Interim Results

Henderson Diversified Income Ltd 06 December 2007 Page 1 of 10 6 December 2007 HENDERSON DIVERSIFIED INCOME LIMITED Unaudited Results for the period ended 31 October 2007 Extracts from the Chairman's Statement This is my first interim statement as Chairman following the launch of your Company on 18 July 2007 and covers the period to 31 October 2007. A second interim report will be produced for the six months ending 30 April 2008, prior to our first full accounting period end on 31 October 2008. The period immediately following the launch of your Company was one of turbulence in financial markets with money markets and problems in the banking sector seldom far from the headlines. Despite the upheavals of the summer the confidence of our Managers in your Company's investment case has proved to be well founded. Performance, Earnings and Dividend Your Company was launched with the objective of providing a high level of income and capital growth over the longer term. The net asset value per ordinary share was 100.2 pence at 31 October 2007 and the share price was 101.5 pence; a 1.3 % premium. At the time of launch it was expected that the Company would achieve a dividend yield on an annualised basis of at least 7% (equivalent to 3 month LIBOR plus 1.25%). I am very pleased to report that during the period from launch in mid - July until 31 October 2007 the Portfolio Managers have been able to acquire assets within their target markets - principally secured loans, high yield corporate bonds and investment grade corporate bonds - at very attractive prices and relatively high yields. In fact the recent difficult market background appears to have worked in your Company's favour and there is no doubt that we were fortuitous to have cash on hand during August and September. We remain committed to delivering an income return to shareholders for the financial period to 31 October 2008 of at least 7% on an annualised basis based on the issue price of 100 pence per share. This means that because the first full financial period is 15 months, the Company is expected to pay five interim dividends of at least 8.75 pence per share in total for that period. The Manager is incentivised to deliver an annualised total return of not less than 3 month sterling LIBOR plus 1.25% which at the present time would equate to an annualised yield on the issue price of approximately 7.9%. For the period to 31 October 2007 the Company's revenue return was 1.56 pence per share and a dividend of 1.50 pence per share will be paid on 31 December 2007, to shareholders on the register at 14 December 2007. In this first financial period your Board intends to adopt a progressive dividend policy and in future financial periods our intention will be to smooth quarterly dividend payments as much as possible. - MORE - Page 2 of 10 HENDERSON DIVERSIFIED INCOME LIMITED Unaudited Results for the period ended 31 October 2007 Annual General Meeting The Company proposes to hold the Annual General Meeting in February or March each year, to approve accounts made up to the previous 31 October. As the Company was incorporated in June 2007, it is not possible to delay the holding of the first AGM until 2009. The Directors have therefore convened the meeting to be held on 28 February 2008, at 12 noon, at BNP House, Anley Street, St. Helier, Jersey and shareholders are most welcome to attend. Outlook 2007 has been a year of unexpected problems for financial markets and further surprises are likely over the coming months. Your Company has been positioned with a heavy weighting towards senior secured assets whilst seeking a high level of income in these very difficult markets. Whilst default rates remain at historically low levels it is prudent to expect a return to more average levels over the coming months. Given the discounts to par at which the Company's assets were purchased during the summer it is the Managers' belief that this scenario has already been reflected by the loan and credit markets. The outlook for your Company is therefore expected to be one of capital stability relative to other asset classes and a very attractive level of income for shareholders. Indeed the Managers have recently deployed further capital in the secured loans market so that the Company's total investments now represent approximately 120% of net assets. We shall be seeking to further enhance returns for shareholders as opportunities within loan and bond markets present themselves over the coming months. Paul Manduca Chairman 6 December 2007 - MORE - Page 3 of 10 HENDERSON DIVERSIFIED INCOME LIMITED Unaudited Results for the period ended 31 October 2007 Consolidated Income Statement for the period 5 June 2007 to 31 October 2007 (Unaudited) Period 5 June 2007 to 31 October 2007 Revenue Capital Return Return Total Note £'000 £'000 £'000 Investment income 246 - 246 Other income 564 - 564 Gains on investments held at fair value through profit or loss - 167 167 --------- --------- --------- Total income 810 167 977 Expenses Management fees (44) (44) (88) Other expenses (130) - (130) --------- --------- --------- Profit before finance costs and taxation 636 123 759 Finance costs (1) (1) (2) --------- --------- --------- Profit before taxation 635 122 757 Taxation (3) - (3) --------- --------- --------- Profit for the period 632 122 754 ====== ====== ====== Earnings per ordinary share (pence) 3 1.56 0.30 1.86 ====== ====== ====== The total column of this statement represents the income statement of the Group, prepared in accordance with IFRS. The revenue and capital columns are supplementary to this and are prepared under guidance published by The Association of Investment Companies ('AIC'). All items in the above statement derive from continuing operations. All income is attributable to the equity holders of Henderson Diversified Income Limited. There are no minority interests. The notes on pages 7 to 10 form an integral part of this interim financial information. - MORE - Page 4 of 10 HENDERSON DIVERSIFIED INCOME LIMITED Unaudited Results for the period ended 31 October 2007 Consolidated Statement of Changes in Equity for the period 5 June 2007 to 31 October 2007 Other Distributable Capital Revenue Total Capital Reserves Reserves Reserves £'000 £'000 £'000 £'000 £'000 Opening balance - - - - - Issue of shares 40,500 - - - 40,500 Share issue costs (668) - - - (668) Transfer to Distributable Reserves (39,832) 39,832 - - - Net profit from ordinary activities after tax - - 122 632 754 ---------- ---------- ---------- ---------- ---------- At 31 October 2007 - 39,832 122 632 40,586 ====== ====== ====== ====== ====== The notes on pages 7 to 10 form an integral part of this interim financial information. - MORE - Page 5 of 10 HENDERSON DIVERSIFIED INCOME LIMITED Unaudited Results for the period ended 31 October 2007 Consolidated Balance Sheet at 31 October 2007 (Unaudited) 31 October 2007 Note £'000 Non-current assets Investments held at fair value through profit or loss 37,733 Current assets Other receivables 634 Cash 18,968 ----------- 19,602 ----------- Total assets 57,335 ----------- Current liabilities Other payables (16,749) ----------- Net assets 40,586 ====== Capital and reserves Distributable reserves 39,832 Retained earnings: Other capital reserves 122 Revenue reserve 632 ----------- Total equity 40,586 ====== Net asset value per ordinary share (pence) 4 100.2 ====== The notes on pages 7 to 10 form an integral part of this interim financial information. - MORE - Page 6 of 10 HENDERSON DIVERSIFIED INCOME LIMITED Unaudited Results for the period ended 31 October 2007 Consolidated Cash Flow Statement for the period 5 June 2007 to 31 October 2007 (Unaudited) Period 5 June 2007 to 31 October 2007 £'000 Net cash outflow from operating activities (20,716) --------- Net cash outflow before use of financing (20,716) Net cash inflow from financing activities 39,832 --------- Increase in cash and cash equivalents 19,116 Exchange movements (148) --------- Cash and cash equivalents at the period end 18,968 ====== The notes on pages 7 to 10 form an integral part of this interim financial information. - MORE - Page 7 of 10 HENDERSON DIVERSIFIED INCOME LIMITED Unaudited Results for the period ended 31 October 2007 Notes to the Consolidated Interim Financial Information: 1. General Information The entity is a closed-ended company, registered as a no par value company under the Companies (Jersey) Law 1991. The Company was incorporated on 5 June 2007. Accordingly, the interim accounting period runs from 5 June 2007 to 31 October 2007 and there are no comparative figures for prior periods. 2. Principal Accounting Policies a Basis of Preparation The interim financial information for the period ended 31 October 2007 has been prepared in accordance with International Accounting Standards ('IAS') 34 'Interim Financial Reporting'. The principal accounting policies adopted are set out below; b Basis of Consolidation The consolidated financial information comprises the financial information of Henderson Diversified Income Limited ('the Company') and its subsidiary undertaking, Henderson Diversified Income (Luxembourg) S.a.r.l ('the Group'). All intra-group balances, transactions, income and expenses and profits and losses resulting from intra-group transactions are eliminated in full. The subsidiary is fully consolidated from the date of acquisition, being the date on which the Group obtained control, and will continue to be consolidated until the date that such control ceases. - MORE - Page 8 of 10 HENDERSON DIVERSIFIED INCOME LIMITED Unaudited Results for the period ended 31 October 2007 Notes to the Consolidated Interim Financial Information: c Investments held at Fair Value through Profit or Loss All investments are designated upon initial recognition as held at fair value through profit or loss. Assets are de-recognised at the trade date of the disposal. Proceeds will be measured at fair value, which will be regarded as the proceeds of sale less any transaction costs. The fair value of the financial instruments is based on their quoted bid price at the balance sheet date, without deduction of the estimated future selling costs. Changes in the fair value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Consolidated Income Statement as 'Gains or losses on investments held at fair value through profit or loss'. Also included within this caption are transaction costs in relation to the purchase or sale of investments, including the difference between the purchase price of an investment and its bid price at the date of