Half Yearly Report

RNS Number : 2208Z

Edinburgh US Tracker Trust plc

17 September 2009

 



    17 September 2009

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 2009

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

•    Interim dividend increased to 6.2p per share for the year ended 31 January 2010 (2009 - 3.50p)

- END -

For further information, please contact:-

David McCraw

Aberdeen Asset Management PLC    0131 528 4000

INTERIM MANAGEMENT REPORT

US equities staged a powerful recovery, after a particularly weak start to the year, as investors began to anticipate that lower interest rates and government stimulus packages would lead to a turnaround in the economy in the second half of this year. The improvement in investor sentiment received a further boost as corporate profits in the second quarter were generally ahead of market expectations. The S&P 500 Index rose by nearly 20% in US dollars but the weakness in the US currency reduced these gains significantly for sterling based investors.

In the six months ended 31 July 2009, the net asset value per share (excluding undistributed revenue for the period) rose by 3.8% to 495.02p (NAV) while the Index rose by 4.0% (in sterling terms). The small shortfall in the NAV performance relative to the index is attributable to timing differences in foreign exchange rate movements on revenue cash balances. The US dollar/sterling exchange rate fell from $1.44 to $1.66 during the period.

The Company's share price fell by 3.3% over the six month period to 31 July 2009 to 473.25p, representing a discount of 4.4% to the NAV. At 31 January 2009, the shares were trading at a premium to NAV of 2.6% and continued to trade below the Board's target discount of 3% for most of the period. Towards the end of the period, however, the discount widened and the Company has been buying back shares to limit discount volatility. In the six months ended 31 July 2009, 52,400 shares were bought back for cancellation and subsequent to the period end a further 298,500 shares have been purchased.

The revenue return per share rose by 15.1% to 4.20p. The increase in the revenue return is attributable to a more beneficial US dollar/exchange rate over the comparative period in 2008 and a lower tax charge. The majority of the Company's income is derived from its overseas investments and, following changes announced in this year's Budget, overseas dividends received by investment trusts after 1 July 2009 are exempt from corporation tax. The Directors have declared an interim dividend of 6.20p per share for the year to 31 January 2010 payable on 23 October 2009 to shareholders on the register on 25 September 2009. The interim dividend includes an additional 2.00p per share from accumulated revenue reserves. This one-off supplement recognises the non-recurring benefit to revenue reserves per share arising from the tender offer, which took place in January 2008, the forthcoming increase in personal tax rates in 2010 and the opportunity to make an increased distribution to shareholders at a time when income from equity investments has 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. The new holdings included Diamond Offshore, Reilly Automotive, FMC Technology and Western Digital. The other feature of the period was the ongoing need of banks and insurance companies to raise additional equity to repair balance sheets. The total value of purchases amounted to £3.7 million while sales totaled £3.2 million.

Events during the period

At the Company's AGM on 21 May 2009, all resolutions were passed. A final dividend of 4.40p was paid to shareholders on 26 May 2009.  

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 Section 842 of the Income and Corporation Taxes Act 1988, the UK 
     Listing Rules and the Companies Act, could lead to a number of detrimental outcomes and reputational 
     damage. The Audit Committee continually 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 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
	__________	__________	__________

	Six months ended 31 July 2008
	(unaudited)
	Revenue	Capital	Total
	£'000	£'000	£'000
Losses on investments	-	(16,493)	(16,493)
Foreign exchange gains	-	71	71
Income (note 2)	2,317	-	2,317
Investment management fee	(212)	-	(212)
Administrative expenses	(186)	-	(186)
	__________	__________	__________
Net return before finance costs and taxation	1,919	(16,422)	(14,503)
Finance costs	-	-	-
	__________	__________	__________
Return on ordinary activities before taxation	1,919	(16,422)	(14,503)
Taxation	(542)	-	(542)
	__________	__________	__________
Return on ordinary activities after taxation	1,377	(16,422)	(15,045)
	__________	__________	__________
Return per share (pence) (note 5)	3.65	(43.48)	(39.83)
	__________	__________	__________

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 6.20p per share (£2,309,000) has been declared for the year to 31 January 2010 and is payable on 23 October 2009 (2009 - 3.50p).

