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RNS

Half-year Report

Released 07:00 27-Sep-2017

RNS Number : 8813R
North American Income Trust (The)
27 September 2017
 

Legal Entity Identifier (LEI): 5493007GCUW7G2BKY360

27 September 2017

 

 

 

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 months to 31 July 2017, the Company's net asset value per share was up by 0.6% on a total return basis in sterling terms. This was slightly ahead of the Russell 1000 Value index return of 0.5% but behind the S&P 500 index return of 4.5%.

 

Dividend

The revenue return per Ordinary share increased by 15% to 20.7p for the six month period. The Board has declared a second quarterly dividend of 7.5p per share, which will mean total dividends for the first half of the fiscal year will be 15.0p (2016 - 14.0p), a 7.1% increase  following last year's increase of 9.1%. The second quarterly dividend is payable on 31 October 2017 to shareholders on the register on 13 October 2017.

 

The Company's dividend yield, using the share price of 1,180.0p at the end of the reporting period on 31 July 2017, was 3.1% compared to yields from the Russell 1000 Value and S&P 500 Indices of 2.4% and 2.0% respectively.

 

Portfolio

As of 31 July 2017, the portfolio had holdings in 45 equities and 8 corporate bonds; the latter representing approximately 2.9% of total assets and providing 4.7% of the portfolio's total income compared to 5.8% for the 2017 fiscal year. During the half year, the Company received premiums totalling £1.1 million (2016 - £1.3 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 14.3% of total income for the half year (full year 2017 - 19.2%).

 

Total revenue from equity holdings in the portfolio over the six month period was £6.1 million (2016 - £5.0 million).  The Trust's equity holdings continued their established record of dividend growth and approximately half of the holdings raised their dividends over the past six months, with an average increase of around 8%. Bond coupons and option premiums will remain secondary sources of income in the belief that dividends must remain the overwhelming source of income that is available for distribution. Further details of the portfolio are shown below.

 

The Company's share price fell by 4.2% from 1,232.0p at 31 January 2017 to 1,180.0p at 31 July 2017 and ended the half year at a 9.8% discount to total net asset value. The Board continues to work with the Manager in both promoting the Company's benefits to a wider audience and providing liquidity to the market through the use of share buybacks. During the six-month period, 152,500 shares were repurchased at a cost of £1.8 million. Since the end of the period, a further 33,000 shares have been repurchased at a cost of £390,000. The Board aims to try to manage the level of discount at which the shares trade and exercises its discretion to repurchase shares. As at 26 September 2017 the discount stood at 8.6%.

 

Gearing

The Company continues to make use of an investment trust company's ability to gear. On 17 July 2017 the Company converted its fully drawn $51.045m fixed term loan with State Street to a revolving loan facility. This remains with State Street and will expire on 31 December 2017. The facility is repayable with no penalty and provides finance at a margin of 0.9% over Libor. The remaining $20m revolving loan facility was allowed to expire in July. Net gearing at 31 July 2017 stood at 7.8%, which includes the offset of cash held used as collateral against open option positions. 

 

Market & Economic Review

Major North American equity market indices recorded positive returns over the six-month period ended 31 July 2017.  Nine of the eleven sectors within the S&P 500 Index posted gains over the period. The strongest performers included the information technology, healthcare and utilities sectors. Conversely, the energy and telecommunication services sectors recorded negative returns and significantly underperformed the overall market for the period.

 

The US Federal Reserve (Fed) raised its benchmark interest rate with two increases of 0.25% in March and June 2017. Following its meeting in late July, the Fed commented that it plans to begin implementing its balance sheet normalisation programme "relatively soon, provided that the economy evolves broadly as anticipated…" US economic data reports released over the six month period were generally positive..

 

Board Composition

In the 2017 Annual Report, we reported that the Board was in the process of establishing a succession plan.  I am pleased to report the appointment of Charles Park as an independent non-executive Director with effect from 13 June 2017.   Charles has over 25 years' investment management experience, with particular expertise on US markets.  

 

Investment Manager

The recent merger between the Company's Manager, Aberdeen Asset Management PLC, and Standard Life plc has produced the new investment arm which is Aberdeen Standard Investments. The new Group's investment approach will remain team-based with a strong emphasis on the fundamentals of individual companies. Co-managers Ralph Bassett and Fran Radano will maintain this investment process. The Board will continue to monitor closely any impact of this merger on the Company to ensure that satisfactory arrangements are in place for its effective management and successful performance.

