Half Yearly Report

RNS Number : 7376K

Henderson Far East Income Limited

26 April 2010

 



26 April 2010

This announcement contains regulated information.

HENDERSON FAR EAST INCOME LIMITED

Unaudited Results for the half year ended 28 February 2010

			As at 28 February 2010
Total net assets			£272,312,000
Net asset value per ordinary share			288.75p
Market price per ordinary share			300.00p
Premium			3.9%
Dividends - first interim (paid 26 February 2010)			3.20p
- second interim (payable 28 May 2010)			3.20p

INTERIM MANAGEMENT REPORT

Extracts from the Chairman's Statement

I am pleased to report that the significant rally in Asian stocks has continued in the six months under review as the Asian economies made a swift recovery from the global financial crisis. Earnings growth is forecast to be 25% in Asia in 2010 and any appreciation in Asian currencies, which remain significantly undervalued compared to both sterling and the US dollar, will benefit overseas investors. Over the last ten years dividends paid by Asian companies have grown at more than twice the rate of those paid by companies in the West. With the region's superior economic fundamentals, your Board remains firmly convinced that the region continues to offer excellent prospects for income and capital growth.

Performance

In the six months to 28 February 2010, the net asset value total return of the Company was 15.74% and the share price total return was 13.81% reflecting the continuing premium to net asset value at which the shares traded over the period. The FTSE All-World Asia Pacific ex Japan Index returned 17.38% on a total return basis over the six month period reflecting the strong performance of growth stocks over yield stocks as the market recovered.

Dividends

Last November, the Company paid a fourth interim dividend of 3.20p per share in respect of the year ended 31 August 2009, making a total of 12.40p for that year. A first interim dividend of 3.20p was paid on 26 February 2010, and I am pleased to report that a second interim dividend of the same amount will be paid on 28 May 2010. Your Board remains confident that it will at least be able to maintain the level of total dividends at 12.80p in this financial year.

Material events or transactions during the period

The portfolio remained ungeared throughout the period, and the countries in which the Company is invested are unchanged from six months previous.

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HENDERSON FAR EAST INCOME LIMITED

Unaudited Results for the half year ended 28 February 2010

INTERIM MANAGEMENT REPORT (continued)

Extracts from the Chairman's Statement (continued)

Issues of shares

In December 2009 your Company allotted 6,462,943 ordinary shares under an institutional placing at a premium to net asset value of 2%. Subsequent to the placing, the Company applied for a new blocklisting of 9,150,555 shares. In addition to the placing, your company has issued a total of a further 4,485,000 shares in smaller tranches, all of which were issued at a premium of not less than 2% making a total of 10,947,943 new shares allotted in the period. We shall continue to issue shares where it is NAV enhancing for shareholders.

Related Party Transactions

Details of related party transactions are contained in the annual report. There have been no material transactions with related parties during the six month period under review.

Outlook, risks and uncertainties

We believe that with low interest rates, supportive government policies, liquid banking sectors, high savings ratios, low fiscal deficits and low debt to GDP the Asia Pacific region will enjoy sustainable growth going forward. This growth will be underpinned by the increasing growth of domestic consumption across Asia and this is the key theme that will dominate stock picking over the next six months. A setback in global growth remains the biggest risk to continued positive progress.

John Russell

Chairman

23 April 2010

DIRECTORS' RESPONSIBILITY STATEMENT

The Directors confirm that, to the best of their knowledge:

(a)     the condensed set of financial statements has been prepared in accordance with IAS 34;

(b)     the interim management report includes a fair review of the information required by Disclosure and Transparency Rule 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

(c)     the interim management report includes a fair review of the information required by Disclosure and Transparency Rule 4.2.8R (disclosure of related party transactions and changes therein).

