Final Results

RNS Number : 2735A

Henderson Opportunities Trust PLC

28 January 2011

 



HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2010

28 January 2011

This announcement contains regulated information

Financial Highlights

	Year ended 31 October 2010	Year ended 31 October 2009
Net asset value per ordinary share	532.0p	437.2p
Ordinary share price	427.5p	361.5p
Subscription share price	3.1p	6.5p
Discount	19.6%	17.3%
Total return per ordinary share	102.23p	131.89p
Revenue return per ordinary share	7.40p	11.38p
Dividends per ordinary share in respect of the year	6.50p	10.50p
Gearing	10.4%	15.3%

Chairman's Comment

I am pleased to report another very satisfactory year.  The net asset value total return was 25.2%, while the FTSE All-Share Index returned 17.5%.  It became even more important for investors to focus on the outlook for individual companies rather than the market as a whole, to look for opportunities among the smaller and medium sized companies rather than the largest and to look for those companies which combine attractive valuations with the prospect of robust and sustainable growth.  This, we believe, has been the key to the strong performance of our portfolio relative to its benchmark index.

George Burnett, Chairman

Between 31 October 2010 and 26 January 2011 the net asset value per share total return was 11.21%, compared with a total return of 5.95% from the FTSE All-Share Index (the Company's benchmark).  (Source: Datastream)

Page 2 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2010

MANAGEMENT REPORT

Chairman's Statement

Review of performance

I am pleased to report another very satisfactory year.  The net asset value total return was 25.2%, while the FTSE All-Share Index returned 17.5%.  The Manager's estimate of performance attribution is set out in the table below, which shows that stock selection was the main contributor with gearing also aiding the return.

	Year ended 31 October 2010 %
Net asset value per share total return	25.2
Benchmark total return	17.5
	------
Relative performance	7.7
	------
Made up:
Stock selection	5.3
Gearing	3.2
Share buy-backs	0.4
Expenses	(1.2)
	-------
	7.7
	=====
Source: Henderson Global Investors Limited

The recovery in the stock market ground to a halt for much of the financial year before resuming an upward path from the summer of 2010.  Whereas last year the share prices that had fallen the furthest at the depth of the credit crisis proved to be the best performers, the year under review showed a more mixed pattern.  Our Portfolio Manager took the view that it had become more important to focus on the outlook for individual companies rather than the market as a whole, to look for opportunities among the smaller and medium sized companies rather than the largest, and to look for those companies which combine attractive valuations with the prospect of robust and sustainable growth.  This, we believe, has been the key to the strong performance of our portfolio relative to its benchmark index.

Borrowings

The Company benefited during the year from maintaining modest gearing, which at the year end stood at 10.4%.  In September the Board renewed its bank facility at £7 million for the forthcoming year, on improved terms.

Page 3 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2010

MANAGEMENT REPORT, continued

Earnings and dividends

The revenue return for the year was 7.40p, which compares with 11.38p last year.  However, in the previous year we benefited from the refund of VAT and related interest which added 4p to the revenue return per share.  There was no VAT reclaim during the year ended 31 October 2010 and it is not expected that there will be any further such receipts.

The total dividend for the year is 6.5p per share, compared to 10.5p last year. We expect the dividends declared by individual companies to grow and we hope in future years to reflect this by increasing the dividend paid to our shareholders.  However, the Portfolio Manager's brief is to focus firmly on total return rather than income.  Accordingly, we can make no absolute commitment about further dividend growth.

Continuation vote

The continuation vote put to the Annual General Meeting on 18 March 2010 received the support of a substantial majority of the shareholders. I am pleased to report that, over the period from the vote on 18 March 2010 to the financial year end on 31 October 2010, the net asset value total return was 16.2%; by comparison the FTSE All-Share Index returned 3.6%.  There will be a continuation vote on 17 March 2011, in accordance with the triennial cycle of continuation votes required by the Company's Articles of Association.  The Board recommends shareholders to vote in favour of the continuation as we firmly believe that the Company is positioned to make good returns for shareholders from favourable market conditions in the coming years.

Going concern

The assets of the Company consist almost entirely of listed investments. Although in practice it might not be possible to realise the entire portfolio quickly at fair value, the liquidity of the investments has continued to increase significantly over the past year, as a result of both improved market conditions and our policy of increasing the marketability of the portfolio.  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.

