Half-year Report

RNS Number : 4369W
Henderson Intl. Income Trust PLC
23 April 2021
 

 

HENDERSON INVESTMENT FUNDS LIMITED

 

HENDERSON INTERNATIONAL INCOME TRUST PLC

 

LEGAL ENTITY IDENTIFIER: 2138006N35XWGK2YUK38

 

23 April 2021

 

 

HENDERSON INTERNATIONAL INCOME TRUST PLC

 

UNAUDITED RESULTS FOR THE HALF-YEAR ENDED 28 FEBRUARY 2021

 

This announcement contains regulated information

 

INVESTMENT OBJECTIVE

The Company's investment objective is to provide shareholders with a growing total annual dividend, as well as capital appreciation.

 

 

PERFORMANCE HIGHLIGHTS FOR THE SIX MONTHS TO 28 FEBRUARY 2021

 

·

The first interim dividend payment for the year ending 31 August 2021 of 1.50p per ordinary share was paid to shareholders on 26 February 2021. A second interim dividend payment for the year ending 31 August 2021 of 1.50p per ordinary share has been declared and will be paid to shareholders on 28 May 2021. The dividend will be paid from the Company's revenue account.

 

·

The share price at 28 February 2021 was 149.25p per share compared with 145.50p at 31 August 2020.

 

·

The net asset value ("NAV") per share as at 28 February 2021 was 162.2p compared to 153.5p (with debt at par) at 31 August 2020 and160.0p at 28 February 2021 compared to 150.5p as at 31 August 2020 (with debt at fair value).

 

·

The discount on the ordinary shares to the net asset value (with debt at par) as at 28 February 2021 was 8.0% compared to a discount of 5.2% as at 31 August 2020.

 

 

Total return performance (including dividends reinvested and excluding transaction costs)

 

6 months

%

1 year

%

3 years

%

Since launch

%

NAV (debt at par)1

7.7

9.1

11.8

134.76

NAV (debt at fair value)2

8.4

9.8

10.4

131.86

Share price3

4.6

1.0

2.5

106.1 

Benchmark4

7.1

19.8

38.5

215.4 

Sector average5

10.9

13.6

17.4

128.4 

 

1 Calculated using published daily NAVs including current year revenue and debt at par

2 Calculated using published daily NAVs including current year revenue and debt at fair value

3 Using mid-market share price

4   MSCI World (ex UK) Index (sterling adjusted)

5 The AIC Global Equity Income sector based on NAV

6 Incorporating the dilution resulting from the impact of the subscription shares which were exercised on 31 August 2014

 

Sources: Morningstar, Refinitiv Datastream and Janus Henderson

 

 

INTERIM MANAGEMENT REPORT

CHAIRMAN'S STATEMENT

 

Performance and markets

During the six months to 28 February 2021, the net asset value ("NAV") total return per ordinary share was 7.7% (debt at par) and 8.4% (debt at fair value). The Company's return on the ordinary share price (on the same basis) was 4.6%. This included dividends totalling 3.0p per share, in line with the same period last year. In comparison, the Company's benchmark total return was 7.1% (MSCI World (ex UK) Index (sterling adjusted)).

 

Over the last six months equity markets around the world have reacted strongly to a combination of central bank action, government spending and positive Covid-19 vaccine developments. The vaccine roll-out around the world is still in its early stages, but the fact that several different vaccines have been identified offers hope that it will be possible to contain the pandemic and start the process of recovering from the crisis. As is often the case after economic recessions, the market has been led by those sectors that benefit the most from a recovery, such as the financial services, energy, and materials sectors. As we expect most companies in the portfolio to gain from the recovery and reopening up of society in due course, gearing levels over the period have been maintained to enhance returns to shareholders. The vaccine news has been positive for market sentiment, but there has also been tangible evidence of increased corporate confidence in the form of dividend trends. Whilst the majority of companies in the portfolio maintained their dividends last year, some sectors and companies suspended them until the outlook was clearer, but encouragingly a number of these have reinstated their dividends this year.

 

Earnings and dividends

The revenue return per ordinary share during the six months to 28 February 2021 was 1.68p. A fourth interim dividend of 1.50p per ordinary share, for the year ended 31 August 2020, was paid to shareholders on 30 November 2020, bringing the total dividend paid in respect of the year ended 31 August 2020 to 6.00p per ordinary share (year ended 31 August 2019: 5.70p per ordinary share).

 

The board declared a first interim dividend payment for the year ending 31 August 2021 of 1.50p per ordinary share and this was paid to shareholders on 26 February 2021. Subsequently, we have declared a second interim dividend of 1.50p per ordinary share that will be paid to shareholders on 28 May 2021.

 

The long-term objective of your Company since launch has been to achieve a high and rising level of dividends as well as capital appreciation. To date, we have increased the dividend each year while setting aside part of the net return after taxation to build up revenue reserves to supplement dividends in difficult years. Revenue reserves amounted to £7.1m at 31 August 2020 and £4.6m (unaudited) at 28 February 2021.

