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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Henderson Far East Income Limited | LSE:HFEL | London | Ordinary Share | JE00B1GXH751 | ORD NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 2.50 | 1.07% | 235.50 | 235.00 | 236.50 | 236.50 | 234.50 | 235.00 | 371,704 | 16:35:13 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Trust,ex Ed,religious,charty | -46.86M | -56.24M | -0.3451 | -6.84 | 384.58M |
From May 2019 to May 2024
TIDMHFEL
RNS Number : 5310L
Henderson Far East Income Limited
19 April 2018
Legal Entity Identifier: 2138008DIQREOD38O596
HERSON FAR EAST INCOME LIMITED
Unaudited Results for the Half-Year ended 28 February 2018
This announcement contains regulated information
Hot Features
Premium
Financial Highlights As at As at
28 February 31 August
2018 2017
------------------------------ --------------- ---------------
Net asset value per ordinary
share 369.93p 375.19p
Share price 369.00p 380.00p
Net assets GBP449,196,000 GBP442,482,000
(Discount)/premium (0.3%) 1.3%
Total return performance 6 months 1 year 3 years 5 years
% % % %
----------------------------------- --------- ------- -------- --------
Net asset value total return(1) 1.4 11.2 35.0 39.4
FTSE All-World Asia Pacific
ex Japan Index (total return)(2) 2.5 13.4 44.6 53.5
FTSE All-World Asia Pacific
Index (total return)(3) 4.2 12.2 47.6 66.1
Share price total return(4) (0.2) 11.0 32.1 39.5
Dividends paid during the period
---------------------------------- -----
Fourth interim (paid 30 November
2017) 5.3p
First interim (paid 28 February
2018) 5.3p
(1) Net asset value (NAV) total return (including dividends reinvested)
(2) FTSE All-World Asia Pacific ex Japan Index (sterling adjusted), for comparison purposes (including dividends reinvested)
(3) FTSE All-World Asia Pacific (sterling adjusted), for comparison purposes (including dividends reinvested)
(4) Share price total return (including dividends reinvested)
The Company does not have a formal benchmark. It uses the FTSE All-World Asia Pacific ex Japan Index (sterling adjusted) for reference purposes only.
Sources: Morningstar for the AIC, Datastream
INTERIM MANAGEMENT REPORT
Chairman's Statement
In recent months we have benefited from renewed investor interest in the Asia Pacific region primarily as a result of renewed global confidence in the outlook for Asian economies as compared to the US and the UK. The flow of funds from west to east has been significant and your Company has shared in this trend with a higher level of new share issuance at a premium to net asset value which benefits all shareholders.
Performance
In the six months to 28 February 2018, the net asset value total return of the Company was 1.4% whilst the share price total return was -0.2% reflecting the reduction in the premium to net asset value at which the shares have traded over the period. The FTSE All-World Asia Pacific ex Japan Index returned 2.5% over the same period as growth stocks continued to outperform value and yield.
Dividends
On 30 November 2017, the Company paid a fourth interim dividend of 5.30p per share in respect of the year ended 31 August 2017 making a total of 20.8p for the year, an increase of 4.0% over the previous year. In respect of the current financial year, a first interim dividend of 5.30p per share was paid on 28 February 2018 and a second interim dividend of the same amount was declared on 19 April 2018 and will be paid on 31 May 2018. Your Board remains confident that it will at least be able to maintain the level of total dividends in this financial year.
Material Events or Transactions
A total of 3,493,000 new shares were issued in the six months to 28 February 2018 at a premium to net asset value, thereby enhancing the net asset value per share. Your Board will continue to issue shares where it is NAV enhancing for shareholders to do so. Since the period end a further 900,000 shares have been issued.
In February of this year the Company's GBP35m revolving multi-currency loan facility with Commonwealth Bank of Australia expired and was replaced with a new GBP45m facility with Sumitomo Mitsui Banking Corporation. At the period end GBP32.7m had been drawn down.
Outlook
Weaker and more volatile global markets are reflecting concerns about geopolitical issues that threaten global economic growth, prosperity and peace. Recent changes in the staffing of the US Administration have signalled further moves in the direction of trade restrictions and a more aggressive foreign policy. Much of the world is committed to free trade thus creating significant tensions with a protectionist US. How this will play out is not possible to predict. China's response to US imposed tariffs is probably the best indicator of the likely outcome. The EU and China will respond with their own tariffs on US imports and the negative effects on the US will be forthcoming. This will be a difficult call for China and their political and diplomatic skills will largely drive the outcome. If the response is too soft there will be negative reactions in China, if too strong it may prompt an even more aggressive US response. Overall it still seems likely that a level of compromise will be reached. Failure to do so will have negative repercussions everywhere. So far US tariff increases appear to have had a minimal impact on global growth but the Company's portfolio has maintained a high domestic focus as a cushion in the event that further measures are implemented. Despite these uncertainties Asian earnings have shown continual upgrades over the past year and the underlying fundamentals of the region continue to improve providing attractive opportunities for investors.
