Henderson Far East Income Limited/Announcement

Annual Financial Results

Full Year Results5 November 2017HFLFinancials

3 November 2017
This announcement contains regulated information.

HENDERSON FAR EAST INCOME LIMITED
Annual Financial Results

STRATEGIC REPORT

Investment objective
The Company seeks to provide shareholders with a growing total annual dividend per share, as well
as capital appreciation, from a diversified portfolio of investments from the Asia Pacific region.

Performance highlights
• Increased proposed annual dividend: Fourth interim final dividend 5.30p, (2016: 5.10p) producing
a total dividend for the year of 20.80p (2016: 20.00p).
•The share price to NAV (including current year income) moved to a premium of 1.3% (2016: 1.6%).

Sources: Morningstar for the AIC, Janus Henderson and Datastream

Total return performance (including dividends reinvested)
1 year
%
3 years
%
5 years
%
NAV per ordinary share
1
17.7 37.6 69.6
AIC Asia Pacific (excluding Japan) Sector (Peer Group) Average
2
22.2 47.3 85.1
FTSE All-World Asia Pacific ex Japan Index (Sterling adjusted) 23.7 46.7 82.6
FTSE All-World Asia Pacific including Japan Index (Sterling adjusted) 20.9 52.5 93.6

1 Source: Morningstar for the AIC including income fair value NAV
2 Size weighted average (shareholders’ funds)

Chairman’s Statement

Introduction
I am pleased to report another good year in both income and capital terms as Asian equity markets
proved resilient against a global backdrop of both political and economic uncertainty. The Company
has increased the dividend each year since its Jersey incorporation in 2007 and, at the period end,
the ordinary shares yielded 5.5%. It is encouraging that, whilst global uncertainties will continue to
drive some volatility, the outlook for dividend growth from Asian companies remains strong.

Performance
In the year under review, the net asset value total return was 17.7% whilst the share price total
return was 17.3%. Though not a benchmark for us, the FTSE All-World Asia Pacific ex Japan Index
(sterling adjusted) returned 23.7% as growth companies generally did better than those paying
attractive dividends.

Dividends
A fourth interim dividend of 5.30p has been declared making a total of 20.8p for the year, an
increase of 4.0%. As referred to in my introduction, the annual dividend has been increased ahead of
UK inflation each year since moving to Jersey. Once again, this total was fully covered by revenue for
the year and also allowed for an addition to our revenue reserve, which will underpin dividends in
future years. Your Board is confident that it will be able to at least maintain this level of total
dividend in the current year.

Capital
During the year the Company issued a total of 3,400,000 new ordinary shares at a premium to asset
value thereby enhancing the net asset value per share for existing shareholders, enabling the fixed
costs of the Company to be spread over a wider shareholder base, and improving the liquidity of the
shares in the market. As at 3 November 2017, a further 1,568,000 shares have been issued since 31
August 2017 for total proceeds (net of commissions) of £5,910,154.

Gearing
The Company has continued to utilise its borrowing facility throughout the year to capitalise on
specific stock opportunities. The Company has a two year £35 million facility with Commonwealth
Bank of Australia. At 31 August 2017 the amount drawn down stood at £31.8 million and net gearing
was 4.3%. The maximum amount drawn down under the facility during the year was £34.9 million
(including exchange rate movements since draw down).

Manager
On 30 May 2017 Henderson Group plc merged with Janus Capital Group Inc. Your Board is
encouraged by this move as it has enhanced the Manager’s footprint in the Asia Pacific region. There
will be no changes to the personnel responsible for the day to day management of your Company as
a result of the merger.

Management Fees
As announced on 26 October 2017, following a formal review of the management fee arrangements,
I am pleased to report that with effect from 1 September 2017, the Board has agreed a tiering basis
to the management fee arrangements so that the existing management fee of 0.9% will only apply
to the first £400m of net assets with the balance above that charged at a reduced rate of 0.75%.
There is no performance fee.

Investment Policy and Objectives
The Board has approved certain changes to the investment objective and policy of the Company, in
order to provide further clarity to investors. As such the Board has been advised the changes are
deemed immaterial and so do not require shareholder consent. The updated investment objective
and policy is set out in full in the Annual Report.

Outlook
Global tensions are rising. Popularism is beginning to embed itself in mainstream politics in a
number of countries with negative implications for global growth. North Korea presents a significant
challenge to the region and the world. Terrorism is also increasing and deaths caused by regional
wars have been rapidly rising since 2008. President Trump’s approach is not helpful in a world calling
out for stability. While the EU is showing better economic growth the underlying tensions and
disagreements among the 28 countries remain high with no consensus in sight.

