Interim Results

Henderson High Income Trust PLC 25 July 2007 25 July 2007 HENDERSON HIGH INCOME TRUST PLC Unaudited Results for the Half Year ended 30 June 2007 Highlights: * Trust welcomes approximately 600 shareholders through the rollover from Martin Currie Income & Growth Trust plc * Net asset value total return per share increased by 2.0% over the half year to 30 June 2007 Extracts from the Chairman's Statement: As I warned in my statement in the last annual report published in March, it was unlikely to be all plain sailing going forward, and this has proved particularly true for income trusts like ours over recent months. Our NAV is slightly lower than at the last year end and our share price has fallen a little more, although both are still significantly higher than a year ago, so leaving the shares on a small discount to the NAV. This has been against a background of a still rising UK equity market but a falling bond market. Unfortunately, the continued strength in the equity market has been largely driven by stocks and sectors which are not natural homes for high income investors like us, and with our exposure to bonds, it is not surprising that we have found the prevailing winds difficult and our recent performance has suffered. Our portfolio manager, Alex Crooke, expands on this and his views on the outlook in his report. In May we were delighted to welcome as new shareholders those who chose to roll into this trust from their previous holdings in the Martin Currie Income & Growth Trust plc on its winding up. There was a large take up of this option which resulted in 16.1m additional shares being issued and does, I believe, reflect a vote of confidence by them in our trust. The benefits of this enlargement, in terms of liquidity and total expense ratio, will accrue to all shareholders over the longer term. In my annual statement I reported that we had already started the process to find a replacement for Sir John Stanley who stepped down as a director at the AGM. I am delighted to report that, as already announced, we have now appointed Janet Walker to the Board. Janet, who is currently the Commercial & Finance Director of Ascot Racecourse, has had a varied and interesting career, mainly in the television world, and will, I am sure, not only bring a different viewpoint on our affairs, but will be a stimulating and valuable member of the Board, as well as make an important contribution to the Company in the years ahead. As some of you may have read, the European Court of Justice has recently given judgement, on a case brought by another investment trust, that VAT should not be payable on its investment management fees, as has been the case in the UK. If this is accepted by HM Revenue & Customs then our Company will be eligible for the repayment of some of the VAT that we have paid on our fees in the past. At the time of writing it is too early to say exactly when all this will be concluded and exactly how much will be involved. I will, of course, inform you once we are able to tell you something definite about this matter. The Board has declared a second interim dividend of 2.015p per share to be paid on 31 October 2007. We shall be reviewing the scope for increasing future dividends at our November meeting in light of the conditions prevailing at that time. - MORE - - 2 - HENDERSON HIGH INCOME TRUST PLC Unaudited Results for the Half Year ended 30 June 2007 Extracts from the Chairman's Statement (continued) Whilst not many of us, I suspect, miss Donald Rumsfeld, his immortal words which I quoted in my annual statement look very perceptive today, particularly in light of the recent problems in the sub-prime mortgages and debt markets. I find that my views on the outlook for markets have not really changed from what I said in my annual statement which was not that many months ago. I will not repeat them in their entirety, as you can reread them in the annual report, but I do remain cautiously optimistic for the medium to longer term, although recognising that it will not be all plain sailing. Trying to predict correctly the direction of markets can be as difficult, as I am sure those who work in the Met Office are currently finding it in predicting our weather. It is hard to believe that in April they were warning us that the weather we were then enjoying would continue throughout the summer and that we must be prepared for the hottest summer on record and, in the South, a continuation and