BLACKROCK SUSTAINABLE AMERICAN INCOME TRUST PLC
BlackRock North American Income Trust plc
Investment objective
The Company's objective is to provide an attractive and growing level of income
return with capital appreciation over the long term, predominantly through
investment in a diversified portfolio of primarily large-cap U.S. equities.
Performance record
Financial Highlights
Attributable to ordinary shareholders 30 31 Change
April October %
2015 2014
Assets
Net assets (£'000)1 100,831 121,199 -16.8
Net asset value per ordinary share 125.59p 120.76p +4.0
- with income reinvested +5.7
Ordinary share price (mid-market) 117.50p 112.00p +4.9
- with income reinvested +6.7
======== ======== ========
For For Change
the the %
six six
months months
ended ended
30 30
April April
2015 2014
Revenue
Net profit after taxation (£'000) 2,066 2,113 -2.2
Earnings per ordinary share 2.27p 2.11p +7.6
======== ======== ========
1The change in net assets reflects market movements and the implementation of
the tender offer in the period.
Chairman's statement
for the six months to 30 April 2015
Overview
Economic data provided a mixed and sometimes conflicting picture of the state
of the U.S. economy over the six months under review. During the fourth quarter
of 2014, steady growth in employment, a moderate housing recovery and rising
capital expenditure all pointed towards a sustainable recovery. A rise in
household wealth, helped by continuing low interest rates and falling energy
prices, also bode well for consumer spending and U.S. major indices pushed
ahead strongly. However, the unusually harsh winter weather, a strong U.S.
dollar and a slowdown in exports meant that the U.S. economy grew well below
forecasts in the first three months of 2015. The steep rally in the dollar came
to a halt in late March, driven by weaker economic data and a more dovish U.S.
central bank, although policymakers have suggested that recent economic
weakness has been caused in part by transitory factors; employment figures have
for the most part remained strong.
Performance
In the six months to 30 April 2015, the Company's net asset value ('NAV')
returned +5.7% compared with a return of +7.1% in the Russell 1000 Value Index.
Although the gap between the portfolio and the Index narrowed, the market
background remained unfavourable for our Portfolio Manager's investment
approach, which is to focus on companies capable of generating dividend growth
and not those with a high initial yield. Your Board is conscious that
performance relative to the Index has been disappointing and has stressed to
the Manager the importance of seeking an improvement in this area. The
Company's share price returned +6.7% over the same period (all figures in
sterling terms with income reinvested). Further information on investment
performance is given in the Investment Manager's Report.
Since the period end, the Company's NAV has increased by 0.3% and the share
price has fallen by 2.9% (in sterling with income reinvested).
Earnings and dividends
The Company's revenue return per share for the six months ended 30 April 2015
amounted to 2.27p compared with 2.11p per share for the corresponding period
last year. The first quarterly dividend of 1.00p per share was paid on 7 April
2015. A second quarterly interim dividend of 1.10p per share will be paid on 1
July 2015 to shareholders on the register on 22 May 2015. This represents an
increase of 10% on the first quarterly dividend and it is the Board's current
intention to maintain this quarterly pay-out.
Tender offers
The Directors exercised their discretion to operate the half yearly tender
offer with a calculation date of 2 February 2015, being the succeeding business
day to 31 January 2015, for up to 20% of the shares in issue at the prevailing
NAV less 2%. The tender offer was oversubscribed with 26,792,753 shares being
tendered at a price of 123.24p per share. Shareholders who tendered had their
basic entitlement satisfied in full and their election for further shares was
scaled-back pro rata with each shareholder receiving 61.3269% of their election
for further shares. All shares tendered were repurchased by the Company and
placed in treasury.
On 6 May 2015, the Directors announced that they had decided not to implement a
semi-annual tender offer in July 2015. Following shareholder consultation, the
Board concluded that a tender was not in the interests of shareholders as a
whole or the Company as the tender process results in the Company shrinking in
size with the resultant negative impact on liquidity and ongoing charges. The
Board will continue to monitor the Company's discount to NAV and use its buy
back authority when appropriate, with the objective of ensuring that the
Company's shares do not trade at a significant discount to their NAV.
Outlook
The recent first quarter U.S. economic growth figures were weaker than expected
but most commentators have concluded that these represented a temporary
weakening of the economy. In recent years first quarter growth has often
disappointed only to rebound later in the year. The unemployment rate has also
dropped to a pre-crisis low. Fiscal challenges are also abating and even if, as
is widely expected, the Federal Reserve start tightening in 2015, monetary
policy should remain highly accommodative. The timing and pace of any rises
will remain dependent on the economic data.
The Investment Manager continues to position the portfolio in companies that
are well managed, soundly financed and which have the capacity to grow their
dividends. Although higher interest rates may induce greater market volatility,
if the background for rising rates is an improving economy, markets have
historically been able to continue to make progress. Our expectation is that we
will now witness greater differentiation between the performance of individual
shares within sectors and this will provide an environment which will reward
active stock picking.
Simon Miller
11 June 2015
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 year ended 31
October 2014. A detailed explanation can be found in the Strategic Report on
pages 6 and 7 and in note 14 on pages 49 to 57 of the Annual Report and
Financial Statements which are available on the website maintained by BlackRock
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.
Going concern
The Directors, having considered the nature and liquidity of the portfolio, the
Company's investment objective and the Company's projected income and
expenditure, 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 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. Ongoing charges
(excluding interest costs and taxation) are approximately 1.3% of net assets.
Related party disclosure and transactions with the AIFM and Investment Manager
BlackRock Fund Managers Limited ('BFM') was appointed as the Company's AIFM
with effect from 2 July 2014. BFM has (with the Company's consent) delegated
certain portfolio and risk management services, and other ancillary services,
to BlackRock Investment Management (UK) Limited ('BIM (UK)'). Both BFM and BIM
(UK) are regarded as related parties under the Listing Rules. Details of the
management and marketing fees payable are set out in note 3 and note 10. Fees
payable to Directors and their interests in the ordinary shares of the Company
are set out in note 9.
