We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for real-time alerts, custom portfolio, and market movers
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Henderson Alternative Strategies Trust Plc | LSE:HAST | London | Ordinary Share | GB0001216000 | ORD 25P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 272.00 | 272.00 | 276.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMHAST
RNS Number : 0890D
Henderson Alternative Strat Tst PLC
21 June 2019
Legal Entity Identifier: 213800J6LLOCA3CUDF69
HERSON ALTERNATIVE STRATEGIES TRUST PLC
Financial Report for the 18-month period ended 31 March 2019
This announcement contains regulated information
INVESTMENT OBJECTIVE
The Company exploits global opportunities not normally readily accessible in one vehicle to provide long-term growth to shareholders via a diversified, international, multi-strategy portfolio which also offers access to specialist funds including hedge and private equity. The Company aims to outperform the FTSE World Total Return Index on a total return basis (a combination of income and capital growth) in Sterling terms.
PERFORMANCE HIGHLIGHTS(1)
-- Total dividend of 7.50p per ordinary share for the 18-month period to 31 March 2019 -- Five-year dividend growth of 8.7% (annualised)
-- NAV total return of 3.4% over the 12 months to 31 March 2019 and 3.0% over the 18 months to 31 March 2019
Hot Features
Premium
31 March 2019 30 September 2017
--------------------------------- -------------- ------------------
NAV per ordinary share 335.5p 335.4p
Total return per ordinary share 9.8p 32.2p
Share price per ordinary share 270.0p 291.5p
Market capitalisation GBP104.4m GBP112.7m
Discount(2) 19.5% 13.1%
Interim dividend 5.00p -
Final dividend(3) 2.50p 4.75p
-------------- ------------------
Total dividend 7.50p 4.75p
-------------- ------------------
Number of investments(4) 44 54
Ongoing charge(5) 0.94%(6) 1.02%
1. Figures in respect of the 18-month period ended 31 March 2019 compared to the previous year ended 30 September 2017
2. Discount calculated using year-end audited NAVs including current-year revenue
3. 2019 final dividend subject to shareholder approval at the annual general meeting on 25 July 2019
4. Includes nil-valued securities 5. Calculated using the methodology prescribed by the AIC 6. Annualised for the 18 months to 31 March 2019
CHAIRMAN'S STATEMENT
Performance
This is my first full report to shareholders since their approval of the change in our financial year end. The report therefore covers the 18-month period to 31 March 2019, a period marked by the return of volatility to stock markets, which led, at times, to severe falls in the levels of indices. The period saw two particularly sharp sell-offs in 2018 with the market downturn in the autumn being precipitated by the continuing lack of resolution of the trade dispute between the United States and China together with increasing concerns over the Federal Reserve's tightening of monetary policy in both raising interest rates and shrinking its balance sheet at a time when economic data appeared to be deteriorating.
The Federal Reserve's abrupt about-turn in the first quarter of 2019 led to a strong rally in assets of every type, including government bonds, credit and equities, in spite of widespread earnings downgrades and of an apparently weak macro-economic environment. Currently, much of the market's optimism is predicated on satisfactory resolution of the US-China trade dispute and on success in China's attempts to stimulate its economy.
Against this backdrop, the Company generated a 3.0% NAV total return over the period. This compares to an 11.4% total return from its benchmark, the FTSE World Total Return Index (in Sterling). The Company share price total return was -4.2% during the period and reflected both its lack of full participation in the recovery in share prices (having defended well the Company's value in the period of market downturn) and some widening of the discount. By contrast, the three-year numbers are healthier: annualised total return improvements of 9.7% in NAV and 10.8% in share price. Such returns have also been achieved with only slightly more than half the volatility displayed by the portfolio's benchmark index: 5.7% compared to 10.2%.
Share Price Discount
The average share price discount to NAV over the period was 16.5%. As experienced at the time of the previous continuation votes, the discount came in for a spell and then widened again as the potential opportunity for a return of cash from a company winding itself up disappeared. The discount ended the period close to its widest levels at 19.5%. The Board remains of the view that the high quality of the Company's assets, the improved underlying liquidity of the portfolio and its re-invigorated performance over the last three years merit a higher rating.
Dividends
The Company extended its financial reporting period from 30 September to 31 March with the aim of aligning more closely its reporting cycle to the receipt of valuations from the unquoted private equity funds and other unlisted investments held in the portfolio. Owing to such an extension, the Board declared an interim dividend of 5.00p per ordinary share which was paid to shareholders on 31 January 2019.
Having considered the performance of the Company's portfolio for the additional six months in this 18-month financial reporting period to 31 March 2019, the Board is pleased to recommend a final dividend of 2.50p per ordinary share which will be payable to shareholders on 2 August 2019, subject to approval by shareholders. The decision has been made with regard to the level of revenue reserves and brings the total dividend for the period to 7.50p (2017: 4.75p) per ordinary share.
For the current and future financial reporting periods, the Board expects to revert to paying a single final dividend following approval by shareholders at the annual general meeting in each year.
Management Fees
Following a review by the Board of the fees paid to the Manager, the management fee was reduced, with effect from 1 April 2018, from 0.70% per annum of net chargeable assets to 0.60% per annum for assets up to GBP250m and 0.55% for assets above this amount.
Fund Management Team
The Board was disappointed to receive the news that Mr Ian Barrass intended to retire from the Manager at the end of June 2018. Ian had been instrumental in the transition of the Company's portfolio to Janus Henderson in 2013 and in restructuring the Company's investments. The Board is particularly grateful for Ian's commitment to the portfolio in that time and wish him all the very best. Mr Peter Webster was appointed as a Fund Manager of the Company on 1 July 2018, alongside the existing Fund Manager, Mr James de Bunsen.
In April 2019, the Board was delighted to announce the appointment as a senior manager of Mr Alex Barr, formerly lead manager of Aberdeen Private Equity Fund Limited and most recently Global Head of Private Markets and Real Estate Investment Oversight at Aberdeen Standard Investment Management. Alex has 26 years of experience in financial markets, specialising in alternative assets, and will be joining in July 2019.
