Final Results
Henderson Strata Investments PLC
14 December 2005
HENDERSON GLOBAL INVESTORS
HENDERSON STRATA INVESTMENTS PLC
14 December 2005
HENDERSON STRATA INVESTMENTS PLC
Unaudited Preliminary Results for the year ended 31 October 2005
Highlights:
• NAV per share up 14.2% and share price up 26.2% over the year
• Successful realignment to UK micro cap portfolio
• Strong second half performance, 6.3% ahead of the benchmark
• Investment outlook favourable.
'Following shareholder approval in February of the change of investment policy,
our portfolio was realigned successfully to focus on UK micro cap companies and
has performed significantly ahead of our new benchmark. In the second half of
our year the net asset value per share increased by 5.1%, which is 6.3% ahead of
the FTSE Fledgling Index. This is the result of good stock selection, the basis
of successful investment in small companies, and augurs well for the future.'
George Burnett, Chairman
For further information, please contact:
George Burnett or James de Sausmarez
Chairman Head of Investment Trusts
Henderson Strata Investments plc Henderson Global Investors
Telephone: 01372 362300 Telephone: 020 7818 3349
or
Colin Hughes or Sarah Gibbons-Cook
Fund Manager Investor Relations and PR Manager
Henderson Strata Investments plc Henderson Global Investors
Telephone: 020 7818 5714 Telephone: 020 7818 3198
Page 2 of 8
HENDERSON STRATA INVESTMENTS PLC
Unaudited Preliminary Results for the year ended 31 October 2005
Review of activity in the year
The net asset value per share rose by 14.2% in the year ended 31 October 2005
and the share price by 26.2%. Over the same period the FTSE Fledgling
(excluding investment companies) Index returned 8.1% and the FTSE SmallCap
(excluding investment companies) Index returned 16.9% while the FTSE All-Share
Index returned 19.8%. These figures include income.
The results for the second half of the Company's year are a more significant
measure of the success of its new investment policy. In the six months ended 31
October 2005, the net asset value per share increased by 5.1% compared with a
total return from the new benchmark, the FTSE Fledgling (excluding investment
companies) Index, of minus 1.2%. This result includes contributions from the
limited but judicious use of the Company's short term borrowing facility and
from the enhancement to net asset value of share buy-backs.
Accounting changes
The Board has decided that, with effect from 1 November 2005, four fifths of the
finance costs and investment management fees will be allocated to capital, to
reflect the significant proportion of these costs that relate to the maintenance
or enhancement of the value of the Company's investments.
Changes to UK accounting standards require the Company to account for its
investments as held at fair value through profit and loss, with effect from the
new accounting period beginning on 1 November 2005. In compliance with this,
the portfolio at 31 October 2005 would be valued on a bid basis at £65,259,000,
some 0.32% less than mid-market value of £65,467,000 shown in the balance sheet.
The discount
The Board is committed, as far as practicable, to maintaining the discount to
net asset value at which the Company's shares trade at close to the 8% level at
which the Tender Offer was made in January. To this end we have maintained an
active share buy-back programme. In addition to the Tender Offer, a total
1,257,846 shares were bought back during the year and a further 72,000 have been
bought back since 31 October. Of this total, 904,246 are held in treasury and
will in due course either be issued at a premium or cancelled.
Page 3 of 8
HENDERSON STRATA INVESTMENTS PLC
Unaudited Preliminary Results for the year ended 31 October 2005
Market review and outlook
Although the markets produced positive returns in the year ended 31 October
2005, the satisfactory outcome for the year as a whole masks some weaker months.
The general improvement in investor confidence has been helpful to Henderson
Strata as a specialist in small companies, particularly in the period of
transition to the new investment objective. The new issues market has been very
active, although the quality of the offerings has varied widely. The Company's
new benchmark, the FTSE Fledgling (excluding investment companies) Index,
underperformed the UK market as a whole but this has facilitated the
restructuring of the portfolio through the acquisition of new investments at
more reasonable prices. The Fund Manager, Colin Hughes, has added significant
value from stock selection and continues to identify interesting opportunities.
