Final Results

Henderson High Income Trust PLC 06 March 2007 Page 1 of 10 6 March 2007 HENDERSON HIGH INCOME TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2006 Highlights • Net asset value total return per ordinary share rose 23.2% during 2006 • A year of outperformance compared to the total return of the FTSE All-Share Index which rose 16.8% • Total return of the share price was 20.5% over 2006 Extracts from the Chairman's Statement: I am delighted to be able to report that in our first full year since we repaid our Zero Dividend Preference shares and reverted to a single share structure that it has been rewarded with excellent returns. The performance of both our assets and the share price have comfortably outperformed the market, and we have also announced an increase in our dividend payments. Assets and Performance The total return growth of our net asset value (NAV) per ordinary share was 23.2% and that of the share price was 20.5%. This compares to a total return of the FTSE All-Share Index of only 16.8%. Our performance is even more encouraging when you consider that the total return on the FTA Government All Stocks bond index was a mere 0.7%; our own bond portfolio not only did better than its comparator index, but our equity portfolio more than made up for the lacklustre performance by bonds. The majority of the return this year came from capital, with the NAV per ordinary share rising 17.0% in capital terms, although income clearly contributed a useful return too. The shares have largely traded through the year on a small premium to their NAV. It is pleasing that, in this my first annual report statement as your Chairman, I am able to report such good results, particularly since the position looked much less certain at the time of the last interim report. I would like to be able to claim the credit for this, but that quite rightly must go to our portfolio manager, Alex Crooke, who has continued to do an excellent job in managing our assets. He was assisted by Ben Lofthouse, who replaced James Henderson as our deputy manager during the year. I also wish to recognise the contribution that my fellow directors have made in providing sound advice and challenging the views of the manager to ensure that they were well founded. - MORE - Page 2 of 10 HENDERSON HIGH INCOME TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2006 Extract from Chairman's Statement (continued) Dividends As highlighted above, we announced in November 2006 a 4% increase in our quarterly dividend payment to 2.015p, the first rise to the dividend since the repayment of the ZDPs. For those of you who are avid readers of the accounts, you may well find the figures confusing, as with the current accounting standards they now reflect the payments actually paid during the year, rather than as before, the dividends announced. Therefore the 4% increase in quarterly dividends will be reflected in next year's accounts. This increase reflects our confidence that we have sufficient revenue reserves to act as a buffer for any likely setbacks in the future, and that the dividends paid by our underlying portfolio investments are and should continue to grow in the foreseeable future. We will review the level of the dividend again later in the year and I hope that we will again be able to consider a further increase, conditions permitting. Size of the Company The Board held a strategy meeting with the manager and advisors last year at which we reviewed and discussed in depth the Company and its objectives and how best to achieve them. One of the decisions which came out of that meeting was that it would be beneficial for the Company to be larger in size and have a broader shareholder base. This should improve the liquidity of the shares and, very importantly, reduce our Total Expense Ratio by spreading the fixed costs over a larger asset base. We therefore decided to look for opportunities to achieve this and I am delighted to report, as already announced, that we have been chosen to act as a roll-over option for shareholders of the Martin Currie Income and Growth Investment Trust plc which will be winding up in May. We are being supported in achieving this by our managers, Henderson Global Investors, who are making a financial contribution to help us ensure that there is no uncovered cost to our shareholders. The transaction will not be dilutive to our shareholders. They will receive a circular shortly concerning the issue of new shares, which will require an extraordinary general meeting of the Company to be held on 19 April 2007. We will continue to look for similar opportunities in the future and pursue them if we consider that they will benefit our Company. Board and other matters At the conclusion of the AGM in May, Sir John Stanley will retire