Governance
The Financial Reporting Council ("FRC") issued a revised UK Corporate Governance Code in July 2018. This was followed in February 2019 by the publication of an updated Code of Governance which was issued by the Association of Investment Companies ("AIC Code"). The AIC Code mirrors the provisions of the UK Corporate Governance Code and includes additional provisions that are of specific relevance to investment companies. The Board is pleased that the AIC Code continues to receive FRC endorsement and is reviewing its governance arrangements in light of the revised provisions. The revised AIC Code is applicable to reporting periods commencing on or after 1 January 2019.
Outlook
Investors have experienced something of a roller-coaster ride in 2018 and early 2019. The calm of 2017 gave way to a much more febrile mood in 2018 as tighter US monetary policy and rising global trade tensions hit sentiment. The recent market recovery in 2019 recognises a reduction in those former concerns as opposed to expectations of substantial improvement in company earnings or in macro-economic data. While it is possible that this sentiment continues to propel markets higher, the Board believes that some caution is warranted. The Company's current portfolio is a blend of assets and strategies, less correlated to traditional market instruments, which have proven to be relatively robust in recent market setbacks. This highly diversified, multi-alternative approach provides investors with a distinct and attractive investment proposition in potentially volatile times ahead.
Richard Gubbins
Chairman
21 June 2019
FUND MANAGERS' REPORT
Performance
Whilst we have negotiated relatively successfully some of the extreme movements in equity markets during the period, we have not captured enough of the market upside when conditions have been more benign. In hindsight, we have been too wary about high asset valuations and the ageing economic and market cycles. However, it is not our mandate to replicate the benchmark and we will always lag in periods of strong equity market performance owing to the different composition of the portfolio. It is interesting to look at how regional equity markets fared during the period: while the US equity market rose 15.9%, Europe and Japan fell 2.7% and 1.8% respectively, whilst Emerging Markets and the UK rose just 1.3% and 3.9% respectively*. The Company's benchmark was 57% weighted towards the US equity market at period end, compared to the Company's average exposure below 30%. Such positioning helps to explain much of the shortfall in overall performance in the latest period under review.
We have secured, however, our aim of delivering to shareholders an equity-like return, but with lower volatility, by achieving three-year annualised total returns, after expenses, of 9.7% in net asset value and 10.8% in share price. Such returns are ahead of longer-term returns from equity markets.
Our view is that we are most likely to outperform global equities over the long term by mitigating the negative impact of severe downturns in the market. We should achieve such a result by sensible portfolio construction and by not overpaying for assets. Sensible portfolio construction entails ensuring we have a suitably diversified portfolio of attractively priced assets. Our remit to invest in alternative assets and strategies is very helpful in this regard. Its strength was demonstrated in the challenging fourth quarter of 2018, when the portfolio's fall in value was a fraction of the severe decline seen in global equity markets. Meanwhile our focus on valuation stems from our belief that attempts to forecast economic data and market movements are largely futile. Instead, we follow a disciplined, valuation-driven approach. Thus we look to raise risk exposure when assets look invitingly valued relative to history and take profits when they look expensive. History shows us that valuation is the most important factor in determining realised returns. Of course, we also take account of macro-economic data, investor sentiment and positioning when evaluating opportunities but adherence to a valuation discipline removes much of the guesswork from investing. In the volatile period under review, we have allowed excessive caution to colour the composition of our portfolio and, despite emerging relatively unscathed during the two particularly steep equity market declines at the beginning and end of 2018, lagged significantly the comparable benchmark return.
We remain convinced that our mandate is not to recreate exposures that investors may include with ease in their investment portfolios, particularly when equity and bond investing has become somewhat commoditised in recent years with the onslaught of very cheap passive index trackers. This portfolio remains a blend of hard-to-access strategies and assets which most investors would find difficult to recreate. It also means that shorter-term returns may vary meaningfully from those of the benchmark.
* S&P 500, Euro Stoxx 50, Topix, MSCI Emerging Markets, FTSE All-Share indices, total returns, local currency, 30/09/17-31/03/19
Performance Contribution
Contribution Average weighting
Investment Category % %
--------------------- ------------- ------------------
Public Equity 1.3 17.7
Private Equity 1.6 30.8
Hedge Funds 0.2 20.9
Property 0.5 10.9
Credit 0.4 13.4
Commodities 0.2 2.3
Cash 0.0 4.0
--------------------- ------------- ------------------
All our investment categories delivered positive performance, led by both Private and Public Equity. Within the portfolio the largest individual contributor was Mantra Secondary Opportunities, which is a fund of secondary private equity funds. The first investment in this fund was made in 2014; since then, it has returned 58% of the capital originally invested and has generated an internal rate of return of 33.4% per annum. Public Equities had the tailwind of a rising stock market but notable returns came from EF Realisation Co Ltd, a special situation stock which looked undervalued compared to its underlying assets. The anomaly was recognised subsequently as such by the market with a strong boost to the share price. In the Hedge Fund category, the Blackrock European Hedge Fund continued to contribute strongly to returns by showing itself to be adept at managing a more volatile environment. Our Commodities strategy made a positive contribution over the period as a whole and was particularly robust in December 2018 when equity markets suffered steep falls. Within Property, CEIBA Investments Ltd and Summit Properties performed well; whilst in Credit our NB Distressed Debt holdings contributed to returns as more assets were realised and capital returned to investors.
On the debit side, the largest detractor from performance was Eurovestech, in the Private Equity category. The holding was marked down by roughly a third as a handful of shares were traded at an extremely large discount to the latest NAV. We believe this unwarranted markdown is more a reflection of the lack of liquidity in this de-listed stock, which only trades on a matched-bargain basis, rather than a reflection of the underlying investee companies' performance. Elsewhere, Riverstone Energy performed poorly as volatile oil prices hurt sentiment towards this investor in US shale oil and gas projects. Finally, in Hedge Funds, the Schroder GAIA Indus Pacifichoice Fund had a disappointing period of performance in tracking Asian equity markets downwards without offsetting any of the generalised market weakness.
