Half Yearly Report

RNS Number : 2339O

North American Income Trust (The)

18 September 2013

 



18 September 2013

THE NORTH AMERICAN INCOME TRUST PLC

HALF YEARLY FINANCIAL REPORT

FOR THE SIX MONTHS TO 31 JULY 2013

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

Portfolio

During the six-month period ended 31 July 2013, the Company's net asset value per share rose by 17.3% on a total return basis, whilst the S&P 500 Index produced a total return of 18.9%, both in sterling terms. Although a healthy absolute return, performance compared to the Index was diluted in part by the lower returns of corporate bonds and the weaker performance of higher yielding stocks in the second half of the period. The Company's share price rose by 19.5% from 738.0p to 882.0p. The Company ended the reporting period with its share price in line with its net asset value, compared with a 4.0% discount to net asset value at the end of the previous fiscal year on 31 January 2013. No shares were bought back in the period.

As of 31 July 2013, the portfolio consisted of 41 equity holdings and 17 corporate bonds; the latter represented approximately 9.6% of total assets. Further details of the portfolio are shown below.

Issue of New Shares

At the Annual General Meeting held in May shareholders renewed the annual authority to issue up to 10% of the Company's issued share capital for cash at a premium to the prevailing net asset value at the time of each issue. During the six month period the Company issued 1,385,000 new Ordinary shares raising an additional £12.3 million of new capital and representing 4.4% of the Ordinary shares in issue at the start of the year. To avoid diluting the asset value of existing shareholders new shares are only issued at a premium to net asset value.

Dividend

Compared to the six-month period ended 31 July 2012, the revenue return per Ordinary share has risen by 149% from 6.66p to 16.57p. This is due to the new focus on higher-yielding stocks, a small number of bonds, dividend increases from our holdings and premia received from traded options (see note 2 of the accounts).

The Directors have recommended a second quarterly dividend of 5.50p per share, which will take the total dividends for the first half of the fiscal year to 11.00p (2012 - 6.5p). The second quarterly dividend is payable on 1 November 2013 to shareholders on the register on 4 October 2013.  Following the move to quarterly dividend payments, pay dates are in August, November, February and May each year.

Gearing

The Company has a three year £30 million revolving bank facility in place until October 2015.  The facility is repayable with no penalty, providing finance at a margin of 1.5% over Libor.  At the period end $24 million (£15.8 million) of the facility was drawn down.   

Market Review

North American equity markets performed strongly in the first three months of the reporting period until encountering a period of volatility in the late spring of 2013, before regaining strength in June and July. The broader-market S&P 500 Index rose 18.9% (in sterling terms) for the period led by strong gains in the healthcare, consumer discretionary and financials sectors.  Most surprising was that materials companies were the weakest performers returning 9.5%. This is indicative of lowered growth expectations, primarily in Asia, and specifically the changing priorities of investment and capital expenditures in China.

The defining moment of the period - if not the last 12 months - would seem to have been US Federal Reserve Chairman Ben Bernanke's decision to put "policy normalisation" at the forefront of investors' minds. Conscious of retaining flexibility whilst maintaining clear intent, Bernanke has done little to discourage the notion that "tapering" (reducing bond purchases) will commence in September or shortly thereafter. Ten-year Treasury yields bottomed early in May at 1.6% and rose by over 100 basis points (bps) to finish July at 2.6%. This level of yield retracement is consistent with academic literature that suggests that QE lowered bond yields by 100-120 bps. Against this backdrop, our Manager has reduced holdings in consumer staples, pharmaceutical and REIT companies and increased holdings in industrials and materials companies. In addition, holdings in investment grade bonds and high yield bonds were reduced as was the interest rate sensitivity of those that remained.  

Marketing

The Board continues to market the company through the Investment Manager's initiative which provides a series of savings schemes through which savers can invest in the Company in a low cost and convenient manner.