John Russell
Chairman
19 April 2018
Fund Manager's Report
Review
Asia Pacific ex Japan markets continued their strong performance over the six months to February 2018, although the returns were mitigated by the strength of sterling. The FTSE All World Asia Pacific ex Japan index returned 8.7% in local currency terms (2.5% in sterling terms) as global and regional economic strength, combined with a positive corporate earnings trajectory, pushed markets higher.
In a period dominated by political and geopolitical uncertainty the positive returns generated are encouraging and reflect an improvement in the underlying fundamentals of the Asia Pacific region. For the first time since 2009 Asian earnings have seen continual upgrades which has helped Asia Pacific ex Japan outperform its developed market peers. Earnings growth in excess of 20% was witnessed for 2017 and, encouragingly, this momentum has continued, with mid teen earnings growth forecast for both 2018 and 2019.
The best performing market was Thailand which rose 14.9% in sterling terms as the strength of the energy sector outweighed uncertainty concerning subdued economic growth, high levels of bad debt within the banking sector and uncertainty over next year's elections. After a sustained period of underperformance Malaysia outperformed helped by the recovery in the oil price, as Malaysia is the only oil exporter in the region. In addition Malaysia is seen as a key spoke in the wheel of China's One Belt One Road policy and a primary beneficiary of Chinese inbound investment. Singapore completed the list of ASEAN outperformers as the economy is showing signs of recovery especially in the shipping and oil services sector while property prices are beginning to improve following a prolonged period of government policy inspired weakness.
The Chinese market again outperformed its regional peers. The 19(th) communist party congress in October 2017 heralded the start of Xi Jinping's second 5 year term and reinforced the policies from his first term. In his three hour long speech Xi outlined his desire to remove poverty by 2021 and to turn China into a fully developed nation by 2049. Policies to reform the state owned enterprises, counter corruption, improve the environment and promote Chinese goods both at home and abroad were at the centre of these ambitions while the One Belt One Road initiative would increase China's standing both regionally and globally.
The worst performing market was India where the February 2018 budget received a mixed response as the government attempted to balance the need for increased spending on infrastructure against the demands of a higher oil price. The target fiscal deficit of 3.3% of GDP rose from 3% in 2017/18 and caused some concern when based on an oil price some way below the current level. This, combined with the possibility of increased government spending leading into key state elections, caused some weakness in the rupee.
Technology was the standout performer at the sector level. Tencent, the Chinese social media, gaming and e-commerce behemoth rose considerably over the period, dominating returns. Defensive sectors underperformed with telecoms in particular lagging.
Performance
Over the period the NAV total return was 1.4% in sterling terms, just over 1% behind the index performance. The biggest contributor to underperformance was style with growth continuing to outperform value and yield. Companies like Tencent epitomise the growth style, with strong earnings growth, high valuations and zero dividend yield and as a result do not suit this Company's style or objectives. In addition, with interest rates rising the appetite for stocks with high yields reduces impacting the Company's holdings of telecoms and real estate property trusts.
Despite these style headwinds there were some notable successes at the stock level. PTT, the Thai energy company rose 42% while Dali Foods (34%), Anhui Conch Cement (34%) and Huayu Automotive (22%) in China all significantly outperformed the country and regional indices.
Revenue and Dividends
The Company's revenue is down 5% compared to the same period last year. The 6% rise in sterling during the period is the main cause but there is also a contribution from portfolio mix. At this time last year the Company had a higher weighting to Australia which partly pays dividends in the Company's first half while in 2018 the portfolio is more exposed to China which pays dividends mostly in the Company's second half. In summary the Company's revenue which is usually split one-third to two-thirds in favour of the second half is more back-end weighted in this financial year.
The dividend story for Asia remains a compelling one. Strong earnings growth and cash flow generation are resulting in more progressive dividend policies from the companies we invest in and the market in general. In the last six months Korean companies in particular such as Samsung Electronics, KB Financial and Macquarie Korea Infrastructure have announced higher dividends than the market was expecting which has been beneficial for the Company's revenue but also for capital performance as these announcements were well received by the market.
Activity
The increase in weighting in China was partly due to market performance but also due to the addition of a few new names. Over the period we added energy company Petrochina, cement company Anhui Conch, Agricultural Bank of China and, finally, software outsourcer and cloud developer Chinasoft. These purchases are a mixture of private and state owned enterprises which we believe are beneficiaries of underlying growth trends and reform. These investments were partly funded by the sales of Jiangsu Expressway and China Mobile.
Elsewhere we added BHP Billiton to the portfolio in expectation of more efficient capital management and higher dividends and also added another oil refiner - S-Oil of South Korea. After a number of years with zero weighting in Malaysia we added Public Bank to the portfolio as a beneficiary of the improving economic environment.
