Annual Financial Report

Henderson Intl. Income Trust PLC

02 November 2023

 

JANUS HENDERSON FUND MANAGEMENT UK LIMITED

HENDERSON INTERNATIONAL INCOME TRUST PLC

LEGAL ENTITY IDENTIFIER: 2138006N35XWGK2YUK38

HENDERSON INTERNATIONAL INCOME TRUST PLC

Annual Financial Report for the year ended 31 August 2023

This announcement contains regulated information

INVESTMENT OBJECTIVE

The Company's investment objective is to provide shareholders with a growing total annual dividend, as well as capital appreciation.

HIGHLIGHTS

•	We are pleased to announce an increase in dividends of 3.0% to 7.47p per share for the year, continuing the track record of having increased the dividend for each of the eleven years since launch. The dividend has grown at an average annualised rate of 5.8% compared to CPI growth of 2.9% during this time.
•	Most companies in the portfolio increased their dividends, supporting the robustness of the income stream.
•	NAV total return rose by 0.8% (debt at par) and 1.4% (debt at fair value) over the year.
•	We continue to maintain and follow the Company's existing strategy of identifying companies that have the capacity to grow their earnings and dividends over the medium to long term while being attractively valued.

PERFORMANCE TO/AT 31 AUGUST

	2023	2022
Dividend in respect of the year	7.47p1	7.25p
Dividend yield at the year end2	4.6%	4.2%
Dividend growth year-on-year	3.0%	15.1%
10-year compound dividend growth	5.8%	6.0%

Dividend growth since launch to 31 August 2023
	20113	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021	2022	2023
Total dividend (pence per share)	1.40	4.00	4.05	4.25	4.50	4.65	4.90	5.30	5.70	6.00	6.30	7.25	7.47

Dividend yields at 31 August	2023 %	2022 %
Company2	4.6	4.2
Benchmark4	3.9	3.9
AIC Global Equity Income sector5	3.6	3.4

Total return performance for year to 31 August	2023 %	2022  %
NAV6 (debt at par)	0.8	3.8
NAV6 (debt at fair value)	1.4	6.3
Share price7	(1.9)	7.8
Benchmark4	2.3	6.6
AIC Global Equity Income sector (NAV)5	5.7	3.6

Performance to/at 31 August	2023	2022
NAV per share at year end (debt at par)	175.7p	181.5p
Discount (debt at par)8	(8.1)%	(5.3)%
NAV per share at year end (debt at fair value)8	178.6p	183.4p
Discount (debt at fair value)8	(9.6)%	(6.3)%
Share price at year end	161.5p	171.8p
NAV total return (debt at fair value)8	1.4%	6.3%
Ongoing charge for year8,9	0.72%	0.83%
Gearing at year end8	3.9%	6.5%

1 Includes the fourth interim dividend in respect of the year ended 31 August 2023 to be paid to shareholders on 30 November 2023

2 Calculated based on the closing share price at 31 August

3 Four-month period from launch on 28 April 2011 to 31 August 2011

4 MSCI ACWI (ex UK) High Dividend Yield Index (sterling adjusted)

5 Excludes British & American Investment Trust plc

6 Net asset value ("NAV") total return (including dividends reinvested, net of fees)

7 The Company's share price total return (assuming the reinvestment of all dividends excluding dealing expenses). Since inception share price return - launch price including discount (97.25p)

8 Alternative performance measure

9 Calculated using the methodology prescribed by the Association of Investment Companies ("AIC")

Source: Morningstar Direct, Janus Henderson

CHAIRMAN'S STATEMENT

This is my first annual statement since taking over as chairman from Simon Jeffreys. I would like to thank Simon for his hard work as chairman during the past five years and especially during the testing period of the Covid pandemic. His attention to detail is remarkable and he did much to improve the quality of the Company's annual report and accounts.

We are building on this legacy and aim to further simplify the narrative where possible and to highlight the primary objective of the Company, which is to provide a rising annual income to shareholders. To this end I am beginning my statement by talking about earnings and the dividend.

Earnings and dividends

We are pleased to announce a total dividend increase from 7.25p to 7.47p per ordinary share for the year to 31 August 2023, a rise of 3.0%. The total dividend for the year consists of a first, second and third interim dividend of 1.85p per ordinary share, and a fourth interim dividend of 1.92p which will be paid on 30 November 2023 to shareholders on the register at 10 November 2023.

After a significant increase of 23% in 2022, the revenue return of the Company this year is 1% lower than last. This slight decline is primarily the result of sterling's appreciation against several currencies, particularly the US, Hong Kong and Australian dollars against which it has rallied 10%. Most companies held in the portfolio increased their dividends, supporting the robustness of the income stream during this period. A small portion of the dividend was not covered by earnings and so it was necessary to draw on our reserves to meet the shortfall.

We continue to recognise the importance of progressive dividend income to our shareholders. We will employ the flexibility of the investment trust structure to utilise both our strong revenue and capital reserves to support dividend growth when necessary. The distributable reserves of the Company increased by £15m to £107m at the year-end. If required, this provides a significant cushion to support the continued growth of the dividend.

We have increased the dividend for each of the eleven years since launch and this positive growth trend is demonstrated in the graphs in the annual report.

Capital performance and markets

Our secondary objective is to provide long-term capital appreciation. Over the year, the net asset value ("NAV") total return per ordinary share rose by 0.8% (debt at par) and by 1.4% (debt at fair value). The total return on the ordinary share price was -1.9%, this figure includes total dividends of 7.47p per ordinary share, an increase of 3.0% on the previous year. The Company's performance comparator, the MSCI ACWI (ex UK) High Dividend Yield Index (sterling adjusted), generated a 2.3% total return over the same period.

A more detailed analysis of performance, portfolio and positioning is provided in the Fund Manager's Report below.

Gearing

Well-judged gearing can enhance returns to shareholders. The board's current policy is to permit the fund manager to gear up to 25% of net assets at the time of drawdown. Borrowing limits for this purpose include implied gearing using derivatives. The Company's senior unsecured notes (€30m at 2.43% due 2044) provide low-cost debt financing and have helped to insulate shareholders from rising interest rates over the period. Total gearing at the year end was 3.9% (31 August 2022: 6.5%).

Liquidity and discount management

The Company's share price has traded at a discount to NAV of between 1% to 10% over the period and was 8.1% (with debt at par) at 31 August 2023. The board continues to monitor the Company's premium/discount to NAV and will consider appropriate action if this moves and remains out of line with the Company's peer group. The board's ability to influence the premium or discount over anything but the short term is limited and accordingly we believe it is not in shareholders' interests to have a specific share issuance or buy-back policy. It is sensible to retain flexibility however, and we shall therefore consider share issuance and/or buy-backs where appropriate and subject to market conditions.

Ongoing charge

The ongoing charge for the year to 31 August 2023, as calculated in accordance with the Association of Investment Companies ("AIC") methodology, was 0.72% (2022: 0.83%). It is pleasing that costs have fallen year on year primarily because of the management fee reduction which took effect from 1 September 2022. This reduction has improved the Company's overall cost position making it a more attractive proposition.

Environmental, Social and Governance

The board pays close attention to the importance of Environmental, Social and Governance ("ESG") matters and, together with the investment team, is conscious that investors' interest in ESG matters will continue to grow. The fund manager carefully considers ESG related risks and opportunities when investing. This year we have enhanced disclosures about the manager's and investment team's approach to ESG and these are contained in the annual report.

