Half-year Report

RNS Number : 2671Q
Henderson Opportunities Trust PLC
17 June 2020
 

HENDERSON INVESTMENT FUNDS LIMITED

 

HENDERSON OPPORTUNITIES TRUST PLC

 

LEGAL ENTITY IDENTIFIER (LEI):  2138005D884NPGHFQS77

 

17 June 2020

 

 

HENDERSON OPPORTUNITIES TRUST PLC

Unaudited results for the half year ended 30 April 2020

 

This announcement contains regulated information.

 

Investment Objective

The Company aims to achieve capital growth in excess of the FTSE All-Share Index from a portfolio of UK investments.

 

Performance summary

 

 

(Unaudited)

30 April 2020

(Unaudited)

30 April 2019

(Audited)

 31 October 2019

Net Asset Value (NAV) per ordinary share

921.3p

1,232.6p

1,161.8p

Ordinary share price

740.0p

1,007.5p

932.0p

Net assets

£72.8m

£97.4m

£91.8m

Discount to NAV1

19.7%

18.3%

19.8%

Total return per ordinary share

(221.6p)

64.5p

1.0p

Revenue return per share - basic and diluted

8.0p

13.4p

29.9p

Dividends per share2

13.0p

7.0p

26.0p

Net Gearing3

15.3%

14.0%

12.7%

 

1 NAV including income reinvested

 

2 The dividends per ordinary share for the period 1 November 2019 to 30 April 2020 include a first interim dividend payable of 6.5p per ordinary share payable on 26 June 2020 and a second interim dividend payment of 6.5p per ordinary share payable on 25 September 2020.  See the Chairman's Statement and Note 3 for further details.

 

3 The net gearing percentage reflects the amount of borrowings (bank loans or overdrafts) the Company has used to invest in the market less cash and investment cash funds, divided by net assets multiplied by 100.

 

 

Total Return Performance to 30 April 2020

 

 

6 Months

%

 

1 Year

%

 

3 Years

%

 

5 Years

%

 

10 Years

%

NAV per share1

-19.7

-23.8

-14.2

-4.2

123.4

Benchmark2

-17.0

-16.7

-7.5

4.8

63.4

Share price3

-19.2

-24.7

-17.9

-10.8

135.0

Sector average NAV4

-19.7

-20.4

-14.1

3.7

91.9

 

Sources: Morningstar for the AIC, Refinitiv Datastream and Janus Henderson

 

1. NAV total return per ordinary share (including income reinvested)

2. FTSE All-Share Index total return with income reinvested

3. Share price total return (including income reinvested) using mid-market closing price

4. Arithmetic average NAV total return of the Association of Investment Companies (AIC) UK All Companies Sector with income reinvested

 

 

 

INTERIM MANAGEMENT REPORT

 

CHAIRMAN'S STATEMENT

 

Performance

The period under review was dominated by the impact of Covid-19 and the Company's NAV total return fell by 19.7% over the first half of the financial year while the FTSE All-Share benchmark was down 17.0%.  The unprecedented slowdown in activity and the consequential falls in equity values seen in February and March 2020 were particularly severe for small businesses geared to the UK economy where the Company's portfolio carries a heavy weighting.  In the near term the economic outlook is inevitably tied to progress on control of the pandemic with the expectation that the virus will eventually be overcome and economic activity will recover.  The most resilient UK companies, those that offer excellent goods or services, should again prosper as the economy recovers and we believe your Company's portfolio is strongly focused around such companies.

 

The following table illustrates the Company's record against the benchmark over the ten year period to 30 April 2020:

       

 

1 year

%

3 years

%

5 years

%

10 years

%

NAV (total return)

-23.8

-14.2

-4.2

123.4

FTSE All-Share (total return)

-16.7

-7.5

4.8

63.4

Outperformance (+)/ Underperformance (-)

-7.1

-6.7

-9.0

60.0

 

Earnings and Dividends

The revenue return in the period was £628,000, compared to £1,061,000 in the corresponding period last year.

 

In February 2020, we announced that, from the beginning of the 2020 financial year, quarterly dividends would be paid to shareholders in order to make dividends as predictable for shareholders as possible.  The first quarterly dividend of 6.5p per ordinary share for the financial year ending 31 October 2020 was declared on 19 March 2020 and will be paid on 26 June 2020.  When we released the 2019 annual results announcement in February 2020 we said we expected to be able to declare a second quarterly dividend of 6.5p per ordinary share.  We are pleased to announce that our expectation to be able to pay this amount has not altered and the Company therefore declares a second interim dividend of 6.5p per ordinary share, in respect of the quarter to 30 April 2020 for the financial year ending 31 October 2020, payable on 25 September 2020 to shareholders registered at the close of business on 21 August 2020.  The Company's shares will be quoted ex-dividend on 20 August 2020. 

