Half-year Report

RNS Number : 8810B
Henderson Opportunities Trust PLC
21 June 2016
 

The issuer advises that the following replaces the Half-year Report announcement released on 21 June 2016 at 11:34pm under RNS number 8288B.

 

In the Notes to the Condensed Financial Statements, (Note 2 Expenses: management fees and performance fees), a date was wrongly stated as 1 October 2015 instead of 1 November 2015. All other details remain unchanged. The full amended text appears below.

 

 

 

HENDERSON OPPORTUNITIES TRUST PLC

Financial Report for the Half Year ended 30 April 2016

 

 

FINANCIAL HIGHLIGHTS

 

(Unaudited)

30 April 2016

(Unaudited)

30 April 2015

(Audited)

3 31 October 2015

Net asset value per ordinary share

974.8p

1,052.9p

1,012.5p

Ordinary share price

830.0p

925.0p

910.3p

Discount

14.9%

12.1%

10.1%

Total return per ordinary share

(24.7p)

158.0p

122.6p

Revenue return per ordinary share - basic and diluted

 

10.3p

 

10.2p

 

22.5p

Dividends per ordinary share

5.5p

5.0p

18.0p

Net Gearing 1

18.1%

18.8%

18.3%

 

1 The net gearing percentage reflects the amount of borrowings (bank loans or overdrafts) the Company has used to invest in the market less cash and investment cash funds, dividend by net assets multiplied by 100.

 

 

TOTAL RETURN PERFORMANCE

(including dividends reinvested and excluding transaction costs)


 

6 Months

%

 

1 Year

%

 

3 Years

%

 

5 Years

%

Net asset value per ordinary share 1

-2.4

-5.6

39.0

72.4

Benchmark Index2

0.0

-5.7

12.0

29.4

Share Price 3

-7.3

-8.3

49.5

85.5

Peer Group4

-1.4

-2.1

25.1

50.3

 

Source: Morningstar for the AIC

 

1. Net asset value per ordinary share total return (including dividends reinvested)

2. The FTSE All-Share Index expressed on a total return basis in sterling terms

3. Share price total return (including dividends reinvested) using mid-market closing price

4. Arithmetic average net asset value total return for the UK All Companies sector

 

 

For further information please contact:

 


James Henderson

Fund Manager

Henderson Global Investors

Telephone: 020 7818 4370

Peter Jones

Chairman

Henderson Opportunities Trust plc

Telephone: 020 7818 4472



INTERIM MANAGEMENT REPORT

 

CHAIRMAN'S STATEMENT

 

Review

Over the first half of the year, the Company's net asset value ("NAV") fell by 2.4%, while the FTSE All Share Total Return ("benchmark") remained flat. This underperformance against benchmark is disappointing, but follows a long period of outperformance, as shown in the performance table on the previous page.

 

The Company's strategy is based upon holding a portfolio which is very different to that of the benchmark, and this differentiation is the principal factor governing relative performance. Over recent years our stronger weighting in smaller companies has clearly contributed to outperformance but in the period under review market sentiment favoured larger companies, with the FTSE 100 returning a rise of 1.5% against a fall of 2.7% in the FTSE 250. We believe the market's preference for larger companies in the first half resulted from an increase in investor caution and concern about the underlying strength of the UK economy.

 

Our fund managers' view, which is endorsed by the Board, is that it would be inadvisable to react precipitately to short-term market sentiment, since this might well change in the second half once the uncertainty arising from the EU referendum ("Brexit") is resolved. The Company has therefore been and will continue to be focussed on stock-picking, since we believe this reflects our fund managers' key strength.

 

In aggregate the companies that we hold in our portfolio are operating successfully and reporting reasonably strong profit growth. We intend to keep with the current approach of running a relatively long list of large, medium and small sized companies that are working towards being excellent at what they do. They operate in diverse areas and it is through this diversity that we attempt to achieve long term capital preservation and growth. We combine this approach with running a reasonable level of portfolio gearing (currently around 18%). The current underlying portfolio yield is 2.2%, compared with the cost of short term borrowing of around 1.5% which applied throughout the period under review. The gearing over the long term has considerably aided performance.

 

Dividends

The revenue return from the Company's investments during the period was £1,063,000 compared to £1,050,000 over the same period in 2015. An interim dividend of 5.5p will be payable on 23 September 2016 to shareholders on the register of members on 19 August 2016. This compares with 5.0p for the same period last time, an increase of 10%.

