Annual Financial Report

RNS Number : 4372X

Henderson Opportunities Trust PLC

08 February 2013

 



HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2012

This announcement contains regulated information

Financial Highlights

	Year ended 31 October 2012	Year ended 31 October 2011	Change %
Net asset value per Ordinary share	608.8p	501.0p	+21.5%
Ordinary share price	477.9p	392.0p	+21.9%
Subscription share price	2.6p	1.5p	+73.3%
Discount	21.5%	21.8%	-
Total return/(loss) per Ordinary share	113.71p	(24.50)p	-
Revenue return per Ordinary share	10.92p	7.94p	+37.5%
Dividends per Ordinary share in respect of the year#	9.0p	7.0p	+28.6%
Gearing*	15.5%	16.8%	-

^#2012 total dividend is subject to approval of the final dividend at the AGM.

* Defined here as the total market value of the investments (excluding the quoted cash fund) less  shareholders' funds as a percentage of shareholders' funds.

Performance

	6 months %	1 year %	2 years %	3 years %
Net asset value per share total return	7.7	23.2	17.4	45.8
FTSE All-Share Index total return	3.3	9.8	10.5	29.8
Ordinary share price total return	11.2	24.1	15.6	40.1

Total return assumes net dividends are reinvested and excludes transaction costs.

Source:  Morningstar for the AIC, using cum income NAV.

Chairman's Comment

It has been an encouraging year with the NAV total return rising 23.2%, while the FTSE All-Share, our benchmark, rose 9.8%

The global economy has been in the doldrums for more than three years and the UK stock market has been dominated by macro-economic concerns. However, the sluggishness of the economy has not prevented good returns being made.  As we have seen from our own performance over the period, for investors concentrating on individual companies there are plenty of opportunities. We have selected companies with strong business franchises which are not only growing but have undemanding valuations given their balance sheet strength. Nor are these businesses tied solely to

Page 2 of 20

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2012

the UK economy, as approximately one half of the revenues of the companies in our portfolio are generated overseas.

Given these growth opportunities and the continued low cost of borrowing, we expect to maintain our current level of gearing with a view to maximising returns, in the belief that we will see further share price appreciation in our portfolio. This view that has been underpinned by our performance in the first quarter of our new financial year to 31 January 2013 where our total return was 15.6% and the share price rose by 22.6% both outperforming our benchmark which rose by 9.3%.

In consequence at 31 January 2013 the Company was the best performing investment trust in its sector over one year and was second over three years on a Net Asset Value total return basis.

George Burnett, Chairman

MANAGEMENT REPORT

Chairman's Statement

Review of performance

It has been an encouraging year with the NAV total return rising 23.2%, while the FTSE All-Share, our benchmark, rose 9.8%. On page 9 of this document we show the major stock contributors and detractors and how the twenty largest holdings performed. The Portfolio Manager's estimate of the overall performance attribution is shown in the table below.

	Year ended 31 October 2012 %
Net asset value per share total return	23.2
Less: Benchmark total return	9.8
	------
Relative performance	13.4
	------
Made up:
Stock selection	13.1
Gearing	1.0
Share buy-backs	0.4
Expenses	-1.1
	-------
	13.4
	=====
Source: Henderson Global Investors Limited

As the table demonstrates, maintaining the gearing level at around 15% has enhanced the return. Despite the excellent performance the discount at which the share price trades in relation to the NAV remained disappointingly high, being 21.5% at the year end. This is not the result of passivity on our part. Our managers are actively encouraged to seek to attract investors to the Company by

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HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2012

explaining the investment case and demonstrating the improving performance but the retail market has until now been concentrating on income rather than capital growth trusts. This we believe will change as investor confidence in equities rebuilds. Over the last three years the NAV total return has increased by 45.8%, while the FTSE All-Share lndex total return has increased by 29.8%. As confidence grows that this is a sustainable improvement, the discount should narrow.

Earnings and Dividends

The revenue return for the year was 10.92p, which compares with 7.94p last year. The final dividend, subject to shareholder approval, will be 6.0p making 9.0p for the year, which compares with 7.0p last year, an increase of 28.6%. Many of the holdings in the portfolio are growing their dividends as they become more confident about their operating performance. Dividend cover is at historically high levels, cash generation is strong and corporate debt is low. Therefore although the dividend yield of the Company is relatively low, the dividends should continue to grow in a strong sustainable manner.

Expenses

The ongoing charge was 1.12% compared to 1.09% last time.

Continuation Vote

The next triennial continuation vote for the Company will be put to the Annual General Meeting in March 2014.

