Final Results

RNS Number : 3759W

Henderson Opportunities Trust PLC

30 January 2012

 



HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2011

30 January 2012

This announcement contains regulated information

Financial Highlights

	Year ended 31 October 2011	Year ended 31 October 2010	Change %
Net asset value per ordinary share	501.0p	532.0p	-5.8
Ordinary share price	392.0p	427.5p	-8.3
Subscription share price	1.5p	3.1p	-51.6
Discount	21.8%	19.6%	-
Total (loss)/return per ordinary share	(24.50)p	102.23p	-
Revenue return per ordinary share	7.94p	7.40p	+7.3
Dividends per ordinary share in respect of the year#	7.0p	6.5p	+7.7
Gearing*	16.8%	10.4%	-

^#2011 total dividend is subject to approval of the final dividend at the AGM.

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

Performance

	6 months %	1 year %	2 years %	3 years %
Net asset value per share total return	(17.0)	(4.7)	18.4	72.4
FTSE All-Share Index total return	(7.8)	0.6	18.2	46.0
Ordinary share price total return	(18.8)	(7.1)	12.9	82.1

Total return assumes net dividends are reinvested and excludes transaction costs.

Source:  Morningstar for the AIC, using cum income NAV for 6 months, 1, 2 and 3 years.

Chairman's Comment

The positive first half of 2011 was unfortunately over-shadowed by a weak second six months.  However, on a three year basis, performance has been strong, significantly out-performing the benchmark.  This strength has derived from investing in companies with good franchises, strong balance sheets and consistent trading performance and Directors continue to support this investment approach and endorse the Managers' confidence for the coming year. 

George Burnett, Chairman

Page 2 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2011

MANAGEMENT REPORT

Chairman's Statement

Review of performance

I am disappointed to report that, after a strong first half of the financial year, the second half has seen marked weakness with the NAV total return over the year falling 4.7%, while the FTSE All-Share Index total return was 0.6%. The Manager's estimate of performance attribution is set out in the table below, which shows that stock selection was the main detractor.

	Year ended 31 October 2011 %
Net asset value per share total return	-4.7
Benchmark total return	+0.6
	------
Relative performance	-5.3
	------
Made up:
Stock selection	-3.9
Gearing	-0.2
Share buy-backs	-
Expenses	-1.2
	-------
	-5.3
	=====
Source: Henderson Global Investors Limited

The main reason for the underperformance has been the portfolio's exposure to smaller companies.  However, it should be remembered that smaller companies have been responsible for much of the strong relative recovery over the past three years, during which the NAV total return was 72.4%, compared to the FTSE All-Share Index total return of 46.0%. Smaller companies are considered by investors to be more economically sensitive and are therefore particularly weak, in terms of share price, when economic turbulence becomes more pronounced, as it did in the closing months of the financial year. The Manager argues in his report that most of the companies held are strong business franchises that are prepared for the likely difficult economic conditions. The Board has regularly challenged the Manager on the quality of the companies held and their ability to withstand a more difficult trading background. In practice, their financial performance has held up well to date, while disappointments have been sold if considered appropriate. 

Borrowings

The gearing has been increased during the year from 10.4% to 16.8% as the valuation of the underlying stocks has fallen.  The Board continues to believe that gearing has a part to play in a portfolio centred on growth opportunities, particularly where the Company's borrowing costs are low. However, as noted in more detail in the Investment Approach section of the Manager's Report, the combination of small company exposure, gearing and a turbulent market has increased the volatility in the Net Asset Value.  In the coming year there will be a more active matching of any gearing levels to larger company investments to maintain liquidity and flexibility in the portfolio.

Page 3 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2011

Chairman's Statement, continued

Expenses

The total expense ratio of the Company increased slightly from 1.20% to 1.23%, this was primarily due to an increase in the management fee which is calculated on quarterly periods of whichthree of the four were positive in NAV performance terms.

Earnings and dividends

The revenue return for the year was 7.94p, which compares with 7.40p last year. The total dividend for the year is 7.0p, while last year the total dividend was 6.5p. Dividends from the underlying holdings are expected to grow, which should lead to dividend growth for the Company. The last few years have seen volatility in dividend payments as some companies have reacted to the difficult operating background by wanting to pay down debt but, now that this has largely been achieved, dividend progression from the underlying companies is expected to be sustained in the future.

