Final Results

RNS Number : 5485O

Henderson Intl. Income Trust PLC

07 November 2016

 

HENDERSON INTERNATIONAL INCOME TRUST PLC

Annual Financial Report for the year ended 31 August 2016

This announcement contains regulated information

PERFORMANCE HIGHLIGHTS	2016	2015
NAV per share at year end1	141.5p	115.6p
Net assets2	£220,904,000	£91,594,000
Dividend in respect of year end3	4.65p	4.50p
Dividend yield for the year end3	3.3%	3.8%
Ongoing charge for year	1.01%	1.11%
Gearing at year end	0.0%	6.3%
Share price at year end	141.75p	118.75p
Shares in issue at year end	156,080,606	79,246,550

¹ Calculated using published daily net asset values ('NAVs') including current year revenue less current liabilities

² The combination of assets with Henderson Global Trust plc was with effect from 25 April 2016

³ Includes the fourth interim dividend in respect of the year ended 31 August 2016 declared on 18 October 2016 to be paid to shareholders on 30 November 2016 and is based on the share price at the year-end date

Source: Morningstar Funddata, Henderson, Datastream

INVESTMENT OBJECTIVE

The Company's investment objective is to provide a high and rising level of dividends as well as capital appreciation over the long-term from a focused and internationally diversified portfolio of securities outside the UK.

INVESTMENT POLICY

The Company will invest in a diversified global portfolio consisting predominantly of listed equities and fixed interest asset classes. The portfolio is diversified by factors such as geography, industry sub-sector and investment size. The Company does not invest in issuers whose securities are, at the time of investment, listed only in the UK.

CHAIRMAN'S STATEMENT

Performance and markets  

During the year to 31 August 2016 the return on the net asset value ('NAV') per ordinary share (on a total return basis) was 26.9%. The return on the ordinary share price (on the same basis) was 24.0%. These returns compare to a total return of 27.2% in the MSCI World (ex UK) Index (sterling adjusted).

Growth and corporate activity

Since your Company's original listing, the board has believed it to be in the interest of all shareholders for the Company to widen its investor base and increase its size. Significant progress to this end has been made over the year by way of the combination of the assets of the Company with certain assets of Henderson Global Trust plc ('HGT'). This increased our issued ordinary share capital by the 75,234,056 ordinary shares issued to the former shareholders of HGT.

The benefits of the transaction to shareholders are both immediate and continuing:

• the management fee was reduced to 0.65% of NAV per annum on 25 April 2016. This will be reduced further to a rate of 0.60% of NAV per annum in respect of any NAV in excess of £250 million;

• the Company's market capitalisation increased and we entered the FTSE All-Share Index. Membership of the index should attract a wider range of investors with a consequent improvement in liquidity; and

• the fixed costs of the Company will be spread over a larger pool of assets, resulting in a lower ongoing charge.

During the year the Company issued 1,600,000 new shares in response to continuing shareholder demand. A further 475,000 ordinary shares have been issued between 1 September 2016 and 4 November 2016, the last practicable reporting date prior to the publication of the annual report. At 31 August 2016 there were 156,080,606 shares in issue and at 4 November 2016 there were 156,555,606 shares in issue.

Your board and the fund manager review conditions in our markets on a regular basis. When conditions allow we intend to bring forward a further share issue to enable the Company and its shareholders to benefit further from the economies of scale I have mentioned above.

Earnings and dividends

The Company has performed well, achieving a dividend increase from 4.50p to 4.65p per ordinary share for the year to 31 August 2016. The year consisted of a first, second and third interim dividend of 1.15p per ordinary share and an increased fourth interim dividend of 1.20p per ordinary share. The fourth interim dividend of 1.20p per ordinary share will paid on 30 November 2016. Given the earnings growth produced by the portfolio and in the absence of an adverse change in conditions, the board intend at least to maintain the quarterly dividend at its new level during the year to 31 August 2017.

Gearing

Well-judged gearing enhances returns to shareholders. The board's current policy is to permit the fund manager to gear up to 25% of net assets at the time of drawdown or investment as appropriate. Borrowing limits for this purpose include implied gearing through the use of derivatives.

To date the Company has used gearing to invest in specific stock opportunities. At 31 August 2016 the Company had an overdraft with HSBC of £5,526,000 (2015: £6,030,000). There was no gearing in place at the year-end (2015: 6.3%).

Discount control

The board is pleased that the Company has returned to trading generally at a premium after the combination with HGT. The board continues to monitor the premium/discount to NAV and will consider appropriate action if the relationship between the NAV and share price moves and remains out of line with the Company's peer group. However, there is a distinct limit to the board's ability to influence the premium or discount to NAV. Accordingly we believe it is not in shareholders' interests to have a specific issuance or buy-back policy. We believe it sensible to retain flexibility; accordingly we shall consider issuance and/or buy-backs within a narrow band relative to NAV where appropriate and subject to market conditions.

