Final Results

RNS Number : 1417C

Henderson Far East Income Limited

06 November 2009

 



6 November 2009

This announcement contains regulated information.

HENDERSON FAR EAST INCOME LIMITED 

Annual Financial Report for the year ended 31 August 2009

	31 August 2009	31 August 2008	% change
Net asset value
ordinary share	258.52p	261.69p	-1.2
Market price
ordinary share	269.50p	238.25p	13.1
Revenue earnings
ordinary share	13.76p	15.67p	-12.2

MANAGEMENT REPORT

Extracts from the Chairman's Statement 

I am pleased to report that following the general collapse in world stock markets in the first half of the year, Asian stock markets have enjoyed a strong recovery. In spite of the turbulence, the net asset value total return per ordinary share improved over the year under review and the share price total return was 19.3%. In addition, total dividends were increased by 3.3% year on year without the need to utilise revenue reserves. Your Board is confident that the Company is well positioned for both capital and income growth.

Performance

In the year under review, the net asset value total return was 5.3%. The share price total return was 19.3%, reflecting a significant re-rating of the shares. This was a favourable performance compared to the FTSE All-World Asia Pacific ex Japan Index which returned 7.9% on a total return basis. Revenue earnings after taxation dipped by 10.7% to £10,868,000, equivalent to 13.76p per share compared to 15.67p in the previous year, but given the background of dividend cuts in the region, revenue held up well.

Dividends

A fourth interim dividend of 3.20p has been declared making a total of 12.40p for the year, an increase of 3.3% year on year. This total has been met from current year revenue without recourse to the revenue reserve. Consequently, your Board is confident that it will be able at least to maintain the level of total dividend in the coming year.

Capital and gearing

During the year your Company enjoyed considerable demand for its shares which was reflected in the share price trading at a premium to net asset value. In view of this, your Board took the opportunity to issue a number of tranches of shares at premiums of 2% or above thereby enhancing the net asset value per share for shareholders. In total, 5,735,000 shares were issued in the year, resulting in proceeds of over £14.3 million and a further  1,685,000 shares have been allotted since 31 August 2009, yielding additional proceeds in excess of £4.7 million.

Your Board has maintained its cautious stance on borrowings and has not geared the portfolio during the year. However, the Board keeps the possibility under regular review.

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HENDERSON FAR EAST INCOME LIMITED 

Annual Financial Report for the year ended 31 August 2009

MANAGEMENT REPORT (continued)

Extracts from the Chairman's Statement (continued)

Share Issue

In view of the strong performance of your Company and the consistent level of demand for the shares, your Board is considering an issue of new shares by way of a placing. Any such issue would be at a premium to net asset value.

Outlook

We believe that the medium to long term prospects for the Asian region remain attractive and that revenue streams from Asian companies are sustainable. Across Asia, government debt to GDP levels has remained at low levels and regional consumers are cash rich; both these factors will continue to drive domestic demand in the region. Whilst Asian stock markets remain vulnerable to any significant further setbacks there is a genuine opportunity for countries with lower debt levels to gain significant ground on their more developed counterparts. Consequently we see long term value in Asian equities and the continued prospect of attractive returns for shareholders.

Annual General Meeting

The Annual General Meeting will be held at 12 noon on Friday 11 December 2009 at Liberté House, 19-23 La Motte Street, St Helier, Jersey JE2 4SY and shareholders are most welcome to attend. In addition, an open presentation to shareholders will be held at 3pm on Tuesday 15 December 2009 at Henderson's offices at 201 Bishopsgate, London EC2M 3AE where the Manager will make an investment presentation and both he and I will be happy to answer questions.

John Russell

Chairman

6 November 2009

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HENDERSON FAR EAST INCOME LIMITED 

Annual Financial Report for the year ended 31 August 2009

MANAGEMENT REPORT (continued)

Principal Risks and Uncertainties

The Board has drawn up a matrix of risks facing the Company and has put in place a schedule of investment limits and restrictions appropriate to the Company's investment objective and policy, in order to mitigate risks as far as practicable. The principal risks which have been identified and the steps taken by the Board to mitigate these are as follows:

• Investment and Strategy

An inappropriate investment strategy, for example, in terms of asset allocation or level of gearing, may result in under performance against the companies in the peer group, and also in the Company's shares trading on a wider discount. The Board manages these risks by ensuring a diversification of investments and a regular review of the extent of borrowings. The Portfolio Manager operates in accordance with an investment limits and restrictions policy determined by the Board, which includes limits on the extent to which borrowings may be employed. The Board reviews the limits and restrictions on a regular basis and the Manager confirms adherence to them every month. The Manager provides the Board with management information, including performance data and reports and shareholder analyses. The Directors monitor the implementation and results of the investment process with the Portfolio Manager at each Board meeting and monitor risk factors in respect of the portfolio. Investment strategy is reviewed at each meeting.

