Final Results

RNS Number : 5275M

Henderson Opportunities Trust PLC

30 January 2009

 



HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2008

30 January 2009

This announcement contains regulated information

Financial Highlights

	Year ended 31 October  2008	Year ended 31 October  2007
Net asset value per ordinary share	319.8p	758.8p
Ordinary share price	241.25p	668.0p
Subscription share price	10.5p	139.0p
Discount	24.6%	12.0%
Revenue return per ordinary share	17.72p	7.08p
Dividends per ordinary share	15.50p	6.00p
Gearing*	10.5%	7.9%

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

For further information, please contact:

George Burnett		James de Sausmarez
Chairman Henderson Opportunities Trust plc		Head of Investment Trusts 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]

Page 2 of 16

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2008

MANAGEMENT REPORT

Chairman's Statement

Review of the year

The Trust's performance for the year has been very disappointing, with the net asset value per share falling by 57.9%.  This compares with a fall of 36.8% in the FTSE All-Share Index. However, revenue earnings per share were 17.72p, compared with 7.08p last year.  The recommended final dividend is 11.50p, giving a total for the year of 15.50p, compared with last year's 6.00p.

During the year the Portfolio Manager, correctly in the Board's view, sought to move away to some degree from the bias towards AIM and small cap stocks.  The type of stocks in which he invested such as banks and property companies were on very low valuations by historical standards and in normal circumstances would have justified an early contrarian investment.  They were bought in the belief that the global economy would recover in the latter part of the year as interest rates fell. However, times proved to be far from normal with the entire global banking system subsequently coming close to collapse.  The effect therefore of some of these investments was to exacerbate the decline in value caused by the de-rating of the rest of the portfolio.  The Portfolio Manager's belief is that the stocks now held are sound, good businesses with balance sheets that will allow them to weather the current storm.  An analysis of the portfolio shows that, excluding banks, insurance and property companies and those stocks which have announced or have funded takeovers in course of completion, over a third by value of the holdings have neutral to net cash positions, a further third have interest cover in excess of five times, with less than 10% having cover of less than two times. In addition the Portfolio Manager assesses that 45% by value have market leading positions or significant barriers to entry.  Accordingly, in addition to the opportunities for growth from what by historical standards are extremely low valuations, the stocks in the portfolio are expected to show sound defensive characteristics. 

The Portfolio Manager's Review provides a detailed analysis of the year's investment activity.

Earnings and dividends

The increase in the earnings is principally the result of buying higher yielding shares during the year and dividend growth from the existing holdings.  However, it also reflects the higher refund of VAT on management fees referred to below.  The recommended final dividend, although well over twice last year's level, is near to the minimum permissible under investment trust rules, which require that the Trust retains not more than 15% of its income from shares and securities in any year.  Given the difficulty of forecasting future dividend income in these turbulent times, the Board believes it to be prudent to build up the Trust's own reserves as much as possible to allow some capacity to smooth the dividend payments in future years.  However, the Board expects the total dividend for the coming year to be substantially lower than the 15.50p reported above.

Refund of VAT on management fees

Last year we wrote back an amount of £348,000 in respect of VAT borne on management fees in the period from 2000 to 2007.  We are still awaiting repayment of this amount but we now expect to recover a total of £508,000 in the near future.  This represents the recovery of all the VAT on management fees borne by the Company since 1 October 2000.  Accordingly, a further £160,000 has been recognised in the year under review, together with an estimated £70,000 of interest. Note 3 to the accounts gives further details of the position. 

Page 3 of 16

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2008

MANAGEMENT REPORT, continued

Continuation vote

The Board decided last year to hold an additional continuation vote at the Annual General Meeting in 2009. This reflected the disappointing performance since the Trust's change of investment policy in January 2007.  In preparation for this forthcoming vote, the opinion of most of the larger shareholders has been canvassed as to whether the Trust should continue.  These consultations have confirmed the Board's opinion that it would not be in shareholders' best interests to force a realisation of the current portfolio in the short term.  Over the coming months much greater emphasis will be placed on increasing the weighting to investments that can be readily realised, although market conditions may continue to restrict the speed with which changes can be made efficiently.  Accordingly, the Board has decided to recommend the continuation of the Company, believing this to represent the current wish of shareholders generally.  The Board also believes it appropriate that there should be a further continuation vote at the Annual General Meeting to be held in 2010.

