Half-year Report

Henderson Intl. Income Trust PLC
26 April 2024
 

JANUS HENDERSON FUND MANAGEMENT UK LIMITED

 

HENDERSON INTERNATIONAL INCOME TRUST PLC

 

LEGAL ENTITY IDENTIFIER: 2138006N35XWGK2YUK38

 

HENDERSON INTERNATIONAL INCOME TRUST PLC

 

UNAUDITED RESULTS FOR THE HALF-YEAR ENDED 29 FEBRUARY 2024

 

This announcement contains regulated information.

 

INVESTMENT OBJECTIVE

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

 

HIGHLIGHTS

 

·     

Dividends for the half year increased by 3.8%. NAV total return 5.1% (debt at par) and 4.8% (debt at fair value), slightly underperforming the 6.6% return of the benchmark

·     

Your Company has been recognised by the AIC as a "next generation dividend hero"

·     

Returns from all regions over the period were positive, but strong performance in North America was offset by weak relative performance in the Asia Pacific region

·     

Many of the portfolio's holdings have performed well, and dividend growth and buybacks have exceeded expectations across the portfolio

·     

The board remains hopeful that interest rates will decline later in the year leading to an improved investment environment

 

PERFORMANCE SUMMARY

SIX MONTHS TO 29 FEBRUARY 2024

 

 

2024 

2023 

Dividends in respect of the six months to 29 February

3.84p

3.70p

Total return for the period (debt at par)1

5.1%

2.2%

 

 

Dividend growth since launch to 29 February 2024

 






Year to

31 August

Total dividend

(pence per share)

 

Year to

31 August

Total dividend

(pence per share)

20112

1.40


2018

5.30

2012

4.00


2019

5.70

2013

4.05


2020

6.00

2014

4.25


2021

6.30

2015

4.50


2022

7.25

2016

4.65


2023

7.47

2017

4.90


2024

3.84*

 

* Represents the first and second interim dividends that have been declared for the year ending 31 August 2024

 

Your Company has recently been recognised by the Association of Investment Companies as a Next Generation Dividend Hero, reflecting its record of having consistently grown its dividend for 10 consecutive years.

 

Dividend yields

 

 

 29 February 2024

 31 August 2023

4.8%

4.6%

Benchmark4

3.8%

3.9%

AIC Global Equity Income sector5

3.4%

3.6%

 

Performance

 


29 February  2024 

31 August 2023 

NAV per share at period end (debt at par)

180.7p

175.7p 

NAV per share at period end (debt at fair value)

183.2p

178.6p 

Share price at period end

156.0p

161.5p

Discount (debt at par)

(13.7)%

(8.1)%

Discount (debt at fair value)

(14.8)%

(9.6)%

Gearing at period end

1.9%

3.9%

 

Total return performance to 29 February 2024

 


6 months

%

1 year

%

3 years

%

10 years

%

Since launch

%

Diluted NAV (debt at par)1

5.1

3.8

25.5

126.5

194.5

Diluted NAV (debt at fair value)1

4.8

3.3

28.8

129.7

198.6

Share price6

(1.0)

(8.8)

18.6

103.7

158.2

Benchmark4

6.6

8.5

32.2

163.0

227.1

AIC Global Equity Income sector (NAV)5

8.6

11.0

41.4

175.7

234.5

 

1 Calculated using published daily NAVs including current year revenue

2 Four month period from launch on 28 April 2011 to 31 August 2011

3 Calculated using the closing share price at the period end and the last four dividends paid

4 MSCI ACWI (ex UK) High Dividend Yield Index (sterling adjusted)

5 Excludes British & American Investment Trust plc

6 The Company's share price total return (assuming the reinvestment of all dividends excluding dealing expenses). Since inception share price return - launch price including discount (97.25p)

 

Sources: Morningstar Direct and Janus Henderson

 

 

INTERIM MANAGEMENT REPORT

CHAIRMAN'S STATEMENT

 

Performance and markets

During the six months to 29 February 2024, the net asset value ("NAV") total return per ordinary share was 5.1% (debt at par) and 4.8% (debt at fair value). This included dividends totalling 3.84p per share (2023: 3.70p), an increase of 3.8% year on year. The total return of the Company's comparator index (MSCI ACWI (ex UK) High Dividend Yield Index (sterling adjusted)) was 6.6%. The Company's return on the ordinary share price was -1.0%.

