Final Results

RNS Number : 1439R

Henderson Intl. Income Trust PLC

22 October 2013

 



22 October 2013                                                                                                                

HENDERSON INTERNATIONAL INCOME TRUST PLC

Annual Financial Report for the year ended 31 August 2013

This announcement contains regulated information

FINANCIAL HIGHLIGHTS

	31 August 2013	31 August 2012
Net asset value per ordinary share (basic)	111.9p	97.2p
Net asset value per ordinary share (diluted)	110.2p	97.2p
Market price per ordinary share	114.1p	100.5p
Premium (basic)	2.0%	3.4%
Premium (diluted)	3.5%	3.4%
Subscription share price	16.0p	7.5p
Dividend per ordinary share in respect of the year/period	4.05p	5.40p*

DIVIDENDS IN RESPECT OF EARNINGS FOR THE YEAR TO 31 August 2013
Payment date	Record date	Ex-dividend date	Amount per Ordinary share
28 February 2013	8 February 2013	6 February 2013	1.00p
31 May 2013	10 May 2013	8 May 2013	1.00p
30 August 2013	9 August 2013	7 August 2013	1.00p
29 November 2013	15 November 2013	13 November 2013	1.05p
			4.05p

PERFORMANCE

	12 months to 31 August 2013		Period to 31 August 2012
Net asset value per ordinary share total return (basic) (1)	19.4%		4.0%
Net asset value per ordinary share total return (diluted) (1)	17.6%		4.0%
Ordinary share price total return (basic) (1)	17.7%		5.4%
Revenue return per ordinary share (basic)	4.57p		6.08p
Capital return/(loss) per ordinary share (basic)	13.62p		(2.23)p
Total return per ordinary share (basic)	18.19p		3.85p
Total return per ordinary share (diluted)	17.88p		3.85p
MSCI World ex UK Index (sterling adjusted) (2)	22.0%		0.9%

Source: (1) FundData (2) Datastream

Total return assumes net dividends are reinvested and excludes transaction costs

*The ordinary and subscription shares were listed on the London Stock Exchange on 28 April 2011 following the incorporation of the Company on 2 March 2011.

CHAIRMAN'S STATEMENT

Performance and Markets

During the year to 31 August 2013 the return on the Net Asset Value ('NAV') per ordinary share (on a total return basis) was 19.4% whilst the Company's return on the ordinary share price (on the same basis) was 17.7%. The diluted NAV total return per ordinary share, which accounts for the subscription shares in issue, was 17.6%. These returns compare to a total return of 22.0% in the MSCI World ex UK Index (sterling adjusted).

During the first half of the Company's year the stabilisation of economic growth in the United States and China, coupled with announcements by policy makers in the European Central Bank ('ECB'), Japan and the UK increased investor confidence and supported a broad based market rally for most equity markets around the world. More recently there has been a significant divergence in developed and emerging equity markets as the developed economies' growth has continued to improve, whilst the growth of some key emerging market economies such as China, India and Brazil has slowed. Against this background the Company has performed robustly delivering good capital gains and providing a constant dividend. The bias of the portfolio towards the US and Europe has helped it avoid the worst of the emerging market disruption, but it has not been immune and the Company's returns have lagged the benchmark index in the second half of the year.

Since the Company's launch in April 2011 the Portfolio Manager has had to negotiate a variety of difficult market conditions, ranging from the first US debt ceiling debate shortly after launch to numerous Eurozone bailouts, and has used the flexible nature of the Company's mandate to take advantage of disruption in markets to enhance returns to investors. The Portfolio Manager continues to react to market conditions as they arise and the current disruptions are likely to offer further opportunities to invest in companies where the quality of the underlying business is not reflected in the share price.

Share Issue

The Company's ordinary share price has traded at a premium to NAV per ordinary share throughout the year. The average premium has been 4.6% (against a sector average discount of 4.0%). We finished the year at a 2.0% premium. The Board believes that the Company's consistent premium since launch in April 2011 is a reflection of the strength of its international (non-UK) mandate and the track record of capital and income returns that the Company is establishing.

The Company has continued to widen its investor base and increase its total size as opportunities have arisen throughout the year to issue shares for cash. We have therefore taken advantage of on-going demand from investors to issue 4,253,050 ordinary shares during the year and a further 450,000 ordinary shares since the year end at an average premium to diluted NAV of 4.2%.