• Market

Market risk arises from uncertainty about the future prices of the Company's investments. This is commented on in the Annual Report.

• Accounting, legal and regulatory

The Company must comply with the provisions of the Companies (Jersey) Law 1991 and since its shares are listed on the London Stock Exchange, the UKLA's Listing and Disclosure Rules. The Company must also ensure compliance with the listing rules of the New Zealand Stock Exchange. A breach of company law could result in the Company and/or the Directors being fined or the subject of criminal proceedings and financial and reputational damage. A breach of the UKLA Rules could result in the suspension of the Company's shares. The Board relies on its Company Secretary and advisers to ensure adherence to company law and UKLA and New Zealand Stock Exchange Rules.

• Operational

Disruption to, or the failure of, the 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 Administrator, BNP Paribas Securities Services Fund Administration Limited sub-contracts some of the operational functions (principally relating to trade processing, investment administration and accounting) to BNP Paribas Securities Services. Details of how the Board monitors the services provided by the Manager and other suppliers, and the key elements designed to provide effective internal control, are explained further in the internal control section of the Annual Report.

• Financial

The financial risks faced by the Company include market risk (market price risk, interest rate risk and currency risk), liquidity risk and credit risk. Further details are disclosed in the Annual Report. Additional disclosures are provided in accordance with IFRS 7: Financial Instruments: Disclosures.

Related Party Transactions 

The contracts with Henderson and BNP Paribas Securities Services Fund Administration Limited are the only related party arrangements currently in place. Other than fees payable in the ordinary course of business, there have been no material transactions with these related parties which have affected the financial position or performance of the Company in the financial year.

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HENDERSON FAR EAST INCOME LIMITED 

Annual Financial Report for the year ended 31 August 2009

MANAGEMENT REPORT (Continued)

Statement under Disclosure and Transparency Rules

The Directors, who are listed in the Annual Report, each confirm to the best of their knowledge that: 

(a)   the financial statements, prepared in accordance with applicable accounting standards, give a true and fair view of the
        assets, liabilities, financial position and profit or loss of the Group; and

(b)   the Report of the Directors in the Annual Report includes a fair review of the development and performance of the
        business and the position of the Company and of the Group, together with a description of the principal risks and
        uncertainties that they face.

On behalf of the Board

Director
6 November 2009

Twenty Largest Holdings

These twenty investments total £107,710,000 (2008: £114,510,000) representing 50.0% (2008: 56.5%) by value of the net assets. 

Rank 2009	Rank 2008	Name of Investment	Country	Value  £'000
1	6	Bank of China	China	8,102
2	19	China Mobile	China	6,699
3	-	Industrial & Commercial Bank of China	China	6,131
4	18	Kasikornbank	Thailand	5,789
5	13	QBE Insurance Group	Australia	5,717
6	-	Venture Corp	Singapore	5,565
7	-	Telekomunikasi Indonesia	Indonesia	5,337
8	1	Santos	Australia	5,301
9	11	BOC Hong Kong Holdings	Hong Kong	5,286
10	-	Taiwan Cement	Taiwan	5,263
11	4	Hang Seng Bank	Hong Kong	5,203
12	-	CTCI Corporation	Taiwan	5,149
13	-	Link REIT	Hong Kong	5,088
14	40	Midland Holdings	Hong Kong	4,868
15	-	Bangkok Bank	Thailand	4,828
16	-	Incitec Pivot	Australia	4,760
17	-	Advanced Information Services	Thailand	4,687
18	20	Singapore Technologies Engineering	Singapore	4,660
19	14	Singapore Press	Singapore	4,659
20	-	Chunghwa Telecom	Taiwan	4,618

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HENDERSON FAR EAST INCOME LIMITED 