Ongoing charge

The ongoing charge to the Company for the year to 31 August 2016, as calculated in accordance with the Association of Investment Companies (the 'AIC') methodology is 1.01% (2015: 1.11%). The ongoing charge should fall further when the full year impact of the reduced management fee and larger asset base takes full effect.

Board changes

The combination with HGT included the appointment of two of its directors, Richard Hills and Aidan Lisser, who joined the board on 25 April 2016. They have a wealth of experience of investment and other relevant matters to the benefit of the Company. Both will be seeking election by shareholders at the annual general meeting.

Peregrine Banbury has decided not to seek re-election at the forthcoming annual general meeting and will retire from the board at the conclusion of the annual general meeting. The board joins me in thanking Peregrine for his contribution over the five years since our launch. He has provided unfailing support for our business and given sound advice at our board meetings. His experience and common sense will be much missed.

Annual general meeting

The sixth annual general meeting of the Company will be held at 2.30 pm on Friday, 16 December 2016 at the registered office, 201 Bishopsgate, London EC2M 3AE. The notice of meeting and the resolutions to be proposed are set out in a separate document which accompanies this annual report. Ben Lofthouse, the fund manager, will give a presentation to the meeting which will be followed by light refreshments.

The directors welcome shareholders' attendance at the meeting and recommend shareholders support the resolutions to be proposed. Those who cannot attend are encouraged to vote on all resolutions by completing their proxy forms.

The Company's annual general meeting will be broadcast live on the internet. If you are unable to attend in person you can watch the meeting as it happens by visiting www.henderson.com/trustslive.

Outlook

The Company is unique as the only international income trust that invests exclusively outside the UK. The board believes that this should continue to make the Company's shares attractive to a wide audience.

The broader international economic outlook is strongly influenced by the following:

• economic growth remains weak in many parts of the world, and inflation has continued to be very low, particularly in developed economies. In general central banks around the world continue to target higher levels of inflation than are currently being experienced, therefore monetary policy remains accommodative and designed to stimulate economic growth;

• negative interest rates and an asset-buying programme have been introduced in a number of countries, which has increased demand for income generating assets. This has primarily benefited bond markets, but has also driven some areas of equity markets higher. In this environment the Company's portfolio of cash generating companies with good dividend yields is proving very attractive for investors; and

• recent currency movements have been challenging. This year the trend has been beneficial for the portfolio as sterling has fallen against all of the world's most important currencies. In the short term this has benefited the capital return of the portfolio. If exchange rates remain at current levels it will also benefit the Company's income account as the sterling value of overseas dividends will be higher year on year.

The recent referendum in the UK regarding membership of the European Union has added an additional level of complexity for UK investors. In the current environment we believe that a prudently managed international portfolio plays a key role in a coherent diversified strategy.

The manager continues to believe that there are sufficient attractive opportunities that will allow them to continue to grow investors' capital and income over the medium term.

Christopher Jonas, CBE

Chairman

PORTFOLIO INFORMATION
Ten largest investments at 31 August

Ranking 2016	Ranking 2015	Company	Country	Sector	Market value 2016 £'000	% of portfolio
1	2	Novartis	Switzerland	Health care	7,759	3.6
2	5	Roche	Switzerland	Health care	7,317	3.4
3	4	Microsoft	US	Technology	7,300	3.4
4	45	Taiwan Semiconductor Manufacturing	Taiwan	Technology	5,629	2.7
5	-	Deutsche Telekom	Germany	Telecommunications	5,429	2.5
6	24	Cisco Systems	US	Technology	5,413	2.5
7	-	ING	Netherlands	Financials	5,239	2.4
8	-	Natixis	France	Financials	5,089	2.4
9	18	Icade	France	Property	4,928	2.3
10	-	Telenor	Norway	Telecommunications	4,824	2.3
					--------	------
					58,927	27.5
					=====	====

Sector exposure at 31 August

As a percentage of the investment portfolio excluding cash

	2016	2015
	%	%
Financials	19.6	22.7
Telecommunications	16.5	11.6
Health care	12.9	9.1
Industrials	10.8	16.7
Property	9.9	11.6
Technology	9.8	12.2
Consumer services	8.1	8.7
Oil & gas	4.9	4.5
Consumer goods	3.3	2.9
Utilities	2.3	-
Basic materials	1.9	-

Geographic exposure at 31 August

As a percentage of the investment portfolio excluding cash

	2016 %	2015 %
US	34.4	42.0
France	14.5	13.1
Switzerland	8.6	7.9
Germany	7.8	5.5
China	6.0	3.7
Australia	5.9	5.9
Netherlands	4.4	2.1
Taiwan	2.7	2.7
Hong Kong	2.5	4.3
Korea	2.4	2.2
Norway	2.3	-
Israel	1.9	1.7
Portugal	1.7	-
New Zealand	1.6	1.2
Thailand	1.2	1.4
Japan	1.1	3.2
Singapore	1.0	0.9
Italy	-	1.2
Canada	-	1.0

