TIDMHFO
RNS Number : 4102P
Henderson Financial Opps Ltd
15 July 2010
15 July 2010
HENDERSON FINANCIAL OPPORTUNITIES LIMITED
Unaudited Results for the half-year ended 31 May 2010
Performance Summary
+--------------------------------------+-------------+-----------+--------+
| | 31 May | 30 | |
| | 2010 | November | Change |
| | (Unaudited) | 2009 | |
| | | (Audited) | |
+--------------------------------------+-------------+-----------+--------+
| Net asset value per share | 39.1p | 42.7p | -8.4% |
+--------------------------------------+-------------+-----------+--------+
| Share price | 33.5p | 37.0p | -9.4% |
+--------------------------------------+-------------+-----------+--------+
| Discount | 14.3% | 13.3% | n/a |
+--------------------------------------+-------------+-----------+--------+
| Revenue earnings per share (6 months | 1.1p | 3.2p | n/a |
| and 12 months) | | | |
+--------------------------------------+-------------+-----------+--------+
| Net asset value total return (6 | -7.8% | | |
| months)* | | | |
+--------------------------------------+-------------+-----------+--------+
| Share price total return (6 months)* | -5.7% | | |
+--------------------------------------+-------------+-----------+--------+
| MSCI World Financials Index (GBP | | | |
| adjusted)** | +2.8% | | |
+--------------------------------------+-------------+-----------+--------+
Source: *Funddata ** Datastream
Interim Management Report
CHAIRMAN'S STATEMENT
During the six months to 31st May 2010 the net asset value per ordinary share
fell by 8.4% compared to a rise of 2.8% in the MSCI World Financials Index as
North American and Australasian financials outperformed their sterling and
Euro-based equivalents. A full commentary on both the portfolio and the
performance is given in the Investment Manager's Report on pages 3 and 4.
Managing a portfolio of financial investments over the last three years has been
very testing and it is difficult to believe that financial institutions are yet
out of the proverbial woods. Whilst the financial situation in the Far East and
many emerging markets appears sound, the situation in the western world remains
of concern and nowhere more so than in Europe, for which it is difficult to see
a short-term solution.
The so-called "PIIGS" countries of Europe (Portugal, Ireland, Italy, Greece and
Spain) have a worrisome mix of very high debt to gross domestic product (GDP)
and often very high budget deficits to GDP. Such a combination can lead to
serious financial consequences, as has already been seen in Greece, which
required a massive bail-out. Spain, Portugal and Italy also are concerns:
Italy's public debt is 118 percent of GDP, one of the largest in the Eurozone,
but, on the positive side, its budget deficit is much lower than many other
European countries.
Unlike prior financial crises, such as the end of World War II, when it was
possible for countries to either grow or inflate their way out of extremely high
debt-to-GDP ratios, those strategies will not work in the world's modern, more
efficient markets and, particularly, for those in the Eurozone with a common
currency. Today, if a country does not do the right thing, markets react
negatively and very quickly and evidence has been seen of that in Greece.
It, therefore, appears that a longer-term process is inevitable in order for
Europe as a whole to become more competitive, balance the books and start to
bring debt levels down. This is not going to happen overnight. Already, Germany,
Ireland and the UK are looking to rein in their budget deficits significantly, a
sobering reminder that Europe is in for an extended period of lower growth.
Cutting spending, of course, will have the effect of reducing already slow
economic growth, although one bit of good news is that the lower value of the
euro will improve the export competitiveness of countries like Germany.
It may be that Europe's debt crisis will have a limited effect on the rest of
the world, unless the financial contagion worsens. As individuals and
corporations watch what is happening in Europe, they get worried about the
potential impact in other regions, a worry that could cause them to reduce their
spending, hiring and capital investment programmes. So, in the short-term, the
combination of confidence and contagion are a very real concern. We can but hope
that the financial stresses outside the eurozone will be more moderate than
severe, as that probably would be regarded by the markets as good news.
Dividends
In accordance with the dividend policy set out in the last Annual Report, your
Board paid a first interim dividend of 0.75p per share on 23 April 2010 and the
second interim dividend will be paid to shareholders on 23 July 2010. It remains
the Board's intention to declare a third interim dividend of the same amount for
payment in October 2010.
Material events or transactions during the period
The move towards a truly global portfolio has continued during the period and at
the period end the portfolio included a wider geographic spread of holdings,
which comprised North America (25.3%), United Kingdom (33.5%), Continental
Europe (26.8%), Asia Pacific (including Japan) (8.7%) and Emerging Markets
(5.7%).
At 30 November 2009, the Company's net gearing was 71%. As markets continued to
rally in the first quarter of 2010, gearing was gradually reduced so that at 31
May 2010 net gearing was 42%. It remains the Board's policy to reduce the level
of net gearing over time to a maximum of 30%.
Related party transactions
Details of related party transactions are contained within the Annual Report.
There have been no material transactions with our related parties during the
period under review.
