Final Results

Henderson Strata Investments PLC 29 November 2006 HENDERSON STRATA INVESTMENTS PLC 29 November 2006 HENDERSON STRATA INVESTMENTS PLC Unaudited Preliminary Results for the year ended 31 October 2006 Highlights: • NAV per share up 31.3% to 709.3p from 540.3p • Share price up 30.3% to 646.5p from 496.0p • Marked outperformance of the benchmark (which returned 26.8%) and the FTSE All-Share Index (which returned 21.7%) • New investment strategy announced on 24 November 2006 'I am pleased to report excellent results. The net asset value per share rose by 31.3% in the year ended 31 October 2006 and the share price by 30.3%. Over the same period the FTSE Fledgling (excluding investment companies) Index returned 26.8% while the FTSE All-Share Index returned 21.7%. These figures include income. Despite the achievement of the Company's stated discount control objective and the strong performance of the Company's fund manager, Colin Hughes, against his benchmark, the Board has concluded that the requirement for share repurchases is such as to jeopardise the viability of the Company in its current form. As a result, we announced last week proposals for a new investment strategy which we believe will have a strong appeal for current and potential investors. We shall be circulating full details to shareholders next month.' George Burnett, Chairman For further information, please contact: George Burnett James de Sausmarez Chairman Head of Investment Trusts Henderson Strata Investments plc Henderson Global Investors Telephone: 01372 362300 Telephone: 020 7818 3349 Colin Hughes or Sarah Gibbons-Cook Fund Manager Investor Relations and PR Manager Henderson Strata Investments plc Henderson Global Investors Telephone: 020 7818 5714 Telephone: 020 7818 3198 Page 2 of 9 HENDERSON STRATA INVESTMENTS PLC Unaudited Preliminary Results for the year ended 31 October 2006 Review of the year Henderson Strata Investments plc reports excellent results. The net asset value per share rose by 31.3% in the year ended 31 October 2006, to 709.3p from 540.3p, and the share price by 30.3%, to 646.5p from 496.0p. Over the same period the FTSE Fledgling (excluding investment companies) Index returned 26.8% while the FTSE All-Share Index returned 21.7%. These figures include income. The total return per share was 148.03p (2005: 63.19p). But for the change in the basis on which the investments are now valued, the total return would have been 152.79p and the increase in the net asset value per share would have been 32.9%. Accounting changes A year ago the Board reported its decision that, with effect from 1 November 2005, four fifths of the finance costs and investment management fees would be allocated to capital, to reflect the significant proportion of these costs that relate to the maintenance or enhancement of the value of the Company's investments. The large increase in the revenue return per share reflects this change. Also with effect from the 1 November 2005, changes to UK accounting standards require the Company to account for its investments as held at fair value through profit or loss. Accordingly, the portfolio at 31 October 2006 is valued on a bid basis rather than as previously at mid-market values. The effect is to reduce the value of the investments at 31 October 2006 by £713,000 (or 1.05%) and to decrease the net return on ordinary activities after taxation for the year by £504,000. The discount The Board has been committed, as far as practicable, to maintaining the discount to net asset value at which the Company's shares trade at close to the 8% level at which the tender offer was made in January 2005. During the year a total of 3,052,121 shares were bought back for cancellation at a cost of £18 million. Of these, 1,021,595 were bought back under the fresh authority granted at the Extraordinary General Meeting on 4 October 2006. In the 90 day period ended 31 October 2006, the average discount to the net asset value per share (as defined for this purpose in the Company's articles of association) at which the Company's shares traded was just under 8%. Accordingly, the discount control objective for this year was met and the Board is not required to arrange a tender offer. Proposals for the future Despite the achievement of the Company's stated discount control objective and the strong performance of the Company's fund manager, Colin Hughes, against his benchmark, the Board has been advised that there is insufficient demand from investors to sustain the discount at the 8% level over the medium term, especially with many other smaller company focused investment companies