TIDMHFEL
RNS Number : 1249V
Henderson Far East Income Limited
30 November 2023
LEGAL ENTITY IDENTIFIER: 2138008DIQREOD38O596
HERSON FAR EAST INCOME LIMITED
Financial results for the year ended 31 August 2023
This announcement contains regulated information
Investment Objective
The Company seeks to provide shareholders with a growing total annual
dividend per share, as well as capital appreciation, from a diversified
portfolio of investments from the Asia Pacific region.
Total return performance to 31 August 2023 (including dividends reinvested)
1 year 3 years 5 years 10 years
% % % %
--------------------------------------------- ------- -------- -------- ---------
NAV(1, 5) -13.0 -4.9 -8.9 41.7
Share price(2, 5) -14.8 -10.3 -10.9 38.4
FTSE All-World Asia Pacific ex Japan
Index(3) -7.2 5.1 15.4 96.2
MSCI AC Asia Pacific ex Japan High Dividend
Yield Index(3) 0.1 25.4 18.4 72.3
--------------------------------------------- ------- -------- -------- ---------
Financial highlights at 31 August 2023 at 31 August 2022
--------------------------------------- -------------------- -------------------
Shareholders' funds
Net assets (GBP'000) 362,032 435,576
NAV per ordinary share 222.12p 281.11p
Share price 218.00p 281.00p
--------------------------------------- -------------------- -------------------
Year ended Year ended
31 August 2023 31 August 2022
Profit/(loss) for year
Revenue return (GBP'000)
Capital return (GBP'000) 33,219 37,102
(89,459) (29,145)
------------ ------------
Net total (loss)/profit (56,240) 7,957
======= =======
Total earnings/(loss) per ordinary
share
Revenue 20.92p 24.41p
Capital (56.35p) (19.18p)
------------ ------------
Total (loss)/earnings per ordinary
share (35.43p) 5.23p
Ongoing charge (4) 0.97% 1.01%
--------------------------------------- -------------------- -------------------
1. Net asset value (NAV) total return performance including dividends
reinvested
2. Share price total return using closing price including dividends
reinvested
3. The Company does not have a benchmark and uses these indices for
comparison purposes only
4. Calculated using the methodology prescribed by the Association of
Investment Companies
5. NAV total return, share price total return and the ongoing charge
are considered alternative performance measures. More information on
these can be found in the Company's annual report.
Sources: Morningstar Direct, Janus Henderson Investors
Chairman's Statement
Introduction
2023 has been a very difficult year for investors with rapidly increasing
interest rates shifting expectations dramatically and undermining what
many hoped would be a strong post-Covid recovery period in the Asia
Pacific region. This was not to be. Instead, we have faced geopolitical
shocks, ongoing supply chain disruptions and new juxtapositions in
market behaviour. Against this backdrop, our investment results are
easier to understand, however disappointing they may be.
Performance
Whilst the Company has once again achieved our high income objective,
the investment performance from a capital growth perspective over the
past financial year has been unsatisfactory. The NAV total return performance
for the period ended 31 August 2023 was -13.0%, versus the FTSE All-World
Asia Pacific ex Japan Index of - 7.2% and MSCI All Country Asia Pacific
ex Japan High Dividend Yield Index of 0.1%. The year-end dividend yield
of 11.1% was not enough to compensate for a falling share price, with
the share price total return standing at -14.8% for the period. Since
the year-end, investment performance has deteriorated further and this
represents a three-year period of underperformance, where capital returns
have suffered when compared to both market indices and many of our
competitors.
Against this backdrop, the Board has looked often and hard at the reasons
for these results and I will use this opportunity to present both an
analysis of the factors which shaped this outcome and an outline of
what your Company is doing to address them.
What happened?
* Investment styles go through periods of being both in
and out of fashion. In the low interest rate
environment, valuation tended to matter less, and our
Fund Managers valuation-focused investment style has
therefore been out of favour.
* China weightings, China stock selection and the
timing of our exposure to this important economy and
market have been the most significant contributing
factors. Since the lifting of Covid restrictions, the
pace of China's recovery fell short of expectations
and the negative impact of global supply chain shifts
on how Chinese companies would prosper has been more
severe. An over allocation to China was exacerbated
by our exposure to Hong Kong which has increasingly
moved in lockstep with the mainland over the Covid
period and beyond.
-- The low combined weighting in India, Japan and Taiwan in our portfolio
has also had a negative influence.
Our strong income bias has historically justified this absence but
these markets have performed strongly over the period.
* Our overweight exposures to the energy and materials
sectors, the latter including investments in copper
and lithium which will be in demand to meet 'green'
targets, have been held back by questions about the
rate of economic recovery.
Our Fund Managers' report expands on all these points in further detail
and outlines their forward thinking alongside the current positioning
of the portfolio.
Strategy
Working closely with the investment manager, your Board holds a formal
review of the Company's investment strategy at least annually. This
year we have spent a substantial amount of extra time outside of formal
board meetings considering this matter - the impact of that strategy
on performance and its appropriateness both over the long term and
in the current market conditions. We also focused on the yield of the
portfolio, projections for dividends from the Asia Pacific region,
and our investment prospects for the portfolio and the region in general.
In light of this re-examination, several points can be made:
First, that our strategy to provide an attractive, growing dividend
without giving up the potential for a degree of
long-term capital growth remains both appropriate and achievable. As
we have in the past, we aim to achieve this objective by identifying
a combination of companies with high and sustainable cash flow generation
and dividends, and those achieving growth that are predicted to be
the high yielding companies of the future. As dividend growth in the
region slowly returns to its historic trend next year, we believe that
prospects for the future will be much improved.
Second, while we believe our broader strategy remains correct, we have
sought to refine the process used to achieve our objectives. Given
our income focus, income returns from stocks has been significantly
undermined by the strength of sterling, especially over the last year.
Our Fund Managers had sought to enhance income and offset sterling
strength through portfolio rebalancing but this had a negative impact
on capital growth. Our analysis has now led us to revise the way in
which we capture dividends, an approach that has too often led to diminished
capital growth. We have now largely restructured the portfolio to allow
the renewed growth in portfolio company dividends to come through along
with better capital growth returns. Through this transition period,
we will use our distributable reserves to supplement your Company's
dividend. In addition to maintaining a progressive dividend, re-establishing
the Company's long-term record of capital growth will be a critical
factor in restoring shareholder confidence. The Fund Managers' report
will comment on this in more detail.
Third, strong sentiment around China's reopening prospects in the fourth
quarter of 2022 reinforced our long-term investment case for the market
and supported a significant position. While the economic power and
potential of many Chinese sectors remains compelling, macroeconomic
influences have ultimately overwhelmed some robust fundamentals, with
broader market sentiment now muted on the market. Further, there is
increasing homogeneity between the markets of Hong Kong and China.
With this in mind, and with the dividend culture in other markets including
India improving rapidly, we are broadening our scope to include more
companies from elsewhere in the region.
