Annual Financial Report

RNS Number : 0261A

Henderson Opportunities Trust PLC

28 January 2022

 

HENDERSON INVESTMENT FUNDS LIMITED

HENDERSON OPPORTUNITIES TRUST PLC

LEGAL ENTITY INDENTIFIER (LEI):  2138005D884NPGHFQS77

28 January 2022

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2021

This announcement contains regulated information

Investment Objective

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

PERFORMANCE HIGHLIGHTS

Total Return Performance to 31 October 2021

	1 year %	3 years %	5 years %	10 years %
NAV¹	58.4	47.3	80.2	285.7
Share price²	59.5	51.0	89.0	332.5
Benchmark³	35.4	17.6	31.4	106.9
Peer group NAV4	43.8	36.7	66.8	202.5

	Year ended 31 October 2021	Year ended 31 October 2020
NAV per share at year end5	1,626.9p	1,046.3p
Share price at year end	1,382.5p	885.0p
Total return per share5	607.5p	(83.6p)
Net assets	£128.5m	£82.6m
Discount at year end5, 6	15.0%	15.4%
Ongoing charge (excluding performance fee)5	0.87%	0.88%
Ongoing charge (including performance fee) 5, 7	1.85%	0.88%
Dividend for year8	27.5p	27.0p

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 average

5 Alternative performance measure

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

7 No performance fee was payable in the year ended 31 October 2020

8 This represents three interim dividends of 6.5p each and a proposed final dividend of 8.0p which will be put to shareholders for approval at the Annual General Meeting on 10 March 2022.  See the Chaiman's statement for more detail. The dividend yield⁵   for the year ended 31 October 2021 was 2.0% (2020: 3.1%) based on the share price at the year end

Sources: Morningstar Direct, Janus Henderson, Refinitiv Datastream

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

 

CHAIRMAN'S STATEMENT

Performance review

After a fall in net asset value in the previous financial year during the peak of the pandemic, we are pleased to be reporting on a strong year of absolute and relative performance, with the Company's portfolioreturning 58.4% during the year compared with the benchmark's return of 35.4%. Despite the challenges of the ongoing pandemic, throughout the year our Fund Managers have continued to manage the Company's capital in a calm and considered manner retaining their focus on long-term investee company fundamentals and analysis. On behalf of the Board, I would like to thank them for their successful efforts on behalf of the Company. The following table illustrates the Company's outperformance record over the last 10 years.

	1 year (%)	3 years (%)	5 years (%)	10 years (%)
NAV Total Return	58.4	47.3	80.2	285.7
Share Price Total Return	59.5	51.0	89.0	332.5
FTSE All-Share Total Return	35.4	17.6	31.4	106.9

This performance is due to the Company's deliberately diverse portfolio and breadth of UK companies held, not to any particular theme. Some of these investee companies are addressing relatively nascent but fast-growing end markets, such as the need to de-carbonise the global economy. Others are seeking to grow market share in already established end markets by bringing a different approach. However, all of them have strong management teams and many have been identified by the Fund Managers as potential next generation leaders in the UK in their particular sector areas. It is this blend of different companies held within the portfolio that has allowed the Company to outperform over the long term.

Income review

We are also pleased to report a healthy income recovery this year, with revenue return per share rising to 24.7p compared to 12.8p last year. This has not quite reached the 29.9p generated in the 2019 financial year as some companies in the portfolio (particularly in the 'recovery' classification) are yet to restore dividends. These companies operate in areas such as hospitality or aerospace that remain highly impacted by the pandemic. In last year's Annual Report we stated that we would be prepared to use the revenue reserve of the Company to support the Company's dividend distributions until the dividend income from the portfolio was fully recovered. We see no reason to change course and we are therefore announcing a modest increase to the final dividend, taking it to 8.0p per share (relative to a 7.5p final dividend in the previous financial year). This will mean a full year dividend of 27.5p, as compared to the 27.0p paid last year and will involve utilising £217,000 from the Company's revenue reserve. Subject to shareholder approval, the dividend will be paid on 25 March 2022 to shareholders on the register as at 18 February 2022.

Fees and expenses

The ongoing charge for the year was 1.85%. This was higher than the 0.88% charge in the previous financial year and reflects the performance fee paid. As a reminder, there is a limit on the total management and performance fee in any one year of 1.5% of the average net assets (calculated quarterly) during the year, and no performance fee will be paid if either the share price or net asset value is lower than their value at the preceding financial year end. Ongoing charges include all fees and expenses (not just management and performance fees) and can therefore be higher than any cap applied to management and performance fees alone. The Board continues to monitor fees and other costs.

The discount level and share buybacks

Although it was encouraging to see the discount narrow substantially during the year to 0.1%, the shares finished the year at a 15.0% discount to the cum income NAV, approximately in line with the discount at the previous year end. The persistent (albeit fluctuating) discount is a source of concern and focus for the Board and the Fund Managers given the Company's strong long and short-term performance and it is difficult to pinpoint exactly why this performance is not influencing the share price more positively. At the same time, the Board is very conscious of an ongoing transition in the Company's share register with some wealth managers gradually selling their positions and more individuals buying and holding their shares on trading platforms. This is an issue many investment trusts are facing, and the resulting challenge for boards and fund managers is how they increase awareness of their companies and find a way of communicating more effectively with the individuals investing through platforms who now own, or may wish to buy, their shares. We have very recently appointed a specialist communications agency to help us progress this.

