Half-yearly Report
BlackRock North American Income Trust plc
Half yearly results announcement to 30 April 2014
Performance record
Financial Highlights
Attributable to ordinary shareholders 30 31 Change
April October %
2014 2013
Assets
Net assets (£'000)* 112,313 111,289 +0.9
Net asset value per ordinary share 111.91p 112.00p -0.1
- with income reinvested +1.7
Ordinary share price (mid-market) 109.75p 112.50p -2.4
- with income reinvested -1.5
For For Change
the the %
six period
months ended
ended 30
30 April
April 2013**
2014
Revenue
Net profit after taxation (£'000) 2,113 1,457 +45.0
Earnings per ordinary share 2.11p 2.09p +1.0
* The change in net assets reflects market movements in the period and proceeds
from the issue of a further 1,000,000 ordinary shares.
** For the period since launch on 24 October 2012.
Chairman's statement
for the six months to 30 April 2014
Overview
Following the strong performance of U.S. markets in 2013, a sudden shift in
market sentiment towards the end of January this year prompted a setback. The
apparent loss of economic momentum in the U.S. was largely attributable to the
severe weather which induced a winter slowdown, as well as lacklustre consumer
spending. Internationally, economic data from China continued to disappoint. At
the same time, escalating tensions in Crimea and Eastern Ukraine unsettled
investors. Despite this, markets appeared to have stabilised with stocks edging
towards record highs supported by better economic data, stronger U.S. earnings
and increased M&A activity.
Performance
For the six month period ended 30 April 2014, the Company's net asset value
("NAV") returned +1.7% compared with a return of +4.3% in the Russell 1000
Value Index. The Company's share price returned -1.5% over the same period, as
the shares moved from a premium to a small discount to NAV (all figures in
sterling terms with income reinvested).
Although the NAV return was positive, it is disappointing that the focus on
dividend-paying quality stocks has not been reflected in a better relative
performance over the six months. Additionally, the strength of sterling
negatively impacted returns for UK based investors. Both these factors could
well reverse in coming months. The Board does not believe that it would be
sensible at this stage either to alter the fundamental investment strategy
which has served the Investment Manager well over the long term, or to
hedge the dollar exposure back into sterling.
Since the period end, the Company's NAV has increased by 2.4% and the
share price has risen by 0.7% (in sterling with income reinvested).
Earnings and dividends
Revenue earnings per share for the six months ended 30 April 2014 amounted to
2.11p (period to 30 April 2013: 2.09p). The target for the financial year
ending 31 October 2014 is to pay dividends amounting to 4.00p per share which
represents a yield of 3.6% based on the share price as at close of business on
31 October 2013. Our ability to achieve this target will depend on the
level of income generated by the portfolio and the target should not be
interpreted as a profit forecast. The first quarterly dividend of 1.00p per
share was paid on 2 April 2014 and the second quarterly dividend of 1.00p per
share will be paid on 2 July 2014 to shareholders on the register on 23 May
2014.
Share issues
During the six months the Company issued a further 1,000,000 shares at a
premium to their NAV. Since the launch of the Company in October 2012, the
Company has allotted a further 35,361,305 shares and there are now 100,361,305
shares in issue.
Tender offer
The Directors announced on 14 May 2014 that they had decided not to implement a
semi-annual tender offer in July 2014 as the average discount during the period
was below the level at which the tender would apply. It was therefore not in the
interests of shareholders to operate the tender on this occasion.
Alternative Investment Fund Managers' Directive ("AIFMD")
BlackRock Fund Managers Limited will be appointed as the Company's Alternative
Investment Fund Manager ("AIFM") on or about 1 July 2014 having been authorised
as an AIFM by the Financial Conduct Authority ("FCA") on 1 May 2014. The terms
agreed with the AIFM will enable the Board to continue to act independently of
the AIFM. The new Investment Management Agreement terms also strike the
appropriate balance between the Board's control over the Company, its
investment policies and compliance with the regulatory obligations. The Board
has taken independent advice from Dickson Minto W.S. on the consequences for
the Company of the AIFMD.
Facilitating retail investments
The Company currently conducts its affairs so that its shares can be
recommended by independent financial advisers to retail investors in accordance
with the FCA rules in relation to non-mainstream investment products and
intends to do so for the foreseeable future. The shares are excluded from the
FCA's restrictions which apply to non-mainstream investment products because
they are shares in an investment trust.
Outlook
Recent data has confirmed that the U.S. economy has shaken off the winter
slowdown and the overall outlook is improving. Strong corporate balance sheets,
firmer manufacturing output, resilient housing market activity, alongside a
slight acceleration in job growth, all point to an improving picture. Equity
market volatility has remained well below average over the period under review,
with easy monetary conditions counteracting the growing geopolitical risks. If
global interest rates were to increase unexpectedly, levels of higher
volatility are likely. However, equities continue to offer reasonable value and
we remain confident that dividend growth stocks should be relatively well
placed should interest rates begin to rise.
Simon Miller
12 June 2014
Interim management report and responsibility statement
The Chairman's Statement and the Investment Manager's Report give details of
the important events which have occurred during the period and their impact on
the financial statements.
Principal risks and uncertainties
The principal risks faced by the Company can be divided into various areas as
follows:
Performance;
Income/dividend;
Regulatory;
Operational;
Market;
Financial; and
Gearing.
The Board reported on the principal risks and uncertainties faced by the
Company in the Annual Report and Financial Statements for the period ended 31
October 2013. A detailed explanation can be found in the Strategic Report on
pages 15 and 16 and in note 15 on pages 47 to 52 of the Annual Report and
Financial Statements which are available on the website maintained by the
Investment Manager, BlackRock Investment Management (UK) Limited, at
blackrock.co.uk/brna.
In the view of the Board, there have not been any changes to the fundamental
nature of these risks since the previous report and these principal risks and
uncertainties are equally applicable to the remaining six months of the
financial year as they were to the six months under review.
Related party disclosure and transactions with Investment Manager
The Investment Manager is regarded under the Listing Rules as a related party
and details of the management and marketing fees payable are set out in note 3
and note 9. The related party transactions with the Directors are set out in
note 8.
Going concern
The Directors are satisfied that the Company has adequate resources to continue
in operational existence for the foreseeable future and is financially sound.
For this reason, they continue to adopt the going concern basis in preparing
the financial statements. The Company has a portfolio of liquid investments
which are considered to be readily realisable and is able to meet all of its
liabilities from its assets and income generated from these assets.
