Half-year Report
05/10/2023 07:00
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RNS Number : 7237O North American Income Trust (The) 05 October 2023
Legal Entity Identifier (LEI): 5493007GCUW7G2BKY360
5 October 2023
THE NORTH AMERICAN INCOME TRUST PLC
HALF-YEARLY FINANCIAL REPORT
FOR THE SIX MONTHS TO 31 JULY 2023
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.
Performance Highlights
Net asset value total return(A) Share price total return(A)
Six months ended 31 July 2023 Six months ended 31 July 2023
-3.2% -5.0%
Year ended 31 January 2023 +9.6% Year ended 31 January 2023 +12.4%
Russell 1000 Value Index (in sterling terms) total return Earnings per Ordinary share (revenue)
Six months ended 31 July 2023 Six months ended 31 July 2023
-1.0% 6.10p
Year ended 31 January 2023 +8.5% Six months ended 31 July 2022 6.10p
Dividends per Ordinary Share Dividend yield(A)
Six months ended 31 July 2023 As at 31 July 2023
5.20p 3.9%
Six months ended 31 July 2022 5.00p As at 31 January 2023 3.6%
(A) Considered to be an Alternative Performance Measure. Further details can
be found below.
Performance (Total return)
6 months ended 1 year ended 3 years ended 5 years ended
31 July 2023 31 July 2023 31 July 2023 31 July 2023
% % % %
Net asset value per Ordinary share(A) -3.2 +1.5 +42.6 +29.7
Share price per Ordinary share(A) -5.0 -1.7 +41.9 +25.5
Russell 1000 Value Index (in sterling terms) -1.0 +2.4 +51.7 +49.9
S&P 500 Index (in sterling terms) +8.6 +6.9 +50.0 +81.3
(A) Total return represents capital return plus dividends reinvested.
Considered to be an Alternative Performance Measure. Further details can be
found below.
Source: abrdn, Morningstar & Lipper.
Financial Calendar, Dividends and Highlights
Payment dates of quarterly dividends August 2023
October 2023
January 2024
May 2024
Financial year end 31 January 2024
Expected announcement of results for April 2024
year ended 31 January 2024
Annual General Meeting (Edinburgh) June 2024
Financial Highlights
As at As at Capital return
31 July 2023 31 January 2023 %
Net asset value per Ordinary share 317.8p 337.2p -5.7
Share price per Ordinary share (mid) 282.0p 306.0p -7.8
Discount to net asset value(A) 11.3% 9.3%
Net gearing (A) 5.5% 2.9%
Ongoing charges ratio(A) 1.00% 0.93%
(A) Considered to be an Alternative Performance Measure. Further details can
be found below.
Six months to Six months to Change
31 July 2023 31 July 2022 %
Revenue return per Ordinary share 6.10p 6.10p -
Interim dividends 5.20p(A) 5.00p(B) +4.0
(A) Includes a first interim dividend of 2.60p paid on 4 August 2023 and a
second interim dividend of 2.60p payable on 27 October 2023.
(B) Includes a first interim dividend of 2.50p paid on 5 August 2022 and a
second interim dividend of 2.50p paid on 28 October 2022.
Chair's Statement
Overview
In the six months ended 31 July 2023, The North American Income Trust plc (the
"Company") navigated high macroeconomic uncertainty amid monetary tightening,
banking sector issues and fears of a looming recession. Against this backdrop,
the Company's net asset value ("NAV") total return per share declined 3.2% in
sterling terms compared with a 1.0% decline in the total return of its
reference index, the Russell 1000 Value Index. Meanwhile, the Company's share
price total return fell 7.8% in sterling terms over the period, with the
discount to NAV widening from 9.3% to 11.3%. Despite this, I am pleased to
note that the Company continues to deliver a dividend yield that is almost
double that of the reference index and among the highest dividend yields
within its peer group. This highlights your Manager's focus on investing in
high quality companies with a strong dividend track record. However, such a
focus on income generation can sometimes be at the expense of capital growth
in the portfolio. While the Company's revenue return per Ordinary share was
unchanged at 6.10 pence over the six months to 31 July 2023, this reflects the
increase in US dollar income being offset by 4.5% appreciation of sterling
against the US dollar during the period.
Inflation, and the efforts of the Federal Reserve (the "Fed") to control it,
was one of the key themes of the period. We have witnessed ten consecutive
rate hikes which led to the target range of the Fed Funds rate reaching 5.25%
-5.50% in July 2023. Despite the Fed's somewhat hawkish stance, your Manager
expects limited further rate increases over the rest of the year. The other
theme that affected markets was the collapse of Silicon Valley Bank and a
small number of regional banks in March 2023, which acted as a brake on market
sentiment. While these events raised the risk of a credit crunch and the
possibility of a recession, investors were reassured by the regulators' timely
actions to stabilise the financial sector.
During the period, the Company's equity portfolio generated £8.8 million in
revenue, down 3.8% from £9.1 million in the same period in 2022. This decline
was partly as a result of sterling strengthening to the US dollar, from $1.23
to $1.28 during the period, continuing a trend that began in October 2022. The
Company maintained a low exposure to corporate bonds, which represented 2.2%
of income in the period, slightly more than last year. Total income was less
than 1% lower than for the same period last year. Meanwhile, the Company's
revenue return per Ordinary share was unchanged at 6.10 pence, with the lower
interest and tax charges offsetting most of the small decline in income.
Dividend
The Board is declaring a second quarterly dividend for the year to 31 January
2024 of 2.6 pence per share (2023- 2.5 pence), taking total dividends for the
first half of the year to 5.2 pence per share (2022 - 5.0 pence). The second
quarterly dividend is payable on 27 October 2023 to shareholders on the
register on 13 October 2023. It is expected that the third interim dividend,
which will be paid in February 2024, will be 2.6 pence per share and the
fourth interim dividend will continue to act as a balancing figure once the
income for the full year has been determined.
Management of Premium and Discount
The Company's share price fell 7.8% to 298.0 pence and ended the half year at
an 11.3% discount to total NAV, compared with a 9.3% discount at the financial
year end, 31 January 2023. Over the period, the Company's shares traded at
discounts between around -8% and -12%, on a cumulative income basis. 197,574
Ordinary shares were bought back and cancelled at a weighted average price of
283.4 pence and a weighted average discount of 9.4%. The total cost was
£565,000. Since 31 July 2023, the Company has bought back a further 659,338
Ordinary shares, at a weighted average discount of 11.8%.
