TIDMHDIV
RNS Number : 0253H
Henderson Diversified Income TstPLC
25 July 2023
JANUS HERSON FUND MANAGEMENT UK LIMITED
HERSON DIVERSIFIED INCOME TRUST PLC
LEGAL ENTITY IDENTIFIER: 213800RV2228EO1JEN02
25 July 2023
HERSON DIVERSIFIED INCOME TRUST PLC
Annual Financial Report for the Year Ended 30 April 2023
This announcement contains regulated information.
PERFORMANCE HIGHLIGHTS
TOTAL RETURN PERFORMANCE FOR THE YEAR
To 30 April 2023 To 30 April 2022
NAV(1) -4.0% -9.0%
Benchmark(2) -0.3% -7.0%
Share price(3) -1.0% -10.4%
At 30 April 2023 At 30 April 2022
----------------------------- -------------------------- --------------------------
NAV per share 71.88p 79.55p
Share price per share(3) 69.10p 73.80p
Revenue return per share 3.80p 4.65p
Net assets GBP130.9m GBP148.4m
Dividend per share for year 4.40p 4.40p
Dividend yield 6.37% 5.96%
Ongoing charge 0.98% 0.91%
Financial gearing 11.31% 16.71%
Company: Benchmark:
Carbon intensity 31.89 tCO2e (4) /Revenue 240.81 tCO2e(4) /Revenue
(1) Net asset value ('NAV') total return (including dividends
reinvested and excluding transaction costs)
(2) The benchmark is a blend of 60% Global High Yield Credit
(ICE Bank of America Global High Yield Constrained Index); 25%
Global Investment Grade Corporate Credit (ICE Bank of America
Global BBB Corporate Bond Index), and; 15% European Loans (Credit
Suisse Western European Leveraged Loan Index)
(3) Share price per ordinary share total return using mid-market
closing price (including dividends reinvested)
(4) tonnes Carbon Dioxide equivalent
Sources: Morningstar, BNP IRP Service, Janus Henderson and
Henderson Diversified Income Trust plc Annual Reports
INVESTMENT OBJECTIVE AND POLICY
The Company's investment objective is to provide shareholders
with a high level of income and preservation of capital, through
the economic cycle.
The Company invests in a diversified portfolio of global fixed
income and floating rate asset classes. The Company uses a dynamic
approach to portfolio allocation across asset classes and is
permitted to invest in a single asset class if required. The
Company seeks a sensible spread of risk at all times.
The Company has adopted the following allocation limits for each
asset class:
-- secured loans 0 to 100% of gross assets
-- government bonds 0 to 100% of gross assets
-- investment grade bonds 0 to 100% of gross assets
-- high yield (sub-investment grade) corporate bonds 0 to 100% of gross assets
-- unrated corporate bonds 0 to 10% of gross assets
-- asset backed securities 0 to 40% of gross assets
-- high yielding equities 0 to 10% of gross assets
As a matter of policy, the Company will not invest more than 10%
in aggregate of its net assets in a single corporate issue or
issuer.
The Company has adopted the following investment
restrictions:
-- The Company will not make any direct investments in corporate issuers who derive more than 10 per cent. of their
revenue from oil and gas generation and production, oil sands extraction, shale energy extraction, thermal coal
extraction and power generation, and Arctic oil and gas extraction.
-- The Company will not make any direct investments in corporate issuers that the Board, as advised by the
investment manager, deems to have failed to comply with the United Nations Global Compact principles.
-- The Company will not directly invest in sovereign bond issuers that have been sanctioned by the European Union or
United Nations and/or that do not score 'free' by the Freedom House Index (or other such similar index as
determined by the Board as advised by the investment manager) that promotes political rights and civil liberties.
-- The Company will not make any direct investments in issuers who derive any of their revenue from fur or
controversial weapons
-- The corporate bond portion of the Company will aim to have a lower carbon intensity than its relevant reference
universe on a monthly basis.
-- Under normal market conditions, the Company will also exclude sovereign bond issuers that have not ratified the
Paris Agreement. Should the US choose to exit the Paris Agreement during a future political cycle, the Investment
Manager will consider whether excluding US Treasuries from the Company would be excessively detrimental to
returns and/or whether it would change the risk-return profile of the Company.
The Company may use financial instruments known as derivatives
to enhance returns. They may also be used to reduce risk or to
manage the Company's assets more efficiently. The use of
derivatives may include credit derivatives (including credit
default swaps) in addition to interest rate futures, interest rate
swaps and forward currency contracts. The credit derivatives,
interest rate futures and swaps are used to take a synthetic
exposure to, or to hedge, an investment position where the
derivative contract is more efficient or cost effective than a
position in the underlying physical asset. The Company's exposure
to derivatives is capped at a maximum net long or net short
position of 40% of net assets.
The Company may also employ financial gearing for efficient
portfolio management purposes and to enhance investment returns,
but total gearing (both financial gearing and synthetic gearing
combined) may not exceed 40% of net assets. Forward currency
contracts are used to hedge other currencies back to sterling.
Any material change to the investment policy of the Company will
only be made with the approval of shareholders.
CHAIRMAN'S STATEMENT
Introduction
It has been a challenging year for your Company. Performance in
the second half picked up after an unusual concentration of
remarkable political and economic events in the first half. I am
disappointed to report however that while this was an improvement,
it was insufficient to offset the performance of the first half and
the net asset total return to shareholders has been -4.0% for the
year as a whole.
The share price, expressed as a total return, has fared
marginally better falling 1.0%. This reflects the shares trading at
a narrower discount to net asset value ('NAV').
These have been challenging times with rising interest rates
globally, high profile bank failures and economic uncertainty.
Inflation has proven much stickier than perhaps anticipated by the
Bank of England, and raising interest rates has, thus far, done
little to contain it.
Performance
At the half year the Company reported a negative total NAV
return of -10.4% which represented underperformance relative to the
Company's benchmark of 3.8%. In the second half performance
improved with a total NAV return increase of 7.1%, slightly
outperforming the benchmark. Accordingly, the Company's NAV total
return has underperformed its benchmark by 3.7% during the
financial year.
As you will see in their report, the Fund Managers attribute
this underperformance mainly to an overweight position in sterling
financial bonds which were badly impacted by the Truss Government's
mini budget. A further contributor was their firmly held view that
the global economy is in a more precarious position than markets
recognise. This caused them to hold an overweight position in
higher rated, longer duration, investment grade bonds which are
expected to perform well in a falling interest rate
environment.
Last year I commented that there was a real risk of sustained
inflation, and that the Fund Managers argued recession was likely.
Recession, except perhaps in the Eurozone, has not yet come to
pass, although there is little argument that sustained inflation
has been a feature of most, if not all, economies. The Fund
Managers continue to expect significant economic downturns, in both
the US, the largest market to which your Company is exposed, but
also particularly in the Eurozone and UK. They believe the
overweight position discussed above would prosper in these
circumstances.