Continuation vote

The continuation vote at the Annual General Meeting on 17 March 2011 received the support of a substantial majority of shareholders and the next vote in accordance with the triennial cycle of continuation votes required by the Company's Articles of Association will be in March 2014.

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 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 I reported last year, after 18 years' service Hamish Bryce will retire from the Board at the conclusion of the AGM and will not stand for re-election. We shall miss Hamish's energetic and insightful contributions to the Board which have given the lie to those who measure independence only in terms of a prescribed period of service.  The Board is delighted that Peter Jones, Chief Executive of Associated British Ports Holdings Ltd and non-executive director of AIM-listed SKIL Ports & Logistics Ltd, joined the Board on 12 December 2011. We thank Hamish for the valuable contribution he has made over the years and welcome Peter to the Board.

AGM

Our Annual General Meeting will be held at 2.30 pm on Thursday 15 March 2012 at the Registered Office, 201 Bishopsgate, London EC2M 3AE. 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.

Page 4 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2011

Chairman's Statement, continued

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 82 companies in the portfolio and on average more than half of their turnover comes from overseas sales.

Outlook

The fundamental valuation of equities suggests the UK market is in cheap territory.  Company cash generation is impressive.  However, investor thinking is being dominated by macro economic concerns and it needs a return of focus onto underlying companies' prospects for a sustained rally.  This will come about as satisfactory corporate results are reported.  The Directors endorse the Manager's confidence for the coming year.

G B Burnett

Chairman

27 January 2012

Page 5 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2011

Portfolio Managers' Review

The economy

In overall terms the global economy has continued to expand with the emerging powerhouse economies of China, India and Brazil continuing to outperform more developed economies like the UK, USA and mainland Europe. However, as the scale of sovereign debt issues surrounding some of the peripheral Eurozone nations, like Greece, moved ever closer to mainstream nations like Italy and Spain, the future of the Euro was increasingly called into question. The inability of the Eurozone political elite of Germany and France to produce a swift resolution shook investor confidence.

Inflation has risen sharply not just in the UK but also globally and is in part a reflection of the surge earlier in the year of commodity prices. However, as the global economy has cooled, many of the bellwether commodities have seen significant declines from recent highs. Copper has declined by 25% for instance. In soft commodities cotton has nearly halved. Oil, which has seen some supply disruptions, has still nevertheless fallen by some 13% from the spring highs. Coupled with a weakening economic outlook, it would appear that the rate of inflation is likely to fall quite sharply over the coming months and may provide some relief to under-pressure consumers.

These factors weighed on public opinion and with apparently no "good news" to report, the mood among investors and business leaders changed from guarded optimism at the start of the year to a feeling of impending doom at the end. It will, as history has shown on many occasions not be quite like that, but at the moment trying to predict the future is a difficult exercise.

Investment approach

The portfolio is a mixture of large, medium and small companies. We employ gearing because it is our belief that the returns from equities will be substantially greater than the cost of borrowings. However, the combination of smaller companies and gearing has led to marked volatility in the Net Asset Value. Therefore we will be more active tempering this volatility by increasing the exposure in larger companies where there is gearing so that there is liquidity and flexibility in the portfolio. The number of holdings is likely to fall over the coming year as we believe in this difficult economic period fewer companies will achieve strong growth and those that do will obtain a premium valuation. The focus continues to be on finding and holding these stocks.

Portfolio review and activity

To borrow a football idiom "this is a game of two halves" feels like an understatement. In truth the investment climate has changed dramatically from the start to the finish of our financial year. Guarded optimism has given way to outright pessimism.

By having a strong bias to industrials and technology we enjoyed a very good first half of the year but that performance unwound sharply over the summer months and has remained somewhat on the sidelines, despite generally very good profit performances, as doubts around the outlook for 2012 have grown. As previously stated we have been underweight in our stock selections that relate to the UK consumer as pressure on household incomes has grown more intense as the year has progressed.

