Final Results

RNS Number : 4483A

Henderson High Income Trust PLC

30 March 2012

 



30 March 2012

HENDERSON HIGH INCOME TRUST PLC

Annual Financial Results for the year ended 31 December 2011

This announcement contains regulated information

Performance Summary:

Per ordinary share	31 December 2011	31 December  2010	% Change
Net asset value ("NAV")	121.36p	126.70p	-4.2
Market price	118.50p	124.75p	-5.0
Revenue return	8.48p	7.37p	+15.1

Chairman's Statement

Performance

In my statement last year I wrote that "it is difficult not to conclude that 2011 is likely to feel like another rollercoaster year on the Big Dipper" and how true that has turned out to be. Sadly the year ended on one of the down rides so that our net asset value closed the year 4.2% lower than it started, despite having been over 5% higher at the interim stage. However, the total return which includes income was positive at +2.3% and so outperformed our benchmark total return of -1.3%. This was, in the circumstances, a reasonable result and credit should be given to our Portfolio Manager for achieving this positive total return and outstripping our benchmark. Indeed we are now also well ahead of our benchmark over both one and three years, and this achievement is reflected in the fact that our Manager, Henderson Global Investors, has earned a payment under our performance-related fee arrangement. Our Portfolio Manager comments in greater detail about the markets and how he achieved this result in his report. However, the continuing Euro crisis and the faltering economic recovery, which arguably has not been helped by the impact of the austerity measures and despite the best efforts of the Bank of England, have taken their toll on markets and investors' confidence.

Dividends

We have continued to pay quarterly dividends at the rate of 8.3p per annum, with the payments in respect of 2011 fully covered by 2011 earnings. I am pleased to be able to report that our total revenue earnings benefited from stronger growth in dividend income from our investments than we had expected at the interim stage, together with some income earned from option overwriting, so that it has not proved necessary for us to utilise our revenue reserves this year. This is a very encouraging development and our current forecasts indicate that there should be a further small improvement in our dividend income in the current year. However, as I will discuss later and our Portfolio Manager highlights too, there are uncertainties ahead and although the outlook for dividend payments in the market appears positive, this position could change. In the circumstances our first priority is to replenish our revenue reserves, so that if conditions again deteriorate and dividend payments by the companies we hold are adversely affected, we are better able to meet our aspiration of maintaining our own dividend. Nonetheless it also remains our aim to increase distributions as and when we can have sufficient confidence that such an increase would be sustainable going forward. We will, therefore, continue to keep the level of our dividend under review as the year unfurls and in light of our actual experience and the investment conditions at the time.

HENDERSON HIGH INCOME TRUST PLC

Annual Financial Results for the year ended 31 December 2011

Chairman's Statement (continued)

Gearing

Gearing is, as shareholders will be well aware, an important feature of the Company. We utilise it as appropriate to enable us to boost the Company's total returns over time. With interest rates substantially lower than the yield on many good quality equities, there are clearly advantages to utilising borrowings when appropriate. At the year end the overall gearing was 26% which was lower than it had been earlier in the year whereas the equity gearing, calculated by netting the fixed interest investments against borrowings, remained at a low level of 5.4%. One benefit of this gearing can be seen in the growth in our revenue last year. Conditions in the banking sector remain difficult and the pricing of longer term facilities is not currently attractive, so we have decided to renew our borrowing facility for a one year term again.