Outlook
Worries about a 'double dip' recession in the UK and other western counties -
and worries about confidence and contagion - will persist over the coming
months, and it is probable that the markets will remain volatile as economists'
and analysts' reports come and go, and rumours ebb and flow. Until there are
real signs of sustained global economic recovery, especially in the West, it is
difficult to see that equity markets can make much headway.
Your Directors are very mindful that they stated in September 2009 that, if a
fund-raising for your Company could not be carried out in 2010, they would
propose a continuation vote to shareholders at the Annual General Meeting in
2011. Given the current, uncertain outlook for the western economies, and thus
for the markets, and some of the fears that still surround some banks and other
financial institutions, it seems increasingly unlikely that a fund-raising for
Henderson Financial Opportunities will be achievable. Your Board is continuing
to monitor the situation closely.
Julian G Tregoning
Chairman
15 July 2010
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors confirm that, to the best of their knowledge:
a) the condensed set of financial statements has been prepared in accordance
with IAS34;
b) the interim management report includes a fair review of the information
required by Disclosure and Transparency Rule 4.2.7R (indication of important
events during the first six months and description of principal risks and
uncertainties for the remaining six months of the year); and
c) the interim management report includes a fair review of the information
required by Disclosure and Transparency Rule 4.2.8R (disclosure of related party
transactions and changes therein).
Julian G Tregoning
Chairman
15 July 2010
Investment Manager's Report
Financial markets overview
Since January investors in the financial sector have been weighing up the risks
from regulation, sovereign credit risk and liquidity withdrawal against the
opportunities presented by global recovery and the transition to more normalised
earnings. These macro factors have been the key driving force for performance of
the global financials sector over the six months under review. The financials
sector has seen a wide disparity in performance between geographical regions and
sub-sectors. This is highlighted by the European banks and Insurances indices
both down more than ten percent versus the US banks index which is up over ten
percent (all in sterling terms).
The first three months of 2010 saw mild optimism with the financials' sector,
despite suffering from macro head winds and volatility, continuing to grind
higher on the back of continued favourable monetary policy globally and the
nascent macroeconomic recovery in the developed world. The 2009 year-end
reporting season provided mixed signals for the financial sector, with both
positive and negative surprises coming through. In summary, the business trends
reported by the investment banks supported our positive view on the sub-sector
as another exceptional quarter was announced in trading revenue from fixed
income, rates and currency divisions. Retail banking in emerging markets
continued to look attractive as economic recovery continues and supports the
outlook for loan growth in coming years, whilst in the pan-European region
performance remained challenging as credit demand remained depressed and
provisions for bad debts remained elevated. Within the insurance sector, while
operational business trends remain difficult, there were surprises with
increased dividend pay outs from excess capital.
However, from mid-April the global markets have suffered from heightened
volatility as macro risks have taken over. Sovereign debt concerns, which spread
from being specific to Greece to all peripheral Europe, were the most important
issue driving the markets and performance. The impact of the outstanding public
and private debt burden, austerity measures and fiscal policy has led to slower
growth expectations for the Eurozone and the likelihood of a "double dip"
scenario in some peripheral countries. While the European Central bank did
announce a EUR750bn bail out package with support from the IMF, this could not
offset concerns over potential default and the likely success of government
policies in managing budget deficits in the coming years. The financials sector
was heavily sold off, not only on the back of their exposures to sovereign debt,
but also as funding markets became illiquid and investors stress tested
assumptions of profitability and normalised earnings in an environment which
sees many institutions paying much more for longer term funding in the wholesale
markets.
The debate over regulation for the financial sector has remained a significant
headwind throughout this period and will continue to be so for some time. Whilst
company managements and investors were hopeful of a co-ordinated approach to
policies, it seems that this is some way off. The US are further down the
process to finalise the US financial reform Bill and the European Basel
Committee continue to work with managements to find a suitable end solution for
capital and liquidity guidelines. Political risk also has been a factor over
this period with announcements of banking taxes and criminal investigations into
working practices of some of the largest institutions.
Performance
Your Company underperformed the benchmark during the period under review, with
the net asset value ("NAV") total return down 7.8% as compared to the MSCI World
Financials Total Return Index (GBP) which rose by 2.8%. The performance was poor
due to a higher exposure to sterling-based and euro-based stocks than the
benchmark, and whilst the exposure to US financials was increased toward the end
of 2009, the Company was less exposed than the benchmark and not particularly
exposed to US regional banks which had a particularly strong start to the year.
In addition, while the level of gearing was reduced to around 42% at the end of
May 2010, it suffered from market weakness in early February and late April. The
Company, nevertheless, has declared dividends totalling 1.5p per share for the
half-year, which is in line with expectations.
The equity portion of the Company's underperformance was driven by sovereign
credit risks and regulatory uncertainty. Whilst we had concentrated our exposure
on large, diversified, recapitalised banks or insurers with good funding bases,
which could take advantage of the necessary de-leveraging in weaker peers and
potentially win market share, we did not anticipate the extent of increased
regulation and political intervention. The announcement of a US Financial Crisis
responsibility fee and then suggestions from the US President that a policy was
being considered to restrict the business mix of banks had wide-ranging
consequences. This politically motivated news-flow towards the sector remains an
overhang on the sector although we do believe that the final rules on regulation
will be less severe and will have a longer lead-time for implementation so as
not to destabilise the fragile macroeconomic recovery.
