Final Results

RNS Number : 3150G

Henderson Opportunities Trust PLC

29 January 2010

 



HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2009

28 January 2010

This announcement contains regulated information

Financial Highlights

	Year ended 31 October  2009	Year ended 31 October  2008
Net asset value per ordinary share	437.2p	319.8p
Ordinary share price	361.5p	241.25p
Subscription share price	6.5p	10.5p
Discount	17.3%	24.6%
"Package" discount(A)	17.0%	23.9%
Total return/(loss) per ordinary share	131.89p	(429.02)p
Revenue return per ordinary share	11.38p	17.72p
Dividends per ordinary share in respect of the year	10.50p	15.50p
Gearing(B)	15.3%	10.5%

        (A)    Calculated on the "package" of five ordinary shares and one subscription share.

(B)     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 18

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2009

MANAGEMENT REPORT

Chairman's Statement

Review of performance

The net asset value total return for the year was 47.1%, while the FTSE All-Share Index returned 23.5%. This outcome is attributable mainly to stock selection but the gearing was a strong contributor to performance. The further recovery of VAT on management fees helped to reduce the costs of managing the Company.

The areas of the portfolio that experienced the most substantial falls during 2008, notably smaller companies, saw the largest bounce this year. Therefore, the Portfolio Manager has been in no hurry to increase weightings in FTSE 350 companies. Despite this, the liquidity of the underlying holdings in the portfolio has been substantially increased, with the most illiquid holdings having been either sold or reduced.

Borrowing

The attribution referred to above shows the benefit the Trust had from being geared through the year. In September the Board renewed the borrowing facility, at £7 million, for the forthcoming year.

Earnings and dividends 

The revenue return for the year was 11.38p per share, compared with the exceptionally high figure of 17.72p achieved in 2008. This reduction was predicted in last year's annual report and results primarily from the fact that some of the underlying holdings in the portfolio, such as banks, either cut or passed their dividends in order to conserve cash. The companies that were likely to cut or pass their dividends have now done so and it is expected that dividend growth will resume in 2010. However, in 2010 the Income Statement will not benefit from the refunds of VAT, together with interest, that increased the returns both this year and last year, by a total of £328,000 and £230,000 respectively (equivalent to 4p and 2.8p per share).  

The total dividend for the year has been reduced from 15.5p to 10.5p per share. We paid an interim dividend of 3.0p per share in September. We propose to distribute less than the full revenue return for the year, in view of the exceptional nature of some of this year's income. Accordingly, we propose a final dividend of 7.5p per ordinary share, payable on 26 March 2010. The resulting revenue reserve will amount to 4.4p per share. This will help us to fund a progressive dividend policy in future years.  

Refund of VAT on management fees 

During the year we received from HM Revenue & Customs all the VAT on management fees borne by the Trust in the periods 1990 to 1996 and 2000 to 2007, amounting in total to £690,000. We also received simple interest of £216,000 on this amount. In summary, the total recognised over three years in the Income Statement, and now received in full, amounts to £906,000, of which £328,000 was included in the year under review.

Page 3 of 18

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2009

MANAGEMENT REPORT, continued

Continuation vote

The continuation vote put to the Annual General Meeting on 19 March 2009 received the support of a substantial majority of the shareholders. I am pleased to report that, over the period from the vote on 19 March 2009 to the financial year end on 31 October 2009, the net asset value per share rose by 88% and the share price rose by 96%. As a result of an undertaking given by the Board in January 2009, there will be a further continuation vote at the Annual General Meeting to be held on 18 March 2010 and the Board recommends shareholders to vote in favour. There will be a further opportunity to vote in 2011, in accordance with the triennial cycle of continuation votes required by the Company's Articles of Association.

Going concern

The assets of the Company consist almost entirely of listed investments. In practice it would not be possible to realise the entire portfolio quickly at fair value. However, the liquidity of the investments has increased significantly over the past year as a result of improved market conditions and the Company has adequate financial resources to continue in operational existence for the foreseeable future. For this reason, and in the light of my comments above about continuation, we have prepared the financial statements on a going concern basis.  

Articles of Association 

We propose to adopt revised Articles of Association and a resolution to this effect will be put to the forthcoming Annual General Meeting. The revised Articles incorporate the changes required to bring the Company's constitution into line with the Companies Act 2006 and the recent enactment of the Shareholder Rights Directive.  

