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RNS

Half-year Report

Released 16:22 24-Jul-2018

RNS Number : 6335V
Henderson High Income Trust PLC
24 July 2018
 

LEGAL ENTITY IDENTIFIER: 213800OEXAGFSF7Y6G11                                    24 July 2018

 

HENDERSON HIGH INCOME TRUST PLC

 

Unaudited results for the half-year ended 30 June 2018

 

 

This announcement contains regulated information.                                                                     

 

INVESTMENT OBJECTIVE

The Company invests in a prudently diversified selection of both well-known and smaller companies to provide investors with a high dividend income stream while also maintaining the prospect of capital growth.

 

PERFORMANCE HIGHLIGHTS FOR THE SIX MONTHS ENDED 30 JUNE 2018

·      Net asset value ('NAV')1 total return (debt at fair value) of -1.6% compared to a total return from the benchmark2 of +1.1%.

·      Mid-market share price total return (including dividends reinvested) of -2.7%.

 


As at 30 June 2018

As at 31 December 2017

NAV per share3

187.5p

195.7p

Mid-market price per share

180.0p

190.0p

Net assets

£246.7m

£257.2m

Dividends paid/payable

4.75p

9.40p

Dividend yield

5.3%

4.9%

Gearing

21.4%

21.0%

 

Total return performance over the ten years to 30 June 2018


6 months

%

1 year

%

3 years

%

5 years

%

10 years

 %

NAV1 Total Return (debt at fair value)

-1.6

+5.6

+23.9

+58.6

+158.5

Share Price Total Return

-2.7

-1.3

+16.2

+45.3

+175.6

Benchmark2

+1.1

+7.4

+28.4

+48.8

+115.0

FTSE All-Share Index

+1.7

+9.0

+31.6

+52.8

+111.2

ICE BofAML Sterling Non-Gilts Index

-1.3

+0.7

+15.6

+31.7

+90.7

 

 

1 Net asset value total return (including dividends reinvested and excluding transaction costs) with debt at fair value

2 A composite of 80% of the FTSE All-Share Index (total return) and 20% of the ICE BofAML Sterling Non-Gilts Index (total return) rebalanced annually

3 Net asset value per share with debt at fair value as published by the AIC

 

Sources: Morningstar for the AIC, Janus Henderson and Datastream



 

INTERIM MANAGEMENT REPORT

 

CHAIRMAN'S STATEMENT

 

Performance

Following a year of strong positive UK equity returns in 2017, the Company's net asset value total return (with debt at fair value) fell by 1.6% during the first six months of 2018. This compares with the Company's benchmark which rose marginally by 1.1% for the half-year, masking a significant market fall in the first quarter and subsequent rally during the second quarter. The discount at which the Company's shares traded to their net asset value (with debt at fair value) widened from 2.9% at 31 December 2017 to 4.0% at the end of this period, giving shareholders a total return of -2.7%. While the more recent fall in the Company's share price is disappointing, it should be viewed in the context of the Company's longer term track record which remains strong. As at 30 June 2018 the dividend yield on the Company's share price of 5.3% outstripped the 3.6% yield on the FTSE All-Share Index.

 

Gearing

In June 2018 we signed a new two year multi-currency loan facility of up to £57 million at an improved margin over LIBOR with our existing lender, Scotiabank.  Our gearing policy, as set out in our Annual Report for the year ended 31 December 2017, remains unchanged. The ability to borrow differentiates closed-ended investment companies from their open-ended counterparts and, when applied judiciously, provides the potential for generating additional income and enhancing total returns to shareholders. The level of gearing employed by the Company over the period has remained fairly constant and was 21.4% at 30 June 2018 (21.0% at 31 December 2017). Approximately half of the borrowing is still being used to finance the Company's fixed interest holdings which currently represent nearly 10% of the investment portfolio and effectively yield 4.5% compared to the Company's average cost of borrowing of 2.2%.

 

Dividends

The first interim dividend of 2.375p per share was paid on 27 April 2018 and the second interim dividend for the same amount will be paid on 27 July 2018. Although the UK economy still faces significant economic and political challenges in the coming months, we still have confidence in our investee companies' ability to sustain and grow their underlying earnings.  Therefore, I am pleased to announce that we have declared an increase in the third dividend to 2.425p for this financial year. This third dividend will be paid on 26 October 2018.