Gearing
The Board believes that sensible use of gearing should enhance returns to
shareholders over the longer term. In December 2020, the Company entered into
a long-term financing agreement for US$50 million with MetLife for two loans
of US$25 million with terms of 10 and 15 years. As a result, net gearing at 31
July 2023 stood at 5.5% (31 January 2023 - 2.9%).
Promotional Activity
The Board continues to update shareholders and promote the Company through the
Manager's marketing programme by means of articles and videos from the fund
manager, webinars, shareholder meetings and an online presentation prior to
the Annual General Meeting ("AGM"). You can register for updates on the
Company's website northamericanincome.co.uk which has been updated and
refreshed over the last couple of months. The website is also the best source
for up-to-date information about the Company, including monthly factsheets,
interviews with the Manager and the latest NAV and price of the Ordinary
shares.
Environmental, Social and Governance
On the environmental, social and governance ("ESG") front, your Manager
continues to engage with companies in the portfolio based on a range of
criteria, including strong governance practices and efficient resource
management. The Investment Manager uses ESG tools, with a particular focus on
climate-related criteria, to assess the carbon footprint of the portfolio. The
Manager also published the first Taskforce on Climate-related Financial
Disclosures ("TCFD") report on the Company's carbon footprint data, which can
be found at invtrusts.co.uk/en-gb/prices-and-literature/company-literature.
This report is produced to support investors in appopriately assessing and
pricing a specific set of risks related to climate change.
Board
The Board continues to review its succession planning. In March 2024, I will
have served nine years as a Director of the Company and, in accordance with
the UK Corporate Governance Code, I intend to retire from the Board at the
conclusion of the AGM in June 2024.
As part of its succession planning, the Board has carefully considered my
successor and I am delighted to report that Charles Park will be appointed as
Chair with effect from the conclusion of the 2024 AGM. Charlie joined the
Board in June 2017. He has extensive experience of investing in the US
including through his valued experience as a Director of the Company.
In May 2023, the Board visited your Manager in the US, an excellent
opportunity to meet the team face to face. The visit allowed the Board to
develop a deeper knowledge of the Manager's investment process and culture, as
well as broaden their understanding on how specific market developments in
the US are impacting the companies in the portfolio. We also appreciated the
opportunity to spend some time meeting directly with management of one of the
companies and hearing from experts on the political and economic backdrop.
Outlook
Macroeconomic uncertainty persists given elevated inflation, tight monetary
policies and geopolitical tensions. At the same time, the US is starting the
extended run-in to the next presidential election in November 2024 and we are
alert to the prospects of vote-garnering announcements by prospective
candidates from both sides over the coming months.
While investor sentiment now favours an end to the Fed's interest-rate hiking
cycle, some further rate increases cannot be ruled out due to still-high core
inflation and the Fed's commitment to achieving its 2% target. Meanwhile,
inflation could increase further due to the recent rise in oil prices. In
addition to price increases, more restrictive lending policies as a result of
the banking sector collapses in March and the restarting of student loan
repayments could hinder consumer spending. However, the US economy has
remained resilient during the review period, with a notably strong labour
market which is an improvement on forecasts at the start of the year.
Against this backdrop, the Board believes a mild recession is still likely to
begin at some point by the end of the year or in early 2024. Your Manager has
positioned the Company's portfolio to focus on high quality companies with
good corporate governance, strong balance sheets and a solid dividend growth
history, with a view to protecting the portfolio from the worst impacts of
such an economic backdrop. This strategy has enabled the Company to pay a
progressive annual dividend over the past eleven years. The Board is convinced
that a focus on quality and income generation is the best approach to navigate
uncertain times and weather a potential recession.
Dame Susan Rice
Chair
4 October 2023
Investment Manager's Review
Market Overview
The Company's reference index, the Russell 1000 Value Index, delivered a total
return of -1.0% in sterling terms over the six month period ended 31 July
2023. The strength of sterling in the period more than offset the 3.5% local
currency total return of the index.
A combination of higher interest rates and inflation - due in part to a robust
employment market - led to continued volatility in US share prices over the
period. This is evidenced by the banking sector turmoil in March 2023 when two
regional banks, Silicon Valley Bank and Signature Bank, both collapsed. There
were several reasons for the failures; however, a key determinant was higher
interest rates forcing both banks to lower the value of their investment
portfolios.
Faced with a US economy that has maintained positive momentum despite a
succession of rate rises since March last year, the Federal Reserve (Fed)
continued to tighten policy over the remainder of 2022. This included four
successive rate hikes of 75 basis points (bps) between June and November 2022.
However, with inflationary pressures moderating, the Fed then eased the pace
of rate increases from 50 bps in December 2022 to 25 bps from its February
2023 meeting onwards. In fact, the Fed refrained from tightening policy
altogether at the June 2023 meeting; however, the rise of 25 bps in July 2023
took the targeted Fed funds rate to 5.25-5.50%, its highest level since 2001.
US stock markets rose steadily during June and July 2023. This was after
investor sentiment was helped at the end of May 2023 by the long-awaited news
of an agreement over temporarily suspending the US debt ceiling until January
2025, thereby reducing the risk of a US debt default.
The communication services, information technology and industrials sectors
were the strongest performers within the Russell 1000 Value Index, while the
real estate, healthcare and utilities sectors were the primary market laggards
for the period.
The technology sector performed strongly amid rising investor demand for
artificial intelligence ("AI")-related stocks and the prospect of less
monetary tightening in the future. The communication services and industrial
sectors were also leading performers within the Russell 1000 Value Index.
Conversely, the real estate, healthcare, and utilities sectors were the
primary laggards for the period.
Revenue Account
The currency effect flows through the balance sheet and the revenue account,
muting the sterling value growth as compared to the local currency
performance.
This year the trend of year-on-year growth in dividend income has checked
slightly as investee companies have reacted to the tightening fiscal
environment. Dividend income in the first six months of the year was £8.8m,
or 3.8% lower than the £9.2m earned in the six months to July 2022. The
marginal reduction in dividend income was offset by an increase in deposit
interest as cash is now generating a more meaningful return than has been the
case for many years. Option income was also down 5.6%. Dividend income is
still almost 15% higher than the pre-pandemic income in July 2019 and our
forecast for the second half of the financial year is that income will be
close to the level earned last year.
