Interim Results

RNS Number : 9392W

Henderson Diversified Income Ltd

17 June 2008

 



Page 1 of 9

17 June 2008

HENDERSON DIVERSIFIED INCOME LIMITED

Unaudited Results for the half year ended 30 April 2008

Extracts from the Chairman's Statement

This is the second interim report of this first financial period of your Company and covers the six months ended 30 April 2008. The turbulence in global fixed income markets which characterised the last months of 2007 and early 2008 has subsided for the time being and while our capital performance has been adversely affected we have managed to secure attractive revenue streams.

Performance

The net asset value per ordinary share fell to 89.1p at the period end including current year income. This disappointing capital performance was due to the forced selling of secured loans by leveraged investors, which we believe is more of a market technical issue than a credit default issue. Your Board believes that in due course the NAV will recover strongly as markets settle down. 

In contrast, I am pleased to report that your Company has enjoyed strong revenue flows with earnings per share of 4.32p per ordinary share in the six month period under review.

Dividends and Dividend Policy

The first interim dividend of 1.50p, for the period from the Company's launch to 31 October 2007, was paid on 31 December 2007 and the second interim dividend of 1.75p, in respect of the three months to 31 January 2008, was paid on 31 March 2008. The third interim dividend of 3.40p is payable on 20 June 2008 and includes not only the income earned in respect of the three months ended 30 April 2008 but also an amount to cover the distributable income forecast to be earned by your Company during May 2008. This was to ensure that the level of distributable income available to existing shareholders was unaffected by the placing of new shares completed on 29 May 2008. This means that your Company has declared dividends totalling 6.65p covering the first ten months of the fifteen month period from launch to the first financial period end as compared to the target of 8.75p for the first financial period which will end on 31 October 2008.

Consequently, the fourth and fifth interim dividends will only include income earned in the five month period to the end of the financial period on 31 October 2008. Your Board has reiterated its objective of achieving distributable income of not less than LIBOR (London Interbank Offered Rate) plus 1.25%. In the absence of a material fall in LIBOR, the Board therefore intends to pay a fourth interim dividend covering the income earned in respect of the two months ending 31 July 2008 of not less than 1p on 30 September 2008 and a fifth interim dividend covering the income earned in respect of the three months ending 31 October 2008 of not less than 1.5p on 31 December 2008 making a total of not less than 9.15p for the fifteen months ending 31 October 2008.

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  Page 2 of 9

HENDERSON DIVERSIFIED INCOME LIMITED

Unaudited Results for the half year ended 30 April 2008

Placing of New Ordinary Shares

Your Company announced on 23 May 2008 that it had raised £38.4 million in a placing of new ordinary shares. The issue price of these new shares was at a 2 per cent. premium to the net asset value. The costs of the placing amounted to approximately 1.93 per cent. of the gross proceeds of the placing which means that existing shareholders experienced a slight uplift in the value of their current holdings. I should like to take this opportunity to welcome these new shareholders.

This broadening of your Company's shareholder base should improve the market liquidity of the shares for all shareholders. In addition, the increased size of your Company means that the fixed costs of operating your Company will be spread across a larger asset base which will benefit all shareholders. 

Material Events or Transactions during the Period

Over the period under review the asset allocation of the portfolio remained broadly unchanged. As was indicated in the prospectus at the time of launch, gearing was introduced into the portfolio and this took place in November 2007 and is currently limited to a maximum of 20% of net assets. Further details on this and other transactions are given in the Manager's Report.

Related Party Transactions

There have been no material transactions with our related parties during the six month period under review.

Outlook (including principal risks and uncertainties) for the six months to 31 October 2008

We believe that the dislocation in the secured loans market is easing and there are signs that the market is starting to stabilise and appetite in both the primary and secondary markets is slowly returning. This is also reflected in the corporate bond market where the takeover of Bear Stearns by JP Morgan Chase & Co. and the rights issues announced by a number of financial institutions suggest that there is a focus on conservative balance sheet management, thus favouring creditors over equity holders. The risk going forward is a significant increase in the number of defaults but this is already discounted in the market. Overall this remains an attractive environment for securing high quality revenue streams.

