Henderson High Income Trust plc Registered as an investment company in England and Wales with registration number 02422514 ## Annual Report 2023 Registered office: 201 Bishopsgate, London EC2M 3AE SEDOL number: 0958057 ## ISIN number: GB0009580571 Henderson London Stock Exchange (TIDM) Code: HHI Global Intermediary Identification Number (GIIN): JBA08I.99999.SL.826 Legal Entity Identifier Number (LEI): 213800OEXAGFSF7Y6G11 ## High Income Telephone: 0800 832 832 Email: support@janushenderson.com ## www.hendersonhighincome.com Trust plc ## Seeking superior ## income generation ## and long-term ## capital growth This report is printed on Revive silk 100% recycled, contains 100% recycled waste and ismanufactured at a mill certified with ISO 14001 environmental management standard. The pulp used in this product is bleached using an Elemental Chlorine Free process (ECF). JHI9212/2023Henderson High Income Trust plc – Annual Report 2023 JHI9212/2023Designed and typeset by 2112 Communications, London. Printed by Paragon, London. Henderson High Income Trust plc Annual Report 2023 Henderson High Income Trust plc Annual Report 2023 ## Corporate Information ### Registered Office Financial Calendar ## Objective | | 201 Bishopsgate | Annual General Meeting Tuesday, 14 May 2024 | | --- | --- | --- | | The Company invests in a prudently | London | First interim dividend payment Friday, 26 April 2024 | | | EC2M 3AE | Second interim dividend payment Friday, 26 July 2024 | diversified selection of both well- Telephone: 020 7818 1818 Third interim dividend payment Friday, 25 October 2024 known and smaller companies to Fourth interim dividend payment Friday, 31 January 2025 Half year results announced September 2024 ### provide investors with a high dividend Service Providers Senior unsecured note interest payment dates 8 July 2024 income stream while also maintaining | | Alternative Investment Fund Manager | 8 January 2025 | | --- | --- | --- | | the prospect of capital growth. | Janus Henderson Fund Management UK Limited | | | | 201 Bishopsgate | Information Sources | London For more information about the Company, visit the website at EC2M 3AE www.hendersonhighincome.com. Corporate Secretary Follow Janus Henderson Investment Trusts on Janus Henderson Secretarial Services UK Limited Twitter, YouTube andFacebook 201 Bishopsgate London EC2M 3AE Telephone: 0800 832 832 Email: support@janushenderson.com ### Investing Depositary and Custodian Shares can be purchased in the market via a stockbroker orthrough share dealing platforms. They can also be held HSBC Bank plc through share plans, ISAs or pensions and links to various 8 Canada Square providers are included on the website. London E14 5HQ Potential investors are reminded that the value of investments and the income from them may go down as well as up and Stockbrokers investors may not receive back the full amount invested. J.P. Morgan Cazenove Limited Taxbenefits may vary as a result of statutory changes and 25 Bank Street their value will depend onindividual circumstances. London E14 5JP ### Nominee Share Code Where notification has been provided in advance, the Company Registrar will arrange for copies of shareholder communications to be Computershare Investor Services PLC provided to the operators of nominee accounts. Nominee The Pavilions investors may attend general meetings and speak at them Bridgwater Road when invited to do so by the Chairman. Bristol BS99 6ZZ Telephone: 0370 707 1039 ### Strategic Report Governance Financial Additional Email: web.queries@computershare.co.uk | Performance Highlights 5 | Board of Directors 35 | Statements | Shareholder | | | --- | --- | --- | --- | --- | | Chairman’s Statement 8 | Corporate Governance | Independent Auditors’ | Information | Investors with share certificates (i.e. not those in a share plan or | | | Report 37 | Report 53 | | ISA) can check their holdings at www.computershare.com. | | Fund Manager’s Report 11 | | | Glossary 80 | | | | Report of the Audit and | Income Statement 59 | | | | Portfolio and | | | Alternative Performance | | Risk Committee 41 | Financial Information 16 | | Statement of Changes | Measures 81 | Independent Auditors | | --- | --- | --- | --- | --- | | | Report of the Management | inEquity 60 | | | | Business Model 22 | | | General Shareholder | PricewaterhouseCoopers LLP | Engagement Managing Risks 25 Statement of Financial Information 83 7 More London Riverside Committee 45 Position 61 Corporate Information 85 London Viability Statement 27 Report of the Nominations Statement of Cash SE1 2RT Key Performance and Remuneration Flows 62 Indicators 28 Committee 46 Notes to the Financial Environmental, Social and Directors’ Remuneration Statements 63 Governance Matters 30 Report 47 Report of the Directors 50 Statement of Directors’ Responsibilities 51 85 ## The Henderson ## High Income ## Story 1 Henderson High Income Trust plc Annual Report 2023 ## What we look for in companies 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. To gain a full understanding of these companies, the stock selection process places emphasis on examining what each company does, its market position and thedynamics of that market. Combining this with analysis of the company’s financial health provides valuable insight into the company’s ability to not only sustain its dividend but grow it in the long-term, a crucial element for generating total returns for shareholders. The stock selection process is broken down into three key component parts: fundamentals, financials and valuation. Fundamentals Financials Valuation Understanding a Analysing its Assessing whether company’s key financial health those qualities are attributes discounted in share prices ### Fundamentals Financials Analysing a company’s fundamentals is the starting point to The second step is to gain a clear understanding of the understanding its qualities and whether its business is robust company’s financial health and its ability to invest for future in the long-term. Emphasis is placed on assessing the growth, sustain profitability and return value to shareholders. company’s strength of industry position, barriers to entry, In particular, focus is given to: senior management and their ability to sustain or improve a ● Sustainability of profits company’s performance. Greater weight is given to long-term ● Robust balance sheets views over short-term considerations andtrends in the market ● Well-invested asset base or sector. ● Strong cash generation The following key attributes are typically looked for: ● Sensible dividend policy ● Robust and understandable business models ● Good earnings visibility ### Valuation ● High barriers to entry Valuation is the final part of analysing a company but ● Market leadership underpins the whole process. Even when companies with ● Strong franchise strong fundamentals and financials are found, their valuations ● also need to be attractive, otherwise capital appreciation may Good Environmental, Social and Governance (ESG) be limited. Various valuation metrics are used, such as price riskmanagement to earnings ratios, to assess whether the qualities we have ● Proven management teams identified in acompany are already discounted in the current shareprice. By applying this disciplined stock selection process, the Company benefits from a well-diversified portfolio of good quality companies in strong financial health that can pay and grow their dividends, but also offer the potential for capital growth over the long-term. 2 Henderson High Income Trust plc Annual Report 2023 # Diversification of income ## Challenges for UK income investors Overall market dividends grew by 5.4% in 2023 on an underlying basis (ex special dividends and at constant currency). The majority of this growth was driven by good dividend increases from large dividend paying sectors such as banks and oil & gas companies. However, this continues to cause a concentration challenge for UK income investors. The top 20 dividend payers in the UK produced 76% of the FTSE 100's income in 2023. This becomes a problem if the dividends of those top 20 companies are unsustainable. The Company deals with this concentration issue by constructing a well-diversified portfolio, making sure that the revenue account is not overly reliant on any one company or sector for income. This materially lowers income concentration for the Company, with those same top 20 companies only contributing around 31% of aggregate income for the Company. ### Concentration of income ![img-0.jpeg](img-0.jpeg) Source: Janus Henderson Investors, Factset and LSEG Datastream ## Utilising Henderson High Income's unique structure ![img-1.jpeg](img-1.jpeg) 1 Computershare UK Dividend Monitor Source: Henderson High Income Trust plc's Annual Reports While maintaining a diversified portfolio is key, the Company can also utilise its unique structure and invest in fixed interest securities to diversify further its income generation. Bond interest paid by companies is usually more sustainable than dividends during times of economic stress, hence having the ability to allocate towards bonds provides a valuable source of differentiated income. The Company also has a number of other ways to diversify its income by utilising its structure: - It can invest 30% of gross assets in overseas markets. - It can invest in listed alternative income investment trusts, such as renewables infrastructure funds. - It can invest a larger proportion in medium sized companies given its size relative to much larger competitors. ## Revenue reserves One of the main advantages of investment trusts is the ability to retain surplus income to create revenue reserves. The Company can add to these reserves in profitable years and pay them out in the leaner years, thereby smoothing the level of their dividend payments when appropriate. The Company was able to utilise its reserves in 2020 and 2021 to continue to pay and grow its own dividend despite the significant dividend cuts and suspensions experienced across the UK market during the pandemic. In 2023 the Company paid dividends totalling 10.35p, growth of 2.0% on 2022, its eleventh consecutive year of dividend growth. The Company fully covered the dividend from earnings with a small surplus carried to revenue reserves, which increased to £8.9 million. With a diversified portfolio and healthy level of revenue reserves, the Company is in a good position going forward. ### Eleven years of consecutive dividend growth ![img-2.jpeg](img-2.jpeg) Source: Janus Henderson Investors, Factset and LSEG Datastream 3 ## Performance ## Highlights 4 Henderson High Income Trust plc Annual Report 2023 ## Strategic Report: Performance Highlights Total return performance to 31December 2023 One year Five years 10 50 9.8 8 40 43.6 8.1 6 30 33.6 31.0 4 20 2 10 0.9 | 0 | | | 0 | | | | --- | --- | --- | --- | --- | --- | | | | 3 | | | 3 | | | Benchmark¹ NAV² Share price | | | Benchmark¹ NAV² Share price | | 4 5 Premium/discount over 5 years to 31December 2023 Dividend yields as at 31December 2023 (%) 4 7 2 6.6 6 0 -2 5 5.2 4.9 -4 4 -6 3.8 3.6 3 -8 2 1 0 7 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 10 Year FTSE ICE BofA Cash Henderson 6 2018 2019 2020 2021 2022 2023 Gilts All-Share Sterling High Income Index Non-Gilt 6 8 Attribution – explanation of movement in net asset value (total return) in 2023 12.0 0.9 2.0 9.8 10.0 -0.4 -0.8 8.1 8.0 0.0 6.0 4.0 (%) 2.0 (%) (%) 0.0 1 Asset Stock Stock Gearing Ongoing Performance Benchmark | (%) | | | | | | 2 | | --- | --- | --- | --- | --- | --- | --- | | | Allocation | Selection – | Selection – | Charges | of Net Asset Value | | | | | Equities | Fixed Income | | | | 1 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 2 Net asset value with debt at fair value per ordinary share total return (including dividends reinvested and excluding transaction costs) 3 Includes dividends reinvested 4 Premium/discount based on net asset value with debt at fair value -10 5 Alternative Performance Measure, see page 82 6 Gross redemption yield -12 7 Cash based on SONIA (Sterling Overnight Index Average) Interest Rate Benchmark 8 Geometric returns -14 A Glossary of Terms and Alternative Performance Measures can be found on page 80 and pages 81 to 82 respectively -16 Sources: Morningstar Direct, Janus Henderson Investors. All data is either as at 31 December 2023 or for the year-ended 31 December 2023 5 Index Henderson High Income Trust plc Annual Report 2023 ## Strategic Report: Performance Highlights (continued) 1,4 | NAV per share | Mid-market price per share | | --- | --- | | 2023169.58p | 2023 156.50p | | 2022 164.24p | 2022 165.25p | | Revenue return per share | Net assets | | 2023 10.39p | 2023 £222.3m | | 2022 10.37p | 2022 £214.3m | 2,4 | Dividend for the year | | Dividend yield | | | --- | --- | --- | --- | | 2023 10.35p | | 2023 6.6% | | | 2022 10.15p | | 2022 6.1% | | | | 3,4 | | 4 | | Ongoing charge for the year | | Gearing | | | 2023 0.86% | | 2023 21.4% | | | 2022 0.84% | | 2022 21.4% | | 1 Net asset value with debt at fair value as published by the Association of Investment Companies (AIC) 2 Based on the dividends paid or announced for the year and the share price at the year-end 3 Calculated using the methodology prescribed by the AIC 4 Alternative Performance Measure, see pages 81 to 82 A Glossary of Terms and Alternative Performance Measures can be found on page 80 and pages 81 to 82 respectively Sources: Morningstar Direct, Janus Henderson Investors. All data is either as at 31 December 2023 or for the year-ended 31 December 2023 6 ## Chairman’s ## Statement 7 Henderson High Income Trust plc Annual Report 2023 # Strategic Report: Chairman's Statement ![img-3.jpeg](img-3.jpeg) Jeremy Rigg ## Performance 2023 was generally a positive year for investment returns. The Company's Net Asset Value (NAV) Total Return was +9.8% compared with the benchmark return of +8.1%, an outperformance of +1.7%. The Company's share price total return was less impressive at +0.9%, with the share price ending the year at a discount to NAV of 7.7% (having started 2023 at a small premium of +0.6%), compared with the average discount for the UK equity income sector of 5.7% at the end of 2023. The year was characterised by considerable volatility within financial markets. Centre stage were elevated inflation levels and correspondingly higher interest rates as policy makers around the globe focused on trying to tame pricing pressure and strong wage settlements. As the year unfolded it became clear that inflation may have peaked and investors began to focus on the likelihood that interest rates could start to fall during 2024. The backdrop of rising geopolitical tensions also contributed to the volatility in markets, not least due to the impact of continuing energy price pressure and firmer global shipping costs. However as 2023 progressed energy prices started to fall significantly which helped inflation forecasts to soften. Against this volatile backdrop, returns from equities were generally superior to fixed interest investments as company profits and dividend payouts remained robust and investors were focused more on the ability of equities to provide greater protection against the impact of inflation. The Company's outperformance during the year of +1.7% versus the benchmark (60% FTSE All-Share Index, 20% ICE BofA Sterling Non-Gifts Index) was mainly due to good equity stock selection and a positive contribution from gearing. ## Dividends The Company's investment objective is to provide investors with a high dividend income stream while also maintaining the prospect of capital growth. As highlighted in my statement in 2022, a period of higher inflation makes this objective even more important for shareholders. The relatively resilient performance of UK companies, which continue to represent the large majority of the Company's investments, in 2023 and their ability to pay out healthy dividends ensured that the Company was able to provide a high level of income to shareholders during the year whilst also enabling a small amount to be added to reserves. At the end of 2023, the Company held approximately £8.9 million in revenue reserves which equates to 6 months of cover over the full year dividend on the enlarged shareholder base (following the combination with Henderson Diversified Income Trust plc, the details of which are below). During 2023 the Board recommended the payment of dividends totalling 10.35 pence per share, an increase of 2.0% over the payment in 2022. This increase represented the 11th consecutive year of dividend growth from the Company. The Board spends a considerable amount of time throughout the year focusing on the prospects for future income levels and the impact on dividends, based on detailed forecasts which the Company's Fund Manager regularly updates. The Board remains confident that the Company can continue to deliver a high level of income to shareholders. ## Gearing The Company's policy on gearing is provided on page 22 of this Annual Report. With the cost of borrowing increasing sharply in 2023, the Board regularly reviewed the level of gearing with the Fund Manager during the course of the year to evaluate whether it remained appropriate and at a level commensurate with achieving targeted income levels. During 2023 overall borrowings and gearing remained consistent with 2022. As a percentage of net assets, gearing finished the year at 21.4%, in line with the level at the start of the year. Overall asset allocation changed little during the year with the Company continuing to favour equities over fixed interest investments. Compared with its benchmark of 80% equities/20% bonds, the Company had a weighting of around 89% in equities and 11% in bonds at the year end. In December 2023 the Company renewed its bank borrowings, agreeing a committed loan facility of £45 million with BNP Paribas, London Branch. This facility included the option to increase borrowings by a further £25 million, up to £70 million, of which an extra £15 million was utilised in January 2024 following the combination with Henderson Diversified Income Trust plc. The facility has a duration of 12 months and the terms on which the facility was agreed were competitive. ## Combination with Henderson Diversified Income Trust plc In October the Board announced that it had agreed terms with the Board of Henderson Diversified Income Trust plc (HDIV) in respect of a proposed combination of HDIV with the Company, which if approved by each company's shareholders, would be effected by way of a Scheme of reconstruction and winding up of HDIV under Section 110 of the Insolvency Act 1986. 8 Henderson High Income Trust plc Annual Report 2023 ## Strategic Report: Chairman’s Statement (continued) I am very pleased to say that the combination was approved ### Prospects and Outlook by both companies’ shareholders and as a result investors The key drivers for investment markets in 2024 will be the path representing approximately 55% of HDIV’s shares became of global interest rates in response to the level of inflation and shareholders in the Company in January 2024. This meant the outlook for corporate profits as companies respond to that the Company was able to issue some £72 million of new rising costs. Generally, global economic activity remains shares which will improve the liquidity and marketability in the relatively robust against the backdrop of higher borrowing Company’s shares and also help to spread the Company’s costs, with overall levels of corporate profitability and fixed costs across a larger shareholder base which is in the consumer demand resilient, albeit China’s recovery from the interests of all our shareholders. pandemic continues to disappoint. Investors believe that On behalf of the Board, I would like to extend a warm inflation will soften appreciably by the middle part of the year, welcome to new shareholders. driven not least by lower energy costs, enabling policy makers to begin reducing interest rates and helping to achieve a relatively soft landing for global economies. Policy makers are, ### Responsible Investment however, continuing to caution against a rapid reduction in Responsible investing relates to how environmental, social interest rates as service sector inflation remains too high in the and corporate governance (ESG) factors impact a company West, and increasing geopolitical tensions may lead to over the long term. Analysis of the resilience of a business persistently higher shipping costs. In addition, there are andits profits has always been at the core of the Company’s upcoming electoral issues to be mindful of, particularly in the investment strategy, and ESG factors are fully integrated into US and of course the UK. the investment processes employed by the Fund Manager. Your Company holds the large majority of its investments in The Board believes that voting the Company’s shareholdings UK companies. The relative valuation of the UK equity market at general meetings is essential to good corporate continues to look attractive when set against other global stewardship and is an effective means of expressing its views equity markets and both international and domestic investors on the policies and practices of its investee companies. Voting have by historic standards a very low exposure to UK assets decisions reflect the provisions of Janus Henderson’s ESG with the scope for that weighting to increase. Within the Corporate Statement and ESG Investment Principles which portfolio, there is a good balance between larger companies are publicly available at www.janushenderson.com and with more international exposure and attractively valued records the high standards of corporate behaviour that are smaller and medium sized UK companies which stand to expected. Ultimately, however, our Fund Manager makes the benefit if the outlook for UK activity starts to improve. As ever final decision after consultation with the Board, as necessary. the Board and the Fund Manager remain focused on the Janus Henderson will actively engage with those companies Company’s primary investment objective of continuing to that fall below such expectations to encourage improvement deliver a high level of income for shareholders while also over time. The final sanction is the divestment of those targeting longer term capital growth. holdings that fail to make an acceptable transition and adapt sufficiently. The Board monitors the process by reviewing a report on the Company’s voting pattern on an annual basis. | For an overview on how Janus Henderson engaged with | Jeremy Rigg | | --- | --- | | companies in which the Company is invested, please refer | Chairman | | topages 30 to 32 of this Annual Report. | 27 March 2024 | ### AGM We look forward to seeing as many of our shareholders aspossible at our AGM which will be held at 12 noon on Tuesday, 14 May 2024 at the offices of Janus Henderson at201 Bishopsgate, London EC2M 3AE. David Smith, the Company’s Fund Manager, will give a presentation on the Company’s portfolio and performance, and you will, as usual, have the opportunity to talk to the Board, David and other Janus Henderson representatives. Wevery much welcome your comments and questions at the AGM and we would encourage those of you who are unable to attend in person to use your proxy votes and to watch the AGM live by logging onto www.janushenderson.com/trustslive. 9 ## Fund ## Manager’s ## Report 10 Henderson High Income Trust plc Annual Report 2023 # Strategic Report: Fund Manager's Report ![img-4.jpeg](img-4.jpeg) David Smith Fund Manager ## Market review The UK equity market produced positive returns during the year, with the FTSE All-Share Index up by 7.9% on a total return basis. Falling inflation and a pause in interest rate hikes by central banks, especially the US, UK and Europe, were the main driving forces for equity returns in 2023. Inflation in the UK (as measured by CPI), which started the year at 9.2%, fell to 4.2% by December, benefitting from lower energy prices, the loosening of supply chains and fading food price inflation. The Bank of England increased interest rates five times in the year to reach 5.25% by August, before pausing. The UK economy weakened during the year and slipped into a technical recession in the fourth quarter, albeit GDP growth was only modestly negative. UK inflation eased during the year while the Bank of England hiked interest rates to 5.25% before pausing ![img-5.jpeg](img-5.jpeg) Source: LSEG DataStream as at 31 December 2023 The UK market performance was fairly broad based with the mid-cap FTSE 250 (+8.0%) marginally outperforming the larger-cap FTSE 100 (+7.9%). However, the vast majority of performance from medium sized companies came in the fourth quarter as markets reacted positively to inflation falling more than expected in October. Despite the recent rebound in that area of the market, it has still significantly underperformed mega cap companies (the largest 20 companies in the UK) over the past two years. Cyclical sectors performed best over the year with financials, industrials and consumer discretionary outperforming, while defensive sectors such as health care, consumer staples and telecommunications lagged. Despite the fall in the oil price during the year, due to concerns over Chinese demand given its weakening economy, the oil & gas sector outperformed. The mining sector underperformed in contrast, despite iron ore and copper prices rising, as production issues and cost inflation weighed on sector profits. A year end rally saw cyclical sectors outperform defensive sectors ![img-6.jpeg](img-6.jpeg) Sector performance based on MSCI UK sector indices. Refused to 100 as at 31 December 2022 Source: LSEG DataStream as at 31 December 2023 Mid-caps have significantly underperformed mega-caps over last 2 years ![img-7.jpeg](img-7.jpeg) Returns shown on a total return basis and released to 100 as at 31 December 2021 Source: LSEG DataStream, Bloomberg, Janus Henderson analysis as at 31 December 2023 Bonds were volatile during the year with yields initially rising in the first half of the year to reflect stubbornly high inflation and increased interest rates. The UK 10-year gilt yield rose from 3.7% at the start of the year to reach a peak of 4.7% in August. Despite the hawkish narrative from central bankers globally, bond yields fell dramatically in the fourth quarter as the market started to price in rate cuts in early 2024 given that inflation began to decline below expectations, particularly in North America. The 10-year gilt yield finished the year at 3.5%, 11 Henderson High Income Trust plc Annual Report 2023 # Strategic Report: Fund Manager's Report (continued) albeit it has since risen as markets have had to reassess their estimates of when the first rate cut may come. Both government and corporate bonds produced positive returns for the year after negative returns in the previous two years. ## Bond yields were volatile during the year and fell sharply in the 4th quarter on lower inflation ![img-8.jpeg](img-8.jpeg) Source: LSEG DataStream as at 31 December 2023 ## Performance review The Company's NAV (debt at fair value) returned 9.8% on a total return basis, outperforming the benchmark's gain of 8.1%. Good stock selection within the equity portfolio drove the outperformance, while gearing also contributed positively. The equity portfolio gained 10.4% on a total return basis during the year, outperforming the FTSE All-Share Index return of 7.9%. The portfolio's holdings in financials 3i and Intermediate Capital were positive for performance. Private equity group 3i benefitted from its portfolio holding in Action, the European discount retailer, which delivered strong profit growth underpinned by its value proposition and its store roll out strategy. Despite a more difficult macro environment, alternative asset manager Intermediate Capital continued to attract inflows with the company delivering its 4-year fundraising target a year ahead of expectations. The portfolio's positions in other consumer stocks that offer value to customers also performed well. B&M European Value Retail saw good growth in volumes benefitting from more cost-conscious consumers given the "cost of living" crisis. Tesco also outperformed with the company's drive to become the cheapest full-line grocer producing market share gains, good profit growth and attractive cash flow. Elsewhere, holdings in Hilton Food Group and RELX also aided performance. Hilton Food Group reported resilient trading in its core meat division, while management action to improve its troubled seafood business showed progress with the business back in profit by the end of the year. RELX announced strong organic growth ahead of its historic average, benefitting from its continued investment in technology tools and analytics. On the negative side the portfolio's holdings in British American Tobacco, Anglo American and NatWest detracted from returns. British American Tobacco announced a payout of $635 million to resolve investigations by the US Department of Justice into the company's historical business activities in North Korea. It also disappointed the market with weaker trading, the suspension of the share buyback and a non-cash impairment charge of £25 billion relating to the Reynolds acquisition in 2017. Anglo American shares were impacted by falling PGM (Platinum Group Metals) prices, while the announced reduction in production guidance towards the end of the year also disappointed investors. Despite higher interest rates, NatWest reported weaker margins given increased competition in savings and mortgage products. The fixed income portfolio rose 4.6% on a total return basis during the year, but this lagged the 8.6% return from the ICE BofA Sterling Non-Gifts Index. The portfolio's exposure to short duration government bonds was detrimental to relative performance given the underperformance of gifts relative to UK corporate bonds. The weakness in the US dollar also created a headwind to relative performance for the US bond holdings. Holdings in high yield bonds, such as Direct Line, Bupa, CenterParcs and Virgin Media, were positive for performance given the more resilient UK economy saw credit spreads tighten during the year. ## Income review On a headline basis UK market dividends fell 3.7% (according to the Computershare UK Dividend Monitor), however, this was driven by a decline in special dividends versus 2022, and the strength of sterling during the year given the number of large companies that declare their dividends in dollars. On an underlying dividend basis (ex special dividends), aggregate UK market dividends grew 5.4% at constant currency. This was primarily due to good growth in dividends from banks and oil & gas companies. ## UK market dividends grew during 2023 on an underlying basis ![img-9.jpeg](img-9.jpeg) Source: Computershare UK Dividend monitor as at 31 December 2023 12 Henderson High Income Trust plc Annual Report 2023 ## Strategic Report: Fund Manager's Report (continued) The income return for the Company in 2023 marginally increased to 10.39p per share, from 10.33p in 2022. Despite income from underlying dividends in the equity portfolio growing 6.8% in the year, there were a number of headwinds which offset this. Special dividends were significantly down from the prior year with only £241,000 earned by the Company versus £1.1 million in 2022. Given the rise in interest rates during the period, the Company's interest costs charged to income from its revolving credit facility also increased, although income from the bond portfolio also rose given the higher yields available which helped dampen this impact. During the year the Board declared a full year dividend of 10.35p which was fully covered by earnings with £128,000 being added to revenue reserves. This was an increase of 2.0% over the dividend in 2022 (10.15p) and represents the eleventh consecutive year of dividend growth, maintaining the Company's status as an AIC Next Generation Dividend Hero. The dividend has grown at a compound annual growth rate of 2.0% over those 11 years. Revenue reserves as at 31 December 2023 were £8.9 million. ### Portfolio Activity As at the end of the year gearing was 21.4%, in line with the level as at the end of 2022. A net £4.4 million was added to the bond portfolio taking advantage of the move higher in yields. New positions were initiated in both investment grade and high yield bonds but in typically higher quality, non-cyclical businesses such as Electricite De France (EDF) (European utility), Allwyn Entertainment (European lottery operator) and Banjay Entertainment (TV content creator). In the middle of the year, some of the lowest yielding investment grade bonds in the portfolio were sold, where credit spreads were particularly tight, and reinvested in short dated government bonds, both a UK gift and a US treasury bond. The bond portfolio represented 12.3% and 14.9% of gross and net assets respectively as at the end of December. New positions initiated in the equity portfolio included DCC, Conduit Re and Engie. DCC is an international sales, marketing and distribution company operating in the LPG, oil, technology and health care sectors. It is a resilient business with strong free cash flow, high returns and a robust balance sheet which should support further accretive bolt on acquisitions. Engie is a French integrated utility and is a diversified business involved in the generation, distribution and supply of energy in Europe and Latin America. The company has a credible business plan with the build out of its renewable energy project pipeline likely to lead to good earnings growth. Conduit Re is a specialist property and casualty reinsurer with a diversified portfolio of reinsurance risks. Given the capacity that has come out of the reinsurance market after a number of years of large losses, the market is entering a period of strong premium rate rises which should underpin high returns over the medium term. The valuation is attractive with the company trading at a discount to its net asset value. In the second half of the year we started to position the equity portfolio for a cyclical recovery, taking advantage of attractive valuations in more domestic and cyclical businesses on the assumption that interest rates were near peak levels for this cycle. New holdings were initiated in Genuit, Taylor Wimpey and British Land. Genuit is the UK's leading provider of plastic piping systems for residential, commercial and infrastructure sectors. The company is exposed to a number of structural tailwinds enforced by government regulation while new management are restructuring the business to drive cost efficiencies and higher margins over the longer term. Although the outlook for the UK housing market is uncertain, we believed this was already discounted with Taylor Wimpey's share trading at a discount to its book value. The company has a very strong balance sheet and with mortgage rates starting to fall, transaction volumes should start to recover. British Land is a diversified UK commercial real estate company with exposure to London office campuses and wider UK retail exposure. After a number of years of falling prices, we believe that property values have now troughed, especially in retail, while the company is also experiencing a return of rental growth. The valuation is attractive with the shares trading at a significant discount to its net asset value. During the year there was a general trend to lower the Company's exposure to overseas stocks, recognising the relative attractiveness of valuations in the UK market. Holdings in McDonalds and Deutsche Post were sold after a period of outperformance and where we believed the valuations had reached a full level. Also the position in Scandinavian bank Nordea was exited given the fears we had over the health of economies in the region and its exposure to commercial real estate. Elsewhere the holdings in Sage Group, United Utilities and Vistry were also sold. Accounting software company Sage Group had performed well, with the valuation fully discounting a continuation of the company's strong organic growth, which could come under pressure from a slowing macro-economic environment. We believe the next regulatory review period could be difficult for United Utilities given the significant investment needed in waste water infrastructure at a time when there is increased scrutiny on consumer bills, debt levels and dividend payments by the sector, especially with a general election likely this year, which could weigh on the share price. The Company sold its holding in housebuilder Vistry after a change in strategy and capital allocation policy. While we agreed with the change in strategy to focus solely on its Partnership division, which builds affordable housing on a contracted basis, we disagreed with the company's decision to suspend the dividend in favour of buying back shares. 