Another significant factor contributing to under-performance against the
benchmark has been driven by the low relative exposure to Canada and Australia
where we considered most of the financials to be fairly valued. Both these
countries, being rich in commodities and benefiting from government finances
(which are currently more stable than those of the US, Europe and the UK), have
seen very strong currency moves recently that has enhanced returns for
sterling-based investors. The Euro has remained under pressure from uncertainty
over the future of the peripheral European states.
On a positive note, exposure to Asia has countered some of the poorer European
performance. Whilst China has not performed well as they began policies to stem
inflation and slow down a potential speculative real estate bubble, there have
been other countries in south East Asia, such as Malaysia, where GDP growth
assumptions have been rising along with future loan growth estimates, coupled
with a supporting drop in provisions against bad debts for the banks making
valuations compelling.
The fixed income portion of the portfolio also has been more defensive than the
equity portion. There have been a few upper tier 2 bonds and lower tier 1 bonds
which have been tendered for by companies and we have taken the opportunity to
sell these at prices higher than offered in the market. We believe this will be
a continuing process as institutions look to rebalance their capital structures
in a way more in line with future regulatory requirements.
Strategy and Portfolio Positioning
As highlighted at the beginning of the year, the portfolio is positioned across
major themes.
Yield - the largest holding and largest contributor to yield from the equity
portfolio, Banque Cantonale Vaudoise, not only has seen positive capital
appreciation this year as Swiss investors look to position away from the two
large cap investment banks but also search for yield in this challenging market
environment. The Company also made new investments into this theme with the
purchase of City of London Investment Group which was yielding over 6% and also
coincides with our theme of growth in Emerging markets as the company is a
leading provider of investment trusts investing in Emerging Asia.
Growth - the Company's holdings within this theme have had volatile performances
so far this year. The Asian and Latin American stocks have suffered from
profit-taking as the market has concerns over the sustainability of their
economic growth and the potential for inflation to drive a faster than expected
rate tightening cycle. The fundamental long-term story in these regions is still
favoured and we are choosing levels at which to selectively increase some
holdings - in particular in China as we believe there will be a support in
coming months on the back of an appreciating Renminbi. On the other hand,
Sberbank has performed well as the economic recovery in Russia is beating
expectations, and holdings in South East Asia have proved more defensive in the
volatility as currency strength has encouraged investors to remain invested in
the region.
Macro recovery and improving asset quality - exposure within this theme has been
reduced on the back of concerns in Europe. While we still believe the global
economy will continue to grow, there will be wide disparity regionally in the
speed and strength of the recovery. We believe there are better investment
opportunities in the US, Canada and developed Asia.
Steep yield curve - while basic fundamentals were in place for good trading
results in the Investment Banks, low volumes, extreme volatility and weak
investor sentiment make it very difficult to forecast earnings. In addition, the
regulatory and political overhangs make this sub-sector susceptible to becoming
valuation constrained. Subsequently we have reduced exposure significantly.
Restructuring - the investment case remains solid for many franchises in this
theme, however, uncertainty for capital markets causes these stocks to de-rate
as it potentially elongates the deleveraging process and many stocks here are
subject to asset disposals. We have made a new acquisition in this theme however
by recently participating in the Bank of Ireland capital raising and rights
issue.
Asset-gatherers - we continue to believe this theme will perform in time as
investors look to diversify away from low-yielding government bonds and look for
investment diversification. The long-term trend in the developed world of saving
for retirement is supportive of the asset growth theme for many traditional and
alternative asset managers.
Outlook
At the end of the period under review, equity markets had sold off sufficiently
having looked over-bought in mid-April and valuations were compelling for some
very solid, well managed companies. In addition, not only will the summer bring
about releases of various stress tests on banks from around Europe that could be
positive, but there should be further clarification on regulation. The key risk
will be that macro sovereign risk continues to drive sentiment and de-rate the
financial sector. However, we believe that by later this year there will be
supportive news on implementation of austerity measures; monetary policy will
remain favourable; and inflation will remain relatively benign therefore leading
to a late-year rally.
