Half Year Results

RNS Number : 3224X

Henderson Opportunities Trust PLC

23 June 2008

 



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HENDERSON GLOBAL INVESTORS

HENDERSON OPPORTUNITIES TRUST PLC

23 JUNE 2008

HENDERSON OPPORTUNITIES TRUST PLC

Unaudited results for the half year ended 30 April 2008

The Company's investment objective is to provide shareholders with higher than average growth of capital over the medium to long term from a portfolio of predominantly UK companies. The strategy is to invest in a concentrated portfolio of shares on an unconstrained basis across the whole range of market capitalisations. The investment portfolio is characterised by focus on growth, recovery and 'special opportunities' company shares which the Portfolio Manager believes should achieve the investment objective.

Highlights

• It has been a period of poor performance and difficult markets.

• The portfolio consists of a diversified list of quality companies at attractive valuations and so the potential returns are considerable.

• The Company is paying an interim dividend for the first time - of 4p per share - and the final dividend is expected to be increased. This is the result of the underlying growth in dividends and the changes made to the portfolio. 

For further information please contact:

James Henderson Portfolio Manager Henderson Global Investors Telephone: [phone]

or

George Burnett     Chairman     Henderson Opportunities Trust plc     Telephone: [phone]

    Page 2 of 10

HENDERSON OPPORTUNITIES TRUST PLC

Unaudited results for the half year ended 30 April 2008

Extracts from the Chairman's Statement

Review

Over the six months to 30 April 2008 the Company's net asset value per ordinary share fell by 21.2% while the FTSE All-Share Index fell by 10.3%. On a total return basis, which takes account of the dividend paid on 26 March 2008, the figures are -20.8% and -8.5% respectively. 

It was an especially weak period for smaller companies, with the FTSE SmallCap (excluding investment companies) Index giving a total return of -21.8%. In general, and excluding the financial sector, corporate results have been satisfactory, with good profits growth. The Portfolio Manager believes that the companies held in the portfolio will prove to be robust businesses that will more than cope with the difficult conditions faced by the UK economy and, as a result, that the falls in valuations have been markedly overdone. Because of this strongly held view, the exposure of the portfolio to smaller companies has not been reduced more substantially during the period. The weighting by size of company held is shown in the table on page 3 below. 

Portfolio Activity

Smaller company valuations are not the only area where investors have become concerned about prospects: the valuations of financial and housing-related companies have also seen severe falls. However, some banks will continue to achieve very good returns on capital over the business cycle and the credit crisis is allowing them to improve their margins. This is not yet being reflected in share prices. Therefore there have been selective purchases in the banking sector. There have also been purchases made in certain industrial companies as, despite the slowdown in the UK and the USA, the global economy is likely to continue to grow steadily. These purchases have been financed by the sale of holdings that we do not believe will stand the more difficult economic conditions, from proceeds received from takeovers and from an increased level of gearing. The borrowings represented 18.4% of the Company's net assets at the period end, compared with 9.1% at 31 October 2007.

Earnings and Dividend

As a result of the purchases of higher yielding shares, particularly of financial companies, the revenue return for the period is 7.49p per ordinary share, which compares with the 2.92p (excluding the costs of the reorganisation) earned in respect of the comparative period. For the first time the Board has declared an interim dividend, of 4p per ordinary share to be paid on 26 September 2008; it expects to recommend an increased final dividend for the full year.  

General Meetings

The shareholders supported the triennial continuation vote that was put to the Annual General Meeting on 19 March 2008. Nevertheless, at that meeting it was announced that the Board had decided to hold an additional continuation vote at the Annual General Meeting in 2009, in recognition that the changes to the investment policy and benchmark have yet to bear fruit.

A Circular will be sent to the shareholders giving notice of a General Meeting to be held at 11.00 am on Thursday 11 September 2008. The purpose of the Meeting, as explained in more detail in the Circular, is to adopt new Articles of Association that reflect the changes to company law made by the Companies Act 2006, some important provisions of which come into effect on 1 October 2008.  

