchange differences. Additionally, expenses, including finance costs, are charged to this reserve in accordance with (b) and (f) above. When making a distribution to shareholders, the Directors determine profits available for distribution by reference to ‘Guidance on realised and distributable profits under the Companies Act 2006’ issued by the Institute of Chartered Accountants in England and Wales and the Institute of Chartered Accountants of Scotland in April 2017. The availability of distributable reserves in the Company is dependent on those distributions meeting the definition of qualifying consideration within the guidance and on available cash resources of the Company and other accessible sources of funds. The distributable reserves are therefore subject to any future restrictions or limitations at the time such distribution is made. The capital reserve, to the extent it constitutes realised profits, is distributable. This may include unrealised (losses)/gains on investments where these are readily convertible to cash. The amount of the capital reserve that is distributable is complex to determine and is not necessarily the full amount of the reserve as disclosed within these financial statements of £489,428,000 as at 30 June 2023 as this is subject to fair value movements and may not be readily realisable at short notice. Revenue reserve. This reserve reflects all income and costs which are recognised in the revenue column of the Statement of Comprehensive Income. The revenue reserve is distributable by way of dividend. (k) Treasury shares. When the Company buys back the Company’s equity share capital as treasury shares, the amount of the consideration paid, including directly attributable costs and any tax effects, is recognised as a deduction from equity. When these shares are sold or reissued subsequently, the net amount received is recognised as an increase in equity, and the resulting surplus or deficit on the transaction is transferred to or from the capital reserve. (l) Dividends payable. Final dividends are recognised from the date on which they are approved by Shareholders. Interim dividends are recognised when paid. Dividends are shown in the Statement of Changes in Equity. (m) Foreign currency. Transactions in foreign currencies are converted to Sterling at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities and non-monetary assets held at fair value denominated in foreign currencies are translated into Sterling at rates of exchange ruling at the Statement of Financial Position date. Exchange gains and losses are taken to the Statement of Comprehensive Income as a capital or revenue item depending on the nature of the underlying item. Notes to the Financial Statements Continued Murray Income Trust PLC 71 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements (n) Significant estimates and judgements. The Directors do not believe that any accounting estimates or judgements have been applied to these financial statements that have a significant risk of causing material adjustment to the carrying amount of assets and liabilities. 3. Income 2023 2022 £’000 £’000 Income from investments UK dividends (all listed): - ordinary 32,132 32,710 - special 353 1,676 Property income dividends 814 1,153 Overseas dividends (all listed) - ordinary 10,343 8,731 - special 756 160 Stock dividends 1,006 3,728 45,404 48,158 Other income Deposit interest 34 7 Money Market interest 682 32 Traded option premiums 2,759 2,820 Compensation payments - 1 3,475 2,860 Total income 48,879 51,018 All special dividends for the year of £1,109,000 (2022 - £1,836,000) have been recognised as being revenue in nature. During the year, the Company received premiums totalling £2,759,000 (2022 - £2,820,000) in exchange for entering into derivative transactions. At the year end there were no open positions (2022 - none). 72 Murray Income Trust PLC 4. Investment management fees 2023 2022 Revenue Capital Total Revenue Capital Total £’000 £’000 £’000 £’000 £’000 £’000 Management fee 1,141 2,663 3,804 1,199 2,798 3,997 The management fee is based on 0.55% per annum for net assets up to £350 million, 0.45% per annum on the next £100 million of net assets and 0.25% per annum for net assets over £450 million, calculated and payable monthly. The fee has been allocated 30% to revenue and 70% to capital. The management agreement is terminable on three months’ notice. The fee payable to the Manager at the year end was £1,273,000 (2022 – £642,000). Under the terms of the management agreement, the value of the Company’s investments in commonly managed funds is excluded from the calculation of the management fee. The Company held no such commonly managed funds at the year end (2022 – none). 5. Administrative expenses 2023 2022 £’000 £’000 Shareholders’ services A 418 400 Directors’ remuneration B 188 193 Secretarial fees C 75 75 Registrars fees 76 110 Depositary fees 90 96 Custody fees 68 60 Printing and postage 61 34 Auditor’s remuneration: – fees payable to the Company’s auditor for the audit of the Company’s annual financial statements 42 42 Legal and professional fees 38 51 Irrecoverable VAT D 164 126 Other expenses 170 163 1,390 1,350 A Includes savings scheme and other wrapper administration and promotion expenses, paid to the Manager under a delegation agreement with the Manager to cover promotional activities during the year. There was £106,000 (2022 – £100,000) due to the Manager in respect of these promotional activities at the year end. B Refer to the Directors’ Remuneration section of the Directors’ Remuneration Report on page 49 for further details. C Payable to the Manager, balance outstanding of £19,000 (2022 – £19,000) at the year end. D The Company was granted VAT registered status on 18 March 2022, backdated to 1 January 2021. As a result the prior year irrecoverable VAT includes backdated VAT of £28,000. Notes to the Financial Statements Continued Murray Income Trust PLC 73 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements 6. Finance costs 2023 2022 Revenue Capital Total Revenue Capital Total £’000 £’000 £’000 £’000 £’000 £’000 Bank loans and overdraft interest 118 274 392 75 175 250 2.51% Senior Loan Note 301 703 1,004 301 703 1,004 4.37% Senior Loan Note 787 1,835 2,622 787 1,835 2,622 Amortisation of 2.51% Senior Loan Note issue expenses 3 9 12 3 9 12 Amortisation of 4.37% Senior Loan Note (474) (1,107) (1,581) (474) (1,107) (1,581) 735 1,714 2,449 692 1,615 2,307 Details of the Loan Notes and their amortisation are set out in note 14. Finance costs are allocated 30% to revenue and 70% to capital. 7. Ordinary dividends on equity shares 2023 2022 Rate £’000 Rate £’000 Fourth interim dividend previous year 11.25p 13,128 9.75p 11,412 First interim dividend current year 8.25p 9,556 8.25p 9,641 Second interim dividend current year 8.25p 9,431 8.25p 9,628 Third interim dividend current year 8.25p 9,337 8.25p 9,627 Return of unclaimed dividends (97) – 41,355 40,308 The fourth interim dividend for 2023 of 12.75p per Ordinary share has not been included as a liability in these financial statements as it was not paid until after the reporting date (14 September 2023). 74 Murray Income Trust PLC The following table sets out the total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of Section 1158–1159 of the Corporation Tax Act 2010 are considered. The revenue available for distribution by way of dividend for the year is £44,528,000 (2022 – £47,314,000). 2023 2022 Rate £’000 Rate £’000 Three interim dividends of 8.25p each (2022: same) 24.75p 28,324 24.75p 28,896 Fourth interim dividend 12.75p 14,088 11.25p 13,128 37.50p 42,412 36.00p 42,024 8. Taxation 2023 2022 Revenue Capital Total Revenue Capital Total £’000 £’000 £’000 £’000 £’000 £’000 (a) Analysis of charge for the year Overseas tax incurred 2,244 – 2,244 1,961 – 1,961 Overseas tax reclaimable (1,159) – (1,159) (1,498) – (1,498) Total tax charge for the year 1,085 – 1,085 463 – 463 Notes to the Financial Statements Continued Murray Income Trust PLC 75 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements (b) Factors affecting the tax charge for the year. The UK corporation tax rate is 25% (2022 – 19%). The tax charge for the year is lower than the corporation tax rate (2022 – lower). The differences are explained below: 2023 2022 Revenue Capital Total Revenue Capital Total £’000 £’000 £’000 £’000 £’000 £’000 Net return before taxation 45,613 28,958 74,571 47,777 (88,415) (40,638) Net return multiplied by the effective rate of corporation tax of 20.5% (2022 – 19%) 9,351 5,936 15,287 9,078 (16,799) (7,721) Effects of: Non-taxable UK dividends (6,057) – (6,057) (6,305) – (6,305) Non-taxable overseas dividends (3,008) – (3,008) (2,553) – (2,553) Expenses not deductible for tax purposes 2 – 2 56 – 56 Movement in unutilised management expenses (288) 897 609 (276) 839 563 Realised and unrealised losses/(gains) on investments held – (6,683) (6,683) – 15,919 15,919 Currency movements not taxable – (150) (150) – 41 41 Overseas tax payable 1,085 – 1,085 463 – 463 Total tax charge 1,085 – 1,085 463 – 463 (c) Factors that may affect future tax charges. No provision for deferred tax has been made in the current or prior accounting period. The Company has not provided for deferred tax on capital gains or losses arising on the revaluation or disposal of investments as it is exempt from tax on these items because of its status as an investment trust company. At the year end, the Company has, for taxation purposes only, accumulated unrelieved management expenses and loan relationship deficits of £74,422,000 (2022 – £71,665,000). A deferred tax asset at the standard rate of corporation of 25% (2022 – 25%) of £18,606,000 (2022 – £17,916,000) has not been recognised and these expenses will only be utilised if the Company has profits chargeable to corporation tax in the future. It is considered highly unlikely that the Company will generate such profits and therefore no deferred tax asset has been recognised. The Finance Act 2021 received Royal Assent on 10 June 2021 and the rate of Corporation Tax of 25% effective from 1 April 2023 has been used to calculate the potential deferred tax asset of £18,606,000. 76 Murray Income Trust PLC 9. Return per Ordinary share 2023 2022 £’000 p £’000 p Returns are based on the following figures: Revenue return 44,528 38.70 47,314 40.5 Capital return 28,958 25.2 (88,415) (75.7) Total return 73,486 63.9 (41,101) (35.2) Weighted average number of Ordinary shares in issue 114,958,339 116,831,407 10. Investments at fair value through profit or loss 2023 2022 £’000 £’000 Opening book cost 1,017,087 995,661 Opening investment holdings gains 81,706 206,629 Opening fair value 1,098,793 1,202,290 Analysis of transactions made during the year Purchases at cost 183,338 241,150 Sales proceeds received (216,422) (260,861) Gains/(losses) on investments 32,602 (83,786) Closing fair value 1,098,311 1,098,793 2023 2022 £’000 £’000 Closing book cost 989,936 1,017,087 Closing investment gains 108,375 81,706 Closing fair value 1,098,311 1,098,793 2023 2022 Gains/(losses) on investments £’000 £’000 Realised gains on sale of investments at fair value 5,988 41,137 Realised loss on exercise of put options (55) – Net movement in investment holdings gains 26,669 (124,923) 32,602 (83,786) Notes to the Financial Statements Continued Murray Income Trust PLC 77 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements The Company received £216,422,000 (2022 – £260,861,000) from investments sold in the year. The book cost of these investments when they were purchased was £210,434,000 (2022 – £219,724,000). These investments have been revalued over time and until they were sold any unrealised gains/(losses) were included in the fair value of the investments. The Company may write and purchase both exchange traded and over the counter derivative contracts as part of its investment policy. The Company pledges collateral greater than the market value of the traded options in accordance with standard commercial practice. At 30 June 2023 there were no shares pledged as part of the option underwriting programme (30 June 2022 – none). The liability of collateral held at the year end was £nil as no open positions existed (30 June 2022 – £nil). Transaction costs. During the year expenses were incurred in acquiring or disposing of investments classified at fair value through profit or loss. These have been expensed through capital and are included within gains on investments in the Statement of Comprehensive Income. The total costs were as follows: 2023 2022 £’000 £’000 Purchases 797 885 Sales 144 146 941 1,031 The above transaction costs are calculated in line with the AIC SORP. The transaction costs in the Company’s Key Information Document are calculated on a different basis and in line with the PRIIPs regulations. 