 

Inflation remains the key influencer of interest rate policy in Western economies. It does, however, now appear that the top of the interest rate cycle has been reached and that the next moves will be downwards. The question is when these moves will begin? Most policy makers will look to the US to lead the way and will be cautious of taking a pre-emptive decision.

 

Over the past year the world has moved on considerably, with new worries replacing previous ones. It appears that the holiday from history which followed the fall of the Berlin Wall is over and we are back to the ideological struggle between capitalism and communism. The West will inevitably have to re-arm to combat Russia in Europe and China in the Pacific. If Mr Trump is elected as the US President, then rearmament in Europe may be quicker and greater than anticipated. Meanwhile, there seems to be a growing realisation that nuclear energy is not such a concern after all and with most of the uranium in the world lying outside of the major oil producing centres this becomes a strategically strong energy option. As long as we avoid a major war then our current state of high alert is not necessarily a bad thing.

 

Earnings and dividends 

The revenue return per ordinary share during the six months to 29 February 2024 was 1.80p (2023: 1.96p). A fourth interim dividend of 1.92p per ordinary share, for the year ended 31 August 2023, was paid to shareholders on 30 November 2023, bringing the total dividend paid in respect of the year to 7.47p per ordinary share (year ended 31 August 2022: 7.25p per ordinary share). 

 

The board declared a first interim dividend payment for the year ending 31 August 2024 of 1.92p per ordinary share and this was paid to shareholders on 29 February 2024. Subsequently, we have declared a second interim dividend of 1.92p per ordinary share that will be paid on 31 May 2024 to shareholders on the register on 10 May 2024.

 

The long-term objective of your Company since launch is to provide shareholders with a growing total annual dividend, as well as capital appreciation. To date, we have increased the dividend each year and we are very pleased this achievement has now been recognised by the Association of Investment Companies ("AIC"), naming us as a "next generation dividend hero".

 

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. Borrowing limits for this purpose include implied gearing through the use of derivatives. The gearing at the period end was 1.9% (31 August 2023: 3.9%).

 

Discount control 

The Company's share price has traded at a discount of between 8% and 15% over the period. As at 24 April 2024, the discount was 11.3% (with debt at par) and 12.4% (with debt at fair value). The board monitors the premium/discount to NAV closely. The factors that usually influence the discount most are the performance of the Company and that of world stock markets. Both of these are covered fully, later on in the fund manager's review. Two other factors have also been at work, but these are more technical. Concerns over current legislation that show the costs of managing an investment trust to be much higher in theory than in reality have led the average discount of the UK investment trust sector to rise markedly over the past 12 months. Secondly, with higher interest rates than in the recent past, bonds have become a more attractive alternative to higher yielding investment trusts where prices have weakened in response. When interest rates, in due course, start to decline we would expect discounts to start to narrow too.

 

While we understand the importance of dividend income to our shareholders we equally appreciate that they also want to see their capital grow over time and for the current discount to reduce. To that end, the fund manager has made changes to the portfolio and is working with the board to consider ways of better achieving these objectives.

 

As has been stated before, there is a distinct limit to the board's ability to influence and maintain the premium or discount to NAV over the short term. Further, we continue to believe that it is not in shareholders' interests to have a specific share buy-back or issuance policy, but retain flexibility to consider share buy-backs and/or issuance where appropriate (and actively do so).

 

Outlook

One new set of worries soon replaces the previous set. It does seem however that the optimist is always the long-term winner. We keep a watching eye on world politics and economics but we can only respond to changing circumstances to a degree and we must guard against chopping and changing short-term strategy to fit each day's changing circumstances. In the meantime, the board remains hopeful that interest rates will decline later in the year leading to an improved investment environment.