Total costs for the period have increased by 5.8%, with a reduction in the
management fee, due to the decline in the underlying asset values, being
outweighed by a rise in administrative expenses.
Investment Performance
The Company generated a NAV total return of -3.2% for the six months ended 31
July 2023, underperforming the -1.0% total return of the reference index, the
Russell 1000 Value Index.
At a sector level, the main detractor from the Company's performance was
industrials due to stock selection and, to a lesser extent, having an
underweight exposure to the sector. The second-largest detractor was stock
selection in the materials sector.
Looking at individual stock contributions, the largest individual detractor
was a lack of exposure to the social media and technology conglomerate, Meta
Platforms ("Meta"). Shares in the Facebook owner surged as the company
reported better-than-expected earnings in the second quarter and issued
optimistic guidance as the company is investing heavily in AI, a move which
has been well received by investors. Non-dividend paying technology companies,
like Meta, do not fall into our stock selection criteria as they do not return
money to shareholders via dividend payments.
Looking at stocks held in the portfolio, agricultural sciences company FMC
Corporation underperformed, after the company reported disappointing second
quarter earnings and lowered its full-year guidance, given lower-than-expected
volumes due to inventory destocking from
its customers.
Diversified healthcare provider CVS Health was another weak performer as it
faced a challenging macroeconomic environment and above-trend claims from its
Aetna insurance segment.
In terms of positive contributors, at a sector level, the largest contributors
to the Company's performance were energy and information technology, both due
to stock selection.
Semiconductor manufacturer Broadcom was among the top positive contributors,
performing strongly, alongside NVIDIA and other companies with AI exposure,
after reports indicated a significant increase in demand for AI solutions.
Broadcom subsequently reported earnings that confirmed these improving demand
trends.
Oilfield services provider Baker Hughes also fared well after it was awarded a
major subsea equipment contract off the Ivory Coast. The company will supply
several technologies to Africa's first net-zero emissions development project.
You can read more about Broadcom and Baker Hughes, and our rationale for
holding them in the portfolio, on pages 15 and 16 of the 2023 Half-Yearly
Report.
Real estate investment trust Omega Healthcare Investors reported
better-than-expected earnings thanks to higher occupancy rates at its customer
facilities, along with fewer staffing issues. At the same time, the company's
management continues to make progress on restructuring certain customer
contracts, a process which should conclude over the coming quarters.
Portfolio Activity
Our investment process focuses on identifying and investing in high quality,
cash-generative businesses. Market volatility created opportunities to add
quality companies into the portfolio at compelling prices.
During the six month period, we initiated positions in three new companies.
Beverage firm Keurig Dr Pepper has products in both the cold drinks segment
(led by the flagship Dr Pepper brand) and the coffee segment, following the
merger with Keurig which is a leading brand in the single-serve coffee
segment. Historically, the cold drinks business has grown in line with, or
above, the market, benefiting from the company's strength in non-cola flavours
and its status as a preferred distributor and acquiror of niche brands. The
single-serve coffee business has recently been under pressure due to the
impact of higher inflation but has excellent long-term trends and pricing in
both segments (especially coffee) has now normalised, while demand strength
and market share gains have continued.
We also introduced Essential Utilities, a diversified utility with two-thirds
of its earnings from the water business and one-third from the gas business.
In the short run, the gas business should grow faster given the infrastructure
upgrades needed. However, the water business should grow at a comparable pace
over the intermediate term due to several small acquisition opportunities
given that around 85% of the country is served by small, privately run
municipal operations. Furthermore, environmental regulations continue to be
more stringent and these incremental costs - some of which can be quite
sizeable - are a common catalyst for acquisition opportunities.
Another new holding is energy infrastructure company Enbridge. It is a premier
midstream company that operates one of the most advantaged oil pipeline
networks in North America, a strong collection of natural gas infrastructure
and utility assets, and a growing renewable energy platform. The company's
diversified asset portfolio generates predictable cash flows thanks to its
regulated and long-term contracts with customers. The strategy is to harvest
this substantial cash generation to complete Enbridge's large backlog of
low-risk projects. Over time, project completion should drive earnings higher
while also supporting the company's shareholder-friendly distribution policy.
Meanwhile, we sold clothing company VF Corporation. Despite having a portfolio
of well-admired brands like Vans and The North Face, the company has faced
multiple setbacks due to its continued poor execution. While many of these
issues appear to be temporary, with most of them stemming from the pandemic's
effects on both supply chains and demand, they have impacted VF Corporation's
balance sheet. Moreover, any improvement in operating performance has likely
been delayed while a new CEO attempts to reposition the company at a time when
consumer sentiment is already weak.
We also sold our position in energy infrastructure firm TC Energy, using the
proceeds to fund our investment in competitor Enbridge. While both are still
high quality energy infrastructure companies, we believe the fundamental
backdrop favours Enbridge. TC Energy is in the process of completing several
large projects that will create longer-term growth opportunities. However,
factors primarily outside the company's control have created delays and put
upward pressure on costs, negatively affecting project-level returns.
Furthermore, because of these pressures, TC Energy has set ambitious
divestiture goals to fund these projects and now risks balance sheet
degradation if these sales are not completed at fair prices in a reasonable
time frame.
A list of investments in the portfolio can be found on pages 12 to 13 of the
2023 Half-Yearly Report.
Within the Company's corporate bond portfolio, we initiated several positions
over the review period to take advantage of more attractive valuations. This
was after these bonds' yields became more attractive due to further monetary
tightening as well as worries about what an economic slowdown could mean for
the instruments' credit quality. In contrast, we exited some other positions
as the valuation of these bonds traded through what we deemed to be their fair
value. We continue to work closely with the Manager's fixed income specialists
to monitor credits and market conditions.
Outlook
The US economy continues to surprise to the upside. After the latest interest
rate increase in July 2023, consensus is shaping up that the Fed may be at the
end of its interest-rate hiking cycle. However, this view may be premature as
core inflation data continue to be slow to contract and the Fed has been clear
that it is committed to hitting its 2% target. Moreover, gasoline prices have
been rising recently, which will negatively affect future inflation data. Up
to now, the consumer has held up remarkedly well; however, higher gasoline
prices, tighter lending conditions post the averted bank crisis and restarting
student loan repayments are likely to constrain spending. That being said, the
abrdn 'house' view remains that a mild recession is still likely. We now
expect it to begin in the first quarter of 2024 and we are not forecasting a
recovery until the tail end of the year.
