TIDMHHI
RNS Number : 2092M
Henderson High Income Trust PLC
13 September 2023
LEGAL ENTITY IDENTIFIER: 213800OEXAGFSF7Y6G11
HERSON HIGH INCOME TRUST PLC
Unaudited results for the half-year ended 30 June 2023
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 for the six months to 30 June 2023
-- Net asset value (NAV) total return (debt at fair value)(1) of
3.0% compared with a total return from the benchmark(2) of
1.9%
-- Mid-market share price total return (including dividends reinvested) of 2.0%
Financial highlights
at 30 June 2023 at 31 December
2022
----------------------------------------- ------------------ -----------------
NAV per share (3) 164.1p 164.2p
Mid-market price per share 163.5p 165.3p
Net assets GBP213.6m GBP214.3m
Dividends paid/payable 5.15p 10.15p
Dividend yield 6.2% 6.1%
Gearing 21.3% 21.4%
(Discount)/premium to NAV (debt at fair
value) (0.4%) 0.6%
Total return performance (including dividends reinvested and excluding
transaction costs)
6 months 1 year 3 years 5 years 10 years
% % % % %
------------------------------------------ --------- ------- -------- -------- ---------
NAV total return (debt at fair value)(1) 3.0 7.7 30.9 17.9 86.9
Share price total return(4) 2.0 8.3 36.4 23.1 78.9
Benchmark(2) 1.9 5.0 21.6 12.5 67.4
FTSE All-Share Index 2.6 7.9 33.2 16.5 78.0
ICE BofA Sterling Non-Gilts Index -1.1 -7.1 -17.6 -7.0 22.4
------------------------------------------ --------- ------- -------- -------- ---------
1. Net asset value with debt at fair value per ordinary share total return
(including dividends reinvested and excluding transaction costs)
2. The benchmark is a composite of 80% of the FTSE All-Share Index (total
return) and 20% of the ICE BofA Sterling Non-Gilts Index (total return)
rebalanced annually
3. Net asset value per share with debt at fair value as published by the
Association of Investment Companies (AIC)
4. The mid-market share price total return (including dividends reinvested)
Sources: Morningstar Direct and Janus Henderson
INTERIM MANAGEMENT REPORT
CHAIRMAN'S STATEMENT
Markets/Performance
The first half of 2023 has been a volatile period for financial markets.
With high inflation globally, policy makers have continued to raise interest
rates in an attempt to cool economic activity and reduce price increases.
Investors are focused on how much further rates will rise and trying to
assess the impact on corporate profitability from increased borrowing
costs. From a global perspective, there are some signs that the UK economy
might see inflationary pressure take a little longer to abate, not least
due to the very tight labour market in the UK and the pressure in particular
from recent public and private sector pay settlements.
Against this backdrop the Company has made modest positive progress in
the first half of 2023 achieving a net asset value total return of +3.0%
compared with a benchmark return of +1.9%, outperformance of 1.1%. The
Company's share price total return has been in line with the benchmark
at +2.0%.
Gearing/Asset Allocation
The Company started 2023 with an overweight position in equities and an
underweight position in fixed interest investments compared with its benchmark
(80% equities, 20% bonds). This position has not changed markedly during
the first half of 2023 and the Company's gearing is also largely unchanged
at 21.3% as at 30 June 2023 (21.4% as at 31 December 2022).
The Board regularly reviews the level of gearing with the Company's Fund
Manager, and this has continued to be the case not least due to the increase
in interest rates which impact the Company's overall borrowing costs,
notwithstanding the fact that a proportion of the Company's borrowings
are at fixed rates.
Dividends
The first interim dividend of 2.575 pence per share was paid on 28 April
2023 and a second interim dividend of the same amount was paid on 28 July
2023.
A third interim dividend, to be paid from the Company's revenue account,
of 2.575 pence per share was announced on 17 July 2023 and this dividend
will be paid on 27 October 2023 to shareholders registered at the close
of business on 15 September 2023 (with the shares being quoted ex-dividend
on 14 September 2023).
Looking across the corporate sector at recent results announcements it
is encouraging that dividend payout levels continue to be relatively healthy
and, notwithstanding the impact of higher borrowing costs on end demand
and corporate profitability, UK corporate balance sheets remain in generally
good health.