 

Richard Hills

Chairman

25 April 2024

 

 

PRINCIPAL RISKS AND UNCERTAINTIES

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

 

Geopolitical risks;

Political risks;

Investment activity and performance risks;

Portfolio and market price risks;

Tax and regulatory risks;

Operational and cyber risks; and

Consolidation of the wealth management industry

 

Information on these risks and how they are managed are given in the annual report for the year ended 31 August 2023. 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 29 February 2024 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

 

Richard Hills

Chairman

25 April 2024

 

 

For more information please contact:

 

Ben Lofthouse

Fund Manager

Henderson International Income Trust plc

Telephone: 020 7818 5187

 

Harriet Hall

PR Director, Investment Trusts

Janus Henderson Investors

Telephone: 020 7818 2919

 

Dan Howe

Head of Investment Trusts

Janus Henderson Investors

Telephone: 020 7818 4458


 

 

FUND MANAGER'S REPORT

 

Performance review

Over the last six months the portfolio produced a total return of 4.8% in NAV per ordinary share over the period (debt at fair value). This return includes dividends totalling 3.84p per share, a 3.8% increase year on year. The portfolio has slightly underperformed its performance comparator, the MSCI ACWI (ex UK) High Dividend Yield Index.

 

Market summary

Equity markets have rallied over the period. Economic data continues to be mixed; the US economy has been stronger than expected despite the significant increases in interest rates around the world over the last three years. Meanwhile the economies of Japan, Germany and the United Kingdom were weak enough to register some quarters of negative economic growth. The Chinese economy has continued to grow but ongoing concerns remain around the property market and weak consumer sentiment. Generally investors have become increasingly optimistic that inflation has peaked and that central banks will be able to reduce interest rates this year. The combination of stronger US growth and expectations of interest rate cuts have driven a recovery in the performance of cyclically exposed sectors, such as industrials and financials. Companies with less cyclically sensitive, defensive earnings have generally underperformed. Many companies' recent quarterly reports suggest that business activity is not deteriorating but still remains lacklustre and, in some cases (chemicals, staffing companies, consumer staples), marginally worse.

 

The area of Artificial Intelligence ("AI") remains a bright spot due to an increasing number of companies rolling out their AI focussed semiconductor offerings. It has been a period during which higher yielding stocks have lagged the wider market; the MSCI ACWI (ex UK) High Dividend Yield Index returned 6.6% compared to 13.2% for the MSCI World (ex UK) Index (both sterling adjusted). One of the primary drivers of this has been the fact that markets have been led by these low yielding technology stocks. The market rally in the US has been driven by a relatively small number of the largest technology companies, which are expected to benefit the most from new Generative Artificial Intelligence developments. These have become known as the 'Magnificent Seven' (Nvidia, Microsoft, Meta, Amazon, Alphabet, Apple and Tesla). The extent to which these companies are generating actual revenues from AI varies. Nvidia and Microsoft are already reporting revenues from AI, for the others the opportunities are more speculative.

 

Portfolio performance

 

Portfolio exposures and returns by region

 


Average exposure

%

Total return

%

North America

37.3

8.1

Europe (ex UK)

36.8

4.6

Asia Pacific (ex Japan)

21.9

3.3

Japan

2.5

7.6

 

Returns from all regions over the period were positive, but strong performance in North America was offset by weak relative performance in the Asia Pacific region. There has been a significant dispersion between sectors and regions over the period. Many of the portfolio's holdings have performed well, and dividend growth and buybacks have exceeded expectations across the portfolio. With the benefit of hindsight though, the portfolio has had too much exposure to defensive sectors such as health care, telecommunications and consumer staples which have lagged the market rally. These sectors have generated good dividend yields and are growing earnings but their share prices have underperformed during the cyclical rotation in the equity market that has occurred since October.

 

Sector and stock performance review

Technology stocks now make up 15.2% of the portfolio and have provided the greatest absolute and relative performance over the period. The largest position is Microsoft which has emerged as one of the leaders in AI by virtue of its investment in OpenAI, the creator of ChatGPT, and its leading positions in cloud computing and business software. Microsoft was the biggest positive contributor to performance over the period. Semiconductor companies Qualcomm and Taiwan Semiconductor Manufacturing were also significant positive contributors to performance because of signs that the semiconductor cycle has bottomed. AI activity is starting to broaden out from semiconductor chip demand to wider computing infrastructure investments. US industrial company nVent, for example, saw its share price increase significantly over the period. It is a leader in electrification related products and is benefiting from the additional demand for data centre cooling systems.