Proposed 'C' Share Issue

Your Board continues to believe it is in the interests of all shareholders that the Company widens its investor base and increases its size as opportunities arise. This should lead to improved liquidity of the shares and will also spread the fixed costs over a wider shareholder base. The continuing demand for the Company's shares has been such that on occasion, the Company has almost exhausted the limits of its ability to issue ordinary shares. As a result the Board has announced that, following market soundings, it will produce a prospectus to make a substantive non-dilutive issue of new ordinary shares in the form of 'C' shares. The Board and Manager believe the potential returns available from the Company's strategy and the income investment opportunities available around the world are compelling. The 'C' share issue is scheduled to be marketed and completed by early November 2013.

Earnings & Dividends

In respect of earnings for the year to 31 August 2013 the Company has paid three interim dividends of 1.0p per ordinary share during the year and a fourth interim dividend of 1.05p per ordinary share will be paid on 29 November 2013 to shareholders on the Register of Members on 15 November 2013, the ex-dividend date is 13 November 2013. Given the earnings growth being produced by the portfolio, in the absence of an adverse change in economic conditions, the Board expects to increase the dividend to be paid during the year to 31 August 2014 by 5%. The revenue reserve has increased from £697,000 at 31 August 2012 to £954,000 at the year end to underpin future dividend payments.

The Board hopes to bring forward future dividend payments so that the quarterly dividend in respect of the period ended 30 November 2013 would be paid in January 2014 following which it is expected that dividends will be paid on or about 31 January, 30 April, 31 July and 31 October in each year.

Gearing

The Portfolio Manager believes that gearing will enhance returns to shareholders. The Board's current policy is to permit gearing up to 20% of net assets at the time of drawdown or investment as appropriate. Borrowings for these purposes include implied gearing through the use of derivatives.

To date the Company has utilised its overdraft facility on a bottom up basis to invest in specific stock opportunities. At 31 August 2013 the Company had an overdraft with HSBC of £7,783,000 (2012: £160,000). The gearing at the year end was 11.1%.

Discount Control

Your Board's aim is for our share price to reflect closely its underlying NAV, enjoy low volatility, and for there to be a liquid market in our shares. There is a distinct limit to the Board's ability to influence the premium or discount to NAV, so we believe it is not in shareholders' interests to have a specific issuance and buy-back policy. Whilst we believe it sensible to retain flexibility we will consider issuance and or buy-backs within a narrow band relative to NAV where appropriate and subject to market conditions.

Ongoing Charges

The ongoing charge for the Company, as calculated in accordance with the Association of Investment Companies ('AIC') methodology is 1.39% for the year to 31 August 2013 (period to 31 August 2012: 1.38%). No performance fee is payable for the year (period to 31 August 2012: nil).

Your Board and the Manager believe that the unique nature of the Company, as the only international income investment trust that invests exclusively outside the UK, together with the impact of the implementation of the Retail Distribution Review, will make the Company's shares attractive to a much wider retail audience. Furthermore, with effect from 1 November 2013 the management fee has been reduced from 0.80% to 0.75% of net assets.  Further details can be found in the Report of the Directors.

Annual General Meeting

The third AGM of the Company will be held at 2:30pm on Wednesday, 18 December 2013 at the Registered Office, 201 Bishopsgate, London EC2M 3AE. The Notice of Meeting and the resolutions to be proposed are set out in a separate document which accompanies the Annual Report. The Directors welcome Shareholders' attendance at the meeting and recommend shareholders support the resolutions to be proposed. Ben Lofthouse, the Portfolio Manager, will give a presentation to the meeting which will be followed by light refreshments.

Outlook

The Company's portfolio is well positioned to deliver its income objective in the current environment.

Whilst economic growth is recovering, the Board and Manager are aware that it is supported by very low interest rate and policies around the world, and it is hard to predict the impact of rising rates. It is in this environment that the policy of the Company remains so relevant: we invest in a diversified mix of companies across geographies and sectors with an investment process that is flexible enough to react to changing market conditions as they arise.

The Board and the Manager would like to take this opportunity to thank investors who have supported the Company at launch and over the last two years. We will do our best to continue to meet their needs over the coming years.

Christopher Jonas, CBE

Chairman

22 October 2013

STATEMENT OF DIRECTORS' RESPONSIBILITIES

In accordance with Disclosure and Transparency Rule 4.1.12, the Directors confirm to the best of their knowledge that:

(a) the financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), give a true and fair view of the assets, liabilities, financial position and profit of the Company; and

(b) the Directors' Report in the Annual Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

For and on behalf of the Board

Christopher Jonas, CBE

Chairman

22 October 2013

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 these 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 activity and performance

An inappropriate investment strategy (for example, in terms of asset allocation or the level of gearing) may result in underperformance against the Company's benchmark index and the companies in its peer group. The Board monitors investment performance at each Board meeting and regularly reviews the extent of its borrowings when in use.