11. Other debtors and receivables 2023 2022 £’000 £’000 Amounts due from brokers – 2,490 Accrued income 3,080 2,685 Taxation recoverable 4,170 3,844 Prepayments 24 42 7,274 9,061 78 Murray Income Trust PLC 12. Cash and cash equivalents 2023 2022 £’000 £’000 Cash at bank and in hand 1,227 1,503 Money market funds 13,888 18,628 15,115 20,131 The Company holds £13,888,000 (2022 – £18,628,000) in Aberdeen Standard Liquidity Fund (Lux) – Sterling Fund which is managed and administered by abrdn. 13. Creditors: amounts falling due within one year 2023 2022 £’000 £’000 Other creditors 2,548 1,513 Amounts due to brokers for purchases of investments 2,202 – Amounts due to brokers for buyback of Ordinary shares for treasury 1,247 – Bank loans 6,378 6,507 12,375 8,020 The Company has a three year £50 million multi-currency unsecured revolving bank credit facility with Bank of Nova Scotia Limited, committed until 27 October 2024. Under the terms of the agreement, advances from the facility may be made for periods of up to six months or for such longer periods agreed by the lender. As at 30 June 2023, the Company had drawn down the following amounts from the facility, all with a maturity date of 26 July 2023 (2022 – 27 July 2022): 2023 2022 Currency £’000 Currency £’000 Swiss Franc at an all-in rate of 2.798% (2022: 1.35%) 1,200,000 1,055 2,500,000 2,150 Euro at an all-in rate of 4.563% (2022: 1.15%) 3,300,000 2,832 2,326,000 2,002 Norwegian Krone at an all-in rate of 5.11% (2022: 2.59%) 6,360,000 467 13,145,000 1,096 Danish Krona at an all-in rate of 4.56% (2022: 1.15%) 6,850,000 789 5,410,000 626 US Dollar at an all-in rate of 6.314% (2022: 2.70%) 1,570,000 1,235 768,000 633 6,378 6,507 Notes to the Financial Statements Continued Murray Income Trust PLC 79 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements At the date this Report was approved, the Company had drawn down the following amounts from the facility, all with a maturity date of 25 September 2023: – Swiss Franc 1,200,000 at an all-in rate of 3.056%, equivalent to £1,079,000. – Euro 3,300,000 at an all-in rate of 4.792%, equivalent to £2,840,000. – Norwegian Krone 6,360,000 at an all-in rate of 5.41%, equivalent to £477,000. – Danish Krona 6,850,000 at an all-in rate of 4.84%, equivalent to £790,000. – US Dollar 1,570,000 at an all-in rate of 6.564%, equivalent to £1,267,000. Financial covenants contained within the facility agreement provide, inter alia, that the ratio of net assets to borrowings must be greater than 3.5:1 and that net assets must exceed £550 million. All financial covenants were met during the year and also during the period from the year end to the date of this report. 14. Creditors: amounts falling due after more than one year 2023 2022 £’000 £’000 2.51% Senior Loan Note 40,000 40,000 Unamortised 2.51% Senior Loan Note issue expenses (59) (70) 39,941 39,930 4.37% Senior Loan Note at fair value 73,344 73,344 Amortisation of 4.37% Senior Loan Note (4,144) (2,564) 69,200 70,780 109,141 110,710 On 8 November 2017 the Company issued £40,000,000 of 10 year Senior Loan Notes at a fixed rate of 2.51%. Interest is payable in half yearly instalments in May and November and the Loan Notes are due to be redeemed at par on 8 November 2027. As a result of the transaction with Perpetual Income and Growth Investment Trust plc on 17 November 2020, £60,000,000 of 15 year Senior Loan Notes at a fixed rate of 4.37% issued on 8 May 2014 were novated to the Company. Under FRS 102 the loan notes are required to be recorded initially at their fair value of £73,344,000 in the Company’s Financial Statements and are then amortised over the remaining life of the loan towards their redemption value of £60,000,000. The amortisation adjustment is presented as a finance cost, split 70% to capital and 30% to revenue. Interest is payable in half yearly instalments in May and November and the Loan Notes are due to be redeemed at par on 8 May 2029. Both the Loan Notes are secured by a floating charge over the whole of the assets of the Company and rank pari passu. The Company has complied with the Senior Loan Note Purchase Agreements covenants throughout the year that the ratio of net assets to gross borrowings must be greater than 3.5:1, and that net assets will not be less than £550,000,000. 80 Murray Income Trust PLC 15. Share capital 2023 2022 Shares £’000 Shares £’000 Allotted, called-up and fully-paid: Ordinary shares of 25p each: publicly held 111,720,001 27,930 116,690,472 29,172 Ordinary shares of 25p each: held in treasury 7,809,531 1,952 2,839,060 710 119,529,532 29,882 119,529,532 29,882 During the year 4,970,471 Ordinary shares were bought back (2022 – 356,015) to be held in treasury by the Company at a total cost of £42,202,000 (2022– £3,195,000) representing 4.3% (2022 – 0.3%) of called-up share capital excluding Ordinary shares held in treasury at the start of the year. 16. Net asset value per Ordinary share The net asset value per Ordinary share and the net asset value attributable to the Ordinary shares at the year end follow. These were calculated using 111,720,001 (2022 – 116,690,472) Ordinary shares in issue at the year end (excluding treasury shares). 2023 2022 Net Asset Value Attributable Net Asset Value Attributable £’000 pence £’000 pence Net asset value – debt at par 999,184 894.4 1,009,255 864.9 Add: amortised cost of 2.51% Senior Loan Notes 39,941 35.8 39,930 34.1 Less: fair value of 2.51% Senior Loan Notes (34,928) (31.3) (39,725) (33.9) Add: amortised cost of 4.37% Senior Loan Notes 69,200 61.9 70,780 60.5 Less: fair value of 4.37% Senior Loan Notes (54,900) (49.1) (63,905) (54.6) Net asset value – debt at fair value 1,018,497 911.7 1,016,335 871.0 Note 19 sets out the basis used to estimate the fair value of the Loan Notes. Notes to the Financial Statements Continued Murray Income Trust PLC 81 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements 17. Analysis of changes in net debt At Currency Non-cash At 01 July 2022 differences Cash flows movements 30 June 2023 £’000 £’000 £’000 £’000 £’000 Cash and cash equivalents 20,131 695 (5,711) – 15,115 Debt due within one year (6,507) 38 91 – (6,378) Debt due after more than one year (110,710) – – 1,569 (109,141) (97,086) 733 (5,620) 1,569 (100,404) At Currency Non-cash At 01 July 2021 differences Cash flows movements 30 June 2022 £’000 £’000 £’000 £’000 £’000 Cash and cash equivalents 4,493 82 15,556 – 20,131 Debt due within one year (6,241) (298) 32 – (6,507) Debt due after more than one year (112,279) – – 1,569 (110,710) (114,027) (216) 15,588 1,569 (97,086) * An analysis of cash and cash equivalents between cash at bank and in hand and money market funds is provided in note 12. A statement reconciling the movement in net funds to the net cash flow has not been presented as there are no differences from the above analysis. 18. Financial instruments This note summarises the risks deriving from the financial instruments that comprise the Company’s assets and liabilities. The Company’s investment activities expose it to various types of financial risk associated with the financial instruments and markets in which it invests. The Company’s financial instruments, other than derivatives, comprise securities and other investments, cash balances, liquid resources, loans and debtors and creditors that arise directly from its operations; for example, in respect of sales and purchases awaiting settlement, and debtors for accrued income. The Company also has the ability to enter into derivative transactions in the form of forward foreign currency contracts, futures and options, subject to Board approval, for the purpose of enhancing portfolio returns and for hedging purposes in a manner consistent with the Company’s broader investment policy. As at 30 June 2023 there were no open positions in derivatives transactions (2022 – same). Risk management framework. The directors of abrdn Fund Managers Limited collectively assume responsibility for the Manager’s obligations under the AIFMD including reviewing investment performance and monitoring the Company’s risk profile during the year. The Manager is a wholly owned subsidiary of the abrdn Group (“the Group”), which provides a variety of services and support to the Manager in the conduct of its business activities, including in the oversight of the risk management framework for the Company. The Manager has delegated the day to day administration of the investment policy to abrdn Investments Limited, which is responsible for ensuring that the Company is managed within the terms of its investment guidelines and the limits set out in its pre-investment disclosures to investors (details of which can be found on the Company’s website). The Manager has retained responsibility for monitoring and oversight of investment performance, product risk and regulatory and operational risk for the Company. 82 Murray Income Trust PLC The Manager conducts its risk oversight function through the operation of the Group’s risk management processes and systems which are embedded within the Group’s operations. The Group’s Risk Division (“the Risk Division”) supports management in the identification and mitigation of risks and provides independent monitoring of the business. The Risk Division includes Compliance, Business Risk, Market Risk, Risk Management and Legal. The team is headed up by the Group’s Chief Risk Officer, who reports to the Chief Executive Officer (“CEO”) of the Group. The Risk Division achieves its objective through embedding the Risk Management Framework throughout the organisation using the Group’s operational risk management system (“SHIELD”). The Group’s Internal Audit Department is independent of the Risk Division and reports directly to the Group CEO and to the Audit Committee of the Group’s Board of Directors. The Internal Audit Department is responsible for providing an independent assessment of the Group’s control environment. The Group’s corporate governance structure is supported by several committees to assist the board of directors, its subsidiaries and the Company to fulfil their roles and responsibilities. The Group’s Risk Division is represented on all committees, with the exception of those committees that deal with investment recommendations. The specific goals and guidelines on the functioning of those committees are described in the committees’ terms of reference. Risk management of the financial instruments. The main risks the Company faces from these financial instruments are (a) market risk (comprising (i) interest rate, (ii) foreign currency and (iii) other price risk), (b) liquidity risk and (c) credit risk. In order to mitigate risk, the investment strategy is to select investments for their fundamental value. Stock selection is therefore based on disciplined accounting, market and sector analysis. It is the Board’s policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from factors specific to a particular sector. The Attribution Analysis, detailing the allocation of assets and the stock selection, is shown in the Performance Attribution table on page 10. The Investment Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to consider investment strategy. The Company’s strategy is detailed in the Chair’s Statement on pages 4 to 8, in the Investment Manager’s Report on pages 9 to 13 and in Overview of Strategy on page 23. The Board has agreed the parameters for net gearing, which was 10.4% of net assets as at 30 June 2023 (2022 – 9.4%). The Manager’s policies for managing these risks are summarised below and have been applied throughout the current and previous year. The numerical disclosures in the tables listed below exclude short-term debtors and creditors. 