 

We continue to recognise the importance of dividend income to our shareholders, and if need be, we intend to utilise the Company's revenue reserves in the event of any temporary shortfall between the Company's distributions and portfolio income.

 

The board continues to monitor the level of dividend paid out to shareholders and currently aims to at least maintain the same level of dividend for the remaining six months of this financial year.

 

Gearing

Well-judged gearing enhances returns to shareholders. The board's current policy is to permit the fund manager to gear up to 25% of net assets at the time of drawdown or investment, as appropriate. Borrowing limits for this purpose include implied gearing through the use of derivatives. The gearing at the period end was 13.8% (31 August 2020: 11.4%).  

 

Discount control

The Company's share price has traded at a discount of between 2-8% over the period. The uncertainty caused by the pandemic has caused discounts to NAV to open up for some trusts and sectors over the last year. The board continues to monitor the premium/discount to NAV and will consider appropriate action if the relationship between NAV and share price moves and remains out of line with the Company's peer group. However, there is a distinct limit to the board's ability to influence the premium or discount to NAV. Accordingly, we believe it is not in shareholders' interests to have a specific share issuance or buy-back policy. We believe that it is sensible to retain flexibility; therefore, we shall consider share issuance and/or buy-backs where appropriate and subject to market conditions.

 

Outlook

This time last year the world was at the start of what would turn out to be an unprecedented global crisis. The ongoing global fiscal and monetary intervention and its associated implications continues to create uncertainty with regards to the long-term economic out-turn. However, with the progressing roll-out of the vaccine programme, we hope that things are set to improve. The impact of the crisis has varied significantly by both region and industry, and we will continue to benefit from having a diversified portfolio and the flexibility to adjust exposures in response to changing conditions.

 

Simon Jeffreys

Chairman

23 April 2021

 

 

PRINCIPAL RISKS AND UNCERTAINTIES

The principal risks and uncertainties associated with the Company's business can be divided into the following main categories:

 

• Global pandemic;

• Investment activity and performance risks;

• Portfolio and market price risks;

• Brexit/political risks;

• Tax and regulatory risks;

• Operational and cyber risks; and

• Risks associated with the senior unsecured notes.

 

Information on these risks and how they are managed are given in the annual report for the year ended 31 August 2020. In the view of the board, the principal risks and uncertainties at the year end remain and are as applicable to the remaining six months of the financial year as they were to the six months under review.

 

 

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors confirm that, to the best of their knowledge:

 

 

(a)

the financial statements for the half-year ended 28 February 2021 have been prepared in accordance with 'FRS 104 Interim Financial Reporting';

 

 

(b)

the Interim Management Report includes a fair review of the information required by Disclosure Guidance and Transparency Rule 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

 

 

(c)

the Interim Management Report includes a fair review of the information required by Disclosure Guidance and Transparency Rule 4.2.8R (disclosure of related party transactions and changes therein).

 

On behalf of the board

 

Simon Jeffreys

Chairman

23 April 2021

 

 

For more information please contact:

 

Ben Lofthouse

Fund Manager

Henderson International Income Trust plc

Telephone: 020 7818 5187

 

Laura Thomas

Investment Trust PR Manager

Janus Henderson Investors

Tel: 020 7818 2636 

 

James de Sausmarez

Director and Head of Investment Trusts

Janus Henderson Investors

Telephone: 020 7818 3349

 

 

 

 

FUND MANAGER'S REPORT

 

Performance review

The portfolio produced a total return of 8.4% in NAV per ordinary share over the period (debt at fair value). The fund return includes dividends totalling 3.0p per share.

 

After falling sharply as Covid-19 emerged at the start of last year, equity markets started to stabilise in March 2020 and received a boost in October 2020 from the announcements of several successful vaccines. During the period under review, the highest returning region for the portfolio was Asia Pacific, followed by Europe and the US. Generally, the best performing sectors in the market and portfolio were those that benefit most from economic recovery, but in addition to this the portfolio benefited significantly from its exposure to the semiconductor industry. We have written before about the increasing structural demand for semiconductors and computer memory (increased data storage and processing, artificial intelligence and, more recently, electric and self-driving vehicle developments) and this theme has continued to drive significant appreciation in the portfolio's holdings of BE Semiconductor, Texas Instruments, Broadcom, Taiwan Semiconductor Manufacturing and Samsung Electronics. All these stocks were amongst the largest positive contributors to performance over the last six months. The portfolio has a significant exposure to the financial services sector (17.3% as at 28 February 2021) and these stocks have also been strong performers, recovering much of their Covid induced losses in early 2020. Whilst the sector has been volatile, the lessons of the financial crisis have been learnt and they went into the crisis with strong balance sheets, which has allowed them to emerge from this crisis in a much better position than the previous recessions.