Portfolio Activity
Private Equity
Within Private Equity, both Mantra Secondary Opportunities and Renewable Energy & Environmental Infrastructure Fund (REEIF) II drew down further capital, thus becoming larger positions over the course of the period. Both funds also wrote up the value of some of their holdings. Mantra is now past its investment period and is regularly realising investments, while REEIF's investment period ends in September 2019.
Having taken some profits in listed private equity names such as Standard Life Private Equity (now sold), Princess Private Equity and Harbourvest Global Private Equity early in the period, in order to reduce our sensitivity to general equity market moves, we took advantage of market volatility in the fourth quarter of 2018 to make a tactical investment in 3i Group. 3i is a leading private equity and infrastructure investor, focused on mid-market businesses in Europe and North America. We have followed the company for some time but have never felt comfortable investing at the high premium to NAV at which its shares have tended to trade. However, following a very constructive meeting with the company in June 2018, we were afforded the opportunity to buy shares amidst the general weakness in UK-listed stocks in January 2019, close to NAV, in contrast to an average premium in the previous 12 months of more than 20% (and which had reached 45% at one stage). We believe the firm is extremely well managed, the current portfolio has attractive growth opportunities and that portfolio valuations are conservative. Its key asset, the European discount retailer Action, continues to perform well and a realisation event is getting closer.
Public Equity
During December 2017 and January 2018 we built a position in Sigma Capital Group PLC, a UK-listed developer of private rental sector (PRS) housing in areas of the UK which require regeneration. Sigma was a 1.7% position at period end. It is rare for us to make direct company investments, but we believed Sigma represented an excellent opportunity. Sigma came to our attention as a result of our Multi-Asset desk's involvement in the GBP250 million IPO of PRS REIT plc during May 2017. PRS REIT is developing and acquiring a portfolio of PRS housing, mainly in northern and central England. Sigma manages PRS REIT's existing property portfolio, oversees PRS REIT's own development activities and also develops projects which may be offered to PRS REIT for purchase. Properties are typically new-build, two- to four-bedroom houses, for households with average incomes.
With high demand in the UK for competitively priced, good-quality PRS accommodation, PRS REIT is planning to raise substantially more capital over the next few years. This will clearly be a major financial boost for Sigma as the fund's manager will receive additional management and development fees. We believe that the market continues to undervalue Sigma's growth potential and the operational leverage within its business.
In early 2018 we invested tactically in three UK-listed infrastructure stocks: HICL Infrastructure Company Limited, 3i Infrastructure PLC and International Public Partnerships Limited. All three of these vehicles were impacted negatively in January 2018 by comments made by leading Labour Party figures regarding the possible "nationalisation" of PFI/PPP contracts under a future Labour government. Such an event would, in theory, result in material reductions in their NAVs. The comments triggered a sell-off across the listed infrastructure sector between January and March which, in our view, was overdone. Even if Labour did come to power, we believe it unlikely that such a government could finance the huge cost of buying out the contracts in question.
We added two new holdings during the October 2018 market sell-off. The Euro Stoxx 50 Dividend December 2022 futures contract was a 4.0% position at the period end. HAST made an attractive return from dividend futures in early 2016, when markets had also fallen sharply. Dividend futures are based on the amount of dividends paid out by the Eurozone's 50 largest firms. Dividends tend to be more predictable and stable than earnings (and much more so than share prices). Company managements are loath to cut dividends unless there is an extremely good reason to do so. Dividends also tend to grow in line with nominal GDP growth over time. However, from time to time, particularly during sharp market corrections, dividend future contracts can also fall sharply. This is usually a function of investment banks, which manufacture these products, de-risking in line with their volatility-driven risk models. The same event happened in October, although there was no major negative news flow on dividends. In fact, earnings in Europe have been decent, thereby indicating further increases in dividend pay-outs.
We chose to invest in the 2022 contract as it appeared to have a very attractive risk/return profile. Longer-dated contracts tend to behave similarly to equities but, as the contracts near maturity and the visibility over the actual level of the underlying dividend index becomes much clearer, this sensitivity falls dramatically. Our conservative forecast was for around 12% annualised returns until 2022. While the volatility of the contract might be similar to the Euro Stoxx 50 index for the next year or so, this will fall significantly thereafter. We also think that downside risk is limited, given that the contracts are already trading almost 50% below bottom-up forecasts for dividends in 2022 and around 20% lower than 2018 dividends.
We also added a position in litigation and arbitration finance provider Burford Capital. Burford has been operating in this hugely under-penetrated space since 2009 and is acknowledged as the market leader in the sector. Its success rate and returns on capital invested have been very impressive, and the company now has interests in thousands of cases, meaning that risks are highly diversified. We have been following the stock for a while and a 25% price correction for Burford, in the absence of any news, gave us a good entry opportunity. We see this as a non-cyclical investment in a small but rapidly growing alternative asset class.
Hedge Funds
There were no new investments made in Hedge Funds in the period, although we topped up our exposure to SAGIL Latin American Opportunities Fund, which briefly opened up to new investment but is now at capacity again. The fund managers have continued to add value in what has been a difficult period in Latin American markets. Meanwhile, we sold the Schroder GAIA Indus Pacifichoice Fund in early 2019, following sustained poor performance. We invested originally in the Indus fund in order to gain pan-Asian equity exposure but with the expectation that the fund would protect us against some of the market downside, given its flexibility to short stocks and indices. However, this proved not to be the case and, in fact, the fund underperformed Asian markets in 2018 and also lagged in the market rally of early 2019. We are currently finalising due diligence on a global macro hedge fund, which will bring the exposure in this category back up to previous levels.
Credit
Over the course of the period, we focused on taking profits in higher risk areas of credit as the market looked priced for perfection, with more downside risk than upside return potential. As such we exited Blackstone GSO Loan Financing, Chenavari Capital Solutions and Tetragon Financial Group, and reduced Chenavari Toro, as all of these had exposure to leveraged loans in one format or another. The NB Distressed Debt vehicles also returned capital over the period.