Against this gloomy backdrop there are still some very positive developments. Global economic
power has moved decidedly eastward to the world’s most populous region in the past few decades,
China and India in particular. The impact of the 2008 financial crisis would have been much worse if
not for China’s policy response in stimulating its economy to further improve its contribution to
global GDP. It was this policy that gave rise to much debate among investors about rising debt in
China and the sustainability of an economy driven by low cost manufacturing and debt. The
concerns have been shown to be overstated. President Xi Jinping has clearly put China on a more
sustainable economic growth path. Household aggregate demand is rising sharply, the services
sector is now the major driver of economic growth and, in contrast to many western economies, the

percentage of GDP going to wages is rising, further stimulating consumption. The household savings
rate is also in decline as social security measures strengthen.

President Xi has also introduced supply side reforms by dissolving some non-performing state owned
enterprises and introducing much tougher regulation to reduce financial risk. These measures will
further improve economic performance giving him more room to tackle the severe environmental
degradation that has resulted from past policies.

The risk to this optimistic view remains populist driven trade disputes. However, even on this front,
the outlook seems a little better than may have been imagined following the aggressive stance taken
by President Trump in his election campaign and immediately following his election. He has not
declared China a currency manipulator and appears to have discovered how damaging a trade war
would be to the global economy including the US. The stakes are just too high. Some mutually
agreed compromise will probably be the final outcome.

The Board attended a conference in Mumbai, India in June. It was an opportunity to meet a number
of Indian companies and hear from numerous experts and commentators. The energy and the
growth of a wealthy middle class was very evident as was the Government’s efforts in supply side
reform notably the introduction of a goods and services tax and the cancellation of large
denomination bank notes to reduce the size of the black economy. Much is made of India’s young
population and it is no doubt a great advantage in a region where other major players, notably China
and Japan, face poor demographic outlooks. However, we were confronted by the severe challenges
India faces as evidenced by the very long queues of young educated people outside employment
offices looking for a job. India needs to find around 15 million new jobs each year to absorb those
leaving full time education. We harbour some doubts that reform in India will be fast enough to
address the issue. Corruption is widespread in government and business while ethnic and religious
tensions remain high. Infrastructure developments, so critical to growth, are promised but progress
is very slow with an outdated and cumbersome planning process. Clearly a significant part of the
population has benefited from an opening up of the economy but the vast bulk of the 1.3 billion
people are still rural with average farm sizes of around 1.5 hectares with very high levels of illiteracy
and inadequate infrastructure support. It is difficult to see in these circumstances how India can
achieve its potential without a much more determined Government effort and deep structural
reform.

Overall, despite all the global problems, the Asian region still offers a strong growth outlook and
attractive opportunities for investors.

Annual General Meeting
The Company’s AGM will be held at 12.00 noon on 13 December 2017 at IFC1, The Esplanade, St.
Helier, Jersey JE1 4BP and full details of the proposed resolutions are set out in the separate Notice
of Meeting which has been issued with this report. As usual an open presentation to shareholders
will be held at Janus Henderson’s offices in London on 14 December 2017 at 11.00 am when Michael
Kerley will make an investment presentation and he, I and other Board members will be happy to
answer questions. If you would like to attend please complete and return the invitation card
enclosed with this report.

John Russell
Chairman
3 November 2017

Management
The Company has an independent Board of Directors which has appointed Henderson Investment
Funds Limited (“HIFL”) to act as its Alternative Investment Fund Manager. HIFL delegates investment
management services to Henderson Global Investors Limited in accordance with an agreement
which was effective from 22 July 2014 and can be terminated on six months’ notice. Both entities
are authorised and regulated by the Financial Conduct Authority (“FCA”). References to the Manager
within this report refer to the services provided by both entities. Both entities are wholly owned
subsidiaries of Janus Henderson Group plc, referred to as Janus Henderson, following the merger of
Henderson Group plc and Janus Capital Group, Inc. on 30 May 2017.

Principal risks and uncertainties
The Board, with the assistance of the Manager, has carried out a robust assessment of the principal
risks facing the Company, including those that would threaten its business model, future
performance, solvency and liquidity. In carrying out this assessment, the Board also considered both
regional and global geopolitical risks, as well as the political instability arising from the UK’s
negotiations to leave the European Union, which the Board does not consider to be material except
for the impact on currency movements.