There were no share issuances or shares bought back during the financial year. It remains the Board's position that buybacks will primarily be undertaken with the aim of enhancing the NAV for shareholders rather than maintaining the discount at any specific level.

Gearing

Gearing ended the year at 13.2% of net assets, modestly lower than the 13.6% at the previous financial year end. This very modest fall in gearing came about despite the Fund Managers being net investors of approximately £4.7m during the year as the rise in the Company's net asset value outpaced net investment. The gearing level remains broadly in line with the Company's long term average and reflects the fact that the Fund Managers are continuing to find a broad range of attractive valuation opportunities in the UK market.

Changes to the Investment Objective and Investment Policy

We are seeking permission from shareholders to make amendments to the Investment Objective and Investment Policy of the Company at the Annual General Meeting ("AGM"). The principal amendment will allow flexibility for the Company to invest up to 10% of its gross asset value in companies outside of the UK. This proposed change should not be seen as indicating any alteration to the Company's investment strategy or process. The change is designed to address issues arising from corporate actions (such as spin-outs from existing holdings) that could result in the Company holding shares in an overseas entity. Rather than making the Company a forced seller in these circumstances, we want to ensure that the Fund Managers have the flexibility to retain any holding if they consider this to be in the best interests of shareholders.  Other amendments are designed to provide some flexibility in the number of individual investments held and to make the current investment policy clearer and are considered to be immaterial in their nature.

ESG

The Board understands the increasing importance of environmental, social and governance ("ESG") concerns to investors. While the Company does not automatically exclude sectors or particular companies based on specific ESG metrics, ESG factors are incorporated into the Fund Managers' investment decision making process. In general, the Fund Managers prefer to rely on company engagement and dialogue rather than metrics alone which, particularly in the smaller company area, can sometimes be subjective. More information on the Fund Managers' approach to ESG can be found in the Annual Report.

The Board

Chris Hills will be stepping down from the Board at the conclusion of the March 2022 AGM having been a Director since June 2010. During his time on the Board Chris has contributed a wealth of industry experience and his calm inputs to Board discussions, particularly at times of great upheaval such as during the pandemic, have always been hugely valuable. The Board extends its thanks and best wishes for the future to Chris.

In August we appointed Harry Morgan to the Board. Harry has highly relevant experience of both investment trusts (as a current non-executive director of Mid Wynd International Investment Trust plc) and of the wealth management industry having previously been a director of investment management and head of key clients in Scotland for Tilney.

AGM

Last year, along with taking precautionary action by amending the Company's Articles of Association to allow a combination of virtual and physical shareholder meetings to be held in the future, the Board committed to holding physical meetings when restrictions were not in place and these could be held safely.

The Company's AGM is currently scheduled to take place at 2.30 pm on Thursday 10 March 2022 at 201 Bishopsgate, London EC2M 3AE (the offices of Janus Henderson Investors). For shareholders unable to travel and attend in person, the meeting will also be broadcast live on the internet at www.janushenderson.com/trustslive.

Whilst we hope to be able to hold the AGM as a physical meeting, please note that it may be necessary to change the arrangements for the AGM depending on the advice of the public health authorities and the UK government closer to the time. If any such changes are required, these will be detailed on the Company's website at www.hendersonopportunitiestrust.com and additionally an announcement will be released to the Stock Exchange.

The AGM will include a presentation by our Fund Managers, James Henderson and Laura Foll. If shareholders would like to submit any questions in advance of the AGM, they are welcome to send these to the Corporate Secretary at [e-mail].

Outlook

While it now appears inevitable that interest rates will rise further, it seems likely that they will remain low if looked at in the context of the last fifty years. The Board believes that investing in companies that provide excellent goods or services to their customers should work as a good hedge against inflation as these companies can increase their prices to prevent margins being eroded by input cost increases.Given the fast rate of change in the economy the Fund Managers' focus also needs to be on companies that are capable of adapting. Both the size of the Company and its highly flexible mandate allow the Fund Managers to pursue the best opportunities across the breadth of the UK market and to take the measures required to enable the Company to invest in the next generation of successful companies. For all of these reasons, the Board remains positive about the outlook for the Company.

Wendy Colquhoun

Chairman

28 January 2022

 

FUND MANAGERS' REPORT

Investment backdrop

The COVID-19 vaccination programme and the re-opening of much of the economy had a beneficial impact on the portfolio. After the three 'lockdowns' there have been labour shortages and supply problems and this led to inflationary pressures picking up. However, well positioned companies that have good management teams were able to respond by putting their own prices up and therefore protecting their margins. These margins were also enhanced by companies focusing hard on their costs during the pandemic which meant they were leaner coming out of it.

The virus accelerated trends that were already in place before it. The move to online retailing away from traditional stores is a notable and obvious example. The desire to create a better, more sustainable environment has also gained greater impetus. Some of the stocks in the portfolio benefited, for example, companies working to provide alternatives to fossil fuels have received greater investor support as they make progress in their product development. Some of the best contributors to portfolio performance this year came from this area. However, it was not only young companies that performed well. Some more established businesses came back with renewed vigour after the pandemic. Certain of the banks and large retailers are examples. The portfolio retained a reasonable level of gearing throughout the year in order to take advantage of this breadth of opportunities.