trading at greater discounts to net asset value than the Company. In the light of this and the ongoing demand for further share repurchases by the Company, the directors have concluded that the viability of the Company on an ongoing basis is jeopardised in its current form. On 24 November 2006 the Board announced proposals for the future of the Company, to include changes to the investment objective, a change of name to Henderson Opportunities Trust plc and a bonus issue of subscription securities. If the proposals are approved by shareholders, James Henderson will become the Company's fund manager at Henderson. The Board is very grateful to Colin Hughes for the excellent performance that he has produced, not least since he became the sole fund manager in February 2005. He will be working with James Henderson, initially to ensure a smooth transition and thereafter to maximise the value of the portfolio. The Board believes that the proposals will have a strong appeal for current and potential investors and it will be circulating full details to shareholders next month. Page 3 of 9 HENDERSON STRATA INVESTMENTS PLC Unaudited Preliminary Results for the year ended 31 October 2006 Income Statement for the year ended 31 October 2006 Year ended 31 October 2006 Year ended 31 October 2005 (unaudited) (audited) Revenue Capital Revenue Capital Return Return Total Return Return Total £'000 £'000 £'000 £'000 £'000 £'000 Gains from investments held at fair value through profit or loss - 15,916 15,916 - 8,068 8,068 Income from investments held at fair value through profit or loss 961 - 961 1,023 - 1,023 Other interest receivable and similar 17 - 17 99 - 99 income --------- ---------- ----------- ---------- ---------- ---------- Gross revenue and capital gains 978 15,916 16,894 1,122 8,068 9,190 Management fee (141) (566) (707) (662) - (662) Other administrative expenses (217) - (217) (183) - (183) ----------- ---------- ----------- --------- ---------- ---------- Net return on ordinary activities before finance charges and taxation 620 15,350 15,970 277 8,068 8,345 Finance charges (60) (240) (300) (77) - (77) ----------- ---------- ----------- ---------- ---------- ---------- Net return on ordinary activities before taxation 560 15,110 15,670 200 8,068 8,268 Taxation on net return on ordinary activities - - - (7) - (7) ----------- ---------- ----------- ----------- ---------- ---------- Net return on ordinary activities after taxation 560 15,110 15,670 193 8,068 8,261 ---------- ---------- ----------- ----------- ------------ ----------- Return per ordinary share (note 3) 5.29p 142.74p 148.03p 1.48p 61.71p 63.19p ======= ======= ======= ======= ======= ======= The total columns of this statement represent the profit and loss account of the Company. Page 4 of 9 HENDERSON STRATA INVESTMENTS PLC Unaudited Preliminary Results for the year ended 31 October 2006 Reconciliation of Movements in Shareholders' Funds for the year ended 31 October 2006 Called up share Share Capital capital premium redemption Capital Revenue £'000 account reserve reserves reserve Total Year ended 31 October 2006 £'000 £'000 £'000 £'000 £'000 At 31 October 2005 3,041 16,479 1,365 42,473 (2,518) 60,840 Adjustment to bid valuation (see note - - - (209) - (209) 1d) Net return from ordinary activities after taxation - - - 15,110 560 15,670 Purchase of own shares for cancellation (763) - 763 (18,078) - (18,078) Cancellation of treasury shares (226) - 226 - - - -------- ---------- ---------- ---------- ----------- ----------- At 31 October 2006 2,052 16,479 2,354 39,296 (1,958) 58,223 ===== ====== ====== ====== ====== ====== Called up share Share Capital capital premium redemption Capital Revenue £'000 account reserve reserves reserve Total Year ended 31 October 2005 £'000 £'000 £'000 £'000 £'000 At 31 October 2004 4,276 16,479 130 62,705 (2,711) 80,879 Net return from ordinary activities after taxation - - - 8,068 193 8,261 Purchase of own shares for (1,235) - 1,235 (24,012) - (24,012) cancellation Purchase of own shares into treasury - - - (4,288) - (4,288) --------- ---------- ----------- ---------- ---------- ---------- At 31 October 2005 3,041 16,479 1,365 42,473 (2,518) 60,840 ===== ====== ====== ====== ====== ====== Page 5 of 9 HENDERSON STRATA INVESTMENTS PLC Unaudited Preliminary Results for the year ended 31 October 2006 Balance Sheet at 31 October 2006 2006 2005 £'000 £'000 Investments held at fair value through profit or loss Listed investments at market value: United Kingdom 35,796 34,747 ------------ ----------- 35,796 34,747 AIM investments at market value 31,091 30,636 Overseas quoted