Board of directors

Following many years of service to the Company, Andrew Bell retired from the Board at the Annual General Meeting in May. The Board and the Company benefited enormously from Andrew's commitment and guidance over the years and we wish him well for the future.

 

We are delighted that Jeremy Rigg joined the Board as a Director in April. More detail on Jeremy's investment skills and experience can be found in the last annual report.

 

Outlook

While global equity markets have recovered from their sharp falls earlier in the year, considerable uncertainty still remains ahead. In the US President Trump continues to court controversy and fears of an escalating tit-for-tat trade war have risen following his introduction of specific trade tariffs, particularly aimed at China. That said, current global economic growth is still relatively strong and inflationary pressures are beginning to prompt some central banks to consider increasing interest rates gradually, with the Federal Reserve leading the way. However, inflation in Japan and the Eurozone remains low.

 

 

 

 

 

 

Given the slow progress on Brexit negotiations and the recent sluggish performance of the UK economy, UK equities are still generally unpopular with international investors and sentiment is particularly negative towards domestic facing companies in this environment. This continues to provide our Fund Manager, David Smith, with some interesting opportunities to select overlooked, lower valued companies with solid cash generative business models. We have every confidence in David's ability to identify such companies to add to the Company's well diversified portfolio.

 

 

Margaret Littlejohns

Chairman

24 July 2018



 

FUND MANAGER'S REPORT

 

Markets

Although the FTSE All-Share Index returned +1.7% during the first half of the year, it masked a distinct increase in volatility with the UK market down almost 10% in the first quarter before staging a strong recovery in Q2.  Concerns over a rise in wage growth and its subsequent impact on the pace of US monetary tightening, further fuelled by the rising trade tensions between the US and China, led to a sell-off in global equity markets.  A good corporate results season, however, aided by the robust global economy drove the market rebound.  With rising inflation expectations, bonds underperformed equities during the period with UK Gilts down 0.25%.

 

Economic data in the UK continued to slow with Q1 GDP growing at only 0.1% (quarter-on-quarter), its slowest in five years.  While poor weather was partially responsible for the slowdown, it highlighted underlying signs of weakness amongst households and a lack of corporate investment.  The rise in bond yields globally put pressure on traditional income sectors with the likes of tobacco, telecoms and utilities underperforming which impacted on the FTSE 100 Index return (+1.4%) versus the FTSE 250 Index (+1.9%).  Sectors exposed to the robust global economy performed well, such as mining, oil & gas and industrials.  While the outlook for the UK economy remains uncertain, this did not put off some overseas companies from investing as there was a notable increase in mergers and acquisitions activity.  Sky, Hammerson and Shire were bid for while foreign activist investors took stakes in Barclays and Whitbread in the first half of the year.

 

Portfolio activity

Within the equity portfolio, new positions were purchased in Bunzl and Ibstock. Distribution group Bunzl is the market leader in supplying non-food consumables to end markets such as food retail, food service, cleaning & hygiene, safety and health care. The valuation appears attractive for a high quality and resilient business with a strong balance sheet and good dividend growth prospects.  Ibstock is the leading brick manufacturer in the UK. Volumes should be driven by the positive outlook for new build residential construction, underpinned by government support, while capacity constraints in the UK brick market should help prices.  The company has a strong balance sheet and cash flow which could lead to increased cash returns to shareholders.  Elsewhere we sold the holding in education publisher Pearson.  With the shares having partially recovered, we felt the valuation reached a level that did not reflect the ongoing structural pressures facing the company.

 

Performance

The Company's NAV was down 1.6% during the period, underperforming the benchmark return of +1.1%. While the underperformance of traditional income sectors created a headwind for performance, disappointing stock selection within the equity portfolio was the main detractor of returns.  Holdings in Standard Life Aberdeen ('SLA') and housebuilder Galliford Try were both negative to performance.  SLA's shares came under pressure from the loss of a major client and the sale of its insurance division which raised concerns over its dividend sustainability.  Galliford Try suffered from woes in its construction division ultimately leading the company to cut its dividend and raise equity.  Elsewhere the Company's holdings in Hilton Food Group and Tesco benefitted performance.  Both companies announced strong results in the period with dividend growth ahead of expectations.

