Half Yearly Report

RNS Number : 3525N
Henderson Diversified Income Ltd
09 June 2010
 



9 June 2010

This announcement contains regulated information.

 

HENDERSON DIVERSIFIED INCOME LIMITED

 

Unaudited Results for the half year ended 30 April 2010

 

Interim Management Report

 

Extracts from the Chairman's Statement

 

I am pleased to report that the recovery in markets that we enjoyed in the second half of last year has continued in the first six months of this year with a rise in the net asset value per ordinary share of 11.4% from 74.4p to 82.9p per ordinary share.  We continued our incremental policy of switching from industrial investment grade bonds into high yield and financial bonds where there is a greater potential for capital appreciation and running yields are high. Despite three month sterling LIBOR remaining low and finishing the period at 0.68%, our income target of 1.25% over three month sterling LIBOR continues to be comfortably exceeded and at the period end the yield on the ordinary shares was an impressive 5.95%.

 

Performance

 

The net asset value total return per ordinary share for the six month period under review was 13.5% whilst the share price total return per ordinary share was 12.5%. This reflected a small widening of the discount over the period from 6.6% to 6.8%. Income earnings per share were almost exactly in line with the previous six months at 2.3p reflecting the stability in the level of three month sterling LIBOR.

 

Dividends and Dividend Policy

 

On 31 December 2009 a fourth interim dividend of 1.25p per share for the year ended 31 October 2009 was paid. In this financial year, your Board paid a first interim dividend of 1.15p per share on 31 March 2010, and has declared a second interim also of 1.15p per share which will be paid on 30 June 2010.

 

Material Events or Transactions during the Period

 

Over the six months under review, the allocation to investment grade bonds was marginally reduced from 31% to 26% whilst high yield bonds rose from 17% to 21% as we continued our policy of recycling cash out of bonds that have performed well, and where capital appreciation is limited by their high government bond sensitivity, into bonds where there is a greater potential for capital appreciation due to declining credit risk and a large yield cushion against government bond yields. Given the modest rally in the gilt market towards the end of the period, we also sold a few more futures contracts and in doing so effectively shortened the duration (interest rate risk) of the portfolio, offsetting the longer dated investment grade holdings that display sensitivity to the gilt market.

 

Prices of European secured loans have continued to recover over the past six months.  The positive momentum in the market has resulted from discounted loans being redeemed early at par through high yield bond and new loan issuance, as well as IPO activity which has led to partial loan repayments and improved margins on the remaining debt.  Proceeds from these repayments have been invested in discounted assets which we would expect to rally to par over time. Gearing, after adjusting for cash held, was reduced slightly from 15.4% to around 13.1% at the period end. In addition, the further gearing provided by exposure to credit default swaps was reduced from £10.7m to £5.3m (7.7% of net assets). Further details are given in the Managers' Report.

 

 

 

- MORE -



HENDERSON DIVERSIFIED INCOME LIMITED

 

Unaudited Results for the half year ended 30 April 2010

 

Interim Management Report (continued)

Extracts from the Chairman's Statement (continued)

 

Related Party Transactions

 

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

 

Outlook, risks and uncertainties

 

We continue to favour credit risk over interest rate risk and will sustain the shorter interest rate risk sensitivity in the portfolio. Bond markets remain vulnerable to the fragility of Greece's sovereign solvency and those of other Southern European states. Corporate default expectations continue to fall, justifying our high yield exposure; however, these sovereign concerns will likely persist and therefore remain a potential source of volatility as does the uncertainty surrounding the extent of measures which the UK's emergency UK Budget on 22 June 2010 will bring. Whilst we have seen stability in the level of three month sterling LIBOR over the last twelve months, it is our belief that interest rates have bottomed and that any increase in rates should lead to higher dividends for shareholders over time.