Fran Radano
abrdn Inc.
4 October 2023
Other Matters
Principal Risks and Uncertainties
There are a number of risks that, if realised, could have a material adverse
effect on the Company and its financial condition, performance and prospects.
The Board has considered the principal risks and uncertainties facing the
Company together with a description of the mitigating actions it has taken.
They can be summarised under the following headings:
- Market Risk
- Major Market Event or Geopolitical Risk
- Income and Dividend Risk
- Operational Risk
- Regulatory Risk
- Gearing Risk
- Discount Volatility
- Derivatives
- Potential Impact of ESG Investment Principles
Details of these risks are provided on pages 14 to 16 of the Annual Report for
the year ended 31 January 2023.
The Board monitors these principal risks closely and has a process to identify
and assess emerging risks such as climate change and geopolitical
developments.
The increasing political and economic uncertainty which could affect markets,
particularly in reaction to higher interest rates and recent banking failures,
received particular focus in the reporting period.
The Board is also aware of the elevated threat posed by climate change and
continues to monitor, through the Investment Manager, the potential risk that
the companies in the portfolio may fail to adapt to changes in policy and
regulation.
In all other respects, the Company's principal risks and uncertainties have
not changed nor are they expected to change in the second half of the
financial year ending 31 January 2024.
Going Concern
In accordance with the Financial Reporting Council's Guidance on Risk
Management, Internal Control and Related Financial and Business, the Directors
have undertaken a rigorous review and consider both that there are no material
uncertainties and that the adoption of the going concern basis of accounting
is appropriate. The Company's assets consist substantially of equity shares in
companies listed on recognised stock exchanges and, in most circumstances, are
realisable within a short timescale.
In December 2020, the Company entered into a long-term financing agreement for
US$50 million with MetLife, comprising two loans of US$25 million with terms
of 10 and 15 years.
The Directors have a reasonable expectation that the Company has adequate
financial resources to continue in operational existence for the foreseeable
future and the ability to meet all its liabilities and ongoing expenses from
its assets. Given that the Company's portfolio comprises primarily "Level
One" assets (listed on a recognisable exchange and realisable within a short
timescale), and the Company's relatively low level of gearing, the Directors
believe that adopting a going concern basis of accounting remains appropriate.
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 financial statements has been prepared in
accordance with Financial Reporting Standard 104 (Interim Financial
Reporting);
- the Half-Yearly Board Report, comprising the Chair's Statement,
Other Matters and Portfolio Information, includes a fair review of the
information required by rule 4.2.7R of the Disclosure Guidance and
Transparency Rules (being an indication of important events that have occurred
during the first six months of the financial year and their impact on the
condensed set of Financial Statements and a description of the principal risks
and uncertainties for the remaining six months of the financial year); and
- the financial statements include a fair review of the
information required by 4.2.8R of the Disclosure Guidance and Transparency
Rules (being related party transactions that have taken place during the first
six months of the financial year and that have materially affected the
financial position of the Company during that period; and any changes in the
related party transactions described in the last Annual Report that could do
so).
The Half-Yearly Financial Report for the six months ended 31 July 2023
comprises the Half-Yearly Board Report, the Directors' Responsibility
Statement and a condensed set of Financial Statements which has not been
reviewed or audited by the Company's auditor.
For and on behalf of the Board
of The North American Income Trust plc
Dame Susan Rice,
Chair
4 October 2023
Ten Largest Investments
As at 31 July 2023
Baker Hughes CVS Health
Baker Hughes Company provides oilfield products and services. The Company CVS Health Corporation provides health care and retail pharmacy services. The
engages in surface logging, drilling, pipeline operations, petroleum Company offers prescription medications, beauty, personal care, cosmetics, and
engineering, and fertilizer solutions, as well as offers gas turbines, valves, health care products as well as pharmacy benefit management, disease
actuators, pumps, flow meters, generators, and motors. Baker Hughes serves oil management, and administrative services.
and gas industries worldwide.
MetLife Gaming & Leisure Properties
MetLife, Inc. provides individual insurance, employee benefits, and financial Gaming and Leisure Properties, Inc. owns and leases casinos and other
services with operations throughout the United States and the regions of Latin entertainment facilities.
America, Europe, and Asia Pacific.
Phillips 66 Medtronic
Phillips 66 is a downstream energy company. The Company's operations include Medtronic plc develops therapeutic and diagnostic medical products for a wide
oil refining, marketing, and transportation. range of conditions, diseases and disorders.
Bristol-Myers Squibb CMS Energy
Bristol-Myers Squibb Company is a global biopharmaceutical company. The CMS Energy Corporation is an energy company. The company, through its
Company develops, licences, manufactures, markets, and sells pharmaceutical subsidiaries, provides electricity and natural gas to its customers. CMS
and nutritional products. energy also invests in and operates non-utility power generation plants in the
United States and abroad.
Merck & Co. L3 Harris Technologies
Merck & Co., Inc. is a global health care company that delivers health L3Harris Technologies, Inc. is an aerospace and defence technology innovator.
solutions through its prescription medicines, vaccines, biological therapies, The Company designs, develops, and manufactures radio communications products
animal health, and consumer care products, which it markets directly and and systems, including single channel ground and airborne radio systems.
through its joint ventures. The Company has operations in pharmaceutical,
animal health, and consumer care.