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 not been audited or reviewed by the
Company's auditors.
The half yearly financial report was approved by the Board on 11 June 2015 and
the above responsibility statement was signed on its behalf by the Chairman.
Simon Miller
For and on behalf of the Board
11 June 2015
Investment manager's report
Market overview
For the six month period ended 30 April 2015, U.S. large-cap stocks, as
represented by the S&P 500® Index, advanced by 4.4% (in U.S. dollar terms).
U.S. equities benefited from a strengthening domestic economy in the fourth
quarter of 2014, although market volatility increased as investors considered
slowing growth in other parts of the world, the impending tightening of U.S.
monetary conditions and rising political turmoil globally. In the first four
months of 2015, divergent monetary policies dominated media headlines as
quantitative easing measures in Europe and Japan stood in contrast to the
Federal Reserve, setting the stage for higher interest rates in the U.S. This
dynamic created volatile conditions in the currency markets and exerted upward
pressure on the U.S. dollar. Economic data in the U.S. generally softened
to start the year; however, employment gains and robust merger and acquisition
activity were strong enough to overcome negative revisions to earnings
expectations. Overall, we remain mindful of current equity valuations and
inflation, as well as the potential impact of currency markets and lower oil
prices on global capital flows and investment.
Portfolio overview
The largest detractor from relative performance during the past six months was
stock selection in financials. Notably, selection in the insurance industry
proved to be costly as portfolio holdings Prudential and MetLife lagged
relative to benchmark peers. We view falling U.S. interest rates during the
period as a short term headwind and remain overweight to both companies given
their current valuations, underlying fundamentals and ability to return capital
to shareholders. Other notable detractors in financials include our ownership
of non-benchmark holding American Express, which underperformed following the
loss of its partnership with Costco and JetBlue, and non-benchmark holding
Toronto-Dominion Bank. A combination of stock selection and an underweight in
health care also dragged on relative performance. Our underweight position to
the managed care industry hurt relative returns as benchmark peers, including
Cigna and Aetna, outperformed. The Company is now modestly overweight the
managed care industry after initiating positions in UnitedHealth Group and
Anthem in January 2015. Lastly, stock selection in the information technology
and consumer discretionary sectors also had a negative impact on relative
performance for the six month period.
A combination of stock selection and a general underweight position to the
energy sector was the largest contributor to relative returns. WTI crude oil
prices declined by over 41% from peak to trough during the period, before
rebounding to -25% by April month-end. Notable stock level contributors include
our underweight to Exxon Mobil and overweight to refiner Marathon Petroleum.
Stock selection in utilities also added to relative performance for the period,
as a timely exit from Duke Energy in January proved to be beneficial.
We eliminated our position in Duke due to its valuation and concerns related to
potential delays in asset sales. Other notable contributors to performance for
the period include non-benchmark holding Kraft, which benefited from the news
that 3G Capital will acquire the company and merge it with H.J. Heinz, and
Kroger Co., which exceeded earnings estimates on strong same-store sales growth
and solid market share gains.
Below is a comprehensive overview of our allocations at the end of the period.
Industrials: 4.9% overweight (15.2% of portfolio)
The Company's overweight position to industrials is driven primarily by our
preference for aerospace and defence stocks due to their strong free cash
flows, healthy balance sheets, attractive valuations and dividend growth
potential. These stocks may also benefit from a potential increase in defence
spending, both domestically and internationally, in the light of rising
geopolitical concerns. We also maintain exposure to industrial conglomerates
given their diverse revenue streams, stable growth profiles and healthy
dividends.
Materials: 1.8% overweight (4.9% of portfolio)
We believe that infrastructure development and spending will continue to be a
critical part of the investment landscape, both in the U.S. and abroad. We
also believe that companies with higher quality, diverse assets in locations
close to developing markets will be able to reap the benefits of high barriers
to entry within local industries and deliver stronger growth.
Consumer Discretionary: 1.1% overweight (7.7% of portfolio)
The balance sheet for U.S. consumers is improving, aided by a recovering
domestic housing market, recent robust equity returns and stronger jobs growth.
These factors have generated an increase in consumer confidence. Although an
improved consumer balance sheet is a positive for the economy and for
consumer-related spending, the Company's modest overweight position in the
consumer discretionary sector is more a reflection of stock-specific factors.
The Company's largest active weights in the sector include Comcast (2.7% of
portfolio) and Home Depot (2.5% of portfolio).
Telecommunication Services: 0.4% overweight (2.6% of portfolio)
Within telecoms, our allocation is concentrated in industry bellwether Verizon
Communications, given the firm's ability to manage competitive pressures and
deliver revenue growth. Wireless operations continue to drive revenues across
the sector and the proliferation of data-heavy smartphones should help certain
companies in the sector 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 offers attractive
dividend yields and opportunity for steady, longer term growth.
Consumer Staples: 0.4% underweight (6.7% of portfolio)
The Company has traditionally maintained an overweight position in consumer
staples due to the sector's recurring purchase theme, solid brand leadership,
stable earnings and dividend growth potential. Although these characteristics
remain long term positives, we have selectively reduced our exposure to the
sector in recent quarters due to concerns about valuations and the potential
for slowing earnings and dividend growth in the near term.
Health Care: 0.6% underweight (13.8% of portfolio)
Our traditional underweight in health care has been driven, at least in part,
by our wariness of the longer term growth prospects of the health care services
sector. We are encouraged by changes shaped by the Affordable Care Act,
especially as it relates to managed-care providers, and recently initiated
positions in providers UnitedHealth Group (1.8% of portfolio) and Anthem (0.8%
of portfolio) as a result. Additionally, we continue to focus our efforts on
opportunities in the pharmaceutical industry, especially in companies with
healthy balance sheets, strong drug pipelines and multiple potential drivers of
future growth.