Up-to-date information about the company, including monthly factsheets, interviews with the Manager and the latest net asset value and price of the Ordinary shares may be found on the Company's website at www.northamericanincome.co.uk

Annual General Meeting ("AGM")

The Company's AGM was held in Edinburgh on 22 May 2013 at which all resolutions were passed by shareholders.

Alternative Investment Fund Managers (AIFM) Directive

Although the legislation for the above Directive came into force in July 2013, there is a 12 month transitional period meaning that investment companies will have until July 2014 to complete the process of compliance and authorisation with the regulator.  The Board continues to review the impact, including costs, of the Directive upon the Company but has agreed, in principle, to appoint a subsidiary of Aberdeen Asset Management PLC as the Company's AIFM. 

Outlook

Uncertainties to the corporate outlook will gather pace in September when Congress will again need to raise the federal debt ceiling. Although this year's budget deficit has materially narrowed in the last six months, the perennial problem of how best to slow the growth of total government debt remains as unclear as ever. Aside from the rhetoric of hope from all sides, we seem to be no closer to a longer-term solution. An unfortunate consequence of the improving economy may be that politicians lose their sense of urgency and desire to act. For this reason, and despite many of the economic and corporate improvements which we have witnessed since 2008, fundamental economic repair remains work in progress.

Most importantly for investors in the Company, US corporate performance remains healthy and North American companies are generating record levels of profitability. The more than doubling of the S&P 500 Index since the lows of March 2009 has been well founded. Looking across the Company's investments, there is a belief that CEOs and board directors are showing admirable capital discipline and are balancing investors' desire to see excess capital returned to shareholders with investment in capital projects. As both domestic and international uncertainty wanes, we feel our holdings are likely to increase their capital expenditures. Conversations with certain companies suggest that an increase in industrial and manufacturing-related spending is in the early stages and that a long-awaited upturn in enterprise information technology spending is edging closer. Despite recent increases, the outlook for sustainable dividend increases across our equity holdings remains promising. Earnings growth potential and growing cash flows lie at the heart of this assessment.  This may well coincide with the emergence of growing confidence in financial markets.

James Ferguson

Chairman

17 September 2013

Risks and Uncertainties

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

Ordinary shares

The market price and the realisable value of the Ordinary shares, as well as being affected by their underlying net asset value, also take into account supply and demand for the Ordinary shares, market conditions and general investor sentiment. As such, the market value of the Ordinary shares may fluctuate and vary considerably from the net asset value of the Ordinary shares and investors may not be able to realise the value of their original investment. There is no certainty that the Board's discount management policy will achieve its objective.

Dividends

The Company will only pay dividends on the Ordinary shares to the extent that it has profits (current year or brought forward) available for that purpose. The ability of the Company to pay any dividends in respect of the Ordinary shares and any future dividend growth will depend primarily on the level of income received from its investments. The Company's income is derived primarily from equity dividends and corporate bond interest income and the amounts received in any year is liable to fluctuation. Accordingly, the amount of the dividends paid to shareholders may also fluctuate.

Borrowings

Whilst the use of borrowings should enhance the total return on the Ordinary shares where the return on the Company's underlying assets is rising and exceeds the cost of borrowing, it will have the opposite effect where the underlying return is less than the cost of borrowing, further reducing the total return on the Ordinary shares.

Market Risks

The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices. Market risk comprises three elements, interest rate risk, currency risk and equity price risk. Further details of these risks are disclosed in note 17 to the financial statements for the year ended 31 January 2013.

Regulatory Risk

The Company operates in a complex regulatory environment and faces a number of regulatory risks. Breaches of regulations, such as the tax legislation for investment trust companies, 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.

Taxation

Any change in the Company's tax status or in taxation legislation (including the tax treatment of dividends or other investment income received by the Company) could affect the value of the investments held by the Company, affect the Company's ability to provide returns to shareholders or alter the post-tax returns to shareholders.