AGM

Our Annual General Meeting will be held at 2.30 pm on Thursday 18 March 2010 at the Registered Office, 201 Bishopsgate, London EC2M 3AE. 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.  

Investment strategy 

It remains our policy to increase the liquidity of the portfolio so that the Portfolio Manager can be as responsive as possible to the changes in the investment environment. However, the Portfolio Manager continues to find some of the best opportunities in smaller companies. Typically these are companies that can control their own destiny as they have the skills, products and commitment to innovation that will allow them to grow strongly in coming years. This means that the portfolio reflects a significant exposure to smaller companies.

Page 4 of 18

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2009

MANAGEMENT REPORT, continued

Outlook 

The recovery in share prices since March 2009 has been impressive and the outlook for corporate profits has improved significantly. Volatility and risk aversion are likely to continue and this, together with continuing significant economic uncertainties, could hold markets back. At the individual company level the outlook is much better. Our portfolio is diverse and focused on businesses that are structured soundly and positioned to grow their revenues from a leaner base. These provide the opportunity for the relative outperformance of the past year to be continued.

G B Burnett

Chairman

28 January 2010

Page 5 of 18

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2009

MANAGEMENT REPORT, continued

Portfolio Manager's Review

The economy

The UK economy by the second half of 2008 was operating well below optimum capacity. The authorities' action was therefore correct in attempting to stimulate demand. The fiscal easing, the reduction in interest rates and most radically the Quantitative Easing (QE) have helped to stabilise the economy during the second half of 2009. The stabilisation of the economy is resulting in an improvement in operating conditions for companies. This can be seen from the number of stock analysts' recent upgrades of profit expectations. The recovery in the medium term will depend on a return to sound and prudent banking. At the moment there are clear signs that this is beginning to happen after a period when the banks in the UK were unwilling to take on new lending at a sensible margin. 

The concerns about the building of inflationary pressures will prove unduly pessimistic. The industrial base in the UK remains disciplined and the growth in demand will be met by increased capacity utilisation rather than price increases.

Our approach

Every holding in the portfolio has been bought for its individual merits rather than a general view about the area it operates in. The reason for the success of a company is a mixture of factors coming together at the right time, the most important being the management's skill and vision. Those management skills include the ability to ensure the company can innovate rapidly, a particularly important attribute during a period of economic turbulence. The good or service that is being provided has to be the one the customer really needs. Successful innovation will give the necessary competitive edge. In looking at potential investments for the portfolio this is an important area for consideration.

Portfolio review and activity

The portfolio is a mix of good quality companies from a wide range of industries. The diversity of activities should reduce the volatility of performance. This has not been the case as regards share price performance over the last couple of years. When investors' risk appetite contracted, medium and smaller companies were sold down mercilessly, regardless of the long term profit outlook. However, with the economic background being so testing the benefit of the diversity has been witnessed during this year. For instance, the portfolio has exposure to general insurance with a holding in Hiscox. Companies such as this have had a year of record profits as insurance premiums went up and the claims experience was benign. The insurance industry is on a different cycle to industrial companies. Some companies have produced good results in spite of the industry they are in because of the quality of the service or product they provide. An example of this is Fidessa, one of the largest holdings in the portfolio, which provides software for the financial services sector. The downturn in the sector has not stopped the company achieving record profits. However, other companies that appeared to be more insulated from the downturn experienced disappointing profits performance as they proved to be more economically sensitive than originally thought. 

Overall the operating performance of the majority of the holdings has been better than might have been expected, given the contraction of the overall economy over the last year. The main reason has been the speed with which companies have reduced their cost base. 

Page 6 of 18

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2009

MANAGEMENT REPORT, continued

This has been done with a determination that has not been witnessed before. Not all these cost reductions will be permanent but, when the sales line returns to growth, the generally lower cost base will lead to enhanced profit margins. This has been seen in recent months with corporate earnings forecasts being raised. It is particularly true of manufacturing companies, some of whom are also benefiting from sterling's weakness against the euro: examples of this in the portfolio are Senior and Hill & Smith. The rapidly improving earnings will inspire support for equities as an asset class.

