HENDERSON INVESTMENT FUNDS LIMITED
HENDERSON INTERNATIONAL INCOME TRUST PLC
LEGAL ENTITY IDENTIFIER: 2138006N35XWGK2YUK38
29 October 2019
HENDERSON INTERNATIONAL INCOME TRUST PLC
Annual Financial Report for the year ended 31 August 2019
This announcement contains regulated information
| PERFORMANCE HIGHLIGHTS | 2019 | 2018 |
| Net asset value (debt at par) per share at year end | 164.8p | 167.1p |
| Net assets | £309,176,000 | £296,748,000 |
| Dividend in respect of year1 | 5.70p | 5.30p |
| Dividend yield for the year2 | 3.57% | 3.16% |
| Ongoing charge for year | 0.84% | 0.83% |
| Gearing at year end | 3.25% | 1.91% |
| Share price at year end | 159.50p | 167.50p |
| Shares in issue at year end | 187,583,716 | 177,581,306 |
1 Includes the fourth interim dividend in respect of the year ended 31 August 2019 declared on 29 October 2019 to be paid to
shareholders on 29 November 2019.
2 Calculated on the share price as at year end.
Source: Morningstar, Funddata, Janus Henderson, Datastream
INVESTMENT OBJECTIVE
The Company's investment objective is to provide shareholders with a growing total annual dividend, as well as capital appreciation.
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 a listed security.
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.
CHAIRMAN'S STATEMENT
Performance and markets
The net asset value ('NAV') total return per ordinary share has increased by 2.2% (debt at par) and by 0.0% (debt at fair value). The total return on the ordinary share price was (1.4%), including total dividends of 5.70p per ordinary share, an increase of 7.5% year-on-year. These returns compare to a total return of 8.0% for the MSCI World (ex UK) Index (sterling adjusted) ('MSCI World Index').
The positive total returns achieved by the market this year suggest a relatively benign environment. The reality is that the economic and political backdrops have been rather chaotic, resulting in significant falls in markets from September to December, followed by an almost symmetrical rally for the rest of the Company's financial year as most major areas of the world continue to deliver reasonable GDP growth, albeit at a lower level than anticipated. For equity market investors perhaps the most significant events in the year have been the escalation of the ongoing trade disputes between the US and the rest of the world, and the change in policy by many central banks from tightening to easing measures in the face of slowing economic growth.
As a result of the political and economic turmoil, investor confidence has been falling over the year and interest rate expectations have moderately declined. At a sector level the strongest performance came from information technology, utilities, consumer staples and healthcare while more cyclical areas such as materials, financials and energy underperformed the market. The US equity market outperformed the MSCI World Index, while Japan, Europe and the UK lagged.
Against this backdrop aggregate company earnings are coming in below expectations, but dividend growth has continued to be positive, a fact echoed by the majority of the portfolio's holdings. As a result of the Company's income objective, portfolio composition can differ significantly from the MSCI World index which can lead to significant variations in performance between the two. Information about the drivers of this period's variation can be found in the fund manager's report. Overall the board is pleased with the Company's performance since inception across the key performance indicators ('KPIs').
Strategy, growth and corporate activity
Since your Company's original listing, the board's strategy has been to provide a high and rising level of dividends as well as long-term capital appreciation from a focused and internationally diversified portfolio of securities outside the UK. We remain willing to issue further shares at appropriate times. This is to provide greater liquidity in our shares, to widen demand for them from wealth managers and to lower our costs. We have made good progress on this during the year, having issued 2,175,000 new shares in response to continuing investor demand.
We were delighted to welcome to the Company those shareholders of The Establishment Investment Trust plc ('EIT') who elected to roll over their holdings into the Company's shares following EIT's scheme of reconstruction and voluntary winding up. On 18 July 2019 the Company issued 7,827,410 new ordinary shares to EIT's shareholders on the terms outlined in the prospectus published on 10 June 2019.
At 31 August 2019 there were 187,583,716 shares in issue. No shares have been issued since the year end and therefore the number of shares in issue as at the date of this report is 187,583,716.
Since inception, management fee reductions and changes combined with the increase in the size of the Company have been the two principal factors that have led to a fall in the ongoing charge from 1.38% (as at 31 August 2012) to 0.84% this year.
Earnings and dividends
We are pleased to announce a total dividend increase from 5.30p to 5.70p per ordinary share for the year to 31 August 2019. The year consisted of a first, second and third interim dividend of 1.40p per ordinary share, and a larger than normal fourth interim dividend of 1.50p per ordinary share in the light of our increased earnings. The fourth interim dividend will be paid on 29 November 2019. Given the earnings growth being produced by the portfolio and in the absence of an adverse change in conditions, the board intends to maintain the quarterly dividend at its new level during the year to 31 August 2020. The board's aim remains to make progressive and steady increases in annual total dividend payments. However, shareholders must recognise that such increases can never be guaranteed or assumed to be repeated in the future.
The dividend is well covered by the income generated by the portfolio. Despite the year-on-year dividend increase, the revenue reserve has increased again, thereby making further provision for the risk of less benign conditions going forward.
Gearing
Well-judged gearing enhances returns to shareholders. The board has reconfirmed its current policy to permit the fund manager to gear up to 25% of net assets at the time of drawdown or investment, as appropriate. Borrowing limits for this purpose include implied gearing through the use of derivatives. To date the Company has used gearing to invest in specific stock opportunities.
In April 2019 your Company took the opportunity to issue €30m fixed rate 25-year senior unsecured notes with an annualised coupon of 2.43%, taking the view that this would secure fixed rate long-dated euro denominated financing at an attractive price. It is also expected to enhance long-term investment performance. The Company's overdraft facility with HSBC Bank plc, which provides short-term gearing, was reduced from £60m to £30m at the same time the senior unsecured notes were issued.