Going Concern

The Company's assets primarily consist of a diverse portfolio of listed securities in most circumstances, are realisable within a short timescale. The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

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 interim financial statements has been prepared in accordance with Statement Half Yearly Financial Reports issued by the UK Accounting Standards Board; and

· the Interim Board Report (constituting the interim management statement) includes a fair review of the information required by rules 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 for the remaining six months of the financial year) and 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 so do).

The Half Yearly Financial Report for the six months to 31 July 2013 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

17 September 2013

FINANCIAL HIGHLIGHTS

	31 July 2013	31 January 2013	% change
Net asset value per Ordinary share	882.4p	769.0p	+14.7
Share price per Ordinary share (mid)	882.0p	738.0p	+19.5
Premium/(discount) to net asset value	+0.0%	(4.0%)
Revenue return per Ordinary share	16.6p	6.7p	+147.8
Interim dividends	11.00p{A}	6.50p{B}	+69.2
{A}    Includes a first interim dividend of 5.50p paid on 2 August 2013 and a second interim dividend of 5.50p payable on 1 November 2013.
{B}     Interim dividend for the six months ended 31 July 2012.

PERFORMANCE - TOTAL RETURN

	Six months ended	Year ended
	31 July 2013	31 January 2013
Net asset value per Ordinary share	+17.3%	+11.6%
Share price per Ordinary share	+22.2%	+13.6%
S&P 500 Index (in sterling terms)	+18.9%	+16.2%

INVESTMENT PORTFOLIO - EQUITIES

As at 31 July 2013

			Total
		Valuation	portfolio
Company	Industry classification	£'000	%
Microsoft	Systems Software	10,849	3.7
Pepsico	Beverages	10,219	3.5
ConocoPhillips	Oil, Gas & Consumable Fuels	9,626	3.3
Republic Services	Commercial Services & Supplies	9,506	3.3
Paychex	IT Services	8,978	3.1
Johnson & Johnson	Pharmaceuticals	8,634	3.0
Chevron	Oil, Gas & Consumable Fuels	8,554	3.0
Nucor	Metals & Mining	8,477	2.9
Baxter International	Healthcare Equipment & Supplies	8,439	2.9
Philip Morris	Tobacco	8,371	2.9
Ten largest equity investments		91,653	31.6
CMS Energy	Multi-Utilities	8,302	2.9
Royal Bank of Canada	Commercial Banks	8,217	2.8
Kraft Foods	Food Products	8,131	2.8
Intel	Semiconductors & Semiconductor Equipment	7,749	2.7
Pfizer	Pharmaceuticals	7,712	2.7
Lockheed Martin	Aerospace & Defense	7,680	2.6
Cisco Systems	Telecommunications Equipment	7,403	2.6
Verizon Communications	Diversified Telecommunication Services	7,343	2.5
Telus	Diversified Telecommunication Services	7,229	2.5
Aflac	Insurance	6,829	2.3
Twenty largest equity investments		168,248	58.0
Dow Chemical	Chemicals	6,398	2.2
TransCanada	Oil, Gas & Consumable Fuels	6,191	2.1
Digital Realty Trust	Real Estate Investment Trusts	5,817	2.0
Staples	Specialty Retail	5,803	2.0
Emerson Electric	Electrical Equipment	5,667	2.0
Colgate-Palmolive	Household Products	5,356	1.8
Kellogg	Food Products	5,299	1.8
CME Group	Investment Services	5,130	1.8
Molson Coors Brewing	Beverages	5,119	1.8
Sysco	Food & Staples Retailing	5,069	1.7
Thirty largest equity investments		224,097	77.2
Mattel	Leisure Equipment & Products	4,879	1.7
Potash Corp Of Saskatchewan	Chemicals	4,782	1.6
Blackrock	Capital Markets	4,352	1.5
Exxon Mobil	Oil, Gas & Consumable Fuels	4,267	1.5
Praxair	Chemicals	4,209	1.4
Healthcare Realty Trust	Real Estate Investment Trusts	3,373	1.2
Genuine Parts	Distributors	3,245	1.1
Southern Company	Electric Utilities	2,895	1.0
Freeport-McMoRan Copper & Gold	Metals & Mining	2,776	1.0
Procter & Gamble	Household Products	2,641	0.9
Total equity investments		261,516	90.1