 

The most significant detractors to performance over the period have been stocks in the pharmaceutical, telecommunications and consumer staples sectors. These companies weathered 2020 well; they have stable earnings that are not significantly impacted by economic trends, often providing essential services or goods, and have managed to deliver them throughout the various lockdowns. They have suffered, however, from investors' shift in focus to more cyclically sensitive sectors that got sold off early in 2020. Whilst the relative underperformance is understandable over this short period of time, in some cases they have seen a fall in absolute value, which feels like an overreaction and the positions continue to be held. Companies held in the portfolio that fit this description include Roche, Nestlé, Mondelez and Telus.

 

Gearing was a positive contributor to performance over the period, enhancing the positive portfolio returns. The currency impact of the Company's euro-denominated long-term financing was also positive as sterling strengthened against the euro. The Company's long-term financing means that a fair value and par value return is quoted. The fair value of the debt reflects a theoretical market price and is impacted by changes in interest rate expectations in the financial markets. The rise in interest rate expectations during the period has reduced the fair value of the debt, enhancing the fair value net asset value return.

 

Portfolio positioning

Stock selection for the portfolio is driven by a combination of the attractiveness of the company in question (competitive positioning, cash flow generation, sustainability of business model) combined with its valuation. Over the last 12-18 months, a number of interesting opportunities arose as a result of market volatility, and this is reflected in the position changes over the period.

 

The most significant asset allocation change in the portfolio has been the sale of all the US dollar-denominated corporate bonds (4.2% of the portfolio at the year end), and reinvestment of the proceeds in the Asia Pacific region. The corporate bonds had performed well since purchase, benefiting from normalisation of the credit markets, and we saw more long-term growth and income opportunity available in a number of sectors and countries in Asia. Positions added include drinks company Thai Beverage, Korean industrial conglomerate LG Corp and Hong Kong holding company Swire Pacific. All these companies were trading at significant discounts to their historical valuations but should see a relatively short-lived impact of the pandemic on their businesses and hence long-term valuations. Exposure to the property sector was also reduced over the period via exits of the positions in gaming REIT Vici Properties, data centre REIT CryusOne and Chinese property company China Vanke. These positions had performed well and might prove to be sensitive to higher interest rates due to the use of debt in their business models. One notable new area of investment in the portfolio is the truck and automotive sector. Many truck and car suppliers have spent several years restructuring their businesses and this activity is starting to bear fruit in terms of stronger balance sheets, higher cash flows and higher margins, even in a downturn. Positions were initiated in Stellantis, Daimler and Volvo during the period.

 

Income trends

Equity markets experienced several high-profile dividend cuts in 2020, particularly amongst some UK and European companies. The experience globally was less severe, and as the year progressed the dividend trends stabilised and it was only those companies whose businesses were most affected by the pandemic that changed their dividend policies. The Company's investment process focuses on companies with attractive dividend yields, strong cash flow generation and the potential to grow capital values via earnings and distributions growth in the future. The result of this focus is that the majority of the companies in the portfolio have either continued to pay their dividends or have reinitiated dividends already. During this period, a wide range of portfolio companies have actually increased their dividends, although understandably the rate of dividend growth has moderated in light of economic conditions. Companies that have increased dividends come from a wide range of sectors, including utility company Enel, food producer Mondelez, and technology companies Broadcom and Cisco. There have also been special dividends from Samsung, Stellantis and Volvo. The only sector that has not fully normalised is the European banking sector; holdings including BFF Banking Group, ING and Van Lanschot have announced the intention to pay dividends, but the regulator has requested that they wait until later in the year to assess the impact of the pandemic.

 

Ben Lofthouse

Fund Manager

23 April 2021

 

 

INVESTMENT PORTFOLIO

at 28 February 2021

 

Company

 

Country

Market value

£'000

%

of portfolio

Basic materials

 

 

 

OZ Minerals

Australia

9,879

2.7

UPM-Kymmene

Finland

5,096

1.4

 

 

14,975

4.1

 

 

 

 

Consumer goods 

 

 

 

Nestlé

Switzerland

11,306

3.1

Samsung

Korea

10,375

2.9

Coca-Cola

US

7,070

2.0

Panasonic

Japan

5,351

1.5

Mondelez

US

4,486

1.2

Thai Beverage 

Thailand

4,219

1.2

Anta Sports

China

4,213

1.2

Hengan International

Hong Kong

3,562

1.0

Pepsico 

US

3,234

0.9

Stellantis 

Netherlands

3,176

0.9

Daimler 

Germany

2,176

0.6

 

 

59,168

16.5

 

 

 

 

Consumer services

 

 

 

China Yongda Automobiles 

China

4,691

1.3

Vivendi

France

3,517

1.0

McDonald's

US

1,917

0.5

 

 

10,125

2.8

 

 

 

 

Financials 

 

 

 