18 (a) Market risk. The Company’s investment portfolio is exposed to market price fluctuations, which are monitored by the Manager in pursuance of the investment objective as set out on page 17. Adherence to investment guidelines and to investment and borrowing powers set out in the management agreement mitigates the risk of exposure to any particular security or issuer. Further information on the investment portfolio is set out in the Investment Manager’s Report on pages 9 to 13. Market price risk arises mainly from uncertainty about future prices of financial instruments used in the Company’s operations. It represents the potential loss the Company might suffer through holding market positions as a consequence of price movements. It is the Board’s policy to hold equity investments in the portfolio in a broad spread of sectors in order to reduce the risk arising from factors specific to a particular sector. An analysis of the equity portfolio by sector is on page 30 and a summary of investment changes during the year is on page 31. 18 (a)(i) Interest rate risk Interest rate movements may affect: – the level of income receivable on cash deposits; – interest payable on the Company’s variable rate borrowings; and – the fair value of any investments in fixed interest rate securities. Notes to the Financial Statements Continued Murray Income Trust PLC 83 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements Management of the risk. The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment and borrowing decisions. Details of the bank loan and interest rates applicable can be found in note 13. The Board imposes borrowing limits to ensure gearing levels are appropriate to market conditions and reviews these on a regular basis. Interest rate risk is the risk of movements in the value of financial instruments as a result of fluctuations in interest rates. Financial assets. The interest rate risk of the portfolio of financial assets at the reporting date was as follows: Floating rate Non-interest bearing 2023 2022 2023 2022 £’000 £’000 £’000 £’000 Danish Krona – 93 22,239 20,888 Euro – 268 69,528 46,543 Norwegian Krone – 66 9,323 20,582 Singapore Dollars – – 21,124 14,833 Sterling 15,115 19,704 898,427 942,138 Swedish Krone – – 16,694 14,075 Swiss Francs – – 36,060 23,009 Taiwan Dollars – – 7,051 5,273 US Dollars – – 17,865 11,452 Total 15,115 20,131 1,098,311 1,098,793 The floating rate assets of cash at bank and in hand and cash held in money market funds earn interest at the prevailing market rates. The non-interest bearing assets represent the equity element of the portfolio. Financial liabilities. The Company has floating rate borrowings by way of its loan facility and fixed rate senior loan note issues, details of which are in notes 13 and 14. Interest rate sensitivity. The sensitivity analysis below has been determined based on the exposure to interest rates for both derivative and non-derivative instruments at the reporting date and the stipulated change taking place at the beginning of the financial year and held constant in the case of instruments that have floating rates. 84 Murray Income Trust PLC If interest rates had been 1% higher or lower and all other variables were held constant, the Company’s profit before tax for the year ended 30 June 2023 and net assets would increase/decrease by £53,000 (2022 – £161,000) respectively. This is mainly attributable to the Company’s exposure to interest rates on its floating rate cash balances and borrowings. 18 (a)(ii) Foreign currency risk. A proportion of the Company’s investment portfolio is invested in overseas securities whose values are subject to fluctuation due to changes in foreign exchange rates. In addition, the impact of changes in foreign exchange rates upon the profits of investee companies can result, indirectly, in changes in their valuations. Consequently, the Statement of Financial Position can be affected by movements in exchange rates. Management of the risk. The revenue account is subject to currency fluctuations arising on dividends receivable in foreign currencies and, indirectly, due to the impact of foreign exchange rates upon the profits of investee companies. It is not the Company’s policy to hedge this currency risk but the Board keeps under review the currency returns in both capital and income. Foreign currency risk exposure by currency of denomination falling due within one year is set out in the table below. Net monetary assets/(liabilities) comprise cash and loan balances and exclude other debtors and receivables and other payables (including amounts due to or from brokers). 30 June 2023 30 June 2022 Net Net monetary Total monetary Total assets/ currency assets/ currency Investments (liabilities) exposure Investments (liabilities) exposure £’000 £’000 £’000 £’000 £’000 £’000 Danish Krona 22,239 (789) 21,450 20,888 (533) 20,355 Euro 69,528 (2,832) 66,696 46,543 (1,734) 44,809 Norwegian Krone 9,323 (467) 8,856 20,582 (1,030) 19,552 Singapore Dollars 21,124 – 21,124 14,833 – 14,833 Swedish Krone 16,694 – 16,694 14,075 – 14,075 Swiss Francs 36,060 (1,055) 35,005 23,009 (2,150) 20,859 Taiwan Dollars 7,051 – 7,051 5,273 – 5,273 US Dollars 17,865 (1,235) 16,630 11,452 (633) 10,819 Total 199,884 (6,378) 193,506 156,655 (6,080) 150,575 Notes to the Financial Statements Continued Murray Income Trust PLC 85 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements Foreign currency sensitivity. The following table details the impact on the Company’s net assets to a 10% decrease (in the context of a 10% increase the figures below should all be read as negative) in Sterling against the foreign currencies in which the Company has exposure. The sensitivity analysis includes foreign currency denominated monetary and non-monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates. 2023 2022 £’000 £’000 Danish Krona 2,145 2,036 Euro 6,670 4,481 Norwegian Krone 886 1,955 Singapore Dollars 2,112 1,483 Swedish Krone 1,669 1,408 Swiss Francs 3,501 2,086 Taiwan Dollars 705 527 US Dollars 1,663 1,082 Total 19,351 15,058 18(a)(iii) Other price risk. Other price risks (ie changes in market prices other than those arising from interest rate or currency risk) may affect the value of the quoted investments. Management of the risk. It is the Board’s policy to hold an appropriate spread of investments in the portfolio in order to reduce the risk arising from factors specific to a particular sector. The allocation of assets to international markets and the stock selection process, as detailed in the section “Delivering the Investment Policy” on page 17, both act to reduce market risk. The Manager actively monitors market prices throughout the year and reports to the Board, which meets regularly in order to review investment strategy. Other price risk sensitivity. If market prices at the reporting date had been 10% higher or lower while all other variables remained constant, the return attributable to Ordinary shareholders and equity for the year ended 30 June 2023 would have increased/decreased by £109,831,000 (2022 – £109,879,000). 86 Murray Income Trust PLC 18 (b) Liquidity risk. This is the risk that the Company will encounter difficulty in meeting obligations associated with financial liabilities as they fall due in line with the maturity profile analysed as follows: Within Within Within More than 1 year 1-3 years 3-5 years 5 years Total At 30 June 2023 £000 £000 £000 £000 £000 Bank loans 6,378 – – – 6,378 2.51% Senior Loan Note 8/11/27 – – 40,000 – 40,000 4.37% Senior Loan Note 8/5/29 – – – 60,000 60,000 Interest cash flows on bank loans 3 – – – 3 Interest cash flows on 2.51% Senior Loan Note 1,004 2,008 1,506 – 4,518 Interest cash flows 4.37% Senior Loan Note 2,622 5,244 5,244 2,622 15,732 Cash flows on other creditors 5,997 – – – 5,997 16,004 7,252 46,750 62,622 132,628 Within Within Within More than 1 year 1-3 years 3-5 years 5 years Total At 30 June 2022 £000 £000 £000 £000 £000 Bank loans 6,507 – – – 6,507 2.51% Senior Loan Note 8/11/27 – – – 40,000 40,000 4.37% Senior Loan Note 8/5/29 – – – 60,000 60,000 Interest cash flows on bank loans 1 – – – 1 Interest cash flows on 2.51% Senior Loan Note 1,004 2,008 2,008 502 5,522 Interest cash flows 4.37% Senior Loan Note 2,622 5,244 5,244 5,244 18,354 Cash flows on other creditors 1,513 – – – 1,513 11,647 7,252 7,252 105,746 131,897 Management of the risk. The Company’s assets comprise readily realisable securities which can be sold to meet funding commitments if necessary. Short-term flexibility is achieved through the use of committed loan and overdraft facilities. As at 30 June 2023 the Company utilised £6,378,000 (2022 – £6,507,000) of a £50,000,000 multi–currency revolving bank credit facility, which is committed until 27 October 2024. Details of maturity dates and interest charges can be found in note 13. The aggregate of all future interest payments at the rate ruling at 30 June 2023 and the redemption of the loan amounted to £6,381,000 (2022 – £6,508,000). Notes to the Financial Statements Continued Murray Income Trust PLC 87 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements 18 (c) Credit risk. This is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. Management of the risk. The risk is mitigated by the Manager reviewing the credit ratings of counterparties. The risk attached to dividend flows is mitigated by the Investment Manager’s research of potential investee companies. The Company’s custodian bank is responsible for the collection of income on behalf of the Company and its performance is reviewed by the Depositary (on an ongoing basis) and by the Board on a regular basis. It is the Manager’s policy to trade only with A– and above (Long Term rated) and A–1/P–1 (Short Term rated) counterparties. The maximum credit risk at 30 June 2023 is £18,123,000 (30 June 2022 – £25,306,000) consisting of £3,080,000 (2022 – £2,685,000) of dividends receivable from equity shares, £nil (2022 – £2,490,000) receivable from brokers and £15,115,000 (2022 – £20,131,000) in cash and cash equivalents. None of the Company’s financial assets are past due or impaired (2022 – none). 19. 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. Categorisation within the hierarchy is determined on the basis of the lowest level input that is significant to the fair value measurement of each relevant asset or liability. The fair value hierarchy has the following levels: 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; and Level 3: inputs are unobservable (ie for which market data is unavailable) for the asset or liability. The valuation techniques used by the Company are explained in the accounting policies note 2(e). The Company’s portfolio consists wholly of quoted equities, all of which are Level 1. The fair value of both the 2.51% Senior Loan Note and 4.37% Senior Loan Note have been calculated by aggregating the expected future cash flows for the loans discounted at a rate based on UK gilts issued with comparable coupon rates and maturity dates plus a margin representing the credit for Investment Grade A bonds (2022 – the fair value of the 4.37% Senior Loan Notes have been calculated based on a comparable debt security). The fair value and amortised cost amounts can be found in note 16. All other financial assets and liabilities of the Company are included in the Statement of Financial Position at their book value which in the opinion of the Directors is not materially different from their fair value. 88 Murray Income Trust PLC 20. Related party transactions and transactions with the Manager Fees payable during the year to the Directors and their interests in shares of the Company are considered to be related party transactions and are disclosed within the Directors’ Remuneration section of the Directors’ Remuneration Report on pages 47 to 50. The Company has agreements with the Manager for the provision of management, secretarial, accounting and administration services and promotional activities. Details of transactions during the year and balances outstanding at the year end are disclosed in notes 4 and 5. 