Final Results

RNS Number : 1967E

Henderson Diversified Income TstPLC

05 July 2021

 

HENDERSON INVESTMENT FUNDS LIMITED

HENDERSON DIVERSIFIED INCOME TRUST PLC

LEGAL ENTITY IDENTIFIER: 213800RV2228EO1JEN02

5 JULY 2021

HENDERSON DIVERSIFIED INCOME TRUST PLC

Annual Financial Report for the Year Ended 30 April 2021

This announcement contains regulated information

PERFORMANCE HIGHLIGHTS

TOTAL RETURN PERFORMANCE FOR THE YEAR

	To 30 April 2021	To 30 April 2020
NAV1	+13.5%	+2.9%
Benchmark2	+2.2%	+2.8%
Share price3	+10.7%	-3.4%
Replacement benchmark4	+15.5%	-3.9%

	At 30 April 2021	At 30 April 2020
NAV per share	91.87p	85.00p
Share price3	88.00p	83.00p
Revenue return per share	4.61p	4.40p
Net assets	£175.7m	£162.6m
Dividend per share	4.40p	4.40p
Dividend yield	5.00%	5.30%
Ongoing charge	0.93%	0.89%
Financial gearing	15.04%	15.38%
Number of portfolio investments held	129	98

¹ Net asset value ('NAV') total return (including dividends reinvested and excluding transaction costs)

² The benchmark is the average return on a rolling annual basis of three month sterling LIBOR + 2%

³ The share price total return using mid-market closing price

⁴ 60% Global High Yield Credit (ICE Bank of America Global High Yield Constrained Index), 25% Global Investment Grade Corporate Credit (ICE Bank of America Global BBB Corporate Bond Index) and 15% European Loans (Credit Suisse Western European Leveraged Loan Index). Please refer to the Chairman's Statement below for further information.

Sources: Morningstar for the AIC, BNP IRP Service, Janus Henderson and Henderson Diversified Income Trust plc Annual Reports

INVESTMENT OBJECTIVE AND POLICY

The Board has recently undertaken a review of the Company's investment objective and policy, initiated by the regulatory requirement to transition away from LIBOR to alternative reference rates by the end of 2021. The Company's current investment objective is to seek income and capital growth such that the total return on the net asset value of the Company exceeds the average return on a rolling annual basis of three month sterling LIBOR + 2%. It is proposed that this will be amended so that the Company's objective is instead to seek a sustainable level of annual income and capital gains consistent with seeking to reduce the risk of capital losses, by investing in a diversified portfolio of global fixed income and floating rate asset classes.

The Company will therefore seek shareholder approval at the Annual General Meeting (AGM) to be held at 11.00am on Thursday, 16 September 2021 to change the Company's investment objective as set. Other minor amendments to the investment policy are also proposed. There will be no imminent or future change in the Company's investment process or strategy as a result of the amendments to the investment objective and policy.

The current investment objective and policy and the proposed new investment objective and policy are set out in full below:

Current objective and investment policy		Proposed objective and investment policy
Objective		Objective
The Company's investment objective is to seek income and capital growth such that the total return on the net asset value of the Company exceeds the average return on a rolling annual basis of three month sterling LIBOR + 2%.		The Company's investment objective is to seek a sustainable level of annual income and capital  gains consistent with seeking to reduce the risk of capital losses, by investing in a diversified portfolio of global fixed income and floating rate asset classes.
Investment policy		Investment policy
The Company aims to deliver this outcome by investing in a diversified portfolio of global fixed and floating rate income asset classes including secured loans, government bonds, high yield (sub-investment grade) corporate bonds, unrated corporate bonds, investment grade corporate bonds and asset backed securities. The Company may also invest in high yielding equities and derivatives. The Company uses a dynamic approach to portfolio allocation across asset classes and is permitted to invest in a single asset class if required. The Company seeks a sensible spread of risk at all times. It can invest in assets of any size, sector, currency or issued from any country. The Company has adopted the following allocation limits: ● secured loans 0 to 100% of gross assets ● government bonds 0 to 100% of gross assets ● investment grade bonds 0 to 100% of gross assets ● high yield corporate bonds 0 to 100% of gross assets ● unrated corporate bonds 0 to 10% of gross assets ● asset backed securities 0 to 40% of gross assets ● high yielding equities 0 to 10% of gross assets As a matter of policy, the Company will not invest more than 10% in aggregate of its net assets in a single corporate issue or issuer. The Company may use financial instruments known as derivatives to enhance returns. They may also be used to reduce risk or to manage the Company's assets more efficiently. The use of derivatives may include credit derivatives (including credit default swaps) in addition to interest rate futures, interest rate swaps and forward currency contracts. The credit derivatives, interest rate futures and swaps are used to take a synthetic exposure to, or to hedge, an investment position where the derivative contract is more efficient or cost effective than a position in the underlying physical asset. The Company's exposure to derivatives is capped at a maximum net long or net short position of 40% of net assets. The Company may also employ financial gearing for efficient portfolio management purposes and to enhance investment returns but total gearing (both financial gearing and synthetic gearing combined) may not exceed 40% of net assets. Forward currency contracts are used to hedge other currencies back to sterling. Any material change to the investment policy of the Company will only be made with the approval of shareholders.		The Company uses a dynamic approach to portfolio allocation across asset classes and is permitted to invest in a single asset class if required. The Company seeks a sensible spread of risk at all times. It can invest in assets of any size, sector, currency or issued from any country. The Company has adopted the following allocation limits for each asset class: ● secured loans 0 to 100% of gross assets ● government bonds 0 to 100% of gross assets ● investment grade bonds 0 to 100% of gross assets ● high yield (sub-investment grade) corporate bonds 0 to 100% of gross assets ● unrated corporate bonds 0 to 10% of gross assets ● asset backed securities 0 to 40% of gross assets ● high yielding equities 0 to 10% of gross assets As a matter of policy, the Company will not invest more than 10% in aggregate of its net assets in a single corporate issue or issuer. The Company may use financial instruments known as derivatives to enhance returns. They may also be used to reduce risk or to manage the Company's assets more efficiently. The use of derivatives may include credit derivatives (including credit default swaps) in addition to interest rate futures, interest rate swaps and forward currency contracts. The credit derivatives, interest rate futures and swaps are used to take a synthetic exposure to, or to hedge, an investment position where the derivative contract is more efficient or cost effective than a position in the underlying physical asset. The Company's exposure to derivatives is capped at a maximum net long or net short position of 40% of net assets. The Company may also employ financial gearing for efficient portfolio management purposes and to enhance investment returns but total gearing (both financial gearing and synthetic gearing combined) may not exceed 40% of net assets. Forward currency contracts are used to hedge other currencies back to sterling. Any material change to the investment policy of the Company will only be made with the approval of shareholders.