tightening of water restrictions. I hope that by the time you read this you are enjoying some semblance of a normal summer and that markets are not being as volatile as the recent weather. Hugh Twiss Chairman 25 July 2007 - MORE - - 3 - HENDERSON HIGH INCOME TRUST PLC Unaudited Results for the Half Year ended 30 June 2007 Manager's Report Markets The UK stock market has made steady progress through the first half of the year, rising 5.7% as measured by the FTSE All-Share Index. However, this progression has come about through ever fewer stocks; while 50% of the top 100 stocks in the UK outperformed, in the mid-cap area of the market returns were harder to come by, with only 38% of stocks outperforming the broad market index. Part of the reason for the lack of breadth in the UK is that the increasing tightening of the interest rate cycle is now beginning to have a real effect. Consumer related companies are having to offer better deals to attract spending, while areas of the market that are valued with reference to bond yields have suffered as yields have risen. Inflation is proving stubborn to control and, with interest rates rising from 5% to 5.75% over the period, longer dated bond yields have also risen. The underlying inflationary price trends are increasingly in goods that have global markets like food and oil, neither of which is likely to be affected seriously by domestic UK interest rates. Bonds have been further affected by the high level of defaults in US sub-prime mortgages. It is odd to think that UK corporate bonds might be affected by US domestic housing problems but increasingly bonds from around the world are being packaged together and resold in layers depending on the buyer's risk appetite. Taking out one constituent can affect the whole edifice and it is this pressure, over and above rising inflation forecasts, that has resulted in lower corporate bond prices and hence higher yields. The final dynamic in equity markets has been a recovery in the value of larger capitalised stocks at the expense of smaller and mid cap issues. This trend is not universal as large financials are still underperforming but telecoms and oil /mining stocks have seen dramatic recoveries in share prices. Mining shares continue to be in vogue, despite a flat market generally for metal prices; however, analysts have been upgrading volume targets and assumptions for future prices. Performance Essentially, the sell off in bonds combined with traditional income sectors (such as property, utilities and life assurance) being out of favour has meant that we had a difficult period for performance. The net asset value total return per share only rose by 2.0%, when the FTSE All-Share Index returned 7.6%, both figures including reinvestment of income. We reduced our gearing further in the period, ending at 30 June with gearing of 21%. The reduction was largely effected in April when we issued the new shares to investors in Martin Currie Income & Growth Trust plc; in return we received a mixture of cash (in the form of a short dated gilt) and large cap stocks. We have been trying to increase the exposure to bigger stocks for some time and accepted holdings in Vodafone, HSBC, National Grid and BP amongst others. The increase in Vodafone has propelled this stock into our Top 5 holdings and performance has been robust all year. Elsewhere, we have not had much luck with takeover bids. The level of activity will quicken over the summer and we expect further deals, especially from corporate buyers, to return in the autumn. - MORE - - 4 - HENDERSON HIGH INCOME TRUST PLC Unaudited Results for the Half Year ended 30 June 2007 Manager's Report (continued) Outlook There is a significant gap opening up between the prospective fortunes of the UK consumer and UK corporates. Interest rates may well rise further and the squeeze on available consumer spending is already apparent and can only tighten further given the price rises in fuel and food. Meanwhile, corporates have generally been reducing their debt levels and earnings growth expectations are still forecast to average near 8% for the market. Since the dip in share prices in March, investors have favoured lower yielding areas of the stock market and many sectors such as industrials and construction look to be overvalued. While some of this pressure is likely to continue, we believe that the financials offer the best combination of higher yields and cheap valuations and we expect