 

 

David Smith

Fund Manager

24 July 2018

 

 

 



 

 

INVESTMENT PORTFOLIO

 

Classification of investments by sector

 





30 June 2018

%

31 December 2017

%

FIXED INTEREST



Preference shares

1.4

1.6

Other fixed interest

8.3

8.7


-------

-------

Total Fixed Interest

9.7

-------

10.3

-------

EQUITIES



Oil & Gas



Oil & gas producers

7.3

6.5


------

------

Total Oil & Gas

7.3

------

6.5

------

Basic Materials



Chemicals

2.8

2.6

Mining

2.0

2.0


-----

-----

Total Basic Materials

4.8

-----

4.6

-----

Industrials



Aerospace & defence

1.6

1.4

Construction & materials

0.8

0.2

General industrials

2.5

2.2

Support services

2.6

1.8


-----

-----

Total Industrials

7.5

-----

5.6

-----

Consumer Goods



Beverages

4.6

4.5

Food producers

4.4

4.2

Household goods & home construction

1.4

1.5

Personal goods

1.5

1.5

Tobacco

5.7

6.5


------

------

Total Consumer Goods

17.6

------

18.2

------

Health Care



Pharmaceuticals & biotechnology

6.7

5.3


-----

-----

Total Health Care

6.7

-----

5.3

-----



 


 

30 June 2018

%


Consumer Services



Food & drug retailers

1.8

1.1

General retailers

1.7

2.3

Media

5.1

6.0

Travel & leisure

3.9

3.8


------

------

Total Consumer Services

12.5

------

13.2

------

Telecommunications



Fixed line telecommunications

2.6

3.4

Mobile telecommunications

2.9

3.2


-----

-----

Total Telecommunications

5.5

-----

6.6

-----

Utilities



Electricity

1.0

0.9

Gas, water & multiutilities

3.4

3.9


-----

-----

Total Utilities

4.4

-----

4.8

-----

Financials



Banks

7.0

6.9

Nonlife insurance

2.5

2.3

Life insurance

4.0

4.6

Real estate investment trusts

3.3

2.5

Financial services

3.3

4.7

Equity investment instruments

3.0

2.9


-------

-------

Total Financials

23.1

23.9


-------

-------

Technology



Software & computer services

0.9

1.0


-----

-----

Total Technology

0.9

-----

1.0

-----


-------

-------

TOTAL INVESTMENTS

100.0

====

100.0

====

 

 



 

TWENTY LARGEST INVESTMENTS

 

 

 

 

Company

 

 

 

Sector

 

 

Fair value

as at

30 June 2018

£'000

 

 

 

 

%

of portfolio 2018

 

 

Fair value

    as at

  31 December 2017

£'000

 

 

 

 

%

of portfolio 2017

Royal Dutch Shell B

Oil & Gas

12,228

4.1

11,304

3.6

Diageo

Consumer Goods

10,649

3.6

10,923

3.5

BP

Oil & Gas

9,723

3.2

8,789

2.8

British American Tobacco

Consumer Goods

9,499

3.2

12,446

4.0

GlaxoSmithKline

Health Care

8,931

3.0

4,846

1.6

AstraZeneca

Health Care

8,480

2.8

9,281

3.0

Tesco*

Consumer Services

7,687

2.6

5,669

1.8

Imperial Brands

Consumer Goods

7,547

2.5

7,910

2.5

HSBC+

Financials

7,371

2.5

8,943

2.9

Lloyds Banking Group*

Financials

7,273

2.4

7,556

2.4

Standard Life Aberdeen*

Financials

6,830

2.3

7,855

2.5

RELX

Consumer Services

6,548

2.2

6,905

2.2

Vodafone

Telecommunications

6,361

2.1

7,862

2.5

Rio Tinto

Basic Materials

6,040

2.0

6,175

2.0

Hilton Food Group

Consumer Goods

5,702

1.9

4,956

1.6

Informa

Consumer Services

5,263

1.8

5,025

1.6

BT

Telecommunications

4,691

1.6

5,180

1.7

Johnson Matthey

Basic Materials

4,497

1.5

3,821

1.2

National Grid

Utilities

4,202

1.4

4,103

1.3

Phoenix

Financials

4,151

1.4

4,786

1.5



-----------

------

-----------

------

Total Investments


143,673

48.1

144,335

46.2



=======

====

=======

====

 