With the assistance of the Manager, the Board has drawn up a matrix of risks facing the Company
and has put in place a schedule of investment limits and restrictions, appropriate to the Company’s
investment objective and policy, in order to mitigate risks as far as practicable. The principal risks
which have been identified and the steps taken by the Board to mitigate these are as follows:

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

Accounting, legal and regulatory
The Company is regulated by the Jersey Financial Services Commission and complies with the
regulatory requirements in Jersey. The Company must comply with the provisions of the Companies
(Jersey) Law 1991 and since its shares are listed on the London Stock Exchange, the FCA’s Listing
Rules. The Company must also ensure compliance with the listing rules of the New Zealand Stock
Exchange. A breach of company law could result in the Company and/or the Directors being fined or
the subject of criminal proceedings and financial and reputational damage. A breach of the Listing
Rules could result in the suspension of the Company’s shares. The Board relies on its Company
Secretary and advisers to ensure adherence to company law and FCA and New Zealand Stock
Exchange Rules.

Operational
Disruption to, or the failure of, Janus Henderson’s or the Administrator’s accounting, dealing, or
payment systems or the Custodian’s records could prevent the accurate reporting or monitoring of

the Company’s financial position. The Administrator, BNP Paribas Securities Services S.C.A. Jersey
Branch, sub-contracts some of the operational functions (principally relating to trade processing,
investment administration and accounting) to BNP Paribas Securities Services. Details of how the
Board monitors the services provided by Janus Henderson and other suppliers, and the key elements
designed to provide effective internal control, are explained further in the internal control section of
the Corporate Governance Statement.

Financial
The financial risks faced by the Company include market risk (market price risk, interest rate risk and
currency risk), liquidity risk and credit risk. The Company does not employ financial instruments to
mitigate risk. Additional disclosures are provided in accordance with IFRS 7: Financial Instruments:
Disclosures.

Viability statement
The Company is a medium to longer term investor and, as such, the Directors believe it is
appropriate to assess the Company’s viability over a five year period in recognition of the Company’s
investment horizon and what the Directors believe to be investors’ horizons.

The assessment has considered the impact of the likelihood of the principal risks and uncertainties
facing the Company, in particular investment strategy and performance absolutely and against
certain indices and other funds with a similar mandate, whether from asset allocation, the level of
gearing, and market risk in severe but plausible scenarios, and the effectiveness of any mitigating
controls in place.

The Directors took into account the liquidity of the portfolio. Nearly all of the Company’s
investments are in listed companies which are frequently traded on recognised markets. The
portfolio comprises investments in approximately 50 companies spread over a wide range of sectors
and geographical areas and hence there is little concentration. The Directors also considered the
borrowing facility the Company has in terms of its duration, the headroom available under any
covenants and how a breach of any of those covenants could impact on the Company’s net asset
value and share price.

Based on their assessment and the fact that the Company’s financial commitments are small in
relation to the current value of the portfolio, which is highly liquid, 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 next five years.

The Directors’ view is that only a cataclysmic financial crisis affecting the global economy could have
an impact on this assessment.

Related party transactions
The Company’s current related parties are its Directors and Janus Henderson. There have been no
material transactions between the Company and its Directors during the year and 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 Janus Henderson, other than fees payable by the Company
in the ordinary course of business and the provision of sales and marketing services there have been
no material transactions with Janus Henderson affecting the financial position of the Company
during the year under review.

Fund Manager’s Report

Overview
Following a strong year last year I am pleased to report another good year for the net asset value
(“NAV”) and share price total return for your company. The NAV total return was 17.7% and the
share price total return was 17.3% in sterling terms over the twelve months to the end of August
2017. The capital returns are all the more encouraging for not being boosted by weak sterling as
they were in the previous year.

In a year dominated by political, geopolitical and economic uncertainty the positive returns
generated are encouraging and reflect an improvement in the underlying fundamentals of the Asia
Pacific region. For the first time since 2009 Asian earnings have been upgraded since the turn of the
year rather than the recent trend of downgrades which has helped Asia ex Japan outperform its
developed market peers.

Consensus EPS growth forecast trend (%)
Critics will say that the improvement is down to the growth of the technology sector and in
particular Tencent, Alibaba and Samsung Electronics but as the year has progressed the contribution
has broadened into financials, industrials and consumer related sectors, which is a positive sign. The
most notable growth is forecast for Korea where earnings are expected to grow by almost 50% in
2017. Admittedly just over half of this is forecast to come from Samsung Electronics and SK Hynix,
the memory chip manufacturers where underlying fundamentals are very strong, but 23.9% forecast
growth for the rest of the Korean market is still an impressive number. From an earnings standpoint
India remains the biggest disappointment. The demonetisation experiment at the end of 2016 and
the implementation of a goods and services tax in June 2017 have caused considerable disruption
which has led to disappointing economic numbers and an ongoing downgrading of earnings
expectations.

