Source - RNS
RNS Number : 4973L
North American Income Trust (The)
03 October 2016
 

3 October 2016

 

THE NORTH AMERICAN INCOME TRUST PLC

 

HALF YEARLY FINANCIAL REPORT

FOR THE SIX MONTHS TO 31 JULY 2016

 

 

The investment objective of The North American Income Trust plc is to provide investors with above average dividend income and long term capital growth through active management of a portfolio consisting predominantly of S&P 500 US equities.

 

 

For further information, please contact:-

 

Gary Jones

Aberdeen Asset Management PLC                                                           0207 463 6000

 

 

INTERIM BOARD REPORT

 

CHAIRMAN'S STATEMENT

Performance

Over the six month period to 31 July 2016 the Company's net asset value per share rose by 28.0% on a total return basis, in sterling terms, outperforming both its reference indices, the S&P 500 and the Russell 1000 Value, which provided total returns of 21.0% and 23.2% respectively in sterling terms.

 

The Company's performance over one year has been particularly strong, outperforming both the S&P 500 and Russell 1000 Value by 13.3% and 13.5% respectively, and it is the best performing investment trust in its sector. 

 

Dividend

The Directors have declared a second quarterly dividend of 7.0p per share, which will take the total dividends for the first half of the fiscal year to 14.0p (2015 - 13.0p), a 7.7% increase. The second quarterly dividend is payable on 31 October 2016 to shareholders on the register on 14 October 2016.

 

The Trust's dividend yield, using the share price of 1,070.0p at the end of the reporting period on 31 July 2016, was 3.2% compared to a 2.0% yield from the S&P 500 Index and a 2.6% yield from the Russell 1000 Value.

 

Portfolio

As of 31 July 2016, the Trust had 45 equity holdings and 11 other holdings, including corporate bonds - the latter represented approximately 4.1% of total assets and provided 6.1% of the portfolio's total income earned compared to 7.3% for the 2016 fiscal year.

 

Most of the Trust's equity holdings continued their established record of dividend growth with almost half of the holdings announcing dividend increases over the six month period.  Those who announced dividend increases grew their dividends at an average of 8%. However, Potash Corp of Saskatchewan and ConocoPhillips announced reductions to their dividends over the period, amid the prolonged slump in global oil and commodities prices.  The Manager believes that each of them has made the right decision in reducing their respective payouts to support their respective businesses and balance sheets. 

 

Total revenue from the equity holdings in the portfolio was £5.0 million over the six month period to 31 July 2016, representing a decrease of roughly £340,000 compared to the same period last year as we switched some overvalued stocks into better value companies that have scope for increasing dividends. 

 

During the six month period ended 31 July 2016, the Company received premiums totalling £1.3 million (full year 2016 - £2.8 million) in exchange for entering into listed stock option transactions. This option income, the generation of which remains consistent with the Manager's company-focused investment process, represents 18.8% of total income (full year 2016 - 18.8%). Bond coupons and option premiums will remain secondary sources of income for us in the belief that dividends must remain the overwhelming source of income available for distribution. Further details of the portfolio are shown below.

 

The Company's share price rose by 31.3% to 1,070.0p and ended the reporting period at a 9.0% discount to total net asset value, compared with a 12.9% discount at the financial year end. We continue to work with the Manager in both promoting the Company to a wider audience and providing liquidity to the market through the use of share buybacks. During the six-month review period, 1.2 million shares were repurchased at a cost of £10.7 million. Since the end of the interim report period, a further 81,380 shares have been repurchased at a cost of £876,000 and the discount stood at 7.6% at 29 September 2016. We seek to manage the level of discount at which the shares trade and will exercise discretion to repurchase shares.

 

Gearing

We continued to make use of our capacity to gear through the $71.0 million facility with State Street. £30.0 million of this was fixed in July 2014 (equivalent to $51.0 million at that time) for three years at an all-in rate of 2.18% and was fully drawn down. The remaining balance of the facility of $20.0 million is uncommitted, repayable with no penalty and provides finance at a margin of 0.9% over Libor.  Half of the uncommitted facility (approximately £7.5 million) remained drawn down at the period end.  With the strengthening of the US dollar against the sterling over the course of the review period, the Company's gearing increased to £46.0 million at 31 July 2016 (31 January 2016 - £43.0 million), with net gearing of 10.6%. 