*includes fixed interest

+includes fixed interest (2017 only)

 

 

 

 

 



 

 

 

EQUITY PORTFOLIO SECTOR EXPOSURE AT 30 JUNE 2018

 


 

Equity Portfolio

Weight

%

 

FTSE

All-Share Index

%

Financials

25.8

25.7

Consumer Goods

19.5

13.8

Consumer Services

13.8

11.8

Oil & Gas

8.1

14.2

Industrials

8.1

11.4

Health Care

7.4

8.8

Telecommunications

6.1

2.9

Basic Materials

5.3

7.8

Utilities

4.9

2.7

Technology

1.0

0.9

 

Total

-------

100.0

  -------

100.0


-------

         --------

                                                         

 

TOP TEN HOLDINGS BY CONTRIBUTION TO INCOME DURING THE SIX MONTHS PERIOD ENDED

30 JUNE 2018

 

Position

Holding

Sector

£'000

1

Royal Dutch Shell B

Oil & Gas

311

2

Vodafone

Telecommunications

307

3

Standard Life Aberdeen*

Financials

264

4

HSBC*

Financials

251

5

BP

Oil & Gas

246

6

GlaxoSmithKline

Health Care

245

7

AstraZeneca

Health Care

242

8

British American Tobacco

Consumer Goods

242

9

Imperial Brands

Consumer Goods

235

10

Lloyds Banking Group*

Financials

230




-------


Total


2,573

====

 

* Includes fixed interest income.

 

These constitute 33.0% of the total income from investments during the period.

 

 



 

PRINCIPAL RISKS AND UNCERTAINTIES

The principal risks and uncertainties associated with the Company's business can be divided into the following main areas:

 

·              Investment

·              Market/Financial

·              Operational

·              Legal and Regulatory

 

Information on these risks and how they are managed is given in the Company's Annual Report for the year ended 31 December 2017. In the view of the Board these principal risks and uncertainties were unchanged over the last six months and are as applicable to the remaining six months of the financial year as they were to the six months under review.

 

RELATED PARTY TRANSACTIONS

The Company's transactions with related parties in the half-year were with the Directors and Janus Henderson ('the Manager'). There have been no material transactions between the Company and its Directors during the period. The only amounts paid to the Directors were in respect of remuneration for which there were no outstanding amounts payable at the period end. In relation to the provision of services by the Manager, other than fees payable by the Company in the ordinary course of business and the provision of sales and marketing services, there have been no material transactions with the Manager affecting the financial position of the Company during the period under review.

 

STATEMENT OF DIRECTORS' RESPONSIBILITIES

Each of the Directors confirms that, to the best of his or her knowledge:

 

a)         the condensed set of financial statements has been prepared in accordance with FRS 104 "Interim Financial Reporting" issued by the Financial Reporting Council;

b)         this report includes a fair review of the information required by Disclosure Guidance and Transparency Rule 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

c)         this report includes a fair review of the information required by Disclosure Guidance and Transparency Rule 4.2.8R (disclosure of related party transactions and changes therein).

 

 

For and on behalf of the Board

Margaret Littlejohns

Chairman

24 July 2018

 



 

CONDENSED INCOME STATEMENT


(Unaudited)

Half-year ended

 30 June 2018

(Unaudited)

Half-year ended

 30 June 2017

(Audited)

Year ended

31 December 2017


Revenue

return

Capital

return

 

Total

Revenue

return

Capital

return

 

Total

Revenue

return

Capital

return

 

Total


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000











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

-

(10,620)

(10,620)

-

4,806

4,806

-

17,779

17,779

Income from investments held at fair value through profit or loss

7,804

-

7,804

7,337

-

7,337

13,512

-

13,512

Other interest receivable and similar income

30

-

30

12

-

12

12

-

12


------

-------

-------

------

-------

-------

----------

----------

----------

Gross revenue and capital (losses)/gains

7,834

(10,620)