• Portfolio and market

Although the Company invests almost entirely in securities that are quoted on recognised markets, share prices may move rapidly. The companies in which investments are made may operate unsuccessfully, or fail entirely. A fall in the market value of the Company's portfolio would have an adverse effect on Shareholders' funds. The Board reviews the portfolio each meeting and mitigates risk through diversification of investments in the portfolio.

• Accounting, Legal and Regulatory

A breach of section 1158 of the Corporation Tax Act 2010 could lead to a loss of investment trust status, resulting in capital gains realised within the portfolio being subject to corporation tax. A breach of the UKLA Listing Rules could result in suspension of the Company's shares, while a breach of the Companies Act 2006 could lead to criminal proceedings, or financial or reputational damage. The Manager is contracted to provide investment, company secretarial, administration and accounting services through qualified professionals.

The Board receives internal control reports produced by the Manager on a quarterly basis, which confirm regulatory compliance, in addition to monthly investment limits and restrictions schedules and annual reviews.

• Operational Disruption

Disruption to, or failure of, the Manager's accounting, dealing or payment systems or the custodian's records could prevent the accurate reporting and monitoring of the Company's financial position. The Company is also exposed to the operational risk that one or more of its suppliers may not provide the required level of service. Details of how the Board monitors the services provided by the Manager and its 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 within the Annual Report.

By its nature as an investment trust, the Company's business activities are exposed to market risk (including price risk, currency risk and interest rate risk), liquidity risk and credit and counterparty risk. Details of these risks and how they are managed are contained in the notes in the Annual Report.

Related party transactions

The provision of investment management, accounting, company secretarial and administration services has been outsourced to Henderson Global Investors Limited ('Henderson' or the 'Manager'). Other than the relationship between the Company and its Directors, the provision of services by Henderson is the only related party arrangement currently in place.  Other than fees payable by the Company in the ordinary course of business, there have been no material transactions with this related party which have affected the financial position or performance of the Company in the financial year.

PORTFOLIO MANAGER'S REPORT

Review of period

The portfolio delivered strong returns over the period, generating a total return of 19.4 per cent. (NAV per ordinary share (basic)) whilst continuing to deliver the Company's income objective.

The portfolio has continued to generate healthy income returns, with dividend growth generally meeting or exceeding expectations. The Company's income is generated across a diverse range of sectors and regions to reduce the risk of any one sector or company affecting it significantly. In general the strongest dividend growth has come from holdings in the US which are benefiting from improving economic growth and very low debt financing costs. These include holdings in General Electric and United Parcels Services which generated double digit dividend increases. The portfolio's European and Asian holdings have generated more subdued dividend growth, but this should change as their economies stabilise and they continue to reduce borrowings. Some large sectors, in particular the banking sector, are still recovering from the financial crisis and have considerable potential to increase pay-out ratios in the coming years. The underlying dividend growth of the portfolio's holdings over the last year has been approximately 10%.

The strong capital returns delivered by the Company and its benchmark mask what has been a relatively difficult period for investors across a number of asset classes. Until relatively recently Emerging Markets were considered the main driver of global economic growth and investment flows reflected this across a number of asset classes, including equities, commodities and fixed income. A confluence of events ranging from improved economic growth in the US, 'Abenomics' in Japan, and a slowdown in the economic growth of a number of the 'BRICs' countries (Brazil, Russia, India, China) has resulted in a marked divergence between asset class returns and a change in equity market leadership from emerging to developed market companies. The accompanying move in the US 10 year bond yield from the lows of 1.5% in 2012 towards 3% in a relatively short period has also caused disruption in the bond and currency markets.

The primary driver of equity markets over the last year has been the stabilisation of economic growth and moderation of concerns regarding the Eurozone and accordingly some of the portfolio's strongest performers have been European companies with exposure to domestic growth, such as mail and logistics company Deutsche Post, German media company RTL and insurer Delta Lloyd. The portfolio returns have also benefited from a pick-up in corporate activity over the last twelve months and two of the portfolio's holdings, Fraser & Neave and NYSE Euronext, were acquired by competitors at considerable premiums to their prevailing share prices in the market. Although equity markets have been strong, underlying economic growth is still below long term trends and operating conditions remain difficult. The biggest single detractor to performance during the period at a stock level was Asian food conglomerate CP Foods, whose animal food stocks were significantly impacted by an outbreak of disease. Another weak performer was IT company Digital China, one of the leading IT distributors in China. The slowdown in Chinese growth has affected sales causing the company to miss forecasts. In both cases the positions have been maintained as the longer term outlook for their businesses remains good.