Board composition

As reported at the half year, we welcomed Chris Hills to the Board in June and bade farewell to Richard Smith in September.  Chris brings investment expertise to replace that lost to us by Richard's retirement and we are very pleased to have recruited him.  Richard Smith was responsible for the launch of the Company and was its first manager. I should like to record my appreciation of his kindly wisdom and enthusiasm, to thank him for his contribution to the work of the Board and to wish him well for the future.  Hamish Bryce will stand down from the Board within the next twelve months.  We are seeking to recruit a new director with an industrial or commercial background who can offer insight into business matters as Hamish has done, with his customary energy and humour, for the past seventeen years.

Page 4 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2010

MANAGEMENT REPORT, continued

Regulation

In November 2010 the European Union approved its Alternative Investment Fund Managers ('AIFM') Directive.  Although some of the devil will be in the detail to be covered by supplementary legislation that has yet to be drafted, it is clear that the most undesirable aspects of the earlier drafts have been removed.  We are most grateful for the effective advocacy and ongoing work of the Association of Investment Companies, our trade body, in helping to secure a regulatory environment in which investment trust companies can continue to offer efficient collective investment on behalf of their shareholders.

Capital changes

At the Annual General Meeting we shall again seek to renew the Company's authority to buy back shares and issue new ones.  In January 2010 we bought back 145,000 shares at a price of 345p, a discount of 25% to the then net asset value per share.  We may buy back shares again when there is clear benefit to the remaining shareholders from doing so. The Board welcomes the new shareholders who have been attracted by the Company's offering but will continue to monitor the discount closely.  Shares are only bought back at a significant discount and would be issued only at a premium.

AGM

Our Annual General Meeting will be held at 2.30 pm on Thursday 17 March 2011 at the Registered Office, 201 Bishopsgate, London EC2M 3AE.  The notice of meeting is set out in the separate circular to shareholders that accompanies this 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.  In addition to the formal business, James Henderson will give a presentation and afternoon tea will be served.

Investment strategy

It has been our policy to increase the liquidity of the portfolio to enable the Portfolio Manager to be as responsive as possible to the changes in the investment environment.  At the same time we have not wanted to jettison smaller companies where the valuation is attractive and the prospects are sound.  The objective is to find and hold stocks that are good business franchises that will deliver substantial growth over time.  These companies will be found across the market capitalisation range but there will usually be a focus on smaller companies when there is large potential in this area. Whatever their size, we look for companies with strong balance sheets and a diverse customer base. At the year end there were 76 companies in the portfolio and on average more than half of their turnover comes from overseas sales.

Page 5 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2010

MANAGEMENT REPORT, continued

Outlook

The concerns about the UK economy are well chronicled and may or may not prove real but at the individual company level the outlook is much better.  In recent years the world has opened up for business in many new areas and so companies with competitive products and services that are responsive to this opportunity are benefiting enormously.  In addition many companies faced up to the difficulties caused by the banking crisis and the ensuing recession by cutting their costs and strengthening their balance sheets.  This leaves cash generation strong and companies in a good position to return to growth.  Whatever the problems of the broader economy, we consider that the outlook for the UK listed corporate sector remains encouraging.

G B Burnett

Chairman

27 January 2011

 

Page 6 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2010

MANAGEMENT REPORT, continued

Portfolio Manager's Review

The economy

In broad terms the performance of the global economy has been encouraging over the past year, driven on the one hand by growing demand from emerging superpowers such as China, India and Brazil whilst the economies of the developed world have consolidated their recovery but have struggled to grow at more than anaemic rates.  Perhaps surprisingly, in the UK the stock market response to the first hung parliament for 36 years was remarkably sanguine.  The new government's Comprehensive Spending Review was finally put before Parliament in October.  While this set out the drastic but necessary cuts to be made to public spending, it also threw on to the private sector much responsibility to continue the recovery seen so far and to create more jobs.

The stock market made reasonable progress over the year, given the background of government overspending and a series of crises around the Eurozone coupled with the continued reluctance of banks to resume lending until their balance sheets are fully restored.  One of the striking features of this year has been the extent of the recovery in profits seen by many companies, particularly those in the capital goods sector producing high added value capital equipment for the global market place.