Information Technology: 0.7% underweight (8.6% of portfolio)
We have gradually increased our exposure to information technology in recent
months, with a preference for large-cap, mature companies with the ability to
return capital to shareholders. We believe that valuations remain attractive
and companies such as Microsoft (2.7% of portfolio), Intel (1.9% of portfolio),
and Qualcomm (1.3% of portfolio) offer a compelling mix of healthy balance
sheets, strong free cash flow generation and growing dividend streams.
Utilities: 0.8% underweight (5.3% 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 that 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 that these factors will be
increasingly important given slowing demand and declining electricity usage
rates across the industry.
Energy: 1.7% underweight (9.7% of portfolio)
Despite the recent sharp decline in crude oil prices, we believe that many of
the long term fundamentals for the energy sector remain positive. We favour
oil-weighted companies over those levered to natural gas. We especially prefer
large-cap integrated oil and independent oil & gas producers due to their
valuations, diverse revenue streams and balance sheet strength. At the industry
level, strong competitive positioning, operating specialization and pricing
power remain most desirable from an investment perspective.
Financials: 4.0% underweight (25.5% of portfolio)
While underweight relative to the benchmark index, financials are the Company's
largest sector allocation on an absolute basis and we maintain a high level of
conviction in the sector. We are particularly bullish on large-cap U.S. banks
and capital markets stocks given their improved balance sheets, low credit
losses, high capital levels and attractive valuations. Notably, we are
encouraged by the Fed's March 2015 stress tests results and believe there is
potential upside to earnings if the U.S. Federal Reserve raises interest rates.
Positioning and outlook
We have positioned the portfolio to take advantage of the maturing U.S.
business cycle and the higher interest rate environment that we see unfolding
over time. Towards that end we have increased our exposure to financials,
health care, industrials and information technology in recent quarters on the
basis of attractive valuations and greater potential for future dividend
growth. Conversely, we have reduced exposure to the higher-yielding sectors of
the market including consumer staples, utilities and telecommunication services
due to concerns related to valuation and limited dividend growth potential in
the future. We have also selectively trimmed our exposure to the consumer
discretionary sector in recent months. In the Company we continue to emphasise
investment in high quality dividend-paying companies, with consideration
towards balancing capital appreciation and current income over time.
Bob Shearer and Tony DeSpirito
BlackRock Investment Management LLC
11 June 2015
Ten largest investments
as at 30 April 2015
Wells Fargo: 3.8% (2014: 3.7%) is a U.S. diversified bank with a strong west
coast franchise and growing national footprint. Wells boasts a strong and
stable management team, led by CEO John Stumpf, who has been with the firm for
over 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: 3.5% (2014: 3.4%) 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
that JPMorgan offers strong earnings power while also affording shareholders a
healthy dividend yield.
General Electric: 2.7% (2014: 2.7%) is a diversified industrials conglomerate
with operations in technology infrastructure, energy infrastructure, home and
business services and capital services. In April 2015, GE announced plans to
divest the majority of its GE Capital business, the firm's financial arm. We
are positive on the news and believe the transaction adds financial flexibility
and enables the firm to focus on growing its core industrial units moving
forward. GE's strong management team, depth and breadth of products and ability
to secure pricing, continue to make it a desirable long term holding.
Comcast: 2.7% (2014: 2.9%) is the largest operator in the U.S. cable industry.
We are positive on Comcast's best-in-class cable assets, its ability to
continue to increase market share and the continued growth potential at NBC
Universal. 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 that this will help the firm offset rising cable costs
better than some of its competitors.
Microsoft: 2.7% (2014: 2.3%) is a global technology leader that is engaged in
developing and licensing both software and hardware products & services. We
view Microsoft as an attractive long term investment given the firm's overall
'ecosystem', which should drive pricing power and efficient free cash flow
generation over time. In the near term, we believe the firm's strength in its
enterprise and cloud units offers upside potential. We are also positive on the
prospects for a pickup in IT capex spending, a dynamic which should benefit the
tech sector moving forward.
Pfizer: 2.5% (2014: 2.3%) is a diversified pharmaceutical firm with a history
of generating returns in excess of its cost of capital, which has translated to
strong free cash flow generation and an attractive and consistent dividend
yield over time. We are positive on the company's prospects for future growth
given their pipeline of early Phase I and II drugs with blockbuster potential.
Additionally, we believe Pfizer's recent U.S.$17 billion acquisition of Hospira
will strengthen their global established pharma business and position the
company for share gains in biosimilars, a growth segment of the pharma market.
Home Depot: 2.5% (2014: 2.6%) is the world's largest home improvement retailer
with over 2,200 warehouse-format stores and more than 365,000 employees. Home
Depot has shown an ability to drive market share gains, currently owning a 20%
share of the home improvement space. We remain encouraged by the company's
focus on the in-store shopping experience and emphasis on controlling costs
through utilising new technology to assist its inventory management. Overall,
we are positive on the stock given the company's strong execution and the
ongoing recovery in consumer home improvement spending and the domestic housing
market.
Merck: 2.3% (2014: 2.3%) is a best-in-class global pharmaceuticals company with
a strengthening pipeline of potential blockbuster drugs including Januvia (for
diabetes), Isentress (for HIV) and the Gardasil vaccine. We believe that Merck
is favourably positioned for long term growth and that the firm's restructuring
efforts should reduce costs and improve margins over the long term. Notably,
Merck posted strong first quarter 2015 earnings results, exceeding analyst
expectations and raising full year earnings guidance.
Bristol-Myers Squibb: 2.1% (2014: 2.0%) is a global pharmaceuticals
manufacturer with strong growth potential in its diabetes and immuno-oncology
business segments. The firm's drug pipeline in immuno-oncology is particularly
robust with multiple drugs in phase I and II clinical trials. Overall, the
company offers a healthy dividend yield and an attractive risk and reward
profile.
Raytheon: 2.1% (2014: 2.2%) is an aerospace and defence contractor that
benefits from spending on reconnaissance-type products within the defence
industry. The firm generates approximately 30% of its sales internationally and
produces smaller, more exportable equipment that is less exposed to one
programme, which we like from a diversification standpoint. Looking forward, we
are positive on Raytheon's income visibility from long term contracts, strong
free cash flow generation and willingness to return capital to shareholders.