At 31 August 2019 the Company had a short-term overdraft facility with HSBC of £nil (2018: £6.2m). There was 3.25% gearing in place at the year end (2018: 1.91%).
Liquidity and discount management
The board continues to monitor the premium/discount to NAV and will consider appropriate action if the relationship between the NAV and share price moves and remains out of line with the Company's peer group. Nonetheless there is a distinct limit to the board's ability to influence the premium or discount to NAV. We consider that it is not in shareholders' interests to have a specific issuance or buy-back policy. However, to retain flexibility, we reserve the right to implement share issues or buy-backs within a narrow band relative to NAV, where appropriate, and subject to market conditions.
Ongoing charge
The ongoing charge for the year to 31 August 2019, as calculated in accordance with the Association of Investment Companies ('AIC') methodology was 0.84% (2018: 0.83%).
Annual General Meeting
The ninth annual general meeting of the Company will be held at 2.30pm on Thursday, 5 December 2019 at the Company's 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 this annual report. Ben Lofthouse, the fund manager, will give a presentation at the meeting, which will be followed by light refreshments. The directors' welcome shareholders' attendance at the meeting and recommend that shareholders support all the resolutions to be proposed. Those who cannot attend are encouraged to vote on all resolutions by completing their proxy forms.
The Company's annual general meeting will be broadcast live on the internet. If you are unable to attend in person you can watch the meeting in real time by visiting https://www.janushenderson.com/en-gb/investor/investment-trusts-live/.
Board composition
The board has agreed to deliberately phase the introduction of new directors, and the retirement of current directors, over the next three years. This will allow sufficient time for new directors to familiarise themselves with the Company whilst retaining the right balance of knowledge, skills, experience and corporate knowledge on the board.
Our succession plan is for Bill Eason to retire at the conclusion of the 2020 annual general meeting with a replacement director to be recruited in the second half of next year, and that I stand down as chairman of the board at the conclusion of the annual general meeting in 2022. This will conclude four years' service as chairman of the board, following six years' service as audit committee chairman. Our plan complies with the new AIC Code of Corporate Governance ('AIC Code').
The board has considered the 'division of responsibilities' provisions of the AIC Code, in particular the advantages of appointing a senior independent director to provide a sounding board for the chair and to act as intermediary for the other directors and shareholders. To this end the board had appointed Bill Eason as the Company's senior independent director with effect from 29 October 2019.
Outlook
There is no denying that we are living in unusual times. In the past, low unemployment has been associated with inflation, strong economic growth and rising interest rates. At the moment a record proportion of the global bond market is trading at negative yields, whilst at the same time unemployment remains low in most major economies. Central banks have not managed to exit the accommodative monetary policies introduced over the last decade yet look like they are preparing to act to stimulate growth again. The uncertainty surrounding the outcome of Brexit continues however the board are comfortable that the manager has detailed plans in place to continue in operation regardless of the final position. Importantly, the portfolio is well-diversified and will be relatively unaffected by Brexit in the short-term given the nature of the investment objective.
Despite the relatively strong performance of equity markets since the 2008 financial crisis overall valuations remain reasonable in an historical context and very attractive on a yield basis relative to bonds. We do not see signs of irrational exuberance, in fact risk aversion is dominating sector relative returns, but there are definitely wide variations in valuations and expectations within different areas of the equity market itself.
It is notoriously difficult to predict market returns, particularly in the short-term. What we can say is that investors around the world are facing an unprecedented challenge to continue to achieve general positive real returns given the low bond yields available in many markets. Against this backdrop the Company's objective of delivering an appealing income from a diversified portfolio of holdings remains highly relevant. The Company will continue with its existing strategy of identifying companies that are attractively valued, pay a sustainable dividend and have the capacity to grow their dividends over the medium to long-term.
Simon Jeffreys
Chairman
29 October 2019
PORTFOLIO INFORMATION
Ten largest investments at 31 August 2019
|
Ranking 2019 |
Ranking 2018 |
Company |
Country |
Sector | Market value 2019 £'000 | Market value (cost) at time of investment 2019 £'000 |
% of portfolio |
| 1 | 3 | Nestlé | Switzerland | Consumer goods | 12,034 | 7,427 | 3.8 |
| 2 | 1 | Microsoft | US | Technology | 11,378 | 2,916 | 3.6 |