Page 3 of 10

HENDERSON OPPORTUNITIES TRUST PLC

Unaudited results for the half year ended 30 April 2008

Outlook

In January 2007 the Company's benchmark was changed to the FTSE All-Share Index. The Portfolio Manager has been slow to make full use of the greater investment flexibility that this allowed, having believed for much of last year that there was little value to be found in larger companies. The credit crisis 

in the financial markets led to a rush for liquidity which favoured, in share price terms, large companies more than smaller companies, but the credit problems will in time abate. As more settled conditions arise, our Portfolio Manager intends to achieve a more even division between large, medium and small companies by switching investments from the latter to the former. However, the smaller companies held in the portfolio are believed to be sound businesses that will perform well in a more difficult economic climate and so it is not desirable to rush and sell them at current low prices. Proceeds will be released from this area when the opportunities arise and the Board will continue to keep gearing under close review.

The portfolio consists of a diversified list of quality companies at attractive valuations and so the potential returns are considerable.  

Analysis of the portfolio by market index at 30 April 2008

	%
FTSE 100 Index	7.2
FTSE 250 Index	12.4
FTSE SmallCap Index	26.2
FTSE Fledgling Index	12.0
FTSE AIM Index	34.6
other Official List	4.2
other AIM	3.4
	100.0

Related Party Transactions

During the first six months of the current financial year, no transactions with related parties have taken place which have materially affected the financial position or performance of the Company during the period. Details of related party transactions are contained in the annual report and accounts.

Principal Risks and Uncertainties

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

• Investment objective and policy

• Gearing

• Market movements and performance of the portfolio.

Information on these risks is given in the Report of the Directors and in the Notes to the Accounts in the Company's Report and Accounts for the year ended 31 October 2007.  In the view of the Board these principal risks and uncertainties are applicable to the remaining six months of the financial year as they were to the six months under review.

    Page 4 of 10

HENDERSON OPPORTUNITIES TRUST PLC

Unaudited results for the half year ended 30 April 2008

Income Statement

for the half year ended 30 April 2008

	(Unaudited) Half year ended 30 April 2008			(Unaudited) Half year ended 30 April 2007			(Audited) Year ended 31 October 2007
	Revenue return	Capital return	Total	Revenue return	Capital return	Total	Revenue return	Capital return	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
(Losses)/gains from investments held at
fair value through profit or loss	-	(13,038)	(13,038)	-	10,638	10,638	-	3,997	3,997
Income from investments held at fair
value through profit or loss	763	-	763	418	-	418	979	-	979
Other interest receivable and similar
income	6	-	6	7	-	7	12	-	12
	----------	----------	----------	----------	----------	----------	----------	----------	---------
Gross revenue and capital
(losses)/gains	769	(13,038)	(12,269)	425	10,638	11,063	991	3,997	4,988
	---------	----------	----------	---------	----------	----------	----------	----------	---------
Management fees (note 4)	(33)	(132)	(165)	(57)	(230)	(287)	(90)	(360)	(450)
Provision for performance fee (note 4)	-	-	-	-	(175)	(175)	-	-	-
Costs of reorganisation (note 4)	-	-	-	(320)	-	(320)	(320)	-	(320)
Write-back of prior years' VAT (note 4)	-	-	-	-	-	-	237	61	298
Other administrative expenses	(75)	-	(75)	(99)	-	(99)	(182)	-	(182)
	---------	----------	----------	---------	----------	----------	----------	----------	---------
	(108)	(132)	(240)	(476)	(405)	(881)	(355)	(299)	(654)
	---------	----------	----------	---------	----------	----------	----------	----------	---------
Net return/(loss) on ordinary activities
before finance charges and taxation	661	(13,170)	(12,509)	(51)	10,233	10,182	636	3,698	4,334
Finance charges (note 4)	(46)	(184)	(230)	(29)	(114)	(143)	(55)	(219)	(274)
	---------	--------	--------	---------	--------	--------	---------	---------	---------
Net return/(loss) on ordinary activities
before taxation	615	(13,354)	(12,739)	(80)	10,119	10,039	581	3,479	4,060
Taxation on net return/(loss) on ordinary
activities	-	-	-	-	-	-	-	-	-
	---------	--------	--------	---------	--------	--------	---------	---------	---------
Net return/(loss) on ordinary activities
after taxation	615	(13,354)	(12,739)	(80)	10,119	10,039	581	3,479	4,060
	=====	======	======	=====	======	=====	=====	=====	=====
Return/(loss) per ordinary share
(note 3)	7.49p	(162.69)p	(155.20)p	(0.97)p	123.27p	122.30p	7.08p	42.38p	49.46p
	=====	======	======	=====	======	=====	=====	=====	=====