INCOME STATEMENT 

		Year ended 31 January 2009
		(audited)
	Revenue	Capital	Total
	£'000	£'000	£'000
Losses on investments	-	(37,641)	(37,641)
Foreign exchange gains	-	1,015	1,015
Income (note 2)	4,936	-	4,936
Investment management fee	(397)	-	(397)
Administrative expenses	(371)	-	(371)
	__________	__________	__________
Net return before finance costs and taxation	4,168	(36,626)	(32,458)
Finance costs	-	-	-
	__________	__________	__________
Return on ordinary activities before taxation	4,168	(36,626)	(32,458)
Taxation	(1,180)	-	(1,180)
	__________	__________	__________
Return on ordinary activities after taxation	2,988	(36,626)	(33,638)
	__________	__________	__________
Return per share (pence) (note 5)	7.93	(97.18)	(89.25)
	__________	__________	__________

  BALANCE SHEET

	As at	As at	As at
	31 July  2009	31 July  2008	31 January 2009
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Non-current assets
Investments at fair value through profit or loss	186,023	196,952	178,452
	__________	__________	__________
Current assets
Debtors and prepayments	239	590	319
Cash and short term deposits	1,539	4,175	2,828
	__________	__________	__________
	1,778	4,765	3,147
Creditors: amounts falling due within one year	(356)	(728)	(522)
	__________	__________	__________
Net current assets	1,422	4,037	2,625
	__________	__________	__________
Total assets less current liabilities	187,445	200,989	181,077
Provisions for liabilities and charges	-	(34)	(35)
	__________	__________	__________
Net assets	187,445	200,955	181,042
	__________	__________	__________
Capital and reserves
Called-up share capital	9,387	9,402	9,400
Share premium account	32,643	32,643	32,643
Capital redemption reserve	12,708	12,693	12,695
Capital reserve	128,798	142,541	122,320
Revenue reserve	3,909	3,676	3,984
	__________	__________	__________
Equity Shareholders' funds	187,445	200,955	181,042
	__________	__________	__________
Net asset value per share (pence)	499.23	534.32	481.50
	__________	__________	__________
Net asset value per share (excluding undistributed revenue for the period) (pence)	495.02	530.66	477.06
	__________	__________	__________

  Reconciliation of Movements in Shareholders' Funds

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
	______	________	_________	______	______	______
Six months ended 31 July 2008 (unaudited)
		Share	Capital
	Share	premium	redemption	Capital	Revenue
	capital	account	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 January 2008	9,489	32,643	12,606	160,917	5,699	221,354
Return on ordinary activities after taxation	-	-	-	(16,422)	1,377	(15,045)
Dividends paid (see note 4)	-	-	-	-	(3,400)	(3,400)
Purchase of own shares for cancellation	(87)	--	87	(1,954)	-	(1,954)
	______	________	_________	______	______	______
Balance at 31 July 2008	9,402	32,643	12,693	142,541	3,676	200,955
	______	________	_________	______	______	______
Year ended 31 January 2009 (audited)		Share	Capital
	Share	premium	redemption	Capital	Revenue
	capital	account	reserve	reserve	reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 January 2008	9,489	32,643	12,606	160,917	5,699	221,354
Return on ordinary activities after taxation	-	-	-	(36,626)	2,988	(33,638)
Dividends paid (see note 4)	-	-	-	-	(4,703)	(4,703)
Purchase of own shares for cancellation	(89)	-	89	(2,010)	-	(2,010)
Over accrual of expenses relating to Tender Offer	-	-	-	39	-	39
	______	________	_________	______	______	______
Balance at 31 January 2009	9,400	32,643	12,695	122,320	3,984	181,042
	______	________	_________	______	______	______

  CASHFLOW STATEMENT

	Six months ended	Six months ended	Year  ended
	31 July  2009	31 July  2008	31 January 2009
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Net return on ordinary activities before taxation	8,717	(14,503)	(32,458)
Adjustment for:
(Gains)/losses on investments	(7,090)	16,493	37,641
Foreign exchange losses/(gains)	365	(71)	(1,015)
Decrease in accrued income	62	126	74
Decrease in other debtors	2	18	21
Decrease in other creditors	(5)	(979)	(1,015)
	__________	__________	__________
Net cash inflow from operating activities	2,051	1,084	3,248
Servicing of finance
Interest paid	(1)	-	-
Taxation
UK corporation tax paid	(252)	(534)	(770)
Overseas with-holding tax paid	(354)	(349)	(716)
	__________	__________	__________
Net tax paid	(606)	(883)	(1,486)
	__________	__________	__________
Financial investment
Purchases of investments	(3,695)	(2,649)	(8,541)
Sales of investments	3,228	8,960	12,023
Index Futures payments	-	(297)	-
	__________	__________	__________
Net cash (outflow)/inflow from financial investment	(467)	6,014	3,482
Equity dividends paid	(1,654)	(3,400)	(4,703)
	__________	__________	__________
Net cash (outflow)/inflow before financing	(677)	2,815	541
	__________	__________	__________
Financing
Buy back of Ordinary shares (including expenses)	(247)	(1,954)	(2,010)
Tender offer of own shares (including expenses)	-	-	39
	__________	__________	__________
Net cash outflow from financing	(247)	(1,954)	(1,971)
	__________	__________	__________
(Decrease)/increase in cash	(924)	861	(1,430)
	__________	__________	__________
Analysis of changes in cash during the period
Opening net funds	2,828	3,243	3,243
(Decrease)/increase in cash as above	(924)	861	(1,430)
Foreign exchange movements	(365)	71	1,015
	__________	__________	__________
Closing net funds	1,539	4,175	2,828
	__________	__________	__________