| 3 | 6 | Coca-Cola | US | Consumer goods | 9,116 | 6,578 | 2.9 |
| 4 | 11 | Novartis | Switzerland | Healthcare | 7,765 | 5,333 | 2.4 |
| 5 | - | Sanofi | France | Healthcare | 7,754 | 7,159 | 2.4 |
| 6 | 4 | Chevron | US | Oil & gas | 7,705 | 5,201 | 2.4 |
| 7 | 14 | Roche | Switzerland | Healthcare | 7,533 | 5,856 | 2.4 |
| 8 | 42 | Verizon Communications | US | Telecommunications | 7,047 | 5,499 | 2.2 |
| 9 | 5 | Cisco Systems | US | Technology | 6,641 | 3,421 | 2.1 |
| 10 | 8 | BASF | Germany | Basic materials | 6,538 | 8,598 | 2.0 |
|
|
|
|
|
| -------- | -------- | ------ |
| Top 10 |
| 83,511 | 57,988 | 26.2 | |||
|
|
|
|
|
| ====== | ====== | ==== |
| 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
| |||||
|
| 2019 % | 2018 % |
|
| 2019 % | 2018 % |
| US | 31.0 | 32.7 |
| Financials | 19.1 | 22.1 |
| France | 11.7 | 7.2 |
| Consumer goods | 15.4 | 12.1 |
| Switzerland | 10.4 | 8.8 |
| Healthcare | 11.8 | 6.7 |
| China | 5.9 | 6.9 |
| Technology | 11.3 | 13.6 |
| Germany | 5.8 | 6.6 |
| Telecommunications | 9.9 | 9.3 |
| Netherlands | 5.3 | 6.4 |
| Oil & gas | 8.1 | 9.7 |
| Italy | 4.1 | 2.2 |
| Industrials | 6.5 | 7.3 |
| Canada | 3.7 | 4.4 |
| Property | 6.1 | 5.8 |
| Taiwan | 3.5 | 4.3 |
| Basic materials | 5.2 | 7.4 |
| Sweden | 3.5 | 4.0 |
| Consumer services | 3.4 | 4.8 |
| Australia | 3.0 | 2.9 |
| Utilities | 3.2 | 1.2 |
| Korea | 2.5 | 2.5 |
|
|
|
|
| Singapore | 2.3 | 0.8 |
|
|
|
|
| Hong Kong | 1.4 | 1.2 |
|
|
|
|
| Austria | 1.3 | 1.1 |
|
|
|
|
| New Zealand | 1.2 | 1.1 |
|
|
|
|
| Indonesia | 1.0 | 0.0 |
|
|
|
|
| Finland | 1.0 | 1.5 |
|
|
|
|
| Thailand | 0.8 | 1.2 |
|
|
|
|
| Spain | 0.6 | 0.9 |
|
|
|
|
| Malaysia | 0.0 | 1.3 |
|
|
|
|
| Japan | 0.0 | 1.2 |
|
|
|
|
| Denmark | 0.0 | 0.8 |
|
|
|
|
Source: Janus Henderson
INVESTMENT PORTFOLIO AS AT 31 AUGUST 2019
|
Company
|
Country | Market value £'000 |
% of portfolio |
| Basic materials |
|
|
|
| BASF | Germany | 6,538 | 2.0 |
| DuPont De Nemours | US | 3,179 | 1.0 |
| UPM-Kymmene | Finland | 3,130 | 1.0 |
| Indorama Ventures | Thailand | 2,617 | 0.8 |
| Dow | US | 1,159 --------- | 0.4 ----- |
|
|
| 16,623 | 5.2 |
|
|
| --------- | ----- |
| Consumer goods |
|
|
|
| Nestlé | Switzerland | 12,034 | 3.8 |
| Coca-Cola | US | 9,116 | 2.9 |
| Treasury Wine Estates | Australia | 5,405 | 1.7 |
| Samsung | Korea | 4,497 | 1.4 |
| Anta Sports | China | 4,166 | 1.3 |
| Henkel | Germany | 3,838 | 1.2 |
| Mondelez | US | 3,422 | 1.1 |
| Michelin | France | 3,222 | 1.0 |
| Danone | France | 3,072 | 1.0 |
|
|
| -------- | ----- |
|
|
| 48,772 | 15.4 |
|
|
| --------- | ----- |
| Consumer services |
|
|
|
| Royal Caribbean | US | 4,619 | 1.4 |
| Sabre | US | 3,144 | 1.0 |
| Las Vegas Sands | US | 3,096 | 1.0 |
|
|
| --------- | ----- |
|
|
| 10,859 | 3.4 |
|
|
| --------- | ----- |
| Financials |
|
|
|
| AXA | France | 5,590 | 1.7 |
| BNP Paribas | France | 5,236 | 1.6 |
| E. Sun | Taiwan | 4,835 | 1.5 |
| United Overseas | Singapore | 4,432 | 1.4 |
| Allianz | Germany | 4,391 | 1.4 |
| Macquarie | Australia | 4,015 | 1.3 |
| Bawag | Austria | 3,996 | 1.3 |
| Van Lanschot | Netherlands | 3,731 | 1.2 |
| Manulife | Canada | 3,702 | 1.2 |
| Banca Negara |
|
|
|
| Indonesia | Indonesia | 3,189 | 1.0 |
| ING | Netherlands | 3,099 | 1.0 |
| NN Group | Netherlands | 3,078 | 1.0 |
| Nordea | Sweden | 3,051 | 1.0 |
| Banca Farmafactoring | Italy | 2,768 | 0.9 |
| JP Morgan Chase | US | 2,507 | 0.8 |
| Swedbank | Sweden | 2,412 | 0.8 |
|
|
| --------- | ----- |
|
|
| 60,032 | 19.1 |
|
|
| ---------- | ------- |
| Healthcare |
|
|
|
| |
| Novartis | Switzerland | 7,765 | 2.4 |
| |
| Sanofi | France | 7,754 | 2.4 |
| |
| Roche | Switzerland | 7,533 | 2.4 |
| |
| Pfizer | US | 6,160 | 1.9 |
| |
| Bristol-Myers Squibb | US | 4,355 | 1.4 |
| |
| Medtronic | US | 4,270 | 1.3 |
| |
|
|
| --------- | ---- |
| |
|
|
| 37,837 | 11.8 |
| |
|
|
| --------- | ----- |
| |
| Industrials |
|
|
| ||
| ABB | Switzerland | 5,784 | 1.8 | ||
| Jiangsu Expressway | China | 4,102 | 1.3 | ||
| Siemens | Germany | 3,762 | 1.2 | ||
| Anhui Conch | China | 3,607 | 1.1 | ||
| Prosegur Cash | Spain | 1,954 | 0.6 | ||
| Sig Combibloc | Canada | 1,560 | 0.5 | ||
|
|
| --------- | ----- | ||
|
|
| 20,769 | 6.5 | ||
|
|
| --------- | ----- | ||
| Oil & gas |
|
|
| ||
| Chevron | US | 7,705 | 2.4 | ||
| Eni | Italy | 4,617 | 1.4 | ||
| Total | France | 4,566 | 1.4 | ||
| Occidental Petroleum | US | 3,369 | 1.0 | ||
| China Petroleum and Chemical | China | 3,103 | 1.0 | ||
| Vermilion | Canada | 3,016 | 0.9 | ||
|
|
| --------- | ----- | ||
|
|
| 26,376 | 8.1 | ||
|
|
| --------- | ----- | ||
| Property |
|
|
| ||
| CyrusOne | US | 6,256 | 2.0 | ||
| China Vanke | China | 3,892 | 1.2 | ||
| Crown Castle | US | 3,626 | 1.1 | ||
| Mapletree North Asia | Singapore | 3,024 | 0.9 | ||
| Eurocommercial | Netherlands | 2,838 | 0.9 | ||
|
|
| --------- | ----- | ||
|
|
| 19,636 | 6.1 | ||
|
|
| --------- | ----- | ||
| Technology |
|
|
| ||
| Microsoft | US | 11,378 | 3.6 | ||
| Cisco Systems | US | 6,641 | 2.1 | ||
| Taiwan Semiconductor Manufacturing | Taiwan | 6,501 | 2.0 | ||
| LAM Research | US | 4,376 | 1.4 | ||
| BE Semiconductor | Netherlands | 3,722 | 1.2 | ||
| Maxim | US | 3,113 | 1.0 | ||
|
|
| --------- | ---- | ||
|
|
| 35,731 | 11.3 | ||
|
|
| --------- | ---- | ||
| Telecommunications |
|
|
| ||
| Verizon Communications | US | 7,047 | 2.2 | ||