Going concern

The Trust's investments are held at fair value which, for almost the whole of the portfolio, is deemed to be the current bid prices in the market.  This policy reflects generally accepted accounting principles.  In practice it would not be possible to realise the whole portfolio quickly at fair value, particularly in the current uncertain and volatile market conditions.  However, it is not intended to realise the investments other than on the basis of ongoing active portfolio management. Accordingly, the Board considers it appropriate to report to shareholders on a going concern basis. Investors will note, however, that the value of the investments changes from day to day.  Note 8 to the accounts reports the change in the net asset value per share from the balance sheet date to the date of this report.

AGM

Our Annual General Meeting will be held at 2.30 pm on Thursday 19 March 2009 at 201 Bishopsgate, London EC2.  The notice of meeting is set out in the annual report and the directors recommend that the shareholders support all the resolutions.  The directors will vote their own shareholdings in favour of all the resolutions to be put at the AGM.  

Outlook

The global economy is slowing at a dramatic rate and the UK is very far from being an exception. Stock markets and share prices remain volatile and at low historic valuations, with little sign yet of a sustained recovery, although governments are introducing substantial monetary and fiscal stimuli. The stock market is a discounting mechanism and share prices are likely to start to move up before the overall economy recovers, though the timing of that is inevitably highly uncertain.  Equity valuations have fallen out of their long term trading ranges while gilts offer little return and interest rates are now very low.  The portfolio, for the reasons set out in the Review of the year above, is positioned, with a diverse list of stocks, for better market conditions.  The Board will monitor gearing closely during 2009.  The recovery, when the outlook for earnings improves and investor confidence starts to return, could be significant.

G B Burnett

Chairman

29 January 2009

Page 4 of 16

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2008

MANAGEMENT REPORT, continued

Portfolio Manager's Review

Review

UK stock market investors are experiencing the worst bear market since 1974. The problems that emanated from an overgeared banking sector have now hurt most areas of the economy. Smaller company investment has been treated particularly brutally by investors fixated on reducing risk and desiring liquidity.  I focused on individual companies where I was seeing good cash generation and substantial returns on capital being achieved from most of the companies in the portfolio.  We had degeared during the previous financial year, with sales outstripping purchases by £4.1 million as valuations had become more demanding, but we had not envisaged the extent of the economic storm that was brewing.  This meant the problems were compounded during the early months of 2008 by buying stocks in some larger companies that had fallen back.  These included property companies, banks and housebuilders.  These stocks were trading below their historic asset values which has often been an indication of a good buying opportunity, particularly when interest rates fall. This time it proved a false indicator of value as the intensity of the deleveraging process overwhelmed traditionally sound valuation methods.  When share prices fell further it became self-fuelling as there were margin calls.  This happened during the summer and came to a head when Lehman Brothers failed.  This event further destroyed confidence between market participants.  The banking system always depends on trust between parties.  When this was broken the authorities had to act and some of the largest UK banks have had to be semi-nationalised.  It has been a massive failure of the financial system.  The fallout from it has hurt companies and individuals who were only distant participants.  Therefore the diversified nature of the holdings in the portfolio, with no dominant single theme or area of activity, has not proved in these conditions to be a way of mitigating risk. The holdings in AIM, which amount for 34% of the equity portfolio by value, were particularly hard hit with the FTSE AIM Index falling 61.3%. 