 

Technology stocks have not been the only good performers. The portfolio's largest sector exposure is the financial sector (18.2% of the portfolio) and it was one of the best performers over the period. Many companies in the sector benefit from higher interest rates. Higher rates coupled with low credit losses are driving strong profit growth across much of the sector. The portfolio's insurance companies are also benefiting from rising insurance premiums and improving profitability. US insurance company Travelers was one of the top performers and the positions in AXA, Zurich and Dai-ichi Life also performed well.

 

As discussed earlier, there has been a wide dispersion between sector performance. At a sector level the biggest detractors to performance have been the materials, energy and consumer staples sectors. Commodity prices have been falling as Covid supply chain issues got resolved and emergency inventory was run down and this short-term weakness has weighed on companies in the sector. Whilst investors in technology like the idea of investing for future growth, in other sectors they seem less enthusiastic. Two examples of this are oil and gas company Woodside and pharmaceutical company Sanofi. Both companies raised their investment budgets to invest in growth projects and both saw their share prices react negatively in response to the increased short-term costs of the investments. Air Products, an industrial gases company, was the biggest single stock detractor. The company is investing heavily in low carbon hydrogen projects (known as green and blue hydrogen technologies) but the projects will not be ready for a few years and the market would like to see evidence of demand before rewarding the company for investment.

 

At a country level the portfolio's exposure to consumer discretionary stocks in Hong Kong and China was a detractor. The country has not seen the recovery from the easing of Covid lockdown that the rest of the world experienced and positions such as internet retailer Alibaba, insurer AIA and sportswear retailer Li-Ning underperformed the market. The positioning in the Asia Pacific portfolio has been changed significantly and this exposure has been reduced (covered below).

 

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 fall in interest rate expectations during the period has increased the fair value of the debt, reducing the fair value net asset value return.

 

Portfolio positioning

The most significant change to the portfolio was the 6.8% increase in exposure to the technology sector. Many companies in the technology sector benefited during Covid from increased demand as companies and individuals updated their systems but suffered a hangover in 2023 as supply chains eased and sales normalised.  Many of these companies' long-term growth is driven by the trend of increasing technology adoption across all industries. This trend should accelerate as AI moves from the testing phase into real world use. We have taken the opportunity of short-term weakness to add to some of these companies. The existing technology positions in semiconductor companies Taiwan Semiconductor Manufacturing and Qualcomm were added to.  New positions were initiated in equipment manufacturers TE Connectivity (connectors and sensors), Lenovo (PCs and servers) and Hon Hai (smart phones, tablets and servers) and technology software and services companies Oracle and Infosys. This increased exposure was funded by closing a number of positions in consumer discretionary stocks in China and Hong Kong, and a reduction in exposures to telecommunications and consumer staples via sales of Brazilian brewer Ambev, telecommunication company HKT Trust and a reduction in telecoms equipment company Cisco.

 

Income trends

The underlying dividend growth from the portfolio's holdings has been good but the income return for the period is slightly lower than last year. One of the reasons for this is that there have been fewer special dividends from companies.  In recent years the portfolio has benefited from approximately £1m of special dividends per year from companies that paused payments during the Covid period but paid catch up payments later, in particular financial sector companies. The other reason for the fall in income is that more opportunities have presented themselves in some lower yielding areas of the market (often at substantially lower yield levels) and the team are using the flexibility of the investment structure to hold some lower yielding stocks with more capital upside potential.

 

Outlook

The global economy has weathered increased interest rates better than expected and falling inflation might allow central banks to cut rates without a significant increase in unemployment. Falling interest rates with improving growth has historically been a relatively rare combination but one that can be positive for equity markets. Irrespective of interest rate trends we remain positive about the portfolio's potential for growth due to a number of ongoing trends that are driving activity. These trends include investments focused on reshoring manufacturing activity, especially in the technology space, modernisation of energy supply and increasing AI capabilities.

