Henderson Int Income - Half-year Report
26/04/2024 09:45
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RNS Number : 2158M Henderson Intl. Income Trust PLC 26 April 2024
JANUS HENDERSON FUND MANAGEMENT UK LIMITED
HENDERSON INTERNATIONAL INCOME TRUST PLC
LEGAL ENTITY IDENTIFIER: 2138006N35XWGK2YUK38
HENDERSON INTERNATIONAL INCOME TRUST PLC
UNAUDITED RESULTS FOR THE HALF-YEAR ENDED 29 FEBRUARY 2024
This announcement contains regulated information.
INVESTMENT OBJECTIVE
Your Company's investment objective is to provide shareholders with a growing
total annual dividend, as well as capital appreciation.
HIGHLIGHTS
· Dividends for the half year increased by 3.8%. NAV total return 5.1% (debt at
par) and 4.8% (debt at fair value), slightly underperforming the 6.6% return
of the benchmark
· Your Company has been recognised by the AIC as a "next generation dividend
hero"
· Returns from all regions over the period were positive, but strong performance
in North America was offset by weak relative performance in the Asia Pacific
region
· Many of the portfolio's holdings have performed well, and dividend growth and
buybacks have exceeded expectations across the portfolio
· The board remains hopeful that interest rates will decline later in the year
leading to an improved investment environment
PERFORMANCE SUMMARY
SIX MONTHS TO 29 FEBRUARY 2024
2024 2023
Dividends in respect of the six months to 29 February 3.84p 3.70p
Total return for the period (debt at par)(1) 5.1% 2.2%
Dividend growth since launch to 29 February 2024
Year to Total dividend Year to Total dividend
31 August (pence per share) 31 August (pence per share)
2011(2) 1.40 2018 5.30
2012 4.00 2019 5.70
2013 4.05 2020 6.00
2014 4.25 2021 6.30
2015 4.50 2022 7.25
2016 4.65 2023 7.47
2017 4.90 2024 3.84*
* Represents the first and second interim dividends that have been declared
for the year ending 31 August 2024
Your Company has recently been recognised by the Association of Investment
Companies as a Next Generation Dividend Hero, reflecting its record of having
consistently grown its dividend for 10 consecutive years.
Dividend yields
29 February 2024 31 August 2023
Ordinary shares(3) 4.8% 4.6%
Benchmark(4) 3.8% 3.9%
AIC Global Equity Income sector(5) 3.4% 3.6%
Performance
29 February 2024 31 August 2023
NAV per share at period end (debt at par) 180.7p 175.7p
NAV per share at period end (debt at fair value) 183.2p 178.6p
Share price at period end 156.0p 161.5p
Discount (debt at par) (13.7)% (8.1)%
Discount (debt at fair value) (14.8)% (9.6)%
Gearing at period end 1.9% 3.9%
Total return performance to 29 February 2024
6 months 1 year 3 years 10 years Since launch
% % % % %
Diluted NAV (debt at par)(1) 5.1 3.8 25.5 126.5 194.5
Diluted NAV (debt at fair value)(1) 4.8 3.3 28.8 129.7 198.6
Share price(6) (1.0) (8.8) 18.6 103.7 158.2
Benchmark(4) 6.6 8.5 32.2 163.0 227.1
AIC Global Equity Income sector (NAV)(5) 8.6 11.0 41.4 175.7 234.5
(1) Calculated using published daily NAVs including current year revenue
(2) Four month period from launch on 28 April 2011 to 31 August 2011
(3) Calculated using the closing share price at the period end and the last
four dividends paid
(4) MSCI ACWI (ex UK) High Dividend Yield Index (sterling adjusted)
(5) Excludes British & American Investment Trust plc
(6) The Company's share price total return (assuming the reinvestment of all
dividends excluding dealing expenses). Since inception share price return -
launch price including discount (97.25p)
Sources: Morningstar Direct and Janus Henderson
INTERIM MANAGEMENT REPORT
CHAIRMAN'S STATEMENT
Performance and markets
During the six months to 29 February 2024, the net asset value ("NAV") total
return per ordinary share was 5.1% (debt at par) and 4.8% (debt at fair
value). This included dividends totalling 3.84p per share (2023: 3.70p), an
increase of 3.8% year on year. The total return of the Company's comparator
index (MSCI ACWI (ex UK) High Dividend Yield Index (sterling adjusted)) was
6.6%. The Company's return on the ordinary share price was -1.0%.
Inflation remains the key influencer of interest rate policy in Western
economies. It does, however, now appear that the top of the interest rate
cycle has been reached and that the next moves will be downwards. The question
is when these moves will begin? Most policy makers will look to the US to lead
the way and will be cautious of taking a pre-emptive decision.
Over the past year the world has moved on considerably, with new worries
replacing previous ones. It appears that the holiday from history which
followed the fall of the Berlin Wall is over and we are back to the
ideological struggle between capitalism and communism. The West will
inevitably have to re-arm to combat Russia in Europe and China in the Pacific.
If Mr Trump is elected as the US President, then rearmament in Europe may be
quicker and greater than anticipated. Meanwhile, there seems to be a growing
realisation that nuclear energy is not such a concern after all and with most
of the uranium in the world lying outside of the major oil producing centres
this becomes a strategically strong energy option. As long as we avoid a major
war then our current state of high alert is not necessarily a bad thing.
Earnings and dividends
The revenue return per ordinary share during the six months to 29 February
2024 was 1.80p (2023: 1.96p). A fourth interim dividend of 1.92p per ordinary
share, for the year ended 31 August 2023, was paid to shareholders on 30
November 2023, bringing the total dividend paid in respect of the year to
7.47p per ordinary share (year ended 31 August 2022: 7.25p per ordinary
share).