Activity

During the year the main focus was on individual companies as I attempted to be in robust reliable stocks that we considered would deal with the difficult economic conditions and come through the downturn in a strong position.  These are the type of businesses that, when their share price falls too far, will receive bids from other companies in their industry.  Axon, the SAP integration specialist, was acquired after a biding contest between two of India's growing band of global software and service companies.  MTL Instruments, the maker of electronic safety protection devices, was acquired by Cooper Industries of America.  Cash bids were also received for Abacus, Heritage Underwriting, IBS Opensystems, Imprint and Clinphone.  This trend will continue if stock market investors do not subscribe reasonable valuations to smaller companies.  There was much less capital raised than usual on the stockmarket during the year.  There was a rights issue from Hampson Industries to fund its growth in the market for composite materials in the aerospace industry, which we participated in.  I also invested in one new issue which was Valiant Petroleum. The recent collapse in the oil price has seen the shares under pressure and they now stand at a large discount to asset value which we believe will correct over time.  The new purchases have included Aviva, the global insurance company, which has demonstrated resilience during this time and whose valuation is very attractive.  The buying of Lloyds TSB and Royal Bank of Scotland was a major error.  The extent of the problems in the banking sector was not appreciated by me and we sold the Lloyds TSB holding at a substantial loss when it became clear it was going to need to rely on state assistance.

Page 5 of 16

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2008

MANAGEMENT REPORT, continued

Portfolio

The core of the portfolio remains good quality companies that are handling the difficult conditions well. The largest equity holding in the portfolio was Fidessa, the financial software and services company, which, despite the difficult background, has produced good year on year growth. The company has net cash on its balance sheet.  The stocks held in the portfolio predominantly have strong balance sheets. Over one third by value of the portfolio, excluding financials, have no debt or have net cash, and a further third of the portfolio by value have interest cover of over five times. There are very few holdings where debt has become uncomfortably high.  Most of the rest of the holdings have good interest cover which will give them a cushion if their profits deteriorate.  The strong balance sheets will allow companies to come through very turbulent economic times.  Market capitalisation does not determine a company's long term growth prospects.  In a bear market equity investors will shelter in big names.  However, as confidence returns companies will be judged on their long term prospects.  I shall be looking for opportunities across the market but, with an eye particularly on liquidity, I expect that the larger company exposure will increase.  The table below shows the year end breakdown of the portfolio by market capitalisation.

Outlook

Some of the stock price falls will prove overdone as the selling has been indiscriminate.  The good have fallen with the bad and next year will be a period of sorting out.  Robust business franchises will not only survive but they will be in an enhanced position as they will have consolidated their market position and their costs will have gone down.  Raw material prices have fallen and sterling's depreciation will help many companies in the portfolio.  The upward pressure on wages has abated. For certain companies, when their sales line moves forward again, there will be a substantial improvement in margin and profit forecasts will prove too low.  However, at the moment attention is on the lack of short term visibility about earnings as it is unclear how deep the recession will be.

Cuts in interest rates, action by the authorities, as well as the natural replacement cycle will in time stabilise the slowdown.  Stock prices will move up as investors anticipate this and for good companies there will be a very strong earnings recovery.  Current valuations are low and this, coupled with the potential earnings recovery, will lead to substantially higher share prices.  The focus of investors will return again to individual stocks rather than global macro economic concerns which will benefit the investment approach.  

During the course of the coming year we shall focus on ensuring that the investments in the portfolio are more easily realisable than many of the current holdings.  This will lead to a greater emphasis on larger companies than on the very small.  However, we shall continue to invest across the whole range of stocks in the FTSE All-Share Index.

Page 6 of 16

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2008

MANAGEMENT REPORT, continued

Analysis of the portfolio by market index at 31 October 2008

	31 October 2008 %	31 October 2007 %
FTSE 100 Index	8.3	4.5
FTSE 250 Index	16.4	9.6
FTSE SmallCap Index	28.6	27.5
	-------	-------
FTSE All-Share Index	53.3	41.6
FTSE Fledgling Index	9.5	12.2
FTSE AIM Index	32.8	37.7
other Official List	2.7	2.7
other AIM	1.7	5.8
	-------	-------
	100.0	100.0
	=====	=====

J H Henderson

Portfolio Manager

29 January 2009

  Page 7 of 16

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2008

MANAGEMENT REPORT, continued

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 listed (or 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.  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 suppliers 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.