 

 

Ben Lofthouse

Fund Manager

25 April 2024


INVESTMENT PORTFOLIO

at 29 February 2024

 

Company

 

Country

Market value

£'000

%

of portfolio

Basic materials

 

 

 

Air Products & Chemicals

US

7,424

2.1

UPM-Kymmene

Finland

4,034

1.1

Pilbara Minerals

Australia

2,605

0.7



14,063

3.9

 




Consumer discretionary




Compagnie Financière Richemont

Switzerland

6,351

1.8

Sony

Japan

5,468

1.5

Samsonite

Hong Kong

4,482

1.2

Midea

China

4,465

1.2

Aptiv

US

3,969

1.1

Mercedes-Benz

Germany

3,540

1.0

Hyundai

Korea

3,282

0.9

Anta Sports

China

2,689

0.7

Astra International

Indonesia

1,318

0.4



35,564

9.8





Consumer staples


 

 

Coca-Cola

US

8,772

2.4

Nestlé

Switzerland

7,387

2.1

Mondelez

US

6,924

1.9

Pepsico

US

5,186

1.4

Pernod-Ricard

France

4,175

1.2



32,444

9.0

 

 



Energy




TotalEnergies

France

5,398

1.5

Woodside Petroleum

Australia

3,769

1.1

Aker BP

Norway

3,726

1.0



12,893

3.6





Financials 




Zurich Insurance

Switzerland

10,139

2.8

Amundi 

France

8,156

2.3

Travelers Companies

US

8,065

2.2

CME

US

7,035

1.9

AXA

France

4,932

1.4

Bank Mandiri

Indonesia

4,907

1.4

Macquarie

Australia

4,468

1.2

OCBC Bank

Singapore

4,004

1.1

BFF Bank

Italy

3,887

1.1

HDFC Bank

India

3,788

1.1

Samsung Fire & Marine Insurance

Korea

3,332

0.9

Dai-ichi Life

Japan

2,991

0.8



65,704

18.2





Health care




Merck & Co

US

12,670

3.5

Sanofi

France

12,161

3.4

Novartis

Switzerland

9,287

2.6

Roche

Switzerland

9,284

2.6

Medtronic

US

6,017

1.6

Novo Nordisk

Denmark

5,065

1.4

Bristol-Myers Squibb

US

4,692

1.3

Johnson & Johnson

US

3,967

1.1



63,143

17.5





Industrials




nVent Electric

US

8,043

2.2

Honeywell International

US

7,118

2.0

Daimler Truck

Germany

6,700

1.9

Sandvik  

Sweden

6,513

1.8

Volvo

Sweden

5,086

1.4

Nari Technology Co

China

2,986

0.8



36,446

10.1





Real estate




CapitaLand Integrated Commercial Trust 

Singapore

3,795

1.1

Goodman

Australia

3,170

0.9

Swire Properties

Hong Kong

3,055

0.8



10,020

2.8





Technology




Microsoft

US

17,227

4.8

Qualcomm

US

7,446

2.1

Taiwan Semiconductor Manufacturing

Taiwan

6,638

1.8

Samsung

Korea

5,593

1.5

Oracle

US

4,381

1.2

TE Connectivity

US

4,172

1.2

Infosys Technologies

India

3,780

1.0

Lenovo

China

2,961

0.8

Hon Hai Precision

Taiwan

2,932

0.8



55,130

15.2





Telecommunications




Deutsche Telekom

Germany

5,698

1.6

Telus

Canada

4,995

1.4

Tele2

Sweden

4,750

1.3

Cisco Systems

US

4,501

1.2

Verizon Communications

US

4,299

1.2

Telekomunikasi

Indonesia

1,290

0.4



25,533

7.1





Utilities




Iberdrola

Spain

6,099

1.7

Enel

Italy

4,025

1.1



10,124

2.8





Total investments


361,064

100.0

 


TEN LARGEST INVESTMENTS

at 29 February 2024

Company

Sector

Country

Market value

£'000

% of portfolio

Microsoft

Technology

US

17,227

4.8

Merck & Co

Health care

US

12,670

3.5

Sanofi

Health care

France

12,161

3.4

Zurich Insurance

Financials

Switzerland

10,139

2.8

Novartis

Health care

Switzerland

9,287

2.6

Roche

Health care

Switzerland

9,284

2.6

Coca-Cola

Consumer staples

US

8,772

2.4

Amundi                                              

Financials

France

8,156

2.3

Travelers Companies

Financials

US

8,065

2.2

nVent Electric

Industrials

US

8,043

2.2

 

These investments total £103,804,000 which represents 28.8% of the portfolio.