The year under review started with the aftermath of the collapse of Lehman's and the near collapse of the global financial system. As stated elsewhere, and well documented through the press, the various government interventions through emergency liquidity support to asset purchases succeeded in stabilising the situation by around Easter last year. The first half of our financial year was spent with markets cascading to lower and lower levels. These falls ended only when the "medicine" being applied at least stopped the situation from getting worse. Stock markets globally touched bottom at the beginning of March. Our general tactic during this period was firstly not to panic and secondly to take advantage of very low prices to buy selectively among our existing portfolio and add new holdings in proven businesses. We also cleared out some of the dead wood in the portfolio where we believed the business had limited recovery appeal. Whilst this latter process was at times painful, we have been proved correct in most of our decisions. 

During the year we started new positions in Clarksons, the ship broker, where we bought on a 10% yield basis in a cash rich company, and Johnson Service, the drycleaner and textile services business, where we are supportive of the turnaround team who are now producing good results. In addition we added Interserve, the international building services group on an 8½% yield, which remains unloved by the market for spurious reasons. We also bought HSBC, the global bank, to increase our exposure to the growth of emerging economies, and Reed Elsevier, a publisher of legal and scientific information, which we believe is misunderstood by the market. 

Merger and acquisition activity was, understandably, at a low ebb in the first half of our year but we did see the completion of the acquisition of Abacus and RDF Media, both for cash, and this was followed in the second half by the culmination of long drawn out talks for the takeover of Concateno. 

We supported a number of portfolio companies that raised new capital from shareholders during the year to repair their balance sheets, for example St Modwen Properties, Xstrata, the mining company, and Redrow, the house builder. We also used this route to start new holdings in Low & Bonar, a producer of technical textiles, and UK Coal. In addition we supported the continuing growth of Goals Soccer Centres, Vertu Motors and Zetar, a producer of confectionery, in small capital raisings. 

We did go "bottom fishing" in the earlier part of the year, notably by adding to Hill & Smith, Senior, Carluccio's and Meggitt, as well as others. We also undertook some profit taking from among our key long term names, in particular Fidessa and Alterian where share prices rose from trough to peak by nearly 200% and 300% respectively during the year.

Page 7 of 18

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2009

MANAGEMENT REPORT, continued

We have added some very interesting new names to the portfolio in addition to those already mentioned. Of note is IP Group, which partners with universities in the commercialisation of their research results, and Avanti Communications, which will launch its first satellite this year to deliver broadband services to remote locations. 

When looking at share price performance, the most significant positive contributions to net asset value have come from Fidessa, Alterian, and Alliance Pharma, which has seen a vindication of its business model during the year. Those stocks that most negatively impacted on performance included E2V, an electronic components company where we are now supporting a fund raising to repair the balance sheet, Hampson Industries, which has suffered from delays to key aerospace projects such as the Boeing 787, and Begbies Traynor, an insolvency practitioner. 

Outlook

There are serious issues facing the UK economy that are well documented, stretching from the need to reduce the budget deficit to the growing problem of unemployment. However, our portfolio of holdings is not a proxy for the UK economy but rather a collection of diverse stocks, each of which will have improving profits growth in spite of the difficult economic backdrop. Our policy will be to remain opportunistic in buying new holdings when our criteria are met and this activity will be funded by recycling money out of holdings where the valuation has become demanding or that are failing to meet the expectations we had for them.

Analysis of the portfolio by market index at 31 October 2009

	31 October 2009 %	31 October 2008 %
FTSE 100 Index	11.5	8.3
FTSE 250 Index	15.9	16.4
FTSE SmallCap Index	30.8	28.6
	-------	-------
FTSE All-Share Index	58.2	53.3
FTSE Fledgling Index	3.8	9.5
FTSE AIM All-Share Index	30.6	32.8
other Official List	5.4	2.7
other AIM	2.0	1.7
	-------	-------
	100.0	100.0
	=====	=====

J H Henderson and C M Hughes

28 January 2010

  Page 8 of 18

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2009

MANAGEMENT REPORT, continued

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. 

A fuller description of the principal risks and uncertainties follows. 

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 2006 ("the Act") and, as the Company's shares are listed for trading on the London Stock Exchange, the Company must comply with the UK Listing Authority's Listing Rules and Disclosure Rules ("UKLA Rules"). A breach of the Act could result in the Company and/or the directors being fined or becoming the subject of criminal proceedings. Breach of the UKLA Rules could result in the suspension of the Company's shares  

Page 9 of 18

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2009

MANAGEMENT REPORT, continued

which would in turn  lead to a breach of section 842. The Board relies on its corporate company secretary and its professional advisers to ensure compliance with the Act and the UKLA Rules.

