Interim Results
Henderson Far East Income Limited
16 April 2008
Page 1 of 10
16 April 2008
HENDERSON FAR EAST INCOME LIMITED
Unaudited Results for the half year ended 29 February 2008
Interim Management Report
Extracts from the Chairman's Statement
As shareholders will be acutely aware, the credit crisis of the last few months
has provided an exceptionally difficult backdrop to investment decision making
and the immediate global economic and market outlook looks distinctly
challenging. Asian stock markets have certainly not remained immune, although
they have demonstrated both independence and resilience in comparison with the
US and Europe.
Performance
Against this background, I am therefore very pleased to report that the absolute
performance of your Company has remained strong over the period. In the six
months to 29 February 2008, the portfolio has produced a net asset value total
return of 9.21%* and a share price total return 9.60%*. In comparison the return
on the FTSE All-World Asia Pacific Ex Japan Index, measured on the same basis,
was 5.63% * and most global markets actually produced negative returns over the
period. (* Source: AIC and Datastream).
Discount
It is also encouraging to note that the discount to net asset value has come
back to 2.3% as at 29 February 2008 from more than 5% at various points over the
last six months.
Dividends
In November 2007, your Company paid a third interim dividend of 2.75p in respect
of the period ended 31 August 2007.
In our annual report, I indicated that the Board expected to pay a quarterly
dividend of 3.0p in this financial year. I am pleased to report that a first
interim dividend of 3.0p was paid on 29 February 2008 and a second interim
dividend of 3.0p will be paid on 30 May 2008. This represents an increase of
9.1% over the previous year.
Material Events or Transactions during the Period
Country allocation within the portfolio remained broadly unchanged. Sector
exposure also saw little change; the exception being the reduction of investment
in technology companies in favour of those in telecommunications. Call options
on five stocks held in the portfolio were sold and put options bought to provide
capital protection. The portfolio remained ungeared throughout.
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Page 2 of 10
HENDERSON FAR EAST INCOME LIMITED
Unaudited Results for the half year ended 29 February 2008
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.
Savings
Your Company aims to be an investment of choice for those looking to build a
total return portfolio with an attractive income element. Investments can be
made through Itshenderson, our Manager's investment service for private
investors or through any other share dealing service.
Outlook (including principal risks and uncertainties) for the six months to 31
August 2008
We remain positive on the medium to long term outlook for the Asian markets
based on the strength of the underlying economies and the improvements being
made in the corporate sector. In the short term, however, markets are likely to
remain volatile until there is greater clarity on the depth of the problems in
the global financial system and their impact on growth. In addition,
inflationary pressures compounded by high energy and commodity prices are
curtailing the ability of central banks to utilise monetary tools to offset the
slowdown. Despite these concerns, we remain focused on finding investments in
Asia that show a favourable growth trend and an attractive income profile.
John Russell
Chairman
16 April 2008
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Page 3 of 10
HENDERSON FAR EAST INCOME LIMITED
Unaudited Results for the half year ended 29 February 2008
Condensed Consolidated Income Statement
for the half year ended 29 February 2008
Half year ended Period 6 November 2006 to Period 6 November 2006 to
29 February 2008 28 February 2007 31 August 2007
(Unaudited) (Unaudited) (Audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Return Return Return Return Return Return
Notes £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Investment income 4,531 - 4,531 2,926 - 2,926 11,808 - 11,808
Other income 1,217 - 1,217 235 - 235 434 - 434
Gains on investments held
at fair value through
profit or loss - 11,328 11,328 - 4,679 4,679 - 23,330 23,330
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Total income 5,748 11,328 17,076 3,161 4,679 7,840 12,242 23,330 35,572
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Expenses
Management fees (471) (471) (942) (150) (150) (300) (599) (599) (1,198)
Other expenses (148) (113) (261) (71) (71) (142) (206) (169) (375)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Profit before finance
costs and taxation
5,129 10,744 15,873 2,940 4,458 7,398 11,437 22,562 33,999
Finance costs (35) (5) (40) (12) (12) (24) (79) (66) (145)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Profit before taxation 5,094 10,739 15,833 2,928 4,446 7,374 11,358 22,496 33,854
Taxation (402) - (402) (316) - (316) (1,282) (36) (1,318)
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Profit for the period 4,692 10,739 15,431 2,612 4,446 7,058 10,076 22,460 32,536
====== ====== ===== ====== ====== ===== ====== ====== =====
Earnings per ordinary 3 6.04p 13.84p 19.88p 3.36p 5.73p 9.09p 12.98p 28.94p 41.92p
share
====== ====== ===== ====== ====== ===== ====== ====== =====
The total column of this statement represents the Consolidated 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. 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.
