Final Results

RNS Number : 3411H

Henderson Far East Income Limited

03 November 2008

 



3 November 2008

This announcement contains regulated information.

HENDERSON FAR EAST INCOME LIMITED 

Annual Financial Report for the year ended 31 August 2008

	31 August 2008	31 August 2007	% change
Net asset value
ordinary share	261.69p	268.91p	-2.7
Market price
ordinary share	238.25p	257.75p	-7.6
Revenue earnings
ordinary share	15.67p	12.98p	+20.7

MANAGEMENT REPORT

Extracts from the Chairman's Statement 

The last twelve months have been turbulent and volatile for all global stock markets with consequential falls in stock market values. Against this background, I am pleased to report that the net asset value total return on your shares over the year under review was positive and dividends have continued to grow. Your Board remains confident that it will again pay a dividend of not less than 12.0p for the current financial year.

Performance

I am pleased to report that revenues continued to be strong with net revenue after taxation of £12,168,000 and revenue earnings per share of 15.67p compared to 12.98p in the previous period. In the year under review, the net asset value total return was 1.8% whilst the share price total return was -3.3%, reflecting a widening of the discount to net asset value. This compares favourably with the FTSE All World Asia Pacific ex Japan Index which returned -5.3% on a total return basis.

Dividends

A fourth interim dividend of 3.0p has been declared making a total of 12.0p for the year. This represents a year on year increase of 9.1%. Although market conditions are challenging Asian companies generally have strong cash flows and therefore the ability to raise payout ratios. Your Board remains confident that it will again pay a dividend of not less than 12.0p for the current financial year.

Gearing

Your Board has taken a cautious approach to gearing in the past year and not used its powers to gear the Company. This approach has been rewarded; however, going forward your Board will continue to monitor the situation and will introduce and actively manage gearing if we believe that it will enhance returns for shareholders. Gearing is only considered in capital terms and is not required for income generation purposes.

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HENDERSON FAR EAST INCOME LIMITED 

Annual Financial Report for the year ended 31 August 2008

MANAGEMENT REPORT (continued)

Extracts from the Chairman's Statement (continued)

Outlook

We shall be maintaining the cautious stance that we have adopted over the last year as we continue to believe that Asian stock markets will be affected by the global economic crisis. However, the exceptional volatility in markets is presenting attractive opportunities and we shall be adding selectively to the portfolio where we feel valuations are compelling. In particular our focus will remain on domestic Asia, where we see the prospect of sustained growth, and away from sectors and companies that are exposed to the global cycle. Our long term view of the Asian markets remains extremely positive.

Savings

Your Company aims to be an investment of choice for those looking to build an income portfolio. Investments can be made cost effectively through Itshenderson, our Manager's investment service for private investors.  

Annual General Meeting

The Annual General Meeting will be held at noon on Tuesday 9 December 2008 at  Liberte House, 19-23 La Motte Street, St Helier, Jersey JE2 4SY and shareholders are most welcome to attend. In addition, an open presentation to shareholders will be held at 3pm on Thursday 11 December 2008 at Henderson's new offices at 201 Bishopsgate, London EC2 where the Manager will make an investment presentation and I shall be happy to answer questions.

John Russell

Chairman

3 November 2008

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HENDERSON FAR EAST INCOME LIMITED 

Annual Financial Report for the year ended 31 August 2008

MANAGEMENT REPORT (continued)

Principal Risks and Uncertainties

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 risks as far as practicable. The principal risks which have been identified and the steps taken by the Board to mitigate these are as follows:

• Investment and Strategy

An inappropriate investment strategy, for example, in terms of asset allocation or level of gearing, may result in under performance against the companies in the peer group, and also in the Company's shares trading on a wider discount. The Board manages these risks by ensuring a diversification of investments and a regular review of the extent of borrowings. The Manager operates in accordance with an investment limits and restrictions policy determined by the Board, which includes limits on the extent to which borrowings may be employed. The Board review the limits and restrictions on a regular basis and the Manager confirms adherence to them every month. The Manager provides the Board with management information, including performance data and reports and shareholder analyses. The Directors monitor the implementation and results of the investment process with the Portfolio Manager at each Board meeting and monitor risk factors in respect of the portfolio. Investment strategy is reviewed at each meeting.

• Market

Market risk arises from uncertainty about the future prices of the Company's investments. This is commented on in the Annual Report.