 

SECTOR EXPOSURE as a percentage of the investment portfolio excluding cash

 

 

29 February 2024

%

31 August 2023

%

Financials                             

18.2

18.7

Health care                            

17.5

17.9

Technology                             

15.2

8.4

Industrials                            

10.1

10.0

Consumer discretionary

9.8

9.2

Consumer staples

9.0

11.8

Telecommunications                     

7.1

9.7

Basic materials                        

3.9

4.3

Energy

3.6

3.9

Utilities                              

2.8

3.0

Real estate

2.8

3.1


100.0

100.0

 

GEOGRAPHIC EXPOSURE as a percentage of the investment portfolio excluding cash

 


29 February 2024

31 August 2023


%

%

US

36.4

34.8

Switzerland

11.9

11.3

France

9.8

9.4

Sweden

4.5

2.6

Germany

4.5

4.9

Australia

3.9

3.2

China

3.5

5.4

Korea

3.3

3.3

Taiwan

2.6

1.0

Japan

2.3

1.4

Italy

2.2

2.2

Singapore

2.2

1.9

Indonesia

2.2

1.9

India

2.1

0.9

Hong Kong

2.0

4.9

Spain

1.7

1.8

Canada

1.4

1.5

Denmark

1.4

1.1

Finland

1.1

0.9

Norway

1.0

1.1

Netherlands

                             -

2.7

Brazil

                             -

1.8


100.0

100.0

 

Source: Janus Henderson


CONDENSED INCOME STATEMENT

 

 

(Unaudited)

Half-year ended
29 February 2024

(Unaudited)

Half-year ended
28 February 2023

(Audited)

Year ended
31 August 2023

 

 

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

14,652 

14,652 

5,496 

5,496 

(8,984)

(8,984)


 

 

 







Income from investments held at fair value through profit or loss

4,308 

4,308 

4,884 

4,884 

16,641 

-  

16,641 


 

 

 







Gains/(losses) on foreign exchange

130 

130 

(621)

(621)

(84)

(84)


 

 

 







Other income

509 

509 

172 

172 

894 

-  

894 

 

 

 

 







Gross revenue and capital gains/ (losses)

4,817 

14,782 

19,599 

5,056 

4,875 

9,931 

17,535 

(9,068)

8,467 

 

 

 

 




 

 

 

Management fee (note 3)

(251)

(755)

(1,006)

(245)

(736)

(981)

(500)

(1,502)

(2,002)


 

 

 







Other administrative expenses

(364)

(364)

(334)

(334)

(609)

-  

(609)


 

 

 







Net return before finance costs and taxation

4,202 

14,027 

18,229 

4,477 

4,139 

8,616 

16,426 

(10,570)

5,856 

 

 

 

 







 

Finance costs

(79)

(235)

(314)

(81)

(243)

(324)

(162)

(488)

(650)


 

 

 







Net return before taxation

               4,123 

            13,792 

            17,915 

               4,396 

              3,896 

               8,292 

16,264 

(11,058)

5,206 

 

 

 

 







Taxation on net return

(599)

(599)

(553)

(553)

(2,020)

(2,020)


 

 

 







Net return after taxation (note 5)

               3,524 

            13,792 

            17,316 

               3,843 

               3,896 

               7,739 

14,244 

(11,058)

3,186 

 

 

 

 







Return per ordinary share

1.80p

7.04p

8.84p

1.96p

1.99p

3.95p

7.27p

(5.64p)

1.63p

 

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 29 February 2024 (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 2023

1,960

194,550

45,732

94,919 

7,209 

344,370 

Net return after taxation

-

-

-

13,792 

3,524 

17,316 

Dividends paid (note 6)

-

-

-

(7,526)

(7,526)


 

 

 

 

 

 

At 29 February 2024

1,960

194,550

45,732

108,711

3,207 

354,160 

 

Half-year ended 28 February 2023 (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 2022

1,960

194,550

45,732

105,977 

7,468 

355,687 

Net return after taxation

-

-

-

3,896 

3,843 

7,739 

Dividends paid

-

-

-

(7,251)

(7,251)








At 28 February 2023

1,960

194,550

45,732

109,873

4,060 

356,175 

 

Year ended 31 August 2023 (audited)

Share
premium
account
£'000

Special
reserve
£'000

Other 

capital 
reserves 
£'000 

Revenue 
reserve 
£'000 

Total 
£'000 

At 31 August 2022

1,960

194,550

45,732

105,977 

7,468 

355,687 

Net return after taxation

-

-

-

(11,058)