David Smith continues to regularly update the Board on prospective income
levels from the Company's portfolio of investments and combined with the
Company's current dividend reserves, the Board continues to have confidence
in the Company's ability to deliver a high income return to shareholders.
Outlook
In the near term the outlook for markets will be driven by inflation expectations
and the impact this will have on monetary policy. There are certainly
some signs that inflation is easing a little, particularly in the US and
across Europe. However, inflation in the UK is proving more problematic,
and although the Bank of England has increased interest rates significantly
in the first half of 2023, the expectation in the market is that they
may have to rise a little further.
The UK corporate sector is in the midst of the interim results season
and whilst there are certainly pockets of weakness, corporate results
are for the most part holding up well. In particular, UK banks have announced
positive updates showing relatively little sign of corporate and personal
sector weakness, and capital levels within the banks are at very positive
levels. In addition, the UK housing market, which is very important to
the UK economy, is holding up reasonably well at this stage.
UK companies, where the majority of the Company's assets remain invested,
still appear to be relatively attractively valued in a global context
and are still delivering the income levels which will assist the Company's
Fund Manager to deliver a high income return for shareholders whilst also
retaining exposure to longer term capital growth.
Jeremy Rigg
Chairman
12 September 2023
Fund Manager's Report
Markets
After a strong start to the year for equity markets on fading recessionary
fears and good corporate earnings, the UK market pared back some of those
gains as a result of higher-than-expected inflation and the subsequent
rise in interest rates. The FTSE All-Share Index returned 2.6% on a total
return basis, which lagged both US and European equity markets. While
inflation continued to fall from its peak in October last year, it remained
stubbornly high in the UK, with the Consumer Price Index (CPI) rising
8.7% in May. This prompted the Bank of England to raise interest rates
four times in the period, from 3.5% to 5.0% as at the end of June. UK
government bond yields also rose during the period due to concerns about
inflation and the prospect of interest rates staying higher for longer,
with the 10-year gilt yield increasing to 4.4% at the end of June, from
3.7% at the beginning of the period.
Larger cap companies continued to outperform mid-caps with the FTSE 100
up 3.2% versus the 0.6% decline in the FTSE 250. Sectors such as consumer
discretionary, industrials and financials performed best, while consumer
staples, basic materials and telecoms lagged.
Performance
The Company's NAV (with debt at fair value) rose by 3.0% during the period,
outperforming the Company's benchmark return of 1.9%. Within the equity
portfolio, holdings in 3i, B&M European Retail and Whitbread were positive
for performance. Private equity group 3i announced strong trading from
its largest holding, European discount retailer Action, which supported
a significant uplift to its NAV. B&M is another discount retailer held
by the portfolio which also delivered robust results, as pressure on consumer
spending led to an increase in customers "trading down" to B&M's value
proposition. Whitbread, the owner of budget hotel chain Premier Inn, reported
good trading momentum with the company benefitting from the investment
it made during the pandemic to emerge in a strong position versus its
competitors. Elsewhere the portfolio's positions in Anglo American and
British American Tobacco (BAT) detracted from returns. Anglo American
shares came under pressure from falling commodity prices and fears the
Chinese economic recovery was stalling, while BAT's underperformed after
it stopped its share buyback program and announced it was to pay $635
million to the US Department of Justice for a historic breach of sanctions
in North Korea.
Portfolio Activity
During the period the allocation to bonds was increased, taking advantage
of the move higher in yields on UK investment grade credit. Bonds were
purchased in typically non-cyclical businesses such as Sky (media) and
EDF (utilities). The bond portfolio represented 11.5% and 13.9% of portfolio
gross and net assets respectively as at the end of June.
Within the equity portfolio new holdings were established in MoneySuperMarket.com,
Conduit Re and DCC . MoneySuperMarket.com is the market leading price
comparison website in the UK and should benefit from consumers looking
to manage their bills in the current high inflation environment. Conduit
Re is a specialist property and casualty reinsurer with a diversified
portfolio of reinsurance risks. Capacity has reduced significantly in
the reinsurance market after a number of years of large losses, and as
a result, the market is entering a period of strong premium rate rises
which should underpin high returns over the medium term. DCC, an international
sales, marketing and distribution company operating in the LPG, oil, technology
and health care sector, has a resilient business with strong free cash
flow, high returns and a robust balance sheet which should support further
accretive acquisitions. The Company sold some of its overseas holdings
during the period, including McDonalds, Deutsche Post and Nordea after
a period of good performance.