Paul Manduca

Chairman

17 June 2008

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Page 3 of 9

HENDERSON DIVERSIFIED INCOME LIMITED

Unaudited Results for the half year ended 30 April 2008

Consolidated Income Statement

for the half year ended 30 April 2008

		(Unaudited)			(Unaudited)
		Half year ended  30 April 2008			Period 5 June 2007 to 31 October 2007
		Revenue	Capital	Total		Revenue	Capital	Total
		Return	Return			Return	Return
	Note	£'000	£'000	£'000		£'000	£'000	£'000
(Losses)/gains on investments held at fair value through profit or loss		-	(1,094)	(1,094)		-	410	410
Losses on foreign exchange transactions		-	(3,720)	(3,720)		-	(243)	(243)
Investment income		1,758	-	1,758		246	-	246
Other operating income		355	-	355		564	-	564
		---------	---------	---------		---------	---------	---------
Total income		2,113	(4,814)	(2,701)		810	167	977
		---------	---------	---------		---------	---------	---------
Expenses
Management fees		(73)	(73)	(146)		(44)	(44)	(88)
Other expenses		(250)	-	(250)		(130)	-	(130)
		---------	---------	---------		---------	---------	---------
Profit/(loss) before finance costs and taxation		1,790	(4,887)	(3,097)		636	123	759
Finance costs		(35)	(35)	(70)		(1)	(1)	(2)
		---------	---------	---------		---------	---------	---------
Profit/(loss) before taxation		1,755	(4,922)	(3,167)		635	122	757
Taxation		(7)	-	(7)		(3)	-	(3)
		---------	---------	---------		---------	---------	---------
Profit/(loss) for the period		1,748	(4,922)	(3,174)		632	122	754
		======	======	======		======	======	======
Earnings per ordinary share (pence)	3	4.32	(12.16)	(7.84)		1.56	0.30	1.86
		======	======	======		======	======	======

The total column of this statement represents the Consolidated Income Statement of the Group, prepared in accordance with IFRS. The revenue and capital columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. All items in the above statement derive from continuing operations.

All income is attributable to the equity holders of Henderson Diversified Income Limited. There are no minority interests.

The notes on pages 7 to 9 form an integral part of this condensed interim financial information.

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  Page 4 of 9

HENDERSON DIVERSIFIED INCOME LIMITED

Unaudited Results for the half year ended 30 April 2008

Consolidated Statement of Changes in Equity

for the half year ended 30 April 2008

		(Unaudited) Half year ended 30 April 2008
				Other
	Note	Share Capital	Distributable Reserves	Capital Reserves	Revenue Reserve	Total
		£'000	£'000	£'000	£'000	£'000
Balance at 31 October 2007		-	39,832	122	632	40,586
Net (loss)/profit from ordinary activities after taxation		-	-	(4,922)	1,748	(3,174)
Ordinary dividends paid	5	-	-	-	(1,316)	(1,316)
		----------	----------	----------	----------	----------
At 30 April 2008		-	39,832	(4,800)	1,064	36,096
		======	======	======	======	======

		(Unaudited) Period 5 June 2007 to 31 October 2007
				Other
		Share Capital	Distributable Reserves	Capital Reserves	Revenue Reserve	Total
		£'000	£'000	£'000	£'000	£'000
Opening balance		-	-	-	-	-
Issue of shares		40,500	-	-	-	40,500
Share issue costs		(668)	-	-	-	(668)
Transfer to Distributable Reserves		(39,832)	39,832	-	-	-
Net profit from ordinary activities after tax		-	-	122	632	754
		----------	----------	----------	----------	----------
At 31 October 2007		-	39,832	122	632	40,586
		======	======	======	======	======

The notes on pages 7 to 9 form an integral part of this condensed interim financial information.