Corporate governance and shareholder relations

Details of the Company's compliance with corporate governance best practice, including information on relations with shareholders, are set out in its Corporate Governance Statement. 

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. 

Related Party Transactions 

Investment management, together with investment administration, company secretarial and accounting services, are provided to the Company by wholly-owned subsidiary companies of Henderson Global Investors (Holdings) plc ("Henderson") and by BNP Paribas Securities Services. Custody services are provided to the Company by JPMorgan Chase Bank N.A.

These are they only related party arrangements currently in place. Other than fees payable by the Company in the ordinary course of business, there have been no material transactions with these related parties affecting the financial position or performance of the Company during the year under review. 

Statement of Directors' Responsibilities (under DTR 4.1.12)

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

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

● the Report of the Directors in this Annual 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

28 January 2010

  Page 10 of 18

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2009

Audited Income Statement

for the year ended 31 October 2009

	Year ended 31 October 2009			Year ended 31 October 2008
	Revenue return £'000	Capital return £'000	Total £'000	Revenue return £'000	Capital return £'000	Total £'000
Gains/(losses) from investments held  at fair value through profit or loss	-	10,087	10,087	-	(36,026)	(36,026)
Income from investments held  at fair value through profit or loss (note 2)	888	-	888	1,528	-	1,528
Interest on VAT refunds (note 3)	146	-	146	70	-	70
Other interest receivable and similar income	102	-	102	22	-	22
	---------	----------	-----------	----------	----------	----------
Gross revenue and capital gains/(losses)	1,136	10,087	11,223	1,620	(36,026)	(34,406)
Management fee	(94)	(94)	(188)	(58)	(230)	(288)
Write-back of prior years' VAT (note 4)	182	-	182	160	-	160
Other administrative expenses	(184)	-	(184)	(163)	-	(163)
	-----------	----------	-----------	---------	----------	----------
Net return/(loss) on ordinary activities    before finance charges and taxation	1,040	9,993	11,033	1,559	(36,256)	(34,697)
Finance charges	(101)	(101)	(202)	(104)	(414)	(518)
	-----------	----------	-----------	----------	----------	----------
Net return/(loss) on ordinary activities    before taxation	939	9,892	10,831	1,455	(36,670)	(35,215)
Taxation on net return on ordinary activities	(5)	-	(5)	-	-	-
	-----------	----------	-----------	-----------	----------	----------
Net return/(loss) on ordinary activities    after taxation	934	9,892	10,826	1,455	(36,670)	(35,215)
	----------	----------	-----------	-----------	------------	-----------
Return/(loss) per ordinary share (note 7)	11.38p	120.51p	131.89p	17.72p	(446.74)p	(429.02)p
	=======	=======	=======	=======	=======	=======

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.   

                      Page 11 of 18

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2009

Audited Reconciliation of Movements in Shareholders' Funds

for the year ended 31 October 2009

Year ended 31 October 2009	Called up share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Other capital reserves £'000	Revenue reserve £'000	Total £'000
At 31 October 2008	2,068	14,505	2,354	6,105	1,216	26,248
Net return on ordinary activities  after taxation	-	-	-	9,892	934	10,826
Conversion of subscription shares	-	3	-	-	-	3
Dividends paid on the ordinary shares	-	-	-	-	(1,188)	(1,188)
	--------	----------	----------	----------	-----------	-----------
At 31 October 2009	2,068	14,508	2,354	15,997	962	35,889
	=====	======	======	======	======	======

Year ended 31 October 2008	Called up share capital £'000	Share premium account £'000	Capital redemption  reserve £'000	Other 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
	=====	======	======	======	======	======