Directors' responsibility statement
The Disclosure and Transparency Rules ("DTR") of the UK Listing Authority
require the Directors to confirm their responsibilities in relation to the
preparation and publication of the Interim Management Report and Financial
Statements.
The Directors confirm to the best of their knowledge that:
* the condensed set of financial statements contained within the half yearly
financial report has been prepared in accordance with applicable UK Accounting
Standards and the Accounting Standards Board's Statement 'Half Yearly Financial
Reports'; and
* the Interim Management Report, together with the Chairman's Statement and
Investment Manager's Report, include a fair review of the information required
by 4.2.7R and 4.2.8R of the FCA's Disclosure and Transparency Rules.
This half yearly financial report has been reviewed by the Company's auditor.
The half yearly financial report was approved by the Board on 12 June 2014 and
the above responsibility statement was signed on its behalf by the Chairman.
Simon Miller
For and on behalf of the Board
12 June 2014
Investment manager's report
Market Overview
For the six month period ended 30 April 2014, U.S. large cap stocks, as
represented by the S&P 500® Index, advanced by 8.3% (in U.S. dollar terms). The
U.S. market posted a +5.6% return between October and December of last year,
before volatility increased in the first four months of 2014, with a sharp
January downturn, a strong rebound in February, range-bound weekly swings
through the month of March and a +0.8% return to round out April. Despite the
recent upticks, the level of absolute volatility has still been below
historical norms.
With accommodative monetary policies from the U.S. Federal Reserve continuing
to provide support for financial markets in a modest growth environment, we
anticipate that broadly higher levels of volatility, rising interest rates and
discussions about the prospect of inflation will continue to permeate the
investment landscape. As such, we expect that large cap, high quality companies
within the U.S. will benefit from this shift in the market, given their strong
balance sheets, higher levels of available cash and relatively defensive
characteristics.
Portfolio Overview
The largest contributor to relative performance during the past six months was
stock selection within the consumer discretionary sector, particularly
non-index positions VF Corporation and Comcast, which both posted strong
returns during the period. Selection in industrials, especially within the
defence industry, also aided performance and a broad underweight to financials
also helped to bolster relative returns. The largest detractor from performance
was stock selection in consumer staples, where non-index holdings Philip
Morris, Diageo, Lorillard and Coca-Cola all posted weaker returns during the
period. Stock selection in the health care, telecommunication services and
information technology sectors detracted from relative performance, as did an
overweight position in consumer discretionary and an underweight position in
information technology.
The portfolio's overall allocations are slightly more pro-cyclical in terms of
sector-level exposures as we begin to see more opportunities in the current
stage of the economic recovery. During the period, we continued to add broadly
to our weighting in the financials sector, particularly to companies like
Morgan Stanley, CME Group and Bank of America. We also added to industrials,
purchasing holdings in both Lockheed Martin and CSX. At the same time, we
reduced our allocations to the defensive utilities, telecommunication services
and consumer staples sectors, selling holdings such as AT&T, Lorillard, PSE&G
and Edison International.
Below is a comprehensive overview of our allocations at the end of the period.
Industrials - 4.3% overweight (14.5% of portfolio)
Over the long term, a growing middle class in emerging markets will demand a
higher quantity and quality of food and we favour industrial names with the
willingness and ability to enter these markets ahead of population surges.
Currently, the portfolio is overweight in the aerospace and defence industry,
where many of the companies have been less impacted by government austerity
measures than previously thought and have benefited from the strong tailwind of
a slowly growing domestic economy.
Materials - 3.4% overweight (6.3% of portfolio)
Our exposure to the materials sector is based on the premise that
infrastructure development and spending will continue to be a critical part of
the investment landscape, both domestically and abroad. As global demand for
metals and raw materials continues to grow, we believe that recent weakness in
commodity prices will subside and long term supply/demand imbalances in
emerging markets will become more evident. Ultimately, we believe that
companies with higher quality and diverse assets in geographies close to
developing markets will be able to reap the benefits of high barriers to entry
within local industries and deliver stronger topline growth.
Consumer Discretionary - 3.2% overweight (9.6% of portfolio)
The balance sheet for U.S. consumers is improving, aided by a recovering
domestic housing market, recent robust equity returns, and mildly stronger jobs
growth. Despite stagnant wage growth, these factors have generated an increase
in consumer confidence, which currently rests near five year highs. We have a
preference for less-cyclical companies not exclusively dependent on the ebb and
flow of the purchasing power and sentiment of the U.S. consumer. We believe
consumers will continue to spend cautiously in the near term, with an improving
economic backdrop ultimately proving to be a tailwind for the sector.
Consumer Staples - 3.0% overweight (8.9% of portfolio)
In consumer staples, we are attracted to the sector's recurring purchase theme,
solid brand leadership and stable earnings growth potential. We believe there
is ample room for additional cost cutting, which may ultimately provide an
opportunity for accelerating earnings growth and multiple expansion within the
sector. We continue to like companies in the space who are supplying essential
goods into emerging market regions and believe the current slowdown in the
emerging markets is cyclical and not a secular issue.
Telecommunication Services - 0.5% underweight (2.0% of portfolio)
Within telecoms, our allocation remains concentrated in diversified
telecommunication bellwethers such as Verizon Communications. Wireless
operations continue to drive revenue in the sector and the proliferation of
data-heavy smartphones should help certain companies in the sector to
strengthen margins. Service bundling has led to stickier consumers, better
earnings visibility and less customer churn, all of which are positives for the
industry. Overall, this sector should offer relatively high yields and
opportunity for steady, longer term growth.
Energy - 1.0% underweight (14.2% of portfolio)
We believe long term fundamentals remain positive as global energy demand
continues to increase in emerging economies. This is especially evident in some
of the fastest growing countries, such as India and China, where per capita
consumption has grown significantly in recent years. Within the sector, we
favour oil-weighted companies over those levered to natural gas and the
large-cap integrated oil and independent oil & gas producers due to their
diverse revenue streams, balance sheet strength and robust dividend profiles.
Strong competitive positioning, operating specialisation and pricing power at
the industry level remain most desirable from an investment perspective.
Utilities - 1.2% underweight (5.1% of portfolio)
Our exposure to utilities has been dominated primarily by regulated names,
given their durable dividend profiles and resilience in slow growth
environments. From a fundamental standpoint, we believe the sector is
increasingly bifurcated in terms of the differences between strong and weak
companies. As such, we are focused on owning firms with clear plans for future
growth that are trading at attractive valuations. We also prefer to invest in
firms that are not entirely dependent on demand and are in a unique position to
focus on strategic capital expenditures. We believe these factors will be
increasingly important given slowing demand and declining electricity usage
rates across the industry.