Outlook

One of the most used jargons in the investment markets these days to explain their volatility is the reference to "risk on" and "risk off". The former is the equivalent of being 'bullish' and the latter being 'bearish'. This is very appropriate jargon because nowadays the risk appetite can be switched on or off very quickly. Indeed there are some days when it appears that everyone's fingers are very nervously on the switch, and others when it appears almost as if they have either forgotten that they have left it on or off, only to be suddenly reminded by a piece of news. Often they have allowed themselves to be lulled into a false sense of hope, only to be yet again disappointed. In the latter category I would put the ongoing sorry saga of the Euro crisis and the apparently never ending series of new measures and heads of government meetings (particularly the Merkozy ones) which usually seem to raise hopes of a solution, but always eventually end up in disappointment. Notwithstanding recent announcements, there appears little prospect that this is going to change any time soon, whilst unfortunately the economic outlook for the Eurozone continues to deteriorate, so making the solutions harder and the risk of catastrophe greater. The prospect of a return to there being very cheap holidays for us in many of the sunnier European countries is of little comfort. We are not immune to the current economic perils here in the UK and probably at best the next few years are going to be a hard grind.

However, we can take some heart from the recent recovery in markets since valuations are still not excessive, many companies have very strong balance sheets and the prospects for dividends are encouraging. At the same time there is little prospect that interest rates will go up in the foreseeable future and with investors still looking for higher returns than deposit accounts can offer, demand for risk assets like equities will probably increase. So, whilst our trip on the Big Dipper will go on with the added excitement of the switchback, our Portfolio Manager will continue to seek out those attractive opportunities that should exist for investment companies like ours.

Hugh Twiss

Chairman

HENDERSON HIGH INCOME TRUST PLC

Annual Financial Results for the year ended 31 December 2011

Investment Review

Review of the year to 31 December 2011

For a second year, concerns about events unfolding in Europe were the biggest influence over the UK stock market. The UK economy showed tentative signs of recovery earlier in the year but these evaporated through the second half of the year.  The stock market was generally stuck in a narrow trading range until August when investors' optimism was punctured by a sharp fall in share prices.  The markets remained in thrall to news from Greece and other highly indebted European nations towards the year end, sapping investor confidence with every gathering of politicians failing to take decisive action.  Despite the difficult macro background the UK stock market was one of the more resilient, being the second best performing major stock market behind the US.

The Trust's equity portfolio delivered robust performance producing a total return of 5.2% over the year and outperforming the FTSE All-Share Index in each of the first nine months of the year.  Income-orientated sectors and stocks were in favour for much of the year as they offered higher levels of income than many bonds, while dividends and earnings were both increasing.  The advent of dividend growth and very few dividend cuts did much to restore investors' faith in equities as a reliable source of income.  Individual holdings in the Trust's portfolio notably enhanced returns, as stocks such as Catlin, Galliford Try, GlaxoSmithKline, Drax and Northumbrian Water all outperformed over the year.  The bid for Northumbrian Water did much to highlight the value of utilities for income and capital growth, boosting the valuations of our other holdings in the water sector.  Many of the largest positions increased in value, despite difficult operating conditions, because management at these companies made tough decisions to expand during the downturn in 2008.  Catlin has expanded its overseas insurance operations over the last three years and is expected to benefit from rising insurance premia.  Similarly Galliford Try, the UK housebuilder, expanded in 2009 seeing the opportunity to purchase cheap land when others exited the market. Not all our holdings contributed to performance, with the smallest companies being hit hardest, as access to credit from banks became increasingly scarce and expensive.

The Trust's corporate bond portfolio had a difficult year, in contrast to UK government gilts which rose in value partly as a consequence of the Bank of England's purchases.  The financial segment of the corporate bond market witnessed the most pain, with the fear of European sovereign default hitting life assurance bonds, while a funding crisis for banks impacted their debt securities.  The corporate bond investments collectively returned -1.1% including income, which was some way behind our chosen bond index, the ML Sterling Non Gilts Index.  This index, despite having no gilts, does include a fair proportion of government-backed securities and therefore returns were boosted by the Bank of England's purchase of gilts.  Their gilt holdings now exceed over a quarter of total issuance and yields are unlikely to rise while such intervention is in process.  Over the medium term though, the bond portfolio should be expected to deliver a decent return and we hope to regain the lost ground against the bond index.