Our investment approach

Every holding in the portfolio has been bought for its individual merits rather than on a general view about the market or sector 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 ability to harness and give direction to the skills of its employees.  Those management skills include the ability to ensure that the company can innovate rapidly, a particularly important attribute during a period of economic turbulence.  The product or service that is being provided has to be the one the customer really needs. Successful innovation will give the necessary competitive edge. It is companies with these qualities that were are looking for.

Portfolio review and activity

The growth of the global economy has been a healthy backdrop for equities.  The pick-up in sales at a time when costs have been firmly controlled has led to healthy profit margins for many of the companies in the portfolio.

Manufacturing companies such as XP Power, Senior and IQE were particular beneficiaries.  Analysts' profit forecasts had to be continually raised throughout the year and this meant their share prices maintained their strong upward momentum. This area was a key ingredient in the outperformance, as was the pick-up in corporate takeover activity. The strong cash generation brought about by improved profitability makes many equities appear cheap to other companies that either have cash or can raise debt.  An example would be the all cash purchase of Delta, which was in the portfolio, by Valmont Industries of the USA.

Page 7 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2010

MANAGEMENT REPORT, continued

The portfolio has remained a mix of good quality companies from a wide range of industries.  This diversity of activity has helped over the year to reduce the volatility of performance, notwithstanding that individual share prices can be highly volatile. The market background over the year has seen the gradual return of risk appetite but it has been given grudgingly and any hint of disappointment is punished with a sharp sell-off.  For the most part the market has focused on company specific performance but has from time to time reverted to worrying about events on the global stage.  When the market focuses purely on the macro we have observed that our portfolio tends to drift in the general direction of the market, whether up or down, but when the market turns to company specifics our holdings have tended to outperform.

We have introduced a number of new holdings during the year but turnover has been relatively low. Indeed our top 30 holdings at the year end, representing 65% by value of the portfolio, were all present in the portfolio at the previous year end.

The new purchases came in a variety of industries.  We have been involved in small oil exploration companies for some time and put further funds to work in Faroe Petroleum, which operates in the UK and Norwegian sectors of the North Sea.  We also added new positions in Nautical Petroleum, Rockhopper Exploration and Desire.  We are conscious of the binary nature of oil exploration and we adopt an appropriately risked approach. We participated in a fund raising in Avanti Communications, which raised money to invest in two further satellites and has more recently launched successfully its first satellite.

We have been investing across companies of all sizes.  We added to HSBC, the global bank, giving exposure to the growing financial services of the Far East.  We also started a holding in Unilever, as demand in developing countries for branded consumer goods is growing rapidly.  These stocks bring liquidity to the portfolio but it is in the smaller companies that the best value long term growth may be found.  This is especially the case in those that are providing their unique skills and services to fast growing areas.  An example would be Hyder Consulting, the international infrastructure consultant, which is benefiting from Asian demand for its services.  It is for this reason that we have retained the portfolio's emphasis towards smaller companies.  The exposure to AIM stocks accounts for 33% of the portfolio. On AIM there are, amongst many poorly managed companies, the successful companies of tomorrow.  It is our objective to find them for the portfolio.

Outlook

Following the sharp falls in profits seen during the credit crisis, many company executives are reluctant to be caught out again and as such their plans and aspirations are generally cautiously couched.  We believe therefore that current profit forecasts are pitched quite conservatively, giving support to our view that, overall, equity valuations are still moderately priced by historical standards.  As we have said in previous reports, this portfolio is not a proxy for the UK economy and is well positioned to benefit from global growth.  Our policy will be to remain opportunistic when buying new holdings, provided that our investment criteria are met. This activity will be funded by recycling money out of holdings which we judge to have run their course, or which have not met the expectations we held for them, or when simple prudence dictates that our larger holdings should be trimmed so that they do not become unduly large.

Page 8 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2010

MANAGEMENT REPORT, continued

The balance sheets of many of the companies represented in our portfolio have improved markedly over the last two years as managements have focused on debt reduction.  When this is combined with the companies' international exposure, it places them well for any turbulence in the UK economy. The valuations of the companies held are undemanding and yet the growth in profits is expected to continue at an impressive pace.  These are the ingredients for further share price advances.

J H Henderson and C M Hughes

27 January 2011

Analysis of the portfolio by market index at 31 October 2010 (by value)

	31 October 2010 %	31 October 2009 %
FTSE 100 Index	12.6	11.5
FTSE 250 Index	19.3	15.9
FTSE SmallCap Index	29.8	30.8
	-------	-------
FTSE All-Share Index	61.7	58.2
FTSE Fledgling Index	1.9	3.8
FTSE AIM All-Share Index	30.8	30.6
other Official List	3.0	5.4
other AIM	2.6	2.0
	-------	-------
	100.0	100.0
	=====	=====

Page 9 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2010

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.

