Final Results

Henderson High Income Trust PLC 09 March 2005 9 March 2005 HENDERSON HIGH INCOME TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2004 Highlights • Another year of strong performance • Board recommends shareholders vote in favour of Continuation Vote to be proposed at forthcoming AGM Extracts from the Chairman's Statement: Assets and Performance It is pleasing to be able to report another period of growth in the Company's assets. Over the year the Company's ordinary shares registered a net asset value total return of 26.1%. This contrasts with a 12.8% increase in equities as measured by the FTSE All-Share Index and a 6.6% return from fixed interest as measured by the FTA Government All Stocks Index. The units produced a net asset value total return over the year of 19.1%. Rising interest rates during the first half of the year subdued the equity market while longer dated bond yields rose. However, by the late summer it became apparent that the overall economy remained in good health and both equities and fixed interest bonds rose in value. Takeover bids from both corporate and private capital investors highlighted the undervaluation of equities and supported share prices. The increase in rates meant that a higher level of interest was payable on the Company's outstanding borrowings. While the rate of growth in dividends from UK companies is increasing, the level of sterling continues to influence distributions from UK listed companies declaring payments in an overseas currency. Taking all these factors into account, the Board has declared an unchanged fourth interim dividend. In total, dividends declared for the year amount to 9.90p. Prospects Share prices have experienced a sustained recovery for two years now, against a backdrop of moderate economic growth, and a combination of low inflation and interest rates. This favourable backdrop has allowed companies to rebuild balance sheets and the very low level of bankruptcies is evidence of the improvement. If inflation within the UK economy continues to be benign, then equity valuations do not look stretched, even after the recent rally. In nearly five years since the Company's reconstruction in August 2000, the Company has returned 43.87p in dividends. Overall this represents a net asset value total return for unit holders of 43.5%*, or an annualised return of 8.5%*. It should be noted that the Company's NAV per unit outperformed the FTSE All-Share Index by 32.7%* over this period. In September the Zero Dividend Preference shares issued by Henderson High Income Trust Securities plc (the ' ZDPs') are expected to repay their final entitlement in full, as currently that entitlement is covered nearly three times by the Company's assets. *Source: AITC Services Limited. All figures for the period 17 August 2000 to 28 February 2005. - MORE - - 2 - HENDERSON HIGH INCOME TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2004 Extracts from the Chairman's Statement (cont'd): Repayment of Zero Dividend Preference shares and the future structure of the Company Shareholders and unit holders will be aware that the ZDPs are due to be repaid a final capital entitlement of 74.87p as at 30 September 2005. For some time the Board has been considering how to continue to meet the objectives of providing a high income stream and prospects of capital growth following the repayment of the ZDPs. We have concluded that in current market conditions shareholders' interests are best served by reverting to a structure with a single, ordinary share class. The Board believes that the Company, with an enviable performance record and a simplified structure delivering a high yield (albeit with a lower initial dividend payment level) will remain an attractive investment for those seeking to combine a high yield along with the prospects of capital and income growth over time. From October 2005, the Company's gearing will be provided solely by borrowings. We have been able to secure a £35 million banking facility that allows us now to forecast a minimum dividend of 7.75p for the accounting period ending 31 December 2006 (although this should not be treated as a profit forecast for that period). Based on a share price of 132p per ordinary share, this level of dividend produces a yield of 5.9%. The new dividend rate, set out above, is forecast to take effect from October 2005 when the ZDPs are repaid. For the financial year ending 31 December 2005, the Board is therefore forecasting that ordinary shareholders will receive a first and second interim dividend based on the rate paid or payable for all four interim dividends over the 2004 financial year and a third and fourth interim dividend based on the rate forecast for the accounting period ending 31 December 2006. Again, this should not be treated as a profit forecast for that period. From October 2005, ordinary shareholders' actual gearing will reduce from 84% to 50% (assuming that the investment portfolio is valued at around £105 million). The Board has been advised that ordinary shareholders, those in receipt of redemption proceeds from the ZDPs and new investors may wish to acquire further ordinary shares in the Company. The Board therefore intends to keep under review whether the Company should offer a purchase facility in respect of new ordinary shares at the time of repayment of the ZDPs. Shareholders should note that new ordinary shares would only be issued on a basis that is not dilutive to the Company's existing shareholders. In addition, shares would only be issued if balanced by additional bank debt in order to maintain