These purchases were funded by the sales of CTCI, Powertech and Quanta Computer in Taiwan and a reduction in the position in Samsung Electronics following a very strong period of performance.
Outlook
The weighting in China has increased ten percentage points from the same period last year and remains the best combination of value, income and income growth in the region. Banks, with the exception of those in Australia, are also an increasingly important part of the portfolio. They are cheap relative to history, with good dividends and, importantly for an income focused portfolio, have a positive correlation to rising interest rates. This provides a natural hedge to the higher yield part of the portfolio which is adversely impacted by such a move. Our bank exposure is focused on China, Hong Kong, Korea, Singapore and Malaysia. Other notable exposure is the energy sector where we retain our positive view on refining margins in the face of strong demand and a lack of new supply while consumer stocks across the region retain appeal as disposable incomes continue to rise.
We are cautiously optimistic on the region. The element of caution comes mainly from outside the region with geopolitical and political tensions running high across the world, while sky high valuations in many asset classes call for a degree of caution. The rise in US interest rates and the potential for removal of quantitative easing from the central banks of Japan and the EU at some point this year could also provide headwinds for equity market performance. For this reason gearing will be used for the facilitation of new ideas rather than being directional.
Asia Pacific markets have risen in the last eighteen months but kept broadly in line with earnings growth, thereby keeping the price to earnings (PE) valuation at an attractive level versus its own history and its developed market peers. Corporate earnings growth is expected to be robust and the potential for sustainable and growing dividends is extremely attractive as companies continue to generate cash flow and slowly adopt a more shareholder friendly dividend culture over time.
Mike Kerley
Fund Manager
19 April 2018
Principal Risks and Uncertainties
The principal risks and uncertainties associated with the Company's business can be divided into the following main areas:
-- Investment and strategy
-- Accounting, legal and regulatory
-- Operational
-- Financial
Information on these risks and how they are managed is given in the Annual Report for the year ended 31 August 2017. In the view of the Board these principal risks and uncertainties are as applicable to the remaining six months of the financial year as they were to the six months under review.
Related Party Transactions
The Company's current related parties are its Directors and Janus Henderson. There have been no material transactions between the Company and its Directors during the period and 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 sales and marketing services, there have been no material transactions with Janus Henderson affecting the financial position of the Company during the period under review.
Directors' Responsibility Statement
The Directors confirm that, to the best of their knowledge:
(a) the condensed set of financial statements has been prepared in accordance with IAS 34 - Interim Financial Reporting ("IAS 34");
(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).
The maintenance and integrity of the Company's website is delegated to Janus Henderson.
Legislation in Jersey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. The Directors shall remain responsible for establishing and controlling the process for doing so, and for ensuring that the financial statements are complete and unaltered in any way.
For and on behalf of the Board
John Russell, Chairman
19 April 2018
Investment Portfolio
As at 28 February 2018
Valuation
at
28 February
Country
of 2018
Company incorporation Sector GBP'000 % of Portfolio
-------------------------------- --------------- -------------------- ------------ ---------------
China Construction
Bank China Financials 16,917 3.65
Samsung Electronics(1) South Korea Technology 15,733 3.40
Agricultural Bank
of China China Financials 14,087 3.04
Taiwan Semiconductor
Manufacturing(2) Taiwan Technology 13,279 2.87
Consumer
Dali Foods China Goods 13,081 2.82
Huayu Automotive Consumer
Systems(3) China Goods 12,560 2.71
Bank of China China Financials 12,113 2.61
Petrochina China Oil & Gas 12,080 2.61
China Yangtze Power(3) China Utilities 11,963 2.59
KB Financial Group South Korea Financials 11,953 2.58
Top Ten Investments 133,766 28.88
----------------------------------------------------------------------- ------------ ---------------
Macquarie Group Australia Financials 11,855 2.56
Rio Tinto Ltd Australia Basic Materials 11,485 2.48
UK (Hong
HSBC Holdings Kong) Financials 11,465 2.47
PTT Thailand Oil & Gas 11,426 2.47
Star Petroleum Refining Thailand Oil & Gas 11,168 2.41
Macquarie Korea Infrastructure
Fund South Korea Financials 10,975 2.37
BHP Billiton Limited Australia Basic Materials 10,719 2.31
Spark New Zealand New Zealand Telecommunications 10,443 2.25
China Resources Land China Property 10,322 2.23
Public Bank Malaysia Financials 10,257 2.22
Top Twenty Investments 243,881 52.65
----------------------------------------------------------------------- ------------ ---------------
Spark Infrastructure Australia Utilities 9,852 2.13