Page 6 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2011

Portfolio Managers' Review, continued

Our positioning has remained very much focused at the company level and very similar to our closing positions at the end of 2010.  At the beginning of the financial year we felt that there were good prospects for increased merger and acquisition activity, indeed most surveys of company Finance Directors gave a strong indication that with trading recovering well in 2010 and strong balance sheets then it was only a matter of time before many transactions that had been put on the shelf would now be dusted off for action. Indeed in our experience the early part of the year held promise with both Velosi (quality control assurance in the energy sector) and Toluna (on line panel surveys) both receiving takeover approaches which led to full bids and we took good profits in both. Since that early flurry for us the cupboard has been somewhat bare with only Pinewood Shepperton (film studios) receiving contested bids, still not fully resolved, and we sold for a profit to avoid being trapped in a minority situation. Apart from a few higher profile bids, like Hewlett Packard's acquisition of Autonomy, it has been a surprisingly quiet time across the whole market.

When it comes to performance at the stock level it is the case that we should look at two distinct halves. In the first part of our year XP Power did exactly as its name implies and powered ahead rising 67% as strong results gave investors confidence but that confidence fell sharply with the market retreat and in the second half it fell 39%. We did take a modest amount of profit from XP Power near the peak but have by and large kept faith with this investment; indeed we have more recently bought a small amount of stock. Similar patterns can be seen with many other holdings, e2v rose by 38% only to fall 19% as did Kenmare Resources rising by 141%, again where we took some profit, only to fall back by 13%. Of particular note on the positive side we should mention IP Group, now our biggest holding, rising by 142% in the year as investors realised how much untapped value lay within its diverse early stage portfolio. In addition old favourites such as Pearson, Senior and Latchways put in reliably robust performances and the latter recently declared good profits and a special dividend: something that Fidessa achieved for the second year running. The companies where money was lost include Hampson Industries, where the full extent of past management failings became painfully exposed and AssetCo, where even with additional shareholder support it proved impossible to save more than a small fraction of shareholder value. Flybe, an addition through an IPO at the start of the year, also suffered but in this case it was rising fuel prices and the weak economy rather than management failings which took their toll. Kofax started the year in very positive frame rising by 65% before falling by 45% as a result of consecutive profit warnings and over optimistic management guidance. This is a highly cash rich and cash generative business so we will not throw the baby out with the bath water even if recent disappointment is annoying.

During the early and most dramatic phase of this summer's market fall we sold our holding in Unilever, which held up well, and re-invested the proceeds in a number of heavy fallers including Ashtead, the plant hire company which has gone on to report rapidly rising profits which have now been reflected in a rapidly improving share price. New investments have been made in Advanced Medical Solutions, the developer of Liquiband medical glue, Asian Plantations, the developer of palm oil plantations in Malaysia and Oxford Instruments, the original birthplace of MRI Scanners, now forging leadership in the nanotechnology space. At the half year we mentioned a new investment in Aurelian Oil & Gas, unconventional gas in Poland, however, drilling results were not satisfactory and we have now sold out of this position for a loss. We also sold out of PureCircle, natural sweeteners, and JJB Sports, sports retailing, where we felt execution of the

Page 7 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2011

Portfolio Managers' Review, continued

business plan was unlikely to benefit shareholders. We added to our holding in Innovation Group, insurance software, before exiting the entire holding at a good profit when our price target was reached. Similarly we made a modest investment in EKF Diagnostics and again sold when our price target was achieved, again for a profit.

Whilst we have introduced over the year a number of new holdings many of our key positions remain essentially unchanged. For instance of last year's top ten, representing some 28% of the portfolio, six are again present in this year's top ten, which has risen slightly to 30% of the portfolio. In total we acquired twenty new holdings and disposed of sixteen positions.

Outlook

We believe that our portfolio whilst it has a strong bias towards small companies has a range and diversity of activity backed up by generally strong balance sheets that will prove more resilient than the stock market is currently giving it credit for.

