Half Yearly Report

RNS Number : 6382S

Edinburgh US Tracker Trust plc

14 September 2010

 



FINAL

                                                                                                                    14 September 2010

EDINBURGH US TRACKER TRUST PLC

Edinburgh US Tracker Trust aims to achieve long term growth of capital and income by tracking the performance of the S&P Composite Index.

Edinburgh US Tracker Trust is the only UK investment trust with the objective of tracking the performance of the S&P Composite Index.

HALF YEARLY FINANCIAL REPORT

FOR THE SIX MONTHS TO 31 JULY 2010

•     Company continues to track the performance of the S&P Composite Index

•     Interim dividend of 4.2p per share for the year ended 31 January 2011 (2010 - 6.2p)

- END -

For further information, please contact:-

David McCraw

Aberdeen Asset Management PLC                                                           0131 528 4000

INTERIM MANAGEMENT REPORT

US equities started the year strongly in response to the recovery in the US economy and better than expected corporate profits. The equity markets reached a short-term peak in April but subsequent concerns over the impact of the sovereign debt issues in Europe and signs of the recovery in the US economy beginning to wane led to a pull back in equity markets. Over the period the main US equity markets recorded modest gains although sterling based investor benefited from strength in the US dollar.

In the six months ended 31 July 2010, the net asset value per share (excluding undistributed revenue for the period) rose by 4.8% to 584.94p (NAV) while the Index rose by 5.0% (in sterling terms). The small shortfall in the NAV performance relative to the index is attributable to the accounting treatment of the additional dividend component of last year's dividends (amounting to 2.0p per share) which was paid from accumulated revenue reserves.   

The Company's share price rose by 3.5% over the six month period to 31 July 2010 to 556.00p, representing a discount of 4.9% to the NAV. At 31 January 2010, the shares were trading at a discount to NAV of 3.8%. In the six months ended 31 July 2010, 1,352,900 shares were bought back for cancellation at a cost of £7.8 million and subsequent to the period end a  further 1,264,790 shares have been purchased.

The revenue return per share rose by 4.5% from 4.20p to 4.39p. The Directors have declared an interim dividend of 4.20p per share (2010: 6.20p) for the year to 31 January 2011 payable on 22 October 2010 to shareholders on the register on 24 September 2010.  The interim dividend for the year ended 31 January 2010 included an additional 2.0p per share from accumulated revenue reserves.  This one-off supplement recognised the non-recurring benefit to revenue reserves arising from the tender offer and was made at a time when income from equity investments had been under pressure.

The level of transactions within the portfolio during the period resulted from changes to the constituents of the Index, which arose mainly from takeover activity, and the need to raise cash from the portfolio to fund share buybacks. The new holdings included Discovery Communications, Helmerich & Payne, Oneok, Cerner, CarMax and ACE. The total value of purchases amounted to £3.7 million while sales totalled £11.6 million.

Events during the period

At the Company's Annual General Meeting on 17 May 2010, all resolutions were passed. A final dividend of 3.80p was paid to shareholders on 21 May 2010.  

Risks and Uncertainties

The Board has identified a number of key risks that affect its business. The principal risks are as follows:

-     Performance risk - the performance of the portfolio relative to the benchmark (S&P 500 Composite Index) is monitored closely by the Board. The NAV performance relative to the Index and the underlying stock weightings in the portfolio against the Index weightings are monitored closely to eliminate any risk of a significant tracking error developing.

-     Market risk - the Company's objective is to track the S&P 500 Composite Index, and the valuation of its portfolio will reflect movements in this Index and in the sterling/dollar exchange rate. Additionally, the Company's revenue will reflect the dividends generated by the constituents of the Index when translated into sterling.

-     Discount volatility - the Company's shares can trade at a discount to its underlying net asset value. The Company operates a discount management policy in the form of an active share buyback programme. The timing of any purchases is decided by the Board, in consultation with management, and is at its absolute discretion.

-     Regulatory risk - the Company operates in a complex regulatory environment and faces a number of regulatory risks. Breaches of regulations, such as Sections 1158 of the Corporation Tax Act 2010, the UK Listing Rules and the Companies Act, could lead to a number of detrimental outcomes and reputational damage. The Audit Committee monitors the Company's compliance with regulations.

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 within the half-yearly financial report has been prepared in accordance with the Accounting Standards Board's Statement "Half Yearly Financial Reports";

-     the Interim Management Report includes a fair review of the information required by rules 4.2.7R and 4.2.8R of the FSA's Disclosure and Transparency Rules. 