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 2014. Together,
the ten largest investments represent 26.9% of the Company's portfolio (ten
largest investments at 31 October 2014: 26.9%).
Portfolio analysis
30 April 2015
Australia Canada France Netherlands Peru South United United Total Benchmark
Sector % % % % % Korea Kingdom States % weight
and % % % %
geographical
breakdown
Consumer - - - - - - - 7.7 7.7 6.6
Discretionary
Consumer Staples - - - 0.2 - - 0.9 5.6 6.7 7.1
Energy - - 1.7 - - - - 8.0 9.7 11.4
Financials - - - - - - - 25.5 25.5 29.5
Health Care - - - - - - - 13.8 13.8 14.4
Industrials - - - - - - - 15.2 15.2 10.3
Information - - - - - 0.9 - 7.7 8.6 9.3
Technology
Materials 0.5 - - - - - - 4.4 4.9 3.1
Telecommunication - 0.3 - - - 0.5 - 1.8 2.6 2.2
Services
Utilities - - - - - - - 5.3 5.3 6.1
------ -------- ----- -------- ----- ----- ----- ----- ----- -------
% Portfolio 0.5 0.3 1.7 0.2 - 1.4 0.9 95.0 100.0 100.0
30.04.15
------ -------- ----- -------- ----- ----- ----- ----- ----- -------
% Portfolio 0.9 1.1 1.3 0.4 0.3 - 1.0 95.0 100.0
31.10.14
------ -------- ----- -------- ----- ----- ----- ----- ----- -------
Investments
as at 30 April 2015
Country Sector Securities Market %
Company value of
total
portfolio
£'000
Wells Fargo United States Financials Ordinary Shares 3,864 3.8
Options (7)
JPMorgan Chase United States Financials Ordinary Shares 3,498 3.5
General Electric United States Industrials Ordinary Shares 2,765 2.7
Options (20)
Comcast United States Consumer Ordinary Shares 2,718 2.7
Discretionary
Options (8)
Microsoft United States Information Ordinary Shares 2,694 2.7
Technology
Pfizer United States Health Care Ordinary Shares 2,571 2.5
Options (1)
Home Depot United States Consumer Ordinary Shares 2,537 2.5
Discretionary
Merck United States Health Care Ordinary Shares 2,331 2.3
Options (9)
Bristol-Myers Squibb United States Health Care Ordinary Shares 2,165 2.1
Options (3)
Raytheon United States Industrials Ordinary Shares 2,145 2.1
Options (1)
Citigroup United States Financials Ordinary Shares 2,105 2.1
Intel Corporation United States Information Ordinary Shares 1,937 1.9
Technology
Procter & Gamble United States Consumer Staples Ordinary Shares 1,931 1.9
Options (7)
Verizon United States Telecommunication Ordinary Shares 1,858 1.8
Communications Services
Options (5)
United Health United States Health Care Ordinary Shares 1,821 1.8
Options (2)
DuPont United States Materials Ordinary Shares 1,808 1.8
Options (1)
Johnson & Johnson United States Health Care Ordinary Shares 1,741 1.7
Options (1)
SunTrust Banks United States Financials Ordinary Shares 1,730 1.7
Options (3)
Exxon Mobil United States Energy Ordinary Shares 1,686 1.7
Options (4)
US Bancorp United States Financials Ordinary Shares 1,682 1.7
Options (1)
Total France Energy Ordinary Shares 1,670 1.7
Options (5)
Occidental Petroleum United States Energy Ordinary Shares 1,572 1.5
Options (14)
Northrop Gruman United States Industrials Ordinary Shares 1,525 1.5
Options (1)
Lockheed Martin United States Industrials Ordinary Shares 1,445 1.4
Honeywell United States Industrials Ordinary Shares 1,362 1.3
Qualcomm United States Information Ordinary Shares 1,351 1.3
Technology
Travelers Companies United States Financials Ordinary Shares 1,319 1.3
Options (1)
3M Company United States Industrials Ordinary Shares 1,239 1.2
MetLife United States Financials Ordinary Shares 1,215 1.2
NextEra Energy United States Utilities Ordinary Shares 1,198 1.2
United Technologies United States Industrials Ordinary Shares 1,192 1.2
Options (1)
Prudential Financial United States Financials Ordinary Shares 1,180 1.2
Options (6)
Morgan Stanley United States Financials Ordinary Shares 1,162 1.2
Bank of America United States Financials Ordinary Shares 1,153 1.1
International Paper United States Materials Ordinary Shares 1,141 1.1
Company
United Parcel Service United States Industrials Ordinary Shares 1,137 1.1
Dominion Resources United States Utilities Ordinary Shares 1,115 1.1
Options (4)
Chevron United States Energy Ordinary Shares 1,069 1.1
Options (3)
McDonald's United States Consumer Ordinary Shares 1,067 1.1
Discretionary
Options (4)
Ace United States Financials Ordinary Shares 1,055 1.1
Goldman Sachs United States Financials Ordinary Shares 1,049 1.0
Marathon Petroleum United States Energy Ordinary Shares 1,041 1.0
Options (4)
Quest Diagnostics United States Health Care Ordinary Shares 985 1.0
Union Pacific United States Industrials Ordinary Shares 976 1.0
Kroger United States Consumer Staples Ordinary Shares 960 1.0
Diageo United Consumer Staples Ordinary Shares 947 0.9
Kingdom
American Express United States Financials Ordinary Shares 901 0.9
Options (3)
Samsung Electronics South Korea Information Ordinary Shares 897 0.9
Technology
CME United States Financials Ordinary Shares 891 0.9
Options (3)
Fifth Third Bank United States Financials Ordinary Shares 860 0.9
Options (5)
IBM United States Information Ordinary Shares 852 0.8
Technology
Options (1)
American Water Works United States Utilities Ordinary Shares 835 0.8