 

Share price

During the period the share price fell by 8.8%, which was more than the NAV. At the end of April the share price discount to NAV was 14.9%. We have not bought in shares as we do not wish to erode the liquidity of the Company's shares that would remain in issue since this would, we believe, reduce demand over the longer term. A sustainable reduction in the discount to NAV will only be achieved by increasing demand for the Company's shares and, to this end, we are strengthening efforts to explain the Company's investment case. In particular, we are promoting the Company to the investing public through marketing campaigns, with focus on ensuring that information about the Company can be easily accessed from share-dealing platforms. Our fund managers are also continuing a busy schedule of meetings with existing and potential investors.

 

Board changes

As reported in the last annual report, George Burnett retired from the Board following the Annual General Meeting. George served on the Board for more than twenty years and was Chairman from 2004, displaying clear leadership and a strong focus on governance through all phases of the investment cycle. The Board will endeavour to maintain these qualities and continue to pursue the objective of achieving a premium to NAV, with a longer term ambition to grow the Company.

 

No further changes to the Board's composition are anticipated in the near future.

 

 

Outlook

In writing this section shortly before the Brexit vote, I am of course acutely aware of the potential market impacts that might arise after 23 June. Whatever the outcome, one source of market uncertainty will be removed and one might expect volatility to reduce somewhat, although nervousness around growth in China and the oil price may well remain for some time. Macroeconomic conditions are beyond our control and, in any case, we always aim to invest in companies with strong management teams that will cope in innovative and productive ways with whatever market conditions their businesses encounter.

 

Given that our investments are exclusively in UK stocks, the impact of recent uncertainties on sterling, delayed investment decisions and subdued equity prices has been significantly negative for our NAV. Nevertheless, income from investments has grown as, by and large, the companies in our portfolio have continued to produce positive results. As the causes of uncertainty recede, we might reasonably expect the market to better reward the performance of well-managed businesses, with good results reflected in equity prices and resumed growth in NAV.

 

 

Peter Jones

Chairman



FUND MANAGERS' REPORT

 

Market Review

The UK stock market ended the six months to the 30 April 2016 marginally lower having experienced high volatility, with falls of nearly 10% early this year followed by a near symmetrical recovery. The FTSE 100 Index bottomed out at 5537 in February, following a fall of having fallen nearly 13% but then rose strongly ending April at 6242, nearly 13% above its low point. So what was worrying the market? Firstly, the potential for a global slowdown, perhaps emanating from China; secondly, the weakness in the oil price and other commodities; and lastly, the prospect of the EU referendum vote in the UK. The latter was not expected until 2017 but this changed in November 2015 when David Cameron announced that the vote would be held in 2016, later specifying the date as 23 June. Sterling's exchange rate quickly fell from $1.54 to $1.38 and from 1.40 to 1.24.

 

Fund Performance

The Company has had an indifferent six months with the NAV total return including income, falling by 2.4% against our benchmark FTSE All Share Index being flat. The share price fell by 8.8% over the period producing a total return of -7.3%. As market volatility rose, so did discounts across the investment trust sector, particularly within the smaller companies' area. The Company was not immune from this with its discount rising from 8% to 14%. The most difficult months for the Company were November through to the end of January but from February performance improved such that from 1 January 2016, the NAV total return was up 3% against a benchmark return of 0.7%. There has been a minimal negative contribution from the level of gearing during the period.

 

Stock Contributors

 

The top and bottom five active contributors to the Company's relative performance are analysed below:

 

Top Five Contributors                            

Six Month Return %

Relative Contribution %

4D Pharma                                                           

17.0

+1.3

RWS

39.3

+0.6

Glencore

44.8

+0.4

Horizon Discovery                                                

41.8

+0.4

XP Power                                                             

18.9

+0.3

                                                                                          

4D Pharma, the developer of live bio-therapeutics, had a busy six months taking its two lead products into the clinic for trials, raising an additional £30m from shareholders, acquiring Tucana from University College Cork, to aid its work in microbiome signatures and, most recently, acquiring the production assets of Instituto Biomar in microbial fermentation to gain greater control over the production process. The company now has 15 assets in various indications including cancer, multiple sclerosis and asthma. RWS, the international patent translations and search service business, has enjoyed very strong trading also making its largest acquisition, CTi, which brings the world's leading life sciences translation and linguistic validation provider and provides another significant leg to the enlarged business. Glencore, the Swiss-based diversified natural resources group, raised over £1.5bn from shareholders and senior staff in September 2015 just as the sector was entering freefall making the investment volatile. This necessary action gave the company financial headroom to embark on a significant business re-structuring which is producing the benefits promised. Horizon Discovery, the life sciences service company, has shown progress towards full year break-even in 2017 and a high growth future enhanced by significant barriers to entry. Lastly, XP Power, the power supply manufacturer, has enjoyed good trading and has entered the high voltage market which extends its addressable market materially.

