Annual Financial Report

RNS Number : 7700H

Henderson High Income Trust PLC

18 March 2015

 



18 March 2015

HENDERSON HIGH INCOME TRUST PLC

Annual Financial Results for the year ended 31 December 2014

This announcement contains regulated information

Performance Highlights:

Total return performance to 31 December 2014 One year % Five years % Benchmark1 3.4 51.8 NAV2 7.5 100.5 Share price 8.1 113.1
2014 2013 NAV per share 173.57p 169.72p Mid-market price per share 177.88p 172.75p Revenue return per share 9.24p 9.12p Net assets at year end £189.0m £175.3m Dividend for the year 8.60p 8.40p Dividend yield 4.8% 4.9% Ongoing charge for the year3 0.72% 0.70% Net gearing at year end 22.7% 22.8%

1 The benchmark is a composite of 80% of the FTSE All-Share Index (total return) and 20% of the Merrill Lynch Sterling Non-Gilts Index (total return)

2 Net asset value total return (including dividends reinvested and excluding transaction costs)

3 The ongoing charge excludes the performance fee. The charge including the performance fee was 1.59% (2013: 2.08%)

Sources: Morningstar Funddata, Henderson Global Investors geometric returns, DataStream, AIC

Chairman's Statement

Performance

I am proud to be able to report that our Fund Managers have more than risen to the challenge that I anticipated they would face at the time of my interim statement. Against a difficult market background they have produced a very commendable outcome for the year of a share price total return of 8.1% which compares to that of our benchmark of only 3.4%. To put this into context, the FTSE All-Share Index which reflects the majority of our assets, only achieved a 1.2% total return for the year. This excellent performance is not a one off as we have significantly outperformed our benchmark over one, three, five and ten years, with the latter showing a share price total return of 189.0% compared to our benchmark's 102.5% and the FTSE All-Share Index's return of 107.6%. Whilst no reason for complacency, it is certainly a powerful case for the benefits of the investment trust structure of a company like ours and against passive management. I will leave it to Alex Crooke and David Smith to explain in their report how they have achieved this performance, but they well deserve both our praise and our thanks and they have again fully justified the payment to Henderson under our performance-related fee arrangement.

Dividends

At the interim stage I was delighted to be able to announce a further modest increase in our dividend by 2.4% which was in excess of the then prevailing inflation rate (Consumer Price Index ('CPI')) of 1.9%. This now looks rather rampant compared to the latest CPI inflation of 0.3%! Shareholders will well know from my previous comments that it is the Board's aspiration to continue to increase gradually the dividend so long as we gain confidence that any such increase will be sustainable in the years ahead. We will, therefore, continue to keep the level of our dividend under review each year and in light of our actual experience and the investment conditions at the time.

Continuation vote

The Company's articles of association provide that Shareholders should have the opportunity every fifth year to vote on whether they wish to continue the life of the Company or to wind it up. Shareholders will, therefore, be asked to vote on this at the forthcoming annual general meeting as an ordinary resolution which requires a majority vote in favour to pass.

Your Board is strongly recommending that you vote in favour, in person or by proxy so that the Company can continue to provide Shareholders with a high level of income (we currently yield 4.7%) whilst maintaining the prospect of capital growth over time. Should the resolution fail to pass then the Board would be required to wind the Company up. If you are in doubt as to what action you should take then I would urge you to consult your financial advisor. The Directors will be voting their own holdings in favour and encourage all other Shareholders to do the same.

Gearing

Gearing is, as I have often reminded Shareholders, an important feature of the Company. We utilise it principally to enable us to improve the total return. With interest rates still lower than the yield on many good quality equities, we believe there are particular advantages to utilising borrowings at the current time.

With interest rates at historic lows there are strong benefits to the Company seeking to secure a certain amount of our borrowings on a longer term basis. With this in mind we have negotiated a short term extension of our existing loan facility while we investigate the prospects of obtaining fixed long term borrowings. If this should not prove possible on attractive terms, then we will look to put in place a longer term extension of our existing loan facility.