Page 12 of 18

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2009

Audited Balance Sheet

at 31 October 2009

	2009 £'000	Restated* 2008 £'000
Investments held at fair value through profit or loss
Listed at market value	27,901	19,205
Quoted on AIM at market value	13,490	9,812
	------------	-----------
	41,391	29,017
	------------	-----------
Current assets
Investment held at fair value through profit or loss	1,076	3,140
Debtors	194	865
Cash at bank	12	1
	------------	-----------
	1,282	4,006
Creditors: amounts falling due within one year	(6,784)	(6,775)
	-----------	-----------
Net current liabilities	(5,502)	(2,769)
	-----------	-----------
Total net assets	35,889	26,248
	=======	=======
Capital and reserves
Called up share capital	2,068	2,068
Share premium account	14,508	14,505
Capital redemption reserve	2,354	2,354
Other capital reserves	15,997	6,105
Revenue reserve	962	1,216
	------------	-----------
Shareholders' funds	35,889	26,248
	=======	=======
Net asset value per ordinary share	437.21p	319.77p
	=======	=======

*See note 6 on page 16

  Page 13 of 18

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2009

Audited Cash Flow Statement

for the year ended 31 October 2009

	2009 £'000	2009 £'000	Restated* 2008 £'000	Restated* 2008 £'000
Net cash inflow from operating activities		1,584		1,005
Servicing of finance
Interest paid	(215)		(490)
	-----------		-----------
Net cash outflow from servicing of finance		(215)		(490)
Taxation
Overseas withholding tax recovered	58		-
	-----------		-----------
Net tax recovered		58		-
Financial investment
Purchases of investments	(9,261)		(17,243)
Sales of investments	6,047		20,390
	-----------		-----------
Net cash (outflow)/inflow from financial investment		(3,214)		3,147
		------------		------------
Net cash (outflow)/inflow before dividends paid,    management of liquid resources and financing		(1,787)		3,662
Equity dividends paid		(1,188)		(820)
Management of liquid resources
Additions to money market funds	(258)		(16,399)
Withdrawals from money market funds	2,322		13,992
	-----------		-----------
Net cash inflow/(outflow) from management  of liquid resources		2,064		(2,407)
Financing
Drawdown/(repayment) of short term loans	490		(401)
Conversion of subscription shares	3		-
	-----------		-----------
Net cash inflow/(outflow) from financing		493		(401)
		-----------		-----------
(Decrease)/increase in cash		(418)		34
		======		======
Reconciliation of net cash flow to movement in net debt
(Decrease)/increase in cash as above		(418)		34
Net cash (inflow)/outflow  from (increase)/decrease in loans		(490)		401
		----------		----------
Movements relating to cash flows		(908)		435
Net cashflow from movement in liquid resources		(2,064)		2,407
Exchange movements		(1)		1
		----------		-----------
Movement in net debt		(2,973)		2,843
Net debt at the start of the year		(2,379)		(5,222)
		----------		-----------
Net debt at the end of the year		(5,352)		(2,379)
		======		======
*See note 6 on page 16

  Page 14 of 18

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2009

Notes to the Accounts

1.	Accounting policies
	(a) Basis of accounting The financial statements have been prepared on a going concern basis and under the historical cost basis of accounting, as modified to include the revaluation of investments and derivative financial instruments. The financial statements have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice and with the Statement of Recommended Practice ("the SORP") for investment trust companies issued by the Association of Investment Companies ("the AIC") in January 2009. All of the Company's operations are of a continuing nature. The Company's accounting policies are consistent with the prior year, except for the restatement of the holding in a money market fund as a current asset investment and liquid resource (as explained more fully in note 6).
	(b) Going concern The Company's Articles of Association require that at the annual general meeting of the Company to be held in 2008, and every third year thereafter, an ordinary resolution be put to approve the continuation of the Company. The resolution put to the annual general meeting in 2008 was duly passed but the Board decided to offer the shareholders further opportunities to vote, first in 2009 and then in 2010. The directors are recommending the Company's shareholders to vote in favour of the second additional continuation resolution that will be put to the annual general meeting in March 2010. In addition, the assets of the Company consist almost entirely of securities that are listed and, accordingly, the directors believe that the Company has adequate resources to continue in existence for the foreseeable future. For these reasons the Board has decided that it is appropriate for the accounts to be prepared on a going concern basis.
	(c) Management fees, administrative expenses and finance charges
	All expenses and finance charges are accounted for on an accruals basis.
	The Board has determined that the capital return should reflect the indirect costs of earning capital returns. With effect from 1 November 2008, the Company allocates 50% of its management fees and finance charges to the capital return of the Income Statement with the remaining 50% being allocated to the revenue return. It had previously allocated 80% of its management fees and finance charges to the capital return and 20% to the revenue return. The comparative figures for the prior year were prepared on this basis. The Board monitors the assumptions that underpin the basis of allocation. It concluded from its most recent review that a greater proportion of the Company's investment returns will come from income than was previously expected. Although the ratio of income returns and capital returns will vary, perhaps considerably, over shorter periods of time, the Board expects that, over the long term, the future investment returns will be earned as income and as capital growth in approximately equal measure. This conclusion reflects both the characteristics of the portfolio and the changing nature of the UK stock market. The effect of this  change is to reduce the net revenue return after taxation for the year ended 31 October 2009 by £117,000 and to increase the net capital return by the same amount; the total return is unaffected by the change. The comparative figures have not been restated.
	The management fee is calculated, quarterly in arrears, as 0.60% per annum of the assets under management. No performance fee was earned or payable in the period, nor in the comparative period. The fee arrangements are unaffected by the allocation of costs described above.
	All other administrative expenses are charged to the revenue return of the Income Statement.
	Expenses which are incidental to the purchase or sale of an investment are recognised immediately in the capital return of the Income Statement, and are included within the gains/losses from investments held at fair value through profit or loss.