The total columns of this statement represent the Income Statement of the Company.  The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies.  All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued during the year. The Company had no recognised gains or losses other than those disclosed in the Income Statement above and the Reconciliation of Movements in Shareholders' Funds.

Page 5 of 10

HENDERSON OPPORTUNITIES TRUST PLC

Unaudited results for the half year ended 30 April 2008

Reconciliation of Movements in Shareholders' Funds

	(Unaudited) Half year ended 30 April 2008
	Called up share capital	Share premium account	Capital redemption reserve	Other capital reserves	Revenue reserve	Total
	£’000	£’000	£’000	£’000	£’000	£’000
At 31 October 2007	2,068	14,505	2,354	42,775	581	62,283
Net (loss)/return from ordinary activities       after taxation	-	-	-	(13,354)	615	(12,739)
Ordinary dividend paid	-	-	-	-	(492)	(492)
	----------	----------	----------	----------	----------	----------
At 30 April 2008	2,068	14,505	2,354	29,421	704	49,052
	======	======	======	=====	======	======

	(Unaudited) Half year ended 30 April 2007
	Called up share capital	Share premium account	Capital redemption reserve	Other capital reserves	Revenue reserve	Total
	£’000	£’000	£’000	£’000	£’000	£’000
At 31 October 2006	2,052	16,479	2,354	39,296	(1,958)	58,223
Issue of subscription shares	16	(16)	-	-	-	-
Cancellation of revenue deficit	-	(1,958)	-	-	1,958	-
Net return/(loss) from ordinary activities  after taxation	-	-	-	10,119	(80)	10,039
	----------	----------	----------	----------	----------	----------
At 30 April 2007	2,068	14,505	2,354	49,415	(80)	68,262
	======	======	======	======	======	======
	(Audited) Year ended 31 October 2007
	Called up share capital	Share premium account	Capital redemption reserve	Other capital reserves	Revenue reserve	Total
	£’000	£’000	£’000	£’000	£’000	£’000
At 31 October 2006	2,052	16,479	2,354	39,296	(1,958)	58,223
Issue of subscription shares	16	(16)	-	-	-	-
Cancellation of revenue deficit	-	(1,958)	-	-	1,958	-
Net return on ordinary activities after taxation	-	-	-	3,479	581	4,060
	----------	----------	----------	----------	----------	----------
At 31 October 2007	2,068	14,505	2,354	42,775	581	62,283
	======	======	======	======	======	======

Page 6 of 10

HENDERSON OPPORTUNITIES TRUST PLC

Unaudited results for the half year ended 30 April 2008

Balance Sheet

as at 30 April 2008

	(Unaudited) 30 April  2008	(Unaudited) 30 April  2007	(Audited) 31 October 2007
	£'000	£'000	£'000
Investments held at fair value through profit or loss
Listed at market value in the United Kingdom	58,081	72,718	67,925
	-----------	-----------	-----------
Current assets
Debtors	1,270	266	487
Cash at bank	4	-	-
	-----------	-----------	-----------
	1,274	266	487
Creditors: amounts falling due within one year	(10,303)	(4,722)	(6,129)
	----------	----------	----------
Net current liabilities	(9,029)	(4,456)	(5,642)
	----------	----------	----------
Total net assets	49,052	68,262	62,283
	======	======	======
Capital and reserves
Called up share capital	2,068	2,068	2,068
Share premium account	14,505	14,505	14,505
Capital redemption reserve	2,354	2,354	2,354
Other capital reserves	29,421	49,415	42,775
Revenue reserve	704	(80)	581
	----------	----------	----------
Equity shareholders' funds	49,052	68,262	62,283
	======	======	======
Net asset value per ordinary share (note 6)	597.59p	831.62p	758.78p
	======	======	======