Association
Options (2)
Anthem United States Health Care Ordinary Shares 827 0.8
Options (1)
American United States Financials Ordinary Shares 787 0.8
International
Options (4)
Dow Chemical United States Materials Ordinary Shares 773 0.8
Options (7)
VF Corporation United States Consumer Ordinary Shares 746 0.7
Discretionary
Options (1)
Dollar General United States Consumer Ordinary Shares 738 0.7
Discretionary
Motorola Solutions United States Information Ordinary Shares 733 0.7
Technology
Marathon Oil United States Energy Ordinary Shares 707 0.7
Options (9)
Praxair United States Materials Ordinary Shares 692 0.7
Options (1)
Becton Dickinson United States Health Care Ordinary Shares 632 0.6
Options (1)
Altria United States Consumer Staples Ordinary Shares 619 0.6
Options (2)
Sempra Energy United States Utilities Ordinary Shares 603 0.6
AbbVie United States Health Care Ordinary Shares 589 0.6
Schlumberger United States Energy Ordinary Shares 590 0.6
Options (8)
Lorillard United States Consumer Staples Ordinary Shares 573 0.6
Options (2)
Chubb United States Financials Ordinary Shares 553 0.6
ConocoPhillips United States Energy Ordinary Shares 524 0.5
Options (3)
BHP Billiton Australia Materials Ordinary Shares 522 0.5
Options (3)
SK Telecom South Korea Telecommunication Ordinary Shares 512 0.5
Services
Mondelez United States Consumer Staples Ordinary Shares 507 0.5
International
Options (5)
Coca-Cola United States Consumer Staples Ordinary Shares 494 0.5
Options (1)
Philip Morris United States Consumer Staples Ordinary Shares 490 0.5
International
Options (1)
Spectra Energy United States Energy Ordinary Shares 484 0.5
Options (1)
Wisconsin Energy United States Utilities Ordinary Shares 471 0.5
Weyerhaeuser United States Financials Ordinary Shares 468 0.5
Tyco International United States Industrials Ordinary Shares 461 0.5
Eversource Energy United States Utilities Ordinary Shares 451 0.4
CSX United States Industrials Ordinary Shares 440 0.4
Options (6)
CMS Energy United States Utilities Ordinary Shares 435 0.4
Options (1)
Abbott Laboratories United States Health Care Ordinary Shares 417 0.4
Options (1)
Rockwell Automation United States Industrials Ordinary Shares 411 0.4
Options (1)
Nielsen United States Industrials Ordinary Shares 395 0.4
Options (1)
Phillips 66 United States Energy Ordinary Shares 385 0.4
Options (1)
Automatic Data United States Information Ordinary Shares 330 0.3
Processing Technology
Options (1)
BCE Canada Telecommunication Ordinary Shares 308 0.3
Services
ITC Holdings United States Utilities Ordinary Shares 287 0.3
Options (1)
Unilever Netherlands Consumer Staples Ordinary Shares 218 0.2
Options (1)
Portfolio ---------- ---------100.0
100,926
===== =====
The negative valuation of £194,000 in respect of options held represents the
notional cost of repurchasing the contracts at market prices as at 30 April
2015.
Statement of comprehensive income
for the six months ended 30 April 2015
Notes Revenue £ Capital £ Total £'000
'000 '000
Six Six Year Six Six Year Six Six Year
months months ended months months ended months months ended
ended ended 31.10.14 ended ended 31.10.14 ended ended 31.10.14
30.04.15 30.04.14 (audited) 30.04.15 30.04.14 (audited) 30.04.15 30.04.14 (audited)
(unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited)
Gains/ - - - 5,021 (208) 9,067 5,021 (208) 9,067
(losses) on
investments
held at
fair value
through
profit or
loss
(Losses)/ - - - (353) 198 13 (353) 198 13
gains on
foreign
exchange
Income from 2 1,505 1,539 3,123 - - - 1,505 1,539 3,123
investments
held at
fair value
through
profit or
loss
Other 2 1,300 1,330 2,670 - - - 1,300 1,330 2,670
income
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total 2,805 2,869 5,793 4,668 (10) 9,080 7,473 2,859 14,873
income
-------- -------- -------- -------- -------- -------- -------- -------- --------
Expenses
Investment 3 (132) (137) (273) (397) (412) (819) (529) (549) (1,092)
management
fees
Other 4 (191) (181) (386) (26) (18) (37) (217) (199) (423)
operating
expenses
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total (323) (318) (659) (423) (430) (856) (746) (748) (1,515)
operating
expenses
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net profit 2,482 2,551 5,134 4,245 (440) 8,224 6,727 2,111 13,358
on
ordinary
activities
before
finance
costs and
taxation
Finance - (1) (2) - (4) (6) - (5) (8)
costs
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net profit 2,482 2,550 5,132 4,245 (444) 8,218 6,727 2,106 13,350
on
ordinary
activities
before
taxation
Taxation (416) (437) (876) 81 91 180 (335) (346) (696)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net profit 2,066 2,113 4,256 4,326 (353) 8,398 6,392 1,760 12,654
on
ordinary
activities
after
taxation
-------- -------- -------- -------- -------- -------- -------- -------- --------
Earnings 6 2.27p 2.11p 4.25p 4.76p (0.35p) 8.38p 7.03p 1.76p 12.63p
per
ordinary
share -
basic and diluted
-------- -------- -------- -------- -------- -------- -------- -------- --------
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.