  Page 15 of 18

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2009

Notes to the Accounts

		2009 £'000	2008 £'000
2.	Income from investments held at fair value through profit or loss
	Franked:
	Dividends from listed investments	630	966
	Dividends from AIM investments	158	290
		-------	-------
		788	1,256
		-------	-------
	Unfranked:
	Dividends from listed investments	100	150
	Dividends from AIM investments	-	23
	Interest from unquoted investments	-	29
	Property income dividends	-	26
	UK stock dividends	-	44
		-------	-------
		100	272
		-------	-------
		888	1,528
		====	====

		2009 £'000	2008 £'000
3.	Other interest receivable and similar income
	Deposit interest	-	8
	Income from underwriting	102	14
		-------	-------
		102	22
	Interest on VAT repayment	146	70
		-------	-------
		248	92
		====	====

4.	Management fee	Revenue return 2009 £'000	Capital  return 2009 £'000	Total  2009 £'000	Revenue return 2008 £'000	Capital return 2008 £'000	Total 2008 £'000
	Management fee	94	94	188	58	230	288
	Write-back of prior    years' VAT	(182)	-	(182)	(160)	-	(160)
		-------	-------	-------	-------	-------	-------
		(88)	94	6	(102)	230	128
		====	====	====	====	====	====

      Page 16 of 18

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2009

Notes to the Accounts, continued

5.	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 in respect of much, but not all, of the period from 1 January 1990 to the point in 2007 from which VAT ceased to be applied to investment management fees. Accordingly, the Manager (Henderson Global Investors Limited) has been able, on behalf of the Company, to reclaim from HMRC the VAT borne, together with simple interest thereon.
	An aggregate amount of £508,000, in respect of the VAT on investment management fees borne by the Company in the period from October 2000 to October 2006, was written back in the years ended 31 October 2007 and 2008, in accordance with an agreement reached between the Manager and the Company. This estimate has been received in full by the Company.
	During the year ended 31 October 2009, the Company received back the VAT on investment management fees borne by the Company in the period from 1 January 1990 to 4 December 1996. Accordingly, a further £182,000 has been written back in the current year. The VAT recovered has been written back to revenue return, in line with the allocation of the amounts originally paid.
	The Company has also received from the Manager the interest paid by HMRC on the amounts of VAT recovered. Interest of £70,000 was recognised in the year ended 31 October 2008 and a further £146,000 has been recognised in the year ended 31 October 2009.