Information Technology - 2.2% underweight (6.8% of portfolio)
Typically, the industry has changed so frequently that there has been little
incentive for firms to return value to shareholders via dividends, but we see
this evolving given higher absolute levels of cash flow, stronger business
models and less income variability among industry titans and relative newcomers
alike. Where applicable, we continue to look for exposure to big data,
analytics and cloud computing, as these areas may gain from incremental
spending in the future.
Health Care - 3.9% underweight (9.4% of portfolio)
While our stance on health care has characteristically been cautious due to our
wariness of the sector's longer term growth prospects, we see this changing
over the next few years as companies focus on efficiencies and begin to benefit
from the volume increases evident under the Affordable Care Act. We are finding
investment opportunities among the diversified pharmaceutical manufacturers,
while avoiding more volatile areas of the sector, including hospitals, prone to
perennial cost overruns. While regulatory burdens and high government
intervention in the sector should elicit caution, we are growing more positive
about the sector in the current environment.
Financials - 5.1% underweight (23.2% of portfolio)
Financials represent our strategy's largest absolute sector allocation and we
maintain exposure in four key areas: U.S. diversified banks, insurance
companies, regional banks and Canadian financial institutions. Recent new
additions to the portfolio include Morgan Stanley and CME Group. We remain
overweight to the insurers, as the potential for higher interest rates and
continued loan growth is a positive backdrop for the industry. Overall, we are
positive on the sector's dividend profile and anticipate additional dividend
increases as companies continue to meet and exceed regulatory capital
requirements.
POSITIONING AND Outlook
After an exceptionally strong 2013 for U.S. markets, recent months have been
underscored by an increase in volatility and mixed signals in key economic
indicators. On the international side, an emerging market credit scare caused a
sell-off and geopolitical tensions escalated with Russia, putting additional
pressure on global and multinational equities. At the same time, U.S. companies
guided lower on earnings and raised questions about the state of the consumer
given weaker volumes during the quarter. Severe weather in the U.S. also
muddied the waters, making it harder to discern true weakness from the impact
of winter storms.
All of these events, however, are taking place within the reaches of an
economic recovery where broader data has improved substantially. For this
reason, we are optimistic on the ability of corporations to continue to
generate cash, especially in the mega-cap space, where many firms are well
positioned to thrive in a slower growth environment. This could lead to
companies exceeding (slightly lower) earnings expectations, setting the stage
for stronger markets later in the year. For the time being, we expect dividend
growth to be an important consideration for investors and remain attentive to
overall volatility, rising rates, valuation, market correlations and inflation.
Our largest absolute allocations remain in the financials, industrials, energy
and health care sectors, with smaller exposures to telecommunication services,
utilities, materials and information technology. During the last quarter, we
added to U.S. financial companies, select technology names and industrial
holdings. We also eliminated positions within telecommunication services,
utilities and consumer staples, where valuations have become more stretched in
recent months. The portfolio remains positioned in high quality stocks, with a
special emphasis on affording relative protection and growth of income.
Bob Shearer and Kathleen Anderson
BlackRock Investment Management, LLC
12 June 2014
Ten largest investments
30 April 2014
Wells Fargo - 3.6% (2013: 3.2%) is a U.S. diversified bank with over U.S.$1
trillion in assets. Wells boasts a strong and stable management team, led by
CEO John Stumpf, who has been with the firm for nearly 30 years. Wells Fargo is
an industry leader in cross-selling financial products and services, which has
built deep customer relationships and added to the bank's pricing and earnings
power.
JPMorgan Chase - 3.3% (2013: 3.1%) is a U.S. based diversified financial
company with over U.S.$2 trillion in assets and operations in dozens of
countries. JPMorgan's capital base remains one of the strongest in the industry
and it provides a measure of safety and financial flexibility. Overall, we
believe JPMorgan offers strong earnings power while also affording shareholders
a dividend yield in the top-quartile of the S&P 500 Index.
General Electric - 3.1% (2013: 2.6%) is a diversified industrials conglomerate
with operations in technology infrastructure, energy infrastructure, home and
business services and capital services. The firm's strong management team,
depth and breadth of products, and ability to secure pricing, make it a
desirable long term holding.
Chevron - 3.1% (2013: 3.1%) is the second largest integrated oil company in the
U.S. with exploration, production and refining operations worldwide. Chevron
has one of the strongest balance sheets and lowest debt to capital ratios among
its peers, and currently generates a sector leading profitability per barrel of
oil. We believe the firm's success in deep-water exploration in recent years
will be a significant driver of earnings growth moving forward.
Comcast - 2.7% (2013: 2.5%) is the largest operator in the U.S. cable industry,
currently reaching 53 million households. We are positive about the firm's
purchase of NBC Universal, one of the world's leading media and entertainment
companies. Comcast is now unique in the cable industry because they own the
distribution network as well as some of their own programming (television
channels). We believe this will help the firm offset rising cable costs better
than some of its competitors.
Pfizer - 2.4% (2013: 2.5%) is the world's largest pharmaceuticals company with
annual sales of approximately U.S.$60 billion. Pfizer offers investors strong
free cash flow, a history of generating high returns on invested capital and an
attractive and consistent dividend yield. At this stage in the company's
business cycle, we believe it will be important for recently launched products
to be well received in the market in order for pipeline momentum to continue.
Home Depot - 2.4% (2013: 2.4%) is the world's largest home improvement
retailer, with over 2,200 warehouse-format stores and more than 300,000
employees. The firm has been an immediate beneficiary of a recovering U.S.
housing market and we continue to believe that upward earnings revisions are
likely as the segment continues to garner strength. Home Depot remains
committed to growing its dividend, raising its quarterly payout by 34% from
2012 to 2013.
Merck - 2.2% (2013: 1.9%) is a global pharmaceuticals company with over 83,000
employees worldwide. We believe that Merck is through the worst of its patent
cliff and that the firm is favourably positioned for long term growth. New
drugs such as Januvia (for diabetes), Isentress (for HIV) and the Gardasil
vaccine represent potential blockbusters. Additionally, we believe that Merck's
restructuring efforts should reduce costs and improve margins over the long
term.