to maintain our positions here. Our historically low level of gearing gives us considerable opportunities to invest into any weakness, as share prices still appear to be fundamentally reasonably valued, albeit that we are entering a period of more volatility. Alex Crooke 25 July 2007 - MORE - - 5 - HENDERSON HIGH INCOME TRUST PLC Unaudited Results for the Half Year ended 30 June 2007 Income Statement for the half year ended 30 June 2007 (Unaudited) (Unaudited) (Audited) Half year ended Half year ended Year ended 30 June 2007 30 June 2006 31 December 2006 Revenue Capital Revenue Capital Revenue Capital return return Total return return Total return return Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 (Losses)/gains on investments held at fair value through profit or loss - (1,036) (1,036) - 3,791 3,791 - 21,069 21,069 Investment income 4,113 - 4,113 3,387 - 3,387 6,838 - 6,838 Other operating income 26 - 26 21 - 21 66 - 66 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Gross revenue and capital (losses) /gains 4,139 (1,036) 3,103 3,408 3,791 7,199 6,904 21,069 27,973 Management and performance fees (186) (886) (1,072) (152) (956) (1,108) (308) (1,691) (1,999) Other administrative expenses (131) - (131) (115) - (115) (276) - (276) ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net return/(loss) before finance costs and taxation 3,822 (1,922) 1,900 3,141 2,835 5,976 6,320 19,378 25,698 Finance costs (242) (725) (967) (252) (757) (1,009) (500) (1,500) (2,000) ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net return/(loss) on ordinary activities before taxation 3,580 (2,647) 933 2,889 2,078 4,967 5,820 17,878 23,698 Taxation on net return on ordinary activities (173) 163 (10) (86) 61 (25) (199) 185 (14) ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net return/(loss) on ordinary activities after taxation 3,407 (2,484) 923 2,803 2,139 4,942 5,621 18,063 23,684 ====== ====== ====== ====== ====== ====== ====== ====== ====== Return/(loss) per share (note 2) 4.53p (3.30)p 1.23p 4.04p 3.09p 7.13p 8.09p 25.99p 34.08p ====== ====== ====== ====== ====== ====== ====== ====== ====== The columns of this statement headed "total" represent the Company's income statement, prepared in accordance with UK GAAP. The revenue and capital columns are supplementary to this and are published under guidance from the Association of Investment Companies. The Company has no recognised gains or losses other than those disclosed in the income statement and reconciliation of movements in shareholders' fund. All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the period. - MORE - - 6- HENDERSON HIGH INCOME TRUST PLC Unaudited Results for the Half Year ended 30 June 2007 Reconciliation of Movements in Shareholders' Funds for the half year ended 30 June 2007 Share Capital Other Share premium redemption capital Revenue capital account reserve reserves reserve Total Half year ended 30 June 2007 (unaudited) £'000 £'000 £'000 £'000 £'000 £'000 At 31 December 2006 3,484 28,288 26,302 64,773 3,790 126,637 Net (loss)/return on ordinary activities after taxation - - - (2,484) 3,407 923 Issue of new shares 808 28,760 - - - 29,568 Issue costs payable - (172) - - - (172) Third interim dividend (2.015p per share) for year ended 31 December 2006 paid 31 January 2007 - - - - (1,404) (1,404) Fourth interim dividend (2.015p per share) for year ended 31 December 2006 paid 30 April 2007 - - - - (1,404) (1,404) ------- ------- ------- ------- ------- --------- At 30 June 2007 4,292 56,876 26,302 62,289 4,389 154,148 ===== ===== ===== ===== ==== ====== Share Capital Other Share premium redemption capital Revenue capital account reserve reserves reserve Total Half year ended 30 June 2006 (unaudited) £'000 £'000 £'000 £'000 £'000 £'000 At 31 December 2005 3,433 26,620 26,302 46,710 3,540 106,605 Net return on ordinary activities after taxation - - - 2,139 2,803 4,942 Issue of new shares 51 1,668 - - - 1,719 Third interim dividend (1.9375p per share) for year ended 31 December 2005 paid 31 January 2006 - - - - (1,329) (1,329) Fourth interim dividend (1.9375p per share) for year ended 31 December 2005 paid 28 April 2006 - - - - (1,342) (1,342) ------- ------- ------- ------- ------- -------- At 30 June 2006 3,484 28,288 26,302 48,849 3,672 110,595 ===== ===== ===== ===== ===== ====== Share Capital Other Share premium redemption capital Revenue capital account reserve reserves reserve Total Year ended 31 December 2006 (audited) £'000 £'000 £'000 £'000 £'000 £'000 At 31 December 2005 3,433 26,620 26,302 46,710 3,540 106,605 Net return on ordinary activities after taxation - - - 18,063 5,621 23,684 Issue of new shares 51 1,668 - - - 1,719 Third interim dividend (1.9375p per share) for year ended 31 December 2005 paid 31 January 2006 - - - - (1,329) (1,329) Fourth interim dividend (1.9375p per share) for year ended 31 December 2005 paid 28 April 2006 - - - - (1,342) (1,342) First interim dividend (1.9375p per share) for year ended 31 December 2006 paid 28 July 2006 - - - - (1,350) (1,350) Second interim dividend (1.9375p per share) for year ended 31 December 2006 paid 31 October 2006 - - - - (1,350) (l,350) ------- -------- ------- ------- ------- -------- At 31 December 2006 3,484 28,288 26,302 64,773 3,790 126,637 ===== ====== ===== ===== ===== ====== - MORE - - 7 - HENDERSON HIGH INCOME TRUST PLC Unaudited Results for the Half Year ended 30 June 2007 Balance Sheet as at 30 June 2007 (Unaudited) (Unaudited) (Audited) 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Fixed assets Investments held at fair value though profit or loss 186,224 147,811 155,910 ----------- ----------- ----------- Current assets Debtors 1,634 1,080 2,161 Cash at bank 747 1,152 4,205 ----------- ----------- ----------- 2,381 2,232 6,366 Creditors: amounts falling due within one year (34,457) (39,448) (35,639) ----------- ----------- ----------- (32,076) (37,216) (29,273) ----------- ----------- ----------- Total net assets 154,148 110,595 126,637 ====== ====== ====== Capital and reserves Called up share capital 4,292 3,484 3,484 Share premium 56,876 28,288 28,288 Capital redemption reserve 26,302 26,302 26,302 Other capital reserves: Realised reserve 23,140 16,004 21,917 Unrealised reserve 39,149 32,845 42,856 Revenue reserve 4,389 3,672 3,790 ---------- ---------- ---------- Equity shareholders' funds 154,148 110,595 126,637 ====== ====== ====== Net asset value per share (note 3) 179.58p 158.70p 181.72p ====== ====== ====== - MORE - - 8 - HENDERSON HIGH INCOME TRUST PLC Unaudited Results for the Half Year ended 30 June 2007 Cash Flow Statement for the half year ended 30 June 2007 (Unaudited) (Unaudited) (Audited) Half Half Year ended year ended year ended 31 December 30 June 2007 30 June 2006 2006 £'000 £'000 £'000 Net cash inflow from operating activities 2,026 2,100 5,083 Net cash outflow from servicing of finance (996) (1,068) (2,008) Net tax recovered 3 3 9 Net cash (outflow)/inflow from financial investment (1,567) (2,175) 5,919 Equity dividends paid (2,808) (2,671) (5,371) --------- ---------- ---------- Net cash (outflow)/inflow before financing (3,342) (3,811) 3,632 Net cash (outflow)/inflow from financing (133) 3,129 (1,275) ---------- ---------- ---------- (Decrease)/increase in cash (3,475) (682) 2,357 ====== ====== ====== Notes to the Cash Flow Statement Reconciliation of operating revenue to net cash inflow from operating activities Net return before finance costs and taxation 1,900 5,976 25,698 Less: capital return before finance costs and taxation 1,922 (2,835) (19,378) -------- --------- --------- Net revenue before finance costs and taxation 3,822 3,141 6,320 (Increase)/decrease in accrued income (328) 77 50 (Decrease)/increase in creditors (572) (119) 424 Tax deducted at source (10) (43) (20) Management, performance and administrative fees charged to capital (886) (956) (1,691) -------- --------- --------- Net cash inflow from operating activities 2,026 2,100 5,083 ===== ===== ===== Reconciliation of net cash flow to movement in net debt (Decrease)/increase in cash (3,475) (682) 2,357 Net repayment/(drawdown) of loans 1,106 (1,410) 2,977 Exchange movements 17 - 14 --------- --------- ---------- Movement in net debt in the period (2,352) (2,092) 5,348 Net debt at the beginning of the period (29,876) (35,224) (35,224) ---------- --------- ---------- Net debt at the end of the period (32,228) (37,316) (29,876) ====== ====== ====== Represented by: Cash at bank and short term deposits 747 1,152 4,205 Debt falling due within one year (32,975) (38,468) (34,081) ----------- ----------- ----------- Total (32,228) (37,316) (29,876) ====== ====== ====== - MORE - - 9 - HENDERSON HIGH INCOME TRUST PLC Unaudited Results for the Half Year ended 30 June 2007 Notes: 1. Accounting policies Basis of accounting The accounts have been prepared on the historical cost basis of accounting, modified to include the revaluation of investments and on the basis of accounting policies which are consistent with the last annual financial statements. The accounts have been prepared in accordance with applicable accounting standards and with the AIC Statement of Recommended Practice Financial Statements of Investment Trust Companies ("SORP") for investment trusts dated December 2005. 