With the assistance of the Manager the Board has drawn up a risk matrix which identifies the key risks to the company.  These key risks fall broadly under the following categories: 

Investment activity and strategy

An inappropriate investment strategy (for example, in terms of asset allocation or the level of gearing) may lead to underperformance against the Company's benchmark index and the companies in its peer group; it may also result in the Company's shares trading on a wider discount. The Board seeks to manage these risks by ensuring a diversification of investments and a regular review of the extent of borrowings. 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 Manager provides the directors with management information, including performance data and reports and shareholder analyses.  The Board monitors the implementation and results of the investment process with the Portfolio Manager, who attends all Board meetings, and reviews regularly data that monitors risk factors in respect of the portfolio. The Board reviews investment strategy at each Board meeting.  

Portfolio and market

Market risk arises from uncertainty about the future prices of the Company's investments. 

Accounting, legal and regulatory

In order to qualify as an investment trust the Company must comply with section 842 of the Income and Corporation Taxes Act 1988 ('section 842').  A breach of section 842 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 842 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 1985, and the Companies Act 2006 as it becomes enacted ('the Companies Acts'), 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 Companies Acts 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 

  Page 8 of 16

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2008

MANAGEMENT REPORT, continued

turn lead to a breach of section 842.  The Board relies on its company secretary and its professional advisers to ensure compliance with the Companies Acts and UKLA Rules.  

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. 

Financial

The directors have reviewed the Manager's statements on the risks associated with the Company and concur with their opinion on these risks.  The financial risks are identified as market risk (comprising market price risk, currency risk and interest rate risk), liquidity risk and credit and counterparty risk.

Related Party Transactions 

Investment management, UK custodial, accounting, administrative and company secretarial services are provided to the Company by Henderson Global Investors (Holdings) plc and its subsidiaries ('Henderson') and by BNP Paribas Securities Services (formerly BNP Paribas Fund Services UK Limited).  In October 2007 the Board appointed JPMorgan Chase Bank N.A. as the Company's global custodian, in place of BNP Paribas Fund Services UK Limited.  During the year there have not been any material transactions with these related parties affecting the financial position or performance of the Company.

Statement of Directors' Responsibilities (under DTR 4.1.12)

The directors of the Company each confirm to the best of their knowledge that:

(a) the financial statements, prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

(b) the management report 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

G B Burnett

Chairman

29 January 2009

Page 9 of 16

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2008

Audited Income Statement

for the year ended 31 October 2008

	Year ended 31 October 2008 (unaudited)			Year ended 31 October 2007 (audited)
	Revenue return	Capital return	Total	Revenue return	Capital return	Total
	£'000	£'000	£'000	£'000	£'000	£'000
(Losses)/gains from investments held at fair value through profit or loss	-	(36,026)	(36,026)	-	3,997	3,997
Income from investments held at fair value through profit or loss (note 2)	1,528	-	1,528	979	-	979
Other interest receivable and similar income	92	-	92	12	-	12
	---------	----------	-----------	----------	----------	----------
Gross revenue and capital gains/(losses)	1,620	(36,026)	(34,406)	991	3,997	4,988
Management fee	(58)	(230)	(288)	(90)	(360)	(450)
Write-back of prior years' VAT (note 3)	160	-	160	237	61	298
Other administrative expenses	(163)	-	(163)	(502)	-	(502)
	-----------	----------	-----------	---------	----------	----------
Net return/(loss) on ordinary activities   before finance charges and taxation	1,559	(36,256)	(34,697)	636	3,698	4,334
Finance charges	(104)	(414)	(518)	(55)	(219)	(274)
	-----------	----------	-----------	----------	----------	----------
Net return/(loss) on ordinary activities  before taxation	1,455	(36,670)	(35,215)	581	3,479	4,060
Taxation on net return on ordinary activities	-	-	-	-	-	-
	-----------	----------	-----------	-----------	----------	----------
Net return/(loss) on ordinary activities  after taxation	1,455	(36,670)	(35,215)	581	3,479	4,060
	----------	----------	-----------	-----------	------------	-----------
Return/(loss) per ordinary share  (note 4)	17.72p	(446.74)p	(429.02)p	7.08p	42.38p	49.46p
	=======	=======	=======	=======	=======	=======