David Smith
Fund Manager
12 September 2023
INVESTMENT PORTFOLIO
Classification of Investments by Sector
Total Total
30 June 2023 31 December 2022
Company % %
------------------------------------------- ---------------------------- -------------------
FIXED INTEREST
Preference shares 1.6 1.8
Other fixed interest 9.9 9.4
------ ------
Total Fixed Interest 11.5 11.2
------ ------
EQUITIES
Energy
Oil, gas and coal 6.0 5.6
------ ------
Total Energy 6.0 5.6
------ ------
Basic Materials
Chemicals 1.7 1.6
Industrial metals and mining 3.8 5.7
------ ------
Total Basic Materials 5.5 7.3
------ ------
Industrials
Electronic and electrical equipment 1.3 0.8
General industrials 1.0 1.2
Industrial engineering 0.9 0.8
Industrial support services 2.0 1.2
Industrial transportation - 0.9
------ ------
Total Industrials 5.2 4.9
------ ------
Consumer Discretionary
Consumer services 1.8 1.6
Household goods and home construction 1.0 1.6
Media 3.1 2.7
Personal goods 1.2 1.4
Retailers 2.4 2.0
Travel and leisure 1.8 2.6
------ ------
Total Consumer Discretionary 11.3 11.9
------ ------
Health Care
Pharmaceuticals and biotechnology 4.7 4.9
------ ------
Total Health Care 4.7 4.9
------ ------
Consumer Staples
Beverages 5.0 5.1
Food producers 2.6 3.5
Personal care, drug and grocery stores 5.9 5.8
Tobacco 5.6 6.8
------ ------
Total Consumer Staples 19.1 21.2
------ ------
Utilities
Electricity 2.0 1.8
Gas, water and multi-utilities 5.1 3.8
------ ------
Total Utilities 7.1 5.6
------ ------
Financials
Banks 6.7 7.3
Closed end investments 2.1 2.3
Finance and credit services 0.9 1.1
Investment banking and brokerage services 7.9 7.0
Life insurance 2.8 2.5
Non-life insurance 3.5 2.6
------ ------
Total Financials 23.9 22.8
------ ------
Technology
Software and computer services 2.4 1.2
Technology hardware and equipment 1.0 0.9
------ ------
Total Technology 3.4 2.1
------ ------
Real Estate
Real estate investment trusts 2.3 2.5
------ ------
Total Real Estate 2.3 2.5
-------- --------
Total investments 100.0 100.0
===== =====
TWENTY LARGEST INVESTMENTS Fair value Fair value
as at as at
30 June % 31 December %
2023 of portfolio 2022 of portfolio
Company Sector GBP'000 2023 GBP'000 2022
-------------- -------------- ------------- ------------- ------------- -------------
British
American Consumer
Tobacco Staples 9,543 3.7 11,775 4.5
Consumer
Unilever Staples 9,433 3.6 9,628 3.7
Relx Consumer
(Netherlands) Discretionary 8,121 3.1 7,102 2.7
3i Financials 6,725 2.6 6,389 2.5
Consumer
Diageo Staples 6,571 2.5 7,100 2.7
HSBC Financials 6,441 2.5 3,943 1.5
NatWest Financials 6,095 2.4 7,165 2.8
Consumer
Tesco Staples 5,910 2.3 5,520 2.1
BP Energy 5,900 2.3 6,114 2.4
Shell Energy 5,753 2.2 4,845 1.9
Basic
Rio Tinto Materials 5,702 2.2 6,034 2.3
AstraZeneca Healthcare 5,528 2.1 7,182 2.8
SSE Utilities 5,101 2.0 4,542 1.7
Imperial Consumer
Brands Staples 5,022 1.9 5,984 2.3
Lloyds
Banking Financials 4,912 1.9 4,819 1.9
National Grid Utilities 4,889 1.9 4,488 1.7
Phoenix Financials 4,712 1.8 4,253 1.6
Consumer
Compass Discretionary 4,696 1.8 4,091 1.6
Immediate
Capital Financials 4,365 1.7 3,299 1.3
Anglo Basic
American Materials 4,315 1.7 7,062 2.7
------------ ------------ ------------ ------------
Total 119,734 46.2 121,335 46.7
======= ======= ======= =======
EQUITY PORTFOLIO SECTOR EXPOSURE AS AT 30 JUNE 2023
Equity portfolio FTSE All-Share
weight Index
% %
-------------------------------------------------- ------------------------------------------- ---------------
Basic Materials 6.2 7.2
Consumer Discretionary 12.6 12.0
Consumer Staples 21.2 15.0
Energy 6.7 10.7
Financials 28.3 23.2
Health Care 5.2 11.6
Industrials 5.7 11.9
Real Estate 2.6 2.3
Technology 3.7 1.2
Telecommunications -- 1.3