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HENDERSON OPPORTUNITIES TRUST PLC

Unaudited results for the half year ended 30 April 2008

Cash Flow Statement

for the half year ended 30 April 2008

	(Unaudited) Half year ended 30 April 2008	(Unaudited) Half year ended 30 April 2007	(Audited) Year ended 31 October 2007
	£'000	£'000	£'000
Net cash inflow/(outflow) from operating activities	137	(432)	(218)
Net cash outflow from servicing of finance	(231)	(147)	(277)
Net cash (outflow)/inflow from financial investment	(3,678)	5,966	4,118
Equity dividends paid	(492)	-	-
	----------	----------	----------
Net cash (outflow)/inflow before financing	(4,264)	5,387	3,623
Net cash inflow/(outflow) from financing	2,755	(5,584)	(3,673)
	----------	----------	----------
Decrease in cash	(1,509)	(197)	(50)
	=====	=====	======
Reconciliation of operating return to net cash
outflow from operating activities
Net total (loss)/return before finance costs and       taxation	(12,509)	10,182	4,334
Less: capital loss/(return) before finance costs and      taxation	13,170	(10,233)	(3,698)
	----------	----------	----------
Net revenue return/(loss) before finance costs and
taxation	661	(51)	636
Increase in accrued income	(358)	(107)	(13)
Increase in other debtors and prepayments	-	-	(348)
(Decrease)/increase in other creditors	(34)	131	(192)
Expenses charged to capital	(132)	(405)	(299)
Overseas withholding tax suffered	-	-	(2)
	----------	----------	----------
Net cash inflow/(outflow) from operating activities	137	(432)	(218)
	=====	=====	======
Reconciliation of net cash flow to movement in
net debt
Decrease in cash as above	(1,509)	(197)	(50)
Net cash movement from (increase)/decrease
in loans	(2,755)	4,100	2,189
	----------	----------	----------
Movement in net debt	(4,264)	3,903	2,139
Net debt at the start of the period	(5,955)	(8,094)	(8,094)
	----------	----------	----------
Net debt at the end of the period	(10,219)	(4,191)	(5,955)
	======	=====	======
Represented by:
Cash at bank less bank overdrafts	(1,509)	(191)	-
Debt falling due within one year	(8,710)	(4,000)	(5,955)
	----------	----------	----------
Net debt	(10,219)	(4,191)	(5,955)
	======	=====	======

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HENDERSON OPPORTUNITIES TRUST PLC

Unaudited results for the half year ended 30 April 2008

Notes to the Accounts

1		Accounting policies – basis of preparation
	The condensed set of financial statements has been prepared on the historical cost basis of accounting, modified to include the revaluation of investments, and in accordance with Accounting Standards applicable in the United Kingdom, statements on half yearly financial reports issued by the Accounting Standards Board and the Statement of Recommended Practice Financial Statements of Investment Trust Companies dated December 2005. All of the Company’s operations are of a continuing nature.   The same accounting policies used for the year ended 31 October 2007 have been applied.   The condensed set of financial statements has not been either audited or reviewed by the Company’s auditors.
2	Issued share capital
	There were 8,208,293 ordinary shares of 25p each in issue at 30 April 2008 (30 April 2007 and 31 October 2007: 8,208,293).
	During the half year ended 30 April 2008 the Company did not make any market purchases of its own issued ordinary shares, either for cancellation or to hold in treasury (half year ended 30 April 2007 and year ended 31 October 2007: none).
	There were 1,641,547 subscription shares of 1p each in issue at 30 April 2008 (30 April 2007 and 31 October 2007: 1,641,547). The subscription shares were issued, as a bonus issue to the ordinary shareholders, on 19 January 2007.