J H Henderson and C M Hughes

27 January 2012

Page 8 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2011

Analysis by market index (by value)

	FTSE All-Share Index  31 October 2011 %	Portfolio 31 October 2011 %	Portfolio 31 October 2010 %
FTSE 100 Index	86.2	8.2	12.6
FTSE 250 Index	12.7	23.7	19.3
FTSE SmallCap Index	1.1	30.5	29.8
	-------	-------	-------
FTSE All-Share Index	100.0	62.4	61.7
FTSE Fledgling Index	-	0.6	1.9
FTSE AIM All-Share Index	-	30.7	30.8
other Official List	-	4.3	3.0
other AIM	-	2.0	2.6
	-------	-------	-------
	100.0	100.0	100.0
	=====	=====	=====

Source:  Henderson Global Investors Limited

Analysis by market capitalisation at 31 October 2011

Index	Market Capitalisation £	FTSE All-Share Index %	Portfolio %
FTSE 100 Index (top 20 stocks)	>£23 bn	58.4	4.0
FTSE 100 Index (remaining 80 stocks)	>£1.2 bn	27.8	4.2
FTSE 250 Index	>£1 bn	6.6	9.7
FTSE 250 Index	<£1 bn	6.1	14.0
FTSE Small Cap (ex. Investment Trusts)	<£350 m	1.1	30.5
FTSE Fledgling	<£60 m	-	0.6
FTSE AIM	<£1.5 bn	-	30.7
Other AIM	<£60 m	-	2.0
Other Official List	<£160 m	-	4.3
		--------	--------
		100.00	100.00
		======	======

>: greater than  <: less than

Source: Henderson Global Investors Limited

Page 9 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2011

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 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. Falls in the value of the Company's investments can be caused by unexpected or unanticipated external events. The companies in which investments are made may operate unsuccessfully, or fail entirely, such that shareholder value is lost. The Company is also exposed to the operational risk that one or more of its contractors or sub-contractors may not provide the required level of service. 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.

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

The Manager provides the directors with management information, including performance data and reports and shareholder analyses on a monthly basis. 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 Manager operates in accordance with investment limits and restrictions determined by the Board; these include limits on the extent to which borrowings may be used. The Board reviews its investment limits and restrictions regularly and the Manager confirms its compliance with them each month. The Board reviews investment strategy at each Board meeting. An inappropriate investment strategy (for example, in terms of asset allocation, stock selection, failure to anticipate external shocks or the level of gearing) may lead to underperformance against the Company's benchmark index and the Company's peer group; it may also result in the Company's shares trading on a wider discount than its peer group. The Board seeks to manage these risks by ensuring a diversification of investments, regular meetings with the Portfolio Manager with measurement against performance indicators and review of the extent of borrowings.

Financial instruments and the management of risk

By its nature as an investment trust, the Company is exposed in varying degrees to market risk, 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 Report and Financial Statements.

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 in the Report and Financial Statements.

Page 10 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2011

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'), to which reference is made in the Report and Financial Statements under the heading 'Status'. 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 to the Company.

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 the net return of the Company; and

● the Report of the Directors in the Report and Financial Statements 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 2012

Page 11 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2011

Audited Income Statement

for the year ended 31 October 2011

	Year ended 31 October 2011			Year ended 31 October 2010
	Revenue return £'000	Capital return £'000	Total £'000	Revenue return £'000	Capital return £'000	Total £'000
(Losses)/gains from investments held   at fair value through profit or loss	-	(2,384)	(2,384)	-	7,884	7,884
Income from investments held   at fair value through profit or loss (note  2)	1, 064	-	1,064	996	-	996
Other interest receivable and other income   (note 3)	17	-	17	27	-	27
	---------	----------	-----------	----------	----------	----------
Gross revenue and capital (losses)/gains	1,081	(2,384)	(1,303)	1,023	7,884	8,907
Management fee (note 4)	(152)	(152)	(304)	(130)	(130)	(260)
Other administrative expenses	(209)	-	(209)	(214)	-	(214)
	-----------	----------	-----------	---------	----------	----------
Net return/(loss) on ordinary activities     before finance charges and taxation	720	(2,536)	(1,816)	679	7,754	8,433
Finance charges	(80)	(80)	(160)	(80)	(80)	(160)
	-----------	----------	-----------	----------	----------	----------
Net return/(loss) on ordinary activities     before taxation	640	(2,616)	(1,976)	599	7,674	8,273
Taxation on net return/(loss) on ordinary        activities	-	-	-	-	-	-
	-----------	----------	-----------	-----------	----------	----------
Net return/(loss) on ordinary activities     after taxation	640	(2,616)	(1,976)	599	7,674	8,273
	----------	----------	-----------	-----------	------------	-----------
Return/(loss) per ordinary share (note 5)	7.94p	(32.44)p	(24.50)p	7.40p	94.83p	102.23p
	=======	=======	=======	=======	=======	=======