 

The Directors appreciate the importance of dividend payments to shareholders.  The dividend going forward will be under review given that many of the underlying holdings are reducing or suspending their dividend payments this year due to the extreme levels of uncertainty.  The Company has a revenue reserve of £1.9m following payment of the 2019 final dividend and this is available for use in the current circumstances.  It is unclear at present whether these revenue reserves will allow the Company's quarterly dividend to remain at this level until the payments of the dividends by the stocks held in the portfolio lead again to the Company's dividend being covered by earnings.

 

Gearing 

The gearing started the period at 12.7% and at the period end was 15.3%. It detracted approximately 2% from the NAV over the 6 months. However, the gearing has been a positive contributor to the Company's long-term NAV return and it helps position the portfolio to benefit strongly from a return of investor confidence as economic growth picks up.

 

Share Capital

During the period 2,813 shares were bought back under the authority given by shareholders at the Company's Annual General Meeting in 2019, at an average price of 953.3p. The shares are being held in treasury. We purchased these shares to marginally enhance the NAV. We will continue to be opportunistic in our approach to buybacks with the main objective of increasing the NAV rather than reducing the discount. It may help reduce the discount if it coincides with a general return of confidence and good performance. 

 

Continuation Vote

At the AGM in March the Continuation Vote was passed. It will next occur at the AGM in March 2023 on its triennial cycle.

 

Outlook

The economic scars from the crisis will clearly take some time to heal and, in particular, the debts incurred in both the public and private sectors will take a long time to pay down.  However, the lockdown is slowly being eased and that is the first prerequisite for economic recovery.  Timing remains uncertain but once the recovery takes hold it is likely that stronger growth will emerge in certain areas of the economy. Adaptable companies which respond fast will benefit in a changed operating environment. The companies held in the portfolio have the advantage over some unquoted competitors of having easier access to equity capital. The ones that need it are using the market to raise capital and therefore place themselves in a strong position for the recovery. The Company is participating in selected placings and some of them will in time prove very good investments we believe. The valuations across the portfolio could prove to be very attractive as economic growth returns. 

 

Since the period end to 16 June 2020 the NAV total return has risen 7.3%, while the benchmark has gone up 2.9%.  Such a sharp movement in share prices reflects the tendency for stock market investors to attempt to foreshadow trends in the real economy and, on this occasion, the magnitude of the bounce belies any equivalent improvement in the outlook for the global economy.

 

 

Peter Jones

Chairman

 

 

FUND MANAGERS' REPORT

 

Overview

The Company's net asset value fell 19.7% during the six months under review, while the FTSE All-Share benchmark fell 17.0% (both on a total return basis). This underperformance was concentrated in March, when the Company's net asset value fell 26.4% relative to a 15.1% fall in the benchmark. It then recovered strongly in April, when the net asset value rose 14.7% versus a rise in the FTSE All-Share of 4.9%, in what was an exceptionally volatile period.

 

With its material exposure to small and medium sized companies, the portfolio is more tied into the performance of and expectations for the domestic economy than the FTSE All-Share benchmark, which is highly international. This can be seen in the stock level detractors from performance financial year to date, which include retail property owner Hammerson, UK building materials company Sigmaroc and Scottish housebuilder Springfield Properties. At a time when large parts of the domestic economy have effectively been mothballed as a result of the Covid-19 (for example Scottish housebuilding has stopped entirely) this will naturally have an impact on the earnings of the companies affected.

 

We go into more detail in the activity section below on recent portfolio changes, but we have left the shape of the portfolio largely unchanged in recent months. The companies held are deliberately diverse in their exposure. Some will benefit from the current 'lockdown'; others will see earnings materially reduced, at least in the short term. The attributes they share is they have experienced management teams and are specialists in the service or product they provide, often they are one of if not the market leader. We have spoken to the management teams of many companies in recent weeks, and are encouraged by how quickly they have responded to the current circumstances. It is speaking to management teams and seeing how quickly companies are adapting that gives us confidence in the current positioning.

 

Portfolio Attribution

The largest active contributor to performance during the period was Ceres Power, a fuel cell technology company. This received further validation of its technology via a manufacturing licence agreement with Bosch, which added to its existing stake in Ceres (taking it to 18%) and took a seat on the Ceres board. This leaves Ceres with a number of impressive partners including Doosan in South Korea and Weichai in China as they move towards full-scale commercialisation of their technology.  While their fuel cells are likely to be used first in buses as a range extender (where hydrogen can be used alongside traditional fossil fuels), there are a number of potentially large end market applications including datacentres and heavy-duty trucks.

 

Technology companies held including Blue Prism, LoopUp and Zoo Digital were also strong contributors to performance. All have resilient business models that in some cases are benefitting from the current environment. For example LoopUp, a competitor to Zoom and WebEx in conference calls, is gaining a substantial number of new customers as a result of its secure, easy to use and reliable technology. Zoo Digital, which provides dubbing and subtitling services to content producers, is also finding that customers are more willing to use their flexible, freelance dubbing technology at a time when traditional dubbing studios are closed.