Emily Adderson
Portfolio Manager
15 July 2010
HENDERSON FINANCIAL OPPORTUNITIES LIMITED
Income Statement
for the half-year ended 31 May 2010
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| | (Unaudited) | (Unaudited) | (Audited) |
+----------------+-----------------------------+-----------------------------+-----------------------------+
| | Half-year ended | Half-year ended | Year ended 30 |
| | 31 May 2010 | 31 May 2009 | November 2009 |
+----------------+-----------------------------+-----------------------------+-----------------------------+
| | Revenue | Capital | Total | Revenue | Capital | Total | Revenue | Capital | Total |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| Net investment | | | | | | | | | |
| (losses)/gains | | | | | | | | | |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| (Losses)/gains | - | (1,132) | (1,132) | - | (576) | (576) | - | 3,885 | 3,885 |
| on investments | | | | | | | | | |
| held at fair | | | | | | | | | |
| value | | | | | | | | | |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| Exchange | - | 52 | 52 | - | 178 | 178 | - | (1) | (1) |
| gains/(losses) | | | | | | | | | |
| on capital | | | | | | | | | |
| items | | | | | | | | | |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| | | | | | | | | | |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| Income | | | | | | | | | |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| Income from | 631 | - | 631 | 690 | - | 690 | 1,266 | - | 1,266 |
| investments | | | | | | | | | |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| Other income | 1 | - | 1 | 7 | - | 7 | 17 | - | 17 |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| | | | | | | | | | |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| Expenses | | | | | | | | | |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| Investment | (30) | (30) | (60) | - | (47) | (47) | - | (109) | (109) |
| management fee | | | | | | | | | |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| Administrative | (36) | (36) | (72) | - | (88) | (88) | - | (175) | (175) |
| expenses | | | | | | | | | |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| Other expenses | (62) | (62) | (124) | - | (92) | (92) | - | (192) | (192) |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| Net return | 504 | (1,208) | (704) | 697 | (625) | 72 | 1,283 | 3,408 | 4,691 |
| before finance | | | | | | | | | |
| costs and | | | | | | | | | |
| taxation | | | | | | | | | |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| | | | | | | | | | |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| Finance costs | | | | | | | | | |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| Interest | (18) | (18) | (36) | - | (89) | (89) | - | (141) | (141) |
| payable | | | | | | | | | |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| Net return | 486 | (1,226) | (740) | 697 | (714) | (17) | 1,283 | 3,267 | 4,550 |
| before | | | | | | | | | |
| taxation | | | | | | | | | |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| | | | | | | | | | |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| Taxation | (58) | - | (58) | (50) | - | (50) | (61) | - | (61) |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| Total return | 428 | (1,226) | (798) | 647 | (714) | (67) | 1,222 | 3,267 | 4,489 |
| attributable | | | | | | | | | |
| to Ordinary | | | | | | | | | |
| Shareholders | | | | | | | | | |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| | | | | | | | | | |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| Basic earnings | 1.12p | (3.21)p | (2.09)p | 1.70p | (1.87)p | (0.17)p | 3.20p | 8.57p | 11.77p |
| per Ordinary | | | | | | | | | |
| Share (see | | | | | | | | | |
| note 2) | | | | | | | | | |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
| | | | | | | | | | |
+----------------+---------+---------+---------+---------+---------+---------+---------+---------+---------+
The total columns of this statement represent the Income Statement of the
Company. The revenue return and capital return columns are supplementary to this
and are prepared under guidance published by the Association of Investment
Companies.
All revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued during the half-year
ended 31 May 2010. The Company has no recognised gains or losses other than
those disclosed in the Income Statement and the Reconciliation of Movements in
Shareholders' Funds.
- MORE -
HENDERSON FINANCIAL OPPORTUNITIES LIMITED
Statement of Changes in Net Equity
for the half-year ended 31 May 2010
+------------------------+---------+---------------+---------------+---------------+---------+
| | | (Unaudited) | |
+------------------------+---------+-----------------------------------------------+---------+
| | | Half-year ended 31 May 2010 | |
+------------------------+---------+-----------------------------------------------+---------+
| | | Distributable | Distributable | Non - | |
+------------------------+---------+---------------+---------------+---------------+---------+
| | Share | reserves | reserves | distributable | |
+------------------------+---------+---------------+---------------+---------------+---------+
| | capital | - | - other | reserves | Total |
| | | revenue | | | |
+------------------------+---------+---------------+---------------+---------------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------------+---------+---------------+---------------+---------------+---------+
| At 30 November 2009 | 38 | 2,133 | 20,390 | (6,279) | 16,282 |
+------------------------+---------+---------------+---------------+---------------+---------+
| Total return | - | 428 | - | (1,226) | (798) |
| attributable to | | | | | |
| Ordinary Shareholders | | | | | |
+------------------------+---------+---------------+---------------+---------------+---------+
| Dividends paid | - | (572) | - | - | (572) |