(2,786)

7,349

4,806

12,155

13,524

17,779

31,303











Management and performance fees (note 2)

(295)

(443)

(738)

(250)

(375)

(625)

(532)

(798)

(1,330)

Other administrative expenses

(204)

-

(204)

(179)

-

(179)

(385)

-

(385)


-------

--------

--------

-------

--------

--------

----------

----------

----------

Net return before finance costs and taxation

7,335

(11,063)

(3,728)

6,920

4,431

11,351

12,607

16,981

29,588











Finance costs

(160)

(481)

(641)

(136)

(407)

(543)

(287)

(860)

(1,147)


--------

---------

--------

--------

---------

--------

----------

----------

----------

Net return before taxation

7,175

(11,544)

(4,369)

6,784

4,024

10,808

12,320

16,121

28,441











Taxation on net return

(85)

25

(60)

(82)

20

(62)

(119)

40

(79)


--------

--------

--------

--------

--------

--------

----------

----------

----------

Net return after taxation

7,090

(11,519)

(4,429)

6,702

4,044

10,746

12,201

16,161

28,362


=====

======

=====

=====

====

=====

======

======

======











Return per ordinary share (note 3)

5.51p

(8.95)p

(3.44)p

5.98p

3.60p

9.58p

 

10.13p

 

13.42p

 

23.55p


=====

=====

=====

=====

=====

=====

======

======

======

 

The total columns of this statement represent the Income Statement of the Company, prepared in accordance with FRS 104. The revenue and capital columns are supplementary to this and are published under guidance from the Association of Investment Companies.  

 

The Company has no other comprehensive income items recognised other than those disclosed in the Income Statement.

 

All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the period.

 

The accompanying notes are an integral part of the condensed financial statements.

 

 



 

CONDENSED STATEMENT OF CHANGES IN EQUITY

 

Half-year ended 30 June 2018 (unaudited)

Called up

share capital

£'000

Share premium account

£'000

Capital redemption reserve

£'000

Other capital reserves

£'000

Revenue reserve

£'000

Total

£'000

At 1 January 2018

6,430

126,783

26,302

88,818

8,910

257,243

Net return after taxation

-

-

-

(11,519)

7,090

(4,429)

Fourth interim dividend (2.375p per share) for the year ended 31 December 2017, paid 26 January 2018

-

-

-

-

(3,054)

(3,054)

First interim dividend (2.375p per share) for the year ending 31 December 2018, paid

27 April 2018

-

-

-

-

(3,054)

(3,054)


--------

---------

--------

--------

--------

----------

At 30 June 2018

6,430

126,783

26,302

77,299

9,892

246,706


=====

======

=====

=====

=====

======















Half-year ended 30 June 2017 (unaudited)

Called up share capital

£'000

Share premium account

£'000

Capital redemption reserve

£'000

Other capital reserves

£'000

Revenue reserve

£'000

Total

£'000

At 1 January 2017

5,597

95,595

26,302

72,657

7,572

207,723

Net return after taxation

-

-

-

4,044

6,702

10,746

Issue of new shares

833

31,213

-

-

-

32,046

Fourth interim dividend (2.325p per share) for the year ended 31 December 2016, paid

27 January 2017

-

-

-

-

(2,603)

(2,603)

First interim dividend (2.325p per share) for the year ended 31 December 2017, paid

28 April 2017

-

-

-

-

(2,603)

(2,603)


--------

---------

--------

--------

--------

----------

At 30 June 2017

6,430

126,808

26,302

76,701

9,068

245,309


=====

======

=====

=====

=====

======















Year ended 31 December 2017 (audited)

 

Called up share capital

£'000

Share premium account

£'000

Capital redemption reserve

£'000

Other capital reserves

£'000

Revenue reserve

£'000

Total

£'000

At 1 January 2017

5,597

95,595

26,302

72,657

7,572

207,723

Net return after taxation

-

-

-

16,161

12,201

28,362

Issue of new shares

833

31,188

-

-

-

32,021

Fourth interim dividend (2.325p per share) for the year ended  31 December 2016, paid

27 January 2017

-

-

-

-

(2,603)