The notes on pages 7 to 9 form an integral part of this condensed interim
financial information.
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Page 4 of 10
HENDERSON FAR EAST INCOME LIMITED
Unaudited Results for the half year ended 29 February 2008
Condensed Consolidated Statement of Changes in Equity
for the half year ended 29 February 2008
Half year ended 29 February 2008
(Unaudited)
Other
capital
Stated Distributable reserves Revenue
capital reserve reserve Total
£'000 £'000 £'000 £'000 £'000
Opening balance - 180,471 22,460 5,806 208,737
Net profit from ordinary activities after
taxation - - 10,739 4,692 15,431
Ordinary dividends paid - - - (4,464) (4,464)
--------- --------- --------- --------- ---------
At 29 February 2008 - 180,471 33,199 6,034 219,704
====== ====== ====== ====== ======
Period 6 November 2006 to 28 February 2007
(Unaudited)
Other
capital
Stated Distributable reserves Revenue
capital reserve reserve Total
£'000 £'000 £'000 £'000 £'000
Opening balance - - - - -
Issue of shares 180,982 - - - 180,982
Share issue costs (499) - - - (499)
Transfer to Distributable Reserve (180,483) 180,483 - - -
Net profit from ordinary activities after - - 4,446 2,612 7,058
taxation
--------- --------- --------- --------- ---------
At 28 February 2007 - 180,483 4,446 2,612 187,541
====== ====== ====== ====== ======
Period 6 November 2006 to 31 August 2007
(Audited)
Other
capital
Stated Distributable reserves Revenue
capital reserve reserve Total
£'000 £'000 £'000 £'000 £'000
Opening balance - - - - -
Issue of shares 180,982 - - - 180,982
Share issue costs (499) (12) - - (511)
Transfer to Distributable Reserve (180,483) 180,483 - - -
Net profit from ordinary activities after - - 22,460 10,076 32,536
taxation
Ordinary dividends paid - - - (4,270) (4,270)
--------- --------- --------- --------- ---------
At 31 August 2007 - 180,471 22,460 5,806 208,737
====== ====== ====== ====== ======
The notes on pages 7 to 9 form an integral part of this condensed interim
financial information.
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Page 5 of 10
HENDERSON FAR EAST INCOME LIMITED
Unaudited Results for the half year ended 29 February 2008
Condensed Consolidated Balance Sheet
at 29 February 2008
29 February 28 February 31 August
2008 2007 2007
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Non-current assets
Investments held at fair value through profit or loss 217,692 178,528 199,414
----------- ----------- -----------
Current assets
Other receivables 7,779 6,780 6,722
Deferred tax asset 152 - 152
Cash and cash equivalents 11,121 5,058 17,657
----------- ----------- -----------
19,052 11,838 24,531
----------- ----------- -----------
Total assets 236,744 190,366 223,945
----------- ----------- -----------
Current liabilities
Other payables (14,521) (1,362) (10,147)
Bank loans and overdrafts (2,519) (1,463) (5,061)
----------- ----------- -----------
(17,040) (2,825) (15,208)
----------- ----------- -----------
Net assets 219,704 187,541 208,737
====== ====== ======
Capital and reserves
Stated capital - - -
Distributable reserve 180,471 180,483 180,471
Retained earnings:
Other capital reserves 33,199 4,446 22,460
Revenue reserve 6,034 2,612 5,806
----------- ----------- -----------
Total equity 219,704 187,541 208,737
====== ====== ======
Net asset value per ordinary share (pence) (note 4) 283.04p 241.61p 268.91p
====== ====== ======
The notes on pages 7 to 9 form an integral part of this condensed interim
financial information.