HENDERSON HIGH INCOME TRUST PLC

Annual Financial Results for the year ended 31 December 2011

Investment Review (continued)

The bright spot in terms of performance this past year has been the revenue return.  Company dividends have maintained their momentum in terms of growth, with a mixture of low digit growth from stable defensives like pharmaceuticals and utilities combined with strong double digit growth from those corporates experiencing a decent rebound in profits, such as IMI and Amec.  Overall our underlying income from equities grew by 15.4% compared to last year.  We have also benefitted from the substantial special dividend from Vodafone, increasing income by £200,000.  This was funded by income from their US joint venture, Verizon Mobile, and is expected to be repeated in future years.  The percentage of corporate profits that is paid out as dividends in the UK remains at historically low levels, around 35% compared to the long term average of 50%.  This gives some comfort that the revenue from the Trust's equity portfolio can continue to grow in the coming years, rebuilding revenue reserves.

Gearing levels have fluctuated over the year, with higher levels in the first half of the year before we reduced borrowings in the market run-up during October.  Markets, both bonds and equities, are increasingly volatile and we are using the flexibility of the borrowing facility to purchase assets when we feel value is most apparent.  The cost of borrowing remains the lowest I have witnessed in 20 years of investing, meaning that there is a substantial yield pick up of over 3% between equity dividend yields and the cost of borrowing.  This remains an attractive proposition despite market volatility.

Portfolio activity

In 2010 we repositioned the portfolio towards equities and throughout 2011 we maintained this stance, ending the year with 84% of the investment portfolio in equities and the remaining 16% in fixed interest securities.  This position was vindicated as the equities outperformed the bonds by 6%.  Until the Bank of England relinquishes control of the gilt market we expect to maintain this balance of assets, which should also enhance income because of the growth from equity dividends compared to the fixed payments from bonds.

We have made a number of changes to the bond portfolio, principally to reduce risk by selling the bonds from European financials and increasing holdings of non-financial issues both in the UK and Europe.  We have increased exposure to safer sectors where cash flows are more defensive, such as the Cable TV networks, with holdings of bonds from Virgin Media in the UK, Ziggo in Holland and Kabel in Germany.  Yields are attractive from these issuers and strong cash flows from increasing broadband adoption are driving up profits, improving these companies' abilities to finance their bonds.

In the equity portfolio we have increased exposure to the Telecoms sector for similar reasons.  Operators are benefitting from increasing penetration of data hungry services such as video-on-demand, the BBC's iPlayer and devices like tablets and smartphones.  Initially this has increased capital investment from the telecoms operators but over time it will drive higher revenues as consumers use more airtime or bandwidth.  We increased the holdings of Vodafone and BT over the year but also added new holdings in the Scandinavian operator Tele2 and Deutsche Telekom in Germany.  Our exposure to Europe, including bonds, remains below 10% of total investments and there are currently no investments in Italy or Spain.

HENDERSON HIGH INCOME TRUST PLC

Annual Financial Results for the year ended 31 December 2011

Investment Review (continued)

We capitalised on the strong appreciation of certain key long term holdings to recycle assets into cheaper areas of the market.  The investments in British American Tobacco and Jardine Lloyd Thompson were purchased when market expectations for their prospects were at a low ebb and P/E valuations depressed.  Now that both stocks trade on P/E's above 14, a portion was sold to fund the purchase of telecommunication stocks on single digit P/E's and twice the dividend yield.  Other significant sales included AstraZeneca on worries about the sustainability of their revenue, given a limited pipeline of new drugs, and KPN on rising competition in their domestic market.

Switches were made within sectors where valuations were more appealing in other stocks that we did not own.  The Northumbrian Water proceeds were switched into Drax, which is benefitting from higher margins for electricity from its coal fired power station.  As more of the UK's energy supply comes from wind power, Drax's efficient power station is increasingly active. It provides nearly instant power to cope with the peaks in demand and for when wind speeds drop, reducing the output from wind turbines.  We also switched the holding of Hiscox into Amlin, a very similar Lloyds insurance company but Amlin provides greater exposure to international markets and particularly catastrophe markets which are experiencing increasing rates after 2011's high frequency of natural disasters.