Property
In April 2018, we took part in a placing for listed UK warehouse fund Urban Logistics REIT PLC. This is a clear structural growth story with the exponential rise in online retail and, although a fairly well understood theme, we think that this niche and highly experienced manager has the wherewithal to continue to generate double-digit returns over the next few years from yield compression and good asset management.
Commodities
One of the largest new holdings was a commodity strategy, which represented 4.3% of NAV at the period end. This is a market-neutral strategy, meaning its returns are not dependent on commodity prices appreciating (or depreciating). It involves a purely systematic process which makes returns from various inefficiencies or "risk premia" in commodity futures markets. It is a strategy with which we are very familiar and which has generated attractive annualised returns over an extended number of years, with relatively low volatility and with minimal correlation to equities, bonds or commodities themselves.
Liquidity
Portfolio liquidity continued to improve over the period. Only 13.4% of the portfolio at period end lacks at least monthly liquidity. Moreover, 9.7% of this exposure is in the two private equity investments (Mantra and REEIF II). Mantra is returning cash regularly and, as mentioned above, REEIF II is approaching the end of its investment period. Meanwhile, in October 2018, our Cuban property fund CEIBA (5.8% of NAV at period end) listed on the Specialist Fund Segment of the Main Market of the London Stock Exchange. It managed to attract GBP30m of new capital and listed with a market capitalisation of c. GBP137m. These fresh funds will allow the company to undertake some new development and increase the potential returns of the portfolio at a time when Cuba is opening up to foreign investment. We also benefitted from liquidity or final distributions from various legacy holdings including Zouk Solar Opportunities Fund, Value Catalysts Fund and ASM Asian Recovery Fund.
Portfolio Classifications
As part of our drive to improve the transparency and clarity of the portfolio, we have decided to re-classify our portfolio holdings. By grouping our investments by commonly understood asset classes, we believe that investors will obtain a better sense of what is in the portfolio, its key drivers and sensitivities. Some classifications will remain unchanged, such as Private Equity, Hedge Funds and Property. We now also include Commodities, Public Equity and Credit, while jettisoning the less helpful categories of Specialist Sector and Specialist Geography.
While Public Equity and Credit are not alternative asset classes, the composition of these sectors will vary greatly from traditional allocations to equities and bonds. Here our focus is on niche strategies and sectors, often managed by very focused specialists, or in more tactical areas of the broader market, where we see particular value and/or a catalyst. These investments are, however, equities and bonds and it is important to describe them as such to enable our investors to understand our portfolio's sensitivity to key factors such as earnings growth, market multiples, credit spreads and interest rates.
These changes have no impact on any of our portfolio maximum limits, which remain in place at: 35% in Private Equity; 30% in Hedge Funds; 20% in Property or any other sector; and 50% in Emerging Markets.
Outlook
As we write, it appears that there is much good news priced into equities and bonds. It does not follow necessarily that prices should fall from here but it does mean that the good news needs to continue for markets to make fresh highs. Certainly, the Federal Reserve's decision to put interest rate rises on hold was a large and unexpected fillip for markets in early 2019 as there was not much good news coming from elsewhere. Economic data was decidedly soggy and earnings were being downgraded across the board. Hence the sharp rally in markets was surprising and happened even as investors continued to pull money out of equity mutual funds, despite cash levels remaining historically on the high side. Moreover, bond yields fell sharply, thereby suggesting that the growth outlook was deteriorating significantly. It is very unusual for bond yields to fall and equities to rally sharply simultaneously. Either bond investors are too pessimistic or equity investors are too optimistic. Historically, it has been the bearish bond buyers who have been right more often than equity buyers.
As mentioned at the outset, we do not make market forecasts and we will not start now. We believe some caution is warranted. We believe similarly that we have adequate risk exposure across our six categories, in areas that would benefit from an ongoing environment of positive market sentiment. We, however, are not wholly reliant on such a scenario. We will continue to take profits in assets that are looking more fully valued and recycle the proceeds advantageously into more attractive areas where we identify improving fundamentals. We will also continue to search for less correlated strategies which will provide ballast in more volatile market episodes. We do not need a crystal ball to be confident that there will be more of those around the corner and volatility normally provides opportunity.
James de Bunsen and Peter Webster
Fund Managers
21 June 2019
INVESTMENT PORTFOLIO
Market
Value Portfolio
Investments Focus GBP'000 %
-------------------------------------------------------------------- ------------------ --------- -----------
Mantra Secondary Opportunities(4) Private Equity 7,960 7.0
Ceiba Investment Limited(1) Property 7,246 6.4
Blackrock European Hedge Fund Limited(3) Hedge Funds 7,038 6.2
Bank of America Merrill Lynch Commodity(2) Commodities 5,783 5.1
Renewable Energy & Environmental Infrastructure
Fund II(4) Private Equity 5,593 5.0
Kls Sloane Robinson Emerging Market Equity
Fund(3) Public Equity 5,446 4.8
Majedie Asset Management Tortoise Fund(3) Hedge Funds 5,183 4.6
Sagil Latin America Opportunities Fund(3) Hedge Funds 4,881 4.3
Baring Vostok Investments Limited Core(2) Private Equity 4,725 4.2
Summit Properties(1) Property 4,621 4.1
-------------------------------------------------------------------- ------------------ --------- -----------