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  Page 5 of 9

HENDERSON DIVERSIFIED INCOME LIMITED

Unaudited Results for the half year ended 30 April 2008

Consolidated Balance Sheet

at 30 April 2008

		(Unaudited)	(Unaudited)
		30 April	31 October
		2008	2007
	Note	£'000	£'000
Non-current assets
Investments held at fair value through profit or loss		42,438	37,733
		----------	---------
Current assets
Other receivables		1,052	634
Cash		1,444	18,968
		-----------	-----------
		2,496	19,602
		-----------	-----------
Total assets		44,934	57,335
		-----------	-----------
Current liabilities
Other payables		(8,838)	(16,749)
		-----------	-----------
Net assets		36,096	40,586
		======	======
Capital and reserves
Distributable Reserves		39,832	39,832
Retained earnings:
Other capital reserves		(4,800)	122
Revenue reserve		1,064	632
		-----------	-----------
Total equity		36,096	40,586
		======	======
Net asset value per ordinary share (pence)	4	89.1	100.2
		======	======

The notes on pages 7 to 9 form an integral part of this condensed interim financial information.

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  Page 6 of 9

HENDERSON DIVERSIFIED INCOME LIMITED

Unaudited Results for the half year ended 30 April 2008

Consolidated Cash Flow Statement

for the half year ended 30 April 2008

		(Unaudited) Half year  ended  30 April  2008	(Unaudited) Period 5 June 2007 to 31 October 2007
	Note	£'000	£'000
Net (loss)/profit before tax		(3,167)	757
Add back interest paid		70	2
Less: losses/(gains) on investments held at fair value through profit or loss		4,814	(167)
Less: exchange movements on forward exchange contracts taken to revenue		(163)	(34)
Increase in accrued income		(208)	(491)
Increase in other receivables		(194)	(136)
(Decrease)/increase in other payables		(22)	161
Net purchases of investments		(5,821)	(37,305)
Increase in sales settlement debtor		(23)	-
(Decrease)/increase in purchase settlement creditor		(15,005)	16,499
		---------	---------
Net cash outflow from operating activities before  finance costs		(19,719)	(20,714)
Interest paid		(62)	(2)
		---------	---------
Net cash outflow from operating activities		(19,781)	(20,716)
		---------	---------
Financing activities
Issue of ordinary shares		-	40,500
Issue expenses paid		-	(668)
Ordinary dividends paid		(1,316)	-
Loans drawn down		6,042	-
		---------	---------
Net cash inflow from financing		4,726	39,832
		---------	---------
(Decrease)/increase in cash and cash equivalents		(15,055)	19,116
Exchange movements		(2,469)	(148)
		---------	---------
Movement in cash and cash equivalents  during the period		(17,524)	18,968
Cash and cash equivalents at the start of the period		18,968	-
		---------	---------
Cash and cash equivalents at the period end		1,444	18,968
		======	======

The notes on pages 7 to 9 form an integral part of this condensed interim financial information.

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Page 7 of 9

HENDERSON DIVERSIFIED INCOME LIMITED

Unaudited Results for the half year ended 30 April 2008

Notes to the Consolidated Interim Financial Information:

1.	General Information
	The entity is a closed-ended company, registered as a no par value company under the Companies (Jersey) Law 1991, with its shares listed on the London Stock Exchange. The Company was incorporated on 5 June 2007. This interim accounting period runs from 1 November 2007 to 30 April 2008. The figures for the first interim period from 5 June 2007 to 31 October 2007 are shown, but are not directly comparable due to the differing accounting period lengths.
2.	Principal Accounting Policies: Basis of Preparation
	This condensed interim financial information has been prepared using the same accounting policies as set out in the Company's first interim report for the period ended 31 October 2007 and in accordance with International Accounting Standards ('IAS') 34 'Interim Financial Reporting'. The consolidated financial information comprises the financial information of Henderson Diversified Income Limited ('the Company') and its subsidiary undertaking Henderson Diversified Income (Luxembourg) S.à.r.l. ('the Group').
	The Company has adopted the following new and revised accounting standards during the period:
	•    International Accounting Standard No 1 (Revised): Presentation of Financial Statements; and
	•    International Financial Reporting Standard No 7, Financial Instruments: Disclosures.
	The condensed interim financial information has not been audited or revised by the Company's auditors.