Exxon Mobil - 2.2% (2013: 2.1%) is an integrated oil and gas company based out
of the U.S. The firm is one of only a few U.S. companies to boast an AAA credit
rating. Exxon's geographic footprint and diversified operations continue to
make it an industry leader. Management remains committed to generating
shareholder returns, paying almost U.S.$40 billion in dividends and
repurchasing approximately U.S.$130 billion worth of stock over the last five
years.
Raytheon - 2.0% (2013: 1.7%) is a defence contractor that benefits from
spending on reconnaissance-type products within the defence market. The firm is
not highly dependent on individual programmes that we believe could be at risk in
the current environment. We are positive on management's dedication to
shareholders, as the firm expects to return approximately 50% of its free cash
flow to investors over the long term and has been a strong dividend payer.
All percentages reflect the value of the holding as a percentage of total
investments (including derivative financial instruments). Percentages in
brackets represent the value of the holding as at 31 October 2013. Together,
the ten largest investments represent 27.0% of the Company's portfolio (ten
largest investments at 31 October 2013: 25.5%).
Portfolio analysis
30 April 2014
Sector
and
geographical Australia Canada France Netherlands Peru United United Benchmark
breakdown Kingdom States Total weight
Sector % % % % % % % % %
Consumer Discretionary - - - - - - 9.6 9.6 6.4
------- ------- ------- -------- ------- ------- ------- ------- --------
Consumer Staples - - - 0.5 - 1.2 7.2 8.9 5.9
------- ------- ------- -------- ------- ------- ------- ------- --------
Energy - 1.4 1.7 0.3 - - 10.8 14.2 15.2
------- ------- ------- -------- ------- ------- ------- ------- --------
Financials - 1.0 - - - - 22.2 23.2 28.3
------- ------- ------- -------- ------- ------- ------- ------- --------
Health Care - - - - - - 9.4 9.4 13.3
-------- -------- -------- -------- -------- -------- -------- -------- --------
Industrials - - - - - - 14.5 14.5 10.2
------- ------- ------- -------- ------- ------- ------- ------- --------
Information - - - - - - 6.8 6.8 9.0
Technology
------- ------- ------- -------- ------- ------- ------- ------- --------
Materials 1.2 - - - 0.3 - 4.8 6.3 2.9
------- ------- ------- -------- ------- ------- ------- ------- --------
Telecommunication
Services - 0.3 - - - - 1.7 2.0 2.5
------- ------- ------- -------- ------- ------- ------- ------- --------
Utilities - - - - - - 5.1 5.1 6.3
------- ------- ------- -------- ------- ------- ------- ------- --------
% Portfolio
30.04.14 1.2 2.7 1.7 0.8 0.3 1.2 92.1 100.0 100.0
------- ------- ------- ------- ------- ------- ------- ------- -------
% Portfolio
31.10.13 1.7 2.7 1.5 1.4 0.3 1.3 91.1 100.0
------- ------- ------- ------- ------- ------- ------- ------- -------
Investments
as at 30 April 2014
Company Country Sector Shares Market %
value of
£'000 total
portfolio
Wells Fargo United Financials Ordinary 4,102 3.6
States Shares
Options (11)
JPMorgan Chase United Financials Ordinary 3,737 3.3
States Shares
Options (3)
General Electric United Industrials Ordinary 3,552 3.1
States Shares
Options (26)
Chevron United Energy Ordinary 3,540 3.1
States Shares
Options (39)
Comcast United Consumer Ordinary 3,055 2.7
States Discretionary Shares
Options (17)
Pfizer United Health Care Ordinary 2,770 2.4
States Shares
Options (7)
Home Depot United Consumer Ordinary 2,717 2.4
States Discretionary Shares
Options (11)
Merck United Health Care Ordinary 2,575 2.2
States Shares
Options (14)
Exxon Mobil United Energy Ordinary 2,525 2.2
States Shares
Options (14)
Raytheon United Industrials Ordinary 2,298 2.0
States Shares
Options (6)
Microsoft United Information Ordinary 2,169 1.9
States Technology Shares
Options (5)
Johnson & Johnson United Health Care Ordinary 2,120 1.8
States Shares
Options (9)
United United Industrials Ordinary 2,096 1.8
Technologies States Shares
Options (8)
Prudential United Financials Ordinary 2,042 1.8
Financial States Shares
Options (1)
Verizon United Telecommunication Ordinary 1,994 1.7
Communications States Services Shares
Options (2)
Bristol-Myers United Health Care Ordinary 1,959 1.7
Squibb States Shares
Options (1)
Total France Energy Ordinary 1,977 1.7
Shares
Options (24)
DuPont United Materials Ordinary 1,939 1.7
States Shares
IBM United Information Ordinary 1,897 1.7
States Technology Shares
US Bancorp United Financials Ordinary 1,841 1.6
States Shares
Options (1)
Suntrust Banks United Financials Ordinary 1,843 1.6
States Shares
Options (3)
McDonald's United Consumer Ordinary 1,696 1.5
States Discretionary Shares
Options (9)
American Express United Financials Ordinary 1,691 1.5
States Shares
Options (8)
Enbridge Canada Energy Ordinary 1,612 1.4
Shares
Options (6)
Northrop Grumman United Industrials Ordinary 1,584 1.4
States Shares
Options (2)
Intel Corporation United Information Ordinary 1,478 1.3
States Technology Shares
Options (1)
United Parcel United Industrials Ordinary 1,468 1.3
Services States Shares
Options (4)
Honeywell United Industrials Ordinary 1,436 1.3
States Shares
Options (2)
Procter & Gamble United Consumer Staples Ordinary 1,435 1.3
States Shares
Options (3)
BHP Billiton Australia Materials Ordinary 1,438 1.2
Shares
Options (10)
VF Corporation United Consumer Ordinary 1,383 1.2
States Discretionary Shares
Options (2)
Travelers United Financials Ordinary 1,387 1.2
Companies States Shares
Options (10)
Diageo United Consumer Staples Ordinary 1,334 1.2
Kingdom Shares
Options (3)
NextEra Energy United Utilities Ordinary 1,337 1.2
States Shares
Options (9)
Citigroup United Financials Ordinary 1,328 1.2
States Shares
Options (3)
Fifth Third Bank United Financials Ordinary 1,309 1.1
States Shares
Options (3)
Occidental United Energy Ordinary 1,303 1.1
Petroleum States Shares
Options (4)
Dominion United Utilities Ordinary 1,298 1.1
Resources States Shares
Options (2)
Ace United Financials Ordinary 1,299 1.1
States Shares
Options (6)
3M Company United Industrials Ordinary 1,267 1.1
States Shares
Options (8)
Toronto-Dominion Canada Financials Ordinary 1,207 1.0
Bank Shares
Options (7)
Union Pacific United Industrials Ordinary 1,177 1.0
States Shares
Options (1)
Marathon United Energy Ordinary 1,154 1.0
Petroleum States Shares
Philip Morris United Consumer Staples Ordinary 1,129 1.0
International States Shares
Options (6)
Mondelez United Consumer Staples Ordinary 1,114 1.0
International States Shares
Options (6)
Chubb United Financials Ordinary 957 0.8