 

The largest detractor from performance was retail property company Hammerson. This owns shopping centres in the UK and Europe including the Bullring in Birmingham and a stake in Bicester Village. With the shift to shopping online it is widely appreciated that rents and valuations of retail properties are likely to fall further. This has recently been exacerbated by the effects of the virus, with the majority of retailers being closed and therefore a significant portion of quarterly rental payments being deferred. The reason the Company continues to hold the position is that we think the demise of physical retail is understood, and to a large degree factored into the current share price. For example the published net asset value per share was £6, versus the share price at the end of April of 71p.

 

Activity

During the period positions were sold or exited in Eland Oil & Gas, Aggregated Micro Power (in both cases following a takeover), BT Group, Renewi, Royal Mail and Character Group. BT, Royal Mail and Character Group were sold on concerns around a lack of visible earnings growth. Therefore while they looked attractively valued, in our view they lacked a catalyst that could cause them to re-rate. Renewi, a waste management company, was sold as a result of balance sheet concerns as they were highly indebted.  There were also two mergers within the period as the holding in fund management group Miton merged with Premier to become Premier Miton Group, and the holding in insurance services provider Redde merged with van rental company Northgate to create Redde Northgate. In both cases we have maintained the holdings.

 

A number of purchases during the period were placings from companies seeking extra headroom once the scale of disruption from the virus became apparent. This included adding to existing holdings in TheGym Group, Hollywood Bowl, Franchise Brands, Van Elle and Safestyle. In all cases we think the companies will emerge from the current environment in a strong competitive position.

 

Outlook

The severity of the slowdown in economic activity and the level of commitment to spending by government to alleviate some of the disruption is on an unprecedented scale for peacetime. The old economic models of how the economy should respond to events are of little help in predicting what will happen. In time the virus will wane, and economic activity will recover. The shape of the recovery will result in an economy that will be different to the past. Greater flexibility in work practices and large advances in the digital space will be evident, but so will higher debt levels and inflation may be higher than in the recent past. For the equity investor there will be multiple opportunities and pitfalls. This portfolio has the scope to be responsive to the changing investment landscape and hold companies that will succeed in moving forward in this changed world.

 

 

James Henderson and Laura Foll

Fund Managers 

 

 

 

 

 

Principal Risks and Uncertainties

 

The principal risks and uncertainties associated with the Company's business can be divided into the following main areas:

 

•   investment activity and strategy;

•   financial instruments and the management of risk;

•   operational;

•   accounting, legal and regulatory;

•   liquidity;

•   net gearing; and

•   failure of Janus Henderson.

 

Detailed information on these risks is given in the Strategic Report and in the Notes to the Financial Statements in the Company's Annual Report for the year to 31 October 2019.

 

In the view of the Board, these principal risks and uncertainties at the year-end remain and are as applicable to the remaining six months of the financial year as they were to the six months under review.

 

The Board notes that there are also a number of emerging risks stemming from the Covid-19 pandemic and the uncertainty that this has created in global markets, both economically and politically, that may impact the operation of the Company. Some of these are set out in more detail in the Chairman's Statement but the medical and epidemiological implications of Covid-19 are yet to be fully understood; neither an effective treatment nor a vaccine are likely to be available in the short term. A second wave of infections could result in even worse economic effects. Changing consumer behaviour, additional administrative burdens and new regulations could significantly alter and negatively affect business operations in the medium to longer term with unknown consequences for affected industries. The Fund Managers will continue to review carefully the composition of the Company's portfolio and be proactive in taking investment decisions where necessary.  The Manager and the Company's other third-party service providers remain fully operational and have implemented appropriate business continuity plans to ensure that there has been no change in service while the majority of staff are working from home.

 

Directors' Responsibility Statement

 

The Directors confirm that, to the best of their knowledge:

 

(a)  the condensed financial statements for the half year ended 30 April 2020 have been prepared in accordance with Financial Reporting Standard 104 Interim Financial Reporting and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company;

 

(b)  this Interim Management Report and condensed financial statements include a fair review of the information required by the Disclosure Guidance and Transparency Rule 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

 

(c)  this Interim Management Report includes a fair review of the information required by the Disclosure Guidance and Transparency Rule 4.2.8R (disclosure of related party transactions and changes therein).