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Page 6 of 10
HENDERSON FAR EAST INCOME LIMITED
Unaudited Results for the period ended 29 February 2008
Condensed Consolidated Cash Flow Statement
for the half year ended 29 February 2008
Period 6 November Period 6 November
2006 to 28 2006 to 31 August
Half year February 2007 2007
ended 29 February (Unaudited) (Audited)
2008
(Unaudited)
£'000 £'000 £'000
Net cash inflow from operating activities (note 7) 384 1,787 15,073
--------- --------- ---------
Net cash inflow before use of financing 384 1,787 15,073
Net cash (outflow)/inflow from financing activities (6,700) 2,061 6
--------- --------- ---------
(Decrease)/increase in cash and cash equivalents (6,316) 3,848 15,079
Cash and cash equivalents at the start of the period
14,832 - -
Exchange movements 86 (253) (247)
--------- --------- ---------
Cash and cash equivalents at the period end 8,602 3,595 14,832
====== ====== ======
The notes on pages 7 to 9 form an integral part of this condensed interim
financial information.
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Page 7 of 10
HENDERSON FAR EAST INCOME LIMITED
Unaudited Results for the half year ended 29 February 2008
Notes to Condensed 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 with its shares listed on the London and New Zealand Stock Exchanges. The Company was
incorporated on 6 November 2006.
2. Principal 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 Report and Accounts for the period ended 31 August 2007 and in accordance with
International Accounting Standards ('IAS') 34 .
The company has adopted the following new and revised accounting standards
during the period:
• International Accounting Standard No. 1 (Revised) Presentation of financial statements
• International Financial Reporting Standard No. 7 Financial Instruments: Disclosures
The condensed interim financial information has not been audited or reviewed by the Company's auditors.
3. Earnings per Ordinary Share
The earnings per ordinary share is based on the net profit after taxation of £15,431,000 (period to 28
February 2007: profit £7,058,000; period to 31 August 2007: profit £32,536,000) and on 77,622,621 ordinary
shares, 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:
Period Period
Half year ended 29 6 November 2006 to 6 November 2006 to
February 2008 28 February 2007 31 August 2007
(Unaudited) (Unaudited) (Audited)
Net revenue gain 4,692 2,612 10,076
Net capital gain 10,739 4,446 22,460
--------- --------- ---------
Net total gain 15,431 7,058 32,536
===== ===== =====
Weighted average number of ordinary shares in
issue during the period 77,622,621 77,622,621 77,622,621
Pence Pence Pence
Revenue earnings per ordinary share 6.04 3.36 12.98
Capital earnings per ordinary share 13.84 5.73 28.94
--------- --------- ---------
Total earnings per ordinary share 19.88 9.09 41.92
===== ===== =====
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Page 8 of 10
HENDERSON FAR EAST INCOME LIMITED
Unaudited Results for the half year ended 29 February 2008
4. Net asset value per ordinary share
The basic net asset value per ordinary share is based on a net asset value of £219,704,000 (28
February 2007: £187,541,000; 31 August 2007: £208,737,000) and on 77,622,621 (28 February 2007: 77,622,621;
31 August 2007: 77,622,621) ordinary shares, being the number of ordinary shares in issue at the period
end.