Ten largest 58,476 51.7 Helium Selection Fund(3) Hedge Funds 4,368 3.9 Ashmore SICAV Emerging Markets Local Currency Bond Broad Fund(3) Credit 4,001 3.5 Worldwide Healthcare Trust PLC(1) Public Equity 3,967 3.5 Safeguard Scientfics Inc(1) Private Equity 3,946 3.5 Riverstone Energy Limited(1) Private Equity 3,841 3.4 Harbourvest Global Private Equity Limited(1) Private Equity 3,837 3.4 NB Distressed Debt Investment Fund Limited - Global Shares(1) Credit 2,856 2.5 Urban Logistics REIT PLC(1) Property 2,837 2.5 Axiom European Financial Debt Fund Limited(1) Credit 2,797 2.5 3i Group Limited(1) Private Equity 2,688 2.4 Twenty largest 93,614 82.8 Burford Capital Limited(1) Public Equity 2,646 2.4 Ashmore SICAV Emerging Markets Short Duration Fund(3) Credit 2,612 2.3 Eurovestech plc(2) Private Equity 2,343 2.1 Princess Private Equity Holding Limited(1) Private Equity 2,276 2.0 Sigma Capital Group PLC(1) Public Equity 2,136 1.9 Toro Limited(1) Credit 1,719 1.5 Century Capital Partners IV L.P.(4) Private Equity 1,487 1.3 Firebird Republics Fund SPV(4) Private Equity 1,285 1.1 Amber Trust SCA(4) Private Equity 1,229 1.1 NB Distressed Debt Investment Fund Limited - Extended Life Shares(1) Credit 765 0.7 -------------------------------------------------------------------- ------------------ --------- ----------- Thirty largest 112,112 99.2 ASM Asian Recovery Fund(4) Hedge Funds 698 0.6 Vix Call Options June 19(1) Public Equity 134 0.1 Armadillo Investments Limited(4) Private Equity 70 0.1 Other investments Various 0 0.0 Total Investments 113,014 100.0 ---------------------------------------------------------------------------------------- --------- ----------- 1. Listed on major market (includes London Stock Exchange (full listing and AIM), Euronext and CBOE) 2. Listed on minor market (includes Luxembourg Stock Exchange, Channel Islands Stock Exchange, ISDX and LMMX) 3. Unlisted investment - with redemption rights 4. Unlisted investment - without redemption rights
PRINCIPAL RISKS
The Board, with the assistance of Janus Henderson, has carried out a robust assessment of the principal risks facing the Company including those that would threaten its business model, future performance, solvency or liquidity. In carrying out this assessment, the Board has considered the market uncertainty arising from the UK's negotiations to leave the EU. The Board has drawn up a matrix of risks and has put in place a schedule of Investment Limits and Restrictions appropriate to the Company's Investment Objective and Policy, in order to mitigate these risks as far as practicable. The significant risks facing the continuing operations of the Company are summarised below:
Risk Controls and mitigation
-----------------------------------------------------
Investment Strategy and
Performance The Board monitors investment performance at
Poor investment performance each meeting and the Fund Managers are committed
to maintaining a diversified portfolio. Market
Failure of the Manager risk is mitigated through the activities set
out in note 15 to the financial statements.
Loss of Fund Manager or
management team The Board seeks assurances that the Manager
maintains and tests business continuity plans
to ensure operations can be maintained in the
event of a business disruption.
The Board seeks assurances from the Managers
that the Multi-Asset team is suitable resourced
and that the Fund Manager are appropriately
remunerated and incentivised in their roles.
------------------------------ -----------------------------------------------------
Regulatory/Operational
Failure of a key third-party The Board receives regular reporting from its
service provider key third-party service providers.
Breach of internal controls The Audit Committee reviews the independently
Loss of s.1158 status audited reports on the effectiveness of internal
controls in place at each of its key third-party
Breach of company law or service providers, monitors compliance with
Listing Rules resulting the investment mandate and receives quarterly
in suspension internal control reports from the Manager and
quarterly reports from the depositary on the
safe custody of the Company's assets.
The Manager regularly reviews and reports on
compliance with s.1158.
------------------------------ -----------------------------------------------------
Discount
The Company's shares trade The Board monitors the level of the Company's
at an increasingly wide discount to NAV per share and reviews the average
discount to NAV NAV for the AIC Flexible Investment sector
at each meeting.
The Board regularly reviews with the Fund Managers
and the Company's brokers measures to maintain
demand in the Company's shares, including a
full range of discount control mechanisms.
------------------------------ -----------------------------------------------------
The Board considers these risks to have remained unchanged throughout
the year under review.
Brexit
The Board has considered the potential effects on the Company of the possible
exit of the United Kingdom from the EU ('Brexit'). The main exposures
are related to potential currency volatility affecting the value of the
Company's holdings until the matter if finally determined.
VIABILITY STATEMENT
The directors have assessed the viability of the Company over a three year period, taking account of the Company's current position and the potential impact of the principal risks and uncertainties as documented in this Strategic Report. The assessment has considered the possible impact of the likelihood of the principal risks and uncertainties facing the Company, in particular the investment strategy risk, and the likelihood of their materialising in severe but plausible scenarios, and the effectiveness of any mitigating controls in place.
The directors took into account the nature of the investment portfolio, including its liquidity, redemption restrictions that exist on certain investments, and the income stream that the current portfolio generates in considering the viability of the Company over the next three years and its ability to meet liabilities as they fall due.
The directors conducted this review for a period of three years as they consider this to be an appropriate period over which they do not expect there to be any significant change in the current principal risks and in the adequacy of the mitigating controls. The directors do not envisage any change in the Investment Objective or Policy, or any events that would prevent the Company from continuing to operate over that period as the Company's assets are sufficiently liquid, its commitments are limited and the Company intends to continue to operate as an investment trust. A substantial financial crisis affecting the global economy could have an impact on this assessment.
The ongoing operation of the Company is subject to a continuation vote every three years, with the next vote due to take place in 2020. In the event such a vote was not passed, the Directors would follow the provisions in the Articles of Association relating to the winding up of the Company and the realisation of its assets.
Based on this assessment, the directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the next three-year period.
STATEMENT OF DIRECTORS' RESPONSIBILITIES UNDER DTR 4.1.12
Each of the directors confirms that, to the best of their knowledge:
-- the financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards comprising FRS 102 and applicable law), give a true and fair view of the assets, liabilities, financial position and profit of the Company; and
-- the annual report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.