| Tele2 | Sweden | 5,558 | 1.7 | ||
| HKT Trust and HKT Ltd | Hong Kong | 4,573 | 1.4 | ||
| Orange | France | 3,966 | 1.2 | ||
| Spark NZ | New Zealand | 3,853 | 1.2 | ||
| SK Telecom | Korea | 3,647 | 1.1 | ||
| Telus | Canada | 3,611 | 1.1 | ||
|
|
| --------- | ----- | ||
|
|
| 32,255 | 9.9 | ||
|
|
| --------- | ----- | ||
| Utilities |
|
|
|
| ENEL | Italy | 5,745 | 1.8 |
| Veolia | France | 4,575 | 1.4 |
|
|
| -------- | ---- |
|
|
| 10,320 | 3.2 |
|
|
| -------- | ---- |
|
|
| ----------- | ------- |
| Total investments |
| 319,210 | 100.0 |
|
|
| ======= | ==== |
FUND MANAGER'S REPORT
Performance review
The portfolio produced positive returns over the period, generating a total return of 2.2% NAV per share with debt at par value, (0.0% debt at fair value) including total dividends of 5.70p per ordinary share, an increase of 7.5% year-on-year.
The Company's investment process focuses on companies with attractive dividend yields, strong cash flow generation, and the potential to grow both earnings and distributions in the future. The dividend growth from the portfolio has been excellent over the period. The majority of companies in the portfolio have increased or maintained their dividends and the dividend growth has been widely spread across sectors and regions. Dividend growth has been driven by both earnings growth and increases in the proportion of earnings paid out as dividend. Despite concerns regarding economic growth the majority of companies in the portfolio have increased or maintained their dividends. And a number of the most significant increases continue to come from economically sensitive sectors. The technology holdings, for example, had a number of the largest increases year-on-year, including semiconductor equipment manufacturers LAM Research (43%) and Maxim (12%), Microsoft (10%) and Cisco Systems (10%). The financial services sector also continues to generate strong dividend growth as regulatory guidelines become clearer. Notable increases include JP Morgan Chase (41%), insurers Manulife (16%) and AXA (6%), and bank and infrastructure asset manager Macquarie (10%). Other significant increases included Italian utility ENEL (18%), wine producer Treasury Wine Estates (25%) and paper and pulp company UPM-Kymmene (13%). All of the Company's holdings contribute to income generation and the diversification across sectors and geographies is designed to enhance the portfolio's dividend stability. Based on the underlying trends within the portfolio the outlook for dividend growth remains good.
The Company's portfolio is relatively concentrated consisting typically of 60-80 positions, so performance can be impacted by stock specific news and events as well as regional equity market performances and sector news.
As noted in the chairman's statement, over the year, investors have become increasingly concerned about the outlook for economic growth. Given these concerns it is not surprising to find that companies and sectors with less sensitivity to economic growth have performed well. Having said this, the extent of the divergence between perceived growth and quality stocks versus other parts of the market is extreme versus history.
In this environment our investment bias toward value as a factor in stock selection has detracted from performance. Whilst we view the price to earnings paid for a company as an important influence on the long-term total returns an investor will receive, this view seems out of favour at this time.
The table below highlights the most significant stock contributors to performance over the year. It shows relative return versus the benchmark, so registers the impact of both stocks held in the portfolio and those not held but which have been significant drivers of the benchmark. The top ten stocks all returned over 20% over the year. They are all industry leaders in their respective fields and are generally growing and/or exposed to structurally growing areas. ENEL, for example has been transitioning from a largely European regulated utility to a renewable energy company. Both Nestlé and Coca-Cola are starting to see improved revenue growth after refocusing on new product innovation for several years.
The technology sector is well represented in the portfolio by data centre operator CyrusOne, semiconductor equipment manufacturer LAM Research, and software and data management company Microsoft. These companies have continued to grow revenue and have been rewarded by the market for their future potential.
At the other extreme, the biggest detractors to performance have a cyclical bias. Although they are in different sectors chemical company Indorama Ventures, oil companies Occidental Petroleum and Vermilion, and property company Eurocommerical have all taken advantage of low prices to make acquisitions, to which the market has reacted negatively for now. Whilst the capital performance has been disappointing they have maintained their dividends and are very attractively valued so they continue to be held in the portfolio. Nordea, ING and Swedbank are mainly retail banks with conservative balance sheets, but whilst their loan books have shown very little signs of impairment their valuations have proved to be very sensitive to interest rate expectations and have de-rated as economic growth has slowed in Scandinavia.