Issue of new shares

As Shareholders will be aware, our shares have traded at a premium to their net asset value throughout the year, indeed at the end of the year the share price was on a 3.8% premium. This has been as a result of a steady demand for our shares in the market and, therefore, we have issued 5,568,469 new shares in the course of the year to 31 December 2014 to meet this demand. This has been within the authority granted to the Board by Shareholders at the last annual general meeting and is consistent with our policy of wishing to see the Company grow. This we believe is to the benefit of our existing Shareholders, as it improves the liquidity of the shares and enhances their NAV since shares are issued at a premium and the fixed costs are spread over a wider base. We will be asking Shareholders to renew this authority at the forthcoming annual general meeting.

Management agreement

Each year, we review the management arrangements for the Company and confirm the arrangements for the following year. This is no formality and the review covers a number of important aspects, including the terms of our agreement with Henderson, and often results in a lively discussion between the Board and Henderson. This year, as a result of the need to appoint an Alternative Investment Fund Manager, we agreed a new and up to date management agreement. During these discussions, both parties agreed that it would be appropriate also to review the fee arrangement and, as a consequence, a new one, summarised as follows, has been agreed with effect from the 1 January 2015.

·     the base management fee will be charged against gross assets less current liabilities other than loans or other debt for investment purposes treated as current liabilities;

·     performance will be measured using the net asset value total return per ordinary share relative to the benchmark equivalent;

·     1.0% will be deducted from any relative outperformance before any performance fee can be paid;

·     the cap on total fees in any one financial year (base management fee and performance fee) is reduced from 1.5% to 1.0% of gross assets less current liabilities other than loans or other debt for investment purposes treated as current liabilities; and

·     any unrewarded outperformance above the cap may be carried forward for a maximum of three years but may only be used to offset any underperformance. It cannot in itself earn a performance fee.

The amendment of the management fees paid by the Company to Henderson, who are a related party of the Company under the Listing Rules, amounts to a smaller related party transaction as defined in Listing Rule 11.1.10.

The Board believes that this new arrangement, which should result in a lower fee being paid, will ensure that the Company continues to benefit from Henderson's proven successful management of the Company in a way that both incentivises and fairly rewards them.

Outlook

If Alex and David thought that 2014 was challenging then I suspect 2015 may well turn out to make 2014 look like a walk in the park. As I write this we have a number of storm clouds appearing such as the consequences of a very uncertain UK election outcome in May, Greece's apparent determination to play a version of 'Call My Bluff', the prospect of deflation in some economic areas, the stand-off between a US Republican Congress and a Democratic President and that is without the activities of Mr Putin or Islamic extremists. Notwithstanding all these, there are some positives like continued very low interest rates and the economic benefits of a substantially lower oil price. So there will be attractive opportunities and with the prospect of still low interest rates, I remain confident that our Fund Managers will continue to find rewarding investments for our portfolio. Positive returns, to the extent we have enjoyed in recent years, may be harder to achieve, but there are currently no reasons to believe that the all-important income part of the return will not be maintained.

Fund Managers' Report

Review of the year

After strong gains from equity markets in the last few years, 2014 proved to be a year of consolidation with a number of global events weighing on investor sentiment: Russia's invasion of the Ukraine; an Ebola virus epidemic in West Africa; increased tensions in the Middle East and a halving of the oil price. Despite this, the Company performed strongly with the net asset value total return up 7.5% versus the FTSE All-Share Index and benchmark gains of 1.2% and 3.4% respectively.

In the UK, the economy continued to strengthen with GDP growing at 2.6% last year, its fastest pace since 2007. Unemployment fell below the Bank of England's 7% target which they expected to be the trigger for an increase in interest rates, however, low inflation and concerns over European economic growth saw expectations for the first rate hike pushed out to 2016. In the Budget, George Osborne unveiled the biggest pensions change for over a century by abolishing the compulsory purchase of annuities, while in December 2014 he announced reforms to stamp duty land on home purchases.

During the year, the Company benefited from the outperformance of the equity portfolio combined with a positive contribution from gearing. The equity portfolio returned 7.4% compared to the FTSE All-Share Index gain of 1.2%. With the sharp fall in the oil price, large integrated oil companies underperformed and the portfolio's limited exposure in this sector aided relative performance. In the low interest rate environment, investors sought after investments with high and stable dividend yields, hence holdings in National Grid, United Utilities and British American Tobacco performed strongly. Elsewhere positions in Catlin, Reed Elsevier and the house builders, Persimmon and Galliford Try, also produced good returns. Catlin was subject to a bid approach in the period while Reed Elsevier announced strong profit growth. Persimmon and Galliford Try are both displaying good capital discipline by prioritising cash returns to shareholders over excess land buying.