We have worked closely with our Fund Managers to address our capital
performance challenges and devise an effective path forward. As part
of this process, we have agreed that now is the right time to pass
the fund management leadership role to Sat Duhra. The Board has full
confidence in Sat's ability to manage the portfolio going forward,
and he has been part of a long-standing succession plan having been
co-manager since 2019. Mike Kerley will be retiring from the asset
management industry in June 2024 and will support Sat to ensure a smooth
transition process. Mike has played a critical role in the Company's
historical development and the Board would like to thank him for his
many contributions over the years and wish him well in all his future
endeavours.
We believe it is in the best interests of all shareholders to support
these changes while benefitting from a revised investment implementation
approach.
The Board remains committed to its historic progressive dividend policy
together with capital growth and we will continue to monitor performance
closely, taking additional action if we believe our revised implementation
approach is not improving investment returns as we expect.
Dividend
The Board has again increased its dividend to shareholders, marking
16 consecutive years of uninterrupted dividend progress. A total dividend
of 24.20p has been paid in respect of the year ended 31 August 2023,
representing a 1.7% increase on the dividend paid last year.
In keeping with the outcome of our discussions on strategy and implementation,
we have opted to augment our fourth interim dividend using the Company's
substantial reserves. We have therefore covered GBP5.7m of the dividend
from distributable reserves. Doing so enables our Fund Managers to
better position the portfolio, with scope to invest in a greater number
of companies with higher growth characteristics.
Board refreshment
I was pleased to announce the appointment of two new directors on 19
September 2023. Susie Rippingall and Carole Ferguson will join as members
of the Board with effect from 1 December 2023. Both are outstanding
investment professionals with strong backgrounds in areas that will
enhance your Board's future decision-making while giving us a better
overall balance.
Susie is an investment professional with more than 25 years of fund
management experience in Asian markets. Carole has extensive experience
in the financial services sector in research, finance and sustainability.
We believe both will contribute meaningfully to our discussions and
bring new perspectives. Indeed, they have already made important contributions
to our discussions of strategy and implementation. We invite shareholders
to join us at the next annual general meeting to meet Susie and Carole,
along with the rest of the Board. Both will offer themselves to shareholders
for election.
Having successfully completed this recruitment process, David Mashiter
will be retiring at the conclusion of the forthcoming annual general
meeting. I would very much like to thank David for his many years'
service to the Company, his thorough and thoughtful contemplation of
the matters for discussion in and out of Board meetings, as well as
his robust, but always courteous, challenge to all of us. His views
will be missed.
AGM
The Company's 17th Annual General Meeting is due to be held at 12.00
pm am on 24 January 2024 at the offices of our investment manager,
201 Bishopsgate, London, EC2M 3AE. The Notice of Meeting has been posted
to shareholders with a copy of this annual report and I encourage all
shareholders to submit their votes to the registrar or their share
dealing platform accordingly.
The Fund Managers will provide their usual update on the Company's
performance and their outlook for the region. They and all directors
will be available to answer any questions you may have.
Recent results & outlook
While the underlying business performance of our portfolio holdings
has been much as expected, their stock prices have not generally reflected
these gains. Since our financial year-end in August, our high exposure
to Greater China has been an unhappy experience, reflecting a far less
robust rate of recovery than we earlier expected. Some new holdings
have benefitted results but not enough to offset the damage from elsewhere.
As I have noted above, we are in the process of making changes that
we believe will lead to improved results over the balance of the year
and beyond. The economic fundamentals of the Asia Pacific region remain
attractive and will look increasingly so when compared to the slowing
performance of western markets. As our portfolio re-captures its capital
growth and with our commitment to the Company's progressive dividend
policy, we look forward to reporting more satisfactory results in the
future. Our focus and commitment are determined and unwavering. The
opportunities are still very much evident and at more attractive valuations
than we have seen in many years.
The Fund Managers' report that follows will give you a more detailed
discussion of both past events and future expectations. I believe it
underscores many good reasons for optimism about the future.
Ronald Gould
Chairman
29 November 2023
Fund mANAGERS' REPORT
The period under review was dominated by global inflationary pressures,
conjecture on the path of interest rates and the war in Ukraine amongst
other factors. The scars of the Covid-19 pandemic continued to be uncovered
as evidenced by the magnitude of the shock to supply chains, which
was unanticipated by investors and contributed to the initial rise
in inflation data. However, it was manner of the response to Covid-19
in China and the subsequent weak recovery once restrictions had been
lifted that produced the greatest impact on our performance. We had
expected to capitalise on a strong recovery in China once the economy
re-opened after a period of strictly enforced restrictions, however,
this failed to materialise and our China consumer holdings suffered
as a result. In addition to that, a steady flow of negative macroeconomic
data, property sector defaults and concerning levels of leverage at
local governments impacted sentiment towards our other holdings in
the country. Our performance in China in recent years has been unsatisfactory
and we are in the process of re-positioning this part of our portfolio
towards higher quality growth names, which are now attractive on valuation,
and come with a genuine domestic advantage and growing dividends.
Our investment style aims to take advantage of market mis-pricings
where we believe the Net Present Value of future cashflows is not reflected
in the current share price. However, this style has been distinctly
out of favour in recent times as demonstrated by the outperformance
of growth over value in most markets. Despite interest rates rising
and therefore the cost of capital increasing in equity valuations,
the emergence of themes such as Artificial Intelligence ('AI') have
supported the thesis of higher growth into the future boosting the
valuation of many expensive stocks. We expect this to reverse as rates
remain higher for longer, pressuring the high valuation of many growth
names. However, this may not transpire to the same degree in China
where value names are more intrinsically tied to the fortunes of the
economy versus underlying operational trends given that much of the
high dividend universe are State Owned Enterprises ('SOEs'). The structural
issues faced by China, amplified by the collapse of the heavily indebted
China Evergrande Group and subsequent defaults, combined with the collapse
in property volumes and the ensuing impact on local government fiscal
positions, have dampened our enthusiasm for high yield value names
in China. We have begun the process of adding more attractive growth
and yield names in other markets such as Indonesia and India where
there is less regulatory risk and a much clearer path to growth without
the structural impediments currently faced by China. Notwithstanding
this we expect to continue uncovering opportunities in China, especially
at the current depressed valuations.
More generally the rapid rise in interest rates has, unsurprisingly,
created problems most notably in the regional banks in the US and the
UK pension industry where the belief that interest rates would remain
low indefinitely, were brutally exposed by the dramatic central bank
moves. Consumer spending has slowed but remained more resilient than
many expected as savings accumulated during the pandemic have offset
the higher cost of food, energy and mortgages. This, though, has probably
delayed the economic slowdown rather than postponed it. The World Bank
expects global growth to be 2.4% in 2024 with the contribution from
developed economies only 1.2%. The US is expected to grow by 0.8% and
the EU, by 1.3%. All recent revisions have seen 2023 adjusted upwards
and 2024 downwards, reflecting the lagging nature of this cycle's monetary
tightening.
The inflationary impact in Asia has been less pronounced. Most countries
in the region did not receive the same fiscal support as the western
world during the pandemic and, as a result, excess liquidity did not
push up asset prices and wages in the same way as elsewhere. Labour
shortages and supply disruptions were also less pronounced. As a result,
the rise in inflation was caused mostly by rising food and energy prices
and, as these have fallen, central banks in the region have started
to ease rates. In short, Asian economies have had to raise rates less
than their western peers and will be reducing them sooner. However,
there are exceptions. Australia, New Zealand and Japan are three as
they share greater similarities with advanced economies, compared to
developing Asia.