States Shares
Options (8)
Lockheed United Industrials Ordinary 943 0.8
States Shares
Options (3)
Marathon Oil United Energy Ordinary 946 0.8
States Shares
Options (16)
Motorola United Information Ordinary 890 0.8
States Technology Shares
Options (2)
Kimberley-Clark United Consumer Staples Ordinary 884 0.8
States Shares
Options (2)
Coca-Cola United Consumer Staples Ordinary 886 0.8
States Shares
Options (9)
Qualcomm United Information Ordinary 867 0.8
States Technology Shares
Options (1)
Morgan Stanley United Financials Ordinary 864 0.8
States Shares
Options (1)
Dow Chemical United Materials Ordinary 851 0.7
States Shares
Options (4)
International United Materials Ordinary 842 0.7
Paper Company States Shares
Options (6)
General Mills United Consumer Staples Ordinary 833 0.7
States Shares
Options (4)
Praxair United Materials Ordinary 813 0.7
States Shares
CME United Financials Ordinary 804 0.7
States Shares
Meadwestvaco United Materials Ordinary 800 0.7
States Shares
Options (8)
America Water United Utilities Ordinary 790 0.7
Works Association States Shares
Options (1)
Schlumberger United Energy Ordinary 735 0.6
States Shares
Options (13)
Walt Disney United Consumer Ordinary 695 0.6
States Discretionary Shares
WalMart United Consumer Staples Ordinary 673 0.6
States Shares
Options (1)
ConocoPhillips United Energy Ordinary 664 0.6
States Shares
Options (6)
Mattel United Consumer Ordinary 630 0.5
States Discretionary Shares
Options (3)
Sempra Energy United Utilities Ordinary 626 0.5
States Shares
Options (2)
Johnson Controls United Consumer Ordinary 621 0.5
States Discretionary Shares
Options (1)
Kraft Foods United Consumer Staples Ordinary 585 0.5
States Shares
Options (1)
Kinder Morgan United Energy Ordinary 584 0.5
(Delaware) States Shares
Spectra Energy United Energy Ordinary 584 0.5
States Shares
Options (2)
Unilever Netherlands Consumer Staples Ordinary 561 0.5
Shares
Options (2)
Altria United Consumer Staples Ordinary 564 0.5
States Shares
Options (6)
AbbVie United Health Care Ordinary 544 0.5
States Shares
Options (3)
MetLife United Financials Ordinary 530 0.5
States Shares
Options (3)
Duke Energy United Utilities Ordinary 522 0.5
States Shares
Options (5)
Wisconsin Energy United Utilities Ordinary 516 0.4
States Shares
Options (2)
Northeast United Utilities Ordinary 499 0.4
Utilities States Shares
Options (4)
Weyerhaeuser United Financials Ordinary 490 0.4
States Shares
Quest Diagnostics United Health Care Ordinary 484 0.4
States Shares
Options (1)
Rockwell United Industrials Ordinary 479 0.4
Automation States Shares
Phillips 66 United Energy Ordinary 478 0.4
States Shares
Options (4)
American Tower United Financials Ordinary 437 0.4
States Shares
Abbott United Health Care Ordinary 406 0.4
Laboratories States Shares
Options (1)
CSX United Industrials Ordinary 391 0.3
States Shares
Options (1)
BCE Canada Telecommunication Ordinary 354 0.3
Services Shares
Automatic Data United Information Ordinary 353 0.3
Processing States Technology Shares
Bank of America United Financials Ordinary 343 0.3
States Shares
Olin United Materials Ordinary 339 0.3
States Shares
Options (2)
ITC Holdings United Utilities Ordinary 337 0.3
States Shares
Options (1)
Royal Dutch Shell Netherlands Energy Ordinary 336 0.3
Shares
Options (2)
Southern Copper Peru Materials Ordinary 318 0.3
Shares
Options (1)
MT&T Bank United Financials Ordinary 288 0.3
States Shares
Nielsen United Consumer Ordinary 250 0.2
States Discretionary Shares
Portfolio ------------- ------------
114,349 100.0
------------- ------------
The negative valuations of £449,000 in respect of options held represent the
notional cost of repurchasing the contracts at market prices as at 30 April
2014.
Statement of comprehensive income for the six months ended 30 April 2014
Notes Revenue £'000 Capital £'000 Total £'000
Six For For Six For For Six For For
months the the months the the months the the
ended period period ended period period ended period period
30.04.14 30.08.12* 30.08.12* 30.04.14 30.08.12* 30.08.12* 30.04.14 30.08.12* 30.08.12*
(unaudited) to to (unaudited) to to (unaudited) to to
30.04.13 31.10.13 30.04.13 31.10.13 30.04.13 31.10.13
(unaudited) (audited) (unaudited) (audited) (unaudited) (audited)
(Losses)/
gains on
investments
held at
fair value
through
profit or
loss - - - (208) 7,844 8,825 (208) 7,844 8,825
Gains on foreign
exchange - - - 198 653 754 198 653 754
Income from investments
held at fair
value
through
profit or
loss 2 1,539 1,237 2,600 - - - 1,539 1,237 2,600
Other
income 2 1,330 761 1,868 - - - 1,330 761 1,868
-------- -------- ------- -------- -------- ------- -------- -------- -------
Total income 2,869 1,998 4,468 (10) 8,497 9,579 2,859 10,495 14,047
-------- -------- ------- -------- -------- ------- -------- -------- -------
Expenses
Investment
management
fees 3 (137) (98) (218) (412) (293) (655) (549) (391) (873)
Other operating
expenses 4 (181) (156) (326) (18) - (15) (199) (156) (341)
-------- -------- ------- -------- -------- ------- -------- -------- -------
Total operating
expenses (318) (254) (544) (430) (293) (670) (748) (547) (1,214)
-------- -------- ------- -------- -------- ------- -------- -------- -------
Net profit
on ordinary
activities
before
finance costs and
taxation 2,551 1,744 3,924 (440) 8,204 8,909 2,111 9,948 12,833
Finance costs (1) (3) (4) (4) (10) (11) (5) (13) (15)
-------- -------- ------- -------- -------- ------- -------- -------- -------
Net profit
on ordinary
activities
before
taxation 2,550 1,741 3,920 (444) 8,194 8,898 2,106 9,935 12,818
Taxation (437) (284) (666) 91 71 156 (346) (213) (510)
-------- -------- ------- -------- -------- ------- -------- -------- -------
Net profit
on ordinary
activities
after
taxation 2,113 1,457 3,254 (353) 8,265 9,054 1,760 9,722 12,308
-------- -------- ------- -------- -------- ------- -------- -------- -------
Earnings
per
ordinary
share -
basic and
diluted 6 2.11p 2.09p 4.28p (0.35p) 11.85p 11.91p 1.76p 13.94p 16.19p
-------- -------- ------- -------- -------- ------- -------- -------- -------
The total column of this statement represents the Company's Statement of
Comprehensive Income, prepared in accordance with International Financial
Reporting Standards ("IFRS") as adopted by the European Union. The
supplementary revenue and capital columns are both prepared under guidance
published by the Association of Investment Companies ("AIC"). All items in the
above statement derive from continuing operations. All income is attributable
to the equity holders of BlackRock North American Income Trust plc.