Allianz

Germany

8,304

2.3

Zurich Insurance

Switzerland

6,431

1.8

AIA

Hong Kong

5,167

1.4

Travelers Companies

US

4,891

1.4

AXA

France

4,784

1.3

Manulife Financial

Canada

4,760

1.3

Macquarie

Australia

4,611

1.3

CME Group

US

4,600

1.3

Van Lanschot

Netherlands

4,332

1.2

ING

Netherlands

4,123

1.1

Citic Securities

Hong Kong

3,620

1.0

BFF Banking Group

Italy

3,467

1.0

KB Financial Group 

Korea

3,151

0.9

 

 

62,241

17.3

 

 

 

 

Health care

 

 

 

Novartis

Switzerland

8,407

2.3

Sanofi

France

6,527

1.8

Pfizer

US

6,486

1.8

Bristol-Myers Squibb

US

6,219

1.7

Roche

Switzerland

5,464

1.4

Medtronic

US

4,743

1.3

Abbvie 

US

3,536

1.0

Merck & Co

US

3,056

0.8

Novo-Nordisk 

Denmark

3,007

0.8

 

 

47,445

12.9

 

Industrials

 

 

 

ABB

Switzerland

9,125

2.5

Volvo

Sweden

6,524

1.8

LG Corp 

Korea

5,518

1.5

Swire Pacific 

Hong Kong

5,434

1.5

SKF 

Sweden

4,898

1.4

Anhui Conch

China

4,681

1.3

Honeywell International

US

3,726

1.0

Sig Combibloc

Canada

3,074

0.9

Siemens

Germany

2,600

0.7

 

 

45,580

12.6

 

 

 

 

Property

 

 

 

Sun Hung Kai Properties

Hong Kong

4,473

1.2

Crown Castle

US

4,447

1.2

Ascendas REIT

Singapore

3,357

0.9

 

 

12,277

3.3

 

 

 

 

Technology 

 

 

 

Microsoft

US

16,685

4.6

Taiwan Semiconductor Manufacturing

Taiwan

11,029

3.1

Cisco Systems

US

8,593

2.4

Tencent Holdings

Hong Kong

7,183

2.0

BE Semiconductor

Netherlands

6,271

1.7

Broadcom 

US

5,650

1.6

Corning

US

4,061

1.1

Chinasoft International 

China

3,924

1.1

Texas Instruments

US

3,516

1.0

 

 

66,912

18.6

 

 

 

 

Telecommunications 

 

 

 

Verizon Communications

US

7,997

2.2

Telenor

Norway

4,806

1.3

SK Telecom

Korea

4,521

1.3

Tele2

Sweden

4,283

1.2

Telus

Canada

3,497

1.0

HKT Trust and HKT Ltd

Hong Kong

3,458

1.0

Telekom Indonesia Persero 

Indonesia

2,252

0.6

 

 

30,814

8.6

 

 

 

 

Utilities

 

 

 

Enel

Italy

7,392

2.0

Iberdola

Spain

4,602

1.3

 

 

11,994

3.3

 

 

 

 

Total investments

 

361,531

100.0

 

TEN LARGEST INVESTMENTS

at 28 February 2021

Company

Sector

Country

Market value

£'000

% of portfolio

Microsoft 

Technology

US

16,685

4.6

Nestlé

Consumer goods

Switzerland

11,306

3.1

Taiwan Semiconductor Manufacturing 

Technology

Taiwan

11,029

3.1

Samsung

Consumer goods

Korea

10,375

2.9

OZ Minerals 

Basic materials

Australia

9,879

2.7

ABB

Industrials

Switzerland

9,125

2.5

Cisco Systems 

Technology

US

8,593

2.4

Novartis 

Health care

Switzerland

8,407

2.3

Allianz 

Financials

Germany

8,304

2.3

Verizon Communications

Telecommunications

US

7,997

2.2

 

These investments total £101,700,000 which represents 28.1% of the portfolio.

 

 

Sector exposure as a percentage of the investment portfolio excluding cash

 

 

28 February 2021

%

31 August 2020

%

Technology 

18.6

16.0

Financials 

17.3

16.9

Consumer goods 

16.5

14.9

Health care 

12.9

15.4

Industrials 

12.6

9.6

Telecommunications 

8.6

12.0

Basic materials 

4.1

2.8

Property

3.3

7.4

Utilities 

3.3

3.5

Consumer services 

2.8

1.5

 

100.0

100.0

 

 

Geographic exposure as a percentage of the investment portfolio excluding cash

 

 

28 February 2021

31 August 2020

 