Utilities 7.8 3.6
Total -------- --------
100.0 100.0
===== =====
Source: Janus Henderson
Principal Risks and Uncertainties
The principal risks associated with the Company's business can be divided
into the following main areas:
-- Climate change risk
-- Investment risk
-- Market/financial risk
-- Operational risks including cyber risks, pandemic risks and epidemic
risks and risks relating to terrorism and international conflicts
-- Tax, legal and regulatory risk
Information on these risks and how they are managed is given in the Company's
Annual Report for the year-ended 31 December 2022. The Board has completed
a thorough review of the principal risks and considers that these risks
have not changed 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.
Statement OF Directors' ResponsibilitIES
The Directors (listed in note 12) confirm that, to the best of their 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
Jeremy Rigg
Chairman
12 September 2023
Condensed Statement of Comprehensive Income
Half-year ended Half-year ended Year-ended
30 June 2023 30 June 2022 31 December 2022
(Unaudited) (Unaudited) (Audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
return return return return return return return return return
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
Losses on
investments
held at fair
value through
profit or
loss - (420) (420) - (25,159) (25,159) - (22,469) (22,469)
Income from
investments
held at fair
value through
profit or
loss 8,415 - 8,415 8,203 - 8,203 14,632 - 14,632
Other interest
receivable
and similar
income 275 - 275 176 - 176 307 - 307
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Gross revenue
and capital
losses 8,690 (420) 8,270 8,379 (25,159) (16,780) 14,939 (22,469) (7,530)
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Expenses
Management
fees (note
2) (282) (422) (704) (276) (415) (691) (557) (836) (1,393)
Other
administrative
expenses (227) - (227) (232) - (232) (498) - (498)
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net return
before finance
costs and
taxation 8,181 (842) 7,339 7,871 (25,574) (17,703) 13,884 (23,305) (9,421)
Finance costs (304) (914) (1,218) (163) (487) (650) (380) (1,140) (1,520)
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net return
before
taxation 7,877 (1,756) 6,121 7,708 (26,061) (18,353) 13,504 (24,445) (10,941)
Taxation on
net return (157) - (157) (54) - (54) (81) - (81)
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net return
after taxation 7,720 (1,756) 5,964 7,654 (26,061) (18,407) 13,423 (24,445) (11,022)
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Return/(loss)
per ordinary
share (note
3) 5.94p (1.35p) 4.59p 5.93p (20.20p) (14.27p) 10.37p (18.89p) (8.52p)
======= ======= ======= ======= ======= ======= ======= ======= =======
The total columns of this statement represent the Company's Income Statement,
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
Called
up Share Capital Other
Half-year ended 30 share premium redemption capital Revenue
June 2023 capital account reserve reserves reserve Total
(Unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- ------------- ------------- ------------- ------------- ------------- -------------
At 1 January 2023 6,490 128,827 26,302 43,870 8,788 214,277
Net return after
taxation - - - (1,756) 7,720 5,964
Fourth interim
dividend
(2.575p per share)
for the year-ended
31 December 2022,
paid
27 January 2023 - - - - (3,342) (3,342)
First interim
dividend
(2.575p per share)
for the
year-ending
31 December 2023,
paid
28 April 2023 - - - - (3,342) (3,342)
Refund of unclaimed
dividends - - - - 14 14
------------ ------------ ------------ ------------ ------------ ------------