CHAIRMAN'S STATEMENT

Introduction

It is pleasing to be able to report another strong year for the Company. The NAV total return was 13.5% in the year to 30 April 2021 and the dividend of 4.40p per share has been covered by revenues received from investments. As the Fund Managers later report, major governments provided unprecedented support to key sectors of the economy.  The evident will to do whatever was required to avoid a depression contributed to a benign investment environment for even some of the riskier assets.

The Fund Managers' commitment to "sensible income" continues to result in a portfolio focussed on larger, less cyclical, modern day facing businesses which have sustainable revenues in the post COVID era.  This has meant a continued bias towards investing in the US high yield market rather than the companies in the UK market which the Fund Managers consider to be smaller, illiquid and analogue.  The capital investment in US dollars is then hedged back into sterling to protect investors from exchange rate volatility.

There are also a number of other developments which I discuss below. The first is that the Board is proposing to shareholders a change in the benchmark for the Company. This does not reflect any change in investment policy or strategy, but rather a belief that the original benchmark selected does not meaningfully provide a guide to the strength of the Fund Managers' performance.

Secondly, the Board wish to ensure that investments, activities and the activities of service providers are consistent with wider social responsibilities which we believe are a growing priority for our stakeholders. Environmental, social and governance (ESG) issues are a key focus of the Board, and the Board is increasing its oversight of the activities of the Manager in these areas. ESG issues can present both opportunities and threats to long-term investment performance. Constructive engagement with management can be the most effective way of driving meaningful positive change in the behaviour of investee company management, but as the Company is largely invested in debt securities, engagement may be lighter touch than in an equity company. We continue to examine the benefits and risks of including a more explicit ESG objective for our investment portfolio.

Change of Investment Objective and Replacement Benchmark

The Board has recently undertaken a review of the Company's investment objective and policy, initiated by the regulatory requirement to transition away from LIBOR to alternative reference rates by the end of 2021.

The Company's current investment objective is to seek income and capital growth such that the total return on the net asset value of the Company exceeds the average return on a rolling annual basis of three month sterling LIBOR + 2%. It is proposed that this will be amended so that the Company's objective is instead to seek a sustainable level of annual income and capital gains consistent with seeking to reduce the risk of capital losses, by investing in a diversified portfolio of global fixed income and floating rate asset classes.

The Company will therefore seek shareholder approval at the Annual General Meeting (AGM) to be held at 11.00am on Thursday, 16 September 2021 to change the Company's investment objective as set out above. Other minor amendments to the investment policy are also proposed. There will be no imminent or future change in the Company's investment process or strategy as a result of the amendments to the investment objective and policy.

The current investment objective and policy and the proposed new investment objective and policy are set out in full above.

Although not part of the investment objective and policy, following recommendations from the Manager, the Board is also proposing to change the Company's benchmark, effective from the date shareholders approve the new investment objective and policy. The Board believes the proposed replacement benchmark will permit the Board and others to ascertain performance of the Company across more dimensions and assess the value added through active management. The replacement benchmark (which is hedged back to sterling) will therefore be as follows:

·     60% Global High Yield Credit (ICE Bank of America Global High Yield Constrained Index)

·   25% Global Investment Grade Corporate Credit (ICE Bank of America Global BBB Corporate Bond Index)

· 15% European Loans (Credit Suisse Western European Leveraged Loan Index)

The table below shows the five-year annualised returns for the Company to 30 April 2021, the existing benchmark forming part of the Company's investment objective and the proposed replacement benchmark. This shows that the proposed replacement benchmark more closely resembles the risk and reward profile of the Company's investments.

Total return performance over 5 years1
As at 30 April	NAV total return %	Replacement benchmark %	Three month sterling LIBOR + 2% %
20161	100	100	100
2017	109.1	109.7	102.4
2018	110.9	112.0	104.9
2019	116.0	116.8	107.9
2020	119.4	112.3	110.8
2021	135.5	129.8	113.2

¹ Figures rebased to 100 . Performance prior to 27 April 2017 reflects the performance of the predecessor company, Henderson Diversified Income Limited, that was launched on 18 July 2007

Sources: Morningstar for the AIC, BNP IRP Service and Janus Henderson Investors

Performance

As mentioned above, the Company's total return NAV rose 13.5% over the 12 months to 30 April 2021. The share price total return was 10.7% underperforming the NAV appreciation due to a widening discount. We continue to maintain the dividend rate of 4.40p per share and managed to add to our modest revenue reserve.  The NAV total return outperformed the existing benchmark by 11.3%, however when compared to the replacement benchmark, it underperformed by -2.0%.

This underperformance reflected the timing of the Company's year end. The asset value of the Company's portfolio rallied earlier and further than the benchmark. As a consequence, this outperformance was captured in last year's numbers when the portfolio outperformed the benchmark by 6.8%.  The Fund Managers believe they have a bias towards higher quality, sustainable businesses which were better equipped to face the challenge of COVID.  In their view much of the performance this year has been driven by late rallying, low quality cyclicals which they do not believe are appropriate for the Company.

Investors should not view the benchmark as a target return for the Company to achieve.  Your Fund Managers are committed to active management of the portfolio, concentrating on companies which fit with their objective of generating "sensible income". The benchmark is however useful in demonstrating the relative risk and return characteristics of the portfolio.

Dividends

For the year ended 30 April 2021, a third interim dividend of 1.10p per share was paid on 31 March 2021 and a fourth interim dividend of 1.10p per share was paid on 30 June 2021 making a total of 4.40p per share for the year, in line with our expectations. These dividends have been paid as interest distributions for UK tax purposes.

Buying Back Shares

The Board has set a policy that gives discretion to the Fund Managers to buy-back the Company's shares, if at any stage the shares are trading at a discount to net asset value at a level which is thought to be more attractive than any risk adjusted return they would be able to find in the market.

In March 2021 the Company repurchased 51,207 shares and a further 1,210,000 shares were bought back on 30 June 2021. These buy-backs were in response to acute discount volatility which was exacerbated by the selling down of the Company's shares by some advisory clients.

Share buy-backs in these circumstances are considered by the Board to be in the best interests of shareholders as they reduce the discount to net asset value and provide liquidity to the market in the Company's shares.

AGM and Adoption of New Articles of Association

Given the level of uncertainty surrounding the Delta variant of the virus, and the potential delay this could continue to cause to the UK Government's lifting of restrictions, the Board has taken the decision at this time to restrict attendance at this year's AGM to a small number of attendees comprising only the required quorum and anyone else whose attendance is necessary for the conduct of the meeting. The AGM will take place at 11.00am on Thursday, 16 September 2021 at 201 Bishopsgate, London EC2M 3AE.

The Board therefore invite shareholders to attend a webinar presentation this year using the conferencing software Zoom which will take place at 11.00am on Thursday, 9 September 2021. This will allow you to be present for the usual presentation from your Fund Managers, John Pattullo and Jenna Barnard, and will enable you to ask questions and debate with your Fund Managers and Board.

To attend the webinar presentation please register in advance at this link, entering your shareholder details: https://jhi.zoom.us/webinar/register/WN_-1sgh5K7RVWHd69oWmjGIQ .

You will then receive a dedicated invitation to join the webinar.

