Annual Financial Report

Henderson Opportunities Trust PLC

01 February 2024

 

JANUS HENDERSON FUND MANAGEMENT UK LIMITED

HENDERSON OPPORTUNITIES TRUST PLC

LEGAL ENTITY INDENTIFIER (LEI):  2138005D884NPGHFQS77

1 February 2024

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2023

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 primarily UK investments.

PERFORMANCE HIGHLIGHTS

Total Return Performance to 31 October 2023

	1 year %	3 years %	5 years %	10 years %
NAV1, 5	-9.3	5.7	-1.7	42.0
Share price2	-12.2	5.4	-0.2	34.4
Benchmark3	5.9	39.4	21.1	58.0
Peer group NAV4	3.0	13.6	7.7	44.1

	Year ended 31 October 2023	Year ended 31 October 2022
NAV per share at year end5	1,035.2p	1,173.7p
Share price at year end	865.0p	1,018.0p
Total return per share5	(103.5p)	(424.7p)
Net assets	£81.8m	£92.7m
Discount at year end5, 6	16.4%	13.3%
Ongoing charge (excluding performance fee)5	1.02%	0.90%
Ongoing charge (including performance fee) 5, 7	1.02%	0.90%
Dividend for year8	35.5p	34.0p

1 Net asset value ("NAV") per ordinary share total return (including dividends reinvested)

2 Share price total return (including dividends reinvested)

3 FTSE All-Share Index

4 AIC UK All Companies simple average

5 Alternative performance measure

6 Calculated based on the NAV per share and share price at year end

7 The Board announced on 8 November 2023 that the performance fee arrangements had been removed with effect from 20 October 2023. No performance fee was payable in the year ended 31 October 2023 (2022: £nil)

8 This represents three interim dividends of 7.5p each and a proposed final dividend of 13.0p which will be put to shareholders for approval at the Annual General Meeting on 7 March 2024. See the Chaiman's statement for more details. The dividend yield⁵ for the year ended 31 October 2023 was 4.1% (2022: 3.3%) based on the share price at the year end

Sources: Morningstar Direct, Janus Henderson, LSEG Datastream

A glossary of terms and alternative performance measures can be found in the Annual Report

CHAIRMAN'S STATEMENT

Performance review

Over the past year the Company has faced significant headwinds. Against a backdrop of high interest rates and persistent inflation, continued and significant market volatility and negative sentiment towards the UK equity market and smaller companies in particular, it has been a very disappointing year for the Company in both absolute and relative terms. The NAV total return for the year was -9.3% and the share price total return over the period was -12.2%. In comparison, over the same period the FTSE All-Share Index, the Company's benchmark index, rose by 5.9%, the FTSE 250 Index of medium-sized companies fell by 1.3%, the FTSE SmallCap Index rose by 1.3% and the AIM All-Share Index of the smallest listed UK businesses fell by 14.1%. The performance of both the Company's NAV and share price over the longer term are illustrated in the table in the Fund Managers' Report.

On a more positive note, it does seem as though October may have marked the low point of sentiment towards the UK equity market. Since then, we have had a well-received Autumn Statement from the UK Chancellor, as well as a succession of commentators lining up to highlight the UK's relatively attractive valuation versus its international peers. Encouragingly, the Company's share price delivered a total return of 10.8% in November and 5.4% in December, outperforming the 3.0% and 0.9% return from the FTSE All-Share in those months respectively. The Fund Managers' report discusses in more detail the weakness last year in smaller UK companies and in particular those quoted on the AIM Index which at the year end made up 44.2% of the Company's portfolio. Last year saw a perfect storm for smaller companies. Institutional investors were concerned about the uncertain economic outlook for the UK and focused on liquidity shunned companies below certain market capitalisations, favouring investments perceived as being less risky. At the same time, many smaller companies have also been under intense pressure due to rising interest rates and their share prices have fallen as a result. The combined effect is that the valuations of many AIM stocks are now very low. The Fund Managers do not believe that these valuations reflect the prospects or potential of the companies held in the portfolio, which overall have been operating satisfactorily, with many reporting growing earnings and dividends.

During the year, the Board has taken a close look at the Company's investment approach and has worked with the Fund Managers in scrutinising the level of the Company's exposure to small companies and AIM stocks. We have also considered the large cap and natural resource companies held in the portfolio as "stabilisers" and their effectiveness in smoothing volatility in the overall portfolio. The Fund Managers are very aware of the importance of ensuring that every stock is held for its long-term growth prospects. They also rightly recognise that there are times when stocks have to be sold. However, the Board has noted that if the current investment approach is maintained there should be good returns to be made when the headwinds abate. The UK small company and AIM sectors are full of vibrant companies that can be expected to lead the UK economy's future growth. Therefore, to be invested in them at the current very depressed valuation levels will, we believe, prove rewarding over the medium to longer term. A question the Board of course asks is "when will this recovery happen?". Unsurprisingly, there is never a very satisfactory answer as the outlook for the UK remains very uncertain. However, since our financial year end, and as mentioned above, the UK market is showing signs of recovery. Inflation is falling, and the belief seems to be that the next move in interest rates will be downwards. This anticipated good news may have unleashed the start of a recovery in some share prices, but only time will tell.

Income review

The Fund Managers' focus is on buying companies with strong balance sheets and good management which have the capacity to grow substantially over the long term. Dividend growth is in the first instance an output of the portfolio rather than a primary consideration of the Fund Managers and the Company's earnings profile will therefore fluctuate from year to year. However, the Company does seek dividend growth over time and so income growth is a secondary objective. One advantage of the investment trust structure is the Company's ability to use its revenue reserves to support dividend distributions and the Board will use these reserves to smooth the dividends paid to shareholders where it considers such use to be appropriate. The Board's intention remains for the dividend to grow progressively. We have declared a final dividend of 13.0p per share for the year ended 31 October 2023. This brings total dividends for the year to 35.5p and represents an increase of 4.4% over last year's total dividend payment for the year of 34.0p. At the current share price of 1,002.5p (as at 30 January 2024) this represents a yield of 3.5%. A resolution to approve the payment of the final dividend for the year ended 31 October 2023 will be proposed at the forthcoming Annual General Meeting ("AGM"). If the resolution is passed, the dividend will be paid on 22 March 2024 to shareholders on the register on 16 February 2024. The shares will be quoted ex-dividend on 15 February 2024.

Fees and expenses

In November 2023, the Board announced that the performance fee arrangements in favour of the Manager had been removed with effect from 20 October 2023. The removal of the performance fee is designed to ensure that shareholders receive the full benefit of any capital gains by the Company at such time as there is a change in sentiment towards, and a potential re-rating of, UK equities and smaller companies in particular. The management fee remains at its previous level of 0.55% of net assets per annum. This is payable quarterly at the rate of 0.1375% based on net assets at the end of the previous quarter. The ongoing charge for the full year was 1.02%, compared to 0.90% in respect of the previous financial year.

Gearing

Given the continued market volatility and as gearing detracted from the NAV total return during 2022, the Board and the Fund Managers decided to reduce gearing slightly this year and at the year end net gearing was 9.6% (2022: 13.9%). From a longer-term perspective gearing has been a positive contributor to returns and the Board and the Fund Managers continue to see its use as one of the key advantages of the investment trust structure, albeit that the benefits now need to be balanced against the increased cost of debt. The intention of the Fund Managers will be to continue to use some gearing where appropriate to take advantage of attractive new investment opportunities.