 

 

 

Bottom Five Contributors                      

Six Month Return %

Relative Contribution %

hVIVO  

-24.5

-0.7

NAHL 

-37.3

-0.7

Vertu Motors                                               

-22.0

-0.7

Snoozebox 

-95.8

-0.7

IP Group                                                              

-27.7

-0.6

 

hVIVO, the bio-medical services company, has seen weaker trading in its traditional space of providing outsourced trials services to pharmaceutical clients but is making steady progress in trials for its own emerging product portfolio. This transition will take time to work through but the company is well funded. NAHL, a marketing services company focused on the personal injury and medical negligence market saw a very sharp fall in its shares when the Chancellor's Autumn Statement contained provisions for consultation to limit personal injury claims and to adjust the value limit for claims within the Small Claims Court. This consultation is already late so we expect the shares to remain at these lower levels until some clarity is available. Vertu Motors, the UK's fifth largest motor retailer, has been trading strongly so a fall of 20% in the share price looks unjustified but the market is worried about "Brexit" and the possibility of a fall in sterling which would make imported vehicles less profitable for them. If the EU Referendum vote is to stay or fears for sterling are unfounded, we would expect shares like Vertu Motors to perform well. We had supported Snoozebox, which provides temporary portable hotel accommodation, to finance its continued development of this nascent market but boardroom disagreements and departures and a realistic review of finances has seen the shares tumble so we have sold. Lastly, IP Group, the university spin out and commercialisation specialist, has demonstrated steady progress with expansion in the USA and also within its existing portfolio companies. However, the stock market has become a little tired in waiting for its lead company Oxford Nanopore to announce an IPO. We hope this will be later this year or early in 2017.

 

Portfolio Activity

As a long term investor we spend a considerable amount of time researching and meeting companies in which we invest. This approach is reflected in a holding period of typically between three to five years as we appreciate that the cycle for a business to grow and mature is not easily reconciled with the volatility of the stock market. We endeavour to be patient. In the half year under review we have been active in either buying or selling positions in 44 companies (41 last year) of which 13 were complete sell downs (8 last year) while starting 8 new investments (11 last year). At the end of April, our total number of holdings stood at 88.

 

We sold out completely in St.Modwen Properties, the property developer, where we believed the market was fully discounting the benefits of its development pipeline and not factoring in enough risk, particularly regarding the Nine Elms project in London. We also reduced our exposure to XP Power, the power supply manufacturer in order to recycle some of our profits into new ideas. Another complete sell-down was Goals Soccer Centres, the 5 a side football centre, which we have owned since it floated in 2004. Here we believed that the business has outgrown management and the competition has become more intense in the UK market. We have still made decent profits but should have seen the writing on the wall earlier. Hill & Smith, which is a galvaniser for the infrastructure and building trade, has served us very well over the years and is run by a very good team but the rating on the shares is now historically high and we would rather own this again when the excitement has died down. Lastly we reduced our exposure to Johnson Service, the linen and garment rental business, again run by a very strong team, as the rating is starting to reflect the progress achieved over the last few years.

 

Our five largest buys are an eclectic mix, unlike our prior half year which was dominated by the very out of favour resource sector. Firstly, we invested in Metro Bank, the emerging high street bank with a very customer centric approach, which could be a very disruptive force over the next few years. We also supported another new entrant to the market, The Gym Group, a budget health and fitness chain. It is driving a nationwide rollout in a niche of the fitness market which is, again, disrupting the models of incumbents and taking market share. We have added to an existing holding in Barclays Bank, which has continued to attract the wrong sort of headlines, but this ignores not only the steps that are being taken by management but also the low valuation against a heavily impaired asset book. Be Heard, a newly created digital media agency, is targeting small specialist businesses in this rapidly evolving space, with a view to creating a fully evolved service offering.  Ultimately, it is likely to be sold to a larger group. Lastly, after a break of a couple of years, we invested again in Alliance Pharma, an international pharmaceutical company, supporting its largest acquisition ever of a portfolio of already licensed products producing good synergies and earnings growth for the future.

 

Outlook

Market sentiment and news flow is currently dominated by the perceived risks or benefits of a Remain or Leave result in the upcoming EU Referendum. Your Company's portfolio is well diversified by activity, has around 47% of sales being generated outside the UK and around 45% of the portfolio by value has net cash on the balance sheet. This should make the portfolio robust to external shocks. We do not have a crystal ball but are confident that we have invested in good businesses with good management teams who, having survived the credit crunch of 2008-9, are well prepared for the future.