Whilst it is disappointing that these stocks have underperformed, it is worth noting that several of the largest, best performing holdings in the portfolio for the last few years were purchased when they were largely being ignored by investors. ENEL, Microsoft, and Cisco Systems were all companies whose futures were being questioned when purchased. The team's investment process is driven by stock selection, based on fundamental qualitative analysis and a strong valuation discipline. Dividends from these companies allow investors to be paid to remain invested until a valuation anomaly corrects. At this time the underperforming holdings have been retained as the valuations are now very attractive with significant dividend yield premiums for each.
| Top 10 contributors to relative return vs benchmark | ||
| Ranking | Company | % |
| 1. | Nestlé | 0.74 |
| 2. | ENEL | 0.59 |
| 3. | Anta Sports | 0.58 |
| 4. | Coca-Cola | 0.46 |
| 5. | Microsoft | 0.42 |
| 6. | LAM Research | 0.39 |
| 7. | CyrusOne | 0.38 |
| 8. | BE Semiconductor | 0.35 |
| 9. | Novartis | 0.34 |
| 10. | HKT Trust and HKT Ltd | 0.32 |
| Top 10 detractors from relative return vs benchmark | ||
| Ranking | Company | % |
| 1. | Vermillion | (0.86) |
| 2. | Occidental Petroleum | (0.68) |
| 3. | China Petroleum & Chemical | (0.62) |
| 4. | Nordea | (0.60) |
| 5. | Swedbank | (0.58) |
| 6. | BASF | (0.57) |
| 7. | Indorama Ventures | (0.43) |
| 8. | Eurocommercial | (0.39) |
| 9. | ING | (0.35) |
| 10. | DuPont de Nemours | (0.34) |
Although the strongest absolute performance came from the US portfolio, in line with the strong performance of the markets, the strongest relative regional performance came from the portfolio's Asian holdings which significantly outperformed the region. This was from a mixture of defensive stocks including telecommunication companies HKT Trust and HKT Ltd and Spark NZ, and companies exposed to the emerging Chinese consumer such as Anta Sports and Treasury Wine Estates.
Portfolio positioning
Over the year we have been taking profits in areas that have reached fair value, or where we see increased risk to returns. The financial sector weight has been reduced as a result of the lower expected economic growth, which will make it harder for some of the companies to bear the fruit of their restructuring efforts. Profits have also been taken in a number of companies that have performed strongly in order to invest in new opportunities. Positions closed included asset manager Blackstone, US electronic goods retailer Best Buy, and toy company Hasbro, which have all appreciated considerably since purchase and have potential sensitivity to any economic slowdown. Although there is a general premium for certainty and stable earnings, some interesting situations have appeared in consumer staples and healthcare and exposure to those sectors has therefore increased. New positions initiated in the healthcare area include Sanofi, whose valuation does not reflect its drug portfolio or the potential for management's cost savings efforts and Bristol-Myers Squibb, which has underperformed the market since announcing the acquisition of Celgene and now offers an attractive entry point. In the consumer staples sector Mondelez and Danone were purchased. Both have strong global brands and are expected to improve their rate of organic revenue growth after focusing on innovation for the last few years, while continuing to generate good levels of cashflow. The Company also bought positions in Michelin, Veolia and Henkel during the twelve-month period. Veolia yields almost 4% and is well positioned for growth as an international waste and water company. Henkel, the health & personal products and adhesives company, has a strong balance sheet and should benefit from restructuring and development initiatives to improve top line performance. Michelin is well placed as a leading global tyre company to benefit from the ongoing replacement market for both higher margin SUV tyres and for electric vehicle tyres.
The Company has taken advantage of low interest rates to secure long-term funding at a rate significantly below the dividend yield of the average portfolio holding. The high levels of uncertainty caused by the many geopolitical issues that persist, present an opportunity to purchase companies at attractive valuations, with the expectation that they will generate significantly higher total returns in the medium to long-term than the low cost of this debt (it is worth noting that the cash position at the year end is a product of The Establishment Investment Trust plc transaction rather than a tactical investment decision). The funding has been taken out in euros, partly to access the lower interest rates available, and partly in reflection of the overseas exposure of the Company's portfolio. Whilst Brexit has little direct impact on the portfolio holdings (due to its ex UK strategy), investors' returns can be impacted by short-term fluctuations in sterling and it seems prudent to match some borrowing to the relevant asset base.
Ben Lofthouse
Fund Manager
29 October 2019
Principal risks and uncertainties
The board, with the assistance of Janus Henderson, has carried out a robust assessment of the principal risks and uncertainties facing the Company that would threaten the business model, future performance, solvency and liquidity. This included consideration of the market uncertainty arising from the United Kingdom's negotiations to leave the European Union ('Brexit') however the board are comfortable that the manager has detailed plans in place to continue in operation regardless of the final position. Importantly, the portfolio is well-diversified and will be relatively unaffected by Brexit in the short-term given the nature of the investment objective.
The board regularly considers the principal risks and has drawn up a matrix of risks facing the Company. The board 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 set out in the table below. The board does not consider these to have changed during the course of the reporting period and up to the 29 October 2019 with the exception of risks associated with the senior unsecured notes.
| Risk | Mitigation |
| 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 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 price risks Although the 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 operate unsuccessfully, or fail entirely. A fall in the market value of the Company's portfolio would have an adverse effect on shareholders' funds.
Most of the 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. |
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 the 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 the 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 s.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 the Company's shares, while a breach of the Companies Act could lead to criminal proceedings, or financial or reputational damage. |
The manager has contracted investment, company secretarial, administration and accounting services to qualified professionals. The board receives internal control reports produced by Janus Henderson on a quarterly basis, which confirm 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. The 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 board also monitors the principal business risks faced by the 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. |
| Risks associated with the senior unsecured notes A breach of the senior unsecured notes covenants would trigger an 'event of default' clause in the note purchase agreement, at which point the outstanding amount may become automatically and immediately repayable. |
The manager monitors the Company's compliance with the senior unsecured notes covenants through the Charles River compliance tool. The senior unsecured notes are conservatively coded into this tool so that the manager would be alerted well in advance of a potential breach of covenant conditions.