%

%

US

29.0

34.0

Switzerland

11.1

14.2

Hong Kong

9.1

9.1

Korea

6.6

3.0

China

4.9

3.1

Netherlands

4.9

3.7

Sweden

4.4

1.2

France

4.1

5.6

Australia

4.0

4.0

Germany

3.6

4.6

Canada

3.2

2.9

Taiwan

3.1

3.3

Italy

3.0

3.4

Japan

1.5

0.9

Finland

1.4

0.9

Norway

1.3

1.3

Spain

1.3

1.3

Thailand

1.2

0.0

Singapore

0.9

1.1

Denmark

0.8

0.0

Indonesia

0.6

0.6

New Zealand

0.0

1.2

Ireland

0.0

0.6

 

100.0

100.0

Source: Janus Henderson

CONDENSED INCOME STATEMENT

 

 

 

(Unaudited)

Half-year ended
29 February 2020

(Audited)

Year ended
31 August 2020

 

Revenue 
 return 
£'000 

Capital 
return 
 '000 

Total 
£'000 

Revenue 
 return 
£'000 

Capital 
return 
 '000

Total 
£'000 

Revenue 
 return 
£'000 

Capital 
return 
 '000 

Total 
£'000 

Gains/(losses) on investments held at fair value through profit or loss

19,822 

19,822 

-

(16,958)

(16,958)

(19,672)

(19,672)

 

 

 

 

 

 

 

 

 

 

Income from investments held at fair value through profit or loss

4,490 

4,490 

3,672 

3,672 

12,482 

188 

12,670 

 

 

 

 

 

 

 

 

 

 

Gains on foreign exchange

726 

726 

1,179 

1,179 

417 

417 

 

 

 

 

 

 

 

 

 

 

Other income

879 

26 

905 

 

 

 

 

 

 

 

 

 

 

Gross revenue and capital gains/(losses)

4,490 

20,548 

25,038 

3,681 

(15,779)

(12,098)

13,361 

(19,041)

(5,680)

 

 

 

 

 

 

 

 

 

 

Management fee (note 3)

(251)

(754)

(1,005)

(253)

(759)

(1,012)

(481)

(1,444)

(1,925)

 

 

 

 

 

 

 

 

 

 

Other administrative expenses

(349)

(349)

(303)

(303)

(611)

(611)

 

 

 

 

 

 

 

 

 

 

Net return before finance costs and taxation

3,890 

19,794 

23,684 

3,125 

(16,538)

(13,413)

12,269 

(20,485)

(8,216)

 

 

 

 

 

 

 

 

 

 

 

Finance costs

(104)

(312)

(416)

(82)

(246)

(328)

(192)

(539)

(731)

 

 

 

 

 

 

 

 

 

 

Net return before taxation

3,786 

19,482 

23,268 

  3,043 

  (16,784)

  (13,741)

12,077 

(21,024)

(8,947)

 

 

 

 

 

 

 

 

 

 

Taxation on net return

(489)

(489)

(434)

(433)

(1,459)

53 

(1,406)

 

 

 

 

 

 

 

 

 

 

Net return after taxation (note 5)

3,297 

19,482 

22,779 

2,609 

(16,783)

(14,174)

10,618 

(20,971)

(10,353)

 

 

 

 

 

 

 

 

 

 

Return per ordinary share

1.68p

9.94p

11.62p

1.37p

(8.82p)

(7.45p)

5.53p

(10.91p)

(5.38p)

 

The total columns of this statement represent the Income Statement of the Company, prepared in accordance with FRS 104. The revenue and capital columns are supplementary to this and are published under guidance from the Association of Investment Companies.

 

The Company has no recognised gains or losses other than those disclosed in the Income Statement and Statement of Changes in Equity.

 

All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the period.

 

The accompanying notes are an integral part of the condensed financial statements.

 

 

CONDENSED STATEMENT OF CHANGES IN EQUITY

 

Half-year ended 28 February 2021 (unaudited)

Called up
share
capital
£'000

Share
premium
account
£'000

Special
reserve
£'000

Other capital
reserves
£'000

Revenue 
reserve 
£'000 

Total 
£'000 

At 31 August 2020

1,960

194,550

45,732

51,509

7,164 

300,915 

Net return after taxation

-

-

-

19,482

3,297 

22,779 

Dividends paid (note 6)

-

-

-

-

(5,879)

(5,879)

 

 

 

 

 

 

 

At 28 February 2021

1,960

194,550

45,732

70,991

4,582 

317,815 

 

Half-year ended 29 February 2020 (unaudited)

Called up
share
capital
£'000

Share
premium
account
£'000

Special
reserve
£'000

Other  capital 
 reserves 
£'000 

Revenue 
reserve 
£'000 

Total 
£'000 

At 31 August 2019

1,876

181,007

45,732 

72,480 

8,081 

309,176 

New shares allotted

51

8,592

8,643 

Net return after taxation

-

-

(16,783)

2,609 

(14,174)

Dividends paid

-

-

(5,705)

(5,705)

 

 

 

 

 

 

 

At 29 February 2020

1,927

189,599

45,732 

55,697 

4,985 

297,940

 

 

Year ended 31 August 2020 (audited)

Share
premium
account
£'000

Special
reserve
£'000

Other 

capital 
reserves 
£'000 

Revenue 
reserve 
£'000 

Total 
£'000 

At 31 August 2019

1,876

181,007

45,732 

72,480 

8,081 

309,176 

New shares allotted

84

13,543

13,627 

Net return after taxation

-

-

(20,971)

10,618 

(10,353)

Dividends paid

-

-

(11,535)

(11,535)

 

 

 

 

 

 

 

At 31 August 2020

1,960

194,550

45,732 

51,509 

7,164 

300,915 

 

The accompanying notes are an integral part of the financial statements.