Continuation vote and share split

At the AGM in March 2023, although 75.8% of the votes cast were voted in favour of the triennial resolution for the continuation of the Company, 24.2% of the votes cast (approximately 6% of the total voting rights) were voted against. Despite the Company encouraging shareholders to vote, only 26.6% of the Company's total voting rights were cast. The Company also received significant votes against the resolutions regarding the authority to allot relevant securities and the authority to disapply pre-emption rights. The Board believes these two additional significant votes against were connected to the votes against the continuation of the Company. The Board has listened to shareholders and it understands their frustration with the Company's performance, the persistent discount to NAV at which the Company's shares trade and the limited share liquidity. The Board does however believe that the Company remains relevant and that the performance will turn round, which will in time attract new long-term investors. There will be another continuation vote in 2026.

Meanwhile, the Board and the Fund Managers are explaining the Company's strategy to existing and potential investors and are working hard to make the Company attractive to retail investors who, as at 31 December 2023, held 77.0% of the Company's issued shares. Measures taken include removing the performance fee, as referred to above, and an increased focus on marketing. The Board is also now proposing a share split.

In the half year results announcement made in June 2023, the Board noted that, in order to assist monthly savers and those who reinvest their dividends, or those who are looking to invest smaller amounts (such as younger investors), it was considering proposing a share split of the Company's ordinary shares. The price of the Company's ordinary shares of 25p each (as at 30 January 2024) has more than doubled over the last 10 years. The Directors believe that a sub-division may also improve the liquidity in and marketability of the Company's shares, which would benefit all shareholders. At the Company's AGM in March 2024, approval from shareholders will be sought to sub-divide each existing ordinary share of 25p each into five new ordinary shares of 5p each (the "new Ordinary Shares") (the "Sub-division"). There will be no interruption to trading in the Company's shares on the London Stock Exchange when the sub-division takes place. The new Ordinary Shares will rank equally with each other and will carry the same rights and be subject to the same restrictions (save as to nominal value) as the existing ordinary shares, including the same rights to participate in dividends paid by the Company. Further details of the proposed sub-division can be found in the notice convening this year's AGM which accompanies this report and can also be found on the Company's website.

The discount level

During the year the Company's shares remained at a discount to net asset value with the discount ranging from 20.2% to 7.2% and finishing the year at 16.4%. This was largely reflective of the widening average discount levels seen across the investment trust sector as a whole, with the AIC UK All Companies sector finishing the year at an average discount of 13.9%, and the AIC UK Smaller Companies sector finishing the year at an average discount of 15.4%.

There were no shares bought back during the financial year and no new shares were issued. Given the size of the Company and its limited capacity for buybacks, it remains the Board's view that were share buybacks to be considered, this would be with the objective of enhancing the NAV for existing shareholders rather than seeking to maintain any specific discount level. It remains the Board and the Fund Managers' belief that market cyclicality over time, the AIM market returning to favour, an increase in investor confidence in the UK and strong performance by the Company are all likely to be key factors in narrowing the discount.

Annual General Meeting

Our AGM will be held on Thursday, 7 March 2024 at 2.30pm at Janus Henderson Investors' offices at 201 Bishopsgate, London EC2M 3AE. I hope as many shareholders as possible will be able to attend to take the opportunity to meet the Board and to hear a presentation from the Fund Managers. However, if you are unable to attend in person, you can listen to the Fund Managers' presentation and watch the Meeting live by visiting www.janushenderson.com/trustslive. Full details are set out in the Notice of Meeting.

The Board is keen to encourage shareholders to vote on the resolutions being put to the AGM. Shareholders on the main register can do this by completing and returning the proxy form which has been sent to them. If you hold your shares on a platform via a nominee, please note that the AIC has provided helpful information on how to vote investment company shares held on some of the major platforms. This information can be found at www.theaic.co.uk/how-to-vote-your-shares.

If shareholders have any questions for the Board or the Fund Managers, I would encourage you to submit these in advance of the AGM to the Corporate Secretary at [e-mail].

Outlook

The period under review has undoubtedly been a very challenging one for the Company. As uncertainty about the economy persists, many good quality smaller companies, with sound long-term plans, are trading on very undemanding valuations. However, we know that stockmarkets are cyclical and this gives us confidence that today's valuations will at some point be the basis of good future returns. In due course (and if this is not already starting to happen) the UK market will anticipate a recovery of the economy and smaller company share prices are likely to rebound. The Company's portfolio of quality companies is well positioned to prosper in these circumstances and the Board shares the Fund Managers' belief that there is considerable potential for gains in coming years when the current clouds affecting the economic outlook eventually clear. This should benefit shareholders over the medium to longer term.

Finally, your views matter. Your Board greatly values shareholder comments and I would encourage you to email me with your views at [e-mail].

Wendy Colquhoun

Chairman

31 January 2024

FUND MANAGERS' REPORT

Introduction

It has been an exceptionally challenging year for performance. While the UK economy has not fallen into the feared recession, company valuations have fallen further, reflecting a deep malaise towards UK smaller companies. This very weak performance is, in our view, more reflective of poor sentiment and the associated outflows from UK equities rather than a fundamental reflection of the health of UK companies.

	1 year %	3 years %	5 years %	10 years %
Company NAV	-9.3	5.7	-1.7	42.0
Company share price	-12.2	5.4	-0.2	34.4
FTSE All-Share (Benchmark)	5.9	39.4	21.1	58.0
AIC UK All Companies NAV (Peer Group)	3.0	13.6	7.7	44.1

Investment backdrop

Before going into more detail on the performance of the Company, it is worth (briefly) setting out the UK economic backdrop.

The key debates in the UK market over the last twelve months have been how fast inflation will come down and the resilience of the economy in the face of rising interest rates. Inflation is now successfully being brought down, finishing the financial year at 4.6%. More importantly from a consumer perspective, real wages are now back in modest growth (see chart below).

Data illustrating the Real wages - year on year chart in the Annual Report is set out below:

	Real Wage Growth, year on year %	Real Wage Contraction, year on year %
15 January 2007	2.7	n/a
15 January 2008	1.6	n/a
15 January 2009	n/a	-2.0
15 January 2010	n/a	-1.5
15 January 2011	n/a	-1.3
15 January 2012	n/a	-2.4
15 January 2013	n/a	-1.6
15 January 2014	n/a	-0.7
15 January 2015	1.5	n/a
15 January 2016	1.9	n/a
15 January 2017	0.3	n/a
15 January 2018	n/a	-0.3
15 January 2019	1.6	n/a
15 January 2020	1.1	n/a
15 January 2021	4.1	n/a
15 January 2022	n/a	-0.7
15 January 2023	n/a	-4.2

Source: Panmure Gordon, ONS

The consumer, and indeed the wider UK economy, has been more resilient than was feared at the start of the year. When thinking about why this is, we need to consider both sides of the household balance sheet, in other words the boost to interest income on household savings as well as higher interest costs on consumer borrowings. It is possible that this time last year the effect of the former was being underestimated versus the latter. While the two effects will be distributed unevenly across the UK population, there are undoubtedly some households that have seen a net benefit from the current interest rate backdrop. This can help to explain why, for example, retail sales have proved more resilient than some anticipated. In looking at the best performing stocks for this Company over the past year, we can see some reflection of this. Marks & Spencer, for example, was one of the best performers.

This more resilient economic backdrop is yet to be reflected in UK valuations, which remain at a historic low relative to other global equity markets (see chart below). Therefore, we would summarise the domestic economic backdrop as "ok" (if not stellar), but with the equity market valued as though the actual outcome will be much worse. This strikes us as anomalous.