(2,603)

First interim dividend (2.325p per share) for the year ended 31 December 2017, paid

28 April 2017

-

-

-

-

(2,603)

(2,603)

Second interim dividend (2.325p per share) for the year ended 31 December 2017, paid

28 July 2017

-

-

-

-

(2,603)

(2,603)

Third interim dividend (2.375p per share) for the year ended 31 December 2017, paid

27 October 2017

-

-

-

-

(3,054)

(3,054)


--------

-----------

---------

---------

---------

----------

At 31 December 2017

6,430

126,783

26,302

     88,818

8,910

257,243


=====

======

=====

=====

=====

======

 

The accompanying notes are an integral part of the condensed financial statements.



 

CONDENSED STATEMENT OF FINANCIAL POSITION

 


(Unaudited)

30 June

2018

£'000

(Unaudited)

30 June

2017

£'000

(Audited)

31 December

2017

£'000





Investments held at fair value through

profit or loss (note 6)

299,555

297,188

311,295


-----------

-----------

----------

Current assets




Debtors

2,812

2,578

1,680

Cash at bank and in hand

3,317

2,506

1,245


-----------

-----------

----------


6,129

5,084

2,925


-----------

-----------

----------

Creditors: amounts falling due within one year

(39,161)

(37,154)

(37,164)


----------

----------

----------

Net current liabilities

(33,032)

(32,070)

(34,239)


-----------

-----------

-----------

Creditors: amounts falling due after more than one year

 

(19,817)

 

(19,809)

 

(19,813)


-----------

-----------

----------

Net assets

246,706

245,309

257,243


======

======

======





Capital and reserves




Share capital (note 5)

6,430

6,430

6,430

Share premium account

126,783

126,808

126,783

Capital redemption reserve

26,302

26,302

26,302

Other capital reserves

77,299

76,701

88,818

Revenue reserve

9,892

9,068

8,910

 

-----------

-----------

----------

Total shareholders' funds

246,706

245,309

257,243

 

======

======

======

 




Net asset value per ordinary share (note 4)

191.85p

190.76p

200.04p


======

======

======





 

The accompanying notes are an integral part of the condensed financial statements.

 



 

CONDENSED CASH FLOW STATEMENT

 


(Unaudited)

Half-year ended 30 June 2018

£'000

(Unaudited)

Half-year ended 30 June 2017

£'000

(Audited)

Year ended

31 December 2017

£'000

Cash flows from operating activities




Net return before taxation

(4,369)

10,808

28,441

Add back: finance costs

641

543

1,147

Add/(less): losses/(gains) on investments held at fair value through profit or loss

10,620

(4,806)

 

(17,779)

Withholding tax on dividends deducted at source

(60)

(62)

(79)

Taxation recovered

9

8

8

Increase in prepayments and accrued income

(588)

(768)

(348)

(Decrease)/increase in accruals and deferred income

(403)

24

438


----------

----------

----------

Net cash inflow from operating activities

5,850

5,747

11,828


----------

----------

----------

Cash flows from investing activities




Sales of investments held at fair value through profit or loss

21,902

24,294

46,265

Purchases of investments held at fair value through profit or loss

(21,051)

(46,734)

 

(71,289)


----------

----------

----------

Net cash inflow/(outflow) from investing activities

851

(22,440)

(25,024)


----------

----------

----------

Cash flows from financing activities




Issue of ordinary share capital

-

16,062

16,516

Equity dividends paid

(6,108)

(5,206)

(10,863)

Drawdown of loans

1,909

7,049

8,078

Interest paid

(637)

(539)

(1,139)


----------

----------

----------

Net cash (outflow)/inflow from financing activities

(4,836)

17,366

12,592


----------

----------

----------

Net increase/(decrease) in cash and cash equivalents

1,865

673

(604)

Cash and cash equivalents at beginning of period

1,245

1,742

1,742

Exchange movements

207

91

107


 ----------

 ----------

----------

Cash and cash equivalents at end of period

3,317

2,506

1,245


 ======

 ======

----------

Comprising:




Cash at bank

3,317

2,506

1,245


======

======

======





 

 

The accompanying notes are an integral part of the condensed financial statements.