A fuller description of the principal risks and uncertainties follows.

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

Investment activity and strategy

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 the 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.

Financial instruments and the management of risk

By its nature as an investment trust, the Company is exposed in varying degrees to market risk (comprising market price risk, currency risk and interest rate risk), liquidity risk and credit and counterparty risk.  Market risk arises from uncertainty about the future prices of the Company's investments.  An analysis of these financial risks and the Company's policies for managing them are set out in note 15 on pages 42 to 47 of the Annual Report.

Operational

Disruption to, or failure of, the Manager's accounting, dealing or payment systems or the  custodian's records could prevent the accurate reporting and monitoring of the Company's financial position.  The Manager has contracted some of its operational functions, principally those relating to trade processing, investment administration and accounting, to BNP Paribas Securities Services. Details of how the Board monitors the services provided by the Manager and its other suppliers, and the key elements designed to provide effective internal control, are explained further in the internal control section of the Corporate Governance Statement on page 21 of the Annual Report.

Page 10 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2010

MANAGEMENT REPORT, continued

Accounting, legal and regulatory

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

Gearing

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

Failure of the Manager

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

Statement of Directors' Responsibilities (under DTR 4.1.12)

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

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

● the Report of the Directors in the 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

27 January 2011

Page 11 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2010

Audited Income Statement

for the year ended 31 October 2010

	Year ended 31 October 2010			Year ended 31 October 2009
	Revenue return £'000	Capital return £'000	Total £'000	Revenue return £'000	Capital return £'000	Total £'000
Gains from investments held   at fair value through profit or loss	-	7,884	7,884	-	10,087	10,087
Income from investments held   at fair value through profit or loss   (note 2)	996	-	996	888	-	888
Interest on VAT refunds	-	-	-	146	-	146
Other interest receivable and similar income    (note 3)	27	-	27	102	-	102
	---------	----------	-----------	----------	----------	----------
Gross revenue and capital gains	1,023	7,884	8,907	1,136	10,087	11,223
Management fee (note 4)	(130)	(130)	(260)	(94)	(94)	(188)
Write-back of prior years' VAT	-	-	-	182	-	182
Other administrative expenses	(214)	-	(214)	(184)	-	(184)
	-----------	----------	-----------	---------	----------	----------
Net return on ordinary activities     before finance charges and taxation	679	7,754	8,433	1,040	9,993	11,033
Finance charges	(80)	(80)	(160)	(101)	(101)	(202)
	-----------	----------	-----------	----------	----------	----------
Net return on ordinary activities     before taxation	599	7,674	8,273	939	9,892	10,831
Taxation on net return on ordinary activities	-	-	-	(5)	-	(5)
	-----------	----------	-----------	-----------	----------	----------
Net return on ordinary activities     after taxation	599	7,674	8,273	934	9,892	10,826
	----------	----------	-----------	-----------	------------	-----------
Return per ordinary share (note 5)	7.40p	94.83p	102.23p	11.38p	120.51p	131.89p
	=======	=======	=======	=======	=======	=======

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 or losses other than those disclosed in the Income Statement.   

                                                                                                                                    Page 12 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2010

Audited Reconciliation of Movements in Shareholders' Funds

for the year ended 31 October 2010

Year ended 31 October 2010	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 2009	2,068	14,508	2,354	15,997	962	35,889
Dividends paid on the ordinary shares	-	-	-	-	(767)	(767)
Net return on ordinary activities    after taxation	-	-	-	7,674	599	8,273
Repurchase of ordinary shares	(36)	-	36	(501)	-	(501)
Conversion of subscription shares	-	4	-	-	-	4
	--------	----------	----------	----------	-----------	-----------
At 31 October 2010	2,032	14,512	2,390	23,170	794	42,898
	=====	======	======	======	======	======

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
Dividends paid on the ordinary shares	-	-	-	-	(1,188)	(1,188)
Net return on ordinary activities    after taxation	-	-	-	9,892	934	10,826
Conversion of subscription shares	-	3	-	-	-	3
	--------	----------	----------	----------	-----------	-----------
At 31 October 2009	2,068	14,508	2,354	15,997	962	35,889
	=====	======	======	======	======	======