Data illustrating the UK valuations chart in the Annual Report is set out below:

	MSCI UK 12m Fwd P/E relative to MSCI World	Median	+2 Stdev	-2 Stdev
20 January 1995	0.76	0.84	0.99	0.68
20 January 1996	0.82	0.84	0.99	0.68
20 January 1997	0.78	0.84	0.99	0.68
20 January 1998	0.86	0.84	0.99	0.68
20 January 1999	0.88	0.84	0.99	0.68
20 January 2000	0.79	0.84	0.99	0.68
20 January 2001	0.89	0.84	0.99	0.68
20 January 2002	0.81	0.84	0.99	0.68
20 January 2003	0.78	0.84	0.99	0.68
20 January 2004	0.76	0.84	0.99	0.68
20 January 2005	0.82	0.84	0.99	0.68
20 January 2006	0.85	0.84	0.99	0.68
20 January 2007	0.84	0.84	0.99	0.68
20 January 2008	0.86	0.84	0.99	0.68
20 January 2009	0.83	0.84	0.99	0.68
20 January 2010	0.85	0.84	0.99	0.68
20 January 2011	0.83	0.84	0.99	0.68
20 January 2012	0.84	0.84	0.99	0.68
20 January 2013	0.87	0.84	0.99	0.68
20 January 2014	0.87	0.84	0.99	0.68
20 January 2015	0.89	0.84	0.99	0.68
20 January 2016	0.98	0.84	0.99	0.68
20 January 2017	0.89	0.84	0.99	0.68
20 January 2018	0.85	0.84	0.99	0.68
20 January 2019	0.83	0.84	0.99	0.68
20 January 2020	0.77	0.84	0.99	0.68
20 January 2021	0.69	0.84	0.99	0.68
20 January 2022	0.67	0.84	0.99	0.68
20 January 2023	0.67	0.84	0.99	0.68
20 November 2023	0.61	0.84	0.99	0.68

Source: JP Morgan

Attribution

Turning in more detail to performance, it has been an exceptionally challenging year for managing a portfolio with small and medium-sized company exposure. This comes on the back of an already poor financial year ended 31 October 2022 and reflects very weak sentiment towards UK equities. This sentiment is at its most extreme in domestic, smaller companies. As the chart below shows, medium-sized UK companies have underperformed the FTSE 100 by more than 30% over the last two years and smaller companies by more than 50%.

Data illustrating the Performance of large, medium and small companies over the last two years chart in the Annual Report is set out below:

	FTSE 100	FTSE 250	FTSE AIM All-Share
31 October 2021	100.0	100.0	100.0
31 January 2022	103.6	95.3	89.8
29 April 2022	106.2	90.6	84.0
29 July 2022	105.2	88.9	76.1
31 October 2022	101.7	79.5	66.8
31 January 2023	112.0	88.8	72.2
28 April 2023	114.9	87.7	69.3
31 July 2023	113.4	87.1	64.2
31 October 2023	109.0	78.5	57.4

Source: LSEG Datastream as at 31 October 2023. Total return, GBP, rebased to 100 as at 31 October 2021

In the previous financial year there were clear reasons for the FTSE 100 outperformance. Following the war in Ukraine, sharp rises in commodity prices caused large benchmark weights such as Shell and BP to materially outperform. This year, the FTSE 100 outperformance reflects weaker sentiment towards the domestic economy, with FTSE 100 company earnings being significantly more international than those of smaller companies. With interest rates rising and real wages (until recently) declining, the concern has been that domestic earnings will come under pressure. Markets are always forward looking and therefore these concerns are reflected in share prices ahead of earnings being adjusted downwards. While we are now seeing some earnings downgrades coming through in select areas such as building materials and media, it is interesting to note that both of those concerns could now have come to an end - real wages are rising again, and interest rate rises (at least for now) appear to have stopped.

Before we go into the stock specific drivers of performance, it is worth looking at the size allocation of the portfolio and the effect this has had on performance. This Company has enviable flexibility in being able to invest across the breadth of the UK market. It remains our view that the best opportunities for long-term sales and earnings growth can be found outside of the FTSE 100, and indeed on a longterm basis almost all of the top relative contributors to performance have been smaller companies. Therefore, while the portfolio holds more than it has done in previous years in the FTSE 100, it remains significantly "underweight" large companies relative to its benchmark (comparing the first and second columns in the table in the next column). This means that the biggest drag on performance this year has been size allocation rather than stock selection, as shown by the waterfall chart in the next column.

It is very important to make clear that this is not justification for the portfolio's underperformance. We have no set market cap allocation, therefore it was entirely within our gift to have more than we have had in the FTSE 100. However, while we were adding to the large company weight and reducing fast growing smaller companies in the period following the Covid recovery, in practice we did not go far enough.

Index:	Company weighting (%)	Benchmark weighting (%)	Index total return (%)
FTSE 100	31.7	84.8	7.2
FTSE 250	13.3	13.0	-1.3
FTSE Small-Cap	9.4	2.2	1.3
FTSE AIM All-Share	44.2	-	-14.1

Company and Benchmark weights are as at financial year end, 31 October 2023. The Company weights do not add up to 100 as a small portion of the portfolio sits outside of major UK indices.

Data illustrating the attribution returns chart in the Annual Report is set out below:

Benchmark	5.89
Size allocation	-15.70
Stock selection	2.31
Gearing	-1.29
Company	-8.79

Source: Janus Henderson Investors, Factset

Turning to the stock specific drivers of performance, there is a clear recurring theme in the best performers - four of the top ten were what we class as "Recovery" shares, in other words companies in the midst of a turnaround, whether because of historic self-inflicted errors or challenging end markets. (It could even be argued that five of the top ten are in Recovery - we have taken Marks & Spencer out of the category given its recent turnaround in profitability, but there is arguably further to go). The reason for "Recovery" outperformance this year could be that in a challenging economic backdrop, in order to outperform companies needed to have a strong self-help element. That could include sizeable cost cutting (such as Rolls-Royce and Babcock) and a return to their core area of focus (for example Kier focusing on smaller regional projects). Where smaller companies performed well outside of recovery was often where sizeable share buybacks were taking place - Vertu Motors was frequently in the market buying back its own shares. In the face of low valuations, we have seen several smaller companies enter the market this year and initiate buybacks.

The top 10 contributors to relative return during the financial year were:

	Company name	Contribution to relative return to Benchmark (%)	Share price total return (%)	Portfolio classification
1.	Vertu Motors	1.5	72.1	Small & mid cap compounders
2.	British American Tobacco (not held)	1.0	-22.5	n/a
3.	Rolls-Royce	0.9	175.4	Recovery
4.	Marks & Spencer	0.7	105.5	Large cap
5.	Diageo (not held)	0.6	-11.6	n/a
6.	International Personal Finance	0.5	83.3	Recovery
7.	IQGeo	0.5	22.6	Growth small cap
8.	Kier	0.4	68.3	Recovery
9.	Glencore (not held)	0.3	-4.3	n/a
10.	Babcock	0.3	41.9	Recovery

The top 10 detractors from relative return during the financial year were:

	Company name	Contribution to relative return to Benchmark (%)	Share price total return (%)	Portfolio classification
1.	ZOO Digital	-2.4	-74.8	Recovery
2.	Deltic Energy	-1.4	-67.5	Natural resources
3.	Springfield Properties	-1.4	-41.5	Small & mid cap compounders
4.	Jersey Oil & Gas	-1.2	-31.1	Natural resources
5.	Next 15	-0.9	-26.5	Growth small cap
6.	Surface Transforms	-0.8	-40.6	Early stage companies
7.	HSBC (underweight)	-0.6	40.2	Large cap
8.	Serica Energy	-0.6	-13.8	Natural resources
9.	Jadestone Energy	-0.6	-56.6	Natural resources
10.	Jubilee Metals	-0.6	-53.4	Natural resources

Turning to the detractors, there are a few themes to draw out. Firstly, natural resource companies were a clear detractor, with five of the top ten largest detractors in the area as commodity prices normalised (to a degree) following the war in Ukraine. Therefore, from a top down perspective, one of the "stabilisers" within the portfolio did not act as a stabiliser, instead falling alongside some of the faster growing companies within "tomorrow's leaders" (see more details on these classifications in the section below). The other theme to draw out from the detractors is that there are effectively recessionary conditions in some end markets such as housebuilding (Springfield Properties) and advertising (Next 15).

