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Henderson High Income Trust plc – Report and Financial Statements for the year ended 31 December 2013 Henderson High Income Trust Henderson High Income Trust plc Report and Financial Statements for the year ended 31 December 2013 Henderson High Income Trust plc is managed by This report is printed on Revive, a paper containing 50% recycled fibre from both pre- and post-consumer waste and 50% FSC certified virgin fibre. Pulps used are elemental chlorine free manufactured at a mill accredited with the ISO 14001 environmental management system. The FSC logo identifies products which contain wood from well managed forests certified in accordance with the rules of the Forest Stewardship Council. HGI9212/2013 Printed by Leycol, London HGI9212/2013 Henderson High Income Trust plc 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. Investment A substantial majority of the Company’s assets is currently invested strategy in ordinary shares of listed companies with the balance in listed fixed interest stocks. The Company invests predominantly in companies listed in the UK and does not expect to invest more than 20% of total assets in non-UK listed companies. The selection process seeks to identify companies with strong balance sheets that are capable of paying dividends. There is a focus on well-managed companies whose qualities may have been temporarily overlooked and which offer potential for capital appreciation over the medium term. The Company has an active policy of using appropriate levels of gearing. Independent The directors, all of whom are considered independent of the board Investment Manager, usually meet at least six times a year to of directors consider investment strategy and monitor performance. Unsolicited approaches Many companies are aware that their shareholders have received unsolicited phone calls or correspondence concerning investment matters. These are typically from overseas based ‘brokers’ who target UK shareholders offering to sell them what often turn out to be worthless or high risk shares in US or UK investments. They can be very persistent and extremely persuasive. Shareholders are therefore advised to be very wary of any unsolicited advice, offers to buy shares at a discount or offers of free company reports. Please note that it is very unlikely that either the Company or the Company’s Registrar, Computershare Investor Services PLC, would make unsolicited telephone calls to shareholders and that any such calls would relate only to official documentation already circulated to shareholders and never in respect of investment ‘advice’. If you are in any doubt about the veracity of an unsolicited approach, please call either the Company Secretary or the Registrar at the numbers provided on page 52. Henderson High Income Trust plc Report and Financial Statements 2013 1 Performance 31 December 31 December Change Per ordinary share 2013 2012 % Summary Net asset value 169.72p 137.32p +23.6 Market price 172.75p 138.25p +25.0 Revenue return 9.12p 8.44p +8.1 1 year 3 years 5 years Total return (with net dividends reinvested) % % % Net asset value (‘NAV’) per ordinary shareN 30.7 61.5 133.8 Market price per ordinary share 31.5 65.6 158.9 Benchmark* 16.8 29.3 85.6 FTSE All-Share Index 20.8 31.0 95.2 Merrill Lynch Sterling Non Gilts Index† 0.8 22.4 47.4 NSee page 49 for explanation of movement in the NAV. * The benchmark is a composite of 80% of the FTSE All-Share Index and 20% of the Merrill Lynch Sterling Non Gilts Index. Source: Morningstar for the AIC. †Source: Datastream, gross dividends reinvested. 2013 2012 Net dividend yield at 31 December % % Henderson High Income Trust plc 4.9 6.0 FTSE All-Share Index† 3.3 3.6 Merrill Lynch Sterling Non Gilts Index† 3.8 3.4 †Source: Datastream. Dividend The next dividend payment to shareholders will be made on 30 April 2014. This will be the first Information interim dividend in respect of the year to 31 December 2014 and will be paid to shareholders and Payment registered on 11 April 2014. The shares will be quoted ex-dividend from 9 April 2014. Dates The Company declared and paid four dividends in respect of the year to 31 December 2013, the first and second of 2.075p each and the third and fourth of 2.125p each, making a total of 8.4p for the year. Details of the dividends paid during the year ended 31 December 2013 are given in the Reconciliation of Movements in Shareholders’ Funds on page 28. The dividends in respect of 2014 are expected to be paid on the following dates: First interim: 30 April 2014 Second interim: 31 July 2014 Third interim: 31 October 2014 Fourth interim: 30 January 2015 2 Henderson High Income Trust plc Report and Financial Statements 2013 Contents * Company Profile Financial