21. Capital management policies and procedures The investment objective of the Company is to achieve a high and growing income combined with capital growth through investment in a portfolio principally of UK equities. The capital of the Company consists of debt (comprising loan notes and bank loans) and equity (comprising issued capital, reserves and retained earnings). The Company manages its capital to ensure that it will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance. The Board monitors and reviews the broad structure of the Company’s capital on an ongoing basis. This review includes: – the level of equity shares in issue; – the planned level of gearing which takes into account the Investment Manager’s views on the market (net gearing figures can be found on page 104); and – the extent to which revenue in excess of that which is required to be distributed should be retained. The Company’s objectives, policies and processes for managing capital are unchanged from the preceding accounting year. Notes 13 and 14 give details of the Company’s bank facility agreement and loan notes respectively. Notes to the Financial Statements Continued Murray Income Trust PLC 89 Corporate Information Owned partly by SSE, a portfolio company, the Clyde Wind Farm in South Lanarkshire has 206 turbines with an installed capacity of 522MW generating sufficient renewable energy to power over 290,000 homes. SSE operates a leading community investment programme, delivering financial support to a diverse range of community projects near to its renewable developments, with the Clyde Wind Farm community investment fund valued at £58m. 90 Murray Income Trust PLC abrdn Fund Managers Limited The Company’s Manager is abrdn Fund Managers Limited, a subsidiary of abrdn, whose assets under management and administration were £496 billion as at 30 June 2023. The Investment Team Charles Luke Senior Investment Director BA in Economics and Japanese Studies from Leeds University and an MSc in Economic History from the London School of Economics. Joined abrdn’s Pan European equities team in 2000. He previously worked at Framlington Investment Management. Rhona Millar Investment Manager An Investment Analyst in the Developed Equities team since 2018, Rhona joined abrdn in 2016 after working at EY. Rhona graduated with a BSc in Mathematics from the University of St Andrews. She is a chartered accountant and a CFA Charterholder. Iain Pyle Investment Director Investment Director in the UK equities team, having joined abrdn in 2015. Prior to joining, he was an analyst on the top-ranked Oil & Gas research team at Sanford Bernstein. Iain graduated with a MEng degree in Chemical Engineering from Imperial College and an MSc (Hons) in Operational Research from Warwick Business School. He is a chartered accountant and a CFA Charterholder. Information about the Manager including Investment Process Murray Income Trust PLC 91 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements The Investment Process Investment Philosophy and Style The Investment Manager believes that company fundamentals ultimately drive stock prices but are often priced inefficiently. It believes that in-depth company research delivers insights that can be used to exploit these market inefficiencies. It focuses on investing in high quality companies, with the market often underestimating the sustainability of their returns. Quality companies tend to produce more resilient earnings streams with fewer tail risks, allowing them to better navigate challenging market conditions whilst also capitalising on opportunities to create value. This makes the approach well suited to identifying companies with sustainable and growing income generation. Investment insights are generated by the extensive equity research platform at abrdn. Ideas are generated through frequent direct company contact, deep fundamental analysis and integrated ESG analysis with rigorous team debate strengthening analytical conclusions. The Investment Manager has a long-term approach, aiming to buy and hold companies for a multi- year time horizon although it has the ability to react quickly if necessary. It is willing to take sizeable deviations to the benchmark based on the companies where it finds the highest quality and most attractive valuations. Investment Process The investment process has three stages: 1. Idea Generation and Research. Comprehensive coverage of the UK equity market with a team of analysts generating investment ideas from company meetings, combined with corroborating evidence from competitors, suppliers and customers. External secondary research is also generated to gain insight on the consensus view and supplement proprietary research. 2. Stock Selection. Buy ideas are peer reviewed by the UK and European equity team, evaluating the level of conviction and the materiality, corroboration and correlation of those investment opportunities. For the Company specifically, the Investment Manager aims to select high quality stocks. Quality is defined by reference to management, business focus, balance sheet and corporate governance. 3. Portfolio Construction and Risk Management. Portfolio construction is undertaken in a disciplined way, prioritising the taking of company specific risk with a rigorous sell discipline. Non-proprietary and proprietary quantitative tools are used to identify and control risk factor exposures, including sector and geographic weights The Investment Manager believes that good investment decision making requires clarity of responsibility for those decisions. Every stock has a named analyst responsible for its coverage, and every portfolio has a named fund manager responsible for its management. The individual portfolio managers make those decisions supported and challenged by the team, but accountability for the final decision is clear. ESG integration means identifying and including all ESG analysis in each investment decision and the Investment Manager is regarded as a leader in this area. A central ESG team supports investment teams across different asset classes with its thematic work on areas such as remuneration and climate change, as well as taking responsibility for voting policies. Further information on ESG may be found on pages 93 to 97. The investment process also leverages a wealth of knowledge, insight and expertise across asset classes and regions within abrdn. This allows the Investment Manager to take advantage of equity colleagues across the globe who are meeting companies and conducting research and sharing their insights using one common global research platform. This is invaluable when investing in the UK equity market, which is one of the most global markets in the world. Corporate level insights are shared with the credit team which enriches the equity view through an understanding of the full capital structure of the businesses invested in. Members of the Investment Manager’s multi-asset and economics teams regularly attend the equity team’s daily meeting to share macro level insights. 92 Murray Income Trust PLC Risk Management The Investment Manager utilises a number of quantitative risk tools to ensure it is fully aware of and understand all the risks prevalent in portfolios it manages. These risk management systems monitor and analyse active risk, the composition of portfolio positions, as well as contribution to risk and marginal contribution to risk of the portfolio’s holdings. The systems break down the risk within the portfolio by industry and country factors, and highlight the stocks with the highest marginal contribution to risk and the largest diversification benefit. Sector, thematic and geographical positions are a residual of stock selection decisions, but are monitored to ensure excessive risk is not taken in any one area. The Investment Manager also makes use of pre-trade analytics to assess the impact of any trades on the portfolio risk metrics. Accountability and Performance Evaluated at Each Stage of the Process Information about the Manager including Investment Process Continued Murray Income Trust PLC 93 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements Summary Some key information is set out below about the way ESG considerations have been embedded in the portfolio by the Investment Manager. abrdn c. 60 Dedicated ESG experts across our business 5-star Rating across nine categories in the latest Principles for Responsible Investment (PRI) assessment 1,020 Company engagements covering ESG topics Equities Investment Team 5-star/4 star PRI Rating for Integration/Active Ownership in Listed Equities 100% of researched companies include integration of ESG company analysis Company 21.7% Lower carbon intensity relative to the Benchmark 58 Number of meetings where the Company voted 20.7% Number of meetings with at least one vote against management 1 st Quartile Peer Group MSCI Rating AA Fund MSCI ESG Rating abrdn’s latest PRI Assessment Report containing its scores across all modules is available at www.abrdn.com/en-gb/intermediary. Engagement: time period referenced is the six months ended 30 June 2023. Voting: time period referenced is the year ended 30 June 2023. How the Investment Mana g er approaches ESG 94 Murray Income Trust PLC Introduction The Board relies on its Investment Manager to apply appropriate Environment, Social and Governance (“ESG”) principles to how the portfolio is constructed and managed within the confines of its investment objective and policy. Having an income objective means that the Company needs to acquire investments which typically provide a higher than average yield. In some cases, this means more exposure to older industries such as mining and oil and gas but, nevertheless the Investment Manager’s ESG principles are applied in deciding on a specific investment. Even within these more mature industries it is evident that the possibility of engagement by the Investment Manager can lead to change, for example business models adapting to account for social and environmental responsibilities. This is irrespective of government interventions. Although ESG factors are not the overriding criteria in relation to the investment decisions taken by the Investment Manager as the Company does not follow a sustainability approach, prominence is placed on ESG and climate-related factors throughout the investment process. The following explains how ESG and climate change factors are considered by the Investment Manager. The Investment Manager does not judge the suitability of an investment from an ESG perspective on a purely binary basis. Instead, a dynamic approach is taken, investing in companies where the greatest alignment to mitigating the risks can be seen or pursued further through the investee companies’ commitment to improving their ESG profile. The Investment Manager believes in active engagement with our investments and potential investments: from providing initial guidance on suitable metrics through to holding the company to account for delivering on its promises. It is through this filter that the Investment Manager is comfortable investing in, for example, sectors such as mining and oil and gas, subject to the belief, based on such engagement and investee companies delivering on their commitments, that a company is taking the necessary action to address their energy transition. The Investment Manager has high expectations for these companies’ commitments to ESG given that many commodities are necessary for the transition to a low carbon future. At the investment stage, ESG factors and analysis can help to frame where best to invest by considering material risks and opportunities alongside other financial metrics. Due diligence can ascertain whether such risks are being adequately managed, and whether the market has understood and priced them accordingly. The Investment Manager is an active investor, voting at shareholder meetings in a considered manner, working with companies to drive positive change, and engaging with policymakers on ESG and stewardship matters. How the Investment Mana g er approaches ESG Continued Murray Income Trust PLC 95 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements There are