John Russell

Chairman

23 April 2010

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HENDERSON FAR EAST INCOME LIMITED

Unaudited Results for the half year ended 28 February 2010

Geographical Distribution of Group Investments

		28 February 2010 %
China		18.9
Hong Kong		16.9
Australia		14.7
Singapore		13.7
South Korea		12.7
Taiwan		11.6
Thailand		6.5
Indonesia		2.6
The Philippines		2.4
		---------
		100.0
		=====

Top Twenty Investments as at 28 February 2010

Company	Country	Value of Investments £'000
Bank of China	China	8,422
Link REIT	Hong Kong	7,659
Telstra Corporation	Australia	7,496
BOC Hong Kong Holdings	Hong Kong	7,179
SK Telecom	South Korea	6,969
KT Corporation	South Korea	6,914
Advanced Information Services	Thailand	6,793
Industrial & Commercial Bank of China	China	6,776
QBE Insurance Group	Australia	6,660
Telekomunikasi Indonesia	Indonesia	6,652
DBS Group	Singapore	6,571
Incitec Pivot	Australia	6,568
Venture Corp	Singapore	6,535
Hang Seng Bank	Hong Kong	6,425
Amcor	Australia	6,399
Philippine Long Distance Telephone	Philippines	6,255
China Oilfield Services	China	6,237
Fraser & Neave	Singapore	6,204
Kasikornbank	Thailand	6,168
Sino Land	Hong Kong	6,158
		------------
Total Top 20 Group Investments		135,040
Top 20 as a percentage of total group investments		51.68%

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HENDERSON FAR EAST INCOME LIMITED

Unaudited Results for the half year ended 28 February 2010

Condensed Consolidated Income Statement

for the half year ended 28 February 2010

		Half year ended 28 February 2010 (Unaudited)			Half year ended 28 February 2009 (Unaudited)			Year ended 31 August 2009 (Audited)
		Revenue return £'000	Capital return £'000	Total £'000	Revenue return £'000	Capital return £'000	Total £'000	Revenue return £'000	Capital return £'000	Total £'000
Investment income		3,725	-	3,725	2,260	-	2,260	11,069	-	11,069
Other income		314	-	314	1,150	-	1,150	1,900	-	1,900
Gains/(losses) on investments held at fair value through profit or loss		- _______	29,324 _______	29,324 _______	- _______	(48,497) _______	(48,497) _______	- _______	(1,870) _______	(1,870) _______
Total income/(losses)		4,039 _______	29,324 _______	33,363 _______	3,410 _______	(48,497) _______	(45,087) _______	12,969 _______	(1,870) _______	11,099 _______
Expenses
Management fees		(610)	(610)	(1,220)	(508)	(508)	(1,016)	(979)	(992)	(1,971)
Other expenses		(149) _______	(139) _______	(288) _______	(109) _______	(116) _______	(225) _______	(242) _______	(249) _______	(491) _______
Profit/(loss) before finance costs and taxation		3,280	28,575	31,855	2,793	(49,121)	(46,328)	11,748	(3,111)	8,637
Finance costs		(7) _______	(7) _______	(14) _______	(9) _______	(8) _______	(17) _______	(25) _______	(25) _______	(50) _______
Profit/(loss) before taxation		3,273	28,568	31,841	2,784	(49,129)	(46,345)	11,723	(3,136)	8,587
Taxation		(295) _______	- _______	(295) _______	(86) _______	- _______	(86) _______	(855) _______	- _______	(855) _______
Profit/(loss) for the period		2,978 _______	28,568 _______	31,546 _______	2,698 _______	(49,129) _______	(46,431) _______	10,868 _______	(3,136) _______	7,732 _______
Basic and diluted earnings/(loss) per ordinary share (note 2)		3.39p _______	32.47p _______	35.86p _______	3.48p _______	(63.29)p _______	(59.81)p _______	13.76p _______	(3.97)p _______	9.79p _______

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 the Henderson Far East Income Limited. There are no minority interests.