Despite superior fundamentals, the performance of the region has been
disappointing with Asian markets significantly lagging the 5.3% positive
return from the S&P 500 and 7.9% return from the FTSE 100 over the
Company's financial year. The weakness of China is partly to blame,
but the strength of the US dollar and a tightening of liquidity from
higher interest rates has prompted flows away from equities as there
are now attractive returns to be achieved on cash and lower risk bonds.
The other phenomenon that has distracted growth investors is the rise
to prominence of AI. A large proportion of positive returns, especially
in 2023, have been derived in this area as borne out by the strong
performance of the 'Big 7' US technology stocks (Microsoft, Apple,
Google, Meta, Amazon, Nvidia and Tesla) compared to the rest of the
market. Although Asia has some beneficiaries of this trend, most notably
in Korea and Taiwan, the region as a whole could be seen as a net loser
from AI as funds flow to more attractive, if less quantifiable, growth
alternatives.
China was the weakest market in the region, although it rallied over
40% in local currency terms following the removal of the Covid restrictions
at the end of October 2022. It has subsequently fallen almost 15% by
the end of August. Although there are clearly headwinds associated
with slower global trade and US sanctions/ geo-political risk, a number
of problems within the China economy are self-imposed. The clampdown
on the property and education sectors, in a valiant attempt to address
wealth inequality, together with regulatory probes on private enterprises
in the technology sector, have sapped confidence. After being locked-down
for almost three years during the pandemic, while their largest asset
(property) decreased in value, the Chinese consumer is reluctant to
spend and, unlike their counterparts in the west, have continued to
save. The Chinese government has begun introducing various measures
to stimulate demand and to shore-up the finances of property developers,
local governments and households. All the while cutting interest rates
and bank reserve requirements to ensure the system is sufficiently
liquid. As yet, there are no meaningful improvements. Having said that,
the industrial production, manufacturing PMI (purchasing managers index)
and industrial profits data in September suggest a mild improvement
while anecdotal evidence of travel expenditure and consumer trends
during the Golden Week holiday at the beginning of October, are somewhat
encouraging.
In local currency terms, the FTSE All-World Asia Pacific ex Japan Index
rose 3.0%. However, with sterling appreciating 10.2% over the period
this translated into a total return performance of -7.2%, impacting
returns for the UK based investor. The best performing market in local
currency terms was Taiwan, where the AI beneficiaries, mostly in the
server and data centre arena, were particularly strong. The weakness
of the Taiwan dollar though resulted in a small negative return in
sterling terms leaving Singapore as the only country in the region
to post a positive return in sterling terms, mainly due to currency
resilience. China and Hong Kong were the worst performing countries,
while basic materials, technology and financials headed the sector
list.
Performance
The Company's NAV total return was -13.0% over the period while the
share price total return was -14.8%, as the share price moved to a
small discount at the financial year-end. For comparison purposes the
FTSE All-World Asia Pacific ex Japan index was -7.2% while the MSCI
Asia Pacific ex Japan High Dividend Yield Index for the same period
was 0.1%.
Without doubt, it has been a disappointing period for the Company's
capital performance. Although the high level of yield has partly impacted
capital returns, a far greater proportion of underperformance can be
attributed to stock selection and country allocation, especially through
the Covid period, but also more recently in calendar year 2023. We
have highlighted below the key areas impacting performance and our
assumptions that prompted this positioning.
At the start of 2023, we expected three events to dictate market performance.
Firstly, we expected China to stage a broad-based recovery from Covid
with the consumer leading the way as excess savings accumulated through
the pandemic would be spent. Secondly, we expected slower global growth,
especially in developed markets, would lead to lower demand for technology
products such as personal computers, laptops and smartphones as consumers
felt the squeeze from higher living costs. As a result, we avoided
Taiwanese contract manufacturers and hence were under-represented relative
to the index and peers when the AI theme took hold. Finally, we believed
that materials and energy, and especially green transition materials,
would be resilient, partly because of a recovery in China and emerging
markets, but more importantly because of a lack of supply and new avenues
of growth, namely electric vehicles and grid upgrades.
The biggest positive contributions over the period were Bank Mandiri
in Indonesia, Lenovo and Samsonite in China and Hong Kong, NTPC in
India and Goodman Group in Australia. Detractors from performance were
predominantly China based consumer discretionary stocks; JD.com (e-commerce)
and Li Ning (sports goods) fell over 50%, while China Yongda (passenger
vehicles) over 40%, China buildings material company CNBM also fell
over 50% while Digital Telecommunications in Thailand fell more than
30%.
Revenue
Dividend income from companies held in the portfolio fell 8.2% and
income from options was flat compared to last year. The fall in revenue
was partly due to the strength of sterling, but also from the lower
levels of distribution from energy and materials companies as the price
of oil and industrial metals declined.
In sterling terms, the level of dividend growth in Asia in recent years
has been below our expectations. The volatility in sterling in recent
years has had a significant impact given that dividend growth in local
currencies has been positive in the last decade with the exception
of 2020. The ability of corporates in the Asia Pacific region to pay
dividends is certainly not in question with record levels of cash held
on balance sheets and one of the lowest net debt to equity ratios globally.
It is the unwillingness of corporates to increase dividends in periods
of elevated global volatility that has contributed to a recent lack
of meaningful growth in dividends. In addition, we had an elevated
contribution from materials and energy holdings last year, amounting
to approximately 31% of our total income. The subsequent weakness in
commodities led to a marked reduction in dividends from this sector.
However, we expect that Asia will return to a growth profile in line
with historical trends and nominal Gross Domestic Product, but in the
meantime the Company intends to utilise distributable reserves to meet
its objective of a progressive dividend policy.
Strategy
The Board has reaffirmed its commitment to the dividend and has made
it clear that utilising distributable reserves is preferable to chasing
yield at the expense of capital growth. This will allow greater exposure
to compelling capital growth opportunities where absolute dividend
per share is growing but the current dividend yield is yet relatively
low. This has also contributed to the lower portfolio turnover this
year relative to the last financial year as genuine structural dividend
growth opportunities were balanced with high sustainable yield names.
Whilst a number of growth opportunities in markets where we have been
underweight in recent years such as India, Indonesia and Taiwan have
already performed well, there are still significant opportunities in
the years ahead. The nascent improvement in Indian and Indonesian macro-economics
has the potential for a long pathway of growth, the resilience of the
Indian rupee and Indonesian rupiah versus the US dollar this year is
a testament to improved sentiment. Indonesia has begun posting a current
account surplus, growth is strong and the country is set to reap the
benefits of significant infrastructure completion. India is seeing
the benefit of earlier reforms such as the Bankruptcy Code, which has
helped to de-risk the banking system speeding up recovery of bad debts.
In addition, corporates are deleveraging, real estate asset prices
are rising and the uptick in private sector capital expenditure alongside
higher government investment, bodes well for the outlook. Investments
in India have already appeared in our top contributors list for the
period despite the current low positioning. We have added to both markets
and observe more opportunities.