As the largest detractor it is worth discussing ZOO Digital in more detail. ZOO provides media services (such as dubbing and subtitling) to global content producers, the largest of which is Disney. This financial year two factors came together that caused ZOO sales to roughly half. The first was the US writer and actors strike, which caused an abrupt fall in the volume of content production (and therefore pipeline of work for ZOO). These strikes have now been materially resolved, which bodes well for work restarting in 2024. The second, and more structural factor, was that global content producers, having been in almost an arms race of producing more and more content, had cost discipline forced upon them as global interest rates rose. Disney was not immune from this and reduced its spend with ZOO as a result. While this is a disappointment, in our view ZOO is still in the foothills of its potential growth - Disney is one (albeit very large) customer and there are other significant content producers with whom ZOO has the potential to gain market share.

Data illustrating the ZOO Digital share price since first purchase (pence) chart in the Annual Report is set out below:

Date	Share price in pence
17 July 2018	165.0
31 January 2019	85.5
31 July 2019	79.5
31 January 2020	72.5
31 July 2020	61.5
29 January 2021	97.0
30 July 2021	137.0
31 January 2022	145.0
29 July 2022	127.5
31 January 2023	175.5
31 July 2023	71.0
31 October 2023	41.0

Source: Bloomberg. Share price since first purchase in July 2018

Portfolio review

As the portfolio is flexible in its approach, with the ability to invest across the breadth of the UK market, we divide it into the classifications below. This serves two purposes. Firstly, from a portfolio construction perspective, it helps to create a framework for the portfolio and serves to challenge us if the current portfolio weight falls outside of the indicative ranges in the table below. Secondly, from the perspective of our shareholders, we find the below descriptions to be helpful in understanding the diverse nature of the portfolio. The current split of the portfolio across classifications is shown below:

	Total (gross assets)1 %	Indicative range %	Largest three holdings
Stabilisers
Large cap (£1b +) These stocks are usually familiar to all investors. They are ballast for the portfolio and often generators of income as individual companies. We believe they remain capable of long-term earnings growth.	25 (+1)	10-30	Barclays, HSBC, Standard Chartered
Natural resources These are companies that will benefit from rising commodity prices. The majority of this classification are smaller companies (outside of the FTSE 100) that are less well understood and where, in our view, we can add more value by paying close attention.	13 (-4)	5-15	Serica Energy, Rio Tinto, Jersey Oil & Gas
Tomorrow's leaders
Growth small cap These are companies that in our view can be substantially larger businesses in time. They have strong management capability and they operate in fast growing end markets or are disruptors within more established markets.	13 (-4)	20-40	Boku, Next 15, Tracsis
Recovery Some of these companies, for example those exposed to the aerospace industry, have fallen into the recovery classification as a result of the pandemic. However, as the global economy recovers, earnings should be able to grow from current suppressed levels.	16 (+6)	0-30	Rolls-Royce, Redcentric, International Personal Finance
Early stage companies These are companies that could serve large end markets with potentially disruptive technologies, however they are at an early stage of their life cycle and whether the technology becomes fully commercialised remains, to a degree, binary. They should perform largely independently of the broader economic cycle.	6 (-1)	0-20	Surface Transforms, AFC Energy, Creo Medical
Small & mid cap compounders These are good quality, long-term holdings with experienced management teams. Over time we expect them to steadily grow sales and earnings.	27 (+2)	20-40	Springfield Properties, Vertu Motors, Van Elle

¹ The number in brackets is the change in percentage compared to the previous financial year end

As discussed in the attribution section of this report, Recovery was the best performing classification this year, led by holdings such as Rolls-Royce. Larger company shares, such as Marks & Spencer and HSBC, also performed well. In contrast the worst performing areas were early stage companies, natural resources and growth smaller companies.

Portfolio activity

The largest five purchases during the financial year were:

1. Marshalls

2. Legal & General

3. Hvivo

4. Reach

5. Oxford Nanopore

The main purchases are a diverse list of companies with Marshalls being the largest. They are a very high quality operation. Marshalls invest well into their assets and the management is forward thinking. It is a changed business from the past, but it remains cyclical and this has concerned investors and has created the investment opportunity. There is economic cyclicality also with Reach (tied to advertising spend), while Oxford Nanopore depends on the quality of its technology which we believe is world leading. Financials generally have been oversold and Legal & General have been added to the mix as, in spite of the headwinds, they continue to grow their book of business.

The largest five sales during the financial year were:

1. K3 capital

2. IQGeo

3. Vodafone

4. NatWest

5. Finsbury Food

Takeover activity has resulted in K3 and Finsbury Foods leaving the portfolio while Vodafone and NatWest were sold to make room for better growth opportunities. There was some profit taking in IQGeo.

Income

This financial year saw a fall in revenue per share from elevated levels the previous year - earnings per share fell to 33.5p including special dividends, compared to 40.6p in the financial year ended 31 October 2022. In a broader context, investment income remained above its 2019 pre pandemic level of 29.9p per share. The Company also received £183,000 (2022: £197,000) net income from its participation in the securities lending programme (see Notes 4 and 15.3 in the Annual Report for more information).  The Board has used the flexibility of the investment trust structure to smooth dividends and the dividend paid to shareholders has continued to grow, totalling 35.5p during the year.

Looking in more detail at what caused the fall in investment income:

·	In the previous financial year, there were special dividends from banks such as NatWest that did not repeat. This year special dividends totalled £32,000 (comprised of special dividends from Hollywood Bowl and Hvivo), compared to £278,000 the previous year.
·	A fall in some commodity prices caused the miners held to significantly reduce their dividend payments. For example Anglo American reduced its ordinary dividend by 47% in the calendar year 2023 compared to 2022.
·	There were selective dividend cuts elsewhere in challenging end markets. For example Scottish housebuilder Springfield Properties cancelled its dividend as buyers held back on making house purchases in the face of rising interest rates.

Outlook

We are hoping that in the above reports we are talking about a period that has passed. In the period since the year end the market backdrop appears to have altered; those that were first are last and last are first. The bear market might have ended but we will not know for sure for a while. Every bear market has short violent bull runs within it. When we look back in time, if the autumn proves to have been the bottom we will say the catalyst was the peaking of rates. It is really that simple. At the moment, rather than keep worrying about the market phase, we need to keep focused on stocks as, for many, things are changing fast. In the big companies there has in recent months been a major change of view about Rolls-Royce and Marks & Spencer. We had bought worthwhile holdings in both in advance of the recovery, recognising that change was underway. In hindsight, we should have bought more, as the recovery came faster than we expected. The speed of change at both the operating level and in stock market perception is fast. We recognise this and will build some new positions, and also cut some old ones if the market has genuinely moved into a new phase of economic recovery.

James Henderson and Laura Foll

Fund Managers

31 January 2024

MANAGING OUR RISKS

The Board, with the assistance of the Manager, has carried out a robust assessment of the principal risks and uncertainties facing the Company, including those that would threaten its business model, future performance, solvency, liquidity and reputation. The principal risks and uncertainties facing the Company relate primarily to investing in the shares of companies that are listed in the UK, including small companies. Although the Company invests almost entirely in securities that are listed on recognised markets, share prices may move rapidly, whether upwards or downwards, and it may not be possible to realise an investment at the Manager's assessment of its value. Falls in the value of the Company's investments can be caused by unexpected external events. The companies in which investments are made may operate unsuccessfully, or fail entirely, such that shareholder value is lost. The Company is also exposed to the operational risk that one or more of its contractors or sub-contractors may not provide the required level of service.