List of Investments
As at 31 July 2023
Valuation Valuation
Company Industry classification £'000 %
Baker Hughes Energy Equipment & Services 25,035 5.3
CVS Health Health Care Providers & Services 20,898 4.5
MetLife Insurance 19,576 4.2
Gaming & Leisure Properties Specialised REITs 18,443 3.9
Phillips 66 Oil, Gas & Consumable Fuels 17,340 3.7
Medtronic Health Care Equipment & Supplies 17,052 3.6
Bristol-Myers Squibb Pharmaceuticals 16,917 3.6
CMS Energy Multi-Utilities 16,613 3.5
Merck & Co. Pharmaceuticals 16,578 3.5
L3 Harris Technologies Aerospace & Defence 16,200 3.4
Ten largest investments 184,652 39.2
Omega Healthcare Investors Health Care REITs 16,115 3.4
Philip Morris Tobacco 15,501 3.3
Comcast Media 15,126 3.2
FMC Chemicals 14,958 3.2
Restaurant Brands International Hotels, Restaurants & Leisure 14,876 3.2
Cogent Communications Diversified Telecommunication 14,279 3.0
Emerson Electric Electrical Equipment 14,199 3.0
American International Insurance 14,055 3.0
Analog Devices Semiconductors & Semiconductor Equipment 13,957 3.0
Citigroup Banks 12,965 2.8
Twenty largest investments 330,683 70.3
JPMorgan Chase & Co. Banks 12,277 2.6
Cisco Systems Communications Equipment 12,134 2.6
Air Products & Chemicals Chemicals 10,679 2.3
PNC Financial Services Banks 10,639 2.3
Enbridge Oil, Gas & Consumable Fuels 10,010 2.1
CME Group Capital Markets 7,732 1.6
Coca-Cola Beverages 7,220 1.5
OneMain Consumer Finance 7,070 1.5
Broadcom Semiconductors & Semiconductor Equipment 6,984 1.5
Royal Bank of Canada Banks 6,934 1.5
Thirty largest investments 422,362 89.8
CI Financial Capital Markets 6,893 1.5
Keurig Dr Pepper Beverages 6,608 1.4
Essential Utilities Water Utilities 6,574 1.4
AbbVie Biotechnology 5,232 1.1
Texas Instruments Semiconductors & Semiconductor Equipment 4,896 1.0
Home Depot Specialty Retail 4,670 1.0
Hannon Armstrong Sustainable Mortgage Real Estate Investment Trusts (REITS) 3,653 0.7
CCO Holdings 7.375% 03/03/31 Media 1,391 0.3
Venture Global 8.375% 01/06/31 Oil, Gas & Consumable Fuels 1,375 0.3
CCO Holdings 4.75% 01/02/32 Media 1,347 0.3
Forty largest investments 465,001 98.8
Goodyear Tire & Rubber 5% 15/07/29 Consumer Durables 716 0.2
NRG Energy 3.625% 15/02/31 Multi-Utilities 694 0.2
Venture Global Calcasie 6.25% 15/01/30 Oil, Gas & Consumable Fuels 685 0.2
NCL 5.875% 15/02/27 Consumer Discretionary 682 0.1
Howmet Aerospace 3% 15/01/29 Aerospace & Defence 678 0.1
Viatris 2.7% 22/06/30 Pharmaceuticals 671 0.1
Graphic Packaging 3.75% 01/02/30 Packaging & Containers 663 0.1
Venture Global Calcasie 3.875% 01/11/33 Oil, Gas & Consumable Fuels 657 0.1
Arsenal AIC Parent 8% 01/10/30 Materials 30 0.1
Total investments 470,477 100.0
Geographical Analysis
As at 31 July 2023
Equity Fixed interest Total
Country % % %
Canada 8.3 - 8.3
USA 89.6 2.1 91.7
97.9 2.1 100.0
Investment Case Studies
Broadcom
Starting out as a sub-division of Hewlett-Packard in the 1960s, Broadcom
(formerly Avago Technologies) has grown into a leading developer and supplier
of semiconductor and software solutions. Its broad product range covers the
wireless, networking, server storage, broadband and industrial markets.
With CEO and president Hock Tan guiding a strong management team, the firm has
built its reputation as a global technology powerhouse through an aggressive,
yet smart, merger and acquisition strategy. The anticipated acquisition of
cloud computing business VMware is evidence of this strategy at work. The deal
has already been approved by the European Commission and provisionally
approved by the UK's Competitions and Markets Authority, so now only needs
clearance from the US Federal Trade Commission.
The explosion in AI is boosting the company's performance. Exposure to AI
comes through custom silicon chips (believed to be used by Google in its
Tensor Processing Unit AI accelerators), and AI ethernet switches. AI is
expected to make up more than 20% of semiconductor sales in fiscal year 2024
(up from 10% in fiscal year 2022), worth around $6-8 billion.
The holding is maintained by the Investment Manager because Broadcom is an
excellent allocator of capital and has the ability to compound earnings per
share over the long-term. The company's management is committed to returning
around 50% of free cash flow to shareholders, with an attractive dividend
yield. Meanwhile, its valuation appears reasonable compared with its peer
group.
Broadcom has made great strides in terms of ESG performance in recent years
(evidenced by its 'A' rating from MSCI). Its products often focus on
minimising power consumption compared with rivals. The company has also
committed to the ethical sourcing of raw materials (as semiconductor
manufacturing can involve the use of conflict minerals, which are linked to
human rights abuses). More than 90% of its suppliers comply with the stringent
Responsible Minerals Initiative standards. Given Broadcom's role as an
industry consolidator, the Investment Manager has also engaged with the
management team on human capital development. This has evidenced a more
positive impression of Broadcom's ability to integrate people into the company
when it makes acquisitions.
Baker Hughes
Baker Hughes is a unique oilfield services company with a diverse portfolio
that includes traditional energy products, liquified natural gas ("LNG")
equipment and 'new energy' solutions.
The mix of traditional oilfield services, LNG technology and new energy
solutions, including carbon capture, utilisation and storage and hydrogen,
presents an intriguing combination of near, medium, and long-term
opportunities from an investment perspective. The company could benefit from
greater spending by upstream customers, multiple years of strong demand for
LNG technologies and secular tailwinds for energy solutions tied in with a
greener, more sustainable future.
In the Investment Manager's opinion, investors do not fully appreciate the
value of Baker Hughes' strong position within LNG equipment and new energy
technologies. From an income perspective, the company's strong balance sheet
and shareholder returns strategy allow it to maintain dividend payments to
shareholders through economic cycles. Holding Baker Hughes gives the Company
exposure to relatively more attractive parts of the energy value chain and
that longer-term opportunity.
From an ESG point of view, Baker Hughes is highly rated (with an 'AA' score
from MSCI). Despite its exposure to traditional oil and gas, the company is
closely linked with the energy transition. It was one of the first energy
companies to establish a net zero emission target for 2050, supported by
interim targets. The Investment Manager views Baker Hughes' performance and
disclosures in this area to be ahead of its peers.
