17th Apr 2025 17:23
JANUS HENDERSON FUND MANAGEMENT UK LIMITED
THE NORTH AMERICAN INCOME TRUST PLC
Legal Entity Identifier (LEI): 5493007GCUW7G2BKY360
THE NORTH AMERICAN INCOME TRUST PLC
ANNUAL FINANCIAL RESULTS FOR THE YEAR ENDED 31 JANUARY 2025
This announcement contains regulated information
INVESTMENT OBJECTIVE
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
| Year ended 31 January 2025 | Year ended 31 January 2024 |
NAV per share total return1,5 | 23.8% | -1.6% |
Share price total return1,5 | 24.9% | -0.9% |
Russell 1000 Value Index6 | 22.5% | 2.6% |
S&P High Yield Dividend Aristocrats Index6 | 14.9% | -4.9% |
NAV per share at year end7 | 379.2p | 317.8p |
Share price at year end3 | 347.0p | 289.0p |
Discount (debt at par) 5 | 8.5% | 9.1% |
Revenue return per share 5 | 12.44p | 11.95p |
Dividends per share2,4 | 12.20p | 11.70p |
Dividend yield2,3,5 | 3.5% | 4.0% |
Net assets at year end7 | £468m | £436m |
Ongoing charges5 | 0.77% | 0.89% |
Total Return Performance (%)
| 1 year | 3 years | 5 years | 10 years |
NAV per share1 | 23.8 | 35.7 | 59.5 | 184.0 |
Share price3 | 24.9 | 39.1 | 46.0 | 188.4 |
Russell 1000 Value Index6 | 22.5 | 36.3 | 72.0 | 197.5 |
S&P High Yield Dividend Aristocrats Index6 | 14.9 | 25.7 | 59.5 | 206.1 |
1 | Net Asset Value ('NAV') per share and share price total return with dividends reinvested and excluding reinvestment costs |
2 | Includes the fourth interim dividend of 4.1p per ordinary share for the year ended 31 January 2025 to be paid to shareholders on 7 May 2025 |
3 | Using mid-market closing price |
4 | Based on dividends paid and payable in respect of the financial year and the share price at the year end |
5 | Alternative Performance Measure ('APM') |
6 | Both in sterling terms on a total return basis |
7 | NAV with debt at par value |
Sources: Morningstar Direct, Janus Henderson, Factset
Financial Calendar, Dividends and Highlights
Annual General Meeting | 3 June 2025 |
Half year end | 31 July 2025 |
Payment dates of quarterly dividends for financial year ending 31 January 2026 | August 2025 October 2025 January 2026 May 2026 |
CHAIRMAN'S STATEMENT
Whilst this has been a widely publicised difficult year for the investment trust sector as a whole, it has been a positive one for the management of your Company. Some of the steps to strengthen governance and to be responsive to shareholders' needs that the Board have taken include:
• A change of manager from Aberdeen Group to Janus Henderson Investors to benefit from the significant resources available to the Janus Henderson North American equities team;
• A reduction in management fee;
• A more pro-active buy back programme, and;
• The introduction of a conditional tender mechanism.
Regarding the change of manager, I am pleased to write that, as noted in our half year report, on 1 August 2024, the transfer of the Company's management to Janus Henderson Investors ('JHI') was completed successfully. At that point Jeremiah Buckley, an experienced portfolio manager at Janus Henderson became the manager of the Company and was joined in November 2024 by Fran Radano, the previous portfolio manager at Aberdeen Group. They now manage the portfolio together with the assistance of 37 research analysts at Janus Henderson. JHI brings significant expertise, resources and depth in the North American equity market, and in marketing and shareholder relations. As a result of the transition, a new, lower, tiered management fee is payable by the Company to Janus Henderson. This lower fee is paid at 0.55% on NAV up to £500 million, and 0.45% on NAV over £500 million.
In common with the wider investment trust sector, the Company's shares traded at a significantly wider discount to their NAV during the year, in response to which the Board introduced a more active buyback programme. During the year, 13,990,660 shares were bought back, or roughly 10% of the share count from the start of the previous year, a noticeable step up from prior years. The buyback added 4.5p to the NAV per share and the shares were cancelled/allotted to treasury at an average price of 305.7 pence. Since 31 January 2025, the Company has bought back an additional 2,051,851 shares.
As announced to shareholders on 14 June 2024, the Board have agreed to implement a conditional tender, which will permit up to 15% of the Company's shares to be repurchased should certain conditions be met in September 2027. Please see the Annual Report for further details.
Indices
In last year's annual report we noted that the Board reviews the Company's performance against the Russell 1000 Value Index, the peer group and the S&P 500, all in sterling terms and on a total return basis. The Russell 1000 Value Index was at that time considered to be a more relevant reference index than the S&P 500 because its higher dividend yield was more consistent with the Company's own investment objective. However, the Russell 1000 Value Index is also an imperfect comparator as its dividend yield, whilst higher than that of the S&P 500, is still significantly lower than that on the Company's shares. Consequently, when we were considering the tender proposal, we wanted to find a recognised index that delivered a more comparable dividend yield and this is why we chose the S&P High Yield Dividend Aristocrat Index Total return.
The Board will continue to review the performance against the Russell 1000 Value Index and the peer group but the reference index for the purposes of the conditional tender will be the S&P High Yield Dividend Aristocrat Index.
Your Company offers a considerably higher yield than is generally available from the North American, and particularly US, market, however, even against higher yield indices, NAIT is actively managed. This differentiated approach has delivered both income and capital growth with an annualised return of 11% over the past ten years.
Performance
The investment trust structure allows the manager to focus on the long term without sudden, large redemptions and also the ability to retain revenues to smooth the dividend path should the need arise. While the Board feels that paying a relatively high yield is an important differentiating factor, we are also aware that paying out too high a level may have an adverse impact on future growth in both earnings and capital. Following careful discussion with the fund managers the portfolio yield has been marginally reduced, resulting in a portfolio that is more balanced across both growth and income and which we expect will result in better total returns going forward.
The performance for the year reflects six months of management under Aberdeen Group, while the second half reflects the refreshed approach under Janus Henderson Investors. While it has only been six months since the transition, the improvement in relative terms is encouraging albeit early days.
During the year the US economy remained strong, with GDP growing by 2.8%. As the financial year progressed, investors embraced the likelihood of a soft landing for the economy, as opposed to a recession. However, macroeconomic uncertainty was also a feature during the election cycle and following the ultimate election of President Trump for a second term. Volatility in the S&P 500 notably increased in the second half of the year, fuelled by this uncertainty and renewed disquiet over valuations in the technology sector.
Concurrent with this backdrop, the US Federal Reserve finally began to relax monetary policy during the year with a series of three rate cuts totalling 100 basis points, from a 5.25%-5.50% target range to 4.25%-4.50%, as inflation began to normalise. Inflation, however, is still above the Federal Reserve's 2% target, as persistent price rises in the service economy have made inflation stickier.
The major US Indices were again driven by technology shares and the expectation of future profits from Artificial Intelligence ('AI'). In particular, Nvidia, the provider of AI chips to data centres was over 20% of the total performance of the S&P 500, which itself was up about 25%. Concentration within that Index for the largest tech stocks continues to be historically high at over 30%.