 

 

For and on behalf of the Board

Peter Jones

Chairman

 

 

 

INVESTMENT PORTFOLIO at 30 April 2020

 

Company

Valuation

£'000

% of portfolio

 

Company

Valuation

£'000

% of portfolio

RWS Holdings¹

Blue Prism¹

Ceres Power¹

Tracsis¹

Learning Technologies¹

Springfield Properties¹

Serica Energy¹

Oxford Instruments

Cohort¹

Zoo Digital¹

10 Largest

GlaxoSmithKline

Sigmaroc¹

Rio Tinto

Integrafin Holdings

XP Power

Assura

Boku¹

Johnson Matthey

SDL

Prudential

20 Largest

Redcentric¹

HSBC

GB Group¹

Workspace

Next Fifteen Communications¹

Direct Line Insurance

Aveva Group

The Gym Group

Ricardo

Franchise Brands¹

30 Largest

Standard Chartered

Vertu Motors¹

IQGeo¹

Tribal Group¹

LoopUp¹

Vodafone

Studio Retail

4D Pharma¹

Van Elle¹

Rolls Royce

40 Largest

Flowtech¹

Ilika¹

IG Group

Mondi

Scapa¹

Redde Northgate

Premier Miton Group¹

Deltex Medical¹

Hollywood Bowl

Royal Bank of Scotland

50 Largest

3,523

3,431

3,176

2,507

2,483

2,472

2,282

2,218

1,941

1,935

25,968

1,910

1,845

1,842

1,821

1,757

1,670

1,644

1,594

1,533

1,411

42,995

1,375

1,356

1,350

1,330

1,295

1,294

1,250

1,225

1,186

1,184

55,840

1,161

1,113

1,015

977

963

953

945

860

857

825

65,509

797

760

754

705

702

659

659

647

638

608

72,438

4.2

4.1

3.8

3.0

3.0

2.9

2.7

2.6

2.3

2.3

30.9

2.3

2.2

2.2

2.2

2.1

2.0

1.9

1.9

1.8

1.7

51.2

1.6

1.6

1.6

1.6

1.6

1.5

1.5

1.5

1.4

1.4

66.5

1.4

1.3

1.2

1.2

1.2

1.1

1.1

1.0

1.0

1.0

78.0

1.0

0.9

0.9

0.8

0.8

0.8

0.8

0.8

0.8

0.7

86.3

 

Eurocell

Quixant¹

Keystone Law¹

Reabold Resources¹

Surface Transforms¹

IP Group

K3 Capital¹

Horizon Discovery¹

Cluff Natural Resources¹

Creo Medical¹

60 Largest

Jersey Oil & Gas¹

CML Microsystems

Mirriad Advertising¹

Senior

Hammerson

Jadestone Energy¹

Oxford Sciences Innovation²

Lloyds Banking

International Consolidated Airlines

Oxford Biodynamics¹

70 Largest

14 Remaining (excluding cash and investments written down to zero)

Total

 

588

576

574

563

563

517

481

479

455

455

77,689

420

414

413

410

406

401

400

387

 

333

330

81,603

 

 

2,367

83,970

0.7

0.7

0.7

0.7

0.7

0.6

0.6

0.5

0.5

0.5

92.5

0.5

0.5

0.5

0.5

0.5

0.5

0.5

0.4

 

0.4

0.4

97.2

 

 

2.8

100.0

 

 

 

 

 

 

 

¹Quoted on the Alternative Investment Market ('AIM')

²Unlisted

 

 

 

Attribution Analysis to 30 April 2020

The table below sets out the top five contributors and top five detractors to NAV:

 

Top Five Contributors 

Total

Return %

Contribution

to NAV %

Ceres Power

+105.9

+1.4

Blue Prism

+57.9

+0.8

LoopUp

+76.7

+0.8

Integrafin Holdings

+35.8

+0.5

Zoo Digital

-12.2

+0.5

 

Top Five Detractors 

Total

Return %

Contribution

to NAV %

Hammerson

-75.6

-1.3

Sigmaroc

-30.7

-1.2

Rolls Royce

-53.5

-1.1

Ricardo

-37.1

-0.9

Senior

-64.8

-0.9

 

Source: Janus Henderson

 

Portfolio by Index at 30 April 2020

As a percentage of the portfolio excluding cash

 

Index

FTSE All-Share Index %

Portfolio

 %

FTSE 100

80.5

17.2

FTSE 250

16.3

14.7

FTSE SmallCap

3.2

7.8

FTSE AIM

-

58.0

OTHER

-

2.3

Total

100.0

100.0

 

Source: Factset

 

Portfolio by Market Capitalisation at 30 April 2020

As a percentage of the portfolio excluding cash

 

Index

FTSE All-Share Index %

Portfolio

%

Greater than £2bn

86.4

19.6

£1bn - £2bn

6.9

15.5

£500m - £1bn

3.5

12.5

£200m - £500m

2.5

17.0

£100m - £200m

0.6

11.2

£50m - £100m

0.1

13.2

Less than £50m

-

10.5

Other

-

0.5

Total

100.0

100.0

 

Source: Factset

 

 

CONDENSED INCOME STATEMENT

 

 

(Unaudited)

Half Year ended

30 April 2020

(Unaudited)