At 30 June 2023 6,490 128,827 26,302 42,114 9,838 213,571
======= ======= ======= ======= ======= =======
Called
up Share Capital Other
Half-year ended 30 share premium redemption capital Revenue
June 2022 capital account reserve reserves reserve Total
(Unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- ------------- ------------- ------------- ------------- ------------- -------------
At 1 January 2022 6,430 126,783 26,302 68,315 8,404 236,234
Net return after
taxation - - - (26,061) 7,654 (18,407)
Issue of new shares 60 2,044 - - - 2,104
Fourth interim
dividend
(2.525p per share)
for the year-ended
31 December 2021,
paid
28 January 2022 - - - - (3,247) (3,247)
First interim
dividend
(2.525p per share)
for the year-ended
31 December 2022,
paid
29 April 2022 - - - - (3,255) (3,255)
Refund of unclaimed
dividends - - - - 15 15
------------ ------------ ------------ ------------ ------------ ------------
At 30 June 2022 6,490 128,827 26,302 42,254 9,571 213,444
======= ======= ======= ======= ======= =======
Called
up Share Capital Other
Year-ended 31 share premium redemption capital Revenue
December capital account reserve reserves reserve Total
2022 (Audited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- ------------- ------------- ------------- ------------- ------------- -------------
At 1 January 2022 6,430 126,783 26,302 68,315 8,404 236,234
Net return after
taxation - - - (24,445) 13,423 (11,022)
Issue of new shares 60 2,044 - - - 2,104
Fourth interim
dividend
(2.525p per share)
for the year-ended
31 December 2021,
paid
28 January 2022 - - - - (3,247) (3,247)
First interim
dividend
(2.525p per share)
for the year-ended
31 December 2022,
paid
29 April 2022 - - - - (3,255) (3,255)
Second interim
dividend
(2.525p per share)
for the year-ended
31 December 2022,
paid
29 July 2022 - - - - (3,275) (3,275)
Third interim
dividend
(2.525p per share)
for the year-ended
31 December 2022,
paid
28 October 2022 - - - - (3,277) (3,277)
Refund of unclaimed
dividends - - - - 15 15
------------ ------------ ------------ ------------ ------------ ------------
At 31 December 2022 6,490 128,827 26,302 43,870 8,788 214,277
======= ======= ======= ======= ======= =======
The accompanying notes are an integral part of the condensed financial
statements.
Condensed STATEMENT OF FINANCIAL POSITION
31 December
30 June 2023 30 June 2022 2022
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
---------------------------------- --------------- ------------- -------------
Non-current assets
Investments held at fair value
through profit or loss (note
4) 259,000 259,292 260,053
------------ ------------ ------------
Current assets
Debtors 4,496 3,514 1,928
Cash at bank and in hand 2,843 3,258 2,873
------------ ------------ ------------
7,339 6,772 4,801
------------ ------------ ------------
Creditors: amounts falling due
within one year (32,906) (32,767) (30,719)
------------ ------------ ------------
Net current liabilities (25,567) (25,995) (25,918)
------------ ------------ ------------
Creditors: amounts falling due
after more than one year (19,862) (19,853) (19,858)
------------ ------------ ------------
Net assets 213,571 213,444 214,277
======= ======= =======
Capital and reserves
Called up share capital (note
6) 6,490 6,490 6,490
Share premium account 128,827 128,827 128,827
Capital redemption reserve 26,302 26,302 26,302
Other capital reserves 42,114 42,254 43,870
Revenue reserve 9,838 9,571 8,788
------------ ------------ ------------
Total shareholders' funds 213,571 213,444 214,277
======= ======= =======
Net asset value per ordinary
share (note 5) 164.54p 164.45p 165.09p
======= ======= =======
The accompanying notes are an integral part of the condensed
financial statements.
