Henderson Opportunities

Annual Financial Report
RNS Number : 1710O
Henderson Opportunities Trust PLC
05 February 2021
 

 

HENDERSON INVESTMENT FUNDS LIMITED

 

HENDERSON OPPORTUNITIES TRUST PLC

 

LEGAL ENTITY INDENTIFIER (LEI):  2138005D884NPGHFQS77

 

5 February 2021

 

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2020

 

This announcement contains regulated information

 

Investment Objective

The Company aims to achieve capital growth in excess of the FTSE All-Share Index from a portfolio of UK investments.

 

PERFORMANCE HIGHLIGHTS

 

Total Return Performance to 31 October 2020

 

 

1 year

%

3 years

%

5 years

%

10 years

%

NAV¹

-7.6

-12.4

14.1

131.4

Share price²

-1.7

-10.4

9.7

152.0

Peer group NAV³

-12.9

-13.0

11.5

93.4

Benchmark4

-18.6

-14.4

8.9

53.7

 

 

 

Year ended

31 October

2020

Year ended

31 October

2019

NAV per share at year end

1,046.3p

1,161.8p

Total return per share

(83.6p)

1.0p

Share price at year end

885.0p

932.0p

Net assets

£82.6m

£91.8m

Discount at year end5

15.4%

19.8%

Ongoing charge6

0.88%

0.91%

Dividend for year7

27.0p

26.0p

Dividend yield8

3.1%

2.6%

 

 

 

 

1 Net Asset Value (NAV) per ordinary share total return (including dividends reinvested)

2 Share price total return (including dividends reinvested)

3 AIC UK All Companies

4 FTSE All-Share Index

5 Calculated based on the NAV per share and share price at year end

6 Ongoing charge excludes performance fee. Ongoing charge including performance fee is 0.88% (2019: 0.91%) as no performance fee was paid during the year

7 This represents three interim dividends of 6.5p each and a proposed final dividend of 7.5p which will be put to shareholders for approval at the Annual General Meeting on 11 March 2021.  See the Annual Report for more details

8 Based on the share price at the year end

 

A glossary of terms and Alternative Performance Measures can be found in the Annual Report

 

Sources: Morningstar Direct, Janus Henderson, Refinitiv Datastream

 

 

CHAIRMAN'S STATEMENT

 

Performance review

It has been a very difficult year for UK equities. The COVID-19 pandemic and the resultant lockdown caused a rapid fall in UK economic activity, and the impact on corporate profitability produced widespread cuts in dividend payments. In this meltdown the returns from the Company's investment portfolio held up relatively well, falling by 7.6% but beating the FTSE All-Share Index (the benchmark) by 11.0%. This outperformance has continued in the early months of the new financial year, with the Company's portfolio returning 33.6% against the benchmark's return of 16.1% up to the end of January 2021. The table below shows the short and longer term returns from the portfolio. It illustrates that in spite of shortterm volatility the portfolio approach of blending a mix of shares in companies of different sizes can produce worthwhile returns. The 10-year comparison shows marked outperformance of the benchmark index.

 

 

 

1 year

(%)

3 year

(%)

 

5 year

(%)

 

10 year

(%)

 

NAV Total Return

-7.6

-12.4

14.1

131.4

Share Price Total Return

-1.7

-10.4

9.7

152.0

FTSE All-Share Total Return

-18.6

-14.4

8.9

53.7

 

Income review

The revenue return was 12.8p, compared to 29.9p last year. The fall in investment income came about due to widespread dividend cuts in the UK market following COVID-19 and the subsequent policy response. The portfolio began the financial year with a forecast dividend yield of 2.8%, somewhat lower than the FTSE All-Share Index dividend yield of 4.6%. The market expects that investment income will be relatively swift to recover and your Board believes that historic income levels from the portfolio will be reached again in two to three years.

 

In February 2020, we announced that, from the beginning of the 2020 financial year, quarterly dividends would be paid to shareholders. Three quarterly dividends of 6.5p per ordinary share for the financial year ending 31 October 2020 have been paid to shareholders. A probable 2020 final dividend recommendation of 7.5p per ordinary share was previously indicated, and the Board is pleased to confirm, subject to shareholder approval, that this distribution will be paid on 26 March 2021, resulting in a full year dividend of 27.0p (2019: 26.0p). As a result of the shortfall in revenue for the year, 14.2p will be paid out of revenue reserves and your Board will be prepared to repeat this exercise in future years to support the level of dividend distributions until the Company's portfolio dividend income fully recovers.

 

Fees and expenses

The ongoing charges ratio for the year was 0.88%. There was no performance fee paid as the NAV, although better than the comparative benchmark figure, was down on the prior year.

 

Share buybacks and the discount level

During the year 2,813 shares were bought back at an average price of 953p. The discount at the time was over 15% and the purchases marginally enhanced the NAV. The shares are held in treasury and can therefore be sold back to the market if the Company begins to trade at a premium in the future. The Board's policy will be to review buyback opportunities regularly and, make purchases from time to time, as appropriate, if the resultant enhancement to NAV is deemed worthwhile. The Board believes that the discount will be eroded over time with continuing outperformance and an investment strategy that offers the prospect of sustainable growth. A continuation vote is held every three years and the next vote will be in March 2023.

 

Gearing

Gearing ended the year at 13.6% of net assets, modestly higher than the 12.7% at the beginning of the financial year. This rise in gearing was caused principally by the fall in the Company's NAV as the pandemic impacted market values. As the Fund Managers describe in their report, they were modest net sellers during the year. The near mid-teens gearing level of the Company reflects a high level of conviction by the Fund Managers that there are a number of attractive investment opportunities at reasonable valuations across the UK equity market.

 

The Board

Davina Curling was appointed to the Board with effect from 1 November 2019 and was elected by shareholders at the AGM in March 2020. Max King retired with effect from the conclusion of the AGM in March 2020.

 

As announced in December 2020, having served on the Board for nine years I will be retiring with effect from the conclusion of the AGM in March 2021. It has been a great privilege for me to serve firstly as a Director and latterly as Chairman of your Company, and a pleasure to work with conscientious and knowledgeable fellow Directors. I trust that the dedicated team at Janus Henderson who have successfully managed your investments and supported the Board through governance and regulatory challenges in recent years will maintain the same exceptional standards for my successor, Wendy Colquhoun. Wendy joined the Board in September 2018 and has brought to the Board the benefit of over 25 years' experience as a lawyer providing advice to investment trust boards on regulatory and transactional matters.

 

Chris Hills reached his nine year anniversary in June 2019.  As I am retiring this year and as there will then be a small number of Directors on the Board when I do so, it is expected that Chris will remain on the Board until the conclusion of the Annual General Meeting in March 2022 to allow for the recruitment of his replacement during the coming year.