Source: Henderson

Investment Portfolio as at 31 August 2016

Company	Country	Market value £'000	% of portfolio
Basic materials
Bayer	Germany	4,037	1.9
		--------	-----
		4,037	1.9
		--------	-----
Consumer goods
Coca-Cola	US	4,667	2.2
Panasonic	Japan	2,390	1.1
		--------	-----
		7,057	3.3
		--------	-----
Consumer services
Nielsen	US	4,464	2.1
NOS	Portugal	3,600	1.7
Las Vegas Sands	US	3,559	1.6
Fairfax Media	Australia	3,037	1.4
Six Flags Entertainment	US	2,717	1.3
		---------	-----
		17,377	8.1
		---------	-----
Financials
ING	Netherlands	5,239	2.4
Natixis	France	5,089	2.4
Wells Fargo	US	4,628	2.2
Ares Capital	US	4,600	2.1
AXA	France	3,978	1.9
Muenchener Rueckver	Germany	3,840	1.8
Synchrony Financial	US	3,402	1.6
KKR	US	3,374	1.6
Suncorp	Australia	3,202	1.5
JP Morgan Chase	US	2,392	1.1
Deutsche Börse	Germany	2,150	1.0
		--------	-----
		41,894	19.6
		--------	-----
Health care
Novartis	Switzerland	7,759	3.6
Roche	Switzerland	7,317	3.4
Pfizer	US	4,614	2.2
Sanofi	France	4,586	2.1
Johnson & Johnson	US	3,453	1.6
		---------	----
		27,729	12.9
		---------	-----
Industrials
Adecco	Switzerland	3,525	1.6
United Parcel Service	US	3,360	1.6
Amcor	Australia	3,349	1.5
Jiangsu Expressway	China	3,003	1.4
Compagnie de Saint-Gobain	France	2,304	1.1
General Electric	US	2,201	1.0
Lockheed Martin	US	2,122	1.0
CK Hutchison	Hong Kong	2,115	1.0
Deutsche Post	Germany	1,235	0.6
		--------	-----
		23,214	10.8
		--------	-----

Oil & gas
Chevron	US	4,655	2.2
Total	France	3,249	1.5
Star Petroleum Refining	Thailand	2,590	1.2
		--------	-----
		10,494	4.9
		--------	-----
Property
Icade	France	4,928	2.3
Eurocommercial	Netherlands	4,271	2.0
Scentre	Australia	3,212	1.5
China Resources Land	China	2,392	1.1
Mapletree Greater China	Singapore	2,219	1.0
Nexity	France	2,161	1.0
Iron Mountain	US	2,005	1.0
		--------	-----
		21,188	9.9
		--------	-----
Technology
Microsoft	US	7,300	3.4
Taiwan Semiconductor Manufacturing	Taiwan	5,629	2.7
Cisco Systems	US	5,413	2.5
NetEase	China	2,624	1.2
		--------	----
		20,966	9.8
		--------	----
Telecommunications
Deutsche Telekom	Germany	5,429	2.5
Telenor	Norway	4,824	2.3
Orange	France	4,706	2.2
Verizon Communications	US	4,518	2.1
Bezeq The Israeli Telecommunication Corporation	Israel	4,018	1.9
Spark New Zealand	New Zealand	3,303	1.6
HKT Trust and HKT Ltd	Hong Kong	3,288	1.5
SK Telecom	Korea	2,621	1.2
China Mobile	China	2,593	1.2
		--------	-----
		35,300	16.5
		--------	-----
Utilities
Korea Electric Power	Korea	2,569	1.2
Guangdong Investment	China	2,343	1.1
		--------	----
		4,912	2.3
		--------	----
		----------	-------
Total investments		214,168	100.0
		======	====

FUND MANAGER'S REPORT

Performance review

The portfolio has delivered reassuring returns over the period, generating a NAV total return of 26.9%, including a dividend of 4.65p, an increase of 3.3% year-on-year.

Global equity markets gains have been made against the backdrop of subdued economic growth and low inflation, particularly in developed market economies. The prevailing low inflation rate environment has resulted in further unconventional monetary policy actions by some central banks designed to improve growth rates, including negative interest rate policies. Many investors require yields from their assets and this low interest rate environment has driven prices of many yielding asset classes higher. Whilst this 'search for yield' trend has been positive for some sectors of equity markets, the lack of growth in the world has been detrimental to others.

Currency movements have been an added driver of returns this year. The portfolio consists entirely of overseas companies therefore weakness in sterling has driven a significant up-lift in the portfolio's value. If rates remain at current levels this currency weakness will also filter through to higher dividend payments. The most important currencies for the portfolio are the US dollar (39% of portfolio assets), the Euro (28%), and the Australian dollar (7%). The table in the annual report shows how sterling has moved relative to these currencies over the year.

The team's investment process prioritises dividend growth and sustainability when selecting investments. Dividend growth from the portfolio holdings has been good, and the majority of investments have increased their dividends over the period. Several of the top ten holdings, for example, increased their dividends by double digit percentages including Cisco Systems (24%) and Taiwan Semiconductor Manufacturing (33%). All of the Company's holdings contribute to income generation and the diversification across sectors and geographies is designed to enhance the portfolio's dividend stability. The weighted average income yield on the portfolio at year end was over 4.0%.