+------------------------+---------+---------------+---------------+---------------+---------+
| At 31 May 2010 | 38 | 1,989 | 20,390 | (7,505) | 14,912 |
+------------------------+---------+---------------+---------------+---------------+---------+
| | | | | | |
+------------------------+---------+---------------+---------------+---------------+---------+
| | | (Unaudited) | |
+------------------------+---------+-----------------------------------------------+---------+
| | | Half-year ended 31 May 2009 | |
+------------------------+---------+-----------------------------------------------+---------+
| | | Distributable | Distributable | Non - | |
+------------------------+---------+---------------+---------------+---------------+---------+
| | Share | reserves | reserves | distributable | |
+------------------------+---------+---------------+---------------+---------------+---------+
| | capital | - | - other | reserves | Total |
| | | revenue | | | |
+------------------------+---------+---------------+---------------+---------------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------------+---------+---------------+---------------+---------------+---------+
| At 30 November 2008 | 42 | 2,188 | 20,386 | (9,546) | 13,070 |
+------------------------+---------+---------------+---------------+---------------+---------+
| Total return | - | 647 | - | (714) | (67) |
| attributable to | | | | | |
| Ordinary Shareholders | | | | | |
+------------------------+---------+---------------+---------------+---------------+---------+
| Cancellation of shares | (4) | - | 4 | - | - |
| held in treasury | | | | | |
+------------------------+---------+---------------+---------------+---------------+---------+
| Dividends paid | - | (705) | - | - | (705) |
+------------------------+---------+---------------+---------------+---------------+---------+
| At 31 May 2009 | 38 | 2,130 | 20,390 | (10,260) | 12,298 |
+------------------------+---------+---------------+---------------+---------------+---------+
| | | | | | |
+------------------------+---------+---------------+---------------+---------------+---------+
| | | (Audited) | |
+------------------------+---------+-----------------------------------------------+---------+
| | | Year ended 30 November 2009 | |
+------------------------+---------+-----------------------------------------------+---------+
| | | Distributable | Distributable | Non - | |
+------------------------+---------+---------------+---------------+---------------+---------+
| | Share | reserves | reserves | distributable | |
+------------------------+---------+---------------+---------------+---------------+---------+
| | capital | - | - other | reserves | Total |
| | | revenue | | | |
+------------------------+---------+---------------+---------------+---------------+---------+
| | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------------+---------+---------------+---------------+---------------+---------+
| At 30 November 2008 | 42 | 2,188 | 20,386 | (9,546) | 13,070 |
+------------------------+---------+---------------+---------------+---------------+---------+
| Total return | - | 1,222 | - | 3,267 | 4,489 |
| attributable to | | | | | |
| Ordinary Shareholders | | | | | |
+------------------------+---------+---------------+---------------+---------------+---------+
| Cancellation of shares | (4) | - | 4 | - | - |
| held in treasury | | | | | |
+------------------------+---------+---------------+---------------+---------------+---------+
| Dividends paid | - | (1,277) | - | - | (1,277) |
+------------------------+---------+---------------+---------------+---------------+---------+
| At 30 November 2009 | 38 | 2,133 | 20,390 | (6,279) | 16,282 |
+------------------------+---------+---------------+---------------+---------------+---------+
| | | | | | |
+------------------------+---------+---------------+---------------+---------------+---------+
- MORE -
HENDERSON FINANCIAL OPPORTUNITIES LIMITED
Statement of Net Assets
at 31 May 2010
+----------------------------+-------------+-------------+--------------+
| | (Unaudited) | (Unaudited) | (Audited) |
+----------------------------+-------------+-------------+--------------+
| | 31 May | 31 May | 30 November |
| | 2010 | 2009 | 2009 |
+----------------------------+-------------+-------------+--------------+
| | GBP'000 | GBP'000 | GBP'000 |
+----------------------------+-------------+-------------+--------------+
| Non-current assets | | | |
+----------------------------+-------------+-------------+--------------+
| Investments at fair value | 20,481 | 20,001 | 26,469 |
+----------------------------+-------------+-------------+--------------+
| | | | |
+----------------------------+-------------+-------------+--------------+
| Current assets | | | |
+----------------------------+-------------+-------------+--------------+
| Amounts due on derivative | - | - | 173 |
| financial instruments | | | |
+----------------------------+-------------+-------------+--------------+
| Trades and other | 509 | 721 | 630 |
| receivables | | | |
+----------------------------+-------------+-------------+--------------+
| Cash and cash equivalents | 174 | 1,246 | 516 |
+----------------------------+-------------+-------------+--------------+
| Total assets | 21,164 | 21,968 | 27,788 |
+----------------------------+-------------+-------------+--------------+
| | | | |
+----------------------------+-------------+-------------+--------------+
| Current liabilities | | | |
+----------------------------+-------------+-------------+--------------+
| Amounts due on derivative | - | 560 | - |
| financial instruments | | | |
+----------------------------+-------------+-------------+--------------+
| Trade and other payables | 244 | 594 | 718 |
+----------------------------+-------------+-------------+--------------+
| Prime broker facility | 6,008 | 8,516 | 10,788 |
+----------------------------+-------------+-------------+--------------+