Going Concern

The assets of the Company consist almost entirely of listed investments. Although in practice it might not be possible to realise the entire portfolio quickly at fair value the Company has adequate financial resources to maintain operations in future. Accordingly, we have prepared the financial statements on a going concern basis.

AGM

Our Annual General Meeting will be held at 2.30pm on Thursday 21 March 2013 at the registered office, 201 Bishopsgate, London EC2M 3AE.

Amendments to the Articles of Association

The Companies Act 2006 (Amendment of Part 23) (Investment Companies) Regulations 2012 removed the requirement for an investment company to include a prohibition on the distribution of capital profits in its articles of association and this has also ceased to be a requirement for investment trust status for UK tax purposes, which provides an exemption from corporation tax on capital profits. We are therefore proposing that the Articles of Association be amended to remove this prohibition, although the Board has no plans for the Company to pay a dividend funded out of capital profits in the near future, this means the Company will have the power to do so if appropriate circumstances arise. 

HMRC has also clarified that investment trust status for UK tax purposes requires that any Subscription shares that remain in issue after the conversion rights cease to be exercisable (in the Company's case at the Annual General Meeting in 2014) must remain listed even though the shares will have no value. 

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HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2012

Chairman's Statement, continued

To avoid the costs of maintaining a listing in these circumstances the Articles of Association are also being amended to permit the Board to appoint an agent for the holders of any Subscription shares that have not been converted by the date of the AGM in 2014 with the power to sell the Subscription shares to the Company for a sum sufficient to meet the agent's reasonable fees and expenses.

Investment Strategy

It has been our policy to increase the liquidity of the portfolio to enable the Portfolio Managers to be as responsive as possible to the changes in the investment environment. At the same time we have not wanted to jettison smaller companies where the valuation is attractive and the prospects are sound. The objective is to find and hold stocks that are good business franchises with attractive valuations and sound prospects capable of delivering substantial growth over time. These companies will be found across the market capitalisation range but there will usually be a focus on smaller companies when there is large potential in this area. Whatever their size, we look for companies with strong balance sheets and diverse customer bases.  During the year the proportion of the portfolio invested in stocks with a market capitalisation of £1bn or more has increased to 25%, up from 18% last year. The use of gearing is therefore more than matched by highly liquid stocks leaving further headroom in these stocks to run up a cash balance if this were ever desired.

Gearing

Gearing, as a percentage of the Net Asset Value, has ranged from a low of 11% to a high of 18% with an average of around 15% during the year. We use gearing to enhance the return on assets and will continue to do so while the cost of debt remains significantly below the prospective return from equities.

Outlook

The global economy has been in the doldrums for more than three years and the UK stock market has been dominated by macro-economic concerns. However, the sluggishness of the economy has not prevented good returns being made.  As we have seen from our own performance over the period, for investors concentrating on individual companies there are plenty of opportunities. We have selected companies with strong business franchises which are not only growing but have undemanding valuations given their balance sheet strength. Nor are these businesses tied solely to the UK economy, as approximately one half of the revenues of the companies in our portfolio are generated overseas.

Given these growth opportunities and the continued low cost of borrowing, we expect to maintain our current level of gearing with a view to maximising returns, in the belief that we will see further share price appreciation in our portfolio. This view has been underpinned by our performance in the first quarter of our new financial year to 31 January 2013 where our total return was 15.6% and the share price rose by 22.6% both outperforming our benchmark which rose by 9.3%.

In consequence at 31 January 2013 the Company was the best performing investment trust in its sector over one year and was second over three years on a NAV total return basis.

George Burnett

Chairman

7 February 2013

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HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2012

Portfolio Managers' Review

The Economy

The overall economic backdrop has not really changed in its essential drivers from our previous financial year. The Eurozone crisis rumbles on with no clear resolution, China and emerging economies have still grown more quickly than developed countries and the USA has continued to show elements of recovery from the credit crisis. All things considered however global growth has been disappointing. In the UK a dip back into technical recession, which was adjusted away by revision of earlier estimates, can mostly be attributed to the continued contraction of European economies. Indeed it should not be forgotten that Europe accounts for over half of the UK's external trade. Although still under pressure, the position of the UK consumer has not worsened over the year and there is some evidence of a small increase in underlying confidence.