three core principles which underpin the Investment Manager’s investment approach (shown below) and the time it dedicates to ESG analysis as part of its overall fundamental equity research process: How the Investment Manager embeds ESG into its Investment Process 1. Investment Insight 2. Active Ownership 3. Risk & Monitoring 4. Our People High quality fundamental and first hand research Assessment of ESG for all stocks under coverage Engage and vote with aim of improving financial resilience and investment performance Raise standards in companies and industries we invest in, and help drive industry best practice Combine in-house and external scoring to inform view Active tracking of portfolio holdings against ESG objectives Over 130 equity professionals, and 60 central and on-desk ESG specialists across the world 96 Murray Income Trust PLC Details of the proprietary ESG scoring system that the Investment Manager uses within its investment process can be found in the bi-annual Sustainability Investment Report which is considered by the Board. The report includes updates on the key data and sustainability ratings for the Company’s portfolio and is made available on its website at: murray-income.co.uk Benchmarking: MSCI ESG Ratings MSCI company ratings are provided by MSCI to enable comparisons with investments held elsewhere in a standardised format. As described above, our Investment Manager conducts its own proprietary research which may lead it to a rating that differs to the MSCI score. MSCI rates companies on a AAA-CCC scale according to their exposure to ESG risks and how well they manage those risks relative to peers. The Company’s MSCI ESG Quality Score assesses the resilience of a fund's aggregate holdings to long term ESG risks and is provided on a 0-10 scale, with 10 being the highest possible fund score. It is based on a granular breakdown of a company’s business, its core product or business segments, the locations of its assets or revenues and other relevant measures such as outsourced production. The Company’s MSCI ESG Quality Score is 8.3. The MSCI ESG Rating measures the resiliency of portfolios to long term risks and opportunities arising from environmental, social, and governance factors. The ESG Rating is calculated as a direct mapping of the "MSCI ESG Quality Score" to letter rating categories. The Company’s MSCI ESG Rating is AA Based on the Company’s holdings as at 30 June 2023 Climate Change Climate change is one of the most significant challenges of the 21st century and has big implications for investors. The energy transition is underway in many parts of the world, and policy changes, falling costs of renewable energy, and a change in public perception are happening at a rapid pace. The task force on climate-related financial disclosures (referred to as “TCFD”) is now a global standard for reporting climate risks and opportunities. As a listed investment company, the Company is not subject to the FCA Listing Rule requirement to comply with TCFD reporting. However, the Board is a keen supporter of the ambitions of TCFD, as it believes it will improve disclosure of climate related risks. This in turn will help the Investment Manager and other stakeholders better assess the risks which will support sound investment decisions. Your Manager is subject to mandatory requirements to report on the Company as one of its products and the first Murray Income Trust PLC TCFD Report, for the year ended 31 December 2022, is available from the Company’s website at murray- income.co.uk. Assessing the risks and opportunities of climate change is already an integral part of the investment process associated with your portfolio. In particular, the Investment Manager considers: Transition risks and opportunities Governments could take robust climate change mitigation actions to reduce emissions and transition to a low-carbon economy. This is reflected in targets, policies and regulation and can have a considerable impact on high-emitting companies. Physical risks and opportunities Insufficient climate change mitigation action will lead to more severe and frequent physical damage. This results in financial implications, including damage to crops and infrastructure, and the need for physical adaptation such as flood defences. The Investment Manager has aligned its approach with that advocated by the investor agenda of the Principles for Responsible Investment (PRI) – a United Nations- supported initiative to promote responsible investment as a way of enhancing returns and better managing risk. Importance of Engagement The Investment Manager is committed to regular, ongoing engagement with the companies in which it invests, to help to maintain and enhance their ESG standards into the future. As part of the investment process, the Investment Manager undertakes a significant number of company meetings each year on behalf of the Company, supported by on-desk ESG analysts as well as a well-resourced specialist ESG Investment team. These meetings provide an opportunity to discuss various relevant ESG issues including board composition, remuneration, audit, climate change, labour issues, human rights, bribery and corruption. Companies are strongly encouraged to set clear targets or key performance indicators on all material ESG risks. Continued How the Investment Mana g er approaches ESG Murray Income Trust PLC 97 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements This engagement is not limited to a company’s management team. It can include many other stakeholders such as non-government agencies, industry and regulatory bodies, as well as activists and the company’s customers and clients. Examples of engagement with companies including Games Workshop, Safestore and Hiscox, during the year ended 30 June 2023, may be found in the Investment Manager’s Report, on page 12. Our Engagement Activity The following chart shows the engagements that have included ESG topics. Over the year ended 30 June 2023, the Investment Manager met with 36 portfolio companies on ESG topics and held 71 engagements with them. This does not include positions sold by the Investment Manager, or potential stocks under consideration. Themes engaged on include: Climate Environment Labour Management, Diversity & Inclusion Human Rights & Stakeholders Corporate Behaviour Corporate Governance abrdn’s Voting Activity The following is a summary of the Investment Manager’s voting activity, on behalf of the Company, for the year ended 31 December 2022 (Source abrdn): Voting Summary Total How many meetings were you eligible to vote? 64 How many meetings did you vote at? 58 How many resolutions were you eligible to vote on? 1,203 What % of resolutions did you vote on for which you were eligible? 89.4% Of the resolutions on which you voted, what % did you vote with management? 96.3% Of the resolutions on which you voted, what % did you vote against management? 3.6% Of the resolutions on which you voted, what % did you abstain from voting? 0.1% In what % of meetings, for which you did vote, did you vote at least once against management? 20.7% While it is most common for the Investment Manager to vote in line with an investee board’s voting recommendation, abrdn will vote against resolutions which are not consistent with the Company’s best interests. For example, abrdn may vote against resolutions which are not aligned with its policies or which conflict with local governance guidelines, such as the Investment Association in the UK. Although the Investment Manager seeks to vote either in favour or against a resolution, it does make use of an abstain vote where this is considered appropriate. The Investment Manager aims to vote at all eligible meetings unless share blocking (which can be a feature of voting in non UK jurisdictions) makes this unviable. 98 Murray Income Trust PLC Alternative Investment Fund Managers Directive (“AIFMD”) and Pre-Investment Disclosure Document (“PIDD”) The Company has appointed the Manager as its alternative investment fund manager and BNP Paribas Trust Corporation UK Limited as its depositary under the AIFMD. The AIFMD requires the Manager, as the Company’s alternative investment fund manager, to make available to investors certain information prior to such investors’ investment in the Company. Details of the leverage and risk policies which the Company is required to have in place under AIFMD are published in the Company’s PIDD which can be found on its website: murray-income.co.uk The periodic disclosures required to be made by the Manager under the AIFMD are set out on page 101. Benchmark The Company’s benchmark is the FTSE All-Share Index. Keeping You Informed For internet users, detailed data on the Company (including price, performance information, a monthly fact sheet and current and historic Annual and Half-Yearly Reports) is available from the Company’s website (murray-income.co.uk) and the TrustNet website (trustnet.co.uk). Alternatively you can call 0808 500 0040 (free when dialling from a UK landline) for investment company information. You can register for regular email updates by visiting the Company’s website. a brdn Investment Trusts Social Media Accounts Twitter: @abrdnTrusts LinkedIn: abrdn Investment Trusts Investor Warning: Be alert to share fraud and boiler room scams The Company has been made aware by abrdn that some investors have received telephone calls from people purporting to work for abrdn, or third parties, who have offered to buy their investment trust shares. These may be scams which attempt to gain personal information with which to commit identity fraud or could be ‘boiler room’ scams where a payment from an investor is required to release the supposed payment for their shares. These callers do not work for abrdn and any third party making such offers has no link with abrdn. abrdn never makes these types of offers and does not ‘cold-call’ investors in this way. If investors have any doubt over the veracity of a caller, they should not offer any personal information, end the call and contact abrdn’s investor services centre using the details provided below. The Financial Conduct Authority provides advice with respect to share fraud and boiler room scams at: fca.org.uk/consumers/scams Shareholder Enquiries For queries regarding shareholdings, lost certificates, dividend payments, registered details and related matters, shareholders holding their shares directly in the Company are advised to contact the Registrar, Link Group (see Additional Shareholder Information for details). Changes of address must be notified to the Registrar in writing. Any general questions about the Company should be addressed to the Company Secretaries, Murray Income Trust PLC, 1 George Street, Edinburgh EH2 2LL or by email to: murray-income@abrdn.com. Suitable for Retail/NMPI Status The Company’s shares are intended for investors, primarily in the UK, including retail investors, professionally- advised private clients and institutional investors who are seeking a high and growing income combined with capital growth through investment in a portfolio principally of UK equities, and who understand and are willing to accept the risks of exposure to equities. Investors should consider consulting a financial adviser who specialises in advising on the acquisition of shares and other securities before acquiring shares. Investors should be capable of evaluating the risks and merits of such an investment and should have sufficient resources to bear any loss that may result. Investor Information Murray Income Trust PLC 99 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements The Company currently conducts its affairs so that the securities issued by the Company can be recommended by a financial adviser to ordinary retail investors in accordance with the Financial Conduct Authority’s rules in relation to non-mainstream pooled investments (“NMPIs”) and intends to continue to do so for the foreseeable future. The Company’s securities are excluded from the Financial Conduct Authority’s restrictions which apply to NMPIs because they are securities issued by an investment trust. Key Information Document (“KID”) The KID relating to the Company can be