The total columns of this statement represent the Income Statement of the Company.  The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies.  All revenue and capital items in the above statement derive from continuing operations.  No operations were acquired or discontinued during the year.  The Company had no recognised gains and losses other than those disclosed in the Income Statement and the Reconciliation of Movements in Shareholders' Funds.   

                      Page 10 of 16

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2008

Audited Reconciliation of Movements in Shareholders' Funds

for the year ended 31 October 2008

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

Year ended 31 October 2007	Called up share capital £'000	Share premium account £'000	Capital redemption  reserve £'000	Capital reserves £'000	Revenue reserve £'000	Total £'000
At 31 October 2006	2,052	16,479	2,354	39,296	(1,958)	58,223
Issue of subscription shares	16	(16)	-	-	-	-
Cancellation of revenue deficit	-	(1,958)	-	-	1,958	-
Net return on ordinary activities after taxation	-	-	-	3,479	581	4,060
	---------	----------	-----------	----------	----------	----------
At 31 October 2007	2,068	14,505	2,354	42,775	581	62,283
	=====	======	======	======	======	======

Page 11 of 16

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2008

Audited Balance Sheet

at 31 October 2008

	2008 £'000	2007 £'000
Investments held at fair value through profit or loss
Listed investments at market value	19,205	41,092
	------------	-----------
	19,205	41,092
AIM investments at market value	9,812	26,100
Overseas quoted cash fund	3,140	733
	------------	-----------
	32,157	67,925
	------------	-----------
Current assets
Debtors	865	487
Cash at bank	1	-
	------------	-----------
	866	487
Creditors: amounts falling due within one year	(6,775)	(6,129)
	-----------	-----------
Net current liabilities	(5,909)	(5,642)
	-----------	-----------
Total net assets	26,248	62,283
	=======	=======
Capital and reserves
Called up share capital (note 6)	2,068	2,068
Share premium account	14,505	14,505
Capital redemption reserve	2,354	2,354
Capital reserve	6,105	42,775
Revenue reserve	1,216	581
	------------	-----------
Equity shareholders' funds	26,248	62,283
	=======	=======
Net asset value per ordinary share (note 5)	319.77p	758.78p
	=======	=======

  Page 12 of 16

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2008

Audited Cash Flow Statement

for the year ended 31 October 2008

	2008 £'000	2008 £'000	2007 £'000	2007 £'000
Net cash inflow/(outflow) from operating activities		1,005		(218)
Servicing of finance
Interest paid	(490)		(277)
	-----------		-----------
Net cash outflow from servicing of finance		(490)		(277)
Financial investment
Purchases of investments	(33,642)		(37,149)
Sales of investments	34,382		41,267
	-----------		-----------
Net cash inflow from financial investment		740		4,118
		------------		------------
Net cash inflow before financing		1,255		3,623
Equity dividends paid		(820)		-
Financing
Repayment of short term loans	(401)		(2,189)
Purchases of own shares	-		(1,484)
	-----------		-----------
Net cash outflow from financing		(401)		(3,673)
		-----------		-----------
Increase/(decrease) in cash		34		(50)
		======		======
Reconciliation of net cash flow to movement in net debt
Increase/(decrease) in cash as above		34		(50)
Net cash outflow from decrease in loans		401		2,189
		----------		----------
Movements relating to cash flows		435		2,139
Exchange movements		1		-
		----------		-----------
Movement in net debt		436		2,139
Net debt at the start of the year		(5,955)		(8,094)
		----------		-----------
Net debt at the end of the year		(5,519)		(5,955)
		======		======

