Half Yearly Report

RNS Number : 4918U

Henderson Opportunities Trust PLC

25 June 2009

 



Page 1 of 13

HENDERSON GLOBAL INVESTORS

HENDERSON OPPORTUNITIES TRUST PLC

25 JUNE 2009

HENDERSON OPPORTUNITIES TRUST PLC

Financial Report for the half year ended 30 April 2009

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.

Chairman's Comment

Although the stock market may continue to be subject to sharp movements, the Board expects positive progress, in both absolute and relative terms, in line with the Company's objective of higher than average growth of capital over the medium to long term.

George Burnett 

Chairman

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 13

HENDERSON OPPORTUNITIES TRUST PLC

Financial Report for the half year ended 30 April 2009

Interim Management Report

Chairman's Statement

Review

Over the half year ended 30 April 2009 the net asset value per ordinary share ('NAV') total return was 4.9% while the total return of the FTSE All-Share Index was 1.9%. However, this does not tell the story of a very volatile period.  The NAV total return was -21.3% over the four and a half month period up to the Company's Annual General Meeting on 19 March 2009, from about which date it began to recover strongly; the NAV total return for the period from the AGM to the period end was 33.4%.  This recovery was the result of a modest return of investor confidence after a period in which the share prices of many companies fell sharply. Tentative signs of economic stability inspired this confidence, as well as the realisation that companies have taken substantial action in shaping their businesses for the difficult economic climate.  From the end of April to date (23 June 2009) the NAV has risen to 327.9p, representing a total return of 4.8%; by comparison the benchmark index has returned 0.04%.

Throughout the half year period a geared position has been maintained, with a bank loan of £5½ million partially offset by cash holdings of varying amounts. The net gearing began the period at 10½%. It was increased to fund investment opportunities as the market began to strengthen and also to replace the cash (representing accumulated income for the previous year) that was paid out as a dividend on 26 March 2009.  Since the half year end the net gearing has been increased a little further, to 17.5% of net assets at 23 June 2009.

Expenses

The Board has reviewed the basis on which it allocates management and finance costs between capital and revenue and believes it prudent to assume that, in future, investment income will form a higher proportion of the long term total investment returns than was expected when the existing allocation was set in 2005.  Accordingly, with effect from 1 November 2008, 50% (rather than 80%) of management and finance costs have been allocated to capital.  The Income Statement for the half year ended 30 April 2009 reflects this change, the effect of which is to reduce the revenue return per ordinary share from 4.39p to 3.69p and to increase the capital return per ordinary share from 0.07p to 0.77p. The change has no effect on the Company's actual expenditure and the total return remains the same. It will, however, reduce the amount of revenue available for distribution by way of dividend because a higher proportion of the total returns will be retained as capital reserve. Further details are given in Note 2 on page 10.  

Earnings and Dividend

The Board has declared an interim dividend of 3p. This is down from the 4p paid last year as the earnings per share have fallen from 7.49p to 3.69p. The reduction in the dividend was predicted in the annual report as some of the underlying holdings in the portfolio have either cut or passed their dividend.

Continuation Vote

On 19 March 2009, at the Annual General Meeting, a substantial majority of the shareholders (88% of those who lodged proxy votes) supported the continuation of the Company. The Board is pleased to note the 50% rise in the Company's ordinary share price since that date. There will be another continuation vote early next year.

Page 3 of 13

HENDERSON OPPORTUNITIES TRUST PLC

Financial Report for the half year ended 30 April 2009

Interim Management Report

Chairman's Statement, continued

Outlook

Although the stock market may continue to be subject to sharp movements, the Board expects positive progress in both absolute and relative terms. The company results that have been reported in recent weeks have in aggregate been better than the reduced expectations of stock analysts. This would suggest that expectations for profits are at least realistic and may prove overly pessimistic. The cost reductions that companies have put through will mean that, if their sales lines stabilise and start to improve, the achieved margins may come through better than many investors are expecting. The portfolio comprises a number of companies that currently stand on low valuations from which there is substantial upside. It is well positioned to benefit, as the companies held are believed to be sound competitive businesses with good prospects that should contribute to the Company's objective of higher than average growth of capital over the medium to long term.

G B Burnett

Chairman

25 June 2009

  Page 4 of 13

HENDERSON OPPORTUNITIES TRUST PLC

Financial Report for the half year ended 30 April 2009

Interim Management Report

Regulatory Disclosures 

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 2008.

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.