The Board considers regularly the principal risks facing the Company in order to mitigate them as far as practicable. The Board monitors the Manager, its other service providers and the internal and external environments in which the Company operates to identify new and emerging risks. The Board's policy on risk management has not materially changed from last year. "Shareholder base and voting on platforms" has been added as a new category.

The Board has drawn up a risk map which identifies the substantial risks to which the Company is exposed. The Board has also put in place a schedule of investment limits and restrictions, appropriate to the Company's Investment Objective and Investment Policy. These principal risks fall broadly under the following categories:

Risk	Trend	Controls and mitigation
Investment activity and strategy An inappropriate investment strategy (for example, in terms of asset allocation, stock selection, failure to anticipate external shocks or the level of gearing) may lead to a reduction in NAV, underperformance against the Company's benchmark and the Company's peer group; it may also result in the Company's shares trading on a wider discount to NAV.	↑	The Manager provides the Directors with management information including performance data reports and portfolio analyses on a monthly basis. The Board monitors the implementation and results of the investment process with the Fund Managers, who attend all Board meetings, and reviews regularly data that monitors risk factors in respect of the portfolio. The Manager operates in accordance with investment limits and restrictions determined by the Board; these include limits on the extent to which borrowings may be used. The Board reviews its investment limits and restrictions regularly and the Manager confirms its compliance with them each month. The Board reviews investment strategy at each Board meeting. The Board seeks to manage these risks by ensuring a diversification of investments. The Board has regular meetings with the Fund Managers to review performance and the extent of borrowings.
Shareholder base and voting on platforms The Company has a large number of retail shareholders, many of whom hold their shares via platforms. The Company has no way of communicating directly with these shareholders or encouraging them to vote at general meetings. If these shareholders do not vote, there is a risk that the outcome of any votes may represent the views of a relatively small number of shareholders and that the decision reached may not reflect the views of, or be in the best interests of, the majority of the Company's shareholders	NEW	The Manager, Board and Fund Managers regularly consider shareholder views and look to implement initiatives that benefit all shareholders. Through general communications in Company documents they also seek to identify ways of assisting shareholders with voting through platforms, for example, by referring shareholders to guidance made available by the Association of Investment Companies.
Financial instruments and the management of risk By its nature as an investment trust, the Company is exposed in varying degrees to market risk, interest rate risk, liquidity risk, currency risk and credit and counterparty risk. Market risk arises from uncertainty about the future prices of the Company's investments.	↔	An analysis of these financial risks, including liquidity and gearing, and the Company's policies for managing them are set out in the Annual Report.
Operational and cyber Disruption to, or failure of, the Manager's accounting, dealing or payment systems or the Custodian or the Depositary's records could prevent the accurate reporting and monitoring of the Company's financial position. The Company is also exposed to the operational risk that one or more of its services providers may not provide the required level of service. The Company may also be exposed to the risk of cyber-attack on its service providers.	↔	The Board monitors the services provided by the Manager and its other suppliers and receives reports on the key elements in place to provide effective internal control. During the year the Board received reports on the Manager's approach to information security and cyber attack defence.
Accounting, legal and regulatory A breach of Section 1158 could lead to a loss of investment trust status, resulting in capital gains realised within the portfolio being subject to corporation tax. A breach of the FCA's Listing Rules could result in suspension of the Company's shares, while a breach of the Companies Act 2006 could lead to criminal proceedings, or financial or reputational damage.	↔	The Manager is contracted to provide investment, corporate secretarial, administration and accounting services through qualified professionals. The Board receives internal controls reports produced by Janus Henderson on a quarterly basis, which confirm regulatory compliance.
Failure of Janus Henderson A failure of the Manager's business, whether or not as a result of regulatory failure, cyber risk or other failure could result in the Manager being unable to meet its obligations and its duty of care to the Company.	↔	The Board meets regularly with representatives of the Manager's Investment Management, Risk, Compliance, Internal Audit and Investment Trust teams and reviews internal control reports from the Manager on a quarterly basis. The failure of the Manager would not necessarily lead to a loss of the Company's assets, however, and this risk is mitigated by the Company's ability to change its investment manager if necessary, subject to the terms of its management agreement.

Details of how the Board monitors the services provided by Janus Henderson and its other suppliers, and the key elements designed to provide effective internal control, are explained further in the internal controls section of the Corporate Governance report and the Audit and Risk Committee report in the Annual Report.

Emerging risks

In addition to the principal risks facing the Company, the Board also regularly considers potential emerging risks, which are defined as potential trends, sudden events or changing risks which are characterised by a high degree of uncertainty in terms of the probability of them happening and the possible effects on the Company. Should an emerging risk become sufficiently clear, it may be moved to a significant risk.

The Board has identified the following as potential emerging risks:

·      Decline in popularity of the investment trust sector

Interest rate rises and external pressures.

·      Demographic change

Ageing population, increasing financial inequality and new trends in social attitudes.

·      Technological change

Artificial intelligence, sector disruption, changes to existing job roles, ethical oversight of technological change, autonomous vehicles, electrification and healthcare impact.

·      Environmental sustainability

Climate change, decarbonisation, extreme bad weather events, increasing legislation/political action, resource scarcity and reputational consequences.

·      Political and economic change

Tax risk (including impact on dividends paid by the Company to shareholders) and impact on performance if the UK were to remain out of favour.

The Company's emerging risks are macro-economic and political in nature and over which the Company has no control (including ongoing heightened macro-economic uncertainty from political events such as Brexit, Russia's invasion of Ukraine and the conflict in the Middle East). The Board monitors these emerging risks and, if specific action relating to the investments, or the Company's marketing approach were to arise, the Board would take appropriate action.

BORROWINGS

The Company has an unsecured loan facility in place which allows it to borrow as and when appropriate. £30m (2022: £30m) is available under the facility. Net gearing is limited by the Board to 25% of net assets. The maximum amount drawn down in the period under review was £18.2m (2022: £21.4m), with borrowing costs for the year totalling £817,000 (2022: £345,000). £10.2m (2022: £14.1m) of the facility was in use at the year end. Net gearing at 31 October 2023 was 9.6% (2022: 13.9%) of net asset value.

VIABILITY STATEMENT AND GOING CONCERN

The Company is a long-term investor. The Board believes it is appropriate to assess the Company's viability over a five year period in recognition of its long-term investment horizon and what the Board believes to be investors' investment horizons, taking account of the Company's current position and the potential impact of the principal risks and uncertainties as documented in the Strategic Report in the Annual Report.

The assessment considered the impact and likelihood of the principal risks and uncertainties facing the Company. Key areas of focus were investment strategy and performance against benchmark, including a consideration of the risks around asset allocation, stock selection and gearing. Market risk was also assessed in terms of the impact of severe but plausible scenarios and the effectiveness of the mitigating controls in place.

The Directors took into account the liquidity of the portfolio and the borrowings in place when considering the viability of the Company over the next five years and its ability to meet liabilities as they fall due. This included consideration of the duration of the Company's borrowing facilities and the ability to renew such facilities, consideration of the impact of rising interest rates and how a breach of any covenants could impact the Company's net asset value and share price. The Board has reviewed three additional model scenarios which evaluate the impact on the revenue forecast and reserves. These range from a worst case scenario which includes a 5% reduction in income and net assets, through to a scenario where there is no income growth and no reduction in income or net assets. Increasing dividends to shareholders could continue under all three scenarios, although the Company would need to use its capital reserves in some cases. None of the results of the scenarios used would therefore threaten the viability of the Company.