Looking into 2013 The Organisation for Economic Co-operation and Development has recently forecast that the global economy will grow by 3.4%. This is down from earlier forecasts principally as the Eurozone debt crisis remains unresolved, causing a deeper and more prolonged recession in Europe. The US should be supportive of an acceleration of global growth later in 2013 provided the politicians can decide how to navigate a course around the so called "fiscal cliff" of enforced budget cuts and tax increases. China enters a new era with a new leadership structure and a challenge to address rising popular aspirations while simultaneously re-energising the economy.The UK will grow at around 1% in 2013 and should continue the slow grind of addressing its budget deficit. The background is not an easy one but this has been the case for the last five years and it has not stopped profitable investments from being made.

Market Review

Share prices made good headway in the first half of our financial year until mid-March when the continued lack of resolution of the Eurozone's issues and slowing growth in USA and China saw stock markets give up all and more of those earlier gains. From early June a recovery set in, even though company profits have been subject to general downgrades, as investors anticipated that the slowdown in global growth was about to turn for the better. At our financial year end the UK stock market had recovered to similar levels to March.

Fund Performance

The Company has had a good year with the net asset value (NAV) rising by 23.2% and the share price rising by 24.1% on a total return basis. By comparison our benchmark index, the FTSE All-Share Index rose by 9.8%. All of these returns are inclusive of income. Looking back over the last three years the NAV has risen by 45.8% against a benchmark which has risen by 29.8%, giving outperformance of 16.0%. On a four year time horizon the NAV has risen by 116.1% against a benchmark which has risen by 60.3%, giving out performance of 55.8%. If we can again outperform our benchmark in the next financial year then we will be able to report to you next time that we have turned around all of the underperformance suffered in our 2008 financial year. Our current five year return which includes 2008 shows underperformance of 16.6%   

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HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2012

Portfolio Managers' Review, continued

Investment Approach

The portfolio is a mixture of large, medium and small companies. We employ a number of valuation techniques in arriving at our portfolio selections but we find nothing really works quite as well as good old fashioned leg work. By that we mean that we meet the senior executive teams of a significant number of companies during the course of the year. For those that do make it into our portfolio it will range up to four or five face to face meetings a year. These meetings will most often take place at Henderson's City offices however we do try to "kick the tyres" by making visits to companies as often as we can. Over the course of the last three calendar years your fund managers have had over 1,250 face to face meetings and company visits.

Last year we said that the number of holdings was likely to fall over the course of the year and it has from 82 to 77. We also said that we would increase our exposure to larger companies which we have, and now 25% of the portfolio is invested in companies with a market capitalisation of over £1 billion compared to 18% last year. This increase has primarily been undertaken to give the portfolio more flexibility whilst retaining a consistent level of gearing as the benefit of equity returns in excess of the cost of borrowings persists. We continue to take a long term approach and and our average holding period is currently around 4 ½ years.

Portfolio Activity

During the year we have been active in 67 names selling out completely in 18 cases and starting 13 new investments. Our top ten holdings last year represented 30.2% of the portfolio whereas they represent slightly less this year at 26.3%. The portfolio has maintained a significant bias towards industrial and IT stocks with global potential, which we see as a key attribute for future success.

There have been five new entrants to the top ten and one of those, Retroscreen Virology, new this year, is our current largest holding. If we look firstly at our disposals we would highlight the following. We took significant amounts of cash and profits out of our position in IP Group following the success of IP's investment in Oxford Nanopore, which has developed a ground breaking DNA sequencing platform. We continue to retain a material holding in IP Group as we anticipate that it has further portfolio companies with as yet unrealised potential. We have also benefitted from an uptick in takeover activity particularly in the second half of our year. Kewill, software logistics, was the subject of competing bids from private equity backed trade competitors; WSP, a building engineering consultancy, agreed to merge with Genivar Inc. of Canada at a 70% premium continuing a trend of consolidation in a global market and Nautical Petroleum, a heavy oil exploration company in the North Sea was acquired by Cairn Energy. In addition, although in the new financial year Zetar, a chocolate confectionery company, has agreed terms with a private German group for a cash takeover. As reported at the half year we have reduced our position in Fidessa, a trading software company for investment banks, as the environment for its customers remains very difficult, but we have retained a position recognising the high quality cash flows inherent in its business model.

Turning now to our purchases our most significant in the year was Retroscreen Virology, which was floated on the AIM market and is an IP Group spin out. Retroscreen is a medical services business specialising in antiviral drugs including a novel viral challenge model used by major pharmaceutical clients for cost effective trialling. We also made our first investment in ITV, the TV

Page 7 of 20

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2012

Portfolio Managers' Review, continued

broadcaster, where we are impressed by the turnaround in the business and the financial discipline now being shown by the new(ish) management. We have added Premier Oil, a global exploration and production company, to the portfolio as we are attracted by the rapidly rising production profile over the next five years from a series of projects all beyond the exploration phase. We are also a new investor in Johnson Matthey, a global leader in autocatalysts, where we see long term growth supported by tightening emissions legislation a theme we are familiar with in Ricardo, an existing portfolio member. We have also added to our existing position in Anglo American, the global mining group, which has had a difficult year with falling commodity prices, strikes in South Africa, and now a change of CEO, however, we believe the company is materially undervalued and its true worth should become more evident in the year ahead.