Continuation vote

The Company's articles of association give shareholders the opportunity every three years to vote on whether they wish to continue the life of the Company, or to wind it up. Such a resolution will be put to shareholders at this year's annual general meeting.

Given that the Company has achieved its primary objective of producing a rising annual income for its shareholders, the board recommends that all shareholders vote in favour of continuing the Company. All directors intend to do so in respect of their own beneficial holdings and recent contact with larger shareholders suggests to the board that they will do likewise.

Board composition

I am delighted to welcome Mai Fenton to the board. Mai was appointed on 1 June 2023. She has a wealth of marketing expertise, having spent over 25 years in this area, focused on high-growth companies. Most recently, Mai was Chief Marketing Officer at Superscript, an SME insurance provider, where she was responsible for all aspects of their brand, digital and partnerships marketing activity. She brings to the board an understanding of, and focus on, the consumer; the key target when creating retail demand for the Company's shares.

The board is fully compliant with the FCA listing rules in relation to targets for board composition and diversity and the directors will endeavour to ensure that it remains so.

Annual general meeting

The twelfth annual general meeting ("AGM") of the Company will be held at 2.30pm on Tuesday, 12 December 2023 at the offices of Janus Henderson Investors, 201 Bishopsgate, London EC2M 3AE. The notice of meeting and details of the resolutions to be proposed are set out in a separate document which accompanies this annual report. Ben Lofthouse, our fund manager, will give a presentation at the meeting.

As an alternative, I invite shareholders to join by Zoom webinar and details of how to register are set out in the notice of meeting. As is our normal practice, there will be live voting for those physically present at the AGM. However, due to technical restrictions, we cannot offer live voting by Zoom. We therefore request all shareholders, particularly those who cannot attend physically, to submit their votes by proxy to ensure that their votes are included.

Outlook

The interest rate environment across the world has changed markedly during the past year in response to higher inflation. By having raised interest rates vigorously over the past 20 months, central banks hope to dampen down economic growth and thus contain inflation without precipitating a major recession. For inflation to fall back to previous levels, interest rates must either be raised further, which may lead to a recession, or be kept at or around current levels for longer. It is therefore unlikely that the very low and, in some cases, negative interest rates of recent years will return in the foreseeable future. A more likely consequence of this interest rate scenario is that stock markets will mark time until the valuations of their underlying companies decline to more attractive levels. This will occur as company earnings continue to grow, albeit slowly, but their share prices do not rise. Eventually, valuations will reach fair value, fully reflecting the inflation background. At this point stock markets can begin to rise again.

Meanwhile, investors will have to rely more on the dividend income from their investments, than they have in recent years, to generate a higher proportion of their total return. Here the relationship between the Company's investment trust status and its dividend is particularly important. This status allows the Company to draw on its reserves to sustain and even grow dividend payments in the most difficult period of an interest rate/inflationary cycle.

We cannot control the macroeconomic background but we can maintain and follow the Company's existing strategy of identifying companies that have the capacity to grow their earnings and dividends over the medium to long term while being attractively valued.

Richard Hills

Chairman

1 November 2023

PORTFOLIO INFORMATION

Ten largest investments at 31 August 2023

Rank 2023	Rank 2022	Company	Country	Sector	Market value £'000	% of portfolio	Market value at time of investment £'000	Income £'000	Yield1 %
1	2	Sanofi	France	Health care	13,665	3.8	11,269	497	3.6
2	1	Microsoft	US	Technology	13,637	3.8	1,530	135	1.0
3	8	Merck & Co	US	Health care	10,845	3.0	7,526	287	2.6
4	7	Cisco Systems	US	Telecommunications	10,380	2.9	6,235	286	2.8
5	6	Roche	Switzerland	Health care	10,367	2.9	10,245	372	3.6
6	18	nVent Electric	US	Industrials	10,098	2.8	5,024	133	1.3
7	10	Air Products & Chemicals	US	Basic materials	9,356	2.6	8,244	209	2.2
8	13	Novartis	Switzerland	Health care	9,224	2.6	6,947	437	4.7
9	-	Zurich Insurance	Switzerland	Financials	8,908	2.5	8,972	520	5.8
10	4	Coca-Cola	US	Consumer staples	8,738	2.5	6,033	286	3.3
Top 10					105,218	29.4	72,025	3,162
1 Dividend yields as at 31 August 2023 are based upon historic dividends, including special dividends where known, and are not representative of future yield

Geographic exposure at 31 August As a percentage of the investment portfolio excluding cash				Sector exposure at 31 August As a percentage of the investment portfolio excluding cash
	2023 %	2022 %			2023 %	2022 %
US	34.8	35.6		Financials	18.7	19.6
Switzerland	11.3	8.7		Health care	17.9	16.0
France	9.4	8.9		Consumer staples	11.8	9.4
China	5.4	4.4		Industrials	10.0	7.0
Germany	4.9	2.6		Telecommunications	9.7	9.8
Hong Kong	4.9	4.7		Consumer discretionary	9.2	8.5
Korea	3.3	4.7		Technology	8.4	13.4
Australia	3.2	5.2		Basic materials	4.3	5.4
Netherlands	2.7	2.0		Energy	3.9	4.5
Sweden	2.6	2.9		Real estate	3.1	4.0
Italy	2.2	2.9		Utilities	3.0	2.4
Singapore	1.9	2.3
Indonesia	1.9	0.9
Brazil	1.8	-
Spain	1.8	1.6
Canada	1.5	2.5
Japan	1.4	1.2
Denmark	1.1	1.4
Norway	1.1	1.3
Taiwan	1.0	3.6
Finland	0.9	2.6
India	0.9	-