Portfolio review

The portfolio is divided into the classifications below. These classifications are not meant to be prescriptive and are, to a degree, subjective, with companies having the potential to move between classifications over time. For example, as a company matures it may progress from an early stage company, to growth small cap, to a 'compounder'. The aim of the classifications alongside the indicative ranges is to ensure the portfolio remains diverse, as different classifications will perform differently depending on the economic backdrop.

Classification	Total (gross assets) 1 %	Indicative portfolio range %	Largest three holdings
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.	21 (+6)	10-30	Barclays, NatWest, HSBC
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.	20 (-7)	20-40	Next Fifteen Communications, Boku, 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.	11 (+5)	0-30	Marks & Spencer, Rolls-Royce, Redcentric
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.	11 (+3)	5-15	Serica Energy, Anglo American, Rio Tinto
Early stage companies/university spin-outs 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.	13 (-4)	0-20	AFC Energy, Ceres Power, Surface Transforms
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.	24 (-3)	20-40	Springfield Properties, Vertu Motors, SigmaRoc

¹ The number in brackets is the change in percentage compared to the previous financial year end.  The special situations classification, used in 2020, has been incorporated into the recovery classification.

The most significant changes in the portfolio from a classifications perspective since the previous financial year end are the increases in weight in large cap and recovery companies, and the reduction in growth small cap companies.

In the large cap and recovery companies classifications, we increased the weight significantly in banks (see more detail in the portfolio activity section) and added new holdings in BT Group and Tesco. While these are more established companies than much of the portfolio, in all cases there needs to be a clear total return opportunity and the positions need to bring a different exposure to the portfolio. For example, BT, as a result of its significant investment in fibre to the home, has a potential route to sustainable earnings growth as that capital investment generates a future return.

Within the recovery allocation, new positions included contractor Kier Group and retailer Marks & Spencer. What we are looking for within the recovery classification is companies which have under-appreciated potential to either return to historic strengths or apply their strengths to new end markets. For example, Kier, under a new leadership team and with a much improved balance sheet, is returning to its historic focus on disciplined local contracting. Other companies within this classification are seeking to diversify into new end markets, for example STV is aiming to transition much of its advertising revenue to online, and International Personal Finance is taking lessons from a long history of door-to-door lending and applying these to its digital lending business.

Within growth small cap, the reduction in weight came about partially due to underperformance of some holdings (such as Blue Prism) and partially due to sales in the area, including full sales of Learning Technologies, AVEVA and Keystone Law and reductions in positions such as Boku. In recent years this area of the portfolio has performed well and in many cases shares have materially re-rated. This has led us to reduce or exit some holdings on valuation grounds, without finding the same quantum of attractive opportunities to replace them and therefore the weight has come down gradually over time.

Portfolio activity

During the year we were net investors, investing £35.5m in aggregate and selling £30.8m. While we were net investors, the rise in net asset value outpaced net investment and as a result gearing ended the year modestly lower at 13.2%, relative to 13.6% at the end of last year. The gearing level for the Company is driven by valuation opportunities across the breadth of the UK market, rather than our view of the macroeconomic backdrop. The current low to mid-teens gearing level for the Company demonstrates that we are continuing to find a broad spread of attractive opportunities.

It was an active year for the portfolio in which there were 20 new purchases, five of which we invested in at the point of IPO (Oxford Nanopore Technology, Glantus, Auction Technology Group (which has since been sold), Orcadian Energy and Dianomi) and others at the point where they were raising additional capital (for example Revolution Bars). Offsetting these new purchases were 17 full portfolio sales, three of which (Scapa, Horizon Discovery and Bacanora Lithium) were driven by takeover offers and two of which (Jackson Financial and Thungela Resources) were driven by sales of small spin-outs from portfolio holdings. The portfolio finished the year with 92 holdings (2020: 87), not including those written down to zero.

Purchases

The largest new purchase during the year was Barclays, which was initially purchased in November 2020 and ended the year as the Company's largest holding. While Barclays was a new purchase for the portfolio, we also added to the Company's existing positions in several other banks. This broad addition to the banks was driven by both valuation, with all still trading at a discount to historic averages, and macroeconomic considerations, with all having the potential to benefit from the economic recovery and (at some stage) the potential for higher interest rates.

Another area that was added to steadily during the course of the year was natural resources, with several new positions established including Orcadian Energy and Jubilee Metals, as well as additions to existing holdings such as Jersey Oil & Gas, Jadestone Energy and Anglo American. Smaller natural resource companies continue to be an area where we are finding attractive valuation opportunities. These companies are run by experienced management teams with material pre-production or producing assets, often acquired from large companies at low valuations as part of disposal programmes. An example of this which has been held in the portfolio since 2013 is Serica Energy, which was one of the best performers this financial year (see separate attribution section below). This was bought as a small company (below £50m market capitalisation) and as a small (approximately 0.5%) holding. It remained a small position until late 2017, when it acquired stakes in material North Sea assets from BP. It has gone on to be one of the largest gas producers in the UK and one of the largest positions in the portfolio. It is this type of less well known but entrepreneurial smaller natural resource company that we are seeking to identify.