 

Market & Economic Review

North American equity markets weathered several periods of volatility as investors waited for firmer guidance on monetary policy from the US Federal Reserve (Fed) and, later in the period, the UK's unexpected referendum result to leave the European Union ("Brexit"). 

 

After increasing the federal funds rate by 25 basis points to a range of 0.25% to 0.50% in mid-December 2015, the Fed left it unchanged following its first five monetary policy meetings of 2016. However, US payroll growth for June and July exceeded consensus expectations, and housing starts climbed 4.8% month-over-month in June, buoyed by historically low mortgage rates. Notwithstanding increased speculation that the Fed might see sufficient impetus for a rate increase following its September meeting, caution prevailed as inflation was below the Fed's 2% target.

 

The result of the Brexit vote had an impact on global stock markets in late June with investors turning to safe-haven assets such as US Treasuries and other global government securities. The downturn was fleeting, however, as equities rebounded sharply at the end of the month and into July. The turmoil in the financial markets had a negative impact on oil prices, which reversed the upward trend that had started in mid-February. Sterling fell to a 30-year low against the US dollar and declined nearly 7% over the six-month review period.

 

Outlook

We are pleased with the progress of both the capital and the revenue accounts, which year-to-date have achieved successful execution of the Trust's dual aim of income and capital preservation in real terms.  At this stage, 2016 has supported our Manager's judgement at the beginning of the year that the outsized dividend growth which we had expected to see coming out of the recession would in future moderate and follow earnings growth. This has been the case with US companies overall, and to a lesser degree, with our investments.  We remain optimistic that our holdings will continue to invest sensibly for the longer term without expanding their balance sheets unnecessarily by borrowing to pay dividends. We expect the best companies to continue to generate healthy levels of free cash flow, despite an environment where it is more difficult to achieve expansion of margins after many years of delivering consistent improvements to profitability.   Our Manager continues to focus on investing in those companies which have a disciplined and balanced capital allocation policy and good prospects for sustainable dividend growth.

 

James Ferguson

Chairman

30 September 2016

 

 

PRINCIPAL RISKS AND UNCERTAINTIES

There are a number of risks which, if realised, could have a material adverse effect on the Company and its financial condition, performance and prospects. The Board has identified the principal risks and uncertainties facing the Company together with a description of the mitigating actions it has taken.  They can be summarised under the following headings:

 

-     Market Risk

-     Gearing Risk

-     Discount Volatility

-     Income and Dividend Risk

-     Regulatory Risk

 

Details of these risks are provided in detail on pages 7 to 8 of the 2016 Annual Report.   The principal risks have not changed nor are they expected to change in the second half of the financial year ended 31 January 2017.

 

There are a large number of international political and economic uncertainties which could impact the performance of US markets.

 

GOING CONCERN

In accordance with the Financial Reporting Council's Guidance on Risk Management, Internal Control and Related Financial and Business Reporting issued in September 2014, the Directors have undertaken a rigorous review and consider both that there are no material uncertainties and that the adoption of the going concern basis of accounting is appropriate. The Company's assets consist entirely of equity shares in companies which are, in most circumstances, realisable within a short timescale.

 

The Company has a bank credit facility in place which is available until July 2017. The Directors have a reasonable expectation that the Company has adequate financial resources to continue in operational existence for the foreseeable future and at least 12 months from the date of approval of this Half-Yearly Report. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

 

The Company's assets comprise mainly readily realisable securities which can be sold to meet funding commitments if necessary.  The Board considers that the Company has adequate financial resources to continue in operational existence for the foreseeable future. The Directors believe that it is appropriate to prepare the financial statements on a going concern basis.

 

DIRECTORS' RESPONSIBILITY STATEMENT

The Directors are responsible for preparing the Half-Yearly Financial Report in accordance with applicable law and regulations. The Directors confirm that to the best of their knowledge:

 

-      the condensed set of Financial Statements has been prepared in accordance with Financial Reporting Standard 104 (Interim Financial Reporting);

-      the Half-Yearly Board Report includes a fair review of the information required by rule 4.2.7R of the Disclosure and Transparency Rules (being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of Financial Statements and a description of the principal risks and uncertainties for the remaining six months of the financial year); and

-      the Half-Yearly Board Report includes a fair review of the information required by 4.2.8R (being related party transactions that have taken place during the first six months of the financial year and that have materially affected the financial position of the Company during that period; and any changes in the related party transactions described in the last Annual Report that could do so).