The improvement in the corporate sector has been accompanied by stability at the macro level.
Chinese GDP growth has been better than expected while positive export momentum has been
witnessed region wide. The much heralded impact of US protectionism has yet to manifest itself in
any meaningful way while Asia’s share of world trade continues to grow, undermining the argument
that Asia and, in particular, China are becoming uncompetitive.

Despite these more positive developments there are clearly risks. The weakness in the US dollar has
been supportive but as interest rates rise there is the potential that this could reverse while
protectionist policies involving trade barriers, which have so far been put on hold, could resurface.
The most significant risk, however, is closer to home. The escalation of tension between North Korea
and the US and its allies shows no sign of abating with no easy solution visible. The options open to
the US to prevent Kim Jong-un obtaining an intercontinental ballistic nuclear capability are all
unpalatable and fraught with danger. So far the pressure brought to bear by the United Nations in
terms of sanctions has not slowed North Korea’s progress. A policy of dialogue and containment
seems the most likely outcome but with the two parties led by volatile personalities this is far from
certain.

The best performing market over the period was Taiwan which benefited from increased demand
for tech hardware and semiconductors. Despite the stunning performance of the internet sector the
performance of Taiwan suggests support for the hardware facilitators of the internet boom. Taiwan
Semiconductor, the world’s largest semiconductor foundry, rose 23.2% over the period in local
currency terms while some of the key manufacturers of optical lenses, microphones etc. rose by
considerably more. The second best performing market was China where the strong performance of

the internet sector was most visible. Tencent, the social media, gaming and ecommerce behemoth,
rose 65% in sterling terms over the period as China continued to embrace online services. At the end
of August 2017 Tencent had a market capitalisation of over $450 billion, comparable to Amazon and
larger than Exxon Mobil. At the other end of the scale ASEAN markets underperformed with the
Philippines actually posting a negative return over the period as President Duterte’s combative style
and fiery rhetoric have soured relations with the US and discouraged investors.

At the sector level performance was dominated by basic materials and technology. The recovery in
Chinese growth expectations together with aggressive supply side reform has seen a significant rise
in basic material prices. Coal and iron ore in particular have seen spectacular recoveries while
copper, aluminium, zinc and steel have also benefited. The energy sector witnessed more modest
returns as the tug of war between US shale and OPEC kept the oil price range bound between $45
and $55 per barrel over the period. With a focus on growth rather than stability and yield the more
defensive sectors struggled to make headway. Utilities and healthcare made modest gains while
telecommunications actually fell over the period.

Performance
The portfolio failed to keep pace with the index performance over the period. The FTSE All-World
Asia Pacific ex Japan index rose 23.7% in sterling terms on a total return basis. The strength of
growth and especially “new economy” growth, which trades at high valuations with no dividends,
was difficult to match while the performance of some of the higher yielding sectors was
disappointing.

At the stock level we had some success with companies such as Star Petroleum, which rose 72% over
the period, Autohome 86%, Anta Sports 56%, Hon Hai Precision 71% and KB Financial 47% but these
were not enough to offset the style differentials which favoured cyclicality and growth over
defensiveness and yield.

Income generation remained strong with investment income rising 6.7% year on year in sterling
terms while option premium rose 3.0%. The geographical breakdown of income reflects the strong
growth in North Asia with China, Taiwan, South Korea and Hong Kong accounting for 65.7% of the
income received. At the sector level financials account for 30.1% of the income received but the rise
of technology to 13.3% of income is reflective of the change in the market structure and the ability
of this sector to produce significant cash flow and dividends.

Over the period we made some notable additions to the portfolio although portfolio turnover was
lower than in the year ended 31 August 2016. In the fourth quarter of 2016 we added Samsung
Electronics preferred shares and Rio Tinto Ltd to the portfolio to capture the cyclical upswing in
global growth and reduced some of the exposure to telecoms and REITS which are more sensitive to
rising interest rates. We remain positive on the refining sector due to a lack of new capacity and
added Star Petroleum to the portfolio while our positive view on online services in China resulted in
the purchase of Autohome (the Auto Trader of China). Other notable purchases included Dali Foods,
the Chinese snacks, drinks and soya milk producer and Anta Sports, China’s largest local brand
sportswear provider. The addition of Chinese banks to the portfolio in the second quarter of 2017 on
the expectation of improving profitability and lower non-performing loans resulted in a significant
increase in the weighting in China (28.1% at year-end compared to 17.6% a year earlier). This
increase was funded by a significant reduction to our exposure in India. We now have no exposure
to this market as the stocks are expensive and the economic and corporate momentum remains
negative.