Directors' Responsibility Statement

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

(a) the condensed set of financial statements has been prepared in accordance with the Accounting Standards Board's Statement Half-Yearly Financial Reports;

(b) the interim management report includes a fair review of the information required by Disclosure and Transparency Rule 4.2.7R (an indication of important events that have occurred during the first six months of the financial year and a description of the principal risks and uncertainties for the remaining six

months of the financial year); and

(c) the interim management report includes a fair review of the information required by Disclosure and Transparency Rule 4.2.8R (disclosure of related party transactions and changes therein).

For and on behalf of the Board

G B Burnett

Chairman

25 June 2009

Page 5 of 13

HENDERSON OPPORTUNITIES TRUST PLC

Financial Report for the half year ended 30 April 2009

Interim Management Report

Portfolio Activity

During the period some larger company holdings were increased. Examples of this are Pearson and Aviva, which were purchased on relatively low valuations but are sound long term business franchises. In the smaller companies area the holdings in Entertainment Rights, Discover Leisure and SDI were sold at substantial losses as these companies' operating performances have severely disappointed, while the Fidessa and SDL holdings were reduced after a period of strong performance as they had become too large an exposure in the overall portfolio.

Portfolio Information

Analysis of the equity portfolio by market index at 30 April 2009

	30 April 2009	30 April 2008	31 October 2008
	%	%	%
FTSE 100 Index	10.8	7.2	8.3
FTSE 250 Index	20.5	12.4	16.4
FTSE SmallCap Index	24.3	26.2	28.6
	----------	----------	----------
FTSE All-Share Index	55.6	45.8	53.3
FTSE Fledgling Index	8.4	12.0	9.5
FTSE AIM Index	29.6	34.6	32.8
other Official List	5.0	4.2	2.7
other AIM	1.4	3.4	1.7
	----------	----------	----------
	100.0	100.0	100.0
	======	======	======

Page 6 of 13

HENDERSON OPPORTUNITIES TRUST PLC

Financial Report for the half year ended 30 April 2009

Income Statement

for the half year ended 30 April 2009

	(Unaudited) Half year ended 30 April 2009			(Unaudited) Half year ended 30 April 2008			(Audited) Year ended 31 October 2008
	Revenue return £'000	Capital return £'000	Total £'000	Revenue return £'000	Capital return £'000	Total £'000	Revenue return £'000	Capital return £'000	Total £'000
Gains/(losses) from investments held at fair value through profit or loss	-	159	159	-	(13,038)	(13,038)	-	(36,026)	(36,026)
Income from investments held at fair value through profit or loss	434	-	434	763	-	763	1,528	-	1,528
Other interest receivable and     similar income	54	-	54	6	-	6	92	-	92
	----------	----------	----------	----------	----------	----------	----------	----------	---------
Gross revenue and capital     gains/(losses)	488	159	647	769	(13,038)	(12,269)	1,620	(36,026)	(34,406)
	---------	----------	----------	---------	----------	----------	----------	----------	---------
Management fees (note 2)	(37)	(37)	(74)	(33)	(132)	(165)	(58)	(230)	(288)
Write-back of prior years' VAT   (note 2)	-	-	-	-	-	-	160	-	160
Other administrative expenses	(86)	-	(86)	(75)	-	(75)	(163)	-	(163)
	---------	----------	----------	---------	----------	----------	----------	----------	---------
	(123)	(37)	(160)	(108)	(132)	(240)	(61)	(230)	(291)
	---------	---------	---------	---------	---------	---------	---------	---------	---------
Net return/(loss) on ordinary    activities before finance     charges and taxation	365	122	487	661	(13,170)	(12,509)	1,559	(36,256)	(34,697)
Finance charges (note 2)	(58)	(59)	(117)	(46)	(184)	(230)	(104)	(414)	(518)
	---------	--------	--------	---------	--------	--------	---------	---------	---------
Net return/(loss) on ordinary     activities before taxation	307	63	370	615	(13,354)	(12,739)	1,455	(36,670)	(35,215)
Taxation on net return/(loss) on ordinary activities	(4)	-	(4)	-	-	-	-	-	-
	---------	--------	--------	---------	--------	--------	---------	---------	---------
Net return/(loss) on ordinary    activities after taxation	303	63	366	615	(13,354)	(12,739)	1,455	(36,670)	(35,215)
	=====	======	======	=====	======	======	======	=====	=====
Return/(loss) per ordinary share (note 3)	3.69p	0.77p	4.46p	7.49p	(162.69)p	(155.20)p	17.72p	(446.74)p	(429.02)p
	=====	======	======	=====	=======	=======	=====	=====	=====

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 on page 7.