a level of gearing consistent with the forecast dividend referred to above. If a purchase facility is offered, shareholders who hold ZDPs alone, or as part of a unit, will be able to elect between receiving their repayment proceeds in cash or directing the reinvestment of all or part of those proceeds into new ordinary shares through a commission free purchase facility. Unfortunately, it will not be possible to reinvest into new ordinary shares made available through any purchase facility on a basis which avoids a realisation for capital gains tax purposes. - MORE - - 3 - HENDERSON HIGH INCOME TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2004 Extracts from the Chairman's Statement (cont'd): Continuation Vote At the AGM, shareholders will have the opportunity to vote on the continuation of the Company with the future simplified capital structure described above. Alex Crooke, our Portfolio Manager, will continue to invest in a prudently diversified selection of well managed companies along with listed fixed interest stocks. The Board believes that the Company will continue to deliver to its shareholders a high income stream with prospects for capital growth over the next five years. We therefore recommend that shareholders vote in favour of the continuation of the Company, as all the directors intend to do in respect of their own shares. - MORE - - 4 - HENDERSON HIGH INCOME TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2004 Group Statement of Total Return (incorporating the revenue account) for the year ended 31 December 2004 Year ended 31 December 2004 Year ended 31 December 2003 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Net capital gains from investments - 13,991 13,991 - 12,107 12,107 Income from fixed asset investments 6,311 - 6,311 6,410 - 6,410 Other interest receivable and similar income 54 - 54 36 - 36 ---------- ---------- ---------- ---------- ---------- --------- Gross revenue and capital gains 6,365 13,991 20,356 6,446 12,107 18,553 Management and performance fees (257) (1,039) (1,296) (258) (778) (1,036) Other administrative expenses (247) - (247) (260) - (260) ---------- ---------- ---------- ---------- ---------- --------- Net return on ordinary activities before interest payable and taxation 5,861 12,952 18,813 5,928 11,329 17,257 Interest payable (275) (824) (1,099) (205) (614) (819) Movement in provision for redemption of the zero dividend preference shares in the Subsidiary - (2,821) (2,821) - (2,600) (2,600) ---------- ---------- ---------- ---------- ---------- --------- Net return on ordinary activities before taxation 5,586 9,307 14,893 5,723 8,115 13,838 Taxation on net return on ordinary activities (269) 257 (12) (279) 267 (12) ---------- ---------- ---------- ---------- ---------- --------- Net return on ordinary activities after taxation 5,317 9,564 14,881 5,444 8,382 13,826 ---------- ---------- ---------- ---------- ---------- --------- Dividends: ordinary shares 1st interim paid of 2.475p (2003: 2.475p) (1,387) - (1,387) (1,372) - (1,372) 2nd interim paid of 2.475p (2003: 2.475p) (1,387) - (1,387) (1,372) - (1,372) 3rd interim declared of 2.475p (2003: 2.475p) (1,387) - (1,387) (1,387) - (1,387) 4th interim proposed of 2.475p (2003: 2.475p) (1,386) - (1,386) (1,387) - (1,387) ---------- ---------- ---------- ---------- ---------- --------- (5,547) - (5,547) (5,518) - (5,518) ---------- ---------- ---------- ---------- ---------- --------- Transfer (from)/to reserves (230) 9,564 9,334 (74) 8,382 8,308 ========== ========== ========== ========== ========== ========= Return per ordinary share 9.49p 17.07p 26.56p 9.79p 15.08p 24.87p ========== ========== ========== ========== ========== ========= Return per zero dividend preference share in the Subsidiary - 5.36p 5.36p - 4.94p 4.94p ========== ========== ========== ========== ========== ========= Return per unit 9.49p 22.43p 31.92p 9.79p 20.02p 29.81p ========== ========== ========== ========== ========== ========= The revenue columns of this statement represent the profit and loss accounts of the Group. There are no recognised gains or losses in either the current year or previous year other than the results for the financial years ended 31 December 2004 and 31 December 2003 respectively, as stated above, and therefore no statement of total recognised gains or losses is required. - MORE - - 5 - HENDERSON HIGH INCOME TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2004 Group and Company Balance Sheets at 31 December 2004 Group Company Group Company 2004 2004 2003 2003 £'000 £'000 £'000 £'000 Fixed asset investments 130,598 130,598 120,409 120,409 ---------- ---------- ---------- ---------- Current assets Debtors 1,061 1,061 1,070 1,070 Cash at bank 1,665 1,665 315 315 ---------- ---------- ---------- ---------- 2,726 2,726 1,385 1,385 Creditors: amounts falling due within one year (62,536) (62,536) (21,030) (21,030) ---------- ---------- ---------- ---------- Net current liabilities (59,810) (59,810) (19,645) (19,645) ---------- ---------- ---------- ---------- Total assets less current liabilities 70,788 70,788 100,764 100,764 Creditors: amounts falling due after one year Provision for amounts owed to group undertaking - - - (34,310) Zero dividend preference shares in the Subsidiary - - (34,310) - Bank loans - - (5,000) (5,000) ---------- ---------- ---------- ---------- Net assets 70,788 70,788 61,454 61,454 ========== ========== ========== ========== Capital and reserves Share capital 2,801 2,801 2,801 2,801 Capital redemption reserve 26,302 26,302 26,302 26,302 Other capital reserves Share premium 