Condensed Statement of Cash Flows
Half-year
ended Half-year ended Year-ended
31 December
30 June 2023 30 June 2022 2022
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
---------------------------------------- ----------------------- ---------------- ---------------
Cash flows from operating activities
Net return/(loss) before taxation 6,121 (18,353) (10,941)
Add back: finance costs 1,218 650 1,520
Add: losses on investments held
at fair value through profit or
loss 420 25,159 22,469
Withholding tax on dividends deducted
at source (157) (54) (81)
(Increase)/decrease in debtors (189) (484) 6
(Decrease)/increase in creditors (292) 36 287
-------------- -------------- --------------
Net cash inflow from operating
activities 7,121 6,954 13,260
-------------- -------------- --------------
Cash flows from investing activities
Sales of investments held at fair
value through profit or loss 28,282 40,692 60,179
Purchases of investments held at
fair value through profit or loss (31,134) (34,604) (51,435)
-------------- -------------- --------------
Net cash (outflow)/inflow from
investing activities (2,852) 6,088 8,744
-------------- -------------- --------------
Cash flows from financing activities
Issue of ordinary share capital - 2,104 2,104
Equity dividends paid (net of refund
of unclaimed distributions) (6,670) (6,487) (13,039)
Drawdown/(repayment) of loans 2,837 (9,519) (11,330)
Interest paid (1,213) (645) (1,512)
-------------- -------------- --------------
Net cash outflow from financing
activities (5,046) (14,547) (23,777)
-------------- -------------- --------------
Net decrease in cash and cash
equivalents (777) (1,505) (1,773)
Cash and cash equivalents at beginning
of period 2,873 3,942 3,942
Exchange movements 747 821 704
-------------- -------------- --------------
Cash and cash equivalents at end
of period 2,843 3,258 2,873
Comprising: -------------- -------------- --------------
Cash at bank 2,843 3,258 2,873
======== ======== ========
The accompanying notes are an integral part of the condensed
financial statements.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
1. Accounting policies: basis of accounting
The Company is a registered investment company as defined by Section 833
of the Companies Act 2006 and operates as an investment trust in accordance
with Section 1158 of the Corporation Tax Act 2010.
The condensed set of financial statements has been prepared in accordance
with FRS 104, Interim Financial Reporting, FRS 102, the Financial Reporting
Standard applicable in the UK and Republic of Ireland and the Statement
of Recommended Practice for "Financial Statements of Investment Trust
Companies and Venture Capital Trusts", which was updated by the Association
of Investment Companies in July 2022.
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 2022. The condensed set of financial statements has been neither
audited nor reviewed by the Company's auditor.
2. Management fees
Management 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 2022.
3. Revenue return/(loss) per ordinary share
The revenue return/(loss) per ordinary share is based on the following
figures:
Year-ended
Half-year Half-year 31 December
ended ended 2022
30 June 2023 30 June 2022
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
---------------------------------------- ---- ----------------- ---------------- -------------
Net revenue return 7,720 7,654 13,423
Net capital return (1,756) (26,061) (24,445)
---------------------------------------------- ----------------- ----------------
Total return 5,964 (18,407) (11,022)
---------------------------------------------- ----------------- ---------------- -------------
Weighted average number of
ordinary shares 129,796,278 128,999,455 129,401,141
---------------------------------------------- ----------------- ---------------- -------------
Pence Pence Pence
---------------------------------------- ---- ----------------- ---------------- -------------
Revenue return per ordinary
share 5.94 5.93 10.37
Capital return/(loss) per
ordinary share (1.35) (20.20) (18.89)
---------------------------------------------- ----------------- ----------------
Total return/(loss) per ordinary
share 4.59 (14.27) (8.52)
---------------------------------------------- ----------------- ---------------- -------------
The Company does not have any dilutive securities therefore the basic
and diluted returns per share are the same.
4. 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 2023 the
fair value of the senior unsecured note has been estimated to be GBP17,043,000
(30 June 2022: GBP19,636,000; 31 December 2022: GBP17,653,000) and is
categorised as Level 3 in the fair value hierarchy.
The current estimated fair value of the senior unsecured note is calculated
using a discount rate based on the redemption yield of the relevant existing
reference UK Gilt plus a suitable estimated credit spread. The estimated
credit spread is based on the spread between the yield of the ICE BofA
10-15 Year A Sterling Non-Gilt Index and the redemption yield of the ICE
BofA 10-15 Year UK Gilt Index. The discount rate is calculated and updated
at each month end and applied daily to determine the Company's published
fair value NAVs.