Over the year to 31 January 2025, the Company's NAV total return per share was 23.8%, against a 22.5% return from the Russell 1000 value index and a 14.9% return from the S&P High Yield Dividend Aristocrats Index. The majority of the outperformance versus the Russell 1000 was captured in the second half of the year under the new management agreement. The Company's share price total return was 24.9% over the year, of which 15.3% was in the second half of the year.
The Fund Managers go into details of the stock specific contributors to and detractors from performance in their report.
Earnings and dividends
The Company's earnings per share were 12.4 pence compared to last year's 12.0 pence. During the year, the dollar strengthened against the pound by 2% which was a benefit to the revenue reserve, which continues to be more than one year's worth of dividends. Dividend and interest payment from investments contributed 78.5% of the Company's gross income, while options generated 21.5% of the Company's total gross income.
The Board has declared a fourth interim dividend of 4.1 pence per share, to be paid on 7 May 2025 to shareholders on the register on 22 April 2025. Total dividends for the year ended 31 January 2025 stand at 12.2 pence per share (2024 - 11.7p), an increase of 4.3% on the previous year. This marks the 14th consecutive year of dividend growth for the Company.
The Board
As previously mentioned at the half year, the Board undertook a great deal of work in the early part of the year to review the Company's management arrangements, which resulted in the change of Investment Manager on 1 August 2024. I would like to thank my colleagues for the extensive work undertaken.
In January 2025, three members of the Board were pleased to travel to North America and meet with analysts and portfolio managers at Janus Henderson Investors in Denver. We were all impressed at the scale, depth, knowledge and team spirit that we saw there. We were also pleased to see Fran Radano settling into his new environment.
At the Company's AGM on 21 June 2024, Dame Susan Rice retired as both Chair and a Director of the Company and I was privileged to take up the position of Chair after seven years' service on the Company's board. The Board would like to reiterate its thanks to Dame Susan for all her contributions to the Company. In light of Dame Susan's retirement, the Board has agreed to appoint Bulbul Barrett as a non-executive director of the Company following an external recruitment process. Bulbul will be appointed on 1 May 2025.
AGM
The Company's Annual General Meeting is due to be held at 12.30 p.m. on 3 June 2025 at the offices of our Investment Manager, Janus Henderson, 201 Bishopsgate, London, EC2M 3AE. Shareholders who are unable to travel to the meeting can join via zoom, using the QR code at the front of this report. The Notice of Meeting is included in the annual report.
I encourage all shareholders to attend the meeting and vote their shares if they are able to do so. If you cannot attend the meeting in person, please ensure you vote your shares using the proxy form provided. If you hold your shares via a share dealing platform, please instruct your platform to vote your shares on your behalf. Our investment manager has a guide on voting available here www.janushenderson.com/en-gb/uk-investment-trusts/how-to-vote
The Company's fund managers, Fran Radano and Jeremiah Buckley, will both be in attendance at the AGM and will be providing an update on the Company's portfolio. They look forward to seeing shareholders there and, along with the Company's directors, will be available to answer any questions you may have.
Outlook
The trade tariffs announced by President Trump have created significant volatility and distress in the markets. We are yet to see the full extent of the retaliation (or not) of the countries involved and we do not yet know the extent of the earnings damage to US companies from higher costs and reduced demand. Trade tariffs harm all participants and other markets have also had setbacks. In the near term, it is likely that earnings estimates in the US will be reduced and conference calls this calendar quarter will be subdued. The unpredictability of the pronouncements has also had an effect on the bond market and the US currency. As Warren Buffett, in his latest Berkshire Hathaway annual report put it, 'never forget that we need you (Uncle Sam) to maintain a stable currency and that result requires both wisdom and vigilance on your part'. We can but hope that wisdom will prevail. Ultimately the administration wants to bring down the deficit, reduce taxes and grow the economy and this would benefit the US market assuming this can be achieved.
While the political backdrop is causing turmoil in the near term, your Company holds a diverse portfolio of high quality stocks that, in general, have historically shown the ability to adapt to new conditions. The Board has taken a number of steps to improve the relative performance and we are confident the new managers and their extensive resources will help NAIT through this difficult and volatile time.
Charles Park
Chairman
17 April 2025
FUND MANAGERS' REPORT
On 1 August 2024, Janus Henderson Investors was appointed the AIFM of The North American Income Trust. As such, while this report considers full-year performance and outcomes for shareholders, it goes into greater depth in terms of investment performance, attribution and themes for the second half of the Company's financial year. Detailed commentary from the Company's previous manager, Aberdeen Group, on performance for the first half of the year can be found in the Company's half-year report.
Market review
The year to 31 January 2025 was another formidable period for US share prices, with the S&P 500 growing over 29% in local currency terms. GDP rose 2.8% in the US over the course of the year, whilst, in the middle of the period, inflation moderated down to 3%. While this remained above the Federal Reserve's 2% target, it was sufficient to prompt the central bank to begin unwinding their restrictive monetary policy. Over the latter half of the period, rate cuts amounted to 100bps, bringing the target range to 4.25-4.50%. At the close of the period, inflation remained at 3% while unemployment hovered near generational lows.
The return of volatility was a notable factor in the second half of the period. Having returned to relatively benign levels over the second half of 2023 and in early 2024, the VIX index (an index which tracks market volatility) saw an upward trend in the second half. This was marked by a series of individual spikes in the index, reflecting short-lived bouts of tumult. Most impacted were Artificial Intelligence ('AI')-associated stocks, notably many of the 'Magnificent Seven'.
In the second half of the financial year, the Financials, Technology, Consumer Staples and Industrials sectors were the strongest market performers, while the Materials, Healthcare and Energy sectors were the primary market laggards for the period.
Performance
The Company had a total return of 23.8% per share on a Net Asset Value (NAV) basis in sterling terms for the year ended 31 January 2025. This was a positive performance against both the Company's reference indices (Russell 1000 Value Index: 22.5%; S&P High Yield Dividend Aristocrats Index; 14.9%).
At a sector level, our stock selection in the Healthcare sector was a significant contributor to performance in the second half of the year, driven by strong returns in Bristol Myers Squibb, Medtronic and Gilead Sciences all of which have seen improving long-term outlooks due to advances in their innovation pipelines. Elsewhere, our overweight to Technology stocks, and our stock selection in the sector driven by strong returns in AI exposed names such as Broadcom, IBM, and Oracle, also aided performance in the second half.
The largest detractor from the Company's performance in the second half was the Industrials sector, due primarily to stock selection where our positions in United Parcel Service and Booz Allen Hamilton declined. The second-largest detractor was the Real Estate sector, due to our overweight position which was impacted by interest rates remaining relatively high and some stock selection within that as our position in Prologis underperformed due to concerns around retail warehousing and industrial demand in the US.
At a specific stock level, the largest contribution came from semiconductor supplier Broadcom. The company has seen accelerating demand for its Application-Specific Integrated Circuits ('ASICs') and networking products from hyperscalers in the US as well as having a leadership position in partnering with nearly all major players driving the significant buildout of AI infrastructure. They have also executed very well on the VMWare acquisition, realising meaningful synergies, and the analog semiconductor segment is finally showing signs of cyclical recovery. Broadcom recently raised their dividend by 12%.