purchase. d Income Income from fixed interest debt securities is recognised using the effective interest rate method. Bank interest and premia on credit default swaps are recognised on an accruals basis within the revenue return column of the Consolidated Income Statement. The interest rate differential contained within currency forward exchange contracts that hedge investment positions against currency risk are recognised within the revenue return over the life of the contract. e Expenses All administration expenses and interest payable are accounted for on an accruals basis. Expenses which are incidental to the purchase or sale of an investment are charged to the capital column of the Consolidated Income Statement and allocated to other capital reserves. On the basis of the Board's expected long term split of returns equally between capital gains and income, the Company charges 50% of investment management fees and finance costs to capital. f Taxation Under Article 123A of the Income Tax (Jersey) Law 1961, as amended, the Company has obtained Jersey exempt company status for the period and is exempt from Jersey income tax on non-Jersey source income and bank interest (by concession). A £600 annual exempt company fee is payable by the Company. - MORE - Page 9 of 10 HENDERSON DIVERSIFIED INCOME LIMITED Unaudited Results for the period ended 31 October 2007 Notes to the Consolidated Interim Financial Information: g Foreign Currency For the purposes of the consolidated financial information, the results and financial position of each entity is expressed in pounds sterling, which is the functional currency of the Company and the presentational currency of the Group. Sterling is the functional currency because it is the currency of the primary economic environment in which the Group operates. The Company is a closed-ended investment company, incorporated in Jersey, with its shares listed on the London Stock Exchange. Sterling is the currency by which dividends are returned to shareholders, share buy-backs and share issues are conducted and is the cost base of the Company. Transactions recorded in overseas currencies during the period are translated into sterling at the appropriate daily exchange rates. Assets and liabilities denominated in overseas currencies at the balance sheet date are translated into sterling at the exchange rates ruling at that date. h Cash and Cash Equivalents Cash comprises cash in hand and demand deposits. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risks of changes in value. i Bank Borrowings Interest-bearing bank loans and overdrafts are recorded as the proceeds received, net of direct issue costs. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accrual basis in the Consolidated Income Statement using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. j Segmental Reporting The directors are of the opinion the Group is engaged in a single segment of business being investment business. 3. Earnings per Ordinary Share The earnings per ordinary share is based on the net profit after taxation of £754,000 and on 40,500,000 ordinary shares, being the weighted average number of ordinary shares in issue during the period. The earnings per ordinary share detailed above can be further analysed between revenue and capital, as below: For the period 5 June 2007 to 31 October 2007 Revenue Capital Total Net profit (£'000) 632 122 754 Weighted average number of ordinary shares in issue 40,500,000 40,500,000 40,500,000 Earnings per ordinary share (p) 1.56p 0.30p 1.86p - MORE - Page 10 of 10 HENDERSON DIVERSIFIED INCOME LIMITED Unaudited Results for the period ended 31 October 2007 Notes to the Consolidated Interim Financial Information: 4. Net Asset Value per Ordinary Share The basic net asset value per ordinary share is based on a net asset value of £40,586,000 and on 40,500,000 ordinary shares, being the number of ordinary shares in issue at the period end. 5. Launch Details On 18 July 2007 the Company issued 40,500,000 ordinary shares of no par value for consideration value of £40,500,000, incurring £668,000 of issue expenses. On 5 October 2007, in accordance with Jersey Company Law, the Company successfully applied for a reduction in the stated capital account and the creation of a distributable reserve. 6. Interim Dividend A first interim dividend of 1.50p per ordinary share will be paid on 31 December 2007 to shareholders on the register on 14 December 2007. The shares will be quoted ex-dividend on 12 December 2007. The cost of the dividend will be £608,000 based on the number of shares in issue at 6 December 2007. Summary of Portfolio % High Yield Bonds 18 Investment Grade Bonds 5 Secured Loans 70 Net Current Assets 7 ------ 100 - ENDS - For further information please contact: John Pattullo, Portfolio Manager, Telephone: 020 7818 4770 Jenna Barnard, Portfolio Manager, Telephone: 020 7818 5584 James de Sausmarez Head of Investment Trusts, Henderson Global Investors, Telephone: 020 7818 3349 Sarah Gibbons-Cook Investor Relations and PR Manager, Henderson Global Investors, Telephone: 020 7818 3198 Jeremy Hamon Company Secretary, Telephone 01534 709108 This information is provided by RNS The company news service from the London Stock Exchange

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