The board declared a first interim dividend payment for the year ending 31
August 2024 of 1.92p per ordinary share and this was paid to shareholders on
29 February 2024. Subsequently, we have declared a second interim dividend of
1.92p per ordinary share that will be paid on 31 May 2024 to shareholders on
the register on 10 May 2024.
The long-term objective of your Company since launch is to provide
shareholders with a growing total annual dividend, as well as capital
appreciation. To date, we have increased the dividend each year and we are
very pleased this achievement has now been recognised by the Association of
Investment Companies ("AIC"), naming us as a "next generation dividend hero".
Gearing
Well-judged gearing enhances returns to shareholders. The board's current
policy is to permit the fund manager to gear up to 25% of net assets at the
time of drawdown. Borrowing limits for this purpose include implied gearing
through the use of derivatives. The gearing at the period end was 1.9% (31
August 2023: 3.9%).
Discount control
The Company's share price has traded at a discount of between 8% and 15% over
the period. As at 24 April 2024, the discount was 11.3% (with debt at par) and
12.4% (with debt at fair value). The board monitors the premium/discount to
NAV closely. The factors that usually influence the discount most are the
performance of the Company and that of world stock markets. Both of these are
covered fully, later on in the fund manager's review. Two other factors have
also been at work, but these are more technical. Concerns over current
legislation that show the costs of managing an investment trust to be much
higher in theory than in reality have led the average discount of the UK
investment trust sector to rise markedly over the past 12 months. Secondly,
with higher interest rates than in the recent past, bonds have become a more
attractive alternative to higher yielding investment trusts where prices have
weakened in response. When interest rates, in due course, start to decline we
would expect discounts to start to narrow too.
While we understand the importance of dividend income to our shareholders we
equally appreciate that they also want to see their capital grow over time and
for the current discount to reduce. To that end, the fund manager has made
changes to the portfolio and is working with the board to consider ways of
better achieving these objectives.
As has been stated before, there is a distinct limit to the board's ability to
influence and maintain the premium or discount to NAV over the short term.
Further, we continue to believe that it is not in shareholders' interests to
have a specific share buy-back or issuance policy, but retain flexibility to
consider share buy-backs and/or issuance where appropriate (and actively do
so).
Outlook
One new set of worries soon replaces the previous set. It does seem however
that the optimist is always the long-term winner. We keep a watching eye on
world politics and economics but we can only respond to changing circumstances
to a degree and we must guard against chopping and changing short-term
strategy to fit each day's changing circumstances. In the meantime, the board
remains hopeful that interest rates will decline later in the year leading to
an improved investment environment.
Richard Hills
Chairman
25 April 2024
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks and uncertainties associated with the Company's business
can be divided into the following main categories:
• Geopolitical risks;
• Political risks;
• Investment activity and performance risks;
• Portfolio and market price risks;
• Tax and regulatory risks;
• Operational and cyber risks; and
• Consolidation of the wealth management industry
Information on these risks and how they are managed are given in the annual
report for the year ended 31 August 2023. In the view of the board, the
principal risks and uncertainties at the year end remain and are as applicable
to the remaining six months of the financial year as they were to the six
months under review.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors confirm that, to the best of their knowledge:
(a) the financial statements for the half-year ended 29 February 2024 have been
prepared in accordance with 'FRS 104 Interim Financial Reporting';
(b) the Interim Management Report includes a fair review of the information
required by Disclosure Guidance and Transparency Rule 4.2.7R (indication of
important events during the first six months and description of principal
risks and uncertainties for the remaining six months of the year); and
(c) the Interim Management Report includes a fair review of the information
required by Disclosure Guidance and Transparency Rule 4.2.8R (disclosure of
related party transactions and changes therein).
On behalf of the board
Richard Hills
Chairman
25 April 2024
For more information please contact:
Ben Lofthouse Harriet Hall
Fund Manager PR Director, Investment Trusts
Henderson International Income Trust plc Janus Henderson Investors
Telephone: 020 7818 5187 Telephone: 020 7818 2919
Dan Howe
Head of Investment Trusts
Janus Henderson Investors
Telephone: 020 7818 4458
FUND MANAGER'S REPORT
Performance review
Over the last six months the portfolio produced a total return of 4.8% in NAV
per ordinary share over the period (debt at fair value). This return includes
dividends totalling 3.84p per share, a 3.8% increase year on year. The
portfolio has slightly underperformed its performance comparator, the MSCI
ACWI (ex UK) High Dividend Yield Index.
Market summary
Equity markets have rallied over the period. Economic data continues to be
mixed; the US economy has been stronger than expected despite the significant
increases in interest rates around the world over the last three years.
Meanwhile the economies of Japan, Germany and the United Kingdom were weak
enough to register some quarters of negative economic growth. The Chinese
economy has continued to grow but ongoing concerns remain around the property
market and weak consumer sentiment. Generally investors have become
increasingly optimistic that inflation has peaked and that central banks will
be able to reduce interest rates this year. The combination of stronger US
growth and expectations of interest rate cuts have driven a recovery in the
performance of cyclically exposed sectors, such as industrials and financials.
Companies with less cyclically sensitive, defensive earnings have generally
underperformed. Many companies' recent quarterly reports suggest that business
activity is not deteriorating but still remains lacklustre and, in some cases
(chemicals, staffing companies, consumer staples), marginally worse.
The area of Artificial Intelligence ("AI") remains a bright spot due to an
increasing number of companies rolling out their AI focussed semiconductor
offerings. It has been a period during which higher yielding stocks have
lagged the wider market; the MSCI ACWI (ex UK) High Dividend Yield Index
returned 6.6% compared to 13.2% for the MSCI World (ex UK) Index (both
sterling adjusted). One of the primary drivers of this has been the fact that
markets have been led by these low yielding technology stocks. The market
rally in the US has been driven by a relatively small number of the largest
technology companies, which are expected to benefit the most from new
Generative Artificial Intelligence developments. These have become known as
the 'Magnificent Seven' (Nvidia, Microsoft, Meta, Amazon, Alphabet, Apple and
Tesla). The extent to which these companies are generating actual revenues
from AI varies. Nvidia and Microsoft are already reporting revenues from AI,
for the others the opportunities are more speculative.