 

 

 

James Henderson and Colin Hughes

Fund Managers



 Principal Risks and Uncertainties

The principal risks and uncertainties associated with the Company's business can be divided into various areas:

 

● Investment activity and strategy;

● Financial instruments and the management of risk;

● Operational;

● Accounting, legal and regulatory;

● Liquidity;

● Net gearing; and

● Failure of Henderson.

 

Detailed information on these risks is given in the Strategic Report and in the Notes to the Financial Statements in the Company's latest Annual Report for the year to 31 October 2015.

 

In the view of the Board these principal risks and uncertainties are as applicable to the remaining six months of the financial year as they were to the six months under review.

 

 

Directors' Responsibility Statement

(Disclosure and Transparency Rule (DTR) 4.2.10R)

 

The Directors confirm that, to the best of their knowledge:

 

● the condensed set of financial statements has been prepared in accordance with "FRS 104 Interim Financial Reporting";

 

● the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and the principal risks and uncertainties for the remaining six months of the year); and

 

● the interim management report and financial statements include a fair review of the information required by DTR 4.2.8R (disclosure of related party transactions and changes therein).

 

 

 

For and on behalf of the Board

Peter Jones

Chairman

 

  

 

 



INVESTMENT PORTFOLIO at 30 April 2016

Company

Valuation

£'000

% of portfolio


  Company

Valuation

£'000

% of

 portfolio

4D Pharma 1

7,320

             7.9


Faroe Petroleum 1

881

             1.0

Ricardo

2,679

           2.9


Boohoo.com 1

876

             0.9

HSBC

2,489

            2.7


Clinigen 1

857

             0.9

e2v technologies

2,467

             2.7


Alliance Pharma 1

817

             0.9

Vertu Motors 1

2,178

            2.3


Gateley 1

789

             0.9

Assura

2,162

             2.3


IG Group

773

             0.8

RWS 1

1,997

             2.1


Character 1

765

             0.8

Johnson Service 1

1,853

             2.0


Tribal 1

765

             0.8

hVIVO 1

1,794

             1.9


Servelec

760

             0.8

Royal Dutch Shell 'B' shares

1,786

             1.9


Aveva

755

             0.8

Ten Largest

26,725

           28.7


Fifty Largest

73,979

          79.5








Glencore

1,777

            1.9


Be Heard 1

750

             0.8

Rio Tinto

1,725

           1.9


Jupiter Fund Management

737

             0.8

Tracsis 1

1,715

            1.8


Creston

721

             0.8

Senior

1,632

             1.8


Benchmark 1

710

             0.8

Redde 1

1,628

            1.8


Dairy Crest

706

             0.8

Conviviality Retail 1

1,603

            1.7


GKN

697

             0.7

Micro Focus

1,573

             1.7


Victoria 1

690

             0.7

Barclays

1,565

             1.7


Electric Word 1

669

             0.7

Oxford Pharmascience 1

1,525

            1.6


Oxford Instruments

656

             0.7

Ebiquity 1

1,469

             1.6


Blue Prism 1

629

             0.7

Twenty Largest

42,937

           46.2


 Sixty Largest

80,944

          87.0








Safestyle 1

1,467

            1.6


WYG1

620

0.7

IP Group

1,431

            1.5


Eurocell

608

0.7

Cohort 1

1,330

            1.4


Xaar

606

0.7

Atlantis 1

1,296

            1.4


Pearson

604

0.7

XP Power

1,260

            1.4


Burberry

594

0.6

Johnson Matthey

1,227

             1.3


Ted Baker

589

0.6

Horizon Discovery 1

1,201

             1.3


Digital Barrier 1

586

0.6

Tarsus

1,194

             1.3


On The Beach

567

0.6

The Gym Group

1,188

             1.3


SCS                                         

564

0.6

BHP Billiton

1,166

             1.2


CML Microsystems

562

0.6

Thirty Largest

55,697

         59.9


Seventy Largest

86,844

93.4








SDL

1,148

             1.2


Countryside Properties                        

552

0.6

ITV

1,126

             1.2


Serica Energy1                               

552

0.6

Ilika 1

1,080

             1.2


Vodafone

548

0.6

NAHL 1

1,067

             1.1


Ubisense1

542

0.6

Metro Bank

1,025

             1.1


Quantum Pharma1                                     

536

0.6

Rolls Royce

1,004

             1.1


Lakehouse

510

0.5

Revolution Bars

984

             1.1


Premier Oil

489

0.5

Fidessa

956

             1.0


Sportech

488

0.5

Keywords Studios 1

934

             1.0


Miton1

438

0.5

Flowtech 1

920

             1.0


Velocys1

391

0.4

Forty Largest

65,941

          70.9


Eighty Largest

91,890

98.8












1Spatial1

375

0.4





Oxford Sciences Innovation

333

0.4





Plexus1

202

0.2





DX1

118

0.1





Circle Oil1

90

0.1





Snoozebox1

6

0.0





Kenmare Resources

0.0

0.0





Total

93,014

        100.0

1 Quoted on the Alternative Investment Market ('AIM')           

                                                                                