The Directors do not expect there to be any significant change to the principal risks and adequacy of the mitigating controls in place. Large cap stocks are held as ballast for the portfolio and for liquidity, and the percentage of the portfolio holding of these stocks generally exceeds the gearing percentage. The Board actively monitors investment performance and considers factors such as significant falls in the NAV, ongoing heightened macro-economic uncertainty from political events such as Brexit, Russia's invasion of Ukraine and the conflict in the Middle East. Any recent experience has not materially affected the long-term viability of the Company, including the significant falls in the NAV at the height of the Covid-19 pandemic (which exceeded 25% in March 2020) when liquidity requirements and covenant restrictions were all met. The Board is therefore confident that significant market collapses would not impact the Company's viability. Also, the Directors do not envisage any change in strategy or objectives or any events that would prevent the Company from continuing to operate over that period as the majority of the Company's assets are liquid, its commitments are limited, and the Company intends to continue to operate as an investment trust. In coming to this conclusion, the Board has considered the factors aforementioned and does not believe that they will have a long-term impact on the viability of the Company and its ability to continue in operation, notwithstanding the short-term uncertainty they have caused in the markets.

Whilst the Directors recognise that there is a continuation vote that is due to take place at the AGM in 2026, the Directors currently believe that the Company will continue to exist for the foreseeable future, and at least for the period of assessment.

Based on this assessment, the Board has a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the next five-year period.

The Directors consider it appropriate to adopt the going concern basis of accounting in preparing the Financial Statements (see the Annual Report for further details).

RELATED PARTY TRANSACTIONS

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

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 year under review. More details on transactions with the Manager, including amounts outstanding at the year end, are given in the Notes to the Financial Statements in the Annual Report.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

In accordance with Disclosure Guidance and Transparency Rule 4.1.12, each of the Directors, who are listed in Note 13, confirms that, to the best of his or her knowledge:

•	the Company's Financial Statements, which have been prepared in accordance with UK Accounting Standards, give a true and fair view of the assets, liabilities, financial position and returns of the Company; and
•	the Annual Report and Financial Statements include a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

On behalf of the Board

Wendy Colquhoun

Chairman

31 January 2024

Twenty largest holdings at 31 October 2023

The stocks in the portfolio are a diverse mix of businesses operating in a wide range of end markets.

Ranking 2023 (2022)	Company	% of portfolio	Approximate market capitalisation	Valuation 2022 £'000	Purchases £'000	Sales £'000	Appreciation/  (depreciation)  £'000	Valuation 2023 £'000
1 (1)	Barclays	3.6	£19.8b	3,620	-	-	(396)	3,224
2 (11)	Vertu Motors¹	3.5	£259.0m	2,505	-	(1,029)	1,644	3,120
3 (9)	Boku¹	3.2	£408.1m	2,645	68	-	144	2,857
4 (3)	Serica Energy¹	3.0	£910.9m	3,444	-	-	(767)	2,677
5 (12)	Rio Tinto	2.9	£88.5b	2,269	-	-	358	2,627
6 (8)	HSBC	2.8	£115.3b	2,821	-	(1,129)	858	2,550
7 (14)	Standard Chartered	2.7	£16.9b	2,003	-	-	423	2,426
8 (2)	Jersey Oil & Gas¹	2.7	£65.6m	3,477	-	-	(1,103)	2,374
9 *	Rolls-Royce	2.6	£18.1b	847	-	-	1,483	2,330
10 (6)	Next 15¹	2.5	£630.6m	3,073	-	-	(864)	2,209
11 (10)	Anglo American	2.3	£25.7b	2,543	-	-	(499)	2,044
12 *	Tesco	2.0	£19.1b	1,452	-	-	368	1,820
13 (13)	Tracsis¹	2.0	£208.8m	2,210	-	-	(416)	1,794
14 *	Marks & Spencer	1.9	£4.3b	843	-	-	891	1,734
15 (5)	Springfield Properties¹	1.9	£61.6m	3,090	-	-	(1,377)	1,713
16 (20)	Van Elle¹	1.8	£42.1m	1,522	-	-	85	1,607
17 *	Cohort¹	1.7	£198.7m	1,519	-	(118)	96	1,497
18 *	Redcentric¹	1.7	£168.1m	1,425	176	-	(117)	1,484
19 *	Babcock	1.6	£2.0b	1,033	-	-	433	1,466
20 *	SigmaRoc¹	1.6	£337.2m	1,521	-	(143)	80	1,458

At 31 October 2023 these investments totalled £43,011,000 or 48.1% of the portfolio.

* Not in the top 20 largest investments last year

¹ Quoted on AIM

Portfolio by sector

As a percentage of the investment portfolio excluding cash

	31 October 2023 %	31 October 2022 %
Basic Materials	6.6	6.7
Consumer Discretionary	18.0	17.1
Consumer Staples	3.0	3.1
Energy	9.2	13.1
Financials	20.6	20.6
Health Care	4.3	3.4
Industrials	27.4	21.1
Real Estate	1.2	0.9
Technology	8.6	11.7
Telecommunications	1.1	2.3
	100.0	100.0

Portfolio by index

As a percentage of the investment portfolio excluding cash

	31 October 2023 %	31 October 2022 %
FTSE 100	31.7	27.9
FTSE 250	13.3	10.5
FTSE SmallCap	9.4	7.8
FTSE AIM	44.2	52.6
Other1	1.4	1.2
	100.0	100.0

¹Other also includes AIM investments outside the FTSE AIM Index and shares listed on the main market which are not included in the FTSE All-Share Index

Market capitalisation of the portfolio at 31 October 2023

	Portfolio Weight %	Benchmark Weight %
Greater than £2b	32.5	89.3
£1b - £2b	4.7	5.6
£500m - £1b	14.6	2.4
£200m - £500m	19.6	2.1
£100m - £200m	10.2	0.5
£50m - £100m	12.2	0.1
Less than £50m	5.6	-
Other	0.6	-
	100.0	100.0

A glossary of terms can be found in the Annual Report

Sources: Morningstar Direct, Janus Henderson, LSEG Datastream

INCOME STATEMENT

		Year ended 31 October 2023			Year ended 31 October 2022
Notes		Revenue return £'000	Capital return £'000	Total return £'000	Revenue return £'000	Capital return £'000	Total return £'000
2	Losses on investments held at fair value through profit or loss	-	(9,892)	(9,892)	-	(36,112)	(36,112)
3	Income from investments held at fair value through profit or loss	3,269	-	3,269	3,715	-	3,715
4	Other interest receivable and other income	242	-	242	205	-	205
		---------	----------	----------	---------	----------	----------
	Gross revenue and capital losses	3,511	(9,892)	(6,381)	3,920	(36,112)	(32,192)
5	Management and performance fees	(151)	(351)	(502)	(173)	(404)	(577)
	Other administrative expenses	(466)	-	(466)	(433)	-	(433)
		---------	----------	----------	---------	----------	----------
	Net return before finance costs and taxation	2,894	(10,243)	(7,349)	3,314	(36,516)	(33,202)
	Finance costs	(245)	(572)	(817)	(104)	(241)	(345)
		-----------	----------	----------	-----------	----------	----------
	Net return before taxation	2,649	(10,815)	(8,166)	3,210	(36,757)	(33,547)
	Taxation	(6)	-	(6)	(1)	-	(1)
		-----------	----------	----------	-----------	----------	----------
	Net return after taxation	2,643	(10,815)	(8,172)	3,209	(36,757)	(33,548)
		======	======	======	======	======	======
6	Net return per ordinary share - basic and diluted	33.46p	(136.92p)	(103.46p)	40.63p	(465.37p)	(424.74p)
		======	=======	======	======	=======	======

The total columns of this statement represent the Profit and Loss Account 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. The Company had no recognised gains or losses other than those disclosed in the Income Statement.