Portfolio performance
Portfolio exposures and returns by region
Average exposure Total return
% %
North America 37.3 8.1
Europe (ex UK) 36.8 4.6
Asia Pacific (ex Japan) 21.9 3.3
Japan 2.5 7.6
Returns from all regions over the period were positive, but strong performance
in North America was offset by weak relative performance in the Asia Pacific
region. There has been a significant dispersion between sectors and regions
over the period. Many of the portfolio's holdings have performed well, and
dividend growth and buybacks have exceeded expectations across the portfolio.
With the benefit of hindsight though, the portfolio has had too much exposure
to defensive sectors such as health care, telecommunications and consumer
staples which have lagged the market rally. These sectors have generated good
dividend yields and are growing earnings but their share prices have
underperformed during the cyclical rotation in the equity market that has
occurred since October.
Sector and stock performance review
Technology stocks now make up 15.2% of the portfolio and have provided the
greatest absolute and relative performance over the period. The largest
position is Microsoft which has emerged as one of the leaders in AI by virtue
of its investment in OpenAI, the creator of ChatGPT, and its leading positions
in cloud computing and business software. Microsoft was the biggest positive
contributor to performance over the period. Semiconductor companies Qualcomm
and Taiwan Semiconductor Manufacturing were also significant positive
contributors to performance because of signs that the semiconductor cycle has
bottomed. AI activity is starting to broaden out from semiconductor chip
demand to wider computing infrastructure investments. US industrial company
nVent, for example, saw its share price increase significantly over the
period. It is a leader in electrification related products and is benefiting
from the additional demand for data centre cooling systems.
Technology stocks have not been the only good performers. The portfolio's
largest sector exposure is the financial sector (18.2% of the portfolio) and
it was one of the best performers over the period. Many companies in the
sector benefit from higher interest rates. Higher rates coupled with low
credit losses are driving strong profit growth across much of the sector. The
portfolio's insurance companies are also benefiting from rising insurance
premiums and improving profitability. US insurance company Travelers was one
of the top performers and the positions in AXA, Zurich and Dai-ichi Life also
performed well.
As discussed earlier, there has been a wide dispersion between sector
performance. At a sector level the biggest detractors to performance have been
the materials, energy and consumer staples sectors. Commodity prices have been
falling as Covid supply chain issues got resolved and emergency inventory was
run down and this short-term weakness has weighed on companies in the sector.
Whilst investors in technology like the idea of investing for future growth,
in other sectors they seem less enthusiastic. Two examples of this are oil and
gas company Woodside and pharmaceutical company Sanofi. Both companies raised
their investment budgets to invest in growth projects and both saw their share
prices react negatively in response to the increased short-term costs of the
investments. Air Products, an industrial gases company, was the biggest single
stock detractor. The company is investing heavily in low carbon hydrogen
projects (known as green and blue hydrogen technologies) but the projects will
not be ready for a few years and the market would like to see evidence of
demand before rewarding the company for investment.
At a country level the portfolio's exposure to consumer discretionary stocks
in Hong Kong and China was a detractor. The country has not seen the recovery
from the easing of Covid lockdown that the rest of the world experienced and
positions such as internet retailer Alibaba, insurer AIA and sportswear
retailer Li-Ning underperformed the market. The positioning in the Asia
Pacific portfolio has been changed significantly and this exposure has been
reduced (covered below).
The Company's long-term financing means that a fair value and par value return
is quoted. The fair value of the debt reflects a theoretical market price and
is impacted by changes in interest rate expectations in the financial markets.
The fall in interest rate expectations during the period has increased the
fair value of the debt, reducing the fair value net asset value return.
Portfolio positioning
The most significant change to the portfolio was the 6.8% increase in exposure
to the technology sector. Many companies in the technology sector benefited
during Covid from increased demand as companies and individuals updated their
systems but suffered a hangover in 2023 as supply chains eased and sales
normalised. Many of these companies' long-term growth is driven by the trend
of increasing technology adoption across all industries. This trend should
accelerate as AI moves from the testing phase into real world use. We have
taken the opportunity of short-term weakness to add to some of these
companies. The existing technology positions in semiconductor companies Taiwan
Semiconductor Manufacturing and Qualcomm were added to. New positions were
initiated in equipment manufacturers TE Connectivity (connectors and sensors),
Lenovo (PCs and servers) and Hon Hai (smart phones, tablets and servers) and
technology software and services companies Oracle and Infosys. This increased
exposure was funded by closing a number of positions in consumer discretionary
stocks in China and Hong Kong, and a reduction in exposures to
telecommunications and consumer staples via sales of Brazilian brewer Ambev,
telecommunication company HKT Trust and a reduction in telecoms equipment
company Cisco.
Income trends
The underlying dividend growth from the portfolio's holdings has been good but
the income return for the period is slightly lower than last year. One of the
reasons for this is that there have been fewer special dividends from
companies. In recent years the portfolio has benefited from approximately
£1m of special dividends per year from companies that paused payments during
the Covid period but paid catch up payments later, in particular financial
sector companies. The other reason for the fall in income is that more
opportunities have presented themselves in some lower yielding areas of the
market (often at substantially lower yield levels) and the team are using the
flexibility of the investment structure to hold some lower yielding stocks
with more capital upside potential.