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: the unadjusted quoted price in an active
market for identical assets or liabilities that the
entity can access at the measurement date.
* Level 2: valued by reference to valuation techniques
using observable inputs other than quoted prices
included in Level 1.
* Level 3: valued by reference to valuation techniques
using inputs that are not based on observable market
data.
Financial assets and financial liabilities Level Level Level
at fair value through profit or loss at 30 1 2 3 Total
June 2023 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------- ----------- ----------- ---------- ---------
Equity investments 229,312 - - 229,312
Fixed interest investments:
- Preference shares 3,870 - - 3,870
- Other 25,818 - - 25,818
- Options - (5) - (5)
------------------------------------------------------- ----------- ----------- ---------- ---------
Total 259,000 (5) - 258,995
------------------------------------------------------- ----------- ----------- ---------- ---------
Financial assets and financial liabilities Level Level Level
at fair value through profit or loss at 30 1 2 3 Total
June 2022 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------- ----------- ----------- ---------- ---------
Equity investments 232,005 - - 232,005
Fixed interest investments:
- Preference shares 4,842 - - 4,842
- Other 22,445 - - 22,445
- Options - (209) - (209)
------------------------------------------------------- ----------- ----------- ---------- ---------
Total 259,292 (209) - 259,083
------------------------------------------------------- ----------- ----------- ---------- ---------
Financial assets and financial liabilities Level Level Level
at fair value through profit or loss at 31 1 2 3 Total
December 2022 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------- ----------- ----------- ---------- ---------
Equity investments 230,977 - - 230,977
Fixed interest investments:
- Preference shares 4,585 - - 4,585
- Other 24,491 - - 24,491
------------------------------------------------------- ----------- ----------- ---------- ---------
Total 260,053 - - 260,053
------------------------------------------------------- ----------- ----------- ---------- ---------
The Company's holdings in options are included within Level 2 and are
included in creditors amounts falling due within one year in the Statement
of Financial Position.
Premiums from written options during the half-year ended 30 June 2023
were GBP239,000 (half-year ended 30 June 2022: GBP175,000; year-ended
31 December 2022: GBP289,000).
5. 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 GBP213,571,000 (half-year ended 30 June 2022:
GBP213,444,000; year ended 31 December 2022: GBP214,277,000) and on the
129,796,278 ordinary shares in issue at 30 June 2023 (30 June 2022: 129,796,278;
31 December 2022: 129,796,278).
6. Share capital
During the six months under review, the Company issued no shares (half-year
ended 30 June 2022: 1,200,000; year ended 31 December 2022: 1,200,000).
Between 1 July and 12 September 2023, no further shares have been issued.
The Company has no shares held in Treasury.
7. Dividends
The Company pays dividends on a quarterly basis. In respect of the year
ended 31 December 2022, a fourth interim dividend of 2.575p per share
(2021: 2.525p) was paid on 27 January 2023 to shareholders on the register
at close of business on 9 December 2022. In respect of the year ending
31 December 2023, a first interim dividend of 2.575p per share (2022:
2.525p) was paid on 28 April 2023 to shareholders on the register at close
of business on 11 April 2023. These dividends are reflected in the half-year
financial statements.
A second interim dividend of 2.575p per share (2022: 2.525p) for the year
ending 31 December 2023 was paid on 28 July 2023 to shareholders on the
register at close of business on 16 June 2023. A third interim dividend
of 2.575p per share (2022: 2.525p) for the year ending 31 December 2023
will be paid on 27 October 2023 to shareholders on the register at close
of business on 15 September 2023. The shares will be quoted ex-dividend
on 14 September 2023. In accordance with FRS 102, the second and third
interim dividends have not been accrued for in the half-year financial
statements as they will be paid after the period end.