Whilst the Company's total returns have been strong, they are slightly behind that of the index during the period. The most significant contributors and detractors to returns consisted of the following positions:

Prinicipal contributors	Sector	12 month absolute return%	*Relative Contribution %
RTL Group	Consumer Services	35.2	0.7
Deutsche Post	Industrials	57.4	0.7
SK Telecom	Telecommunications	64.3	0.6
Myer Holdings	Consumer Services	32.9	0.5
Och-Ziff	Financials	57.1	0.4

Principal detractors	Sector	12 month absolute return%	*Relative Contribution %
Ambev de Bebidas	Consumer Goods	-2.5	-0.5
CCR	Industrials	-14.1	-0.5
Statoil	Oil & Gas	-7. 9	-0.5
Digital China	Technology	-26.4	-0.6
Charoen Pokphand Foods	Consumer Goods	-29.7	-0.7

*Contribution to the Company's performance relative to the Benchmark

On a geographical basis the overweight position in European listed companies has been a strong positive contributor to performance, as the European portfolio has outperformed the MSCI World ex-UK Index over the period. Elsewhere asset allocation has not been as successful as the overweight position in Asia excluding Japan and the holdings in Brazilian companies drinks manufacturer Ambev and toll road operator CCR were impacted by the emerging market sell-off in the second half of the year. Whilst the long term outlook for the emerging market companies held in the portfolio is still intact, in the short term they have been detrimental to performance. In addition to this, two of the strongest performing markets over the last twelve months have been Japan and the US where the portfolio is underweight despite our positive view on the latter. Both of these markets are lower yielding markets.

Given the Company's income objective we have found it hard to find suitable investment opportunities in Japan that we considered had the combination of dividend yield, valuation and growth opportunities that we look for in investments. In the short term this has impacted performance versus the benchmark as the Japanese market has been one of the strongest markets globally due to government policy action.

The Company has increased its gearing from 0% to 11.1% over the year to take advantage of low equity valuations and low interest rates. This has been a significant contributor to performance, adding approximately 1% to the total return over the twelve months. The use and rationale for this gearing is explained further in the following section on activity.

Activity and Positioning

Over the year a combination of valuation considerations and improving developed market economic fundamentals prompted the investment team to reduce exposure to some of the portfolio's more defensive companies. A number of high yielding but slower growing 'bond proxies' in the portfolio that had performed strongly since we launched, were sold to take advantage of market dislocation to add to companies more exposed to economic recovery, or in the case of Europe, signs of economic stabilisation. This has led to a reduction in the telecommunications sectors, where positions in Australian telecommunications company Telstra, and Philippines Long Distance Telephone were sold, and the consumer goods sector via the sale of Asian conglomerate Fraser & Neave, which was sold after a sustained bidding war for its brewing and property assets. Malaysian car parts manufacturer UMW was sold after performing well. The proceeds of the sales were reinvested in opportunities where we saw greater dividend and capital growth potential. These included Singaporean oil rig manufacturer Keppel, whose order book is benefiting from continued deep sea oil exploration around the world, and Canadian rewards scheme operator Aimia, where we reacted quickly to contract announcements that imply better future growth than the market had factored in. The weighting in the technology sector has also been increased with the additions of Microsoft and Taiwanese circuit manufacturer United Microelectronics to take advantage of low valuations and subdued growth expectations for two companies which we believe can generate stronger earnings growth than the market is anticipating.

The Company has a flexible investment mandate that allows it to react to investment opportunities as they arise, and we took advantage of this to significantly increase the portfolio's exposure to European equities over the year from under 30% at the start of the year to 44% at the year-end.  The decision to increase exposure was driven by the low valuations and attractive dividend yields of many European companies compared to both history and other equity markets, coupled with the ECB's more supportive stance towards addressing potential sovereign funding issues. The Company invests in a focused portfolio driven by a combination of regional asset allocation combined with bottom up stock selection. The decision to increase the European exposure was executed by increasing the size of a number of existing positions where, in our opinion, the market was undervaluing the underlying businesses, particularly the sustainability of their cash flows and dividend streams. Positions added to included property REIT Eurocommerical, which was trading at a significant discount to the value of its assets, oil rig operator Seadrill which has significant earnings growth over the next few years as its oil rig fleet increases in size, and Deutsche Post, which after many years of perpetual restructuring is now seeing the benefits of greater focus on cash generation, and a pick-up in e-commerce parcels volumes in its German postal network. New positions were also initiated in a range of domestically focused Northern European companies such as: Swedish banking group Swedbank, which increased its dividend by over 80% this year post approval from the regulator on the strength of its capital position, Belgian cable company Ziggo, and European TV conglomerate RTL. This increased exposure has been the single largest asset allocation change during the period, and it has been facilitated by the use of the Company's borrowing facility.