INVESTMENT PORTFOLIO - FIXED INTEREST

As at 31 July 2013

			Total
		Valuation	portfolio
Company	Industry classification	£'000	%
General Electric Capital 7.125% 15/12/49 Perp Pref	Diversified Financial Services	2,620	0.9
HSBC Finance 6.676% 15/01/21	Consumer Finance	2,614	0.9
Qwest Corp 7.25% 15/10/35	Telephone Communications	2,503	0.9
First Data 7.375% 15/06/19	IT Services	2,418	0.8
Seagate HDD Cayman 7% 01/11/21	Computer & Office Equipment	2,223	0.8
Blackstone Holdings Finance 5.875% 15/03/21	Capital Markets	2,182	0.7
Bombardier 7.75% 15/03/20	Aerospace & Defense	1,934	0.7
Windstream 7.75% 01/10/21	Diversified Telecommunication Services	1,835	0.6
Cincinnati Bell 8.375% 15/10/20	Diversified Telecommunication Services	1,757	0.6
International Lease Finance Corp 6.25% 15/05/19	Diversified Financial Services	1,678	0.6
Ten largest fixed interest investments		21,764	7.5
Hilcorp Energy 8% 15/02/20	Oil, Gas & Consumable Fuels	1,652	0.6
Alpha Natural Resources 6.25% 01/06/21	Oil, Gas & Consumable Fuels	1,441	0.5
Taseko Mines 7.75% 15/04/19	Metals & Mining	1,138	0.4
Post Holdings 7.375% 15/02/22	Food Products	817	0.3
Tenneco 6.875% 15/12/20	Auto Components	716	0.2
Genon Energy 9.875% 15/10/20	Independent Power Producers & Energy Traders	596	0.2
Entergy Louisiana 6.3% 01/09/35	Electric Utilities	560	0.2
Total fixed interest investments		28,684	9.9
Total investments		290,200	100.00

GEOGRAPHICAL ANALYSIS

As at 31 July 2013

	Equities	Bonds	Total
Country	%	%	%
Canada	9.0	1.1	10.1
USA	81.1	8.8	89.9
	________	________	________
	90.1	9.9	100.0
	________	________	________

INCOME STATEMENT

	Six months ended 31 July 2013
	(unaudited)
	Revenue	Capital	Total
	£'000	£'000	£'000
Gains on investments	-	35,193	35,193
Net currency losses	-	(159)	(159)
Income (note 2)	6,926	-	6,926
Investment management fee	(331)	(772)	(1,103)
Administrative expenses (note 3)	(321)	-	(321)
	________	________	________
Net return before finance costs and taxation	6,274	34,262	40,536
Finance costs	(47)	(110)	(157)
	________	________	________
Return on ordinary activities before taxation	6,227	34,152	40,379
Taxation (note 4)	(941)	303	(638)
	________	________	________
Return on ordinary activities after taxation	5,286	34,455	39,741
	________	________	________
Return per share (pence) (note 6)	16.57	108.02	124.59
	________	________	________
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.

INCOME STATEMENT (cont'd)

	Six months ended 31 July 2012
	(unaudited)
	Revenue	Capital	Total
	£'000	£'000	£'000
Gains on investments	-	11,964	11,964
Net currency losses	-	(58)	(58)
Income (note 2)	3,080	-	3,080
Investment management fee	(232)	(190)	(422)
Administrative expenses (note 3)	(354)	(254)	(608)
	________	________	________
Net return before finance costs and taxation	2,494	11,462	13,956
Finance costs	-	-	-
	________	________	________
Return on ordinary activities before taxation	2,494	11,462	13,956
Taxation (note 4)	(399)	-	(399)
	________	________	________
Return on ordinary activities after taxation	2,095	11,462	13,557
	________	________	________
Return per share (pence) (note 6)	6.66	36.41	43.07
	________	________	________