STATEMENT OF CHANGES IN EQUITY

Year ended 31 October 2023	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 2022	2,000	14,838	2,431	70,739	2,693	92,701
Ordinary dividends paid	-	-	-	-	(2,764)	(2,764)
Net return after taxation	-	-	-	(10,815)	2,643	(8,172)
	--------	----------	----------	----------	-----------	---------
At 31 October 2023	2,000	14,838	2,431	59,924	2,572	81,765
	=====	======	======	======	======	=====

Year ended 31 October 2023	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 2021	2,000	14,838	2,431	107,496	1,732	128,497
Ordinary dividends paid	-	-	-	-	(2,251)	(2,251)
Refund of unclaimed dividends over 12 years old	-	-	-	-	3	3
Net return after taxation	-	-	-	(36,757)	3,209	(33,548)
	--------	----------	----------	----------	-----------	----------
At 31 October 2022	2,000	14,838	2,431	70,739	2,693	92,701
	=====	======	======	======	======	======

STATEMENT OF FINANCIAL POSITION

	31 October 2023 £'000	31 October 2022 £'000
Fixed assets
Investments held at fair value through profit or loss
Listed at market value	50,270	50,786
Quoted on AIM at market value	38,703	54,392
Unlisted at market value	513	517
	------------	------------
	89,486	105,695
	------------	------------
Current assets
Investment held at fair value through profit or loss	2	2
Debtors	487	216
Cash at bank and in hand	2,315	1,219
	------------	------------
	2,804	1,437
Creditors: amounts falling due within one year	(10,525)	(14,431)
	-----------	-----------
Net current liabilities	(7,721)	(12,994)
	-----------	-----------
Total assets less current liabilities	81,765	92,701
	-----------	-----------
Net assets	81,765	92,701
	=======	=======
Capital and reserves
Called up share capital	2,000	2,000
Share premium account	14,838	14,838
Capital redemption reserve	2,431	2,431
Other capital reserves	59,924	70,739
Revenue reserve	2,572	2,693
	------------	------------
Total shareholders' funds	81,765	92,701
	=======	=======
Net asset value per ordinary share - basic and diluted	1,035.2p	1,173.7p
	=======	=======

STATEMENT OF CASH FLOWS

	Year ended 31 October 2023	Year ended 31 October 2022
	£'000	£'000
Cash flows from operating activities
Net loss before taxation	(8,166)	(33,547)
Add: finance costs	817	345
Add: losses on investments held at fair value through profit or loss	9,892	36,112
Increase in other debtors	(81)	(127)
Decrease in creditors	(12)	(1,361)
	----------	----------
Net cash inflow from operating activities	2,450	1,422
	----------	----------
Cash flows from investing activities
Purchase of investments	(7,527)	(15,811)
Sale of investments	13,647	20,625
Proceeds from capital dividends	-	483
	------------	------------
Net cash inflow from investing activities	6,120	5,297
	------------	------------
Cash flows from financing activities
Equity dividends paid	(2,764)	(2,248)
Net loans repaid	(3,937)	(4,261)
Interest paid	(773)	(351)
	-----------	-----------
Net cash outflow from financing activities	(7,474)	(6,860)
	-----------	-----------
Net increase/(decrease) in cash at bank and in hand	1,096	(141)
Cash at bank and in hand at start of year	1,219	1,360
	----------	----------
Cash at bank and in hand at end of year	2,315	1,219
	======	======
Comprising:
Cash at bank and in hand	2,315	1,219
	======	======

NOTES TO THE FINANCIAL STATEMENTS

1.	Accounting policies
	(a) Basis of accounting The Company is a registered investment company as defined in Section 833 of the Companies Act 2006 and is incorporated in the United Kingdom. It operates in the United Kingdom and is registered at 201 Bishopsgate, London EC2M 3AE. The Financial Statements have been prepared in accordance with the Companies Act 2006, FRS 102 - The Financial Reporting Standard applicable in the UK and Republic of Ireland and with the Statement of Recommended Practice: Financial Statements of Investment Trust Companies and Venture Capital Trusts (the "SORP") issued in July 2022 by the Association of Investment Companies. The principal accounting policies applied in the presentation of these Financial Statements are set out in the Annual Report. These policies have been consistently applied to all the years presented. The Financial Statements have been prepared under the historical cost basis except for the measurement of fair value of investments. In applying FRS 102, financial instruments have been accounted for in accordance with Sections 11 and 12 of the standard. All of the Company's operations are of a continuing nature.
	(b) Going concern The Company's Articles of Association require that at every third AGM, an ordinary resolution be put to approve the continuation of the Company. The resolution put to the AGM in 2023 was duly passed. The next triennial continuation resolution will be put to the AGM in 2026. The assets of the Company consist almost entirely of securities that are listed (or quoted on AIM) and are readily realisable. The net current liabilities are primarily due to borrowings under the loan facility, and the Company's portfolio is sufficiently liquid to meet the net current liabilities in the unlikely event that the loan needed to be fully repaid. The Board has considered the portfolio's liquidity and covenant compliance in event of significant and prolonged market falls. The securities lending programme entered into by the Company (see Note 15.3 in the Annual Report for more information) is supported by indemnification and therefore does not impact the liquidity of the portfolio or the Company's going concern. 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 ongoing macro-economic factors referred to in the viability statement above, the Directors considered it appropriate to adopt the going concern basis of accounting in preparing the Financial Statements.
2.	Losses on investments held at fair value through profit or loss	2023 £'000	2022 £'000
	(Losses)/gains on the sale of investments based on historical cost	(3,497)	8,286
	Revaluation gains/(losses) recognised in previous years	4,342	(6,736)
		----------	----------
	Gains on investments sold in the year based on carrying value at previous Statement of Financial Position date	845	1,550
	Revaluation losses on investments held at 31 October	(10,737)	(37,662)
		----------	----------
		(9,892)	(36,112)
		======	======
	Included within (losses)/gains on investments are special capital dividends of £nil (2022: £483,000). These are accounted for in accordance with accounting policy 1f) (see Annual Report for more detail)

3.	Income from investments held at fair value through profit or loss							2023 £'000	2022 £'000
	UK:
	Dividends from listed investments							1,384	2,668
	Dividends from AIM investments							1,795	979
								-------	-------
								3,179	3,647
								-------	-------
	Non-UK:
	Dividends from listed investments							90	68
								-------	-------
								90	68
								-------	-------
								3,269	3,715
								====	====
4.	Other interest receivable and other income							2023 £'000	2022 £'000
	Deposit interest							56	7
	Stock lending commission							183	197
	Underwriting commission (allocated to revenue)							3	1
								-------	-------
								242	205
								====	====
	At 31 October 2023, the total value of securities on loan by the Company for stock lending purposes was £11,760,000 (2022: £9,691,000). The maximum aggregate value of securities on loan at any one time during the year ended 31 October 2023 was £19,850,000 (2022: £17,350,000). The Company's agent holds collateral at 31 October 2023 with the value of £12,380,000 (2022: £10,203,000) in respect of securities on loan, the value of which is reviewed on a daily basis and comprises CREST Delivery By Value ("DBVs") and Government Bonds with a market value of 105% (2022: 105%) of the market value of any securities on loan. During the year the Company was not required to take up shares in respect of underwriting commission; no commission was taken to capital (2022: same).
5.	Management and performance fees
		2023			2022
		Revenue return £'000	Capital return £'000	Total return £'000	Revenue return £'000		Capital return £'000		Total return £'000
	Management fee	151	351	502	173		404		577
	Performance fee	-	-	-	-		-		-
		--------	---------	---------	--------		---------		---------
		151	351	502	173		404		577
		=====	=====	=====	=====		=====		=====
	The basis on which the management fee is calculated is set out in the strategic report contained in the Annual Report. Performance fee provisions were removed with effect from 20 October 2023 and no performance fee was payable in the year ended 31 October 2023 (2022: £nil).