5. Transaction Costs
Purchase transaction costs for the half year ended 29 February 2008 were £225,000 (period 6 November 2006
to 28 February 2007: £80,000; period 6 November 2006 to 31 August 2007: £435,000). These comprise mostly
stamp duty and commission. Sales transaction costs for the half year ended 29 February 2008 were £199,000
(period 6 November 2006 to 28 February 2007: £149,000; period 6 November 2006 to 31 August 2007: £544,000).
6. Interim Dividend
On 30 November 2007, the Company paid a third interim dividend of 2.75p per share in respect of the period
ended 31 August 2007.
A first interim dividend of 3.0p per share was paid on 29 February 2008. The second interim dividend of
3.0p per share will be paid on 30 May 2008 to shareholders on the register on 9 May 2008. Based on the
number of shares in issue on 15 April 2008, the cost of this dividend will be £2,329,000. The shares will
be quoted ex-dividend on 7 May 2008.
Copies of the Half Year Report will be posted to shareholders in late April 2008 and will thereafter be
available from the Secretary at BNP House, Anley Street, St.Helier, Jersey, JE2 3QE.
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Page 9 of 10
HENDERSON FAR EAST INCOME LIMITED
Unaudited Results for the half year ended 29 February 2008
7. Reconciliation of profit before taxation to net cash inflow from operating activities
Period
Half year ended 29 Half year 6 November 2006 to
February 2008 ended 31 August 2007
(Unaudited) 28 February 2007 (Audited)
(Unaudited)
Net profit before tax 15,833 7,374 33,854
Add back interest paid 46 16 139
Less: gains on investments held at fair
value through profit or loss (11,328) (4,679) (23,330)
Net purchases of investments (7,076) (173,596) (175,534)
In specie transfer of securities in
consideration for shares issued - 178,200 178,200
Decrease/(increase) in other receivables 86 (1,697) (1,942)
Increase in amounts due from brokers (1,161) (4,822) (4,072)
Increase in other payables 413 440 451
Unrealised losses on foreign exchange
contracts - - 47
Increase in amounts due to brokers 4,011 901 9,034
Scrip dividends included in investment
income (4) - (303)
Interest paid (46) (16) (139)
Taxation on investment income (390) (334) (1,332)
--------- --------- ---------
Net cash inflow from operating activities 384 1,787 15,073
===== ===== =====
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Page 10 of 10
HENDERSON FAR EAST INCOME LIMITED
Unaudited Results for the period ended 29 February 2008
Geographical Distribution of Group Investments
29 February 2008
%
Australia 21.4
Taiwan 19.1
Hong Kong 17.4
Singapore 13.1
South Korea 12.6
Malaysia 8.3
The Philippines 3.0
Thailand 2.6
China 2.5
---------
100.0
=====
Top Twenty Investments as at 29 February 2008
Value of Investments
Company Country £'000
Singapore Telecommunications Singapore 6,742
Telstra Corporation Australia 6,632
Philippines Long Distance Telephone Philippines 6,591
Hang Seng Bank Hong Kong 6,409
High Tech Computer Taiwan 6,111
Farglory Land Development Taiwan 6,082
Formosa International Hotels Taiwan 5,984
BOC Hong Kong Holdings Hong Kong 5,801
Fairfax Media Australia 5,783
Keppel Corp Singapore 5,713
Krung Thai Bank Thailand 5,587
DBS Singapore 5,464
Transurban Group Australia 5,450
Petrochina China 5,355
Malayan Banking Malaysia 5,341
Singapore Press Singapore 5,302
Singapore Technologies Singapore 5,271
Santos Australia 5,237
Bumiputra-Commerce Malaysia 5,122
Woolworths Australia 5,105
------------
Total Top 20 Investments 115,082
Top 20 as a percentage of total investments 52.86%
- ENDS -
For further information please contact :
Michael Kerley, Fund Manager, Telephone: 020 7818 5053
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
This information is provided by RNS
The company news service from the London Stock Exchange
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