INCOME STATEMENT (cont'd)

	Year ended 31 January 2013
	(audited)
	Revenue	Capital	Total
	£'000	£'000	£'000
Gains on investments	-	20,480	20,480
Net currency losses	-	(171)	(171)
Income (note 2)	8,338	-	8,338
Investment management fee	(515)	(851)	(1,366)
Administrative expenses (note 3)	(605)	(254)	(859)
	________	________	________
Net return before finance costs and taxation	7,218	19,204	26,422
Finance costs	(32)	(74)	(106)
	________	________	________
Return on ordinary activities before taxation	7,186	19,130	26,316
Taxation (note 4)	(978)	-	(978)
	________	________	________
Return on ordinary activities after taxation	6,208	19,130	25,338
	________	________	________
Return per share (pence) (note 6)	19.72	60.77	80.49
	________	________	________

BALANCE SHEET

		As at	As at	As at
		31 July 2013	31 July 2012	31 January 2013
		(unaudited)	(unaudited)	(audited)
	Notes	£'000	£'000	£'000
Non-current assets
Investments at fair value through profit or loss		290,200	228,308	248,001
		________	________	________
Current assets
Debtors and prepayments		2,849	2,131	843
Cash and short term deposits		12,659	4,175	9,238
		________	________	________
		15,508	6,306	10,081
		________	________	________
Creditors: amounts falling due within one year
Bank loan		(15,831)	-	(15,138)
Other payables		(737)	(2,279)	(875)
		________	________	________
		(16,568)	(2,279)	(16,013)
		________	________	________
Net current (liabilities)/assets		(1,060)	4,027	(5,932)
		________	________	________
Net assets		289,140	232,335	242,069
		________	________	________
Capital and reserves
Called-up share capital		8,192	7,870	7,870
Share premium account		43,736	32,643	32,643
Capital redemption reserve		14,225	14,225	14,225
Capital reserve	8	215,899	173,776	181,444
Revenue reserve		7,088	3,821	5,887
		________	________	________
Equity shareholders' funds		289,140	232,335	242,069
		________
Net asset value per share (pence)	9	882.37	738.07	769.00
		________	________	________

Reconciliation of Movements in Shareholders' Funds

Six months ended 31 July 2013 (unaudited)

		Share	Capital
	Share	premium	redemption	Capital	Revenue
	capital	account	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 January 2013	7,870	32,643	14,225	181,444	5,887	242,069
Return on ordinary activities after taxation	-	-	-	34,455	5,286	39,741
Issue of Ordinary shares	322	11,093	-	-	-	11,415
Dividends paid (note 5)	-	-	-	-	(4,085)	(4,085)
	_____	_______	_________	______	______	______
Balance at 31 July 2013	8,192	43,736	14,225	215,899	7,088	289,140
	_____	_______	_________	______	______	______
Six months ended 31 July 2012 (unaudited)
		Share	Capital
	Share	premium	redemption	Capital	Revenue
	capital	account	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 January 2012	7,870	32,643	14,225	162,314	3,357	220,409
Return on ordinary activities after taxation	-	-	-	11,462	2,095	13,557
Dividends paid (note 5)	-	-	-	-	(1,631)	(1,631)
	_____	_______	_________	______	______	______
Balance at 31 July 2012	7,870	32,643	14,225	173,776	3,821	232,335
	_____	_______	_________	______	______	______
Year ended 31 January 2013 (audited)
		Share	Capital
	Share	premium	redemption	Capital	Revenue
	capital	account	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 January 2012	7,870	32,643	14,225	162,314	3,357	220,409
Return on ordinary activities after taxation	-	-	-	19,130	6,208	25,338
Dividends paid (note 5)	-	-	-	-	(3,678)	(3,678)
	_____	_______	_________	______	______	______
Balance at 31 January 2013	7,870	32,643	14,225	181,444	5,887	242,069
	_____	_______	_________	______	______	______