found under ‘Key Documents’ in the ‘Literature’ section of the Company’s website at murray-income.co.uk. How to Attend and Vote at Company Meetings The Chair’s Statement, in “Action to be Taken” on page 7 includes information on how shareholders may exercise their voting rights in relation to the Annual General Meeting on 7 November 2023. How to Invest in Murray Income Trust PLC and other abrdn-managed investment trusts A range of leading investment platforms and share dealing services let you buy and sell abrdn-managed investment trusts including Murray Income Trust PLC. Many of these platforms operate on an ‘execution-only’ basis. This means they can carry out your instruction to buy or sell a particular investment trust. But they may not be able to advise on suitable investments for you. If you require advice, please speak to a qualified financial adviser (see below). A note about the abrdn Investment Trusts Savings Plans (the “Plans”) In June 2023, abrdn notified existing investors in the abrdn Investment Trusts ISA, Share Plan and Investment Plan for Children that these Plans would be closing in December 2023. The Plans are no longer open to new investors. Further information on the options available to investors in the Plans may be found at: invtrusts.co.uk/planclosure If you are an existing investor in the Plans and have any queries, please contact our Investor Services department on 0808 500 4000 or, from overseas, on 00 44 1268 448 222. We are open from 9am to 5pm, Monday to Friday, Call charges will vary. Alternatively, please contact us by email at inv.trusts@abrdn.com . Email is not a secure form of communication so you should not send any personal or sensitive information. Flexibility Many investment platform providers will allow you to buy and hold abrdn Investment Trust shares within an Individual Savings Account (ISA), Junior ISA or Self Invested Personal Pension (SIPP), all of which have potential tax advantages. Most will also allow you to invest on both a lump sum and regular savings basis. Costs and service It is important to choose the right platform for your needs, so take time to research what each platform offers before you make your decision, as well as considering charges. When it comes to charges, some platforms have flat fee structures while others levy percentage-based charges. Typically, you will also pay a fee every time you buy and sell shares, so you need to bear in mind these transaction costs if you are trading frequently. There may also be additional charges for ISA and SIPP investments. Can I exercise my voting rights if I hold my shares through an investment platform? Yes, you should be able to exercise your right to vote by contacting your platform provider. Procedures differ, but some platforms will automatically alert you when new statutory documents are available and then allow you to vote online. Others will require you to contact them to vote. Your chosen platform provider will provide further guidance. Getting advice abrdn recommends that you seek financial advice prior to making an investment decision. If you do not currently have a financial adviser, details of authorised financial advisers in your area can be found at pimfa.co.uk or unbiased.co.uk (see below). You will pay a fee for advisory services. 100 Murray Income Trust PLC Platform providers Platforms featuring Murray Income Trust PLC, as well as other abrdn-managed investment trusts, include: · AJ Bell: www.ajbell.co.uk/markets/investment-trusts · Barclays Smart Investor: www.barclays.co.uk/smart-investor · Charles Stanley Direct: www.charles-stanley-direct.co.uk · Fidelity: www.fidelity.co.uk · Halifax: www.halifax.co.uk/investing · Hargreaves Lansdown: www.hl.co.uk/shares/investment-trusts · interactive investor (owned by abrdn): www.ii.co.uk/investment-trusts The companies above are shown for illustrative purposes only. Other platform providers are available. The links above direct you to external websites operated by each platform provider. abrdn is not responsible for the content and information on these third-party sites, apart from interactive investor, which is owned by abrdn. Discretionary Private Client Stockbrokers If you have a large sum to invest, you may wish to contact a discretionary private client stockbroker. They can manage your entire portfolio of shares and will advise you on your investments. To find a private client stockbroker visit The Personal Investment Management & Financial Advice Association at: pimfa.co.uk. Financial Advisers To find an adviser who recommends on investment trusts, visit: unbiased.co.uk Regulation of Stockbrokers Before approaching a stockbroker, always check that they are regulated by the Financial Conduct Authority: Tel: 0800 111 6768 or at at https://register.fca.org.uk Email: consumerqueries@fca.org.uk Note Please remember that past performance is not a guide to the future. Stock market and currency movements may cause the value of shares and the income from them to fall as well as rise and investors may not get back the amount they originally invested. As with all equity investments, the value of investment trusts purchased will immediately be reduced by the difference between the buying and selling prices of the shares, the market maker’s spread. Investors should further bear in mind that the value of any tax relief will depend on the individual circumstances of the investor and that tax rates and reliefs, as well as the tax treatment of ISAs, may be changed by future legislation. The information on pages 98 to 100 has been approved for the purposes of Section 21 of the Financial Services and Markets Act 2000 (as amended by the Financial Services Act 2012) by abrdn Investments Limited, 280 Bishopsgate, London EC2M 4AG which is authorised and regulated by the Financial Conduct Authority in the United Kingdom. Financial Calendar Payment months of quarterly dividends March, June, September, December Financial year end 30 June Expected announcement of annual results September Annual General Meeting November Investor Information Continued Murray Income Trust PLC 101 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements The Manager and the Company are required to make certain disclosures available to investors in accordance with the AIFMD. Those disclosures that are required to be made pre-investment are included within a pre-investment disclosure document (“PIDD”) which may be found on the Company’s website (murray-income.co.uk), maintained by the Manager. AIFMD or the Directive The Alternative Investment Fund Managers Directive - There have been no material changes to the disclosures contained within the PIDD since its latest publication in September 2023. The periodic disclosures as required under the AIFMD to investors are made below: · information on the investment strategy, geographic and sector investment focus and principal stock exposures is included in the Strategic Report; · none of the Company’s assets are subject to special arrangements arising from their illiquid nature; · the Strategic Report, Note 18 to the financial statements and the PIDD, together set out the risk profile and risk management systems in place. There have been no changes to the risk management systems in place in the period under review and no breaches of any of the risk limits set, with no breach expected; · there are no new arrangements for managing the liquidity of the Company or any material changes to the liquidity management systems and procedures employed by the Manager; · all authorised Alternative Investment Fund Managers are required to comply with the AIFMD Remuneration Code. In accordance with the AIFMD Remuneration Code, the AIFM’s remuneration policy in respect of its reporting period ended 31 December 2022 is available on the website of abrdn plc at www.abrdn.com/en-gb/corporate/about-us/our- leadership-team/remuneration-disclosure, or on request from the Company Secretaries, abrdn Holdings Limited (see Additional Shareholder Information on page 113 for contact details). Leverage For the purposes of the Alternative Investment Fund Managers Directive, leverage is any method which increases the Company’s exposure, including the borrowing of cash and the use of derivatives. It is expressed as a ratio between the Company’s exposure and its net asset value and can be calculated on a gross and a commitment method. Under the gross method, exposure represents the sum of the Company’s positions after the deduction of Sterling cash balances, without taking into account any hedging and netting arrangements. Under the commitment method, exposure is calculated without the deduction of Sterling cash balances and after certain hedging and netting positions are offset against each other. The table below sets out the current maximum permitted limit and actual level of leverage for the Company: Gross Method Commitment Method Maximum level of leverage 2.50:1 2.00:1 Actual level at 30 June 2023 1.21:1 1.23:1 There have been no breaches of the maximum level during the period and no changes to the maximum level of leverage employed by the Company. There is no right of re-use of collateral or any guarantees granted under the leveraging arrangement. Changes to the information contained either within this Annual Report or the PIDD in relation to any special arrangements in place, the maximum level of leverage which the AIFM may employ on behalf of the Company; the right of use of collateral or any guarantee granted under any leveraging arrangement; or any change to the position in relation to any discharge of liability by the Depositary will be notified via a regulatory news service without undue delay in accordance with the AIFMD. The information on this page has been approved for the purposes of Section 21 of the Financial Services and Markets Act 2000 (as amended by the Financial Services Act 2012) by the Manager which is authorised and regulated by the Financial Conduct Authority in the United Kingdom. AIFMD Disclosures ( Unaudited ) 102 Murray Income Trust PLC General Safestore, a portfolio company, is the UK's largest self-storage group with 181 stores, comprising 130 stores in the UK (including 72 in London and the South East with the remainder in key metropolitan areas such as Manchester, Birmingham, Glasgow, Edinburgh, Liverpool and Bristol), 29 stores in the Paris region, as well as 22 in Belgium, Spain and the Netherlands. The Manager’s engagement with the company is described on page 12. Murray Income Trust PLC 103 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements 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. Discount to net asset value per Ordinary share with debt at fair value The discount is the amount by which the share price is lower than the net asset value per share with debt at fair value, expressed as a percentage of the net asset value. 2023 2022 NAV per Ordinary share a 911.7p 871.0p Share price b 837.0p 832.0p Discount (b-a)/a –8.2% –4.5% Discount to net asset value per Ordinary share with debt at par value The discount is the amount by which the share price is lower than the net asset value per share with debt at par value, expressed as a percentage of the net asset value. 2023 2022 NAV per Ordinary share a 894.4p 864.9p Share price b 837.0p 832.0p Discount (b-a)/a –6.4% –3.8% Dividend cover Dividend cover is the revenue return per share divided by dividends per share expressed as a ratio. 2023 2022 Revenue return per share a 38.73p 40.50p Dividends per share b 37.50p 36.00p Dividend cover a/b 1.03 1.13 Alternative Performance Measures 104 Murray Income Trust PLC Alternative Performance Measures Continued Dividend yield The annual dividend per Ordinary share divided by the share price, expressed as a percentage. 2023 2022 Dividends per share a 37.50p 36.00p Share price b 837.00p 832.00p Dividend yield a/b 4.5% 4.3% Net asset value per Ordinary share with debt at fair value The calculation of the Company’s net asset value per Ordinary share with debt at fair value is set out in note 16. Net gearing Net gearing measures the total borrowings less cash and cash equivalents divided by shareholders’ funds, 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. 