Annual Financial Report

Henderson Diversified Income TstPLC

25 July 2023

 

JANUS HENDERSON FUND MANAGEMENT UK LIMITED

HENDERSON DIVERSIFIED INCOME TRUST PLC

LEGAL ENTITY IDENTIFIER: 213800RV2228EO1JEN02

25 July 2023

HENDERSON 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
NAV1	-4.0%	-9.0%
Benchmark2	-0.3%	-7.0%
Share price3	-1.0%	-10.4%

	At 30 April 2023	At 30 April 2022
NAV per share	71.88p	79.55p
Share price per share3	69.10p	73.80p
Revenue return per share	3.80p	4.65p
Net assets	£130.9m	£148.4m
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%
Carbon intensity	Company: 31.89 tCO2e4/Revenue	Benchmark: 240.81 tCO2e4/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

Ranking 2023 (2022)	Investment	Country	Industry	Market value £'000	% of 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 Company takes on interest rate risk so as to deliver portfolio returns. Reductions in market interest rates will reduce gross and net revenue income and this effect may be amplified by the use of leverage. Such falls may be mitigated for a period if the Company has invested in longer term fixed rate assets prior to such market movements. The Company invests in secured loans. Whilst such secured loans may contain fixed interest rates, they may also contain prepayment provisions that reduce their effectiveness at mitigating interest rate risk. Increases in market interest rates can reduce net asset value if interest rates rise whilst holding fixed rate assets of longer duration. Interest rate risk also arises from an investment in interest rate derivatives and the use of rolling forward foreign exchange contracts.	The Board has not set any limits on the amount of interest rate risk that may be taken by the Manager other than to limit the gross on balance sheet and synthetic leverage to 40% of net assets. The Board discusses interest rate risk with the Fund Managers at each Board meeting and probes their assessment of market conditions and their judgment as to the direction of interest rates and speed of development. The Board receives a projection of net income on a monthly basis and probes the income realised to date and forecast to the financial year end. The Board receives a list of the assets in the portfolio which contains details of interest rates and periods to maturity at each Board meeting. The Board supports the use of interest rate derivatives to increase, as well as manage and mitigate interest rate risk. The interest rate risk profile of the portfolio as at the year end is set out in Note 14.1.3 to the financial statements within the Annual Report.
Credit risk The Company takes on credit risk so as to deliver portfolio returns. Investing in debt securities and secured loans exposes the Company to credit risk from company defaults and restructurings. Whilst it may be possible to hold a debt instrument to maturity, and be paid out in full, the Fund Managers have discretion to sell a distressed asset which would give rise to realised losses without a default having occurred. Reductions in credit spreads will reduce gross and net income and 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.	The Board has not set any limits on the credit quality of the portfolio. The Board relies on the Fund Managers to make investment decisions in this regard given the level of skill and experience in debt securities and secured loan lending within the fund management team. The Board receives a report of the assets held in the portfolio at each Board meeting and discusses credit quality and default trends with the Fund Managers. The credit rating table for the portfolio at the year end is disclosed in Note 14.3 to the financial statements within the Annual Report.
Currency risk The Company invests in assets of fixed amounts denominated in currencies other than sterling which give rise to currency risk. Significant gains and losses would likely be incurred on the liquidation of such assets when repatriating capital to sterling. Less significant gains and losses are incurred on repatriating interest and other income to sterling. 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.	The capital amount of any investment denominated in a foreign currency is hedged to sterling so as to mitigate currency gains and losses. The Board receives a report of gross and hedged currency positions at each Board meeting so it can monitor the level of hedging actually undertaken. Gross and net hedging currency exposures are set out in Note 14.1.2 to the financial statements within the Annual Report.