Analysis by Market Index

 

Index

FTSE All-Share Index %

Portfolio

 %

FTSE AIM

--

44.7

FTSE SMALLCAP

3.6

13.9

FTSE 250

16.3

12.1

FTSE 100

80.1

17.5

OTHER

--

9.4

FTSE FLEDGLING

--

2.4

Total

100.0

100.0

 

 

Analysis by Market Capitalisation

 

Index

FTSE All-Share Index %

Portfolio

%

Greater than £2bn

87.6

20.0

£1bn - £2bn

5.7

3.9

£500m - £1bn

3.7

17.1

£200m - £500m

2.3

25.6

£100m - £200m

0.6

14.6

£50m - £100m

0.1

12.7

Less than £50m

0.0

6.1

Total

100.0

100.0

 

 

Source: Factset

 

 



CONDENSED INCOME STATEMENT

 


(Unaudited)

Half Year ended

30 April 2016

(Unaudited)

Half Year ended

30 April 2015

(Audited)

Year ended

31 October 2015


Revenue  return £'000

Capital return £'000

Total £'000

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        

-

(2,562)

(2,562)

 

 

-

 

 

12,852

 

 

12,852

-

9,340

9,340

Income from investments

held at fair value through

profit or loss        

1,058

-

1,058

 

 

1,036

 

 

-

 

 

1,036

 

2,302

-

 

2,302

Interest receivable

and other income               

5

-

5

 

14

 

-

 

14

14

 

-

14

Gross revenue and

Capital (losses)/ gains

1,063

(2,562)

(1,499)

 

1,050

 

12,852

 

13,902

2,316

9,340

11,656

 

Management fee (note 2)

(62)

(146)

(208)

 

(85)

 

(198)

 

(283)

(173)

(403)

(576)

 

Performance fee (note 2)

-

-

-

-

(753)

(753)

-

(765)

(765)

Administrative expenses

(144)

-

(144)

 

(119)

 

-

 

(119)

(272)

-

(272)

Net return/(loss) on ordinary activities before finance charges and taxation

 

 

 

857

 

 

 

(2,708)

 

 

 

(1,851)

 

 

 

846

 

 

 

11,901

 

 

 

12,747

 

 

 

1,871

 

 

 

8,172

 

 

 

10,043

Finance charges

(36)

(85)

(121)

(32)

(74)

(106)

(70)

(164)

(234)

Net return/(loss) on ordinary activities before taxation  

821

(2,793)

(1,972)

 

814

 

11,827

 

12,641

1,801

8,008

9,809

Taxation on net return on ordinary activities

-

-

-

-

-

-

-

-

-

Net return/(loss)  on ordinary activities after taxation

821

(2,793)

(1,972)

 

814

 

11,827

 

12,641

1,801

8,008

9,809

Return/(loss) per ordinary share - basic and diluted (note 4)

10.26p

(34.91p)

(24.65p)

10.17p

147.83p

158.00p

22.51p

100.09p

122.60p

 

The total columns of this statement represent the Income Statement of the Company, prepared in accordance with FRS 104. The revenue and capital columns are supplementary to this and are published under guidance from the Association of Investment Companies.

 

The Company has no recognised gains or losses other than those disclosed in the Income Statement and Statement of Changes in Equity.

 

All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the period.

 

The accompanying notes are an integral part of the condensed financial statements.

CONDENSED STATEMENT OF CHANGES IN EQUITY

 


(Unaudited)

Half Year ended 30 April 2016


Called up share capital  £'000

Share premium account1 £'000

Capital redemption reserve1 £'000

Other capital reserves1 £'000

 

Revenue reserve1 £'000

 

 

Total

£'000

At 1 November 2015

2,000

14,838

2,431

59,298

2,440

81,007

Dividends paid on the ordinary shares

-

-

-

-

(1,040)

(1,040)

Net return on ordinary activities after taxation

-

-

-

(2,793)

821

(1,972)

At 30 April 2016

2,000

14,838

2,431

56,505

2,221

77,995

 

 


(Unaudited)

Half Year ended 30 April 2015


Called up share capital  £'000

Share premium account1

£'000

Capital redemption reserve1

£'000

Other capital reserves1

£'000

 

Revenue reserve1 £'000

 

 

Total

£'000

At 1 November 2014

2,000

14,838

2,431

51,290

1,743

72,302

Dividends paid on the ordinary shares

 