Annual Financial Report for the year ended 31 August 2009

Consolidated Income Statement 

for the year ended 31 August 2009

	Year ended 31 August 2009			Year ended 31 August 2008
	Revenue  return	Capital  return	Total	Revenue  return	Capital  return	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Investment income (note 2)	11,069	-	11,069	12,127	-	12,127
Other income (note 3)	1,900	-	1,900	2,278	-	2,278
Losses on investments held at fair value through profit or loss	-	(1,870)	(1,870)	-	(7,271)	(7,271)
	---------	-----------	-----------	---------	---------	---------
Total income	12,969	(1,870)	11,099	14,405	(7,271)	7,134
	---------	-----------	-----------	---------	---------	---------
Expenses
Management fees	(979)	(992)	(1,971)	(984)	(984)	(1,968)
Other expenses	(242)	(249)	(491)	(325)	(225)	(550)
	---------	-----------	-----------	---------	---------	---------
Profit/(loss) before finance costs and taxation	11,748	(3,111)	8,637	13,096	(8,480)	4,616
Finance costs	(25)	(25)	(50)	(50)	(17)	(67)
	---------	-----------	-----------	---------	---------	---------
Profit/(loss) before taxation	11,723	(3,136)	8,587	13,046	(8,497)	4,549
Taxation	(855)	-	(855)	(878)	(152)	(1,030)
	---------	-----------	-----------	---------	---------	---------
Profit/(loss) for the year	10,868	(3,136)	7,732	12,168	(8,649)	3,519
	=====	======	=======	=====	=====	=====
Earnings/(loss) per ordinary share  (note 4)	13.76p	(3.97)p	9.79p	15.67p	(11.14)p	4.53p
	=====	======	======	=====	=====	=====

The total column of this statement represents the Consolidated Income Statement of the Group, prepared in accordance with IFRS. The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies.

All items in the above statement derive from continuing operations.

All income is attributable to the equity holders of Henderson Far East Income Limited. There are no minority interests.

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HENDERSON FAR EAST INCOME LIMITED 

Annual Financial Report for the year ended 31 August 2009

Consolidated and Parent Company Statement of Changes in Equity

for the year ended 31 August 2009

	Stated capital	Distributable reserve	Other capital reserves	Revenue reserve	Total
Consolidated year ended 31 August 2009	£'000	£'000	£'000	£'000	£'000
Balance at 31 August 2008	-	180,471	13,811	8,852	203,134
Net (loss)/profit from ordinary activities after taxation	-	-	(3,136)	10,868	7,732
Shares issued	14,323	-	-	-	14,323
Ordinary dividends paid (note 5)	-	-	-	(9,693)	(9,693)
	---------	---------	---------	---------	---------
At 31 August 2009	14,323	180,471	10,675	10,027	215,496
	=====	=====	=====	=====	=====
	Stated capital	Distributable reserve	Other capital reserves	Revenue reserve	Total
Consolidated year ended 31 August 2008	£'000	£'000	£'000	£'000	£'000
Balance at 31 August 2007	-	180,471	22,460	5,806	208,737
Net (loss)/profit from ordinary activities after taxation	-	-	(8,649)	12,168	3,519
Ordinary dividends paid (note 5)	-	-	-	(9,122)	(9,122)
	--------	--------	----------	----------	--------
At 31 August 2008	-	180,471	13,811	8,852	203,134
	=====	=====	======	======	=====

	Stated capital	Distributable reserve	Other capital reserves	Revenue reserve	Total
Company year ended 31 August 2009	£'000	£'000	£'000	£'000	£'000
Balance at 31 August 2008	-	180,471	14,082	8,581	203,134
Net (loss)/profit from ordinary activities after taxation	-	-	(3,235)	10,967	7,732
Shares issued	14,323	-	-	-	14,323
Ordinary dividends paid (note 5)	-	-	-	(9,693)	(9,693)
	---------	---------	---------	---------	---------
At 31 August 2009	14,323	180,471	10,847	9,855	215,496
	=====	=====	=====	=====	=====
	Stated capital	Distributable reserve	Other capital reserves	Revenue reserve	Total
Company year ended 31 August 2008	£'000	£'000	£'000	£'000	£'000
Balance at 31 August 2007	-	180,471	24,098	4,168	208,737
Net (loss)/profit from ordinary activities after taxation	-	-	(10,016)	13,535	3,519
Ordinary dividends paid (note 5)	-	-	-	(9,122)	(9,122)
	--------	--------	----------	----------	--------
At 31 August 2008	-	180,471	14,082	8,581	203,134
	=====	=====	======	======	=====

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HENDERSON FAR EAST INCOME LIMITED 