In order to provide the Fund Managers with the greatest possible
flexibility, the Board resolved last year that, if necessary, the
dividend could be paid in part from reserves rather than current
year income. They took advantage of this during the year, and most
of the accrued revenue reserves have been used to bolster the
dividend. As a Board, we remain sensitive to the fact that the
dividend is important for shareholders. We are therefore keeping
portfolio income and its likely trajectory under careful
review.
AGM
The Board is always pleased to meet with shareholders, to hear
their concerns and answer any questions they may have, and the AGM
is an excellent chance for us to do this. This year the AGM will
once again be held at Janus Henderson's offices at 201 Bishopsgate,
London EC2M 3AE on 9 October 2023 at 2.30 p.m. I look forward to
welcoming those shareholders who attend in person at the meeting.
For those unable to travel, the meeting will be broadcast on the
internet at www.janushenderson.com/trustslive . Whilst you will be
able to submit questions if you're watching online, you will not be
able to vote your shares, so I would encourage you to submit your
vote via proxy ahead of the meeting if you don't intend to be there
in person.
Dividends
For the year ended 30 April 2023, a third interim dividend of
1.10p (2022: 1.10p) per ordinary share was paid on 31 March 2023
and a fourth interim dividend of 1.10p (2022: 1.10p) per ordinary
share was paid on 30 June 2023, making a total of 4.40p per
ordinary share for the year, in line with our expectations. These
dividends have been paid as interest distributions for UK tax
purposes.
Buying Back Shares
As previously notified to shareholders, the Board will act to
buy-back the Company's shares, where it is deemed accretive to
shareholders to do so. During the year, 4.5 million shares were
bought back at an average discount of 6.83%. The Board continues to
work with both the Fund Managers and its broker to monitor the
discount and enhance the market in the Company's shares.
Company Objectives
Whilst share buybacks have been accretive, the size of the
Company has consequently reduced, and the Company remains
relatively small, meaning that costs are shared over a diminishing
asset base when compared to other investment trusts. These costs
eat into the returns available for distribution. This small size
also impacts liquidity in the Company's shares.
At inception in 2007, the objective of the Company was to invest
in a wide range of fixed income instruments including secured
loans. This would allow the Fund Managers to take advantage of the
credit cycle to increase the allocation to loans when interest
rates rose, protecting investors against capital losses. It was
also envisaged there would be opportunities for capital growth in
periods of falling interest rates which would enhance total
returns.
Quantitative easing and the persistence of negative real
interest rates during the last decade were not envisaged at launch.
As a consequence, returns from loans have looked relatively
unattractive and the Fund Managers chose not to invest in loans
because they felt a reasonable reward was not available for the
risks
taken. It is not clear whether this will change in the near future.
Of greater concern is the challenge to income in the future. We
are very aware that shareholders are principally interested in the
yield offered by the Company's shares. The sustainability of this
yield, and the risks necessary to achieve it, are an area of
increasing focus for the Board, especially as revenue reserves have
diminished.
The Board are therefore concerned that the structure of the
Company as originally envisaged does not allow the Fund Managers to
preserve the real value of the capital of its shareholders, and
feel that perhaps an alternative investment process could offer
greater scope to provide a more consistent return to our
shareholders. The Board have not reached any conclusions on these
matters but will be considering options for
the Company in the near term. We will report any recommendations to you as soon as we are able.
Outlook
As has been communicated before, the Fund Managers have a
distinct view of the economic outlook. This has served the Company
well in the past. As they describe in their report, they have
positioned the portfolio to have longer duration and lower credit
risk. This is consistent with their view of the global economy.
Their thesis is described in detail in the Fund Managers' report
and I would urge shareholders to read it carefully. Such active
management can result in significant deviation from the benchmark,
hopefully positive but also, as we have seen, negative.
Angus Macpherson
Chairman
FUND MANAGERS' REPORT
Performance
The Company's net asset total return fell by 4.0% over the 12
months to 30 April 2023, underperforming the benchmark which
returned -0.3%. The share price total return was -1.0% reflecting a
narrowing of the discount over the period. The underperformance to
benchmark was driven by being overweight investment grade and
underweight both high yield bonds and leveraged loans - all of this
detracted from relative performance by a modest amount
(approximately -0.2% to -0.4%). The more significant detractor was
the relative overweight to sterling financial bonds which performed
very poorly given the Liz Truss mini-budget debacle affecting the
Gilt market. Financial bonds then slumped further towards to the
end of the period under review given the run on Silicon Valley Bank
and the managed takeover of Credit Suisse (which we did not hold)
by UBS. Earnings were lower over the period as we ran gearing at a
structurally lower level. We maintained the dividend and used most
of the revenue reserve which is now broadly depleted. We expect to
maintain the dividend at the current level albeit if we need to be
dip into capital reserves for a short period of time.
Macro Backdrop
As discussed in our last outlook we feel the global economy is
in a precarious position. The extraordinary size of the monetary
and fiscal stimulus to enable a successful exit from COVID has led
to a classic sine wave boom/bust business cycle response akin to
fighting a war. With the benefit of hindsight policymakers have
needed to put the brakes on too late and too hard to stamp down on
the less than "transitory" inflationary surge. Bottlenecks were of
course compounded by the surprising tightness of the labour market
and the Ukraine War adding significant fuel to the fire. Investing
at this time in the cycle is always challenging and is often
compared to picking up pennies in front of a steam roller. We have
seen a very aggressive and broadly co-ordinated tightening in
global monetary conditions - it is unusual to have such a
synchronised upswing and then downswing across the globe. The good
news is that in America, at least, the medicine is working as core
and headline inflation have peaked out and are fading. Many of the
global supply bottlenecks have disappeared as witnessed by the
extra-ordinary slump, albeit from high levels, in vital commodities
such as oil, gas, copper and lumber amongst others. Many
corporations have found it very hard to manage stock levels given
the changing demand patterns, as consumption shifted from
stay-at-home goods to "revenge spending" (expenditure meant to make
up for lost time after an event such as the pandemic) on services
such as eating out and travel.
The bulk of our portfolio is invested in American companies -
the US policy response has been more coherent and successful than
Europe and the UK which seem to have some semi-persistent inflation
lags. Labour markets are now more balanced, and we expect the cycle
to evolve in this area as the long and variable lags of monetary
policy begin to bite. Market commentators often say that the
Federal Reserve raises rates until something breaks. Well, the
aggressive raising on short-term rates altered depositor and
investment behaviour most pertinently in some American regional
banks. This caused a digital bank run which is a new phenomenon.
Further, the swift demise and wipe out of Credit Suisse junior
bonds demonstrates the pressure some weaker financial institutions
were under, from depositor confidence, not capital. We always keep
a keen eye on the quarterly bank lending surveys - these were
already tight and interestingly, the most recent surveys highlight
a decline in the demand for credit as well as a decrease in the
supply and cost of credit.
As noted earlier, the UK is an outlier, with headline CPI at
8.7% in April, above consensus forecasts of 8.2% and a (still
rising) core CPI of 6.8%. Following the robust core inflation print
and wage growth at the end of April, the UK data sparked worries
about a wage price spiral which meant terminal rate expectations
were lifted. This reflects concerns that interest rates have
limited traction and that monetary policy is behind the curve. This
argument ignores the inherent lags of monetary policy. This
repricing has created attractive front-end yields of 6-7.75% for
Sterling investment grade bonds.