 

Paul Manduca

Chairman

 

9 June 2010

 

Directors' Responsibility Statement

 

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

 

(a)        the set of financial statements has been prepared in accordance with the Accounting Standards Board's statement 'Half-Yearly Financial Reports';

(b)        the Interim Management Report includes a fair review of the information required by Disclosure and Transparency Rule 4.2.7R (indication of important events during the six month period and description of principal risks and uncertainties for the remaining six months of the year); and

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

 

Paul Manduca

Chairman

 

9 June 2010

 

Summary of Portfolio

 

 

%

Secured Loans

53

Investment Grade Bonds

26

High Yield Bonds

21

 

--------

 

100

 

- MORE -


 

HENDERSON DIVERSIFIED INCOME LIMITED

 

Unaudited Results for the half year ended 30 April 2010

 

Consolidated Income Statement

      for the half year ended 30 April 2010

 


(Unaudited)

Half year ended 30 April 2010

(Unaudited)

Half year ended 30 April 2009

(Audited)

Year ended 31 October 2009


Revenue

return

£'000

Capital

return

£'000

 

Total

£'000

Revenue return

£'000

Capital return £'000

 

Total

£'000

Revenue

return

£'000

Capital return

£'000

 

Total

£'000

 

Gains/(losses) on investments designated as fair value through profit or  loss

 

 

 

-

 

 

 

6,904

 

 

 

6,904

 

 

 

-

 

 

 

(1,468)

 

 

 

(1,468)

 

 

 

-

 

 

 

16,661

 

 

 

16,661

Gains/(losses) on foreign exchange transactions

 

-

 

447

 

447

 

-

 

(4,688)

 

(4,688)

 

-

 

(4,226)

 

(4,226)

Investment income

2,420

-

2,420

3,005

-

3,005

5,381

-

5,381

Other income

1

_______

-

_______

1

______

24

_______

-

_______

24

______

26

_______

-

_______

26

_______

Total income/(loss)

2,421

_______

7,351

_______

9,772

______

3,029

_______

(6,156)

_______

(3,127)

______

5,407

_______

12,435

_______

17,842

_______











Expenses










Management fee

(141)

(141)

(282)

(88)

(89)

(177)

(215)

(216)

(431)

Other expenses

(279)

_______

-

_______

(279)

______

(290)

_______

-

_______

(290)

______

(560)

_______

-

_______

(560)

_______

Profit/(loss) before finance costs and taxation

 

2,001

 

7,210

 

9,211

 

2,651

 

(6,245)

 

(3,594)

 

4,632

 

12,219

 

16,851











Finance costs

(54)

_______

(54)

_______

(108)

______

(56)

_______

(56)

_______

(112)

______

(107)

_______

(106)

_______

(213)

_______

Profit/(loss) before taxation

1,947

7,156

9,103

2,595

(6,301)

(3,706)

4,525

12,113

16,638

Taxation

-

_______

-

_______

-

______

(7)

_______

-

_______

(7)

______

-

_______

-

_______

-

_______

Profit/(loss) for the period

1,947

_______

7,156

_______

9,103

______

2,588

_______

(6,301)

_______

(3,713)

______

4,525

_______

12,113

_______

16,638

_______











Earnings/(loss) per ordinary share (note 3)

 

2.33p

_______

 

8.55p

_______

 

10.88p

______

 

3.09p

_______

 

(7.53)p

_______

 

(4.44)p

______

 

5.41p

_______

 

14.48p

_______

 

19.89p

_______

 

 

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

 

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

 

The notes on pages 7 and 8 form an integral part of this condensed interim financial information.

 

 

 

 

- MORE -



HENDERSON DIVERSIFIED INCOME LIMITED

 

Unaudited Results for the half year ended 30 April 2010

 

 

Consolidated Statement of Changes in Equity

for the half year ended 30 April 2010

 


(Unaudited)

Half year ended 30 April 2010


Stated

capital

Distributable reserve

Capital reserves

Revenue reserve

 

Total


£'000

£'000

£'000

£'000

£'000







Balance at 31 October 2009

37,677

39,832

(16,414)

1,141

62,236







Net profit from ordinary activities after taxation

 

-

 

-

 

7,156

 

1,947

 

9,103







Dividends paid  (note 5)

-

-

-

(2,008)

(2,008)


----------

----------

----------

----------

----------

At 30 April 2010

37,677

39,832

(9,258)

1,080

69,331


======

======

======

======

======

 


(Unaudited)

Half year ended 30 April 2009


Stated

capital

Distributable

reserve

Capital reserves

Revenue reserve

 

Total


£'000

£'000

£'000

£'000

£'000







Balance at 31 October 2008

37,677

39,832

(28,527)

1,718

50,700







Net (loss)/profit from ordinary activities after taxation

 

-

 

-

 

(6,301)

 

2,588

 

(3,713)







Dividends paid (note 5)

-

-

-

(3,137)

(3,137)


----------

----------

----------

----------

----------

At 30 April 2009

37,677

39,832

(34,828)

1,169

43,850


======

======

======

======

======

 


(Audited)

Year ended 31 October 2009


Stated

capital

Distributable

reserve

Capital reserves

Revenue reserve

 

Total


£'000

£'000

£'000

£'000

£'000







Balance at 31 October 2008

37,677

39,832

(28,527)

1,718

50,700







Net profit from ordinary activities after taxation

 

-

 

-

 

12,113

 

4,525

 

16,638

Dividends paid (note 5)

-

-

-

(5,102)

(5,102)


----------

----------

----------

----------

----------

At 31 October 2009

37,677

39,832

(16,414)

1,141

62,236


======

======

======

======

======













 

The notes on pages 7 and 8 form an integral part of this condensed interim financial information.