  Page 13 of 16

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2008

Notes to the Accounts

1.	Accounting policies - basis of accounting
	The financial statements are prepared on a going concern basis and on the historical cost basis of accounting, modified to include the revaluation of fixed asset investments at fair value, and in accordance with the Companies Act 1985, Accounting Standards applicable in the United Kingdom and the Revised Statement of Recommended Practice Financial Statements of Investment Trust Companies dated December 2005 (the 'Revised SORP'). All of the Company's operations are of continuing nature.  The same accounting policies used for the year ended 31 October 2007 have been applied.
		2008	2007
2.	Income from investments held at fair value through profit or loss	£'000	£'000
	Franked:
	Dividends from listed investments	966	609
	Special dividends	-	36
	Dividends from AIM investments	290	262
		-------	-------
		1,256	907
		-------	-------
	Unfranked:
	Dividends from listed investments	150	33
	Dividends from AIM investments	23	-
	Interest from unquoted investments	29	31
	Property income dividends	26	8
	UK stock dividends	44	-
		-------	-------
		272	72
		-------	-------
		1,528	979
		====	====
3.	VAT on management fees
	In 2004 the Association of Investment Companies (the 'AIC'), together with JPMorgan Claverhouse Investment Trust plc, launched a case against HM Revenue & Customs ('HMRC') to challenge whether Value Added Tax ('VAT') should have been charged on fees paid for management services provided to investment trust companies.  On 28 June 2007 the European Court of Justice delivered its judgement on the case in favour of the AIC.
	Since then HMRC has accepted that the provision of investment management services to investment trust companies is VAT exempt and has acknowledged its liability to pay claims in respect of VAT borne by investment companies. The Manager (Henderson Global Investors Limited) will now be able to reclaim from HMRC the amount of VAT charged to the Company in respect of investment management services from 1 October 2000 to 30 June 2007, to the extent that such VAT was paid by the Manager to HMRC. VAT has not been applied to investment management fees invoiced in respect of periods since June 2007.
	An amount of £348,000, representing some of the VAT borne by the Company on investment management fees invoiced in the period from 1 October 2000 to 30 June 2007, was written back in the year ended 31 October 2007 in accordance with a standstill agreement reached between the Manager and the Company.  As at the date of this report no amounts had been received back from HMRC, via the Manager, but since the year end the Manager has reported that it has reached

      Page 14 of 16

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2008

Notes to the Accounts, continued

	agreement with HMRC and that the Company can expect to receive an amount of £508,000 in respect of the above period. Accordingly, an additional £160,000 has been recognised as recoverable in the Income Statement. The £508,000 represents all the VAT borne by the Company in the period from 1 October 2000 to the point in 2007 from which VAT was no longer charged.
	The Company will receive from the Manager any interest paid by HMRC on the amounts to be recovered. The Board is not yet certain as to how this interest will be calculated but has included a figure of £70,000 in the Income Statement as interest receivable.
	The Company may be able to recover further amounts of the VAT charged on investment management fees in the years from 1990 to 2000 inclusive. For this purpose the years 1990 to 2000 fall into two distinct periods. The Company expects to be able to reclaim VAT paid in respect of the period from 1 January 1990 to 4 December 1996, following the judgement of the House of Lords in a case concerning the time limits applicable to VAT claims. The Board considers that the calculation of the figures is too uncertain to permit a realistic estimate to be made but it does not expect the amount to be material. There may also be some possibility, albeit remote, of recovering VAT paid in the period from then to 30 September 2000.
4.	Return/(loss) per ordinary share
	The total loss per ordinary share is based on the net loss attributable to the ordinary shares of £35,215,000 (2007: £4,060,000) and on 8,208,293 ordinary shares (2007: 8,208,293) being the weighted average number of shares in issue during the year.
	The total loss can be further analysed as follows:
		2008 £'000	2007 £'000
	Revenue return	1,455	581
	Capital (loss)/return	(36,670)	3,479
		----------	----------
	Total (loss)/return	(35,215)	4,060
		======	======
	Weighted average number of ordinary shares	8,208,293	8,208,293
	Revenue return per ordinary share	17.72p	7.08p
	Capital (loss)/return per ordinary share	(446.74)p	42.38p
		-----------	-----------
	Total (loss)/return per ordinary share	(429.02)p	49.46p
		======	======
	The Company has in issue 1,641,547 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 2007: no dilution).