CASHFLOW STATEMENT

	Six months ended	Six months ended	Year ended
	31 July 2013	31 July 2012	31 January 2013
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Net return on ordinary activities before taxation	40,536	13,956	26,422
Adjustment for:
Gains on investments	(35,193)	(11,964)	(20,480)
Foreign exchange losses	159	58	171
Amortisation of fixed income book cost	37	8	37
Increase in accrued income	(255)	(716)	(619)
Increase in other debtors	(1,793)	(51)	(5)
(Decrease)/increase in other creditors	(138)	253	672
	__________	__________	__________
Net cash inflow from operating activities	3,353	1,544	6,198
Servicing of finance
Interest paid	(157)	-	(102)
Taxation
Overseas withholding tax paid	(596)	(366)	(957)
	__________	__________	__________
Net tax paid	(596)	(366)	(957)
Financial investment
Purchases of investments	(52,797)	(213,081)	(269,518)
Sales of investments	45,754	215,365	259,926
	__________	__________	__________
Net cash (outflow)/inflow from financial investment	(7,043)	2,284	(9,592)
Equity dividends paid	(4,085)	(1,631)	(3,678)
	__________	__________	__________
Net cash (outflow)/inflow before financing	(8,528)	1,831	(8,131)
Financing
Issue of Ordinary shares	11,415	-	-
Drawdown of bank loan	-	-	15,138
	__________	__________	__________
Net cash inflow from financing	11,415	-	15,138
	__________	__________	__________
Increase in cash	2,887	1,831	7,007
	__________	__________	__________
Analysis of changes in cash during the period
Opening net (debt)/funds	(5,900)	2,402	2,402
Increase in cash as above	2,887	1,831	7,007
Foreign exchange movements	(159)	(58)	(171)
Drawdown of bank loan	-	-	(15,138)
	__________	__________	__________
Closing net (debt)/funds	(3,172)	4,175	(5,900)
	__________	__________	__________

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'. They have also been prepared on the assumption that approval as an investment trust will continue to be granted.
		The financial statements and the net asset value per share figures have been prepared in accordance with UK Generally Accepted Accounting Practice (UK GAAP).
		All expenses are charged to revenue except those where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. Accordingly, the investment management fee will be allocated 30% to revenue and 70% to capital, in order to reflect the Board's expected long-term view of the nature of investment returns of the Company. The half yearly financial statements have been prepared using the same accounting policies applied for the year ended 31 January 2013.
	(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 2013	31 July 2012	31 January 2013
2.	Income	£'000	£'000	£'000
	Income from overseas listed investments
	Dividends	4,433	2,793	6,749
	Interest income from investments	868	287	1,178
		__________	__________	__________
		5,301	3,080	7,927
		__________	__________	__________
	Other income from investment activity
	Traded option premiums	1,622	-	410
	Deposit interest	3	-	1
		__________	__________	__________
		1,625	-	411
	Total income	6,926	3,080	8,338
		__________	__________	__________

		Six months ended	Six months ended	Year ended
		31 July 2013	31 July 2012	31 January 2013
		(unaudited)	(unaudited)	(audited)
3.	Administration expenses	£'000	£'000	£'000
	Directors' fees	27	27	54
	Secretarial and administration fees	50	17	67
	Marketing contribution	85	37	106
	Auditor's remuneration	9	8	15
	Custodian charges	16	48	64
	Registrar's fees	29	33	44
	Professional fees	31	105	156
	Other	74	79	99
		__________	__________	__________
		321	354	605
		__________	__________	__________
	During the six months period ended 31 July 2012 expenses of £359,000 (year ended 31 January 2013 - £359,000) were incurred in relation to the reorganisation of the Company, of which 70% (£254,000) were allocated to capital in line with current policy on the charging of management fee and finance costs to capital. There were no such costs allocated to capital in the current period.