as a director of the Company. He has been on this Board and that of one of the forerunner trusts for almost 18 years. During this time he has served the Company well, tirelessly and doggedly carrying out his duties and looking after the best interests of the shareholders. I suggest it is no exaggeration to say he will be greatly missed. We have already started the process of looking for a replacement. I hope that as many shareholders as are able will come to the AGM on Tuesday 15 May, when they will have the opportunity to be updated by our manager and to meet me and other members of the Board, as well as say goodbye to Sir John in person. - MORE - Page 3 of 10 HENDERSON HIGH INCOME TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2006 As I reported in my interim statement we have appointed new auditors, RSM Robson Rhodes LLP, and they have quickly and efficiently taken on the role. They will, of course, be at the AGM when shareholders will be asked to approve their appointment. This change came about as a result of our corporate governance process which, as a Board, we take very seriously. There has been a substantial increase in the number of matters which the Board must take account of in this area and there will be more in the next few years. Not all of it is necessarily completely relevant to a company like ours and it undoubtedly leads to longer and not always necessarily clearer annual reports. We will always try to make it as clear as possible, but this sometimes defeats even the most clear headed of us. So please be warned, expect more in future and, therefore, allow more time to read and digest the annual report as I know so many of you diligently do. Outlook I was quite cautious in my interim statement about the second half of last year and was proved very wrong. Although there were particular circumstances at the time which are not present in the same way now, I have been around long enough to know that markets do not go up for ever without the occasional setback (usually a wonderful opportunity to invest more money), and that in the immortal words of Donald Rumsfeld, it is "the known unknowns" that we need to be most worried about. Having said that and hoping that Donald Rumsfeld's clearly appalling record in the area of 'known unknowns' does not befall me too, I remain cautiously optimistic for the medium to longer term, but recognise that it will not all be plain sailing. However, I am confident that we have the right structure to allow us to have the flexibility to cope with changing market conditions and a portfolio manager who has proven himself more than equal to the task. HJ Twiss Chairman - MORE - Page 4 of 10 HENDERSON HIGH INCOME TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2006 Income Statement for the year ended 31 December 2006 Year ended 31 December 2006 Year ended 31 December 2005 (Unaudited) (Audited) Revenue Capital Revenue Capital Return Return Total Return Return Total £'000 £'000 £'000 £'000 £'000 £'000 Gains on investments held at fair value through profit or loss - 21,069 21,069 - 19,355 19,355 Income from investments held at fair value through profit or loss (note 2) 6,838 - 6,838 6,596 - 6,596 Other interest receivable and similar income (note 3) 66 - 66 92 - 92 ---------- ---------- ---------- ---------- ---------- --------- Gross revenue and capital gains 6,904 21,069 27,973 6,688 19,355 26,043 Management and performance fees (note 4) (308) (1,691) (1,999) (288) (1,210) (1,498) Other administrative expenses (276) - (276) (309) (173) (482) ---------- ---------- ---------- ---------- ---------- --------- Net return on ordinary activities before finance costs and taxation 6,320 19,378 25,698 6,091 17,972 24,063 Finance costs (500) (1,500) (2,000) (358) (1,074) (1,432) Movement in provision for redemption of the zero dividend preference shares in the subsidiary - - - - (2,253) (2,253) ---------- ---------- ---------- ---------- ---------- --------- Net return on ordinary activities before taxation 5,820 17,878 23,698 5,733 14,645 20,378 Taxation on net return on ordinary activities (199) 185 (14) (217) 204 (13) ---------- ---------- ---------- ---------- ---------- --------- Net return on ordinary activities after taxation 5,621 18,063 23,684 5,516 14,849 20,365 ====== ====== ====== ====== ====== ===== Return per ordinary share (note 5) 8.09p 25.99p 34.08p 9.33p 25.12p 34.45p ====== ====== ====== ====== ====== ===== The total columns of this statement represent the income statements 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. - MORE - Page 5 of 10 HENDERSON HIGH INCOME TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2006 Reconciliation of Movements in Shareholders' Funds for the year ended 31 December 2006 Share Capital Other premium redemption capital