13 Henderson High Income Trust plc Annual Report 2023 ## Strategic Report: Fund Manager’s Report (continued) ### Outlook The UK market is attractively valued Over the past two years, global market returns, both equity and bonds, have been shaped by inflation and the sharp rise 22 in interest rates. Now that inflation is falling, the pressure on central banks to keep monetary policy tight is easing which 20 suggests rates could be cut over the next 12months. While 18 the impact of the significant rise in interest rates on economic growth needs to be carefully watched, consumer borrowings 16 are historically low, corporate balance sheets are robust and 14 the banking sector is well capitalised. With wage growth also 12 likely to outstrip inflation this year, the outlook for the UK economy could be better than current low expectations, albeit 10 still below trend. 8 6 2002 2006 20101998 2018 20222014 Real wage growth likely to be positive in 2024 Price Earnings Ratio based on 12 month forward earnings consensus Source: LSEG DataStream as at 31 December 2023 6 While a more subdued economic environment, along with 4 higher interest rates and higher costs, is likely to be a headwind for earnings growth, equity valuations in the UK are 2 attractive both versus their own history and relative to global equity markets and we have continued to see overseas buyers make approaches to quoted UK companies. Although 0 one has to be mindful of geopolitical risks, we remain cautiously optimistic that equities can make positive progress over the medium term. As ever the focus remains on finding good quality businesses at a compelling valuation that can pay and grow an attractive dividend. Jul 21 Jan 22 Jul 22Jan 21 Jul 23Jan 23 Real wage growth Chart shows wage growth adjusted for inflation Source: ONS, LSEG DataStream, Janus Henderson Analysis as at 31December 2023 David Smith Similar to the UK, global economic growth is likely to be better Fund Manager this year than expectations a year ago, given that the US 27 March 2024 economy has proved more resilient. Offsetting this has been China, where economic growth has disappointed despite the government introducing stimulus measures. The US economy should avoid recession this year given manufacturing lead indicators are now recovering and unemployment, albeit rising, is still at low levels. 24 8 -2 -4 14 Jan 24 estimates ## Portfolio and ## Financial ## Information 15 Henderson High Income Trust plc Annual Report 2023 ## Strategic Report: Investment Portfolio ### Investments: Fixed Interest Investments: Equities (including ### convertibles and investment funds) | | | Total | | | Total | | --- | --- | --- | --- | --- | --- | | | 31December | | | 31December | | | | | 2023 | | | 2023 | | PREFERENCE SHARES | | £’000 | ENERGY | | £’000 | | General Accident 8.875% 1,036 | | | Oil, Gas and Coal | | | | Middlefield Canadian Income 7% 1,438 | | | BP 6,399 | | | | National Westminster Bank 9% 319 | | | Shell 6,310 | | | | Nationwide Building Society 10.25% 1,677 | | | Woodside (Australia) 2,278 | | | | Total Preference Shares 4,470 | | | Total Energy 14,987 | | | | OTHER FIXED INTEREST | | | BASIC MATERIALS | | | | Allwyn Entertainment 7.25% 2030 1,046 | | | Chemicals | | | | Amazon 4.8% 2034 (USA) 1,095 | | | Johnson Matthey 2,693 | | | | Anheuser-Busch 4% 2025 496 | | | Victrex 2,000 | | | | Anheuser-Busch 4.75% 2029 (USA) 877 | | | Industrial Metals and Mining | | | | AXA 5.453% Variable Perpetual 838 | | | Anglo American 3,992 | | | | B&M European Value Retail 8.125% 2030 1,062 | | | Rio Tinto 8,025 | | | | Banijay Entertainment 7% 2029 (France) 1,141 | | | Total Basic Materials 16,710 | | | Broadcom 4.15% 2030 (USA) 239 | Broadcom 4.926% 2037 (USA) 784 | INDUSTRIALS | | --- | --- | | Bupa Finance 4.125% 2035 421 | Construction and Materials | | Bupa Finance 5% 2026 344 | Genuit 2,149 | | Centene Corporation 4.625% 2029 (USA) 677 | Electronic and Electrical Equipment | | Charter Communications 5.05% 2029 (USA) 777 | Spectris 2,680 | | CPUK Finance 4.875% 2025 454 | General Industrials | | Direct Line Insurance 4.75% Variable Perpetual 381 | Bunzl 3,587 | | Électricité De France 6.25% 2028 955 | Industrial Engineering | | Gartner 3.75% 2030 (USA) 1,526 | Vesuvius 2,498 | | GLP 5.3% 2029 (USA) 623 | Industrial Support Services | | Iron Mountain 4.5% 2031 (USA) 665 | DCC 3,607 | | MSCI 3.875% 2031 (USA) 674 | PageGroup 3,658 | | Service Corp Intl 4.625% 2027 (USA) 1,271 | Total Industrials 18,179 | UK Treasury 5% 2025 4,943 | USA Treasury Bonds 7.5% 2024 (USA) 4,904 | CONSUMER DISCRETIONARY | | --- | --- | | VICI Properties 4.95% 2030 (USA) 380 | Consumer Services | | Virgin Media 4.125% 2030 1,472 | Compass 4,579 | | Ziggo 4.875% 2030 (USA) 699 | Household Goods and Home Construction | | Total Other Fixed Interest 28,744 | Taylor Wimpey 3,573 | Media TOTAL FIXED INTEREST 33,214 RELX (Netherlands) 8,221 Personal Goods Burberry Group 3,222 Retailers B&M European Value Retail 2,668 Next 3,588 Travel and Leisure Mobico 1,566 Whitbread 2,927 Total Consumer Discretionary 30,344 16 Henderson High Income Trust plc Annual Report 2023 ## Strategic Report: Investment Portfolio (continued) ### Investments: Equities (including ### convertibles and investment funds) | | | Total | | | Total | | --- | --- | --- | --- | --- | --- | | | 31December | | | 31December | | | | | 2023 | | | 2023 | | HEALTHCARE | | £’000 | FINANCIALS | | £’000 | | Pharmaceuticals and Biotechnology | | | Banks | | | | AstraZeneca 4,584 | | | HSBC 7,737 | | | | GlaxoSmithKline 3,306 | | | Lloyds Banking 3,958 | | | | Sanofi (France) 3,032 | | | NatWest 3,026 | | | | Total Healthcare 10,922 | | | Nonlife Insurance | | | ASR Nederland (Netherlands) 2,320 | CONSUMER STAPLES | Conduit Re 2,721 | | --- | --- | | Beverages | Sabre Insurance 1,612 | | Britvic 4,282 | Life Insurance | | Coca-Cola HBC 2,493 | Chesnara 2,798 | | Diageo 4,940 | Phoenix 5,379 | | Food Producers | Investment Banking and Brokerage Services | | Cranswick 3,911 | 3i 5,602 | | Hilton Food Group 4,406 | Ashmore 3,534 | | Personal Care, Drug and Grocery Stores | Intermediate Capital 5,323 | | Tesco 5,374 | M&G 5,085 | | Unilever 8,747 | Schroders 2,497 | | Tobacco | St. James’s Place 1,603 | | British American Tobacco 9,545 | Finance and Credit Services | | Imperial Brands 5,927 | Paragon Banking Group 3,046 | | Total Consumer Staples 49,625 | Closed End Investments | Blackstone/GSO Loan Funding (Jersey) 1,629 | UTILITIES | Greencoat UK Wind 2,632 | | --- | --- | | Electricity | Tufton Oceanic Assets 1,807 | | SSE 3,620 | Total Financials 62,309 | Gas, Water and Multiutilities | E.ON (Germany) 2,780 | REAL ESTATE | | --- | --- | | Engie (France) 2,843 | Real Estate Investment Trusts | | National Grid 5,407 | Big Yellow 3,764 | | Severn Trent 4,243 | British Land 2,361 | | Total Utilities 18,893 | Land Securities 3,617 | Total Real Estate 9,742 TECHNOLOGY Software and Computer Services Moneysupermarket.com 2,672 Technology Hardware and Equipment Texas Instruments (USA) 2,410 Total Technology 5,082 TOTAL EQUITIES 236,793 TOTAL 270,007 17 Henderson High Income Trust plc Annual Report 2023 ## Strategic Report: Investment Portfolio (continued) ### Percentage Breakdown of Investments by Sector | | | Total | | | Total | | | Total | | | Total | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 31December | | | 31December | | | 31December | | | 31December | | | | | 2023 | | | 2022 | | | 2023 | | | 2022 | | FIXED INTEREST | | | % | | % | FIXED INTEREST | | | % | | % | | Preference shares 1.7 1.8 | | | | | | Utilities | | | | | | | Other fixed interest 10.6 9.4 | | | | | | Electricity 1.3 1.8 | | | | | | | Total Fixed Interest 12.3 11.2 | | | | | | Gas, water and multiutilities 5.7 3.8 | | | | | | Total Utilities 7.0 5.6 EQUITIES | Energy | Financials | | --- | --- | | Oil, gas and coal 5.6 5.6 | Banks 5.5 7.3 | | Total Energy 5.6 5.6 | Closed end investments 2.3 2.3 | Finance and credit services 1.1 1.1 Basic Materials Investment banking and brokerage services 8.7 7.0 Chemicals 1.7 1.6 Life insurance 3.0 2.5 Industrial metals and mining 4.5 5.7 Nonlife insurance 2.5 2.6 Total Basic Materials 6.2 7.3 Total Financials 23.1 22.8 Industrials Technology Construction and materials 0.8 – Software and computer services 1.0 1.2 Electronic and electrical equipment 1.0 0.8 Technology hardware and equipment 0.9 0.9 General industrials 1.3 1.2 Total Technology 1.9 2.1 Industrial engineering 0.9 0.8 Industrial support services 2.7 1.2 Real Estate Industrial transportation – 0.9 Real estate investment trusts 3.6 2.5 Total Industrials 6.7 4.9 Total Real Estate 3.6 2.5 Consumer Discretionary TOTAL INVESTMENTS 100.0 100.0 Consumer services 1.7 1.6 Household goods and home construction 1.3 1.6 Media 3.0 2.7 Distribution of the UK equity portfolio holdings Personal goods 1.2 1.4 at31December Retailers 2.3 2.0 Travel and leisure 1.7 2.6 2 0 2 3 | Total Consumer Discretionary 11.2 11.9 | 2 | | | --- | --- | --- | | | 0 2 | | | | 2 | 2023 2022 | % % Healthcare Large Companies: 65.6 68.5 Pharmaceuticals and Medium-sized Companies: 30.1 26.6 biotechnology 4.0 4.9 Small Companies: 4.3 4.9 Total Healthcare 4.0 4.9 Consumer Staples Beverages 4.4 5.1 Large companies = Market Cap of >£5bn Food producers 3.0 3.5 Medium-sized companies = Market Cap of <£5bn and >£500m Personal care, drug and Small companies = Market Cap of <£500m Source: Janus Henderson grocery stores 5.2 5.8 Tobacco 5.8 6.8 Total Consumer Staples 18.4 21.2 18 Henderson High Income Trust plc Annual Report 2023 # Strategic Report: Portfolio Information ## Sector Exposure at 31 December Excluding cash | Sector | 2023 £'000 | 2023 % of portfolio | 2022 £'000 | 2022 % of portfolio | | --- | --- | --- | --- | --- | | Preference shares | 4,470 | 1.7 | 4,585 | 1.8 | | Other fixed interest | 28,744 | 10.6 | 24,491 | 9.4 | | **Total Fixed Interest** | **33,214** | **12.3** | **29,076** | **11.2** | | Financials | 62,309 | 23.1 | 59,345 | 22.8 | | Consumer Staples | 49,625 | 18.4 | 55,213 | 21.2 | | Consumer Discretionary | 30,344 | 11.2 | 30,933 | 11.9 | | Utilities | 18,893 | 7.0 | 14,541 | 5.6 | | Industrials | 18,179 | 6.7 | 12,667 | 4.9 | | Basic Materials | 16,710 | 6.2 | 19,050 | 7.3 | | Energy | 14,987 | 5.6 | 14,492 | 5.6 | | Healthcare | 10,922 | 4.0 | 12,765 | 4.9 | | Real Estate | 9,742 | 3.6 | 6,438 | 2.5 | | Technology | 5,082 | 1.9 | 5,533 | 2.1 | | **Total Equities** | **236,793** | **87.7** | **230,977** | **88.8** | | **Total** | **270,007** | **100.0** | **260,053** | **100.0** | ## Equity Portfolio Sector Weightings at 31 December 2023 ![img-10.jpeg](img-10.jpeg) ## Ten Largest Investments at 31 December | Position | Company | Sector | 2023 £'000 | 2023 % of portfolio | 2022 £'000 | 2022 % of portfolio | | --- | --- | --- | --- | --- | --- | --- | | 1 | British American Tobacco | Consumer Staples | 9,545 | 3.5 | 11,775 | 4.5 | | 2 | Unilever | Consumer Staples | 8,747 | 3.2 | 9,628 | 3.7 | | 3 | RELX (Netherlands) | Consumer Discretionary | 8,221 | 3.0 | 7,102 | 2.7 | | 4 | Rio Tinto | Basic Materials | 8,025 | 3.0 | 6,034 | 2.3 | | 5 | HSBC | Financials | 7,737 | 2.9 | 3,943 | 1.5 | | 6 | BP | Energy | 6,399 | 2.4 | 6,114 | 2.4 | | 7 | Shell | Energy | 6,310 | 2.3 | 4,845 | 1.9 | | 8 | Imperial Brands | Consumer Staples | 5,927 | 2.2 | 5,984 | 2.3 | | 9 | 3i | Financials | 5,602 | 2.1 | 6,389 | 2.5 | | 10 | National Grid | Utilities | 5,407 | 2.0 | 4,488 | 1.7 | | **Total** | | | **71,920** | **26.6** | **66,302** | **25.5** | 19 Henderson High Income Trust plc Annual Report 2023 # Strategic Report: Historical Performance and Financial Information ## Total Return Performance to 31 December | | 1 year % | 3 years % | 5 years % | 10 years % | | --- | --- | --- | --- | --- | | NAV^{1} | +9.8 | +29.1 | +43.6 | +74.3 | | Share Price^{2} | +0.9 | +27.7 | +33.6 | +58.9 | | Benchmark^{3} | +8.1 | +19.2 | +31.0 | +62.0 | | ICE ButA Sterling Non-Gifts Index | +8.6 | -13.4 | +2.4 | +31.6 | | FTSE All-Share Index | +7.9 | +28.1 | +37.7 | +68.2 | ## Total Return Performance over 10 years to 31 December 2023 ![img-11.jpeg](img-11.jpeg) ## Financial Information as at 31 December | | Net assets £m | NAV per ordinary share^{4} p | Mid-market price per ordinary share p | Dividends per ordinary share p | | --- | --- | --- | --- | --- | | 2014 | 189.0 | 171.4 | 177.9 | 8.60 | | 2015 | 197.1 | 175.3 | 180.5 | 8.90 | | 2016 | 207.7 | 181.3 | 183.6 | 9.15 | | 2017 | 257.2 | 195.7 | 190.0 | 9.40 | | 2018 | 210.8 | 159.5 | 159.5 | 9.60 | | 2019 | 251.1 | 189.8 | 191.8 | 9.80 | | 2020 | 211.4 | 157.3 | 147.0 | 9.90 | | 2021 | 236.2 | 177.9 | 177.5 | 9.95 | | 2022 | 214.3 | 164.2 | 165.3 | 10.15 | | **2023** | **222.3** | **169.6** | **156.5** | **10.35** | 1 Net asset value with debt at fair value total return (including dividends reinvested and excluding transaction costs) 2 Includes dividends reinvested 3 A composite of 80% of the FTSE All-Share Index (total return) and 20% of the ICE ButA Sterling Non-Gifts Index (total return) rebalanced annually 4 Based on net assets with debt at fair value as published by the AIC Source: Janus Henderson, Morningstar Direct and LSEG Datastream 20 ## Business Model 21 Henderson High Income Trust plc Annual Report 2023 # Strategic Report: Business Model ## Purpose and Strategy The Company's purpose is to deliver consistently to shareholders a high level of income on a regular basis while also targeting capital growth over the longer term. This purpose is fulfilled by achieving the investment objective and applying the investment policy. The Board has appointed Janus Henderson Investors ("the Manager") to manage the investment strategy within the parameters determined by the Board and approved by shareholders. ## 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. ## Investment Policy In normal circumstances the Company will invest up to 80% of its gross assets in equities and up to 20% of its gross assets in fixed income (in companies of any size that are either listed in, registered in, or whose principal business is in the UK). Within these limits a maximum of 30% of gross assets may be invested outside of the UK. No single investment will exceed 15% of total gross assets at the time of investment and no more than 15% of gross assets may be invested in other listed investment companies (including investment trusts) or collective investment schemes. The Company may from time to time use financial instruments known as derivatives for the purpose of efficient portfolio management or to generate additional income while maintaining a level of risk consistent with the risk profile of the Company. ## Investment Selection 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. ## Gearing¹ The Company has an active policy of using appropriate levels of gearing, both in the form of bank and longer-term borrowings, with the objective of enhancing income returns and also achieving capital growth over time. A portion of gearing is usually employed with respect to the Company's fixed interest securities to generate additional income. The Company can borrow up to 40% of gross assets. The drawdown of floating rate borrowings can be in non-sterling currencies, provided that these borrowings do not exceed the market value of non-sterling assets. Gearing as at 31 December 2023 was 21.4% (2022: 21.4%). ¹ Please refer to the Alternative Performance Measures on page 81 ## Company Structure The Company operates as an investment company with a Board of Directors who appoint specialist third-party service providers to deliver the operations of the Company. Their performance is monitored and challenged by the Board who retain oversight of the Company's operations. The Board is comprised entirely of non-executive directors accountable to shareholders, who have the ability to remove a director from office where they deem it to be in the interests of the Company. The framework of delegation provides a cost-effective mechanism for achieving the Company's objectives under section 1158/9 of the Corporation Tax Act 2010 ("c.1158/9"). The closed-end nature of the Company enables the Fund Manager to take a longer-term view on investments. It also supports a fully invested portfolio as the Company does not have to maintain or create sufficient cash balances to satisfy investor redemptions. Investment trusts have two significant advantages over other investment fund structures: firstly, the ability to pay dividends out of revenue reserves to support the provision of income to shareholders, as necessary, and secondly, the ability to borrow to increase potential returns for shareholders. ## Income The investment objective underpins the Company's dividend policy, which is to pay quarterly interim dividends from current revenue and add to the revenue reserve where possible each year. The purpose of this reserve is to enable the Company to support dividend payments in difficult market conditions. When deciding on whether to pay each quarterly interim dividend, the Board has regard to a variety of factors, including current and forecast levels of income (including any special dividends received) and the historic dividend schedule. The Board also considers a range of stress tests which forecast revenue under different scenarios in order to form a view on the sustainability of the Company's dividends. ## Borrowings During the year under review, the Company had a committed loan facility of £45 million with The Bank of Nova Scotia, London Branch. This facility matured on 20 December 2023 and on that date the Company put in place an unsecured loan facility of £45 million with BNP Paribas, London Branch to replace the previous facility. This facility has an accordion of £25 million allowing the Company to borrow up to £70 million. As part of the combination with Henderson Diversified Income Trust plc, the facility was drawn down by approximately £60 million in January 2024. The Company also has a 18-year £20 million fixed rate senior unsecured loan note with a sterling coupon of 3.67% which will mature on 8 July 2034. 22 Henderson High Income Trust plc Annual Report 2023 ## Strategic Report: Business Model (continued) Co Limited (Sponsored Research), Computershare Investor ### Section 172(1) Statement Services PLC (Registrar) and HSBC(Depositary and Service Providers Custodian) provide an annual self-assessment covering value for money for the service provided and confirmation of The Directors use their experience and knowledge to select adherence to the terms and conditions. This report confirms and engage reputable organisations to carry out operations that each service provider has appropriate corporate on behalf of the Company. The Board is responsible for governance and environmental, social and governance effectively monitoring the services provided by the Company’s policies, processes and procedures in place. third-party suppliers on an ongoing basis. The principal outsourced arrangement is the investment management Values and Culture service provided by the Manager. The Board expects all Directors to act with integrity and The Board reviews and monitors the arrangements in place toapply their skill, care, due diligence and professional with all the Company’s third-party service providers at least experience in the boardroom. The Board has a strong annually. As the Manager oversees the overall day-to-day relationship with the Manager, in particular with the Fund relationship with the Company’s other third-party suppliers, Manager and the Company Secretary. The culture of the the Board places reliance on the Manager and is confident Board is one that promotes integrity and openness which that the Manager has developed and maintains good working isreciprocated by the Manager. relationships with them. The Board receives appropriate The Board expects the Company’s third-party service information from the Manager to assess the third-party providers, particularly the Manager who is responsible for the suppliers’ performance, value for service, approach to ESG management of the Company’s portfolio, to uphold the same issues and their internal controls and risk management values and high standard of conduct as the Board. To this frameworks, including information security and business end, the Board considered the Manager’s corporate culture resilience. The Board also meets with representatives of the and values as part of its overall assessment of the service Depositary and Custodian on an annual basis, and other provided by them in the year under review. service providers, as and when it is deemed necessary. Inaddition, J.P. Morgan Cazenove Limited (Broker), Marten & ### Engagement and Communication with Stakeholders The Board has drafted a stakeholder map to identify the relationships the Company has with each stakeholder group. Thefollowing table sets out how the Manager and/or the Board engages with stakeholders who are deemed to have a high levelof stakeholder interest in the Company. Who? Why? How? Stakeholder Why it is important to engage? How has the Manager and/or the Board engaged? Shareholders/ ● To allow investors to make informed ● Annual and Half Year Reports. Potential Investors investment decisions. ● Monthly factsheets. ● To retain existing shareholders and ● Fund Manager videos and commentary and webinars attractnew ones. with professional investors. ● To understand investors’ requirements ● Sponsored research notes. and expectations. ● AGM. ● RNS announcements. ● Website updates. ● The Board receives shareholder feedback from its Broker, the Manager’s Investment Trust Sales and Marketing Teams and the Fund Manager. ● The Board and the Fund Manager are also happy to meet shareholders when requested. Alternative ● To ensure that the Company complies ● The AIFM confirms compliance with investment limits Investment Fund with the AIFMD regulation. and restrictions each month. Manager (AIFM) ● Quarterly internal controls reports to provide the Board – Janus Henderson with regular reporting on the Manager’s internal Fund Management controls in operation over the services delivered to the UK Limited Company. (“JHFM”) 23 Henderson High Income Trust plc Annual Report 2023 ## Strategic Report: Business Model (continued) Who? Why? How? Stakeholder Why it is important to engage? How has the Manager and/or the Board engaged? Fund Manager– ● To ensure that the investments of the ● The Fund Manager and Company Secretary attend all Janus Henderson portfolio and the administration of the meetings and provide specific reports. Company are well-managed. Service Providers ● To monitor the quality and cost ● Quarterly service review meetings with the Depositary (including the effectiveness of the services provided. and biannual service review meetings with the Registrar. Depositary, Broker, ● Self-assessment reports provided to the Board annually. Registrar and ● Review and discussion of reports on the effectiveness Auditors) of internal controls and risk management. ● Review of proposed audit plan and audit fee each year, as well as any audit findings, the auditors’ letter of engagement and terms of business. ● Regular attendance at meetings throughout the year with specialist input provided. Portfolio Holdings ● The Fund Manager’s decisions are key ● The Manager votes at shareholder meetings of the tothe Company achieving its portfolio holdings on behalf of the Company (engaging investmentobjective and policy. Direct with companies as appropriate prior to voting e.g. on communication with investee companies ESG matters/contentious resolutions). can lead to more informed decisions. ● The Fund Manager regularly engages with investee companies. Lender ● The Company has an active policy of ● The Manager confirms compliance with the loan using appropriate levels of gearing, both covenants (to both the short-term and long-term lender) in the form of bank and longer-term each month. borrowings, with the objective of ● The Manager responds to audit requests from its enhancing income returns and also Lenders. achieving capital growth over time. of capital growth. At each meeting, the Board carefully ### Board Discussions and Decision Making reviews the level of revenue income received and forecast The following paragraphs provide some examples of the key as well as the available distributable reserves. Forthe year discussions held and decisions made by the Board and its under review, dividends amounting to 10.35p were Committees during the year ended 31 December 2023. declared, compared to 10.15p in 2022, an increase of 2.0% ● Negotiations with the Manager in relation to and the Company’s 11th consecutive annual increase. Henderson Diversified Income Trust plc’s scheme of ● Short-term debt: The Board reviewed the Company’s reconstruction and voluntary winding up: In its borrowing position. Taking into consideration the discussions and negotiations with the Manager, the Board advantages of gearing for an investment trust, the focused on the financial terms of the scheme to ensure Company’s performance record over the longer term, and that they were in the best interests of the Company’s that the Company’s £20 million fixed rate senior unsecured existing shareholders. In particular, the Board ensured that note is due to be repaid in 2034, the Board approved a any shares to be issued would be at a premium to net one-year loan facility agreement with BNP Paribas, asset value and that the transaction costs would be London Branch, after considering a number of indicative substantially payable by the Manager under any level of quotes from potential lenders, to take advantage of the rollover, thereby ensuring that the Company’s existing most competitive rates and terms on offer. shareholders would be protected and there would be no As explained above, the Directors’ overarching duty is to promote dilution to the Company’s NAV per share. the success of the Company for the benefit of shareholders The Board considered that the scheme would offer a with consideration of stakeholders’ interests. TheCompany’s number of benefits to the Company’s existing main stakeholders are the Company’s shareholders, the shareholders, including a lower ongoing charges ratio with Manager, its lenders and other service providers. the Company’s fixed costs spread over a larger asset base and enhanced liquidity as the scale of the enlarged ### Liquidity and Discount Management Company is expected to improve the marketability and The Board’s aim is for the Company’s share price to reflect liquidity of the Company’s shares. closely its underlying net asset value, and for the market in its ● Dividends paid to shareholders: The Company’s shares to be liquid. The ability of the Company to influence this investment objective is to provide investors with a high meaningfully over the longer term is, of course, limited since it is dividend income stream while also maintaining the prospect dependent on the market supply of, and demand for, the 24 Henderson High Income Trust plc Annual Report 2023 ## Strategic Report: Business Model (continued) Company’s shares. However, the Board considers theissuance The base management fee is payable quarterly in arrears. and buyback of the Company’s shares where prudent, subject Inaddition, a supplemental base management fee is paid on always to the overall impact on the portfolio, the pricing of other any new funds in relation to share issues in the year they were comparable investment companies and overall market raised, at the pro-rata annual rate. For the following year any conditions. The Board believes that flexibility is important and funds raised are added to prior year assets for the purposes that it is not in shareholders’ interests to set specific levels of of calculating the base management fee. premium and discount for its issuance and buyback policy. ### Managing Risks ### Arrangements with the Manager In accordance with the AIC Code of Corporate Governance The Company is an Alternative Investment Fund and has (AIC Code) and FRC Guidance, the Board has established appointed Janus Henderson Fund Management UK Limited procedures to identify and manage the principal and emerging (‘JHFM’) to act as its AIFM in accordance with an agreement risks to which the Company is exposed in achieving its which has been effective from July 2014 and is terminable on long-term objectives. The Company’s principal risks are six months’ notice. JHFM delegates investment management considered to be those that would threaten its business services to Janus Henderson Investors UK Limited, which acts model, future performance, solvency, liquidity and reputation. as Manager. Both entities are wholly owned subsidiaries of In addition, it is the Board’s responsibility to identify emerging JanusHenderson Group plc (‘Janus Henderson’) and are risks which it defines as events, trends or uncertainties that authorised and regulated by the FCA. References to are at an early stage of development but could pose a JanusHenderson and the Manager within this report refer to significant threat to the Company’s future and therefore the services provided by both entities. The Fund Management require further monitoring and investigation. Team is led by David Smith, a portfolio manager on the Global ### Equity Income Team at Janus Henderson, a position he has Principal Risks held since 2008. David has been the Company’s Fund The Board, with the assistance of the Manager, regularly Manager since July 2015. carries out a robust assessment of the principal and emerging risks facing the Company and seeks assurance that the risks Janus Henderson and its subsidiaries also provide are appropriately evaluated and that effective mitigating accounting, company secretarial and general administrative controls are in place, where possible. To aid the process, services. Some of the administration and accounting services theCompany has drawn up a detailed risk matrix, where the are carried out on behalf of the Manager by BNP Paribas S.A. individual risks and the application of any relevant controls are Janus Henderson Secretarial Services UK Limited acts as the described. Such safeguarding measures may be established Corporate Secretary. by the Board itself: for example, the Board has put in place a Please refer to the Management Engagement Committee schedule of investment limits and restrictions, appropriate to Report on page 45 for further details about how the Directors the Company’s investment objective and policy, to which the consider the continuing appointment of the Manager. Manager must adhere and report upon monthly. In addition, the design and application of controls may be delegated by ### Management Fee the Board to the Company’s third-party service providers, The base management fee is charged at 0.50% of adjusted who report regularly to the Board on the effectiveness of their average gross assets up to £325 million. A reduced control environments. Using a colour coded traffic light management fee of 0.45% is applied to average adjusted system, each risk within the matrix is assessed, scored and gross assets above £325 million. prioritised according to the severity of its potential impact on the Company and its likelihood of occurrence. The principal This average value is calculated by using the values on the last risks which have been identified as part of this process, and day of each of the two calendar years preceding the reporting the steps taken by the Board to mitigate these, are set out in year. Average adjusted gross assets are gross assets less the table below. current liabilities and less any Janus Henderson managed funds or Janus Henderson Group plc shares within the portfolio. The Board does not consider these principal risks to have Anydebt used for investment purposes, including that recorded changed during the year under review and up to the date of in current liabilities, is not deducted from gross assets. this report. Principal Risk Mitigating Measures Climate Change Risk ESG considerations are a fully integrated component of the investment process. TheFund Manager seeks to understand how a company is managing ESG risks Risk that investee companies within the through its policies and processes and where its investments are targeted, to ensure Company’s portfolio fail to respond to that its business model remains sustainable over the longer term. thepressures of the growing climate emergency and fail to limit their carbon Please refer to Environmental, Social and Governance Matters on page 30 for footprint to regulated targets, resulting in further details. reduced investor demand for their shares and falling market values. 