 

AGM

The Company's AGM is scheduled to take place at 2.30pm on Thursday 11 March 2021.

 

Due to the ongoing restrictions on large gatherings, shareholders will be unable to attend the Annual General Meeting on 11 March 2021 in person and it will be held as a "closed meeting".

 

The Notice of Meeting and details of the resolutions to be proposed at the AGM are contained in the Notice of Meeting being sent to shareholders with the Annual Report. The statutory business of the AGM will be conducted on a poll, counting the Directors in the quorum, and the Chairman will hold the proxy votes. Shareholders are strongly encouraged to submit their proxy forms ahead of the proxy voting deadline of 2.30pm on 9 March 2021 to ensure their vote counts. Shareholders holding shares on share dealing platforms should contact their platform directly to vote their shares.

 

A presentation from our Fund Managers, James Henderson and Laura Foll, providing their review of the year and thoughts on the future will be available to view on our website at www.hendersonopportunitiestrust.com. If shareholders would like to submit any questions in advance of the AGM, they are welcome to send these to the Corporate Secretary at itsecretariat@janushenderson.com, answers to shareholder questions will be provided on our website shortly after the AGM has been held.

 

The Board commits to holding physical meetings in future when restrictions are not in place and these can be held safely; however in case of any further extraordinary crises such as the COVID-19 lockdown, the Company is putting a proposed amendment to the Company's articles of association to shareholders to enable a combination of virtual and physical shareholder meetings to be held in the future.

 

Outlook

The prospect of success with the vaccine roll out and a substantial resolution of Brexit tariff concerns provide the ingredients for a pick-up in economic activity in the second half of this year. Stock market prices are not correlated to economic activity and the managers need to be careful as some company valuations already anticipate the better times. Therefore, there will be some reduction in holdings that have performed well to allow the Company to take on new opportunities as they arise.

 

The approach of having a mix of companies with different attributes that are in a variety of phases of their corporate development can add real value. It is possible with this approach to catch the growth and take out some of the volatility of investing in young companies which can in turn provide a seedbed for future success.

 

Peter Jones

Chairman

5 February 2021

 

 

FUND MANAGERS' REPORT

 

Investment backdrop

COVID-19 has accelerated the pace of pre-existing structural changes in the UK economy. The move towards online retailing had shown substantial growth for a number of years but was given a further enormous boost by lockdown with consumers staying at home. Some traditional older businesses are fast adapting to the changed circumstances but many have seen very large falls in revenue without having much chance of offsetting it. They have pulled what levers they can and that usually means a real attack on their cost base, the result of which hits the supply chain hard. The government schemes have allowed many businesses to survive, but they are struggling and much weaker. As a result of the acceleration in trends that were already established, it is the new economy stocks that have found favour with investors. These are usually companies that have a technological lead and have relatively light capital requirements. It has been traditional businesses such as aviation that have been most materially impacted.

 

Our portfolio is a blend of very different businesses serving a diverse mix of end markets. This diversification has helped the relative performance of the portfolio but there has still been a negative return for the year. However, in aggregate the companies in the portfolio have adapted well to the challenging circumstances. This has meant we have remained fully committed to UK equities and we believe the action taken by the companies leaves them well placed for some sort of return to normality. The valuations for many have fallen to very cheap levels.

 

Portfolio review

The portfolio is divided into the seven classifications below. These classifications are not meant to be prescriptive and are, to a degree, subjective. The aim is to ensure that the portfolio remains diverse in its exposure, as the different classifications will perform differently depending on the economic backdrop.

 

Classification

Total

(gross assets)

%

Indicative portfolio range

%

Largest

three holdings

Large cap (£1bn+)

These stocks are usually familiar to all investors. They are ballast for the portfolio but as individual companies we believe they remain long-term growth opportunities that are genuinely good in some of their operations.

15

10 - 30

Johnson Matthey,

GlaxoSmithKline,

Direct Line Insurance

Growth small cap

These are companies that can be substantially larger businesses in time. They have the management capability to do this and they have real quality.

27

20 - 40

Blue Prism, Boku,

Next Fifteen

Communications

Recovery

Some of these companies, for example those exposed to the aerospace industry, have fallen into the recovery classification as a result of COVID-19. However, as the global economy begins to recover earnings should be able to grow from current suppressed levels and the returns from the recovery area have been good over time.

4

0 - 20

Scapa, Provident

Financial, Rolls-Royce

Natural resources

These stocks have a place in the portfolio but they are two decision holdings. We need to think when to buy and when to sell if they are going to add value.

8

5 - 15

Serica Energy, Rio Tinto, Anglo American

Early stage companies

This area is not producing the returns that have been hoped for in a number of stocks. It was always going to be an area for some stocks to fail but we are working on how to do it better.

17

0 - 20

Ceres Power, Surface

Transforms, Mirriad

Advertising

Small & mid cap compounders

These are the quality long term holds. We believe that they are long term compounders which over time will grow into larger companies.

27

20 - 40

SigmaRoc, Springfield

Properties, RWS

Holdings

Special situations

These are one off situations that we need to monitor closely.

2

0 - 10

Redcentric

 

Since the previous year end, the largest changes to the portfolio on a classification basis were a smaller exposure to the recovery area, a smaller exposure to large companies, and a higher exposure to early stage companies and growth small cap. In all cases this change has come about primarily as a result of passive movements in share prices rather than active allocation changes. For example, in early stage companies Ceres Power, Mirriad Advertising and Ilika were all among the best contributors to performance, and in growth small cap Blue Prism and LoopUp were also among the top ten contributors during the year.

 

The recovery area performed poorly, despite many shares held beginning the year trading at an already low valuation versus history. This area of the portfolio is most exposed to traditional business models which were among the most impacted by the pandemic. With a few exceptions, we have maintained the Company's holdings in this area, and in the case of International Consolidated Airlines, Rolls-Royce and Hammerson, participated in rights issues in order to fund companies through the current challenging end markets. There was one new recovery position established during the year in International Personal Finance, a sub-prime lender outside the UK that has a strong digital lending business.

 

Income

It was a very difficult year for UK dividends, resulting in earnings per share falling to 12.8p versus 29.9p in the prior year. Many companies in the portfolio suspended dividends during the spring in response to COVID-19. The most material loss of income came from the financials sector, where banks were mandated by the UK regulator to suspend their dividends, and some non-life insurers held (such as Direct Line Insurance) temporarily suspended their dividend as a result of an uncertain claims outlook. Since the summer there has been an encouraging trend of companies across a broad range of sectors reinstating their dividends. Examples include Mondi, XP Power, Keystone Law and Direct Line Insurance.