Page 7 of 13

HENDERSON OPPORTUNITIES TRUST PLC

Financial Report for the half year ended 30 April 2009

Reconciliation of Movements in Shareholders' Funds

	(Unaudited) Half year ended 30 April 2009
	Called up share capital £'000	Share premium account  £'000	Capital redemption reserve £'000	Other  capital reserves £'000	Revenue reserve £'000	Total £'000
At 31 October 2008	2,068	14,505	2,354	6,105	1,216	26,248
Net return on ordinary activities       after taxation	-	-	-	63	303	366
Issue of ordinary shares	-	3	-	-	-	3
Dividend paid on the ordinary shares	-	-	-	-	(944)	(944)
	----------	----------	----------	----------	----------	----------
At 30 April 2009	2,068	14,508	2,354	6,168	575	25,673
	======	======	======	=====	======	======

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

	(Audited) Year ended 31 October 2008
	Called up share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Other capital reserves £'000	Revenue reserve £'000	Total £'000
At 31 October 2007	2,068	14,505	2,354	42,775	581	62,283
Net (loss)/return on ordinary activities after taxation	-	-	-	(36,670)	1,455	(35,215)
Dividends paid on the ordinary shares	-	-	-	-	(820)	(820)
	----------	----------	----------	----------	----------	----------
At 31 October 2008	2,068	14,505	2,354	6,105	1,216	26,248
	======	======	======	======	======	======

Page 8 of 13

HENDERSON OPPORTUNITIES TRUST PLC

Financial Report for the half year ended 30 April 2009

Balance Sheet

as at 30 April 2009

	(Unaudited) 30 April  2009 £'000	(Unaudited) 30 April  2008 (restated)* £'000	(Audited) 31 October 2008 (restated)* £'000
Fixed assets
Investments held at fair value through profit or loss	29,990	57,953	29,017
	-----------	-----------	-----------
Current assets
Investment held at fair value through profit or loss (note 5)	1,996	128	3,140
Debtors	329	1,270	865
Cash at bank	13	4	1
	-----------	-----------	-----------
	2,338	1,402	4,006
Creditors: amounts falling due within one year	(6,655)	(10,303)	(6,775)
	----------	----------	----------
Net current liabilities	(4,317)	(8,901)	(2,769)
	----------	----------	----------
Total net assets	25,673	49,052	26,248
	======	======	======
Capital and reserves
Called up share capital (note 6)	2,068	2,068	2,068
Share premium account	14,508	14,505	14,505
Capital redemption reserve	2,354	2,354	2,354
Other capital reserves	6,168	29,421	6,105
Revenue reserve	575	704	1,216
	----------	----------	----------
Equity shareholders' funds	25,673	49,052	26,248
	======	======	======
Net asset value per ordinary share (note 7)	312.76p	597.59p	319.77p
	======	======	======

* See note 5 on page 11.