Although the fixed income portfolio delivered a good performance of 9.5%, this was behind the 12.3% return from the Merrill Lynch Sterling Non-Gilts Index. The uncertainty surrounding global economic growth led to strong gains in bond markets as investors sought out their relative safety. The 10 year Government bond yield in the UK fell to a low of 1.76% by year end, a level not reached since the height of the Eurozone crisis. The portfolio positioning in shorter dated bonds relative to the benchmark proved negative, as longer maturing bonds produced the strongest returns in the period.

The revenue return over the year was modest, increasing by 1.3% to 9.24p per share, representing a lower level of special dividends in 2014 offset by good dividend growth from our underlying investments. Company dividends across the market continue to grow as despite pedestrian market earnings growth, pay-out ratios have increased given strong corporate balance sheets and cash flows. Some of the Company's largest holdings are rewarding shareholdings with attractive double digit growth in their dividends, such as Legal & General, BT and Galliford Try, reflecting the confidence management have in their cash flows. For the second year running the Company increased the final two quarterly dividends, giving a rise in the total dividend for the year of 2.4%, a growth rate ahead of inflation.

The Company's gearing level as a percentage of Shareholders' funds remained relatively constant during the year (22.8% to 22.7%). The cost of borrowing is still extremely low, and we believe utilising borrowings to enhance the revenue account continues to be attractive.

Portfolio activity

In 2013 we increased the Company's equity exposure and maintained this throughout 2014, ending the year with 89% of the investment portfolio in equities and the remaining 11% in bonds. A year ago it was hard to imagine that bond yields could fall further, however, this proved incorrect as bonds outperformed equities in the period. At the time of writing, Unilever has just issued a seven year bond at a fixed rate of 0.5%. If this is synonymous with the rest of the bond market this appears to offer limited value, especially when compared to equities. Indeed, the dividend yield on the UK equity market is now at a 100 year high relative to the UK 10 year Government bond yield.

In the equity portfolio we increased our exposure to the media sector with the addition of education publisher, Pearson. Near term headwinds created an opportunity to own this high quality, global market leading company on an attractive valuation. New holdings in the financials sector included Paragon, the specialist Buy-To-Let lender, real estate company, Hammerson and Jupiter Fund Management. With the domestic banks offering little by way of dividends, Paragon offers a similar exposure but with a reasonable yield which is growing very strongly. The fundamentals of the rental market are good and the company is writing new business at an attractive return. Hammerson was trading at a significant discount to its net asset value when we initiated a position, despite owning prime retail property such as the Bull Ring Shopping Centre in Birmingham and Bicester Village Outlet Centre. Rental growth should improve as retail sales recover, while the investment pipeline will deliver robust net asset value growth going forward. Jupiter Fund Management has a strong brand in the UK retail market and now the company is debt free we expect a significant increase in cash returns to shareholders.

One consequence of the falling oil price has been a reduction in energy and petrol bills, so supporting a healthy outlook for the consumer next year. We initiated a position in the global market leading tourism group, TUI AG (formally TUI Travel) and added to our holding in the pub company, Marston's. Management at TUI AG are driving profit growth through merger synergies, improving its German division's margins and expanding its highly profitable cruise ship business. The company is also expected to grow its dividend at a double digit rate from an already attractive level.

Sales during the year included positions in waste management company Shanks Group and Direct Line Insurance. We became concerned that the recovery in Shanks' Dutch solid waste division would be slower than expected thereby delaying the ability of the company to start growing its dividend again. Direct Line had been a strong performer since its Initial Public Offering but with the outlook for motor insurance prices weak, we sold our position. Elsewhere we sold our holdings in Greene King and Lloyd's insurer Amlin after a period of outperformance.