Voting at this year's AGM will be conducted on a poll among the directors, rather than on a show of hands, with the Chairman of the AGM holding the proxy votes. We therefore request all shareholders to submit their votes by proxy, ahead of the deadline of 11.00am on Tuesday, 14 September 2021, to ensure that their vote counts. If you hold your shares in a nominee account, such as through a share dealing service or platform, you will need to contact your provider and ask them to submit the proxy votes on your behalf.

The Board commits to holding physical meetings in future when restrictions are not in place and these can be held safely, and the Board would be delighted to hold an in-person AGM this year if circumstances allow.

Any change to the format of the AGM will be notified to shareholders via a Regulatory Information Service announcement and the Company's website.

In case of any further extraordinary crises such as the COVID-19 pandemic, the Company is putting a proposed amendment to the Company's Articles of Association to shareholders this year to give the Company flexibility to hold virtual and/or physical shareholder meetings in future, as necessary.

Outlook

The main focus of currency and fixed income markets is inflation.  Expectations differ as to whether the current inflationary pressures spiral into a return of an environment of higher inflation. The market seems happy to price in negative real returns from high quality bonds for the moment, however should policy makers be forced to act this could have a significant impact on asset prices.

The Fund Managers remain cautiously optimistic. Their central thesis is of a return to disinflationary pressures crushing the inflationary impetus.  During my time on the Board they have been consistently right on this, however we are once again in uncharted territory.  I am comforted that they have shown the ability, should the facts change, to change their mind but in the short-term this could cause considerable volatility in asset prices. 

Angus Macpherson

Chairman

5 July 2021
 

FUND MANAGERS' REPORT

Performance

The Company's net asset value total return rose 13.5% over the 12 months to 30 April 2021 outperforming the existing benchmark (three month sterling LIBOR + 2%) which returned 2.2% and slightly underperforming the replacement benchmark (60% Global High Yield Credit, 25% Global Investment Grade Corporate Credit and 15% European Loans) which returned 15.5%. The share price total return was 10.7% reflecting a widening discount as private investors favoured equity income over bond income. We continue to maintain the total annual dividend at 4.40p per share and managed to add to our modest revenue reserve.

Macro Background

In many ways the period under review was fairly easy to navigate. The global COVID fiscal and monetary stimulus continued supporting markets fantastically well. The period was entirely about credit repair, recovery and reflation. The war on COVID led to extraordinary support which was hugely beneficial to the corporate bonds we hold in this Company. In fact, given that COVID was not anybody's fault it is arguably unlikely we will ever see such widespread support for corporate bonds ever again. In early April 2020 (before the start of this financial year), the Fed crossed the Rubicon and announced they would start buying corporate bonds and ETFs. This was the ultimate signal to "not fight the Fed."

In reality they only bought a tiny $14bn of corporate bonds as market participants, knowing they had an explicit backstop support, wanted to front run them. Unlike previous crises we have endured this essentially meant that the investment grade and high yield markets were open for business - open at a price, but open.

Many large investment grade businesses tapped the markets for precautionary reasons to bullet proof their balance sheets. 2020 was a period of record issuance and record spread levels and volatility. US investment grade spreads peaked at a scary 4% over Treasury yields in late March 2020 and rallied with frightening speed to only 0.9% - reassuringly expensive, again at 30 April 2021. The snap back in spreads was the fastest on record and was further compounded in the Autumn of 2020 by the exceptionally positive vaccine news and then the market friendly US election result. As mentioned last year we increased gearing where possible to lock in some of these scarily wide corporate bond yields. As the markets matured we then saw more desperate high yield issuers tap the markets - Carnival Cruises has in some ways become the poster child in this crisis for rescue bridging finance - indeed they have raised loans, secured bonds, unsecured bonds, convertible and ordinary equity many times in the last year. Other distressed issues followed suit in names such as AMC Cinemas and Six Flags.

The EU and UK Government's demonstrated extraordinary levels of state support to vital sectors such as autos, airlines, travel companies etc. These businesses were considered too big to fail. There was of course unprecedented support to employees on furlough type schemes. Governments were desperate to avoid a depression and by using enormous transfer payments they kept money moving around the economy. Life was of course much tougher for smaller businesses who do not have access to financing so easily. Unlike "normal" recessions we have not seen a dramatic fall in incomes nor a rise in unemployment. In addition, we have seen significant demand for physical goods for the home offset by the collapse in demand for services. The COVID crisis has widened inequality between large cap and small businesses but also between wealthy and employed and those less fortunate. The wealthy and retired have been forced savers whilst low income groups have had to borrow to survive. US high yield default rates have been surprisingly low - they peaked around 5.9% in May; with many of the problems in highly cyclical and highly levered sectors such as energy and retail. Projected defaults, per Credit Suisse for the next 12 months are a paltry 2.5%.

Asset Allocation and Stock Selection

We tend to run approximately 20-25% gearing as a neutral level being a combination of financial gearing (borrowing money and investing at a better yield than the cost of the debt) and synthetic gearing (the use of credit derivatives). As discussed in last year's review we increased this into the eye of the storm in March/April 2020. We were able to add risk profitably whilst many others were forced to reduce gearing, a benefit of our closed-end structure. The gearing has been run at above average levels for much of the period but was reduced into the summer period as valuations returned to more normal levels. In addition, over the period we broadly rotated our better quality investment grade bonds into shorter duration, but higher yielding, high yield bonds as the recovery progressed.

New high yield bonds were bought in both the primary and secondary markets. In keeping with our sensible income philosophy, we favoured larger, less cyclical modern day facing businesses which have a reason to exist in the post COVID era. Some examples include Virgin Media, Davita, Rackspace Technology, Sirius, Broadcom, Avantor, Black Knight, Crowdstrike & Expedia. A lot of these names tend to be American based global technology companies specialising in the modern economy in areas such as media/cable tv, cloud infrastructure, cyber security and payment processing. These businesses are of significant size and proven for the digital age. We feel shareholders are much better served by our holding the bonds of such companies rather than scrapping around in the much smaller and illiquid, old world analogue UK based high yield market.

There are, of course, obvious exceptions, but as a rule we continue to be attracted to the size, depth, breadth and diversity of the US corporate bond markets. Having said that, certain European financials also offer good value. We added some junior banking and insurance bonds to enhance the yield of the portfolio in names such as RBS, Lloyds, Aviva, Direct Line Insurance, ING, Rabobank and Barclays. The banks have had a remarkably good crisis - they went into this period with record levels of capital; they over-provisioned early in the crisis, making prudent use of the more flexible accounting rules. In addition, they have greatly benefitted from the direct and indirect Government support schemes aimed at the UK housing markets and company support schemes. Finally, we have added a little to our loan holdings - although the all in yield is not overly attractive, they do add some diversification and low beta carry to the portfolio.