Outlook

Economic growth in a number of the world's largest developed market economies is gathering momentum, and as long as the removal of liquidity and support by central banks is done in a proportionate manner we expect economic conditions to continue to improve. Against this backdrop the general theme across the Company's portfolio of investments is one of on-going, moderate, earnings growth, supporting continued dividend growth. We continue to anticipate strong investor demand for income generating companies as short term interest rates seem unlikely to increase in the next twelve to eighteen months, and will continue to take advantage of market disruptions to enhance the porfolio's income and capital return potential.

Ben Lofthouse

Portfolio Manager

22 October 2013

Investment Portfolio

as at 31 August 2013

Sector/Company	Country	£'000	% of Portfolio		Sector/Company	Country	£'000	% of portfolio
BASIC MATERIALS					INDUSTRIALS
BASF	Germany	1,052	1.7		Deutsche Post	Germany	1,707	2.8
		1,052	1.7		United Parcel Services	US	1,255	2.0
CONSUMER GOODS					Emerson Electric	US	1,229	2.0
Reynolds American	US	1,814	2.9		General Electric	US	1,119	1.8
Ambev De Bebidas	Brazil	1,400	2.3		Amcor	Australia	1,015	1.6
Electrolux	Sweden	1,225	2.0		Taiwan Cement	Taiwan	802	1.3
Mattel	US	955	1.5		Lockheed Martin	US	791	1.3
Charoen Pokphand Foods	Thailand	492	0.8		NWS Holdings	China	754	1.2
		5,886	9.5		CCR	Brazil	751	1.2
					Shanghai Industrial	China	621	1.0
							10,044	16.2
					OIL & GAS
CONSUMER SERVICES					ENI	Italy	1,233	2.0
RTL Group	Germany	1,512	2.4		Total	France	1,186	1.9
SES	Luxembourg	1,157	1.9		Kinder Morgan Delaware	US	1,137	1.8
Six Flags Entertainment	US	1,152	1.8		Seadrill	Norway	1,130	1.8
Aimia	Canada	1,128	1.8		Statoil	Norway	1,003	1.6
Vivendi	France	1,116	1.8		Sembcorp Marine	Singapore	709	1.2
Time Warner Cable	US	971	1.6				6,398	10.3
Las Vegas Sands	US	801	1.3		PROPERTY
Myer Holdings	Australia	550	0.9		Eurocommercial	Netherlands	1,138	1.8
		8,387	13.5		Westfield Retail	Australia	846	1.4
					Mapletree Greater China	Singapore	685	1.1
					New World Development	Hong Kong	669	1.1
					Cheung Kong	Hong Kong	581	1.0
FINANCIALS							3,919	6.4
PNC Financial Services Group	US	1,494	2.4
Zurich Insurance	Switzerland	1,154	1.9
Scor Se	France	1,136	1.8		TECHNOLOGY
Bank of Montreal	Canada	1,134	1.8		Microsoft	US	1,415	2.3
Deutsche Börse	Germany	1,112	1.8		Taiwan Semiconductor Manufacturing	Taiwan	883	1.4
Malayan Banking	Malaysia	864	1.4		United Micro Electric	Taiwan	659	1.1
Swedbank	Sweden	820	1.3		Digital China	China	478	0.8
Och-Ziff Capital Mgt	US	816	1.3				3,435	5.6
Delta Lloyd	Netherlands	758	1.2		TELECOMMUNICATIONS
Bank of China	China	751	1.2		Deutsche Telekom	Germany	1,245	2.0
		10,039	16.1		SK Telecom	Korea	1,244	2.0
					Ziggo	Netherlands	1,220	2.0
HEALTHCARE					BCE	Canada	927	1.5
Pfizer	US	1,700	2.8		China Mobile	China	844	1.4
Roche	Switzerland	1,660	2.7		Telecom Corporation of New Zealand	New Zealand	763	1.2
Novartis	Switzerland	1,379	2.2				6,243	10.1
		4,739	7.7		UTILITIES
					Dominion Resources	US	1,170	1.9
					Perusahaan Gas Negara	Indonesia	647	1.0
							1,817	2.9
					Total Investments		61,959	100.0
The top ten investments are highlighted in bold, these equate to 24.8% of the total portfolio.