 

At the Company level, the dividend was grown modestly from 26.0p the previous financial year to 27.0p. The Company entered the financial year with a strong revenue reserve of £3.4m, which has been partially utilised to fund this year's dividend, ending the year at £1.9m (prior to the payment of the third interim and final dividend payment). As the Chairman describes in his statement, the dividend guidance that we originally described in last year's annual report was adhered to despite the loss of investment income. This is because we can see a bridge to investment income recovering to its historic trend on a two to three year time horizon.

 

Portfolio activity

During the year we were small net sellers, purchasing £13.3m in aggregate and selling £14.9m. As a result of the fall in net asset value during the year, gearing ended the year at 13.6%, modestly higher than at the beginning of the year when it was 12.7%. The gearing level continues to be determined not by our view of the macroeconomic backdrop, but by valuation opportunities across the UK equity market. The near mid-teens level of gearing currently deployed in the Company signals that we are finding a broad array of attractive opportunities.

 

During the year we fully sold out of eight holdings. Four of the eight sales were driven by takeover approaches and we go into more detail below. There were seven new purchases, and on the classifications basis (described in the 'portfolio review' section), these purchases were deliberately spread across early stage companies, large companies, recovery, natural resources and growth small cap. The portfolio finished the year with 87 holdings (not including those written down to zero).

 

Purchases

The largest five purchases during the year were:

 

Aviva (new holding). Under a new CEO they are making progress in simplifying the group, which has traditionally been a conglomerate and therefore traded at a valuation discount to peers. The shares continue to trade at a material discount to book value with an attractive dividend yield.

Van Elle (addition to existing holding). The company (which provides piling) is positively exposed to growing UK infrastructure spend, such as road building and large infrastructure projects such as HS2. The valuation, whether relative to book value or on a historic earnings basis, continues to look low.

Anglo American (new holding). The company mines for a broad range of commodities including diamonds, copper, platinum and iron ore. Earnings have good scope to grow from a combination of new projects coming on stream (such as a new Peruvian copper mine), and from earnings recovering in areas such as diamonds.

AFC Energy (new holding). The company manufactures fuel cells. It is in the early stages of its development with its target markets being construction, temporary power and ultra rapid EV charging.

ITM Power (new holding). The company develops equipment to convert renewable energy to a clean fuel. It enables the use of green hydrogen for industrial, transport and residential sectors. It has raised sufficient capital to fund its medium-term growth objectives.

 

Sales

The largest five sales during the year were:

 

SDL (sold). The position was sold following an all shares takeover approach from RWS (also held within the portfolio). While the combination in our view was logical from both a strategic and financial perspective, the position in SDL was sold for portfolio balance reasons in order to prevent the combined holding in the portfolio becoming too large. RWS remains a top ten holding in the portfolio.

Assura (reduced). Some profits were taken in the position as it had performed well on an absolute and relative basis and was trading at a substantial premium to net asset value.

RWS (reduced). Prior to the announced SDL acquisition some profits were taken in the position as it had been a strong absolute and relative performer and was trading on a high valuation versus history.

Ceres Power (reduced). The shares were the largest contributor to performance this year following a manufacturing license agreement with Bosch (with Bosch also increasing its equity stake and taking a seat on the Ceres board). Some profits were taken in the holding, as while the commercial potential of the technology is large, commercialisation remains at a relatively early stage and the valuation on any traditional basis is high.

Learning Technologies (reduced). The shares have been a good absolute and relative performer over time, and as a result the valuation is relatively high while recent organic growth has been modest.

 

There were four takeover approaches during the year, including SDL described above. Eland Oil & Gas, Aggregated Micro Power and Be Heard also received approaches and were subsequently sold.

 

Attribution

 

Top 10 absolute contributors to return during the financial year:

Company name

Share Price Total Return (%)

Contribution to NAV (%)

Ceres Power

241.7

4.3

LoopUp

233.3

2.3

Blue Prism

87.8

1.7

Mirriad Advertising

120.6

1.4

Boku

21.8

1.4

Ilika

287.0

1.4

XP Power

53.7

1.2

Surface Transforms

103.4

0.9

Rio Tinto

16.7

0.9

Oxford Instruments

22.6

0.9

 

While it is encouraging to see the diversity of end markets among the top ten largest contributors to performance, were there to be a common theme, it would be that the majority of the companies are in structurally growing areas and often challenging traditional incumbents. Two of the top ten are, for example, in the alternative energy space; Ceres Power designs fuel cells and Ilika designs and manufactures solid state batteries.

 

A number of the earlier stage companies that performed well this year received external validation of their technology from larger companies. This took the form of either a commercial partnership (for example Ceres Power signed a manufacturing licensing agreement with Bosch) or the larger company becoming a customer (for example Surface Transforms, which makes high performance ceramic brakes, signed a contract with a large electric vehicle manufacturer). In other cases good performance was as a result of resilient sales growth despite the pandemic; Blue Prism, LoopUp, Boku and XP Power are all forecast to grow sales in 2020 (their results had not been published at the time of writing this report).

 

LoopUp, the second largest contributor to performance, was in the previous financial year the largest detractor from performance. They are a software-as-a-service conference call provider. While in the previous year they were impacted by lower than expected demand among UK professional services firms, in the current year the transition of a significant proportion of workers to working from home meant a material step change in their revenues, with sales growing over 40% in the first six months of the year.

 

(See chart in the Annual Report)

 

Top 10 absolute detractors from return during the financial year:

Company Name

Share Price Total Return (%)

Contribution to NAV (%)

Hammerson

-96.2

-2.1

Rolls-Royce

-72.3

-1.9

Springfield Properties

-18.7

-1.4

Ricardo

-41.8

-1.4

Senior

-70.3

-1.2

Fastjet

-100.0

-1.2

HSBC

-44.3

-1.2

Standard Chartered

-50.0

-1.1

Workspace

-36.3

-1.0

International Consolidated Airlines

-82.1

-0.9

 

The common themes among the majority of the largest detractors from performance are civil aerospace, physical property and banks. In all cases the primary cause of weakness was the pandemic. Examining each in more detail:

 

Civil aerospace - the majority of the global plane fleet was, over the spring, temporarily grounded and global passenger miles have been very slow to recover. This has caused substantial overcapacity and as result the two largest Original Equipment Manufacturers (OEMs) (Airbus and Boeing) have reduced production rates, causing a knock-on impact throughout the aerospace supply chain. The companies held have responded by sharply reducing costs and, in the case of Rolls-Royce and International Consolidated Airlines, raising additional funding from the equity market via rights issues (in which the Company participated). The civil aerospace market is forecast to be slow to recover, however valuations in the area are low on any return to 'normal' earnings and some companies may emerge to a diminished competitive environment. The holding in Fastjet has been written down to zero.