6.	Current asset investment
	The Company has a holding in Henderson Liquid Assets Fund plc, a money market fund which is viewed as a readily disposable store of value and which is used to invest cash balances that would otherwise be placed on short term deposit. At 31 October 2009 this holding had a value of £1,076,000 (2008: £3,140,000).
	The holding in Henderson Liquid Assets Fund plc was previously shown within fixed asset investments but, having regard to the way in which this investment is viewed, the Board has decided that it would be more appropriate to present it on the balance sheet as a current asset investment, with changes in the amount invested being presented as part of the Company's management of liquid resources. This represents a change of accounting policy, and hence the prior year figures in the balance sheet and the cash flow statement have been restated. The amounts presented on the cash flow statement under the heading "management of liquid resources" would have been included in the cash flow statement as "financial investment" under the previous treatment. This restatement has no impact on either the Company's net assets or the net increase/decrease in the Company's cash and it has not affected the amounts presented in the Income Statement. The effect is to increase the investments held at fair value through profit or loss as current assets by £1,076,000 (2008: £3,140,000) and to reduce the investments held at fair value through profit or loss as non-current assets by £1,076,000 (2008: £3,140,000).
	Henderson Liquid Assets Fund plc is managed by Henderson Global Investors Limited ("Henderson"). The Company's holding is made through a class of shares that does not bear management fees and, accordingly, it has no effect on the management fees payable by the Company to Henderson (which are based on the value of the total assets under management, wherever held).

      Page 17 of 18

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2009

Notes to the Accounts, continued

7.	Return/(loss) per ordinary share
	The total return per ordinary share is based on the net return attributable to the ordinary shares of £10,826,000 (2008: net loss of £35,215,000) and on 8,208,439 ordinary shares (2008: 8,208,293) being the weighted average number of shares in issue during the year.
	The total retun/(loss) can be further analysed as follows:
		2009 £'000	2008 £'000
	Revenue return	934	1,455
	Capital return/(loss)	9,892	(36,670)
		----------	----------
	Total return/(loss)	10,826	(35,215)
		----------	----------
	Weighted average number of ordinary shares	8,208,439	8,208,293
	Revenue return per ordinary share	11.38p	17.72p
	Capital return/(loss) per ordinary share	120.51p	(446.74)p
		-----------	-----------
	Total return/(loss) per ordinary share	131.89p	(429.02)p
		======	======
	The Company has in issue 1,641,258 (2008: 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 2008: no dilution).

8.	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 £35,889,000 (2008: £26,248,000) and on the 8,208,582 ordinary shares in issue at 31 October 2009 (2008: 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 2008:  no dilution).

9.	Issued share capital There were 8,208,582 ordinary shares of 25p each in issue at 31 October 2009 (31 October 2008: 8,208,293). There were 1,641,258 subscription shares of 1p each in issue at 31 October 2009 (31 October 2008: 1,641,547).
	No shares were bought back during the year (2008: none).  Since the year end 145,000 ordinary shares have been bought back for cancellation.

10.	Dividends
	The final dividend of 11.50p per ordinary share in respect of the year ended 31 October 2008 was paid on 26 March 2009 to shareholders on the register of members at the close of business on 27 February 2009.
	The interim dividend of 3.00p per ordinary share in respect for the year ended 31 October 2009 was paid on 25 September 2009 to shareholders on the register of members at close of business on 29 August 2009.

      Page 18 of 18

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2009

Notes to the Accounts, continued

	Subject to approval at the annual general meeting, the proposed final dividend of 7.50p per ordinary share will be paid on 26 March 2010 to shareholders on the register of members at the close of business on 26 February 2010.
	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 2009 £'000
	Revenue available for distribution by way of dividends for the year	934
	Interim dividend for the year ended 31 October 2009:  3.00p	(246)
	Proposed final dividend for the year ended 31 October 2009:  7.50p   (based on the 8,063,582 ordinary shares in issue at 28 January 2010)	(605)
		-------
	Undistributed revenue for section 842 purposes*	83
		====
	*Undistributed revenue comprises 9.3% of the income from investments of £888,000.

11.	2009 Accounts The figures and financial information for the year ended 31 October 2009 are compiled from an extract of the latest financial statements of the Company and do not constitute the statutory accounts for that year. Those financial statements included the report of the auditors which was unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006.  They have not yet been delivered to the Registrar of Companies.
12.	2008 Accounts The figures and financial information for the year ended 31 October 2008 are compiled from an extract of the latest published financial statements of the Company and do not constitute the statutory accounts for that year. Those financial statements have been delivered to the Registrar of Companies and included the report of the auditors which was unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006.
13.	Annual Report The Report and Accounts for the year ended 31 October 2009 will be posted to shareholders in early 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.
14.	Annual General Meeting The Annual General Meeting will be held on Thursday 18 March 2010 at 2.30 pm at 201 Bishopsgate, London EC2M 3AE.

ENDS

 

END

 

 

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