NOTES TO THE CONDENSED FINANCIAL STATEMENTS:

 

1.   Accounting policies - basis of accounting

Henderson High Income Trust plc ('the Company") is a company incorporated and domiciled in the United Kingdom under the Companies Act 2006.

 

The condensed set of financial statements has been prepared in accordance with FRS 104, Interim Financial Reporting, the reporting standard for half-year reporting that accompanies FRS 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland and the Statement of Recommended Practice: Financial Statements of Investment Trust Companies and Venture Capital Trusts ('the SORP') which was updated by the Association of Investment Companies in November 2014 and in February 2018 with consequential amendments.

 

For the period under review the Company's accounting policies have not varied from those described in the Annual Report for the year ended 31 December 2017.

 

The condensed set of financial statements has been neither audited nor reviewed by the Company's auditors.

 

2.   Management and performance fees

Management and performance fees are charged in accordance with the terms of the management agreement which are set out in the Company's Annual Report for the year ended 31 December 2017. Performance fees are provided for based on the out-performance against the Company's net asset value versus the benchmark index. For the half-year ended 30 June 2018 there was no provision for a performance fee (half-year ended 30 June 2017: no provision and year ended 31 December 2017: no provision). The actual performance fee, if any, payable to the Manager for the year to 31 December 2018 requires outperformance above a hurdle of 1% over the full financial year. The performance fee is subject to a 0.4% cap of the average gross assets in any one year.

 

3.   Return per ordinary share


(Unaudited)

Half-year ended

30 June 2018

£'000


(Unaudited)

Half-year ended

30 June 2017

£'000


(Audited)

Year ended

31 December 2017

£'000

The return per share is based on the following figures:












Net revenue return

7,090


6,702


12,201

Net capital return

(11,519)


4,044


16,161


---------


---------


----------

Total

(4,429)


10,746


28,362


=====


=====


======

Weighted average number of ordinary shares

128,596,278


 112,126,387


 

120,429,018







Revenue return per share

5.51p


5.98p


10.13p

Capital return per share

(8.95)p


3.60p


13.42p


---------


---------


----------

Total

(3.44)p


9.58p


23.55p


=====


=====


=====

The Company does not have any dilutive securities.

 

4.   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 £246,706,000 (30 June 2017: £245,309,000; 31 December 2017: £257,243,000) and on the 128,596,278 ordinary shares in issue at 30 June 2018 (30 June 2017: 128,596,278; 31 December 2017: 128,596,278).

                                                                                               

5.   Share capital

During the half-year ended 30 June 2018, no ordinary shares were issued (half-year ended 30 June 2017: 16,653,913 new ordinary shares were issued for net proceeds of £32,046,000; year ended 31 December 2017: 16,653,913 new ordinary shares were issued for net proceeds of £32,021,000). At 30 June 2018 there were 128,596,278 ordinary shares of 5p nominal value in issue. Since 30 June 2018, no further shares have been issued. The Company has no shares held in Treasury.

 

 

 

6.   Fair values of financial assets and financial liabilities

The fair values of the financial assets and liabilities are either carried in the statement of financial position at their fair value (investments and derivatives) or the statement of financial position amount is a reasonable approximation of fair value (due from brokers, dividends, and interest receivable, due to brokers, accruals, cash at bank, bank overdrafts and amounts due under the multi-currency loan facility). At 30 June 2018 the fair value of the senior unsecured note has been estimated to be £22,559,000 (30 June 2017: £22,124,000; 31 December 2017: £22,727,000) and is categorised as Level 3 in the fair value hierarchy.

 

The fair value of the senior unsecured note is calculated using a discount rate which reflects the yield on a UK Gilt of similar maturity plus a suitable credit spread.     

 

Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset:

 

Level 1 - valued using quoted prices in active markets for identical assets;

 

Level 2 - valued by reference to valuation techniques using observable inputs other than quoted prices included in Level 1; and

 

Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data.

 

The valuation techniques used by the Company are explained in the accounting policies note 1(c) in the Company's Annual Report for the year ended 31 December 2017. The Company does not hold any Level 2 or Level 3 financial assets.

 

There have been no transfers between levels of the fair value hierarchy during the period.

