Interim Results

Henderson High Income Trust PLC 01 August 2006 1 August 2006 HENDERSON HIGH INCOME TRUST PLC Unaudited Interim Results for the half year ended 30 June 2006 Highlights: * Net asset value total return per ordinary share increased by 3.5% over the half year to 30 June 2006 * Market price total return per ordinary share increased by 2.6% over the half year to 30 June 2006 Chairman's Statement: This is my first statement as your Chairman and whilst I am glad to be able to report substantial growth since this time last year, there has sadly been little change in the value of our assets in the first half of this year, as well as an underperformance against the FTSE All-Share Index. The reasons for this I will cover later. However, given the strong performance seen over the previous few years and the investment environment of recent months, such a performance, particularly for a Company like ours with its emphasis on generating and paying out a high level of income, is neither surprising nor something to be ashamed about. My predecessor, Bill Eason, and fellow director, Patrick Dalby, who retired after the recent AGM, made a significant contribution to our Company and we will miss their wise counsel. On behalf of us all, I would like to thank them for their valuable service to the Company and its forerunners over many years. Portfolio The broader market in the UK, with the exception of the mining sector, has struggled all year and income yielding shares, in particular, have been dull. This is probably due to the expectation that interest rates are likely to rise and bond yields have, therefore, risen over the first half of the year. Our portfolio, as I said, has underperformed the UK market, although with over 20% invested in bonds, which fell in value over the period, this outcome is not too surprising. The net asset value total return per ordinary share was 3.49%, whilst the FTSE All-Share Index returned 6.11%; both figures include the reinvestment of income. As I highlighted earlier, the mining sector, with the underlying rise in metal prices driving the sector to new highs in early May before encountering a sell-off later in that month, has been the star of the market. However, we have had little exposure to mining and also oil stocks, as neither sector has been a generous dividend payer in the past, preferring to invest their profits rather than distribute to shareholders. April was a difficult month for our portfolio when mining shares were very strong, but much of this appreciation has been subsequently given back and there must be the risk that commodity prices are being driven more by financial speculation than fundamentals. Elsewhere financials, such as banks and insurers, have been disappointing. We have taken this underperformance as an opportunity to increase our holdings in both these sectors as we feel they represent good value. The portfolio has otherwise changed little over the period. - MORE - - 2 - HENDERSON HIGH INCOME TRUST PLC Unaudited Interim Results for the half year ended 30 June 2006 Chairman's Statement cont'd Earnings and Dividends Over the first half of the year, the revenue earnings of the Company amounted to 4.04p compared with 4.93p a year ago. This reduced level of earnings is mainly due to the new capital structure put in place last September, following the repayment of the zero dividend preference shares. This fall, however, masks a strong, often double digit, growth in dividends from UK equities in the portfolio, as margins and profits have risen, although we expect going forward this rate of increase to return to the 5-6% long term average. The Board has today declared an unchanged second interim dividend of 1.9375p per ordinary share to be paid on 31 October 2006. Auditors Deloitte & Touche LLP have been the Company's auditors since 1990 and have served the Company well throughout the period. However, in line with corporate governance recommendations, the Audit Committee recently undertook a review of the Company's auditors. As a result, the Board has decided to appoint RSM Robson Rhodes LLP to be the new independent auditors to the Company. Prospects At the time of writing this statement, the background to markets is very uncertain with the oil price hitting new highs, instability in the Middle East and mixed economic indicators. This is likely to be reflected in greater volatility and markets may well find it difficult to progress much from, or indeed hold, their current levels over the rest of the year, although by most measures the UK equity market is not expensive. On a positive note, we have a broadly defensive portfolio which should hold us in good stead and our Portfolio Manager has steered us successfully through difficult waters before. I remain confident that he will do so again and will continue to deliver the high level of income required and to achieve growth in capital over the longer term, notwithstanding any squalls we may encounter in the shorter term. Hugh Twiss Chairman 1 August 2006 - MORE - - 3 - HENDERSON HIGH INCOME TRUST PLC Unaudited Interim Results for the half year ended 30 June 2006 Income Statement for the half year ended 30 June 2006 (Unaudited) (Unaudited) (Audited) Half year ended 30 June 2006 Half year ended 30 June Year ended 31 December 2005 2005 Revenue Capital Revenue Capital Revenue Capital return return Total return return Total return return Total Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Gains on investments held at fair value through profit or loss - 3,791 3,791 - 8,115 8,115 - 19,355 19,355 Investment income 3,387 - 3,387 3,386 - 3,386 6,596 - 6,596 Other operating income 21 - 21 14 - 14 92 - 92 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Gross revenue and capital 3,408 3,791 7,199 3,400 8,115 11,515 6,688 19,355 26,043 gains Management and performance (152) (956) (1,108) (144) (931) (1,075) (288) (1,210) (1,498) fees Other administrative (115) - (115) (184) (190) (374) (309) (173) (482) expenses ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net return before finance costs and taxation 3,141 2,835 5,976 3,072 6,994 10,066 6,091 17,972 24,063 Interest payable (252) (757) (1,009) (170) (511) (681) (358) (1,074) (1,432) Movement in provision for redemption of the zero dividend preference shares in subsidiary - - - - (1,480) (1,480) - (2,253) (2,253) ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net return on ordinary activities before taxation 2,889 2,078 4,967 2,902 5,003 7,905 5,733 14,645 20,378 Taxation on net return on ordinary activities (86) 61 (25) (142) 134 (8) (217) 204 (13) ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Net return on ordinary activities after taxation attributable to equity shareholders 2,803 2,139 4,942 2,760 5,137 7,897 5,516 14,849 20,365 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Transfer to reserves 2,803 2,139 4,942 2,760 5,137 7,897 5,516 14,849 20,365 ====== ====== ====== ====== ====== ====== ====== ====== ====== Return per ordinary share 4.04p 3.09p 7.13p 4.93p 9.16p 14.09p 9.33p 25.12p 34.45p (note 2) ====== ====== ====== ====== ====== ====== ====== ====== ====== The total columns of this statement 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 Trust Companies. - MORE - - 4 - HENDERSON HIGH INCOME TRUST PLC Unaudited Interim Results for the half year ended 30 June 2006 Balance Sheet as at 30 June 2006 (Unaudited and (Unaudited) restated)* (Audited) 30 June 30 June 31 December 2006 2005 2005 Â£'000 Â£'000 Â£'000 Non-current assets Investments held at fair value through profit or loss 147,811 141,881 141,845 ----------- ----------- ----------- Current assets Debtors 1,080 1,112 1,152 Cash at bank 1,152 156 1,834 ----------- ----------- ----------- 2,232 1,268 2,986 Current liabilities (39,448) (64,464) (38,226) ----------- ----------- ----------- (37,216) (63,196) (35,240) ----------- ----------- ----------- Total net assets 110,595 78,685 106,605 ======= ======= ======= Capital and reserves Called up share capital 3,484 2,801 3,433 Capital redemption reserve 26,302 26,302 26,302 Other capital reserves: Share premium 28,288 9,034 26,620 Realised reserves 16,004 12,845 14,415 Unrealised reserves 32,845 24,152 32,295 Revenue reserve 3,672 3,551 3,540 ---------- ---------- ---------- Equity shareholders' funds 110,595 78,685 106,605 ======= ======= ======= Net asset value per ordinary share (note 3) 158.70p 140.44p 155.26p ======= ======= ======= * Restated in accordance with accounting policy at 31 December 2005 - MORE - - 5 - HENDERSON HIGH INCOME TRUST PLC Unaudited Interim Results for the half year ended 30 June 2006 Reconciliation of Movements in Shareholders' Funds (Unaudited and restated)* (Unaudited) (Audited) Half year ended Half year ended Year ended 30 June 2006 30 June 2005 31 December 2005 Â£'000 Â£'000 Â£'000 Net revenue on ordinary activities after taxation 2,803 2,760 5,516 Dividends (2,671) (2,773) (5,539) ---------- ---------- ---------- 132 (13) (23) Increase in realised and unrealised profits 2,139 5,137 14,849 ---------- ---------- ---------- 2,271 5,124 14,826 Issue of shares 1,719 - 18,218 Shareholders' funds at start of period 106,605 73,561 73,561 ---------- ---------- ---------- Shareholders' funds at end of period 110,595 78,685 106,605 ====== ====== ====== * Restated in accordance with accounting policy at 31 December 2005. - MORE - - 6 - HENDERSON HIGH INCOME TRUST PLC Unaudited Interim Results for the half year ended 30 June 2006 Cash Flow Statement for the half year ended 30 June 2006 (Unaudited) (Unaudited) Half Half (Audited) year ended year ended year ended 30 June 30 June 31 December 2005 2006 2005 Â£'000 Â£'000 Â£'000 Net cash inflow from operating activities 2,100 1,936 4,761 Net cash outflow from servicing of finance (1,068) (788) (1,577) Net tax recovered 3 10 7 Net cash (outflow)/inflow from financial investment (2,175) (3,209) 8,116 Equity dividends paid (2,671) (2,773) (5,540) ---------- ---------- ---------- Net cash (outflow)/inflow before financing (3,811) (4,824) 5,767 Net cash inflow/(outflow) from financing 3,129 3,291 (5,592) ---------- ---------- ---------- (Decrease)/increase in cash (682) (1,533) 175 ====== ====== ====== Notes to the Cash Flow Statement Reconciliation of operating revenue to net cash inflow from operating activities Net revenue before interest payable and taxation 3,141 3,072 6,091 