Outlook

We remain cautiously optimistic on the outlook for Asia Pacific in the medium to long term. Earnings
momentum is positive and, although markets have risen, valuations on a price to earnings basis have
not changed markedly as earnings growth has kept up with price movements. This is not true of
developed markets which are trading at, or close to, all-time highs. Without the same kind of
earnings support developed markets are looking fully valued. These levels of valuations are a risk in
themselves and together with the headwinds of geopolitical tension, rising interest rates and Brexit
negotiations, merit some caution. For this reason the Company’s level of gearing is modest and will
remain so for the near term.

Despite the strong performance in some of the expensive new economy sectors we will stick to our
discipline of focusing on well managed companies with attractive valuations which have the ability
to sustain and grow their dividends in the years ahead. Our focus remains on domestic orientated
areas which are exposed to the improving spending power of the consumer across the region. The
outlook for dividends in Asia Pacific is still a compelling story. Asian companies have low levels of
debt, a pragmatic view on capital expenditure and strong cash flow generation which should allow
dividend pay-out ratios to continue to rise in the years ahead.

Michael Kerley
Fund Manager
3 November 2017

Rank
2017
Rank
2016
Company Country of
incorporation
Sector Valuation
2017
£’000
% of
portfolio
1 27 Samsung Electronics
1
South Korea Technology 21,810 4.72

2 - Rio Tinto Ltd Australia Basic Materials 14,107 3.06
3 15 Hon Hai Precision
Industry
Taiwan Technology 13,150 2.85
4 - Bank of China China Financials 12,494 2.71
5 2 Taiwan
Semiconductor
Manufacturing
2

Taiwan Technology 12,106 2.62
6 4 Telekomunikasi
Indonesia
Indonesia Telecommunicati
ons
11,935 2.59
7 - PTT Thailand Oil & Gas 11,452 2.48
8 3 Macquarie Korea
Infrastructure Fund
South Korea Financials 11,405 2.47
9 19 China Yangtze Power
3
China Utilities 11,180 2.42
10 32 Star Petroleum Refining Thailand Oil & Gas 11,135 2.41
Top Ten Investments 130,774 28.33

11 9 HKT Trust & HKT Hong Kong Telecommunicati
ons
11,048 2.39
12 25 Advanced
Semiconductor
Engineering
Taiwan Technology 11,016 2.39
13 36 HSBC Holdings UK (Hong
Kong)
Financials 10,760 2.33

14 5 Spark New Zealand New Zealand Telecommunicati
ons
10,737 2.33
15 - Mega Financial Taiwan Financials 10,642 2.30
16 8 KB Financial Group South Korea Financials 10,622 2.30
17 16 Amcor Australia Industrials 10,613 2.30
18 - China Construction
Bank
China Financials 10,456 2.27
19 40 Lend Lease Australia Property 10,432 2.26
20 24 SK Innovation South Korea Basic Materials 10,389 2.25
Top Twenty
Investments
237,489 51.45

1
Preferred Shares
2
American Depositary Receipts
3
Participation Notes

Sector exposure
As a percentage of the investment portfolio excluding cash

31 August
2017
31 August
2016
Financials 21.6 14.2
Technology 19.0 15.8
Telecommunications 13.1 20.2
Property 11.9 11.0
Industrials 9.5 11.3
Consumer Goods 6.4 4.5
Basic Materials 5.1 4.1
Oil and Gas 4.9 1.9
Utilities 4.4 11.4
Consumer Services 4.1 5.6

Geographic focus
As a percentage of the investment portfolio excluding cash

31 August
2017
31 August
2016
Australia 19.0 21.3
China 28.1 17.6
Hong Kong 6.8 8.3
India - 5.6
Indonesia 2.6 2.6
South Korea 13.6 14.0
New Zealand 2.3 2.6
Singapore 3.8 8.4
Taiwan 17.1 13.8
Thailand 6.7 5.8

CORPORATE REPORT

Statement of Directors’ Responsibilities
In accordance with Disclosure Guidance and Transparency Rule 4.1.12, each of the Directors
confirms that, to the best of his or her knowledge:

• the Company’s financial statements, which have been prepared in accordance with IFRSs as
adopted by the European Union 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, Corporate Governance Statement, Remuneration
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.