 

Outlook

GDP growth of 2.6% was recorded for the second quarter of 2017, which was much improved relative to the revised 1.4% growth in the first quarter and was consistent with our Manager's outlook for improvement throughout this year. Growth was supported by an increase in consumer spending, whilst business investment also had a positive impact. Achievement of the 4% growth target of the Trump administration seems unlikely in the medium-term, particularly given the continued political stalemate, which reduces the likelihood of policy initiatives being implemented.

 

Our Manager however, at present believes that corporate fundamentals continue to improve steadily. Valuations remain above long-term averages; this is supported by the continued environment of low interest rates. Companies will need to show an acceleration in earnings and cash flow growth for share prices to appreciate further. Earnings growth is also now increasingly reliant on economic growth,  given that it has  become more difficult to expand profit margins as  wage and input inflation both increase.

 

There has been a wide divergence in returns between various investment styles and sectors, with high growth companies in technology and healthcare having outperformed materially over the past year. Many cash generative companies which pay dividends have been out of favour but this sector of the market is becoming more attractive because the risk of higher interest rates has been discounted.  We therefore believe that this sector is attracting more interest and our Manager feels we are well positioned for the future. The longer term prospects for underlying dividend growth in our companies provides strong support for future growth in the Company's dividends.

 

 

James Ferguson

Chairman

26 September 2017

 

 

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

-     Derivatives

 

Details of these risks are provided in detail on pages 7 to 8 of the 2017 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 2018.

 

There are a large number of international political and economic uncertainties which could have an impact on 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 December 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 2017 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

 

26 September 2017

 

 

FINANCIAL HIGHLIGHTS

 


31 July 2017

31 January 2017

% change

Net asset value per Ordinary share

1308.3p

1323.5p

-1.1

Share price per Ordinary share (mid)

1180.0p

1232.0p

-4.2

Discount to net asset value

9.8%

6.9%


Revenue return per Ordinary share{A}

20.7p

18.0p

+15.0

Interim dividends

15.0p{B}

14.0p{C}

+7.1


{A}       Comparison uses the six months ended 31 July 2016. 

{B}       Includes a first interim dividend of 7.5p paid on 4 August 2017 and a second interim dividend of 7.5p payable on 31 October 2017.

{C}       Interim dividend for the six months ended 31 July 2016.

 

 

PERFORMANCE - TOTAL RETURN

 


6 months ended

Year
ended

3 Years ended

31 May 2012{B} to


31 July
2017

31 July
2017

31 July
2017

31 July
2017

Total return{A}

%

%

% pa

% pa

Net asset value per Ordinary share

0.6

14.5

18.8

15.9

Share price per Ordinary share

-2.4

13.8

17.5

15.6

S&P 500 Index (in sterling terms)

4.5

16.9

20.4

19.0

Russell 1000 Value Index

0.5

14.6

17.8

18.3


{A} Capital return plus dividends reinvested

{B} Date of investment mandate change.

 

 

INVESTMENT PORTFOLIO - EQUITIES

As at 31 July 2017

 