Half Year ended

30 April 2019

(Audited)

Year ended

31 October 2019

 

Revenue return £'000

Capital return £'000

Total

return £'000

Revenue return £'000

Capital return £'000

Total return £'000

Revenue return £'000

Capital return £'000

Total return £'000

(Losses)/gains from investments held at fair value through profit or loss   

-

(17,925)

(17,925)

-

4,277

4,277

-

(1,824)

(1,824)

Investment income

held at fair value through

profit or loss 

810

-

810

1,095

-

1,095

2,538

-

2,538

Interest receivable

and other income 

86

-

86

228

-

228

379

-

379

Gross revenue and

capital (losses)/gains

896

(17,925)

(17,029)

1,323

4,277

5,600

2,917

(1,824)

1,093

 

Management fee (note 2)

(64)

(149)

(213)

(71)

(166)

(237)

(147)

(342)

(489)

Administrative expenses

(178)

-

(178)

(167)

-

(167)

(347)

-

(347)

 

Net return/(loss) before finance costs and taxation

654

(18,074)

(17,420)

1,085

4,111

5,196

2,423

(2,166)

257

Finance costs

(24)

(56)

(80)

(23)

(54)

(77)

(53)

(124)

(177)

 

Net return/(loss) before taxation 

630

(18,130)

(17,500)

1,062

4,057

5,119

2,370

(2,290)

80

 

Net return/(loss) after taxation

628

(18,130)

(17,502)

1,061

4,057

5,118

2,366

(2,290)

76

 

Return/(loss) per ordinary share - basic and diluted (note 4)

7.95p

(229.53p)

(221.58p)

13.36p

51.11p

64.47p

29.88p

(28.92p)

0.96p

 

The total columns of this statement represent the Income Statement of the Company, prepared in accordance with FRS 104.

 

All revenue and capital items in the above statement derive from continuing operations. The revenue and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. The Company had no recognised gains or losses other than those disclosed in the Income Statement and Statement of Changes in Equity. The accompanying notes are an integral part of the condensed financial statements.

 

 


CONDENSED STATEMENT OF CHANGES IN EQUITY

 

 

(Unaudited)

Half Year ended 30 April 2020

 

 

Called up share capital £'000

 

 

Share premium account £'000

 

 

Capital redemption reserve £'000

 

 

Other capital reserves

£'000

 

 

 

Revenue reserve £'000

 

 

Total shareholders' funds

£'000

At 1 November 2019

2,000

14,838

2,431

69,105

3,424

91,798

Ordinary dividends paid

-

-

-

-

(1,501)

(1,501)

Net (loss)/return after taxation

-

-

-

(18,130)

628

(17,502)

Buyback of ordinary shares into treasury

-

-

-

(27)

-

(27)

At 30 April 2020

2,000

14,838

2,431

50,948

2,551

72,768

 

 

 

(Unaudited)

Half Year ended 30 April 2019

 

 

Called up share capital £'000

 

 

Share premium account

£'000

 

 

Capital redemption reserve

£'000

 

 

Other capital reserves

£'000

 

 

 

Revenue reserve £'000

 

 

Total shareholders' funds

£'000

At 1 November 2018

2,000

14,838

2,431

72,334

2,757

94,360

Ordinary dividends paid

-

-

-

-

(1,146)

(1,146)

Net return after taxation

-

-

-

4,057

1,061

5,118

Buyback of ordinary shares into treasury

-

-

-

(939)

-

(939)

At 30 April 2019

2,000

14,838

2,431

75,452

2,672

97,393

 

 

 

(Audited)

Year ended 31 October 2019

 

Called up share capital £'000

 

Share premium account

£'000

 

Capital redemption reserve

£'000

 

 

Other capital reserves £'000

 

 

Revenue reserve £'000

 

Total shareholders' funds

£'000

At 1 November 2018

2,000

14,838

2,431

72,334

2,757

94,360

Ordinary dividends paid

-

-

-

-

(1,699)

(1,699)

Net (loss)/return after taxation

-

-

-

(2,290)

2,366

76

Buyback of ordinary shares into treasury

-

-

-

(939)

-

(939)

At 31 October 2019

2,000

14,838

2,431

69,105

3,424

91,798

 

 

The accompanying notes are an integral part of these condensed financial statements.