Asset Allocation & Stock Selection
Against this late-cycle background, with flat or inverted yield
curves it is hard for bonds to perform in the short term. Given the
above macro-outlook we became more cautious in our asset
allocation. We reduced our high yield holdings by approximately
12%, to around 40% at year end. We increased our investment grade
holding by around 13% to approximately 50% by year end. By doing
this we reduced default risk and increased our duration risk
(interest rate sensitivity). In the event of a severe downturn,
high yield, being a risk asset, can trade down significantly whilst
investment grade spreads would widen but to a much lesser degree
and have a reasonable, but not perfect correlation to the direction
of sovereign bonds. In hindsight over the 12 months there was
limited divergence, both falling around 1%. We generally sold the
higher beta and lower rated bonds in high yield. In addition, we
reduced beta by trimming the overweight to banking and insurance
bonds. The loan percentage was trimmed very modestly over the
period but was broadly stable. In addition, in the Autumn, given
the shape of the yield curve, we added some short dated financial
and industrial bonds in the 6%/7% area - it is rare such short
dated bonds yield so much. Finally, we ran gearing materially lower
over the period - as we felt it was the wrong time in the cycle to
be leveraged. In a systemic shake out we would look to add a
significant amount of geared exposure - a degree of patience and
perspective will be needed here. We normally need to run gearing
around 20% to generate enough income to pay the dividend. The Board
and management team see this as a temporary holding period as we
await the economic cycle to turn down.
The main asset classes we invest in returned the following: -
Global High yield bonds (60% of benchmark) fell 0.8%, Global BBB
Investment grade bonds (25% of benchmark) fell 1.5% and European
leveraged loans (15% of benchmark), which float over short-term
rates, gained 3.6%. To which, the obvious question is, why did you
not hold more leveraged loans? Firstly, loans a few years ago did
not yield enough to achieve our income objective given how low base
rates were. Secondly, the quality of leveraged loan issuance this
cycle has deteriorated materially, being the rating, covenant
protection, leverage or business resilience. So, it was for good
long-term reasons we were cautious on loans. They have continued to
perform well but may be fading more recently. Interestingly, the
current downgrade to upgrade ratio of loans to bonds is running
about 2.5 times to 1. Annualised default rates in loans are also
running at roughly twice the level of high yield bonds and the
relatively few recoveries (i.e. what you receive in bankruptcy) are
surprisingly low in a historical context. Another theme we have
observed has been how the leveraged loan market has "stolen" supply
from the high yield bond market in the debt financings on leveraged
buyouts (companies going private). This of course has limited new
supply into the high yield market which has caused the market to
shrink, thereby improving the technical backdrop. Another related
theme is the extraordinary growth of the private credit markets,
which again have outcompeted in offering favourable financing terms
versus the mainstream, public, high yield market. Given this
backdrop we favoured the more defensive investment grade market
over the more levered high yield and leveraged loan markets. As
discussed above this was a small detractor versus the benchmark.
The more meaningful detractor was the appalling performance of
Gilts which fell over 16% over the period. Sterling credit which
prices over Gilts fell 7.7% and an index of junior banking bonds,
so called "Cocos" (Contingent convertible capital instruments),
fell 10%. Our banking and insurance bonds performed poorly. We
continue to favour such names as Nationwide and Bupa, both mutual
organisations, and foresee no credit concerns. However, they traded
down in sympathy with the sector. Another detractor was Direct
Line, which had a number of profit warnings and struggled after a
very favourable lockdown period. On the more positive side, Service
Corporation International, an American funeral operator which we
have held for decades, was a positive performer, as was TransDigm
(aircraft parts supplier) and Restaurant Brands International
(Burger King). By sector, versus the benchmark we lost performance
in financials, asset backed bonds, energy and gained in a relative
sense in real estate (we hold a number of data warehouses, not
office blocks), media, retail and telecommunications.
ESG
We have seen no material change to our investment policy
following the amendments to the investment objective and policy
that we made for ESG considerations in 2022. Please see the
disclosures on our ESG approach in the annual report for further
analysis.
Outlook
This cycle seems like a classic boom/bust one, with potential
for significant depth and duration. It is of course an inflationary
cycle, and nominal growth has muddied and delayed many historical
economic relationships. However, if you believe in business cycle
analysis, we continue to remain relatively cautious from here. We
expect a significant downturn. This would, with careful judgment,
give us an opportunity to gear the Company and make back some of
what we consider is only temporary depletion of capital. We will
continue to stick to our sensible income credit selection strategy
into a period of expected volatility.
John Pattullo, Jenna Barnard and Nicholas Ware
Fund Managers
PORTFOLIO INFORMATION
TEN LARGEST INVESTMENTS AT 30 APRIL 2023
Market
value % of
Ranking 2023 (2022) Investment Country Industry GBP'000 portfolio
------------------- ------------------------------- ------- --------------------- -------------- -----------
1 (13) T-Mobile US Communications 4,130 2.84
2 (8) Service Corp US Consumer non-cyclical 3,301 2.27
3 (76) Trivium US Industrials 3,226 2.21
4 (1) Nationwide Building Society UK Financials 2,971 2.04
5 (11) Royal Bank of Scotland UK Financials 2,903 1.99
6 (9) Restaurant Brands International Canada Consumer cyclical 2,825 1.94
7 (10) Lloyds Group UK Financials 2,776 1.90
8 (21) Tesco UK Consumer non-cyclical 2,760 1.90
9 (2) Crown Castle US Industrials 2,722 1.87
10 (3) Virgin Media UK Communications 2,576 1.77
MANAGING RISKS
The Board, with the assistance of the Manager, has carried out a
robust assessment of the principal risks facing the Company,
including those that would threaten its business model, future
performance, solvency and liquidity. The Board will continue to
monitor this position.
The Company is an investment trust and the Board is wholly
non-executive. The Board has delegated many of its functions to
third-party service suppliers including Janus Henderson and BNP
Paribas. However, certain risks and functions cannot be delegated
and are retained by the Board.
The following summary identifies those risks and uncertainties
that the Board believes are the most significant and explains
whether, and if so how, they are mitigated. This reflects the
Company's risk map.
The Board has analysed risk from the perspectives of the markets
in which it invests and its operations.
PRINCIPAL MARKET RISKS
The Board has agreed with the Manager that it seeks to provide
shareholders with a high level of income and preservation of
capital, through the economic cycle. To achieve this the Fund
Managers identify risk assets that they believe adequately
compensate the Company for the risks that arise. The Board has set
limits on the class of debt and equity assets that may be utilised
by the Manager and given permission for the Manager to leverage the
portfolio through significant on balance sheet and synthetic
gearing. As a result investors are exposed to a number of risks
which are not mitigated and may give rise to gains and losses which
may be significant.
The Board is conscious that predictable dividend distributions
are particularly important to shareholders. Dividends are
principally declared from net revenue income although the Board
does have the power to declare dividends out of capital.