Environmental, Social and Governance (ESG)

Shareholders will be aware of our bias to large cap, non-cyclical, reason to exist, high cash flow return companies. This was discussed extensively in last year's Annual Report. In equities language these would be labelled as growth companies. We have always focused on doing the right thing as we allocate shareholders capital. We, as a management team are in it for the long haul. If you like we are playing an infinite game and hence when we invest not only do we want to invest in sustainable companies but also resilient companies, which should survive and prosper going forward. We ensure that the companies we invest in look after all their stakeholders - that is they not only respect the environment but also their employees, suppliers, customers, bond holders and shareholders, amongst others.

Short-term management teams that focus on a quick buck, polluting one stakeholder over another get little attention from us. By only focusing on resilient businesses, we exclude those businesses which have high operational and financial leverage. We have for example always avoided energy, airlines, miners and autos. These businesses rarely achieve a return on capital, higher than their cost of capital and hence do not merit our attention. We monitor and engage regarding ESG. It is one of the largest macro trends we have ever seen. We have an internal rating system to facilitate this. We also take some comfort from an external third-party system as well which shows our portfolio is well positioned in this regard. This is an evolving and growing focus and we will be enhancing our reporting in this area in due course.

Outlook

Volatility and measures of distress in credit markets are at 15 year lows. Credit markets are priced tight but arguably fairly given the remarkably benign outlook. In this market it is more important than ever that we keep focused on sensible income and not get drawn to illusory "fools yield" bonds where the yield is so high you are almost guaranteed to lose capital. We are very mindful of value traps, illiquid, esoteric and exotic credits. The COVID crisis accelerated many of the existing structural themes we have spoken about in previous reports and if anything, in the longer term we see a more deflationary world. We completely understand the markets obsession with inflation but feel it is predominately a cyclical and transitory phenomenon. The modest rise in bond yields may well give us an opportunity to lock in higher yields for shareholders and, reassuringly, in the current environment we feel the annual dividend remains secure.

John Pattullo and Jenna Barnard

Fund Managers

5 July 2021

The charts included in the Fund Managers' Report within the Annual Report for the year ended 30 April 2021 have not been included in this announcement. The Annual Report for the year ended 30 April 2021 will be available on the Company's website shortly. In the meantime you can contact the Company Secretary ( [e-mail] ) to obtain a copy of the charts.

PORTFOLIO INFORMATION

TEN LARGEST INVESTMENTS AT 30 APRIL

Ranking 2021 (2020)	Investment	Country	Industry	Market value £'000	% of portfolio
1 (13)	Nationwide Building Society	UK	Financials	4,762	2.36
2 (36)	Royal Bank of Scotland	UK	Financials	4,561	2.26
3 (5)	Verizon Communications	US	Communications	4,461	2.21
4 (31)	Virgin Media	UK	Communications	4,390	2.17
5 (12)	Co-Operative Group	UK	Consumer non-cyclical	4,314	2.13
6 (11)	Phoenix	UK	Financials	4,279	2.12
7 (6)	Crown Castle	US	Industrials	4,039	2.00
8 (8)	IMS	US	Technology	3,958	1.96
9 (17)	Lloyds Group	UK	Financials	3,885	1.92
10 (7)	Sirius	US	Communications	3,843	1.90

 

MANAGING RISKS

The Board, with the assistance of the Manager, has carried out a robust assessment of the principal risks facing the Company, including those that would threaten its business model, future performance, solvency and liquidity. The Board has considered the impact of COVID-19 on the Company and concluded that the current portfolio is in a strong position to weather the market with the Fund Managers' long standing philosophy of thematic investing, long-term duration management and "sensible income" credit investing. The Board will continue to monitor this position.

The Company is an investment trust and the Board is wholly non-executive. The Board has delegated many of its functions to third-party service suppliers including Janus Henderson and BNP Paribas Securities Services (BNPPSS). However, certain risks and functions cannot be delegated and are retained by the Board.

The following summary identifies those risks and uncertainties that the Board believes are the most significant and explains whether, and if so how, they are mitigated. This reflects the Company's risk map.

The Board has analysed risk from the perspectives of the markets in which it invests and its operations.

PRINCIPAL MARKET RISKS

The Board has agreed with the Manager that it seeks an average total return on a rolling three month basis of LIBOR + 2%. To achieve a return over LIBOR + 2% the Fund Managers identify risk assets that they believe adequately compensate the Company for the risks that arise. It is proposed that this be amended so that the Company's objective is instead to seek a sustainable level of annual income and capital gains consistent with seeking to reduce the risk of capital losses, by investing in a diversified portfolio of global fixed income and floating rate asset classes. This change is subject to shareholder approval at the 2021 AGM on Thursday, 16 September. The Board has set limits on the class of debt and equity assets that may be utilised by the Manager and given permission for the Manager to leverage the portfolio through significant on balance sheet and synthetic gearing. As a result investors are exposed to a number of risks which are not mitigated and may give rise to gains and losses which may be significant.

The Board is conscious that predictable dividend distributions are particularly important to shareholders. Dividends are principally declared from net revenue income although the Board does have the power to declare dividends out of capital.

Net revenue income arises in the main from seeking interest rate and credit returns from investments. The selection of such investments is based on the judgment of the Fund Managers as to current and expected market conditions. The Board believes that the principal market risks faced by the Company and its shareholders arise from interest rate, credit and currency risks.

Market risk	Mitigation
Interest rate risk The Company takes on interest rate risk so as to deliver portfolio returns. Reductions in market interest rates will reduce gross and net revenue income and this effect may be amplified by the use of leverage. Such falls may be mitigated for a period if the Company has invested in longer term fixed rate assets prior to such market movements. The Company invests in secured loans. Whilst such secured loans may contain fixed interest rates, they may also contain prepayment provisions that reduce their effectiveness at mitigating interest rate risk. Increases in market interest rates can reduce net asset value if interest rates rise whilst holding fixed rate assets of longer duration. Interest rate risk also arises from an investment in interest rate derivatives and the use of rolling forward foreign exchange contracts.	The Board has not set any limits on the amount of interest rate risk that may be taken by the Manager other than to limit the gross on balance sheet and synthetic leverage to 40% of net assets. The Board discusses interest rate risk with the Fund Managers at each Board meeting and probes their assessment of market conditions and their judgment as to the direction of interest rates and speed of development. The Board receives a projection of net income on a monthly basis and probes the income realised to date and forecast to the financial year end. The Board receives a list of the assets in the portfolio which contains details of interest rates and periods to maturity at each Board meeting. The Board supports the use of interest rate derivatives to increase, as well as manage and mitigate interest rate risk. The interest rate risk profile of the portfolio as at the year end is set out in Note 14.1.3 to the financial statements within the Annual Report.
Credit risk The Company takes on credit risk so as to deliver portfolio returns. Investing in debt securities and secured loans exposes the Company to credit risk from company defaults and restructurings. Whilst it may be possible to hold a debt instrument to maturity, and be paid out in full, the Fund Managers have discretion to sell a distressed asset which would give rise to realised losses without a default having occurred. Reductions in credit spreads will reduce gross and net income and this effect may be amplified by leverage. Reductions in spreads may also reduce the availability of assets which the Manager believes would appropriately compensate the Company and its shareholders for the credit risk assumed leading to reduced flexibility if the portfolio needs to be repositioned. The Company is also exposed to counterparty credit risk through the use of derivatives.	The Board has not set any limits on the credit quality of the portfolio. The Board relies on the Fund Managers to make investment decisions in this regard given the level of skill and experience in debt securities and secured loan lending within the fund management team. The Board receives a report of the assets held in the portfolio at each Board meeting and discusses credit quality and default trends with the Fund Managers. The credit rating table for the portfolio at the year end is disclosed in Note 14.3 to the financial statements within the Annual Report.
Currency risk The Company invests in assets of fixed amounts denominated in currencies other than sterling which give rise to currency risk. Significant gains and losses would likely be incurred on the liquidation of such assets when repatriating capital to sterling. Less significant gains and losses are incurred on repatriating interest and other income to sterling. The Custodian undertakes a rolling programme of forward sales of foreign currency which gives rise to elements of interest rate risk and credit default risk with the counterparty.	The Board has set a requirement that the capital amount of any investment denominated in a foreign currency be hedged to sterling so as to mitigate currency gains and losses. The Board receives a report of gross and hedged currency positions at each Board meeting so it can monitor the level of hedging actually undertaken. Gross and net hedging currency exposures are set out in Note 14.1.2 to the financial statements within the Annual Report.