Elsewhere, our overweight to investment bank Morgan Stanley was also a contributor. In the back half of the year, Morgan Stanley saw an acceleration in revenue growth in their capital markets businesses - both trading and investment banking. Investment banking is recovering from a cyclical bottom and the outlook has been boosted by the improving outlook for interest rates, private market monetisations and less regulation in the US. Revenue growth was also strong in its wealth management business as the pressure on net interest income from deposits flowing to higher earnings asset classes abated and market gains translated into fee growth. Morgan Stanley increased the dividend nearly 9% during the period.
In terms of second half specific stock detractors, pharmaceutical company Amgen underperformed as they were caught in a difficult market environment for pharma and biotech stocks as defensive sectors underperformed during the period, and there was concern around what the new cabinet would mean for the industry. Amgen also released important data on their anti-obesity therapy that didn't quite meet lofty expectations causing the stock to underperform. We still believe the therapy will contribute to long-term growth for the company and the rest of their portfolio continues to do well.
Another detractor that impacted our performance within the Industrial sector was United Parcel Service. The company has been challenged to gain back market share that they lost during their last round of labour negotiations which has impacted markets. The overall freight market has also been hampered by inventory adjustments in the retail and industrial end markets. Finally, they decided to adjust their relationship with Amazon which will end up reducing revenues but improving margins over time. We believe the freight cycle is poised to recover as inventory levels normalise in supply chains and that UPS will eventually get through these headwinds.
Portfolio activity
Following Janus Henderson's appointment as Investment Manager on 1 August 2024, substantial changes were made to the overall portfolio. The strategy has been to increase the yield we are getting in the old economy sectors of the market so that we can make room for lower yielding but faster growth companies in the new economy sectors of the market, while maintaining the overall income of the portfolio. We increased the yield in sectors like Financials, Industrials, and Healthcare so that we could afford to add more exposure in sectors like Technology and Communications. The net effect of these changes has slightly reduced the overall portfolio yield but the long-term growth prospects should be improved.
Sector-wise, we increased our exposure to Technology with additions to companies that we believe will benefit from increased spending on AI. This includes companies providing the infrastructure for Generative AI as well as companies that are leading in providing applications that leverage this new technology.
We have also added to our investments in the Healthcare sector. As mentioned above, the sector was one of the weaker performers during the period and has seen multiple compression over the last couple of years. We believe strong innovation pipelines will support earnings and dividend growth for years to come and with the multiple compression we have seen, dividend yields look very attractive relative to other sectors. We like both the offensive as well as defensive aspects of the sector.
On the other side of the transition, we reduced exposure in Materials, Financials and Consumer Staples where the combination of earnings growth and dividend yield were less than what we believe we can achieve in the overall portfolio. We have sold our corporate bond positions given extremely tight spreads in the corporate bond market. This approach has led to a modest increase in the total number of positions in the portfolio, but we are confident that it continues to represent a 'best ideas' concentrated portfolio.
A sector analysis chart of the portfolio can be found in the annual report.
Dividend growth
Over the course of the year, the Company had earnings of over 12.4p per share, an uplift on the 12.0p received in the previous year. The revenue reserve stood at £22.66m before the fourth interim dividend was paid, which continues to be over a year of dividend payments.
We were pleased with the overall dividend growth of the companies within the portfolio during the year. We have only two positions that didn't increase the dividend during the period while the rest of the portfolio saw year over year increases and we think the run rate for the overall portfolio remains in the mid- to high- single digit range. The two positions that didn't raise the dividend are priced at a very attractive absolute yield and we are confident they will raise the dividend in the future. We saw very strong dividend growth in our holdings in the technology sector where several companies raised the dividend by more than 10% during the period. Our holdings in Financials were also standouts in dividend increases during the period with several holdings in that sector raising the payouts by a high-single digit percentage.
Alongside regular dividend income, two holdings in the portfolio announced special dividend payments to shareholders during the year. Derivatives exchange operator CME Group declared an annual variable dividend of US$5.80 per share in December 2024. The company uses this approach to facilitate paying out all cash it generates over the year beyond a minimum threshold. Outdoor advertising company REIT Lamar Advertising declared a special earnings and profits cash dividend of US$0.25 per share.
Outlook
Year to date, there have been economic concerns due to changes in policy around tariffs, trade and government spending from the new administration in the US. As this new administration attempts to recalibrate global trade rules and regulations there has been a slow down in economic activity until visibility on this new framework can be properly evaluated. This pause in corporate activity has the ability to mute economic growth and thus earnings in the near-term. As a result of this transition in policy, we expect to see continued volatility as trade negotiations begin in earnest. Conversely, benefits of deregulation should improve the operating environment for companies across multiple sectors.
The consumer backdrop remains positive due to a strong labour market, but the reduction in corporate activity and a volatile stock market impacting consumer net worth has the potential to reduce spending despite strong equity market performance in recent years and higher interest earnings on cash which has supported the consumer. Debt service below long-term norms does provide a reduction in risk especially when compared to prior periods of consumer weakness.
In addition, labour productivity trends remain positive, supporting wage growth and corporate profitability. AI integration across sectors is enhancing efficiency and reducing costs, and we have recently seen practical examples in healthcare, e-commerce, finance, and energy. While AI adoption is still early, its potential for having a significant impact on productivity and revenue growth is clear.
We continue to be excited about the innovation and productivity gains that large US companies continue to drive through capital and R&D spending. The investments required to stay relevant and prosper in the new digital economy are significant and hence favour the largest companies that lead their industries. Having large amounts of data that can inform strategy and execution has become critical. We have populated the portfolio with companies that have the scale to make these investments which should drive growth in earnings and dividends for years to come.
We believe the portfolio companies in the Company are well positioned to manage through a period of volatility. We also feel comfortable with the current valuations of these companies, which in aggregate are at a discount to market multiples. The high-quality nature of these holdings should help insulate them against some of the macroeconomic forces at play. From a revenue perspective, the predictable cash generation and robust balance sheets should lead to continued dividend growth prospects for 2025. We continue to seek resilient companies, where macroeconomic tailwinds are not needed for growth and that have the cash and ability to invest in themselves for the future.
