1st Quarter Results

M&G High Income Investment Trust P.L.C. First Interim Results Performance during the period The Company's revenue earnings per Package Unit were 1.89p. In respect of the review period, the Company declared an interim dividend of 1.20p per Income Share which was unchanged from the amount declared at the same stage last year. On a net asset value (NAV) basis, each Package Unit produced a total return of -3.8% over the three months to 31 August 2008. This was above the -5.9% total return on the FTSE All-Share Index over the same period. At the period end the Package Unit mid-market price was at an 8.5% discount to the NAV and on a mid-market price basis each Package Unit delivered a total return of -8.1%. Much of the out performance this quarter was attributable to a sharp retreat in the low yielding mining sector throughout much of July and August. This meant that high yielding stocks were ahead this quarter; the FTSE 350 Higher Yield total return was down 4.3%, outperforming the FTSE All-Share Index total return by 1.6%. The corporate bond portfolio was up by around 3.5%, representing a strong performance that was ahead of the ML Sterling Non-Gilts All Stocks index and the FTSE Government All Stocks Index. Gilts rallied strongly during the quarter as deteriorating economic conditions replaced earlier fears over rising inflation, prompting investors to seek the relative safe haven of government bonds. Investment grade corporate bonds also delivered positive returns but a slight widening of credit spreads meant that they underperformed gilts. The Company's preference share holdings delivered a disappointing return of approximately 8% as a result of the banking sector's nervousness. Although the UK and other international economies are going through a period of no growth at best with the strong likelihood of recession, a relatively full weighting in blue chip stocks with strong balance sheets is helpful during this difficult period. Income statement (unaudited) For the three months ended For year ended 31 August 2008 31 August 2007 31 May 2008 Revenue Capital Total Revenue Capital Total Revenue Capital Total £000 £000 £000 £000 £000 £000 £000 £000 £000 -------- -------- ------ -------- -------- ------- -------- ------- -------- Net losses on - (3,853) (3,853) - (5,695) (5,695) - (16,816) (16,816) investments Income 1,108 - 1,108 1,070 - 1,070 3,965 - 3,965 Investment (58) (118) (176) (85) (172) (257) (42) (83) (125) management fee Other expenses (39) - (39) (32) - (32) (130) - (130) ------- ------- ------ ------- ------- ------- ------ -------- -------- Net return before finance 1,011 (3,971) (2,960) 953 (5,867) (4,914) 3,794 (16,900) (13,106) cost and tax Finance costs: - (659) (659) - (609) (609) - (2,495) (2,495) Appropriations Finance costs: (1,499) - (1,499) (1,178) - (1,178) (3,107) - (3,107) Dividends ------- ------- ------ ------- ------- ------- ------ -------- -------- Net return on ordinary (488) (4,630) (5,118) (225) (6,476) (6,701) 686 (19,394) (18,708) activities before tax Tax on - - - - - - - - - ordinary activities ------- ------- ------ ------- ------- ------- ------ -------- -------- Net return on ordinary (488) (4,630) (5,118) (225) (6,476) (6,701) 686 (19,394) (18,708) activities after tax ------- ------- ------ ------- ------- ------- ------ -------- -------- Return per Zero Dividend - 1.23p 1.23p - 1.14p 1.14p - 4.66p 4.66p Preference Share Revenue earnings / 1.89p (1.87)p 0.02p 1.78p - 1.78p 7.08p - 7.08p return per Income Share Return per - (6.78)p (6.78)p - (12.09)p (12.09)p - (36.22)p (36.22)p Capital Share Total return per Income and 1.89p (8.65)p (6.76)p 1.78p (12.09)p (10.31)p 7.08p (36.22)p (29.14)p Growth Unit Total return per Package 1.89p (7.42)p (5.53)p 1.78p (10.95)p (9.17)p 7.08p (31.56)p (24.48)p Unit Return per Income Share is calculated on the basis of net capital losses for the year, after deduction for appropriations in respect of Zero Dividend Preference Shares and after offsetting maximum capital losses against Capital Shares, of £1,001,000 (2007: nil) and a weighted average number of 53,552,179 shares (2007:53,552,179 shares) in issue during the year. The total column of this statement is the profit and loss account of the Company. The revenue return and capital return columns are supplementary to this and are prepared under the guidance published by the Association of Investment Companies. All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the period. A statement of Total Recognised Gains and Losses is not required as all gains and losses of the Company have been reflected in the above statement. Statement of movements in net assets attributable to shareholders (unaudited) For the three months ended 31.08.08 31.08.07 £000 £000 ---------- ---------- Return on ordinary activities after tax (5,118) (6,701) Finance costs: Appropriations 659 609 ---------- ---------- Net movement in net assets attributable (4,459) (6,092) to shareholders Opening net assets attributable to 73,391 89,604 shareholders (all non-equity) ---------- ---------- Closing net assets attributable to 68,932 83,512 shareholders (all non-equity) ---------- ---------- Balance sheet (unaudited) As at 31.08.08 31.08.07 31.05.08 £000 £000 £000 ------- ------- ------- Fixed assets Portfolio of investments 66,997 82,291 69,192 ------- ------- ------- Current assets Debtors 744 828 1,434 Cash at bank and short-term deposits 1,351 574 2,814 ------- ------- ------- 2,095 1,402 4,248 ------- ------- ------- Total financial assets 69,092 83,693 73,440 Creditors: Amounts falling due within one (160) (181) (49) year ------- ------- ------- Net assets attributable to shareholders 68,932 83,512 73,391 (all non-equity) ------- ------- ------- Net assets attributable to Shareholders (unaudited) As at 31.08.08 31.08.07 31.05.08 £000 £000 £000 ------- ------- ------- Zero Dividend Preference Shareholders 30,326 27,691 29,641 Income Shareholders 38,606 39,209 40,121 Capital Shareholders - 16,612 3,629 -------- ------- -------- Net assets attributable to shareholders 68,932 83,512 73,391 (all non-equity) -------- -------- -------- The net assets attributable to shareholders have been calculated in accordance with the Company's Articles of Association and the net asset values (per share) applicable to each class of shareholding as shown below. Each class of the Company's shares meets the definition of a liability and therefore the Company has no equity shares. This does not affect the rights and benefits of each class. The Condensed Financial Statements have been prepared in accordance with the Statement: Half Yearly Financial Reports issued by the Accounting Standards Board. As at 31.08.08 31.08.07 Net asset value per Zero Dividend 56.63p 51.71p Preference Share Net asset value per 72.09p 73.22p Income Share Net asset value per - 31.02p Capital Share Net asset value per Income & Growth 72.09p 104.24p Unit Net asset value per 128.72p 155.95p Package Unit Cash flow Statement (unaudited) For the three For the year months ended ended 31.08.08 31.08.07 31.05.08 £000 £000 £000 £000 £000 £000 -------- -------- ------ -------- -------- ------- Net cash inflow from 1,584 657 2,655 operating activities Servicing of finance Dividends paid (1,499) (1,178) (3,107) (non-equity) Financial investment Capital 297 215 215 distributions Purchase of (3,775) (1,772) (12,073) investments Sale of 1,930 2,022 14,494 investments ------- ------ ------- (1,548) 465 2,636 ------- ------- ------- Net (decrease) (1,463) (56) 2,184 / increase