Outlook
The global economy has weathered increased interest rates better than expected
and falling inflation might allow central banks to cut rates without a
significant increase in unemployment. Falling interest rates with improving
growth has historically been a relatively rare combination but one that can be
positive for equity markets. Irrespective of interest rate trends we remain
positive about the portfolio's potential for growth due to a number of ongoing
trends that are driving activity. These trends include investments focused on
reshoring manufacturing activity, especially in the technology space,
modernisation of energy supply and increasing AI capabilities.
Ben Lofthouse
Fund Manager
25 April 2024
INVESTMENT PORTFOLIO
at 29 February 2024
Market value %
Company Country £'000 of portfolio
Basic materials
Air Products & Chemicals US 7,424 2.1
UPM-Kymmene Finland 4,034 1.1
Pilbara Minerals Australia 2,605 0.7
14,063 3.9
Consumer discretionary
Compagnie Financière Richemont Switzerland 6,351 1.8
Sony Japan 5,468 1.5
Samsonite Hong Kong 4,482 1.2
Midea China 4,465 1.2
Aptiv US 3,969 1.1
Mercedes-Benz Germany 3,540 1.0
Hyundai Korea 3,282 0.9
Anta Sports China 2,689 0.7
Astra International Indonesia 1,318 0.4
35,564 9.8
Consumer staples
Coca-Cola US 8,772 2.4
Nestlé Switzerland 7,387 2.1
Mondelez US 6,924 1.9
Pepsico US 5,186 1.4
Pernod-Ricard France 4,175 1.2
32,444 9.0
Energy
TotalEnergies France 5,398 1.5
Woodside Petroleum Australia 3,769 1.1
Aker BP Norway 3,726 1.0
12,893 3.6
Financials
Zurich Insurance Switzerland 10,139 2.8
Amundi France 8,156 2.3
Travelers Companies US 8,065 2.2
CME US 7,035 1.9
AXA France 4,932 1.4
Bank Mandiri Indonesia 4,907 1.4
Macquarie Australia 4,468 1.2
OCBC Bank Singapore 4,004 1.1
BFF Bank Italy 3,887 1.1
HDFC Bank India 3,788 1.1
Samsung Fire & Marine Insurance Korea 3,332 0.9
Dai-ichi Life Japan 2,991 0.8
65,704 18.2
Health care
Merck & Co US 12,670 3.5
Sanofi France 12,161 3.4
Novartis Switzerland 9,287 2.6
Roche Switzerland 9,284 2.6
Medtronic US 6,017 1.6
Novo Nordisk Denmark 5,065 1.4
Bristol-Myers Squibb US 4,692 1.3
Johnson & Johnson US 3,967 1.1
63,143 17.5
Industrials
nVent Electric US 8,043 2.2
Honeywell International US 7,118 2.0
Daimler Truck Germany 6,700 1.9
Sandvik Sweden 6,513 1.8
Volvo Sweden 5,086 1.4
Nari Technology Co China 2,986 0.8
36,446 10.1
Real estate
CapitaLand Integrated Commercial Trust Singapore 3,795 1.1
Goodman Australia 3,170 0.9
Swire Properties Hong Kong 3,055 0.8
10,020 2.8
Technology
Microsoft US 17,227 4.8
Qualcomm US 7,446 2.1
Taiwan Semiconductor Manufacturing Taiwan 6,638 1.8
Samsung Korea 5,593 1.5
Oracle US 4,381 1.2
TE Connectivity US 4,172 1.2
Infosys Technologies India 3,780 1.0
Lenovo China 2,961 0.8
Hon Hai Precision Taiwan 2,932 0.8
55,130 15.2
Telecommunications
Deutsche Telekom Germany 5,698 1.6
Telus Canada 4,995 1.4
Tele2 Sweden 4,750 1.3
Cisco Systems US 4,501 1.2
Verizon Communications US 4,299 1.2
Telekomunikasi Indonesia 1,290 0.4
25,533 7.1
Utilities
Iberdrola Spain 6,099 1.7
Enel Italy 4,025 1.1
10,124 2.8
Total investments 361,064 100.0
TEN LARGEST INVESTMENTS
at 29 February 2024
Company Sector Country Market value % of portfolio
£'000
Microsoft Technology US 17,227 4.8
Merck & Co Health care US 12,670 3.5
Sanofi Health care France 12,161 3.4
Zurich Insurance Financials Switzerland 10,139 2.8
Novartis Health care Switzerland 9,287 2.6
Roche Health care Switzerland 9,284 2.6
Coca-Cola Consumer staples US 8,772 2.4
Amundi Financials France 8,156 2.3
Travelers Companies Financials US 8,065 2.2
nVent Electric Industrials US 8,043 2.2
These investments total £103,804,000 which represents 28.8% of the portfolio.