Fran Radano and Jeremiah Buckley
Fund Managers
17 April 2025
Portfolio as at 31 January 2025
Company | Valuation 2025 £'000 | % of portfolio |
Johnson & Johnson | 19,596 | 3.9 |
Medtronic | 18,265 | 3.6 |
Chevron | 16,812 | 3.3 |
Philip Morris | 16,767 | 3.3 |
Bristol-Myers Squibb | 16,599 | 3.3 |
IBM | 16,461 | 3.2 |
Morgan Stanley | 15,589 | 3.1 |
Gaming & Leisure Properties | 15,571 | 3.1 |
PNC Financial Services | 15,559 | 3.0 |
Broadcom | 14,237 | 2.8 |
Ten largest investments | 165,456 | 32.6 |
CVS Health | 13,639 | 2.7 |
Enbridge | 13,047 | 2.6 |
CME Group | 12,365 | 2.4 |
CMS Energy | 12,219 | 2.4 |
AbbVie | 11,840 | 2.3 |
Lamar Advertising | 11,687 | 2.3 |
Citigroup | 11,464 | 2.3 |
Verizon Communications | 11,371 | 2.2 |
U.S. Bancorp | 10,961 | 2.2 |
UnitedHealth | 10,917 | 2.1 |
Twenty largest investments | 284,966 | 56.1 |
Xcel Energy | 10,813 | 2.1 |
UPS | 10,571 | 2.1 |
RTX | 10,378 | 2.1 |
Goldman Sachs | 10,299 | 2.0 |
Restaurant Brands International | 9,901 | 1.9 |
Lam Research | 9,637 | 1.9 |
Dell Technologies | 9,591 | 1.9 |
Home Depot | 9,451 | 1.9 |
Accenture | 9,290 | 1.8 |
Amgen | 9,188 | 1.8 |
Thirty largest investments | 384,085 | 75.6 |
American Express | 8,572 | 1.7 |
Sempra | 8,341 | 1.7 |
Alphabet | 8,271 | 1.6 |
Eaton | 7,878 | 1.6 |
Honeywell | 7,200 | 1.4 |
OneMain | 7,148 | 1.4 |
Booz Allen Hamilton | 6,749 | 1.3 |
Texas Instruments | 6,681 | 1.3 |
Microsoft | 6,679 | 1.3 |
Coca-Cola | 6,383 | 1.3 |
Forty largest investments | 457,987 | 90.2 |
Nike | 6,186 | 1.2 |
Sysco | 5,868 | 1.1 |
Las Vegas Sands | 5,532 | 1.1 |
Comcast | 5,415 | 1.1 |
Marriott International | 5,390 | 1.1 |
Union Pacific | 4,987 | 1.0 |
Oracle | 4,789 | 0.9 |
Phillips 66 | 4,739 | 0.9 |
Amphenol | 3,701 | 0.7 |
Total investments | 504,594 | 99.3 |
Net current assets | 3,425 | 0.7 |
Total assets | 508,019 | 100.0 |
Sector breakdown
Sector exposure at 31 January
As a percentage of the investment portfolio excluding cash
2025 % | |
Health Care | 19.8 |
Financials | 16.5 |
Information Technology | 15.9 |
Industrials | 13.0 |
Consumer Discretionary | 7.2 |
Energy | 6.9 |
Utilities | 6.2 |
Consumer Staples | 5.8 |
Real Estate | 5.4 |
Communication Services | 3.3 |
Regional breakdown
Geographic exposure at 31 January
As a percentage of the investment portfolio excluding cash
| 2025 | 2024 | ||||
| Equity %
| Fixed interest % | Total % | Equity %
| Fixed interest % | Total % |
Canada | 4.5 | - | 4.5 | 6.1 | - | 6.1 |
USA | 95.5 | - | 95.5 | 92.0 | 1.9 | 93.9 |
100.0 | - | 100.0 | 98.1 | 1.9 | 100.0 | |
MANAGING RISKS
The Board, with the assistance of the Manager, has carried out a robust assessment of the principal risks facing the Company, including those which would threaten its business model, future performance, solvency, liquidity in its shares and reputation. The assessment includes consideration of economic and political risks, most of which are outside the Board's direct control. The Board has drawn up a detailed matrix of risks facing the Company, which it has distilled into six categories of principal risks, as shown on the following pages. To assist in mitigating the decision-taking risks as far as practicable, the Board has also put in place a schedule of investment limits and restrictions, appropriate to the Company's investment objective and policy, which it reviews at each board meeting.
Emerging risks
The Board considers closely changes to the risk profile of the Company, arising from both internal and external triggers, and examines emerging risks as part of its regular review of the Company's risk profile. The Board defines emerging risks as potential trends, sudden events or changing risks which are characterised by a high degree of uncertainty in terms of occurrence, probability and possible effects on the Company. Once the emerging risks become sufficiently clear, they may be treated as specific risks and enter the Company's matrix of risks.
The decision during the year to change the Company's management arrangements was a potential risk, and was closely monitored by the Board, with the Audit Chair in regular communication with teams at both Janus Henderson and Aberdeen Group, and weekly Board steering committee meetings.
The Board receives regular reporting on specific and emerging risks from the Manager and other service providers. In addition, the Board receives ad hoc reports on specialist topics from professional advisers, including lawyers and tax agents, when necessary. These reports, as well as the directors' own experience, enable effective monitoring of the risk landscape and changes to it.
The Board has concluded that the portfolio, investment approach and operational requirements of the Company have, to date, proven resilient and the investment approach remains unchanged. The impacts of geopolitical tensions affect the investment landscape, as do borrowing levels in economies, relatively low growth in developed economies and the threat of inflation, all of which are factored into investment decisions. There are specific risks in the UK environment that might impact on investors and demand for the Company's shares which are also taken into consideration in managing the Company's share price rating, where possible.
The Company's principal risks and mitigating steps are as follows:
Risk | Controls and mitigation |
Market The Company's absolute performance in terms of NAV total return and share price total return is dependent on the performance of the investee companies and markets in which the Company invests. Performance is also impacted by currency and interest rate movements, as well as by political and economic events, including changes to the fiscal environment for UK investors. Any debt securities that may be held by the Company will be affected by general changes in interest rates that will in turn result in increases or decreases in the market value of those instruments. | Stock specific investment risk is spread by holding a diversified portfolio of investee companies, typically with strong balance sheets and good growth prospects. The Company does not currently undertake any currency hedging strategies, though it has the ability to do so.
The Company's investment strategy is reviewed formally by the Board at least annually, and takes into account shareholder views, developments in the marketplace and how the structure of the Company is positioned to meet them.
Details on financial risks, including market price volatility, inflation, interest rates, liquidity and foreign currency risks and the controls in place to manage these risks are provided in note 18 to the financial statements. |
Investment performance The relative performance of the Company against its reference indices and AIC peer group depends principally on asset allocation and stock selection, which, in turn, require investment skills. In exercising these skills, the Manager is responsible for adhering to the investment policy and investment guideline restrictions set by the Board and amended from time to time. | The Board is responsible for ensuring that the investment policy is met. The day-to-day management of the Company's assets is delegated to the Manager under investment guidelines, with close monitoring of the guidelines.
The Board meets the Manager on a regular basis and keeps investment performance, in terms of both capital and income returns, under close review. The Management Engagement Committee reviews the Manager's performance annually. Although the Company is not invested against any income criteria, the net income of the Company and the revenue reserves are monitored against dividend pay-outs and anticipated future net income.
Investment performance is monitored over the short, medium and longer term against the Company's reference indices and against the Company's AIC peer group (North America).
The Fund Managers keep the global political and economic picture under review as part of the investment process and members of the wider Janus Henderson team are available should the Board want additional information on sector or market specific issues. Climate risk is assessed within the individual stock selection process.
The Board monitors the Company's ordinary share price relative to NAV per share and reviews changes in shareholdings in the Company to understand short or longer-term trends in supply of and demand for the shares. |
Major market event or geopolitical risk The Company is exposed to stock market volatility or illiquidity that could result from major market shocks due to a national or global crisis such as a pandemic, war, natural disaster, geopolitical developments or similar. There could also be a resultant impact of disruption on the operations of the Company and its service providers temporarily or for prolonged duration. | The Board is cognisant of the heightened risks arising from geopolitical developments including stock market instability and economic effects or the potential impact on the operations of the third-party suppliers, including the Manager.
The Manager maintains close oversight of the Company's portfolio and the performance of investee companies. The Board monitors volatility and holds a regular dialogue with the Fund Managers to understand the impact on the Company's portfolio.