14,244 

3,186 

Dividends paid

-

-

-

(14,503)

(14,503)








At 31 August 2023

1,960

194,550

45,732

94,919 

7,209 

344,370 

 

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



CONDENSED STATEMENT OF FINANCIAL POSITION

 


(Unaudited)

At 
29 February 
2024 
£'000 

 (Unaudited)

At 
28 February 
2023 
£'000 

(Audited)

At 
31 August 
2023 
£'000 

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

 



Fixed asset investments held at fair value through profit or loss

361,064 

362,248 

357,671 





Current assets




Debtors

4,996 

3,258 

3,588 

Cash at bank

16,206 

18,886 

18,028 


21,202 

22,144 

21,616 





Creditors: amounts falling due within one year

(2,592)

(2,094)

(9,375)

 




Net current assets

18,610 

20,050 

12,241 

 

 



Total assets less current liabilities

379,674 

382,298 

369,912 

 

 



Creditors: amounts falling due after more than one year

(25,514)

(26,123)

(25,542)

 

 



Total net assets

354,160 

356,175 

344,370 

 




Capital and reserves




Called up share capital (note 8)

1,960 

1,960 

1,960 

Share premium account

194,550 

194,550 

194,550 

Special reserve

45,732 

45,732 

45,732 

Other capital reserves

108,711 

109,873 

94,919 

Revenue reserve

3,207 

4,060 

7,209 


 



Total shareholders' funds

354,160 

356,175 

344,370 

 




Net asset value per ordinary share (note 7)

180.7p

181.7p

175.7p

 

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



CONDENSED STATEMENT OF CASH FLOWS

 


(Unaudited)

Half-year ended 
29 February 
2024 
£'000 

(Unaudited)

Half-year ended 
28 February 
2023 
£'000 

 (Audited)

Year ended 
31 August 
2023 
£'000 

Cash flows from operating activities

 



Net return before taxation

17,915 

8,292 

5,206 

Add back: finance costs

314 

324 

650 

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

(14,652)

(5,496)

8,984 

Less: (gains)/losses on foreign exchange

(130)

621 

84 

Withholding tax on dividends deducted at source

(500)

(553)

(2,432)

Taxation recovered

53 

56 

Increase in debtors

(274)

(167)

(189) 

(Decrease)/increase in creditors

(303)

380 

(104)


 



Net cash inflow from operating activities

2,423 

3,401 

12,255 


 



Cash flows from investing activities

 



Purchase of investments

(74,724)

(43,497)

(105,273)

Sale of investments

78,216 

 60,235

119,914 

Proceeds from capital dividends


 



Net cash inflow from investing activities

3,500 

16,738 

14,643 


 



Cash flows from financing activities

 



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

(7,526)

(7,251)

(14,503)

Interest paid

(318)

(322)

(644)


 



Net cash outflow from financing activities

(7,844)

(7,573)

(15,147)


 



Net cash (decrease)/increase in cash and cash equivalents

(1,921)

12,566 

11,751 

 

 



Cash and cash equivalents at start of year

18,028 

6,590 

6,590 

Effect of foreign exchange rates

99 

(270)

(313)


 



Cash and cash equivalents at end of year

16,206 

18,886 

18,028 

 

 



Comprising:

 



Cash at bank

16,206 

18,886 

18,028 


 




16,206 

18,886 

18,028 

 

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 2023 to 29 February 2024.

 

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 and FRS 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 July 2022 by the Association of Investment Companies.

 

The accounting policies applied are consistent with those of the most recent annual financial statements for the period ended 31 August 2023.

 

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 a rate of 0.575% per annum of the Company's net assets. 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 table below analyses fair value measurements for investments held at fair value through profit or loss.