Outlook

The key issues for markets have not changed much from a year ago, namely the political uncertainties in Europe and weak or non-existent economic growth in the region.  It is frustrating that, despite the obvious symptoms, no plan for a long term return to health has been accepted by all parties.  As any solution requires considerable expense and economic hardship, it is therefore little surprise that it is proving difficult to persuade elected officials or the electorate to accept the inevitable.  The European Central Bank provides the only form of funding for a large proportion of the banking sector in Europe, which is an unsettling position that is further limiting the region's economic growth, leading to little new lending.

Closer to home, the UK has to contend with weak demand from across the Channel and government austerity which is squeezing consumers' income.  With every month, these effects should very gradually ease, as tax rises fade, energy bills fall and inflationary pressures ease.  It is important that the government acts quickly to create more discretionary income through tax cuts and by limiting the inflationary rises in people's bills such as insurance, utilities or transport costs.

Despite the obvious uncertainties to the outlook, we believe that the prospect for equities is positive because the risks are well understood and companies are in good health.  Generally, corporates have made great progress repairing balance sheets, paring back costs and improving efficiency.  Their reliance on bank funding has been cut sharply and the resulting improvement in cash flow is funding takeovers, investment spending and ultimately dividends.  The increase in equity dividends is a crucial foundation, underpinning the value of equities. The key attributes of why equities are more attractive than bonds are that yields are on average higher and that this income stream is forecast to grow.

HENDERSON HIGH INCOME TRUST PLC

Annual Financial Results for the year ended 31 December 2011

Investment Review (continued)

Our prime focus over the coming year is to build on the good progress we have made with regard to the income account.  We expect income from our portfolio to continue to grow and this extra income will rebuild our revenue reserves and bring forward the point in time when our distributions may be increased.  A sound base for income generation is vital but the year ahead should also see the equity market breadth increase, in terms of more sectors participating in the market's growth.  We intend to make sure that the Trust's portfolio is broadly invested, in order to participate in any upward progress of share prices.

Alex Crooke

Portfolio Manager

HENDERSON HIGH INCOME TRUST PLC

Annual Financial Results for the year ended 31 December 2011

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 Board reviews the portfolio each month and mitigates this risk through diversification of investments in the portfolio.

Further details of these risks and how they are managed are contained in note 13 in the Annual Report.

● Regulatory

A breach of Section 1158 of the Corporation Tax Act 2010 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 UKLA 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. The Manager has contracted to provide investment, company secretarial, accounting and administration services through qualified professionals. The Board receives internal control reports produced by the Manager on a quarterly basis, which confirm regulatory compliance.

● Operational

Disruption to, or failure of, the Manager'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 the Manager and its other suppliers, and the key elements designed to provide effective internal control, are explained further in the internal controls section of the corporate governance statement in the annual report.

HENDERSON HIGH INCOME TRUST PLC

Annual Financial Results for the year ended 31 December 2011

Related Party Transactions

Investment management, accounting, company secretarial and administration services are provided to the Company by wholly-owned subsidiary companies of Henderson Global Investors Limited. This is the only related party arrangement currently in place. Revised performance fee arrangements were agreed with the Manager which were effective from 1 January 2011.  Full details were included in the announcement of the Company's annual results for the year ended 31 December 2010, which was released on 21 March 2011 and are also contained in both the 2010 and 2011 annual reports.

Statement of directors' responsibilities

Statement under DTR 4.1.12

To the best of our knowledge:

a)         the financial statements, prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law) give a true and fair view of the assets, liabilities, financial position and profit of the Company; and

b)         the Report of the Directors 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.

