Henderson HighIncome - Half-year Report
13/09/2023 07:00
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RNS Number : 2092M Henderson High Income Trust PLC 13 September 2023
LEGAL ENTITY IDENTIFIER: 213800OEXAGFSF7Y6G11
HENDERSON 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 £213.6m £214.3m
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
Company Total Total
30 June 2023 31 December 2022
% %
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
Company Sector Fair value % Fair value %
as at of portfolio as at of portfolio
30 June 2023 31 December 2022 2022
2023 £'000
£'000
British American Tobacco Consumer Staples 9,543 3.7 11,775 4.5
Unilever Consumer Staples 9,433 3.6 9,628 3.7
Relx (Netherlands) Consumer Discretionary 8,121 3.1 7,102 2.7
3i Financials 6,725 2.6 6,389 2.5
Diageo Consumer 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
Tesco Consumer 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
Rio Tinto Basic 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 Brands Consumer 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
Compass Consumer Discretionary 4,696 1.8 4,091 1.6
Immediate Capital Financials 4,365 1.7 3,299 1.3
Anglo American Basic 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 weight FTSE All-Share 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
EQUITY PORTFOLIO SECTOR EXPOSURE AS AT 30 JUNE 2023
Equity portfolio weight
%
FTSE All-Share 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 return Capital return £'000 Total Revenue Capital return Total
return return return £'000 return return £'000 return
£'000 £'000 £'000 £'000 £'000 £'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
Half-year ended 30 June 2023 (Unaudited) Called up Share premium account Capital redemption reserve Other capital reserves Revenue reserve Total
share capital £'000 £'000 £'000 £'000 £'000
£'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 - - - - (3,342) (3,342)
2022, paid 27 January 2023
First interim dividend (2.575p per share) for the year-ending 31 December - - - - (3,342) (3,342)
2023, paid
28 April 2023
Refund of unclaimed dividends - - - - 14 14
------------ ------------ ------------ ------------ ------------ ------------
At 30 June 2023 6,490 128,827 26,302 42,114 9,838 213,571
======= ======= ======= ======= ======= =======
Half-year ended 30 June 2022 (Unaudited) Called up Share premium account Capital redemption reserve Other capital reserves Revenue reserve Total
share capital £'000 £'000 £'000 £'000 £'000
£'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 - - - - (3,247) (3,247)
2021, paid 28 January 2022
First interim dividend (2.525p per share) for the year-ended 31 December 2022, - - - - (3,255) (3,255)
paid 29 April 2022
Refund of unclaimed dividends - - - - 15 15
------------ ------------ ------------ ------------ ------------ ------------
At 30 June 2022 6,490 128,827 26,302 42,254 9,571 213,444
======= ======= ======= ======= ======= =======
Year-ended 31 December 2022 (Audited) Called up Share premium account Capital redemption reserve Other capital reserves Revenue reserve Total
share capital £'000 £'000 £'000 £'000 £'000
£'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 - - - - (3,247) (3,247)
2021, paid
28 January 2022
First interim dividend (2.525p per share) for the year-ended 31 December 2022, - - - - (3,255) (3,255)
paid 29 April 2022
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
30 June 2023 30 June 2022 31 December 2022
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'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
30 June 2023 30 June 2022 Year-ended
(Unaudited) (Unaudited) 31 December 2022
£'000 £'000 (Audited)
£'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:
Half-year ended Half-year ended Year-ended
30 June 2023 (Unaudited) 30 June 2022 (Unaudited) 31 December 2022
£'000 £'000 (Audited)
£'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 £17,043,000 (30
June 2022: £19,636,000; 31 December 2022: £17,653,000) 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 at fair value through profit or Level 1 Level 2 Level 3 Total
loss at 30 June 2023
£'000 £'000 £'000 £'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 at fair value through profit or Level 1 Level 2 Level 3 Total
loss at 30 June 2022
£'000 £'000 £'000 £'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
Level 1 Level 2 Level 3 Total
Financial assets and financial liabilities at fair value through profit or £'000 £'000 £'000 £'000
loss at 31 December 2022
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
£239,000 (half-year ended 30 June 2022: £175,000; year-ended 31 December
2022: £289,000).
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 £213,571,000 (half-year ended 30 June 2022:
£213,444,000; year ended 31 December 2022: £214,277,000) 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
Cash and cash equivalents Bank loans repayable within one year Other debt repayable after more than one year Total
£'000 £'000 £'000 £'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)
Cash and cash equivalents Bank loans repayable within one year Other debt repayable after more Total
£'000 £'000 than one year £'000
£'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)
Cash and cash equivalents Bank loans repayable within one year Other debt repayable after more Total
£'000 £'000 than one year £'000
£'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
(mailto: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
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