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

Date	Share price in pence
12 November 2013	17.38
28 November 2014	6.63
30 November 2015	8.85
30 November 2016	13.50
30 November 2017	66.75
30 November 2018	131.00
29 November 2019	124.00
30 November 2020	113.00
29 October 2021	206.00

Source: Bloomberg at 31 October 2021

Sales

A number of the largest sales during the year were in the alternative energy area, with material reductions to the position in Ceres Power and a full sale of the position in EQTEC. Ceres Power had been the largest contributor to performance in the previous financial year, and while we continue to think that the quality of their partnerships (for example with Bosch) suggests they could be among the future leaders within fuel cells, the valuation has moved materially from the point of purchase and for portfolio balance reasons the holding was reduced.

Another material reduction during the year was building materials company SigmaRoc. This was originally purchased for the portfolio in December 2017. It is a 'buy and build' model, with the company acquiring heavy building materials companies with strong incumbent market positions. Following good performance (and further additions) it has become one of the Company's largest holdings. In the summer of 2021, it announced the acquisition of a Nordic company called Nordkalk. This was by far its largest acquisition to date, moving the company from a sub £100m market cap company at the point at which its shares were purchased by the Company to a company with a market cap of over £500m. While we saw the strategic logic, a deal of this size always comes with a degree of integration risk and for this reason, as well as portfolio balance considerations, we reduced the holding.

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

Date	Share price in pence
13 December 2017	42.25
28 June 2018	40.50
31 December 2018	39.20
28 June 2019	45.50
31 December 2019	49.50
30 June 2020	44.00
31 December 2020	63.00
30 June 2021	94.50
29 October 2021	95.00

Source: Bloomberg at 31 October 2021

Attribution

Top 10 absolute contributors to return during the financial year:

Company name	Share price total return (%)	Contribution to NAV (%)	Classification
Ceres Power	77.5	3.5	Early stage company
SigmaRoc	111.6	3.3	Compounder
Next Fifteen Communications	180.0	2.9	Growth small cap
AFC Energy	247.7	2.5	Early stage company
Serica Energy	103.3	2.4	Natural resources
EQTEC	228.3	2.2	Early stage company
Springfield Properties	58.8	1.9	Compounder
Zoo Digital	129.2	1.9	Growth small cap
Vertu Motors	108.9	1.9	Compounder
Tracsis	78.6	1.8	Growth small cap

While there is little commonality of end markets among the top ten best performers, were there to be a theme it is that they all have experienced, ambitious management teams combined with the potential to be much larger businesses in time. This could be because the end markets themselves are at an early stage and could become much larger (this would be the case for Ceres Power and AFC Energy, which produce fuel cells) or because they are challenging traditional business models and seeking to grow market share, whether organically or inorganically. This would be the case for Zoo Digital, which is challenging traditional dubbing studios with its cloud-based model, and Vertu Motors, which continues to acquire other motor dealerships and integrate them into its platform.

Top 10 absolute detractors from return during the financial year:

Company name	Share price total return (%)	Contribution to NAV (%)	Classification
LoopUp	-61.9	-1.8	Growth small cap
Blue Prism	-26.9	-0.9	Growth small cap
SIMEC Atlantis Energy	-92.0	-0.8	Early stage company
Reabold Resources	-67.7	-0.6	Natural resources
Sensyne Health	-35.8	-0.5	Early stage company
4D Pharma	-43.7	-0.4	Early stage company
AVEVA	-6.3	-0.1	Large cap
Oxford BioDynamics	-39.3	-0.1	Early stage company
Glantus	-12.3	-0.1	Growth small cap
Redcentic	0.5	-0.1	Recovery

The most material detractor from performance was LoopUp, having in the previous financial year been among the best performers as its conference call software saw uptake increase materially during the peak of the pandemic. The position was sold in December 2020 following a disappointing trading update in which it was clear that the competitive environment had materially changed with Microsoft taking market share. Given the scale of this competitor we decided that the risk was that there would be further disappointments and exited the holding. Another detractor during the year was robotic process automation software provider Blue Prism, which did not achieve the revenue growth it set out to at the beginning of the year. This was partially pandemic driven as potential customers were (understandably) reluctant to make material automation decisions at a time when a substantial portion of staff were working from home. In recent months its board has recommended a takeover approach from private equity.

Income

2021 saw a strong recovery in dividend payments as company earnings recovered from the peak of the pandemic. As a result, the Company earnings per share rose to 24.7p, relative to 12.8p the previous year (and 29.9p in the 2019 financial year to provide pre-pandemic context). The rise in earnings per share was also helped by the net investment during the year and by stock lending which contributed £267,000 during the financial year relative to £163,000 in the previous year.

Outlook

We invest across the UK market in companies of all sizes. This allows us a greater set of opportunities. Large company investors have little exposure to dynamic technology stocks, while small cap investors will have little exposure to the banking sector, where substantial value can be found. We have the flexibility within this Company to invest in both areas. Some of the large companies we hold are reinventing themselves. They are adapting to a much changed economy, while the smaller companies are utilising their ability to be nimble.

It is an exciting time to be investing in the UK. Rapid changes within the economy are creating real opportunities for those companies with the ability to grasp them. For instance, the alternative energy companies have extraordinary potential if they have the technology that will help the world move away from fossil fuel, while the step up in infrastructure spend within the UK is creating opportunities for more traditional construction based businesses. The portfolio is a blend of very different businesses. Diversity of businesses and end markets together give us the opportunity to invest in the next generation of successful companies. We remain positive about the opportunities for the portfolio and intend to maintain a reasonable level of gearing.