Source: Janus Henderson

Investment portfolio as at 31 August 2023

Company	Country	Market value £'000	% of portfolio
Basic materials
Air Products & Chemicals	US	9,356	2.6
UPM-Kymmene	Finland	3,235	0.9
Pilbara Minerals	Australia	2,864	0.8
		15,455	4.3
Consumer discretionary
Sony	Japan	4,817	1.4
Alibaba	China	4,046	1.1
Midea	China	3,981	1.1
Compagnie Financière Richemont	Switzerland	3,422	0.9
Mercedes-Benz	Germany	3,248	0.9
Samsonite	Hong Kong	3,064	0.9
BMW	Germany	3,052	0.9
JD.Com	China	2,973	0.8
Li-Ning	China	2,856	0.8
China Yongda Automobiles	China	1,442	0.4
		32,901	9.2
Consumer staples
Coca-Cola	US	8,738	2.5
Nestlé	Switzerland	8,524	2.4
Mondelez	US	8,394	2.3
Pepsico	US	6,595	1.8
Ambev	Brazil	6,453	1.8
Pernod-Ricard	France	3,461	1.0
		42,165	11.8
Energy
TotalEnergies	France	5,321	1.5
Woodside Energy	Australia	4,555	1.3
Aker	Norway	4,151	1.1
		14,027	3.9
Financials
Zurich Insurance	Switzerland	8,908	2.5
Amundi	France	6,678	1.9
CME	US	6,067	1.7
ING	Netherlands	5,928	1.6
Travelers Companies	US	5,055	1.4
Bank Mandiri	Indonesia	4,350	1.2
AXA	France	4,172	1.2
CITIC Securities	Hong Kong	4,163	1.2
Macquarie	Australia	4,048	1.1
ASR Nederland	Netherlands	4,034	1.1
AIA	Hong Kong	3,546	1.0
BFF Bank	Italy	3,538	1.0
United Overseas Bank	Singapore	3,397	0.9
HDFC Bank	India	3,073	0.9
		66,957	18.7
Health care
Sanofi	France	13,665	3.8
Merck & Co	US	10,845	3.0
Roche	Switzerland	10,367	2.9
Novartis	Switzerland	9,224	2.6
Bristol-Myers Squibb	US	6,667	1.9
Medtronic	US	5,326	1.5
Johnson & Johnson	US	3,971	1.1
Novo Nordisk	Denmark	3,948	1.1
		64,013	17.9
Industrials
nVent Electric	US	10,098	2.8
Honeywell International	US	6,722	1.9
Daimler Truck	Germany	5,738	1.6
Sandvik	Sweden	5,448	1.5
LG Corp	Korea	3,487	1.0
Nari Technology Co	China	3,030	0.8
China National Building Material	China	1,380	0.4
		35,903	10.0
Real estate
Crown Castle	US	3,869	1.1
CapitaLand Integrated Commercial Trust	Singapore	3,656	1.0
Sun Hung Kai Properties	Hong Kong	3,466	1.0
		10,991	3.1
Technology
Microsoft	US	13,637	3.8
Qualcomm	US	5,114	1.4
Samsung	Korea	4,084	1.1
Fidelity National Information	US	3,775	1.1
Taiwan Semiconductor Manufacturing	Taiwan	3,560	1.0
		30,170	8.4
Telecommunications
Cisco Systems	US	10,380	2.9
Deutsche Telekom	Germany	5,406	1.5
Telus	Canada	5,003	1.5
SK Telecom	Korea	4,291	1.2
Tele2	Sweden	3,979	1.1
HKT Trust and HKT Ltd	Hong Kong	2,999	0.8
Telekomunikasi	Indonesia	2,477	0.7
		34,535	9.7
Utilities
Iberdrola	Spain	6,302	1.8
Enel	Italy	4,252	1.2
		10,554	3.0
Total investments		357,671	100.0

FUND MANAGER'S REPORT

•	Equity markets have absorbed a rapid increase in interest rates. Portfolio companies are generally coping well and earnings and dividend growth have been stronger than many investors and commentators expected.
•	The portfolio slightly outperformed the MSCI ACWI (ex UK) High Dividend Yield Index but after fees the NAV (with debt at fair value) has lagged by 0.9%. There has been a significant regional dispersion of returns and the strong performance of the portfolio's European stocks has been offset by the weak performance from the Asia Pacific holdings.
•	We are in a period of incredible innovation and change which is not reflected in current valuations due to macro-economic concerns.
•	The diversified nature of the portfolio helps to protect against particular earnings shocks to any one sector or region that might impact dividends in any one year.

Over the period some factors that had suppressed economic growth in recent years have abated. The energy crisis precipitated by Russia's invasion of Ukraine was less severe than anticipated while the remaining Covid-impacted countries abandoned their zero Covid policies and opened to the world. Both of these factors have allowed supply chains to continue their recovery and goods and services have become more available.

The chart in the annual report shows the performance of some of the major regions' equity markets over the period. European equity markets have recovered well from a difficult 2022, but Asia Pacific has been weak despite moving on from measures implemented to contain Covid.

These developments have benefited economic growth but supply chain improvements have not been reflected in price reductions. As a result, inflation has proved to be more persistent than policy makers had expected, forcing central banks to react by raising interest rates to higher levels than markets predicted. The chart in the annual report illustrates the increases by some of the major central banks this year.

This is a significant moment for financial markets. Since the financial crisis of 2008, inflation has been lower than the levels that central banks perceived to be healthy and economic growth has been 'below trend' too. Central banks, as a result, have maintained a highly stimulative monetary environment, employing new tools that have included quantitative easing and sub-zero interest rates. This period lasted so long that some market participants began to believe that rates would remain permanently lower. This year put paid to that theory.

Inflation has spiked to historically high levels and central banks have been forced to respond by increasing interest rates at the fastest rate in 40 years. This change has disrupted businesses that relied on plentiful debt at low interest rates to enhance their returns or fund their cash flow. These businesses include property, renewables, infrastructure, and early-stage companies with little or no net cash flows. A combination of these effects has resulted in problems for regional banks in the United States, leading to the collapse of some relatively large financial institutions.

However, despite the fears and expectations of many observers, the rise in interest rates has so far not caused a significant economic slowdown, increase in unemployment, or recession. The rise in inflation has caused problems for some companies that have not been able to pass on input cost increases, but many other companies that have been able to have benefited from higher pricing. The rise in inflation has also harmed large parts of society where the cost of living has risen faster than wages. Recently wage growth has picked up due to low unemployment and tough labour union negotiations, so some of the cost-of-living crisis is now abating.

In the US, the world's largest stock market, it is notable that macro-economic news has been overshadowed by advances in Artificial Intelligence ("AI"). Excitement around new AI systems that can generate content and the technology infrastructure needed to power them has driven a strong rise in a narrow group of stocks. Many of these companies are already large constituents of the US equity market, including Microsoft, Nvidia, Facebook, Amazon and Apple. The rally in these stocks has masked a general weakness in the US market and reignited the tech/growth equity performance that faltered last year. The chart in the annual report shows that these large companies have had a disproportionately large impact in driving the market upwards compared to the average company, as represented by the equal weighted S&P Index.

Performance review

The portfolio produced a total return of 1.4% in NAV per ordinary share over the period (debt at fair value). This return includes dividends totalling 7.47p per share, a 3.0% increase year on year. Income growth has not been matched by capital appreciation in recent years. Whilst disappointing, it is perhaps understandable that against a background of a sharp rise in interest rates, asset prices have stagnated.

Dividend performance

Investors sometimes ask about dividend trends, and how stable they may be in the face of a recession. Research over long time periods show dividends are significantly less volatile than earnings and tend to reflect the medium-term outlook for companies rather than being overly driven by short-term earnings. The diversified nature of the portfolio helps to protect against earnings shocks in any one sector or region, while the focus on companies' long-term prospects is designed to identify those that can grow through the cycle.

The Company's investment process focuses on companies with attractive dividend yields, strong cash flow generation and the potential to grow. They are often leaders in their respective industries, with established competitive advantages. In a higher interest rate environment these characteristics are increasingly important because they allow companies to continue to invest in their businesses and pay dividends despite higher financing costs. The underlying dividend growth of the portfolio has been solid, reflecting the earnings growth of the underlying holdings.

After a significant increase of 23% in 2022, the revenue return of the Company this year is 1% lower than last year. This slight decline is primarily the result of sterling's appreciation against several currencies, particularly the US, Hong Kong and Australian dollars against which it has rallied 10%. In a global portfolio, currencies often move in different, uncorrelated directions, cancelling each other out. Note 16.1.2 of the financial statements provides some analysis of the portfolio's foreign currency sensitivity.

Local currency dividend growth from the top ten holdings averaged 5.2% during the period, while the weighted average of the portfolio was over 8%, coming from a wide range of sectors and regions. The three largest sectors in the portfolio are financials, health care and consumer staples, where dividend growth has exceeded our expectations.