Total



Valuation

portfolio

Company

Industry classification

£'000

%

Dow Chemical

Chemicals

16,567

4.2

BB&T

Banks

16,511

4.1

Pfizer

Pharmaceuticals

16,349

4.1

Chevron

Oil, Gas & Consumable Fuels

14,908

3.7

CME Group

Capital Markets

13,951

3.5

Molson Coors Brewing

Beverages

12,824

3.2

Regions Financial

Banks

12,736

3.2

Procter & Gamble

Household Products

12,056

3.0

Telus

Diversified Telecommunication Services

10,925

2.7

TransCanada

Oil, Gas & Consumable Fuels

10,625

2.7

Ten largest equity investments


137,452

34.4

Cisco Systems

Communications Equipment

10,139

2.5

Glacier Bancorp

Banks

9,933

2.5

Microsoft

Software

9,926

2.5

Coach

Textiles, Apparel & Luxury Goods

9,475

2.4

Intel

Semiconductors & Semiconductor Equipment

9,417

2.4

Philip Morris

Tobacco

9,295

2.3

ConocoPhillips

Oil, Gas & Consumable Fuels

8,948

2.2

Pepsico

Beverages

8,845

2.2

Abbott Laboratories

Health Care Equipment & Supplies

8,580

2.2

Canadian Western Bank

Banks

8,492

2.1

Twenty largest equity investments


230,502

57.7

Royal Bank Of Canada

Banks

8,462

2.1

Potash Corporation Of Saskatchewan

Chemicals

8,147

2.0

Meredith

Media

8,117

2.0

Gilead Sciences

Biotechnology

8,080

2.0

Texas Instruments

Semiconductors & Semiconductor Equipment

8,025

2.0

Ventas

Equity Real Estate Investment

7,663

1.9

Johnson & Johnson

Pharmaceuticals

7,550

1.9

American International

Insurance

7,447

1.9

Genuine Parts

Distributors

7,086

1.8

Union Pacific

Road & Rail

7,029

1.8

Thirty largest equity investments


308,108

77.1

Sonoco Products

Containers & Packaging

6,435

1.6

Verizon Communications

Diversified Telecommunication Services

6,241

1.6

WEC Energy

Multi-Utilities

5,732

1.4

Paychex

IT Services

5,705

1.4

CMS Energy

Multi-Utilities

5,612

1.4

Lockheed Martin

Aerospace & Defence

5,540

1.4

Nucor

Metals & Mining

5,468

1.4

Praxair

Chemicals

5,430

1.4

Digital Realty Trust

Equity Real Estate Investment

5,249

1.3

Schlumberger

Energy Equipment & Services

5,203

1.3

Forty largest equity investments


364,723

91.3

Staples

Specialty Retail

5,004

1.2

Target

Multiline Retail

4,943

1.2

Helmerich & Payne

Energy Equipment & Services

4,800

1.2

Provident Financial Services

Thrifts & Mortgage Finance

4,226

1.1

Blackrock

Capital Markets

4,044

1.0

Total equity investments


387,740

97.0

 

 

INVESTMENT PORTFOLIO - FIXED INTEREST

As at 31 July 2017

 




Total



Valuation

portfolio

Company

Industry classification

£'000

%

Qwest 7.25% 15/10/35

Diversified Telecommunications

2,801

0.7

HSBC Finance  6.676% 15/01/21

Banks

2,325

0.6

International Lease Finance Corp 6.25% 15/05/19

Trading Companies & Distributors

1,953

0.5

Western Digital Corp 7.375% 01/04/23

Technology Hardware, Storage & Peripherals

1,669

0.4

HCA 5.875% 15/02/26

Health Care Providers & Services

1,243

0.3

First Data 6.75% 01/11/20

IT Services

902

0.2

Nationstar 6.5% 01/06/22

Thrifts & Mortgage Finance

779

0.2

Prestige Brands 6.375% 01/02/24

Pharmaceuticals

172

0.1

Total fixed interest investments


11,844

3.0

Total investments


399,584

100.0

 

 

GEOGRAPHICAL ANALYSIS

As at 31 July 2017

 

Country

%

%

%

Canada

11.7

-

11.7

USA

85.3

3.0

88.3


________

________

________


97.0

3.0

100.0


________

________

________

 

 

CONDENSED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

 





Revenue

Capital

Total


Notes

£'000

£'000

£'000

(Losses)/gains on investments


-

(4,034)

(4,034)

Exchange gains/(losses)


-

1,109

1,109

Income

2

7,941

-

7,941

Investment management fee


(442)

(1,030)

(1,472)

Administrative expenses

3

(377)

-

(377)



________

________

________

Net return before finance costs and taxation


7,122

(3,955)

3,167

Finance costs


(144)

(334)

(478)



________

________

________

Return on ordinary activities before taxation


6,978

(4,289)

2,689

Taxation

4

(1,072)

168

(904)



________

________

________

Return on ordinary activities after taxation


5,906

(4,121)

1,785



________

________

________






Return per share (pence)

6

20.67

(14.42)

6.25



________

________

________






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.

 





Revenue

Capital

Total


Notes

£'000

£'000

£'000

(Losses)/gains on investments


-

72,343

72,343

Exchange gains/(losses)


-

(2,297)

(2,297)

Income

2

7,076

-

7,076

Investment management fee


(377)

(880)

(1,257)

Administrative expenses

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

4

(936)

190

(746)



________

________

________

Return on ordinary activities after taxation


5,246

69,026

74,272



________

________

________






Return per share (pence)

6

17.97

236.49

254.46



________

________

________

 

 

CONDENSED STATEMENT OF FINANCIAL POSITION (UNAUDITED)

 



As at

As at



31 July
2017

31 January 2017


Notes

£'000

£'000

Non-current assets




Investments at fair value through profit or loss


399,584

410,344



________

________

Current assets




Debtors and prepayments


782

3,940

Cash and short-term deposits


12,156

12,609



________

________



12,938

16,549



________

________





Creditors: amounts falling due within one year




Bank loans


(38,719)

(40,573)

Traded options


(105)

(30)

Other creditors


(943)

(7,189)



________

________



(39,767)

(47,792)



________

________

Net current liabilities


(26,829)