25 Henderson High Income Trust plc Annual Report 2023 ## Strategic Report: Business Model (continued) Principal Risk Mitigating Measures Investment Risk The Manager provides the Board with regular investment performance statistics against the benchmark and the peer group. The implementation of the investment Risk of long-term underperformance of strategy and results of the investment process, for which the Fund Manager is the Company against the benchmark responsible, are discussed with the Manager and reviewed at each Board meeting. and/or peer group. This could result in The premium/discount to net asset value and the trading volume of the Company’s the shares of the Company trading at a shares are also regularly reviewed, taking account of market conditions. persistent discount to net asset value and/or reduced liquidity in the The Board regularly reviews and monitors the investment in marketing activities with Company’s shares. the Manager. Both the Manager and the Board maintain close contact with the Company’s Broker to understand the supply of and demand for shares. Risk that insufficient income generation could lead to a cut in the dividend. The Board reviews the Income Statement and revenue forecasts at each meeting and continually monitors the Company’s revenue reserves. Market/Financial Risk The Board reviews the Company’s compliance with its loan covenants (for both the short-term and long-term facilities) on a monthly basis and additional covenant Risk that market conditions lead to a fall testing is undertaken in extreme market conditions to give comfort that the in the value of the portfolio (magnified Company can meet its financial liabilities. byany gearing) and/or a reduction ofincome. The portfolio is diverse, containing a sufficient range of investments to ensure that no single investment puts undue risk on the sustainability of the income generated Risks associated with rising interest rates by the portfolio or indeed the capital value. Regard is also given to having a broad and their impact on the broader financial mix of companies in the portfolio, as well as a spread across a range of economic system. sectors. The Board reviews the portfolio on a monthly basis. These could result in a loss of capital The Manager operates within investment limits and restrictions set by the Board, value for shareholders and/or a cut in the including limits for gearing and derivatives and confirms compliance with these each dividend payment. month. Any particularly high risks are highlighted and discussed, and appropriate follow up action is taken where necessary. A detailed analysis of the Company’s financial risk management policies and procedures can be found in the Financial Risk Management Policies and Procedures note on pages 70 to 75. The Board reviews the Income Statement and revenue forecasts at each meeting and continually monitors the Company’s revenue reserves. Operational Risks including cyber The Board receives a quarterly internal control report from the Manager to assist risks, pandemic risks and epidemic with the ongoing review and monitoring of the internal control and risk management risks and risks relating to terrorism systems it has in place. and international conflicts The Board regularly receives reports from the Manager’s Internal Audit, Risk, Risk of loss through inadequate or failed Compliance, Information Security and Business Resilience teams. This provides internal procedures, policies, processes, assurance that the Manager has appropriate policies and procedures in place to systems or human error. This includes beable to continue in operation and maintain stability in times of such risks. risk of loss to the Company’s third-party In particular, the Board asks the Manager to confirm that the Fund Manager can service providers. continue to manage the portfolio in these circumstances. Risk of financial loss, disruption or The Board makes similar enquiries of its other key third-party service providers damage to the reputation of the togain assurance that they too have appropriate policies and procedures in place Company, the Manager and the tobe able to continue in operation and maintain stability in times of such risks. Company’s other key third-party service Please refer to the Internal Control and Risk Management section on page 41 for providers, as a result of failure of further details. information technology systems. Risk of loss as a result of external events outside of the Board’s control such as pandemic and/or epidemic risks and risks relating to terrorism and/or international conflicts that disrupt and impact the global economy. This includes the risk of loss to the Company’s third-party service providers that are also disrupted and impacted by such events. 26 Henderson High Income Trust plc Annual Report 2023 # Strategic Report: Business Model (continued) | Principal Risk | Mitigating Measures | | --- | --- | | **Tax, Legal and Regulatory Risk** Risk that a breach of, or a change in laws and regulations, could materially affect the viability and appeal of the Company, in particular s.1158/9 which exempts capital gains from being taxed within investment trusts. | The Manager has been contracted to provide investment, company secretarial, administration and accounting services through qualified professionals. The Board receives internal control reports produced by the Manager on a quarterly basis, which confirm tax, legal and regulatory compliance. | ## Emerging Risks With the help of the Manager's research resources and using its own market intelligence, the Board continually monitors the changing risk landscape and any emerging and increasing threats to the Company's business model. Such emerging risks could cause disruption for the Company if ignored, but if identified could provide business opportunities. Should an emerging risk become sufficiently clear, it may be moved to a principal risk. ## Viability Statement The Company seeks to provide superior income generation and long-term capital growth for its shareholders. The Board aims to achieve this by implementing the Company's business model and strategy through the investment objective and policy. The Board will continue to consider and assess how it can adapt the business model and strategy of the Company to ensure its long-term viability in relation to its principal and emerging risks. The Board also considers: - the prospects for the Company including the liquidity of the portfolio (which is mainly invested in readily realisable listed securities); - the level of borrowings (which are restricted); - the closed-end nature as an investment company (therefore there are no issues arising from unexpected redemptions); - a low ongoing charge (0.86% for the year-ended 31 December 2023 (2022: 0.84%)); and - long-term borrowings in place in the form of the 3.67% senior unsecured loan note which matures in July 2034 (the value of this long-term borrowing is at 8.9% of net assets as at 31 December 2023, relatively small in comparison to the value of total net assets). Furthermore, the Company retains title to all assets held by the Custodian (under the terms of the formal agreement with the Depositary), cash is held with approved banks and revenue and expenditure forecasts are reviewed at each Board meeting. The Fund Manager provides revenue scenario analysis at each Board meeting, modelling revenue forecasts over a five year time horizon under pessimistic, conservative and optimistic scenarios. This assists the Board in assessing the impact of any dividend decision over the short, medium and long term in various different scenarios. The Company's revenue reserves remain strong with approximately £8.9 million in revenue reserves as at 31 December 2023 providing additional comfort for any difficult years that may arise in the future. The Board believes it is appropriate to assess the Company's viability over a five-year period in recognition of its long-term horizon and taking account of the Company's current position and the assessment factors detailed above. When assessing the viability of the Company over the next five years the Directors considered its ability to meet liabilities as they fall due. This included consideration of the duration of the Company's borrowing facilities and how a breach of any loan covenants could impact on the Company's net asset value and share price. The Directors also considered the impact of a global recession, rising inflation and risks associated with geopolitical conflicts. Whilst these currently present uncertainty and volatility in financial markets, they do not threaten the Company's viability. The Board does not envisage any change in strategy or investment objective, or any events that would prevent the Company from continuing to operate over the next five years as the Company's assets are liquid, its commitments are limited, and the Company intends to continue to operate as an investment trust. The Board notes the Company's next continuation vote is due to take place at the AGM in 2025. In 2023 the Board received feedback from the Fund Manager and the Janus Henderson Investment Trust Sales Team on meetings held with shareholders. The feedback suggested that the shareholders were supportive of the Company continuing in operation. The Board remains confident that shareholders remain supportive of the Company. The Board takes comfort in the robustness of the Company's position, performance, liquidity and the well-diversified portfolio, as well as the Fund Manager's monitoring of the portfolio and therefore has a reasonable expectation that the Company will continue in operation and meet its liabilities as they fall due up to and including the year-ending 31 December 2028. 27 Henderson High Income Trust plc Annual Report 2023 ## Strategic Report: Business Model (continued) ### Key Performance Indicators 1 NAV and Share Price per share Measuring Performance In order to measure the success of the Company in meeting its objectives and to evaluate the performance of the Manager, the Directors consider a number of Key Performance Indicators (KPIs). 1 Dividend per share (Pence) 2.65 2.60 2.55 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 2.50 2018 2019 2020 2021 2022 2023 Share price (p)NAV per share (p) 2.45 1 Net asset value with debt at fair value as published by the AIC 2.40 2.35 At each meeting, the Board reviews the performance of the 2.30 portfolio as well as the Company’s NAV (with debt at par value 2.25 and fair value) and share price. The Board also compares the 2.20 performance of the Company against its benchmark. 2.15 2022202120202019 2023 1 1st Interim 2nd Interim 3rd Interim 4th Interim Premium/discount over 5 years to 31December 2023 1 Based on the dividends paid or announced for the year. See Alternative 4 Performance Measures on page 82 2 Source: Henderson High Income Trust plc Annual Reports 0 The Board places a high level of importance on maintaining -2 the Company’s quarterly dividend payments. The aim is to -4 maintain a suitable asset allocation that will permit a sustainable high level of dividend distributions to shareholders -6 with the potential to grow the capital value in the longer term. -8 The Board reviews the Company’s revenue account at each meeting, along with the appropriateness of its dividend payments. The Board also compares the yield on the Company’s shares to other relevant sectors of the AIC. Shareholders must, however, recognise that dividend 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 De payments can never be guaranteed, and that circumstances 1 Premium/discount based on net asset value with debt at fair value could arise when it would be necessary to reduce or pass a dividend payment. In 2023 £128,000 was added to revenue At each meeting, the Board monitors the level of the reserves. The Company has built up revenue reserves of Company’s premium or discount to net asset value per share around £8.9 million at the end of the year under review, which and reviews the average premium or discount for companies equates to approximately six months’ worth of cover over the from the AIC Equity Income sector. full year dividend on the enlarged shareholder base following the issue of equity due to the combination with HDIV in ### Ongoing Charge (%) January 2024. This compares with reserves of around (Pence) The Board regularly reviews the ongoing charge and monitors 200 £8.8million at the end of 2022 which represented all Company expenses, with a detailed schedule of expenses approximately eight months’ worth of dividend cover on the reviewed twice a year in conjunction with the half year and full 180 Company’s shareholder base before the merger with HDIV. year financial results. The ongoing charge for the year-ended Equally, there may be instances when the level of payment 31 December 2023 was 0.86% (2022: 0.84%). must be increased in order to comply with s.1158/9 which 160 requires an investment trust not to retain more than 15% of its For and on behalf of the Board total income. Where such instances would result in a payment 140 going beyond the Board’s policy, one-off special dividend -10 payments could be announced and paid. Jeremy Rigg 120 -12 Chairman | -14 | | | 27 March 2024 | | --- | --- | --- | --- | | 100 | 28 | | | | -16 | | 31 Dec | | c 2018 2019 2020 2021 2022 2023 ## Environmental, ## Social and ## Governance ## Matters 29 Henderson High Income Trust plc Annual Report 2023 ## Environmental, Social and Governance Matters ofthose risks which could have significant implications for a ### Our Approach to Environmental, Social company’s cash flow and dividend. While companies with ### and Governance Matters severe ESG risk exposure are likely to be avoided, those The Board believes that integrating environmental, social and companies that have high ESG risk exposure but demonstrate governance (ESG) factors into the investment decision making strong controls may be considered for investment. and ownership practices is an important element in delivering ESG risks and opportunities are broken down into short and the Company’s investment objective. ESG considerations are long term considerations: a fully integrated component of the investment processes employed by the Fund Manager and the wider investment Short term – Understanding the materiality of a failure in a teams at Janus Henderson. company’s operations in regard to ESG issues on its short term financials, reputation and regulatory backlash. Companies operating in higher risk sectors, such as oil & gas, ### Defining ESG where the materiality of a failure in operations is significant, ● Environmental factors include climate change, energy require critical safety controls and processes. The use of efficiency, resource depletion and water and waste third-party ESG research providers, such as MSCI, helps to management. identify the short term ESG risks and the level of controls and ● Social factors include employee and community processes companies have in place to mitigate those risks. relations,diversity, quality of life, enhancements in This is then followed up by detailed stock analysis. knowledge and advances in supportive technology Long term – Understanding how ESG issues could impact forimprovedsustainability. abusiness in the long term and its ability to continue to pay ● Governance factors include mitigating risks such as andgrow a dividend. Those businesses that operate in bribery and corruption, questioning board diversity, contentious industries face structural pressure on their core executive pay, accounting standards and shareholder products or services as a result of government legislation or rights, and positively influencing corporate behaviour. consumer habits and it is important to understand the pace ofthat structural decline, how a company is investing or ### Investment Considerations changing and what is currently discounted in the company’s Companies that have a resilient business model is at the core valuation. For instance, tobacco companies have faced of the investment strategy of the Company and its important declining volumes in traditional combustible cigarettes for many years but have managed that decline through higher to understand how ESG considerations impact those pricing while investing in alternative products, such as vaping business models. As with managing a business’s operational and heated tobacco, which are less harmful. and financial risks, those companies with good processes for managing ESG risk factors tend to outperform. While no It is also important to understand how ESG factors could company is specifically excluded from investment on ESG present an opportunity to companies in the long term. grounds, the Fund Manager seeks to understand how a Clearlybusinesses which have exposure to ESG trends or company is managing ESG risks through its policies and thematics, such as renewable energy or recyclable packaging processes and where its investments are targeted to evolve for example, should benefit but it is important to quantify the itsbusiness model to remain durable over the longer term. benefits versus what is already discounted in the valuation. The process of identifying and assessing the longer term The analysis of ESG factors is integrated into the stock ESGrisks and opportunities forms part of our detailed selection and monitoring process. As with understanding a stockanalysis. company’s fundamentals and financial health, the evaluation of ESG risks and opportunities is also integral in determining 3) Assessing ESG targets the value of a business. A resilient business model is imperative to the long-term value of a company which includes the consideration of ESG When analysing ESG factors the Fund Manager will seek to: factors. Companies need to adapt their business models to 1) Identify the risks and opportunities changes in ESG attitudes and regulation to remain relevant Determining the underlying ESG risks and opportunities and have realistic targets verified by independent institutions, acompany is exposed to is the first step in the process. such as the Science Based Targets Initiative (SBTi) for Companies within similar sectors and industries will have emissions, helps determine their ability and willingness. It also common ESG risks associated with them but it is important gives a good framework to hold management accountable for tounderstand the specific risks to each company. the success or failure in delivering on ESG goals. Ideally a portion of management’s incentives should be linked to the 2) Analyse the controls and actions delivery of short and/or medium term ESG targets. Once the key and material ESG risks are identified, it is important to gain insight into the controls and actions a 4) Engage with management company performs to mitigate those risks. ESG risks are Company engagement forms an important part of the Fund unavoidable for most companies but it is how a business Manager’s investment process and incorporates a wide range adapts its processes and operations to minimise the impact of topics including business strategy, capital allocation, 30 Henderson High Income Trust plc Annual Report 2023 ## Environmental, Social and Governance Matters ### (continued) remuneration incentives, business risks, management Due to the terms of the settlement the company could not succession as well as ESG issues. Senior management teams gointo details surrounding North Korea but discussed what of the Company’s portfolio holdings are engaged with on a policies and processes they have implemented. They were regular basis, typically once or twice a year, or on an ad hoc confident the changes are sufficient to make sure a similar basis if a specific issue, whether ESG related or not, has incident could not happen again. We will continue to monitor arisen that could potentially impact the value of a business. and engage with the company on this. The centralised Janus Henderson Responsible & Governance ### 2) Engagement on an industry wide Team (the R&G Team) also assists with specific engagement ### matters, including those of an ESG nature, in respect of the ESGtopic positions held across the portfolio. The R&G Team screens Oil & Gas industry – Meetings on methane emissions portfolios for major ESG issues and works to highlight important ESG engagement topics ahead of company Janus Henderson has consistently engaged with the large meetings or any communications with companies. In addition, energy companies, including BP and Shell, on issues relating the R&G Team directly engages with companies with or on to energy transition and climate. One area of engagement has behalf of the Fund Manager on a wide range of ESG themes been around the industry’s methane emissions which occur including key topics such as climate change, social through flaring, venting or leaks. considerations and natural resource consumption. This is an area in which the large energy companies are making Engagement is an ongoing process between the team and some progress. They all have put in place LDAR (leak detection senior management with the team monitoring the progress and repair) programs, have started to use satellite data and are made on issues raised. focusing their efforts on the ‘worst offending’ parts of their During the year Janus Henderson conducted 26 meetings portfolio. Although methane emissions are still asignificant withportfolio companies on dedicated ESG issues. These problem, we are seeing improvement in transparency and engagements were separate to the more regular meetings with reporting, particularly regarding non-operated assets which management focusing on financials and business strategy. have historically been excluded from scope. ESG engagements during the year took various forms with the ### 3) Engagement to gain insight on a most common being: ### company’s ESG policy 1) Engagement on a specific ESG issue; Victrex – Meeting on the company’s circular economy 2) Engagement on an industry wide ESG topic; strategy 3) Engagement to gain insight on a company’s ESG policies. The objective of the meeting was to gain a better Examples of each type of engagement during 2023 are understanding of the company’s circular economy strategy below: and related opportunities. The nature of the company’s core high performance plastic ### 1) Engagement on a specific ESG issue PEEK (Polyether ether keytone) product has clear sustainability advantages compared to metal but presents British American Tobacco (BAT) – Meeting on breaches of difficult challenges from a circular economy perspective North Korea sanctions (e.g.currently only 2% is recycled due to the long product life While we continue to have ongoing ESG engagement with the cycle). Progress is being made in completing life-cycle company on a broad range of topics covering supply chain assessments across all products which is of increased management, next generation products, water utilisation and importance with customers. The company’s PEEK product vaping product waste, we had a separate ESG meeting with has high stability so lends itself to being re-granulated and BAT post the announcement the company had paid out recycled multiple times. There are, however, a number of $635million to resolve investigations by the US Department challenges to overcome including the volume of recoverable ofJustice into the company’s historical business activities in waste, legislative barriers and provenance of material. North Korea. Theyare working closely with Value Added Resellers looking The objective of the meeting was to understand how this at various initiatives to improve recycling rates and helping event happened and what has been changed internally customers understand the properties of the recycled product. asaresult to ensure such breaches do not occur again. We will continue to discuss and monitor the company’s Wewanted reassurances that better controls and practices progress on these matters at future meetings. on compliance and governance of subsidiaries in countries that are deemed high risk have significantly improved. 31 Henderson High Income Trust plc Annual Report 2023 ## Environmental, Social and Governance Matters ### (continued) conducts systematic monitoring and quality review of ### ESG Ratings information, as well as a formal committee review. There are Janus Henderson engages MSCI, an independent leading 35 key metrics underlying the rating, each of which is centred firmresearching and rating ESG factors globally, to support on the intersection between a company’s unique material investment research. The Company’s portfolio as at issues and industry-specific issues. This means that the MSCI 31December 2023 exhibited the following factors, as ESG ratings assess companies on their performance relative definedby MSCI’s analysis. to peers within their industry. Overall MSCI ESG quality score Carbon intensity Portfolio 7.8 Portfolio 74.7 Benchmark 7.7 Benchmark 80.1 020406080 100 Source: MSCI as at 31 December 2023 tCO e/USD million ESG Quality Score measures the ability of underlying Source: MSCI as at 31 December 2023 holdings to manage key medium to long-term risks and Carbon intensity (Scope 1 and 2) is a metric used to compare opportunities arising from environmental, social, and company emissions across industries. MSCI divides the governance factors. It is based on MSCI ESG Ratings and is absolute emissions by total revenue, meaning the figure is measured on a scale of 0 to 10 (worst to best). expressed in tonnes of carbon dioxide equivalent per US Dollar million of total revenue. The Company’s overall portfolio is 6.7% less carbon intensive than the benchmark. ESG Rating Distribution ### 35% Stewardship and Company Engagement 28% 26% Stewardship is an integral and natural part of JanusHenderson’s long-term, active approach to investmentmanagement. Strong ownership practices, such 3% | | | 0%0% | 1% | | as management engagement and proxy voting, can help | | --- | --- | --- | --- | --- | --- | | CCC B A AA AAABB BBB | | | | | protect and enhance long-term shareholder value. | | | Laggard Average | | | Leader | JanusHenderson entities support a number of stewardship | codes and broader initiatives around the world including being Benchmark 46% a founder signatory of the UN Principles for Responsible Investment. The intensive research of the portfolio managers and analysts involves conducting on an annual basis 21% thousands of interviews with senior executives and chairmen 18% of companies throughout the world. These teams naturally 6% develop long-term relationships with the management of firms 0%0% 1% in which they invest. Should concerns arise over a firm’s CCC B A AA AAABB BBB practices or performance, they seek to leverage these Laggard Average Leader constructive relationships by engaging with company Portfolio management or expressing their views through voting on 1 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) management or shareholder proposals. Escalation of the rebalanced annually engagement activities depends upon a company’s Source: MSCI as at 31 December 2023 individualcircumstances. ESG Ratings Distribution represents the percentage of a ### portfolio’s market value coming from holdings classified as Voting ESG Ratings Leaders (AAA and AA), Average (A, BBB and The Board believes that voting at general meetings is an BB), and Laggards (B and CCC). ESG ratings are calculated important aspect of corporate stewardship and a means of based upon each company’s exposure to key ESG risks signalling shareholder views on board policy, practices and across different components of a business’s value chain: performance. The Board has appointed the Manager to vote including core product/business segments, the locations of its the rights attached to the shares held in the Company’s equity operations, and other relevant measures such as outsourced portfolio and the Manager actively votes at shareholder meetings production or reliance on government contracts. MSCI and engages with companies as part of the voting process. 32 0 12345678 2 Henderson High Income Trust plc Annual Report 2023 ## Environmental, Social and Governance Matters ### (continued) Voting decisions are taken in keeping with the provisions of ### The Environment the Manager’s ESG Investment Principles. These can be As an investment company, the Company’s own direct found on the Manager’s website www.janushenderson.com. environmental impact is minimal. The Company has no Corporate governance regimes vary significantly as a function greenhouse gas emissions to report from its operations, nordoes of factors such as the relevant legal system, extent of it have responsibility for any other emissions producing sources shareholder rights and level of dispersed ownership. under the Companies Act 2006 (Strategic Report and Directors’ Thevoting and engagement activities vary according to the Reports) Regulations 2013. For the same reasons, the Company market and pay close attention to local market codes of considers itself to be a low energy user under the Streamlined bestpractice. Energy & Carbon Reporting regulations and therefore is not required to discloseenergy and carbon information. However, there are certain core principles that are universal: The Manager recognises the importance of managing its ● disclosure and transparency; operational activities in a sustainable way and minimising any ● board responsibilities; adverse impact on the environment. In 2019 the Manager ● shareholder rights; and committed to reducing its carbon footprint by 15% per full-time ● audit and internal controls. employee over three years based on 2018 consumption. In 2021 the Manager reached this target and set new five-year A key element of the Board’s approach to proxy voting is to targets in 2022 in line with guidance from the SBTi to reduce support these principles and to foster the long-term interests Scope 1 (fuel) and Scope 2 (electricity) emissions by 29.4%, as of the Company’s shareholders. well as Scope 3 (business travel, hotel stays, freight, paper In order to retain oversight of the process, the Board receives consumption, water, waste) operational emissions by 17.5%. an annual report on how the Manager has voted the shares In addition to this, the Manager has maintained a held in the Company’s equity portfolio and reviews at least ® CarbonNeutral certification since 2007 and offsets all its annually the Manager’s ESG Corporate Statement and ESG operational Scope 1, Scope 2 and Scope 3 operational Investment Principles. emissions each year. Through this process, the Manager In the period under review, investee companies held 72 hasinvested in a variety of offset projects around the world, general meetings. The shares held in the Company’s equity delivering financial support to essential renewable energy, portfolio were voted in respect of 97.2% of these meetings. forestry and resource conservation projects that support 2.8% of the shares held were not voted due to voting reductions in greenhouse gas emissions. All projects the impediments. The level of governance in leading global Manager supports have been classified as ‘additional’ by an companies is generally of a high standard in terms of best independent third party, meaning that they would not happen practice which has meant that support in favour of the without the sale of carbon credits. resolutions proposed by management was warranted. The Manager discloses its carbon emissions annually However, out of the 70 meetings voted there were eight where throughregulatory and voluntary reporting frameworks, theManager voted against or abstained from at least one including Streamlined Energy and Carbon Reporting (SECR) resolution. In terms of the resolutions not supported, the and theCarbon Disclosure Project (CDP), as well as inits majority of these related to approving compensation and Annual Report and 2022 Impact Report, which provide environmental proposals. moreinformation. ### Business Ethics Voting record As the Company’s operations are delegated to third-party Number of votable meetings 72 service providers, the Board seeks assurances at least Number of meetings voted 70 annually from its service providers that they comply with the Number of resolutions voted 1,332 provisions of the UK Modern Slavery Act 2015 and maintain adequate safeguards in keeping with the provisions of the Number of meetings voted (%) 97.22% Bribery Act 2010, Criminal Finances Act 2017 and the Percentage of votes for 99.02% sanctions element of the Economic Crime (Transparency Percentage of votes against 0.83% andEnforcement) Act 2022. The Company has received | Percentage of votes abstain 0.08% | | assurances from its main service providers that they | | --- | --- | --- | | Number of meetings with at least 1 vote | 11.11% | maintaina zero-tolerance policy towards the provision | | against, withheld or abstain | | ofillegal services. | 33 ## Governance 34 Henderson High Income Trust plc Annual Report 2023 ## Board of Directors ### The right balance of skills and knowledge The Directors appointed to the Board at the date of this report and the specific reasons why each Director’s contribution is, and continues to be, important to the Company’s long-term sustainable success are set out below. The Nominations and Remuneration Committee is responsible for ensuring that on appointment each Director receives a letter ofappointment that setsout, amongst other matters, what isexpected of them in terms of time commitment. The annual board evaluation also considers the time commitment of the Directors. The Board considers that each Director appointed as at the date of this report allocates sufficient time to the Company to perform his/her responsibilities effectively. | Jeremy Rigg | Richard Cranfield | Zoe King | | --- | --- | --- | | (Chairman) | (Independent Non-Executive | (Senior Independent Director) | | Date of appointment: 1 April 2018 | Director) | Date of appointment: 1 April 2016 | | (appointed Chairman of the Board and | Date of appointment: 1 March 2020. | (appointed Senior Independent Director | | Management Engagement Committee on | | on 23 June 2020). | Committees: Member of the Nominations 24 May 2021). & Remuneration Committee, Management Committees: Chairman of the Committees: Chairman of the Engagement Committee and Audit & Nominations & Remuneration Committee, Management Engagement Committee RiskCommittee. Member of the Management Engagement and Member of the Nominations & Committee and Audit & Risk Committee. External appointments: Richard is Chair Remuneration Committee and Audit & of IntegraFin Holdings plc. External appointments: Zoe is a director RiskCommittee. of Evelyn Partners Investment Background: Richard retired as a partner External appointments: Jeremy is a Management Limited, specialising in the in law firm Allen & Overy LLP in October Director of Moorland Green Properties management of private client portfolios. 