The Manager has disaster recovery and business continuity arrangements in place to ensure that it is able to continue to service its clients, including investment trusts. The Board monitors third party risk management frameworks through updates from the Manager. |
Income and Dividend Risk The ability of the Company to pay dividends and any future dividend growth will depend primarily on the timing and level of income received from its investments (which may be affected by currency movements, exchange controls or withholding taxes imposed by jurisdictions in which the Company invests). Accordingly, there is no guarantee that the Company's dividend income objective will continue to be met and the amount of the dividends paid to Ordinary shareholders may go down as well as up. | The Board monitors this risk through the regular review of detailed revenue forecasts and considers the current and forecast level of income at each meeting.
The Company has built up its revenue reserves over recent years which provides flexibility in future years, should the dividend environment become challenging. The Company has revenue reserves of £22.66m before payment of the fourth interim dividend. |
Gearing The Fund Managers have authority to use gearing in line with the Company's investment policy. Gearing is used to leverage the Company's portfolio in order to enhance returns. In the event of a significant or prolonged fall in equity markets, gearing can have the effect of exacerbating market falls on the Company's NAV and, consequently, its share price. Gearing would have the opposite effect in the event of a significant or prolonged rise in equity markets in which the Company is invested. | The Company's investment policy sets a limit on borrowing of 20% of net assets at the time the borrowing is assumed, and the Board monitors the Company's level of gearing at each meeting, and its compliance with loan covenants.
As at 31 January 2025 the Company had £40.2 million of borrowings and net gearing was 7.8% at the year end. More details are provided in note 14 of the annual report. |
Discount volatility Investment company shares can trade at a discount to their underlying net asset values (NAV), although they can also trade at a premium. | The Company's share price, NAV and discount are monitored daily by the Manager. When there is a significant discount and it is deemed to be in the best interest of shareholders, the Manager will exercise discretion to undertake share buybacks, within authorities set by the Board. The Board monitors the discount level of the Company's shares and monitors the level of share buybacks, within shareholder authorities. During the year 13,990,660 shares were bought back. |
Derivatives The Company uses derivatives primarily to enhance the income generation of the Company.
Derivatives are difficult to value and exposed to counterparty risk | The risks associated with derivatives contracts are managed within guidelines and limits set by the Board. |
Operational The Company is reliant on third-party service providers for all its operational activities, including reliance on Janus Henderson (and Aberdeen Group for the first six months of the year) as investment manager, corporate secretary and administrator to the Company.
The Company depends on the diligence, skill and judgement of the Manager's investment team. Continuity of service of the team and individuals in the team could impact the future success of the Company.
Failure of third parties' operational or internal control systems could prevent the accurate reporting or monitoring of the Company's financial position. Janus Henderson subcontracts some of the operational functions (principally those relating to trade processing, investment administration and accounting) to BNP Paribas.
Failure of controls could also impact the Company meeting its regulatory obligations. | The Management Engagement Committee reviews each service provider at least annually, and, in conjunction with the Audit Committee, considers reports on internal controls, including any reported breaches, throughout the year, from all the service providers. This reporting covers such matters as business resilience and cyber security risk as well as matters that are subject to review as part of the annual audit of the Company.
Janus Henderson has a strong North American Equities team, which supports the Fund Managers in the management of the Company's portfolio. Constructive challenge, succession and continuity planning are key elements of the management of the team and are reported closely to the Board with consultation on any major changes.
The Board reviews the internal control structure and reporting for the Company from all agents and meets with their representatives throughout the year to make enquiry on the systems and controls.
|
Regulatory and reporting The Company operates in a highly regulated environment which could inter alia affect the listing of the Company's shares and the Company's tax status, as well as how the Company conducts its affairs in the market more generally.
The Company has strict reporting requirements that need to be adhered to both internally and externally to the market. | The Board is apprised regularly of impending regulatory and reporting changes and monitors closely, through its various agents, the Company's adherence to existing requirements, including maintaining investment trust and listed company status. The Board is also kept aware of fiscal and other developments that might affect shareholders' interests.
The Board is kept informed of corporate governance developments and, as far as practicable, adheres to corporate governance guidelines that are applicable to an investment company. |
VIABILITY STATEMENT
The AIC Code of Corporate Governance includes a requirement for the Board to assess future prospects for the Company, and to report on that assessment within the Annual Report. The Board considers that certain characteristics of the Company's business model and strategy are relevant to this assessment:
• the Board aims for the Company to deliver long-term performance;
• the Company's investment objective, strategy and policy, which are subject to regular Board monitoring, mean that the Company is invested mainly in readily realisable, listed securities and that the level of borrowings is restricted; and
• the Company is a closed-ended investment company and therefore does not suffer from liquidity issues arising from unexpected redemptions.
Also relevant are a number of aspects of the Company's operational agreements:
• the Company retains title to all assets held by the custodian under the terms of formal agreements with the custodian and depositary;
• revenue and expenditure forecasts are reviewed by the directors at each board meeting; and
• cash is held with approved banks.
In addition, the directors have carried out a robust assessment of the principal risks and uncertainties which could threaten the Company's business model, including future performance, liquidity and solvency, and climate change, and considered emerging risks that could have a future impact on the Company. The Board takes into account the liquidity of the portfolio, short-term and structural gearing, the income stream from the portfolio, and the Company's ability to meet its liabilities as they fall due. This includes consideration of how the forecast income stream, expenditure and levels of reserves could impact the Company's ability to pay dividends to shareholders. Detailed income and expense forecasts are made over a shorter time frame. The nature of the Company's business means that such forecasts are equally valid to be considered over the longer three-year period as a means of assessing whether the Company can continue in operation.
The directors assess viability over three-year rolling periods, which aligns with its continuation vote, taking account of foreseeable severe but plausible scenarios. This includes consideration of the duration of the Company's loan notes facility and how a breach of any covenants could impact the Company's NAV and share price. The Board has assessed the risks associated with geopolitical, economic and health crises in recent years, including the conflict in the Middle East and the war in Ukraine, and has concluded that these events have not affected the long-term viability of the Company, and its ability to continue in operation, notwithstanding any short-term uncertainty they have caused in the markets.
The directors believe that a rolling three-year period best balances the Company's long-term objective, its financial flexibility, commitment to holding continuation votes every three years and scope with the difficulty in forecasting economic conditions affecting the Company and its shareholders.
Based on their assessment, and in the context of the Company's business model, strategy and operational arrangements above, the directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the three-year period to January 2028.
The directors have also concluded that the Company has adequate resources to continue in operational existence for at least 12 months from the date of approval of these financial statements being 30 April 2026, and it is therefore appropriate to prepare these financial statements on a going concern basis.
RELATED PARTY TRANSACTIONS
The Company's transactions with related parties in the year were with the directors and the Manager. There were no material transactions between the Company and its directors during the year other than amounts paid to them in respect of remuneration and expenses, for which there were no outstanding amounts payable at the year end. Directors' shareholdings in the Company are disclosed in the directors' remuneration report.
The Company has an agreement with the Manager for the provision of investment management, secretarial, accounting and administration and promotional activity services. Details of transactions during the year and balances outstanding at the year end are given in notes 5 and 7 in the Annual Report. During the year the Company received £247,000 from Janus Henderson to cover project costs paid or payable in relation to the manager change from abrdn Fund Managers Limited.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
In accordance with Disclosure Guidance and Transparency Rule 4.1.12, each of the Directors, who are listed in the Annual Report, confirms that, to the best of his or her knowledge:
· the Company's financial statements, which have been prepared in accordance with UK Accounting Standards and applicable law give a true and fair view of the assets, liabilities, financial position and return of the Company; and
· the Annual Report and Financial Statements include a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.