Despite the company's above-average exposure to climate change risk, the
Investment Manager is confident in its ability to mitigate these concerns
following our engagement on the issue. For example, Baker Hughes uses robust
internal models to run various scenarios and to better plan, or avoid,
physical asset risk.
Condensed Statement of Comprehensive Income (unaudited)
Six months ended Six months ended
31 July 2023 31 July 2022
Revenue Capital Total Revenue Capital Total
Notes £'000 £'000 £'000 £'000 £'000 £'000
Net (losses)/gains on investments - (28,238) (28,238) - 14,435 14,435
Net currency gains/(losses) - 1,573 1,573 - (1,337) (1,337)
Income 2 11,135 429 11,564 11,219 324 11,543
Investment management fee (451) (1,052) (1,503) (464) (1,082) (1,546)
Administrative expenses 3 (464) - (464) (401) - (401)
Net return before finance costs and taxation 10,220 (27,288) (17,068) 10,354 12,340 22,694
Finance costs (165) (385) (550) (176) (411) (587)
Return before taxation 10,055 (27,673) (17,618) 10,178 11,929 22,107
Taxation 4 (1,513) 281 (1,232) (1,610) 235 (1,375)
Return after taxation 8,542 (27,392) (18,850) 8,568 12,164 20,732
Return per share (pence) 6 6.10 (19.55) (13.45) 6.10 8.67 14.77
The total column of the Condensed Statement of Comprehensive Income is the
profit and loss account of the Company.
All revenue and capital items in the above statement derive from continuing
operations.
The accompanying notes are an integral part of the financial statements.
Condensed Statement of Financial Position (unaudited)
As at As at
31 July 2023 31 January 2023
Notes £'000 £'000
Non-current assets
Investments at fair value through profit or loss 11 470,477 486,940
Current assets
Debtors and prepayments 7,538 2,675
Cash and short-term deposits 19,363 26,699
26,901 29,374
Creditors: amounts falling due within one year
Traded options 11 (291) (264)
Other creditors (13,227) (2,616)
(13,518) (2,880)
Net current assets 13,383 26,494
Total assets less current liabilities 483,860 513,434
Creditors: amounts falling due after more than one year
Senior Loan Notes (38,792) (40,543)
Net assets 445,068 472,891
Capital and reserves
Called-up share capital 7,002 7,012
Share premium account 51,806 51,806
Capital redemption reserve 15,614 15,604
Capital reserve 8 345,871 373,828
Revenue reserve 24,775 24,641
Total shareholders' funds 445,068 472,891
Net asset value per share (pence) 9 317.82 337.21
The accompanying notes are an integral part of the financial statements.
Condensed Statement of Changes in Equity (unaudited)
Six months ended 31 July 2023
Share Capital
Share premium redemption Capital Revenue
capital account reserve reserve reserve Total
Note £'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 January 2023 7,012 51,806 15,604 373,828 24,641 472,891
Buyback of Ordinary shares (10) - 10 (565) - (565)
Return after taxation - - - (27,392) 8,542 (18,850)
Dividends paid 5 - - - - (8,408) (8,408)
Balance at 31 July 2023 7,002 51,806 15,614 345,871 24,775 445,068
Six months ended 31 July 2022
Share Capital
Share premium redemption Capital Revenue
capital account reserve reserve reserve Total
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 January 2022 7,034 51,806 15,582 350,388 23,653 448,463
Buyback of Ordinary shares (22) - 22 (1,252) - (1,252)
Return after taxation - - - 12,164 8,568 20,732
Dividends paid 5 - - - - (9,126) (9,126)
Balance at 31 July 2022 7,012 51,806 15,604 361,300 23,095 458,817
The accompanying notes are an integral part of the financial statements.
Condensed Statement of Cash Flows (unaudited)
Six months ended Six months ended
31 July 2023 31 July 2022
£'000 £'000
Operating activities
Net return before taxation (17,618) 22,107
Adjustments for:
Net losses/(gains) on investments 28,075 (14,667)
Net (gains)/losses on foreign exchange transactions (1,573) 1,337
Increase in dividend income receivable (248) (681)
Increase in fixed interest income receivable (64) (23)
Increase in derivatives 27 343
Decrease/(increase) in other debtors 16 (24)
Increase in other creditors 687 849
Tax on overseas income (1,053) (1,357)
Amortisation of fixed income book cost (45) (4)
Net cash flow from operating activities 8,204 7,880
Investing activities
Purchases of investments (72,882) (106,369)
Sales of investments 66,493 107,830
Net cash flow from investing activities (6,389) 1,461
Financing activities
Equity dividends paid (8,408) (9,126)
Buyback of Ordinary shares (565) (1,252)
Net cash used in financing activities (8,973) (10,378)
Decrease in cash (7,158) (1,037)
Analysis of changes in cash during the period
Opening balance 26,699 13,875
Effect of exchange rate fluctuations on cash held (178) 2,486
Decrease in cash as above (7,158) (1,037)
Closing balance 19,363 15,324
The accompanying notes are an integral part of the financial statements.
Notes to the Financial Statements (unaudited)
For the year ended 31 July 2023
1. Accounting policies
Basis of preparation. The condensed financial statements have been prepared in
accordance with Financial Reporting Standard 104 (Interim Financial Reporting)
and with the Statement of Recommended Practice for 'Financial Statements of
Investment Trust Companies and Venture Capital Trusts'. They have also been
prepared on a going concern basis and on the assumption that approval as an
investment trust will continue to be granted. Annual financial statements are
prepared under Financial Reporting Standard 102.
The condensed interim financial statements have been prepared using the same
accounting policies as the preceding annual financial statements.
2. Income
Six months ended Six months ended
31 July 2023 31 July 2022
£'000 £'000
Income from overseas listed investments
Dividend income 7,658 8,169
REIT income 1,134 972
Interest income from investments 248 76
9,040 9,217
Other income from investment activity
Traded option premiums 1,846 1,955
Deposit interest 249 47
2,095 2,002
Total income 11,135 11,219
3. Administrative expenses
Six months ended Six months ended
31 July 2023 31 July 2022
£'000 £'000
Directors' fees 78 60
Secretarial fees 73 65
Promotional activities 107 107
Auditor's remuneration:
- fees payable to the Company's auditor for the audit of the annual report 26 18
Custody and bank charges 12 14
Registrar's fees 14 16
Professional fees 21 17
Depositary charges 22 23
Other expenses 111 81
464 401
4. Taxation
The taxation expense reflected in the Condensed Statement of Comprehensive
Income is based on the estimated annual tax rate expected for the full
financial year. The estimated annual corporation tax rate used for the year to
31 January 2024 is 24% (2023 - 19%).
Detailed below is an analysis of the tax charge for each period.