| Total liabilities | 6,252 | 9,670 | 11,506 |
+----------------------------+-------------+-------------+--------------+
| | | | |
+----------------------------+-------------+-------------+--------------+
| Net assets | 14,912 | 12,298 | 16,282 |
+----------------------------+-------------+-------------+--------------+
| | | | |
+----------------------------+-------------+-------------+--------------+
| Capital and reserves | | | |
+----------------------------+-------------+-------------+--------------+
| Called-up share capital | 38 | 38 | 38 |
+----------------------------+-------------+-------------+--------------+
| Distributable reserves - | 1,989 | 2,130 | 2,133 |
| revenue | | | |
+----------------------------+-------------+-------------+--------------+
| Distributable reserves - | 20,390 | 20,390 | 20,390 |
| other | | | |
+----------------------------+-------------+-------------+--------------+
| Non-distributable reserves | (7,505) | (10,260) | (6,279) |
+----------------------------+-------------+-------------+--------------+
| Total equity shareholders' | 14,912 | 12,298 | 16,282 |
| funds | | | |
+----------------------------+-------------+-------------+--------------+
| | | | |
+----------------------------+-------------+-------------+--------------+
| Net asset value per | 39.11p | 32.25p | 42.70p |
| Ordinary Share (see note | | | |
| 3) | | | |
+----------------------------+-------------+-------------+--------------+
| | | | |
+----------------------------+-------------+-------------+--------------+
- MORE -
HENDERSON FINANCIAL OPPORTUNITIES LIMITED
Statement of Cash Flows
for the half-year ended 31 May 2010
+----------------------------------+-------------+-------------+-------------+
| | (Unaudited) | (Unaudited) | (Audited) |
+----------------------------------+-------------+-------------+-------------+
| | Half-year | Half-year | Year ended |
| | ended | ended | |
+----------------------------------+-------------+-------------+-------------+
| | 31 May | 31 May | 30 November |
| | 2010 | 2009 | 2009 |
+----------------------------------+-------------+-------------+-------------+
| | GBP'000 | GBP'000 | GBP'000 |
+----------------------------------+-------------+-------------+-------------+
| Operating activities | | | |
+----------------------------------+-------------+-------------+-------------+
| Net return before finance costs | (704) | 72 | 4,691 |
| and tax | | | |
+----------------------------------+-------------+-------------+-------------+
| Adjustments to reconcile net | | | |
| return before finance costs and | | | |
| tax to net cash | | | |
+----------------------------------+-------------+-------------+-------------+
| flows from operating activities: | | | |
+----------------------------------+-------------+-------------+-------------+
| Adjustment for losses/(gains) on | 1,132 | 576 | (3,885) |
| investments | | | |
+----------------------------------+-------------+-------------+-------------+
| Adjustment for exchange | (52) | (178) | 1 |
| (gains)/losses | | | |
+----------------------------------+-------------+-------------+-------------+
| Decrease/(increase) in | 71 | (5) | 128 |
| receivables | | | |
+----------------------------------+-------------+-------------+-------------+
| Increase in payables | 25 | 36 | 25 |
+----------------------------------+-------------+-------------+-------------+
| Cash generated from operating | 472 | 501 | 960 |
| activities | | | |
+----------------------------------+-------------+-------------+-------------+
| | | | |
+----------------------------------+-------------+-------------+-------------+
| Taxation | | | |
+----------------------------------+-------------+-------------+-------------+
| Tax paid | (58) | (50) | (61) |
+----------------------------------+-------------+-------------+-------------+
| | | | |
+----------------------------------+-------------+-------------+-------------+
| Investing activities | | | |
+----------------------------------+-------------+-------------+-------------+
| Purchases of financial | (17,902) | (9,016) | (49,599) |
| investments | | | |
+----------------------------------+-------------+-------------+-------------+
| Sale of investments | 22,365 | 8,396 | 47,379 |
+----------------------------------+-------------+-------------+-------------+
| Realised exchange gains on | 52 | 178 | (1) |
| currency | | | |
+----------------------------------+-------------+-------------+-------------+
| Short investments | - | (175) | (175) |
+----------------------------------+-------------+-------------+-------------+
| Realised gains on derivative | 121 | 2,181 | 1,134 |
| instruments | | | |
+----------------------------------+-------------+-------------+-------------+
| Cash generated from/(used in) | 4,636 | 1,564 | (1,262) |
| investing activities | | | |
+----------------------------------+-------------+-------------+-------------+
| | | | |
+----------------------------------+-------------+-------------+-------------+
| Dividends | | | |
+----------------------------------+-------------+-------------+-------------+
| Equity dividends paid | (572) | (705) | (1,277) |
+----------------------------------+-------------+-------------+-------------+
| | | | |
+----------------------------------+-------------+-------------+-------------+
| Financing Activities | | | |
+----------------------------------+-------------+-------------+-------------+
| Interest paid | (40) | (121) | (173) |
+----------------------------------+-------------+-------------+-------------+
| | | | |
+----------------------------------+-------------+-------------+-------------+
| Increase/(decrease) in cash and | 4,438 | 1,189 | (1,813) |
| cash equivalents | | | |
+----------------------------------+-------------+-------------+-------------+
| Cash and cash equivalents at the | | | |