The total columns of this statement represent the Profit and Loss Account of the Company.  The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies.  All revenue and capital items in the above statement derive from continuing operations.  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 2011

Audited Reconciliation of Movements in Shareholders' Funds

for the year ended 31 October 2011

Year ended 31 October 2011	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 2010	2,032	14,512	2,390	23,170	794	42,898
Dividends paid on the ordinary shares	-	-	-	-	(524)	(524)
Net (loss)/return on ordinary activities    after taxation	-	-	-	(2,616)	640	(1,976)
Conversion of subscription shares	-	10	-	-	-	10
	--------	----------	----------	----------	-----------	-----------
At 31 October 2011	2,032	14,522	2,390	20,554	910	40,408
	=====	======	======	======	======	======

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
	=====	======	======	======	======	======

Page 13 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2011

Audited Balance Sheet

at 31 October 2011

	2011 £'000	2010 £'000
Investments held at fair value through profit or loss
Listed at market value	31,754	31,556
Quoted on AIM at market value	15,428	15,798
	------------	-----------
	47,182	47,354
	------------	-----------
Current assets
Investment held at fair value through profit or loss	181	1,037
Debtors	164	123
Cash at bank	180	800
	------------	-----------
	525	1,960
Creditors: amounts falling due within one year	(7,299)	(6,416)
	-----------	-----------
Net current liabilities	(6,774)	(4,456)
	-----------	-----------
Total net assets	40,408	42,898
	=======	=======
Capital and reserves
Called up share capital	2,032	2,032
Share premium account	14,522	14,512
Capital redemption reserve	2,390	2,390
Other capital reserves	20,554	23,170
Revenue reserve	910	794
	------------	-----------
Shareholders' funds	40,408	42,898
	=======	=======
Net asset value per ordinary share (note 6)	501.0p	532.0p
	=======	=======

Page 14 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2011

Audited Cash Flow Statement

for the year ended 31 October 2011

	2011 £'000	2011 £'000	2010 £'000	2010 £'000
Net cash inflow from operating activities		564		553
Servicing of finance
Interest paid	(154)		(163)
	-----------		-----------
Net cash outflow from servicing of finance		(154)		(163)
Taxation
Overseas withholding tax recovered	2		18
	-----------		-----------
Net tax recovered		2		18
Financial investment
Purchases of investments	(11,316)		(8,856)
Sales of investments	8,995		10,746
	-----------		-----------
Net cash (outflow)/inflow from financial investment		(2,321)		1,890
		------------		------------
Net cash (outflow)/ inflow before dividends paid,    management of liquid resources and financing		(1,909)		2,298
Equity dividends paid		(524)		(767)
Management of liquid resources
Additions to money market funds	(6,915)		(3,045)
Withdrawals from money market funds	7,771		3,084
	-----------		-----------
Net cash inflow from management    of liquid resources		856		39
Financing
Drawdown of short term loans	945		155
Repurchase of ordinary shares	-		(501)
Conversion of subscription shares	10		4
	-----------		-----------
Net cash inflow/(outflow) from financing		955		(342)
		-----------		-----------
(Decrease)/increase in cash		(622)		1,228
		======		======
Reconciliation of net cash flow to movement in net debt
(Decrease)/increase in cash as above		(622)		1,228
Net cash inflow from increase in loans		(945)		(155)
		----------		----------
Movements relating to cash flows		(1,567)		1,073
Net cashflow from movement in liquid resources		(856)		(39)
Exchange movements		2		-
		----------		-----------
Movement in net debt		(2,421)		1,034
Net debt at the start of the year		(4,318)		(5,352)
		----------		-----------
Net debt at the end of the year		(6,739)		(4,318)
		======		======

Page 15 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2011

Notes to the Financial Statements

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 2011 was duly passed. The next triennial continuation resolution will be put to the annual general meeting in March 2014. 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 2011