The board monitors compliance with the unsecured loan notes covenants through a monthly investment limits and restrictions schedule that is provided at each board meeting.
Other 'events of default' not relating to covenant conditions are also monitored. |
Viability Statement
The 2014 UK Corporate Governance Code introduced a requirement for the board to assess the future prospects for the Company, and report on the assessment within the annual report. The board considered that certain characteristics of the Company's business model and strategy were relevant to this assessment:
• the board looks to ensure the Company seeks to deliver long-term performance
• the Company's investment objective, strategy and policy, which are subject to regular board monitoring, mean that the Company is invested mainly in readily realisable listed securities and that the level of borrowings is restricted
• the Company is a closed-end investment company and therefore does not suffer from the liquidity issues arising from unexpected redemptions
• the Company has an ongoing charge of 0.84%.
Also relevant were a number of aspects of the Company's operational agreements:
• the Company retains title to all assets held by the custodian under the terms of formal agreements with the custodian and depositary
• long-term borrowing is in place being the 2.43% senior unsecured notes 2044 which is also subject to a formal agreement, including financial covenants with which the 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 8.72%
• revenue and expenditure forecasts are reviewed by the directors at each board meeting
• 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 the Company's business model, including future performance, liquidity and solvency.
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 the 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 to maintain a narrow share price discount. The directors assess viability over three year rolling periods, taking account of foreseeable severe but plausible scenarios. The directors believe that a rolling three year period best balances the Company's long-term objective, its financial flexibility and scope with the difficulty in forecasting economic conditions affecting the Company and its shareholders.
Based on their assessment, and in the context of the Company's business model, strategy and operational arrangements set out above, the directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the three year period to 31 August 2022.
Borrowings
Where the fund manager believes that gearing will enhance returns to shareholders, the Company may borrow up to 25% of its gross assets at the time of drawdown or investment (as appropriate). Borrowings for these purposes would include implied gearing through the use of derivatives. The Company's short-term gearing facility allows borrowing 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.
In addition, on 30 April 2019 the 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.
At the same time the long-term senior unsecured notes were issued the Company's short-term overdraft facility was simultaneously reduced from £60m to £30m, to maintain the gearing level.
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 these events are highly unlikely to occur.
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. Directors' shareholdings are disclosed in the annual report.
In relation to the provision of services by the manager (other than fees payable by the Company in the ordinary course of business and the 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 the annual report.
Directors' responsibility statement
Each of the directors confirms that, to the best of their knowledge:
• the Company's financial statements, which have been prepared in accordance with UK Accounting Standards on a going concern basis, give a true and fair view of the assets, liabilities, financial position and profit of the Company; and
• the strategic report, report of the directors and financial statements include a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.
For and on behalf of the board
Simon Jeffreys
Chairman
29 October 2019
INCOME STATEMENT
|
|
| Year ended 31 August 2019 | Year ended 31 August 2018 | ||||
|
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 |
- |
(2,432) |
(2,432)
|
- |
7,481 |
7,481 |
| 3 | Income from investments held at fair value through profit or loss |
13,415 |
- |
13,415 |
12,500 |
- |
12,500 |
|
| (Loss)/profit on foreign exchange |
- |
(1,301) |
(1,301) | - | 85 | 85 |
|
| Other income | 327 | - | 327 | 220 | - | 220 |
|
|
| --------- | ------- | --------- | --------- | ------- | --------- |
|
| Gross revenue and capital (losses)/gains |
13,742 |
(3,733) |
10,009 |
12,720 |
7,566 |
20,286 |
|
| Management fee | (462) | (1,385) | (1,847) | (458) | (1,374) | (1,832) |
|
| Other administrative expenses | (557) | - | (557) | (559) | - | (559) |
|
|
| ---------- | -------- | -------- | ---------- | -------- | -------- |
|
| Net return before finance costs and taxation |
12,723 |
(5,118) |
7,605 |
11,703 |
6,192 |
17,895 |
|
|
| ---------- | -------- | -------- | ---------- | -------- | -------- |
|
| Finance costs | (76) | (185) | (261) | (25) | (31) | (56) |
|
|
| ---------- | -------- | -------- | ------ | -------- | ---------- |
|
| Net return before taxation | 12,647 | (5,303) | 7,344 | 11,678
| 6,161
| 17,839 |
|
|