• Accounting, legal and regulatory

The Company must comply with the provisions of the Companies (Jersey) Law, 1991 and since its shares are listed on the London Stock Exchange, the UKLA's Listing and Disclosure Rules. The Company must also ensure compliance with the listing rules of the New Zealand Stock Exchange. A breach of company law could result in the Company and/or the Directors being fined or the subject of criminal proceedings and financial and reputational damage. A breach of the UKLA Rules could result in the suspension of the Company's shares. The Board relies on its Company Secretary and advisers to ensure adherence to company law and UKLA and New Zealand Stock Exchange Rules.

• Corporate governance and shareholder relations

Details of the Company's compliance with corporate governance best practice, including information on shareholder relations, are set out in the Corporate Governance Statement in the Annual Report.

• Operational

Disruption to, or the failure of, the Manager's or the Administrator's accounting, dealing or payment systems or the Custodian's records could prevent the accurate reporting or monitoring of the Company's financial position. The Administrator, BNP Paribas Fund Services Jersey Limited sub-contracts some of the operational functions (principally relating to trade processing, investment administration and accounting) to BNP Paribas Fund Services UK Limited. Details of how the Board monitors the services provided by the Manager and other suppliers, and the key elements designed to provide effective internal control, are explained further in the internal control section of the Corporate Governance Statement in the Annual Report. 

• Financial

The financial risks faced by the Company include market price risk, interest rate risk, liability risk and credit risk. Further details are disclosed in the notes to the Annual Report. Additional disclosures are provided this year for the first time in accordance with IFRS 7: Financial Instruments: Disclosures.

Related Party Transactions 

The contracts with Henderson and BNP are the only related party transactions currently in place. There have been no material transactions with these related parties which have affected the financial position or performance of the Company in the financial year.

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HENDERSON FAR EAST INCOME LIMITED 

Annual Financial Report for the year ended 31 August 2008

MANAGEMENT REPORT (Continued)

Statement under Disclosure and Transparency Rules

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

a)        the financial statements, prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group; and

b)       this Annual Report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that they face.

For and on behalf of the Board

C P Spencer

Director

3 November 2008

Twenty Largest Holdings

These twenty investments total £114,510,000 representing 56.5% by value of the total investments. 

Name of Investment	Country	Value  £'000
Santos	Australia	7,271
High Tech Computer *	Taiwan	6,633
DBS Group	Singapore	6,483
Hang Seng Bank	Hong Kong	6,424
Telstra Corporation	Australia	6,271
Bank of China	China	6,073
Petrochina	China	6,020
Philippine Long Distance Telephone	Philippines	6,002
Taiwan Mobile	Taiwan	5,868
Woolworths	Australia	5,679
BOC Hong Kong Holdings	Hong Kong	5,648
Far Eastone Telecommunications	Taiwan	5,602
QBE Insurance Group	Australia	5,521
Singapore Press	Singapore	5,351
Delta Electronics	Taiwan	5,313
Keppel Corp	Singapore	5,044
Sino Land	Hong Kong	4,925
Kasikornbank	Thailand	4,866
China Mobile	China	4,815
Singapore Technologies Engineering	Singapore	4,701

* value adjusted for call  options  written

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HENDERSON FAR EAST INCOME LIMITED 

Annual Financial Report for the year ended 31 August 2008

Consolidated Income Statement 

for the year ended 31 August 2008

				Period 6 November 2006
	Year ended 31 August 2008			to 31 August 2007
	Revenue  return	Capital  return	Total	Revenue  return	Capital  return	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Investment income (note 2)	12,127	-	12,127	11,808	-	11,808
Other income (note 3)	2,278	-	2,278	434	-	434
(Losses)/gains on investments held at fair value through profit or loss	-	(7,271)	(7,271)	-	23,330	23,330
	---------	-----------	-----------	---------	---------	---------
Total income	14,405	(7,271)	7,134	12,242	23,330	35,572
	---------	-----------	-----------	---------	---------	---------
Expenses
Management fees	(984)	(984)	(1,968)	(599)	(599)	(1,198)
Other expenses	(325)	(225)	(550)	(206)	(169)	(375)
	---------	-----------	-----------	---------	---------	---------
Profit/(loss) before finance costs and taxation	13,096	(8,480)	4,616	11,437	22,562	33,999
Finance costs	(50)	(17)	(67)	(79)	(66)	(145)
	---------	-----------	-----------	---------	---------	---------
Profit/(loss) before taxation	13,046	(8,497)	4,549	11,358	22,496	33,854
Taxation	(878)	(152)	(1,030)	(1,282)	(36)	(1,318)
	---------	-----------	-----------	---------	---------	---------
Profit/(loss) for the year/ period	12,168	(8,649)	3,519	10,076	22,460	32,536
	=====	======	=======	=====	=====	=====
Earnings/ (loss) per ordinary share  (note 4)	15.67p	(11.14)p	4.53p	12.98p	28.94p	41.92p
	=====	======	======	=====	=====	=====

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

All items in the above statement derive from continuing operations.