4.	Taxation
	The taxation expense reflected in the Income Statement 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 2014 is an effective rate of 23.17%. This is above the current corporation tax rate of 23% as, prior to 1 April 2013, the prevailing corporation tax rate was 24%.

		Six months ended	Six months ended	Year ended
		31 July 2013	31 July 2012	31 January 2013
5.	Dividends	£'000	£'000	£'000
	Interim dividend for 2013 - 6.50p	-	-	2,046
	Final dividend for 2013 - 13.00p (2012 - 5.20p)	4,092	1,637	1,637
	Refund of overfunding of dividend May 2012	(3)	-	-
	Unclaimed dividends from previous years	(4)	(6)	(5)
		__________	__________	__________
		4,085	1,631	3,678
		__________	__________	__________
	A final dividend of 13.00p for the year ended 31 January 2013 was paid to shareholders on 24 May 2013.
	The Company has commenced paying four interim dividends per year. The first interim dividend of 5.50p (2012 - n/a) for the year ending 31 January 2014 was paid on 2 August 2013 to shareholders on the register at 5 July 2013. The ex-dividend date was 3 July 2013.  A second interim dividend of 5.50p (2012 - n/a) for the year ending 31 January 2014 will be paid on 1 November 2013 to shareholders on the register at 4 October 2013. The ex-dividend date is 2 October 2013. In accordance with UK GAAP neither of these interim dividends is recognised in these financial statements.

		Six months ended	Six months ended	Year ended
		31 July 2013	31 July 2012	31 January 2013
6.	Return per Ordinary share	£'000	£'000	£'000
	Based on the following figures:
	Revenue return	5,286	2,095	6,208
	Capital return	34,455	11,462	19,130
		__________	__________	__________
	Total return	39,741	13,557	25,338
		__________	__________	__________
	Weighted average number of shares in issue	31,898,085	31,478,582	31,478,582
		__________	__________	__________
		p	p	p
	Revenue return per Ordinary share	16.57	6.66	19.72
	Capital return per Ordinary share	108.02	36.41	60.77
		__________	__________	__________
	Total return per Ordinary share	124.59	43.07	80.49
		__________	__________	__________

7.	Transaction costs
	During the six months ended 31 July 2013 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 2013	31 July 2012	31 January 2013
		£'000	£'000	£'000
	Purchases	56	32	69
	Sales	67	35	71
		__________	__________	__________
		123	67	140
		__________	__________	__________

8.	Capital reserve
	The capital reserve reflected in the Balance Sheet at 31 July 2013 includes gains of £60,268,000 (31 July 2012 - £31,391,000; 31 January 2013 - £36,295,000) which relate to the revaluation of investments held at the reporting date.

		As at	As at	As at
9.	Net asset value per Ordinary share	31 July 2013	31 July 2012	31 January 2013
	Net assets attributable (£'000)	289,140	232,335	242,069
	Number of Ordinary shares in issue	32,768,582	31,478,582	31,478,582
	Net asset value per Ordinary share (p)	882.37	738.07	769.00

		At 1 Feb 2013	Cashflow	Exchnage movements	At 31 July 2013
10.	Analysis of changes in net debt	£'000	£'000	£'000	£'000
	Cash and short term deposits	9,238	2,887	534	12,659
	Bank loan	(15,138)	-	(693)	(15,831)
		__________	________	_________	__________
		(5,900)	2,887	(159)	(3,172)
		__________	________	_________	__________

11.	Subsequent events
	A further 140,000 Ordinary shares have been issued by the Company subsequent to the reporting period end at a total consideration received, including transaction costs, of £1,190,000. Following the share issue there were 32,908,582 Ordinary shares in issue.

12.	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 2013 and 31 July 2012 has not been audited.
	The information for the year ended 31 January 2013 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 (2), (3) or (4) of the Companies Act 2006.

13.	The Half-Yearly Financial Report was approved by the Board on 17 September 2013.

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

15.       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 2013 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

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