On behalf of the Board
Charles Park
Chair
17 April 2025
INCOME STATEMENT
Year ended 31 January 2025 | Year ended 31 January 2024 | |||||
| Revenue return £'000 | Capital return £'000 |
Total £'000 | Revenue return £'000 | Capital return £'000 |
Total £'000 |
|
|
| ||||
Net gains/(losses) on investments | - | 77,132 | 77,132 | - | (25,504) | (25,504) |
Net currency (losses)/gains | - | (868) | (868) | - | 1,375 | 1,375 |
Income | 21,193 | 262 | 21,455 | 21,952 | 620 | 22,572 |
| --------- | --------- | --------- | --------- | ----------- | --------- |
Gross revenue and capital gains/(losses) | 21,193 | 76,526 | 97,719 | 21,952 | (23,509) | (1,557) |
Investment management fee | (833) | (1,943) | (2,776) | (894) | (2,088) | (2,982) |
Administrative expenses | (795) | - | (795) | (943) | - | (943) |
---------- | ---------- | --------- | ---------- | ---------- | ---------- | |
Return before finance costs and taxation | 19,565 | 74,583 | 94,148 | 20,115 | (25,597) | (5,482) |
|
|
| ||||
Finance costs | (343) | (800) | (1,143) | (368) | (858) | (1,226) |
---------- | ---------- | ---------- | ---------- | ---------- | ---------- | |
Return before taxation | 19,222 | 73,783 | 93,005 | 19,747 | (26,455) | (6,708) |
|
|
|
| |||
Taxation | (2,907) | 646 | (2,261) | (3,079) | 614 | (2,465) |
---------- | ---------- | ---------- | ---------- | ---------- | ---------- | |
Return after taxation | 16,315 | 74,429 | 90,744 | 16,668 | (25,841) | (9,173) |
|
|
|
| |||
| ---------- | ---------- | ---------- | ---------- | ---------- | ---------- |
Return per Ordinary share (pence) | 12.44 | 56.76 | 69.20 | 11.95 | (18.53) | (6.58) |
===== | ===== | ===== | ===== | ===== | ===== | |
The total columns of this statement represent the Profit and Loss Account of the Company. The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. All revenue and capital items in the above statement derive from continuing operations. The Company had no other comprehensive income other than those disclosed in the Income Statement. The net return is both the profit for the year and the total comprehensive income.
STATEMENT OF CHANGES IN EQUITY
Year ended 31 January 2025 | Called up share capital £'000 | Share premium account £'000 | Capital redemption reserve £'000 | Capital reserve £'000 |
Revenue reserve £'000 |
Total £'000 |
Balance at 1 February 2024 | 6,868 | 51,806 | 15,748 | 340,003 | 22,054 | 436,479 |
Buyback of Ordinary shares for cancellation | (522) | - | 522 | (31,701) | - | (31,701) |
Buyback of Ordinary shares for treasury | - | - | - | (11,973) | - | (11,973) |
Return after taxation | - | - | - | 74,429 | 16,315 | 90,744 |
Dividends paid | - | - | - | - | (15,714) | (15,714) |
| --------- | ---------- | ---------- | ----------- | ---------- | ---------- |
At 31 January 2025 | 6,346 | 51,806 | 16,270 | 370,758 | 22,655 | 467,835 |
====== | ====== | ====== | ====== | ====== | ====== | |
Year ended 31 January 2024 | Called up share capital £'000 | Share premium account £'000 | Capital redemption reserve £'000 | Capital reserve £'000 |
Revenue reserve £'000 |
Total £'000 |
Balance at 1 February 2023 | 7,012 | 51,806 | 15,604 | 373,828 | 24,641 | 472,891 |
Buyback of Ordinary shares for cancellation | (144) | - | 144 | (7,984) | - | (7,984) |
Return after taxation | - | - | - | (25,841) | 16,668 | (9,173) |
Dividends paid | - | - | - | - | (19,255) | (19,255) |
| --------- | ---------- | ---------- | ----------- | ---------- | ---------- |
At 31 January 2024 | 6,868 | 51,806 | 15,748 | 340,003 | 22,054 | 436,479 |
====== | ====== | ====== | ====== | ====== | ====== |
STATEMENT OF FINANCIAL POSITION
As at 31 January 2025 £'000 | As at 31 January 2024 £'000 | |
Fixed assets |
| |
Investments held at fair value through profit or loss | 504,594 | 454,932 |
| ----------- | ----------- |
Current assets |
| |
Prepayments and accrued income | 896 | 846 |
Other debtors | 2,975 | 105 |
Cash at bank and in hand | 5,264 | 21,285 |
----------- | ----------- | |
9,135 | 22,236 | |
----------- | ----------- | |
Creditors: amounts falling due within one year |
| |
Other creditors | (5,710) | (1,491) |
----------- | ----------- | |
Net current assets | 3,425 | 20,745 |
----------- | ----------- | |
Total assets less current liabilities | 508,019
| 475,677
|
Creditors: amounts falling due after more than one year |
| |
Senior Loan Notes | (40,184) | (39,198) |
----------- | ----------- | |
Net assets | 467,835 | 436,479 |
| ======= | ======= |
Capital and reserves |
| |
Called up share capital | 6,346 | 6,868 |
Share premium account | 51,806 | 51,806 |
Capital redemption reserve | 16,270 | 15,748 |
Capital reserve | 370,758 | 340,003 |
Revenue reserve | 22,655 | 22,054 |
----------- | ----------- | |
Total shareholders' funds | 467,835 | 436,479 |
======= | ======= | |
Net asset value per ordinary share (pence) | 379.24 | 317.78 |
======= | ======= |
STATEMENT OF CASH FLOWS
Year ended 31 January 2025 £'000 | Year ended 31 January 2024 £'000 | |
|
| |
Cash flows from operating activities |
| |
Net return before taxation | 93,005 | (6,708) |
Adjustments for: |
| |
Net (gains)/losses on investments | (77,146) | 25,410 |
Net losses/(gains) on foreign exchange transactions | 868 | (1,375) |
Increase in dividend income receivable | (52) | (60) |
Decrease/(increase) in fixed interest income receivable | 2 | (2) |
Decrease in derivatives | (66) | (102) |
Decrease in other debtors | 32 | 155 |
Increase/(decrease) in other creditors | 163 | (53) |
Tax on overseas income | (2,261) | (2,465) |
Amortisation of senior loan note expenses | 8 | - |
Accretion of fixed income book cost | (44) | (94) |
----------- | ----------- | |
Net cash inflow from operating activities | 14,509 | 14,706 |
|
| |
Cash flows from investing activities |
| |
Purchase of investments | (446,018) | (140,765) |
Sale of investments | 474,976 | 147,854 |
----------- | ----------- | |
Net cash inflow from investing activities | 28,958 | 7,089 |
| ||
Financing activities |
| |
Equity dividends paid | (15,714) | (19,255) |
Buyback of Ordinary shares | (31,911) | (7,984) |
Buyback of Ordinary shares for treasury | (11,973) | - |
| ----------- | ----------- |
Net cash used in financing activities | (59,598) | (27,239) |
----------- | ----------- | |
Decrease in cash at bank and in hand | (16,131) | (5,444) |
| ----------- | ----------- |
Analysis of changes in cash at bank and in hand during the year |
| |
Opening balance | 21,285 | 26,699 |
Effect of exchange rate fluctuation on cash held | 110 | 30 |
Decrease in cash as above | (16,131) | (5,444) |
----------- | ----------- | |
Closing balance | 5,264 | 21,285 |
| ======= | ======= |
Represented by: |
| |
Cash at bank and in hand | 5,264 | 21,285 |
----------- | ----------- | |
| 5,264 | 21,285 |
======= | ======= | |
| ||
| ||
The accompanying notes are an integral part of the financial statements. | ||
NOTES TO THE FINANCIAL STATEMENTS
1. | Principal activity | ||||||
| The Company is a closed-end investment company, registered in Scotland No. SC005218, with its Ordinary shares being listed on the London Stock Exchange.
