Hastings High Yield Fund
Profile
Overview
Hastings High Yield Fund (HHY or the Fund) is an ASX listed fund investing in debt securities with the objective of providing unitholders with a regular source of income. Quarterly distributions are funded from interest received, participation fees and realised gains. Investments are made in debt securities sourced from transactions associated with:
- infrastructure and privatisation;
- private equity;
- acquisitions and financial restructures; and
- other leveraged finance transactions.
Strategy
The key elements of HHY's investment strategy are as follows:
- target investment in unlisted and unrated securities that are not otherwise readily accessible to Australian Securities Exchange (ASX) investors;
- invest in debt securities issued by Australian and international entities that:
- are exposed to the infrastructure and essential services industry sectors;
- hold a significant market position;
- generate predictable cash flows;
- rank ahead of an appropriate level of shareholder equity; and
- share an alignment of interests with management and shareholders;
- invest in debt securities that provide for potential gains flowing from re-rating, early repayment and equity participation;
- target active involvement to generate fee income and positively influence the terms of investment; and
- hold investments for the medium to long term.
Generation of returns
Returns to unitholders comprise regular cash distributions, distribution of annual tax credits and movements in the traded price of units listed on the ASX.
Cash distributions are predominately derived from:
- periodic income, in the form of interest and dividends, generated by the Fund's investment portfolio of debt securities;
- fee income associated with investments;
- any realised gains, in the form of gains on sale, early repayment and equity participation; and
- surplus cash on balance sheet.
Information on distribution history and guidance is available in the HHY Investor Centre.
Assets
investment portfolio
At 30 June 2011, the Fund was invested in 10 securities; the details of each investment are set out below:
|
| Initial Investment Date | Investment source | Transaction instrument | Investment at |
| AB Ports | October 2006 | Infrastructure | Junior Floating | 7,574 |
| Arqiva | July 2007 | Infrastructure | Junior Floating | 18,382 |
| BAA | August 2006 | Infrastructure | Toggle Facility | 18,582 |
| Cory Environmental | June 2007 | Infrastructure | Junior Floating | 11,286 |
| DCA Group | January 2007 | Private equity | Senior Term Loan, Ordinary Equity | 2,477 |
| EnviroWaste | June 2007 | Private equity | Junior Floating Rate Loan | 16,019 |
| Hyne Timber | April 2005 | Financial restructure | Ordinary Equity | 14,292 |
| Maher Terminals | July 2007 | Infrastructure | Junior Floating Rate Loan | 21,922 |
| Manildra Group | September 2005 | Financial restructure | Reset Secured Notes | 4,012 |
| South East Water | December 2007 | Infrastructure | Junior Floating | 14,576 |
| Total |
|
|
| 129,122 |
Key Performance Indicators
|
|
| Year ended | Year ended |
| Weighted average earnings per unit | cents | (7.08) | 5.11 |
| Cash distribution per unit | cents | 14.8 | 14.6 |
| Distribution per unit (inclusive of tax credits) | cents | 15.1 | 15.0 |
| Net asset value per unit(2) | $ | 1.52 | 1.75 |
| Market value per unit(3) | $ | 1.11 | 1.15 |
| Distribution yield based on market value per unit(4) | % p.a. | 13.1 | 13.1 |
| Market capitalisation (trading value of the Fund)(4) | $ million | 124.4 | 127.3 |
| Net debt(5) | $ million | - | 41.1 |
| Gearing (drawn debt/total assets) | % | - | 20.5 |
| Management and performance fees, and administrative costs on market capitalisation (MER) (inclusive of GST) | % p.a. | 1.26 | 1.17 |
| Number of unitholders |
| 3,941 | 4,034 |
Note: All dollar amounts are denoted in Australian dollars.
(1) Includes mark-to-market on related derivative security, if any.
(2) After taking into account taxation on realised and unrealised gains where applicable, accounting adjustments, and after provision for the 30 June 2011 distribution.
(3) Distribution yield includes cash distributions together with tax credits.
(4) Market value per unit and market capitalisation are based on the closing price at the end of each period, i.e. $1.15 on 30 June 2010 and $1.11 on 30 June 2011.
(5) Net debt is outstanding debt less cash. The Fund's debt facility was repaid in full in March 2011.
The latest Product Disclosure Statement, Annual Report and Quarterly Report can be downloaded in the Reports section of the HHY Investor Centre.
Investor Support
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