For and on behalf of the Board
Graham Oldroyd
Director
21 June 2019
INCOME STATEMENT
18 months ended Year ended
31 March 2019 30 September 2017
Revenue Capital Revenue Capital
return return Total return return Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- --------------------------- --------- --------- ---------- --------- --------- ----------
Gains on investments at
fair value through profit
or loss - 2,285 2,285 - 11,684 11,684
Exchange differences - 32 32 - (55) (55)
2 Investment income 3,312 - 3,312 2,644 - 2,644
--------- --------- ---------- --------- --------- ----------
Gross revenue and capital
gains 3,312 2,317 5,629 2,644 11,629 14,273
Investment management
3 fees (247) (989) (1,236) (91) (821) (912)
4 Other expenses (611) - (611) (442) - (442)
--------- --------- ---------- --------- --------- ----------
Net return before finance
costs and taxation 2,454 1,328 3,782 2,111 10,808 12,919
Finance costs - (1) (1) - (1) (1)
--------- --------- ---------- --------- --------- ----------
Net return before taxation 2,454 1,327 3,781 2,111 10,807 12,918
5 Taxation - - - (15) - (15)
--------- --------- ---------- --------- --------- ----------
7 Net return after taxation 2,454 1,327 3,781 2,096 10,807 12,903
--------- --------- ---------- --------- --------- ----------
7 Return per ordinary share 6.34p 3.43p 9.77p 5.23p 26.97p 32.20p
--------- --------- ---------- --------- --------- ----------
The Total columns of this statement represent the Income Statement of the Company. The Revenue return and Capital return columns are supplementary to this and are prepared under guidance published by the AIC. The Company had no recognised gains or losses other than those recognised in the Income Statement. No operations were acquired or discontinued in the year. All revenue and capital items in the above statement derive from continuing operations.
STATEMENT OF CHANGES IN EQUITY
18 months ended 31 March 2019
Share premium Capital
Share account redemption Capital Revenue
capital GBP'000 reserve reserve reserve Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------- --------------------- ---------- -------------- ------------ ---------- ---------- ----------
Balance at 1 October
2017 9,670 10,966 8,783 97,255 3,068 129,742
Net return after
taxation - - - 1,327 2,454 3,781
6 Ordinary dividends - - - - (3,771) (3,771)
---------- -------------- ------------ ---------- ---------- ----------
Balance at 31
March 2019 9,670 10,966 8,783 98,582 1,751 129,752
---------- -------------- ------------ ---------- ---------- ----------
Year ended 30 September 2017
Share premium Capital
Share account redemption Capital Revenue
capital GBP'000 reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ---------- -------------- ------------ ---------- ---------- ----------
Balance at 1 October
2016 10,744 10,966 7,709 99,507 3,722 132,648
Net return after
taxation - - - 10,807 2,096 12,903
Shares bought
back - tender
offer (1,074) - (1,074) (13,059) - (13,059)
6 Ordinary dividends - - - - (2,750) (2,750)
---------- -------------- ------------ ---------- ---------- ----------
Balance at 30
September 2017 9,670 10,966 8,783 97,255 3,068 129,742
---------- -------------- ------------ ---------- ---------- ----------
STATEMENT OF FINANCIAL POSITION
31 March 2019 30 September 2017
Notes As at 30 September GBP'000 GBP'000
-------- --------------------------------------- -------------- ------------------
Fixed Assets
Investments held at fair value through
profit or loss 113,014 123,690
Current assets
Investments held at fair value through
profit or loss 14,810 4,718
Debtors 2,600 1,545
Cash and cash equivalents - 155
Total current assets 17,410 6,418
-------------- ------------------
Creditors: amounts falling due within
one year (672) (366)
Net current assets 16,738 6,052
-------------- ------------------
Total assets less current liabilities 129,752 129,742
-------------- ------------------
Capital and reserves
8 Share capital 9,670 9,670
Share premium account 10,966 10,966
Capital redemption reserve 8,783 8,783
Capital reserve 98,582 97,255
Revenue reserve 1,751 3,068
-------------- ------------------
Total equity shareholders' funds 129,752 129,742
-------------- ------------------
7 Net asset value per ordinary share 335.46p 335.44p
The financial statements were approved and authorised for issue by the Board of Directors on 20 June 2019.
Graham Oldroyd
Director
21 June 2019
CASH FLOW STATEMENT
18 months ended Year ended
31 March 2019 30 September
GBP'000 2017 GBP'000
------------------------------------------------ --------------- --------------
Cash flows from operating activities
Net return before taxation 3,781 12,918
Add back: finance costs 1 1
Gains on investments held at fair value through
profit or loss (2,285) (11,684)
Withholding tax on dividends deducted at source - (15)
Increase in prepayments and accrued income (867) (381)
Increase in other creditors 283 32
Exchange movements: cash and cash equivalents 8 -
--------------- --------------
Net cash inflow from operating activities 921 871
--------------- --------------
Cash flows from investing activities
Purchases of investments held at fair value
through profit or loss (31,458) (36,122)
Sales of investments held at fair value through
profit or loss 44,231 33,068
Purchases of current asset investments held
at fair value through profit or loss (43,283) (27,631)
Sales of current asset investments held at fair
value through profit or loss 33,191 45,781
--------------- --------------
Net cash inflow from investing activities 2,681 15,096
--------------- --------------
Cash flows from financing activities
Shares bought back - (13,059)
Equity dividends paid (3,771) (2,750)
Interest paid (1) (1)
Net cash outflow from financing activities (3,772) (15,810)
Net (decrease)/increase in cash and equivalents 170 157
Cash and cash equivalents at beginning of year 155 (2)
Exchange movements (8) -
(Bank overdraft)/cash and cash equivalents (23) 155
NOTES TO THE FINANCIAL STATEMENTS
1 Accounting Policies
Basis of preparation
The Company is a registered investment company as defined in Section
833 of the Companies Act 2006 and is incorporated in the United Kingdom.
It operates in the United Kingdom and is registered at the address
set out in the annual report.
The financial statements have been prepared in accordance with the
Companies Act 2006, FRS 102 - the Financial Reporting Standard applicable
in the UK and Republic of Ireland and the Statement of Recommended
Practice 'Financial Statements of Investment Trust Companies and
Venture Capital Trusts' ("SORP") issued in November 2014 and updated
in February 2018 for consequential amendments.
The principal accounting policies applied in the presentation of
these financial statements are set out below. These policies have
been consistently applied to all the years presented. There have
been no significant changes to the accounting policies compared to
those set out in the Company's Annual Report for the year ended 30
September 2017.