Whilst the IPO market has been at a low ebb with little investor enthusiasm we have nevertheless found some very interesting opportunities this year. We have already mentioned Retroscreen but would also highlight Direct Line, the insurer which was floated at the year end at a very competitive price, and WANdisco, a small UK software tools developer with unique intellectual property and a potentially large market opportunity.

Portfolio Attribution Analysis

The table on page 9 of this announcement shows the top five and bottom five contributors to the Company's absolute performance in growth in the NAV.

We have already touched upon three of the stocks in our top five contributors above so we will just mention here the remaining two. Ashtead, the North American focused plant hire company which has produced a string of profit upgrades as structural changes in the US market continue to add momentum to the recovering activity levels in the construction market. Oxford Catalyst has seen its innovative micro refinery gas to liquids technology make real commercial progress and whilst still at an early stage the outlook is very promising.

Not everything worked as well as those above however so we must add some colour. Avocet Mining has had production issues which has seen gold recovery fall. A new CEO has been appointed with an action plan and we believe the issues are solvable so we continue to hold for now. SDL has encountered slower growth than hoped for at the start of the year but we are confident that this is a just a pause in the business. Shaft Sinkers saw a major contract terminated and has also been impacted more recently by the miners' strike in South Africa, however recent new contract wins mean that 2013 can start on a brighter note. Latchways suffered from a slow start to the year but this has already improved and we remain firmly committed investors. UK Coal is undergoing a major financial reconstruction as a combination of debt and pension liabilities and unpredictable mining conditions nearly sunk the company. The rump of the business has been saved but recovering our investment in full is very unlikely.

Outlook

The portfolio is a mix of companies which are diversified in their activities. They are strong businesses and are striving to be excellent in their field. The companies that achieve this will be good investments over time, almost regardless of the economic backdrop.

James Henderson and Colin Hughes

7 February 2013

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HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2012

Analysis by market index (by value)

	FTSE All-Share Index  31 October 2012 %	Portfolio 31 October 2012 %	Portfolio 31 October 2011 %
FTSE 100 Index	84.7	13.4	8.2
FTSE 250 Index	13.1	29.2	23.7
FTSE SmallCap Index	2.2	17.9	30.5
	-------	-------	-------
FTSE All-Share Index	100.0	60.5	62.4
FTSE Fledgling Index	-	1.1	0.6
FTSE AIM All-Share Index	-	29.7	30.7
other Official List	-	5.6	4.3
other AIM	-	3.1	2.0
	-------	-------	-------
	100.0	100.0	100.0
	=====	=====	=====

Source:  Henderson Global Investors Limited

Analysis by market capitalisation at 31 October 2012

	FTSE All-Share Index %	Portfolio %
Greater than £2bn	87.0	15.7
£1bn - £2bn	6.1	9.3
£500m - £1bn	3.6	10.9
£200m - £500m	2.4	20.8
£100m - £200m	0.7	19.8
£50m - £100m	0.2	17.1
Less than £50m	-	6.4
	--------	--------
	100.0	100.0
	======	======

Source: Henderson Global Investors Limited

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HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2012

Portfolio Managers' Review, continued

Twenty Largest Holdings at 31 October 2012

Rank (2012)	Rank (2011)	Company	Valuation 2011 £'000	Purchases £'000	Sales £'000	Appreciation £'000	Valuation 2012 £'000
1	-	Retroscreen Virology		1,304		685	1,989
2	2	Senior	1,660		(92)	281	1,849
3	4	Hyder Consulting	1,433			196	1,629
4	5	XP Power	1,432	119	(85)	1	1,467
5	29	Ashtead	698		(193)	894	1,399
6	8	e2v technologies	1,274			72	1,346
7	22	Anglo American	803	699		(170)	1,332
8	3	SDL	1,615			(315)	1,300
9	11	HSBC	1,090			128	1,218
10	12	Majestic Wine	1,063			122	1,185
11	31	Oxford Catalysts	650	25		495	1,170
12	21	Zetar	805	20		269	1,094
13	-	ITV		1,062		20	1,082
14	9	Latchways	1,258			(178)	1,080
15	19	RWS	823			251	1,074
16	30	St Modwen Properties	656			401	1,057
17	28	Vertu Motors	702			351	1,053
18	-	Premier Oil		1,183		(131)	1,052
19	52	Jupiter Fund Management	352	550		145	1,047
20	10	Johnson Service	1,099		(289)	218	1,028
			----------	-----------	----------	---------	----------
			17,413	4,962	(659)	3,735	25,451
			======	======	======	======	======

At 31 October 2012 these investments totalled £25,451,000 or 45.43% of the portfolio.