Page 13 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2010

Audited Balance Sheet

at 31 October 2010

	2010 £'000	2009 £'000
Investments held at fair value through profit or loss
Listed at market value	31,556	27,901
Quoted on AIM at market value	15,798	13,490
	------------	-----------
	47,354	41,391
	------------	-----------
Current assets
Investment held at fair value through profit or loss	1,037	1,076
Debtors	123	194
Cash at bank	800	12
	------------	-----------
	1,960	1,282
Creditors: amounts falling due within one year	(6,416)	(6,784)
	-----------	-----------
Net current liabilities	(4,456)	(5,502)
	-----------	-----------
Total net assets	42,898	35,889
	=======	=======
Capital and reserves
Called up share capital	2,032	2,068
Share premium account	14,512	14,508
Capital redemption reserve	2,390	2,354
Other capital reserves	23,170	15,997
Revenue reserve	794	962
	------------	-----------
Shareholders' funds	42,898	35,889
	=======	=======
Net asset value per ordinary share (note 6)	532.0p	437.2p
	=======	=======

Page 14 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2010

Audited Cash Flow Statement

for the year ended 31 October 2010

	2010 £'000	2010 £'000	2009 £'000	2009 £'000
Net cash inflow from operating activities		553		1,584
Servicing of finance
Interest paid	(163)		(215)
	-----------		-----------
Net cash outflow from servicing of finance		(163)		(215)
Taxation
Overseas withholding tax recovered	18		58
	-----------		-----------
Net tax recovered		18		58
Financial investment
Purchases of investments	(8,856)		(9,261)
Sales of investments	10,746		6,047
	-----------		-----------
Net cash inflow/(outflow) from financial investment		1,890		(3,214)
		------------		------------
Net cash inflow/(outflow) before dividends paid,    management of liquid resources and financing		2,298		(1,787)
Equity dividends paid		(767)		(1,188)
Management of liquid resources
Additions to money market funds	(3,045)		(258)
Withdrawals from money market funds	3,084		2,322
	-----------		-----------
Net cash inflow from management    of liquid resources		39		2,064
Financing
Drawdown of short term loans	155		490
Repurchase of ordinary shares	(501)		-
Conversion of subscription shares	4		3
	-----------		-----------
Net cash (outflow)/inflow from financing		(342)		493
		-----------		-----------
Increase/(decrease) in cash		1,228		(418)
		======		======
Reconciliation of net cash flow to movement in net debt
Increase/(decrease) in cash as above		1,228		(418)
Net cash inflow from increase in loans		(155)		(490)
		----------		----------
Movements relating to cash flows		1,073		(908)
Net cashflow from movement in liquid resources		(39)		(2,064)
Exchange movements		-		(1)
		----------		-----------
Movement in net debt		1,034		(2,973)
Net debt at the start of the year		(5,352)		(2,379)
		----------		-----------
Net debt at the end of the year		(4,318)		(5,352)
		======		======

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HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2010

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.
	(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 triennial continuation resolution that will be put to the annual general meeting in March 2011. In addition, the assets of the Company consist almost entirely of securities that are listed (or quoted on AIM) and, accordingly, the directors believe that the Company has adequate resources to continue in existence for the foreseeable future. For these reasons the Board has decided that it is appropriate for the financial statements to be prepared on a going concern basis.
	(c) Management fees, administrative expenses and finance charges
	All expenses and finance charges are accounted for on an accruals basis.
	The Board has determined that the capital return should reflect the indirect costs of earning capital returns. 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.
	The management fee is calculated, quarterly in arrears, as 0.60% per annum of the assets under management.  No performance fee was earned or payable in the period, nor in the comparative period.
	All other administrative expenses are charged to the revenue return of the Income Statement.
	Expenses which are incidental to the purchase or sale of an investment are recognised immediately in the capital return of the Income Statement, and are included within the gains/losses from investments held at fair value through profit or loss.