2021 and became Senior Adviser, a role he Limited. She is also a member of the Trinity held until April 2022. He was previously College Oxford Investment Committee, Background: Jeremy was a Director of Global Chairman of the Corporate Practice the Carvetian Capital Fund Investment Schroder Investment Management (UK) and Co-Head of its Financial Institutions Committee and the Stramongate S.A Ltd and a Senior Investment Manager at Group. Richard had been with Allen & Shareholder AdvisoryCommittee. | Investec Asset Management Limited. | Overy LLP since he joined them from | | | --- | --- | --- | | In2004, he was a Founding Partner of | university in 1978. In 2000, Richard was | Background: Zoe was formerly Vice | | Origin Asset Management LLP, a boutique | appointed Global Head of Corporate and in | President at Merrill Lynch Mercury Asset | | equity investment manager which grew | 2010 took a step back from management | Management and a Fund Manager at | | successfully and was acquired by | to focus on client relationships. In June | Foreign & Colonial Investment | | Principal Global Investors Limited in 2011. | 2019, Richard was appointed to the board | Management. She graduated from | | Jeremy graduated from St Andrews | of IntegraFin Holdings plc and became | OxfordUniversity in 1994. | | University in 1989. | Chair in October 2019. IntegraFin Holdings | | Skills and experience: Zoe is an | Skills and experience: Jeremy provides | plc is a FTSE 250 company, the ultimate | experienced investment professional and | | --- | --- | --- | | an objective and broad view to board | owner of the investment platform provider | a director of Evelyn Partners Investment | | discussions and challenges the Manager | Transact. | Management Limited, which ensures that | | on investment decisions. Jeremy has over | Skills and experience: Richard has spent | her fund management skills and | | 25 years’ experience in the investment | 40 years at the highest levels of legal | knowledge remain up to date. Zoe utilises | | management industry and has proven | practice. He has extensive understanding | her fund management background to | | himself as a key member of the Board. | of corporate governance and understands | bring an objective view to the Manager’s | | | financial institutions from his career at | investment strategy and to challenge the | | | Allen & Overy LLP and as the Chair of | Manager on investment decisions, while | | | IntegraFin Holdings plc. This has also | her years of experience in looking after the | | | given him a good understanding of the | capital of individuals bring a shareholder’s | | | workings of investment platforms which | perspective to Board discussions. | the Board believes is important as more of the Company’s shareholders choose to hold their shares through platforms. 35 Henderson High Income Trust plc Annual Report 2023 ## Board of Directors (continued) | Francesca Ecsery | Jonathan Silver | | --- | --- | | (Independent Non-Executive | (Chairman of the Audit | | Director) | andRisk Committee) | | Date of appointment: 31 December | Date of appointment: 2 January 2019 | | 2022. | (appointed as Chairman of the Audit & | Risk Committee on 8 May 2019). Committees: Member of the Nominations &Remuneration Committee, Management Committees: Chairman of the Audit & Engagement Committee and Audit & Risk Committee, Member of the RiskCommittee. Nominations & Remuneration Committee and Management Engagement External appointments: Francesca is a Committee. non-executive director at the Association of Investment Companies (AIC), CT External appointments: Jonathan is a Automotive PLC, HaffnerEnergy SA and non-executive director of Baillie Gifford Air France S.A. China Growth Trust plc and a non- executive director and Chairman of the Background: Francesca was previously a Audit Committee of Spirent non-executive director at F&C Investment Communications plc, a position he has Trust PLC, Marshall Motor Holdings PLC, held since 2015. Jonathan is also a Share PLC and Good Energy Group PLC non-executive director and Audit and has held various senior positions in Committee Chair of East and North consumer-focused industries including Hertfordshire NHS Trust. the digital, retail, leisure and travel sectors. Her previous executive roles Background: Jonathan is a member of include McKinsey, PepsiCo, Thorn EMI, the Institute of Chartered Accountants of Thomas Cook and STA Travel. Scotland. He has held various senior financial positions throughout his career, Skills and experience: Francesca has including 21 years as Chief Financial over 30years’ experience working in both Officer on the main Board of Laird plc blue-chip companies and start-ups and from 1994 until 2015. has special expertise in multiplatform consumer marketing, branding and Skills and experience: Jonathan is a commercial strategies. qualified accountant and therefore brings financial and accounting skills and experience to the Board. He is an experienced non-executive director and in particular brings previous investment trust experience and leadership skills to the Board from his former and current roles as Chief Financial Officer of Laird plc, and as Audit Committee Chairman of Invesco Income and Growth Trust plc and Spirent Communications plc. Jonathan has recent and relevant financial experience, a principal requirement for the composition of an Audit Committee under the UK Corporate Governance Code. The Board also believes this experience is fundamental to an effective Board. All Directors are members of the Insider Committee that meets when required in accordance with the Market Abuse Regulations. 36 Henderson High Income Trust plc Annual Report 2023 ## Corporate Governance Report The terms of reference for each of the Committees of the ### Applicable Corporate Governance Codes Board are kept under regular review and are available at The Company maintains a premium listing on the London www.hendersonhighincome.com. Stock Exchange and is therefore required to report on how the principles of the UK Corporate Governance Code (UK Code) Board Leadership and Purpose have been applied. The AIC Code of Corporate Governance The Board is responsible for providing leadership, setting the (AIC Code) published in January 2019 has been endorsed by investment objective and policy, appointing the Company’s the Financial Reporting Council. This enables boards to report third-party service providers, establishing a robust internal against the AIC Code and still meet their obligations in relation control and risk management system and monitoring the to the UK Code and associated disclosure requirements under performance delivered by its service providers within the paragraph 9.8.6 of the Listing Rules. established control framework. Closed-end investment companies have particular factors At each meeting the Board reviews the Company’s investment which have an impact on their governance arrangements and performance and considers financial analyses and other the AIC Code adopts the principles and provisions of the UK reports of an operational nature. The Board monitors Code to make them relevant for investment companies. compliance with the Company’s investment objective and TheBoard has therefore chosen to report under the AIC policy, and is responsible for setting investment limits and Code. The Company is governed entirely by a Board of restrictions, including gearing limits, within which the Manager non-executive Directors, therefore the Company has no has discretion to act. The Board has responsibility for the executive directors or senior management remuneration approval of any investments in in-house funds managed or packages. advised by the Manager. It has adopted a procedure for Copies of the AIC Code and the UK Code can be found on Directors, in the furtherance of their duties, to take the respective organisations’ websites: www.theaic.co.uk independent professional advice at the expense of the and www.frc.org.uk. Company. In order to enable them to discharge their responsibilities, all Directors have full and timely access Statement of Compliance torelevant information. For the year-ended 31 December 2023 the Company has The Board has engaged third-party service providers to complied with all the provisions of the AIC Code with the deliver the operations of the Company. Management of the exception of provision 9.2.37 to establish a separate Remuneration Committee. Instead, the Board has established investment portfolio has been delegated contractually to a combined Nominations and Remuneration Committee Janus Henderson, which also provides the day-to-day comprising all the independent non-executive Directors. accounting, company secretarial, administrative and sales andmarketing activities. The Company has appointed a Given the Board has a simple remuneration structure and Depositary, who in turn appoints the Custodian who is does not need to consider executive remuneration, including responsible for the safe custody of the Company’s assets. bonuses and long-term incentive schemes, it was considered The Company has appointed a Registrar to maintain the appropriate for a combined Nominations and Remuneration Register of Members and assist shareholders with queries in Committee to be formed. respect of their holdings. The Company entered into each of these principal contracts after full and proper consideration ### The Board ofthe quality and cost of the services offered, including the operation of their control systems in relation to the affairs of Overview the Company. The Board and its Committees maintain The Articles of Association provide that the total number of oversight of the third-party service providers through regular Directors shall not be less than two nor more than ten in and ad hoc reporting. The Board meets annually with number. The Board currently consists of five non-executive representatives from the Depositary and Custodian to discuss Directors. The biographies of the Directors holding office at amongst other matters performance, service levels, their value the date of this report, which are set out on pages 35 to 36, for money, and their approach to ESG matters, information demonstrate the breadth of investment, commercial, legal, security and business continuity plans. financial and other professional experience relevant to their positions as Directors. In addition, the Chairman is able to attend meetings of all the chairmen of the investment trust companies managed by The Board meets formally at least six times a year, with Janus Henderson which provide a forum to discuss industry additional Board or Committee meetings arranged when matters which are then reported to the Board as necessary. required. The Directors have regular contact with the Manager between formal meetings. The Board has a formal Schedule The Manager takes decisions as to the purchase and sale of Matters Reserved for its decision which can be viewed at ofindividual investments. The Manager also ensures that all www.hendersonhighincome.com. Directors receive all relevant management, regulatory and 37 Henderson High Income Trust plc Annual Report 2023 ## Corporate Governance Report (continued) financial information in a timely manner. Representatives of the ### Arrangements with Directors Manager attend each Board meeting enabling the Directors to probe further on matters of interest or concern. The Directors Policy on Tenure have access to the advice and services of the Company No Director is expected to serve for more than nine years Secretary, Janus Henderson Secretarial Services UK Limited. unless particular circumstances warrant it, for example to The Company Secretary is responsible to the Board for facilitate effective succession planning, or promote diversity. ensuring compliance both with Board and Committee duties There may be occasions when the Board may decide to and responsibilities, and applicable rules and regulations. extend the tenure of the Chairman for the sake of continuity Theproceedings at all Board and Committee meetings are and/or historical knowledge of the Company. This may be so recorded through a process that allows any Director’s concerns particularly if an existing non-executive Director is appointed to be recorded in the minutes. The Board and theManager as Chairman of the Board. In these exceptional cases an operate in a supportive, co-operative and openenvironment. explanation for such adecision will be given to shareholders. The Corporate Secretary, Janus Henderson Secretarial Services Directors’ Independence UK Limited, is a subsidiary of Janus Henderson with its own The independence of the Directors is determined with reporting lines and audited internal controls. There are processes reference to the AIC Code. The Nominations & Remuneration and controls in place to ensure that there is a clear distinction Committee considers the independence of each Director at between the two entities, particularly when dealing with any least annually by reviewing the Directors’ other appointments conflicts of interest or issues between the Company and the and commitments, as well as their tenure of service and any Manager. Correspondence from shareholders addressed to the connection they may have with the Manager. The Board does Chairman or the Board received at the registered office is not believe that length of service on the Board necessarily forwarded to the Chairman in line with the audited procedures in compromises a Director’s independence nor that it should place. Correspondence is provided to the full Board at the next necessarily disqualify a Director from seeking re-appointment. meeting with any urgent or important correspondence circulated promptly at the request of the Chairman. There were no contracts subsisting during or at the end of the year in which any Director is or was materially interested and ### Meeting Attendance which is or was significant in relation to the Company’s business. No Director has a contract of service with the The table below sets out the number of formal Board and Company and there are no agreements between the Committee meetings held during the year under review and Company and its Directors concerning compensation for the number of meetings attended by each Director. All lossof office. Directors attended the AGM on 16 May 2023. The Insider Committee didnot meet during the year. In the year under review, the Nominations and Remuneration Committee determined that all Directors continued to be Board ARC NRC MEC independent in character and judgment. The Committee Number of Meetings 6 3 2 1 believed that the Directors’ skills, broad business experience Jeremy Rigg 6 3 2 1 and knowledge and understanding of the Company were of benefit to shareholders and its long-term sustainable success. Jonathan Silver 6 3 2 1 Zoe King 6 3 2 1 Directors’ Re-appointment Richard Cranfield 6 3 2 1 Jeremy Rigg, Richard Cranfield, Francesca Ecsery, Zoe King Francesca Ecsery 6 3 2 1 and Jonathan Silver will offer themselves for re-appointment ARC: Audit and Risk Committee by the shareholders at the AGM in 2024. NRC: Nominations and Remuneration Committee MEC: Management Engagement Committee Under the Articles of Association, shareholders may remove aDirector before the end of his or her term by passing an An additional meeting of a Committee of the Board was held ordinary resolution at a general meeting. to approve the Company’s year-end results. There were also six ad hoc Board meetings held during the Directors’ Professional Development year to undertake business in relation to: Newly appointed directors are offered a bespoke induction programme which covers the legal and regulatory framework ● the allocation of funds to support specific marketing for investment companies and the operations of the Manager, activities for the Company; and including risk, compliance and internal audit, financial ● the scheme of reconstruction and winding up of reporting oversight and bespoke sales and marketing specific Henderson Diversified Income Trust plc (HDIV) under to the Janus Henderson managed investment trusts. section 110 of the Insolvency Act 1986 and the associated transfer of part of the assets and undertaking of HDIV to the Company in exchange for the issue of new ordinary shares in the Company. 38 Henderson High Income Trust plc Annual Report 2023 ## Corporate Governance Report (continued) ### Governance Structure Board of Directors Comprises independent non-executive Directors Chairman: Jeremy Rigg Audit and Risk Committee Management Engagement Nominations and Committee Remuneration Committee Chairman: Jonathan Silver Chairman: Chairman: Non-executive Jeremy Rigg Zoe King Purpose: Ensure the integrity of oversight of the the financial reporting, evaluate Purpose: Formally evaluate Purpose: Advise on the Company’s the effectiveness of the systems the overall performance of the composition of the Board and its operations; of internal control and risk Manager and other third-party Committees, in making selection and management, and oversee the service providers engaged by appointments to the Board and appointment of relationship with the external the Company and consider ensuring suitable succession service auditors. whether their continuing plans are in place. Italso has providers appointment is in the interests responsibility for setting the of shareholders. Remuneration Policy and setting remuneration levels for the non-executive Directors. Contractually engages third-party service providers Company’s Janus Henderson operations Fund Management: Led by David Smith as Fund Manager carried out by Sales, Marketing, Company Secretary specialised Alternative Investment Fund Manager: Janus Henderson Fund Management UK Limited third-party service HSBC Bank plc Computershare J.P. Morgan Cazenove providers Depositary and Custodian Investor Services PLC Corporate Broker Registrar Directors’ Conflicts of Interest Directors’ Insurance and Indemnification The Company’s Articles of Association permit the Board to Directors’ and officers’ liability insurance cover is in place consider and, if it sees fit, to authorise situations where a which indemnifies the Directors against certain liabilities arising Director has an interest that conflicts, or may possibly conflict, from carrying out their duties. Under the Company’s Articles of with the interests of the Company (situational conflicts). Association and subject to the provisions of UK legislation, TheBoard has a formal system in place for Directors to aqualifying third-party provision indemnity may be provided to declare situational conflicts to be considered for authorisation Directors in respect of costs which they may incur relating to by those Directors who have no interest in the matter being the defence of any proceedings brought against them arising considered. In deciding whether to authorise a situational out of their positions as Directors, in which they are acquitted, conflict, the non-conflicted Directors must act honestly and or judgment is given in their favour by the Court. No indemnity ingood faith with a view to the best interests of the Company was given during the year or up to the date of this report. and they may impose limits or conditions when giving the authorisation, or subsequently, if they think this is appropriate. Any situational conflicts considered, and any authorisations given, are recorded in the relevant meetings’ minutes. Theprescribed procedures have been followed in deciding whether, and on what terms, to authorise situational conflicts and the Board believes that the systems it has in place for reporting and considering situational conflicts continue to operate effectively. Furthermore, no conflicts of interest have been identified that would allow third parties to influence or compromise the individual Director’s independent judgment. 39 Henderson High Income Trust plc Annual Report 2023 ## Corporate Governance Report (continued) ### System of Internal Controls How the system of internal Board of Directors control operates (comprised entirely of independent non-executive Directors) The Board delegates contractually to third-party service providers for all of the Company’s operational requirements. It maintains oversight of these providers throughout the Janus HSBC BNP Paribas year by receiving regular reporting Henderson (Depositary/ S.A. on their activities. Principal third-party (Investment Custodian) (Accounting and management, administration The Company’s principal third- service providers company services party service providers are the The Directors: secretarial, engaged by the Manager (Janus Henderson); the ● receive regular sales, marketing, Manager) Depositary/Custodian (HSBC) and reporting at meetings; PR and the accountants and administrators administration) (BNP Paribas S.A.). ● review the annual assurance report In respect of its principal providers, | | | | Reporting | Reporting | Reporting | | --- | --- | --- | --- | --- | --- | | the Board receives quarterly | | produced by each | | | | | | | | • Investment | • Depositary’s | • Balance sheet | | reporting on compliance with the | | organisation; | | | | | | | | performance | report | | | control environment and assesses | ● | | | | • Liquidity and | | | | receive additional | update at | (quarterly) | | | the effectiveness of the control | | | | | gearing | | | | reporting on the | each meeting | | | | environment through review of the | | | | • Presentation | | | | | control environment | | | • Income | | annual assurance reports (usually | | | • Investment | from the | | | | | from the Manager’s | | | forecasts | | ISAE 3402) from each organisation. | | | limits and | Depositary | | | | | Operational Risk | restrictions | and | | | This reporting is supplemented by | | | | | • Portfolio | | | | Team; | (monthly) | Custodian | | | the view of the Manager’s | | | | | valuation | | Operational Risk Team regarding | ● | | | (annually) | | receive reporting from • Internal • Portfolio the control environments in the Manager’s Internal control report • Effectiveness transactions operation at the providers. Audit Team on areas (quarterly) of control • Portfolio The Company’s secondary relevant to investment environment • Effectiveness attribution providers report regularly to the trusts; and (biannually) of control Board. A failing in their services is ● • Effectiveness formally evaluate the environment deemed to have a minimal impact of control performance on an (annually) on the Company’s value and environment annual basis. therefore less stringent reporting (annually) isrequired. The Management Engagement Committee formally evaluates the performance and service delivery Secondary third-party Computershare of all third-party service providers service providers Investor Services PLC at least annually. The Directors: (Registrar) The Audit and Risk Committee ● receive regular evaluates the performance of the reporting on their statutory auditors on completion of activities at meetings; each audit cycle. and J.P. Morgan Marten & Co Cazenove Limited Limited ● formally evaluate their (Corporate Broker) (Sponsored Research) performance on an annual basis. PricewaterhouseCoopers LLP have been appointed as the Company’s Statutory Auditors. By order of the Board For and on behalf of Janus Henderson Secretarial Services UK Limited Corporate Secretary 27 March 2024 40 Henderson High Income Trust plc Annual Report 2023 ## Report of the Audit and Risk Committee ● whether the Company had followed appropriate ### Membership accounting standards and made appropriate estimates All Directors are members of the Committee, including the and judgments, taking into account the views of the Chairman of the Board. Taking account of the size of the Auditors; Board as a whole, the absence of any executive directors ● the clarity and completeness of disclosures in the andthe collaborative manner in which the Board and its Company’s financial statements and the context in which Committees work, it was not considered practical or these statements were made; constructive to exclude the Chairman from being a member of the Committee. The Chairman of the Board was determined ● all material information presented within the Annual Report to be independent at the time of his appointment. insofar as it relates to audit and risk management; ● the Company’s statement on Internal Control and Risk The Committee is chaired by Jonathan Silver, who is Management and Internal Audit Function (please refer to considered by the Board to have recent and relevant financial pages 42 to 43) prior to endorsement by the Board; experience. ● the policies and processes used for identifying and assessing business risks and the management of those ### Meetings risks by the Company and other narrative statements The Committee met three times in the year under review. made in the Annual Report and half year reports including TheCompany’s Auditors, the Fund Manager and the the Viability Statement (please refer to page 27); Manager’s Financial Reporting Senior Manager for Investment ● whether the information presented inthe Annual Report is, Trusts are invited to attend meetings of the Committee on a in the Committee’s view, fair, balanced and regular basis. Other representatives of the Manager (including understandable and provides the information necessary the Head of EMEA Operational Risk, Global Head of forshareholders to assess theCompany’s position and Compliance, Global Head of Internal Audit, Global Head of performance, business modeland strategy; and Business Resilience, Chief Information Security Officer and ● any significant issues considered in relation to the financial BNP Paribas S.A.) may also be invited to attend meetings ifdeemed necessary by theCommittee. statements and how these were addressed in the year under review. ### Role and Responsibilities Internal Controls and Risk Management Systems The role of the Committee is to assist the Board with ● the adequacy and effectiveness of the Company’s internal monitoring the integrity of the Company’s financial reporting controls and risk management systems, including a review and monitoring and reviewing the internal controls and risk of the Company’s key third-party suppliers’ assurance management systems in place at the Manager and the reports; Company’s other third-party service providers. The ● the Company’s risk map including consideration of the Committee also makes recommendations to the Board on the principal and emerging risks; appointment, re-appointment and removal of the Company’s Auditors. TheCommittee formally reports to the Board after ● the remit and effectiveness of the Manager’s Internal each meeting and its responsibilities are set out in formal Audit, Compliance, Risk, Information Security and terms ofreference which are regularly reviewed. Business Resilience functions in the context of the Manager’s overall risk management systems. The In discharging its duties over the course of the year the Committee met representatives of the Manager’s Risk and Committee considered: Internal Audit Teams, at the half year and full year reporting stage and with representatives of the Manager’s Financial Reporting Compliance, Information Security and Business Resilience ● the integrity of the financial statements of the Company, Teams; and including its annual and half year reports, and any formal ● the remit and effectiveness of the overall risk management announcements relating to its financial performance; systems of the Company’s key third-party suppliers. ● the significant financial reporting issues and judgments made in connection with the preparation of the Company’s External Audit financial statements, half year reports and related formal ● the relationship with the Auditors including (butnot statements and challenging the Manager where necessary limitedto): on the consistency of, and any changes to, accounting policies both on a year-on-year basis and across the – consideration of their remuneration, whether for audit Company; or non-audit services, and ensuring that the level of ● fees is sufficient to enable an adequate audit to be the methods used to account for significant or unusual carried out and make recommendations to the Board transactions where different approaches are possible; on fees; 41 Henderson High Income Trust plc Annual Report 2023 ## Report of the Audit and Risk Committee (continued) – approval of their terms of engagement, including any The key components of the internal control framework engagement letter and terms of business issued at the include: start of each audit and the scope of the audit; ● clearly defined investment criteria which specify levels of – independence and objectivity (please refer to authority and exposure limits. The Board reviews reports Effectiveness and Independence of the Auditors on on compliance with the criteria at each meeting; page 43), taking into account relevant professional and ● regular reporting which allows the Board to assess the regulatory requirements and the relationship with the Company’s financial position. The management accounts Auditors as a whole, including the provision of any and forecasts are reviewed by the Board at each meeting; non-audit services (please refer to the Policy on ● the contractual agreements with the Manager and other Non-Audit Services on page 43); third-party service providers. The Board reviews – the need to include the risk of the withdrawal of the performance levels and adherence to relevant provisions Auditors from the market in the Board’s risk evaluation of the agreements on a regular basis. The Management and planning; and Engagement Committee conducts a formal evaluation of – meeting regularly with the Auditors to discuss the the overall level of services from third-party providers at Auditors’ remit and any issues arising from the audit least annually; (including at least once a year without representatives ● the review of controls (including financial, operational and of the Manager being present). compliance) at the Manager and other third-party service ● the findings of the audit with the Auditors, including any providers; and accounting and audit judgments. ● the Board receives quarterly internal controls reports from the Manager and a quarterly report from the Depositary. Compliance, Whistleblowing and Fraud The Committee reviewed the assurance reports of the ● the adequacy and security of the Manager’s arrangements Manager, BNP Paribas S.A., HSBC (Custodian and for its employees and service providers to raise concerns, Depositary) and Computershare Investor Services PLC in confidence, about possible wrongdoing in financial (Registrar) that report on the effectiveness of the control reporting or other matters to ensure that they are environment in operation at these service providers. comfortable that these arrangements