 

The Half-Yearly Financial Report for the six months ended 31 July 2016 comprises the Interim Board Report, the Directors' Responsibility Statement and the condensed set of Financial Statements.

 

For and on behalf of the Board of The North American Income Trust plc

 

James Ferguson

Chairman

30 September 2016

 

 

FINANCIAL HIGHLIGHTS

 


31 July 2016

31 January 2016

% change

Net asset value per Ordinary share

1175.3p

935.6p

+25.6

Share price per Ordinary share (mid)

1070.0p

815.0p

+31.3

Discount to net asset value

9.0%

12.9%


Revenue return per Ordinary share{A}

18.0p

17.3p

+4.0

Interim dividends

14.0p{B}

13.0p{C}

+7.7


{A}      Comparison uses the six months ended 31 July 2015. 

{B}       Includes a first interim dividend of 7.0p paid on 5 August 2016 and a second interim dividend of 7.0p payable on 31 October 2016.

{C}      Interim dividend for the six months ended 31 July 2015.

 

 

PERFORMANCE - TOTAL RETURN

 


6 months ended

Year
ended

3 Years ended

31 May 2012{A}


31 July
2016

31 July
2016

31 July
2016

to 31 July 2016

Total return*

(%)

(%)

(% pa)

(% pa)

Net asset value per Ordinary share

28.0

37.4

13.8

16.2

Share price per Ordinary share

34.1

38.4

10.6

16.1

S&P 500 Index (in sterling terms)

21.0

24.1

16.2

19.5

Russell 1000 Value Index

23.2

23.9

13.9

19.2

*Capital return plus dividends reinvested





{A}Date of investment mandate change. 

 

 

INVESTMENT PORTFOLIO - EQUITIES

As at 31 July 2016

 




Total



Valuation

portfolio

Company

Industry classification

£'000

%

Wells Fargo

Banks

14,452

3.9

Pfizer

Pharmaceuticals

13,893

3.8

Dow Chemical

Chemicals

13,744

3.8

CME Group

Diversified Financial Services

13,091

3.6

Microsoft

Software

12,807

3.5

Molson Coors Brewing

Beverages

11,926

3.2

Chevron

Oil, Gas & Consumable Fuels

11,578

3.2

Rockwell Automation

Electrical Equipment

10,771

2.9

Verizon Communications

Diversified Telecommunication Services

10,433

2.8

Johnson & Johnson

Pharmaceuticals

10,375

2.8

Ten largest equity investments


123,070

33.5

Intel

Semiconductors & Semiconductor Equipment

9,190

2.5

Pepsico

Beverages

9,024

2.4

TransCanada

Oil, Gas & Consumable Fuels

8,742

2.4

Philip Morris

Tobacco

8,684

2.4

Ventas

Real Estate Investment Trusts (REITs)

8,031

2.2

Sonoco Products

Containers & Packaging

7,672

2.1

BB&T

Banks

7,637

2.1

Telus

Diversified Telecommunication Services

7,570

2.0

Cisco Systems

Communications Equipment

7,473

2.0

Texas Instruments

Semiconductors & Semiconductor Equipment

7,355

2.0

Twenty largest equity investments


204,448

55.6

WEC Energy

Multi-Utilities

7,333

2.0

Target

Multiline Retail

7,092

1.9

Potash Corporation Of Saskatchewan

Chemicals

7,050

1.9

Union Pacific

Road & Rail

7,008

1.9

Regions Financial

Banks

6,907

1.9

Blackrock

Capital Markets

6,896

1.9

CMS Energy

Multi-Utilities

6,806

1.9

Paychex

IT Services

6,697

1.8

Abbott Laboratories

Pharmaceuticals

6,067

1.6

Nucor

Metals & Mining

6,060

1.6

Thirty largest equity investments


272,364

74.0

Sysco

Food & Staples Retailing

5,851

1.6

Republic Services

Commercial Services & Supplies

5,791

1.6

Schlumberger

Oil Equipment, Services & Distribution

5,761

1.6

Royal Bank Of Canada

Banks

5,746

1.6

Meredith

Media

5,745

1.6

Lockheed Martin

Aerospace & Defence

5,711

1.5

Coach

Personal Goods

5,682

1.5

ConocoPhillips

Oil, Gas & Consumable Fuels

5,534

1.5

Digital Realty Trust

Real Estate Investment Trusts (REITs)