The Board expects the Company to benefit steadily from the stock-picking skills
that he has demonstrated in the last three years, initially in the UK portion of
what was then an international portfolio.
The directors concur with his view that valuations are reasonable and are
supported by the prospect of continued growth in corporate earnings and they
believe that the medium-term outlook for the portfolio is encouraging.
Page 4 of 8
HENDERSON STRATA INVESTMENTS PLC
Unaudited Preliminary Results for the year ended 31 October 2005
Statement of Total Return (incorporating the revenue account)
for the year ended 31 October 2005
Year ended 31 October 2005 Year ended 31 October 2004
(unaudited) (audited)
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Total capital gains from investments - 8,068 8,068 - 4,577 4,577
Income from fixed asset investments 1,023 - 1,023 1,495 - 1,495
Other interest receivable and similar 99 - 99 39 - 39
income
---------- ---------- ---------- ---------- ---------- ----------
Gross revenue and capital gains 1,122 8,068 9,190 1,534 4,577 6,111
Management fee (662) - (662) (639) - (639)
Other administrative expenses (181) - (181) (208) - (208)
--------- ---------- ---------- --------- ---------- ----------
Net return on ordinary activities
before interest payable and taxation 279 8,068 8,347 687 4,577 5,264
Interest payable (79) - (79) (47) - (47)
---------- ---------- ---------- ---------- ---------- ----------
Net return on ordinary activities
before taxation 200 8,068 8,268 640 4,577 5,217
Taxation on net return on ordinary (7) - (7) (57) - (57)
activities
----------- ---------- ---------- ----------- ---------- ----------
Net return on ordinary activities
after taxation 193 8,068 8,261 583 4,577 5,160
Dividends - nil - - - - - -
----------- ------------ ----------- ----------- ------------ -----------
Transfer to reserves 193 8,068 8,261 583 4,577 5,160
======= ======= ======= ======= ======= =======
Return per ordinary share (note 2) 1.48p 61.71p 63.19p 3.41p 26.75p 30.16p
======= ======= ======= ======= ======= =======
The revenue columns of this statement represent the profit and loss accounts of
the Company.
Page 5 of 8
HENDERSON STRATA INVESTMENTS PLC
Unaudited Preliminary Results for the year ended 31 October 2005
Balance Sheet
at 31 October 2005
2005 2004
£'000 £'000
Fixed asset investments
Listed investments at market value:
United Kingdom 34,784 40,272
Overseas - 24,026
----------- -----------
34,784 64,298
AIM investments at market value 30,636 17,243
Unquoted investments at directors' valuation 47 58
----------- -----------
65,467 81,599
----------- -----------
Current assets
Debtors 196 1,236
Cash at bank 1,407 380
----------- -----------
1,603 1,616
Creditors: amounts falling due within one year (6,230) (2,336)
----------- -----------
Net current liabilities (4,627) (720)
----------- -----------
Total net assets 60,840 80,879
======= =======
Capital and reserves
Called up share capital 3,041 4,276
Share premium account 16,479 16,479
Capital redemption reserve 1,365 130
Capital reserve - realised 36,977 57,774
Capital reserve - unrealised 5,496 4,931
Revenue reserve (2,518) (2,711)
----------- -----------
Equity shareholders' funds 60,840 80,879
======= =======
Net asset value per ordinary share (note 3) 540.30p 472.93p
======= =======
Page 6 of 8
HENDERSON STRATA INVESTMENTS PLC
Unaudited Preliminary Results for the year ended 31 October 2005
Cash Flow Statement
for the year ended 31 October 2005
2005 2005 2004 2004
£'000 £'000 £'000 £'000
Net cash inflow from operating activities 678 751
Servicing of finance
Interest paid (75) (47)
----------- -----------
Net cash outflow from servicing of finance (75) (47)
Taxation
Tax recovered 11 17
----------- -----------
Net tax recovered 11 17
Financial investment
Purchases of investments (64,358) (46,849)
Sales of investments 87,559 46,124
----------- -----------
Net cash inflow/(outflow) from financial investment
23,201 (725)
Financing
Drawdown of short term loan 4,000
Purchases of own shares (28,300) (283)
----------- -----------
Net cash outflow from financing (24,300) (283)
----------- -----------
Decrease in cash (485) (287)
====== ======
Reconciliation of net cash flow to movement in net (debt)/funds
Decrease in cash as above (485) (287)
Net cash inflow from increase in loans (4,000) -
Exchange movements 67 2
----------- -----------
Movement in net funds/debt (4,418) (285)
Net funds at 1 November 380 665
----------- -----------
Net (debt)/funds at 31 October (4,038) 380
====== ======
- MORE -
Page 7 of 8
HENDERSON STRATA INVESTMENTS PLC
Unaudited Preliminary Results for the year ended 31 October 2005
Notes :
1. Issued share capital
There were 12,164,600 ordinary shares of 25p each in issue at 31 October
2005 (31 October 2004: 17,101,515), including 904,246 shares held in
treasury either for reissue to the market or for cancellation at a future
date (31 October 2004:nil).