The financial statements have been prepared under the historical
cost basis except for the measurement at fair value of investments.
In applying FRS 102, financial instruments have been accounted for
in accordance with Sections 11 and 12 of the Standard. All of the
Company's operations are of a continuing nature.
On 26 February 2018, the Company announced that it was changing its
financial year end from 30 September to 31 March with the aim of
aligning more closely its reporting cycle to the receipt of valuations
from the unquoted funds and other unlisted investments held in the
portfolio. Therefore, the current financial accounting period for
which financial statements have been prepared has been extended to
an 18 month period ending on 31 March 2019. The comparative amounts
presented in the financial statements (including the related notes)
are therefore not entirely comparable.
Going concern
Having considered the Company's Investment Objective, risk management
and capital management policies, the nature of the portfolio and
expenditure projections, 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, the principal risks and other matters
discussed in connection with the viability statement, the Board has
determined that it is appropriate for the financial statements to
be prepared on a going concern basis.
18 months ended Year ended
31 March 2019 30 September 2017
2 Investment Income GBP'000 GBP'000
--------------------------------------------------------------- ---------------- -------------------
Income from equity shares and securities
UK investment income 352 286
Overseas income 2,843 2,297
Property income distributions 75 32
---------------- -------------------
3,270 2,615
---------------- -------------------
Other income
Interest from money market funds 40 27
Other income 2 2
---------------- -------------------
42 29
---------------- -------------------
Total income 3,312 2,644
---------------- -------------------
18 months ended Year ended
3 Investment Management 31 March 2019 30 September 2017
Fees GBP'000 GBP'000
-------------------------------------------------------------- ---------------- -------------------
Revenue
Investment management
fee 247 91
Capital
Investment management
fee 989 821
----------------
Total 1,236 912
---------------- -------------------
With effect from 1 October 2017, investment management fees and finance
costs are allocated 80% to capital and 20% to revenue. Fees had previously
been allocated 90% to capital and 10% to revenue. This change reflects
the Company's revised view of the appropriate long-term revenue/capital
allocation.
For the period 1 October 2017 to 21 March 2018, the management fee
was charged at a rate of 0.70% per annum, payable quarterly in arrears
based on the net asset value at the relevant quarter end. With effect
from 1 April 2018, the rate was reduced to 0.60% per annum on the
first GBP250,000,000 of the net asset value and 0.55% per annum in
excess thereof.
18 months ended Year ended
31 March 2019 30 September 2017
4 Other Expenses GBP'000 GBP'000
---------------------------------------------------------------- ---------------- -------------------
Revenue
General expenses 357 263
Directors' fees 165 107
Auditor's remuneration - fees payable
to the Company's auditor for the audit
of the Company's annual accounts(1) 39 38
Depositary charges 50 34
---------------- -------------------
611 442
---------------- -------------------
1 These figures include VAT. Fees for audit services excluding VAT
were GBP32,300 (2015: GBP31,450).
5 Taxation
a) Analysis of the charge for the period
18 months ended Year ended
31 March 2019 30 September 2017
GBP'000 GBP'000
---------------------------------------------------------------- ---------------- -------------------
Overseas withholding taxes - 30
Overseas tax reclaimable - (15)
Total taxation charge for the period - 15
---------------- -------------------
b) Factors affecting the tax charge for the period
18 months ended Year ended
31 March 2019 30 September 2017
GBP'000 GBP'000
---------------------------------------------------------------- ---------------- -------------------
Net return on before taxation 3,781 12,918
---------------- -------------------
Corporation tax 19.0% (2017: 19.5%) 718 2,519
Non-taxable dividends (512) (461)
Non-taxable gains on investments (92) (2,278)
Gains on disposal of non-qualifying
offshore funds - 8
Movement in unutilised management
expenses (108) 201
Non-taxable currency losses (6) 11
Overseas withholding tax - 15
Total taxation charge for the period - 15
---------------- -------------------
The Company's profit for the accounting year is taxed at an effective
rate of 19.0% (2017: 19.5%).
The Company is subject to taxation on gains arising from the realisation
of investments in non-qualifying offshore funds but is otherwise
exempt from taxation on chargeable gains. Excess management expenses
are available to be offset against future taxable profits including
any profits on the disposal of interests in non-qualifying offshore
funds. The position at the period-end is as follows:
18 months ended Year ended
31 March 2019 30 September 2017
GBP'000 GBP'000
---------------------------------------------------------------- ---------------- -------------------
Excess management expenses 7,722 6,494
Unrealised appreciation on non-qualifying
offshore funds (6,632) (4,833)
Excess management expenses 1,090 1,661
---------------- -------------------
No provision for deferred taxation has been made in the current or
prior accounting year. The Company has not provided for deferred
tax on capital gains or losses arising on the revaluation and disposal
of investments, as it is exempt from tax on these items because of
its investment trust status, except for those arising from the realisation
of investments in non-qualifying offshore funds. The Company has
not recognised a deferred tax asset totalling GBP185,000 (2017: GBP282,000)
based on a prospective corporation tax rate of 17% (2017: 17%). The
deferred tax asset arises as a result of having unutilised management
expenses in excess of unrealised appreciation on non-qualifying offshore
funds. These expenses will only be utilised, to any material extent,
if the Company has profits chargeable to corporation tax in the future,
because changes are made to the tax treatment of the capital gains
made by investment trusts, where disposals of non-qualifying offshore
funds would otherwise result in a tax charge or there are other changes
to the Company's investment profile which require them to be used.
18 months ended Year ended
31 March 2019 30 September 2017
6 Dividends on equity shares GBP'000 GBP'000
---------------------------------------------------------------- ---------------- -------------------
2016 special dividend 2.60p - 1,117
2017 final dividend paid 4.75p (2016:
3.80p) 1,837 1,633
2019 interim dividend 5.00p 1,934 -
---------------- -------------------
3,771 2,750
---------------- -------------------
The proposed final dividend of 2.50 per share is subject to approval
by shareholders at the annual general meeting and has not been included
as a liability in these financial statements. This dividend of GBP967,000,
combined with the interim dividend of 5.00p per ordinary share paid
on 31 January 2019, together totalling GBP2,901,000 (2017: GBP1,837,000)
is the basis on which the requirements of s.1158 of the Corporation
Tax Act 2010 are considered. The revenue available for distribution
by way of dividend for the period is GBP2,454,000 (2017: GBP2,096,000).