 

 

CONDENSED STATEMENT OF FINANCIAL POSITION

 

 

(Unaudited)

Half year ended 30 April 2020

£'000

(Unaudited)

Half year ended

30 April 2019

£'000

(Audited)

Year ended

31 October 2019 £'000

Investments held at fair value through profit or loss

 

 

 

Listed at market value

34,676

44,347

45,684

Quoted on AIM at market value

48,894

66,130

57,514

Unlisted at market value

400

400

400

 

83,970

110,877

103,598

Current assets

 

 

 

Investments held at fair value through profit or loss

2

2

2

Debtors

327

579

231

Cash at bank and in hand

506

935

971

 

835

1,516

1,204

 

 

 

 

Creditors: amounts falling due within one year

 

 

 

Bank loans

(11,635)

(14,552)

(12,603)

Other creditors

(402)

(448)

(401)

 

 

 

 

Net current liabilities

(11,202)

(13,484)

(11,800)

 

 

 

 

Net assets

72,768

97,393

91,798

 

 

 

 

Capital and reserves

 

 

 

Called up share capital (note 6)

2,000

2,000

2,000

Share premium account

14,838

14,838

14,838

Capital redemption reserve

2,431

2,431

2,431

Other capital reserves

50,948

75,452

69,105

Revenue reserves

2,551

2,672

3,424

 

 

 

 

 

Total shareholders' funds

72,768

97,393

91,798

 

 

 

 

Net asset value per ordinary share - basic and diluted (note 7)

921.3p

1,232.6p

1,161.8p

 

 

 

 

 

The accompanying notes are an integral part of these condensed financial statements.

 

 

 

CONDENSED STATEMENT OF CASH FLOWS 

 

 

(Unaudited)

Half Year ended

30 April 2020

£'000

(Unaudited)

Half Year ended

30 April 2019

£'000

(Audited)

Year ended

31 October 2019

£'000

Cash flows from operating activities

 

 

 

Net (loss)/return before taxation

(17,500)

5,119

80

Add back: finance costs

80

77

177

Add: losses/(gains) on investments held at fair value through profit or loss

17,925

(4,277)

1,824

Withholding tax on dividends deducted at source

(4)

(2)

(7)

Decrease/(increase) in debtors

135

(203)

(81)

(Decrease)/increase in creditors

(180)

(34)

132

Net cash inflow from operating activities

456

680

2,125

 

 

 

 

Cash flows from investing activities

 

 

 

Purchase of investments

(4,938)

(15,115)

(28,081)

Sale of investments

6,595

9,268

23,431

Net cash inflow/(outflow) from investing activities

1,657

(5,847)

(4,650)

 

 

 

 

Cash flows from financing activities

 

 

 

Equity dividends paid (net of refund or unclaimed distributions and reclaimed distributions)

(1,501)

(1,146)

(1,699)

Buyback of ordinary shares into treasury

(27)

(939)

(939)

Net loans (repaid)/drawn down

(968)

7,551

5,602

Interest paid

(82)

(71)

(175)

Net cash (outflow)/inflow from financing activities

(2,578)

5,395

2,789

Net (decrease)/increase in cash and cash equivalents

(465)

228

264

 

 

 

 

Cash and cash equivalents at start of year

971

707

707

 

 

 

 

Cash and cash equivalents at end of period

506

935

971

 

 

 

 

Comprising:

 

 

 

Cash at bank

506

935

971

 

 

 

 

 

The accompanying notes are an integral part of these condensed financial statements.

 

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

 

1

Accounting policies - basis of preparation

 

The condensed set of financial statements has been prepared in accordance with FRS 104, Interim Financial Reporting, FRS 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland, and the Statement of Recommended Practice for "Financial Statements of Investment Trust Companies and Venture Capital Trusts", which was updated by the Association of Investment Companies in October 2019.

 

For the period under review, the Company's accounting policies have not varied from those described in the annual report for the year ended 31 October 2019. These financial statements have been neither audited nor reviewed by theCompany's auditor.

 

2

Management and performance fees

 

Henderson Investment Funds Limited ("HIFL") is appointed to act as the Company's Alternative Investment Fund Manager. HIFL delegates investment management services to Henderson Global Investors Limited ("HGIL"). References to Janus Henderson or the Manager within these results refer to the services provided by both HIFL and HGIL.

 

Management and performance fees are charged in accordance with the terms of the management agreement and provided for when due.  The management fee is calculated, quarterly in arrears, as 0.55% per annum on the net assets. Arrangements are in place for the Manager to earn a performance fee. The cap on total fees that can be earned in a financial year is 1.5% of the average net assets over the year. There is no performance fee accrual for the current period (30 April 2019 and 31 October 2019: £nil).

 

Since 1 November 2013, the Company has allocated 70% of its management fees and finance costs to the capital return of the Income Statement with the remaining 30% being allocated to the revenue return. Performance fees payable are allocated 100% to the capital return.

 

3

Dividends

 

The Board decided to pay quarterly dividends from the beginning of the 2020 financial year, to make dividends as predictable for shareholders as possible.

 

In March 2020, the Board declared a first interim dividend of 6.5p per ordinary share, to be paid out of revenue on 26 June 2020 to shareholders on the register of the Company at the close of business on 22 May 2020. The cost of this dividend will be £513,000.