Several of the financial sector holdings were among the fastest dividend growers: Asia Pacific banks United Overseas Bank, Bank Mandiri and Macquarie all grew their dividends by over 20%, and European insurers Zurich Insurance, ASR Nederland and AXA grew in the region of 10%. This has been driven by increased regulatory clarity about balance sheet requirements and higher interest and insurance rates.

Earnings in the health care sector are less impacted by short-term factors like interest rates or price trends but more by new treatment approvals and competition for specific medicines. Despite concerns about drug pricing reform in the United States all the health care holdings in the portfolio announced dividend increases this year. The fastest growth has come from Novo Nordisk and Sanofi, which have some blockbuster drugs still in the early stages of their adoption and with little competition. Holdings such as Merck & Co, Novartis and Roche are growing but their drugs are more mature, and their dividend growth is more conservative to fund investment in their development pipeline.

Consumer staples is the third largest sector, and the portfolio companies have also benefited from a supportive pricing environment and good demand for their products. They have generally been increasing their dividends. Beverage company Pernod-Ricard increased its dividend by 23% and food company Mondelez by 10%. Their growth is less cyclical and comes more from their exposures to emerging markets where consumption is increasing and consumers are trading up as GDP per capita increases.

Special dividends were received from TotalEnergies, exchange operator CME, and luxury goods company Richemont.

Capital performance

The Company's portfolio is relatively concentrated, consisting of 50-80 positions, so performance can be impacted by stock-specific news as well as regional equity market performance and sector news. The investment process focuses on identifying businesses that are attractively valued and where the dividends both add to shareholders' total return and reward them for being invested until the value is realised by capital appreciation. Portfolio construction ensures the portfolio is diversified to reduce concentration risks, and the portfolio is organised in regional sleeves: North America, Europe and Asia Pacific.

The Company produced a net asset total return of 1.4% (debt at fair value), which was 0.9% behind the MSCI ACWI (ex UK) High Dividend Yield Index. The portfolio's performance was 2.8%. An estimated attribution of the portfolio's performance between asset allocation and stock selection is given below, which also includes the impact of other factors to explain the movement of the net asset value over the year.

Estimated performance attribution (relative to the MSCI ACWI (ex UK) High Dividend Yield Index)

	%
Stock selection	-1.3
Asset allocation	+1.5
Gearing	+0.3
Expenses	-0.7
Timing residual*	-0.7
Total	-0.9

* Refer to glossary in the annual report

There has been a considerable dispersion between the returns of different regions and sectors this year. The average exposures and total returns for each region are detailed below. The positive asset allocation was primarily driven by the overweight position in Europe, as well as the underweight in North America. Stock selection in Europe and North America was positive but was offset by weak stock selection in the Asia Pacific region.

Portfolio exposures and returns by region

	Average exposure %	Total return %
Europe (ex UK)	33.6	+17.1
North America	40.9	+1.5
Asia Pacific (ex Japan)	24.4	-12.1
Other*	2.5	-6.5

* Other represents holdings in Japan and Latin America

The overweight exposure to European stocks, which represented on average a third of the portfolio, contributed most to performance. Due to concerted efforts by European governments to increase gas inventory levels and by consumers to reduce consumption, energy prices gradually abated over the period.

Many of the portfolio's financial holdings have been significant positive contributors to performance aided by rising interest rates and an improving economic environment. In recent years the portfolio has maintained a significant exposure to financial companies because their valuations have not reflected their profitability or dividend sustainability, both of which have endured despite the low interest rate environment of the last decade. European financial companies BFF Bank, ING and AXA, and asset managers Van Lanschot and Amundi were amongst the most positive individual contributors to performance.

The pharmaceutical sector was also a positive contributor. Novo Nordisk has developed its diabetes treatment to also target obesity, where it is proving remarkably effective and seeing a surge in demand. Sanofi was sold off by the market last year due to litigation concerns that have proved unfounded (our position was added to at the time), and revenues have grown faster than the market expected.

North America returned 1.5% and was a poor performing region for higher yielding stocks. The top performers were those with additional demand related to AI: Microsoft, Cisco and nVent. Microsoft is a leader in AI through its investment in OpenAI, the creator of ChatGPT, and has been one of the first companies to monetise generative AI. nVent is benefiting from AI albeit in a much more moderate way via demand for its data centre cooling systems. Whilst the portfolio avoided exposure to real estate or regional banks, the worst hit sectors from rising interest rates, telecommunications has derated as bond yields have risen and Crown Castle (telecom towers) and Canadian telecoms operator Telus have both fallen in value. Broadcom appears as the largest single detractor. We had held the company for several years and took profit from it. It has subsequently rallied on the excitement around AI, causing a relative underperformance against the index. Fidelity National Information Services is a payments company that has suffered from lower transactions than expected because of a more price competitive market. It has been sold post year-end to invest in other opportunities.

The most significant negative contributor to performance has been the overweight to the Asia Pacific region. The region makes up approximately 25% of the portfolio and the return for the period was -12.1%. Despite high levels of consumer savings, the opening up of the Chinese economy after Covid has not yet triggered the pickup in economic and consumer activity that the rest of the world experienced post Covid. Whilst Chinese exposure is relatively low (5.4%), it has disproportionately impacted performance despite the general avoidance of companies involved in property construction. Consumer facing companies including leisure wear retailer Li-Ning, auto dealer China Yongda Automobiles, and JD.Com were some of the largest underperformers. The companies held in the region are all leaders in their respective industries, and in many cases have cash balance sheets, but this has not stopped them falling to very low valuations. Often the best investments are made when sentiment in a particular stock, sector or region is depressed and it certainly feels like sentiment regarding China is now very low.

The table below highlights the most significant stock contributors to performance over the year measured by contribution to absolute return.

The table below highlights the most significant stock contributors to performance over the year measured by contribution to absolute return.

	%
nVent Electric	+1.1
Sanofi	+0.7
Microsoft	+0.6
Novo Nordisk	+0.6
ING	+0.6
JD.Com	-0.7
Fidelity National Information	-0.7
Li-Ning	-0.7
Crown Castle	-0.9
Broadcom	-1.2

Source: Janus Henderson. Based on Total Effect Relative MSCI ACWI (ex UK) High Dividend Yield Index, as at 31 August 2023

Impact of gearing

Since the Company has long-term debt we provide both a fair value and par value return (see note 16.4 in the annual report for details). The fair value of the debt reflects a theoretical market price which reflects interest rate expectations. The rise in interest rate expectations during the period has reduced the fair value of the debt by £2,196,000, enhancing the fair value net asset value return of the Company by 0.6%. The par value of the debt is only changed by currency movements and has fallen by £224,000 over the year, as a result of sterling slightly strengthening against the euro.

ESG and company engagement

Integration of environmental, social and governance factors into investment decision making and ownership is detailed in the annual report. During the period under review the investment team continued to actively engage with investee companies. Recent discussions have focused on climate related areas, including how forestry products manufacturer UPM-Kymmene has assessed the potential impact of climate change on its forestry assets. Also, how consumer staples companies such as Nestlé and Mondelez are addressing deforestation and traceability of their supply chain. Elsewhere, the team has engaged with TotalEnergies about their progress on methane emission reductions, and industrial gas company Air Products & Chemicals' investments in hydrogen generation to help the sector decarbonise.

Portfolio positioning

Stock selection is driven by a combination of the attractiveness of the company (leading competitive positioning, positive supply/demand outlook, good cash flow generation, long-term sustainability of business model) and its valuation.