S-Oil South Korea Oil & Gas 9,623 2.08
Hon Hai Precision
Industry Taiwan Technology 9,531 2.06
Lend Lease Australia Property 9,298 2.01
Suncorp Australia Financials 9,176 1.98
Taiwan Cement Taiwan Industrials 9,153 1.98
Advanced Semiconductor
Engineering Taiwan Technology 9,106 1.96
Mapletree Greater
China Commercial
Trust Hong Kong Property 8,992 1.94
Ascendas REIT Singapore Property 8,803 1.90
AMP Australia Financials 8,793 1.89
Top Thirty Investments 336,208 72.58
----------------------------------------------------------------------- ------------ ---------------
Scentre Group Australia Property 8,647 1.87
SK Telecom(2) South Korea Telecommunications 8,579 1.85
Digital Telecommunications Thailand Telecommunications 8,319 1.80
Mapletree Commercial
Trust Singapore Property 8,276 1.79
ING Life Insurance South Korea Financials 8,253 1.78
HKT Trust & HKT Hong Kong Telecommunications 8,052 1.74
Anhui Conch Cement China Industrials 7,994 1.72
Netease(2) China Technology 7,828 1.69
Amcor Australia Industrials 7,697 1.66
SK Innovation South Korea Basic Materials 7,366 1.59
Top Forty Investments 417,219 90.07
----------------------------------------------------------------------- ------------ ---------------
Consumer
Fairfax Media Australia Services 7,081 1.53
Telekomunikasi Indonesia Indonesia Telecommunications 7,069 1.53
Zhengzhou Yutong
Bus Co.(3) China Industrials 7,064 1.52
United Overseas Bank Singapore Financials 6,840 1.48
Consumer
Anta Sports Products China Goods 6,213 1.34
Chinasoft International China Technology 5,741 1.24
NWS Hong Kong Industrials 4,916 1.06
Quanta Computers Taiwan Technology 1,573 0.34
China Forestry Holdings China Basic Materials - -
Chinasoft International
Apr 18 Put (Expiry
09/04/18) China Technology (41) (0.01)
Top Fifty Investments 463,675 100.10
----------------------------------------------------------------------- ------------ ---------------
China Construction
Bank Apr 18 Call
(Expiry 30/04/18) China Financials (62) (0.02)
Anta Sports Products
May 18 Call (Expiry Consumer
28/05/18) China Goods (197) (0.04)
SK Innovation Apr
18 Call (Expiry 10/04/18) South Korea Basic Materials (203) (0.04)
Total Investments 463,213 100.00
----------------------------------------------------------------------- ------------ ---------------
(1) Preferred Shares
(2) American Depositary Receipts
(3) Participation Notes
Sector and Geographic Exposure as a percentage of the investment portfolio excluding cash
Portfolio Portfolio Portfolio Portfolio
as at as at as at as at
28 February 28 February 28 February 28 February
2018 2017 2018 2017
% % % %
Sector Exposure Geographic
Exposure
-------------------- ------------- ------------- ------------ ------------- -------------
Financials 28.6 20.2 China 29.7 20.4
Technology 13.6 16.1 Australia 20.4 24.4
Property 11.7 12.2 South Korea 15.6 17.0
Oil & Gas 9.6 4.6 Taiwan 9.2 11.5
Telecommunications 9.2 15.5 Hong Kong* 7.2 6.5
Industrials 8.0 11.6 Thailand 6.7 6.4
Consumer Goods 6.8 3.7 Singapore 5.2 7.7
Basic Materials 6.3 5.0 New Zealand 2.3 2.4
Utilities 4.7 5.6 Malaysia 2.2 -
Consumer Services 1.5 5.5 Indonesia 1.5 2.4
India - 1.3
Total 100.0 100.0 Total 100.0 100.0
-------------------- ------------- ------------- ------------ ------------- -------------
* Includes HSBC Holdings
Condensed Statement of Comprehensive Income
Half-year ended Half-year ended Year ended 31 August
28 February 2018 28 February 2017 2017
(Unaudited) (Unaudited)
(Audited)
Revenue Capital Revenue Capital Revenue Capital
return return Total return return Total return return Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- --------- --------- ---------- --------- --------- ---------- --------- ---------- ----------
Investment
income 7,897 - 7,897 8,551 - 8,551 27,702 - 27,702
Other income 1,108 - 1,108 960 - 960 2,563 - 2,563
(Loss)/gain
on
investments
held at
fair value
through
profit or
loss - (256) (256) - 22,408 22,408 - 45,754 45,754
Net foreign
exchange
gain/(loss)
excluding
gain/(loss)
on
investments - 905 905 - (835) (835) - (1,498) (1,498)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total income 9,005 649 9,654 9,511 21,573 31,084 30,265 44,256 74,521
------- -------- -------- ------- -------- ------- -------- -------- ---------
Expenses
Management
fees (973) (973) (1,946) (892) (892) (1,784) (1,865) (1,865) (3,730)
Other expenses (247) (247) (494) (192) (192) (384) (421) (421) (842)
------- -------- -------- ------- -------- ------- -------- -------- ---------
Profit/(loss)
before
finance
costs and
taxation 7,785 (571) 7,214 8,427 20,489 28,916 27,979 41,970 69,949
Finance
costs (105) (105) (210) (87) (87) (174) (169) (169) (338)
------- -------- -------- ------- -------- ------- -------- -------- ---------
Profit/(loss)
before
taxation 7,680 (676) 7,004 8,340 20,402 28,742 27,810 41,801 69,611
Taxation (639) - (639) (652) - (652) (2,400) - (2,400)
------- -------- -------- ------- -------- ------- -------- -------- ---------
Profit for
the period
and total
comprehensive
income 7,041 (676) 6,365 7,688 20,402 28,090 25,410 41,801 67,211
------- -------- -------- ------- -------- ------- -------- -------- ---------
Earnings
per ordinary
share basic
and diluted
(note 2) 5.88p (0.57p) 5.31p 6.67p 17.72p 24.39p 21.94p 36.09p 58.03p
------- -------- -------- ------- -------- ------- -------- ------ ---------
The total column of this statement represents the Condensed Statement of Comprehensive Income of the Company, prepared in accordance with IAS 34.