Six months ended 31 July 2023 Six months ended 31 July 2022
Revenue Capital Total Revenue Capital Total
Taxation £'000 £'000 £'000 £'000 £'000 £'000
UK corporation tax 231 - 231 98 - 98
Double tax relief (170) - (170) (98) - (98)
Overseas tax suffered 1,107 64 1,171 1,308 49 1,357
Tax relief to capital 345 (345) - 284 (284) -
Deferred tax - - - 84 - 84
Double tax relief on deferred tax items - - - (66) - (66)
Total tax charge for the period 1,513 (281) 1,232 1,610 (235) 1,375
5. Dividends
Six months ended Six months ended
31 July 2023 31 July 2022
£'000 £'000
Third interim dividend for 2023 - 2.5p (2022 - 2.5p) 3,506 3,517
Final dividend for 2023 - 3.5p (2022 - 4.0p) 4,902 5,609
8,408 9,126
The Company pays four dividends per year. The first interim dividend of 2.60p
(2023 - 2.50p) for the year ending 31 January 2024 was paid on 4 August 2023
to shareholders on the register at 21 July 2023, with an ex-dividend date of
20 July 2023. A second interim dividend of 2.60p (2023 - 2.50p) for the year
ending 31 January 2024, will be paid on 27 October 2023 to shareholders on the
register at 13 October 2023, with an ex-dividend date of 12 October 2023.
6. Return per Ordinary share
Six months ended Six months ended
31 July 2023 31 July 2022
£'000 £'000
Based on the following figures:
Revenue return 8,542 8,568
Capital return (27,392) 12,164
Total return (18,850) 20,732
Weighted average number of shares in issue 140,135,287 140,335,159
p p
Revenue return per Ordinary share 6.10 6.10
Capital return per Ordinary share (19.55) 8.67
Total return per Ordinary share (13.45) 14.77
7. Transaction costs
During the six months ended 31 July 2023 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 net
(losses)/gains on investments in the Condensed Statement of Comprehensive
Income. The total costs were as follows:
Six months ended Six months ended
31 July 2023 31 July 2022
£'000 £'000
Purchases 39 30
Sales 59 66
98 96
8. Capital reserve
The capital reserve reflected in the Condensed Statement of Financial Position
at 31 July 2023 includes gains of £21,137,000 (31 January 2023 - gains
£48,049,000) which relate to the revaluation of investments held at the
reporting date.
9. Net asset value per Ordinary share
As at As at
31 July 2023 31 January 2023
Net assets attributable (£'000) 445,068 472,891
Number of Ordinary shares in issue 140,037,175 140,234,749
Net asset value per Ordinary share (p) 317.82 337.21
10. Analysis of changes in net debt
At At
31 January Currency Cash Non-cash 31 July
2023 differences flows movement 2023
£'000 £'000 £'000 £'000 £'000
Cash and short-term deposits 26,699 (178) (7,158) - 19,363
Debt due after more than one year (40,543) 1,751 - - (38,792)
(13,844) 1,573 (7,158) - (19,429)
At At
31 January Currency Cash Non-cash 31 July
2022 differences flows movement 2022
£'000 £'000 £'000 £'000 £'000
Cash and short-term deposits 13,875 2,486 (1,037) - 15,324
Debt due after more than one year (37,191) (3,823) - - (41,014)
(23,316) (1,337) (1,037) - (25,690)
A statement reconciling the movement in net debt to the net cash flow has not
been presented as there are no differences from the above analysis.
11. Fair value hierarchy
FRS 102 requires an entity to classify fair value measurements using a fair
value hierarchy that reflects the significance of the inputs used in making
the measurements. The fair value hierarchy shall have the following
classifications:
Level 1: unadjusted quoted prices in an active market for identical assets or
liabilities that the entity can access at the measurement date.
Level 2: inputs other than quoted prices included within Level 1 that are
observable (ie developed using market data) for the asset or liability, either
directly or indirectly.
Level 3: inputs are unobservable (ie for which market data is unavailable) for
the asset or liability.
The financial assets and liabilities measured at fair value in the Condensed
Statement of Financial Position are grouped into the fair value hierarchy at
the reporting date as follows:
Level 1 Level 2 Level 3 Total
As at 31 July 2023 Note £'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
Quoted equities a) 460,888 - - 460,888
Quoted bonds b) - 9,589 - 9,589
Total 460,888 9,589 - 470,477
Financial liabilities at fair value through profit or loss
Derivatives c) - (291) - (291)
Net fair value 460,888 9,298 - 470,186
Level 1 Level 2 Level 3 Total
As at 31 January 2023 Note £'000 £'000 £'000 £'000
Financial assets at fair value through profit or loss
Quoted equities a) 479,799 - - 479,799
Quoted bonds b) - 7,141 - 7,141
Total 479,799 7,141 - 486,940
Financial liabilities at fair value through profit or loss
Derivatives c) - (264) - (264)
Net fair value 479,799 6,877 - 486,676
a) Quoted equities. The fair value of the Company's investments in quoted
equities has been determined by reference to their quoted prices at the
reporting date. Quoted equities included in Fair Value Level 1 are actively
traded on recognised stock exchanges.
b) Quoted bonds. The fair value of the Company's investments in quoted bonds has
been determined by reference to their quoted bid prices at the reporting date.
Investments categorised as Level 2 are not considered to trade in active
markets.
c) Derivatives. The Company's investment in exchange traded options have been
fair valued using quoted prices and have been classified as Level 2 as they
are not considered to trade in active markets.
12. Transactions with the Manager
The Company has an agreement with abrdn Fund Managers Limited ("aFML" or the
"Manager") for the provision of investment management, secretarial, accounting
and administration and promotional activity services.