In recent years we have been concerned about two potential macro-economic risks when analysing companies: the risk that interest rates may rise and the ability for companies to deal with cost inflation. The risk of higher interest rates has largely been realised, and new opportunities are being presented as valuations become more attractive in some parts of the market. The main risk now is that the sharp rise in interest rates may slow growth more than expected.

The reduction in the Company's technology and financial sector weightings reflects that many of these stocks have recovered well and could be vulnerable to economic weakness. Financial services positions closed on this basis included Taiwanese financial conglomerate CTBC Financial, insurers Sampo and Manulife, and asset manager Van Lanschot. Where new positions in the sector were initiated, they have less credit exposure and earnings are driven more by volume growth than interest rate movements. These include derivative exchange operator CME, Zurich Insurance and Indian bank HDFC. CME is one of the largest providers of interest rate derivatives, used by investors and financial companies to help manage interest rate risk, especially in times of interest rate uncertainty. Zurich Insurance is benefiting from tightness in insurance markets due to higher-than-expected losses by competitors who have mispriced inflation and natural catastrophe related events.

In the technology sector semi-conductor companies MediaTek and Broadcom were sold, along with glass-focused technology business Corning and consumer gaming company Nintendo. A position in Qualcomm was purchased. Qualcomm designs and manufactures communication technology and software, including for mobile phones, modems and PCs. Although it is well known for supplying the smartphone industry, it is a much more diversified business that it was in the past. The company is seeing growth from new markets including the auto sector which is using more technology on each new car designed, and potentially the AI industry. The increased penetration of technology into society remains one of the most exciting themes for the coming decade and the portfolio continues to own leaders in the area including Microsoft, Taiwan Semiconductor Manufacturing and Samsung.

If the interest rate environment remains high it will be important for companies to be able to grow despite that environment. Some of the changes in the portfolio also reflect the opportunity of falling valuations to invest in companies with more structural growth. A new position was initiated in Sony, which has superior and more diversified long-term growth drivers than many competitors, yet trades at a similar or lower valuation. Emerging markets have been out of favour due to interest rate and currency concerns, which provided an opportunity to initiate new positions in consumer staples companies Pernod-Ricard and Ambev. Both have material exposure to Asian and Latin American markets and the potential to grow earnings and dividends throughout the economic cycle.

The largest individual stock changes are shown below:

Purchases	%
Zurich Insurance	+2.6
Ambev	+1.9
CME	+1.8
Daimler Truck	+1.7
Qualcomm	+1.5
Sales	%
Verizon Communications	-2.1
Panasonic	-2.1
Texas Instruments	-1.8
Quanta Computer	-1.7
Swire Pacific	-1.3

Outlook

The portfolio remains well diversified by region and sector with North America and Europe the largest regional exposures. The proportion of the portfolio in the Asia Pacific region has been maintained. In the long term, this region has attractive economic characteristics with many technology leaders listed there. With regard to China and Hong Kong, exposure remains relatively low in a portfolio context, at 9%.

If consensus economic forecasts are correct, the Asia Pacific region could see more investor interest next year.

Global gross domestic product (GDP) growth and consensus forecasts

GDP growth (%)	2022	2023e	2024e
World	3.4	2.8	2.6
US	2.1	2.4	1.0
UK	4.3	0.4	0.4
Eurozone	3.3	0.5	0.8
Asia Pacific (ex Japan)	3.2	4.5	4.6
Japan	1.1	1.8	1.0
China	3.0	5.0	4.5

Source: Bloomberg, as at 16 October 2023

Note: 2023-2024 are estimates

It is hard to know the impact of higher interest rates on economies, but as discussed earlier there are interesting long-term demand trends for many companies and sectors that have, if anything, strengthened over the last few years. These include decarbonisation spend, the relocation of supply chains and technological innovation. There is still a very wide divergence between the performance of different regions, stocks and sectors. As the chart in the annual report shows, the relative underperformance of value versus growth stocks remains at levels unprecedented in recent history. While stock selection remains important to avoid value traps, there remain many undervalued opportunities.

Ben Lofthouse

Fund Manager

1 November 2023

INVESTMENT POLICY

The Company will invest in a focused and internationally diversified portfolio of 50-80 companies that are either listed in, registered in, or whose principal business is in countries that are outside the UK and will be made up of shares (equity securities) and fixed interest asset classes that are diversified by factors such as geography, industry and investment size. A maximum of 25% of gross assets may be invested in fixed interest securities. The Company does not hold investments in unlisted companies unless it is through subsequent delisting of an existing investment.

Investment in any single company (including any derivative instruments) will not, in gross terms, exceed 5% of net assets at the time of investment and no more than 15% of gross assets may be invested in other listed investment companies (including investment trusts) or collective investment schemes. No more than 10% of gross assets may be invested in companies that themselves invest more than 15% of their gross assets in UK listed investment companies or collective investment schemes.

The Company may use financial instruments known as derivatives for the purpose of efficient portfolio management, for investment purposes or to generate additional income while maintaining a level of risk consistent with the risk profile of the Company. The Company may hedge exposure to foreign currencies up to a maximum of 20% of gross assets and may generate up to a maximum of 20% of gross income through investment in traded options.

The Company can borrow to make additional investments with the aim of achieving a return that is greater than the cost of borrowing. The Company's articles of association allow borrowings up to 100% of net asset value. In normal circumstances, the manager may only utilise gearing up to 25% of net assets at the time of drawdown or investment (as appropriate) in accordance with the board's policy and for these purposes 'gearing' includes implied gearing through the use of derivatives.

PRINCIPAL RISKS AND UNCERTAINTIES

The board, with the assistance of Janus Henderson, has carried out a robust assessment of the principal risks and uncertainties, including emerging risks, facing the Company, including those that would threaten its business model, future performance, solvency or liquidity and reputation.

The board regularly considers the principal risks facing your Company and has drawn up a matrix of risks. The board has also put in place a schedule of investment limits and restrictions, appropriate to your Company's investment objective and policy. The principal risks which have been identified and the steps taken by the board to mitigate these are set out in the table below. The principal financial risks are detailed in note 16 to the financial statements in the annual report.

The risk register has been updated during the year to reflect increasing geopolitical and political risks and increased cyber security risks. The risk arising from the continued consolidation of the wealth management industry has been moved from an emerging risk to a principal risk.