Within the fixed income portfolio we initiated a position in Altice, the holding company of French cable business Numericable, and German cable operator Unitymedia, to increase our exposure to consumers fast growing adoption of a single telecoms provider for multiple services (landline, mobile, cable TV and broadband services) across Europe. We also added a new high yield holding in Siemens Audiology, a global hearing aid device manufacturer. The company has a strong management team, good market share and benefits from supportive demographic trends. Positions in ITV and William Hill were sold during the year as we felt the yields had fallen to unattractive levels.

Outlook

We are now a number of years into recovery since the last recession but there still remains uncertainty. Despite the European Central Bank finally launching quantitative easing in the Eurozone, worries are focused on deflation and the impact of a Greek debt default or its exit from the Euro, the repercussions of the sharp fall in the oil price and continued slowing economic growth in emerging markets. In the UK, the General Election and the prospect of another hung Parliament will throw up its own uncertainties. The formation of a Coalition Government could prove complicated. US and UK economic growth for 2015, however, is forecast to be above trend and with wage inflation in the UK picking up, low interest rates and lower energy, petrol and food bills, the outlook for the consumer is robust.

In absolute terms, UK equity valuations are reasonable, but given the low yields available in other asset classes, equities represent very good value. The Company's exposure to bonds remains at its lowest level historically and this is unlikely to change unless bond yields become more appealing. This year we expect to continue to utilise gearing to enhance both income and capital growth when we feel opportunities exist in investment markets.

The sharp declines in commodity prices could mean aggregate earnings do not grow in the UK market this year given the weighting of the equity market toward resource stocks. In other parts of the market, however, companies are experiencing robust growth as on the whole the global economy is recovering, especially in the US. Good growth in dividends is expected (consensus forecast a 6% market dividend growth in 2015) given pay-out ratios are only in line with the long term average and corporate balance sheets remain strong. We remain positive on equities as the dividend yield and dividend growth on offer should underpin the market.

Principal risks and uncertainties

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

Investment activity and performance

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

Financial

By its nature as an investment trust, the Company's business activities are exposed to market risk (including currency risk, interest rate risk and other price risk), liquidity risk, and credit and counterparty risk. Although the Company invests almost entirely in securities that are quoted on recognised markets, share prices may move rapidly. The companies in which investments are made may operate unsuccessfully, or fail entirely. A fall in the market value of the Company's portfolio would have an adverse effect on Shareholders' funds. The Directors review the portfolio regularly and risk is mitigated through diversification of investments in the portfolio.

Regulatory

A breach of Section 1158 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 2006 could lead to criminal proceedings, or financial or reputational damage. Henderson has contracted to provide investment, company secretarial, accounting and administration services through qualified professionals. The Board receives internal control reports produced by Henderson on a quarterly basis, which confirm regulatory compliance.

Operational

Disruption to, or failure of, 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 risk that one or more of its suppliers may not provide the required level of service. Details of how the Board monitors the services provided by Henderson and its other suppliers, and the key elements designed to provide effective internal control, are explained further in the internal controls and risk management in the Annual Report.

Related party transactions

The Company's current related parties are its Directors and 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 remuneration for which there were no outstanding amounts payable at the year end. In relation to the provision of services by Henderson, 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 Henderson affecting the financial position of the Company during the year under review.

Statement of directors' responsibilities

Statement under DTR 4.1.12

Each of the Directors confirms that, to the best of his or her knowledge:

•     the financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law) 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 includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

 