Decrease/(increase) in accrued income 77 (29) (84) (Decrease)/increase in creditors (119) 37 165 Tax deducted at source (43) (23) (28) Management, performance and administrative fees charged to capital (956) (1,121) (1,383) --------- ---------- ---------- Net cash inflow from operating activities 2,100 1,936 4,761 ====== ====== ====== Reconciliation of net cash flow to movement in net debt (Decrease)/increase in cash (682) (1,533) 175 Net drawdown of loans (1,410) (3,291) (15,558) Exchange movements - 24 (6) --------- ---------- ---------- Movement in net funds in the period (2,092) (4,800) (15,389) Net debt at the beginning of the period (35,224) (19,835) (19,835) --------- ---------- ---------- Net debt at the end of the period (37,316) (24,635) (35,224) ====== ====== ====== Represented by: Cash at bank and short term deposits 1,152 156 1,834 Debt falling due within one year (38,468) (24,791) (37,058) ----------- ----------- ----------- Total (37,316) (24,635) (35,224) ====== ====== ====== - MORE - - 7 - HENDERSON HIGH INCOME TRUST PLC Unaudited Interim Results for the half year ended 30 June 2006 Notes: 1. Accounting policies a) 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 United Kingdom Generally Accepted Accounting Practice ("UK GAAP") and the AITC Statement of Recommended Practice ("SORP") for investment trusts dated January 2003 and revised in December 2005. All of the Company's operations are of a continuing nature. b) Expenses All expenses are accounted for on an accruals basis. The Board's expectation is that over the long term three quarters of the Company's investment returns will be in the form of capital gains. On this basis, the Company charges to capital 75% of its finance costs and management fees (to the extent that the management fees relate to the maintenance or enhancement of the valuation of investments). All performance fees are charged to capital. c) Income Dividends receivable on equity shares are recognised as revenue for the year on an ex-dividend basis. Income from fixed interest debt securities is recognised using the effective interest rate method. Bank deposit interest, underwriting commission and stock lending income is accounted for on an accruals basis. Special dividends are allocated as revenue return or capital return, depending on whether they are capital or income in nature. 2. Returns per share The return per ordinary share amounting to 7.13p (30 June 2005: 14.09p; 31 December 2005: 34.45p) is based on the net gain attributable to the ordinary shares of Â£4,942,000 (30 June 2005: Â£7,897,000; 31 December 2005: Â£20,365,000) and on the 69,288,212 weighted average number of ordinary shares in issue during the period (30 June 2005: 56,028,865; 31 December 2005: 59,111,073). Revenue return per ordinary share amounting to 4.04p (30 June 2005: 4.93p; 31 December 2005: 9.33p) is based on the earnings attributable to the ordinary shares of Â£2,803,000 (30 June 2005: Â£2,760,000; 31 December 2005: Â£5,516,000) and on the 69,288,212 weighted average number of ordinary shares in issue during the period (30 June 2005: 56,028,865; 31 December 2005: 59,111,073). Capital return per ordinary share amounting to 3.09p (30 June 2005: 9.16p; 31 December 2005: 25.12p) is based on the net capital gains for the period of Â£2,139,000 (30 June 2005: Â£5,137,000; 31 December 2005: Â£14,849,000) and on the 69,288,212 weighted average number of ordinary shares in issue during the period (30 June 2005: 56,028,865; 31 December 2005: 59,111,073). - MORE - - 8 - HENDERSON HIGH INCOME TRUST PLC Unaudited Interim Results for the half year ended 30 June 2006 Notes cont'd 3. 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 Â£110,595,000 (30 June 2005: Â£78,685,000; 31 December 2005: Â£106,605,000) and on the 69,687,798 ordinary shares in issue (30 June 2005: 56,028,865; 31 December 2005: 68,662,798). 4. Dividends Interim dividends are recognised in the period in which they are paid. In respect of the year ended 31 December 2005, a third interim dividend of 1.9375p per ordinary share (2004: 2.475p) was paid on 31 January 2006 to shareholders on the register at close of business on 6 January 2006. A fourth interim dividend of 1.9375p per ordinary share (2004: 2.475p) was paid on 28 April 2006 to shareholders on the register at close of business on 31 March 2006. These two dividends are reflected in these interim accounts. In respect of the year ending 31 December 2006, a first interim dividend of 1.9375p per ordinary share (2005: 2.475p) was paid on 28 July 2006 to shareholders on the register on 23 June 2006. The aggregate cost of this dividend was Â£1,350,000. A second interim dividend of 1.9375p per ordinary share (2005: 2.475p) will be paid on 31 October 2006 to shareholders on the register on 22 September 2006. The shares will go ex-dividend on 20 September 2006. 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. 5. 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 2005 and 30 June 2006 has not been audited. The figures and financial information for the year ended 31 December 2005 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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