allow proportionate and independent investigation of such matters and The Committee also met with the Manager’s Global Head appropriate follow up action; ofInternal Audit at the full year and half year stage to obtain ● the Manager’s procedures for detecting fraud;and comfort that the high standards of internal control and the riskmanagement systems in place at the Manager were ● confirmations from the Manager and the Company’s satisfactory. In particular, the Committee asked questions third-party suppliers of their adherence to the UK Bribery relating specifically to areas of the Manager’s business that Act 2010, the Modern Slavery Act 2015, Criminal Finances directly or indirectly affected investment trusts. The Act 2017 and sanctions element of the Economic Crime Committee did not identify nor has been advised of any (Transparency and Enforcement) Act 2022. failings or weaknesses relating to the Company’s portfolio that have been determined as significant for the year under review. ### Internal Control and Risk Management The Committee is therefore satisfied that the internal control The Board has overall responsibility for the Company’s system and risk management systems in place at the Manager and its of internal control and for reviewing its effectiveness. The key service providers remain effective. Committee supports the Board in the continuous monitoring of the Company’s internal control and risk management ### Internal Audit Function framework and that of its key service providers. Please refer to Systems are in operation to safeguard the Company’s assets the System of Internal Controls on page 40. and shareholders’ investments, to maintain proper accounting The Committee uses an ongoing process for identifying, records and to ensure that financial information used within evaluating and managing the principal risks faced by the the business, or published, is reliable. Company. The process accords with the FRC’s Guidance on The Company is an investment company, has no employees Risk Management, Internal Control and Related Business and and delegates all executive activities to third-party service Financial Reporting published in September 2014. The system providers, principally among them, the Manager. The Board is designed to meet the specific risks faced by the Company places reliance on the Company’s framework of internal and takes account of the nature of the Company’s reliance control and the Committee’s view on reporting received onits service providers and their internal controls and risk fromspecific second and third line of defence teams at management systems. The system therefore manages rather theManager. than eliminates the risk of failure to achieve the Company’s business objectives and provides reasonable, but not The Manager’s Operational Risk Team supports the absolute assurance against material misstatement or loss. Committee in considering the independently audited 42 Henderson High Income Trust plc Annual Report 2023 ## Report of the Audit and Risk Committee (continued) assurance reports on the effectiveness of internal controls in PwC have been appointed as the Company’s Auditor since place at the Company’s third-party service providers. The the year-ended 31 December 2016. The Committee and the Manager’s Internal Audit Team provides regular reporting to Manager have developed a strong working relationship with the Board on the operations at the Manager and presents to PwC over that time. The Committee is satisfied that auditor the Committee at the full year and half year reporting stage. independence and objectivity are safeguarded as a result of The Committee therefore concluded that it is not necessary the independence checks within PwC, the change of Audit atthe present time for the Company to have its own internal Partner every five years and because PwC do not provide audit function. anynon-audit services to the Company. The Committee’s process for evaluating the effectiveness ### Appointment and Tenure of the Auditors ofthe external audit comprises two components: firstly, Regulations currently in force require the Company to change consideration is given to the findings of the FRC’s Audit statutory auditor every 20 years and undertake an audit Quality Inspection Report (AQIR) and secondly, a post-audit tender process after a period of ten years, which may be assessment is carried out, led by the Committee Chairman. extended where audit tenders are carried out or where more In assessing the effectiveness of the audit process, the than one audit firm is appointed to carry out the audit. The Committee discussed the service provided by PwC with Committee last carried out an audit tender process during the Janus Henderson’s Financial Reporting Senior Manager for year-ended 31 December 2016 and PricewaterhouseCoopers Investment Trusts and the Company Secretary, who have LLP (PwC) has been appointed asAuditors since then. The themost hands-on involvement in the audit each year. Auditors are required to rotate partners every five years. This TheCommittee reviewed and assessed the robustness of the is the third year that the current audit partner, Jennifer March, audit, level of challenge offered by the Audit Team, the quality has been in place. Subject to the audit remaining effective and of the Audit Team and timeliness of delivering the tasks the continuing agreement from shareholders on the required for the audit and reporting for the Committee and appointment of the Auditors, the Committee envisages benchmarking PwC’s performance against the Committee carrying out an audit tender process in respect of the members’ recent experience with other firms gained through year-ending 31 December 2026 at the latest. their other commitments. The Committee also met privately with the Audit Partner to discuss how the audit operated from ### Policy on Non-Audit Services their perspective. The Committee has approved, and keeps under regular The Committee remain satisfied with the effectiveness of the review, the policy on the provision of non-audit services by the audit provided by PwC and therefore recommended their Auditors. The policy sets out that the Company’s Auditors will continuing appointment to the Board. PwC have indicated not be considered for non-audit work where this is prohibited their willingness to continue in office. Accordingly, resolutions by the current regulations and where it appears to affect their re-appointing PwC as the Company’s Auditors and independence, effectiveness and objectivity. In addition, the authorising the Directors to determine their remuneration will provision of any non-audit services by the Auditors are not be proposed at theAGM in 2024. permitted to exceed 70% of the average annual statutory audit fee for the three consecutive financial periods preceding ### Disclosure of Information to the Auditors the financial period to which the cap applies. Such services require approval in advance by the Audit and Risk Committee, Each of the Directors who were members of the Board at the or the Chairman of the Committee, following due date of approval of this report confirm that to the best of his consideration of the proposed services. orher knowledge and belief, there is no information relevant tothe preparation of the Annual Report which the Company’s No fees were paid, or are payable to the Auditors for non- Auditors are unaware of, and they have taken all the steps a audit services in the year under review (2022: none). Director might reasonably be expected to have taken to be aware of relevant audit information and to establish that the ### Effectiveness and Independence of the Company’s Auditors are aware of that information. ### External Auditors The Committee monitors the Auditors’ independence, effectiveness and objectivity through three aspects of its work: approval of the Policy on Non-Audit Services; assessing the appropriateness of the fees paid to the Auditors for all work undertaken by them; and by reviewing the information and assurances provided by the Auditors on their compliance with the relevant ethical standards including confirmation of PwC’s independence in accordance with the FRC’s Ethical Standard. 43 Henderson High Income Trust plc Annual Report 2023 ## Report of the Audit and Risk Committee (continued) In relation to the Annual Report for the year-ended 31December 2023 the following significant issues were considered and addressed by the Committee: Significant issues and audit matters How it was addressed Valuation and Ownership of The Directors have appointed Janus Henderson, who outsource some of the the Company’s Investments administration and accounting services to BNP Paribas S.A., to perform the valuation of the assets of the Company in accordance with its responsibilities under the AIFMD rules. As required under the AIFMD rules, Janus Henderson has adopted a written valuation policy, which may be modified from time to time. Actively traded investments are valued using stock exchange prices provided by third-party pricing vendors. Ownership of listed investments is verified by reconciliation to the Custodian’s records and the Directors have received quarterly reports from the Depositary who has responsibility for overseeing operations of the Company, including verification of ownership and valuation of investments. Recognition of Income Income received has been accounted for in line with the Company’s accounting policies (asset out in Note 1f on page 64).The Board reviews the revenue forecast at every meeting in support of theCompany’s future dividend. In respect of special dividends where there is a requirement to allocate between revenue and capital, the Committee reviews the rationale provided by Janus Henderson and approves the relevant treatment. Compliance with Section 1158 of The Committee regularly considers the controls in place to ensure that the the Corporation Tax Act 2010 regulations for ensuring investment trust status are observed at all times, receiving supporting documentation from Janus Henderson and BNP Paribas S.A. Maintaining Internal Controls The Committee receives regular reports on internal controls from Janus Henderson Investors (Manager), BNP Paribas S.A. (Administrator), Computershare Investor Services PLC (Registrar) and HSBC (Depositary and Custodian) and has access to the relevant personnel of JanusHenderson who have a responsibility for risk management and internal audit.TheCommittee is satisfied that these key stakeholders have appropriate andeffective internal control and risk management systems in place. ### Audit for the Year-Ended 31 December 2023 In the year under review PwC challenged both the Manager’s and the Board’s judgments and exercised professional scepticism. The Audit Team required detailed evidence of all metrics, numbers and disclosures made within the Annual Report to support arobust assessment and evaluation of the financial information contained therein. Overall the Committee considers that the audit quality has been high and is satisfied that the Annual Report for the year-ended 31December 2023, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s position and performance, business model and strategy. Jonathan Silver Chairman of the Audit and Risk Committee 27 March 2024 44 Henderson High Income Trust plc Annual Report 2023 ## Management Engagement Committee Report ### Membership All Directors are members of the Committee. Jeremy Rigg is the Chairman of the Committee. ### Meetings The Committee meets at least annually, with additional meetings scheduled when required. ### Role and Responsibilities The Committee is responsible for formally evaluating the overall performance of the Manager and other third-party service providers engaged by the Company, to consider whether their continuing appointment is in the interests oftheCompany and its long-term sustainable success. The Board monitors the performance of the Manager by reviewing key performance indicators at each meeting. Aseparate formal review of the Manager is undertaken by theCommittee each year. For the year under review this included a questionnaire that each Director was asked to complete about the Manager’s performance. In discharging its duties over the course of the year, the Committee assessed: ● the Manager’s compliance with legal and regulatory obligations; ● the key clauses of the Investment Management Agreement, how the Manager had fulfilled these and whether these continued to be appropriate; ● the composition of the Janus Henderson team that directlyinput to the work of the Company; ● fees and cumulative and annual performance figures in comparison to those in the AIC UK Equity Income sector with total assets under management of between £200 million and £700 million and the management fee; ● arrangements compared against the other Janus Henderson managed investment trusts; and ● the performance and fees of the Company’s other third-party service providers, including the depositary, custodian, registrar, broker, research provider and the Company’s accountants. ### Continuing appointment of the Manager The Committee has concluded that the continuing appointment of Janus Henderson as Manager to the Company on the existing terms continues to be in the best interests of the long-term success of the Company and its shareholders. The Committee was satisfied that the high standards of business conduct expected in the services of the Company’s suppliers had been demonstrated. 45 Henderson High Income Trust plc Annual Report 2023 ## Nominations & Remuneration Committee Report Nominations and Remuneration Committee considers ### Membership diversity generally when making recommendations for All Directors are members of the Committee. Zoe King, the appointments to the Board, taking into account gender, social Company’s Senior Independent Director, is the Chairman and ethnic backgrounds, cognitive and personal strengths ofthe Committee. and experience. All Board appointments are subject to a formal, rigorous and transparent procedure. ### Meetings The Board’s prime responsibility is the strength of the Board The Committee meets twice annually, with additional meetings and its overriding aim in making any new appointments upon scheduled when required. rotation of Directors is to select the best candidate based onobjective criteria and merit, which it did at the time the ### Role and Responsibilities currentDirectors were selected. When the Board next The Committee advises the Board on the composition of the recruits, it will request the relevant search firm retained to Board and its Committees, ensuring suitable succession provide a diverse list of potential candidates. plans are in place for the Directors and Fund Manager and Number hasa formal, rigorous and transparent approach to the of senior appointment of Directors to the Board. It also has Number positions of Board % of the on the responsibility for setting the Remuneration Policy (please 1 Gender diversity members Board Board referto page 47) and determining the remuneration for all Men 3 60 2 theindependent non-executive Directors within the parameters determined by shareholders. Women 2 40 1 Ethnic diversity ### Annual Performance Evaluation White British or other White (including minority white groups) 5 100 3 The Chairman of the Committee led the review of the annual performance evaluation process. The evaluation was 1 As a fully managed investment company, the Company does not have a CEO or CFO. Accordingly, only the roles of Chairman, Audit & Risk Committee conducted by way of a questionnaire circulated to each Chairman and Senior Independent Director are applicable to this disclosure. individual Director and the outcomes were presented to the Committee. The evaluation addressed board and committee The information in the table was provided by individual meetings, board composition, board dynamics and culture, Directors in response to a request from the Company. Directors’ remuneration and training and development. The Board recognises the benefits of diversity and therefore TheDirectors considered that meetings were constructive takes an interest in the diversity initiatives in place at its andcollaborative in nature and each Director made a valuable otherservice providers and in particular, supports and contribution to the Board and its discussions. All Directors encourages the Manager’s diversity training and initiatives to remained independent in character and judgment and there improve any imbalances. These include Janus Henderson’s was a good balance of skills and experience on the Board gender and ethnicity pay gap analysis, returnship, trainee, that encouraged diversity of thought. There is an orderly apprenticeship and internship programmes, such as succession plan for appointments going forward to INROADS, Girls Who Invest, Investment 2020 and #100 Black maintainan appropriate balance of skills and experience. Interns. The Board monitors the culture at Janus Henderson Therelationship with the Manager was also considered very and appreciates that the Manager fosters and maintains an good,in particular with theFund Manager and the environment that values the unique talents and contributions CompanySecretary. of individuals, and strives to cultivate and practise inclusiveness for the long-term success of the business and ### Board Diversity for the benefit of its employees, investors and shareholders. The FCA’s Listing Rules require companies to report on the The Board is supportive of developing talent and recognises following targets on board diversity: that at least 40% of the the challenges all organisations face to ensure there is a individuals on the board are women; at least one of the senior sufficient pipeline of talent. To assist the Manager in this positions on the board is held by a woman; and that at least regard the Board invites selected junior members of the one individual on the board is from a minority ethnic JanusHenderson Global Equity Income Team and Investment background. Trust Secretariat Team to its meetings to gain experience and It is the Company’s aim to have a diverse Board. At exposure to the boardroom. 31December 2023, the Board complied with targets one andtwo with 40% of the Board membership being female andthe role of the Senior Independent Director being held by a woman. None of the five Directors, as at 31 December 2023, were from a minority ethnic background. The 46 Henderson High Income Trust plc Annual Report 2023 # Directors' Remuneration Report ## Annual Report on Remuneration This report is submitted in accordance with Schedule 8 of The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 as amended ("the Regulations"). The report also meets the relevant requirements of the Companies Act 2006 ("the Act") and the Listing Rules of the FCA and describes how the Board has applied the principles relating to Directors' remuneration. As required by section 439 of the Act, an ordinary resolution to approve the Directors' Remuneration Policy was proposed at the 2023 AGM and was subsequently approved by shareholders. The Company's Auditors are required to report on certain information contained within this report: where information set out below has been audited it is indicated as such. All Directors are non-executive and the Company has no chief executive officer or employees. As such some of the reporting requirements contained in the Regulations are not applicable and have not been reported on, including the requirement for a future policy table and an illustrative representation of the level of remuneration that could be received by each individual Director. It is believed that all relevant information is disclosed within this report in an appropriate format. The Board has established a Nominations and Remuneration Committee with responsibility for determining the Remuneration Policy and setting the individual remuneration of all Directors in accordance with the Articles of Association. Zoe King, the Senior Independent Director, is Chairman of the Nominations and Remuneration Committee. The Board has not been provided with advice or services by any person in respect of its consideration of Directors' remuneration (although the Directors review annually the fees paid to the boards of directors of other comparable investment companies). ## Remuneration Policy Shareholders last approved the Remuneration Policy at the AGM in 2023. In accordance with section 439A of the Act, shareholders will need be asked to approve the Remuneration Policy at the 2026 AGM. In determining the Remuneration Policy, the Board takes into account all factors which it deems necessary including relevant legal and regulatory requirements, the provisions and recommendations of the UK Code and the AIC Code. The objective of the Remuneration Policy is to attract, retain and motivate non-executive Directors of the quality required to manage the Company successfully without paying more than is necessary, having regard to views of shareholders and other stakeholders. The Board obtains up-to-date information about remuneration in other companies of comparable scale and complexity in order to avoid and manage conflicts of interest in determining remuneration levels. The appropriateness and relevance of the Remuneration Policy is reviewed at least annually, particularly in terms of whether it supports the Company's long-term sustainable success. Directors are remunerated in the form of fees, payable quarterly in arrears. In accordance with the Company's Articles of Association the aggregate remuneration of the Directors may not exceed £250,000 per annum. All Directors, including any new appointments to the Board, are paid at the same rate, apart from the Chairman of the Board and the Chairman of the Audit and Risk Committee, who are paid a higher fee in recognition of their additional responsibilities. From time to time the Board may approve one-off payments to Directors for specific work undertaken in addition to their regular responsibilities. Any feedback from shareholders would be taken into account when setting remuneration levels. Directors are authorised to claim reasonable expenses from the Company in relation to the performance of their duties. No Director has a service contract with the Company. Directors' appointments may be terminated at any time by written notice with no compensation payable. No Director is eligible to receive bonuses, pension benefits, share options or other benefits and no long-term incentive schemes are in place. ## Statement from the Chairman Zoe King, Chairman of the Nominations and Remuneration Committee, reports that the Committee carried out its annual review of the fees being paid to the Directors and as part of this it reviewed the fees paid to other investment companies in the AIC UK Equity Income Sector for companies with total assets under management of between £200 million and £700 million, the fees paid in other sectors and the other Janus Henderson managed investment trusts. The Committee also considered the changes in the retail prices index and the consumer prices index since the last fee increase in July 2022. Following consideration, it was agreed that an increase of approximately 5.6% should be made with effect from 1 July 2023 to ensure that the Directors are properly remunerated for their services to the Company and so that the Company can remain competitive when seeking new directors. The new rates are set out on the following page. The Board is satisfied that the changes to the remuneration of the Directors are compliant with the Directors' Remuneration Policy approved by shareholders at the 2023 AGM. 47 Henderson High Income Trust plc Annual Report 2023 ## Directors’ Remuneration Report (continued) ### Directors’ Interests in Shares (Audited) Table of Directors’ Annual Fees Ordinary shares of 5p The current fees for specific responsibilities are set out in the table below. 31December 2023 1 January 2023 Rate from Rate from % Beneficial 1 July 2023 1 July 2022 increase Jeremy Rigg 27,000 20,000 Chairman of the Board £42,750 £40,500 5.6% Jonathan Silver 30,000 30,000 Chairman of the Audit & Zoe King 9,000 9,000 Risk Committee £34,200 £32,400 5.6% Francesca Ecsery 3,481 – Directors £28,500 £27,000 5.6% Non-Beneficial Richard Cranfield 30,000 30,000 Since the Company’s year-end Francesca Ecsery purchased 57 shares in the Company bringing her total beneficial holding to 3,538 shares. There have been no further changes reported since the year end to the date of this Annual Report. No Director is required to hold shares of the Company by way of qualification. ### Directors’ Remuneration (Audited) The total remuneration paid to the Directors who served during the years-ended 31 December 2023 and 31 December 2022 was asfollows: | | Year-ended | | | Year-ended | | | --- | --- | --- | --- | --- | --- | | 31December 2023 | | | 31December 2022 | | | | | Total fees | | | Total fees | | | | | £ | | | £ | Jeremy Rigg (Chairman of the Board) 41,625 39,000 Jonathan Silver (Chairman of the Audit and Risk Committee) 33,300 31,200 Zoe King 27,750 26,000 Richard Cranfield 27,750 26,000 1 Francesca Ecsery 27,824 n/a 2 Penny Lovell n/a 19,250 Total 158,249 141,450 1 Appointed to the Board on 31 December 2022 2 Retired from the Board on 30 September 2022 The table above omits other columns set out in the relevant regulations because no payments of other types such as taxable benefits including expenses, performance related pay, vesting performance related pay and pension related benefits were made. No other remuneration or compensation was paid or payable by the Company during the year to any of the current or former Directors or third parties specified by any of them. ### Relative importance of spend on pay In order to show the relative importance of expenditure on pay, the table below sets out the total level of remuneration compared to the distributions to shareholders by way of dividends. There were no share buybacks during the year. There were no other significant distributions, payments or other uses of the Company’s net return or cash flow deemed to assist in the understanding of the relative importance of spend on pay. | | | | | | | 1 year | | 1 year | | 5 year | | 5 year | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | 2023 | | 2022 | | 2018 | | change | | change | | change | | change | | | | £ | | £ | | £ | | £ | | % | | £ | | % | 1 Total remuneration paid to Directors 158,249 141,450 137,893 16,799 11.9 20,356 14.8 Ordinary dividends paid during the year 13,369,017 13,054,505 12,280,945 314,512 2.4 1,088,072 8.9 1 Remuneration will fluctuate due to the number of directors in any one year 48 Henderson High Income Trust plc Annual Report 2023 ## Directors’ Remuneration Report (continued) ### Annual Percentage Change in Directors’ Remuneration The table below sets out the annual percentage change in Directors’ fees (excluding expenses paid) for the Directors for the last three years in respect of each Director who has served for a minimum of two financial years. | | | | Year to | | | Year to | | | Year to | | | Year to | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | 31 December 2023 | | | 31 December 2022 | | | 31 December 2021 | | | 31 December 2020 | | | | | | | | % | | | % | | | % | | | % | | | 1 | | | | | | 1 | | | 1 | | | | | Jeremy Rigg | | | | 6.7 20.8 | | | | | 31.8 | | | | 1.0 | Jonathan Silver 6.7 5.1 1.0 7.6 Zoe King 6.7 5.1 1.0 1.0 2 Richard Cranfield 6.7 5.1 21.0 n/a 3 Francesca Ecsery n/a n/a n/a n/a 1 Appointed Chairman of the Board on 24 May 2021. The increase in Mr Rigg’s remuneration reflects this appointment part way through the year to 31 December 2021 and the additional remuneration associated with this role. The year to 31 December 2022 was his first full year in this role 2 Appointed to the Board on 1 March 2020 3 Appointed to the Board on 31 December 2022 ### Performance The Company’s performance has been measured against the benchmark for the ten-year period ended 31 December 2023 onatotal return basis in sterling terms. The graph compares the mid-market price of the Company’s ordinary shares with the benchmark over the same period, assuming a notional investment of £1,000 on 31 December 2013 and the reinvestment of alldividends. 2000 1500 1000 2019 2021 202220172015 2020201820162013 2014 2023 1 1 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 Source: Morningstar Direct ### Statement of Voting at AGM At the Company’s last AGM held on 16 May 2023, shareholders approved the Directors’ Remuneration Report and the Directors’Remuneration Policy in respect of the year ended 31 December 2022. The following proxy votes were received on therespective resolutions: | | For (including | % of total | | | | % of total | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | 1 | | | | 1 | | | Resolution | discretionary) | | votes | | Against | | votes | | Withheld | To receive the Directors’ Remuneration Report 10,358,926 98.4 171,388 1.6 240,939 (£) To approve the Directors’ Remuneration Policy 10,349,367 98.4 171,388 1.6 250,498 1 Excluding votes withheld For and on behalf of the Board Zoe King Chairman of the Nominations and Remuneration Committee 27 March 2024 49 Share price total return Benchmark Henderson High Income Trust plc Annual Report 2023 # Report of the Directors The Directors who are listed on pages 35 to 36 present their report and financial statements for the year ended 31 December 2023. The Company (a public limited company registered and domiciled in England & Wales with company registration number 02422514) was active throughout the year under review. The Corporate Governance Report (pages 37 to 40 and 45 to 46), the Report of the Audit and Risk Committee (pages 41 to 44), the Statement of Directors' Responsibilities (page 51), the Glossary (page 60), the Alternative Performance Measures (pages 61 to 62) and General Shareholder Information (pages 63 to 64) all form part of the Report of the Directors. ## Share Capital The Company's share capital comprises ordinary shares with a nominal value of 5p. The voting rights of the shares on a poll are one vote for every share held. There are no restrictions concerning the transfer of securities in the Company, no special rights with regard to control attached to securities, no agreements between holders of securities regarding their transfer known to the Company and no agreement which the Company is party to that affects its control following a takeover bid. To the extent that they exist, the revenue profits and capital of the Company (including accumulated revenue and capital reserves) are available for distribution by way of dividends to the holders of the ordinary shares. Upon a winding up, after meeting the liabilities of the Company, the surplus assets would be distributed to the shareholders pro-rata to their holding of ordinary shares. At the beginning of the year, there were 129,796,278 ordinary shares in issue. During the year no shares were issued or bought back. Therefore, at 31 December 2023 the number of ordinary shares in issue with voting rights was 129,796,278 (2022: 129,796,278). On 16 January 2024 the Company issued 42,345,422 new shares at a price of 170.25p per share to Henderson Diversified Income Trust plc (HDIV) shareholders in consideration of the £72.1 million of net assets acquired from HDIV in accordance with the scheme of reconstruction and winding up of HDIV under section 110 of the Insolvency Act 1986. Between 16 January 2024 and 27 March 2024, being the last practicable date prior to the publication of this Annual Report, no further ordinary shares have been issued. Accordingly, the number of shares in issue with voting rights as at 27 March 2024 was 172,141,700. The Company will seek authority from its shareholders at the 2024 AGM to renew its authority to allot shares up to 10% of the issued share capital. Please refer to the Notice of Meeting that has been sent to shareholders with this report for further details. This is also available at www.hendersonhighincome.com. ## Holdings in the Company's Shares In accordance with the Disclosure Guidance and Transparency Rules there were no declarations of interest in the voting rights of the Company in the year under review. No changes have been notified in the period 1 January 2024 to the date of this report. ## Related Party Transactions The Company's transactions with related parties in the year were with the Directors and the Manager. There have been no material transactions between the Company and its Directors during the year. The only amounts paid to them were in respect of remuneration for which there were no outstanding amounts payable at the year-end. Directors' interests in shares are disclosed in the Directors' Remuneration Report on page 48. 