5,507

1.5

Procter & Gamble

Household Products

5,480

1.5

Forty largest equity investments


329,172

89.5

Canadian Western Bank

Banks

5,387

1.5

Glacier Bancorp

Banks

5,193

1.4

Tiffany

Specialty Retail

4,860

1.3

Staples

Specialty Retail

4,548

1.2

Genuine Parts

Distributors

3,850

1.1

Total equity investments


353,010

96.0

 

 

INVESTMENT PORTFOLIO - FIXED INTEREST

As at 31 July 2016

 




Total



Valuation

portfolio

Company

Industry classification

£'000

%

Qwest 7.25% 15/10/35

Telecommunications

2,837

0.8

HSBC Finance  6.676% 15/01/21

Diversified Financial Services

2,311

0.6

International Lease Finance Corp 6.25% 15/05/19

Diversified Financial Services

1,986

0.5

Western Digital Corp 7.375% 01/04/23

Technology

1,644

0.4

HCA 5.875% 15/02/26

Healthcare Services

1,212

0.3

First Data 6.75% 01/11/20

Software

1,179

0.3

Cincinnati Bell 8.375% 15/10/20

Telecommunications

982

0.3

Post Holdings 7.375% 15/02/22

Food

928

0.3

Corrections Corp of America 4.625% 01/05/23

Real Estate Investment Trusts (REITs)

768

0.2

Nationstar 6.5% 01/06/22

Diversified Financial Services

636

0.2

Transdigm 6.5% 15/07/24

Industrials

334

0.1



________

________

Total fixed interest investments


14,817

4.0



________

________

Total investments


367,827

100.0



________

________

 

 

GEOGRAPHICAL ANALYSIS

As at 31 July 2016

 


Equities

Bonds

Total

Country

%

%

%

Canada

9.4

-

9.4

USA

86.6

4.0

90.6


________

________

________


96.0

4.0

100.0


________

________

________

 

 

CONDENSED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

 


Six months ended 31 July 2016


Revenue

Capital

Total


£'000

£'000

£'000

Gains /(losses) on investments

-

72,343

72,343

Exchange (losses)/gains

-

(2,297)

(2,297)

Income (note 2)

7,076

-

7,076

Investment management fee

(377)

(880)

(1,257)

Administrative expenses (note 3)

(376)

-

(376)


________

________

________

Net return before finance costs and taxation

6,323

69,166

75,489

Finance costs

(141)

(330)

(471)


________

________

________

Return on ordinary activities before taxation

6,182

68,836

75,018

Taxation (note 4)

(936)

190

(746)


________

________

________

Return on ordinary activities after taxation

5,246

69,026

74,272


________

________

________





Return per share (pence) (note 6)

17.97

236.49

254.46


________

________

________





The total column of the Condensed Statement of Comprehensive Income is the profit and loss account of the Company.

All revenue and capital items in the above statement derive from continuing operations.

 

 


Six months ended 31 July 2015


Revenue

Capital

Total


£'000

£'000

£'000

Gains /(losses) on investments

-

(15,993)

(15,993)

Exchange (losses)/gains

-

1,121

1,121

Income (note 2)

7,416

-

7,416

Investment management fee

(348)

(813)

(1,161)

Administrative expenses (note 3)

(358)

-

(358)


________

________

________

Net return before finance costs and taxation

6,710

(15,685)

(8,975)

Finance costs

(125)

(292)

(417)


________

________

________

Return on ordinary activities before taxation

6,585

(15,977)

(9,392)

Taxation (note 4)

(1,023)

223

(800)


________

________

________

Return on ordinary activities after taxation

5,562

(15,754)

(10,192)


________

________

________





Return per share (pence) (note 6)

17.33

(49.09)

(31.76)


________

________

________

 

 



CONDENSED STATEMENT OF FINANCIAL POSITION (UNAUDITED)

 



As at

As at



31 July
2016

31 January 2016


Notes

£'000

£'000

Non-current assets




Investments at fair value through profit or loss


367,827

312,983



________

________





Current assets




Debtors and prepayments


10,255

743

Cash and short-term deposits


11,795

11,685



________

________



22,050

12,428



________

________





Creditors: amounts falling due within one year




Bank loans


(45,978)

(7,050)

Traded options


(73)

(66)

Other creditors


(5,476)

(1,666)