 

Fair value hierarchy disclosures

The table below sets out fair value measurements using the FRS 102 fair value hierarchy.

      

Financial assets at fair value through profit or loss at 30 June 2018

Level 1

£'000

Total

£'000

Equity investments

269,617

269,617

Convertibles

724

724

Fixed interest investments



- Preference shares

4,262

4,262

- Other

24,952

24,952

Total

299,555

299,555

 

      

Financial assets at fair value through profit or loss at

30 June 2017

Level 1

£'000

Total

£'000

Equity investments

265,282

265,282

Convertibles

771

771

Fixed interest investments



- Preference shares

4,713

4,713

- Other

26,422

26,422

Total

297,188

297,188

 



 

      

Financial assets at fair value through profit or loss at

31 December 2017

Level 1

£'000

Total

£'000

Equity investments

278,601

278,601

Convertibles

747

747

Fixed interest investments



- Preference shares

5,025

5,025

- Other

26,922

26,922

Total

311,295

311,295

 

7.   Dividends

In respect of the year ended 31 December 2017, a fourth interim dividend of 2.375p per share (2016: 2.325p) was paid on 26 January 2018 to shareholders on the register at close of business on 15 December 2017.

 

In respect of the year ending 31 December 2018, a first interim dividend of 2.375p per share (2017: 2.325p) was paid on 27 April 2018 to shareholders on the register at close of business on 6 April 2018. 

 

These dividends are reflected in these half-year financial statements.

 

A second interim dividend of 2.375p per share (2017: 2.325p) will be paid on 27 July 2018 to shareholders on the register at close of business on 22 June 2018. The shares went ex-dividend on 21 June 2018.

 

A third interim dividend of 2.425p per share (2017: 2.375p) will be paid on 26 October 2018 to shareholders on the register on 21 September 2018. The shares will go ex-dividend on 20 September 2018.

 

In accordance with FRS 102, the second and third interim dividends have not been accrued for in the half-year financial statements as they are paid after the period end.

 

8.   Going concern

The assets of the Company consist of securities that are readily realisable and, accordingly, the Directors believe that the Company has adequate resources to continue in operational existence for at least twelve months from the date of approval of the financial statements. The Company's shareholders are asked every five years to vote for the continuation of the Company. An ordinary resolution to this effect was passed by the shareholders at the Annual General Meeting held on 5 May 2015. Having assessed these factors, the principal risks and other matters discussed in connection with the viability statement, the Directors considered it appropriate to adopt the going concern basis of accounting in preparing the financial statements.

 

9.   Comparative information

The financial information contained in this half-year report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006.  The figures and financial information for the year ended 31 December 2017 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 498(2) or 498(3) of the Companies Act 2006.

 

10.  Half-year report

The half-year report will shortly be available on the Company's website (www.hendersonhighincome.com) or in hard copy from the Company's registered office. An abbreviated version of this half-year report, the 'update', will be circulated to shareholders in August 2018.

 

11. General Information

Company Status

The Company is a UK domiciled investment trust company. Registered number: 02422514

London Stock Exchange Daily Official List (SEDOL): 0958057 / ISIN number is GB0009580571

London Stock Exchange (TIDM) Code: HHI

Global Intermediary Identification Number (GIIN): JBA08I.99999.SL.826

Legal Entity Identifier (LEI): 213800OEXAGFSF7Y6G11

 

 

Registered Office

201 Bishopsgate, London EC2M 3AE.

 

Directors

The Directors of the Company are Margaret Littlejohns (Chairman), Janet Walker (Audit Committee Chair), Zoe King, Anthony Newhouse and Jeremy Rigg.

 

Corporate Secretary

Henderson Secretarial Services Limited, represented by Hannah Gibson ACIS.

 

Website

Details of the Company's share price and net asset value, together with general information about the Company, monthly factsheets and data, copies of announcements, reports and details of general meetings can be found at www.hendersonhighincome.com.

 

For further information please contact:

 

David Smith

Fund Manager              

Henderson High Income Trust plc

Telephone: 020 7818 4443         

James de Sausmarez

Director & Head of Investment Trusts

Janus Henderson Investors

Telephone: 020 7818 3349

 

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.

 

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
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Half-year Report - RNS