Risk	Trend	Mitigation
Geopolitical risks Geopolitical risks, including the Russian invasion of Ukraine and the conflict in the Middle East, are causing political and economic volatility. Supply chains, energy supply and consequential price increases are among the risks.	↑	The fund manager is active in the review of geographic and sector allocations, including an understanding of underlying impacts of trade with Russia. At each board meeting, the allocation of the assets across the geographic markets and the sector relative weightings are discussed with the fund manager, with a focus on the current market context.
Political risks Political and economic uncertainty, including the political climate in China, could give rise to market volatility. This could affect foreign exchange movements and impact the valuation of your Company's portfolio and dividend income.	↑	The board actively engages in dialogue with the fund manager to ensure an ongoing review of the portfolio and reallocation, if considered appropriate, to adjust stocks or geographical allocations. The fund manager monitors political and economic issues and regularly reviews geographic and sector allocation. The risk is spread through holding a diverse portfolio.
Investment activity and performance risks An inappropriate investment strategy (for example, in terms of asset allocation or the level of gearing) may result in underperformance against your Company's benchmark index and the companies in its peer group. Further increases in interest rates could materially affect the performance of stocks with high levels of gearing. This could impact their cashflows and ability to pay dividends, and thus affect the performance of the Company's portfolio.	↔	The board monitors investment performance at each board meeting, including performance relative to the benchmark. It also regularly reviews the extent of its borrowings, when in use. The fund manager actively monitors the level of gearing in the stocks across the portfolio and adjusts exposure where necessary. This is discussed on a regular basis with the board.
Portfolio and market price risks Although your Company invests almost entirely in securities that are listed on recognised markets, share prices may move rapidly. The companies in which investments are made may underperform or fail entirely with a potential impact on their share price and/or dividend yield. A fall in the market value of your Company's portfolio would have an adverse effect on shareholders' funds. Most of your Company's assets, liabilities, income and expenses are denominated in currencies other than sterling (the Company's functional currency and presentational currency). As a result, movements in exchange rates may affect the sterling value of those items. Increasing inflation could impact the performance of markets internationally, with greater market price volatility having a consequential impact on the performance of the portfolio.	↔	The manager seeks to maintain a diversified portfolio to mitigate against this risk. The board regularly reviews the portfolio, activities and performance. The fund manager monitors your Company's exposure to foreign currencies daily and reports to the board at each meeting. The fund manager measures the risk to the Company of the foreign currency exposure by considering the effect on the Company's net asset value and total return of a movement in the exchange rates to which your Company's assets, liabilities, income and expenses are exposed. The board has set an investment limit on currency hedging to a maximum of 25% of gross assets to mitigate against this risk.
Tax and regulatory risks A breach of section 1158/9 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 Listing Rules could result in suspension of your Company's shares, while a breach of the Companies Act could lead to criminal proceedings, or financial or reputational damage.	↔	The manager has been contracted to provide investment, company secretarial, administration and accounting services through suitably qualified professionals. The board receives internal control reports produced by Janus Henderson on a quarterly basis, which confirm legal and regulatory compliance.
Operational and cyber risks Disruption to, or failure of, Janus Henderson's accounting, dealing or payment systems or the custodian's records could prevent the accurate reporting and monitoring of the Company's financial position. Your Company is also exposed to the operational and/or cyber risk that one or more of its service providers may not provide the required level of service in the event of a cyber attack.	↑	The board monitors the services provided by the manager and its other third-party suppliers and receives reports on the key elements in place to provide effective internal controls. The board also receives assurances from the manager's chief information security officer that the manager maintains robust cyber and information security policies, processes and procedures. The manager maintains appropriate policies and procedures, together with a robust firewall, to mitigate any such attacks. The board also monitors the principal business risks faced by your Company which are recorded in a risk map which is reviewed regularly. Systems are in operation to safeguard the Company's assets and shareholders' investments, to maintain proper accounting records and to ensure that financial information used within the business, or published, is reliable.
Consolidation of the wealth management industry Continued consolidation of the wealth management industry may result in a narrower customer base and the increasing importance of being on the 'buy list'.	↑	A key focus is on performance and to ensure that your Company meets buy list requirements of institutional investors. The manager makes use of PR and marketing in order to reach individual buyers. The board is enhancing your Company's marketing strategy to ensure the growing needs of individual self-directed investors are met to help stimulate ongoing demand for your Company's shares.

Emerging risks

In addition to the principal risks facing your Company, the board also regularly considers potential emerging risks, which are defined as potential trends, sudden events or changing risks which are characterised by a high degree of uncertainty in terms of the probability of them happening and the possible effects on the Company. Should an emerging risk become sufficiently clear, it may be moved to a significant risk.

The board has identified the following as potential emerging risks:

Emerging risk	Mitigation
Consolidation of the investment trust sector leading to a greater average size of investment trusts becoming the norm.	The board regularly reviews the market to identify and participate in consolidation opportunities and looks to the manager to provide performance to improve the Company's chances for growth.
Unfavourable regulatory changes, including tax changes and the possible imposition of a wealth tax.	The board and the manager monitor potential changes on an ongoing basis.
Increased regulation and focus by investors on climate change and ESG developments.	The board, through the manager and corporate broker, maintains a regular dialogue with major shareholders and discusses the Company's objectives with them. The feedback from this, together with the investment strategy in the context of performance, is regularly reviewed by the board.

VIABILITY AND GOING CONCERN

The AIC Code of Corporate Governance includes a requirement for the board to assess the future prospects for your Company, and to report on the assessment within the annual report. The board considers that certain characteristics of your Company's business model and strategy are relevant to this assessment:

•	the board looks to ensure that your Company seeks to deliver long-term performance;
•	the Company's investment objective, strategy and policy, which are subject to regular board monitoring, mean that your Company is invested mainly in readily realisable listed securities and that the level of borrowings is restricted;
•	your Company is a closed-end investment company and therefore does not suffer from the liquidity issues arising from unexpected redemptions; and
•	the Company has an ongoing charge of 0.72% (2022: 0.83%).

Also relevant were a number of aspects of your Company's operational agreements:

•	your Company retains title to all assets held by the custodian under the terms of the formal agreement with the depositary;
•	long-term borrowing is in place, being the 2.43% senior unsecured notes 2044, which are also subject to a formal agreement, including financial covenants with which your Company complied in full during the period since issuance. The value of long-term borrowing is relatively small in comparison to the value of net assets, being 7.4% at 31 August 2023 (2022: 7.2%);
•	revenue and expenditure forecasts are reviewed by the directors at each board meeting; and
•	cash is held with an approved bank.

In addition, the directors carried out a robust assessment of the principal risks and uncertainties which could threaten your Company's business model, including future performance, liquidity or solvency and reputation and considered emerging risks that could have a future impact on your Company.

The principal risks identified as relevant to the viability assessment were those relating to investment activity and performance, portfolio and market price risks. The board took into account the liquidity of your Company's portfolio, the existence of the long-term fixed rate borrowings, the effects of any significant future falls in investment values and income receipts on the ability to repay and re-negotiate borrowings, grow dividend payments and retain investors and the potential need for share buy-backs in order to maintain a narrow share price discount.

The directors assess viability over three-year rolling periods, taking account of foreseeable severe but plausible scenarios. In coming to this conclusion, the directors have considered the heightened macroeconomic uncertainty following Russia's invasion of Ukraine, the conflict in the Middle East and the political climate in China, in particular, the potential impact on income and your Company's ability to meet its investment objective, and the impact on loan covenants. The directors do not believe that they will have a long-term impact on the viability of your Company and its ability to continue in operation, notwithstanding the short-term uncertainty that these events have caused in the markets and specific short-term issues, such as to energy, supply chain disruption, inflation and labour shortages.

The directors believe that a rolling three-year period best balances your Company's long-term objective, its financial flexibility and scope with the difficulty in forecasting economic conditions affecting your Company and its shareholders.

The directors recognise that there is a continuation vote that is due to take place at the 2023 AGM. The directors currently believe that your Company will continue to exist for the foreseeable future, and at least for the period of assessment.

Based on their assessment, and in the context of your Company's business model, strategy and operational arrangements set out above, the directors have a reasonable expectation that your Company will be able to continue in operation and meet its liabilities as they fall due over the three-year period to 31 August 2026.

The directors consider your Company has adequate resources to continue in operational existence for at least twelve months from the date of approval of the financial statements and that it is appropriate to adopt the going concern basis of accounting in preparing the financial statements (see below for further details).