The Company's portfolio is relatively concentrated consisting typically of 60 positions. So performance is particularly impacted by stock specific news and events as well as regional equity market performances and sector news.

The capital return has been reassuring this year. The strongest performing portfolios have been the Asia-Pacific and North American portfolios, which returned 40% and 38% respectively. Despite some signs of economic stabilisation and continued central bank stimulus European returns were lower at 17%. Stock selection has been strong and the returns of each portfolio exceeded their respective benchmarks. The portfolio return was in line with the benchmark, but the strong stock selection was offset by the relative weakness of the overweight position in Europe. The geographical and sector allocation of the portfolio is largely driven by stock selection. The stock selection process focuses on identifying undervalued companies that are well invested, market leading and generate enough to profits and cash to finance both dividends and appropriate growth investments. Dividends from these companies allow investors to be paid to remain invested until the valuation anomaly corrects. The European market has many such companies, both domestic and global, and its current unpopularity with investors provides an interesting investment opportunity. For this reason the European exposure within the portfolio has been maintained.

At a sector level falling interest rate expectations have generally driven a re-rating of defensive dividend stocks, and a de-rating of many financial stocks. Within the portfolio, this trend explains in part the strong performance of defensive stocks like tobacco company Reynolds American and Australian REIT Scentre, and the weak performance of insurers AXA and China Life.

In the US portfolio the strongest performers were document storage company Iron Mountain, which is in the process of acquiring a competitor to enhance profitability, Lockheed Martin, which has generated outstanding cash flows whilst growing the business, and theme park operator Six Flags Entertainment where growing revenues underpin an attractive dividend yield. The weakest performers include fund manager Och-Ziff, which has been investigated for its sales practices in some countries. The burden of legal costs have resulted in a dividend cut and the position has been sold. Data storage company Seagate operates in a consolidated market, but despite this price deflation has been higher than expected. Concerns around the dividend mean that this position has also been closed.

The largest positive contributors in the Asia-Pacific portfolio included technology companies Taiwan Semiconductor Manufacturing. It has a clear technological lead in its industry and has been successfully winning orders. Meanwhile the Chinese online gaming company NetEase, launched some very successful new products that will enhance its growth profile.

Within the European portfolio the strongest performers included French house builder Nexity and Deutsche Post. Nexity reported stronger than expected sales growth driven by low interest rates and government initiatives to boost house building. German parcels and logistics company Deutsche Post continued to see parcel delivery growth as a result of online retail trends. The weakest performers included pharmaceutical companies Novartis and Roche. The sector has been impacted by the highly publicised actions of a few, high profile companies. Nevertheless the companies held in the portfolio have good drug pipelines and diversified portfolios which should drive future earnings and dividend growth.

Portfolio positioning

The most significant asset allocation changes in the portfolio composition over the year are the reduction in the US portfolio weight from 42% to 34% and the reduction of gearing from 6% to 0%. The reduction in the gearing and US weight is the result of profit taking in long held positions such as Swiss consumer finance company Cembra, US bank PNC Financial Services Group, tobacco company Reynolds American, and German TV company RTL. These companies' valuations had recovered from very depressed levels a few years ago and they were sold in order to finance new investments with greater total return potential. As a result of this activity the industrial and financial sector exposures were also reduced. European exposure was increased from 32% to 40% which is a reflection of the attractive valuations on offer in areas of the European market. Examples of positions initiated include telecommunications company Deutsche Telekom, Netherlands financial services company ING, and Portuguese cable company NOS.

Outlook

The Company's investment strategy is to provide a high and rising level of dividends and capital appreciation over the long term. To facilitate this it invests in an internationally diversified portfolio of securities outside the UK. Given the very low yields available from some asset classes and the numerous political and economic uncertainties currently on investors' minds this strategy seems as relevant now as it was at launch five years ago. The landscape is constantly changing and the investment team continue to find attractive opportunities that they believe can achieve investors' goals.

Ben Lofthouse

Fund Manager

PRINCIPAL RISKS AND UNCERTAINTIES

The board, with the assistance of Henderson, has carried out a robust assessment of the principal risks facing the Company including those that would threaten its business model, future performance, solvency or liquidity. In carrying out this assessment, the board has considered the market uncertainty arising from the result of the UK referendum to leave the European Union. 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 these risks as far as practicable. The principal risks which have been identified, which have not changed from last year, and the steps taken by the board to mitigate these, and whether the board considers the impact of such risks has changed over the past year are as follows:

·      Investment activity and performance risks

An inappropriate investment strategy (for example, in terms of asset allocation or the level of gearing) may result in underperformance against the Company's benchmark index and the companies in its peer group.

The board monitors investment performance at each board meeting and regularly reviews the extent of its borrowings when in use.

·      Portfolio and market price risks

Although the Company invests almost entirely in securities that are listed on recognised markets, share prices may move rapidly. The companies in which investments are made may operate unsuccessfully, or fail entirely. A fall in the market value of the Company's portfolio would have an adverse effect on shareholders' funds.