 

 

CONDENSED STATEMENT OF FINANCIAL POSITION

 

 

(Unaudited)

At 
28 February 
2021 
£'000 

 (Unaudited)

At 
29 February 
2020 
£'000 

(Audited)

At 
31 August 
2020 
£'000 

Investments held at fair value through profit or loss (note 4)

 

 

 

Fixed asset investments held at fair value through profit or loss

361,531 

320,450 

335,243 

 

 

 

 

Current assets

 

 

 

Debtors

2,278 

1,361 

10,621 

Cash at bank

2,471 

 

2,278 

3,832 

10,621 

 

 

 

 

Bank overdraft (note 8)

(18,050)

(4,900)

Creditors: amounts falling due within one year

(2,068)

(716)

(13,423)

 

 

 

 

Net current (liabilities)/assets

(17,840)

3,116 

(7,702)

 

 

 

 

Total assets less current liabilities

343,691 

323,566 

327,541 

Creditors: amounts falling due after more than one year

(25,876)

(25,626)

(26,626)

 

 

 

 

Total net assets

317,815 

297,940 

300,915 

 

 

 

 

Capital and reserves

 

 

 

Called up share capital (note 9)

1,960 

1,927 

1,960 

Share premium account

194,550 

189,599 

194,550 

Special reserve

45,732 

45,732 

45,732 

Other capital reserves

70,991 

55,697 

51,509 

Revenue reserve

4,582 

4,985 

7,164 

 

 

 

 

Total shareholders' funds

317,815 

297,940 

300,915 

 

 

 

 

Net asset value per ordinary share - basic and diluted (note 7)

162.2p

154.6p

153.5p

 

The accompanying notes are an integral part of the financial statements.

 

 

CONDENSED STATEMENT OF CASH FLOWS

 

 

(Unaudited)

Half-year ended 
28 February 
2021 
£'000 

(Unaudited)

Half-year ended 
29 February 
2020 
£'000 

 (Audited)

Year ended 
31 August 
202019 
£'000 

Cash flows from operating activities

 

 

 

Net return before taxation

23,268 

(13,741)

(8,947)

Add back: finance costs

416 

328 

731 

Less: (gains)/losses on investments held at fair value through profit or loss

(19,822)

16,958 

19,672 

Less: gains on foreign exchange

(726)

(1,179)

(417)

Withholding tax on dividends deducted at source

(471)

(426)

(2,128)

Taxation recovered

68 

38 

39 

(Increase)/decrease in debtors

(147)

216 

88 

Increase/(decrease) in creditors

16 

(429)

30 

 

 

 

 

Net cash inflow from operating activities

2,602 

1,765 

9,068 

 

 

 

 

Cash flows from investing activities

 

 

 

Purchase of investments

(84,405)

(66,695)

(173,890)

Sale of investments

74,972 

41,759 

135,281 

 

 

 

 

Net cash outflow from investing activities

(9,433)

(24,936)

(38,609)

 

 

 

 

Cash flows from financing activities

 

 

 

Equity dividends paid (net of refund of unclaimed distributions and reclaimed distributions)

(5,879)

(5,704)

(11,535)

Proceeds from issue of ordinary shares

8,643 

13,627 

Interest paid

(413)

(337)

(728)

 

 

 

 

Net cash (outflow)/inflow from financing activities

(6,292)

2,602 

1,364 

 

 

 

 

Net decrease in cash and cash equivalents

(13,123)

(20,569)

(28,177)

 

 

 

 

Cash and cash equivalents at start of year

(4,900)

23,189 

23,189 

Effect of foreign exchange rates

(27)

(149)

88 

 

 

 

 

Cash and cash equivalents at end of year

(18,050)

2,471 

(4,900)

 

 

 

 

Comprising:

 

 

 

Cash at bank

-

2,471 

Bank overdraft

(18,050)

(4,900)

 

 

 

 

 

(18,050)

2,471 

(4,900)

 

The accompanying notes are an integral part of the financial statements.

 

 

NOTES TO THE FINANCIAL STATEMENTS

The half-year financial statements cover the period from 1 September 2020 to 28 February 2021.

 

1.

Principal activity

 

The Company is an investment company as defined in section 833 of the Companies Act 2006 and operates as an investment trust in accordance with section 1158 of the Corporation Tax Act 2010.

 

 

2.