At the overall portfolio level, we retain a balance between stable
high yielding companies and those with strong cash flow and dividend
growth. The weakness in share prices and resilient earnings have seen
Asian companies de-rate to valuation levels that are attractive relative
to their own history and to other markets. This applies both to high
yielding and dividend growth companies, allowing for plenty of opportunity
to accumulate propositions at attractive valuations. In previous years
some of the best regional and global themes have been outside the remit
of a value-based investment process due to elevated valuations. Recent
underperformance has made some of these areas much more attractive
and the portfolio now has exposure to Chinese e-commerce, Indian renewable
energy, consumption in Indonesia and China as well as mining companies
that provide the raw materials for the transition to electric vehicles
and clean energy. An example of the opportunities available is Samsonite,
the global luggage brand, which we have just added to the portfolio.
The Hong Kong listed company is experiencing a strong demand recovery
following Covid, but the shares have languished relative to peers with
earnings upgrades outstripping share price performance. As a result,
the stock is trading at 11x forward earnings despite having 20% earnings
growth forecast for the next few years and dividend yield which is
forecast to go from zero to 6% within three years.
At the country level, our highest weighting at the year-end was in
China at 19.7%, the companies we own have exposure to consumption,
insurance, wealth management, electricity grid upgrades, technology
and an improvement in infrastructure spending. We do not have any exposure
to property developers or banks. Our exposure in Australia is predominantly
in mining companies as we have a cautious outlook on the domestic economy.
In India, the power sector is dominated by state owned companies, but
following the push to transition to cleaner energy, opportunities have
arisen for some of these companies to embrace this new area of growth.
We own NTPC and Power Grid which provide exposure to this theme at
a significant valuation discount to the market and bring with them
an attractive dividend yield. We have also added HDFC Bank which provides
us with exposure to domestic credit and mortgage growth at half the
valuations it once traded at following a degree of uncertainty following
a merger with its finance arm.
ESG
Environmental, social and governance ('ESG') concerns are an important
part of our investment approach, but we believe in a pragmatic stance
that looks to engage rather than avoid. We believe that the transition
from where we are to where we want to be is the most important part
of this process. What this means in practice is that we don't exclude
any sector, with the exception of munitions, from our investment universe
but look to invest in companies with an awareness of their environmental
and social impact, as well as an approach to managing them, and work
with them to set and achieve targets for improvement. Our belief is
that these companies will take market share away from the those which
don't commit to change over time, improving the environment and working
conditions for all. As responsible investors, it is our duty to help
this transition rather than to divest and hand that responsibility
to someone else.
We regularly engage with the companies we invest in to ensure that
the targets set are viable and that there is a clear and coherent strategy
on how to achieve them.
Outlook
We are focused on re-establishing the capital performance of the Company
alongside our long- standing income mandate and whilst the headlines
around China, some fair and some unfair, have dominated news flows,
this has masked the strong performance in several of our other markets.
The strength of a number of themes which are unique to our region and
are yet to fully play out, creates an exciting time for investors.
We are witnessing the build-out of green infrastructure, strong consumption
trends, technology supply chains supporting global innovation and financial
inclusion as household wealth increases, amongst others.
Asian markets have, however, struggled over the last five years and
are now at attractive valuations relative to other regions. Record
low interest rates and supportive fiscal policies have encouraged money
flows into alternative risk assets such as housing, private equity,
special purpose acquisition companies and crypto currency, to name
a few, at the expense of Asia and Emerging Markets. The return of inflation
and higher interest rates has called into question some of these investment
destinations and should lead to a focus on fundamentals now that the
cost of capital is well above zero.
There are, though, some headwinds. Higher for longer interest rates
in the US will most likely lead to a stronger US dollar, which historically
has been a challenge for Asia, and the relationship between the US
and China around Taiwan and access to technology continues to have
the potential to escalate. There is also considerable risk in China
with local governments facing significant bond maturities this year
and property volumes still weak. We believe that the Chinese government
still has the monetary and fiscal tools to address these issues, but
it is sure to be a bumpy ride. In light of this, we have reduced the
Company's exposure to China notably since the financial year-end. New
positions have been initiated in high quality dividend growth names
in other markets where the macro-economics are tailwinds rather than
headwinds. We do not anticipate these changes to impact the level of
income the portfolio will generate.
As the developed world slows over the next couple years, the growth
differentials between Asia Pacific and the US, EU and UK will look
increasingly attractive, which we believe will prompt positive flows
to the region and be supportive of equity market returns.
Mike Kerley and Sat Duhra
Fund Managers
29 November 2023
Investment portfolio as at 31 August 2023
Country Value
Ranking Ranking of 2023 % of
2023 2022 Company incorporation Sector GBP'000 portfolio
-------- -------- ------------------------------- --------------- ----------------------- --------- ------------
Taiwan Semiconductor
1 16 Manufacturing(1) Taiwan Technology 14,365 3.73
2 12 Hon Hai Precision Industry Taiwan Technology 14,265 3.70
Macquarie Korea Infrastructure
3 7 Fund South Korea Financials 14,100 3.66
4 26 Samsung Electronics(2) South Korea Technology 13,512 3.51
VinaCapital Vietnam
5 8 Opportunity Fund Vietnam(3) Financials 12,476 3.24
6 - Midea Group China Consumer discretionary 11,231 2.92
7 21 Bank Mandiri Indonesia Financials 11,109 2.88
8 10 Rio Tinto Limited Australia Basic Materials 10,650 2.76
9 1 BHP Group Limited Australia Basic Materials 10,462 2.72
10 - Ping An Insurance China Financials 10,261 2.66
Top Ten Investments 122,431 31.78
-------- -------- ------------------------------- --------------- ----------------------- --------- ------------
11 5 Santos Australia Energy 9,748 2.53
12 4 Macquarie Group Australia Financials 9,706 2.52
13 3 Woodside Energy Australia Energy 9,619 2.50
14 - Goodman Group Australia Real Estate 9,352 2.43
15 18 CITIC Securities China Financials 8,829 2.29
16 - Samsonite International Hong Kong Consumer discretionary 8,815 2.29
17 - Lenovo China Technology 8,182 2.12
18 - Anta Sports China Consumer discretionary 8,111 2.10
19 29 Mapletree Logistics Singapore Real Estate 7,897 2.05
20 22 AIA Group Hong Kong Financials 7,652 1.98
Top Twenty Investments 210,342 54.59
-------- -------- ------------------------------- --------------- ----------------------- --------- ------------
21 14 United Overseas Bank Singapore Financials 7,634 1.99
22 - Nari Technology China Industrials 7,570 1.97
23 - HSBC Hong Kong Financials 7,356 1.91
24 15 Spark New Zealand New Zealand Telecommunications 7,335 1.90