-

 

-

 

-

 

-

 

(704)

 

(704)

Net return on ordinary activities after taxation

 

-

 

-

 

-

 

11,827

 

814

 

12,641

At 30 April 2015

2,000

14,838

2,431

63,117

1,853

84,239

 

 


(Audited)

Year ended 31 October 2015


Called up share capital  £'000

Share premium account1

£'000

Capital redemption reserve1

£'000

Other capital reserves £'000

 

Revenue reserve1 £'000

 

 

Total

£'000

At 1 November 2014

2,000

14,838

2,431

51,290

1,743

72,302

Dividends paid on the ordinary shares

-

-

-

-

(1,104)

(1,104)

Net return on ordinary activities after taxation

-

-

-

8,008

1,801

9,809

At 31 October 2015

2,000

14,838

2,431

59,298

2,440

81,007

 

 

The accompanying notes are an integral part of these condensed financial statements.

 

1Distributions can be made from the 'revenue reserve' and from realised gains in 'other capital reserves'. Distributions cannot be made from 'share premium account' or the 'capital redemption reserve'.

CONDENSED STATEMENT OF FINANCIAL POSITION

 


(Unaudited)

30 April 2016

£'000

(Unaudited)

30 April 2015

£'000

(Audited)

31 October 2015 £'000

Investments held at fair value through profit or loss




Listed at market value

46,650

58,758

50,984

Quoted on AIM at market value

46,031

42,127

45,327

Unlisted at market value

333

-

333


93,014

100,885

96,644

Current assets




Investments held at fair value through profit or loss (note 6)

2

2

2

Debtors

276

327

265

Cash at bank and in hand

948

1,163

508


1,226

1,492

775

Creditors: amounts falling due within one year




Bank loans

(15,048)

(16,962)

(15,362)

Other creditors

(1,197)

(1,176)

(1,050)





Net current liabilities

(15,019)

(16,646)

(15,637)





Net assets

77,995

84,239

81,007





Capital and reserves




Called up share capital (note 7)

2,000

2,000

2,000

Share premium account

14,838

14,838

14,838

Capital redemption reserve

2,431

2,431

2,431

Other capital reserves

56,505

 63,117

59,298

Revenue reserves

2,221

1,853

2,440





 

Total shareholders' funds

 

77,995

 

84,239

 

81,007





Net asset value per ordinary share - basic and diluted (note 8)

 

974.8p

 

1,052.9p

 

1,012.5p





 

The accompanying notes are an integral part of these condensed financial statements.

  

 

 

CONDENSED STATEMENT OF CASH FLOWS

 


(Unaudited)

 

Half Year ended

30 April 2016

£'000

(Unaudited and restated1)

Half Year ended

30 April 2015

£'000

(Audited and restated) 1

Year ended

31 October 2015

£'000

Cash flows from operating activities



 

Net return on ordinary activities before taxation

(1,972)

12,641

9,809

Add back: finance costs

121

106

234

Add/(less): losses/(gains) on investments held at fair value through profit or loss

2,562

(12,852)

(9,340)

Increase in debtors

(9)

(72)

(12)

(Decrease)/increase in creditors

(783)

687

563





Net cash (outflow)/inflow from operating activities

(81)

510

1,254





Cash flows from investing activities




Purchase of investments

(7,361)

(14,651)

(25,616)

Sale of investments

9,358

9,490

21,184

Net cash inflow/(outflow) from investing activities

1,997

(5,161)

(4,432)





Cash flows from financing activities




Equity dividends paid (net of refund of unclaimed distributions and reclaimed distributions)

(1,040)

(704)

(1,104)

Net loans (repaid)/drawn down

(314)

5,125

3,525

Interest paid

(122)

(97)

(225)

Net cash (outflow)/inflow from financing activities

(1,476)

4,324

2,196





Net increase/(decrease) in cash and cash equivalents

440

(327)

(982)





Cash and cash equivalents at start of year

508

1,490

1,490

Effect of foreign exchange rates

-

-

-





Cash and cash equivalents at end of year

948

1,163

508









Comprising:




Cash at Bank

948

1,163

508





 

The accompanying notes are an integral part of these condensed financial statements.

 

1 The Cash Flow Statements previously reported have been restated to comply with the new disclosure requirements of FRS 102. There has been no impact on the Company's Income Statement, Statement of Financial Position (previously called the Balance Sheet) or Statement of Changes in Equity (previously called the Reconciliation of Movement in Shareholders' Funds) for periods previously reported.