9,034 9,034 9,034 9,034 Realised reserve 13,726 13,726 14,600 14,600 Unrealised appreciation 18,134 18,134 7,696 7,696 Revenue reserve 791 791 1,021 1,021 ---------- ---------- ---------- ---------- Equity shareholders' funds 70,788 70,788 61,454 61,454 ========== ========== ========== ========== Net asset value per ordinary share 126.34p 126.34p 109.68p 109.68p ========== ========== ========== ========== Funds attributable to: Ordinary shares 70,788 61,454 Zero dividend preference shares in the Subsidiary 37,131 34,310 ---------- ---------- 107,919 95,764 ========== ========== Net asset value per: Ordinary share 126.34p 109.68p Zero dividend preference share in the Subsidiary 70.59p 65.22p ---------- ---------- Unit 196.93p 174.90p ========== ========== - MORE - - 6 - HENDERSON HIGH INCOME TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2004 Group Cash Flow Statement for the year ended 31 December 2004 2004 2004 2003 2003 £'000 £'000 £'000 £'000 Net cash inflow from operating activities 5,085 5,846 Servicing of finance Bank overdraft and loan interest paid (1,092) (648) Taxation Taxation recovered 11 13 Financial investment Purchase of investments (24,033) (33,115) Sale of investments 27,791 29,663 ----------- ----------- Net cash inflow/(outflow) from financial investment 3,758 (3,452) Equity dividends paid (5,547) (5,487) ----------- ----------- Net cash inflow/(outflow) before financing 2,215 (3,728) Financing Issue of shares - 666 (Decrease)/increase in debt (909) 3,629 ----------- ----------- Net cash (outflow)/inflow from financing (909) 4,295 ---------- ---------- Increase in cash 1,306 567 ========== ========== Reconciliation of net cash flow to movement in net debt Increase in cash as above 1,306 567 Cash outflow/(inflow) from (decrease)/increase in debt 909 (3,629) Exchange movements 44 (91) ---------- ---------- Movement in net debt 2,259 (3,153) Net debt at 1 January (22,094) (18,941) ---------- ---------- Net debt at 31 December (19,835) (22,094) ========== ========== -MORE- - 7 - HENDERSON HIGH INCOME TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2004 Notes: 1. Share Capital At 31 December 2004 there were in issue 56,028,865 (2003: 56,028,865) ordinary shares of 5p in the Company and 52,603,865 (2003: 52,603,865) zero dividend preference shares of 50p in the Subsidiary. 2. Return per Share a) Returns per ordinary share Revenue return per ordinary share is based on the earnings attributable to the ordinary shares of £5,317,000 (2003: £5,444,000) and on the 56,028,865 weighted average number of ordinary shares in issue during the year (2003: 55,578,043). Capital return per ordinary share is based on the net capital gain for the year of £9,564,000 (2003: £8,382,000) and on the 56,028,865 weighted average number of ordinary shares in issue during the year (2003: 55,578,043). b) Returns per zero dividend preference share Capital return per zero dividend preference share reflects the predetermined growth in capital entitlement for the year of £2,821,000 (2003: £2,600,000) based on the 52,603,865 (2003: 52,603,865) zero dividend preference shares in issue. c) Returns per unit Revenue return per unit, each unit consisting of one ordinary share of 5p in the Company and one zero dividend preference share of 50p in the Subsidiary, amounts to 9.49p per unit (2003: 9.79p per unit). Capital return per unit, each unit consisting of one ordinary share of 5p in the Company and one zero dividend preference share of 50p in the Subsidiary, amounts to 22.43p per unit (2003: 20.02p per unit). 3. Group Accounts The Group accounts consolidate the accounts of the Company and its wholly owned Subsidiary, Henderson High Income Trust Securities plc. 4. Dividend A fourth interim dividend of 2.475p per ordinary share of 5p (2003: 2.475p per ordinary share of 5p) will be paid on 29 April 2005 to shareholders on the register on 1 April 2005. The shares will be quoted ex-dividend from 30 March 2005. 5. 2004 Accounts The preliminary figures for the year ended 31 December 2004 are an extract from the latest accounts of the Group and have been prepared on the basis of the same accounting policies as set out in the statutory accounts for 2003. These accounts have not yet been delivered to the Registrar of Companies, nor have the auditors yet reported on them. - MORE - - 8 - HENDERSON HIGH INCOME TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2004 6. 2003 Accounts The figures and financial information for the year ended 31 December 2003 are extracted from the latest published accounts of the Group 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 auditors which was unqualified and did not contain statements under either section 237(2) or section 237(3) of the Companies Act 1985. 7. Annual Report and Annual General Meeting The full Annual Report and Accounts will be posted to shareholders in March and copies will be available from the Secretary at the Company's Registered Office, 4 Broadgate, London EC2M 2DA. The Annual General Meeting will be held on Wednesday 27 April 2005. - ENDS - For further information please contact: Alex Crooke James de Sausmarez Fund Manager Head of Investment Trusts Henderson High Income Trust plc Henderson Global Investors Telephone: 020 7818 4447 Telephone: 020 7818 3349 Vicki Staveacre Richard Acworth Press Office Press Office Henderson Global Investors Henderson Global Investors Telephone: 020 7818 4222 Telephone: 020 7818 3010 This information is provided by RNS The company news service from the London Stock Exchange AUSISELD

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