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 marketing services) there have been no material transactions with the Manager affecting the financial position or performance of the Company during the year under review. More details on Transactions with Janus Henderson and Related Parties, including amounts outstanding at the year-end, are given in Note 21 on page 78. ## Energy and Carbon Reporting Details of the Company's disclosures with regard to energy and carbon reporting can be found on page 33. ## Future Developments While the future performance of the Company is mainly dependent on the performance of financial markets which are subject to various external factors, the Board's intention is that the Company will continue to pursue its stated investment objective and policy explained on page 22. The Chairman's Statement and Fund Manager's Report provide commentary on the outlook for the Company. ## Annual General Meeting The Annual General Meeting (AGM) will be held on Tuesday, 14 May 2024 at 12 noon at 201 Bishopsgate, London EC2M 3AE. The Notice of Meeting and details of the resolutions to be put to the AGM are contained in the separate document being sent to shareholders with this Annual Report. ## Listing Rule 9.8.4 Listing Rule 9.8.4 requires the Company to include certain information in a single identifiable section of the Annual Report or a cross reference table indicating where the information is set out. The Directors confirm that there are no disclosures to be made in this regard other than in accordance with Listing Rule 9.8.4(7), the information of which is detailed in the adjacent column under Share Capital. ## Other Information Information on dividends and financial risks are detailed in the Strategic Report. By order of the Board Janus Henderson Secretarial Services UK Limited Corporate Secretary 27 March 2024 50 Henderson High Income Trust plc Annual Report 2023 ## Statement of Directors’ Responsibilities in ## Respect of the Financial Statements The Directors are responsible for preparing the Annual Report ### Directors’ Confirmations and the financial statements in accordance with applicable Each of the Directors, whose names and functions are listed law and regulation. on pages 35 to 36, confirm that, to the best of their Company law requires the Directors to prepare financial knowledge: statements for each financial year. Under that law the Directors ● the Company’s financial statements, which have been have prepared the financial statements in accordance with prepared in accordance with United Kingdom Accounting United Kingdom Generally Accepted Accounting Practice Standards, comprising FRS 102, give a true and fair view (United Kingdom Accounting Standards, comprising FRS 102 of the assets, liabilities, financial position and profit of the – The Financial Reporting Standard applicable in the UK and Company; and Republic of Ireland, and applicable law). ● the Strategic Report includes a fair review of the Under company law, directors must not approve the financial development and performance of the business and the statements unless they are satisfied that they give a true and position of the Company, together with a description of fair view of the state of affairs of the company and of the profit theprincipal risks and uncertainties that it faces. or loss of the company for that period. In preparing the financial statements, the Directors are required to: ● For and on behalf of the Board select suitable accounting policies and then apply them consistently; ● state whether applicable United Kingdom Accounting Standards, comprising FRS 102 have been followed, | | subject to any material departures disclosed and | Jeremy Rigg | | --- | --- | --- | | | explained in the financial statements; | Chairman | | ● | | 27 March 2024 | make judgments and accounting estimates that are reasonable and prudent; and ● prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. The Directors are responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are also responsible for keeping adequate accounting records that are sufficient to show and explain theCompany’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements and the Directors’ Remuneration Report comply with the Companies Act 2006. The Directors are responsible for the maintenance and integrity of the Company’s financial statements published onthe Company’s website. This responsibility is delegated toJanus Henderson as Manager. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. 51 ## Financial ## Statements 52 Henderson High Income Trust plc Annual Report 2023 ## Independent Auditors’ Report to the Members ## ofHenderson High Income Trust plc ### Report on the Audit of the Financial Statements ### Opinion In our opinion, Henderson High Income Trust plc’s financial statements: ● give a true and fair view of the state of the Company’s affairs as at 31 December 2023 and of its return and cash flows for the year then ended; ● have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards, including FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland”, and applicable law); and ● have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the Financial Statements, included within the Annual Report 2023 (the “Annual Report”), which comprise: the Statement of Financial Position as at 31 December 2023; the Income Statement; the Statement of Cash Flows; the Statement of Changes in Equity for the year then ended; and the notes to the Financial Statements, which include a description of the significant accounting policies. Our opinion is consistent with our reporting to the Audit and Risk Committee. ### Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We remained independent of the Company in accordance with the ethical requirements that are relevant to our audit of the Financial Statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided. We have provided no non-audit services to the Company in the period under audit. ### Our audit approach Overview Audit scope ● The Company is a standalone Investment Trust Company and engages Janus Henderson Fund Management UK Limited (the “Manager”) to manage its assets. ● We conducted our audit of the Financial Statements using information from BNP Paribas S.A. (the “Administrator”) to whom the Manager has, with the consent of the Directors, delegated the provision of certain administrative functions. ● We tailored the scope of our audit taking into account the types of investments within the Company, the involvement of the third parties referred to above, the accounting processes and controls, and the industry in which the Company operates. ● We obtained an understanding of the control environment in place at both the Manager and the Administrator and adopted a fully substantive testing approach using reports obtained from the Administrator. | Key audit matters | ● | Valuation and existence of investments. | | --- | --- | --- | | | ● | Accuracy, occurrence and completeness of income from investments. | | Materiality | ● | Overall materiality: £2,223,420 (2022: £2,142,767) based on 1% of net asset value. | | | ● | Performance materiality: £1,667,565 (2022: £1,607,075). | The scope of our audit As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the Financial Statements. 53 Henderson High Income Trust plc Annual Report 2023 ## Independent Auditors’ Report to the Members ## ofHenderson High Income Trust plc (continued) Key audit matters Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the Financial Statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit. The key audit matters below are consistent with last year. Key audit matter How our audit addressed the key audit matter Valuation and existence of investments Our audit work on the valuation and existence of investments included the Refer to the Report of the Audit and Risk Committee, following: Accounting Policy – 1d) and page the Notes to the ● We tested the valuation of 100% of the listed equity investments and Financial Statements – Note 11. fixed interest investments by agreeing the prices used in the valuation to The investment portfolio at the year-end comprised independent third-party sources; and listed equity investments at £236.8 million and fixed ● We tested the existence of the investment portfolio by agreeing interest investments valued at £33.2 million investment holdings to an independent custodian confirmation. (£270million total). Based on the results of the audit procedures performed we are satisfied We focused on the valuation and existence of that the listed equity investments and fixed interest investments exist, and investments because investments represent the that the valuation of listed equity investments and fixed interest investments principal element of the net asset value as disclosed is not materially misstated. on the Statement of Financial Position within the Financial Statements. Accuracy, occurrence and We responded to this risk by performing the following audit procedures: completeness of income ● We obtained an understanding of the processes and controls around frominvestments income recognition and classification of special dividends by reviewing Refer to the Report of the Audit and Risk Committee, the internal controls reports of the Administrator; and Accounting Policy – 1f) and the Notes to the Financial ● We assessed the appropriateness of the classification of special Statements – Note 3. dividends as revenue or capital by the Directors with reference to publicly available information. ISAs (UK) presume there is a risk of fraud in income recognition because of the pressure management For all dividends recorded by the Company, we performed our audit may feel to achieve a certain objective. In this procedures through the use of our proprietary testing tool Halo: instance, we consider that ‘income’ refers to all the ● We tested the accuracy of dividend income by agreeing the dividend Company’s income streams, both revenue and rates from investments to independent market data; capital (including gains and losses on investments). ● We tested occurrence by testing that all dividends recorded in the year Income from investments comprised dividend had been declared in the market by investment holdings; and income and fixed interest income. We focused on the ● To test for completeness, we investigated that the appropriate dividends accuracy, occurrence and completeness of dividend and fixed interest income recognition as incomplete, had been received in the year by reference to independent data of fictitious or inaccurate income could have a material dividends declared for all investment holdings held within theyear. impact on the Company’s net asset value and We have no matters to report as a result of this testing. dividend cover. In addition, the Directors are required For all fixed interest income recorded by the Company, we have performed to exercise judgment in determining whether income the following procedures: receivable in the form of special dividends should be classified as ‘revenue’ or ‘capital’ in the Statement of ● We have tested interest income for the year by obtaining the bond Comprehensive Income. standing data; ● We tested the accuracy of fixed-interest income by agreeing a sample We also focused on the accounting policy for income recognition and its presentation in the Income of coupon rates and maturity dates to third-party sources; and Statement as set out in the requirements of The ● We have recalculated the income received as well as tracing a sample Association of Investment Companies Statement of of receipts to bank statements. Recommended Practice (the ‘AIC SORP’) as We have no matters to report as a result of this testing. incorrect application could indicate a misstatement in income recognition. 54 Henderson High Income Trust plc Annual Report 2023 ## Independent Auditors’ Report to the Members ## ofHenderson High Income Trust plc (continued) How we tailored the audit scope We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the Financial Statements as a whole, taking into account the structure of the Company, the accounting processes and controls, and the industry inwhich it operates. The Company’s accounting is delegated to the Administrator who maintains the Company’s accounting records and who has implemented controls over those accounting records. We obtained our audit evidence from substantive tests. However, as part of our risk assessment, we understood and assessed the internal controls in place at both the Manager and the Administrator to the extent relevant to our audit. This assessment of the operating and accounting structure in place at both organisations involved obtaining and analysing the relevant controls reports issued by the independent service auditor of the Manager and the Administrator in accordance with generally accepted assurance standards for such work. Following this assessment, we applied professional judgment to determine the extent of testing required over each balance in the Financial Statements. The impact of climate risk on our audit In planning our audit, we made enquiries of the Directors and Manager to understand the extent of the potential impact of climate change risk on the Company’s financial statements. In conducting our audit, we made enquiries of the Directors and Manager to understand the extent of the potential impact of the climate change risk on the Company’s Financial Statements. Both concluded that the impact on the measurement and disclosures within the Financial Statements is not material because the Company’s investment portfolio is made up of Level 1 quoted securities which are valued at fair value based on market prices. We found this to be consistent with our understanding of the Company’s investment activities. We also considered the consistency of the climate change disclosures included in the Strategic Report with the Financial Statements and our knowledge from our audit. Our procedures did not identify any material impact as a result of climate risk on the Company’s Financial Statements. Materiality The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the Financial Statements as a whole. Based on our professional judgement, we determined materiality for the Financial Statements as a whole as follows: Overall Company materiality £2,223,420 (2022: £2,142,767). How we determined it 1% of net asset value. Rationale for benchmark applied We have applied this benchmark, which is a generally accepted auditing practice for investment trust audits. We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance materiality was 75% (2022: 75%) of overall materiality, amounting to £1,667,565 (2022: £1,607,075) for the Company’s Financial Statements. In determining the performance materiality, we considered a number of factors – the history of misstatements, risk assessment and aggregation risk and the effectiveness of controls – and concluded that an amount in the middle end of our normal range wasappropriate. We agreed with the Audit and Risk Committee that we would report to them misstatements identified during our audit above £111,171 (2022: £107,138) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons. ### Conclusions relating to going concern Our evaluation of the Directors’ assessment of the Company’s ability to continue to adopt the going concern basis of accounting included: ● evaluating the Directors’ updated risk assessment and considering whether it addressed relevant threats; ● evaluating the Directors’ assessment of potential operational impacts, considering their consistency with other available information and our understanding of the business and assessed the potential impact on the Financial Statements; ● reviewing the Directors’ assessment of the Company’s financial position in the context of its ability to meet future expected operating expenses and debt repayments, their assessment of liquidity as well as their review of the operational resilience of the Company and oversight of key third-party service providers; and ● assessing the implication of significant reductions in net asset value as a result of market performance on the ongoing ability of the Company to operate. 55 Henderson High Income Trust plc Annual Report 2023 ## Independent Auditors’ Report to the Members ## ofHenderson High Income Trust plc (continued) Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for a period of at least twelve months from when the Financial Statements are authorised for issue. In auditing the Financial Statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the Financial Statements is appropriate. However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Company’s ability to continue as a going concern. In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the Directors’ statement in the Financial Statements about whether the Directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. ### Reporting on other information The other information comprises all of the information in the Annual Report other than the Financial Statements and our auditors’ report thereon. The Directors are responsible for the other information. Our opinion on the Financial Statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon. In connection with our audit of the Financial Statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the Financial Statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the Financial Statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on these responsibilities. With respect to the Strategic Report and Report of the Directors, we also considered whether the disclosures required by the UK Companies Act 2006 have been included. Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as described below. Strategic Report and Report of the Directors In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and Report of the Directors for the year ended 31 December 2023 is consistent with the Financial Statements and has been prepared in accordance with applicable legal requirements. In light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we did not identify any material misstatements in the Strategic Report and Report of the Directors. Directors’ Remuneration In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006. Corporate Governance Statement The Listing Rules require us to review the Directors’ statements in relation to going concern, longer-term viability and that part of the corporate governance statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review. Our additional responsibilities with respect to the corporate governance statement as other information are described in the ‘Reporting on other information’ section of this report. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement included within the Corporate Governance Report is materially consistent with the Financial Statements and our knowledge obtained during the audit, and we have nothing material to add or draw attention to in relation to: ● The Directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks; ● The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks and an explanation of how these are being managed or mitigated; 56 Henderson High Income Trust plc Annual Report 2023 ## Independent Auditors’ Report to the Members ## ofHenderson High Income Trust plc (continued) ● The Directors’ statement in the Financial Statements about whether they considered it appropriate to adopt the going concern basis of accounting in preparing them, and their identification of any material uncertainties to the Company’s ability to continue to do so over a period of at least twelve months from the date of approval of the Financial Statements; ● The Directors’ explanation as to their assessment of the Company’s prospects, the period this assessment covers and why the period is appropriate; and ● The Directors’ statement as to whether they have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions. Our review of the Directors’ statement regarding the longer-term viability of the Company was substantially less in scope than an audit and only consisted of making inquiries and considering the Directors’ process supporting their statement; checking that the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the statement is consistent with the Financial Statements and our knowledge and understanding of the Company and its environment obtained in the course of the audit. In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Report is materially consistent with the Financial Statements and our knowledge obtained during the audit: ● The Directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, andprovides the information necessary for the members to assess the Company’s position, performance, business model and strategy; ● The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems;and ● The section of the Annual Report describing the work of the Audit and Risk Committee. We have nothing to report in respect of our responsibility to report when the Directors’ statement relating to the Company’s compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review by the auditors. ### Responsibilities for the financial statements and the audit Responsibilities of the Directors for the financial statements As explained more fully in the Statement of Directors’ Responsibilities in Respect of the Financial Statements, the Directors are responsible for the preparation of the Financial Statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The Directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the Financial Statements, the Directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. Auditors’ responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below. Based on our understanding of the Company and industry, we identified that the principal risks of non-compliance with laws and regulations related to the ongoing qualification as an Investment Trust under the Corporation Tax Act 2010, and we considered the extent to which non-compliance might have a material effect on the Financial Statements. We also considered those laws and regulations that have a direct impact on the financial Statements such as the Companies Act 2006. We evaluated management’s incentives and opportunities for fraudulent manipulation of the Financial Statements (including the risk of override of controls), and determined that the principal risks were related to posting of inappropriate journal entries to increase income or to overstate the value of investments and increase the net asset value of the Company. Audit procedures performed by the engagement team included: 57 Henderson High Income Trust plc Annual Report 2023 ## Independent Auditors’ Report to the Members ## ofHenderson High Income Trust plc (continued) ● discussions with the Directors, the Manager and the Administrator, including consideration of known or suspected instances of non-compliance with laws and regulation and fraud; ● evaluation of the controls implemented by the Manager and the Administrator designed to prevent and detect irregularities; ● assessment of the Company’s compliance with the requirements of Section 1158 of the Corporation Tax Act 2010, including recalculation of numerical aspects of the eligibility conditions; ● identifying and testing journal entries, in particular year-end journal entries posted by the Administrator during the preparation of the Financial Statements; ● designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing; and ● reviewing relevant meeting minutes, including those of the Audit and Risk Committee. There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the Financial Statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected. A further description of our responsibilities for the audit of the Financial Statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report. Use of this report This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. ### Other required reporting Companies Act 2006 Exception Reporting Under the Companies Act 2006 we are required to report to you if, in our opinion: ● we have not obtained all the information and explanations we require for our audit; or ● adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not visited by us; or ● certain disclosures of Directors’ remuneration specified by law are not made; or ● the Financial Statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns. We have no exceptions to report arising from this responsibility. ### Appointment Following the recommendation of the Audit and Risk Committee, we were appointed by the Directors on 14 December 2016 to audit the Financial Statements for the year ended 31 December 2016 and subsequent financial periods. The period of total uninterrupted engagement is eight years, covering the years ended 31 December 2016 to 31 December 2023. Jennifer March (Senior Statutory Auditor) For and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors London 27 March 2024 58 Henderson High Income Trust plc Annual Report 2023 ## Income Statement Year-ended 31December 2023 Year-ended 31December 2022 | | Revenue | | Capital | | Revenue | | Capital | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | return | return | Total | | return | return | Total | | Notes | | £’000 | £’000 | £’000 | | £’000 | £’000 | £’000 | 2 Gains/(losses) on investments held at fair value through profit or loss – 10,620 10,620 – (22,469) (22,469) 3 Income from investments held at fair value through profit or loss 14,859 – 14,859 14,632 – 14,632 4 Other interest receivable and similar income 538 – 538 307 – 307 Gross revenue and capital gains/(losses) 15,397 10,620 26,017 14,939 (22,469) (7,530) 5 Management fee (565) (846) (1,411) (557) (836) (1,393) 6 Other administrative expenses (456) – (456) (498) – (498) Net return before finance costs and taxation 14,376 9,774 24,150 13,884 (23,305) (9,421) 7 Finance costs (646) (1,938) (2,584) (380) (1,140) (1,520) Net return before taxation 13,730 7,836 21,566 13,504 (24,445) (10,941) 8 Taxation on net return (247) 101 (146) (81) – (81) Net return after taxation 13,483 7,937 21,420 13,423 (24,445) (11,022) 9 Return/(loss) per ordinary share 10.39p 6.11p 16.50p 10.37p (18.89p) (8.52p) The total columns of this statement represent the Income Statement of the Company. All capital and revenue items derive from continuing operations. No operations were acquired or discontinued during the year. The Company has no other comprehensive income other than those items recognised in the Income Statement. The notes on pages 63 to 78 form part of these financial statements 59 Henderson High Income Trust plc Annual Report 2023 ## Statement of Changes in Equity | | Called up | | | Share | | Capital | | Other | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | share | premium | | redemption | | | capital | Revenue | | | | | | capital | account | | | reserve | reserves | | reserve | | Total | | Notes Year-ended 31December 2023 | | £’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 – – – 7,937 13,483 21,420 10 Dividends paid – – – – (13,355) (13,355) At 31 December 2023 6,490 128,827 26,302 51,807 8,916 222,342 | | Called up | | Share | | Capital | | Other | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | share | premium | redemption | | | capital | Revenue | | | | | capital | account | | reserve | reserves | | reserve | Total | | Notes Year-ended 31December 2022 | | £’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) 16 Issue of new shares 60 2,044 – – – 2,104 10 Dividends paid – – – – (13,039) (13,039) At 31 December 2022 6,490 128,827 26,302 43,870 8,788 214,277 The notes on pages 63 to 78 form part of these financial statements 60 Henderson High Income Trust plc Annual Report 2023 # Statement of Financial Position | Notes | At 31 December 2023 £'000 | At 31 December 2022 £'000 | | --- | --- | --- | | **Fixed assets** | | | | 11 Investments held at fair value through profit or loss | 270,007 | 280,053 | | **Current assets** | | | | 12 Debtors | 2,092 | 1,928 | | Cash at bank and in hand | 1,990 | 2,873 | | | **4,082** | **4,801** | | 13 Creditors: amounts falling due within one year | (31,880) | (30,719) | | **Net current liabilities** | **(27,798)** | **(25,918)** | | **Total assets less current liabilities** | **242,209** | **234,135** | | 14 Creditors: amounts falling due after more than one year | (19,867) | (19,858) | | **Net assets** | **222,342** | **214,277** | | **Capital and reserves** | | | | 16 Called up share capital | 6,490 | 6,490 | | 17 Share premium account | 128,827 | 128,827 | | 17 Capital redemption reserve | 26,302 | 26,302 | | 17 Other capital reserves | 51,807 | 43,870 | | 17 Revenue reserve | 8,916 | 8,788 | | **Total shareholders' funds** | **222,342** | **214,277** | | 18 **Net asset value per ordinary share (basic and diluted)** | **171.30p** | **165.09p** | The financial statements and corresponding notes on pages 59 to 78 were approved by the Board on 27 March 2024 and signed on its behalf by: Jeremy Rigg Chairman The notes on pages 63 to 78 form part of these financial statements 61 Henderson High Income Trust plc Annual Report 2023 ## Statement of Cash Flows | | Year-ended | | | Year-ended | | | --- | --- | --- | --- | --- | --- | | 31December 2023 | | | 31December 2022 | | | | | | £’000 | | | £’000 | Cash flows from operating activities Net return before taxation 21,566 (10,941) Add back: finance costs 2,584 1,520 (Less)/add: (gains)/losses on investments held at fair value through profit or loss (10,620) 22,469 Withholding tax on dividends deducted at source (146) (81) (Increase)/decrease in debtors (164) 6 (Decrease)/increase in creditors (337) 287 1 Net cash inflow from operating activities 12,883 13,260 Cash flows from investing activities Sales of investments held at fair value through profit or loss 66,925 60,179 Purchases of investments held at fair value through profit or loss (67,282) (51,435) Net cash (outflow)/inflow from investing activities (357) 8,744 Cash flows from financing activities Issue of ordinary share capital – 2,104 Equity dividends paid (13,355) (13,039) Drawdown/(repayment) of loans 1,649 (11,330) Interest paid (2,575) (1,512) Net cash outflow from financing activities (14,281) (23,777) Net decrease in cash and cash equivalents (1,755) (1,773) Cash and cash equivalents at beginning of year 2,873 3,942 Exchange movements 872 704 Cash and cash equivalents at end of year 1,990 2,873 Comprising: Cash at bank 1,990 2,873 1 Cash inflow from dividends was £13,528,000 (2022: £13,729,000) and cash inflow from interest was £1,395,000 (2022: £1,093,000) The notes on pages 63 to 78 form part of these financial statements 62 Henderson High Income Trust plc Annual Report 2023 ## Notes to the Financial Statements ### 1 Accounting Policies a) Basis of Accounting The Company is an investment company as defined in Section 833 of the Companies Act 2006 and is incorporated in the UK. It operates in England andWales and is registered at 201 Bishopsgate, London EC2M 3AE. The financial statements have been prepared in accordance with the Companies Act 2006, FRS 102 – The Financial Reporting Standard applicable in the UK and Republic of Ireland, and with the AIC Statement of Recommended Practice: Financial Statements of Investment Trust Companies and Venture Capital Trusts (SORP). The principal accounting policies applied in the presentation of these financial statements are set out below. These policies have been consistently applied to all the years presented. The financial statements have been prepared under the historical cost basis except for the measurement at fair value of investments. In applying FRS 102, financial instruments have been accounted for in accordance with Sections 11 and 12 of the standard. All of the Company’s operations are of a continuing nature. b) Significant Judgments and Estimates The decision to allocate special dividends as income or capital is a judgment but not deemed to be material. The allocation ofexpenses as income or capital is not material but has an impact on distributable reserves. The Directors do not consider these to be significant judgments or estimates and do not believe any accounting judgments or estimates have been applied to this set of financial statements that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year. c) 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 the risks arising from the wider ramifications of geopolitical conflicts, including 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. d) Valuation of investments The Company’s business is investing in financial assets with a view to profiting from their total return in the form of income and capital growth. This portfolio of financial assets is managed and its performance evaluated on a fair value basis, in accordance with a documented investment strategy, and information about the portfolio is provided internally on that basis to the Company’s Directors. Accordingly, upon initial recognition the investments are included initially at fair value, which is taken to be their cost. Subsequently, the investments are valued at fair value, which is deemed to be the bid market prices or the last traded price as at close of business on the last business day of the accounting period depending on the convention of the exchange on which the investment is quoted. All fair value movements in investments are taken to the Income Statement. In accordance with the SORP, the Company’s profit and loss account is split between revenue and capital returns columns as can be seen in the Income Statement. Fairvalue movements on investments are taken to the capital column in the Income Statement. e) Capital gains and losses Profits or losses or disposal of investments and investment holding gains and losses are taken to the capital column in the Income Statement and transferred to other capital reserves. The Company’s capital reserves arising on investments sold and revenue reserve may be distributed by way of a dividend. The portion of the capital reserve arising on investments held is wholly non-distributable. There may be factors that restrict the value of reserves that can be distributed and these factors may be complex to determine. Amounts fully distributable may therefore not be the total of the revenue and the portion of capital reserve arising on investments sold. 63 Henderson High Income Trust plc Annual Report 2023 ## Notes to the Financial Statements (continued) ### 1 Accounting Policies (continued) f) Income Dividends receivable on equity shares are taken to the revenue return of the Income Statement on an ex-dividend basis except where, in the opinion of the Directors, based on the facts and circumstances the dividend is capital in nature in which case it is taken to the capital return. Income from fixed interest debt securities and preference shares with no fixed maturity date is recognised on a time-apportioned basis. Income from other fixed interest securities is recognised so as to reflect the effective interest rate on these securities. g) Expenses All expenses and finance costs are accounted for on an accruals basis. The Board’s expectation is that over the long term three quarters of the Company’s investment returns will be in the form of capital gains. The Directors have determined that the proportion of the annual management fees that relates to the maintenance or enhancement of the valuation of investments is 80%. On this basis, the Company charges to capital 60% of total management fees (i.e. 75% of 80%) and 75% of its finance costs. The balance of the management fees is charged to revenue. Expenses which are incidental to theacquisition of an investment are charged to the Income Statement and included within gains/losses on investments. Expenses which are incidental to the disposal of an investment are deducted from sale proceeds and go to the Income Statement indirectly. h) Taxation The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the Income Statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company’s liability for current tax is calculated using the applicable tax rate of corporation tax for the accounting period. The tax effect of different items of expenditure is allocated between the capital return and revenue return using the Company’s applicable rate of tax for the year. In line with the recommendations of the SORP, the allocation method used to calculate tax relief on expenses presented against capital returns on the Income Statement is the ‘marginal basis’. Under this basis, if taxable income is capable of being offset entirely by expenses presented in the revenue column of the Income Statement, then no tax relief is transferred to the capital return column. Deferred taxation is provided on all timing differences that have originated but not been reversed by the Statement of Financial Position date, other than those differences regarded as permanent. Timing differences arise from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included in the financial statements. Any liability to deferred tax is provided at the average rate of tax expected to apply. Deferred tax assets and liabilities are not discounted to reflect the time value of money. The carrying amount of deferred tax assets is reviewed at each Statement of Financial Position date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. i) Foreign Currency The results and financial position of the Company are expressed in sterling, which is the functional and presentational currency of the Company. Sterling is the functional currency because the Company is listed in the UK with a predominantly UK shareholder base. Transactions denominated in overseas currencies during the year are translated into sterling at the appropriate daily exchange rate. Assets and liabilities denominated in overseas currencies at the Statement of Financial Position date are translated into sterling at the exchange rate ruling at that date. Differences arising from translation at this rate of exchange are included within the Income Statement as a capital item and then transferred to capital reserves. j) Borrowings Interest-bearing bank loans, overdrafts and the senior unsecured note are recorded as proceeds received, net of direct issue costs. They are subsequently measured at amortised cost. Finance costs, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis in the Income Statement, using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. 