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

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HENDERSON FAR EAST INCOME LIMITED 

Annual Financial Report for the year ended 31 August 2008

Consolidated and Parent Company Statement of Changes in Equity

for the year ended 31 August 2008

	Stated Capital	Distributable reserve	Other capital reserves	Revenue reserve	Total
Consolidated year ended 31 August 2008	£'000	£'000	£'000	£'000	£'000
Balance at 31 August 2007	-	180,471	22,460	5,806	208,737
Net (loss)/profit from ordinary activities after taxation	-	-	(8,649)	12,168	3,519
Ordinary dividends paid (note 5)	-	-	-	(9,122)	(9,122)
	---------	---------	---------	---------	---------
At 31 August 2008	-	180,471	13,811	8,852	203,134
	=====	=====	=====	=====	=====
	Stated capital	Distributable reserve	Other capital reserves	Revenue reserve	Total
Consolidated period 6 November 2006 to 31 August 2007	£'000	£'000	£'000	£'000	£'000
Opening balance	-	-	-	-	-
Issue of shares	180,982	-	-	-	180,982
Share issue costs	(499)	(12)	-	-	(511)
Transfer to distributable reserves	(180,483)	180,483	-	-	-
Net profit from ordinary activities after taxation	-	-	22,460	10,076	32,536
Ordinary dividends paid (note 5)	-	-	-	(4,270)	(4,270)
	--------	--------	----------	----------	--------
At 31 August 2007	-	180,471	22,460	5,806	208,737
	=====	=====	======	======	=====

	Stated Capital	Distributable reserve	Other capital reserves	Revenue reserve	Total
Company year ended 31 August 2008	£'000	£'000	£'000	£'000	£'000
Balance at 31 August 2007	-	180,471	24,098	4,168	208,737
Net (loss)/profit from ordinary activities after taxation	-	-	(10,016)	13,535	3,519
Ordinary dividends paid (note 5)	-	-	-	(9,122)	(9,122)
	---------	---------	---------	---------	---------
At 31 August 2008	-	180,471	14,082	8,581	203,134
	=====	=====	=====	=====	=====
	Stated capital	Distributable reserve	Other capital reserves	Revenue reserve	Total
Company period 6 November 2006 to 31 August 2007	£'000	£'000	£'000	£'000	£'000
Opening balance	-	-	-	-	-
Issue of shares	180,982	-	-	-	180,982
Share issue costs	(499)	(12)	-	-	(511)
Transfer to distributable reserves	(180,483)	180,483	-	-	-
Net profit from ordinary activities after taxation	-	-	24,098	8,438	32,536
Ordinary dividends paid (note 5)	-	-	-	(4,270)	(4,270)
	--------	--------	----------	----------	--------
At 31 August 2007	-	180,471	24,098	4,168	208,737
	=====	=====	======	======	=====

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HENDERSON FAR EAST INCOME LIMITED 

 Annual Financial Report for the year ended 31 August 2008

Consolidated and Parent Company Balance Sheet

at 31 August 2008

	Consolidated 2008 £'000	Consolidated 2007 £'000	Company 2008 £'000	Company 2007 £'000
Non current assets
Investments held at fair value through profit or loss	198,137	199,414	198,952	143,433
	----------	----------	----------	----------
Current assets
Other receivables	7,400	6,722	7,285	61,262
Deferred tax asset	-	152	-	-
Cash and cash equivalents	8,894	17,657	8,891	16,614
	----------	----------	----------	----------
	16,294	24,531	16,176	77,876
	----------	----------	----------	----------
Total assets	214,431	223,945	215,128	221,309
	======	======	======	======
Current liabilities
Other payables	(7,743)	(10,147)	(8,440)	(7,733)
Bank loans and overdrafts	(3,554)	(5,061)	(3,554)	(4,839)
	----------	----------	----------	----------
	(11,297)	(15,208)	(11,994)	(12,572)
	----------	----------	----------	----------
Net assets	203,134	208,737	203,134	208,737
	======	======	======	======
Equity attributable to equity shareholders
Stated capital (note 7)	-	-	-	-
Distributable reserve	180,471	180,471	180,471	180,471
Retained earnings:
Other capital reserves	13,811	22,460	14,082	24,098
Revenue reserve	8,852	5,806	8,581	4,168
	----------	----------	----------	----------
Total equity	203,134	208,737	203,134	208,737
	======	======	======	======
Net asset value per ordinary share (note 6)	261.69p	268.91p	261.69p	268.91p
	======	======	======	======