INCOME STATEMENT

for the year ended 31 August 2013

		Year ended 31 August 2013			For the period from incorporation (2 March 2011) to 31 August 2012
	Notes	Revenue Return £'000	Capital Return £'000	Total £'000	Revenue Return £'000	Capital Return £'000	Total £'000
Gains/(losses) from investments held at fair value through profit or loss	2	-	6,705	6,705	-	(131)	(131)
Income from investments held at fair value through profit or loss	3	2,846	-	2,846	3,339	-	3,339
Profit/(losses) on foreign exchange		-	133	133	-	(495)	(495)
Option premium income and interest received		37	-	37	75	-	75
		--------	--------	--------	--------	--------	--------
Gross revenue and capital gains/(losses)		2,883	6,838	9,721	3,414	(626)	2,788
Management fees		(104)	(314)	(418)	(109)	(327)	(436)
Other administrative expenses		(302)	-	(302)	(349)	-	(349)
		--------	--------	--------	--------	--------	--------
Net return/(loss) on ordinary activities before finance charges and taxation		2,477	6,524	9,001	2,956	(953)	2,003
Finance charges		(22)	(64)	(86)	(1)	(3)	(4)
		--------	--------	--------	--------	--------	--------
Net return/(loss) on ordinary activities before taxation		2,455	6,460	8,915	2,955	(956)	1,999
Taxation on net return/(loss) on ordinary activities		(285)	-	(285)	(344)	-	(344)
		--------	--------	--------	--------	--------	--------
Net return/(loss) on ordinary activities after taxation		2,170	6,460	8,630	2,611	(956)	1,655
		=====	=====	=====	=====	=====	=====
Basic return/(loss) per ordinary share	4	4.57p	13.62p	18.19p	6.08p	(2.23)p	3.85p
		=====	=====	=====	=====	=====	=====
Diluted return per ordinary share		4.50p	13.38p	17.88p	6.08p	(2.23)p	3.85p
		=====	=====	=====	=====	=====	=====

The total column of this statement represents the Income Statement of the Company. The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. All revenue and capital items derive from continuing operations. The Company had no recognised gains or losses other than those disclosed in the Income Statement.

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

for the year ended 31 August 2013 and period ended 31 August 2012

Year ended 31 August 2013	Called up Share capital £'000	Share premium account £'000	Special reserve £'000	Other capital reserves £'000	Revenue reserve £'000	Total £'000
At the start of the year	539	43,988	-	(956)	697	44,268
Allotment of new ordinary shares in the year	42	4,739	-	-	-	4,781
Issue Costs	-	(37)	-	-	-	(37)
Cancellation of share premium account	-	(45,732)	45,732	-	-	-
Net return for the year	-	-	-	6,460	2,170	8,630
Dividends paid	-	-	-	-	(1,913)	(1,913)
	------	------	------	------	------	------
At 31 August 2013	581	2,958	45,732	5,504	954	55,729
	====	====	====	====	====	====

From the period from incorporation (2 March 2011) to 31 August 2012	Called up Share capital £'000	Share premium account £'000	Special Reserve £'000	Other capital reserves £'000	Revenue reserve £'000	Total £'000
At the start of the period	-	-	-	-	-	-
Ordinary shares issued at launch	415	41,002	-	-	-	41,417
Subscription shares issued at launch	83	-	-	-	-	83
Issue costs	-	(790)	-	-	-	(790)
	------	------	------	------	------	------
	498	40,212	-	-	-	40,710
Allotment of new ordinary shares in the period	41	3,820	-	-	-	3,861
Issue costs	-	(44)	-	-	-	(44)
Net (loss)/return for the period	-	-	-	(956)	2,611	1,655
Dividends paid	-	-	-	-	(1,914)	(1,914)
	------	------	------	------	------	------
At 31 August 2012	539	43,988	-	(956)	697	44,268
	====	====	====	====	====	====

BALANCE SHEET

at 31 August 2013

	Notes	2013 £'000	2012 £'000
Fixed asset investments held at fair value through profit or loss		61,959 --------	43,997 --------
Current assets
Debtors		2,153	981
Cash at bank		-	162
		--------	--------
		2,153	1,143
Creditors: amounts falling due within one year		(8,383)	(872)
		--------	--------
Net current (liabilities)/assets		(6,230)	271
		--------	--------
Total net assets		55,729	44,268
		======	======
Capital and reserves
Called up share capital	7	581	539
Share premium account		2,958	43,988
Special reserve		45,732	-
Other capital reserves		5,504	(956)
Revenue reserve		954	697
		--------	--------
Total Shareholders' funds		55,729	44,268
		======	======
Net asset value per Ordinary share (basic)	6	111.9p	97.2p
		======	======
Net asset value per Ordinary share (diluted)		110.2p	97.2p
		======	======