64 Henderson High Income Trust plc Annual Report 2023 ## Notes to the Financial Statements (continued) ### 1 Accounting Policies (continued) k) Derivative financial instruments The Company does not use derivative financial instruments for speculative purposes. Derivative transactions which the Company may enter into comprise forward exchange contracts (the purpose of which is to hedge foreign currency exposure) and futures contracts on indices appropriate to sections of the portfolio (one purpose for which may be to provide protection against falls in the capital values of the holdings). The Company may also write options on shares represented in the portfolio where such options are priced attractively relative to Janus Henderson’s expectations for the relevant share prices and to generate additional return for shareholders. The use of financial derivatives is governed by the Company’s polices as approved by the Board. Changes in the fair value of derivative financial instruments are recognised in the Income Statement as they arise. If based on circumstances and motive they are capital in nature, the associated change in value is presented as a capital item in the Income Statement. Where options are written for the purpose of generating revenue, applicable premiums are recognised evenly over the life of the option and shown in the revenue return, with the appropriate amount shown as a capital return such that the total return reflects the overall change in the fair value of the option. l) Dividends payable to shareholders Interim dividends payable to shareholders are recognised in the financial statements when they are paid. The Company does not pay a final dividend. Details of dividends provided are in the Statement of Changes in Equity on page 60 and Note 10 on pages 68 to 69. m) Capital and reserves Share capital represents the nominal value of shares issued. The share premium account represents the premium above nominal value received by the Company on issuing shares net of issue costs. The revenue reserve represents accumulated revenue profits retained by the Company that have not currently been distributed to shareholders as a dividend. The capital redemption reserve represents the nominal value of ordinary shares repurchased and cancelled. Other capital reserves are split into two components, the capital reserve arising on investments sold and the capital reserve arising on investments held. The following analyses what is accounted for in each of these components. Capital reserve arising on investments sold ● gains and losses on disposals of investments; ● realised foreign exchange differences of a capital nature; ● cost of repurchasing ordinary share capital; and ● other capital charges and credits charged to this account in accordance with the above policies. Capital reserve arising on investments held ● increases and decreases in the valuation of investments held at the year end; and ● unrealised foreign exchange differences of a capital nature. n) Distributable Reserves The Company’s capital reserve arising on investments sold and revenue reserve may be distributed by way of a dividend. The portion of the capital reserve arising on investments held is wholly non-distributable. There may be factors that restrict the value of reserves that can be distributed and these factors may be complex to determine. Amounts fully distributable may therefore not be the total of the revenue reserve and the portion of capital reserve arising on investments sold. 65 Henderson High Income Trust plc Annual Report 2023 ## Notes to the Financial Statements (continued) ### 2 Gains/(losses) on Investments Held at Fair Value through Profit or Loss 2023 2022 £’000 £’000 Gains on the sale of investments based on historical cost 4,360 1,102 Revaluation gains recognised in previous years (2,523) (3,655) Gains/(losses) on investments sold in the year based on carrying value at previous Statement of Financial Position date 1,837 (2,553) Net movement on revaluation of investments 7,722 (17,748) Effective yield movement 38 6 Exchange gains/(losses) 1,023 (2,174) 10,620 (22,469) ### 3 Income from Investments Held at Fair Value through Profit or Loss 2023 2022 £’000 £’000 UK dividend income – listed 10,612 10,198 UK dividend income – special dividends 119 1,016 10,731 11,214 Interest income – listed 1,328 1,082 Overseas and other dividend income – listed 2,678 2,245 Overseas and other dividend income – special dividends 122 91 4,128 3,418 14,859 14,632 ### 4 Other Interest Receivable and Similar Income 2023 2022 £’000 £’000 Deposit interest 84 18 Traded option premiums 454 289 538 307 ### 5 Management Fee 2023 2022 | Revenue | | Capital | | Revenue | | Capital | | | --- | --- | --- | --- | --- | --- | --- | --- | | | return | return | Total | | return | return | Total | | | £’000 | £’000 | £’000 | | £’000 | £’000 | £’000 | Management fee 565 846 1,411 557 836 1,393 A summary of the terms of the Investment Management Agreement is given in Arrangements with the Manager on page 25. An explanation of the split between revenue and capital is contained in Note 1g on page 64. 66 Henderson High Income Trust plc Annual Report 2023 ## Notes to the Financial Statements (continued) ### 6 Other Administrative Expenses 2023 2022 £’000 £’000 Directors’ fees (please refer to the Directors’ Remuneration Report on page 48) 158 141 Auditor’s remuneration – for audit services (excluding VAT) 45 42 Depositary fees 23 23 Registrar fees 22 22 Sales and marketing expenses payable to the Manager 44 75 Listing fees 35 32 Printing and postage fees 24 25 Legal and professional fees 46 83 AIC subscriptions 17 16 Other expenses 42 39 456 498 ### 7 Finance Costs 2023 2022 | Revenue | | Capital | | Revenue | Capital | | | --- | --- | --- | --- | --- | --- | --- | | | return | return | Total | return | return | Total | | | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | Interest on bank loans repayable within one year 461 1,383 1,844 193 580 773 Interest on senior unsecured note 185 555 740 187 560 747 646 1,938 2,584 380 1,140 1,520 ### 8 Taxation on Net Return 2023 2022 | Revenue | | Capital | | Revenue | Capital | | | --- | --- | --- | --- | --- | --- | --- | | | return | return | Total | return | return | Total | | | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | Overseas withholding tax 146 – 146 81 – 81 Tax relief on management expenses allocated to capital 101 (101) – – – – Total current tax charge for the year 247 (101) 146 81 – 81 a) Factors affecting tax charge for the year The UK corporation tax rate was 19% until 31 March 2023 and 25% from 1 April 2023, giving an effective rate of 23.5% (2022 – applicable rate of 19%). The tax charge for the year is lower than the corporation tax rate. The differences are explained below: 2023 2022 | Revenue | | Capital | | Revenue | Capital | | | --- | --- | --- | --- | --- | --- | --- | | | return | return | Total | return | return | Total | | | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | Net revenue before taxation 13,730 7,836 21,566 13,504 (24,445) (10,941) Corporation tax of 23.5% (2022: 19%) 3,227 1,841 5,068 2,566 (4,645) (2,079) Effects of: – UK dividends (2,500) – (2,500) (2,113) – (2,113) – Non–taxable overseas dividends (554) – (554) (374) – (374) – Utilised excess management expenses (173) 654 481 (77) 376 299 – Tax relief on management expenses allocated to capital 101 (101) – – – – – Irrecoverable overseas withholding tax 146 – 146 81 – 81 – Tax effect of expensed double taxation relief – – – (2) – (2) – (Gains)/losses on investments held at fair value – (2,495) (2,495) – 4,269 4,269 Total current tax charge for the year 247 (101) 146 81 – 81 The Company is an investment trust and therefore its capital gains are not taxable. 67 Henderson High Income Trust plc Annual Report 2023 # Notes to the Financial Statements (continued) ## 8 Taxation on Net Return (continued) ### b) Factors that may affect future tax charges The Company can offset management fees, other administrative expenses and interest costs against taxable income to eliminate any tax charge on such income. The tax legislation refers to these as management expenses (management fees and other administrative expenses) and non-trade loan relationship deficits (interest costs) and these are captured together under the heading "Utilised excess management expenses" in the table above. Where these are not fully utilised, they can be carried forward to future years. As the Company is unlikely to generate future taxable profits to utilise these amounts, the Company cannot recognise an asset to reflect them, but must still disclose the deferred tax amount carried forward arising from any unutilised amounts. Consequently, the Company has not recognised a deferred tax asset totalling £6,118,000 (2022: £5,598,000) based on a prospective tax rate of 25% (2022: 25%) arising as a result of having unutilised management expenses and unutilised non-trade loan relationship deficits. These expenses will only be utilised, to any material extent if changes are made either to the tax treatment of the capital gains made by investment trusts or to the Company's investment profile which require them to be used. ## 9 Profit/(loss) for the year Profit/(loss) attributable per ordinary share figure is based on the return attributable to the ordinary shares of £21,420,000 (2022 loss: £11,022,000) and on the 129,796,278 weighted average number of ordinary shares in issue during the year (2022: 129,401,141). The Company had no securities in issue that could dilute the return per ordinary share. The return per ordinary share can be analysed between revenue and capital as shown below: | | 2023 £'000 | 2022 £'000 | | --- | --- | --- | | Net revenue return | 13,483 | 13,423 | | Net capital return/(loss) | 7,937 | (24,445) | | **Profit/(loss) for the year** | **21,420** | **(11,022)** | | **Weighted average number of ordinary shares** | **129,796,278** | **129,401,141** | | Revenue return per ordinary share | 10.39p | 10.37p | | Capital return/(loss) per ordinary share | 6.11p | (18.89p) | | **Profit/(loss) attributable per ordinary share** | **16.50p** | **(8.52p)** | ## 10 Dividends Paid on Ordinary Shares | | Payment date | 2023 £'000 | 2022 £'000 | | --- | --- | --- | --- | | Fourth interim dividend (2.525p per share) for the year ended 31 December 2021 | 28 January 2022 | – | 3,247 | | First interim dividend (2.525p per share) for the year ended 31 December 2022 | 29 April 2022 | – | 3,255 | | Second interim dividend (2.525p per share) for the year ended 31 December 2022 | 29 July 2022 | – | 3,275 | | Third interim dividend (2.525p per share) for the year ended 31 December 2022 | 28 October 2022 | – | 3,277 | | Fourth interim dividend (2.575p per share) for the year ended 31 December 2022 | 27 January 2023 | 3,342 | – | | First interim dividend (2.575p per share) for the year ended 31 December 2023 | 28 April 2023 | 3,342 | – | | Second interim dividend (2.575p per share) for the year ended 31 December 2023 | 28 July 2023 | 3,342 | – | | Third interim dividend (2.575p per share) for the year ended 31 December 2023 | 27 October 2023 | 3,342 | – | | Unclaimed dividends | | (13) | (15) | | | | **13,355** | **13,039** | 68 Henderson High Income Trust plc Annual Report 2023 # Notes to the Financial Statements (continued) ## 10 Dividends Paid on Ordinary Shares (continued) The total dividends payable in respect of the financial year which form the basis of the test under Section 1158 of the Corporation Tax Act 2010 are set out below: | | 2023 £'000 | 2022 £'000 | | --- | --- | --- | | Revenue available for distribution by way of dividend for the year | 13,483 | 13,423 | | First interim dividend of 2.575p (2022: 2.525p) | (3,342) | (3,255) | | Second interim dividend of 2.575p (2022: 2.525p) | (3,342) | (3,275) | | Third interim dividend of 2.575p (2022: 2.525p) | (3,342) | (3,277) | | Fourth interim dividend 2.625p (2022: 2.575p) | (3,407) | (3,342) | | | **50** | **274** | In accordance with FRS102, interim dividends payable to equity shareholders are recognised in the Statement of Changes in Equity when they have been paid to shareholders. All dividends have been paid out of revenue reserves or current year revenue profits and at no point during the year did the revenue reserve move to a negative position. ## 11 Investments Held at Fair Value through Profit or Loss | | 2023 £'000 | 2022 £'000 | | --- | --- | --- | | Valuation at 1 January | 260,053 | 289,091 | | Investment holding gains at 1 January | (25,734) | (47,124) | | **Cost at 1 January** | **234,319** | **241,967** | | Purchases at cost | 67,282 | 51,435 | | Sales at cost | (62,527) | (59,083) | | **Cost at 31 December** | **239,074** | **234,319** | | Investment holding gains at 31 December | 30,933 | 25,734 | | **Valuation of investments at 31 December** | **270,007** | **260,053** | Total transaction costs amounted to £257,000 (2022: £165,000) of which purchase transaction costs for the year-ended 31 December 2023 were £238,000 (2022: £147,000). Sale transaction costs for the year-ended 31 December 2023 were £19,000 (2022: £18,000). These comprise mainly stamp duty (purchases only) and commissions. The Company received £96,925,000 (2022: £60,179,000) from investments sold in the year. The book cost of these investments when they were purchased was £62,527,000 (2022: £59,083,000). These investments have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments. ## 12 Debtors | | 2023 £'000 | 2022 £'000 | | --- | --- | --- | | Taxation recoverable | 565 | 508 | | Prepayments and accrued income | 1,527 | 1,420 | | | **2,092** | **1,928** | ## 13 Creditors: Amounts Falling Due Within One Year | | 2023 £'000 | 2022 £'000 | | --- | --- | --- | | Bank loans | 30,639 | 29,141 | | Accruals and deferred income | 1,241 | 1,578 | | | **31,880** | **30,719** | 69 Henderson High Income Trust plc Annual Report 2023 # Notes to the Financial Statements (continued) ### 13 Creditors: Amounts Falling Due Within One Year (continued) On 20 December 2023, the short-term multi-currency loan facility with The Bank of Nova Scotia, London Branch expired. The Company entered into a short term multi-currency loan facility with BNP Paribas, London Branch. As at 31 December 2023 £30,639,000, repayable in January and February 2024 (2022: £29,141,000, repayable January and March 2023) of the facility was drawn down. The average interest rate payable on these loans was 5.61% (2022: 4.10%). ### 14 Creditors: Amounts Falling Due After More Than One Year | | 2023 £'000 | 2022 £'000 | | --- | --- | --- | | Senior unsecured note | 19,867 | 19,858 | | | 19,867 | 19,858 | On 8 July 2015 the Company issued £20 million (nominal) 3.67% senior unsecured note due 2034, net of issue costs totalling £204,000. The issue costs will be amortised over the life of the senior unsecured note by way of an effective interest rate method. The fair value methodology of the senior unsecured note is detailed in note 15.4 on page 74. Please refer to the Financial Calendar on page 85 for the senior unsecured note interest payment dates. ### 15 Financial Risk Management Policies and Procedures As an investment trust, the Company invests in equities and other investments for the long-term so as to secure its investment objective and policy (please refer to page 22). In pursuing its investment objective and policy, the Company is exposed to a variety of financial risks that could result in either a reduction in the Company's net assets or a reduction in the profits available for distribution by way of dividends. These financial risks are: market risk (comprising market price risk, currency risk and interest rate risk), credit risk, liquidity risk and gearing. Details of these risks and of the Directors' approach to the management of these risks, are set out below and have not changed from the previous accounting year. The Board receives regular financial and other reporting to enable it to measure these risks. The Board and Janus Henderson co-ordinate the Company's risk management and there are various risk management systems in place as detailed below: - Listed securities, exchange-traded derivatives and over the counter (OTC) derivatives contracts are processed, confirmed and reconciled using automated systems linked to counterparties and clearing houses; - Portfolio modeling and investment management functions (including order-raising, dealing and trade execution) are performed using one of, or a combination of, third-party software applications; and - Fund pricing and accounting services are outsourced to a third-party administrator (currently BNP Paribas S.A.) Janus Henderson Risk, Compliance and Operations Teams have access to and use a variety of in-house and third party databases and applications for independent monitoring and risk measurement and compliance purposes. #### 15.1 Market Risk The fair value of a financial instrument held by the Company may fluctuate due to changes in market prices. This market risk comprises currency risk (see note 15.1.1), interest rate risk (see note 15.1.2) and other price risk (see note 15.1.3), in particular the risk of fluctuations in prices of securities. The Board reviews and agrees policies for managing these risks and agrees investment guidelines and restrictions for managing the portfolio; these have remained substantially unchanged from those applying in the previous year. The Fund Manager assesses the exposure to market risk when making each investment decision, and monitors the overall level of market risk on the whole of the investment portfolio on an ongoing basis. This risk is mitigated through diversification of investments in the portfolio. #### 15.1.1 Currency Risk A proportion of the Company's assets and income is denominated in currencies other than sterling (the Company's functional currency and the one in which it reports its results). Therefore, movements in exchange rates may affect the sterling value of these items. This may be partially offset by borrowing in foreign currencies. The Board regularly reviews currency risk. 70 Henderson High Income Trust plc Annual Report 2023 # Notes to the Financial Statements (continued) ## 15 Financial Risk Management Policies and Procedures (continued) ### 15.1.1 Currency Risk (continued) #### Foreign currency exposure The fair values of the Company's monetary items that have foreign currency exposure as at 31 December 2023 and 2022 are shown below. Where the Company's investments which are not monetary items are denominated in a foreign currency, they have been included separately in the analysis so as to show the overall level of exposure. | 2023 | EUR £'000 | US$ £'000 | SEK £'000 | | --- | --- | --- | --- | | Cash and cash equivalents | 50 | 13 | – | | Bank loans | (11,412) | (9,727) | – | | **Total foreign currency exposure on net monetary items** | **(11,362)** | **(9,714)** | **–** | | Investments at fair value through profit or loss that are equities | 23,012 | 19,408 | – | | **Total net foreign currency exposures** | **11,650** | **9,694** | **–** | | 2022 | EUR £'000 | US$ £'000 | SEK £'000 | | --- | --- | --- | --- | | Cash and cash equivalents | 3 | – | – | | Bank loans | (8,140) | (12,909) | – | | **Total foreign currency exposure on net monetary items** | **(8,137)** | **(12,909)** | **–** | | Investments at fair value through profit or loss that are equities | 16,470 | 26,012 | 2,920 | | **Total net foreign currency exposures** | **8,333** | **13,103** | **2,920** | The above amounts are not necessarily representative of the exposure to risk during the year as levels of monetary foreign currency exposure may have changed significantly throughout the year. If sterling depreciates against the currencies shown by 10%, the impact on the total return and net assets would be £2,844,000 (2022: £3,114,000). If sterling appreciates against the currencies shown by 10%, the impact on the total return and net assets would be (£2,327,000) (2022: £2,548,000). ### 15.1.2 Interest Rate Risk Interest rate movements may affect: - the fair value of investments on fixed interest securities; - the level of income receivable from interest-bearing securities and cash at bank and on deposit; and - the interest payable on the Company's variable rate borrowings. #### Management of the risk The possible effects of fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investment decisions and borrowing under the multi-currency loan facility. The Company generally does not hold significant cash balances; short term borrowings are used when required. The Company finances part of its activities through borrowings at levels approved by the Board. Derivative contracts may sometimes be used to hedge against the exposure to interest rate risk. #### Interest rate exposure The exposure at 31 December of financial assets and financial liabilities to interest rate risk is shown by reference to: - floating interest rates: when the interest rate is due to be re-set; and - fixed interest rates: when the financial instrument is due for repayment. Please refer to the Financial Calendar on page 85 for the senior unsecured note interest repayment dates. 71 Henderson High Income Trust plc Annual Report 2023 ## Notes to the Financial Statements (continued) ### 15 Financial Risk Management Policies and Procedures (continued) 15.1.2 Interest Rate Risk (continued) 2023 2022 | Within | More than | | | Within | More than | | | | --- | --- | --- | --- | --- | --- | --- | --- | | one year | one year | | Total | one year | one year | | Total | | £’000 | | £’000 | £’000 | £’000 | | £’000 | £’000 | Exposure to floating interest rates: Cash at bank 1,990 – 1,990 2,873 – 2,873 Creditors – within one year: Borrowings under multi-currency loan facility (30,771) – (30,771) (29,200) – (29,200) (28,781) – (28,781) (26,327) – (26,327) Exposure to fixed interest rates: Investments held at fair value through profit or loss 4,904 28,310 33,214 – 29,076 29,076 Creditors – more than one year: 1 Senior unsecured note (740) (27,334) (28,074) (747) (28,061) (28,808) Total exposure to interest rates (24,617) 976 (23,641) (27,074) 1,015 (26,059) 1 The above figures show interest payable over the remaining term of the senior unsecured note. The figures in the ‘more than one year’ column also include the capital to be repaid Interest receivable and finance costs are at the following rates: ● interest received on cash balances, or paid on bank overdrafts, is at a margin linked to SONIA or its foreign currency equivalent (2022: same); ● interest paid on borrowings under the multi-currency loan facility is at a margin over SONIA or its foreign currency equivalent for the type of loan. The weighted average interest rate of these was 5.61% at 31 December 2023 (2022:4.10%); ● interest paid on the senior unsecured note is at a rate of 3.67% (2022: 3.67%); and ● the nominal interest rates on the investments held at fair value through profit and loss are shown above. Interest rate risk sensitivity The Company is primarily exposed to interest rate risk through its loan facility with BNP Paribas, London Branch, previouslyThe Bank of Nova Scotia, London Branch, and its fixed interest investment portfolio. The sensitivity of each exposure is as follows: ● loan sensitivity: borrowings vary throughout the year as a result of the Board’s borrowing policy. Borrowings at the year end were £30,639,000 (2022: £29,141,000) (see note 13 on pages 69 to 70) and if that level of borrowings were maintained for a full year, then a 100 basis points change in SONIA (up or down) would decrease or increase total return after taxation by approximately £306,000 (2022: £291,000). This level of change is considered to be reasonably possible based on changes that have been applied to interest rates and a reader of the financial statements can apply this to any future rate change. This is not representative of the year as a whole, since the exposure changes as investments are made; and ● Senior unsecured note: the senior unsecured note is at a fixed rate of interest so will not be impacted by any changes in SONIA or short term interest rates; and ● fixed interest investment sensitivity: the Company’s fixed interest portfolio at the year end was valued at £33,214,000 (2022: £29,076,000), and it has a modified duration (interest rate sensitivity) of approximately 5.8 years (2022: 6.9 years). A 100 basis points change in short term interest rates (up or down), which is mirrored by an equivalent change in long term interest rates, would be expected to decrease or increase this portfolio’s value by approximately £3,321,000 (2022: £2,908,000), all other factors being equal. 15.1.3 Other Price Risk Other price risks (changes in market prices other than those arising from interest rate risk or currency risk) may affect the value of quoted and unquoted investments. Management of the risk The Board manages the risks inherent in the investment portfolio by ensuring full and timely access to relevant information from Janus Henderson. The Board meets regularly and at each meeting reviews investment performance. The Board monitors Janus Henderson’s compliance with the Company’s objectives, and is directly responsible for investment strategy and ultimately for asset allocation. 72 Henderson High Income Trust plc Annual Report 2023 ## Notes to the Financial Statements (continued) ### 15 Financial Risk Management Policies and Procedures (continued) 15.1.3 Other Price Risk (continued) When appropriate, the Company may buy/sell put or call options or futures on indices and on equity investments in its portfolio to manage its exposure to price risk or to generate income. At 31 December 2023 the Company had no open positions (2022: no open positions). Concentration of exposure to other price risks An analysis of the Company’s investment portfolio is shown on pages 16 to 17. The majority of the investments are in UK companies. Accordingly, there is a concentration of exposure to the UK, particularly to financials and consumer staples (please refer to page 18). It is recognised that an investment’s country of domicile or of listing does not necessarily equate to its exposure to the economic conditions in that country. Other price risk sensitivity The following table illustrates the sensitivity of the net return after taxation for the year and the equity shareholders’ funds to an increase or decrease in the fair values of the Company’s investments. The level of change used in the table below is considered to be reasonably possible based on observation of current market conditions. The sensitivity analysis is based on the Company’s equities at each Statement of Financial Position date, with all other variables held constant. 2023 2022 | 10% increase | | 10% decrease | | | 10% increase | | 10% decrease | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | in fair value | | | in fair value | | in fair value | | | in fair value | | | | £’000 | | | £’000 | | £’000 | | | £’000 | Income Statement – net return after tax Revenue return (40) 40 (42) 42 Capital return 26,906 (26,906) 25,917 (25,917) Net return after tax for the year 26,866 (26,866) 25,875 (25,875) Equity shareholders’ funds 26,866 (26,866) 25,875 (25,875) 15.2 Liquidity Risk This is the risk that the Company will encounter difficulty in meeting obligations associated with the financial liabilities. Management of the risk Liquidity risk is not significant as the majority of the Company’s assets are investments in quoted securities that are readily realisable. The Company has a one year multi-currency loan facility of £45 million with BNP Paribas, London Branch which will expire on 19 December 2024 (2022:£45 million with The Bank of Nova Scotia, London Branch). This facility has an accordion of £25 million allowing the Company to borrow up to £70 million. As part of the combination with Henderson Diversified Income Trust plc, the facility was drawn down by approximately £60 million in January 2024. Liquidity risk exposure The contractual maturities of the financial liabilities at 31 December, based on the earliest date on which payment can be required, were as follows: | | | 2023 | | 2022 | | --- | --- | --- | --- | --- | | | Due within | | Due within | | | three months | | | three months | | | | | £’000 | | £’000 | Bank loans 30,639 29,141 Other creditors and accruals 1,241 1,578 31,880 30,179 15.3 Credit and Counterparty Risk The failure of the counterparty to a transaction to discharge its obligations under that transaction could result in the Company suffering a loss. Management of the risk ● transactions involving derivatives are entered into only with investment banks, whose creditworthiness is carefully assessed so as to minimise the risk to the Company of default; ● investment transactions are carried out with a large number of brokers, whose credit standard is reviewed periodically by the Manager, and limits are set on the amount that may be due from any one broker; ● the Company’s trades are usually on a delivery versus payment (DVP) settlement basis. This process mitigates the risk of loss during the settlement process; 73 Henderson High Income Trust plc Annual Report 2023 # Notes to the Financial Statements (continued) ## 15 Financial Risk Management Policies and Procedures (continued) ### 15.3 Credit and Counterparty Risk (continued) Management of the risk (continued) - Janus Henderson and the Board monitor the Company's risk by reviewing the Depositary's biannual assurance report. The Manager's Operational Risk Team also reports to the Board on these reports. They also engage with the Depositary to ensure that follow up action arising from any exceptions identified in the report are completed, and report back to the Board where necessary; - cash at bank is held only with banks considered to be creditworthy; and - with regards to the corporate bonds in the portfolio, there is a credit risk that the borrowers do not repay principal or make interest payments. This is managed through careful selection, supported by monitoring of credit ratings, and is reviewed regularly. The percentages below represent the value of fixed interest investments included in the Statement of Financial Position which are exposed to credit and counterparty risk by credit rating. | Rating | 2023 % | 2022 % | | --- | --- | --- | | AA | 32.9 | 5.4 | | A | 8.7 | 6.2 | | BBB | 22.3 | 23.0 | | BB | 20.8 | 44.6 | | B | 4.8 | 3.9 | | Not rated | 12.5 | 16.9 | | Total | 100.0 | 100.0 | Source: Bloomberg composite rating None of the Company's financial assets or financial liabilities is secured by collateral or other credit enhancements. None of the Company's financial assets are past due or impaired, and any expected credit loss has not had a material impact on the Company. ### 15.4 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 and amounts due under the multi-currency loan facility). At 31 December 2023 the fair value of the senior unsecured note has been estimated to be £18,696,000 (2022: £17,653,000) and is categorised as level 3 (see note 15.5 below) 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 Gift 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-Gift Index and the redemption yield of the ICE BofA 10-15 Year UK Gift Index. The discount rate is calculated and updated at each month end and applied daily to determine the Company's published fair value NAVs. ### 15.5 Fair Value Hierarchy Disclosures 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 within 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 note 1d on page 63. There have been no transfers during the year between levels. The table overleaf sets out fair value measurements using the FRS 102 fair value hierarchy. Fixed interest investments have been included in level 1 because they are considered to be highly liquid and therefore trade in an active market. 