Page 16 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2010

Notes to the Accounts, continued

						2010 £'000	2009 £'000
2.	Income from investments held at fair value through profit or loss
	Franked:
	Dividends from listed investments					703	630
	Dividends from AIM investments					211	158
						-------	-------
						914	788
						-------	-------
	Unfranked:
	Dividends from listed investments					74	100
	Dividends from AIM investments					8	-
						-------	-------
						82	100
						-------	-------
						996	888
						====	====
						2010 £'000	2009 £'000
3.	Other interest receivable and similar income
	Deposit interest					3	-
	Income from underwriting					24	102
						-------	-------
						27	102
	Interest on VAT repayment					-	146
						-------	-------
						27	248
						====	====
4.	Management fee	Revenue return 2010 £'000	Capital return 2010 £'000	Total 2010 £'000	Revenue return 2009 £'000	Capital return 2009 £'000		Total 2009 £'000
	Management fee	130	130	260	94	94		188
	Write-back of prior     years' VAT	-	-	-	(182)	-		(182)
		-------	-------	-------	-------	-------		-------
		130	130	260	(88)	94		6
		====	====	====	====	====		====

   Page 17 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2010

Notes to the Accounts, continued

5.	Return per ordinary share
	The total return per ordinary share is based on the net return attributable to the ordinary shares of £8,273,000 (2009: £10,826,000) and on 8,092,497 ordinary shares (2009: 8,208,439) being the weighted average number of shares in issue during the year.
	The total return can be further analysed as follows:
		2010 £'000	2009 £'000
	Revenue return	599	934
	Capital return	7,674	9,892
		----------	----------
	Total return	8,273	10,826
		----------	----------
	Weighted average number of ordinary shares	8,092,497	8,208,439
	Revenue return per ordinary share	7.40p	11.38p
	Capital return per ordinary share	94.83p	120.51p
		-----------	-----------
	Total return per ordinary share	102.23p	131.89p
		======	======
	The Company has in issue 1,640,753 (2009: 1,641,258) 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 2009: no dilution).
6.	Net asset value per ordinary share
	The net asset value per ordinary share is based on the net assets attributable to the ordinary shares of £42,898,000 (2009: £35,889,000) and on the 8,064,087 ordinary shares in issue at 31 October 2010 (2009: 8,208,582).  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 2009:  no dilution).
7.	Issued share capital There were 8,064,087 ordinary shares of 25p each in issue at 31 October 2010 (31 October 2009: 8,208,582). There were 1,640,753 subscription shares of 1p each in issue at 31 October 2010 (31 October 2009: 1,641,258).
	During the year 145,000 ordinary shares were bought back for cancellation (2009: none).  During the year 505 subscription shares were converted into 505 ordinary shares.

   Page 18 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2010

Notes to the Accounts, continued

8.	Dividends
	The final dividend of 7.50p per ordinary share in respect of the year ended 31 October 2009 was paid on 26 March 2010 to shareholders on the register of members at the close of business on 26 February 2010.
	The interim dividend of 2.00p per ordinary share in respect of the year ended 31 October 2010 was paid on 24 September 2010 to shareholders on the register of members at close of business on 27 August 2010.
	Subject to approval at the annual general meeting, the proposed final dividend of 4.50p per ordinary share will be paid on 25 March 2011 to shareholders on the register of members at the close of business on 25 February 2011.
	The total dividends payable in respect of the financial year, which form the basis of the test under section 1158 of the Corporation Tax Act 2010, are set out below:
		Year ended 31 October 2010 £'000
	Revenue available for distribution by way of dividends for the year	599
	Interim dividend for the year ended 31 October 2010:  2.00p	(162)
	Proposed final dividend for the year ended 31 October 2010:  4.50p   (based on the 8,064,087 ordinary shares in issue at 27 January 2011)	(363)
		----------
	Undistributed revenue for section 1158 purposes*	74
		======
	*Undistributed revenue comprises 7.4% of the income from investments of £996,000.
9.	2010 Accounts The figures and financial information for the year ended 31 October 2010 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.

   Page 19 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2010

Notes to the Accounts, continued

10.	2009 Accounts The figures and financial information for the year ended 31 October 2009 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.
11.	Annual Report The Report and Financial Statements for the year ended 31 October 2010 will be posted to shareholders in early February 2011 and will be available on the Company's website (www.hendersonopportunitiestrust.com) or in hard copy format from the Company's Registered Office, 201 Bishopsgate, London EC2M 3AE.
12.	Annual General Meeting The Annual General Meeting will be held on Thursday 17 March 2011 at 2.30 pm at 201 Bishopsgate, London EC2M 3AE.

ENDS

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

For further information, please contact:

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

 

END

 

 

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