For and on behalf of the Board

Hugh Twiss

Chairman

HENDERSON HIGH INCOME TRUST PLC

Annual Financial Results for the year ended 31 December 2011

 

Income Statement

for the year ended 31 December 2011

	Year ended 31 December 2011			Year ended 31 December 2010
	Revenue return £'000	Capital return £'000	Total £'000	Revenue return £'000	Capital return £'000	Total £'000
(Losses)/gains on investments held at fair value through profit or loss (note 2)	-	(3,066)	(3,066)	-	9,152	9,152
Income from investments held at fair value through profit or loss (note 3)	8,407	-	8,407	7,367	-	7,367
Other interest receivable and similar income (note 4)	297	-	297	48	-	48
	----------	----------	----------	----------	----------	----------
Gross revenue and capital (losses)/gains	8,704	(3,066)	5,638	7,415	9,152	16,567
Management and performance fees (note 5)	(262)	(1,543)	(1,805)	(222)	(333)	(555)
Other administrative expenses	(338)	-	(338)	(318)	-	(318)
	----------	----------	----------	----------	----------	----------
Net return/(loss) on ordinary activities before finance costs and taxation	8,104	(4,609)	3,495	6,875	8,819	15,694
Finance costs	(213)	(638)	(851)	(169)	(508)	(677)
	----------	----------	----------	----------	----------	----------
Net return/(loss) on ordinary activities before taxation	7,891	(5,247)	2,644	6,706	8,311	15,017
Taxation on net return on ordinary activities	(310)	294	(16)	(317)	224	(93)
	----------	----------	----------	----------	----------	----------
Net return/(loss) on ordinary activities after taxation	7,581	(4,953)	2,628	6,389	8,535	14,924
	======	======	======	======	======	======
Return/(loss) per ordinary share (note 6)	8.48p	(5.54)p	2.94p	7.37p	9.85p	17.22p
	======	======	======	======	======	======
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.

 

HENDERSON HIGH INCOME TRUST PLC

Annual Financial Results for the year ended 31 December 2011

 

Reconciliation of Movements in Shareholders' Funds

for the year ended 31 December 2011

Year ended 31 December 2011	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 2010	4,448	60,562	26,302	18,119	3,281	112,712
Net (loss)/return on ordinary activities after taxation	-	-	-	(4,953)	7,581	2,628
Issue of new  shares	37	900	-	-	-	937
Third interim dividend (2.075p per share) for the year ended 31 December 2010 paid 31 January 2011	-	-	-	-	(1,846)	(1,846)
First interim dividend (2.075p per share) for the year ended 31 December 2011 paid 28 April 2011	-	-	-	-	(1,851)	(1,851)
Second interim dividend (2.075p per share) for the year ended 31 December 2011 paid 29 July 2011	-	-	-	-	(1,851)	(1,851)
Third interim dividend (2.075p per share) for the year ended 31 December 2011 paid 31 October 2011	-	-	-	-	(1,861)	(1,861)
Refund of unclaimed dividends	-	-	-	-	2	2
	--------	---------	---------	---------	---------	----------
At 31 December 2011	4,485	61,462	26,302	13,166	3,455	108,870
	=====	=====	=====	=====	=====	======
Year ended 31 December 2010	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 2009	4,291	56,877	26,302	9,281	4,012	100,763
Net return on ordinary activities after taxation	-	-	-	8,535	6,389	14,924
Sale of shares held in treasury	-	-	-	303	-	303
Issue of new shares	157	3,685	-	-	-	3,842
Third interim dividend (2.075p per share) for the year ended 31 December 2009 paid 29 January 2010	-	-	-	-	(1,776)	(1,776)
Fourth interim dividend (2.075p per share) for the year ended 31 December 2009 paid 30 April 2010	-	-	-	-	(1,776)	(1,776)
First interim dividend (2.075p per share) for the year ended 31 December 2010 paid 29 July 2010	-	-	-	-	(1,776)	(1,776)
Second interim dividend (2.075p per share) for the year ended 31 December 2010 paid 29 October 2010	-	-	-	-	(1,822)	(1,822)
Refund of unclaimed dividends	-	-	-	-	30	30
	--------	---------	---------	---------	---------	----------
At 31 December 2010	4,448	60,562	26,302	18,119	3,281	112,712
	=====	=====	=====	=====	=====	======