Statement of changes in equity
for the six months ended 30 April 2015
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 2015
(unaudited)
At 31 October 2014 1,004 36,774 1,460 63,213 17,402 1,346 121,199
Total comprehensive
income:
Net profit for the - - - - 4,326 2,066 6,392
period
Transaction with owners,
recorded directly to
equity:
Shares purchased and 7 - - - (24,737) - - (24,737)
held in treasury
Tender costs - - - (216) - - (216)
Dividends paid (a) 5 - - - - - (1,807) (1,807)
------ ------ ------ ------ ------ ------ ------
At 30 April 2015 1,004 36,774 1,460 38,260 21,728 1,605 100,831
------ ------ ------ ------ ------ ------ ------
For the period 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 - - - - (353) 2,113 1,760
period
Transaction with owners,
recorded directly to
equity:
Issue of ordinary shares 7 10 1,108 - - - - 1,118
Share issue costs - (5) - - - - (5)
Dividends paid (b) 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 year ended 31
October 2014 (audited)
At 31 October 2013 994 35,671 1,460 63,213 9,004 947 111,289
Total comprehensive
income:
Net profit for the year - - - - 8,398 4,256 12,654
Transaction with owners,
recorded directly to
equity:
Issue of ordinary shares 7 10 1,108 - - - - 1,118
Share issue costs - (5) - - - - (5)
Dividends paid (c) 5 - - - - - (3,857) (3,857)
------ ------ ------ ------ ------ ------ ------
At 31 October 2014 1,004 36,774 1,460 63,213 17,402 1,346 121,199
------ ------ ------ ------ ------ ------ ------
(a) Final dividend of 1p per share for the year ended 31 October 2014,
declared on 6 November 2014 and paid on 5 January 2015 and 1st interim dividend
of 1p per share for the year ending 31 October 2015, declared on 12 February
2015 and paid on 7 April 2015.
(b) Final dividend of 1p per share for the period ended 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 ended 31 October 2014, declared on 13 February
2014 and paid on 2 April 2014.
(c) 4th interim dividend of 1p per share for the period ended 31 October
2013, declared on 3 October 2013 and paid on 4 December 2013 (based on
84,488,500 ordinary shares); 1st interim dividend of 1p each for the year ended
31 October 2014, declared on 13 February 2014 and paid on 2 April 2014, 2nd
interim dividend of 1p each for the year ended 31 October 2014, declared on 14
May 2014 and paid on 2 July 2014 and 3rd interim dividend of 1p each for the
year ended 31 October 2014, declared on 6 August 2014 and paid on 2 October
2014 (based on 100,361,305 ordinary shares).
The transaction costs incurred on the acquisition and disposal of investments
are included within the capital reserves and amounted to £10,000 for the six
months ended 30 April 2015 (period ended 30 April 2014: £18,000; year ended 31
October 2014: £51,000).
Statement of financial position
as at 30 April 2015
Notes 30 30 31
April April October
2015 2014 2014
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Non current assets
Investments held at fair value 101,120 114,798 121,965
through profit or loss
-------- -------- --------
Current assets
Other receivables 225 586 218
Cash and cash equivalents 1,583 580 923
-------- -------- --------
1,808 1,166 1,141
-------- -------- --------
Current liabilities
Bank overdraft - (1,088) -
Derivative financial instruments (194) (449) (746)
Other payables (1,903) (2,114) (1,161)
-------- -------- --------
(2,097) (3,651) (1,907)
-------- -------- --------
Net current liabilities (289) (2,485) (766)
-------- -------- --------
Net assets 100,831 112,313 121,199
======== ======== ========
Equity attributable to equity holders
Called-up share capital 7 1,004 1,004 1,004
Share premium account 36,774 36,774 36,774
Capital redemption reserve 1,460 1,460 1,460
Special reserve 38,260 63,213 63,213
Capital reserves 21,728 8,651 17,402
Revenue reserve 1,605 1,211 1,346
-------- -------- --------
Total equity shareholders' funds 100,831 112,313 121,199
======== ======== ========
Net asset value per ordinary share 6 125.59p 111.91p 120.76p
======== ======== ========
Cash flow statement
for the six months ended 30 April 2015
Six Six Year
months months ended
ended ended 31
30 30 October
April April 2014
2015 2014
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Operating activities
Profit before taxation 6,727 2,106 13,350
Add back interest paid - 5 8
(Gains)/losses on investments held at fair (5,021) 208 (9,067)
value through profit or loss
Net movement on foreign exchange 353 (198) (13)
Sale of investments held at fair value through 71,282 45,364 91,353
profit or loss
Purchases of investments held at fair value (45,968) (47,578) (91,551)
through profit or loss
(Increase)/decrease in other receivables (127) 57 88
Increase in other payables 307 278 89
(Increase)/decrease in amounts due from (16) (216) 129
brokers
Increase/(decrease) in amounts due to brokers 812 561 (351)
-------- -------- --------
Net cash inflow from operating activities 28,349 587 4,035
before interest and taxation
-------- -------- --------
Interest paid - (5) (8)
Taxation on investment income included within (333) (224) (720)
gross income
-------- -------- --------
Net cash inflow from operating activities 28,016 358 3,307
-------- -------- --------
Financing activities
Dividends paid (1,807) (1,849) (3,857)
Proceeds from issue of ordinary shares - 1,118 1,796
Tender offer repurchase of shares (24,737) - -
Tender offer costs paid (216) - -
Share issue costs paid (243) (5) (8)
-------- -------- --------
Net cash outflow from financing activities (27,003) (736) (2,069)
-------- -------- --------
Increase/(decrease) in cash and cash 1,013 (378) 1,238
equivalents
-------- -------- --------
Cash and cash equivalents at start of period 923 (328) (328)
Effect of foreign exchange rate changes (353) 198 13
-------- -------- --------
Cash and cash equivalents at end of period 1,583 (508) 923
-------- -------- --------
Comprised of:
Cash and cash equivalents 1,583 580 923
Bank overdraft - (1,088) -
-------------- -------------- --------------
1,583 (508) 923
======== ======== ========
Notes to the financial statements
for the six months ended 30 April 2015
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 Company's Annual Report and Financial
Statements for the year ended 31 October 2014 (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
Six Six Year
months months ended
ended ended 31
30 30 October
April April 2014
2015 2014
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Investment income:
Overseas listed dividends 1,494 1,525 3,088
UK listed dividends 11 14 35
-------- -------- --------
1,505 1,539 3,123
Other income:
Deposit interest on cash balances 1 3 4
Option premium income 1,299 1,327 2,666
-------- -------- --------
1,300 1,330 2,670
-------- -------- --------
Total 2,805 2,869 5,793
======== ======== ========
During the period, the Company received premiums totalling £1,436,000 (period
ended 30 April 2014: £1,497,000; year ended 31 October 2014: £2,747,000) for
writing covered call options for the purposes of revenue generation, of which £
1,299,000 (period ended 30 April 2014: £1,327,000; year ended 31 October 2014:
£2,666,000) was taken to income. All derivative transactions were based on
constituent stocks in the Russell 1000 Value Index. At 30 April 2015, there
were 123 open positions with an associated liability of £194,000 (period ended
30 April 2014: 165 open positions with associated liability of £449,000 and
year ended 31 October 2014: 130 open positions with associated liability of £
746,000).