Statements 1 Performance Summary, Dividend Information 27 Income Statement and Payment Dates 28 Reconciliation of Movements in Shareholders’ Funds Strategic Report 29 Balance Sheet 3-4 Chairman’s Statement 30 Cash Flow Statement 5-7 Investment Review 31-45 Notes to the Financial Statements 8-9 Investments: Fixed Interest and Equities 10 Classification of investments Auditor’s Report 11-15 Strategic Review 46-48 Independent Auditor’s Report Report of the Directors and Governance Shareholder Information Reports 49 Ten Year Record 16 Directors and Management 49 Explanation of Movement in Net Asset Value 17-18 Report of the Directors (total return) per Ordinary Share 19-23 Corporate Governance Statement 50 General Shareholder Information 24 Statement of Directors’ Responsibilities 51 Glossary of Terms 25-26 Directors’ Remuneration Report 51 A Brief History 52 Directors and other Information *Inside front cover Henderson High Income Trust plc Report and Financial Statements 2013 3 Strategic Report Chairman’s Statement Hugh Twiss, MBE Performance Gearing In my interim statement I suggested that we were entering Gearing is, as I have often reminded shareholders, an a period when in airline parlance the ‘fasten seat belts’ sign important feature of the Company. We utilise it principally would be switched on. In reality there was some turbulence, to enable us to generate additional income, and also capital but actually it turned out to be a very rewarding experience growth over time. With interest rates still lower than the yield with the Company achieving a net asset total return of 30.7% on many good quality equities, there are clearly advantages to for the year, far outstripping the 16.8% total return of our utilising borrowings at the current time. At the year end the benchmark. The credit for this excellent performance, which is gearing was 22.8% which was higher than it had been at the a continuum of what we have seen since the nadir of the same point last year although not quite fully utilising our two market in 2009, belongs to our Portfolio Manager, year borrowing facility. We will continue to keep the level of Alex Crooke, who has been ably assisted by David Smith. gearing under careful consideration. I am delighted that David’s contribution has been recognised by him becoming Co-Portfolio Manager with Alex from the Issue of new shares start of 2014. They will expand in their report on how they As shareholders will be aware, our shares have traded at a achieved this performance, but clearly we have benefited not premium to their net asset value for most of the year, indeed only from our gearing, but also because the general hunt for at the end of the year the share price was at a 1.8% premium. yield has benefited the sort of companies in which we This has been as a result of a steady demand for our shares predominantly invest. This is not to take away from their in the market and, therefore, we have issued 6,633,074 new achievement, as there have been many ‘bear traps’ along the shares in the course of the year to meet this demand. way to be avoided, and they have undoubtedly again justified This has been within the authority granted to the Board by the payment to Henderson Global Investors under our shareholders at the last AGM and is consistent with our policy performance-related fee arrangement. of wishing to see the Company grow. This we believe is to the It is satisfying to be able to report that the Company has benefit of our existing shareholders, as the issuance of shares outperformed its benchmark over one, three and five years. at a premium enhances the NAV and the Company’s fixed This is no mean achievement but also is not a reason for costs are spread over a wider base. In addition, the increased complacency. number of shares improves market liquidity in the shares. We will again be asking shareholders to renew this authority at Dividends the forthcoming AGM. In my interim report I was delighted to be able to report that we were able to increase our third quarterly dividend paid in Regulatory Issues October 2013 to 2.125p per share. It remains our aspiration Shareholders will be aware that a company like ours is subject to increase distributions further as and when we can have to many different regulatory requirements, some which sufficient confidence that such an increase could be emanate from our own UK authorities and others from the sustainable going forward. We will, therefore, continue to European authorities in Brussels. The burden has increased keep the level of our dividend under review as the year unfurls substantially in recent years, as well as creating additional cost and in light of our actual experience and the investment to the Company.

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