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HENDERSON FAR EAST INCOME LIMITED

Unaudited Results for the half year ended 28 February 2010

Condensed Consolidated Statement of Changes in Equity

for the half year ended 28 February 2010

	Half year ended 28 February 2010 (Unaudited)
	Stated capital £'000		Distributable reserve £'000		Other capital reserves £'000		Revenue reserve £'000		Total £'000
Balance at 31 August 2009	14,323		180,471		10,675		10,027		215,496
Net profit from ordinary activities after taxation	-		-		28,568		2,978		31,546
Shares issued	30,954		-		-		-		30,954
Ordinary dividends paid	-		-		-		(5,684)		(5,684)
At 28 February 2010	45,277		180,471		39,243		7,321		272,312
	Half year ended 28 February 2009 (Unaudited)
	Stated capital £'000		Distributable reserve £'000		Other capital reserves £'000		Revenue reserve £'000		Total £'000
Balance at 31 August 2008	-		180,471		13,811		8,852		203,134
Net (loss)/profit from ordinary activities after taxation	-		-		(49,129)		2,698		(46,431)
Ordinary dividends paid	-		-		-		(4,658)		(4,658)
At 28 February 2009	-		180,471		(35,318)		6,892		152,045
	Year ended 31 August 2009 (Audited)
	Stated capital £'000		Distributable reserve £'000		Other capital reserves £'000		Revenue reserve £'000		Total £'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	-		-		-		(9,693)		(9,693)
At 31 August 2009	14,323		180,471		10,675		10,027		215,496

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HENDERSON FAR EAST INCOME LIMITED

 Unaudited Results for the half year ended 28 February 2010

Condensed Consolidated Balance Sheet

as at 28 February 2010

	28 February 2010 (Unaudited) £'000		28 February 2009 (Unaudited) £'000		31 August 2009 (Audited) £'000
Non current assets
Investments held at fair value through profit or loss	261,278		149,876		206,757
Current assets
Other receivables	4,220		1,612		6,865
Cash and cash equivalents	9,914		4,167		3,845
	14,134		5,779		10,710
Total assets	275,412		155,655		217,467
Current liabilities
Other payables	(2,897)		(3,610)		(510)
Bank overdrafts	(203)		-		(1,461)
	(3,100)		(3,610)		(1,971)
Net assets	272,312		152,045		215,496
Capital and reserves
Stated capital	45,277		-		14,323
Distributable reserve	180,471		180,471		180,471
Retained earnings:
Other capital reserves	39,243		(35,318)		10,675
Revenue reserve	7,321		6,892		10,027
Total equity	272,312		152,045		215,496
Net asset value per ordinary share (note 3)	288.75p		195.88p		258.52p

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HENDERSON FAR EAST INCOME LIMITED

Unaudited Results for the half year ended 28 February 2010

Condensed Consolidated Cash Flow Statement

for the half year ended 28 February 2010

	Half year ended 28 February 2010 (Unaudited) £'000		Half year ended 28 February 2009 (Unaudited) £'000		Year ended 31 August 2009 (Audited) £'000
Net cash (outflow)/inflow from operating activities (note 7)	(18,874)		3,817		(6,481)
Net cash (outflow)/inflow before use of financing	(18,874)		3,817		(6,481)
Net cash inflow/(outflow) from financing	25,305		(4,658)		4,362
Increase/(decrease) in cash and cash equivalents	6,431		(841)		(2,119)
Cash and cash equivalents at the start of the period	2,384		5,340		5,340
Exchange movements	896		(332)		(837)
Cash and cash equivalents at the period end	9,711		4,167		2,384

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HENDERSON FAR EAST INCOME LIMITED

Unaudited Results for the half year ended 28 February 2010

Notes:

1.	Accounting Policies: Basis of preparation
	The condensed interim financial information has been prepared using the same accounting policies as set out in the Company's Financial Statements for the year ended 31 August 2009 and in accordance with IAS 34. The condensed interim financial information has not been audited or reviewed by the Company's auditors.
2.	Earnings per ordinary share
	The earnings per ordinary share figure is based on the net profit after taxation of £31,546,000 (half year ended 28 February 2009: loss £46,431,000; year ended 31 August 2009: profit £7,732,000) and on 87,973,231 ordinary shares (half year ended 28 February 2009: 77,622,621; year ended 31 August 2009: 78,973,771), being the weighted average number of ordinary shares in issue during each of the periods.
	The earnings per ordinary share detailed above can be further analysed between revenue and capital, as below:

		Half year ended 28 February 2010 (Unaudited) £'000		Half year ended 28 February 2009 (Unaudited) £'000		Year ended 31 August 2009 (Audited) £'000
Net revenue gain		2,978		2,698		10,868
Net capital gain/(loss)		28,568		(49,129)		(3,136)
Net total gain/(loss)		31,546		(46,431)		7,732
Weighted average number of ordinary shares in issue during the period		87,973,231		77,622,621		78,973,771
		Pence		Pence		Pence
Revenue earnings per ordinary share		3.39		3.48		13.76
Capital earnings/(loss) per ordinary share		32.47		(63.29)		(3.97)
Total earnings/(loss) per ordinary share		35.86		(59.81)		9.79

3.	Net asset value per ordinary share
	The basic net asset value per ordinary share is based on a net asset value of £272,312,000 (28 February 2009: £152,045,000; 31 August 2009: £215,496,000) and on 94,305,564 (28 February 2009: 77,622,621; 31 August 2009: 83,357,621) ordinary shares, being the number of ordinary shares in issue at each period end.
4.	Transaction costs
	Purchase transaction costs for the half year ended 28 February 2010 were £177,000 (half year ended 28 February 2009: £115,000; year ended 31 August 2009: £271,000). These mainly comprise commission. Sales transaction costs for the half year ended 28 February 2010 were £166,000 (half year ended 28 February 2009: £125,000; year ended 31 August 2009: £296,000).
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5.	Share capital
	During the six months under review the Company issued a total of 10,947,943 shares for net proceeds of £30,954,000. 6,462,943 of the shares were issued under a placing arrangement on 11 December 2009, 1,685,000 from last year's blocklisting and 2,800,000 from this year's blocklisting (of 9,150,155 shares which was applied for on 11 December 2009). A further 525,000 shares have been issued since the period end.
6.	Interim dividend
	On 30 November 2009, the Company paid a fourth interim dividend of 3.20p per share in respect of the year ended 31 August 2009. A first interim dividend of 3.20p per share was paid on 26 February 2010. The second interim dividend of 3.20p per share will be paid on 28 May 2010 to shareholders on the register on 7 May 2010. The Company's shares will be quoted ex-dividend on 5 May 2010. Based on the number of shares in issue on 23 April 2010, the cost of this dividend will be £3,035,000.
7.	Reconciliation of profit before taxation to net cash inflow from operating activities

	Half year ended 28 February 2010 (Unaudited) £'000		Half year ended 28 February 2009 (Unaudited) £'000		Year ended 31 August 2009 (Audited) £'000
Net profit/(loss) before tax	31,841		(46,345)		8,587
(Less)/add: (gains)/losses on investments held at fair value through profit or loss	(29,324)		48,497		1,870
Net (purchases)/sales of investments	(26,093)		159		(9,458)
Decrease in other receivables	749		1,857		232
Decrease in amounts due from brokers	1,961		3,854		384
Increase/(decrease) in other payables	101		(66)		(41)
Increase/(decrease) in amounts due to brokers	2,236		(3,483)		(6,595)
Scrip dividends included in investment income	-		(63)		(195)
Taxation on investment income	(335)		(28)		(743)
Taxation paid	(10)		(565)		(522)
Net cash (outflow)/inflow from operating activities	(18,874)		3,817		(6,481)

8.	Going concern
	The Directors believe that it is appropriate to adopt the going concern basis in preparing the financial statements. The assets of the Company consists mainly of securities that are readily realisable and, accordingly, the Company has adequate financial resources to continue in operational existence for the foreseeable future.
9.	Half Year Report
	The Half Year Report will be posted to shareholders on 4 May 2010 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
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	For further information please contact:
	Mike Kerley
	Portfolio Manager, Henderson Far East Income Limited
	Telephone: [phone]
	James de Sausmarez
	Director, 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 Limited, Company Secretary
	Telephone: [phone]

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