Accounting policies - basis of preparation

The condensed set of financial statements has been prepared in accordance with FRS 104, Interim Financial Reporting andFRS 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland. The financial statements have also been prepared in accordance with the Statement of Recommended Practice ("SORP"), "Financial Statements of Investment Trust Companies and Venture Capital Trusts" issued in October 2019.

 

The accounting policies applied are consistent with those of the most recent annual financial statements for the period ended 31 August 2020.

 

The condensed set of financial statements has been neither audited nor reviewed by the Company's auditor.

 

 

3.

Management fee

The management fee is payable quarterly in arrears at the rate of 0.65% per annum of the Company's net assets up to £250 million and the rate reduces to 0.60% per annum of net assets in excess of £250 million.  In accordance with the directors' policy on the allocation of expenses between income and capital, in each financial year 75% of the management fee payable is charged to capital and the remaining 25% to income.

 

4.

Financial instruments

The financial assets and financial liabilities are either carried in the statement of financial position at their fair value or the statement of financial position amount is a reasonable approximation of fair value (debtors and creditors falling due within one year). The senior unsecured notes are carried in the statement of financial position at par.

 

As at 28 February 2021, the fair value of the senior unsecured notes was estimated to be £30,158,000 (29 February 2020: £31,445,000; 31 August 2020: £32,616,000).

 

The fair value of the senior unsecured notes is calculated using a discount rate which reflects the yield of a euro swap of similar maturity plus a suitable credit spread. Within the terms of the senior unsecured notes are clauses that would be enacted in certain scenarios should the notes be prepaid by the Company before maturity. These clauses could impact the total amount repayable.

 

The directors have assessed these and have concluded that these clauses are highly unlikely to occur. The value of such additional payments has therefore been deemed to be immaterial and has not been recognised in the financial statements.

 

The senior unsecured notes are categorised as level 3 in the fair value hierarchy.

 

The table below analyses fair value measurements for investments held at fair value through profit or loss. These fair value measurements are categorised into different levels in the fair value hierarchy based on the valuation techniques used and are defined as follows under FRS 102:

 

Level 1: Valued using quoted prices in active markets for identical assets.

Level 2: Valued by reference to valuation techniques using observable inputs other than quoted prices included in level 1.

Level 3: Valued by reference to valuation techniques using inputs that are not based on observable market data.

 

Financial assets at fair value through profit or loss at 28 February 2021

 

 

 

Level 1

Level 2

Level 3

Total

 

£'000

£'000

£'000

£'000

Equity investments

361,531

-

-

361,531

Total financial assets carried at fair value

361,531

-

-

361,531

 

 

Financial assets at fair value through profit or loss at 29 February 2020

 

 

 

 

Level 1

Level 2

Level 3

Total

 

£'000

£'000

£'000

£'000

Equity investments

320,450

-

-

320,450

Total financial assets carried at fair value

320,450

-

-

320,450

 

Financial assets at fair value through profit or loss at 31 August 2020

 

 

 

 

Level 1

Level 2

Level 3

Total

 

 

£'000

£'000

£'000

£'000

 

Equity investments

321,396

-

-

321,396

 

Fixed interest investments

13,847

-

-

13,847

 

Total financial assets carried at fair value

335,243

 -

-

335,243

 

       

 

There have been no transfers between levels of the fair value hierarchy during the period.

 

 

5.

Return per ordinary share

 

 

(Unaudited)

Half-year ended

28 February 2021

£'000

(Unaudited)

Half-year ended

29 February 2020

£'000

 

(Audited)

Year ended

31 August 2020

£'000

 

The return per ordinary share is based on the following figures:

 

 

 

 

Revenue return

3,297

2,609 

10,618 

 

Capital return

19,482

(16,783)

(20,971)

 

Total

22,779

(14,174)

(10,353)

 

 

 

 

 

 

Weighted average number of ordinary shares in issue for each period

195,978,716

190,262,287 

192,134,317 

 

 

 

 

 

 

Revenue return per ordinary share

1.68p

1.37p 

5.53p 

 

Capital return per ordinary share

9.94p

(8.82p)

(10.91p)

 

Total return per ordinary share

11.62p

(7.45p)

(5.38p)

 

 

 

 

 

 

The Company does not have any dilutive securities, therefore, the basic and diluted returns per share are the same.

 

 

6.

Dividends

 

 

£'000

 

Fourth interim dividend of 1.50p for the year ended 31 August 2020 (paid 30 November 2020)

2,939

 

First interim dividend of 1.50p for the year ending 31 August 2021 (paid 26 February 2021)

2,940

 

Total

5,879

 

 

 

The board has declared a second interim dividend of 1.50p per ordinary share to be paid on 28 May 2021 to shareholders registered at the close of business on 7 May 2021. The shares will be quoted ex-dividend on 6 May 2021.

 

 

7.