Net revenue income arises in the main from seeking interest rate
and credit returns from investments. The selection of such
investments is based on the judgment of the Fund Managers as to
current and expected market conditions. The Board believes that the
principal market risks (set out below) faced by the Company and its
shareholders arise from interest rate, credit and currency
risks.
Market risk Mitigation
Interest rate risk The Board has not set any limits
The Company takes on interest on the amount of interest rate risk
rate risk so as to deliver portfolio that may be taken by the Manager
returns. other than to limit the gross on
balance sheet and synthetic leverage
Reductions in market interest to 40% of net assets.
rates will reduce gross and net
revenue income and this effect The Board discusses interest rate
may be amplified by the use of risk with the Fund Managers at each
leverage. Board meeting and probes their assessment
of market conditions and their judgment
Such falls may be mitigated for as to the direction of interest rates
a period if the Company has invested and speed of development.
in longer term fixed rate assets
prior to such market movements. The Board receives a projection of
net income on a monthly basis and
The Company invests in secured probes the income realised to date
loans. Whilst such secured loans and forecast to the financial year
may contain fixed interest rates, end.
they may also contain prepayment
provisions that reduce their effectiveness The Board receives a list of the
at mitigating interest rate risk. assets in the portfolio which contains
details of interest rates and periods
Increases in market interest rates to maturity at each Board meeting.
can reduce net asset value if
interest rates rise whilst holding The Board supports the use of interest
fixed rate assets of longer duration. rate derivatives to increase, as
well as manage and mitigate interest
Interest rate risk also arises rate risk. The interest rate risk
from an investment in interest profile of the portfolio as at the
rate derivatives and the use of year end is set out in Note 14.1.3
rolling forward foreign exchange to the financial statements within
contracts. the Annual Report.
-------------------------------------------
Credit risk The Board has not set any limits
The Company takes on credit risk on the credit quality of the portfolio.
so as to deliver portfolio returns. The Board relies on the Fund Managers
to make investment decisions in this
Investing in debt securities and regard given the level of skill and
secured loans exposes the Company experience in debt securities and
to credit risk from company defaults secured loan lending within the fund
and restructurings. management team.
Whilst it may be possible to hold The Board receives a report of the
a debt instrument to maturity, assets held in the portfolio at each
and be paid out in full, the Fund Board meeting and discusses credit
Managers have discretion to sell quality and default trends with the
a distressed asset which would Fund Managers.
give rise to realised losses without
a default having occurred. The credit rating table for the portfolio
at the year end is disclosed in Note
Reductions in credit spreads will 14.3 to the financial statements
reduce gross and net income and within the Annual Report.
this effect may be amplified by
leverage.
Reductions in spreads may also
reduce the availability of assets
which the Manager believes would
appropriately compensate the Company
and its shareholders for the credit
risk assumed leading to reduced
flexibility if the portfolio needs
to be repositioned.
The Company is also exposed to
counterparty credit risk through
the use of derivatives.
-------------------------------------------
Currency risk The capital amount of any investment
The Company invests in assets denominated in a foreign currency
of fixed amounts denominated in is hedged to sterling so as to mitigate
currencies other than sterling currency gains and losses.
which give rise to currency risk.
The Board receives a report of gross
Significant gains and losses would and hedged currency positions at
likely be incurred on the liquidation each Board meeting so it can monitor
of such assets when repatriating the level of hedging actually undertaken.
capital to sterling. Less significant Gross and net hedging currency exposures
gains and losses are incurred are set out in Note 14.1.2 to the
on repatriating interest and other financial statements within the Annual
income to sterling. Report.
The Custodian undertakes a rolling
programme of forward sales of
foreign currency which gives rise
to elements of interest rate risk
and credit default risk with the
counterparty.
-------------------------------------------
PRINCIPAL OPERATIONAL RISKS
In terms of operational risk, the Board has determined that the
principal risks arise from its relationship and management of
third-party service suppliers and from the nature of the activities
of the Company to the degree that they are unusual when compared to
other investment trusts .
Operational risk Mitigation
Continued interest and commitment The Board has an extensive and
of Jenna Barnard, John Pattullo ongoing dialogue with Jenna,
and Nicholas Ware as Fund Managers John and Nicholas on a quarterly
Jenna and John have directed basis and seeks to ensure that
the portfolio since its launch, they remain interested and committed
Nicholas being appointed as co-manager to the portfolio.
from 1 January 2022 and the portfolio
reflects their assessment of The Board discusses this risk
current economic conditions and regularly with Janus Henderson
likely market opportunities and management and seeks to ensure
developments. that Jenna, John and Nicholas
remain allocated to the portfolio
It may prove difficult to replace and are appropriately rewarded
any or all of them should they for their services.
decide to step down or if Janus
Henderson allocates them to alternative
funds under management. Any replacements
may have a different style and
different view of how the benchmark
return may best be met.
------------------------------------------
Continued interest and commitment The Board has a regular dialogue
of Janus Henderson as Investment with representatives of Janus
Manager and its operation of Henderson about their support
effective systems of internal for the Company and annually
control and management reporting assesses their performance to
(and execution and settlement ensure that economies of scale
of secured loans) and other benefits from the relationship
The Board appointed Janus Henderson are in fact being delivered.
as its Manager at inception and
the Group has supported shareholders The Board receives regular reports
since listing the predecessor on compliance with laws and regulations
company. and receives regular updates
as new legislation is enacted.
The Board benefits from the extensive
knowledge and experience of Janus The Board receives an annual
Henderson who manage a substantial report on internal controls in
portfolio of investment trusts operation at Janus Henderson
and the economies of scale from and is promptly made aware of
contracting with other investment any compliance failings and how
trusts for services. they are remediated. The Board
also receives an annual report
The Board relies on the knowledge on internal controls at BNP Paribas
and expertise of Janus Henderson in respect of its collateralized
in ensuring that the Company loan obligations and loan administration
complies with all relevant laws services and is promptly made
and regulations which include aware of any compliance failings
company law, securities legislation, and how they are remediated.
data protection, anti-bribery
and corruption and anti-tax evasion On an annual basis the Board
legislation. reviews the quality of the service
it has received and any issues
It may prove difficult to replace and provides feedback to Janus
the Manager with an alternative Henderson.
provider that would bring the
same knowledge, experience and
economies of scale should Janus
Henderson decide to exit the
investment trust business or
to cease trading.
------------------------------------------
ESG reputational risk The Company's ESG criteria are
The Company has transitioned considered to be sufficiently
to Article 8 status under SFDR. clear and measurable. These criteria
Decisions on ESG matters can and the Company's adherence to
be subjective and criteria may them are monitored and reviewed
change as knowledge, technology on a regular basis. Should the
and science evolves. There is Board or the Manager consider
a risk that an investment, assessed it appropriate to review or alter
as appropriate at a point in the criteria, this would be considered
time, subsequently does not meet on a case by case basis against
ESG criteria, and exposes the known factors prevailing at the
Company to reputational risk. time.
------------------------------------------
Reliance on credit standing The Board assessed the credit
and quality of service of BNP standing of BNPPSS, and subsequently
Trust Corporation UK (BNPTCo) BNPTCo, on a regular basis and
as the appointed Depositary and keeps aware of market commentary
Custodian of assets and their should adverse events and circumstances
execution and settlement of transactions begin to appear.