Income Statement

	Year ended 31 December 2014			Year ended 31 December 2013
	Revenue return £'000	Capital return £'000	Total £'000	Revenue return £'000	Capital return £'000	Total £'000
Gains on investments held at fair value through profit or loss (note 2)	-	5,549	5,549	-	33,858	33,858
Income from investments held at fair value through profit or loss (note 3)	10,758	-	10,758	10,080	-	10,080
Other interest receivable and similar income (note 4)	126	-	126	13	-	13
	----------	----------	----------	----------	----------	----------
Gross revenue and capital gains	10,884	5,549	16,433	10,093	33,858	43,951
Management and performance fees (note 5)	(387)	(2,139)	(2,526)	(305)	(2,616)	(2,921)
Other administrative expenses	(353)	-	(353)	(329)	-	(329)
	----------	----------	----------	----------	----------	----------
Net return on ordinary activities before finance costs and taxation	10,144	3,410	13,554	9,459	31,242	40,701
Finance costs	(150)	(449)	(599)	(137)	(408)	(545)
	----------	----------	----------	----------	----------	----------
Net return on ordinary activities before taxation	9,994	2,961	12,955	9,322	30,834	40,156
Taxation on net return on ordinary activities	(177)	148	(29)	(207)	189	(18)
	----------	----------	----------	----------	----------	----------
Net return on ordinary activities after taxation	9,817	3,109	12,926	9,115	31,023	40,138
	======	======	======	======	======	======
Return per ordinary share (note 6)	9.24p	2.93p	12.17p	9.12p	31.06p	40.18p
	======	======	======	======	======	======
The total columns of this statement represent the income statement of the Company.  All capital and revenue items derive from continuing operations.  No operations were acquired or discontinued during the year.  The Company has no recognised gains or losses other than those recognised in the income statement.

Reconciliation of Movements in Shareholders' Funds

Year ended 31 December 2014	Called up share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Other capital reserves £'000	Revenue reserve £'000	Total £'000
At 31 December 2013	5,166	80,754	26,302	58,594	4,532	175,348
Net return on ordinary activities after taxation	-	-	-	3,109	9,817	12,926
Issue of new shares	278	9,444	-	-	-	9,722
Fourth interim dividend (2.125p per share) for the year ended 31 December 2013 paid 31 January 2014	-	-	-	-	(2,186)	(2,186)
First interim dividend (2.125p per share) for the year ended 31 December 2014 paid 30 April 2014	-	-	-	-	(2,226)	(2,226)
Second interim dividend (2.125p per share) for the year ended 31 December 2014 paid 31 July 2014	-	-	-	-	(2,257)	(2,257)
Third interim dividend (2.175p per share) for the year ended 31 December 2014 paid 31 October 2014	-	-	-	-	(2,340)	(2,340)
	--------	---------	---------	---------	---------	----------
At 31 December 2014	5,444	90,198	26,302	61,703	5,340	188,987
	=====	=====	=====	=====	=====	======
Year ended 31 December 2013	Called up share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Other capital reserves £'000	Revenue reserve £'000	Total £'000
At 31 December 2012	4,834	70,386	26,302	27,571	3,671	132,764
Net return on ordinary activities after taxation	-	-	-	31,023	9,115	40,138
Issue of new shares	332	10,368	-	-	-	10,700
Fourth interim dividend (2.075p per share) for the year ended 31 December 2012 paid 31 January 2013	-	-	-	-	(2,006)	(2,006)
First interim dividend (2.075p per share) for the year ended 31 December 2013 paid 30 April 2013	-	-	-	-	(2,043)	(2,043)
Second interim dividend (2.075p per share) for the year ended 31 December 2013 paid 31 July 2013	-	-	-	-	(2,066)	(2,066)
Third interim dividend (2.125p per share) for the year ended 31 December 2013 paid 31 October 2013	-	-	-	-	(2,146)	(2,146)
Refund of unclaimed dividends	-	-	-	-	7	7
	--------	---------	---------	---------	---------	----------
At 31 December 2013	5,166	80,754	26,302	58,594	4,532	175,348
	=====	=====	=====	=====	=====	======

Balance Sheet

                                                                                                             At 31 December      

	2014 £'000	2013 £'000
Investments held at fair value through profit or loss	231,802	215,334
	----------	----------
Current assets
Debtors	1,362	1,476
Cash at bank	1,860	184
	----------	----------
	3,222	1,660
Creditors: amounts falling due within one year	(46,037)	(41,646)
	----------	----------
Net current liabilities	(42,815)	(39,986)
	----------	----------
Total assets less current liabilities	188,987	175,348
	======	======
Capital and reserves
Share capital	5,444	5,166
Share premium account	90,198	80,754
Capital redemption reserve	26,302	26,302
Other capital reserves	61,703	58,594
Revenue reserve	5,340	4,532
	----------	----------
Equity shareholders' funds	188,987	175,348
	======	======
Net asset value per ordinary share (note 7)	173.57p	169.72p
	======	======