 

Financial assets and financial liabilities at fair value through

profit or loss at 29 February 2024




Level 1

Level 2

Level 3

Total 


£'000

£'000

£'000

£'000 

Equity investments

361,064

-

361,064 

Derivatives (options)

-

       (540)

-

          (540)

Total financial assets carried at fair value

361,064

       (540)

-

360,524 

 

 

Financial assets at fair value through profit or loss at 28 February 2023

 




Level 1

Level 2

Level 3

Total


£'000

£'000

£'000

£'000

Equity investments

362,248

            -  

            -  

362,248

Total financial assets carried at fair value

362,248

            -  

            -  

362,248

 

Financial assets at fair value through profit or loss at 31 August 2023

 




Level 1

Level 2

Level 3

Total

 


£'000

£'000

£'000

£'000

 

Equity investments

357,671

            -  

            -  

357,671

 

Total financial assets carried at fair value

357,671

            -  

            -  

357,671

 

 

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

 

The Company's holdings in options are included within Level 2.

 

Premiums from written options during the half-year ended 29 February 2024 were £198,000 (half-year ended 28 February 2023: £81,000, year ended 31 August 2023: £576,000).

 

Financial liabilities

The senior unsecured notes are carried in the Statement of Financial Position at par.

 

As at 29 February 2024, the fair value of the senior unsecured notes was estimated to be £20,723,000 (28 February 2023: £20,075,000; 31 August 2023: £19,808,000).

 

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.

 

Fair value hierarchy categories

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.

 

 

5.

Return per ordinary share

 

 

(Unaudited)

Half-year ended 

29 February 2024 

£'000 

(Unaudited)

Half-year ended 

28 February 2023 

£'000 

 

(Audited)

Year ended 

31 August 2023 

£'000 

 

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

 

 

 

 

Revenue return

3,524

3,843 

14,244 

 

Capital return

13,792

3,896 

(11,058)

 

Total

17,316

7,739 

3,186 

 

 

 



 

Weighted average number of ordinary shares in issue for each period

195,978,716

195,978,716 

195,978,716 

 

 

 



 

Revenue return per ordinary share

1.80p

1.96p

7.27p

 

Capital return per ordinary share

7.04p

1.99p

  (5.64)p

 

Total return per ordinary share

8.84p

3.95p

1.63p

 

 

 



 

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 1.92p for the year ended 31 August 2023 (paid 30 November 2023)

3,763


First interim dividend of 1.92p for the year ending 31 August 2024 (paid 29 February 2024)

3,763


Total

7,526




The board has declared a second interim dividend of 1.92p per ordinary share to be paid on 31 May 2024 to shareholders registered at the close of business on 10 May 2024. The shares will be quoted ex-dividend on 9 May 2024.



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)
29 February 2024 

(Unaudited)
29 February 2023 

(Audited)
31 August 2023

NAV per ordinary share with debt at par

 


 

Net assets (£'000)

354,160 

356,175 

344,370

 

Number of ordinary shares

195,978,716 

195,978,716 

195,978,716

 

NAV per ordinary share with debt at par (p)

180.7 

181.7 

175.7

 

 



NAV per ordinary share with debt at fair value

 



Net assets (£'000)

354,160 

356,175 

344,370

Add back debt at par (£'000)

25,514 

26,123 

25,542

Less debt at fair value (£'000)

(20,723)

(20,075)

(19,808)

 

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

358,951 

362,223 

350,104

 

 

Number of ordinary shares

195,978,716 

195,978,716 

195,978,716

 

 

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

183.2 

184.8 

178.6

 

 



8.

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

 


At 29 February 2024

195,978,716

1,960

 


 

No ordinary shares were issued during the half-year to 29 February 2024 (half-year to 28 February 2023 and year to 31 August 2023: none).

 



 

9.

Related party transactions

The Company's current related parties are its directors and Janus Henderson Fund Management UK 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.

 

 

 

 

10.

Going concern

The assets of the Company consist of securities that are readily realisable and, accordingly, the directors believe that the Company has adequate resources to continue in operational existence for at least twelve months from the date of approval of the financial statements. Having assessed these factors and the principal risks, as well as considering the heightened macroeconomic uncertainties, the board has determined that it is appropriate for the financial statements to be prepared on a going concern basis.

 

 

 

 

11.

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 2023 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 2023.

 



 

12.

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 mid-May 2024.

 

 

13.

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/GB00B3PHCS86

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 Richard Hills (chairman), Jo Parfrey (chair of the audit committee), Lucy Walker (senior independent director), Mai Fenton and Aidan Lisser.

 

Corporate Secretary

Janus Henderson Secretarial Services UK 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.

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