Most of the Company's assets, liabilities, income and expenses are denominated in currencies other than sterling (the Company's functional currency and presentational currency). As a result, movements in exchange rates may affect the sterling value of those items.

Henderson seeks to maintain a diversified portfolio to mitigate against this risk. The board regularly reviews the portfolio, activities and performance.

The fund manager monitors the Company's exposure to foreign currencies daily and reports to the board at each meeting. The fund manager measures the risk to the Company of the foreign currency exposure by considering the effect on the Company's net asset value and total return of a movement in the exchange rate to which the Company's assets, liabilities, income and expenses are exposed.

The board has set an investment limit on currency hedging to a maximum of 30% of gross assets to mitigate against this risk.

·      Tax and regulatory risks

A breach of section 1158 could lead to a loss of investment trust status, resulting in capital gains realised within the portfolio being subject to corporation tax. A breach of the UK Listing Rules could result in suspension of the Company's shares, while a breach of the Companies Act could lead to criminal proceedings, or financial or reputational damage. The Company must also ensure compliance with the Listing Rules.

Henderson has contracted to provide investment, company secretarial, administration and accounting services through qualified professionals. The board receives internal control reports produced by Henderson on a quarterly basis, which confirm regulatory compliance.

·      Operational risks

Disruption to, or failure of, Henderson's accounting, dealing or payment systems or the custodian's records could prevent the accurate reporting and monitoring of the Company's financial position. The Company is also exposed to the operational risk that one or more of its service providers may not provide the required level of service.

The board monitors the services provided by Henderson and its other suppliers and receives reports on the key elements in place to provide effective internal control.

The board also monitors all business risks faced by the Company which are recorded in a risk map and is reviewed regularly. Systems are in operation to safeguard the Company's assets and shareholders' investments, to maintain proper accounting records and to ensure that financial information used within the business, or published, is reliable.

The board considers these risks to have remained unchanged throughout the year under review.

Borrowings

Where the fund manager believes that gearing will enhance returns to shareholders, the Company may borrow up to 25% of its custody assets at the time of drawdown or investment (as appropriate). Borrowings for these purposes would include implied gearing through the use of derivatives. The Company's gearing facility allows borrowing in sterling and other currencies. In the year under review the Company borrowed in both sterling and euros.

Viability statement

The directors have assessed the viability of the Company over a three year period, taking account of the Company's current position and the potential impact of the principal risks and uncertainties documented in the annual report.

The assessment has considered the impact of the likelihood of the principal risks and uncertainties facing the Company, in particular investment activity and performance, portfolio, market and currency risks, in severe but plausible scenarios, and the effectiveness of any mitigating controls in place.

The directors also took into account the liquidity of the portfolio, the gearing and the income stream from the portfolio in considering the viability of the Company over the next three years and its ability to meet liabilities as they fall due. This included consideration of the duration of the Company's long term borrowings, and how the forecast income stream, expenditure and levels of reserves could impact on the Company's ability to pay dividends to shareholders over that period in line with its current dividend policy. Whilst detailed forecasts are only made over a shorter time frame, the nature of the Company's business as an investment trust means that such forecasts are equally valid to be considered over the longer three year period as a means of assessing whether the Company can continue in operation. This included consideration of the duration of the Company's overdraft facility and how a breach of the overdraft facility covenants could impact on the Company's net asset value and share price.

The directors conducted this review for a period of three years. They consider this to be an appropriate period over which they do not expect there to be any significant change in the current principal risks and adequacy of the mitigating controls in place. The directors do not envisage any change in strategy or objectives or any events that would prevent the Company from continuing to operate over that period because the Company's assets are liquid, its commitments are limited and the Company intends to continue to operate as an investment trust. Only a substantial financial crisis affecting the global economy could have an impact on this assessment. Whilst there is currently uncertainty in the markets following the UK referendum result to leave the European Union, the board does not believe that this will have a long term impact on the viability of the Company and its ability to continue in operation.

The directors recognise that there is a continuation vote that is due to take place at the annual general meeting following the 31 August 2017 year end. The directors currently support the continuation of the Company and expect that the Company will continue to exist for the foreseeable future, and at least for the period of assessment. However if such a vote were not passed, the directors would follow the provisions in the articles of association to the effect that the Company be wound up, liquidated, reorganised or unitised.

Based on this assessment, the directors expect that the Company will be able to continue in operation and meet its liabilities as they fall due over the next three year period.

Related party transactions

The Company's current related parties are its directors and Henderson. 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 expenses and remuneration for which there were no outstanding amounts payable at the year end.

In relation to the provision of services by Henderson (other than fees payable by the Company in the ordinary course of business and the provision of marketing services) there have been no material transactions with Henderson affecting the financial position of the Company during the year under review.