6.	Net return per ordinary share - basic and diluted
	The total loss per ordinary share is based on the total loss attributable to the ordinary shares of £8,172,000 (2022: total loss of £33,548,000) and on 7,898,375 ordinary shares (2022: 7,898,375) being the weighted average number of shares in issue during the year. The return per ordinary share can be further analysed as follows:
		2023 £'000	2022 £'000
	Revenue return	2,643	3,209
	Capital loss	(10,815)	(36,757)
		-----------	-----------
	Total loss	(8,172)	(33,548)
		======	======
	Weighted average number of ordinary shares	7,898,375	7,898,375
		========	========
		2023	2022
	Revenue return per ordinary share	33.46p	40.63p
	Capital loss per ordinary share	(136.92p)	(465.37p)
		------------	------------
	Total loss per ordinary share - basic and diluted	(103.46p)	(424.74p)
		=======	=======
7.	Net asset value per ordinary share - basic and diluted
	The net asset value per ordinary share at the year end was 1,035.2p (2022: 1,173.7p). The net asset value per ordinary share is based on the net assets attributable to the ordinary shares of £81,765,000 (2022: £92,701,000) and on the 7,898,375 ordinary shares in issue at 31 October 2023 (2022: 7,898,375). There are no dilutive securities so the basic and diluted net asset value per ordinary share are the same. The movements during the year of the assets attributable to the ordinary shares were as follows:
		2023 £'000	2022 £'000
	Total net assets at 1 November	92,701	128,497
	Total net loss	(8,172)	(33,548)
	Dividends paid in the year	(2,764)	(2,248)
		-----------	-----------
	Total net assets at 31 October	81,765	92,701
		======	======
8.	Called up share capital	2023 £'000	2022 £'000
	Allotted and issued ordinary shares of 25p each 7,898,375
	(2022: 7,898,375)	1,974	1,974
	Ordinary shares of 25p each held in treasury 102,483 (2022: 102,483)	26	26
		----------	----------
		2,000	2,000
		======	======
	During the year ended 31 October 2023 no ordinary shares of 25p each were issued or repurchased by the Company (2022: none). Shares held in treasury do not carry a right to receive dividends or vote.

9.	Ordinary dividends paid	Record date	Payment date		2023 £'000	2022 £'000
	Amounts recognised as distributions to equity holders in the year:
	Third interim dividend for the year ended 31 October 2021 of 6.5p	19 November 2021	17 December 2021		-	513
	Final dividend for the year ended 31 October 2021 of 8.0p	18 February 2022	25 March 2022		-	632
	First interim dividend for the year ended 31 October 2022 of 7.0p	20 May 2022	24 June 2022		-	553
	Second interim dividend for the year ended 31 October 2022 of 7.0p	19 August 2022	23 September 2022		-	553
	Third interim dividend for the year ended 31 October 2022 of 7.0p	18 November 2022	16 December 2022		553	-
	Final dividend for the year ended 31 October 2022 of 13.0p	17 February 2023	24 March 2023		1,027	-
	First interim dividend for the year ended 31 October 2023 of 7.5p	19 May 2023	23 June 2023		592	-
	Second interim dividend for the year ended 31 October 2023 of 7.5p	18 August 2023	22 September 2023		592
	Refund of unclaimed dividends over 12 years old				-	(3)
					---------	---------
					2,764	2,248
					=====	=====
	The Board declared a third interim dividend of 7.5p per ordinary share, paid on 15 December 2023 to shareholders on the register of the Company at the close of business on 17 November 2023. The ex-dividend date was 16 November 2023. Based on the number of ordinary shares in issue on 31 October 2023, the cost of this dividend was £592,000. Subject to approval at the AGM, the proposed final dividend of 13.0p per ordinary share will be paid on 22 March 2024 to shareholders on the register of members at the close of business on 16 February 2024. The shares will be quoted ex-dividend on 15 February 2024. The total dividends payable in respect of the financial year, which form the basis of the test under Section 1158 of the Corporation Tax Act 2010, are set out below:
				Year ended 31 October 2023		Year ended 31 October 2022
				£'000		£'000
	Revenue available for distribution by way of dividends for the year			2,643		3,209
	First interim dividend for the year ended 31 October 2023: 7.5p (2022: 7.0p)			(592)		(553)
	Second interim dividend for the year ended 31 October 2023: 7.5p (2022: 7.0p)			(592)		(553)
	Third interim dividend for the year ended 31 October 2023: 7.5p (2022: 7.0p)			(592)		(553)
	Proposed final dividend for the year ended 31 October 2023: 13.0p (based on the 7,898,375 ordinary shares in issue at 31 January 2024) (2022: 13.0p on 7,898,375 ordinary shares)			(1,027)		(1,027)
				-----------		-----------
	Transferred (from)/to revenue reserve1			(160)		523
				=======		=======
	All dividends have been paid or will be paid out of revenue profit and the revenue reserve. 1 Undistributed revenue comprises nil% of income from investments (2022: 13.3%)

10.	2023 Financial Information
	The figures and financial information for the year ended 31 October 2023 are extracted from the Company's Annual Financial Statements for that period and do not constitute statutory financial statements for that period. The Company's Annual Financial Statements for the year ended 31 October 2023 have been audited but have not yet been delivered to the Registrar of Companies. The Independent Auditor's Report on the 2023 Financial Statements was unqualified, did not include a reference to any matter to which the Auditors drew attention without qualifying the report, and did not contain any statements under Sections 498(2) and 498(3) of the Companies Act 2006.
11.	2022 Financial Information The figures and financial information for the year ended 31 October 2022 are extracted from the Company's Annual Financial Statements for that period and do not constitute statutory financial statements for that period. The Company's Annual Financial Statements for the year ended 31 October 2022 have been audited and delivered to the Registrar of Companies. The Independent Auditor's Report on the 2022 Financial Statements was unqualified, did not include a reference to any matter to which the Auditors drew attention without qualifying the report, and did not contain any statements under Sections 498(2) and 498(3) of the Companies Act 2006.
12.	Annual Report and Annual General Meeting The Annual Report for the year ended 31 October 2023 will be posted to shareholders in February 2024 and will be available on the Company's website www.hendersonopportunitiestrust.com or from the Corporate Secretary at the Company's Registered Office, 201 Bishopsgate, London EC2M 3AE. The Annual General Meeting will be held on Thursday, 7 March 2024 at 2.30pm at 201 Bishopsgate, London, EC2M 3AE. The Notice of the Annual General Meeting will be posted to shareholders with the Annual Report and will be available on the Company's website.
13.	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 Wendy Colquhoun (Chairman), Frances Daley (Audit and Risk Committee Chairman), Davina Curling and Harry Morgan. The Corporate Secretary is Janus Henderson Secretarial Services UK 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.

For further information, please contact:

James Henderson Fund Manager Henderson Opportunities Trust plc Telephone: [phone]		Laura Foll Fund Manager Henderson Opportunities Trust plc Telephone: [phone]
Dan Howe Head of Investment Trusts Janus Henderson Investors Telephone: [phone]		Harriet Hall PR Director, Investment Trusts Janus Henderson Investors Telephone: [phone]

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) is incorporated into, or forms part of, this announcement.

 

END