HENDERSON HIGH INCOME TRUST PLC

Annual Financial Results for the year ended 31 December 2011

Balance Sheet

at 31 December 2011

	2011 £'000	2010 £'000
Investments held at fair value through profit or loss	136,388	138,636
	----------	----------
Current assets
Debtors	1,703	1,581
Cash at bank	682	3,227
	----------	----------
	2,385	4,808
Creditors: amounts falling due within one year	(29,903)	(30,732)
	----------	----------
Net current liabilities	(27,518)	(25,924)
	----------	----------
Total assets less current liabilities	108,870	112,712
	======	======
Capital and reserves
Share capital	4,485	4,448
Share premium account	61,462	60,562
Capital redemption reserve	26,302	26,302
Other capital reserves	13,166	18,119
Revenue reserve	3,455	3,281
	----------	----------
Equity shareholders'  funds	108,870	112,712
	======	======
Net asset value per ordinary share (note 7)	121.36p	126.70p
	======	======

HENDERSON HIGH INCOME TRUST PLC

Annual Financial Results for the year ended 31 December 2011

Cash Flow Statement

for the year ended 31 December 2011

	2011 £'000	2011 £'000	2010 £'000	2010 £'000
Net cash inflow from operating activities (note 8)		7,770		6,215
Servicing of finance
Bank overdraft and loan interest paid		(847)		(675)
Taxation
Tax recovered		28		-
Financial investment
Purchases of investments	(32,351)		(45,689)
Sales of investments	31,699		36,159
	----------		-----------
Net cash outflow from financial investment		(652)		(9,530)
Equity dividends paid		(7,407)		(7,120)
		----------		-----------
Net cash outflow before financing		(1,108)		(11,110)
Financing
Issue of shares	937		3,842
Sale of shares held in treasury	-		303
(Repayment)/drawdown of loans	(2,314)		8,985
	----------		----------
Net cash (outflow)/inflow from financing		(1,377)		13,130
		----------		----------
(Decrease)/increase in cash in the year		(2,485)		2,020
		======		======
Reconciliation of net cash flow to movement in net debt
(Decrease)/increase in cash as above		(2,485)		2,020
Cash outflow/(inflow) from repayment/(drawdown) of loans		2,314		(8,985)
Exchange movements		(60)		(138)
		-----------		-----------
Movement in net debt		(231)		(7,103)
Net debt at 1 January		(27,287)		(20,184)
		-----------		-----------
Net debt at 31 December		(27,518)		(27,287)
		======		======

HENDERSON HIGH INCOME TRUST PLC

Annual Financial Results for the year ended 31 December 2011

Notes:

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.   (Losses)/gains from investments held at fair value through profit or loss

	2011 £'000	2010 £'000
Gains on sale of investments based on historical cost	2,125	383
Less: revaluation gains recognised in previous years	(1,846)	(212)
	---------	---------
Gains on investments sold in the year based on carrying value at the previous balance sheet date	279	171
Net movement on revaluation of investments	(3,285)	9,119
Exchange losses	(60)	(138)
	---------	---------
	(3,066)	9,152
	=====	=====

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

	2011 £'000	2010 £'000
Franked:
Listed - dividends	5,361	4,742
	-------	-------
Unfranked:
Listed -  interest income	1,516	1,398
-  dividend income	1,530	1,227
	-------	--------
	3,046	2,625
	-------	--------
	8,407	7,367
	====	====