| ---------- | -------- | -------- | -------- | -------- | ---------- |
|
| Taxation on net return | (1,357) | (36) | (1,393) | (1,456)
| 3
| (1,453)
|
|
|
| ---------- | -------- | -------- | --------- | -------- | -------- |
|
| Net return after taxation | 11,290 | (5,399) | 5,951 | 10,222 | 6,164 | 16,386 |
|
|
| ====== | ===== | ===== | ===== | ===== | ===== |
| 4 | Return per ordinary share | 6.29p | (2.98p) | 3.31p | 5.80p | 3.50p | 9.30p |
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 2019 |
Called up share capital £'000 | Share premium account £'000 |
Special reserve £'000 | Other capital reserves £'000 |
Revenue reserve £'000 |
Total £'000 |
|
| At 31 August 2018 | 1,776 | 164,631 | 45,732 | 77,819 | 6,790 | 296,748 |
| 7, 8 | New shares allotted | 100 | 16,376 | - | - | - | 16,476 |
|
| Net return for the year | - | - | - | (5,339) | 11,290 | 5,951 |
| 5 | Dividends paid | - | - | - | - | (9,999) | (9,999) |
|
|
| ------- | ---------- | ---------- | --------- | -------- | ---------- |
|
| At 31 August 2019 | 1,876 | 181,007 | 45,732 | 72,480 | 8,081 | 309,176 |
|
|
| ===== | ====== | ====== | ====== | ===== | ====== |
|
Notes |
Year ended 31 August 2018 |
Called up share capital £'000 | Share premium account £'000 |
Special reserve £'000 |
Other capital reserves £'000 |
Revenue reserve £'000 |
Total £'000 |
|
| At 31 August 2017 | 1,742 | 159,102 | 45,732 | 71,655 | 5,741 | 283,972 |
| 7, 8 | New shares allotted | 34 | 5,529 | - | - | - | 5,563 |
|
| Net return for the year | - | - | - | 6,164 | 10,222 | 16,386 |
| 5 | Dividends paid | - | - | - | - | (9,173) | (9,173) |
|
|
| ------- | ---------- | --------- | --------- | -------- | ---------- |
|
| At 31 August 2018 | 1,776 | 164,631 | 45,732 | 77,819 | 6,790 | 296,748 |
|
|
| ==== | ===== | ===== | ===== | ===== | ====== |
STATEMENT OF FINANCIAL POSITION
|
Notes |
| At 31 August 2019 £'000 | At 31 August 2018 £'000 |
|
| Fixed asset investments held at fair value through profit or loss | 319,210 | 302,416 |
|
|
| ---------- | ---------- |
|
| Current assets |
|
|
|
| Debtors | 1,621 | 1,420 |
|
| Cash and cash equivalents | 23,189 | - |
|
|
| ---------- | -------- |
|
|
| 24,810 | 1,420 |
|
|
| ---------- | -------- |
|
| Creditors: amounts falling due within one year | (7,892) | (7,088) |
|
|
| --------- | --------- |
|
| Net current assets/(liabilities) | 16,918 | (5,668) |
|
|
| ---------- | ---------- |
|
| Total net assets | 309,176 | 296,748 |
|
|
| ====== | ====== |
|
| Capital and reserves |
|
|
| 7 | Called up share capital | 1,876 | 1,776 |
| 8 | Share premium account | 181,007 | 164,631 |
|
| Special reserve | 45,732 | 45,732 |
|
| Other capital reserves | 72,480 | 77,819 |
|
| Revenue reserve | 8,081 | 6,790 |
|
|
| ---------- | ---------- |
|
| Total shareholders' funds | 309,176 | 296,748 |
|
|
| ====== | ====== |
| 6 | Net asset value per ordinary share | 164.8p | 167.1p |
STATEMENT OF CASH FLOWS
|
| Year ended 31 August 2019 £'000 | Year ended 31 August 2018 £'000 |
| Cash flows from operating activities |
|
|
| Net return before taxation | 7,344 | 17,839 |
| Add back: finance costs | 261 | 56 |
| Less: losses/(gains) on investments held at fair value through profit or loss | 2,432 | (7,481) |
| Add: losses/(gains) on foreign exchange | 1,301 | (85) |
| Withholding tax on dividends deducted at source | (1,965) | (1,617) |
| Taxation recovered | 110 | 55 |
| (Increase)/decrease in debtors | (60) | 386 |
| Increase/(decrease) in creditors | 512 | (9) |
|
| -------- | -------- |
| Net cash inflow from operating activities | 9,935 | 9,144 |
|
| -------- | -------- |
| Cash flows from investing activities |
|
|
| Purchase of investments | (114,653) | (123,621) |
| Sale of investments | 114,175 | 107,765 |
|
| -------- | -------- |
| Net cash outflow from investing activities | (478) | (15,856) |
|
| -------- | -------- |
| Cash flows from financing activities |
|
|
| Equity dividends paid (net of refund of unclaimed distributions and reclaimed distributions) | (9,999) | (9,173) |
| Proceeds from issue of ordinary shares | 3,482 | 5,530 |
| Proceeds from issue of senior unsecured notes | 25,921 | - |
| Cash received from EIT | 866 | - |
| Senior unsecured notes issue costs | (177) | - |
| Interest paid | (38) | (56) |
|
| -------- | -------- |
| Net cash inflow/(outflow) from financing activities | 20,055 | (3,699) |
|
| -------- | -------- |
| Net increase/(decrease) in cash and cash equivalents | 29,512 | (10,411) |
| Cash and cash equivalents at start of year | (6,227) | 4,099 |
| Effect of foreign exchange rates | (96) | 85 |
|
| -------- | -------- |
| Cash and cash equivalents at end of year | 23,189 | (6,227) |
|
| ===== | ===== |
| Comprising: |
|
|
| Cash at bank | 23,189 | - |
| Bank overdraft | - | (6,227) |
|
| ---------- | -------- |
|
| 23,189 | (6,227) |
|
| ====== | ===== |
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 ('SORP') issued in November 2014 and updated in February 2018 with consequential amendments.
The principal accounting policies applied in the presentation of these financial statements are set out below.
Following the issue of the senior unsecured loan 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 section 11 and 12 of FRS 102. This was determined to better reflect the directors' assessment of the carrying value of the senior unsecured notes. This has not resulted in any impact to the financial statements in the prior year.