Attribution Analysis

The table below shows the top five active contributors to and the bottom five detractors from the Company's relative performance.

Top five contributors to relative performance	Share price return %	Absolute contribution %	Top five detractors from relative performance	Share price return %	Absolute contribution %
IP Group	+76	+2.2	Avocet Mining	-66	-1.4
Ashtead	+145	+1.8	SDL	-19	-0.9
Retroscreen Virology	+56	+1.3	Shaft Sinkers	-65	-0.6
WSP	+112	+1.1	Latchways	-8	-0.5
Oxford Catalyst	+73	+0.9	UK Coal	-80	-0.4

Source: Henderson Global Investors Limited

Page 10 of 20

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2012

Principal Risks and Uncertainties

The principal risks and uncertainties facing the Company relate to the activity of investing in the shares of companies that are quoted in the United Kingdom, including small companies. Although the Company invests almost entirely in securities that are quoted 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. A further risk is that the Company could become too small to remain viable, perhaps because of the reduction in the capital base as a result of share buy-backs. The Board considers regularly the principal risks facing the Company in order to mitigate them as far as practicable.

The Board has drawn up a risk map which identifies the cardinal risks to which the Company is exposed. These principal risks fall broadly under the following categories:

Investment activity and strategy

The Manager provides the directors with management information, including performance data and reports and shareholder analyses on a monthly basis. The Board monitors the implementation and results of the investment process with the Portfolio 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. 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 underperformance against the Company's benchmark index and the Company's peer group; it may also result in the Company's shares trading on a wider discount than its peer group. The Board seeks to manage these risks by ensuring a diversification of investments, regular meetings with the Portfolio Managers with measurement against performance indicators and review of the extent of borrowings.

Financial instruments and the management of risk

By its nature as an investment trust, the Company is exposed in varying degrees to market risk, liquidity 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 and the Company's policies for managing them are set out in the Report and Financial Statements.

Operational

Disruption to, or failure of, the Manager's accounting, dealing or payment systems or the Custodian's records could prevent the accurate reporting and monitoring of the Company's financial position. The Manager has contracted some of its operational functions, principally those relating to trade processing, investment administration and accounting, to BNP Paribas Securities Services. Details of how the Board monitors the services provided by the Manager and its other suppliers, and the key elements designed to provide effective internal control, are explained further in the internal control section of the Corporate Governance Statement in the Report and Financial Statements.

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HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2012

Accounting, legal and regulatory

In order to qualify as an investment trust the Company must comply with section 1158 of the Corporation Tax Act 2010 ('section 1158'), to which reference is made in the Report and Financial Statements under the heading 'Status'. A breach of section 1158 could result in the Company losing investment trust status and, as a consequence, capital gains realised within the Company's portfolio would be subject to Corporation Tax. The section 1158 criteria are monitored by the Manager and the results are reported to the directors at each Board meeting. The Company must comply with the provisions of the Companies Act 2006 ('the Act') and, as the Company's shares are listed for trading on the London Stock Exchange, the Company must comply with the UK Listing Authority's Listing Rules and Disclosure Rules ('UKLA Rules'). A breach of the Act could result in the Company and/or the directors being fined or becoming the subject of criminal proceedings. Breach of the UKLA Rules could result in the suspension of the Company's shares which would in turn lead to a breach of section 1158. The Board relies on its corporate company secretary and its professional advisers to ensure compliance with the Act and the UKLA Rules.

Gearing

The ability to borrow money for investment purposes is a key advantage of the investment trust structure. A failure to maintain a bank facility, whether because of a breach of the agreed covenants or because of banks' unwillingness to lend, would prevent the Company from gearing.

Failure of the Manager

A failure of the Manager's business, whether or not as a result of regulatory failure, would result in the Manager being unable to meet their obligations and their duty of care to the Company.

Statement of Directors' Responsibilities (under DTR 4.1.12)

Each of the directors confirm that, to the best of their knowledge:

● the financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law), give a true and fair view of the assets, liabilities, financial position and the net return of the Company; and

● the Report of the Directors in the Report and Financial Statements includes 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.