The Company does not have any other recognised gains or losses. The net profit
for the period disclosed above represents the Company's total comprehensive
income.
* the date of incorporation.
Statement of changes in equity for the six months ended 30 April 2014
Notes Called-up Share Capital Special Capital Revenue Total
share premium redemption reserve reserves reserve
capital account reserve
£'000 £'000 £'000 £'000 £'000 £'000 £'000
For the six months
ended 30 April 2014
(unaudited)
At 31 October 2013 994 35,671 1,460 63,213 9,004 947 111,289
Total comprehensive
income:
Net profit for the period - - - - (353) 2,113 1,760
Transaction with
owners, recorded
directly to equity:
Issue of ordinary
shares 7 10 1,108 - - - - 1,118
Share issue costs - (5) - - - - (5)
Dividends paid (a) 5 - - - - - (1,849) (1,849)
------ ------ ------ ----- ------ ------ -----
At 30 April 2014 1,004 36,774 1,460 63,213 8,651 1,211 112,313
------ ------ ------ ----- ------ ------ -----
For the period ended
30 April 2013
(unaudited)
Total comprehensive
income:
Net profit for the period - - - - 8,265 1,457 9,722
Transaction with
owners, recorded
directly to equity:
Issue of management shares 50 - - - - - 50
Issue of ordinary shares 762 76,377 - - - - 77,139
Share issue costs - (1,467) - - - - (1,467)
Cancellation of share
premium account - (63,213) - 63,213 - - -
Redemption and
cancellation of
management shares (50) - 50 - (50) - (50)
Dividends paid (b) 5 - - - - - (701) (701)
------ ------ ------ ----- ------ ------ -----
At 30 April 2013 762 11,697 50 63,213 8,215 756 84,693
------ ------ ------ ----- ------ ------ -----
For the period ended
31 October 2013
(audited)
Total comprehensive
income:
Net profit for the period - - - - 9,054 3,254 12,308
Transaction with
owners, recorded
directly to equity:
Issue of management shares 50 - - - - - 50
Issue of ordinary shares 854 86,833 - - - - 87,687
Share issue costs - (1,899) - - - - (1,899)
Cancellation of share
premium account - (63,213) - 63,213 - - -
Dividends paid (c) - - - - - (2,307) (2,307)
Share issue - C shares 1,550 13,950 - - - - 15,500
Share conversion - C
shares to ordinary
shares (1,410) - 1,410 - - - -
Redemption and
cancellation of
management shares (50) - 50 - (50) - (50)
------ ------ ------ ----- ------ ------ -----
At 31 October 2013 994 35,671 1,460 63,213 9,004 947 111,289
----- ----- ----- ----- ----- ----- -----
(a) Final dividend of 1p per share for the period ending 31 October 2013,
declared on 3 October 2013 and paid on 4 December 2013 and 1st interim dividend
of 1p per share for the year ending 31 October 2014, declared on 13 February
2014 and paid on 2 April 2014.
(b) 1st interim dividend of 1p per share declared on 14 February 2013 and paid
on 2 April 2013.
(c) 1st interim dividend of 1p per share for the period ending 31 October 2013,
declared on 14 February 2013 and paid on 2 April 2013 (based on 70,050,000
ordinary shares); 2nd interim dividend of 1p per share, declared on 22 May 2013
and paid on 2 July 2013 (based on 76,175,000 ordinary shares); and 3rd interim
dividend of 1p per share, declared on 14 August 2013 and paid on 2 October 2013
(based on 84,488,500 ordinary shares).
The transaction costs incurred on the acquisition and disposal of investments
are included within the capital reserves and amounted to £18,000 for the six
months ended 30 April 2014; (period from 30 August 2012 (date of incorporation)
to 30 April 2013: £76,000; and period from 30 August 2012 (date of
incorporation) to 31 October 2013: £79,000).