PRINCIPAL OPERATIONAL RISKS

In terms of operational risk, the Board has determined that the principal risks arise from its relationship and management of third-party service suppliers and from the nature of the activities of the Company to the degree that they are unusual when compared to other investment trusts.

Operational risk	Mitigation
Continued interest and commitment of Jenna Barnard and John Pattullo as Fund Managers Jenna and John have directed the portfolio since its launch and the portfolio reflects their assessment of current economic conditions and likely market opportunities and developments. It may prove difficult to replace either or both of them should they decide to step down or if Janus Henderson allocates them to alternative funds under management. Any replacements may have a different style and different view of how the benchmark return may best be met.	The Board has an extensive and ongoing dialogue with Jenna and John on a quarterly basis and seeks to ensure that they remain interested and committed to the portfolio. The Board discusses this risk regularly with Janus Henderson management and seeks to ensure that Jenna and John remain allocated to the portfolio and are appropriately rewarded for their services.
Continued interest and commitment of Janus Henderson as Investment Manager and its operation of effective systems of internal control and management reporting (and execution and settlement of secured loans) The Board appointed Janus Henderson as its Manager at inception and the Group has supported shareholders since listing the predecessor company. The Board benefits from the extensive knowledge and experience of Janus Henderson who manage a substantial portfolio of investment trusts and the economies of scale from contracting with other investment trusts for services. The Board relies on the knowledge and expertise of Janus Henderson in ensuring that the Company complies with all relevant laws and regulations which include company law, securities legislation, data protection, anti-bribery and corruption and anti-tax evasion legislation. It may prove difficult to replace the Manager with an alternative provider that would bring the same knowledge, experience and economies of scale should Janus Henderson decide to exit the investment trust business or to cease trading.	The Board has a regular dialogue with representatives of Janus Henderson about their support for the Company and annually assesses their performance to ensure that economies of scale and other benefits from the relationship are in fact being delivered. The Board receives regular reports on compliance with laws and regulations and receives regular updates as new legislation is enacted. The Board receives an annual report on internal controls in operation at Janus Henderson and is promptly made aware of any compliance failings and how they are remediated. The Board also receives an annual report on internal controls at BNPPSS in respect of its collateralized loan obligations and loan administration services and is promptly made aware of any compliance failings and how they are remediated. On an annual basis the Board reviews the quality of the service it has received and any issues and provides feedback to Janus Henderson.
Reliance on credit standing and quality of service of BNPPSS as the appointed Depositary and Custodian of assets and their execution and settlement of transactions (other than secured loans) The Board has appointed BNPPSS as its Depositary.  As Depositary BNPPSS acts as the Company's investment Custodian, with responsibility for transaction execution and settlement. The Company is reliant on BNPPSS operating effective systems to ensure the Company's transactions are undertaken promptly, that they are properly recorded, that assets are kept segregated from those of other clients, and that BNPPSS's credit rating does not deteriorate or the Custodian fails such that assets are not immediately recoverable.	The Board assesses the credit standing of BNPPSS on a regular basis and keeps aware of market commentary should adverse events and circumstances begin to appear. The Board receives an annual report on internal controls in operation at BNPPSS (Fund Administration, Global and Local Custody, Middle Office Functions and Collateralized Loan Obligations) and would be made aware promptly of any compliance failings and how they are remediated. On an annual basis the Board reviews the quality of the service received by BNP Depositary and Custodian and discusses any issues.
Reliance on service providers to manage and control certain features of the portfolio The investment portfolio contains certain assets and liabilities (that are not present in most investment trusts) that require specific procedures and internal controls to be present for the Company, as follows: The Company invests in secured loans which are individually documented and require additional systems and controls to manage. The Company uses forward foreign exchange contracts to hedge currency exposure and may use future interest rate agreements to manage interest rate risk which require specialised reports to be produced to monitor net risks. The Company has borrowed funds and given covenants to the lender regarding certain ratios which require monitoring to ensure they are met.	The Board receives a regular report on net income earned to date and a projection of net income to the end of the year. The Board uses this to obtain comfort that the portfolio and its risks are being managed as intended. It also receives a monthly investment limits and restrictions schedule that confirms that the Manager has complied with the Board set investment limits and restrictions each month that includes borrowing covenants. On a quarterly basis the Board receives and reviews detailed reports with Janus Henderson including: - balance sheet - income statement - asset listing including purchases and sales - revenue forecast - gross and net currency position

COVID-19 IMPACT

The Board have assessed how the COVID-19 pandemic may impact the Company's principal market and operational risks and concluded that the Company is remarkably resilient to these risks.

EMERGING RISKS

The Board have defined emerging risks as "known unknowns" and have concluded that the existing principal market and operational risks capture sufficiently the risks faced by the Company.

VIABILITY STATEMENT

The Company seeks to provide shareholders with income and capital growth such that the total return on the net asset value of the Company exceeds the average return on a rolling annual basis of three month sterling LIBOR + 2%. The Board aims to achieve this by pursuing the Company's business model and strategy through its investment objective and policy. It is proposed that the investment objective and policy will be amended (subject to the approval of shareholders at the 2021 AGM) so that the Company's objective is instead to seek a sustainable level of annual income and capital gains consistent with seeking to reduce the risk of capital losses, by investing in a diversified portfolio of global fixed income and floating rate asset classes. The current investment objective and policy and the proposed new investment objective and policy are set out in full above.

The Board will continue to consider and assess how it can adapt the business model and strategy of the Company to ensure its long-term viability in relation to the principal risks as detailed above.