3. Investment management fee
Six months Six months Year
ended ended ended
30 April 30 April 31
2015 2014 October
(unaudited) (unaudited) 2014
(audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Investment 132 397 529 137 412 549 273 819 1,092
management
fee
------- ------- ------- ------- ------- ------- ------- ------- -------
Total 132 397 529 137 412 549 273 819 1,092
======= ======= ======= ====== ======= ======= ======= ======= =======
The Company has a management agreement with BlackRock Fund Managers Limited
('BFM') under which BFM 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
Six Six Year
months months ended
ended ended 31
30 30 October
April April 2014
2015 2014
(unaudited) (unaudited) (audited)
£'000 £'000 £'000
Taken to revenue:
Custody fee 3 2 5
Auditors' remuneration:
- audit services 13 14 26
- other audit services - 6 6
Registrar's fee 9 13 30
Marketing fees 42 38 77
Directors' emoluments 49 48 104
Other administration costs 75 60 138
-------- -------- --------
191 181 386
Taken to capital:
Transaction costs - custody 26 18 37
-------- -------- --------
217 199 423
======== ======== ========
5. Dividends
The Directors have declared a second quarterly interim dividend of 1.10p per
share. The dividend will be paid on 1 July 2015 to shareholders on the
Company's register on 22 May 2015. 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 on equity shares during the period were:
Six
months
ended
30
April
2015
£'000
(unaudited)
Dividends on equity shares:
Fourth interim of 1.00p per ordinary share paid on 5 January 2015* 1,004
--------
First interim dividend of 1.00p per ordinary share paid on 7 April 2015** 803
--------
Accounted for in the financial statements 1,807
--------
Second interim dividend of 1.10p per ordinary share payable on 1 July 880
2015***
--------
2,687
--------
* based on 100,361,305 ordinary shares.
** based on 80,289,044 ordinary shares.
*** based on 80,039,044 ordinary shares.
6. Earnings and net asset value per ordinary share
Six Six Year
months months ended
ended ended 31
30 30 October
April April 2014
2015 2014
(unaudited) (unaudited) (audited)
Net revenue profit attributable to ordinary 2,066 2,113 4,256
shareholders (£'000)
Net capital profit/(losses) attributable to 4,326 (353) 8,398
ordinary shareholders (£'000)
-------- -------- --------
Total profit attributable to ordinary 6,392 1,760 12,654
shareholders (£'000)
-------- -------- --------
Total equity attributable to shareholders (£ 100,831 112,313 121,199
'000)
-------- -------- --------
The weighted average number of ordinary shares 90,935,105 99,997,217 100,180,757
in issue during the period on which the
earnings per ordinary share was calculated
was:
-------- -------- --------
The actual number of ordinary shares in issue 80,289,044 100,361,305 100,361,305
at the end of the period on which the net
asset value was calculated was:
-------- -------- --------
Revenue earnings per share 2.27p 2.11p 4.25p
Capital earnings per share 4.76p (0.35p) 8.38p
-------- -------- --------
Total earnings per share - basic and diluted 7.03p 1.76p 12.63p
-------- -------- --------
Net asset value per share - basic and diluted 125.59p 111.91p 120.76p
-------- -------- --------
Share price 117.50p 109.75p 112.00p
======== ======== ========
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
Ordinary Treasury Total Nominal
shares shares shares value
in (number) in £'000
issue issue
(number) (number)
Allotted, called up and fully
paid share capital comprised:
Ordinary shares of 1 pence each:
At 1 November 2014 100,361,305 - 100,361,305 1,004
-------- -------- -------- --------
At 30 April 2015 80,289,044 20,072,261 100,361,305 1,004
======== ======== ======== ========
During the period to 30 April 2015, 20,072,261 ordinary shares were purchased
(period ended 30 April 2014: nil) via the tender offer to be held in treasury
at a total cost of £24,737,000.
No ordinary shares were cancelled during the period (period ended 30 April
2014: nil). Since the period end and up to the date of this report, 250,000
ordinary shares have been purchased and placed in treasury at a total cost of £
287,000.
8. Valuation of financial instruments
Financial assets and financial liabilities are either carried in the Statement
of Financial Position at their fair value (investment and derivatives) or at an
amount which is a reasonable approximation of fair value (due from brokers,
dividends and interest receivable, due to brokers, accruals, cash at bank and
bank overdrafts). IFRS 13 requires the Company to classify fair value
measurements using a fair value hierarchy that reflects the significance of
inputs used in making the measurements.
Categorisation within the hierarchy has been determined on the basis of the
lowest level input that is significant to the fair value measurement of the
relevant asset as follows.
The fair value hierarchy has the following levels:
Level 1 - quoted market price in an active market for an identical instrument.
These include exchange traded derivative option contracts. A financial
instrument is regarded as quoted in an active market if quoted prices are
readily and regularly available from an exchange, dealer, broker, industry
group, pricing service, or regulatory agency, and those prices represent actual
and regularly occurring market transactions on an arm's length basis.
Level 2 - Valuation techniques used to price securities based on observable
inputs. This category includes quoted prices for similar instruments in markets
that are considered less than active; or other valuation techniques where all
significant inputs are directly or indirectly observable from market data.