Share account reserve £'000 reserves Revenue capital £'000 £'000 reserve Total Year ended 31 December 2006 £'000 £'000 £'000 (Unaudited) 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 the year ended 31 December 2005 paid 31 January 2006 - - - - (1,329) (1,329) Fourth interim dividend (1.9375p per share) for the year ended 31 December 2005 paid 28 April 2006 - - - - (1,342) (1,342) First interim dividend (1.9375p per share) for the year ended 31 December 2006 paid 28 July 2006 - - - - (1,350) (1,350) Second interim dividend (1.9375p per share) for the year ended 31 December 2006 paid 31 October 2006 - - - - (1,350) (1,350) --------- --------- --------- --------- --------- --------- At 31 December 2006 3,484 28,288 26,302 64,773 3,790 126,637 ========= ========= ========= ========= ========= ========= Share Capital Other premium redemption capital Share account reserve £'000 reserves Revenue capital £'000 £'000 reserve Total Year ended 31 December 2005 £'000 £'000 £'000 (Audited) At 31 December 2004 2,801 9,034 26,302 31,860 3,564 73,561 Net return on ordinary activities after taxation - - - 14,850 5,516 20,366 Issue of new shares 632 17,586 - - - 18,218 Third interim dividend (2.475p per share) for the year ended 31 December 2004 paid 31 January 2005 - - - - (1,387) (1,387) Fourth interim dividend (2.475p per share) for the year ended 31 December 2004 paid 29 April 2005 - - - - (1,387) (1,387) First interim dividend (2.475p per share) for the year ended 31 December 2005 paid 29 July 2005 - - - - (1,387) (1,387) Second interim dividend (2.475p per share) for the year ended 31 December 2005 paid 31 October 2005 - - - - (1,387) (1,387) Return of unclaimed dividends - - - - 8 8 --------- --------- --------- --------- --------- --------- At 31 December 2005 3,433 26,620 26,302 46,710 3,540 106,605 ===== ===== ===== ===== ===== ===== - MORE - Page 6 of 10 HENDERSON HIGH INCOME TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2006 Balance Sheet at 31 December 2006 2006 2005 (Unaudited) (Audited) £'000 £'000 Fixed asset investments held at fair value through profit or loss 155,910 141,845 ---------- ---------- Current assets Debtors 2,161 1,152 Cash at bank 4,205 1,834 ---------- ---------- 6,366 2,986 Creditors: amounts falling due within one year (35,639) (38,226) ---------- ---------- Net current liabilities (29,273) (35,240) ---------- ---------- Total assets less current liabilities 126,637 106,605 ========== ========== Capital and reserves Share capital 3,484 3,433 Share premium account 28,288 26,620 Capital redemption reserve 26,302 26,302 Other capital reserves Realised reserve 21,917 14,415 Unrealised reserve 42,856 32,295 Revenue reserve 3,790 3,540 ---------- ---------- Equity shareholders' funds 126,637 106,605 ====== ====== Net asset value per ordinary share (note 6) 181.72p 155.26p ========== ========== - MORE - Page 7 of 10 HENDERSON HIGH INCOME TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2006 Cash Flow Statement for the year ended 31 December 2006 2006 2005 (Unaudited) (Audited) £'000 £'000 £'000 £'000 Net cash inflow from operating activities 5,083 4,761 Servicing of finance Bank overdraft and loan interest paid (2,008) (1,577) Taxation Taxation recovered 9 7 Financial investment Purchase of investments (27,435) (26,410) Sale of investments 33,354 34,526 ----------- ----------- Net cash inflow from financial investment 5,919 8,116 Equity dividends paid (5,371) (5,540) ----------- ----------- Net cash inflow before financing 3,632 5,767 Financing Issue of shares 1,719 18,640 Share issue expenses (17) (405) Redemption of zero dividend preference shares in subsidiary - (39,385) (Repayment)/drawdown of loans (2,977) 15,558 ----------- ----------- Net cash outflow from financing (1,275) (5,592) ---------- ---------- Increase in cash in the year 2,357 175 ========== ========== Reconciliation of net cash flow to movement in net debt Increase in cash as above 2,357 175 Cash outflow/(inflow) from repayment/(drawdown) of loans 2,977 (15,558) Exchange movements 14 (6) ---------- ---------- Movement in net debt 5,348 (15,389) Net debt at 1 January (35,224) (19,835) ---------- ---------- Net debt at 31 December (29,876) (35,224) ========== ========== - MORE - Page 8 of 10 HENDERSON HIGH INCOME TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2006 Notes: 1. Basis of accounting This announcement has been prepared on the historical cost basis of accounting, modified to include the revaluation of investments. The accounts have been prepared on the basis of the accounting policies as stated in the previous year's financial statements in accordance with applicable UK law and accounting standards and with the Statement of Recommended Practice Financial Statements of Investment Trust Companies ("the SORP") (dated December 2005). 