In assessing the viability of the Company, the Board also considers the prospects of the Company including the liquidity of the portfolio (which is mainly invested in readily realisable listed securities), the level of borrowings (which are restricted), the closed-ended nature as an investment company (therefore there are no liquidity issues arising from unexpected redemptions) and a low ongoing charge (0.93% for the year ended 30 April 2021 (2020: 0.89%)). The Company retains title to all assets held by the Custodian under the terms of the formal agreement with the Depositary, cash is held with approved banks and revenue and expenditure forecasts are reviewed monthly by the Board.

The Board therefore believes it is appropriate to assess the Company's viability over a three-year period, taking account of the Company's current position and the assessment factors detailed above.

When assessing the viability of the Company over the next three years the directors have considered its ability to meet liabilities as they fall due. This included consideration of the principal risks as set out above, covenant levels on the loan facility, the cash flow forecast to meet dividend flow and liquidity of the portfolio.

The directors continue to support the Fund Managers investment strategy.

The directors consider the COVID-19 pandemic to have highlighted the advantages of holding an investment trust. The directors do not envisage that any change in strategy or investment objective, or any events, would prevent the Company from continuing to operate over the next three years as the Company's assets are liquid, its commitments are limited, and the Company intends to continue to operate as an investment trust. The Board takes comfort in the robustness of the Company's position, performance, liquidity and the well-diversified portfolio designed by the Fund Managers. The Board is confident that the Company is well equipped to navigate this uncertain inflationary environment and therefore has a reasonable expectation that the Company will continue in operation and meet its liabilities as they fall due up to and including the year ended 30 April 2024.

RELATED PARTY TRANSACTIONS

The Company's transactions with related parties in the year were with the directors and the Manager. 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 remuneration for which there were no outstanding amounts payable at the year end. Directors' Interests in Shares are disclosed in the Directors' Remuneration Report. In relation to the provision of services by the Manager (other than fees payable by the Company in the ordinary course of business and the facilitation of marketing activities with third parties) there have been no material transactions with the Manager affecting the financial position or performance of the Company during the year under review. More details on Transactions with the Manager, including amounts outstanding at the year end, are given in Note 23 to the financial statements within the Annual Report.

The directors confirm that in accordance with Listing Rule 9.8.4(7) there are no further disclosures that need to be made in this regard.

DIRECTORS STATEMENT OF RESPONSIBILITIES

Each of the directors confirm that to the best of his/her knowledge:

● the Company's financial statements, which have been prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006 and, as regards the financial statements, International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union, give a true and fair view of

the assets, liabilities, financial position and profit of the Company; and

● the Strategic Report 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

Angus Macpherson

Chairman

5 July 2021

 

STATEMENT OF COMPREHENSIVE INCOME

	Year ended 30 April 2021			Year ended 30 April 2020
	Revenue return £'000	Capital return £'000	Total £'000	Revenue return £'000	Capital return £'000	Total £'000
Gains on investments at fair value through profit or loss	-	13,530	13,530	-	1,683	1,683
Losses on foreign exchange transactions at fair value through profit or loss	-	(58)	(58)	-	(4,514)	(4,514)
Investment income (note 3)	10,035	-	10,035	9,548	-	9,548
Other operating income (note 4)	10	-	10	11	-	11
	----------	----------	--------	----------	----------	--------
Total income	10,045	13,472	23,517	9,559	(2,831)	6,728
	----------	----------	---------	----------	----------	--------
Expenses
Management fee (note 5)	(566)	(565)	(1,131)	(535)	(534)	(1,069)
Other expenses	(476)	-	(476)	(414)	-	(414)
	----------	----------	--------	----------	----------	--------
Profit before finance costs and taxation	9,003	12,907	21,910	8,610	(3,365)	5,245
Finance costs	(166)	(166)	(332)	(233)	(232)	(465)
	----------	----------	--------	----------	----------	--------
Profit before taxation	8,837	12,741	21,578	8,377	(3,597)	4,780
Taxation (note 6)	(22)	-	(22)	(5)	-	(5)
	----------	----------	--------	----------	----------	--------
Profit after taxation	8,815	12,741	21,556	8,372	(3,597)	4,775
	=====	======	=====	=====	======	=====
Earnings/(loss) per ordinary share (note 7)	4.61p	6.66p	11.27p	4.40p	(1.89p)	2.51p
	======	======	======	======	======	====

The total columns of this statement represents the Statement of Comprehensive Income, prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006 and, as regards the financial statements, International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. The Company had no other comprehensive income. The profit after taxation is also the total comprehensive income for the year.

STATEMENT OF CHANGES IN EQUITY

		Year ended 30 April 2021
	Called-up share capital £'000	Capital redemption reserve £'000	Share premium £'000	Distributable reserve £'000	Capital reserve £'000	Revenue reserve £'000	Total £'000
Total equity at 1 May 2020	1,913	-	1,576	165,533	(8,742)	2,344	162,624
Total comprehensive income:
Profit after taxation	-	-	-	-	12,741	8,815	21,556
Transactions with owners, recorded directly to equity:
Cost of buy-back of shares (note 9)	(1)	1	-	-	(42)	-	(42)
Dividends (note 8)	-	-	-	-	-	(8,418)	(8,418)
	--------	--------	-----------	-----------	---------	---------	----------
Total equity at 30 April 2021	1,912	1	1,576	165,533	3,957	2,741	175,720
	=====	=====	======	=======	======	=====	======

		Year ended 30 April 2020
	Called-up share capital £'000	Capital redemption reserve £'000	Share premium £'000	Distributable reserve £'000	Capital reserve £'000	Revenue reserve £'000	Total £'000
Total equity at 1 May 2019	1,896	-	-	165,533	(5,145)	2,334	164,618
Total comprehensive income:
Profit after taxation	-	-	-	-	(3,597)	8,372	4,775
Transactions with owners, recorded directly to equity:
Proceeds from issue of shares (note 9)	17	-	1,576	-	-	-	1,593
Dividends (note 8)	-	-	-	-	-	(8,362)	(8,362)
	--------	--------	-----------	-----------	---------	---------	----------
Total equity at 30 April 2020	1,913	-	1,576	165,533	(8,742)	2,344	162,624
	=====	======	======	=======	======	=====	======

STATEMENT OF FINANCIAL POSITION

	At 30 April 2021 £'000	At 30 April 2020 £'000
Non current assets
Investments at fair value through profit or loss	202,152	187,645
Current assets
Other receivables	5,464	6,127
Cash and cash equivalents	4,197	3,735
	----------	----------
	9,661	9,862
	----------	----------
Total assets	211,813	197,507
	-----------	----------
Current liabilities
Other payables	(10,031)	(2,248)
Bank loan	(26,062)	(32,635)
	----------	----------
Total assets less current liabilities	175,720	162,624
	======	======
Net assets	175,720	162,624
	======	======
Equity attributable to equity shareholders
Called-up share capital	1,912	1,913
Capital redemption reserve	1	-
Share premium (note 10)	1,576	1,576
Distributable reserve	165,533	165,533
Capital reserve	3,957	(8,742)
Revenue reserve	2,741	2,344
	----------	----------
Total equity	175,720	162,624
	======	======
Net asset value per ordinary share (note 11)	91.87p	85.00p
	======	======