Physical property - the closure of non-essential shops and some offices in the spring mean reduced rent collections for landlords. For Hammerson, which owns prime retail property in the UK and Continental Europe, this temporary closure of a large portion of the retail estate came at a time when rents were already under structural pressure as consumer spending shifted to online. This reduced rent collection alongside pressure on asset values resulted in a rights issue (in which we participated for the Company) in order to reduce the indebtedness of its balance sheet. We continue to think there is a role for prime physical retail in a brand's omnichannel offering, and think Hammerson is well placed to provide this. Similarly we think the flexible office space that Workspace provides will see a good recovery in demand once the current restrictions ease.

Banks - the Company has a relatively low overall exposure to banks, but those it does hold detracted from absolute returns. Following the pandemic, interest rates were cut from already low levels further pressuring margins in the sector. There were also question marks surrounding the scale of loan losses as some corporate borrowers saw their businesses forcibly closed, while on the consumer lending side, a rise in unemployment levels may lead to customers struggling to meet mortgage payments. The true scale of loan losses remains unknown, although to date loan losses have been at the lower end of expectations. Valuations in the area remain low and on any rise in interest rates in the future the sector could perform better.

 

The Board

We will miss Peter Jones' guidance as the Chairman of the Company. His calmness during the market volatility that occurred in the early stages of the pandemic helped the portfolio to be well placed for the subsequent recovery. We look forward to working with Wendy Colquhoun who will become the new Chairman after the AGM.

 

Outlook

Since the end of the financial year (to the end of January 2021) the portfolio has performed well, with the net asset value rising 33.6% compared to a rise in the FTSE All-Share of 16.1%. This performance has been driven predominantly by strength in the alternative energy area, with positions including AFC Energy, Ceres Power and Ilika performing well. COVID-19 has accelerated the desire of governments and the private sector to make tangible progress in targeting climate change and there is material investment going into the area. Some of the early stage companies held in the portfolio could be the market leaders in, for example, fuel cells in the future, while others may see their technologies outcompeted and become obsolete. The size of these end markets is large and therefore the 'prize' is big for companies that become market leaders, but we need to be aware of the risks involved and the difficulties of precisely valuing companies at an early stage of their lifecycle. Further volatility is to be expected on the route to full commercialisation. We have, therefore, continued to take some profits in the area. Elsewhere in the portfolio it is encouraging to see companies in more traditional industries such as housebuilding and building materials also performing well. We are continuing to find a number of attractive valuation opportunities in the UK across both new and existing holdings, and intend to remain fully invested with a modest (low to mid-teens) level of gearing.

 

James Henderson and Laura Foll

Fund Managers

5 February 2021

 

 

MANAGING OUR RISKS

 

The Board, with the assistance of the Manager, has carried out a robust assessment of the principal risks and uncertainties facing the Company, including those that would threaten its business model, future performance, solvency, liquidity and reputation. The principal risks and uncertainties facing the Company relate to investing in the shares of companies that are listed in the United Kingdom, including small companies. Although the Company invests almost entirely in securities that are listed 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 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.

 

The Board considers regularly the principal risks facing the Company in order to mitigate them as far as practicable. The Board monitors the Manager, its other service providers and the internal and external environments in which the Company operates to identify new and emerging risks. The Board's policy on risk management has not materially changed from last year, although the inherent likelihood of the occurrence of poor investment performance, failure or serious difficulties of one of the Company's third-party service providers, the loss of bank borrowing facilities and failure of the Manager to manage financial or administrative controls due to the increased possibility of cyberattacks or issues with bandwidth as many employees worked from home were increased due to the COVID-19 pandemic. The Board has received regular updates from the Fund Managers during the pandemic. These have enabled the Directors to monitor and manage risks related to the pandemic. COVID-19 will continue to affect the value of the Company's investments due to the disruption of supply chains and demand from products and services, increased costs and cash flow problems, and changed legal and regulatory requirements for companies. The pandemic has triggered a share fall in global stock markets and created uncertainty around future dividend income. The Board notes that the Fund Managers' investment process remains unchanged by the COVID-19 pandemic and they continue to focus on long-term company fundamentals and detailed analysis of current and future investments. It is the Board's view that demographic change, technological change, environmental sustainability and political change are emerging risks.

 

The Board has drawn up a risk map which identifies the substantial risks to which the Company is exposed. The Board has also put in place a schedule of investment limits and restrictions, appropriate to the Company's investment objective and policy. These principal risks fall broadly under the following categories:

 

Risk

Controls and mitigation

 

Investment activity and strategy

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 a reduction in NAV, underperformance against the Company's benchmark and the Company's peer group; it may also result in the Company's shares trading on a wider discount to NAV.

The Manager provides the Directors with management information including performance data reports and portfolio analyses on a monthly basis. The Board monitors the implementation and results of the investment process with the Fund Managers, who attend 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. The Board seeks to manage these risks by ensuring a diversification of investments through regular meetings with the Fund Managers with measurement against performance indicators and by reviewing the extent of borrowings.

 

The Board seeks to manage these risks by ensuring a diversification of investments through regular meetings with the Fund Managers with measurement against performance indicators and by reviewing 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, interest rate risk, liquidity risk, currency 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 the Annual Report.

Operational and cyber

Disruption to, or failure of, the Manager's accounting, dealing or payment systems or the Custodian or the Depositary's records could prevent the accurate reporting and monitoring of the Company's financial position. The Company is also exposed to the operational risk that one or more of its services providers may not provide the required level of service. The Company may also be exposed to the risk of cyberattack on its service providers.

The Manager has contracted some of its operational functions, principally those relating to trade processing, investment administration, accounting and cash management, to BNP Paribas Securities Services.

 

The risk of failure of the Manager to manage financial or administrative controls due to the increased possibility of cyberattacks or issues with bandwidth as many employees worked from home was increased due to the COVID-19 pandemic. The Directors report that, despite the COVID-19 pandemic, there has been no change to the level of service provided by the Manager or the Company's other third-party suppliers and the pandemic has served to highlight the resilience and high quality of the services provided.

 

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 controls section of the Audit and Risk Committee report in the Annual Report.

 

Accounting, legal and regulatory

A breach of Section 1158 could lead to a loss of investment trust status, resulting in capital gains realised within the portfolio being subject to corporation tax. A breach of the FCA's Listing Rules could result in suspension of the Company's shares, while a breach of the Companies Act 2006 could lead to criminal proceedings, or financial or reputational damage.

 

The Manager is contracted to provide investment, company secretarial, administration and accounting services through qualified professionals. The Board receives internal controls reports produced by Janus Henderson on a quarterly basis, which confirm regulatory compliance.