      Page 15 of 16

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2008

Notes to the Accounts, continued

5.	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 £26,248,000 (2007: £62,283,000) and on the 8,208,293 ordinary shares in issue at 31 October 2008 (2007: 8,208,293).  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 2007: no dilution).

6.	Issued share capital There were 8,208,293 ordinary shares of 25p each in issue at 31 October 2008 (31 October 2007: 8,208,293). There were 1,641,547 subscription shares of 1p each in issue at 31 October 2008 (31 October 2007: 1,641,547). No shares were bought back during the year (2007: none).
7.	Dividends
	The final dividend of 6.00p per ordinary share in respect of the year ended 31 October 2007 was paid on 26 March 2008 to shareholders on the register of members at the close of business on 29 February 2008. The interim dividend of 4.00p per ordinary share in respect for the year ended 31 October 2008 was paid on 26 September 2008 to shareholders on the register of members at close of business on 29 August 2008. Subject to approval at the annual general meeting, the proposed final dividend of 11.50p per ordinary share will be paid on 26 March 2009 to shareholders on the register of members at the close of business on 27 February 2009.  The ex-dividend date will be 25 February 2009.
	No provision has been made for the final dividend in these accounts. Under the current Financial Reporting Standards, the final dividend is not recognised until approved by the shareholders.
	The total dividends payable in respect of the financial year, which form the basis of the test under section 842 of the Income and Corporation Taxes Act 1988, are set out below:

		Year ended  31 October 2008 £'000
	Revenue available for distribution by way of dividends for the year	1,455
	Interim dividend for the year ended 31 October 2008: 4.00p	(328)
	Proposed final dividend for the year ended 31 October 2008:  11.50p   (based on the 8,208,293 ordinary shares in issue at 29 January 2009)	(944)
		-------
	Undistributed revenue for section 842 purposes*	183
		====
	*Undistributed revenue comprises 12.3% of the income from investments (excluding stock dividends) of £1,484,000.
8.	Subsequent events Due primarily to a reduction in the market values of the investments held, the Company's net asset value per share as at 28 January 2009 was 263.5p per share, a decrease of 17.6% from the net asset value per share as at the balance sheet date. In accordance with FRS 21 Events after the balance sheet date, changes in asset prices after the balance sheet date constitute a non-adjusting event as they do not relate to conditions that existed at the balance sheet date. Accordingly, it is not appropriate to reflect any financial effect of these changes in asset prices in the balance sheet as at 31 October 2008.

Page 16 of 16

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2008

Notes to the Accounts, continued

9.	2008 Accounts The figures and financial information for the year ended 31 October 2008 are compiled from an extract of the latest accounts of the Company and do not constitute the statutory accounts for that year. Those accounts 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.  They have not yet been delivered to the Registrar of Companies.
10.	2007 Accounts     The figures and financial information for the year ended 31 October 2007 are compiled from an extract of 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.
11.	Annual Report The Report and Accounts for the year ended 31 October 2008 will be posted to shareholders in February 2009 and will be available on the Company's website (www.hendersonopportunities.com) or in hard copy format from the Company's Registered Office, 201 Bishopsgate, London EC2M 3AE.
12.	Annual General Meeting The Annual General Meeting will be held on Thursday 19 March 2009 at 2.30 pm at  201 Bishopsgate, London EC2M 3AE.

ENDS

 

END

 

 

FR SDLFSSSUSESF