4.   Other interest receivable and similar income

	2011 £'000	2010 £'000
Bank interest	2	9
Underwriting commission	-	39
Option premium income	295	-
	-----	------
	297	48
	===	===

5.   Management and performance fees

	2011 Revenue return £'000	2011 Capital return £'000	2011 Total £'000	2010 Revenue return £'000	2010 Capital return £'000	2010 Total £'000
Management fee	262	394	656	222	333	555
Performance fee	-	1,149	1,149	-	-	-
	------	-------	-------	------	------	------
	262	1,543	1,805	222	333	555
	====	====	====	====	====	====

The portfolio performance in terms of cash return, adjusting for purchases, sales and income during the year was £5,675,000 compared to a negative benchmark return of £1,988,000.  A performance fee of £1,149,000, being 15% of the difference between the two sums has been earned.

HENDERSON HIGH INCOME TRUST PLC

Annual Financial Results for the year ended 31 December 2011

Notes (continued)

6.   Return per ordinary share

The return per ordinary share figure is based on the gains attributable to the ordinary shares of £2,628,000 (2010: £14,924,000) and on the 89,395,675 weighted average number of ordinary shares in issue during the year (2010: 86,654,031).

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 below:

	2011 £'000	2010 £'000
Net revenue return	7,581	6,389
Net capital (loss)/return	(4,953)	8,535
	----------	----------
Net total return	2,628	14,924
	======	======
Weighted average number of ordinary shares in issue during the year	89,395,675	86,654,031
	Pence	Pence
Revenue return per ordinary share	8.48	7.37
Capital (loss)/return per ordinary share	(5.54)	9.85
	----------	----------
Total return per ordinary share	2.94	17.22
	======	======

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 £108,870,000 (2010: £112,712,000) and on the 89,710,744 ordinary shares in issue at 31 December 2011 (2010: 88,960,744 ordinary shares).

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

      and taxation to net cash inflow from operating activities

	2011 £'000	2010 £'000
Net return before finance costs and taxation	3,495	15,694
Losses/(gains) on investments held at fair value through profit or loss	3,066	(9,152)
Increase in accrued income and debtors of a revenue nature	(125)	(130)
Increase/(decrease) in creditors	1,375	(71)
Tax deducted on investment income	(41)	(126)
	--------	--------
Net cash inflow from operating activities	7,770	6,215
	=====	=====

9.   Dividends

A fourth interim dividend of 2.075p per ordinary share (2010: 2.075p per ordinary share) was paid on 31 January 2012.  

A first interim dividend of 2.075p per ordinary share for the year to 31 December 2012 (2011: 2.075p per ordinary share) will be paid on 30 April 2012 to shareholders on the register on 13 April 2012.  The shares will be quoted ex-dividend from 11 April 2012.

HENDERSON HIGH INCOME TRUST PLC

Annual Financial Results for the year ended 31 December 2011

Notes (continued)

10.   Going concern statement

As the assets of the Company consist mainly of a portfolio of diversified securities that are readily realisable, the Company has adequate financial resources to meet its liabilities and continue in operational existence for the foreseeable future.  The directors therefore 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 this announcement, the Board has considered the guidance on this matter issued by the Financial Reporting Council in October 2009.

11.   2011 Financial information

The figures and financial information for 2011 are extracted from the Annual Report and Financial Statements for the year ended 31 December 2011 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.   2010 Financial information

The figures and financial information for 2010 are extracted from the published Annual Report and Financial Statements for the year ended 31 December 2010 and do not constitute the statutory accounts for that year.  The Annual Report and Financial Statements has been delivered to the Registrar of Companies and included the Independent Auditor's Report which was unqualified and did 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 will be posted to shareholders on 12 April 2012 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 22 May 2012 at 12.00 noon at the Company's Registered Office.  The Notice convening the Annual General Meeting will be available on the Company's website from 12  April 2012.

For further information please contact:

Alex Crooke

Portfolio 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]

- ENDS -

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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