in cash ------- ------- ------- Portfolio of investments As at 31 August 2008 Oil & gas producers 13.50 BP 4,575 6.64 Royal Dutch Shell 'B' 4,730 6.86 Chemicals 1.00 Johnson Matthey 326 0.47 Yule Catto 365 0.53 Mining 2.44 Anglo American 292 0.42 Lonmin 1,392 2.02 Aerospace & defence 0.35 Rolls-Royce Group 239 0.35 Construction & materials 0.48 Marshalls 334 0.48 Electronic & electric equipment 0.73 Halma 505 0.73 General industrials 1.44 Smith (D.S.) 412 0.60 Smiths Group 581 0.84 Industrial engineering 2.02 IMI 426 0.62 Rotork 542 0.79 Vitec Group 422 0.61 Industrial transportation 0.81 Wincanton 557 0.81 Support services 3.20 Acal 149 0.22 Bunzl 348 0.50 Davis Service Group 291 0.42 Electrocomponents 260 0.38 Filtrona 173 0.25 Premier Farnell 295 0.43 Rentokil Initial 364 0.53 Smiths News 327 0.47 Automobiles & parts 0.55 GKN 378 0.55 Beverages 1.03 Diageo 712 1.03 Food producers 2.82 Tate & Lyle 397 0.58 Unilever 1,546 2.24 Household goods 0.57 Bovis Homes Group 283 0.41 Persimmon 112 0.16 Tobacco 2.91 British American Tobacco 1,464 2.12 Imperial Tobacco 541 0.79 Pharmaceuticals & biotechnology 8.55 AstraZeneca 1,868 2.71 GlaxoSmithKline 4,025 5.84 General retailers 1.26 Carpetright 510 0.74 Halfords Group 244 0.35 Topps Tiles 118 0.17 Media 1.87 Pearson 812 1.18 Reed Elsevier 345 0.50 Trinity Mirror 134 0.19 Travel & leisure 1.74 Compass Group 493 0.72 Holidaybreak 423 0.61 William Hill 283 0.41 Fixed line telecommunications 2.00 BT Group 1,379 2.00 Mobile telecommunications 4.95 Vodafone Group 3,409 4.95 Electricity 2.50 British Energy Group 663 0.96 Scottish & Southern Energy 1,058 1.54 Gas, water & multi-utilities 5.74 National Grid 893 1.30 Northumbrian Water Group 775 1.12 Pennon Group 647 0.94 Severn Trent 682 0.99 United Utilities 961 1.39 Banks 10.53 Alliance & Leicester 409 0.59 Barclays 1,268 1.84 HSBC Holdings 4,519 6.56 Lloyds TSB Group 1,063 1.54 Equity investment instruments 1.52 Ecofin Water & Power Opportunities 338 0.49 BlackRock Commodities Income 708 1.03 Investment Trust General financial 0.86 Close Brothers Group 316 0.46 Provident Financial 275 0.40 Life insurance 3.17 Aviva 675 0.98 Friends Provident 446 0.65 Legal & General Group 477 0.69 Old Mutual 244 0.35 Prudential 343 0.50 Non-life insurance 2.48 Catlin Group 262 0.38 Jardine Lloyd Thompson Group 568 0.82 Royal & Sun Alliance 884 1.28 Real estate investment trusts 0.72 Alpha Pyrenees Trust 179 0.26 Segro 317 0.46 Non-convertible preference shares 8.10 Aviva 8.75% Cum. Irrd. Pref. 1,834 2.66 General Accident 8.875% Cum. Irrd. 902 1.31 Pref. HBOS 6.475% Non-cum. Pref. 788 1.14 HBOS 9.25% Non-cum. Irrd. Pref. 648 0.94 HBOS 9.75% Non-cum. Irrd. Pref. 628 0.91 Royal & Sun Alliance 7.375% Cum. 255 0.37 Irrd. Pref. Standard Chartered 7.375% Non-cum. 528 0.77 Irrd. Pref. 'AA' credit rated bonds 0.70 Land Securities Capital Markets Var. 481 0.70 Rate 2013 'A' credit rated bonds 2.53 E.ON International Finance 6.375% 503 0.73 2012 France Telecom 5.5% 2012 488 0.71 London Merchant Securities 6.5% 248 0.36 2026 National Grid Gas 6% 2017 502 0.73 'BBB' credit rated bonds 3.65 British Telecommunications 8% 2016 540 0.78 Deutsche Telekom 7.125% 2012 502 0.73 DWR Cymru Financing Var. Rate 2036 719 1.04 Imperial Tobacco Finance 6.25% 2018 460 0.67 Thames Water Utilities Finance 293 0.43 4.75% 2010 Bonds with no credit rating 0.47 Shaftesbury 8.5% 2024 327 0.47 Total investments 66,997 97.19 Net other assets 1,935 2.81 Net assets attributable to shareholders (all non-equity) 68,932 100.00 The interim report will not be advertised in the press, but copies are available from the registered office, Laurence Pountney Hill, London, EC4R 0HH. J. P. McClelland Secretary ---END OF MESSAGE--- This announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.