The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. All items in the above statement derive from continuing operations.
All income is attributable to the equity shareholders of the Company. There are no minority interests.
Condensed Statement of Changes in Equity
Half-year ended 28 February 2018
(Unaudited)
------------------------ -----------------------------------------------------------------
Stated Distributable Capital Revenue
capital reserve reserves reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ---------- ---------------- ----------- ---------- ----------
Total equity at 31
August 2017 121,784 180,471 117,560 22,667 442,482
Total comprehensive
income:
(Loss)/profit for
the period - - (676) 7,041 6,365
Transaction with
owners,
recorded directly
to equity:
Dividends paid - - - (12,736) (12,736)
Shares issued 13,138 - - - 13,138
Share issue costs (53) - - - (53)
Total equity at 28
February 2018 134,869 180,471 116,884 16,972 449,196
========== ================ =========== ========== ==========
Half-year ended 28 February 2017
(Unaudited)
--------------------------- -----------------------------------------------------------------
Stated Distributable Capital Revenue
capital reserve reserves reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- ---------- ---------------- ----------- ---------- ----------
Total equity at 31
August 2016 109,471 180,471 75,759 21,158 386,859
Total comprehensive
income:
Profit for the period - - 20,402 7,688 28,090
Transaction with
owners,
recorded directly
to equity:
Dividends paid - - - (11,753) (11,753)
Shares issued 3,860 - - - 3,860
Share issue costs (16) - - - (16)
Total equity at 28
February 2017 113,315 180,471 96,161 17,093 407,040
========== ================ =========== ========== ==========
Year ended 31 August 2017 (Audited)
------------------------- -----------------------------------------------------------------
Stated Distributable Capital Revenue
capital reserve reserves reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------- ---------- ---------------- ----------- ---------- ----------
Total equity at 31
August 2016 109,471 180,471 75,759 21,158 386,859
Total comprehensive
income:
Profit for the year - - 41,801 25,410 67,211
Transaction with
owners,
recorded directly
to equity:
Dividends paid - - - (23,901) (23,901)
Shares issued 12,362 - - - 12,362
Share issue costs (49) - - - (49)
Total equity at 31
August 2017 121,784 180,471 117,560 22,667 442,482
========== ================ =========== ========== ==========
Condensed Balance Sheet
28 February 28 February 31 August
2018 2017 2017
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
---------------------------- -------------- ------------- -----------
Non current assets
Investments held at
fair value through profit
or loss (note 8) 463,716 425,598 465,266
-------------- ------------- -----------
Current assets
Other receivables 12,730 3,140 3,421
Cash and cash equivalents 16,874 2,905 10,241
-------------- ------------- -----------
29,604 6,045 13,661
-------------- ------------- -----------
Total assets 493,320 431,643 478,927
-------------- ------------- -----------
Current liabilities
Written options (503) (1,942) (3,671)
Other payables (10,961) (1,694) (941)
Bank loans and overdrafts (32,660) (20,967) (31,833)
-------------- ------------- -----------
(44,124) (24,603) (36,445)
-------------- ------------- -----------
Net assets 449,196 407,040 442,482
============== ============= ===========
Equity attributable
to equity shareholders
Stated share capital 134,869 113,315 121,784
Distributable reserve 180,471 180,471 180,471
Retained earnings:
Capital reserves 116,884 96,161 117,560
Revenue reserve 16,972 17,093 22,667
-------------- ------------- -----------
Total equity 449,196 407,040 442,482
============== ============= ===========
Net asset value per
ordinary share
(note 3) 369.93p 351.93p 375.19p
============== ============= ===========
Condensed Statement of Cash Flows
Half-year
ended
Half-year 28 February Year ended
ended 2017
28 February (Unaudited) 31 August
2018 2017
(Unaudited) GBP'000 (Audited)
GBP'000 GBP'000
------------------------------- ------------- ------------- ------------
Operating activities
Profit before tax 7,004 28,742 69,611
Add back: finance cost 210 174 338
Loss/(gain) on investments
held at fair value through
profit or loss 256 (22,408) (45,754)
Net foreign exchange
(gain)/loss excluding
foreign exchange (gain)/loss
on investments (905) 835 1,498
Sales of investments 160,052 149,000 331,080
Purchases of investments (161,927) (145,656) (342,222)
Decrease in prepayments
and accrued income 221 10 (208)
(Increase)/decrease
in amounts due from
brokers (9,530) 171 109
Increase in other payables 978 109 (677)
Increase in amounts
due to brokers 9,086 -
Stock dividends included
in investment income - (96) (203)
------------- ------------- ------------
Net cash inflow from
operating activities
before interest and
taxation 5,445 10,881 13,572
------------- ------------- ------------
Interest paid (254) (169) (301)
Withholding tax on investment
income (639) (652) (2,400)