 

 

 

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

 

1

Accounting policies - basis of preparation


The condensed set of financial statements has been prepared in accordance with FRS 104, Interim Financial Reporting, issued in March 2015, the revised reporting standard for half-year reporting that was issued following the introduction of FRS 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland, which is effective for periods commencing on or after 1 January 2015. The Statement of Recommended Practice for "Financial Statements of Investment Trust Companies and Venture Capital Trusts", in accordance with which the Company's financial statements are also prepared, was reissued by the Association of Investment Companies in November 2014 to comply with the revised reporting standards. The Company has early adopted the amendments to FRS 102 in respect to fair value hierarchy disclosures as published in March 2016.

 

Following the application of the revised reporting standards, there have been no significant changes to the accounting policies set out in the Company's Annual Report for the year ended 31 October 2015.

 

The condensed financial statements for the year ended 31 October 2015 and the six months ended 30 April 2015 have been restated where necessary to comply with the new standards and disclosure requirements.

 

There has been no impact on the Company's Income Statement, Statement of Financial Position (previously called the Balance Sheet) or Statement of Changes in Equity (previously called the Reconciliation of Movements in Shareholders' Funds) for periods previously reported. The Cash Flow Statements previously reported have been restated to comply with the new disclosure requirements of the revised reporting standard. The condensed set of financial statements has been neither audited nor reviewed by the Company's auditors.

 

2

Expenses: management fees and performance fees


Henderson Investment Funds Limited ("HIFL") is appointed to act as the Company's Alternative Investment Fund Manager. HIFL delegates investment management services to Henderson Global Investors Limited. References to Henderson within these results refer to the services provided by both entities. The management fee is calculated, quarterly in arrears, as 0.55% per annum on the net assets from 1 November 2015. Arrangements are in place for Henderson to earn a performance fee. The cap on total fees that can be earned in a financial year is, from 1 November 2015, 1.5% of the average net assets over the year (previously capped at 1.65%). There is no performance fee accrual for the current period (half year ended 30 April 2015: £753,000, year ended 31 October 2015: £765,000). Since 1 November 2013, the Company has allocated 70% of its management fees and finance charges to the capital return of the Income Statement with the remaining 30% being allocated to the revenue return. Performance fees payable are allocated 100% to the capital return.

 

3

Dividends


The Board has declared an interim dividend of 5.5p per ordinary share (2015: 5.0p), to be paid on 23 September 2016 to shareholders on the Register at the close of business on 19 August 2016. The ex-dividend date will be 18 August 2016. Based on the number of ordinary shares in issue at 20 June 2016 of 8,000,858, the cost of this dividend will be £440,000.

 

No provision has been made for the interim dividend in these condensed financial statements. The final dividend of 13.0p per ordinary share, paid on 24 March 2016 in respect of the year ended 31 October 2015, has been recognised as a distribution in this period.

 

 


4

Return per ordinary share - basic and diluted


(Unaudited)

Half Year

ended

30 April 2016

£'000

(Unaudited)

Half Year ended

30 April 2015

£'000

(Audited)

Year ended

31 October 2015

£'000

The return per ordinary share is based on the following figures:

 




Revenue return

821

814

1,801

Capital return

(2,793)

11,827

8,008

Total

(1,972)

12,641

9,809





Weighted average number of ordinary shares in issue for the period

 

8,000,858

 

8,000,858

 

8,000,858





Revenue return per ordinary share

10.26p

10.17p

22.51p

Capital return per ordinary share

                    (34.91p)

147.83p

100.09p

Total return per ordinary share

(24.65p)

158.00p

122.60p





5

Investments held at fair value through profit of loss


The table below analyses fair value measurements for investments held at fair value through profit or loss. These fair value measurements are categorised into different levels in the fair value hierarchy based on the valuation techniques used and are defined as follows under FRS 102:

 

Level 1: valued using quoted prices in active markets for identical assets

 

Level 2: valued by reference to valuation techniques using observable inputs other than quoted prices included in Level 1

 

Level 3: valued by reference to valuation techniques using inputs that are not based on observable market date

 

Investments held at fair value through profit or loss at 30 April 2016 (unaudited)

Level 1

£'000

Level 2

£'000

Level 3

£'000

Total

£'000

Investments

92,681

-

333

93,014

Current asset investments

2

-

-

2

Total

92,683

-

333

93,016

 

Investments held at fair value through profit or loss at 30 April 2015 (unaudited)

Level 1

£'000

Level 2

£'000

Level 3

£'000

Total

£'000

Investments

100,885

-

-

100,885

Current asset investments

2

-

-

2

Total

100,887

-

-

100,887

Investments held at fair value through profit or loss at 31 October 2015 (audited)

Level 1

£'000

Level 2

£'000

Level 3

£'000

Total

£'000

Investments

96,311

-

333

96,644

Current asset investments

2

-

-

2

Total

96,313

-

333

96,646






 

The investments were previously reported as Level 1 or Level 3 investments under the FRS 29 fair value hierarchy and those same investments continue to be classified as Level 1 or Level 3 investments following the adoption of FRS 102 and the amendments to the fair value hierarchy issued in March 2016. There have been no transfers between levels of the fair value hierarchy during the period.                   