Statement under Disclosure and Transparency Rule 4.1.12

Each of the directors confirms that, to the best of his knowledge:

·     the Company's financial statements, which have been prepared in accordance with UK Accounting Standards on a going concern basis, give a true and fair view of the assets, liabilities, financial position and profit of the Company; and

·     the strategic report, report of the directors 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

Christopher Jonas, CBE

Chairman

INCOME STATEMENT

		Year ended 31 August 2016			Year ended 31 August 2015
Notes		Revenue return £'000	Capital return £'000	Total £'000	Revenue return £'000	Capital return £'000	Total £'000
3	Gains/(losses) from investments held at fair value through profit or loss	-	31,899	31,899	-	(2,010)	(2,010)
4	Income from investments held at fair value through profit or loss	7,684	-	7,684	4,821	-	4,821
	(Loss)/profit on foreign exchange	-	(50)	(50)	-	310	310
	Other income	325	-	325	192	-	192
		-----	------	------	-----	-----	----
	Gross revenue and capital gains/(losses)	8,009	31,849	39,858	5,013	(1,700)	3,313
	Management fee	(244)	(731)	(975)	(177)	(532)	(709)
	Other administrative expenses	(395)	-	(395)	(350)	-	(350)
		-------	--------	--------	-------	--------	--------
	Net return on ordinary activities before finance costs and taxation	7,370	31,118	38,488	4,486	(2,232)	2,254
		--------	--------	--------	--------	--------	--------
	Finance costs	(49)	(58)	(107)	(23)	(70)	(93)
		------	--------	--------	------	--------	--------
	Net return on ordinary activities before taxation	7,321	31,060	38,381	4,463	(2,302)	2,161
		--------	--------	--------	--------	--------	--------
	Taxation on net return on ordinary activities	(800)	(11)	(811)	(493)	-	(493)
		--------	--------	--------	--------	---	--------
	Net return on ordinary activities after taxation	6,521	31,049	37,570	3,970	(2,302)	1,668
		====	=====	=====	====	====	====
5	Return per ordinary share - basic	6.12p	29.14p	35.26p	5.14p	(2.98p)	2.16p

The total column of this statement represents the Income Statement of the Company. The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies.

All revenue and capital items derive from continuing operations. The Company had no recognised gains or losses other than those disclosed in the Income Statement. There is no material difference between the net return on ordinary activities before taxation and the net return for the financial year stated above and their historical cost equivalent.

STATEMENT OF CHANGES IN EQUITY

Notes	Year ended 31 August 2016	Called up share capital £'000	Share premium account £'000	Special reserve £'000	Other capital reserves £'000	Revenue reserve £'000	Total £'000
	At 31 August 2015	793	35,796	45,732	6,866	2,407	91,594
8 and 9	New shares allotted	768	95,933	-	-	-	96,701
	Issue costs	-	(401)	-	-	-	(401)
	Net return for the year	-	-	-	31,049	6,521	37,570
6	Dividends paid	-	-	-	-	(4,560)	(4,560)
		-------	----------	----------	---------	--------	----------
	At 31 August 2016	1,561	131,328	45,732	37,915	4,368	220,904
		====	=====	=====	=====	=====	======

Notes	Year ended 31 August 2015	Called up share capital £'000	Share premium account £'000	Special reserve £'000	Other capital reserves £'000	Revenue reserve £'000	Total £'000
	At 31 August 2014	764	28,239	45,732	9,168	1,884	85,787
8 and 9	New shares allotted	29	3,654	-	-	-	3,683
	Issue costs	-	(18)	-	-	-	(18)
9	Ordinary shares issued following conversion of subscription shares	-	3,921	-	-	-	3,921
	Net return for the year	-	-	-	(2,302)	3,970	1,668
6	Dividends paid	-	-	-	-	(3,447)	(3,447)
		-----	---------	----------	--------	--------	----------
	At 31 August 2015	793	35,796	45,732	6,866	2,407	91,594
		===	=====	=====	=====	=====	=====

STATEMENT OF FINANCIAL POSITION

Notes		At 31 August         2016 £'000	At 31 August 2015 £'000
	Fixed asset investments held at fair value through profit or loss	214,168	97,328
		----------	--------
	Current assets
	Debtors	831	4,153
	Cash at bank	12,183	-
		--------	--------
		13,014	4,153
		--------	--------
	Creditors: amounts falling due within one year	(6,278)	(9,887)
		---------	---------
	Net current assets/(liabilities)	6,736	(5,734)
		----------	---------
	Total net assets	220,904	91,594
		======	=====
	Capital and reserves
8	Called up share capital	1,561	793
9	Share premium account	131,328	35,796
	Special reserve	45,732	45,732
	Other capital reserves	37,915	6,866
	Revenue reserve	4,368	2,407
		----------	--------
	Total shareholders' funds	220,904	91,594
		======	=====
7	Net asset value per ordinary share - basic and diluted	141.5p	115.6p