 

The Board has declared a second interim dividend of 6.5p per ordinary share, to be paid out of revenue on 25 September 2020 to shareholders on the register of the Company at the close of business on 21 August 2020. The ex-dividend date will be 20 August 2020. Based on the number of ordinary shares in issue on 17 June 2020, the cost of this dividend will be £513,000.

 

In February 2020, the Board advised that, in the absence of any adverse changes in conditions, it expected to be able to declare a Q3 2020 dividend of 6.5p per ordinary share (to be confirmed in September 2020) to be paid in December 2020 and a final dividend of 7.5p per ordinary share (to be confirmed in January / February 2021) to be paid in March 2021.  The anticipated total dividend for 2020 was 27.0p per ordinary share.  The dividends for the remainder of the year remain under review.

 

The interim dividend for the year ended 31 October 2019 was 7.0p; the final dividend for the year ended 31 October 2019 was 19.0p.  The total dividend for the year ended 31 October 2019 was 26.0p.


No provision has been made for the interim dividends in these condensed financial statements. The final dividend of 19.0p per ordinary share, paid on 27 March 2020 in respect of the year ended 31 October 2019, has been recognised as a distribution in this period.

 

4

Return/(loss) per ordinary share - basic and diluted

The return/(loss) per ordinary share is based on the following figures:

 

 

(Unaudited)

Half Year ended

30 April 2020

£'000

(Unaudited)

Half Year ended

30 April 2019

£'000

(Audited)

Year ended

31 October 2019

£'000

Revenue return

628

1,061

2,366

Capital (loss)/return

(18,130)

4,057

(2,290)

Total (loss)/return

(17,502)

5,118

76

 

 

 

 

Weighted average number of ordinary shares in issue for the period

7,898,669

7,938,225

7,919,555

 

 

 

 

Revenue return per ordinary share

7.95p

13.36p

29.88p

Capital (loss)/return per ordinary share

(229.53p)

51.11p

(28.92p)

Total (loss)/return per ordinary share

(221.58p)

64.47p

0.96p

 

 

The Company has no securities in issue that could dilute the return per ordinary share. Therefore, the basic and diluted returns per share are the same.

 

5

Investments held at fair value through profit or loss

 

The table below analyses fair value measurements for investments held at fair value through profit or loss. These fair value measurements are categorised into different levels in the fair value hierarchy based on the valuation techniques used and are defined as follows under FRS 102:   

Level 1:   valued using quoted prices in active markets for identical assets

Level 2:  valued by reference to valuation techniques using observable inputs other than quoted prices included in Level 1 

Level 3: valued by reference to valuation techniques using inputs that are not based on observable market date

 

Investments held at fair value through profit or loss at 30 April 2020 (unaudited)

Level 1

£'000

Level 2

£'000

Level 3

£'000

Total

£'000

Investments

83,570

-

400

83,970

Current asset investments

2

-

-

2

Total

83,572

-

400

83,972

 

Investments held at fair value through profit or loss at 30 April 2019 (unaudited)

Level 1

£'000

Level 2

£'000

Level 3

£'000

Total

£'000

Investments

110,477

-

400

110,877

Current asset investments

2

-

-

2

Total

110,479

-

400

110,879

 

Investments held at fair value through profit or loss at 31 October 2019 (audited)

Level 1

£'000

Level 2

£'000

Level 3

£'000

Total

£'000

Investments

103,198

-

400

103,598

Current asset investments

2

-

-

2

Total

103,200

-

400

103,600

 

There have been no transfers between levels of the fair value hierarchy during the period.

 

The valuation techniques used by the Company are explained in the accounting policies note 1(d) in the Company's Annual Report for the year ended 31 October 2019.

 

6

Called up share capital

 

During the half year ended 30 April 2020, no shares were issued and 2,813 shares were repurchased to be held in treasury at a cost of £27,000 (half year ended 30 April 2019 and year ended 31 October 2019: no shares issued and 99,670 shares repurchased at a cost of £939,000). At 30 April 2020 there were 8,000,858 ordinary shares of 25p each in issue (30 April 2019 and 31 October 2019: 8,000,858) of which 102,483 were held in treasury (30 April 2019 and 31 October 2019: 99,670 shares held in treasury) resulting in 7,898,375 shares being entitled to a dividend (30 April 2019 and 31 October 2019: 7,901,188).

 

7

Net asset value per ordinary share - basic and diluted

 

Net asset value per ordinary share is based on the net assets attributable to the ordinary shares of £72,768,000 (30 April 2019: £97,393,000; 31 October 2019: £91,798,000) and on the 7,898,375 ordinary shares of 25p each in issue at 30 April 2020 (half year ended 30 April 2019 and year ended 31 October 2019: 7,901,188).

 

8

Transaction costs

 

Purchase transaction costs for the half-year ended 30 April 2020 were £8,000 (30 April 2019: £43,000; 31 October 2019: £74,000); these comprise mainly stamp duty and commissions. Sale transaction costs for the half-year ended 30 April 2020 were £2,000 (30 April 2019: £4,000; 31 October 2019: £11,000); these comprise mainly commissions.