James Henderson and Laura Foll

Fund Managers

28 January 2022

 

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 to investing in the shares of companies that are listed in the United Kingdom, 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.  The inherent likelihood of the occurrence of poor investment performance, failure or serious difficulties of one of the Company's third-party service providers, the loss of bank borrowing facilities and failure of the Manager to manage financial or administrative controls due to the increased possibility of cyberattacks or issues with bandwidth as many employees worked from home, continued to be increased due to the COVID-19 pandemic.

The Board has received regular updates from the Fund Managers during the pandemic. These have enabled the Directors to monitor and manage risks related to the pandemic. COVID-19 continues to affect the value of the Company's investments due to the disruption of supply chains and demand for products and services, increased costs and cash flow problems, and changed legal and regulatory requirements. The Board notes that the Fund Managers' investment process remains unchanged by the COVID-19 pandemic and they continue to focus on long-term company fundamentals and detailed analysis of current and future investments.

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	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.
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 (which were shown as separate principal risks in the 2020 Annual Report), 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 Manager has contracted some of its operational functions, principally those relating to trade processing, investment administration, accounting and cash management, to BNP Paribas Securities Services. The risk of failure of the Manager to manage financial or administrative controls due to the increased possibility of cyber-attacks or issues with bandwidth as many employees worked from home was increased due to the COVID-19 pandemic. The Directors report that, despite the COVID-19 pandemic, there has been no change to the level of service provided by the Manager or the Company's other third-party suppliers and the pandemic served to highlight the resilience and high quality of the services provided.
Accounting, legal and regulatory A breach of Section 1158/9 of the Corporation Tax Act 2010 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, company 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, 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 in the Annual Report. Further details of the Company's exposure to market risk (including market price risk, currency risk and interest rate risk), liquidity risk and credit and counterparty risk and how they are managed are contained 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:

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 change

Tax risk (including impact on dividends paid by the Company to shareholders) and impact on performance.

The Company's emerging risks are macro-economic and political in nature and over which the Company has no control. 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 (2020: 20m) 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 £19.8m (2020: 14.1m), with borrowing costs for the year totalling £150,000 (2020: 131,000). £18.4m (2020: 14.1m) of the facility was in use at the year end. Net gearing at 31 October 2021 was 13.2% (2020: 13.6%) 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 horizon and what the Board believes to be investors' horizons, taking account of the Company's current position and the potential impact of the principal risks and uncertainties as documented above.

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 how a breach of any covenants could impact the Company's net asset value and share price.

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 against liquidity, and the percentage of the portfolio holding of these stocks generally exceeds the gearing percentage. The Board actively monitors investment performance and even with the significant falls in the NAV at the height of the pandemic (which exceeded 25% in March 2020), 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 impact of COVID-19. The Company's revenue stream was severely impacted in the 2020 financial year by widespread dividend cuts in the UK market as a result of the COVID-19 pandemic. The Board believes that income will recover to historic income levels within a two to three year period and the Company has sufficient distributable reserves to meet any dividend distributions until dividend income fully recovers. The Board does not believe that these factors 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.

The Directors recognise that there is a continuation vote that is due to take place at the AGM in March 2023. 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 below).

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 on a going concern basis, give a true and fair view of the assets, liabilities, financial position and profit of the Company; and
•	the Strategic 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

28 January 2022

 

Twenty Largest Holdings at 31 October 2021

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

Ranking 2021 (2020)	Company	% of portfolio	Approximate market capitalisation	Valuation 2020 £'000	Purchases £'000	Sales £'000	Appreciation/  (depreciation)  £'000	Valuation 2021 £'000
1 *	Barclays	3.4	£34b	-	3,673	-	1,282	4,955
2 (6)	Serica Energy¹	3.1	£554m	2,510	334	(937)	2,728	4,635
3 (8)	Springfield Properties¹	2.9	£153m	2,445	391	(166)	1,556	4,226
4 (12)	Next Fifteen Communications¹	2.7	£1.1b	2,007	-	(1,137)	3,111	3,981
5 (17)	Vertu Motors¹	2.7	£224m	1,766	359	(271)	2,114	3,968
6 *	NatWest	2.4	£25.2b	683	1,662	-	1,193	3,538
7 (3)	Boku¹	2.4	£560m	3,079	-	(1,140)	1,551	3,490
8 (10)	Tracsis¹	2.3	£270m	2,168	-	(540)	1,785	3,413
9 (5)	SigmaRoc¹	2.1	£606m	2,618	128	(2,677)	2,986	3,055
10 (1)	Blue Prism¹	2.0	£1.1b	4,081	-	-	(1,100)	2,981
11 *	HSBC	1.9	£90.1b	1,073	1,337	-	374	2,784
12 (7)	RWS Holdings¹	1.9	£2.4b	2,458	-	-	275	2,733
13 *	Anglo American	1.8	£34.5b	860	1,308	-	545	2,713
14 *	Lloyds Banking	1.8	£35.7b	336	1,548	-	728	2,612
15 *	AFC Energy¹	1.7	£443m	626	253	(23)	1,651	2,507
16 (2)	Ceres Power¹	1.7	£2.4b	3,685	-	(3,679)	2,482	2,488
17 *	Zoo Digital¹	1.6	£111m	1,412	-	(872)	1,848	2,388
18 *	IQGeo¹	1.6	£76m	1,079	160	-	1,108	2,347
19 (14)	Surface Transforms¹	1.6	£114m	1,875	266	(157)	346	2,330
20 (9)	Rio Tinto	1.5	£75.3b	2,179	-	-	101	2,280

At 31 October 2021 these investments totalled £63,424,000 or 43.1% of the portfolio.