25 - HDFC Bank India Financials 7,329 1.90
26 - Oversea-Chinese Banking Singapore Financials 7,328 1.90
27 17 SK Telekom(1) South Korea Telecommunications 7,159 1.86
28 - Astra International Indonesia Consumer discretionary 7,117 1.85
29 - Sumitomo Metal Mining Japan Basic Materials 7,018 1.82
30 - Pilbara Minerals Australia Basic Materials 6,800 1.76
Top Thirty Investments 282,988 73.45
-------- -------- ------------------------------- --------------- ----------------------- --------- ------------
31 - Oil & Natural Gas India Energy 6,542 1.70
32 35 Sun Hung Kai Properties Hong Kong Real Estate 6,469 1.68
33 2 HKT Trust & HKT Hong Kong Telecommunications 6,260 1.63
34 33 LG Corp South Korea Industrials 6,257 1.62
35 - Swire Properties Hong Kong Real Estate 6,208 1.61
CapitaLand Integrated
36 23 Commercial Trust Singapore Real Estate 6,204 1.61
37 6 JD.com China Consumer discretionary 6,096 1.58
38 11 PT Telkom Indonesia Telecommunications 6,006 1.56
39 - Power Grid India Utilities 5,934 1.54
40 - Alibaba Group China Consumer discretionary 5,792 1.50
Top Forty Investments 344,756 89.48
-------- -------- ------------------------------- --------------- ----------------------- --------- ------------
41 27 MediaTek Taiwan Technology 5,765 1.50
42 - ASE Technology Taiwan Technology 5,509 1.43
Digital Telecommunications
43 9 Infrastructure Fund Thailand Telecommunications 5,140 1.34
44 36 Mega Financial Taiwan Financials 5,127 1.33
45 - NTPC India Utilities 4,904 1.27
China National Building
46 28 Material China Industrials 4,710 1.22
47 39 Guangdong Investment Hong Kong Utilities 4,683 1.21
48 37 Li-Ning China Consumer discretionary 3,593 0.93
49 41 China Yongda Automobiles China Consumer discretionary 2,680 0.70
50 42 China Forestry China Basic Materials - -
Top Fifty Investments 386,867 100.41
-------- -------- ------------------------------- --------------- ----------------------- --------- ------------
Alibaba Group Put 89
51 - (expiry 26/10/23) China Consumer discretionary (48) (0.01)
Pilbara Minerals Put
52 - 4.41 (expiry 07/09/23) Australia Basic Materials (259) (0.07)
CITIC Securities Call
53 - 16.6 (expiry 29/11/23) China Financials (272) (0.07)
Li-Ning Put 39.9 (expiry
54 - 28/09/23) China Consumer discretionary (475) (0.12)
JD.com Put 138 (expiry
55 - 08/11/23) China Consumer discretionary (528) (0.14)
Total Investments 385,285 100.00
-------- -------- ------------------------------- --------------- ----------------------- --------- ------------
1 American Depositary Receipts
2 Preferred Shares
3 Incorporated in Guernsey with 100% exposure to Vietnam
4 Unquoted investment valued at GBPnil
Sector exposure at 31 August 2023
(% of portfolio excluding cash)
2023 2022
% %
------------------------ ------ ------
Financials 28.2 25.8
Technology 16.0 9.7
Consumer Discretionary 13.6 5.9
Real Estate 9.4 8.6
Basic Materials 9.0 15.6
Telecommunications 8.3 19.9
Energy 6.7 9.6
Industrials 4.8 3.7
Utilities 4.0 1.2
------
100% 100.0
Geographic exposure at 31 August
2023
(% of portfolio excluding cash)
2023 2022
% %
------------------ -------- --------
China 19.7 17.1
Australia 17.2 24.3
Hong Kong 12.3 9.4
Taiwan 11.7 9.3
South Korea 10.7 13.4
Singapore 7.5 10.2
India 6.4 1.9
Indonesia 6.3 5.2
Vietnam 3.2 3.2
New Zealand 1.9 2.9
Japan 1.8 -
Thailand 1.3 3.1
-------- --------
100.0
MANAGING RISKS
Principal risks and emerging risks
Investing, by its nature, carries inherent risk. The Board, with the
assistance of the investment manager, carries out a robust assessment
of the principal and emerging risks and uncertainties facing the Company
which could threaten the business model and future performance, solvency
and liquidity of the portfolio. A matrix of these risks, along with
the steps taken to mitigate them, is maintained and kept under regular
review. The mitigating measures include a schedule of investment limits
and restrictions within which the Fund Managers must operate. We do
not believe these principal risks to have changed over the course of
the year.
Alongside the principal risks, the Board considers emerging risks,
which are defined as potential trends, sudden events or changing risks
which are characterised by a high degree of uncertainty in terms of
the probability of them happening and the possible effects on the Company.
Should an emerging risk become sufficiently clear, it may be classified
as a principal risk.
Our assessment includes consideration of the possibility of severe
market disruption and some of the areas which we reviewed over the
course of the year are outlined in the table below. The principal risks
which have been identified and the steps we have taken to mitigate
these are set out below:
* Investment and strategy
An inappropriate investment strategy, for example, in terms of asset
allocation or level of gearing, may result in underperformance against
the companies in the peer group, and in the Company's shares trading
on a wider discount.
Investments in Asian markets may be impacted by political, market and
financial events resulting in changes to the market value of the Company's
portfolio.
We manage these risks by ensuring a diversification of investments
and a regular review of the extent of borrowings. The investment manager
operates in accordance with investment limits and restrictions determined
by the Board, which include limits on the extent to which borrowings
may be employed. We review compliance with limits and monitor performance
at each Board meeting.
The Board receives an update from the Fund Managers on market conditions
in the region at each meeting. During the year, the Board considered
the global economic and geopolitical environment including the repercussions
of the Covid-19 pandemic, the ongoing war in Ukraine and recent conflict
in the Middle East, the impact of this and the pandemic on supply chains,
as well as tensions between China and the US, including over Taiwan.
Consideration was also given to whether climate change could impact
the value of the portfolio, but the Board concluded that this was not
the case at present as the investments continued to be valued based
on quoted market prices.
* Accounting, legal and regulatory
The Company is regulated by the Jersey Financial Services Commission,
under the Collective Investment Funds (Jersey) Law 1998, and is required
to comply with the Companies (Jersey) Law 1991, the Financial Conduct
Authority's Listing Rules, Transparency Guidance and Disclosure Rules
and Prospectus Rules and the Listing Rules of the New Zealand Stock
Exchange. To retain investment trust status, the Company must comply
with the provisions of s.1158 of the Corporation Tax Act 2010. A breach
of company law could result in the Company being subject to criminal
proceedings or financial and reputational damage. A breach of the listing
rules could result in the suspension of the Company's shares. A breach
of s.1158 could result in capital gains realised within the portfolio
being subject to corporation tax.
The investment manager provides investment management, company secretarial,
administration and accounting services through qualified professionals.
We receive quarterly internal control reports from the Manager which
demonstrate compliance with legal and regulatory requirements and assess
the effectiveness of the internal control environment in operation
at the investment manager and our key third-party service providers
at least annually.
* Operational
Disruption to, or the failure of, the investment manager's or the administrator's
accounting, dealing, or payment systems or the custodian's records
could prevent the accurate reporting or monitoring of the Company's
financial position.
The Company may be exposed to cyber risk through vulnerabilities at
one or more of its service providers.
The Board engages reputable third-party service providers and formally
evaluates their performance, and terms of appointment, at least annually.