| start of the period | (10,272) | (8,459) | (8,459) |
+----------------------------------+-------------+-------------+-------------+
| Cash and cash equivalents at the | | | |
| end of the period | (5,834) | (7,270) | (10,272) |
+----------------------------------+-------------+-------------+-------------+
| | | | |
+----------------------------------+-------------+-------------+-------------+
| Cash and cash equivalents | | | |
| comprise: | | | |
+----------------------------------+-------------+-------------+-------------+
| Cash and cash equivalents | 174 | 1,246 | 516 |
+----------------------------------+-------------+-------------+-------------+
| Overdraft with prime broker | (6,008) | (8,516) | (10,788) |
+----------------------------------+-------------+-------------+-------------+
| | (5,834) | (7,270) | (10,272) |
+----------------------------------+-------------+-------------+-------------+
- MORE -
HENDERSON FINANCIAL OPPORTUNITIES LIMITED
Notes
+--+------------------------+----------+------------+--------------+
| 1.| Significant accounting policies |
| | |
+--+---------------------------------------------------------------+
| | a) Statement of compliance |
+--+---------------------------------------------------------------+
| | These condensed unaudited financial statements have been |
| | prepared under the historical cost convention, as modified |
| | for the revaluation of investments, they give a true and fair |
| | view, have been prepared in accordance with International |
| | Financial reporting Standards ("IFRS") and are in compliance |
| | with The Companies (Guernsey) Law, 2008. |
| | |
| | Where presentational guidance set out in the Statement of |
| | Recommended Practice ("SORP") for investment trusts issued by |
| | the Association of Investment Companies ("AIC") in January |
| | 2009 is consistent with the requirements of IFRS, the |
| | Directors have sought to prepare the financial statements on |
| | a basis compliant with the recommendations of the SORP. |
| | |
+--+---------------------------------------------------------------+
| | b) Basis of preparation |
+--+---------------------------------------------------------------+
| | The condensed unaudited financial statements have been |
| | prepared on a fair value for financial assets and liabilities |
| | at fair value through profit and loss and derivative |
| | financial instruments. |
| | |
| | The condensed unaudited financial statements are presented in |
| | Sterling rounded to the nearest thousand. The functional |
| | currency of the Company is Sterling as this is the currency |
| | within the primary economic environment within which the |
| | Company operates. |
| | |
| | The accounting policies have been consistently applied by the |
| | Company and are consistent with those used in the audited |
| | financial statements for the year ended 30 November 2009. |
| | |
| | These unaudited condensed half-yearly financial statements |
| | should be read in conjunction with the last audited financial |
| | statements as at 30 November 2009. |
| | |
+--+---------------------------------------------------------------+
| | c) Taxation |
+--+---------------------------------------------------------------+
| | The Company is domiciled in Guernsey and is exempt from |
| | paying tax on income or capital gains tax of that |
| | jurisdiction under the terms of The Income Tax (Exempt |
| | Bodies) (Guernsey) Ordinance 1989. The Company is liable to |
| | an exemption fee of GBP600 per annum. |
| | |
| | The Company currently incurs withholding tax imposed by |
| | certain countries on investment income. This income is |
| | recorded gross of withholding tax in the Income Statement. |
| | |
+--+---------------------------------------------------------------+
| | d) Allocation of expenses |
+--+---------------------------------------------------------------+
| | Prior to 1 December 2009, all expenses were allocated 100% to |
| | capital. Expenses are now allocated equally between revenue |
| | and capital. |
+--+---------------------------------------------------------------+
| | | | | |
+--+------------------------+----------+------------+--------------+
+--+----------------------------+-------------+-------------+------------+
|2.| Earnings per Ordinary | (Unaudited) | (Unaudited) | (Audited) |
| | Share | | | |
+--+----------------------------+-------------+-------------+------------+
| | | Half-year | Half-year | Year |
| | | ended | ended | ended |
+--+----------------------------+-------------+-------------+------------+
| | | 31 May | 31 May | 30 |
| | | 2010 | 2009 | November |
| | | | | 2009 |
+--+----------------------------+-------------+-------------+------------+
| | | | | |
+--+----------------------------+-------------+-------------+------------+
| | Basic earnings/(loss) per | (2.09)p | (0.17)p | 11.77p |
| | Ordinary Share (Total) | | | |
+--+----------------------------+-------------+-------------+------------+
| | | | | |
+--+----------------------------+-------------+-------------+------------+
| | Weighted average number of | 38,132,932 | 38,132,932 | 38,132,932 |
| | ordinary shares in issue | | | |
| | during the period | | | |
+--+----------------------------+-------------+-------------+------------+
| | | | | |
+--+----------------------------+-------------+-------------+------------+
HENDERSON FINANCIAL OPPORTUNITIES LIMITED
Notes continued:
+----------+--+----------+-----------------------------------+--------+--------+---------------+----------+
| 3. | Net asset value per ordinary share | | | | |
+-------------+----------------------------------------------+--------+--------+---------------+----------+
| | | 31 | 31 | 30 November | |
| | | May | May | 2009 | |
| | | 2010 | 2009 | | |
+-------------+----------------------------------------------+--------+--------+---------------+----------+
| | | | | | |