------------- ------------- ------------
Net cash inflow from
operating activities
after interest and taxation 4,552 10,060 10,871
------------- ------------- ------------
Financing activities
Net loans repayment 2,063 (5,774) 5,232
Equity dividends paid (12,736) (11,753) (23,901)
Share issue proceeds 13,138 3,860 12,362
Share issue costs (53) (16) (49)
------------- ------------- ------------
Net cash (outflow)/inflow
from financing 2,412 (13,683) (6,356)
------------- ------------- ------------
Increase/(decrease)
in cash and cash equivalents 6,964 (3,623) 4,515
Cash and cash equivalents
at the start of the
period / year 10,241 5,944 5,944
Exchange movements (331) 584 (218)
------------- ------------- ------------
Cash and cash equivalents
at the end of the period
/ year 16,874 2,905 10,241
============= ============= ============
Notes:
1. Accounting Policies:
(a) Basis of preparation
The condensed interim financial information has been prepared on a going concern basis, in accordance with IAS 34 and the Disclosure Guidance and Transparency Rules of the UK's Financial Conduct Authority.
The Annual Report and Financial Statements for the year ended 31 August 2017 were prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union. The unaudited results for the half-year ended 28 February 2018 have been prepared using the same accounting policies as those applied in the Company's financial statements for the year ended 31 August 2017. The 31 August 2017 financial statements include details of any new accounting standards not yet adopted by the Company. There has been no change to the segmental reporting assessment compared to the 31 August 2017 financial statements.
These condensed financial statements do not include all information required for a full set of financials statements. The figures and financial information for the year ended 31 August 2017 are an extract based on the published financial statements and should be read in conjunction with them.
The condensed financial information for the half-years ended 28 February 2018 and 28 February 2017 has not been audited.
(b) Investments held at fair value through profit or loss
All investments are designated upon initial recognition as held at fair value through profit or loss. These financial assets are designated on the basis that they are part of a group of financial assets which are managed and have their performance evaluated on a fair value basis. Financial assets are recognised/de-recognised at the trade date of the purchase/disposal. Proceeds will be measured at fair value, which will be regarded as the proceeds of sale less any transaction costs. The fair value of the financial instruments is based on their quoted bid price at the balance sheet date, without deduction of the estimated future selling costs. Participation notes are fair valued by reference to underlying stocks. The fair value of option contracts is determined by reference to the Black-Scholes model. The fair values of unquoted financial instruments within the portfolio are based on their last audited net asset values discounted where necessary to arrive at a fair value.
Changes in the fair value of investments held at fair value through profit or loss and gains and losses on disposal, including exchange gains and losses, are recognised in the Statement of Comprehensive Income as 'Gain or loss on investments held at fair value through profit or loss', including exchange gains and losses. Also included within this caption are transaction costs in relation to the purchase or sale of investments, including the difference between the purchase price of an investment and its bid price at the date of purchase.
Significant accounting judgments and estimates
The preparation of the Company's financial statements requires management to make judgements, estimates and assumptions that affect the amounts recognised in the financial statements; however, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in the future. As the majority of the Company's financial assets are quoted securities, in the opinion of the Directors, the amounts included as assets and liabilities in the financial statements are not subject to significant judgements, estimates or assumptions.
The Company's holdings in Participation Notes are valued at GBP31.6 million (28 February 2017: GBP29.9 million, 31 August 2017: GBP30.1 million). These are valued by reference to the underlying quoted stock. The obligations relating to the options valued at GBP503,000 (liability) (28 February 2017: GBP1,942,000 (liability), 31 August 2017: GBP3,671,000 (liability)) are valued by reference to the Black-Scholes model.
2. Earnings per ordinary share
The earnings per ordinary share figure is based on the net profit after taxation of GBP6,365,000 (half-year ended 28 February 2017: profit GBP28,090,000; year ended 31 August 2017: profit GBP67,211,000) and on 119,764,056 ordinary shares (half-year ended 28 February 2017: 115,160,564; year ended 31 August 2017: 115,829,263) being the weighted average number of ordinary shares in issue during each of the periods.