The Audit Committee assesses the effectiveness of internal controls
in place at the Company's key third-party services providers through
review of their reports on the effectiveness of internal controls,
quarterly internal control, reports from the investment manager and
monthly reporting on compliance with the investment limits and restrictions
established by the Board.
* Financial
The financial risks faced by the Company include market risk (comprising
market price, currency risk and interest rate risk), liquidity risk
and credit risk.
We determine the investment parameters and monitor compliance with
these at each meeting. We review the portfolio liquidity at each meeting
and periodically consider the appropriateness of hedging the portfolio
against currency risk. The Company is denominated in sterling, but
receives dividends in a wide range of currencies from the Asia Pacific
region. The income received is therefore subject to the impact of movements
in exchange rates. The portfolio remains unhedged.
The Board reviews the portfolio valuation at each meeting.
Investment transactions are carried out by a large number of approved
brokers whose credit standard is periodically reviewed and limits are
set on the amount that may be due from any one broker, cash is only
held with the depositary/custodian or reputable banks.
We review the broad structure of the Company's capital including the
need to buy back or allot ordinary shares and the extent to which revenue
in excess of that which is required to be distributed, should be retained.
Further detail on how we mitigate these risks are set out in note 13
in the annual report.
VIABILITY STATEMENT
In keeping with provisions of the Code of Corporate Governance issued
by the Association of Investment Companies (the 'AIC Code'), we have
assessed the prospects of the Company over a period longer than the
12 months required by the going concern provision.
We consider the Company's viability over a five-year period as we believe
this is a reasonable timeframe reflecting the longer-term investment
horizon for the portfolio, but which acknowledges the inherent shorter
term uncertainties in equity markets. As part of the assessment, we
have considered the Company's financial position, as well as its ability
to liquidate the portfolio and meet expenses as they fall due. The
following aspects formed part of our assessment:
-- the Company's purpose and investment approach which means we remain
a medium to long term investor;
* consideration of the principal risks and
uncertainties facing the Company (set out in the
table above) and determined that no significant
issues had been identified;
* the nature of the portfolio which remained diverse
comprising a wide range of stocks which are traded on
major international exchanges meaning that, in normal
market conditions, over 80% of the portfolio can be
liquidated in 2 to 7 days;
-- the closed end nature of the Company which does not need to account
for redemptions;
-- the level of the Company's revenue reserves and size of the banking
facility; and
* the expenses incurred by the Company, which are
predictable and modest in comparison with the assets
and the fact that there are no capital commitments
currently foreseen which would alter that position.
As well as considering the principal risks and financial position of
the Company, the Board has made the following assumptions:
-- an aging population will continue to seek income opportunities through
investing;
-- investors will continue to wish to have exposure to investing in
the Asia Pacific region;
-- investors will continue to invest in closed-end funds;
-- the Company's performance will improve following an in-depth review
of strategy; and
-- the Company will continue to have access to adequate capital when
required.
Based on the results of the viability assessment, we have a reasonable
expectation that the Company will be able to continue its operations
and meet its expenses and liabilities as they fall due for our assessment
period of five years. Forecasting over a longer period is imprecise
given investments are bought and sold regularly. We revisit this assessment
annually and report the outcome to shareholders in the annual report.
RELATED PARTY TRANSACTIONS
The Company's current related parties are its directors and the investment
manager. There have been no material transactions between the Company
and the directors during the year, with the only amounts paid to them
being in respect of remuneration. In relation to the provision of services
by the investment manager, 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 the investment manager
affecting the financial position of the Company during the year under
review. More details on transactions with the investment manager, including
amounts outstanding at the year end, are given in note 19 in the annual
report.
Directors' responsibility STATEMENTS
Each of the directors in office at the date of this report confirms
that, to the best of their knowledge:
* the Company's financial statements, which have been
prepared in accordance with IFRS as adopted by the
European Union on a going concern basis, give a true
and fair view of the assets, liabilities, financial
position and profit of the Company; and
* the annual 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
Ronald Gould
Chairman
29 November 2023
Statement of Comprehensive Income
Year ended 31 August Year ended 31 August 2022
2023
Revenue Capital Revenue Capital
return return Total return return Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- --------- ---------- ----------- --------- ---------- -----------
Investment income (note 3) 37,331 - 37,331 40,646 - 40,646
Other income (note 4) 2,937 - 2,937 2,925 - 2,925
Losses on investments held
at fair value through profit
or loss - (87,446) (87,446) - (22,592) (22,592)
Net foreign exchange profit/(loss)
excluding foreign exchange
losses on investments - 318 318 - (4,552) (4,552)
--------- ---------- ----------- --------- ---------- -----------
Total (loss)/income 40,268 (87,128) (46,860) 43,571 (27,144) 16,427
Expenses
Management fees (1,456) (1,456) (2,912) (1,679) (1,679) (3,358)
Other expenses (525) (524) (1,049) (567) (567) (1,134)
--------- ---------- ----------- --------- ---------- ----------
(Loss)/profit before finance
costs and taxation 38,287 (89,108) (50,821) 41,325 (29,390) 11,935
Finance costs (766) (766) (1,532) (200) (200) (400)
--------- ---------- ----------- --------- -------- ---------
(Loss)/profit before taxation 37,521 (89,874) (52,353) 41,125 (29,590) 11,535
Taxation (4,302) 415 (3,887) (4,023) 445 (3,578)
--------- ---------- ----------- --------- --------- ----------
(Loss)/profit for the year
and total comprehensive income 33,219 (89,549) (56,240) 37,102 (29,145) 7,957
====== ====== ====== ====== ====== ======
(Losses)/earnings per ordinary
share - basic and diluted
(note 5) 20.92p (56.35p) (35.43p) 24.41p (19.18p) 5.23p
====== ====== ====== ====== ====== ======
The total column of this statement represents the Statement of Comprehensive
Income, prepared in accordance with IFRS as adopted by the European
Union. The revenue return and capital return columns are supplementary
to this and are prepared under guidance published by the Association
of Investment Companies.