For Edinburgh US Tracker Trust plc

James Ferguson

Chairman

INCOME STATEMENT

		Six months ended 31 July 2010
		(unaudited)
		Revenue	Capital	Total
		£'000	£'000	£'000
Gains on investments		-	10,333	10,333
Foreign exchange gains/(losses) (note 9)		-	57	57
Income  (note 2)		2,305	-	2,305
Investment management fee		(218)	-	(218)
Administrative expenses		(198)	-	(198)
		__________	__________	__________
Net return before finance costs and taxation		1,889	10,390	12,279
Finance costs		-	-	-
		__________	__________	__________
Return on ordinary activities before taxation		1,889	10,390	12,279
Taxation (note 3)		(336)	-	(336)
		__________	__________	__________
Return on ordinary activities after taxation		1,553	10,390	11,943
		__________	__________	__________
Return per share (pence)  (note 5)		4.39	29.33	33.72
		__________	__________	__________

	Six months ended 31 July 2009
	(unaudited)
	Revenue	Capital	Total
	£'000	£'000	£'000
Gains on investments	-	7,090	7,090
Foreign exchange losses (note 9)	-	(365)	(365)
Income (note 2)	2,365	-	2,365
Investment management fee	(187)	-	(187)
Administrative expenses	(186)	-	(186)
	__________	__________	__________
Net return before finance costs and taxation	1,992	6,725	8,717
Finance costs	(1)	-	(1)
	__________	__________	__________
Return on ordinary activities before taxation	1,991	6,725	8,716
Taxation	(412)	-	(412)
	__________	__________	__________
Return on ordinary activities after taxation	1,579	6,725	8,304
	__________	__________	__________
Return per share (pence)  (note 5)	4.20	17.90	22.10
	__________	__________	__________

The total column of this statement represents the profit and loss account of the Company. 

A Statement of Total Recognised Gains and Losses has not been prepared as all gains and losses are recognised in the Income Statement. 

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

No operations were acquired or discontinued in the period.

Interim Dividend

An interim dividend of 4.20p per share (£1,421,000) has been declared for the year to 31 January 2011 and is payable on 22 October 2010 (2010 - 6.20p).

INCOME STATEMENT

	Year ended 31 January 2009
	(audited)
	Revenue	Capital	Total
	£'000	£'000	£'000
Gains on investments	-	30,214	30,214
Foreign exchange gains/(losses) (note 9)	-	(284)	(284)
Income  (note 2)	4,433	-	4,433
Investment management fee	(386)	-	(386)
Administrative expenses	(370)	-	(370)
	__________	__________	__________
Net return before finance costs and taxation	3,677	29,930	33,607
Finance costs	(1)	-	(1)
	__________	__________	__________
Return on ordinary activities before taxation	3,676	29,930	33,606
Taxation (note 3)	(687)	-	(687)
	__________	__________	__________
Return on ordinary activities after taxation	2,989	29,930	32,919
	__________	__________	__________
Return per share (pence)  (note 5)	8.02	80.28	88.30
	__________	__________	__________

BALANCE SHEET

	As at	As at	As at
	31 July 2010	31 July 2009	31 January 2010
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Non-current assets
Investments at fair value through profit or loss	205,074	186,023	202,656
Current assets
Debtors and prepayments	342	239	206
Cash and short term deposits	1,654	1,539	1,729
	__________	__________	__________
	1,996	1,778	1,935
	__________	__________	__________
Creditors: amounts falling due within one year	(183)	(356)	(493)
	__________	__________	__________
Net current assets	1,813	1,422	1,442
	__________	__________	__________
Total assets less current liabilities	206,887	187,445	204,098
Provisions for liabilities and charges	-	-	-
	__________	__________	__________
Net assets	206,887	187,445	204,098
	__________	__________	__________
Capital and reserves
Called-up share capital	8,776	9,387	9,114
Share premium account	32,643	32,643	32,643
Capital redemption reserve	13,319	12,708	12,981
Capital reserve	148,924	128,798	146,346
Revenue reserve	3,225	3,909	3,014
	__________	__________	__________
Equity shareholders' funds	206,887	187,445	204,098
	__________	__________	__________
Net asset value per share (pence)	589.36	499.23	559.84
	__________	__________	__________
Net asset value per share (excluding undistributed revenue for the period) (pence)	584.94	495.02	557.96
	__________	__________	__________