For and on behalf of the Board

George Burnett

Chairman

7 February 2013

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HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2012

Audited Income Statement

for the year ended 31 October 2012

	Year ended 31 October 2012			Year ended 31 October 2011
	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	-	8,443	8,443	-	(2,384)	(2,384)
Income from investments held   at fair value through profit or loss (note 2)	1,301	-	1,301	1, 064	-	1,064
Other interest receivable and other income   (note 3)	21	-	21	17	-	17
	---------	----------	-----------	----------	----------	----------
Gross revenue and capital gains/(losses)	1,322	8,443	9,765	1,081	(2,384)	(1,303)
Management fee (note 4)	(150)	(150)	(300)	(152)	(152)	(304)
Other administrative expenses	(207)	-	(207)	(209)	-	(209)
	-----------	----------	-----------	---------	----------	----------
Net return/(loss) on ordinary activities     before finance charges and taxation	965	8,293	9,258	720	(2,536)	(1,816)
Finance charges	(94)	(94)	(188)	(80)	(80)	(160)
	-----------	----------	-----------	----------	----------	----------
Net return/(loss) on ordinary activities     before taxation	871	8,199	9,070	640	(2,616)	(1,976)
Taxation on net return/(loss) on ordinary       activities	-	-	-	-	-	-
	-----------	----------	-----------	-----------	----------	----------
Net return/(loss) on ordinary activities     after taxation	871	8,199	9,070	640	(2,616)	(1,976)
	----------	----------	-----------	-----------	------------	-----------
Return/(loss) per ordinary share	10.92p	102.79p	113.71p	7.94p	(32.44)p	(24.50)p
basic and  diluted	=======	=======	=======	=======	=======	=======

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.  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. There is no material difference between the return on ordinary activities before taxation and the return for the financial year stated above and their historical cost equivalents.

                                                                                                                                    Page 13 of 20

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2012

Audited Reconciliation of Movements in Shareholders' Funds

for the year ended 31 October 2012

Year ended 31 October 2012	Called up share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Other capital reserves £'000	Revenue reserve £'000	Total £'000
At 1 November  2011	2,032	14,522	2,390	20,554	910	40,408
Dividends paid on the ordinary shares	-	-	-	-	(637)	(637)
Net return on ordinary activities    after taxation	-	-	-	8,199	871	9,070
Share buy-backs	(25)	-	25	(351)	-	(351)
	--------	----------	----------	----------	-----------	-----------
At 31 October 2012	2,007	14,522	2,415	28,402	1,144	48,490
	=====	======	======	======	======	======

Year ended 31 October 2011	Called up share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Other capital reserves £'000	Revenue reserve £'000	Total £'000
At 1 November  2010	2,032	14,512	2,390	23,170	794	42,898
Dividends paid on the ordinary shares	-	-	-	-	(524)	(524)
Net (loss)/return on ordinary activities    after taxation	-	-	-	(2,616)	640	(1,976)
Conversion of subscription shares	-	10	-	-	-	10
	--------	----------	----------	----------	-----------	-----------
At 31 October 2011	2,032	14,522	2,390	20,554	910	40,408
	=====	======	======	======	======	======

Page 14 of 20

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2012

Audited Balance Sheet

at 31 October 2012

	2012 £'000	2011 £'000
Investments held at fair value through profit or loss
Listed at market value	36,947	31,754
Quoted on AIM at market value	19,070	15,428
	------------	-----------
	56,017	47,182
	------------	-----------
Current assets
Investment held at fair value through profit or loss	2	181
Debtors	315	164
Cash at bank and in hand	249	180
	------------	-----------
	566	525
Creditors: amounts falling due within one year	(8,093)	(7,299)
	-----------	-----------
Net current liabilities	(7,527)	(6,774)
	-----------	-----------
Total net assets less current liabilities	48,490	40,408
	=======	=======
Capital and reserves
Called up share capital	2,007	2,032
Share premium account	14,522	14,522
Capital redemption reserve	2,415	2,390
Other capital reserves	28,402	20,554
Revenue reserve	1,144	910
	------------	-----------
Total shareholders' funds	48,490	40,408
	=======	=======
Net asset value per ordinary share (basic and diluted)	608.8p	501.0p
	=======	=======