(31,243)



________

________

Net assets


372,755

379,101



________

________





Capital and reserves




Called-up share capital


7,123

7,161

Share premium account


48,467

48,467

Capital redemption reserve


15,437

15,399

Capital reserve

8

289,752

295,709

Revenue reserve


11,976

12,365



________

________

Equity shareholders' funds


372,755

379,101



________

________





Net asset value per share (pence)

9

1,308.26

1,323.45



________

________

 

 



CONDENSED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

 

Six months ended 31 July 2017









Share

Capital





Share

premium

redemption

Capital

Revenue



capital

account

reserve

reserve

reserve

Total


£'000

£'000

£'000

£'000

£'000

£'000

Balance at 31 January 2017

7,161

48,467

15,399

295,709

12,365

379,101

Buyback of Ordinary shares

(38)

-

38

(1,836)

-

(1,836)

Return on ordinary activities after taxation

-

-

-

(4,121)

5,906

1,785

Dividends paid (note 5)

-

-

-

-

(6,295)

(6,295)


_____

_______

________

______

______

______

Balance at 31 July 2017

7,123

48,467

15,437

289,752

11,976

372,755


_____

_______

________

______

______

______








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


_____

_______

________

______

______

______

 

 



CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)

 


Six months ended

Six months ended


31 July 2017

31 July 2016


£'000

£'000

Operating activities



Net return on ordinary activities before finance costs and taxation

3,167

75,489

Adjustments for:



Net losses/(gains) on investments

4,034

(72,343)

Realised losses/(gains) on foreign exchange transactions

744

(645)

(Increase)/decrease in dividend income receivable

(133)

9

Decrease/(increase) in fixed interest income receivable

32

(52)

Increase in other debtors

(131)

(5)

Increase in other creditors

216

38

Tax on overseas income

(902)

(746)

Amortisation of fixed income book cost

15

26


________

________

Net cash flow from operating activities

7,042

1,771




Investing activities



Purchases of investments

(60,016)

(59,656)

Sales of investments

63,724

71,441


________

________

Net cash flow from investing activities

3,708

11,785




Financing activities



Interest paid

(473)

(468)

Equity dividends paid

(6,295)

(5,900)

Buyback of Ordinary shares

(1,836)

(10,666)


________

________

Net cash used in financing activities

(8,604)

(17,034)


________

________

Increase/(decrease) in cash

2,146

(3,478)


________

________

Analysis of changes in cash and cash equivalents during the period



Opening balance

12,609

11,685

Effect of exchange rate fluctuations on cash held

(2,599)

3,588

Increase/(decrease) in cash as above

2,146

(3,478)


________

________

Closing balance

12,156

11,795


________

________

 

 



NOTES:

 

Accounting policies

(a)

Basis of preparation


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




The half-yearly financial statements have been prepared using the same accounting policies applied as the preceding annual financial statements.

 


Six months ended

Six months ended


31 July 2017

31 July 2016

2.

Income

£'000

£'000


Income from overseas listed investments




Dividend income

6,100

5,014


REIT income

302

297

Interest income from investments

372

428


________

________


6,774

5,739



________

________


Other income from investment activity




Traded option premiums

1,138

1,329


Deposit interest

29

8



________

________



1,167

1,337



________

________


Total income

7,941

7,076



________

________

 



 Six months ended

 Six months ended



 31 July 2017

 31 July 2016

3.

Administration expenses

£'000

£'000


Directors' fees

47

40


Secretarial and administration fees

54

53


Promotional activities

106

106


Auditor's remuneration:




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

9

9


Custodian charges

14

11


Registrar's fees

33

31


Professional fees

31

37


Depositary charges

24

20


Other

59

69



________

________



377

376



________

________

 

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 estimated annual corporation tax rate used for the year to 31 January 2018 is a rate of 19.17%.  This is above the current tax rate of 19% because prior to 1 April 2017 the prevailing corporation tax rate was 20%.




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







Revenue

Capital

Total

Revenue

Capital

Total


Taxation

£'000

£'000

£'000

£'000

£'000

£'000


UK corporation tax

168

(168)

-

190

(190)

-


Overseas tax suffered

904

-

904

746

-

746



______

______

______

______

______

______


Total tax charge for the period

1,072

(168)

904

936

(190)

746



______

______

______

______

______

______

 



Six months ended

Six months ended



31 July 2017

31 July 2016

5.