 Annual Financial Report for the year ended 31 August 2009

Consolidated and Parent Company Balance Sheet

at 31 August 2009

	Consolidated 2009 £'000	Consolidated 2008 £'000	Company 2009 £'000	Company 2008 £'000
Non current assets
Investments held at fair value through profit or loss	206,757	198,137	207,473	198,952
	----------	----------	----------	----------
Current assets
Other receivables	6,865	7,400	6,865	7,285
Cash and cash equivalents	3,845	8,894	3,845	8,891
	----------	----------	----------	----------
	10,710	16,294	10,710	16,176
	----------	----------	----------	----------
Total assets	217,467	214,431	218,183	215,128
	----------	----------	----------	----------
Current liabilities
Other payables	(510)	(7,743)	(1,226)	(8,440)
Bank overdrafts	(1,461)	(3,554)	(1,461)	(3,554)
	----------	----------	----------	----------
	(1,971)	(11,297)	(2,687)	(11,994)
	----------	----------	----------	----------
Net assets	215,496	203,134	215,496	203,134
	======	======	======	======
Equity attributable to equity shareholders
Stated capital	14,323	-	14,323	-
Distributable reserve	180,471	180,471	180,471	180,471
Retained earnings:
Other capital reserves	10,675	13,811	10,847	14,082
Revenue reserve	10,027	8,852	9,855	8,581
	----------	----------	----------	----------
Total equity	215,496	203,134	215,496	203,134
	======	======	======	======
Net asset value per ordinary share (note 6)	258.52p	261.69p	258.52p	261.69p
	======	======	======	======

The financial statements were approved by the Board of Directors and authorised for issue on 6 November 2009 and were signed on its behalf by:

David Edward Peter Mashiter                                                                        Christopher Paul Spencer

Director                                                                                                              Director

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HENDERSON FAR EAST INCOME LIMITED 

Annual Financial Report for the year ended 31 August 2009

Consolidated and Parent Company Cash Flow Statement

for the year ended 31 August 2009

	Consolidated 2009 £'000	Consolidated 2008 £'000	Company 2009 £'000	Company 2008 £'000
Operating activities
Profit before taxation	8,587	4,549	8,481	4,222
Add back interest paid	50	73	50	38
Add loss on investments held at fair value through profit or loss	1,870	7,271	1,969	8,790
Less net  purchases of investments held at fair value through profit or loss	(9,458)	(6,058)	(9,458)	(67,563)
Decrease/(increase) in other receivables	232	(185)	117	2,524
Decrease/(increase) in amounts due from brokers	384	(474)	384	(474)
(Decrease)/increase in other payables	(41)	1	(13)	12
Decrease in amounts due to brokers	(6,595)	(2,404)	(6,595)	(593)
Capital distribution  from subsidiary	-	-	-	2,862
Scrip dividends included in investment income	(195)	(216)	(195)	(216)
	----------	----------	----------	----------
Net cash (outflow)/inflow from operating activities before interest and taxation	(5,166)	2,557	(5,260)	(50,398)
Interest paid	(50)	(73)	(50)	(38)
Taxation on investment income	(743)	(933)	(743)	(719)
Taxation (paid)/recovered	(522)	-	153	-
	----------	----------	----------	----------
Net cash (outflow)/inflow from operating activities	(6,481)	1,551	(5,900)	(51,155)
	----------	----------	----------	----------
Financing activies
Equity dividends paid	(9,693)	(9,122)	(9,693)	(9,122)
Repayment of loan	-	(2,236)	-	(2,236)
Share issue proceeds	14,055	-	14,055	-
Movement in inter-company loan	-	-	(578)	53,231
	----------	----------	----------	----------
Net cash inflow/(outflow) from financing	4,362	(11,358)	3,784	41,873
	----------	----------	----------	----------
Decrease in cash and cash equivalents	(2,119)	(9,807)	(2,116)	(9,282)
Cash and cash equivalents at the start of the year	5,340	14,832	5,337	14,011
Exchange movements	(837)	315	(837)	608
	----------	----------	----------	----------
Cash and cash equivalents at the end of the year (including bank overdrafts of £1,461,000 (2008: £3,554,000))	2,384	5,340	2,384	5,337
	======	======	======	======

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HENDERSON FAR EAST INCOME LIMITED 

Annual Financial Report for the year ended 31 August 2009

Notes:

1.	Accounting Policies
	Basis of preparation
	This consolidated financial information for the year ended 31 August 2009 has been prepared in accordance with International Financial Reporting Standards ('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. The principal accounting policies adopted are set out in the Annual Report. Where consistent with IFRS the financial statements have also been prepared in accordance with the guidance set out in the Statement of Recommended Practice ('SORP') for Investment Companies issued by the Association of Investment Companies ('AIC') as revised in January 2009.
2.	Investment income
						2009			2008
						£'000			£'000
	Overseas dividends					10,821			11,873
						---------			---------
	Interest income					53			38
	Stock dividends					195			216
						---------			---------
						11,069			12,127
						======			======
3.	Other income
					2009				2008
					£'000				£'000
	Bank and other interest				47				224
	Option premium income				1,853				2,054
					-------				-------
					1,900				2,278
					======				======
4.	Earnings per ordinary share
	The earnings per ordinary share figure is based on the net gains for the year of £7,732,000 (2008: £3,519,000) and on 78,973,771 (2008: 77,622,621) being the weighted average number of ordinary shares in issue. The earnings per ordinary share figure detailed above can be further analysed between revenue and capital, as below.
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	-10 - HENDERSON FAR EAST INCOME LIMITED  Annual Financial Report for the year ended 31 August 2009
4.	Earnings per ordinary share (continued)
	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.
					2009				2008
					£'000				£'000
	Net revenue profit				10,868				12,168
	Net capital loss				(3,136)				(8,649)
					-------				-------
	Net total profit				7,732				3,519
					======				======
	Weighted average number of ordinary shares in issue during the year				78,973,771				77,622,621
					2009				2008
	Revenue earnings per ordinary share				13.76p				15.67p
	Capital loss per ordinary share				(3.97)p				(11.14)p
					-------				-------
	Total earnings per ordinary share				9.79p				4.53p
					======				======
5.	Dividends
								2009			2008
		Record date		Pay date				£'000			£'000
	Third interim dividend 2.75p for the year ended 2007	9 November 2007		30 November 2007				-			2,135
	First interim dividend 3.00p for the year ended 2008	8 February 2008		29 February 2008				-			2,329
	Second interim dividend 3.00p for the year ended 2008	9 May 2008		30 May 2008				-			2,329
	Third interim dividend 3.00p for the year ended 2008	8 August 2008		29 August 2008				-			2,329
	Fourth interim dividend 3.00p for the year ended 2008	7 November 2008		28 November 2008				2,329			-
	First interim dividend 3.00p for the year ended 2009	6 February 2009		27 February 2009				2,329			-
	Second interim dividend 3.00p for the year ended 2009	8 May 2009		29 May 2009				2,385			-
	Third interim dividend 3.20p for the year ended 2009	7 August 2009		28 August 2009				2,650			-
								-------			-------
								9,693			9,122
								======			======
	The fourth interim dividend for the year ended 31 August 2009 has not been included as a liability in these financial statements as it was announced and paid after the year end. - MORE - -11 - HENDERSON FAR EAST INCOME LIMITED  Annual Financial Report for the year ended 31 August 2009
5.	Dividends (continued)
	The table below sets out the total dividends paid and to be paid in respect of the financial year. The revenue available for distribution by way of dividend for the year is £10,868,000 (2008: £12,168,000).
					2009
					£'000
	First interim dividend for 2009 - 3.00p				2,329
	Second interim dividend for 2009 - 3.00p				2,385
	Third interim dividend for 2009 - 3.20p				2,650
	Fourth interim dividend for 2009 - 3.20p  (payable 30 November 2009 based on 85,042,621 shares in issue at 4 November 2009)				2,721
					--------
					10,085
					======
6.	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:
			Net asset value per share 2009 pence	Net asset value attributable 2009 £'000			Net asset value per share 2008 pence			Net asset value attributable 2008 £'000
	Ordinary shares		258.52	215,496			261.69			203,134
			======	======			======			======
	The basic net asset value per ordinary share is based on 83,357,621 (2008: 77,622,621) ordinary shares, being the number of ordinary shares in issue.
7.	2009 Financial information
	The figures and financial information for the year ended 31 August 2009 are compiled from an extract of the latest financial statements and do not constitute statutory accounts. These accounts included the report of the auditors which was unqualified.
8.	2008 Financial information
	The figures and financial information for the year ended 31 August 2008 are compiled from an extract of the latest published accounts and do not constitute the statutory accounts for that period.
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9.	Annual Report
	The Annual Report and Accounts will be posted to shareholders on 10 November 2009 and copies will be available on the Company's website (www.hendersonfareastincome.com) or in hard copy format from the Company's registered office, Liberté House, 19-23 La Motte Street, St Helier, Jersey, JE2 4SY.
	For further information please contact:
	Mike Kerley
	Portfolio Manager, Henderson Far East Income Limited
	Telephone: [phone]
	James de Sausmarez
	Head of Investment Trusts, Henderson Global Investors
	Telephone: [phone]
	Sarah Gibbons-Cook
	Investor Relations and PR Manager, Henderson Global Investors
	Telephone: [phone]
	Jeremy Hamon
	BNP Paribas Securities Services Fund Administration, Company Secretary
	Telephone: [phone]

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