* Not in the top 20 largest holdings last year

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

Portfolio by sector

As a percentage of the investment portfolio excluding cash

	31 October 2021 %	31 October 2020 %
Basic Materials	5.4	5.8
Consumer Discretionary	17.3	12.1
Consumer Staples	1.0	0.0
Energy	11.5	11.9
Financials	21.1	13.4
Health Care	4.1	5.2
Industrials	22.1	24.9
Real Estate	1.0	2.3
Technology	13.7	22.4
Telecommunications	1.8	0.9
Utilities	1.0	1.1
	100.0	100.0

 

Portfolio by index

As a percentage of the investment portfolio excluding cash

	31 October 2021 %	31 October 2020 %
FTSE 100	21.8	15.6
FTSE 250	11.1	11.9
FTSE SmallCap	6.7	6.4
FTSE AIM	55.5	63.5
Other1	4.9	2.6
	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 2021

	Portfolio Weight %	Benchmark Weight %
Greater than £2b	31.5	89.5
£1b - £2b	12.3	5.4
£500m - £1b	9.1	3.1
£200m - £500m	21.6	1.7
£100m - £200m	13.2	0.3
£50m - £100m	6.3	0.0
Less than £50m	5.7	0.0
Other	0.3	0.0
	100.0	100.0

A glossary of terms can be found in the Annual Report

Sources: Morningstar Direct, Janus Henderson, Refinitiv Datastream

 

AUDITED INCOME STATEMENT

		Year ended 31 October 2021			Year ended 31 October 2020
Notes		Revenue return £'000	Capital return £'000	Total return £'000	Revenue return £'000	Capital return £'000	Total return £'000
2	Gains/(losses) on investments held at fair value through profit or loss	-	47,667	47,667	-	(7,215)	(7,215)
	Gain on foreign exchange	-	1	1	-	-	-
3	Income from investments held at fair value through profit or loss	2,317	108	2,425	1,329	-	1,329
4	Other interest receivable and other income	268	-	268	166	-	166
		---------	----------	----------	---------	----------	----------
	Gross revenue and capital gains/(losses)	2,585	47,776	50,361	1,495	(7,215)	(5,720)
5	Management and performance fees	(203)	(1,642)	(1,845)	(130)	(305)	(435)
	Other administrative expenses	(379)	-	(379)	(312)	-	(312)
		---------	----------	----------	---------	----------	----------
	Net return/(loss) before finance costs and taxation	2,003	46,134	48,137	1,053	(7,520)	(6,467)
	Finance costs	(45)	(105)	(150)	(40)	(91)	(131)
		-----------	----------	----------	-----------	----------	----------
	Net return/(loss) before taxation	1,958	46,029	47,987	1,013	(7,611)	(6,598)
	Taxation	(4)	-	(4)	(3)	-	(3)
		-----------	----------	----------	-----------	----------	----------
	Net return/(loss) after taxation	1,954	46,029	47,983	1,010	(7,611)	(6,601)
		======	======	======	======	======	======
6	Net return per ordinary share -
	basic and diluted	24.74p	582.77p	607.51p	12.78p	(96.36p)	(83.58p)
		======	=======	======	======	=======	======

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.

 

AUDITED STATEMENT OF CHANGES IN EQUITY

Year ended 31 October 2021	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 2020	2,000	14,838	2,431	61,467	1,907	82,643
Ordinary dividends paid	-	-	-	-	(2,131)	(2,131)
Refund of unclaimed dividends over 12 years old	-	-	-	-	2	2
Net return after taxation	-	-	-	46,029	1,954	47,983
	--------	----------	----------	----------	-----------	---------
At 31 October 2021	2,000	14,838	2,431	107,496	1,732	128,497
	=====	======	======	======	======	=====

Year ended 31 October 2020	Called up share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Other capital reserves £'000	Revenue reserve £'000	Total shareholders' funds £'000
At 1 November 2019	2,000	14,838	2,431	69,105	3,424	91,798
Ordinary dividends paid	-	-	-	-	(2,527)	(2,527)
Net (loss)/return after taxation	-	-	-	(7,611)	1,010	(6,601)
Purchase of 2,813 ordinary shares to be held in treasury	-	-	-	(27)	-	(27)
	--------	----------	----------	----------	-----------	---------
At 31 October 2020	2,000	14,838	2,431	61,467	1,907	82,643
	=====	======	======	======	======	=====

 