(other than secured loans)
The Board originally appointed The Board received an annual
BNP Paribas as its Depositary. report on internal controls in
BNP Paribas acted as Depositary operation at BNP Paribas (Fund
during the year under review, Administration, Global and Local
however, this agreement was novated Custody, Middle Office Functions
to BNPTCo in 2022. As Depositary and Collateralized Loan Obligations),
BNPTCo acts as the Company's will receive the same in respect
investment Custodian, with responsibility of BNPTCo and would be made aware
for transaction execution and promptly of any compliance failings
settlement. and how they are remediated.
The Company is reliant on BNPTCo On an annual basis the Board
operating effective systems to reviewed the quality of the service
ensure the Company's transactions received by BNP Paribas Depositary
are undertaken promptly, that and Custodian and discusses any
they are properly recorded, that issues. The same reviews will
assets are kept segregated from be carried out in respect of
those of other clients, and that BNPTCo going forward.
the credit rating of BNPTCo does
not deteriorate or the custodian
fails such that assets are not
immediately recoverable.
------------------------------------------
Reliance on service providers The Board receives a regular
to manage and control certain report on net income earned to
features of the portfolio date and a projection of net
The investment portfolio contains income to the end of the year.
certain assets and liabilities The Board uses this to obtain
(that are not present in most comfort that the portfolio and
investment trusts) that require its risks are being managed as
specific procedures and internal intended. It also receives a
controls to be present for the monthly investment limits and
Company, as follows: restrictions schedule that confirms
that the Manager has complied
The Company invests in secured with the Board set investment
loans which are individually limits and restrictions each
documented and require additional month that includes borrowing
systems and controls to manage. covenants.
The Company uses forward foreign On a quarterly basis the Board
exchange contracts to hedge currency receives and reviews detailed
exposure and may use future interest reports with Janus Henderson
rate agreements to manage interest including:
rate risk which require specialised
reports to be produced to monitor - balance sheet
net risks. - income statement
- asset listing including purchases
The Company has borrowed funds and sales
and given covenants to the lender - revenue forecast
regarding certain ratios which - gross and net currency position
require monitoring to ensure
they are met.
------------------------------------------
CONFLICT IN UKRAINE
The Board have assessed how the ongoing impact of the conflict
in Ukraine may impact the Company's principal market and
operational risks and concluded that the Company is remarkably
resilient to this risk.
EMERGING RISKS
The Board have defined emerging risks as "known unknowns" and
have concluded that the existing principal market and operational
risks capture sufficiently the risks faced by the Company.
VIABILITY STATEMENT
The Company seeks to provide shareholders with a high level of
income and preservation of capital, through the economic cycle. The
Board aims to achieve this by pursuing the Company's business model
and strategy through its investment objective and policy. The
current investment objective and policy is set out in full earlier
in this announcement.
The Board will continue to consider and assess how it can adapt
the business model and strategy of the Company to ensure its
long-term viability in relation to the principal risks as detailed
above.
In assessing the viability of the Company, the Board also
considers the prospects of the Company including the liquidity of
the portfolio (which is mainly invested in readily realisable
listed securities), the level of borrowings (which are restricted),
the closed-ended nature as an investment company (therefore there
are no liquidity issues arising from unexpected redemptions) and a
low ongoing charge (0.98% for the year ended 30 April 2023 (2022:
0.91%)).
The Company retains title to all assets held by the Custodian
under the terms of the formal agreement with the Depositary, cash
is held with approved banks and revenue and expenditure forecasts
are reviewed monthly by the Board.
The Board therefore believes it is appropriate to assess the
Company's viability over a three-year period, taking account of the
Company's current position and the assessment factors detailed
above.
When assessing the viability of the Company over the next three
years the directors have considered its ability to meet liabilities
as they fall due. This included consideration of the principal
risks as set out above, covenant levels on the loan facility, the
cash flow forecast to meet dividend flow and liquidity of the
portfolio.
The directors continue to support the Fund Managers investment
strategy.
The directors consider the COVID-19 pandemic to have highlighted
the advantages of holding an investment trust. The directors do not
envisage that any change in strategy or investment objective, or
any events, would prevent the Company from continuing to operate
over the next three years as the Company's assets are liquid, its
commitments are limited, and the Company intends to continue to
operate as an investment trust. The Board takes comfort in the
robustness of the Company's position, performance, liquidity and
the well-diversified portfolio designed by the Fund Managers. The
Board is confident that the Company is well equipped to navigate
this uncertain inflationary environment and therefore has a
reasonable expectation that the Company will continue in operation
and meet its liabilities as they fall due up to and including the
year ended 30 April 2026.
RELATED PARTY TRANSACTIONS
The Company's transactions with related parties in the year were
with the directors and the Manager. There have been no material
transactions between the Company and its directors during the year.
The only amounts paid to them were in respect of remuneration for
which there were no outstanding amounts payable at the year end.
Directors' Interests in Shares are disclosed in the Directors'
Remuneration Report within the Annual Report. In relation to the
provision of services by the Manager (other than fees payable by
the Company in the ordinary course of business and the facilitation
of marketing activities with third parties) there have been no
material transactions with the Manager affecting the financial
position or performance of the Company during the year under
review. More details on Transactions with the Manager, including
amounts outstanding at the year end, are given in Note 23 to the
financial statements within the Annual Report.
The directors confirm that in accordance with Listing Rule
9.8.4(7) there are no further disclosures that need to be made in
this regard.
DIRECTORS STATEMENT OF RESPONSIBILITIES
Each of the directors confirm that to the best of his/her
knowledge:
-- the Company's financial statements, which have been prepared
in accordance with UK adopted International Accounting Standards in
conformity with the requirements of the Companies Act 2006, give a
true and fair view of the assets, liabilities, financial position
and profit of the Company; and
-- the Strategic Report and financial statements include a fair
review of the development and performance of the business and the
position of the Company, together with a description of the
principal risks and uncertainties that it faces.
For and on behalf of the Board
Angus Macpherson
Chairman
STATEMENT OF COMPREHENSIVE INCOME
Year ended 30 April
2023 Year ended 30 April 2023
Revenue Capital Revenue Capital
return return Total return return Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ----------- ----------- ---------- -------------- ----------- -----------
Net losses on investments
at fair value through profit
or loss - (7,388) (7,388) - (26,063) (26,063)
(Losses)/gains on foreign
exchange transactions at
fair value through profit
or loss - (5,177) (5,177) - 2,887 2,887
Investment income (note
3) 8,280 - 8,280 9,953 - 9,953
Other operating income
(note 4) 57 - 57 17 - 17
---------- ---------- -------- ---------- ---------- --------
Total income/(loss) 8,337 (12,565) (4,228) 9,970 (23,176) (13,206)
---------- ---------- --------- ---------- ---------- ---------
Expenses
Management fee (note 5) (416) (416) (832) (543) (543) (1,086)
Other expenses (note 6) (488) - (488) (465) - (465)
---------- ---------- -------- ---------- ---------- --------
Profit/(loss) before finance
costs and taxation 7,433 (12,981) (5,548) 8,962 (23,719) (14,757)
Finance costs (454) (454) (908) (172) (172) (344)
---------- ---------- -------- ---------- ---------- --------
Profit/(loss) before taxation 6,979 (13,435) (6,456) 8,790 (23,891) (15,101)
Taxation (note 6) - - - (15) - (15)
---------- ---------- -------- ---------- ---------- --------
Profit/(loss) after taxation 6,979 (13,435) (6,456) 8,775 (23,891) (15,116)
===== ====== ===== ===== ====== =====
Earnings/(loss) per ordinary
share
(note 7) 3.80p (7.32p) (3.52p) 4.65p (12.66p) (8.01p)
====== ====== ====== ====== ====== ======
The total columns of this statement represents the Statement of
Comprehensive Income, prepared in accordance with UK adopted
international accounting standards in conformity with the Companies
Act 2006. The revenue return and capital return columns are
supplementary to this and are prepared under guidance published by
the Association of Investment Companies. The Company had no other
comprehensive income. The loss after taxation is also the total
comprehensive income for the year.