SECTOR EXPOSURE as a percentage of the investment portfolio excluding cash
29 February 2024 31 August 2023
% %
Financials 18.2 18.7
Health care 17.5 17.9
Technology 15.2 8.4
Industrials 10.1 10.0
Consumer discretionary 9.8 9.2
Consumer staples 9.0 11.8
Telecommunications 7.1 9.7
Basic materials 3.9 4.3
Energy 3.6 3.9
Utilities 2.8 3.0
Real estate 2.8 3.1
100.0 100.0
GEOGRAPHIC EXPOSURE as a percentage of the investment portfolio excluding cash
29 February 2024 31 August 2023
% %
US 36.4 34.8
Switzerland 11.9 11.3
France 9.8 9.4
Sweden 4.5 2.6
Germany 4.5 4.9
Australia 3.9 3.2
China 3.5 5.4
Korea 3.3 3.3
Taiwan 2.6 1.0
Japan 2.3 1.4
Italy 2.2 2.2
Singapore 2.2 1.9
Indonesia 2.2 1.9
India 2.1 0.9
Hong Kong 2.0 4.9
Spain 1.7 1.8
Canada 1.4 1.5
Denmark 1.4 1.1
Finland 1.1 0.9
Norway 1.0 1.1
Netherlands - 2.7
Brazil - 1.8
100.0 100.0
Source: Janus Henderson
CONDENSED INCOME STATEMENT
(Unaudited) (Unaudited) (Audited)
Half-year ended Half-year ended Year ended
29 February 2024
28 February 2023
31 August 2023
Revenue Capital Total Revenue Capital Total Revenue Capital Total
return
return
£'000
return
return
£'000
return
return
£'000
£'000
£'000
£'000
£'000
£'000
£'000
Gains/(losses) on investments held at fair value through profit or loss - 14,652 14,652 - 5,496 5,496 - (8,984) (8,984)
Income from investments held at fair value through profit or loss 4,308 - 4,308 4,884 - 4,884 16,641 - 16,641
Gains/(losses) on foreign exchange - 130 130 - (621) (621) - (84) (84)
Other income 509 - 509 172 - 172 894 - 894
Gross revenue and capital gains/ (losses) 4,817 14,782 19,599 5,056 4,875 9,931 17,535 (9,068) 8,467
Management fee (note 3) (251) (755) (1,006) (245) (736) (981) (500) (1,502) (2,002)
Other administrative expenses (364) - (364) (334) - (334) (609) - (609)
Net return before finance costs and taxation 4,202 14,027 18,229 4,477 4,139 8,616 16,426 (10,570) 5,856
(79) (235) (314) (81) (243) (324) (162) (488) (650)
Finance costs
Net return before taxation 4,123 13,792 17,915 4,396 3,896 8,292 16,264 (11,058) 5,206
Taxation on net return (599) - (599) (553) - (553) (2,020) - (2,020)
Net return after taxation (note 5) 3,524 13,792 17,316 3,843 3,896 7,739 14,244 (11,058) 3,186
Return per ordinary share 1.80p 7.04p 8.84p 1.96p 1.99p 3.95p 7.27p (5.64p) 1.63p
The total columns of this statement represent the Income Statement of the
Company, prepared in accordance with FRS 104. The revenue and capital columns
are supplementary to this and are published under guidance from the
Association of Investment Companies.
The Company has no recognised gains or losses other than those disclosed in
the Income Statement and Statement of Changes in Equity.
All items in the above statement derive from continuing operations. No
operations were acquired or discontinued during the period.
The accompanying notes are an integral part of the condensed financial
statements.
CONDENSED STATEMENT OF CHANGES IN EQUITY
Half-year ended 29 February 2024 (unaudited) Called up Share Special Other Revenue Total
share
premium
reserve
reserve
£'000
capital
account
£'000 capital
£'000
£'000
£'000
reserves
£'000
At 31 August 2023 1,960 194,550 45,732 94,919 7,209 344,370
Net return after taxation - - - 13,792 3,524 17,316
Dividends paid (note 6) - - - - (7,526) (7,526)
At 29 February 2024 1,960 194,550 45,732 108,711 3,207 354,160
Half-year ended 28 February 2023 (unaudited) Called up Share Special Other Revenue Total
share
premium
reserve
reserve
£'000
capital
account
£'000 capital
£'000
£'000
£'000
reserves
£'000
At 31 August 2022 1,960 194,550 45,732 105,977 7,468 355,687
Net return after taxation - - - 3,896 3,843 7,739
Dividends paid - - - - (7,251) (7,251)
At 28 February 2023 1,960 194,550 45,732 109,873 4,060 356,175
Year ended 31 August 2023 (audited) Called up Share Special Other Revenue Total
share
premium
reserve
reserve
£'000
capital
account
£'000 capital
£'000
£'000
£'000
reserves
£'000
At 31 August 2022 1,960 194,550 45,732 105,977 7,468 355,687
Net return after taxation - - - (11,058) 14,244 3,186
Dividends paid - - - - (14,503) (14,503)
At 31 August 2023 1,960 194,550 45,732 94,919 7,209 344,370
The accompanying notes are an integral part of the financial statements.
CONDENSED STATEMENT OF FINANCIAL POSITION
(Unaudited) (Unaudited) (Audited)
At At At
29 February
28 February
31 August
2024
2023
2023
£'000
£'000
£'000
Investments held at fair value through profit or loss (note 4)
Fixed asset investments held at fair value through profit or loss 361,064 362,248 357,671
Current assets
Debtors 4,996 3,258 3,588
Cash at bank 16,206 18,886 18,028
21,202 22,144 21,616
Creditors: amounts falling due within one year (2,592) (2,094) (9,375)
Net current assets 18,610 20,050 12,241
Total assets less current liabilities 379,674 382,298 369,912
Creditors: amounts falling due after more than one year (25,514) (26,123) (25,542)
Total net assets 354,160 356,175 344,370
Capital and reserves
Called up share capital (note 8) 1,960 1,960 1,960
Share premium account 194,550 194,550 194,550
Special reserve 45,732 45,732 45,732
Other capital reserves 108,711 109,873 94,919
Revenue reserve 3,207 4,060 7,209
Total shareholders' funds 354,160 356,175 344,370
Net asset value per ordinary share (note 7) 180.7p 181.7p 175.7p
The accompanying notes are an integral part of the financial statements.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited) (Unaudited) (Audited)
Half-year ended Half-year ended Year ended
29 February
28 February
31 August
2024
2023
2023
£'000
£'000
£'000
Cash flows from operating activities
Net return before taxation 17,915 8,292 5,206
Add back: finance costs 314 324 650
(Less)/add: (gains)/losses on investments held at fair value through profit or (14,652) (5,496) 8,984
loss
Less: (gains)/losses on foreign exchange (130) 621 84
Withholding tax on dividends deducted at source (500) (553) (2,432)
Taxation recovered 53 - 56
Increase in debtors (274) (167) (189)
(Decrease)/increase in creditors (303) 380 (104)
Net cash inflow from operating activities 2,423 3,401 12,255
Cash flows from investing activities
Purchase of investments (74,724) (43,497) (105,273)
Sale of investments 78,216 60,235 119,914
Proceeds from capital dividends 8 - 2
Net cash inflow from investing activities 3,500 16,738 14,643
Cash flows from financing activities
Equity dividends paid (net of refund of unclaimed distributions and reclaimed (7,526) (7,251) (14,503)
distributions)
Interest paid (318) (322) (644)
Net cash outflow from financing activities (7,844) (7,573) (15,147)
Net cash (decrease)/increase in cash and cash equivalents (1,921) 12,566 11,751
Cash and cash equivalents at start of year 18,028 6,590 6,590
Effect of foreign exchange rates 99 (270) (313)
Cash and cash equivalents at end of year 16,206 18,886 18,028
Comprising:
Cash at bank 16,206 18,886 18,028
16,206 18,886 18,028
The accompanying notes are an integral part of the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