AUDITED STATEMENT OF FINANCIAL POSITION

	31 October 2021 £'000	31 October 2020 £'000
Fixed assets
Investments held at fair value through profit or loss
Listed at market value	65,075	33,606
Quoted on AIM at market value	81,536	60,746
Unlisted at market value	493	407
	------------	------------
	147,104	94,759
	------------	------------
Current assets
Investment held at fair value through profit or loss	2	2
Debtors	90	66
Cash at bank and in hand	1,360	2,882
	------------	------------
	1,452	2,950
Creditors: amounts falling due within one year	(20,059)	(15,066)
	-----------	-----------
Net current liabilities	(18,607)	(12,116)
	-----------	-----------
Total assets less current liabilities	128,497	82,643
	-----------	-----------
Net assets	128,497	82,643
	=======	=======
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	107,496	61,467
Revenue reserve	1,732	1,907
	------------	------------
Total shareholders' funds	128,497	82,643
	=======	=======
Net asset value per ordinary share- basic and diluted	1,626.9p	1,046.3p
	=======	=======

 

AUDITED STATEMENT OF CASH FLOWS

	Year ended 31 October 2021	Year ended 31 October 2020
	£'000	£'000
Cash flows from operating activities
Net return/(loss) before taxation	47,987	(6,598)
Add: finance costs	150	131
(Less)/add: (gains)/losses on investments held at fair value through profit or loss	(47,667)	7,215
Add: gains on foreign exchange	1	-
Withholding tax on dividends deducted at source	-	(5)
(Increase)/decrease in other debtors	(28)	167
Increase/(decrease) in creditors	1,295	(27)
	----------	----------
Net cash inflow from operating activities	1,738	883
	----------	----------
Cash flows from investing activities
Purchase of investments	(36,086)	(12,719)
Sale of investments	30,812	14,938
	------------	------------
Net cash (outflow)/inflow from investing activities	(5,274)	2,219
	------------	------------
Cash flows from financing activities
Equity dividends paid	(2,129)	(2,527)
Net loans drawn down	4,263	1,501
Buyback of ordinary shares	-	(27)
Interest paid	(120)	(138)
	-----------	-----------
Net cash inflow/(outflow) from financing activities	2,014	(1,191)
	-----------	-----------
Net (decrease)/increase in cash and cash equivalents	(1,522)	1,911
Cash and cash equivalents at start of year	2,882	971
	----------	----------
Cash and cash equivalents at end of year	1,360	2,882
	======	======
Comprising:
Cash at bank	1,360	2,882
	======	======

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 October 2019. 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 Section 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 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 AGM in 2020 was duly passed. The next triennial continuation resolution will be put to the Annual General Meeting in 2023. The assets of the Company consist almost entirely of securities that are listed (or quoted on AIM) and are readily realisable. 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 securities lending programme entered into by the Company 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 impact of COVID-19 on the Company, the Directors considered it appropriate to adopt the going concern basis of accounting in preparing the financial statements.
2.	Gains/(losses) on investments held at fair value through profit or loss	2021 £'000	2020 £'000
	Gains on the sale of investments based on historical cost1	11,553	5,303
	Revaluation losses recognised in previous years	(1,075)	5,315
		----------	----------
	Gains on investments sold in the year based on carrying value at previous Statement of Financial Position date	10,478	10,618
	Revaluation gains/(losses) on investments held at 31 October	37,189	(17,833)
		----------	----------
		47,667	(7,215)
		======	======

¹ Also includes special capital dividends of £149,000 (2020: £110,000)
 

3.	Income from investments held at fair value through profit or loss							2021 £'000	2020 £'000
	UK:
	Dividends from listed investments							1,737	876
	Dividends from AIM investments							518	348
								-------	-------
								2,255	1,224
								-------	-------
	Non-UK:
	Dividends from listed investments							62	101
	Dividends from AIM investments							-	4
								-------	-------
								62	105
								-------	-------
								2,317	1,329
								====	====
4.	Other interest receivable and other income							2021 £'000	2020 £'000
	Deposit interest							-	1
	Stock lending commission							267	163
	Underwriting commission (allocated to revenue)							1	2
								-------	-------
								268	166
								====	====
	At 31 October 2021, the total value of securities on loan by the Company for stock lending purposes was £14,011,000 (2020: £16,590,000). The maximum aggregate value of securities on loan at any one time during the year ended 31 October 2021 was £27,450,000 (2020: £20,075,000). The Company's agent holds collateral at 31 October 2021 with the value of £14,789,000 (2020: £17,545,000) 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 106% (2020: 106%) 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 (2020: same).
5.	Management and performance fee
	2021				2020
		Revenue return £'000	Capital return £'000	Total return £'000	Revenue return £'000		Capital return £'000		Total return £'000
	Management fee	203	474	677	130		305		435
	Performance fee	-	1,168	1,168	-		-		-
		--------	---------	---------	--------		---------		---------
		203	1,642	1,845	130		305		435
		=====	=====	=====	=====		=====		=====
	The basis on which the management fee is calculated is set out in the Strategic Report contained in the Annual Report. The performance fee is accrued as a liability throughout the year whenever the criteria for a performance fee to be payable are met. The performance fee crystallises and becomes payable at the Company's year end. The allocation between revenue return and capital return is explained in the Notes to the Financial Statements within the Annual Report.