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 of Jenna Barnard, John Pattullo and Nicholas Ware as Fund Managers Jenna and John have directed the portfolio since its launch, Nicholas being appointed as co-manager from 1 January 2022 and the portfolio reflects their assessment of current economic conditions and likely market opportunities and developments. It may prove difficult to replace any or all of them should they 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.	The Board has an extensive and ongoing dialogue with Jenna, John and Nicholas on a quarterly basis and seeks to ensure that they remain interested and committed to the portfolio. The Board discusses this risk regularly with Janus Henderson management and seeks to ensure that Jenna, John and Nicholas remain allocated to the portfolio and are appropriately rewarded for their services.
Continued interest and commitment of Janus Henderson as Investment Manager and its operation of effective systems of internal control and management reporting (and execution and settlement of secured loans) The Board appointed Janus Henderson as its Manager at inception and the Group has supported shareholders since listing the predecessor company. The Board benefits from the extensive knowledge and experience of Janus Henderson who manage a substantial portfolio of investment trusts and the economies of scale from contracting with other investment trusts for services. The Board relies on the knowledge and expertise of Janus Henderson in ensuring that the Company complies with all relevant laws and regulations which include company law, securities legislation, data protection, anti-bribery and corruption and anti-tax evasion legislation. It may prove difficult to replace the Manager with an alternative 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.	The Board has a regular dialogue with representatives of Janus Henderson about their support for the Company and annually assesses their performance to ensure that economies of scale and other benefits from the relationship are in fact being delivered. The Board receives regular reports on compliance with laws and regulations and receives regular updates as new legislation is enacted. The Board receives an annual report on internal controls in operation at Janus Henderson and is promptly made aware of any compliance failings and how they are remediated. The Board also receives an annual report on internal controls at BNP Paribas in respect of its collateralized loan obligations and loan administration services and is promptly made aware of any compliance failings and how they are remediated. On an annual basis the Board reviews the quality of the service it has received and any issues and provides feedback to Janus Henderson.
ESG reputational risk The Company has transitioned to Article 8 status under SFDR.  Decisions on ESG matters can be subjective and criteria may change as knowledge, technology and science evolves. There is a risk that an investment, assessed as appropriate at a point in time, subsequently does not meet ESG criteria, and exposes the Company to reputational risk.	The Company's ESG criteria are considered to be sufficiently clear and measurable. These criteria and the Company's adherence to them are monitored and reviewed on a regular basis. Should the Board or the Manager consider it appropriate to review or alter the criteria, this would be considered on a case by case basis against known factors prevailing at the time.
Reliance on credit standing and quality of service of BNP Trust Corporation UK (BNPTCo) as the appointed Depositary and Custodian of assets and their execution and settlement of transactions (other than secured loans) The Board originally appointed BNP Paribas as its Depositary. BNP Paribas acted as Depositary during the year under review, however, this agreement was novated to BNPTCo in 2022. As Depositary BNPTCo acts as the Company's investment Custodian, with responsibility for transaction execution and settlement. The Company is reliant on BNPTCo operating effective systems to ensure the Company's transactions are undertaken promptly, that they are properly recorded, that assets are kept segregated from those of other clients, and that the credit rating of BNPTCo does not deteriorate or the custodian fails such that assets are not immediately recoverable.	The Board assessed the credit standing of BNPPSS, and subsequently BNPTCo, on a regular basis and keeps aware of market commentary should adverse events and circumstances begin to appear. The Board received an annual report on internal controls in operation at BNP Paribas (Fund Administration, Global and Local Custody, Middle Office Functions and Collateralized Loan Obligations), will receive the same in respect of BNPTCo and would be made aware promptly of any compliance failings and how they are remediated. On an annual basis the Board reviewed the quality of the service received by BNP Paribas Depositary and Custodian and discusses any issues. The same reviews will be carried out in respect of BNPTCo going forward.
Reliance on service providers to manage and control certain features of the portfolio The investment portfolio contains certain assets and liabilities (that are not present in most investment trusts) that require specific procedures and internal controls to be present for the Company, as follows: The Company invests in secured loans which are individually documented and require additional systems and controls to manage. The Company uses forward foreign exchange contracts to hedge currency exposure and may use future interest rate agreements to manage interest rate risk which require specialised reports to be produced to monitor net risks. The Company has borrowed funds and given covenants to the lender regarding certain ratios which require monitoring to ensure they are met.	The Board receives a regular report on net income earned to date and a projection of net income to the end of the year. The Board uses this to obtain comfort that the portfolio and its risks are being managed as intended. It also receives a monthly investment limits and restrictions schedule that confirms that the Manager has complied with the Board set investment limits and restrictions each month that includes borrowing covenants. On a quarterly basis the Board receives and reviews detailed reports with Janus Henderson including: - balance sheet - income statement - asset listing including purchases and sales - revenue forecast - gross and net currency position