2023 2022 Bank loans (£’000) a (6,378) (6,507) Senior Loan Notes (£’000) b (109,141) (110,710) Total borrowings (£’000) c=a+b (115,519) (117,217) Cash (£’000) d 15,115 20,131 Amounts due to brokers (£’000) e (3,449) – Amounts due from brokers (£’000) f – 2,490 Shareholders’ funds (£’000) g 999,184 1,009,255 Net gearing –(c+d+e+f)/g 10.4% 9.4% Murray Income Trust PLC 105 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements Ongoing charges ratio The ongoing charges ratio has been calculated based on the total of investment management fees and administrative expenses less non-recurring charges and expressed as a percentage of the average daily net asset values with debt at fair value published throughout the year. 2023 2022 Investment management fees (£’000) a 3,804 3,997 Administrative expenses (£’000) b 1,390 1,350 Less: non-recurring charges A (£’000) c (8) (30) Ongoing charges (£’000) a+b+c 5,186 5,317 Average net assets (£’000) d 1,036,020 1,102,862 Ongoing charges ratio e=(a+b+c)/d 0.50% 0.48% A 2023 comprises £7,000 professional fees relating to discussions with the registrar and £1,000 quick turnaround fee on ESEF filing. 2022 comprises £20,000 director recruitment fee, £8,000 legal fees relating to the private placement notes and £2,000 professional fees for Taiwan tax work. The ongoing charges ratio provided in the Company’s Key Information Document is calculated in line with the PRIIPs regulations, which includes financing and transaction costs. Total return Share price and NAV 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. Share price and NAV total returns are monitored against open- ended and closed-ended competitors, and the FTSE All-Share Index, respectively. Share NAV NAV Year ended 30 June 2023 Price (debt at fair value) (debt at par) Opening at 1 July 2022 a 832.0p 871.0p 864.9p Closing at 30 June 2023 b 837.0p 911.7p 894.4p Price movements c=(b/a)-1 0.6% 4.7% 3.4% Dividend reinvestment A d 4.3% 4.1% 4.1% Total return c+d 4.9% 8.8% 7.5% 106 Murray Income Trust PLC Alternative Performance Measures Continued Share NAV NAV Year ended 30 June 2022 Price (debt at fair value) (debt at par) Opening at 1 July 2021 a 871.0p 935.7p 934.6p Closing at 30 June 2022 b 832.0p 871.0p 864.9p Price movements c=(b/a)-1 –4.5% –6.9% –7.5% Dividend reinvestment A d 3.8% 3.4% 3.5% Total return c+d –0.7% –3.5% –4.0% A 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. 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. Murray Income Trust PLC 107 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements Active Share A measure of the difference between a portfolio and a benchmark, calculated as a percentage abrdn or the Group The abrdn plc group of companies. AIFMD Alternative Investment Fund Managers Directive AIC The Association of Investment Companies (theaic.co.uk). Benchmark FTSE All-Share Index. Depositary A depositary is responsible for cash monitoring, the custody and safeguarding of the Company’s financial instruments and monitoring the Company’s compliance with investment limits and leverage requirements. During the year the Depositary was BNP Paribas Trust Corporation UK Limited. FCA The Financial Conduct Authority. Investment Manager abrdn Investments Limited (formerly Aberdeen Asset Managers Limited, until 25 November 2022). Investment Trust A type of Closed-End Fund which invests in other securities, allowing shareholders to share the risks, and returns, of collective investment. Key Information Document or KID The Packaged Retail and Insurance-based Investment Products (“PRIIPS”) Regulation requires the Manager, as the Company’s PRIIP ‘manufacturer’, to prepare a Key Information Document (“KID”) in respect of the Company. This KID must be made available by the Manager to retail investors prior to them making any investment decision and is available via the Company’s website. The Company is not responsible for the information contained in the KID and investors should note that the procedures for calculating the risks, costs and potential returns are prescribed by law. The figures in the KID may not reflect the expected returns for the Company and performance returns cannot be guaranteed. Manager (the “Manager”) abrdn Fund Managers Limited (formerly Aberdeen Standard Fund Managers Limited, until 31 July 2022), is a wholly owned subsidiary of abrdn and acts as the alternative investment fund manager for the Company. abrdn Fund Managers Limited is authorised and regulated by the Financial Conduct Authority. Net Asset Value or NAV The net asset value or NAV is the Company’s total assets less liabilities. Liabilities for this purpose include current and long-term liabilities such as the Company’s £40m senior loan notes expiring in 2027 and £60m senior loan notes expiring in 2029. NAV per Ordinary Share The calculation of the NAV per Ordinary share is shown in note 16 on the basis of debt at par value (amortised cost) and debt at fair value (discounted cashflow basis, as set out in note 19). Price/Earnings Ratio The ratio is calculated by dividing the middle-market price per share by the earnings per share. The calculation assumes no change in earnings but in practice the multiple reflects the stock market’s view of a company’s prospects and profit growth potential. PRIIPs Packaged retail and insurance-based investment products marketed to retail investors which are subject to investment risk Scrip Dividend An issue of shares to a shareholder in proportion to their existing holding, in lieu of paying a dividend. Glossary of Terms 108 Murray Income Trust PLC NOTICE IS HEREBY GIVEN that the Annual General Meeting of Murray Income Trust PLC will be held at 12.30pm on Tuesday 7 November 2023 in the Strathclyde Suite, The Glasgow Royal Concert Hall, 2 Sauchiehall Street, Glasgow, G2 3NY for the purpose of considering and if thought fit passing the following resolutions, of which Resolutions 1 to 11 inclusive will be proposed as Ordinary Resolutions and Resolutions 12 and 13 inclusive will be proposed as Special Resolutions:– Ordinary Business 1. To receive and adopt the Directors’ Report, Auditor’s Report and the audited financial statements for the year ended 30 June 2023. 2. To receive and adopt the Directors’ Remuneration Report for the year ended 30 June 2023 other than the Directors’ Remuneration Policy. 3. To receive and adopt the Directors’ Remuneration Policy as set out on pages 47 and 48 of the Annual Report of the Company for the year ended 30 June 2023. 4. To approve the Company’s dividend policy to pay four quarterly interim dividends per year. 5. To re-elect Stephanie Eastment as a Director of the Company. 6. To re-elect Alan Giles as a Director of the Company. 7. To re-elect Nandita Sahgal Tully as a Director of the Company. 8. To re-elect Peter Tait as a Director of the Company. 9. To re-appoint PricewaterhouseCoopers LLP as independent auditor of the Company. 10. To authorise the Audit Committee to fix the remuneration of PricewaterhouseCoopers LLP as independent auditor of the Company for the year ended 30 June 2024. Special Business Authority to Allot 11. THAT, in substitution of all existing powers, the Directors be and are hereby generally and unconditionally authorised in accordance with Section 551 of the Companies Act 2006 (the “Act”) to exercise all the powers of the Company to allot Ordinary shares of 25p each in the capital of the Company (“shares”) up to an aggregate nominal amount of £1,374,150 (or, if less, the number representing 5 per cent. of the total Ordinary shares in issue (excluding treasury shares) as at the date of passing of this resolution), during the period expiring on the conclusion of the next Annual General Meeting of the Company after the passing of this resolution or on 31 December 2024, whichever is the earlier, but so that this authority shall allow the Company to make offers or agreements before the expiry of this authority which would or might require shares to be allotted after such expiry and the Directors shall be entitled to allot shares in pursuance of such an offer or agreement as if such authority had not expired. Disapplication of Pre-emption Rights 12. THAT, subject to the passing of Resolution 11 proposed at the Annual General Meeting of the Company convened for 7 November 2023, and in substitution for all existing powers, the Directors be and are hereby empowered, pursuant to Section 570 of the Companies Act 2006 (the “Act”), to allot equity securities (as defined in Section 560(1) of the Act) for cash pursuant to the authority given in accordance with Section 551 of the Act by Resolution 11 or otherwise as if Section 561 of the Act did not apply to any such allotment and to sell or transfer equity securities if, immediately before the sale or transfer, such equity securities are held by the Company as treasury shares (as defined in Section 724(5) of the Act) as if Section 561 of the Act did not apply to any such sale or transfer, provided that this power:- Notice of Annual General Meetin g Murray Income Trust PLC 109 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements i. expires at the conclusion of the next Annual General Meeting of the Company after the passing of this resolution or on 31 December 2024, whichever is the earlier, but so that this power shall enable the Company to make offers or agreements which would or might require equity securities to be allotted or treasury shares to be sold or transferred after the expiry of this power and the Directors may allot equity securities or sell or transfer treasury shares in pursuance of any such offers or agreements as if this power had not expired; ii. shall be limited to the allotment of equity securities up to an aggregate nominal amount of £2,748,300 (or, if less, the number representing 10 per cent. of the total Ordinary shares in issue (excluding treasury shares) as at the date of passing of this resolution); and iii. shall be limited in respect of the issue of shares or the sale of equity securities from treasury in the circumstances as detailed in the section headed “Authority to allot shares and disapply pre-emption rights” in the Directors’ Report on page 44 of the Annual Report of the Company for the year ended 30 June 2023 and at a price not less than 0.5% above the net asset value per share (as determined by the Directors). Authority to Make Market Purchases of Shares 13. THAT the Company be and is hereby generally and, subject as hereinafter appears, unconditionally authorised in accordance with Section 701 of the Companies Act 2006 (the “Act”) to make market purchases (within the meaning of Section 693(4) of the Act) of Ordinary shares of 25p each in the capital of the Company (“shares”) and to cancel or hold in treasury such shares, provided always that: i. the maximum number of shares hereby authorised to be purchased shall be an aggregate of 16,478,806 Ordinary shares or, if less, the number representing 14.99% of the total Ordinary shares in issue (excluding treasury shares) as at the date of passing this resolution; ii. the minimum price which may be paid for each share shall be 25p; iii. the maximum price (exclusive of expenses) which may be paid for a share is the higher of (i) 5% above the average of the middle market quotations for a share taken from, and calculated by reference to, the London Stock Exchange Daily Official List for the five business days immediately preceding the day on which the share is purchased; and (ii) the higher of the price of the last independent trade and the highest current independent bid on the London Stock Exchange at the time the purchase is carried out; iv. the authority hereby conferred shall expire on 31 December 2024 or, if earlier, at the conclusion of the next Annual General Meeting of the Company unless such authority is previously varied, revoked or renewed prior to such time; and v. the Company may enter into a contract to purchase shares under the authority hereby conferred prior to the expiry of such authority and may purchase shares pursuant to any such contract notwithstanding such expiry above. The biographies of the Directors offering themselves for re-election may be found on pages 34 to 36. By order of the Board abrdn Holdings Limited Secretaries 19 September 2023 Registered Office 1 George Street Edinburgh EH2 2LL 110 Murray Income Trust PLC Notes i. To be entitled to attend and vote at the Meeting (and for the purpose of the determination by the Company of the number of votes they may cast), shareholders must be registered in the Register of Members of the Company at close of trading on 3 November 2023. Changes to the Register of Members after the relevant deadline shall be disregarded in determining the rights of any person to attend and vote at the Meeting. ii. Shareholders, or their proxies, intending to attend the Meeting in person are requested, if possible, to arrive at the Meeting venue at least 20 minutes prior to the commencement of the Meeting at 12.30pm (UK time) on 7 November 2023 so that their shareholding may be checked against the Company’s Register of Members and attendances recorded. iii. Shareholders are entitled to appoint another person as a proxy to exercise all or part of their rights to attend and to speak and vote on their behalf at the Meeting. A shareholder may appoint more than one proxy in relation to the Meeting provided that each proxy is appointed to exercise the rights attached to a different ordinary share or ordinary shares held by that shareholder. A proxy need not be a shareholder of the Company. iv. In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company’s Register of Members in respect of the joint holding (the first named being the most senior). v. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolution. If no voting indication is given, your proxy will vote or abstain from voting at his or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the Meeting. vi. You can vote either: · by logging on to signalshares.com and following the instructions; or · you may request a hard copy form of proxy directly from the registrars, Link Group, on Tel: 0371 664 0300. Calls are charged at the standard geographic rate and will vary by provider. Calls from outside the UK will be charged at the applicable international rate. Lines are open between 08:30 – 17:30, Monday to Friday excluding public holidays in England and Wales. · in the case of CREST members, by utilising the CREST electronic proxy appointment service in accordance with the procedures set out below. In order for a proxy appointment to be valid a form of proxy must be completed. In each case the form of proxy must be received by Link Group at PXS 1, Central Square, 29 Wellington Street, Leeds, LS1 4DL by 12.30pm on 3 November 2023. vii. If you return more than one proxy appointment, either by paper or electronic communication, the appointment received last by the Registrar before the latest time for the receipt of proxies will take precedence. You are advised to read the terms and conditions of use carefully. Electronic communication facilities are open to all shareholders and those who use them will not be disadvantaged. viii. The return of a completed form of proxy, electronic filing or any CREST Proxy Instruction (as described in note (x) below) will not prevent a shareholder from attending the Meeting and voting in person if he/she wishes to do so. ix. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the Meeting (and any adjournment of the Meeting) by using the procedures described in the CREST Manual (available from euroclear.com/site/public/EUI ). CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. Notice of Annual General Meetin g Continued Murray Income Trust PLC 111 Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements x. In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message (a ‘CREST Proxy Instruction’) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s specifications and must contain the information required for such instructions, as described in the CREST Manual. The message must be transmitted so as to be received by the issuer’s agent (ID RA10) by 12.30pm on 3 November 2023. For this purpose, the time of receipt will be taken to mean the time (as determined by the timestamp applied to the message by the CREST application host) from which the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means. xi. CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular message. Normal system timings and limitations will, therefore, apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member, or sponsored member, or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting system providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001. xii. Any corporation which is a shareholder can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a shareholder provided that no more than one corporate representative exercises powers in relation to the same shares. xiii. As at 19 September 2023 (being the latest practicable business day prior to the publication of this Notice), the Company’s ordinary issued share capital consists of 109,932,001 ordinary shares, carrying one vote each and 9,597,531 shares held in treasury. Therefore, the total voting rights in the Company as at 19 September 2023 are 109,932,001. xiv. Under Section 527 of the Companies Act 2006, shareholders meeting the threshold requirements set out in that section have the right to require the Company to publish on a website a statement setting out any matter relating to: (i) the audit of the Company’s financial statements (including the Auditor’s Report and the conduct of the audit) that are to be laid before the Meeting; or (ii) any circumstances connected with an auditor of the Company ceasing to hold office since the previous meeting at which annual financial statements and reports were laid in accordance with Section 437 of the Companies Act 2006 (in each case) that the shareholders propose to raise at the relevant meeting. The Company may not require the shareholders requesting any such website publication to pay its expenses in complying with Sections 527 or 528 of the Companies Act 2006. Where the Company is required to place a statement on a website under Section 527 of the Companies Act 2006, it must forward the statement to the Company’s auditor not later than the time when it makes the statement available on the website. The business which may be dealt with at the Meeting for the relevant financial year includes any statement that the Company has been required under Section 527 of the Companies Act 2006 to publish on a website. xv. Any shareholder attending the Meeting has the right to ask questions. The Company must cause to be answered any such question relating to the business being dealt with at the Meeting but no such answer need be given if: (a) to do so would interfere unduly with the preparation for the Meeting or involve the disclosure of confidential information; (b) the answer has already been given on a website in the form of an answer to a question; or (c) it is undesirable in the interests of the Company or the good order of the Meeting that the question be answered. xvi. Copies of the Directors’ letters of appointment will be available for inspection during normal business hours at the registered office of the Company on any business day from the date of this Notice until the time of the Meeting and may also be inspected at the Meeting venue, as specified in this Notice, for 15 minutes before and during the Annual General Meeting until the conclusion of the Meeting. 112 Murray Income Trust PLC xvii. You may not use any electronic address (within the meaning of Section 333(4) of the Companies Act 2006) provided in either this Notice or any related documents (including the form of proxy) to communicate with the Company for any purposes other than those expressly stated. xviii. A copy of this Notice, and other information required by Section 311A of the Companies Act 2006, can be found on the Company’s website at murray-income.co.uk xix. There are special arrangements for holders of shares through the abrdn Investment Plan for Children, Investment Trust Share Plan and Investment Trust Individual Savings Account (“ISA”). These are explained in the separate ‘Letter of Direction’ which such holders will have received with this Annual Report. xx. If the law or Government guidance so requires at the time of the Meeting, physical attendance at the Meeting may not be possible. In these circumstances, the Chair will limit, in their sole discretion, the number of individuals in physical attendance at the meeting to two persons. Should there be no restrictions imposed by law or Government at the time of the Meeting, the Company may still impose entry restrictions on certain persons wishing to attend the Meeting in order to ensure the safety of those attending the Meeting. As set out in the Chair’s Statement, shareholders are encouraged to submit questions in advance of the Meeting by email to: murray.income@abrdn.com THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the action you should take, you are recommended to seek your own independent financial advice from your stockbroker, bank manager, solicitor, accountant or other independent financial adviser authorised under the Financial Services and Markets Act 2000 (as amended by the Financial Services Act 2012) if you are in the United Kingdom or, if not, from another appropriately authorised financial adviser. If you have sold or otherwise transferred all your Ordinary shares in Murray Income Trust PLC, please forward this document together with the accompanying documents immediately to the purchaser or transferee, or to the stockbroker, bank or agent through whom the sale or transfer was effected for transmission to the purchaser or transferee. Notice of Annual General Meetin g Continued Murray Income Trust PLC 113 Directors Neil Rogan (Chair) Peter Tait (Senior Independent Director) Stephanie Eastment (Audit Committee Chair) Alan Giles Merryn Somerset Webb Nandita Sahgal Tully Company Secretaries, Registered Office and Company Number abrdn Holdings Limited (formerly Aberdeen Asset Management PLC) 1 George Street Edinburgh EH2 2LL Registered in Scotland under company number SC012725 Website murray-income.co.uk Legal Entity Identifier 549300IRNFGVQIQHUI13 United States Internal Revenue Service FATCA Registration Number (“GIIN”) 8Q8ZFE.99999.SL.826 Points of Contact The Chair or Company Secretaries at the Registered Office of the Company Email: murray.income@abrdn.com Customer Services Department and Enquiries for the abrdn Children’s Plan, Share Plan and ISA abrdn Investment Trusts PO Box 11020 Chelmsford Essex CM99 2DB Freephone: 0808 500 0040 (open Monday to Friday from 9.00am to 5.00pm, excluding public holidays) Email: inv.trusts@abrdn.com Please see page 99 for information on the closure of the abrdn Children’s Plan, Share Plan and ISA in December 2023. Alternative Investment Fund Manager abrdn Fund Managers Limited Authorised and regulated by the Financial Conduct Authority Investment Manager abrdn Investments Limited (formerly Aberdeen Asset Managers Limited) Authorised and regulated by the Financial Conduct Authority Registrar (for direct shareholders) The Share Portal, operated by Link Group, is a secure online website where shareholdings can be managed quickly and easily, including changing address or arranging to pay dividends directly into a bank account, or to receive electronic communications. To register, shareholders will need their Investor Code which may be found on their share certificate or by contacting the Registrar at: signalshares.com Alternatively, please contact the Registrar – By email, via the above website By phone, Tel: 0371 664 0300 (UK calls cost 10p per minute plus network extras) From overseas: +44 208 639 3399 (open Monday to Friday, from 9.00am to 5.30pm, excluding public holidays) By post - Link Group PXS 1 Central Square 29 Wellington Street Leeds LS1 4DL Independent Auditor PricewaterhouseCoopers LLP Depositary BNP Paribas Trust Corporation UK Limited Solicitors Dickson Minto W.S. Stockbroker Investec Bank plc Additional Shareholder Information murray-income.co.uk Murray Income Trust PLC Annual Report 30 June 2023 An investment trust founded in 1923 aiming for high and growing income with capital growth For more information visit murray-income.co.uk abrdn.com