________

________



(51,454)

(8,782)



________

________

Net current (liabilities)/assets


(29,477)

3,646



________

________

Total assets less current liabilities


338,350

316,629



________

________





Creditors: amounts falling due after more than one year



Bank loan


-

(35,985)



________

________

Net assets


338,350

280,644



________

________





Capital and reserves




Called-up share capital


7,197

7,499

Share premium account


48,467

48,467

Capital redemption reserve


15,363

15,061

Capital reserve

8

257,226

198,866

Revenue reserve


10,097

10,751



________

________

Equity shareholders' funds


338,350

280,644



________

________





Net asset value per share (pence)

9

1,175.27

935.55



________

________

 

 



CONDENSED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

 

Six months ended 31 July 2016









Share

Capital





Share

premium

redemption

Capital

Revenue



capital

account

reserve

reserve

reserve

Total


£'000

£'000

£'000

£'000

£'000

£'000

Balance at 31 January 2016

7,499

48,467

15,061

198,866

10,751

280,644

Buyback of Ordinary shares

(302)

-

302

(10,666)

-

(10,666)

Return on ordinary activities after taxation

-

-

-

69,026

5,246

74,272

Dividends paid (note 5)

-

-

-

-

(5,900)

(5,900)


_____

_______

________

______

______

______

Balance at 31 July 2016

7,197

48,467

15,363

257,226

10,097

338,350


_____

_______

________

______

______

______








Six months ended 31 July 2015









Share

Capital





Share

premium

redemption

Capital

Revenue



capital

account

reserve

reserve

reserve

Total


£'000

£'000

£'000

£'000

£'000

£'000

Balance at 31 January 2015

8,235

48,467

14,325

228,822

9,424

309,273

Buyback of Ordinary shares

(373)

-

373

(12,763)

-

(12,763)

Return on ordinary activities after taxation

-

-

-

(15,754)

5,562

(10,192)

Dividends paid (note 5)

-

-

-

-

(7,878)

(7,878)


_____

_______

________

______

______

______

Balance at 31 July 2015

7,862

48,467

14,698

200,305

7,108

278,440


_____

_______

________

______

______

______

 

 



CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)

 


Six months ended

Six months ended


31 July 2016

31 July 2015


£'000

£'000

Operating activities



Net return on ordinary activities before finance costs and taxation

75,489

(8,975)

Adjustments for:



Net (gains)/losses on investments

(72,343)

15,993

Realised (gains)/losses on foreign exchange transactions

(645)

406

Decrease/(increase) in dividend income

9

(43)

(Increase)/decrease in fixed interest income

(52)

10

Increase in other debtors

(5)

(23)

Increase in other creditors

38

887

Tax on overseas income

(746)

(938)

Amortisation of fixed income book cost

26

11


________

________

Net cash flow from operating activities

1,771

7,328




Investing activities



Purchases of investments

(59,656)

(48,379)

Sales of investments

71,441

74,933


________

________

Net cash flow from investing activities

11,785

26,554




Financing activities



Interest paid

(468)

(605)

Equity dividends paid

(5,900)

(7,878)

Buyback of Ordinary shares

(10,666)

(12,763)


________

________

Net cash used in financing activities

(17,034)

(21,246)


________

________

(Decrease)/increase in cash and cash equivalents

(3,478)

12,636


________

________




Analysis of changes in cash and cash equivalents during the period



Opening balance

11,685

9,231

Effect of exchange rate fluctuations on cash held

3,588

(1,932)

(Decrease)/increase in cash as above

(3,478)

12,636


________

________

Closing balance

11,795

19,935


________

________

 

 



NOTES:

 

1.

Accounting policies


(a)

Basis of accounting



The condensed financial statements have been prepared in accordance with Financial Reporting Standard 104 (Interim Financial Reporting) and with the Statement of Recommended Practice for 'Financial Statements of Investment Trust Companies and Venture Capital Trusts'. They have also been prepared on a going concern basis and on the assumption that approval as an investment trust will continue to be granted.






The half-yearly financial statements have been prepared using the same accounting policies applied as the preceding annual accounts. The Company has early adopted Amendments to FRS 102 - Fair Value Hierarchy Disclosures, issued by the Financial Reporting Council in March 2016. 

 



Six months ended

Six months ended



31 July 2016

31 July 2015

2.