| ||||||
2. | Accounting policies | ||||||
| A summary of the principal accounting policies, all of which, unless otherwise stated, have been consistently applied throughout the year and the preceding year, is set out below.
a) Basis of preparation and going concern The financial statements have been prepared in accordance with Financial Reporting Standard 102, the Companies Act 2006 and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued in July 2022. The financial statements are prepared in sterling which is the functional currency of the Company and rounded to the nearest £'000. 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.
Going concern The Company's assets consist substantially of securities in companies listed on recognised stock exchanges and in normal circumstances are realisable within a short timescale and which can be sold to meet funding commitments if necessary.
The Board has set gearing limits and regularly reviews actual exposures, cash flow projections and compliance with banking covenants.
The Company undertakes a continuation vote every three years. The last continuation vote was passed at the AGM held in June 2024 with 89.2% of votes in favour.
The Board has considered the impact of geopolitical developments and believes that there will be a limited resulting financial impact on the Company's operational resources and existence. 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 Company has sufficient liquidity within its portfolio so as to remain within its debt covenants and pay expenses.
Taking the above factors into consideration, the Directors have a reasonable expectation that the Company has adequate financial resources to continue in operational existence for the foreseeable future and for at least twelve months from the date of this Report. Accordingly, the Board continues to adopt the going concern basis in preparing the financial statements.
Significant estimates and judgements Disclosure is required of judgements and estimates made by management in applying the accounting policies that have a significant effect on the financial statements. There are no significant estimates or judgements which impact these financial statements.
b) Income Income from investments, including taxes deducted at source, is included in revenue by reference to the date on which the investment is quoted ex dividend. Special dividends are credited to capital or revenue, according to the circumstances. The fixed returns on debt instruments are recognised using the time apportioned accruals basis and the discount or premium on acquisition is amortised or accreted on a straight-line basis. Interest receivable from cash and short-term deposits is recognised the time apportioned accruals basis.
c) Expenses All expenses are accounted for on an accruals basis and are charged to the Statement of Comprehensive Income. Expenses are charged against revenue except as follows: · Transaction costs on the acquisition or disposal of investments are charged to capital in the Statement of Comprehensive Income; · Expenses are charged to capital where a connection with the maintenance or enhancement of the value of the investments can be demonstrated. In this respect, the investment management fee is allocated 30% to revenue and 70% to capital to reflect the Company's investment policy and prospective income and capital growth.
d) Taxation The tax payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible (see note 8 for a more detailed explanation). The Company has no liability for current tax.
Deferred taxation is provided on all timing differences, that have originated but not reversed at the Statement of Financial Position date, where transactions or events that result in an obligation to pay more or a right to pay less tax in future have occurred at the Statement of Financial Position date, measured on an undiscounted basis and based on enacted tax rates. This is subject to deferred tax assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the underlying timing differences can be deducted. Timing differences are differences arising between the Company's taxable profits and its results as stated in the financial statements which are capable of reversal in one or more subsequent periods.
Owing to the Company's status as an investment trust company, and the intention to continue to meet the conditions required to obtain approval for the foreseeable future, the Company has not provided deferred tax on any capital gains and losses arising on the revaluation or disposal of investments.
e) Investments The Company has chosen to apply the recognition and measurement provisions of IAS 39 Financial Instruments: Recognition and Measurement and investments have been designated upon initial recognition at fair value through profit or loss. Investments are recognised and de-recognised at trade date where a purchase or sale is under a contract whose terms require delivery within the time frame established by the market concerned and are initially measured at fair value. Subsequent to initial recognition, investments are measured at fair value. For listed investments, this is deemed to be closing bid market prices. Gains and losses arising from changes in fair value and disposals are included as a capital item in the Statement of Comprehensive Income and are ultimately recognised in the capital reserve.
f) Borrowings Monies borrowed to finance the investment objectives of the Company are stated at the amount of the net proceeds immediately after issue plus cumulative finance costs less cumulative payments made in respect of the debt. The finance costs of such borrowings are accounted for on an accruals basis using the effective interest rate method and are charged 30% to revenue and 70% to capital to reflect the Company's investment policy and prospective income and capital growth.
g) Dividends payable Interim and final dividends are recognised in the period in which they are paid.
h) Nature and purpose of reserves Share premium account - The balance classified as share premium includes the premium above nominal value from the proceeds on issue of any equity capital comprising Ordinary shares of 5p. This reserve is not distributable. Capital redemption reserve - The capital redemption reserve is used to record the amount equivalent to the nominal value of any of the Company's own shares purchased and cancelled in order to maintain the Company's capital. This reserve is not distributable. Capital reserve - This reserve reflects any gains or losses on realisation of investments in the period along with any changes in fair values of investments held that have been recognised in the Statement of Comprehensive Income. The costs of share buybacks for treasury are also deducted from this reserve. This reserve is distributable although the amount that is distributable is complex to determine and is not necessarily the full amount of the reserve as disclosed within these financial statements. Revenue reserve -This reserve reflects all income and costs which are recognised in the revenue column of the Statement of Comprehensive Income. The revenue reserve represents the amount of the Company's reserves distributable by way of dividend. The amount of the revenue reserve as at 31 January 2025 may not be available at the time of any future distribution due to movements between 31 January 2025 and the date of distribution.
i) Foreign currency Assets and liabilities in foreign currencies are translated at the rates of exchange ruling on the Statement of Financial Position date. Transactions involving foreign currencies are converted at the rate ruling on the date of the transaction. Gains and losses on the realisation of foreign currencies are recognised in the Statement of Comprehensive Income and are then transferred to the capital reserve.
j) Traded options The Company may enter into certain derivative contracts (e.g. writing traded options). Option contracts are accounted for as separate derivative contracts and are therefore shown in other assets or other liabilities at their fair value. The initial fair value is based on the initial premium which is received/paid on inception. The premium is recognised in the revenue column over the life of the contract period. Losses on any movement in the fair value of open contracts at the year end realised and on the exercise of the contracts are recorded in the capital column of the Statement of Comprehensive Income. For written options, where exercised, losses are treated as a realised loss, including where it is a component of the cost paid to acquire underlying securities on a written contract.