  Page 9 of 13

HENDERSON OPPORTUNITIES TRUST PLC

Financial Report for the half year ended 30 April 2009

Cash Flow Statement

for the half year ended 30 April 2009

	(Unaudited) Half year ended 30 April 2009 £'000	(Unaudited) Half year ended 30 April 2008 £'000	(Audited) Year ended 31 October 2008 £'000
Net cash inflow from operating activities	722	137	1,005
Net cash outflow from servicing of finance	(148)	(231)	(490)
Net cash (outflow)/inflow from financial investment	(1,856)	(4,283)	3,147
Equity dividends paid	(944)	(492)	(820)
Net cash inflow/(outflow) from management of liquid resources	1,144	605	(2,407)
	----------	----------	----------
Net cash (outflow)/inflow before financing	(1,082)	(4,264)	435
Net cash inflow/(outflow) from financing	149	2,755	(401)
	----------	----------	----------
(Decrease)/increase in cash	(933)	(1,509)	34
	=====	=====	======
Reconciliation of operating return to net cash    outflow from operating activities
Net total return/(loss) before finance costs and     taxation	487	(12,509)	(34,697)
(Less)/add: capital (return)/loss before finance costs and taxation	(122)	13,170	36,256
	----------	----------	----------
Net revenue return before finance costs and taxation	365	661	1,559
Increase in accrued income	(2)	(358)	(143)
Decrease/(increase) in other debtors and prepayments	508	-	(160)
(Decrease)/increase in other creditors	(103)	(34)	36
Expenses charged to capital	(37)	(132)	(230)
Taxation suffered	-	-	(13)
Scrip dividends included as investment income	-	-	(44)
Overseas withholding tax suffered	(9)	-	-
	----------	----------	----------
Net cash inflow from operating activities	722	137	1,005
	=====	=====	======
Reconciliation of net cash flow to movement in net debt
(Decrease)/increase in cash as above	(933)	(1,509)	34
Net cash movement from (increase)/decrease in loans	(146)	(2,755)	401
Net cash flow from movement in liquid resources	(1,144)	(605)	2,407
Exchange movements	-	-	1
	----------	----------	----------
Movement in net debt	(2,223)	(4,869)	2,843
Net debt at the start of the period	(2,379)	(5,222)	(5,222)
	----------	----------	----------
Net debt at the end of the period	(4,602)	(10,091)	(2,379)
	======	=====	======
Represented by:
Cash at bank less bank overdrafts	(942)	(1,509)	(9)
Liquid resources (investment in cash fund)	1,996	128	3,140
Debt falling due within one year	(5,656)	(8,710)	(5,510)
	----------	----------	----------
Net debt	(4,602)	(10,091)	(2,379)
	======	=====	======

  Page 10 of 13

HENDERSON OPPORTUNITIES TRUST PLC

Financial Report for the half year ended 30 April 2009

Notes to the Condensed Financial Statements

1		Accounting policies - basis of preparation
	The condensed set of financial statements has been prepared using the same accounting policies as are set out in the Company's Report and Accounts for the year ended 31 October 2008, except for the reclassification of the holding in a money market fund as a current asset investment and liquid resource (as explained more fully in note 5). The basis on which expenses are allocated between capital and revenue has been changed (see note 2 below).  The condensed set of financial statements has not been either audited or reviewed by the Company's auditors.
2	Expenses
	Management fees and finance charges With effect from 1 November 2008 the Company allocates 50% of its management fees and finance charges to the capital return.  It had previously allocated 80% of its management fees and finance charges to the capital return and the comparative figures for the prior year were prepared on this basis.
	The Board monitors the assumptions that underpin the basis of allocation. It has concluded from its most recent review that a greater proportion of the Company's investment returns will come from income than was previously expected.  Although the ratio of income returns and capital returns will vary, perhaps considerably, over shorter periods of time, the Board expects that, over the long term, the future investment returns will be earned as income and as capital growth in approximately equal measure.  This conclusion reflects both the characteristics of the portfolio and the changing nature of the UK stock market.
	The effect of this change is to reduce the net revenue return after taxation for the half year ended 30 April 2009 by £57,000 and to increase the net capital return by the same amount; the total return is unaffected by the change.  The comparative figures have not been restated.
	The management fee is calculated, quarterly in arrears, as 0.60% per annum of the assets under management.  No performance fee was earned or payable in the period, nor in the comparative periods.  The fee arrangements are unaffected by the allocation of costs described above.
	Write-back of prior years' VAT Value Added Tax amounting to £160,000, being the balance of the VAT borne on investment management fees in the period from October 2000 to October 2006, was recognised as recoverable in the year to 31 October 2008. The Company may be able to recover further amounts of the VAT charged on investment management fees back to 1990, in particular in respect of the period from 1 January 1990 to 4 December 1996.  However, the Board considers that currently there are too many uncertainties for any reasonable estimate of the amounts potentially recoverable to be calculated.

  Page 11 of 13

HENDERSON OPPORTUNITIES TRUST PLC

Financial Report for the half year ended 30 April 2009

Notes to the Condensed Financial Statements, continued

3	Return/(loss) per ordinary share
			(Unaudited) Half year ended  30 April 2009 £'000	(Unaudited) Half year ended  30 April 2008 £'000	(Audited) Year ended 31 October 2008 £'000
		The return/(loss) per ordinary share is based on the following figures:
		Revenue return	303	615	1,455
		Capital return /(loss)	63	(13,354)	(36,670)
			----------	----------	----------
		Total	366	(12,739)	(35,215)
			======	======	======
		Weighted average number of ordinary shares in issue for the period	8,208,295	8,208,293	8,208,293
		Revenue return per ordinary share	3.69p	7.49p	17.72p
		Capital return/(loss) per ordinary share	0.77p	(162.69)p	(446.74)p
			----------	----------	----------
			4.46p	(155.20)p	(429.02)p
			======	======	======