Income

£'000

£'000


Income from overseas listed investments




Dividend income

5,014

5,359


REIT income

297

287


Interest income from investments

428

485



________

________



5,739

6,131



________

________


Other income from investment activity




Traded option premiums

1,329

1,285


Deposit interest

8

-



1,337

1,285



________

________


Total income

7,076

7,416



________

________

 



 Six months ended

 Six months ended



 31 July 2016

 31 July 2015

3.

Administration expenses

£'000

£'000


Directors' fees

40

38


Secretarial and administration fees

53

52


Promotional activities

106

106


Auditor's remuneration:




Fees payable to the Company's auditor for the audit of the annual accounts

9

8


Custodian charges

11

13


Registrar's fees

31

28


Professional fees

37

36


Depositary charges

20

19


Other

69

58



________

________



376

358



________

________

 

4.

Taxation


The taxation expense reflected in the Condensed Statement of Comprehensive Income is based on the estimated annual tax rate expected for the full financial year. The annual corporation tax rate used for the year to 31 January 2017 is a rate of 20%.




Detailed below is an analysis of the tax charge for each period.





Six months ended 31 July 2016

Six months ended 31 July 2015



Revenue

Capital

Total

Revenue

Capital

Total


Taxation

£'000

£'000

£'000

£'000

£'000

£'000


UK corporation tax

190

(190)

-

223

(223)

-


Overseas tax suffered

746

-

746

800

-

800



________

_______

_______

________

_______

_______


Total tax charge for the period

936

(190)

746

1,023

(223)

800



________

_______

_______

________

_______

_______

 



Six months ended

Six months ended



31 July 2016

31 July 2015

5.

Dividends

£'000

£'000


3rd interim dividend for 2016 - 7.0p (2015 - 6.5p)

2,111

2,141


Final dividend for 2016 - 13.0p (2015 - 11.5p)

3,789

3,679


1st interim dividend for 2016 - 6.5p

-

2,058



________

________



5,900

7,878



________

________






The Company pays four dividends per year. The first interim dividend of 7.0p (2016 - 6.5p) for the year ending 31 January 2017 was paid on 5 August 2016 to shareholders on the register at 15 July 2016, with an ex-dividend date of 14 July 2016. A second interim dividend of 7.0p (2016 - 6.5p) for the year ending 31 January 2017, will be paid on 31 October 2016 to shareholders on the register at 14 October 2016. The ex-dividend date is 13 October 2016.

 



Six months ended

Six months ended



31 July 2016

31 July 2015

6.

Return per Ordinary share

£'000

£'000


Based on the following figures:




Revenue return

5,246

5,562


Capital return

69,026

(15,754)



________

________


Total return

74,272

(10,192)



________

________


Weighted average number of shares in issue

29,187,655

32,095,089



________

________







p

p


Revenue return per Ordinary share

17.97

17.33


Capital return per Ordinary share

236.49

(49.09)



________

________


Total return per Ordinary share

254.46

(31.76)



________

________

 

7.

Transaction costs 


During the six months ended 31 July 2016 expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss. These have been expensed through capital and are included within gains/(losses) on investments in the Condensed Statement of Comprehensive Income. The total costs were as follows:







Six months ended

Six months ended



31 July 2016

31 July 2015



£'000

£'000


Purchases

76

63


Sales

86

116



________

________



162

179



________

________

 

8.

Capital reserve


The capital reserve reflected in the Condensed Statement of Financial Position at 31 July 2016 includes gains of £111,078,000 (31 January 2016 - £50,718,000) which relate to the revaluation of investments held at the reporting date.

 



As at

As at

9.

Net asset value per Ordinary share

31 July 2016

31 January 2016


Net assets attributable (£'000)

338,350

280,644


Number of Ordinary shares in issue

28,789,134

29,997,734


Net asset value per Ordinary share (p)

1,175.27

935.55

 

10.

Fair value hierarchy


FRS 102 requires an entity to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The Company has early adopted Amendments to FRS102 - Fair value hierarchy disclosures issued by the Financial Reporting Council in March 2016. This has not resulted in any reclassifications in levelling and the prior year comparative has been disclosed under the new hierarchy. The fair value hierarchy shall have the following classifications:




Level 1: unadjusted quoted prices in an active market for identical assets or liabilities that the entity can access at the measurement date.


Level 2: inputs other than quoted prices included within Level 1 that are observable (ie developed using market data) for the asset or liability, either directly or indirectly.