The half-year financial statements cover the period from 1 September 2023 to
29 February 2024.
1. Principal activity
The Company is an investment company as defined in section 833 of the
Companies Act 2006 and operates as an investment trust in accordance with
section 1158 of the Corporation Tax Act 2010.
2. Accounting policies - basis of preparation
The condensed set of financial statements has been prepared in accordance with
FRS 104, Interim Financial Reporting and FRS 102, the Financial Reporting
Standard applicable in the UK and Republic of Ireland. The financial
statements have also been prepared in accordance with the Statement of
Recommended Practice ("SORP"), 'Financial Statements of Investment Trust
Companies and Venture Capital Trusts' issued in July 2022 by the Association
of Investment Companies.
The accounting policies applied are consistent with those of the most recent
annual financial statements for the period ended 31 August 2023.
The condensed set of financial statements has been neither audited nor
reviewed by the Company's auditor.
3. Management fee
The management fee is payable quarterly in arrears at a rate of 0.575% per
annum of the Company's net assets. In accordance with the directors' policy on
the allocation of expenses between income and capital, in each financial year
75% of the management fee payable is charged to capital and the remaining 25%
to income.
4. Financial instruments
The financial assets and financial liabilities are either carried in the
Statement of Financial Position at their fair value or the Statement of
Financial Position amount is a reasonable approximation of fair value (debtors
and creditors falling due within one year).
The table below analyses fair value measurements for investments held at fair
value through profit or loss.
Financial assets and financial liabilities at fair value through
profit or loss at 29 February 2024
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Equity investments 361,064 - - 361,064
Derivatives (options) - (540) - (540)
Total financial assets carried at fair value 361,064 (540) - 360,524
Financial assets at fair value through profit or loss at 28 February 2023
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Equity investments 362,248 - - 362,248
Total financial assets carried at fair value 362,248 - - 362,248
Financial assets at fair value through profit or loss at 31 August 2023
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Equity investments 357,671 - - 357,671
Total financial assets carried at fair value 357,671 - - 357,671
There have been no transfers between levels of the fair value hierarchy during
the period.
The Company's holdings in options are included within Level 2.
Premiums from written options during the half-year ended 29 February 2024 were
£198,000 (half-year ended 28 February 2023: £81,000, year ended 31 August
2023: £576,000).
Financial liabilities
The senior unsecured notes are carried in the Statement of Financial Position
at par.
As at 29 February 2024, the fair value of the senior unsecured notes was
estimated to be £20,723,000 (28 February 2023: £20,075,000; 31 August 2023:
£19,808,000).
The fair value of the senior unsecured notes is calculated using a discount
rate which reflects the yield of a euro swap of similar maturity plus a
suitable credit spread. Within the terms of the senior unsecured notes are
clauses that would be enacted in certain scenarios should the notes be prepaid
by the Company before maturity. These clauses could impact the total amount
repayable.
The directors have assessed these and have concluded that these clauses are
highly unlikely to occur. The value of such additional payments has therefore
been deemed to be immaterial and has not been recognised in the financial
statements.
The senior unsecured notes are categorised as level 3 in the fair value
hierarchy.
Fair value hierarchy categories
These fair value measurements are categorised into different levels in the
fair value hierarchy based on the valuation techniques used and are defined as
follows under FRS 102:
Level 1: Valued using quoted prices in active markets for identical assets.
Level 2: Valued by reference to valuation techniques using observable inputs
other than quoted prices included in level 1.
Level 3: Valued by reference to valuation techniques using inputs that are not
based on observable market data.
5. Return per ordinary share
(Unaudited) (Unaudited)
Half-year ended Half-year ended (Audited)
29 February 2024 28 February 2023 Year ended
£'000 £'000 31 August 2023
£'000
The return per ordinary share is based on the following figures:
Revenue return 3,524 3,843 14,244
Capital return 13,792 3,896 (11,058)
Total 17,316 7,739 3,186
Weighted average number of ordinary shares in issue for each period 195,978,716 195,978,716 195,978,716
Revenue return per ordinary share 1.80p 1.96p 7.27p
Capital return per ordinary share 7.04p 1.99p (5.64)p
Total return per ordinary share 8.84p 3.95p 1.63p
The Company does not have any dilutive securities, therefore, the basic and
diluted returns per share are the same.
6. Dividends
£'000
Fourth interim dividend of 1.92p for the year ended 31 August 2023 (paid 30 3,763
November 2023)
First interim dividend of 1.92p for the year ending 31 August 2024 (paid 29 3,763
February 2024)
Total 7,526
The board has declared a second interim dividend of 1.92p per ordinary share
to be paid on 31 May 2024 to shareholders registered at the close of business
on 10 May 2024. The shares will be quoted ex-dividend on 9 May 2024.