8. Net debt reconciliation
Bank loans Other debt repayable
Cash and repayable within after more than
cash equivalents one year one year Total
GBP'000 GBP'000 GBP'000 GBP'000
Net debt as at 1 January
2023 2,873 (29,141) (19,858) (46,126)
Cash flows (777) (2,837) - (3,614)
Exchange movements 747 257 - 1,004
Non cash flow:
Effective interest
movements - - (4) (4)
------------------------------ ------------------ ------------------ --------------------- ---------
Net debt as at 30 June
2023 2,843 (31,721) (19,862) (48,740)
------------------------------ ------------------ ------------------ --------------------- ---------
Bank loans Other debt repayable
Cash and repayable within after more
cash equivalents one year than one year Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ------------------ ------------------ --------------------- ---------
Net debt as at 1 January
2022 3,942 (37,593) (19,849) (53,500)
Cash flows (1,505) 9,519 - 8,014
Exchange movements 821 (2,525) - (1,704)
Non cash flow:
Effective interest movements - - (4) (4)
------------------------------ ------------------ ------------------ --------------------- ---------
Net debt as at 30 June
2022 3,258 (30,599) (19,853) (47,194)
------------------------------ ------------------ ------------------ --------------------- ---------
Bank loans Other debt repayable
Cash and repayable within after more
cash equivalents one year than one year Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ------------------ ------------------ --------------------- ---------
Net debt as at 1 January
2022 3,942 (37,593) (19,849) (53,500)
Cash flows (1,773) 11,330 - 9,557
Exchange movements 704 (2,878) - (2,174)
Non cash flow:
Effective interest movements - - (9) (9)
------------------------------ ------------------ ------------------ --------------------- ---------
Net debt as at 31 December
2022 2,873 (29,141) (19,858) (46,126)
------------------------------ ------------------ ------------------ --------------------- ---------
9. Related party transactions
The Company's current related parties are its Directors and Janus Henderson.
There have been no material transactions between the Company and its Directors
during the period and the only amounts paid to them were in respect of
expenses and remuneration, for which there were no outstanding amounts
payable at the period end.
In relation to the provision of services by Janus Henderson, other than
fees payable by the Company in the ordinary course of business and the
provision of marketing services, there have been no material transactions
with Janus Henderson affecting the financial position of the Company during
the period under review.
10. 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 23 June
2020.
The Directors have considered the risks associated with rising interest
rates and its impact on the broader financial system, as well as considering
cash flow forecasting, a review of covenant compliance including the headroom
above the most restrictive covenants and an assessment of the liquidity
of the portfolio. They have concluded that they are able to meet their
financial obligations, including the repayment of the bank loan, as they
fall due for a period of at least twelve months from the date of issuance.
Having assessed these factors, the principal risks and other matters discussed
in connection with the viability statement, the Board has determined that
it is appropriate for the financial statements to be prepared on a going
concern basis.
11. Half-year report
The half-year report is available at www.hendersonhighincome.com or in
hard copy from the Corporate Secretary by emailing itsecretariat@janushenderson.com
. An abbreviated version of this half-year report, the 'Update', will
be circulated to shareholders in September 2023.
12. General information
a) Company Status
The Company is a UK domiciled investment trust company with registered
number 02422514.
SEDOL/ISIN number: 0958057
London Stock Exchange (TIDM) code: HHI
Global Intermediary Identification Number (GIIN): JBA08I.99999.SL.826
Legal Entity Identifier (LEI): 213800OEXAGFSF7Y6G11
b) Directors, Corporate Secretary and Registered Office
The Directors of the Company are Jeremy Rigg (Chairman), Jonathan Silver
(Chairman of the Audit & Risk Committee), Zoe King (Senior Independent
Director), Richard Cranfield and Francesca Ecsery. The Corporate Secretary
is Janus Henderson Secretarial Services UK Limited, represented by Samantha
McDonald, ACG. The registered office is 201 Bishopsgate, London EC2M 3AE.
c) 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 Dan Howe
Fund Manager Head of Investment Trusts
Janus Henderson Investors Janus Henderson Investors
Telephone: 020 7818 4443 Telephone: 020 7818 4458
Harriet Hall
Investment Trust PR Manager
Janus Henderson Investors
Telephone: 020 7818 2919
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) are incorporated into, or form part of, this announcement.
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END
IR BUGDCXDBDGXD
(END) Dow Jones Newswires
September 13, 2023 02:00 ET (06:00 GMT)
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