 

 

- MORE -



HENDERSON DIVERSIFIED INCOME LIMITED

 

Unaudited Results for the half year ended 30 April 2010

 

 

Consolidated Balance Sheet

as at 30 April 2010

 


(Unaudited)

30 April

(Unaudited)

30 April

(Audited)

31 October


2010

2009

2009


£'000

£'000

£'000





Non current assets




Investments designated as fair value through profit or loss

 

77,851

 

48,911

 

69,537


---------

----------

---------





Current assets




Other receivables

2,491

1,991

4,489

Cash and cash equivalents

1,995

201

492


---------

-----------

-----------


4,486

2,192

4,981


---------

-----------

-----------





Total assets

82,337

51,103

74,518


---------

-----------

-----------

Current liabilities




Other payables

(13,006)

(7,253)

(12,282)


---------

-----------

-----------













Net assets

69,331

43,850

62,236


======

======

======





Capital and reserves




Stated capital

37,677

37,677

37,677

Distributable reserve

39,832

39,832

39,832

Retained earnings:




       Capital reserves

(9,258)

(34,828)

(16,414)

       Revenue reserve

1,080

1,169

1,141


---------

-----------

-----------

Total equity

69,331

43,850

62,236


======

======

======





Net asset value per ordinary share

(note 4)

82.89p

52.43p

74.41p


======

======

======





 

 

The notes on pages 7 and 8 form an integral part of this condensed interim financial information.

 

 

- MORE -



 

HENDERSON DIVERSIFIED INCOME LIMITED

 

Unaudited Results for the half year ended 30 April 2010

 

 

Consolidated Cash Flow Statement

for the half year ended 30 April 2010

 


(Unaudited)

Half year

ended

30 April

2010

(Unaudited)

Half year

ended

30 April

2009

(Audited)

Year

ended

31 October  2009


£'000

£'000

£'000





Net gain/(loss) before taxation

9,103

(3,706)

16,638

Add back interest paid

108

112

213

(Less)/add: (gains)/losses on investments held at fair value

through profit or loss

 

(7,351)

 

6,156

 

(12,435)

Less: exchange movements on forward exchange

contracts taken to revenue

 

-

 

-

 

(12)

Increase in prepayments and accrued income

(155)

(125)

(61)

Decrease in other receivables

-

174

143

Increase/(decrease) in other payables

244

(122)

(167)

Net (purchases)/sales of investments

(476)

8,093

4,468

Decrease in sales settlement debtor

852

1,707

946

Decrease in purchase settlement creditor

(848)

(2,665)

(770)


---------

---------

---------

Net cash inflow from operating activities before

finance costs

 

1,477

 

9,624

 

8,963

Interest paid

(108)

(112)

(213)

Taxation on investment income

(11)

(4)

(12)


---------

---------

---------

Net cash inflow from operating activities

1,358

9,508

8,738


---------

---------

---------

Financing activities




Equity dividends paid

(2,008)

(3,137)

(5,102)

Drawdown/(repayment) of loan

1,013

(1,061)

2,322


---------

---------

---------

Net cash outflow from financing

(995)

(4,198)

(2,780)


---------

---------

---------

Increase in cash and cash equivalents

363

5,310

5,958

Exchange movements

1,140

(6,056)

(6,413)


---------

---------

---------

Movement in cash and cash equivalents during the period

 

1,503

 

(746)

 

(455)

Cash and cash equivalents at the start of the period

492

947

947


---------

---------

---------

Cash and cash equivalents at the end of the period

1,995

201

492


======

======

======





 

The notes on pages 7 and 8 form an integral part of this condensed interim financial information.

 

- MORE -


HENDERSON DIVERSIFIED INCOME LIMITED

 

Unaudited Results for the half year ended 30 April 2010

 

Notes to the Consolidated Interim Financial Information:

 

1.