7. Net asset value per ordinary share
The net asset value ("NAV") per ordinary share is calculated on the net assets
attributable to shareholders' funds and the number of ordinary shares in
issue. The NAV per ordinary share with debt at par and the NAV per ordinary
share with debt at fair value is calculated as follows:
(Unaudited) (Unaudited) (Audited)
29 February 2024
29 February 2023
31 August 2023
NAV per ordinary share with debt at par
Net assets (£'000) 354,160 356,175 344,370
195,978,716 195,978,716 195,978,716
Number of ordinary shares
180.7 181.7 175.7
NAV per ordinary share with debt at par (p)
NAV per ordinary share with debt at fair value
Net assets (£'000) 354,160 356,175 344,370
Add back debt at par (£'000) 25,514 26,123 25,542
Less debt at fair value (£'000) (20,723) (20,075) (19,808)
Net assets with debt at fair value (£'000) 358,951 362,223 350,104
195,978,716 195,978,716 195,978,716
Number of ordinary shares
183.2 184.8 178.6
NAV per ordinary share with debt at fair value (p)
8. Called up share capital
Number of shares in issue Nominal value
£'000
Ordinary shares of 1p each
In issue at start of year 195,978,716 1,960
At 29 February 2024 195,978,716 1,960
No ordinary shares were issued during the half-year to 29 February 2024
(half-year to 28 February 2023 and year to 31 August 2023: none).
9. Related party transactions
The Company's current related parties are its directors and Janus Henderson
Fund Management UK Limited ("Janus Henderson"). There have been no material
transactions between the Company and its directors during the period. The only
amounts paid to them were in respect of expenses and remuneration for which
there were no outstanding amounts payable at the period end.
In relation to the provision of services by Janus Henderson (other than fees
payable by the Company in the ordinary course of business and the provision of
marketing services) there have been no material transactions with Janus
Henderson affecting the financial position of the Company during the period
under review.
10. Going concern
The assets of the Company consist of securities that are readily realisable
and, accordingly, the directors believe that the Company has adequate
resources to continue in operational existence for at least twelve months from
the date of approval of the financial statements. Having assessed these
factors and the principal risks, as well as considering the heightened
macroeconomic uncertainties, the board has determined that it is appropriate
for the financial statements to be prepared on a going concern basis.
11. Comparative information
The financial information contained in this half-year report does not
constitute statutory accounts as defined in section 434 of the Companies Act
2006. The figures and financial information for the year ended 31 August 2023
are extracted from the latest published accounts and do not constitute the
statutory accounts for that year. Those accounts have been delivered to the
Registrar of Companies and included the report of the independent auditor,
which was unqualified and did not include a statement under either section
498(2) or 498(3) of the Companies Act 2006.
A glossary of terms and details of alternative performance measures can be
found in the annual report for the year ended 31 August 2023.
12. Half-year report
The half-year report will shortly be available on the Company's website
(www.hendersoninternationalincometrust.com
(http://www.hendersoninternationalincometrust.com) ) or in hard copy from the
Company's registered office. An abbreviated version of this half-year
report, the 'update', will be circulated to shareholders in mid-May 2024.
13. General information
Company status
Registered as an investment company in England and Wales.
London Stock Exchange (TIDM) Code: HINT
SEDOL/ISIN number: Ordinary shares B3PHCS8/GB00B3PHCS86
Global Intermediary Identification Number (GIIN): WRGF5X.99999.SL.826
Legal Entity Identifier (LEI): 2138006N35XWGK2YUK38
Registered office
201 Bishopsgate, London EC2M 3AE
Company registration number
7549407
Directors
The directors of the Company are Richard Hills (chairman), Jo Parfrey (chair
of the audit committee), Lucy Walker (senior independent director), Mai Fenton
and Aidan Lisser.
Corporate Secretary
Janus Henderson Secretarial Services UK Limited, represented by Sally Porter,
ACG.
Website
Details of the Company's share price and net asset value, together with
general information about the Company, monthly factsheets and data, copies of
announcements, reports and details of general meetings can be found at
www.hendersoninternationalincometrust.com
(http://www.hendersoninternationalincometrust.com) .
Financial assets at fair value through profit or loss at 28 February 2023
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Equity investments 362,248 - - 362,248
Total financial assets carried at fair value 362,248 - - 362,248
Financial assets at fair value through profit or loss at 31 August 2023
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Equity investments 357,671 - - 357,671
Total financial assets carried at fair value 357,671 - - 357,671
There have been no transfers between levels of the fair value hierarchy during
the period.
The Company's holdings in options are included within Level 2.
Premiums from written options during the half-year ended 29 February 2024 were
£198,000 (half-year ended 28 February 2023: £81,000, year ended 31 August
2023: £576,000).
Financial liabilities
The senior unsecured notes are carried in the Statement of Financial Position
at par.
As at 29 February 2024, the fair value of the senior unsecured notes was
estimated to be £20,723,000 (28 February 2023: £20,075,000; 31 August 2023:
£19,808,000).
The fair value of the senior unsecured notes is calculated using a discount
rate which reflects the yield of a euro swap of similar maturity plus a
suitable credit spread. Within the terms of the senior unsecured notes are
clauses that would be enacted in certain scenarios should the notes be prepaid
by the Company before maturity. These clauses could impact the total amount
repayable.
The directors have assessed these and have concluded that these clauses are
highly unlikely to occur. The value of such additional payments has therefore
been deemed to be immaterial and has not been recognised in the financial
statements.
The senior unsecured notes are categorised as level 3 in the fair value
hierarchy.