STATEMENT OF CASH FLOWS

	Year ended 30 April 2021 £'000	Year ended 30 April 2020 £'000
Operating activities
Net profit before tax	21,578	4,780
Interest payable	332	465
Gains on investments at fair value through profit or loss	(13,530)	(1,683)
Losses on foreign exchange transactions at fair value through profit or loss	58	4,514
Net receipts/(payments) on settlement of forward foreign exchange contracts	13,965	(8,849)
Net payments on credit default swaps	(46)	(1,573)
Increase in prepayments and accrued income	(9)	(19)
(Decrease)/increase in other creditors	(7)	7
Purchases of investments	(92,980)	(92,690)
Sales of investments	85,747	91,120
	----------	----------
Net cash inflow/(outflow) from operating activities before  finance costs1	15,108	(3,928)
	----------	----------
Interest paid	(343)	(452)
Taxation paid on investment income	(22)	(5)
	----------	----------
Net cash inflow/(outflow) from operating activities	14,743	(4,385)
	----------	----------
Financing activities
Equity dividends paid	(8,418)	(8,362)
Issue of ordinary shares	-	1,593
Buy-back of ordinary shares	(42)	-
Drawdown of bank overdraft	548	317
(Repayment)/drawdown of loans	(6,573)	14,108
	----------	----------
Net cash (outflow)/inflow from financing activities	(14,485)	7,656
	-----------	----------
Increase in cash and cash equivalents	258	3,271
	----------	----------
Cash and cash equivalents at start of year	3,735	525
Exchange movements	204	(61)
	----------	----------
Cash and cash equivalents at 30 April	4,197	3,735
	======	======

1Cash inflow from interest income was £8,888,000 (2020: £9,302,000) and cash inflow from dividends was £264,000 (2020: £264,000)

 

NOTES TO THE FINANCIAL STATEMENTS

1.  General information

The Company was incorporated on 23 February 2017. On 26 April 2017, the Directors of its predecessor company, Henderson Diversified Income Limited (predecessor company), placed the Jersey domiciled company into a Jersey Summary Winding Up and transferred the shareholdings and assets and liabilities of the predecessor company to the Company. The Company is a registered investment company incorporated and domiciled in the United Kingdom under the Companies Act 2006.

2. 

a)  Basis of preparation

The financial statements have been prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006 and, as regards the financial statements, International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union (IFRSs). 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 IFRS Interpretations Committee (IFRS IC) that remain in effect, to the extent that IFRSs have been adopted by the European Union.

b)  Going concern

The financial statements have been prepared on a going concern basis and on the historical cost basis, except for the revaluation of certain financial instruments held at fair value through profit or loss. The principal accounting policies adopted are set out in full in the Annual Report. These policies have been applied consistently throughout the year. Where presentational guidance set out in the Statement of Recommended Practice (SORP) for investment trusts issued by the Association of Investment Companies (AIC) in October 2019 is consistent with the requirements of IFRSs, the Directors have sought to prepare the financial statements on a basis consistent with the recommendations of the SORP.

The directors have considered the impact of COVID-19, including cash flow forecasting, a review of covenant compliance including the headroom above the most restrictive covenants and an assessment of the liquidity of the portfolio. They have concluded that they are able to meet their financial obligations, including the repayment of the bank loans, as they fall due for a period of at least twelve months from the date of issuance. 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.  Investment income

	2021 £'000	2020 £'000
Income from investments:
Dividend income	264	264
Bond and loan interest	8,532	8,831
Premiums on credit default swaps	1,239	453
	----------	----------
	10,035	9,548
	----------	----------

4.  Other operating income

		2021 £'000	2020 £'000
Bank and other interest		10	11
		----	----
		10	11
		----	----

5.  Management fee

		2021		2020
	Revenue return £'000	Capital return £'000	Total £'000	Revenue return £'000	Capital return £'000	Total £'000
Investment management fee	566	565	1,131	535	534	1,069
	-------	-------	--------	-------	-------	--------

A summary of the terms of the management agreement are given in the Annual Report.

6.  Taxation

In the opinion of the directors, the Company has complied with the requirements of Section 1158 and Section 1159 of the Corporation Tax Act 2010 and will therefore be exempt from corporation tax on any capital gains reflected in the capital return during the year. The Company has elected to designate all of the proposed and paid dividends as an interest distribution to its shareholders. This distribution is treated as a tax deduction against taxable income in the revenue return and results in a reduction of corporation tax being payable by the Company at 30 April 2021.

The standard rate of corporation tax in the UK was 19% for the year. However, the tax charge in the current year was lower than the standard effective tax rate, largely due to the reduction in corporation tax from the interest distribution noted above. The effect of this and other items affecting the tax charge is shown in note 6b) below.

 

a) Analysis of charge in the year

		2021		2020
	Revenue return £'000	Capital return £'000	Total £'000	Revenue return £'000	Capital return £'000	Total £'000
Current tax:
Overseas withholding tax	22	-	22	5	-	5
	-------	-------	--------	-------	-------	--------
Total tax charge for the year	22	-	22	5	-	5
	====	====	====	====	====	====

b) Factors affecting the current tax charge for the year

	2021			2020
	Revenue return £'000	Capital return £'000	Total £'000	Revenue return £'000	Capital return £'000	Total £'000
Net return before taxation	8,837	12,741	21,578	8,377	(3,597)	4,780
UK corporation tax charge at 19%	1,679	2,421	4,100	1,592	(683)	909
Effects of:
UK dividends	(50)	-	(50)	(50)	-	(50)
Currency (gains)/losses	-	(2,692)	(2,692)	-	1,693	1,693
Realised/unrealised losses/(gains) on investments	-	132	132	-	(1,155)	(1,155)
Income being paid as interest distribution	(1,549)	-	(1,549)	(1,592)	-	(1,592)
(Utilised)/excess management expenses and loan relationships	(80)	139	59	50	145	195
Irrecoverable overseas withholding tax	22	-	22	5	-	5
	-------	-------	--------	-------	-------	--------
Total tax charge for the year	22	-	22	5	-	5
	====	====	====	====	====	====

c) Provision for deferred taxation

No provision for deferred taxation has been made in the current or previous year.

The Company has not provided for deferred taxation on capital gains or losses arising on the revaluation of investments as it is exempt from tax on these items because of its status as an investment trust company, which it intends to maintain for the foreseeable future.

The Company has not recognised a deferred tax asset totalling £803,000 (2020: £744,000) based on the prospective corporation tax rate of 19%. The deferred tax asset arises as a result of having unutilised management expenses and unutilised non-trade loan relationship deficits. These expenses will only be utilised, to any material extent, if the Company has profits chargeable to corporation tax in the future because changes are made either to the tax treatment of the capital gains made by investment trusts or to the Company's investment profile which require them to be used.

d) Factors that may affect future tax charges

With effect from 1 April 2023 the prospective corporation tax rate on which this is based will increase to 25%.