Level 3: inputs are unobservable (ie for which market data is unavailable) for the asset or liability.




The financial assets and liabilities measured at fair value in the Condensed Statement of Financial Position are grouped into the fair value hierarchy at the reporting date as follows:






Level 1

Level 2


As at 31 July 2016

Note

£'000

£'000


Financial assets at fair value through profit or loss





Quoted equities

a)

353,010

-


Quoted bonds

b)

-

14,817




________

________


Total


353,010

14,817




________

________


Financial liabilities at fair value through profit or loss




Derivatives

c)

-

(73)




________

________


Net fair value


353,010

14,744




________

________









Level 1

Level 2


As at 31 January 2016

Note

£'000

£'000


Financial assets at fair value through profit or loss





Quoted equities

a)

298,353

-


Quoted bonds

b)

-

14,630




________

________


Total


298,353

14,630




________

________


Financial liabilities at fair value through profit or loss




Derivatives

c)

-

(66)




________

________


Net fair value


298,353

14,564





________

________








a)

Quoted equities






The fair value of the Company's investments in quoted equities and preference shares has been determined by reference to their quoted bid prices at the reporting date. Quoted equities and preference shares included in Fair Value Level 1 are actively traded on recognised stock exchanges.


b)

Quoted bonds



The fair value of the Company's investments in quoted bonds has been determined by reference to their quoted bid prices at the reporting date. Quoted bonds included in Fair Value Level 2 are not actively traded on recognised stock exchanges.


c)

Derivatives



The fair value of the Company's investments in Exchange Traded Options has been determined using observable market inputs on an exchange traded basis and has been included in Fair Value Level 2.

 

11.

Transactions with the Manager


The Company has agreements with Aberdeen Fund Managers Limited ("AFML" or the "Manager") for the provision of investment management, secretarial, accounting and administration and promotional activity services.




The management fee is payable quarterly in arrears based on an annual amount of 0.8% of the value of net assets. The investment management fee is chargeable 30% to revenue and 70% to capital. During the period £1,257,000 (31 July 2015 - £1,161,000) of investment management fees were payable to the Manager, with a balance of £680,000 (31 July 2015 - £561,000) being due to AFML at the period end.




The secretarial fee of £105,000 per annum is chargeable 100% to revenue and is payable monthly in arrears. During the period £53,000 (31 July 2015 - £52,000) of secretarial fees were payable to the Manager, with a balance of £9,000 (31 July 2015 - £17,000) being due to AFML at the period end.




The promotional activities fee is based on a current annual amount of £213,000, payable quarterly in arrears. During the period £106,000 (31 July 2015 - £106,000) of fees were payable, with a balance of £18,000 (31 July 2015 - £71,000) being due to AFML at the period end.

 

12.

Segmental information


The Company is engaged in a single segment of business, which is to invest in equity securities and debt instruments. All of the Company's activities are interrelated, and each activity is dependent on the others. Accordingly, all significant operating decisions are based on the Company as one segment.

 

13.

Subsequent events


A further 81,380 Ordinary shares have been bought back and cancelled by the Company subsequent to the reporting period end for a total consideration of £879,000. Following the buyback of shares there were 28,707,754 Ordinary shares in issue.

 

14.

Half-Yearly Financial Report


The financial information contained in this Half-Yearly Financial Report does not constitute statutory accounts as defined in Sections 434 - 436 of the Companies Act 2006. The financial information for the six months ended 31 July 2016 and 31 July 2015 has not been audited.




The information for the year ended 31 January 2016 has been extracted from the latest published audited financial statements which have been filed with the Registrar of Companies. The report of the auditor on those accounts contained no qualification or statement under Section 498 of the Companies Act 2006.

 

15.

This Half-Yearly Financial Report was approved by the Board on 30 September 2016.

 

16.     The Half-Yearly Financial Report has not been reviewed by the Company's auditors.

 

17.     The Half-Yearly Financial Report is available on the Company's website, www.northamericanincome.co.uk.  The Half-Yearly Report will be posted to shareholders in September 2016 and copies will be available from the Company Secretary.

 

Please note that past performance is not necessarily a guide to the future and that the value of investments and the income from them may fall as well as rise and may be affected by exchange rate movements.  Investors may not get back the amount they originally invested.

 

 

For The North American Income Trust plc

Aberdeen Asset Management PLC, Secretary

END


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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