Notes to the Financial Statements, continued

						2011 £'000	2010 £'000
2.	Income from investments held at fair value through profit or loss
	Franked:
	Dividends from listed investments					744	703
	Dividends from AIM investments					228	211
						-------	-------
						972	914
						-------	-------
	Unfranked:
	Dividends from listed investments					92	74
	Dividends from AIM investments					-	8
						-------	-------
						92	82
						-------	-------
						1,064	996
						====	====
						2011 £'000	2010 £'000
3.	Other interest receivable and other income
	Deposit interest					-	3
	Underwriting commission (allocated to revenue)*					17	24
						-------	-------
						17	27
						====	====
	*During the year the Company was required to take up shares to the value of £59,000 and £1,000 of commission was taken to capital (2010:  nil).
		Revenue return 2011 £'000	Capital return 2011 £'000	Total 2011 £'000	Revenue return 2010 £'000	Capital return 2010 £'000		Total 2010 £'000
4.	Management fee
	Management fee	152	152	304	130	130		260
		====	====	====	====	====		====

   Page 17 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2011

Notes to the Financial Statements, continued

5.	(Loss)/return per ordinary share
	The total loss per ordinary share is based on the total loss attributable to the ordinary shares of £1,976,000 (2010: total return of £8,273,000) and on 8,064,762 ordinary shares (2010: 8,092,497) being the weighted average number of shares in issue during the year.
	The total (loss)/return can be further analysed as follows:
		2011 £'000	2010 £'000
	Revenue return	640	599
	Capital (loss)/return	(2,616)	7,674
		----------	----------
	Total (loss)/return	(1,976)	8,273
		----------	----------
	Weighted average number of ordinary shares	8,064,762	8,092,497
	Revenue return per ordinary share	7.94p	7.40p
	Capital (loss)/return per ordinary share	(32.44)p	94.83p
		-----------	-----------
	Total (loss)/return per ordinary share	(24.50)p	102.23p
		======	======
	The Company has in issue 1,639,672 (2010: 1,640,753) 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 2010: 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 £40,408,000 (2010: £42,898,000) and on the 8,065,168 ordinary shares in issue at 31 October 2011 (2010: 8,064,087).  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 2010:  no dilution).
7.	Issued share capital There were 8,065,168 ordinary shares of 25p each in issue at 31 October 2011 (31 October 2010:  8,064,087). There were 1,639,672 subscription shares of 1p each in issue at 31 October 2011 (31 October 2010: 1,640,753).
	During the year no ordinary shares were bought back for cancellation (2010: 145,000).  During the year 1,081 subscription shares were converted into 1,081 ordinary shares.

   Page 18 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2011

Notes to the Financial Statements, continued

8.	Dividends
	The final dividend of 4.50p per ordinary share in respect of the year ended 31 October 2010 was paid on 25 March 2011 to shareholders on the register of members at the close of business on 25 February 2011.
	The interim dividend of 2.00p per ordinary share in respect of the year ended 31 October 2011 was paid on 23 September 2011 to shareholders on the register of members at close of business on 26 August 2011.
	Subject to approval at the annual general meeting, the proposed final dividend of 5.00p per ordinary share will be paid on 29 March 2012 to shareholders on the register of members at the close of business on 10 February 2012.
	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 2011 £'000
	Revenue available for distribution by way of dividends for the year	640
	Interim dividend for the year ended 31 October 2011:  2.00p	(162)
	Proposed final dividend for the year ended 31 October 2011:  5.00p   (based on the 7,965,168 ordinary shares in issue at 27 January 2012)	(398)
		----------
	Undistributed revenue for section 1158 purposes*	80
		======
	*Undistributed revenue comprises 7.5% of the income from investments of £1,064,000.
9.	2011 Report and Financial Statements The figures and financial information for the year ended 31 October 2011 are extracted from the Company's annual financial statements for that period and do not constitute statutory accounts.  The Company's annual financial statements for the year to 31 October 2011 have been audited but have not yet been delivered to the Registrar of Companies.  The auditors' report on the 2011 annual financial statements was unqualified, did not include a reference to any matter to which the auditors drew attention without qualifying the report, and did not contain any statements under section 498 of the Companies Act 2006.
10.	2010 Report and Financial Statements           The figures and financial information for the year ended 31 October 2010 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.

   Page 19 of 19

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2011

Notes to the Financial Statements, continued

11.	Annual Report The Report and Financial Statements for the year ended 31 October 2011 will be posted to shareholders in early February 2012 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 15 March 2012 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

 

 

FR SDUSUSFESEIF