cash fund 128 37 Unquoted investments at directors' valuation 36 47 ------------ ----------- 67,051 65,467 ------------ ----------- Current assets Debtors 1,110 196 Cash at bank 6 1,407 ------------ ----------- 1,116 1,603 Creditors: amounts falling due within one year (9,944) (6,230) ----------- ----------- Net current liabilities (8,828) (4,627) ------------ ----------- Total net assets 58,223 60,840 ======= ======= Capital and reserves Called up share capital 2,052 3,041 Share premium account 16,479 16,479 Capital redemption reserve 2,354 1,365 Capital reserve - realised 25,191 36,977 Capital reserve - unrealised 14,105 5,496 Revenue reserve (1,958) (2,518) ------------ ----------- Equity shareholders' funds 58,223 60,840 ======= ======= Net asset value per ordinary share (note 4) 709.32p 540.30p ======= ======= Page 6 of 9 HENDERSON STRATA INVESTMENTS PLC Unaudited Preliminary Results for the year ended 31 October 2006 Cash Flow Statement for the year ended 31 October 2006 2006 2006 2005 2005 £'000 £'000 £'000 £'000 Net cash (outflow)/inflow from operating activities (121) 678 Servicing of finance Interest paid (294) (75) ----------- ----------- Net cash outflow from servicing (294) (75) of finance Taxation Tax recovered 7 11 ----------- ----------- Net tax recovered 7 11 Financial investment Purchases of investments (25,131) (64,358) Sales of investments 38,078 87,559 ----------- ----------- Net cash inflow from financial 12,947 23,201 investment -------- -------- Net cash inflow before financing 12,539 23,815 Financing Drawdown of short term loan 4,100 4,000 Purchases of own shares (16,594) (28,300) ----------- ----------- Net cash outflow from financing (12,494) (24,300) -------- -------- Increase/(decrease) in cash 45 (485) ====== ====== Reconciliation of net cash flow to movement in net (debt)/funds Increase/(decrease) in cash as above 45 (485) Net cash inflow from increase in loans (4,100) (4,000) -------- -------- Movements relating to cash flows (4,055) (4,485) Exchange movements (1) 67 -------- -------- Movement in net (debt)/ funds (4,056) (4,418) Net (debt)/ funds at 1 November (4,038) 380 -------- -------- Net debt at 31 October (8,094) (4,038) ====== ====== Page 7 of 9 HENDERSON STRATA INVESTMENTS PLC Unaudited Preliminary Results for the year ended 31 October 2006 Notes : 1. Accounting policies a) Basis of accounting The accounts are prepared on the historical cost basis of accounting, modified to include the revaluation of fixed asset investments, and in accordance with the Companies Act 1985, Accounting Standards applicable in the United Kingdom and the Revised Statement of Recommended Practice - 'Financial Statements of Investment Trust Companies' dated December 2005 (the 'Revised SORP'). All of the Company's operations are of a continuing nature. b) Changes in presentation The Company has adopted the provisions of the Revised SORP which has resulted in some changes to the presentation of the Company's accounts. The Statement of Total Return is now called the Income Statement. The Reconciliation of Movements in Shareholders' Funds is now presented as a primary statement. c) Changes in accounting policies The Company has changed its accounting policy for the revaluation of investments in accordance with the provisions of FRS 26 - Financial Instruments: Recognition and Measurement ('FRS 26'). This change in policy and the associated impact on the results of the Company are referred to below. d) Valuation of fixed asset investments Prior to 1 November 2005, quoted investments were valued at middle market prices. Following the adoption of FRS 26, quoted investments have been designated by the Board as held at fair value through profit or loss and accordingly are valued at fair value, deemed to be bid market prices or the last trade price depending on the convention of the exchange on which the investment is quoted. In accordance with the exemption conferred by FRS 26, comparatives have not been restated for this change in accounting policy and therefore listed investments shown at 31 October 2005 are stated at middle market prices. The adoption of bid prices at 1 November 2005 decreased the value of listed investments by £209,000. The effect of this change in accounting policy is to decrease the value of investments at 31 October 2006 by £713,000 and decrease the net return on ordinary activities after taxation for the year then ended by £504,000. Unquoted investments have also been designated by the Board as held at fair value through profit or loss and are valued by the directors using primary valuation techniques such as earnings