CASH FLOW STATEMENT

for the period ended 31 August 2013

	2013 £'000	2013 £'000	2012 £'000	2012 £'000
Net cash inflow from operating activities		1,900		2,234
Servicing of finance
Interest paid	(73) ------		(4) ------
Net cash outflow from servicing of finance		(73)		(4)
Net tax recovered		29		-
Financial investment
Purchases of investments	(40,259)		(60,526)
Sales of investments	27,618 ---------		16,235 ---------
Net cash outflow from financial investment		(12,641)		(44,291)
Equity dividends paid		(1,913) --------		(1,914) --------
Net cash outflow before financing		(12,698)		(43,975)
Financing
Proceeds from issue of ordinary shares	4,781		45,361
Expenses paid in respect of shares issued	(42) --------		(829) --------
Net cash inflow from financing		4,739 ----------		44,532 ----------
Decrease/(increase) in cash		(7,959) ======		557 ======
Reconciliation of net cash flow to movement in net debt
(Decrease)/Increase in cash as above		(7,959)		557
Exchange movements		174		(555)
Net funds at start of year		2 ---------		- ---------
Net (debt)/funds at 31 August		(7,783) ======		2 ======
Represented by: Cash at bank Bank overdraft		- (7,783) --------- (7,783)		162 (160) --------- 2
		======		======

NOTES TO THE FINANCIAL STATEMENTS

The Company was incorporated 2 March 2011 and the ordinary and subscription shares were listed on the London Stock Exchange on 28 April 2011. The financial statements relate to the year ended 31 August 2013.

1.	Accounting policies
	Basis of accounting
	The financial statements have been prepared on a going concern basis and under the historical cost basis of accounting, modified to include the revaluation of investments at fair value through profit or loss. The financial statements have been prepared in accordance with applicable accounting standards in the United Kingdom and with those parts of the Companies Act 2006 applicable to companies reporting under the standards and with the Statement of Recommended Practice ('SORP') for investment trusts issued by the Association of Investment Companies ('the AIC') in January 2009.

2.	Gains/(losses) from investments held at fair value through profit or loss	2013 £'000	Period to 2012 £'000
	Gains/(losses) on investments sold in the year/period                                Revaluation of investments held at 31 August	3,046 3,659 ====== 6,705 ======	(1,341) 1,210 ====== (131) ======
3.	Income from investments held at fair value through profit or loss	2013 £'000	Period to 2012 £'000
	Overseas dividend income	2,846 ======	3,339 ======

4.	Return per ordinary share
	Year to 31 August			Period to 31 August
	Return per ordinary share	2013 £'000	2013 Pence	2012 £'000	2012 Pence
	Basic
	Revenue return	2,170	4.57p	2,611	6.08p
	Capital return/(loss)	6,460 ---------	13.62p ---------	(956) ---------	(2.23)p ---------
	Total return	8,630 =====	18.19p ======	1,655 ======	3.85p ======
	Weighted average number of ordinary shares in issue		47,434,946 ========		42,947,148 ========
	Diluted
	Revenue return	2,170	4.50p	2,611	6.08p
	Capital return/(loss)	6,460 ---------	13.38p ---------	(956) ---------	(2.23)p ---------
	Total return	8,630 =====	17.88p ======	1,655 ======	3.85p ======
	Number of dilutive shares		822,186 -----------		- -----------
	Diluted shares in issue for return per share		48,257,132 ========		42,947,148 ========
	For the purposes of calculating diluted total, revenue and capital returns per ordinary share, the number of ordinary shares is the weighted average used in basic calculation plus the number of ordinary shares deemed to be issued for no consideration on exercise of all subscription shares by reference to the average share price of the ordinary shares during the period. At 31 August 2012 the impact of these subscription shares on the return per ordinary share was anti-dilutive due to the fact that the average share price of the ordinary share during the period was lower than the exercise price of the subscription shares.

5.	Dividends on ordinary shares
	The total dividends payable in respect of the financial period which form the basis of section 1158 of the Corporation Tax Act 2010 are set below:
		2013 £'000	2012 £'000
	Revenue available for distribution by way of dividend for the year/period Interim dividends of 3.0p paid (2012: 4.0p) Interim dividend for the year ended 31 August 2013 of 1.05p (based on 50,253,050 ordinary shares in issue at 22 October 2013) Undistributed revenue for section 1158 purposes*	2,170 (1,452) (528) --------- 190 ======	2,611 (1,914) (461) --------- 236 ======
	*Undistributed revenue comprises 6.7% of the income from investments of £2,846,000.