CASH FLOW STATEMENT

	Year ended 31 August 2016 £'000	(Restated*) Year ended 31 August 2015 £'000
Cash flows from operating activities
Net return on ordinary activities before taxation	38,381	2,161
Add back: finance costs	107	93
(Less)/add: (gains)/losses on investments held at fair value through profit or loss	(31,899)	2,010
Add/(less): loss/(profit) on foreign exchange	50	(310)
Withholding tax on dividends deducted at source	(1,136)	(546)
Taxation recovered	193	61
Increase in debtors	(291)	(186)
Increase in creditors	463	89
	--------	-------
Net cash inflow from operating activities	5,868	3,372
	--------	-------
Cash flows from investing activities
Purchase of investments	(139,050)	(51,170)
Sale of investments	148,976	39,743
	--------	----------
Net cash inflow/(outflow) from investing activities	9,926	(11,427)
	--------	----------
Cash flows from financing activities
Equity dividends paid (net of refund of unclaimed distributions and reclaimed distributions)	(4,560)	(3,447)
Proceeds from issue of ordinary shares	1,618	11,996
Interest paid	(107)	(93)
	--------	-------
Net cash (outflow)/inflow from financing activities	(3,049)	8,456
	--------	-------
Net increase in cash and cash equivalents	12,745	401
Cash and cash equivalents at start of year	(6,030)	(6,740)
Effect of foreign exchange rates	(58)	309
	--------	--------
Cash and cash equivalents at end of year	6,657	(6,030)
	=====	=====
Comprising:
Cash at bank	12,183	-
Bank overdraft	(5,526)	(6,030)
	--------	--------
	6,657	(6,030)
	=====	=====

* The Cash Flow Statement previously reported has been restated to comply with the new disclosure requirements of FRS 102.

NOTES TO THE FINANCIAL STATEMENTS

1.   Accounting policies

Basis of accounting

The Company is a registered investment company as defined in section 833 of the Companies Act 2006 and is incorporated in the United Kingdom. It operates in the United Kingdom and is registered at 201 Bishopsgate, London EC2M 3AE.

The financial statements have been prepared in accordance with the Companies Act 2006, FRS 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland, which is effective for periods commencing on or after 1 January 2015, and with the Statement of Recommended Practice: Financial Statements of Investment Trust Companies and Venture Capital Trusts ('the SORP') issued in November 2014. The date of transition to FRS 102 was 1 September 2014. The Company has early adopted the amendments to FRS 102 in respect of fair value hierarchy disclosures as published in March 2016.

The principal accounting policies applied in the presentation of these financial statements are set out in the annual report. These policies have been consistently applied to all the years presented. Following the application of the revised reporting standards there have been no significant changes to the accounting policies compared to those set out in the Company's annual report for the year ended 31 August 2015.

There has been no impact on the Company's Income Statement, Statement of Financial Position (previously called the Balance Sheet) or Statement of Changes in Equity (previously called the Reconciliation of Movements in Shareholders' Funds) for periods previously reported.

The Cash Flow Statement previously reported has been restated to comply with the new disclosure requirements of the revised reporting standard. The accounts have been prepared under the historical cost basis except for the measurement at fair value of investments. In applying FRS 102, financial instruments have been accounted for in accordance with Section 11 and 12 of the standard. All of the Company's operations are of a continuing nature.

2.   Going concern

The assets of the Company consist of securities that are readily realisable and, accordingly, the directors believe that the Company has adequate resources to continue in operational existence for at least twelve months from the date of approval of the financial statements. 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.

3.   Gains/(losses) from investments held at fair value through profit or loss

	2016 £'000	2015 £'000
Gains on investments sold in the year	1,533	2,395
Revaluation of investments held at 31 August	30,355	(4,405)
Movement in appreciation of traded options held	11	-
	--------	--------
	31,899	(2,010)
	=====	=====

4.   Income from investments held at fair value through profit or loss

	2016 £'000	2015 £'000
Dividend income	7,684	4,738
Scrip dividends	-	83
	-------	-------
	7,684	4,821
	====	====

5.   Return per ordinary share

	2016			2015
	£'000	pence		£'000	pence
Revenue return	6,521	6.12		3,970	5.14
Capital return	31,049	29.14		(2,302)	(2.98)
	-------	------		-------	------
Total return	37,570	35.26		1,668	2.16
	====	====		====	====
Weighted number of ordinary shares			106,540,906			77,267,337

6.   Dividends paid on ordinary shares for the year ended 31 August

		Record date	Payment date	Ex-dividend date	2016 £'000	2015 £'000
4th interim dividend	1.10p	10 October 2014	31 October 2014	9 October 2014	-	840
1st interim dividend	1.10p	6 February 2015	27 February 2015	5 February 2015	-	843
2nd interim dividend	1.10p	8 May 2015	29 May 2015	7 May 2015	-	853
3rd interim dividend	1.15p	7 August 2015	28 August 2015	6 August 2015	-	911
4th interim dividend	1.15p	6 November 2015	27 November 2015	5 November 2015	920	-
1st interim dividend	1.15p	5 February 2016	26 February 2016	4 February 2016	923	-
2nd interim dividend	1.15p	15 April 2016	31 May 2016	14 April 2016	923	-
3rd interim dividend	1.15p	29 July 2016	31 August 2016	28 July 2016	1,794	-
					-------	-------
					4,560	3,447
					====	====

A fourth interim dividend in respect of the year ended 31 August 2016 of 1.20p per share was declared on 18 October 2016 and will be paid to shareholders on 30 November 2016 with record date 28 October 2016. The Company's shares will go ex-dividend on 27 October 2016.