Statement of financial position as at 30 April 2014
Notes 30 30 31
April April October
2014 2013 2013
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Non current assets
Investments held at fair value
through profit or loss 114,798 85,318 112,429
======== ======== ========
Current assets
Other receivables 586 1,336 1,097
Cash and cash equivalents 580 60 227
-------- ------- --------
1,166 1,396 1,324
-------- -------- --------
Current liabilities
Bank overdraft (1,088) (65) (555)
Derivative financial instruments (449) (408) (475)
Other payables (2,114) (1,548) (1,434)
-------- -------- --------
(3,651) (2,021) (2,464)
-------- -------- --------
Net current liabilities (2,485) (625) (1,140)
-------- -------- --------
Net assets 112,313 84,693 111,289
======== ======== ========
Equity attributable to equity
holders
Called-up share capital 7 1,004 762 994
Share premium account 36,774 11,697 35,671
Capital redemption reserve 1,460 50 1,460
Special reserve 63,213 63,213 63,213
Capital reserves 8,651 8,215 9,004
Revenue reserve 1,211 756 947
-------- -------- --------
Total equity shareholders' funds 112,313 84,693 111,289
======== ======== ========
Net asset value per ordinary share 6 111.91p 111.18p 112.00p
======== ======== ========
Cash flow statement for the six months ended 30 April 2014
For For
the the
period period
30 30
Six August August
months 2012* 2012*
ended to to
30 30 31
April April October
2014 2013 2013
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Operating activities
Profit before taxation 2,106 9,935 12,818
Add back interest paid 5 13 15
Losses/(gains) on investments held at
fair value through profit or loss 208 (7,844) (8,825)
Net movement on foreign exchange (198) (653) (754)
Sales of investments held at fair value
through profit or loss 45,364 27,687 52,861
Purchases of investments held at fair
value through profit or loss (47,578) (104,753) (155,990)
Decrease/(increase) in other receivables 57 (114) (169)
Increase in other payables 278 551 666
Increase in amounts due from brokers (216) (1,213) (228)
Increase in amounts due to brokers 561 520 352
------------ ------------ -----------
Net cash outflow from operating
activities before interest and taxation 587 (75,871) (99,254)
------------ ------------ ------------
Interest paid (5) (13) (15)
Taxation on investment income included
within gross income (224) (204) (406)
------------ ----------- ------------
Net cash outflow from operating
activities 358 (76,088) (99,675)
------------ ----------- ------------
Financing activities
Dividends paid (1,849) (701) (2,307)
Proceeds from issue of ordinary shares 1,118 77,139 102,509
Share issue costs paid (5) (1,008) (1,609)
-------- --------- --------
Net cash inflow from financing activities (736) 75,430 98,593
-------- -------- --------
Decrease in cash and cash equivalents (378) (658) (1,082)
-------- -------- --------
Cash and cash equivalents at start of
period (328) - -
Effect of foreign exchange rate changes 198 653 754
-------- -------- --------
Cash and cash equivalents at end of
period (508) (5) (328)
-------- -------- --------
Comprised of:
Cash and cash equivalents 580 60 227
Bank overdraft (1,088) (65) (555)
-------- -------- --------
(508) (5) (328)
======== ======== ========
* the date of incorporation.
Notes to the financial statements for the six months ended 30 April 2014
1. Principal activity and basis of preparation
The principal activity of the Company is that of an investment trust company
within the meaning of section 1158 of the Corporation Tax Act 2010.
The half yearly financial statements have been prepared using the same
accounting policies as set out in the Annual Report for the period from 30
August 2012 (date of incorporation) to 31 October 2013 (which were prepared in
accordance with International Financial Reporting Standards ("IFRS") as adopted
by the European Union ("EU") and as applied in accordance with the provisions
of the Companies Act 2006) and in accordance with International Accounting
Standard 34, 'Interim Financial Reporting'. Insofar as the Statement of
Recommended Practice ("SORP") for investment trust companies ("AIC"), revised
in January 2009 is compatible with IFRS, the financial statements have been
prepared in accordance with guidance set out in the SORP.
2. Income
For For
the the
period period
30 30
Six August August
months 2012 2012
ended to to
30 30 31
April April October
2014 2013 2013
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Investment income:
Overseas listed dividends 1,525 1,228 2,558
UK listed dividends 14 9 42
----------- ----------- -----------
1,539 1,237 2,600
Other income:
Deposit interest on cash balances 3 2 2
Option premium income 1,327 759 1,866
----------- ---------- ----------
1,330 761 1,868
----------- ----------- -------------
Total 2,869 1,998 4,468
------------- ----------- -------------
During the period, the Company received premiums totalling £1,497,000 (period
ended 30 April 2013: £884,000; period ended 31 October 2013: £2,017,000) for
writing covered call options for the purposes of revenue generation, of which
£1,327,000 (period ended 30 April 2013: £759,000; period ended 31 October 2013:
£1,866,000) was taken to income. All derivative transactions were based on
constituent stocks in the Russell 1000 Value Index. At 30 April 2014 there were
165 open positions with an associated liability of £449,000 (period ended 30
April 2013: 139 open positions with an associated liability of £408,000 and
period ended 31 October 2013: 188 open positions with an associated liability of £475,000).
3. Investment management fee
For the
Six months For the period
Six months period 30 August
ended 30 August 2012 to
30 April 2012 to 31 October
2014 30 April 2013 2013
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Investment
management
fee 137 412 549 98 293 391 218 655 873
------- ------- ----- ------ ------- ----- ------- ------- -------
Total 137 412 549 98 293 391 218 655 873
======= ======= ===== ====== ======= ===== ====== ====== ======
The Company has a management agreement with BlackRock Investment Management
(UK) Limited under which BlackRock is entitled to an investment management fee,
payable in arrears, calculated at the rate of 0.25 per cent per quarter of the
Company's average market capitalisation. Average market capitalisation is
calculated as the aggregate of the closing mid-market share price, multiplied
by the number of shares in issue on each business day during the quarter,
divided by the number of business days in the quarter.
4. Other operating expenses
For For
the the
period period
30 30
Six August August
months 2012 2012
ended to to
30 30 31
April April October
2014 2013 2013
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Custody fee 2 8 22
Auditor's remuneration:
- audit services 14 12 26
- other audit services 6 6 14
Registrar's fee 13 18 20
Directors' emoluments 55 39 86
Other administration costs 91 73 158
-------- -------- --------
181 156 326
======== ======== ========
5. Dividends
The Directors have declared a second quarterly interim dividend of 1.00p per
share. The dividend will be paid on 2 July 2014 to shareholders on the
Company's register on 23 May 2014. Under IFRS, the second interim dividend has
not been recognised as a liability in the financial statements as interim
dividends are not recognised in the financial statements until they are paid.
They are also debited directly to revenue reserves.
Dividends paid on equity shares during the period were:
Six
months
ended
30
April
2014
£'000
(unaudited)
Dividends on equity shares:
Fourth interim dividend of 1.00p per ordinary share paid on 4
December 2013* 845
First interim dividend of 1.00p per ordinary share paid on
2 April 2014** 1,004
--------
1,849
========
* based on 84,488,500 ordinary shares.