Cash Flow Statement

	Year ended 31 December 2014			Year ended 31 December 2013
	£'000	£'000		£'000	£'000
Net cash inflow from operating activities (note 8)		7,616			7,731
Servicing of finance
Bank overdraft and loan interest paid		(590)			(524)
Taxation
Tax recovered		15			61
Financial investment
Purchases of investments	(46,511)			(54,637)
Sales of investments	35,622			30,328
	----------			----------
Net cash outflow from financial investment		(10,889)			(24,309)
Equity dividends paid		(9,009)			(8,254)
		----------			----------
Net cash outflow before financing		(12,857)			(25,295)
Financing
Issue of shares	9,722			10,700
Drawdown of loans	4,874			11,596
	----------			----------
Net cash inflow from financing		14,596			22,296
		----------			----------
Increase/(decrease) in cash in the year		1,739			(2,999)
		======			======
Reconciliation of net cash flow to movement in net debt
Increase/(decrease) in cash as above		1,739			(2,999)
Cash inflow from drawdown of loans		(4,874)			(11,596)
Exchange movements		(63)			(67)
		-----------			-----------
Movement in net debt		(3,198)			(14,662)
Net debt at 1 January		(38,941)			(24,279)
		-----------			-----------
Net debt at 31 December		(42,139)			(38,941)
		======			======

Notes to Financial Statements:

1.  Basis of accounting

The financial statements have been prepared on the historical cost basis except for the measurement at fair value of investments.  The financial statements have been prepared in accordance with applicable UK accounting standards and with the Statement of Recommended Practice Financial Statements of Investment Trust Companies and Venture Capital Trusts (the 'SORP') dated January 2009.  All of the Company's operations are of a continuing nature.

2.  Gains on investments held at fair value through profit or loss

	2014 £'000	2013 £'000
Gains on sale of investments based on historical cost	5,633	4,543
Less: revaluation gains recognised in previous years	(5,145)	(3,224)
	---------	---------
Gains on investments sold in the year based on carrying value at the previous balance sheet date	488	1,319
Net movement on revaluation of investments	5,126	32,609
Exchange losses	(65)	(70)
	---------	---------
	5,549	33,858
	=====	=====

3.  Income from investments held at fair value through profit or loss

	2014 £'000	2013 £'000
UK dividend income - listed	7,138	6,264
UK dividend income - special dividends	327	449
	-------	-------
	7,465	6,713
Interest income - listed	1,401	1,519
Overseas dividend income - listed	1,892	1,848
	-------	-------
	3,293	3,367
	-------	-------
	10,758	10,080
	=====	=====

4.   Other interest receivable and similar income

	2014 £'000	2013 £'000
Bank interest	1	1
Underwriting commission	44	12
Option premium income	81	-
	-----	-----
	126	13
	===	===

5.   Management and performance fees

	Revenue return £'000	2014  Capital return £'000	Total £'000	Revenue return £'000	2013  Capital return £'000	Total £'000
Management fee	387	580	967	305	457	762
Performance fee	-	1,559	1,559	-	2,159	2,159
	------	-------	-------	------	-------	-------
	387	2,139	2,526	305	2,616	2,921
	===	====	====	====	====	====

A performance fee of £1,559,000 was earned during the year (2013:  £2,159,000). 

6.  Return per ordinary share

The return per ordinary share figure is based on the gains attributable to the ordinary shares of £12,926,000 (2013: £40,138,000) and on the 106,237,900 weighted average number of ordinary shares in issue during the year (2013: 99,894,668).

The Company had no securities in issue that could dilute the return per ordinary share.

The return per ordinary share can be analysed between revenue and capital, as shown below:

	2014 £'000	2013 £'000
Net revenue return	9,817	9,115
Net capital return	3,109	31,023
	----------	----------
Net total return	12,926	40,138
	======	======
Weighted average number of ordinary shares in issue during the year	106,237,900	99,894,668
Revenue return per ordinary share	9.24p	9.12p
Capital return per ordinary share	2.93p	31.06p
	----------	----------
Total return per ordinary share	12.17p	40.18p
	======	======

7.   Net asset value per ordinary share

The net asset value per ordinary share is based on the net assets attributable to the ordinary shares of £188,987,000 (2013: £175,348,000) and on the 108,882,287 ordinary shares in issue at 31 December 2014 (2013: 103,313,818 ordinary shares).