BORROWINGS

Your Company's short-term gearing facility allows borrowing of up to £30m in sterling and other currencies by way of an overdraft facility with HSBC Bank plc. Under this facility the Company borrowed in both sterling and euros in the year under review.

On 30 April 2019, your Company issued €30m fixed rate 25-year senior unsecured notes at an annualised coupon of 2.43%. This long-term fixed rate euro denominated financing was obtained at a price that the board considered attractive. The senior unsecured notes are expected to enhance long-term investment performance.

Within the terms of the senior unsecured notes are clauses that would be enacted in certain scenarios should the notes be prepaid by the Company before maturity. These clauses could impact the total amount repayable. The directors have assessed these and have concluded that these clauses are highly unlikely to occur.

The level of gearing at 31 August 2023 was 3.9% of net asset value (2022: 6.5%).

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 expenses and remuneration for which there were no outstanding amounts payable at the year end.

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 provision of marketing services) 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 21 of the annual report.

DIRECTORS' RESPONSIBILITY STATEMENT

Each of the directors, who are listed below, confirms that, to the best of their knowledge:

•	the Company's financial statements, which have been prepared in accordance with UK Accounting Standards, give a true and fair view of the assets, liabilities, financial position and return of the Company; and
•	the annual 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.

On behalf of the board

Richard Hills

Chairman

1 November 2023

INCOME STATEMENT

		Year ended 31 August 2023			Year ended 31 August 2022
Notes		Revenue  return  £'000	Capital  return  £'000	Total  £'000	Revenue  return  £'000	Capital  return  £'000	Total  £'000
	(Losses)/gains from investments held at fair value through profit or loss	-	(8,984)	(8,984)	-	1,834	1,834
3	Income from investments held at fair value through profit or loss	16,641	-	16,641	16,431	-	16,431
	Loss on foreign exchange	-	(84)	(84)	-	(337)	(337)
4	Other income	894	-	894	852	-	852
	Gross revenue and capital (losses)/gains	17,535	(9,068)	8,467	17,283	1,497	18,780
	Management fee	(500)	(1,502)	(2,002)	(563)	(1,690)	(2,253)
	Other administrative expenses	(609)	-	(609)	(682)	-	(682)
	Net return before finance costs and taxation	16,426	(10,570)	5,856	16,038	(193)	15,845
	Finance costs	(162)	(488)	(650)	(158)	(475)	(633)
	Net return before taxation	16,264	(11,058)	5,206	15,880	(668)	15,212
	Taxation on net return	(2,020)	-	(2,020)	(1,439)	(128)	(1,567)
	Net return after taxation	14,244	(11,058)	3,186	14,441	(796)	13,645
6	Return per ordinary share	7.27p	(5.64p)	1.63p	7.37p	(0.41p)	6.96p

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.

STATEMENT OF CHANGES IN EQUITY

Notes	Year ended 31 August 2023	Called up share capital £'000	Share premium account £'000	Special reserve £'000	Other capital reserves £'000	Revenue reserve  £'000	Total  £'000
	At 31 August 2022	1,960	194,550	45,732	105,977	7,468	355,687
	Net return for the year	-	-	-	(11,058)	14,244	3,186
7	Dividends paid	-	-	-	-	(14,503)	(14,503)
	At 31 August 2023	1,960	194,550	45,732	94,919	7,209	344,370
Notes	Year ended 31 August 2022	Called up share capital £'000	Share premium account £'000	Special reserve £'000	Other  capital  reserves  £'000	Revenue  reserve  £'000	Total  £'000
	At 31 August 2021	1,960	194,550	45,732	106,773	7,137	356,152
	Net return for the year	-	-	-	(796)	14,441	13,645
7	Dividends paid	-	-	-	-	(14,110)	(14,110)
	At 31 August 2022	1,960	194,550	45,732	105,977	7,468	355,687

STATEMENT OF FINANCIAL POSITION

Notes		At  31 August  2023  £'000	At  31 August  2022  £'000
	Fixed asset investments held at fair value through profit or loss	357,671	378,931
	Current assets
	Debtors	3,588	3,039
	Cash at bank and in hand	18,028	6,590
		21,616	9,629
	Creditors: amounts falling due within one year	(9,375)	(7,107)
	Net current assets	12,241	2,522
	Total assets less current liabilities	369,912	381,453
	Creditors: amounts falling due after more than one year	(25,542)	(25,766)
	Total net assets	344,370	355,687
	Capital and reserves
9	Called up share capital	1,960	1,960
10	Share premium account	194,550	194,550
	Special reserve	45,732	45,732
	Other capital reserves	94,919	105,977
	Revenue reserve	7,209	7,468
	Total shareholders' funds	344,370	355,687
8	Net asset value per ordinary share	175.7p	181.5p

STATEMENT OF CASH FLOWS

	Year ended  31 August  2023  £'000	Year ended  31 August  2022  £'000
Cash flows from operating activities
Net return before taxation	5,206	15,212
Add back: finance costs	650	633
Losses/(gains) on investments held at fair value through profit or loss	8,984	(1,834)
Losses on foreign exchange	84	337
Withholding tax on dividends deducted at source	(2,432)	(2,553)
Taxation recovered	56	439
(Increase)/decrease in debtors	(189)	76
Decrease in creditors	(104)	(5)
Net cash inflow from operating activities	12,255	12,305
Cash flows from investing activities
Purchase of investments	(105,273)	(117,656)
Sale of investments	119,914	105,417
Proceeds from capital dividends	2	4,206
Net cash inflow/(outflow) from investing activities	14,643	(8,033)
Cash flows from financing activities
Equity dividends paid (net of refund of unclaimed distributions and reclaimed distributions)	(14,503)	(14,110)
Interest paid	(644)	(628)
Net cash outflow from financing activities	(15,147)	(14,738)
Net increase/(decrease) in cash at bank and in hand	11,751	(10,466)
Cash at bank and in hand at start of year	6,590	17,199
Effect of foreign exchange rates	(313)	(143)
Cash at bank and in hand at end of year	18,028	6,590
Comprising:
Cash at bank and in hand	18,028	6,590
	18,028	6,590

NOTES TO THE FINANCIAL STATEMENTS

1.   Accounting policies

Basis of accounting

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

The financial statements have been prepared in accordance with the Companies Act 2006, FRS 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland, and with the Statement of Recommended Practice: Financial Statements of Investment Trust Companies and Venture Capital Trusts (the "SORP") issued in July 2022 by the Association of Investment Companies.

The principal accounting policies applied in the presentation of these financial statements are set out in the annual report.

Following the issue of the senior unsecured notes on 30 April 2019 it was determined that the Company would adopt the recognition and measurement provisions of IFRS 9 (Financial Instruments), as permitted by sections 11 and 12 of FRS 102. This was determined to better reflect the directors' assessment of the carrying value of the senior unsecured notes and has no impact on the carrying value of the Company's financial assets.

The financial statements are prepared under the historical cost basis except for the measurement at fair value of investments.