 

9

Related party transactions

 

The Company's transactions with related parties in the period were with the Directors and the Manager. There have been no material transactions between the Company and its Directors during the half year other than amounts paid to them in respect of expenses and remuneration for which there are no outstanding amounts payable at the half year period end. 

 

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 facilitation of marketing activities with third parties, there have been no material transactions with the Manager affecting the financial position of the Company during the half year period.

 

10

Going concern

 

The Company's Articles of Association require that at the Annual General Meeting of the Company held in 2008, and every third year thereafter, an ordinary resolution be put to approve the continuation of the Company. The resolutions put to the Annual General Meetings in 2011, 2014, 2017 and 2020 were duly passed. The next triennial continuation resolution will be put to the Annual General Meeting in 2023. The assets of the Company consist almost entirely of securities that are listed (or quoted on AIM) and are readily realisable. 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. Having assessed these factors and the principal risks, as well as considering the additional risks related to Covid-19, the Directors consider it appropriate to adopt the going concern basis of accounting in preparing the financial statements.

11

Net debt reconciliation

 

 

Cash and cash equivalents

£'000

Bank loans and overdraft repayable within one year

£'000

Total

£'000

 

Net debt as at 

31 October 2019

971

(12,603)

(11,632)

 

Cash flows

(465)

968

503

 

Net debt as at 

30 April 2020

506

(11,635)

(11,129)

 

 

 

 

 

 

 

Cash and cash equivalents

£'000

Bank loans and overdraft repayable within one year

£'000

Total

£'000

 

Net debt as at 

31 October 2018

707

(7,001)

(6,294)

 

Cash flows

228

(7,551)

(7,323)

 

Net debt as at 

30 April 2019

935

(14,552)

(13,617)

 

 

 

 

 

 

 

Cash and cash equivalents

Bank loans and overdraft repayable within one year

Total

£'000

£'000

£'000

Net debt as at 

31 October 2018

707

(7,001)

(6,294)

Cash flows

264

(5,602)

(5,338)

Net debt as at 

31 October 2019

971

(12,603)

(11,632)

 

 

 

 

 

               

12

General information

 

Company Status:

Henderson Opportunities Trust plc is registered in England and Wales No. 01940906, has its registered office at 201 Bishopsgate, London EC2M 3AE and is listed on the London Stock Exchange.

 

SEDOL/ISIN: 0853657/Gb0008536574

London Stock Exchange (TIDM) Code: HOT

Global Intermediary Identification Number (GIIN): LVAHJH.99999.SL.826

Legal Entity Identifier (LEI): 2138005D884NPGHFQS77

 

Directors and Corporate Secretary:

The Directors of the Company are Peter Jones (Chairman), Frances Daley (Audit Committee Chairman), Chris Hills, Wendy Colquhoun and Davina Curling. The Corporate Secretary is Henderson Secretarial Services Limited, represented by Melanie Stoner (Fellow of the Chartered Governance Institute).

 

Website:

Details of the Company's share price and net asset value, together with general information about the Company, monthly factsheets and data, copies of announcements, reports and details of general meetings can be found at www.hendersonopportunitiestrust.com.

 

13

Comparative information

 

The financial information contained in the half-year report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The financial information for the half year periods ended 30 April 2020 and 30 April 2019 has not been audited or reviewed by the Company's auditors. The figures and financial information for the year ended 31 October 2019 are an extract based on the latest published accounts and do not constitute statutory accounts for that year. Those accounts have been delivered to the Registrar of Companies and included the Independent Auditor's Report which was unqualified and did not contain a statement under either section 498(2) or 498(3) of the Companies Act 2006.

 

A glossary of terms and details of alternative performance measures can be found in the Annual Report for the year ended 31 October 2019.

 

14

Half Year Report

 

The half-year report will shortly be available on the Company's website or from the Company's registered office. An abbreviated version, the 'Update', will be posted to shareholders in June 2020. The Update will also be posted on the Company's website, and hard copies will be available from the Company's registered office.

 

For further information, please contact:

 

 

James Henderson

Fund Manager

Janus Henderson Investors

Telephone: 020 7818 4370

Laura Foll

Fund Manager

Janus Henderson Investors

Telephone: 020 7818 6364

 

 

Peter Jones

Chairman

Henderson Opportunities Trust plc

Telephone: 020 7818 4082

James de Sausmarez

Director and Head of Investment Trusts

Henderson Investment Funds Limited

Tel: 020 7818 3349

 

Laura Thomas

Investment Trust PR Manager

Janus Henderson Investors

Telephone: 020 7818 2636

 

 

 

 

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) are incorporated into, or form part of, this announcement.


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
END
 
 
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