During the year ended 31 October 2005 the Company bought back for
cancellation a net total of 4,583,255 of its own issued shares at a price of
475.87p, under the terms of the Tender Offer and Matching Facility as set
out in the circular to shareholders dated 22 December 2004. A further
353,600 ordinary shares were bought back in the market for cancellation
(year ended 31 October 2004: 85,000) and a further 904,246 ordinary shares
were bought back in the market to hold in treasury.
2. Return per ordinary share
The revenue return per ordinary share is based on the net return on ordinary
activities after taxation of £193,000 (2004: £583,000) and on the weighted
average number of ordinary shares of 25p each in issue during the year of
13,073,684 (2004: 17,112,430) and for this purpose shares bought and held in
treasury are treated as having been cancelled.
The capital return per ordinary share is based on the net capital gains for
the year of £8,068,000 (2004: £4,577,000)and on the weighted average number
of ordinary shares of 25p each in issue during the year, as stated above.
3. 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 £60,840,000(31 October 2004:
£80,879,000) and on the 11,260,414* ordinary shares of 25p each in issue at
31 October 2005 (31 October 2004: 17,101,515).
* The number of shares in issue has been adjusted for the shares held in
treasury which, for this purpose, are treated as not being in issue.
4. Reconciliation of movement in equity shareholders' funds 2005 2004
£'000 £'000
Net return on ordinary activities after taxation for the year 193 583
Increase in other capital reserves 8,068 4,577
8,261 5,160
Purchase of own shares for cancellation (24,012) (283)
Purchase of own shares into treasury (4,288) -
Net (decrease)/increase in shareholders' funds (20,039) 4,877
Shareholders' funds at 1 November 80,879 76,002
Shareholders' funds at 31 October 60,840 80,879
5. Dividend
No dividend has been declared in respect of the year.
Page 8 of 8
HENDERSON STRATA INVESTMENTS PLC
Unaudited Preliminary Results for the year ended 31 October 2005
6. 2005 Accounts
The preliminary figures for the year ended 31 October 2005 are an extract
from the Company's latest accounts for that period. These accounts have
not yet been delivered to the Registrar of Companies, nor have the
auditors yet reported on them.
7. 2004 Accounts
The figures and financial information for the year ended 31 October 2004
are an extract from the latest published accounts of the Company and do
not constitute the statutory accounts for that year. Those accounts have
been delivered to the Registrar of Companies and included the report of
the auditors which was unqualified and did not contain a statement under
either section 237(2) or section 237(3) of the Companies Act 1985.
8. Annual Report
The full annual report and accounts will be posted to shareholders on
early in January 2006 and copies will be available thereafter from the
Secretary at the Company's Registered Office, 4 Broadgate, London EC2M 2DA.
9. Annual General Meeting
The Annual General Meeting will be held on Thursday 9 February 2006 at
2.30 pm at 4 Broadgate, London EC2M 2DA.
- ENDS -
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