2. Income from investments held at fair value through profit or loss 2006 2005 (Unaudited) (Audited) £'000 £'000 Franked: Listed - dividends 5,191 5,055 --------- --------- Unfranked: Listed - interest income 1,280 1,358 - dividend income 367 183 --------- --------- 1,647 1,541 --------- --------- 6,838 6,596 ========= ========= 3. Other interest receivable and similar income 2006 2005 (Unaudited) (Audited) £'000 £'000 Bank interest 35 46 Underwriting commission 31 46 --------- --------- 66 92 ========= ========= 4. Management and performance fees 2006 2005 (Unaudited) (Audited) Revenue Capital Revenue Capital Return Return Total Return Return Total £'000 £'000 £'000 £'000 £'000 £'000 Management fee 133 399 532 124 373 497 Accounting, secretarial and administration 133 - 133 125 - 125 Performance fee - 1,046 1,046 - 662 662 Irrecoverable VAT thereon 42 246 288 39 175 214 ------- -------- ------- ------- ------- --------- 308 1,691 1,999 288 1,210 1,498 ======= ======== ======= ======= ======= ========= - MORE - Page 9 of 10 HENDERSON HIGH INCOME TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2006 Notes (continued) 5. Returns per ordinary share The return per ordinary share is based on earnings attributable to the ordinary shares of £23,684,000 (2005: £20,365,000) and on the 69,489,647 weighted average number of ordinary shares in issue during the year (2005: 59,111,073). The revenue return per ordinary share is based on the revenue earnings attributable to the ordinary shares of £5,621,000 (2005: £5,516,000) and on the 69,489,647 weighted average number of ordinary shares in issue during the year (2005: 59,111,073). The capital return per ordinary share is based on the net capital gains for the year of £18,063,000 (2005: £14,849,000) and on the 69,489,647 weighted average number of ordinary shares in issue during the year (2005: 59,111,073). 6. 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 £126,637,000 (2005: £106,605,000) and on the 69,687,798 ordinary shares of 5p in issue at 31 December 2006 (2005: 68,662,798 ordinary shares of 5p). 7. Reconciliation of net return on ordinary activities before finance costs and taxationto net cash inflow from operating activities 2006 2005 (Unaudited) (Audited) £'000 £'000 Net revenue before finance costs and taxation 25,698 24,063 Gains on investments held at fair value through profit or loss (21,069) (19,355) Decrease/(increase) in accrued income 50 (84) Increase in creditors 424 165 Tax on investment income (20) (28) -------- --------- Net cash inflow from operating activities 5,083 4,761 ======== ========= 8. Proposed dividends A third interim dividend of 2.015p per ordinary share of 5p (2005: 1.9375p per ordinary share of 5p) was paid on 31 January 2007. A fourth interim dividend of 2.015p per ordinary share of 5p (2005: 1.9375p per ordinary share of 5p) will be paid on 30 April 2007 to shareholders on the register on 30 March 2007. The shares will be quoted ex-dividend from 28 March 2007. - MORE - Page 10 of 10 HENDERSON HIGH INCOME TRUST PLC Unaudited Preliminary Results for the year ended 31 December 2006 Notes (continued) 9. Status of preliminary announcement The financial information set out in this preliminary announcement does not constitute the Company's statutory accounts for the years ended 31 December 2006 or 2005. The figures and financial information for the year ended 31 December 2005 are derived from the latest published accounts of the Company. Those accounts have been delivered to the Registrar of Companies and received an audit report which was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report, and did not contain statements under section 237(2) and (3) of the Companies Act 1985. The statutory accounts for the year ended 31 December 2006 have not yet been delivered to the Registrar of Companies, nor have the auditors yet reported on them. The statutory accounts for the year ended 31 December 2006 will be finalised on the basis of the information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's Annual General Meeting. 10. Annual report and Annual General Meeting The full Annual Report and Accounts will be posted to shareholders in late March 2007 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 Tuesday 15 May 2007. For further information please contact: Alex Crooke Portfolio Manager Henderson High Income Trust plc Telephone: 020 7818 4447 James de Sausmarez Head of Investment Trusts Henderson Global Investors Telephone: 020 7818 3349 Sarah Gibbons-Cook Investor Relations and PR Manager Investment Trusts Henderson Global Investors Telephone: 020 7818 3198 - ENDS - This information is provided by RNS The company news service from the London Stock Exchange

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