The earnings per ordinary share detailed above can be further analysed between revenue and capital, as below:
Half-year Half-year
ended ended
28 February 28 February Year ended
2018 (Unaudited) 2017 (Unaudited)
GBP'000 GBP'000 31 August
2017
(Audited)
GBP'000
----------------------------- --- ---------------------------------- ------------------- --------------
Net revenue profit 7,041 7,688 25,410
Net capital profit (676) 20,402 41,801
---------------------------------- ------------------- --------------
Net total profit 6,365 28,090 67,211
================================== =================== ==============
Weighted average number
of ordinary shares in
issue during the period
/ year 119,764,056 115,160,564 115,829,263
Pence Pence Pence
----------------------------- --- ---------------------------------- ------------------- --------------
Revenue earnings per
ordinary share 5.88 6.67 21.94
Capital earnings per
ordinary share (0.57) 17.72 36.09
---------------------------------- ------------------- --------------
Total earnings per ordinary
share 5.31 24.39 58.03
================================== =================== ==============
The Company does not have any dilutive securities; therefore the basic and diluted returns per share are the same.
3. Net asset value per ordinary share
The basic net asset value per ordinary share is based on a net asset value of GBP449,196,000 (28 February 2017: GBP407,040,000; 31 August 2017: GBP442,482,000) and on 121,428,564 (28 February 2017: 115,660,564; 31 August 2017: 117,935,564) ordinary shares, being the number of ordinary shares in issue at each period end.
4. Transaction costs
Purchase transaction costs for the half-year ended 28 February 2018 were GBP189,000 (half-year ended 28 February 2017: GBP184,000; year ended 31 August 2017: GBP484,000). These mainly comprise commission. Sales transaction costs for the half-year ended 28 February 2018 were GBP275,000 (half-year ended 28 February 2017: GBP349,000; year ended 31 August 2017: GBP731,000).
5. Share capital
During the six months under review the Company issued a total of 3,493,000 shares (half-year ended 28 February 2017: 1,125,000; year ended 31 August 2017: 3,400,000) for net proceeds of GBP13,085,000 (half-year ended 28 February 2017: GBP3,844,000; year ended 31 August 2017: GBP12,313,000) net of costs. Since the period end a further 900,000 shares have been issued for net proceeds of GBP3,293,000.
6. Dividends
The Company pays dividends on a quarterly basis. On 30 November 2017 a fourth interim dividend of 5.3p per share was paid in respect of the year ended 31 August 2017. A first interim dividend, in respect of the year ended 31 August 2018, of 5.3p per share was paid on 28 February 2018. The second interim dividend of 5.3p per share will be paid on 31 May 2018 to shareholders on the register on 4 May 2018. The Company's shares will be quoted ex-dividend on 3 May 2018. Based on the number of shares in issue on 19 April 2018, the cost of the dividend will be GBP6,483,000.
7. Management Fees
Management fees are charged in accordance with the terms of the management agreement at a rate of 0.9% per annum of the first GBP400,000,000 of net assets and 0.75% per annum of the balance of net assets greater than GBP400,000,000.
8. Financial Instruments
At the period end the carrying value of financial assets and financial liabilities approximates their fair value.
Financial instruments carried at fair value
Fair value hierarchy
The table below analyses recurring fair value measurements for financial assets and financial liabilities. These fair value measurements are categorised into different levels in the fair value hierarchy based on the inputs to valuation techniques used. The different levels are defined as follows:
-- Level 1: value using quoted prices in active markets for identical assets and liabilities.
-- Level 2: valued by reference to valuation techniques using observable inputs other than quoted prices in Level 1.
-- Level 3: valued by reference to valuation techniques using inputs that are not based on observable market data.
Financial assets and financial liabilities at fair value through Level Level Level profit or loss at 28 February 1 2 3 Total 2018 GBP'000 GBP'000 GBP'000 GBP'000 ------------------------------------ --------- --------- --------- --------- Investments including derivatives: - Equity securities designated at fair value through profit or loss 432,129 31,587 - 463,716 - Written options - (503) - (503) Total financial assets and liabilities carried at fair value 432,129 31,084 - 463,213 ------------------------------------ --------- --------- --------- --------- Financial assets and financial liabilities at fair value through Level Level Level profit or loss at 28 February 1 2 3 Total 2017 GBP'000 GBP'000 GBP'000 GBP'000 ------------------------------------ --------- --------- --------- --------- Investments including derivatives: - Equity securities designated at fair value through profit or loss 395,683 29,915 - 425,598 - Written options - (1,942) - (1,942) Total financial assets and liabilities carried at fair value 395,683 27,973 - 423,656 ------------------------------------ --------- --------- --------- --------- Financial assets and financial liabilities at fair value through Level Level Level profit or loss at 31 August 1 2 3 Total 2017 GBP'000 GBP'000 GBP'000 GBP'000 ------------------------------------ --------- --------- --------- --------- Investments including derivatives: - Equity securities designated at fair value through profit or loss 435,122 30,144 - 465,266 - Written options - (3,671) - (3,671) ------------------------------------ --------- --------- --------- --------- Total financial assets and liabilities carried at fair value 435,122 26,473 - 461,595 ------------------------------------ --------- --------- --------- ---------
Level 3 investments relate to one holding of China Forestry, transferred into Level 3 in 2012, written down to zero during the year ended 31 August 2014.