Liquidity

In line with the Company's investment strategy the Fund Managers can invest on an unconstrained basis across the whole range of market capitalisations. This includes investing in smaller, early stage development companies. The market for these shares is less liquid than for those stocks which have a larger market capitalisation.

 

The Board monitors the Company's exposure to these smaller companies on a monthly basis and reviews this in detail at Board meetings. The liquidity of the whole portfolio is also considered at Board meetings.

Net 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 would prevent the Company from gearing. A breach of the Company's borrowing covenants or the gearing range determined by the Board could lead to the Company becoming a forced seller of shares with possible losses for shareholders.

 

The Board reviews the level of net gearing at each Board meeting in the light of the liquidity of the portfolio and ensures that it is well within the covenants so that this risk is unlikely to arise.

Failure of Janus Henderson

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

The Board meets regularly with representatives of the Manager's Investment Management, Risk, Compliance, Internal Audit and Investment Trust teams and reviews internal control reports from the Manager on a quarterly basis. The failure of the Manager would not necessarily lead to a loss of the Company's assets, however, this risk is mitigated by the Company's ability to change its investment manager if necessary, subject to the terms of its management agreement.

 

BORROWINGS

The Company has an unsecured loan facility in place which allows it to borrow as and when appropriate. £20m (2019: £20m) is available under the facility. Net gearing is limited by the Board to 25% of net assets. The maximum amount drawn down in the period under review was £14.1m (2019: £14.6m), with borrowing costs for the year totalling £131,000 (2019: £177,000). £14.1m (2019: £12.6m) of the facility was in use at the year end. Net gearing at 31 October 2020 was 13.6% (2019: 12.7%) of net asset value.

 

VIABILITY STATEMENT

The Company is normally a long-term investor; the Board believes it is appropriate to assess the Company's viability over a five year period in recognition of its long-term horizon and what the Board believes to be investors' horizons, taking account of the Company's current position and the potential impact of the principal risks and uncertainties as documented in this Strategic Report.

 

The assessment has considered the impact of the likelihood of the principal risks and uncertainties facing the Company, in particular investment strategy and performance against benchmark, whether from asset allocation or the level of gearing, and market risk, materialising in severe but plausible scenarios, and the effectiveness of any mitigating controls in place. The Directors took into account the liquidity of the portfolio and the borrowings in place when considering the viability of the Company over the next five years and its ability to meet liabilities as they fall due. This included consideration of the duration of the Company's borrowing facilities and how a breach of any covenants could impact on the Company's net asset value and share price.

 

The Directors do not expect there to be any significant change in the current principal risks and adequacy of the mitigating controls in place. Also the Directors do not envisage any change in strategy or objectives or any events that would prevent the Company from continuing to operate over that period as the Company's assets are liquid, its commitments are limited and the Company intends to continue to operate as an investment trust. In coming to this conclusion, the Board has considered the current COVID-19 pandemic and the impact of the end of the UK's transition phase of leaving the European Union. The Company's revenue stream has been severely impacted by widespread dividend cuts in the UK market as a result of the COVID-19 pandemic. The Board believes that income will recover to historic income levels within a two to three year period and the Company has sufficient distributable reserves to meet any dividend distributions until dividend income fully recovers. The Board does not believe that these factors will have a long-term impact on the viability of the Company and its ability to continue in operation, notwithstanding the short-term uncertainty they have caused in the markets.

 

Based on this assessment, the Board has a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the next five year period.

 

RELATED PARTY TRANSACTIONS

The Company's transactions with related parties in the year were with its Directors and the Manager. There have been no material transactions between the Company and its Directors during the year and the only amounts paid to them were in respect of expenses and remuneration for which there were no outstanding amounts payable at the year end. Directors' shareholdings are disclosed in the Annual Report.

 

In relation to the provision of services by the Manager, other than fees payable by the Company in the ordinary course of business and the facilitation of marketing activities with third parties, there have been no material transactions with the Manager affecting the financial position of the Company during the year under review. More details on transactions with the Manager, including amounts outstanding at the year end, are given in the Notes of the Annual Report.

 

STATEMENT OF DIRECTORS' RESPONSIBILITIES

In accordance with Disclosure Guidance and Transparency Rule 4.1.12, each of the Directors, who are listed in the Annual Report, confirms that, to the best of his or her knowledge:

 

the Company's Financial Statements, which have been prepared in accordance with UK Accounting Standards on a going concern basis, give a true and fair view of the assets, liabilities, financial position and profit of the Company; and

 

the Strategic Report and Financial Statements include 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

Peter Jones

Chairman

5 February 2021

 

Twenty Largest Holdings at 31 October 2020

The stocks in the portfolio are a diverse mix of businesses operating in a wide range of end markets.

 

Rank

2020 (2019)

 

 

Company

% of

Portfolio

 

Approximate Market Capitalisation

Valuation

2019

£'000

 

Purchases

£'000

Sales

£'000

Appreciation/

(depreciation)

£'000

Valuation

2020

£'000

1 (12)

Blue Prism¹

4.3

£1.4b

2,256

-

(183)

2,008

4,081

2 *

Ceres Power¹

3.9

£1.2b

1,035

530

(1,325)

3,445

3,685

Boku¹

3.3

£342m

2,170

310

-

599

3,079

Oxford Instruments

3.0

£911m

2,337

-

-

528

2,865

SigmaRoc¹

2.8

£114m

2,452

256

-

(90)

2,618

6 (2)

Serica Energy¹

2.6

£280m

3,216

-

-

(706)

2,510

RWS Holdings¹

2.6

£1.5b

3,929

-

(1,394)

(77)

2,458

Springfield Properties¹

2.6

£95m

2,501

516

-

(572)

2,445

9 (15)

Rio Tinto

2.3

£70.6b

2,007

-

-

172

2,179

Tracsis¹

2.3

£148m

2,975

-

(505)

(302)

2,168

Cohort¹

2.1

£246m

1,921

-

(128)

232

2,025

Next Fifteen Communications¹

2.1

£404m

1,741

377

-

(111)

2,007

13 *

GB Group¹

2.1

£1.7b

1,208

183

-

609

2,000

Surface Transforms¹

2.0

£78m

840

61

-

974

1,875

LoopUp¹

1.9

£119m

542

-

-

1,295

1,837

16 *

Integrafin Holdings

1.9

£1.6b

1,356

-

-

432

1,788

Vertu Motors¹

1.9

£108m

1,861

440

-

(535)

1,766

Johnson Matthey

1.8

£4.2b

2,456

-

-

(737)

1,719

19 *

Mirriad Advertising¹

1.8

£78m

530

246

-

922

1,698

20 (5)

Learning Technologies¹

1.8

£927m

2,552

-

(1,324)

451

1,679

 

At 31 October 2020 these investments totalled £46,482,000 or 49.1% of the portfolio.