2. Returns per share The return per share amounting to 1.23p (half year ended 30 June 2006: 7.13p; year ended 31 December 2006: 34.08p) is based on the net gain attributable to the shares of £923,000 (half year ended 30 June 2006: £4,942,000; year ended 31 December 2006: £23,684,000) and on the 75,129,923 weighted average number of shares in issue during the period (half year ended 30 June 2006: 69,288,212; year ended 31 December 2006: 69,489,647). Revenue return per share amounting to 4.53p (half year ended 30 June 2006: 4.04p; year ended 31 December 2006: 8.09p) is based on the earnings attributable to the shares of £3,407,000 (half year ended 30 June 2006: £2,803,000; year ended 31 December 2006: £5,621,000) and on the 75,129,923 weighted average number of shares in issue during the period (half year ended 30 June 2006: 69,288,212; year ended 31 December 2006: 69,489,647). Capital loss per share amounting to 3.30p (half year ended 30 June 2006: gain of 3.09p; year ended 31 December 2006: gain of 25.99p) is based on the net capital loss for the period of £2,484,000 (half year ended 30 June 2006: gains of £2,139,000; year ended 31 December 2006: gains of £18,063,000) and on the 75,129,923 weighted average number of shares in issue during the period (half year ended 30 June 2006: 69,288,212; year ended 31 December 2006: 69,489,647). 3. Net asset value per share The net asset value per share is based on the net assets attributable to the shares of £154,148,000 (30 June 2006: £110,595,000; 31 December 2006: £126,637,000) and on the 85,835,744 shares in issue (30 June 2006: 69,687,798; 31 December 2006: 69,687,798). - MORE - - 10 - HENDERSON HIGH INCOME TRUST PLC Unaudited Results for the Half Year ended 30 June 2007 Notes (continued) 4. Share capital During the period the Company issued 16,147,946 shares for a total consideration (before issue costs) of £29,568,000. 5. Dividends Interim dividends are recognised in the period in which they are paid. In respect of the year ended 31 December 2006, a third interim dividend of 2.015p per share (2005: 1.9375p) was paid on 31 January 2007 to shareholders on the register at close of business on 5 January 2007. A fourth interim dividend of 2.015p per share (2005: 1.9375p) was paid on 30 April 2007 to shareholders on the register at close of business on 30 March 2007. These two dividends are reflected in these interim accounts. In respect of the year ending 31 December 2007, a first interim dividend of 2.015p per share (2006: 1.9375p) will be paid on 31 July 2007 to shareholders on the register on 22 June 2007. The aggregate cost of this dividend will be £1,730,000. A second interim dividend of 2.015p per share (2006: 1.9375p) will be paid on 31 October 2007 to shareholders on the register on 21 September 2007. The shares will go ex-dividend on 19 September 2007. In accordance with FRS 21, the first and second interim dividends have not been accrued for in the interim accounts as they are paid after the period end. 6. Comparative information The financial information contained in this interim statement does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The financial information for the half years ended 30 June 2006 and 30 June 2007 has not been audited. The figures and financial information for the year ended 31 December 2006 are extracted from the latest published accounts and do not constitute the statutory accounts for that year. Those accounts have been delivered to the Registrar of Companies and included the Report of the Independent Auditors, which was unqualified and did not include a statement under either section 237(2) or 237(3) of the Companies Act 1985. - ENDS - For further information please contact: Alex Crooke Sarah Gibbons-Cook Fund Manager Investor Relations & PR Manager Henderson High Income Trust plc Henderson Global Investors Telephone: 020 7818 4447 Telephone: 020 7818 3198 James de Sausmarez Head of Investment Trusts Henderson Global Investors Telephone: 020 7818 3349 This information is provided by RNS The company news service from the London Stock Exchange

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