There have been no movements in Level 3 investments during the half-year ended 28 February 2018 and 28 February 2017 and the year ended 31 August 2017.
The Company's holdings in options and Participation Notes are included within Level 2.
The valuation techniques used by the Company are explained in the accounting policies note of the Annual Report and Financial Statements for the year ended 31 August 2017.
Premiums from written options during the half-year ended 28 February 2018 were GBP1,072,000 (half-year ended 28 February 2017: GBP948,000, year ended 31 August 2017: GBP2,532,000).
The valuation techniques and inputs used for level 2 and level 3 investments are as disclosed in note 1(b).
9. Going concern
The assets of the Company consist almost entirely of securities that are listed and regularly traded and, accordingly, the Directors believe that the Company has adequate financial 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, the Board has decided that it is appropriate for the financial statements to be prepared on a going concern basis.
10. Net debt reconciliation
Bank loans
and
overdraft
Cash and repayable
within one
cash equivalents year Total
GBP'000 GBP'000 GBP'000
----------------- ----------- ---------
Net debt as at
31 August 2017 10,241 (31,833) (21,592)
Cash flows 6,964 (2,063) 4,901
Exchange movements (331) 1,236 905
Net debt as at
28 February 2018 16,874 (32,660) (15,786)
================= =========== =========
11. Half-Year Report
The Half-Year Report will be available on the Company's website (www.hendersonfareastincome.com) or in hard copy format from the Company's registered office, IFC 1, The Esplanade, St Helier, Jersey, JE1 4BP from late April 2018. Shareholders will be sent a copy of the Update, an abridged version of the half-year results, in early May 2018.
12. General Information
a) Company Objective
The Company seeks to provide shareholders with a growing total annual dividend per share, as well as capital appreciation, from a diversified portfolio of investments from the Asia Pacific region..
b) Company Status
The Company is a Jersey domiciled closed-end investment company, number 95064, which was incorporated in 2006 and which is listed on the London and New Zealand Stock Exchanges. The ISIN number is JE00B1GXH751. The London Stock Exchange code is HFEL. The Company is a Jersey fund which is regulated by the Jersey Financial Services Commission.
c) Directors, Secretary and Registered Office
The Directors of the Company are John Russell (Chairman), David Mashiter, Julia Chapman, David Staples and Nicholas George. The Secretary is BNP Paribas Securities Services S.C.A. Jersey Branch, represented by Siobhan Lavery and which is regulated by the Jersey Financial Services Commission. The registered office is IFC 1, The Esplanade, St Helier, Jersey, JE1 4BP.
d) 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.hendersonfareastincome.com).
Independent Review Report to Henderson Far East Income Limited
Conclusion
We have been engaged by Henderson Far East Income Limited (the "Company") to review the condensed set of financial statements in the half-yearly financial report for the six months ended 28 February 2018 of the Company which comprises the Condensed Statement of Comprehensive Income, the Condensed Statement of Changes in Equity, the Condensed Balance Sheet, the Condensed Statement of Cash Flows and the related explanatory notes.
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 28 February 2018 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.
As disclosed in note 1, the annual financial statements of the Company are prepared in accordance with International Financial Reporting Standards as adopted by the EU. The directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with IAS 34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Company in accordance with the terms of our engagement letter to assist the Company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.
Andrew P. Quinn
For and on behalf of KPMG Channel Islands Limited
Chartered Accountants
37 Esplanade, St. Helier, Jersey
JE4 8WQ
19 April 2018
For further information please contact:
Mike Kerley
Fund Manager for Henderson Far East Income Limited
Telephone: 020 7818 5053
James de Sausmarez
Director and Head of Investment Trusts, Henderson Investment Funds Limited
Telephone: 020 7818 3349
Sarah Gibbons-Cook
Investor Relations and PR Manager, Henderson Investment Funds Limited
Telephone: 020 7818 3198
Siobhan Lavery
Company Secretary and RNS Agent
BNP Paribas Securities Services S.C.A. Jersey Branch
Telephone: 01534 709 181
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 company news service from the London Stock Exchange
END
IR BLGDSDDBBGIC
(END) Dow Jones Newswires
April 19, 2018 12:26 ET (16:26 GMT)
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