 

* Not in the top 20 largest holdings last year

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

 

Portfolio by Sector

As a percentage of the investment portfolio excluding cash

 

31 October 2020

%

31 October 2019

%

Basic Materials

6.6

5.8

Consumer Goods

4.6

4.2

Consumer Services

10.4

10.6

Financials

17.0

21.1

Health Care

5.2

5.6

Industrials

22.4

22.4

Oil & Gas

11.6

8.0

Technology

20.7

20.0

Telecommunications

0.9

1.8

Utilities

0.6

0.5

 

100.0

100.0

 

 

Portfolio by Index

As a percentage of the investment portfolio excluding cash

 

31 October 2020

%

31 October 2019

%

FTSE 100

15.6

20.3

FTSE 250

11.9

13.8

FTSE SmallCap

6.4

8.6

FTSE AIM

63.5

54.2

Other1

2.6

3.1

 

100.0

100.0

 

1 Other also includes AIM investments outside the FTSE AIM Index and shares listed on the main market which are not included in the FTSE All-Share Index

 

Market capitalisation of the portfolio at 31 October 2020

 

 

Portfolio Weight

%

Benchmark Weight

%

Greater than £2b

18.0

85.9

£1b - £2b

17.0

7.4

£500m - £1b

7.9

3.5

£200m - £500m

17.7

2.5

£100m - £200m

18.7

0.6

£50m - £100m

11.3

0.1

Less than £50m

9.0

0.0

Other

0.4

0.0

 

100.0

100.0

 

A glossary of terms can be found in the Annual Report

Sources: Morningstar Direct, Janus Henderson, Refinitiv Datastream

 

AUDITED INCOME STATEMENT

 

 

 

Year ended 31 October 2020

Year ended 31 October 2019

 

 

Revenue

return

£'000

Capital

return

£'000

 

Total

return

£'000

Revenue

return

£'000

Capital

return

£'000

 

Total

return

£'000

Notes

 

 

 

 

 

 

 

2

Losses on investments held at fair value through profit or loss

-

(7,215)

(7,215)

-

(1,824)

(1,824)

3

Income from investments held at fair value through profit or loss

1,329

-

1,329

2,538

-

2,538

4

Other interest receivable and other income

166

-

166

379

-

379

 

 

 

 

 

 

 

 

 

 

---------

----------

----------

---------

----------

----------

Gross revenue and capital losses

1,495

(7,215)

(5,720)

2,917

(1,824)

1,093

 

 

 

 

 

 

 

 

5

Management and performance fee

(130)

(305)

(435)

(147)

(342)

(489)

 

Other administrative expenses

(312)

-

(312)

(347)

-

(347)

 

 

---------

----------

----------

-----------

----------

----------

 

Net return/(loss) before finance costs and taxation

1,053

(7,520)

(6,467)

2,423

(2,166)

257

 

 

Finance costs

(40)

(91)

(131)

(53)

(124)

(177)

 

 

-----------

----------

----------

-----------

----------

----------

 

Net return/(loss) before taxation

1,013

(7,611)

(6,598)

2,370

(2,290)

80

 

 

Taxation

(3)

-

(3)

(4)

-

(4)

 

 

-----------

----------

----------

-----------

----------

----------

 

Net return/(loss) after taxation

1,010

(7,611)

(6,601)

2,366

(2,290)

76

 

 

----------

----------

----------

----------

----------

----------

6

Net return/(loss) per ordinary share -

 

 

 

 

 

 

 

basic and diluted

12.78p

(96.36p)

(83.58p)

29.88p

(28.92p)

0.96p

 

 

======

=======

======

======

=======

======

 

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. The Company had no recognised gains or losses other than those disclosed in the Income Statement.

 

 

AUDITED STATEMENT OF CHANGES IN EQUITY

 

 

 

 

Year ended 31 October 2020

 

Called up

share capital

£'000

 

Share

premium

account

£'000

 

Capital

redemption

reserve

£'000

 

Other

capital

reserves

£'000

 

 

Revenue

reserve

£'000

 

Total shareholders' funds

£'000

 

 

 

 

 

 

 

At 1 November 2019

2,000

14,838

2,431

69,105

3,424

91,798

Ordinary dividends paid

-

-

-

-

(2,527)

(2,527)

Net (loss)/return after taxation

-

-

-

(7,611)

1,010

(6,601)

Purchase of 2,813 ordinary shares to be held in treasury

-

-

-

(27)

-

(27)

 

--------

----------

----------

----------

-----------

---------

At 31 October 2020

2,000

14,838

2,431

61,467

1,907

82,643

 

=====

======

======

======

======

=====

 

 

 

 

 

 

Year ended 31 October 2019

 

Called up

share capital

£'000

 

Share

premium

account

£'000

 

Capital

redemption

reserve

£'000

 

Other

capital

reserves

£'000

 

 

Revenue

reserve

£'000

 

Total shareholders' funds

£'000

 

 

 

 

 

 

 

At 1 November 2018

2,000

14,838

2,431

72,334

2,757

94,360

Ordinary dividends paid

-

-

-

-

(1,699)

(1,699)

Net (loss)/return after taxation

-

-

-

(2,290)

2,366

76

Purchase of 99,670 ordinary shares to be held in treasury

-

-

-

(939)

-

(939)

 

--------

----------

----------

----------

-----------

---------

At 31 October 2019

2,000

14,838

2,431

69,105

3,424

91,798

 

=====

======

======

======

======

=====

 

 

AUDITED STATEMENT OF FINANCIAL POSITION

 

 

31 October 2020

£'000

31 October 2019

£'000

Fixed Assets

 

 

Investments held at fair value through profit or loss

 

 

Listed at market value

33,606

45,684

Quoted on AIM at market value

60,746

57,514

Unlisted at market value

407

400

 

------------

------------

 

94,759

103,598

 

------------

------------

 

 

 

Current assets

 

 

Investment held at fair value through profit or loss

2

2

Debtors

66

231

Cash at bank and in hand

2,882

971

 

------------

------------

 

2,950

1,204

 

 

 

Creditors: amounts falling due within one year

(15,066)

(13,004)

 

-----------

-----------

Net current liabilities

(12,116)

(11,800)

 

 

 

Total assets less current liabilities

82,643

91,798

 

-----------

-----------

Net assets

82,643

91,798

 

=======

=======

 

 

 

Capital and reserves

 

 

Called up share capital

2,000

2,000

Share premium account

14,838

14,838

Capital redemption reserve

2,431

2,431

Other capital reserves

61,467

69,105

Revenue reserve

1,907

3,424

 