8.   Reconciliation of net return on ordinary activities before finance costs

      and taxation to net cash inflow from operating activities

	2014 £'000	2013 £'000
Net return before finance costs and taxation	13,554	40,701
Gains on investments held at fair value through profit or loss	(5,549)	(33,858)
Increase/(decrease) in accrued income and debtors of a revenue nature	98	(137)
(Decrease)/increase in creditors	(458)	1,062
Tax deducted on investment income	(29)	(37)
	--------	--------
Net cash inflow from operating activities	7,616	7,731
	=====	=====

9.   Dividends

		£'000
Revenue available for distribution by way of dividend for the year		9,817
First interim dividend (2.125p) paid on 30 April 2014		(2,226)
Second interim dividend (2.125p) paid on 31 July 2014		(2,257)
Third interim dividend (2.175p) paid on 31 October 2014		(2,340)
Fourth interim dividend (2.175p) paid on 30 January 2015		(2,368)
Undistributed revenue for Section 1158 purposes		--------
		626
		=====

10.   Going concern statement

The Company's articles of association require that at every fifth annual general meeting of the Company an ordinary resolution be put to Shareholders asking them to approve the continuation of the Company. The Directors therefore are proposing an ordinary resolution to the Shareholders that the Company continues in existence as an investment trust at this year's annual general meeting and the Directors are recommending that Shareholders should vote in favour of the resolution, as they shall do in respect of their own shareholdings.

The Directors have no reason to believe that the resolution will not be passed however if such resolution is not passed, proposals for the Company's liquidation or reconstruction will be put to Shareholders. The ongoing viability of the Company and the validity of the going concern basis depend on the outcome of the continuation vote, on which the Board is recommending that Shareholders vote in favour. In particular, no provision has been made for the costs of winding-up the Company or liquidating its investments in the event that the resolution is not passed.

The assets of the Company consist mainly of a portfolio of diversified securities that are readily realisable, and the Company has adequate financial resources to meet its liabilities and continue in operational existence for the foreseeable future.

The Directors believe that it is appropriate to continue to adopt the going concern basis in preparing the financial statements. In reviewing the position as at the date of the Annual Report, the Board has considered 'Going Concern and Liquidity Risk: Guidance for Directors of UK Companies 2009' published by the Financial Reporting Council.

11.   2014 Financial information

The figures and financial information for 2014 are extracted from the Annual Report and Financial Statements for the year ended 31 December 2014 and do not constitute the statutory accounts for the year. The Annual Report and Financial Statements includes the Independent Auditor's Report which is unqualified and does not contain a statement under either Section 498(2) or Section 498(3) of the Companies Act 2006.  The Annual Report and Financial Statements have not yet been delivered to the Registrar of Companies.

12.   2013 Financial information

The figures and financial information for 2013 are extracted from the Annual Report and Financial Statements for the year ended 31 December 2013 and do not constitute the statutory accounts for the year. The Annual Report and Financial Statements includes the Independent Auditor's Report which is unqualified and does not contain a statement under either Section 498(2) or Section 498(3) of the Companies Act 2006. 

13.   Annual Report and Financial Statements

The Annual Report and Financial Statements for the year ended 31 December 2014 will be posted to Shareholders in early April 2015 and will be available thereafter on the Company's website (www.hendersonhighincome.com) or from the Company's registered office, 201 Bishopsgate, London, EC2M 3AE.

14.    Annual general meeting

The annual general meeting will be held on Tuesday 5 May 2015 at 12.00 noon at the Company's registered office, 201 Bishopsgate, London EC2M 3AE. The notice convening the annual general meeting will shortly be available on the Company's website www.hendersonhighincome.com 

For further information please contact:

Alex Crooke

Co-Fund Manager

Henderson High Income Trust plc

Telephone: [phone]

David Smith

Co-Fund Manager

Henderson High Income Trust plc

Telephone: [phone]

James de Sausmarez

Director and Head of Investment Trusts

Henderson Global Investors

Telephone: [phone]

Sarah Gibbons-Cook

Investor Relations and PR Manager Investment Trusts

Henderson Global Investors

Telephone: [phone]

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

 

END

 

 

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