6.	Net asset value per ordinary share
	The net asset value per ordinary share and the net assets attributable to ordinary shares at the end of the year/period were as follows:
		2013	2012
	Basic
	Net assets attributable (£'000)	55,729	44,268
	Number of ordinary shares in issue	49,803,050	45,550,000
	Net asset per ordinary share	111.9p	97.2p
		2013	2012
	Diluted
	Net assets attributable assuming exercise of subscription shares (£'000)	64,029	44,268
	Number of potential ordinary shares in issue	58,103,050	45,550,000
	Net assets per ordinary share	110.2p	97.2p
	The diluted net asset value per ordinary share has been calculated in accordance with guidelines issued by the Association of Investment Companies, and assumes that all outstanding subscription shares were converted into ordinary shares at the year end. The movements during the year/period of the assets attributable to the ordinary shares were as follows:
		2013	2012
	Net assets at the start of the year/period	44,268	-
	Total net return on ordinary activities after taxation	8,630	1,655
	Dividends paid on ordinary shares in the year/period	(1,913)	(1,914)
	Issue of ordinary shares less issue costs	4,744	44,527
	Total net assets attributable to the ordinary shares at 31 August	55,729	44,268

7.	Called up share capital	Number of shares	Number of shares entitled to dividend	£'000
	2013:
	Ordinary shares of 1p each
	At the start of the year	45,550,000	45,550,000	456
	Allotment of new shares in the year	4,253,050	4,253,050	42
		---------------	---------------	---------
	At 31 August 2013	49,803,050 =========	49,803,050 =========	498 ======
	Subscription shares of 1p each At the start of the year	8,300,000	8,300,000	83
		---------------	---------------	---------
	At 31 August 2013	8,300,000 =========	8,300,000 =========	83 ======
	During the year, 4,253,050 ordinary shares were allotted for a total consideration of £4,744,000. At launch the Company issued subscription shares to all subscribers on the basis of one subscription share for every five ordinary shares subscribed. Each subscription share confers the right to subscribe for one ordinary share on payment of the subscription price of 100p. Notice to exercise the subscription rights may be given by subscription shareholders during the 30 days prior to the subscription date of 31 August 2014 after which the subscription rights will lapse.

8.	Share premium account	2013 £'000	2012 £'000
	At the start of the year/period	43,988	-
	Ordinary and subscription shares issued at launch	-	41,002
	Ordinary shares allotted in year	4,739	3,820
	Issue costs	(37)	(834)
	Cancellation of share premium account on 28 February 2013	(45,732)	-
		-------------	-------------
	At end of year/period	2,958	43,988
		======	======
	At the Annual General Meeting of the Company held on 12 December 2012, a special resolution was passed approving the cancellation of the amount standing to the credit of the Company's share premium account. On 28 February 2013, following approval of the Court Order with the Registrar of Companies, the cancellation became effective. Approximately £45.7 million, held in the share premium account was transferred to the distributable reserves of the Company. No payment to ordinary shareholders will be made without prior consent of the subscription shareholders.
9.	Going concern
	The Directors believe it is appropriate to continue to adopt the going concern basis in preparing the financial statements as the assets of the Company consist mainly of securities which are readily realisable and, accordingly, the Company has adequate financial resources to continue in operational existence for the foreseeable future. In reviewing the position as at the date of this statement, the Board has considered the 'Going Concern and Liquidity Risk: Guidance for Directors of UK Companies 2009' published by the Financial Reporting Council in October 2009.
10.	2013 Financial Information
	The figures and financial information for the year ended 31 August 2013 are extracted from the Company's annual financial statements for that period and do not constitute statutory financial statements for that period. The Company's annual financial statements for the year ended 31 August 2013 have been audited but have not yet been delivered to the Registrar of Companies. The Auditors' report on the 2013 financial statements was unqualified, did not include a reference to any matter which the Auditors drew attention without qualifying the report and did not contain any statements under sections 498(2) and 498(3) of the Companies Act 2006.
11.	2012 Financial Information
	The figures and financial information for the period ended 31 August 2012 are extracted from financial statements for that period and do not constitute statutory financial statements for that period. Those financial statements have been delivered to the Registrar of Companies and included the report of the auditors which was unqualified, did not include a reference to any matter to which the Auditors drew attention without qualifying the report and did not contain any statements under sections 498(2) or 498(3) of the Companies Act 2006.
12.	Annual Report and Financial Statements
	The Report and Financial Statements for the period ended 31 August 2013 will be posted to shareholders in early November 2013 and copies will be available on the Company's website www.hendersoninternationalincometrust.com or in hard copy format from the Company's registered office, 201 Bishopsgate, London EC2M 3AE. The Annual General Meeting will be held at the registered office on Wednesday, 18 December 2013 at 2.30pm. The Notice of the Annual General Meeting will be posted to shareholders with the Annual Report and Financial Statements.

For more information please contact:

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

- ENDS -

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

 

 

FR FEIFMEFDSELS