6.	Net return/(loss) per ordinary share - basic and diluted
	The total return per ordinary share is based on the total return attributable to the ordinary shares of £47,983,000 (2020: total loss of £6,601,000) and on 7,898,375 ordinary shares (2020: 7,898,521) being the weighted average number of shares in issue during the year. The return/(loss) per ordinary share can be further analysed as follows:
		2021 £'000	2020 £'000
	Revenue return	1,954	1,010
	Capital return/(loss)	46,029	(7,611)
		-----------	-----------
	Total return/(loss)	47,983	(6,601)
		======	======
	Weighted average number of ordinary shares	7,898,375	7,898,521
		======	======
		2021	2020
	Revenue return per ordinary share	24.74p	12.78p
	Capital return/(loss) per ordinary share	582.77p	(96.36p)
		-----------	-----------
	Total return/(loss) per ordinary share - basic and diluted	607.51p	(83.58p)
		======	======
7.	Net asset value per ordinary share - basic and diluted
	The net asset value per ordinary share at the year end was 1,626.9p (2020: 1,046.3p). The net asset value per ordinary share is based on the net assets attributable to the ordinary shares of £128,497,000 (2020: £82,643,000) and on the 7,898,375 ordinary shares in issue at 31 October 2021 (2020: 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:
		2021 £'000	2020 £'000
	Total net assets at 1 November	82,643	91,798
	Total net return/(loss)	47,983	(6,601)
	Dividends paid in the year	(2,129)	(2,527)
	Buyback of shares	-	(27)
		-----------	-----------
	Total net assets at 31 October	128,497	82,643
		======	======
8.	Called up share capital	2021 £'000	2020 £'000
	Allotted and issued ordinary shares of 25p each 7,898,375
	(2020: 7,898,375)	1,974	1,974
	Ordinary shares of 25p each held in treasury 102,483 (2020: 102,483)	26	26
		----------	----------
		2,000	2,000
		======	======
	During the year ended 31 October 2021 no ordinary shares of 25p each were issued or repurchased by the Company (2020: 2,813 shares were repurchased, and placed in treasury, at a cost of £27,000). Shares held in treasury do not carry a right to receive dividends.

9.	Ordinary dividends paid	Record date	Payment date	2021 £'000	2020 £'000
	Amounts recognised as distributions to equity holders in the year:
	Final dividend for the year ended 31 October 2019 of 19.0p	21 February 2020	27 March 2020	-	1,501
	First Interim dividend for the year ended 31 October 2020 of 6.5p	22 May 2020	26 June 2020	-	513
	Second Interim dividend for the year ended 31 October 2020 of 6.5p	21 August 2020	25 September 2020	-	513
	Third Interim dividend for the year ended 31 October 2020 of 6.5p	20 November 2020	18 December 2020	513	-
	Final Interim dividend for the year ended 31 October 2020 of 7.5p	19 February 2021	26 March 2021	592	-
	First Interim dividend for the year ended 31 October 2021 of 6.5p	21 May 2021	25 June 2021	513	-
	Second Interim dividend for the year ended 31 October 2021 of 6.5p	20 August 2021	24 September 2021	513	-
	Unclaimed dividends			(2)	-
				---------	---------
				2,129	2,527
				=====	=====

The Board decided to pay quarterly dividends from the beginning of the 2020 financial year, to make dividends as predictable for shareholders as possible. The Board declared a third interim dividend of 6.5p per ordinary share, paid on 17 December 2021 to shareholders on the register of the Company at the close of business on 19 November 2021. The ex-dividend date was 18 November 2021. Based on the number of ordinary shares in issue on 31 October 2021, the cost of this dividend was £513,000. Subject to approval at the Annual General Meeting, the proposed final dividend of 8.0p per ordinary share will be paid on 25 March 2022 to shareholders on the register of members at the close of business on 18 February 2022. The shares will be quoted ex-dividend on 17 February 2022. 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 2021	Year ended 31 October 2020
		£'000	£'000
	Revenue available for distribution by way of dividends for the year	1,954	1,010
	First interim dividend for the year ended 31 October 2021: 6.5p (2020: 6.5p)	(513)	(513)
	Second interim dividend for the year ended 31 October 2021: 6.5p (2020: 6.5p)	(513)	(513)
	Third interim dividend for the year ended 31 October 2021: 6.5p (2020: 6.5p)	(513)	(513)
	Proposed final dividend for the year ended 31 October 2021: 8.0p (based on the 7,898,375 ordinary shares in issue at 28 January 2022) (2020: 7.5p on 7,898,375 ordinary shares)	(632)	(592)
		-----------	-----------
	Transferred from revenue reserve1	(217)	(1,121)
		=======	=======
	All dividends have been paid or will be paid out of revenue profit and the revenue reserve. 1 There is no undistributed revenue in the current year (2020: no undistributed revenue)

10.

2021 Financial Information

The figures and financial information for the year ended 31 October 2021 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 2021 have been audited but have not yet been delivered to the Registrar of Companies. The Independent Auditor's Report on the 2021 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.	2020 Financial Information The figures and financial information for the year ended 31 October 2020 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 2020 have been audited and delivered to the Registrar of Companies. The Independent Auditor's Report on the 2020 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 2021 will be posted to shareholders in February 2022 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 10 March 2022 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, Chris Hills and Harry Morgan. The Corporate Secretary is Henderson Secretarial Services Limited, represented by Melanie Stoner (Fellow of the Chartered Governance Institute). Website: Details of the Company's share price and net asset value, together with general information about the Company, monthly factsheets and data, copies of announcements, reports and details of general meetings can be found at www.hendersonopportunitiestrust.com.

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]
Harriet Hall Investment Trust PR Manager Janus Henderson Investors Telephone: [phone]		James de Sausmarez Director and Head of 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.

 

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