Dividends

£'000

£'000


3rd interim dividend for 2017 - 7.5p (2016 - 7.0p)

2,149

2,111


Final dividend for 2017 - 14.5p (2016 - 13.0p)

4,146

3,789



______

______



6,295

5,900



______

______






The Company pays four dividends per year. The first interim dividend of 7.5p (2017 - 7.0p) for the year ending 31 January 2018 was paid on 4 August 2017 to shareholders on the register at 14 July 2017, with an ex-dividend date of 13 July 2017. A second interim dividend of 7.5p (2017 - 7.0p) for the year ending 31 January 2018, will be paid on 31 October 2017 to shareholders on the register at 13 October 2017. The ex-dividend date is 12 October 2017.

 



Six months ended

Six months ended



31 July 2017

31 July 2016

6.

Return per Ordinary share

£'000

£'000


Based on the following figures:




Revenue return

5,906

5,246


Capital return

(4,121)

69,026



______

______


Total return

1,785

74,272



______

______


Weighted average number of shares in issue

28,582,134

29,187,655



_________

_________







p

p


Revenue return per Ordinary share

20.67

17.97


Capital return per Ordinary share

(14.42)

236.49



______

______


Total return per Ordinary share

6.25

254.46



______

______

 

7.

Transaction costs 


During the six months ended 31 July 2017 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 (losses)/gains on investments in the Condensed Statement of Comprehensive Income. The total costs were as follows:





Six months ended

Six months ended



31 July 2017

31 July 2016



£'000

£'000


Purchases

28

76


Sales

61

86



______

______



89

162



______

______

 

8.

Capital reserve


The capital reserve reflected in the Condensed Statement of Financial Position at 31 July 2017 includes gains of £104,299,000 (31 January 2017 - £132,009,000) 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
2017

31 January 2017


Net assets attributable (£'000)

372,755

379,101


Number of Ordinary shares in issue

28,492,504

28,645,004


Net asset value per Ordinary share (p)

1,308.26

1,323.45

 

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 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

Level 3

Total


As at 31 July 2017

Note

£'000

£'000

£'000

£'000


Financial assets at fair value through profit or loss







Quoted equities

a)

387,740

-

-

387,740


Quoted bonds

b)

-

11,844

-

11,844




______

______

______

______


Total


387,740

11,844

-

399,584




______

______

______

______


Financial liabilities at fair value through profit or loss






Derivatives

c)

-

(105)

-

(105)




______

______

______

______


Net fair value


387,740

11,739

-

399,479




______

______

______

______











Level 1

Level 2

Level 3

Total


As at 31 January 2017

Note

£'000

£'000

£'000

£'000


Financial assets at fair value through profit or loss







Quoted equities

a)

396,609

-

-

396,609


Quoted bonds

b)

-

13,735

-

13,735




______

______

______

______


Total


396,609

13,735

-

410,344




______

______

______

______









Financial liabilities at fair value through profit or loss






Derivatives

c)

-

(30)

-

(30)




______

______

______

______


Net fair value


396,609

13,705

-

410,314




______

______

______

______









a)

Quoted equities



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


c)

Derivatives



The Company's investment in over the counter options at 31 July 2017 and 31 January 2017 have been fair valued using a marked-to-market model and has been classed as 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 £1,472,000 (31 July 2016 - £1,257,000) of investment management fees were payable to the Manager, with a balance of £752,000 (31 July 2016 - £680,000) being due to AFML at the period end.




The secretarial fee of £108,000 per annum is chargeable 100% to revenue and is payable monthly in arrears. During the period £54,000 (31 July 2016 - £53,000) of secretarial fees were payable to the Manager, with a balance of £18,000 (31 July 2016 - £9,000) 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 2016 - £106,000) of fees were payable, with a balance of £18,000 (31 July 2016 - £18,000) 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 33,000 Ordinary shares have been bought back and cancelled by the Company subsequent to the reporting period end for a total consideration of £387,552. Following the buyback of shares there were 28,459,504 Ordinary shares in issue.

 

14.

Half-Yearly Financial Report


The financial information in this Report does not comprise statutory accounts within the meaning of Section 434 - 436 of the Companies Act 2006. The financial information for the year ended 31 January 2017 has been extracted from published accounts that have been delivered to the Registrar of Companies and on which the report of the Company's auditor was unqualified and contained no statement under Section 498 (2), (3) or (4) of the Companies Act 2006. The condensed interim financial statements have been prepared using the same accounting policies as contained within the preceding annual financial statements.




The financial information for the six months ended 31 July 2017 and 31 July 2016 has not been audited or reviewed by the Company's auditor.

 

15.

This Half-Yearly Financial Report was approved by the Board on 26 September 2017.

 

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 2017 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

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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Half-year Report - RNS