Statement of CHANGES IN EQUITY
Year ended 31 August 2023
Stated
share Distributable Capital Revenue
capital reserve reserves reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ------------- ---------------- ------------- ------------- -------------
Total equity at 31 August
2022 246,997 180,471 (18,558) 26,696 435,576
Total comprehensive income:
(Loss)/profit for the year - - (89,459) 33,219 (56,240)
Transactions with owners,
recorded directly to equity:
Dividends paid - - - (38,345) (38,345)
Shares issued 21,083 - - - 21,083
Share issue costs (42) - - - (42)
------------ ------------ ------------ ------------ ------------
Total equity at 31 August
2023 268,038 180,471 (108,047) 21,570 362,032
======= ======= ======= ======= =======
Year ended 31 August 2022
Stated
share Distributable Capital Revenue
capital reserve reserves reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ------------- ---------------- ------------- ------------- -------------
Total equity at 31 August
2021 235,955 180,471 10,557 25,661 452,644
Total comprehensive income:
(Loss)/profit for the year - - (29,145) 37,102 7,957
Transactions with owners,
recorded directly to equity:
Dividends paid - - - (36,067) (36,067)
Shares issued 11,064 - - - 11,064
Share issue costs (22) - - - (22)
------------ ------------ ------------ ------------ ------------
Total equity at 31 August
2022 246,997 180,471 (18,588) 26,696 435,576
======= ======= ======= ======= =======
BALANCE SHEET
31 August 31 August
2023 2022
GBP'000 GBP'000
----------------------------------------------- ------------ -------------
Non current assets
Investments held at fair value through profit
or loss 386,867 438,527
Current assets
Other receivables 2,587 3,673
Cash and cash equivalents 3,944 14,310
------------ ------------
6,531 17,983
------------ ------------
Total assets 393,398 456,510
------------ ------------
Current liabilities
Investments held at fair value through profit
or loss - written options (1,582) (1,031)
Deferred taxation (149) (155)
Other payables (1,444) (2,542)
Bank loans (28,191) (17,206)
------------ ------------
(31,366) (20,934)
------------ ------------
Net assets 632,032 435,576
======= =======
Equity attributable to equity shareholders
Stated share capital 268,038 246,997
Distributable reserve 180,471 180,471
Retained earnings:
Capital reserves (108,047) (18,588)
Revenue reserves 21,570 26,696
------------ ------------
Total equity 362,032 435,576
======= =======
Net asset value per ordinary share 222.21p 281.11p
======= =======
STATEMENT OF CASH FLOWS
Year ended Year ended
31 August 31 August
2023 2022
GBP'000 GBP'000
----------------------------------------------------- ---------- -----------
Cash flows from operating activities
(Loss)/profit before taxation (52,353) 11,535
Add back finance costs payable 1,532 400
Losses on investments held at fair value through
profit or loss 87,446 22,592
Withholding tax on investment income (3,727) (3,662)
Net foreign exchange (profit)/loss excluding
foreign exchange losses on investments (318) 4,552
Decrease in prepayments and accrued income 839 1,876
Decrease/(increase) in amounts due from brokers 37 (37)
Decrease in other payables (1,064) (435)
---------- ----------
Net cash inflow from operating activities 32,392 36,821
---------- ----------
Cash flows from investing activities:
Sales of investments 348,721 449,586
Purchases of investments (383,956) (447,589)
---------- ----------
Net cash (outflow)/inflow from investing activities (35,235) 1,997
---------- ----------
Cashflow from financing activities
Loan drawdown 211,162 88,078
Loan repayment (199,302) (100,658)
Equity dividends paid (38,345) (36,067)
Share issue proceeds 21,083 11,064
Share issue costs (42) (22)
Interest paid (1,522) (376)
---------- ----------
Net cash outflow from financing activities (6,966) (37,981)
---------- ----------
(Decrease)/increase in cash and cash equivalents (9,809) 837
---------- ----------
Cash and cash equivalents at the start of the
year 14,310 13,693
Exchange movements (557) (228)
---------- ----------
Cash and cash equivalents at the end of the
year 3,944 14,310
====== ======
NOTES TO THE FINANCIAL STATEMENTS
1. General information
The entity is a closed end company, registered as a no par value company
under the Companies (Jersey) Law 1991, with its shares listed on the
London and New Zealand stock exchanges. The Company's registered office
is IFC1, The Esplanade, St Helier, Jersey JE1 4BP and its principal
place of business is 201 Bishopsgate, London EC2M 3AE.
The Company was incorporated on 6 November 2006.
2. Accounting policies
The Company's financial statements for the year ended 31 August 2023
have been prepared in accordance with International Financial Reporting
Standards as adopted by the European Union ('IFRS'). 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 International Accounting Standards Committee ('IASC') that remain
in effect, to the extent that IFRS have been adopted by the European
Union.
The financial statements have been prepared on a going concern basis
and on the historical cost basis, except for the revaluation of financial
assets and liabilities designated as held at fair value through profit
and loss.
The financial statements are presented in sterling and all values are
rounded to the nearest thousand pounds (GBP000) except where otherwise
indicated.
3. Investment income
2023 2022
GBP'000 GBP'000
------------------------------------------------------ ------------- ------------
Overseas investment income 37,304 40,570
Stock dividends 27 76
---------- ----------
37,331 40,646
====== ======
Analysis of investment income by geography:
------------------------------------------------------ ------------- ------------
Australia 6,154 7,966
China 10,561 13,571
Hong Kong 2,653 2,899
India 347 972
Indonesia 2,271 547
Japan 181 -
New Zealand 579 907
Singapore 2,583 1,722
South Korea 5,488 3,759
Taiwan 5,351 6,926
Thailand 836 1,016
Vietnam 327 361
---------- ----------
37,331 40,646
====== ======
All of the above income is derived from equity related
investments.
4. Other income
2023 2022
GBP'000 GBP'000
------------------------- --------- ---------
Bank and other interest 68 3
Option premium income 2,869 2,922
-------- --------
2,937 2,952
===== =====
5. Earnings/(losses) per ordinary share
The earnings/(losses) per ordinary share figure is based on the net
loss for the year of GBP56,240,000 (2022: profit GBP7,957,000) and
on the weighted average number of ordinary shares in issue during the
year of 158,745,879 (2022: 152,008,180).
The earnings/(losses) per ordinary share figure can be further analysed
between revenue and capital, as below:
2023 2022
GBP'000 GBP'000
---------------------------------------------------------------- ------------------------ --------------------------
Net Revenue profit attributable to ordinary
shares 33,219 37,102
(89,459) (29,145)
Net Capital loss attributable to ordinary shares ----------- -----------
(Loss)/profit attributable to ordinary shares (56,240) 7,957
====== ======
Weighted average number of ordinary shares in
issue during the year 158,745,879 152,008,180
2022
Pence
---------------------------------------------------------------- ------------------------ --------------------------
Revenue earnings per ordinary share 20.92 24.41
(56.35) (19.17)
Capital losses per ordinary share --------- ---------
Total (loss)/earnings per ordinary share (35.43) 5.23
===== =====
The Company has no securities in issue that could dilute the return
per ordinary share. Therefore the basic and diluted earnings per ordinary
share are the same.
6. Dividends
2023 2022
Dividend Record date Pay date GBP'000 GBP'000
--------------------------------- ----------------- -------------------- ------------------- -------------------
Fourth interim dividend 5.90p 29 October 26 November
for the year ended 2021 2021 2021 - 8,914
First interim dividend 5.90p 28 January 25 February
for the year ended 2022 2022 2022 - 8,931
Second interim dividend 5.90p
for the year ended 2022 29 April 2022 27 May 2022 - 8,943
Third interim dividend 6.00p
for the year ended 2022 29 July 2022 26 August 2022 - 9,279
Fourth interim dividend 6.00p 28 October 25 November 9,319 -
for the year ended 2022 2022 2022
First interim dividend 6.00p 27 January 24 February 9,461 -
for the year ended 2023 2023 2023
Second interim dividend 6.00p 28 April 2023 26 May 2023 9,650 -
for the year ended 2023
Third interim dividend 6.10p 28 July 2023 25 August 2023 9,915 -
for the year ended 2023 ---------- ----------
38,345 36,067
====== ======
The fourth interim dividend for the year ended 31 August 2023 has not
been included as a liability in these financial statements as it was
announced and paid after the year end. The table which follows sets
out the total dividends paid and to be paid in respect of the financial
year and the previous year. The revenue available for distribution
by way of dividend for the year is GBP33,219,000 (2022: GBP37,102,000).