74 Henderson High Income Trust plc Annual Report 2023 # Notes to the Financial Statements (continued) ## 15 Financial Risk Management Policies and Procedures (continued) ### 15.5 Fair Value Hierarchy Disclosures (continued) | Financial assets at fair value through profit or loss at 31 December 2023 | Level 1 £'000 | Level 2 £'000 | Level 3 £'000 | Total £'000 | | --- | --- | --- | --- | --- | | Equity investments | 236,793 | – | – | 236,793 | | Fixed interest instruments: | | | | | | Preference shares | 4,470 | – | – | 4,470 | | Other | 28,744 | – | – | 28,744 | | **Total** | **270,007** | **–** | **–** | **270,007** | | Financial assets at fair value through profit or loss at 31 December 2022 | Level 1 £'000 | Level 2 £'000 | Level 3 £'000 | Total £'000 | | Equity investments | 230,977 | – | – | 230,977 | | Fixed interest instruments: | | | | | | Preference shares | 4,585 | – | – | 4,585 | | Other | 24,491 | – | – | 24,491 | | **Total** | **260,053** | **–** | **–** | **260,053** | ### 15.6 Capital Management Policies and Procedures The Company's capital management objectives are: - to ensure that it will be able to continue as a going concern; and - to provide investors with a high dividend income while also maintaining the prospect of capital growth. The Company's capital is its equity share capital, reserves and debt that are shown in the Statement of Financial Position at a total of £272,848,000 (2022: £263,276,000). The Board, with assistance of the Manager, monitors and reviews the broad structure of the Company's capital on an ongoing basis. This review includes: - the planned level of gearing, which takes into account Janus Henderson's view on the market; - the need to buy back equity shares, either for cancellation or to hold in treasury, which takes account of the difference between the net asset value per ordinary share and the share price (i.e. the level of share price discount); - the need for new issues of equity shares, including sales from treasury; and - the extent to which revenue in excess of that which is required to be distributed should be retained. The Company is subject to several externally imposed capital requirements: - under the multi-currency loan facility and the senior unsecured note agreement the total of these borrowings may not exceed one third of adjusted total assets (as defined in the facility agreement) and net assets must be more than £90 million; - as a public company, the Company has a minimum share capital of £50,000; and - in order to be able to pay dividends out of profits available for distribution by way of dividends, the Company has to be able to meet one of the two capital retention tests imposed on investment companies by company law and cannot retain more than 15% of income. The Company has complied with these requirements in the year under review and the prior year. 75 Henderson High Income Trust plc Annual Report 2023 ## Notes to the Financial Statements (continued) ### 16 Called Up Share Capital Nominal value Shares entitled Total shares in issue to dividend in issue £’000 Issued ordinary shares of 5p each At 1 January 2023 129,796,278 129,796,278 6,490 At 31 December 2023 129,796,278 129,796,278 6,490 Nominal value in Shares entitled Total shares issue to dividend in issue £’000 Issued ordinary shares of 5p each At 1 January 2022 128,596,278 128,596,278 6,430 Issued during the year 1,200,000 1,200,000 60 At 31 December 2022 129,796,278 129,796,278 6,490 During the year the Company issued nil shares (2022: 1,200,000) for net proceeds of £nil (2022: £2,104,000). On 16 January 2024 the Company issued 42,345,422 new shares to Henderson Diversified Income Trust plc (HDIV) shareholders in consideration of the £72.1 million of net assets acquired from HDIV in accordance with the scheme of reconstruction and winding up of HDIV under section 110 of the Insolvency Act 1986. Between 18 January and 27 March 2024, no further shares have been issued. Accordingly, the number of shares in issue with voting rights as at 27 March 2024 was 172,141,700. ### 17 Reserves | | | | | | Capital | Capital reserve | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | reserve | | arising on | | | | | | Share | | Capital | arising on | | revaluation of | | | | | | premium | | redemption | | investments | | | investments | | Revenue | | | account | | | reserve | | sold | | | held | reserve | | | | £’000 | | £’000 | | £’000 | | | £’000 | | £’000 | At 1 January 2023 128,827 26,302 18,197 25,673 8,788 Transfer on disposal of investments – – 2,523 (2,523) – Net profit on investments – – 1,837 7,760 – Foreign exchange gains – – 1,023 – – Management fee and finance costs charged to capital – – (2,784) – – Tax relief thereon – – 101 – – Net return after taxation – – – – 13,483 Dividends paid – – – – (13,355) At 31 December 2023 128,827 26,302 20,897 30,910 8,916 76 Henderson High Income Trust plc Annual Report 2023 ## Notes to the Financial Statements (continued) ### 17 Reserves (continued) | | | | | | Capital | | Capital reserve | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | | | reserve | | | arising on | | | | | Share | | Capital | | arising on | | revaluation of | | | | | premium | | redemption | | investments | | | | investments | | Revenue | | account | | | reserve | | | sold | | | held | reserve | | | £’000 | | £’000 | | £’000 | | | | £’000 | £’000 | At 1 January 2022 126,783 26,302 21,245 47,070 8,404 Transfer on disposal of investments – – 3,655 (3,655) – Net loss on investments – – (2,553) (17,742) – Foreign exchange losses – – (2,174) – – Issue of shares 2,044 – – – – Management fee and finance costs charged to capital – – (1,976) – – Net return after taxation – – – – 13,423 Dividends paid – – – – (13,039) At 31 December 2022 128,827 26,302 18,197 25,673 8,788 The capital reserve arising on investments sold is distributable. The amount of the capital reserve that is distributable is complex to determine and is not necessarily the full amount of the reserve as disclosed within these financial statements of £20,897,000 as at 31 December 2023 (2022: £18,197,000). The portion of the capital reserve arising on revaluation of investments held is wholly non-distributable. The revenue reserve is distributable. The amount of the revenue reserve that is distributable is not necessarily the full amount of the reserve as disclosed within these financial statements of £8,916,000 as at 31 December 2023 (2022: £8,788,000). ### 18 Net Asset Value per Ordinary Share (basic and diluted) The net asset value per ordinary share is based on the net assets attributable to the ordinary shares of £222,342,000 (2022: £214,277,000) and on the 129,796,278 ordinary shares in issue at 31 December 2023 (2022: 129,796,278). The movements during the year of the assets attributable to the ordinary shares were as follows: 2023 2022 £’000 £’000 Net assets at start of year 214,277 236,234 Total net return/(loss) after taxation 21,420 (11,022) Dividends paid in the year (13,355) (13,039) Issue of ordinary shares less issue costs – 2,104 222,342 214,277 ### 19 Contingent Liabilities There were no partly paid shares or underwriting commitments or any other contingent liabilities at 31 December 2023 (2022: nil). ### 20 Net Debt Reconciliation | | | | | Bank loans | | | | Other debt | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Cash and cash | | | repayable within | | | | repayable after | | | | | | equivalents | | | one year | | 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 (1,755) (1,649) – (3,404) Exchange movements 872 151 – 1,023 Non cash flow: Effective interest movements – – (9) (9) Net debt as at 31 December 2023 1,990 (30,639) (19,867) (48,516) 77 Henderson High Income Trust plc Annual Report 2023 ## Notes to the Financial Statements (continued) ### 20 Net Debt Reconciliation (continued) | | | | | Bank loans | | | | Other debt | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Cash and | | repayable within | | | | repayable after | | | | | cash equivalents | | | | one year | | more than one year | | | | Total | | | | £’000 | | | £’000 | | | | £’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) ### 21 Transactions with JanusHenderson and Related Parties Under the terms of an agreement effective from 22 July 2014 the Company has appointed wholly owned subsidiaries ofJanus Henderson to provide investment management, accounting, administrative and company secretarial services. JanusHenderson has contracted with BNP Paribas S.A. to provide accounting and administration services. Details of themanagement fee arrangements for these services are given in the Strategic Report on page 25. The total fees paid or payable under this agreement to Janus Henderson in respect of the year ended 31 December 2023 were £1,411,000 (2022: £1,393,000), of which £715,000 was outstanding as at 31 December 2023 (2022: £1,040,000). Please refer to the Directors’ Remuneration Report on page 48 and in Note 6 on page 67 for the fees paid to the Directors. In addition to the above, Janus Henderson facilitates marketing activities with third parties which are recharged to the Company. ### 22 Subsequent Events Since the year-end, the Board announced a first interim dividend of 2.625p per ordinary share, in respect of the year- ending 31December 2024. This will be paid on 26 April 2024 to holders registered at the close of business on 5 April 2024. Thisdividend is to be paid from the Company’s revenue account. The Company’s shares will become ex-dividend on 4April 2024. On 4 October 2023 the Company announced that the Board had agreed heads of terms with Henderson Diversified Income Trust plc (HDIV) in respect of a proposed combination of the Company with HDIV. The combination was approved by each company’s shareholders at general meetings held on 8 January 2024. In accordance with the scheme of reconstruction and winding up of HDIV under section 110 of the Insolvency Act 1986, on 16 January 2024 the Company issued 42,345,422 new shares at a price of 170.25p per share to HDIV shareholders in consideration of the £72.1 million ofnet assets acquired from HDIV. Following the issue of the new shares, the total number of shares in issue with voting rights was 172,141,700 ordinary shares, with each ordinary share holding one voting right. Noordinary shares are held intreasury. 78 ## Additional ## Shareholder ## Information 79 Henderson High Income Trust plc Annual Report 2023 ## Glossary ### Alternative Investment Fund Managers Dividend Dates ### Directive (AIFMD) When declared or announced, each dividend will have three keydates applied to it. The payment date is the date on which Agreed by the European Parliament and the Council of the shareholders will receive their dividend, either by BACS European Union and adopted into UK legislation, the AIFMD transfer or byreceipt of a dividend cheque. The record date classifies certain investment vehicles, including investment applied to the dividend is used as a cut-off for the Company’s companies, as Alternative Investment Funds (AIFs) and requires Registrars to know which shareholders should be paid a them to appoint an Alternative Investment Fund Manager (AIFM) dividend. Only shareholders on the Register of Members at the and Depositary to manage and oversee the operations of the close of business on the record date will receive the dividend. investment vehicle. TheBoard of Directors retains responsibility The ex-dividend date is the business day before the record for strategy, operations and compliance and the Directors retain date and is the date upon which the Company’s net asset a fiduciary dutyto shareholders. value per share and share price will be disclosed ex-dividend. ### Association of Investment Companies (AIC) ### Effective Interest Rate Method The Company is a member of the AIC which is the trade body The effective interest rate is a method used by a bond buyer for investment companies and represents the industry in relation to calculate the total yield to maturity including any capital loss to various matters which impact the regulation of such entities. if the bond is purchased above par, or capital gain if purchased at a discount to par. ### Benchmark An index against which performance is compared. For the ### Geometric Returns Company this is a composite of 80% of the FTSE All-Share A method for aggregating percentage returns over a holding Index (total return) and 20% of the ICE BofA Sterling Non-Gilts period to include the impact of compounding. Index (total return) and is rebalanced annually. ### Investment Trusts ### Compounding Investment trusts are public limited companies, listed on the Compounding is the process whereby interest is credited to an London Stock Exchange, which provide shareholders with a existing principal amount as well as to interest already paid. professionally managed portfolio of investments. Investment trusts are exempt from tax on the capital gains arising on ### Custodian their investments subject to meeting certain criteria. Income, The Custodian is responsible for ensuring the safe custody of net of expenses and tax, is substantially distributed to theCompany’s assets and that all transactions in the underlying shareholders. Investment trusts are also known as holdings are transacted in an accurate and timely manner. investment companies although the tax legislation retains the reference to investment trusts. ### Depositary ### As an AIF the Company is required to appoint a Depositary Liquidity which has responsibility for overseeing the operations of the In the context of the liquidity of shares in the stock market, this Company, including safekeeping, cash monitoring and refers to the availability of buyers in the market for the share in verification ofownership and valuation of the underlying question. Where the market in a particular share is described as holdings and is responsible for the appointment of a liquid that share will be in demand and holders wishing to sell Custodian. The Depositary is strictly liable for the loss of any their shares should find ready buyers. Conversely, where the investments or other assets in its custody unless it hasnotified market in a share is illiquid the difficulty of finding a buyer will that it has discharged its liability in certain markets. tend to depress the price that might be negotiated for a sale. TheDepositary has confirmed that it has not discharged liability inrelationto any of the Company’s assets. ### Market Capitalisation The market value of a company calculated by multiplying the ### Derivative mid-market price per share by the number of shares in issue. A contract between two or more parties in relation to an underlying security. The value of a derivative will fluctuate ### Mid-Market Price inaccordance with the value of the security and is a form The middle (or mid) market price is the price between the best ofgearing as the fluctuations invalue are usually greater than offered price and the best bid price. It can simply be defined as the fluctuations in the underlying security’s value. Examples the average of the current bid and offer prices being quoted. ofderivatives are put and call options, swap contracts, futures and contracts for difference. ### Treasury Shares Shares repurchased by the Company but not cancelled. 80 Henderson High Income Trust plc Annual Report 2023 # Alternative Performance Measures (Unaudited) The Company uses the following Alternative Performance Measures (APMs) throughout the Annual Report and financial statements and notes to the financial statements. The APMs are reconciled to the financial statements through the narrative below. The Board believes that each of the APMs, which are typically used within the investment trust sector, provide additional useful information to shareholders to help assess the Company's performance against its peer group. ## Discount or Premium to NAV The NAV per ordinary share used in this calculation is the NAV published by the London Stock Exchange and by the AIC with the interim dividends deducted on the corresponding ex-dividend date and with debt at fair value, as defined below. The amount by which the market price per share of an investment trust is either higher (premium) or lower (discount) than the NAV per ordinary share, expressed as a percentage of the NAV per ordinary share. | | NAV pence | Share price pence | (Discount) premium to NAV % | | --- | --- | --- | --- | | At 31 December 2023 | 169.58 | 156.50 | (7.71) | | At 31 December 2022 | 164.24 | 165.25 | 0.61 | ## Gearing/(Net Cash) Gearing means borrowing money to buy assets with the expectation that the return on investments bought will exceed the interest cost of the borrowings. The gearing percentage reflects the amount of borrowings (e.g. bank loans and senior unsecured notes) the Company has used to invest in the market and also takes into account the exposure to hedging and derivatives which have a gearing effect. It is calculated by taking the difference between total investments (see Note 11 on page 69) and equity shareholders' funds (see Statement of Financial Position) and dividing by equity shareholders' funds and multiplying by 100. | | 2023 | 2022 | | --- | --- | --- | | Investments held at fair value through profit or loss (£'000) (page 61) | (A) 270,007 | 280,053 | | Net assets (£'000) (page 61) | (B) 222,342 | 214,277 | | Gearing (C = A/B -1) (%) | (C) 21.4 | 21.4 | ## NAV with debt at par and fair value | | 2023 £'000 | 2022 £'000 | | --- | --- | --- | | Investments held at fair value through profit or loss (see note 11) | 270,007 | 280,053 | | Current assets (see page 61) | 4,082 | 4,801 | | Creditors: amounts falling due within one year (see note 13) | (31,880) | (30,719) | | Creditors: amounts falling due after more than one year (see note 14) | (19,867) | (19,858) | | **NAV with debt at par (A)** | **222,342** | **214,277** | | Less: fair value of senior unsecured note (see note 15.4) | (18,696) | (17,653) | | Add back: amortised cost of senior unsecured note | 19,867 | 19,858 | | **NAV with debt at fair value (B)** | **223,513** | **216,482** | | **Ordinary shares in issue (see note 16) (C)** | **129,796,278** | **129,796,278** | | --- | --- | --- | | **NAV per ordinary share with debt at par (see page 61) (A/C x 100) (p)** | **171.30** | **165.09** | | **NAV per ordinary share with debt at fair value (B/C x 100) (p)** | **172.20** | **166.79** | The NAV per share is published daily and the year-end NAV as published by the AIC can be found on page 6. The NAV published to the London Stock Exchange and by the AIC will deduct interim dividends on the corresponding ex-dividend date. The NAV in the Company's financial statements will deduct the interim dividends on the corresponding dividend payment date. The Company currently publishes two NAVs, one with debt at par and the other with debt at fair value and further information is available in Note 15. 81 Henderson High Income Trust plc Annual Report 2023 # Alternative Performance Measures (Unaudited) (continued) ## Ongoing Charge The ongoing charges ratio has been calculated in accordance with the guidance issued by the AIC as the total investment management fees and administrative expenses and expressed as a percentage of the net asset values throughout the year. | | 2023 £'000 | 2022 £'000 | | --- | --- | --- | | Management fee | 1,411 | 1,393 | | Other administrative expenses (note 6) | 456 | 498 | | Less: non-recurring expenses | (4) | (46) | | **Ongoing charge** | **1,863** | **1,845** | | **Average net assets^{1}** | **217,464** | **218,505** | | **Ongoing charge ratio** | **0.86%** | **0.84%** | $^{1}$ Calculated using the average daily net asset value (with debt at fair value) The ongoing costs provided in the Company's Key Investor Document (KID) is calculated in line with the PRIIPs regulations. The ongoing costs in the KID includes finance costs and look through to costs incurred by other investment trusts and funds that the Company invests in. ## Total Return The total return on the share price or NAV (with debt at fair value) takes into account both the rise and fall of NAVs/share prices and dividends paid to shareholders. Any dividends received by a shareholder are assumed to have been reinvested in either additional shares (for share price total return) or the Company's assets (for NAV with debt at fair value total return). Dividends paid and payable are set out in note 10 on pages 68 to 69. | | NAV (with debt at fair value) | Share price | | --- | --- | --- | | NAV/Share price per share at 31 December 2022 (pence) | 164.24 | 165.25 | | NAV/Share price per share at 31 December 2023 (pence) | 169.58 | 156.50 | | Change in the year (%) | 3.3 | (5.3) | | Impact of dividends reinvested (%) | 6.3 | 6.6 | | **Total return for the year (%)^{1}** | **9.8** | **0.9** | $^{1}$ Deometric returns ## Income/Dividend Yield The yield is the annual dividend (paid or announced for the year) expressed as a percentage of the year-end share price. | | | 31 December 2023 | 31 December 2022 | | --- | --- | --- | --- | | Annual dividend (pence) | (A) | 10.35 | 10.15 | | Share price (pence) | (B) | 156.50 | 165.25 | | Yield (C=A/B) (%) | (C) | 6.6 | 6.1 | 82 Henderson High Income Trust plc Annual Report 2023 ## General Shareholder Information ### Alternative Investment Fund Managers Foreign Account Tax Compliance Act ### Directive (AIFMD) Disclosures (FATCA) In accordance with the AIFMD, information in relation to the FATCA is a United States federal law enacted in 2010 whose Company’s leverage and remuneration of JanusHenderson, intent is to enforce the requirement for United States persons as the Company’s Alternative Investment Fund Manager (including those living outside the U.S.) to file yearly reports on (AIFM) is required to be made available to investors. These their non-U.S. financial accounts. As a result of HMRC’s disclosures, including those on the AIFM’s remuneration change of interpretation on the meaning of shares and policy, are contained in a separate document (AIFMD securities ‘regularly traded on an established securities Disclosure) at: www.hendersonhighincome.com. market’, investment trusts now need to monitor each year the trading volume and frequency of their shares and securities to assess whether they have financial accounts. The Company ### BACS therefore needs to make an annual assessment, before the Dividends can be paid by means of BACS (Bankers’ FATCA return is due, to determine if the shares represent Automated Clearing Services); mandate forms for this purpose financial accounts and, where they do, will need to identify are available from the Registrar, Computershare Investor and report U.S. reportable accounts to HMRC, as required. Services PLC. Alternatively, shareholders can write to the Registrar (the address isgiven on page 85) to give their ### General Data Protection Regulation instructions; these must include thebank account number, ### the bank account title and the sort code ofthe bank to which (GDPR) payments are to be made. A privacy statement can be found at www.janushenderson.com. ### Common Reporting Standard ### Tax legislation under The Organisation for Economic ISA Co-operation and Development Common Reporting Standard The Company intends to continue to manage its affairs in for Automatic Exchange of Financial Account Information was order to qualify as an eligible investment for a stocks and introduced with effect from 1 January 2016. The legislation shares ISA. requires the Company to provide personal information to HMRC on certain investors who purchase shares in ### Non-Mainstream Pooled Investments investment trusts. This information is provided annually to ### thelocal tax authority of the tax residencies of a number (NMPI)Status ofnon-UK based certificated shareholders and The Company currently conducts its affairs so that its ordinary corporateentities. shares of 5p each can be recommended by IFAs to ordinary retail investors in accordance with the FCA rules in relation to ### Equality Act 2010 non-mainstream investment products and intends to continue to do so for the foreseeable future. The shares are excluded Copies of this Annual Report and other documents issued by from the FCA’s restrictions which apply to non-mainstream the Company are available from the Corporate Secretary. investment products because they are shares in an Ifneeded, copies can be made available in a variety of investment trust. formats, including Braille, audio tape or larger type as appropriate. ### Packaged Retail and Insurance-based You can contact the Registrar, which has installed textphones ### Investment Products Regulation to allow speech and hearing impaired people who have their ### own textphone to contact them directly, without the need for (PRIIPs)/Key Information Document (KID) an intermediate operator by dialling 03707020005. Specially Investors should be aware that the PRIIPs Regulation requires trained operators are available during normal business hours the Manager, as the PRIIP manufacturer, to prepare a key to answer queries via this service. information document in respect of the Company. This KID Alternatively, if you prefer to go through a Typetalk operator must be made available by the Manager to retail investors (provided by the Royal National Institute for Deaf People) dial prior to them making any investment decision and is available 18001followed by the number you wish to dial. on the Company’s website. The Company is not responsible for the information contained in the KID and investors should note that the procedures for calculating the risks, costs and potential returns are prescribed by the law. The figures in the KID may not reflect the expected returns for the Company and anticipated performance returns cannot be guaranteed. 83 Henderson High Income Trust plc Annual Report 2023 ## General Shareholder Information (continued) ### Performance Details/Share Price ### Information Details of the Company’s share price and NAV per share can befound at www.hendersonhighincome.com. TheCompany’s NAV is published daily. The market price of the Company’s ordinary shares is published daily in the Financial Times and the Daily Telegraph, which also show figures for the estimated net asset value per share. The market price of the Company’s shares can be found in the London Stock Exchange Daily Official List. ### Shareholder Details Shareholders who hold their shares in certificated form can check their shareholding with the Registrar, Computershare Investor Services PLC, via www.computershare.com. Please note that to gain access to your details on the Computershare site you will need the holder reference number shown on your share certificate. ### Taxonomy Regulation Regulation (EU) 2020/852 establishes the basis for the EUtaxonomy. The EU taxonomy is a classification system, establishing a list of environmentally sustainable economic activities to provide companies, investors and policymakers with appropriate definitions for which economic activities can be considered environmentally sustainable. In accordance with the Taxonomy Regulation, the Company states that the investments underlying this financial product do not take into account the EU criteria for environmentally sustainable economic activities. ### Warning to Shareholders 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 phone call, please call the Corporate Secretary on 0800 832 832. You can also check the FCA Warning List at #BeScamSmart https://www.fca.org.uk/scamsmart 84 Henderson High Income Trust plc Annual Report 2023 Henderson High Income Trust plc Annual Report 2023 ## Corporate Information ### Registered Office Financial Calendar ## Objective | | 201 Bishopsgate | Annual General Meeting Tuesday, 14 May 2024 | | --- | --- | --- | | The Company invests in a prudently | London | First interim dividend payment Friday, 26 April 2024 | | | EC2M 3AE | Second interim dividend payment Friday, 26 July 2024 | diversified selection of both well- Telephone: 020 7818 1818 Third interim dividend payment Friday, 25 October 2024 known and smaller companies to Fourth interim dividend payment Friday, 31 January 2025 Half year results announced September 2024 ### provide investors with a high dividend Service Providers Senior unsecured note interest payment dates 8 July 2024 income stream while also maintaining | | Alternative Investment Fund Manager | 8 January 2025 | | --- | --- | --- | | the prospect of capital growth. | Janus Henderson Fund Management UK Limited | | | | 201 Bishopsgate | Information Sources | London For more information about the Company, visit the website at EC2M 3AE www.hendersonhighincome.com. Corporate Secretary Follow Janus Henderson Investment Trusts on Janus Henderson Secretarial Services UK Limited Twitter, YouTube andFacebook 201 Bishopsgate London EC2M 3AE Telephone: 0800 832 832 Email: support@janushenderson.com ### Investing Depositary and Custodian Shares can be purchased in the market via a stockbroker orthrough share dealing platforms. They can also be held HSBC Bank plc through share plans, ISAs or pensions and links to various 8 Canada Square providers are included on the website. London E14 5HQ Potential investors are reminded that the value of investments and the income from them may go down as well as up and Stockbrokers investors may not receive back the full amount invested. J.P. Morgan Cazenove Limited Taxbenefits may vary as a result of statutory changes and 25 Bank Street their value will depend onindividual circumstances. London E14 5JP ### Nominee Share Code Where notification has been provided in advance, the Company Registrar will arrange for copies of shareholder communications to be Computershare Investor Services PLC provided to the operators of nominee accounts. Nominee The Pavilions investors may attend general meetings and speak at them Bridgwater Road when invited to do so by the Chairman. Bristol BS99 6ZZ Telephone: 0370 707 1039 ### Strategic Report Governance Financial Additional Email: web.queries@computershare.co.uk | Performance Highlights 5 | Board of Directors 35 | Statements | Shareholder | | | --- | --- | --- | --- | --- | | Chairman’s Statement 8 | Corporate Governance | Independent Auditors’ | Information | Investors with share certificates (i.e. not those in a share plan or | | | Report 37 | Report 53 | | ISA) can check their holdings at www.computershare.com. | | Fund Manager’s Report 11 | | | Glossary 80 | | | | Report of the Audit and | Income Statement 59 | | | | Portfolio and | | | Alternative Performance | | Risk Committee 41 | Financial Information 16 | | Statement of Changes | Measures 81 | Independent Auditors | | --- | --- | --- | --- | --- | | | Report of the Management | inEquity 60 | | | | Business Model 22 | | | General Shareholder | PricewaterhouseCoopers LLP | Engagement Managing Risks 25 Statement of Financial Information 83 7 More London Riverside Committee 45 Position 61 Corporate Information 85 London Viability Statement 27 Report of the Nominations Statement of Cash SE1 2RT Key Performance and Remuneration Flows 62 Indicators 28 Committee 46 Notes to the Financial Environmental, Social and Directors’ Remuneration Statements 63 Governance Matters 30 Report 47 Report of the Directors 50 Statement of Directors’ Responsibilities 51 85 Henderson High Income Trust plc Registered as an investment company in England and Wales with registration number 02422514 ## Annual Report 2023 Registered office: 201 Bishopsgate, London EC2M 3AE SEDOL number: 0958057 ## ISIN number: GB0009580571 Henderson London Stock Exchange (TIDM) Code: HHI Global Intermediary Identification Number (GIIN): JBA08I.99999.SL.826 Legal Entity Identifier Number (LEI): 213800OEXAGFSF7Y6G11 ## High Income Telephone: 0800 832 832 Email: support@janushenderson.com ## www.hendersonhighincome.com Trust plc ## Seeking superior ## income generation ## and long-term ## capital growth This report is printed on Revive silk 100% recycled, contains 100% recycled waste and ismanufactured at a mill certified with ISO 14001 environmental management standard. The pulp used in this product is bleached using an Elemental Chlorine Free process (ECF). JHI9212/2023Henderson High Income Trust plc – Annual Report 2023 JHI9212/2023Designed and typeset by 2112 Communications, London. Printed by Paragon, London.