4	Dividends
	The Board has declared an interim dividend of 3.00p per ordinary share (2008: 4.00p), to be paid on 25 September 2009 to shareholders registered at the close of business on 28 August 2009. The ex-dividend date will be 26 August 2009. Based on the number of ordinary shares in issue at 24 June 2009 (8,208,582), this dividend will absorb £246,000.
	No provision has been made for the interim dividend in these accounts. The final dividend of 11.50p per ordinary share, paid on 26 March 2009 in respect of the year ended 31 October 2008, has been recognised as a distribution in the period.
5	Current asset investment
	The Company has a holding in Henderson Liquid Assets Fund plc, a money market fund which is viewed as a readily disposable store of value and which is used to invest cash balances that would otherwise be placed on short term deposit.  At 30 April 2009 this holding had a value of £1,996,000 (30 April 2008: £128,000; 31 October 2008: £3,140,000).

  Page 12 of 13

HENDERSON OPPORTUNITIES TRUST PLC

Financial Report for the half year ended 30 April 2009

Notes to the Condensed Financial Statements, continued

	The holding in Henderson Liquid Assets Fund plc was previously shown within fixed asset investments but, having regard to way in which this investment is viewed, the Board has decided that it would be more appropriate to present it on the balance sheet as a current asset investment, with changes in the amount invested being presented as part of the Company's management of liquid resources. This represents a change of accounting policy, and hence the prior year figures in the balance sheet and the cash flow statement have been restated.  The amounts presented on the cash flow statement under the heading 'management of liquid resources' would have been included in the cash flow as 'financial investment' under the previous treatment.  This reclassification has no impact on either the Company's net assets or the net increase/decrease in the Company's cash and it has not affected the amounts presented in the Income Statement.
	Henderson Liquid Assets Fund plc is managed by Henderson Global Investors Limited ('Henderson').  The Company's holding is made through a class of shares that does not bear management fees and, accordingly, it has no effect on the management fees payable by the Company to Henderson (which are based on the value of the total assets under management, wherever held).
6	Called up share capital
	During the half year ended 30 April 2009, 289 of the Company's subscription shares were converted into 289 ordinary shares.  Subscription shareholders have an opportunity to convert their subscription shares into ordinary shares, at the conversion price of 936p per share, in each of the years 2009 to 2014 inclusive.
	There were 8,208,582 ordinary shares of 25p each in issue at 30 April 2009 (30 April 2008 and 31 October 2008: 8,208,293).
	There were 1,641,258 subscription shares of 1p each in issue at 30 April 2009 (30 April 2008 and 31 October 2008: 1,641,547). The subscription shares were issued, as a bonus issue to the ordinary shareholders, on 19 January 2007.
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 £25,673,000 (30 April 2008: £49,052,000; 31 October 2008: £26,248,000) and on the 8,208,582 ordinary shares of 25p each in issue at 30 April 2009 (30 April 2008 and 31 October 2008: 8,208,293).
8	Transaction costs
	Purchase transaction costs for the half year ended 30 April 2009 were £25,000 (half year ended 30 April 2008: £15,000; year ended 31 October 2008: £104,000).  These comprise mainly stamp duty and commissions.  Sale transaction costs for the half year ended 30 April 2009 were £9,000 (half year ended 30 April 2008: £7,000; year ended 31 October 2008: £22,000).  These comprise mainly commissions.

  Page 13 of 13

HENDERSON OPPORTUNITIES TRUST PLC

Financial Report for the half year ended 30 April 2009

Notes to the Condensed Financial Statements, continued

9	Comparative information
	The financial information contained in this half-yearly financial report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006.
	The information for the year ended 31 October 2008 has been extracted from the statutory accounts (restated, as explained in note 5 above), which have been filed with the Registrar of Companies.  The report of the auditors on those accounts was unqualified and contained no statement under either section 498(2) or section 498(3) of the Companies Act 2006.
10	Financial Report for the half year ended 30 April 2009
	The full half year report, as printed for circulation to the shareholders, will be available on www.hendersonopportunities.com for viewing. Copies will be posted to the shareholders in early July 2009 and will be available thereafter from the Secretary at the Company's Registered Office, 201 Bishopsgate, London EC2M 3AE.

- ENDS -

 

END

 

 

IR PUUGGQUPBUBA