Reconciliation of Movements in Shareholders' Funds

Six months ended 31 July 2010 (unaudited)
		Share	Capital
	Share	premium	redemption	Capital	Revenue
	capital	account	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 January 2010	9,114	32,643	12,981	146,346	3,014	204,098
Return on ordinary activities after taxation	-	-	-	10,390	1,553	11,943
Dividends paid (see note 4)	-	-	-	-	(1,342	(1,342)
Purchase of own shares for cancellation	(338)	-	338	(7,812)	-	(7,812)
	______	________	_________	______	______	______
Balance at 31 July 2010	8,776	32,643	13,319	148,924	3,225	206,887
	______	________	_________	______	______	______

Six months ended 31 July 2009 (unaudited)
		Share	Capital
	Share	premium	redemption	Capital	Revenue
	capital	account	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 January 2009	9,400	32,643	12,695	122,320	3,984	181,042
Return on ordinary activities after taxation	-	-	-	6,725	1,579	8,304
Dividends paid (see note 4)	-	-	-	-	(1,654)	(1,654)
Purchase of own shares for cancellation	(13)	-	13	(247)	-	(247)
	______	________	_________	______	______	______
Balance at 31 July 2009	9,387	32,643	12,708	128,798	3,909	187,445
	______	________	_________	______	______	______

Year ended 31 January 2010 (audited)		Share	Capital
	Share	premium	redemption	Capital	Revenue
	capital	account	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 January 2009	9,400	32,643	12,695	122,320	3,984	181,042
Return on ordinary activities after taxation	-	-	-	29,930	2,989	32,919
Dividends paid (see note 4)	-	-	-	-	(3,959)	(3,959)
Purchase of own shares for cancellation	(286)	-	286	(5,904)	-	(5,904)
	______	________	_________	______	______	______
Balance at 31 January 2010	9,114	32,643	12,981	122,320	3,014	204,098
	______	________	_________	______	______	______

CASHFLOW STATEMENT

	Six months ended	Six months ended	Year ended
	31 July 2010	31 July 2009	31 January 2010
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Net return on ordinary activities before finance costs and taxation	12,279	8,717	33,607
Adjustment for:
Gains on investments	(10,333)	(7,090)	(30,214)
Foreign exchange (gains)/losses	(57)	365	284
(Increase)/decrease in accrued income	(152)	62	81
(Increase)/decrease in other debtors	(5)	2	25
(Decrease)/increase in other creditors	(9)	(5)	28
	__________	__________	__________
Net cash inflow from operating activities	1,723	2,051	3,811
Servicing of finance
Interest paid	-	(1)	(1)
Taxation
UK corporation tax paid	(37)	(252)	(290)
Overseas withholding tax paid	(313)	(354)	(660)
	__________	__________	__________
Net tax paid	(350)	(606)	(950)
Financial investment
Purchases of investments	(3,969)	(3,695)	(8,666)
Sales of investments	11,618	3,228	14,859
	__________	__________	__________
Net cash inflow/(outflow) from financial investment	7,649	(467)	6,193
Equity dividends paid	(1,342)	(1,654)	(3,964)
	__________	__________	__________
Net cash inflow/(outflow) before financing	7,680	(677)	5,089
Financing
Buy back of Ordinary shares (including expenses)	(7,812)	(247)	(5,904)
	__________	__________	__________
Net cash outflow from financing	(7,812)	(247)	(5,904)
	__________	__________	__________
Decrease in cash	(132)	(924)	(815)
	__________	__________	__________
Analysis of changes in cash during the period
Opening net funds	1,729	2,828	2,828
Decrease in cash as above	(132)	(924)	(815)
Foreign exchange movements	57	(365)	(284)
	__________	__________	__________
Closing net funds	1,654	1,539	1,729
	__________	__________	__________

NOTES:

1.	Accounting policies
	(a)	Basis of accounting
		The accounts have been prepared in accordance with applicable UK Accounting Standards, with pronouncements on half yearly reporting issued by the Accounting Standards Board and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued in January 2009. They have also been prepared on the assumption that approval as an investment trust will continue to be granted. The financial statements have been prepared on a going concern basis.
		The financial statements and the net asset value per share figures have been prepared in accordance with UK Generally Accepted Accounting Practice (UK GAAP).
		The half yearly financial statements have been prepared using the same accounting policies applied for the year ended 31 January 2010.
	(b)	Dividends payable
		Interim and final dividends are recognised in the period in which they are paid.