Fair value hierarchy categories
These fair value measurements are categorised into different levels in the
fair value hierarchy based on the valuation techniques used and are defined as
follows under FRS 102:
Level 1: Valued using quoted prices in active markets for identical assets.
Level 2: Valued by reference to valuation techniques using observable inputs
other than quoted prices included in level 1.
Level 3: Valued by reference to valuation techniques using inputs that are not
based on observable market data.
5.
Return per ordinary share
(Unaudited)
Half-year ended
29 February 2024
£'000
(Unaudited)
Half-year ended
28 February 2023
£'000
(Audited)
Year ended
31 August 2023
£'000
The return per ordinary share is based on the following figures:
Revenue return
3,524
3,843
14,244
Capital return
13,792
3,896
(11,058)
Total
17,316
7,739
3,186
Weighted average number of ordinary shares in issue for each period
195,978,716
195,978,716
195,978,716
Revenue return per ordinary share
1.80p
1.96p
7.27p
Capital return per ordinary share
7.04p
1.99p
(5.64)p
Total return per ordinary share
8.84p
3.95p
1.63p
The Company does not have any dilutive securities, therefore, the basic and
diluted returns per share are the same.
6.
Dividends
£'000
Fourth interim dividend of 1.92p for the year ended 31 August 2023 (paid 30
November 2023)
3,763
First interim dividend of 1.92p for the year ending 31 August 2024 (paid 29
February 2024)
3,763
Total
7,526
The board has declared a second interim dividend of 1.92p per ordinary share
to be paid on 31 May 2024 to shareholders registered at the close of business
on 10 May 2024. The shares will be quoted ex-dividend on 9 May 2024.
7.
Net asset value per ordinary share
The net asset value ("NAV") per ordinary share is calculated on the net assets
attributable to shareholders' funds and the number of ordinary shares in
issue. The NAV per ordinary share with debt at par and the NAV per ordinary
share with debt at fair value is calculated as follows:
(Unaudited)
29 February 2024
(Unaudited)
29 February 2023
(Audited)
31 August 2023
NAV per ordinary share with debt at par
Net assets (£'000)
354,160
356,175
344,370
Number of ordinary shares
195,978,716
195,978,716
195,978,716
NAV per ordinary share with debt at par (p)
180.7
181.7
175.7
NAV per ordinary share with debt at fair value
Net assets (£'000)
354,160
356,175
344,370
Add back debt at par (£'000)
25,514
26,123
25,542
Less debt at fair value (£'000)
(20,723)
(20,075)
(19,808)
Net assets with debt at fair value (£'000)
358,951
362,223
350,104
Number of ordinary shares
195,978,716
195,978,716
195,978,716
NAV per ordinary share with debt at fair value (p)
183.2
184.8
178.6
8.
Called up share capital
Number of shares in issue
Nominal value
£'000
Ordinary shares of 1p each
In issue at start of year
195,978,716
1,960
At 29 February 2024
195,978,716
1,960
No ordinary shares were issued during the half-year to 29 February 2024
(half-year to 28 February 2023 and year to 31 August 2023: none).
9.
Related party transactions
The Company's current related parties are its directors and Janus Henderson
Fund Management UK Limited ("Janus Henderson"). There have been no material
transactions between the Company and its directors during the period. The only
amounts paid to them were in respect of expenses and remuneration for which
there were no outstanding amounts payable at the period end.
In relation to the provision of services by Janus Henderson (other than fees
payable by the Company in the ordinary course of business and the provision of
marketing services) there have been no material transactions with Janus
Henderson affecting the financial position of the Company during the period
under review.
10.
Going concern
The assets of the Company consist of securities that are readily realisable
and, accordingly, the directors believe that the Company has adequate
resources to continue in operational existence for at least twelve months from
the date of approval of the financial statements. Having assessed these
factors and the principal risks, as well as considering the heightened
macroeconomic uncertainties, the board has determined that it is appropriate
for the financial statements to be prepared on a going concern basis.
11.
Comparative information
The financial information contained in this half-year report does not
constitute statutory accounts as defined in section 434 of the Companies Act
2006. The figures and financial information for the year ended 31 August 2023
are extracted from the latest published accounts and do not constitute the
statutory accounts for that year. Those accounts have been delivered to the
Registrar of Companies and included the report of the independent auditor,
which was unqualified and did not include a statement under either section
498(2) or 498(3) of the Companies Act 2006.
A glossary of terms and details of alternative performance measures can be
found in the annual report for the year ended 31 August 2023.
12.
Half-year report
The half-year report will shortly be available on the Company's website
(www.hendersoninternationalincometrust.com
(http://www.hendersoninternationalincometrust.com) ) or in hard copy from the
Company's registered office. An abbreviated version of this half-year
report, the 'update', will be circulated to shareholders in mid-May 2024.
13.
General information
Company status
Registered as an investment company in England and Wales.
London Stock Exchange (TIDM) Code: HINT
SEDOL/ISIN number: Ordinary shares B3PHCS8/GB00B3PHCS86
Global Intermediary Identification Number (GIIN): WRGF5X.99999.SL.826
Legal Entity Identifier (LEI): 2138006N35XWGK2YUK38
Registered office
201 Bishopsgate, London EC2M 3AE
Company registration number
7549407
Directors
The directors of the Company are Richard Hills (chairman), Jo Parfrey (chair
of the audit committee), Lucy Walker (senior independent director), Mai Fenton
and Aidan Lisser.
Corporate Secretary
Janus Henderson Secretarial Services UK Limited, represented by Sally Porter,
ACG.
Website
Details of the Company's share price and net asset value, together with
general information about the Company, monthly factsheets and data, copies of
announcements, reports and details of general meetings can be found at
www.hendersoninternationalincometrust.com
(http://www.hendersoninternationalincometrust.com) .
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on the Company's website (or any other website) are
incorporated into, or form part of, this announcement.
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