For and on behalf of the Board

Julia Chapman
Director
3 November 2017

Audited Statement of Comprehensive Income

Year ended 31 August 2017 Year ended 31 August 2016
Revenue
return
Capital
return

Total
Revenue
return
Capital
return

Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment income (note 3) 27,702 - 27,702 25,974 - 25,974
Other income (note 4) 2,563 - 2,563 2,489 - 2,489
Gains on investments held at fair value through
profit or loss - 45,754 45,754 - 75,636 75,636
Net foreign exchange loss excluding foreign
exchange gains/(losses) on investments - (1,498) (1,498) - (2,275) (2,275)
--------- --------- --------- --------- --------- ---------
Total income
30,265 44,256 74,521 28,463 73,361 101,824
--------- --------- --------- --------- --------- ---------
Expenses
Management fees (1,865) (1,865) (3,730) (1,565) (1,565) (3,130)
Other expenses (421) (421) (842) (403) (403) (806)
--------- --------- --------- --------- --------- ---------

Profit before finance costs and taxation 27,979 41,970 69,949 26,495 71,393 97,888
Finance costs (169) (169) (338) (142) (143) (285)
--------- --------- --------- --------- --------- ---------
Profit before taxation 27,810 41,801 69,611 26,353 71,250 97,603
Taxation (2,400) - (2,400) (2,228) - (2,228)
--------- --------- --------- --------- --------- ---------
Profit for the year and total comprehensive
income 25,410 41,801 67,211 24,125 71,250 95,375
===== ===== ===== ===== ===== =====

Earnings per ordinary share
- basic and diluted (note 5) 21.94p 36.09p 58.03p 21.13p 62.41p 83.54p
===== ===== ===== ===== ===== =====

The total column of this statement represents the Statement of Comprehensive Income, prepared in
accordance with IFRS as adopted by the European Union. The revenue return and capital return

columns are supplementary to this and are prepared under guidance published by the Association of
Investment Companies.

Audited Statement of Changes in Equity

Year ended 31 August 2017
Stated
share
capital
£’000

Distributable
reserve
£’000

Capital
reserves
£’000

Revenue
reserve
£’000

Total
£’000
Total equity at 31 August 2016 109,471 180,471 75,759 21,158 386,859
Total comprehensive income:
Profit for the year - - 41,801 25,410 67,211
Transactions with owners, recorded directly to
equity:

Dividends paid (note 6) - - - (23,901) (23,901)
Shares issued (note 8) 12,362 - - - 12,362
Share issue costs (note 8) (49) - - - (49)
---------- ----------- ---------- ---------- ----------
Total equity at 31 August 2017 121,784 180,471 117,560 22,667 442,482
====== ====== ====== ====== ======

Year ended 31 August 2016
Stated
share
capital

£’000

Distributable
reserve

£’000

Capital
reserves

£’000

Revenue
reserve

£’000

Total

£’000
Total equity at 31 August 2015 103,202 180,471 4,509 19,639 307,821
Total comprehensive income:
Profit for the year - - 71,250 24,125 95,375
Transactions with owners, recorded directly to
equity:

Dividends paid (note 6) - - - (22,606) (22,606)
Shares issued (note 8) 6,294 - - - 6,294
Share issue costs (note 8) (25) - - - (25)
---------- ----------- ---------- ---------- ----------
Total equity at 31 August 2016 109,471 180,471 75,759 21,158 386,859
====== ====== ====== ====== ======

Audited Balance Sheet

31 August
2017
£’000
31 August
2016
£’000
Non current assets
Investments held at fair value through profit or loss 465,266 405,131
---------- ----------
Current assets
Other receivables 3,420 3,321
Cash and cash equivalents 10,241 5,944
---------- ----------
13,661 9,265
---------- ----------
Total assets 478,927 414,396

---------- ----------
Current liabilities
Investments held at fair value through profit or loss - (3,671) (635)

written options
Other payables (941) (1,581)
Bank loans (31,833) (25,321)
---------- ----------
(36,445) (27,537)
---------- ----------
Net assets 442,482 386,859

====== ======
Equity attributable to equity shareholders
Stated share capital (note 8) 121,784 109,471
Distributable reserve 180,471 180,471
Retained earnings:
Capital reserves 117,560 75,759
Revenue reserve 22,667 21,158
---------- ----------
Total equity 442,482 386,859

====== ======

Net asset value per ordinary share (note 7) 375.19p 337.76p

====== ======

The financial statements were approved by the Board of Directors on 3 November 2017 and were
signed on its behalf by:

Julia Chapman
Director

Audited Statement of Cash Flows

31 August
2017
£’000
31 August
2016
£’000
Operating activities
Profit before taxation 69,611 97,603
Add back interest payable 338 285
Gains on investments held at fair value through profit or loss (45,754) (75,636)
Net foreign exchange loss excluding foreign exchange gains on investments
1,498 2,275
Sales of investments 331,080 310,929
Purchases of investments (342,222) (316,188)
(Increase)/decrease in prepayments and accrued income (208) 170
Decrease in amounts due from brokers 109 4,093
(Decrease)/ increase in other payables (677) 1,153
Stock dividends included in investment income (203) (134)
---------- ----------
Net cash inflow from operating activities before interest and taxation 13,572 24,550