Page 15 of 20

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2012

Audited Cash Flow Statement

for the year ended 31 October 2012

	2012 £'000	2012 £'000	2011 £'000	2011 £'000
Net cash inflow from operating activities		819		564
Servicing of finance
Interest paid	(192)		(154)
	-----------		-----------
Net cash outflow from servicing of finance		(192)		(154)
Taxation
Overseas withholding tax recovered	-		2
	-----------		-----------
Net tax recovered		-		2
Financial investment
Purchases of investments	(11,442)		(11,316)
Sales of investments	11,293		8,995
	-----------		-----------
Net cash outflow from financial investment		(149)		(2,321)
Equity dividends paid		(637)		(524)
		------------		------------
Net cash outflow before management of liquid resources and financing		(159)		(2,433)
Management of liquid resources
Additions to money market funds	(1,680)		(6,915)
Withdrawals from money market funds	1,859		7,771
	-----------		-----------
Net cash inflow from management    of liquid resources		179		856
Financing
Drawdown of short term loans	400		945
Repurchase of ordinary shares	(351)		-
Conversion of subscription shares	-		10
	-----------		-----------
Net cash inflow from financing		49		955
		-----------		-----------
Increase/ (decrease) in cash		69		(622)
		======		======
Reconciliation of net cash flow to movement in net debt
Increase/(decrease)  in cash as above		69		(622)
Net cash inflow from movement in liquid resources		(179)		(856)
Net cash inflow from increase in loans		(400)		(945)
		----------		----------
Movements relating to cash flows		(510)		(2,423)
Exchange movements		-		2
		----------		-----------
Movement in net debt		(510)		(2,421)
Net debt at the start of the year		(6,739)		(4,318)
		----------		-----------
Net debt at the end of the year		(7,249)		(6,739)
		======		======

Page 16 of 20

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2012

Notes to the Financial Statements

1.	Accounting policies
	(a) Basis of accounting The financial statements have been prepared on a going concern basis and under the historical cost basis of accounting, modified to include the revaluation of investments at fair value through profit or loss. The financial statements have been prepared in accordance with applicable accounting standards in the United Kingdom and with those parts of the Companies Act 2006 applicable to companies reporting under the standards and with the Statement of Recommended Practice ('SORP') for investments trusts issued by the Association of Investment Companies ('the AIC') in January 2009. The Company's accounting policies are consistent with the prior year.
	(b) Going concern The Company's Articles of Association require that at the annual general meeting of the Company held in 2008, and every third year thereafter, an ordinary resolution be put to approve the continuation of the Company. The resolution put to the annual general meeting in 2011 was duly passed. The next triennial continuation resolution will be put to the annual general meeting in March 2014. The assets of the Company consist almost entirely of securities that are listed (or quoted on AIM) and, accordingly, the directors believe that the Company has adequate resources to continue in existence for the foreseeable future. For these reasons the Board has decided that it is appropriate for the financial statements to be prepared on a going concern basis.
	(c) Management fees, administrative expenses and finance charges All expenses and finance charges are accounted for on an accruals basis. The Board has determined that the capital return should reflect the indirect costs of earning capital returns. Since 1 November 2008, the Company has allocated 50% of its management fees and finance charges to the capital return of the Income Statement with the remaining 50% being allocated to the revenue return. 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 period. All other administrative expenses are charged to the revenue return of the Income Statement. Expenses which are incidental to the purchase or sale of an investment are recognised immediately in the capital return of the Income Statement, and are included within the gains/losses from investments held at fair value through profit or loss.

Page 17 of 20

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2012

Notes to the Financial Statements, continued

						2012 £'000	2011 £'000
2.	Income from investments held at fair value through profit or loss
	Franked:
	Dividends from listed investments					976	744
	Dividends from AIM investments					200	228
						-------	-------
						1,176	972
	Unfranked:
	Dividends from listed investments					125	92
						-------	-------
						1,301	1,064
						====	====
						2012 £'000	2011 £'000
3.	Other interest receivable and other income
	Underwriting commission (allocated to revenue)*					21	17
						====	====
	*During the year the Company was not required to take up shares; no commission was taken to capital (2011: £59,000 shares taken up and £1,000 commission taken to capital).
		Revenue return 2012 £'000	Capital return 2012 £'000	Total 2012 £'000	Revenue return 2011 £'000	Capital return 2011 £'000	Total 2011 £'000
4.	Management fee
	Management fee	150	150	300	152	152	304
		====	====	====	====	====	====

Page 18 of 20 HENDERSON OPPORTUNITIES TRUST PLC Annual Financial Report for the year ended 31 October 2012 Notes to the Financial Statements, continued