3         Return/(loss) per ordinary share
	(Unaudited) Half year ended 30 April 2008	(Unaudited) Half year ended 30 April 2007	(Audited) Year ended 31 October 2007
	£’000	£’000	£’000
The return/(loss) per ordinary share is based on the
following figures:
Revenue return/(loss)	615	(80)	581
Capital (loss)/return	(13,354)	10,119	3,479
	----------	----------	----------
Total	(12,739)	10,039	4,060
	======	======	======
Weighted average number of ordinary shares in
issue for the period	8,208,293	8,208,293	8,208,293
Revenue return/(loss) per ordinary share	7.49p	(0.97)p	7.08p
Capital (loss)/return per ordinary share	(162.69)p	123.27p	42.38p
	----------	----------	----------
	(155.20)p	122.30p	49.46p
	======	======	======

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HENDERSON OPPORTUNITIES TRUST PLC

Unaudited results for the half year ended 30 April 2008

Notes to the Accounts (continued)

4	Expenses
	Management fees and finance charges The Company allocates 80% of its finance charges and management fees to the capital return. The management fee is calculated, quarterly in arrears, as 0.60% per annum of the assets under management.   Provision for performance fee The Income Statement for the comparative half year period includes provision for a performance fee in respect of the period from 19 January 2007 to 31 October 2007 inclusive. As any performance fees payable to Henderson are based on investment performance over the full accounting period and crystallise only at the accounting period end, the calculation as at 30 April 2007 (of £175,000, including irrecoverable VAT) was merely an accrual based on outperformance up to that date. The performance fee is calculated as 15% of outperformance of the FTSE All-Share Index by the aggregate net asset value per share (fully diluted), calculated on a total return basis. The performance fee is allocated as a cost to the capital return.   Costs of reorganisation On 19 January 2007 the Company changed its investment objective and investment strategy, changed its name and made a bonus issue of subscription shares to the ordinary shareholders, as set out in the Prospectus dated 21 December 2006. The costs of these changes totalled £320,000 (including irrecoverable VAT). The costs of the reorganisation were allocated to the revenue return in the comparative periods.   Write-back of prior years’ VAT Value Added Tax amounting to £298,000, borne on investment management fees in the period from October 2000 to October 2006, was recognised as recoverable in the comparative year. The management fees disclosed in the Income Statement, payable for the periods since 1 October 2006, do not include VAT.
5	Transaction costs
	Purchase transaction costs for the half year ended 30 April 2008 were £15,000 (half year ended 30 April 2007: £34,000; year ended 31 October 2007: £68,000). These comprise mainly stamp duty and commission.  Sale transaction costs for the half year ended 30 April 2008 were £7,000 (half year ended 30 April 2007: £19,000; year ended 31 October 2007: £26,000). These comprise mainly commissions.
6	Dividends
	The Board has declared an interim dividend of 4.00p per ordinary share (2007: none), to be paid on 26 September 2008 to shareholders registered at the close of business on 29 August 2008. The ex-dividend date will be 27 August 2008.  Based on the number of ordinary shares in issue at 23 June 2008 (8,208,293), this dividend will absorb £328,000.    No provision has been made for the interim dividend in these accounts. The final dividend of 6.00p per ordinary share, paid on 26 March 2008  in respect of the year ended 31 October 2007, has been recognised as a distribution in the period.

Page 10 of 10

HENDERSON OPPORTUNITIES TRUST PLC

Unaudited results for the half year ended 30 April 2008

7	Net asset value per ordinary share
	The net asset value per ordinary share is based on the net assets attributable to the ordinary shares of £49,052,000 (30 April 2007: £68,262,000; 31 October 2007: £62,283,000) and on the 8,208,293 ordinary shares of 25p each in issue at 30 April 2008 (30 April 2007 and 31 October 2007: 8,208,293).
8	Accounts for the year ended 31 October 2007
	The figures and financial information for the year ended 31 October 2007 are extracted from the latest published accounts of the Company and do not constitute the statutory accounts for that year. Those accounts have been delivered to the Registrar of Companies and included the report of the auditors which was unqualified and did not contain a statement under either section 237(2) or section 237(3) of the Companies Act 1985.

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