General Information


The entity is a closed-ended company, registered as a no par value company under the Companies (Jersey) Law 1991, with its shares listed on the London Stock Exchange.  The Company was incorporated on 5 June 2007. 



2.

Accounting Policies: Basis of Preparation


This condensed interim financial information has been prepared using the same accounting policies as set out in the Company's Financial Statements for the year ended 31 October 2009 and in accordance with International Accounting Standards (IAS) 34 Interim Financial Reporting. The consolidated financial information comprises the financial information of Henderson Diversified Income Limited ('the Company') and its subsidiary undertaking Henderson Diversified Income (Luxembourg) S.à.r.l. ('the Group').




The condensed interim financial information has not been audited or reviewed by the Company's auditors.

 

3.

Earnings per ordinary share


The earnings per ordinary share is based on the net profit after taxation of £9,103,000 (half year ended 30 April 2009: loss of £3,713,000; year ended 31 October 2009: profit of £16,638,000) and on 83,640,877 (83,640,877: half year ended 30 April 2009; 83,640,877: year ended 31 October 2009) ordinary shares, being the weighted average number of ordinary shares in issue during each of the periods.




The earnings per ordinary share detailed above can be further analysed between revenue and capital, as below:

 

 

 

(Unaudited)

(Unaudited)

(Audited)

 

 

Half year ended

30 April 2010

Half year

ended 

30 April 2009

Year

ended

31 October 2009

 

 

£'000

£'000

£'000

 

Net revenue gain

1,947

2,588

4,525

 

Net capital gain/(loss)

7,156

(6,301)

12,113

 


---------

---------

---------

 

Net total gain/(loss)

9,103

(3,713)

16,638

 


=====

=====

=====

 

Weighted average number of ordinary shares

in issue during the period

 

83,640,877

 

83,640,877

 

83,640,877






 


Pence

Pence

Pence

 

Revenue earnings per ordinary share

2.33

3.09

5.41

 

Capital gain/(loss) per ordinary share

8.55

(7.53)

14.48

 


---------

---------

---------

 

Total gain/(loss) per ordinary share

10.88

(4.44)

19.89

 


=====

=====

=====

 

 

-     MORE -

 

 

HENDERSON DIVERSIFIED INCOME LIMITED

 

Unaudited Results for the half year ended 30 April 2010

 

Notes to the Consolidated Interim Financial Information:

 

 

4.

Net Asset Value per ordinary share


The basic net asset value per ordinary share is based on a net asset value of £69,331,000 (30 April 2009: £43,850,000; 31 October 2009: £62,236,000) and on 83,640,877 (30 April 2009: 83,640,877; 31 October 2009: 83,640,877) ordinary shares, being the number of ordinary shares in issue at each period end.



5.

Dividends paid


The fourth interim dividend of 1.25p per share in respect of the year ended 31 October 2009 was paid on 31 December 2009.

 

A first interim dividend of 1.15p per share was paid on 31 March 2010.  The second interim dividend of 1.15p per share was declared on 28 May 2010 and will be paid on 30 June 2010 to shareholders on the register on 11 June 2010.  The shares were quoted ex-dividend on 9 June 2010.  The cost of this dividend will be £962,000 based on the number of shares in issue at the ex-dividend date.



6.

Going Concern


The Directors believe that it is appropriate to adopt the going concern basis in preparing the financial statements. The assets of the Company consists mainly of securities that are readily realisable and, accordingly, the company has adequate financial resources to continue in operational existence for the foreseeable future.



7.

Half Year Report


The Half year report will be posted to shareholders on 18 June 2010 and copies will be available on the Company's website (www.hendersondiversifiedincome.com) or in hard copy format from the Company's registered office, Liberté House, 19-23 La Motte Street, St Helier, Jersey, JE2 4SY

 

 

 

- ENDS -

 

 

For further information please contact:

 

John Pattullo and Jenna Barnard, Portfolio Managers, Henderson Global Investors

Telephone: 020 7818 4770

 

James de Sausmarez

Head of Investment Trusts, Henderson Global Investors

Telephone: 020 7818 3349

 

Sarah Gibbons-Cook

Investor Relations and PR Manager, Henderson Global Investors

Telephone: 020 7818 3198

 

Jeremy Hamon

Company Secretary, BNP Paribas Securities Services Fund Administration Limited

Telephone: 01534 709108

 


This information is provided by RNS
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