------------

------------

Total shareholders' funds

82,643

91,798

 

=======

=======

 

 

 

Net asset value per ordinary share (basic and diluted)

1,046.3p

1,161.8p

 

=======

=======

 

 

AUDITED STATEMENT OF CASH FLOWS

 

Year ended

31 October

2020

Year ended

31 October

2019

 

£'000

£'000

Cash flows from operating activities

 

 

Net (loss)/return before taxation

(6,598)

80

Add: finance costs

131

177

Add: losses on investments held at fair value through profit or loss

7,215

1,824

Withholding tax on dividends deducted at source

(5)

(7)

Decrease/(increase) in other debtors

167

(81)

(Decrease)/increase in creditors

(27)

132

 

----------

----------

Net cash inflow from operating activities

883

2,125

 

----------

----------

Cash flows from investing activities

 

 

Purchase of investments

(12,719)

(28,081)

Sale of investments

14,938

23,431

 

------------

------------

Net cash inflow/(outflow) from investing activities

2,219

(4,650)

 

------------

------------

Cash flows from financing activities

 

 

Equity dividends paid

(2,527)

(1,699)

Net loans drawn down

1,501

5,602

Buyback of ordinary shares

(27)

(939)

Interest paid

(138)

(175)

 

-----------

-----------

Net cash (outflow)/inflow from financing activities

(1,191)

2,789

 

-----------

-----------

Net increase in cash and cash equivalents

1,911

264

 

 

 

Cash and cash equivalents at start of year

971

707

 

----------

----------

Cash and cash equivalents at end of year

2,882

971

 

----------

----------

Comprising:

 

 

Cash at bank

2,882

971

 

=====

=====

 

 

 

 

 

NOTES TO THE FINANCIAL STATEMENTS

 

1.

Accounting policies

 

(a) Basis of accounting

The Company is a registered investment company as defined in Section 833 of the Companies Act 2006 and is incorporated in the United Kingdom. It operates in the United Kingdom and is registered at 201 Bishopsgate, London EC2M 3AE.

 

The Financial Statements have been prepared in accordance with the Companies Act 2006, FRS 102 - The Financial Reporting Standard applicable in the UK and Republic of Ireland and with the Statement of Recommended Practice: Financial Statements of Investment Trust Companies and Venture Capital Trusts (the 'SORP') issued in October 2019.

 

The principal accounting policies applied in the presentation of these Financial Statements are set out below. These policies have been consistently applied to all the years presented.

 

The Financial Statements have been prepared under the historical cost basis except for the measurement of fair value of investments. In applying FRS 102, financial instruments have been accounted for in accordance with Section 11 and 12 of the standard. All of the Company's operations are of a continuing nature.

 

 

 

(b) Going concern

The Company's Articles of Association require that at the Annual General Meeting of the Company held in 2008, and every third year thereafter, an ordinary resolution be put to approve the continuation of the Company. The resolutions put to the Annual General Meetings in 2011, 2014, 2017 and in 2020 were duly passed. The next triennial continuation resolution will be put to the Annual General Meeting in 2023. The assets of the Company consist almost entirely of securities that are listed (or quoted on AIM) and are readily realisable. Accordingly, the Directors believe that the Company has adequate resources to continue in operational existence for at least twelve months from the date of approval of the financial statements. Having assessed these factors, the principal risks, as well as considering the additional risks related to COVID-19, and other matters discussed in connection with the Viability Statement, the Directors considered it appropriate to adopt the going concern basis of accounting in preparing the financial statements.

 

 

2.

Losses on investments held at fair value through profit or loss

 

2020

£'000

2019

£'000

 

Gains on the sale of investments based on historical cost1

5,303

6,871

 

Revaluation losses/(gains) recognised in previous years

5,315

(3,418)

 

 

----------

----------

 

Gains on investments sold in the year based on carrying value at previous Statement of Financial Position date

10,618

3,453

 

Revaluation losses on investments held at 31 October

(17,833)

(5,277)

 

 

----------

----------

 

 

(7,215)

(1,824)

 

 

======

======

         

1 Also includes special capital dividends of £110,000 (2019: £92,000)

 

 

3.

Income from investments held at fair value through profit or loss

2020

£'000

2019

£'000

 

UK:

 

 

 

Dividends from listed investments

876

1,433

 

Dividends from AIM investments

348

798

 

 

-------

-------

 

 

1,224

2,231

 

Non-UK:

 

 

 

Dividends from listed investments

101

307

 

Dividends from AIM investments

4

-

 

 

-------

-------

 

 

105

307

 

 

1,329

2,538

 

 

====

====

 

 

 

 

4.

 

Other interest receivable and other income

 

2020

£'000

2019

£'000

 

Deposit interest

1

3

 

Stock lending commission

163

373

 

Underwriting commission (allocated to revenue)

2

3

 

 

-------

-------

 

 

166

379

 

 

====

====

 

 

 

At 31 October 2020, the total value of securities on loan by the Company for stock lending purposes was £16,590,000 (2019: £14,423,000). The maximum aggregate value of securities on loan at any one time during the year ended 31 October 2020 was £20,075,000 (2019: £22,162,000). The Company's agent holds collateral at 31 October 2020 with the value of £17,545,000 (2019: £15,234,000) in respect of securities on loan, the value of which is reviewed on a daily basis and comprises CREST Delivery By Value ('DBVs') and Government Bonds with a market value of 106% (2019: 106%) of the market value of any securities on loan.

 

During the year the Company was not required to take up shares in respect of underwriting commission; no commission was taken to capital (2019: same).

 

 

5.

Management and performance fee

 

 

 

 

 

                                     2020

 2019

 

 

Revenue

return

£'000

Capital

return

£'000

 

Total

return

£'000

Revenue

return

£'000

Capital

return

£'000

 

Total

return

£'000

 

Management fee

130

305

435

147

342

489

 

Performance fee

-

-

-

-

-

-

 

 

--------

----------

----------

--------

----------

----------

 

 

130

305

435

147

342

489

 

 

--------

----------

----------

--------

----------

----------

 

 

 

 

 

 

 

 

 

The basis on which the management fee is calculated is set out in the Strategic Report contained in the Annual Report. The allocation between revenue return and capital return is explained in the Notes to the Financial Statements within the Annual Report. No performance fee was earned during the year (2019: £nil). 

                   

6.

Net (loss)/return per ordinary share - basic and diluted

 

 

 

The total loss per ordinary share is based on the total loss attributable to the ordinary shares of £6,601,000 (2019: total return of £76,000) and on 7,898,521 ordinary shares (2019: 7,919,555) being the weighted average number of shares in issue during the year.