All dividends have been paid or will be paid out of revenue profits.

The total dividend payable in respect of the financial period which form the basis of section 1158 of the Corporation Tax Act 2010 are set out below:

	2016 £'000	2015 £'000
Revenue available for distribution by way of dividend for the year	6,521	3,970
Interim dividends of 3.45p paid (2015: 3.35p)	(3,640)	(2,607)
Fourth interim dividend for the year ended 31 August 2016 of 1.20p (based on 156,555,606 ordinary shares in issue as at 4 November 2016) (2015: 1.15p)	(1,879)	(920)
	--------	------
Undistributed revenue for section 1158 purposes1	1,002	443
	====	===

¹ Comprises 13.7% based on taxable income

7.    Net asset value per ordinary share

The net asset value per ordinary share and the net assets attributable to ordinary shares at the end of the year were as follows:

	2016 £'000	2015 £'000
Net assets attributable	220,904	91,594
Number of ordinary shares in issue	156,080,606	79,246,550
Net assets per ordinary share	141.5p	115.6p

The movements during the year of the assets attributable to the ordinary shares were as follows:

	2016 £'000	2015 £'000
Net assets at start of the year	91,594	85,787
Total net return on ordinary activities after taxation	37,570	1,668
Dividends paid on ordinary shares in the period	(4,560)	(3,447)
Issue of ordinary shares less issue costs	96,300	7,586
	----------	----------
Total net assets attributable to the ordinary shares at 31 August	220,904	91,594
	======	=====

8.   Called up share capital

2016	Number of shares	Number of shares entitled to dividend	£'000
Ordinary shares 1p each
At 31 August 2015	79,246,550	79,246,550	793
New shares allotted in year	76,834,056	76,834,056	768
	---------------	---------------	-----
At 31 August 2016	156,080,606	156,080,606	1,561
	=========	=========	====

During the year, the Company issued 76,834,056 ordinary shares for a total consideration of £96,300,000 after deduction of issue costs.

Included within the issue of 76,834,056 ordinary shares during the period were 75,234,056 shares issued following the liquidation of Henderson Global Trust plc ('HGT') whereby investors in HGT were given the option of receiving shares in either The Bankers Investment Trust PLC or Henderson International Income Trust plc.

2015	Number of shares	Number of shares entitled to dividend	£'000
Ordinary shares of 1p each
At 31 August 2014	72,450,588	72,450,588	725
New shares allotted in the year	2,875,000	2,875,000	29
New shares allotted from exercise of subscription shares	3,920,962	3,920,962	39
	---------------	---------------	-----
At 31 August 2015	79,246,550	79,246,550	793
	=========	=========	===
Subscription shares of 1p each
At 31 August 2014	3,920,962	-	39
Exercise of subscription shares	(3,920,962)	-	(39)
	---------------	---	-----
At 31 August 2015	-	-	-
	========	==	===

During the year, the Company issued 2,875,000 ordinary shares for a total consideration of £3,665,000 after deduction of issue costs.

9.   Share premium account

	2016 £'000	2015 £'000
At the start of the year	35,796	28,239
Ordinary shares allotted in year	95,933	3,654
Issue costs	(401)	(18)
Ordinary shares allotted from exercise of subscription shares	-	3,921
	----------	----------
At 31 August	131,328	35,796
	======	======

10.  2016 Financial information

The figures and financial information for the year ended 31 August 2016 are extracted from the Company's annual financial statements for that period and do not constitute statutory financial statements for that period. The Company's annual financial statements for the year ended 31 August 2016 have been audited but have not yet been delivered to the Registrar of Companies. The auditors' report on the 2016 financial statements was unqualified and did not contain any statements under sections 498(2) and 498(3) of the Companies Act 2006.

11.  2015 Financial information

The figures and financial information for the period ended 31 August 2015 are extracted from financial statements for that period and do not constitute statutory financial statements for that period. Those financial statements have been delivered to the Registrar of Companies and included the report of the auditors which was unqualified and did not contain any statements under sections 498(2) or 498(3) of the Companies Act 2006.

12.  Annual report and financial statements

The annual report and financial statements for the period ended 31 August 2016 will be posted to shareholders in November 2016 and copies will be available on the Company's website

www.hendersoninternationalincometrust.com or in hard copy format from the Company's registered office, 201 Bishopsgate, London EC2M 3AE.

The annual general meeting will be held at the registered office on Friday, 16 December 2016 at 2.30 pm. The notice of the annual general meeting will be posted to shareholders with the annual report and financial statements.

For more information please contact:

Ben Lofthouse Fund Manager Henderson International Income Trust plc Telephone: [phone]
James de Sausmarez Head and Director of Investment Trusts Henderson Investment Funds Limited Telephone: [phone]	Sarah Gibbons-Cook Investor Relations and PR Manager Henderson Global 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

 

 

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