multiples, recent transactions and net assets. Where fair value cannot reliably be measured, the investment will be carried at the previous reporting date value unless there is evidence that the investment has since been impaired, in which case the value will be reduced. Changes in the fair value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Income Statement as 'gains or losses on investments held at fair value through profit or loss'. All purchases and sales are accounted for on a trade date basis. Page 8 or 9 HENDERSON STRATA INVESTMENTS PLC Unaudited Preliminary Results for the year ended 31 October 2006 e) Management fees, administration expenses and finance charges All expenses and finance charges are accounted for on an accruals basis. With effect from 1 November 2005, the Board determined that the capital return should reflect the indirect costs of earning capital returns. Accordingly from 1 November 2005, on the basis of the Board's expected long-term split of returns in the form of capital gains and revenue of 80% and 20% respectively, the Company charges 80% of its finance charges and management fee to the capital return column of the Income Statement. Previously, all such expenses were charged to the revenue return. The impact of this change in allocation is to increase net revenue return after taxation by £806,000 and decrease net capital return after taxation by the same amount. Expenses which are incidental to the purchase or sale of an investment are included within the cost or deducted from the proceeds of the investment. 2. Issued share capital There were 8,208,293 ordinary shares of 25p each in issue at 31 October 2006 (31 October 2005: 12,164,660, including 904,246 shares held in treasury). During the year ended 31 October 2006 the Company bought back for cancellation a total of 3,052,121 of its own issued ordinary shares (2005: 4,936,855, including 904,246 which at 31 October 2005 were held in treasury). The 904,246 shares held in treasury at 31 October 2005 were cancelled on 1 August 2006. 3. Return per ordinary share The total return per ordinary share is based on the net return attributable to the ordinary shares of £15,670,000 (2005: £8,261,000) and on 10,585,584 ordinary shares (2005: 13,073,684) being the weighted average number of shares in issue during the year. The total return can be further analysed as follows: 2006 2005 £'000 £'000 Revenue return 560 193 Capital return 15,110 8,068 ---------- ---------- Total 15,670 8,261 ====== ====== Weighted average number of ordinary shares 10,585,584 13,073,684 Revenue return per ordinary share 5.29p 1.48p Capital return per ordinary share 142.74p 61.71p ----------- ------------ 148.03p 63.19p ======= ======= The Company does not have any dilutive securities. Page 9 of 9 HENDERSON STRATA INVESTMENTS PLC Unaudited Preliminary Results for the year ended 31 October 2006 4. 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 £58,223,000 (31 October 2005: £60,840,000) and on the 8,208,293 ordinary shares of 25p each in issue at 31 October 2006 (31 October 2005: 11,260,414*). * The number of shares in issue has been adjusted for the shares held in treasury which, for this purpose, are treated as not having been in issue. 5. Dividend No dividend has been declared in respect of the year. 6. 2006 Accounts The preliminary figures for the year ended 31 October 2006 are an extract from the Company's latest accounts for that period. These accounts have not yet been delivered to the Registrar of Companies, nor have the auditors yet reported on them. 7. 2005 Accounts The figures and financial information for the year ended 31 October 2005 are an extract from the latest published accounts of the Company and do not constitute the statutory accounts for that year. Those accounts have been delivered to the Registrar of Companies and included the report of the auditors which was unqualified and did not contain a statement under either section 237(2) or section 237(3) of the Companies Act 1985. 8. Annual Report The annual report and accounts are expected to be posted to shareholders in December, together with the circular and prospectus in respect of the proposals announced on 24 November 2006, and copies will be available thereafter from the Secretary at the Company's Registered Office, 4 Broadgate, London EC2M 2DA. 9. Annual General Meeting The Annual General Meeting will be held on Thursday 15 February 2007 at 2.30 pm at 4 Broadgate, London EC2M 2DA. - ENDS - This information is provided by RNS The company news service from the London Stock Exchange

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