Interest paid (301) (289)
Withholding tax on investment income (2,400) (2,228)
---------- ----------
Net cash inflow from operating activities after interest and taxation 10,871 22,033

---------- ----------
Financing activities
Net loan drawdown/(repayment) 5,232 (12,231)

Equity dividends paid (note 6) (23,901) (22,606)
Share issue proceeds (note 8) 12,362 6,294
Share issue costs (note 8) (49) (25)
---------- ----------
Net cash outflow from financing (6,356) (28,568)
---------- ----------

Increase/(decrease) in cash and cash equivalents 4,515 (6,535)

Cash and cash equivalents at the start of the year 5,944 11,681
Exchange movements (218) 798
---------- ----------
Cash and cash equivalents at the end of the year 10,241 5,944
====== ======

Notes to the Financial Statements

1. General information
The entity is a closed-end company, registered as a no par value company under the Companies
(Jersey) Law 1991, with its shares listed on the London and New Zealand Stock Exchanges.

The company was incorporated on 6 November 2006.

2. Accounting policies
Basis of preparation
The Company’s financial statements for the year ended 31 August 2017 have been prepared in
accordance with International Financial Reporting Standards as adopted by the European Union
(‘IFRS’). These comprise standards and interpretations approved by the International Accounting
Standards Board (‘IASB’), together with interpretations of the International Accounting Standards
and Standing Interpretations Committee approved by the International Accounting Standards
Committee (‘IASC’) that remain in effect, to the extent that IFRS have been adopted by the European
Union.

The financial statements have been prepared on a going concern basis and on the historical cost
basis, except for the revaluation of financial assets and liabilities designated as held at fair value
through profit and loss.

The financial statements are presented in Sterling and all values are rounded to the nearest
thousand pounds (£’000) except where otherwise indicated.

3. Investment income
2017 2016
£’000 £’000
Overseas investment income 25,997 23,485
Participation Note income 1,502 2,355
Stock dividends 203 134
--------- ---------
27,702 25,974
====== ======
Analysis of investment income by geography:
Australia 5,199 5,615
China 7,301 5,779
Hong Kong 2,462 2,173

India 309 1,265
Indonesia 349 254
Japan - 262
Malaysia - 394
New Zealand 824 660
Singapore 1,005 1,628
South Korea 2,887 2,173
Taiwan 5,552 4,255
Thailand 1,814 1,516
--------- ---------
27,702 25,974
====== ======
All of the above income is derived from equity investments.

4. Other income
2017 2016
£’000 £’000
Bank and other interest 31 14
Option premium income 2,532 2,475
------- -------
2,563 2,489
==== ====

5. Earnings per ordinary share
The earnings per ordinary share figure is based on the net profit for the year of £67,211,000 (2016:
£95,375,000) and on the weighted average number of ordinary shares in issue during the year of
115,829,263 (2016: 114,161,274).

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

2017 2016
£’000 £’000
Net revenue profit 25,410 24,125
Net capital profit 41,801 71,250
---------- ----------
Net total profit 67,211 95,375
====== ======

Weighted average number of ordinary shares in issue during the year 115,829,263 114,161,274

2017
Pence
2016
Pence
Revenue earnings per ordinary share 21.94 21.13
Capital earnings per ordinary share 36.09 62.41
--------- ---------
Total earnings per ordinary share 58.03 83.54
====== ======

The Company has no securities in issue that could dilute the return per ordinary share. Therefore the
basic and diluted earnings per ordinary share are the same.

6. Dividends
2017 2016
Record date Pay date £’000 £’000
Fourth interim dividend 4.90p for the
year ended 2015
6 November 2015 30 November 2015 - 5,540
First interim dividend 4.90p for the year 5 February 2016 29 February 2016 - 5,612

ended 2016
Second interim dividend 4.90p for the
year ended 2016
6 May 2016 31 May 2016 - 5,612
Third interim dividend 5.10p for the
year ended 2016
5 August 2016 31 August 2016 - 5,842
Fourth interim dividend 5.10p for the
year ended 2016
4 November 2016 30 November 2016 5,859 -
First interim dividend 5.10p for the year
ended 2017
3 February 2017 28 February 2017 5,894 -
Second interim dividend 5.10p for the
year ended 2017
5 May 2017 31 May 2017 5,924 -
Third interim dividend 5.30p for the
year ended 2017
4 August 2017 31 August 2017 6,224 -
------- -------
23,901 22,606

The fourth interim dividend for the year ended 31 August 2017 has not been included as a liability in
these financial statements as it was announced and paid after the year end. The table which follows
sets out the total dividends paid and to be paid in respect of the financial year and the previous year.
The revenue available for distribution by way of dividend for the year is £25,410,000 (2016:
24,125,000).