Net asset value per ordinary share

The net asset value ("NAV") per ordinary share is calculated on the net assets attributable to shareholders' funds and the number of ordinary shares in issue. The NAV per ordinary share with debt at par and the NAV per ordinary share with debt at fair value is calculated as follows:

 

 

 

 

(Unaudited)
28 February 2021

(Unaudited)
29 February 2020

(Audited)
31 August 2020

NAV per ordinary share with debt at par

 

 

 

Net assets (£'000)

317,815 

297,940 

300,915 

Number of ordinary shares

195,978,716 

192,708,716 

195,978,716 

NAV per ordinary share with debt at par (p)

162.2 

154.6 

153.5 

 

 

 

 

NAV per ordinary share with debt at fair value

 

 

 

Net assets (£'000)

317,815 

297,940 

300,915 

Add back debt at par (£'000)

25,876 

 25,626 

26,626 

Less debt at fair value (£'000)

(30,158)

 (31,445)

(32,616)

 

Net assets with debt at fair value (£'000)

313,533 

292,121 

294,925 

 

Number of ordinary shares

 195,978,716 

192,708,716 

195,978,716 

 

NAV per ordinary share with debt at fair value (p)

160.0 

151.6 

150.5 

 

 

8.

Bank overdraft

At 28 February 2021, the Company had an overdraft with HSBC of £18,050,000 (29 February 2020: £nil; 31 August 2020: £4,900,000).

 

       

9.

Called up share capital

 

 

 

 

Number of shares in issue

Nominal value
£'000

 

Ordinary shares of 1p each

 

 

 

In issue at start of year

195,978,716

1,960

 

Allotment of new shares in the period

-

-

 

At 28 February 2021

195,978,716

1,960

 

 

During the half-year to 28 February 2021, the Company issued no ordinary shares (half year to 29 February 2020: 5,125,000; year to 31 August 2020: 8,395,000) for a total consideration of £nil (29 February 2020: £8,643,000; 31 August 2020: £13,627,000) after deduction of issue costs.

 

 

10.

Related party transactions

The Company's current related parties are its directors and Henderson Investment Funds Limited ("Janus Henderson"). There have been no material transactions between the Company and its directors during the period. The only amounts paid to them were in respect of expenses and remuneration for which there were no outstanding amounts payable at the period end.

 

In relation to the provision of services by Janus Henderson (other than fees payable by the Company in the ordinary course of business and the provision of marketing services) there have been no material transactions with Janus Henderson affecting the financial position of the Company during the period under review.

 

 

11.

Going concern

The assets of the Company consist of securities that are readily realisable. The directors have also considered the impact of Covid-19, including cash flow forecasting, a review of covenant compliance including the headroom above the most restrictive covenants and an assessment of the liquidity of the portfolio and have concluded that the Company has adequate resources to meet its financial obligations, including the repayment of the  bank overdraft, as they fall due for a period of at least twelve months from the date of approval of the financial statements. Having assessed these factors and the principal risks, the board has determined that it is appropriate for the financial statements to be prepared on a going concern basis.

 

 

12.

Comparative information

 

The financial information contained in this half-year report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The figures and financial information for the year ended 31 August 2020 are extracted from the latest published accounts and do not constitute the statutory accounts for that year. Those accounts have been delivered to the Registrar of Companies and included the report of the independent auditor, which was unqualified and did not include a statement under either section 498(2) or 498(3) of the Companies Act 2006.

 

A glossary of terms and details of alternative performance measures can be found in the Annual Report for the year ended 31 August 2020.

 

 

13.

Half-year report

 

 

 

 

The half-year report will shortly be available on the Company's website

(www.hendersoninternationalincometrust.com) or in hard copy from the Company's registered office.  An abbreviated version of this half-year report, the 'update', will be circulated to shareholders in early May 2021.

 

14.

General information

Company status

Registered as an investment company in England and Wales.

London Stock Exchange (TIDM) Code: HINT

SEDOL/ISIN number: Ordinary shares B3PHCS8/GB00B3PHC586

Global Intermediary Identification Number (GIIN): WRGF5X.99999.SL.826

Legal Entity Identifier (LEI): 2138006N35XWGK2YUK38

 

Registered office

201 Bishopsgate, London EC2M 3AE

 

Company registration number

7549407

 

Directors

The directors of the Company are Simon Jeffreys (Chairman), Joanne Parfrey (Chair of the Audit Committee), Lucy Walker, Richard Hills and Aidan Lisser.

 

Corporate Secretary

Henderson Secretarial Services Limited, represented by Sally Porter, ACG.

 

Website

Details of the Company's share price and net asset value, together with general information about the Company, monthly factsheets and data, copies of announcements, reports and details of general meetings can be found at www.hendersoninternationalincometrust.com.

 

 

 

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) are incorporated into, or form part of, this announcement.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.
 
END
 
 
IR GIGDSGUDDGBX
UK 100

Latest directors dealings