STATEMENT OF CHANGES IN EQUITY
Year ended 30 April 2023
Called-up Capital
share capital redemption Share premium Distributable Capital Revenue
GBP'000 reserve GBP'000 reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- ------------- ------------- -------------- -------------- ------------- ------------- ----------
Total equity
at 1 May 2022 1,874 39 1,576 165,533 (23,804) 3,199 148,417
Total
comprehensive
income:
(Loss)/profit
after
taxation - - - - (13,435) 6,979 (6,456)
Transactions
with owners,
recorded
directly to
equity:
Cost of
buy-back of
shares (note
13) - - - - (3,007) - (3,007)
Dividends paid - - - - - (8,084) (8,084)
-------- -------- ----------- ----------- --------- --------- ----------
Total equity
at
30 April 2023 1,874 39 1,576 165,533 (40,246) 2,094 130,870
===== ===== ====== ======= ====== ===== ======
Year ended 30 April 2022
Called-up Capital
share capital redemption Share premium Distributable Capital Revenue
GBP'000 reserve GBP'000 reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- ------------- ------------- -------------- -------------- ------------- ------------- ----------
Total equity
at 1 May 2021 1,912 1 1,576 165,533 3,957 2,741 175,720
Total
comprehensive
income:
(Loss)/profit
after
taxation - - - - (23,891) 8,775 (15,116)
Transactions
with owners,
recorded
directly to
equity:
Cost of
buy-back of
shares (note
13) (38) 38 - - (3,906) - (3,906)
Dividends paid
(note 8) - - - - - (8,317) (8,317)
Proceeds from
predecessor
company (note
13) - - - - 36 - 36
-------- -------- ----------- ----------- --------- --------- ----------
Total equity
at
30 April 2022 1,874 39 1,576 165,533 (23,804) 3,199 148,417
===== ===== ====== ======= ====== ===== ======
STATEMENT OF FINANCIAL POSITION
At At
30 April 2023 30 April 2022
GBP'000 GBP'000
-------------------------------------------------- --------------- ---------------
Non current assets
Investments at fair value through profit or loss 145,676 173,224
Current assets
Other receivables 5,036 10,558
Cash and cash equivalents 648 1,806
---------- ----------
5,684 12,364
---------- ----------
Total assets 151,360 185,588
----------- -----------
Current liabilities
Other payables (788) (5,626)
Bank loan (19,702) (31,545)
---------- ----------
Total assets less current liabilities 130,870 148,417
====== ======
Net assets 130,870 148,417
====== ======
Equity attributable to equity shareholders
Called-up share capital 1,874 1,874
Capital redemption reserve 39 39
Share premium (note 11) 1,576 1,576
Distributable reserve 165,533 165,533
Capital reserve (40,246) (23,804)
Revenue reserve 2,094 3,199
---------- ----------
Total equity 130,870 148,417
====== ======
Net asset value per ordinary share (note 14) 71.88p 79.55p
====== ======
STATEMENT OF CASH FLOWS
Year ended Year ended
30 April 30 April
2023 2022
GBP'000 GBP'000
------------------------------------------------- ------------ ------------
Operating activities
Net loss before tax (6,456) (15,101)
Interest payable 908 344
Net losses on investments at fair value through
profit or loss 7,388 26,063
Losses/(gains) on foreign exchange transactions
at fair value through profit or loss 5,177 (2,887)
Net payments on settlement of forward foreign
exchange contracts (9,209) (7,143)
Net receipts on credit default swaps 121 206
Net receipts/(payments) on margin accounts 971 (1,999)
Decrease/(increase) in prepayments and accrued
income 639 (186)
Decrease/(increase) in other creditors (273) 267
Purchases of investments (58,099) (78,041)
Sales of investments 81,254 82,981
---------- ----------
Net cash inflow from operating activities
before
finance costs(1) 22,421 4,504
---------- ----------
Interest paid (841) (320)
Taxation paid on investment income - (15)
---------- ----------
Net cash inflow from operating activities 21,580 4,169
---------- ----------
Financing activities
Equity dividends paid (8,084) (8,317)
Buy-back of ordinary shares (3,007) (3,906)
Proceeds from predecessor company - 36
(Repayment)/drawdown of loans (11,843) 5,483
---------- ----------
Net cash outflow from financing (22,934) (6,704)
----------- -----------
Decrease in cash and cash equivalents (1,354) (2,535)
---------- ----------
Cash and cash equivalents at start of year 1,806 4,197
Exchange movements 196 144
---------- ----------
Cash and cash equivalents at 30 April 648 1,806
====== ======
(1) Cash inflow from interest income was GBP8,163,000 (2022:
GBP8,892,000) and cash inflow from dividends was GBP264,000 (2022:
GBP264,000).
NOTES TO THE FINANCIAL STATEMENTS
1. General information
The Company was incorporated on 23 February 2017. On 26 April
2017, the directors of its predecessor company, Henderson
Diversified Income Limited (the 'Jersey Company'), placed the
Jersey domiciled company into a Jersey Summary Winding Up and
transferred the shareholdings and assets and liabilities of the
Jersey Company to the Company. The Company is a registered
investment company incorporated and domiciled in the United Kingdom
under Companies Act 2006.
2. Accounting policies
a) Basis of preparation
The financial statements have been prepared in accordance with
UK-adopted international accounting standards in conformity with
the requirements of the Companies Act 2006. These comprise
standards and interpretations approved by the International
Accounting Standards Board ('IASB'), together with interpretations
of the International Accounting Standards and Standing
Interpretations Committee approved by the IFRS Interpretations
Committee ('IFRS IC') that remain in effect, to the extent that
IFRSs have been adopted by the UK Endorsement Board. Where
presentational guidance set out in the Statement of Recommended
Practice (the 'SORP') for investment companies issued by the
Association of Investment Companies (the 'AIC') is consistent with
the requirements of UK-adopted international accounting standards,
the directors have sought to prepare the financial statements on a
basis consistent with the recommendations of the SORP.
b) Going concern
The financial statements have been prepared on a going concern
basis and on the historical cost basis, except for the revaluation
of certain financial instruments held at fair value through profit
or loss. The principal accounting policies adopted are set out
below. These policies have been applied consistently throughout the
year.