                                                           

The valuation techniques used by the Company are explained in the accounting policies note in the Company's Annual Report for the year ended 31 October 2015 and are equally applicable under both FRS 29 and FRS 102.

       

6

Current asset investment


The Company has a holding in Deutsche Global Managed Platinum Income Fund, a money market fund which is used to invest cash balances that would otherwise be placed on short term deposit. At 30 April 2016 this holding had a value of £2,000 (30 April 2015: £2,000; 31 October 2015: £2,000).

 

7

Called up share capital


There were 8,000,858 ordinary shares of 25p each in issue at 30 April 2016 (30 April 2015 and 31 October 2015: 8,000,858).

 

8

Net asset value per ordinary share - basic and diluted


The net asset value per ordinary share is based on the net assets attributable to the ordinary shares of £77,995,000 (30 April 2015: £84,239,000; 31 October 2015: £81,007,000) and on the 8,000,858 ordinary shares of 25p each in issue at 30 April 2016 (30 April 2015: 8,000,858 and 31 October 2015: 8,000,858).

 

9

Transaction costs


Purchase transaction costs for the half-year ended 30 April 2016 were £9,000 (half-year ended 30 April 2015: £32,000; year ended 31 October 2015: £49,000); these comprise mainly stamp duty and commissions. Sale transaction costs for the half-year ended 30 April 2016 were £9,000 (half-year ended 30 April 2015: £9,000; year ended 31 October 2015: £19,000); these comprise mainly commissions.

 

10

Related party transactions


Other than the relationship between the Company and its Directors, the only related party arrangement currently in place is that with Henderson Investment Funds Limited for the provision of investment management, accounting, company secretarial, marketing and administration services. Other than fees payable in the ordinary course of business, there have been no material transactions with related parties that have affected the financial position of the Company during the half year period.

 

11

Going concern


Having reassessed the principal risks and uncertainties the directors believe that it is appropriate to adopt the going concern basis in preparing the financial statements.

 

12

General information


 

a) Investment Objective: The Company's objective is to achieve above average capital growth from investment in a portfolio of predominantly UK listed companies.

 

Investment Portfolio - Asset Allocation: The strategy is to invest in a concentrated portfolio of shares on an unconstrained basis across the whole range of market capitalisations. The investment portfolio is characterised by focus on growth, recovery and 'special opportunities' company shares which the Fund Manager believes should achieve the investment objective.

 

Benchmark: The benchmark is the FTSE All-Share Index.

 

b) Company Status

Henderson Opportunities Trust plc is registered in England and Wales No. 1940906, has its registered office at 201 Bishopsgate, London EC2M 3AE and is listed on the London Stock Exchange. The SEDOL number is 0853657. The London Stock Exchange (EPIC) Code is HOT. The Company's Global Intermediary Identification Number (GIIN) is LVAHJH.99999.SL.826 and its Legal Entity Identifier (LEI) is 2138005D884NPGHFQS77.

 

c) Directors and Secretary

The Directors of the Company are Peter Jones (Chairman of the Board), Peter May (Chairman of the Audit Committee), Frances Daley, Chris Hills, and Malcolm King. George Burnett was Chairman of the Board until his resignation on 17 March 2016. The Company Secretary is Henderson Secretarial Services Limited.

 

d) Website

Details of the Company's share price and net asset value, together with general information about the Company, monthly factsheets and data, copies of announcements, reports and details of general meetings can be found at www.hendersonopportunitiestrust.com.

 

13

Comparative information


The financial information contained in the half-year financial report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The figures and financial information for the year ended 31 October 2015 are extracted from the latest published accounts, restated where necessary to comply with FRS 102 and FRS 104 as explained in note 1, and do not constitute the statutory accounts for that year. Those accounts have been delivered to the Registrar of Companies and included in the report of the independent auditors, which was unqualified and did not include a statement under either section 498(2) or 498(3) of the Companies Act 2006.

 

14

Financial report for the half year ended 30 April 2016


The Half Year Report will be available on the Company's website or in hard copy from the Company's registered office, 201 Bishopsgate, London, EC2M 3AE. An abbreviated version of this Report, the 'Update', will be posted to shareholders in early July 2016.

 

 

 

Neither the contents of the Company's website not 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.

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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