The preparation of the Company's financial statements on occasion requires the directors to make judgements, estimates and assumptions that affect the reported amounts in the primary financial statements and the accompanying disclosures. These assumptions and estimates could result in outcomes that require a material adjustment to the carrying amounts of assets or liabilities affected in current and future periods, depending on circumstances. The directors have considered the accounting treatment of the senior unsecured notes as set out in accounting policy 1i) in the annual report to be an area of judgement, in particular with reference to clauses that would be enacted should the notes be prepaid before maturity and concluded the adoption of IFRS 9 described above is the most appropriate and complies with accounting standards. The decision to allocate special dividends as income or capital is a judgement but not deemed to be material.

The directors do not believe that any accounting judgements or estimates have been applied to this set of financial statements that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year.

2.    Going concern

The Company's articles of association require that at every third annual general meeting of the Company an ordinary resolution be put to shareholders asking them to approve the continuation of the Company. The next such resolution will be proposed at the forthcoming annual general meeting. The directors believe that the Company will continue to exist for the foreseeable future. The assets of the Company consist of securities that are readily realisable and, accordingly, the directors believe that the Company has adequate resources to continue in operational existence for at least twelve months from the date of approval of the financial statements. Having assessed these factors, the principal risks, as well as considering the heightened macroeconomic uncertainties 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.    Income from investments held at fair value through profit or loss

	2023 £'000	2022 £'000
Dividend income	16,641	16,431
	16,641	16,431

4.    Other income

	2023 £'000	2022 £'000
Bank interest	318	16
Option premium income	576	836
	894	852

5.    Management fee

	2023				2022
	Revenue return £'000	Capital return £'000	Total £'000	Revenue return £'000		Capital return £'000	Total £'000
Management fee	500	1,502	2,002	563		1,690	2,253

A summary of the terms of the management agreement is given in the strategic report in the annual report.

6.    Return per ordinary share

	2023		2022
	£'000	pence	£'000	pence
Revenue return	14,244	7.27	14,441	7.37
Capital return	(11,058)	(5.64)	(796)	(0.41)
Total return	3,186	1.63	13,645	6.96
Weighted average number of ordinary shares	195,978,716		195,978,716

7.   Dividends paid on ordinary shares for the year to 31 August

Dividends on ordinary shares	Ex-dividend date	Record date	Payment date	2023 £'000	2022 £'000
4th interim dividend - 1.85p	3 November 2022	4 November 2022	30 November 2022	3,626	-
1st interim dividend - 1.85p	2 February 2023	3 February 2023	28 February 2023	3,626	-
2nd interim dividend - 1.85p	11 May 2023	12 May 2023	31 May 2023	3,625	-
3rd interim dividend - 1.85p	27 July 2023	28 July 2023	31 August 2023	3,626	-
4th interim dividend - 1.80p	4 November 2021	5 November 2021	30 November 2021	-	3,527
1st interim dividend - 1.80p	3 February 2022	4 February 2022	28 February 2022	-	3,527
2nd interim dividend - 1.80p	5 May 2022	6 May 2022	31 May 2022	-	3,528
3rd interim dividend - 1.80p	28 July 2022	29 July 2022	31 August 2022	-	3,528
				14,503	14,110

A fourth interim dividend in respect of the year ended 31 August 2023 of 1.92p per share has been declared and will be paid to shareholders on 30 November 2023 with record date 10 November 2023. The Company's shares will go ex-dividend on 9 November 2023.

The total dividends payable in respect of the financial year which form the basis of section 1158 of the Corporation Tax Act 2010 are set out below. At the point of declaring each dividend, the directors consider the revenue earned during the financial period to date as well as the distributable revenue reserves brought forward, out of which total amount the dividend is to be paid.

	2023  £'000	2022  £'000
Revenue available for distribution by way of dividend for the year	14,244	14,441
Interim dividends of 5.55p paid (2022: 5.40p)	(10,877)	(10,583)
Fourth interim dividend for the year ended 31 August 2023 of 1.92p (based on 195,978,716 ordinary shares in issue as at 30 October 2023) (2022: 1.85p)	(3,763)	(3,626)
Transfer (from)/to revenue reserve1	(396)	232

¹ The deficit of £396,000 (2022: surplus of £232,000) has been transferred (from)/to the revenue reserve

8.    Net asset value per ordinary share

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

	2023	2022
Net assets attributable (£'000)	344,370	355,687
Number of ordinary shares in issue	195,978,716	195,978,716
Net assets per ordinary share (pence)	175.7	181.5

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

	2023  £'000	2022  £'000
Net assets at start of the year	355,687	356,152
Total net return after taxation	3,186	13,645
Dividends paid on ordinary shares in the period	(14,503)	(14,110)
Total net assets attributable to the ordinary shares at 31 August	344,370	355,687

9.    Called up share capital

Ordinary shares 1p each	Number of shares	Number of shares entitled to dividend	£'000
At 31 August 2023	195,978,716	195,978,716	1,960
At 31 August 2022	195,978,716	195,978,716	1,960

No shares were issued or bought back during the year (2022: same).

10.   Share premium account

	2023  £'000	2022  £'000
At the start of the year	194,550	194,550
At 31 August	194,550	194,550

11.   2023 financial information

The figures and financial information for the year ended 31 August 2023 are extracted from the Company's annual financial statements for that year and do not constitute statutory financial statements for that year. The Company's annual financial statements for the year ended 31 August 2023 have been audited but have not yet been delivered to the Registrar of Companies. The auditors' report on the 2023 financial statements was unqualified and did not contain any statements under sections 498(2) and 498(3) of the Companies Act 2006.

12.   2022 financial information

The figures and financial information for the year ended 31 August 2022 are extracted from financial statements for that year and do not constitute statutory financial statements for that year. Those financial statements have been delivered to the Registrar of Companies and included the report of the auditors which was unqualified and did not contain any statements under sections 498(2) or 498(3) of the Companies Act 2006.

13.   Annual report and financial statements

The annual report and financial statements for the year ended 31 August 2023 will be posted to shareholders in early November 2023 and will be available on the Company's website www.hendersoninternationalincometrust.com. Copies will be available in hard copy format from the Company's registered office, 201 Bishopsgate, London EC2M 3AE.

14.   Annual general meeting

The annual general meeting will be held on Tuesday, 12 December 2023 at 2.30pm at the offices of Janus Henderson Investors, 201 Bishopsgate, London EC2M 2AE. The notice of the annual general meeting will be posted to shareholders with the annual report and financial statements.

15.   General information

Company Status Henderson International Income Trust plc is a UK domiciled investment trust company.

SEDOL/ISIN number: ordinary shares: B3PHCS8/GB00B3PHCS86 London Stock Exchange (TIDM) Code: HINT

Global Intermediary Identification Number (GIIN): WRGF5X.99999.SL.826

Legal Entity Identifier (LEI): 2138006N35XWGK2YUK38

Company Registration Number: 7549407

Registered Office

201 Bishopsgate, London EC2M 3AE

Directors and Secretary

The directors of the Company are Richard Hills (chairman), Jo Parfrey (audit committee chair), Lucy Walker (senior independent director), Mai Fenton and Aidan Lisser.

The corporate secretary is Janus Henderson Secretarial Services UK Limited, represented by Sally Porter, ACG.

Website

Details of the Company's share price and net asset value, together with general information about the Company, monthly factsheets and data, copies of announcements, reports and details of general meetings can be found at www.hendersoninternationalincometrust.com.

For more information please contact:

Ben Lofthouse Fund Manager Henderson International Income Trust plc Telephone: [phone]
Dan Howe Head of Investment Trusts Janus Henderson Investors Telephone: [phone]	Harriet Hall Investment Trusts 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