Valuation techniques used for non-standardised financial instruments such as
options, currency swaps and other over-the-counter derivatives, include the use
of comparable recent arm's length transactions, reference to other instruments
that are substantially the same, discounted cash flow analysis, option pricing
models and other valuation techniques commonly used by market participants
making the maximum use of market inputs and relying as little as possible on
entity specific inputs.
Level 3 - Valuation techniques using significant unobservable inputs. This
category includes all instruments where the valuation technique includes inputs
not based on observable data and the unobservable inputs could have a
significant impact on the instrument's valuation. This category includes
instruments that are valued based on quoted prices for similar instruments
where significant unobservable adjustments or assumptions are required to
reflect differences between the instruments and instruments for which there is
no active market. The level in the fair value hierarchy within which the fair
value measurement is categorised in its entirety is determined on the basis of
the lowest level input that is significant to the fair value measurement in its
entirety.
For this purpose, the significance of an input is assessed against the fair
value measurement in its entirety. If a fair value measurement uses observable
inputs that require significant adjustment based on unobservable inputs, that
measurement is a level 3 measurement. Assessing the significance of a
particular input to the fair value measurement in its entirety requires
judgement, considering factors specific to the asset or liability.
The determination of what constitutes 'observable' requires significant
judgement by the Investment Manager. The Investment Manager considers
observable data to be that market data that is readily available, regularly
distributed or updated, reliable and verifiable, not proprietary, and provided
by independent sources that are actively involved in the relevant market.
Over-the-counter derivative option contracts have been classified as level 2
investments as their valuation has been based on market observable inputs
represented by the underlying quoted securities to which these contracts expose
the Company.
The table below sets out fair value measurements using the IFRS 13 fair value
hierarchy.
Financial assets at fair value through Level Level Level Total
profit or loss at 30 April 2015 1 2 3 £'000
£'000 £'000 £'000
Assets:
Equity investments 101,120 - - 101,120
Liabilities:
Derivative financial instruments - (161) (33) - (194)
written options
-------- -------- -------- --------
100,959 (33) - 100,926
======== ======== ======== ========
Financial assets at fair value through Level Level Level Total
profit or loss at 30 April 2014 1 2 3 £'000
£'000 £'000 £'000
Assets:
Equity investments 114,798 - - 114,798
Liabilities:
Derivative financial instruments - (336) (113) - (449)
written options
-------- -------- -------- --------
114,462 (113) - 114,349
======== ======== ======== ========
Financial assets at fair value through Level Level Level Total
profit or loss at 31 October 2014 1 2 3 £'000
£'000 £'000 £'000
Assets:
Equity investments 121,965 - - 121,965
Liabilities:
Derivative financial instruments - (554) (192) - (746)
written options
-------- -------- -------- --------
121,411 (192) - 121,219
======== ======== ======== ========
There were no transfers between levels for financial assets and financial
liabilities during the period recorded at fair value as at 30 April 2015, 30
April 2014 and 31 October 2014. The Company did not hold any level 3 securities
throughout the financial period or as at 30 April 2015, 30 April 2014 and 31
October 2014.
9. 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 2015, an amount of £8,080 (30 April 2014: £8,080; 31 October 2014: £
9,489) was outstanding in respect of Directors' fees.
At 30 April 2015, the Directors' interests in the Company's ordinary shares
were as follows:
Six Six Year
months months ended
ended ended 31
30 30 October
April April 2014
2015 2014 (audited)
(unaudited) (unaudited)
Simon Miller (Chairman) 38,094 38,094 38,094
-------- -------- --------
Christopher Casey 19,047 19,047 19,047
-------- -------- --------
Andrew Irvine 38,094 38,094 38,094
-------- -------- --------
Alice Ryder 9,047 9,047 9,047
-------- -------- --------
Since the period end and up to the date of this report there have been no
changes in Directors' holdings.
10. Transactions with the Investment Manager
BlackRock Fund Managers Limited ('BFM') was appointed as the Company's
Alternative Investment Fund Manager ('AIFM') with effect from 2 July 2014. BFM
provides management and administration services to the Company under a contract
which is terminable on six months' notice in writing. BFM has (with the
Company's consent) delegated certain portfolio and risk management services,
and other ancillary services, to BlackRock Investment Management (UK) Limited.
For details, see note 3.
The investment management fee for the six months ended 30 April 2015 was £
529,000 (period ended 30 April 2014: £549,000; year ended 31 October 2014: £
1,092,000). At the period end, an amount of £529,000 (period ended 30 April
2014: £265,000; year ended 31 October 2014: £356,000) 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 fees paid or
payable for these services for the period ended 30 April 2015 amounted to £
42,000 excluding VAT (period ended 30 April 2014: £38,000; year ended 31
October 2014: £77,000). At 30 April 2015, £119,000 (period ended 30 April 2014:
£38,000; year ended 31 October 2014: £77,000) was outstanding.
11. Contingent liabilities
There were no contingent liabilities at 30 April 2015, 30 April 2014 or 31
October 2014.
12. Publication of non statutory accounts
The financial information contained in this half yearly financial 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 2015 and 30
April 2014 has not been audited.
The information for the year ended 31 October 2014 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 these financial
statements contained no qualifications or statement under sections 498(2) or
498(3) of the Companies Act 2006.
13. Annual results
The Board expects to announce the annual results for the year ended 31 October
2015 in mid December 2015.
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 2015 with
the Annual General Meeting being held in February 2016.
For further information, please contact:
Simon White, Head of Investment Trusts, BlackRock Investment Management (UK)
Limited -
Tel: 020 7743 5284
Scott Malatesta, Senior Product Strategies, BlackRock Investment Management
(UK) LLC -
Tel: 020 7743 3000
Emma Philips, Media & Communications, BlackRock Investment Management (UK)
Limited -
Tel: 020 7743 2922
BLACKROCK NORTH AMERICAN INCOME : Half-yearly Report
June 11, 2015 at 11:34 am EDT
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