The total dividends payable in respect of the financial year which
form the basis of s.1158 of the Corporation Tax Act 2010 are set out
below:
2023 2022
GBP'000 GBP'000
------------------------------------------------------------------------------------ ---------------- --------------
Revenue available for distribution by way of dividend
for the year 33,219 37,102
First interim dividend of 6.00p (2022: 5.90p) paid 24
February 2023 (25 February 2022) (9,461) (8,931)
Second interim dividend of 6.00p (2022: 5.90p) paid 26
May 2023 (27 May 2022) (9,650) (8,943)
Third interim dividend of 6.10p (2022: 6.00p) paid 25
August 2023 (26 August 2022) (9,915) (9,279)
Fourth interim dividend for the year ended 31 August
2023 of 6.10p (2022: 6.00p) (based on 162,988,564 shares (9,942) (9,319)
in issue at 24 November 2023) (2022: 155,323,564) ---------- ----------
(Transfer from reserves)/undistributed revenue for s.1158 (5,749) 630
purposes ====== ======
7. Net asset value per share
The basic net asset value per ordinary share and the net asset value
attributable to ordinary shareholders at the year-end calculated in
accordance with the articles of association were as follows:
2023 2022
Net asset Net asset Net asset Net asset
value per value attributable value per value attributable
share GBP'000 share GBP'000
pence pence
------------------------ ----------- -------------------- -------------- ----------------------------
Ordinary shares 222.12p 362,032 281.11p 435,576
======= ====== ====== ======
The basic net asset value per ordinary share is based on 162,988,564
(2022: 154,948,564) ordinary shares, being the number of ordinary shares
in issue. This is considered to be an Alternative Performance Measure,
please see the annual report for further details.
The movements during the year in net assets attributable to the ordinary
shares were as follows:
2023 2022
GBP'000 GBP'000
----------------------------------------------------------------------- ---------------- --------------
Net assets attributable to ordinary shares at beginning
of year 435,576 452,644
Total net (loss)/profit after taxation (56,240) 7,957
Dividends paid (38,345) (36,067)
21,041 11,042
Issue of ordinary shares net of issue costs ------------ ------------
632,032 435,576
======= =======
8. Stated share capital
2023 2022
Issued Issued and
Authorised and fully GBP'000 fully paid GBP'000
paid
------------------------- -------------- ----------------- ----------- ---------------- ------------
Opening balance at 1
September
Ordinary shares of no
par value Unlimited 154,948,564 246,997 151,093,564 235,955
Issued during the year 8,040,000 21,083 3,855,000 11,064
Share issue costs - (42) - (22)
---------------- ----------- ---------------- ------------
Closing balance at 31 162,988,564 268,038 154,948,564 246,997
August ========= ====== ========= =======
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. The
Company has no significant or controlling shareholders.
During the year, the Company issued 8,040,000 (2022: 3,855,000) shares
for proceeds of GBP21,041,000 (2022: GBP11,042,000) net of costs.
9. Subsequent events
On 17 October 2023, the Company announced an interim dividend of 6.10p
per ordinary share in respect of the year ended 31 August 2023. The
dividend will be paid on 24 November 2023 to shareholders on the register
at 27 October 2023. The shares will be quoted ex-dividend on 26 October
2023.
10. Going concern statement
Notwithstanding the net current liability position at 31 August 2023,
the directors have determined that it is appropriate to prepare the
financial statements on a going concern basis and have concluded 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.
In coming to this conclusion, the directors have considered the nature
of the portfolio, which consists almost entirely of securities which
are listed and regularly traded on recognised exchanges, the size of
the Company's bank facility and the strength of its distributable reserves.
The directors have reviewed cash flow forecasting, covenant compliance
for the loan facility, the ability to make repayments on this facility
and the liquidity of the portfolio. They have further considered the
global economic and geopolitical environment including the repercussions
of the Covid-19 pandemic, ongoing tensions between China and the US,
as well as the war in Ukraine and recent conflict in the Middle East,
the impact of these on supply chains and the possible impact of climate
change risk on the value of the portfolio.
11. Financial information for 2023
The figures and financial information for the year ended 31 August
2023 are compiled from an extract of the latest financial statements
and do not constitute statutory accounts. These financial statements
included the report of the auditors which was unqualified.
12. Financial information for 2022
The figures and financial information for the year ended 31 August
2022 are compiled from an extract of the published accounts and do
not constitute the statutory accounts for that year.
13. Annual Report 2023
The annual report and financial statements will be posted to shareholders
in December 2023 and copies will be available on the Company's website
at: www.hendersonfareastincome.com.
14. Annual General Meeting
The 17th Annual General Meeting will be held at the offices of Janus
Henderson Investors at 201 Bishopsgate, London EC2M 3AE at 12.00 pm
on 24 January 2024. The Notice of the Meeting will be sent to shareholders
with the Annual Report 2023.
15. General Information
Company Status
The Company was incorporated in Jersey in 2006, number 95064, and is
a closed-end investment company. The Company is regulated by the Jersey
Financial Services Commission under the Collective Investment Funds
(Jersey) Law 1998. It is listed on the London and New Zealand stock
exchanges and became UK tax resident with effect from 1 September 2018.
SEDOL/ISIN: B1GXH75/JE00B1GXH751
London Stock Exchange (TIDM) code: HFEL
New Zealand Stock Exchange code: HFL
Global Intermediary Identification Number (GIIN): NTTIYP.99999.SL.832
Legal Entity Identifier (LEI): 2138008 DIQRE00380596
Directors and Secretary
The directors of the Company are Ronald Gould (Chairman), Nicholas
George (Chairman of the Audit Committee), Julia Chapman, Timothy Clissold
and David Mashiter. With effect from 1 December 2023, Susie Rippingall
and Carole Ferguson will be appointed as directors. The Corporate Secretary
is Janus Henderson Secretarial Services UK Limited. The registered
office is IFC1, The Esplanade, St Helier, Jersey, JF1 4BP. The Company's
principal place of business is 201 Bishopsgate, London, EC2M 3AE.
Website
Details of the Company's share price and net asset value, together
with general information about the Company, monthly factsheets and
data, copies of announcements, reports and details of general meetings
can be found at www.hendersonfareastincome.com
For further information please contact:
Sat Duhra Mike Kerley
Fund Manager Fund Manager
Henderson Far East Income Limited Henderson Far East Income Limited
Telephone: +658 388 3175 Telephone: 020 7818 5053
Dan Howe Harriet Hall
Head of Investment Trusts PR Manager
Janus Henderson Investors Janus Henderson Investors
Telephone: 020 7818 4458 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.
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END
FR FEDFWUEDSEDF
(END) Dow Jones Newswires
November 30, 2023 02:00 ET (07:00 GMT)
Henderson Far East Income (LSE:HFEL)
Graphique Historique de l'Action
De Avr 2024 à Mai 2024
Henderson Far East Income (LSE:HFEL)
Graphique Historique de l'Action
De Mai 2023 à Mai 2024