All dividends have been paid or will be paid out of revenue profits
or the revenue reserve.
7 Returns/Net asset value per Ordinary Share
---------------------------------------------------------------- ---------------- -------------------
The return per ordinary share is based on the net return attributable
to the ordinary shares of GBP3,781,000 (2017: GBP12,903,000) and
on 38,678,638 ordinary shares (2017: 40,068,008) being the weighted
average number of ordinary shares in issue during the period. The
return per ordinary share can be further analysed between revenue
and capital, as below:
18 months ended Year ended
31 March 2019 30 September 2017
GBP'000 GBP'000
---------------------------------------------------------------- ---------------- -------------------
Net revenue return 2,454 2,096
Net capital return 1,327 10,807
---------------- -------------------
Net total return 3,781 12,903
---------------- -------------------
Weighted average number of ordinary
shares in issue during the period 38,678,638 40,068,008
18 months ended Year ended
31 March 2019 30 September 2017
Pence Pence
---------------------------------------------------------------- ---------------- -------------------
Revenue return per ordinary share 6.34 5.23
Capital return per ordinary share 3.43 26.97
---------------- -------------------
Total return per ordinary share 9.78 32.20
---------------- -------------------
The Company does not have any dilutive securities. Therefore, the
basic and diluted returns per share are the same.
The net asset value per share is based on the net assets of GBP129,752,000
(2017: GBP129,742,000) divided by the number of shares in issue at
the end of the period, 38,678,638 (2017: 38,678,638). The net asset
value per ordinary share at 31 March 2019 was 335.46p (2017: 335.44p).
The movements during the period of the assets attributable to the
ordinary shares were as follows:
18 months ended Year ended
31 March 2019 30 September 2017
GBP'000 GBP'000
---------------- -------------------
Total net assets at 1 October 129,742 132,648
Total net return after taxation 3,781 12,903
Ordinary dividends paid in the period (3,771) (2,750)
Ordinary shares bought back - tender
offer - (13,059)
---------------- -------------------
Net assets attributable to the ordinary
shares at 30 September 129,752 129,742
---------------- -------------------
Nominal value of
total shares in
issue
8 Share capital Shares in issue GBP'000
---------------------------------------------------------------- ---------------- -------------------
Allotted, issued and fully paid ordinary
shares of 25p
At 1 October 2017 38,678,638 9,670
Shares bought back and cancelled - -
---------------- -------------------
At 31 March 2019 38,678,638 9,670
---------------- -------------------
Allotted, issued and fully paid ordinary
shares of 25p
At 1 October 2016 42,976,264 10,744
Shares bought back and cancelled (4,297,626) (1,074)
At 30 September 2017 38,678,638 9,670
---------------- -------------------
In January 2017, a tender offer, for up to 10% of the Company's shares,
was fully subscribed. As a result, 4,297,626 ordinary shares were
bought back and subsequently cancelled. The cost of the purchases
amounted to GBP12,952,000 and a further GBP107,000 of costs were
incurred in connection with the tender offer. The total costs of
GBP13,059,000 were charged to Capital Reserve.
No shares were bought back in the period to 31 March 2019 or in the
period to 20 June 2019 subsequent to the year-end.
Every shareholder has the right to one vote for each share held.
9 Related party transactions
Other than the relationship between the Company and its directors,
the provision of services by the Manager is the only related party
arrangement currently in place as defined in the Listing Rules. 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 this related party affecting the financial position
of the Company during the year under review.
10 2019 Financial statements
The figures and financial information for the 18 months ended 31
March 2019 are compiled from an extract of the latest financial statements
of the Company and do not constitute the statutory accounts for that
year. Those financial statements included the report of the auditors
which was unqualified and did not contain a statement under either
section 498(2) or section 498(3) of the Companies Act 2006. They
have not yet been delivered to the Registrar of Companies.
11 2017 Financial statements
The figures and financial information for the year ended 30 September
2017 are compiled from an extract of the published financial statements
of the Company and do not constitute the statutory accounts for that
year. Those financial statements have been delivered to the Registrar
of Companies and included the report of the auditors which was unqualified
and did not contain a statement under either section 498(2) or section
498(3) of the Companies Act 2006.
12 Dividend
The final dividend, if approved by the shareholders at the annual
general meeting, of 2.50p per ordinary share will be paid on 2 August
2019 to shareholders on the Register of Members at the close of business
on 12 July 2019. The Company's shares will be traded ex-dividend
on 11 July 2019.
13 Annual Report
Copies of the Annual Report for the 18 months ended 31 March 2019
will be posted to shareholders in December and will be available
on the Company's website www.hendersonalternativestrategies.com or
in hard copy from the Corporate Secretary, Henderson Secretarial
Services Limited, 201 Bishopsgate, London EC2M 3AE.
14 Annual General Meeting
The annual general meeting will be held on Thursday 25 July 2019
at 11.30am at 201 Bishopsgate, London EC2M 3AE.
For further information please contact:
James de Bunsen James de Sausmarez Fund Manager Director and Head of Investment Henderson Alternative Strategies Trusts Trust plc Henderson Investment Funds Limited Telephone: 020 7818 3869 Telephone: 020 7818 3349 Peter Webster Laura Thomas Fund Manager Investor Relations and PR Manager Henderson Alternative Strategies Henderson Investment Funds Limited Trust plc Telephone: 020 7818 2636 Telephone: 020 7818 6116
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) is incorporated into, or forms 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.
END
FR CKDDKPBKDBAB
(END) Dow Jones Newswires
June 21, 2019 11:15 ET (15:15 GMT)
1 Year Henderson Alternative St... Chart |
1 Month Henderson Alternative St... Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