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 directors do not believe there are any other accounting judgements or estimates that 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 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 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
|
| 2019 £'000 | 2018 £'000 |
| Dividend income | 13,415 | 12,500 |
|
| --------- | --------- |
|
| 13,415 | 12,500 |
|
| ====== | ====== |
4. Return per ordinary share
|
| 2019 | 2018 | ||
|
| £'000 | pence | £'000 | pence |
| Revenue return | 11,290 | 6.29 | 10,222 | 5.80 |
| Capital return | (5,339) | (2.98) | 6,164 | 3.50 |
|
| --------- | -------- | --------- | ------- |
| Total return | 5,951 | 3.31 | 16,386 | 9.30 |
|
| ===== | ===== | ===== | ==== |
| Weighted number of ordinary shares | 179,379,411 | 176,164,731 | ||
|
| ========== | ========== | ||
|
|
|
| ||
5. Dividends paid on ordinary shares for the year ended 31 August
|
|
| Record date | Payment date | Ex-dividend date | 2019 £'000 | 2018 £'000 |
| 4th interim dividend | 1.30p | 27 October 2017 | 30 November 2017 | 26 October 2017 | - | 2,275 |
| 1st interim dividend | 1.30p | 9 February 2018 | 28 February 2018 | 8 February 2018 | - | 2,291 |
| 2nd interim dividend | 1.30p | 4 May 2018 | 31 May 2018 | 3 May 2018 | - | 2,298 |
| 3rd interim dividend | 1.30p | 10 August 2018 | 31 August 2018 | 9 August 2018 | - | 2,309 |
| 4th interim dividend | 1.40p | 9 November 2018 | 30 November 2018 | 8 November 2018 | 2,486 | - |
| 1st interim dividend | 1.40p | 8 February 2019 | 28 February 2019 | 7 February 2019 | 2,492 | - |
| 2nd interim dividend | 1.40p | 3 May 2019 | 31 May 2019 | 2 May 2019 | 2,508 | - |
| 3rd interim dividend | 1.40p | 12 July 2019 | 30 August 2019 | 11 July 2019 | 2,513 | - |
|
|
|
|
|
| ------- | ------- |
|
|
|
|
|
| 9,999 | 9,173 |
|
|
|
|
|
| ==== | ==== |
A fourth interim dividend in respect of the year ended 31 August 2019 of 1.50p per ordinary share was announced on 29 October 2019 and will be paid to shareholders on 29 November 2019 with record date 8 November 2019. The Company's shares will go ex-dividend on 7 November 2019.
All dividends have been or will be paid out of revenue profits.
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 were as follows:
|
| 2019 | 2018 |
| Net assets attributable (£'000) | 309,176 | 296,748 |
| Number of ordinary shares in issue | 187,583,176 | 177,581,306 |
| Net assets per ordinary share | 164.8p | 167.1p |
The movements during the year of the assets attributable to the ordinary shares were as follows:
|
| 2019 £'000 | 2018 £'000 |
| Net assets at start of the year | 296,748 | 283,972 |
| Total net return after taxation | 5,951 | 16,386 |
| Dividends paid on ordinary shares in the period | (9,999) | (9,173) |
| Issue of ordinary shares less issue costs | 16,476 | 5,563 |
|
| ---------- | ---------- |
| Total net assets attributable to the ordinary shares at 31 August | 309,176 | 296,748 |
|
| ====== | ====== |
7. Called up share capital
|
2019 | Number of shares | Number of shares entitled to dividend |
£'000 |
| Ordinary shares 1p each |
|
|
|
| At 31 August 2018 | 177,581,306 | 177,581,306 | 1,776 |
| New shares allotted in year | 10,002,410 | 10,002,410 | 100 |
|
| ---------------- | ----------------- | ------- |
| At 31 August 2019 | 187,583,716 | 187,583,716 | 1,876 |
|
| ========= | ========= | ==== |
During the year, the Company issued 10,002,410 ordinary shares for a total consideration of £16,476,000 after deduction of issue costs of £20,000.
Included in the issue of 10,002,410 ordinary shares during the year was 7,827,410 ordinary shares issued following the scheme of reconstruction and voluntary winding up of The Establishment Investment Trust plc ('EIT') whereby investors in EIT were given the option of receiving shares in the Company. The net proceeds received from this transaction comprised £12,128,000 investments and £866,000 cash. Since the year end no shares have been issued.
|
2018 | Number of shares | Number of shares entitled to dividend |
£'000 |
| Ordinary shares 1p each |
|
|
|
| At 31 August 2017 | 174,206,306 | 174,206,306 | 1,742 |
| New shares allotted in year | 3,375,000 | 3,375,000 | 34 |
|
| ----------------- | ---------------- | ------- |
| At 31 August 2018 | 177,581,306 | 177,581,306 | 1,776 |
|
| ========== | ========== | ==== |
During 2018, the Company issued 3,375,000 ordinary shares for a total consideration of £5,530,000 after deduction of issue costs of £22,000. In addition, £33,000 was written back following the non-utilisation of prior year issue costs relating to the issue of C shares.
8. Share premium account
|
| 2019 £'000 | 2018 £'000 |
| At the start of the year | 164,631 | 159,102 |
| Ordinary shares allotted in year | 16,396 | 5,518 |
| Issue costs | (20) | (22) |
| Issue costs from C share issue | - ---------- | 33 ---------- |
| At 31 August | 181,007 | 164,631 |
|
| ====== | ====== |
9. 2019 Financial information
The figures and financial information for the year ended 31 August 2019 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 2019 have been audited but have not yet been delivered to the Registrar of Companies. The auditors' report on the 2019 financial statements was unqualified and did not contain any statements under sections 498(2) and 498(3) of the Companies Act 2006.
10. 2018 Financial information
The figures and financial information for the year ended 31 August 2018 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.
11. Annual report and financial statements
The annual report and financial statements for the year ended 31 August 2019 will be posted to shareholders in early November 2019 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 Thursday, 5 December 2019 at 2.30pm. The notice of the annual general meeting will be posted to shareholders in early November with the annual report and financial statements.
For more information please contact:
| Ben Lofthouse Fund Manager Henderson International Income Trust plc Telephone: 020 7818 5187 |
|
|
James de Sausmarez Director and Head of Investment Trusts Henderson Investment Funds Limited Telephone: 020 7818 3349 |
Laura Thomas Investment Trust PR Manager Janus Henderson Investors Telephone: 020 7818 2636
|
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.