  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. The adoption of the January 2009 SORP has no effect on the financial statements of the Company, other than the requirement separately to disclose capital reserves that relate to the revaluation of investments held at the reporting date. These are disclosed in note 7. This new requirement replaces the previous requirement to disclose the value of the capital reserve that was unrealised. 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 2009.

(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
2.	Income	31 July 2009	31 July 2008	31 January 2009
	Income from investments	£'000	£'000	£'000
	Overseas listed - unfranked	2,365	2,268	4,863
	Other income
	Deposit interest	-	49	73
		__________	__________	__________
	Total income	2,365	2,317	4,936
		__________	__________	__________

3.     Taxation

The charge for the period represents withholding tax suffered on overseas dividend income and estimated corporation tax charge for the year to 31 January 2010, based on a rate of 28%.

		Six months ended	Six months ended	Year  ended
		31 July 2009	31 July 2008	31 January 2009
4.	Dividends	£'000	£'000	£'000
	Interim dividend	-	-	1,316
	Final dividend	1,654	3,400	3,400
	Unclaimed dividends written back	-	-	(13)
		__________	__________	__________
		1,654	3,400	4,703
		__________	__________	__________

A final dividend of 4.40p for the year ended 31 January 2009 (2008 - 8.97p) was paid to shareholders on 26 May 2009.

An interim dividend of 6.20p (2009 - 3.50p) for the year ending 31 January 2010 will be paid on 23 October 2009 to shareholders on the register at 25 September 2009. The ex-dividend date is 23 September 2009. In accordance with UK GAAP this is not recognised in these financial statements.

		Six months ended	Six months ended	Year  ended
		31 July 2009	31 July 2008	31 January 2009
5.	Return per Ordinary share	£'000	£'000	£'000
	Return per share is based on the following figures:
	Revenue return per Ordinary share	1,579	1,377	2,988
	Capital return per Ordinary share	6,725	(16,422)	(36,626)
		__________	__________	__________
	Total return per Ordinary share	8,304	(15,045)	(33,638)
		__________	__________	__________
	Weighted average number of shares in issue	37,579,719	37,775,588	37,687,412
		__________	__________	__________
		p	p	p
	Revenue return per Ordinary share	4.20	3.65	7.93
	Capital return per Ordinary share	17.90	(43.48)	(97.18)
		__________	__________	__________
	Total return per Ordinary share	22.10	(39.83)	(89.25)
		__________	__________	__________

6.    Transaction costs

During the six months ended 31 July 2009 expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss. These have been expensed through capital and are included within gains/(losses) on investments in the Income Statement. The total costs were as follows:

			Six months ended	Six months ended	Year  ended
			31 July 2009	31 July 2008	31 January 2009
			£'000	£'000	£'000
	Purchases		3	1	7
	Sales		2	2	6
			__________	__________	__________
			5	3	13
			__________	__________	__________

     7.    Capital reserve 

     The capital reserve reflected in the Balance Sheet at 31 July 2009 includes gains of £12,798,000 (31 July 2008 - 
     £23,065,000; 31 January 2009 - £4,546,000) 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 2009	31 July 2008	31 January 2009
	Net assets attributable	£187,445,000	£200,955,000	£181,042,000
	Number of Ordinary shares in issue	37,546,979	37,609,379	37,599,379
	Net asset value per Ordinary share	499.23p	534.32p	481.50p

9.	Analysis of changes in net funds	At 1 February 2009	Cash-flow	Exchange rate movements	At 31 July 2009
		£'000	£'000	£'000	£'000
	Cash and short term deposits	2,828	(924)	(365)	1,539
		__________	__________	_________	_________

10.  Called up Share Capital 

During the period to 31 July 2009, 52,400 Ordinary shares of 25p each were bought back for cancellation at a total cost of £247,000, including expenses. Subsequent to the period end, a further 298,500 Ordinary shares were bought back at a total cost of £1,474,000, including expenses, leaving 37,248,479 Ordinary shares in issue at the date of this report.

11.  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 2009 and 31 July 2008 has not been audited.

The information for the year ended 31 January 2009 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 237 (2) or (3) of the Companies Act 1985.

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

13.    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 2009 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

 

END

 

 

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