		Six months ended	Six months ended	Year ended
		31 July 2010	31 July 2009	31 January 2010
2.	Income	£'000	£'000	£'000
	Income from investments
	Overseas listed - unfranked	2,179	2,365	4,404
	Stock Dividends	126	-	29
		__________	__________	__________
		2,305	2,365	4,433
		__________	__________	__________
	Other income
	Deposit interest	-	-	-
		__________	__________	__________
	Total income	2,305	2,365	4,433
		__________	__________	__________

3.	Taxation
	The charge for the period represents withholding tax suffered on overseas dividend income.

		Six months ended	Six months ended	Year ended
		31 July 2010	31 July 2009	31 January 2010
4.	Dividends	£'000	£'000	£'000
	Interim dividend	-	-	2,305
	Final dividend	1,344	1,654	1,654
	Unclaimed dividends written back	(2)	-	-
		__________	__________	__________
		1,342	1,654	3,959
		__________	__________	__________
	A final dividend of 3.80p for the year ended 31 January 2010 (2009 - 4.40p) was paid to shareholders on 21 May 2010.
	An interim dividend of 4.20p (2010 - 6.20p) for the year ending 31 January 2011 will be paid on 22 October 2010 to shareholders on the register at 24 September 2010. The ex-dividend date is 22 September 2010. In accordance with UK GAAP this is not recognised in these financial statements.

		Six months ended	Six months ended	Year ended
		31 July 2010	31 July 2009	31 January 2010
5.	Return per Ordinary share	£'000	£'000	£'000
	Based on the following figures:
	Revenue return	1,553	1,579	2,989
	Capital return	10,390	6,725	29,930
		__________	__________	__________
	Total return	11,943	8,304	32,919
		__________	__________	__________
	Weighted average number of shares in issue	35,413,023	37,579,719	37,279,331
		__________	__________	__________
		p	p	p
	Revenue return per Ordinary share	4.39	4.20	8.02
	Capital return per Ordinary share	29.33	17.90	80.28
		__________	__________	__________
	Total return per Ordinary share	33.72	22.10	88.30
		__________	__________	__________

6.	Transaction costs
	During the six months ended 31 July 2010 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 on investments in the Income Statement. The total costs were as follows:
		Six months ended	Six months ended	Year ended
		31 July 2010	31 July 2009	31 January 2010
		£'000	£'000	£'000
	Purchases	13	3	15
	Sales	3	2	6
		__________	__________	__________
		16	5	21
		__________	__________	__________

7.	Capital reserve
	The capital reserve reflected in the Balance Sheet at 31 July 2010 includes gains of £40,299,000 (31 July 2009 - £12,282,000; 31 January 2010 - £33,482,000) which relate to the revaluation of investments held at the reporting date.

		As at	As at	As at
8.	Net asset value per Ordinary share	31 July 2010	31 July 2009	31 January 2010
	Net assets attributable	£206,887,000	£187,445,000	£204,098,000
	Number of Ordinary shares in issue	35,103,608	37,546,979	36,456,508
	Net asset value per Ordinary share	589.36p	499.23p	559.84p

		At 1 Feb 2010	Cashflow	Exchange movements	At 31 July 2010
9.	Analysis of changes in net funds	£'000	£'000	£'000	£'000
	Cash and short term deposits	1,729	(132)	57	1,654

10.	Called-up share capital
	During the period to 31 July 2010, 1,352,900 Ordinary shares of 25p each were bought back for cancellation at a total cost of £7,812,000, including expenses. Subsequent to the period end, a further 1,264,790 Ordinary shares were bought back at a total cost of £7,007,000, including expenses, leaving 33,838,818 Ordinary shares in issue at the date of this report.

11.	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 2010 and 31 July 2009 has not been audited.
	The information for the year ended 31 January 2010 has been extracted from the latest published audited financial statements which have been filed with the Registrar of Companies. The report of the auditors on those accounts contained no qualification or statement under Section 498 (2),(3) or (4) of the Companies Act 2006.

12.	This Half-Yearly Financial Report was approved by the Board on 14 September 2010.

    13.    The half yearly financial report has not been reviewed by the Company's auditors.

    14.   The half yearly financial report is available on the Company's website, www.edinburghustracker.co.uk.  The Interim Report will be posted to shareholders in early October 2010 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 Edinburgh US Tracker Trust plc

Aberdeen Asset Management PLC, Secretary

END

 

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