The annual management fee is charged on gross assets after deducting current
liabilities and borrowings and excluding commonly managed funds (net assets),
on a tiered basis at 0.75% of net assets up to £250 million, 0.6% between
£250 million and £500 million, and 0.5% over £500 million, payable
quarterly. The fee is allocated 30% to revenue and 70% to capital. During the
period £1,503,000 (31 July 2022 - £1,546,000) of investment management fees
were payable to the Manager, with a balance of £1,503,000 (31 July 2022 -
£1,546,000) being due to aFML at the period end.
The secretarial fee of £147,000 per annum is chargeable 100% to revenue and
is payable monthly in arrears. During the period £73,000 (31 July 2022 -
£65,000) of secretarial fees were payable to the Manager, with a balance of
£24,000 (31 July 2022 - £22,000) being due to aFML at the period end.
The promotional activities fee is based on a current annual amount of
£215,000, payable quarterly in arrears. During the period £107,000 (31 July
2022 - £107,000) of fees were payable, with a balance of £72,000 (31 July
2022 - £72,000) being due to aFML at the period end.
13. Segmental information
The Company is engaged in a single segment of business, which is to invest in
equity securities and debt instruments. All of the Company's activities are
interrelated, and each activity is dependent on the others. Accordingly, all
significant operating decisions are based on the Company as one segment.
14. Subsequent events
Subsequent to the period end, the Company has bought back a further 659,338
Ordinary shares for cancellation at a cost of £1,851,000.
15. Half-Yearly Financial Report
The financial information in this Report does not comprise statutory accounts
within the meaning of Section 434 - 436 of the Companies Act 2006. The
financial information for the year ended 31 January 2023 has been extracted
from published accounts that have been delivered to the Registrar of Companies
and on which the report of the Company's auditor was unqualified and contained
no statement under Section 498 (2), (3) or (4) of the Companies Act 2006. The
condensed interim financial statements have been prepared using the same
accounting policies as contained within the preceding annual financial
statements.
The financial information for the six months ended 31 July 2023 and 31 July
2022 have not been audited or reviewed by the Company's auditor.
16. This Half-Yearly Financial Report was approved by the Board on 4 October 2023.
17. The Half-Yearly Financial Report is available on the
Company's website, northamericanincome.co.uk. The Half-Yearly Report will be
posted to shareholders in October 2023 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
abrdn Holdings Limited, Company Secretary
For further information, please contact:-
Company Secretary, abrdn
Tel: 0131 372 2200
Alternative Performance Measures ("APMs")
Alternative performance measures are numerical measures of the Company's
current, historical or future performance, financial position or cash flows,
other than financial measures defined or specified in the applicable financial
framework. The Company's applicable financial framework includes FRS 102 and
the AIC SORP. The Directors assess the Company's performance against a range
of criteria which are viewed as particularly relevant for closed-end
investment companies.
Discount to net asset value
The discount is the amount by which the share price is lower than the net
asset value per share with debt at fair value, expressed as a percentage of
the net asset value with debt at fair value.
31 July 2023 31 January 2023
NAV per Ordinary share (p) a 317.82p 337.21p
Share price (p) b 282.00p 306.00p
Discount (a-b)/a 11.3% 9.3%
Dividend yield
Dividend yield is calculated using the Company's historic annual dividend per
Ordinary share divided by the share price, expressed as a percentage.
31 July 2023 31 January 2023
Annual dividend per Ordinary share (p) a 11.00p 11.00p
Share price (p) b 282.00p 306.00p
Dividend yield a/b 3.9% 3.6%
Net gearing
Net gearing measures total borrowings less cash and cash equivalents divided
by shareholders' funds, expressed as a percentage. Under AIC reporting
guidance cash and cash equivalents includes net amounts due to and from
brokers at the period end as well as cash and short term deposits.
31 July 2023 31 January 2023
Borrowings (£'000) a 38,792 40,543
Cash (£'000) b 19,363 26,699
Amounts due to brokers (£'000) c 11,308 1,444
Amounts due from brokers (£'000) d 6,346 1,660
Shareholders' funds (£'000) e 445,068 472,891
Net gearing (a-b+c-d)/e 5.5% 2.9%
Ongoing charges ratio
The ongoing charges ratio has been calculated in accordance with guidance
issued by the AIC which is defined as the total of investment management fees
and administrative expenses and expressed as a percentage of the average
published daily net asset values with debt at fair value throughout the year.
The ratio for 31 July 2023 is based on forecast ongoing charges for the year
ending 31 January 2024.
31 July 2023 31 January 2023
Investment management fees (£'000) 3,038 3,156
Administrative expenses (£'000) 893 854
Less: non-recurring expenses(A) (£'000) - (8)
Ongoing charges (£'000) 3,931 4,002
Average net assets(£'000) 443,416 458,929
Ongoing charges ratio (excluding look-through costs) 0.89% 0.87%
Look-through costs(B) 0.11% 0.06%
Ongoing charges ratio (including look-through costs) 1.00% 0.93%
(A) Professional services considered unlikely to recur.
(B) Calculated in accordance with AIC guidance issued in October 2020 to
include the Company's share of costs of holdings in investment companies on a
look-through basis.
The ongoing charges ratio provided in the Company's Key Information Document
is calculated in line with the PRIIPs regulations which includes finance costs
and transaction charges.
Total return
NAV and share price total returns show how the NAV and share price has
performed over a period of time in percentage terms, taking into account both
capital returns and dividends paid to shareholders. Share price and NAV total
returns are monitored against open-ended and closed-ended competitors, and the
Reference Index, respectively.
Share
Six months ended 31 July 2023 NAV Price
Opening at 1 February 2023 a 337.2p 306.0p
Closing at 31 July 2023 b 317.8p 282.0p
Price movements c=(b/a)-1 -5.7% -7.8%
Dividend reinvestment(A) d 2.5% 2.8%
Total return c+d -3.2% -5.0%
Share
Year ended 31 January 2023 NAV Price
Opening at 1 February 2022 a 318.8p 283.0p
Closing at 31 January 2023 b 337.2p 306.0p
Price movements c=(b/a)-1 5.8% 8.1%
Dividend reinvestment(A) d 3.8% 4.3%
Total return c+d +9.6% +12.4%
(A) NAV total return involves investing the net dividend in the NAV of the
Company with debt at fair value on the date on which that dividend goes
ex-dividend. Share price total return involves reinvesting the net dividend in
the share price of the Company on the date on which that dividend goes
ex-dividend.
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