The directors have considered the impact of COVID-19, cash flow
forecasting, a review of covenant compliance including the headroom
above the most restrictive covenants and an assessment of the
liquidity of the portfolio. They have concluded that they are able
to meet their financial obligations, including the repayment of the
bank loans, as they fall due for a period of at least twelve months
from the date of issuance. Having assessed these factors, the
principal risks and other matters discussed in connection with the
viability statement, the Board has determined that it is
appropriate for the financial statements to be prepared on a going
concern basis.
c) Significant accounting judgements 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.
3. Investment income
2023 2022
GBP'000 GBP'000
---------------------------------- ----------- -----------
Income from investments:
Dividend income 264 264
Bond and loan interest 7,714 8,488
Premiums on credit default swaps 302 1,201
---------- ----------
8,280 9,935
---------- ----------
4. Other operating income
2023 2022
GBP'000 GBP'000
------------------------- --------- ---------
Bank and other interest 57 17
---- ----
57 17
---- ----
5. Management fee
2023 2022
Revenue Capital Revenue Capital
return return Total return return Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- --------- --------- --------- --------- --------- ---------
Investment management
fee 416 416 832 543 543 1,086
------- ------- -------- ------- ------- --------
416 416 832 543 543 1,086
A summary of the terms of the management agreement is given in
the Annual Report.
6. Taxation
In the opinion of the directors, the Company has complied with
the requirements of Section 1158 and Section 1159 of the
Corporation Tax Act 2010 and will, therefore, be exempt from
corporation tax on any capital gains reflected in the capital
return during the year. The Company has elected to designate all of
the proposed and paid dividends as an interest distribution to its
shareholders. This distribution is treated as a tax deduction
against taxable income in the revenue return and results in a
reduction of corporation tax being payable by the Company at 30
April 2023.
The standard rate of corporation tax in the UK is 25% with
effect from 1 April 2023. However, the tax charge in the current
year was lower than the standard effective tax rate, largely due to
the reduction in corporation tax from the interest distribution
noted above. The effect of this and other items affecting the tax
charge is shown in note (b) below.
a) Analysis of charge in the year
2023 2022
Revenue Capital Revenue Capital
return return Total return return Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- ---------- ---------- ---------- --------- --------- ---------
Current tax:
Overseas withholding
tax - - - 15 - 15
------- ------- -------- ------- ------- --------
Total tax charge for
the year - - - 15 - 15
==== ==== ==== ==== ==== ====
b) Factors affecting the current tax charge for the year
2023 2022
Revenue Capital Revenue Capital
return return Total return return Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- --------- --------- --------- --------- --------- ---------
Net return before
taxation 6,979 (13,435) (6,456) 8,790 (23,891) (15,101)
UK corporation tax
charge at 19.5% (2033:
19.0%) 1,361 (2,620) (1,259) 1,670 (4,539) (2,869)
Effects of:
UK dividends (51) - (51) (50) - (50)
Currency losses - 1,758 1,758 - 1,329 1,329
Realised/unrealised
losses on investments - 692 692 - 3,074 3,074
Expenses not deductible
for tax purposes 1 - 1 - - -
Income being paid
as interest distribution (1,141) - (1,141) (1,520) - (1,520)
(Utilised)/excess
management expenses
and loan relationships (170) 170 - (100) 136 36
Irrecoverable overseas
withholding tax - - - 15 - 15
------- ------- -------- ------- ------- --------
Total tax charge
for the year - - - 15 - 15
==== ==== ==== ==== ==== ====
c) Provision for deferred taxation
No provision for deferred taxation has been made in the current
or previous year.
The Company has not provided for deferred taxation on capital
gains or losses arising on the revaluation in investments as it is
exempt from tax on these items because of its status as an
investment trust company, which it intends to maintain for the
foreseeable future.
The Company has not recognised a deferred tax asset totalling
GBP1,037,000 (2022: GBP1,037,000) based on the prospective
corporation tax rate of 25%. The deferred tax asset arises as a
result of having unutilised management expenses and unutilised
non-trade loan relationship deficits. These expenses will only be
utilised, to any material extent, if the Company has profits
chargeable to corporation tax in the future because changes are
made either to the tax treatment of the capital gains made by
investment trusts or to the Company's investment profile which
require them to be used.
d) Factors that may affect future tax charges
There are no factors which will affect the future tax
charge.
7. (Loss)/earnings per ordinary share
The total earnings per ordinary share figure is based on the net
loss attributable to the ordinary shares of GBP6,456,000 and on
183,481,385 ordinary shares (2022: loss of GBP15,116,000 on
188,788,384 ordinary shares) being the weighted average number of
ordinary shares in issue during the period.
The total earnings can be further analysed as follows:
2023 2022
GBP'000 GBP'000
-------------------------------------------- ------------ ------------
Revenue profit 6,979 8,775
Capital loss (13,435) (23,891)
---------- ----------
Loss for the year (6,456) (15,116)
====== ======
Weighted average number of ordinary shares 183,481,385 188,788,384
Revenue earnings per ordinary share 3.80p 4.65p
Capital loss per ordinary share (7.32p) (12.66p)
---------- ----------
Loss per ordinary share (3.52p) (8.01p)
====== ======
The Company does not have any dilutive securities therefore
basic and diluted earnings are the same.
8. Dividends
2023 2022
Dividends on ordinary Record date Payment date GBP'000 GBP'000
shares
------------------------------- --------------- ---------------- --------- ---------
Fourth interim dividend
(1.10p) for the year ended 6 June 30 June
30 April 2022 (2021 - 1.10p) 2022 2022 2,052 2,104
First interim dividend
(1.10p) for the year ended 9 September 30 September
30 April 2023 (2022 - 1.10p) 2022 2022 2,026 2,085
Second interim dividend
(1.10p) for the year ended 2 December 31 December
30 April 2023 (2022 - 1.10p) 2022 2022 2,003 2,066
Third interim dividend
(1.10p) for the year ended 3 March 31 March
30 April 2023 (2022 - 1.10p) 2023 2023 2,003 2,062
-------- --------
8,084 8,317
-------- --------
The fourth interim dividend has not been included as a liability
in these financial statements as it was announced and paid after 30
April 2023 (record date: 2 June 2023; payment date: 30 June
2023).