2017 2016
£’000 £’000
First interim dividend for 2017 – 5.10p (2016: 4.90p) 5,894 5,612
Second interim dividend for 2017 – 5.10p (2016: 4.90p) 5,924 5,612
Third interim dividend for 2017 – 5.30p (2016: 5.10p) 6,224 5,842
Fourth interim dividend for 2017 – 5.30p (2016: 5.10p) (payable 30 November 2017
based on 119,503,564 shares in issue at 3 November 2017)
6,334 5,859
-------- --------
24,376 22,925
===== =====

7. Net asset value per share
The basic net asset value per ordinary share and the net asset value attributable to ordinary
shareholders at the year end calculated in accordance with the Articles of Association were as
follows:

2017 2016
Net asset value
per share
pence
Net asset value
attributable
£’000
Net asset
value per
share
pence
Net asset
value
attributable
£’000
Ordinary shares 375.19p 442,482 337.76p 386,859
====== ====== ====== ======

The basic net asset value per ordinary share is based on 117,935,564 (2016: 114,535,564) ordinary
shares, being the number of ordinary shares in issue.

8. Stated share capital

Authorised
Issued and fully
paid
2017
£’000
Issued and fully
paid
2016
£’000

Opening balance at 1 September
Ordinary shares of no par value

Unlimited

114,535,564

109,471

112,345,564

103,202
Issued during the year 3,400,000 12,362 2,190,000 6,294
Share issue costs - (49) - (25)
--------------- ---------- --------------- ----------

Closing balance at 31 August 117,935,564 121,784 114,535,564 109,471
========= ====== ========= ======

The holders of Ordinary shares are entitled to all the capital growth in the Company and all the
income from the Company that is resolved by the Directors to be distributed. Each shareholder
present at a general meeting has one vote on a show of hands and on a poll every member present
in person or by proxy has one vote for each share held.

During the year, the Company issued 3,400,000 (2016: 2,190,000) shares for the proceeds of
£12,313,000 (2016: £6,269,000) net of costs.

9. Going concern statement
The assets of the Company consist almost entirely of securities that are listed and regularly traded
and, accordingly, the Directors believe that the Company has adequate financial 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 decided that it is appropriate for the
financial statements to be prepared on a going concern basis.

10. 2017 Financial information
The figures and financial information for the year ended 31 August 2017 are compiled from an
extract of the latest financial statements and do not constitute statutory accounts. These financial
statements included the report of the auditors which was unqualified.

11. 2016 Financial information
The figures and financial information for the year ended 31 August 2016 are compiled from an
extract of the published accounts and do not constitute the statutory accounts for that year.

12. Company Status
The Company is a Jersey domiciled closed-end investment company, number 95064, which was
incorporated in 2006 and which is listed on the London and New Zealand Stock Exchanges. The
Company is a Jersey fund with its registered office at IFC 1, the Esplanade, St Helier, Jersey JE1 4BP
and is regulated by the Jersey Financial Services Commission.

13. Annual Report and Annual Strategic Report
The Annual Report and financial statements will be available for posting to those shareholders who
have requested a copy in late November 2017 and copies will be available on the Company’s website
(www.hendersonfareastincome.com) or in hard copy format from the Company’s registered office,
IFC 1, the Esplanade, St Helier, Jersey JE1 4BP. Shareholders who did not indicate that they wished to
receive the full Annual Report in future years will receive an abbreviated report on the Company’s
results for the year, the Annual Strategic Report.

The Annual General Meeting will be held at the registered office at 12.00 noon on Wednesday 13
December 2017. The Notice of the Annual General Meeting will be sent to shareholders with the
Annual Report.

For further information please contact:

Mike Kerley
Fund Manager, Henderson Far East Income Limited
Telephone: 020 7818 5053

James de Sausmarez
Director and Head of Investment Trusts, Henderson Investment Funds Limited
Telephone: 020 7818 3349

Sarah Gibbons-Cook
Investor Relations and PR Manager, Henderson Investment Funds Limited
Telephone: 020 7818 3198

Siobhan Lavery
BNP Paribas Securities Services. S.C.A., Jersey Branch, Company Secretary
Telephone: 01534 709181

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.

---

Issue of Equity Net Asset Value

Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.