5.	Return/(loss) per ordinary share
	The total return per ordinary share is based on the total attributable to the ordinary shares of £9,070,000 (2011: total loss of £1,976,000) and on 7,976,314 ordinary shares (2011: 8,064,762) being the weighted average number of shares in issue during the year.
	The total return/(loss) can be further analysed as follows:
		2012 £'000	2011 £'000
	Revenue return	871	640
	Capital  return/(loss)	8,199	(2,616)
		----------	----------
	Total  return/(loss)	9,070	(1,976)
		----------	----------
	Weighted average number of ordinary shares	7,976,314	8,064,762
	Revenue return per ordinary share	10.92p	7.94p
	Capital  return/(loss) per ordinary share	102.79p	(32.44)p
		-----------	-----------
	Total  return/(loss) per ordinary share	113.71p	(24.50)p
		======	======
	The Company has in issue 1,639,672 (2011: 1,639,672) subscription shares which are convertible into ordinary shares at a conversion price of 936p per share in any of the years 2009 to 2014 inclusive.  The subscription shares were issued on 19 January 2007.  There was no dilution of the return per ordinary share in respect of the conversion rights attaching to the subscription shares (year ended 31 October 2011: no dilution).
6.	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 £48,490,000 (2011: £40,408,000) and on the 7,965,168 ordinary shares in issue at 31 October 2012 (2011: 8,065,168).  There was no dilution of the net asset value per ordinary share in respect of the conversion rights attaching to the subscription shares (31 October 2011: no dilution).
7.	Called up share capital There were 7,965,168 ordinary shares of 25p each in issue at 31 October 2012 (31 October 2011: 8,065,168). There were 1,639,672 subscription shares of 1p each in issue at 31 October 2012 (31 October 2011: 1,639,672). During the year ended 31 October 2012, none of the Company's subscription shares were converted into ordinary shares.

Page 19 of 20

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2012

Notes to the Financial Statements, continued

8.	Dividends
	The final dividend of 5.00p per ordinary share in respect of the year ended 31 October 2011 was paid on 29 March 2012 to shareholders on the register of members at the close of business on 10 February 2012.
	The interim dividend of 3.00p per ordinary share in respect of the year ended 31 October 2012 was paid on 24 September 2012 to shareholders on the register of members at close of business on 24 August 2012.
	Subject to approval at the annual general meeting, the proposed final dividend of 6.00p per ordinary share will be paid on 28 March 2013 to shareholders on the register of members at the close of business on 22 February 2013.
	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 2012 £'000
	Revenue available for distribution by way of dividends for the year	871
	Interim dividend for the year ended 31 October 2012:  3.00p	(239)
	Proposed final dividend for the year ended 31 October 2012:  6.00p   (based on the 7,965,168 ordinary shares in issue at 7 February 2013)	(478)
		----------
	Undistributed revenue for section 1158 purposes*	154
		======
	*Undistributed revenue comprises 11.8% of the income from investments of £1,301,000.
	(*2011: undistributed revenue comprised 7.5% of the income from investment of £1,064,000.)
10.	2012 Report and Financial Statements The figures and financial information for the year ended 31 October 2012 are extracted from the Company's annual financial statements for that period and do not constitute statutory accounts.  The Company's annual financial statements for the year to 31 October 2012 have been audited but have not yet been delivered to the Registrar of Companies.  The auditors' report on the 2012 annual 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 section 498 of the Companies Act 2006.
11.	2011 Report and Financial Statements           The figures and financial information for the year ended 31 October 2011 are compiled from an extract of the latest published financial statements of the Company and do not constitute the statutory accounts for that year.  Those financial statements have been delivered to the Registrar of Companies and included the report of the auditors which was unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006.

   Page 20 of 20

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2012

Notes to the Financial Statements, continued

12.	Annual Report The Report and Financial Statements for the year ended 31 October 2012 will be posted to shareholders in mid-February 2013 and will be available on the Company's website (www.hendersonopportunitiestrust.com) or in hard copy format from the Company's Registered Office, 201 Bishopsgate, London EC2M 3AE.
13.	Annual General Meeting The Annual General Meeting will be held on Thursday 21 March 2013 at 2.30pm at 201 Bishopsgate, London EC2M 3AE.

ENDS

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.

For further information, please contact:

George Burnett		James de Sausmarez
Chairman		Head of Investment Trusts
Henderson Opportunities Trust plc		Henderson Global Investors
Telephone:  [phone]		Telephone: [phone]
James Henderson	or	Sarah Gibbons-Cook
Portfolio Manager Henderson Opportunities Trust plc		Investor Relations and PR Manager Henderson Global Investors
Telephone: [phone]		Telephone: [phone]

 

END

 

 

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