2023 2022
GBP'000 GBP'000
-------------------------------------------------------- --------- ---------
Revenue available for distribution by way of dividends 6,979 8,775
First interim dividend (2,026) (2,085)
Second interim dividend (2,003) (2,066)
Third interim dividend (2,003) (2,062)
Fourth interim dividend (2,003) (2,052)
-------- --------
Transferred (from)/to revenue reserve (1,056) 510
-------- --------
9. Share capital
2023
Number of Total Nominal value
shares entitled number of of shares
to dividend shares GBP'000
-------------------------------- ----------------- ----------------- -----------------
Ordinary shares of 1p each
At start of year 186,559,219 186,559,219 1,865
Buy-back of shares for
cancellation - - -
Buy-back of shares to Treasury (4,486,502) (4,486,502) (45)
---------------- ---------------- ----------------
Closing balance at 30 April 182,072,717 182,072,717 1,820
---------------- ---------------- ----------------
Treasury shares:
Opening balance - 875,084 9
Buy-back of shares to Treasury - 4,476,502 45
---------------- ---------------- ----------------
Closing balance - 5,361,586 54
---------------- ---------------- ----------------
Closing balance at 30 April 182,072,717 187,434,303 1,874
---------------- ---------------- ----------------
2022
Number of Total Nominal value
shares entitled number of of shares
to dividend shares GBP'000
-------------------------------- ----------------- ----------------- -----------------
Ordinary shares of 1p each
At start of year 191,267,033 191,267,033 1,912
Buy-back of shares for
cancellation (3,832,730) (3,832,730) (38)
Buy-back of shares to Treasury (875,084) (875,084) (9)
---------------- ---------------- ----------------
Closing balance at 30 April 186,559,219 186,559,219 1,865
---------------- ---------------- ----------------
Treasury shares:
Opening balance - - -
Buy-back of shares to Treasury - 875,084 9
---------------- ---------------- ----------------
Closing balance - 875,084 9
---------------- ---------------- ----------------
Closing balance at 30 April 186,559,219 187,434,303 1,874
At 30 April 2023, shares held in Treasury represented 2.9%
(2022: 0.5%) of the Company's total issued share capital.
During the year to 30 April 2023, there were no shares bought
back for cancellation (2022: 3,832,730 were bought back for
cancellation at a cost of GBP3,236,000) and 4,486,502 ordinary
shares were bought back to Treasury at a cost of GBP3,007,000
(2022: 875,084 ordinary shares were bought back to Treasury at a
cost of GBP670,000).
The holders of ordinary shares are entitled to all the capital
growth in the Company and all the income from the Company that is
resolved by the directors to be distributed. Each shareholder
present at a general meeting has one vote on a show of hands and on
a poll every member present in person or by proxy has one vote for
each share held.
10. Capital redemption reserve
2023 2022
GBP'000 GBP'000
-------------------- --------- ---------
At start of year 39 1
Buy-back of shares - 38
====== ======
At 30 April 39 39
====== ======
11. Share premium account
2023 2022
GBP'000 GBP'000
------------------ --------- ---------
At start of year 1,576 1,576
====== ======
At 30 April 1,576 1,576
====== ======
12. Distributable reserve
2023 2022
GBP'000 GBP'000
------------------ --------- ---------
At start of year 165,533 165,533
====== ======
At 30 April 165,533 165,533
====== ======
13. Capital reserves
2023
Capital reserve
arising on revaluation Capital reserve
of investments arising on investments
held sold Total
GBP'000 GBP'000 GBP'000
------------------------------------- ------------------------ ---------
At start of year (13,696) (10,108) (23,804)
Exchange movements(1) 3,836 (9,013) (5,177)
Movement in unrealised
appreciation(1) 1,381 - 1,381
Losses on investments - (7,985) (7,985)
Costs charged to capital - (870) (870)
Cost of share buy-backs - (3,007) (3,007)
Movement in credit
default swaps 721 (1,505) (784)
Proceeds from predecessor
company(2) - - -
At end of year (7,758) (32,488) (40,246)
==== ==== ====
2022
Capital reserve
arising on revaluation Capital reserve
of investments arising on investments
held sold Total
GBP'000 GBP'000 GBP'000
At start of year 232 3,725 3,957
Exchange movements(1) 9,886 (6,999) 2,887
Movement in unrealised
depreciation(1) (22,687) - (22,687)
Losses on investments - (1,337) (1,337)
Costs charged to
capital - (715) (715)
Cost of share buy-backs - (3,906) (3,906)
Movement in credit
default swaps (1,127) (912) (2,039)
Proceeds from predecessor
company(2) - 36 36
At end of year (13,696) (10,108) (23,804)
==== ==== ====
(1) There has been a transfer of GBP2,727,000 (2022:
GBP13,051,000) foreign exchange movements between these lines to
reflect how the foreword foreign exchange contracts hedge the
portfolio.
(2) During the prior year the Company received GBP36,000 of
additional proceeds following the completion of the liquidation of
the predecessor company Henderson Diversified Income Limited
14. Net asset value per ordinary share
The net asset value per ordinary share is based on the net asset
value attributable to ordinary shareholders at 30 April 2023 of
GBP130,870,000 (2022: GBP148,417,000) and on 182,072,717 (2022:
186,559,219) ordinary shares, being the number of ordinary shares
in issue at the year end, excluding shares held in treasury.
15. 2023 Financial information
The figures and financial information for the year ended 30
April 2023 are extracted from the Company's Annual Report and
financial statements for that year and do not constitute statutory
financial statements for that year. The Company's Annual Report and
financial statements includes the Independent Auditor's Report
which is unqualified and does not contain a statement under either
Section 498(2) or Section 498(3) of the Companies Act 2006. The
Company's Annual Report and financial statements for the year ended
30 April 2023 have not yet been delivered to the Registrar of
Companies.
16. 2022 Financial information
The figures and financial information for the year ended 30
April 2022 are extracted from the Company's Annual Report and
financial statements for that year and do not constitute statutory
financial statements for that year. The Company's Annual Report and
financial statements includes the Independent Auditor's Report
which is unqualified and does not contain a statement under either
Section 498(2) or Section 498(3) of the Companies Act 2006. The
Company's Annual Report and financial statements for the year ended
30 April 2022 have been delivered to the Registrar of
Companies.
17. Annual Report and Annual General Meeting
Copies of the Company's Annual Report and financial statements
for the year ended 30 April 2023 and the Notice of Annual General
Meeting 2023 will be posted to shareholders at the end of July 2023
and will be available thereafter on the Company's website
www.hendersondiversifiedincome.com or you can request a copy from
the Corporate Secretary itsecretariat@janushenderson.com .
The AGM will take place at 2.30pm on Monday, 9 October 2023 at
201 Bishopsgate, London EC2M 3AE, and the meeting will also be
broadcast if you do not wish to attend in person. Please visit
www.janushenderson.com/trustslive to register. This will allow you
to be present for the usual presentation from your fund managers,
John Pattullo, Jenna Barnard and Nicholas Ware, and will enable you
to ask questions and debate with your fund managers and Board.
Should any change to the format of the AGM become necessary for any
reason, this will be notified to shareholders via a Regulatory
Information Service announcement and the Company's website. Voting
at this year's AGM will be conducted on a show of hands.
For further information please contact:
Dan Howe
Head of Investment Trusts
Janus Henderson Investors
Telephone: 020 7818 4458
Harriet Hall
PR Manager
Janus Henderson Investors
Telephone: 020 7818 2919
Neither the contents of the Company's website nor the contents
of any website accessible from hyperlinks on the Company's website
(or any other website) is incorporated into, or forms part of, this
announcement.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
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Policy.
END
FR FLFIADLISFIV
(END) Dow Jones Newswires
July 25, 2023 02:00 ET (06:00 GMT)
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