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Page 8 of 9

HENDERSON DIVERSIFIED INCOME LIMITED

Unaudited Results for the half year ended 30 April 2008

Notes to the Consolidated Interim Financial Information:

3.	Earnings per ordinary share
	The earnings per ordinary share is based on the net loss for the period after taxation of £3,174,000 (period to 31 October 2007: profit £754,000) and on 40,500,000 ordinary shares, being the weighted average number of ordinary shares in issue during each of the periods.
	The earnings per ordinary share detailed above can be further analysed between revenue and capital, as below:
		(Unaudited)	(Unaudited)
		Half year ended 30 April 2008	Period 5 June 2007 to 31 October 2007
		£'000	£'000
	Net revenue gain	1,748	632
	Net capital (loss)/gain	(4,922)	122
		---------	---------
	Net total (loss)/gain	(3,174)	754
		=====	=====
	Weighted average number of ordinary shares in issue during the period	40,500,000	40,500,000
		Pence	Pence
	Revenue earnings per ordinary share	4.32	1.56
	Capital (loss)/earnings per ordinary share	(12.16)	0.30
		---------	---------
	Total (loss)/earnings per ordinary share	(7.84)	1.86
		=====	=====

4.	Net Asset Value per ordinary share
	The basic net asset value per ordinary share is based on a net asset value of £36,096,000 (31 October 2007: £40,586,000) and on 40,500,000 (31 October 2007: 40,500,000) ordinary shares, being the number of ordinary shares in issue at each period end.
5.	Interim Dividend
	A first interim dividend of 1.50p per ordinary share was paid on 31 December 2007. The second interim dividend of 1.75p per share was paid on 31 March 2008. The third interim dividend of 3.40p per share was declared on 13 May 2008 and will be paid on 20 June 2008 to shareholders on the register on 23 May 2008. The shares were quoted ex-dividend on 21 May 2008. The cost of this dividend will be £1,377,000 based on the number of shares in issue at the ex-dividend date.

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  Page 9 of 9

HENDERSON DIVERSIFIED INCOME LIMITED

Unaudited Results for the half year ended 30 April 2008

Notes to the Consolidated Interim Financial Information:

6.

Related Party Transactions

Investment management services are provided to the Company by wholly owned subsidiary companies of Henderson Global Investors Limited ('Henderson'), under a management agreement. Henderson receives a fee which is payable quarterly in arrears at an annual rate of 0.75 per cent. of the Net Chargeable Assets of the Company. The charge for the period since the launch of the business on 18 July 2007 is £234,000 with £26,000 payable as at 30 April 2008. A performance fee is also payable in certain circumstances. This fee is calculated and payable at the end of the Company's financial year, if the Company's Total Return in that year exceeds the Hurdle Return for the year at a rate of 15 per cent. of such excess subject to a cap of 1.75 per cent. of the Company's net assets in any financial year. The first performance period is from 18 July 2007 to 31 October 2008.

Summary of Portfolio

	%
Secured Loans	79
High Yield Bonds	15
Investment Grade Bonds	6
	------
	100

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For further information please contact:

John Pattullo, Portfolio Manager, Henderson Global Investors, Telephone: [phone]

James de Sausmarez

Head of Investment Trusts, Henderson Global Investors, Telephone: [phone]

Sarah Gibbons-Cook

Investor Relations and PR Manager, Henderson Global Investors, Telephone: [phone]

Jeremy Hamon

Company Secretary, BNP Paribas Fund Services Jersey Limited, Telephone: [phone]

 

END

 

 

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