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 return £'000	Capital return £'000	Total £'000	Revenue return £'000		Capital return £'000		Total £'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 share capital £'000	Capital redemption reserve £'000	Share premium £'000	Distributable reserve £'000	Capital reserve £'000	Revenue reserve £'000	Total £'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 share capital £'000	Capital redemption reserve £'000	Share premium £'000	Distributable reserve £'000	Capital reserve £'000	Revenue reserve £'000	Total £'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 30 April 2023 £'000	At 30 April 2022 £'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 30 April 2023 £'000	Year ended 30 April 2022 £'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 costs1	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
	======	======

¹Cash inflow from interest income was £8,163,000 (2022: £8,892,000) and cash inflow from dividends was £264,000 (2022: £264,000).

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 £'000	2022 £'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 £'000	2022 £'000
Bank and other interest		57	17
		----	----
		57	17
		----	----

5.   Management fee

		2023		2022
	Revenue return £'000	Capital return £'000	Total £'000	Revenue return £'000	Capital return £'000	Total £'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 return £'000	Capital return £'000	Total £'000	Revenue return £'000	Capital return £'000	Total £'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 return £'000	Capital return £'000	Total £'000	Revenue return £'000	Capital return £'000	Total £'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 £1,037,000 (2022: £1,037,000) 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 £6,456,000 and on 183,481,385 ordinary shares (2022: loss of £15,116,000 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 £'000	2022 £'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

Dividends on ordinary shares	Record date	Payment date	2023 £'000	2022 £'000
Fourth interim dividend (1.10p) for the year ended 30 April 2022 (2021 - 1.10p)	6 June 2022	30 June 2022	2,052	2,104
First interim dividend (1.10p) for the year ended 30 April 2023 (2022 - 1.10p)	9 September 2022	30 September 2022	2,026	2,085
Second interim dividend (1.10p) for the year ended 30 April 2023 (2022 - 1.10p)	2 December 2022	31 December 2022	2,003	2,066
Third interim dividend (1.10p) for the year ended 30 April 2023 (2022 - 1.10p)	3 March 2023	31 March 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 £'000	2022 £'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 shares entitled to dividend	Total number of shares	Nominal value of shares £'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 shares entitled to dividend	Total number of shares	Nominal value of shares £'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 £3,236,000) and 4,486,502 ordinary shares were bought back to Treasury at a cost of £3,007,000 (2022: 875,084 ordinary shares were bought back to Treasury at a cost of £670,000).

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 £'000	2022 £'000
At start of year	39	1
Buy-back of shares	-	38
	======	======
At 30 April	39	39
	======	======

11.  Share premium account

	2023 £'000	2022 £'000
At start of year	1,576	1,576
	======	======
At 30 April	1,576	1,576
	======	======

12.  Distributable reserve

	2023 £'000	2022 £'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 of investments held  £'000		Capital reserve arising on investments sold £'000	Total £'000
At start of year		(13,696)	(10,108)	(23,804)
Exchange movements1		3,836	(9,013)	(5,177)
Movement in unrealised appreciation1		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 company2		-	-	-
At end of year		(7,758)	(32,488)	(40,246)
	====		====	====

	2022
	Capital reserve arising on revaluation of investments held  £'000	Capital reserve arising on investments sold £'000	Total £'000
At start of year	232	3,725	3,957
Exchange movements1	9,886	(6,999)	2,887
Movement in unrealised depreciation1	(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 company2	-	36	36
At end of year	(13,696)	(10,108)	(23,804)
	====	====	====

¹There has been a transfer of £2,727,000 (2022: £13,051,000) 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 £36,000 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 £130,870,000 (2022: £148,417,000) 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 [e-mail].  

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: [phone]

Harriet Hall

PR Manager

Janus Henderson Investors

Telephone: [phone]

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.

 

END