 

The (loss)/return per ordinary share can be further analysed as follows:

 

 

2020

£'000

2019

£'000

 

Revenue return

1,010

2,366

 

Capital loss

(7,611)

(2,290)

 

 

-----------

-----------

 

Total (loss)/return

(6,601)

76

 

 

-----------

-----------

 

 

Weighted average number of ordinary shares

7,898,521

7,919,555

 

 

 

 

 

 

2020

2019

 

Revenue return per ordinary share

12.78p

29.88p

 

Capital loss per ordinary share

(96.36p)

(28.92p)

 

 

-----------

-----------

 

Total (loss)/return per ordinary share (basic and diluted)

(83.58p)

0.96p

 

 

======

======

 

 

7.

Net asset value per ordinary share - basic and diluted

 

The net asset value per ordinary share at the year end was 1,046.3p (2019: 1,161.8p). The net asset value per ordinary share is based on the net assets attributable to the ordinary shares of £82,643,000 (2019: £91,798,000) and on the 7,898,375 ordinary shares in issue at 31 October 2020 (2019: 7,901,188). There are no dilutive securities so the basic and diluted net asset value per ordinary share are the same.

                                                                                                                                   

The movements during the year of the assets attributable to the ordinary shares were as follows:

 

 

2020

£'000

 

2019

£'000

 

 

Total net assets at 1 November

91,798

94,360

 

Total net (loss)/return

(6,601)

76

 

Dividends paid in the year

(2,527)

(1,699)

 

Buyback of shares

(27)

(939)

 

 

-----------

-----------

 

Total net assets at 31 October

82,643

91,798

 

 

======

======

 

 

 

8.

 

Called up share capital

2020

£'000

2019

£'000

 

Allotted and issued ordinary shares of 25p each 7,898,375

 

 

 

(2019: 7,901,188)

1,974

1,975

 

Ordinary shares of 25p each held in treasury 102,483 (2019: 99,670)

26

25

 

 

----------

----------

 

 

2,000

2,000

 

 

======

======

 

 

During the year 2,813 (2019: 99,670) ordinary shares of 25p each were repurchased by the Company at a total cost, including transaction costs, of £27,000 (2019: £939,000). All of the shares were placed in treasury. Shares held in treasury do not carry a right to receive dividends.

 

 

9.

 

Ordinary dividends paid

 

 

Record date

Payment date

2020

£'000

2019

£'000

 

Amounts recognised as distributions to equity holders in the year:

 

 

 

 

 

Final dividend for the year ended 31 October 2018 of 14.5p

15 February 2019

22 March

2019

-

1,146

 

Interim dividend for the year ended 31 October 2019 of 7.0p

16 August 2019

20 September 2019

-

553

 

Final dividend for the year ended

31 October 2019 of 19.0p

21 February 2020

27 March 2020

1,501

-

 

First interim dividend for the year

ended 31 October 2020 of 6.5p

22 May 2020

26 June 2020

513

-

 

Second interim dividend for the year

ended 31 October 2020 of 6.5p

21 August 2020

25 September 2020

513

-

 

 

 

 

---------

---------

 

 

 

 

2,527

1,699

 

 

 

 

=====

=====

 

 

 

The Board decided to pay quarterly dividends from the beginning of the 2020 financial year, to make dividends as predictable for shareholders as possible.

 

The Board declared a third interim dividend of 6.5p per ordinary share, paid on 18 December 2020 to shareholders on the register of the Company at the close of business on 20 November 2020. The ex-dividend date was 19 November 2020. Based on the number of ordinary shares in issue on 31 October 2020, the cost of this dividend was £513,000.

 

Subject to approval at the Annual General Meeting, the proposed final dividend of 7.5p per ordinary share will be paid on 26 March 2021 to shareholders on the register of members at the close of business on 19 February 2021. The shares will be quoted ex-dividend on 18 February 2021.

 

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 2020

Year ended 31 October 2019

 

 

£'000

 

£'000

 

Revenue available for distribution by way of dividends for the year

1,010

2,366

 

Interim dividend for the year ended 31 October 2019: 7.0p

-

(553)

 

First interim dividend for the year ended 31 October 2020: 6.5p

(513)

-

 

Second interim dividend for the year ended 31 October 2020: 6.5p

(513)

-

 

Third interim dividend for the year ended 31 October 2020: 6.5p

(513)

-

 

Proposed final dividend for the year ended 31 October 2020: 7.5p (based on the 7,898,375 ordinary shares in issue at 5 February 2021) (2019: 19.0p on 7,898,375 ordinary shares)

(592)

(1,501)

 

 

-----------

-----------

 

Transferred (from)/to revenue reserve1

(1,121)

312

 

 

=======

=======

 

 

All dividends have been paid or will be paid out of revenue profit and the revenue reserve.

 

1There is no undistributed revenue in the current year (2019: 12.3%)

 

10.

2020 Financial Information

 

The figures and financial information for the year ended 31 October 2020 are extracted from the Company's Annual Financial Statements for that period and do not constitute statutory financial statements for that period. The Company's Annual Financial Statements for the year ended 31 October 2020 have been audited but have not yet been delivered to the Registrar of Companies. The Independent Auditor's Report on the 2020 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 Sections 498(2) and 498(3) of the Companies Act 2006.

 

 

11.

2019 Financial Information

The figures and financial information for the year ended 31 October 2019 are extracted from the Company's Annual Financial Statements for that period and do not constitute statutory financial statements for that period. The Company's Annual Financial Statements for the year ended 31 October 2019 have been audited and delivered to the Registrar of Companies. The Independent Auditor's Report on the 2019 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 Sections 498(2) and 498(3) of the Companies Act 2006.

 

 

12.

Annual Report and Annual General Meeting

The Annual Report for the year ended 31 October 2020 will be posted to shareholders in February 2021 and will be available on the Company's website www.hendersonopportunitiestrust.com or from the Corporate Secretary at the Company's Registered Office, 201 Bishopsgate, London EC2M 3AE.

 

The Annual General Meeting will be held as a "closed meeting" on Thursday 11 March 2021 at 2.30pm. The Notice of the Annual General Meeting will be posted to shareholders with the Annual Report and will be available on the Company's website.

 

 

             

 

For further information, please contact:

 

James Henderson

Fund Manager

Henderson Opportunities Trust plc

Telephone: 020 7818 4370

 

 

Laura Foll

Fund Manager

Henderson Opportunities Trust plc

Telephone: 020 7818 6364

 

Laura Thomas

Investment Trust PR Manager

Janus Henderson Investors

Telephone: 020 7818 2636 

 

James de Sausmarez

Director and Head of Investment Trusts

Janus Henderson Investors

Telephone: 020 7818 3349

 

 

 

 

 

 

 

 

 

 

 

 

               

 

 

 

 

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.

 

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