In addition, the Company may enter into derivative contracts to manage market risk and gains or losses arising on such contracts are recorded in the capital column of the Statement of Comprehensive Income.
k) Cash at bank and in hand Cash comprises cash at bank and collateral accounts at brokers. The amounts held in collateral accounts at brokers were £362,000 with Goldman Sachs and £14,000 with UBS as at 31 January 2025
l) Treasury shares When the Company purchases its Ordinary shares to be held in treasury, the amount of the consideration paid, which includes directly attributable costs, is net of any tax effect, and is recognised as a deduction from the capital reserve. When these shares are sold subsequently, the amount received is recognised as an increase in equity, and any resulting surplus on the transaction is transferred to the share premium account and any resulting deficit is transferred from the capital reserve. | ||||||
3. |
Gains on investments held at fair value through profit or loss | 2025 £'000 | 2024 £'000 | ||||
Gains on cash held | 110 | 30 | |||||
(Losses)/gains on Senior Loan Notes | (978) | 1,345 | |||||
----------- | ----------- | ||||||
(868) | 1,375 | ||||||
| ====== | ====== | |||||
4. |
Income from overseas listed investments | 2025 £'000 | 2024 £'000 | ||||
Dividend income | 14,368 | 14,879 | |||||
REIT income | 2,191 | 2,817 | |||||
Interest income from investments | 286 | 567 | |||||
--------- | --------- | ||||||
| 16,845 | 18,263 | |||||
====== | ====== | ||||||
During the year, the Company was entitled to premiums totalling £4,099,000 (2024 - £3,781,000) in exchange for entering into option contracts. At the year end there were 4 (2024 - 6) open positions, valued at a liability of £96,000 (2024 - liability of £162,000) as disclosed in note 13 to the accounts. Losses realised on the exercise of derivative transactions are disclosed in note 11 to the accounts.
| |||||||
5. | Investment management fee | 2025 | 2024 | ||||
Investment management fee | Revenue | Capital | Total | Revenue | Capital | Total | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||
833 | 1,943 | 2,776 | 894 | 2,088 | 2,982 | ||
|
| ||||||
6. | Finance costs | 2025 | 2024 | ||||
| Revenue | Capital | Total | Revenue | Capital | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Bank interest paid | 2 | 6 | 8 | 33 | 76 | 109 | |
Senior Loan Notes | 338 | 789 | 1,127 | 333 | 778 | 1,111 | |
Amortised Senior Loan Note issue expenses | 3 | 5 | 8 | 2 | 4 | 6 | |
| ----------- | ---------- | ------- | ----------- | -------- | ------- | |
| 343 | 800 | 1,143 | 368 | 858 | 1,226 | |
| ----------- | ---------- | ------- | ----------- | --------- | ------- | |
7. | Dividends on ordinary shares |
| |
|
| 2025 £'000 | 2024 £'000 |
| Amounts recognised as distributions to equity holders in the year: | ||
| 3rd interim dividend for 2023 of 2.5p per share | - | 3,506 |
| Final dividend for 2023 of 3.5p per share | - | 4,902 |
| 4th interim dividend for 2024 of 3.9p per share | 5,305 | - |
| 1st interim dividend for 2025 of 2.7p per share (2024 - 2.6p) | 3,569 | 3,642 |
| 2nd interim dividend for 2025 of 2.7p per share (2024 - 2.6p) | 3,467 | 3,621 |
| 3rd interim dividend for 2025 of 2.7p per share (2024 - 2.6p) | 3,373 | 3,584 |
| --------- | --------- | |
| 15,714 ===== | 19,255 ===== | |
| The fourth interim dividend was unpaid at the year end. Accordingly, this has not been included as a liability in these financial statements. The table below sets out the total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of Sections 1158-1159 of the Corporation Tax Act 2010 are considered. The revenue available for distribution by way of dividend for the year is £16,315,000 (2024 - £16,668,000). | ||
2025 £'000 | 2024 £'000 | |||||
1st interim dividend for 2025 of 2.7p per share (2024 - 2.6p) | 3,569 | 3,642 | ||||
2nd interim dividend for 2025 of 2.7p per share (2024 - 2.6p) | 3,467 | 3,621 | ||||
3rd interim dividend for 2025 of 2.7p per share (2024 - 2.6p) | 3,373 | 3,584 | ||||
4th interim dividend for 2025 of 4.1p per share (2024 - 3.9p) | 4,974 | 5,310 | ||||
--------- | --------- | |||||
|
| 15,383 | 16,157 | |||
===== | ===== | |||||
The cost of the proposed fourth interim dividend for 2025 is based on 121,309,836 Ordinary shares in issue, being the number of Ordinary shares in issue, excluding treasury shares, at the date of this report.
| ||||||
8. | Return per Ordinary share | |||||
2025 | 2024 | |||||
£'000 | p | £'000 | p | |||
Based on the following figures: |
|
|
|
| ||
Revenue return | 16,315 | 12.44 | 16,668 | 11.95 | ||
Capital return | 74,429 | 56.76 | (25,841) | (18.53) | ||
|
| --------- | --------- | ---------- | ---------- | |
| Total return
| 90,744 | 69.20 | (9,173) | (6.58) | |
| Weighted average number of Ordinary shares in issue {A} |
| 131,124,251 | 139,474,109 | ||
| {A} Calculated excluding shares held in Treasury where applicable. |
|
|
|
| |
9. | 2025 Financial Information |
| The figures and financial information for the year ended 31 January 2025 are extracted from the Company's annual financial statements for that period and do not constitute statutory accounts. The Company's annual financial statements for the year to 31 January 2025 have been audited but have not yet been delivered to the Registrar of Companies. The Independent Auditor's Report on the 2025 annual financial statements was unqualified, did not include reference to any matter to which the Auditor drew attention without qualifying the report, and did not contain any statements under sections 498(2) or 498(3) of the Companies Act 2006.
|
10. | 2024 Financial Information |
| The figures and financial information for the year ended 31 January 2024 are extracted from the Company's annual financial statements for that period and do not constitute statutory accounts. The Company's annual financial statements for the year to 31 January 2024 have been audited and filed with the Registrar of Companies. The Independent Auditor's Report on the 2024 annual financial statements was unqualified, did not include reference to any matter to which the Auditor drew attention without qualifying the report, and did not contain any statements under sections 498(2) or 498(3) of the Companies Act 2006.
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11. | Dividend |
| The fourth interim dividend of 4.1p per ordinary share will be paid on 7 May 2025 to shareholders on the register of members at the close of business on 22 April 2025. This will take the total dividends for the year to 12.2p (2024: 11.70p). The Company's shares will be traded ex-dividend on 17 April 2025.
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12. | Annual Report |
| The Annual Report will be posted to shareholders in May 2025 and will be available on the Company's website (www.northamericanincome.com). |
13. | Annual General Meeting |
| The Annual General Meeting will be held on Tuesday 3 June 2025 at 12.30 p.m. at 201 Bishopsgate, London EC2M 3AE. The Notice of Meeting is included in the Annual Report. |
For further information please contact:
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Fran Radano Fund Manager The North American Income Trust plc Telephone: +1 303 336 7935
| Jeremiah Buckley Fund Manager The North American Income Trust plc Telephone: +1 303 883 2367
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Dan Howe Head of Investment Trusts Janus Henderson Investors Telephone: 020 7818 1818 | Harriet Hall PR Director, Investment Trusts Janus Henderson Investors Telephone: 020 7818 2919 |
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Related Shares:
North American