** based on 100,361,305 ordinary shares.
6. Earnings and net asset value per ordinary share
Six period period
months 30 30
ended August August
30 2012 2012
April to to
2014 30 31
April April October
2014 2013 2013
(unaudited) (unaudited) (audited)
Net revenue profit attributable to
ordinary shareholders (£'000) 2,113 1,457 3,254
Net capital (losses)/profit attributable
to ordinary shareholders (£'000) (353) 8,265 9,054
-------- -------- --------
Total profit attributable to ordinary
shareholders (£'000) 1,760 9,722 12,308
-------- -------- --------
Total equity attributable to shareholders
(£'000) 112,313 84,693 111,289
-------- -------- --------
The weighted average number of ordinary
shares in issue during the period on
which the earnings per ordinary share was
calculated was: 99,997,217 69,720,106 76,004,895
-------- -------- --------
The actual number of ordinary shares in
issue at the end of the period on which
the net asset value was calculated was: 100,361,305 76,175,000 99,361,305
-------- -------- --------
Revenue earnings per share 2.11p 2.09p 4.28p
Capital earnings per share (0.35p) 11.85p 11.91p
Total earnings per share - basic and -------- --------- --------
diluted 1.76p 13.94p 16.19p
Net asset value per share - basic and -------- --------- --------
diluted 111.91p 111.18p 112.00p
-------- -------- --------
Share price 109.75p 114.38p 112.50p
-------- -------- --------
Basic and diluted earnings per share and net asset value per share are the same
as the Company does not have any dilutive securities outstanding.
7. Share capital
Total
number
of
shares Nominal
in value
issue £'000
Allotted, called up and fully paid share capital
comprised:
Ordinary shares of 1p each:
At 1 November 2013 99,361,305 994
Issues of ordinary shares in the period 1,000,000 10
-------- --------
At 30 April 2014 100,361,305 1,004
======== ========
During the period to 30 April 2014 the Company issued 1,000,000 ordinary shares
for a total gross consideration of £1,118,000 before the deduction of issue
costs. Since 30 April 2014 and up to the date of this report, no shares have
been issued.
8. Related party disclosure
The Board consists of four non-executive Directors, all of whom are considered
to be independent by the Board. None of the Directors has a service contract
with the Company. The Chairman receives an annual fee of £30,000, the Chairman
of the Audit and Management Engagement Committee receives an annual fee of
£25,000 and the other Directors each receive an annual fee of £21,000.
At 30 April 2014 the Directors' interests in the Company's ordinary shares were
as follows:
30 30 31
April April October
2014 2013 2013
(unaudited) (unaudited) (audited)
Simon Miller (Chairman) 38,094 20,000 38,094
Christopher Casey 19,047 10,000 19,047
Andrew Irvine 38,094 20,000 38,094
Alice Ryder 9,047 - 9,047
Since the period end and up to the date of this report there have been no
changes in Directors' holdings.
9. Transactions with the Investment Manager
BlackRock Investment Management (UK) Limited ("BlackRock") provides management
and administration services to the Company under a contract which is terminable
on six months' notice in writing. BlackRock is entitled to receive from the
Company a management fee payable quarterly in arrears calculated at the rate of
0.25 per cent. per quarter of the average market capitalisation, together with
reimbursement of reasonable expenses properly incurred by it in the performance
of its duties. For details, see note 3.
The investment management fee for the six months ended 30 April 2014 was
£549,000 (period ended 30 April 2013: £391,000; period ended 31 October 2013:
£873,000). At the period end, an amount of £265,000 (30 April 2013: £391,000; 31
October 2013: £482,000) was outstanding in respect of the investment management
fee.
In addition to the above services, with effect from 1 November 2013 BlackRock
has provided the Company with marketing services. The total fee paid or payable
for these services for the period ended 30 April 2014 amounted to £46,000
including VAT (period ended 30 April 2013: nil; period ended 31 October 2013:
nil) of which £46,000 (period ended 30 April 2013: nil; period ended 31
October 2013: nil) was outstanding at 30 April 2014.
10. Contingent liabilities
There were no contingent liabilities at 30 April 2014, 30 April 2013 or 31
October 2013.
11. Publication of non statutory accounts
The financial information contained in this half yearly report does not
constitute statutory accounts, as defined in section 435 of the Companies Act
2006. The financial information for the periods ended 30 April 2014 and 30
April 2013 has not been audited.
The information for the period from 30 August 2012 (date of incorporation) to
31 October 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 these finaical statements contained no qualifications or statement under
sections 498(2) or 498(3) of the Companies Act 2006.
12. Annual results
The Board expects to announce the annual results for the year ended 31 October
2014 in mid December 2014.
Copies of the annual results announcement can be obtained from the Secretary on
0207 743 3000. The annual report should be available by late December 2014 with
the Annual General Meeting being held in February 2015.
Independent review report to BlackRock North American Income Trust plc
Introduction
We have been engaged by the Company to review the condensed set of financial
statements in the half yearly financial report for the six months ended 30
April 2014 which comprises the Statement of Comprehensive Income, Statement of
Changes in Equity, Statement of Financial Position, Cash Flow Statement and the
related notes. We have read the other information contained in the half yearly
financial report and considered whether it contains any apparent misstatements
or material inconsistencies with the information in the condensed set of
financial statements.
This report is made solely to the Company, in accordance with guidance contained
in International Standard on Review Engagements 2410 (UK and Ireland) "Review
of Interim Financial Information Performed by the Independent Auditor of the
Entity" issued by the Auditing Practices Board. To the fullest extent permitted
by law, we do not accept or assume responsibility to anyone other than the
Company for our work, for this report, or for the conclusions we have formed.
Directors' Responsibilities
The half yearly financial report is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for preparing the
half yearly financial report in accordance with the Disclosure and Transparency
Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the Company are
prepared in accordance with IFRS as adopted by the European Union. The
condensed set of financial statements included in this half yearly financial
report has been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting", as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half yearly financial report based on our
review.
Scope of Review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, "Review of Interim Financial Information
Performed by the Independent Auditor of the Entity" issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland), and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half yearly
financial report for the six months ended 30 April 2014 is not prepared, in all
material respects, in accordance with International Accounting Standard 34 as
adopted by the European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
Ernst & Young LLP
London
12 June 2014
The Half Yearly Financial Report will also be available on the BlackRock
Investment Management website at www.blackrock.co.uk/brna. Neither the contents
of the Manager's website nor the contents of any website accessible from hyperlinks
on the Manager's website (or any other website) is incorporated into, or forms part of,
this announcement.
For further information, please contact:
Jonathan Ruck Keene, Head of Closed End Funds Group, BlackRock Investment
Management (UK) Limited -
Tel: 020 7743 2178
Scott Malatesta, Senior Product Strategist, BlackRock Investment Management, LLC -
Tel: 020 7743 3000
Emma Philips, Media & Communications, BlackRock Investment Management (UK)
Limited -
Tel: 020 7743 2922
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