This change has not been substantively enacted at year end and therefore does not change the value at which the deferred tax asset that has not been recognised has been disclosed.

7.  Earnings/(loss) per ordinary share

The total earnings per ordinary share figure is based on the net profit attributable to the ordinary shares of £21,556,000 and on 191,312,174 ordinary shares (2020: £4,775,000 on 190,017,557 ordinary shares) being the weighted average number of ordinary shares in issue during the year.

The total earnings can be further analysed as follows:

	2021 £'000	2020 £'000
Revenue profit	8,815	8,372
Capital gain/(loss)	12,741	(3,597)
	----------	----------
Profit for the year	21,556	4,775
	======	======
Weighted average number of ordinary shares	191,312,174	190,017,557
Revenue earnings per ordinary share	4.61p	4.40p
Capital earnings per ordinary share	6.66p	(1.89p)
	----------	----------
Earnings per ordinary share	11.27p	2.51p
	======	======

The Company does not have any dilutive securities therefore basic and diluted earnings are the same.

 

8. Dividends

Dividends on ordinary shares	Record date	Payment date	2021 £'000	2020 £'000
Fourth interim divided (1.10p) for the year ended 30 April 2020 (2019 - 1.10p)	5 June 2020	30 June 2020	2,104	2,086
First interim dividend (1.10p) for the year ended 30 April 2021 (2020 - 1.10p)	4 September 2020	30 September 2020	2,105	2,086
Second interim dividend (1.10p) for the year ended 30 April 2021 (2020 - 1.10p)	4 December 2020	31 December 2020	2,104	2,086
Third interim dividend (1.10p) for the year ended 30 April 2021 (2020 - 1.10p)	5 March 2021	31 March 2021	2,105	2,104
			--------	--------
			8,418	8,362
			--------	--------

The fourth interim dividend has not been included as a liability in these financial statements as it was announced and paid after 30 April 2021.

	For the year ended 30 April 2021 £'000	For the year ended 30 April 2020 £'000
Revenue available for distribution by way of dividends	8,815	8,372
First interim dividend	(2,105)	(2,086)
Second interim dividend	(2,104)	(2,086)
Third interim dividend	(2,105)	(2,104)
Fourth interim dividend	(2,104)	(2,104)
	--------	--------
	397	(8)
	--------	--------

9. Share capital

	2021
	Number of shares entitled to dividend	Total number of shares	Nominal value of shares £'000
Ordinary shares of 1p each
At start of year	191,318,240	191,318,240	1,913
Buy-back of shares	(51,207)	(51,207)	(1)
	----------------	----------------	----------------
Closing balance at 30 April	191,267,033	191,267,033	1,912
	----------------	----------------	----------------
	2020
	Number of shares entitled to dividend	Total number of shares	Nominal value of shares £'000
Ordinary shares of 1p each
At start of year	189,618,240	189,618,240	1,896
Issue of shares	1,700,000	1,700,000	1,700
	----------------	----------------	----------------
Closing balance at 30 April	191,318,240	191,318,240	1,913
	----------------	-----------------	----------------

During the year to 30 April 2021 51,207 ordinary shares were bought back at a cost of £42,000 (2020: 1,700,000 ordinary shares were issued for proceeds of £1,593,000). On 30 June 2021 a further 1,210,000 ordinary shares were bought back at a cost of £1,031,000.

The holders of ordinary shares are entitled to all the capital growth in the Company and all the income from the Company that is resolved by the directors to be distributed. Each shareholder present at a general meeting has one vote on a show of hands and on a poll every member present in person or by proxy has one vote for each share held.

10. Share premium account

	2021 £'000	2020 £'000
At start of year	1,576	-
Issue of shares	-	1,576
	======	======
At 30 April	1,576	1,576
	======	======

11. Net asset value per ordinary share

The net asset value per ordinary share is based on the net asset value attributable to ordinary shareholders at 30 April 2021 of £175,720,000 (2020: £162,624,000) and on 191,267,033 (2020: 191,318,240) ordinary shares, being the number of ordinary shares in issue at the year end.

12. Subsequent events

On 30 June 2021, the Company re-purchased 1,210,000 shares for cancellation at a price of 85.00p per share. Following the above purchase, the Company's issued ordinary share capital was 190,057,033 ordinary shares of 1p each. No shares are held in Treasury. Therefore, the total number of voting rights in the Company is 190,057,033.

The directors have evaluated the period since the year end and have not noted any other subsequent events.

13. 2021 Financial information

The figures and financial information for the year ended 30 April 2021 are extracted from the Company's Annual Report and financial statements for that year and do not constitute statutory financial statements for that year. The Company's Annual Report and financial statements includes the Independent Auditor's Report which is unqualified and does not contain a statement under either Section 498(2) or Section 498(3) of the Companies Act 2006.  The Company's Annual Report and financial statements for the year ended 30 April 2021 have not yet been delivered to the Registrar of Companies.

14. 2020 Financial information

The figures and financial information for the year ended 30 April 2020 are extracted from the Company's Annual Report and financial statements for that year and do not constitute statutory financial statements for that period. The Company's Annual Report and financial statements for the year ended 30 April 2020 have been audited and delivered to the Registrar of Companies. The Independent Auditors' Report on the 2020 financial statements was unqualified and did not contain any statements under sections 498(2) and 498(3) of the Companies Act 2006.

15. Annual Report and Annual General Meeting

Copies of the Company's Annual Report and financial statements for the year ended 30 April 2021 and the Notice of Annual General Meeting 2021 will be posted to shareholders in mid-July 2021 and will be available thereafter on the Company's website www.hendersondiversifiedincome.com or you can request a copy from the Corporate Secretary [e-mail].  

Given the level of uncertainty surrounding the Delta variant of the virus, and the potential delay this could continue to cause to the UK Government's lifting of restrictions, the Board has taken the decision at this time to restrict attendance at this year's AGM to a small number of attendees comprising only the required quorum and anyone else whose attendance is necessary for the conduct of the meeting. The AGM will take place at 11.00am on Thursday, 16 September 2021 at 201 Bishopsgate, London EC2M 3AE.

The Board therefore invite shareholders to attend a webinar presentation this year using the conferencing software Zoom which will take place at 11.00am on Thursday, 9 September 2021. This will allow you to be present for the usual presentation from your Fund Managers, John Pattullo and Jenna Barnard, and will enable you to ask questions and debate with your Fund Managers and Board.

To attend the webinar presentation please register in advance at this link, entering your shareholder details: https://jhi.zoom.us/webinar/register/WN_-1sgh5K7RVWHd69oWmjGIQ.

You will then receive a dedicated invitation to join the webinar.

For further information please contact:

James de Sausmarez

Director and Head of Investment Trusts

Janus Henderson Investors

Telephone: [phone]

Laura Thomas

PR Manager

Janus Henderson 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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