The financial statements were approved by the Board of Directors and authorised for issue on 3 November 2008 and were signed on its behalf by:

David Edward Peter Mashiter        Christopher Paul Spencer

Director                                              Director

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HENDERSON FAR EAST INCOME LIMITED 

Annual Financial Report for the year ended 31 August 2008

Consolidated and Parent Company Cash Flow Statement

for the year ended 31 August 2008

	Consolidated 2008 £'000	Consolidated 2007 £'000	Company 2008 £'000	Company 2007 £'000
Operating activities
Profit before taxation	4,549	33,854	4,222	32,816
Add back interest paid	73	139	38	126
Add loss/(gains) on investments held at fair value through profit or loss	7,271	(23,330)	8,790	(24,556)
Less purchases of investments held at fair value through profit or loss	(6,058)	(175,534)	(67,563)	(118,520)
In specie transfer of securities in consideration for shares issued	-	178,200	-	178,200
(Increase)/decrease in other receivables	(185)	(1,942)	2,524	(4,649)
Increase in amounts due from brokers	(474)	(4,072)	(474)	(4,072)
Increase in other payables	1	451	12	436
Unrealised losses on foreign exchange contracts	-	47	-	23
(Decrease)/increase in amounts due to brokers	(2,404)	9,034	(593)	7,223
Capital distribution  from subsidiary	-	-	2,862	-
Scrip dividends included in investment income	(216)	(303)	(216)	(303)
	----------	----------	----------	----------
Net cash inflow/(outflow) from operating activities before interest and taxation	2,557	16,544	(50,398)	66,724
Interest paid	(73)	(139)	(38)	(126)
Taxation on investment income	(933)	(1,332)	(719)	(612)
	----------	----------	----------	----------
Net cash inflow/(outflow) from operating activities	1,551	15,073	(51,155)	65,986
	======	======	======	======
Financing activies
Equity dividends paid	(9,122)	(4,270)	(9,122)	(4,270)
(Repayment)/drawdown of loan	(2,236)	2,236	(2,236)	2,236
Issue proceeds	-	2,544	-	2,544
Issue costs	-	(504)	-	(504)
Movement in inter-company loan	-	-	53,231	(51,927)
	----------	----------	----------	----------
Net cash (outflow)/inflow from financing	(11,358)	6	41,873	(51,921)
	======	======	======	======
(Decrease)/increase in cash and cash equivalents	(9,807)	15,079	(9,282)	14,065
Cash and cash equivalents at the start of the year/period	14,832	-	14,011	-
Exchange movements	315	(247)	608	(54)
	----------	----------	----------	----------
Cash and cash equivalents at the end of the year/period (including bank overdrafts of £3,554 and £3,554 (2007: £2,825 and £2,603 respectively)	5,340	14,832	5,337	14,011
	======	======	======	======

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HENDERSON FAR EAST INCOME LIMITED 

Annual Financial Report for the year ended 31 August 2008

Notes:

1.	Accounting Policies
	Basis of preparation
	This consolidated financial information for the year ended 31 August 2008 has been prepared in accordance with International Financial Reporting Standards ('IFRS'). 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 International Accounting Standards Committee ('IASC') that remain in effect, to the extent that IFRS have been adopted. The principal accounting policies adopted are set out below. Where consistent with IFRS the financial statements have also been prepared in accordance with the guidance set out in the Statement of Recommended Practice ('SORP') for Investment Companies issued by the Association of Investment Companies ('AIC') as revised in December 2005. The Company has adopted the following new and revised accounting standards during the year: International Accounting Standard No. 1 (Revised): Presentation of financial statements International Financial Reporting Standard No. 7, Financial Instruments: Disclosures.
2.	Investment Income
					2008		Period 6 Nov 2006 to 31 August 2007
					£'000		£'000
	Income from investments
	Overseas dividends				11,873		11,465
					---------		---------
	Interest income				38		40
	Stock dividends				216		303
					---------		---------
					12,127		11,808
					======		======
3.	Other income
				2008			Period 6 Nov 2006 to 31 August 2007
				£'000			£'000
	Bank and other interest			224			124
	Option premium income			2,054			310
				-------			-------
				2,278			434
				======			======
4.	Earnings per ordinary share
	The earnings per ordinary share figure is based on the net gains for the period of £3,519,000 (2007: £32,536,000) and on 77,622,621 (2007: 77,622,621) being the weighted average number of ordinary shares in issue.
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4.	Earnings per ordinary share (continued)
	The earnings per ordinary share figure detailed above can be further analysed between revenue and capital, as below.
	The Company has no securities in issue that could dilute the return per ordinary share. Therefore the basic and diluted earnings per ordinary share are the same.
				2008			Period 6 Nov 2006 to 31 August 2007
				£'000			£'000
	Net revenue gain			12,168			10,076
	Net capital (loss)/gain			(8,649)			22,460
				-------			-------
	Net total gain			3,519			32,536
				======			======
	Weighted average number of ordinary shares in issue during the period			77,622,621			77,622,621
	Revenue earnings per ordinary share			15.67p			12.98p
	Capital (loss)/earnings per ordinary share			(11.14)p			28.94p
				-------			-------
	Total earnings per ordinary share			4.53p			41.92p
				======			======
5.	Dividends
				2008			Period 6 Nov 2006 to 31 August 2007
				£'000			£'000
	Amounts recognised as distributions to equity shareholders during the period:
	First interim paid 2007 - 2.75p			-			2,135
	Second interim paid 2007 - 2.75p			-			2,135
	Third interim paid 2007 - 2.75p			2,135			-
	First interim paid 2008 - 3.00p			2,329			-
	Second interim paid 2008 - 3.00p			2,329			-
	Third interim paid 2008 - 3.00p			2,329			-
				-------			-------
				9,122			4,270
				======			======
	The fourth interim dividend has not been included as a liability in these financial statements as it was announced and paid after 31 August 2008. - MORE - -11 - HENDERSON FAR EAST INCOME LIMITED  Annual Financial Report for the year ended 31 August 2008
5.	Dividends (continued)
	The table below sets out the total dividends paid and to be paid in respect of the financial period. The revenue available for distribution by way of dividend for the period is £12,168,000 (2007: £10,076,000).
				2008
				£'000
	First interim dividend for 2008 - 3.00p			2,329
	Second interim dividend for 2008 - 3.00p			2,329
	Third interim dividend for 2008 - 3.00p			2,329
	Fourth interim dividend for 2008 - 3.00p			2,329
	(payable 28 November 2008)
				-------
				9,316
				======
6.	Net asset value per share
	The basic net asset value per Ordinary share and the net asset values attributable to Ordinary Shareholders at the period end calculated in accordance with the Articles of Association were were follows:
		Net asset value per share 2008 pence	Net asset value attributable 2008 £'000			Net asset value per share 2007 pence		Net asset value attributable 2007 £'000
	Ordinary shares	261.69p	203,134			268.91p		208,737
		======	======			======		======
	The basic net asset value per Ordinary share is based on 77,622,621 (2007: 77,622,621) Ordinary shares, being the number of Ordinary shares in issue.
7.	Called-up share capital
				Authorised			Issued and fully paid
	At 31 August 2008 and 2007 Founder shares of no par value			2			-
	Ordinary shares of no par value			Unlimited			77,622,621
							-------
							77,622,621
							======
	On 15 December 2006 the Company issued 77,622,621 Ordinary shares of no par value for consideration value of £180,982,000, incurring £511,000 of issue expenses.
8.	2008 Financial information
	The figures and financial information for the year ended 31 August 2008 are compiled from an extract of the latest accounts and do not constitute statutory accounts. These accounts included the report of the auditors which was unqualified.
9.	2007 Financial information
	The figures and financial information for the period ended 31 August 2007 are compiled from an extract of the latest published accounts and do not constitute the statutory accounts for that period.
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10.	Annual Report
	The Annual Report and Accounts will be posted to shareholders on 7 November 2008 and copies will be available on the Company's website (www.hendersonfareastincome.com/) or in hard copy format from the Company's registered office, BNP House, Anley Street, St Helier, Jersey, JE2 3QE
	For further information please contact:
	Mike Kerley
	Portfolio Manager, Henderson Far East Income Limited
	Telephone: [phone]
	James de Sausmarez
	Head of Investment Trusts, Henderson Global Investors
	Telephone: [phone]
	Sarah Gibbons-Cook
	Investor Relations and PR Manager, Henderson Global Investors
	Telephone: [phone]
	Jeremy Hamon
	BNP Paribas Fund Services Jersey Limited, Company Secretary
	Telephone: [phone]

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