+-------------+----------------------------------------------+--------+--------+---------------+----------+
| Net asset value per Ordinary Share | 39.11p | 32.25p | 42.70p | |
+------------------------------------------------------------+--------+--------+---------------+----------+
| | | | | | |
+-------------+----------------------------------------------+--------+--------+---------------+----------+
| The net asset value per Ordinary Share is calculated on the basis of shareholders' funds of | |
| GBP14,912,000 (31 May 2009: GBP12,298,000; 30 November 2009: GBP16,282,000) attributable to | |
| Ordinary Shareholders divided by the number of Ordinary Shares in issue (excluding own | |
| shares held in treasury) at 31 May 2010, being 38,132,932 (31 May 2009: 38,132,932; 30 | |
| November 2009: 38,132,932). | |
| | |
+----------------------------------------------------------------------------------------------+----------+
| | 4. | Interim dividends |
+----------+-------------+--------------------------------------------------------------------------------+
| | On 23 June 2010 the Company declared a second interim dividend of 0.75p (2009: 0.75p) per |
| | Ordinary share for the year ending 30 November 2010. This dividend, which is payable on 23 |
| | July 2010, has not been shown in the Statement of Changes in Net Equity on Page 8. Dividends |
| | are recognised in the Statement of Changes in Net Equity in the period in which they are |
| | paid. |
| | |
+----------+----------------------------------------------------------------------------------------------+
| | 5. | Going concern |
+----------+-------------+--------------------------------------------------------------------------------+
| | The directors believe that it is appropriate to adopt the going concern basis in preparing |
| | the financial statements. Having made enquiries and bearing in mind the nature of the |
| | Company's business, the directors consider that the Company has adequate financial resources |
| | to continue in operational existence for the foreseeable future. |
+----------+----------------------------------------------------------------------------------------------+
| | | | | | | | |
+----------+--+----------+-----------------------------------+--------+--------+---------------+----------+
-MORE-
HENDERSON FINANCIAL OPPORTUNITIES LIMITED
Investment Portfolio
The 40 largest investments by value at 31 May 2010 were:
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| Company | Security | Holding | Sector | Country | Fair | % |
| | Type | Size | | (of | Value | of |
| | | | | listing) | GBP'000 | Portfolio |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| Banque | Ordinary | 3,477 | Banks | Switzerland | 927 | 4.53 |
| Cantonale | | | | | | |
| Vaudoise | | | | | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| Personal Group | Ordinary | 286,557 | Non-Life | United | 759 | 3.71 |
| Holdings Plc | | | Insurance | Kingdom | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| Toronto-Dominion | Ordinary | 11,543 | General | Canada | 540 | 2.63 |
| | | | Financial | | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| Industrial & | Ordinary | 310,000 | Banks | Hong | 518 | 2.53 |
| Commercial Bank | | | | Kong | | |
| of China | | | | | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| SVG Capital | Convertible | 550,000 | Fixed-Income | United | 486 | 2.37 |
| | Bond | | | Kingdom | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| New York | Ordinary | 39,201 | General | USA | 433 | 2.11 |
| Community | | | Financial | | | |
| Bancorp | | | | | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| Wells Fargo & | Ordinary | 21,696 | General | USA | 428 | 2.09 |
| Co | | | Financial | | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| Comerica | Ordinary | 16,226 | General | USA | 425 | 2.07 |
| | | | Financial | | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| Kensington | Bond | 500,000 | Fixed-Income | United | 410 | 2.00 |
| Group 9% | | | | Kingdom | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| Zurich | Ordinary | 2,826 | General | Switzerland | 399 | 1.95 |
| Financial | | | Financial | | | |
| Services | | | | | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| Sberbank of | Ordinary | 2,401 | Banks | Germany | 394 | 1.93 |
| Russia | | | | | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| Lloyds Banking | Ordinary | 687,522 | Banks | United | 389 | 1.90 |
| Group | | | | Kingdom | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| Investec | Bond | 406,000 | Fixed-Income | United | 389 | 1.90 |
| Finance 7.75% | | | | Kingdom | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| F&C Finance 9% | Bond | 380,000 | Fixed-Income | United | 386 | 1.88 |
| | | | | Kingdom | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| Lazard | Ordinary | 17,700 | General | USA | 384 | 1.88 |
| | | | Financial | | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| Barclays | Ordinary | 116,741 | Banks | United | 356 | 1.74 |
| | | | | Kingdom | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| AXA 6.772% | Bond | 415,000 | Fixed-Income | United | 345 | 1.69 |
| | | | | Kingdom | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| Nordea Bank | Bond | 350,000 | Fixed-Income | United | 342 | 1.67 |
| Finland 6.25% | | | | Kingdom | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| HSBC Holdings | Ordinary | 54,272 | Banks | United | 341 | 1.66 |
| | | | | Kingdom | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| City of London | Ordinary | 116,356 | General | United | 324 | 1.58 |
| Investment | | | Financial | Kingdom | | |
| Group | | | | | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| Ageas | Ordinary | 182,708 | General | Belgium | 320 | 1.56 |
| | | | Financial | | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| JP Morgan Chase | Ordinary | 11,415 | Banks | USA | 311 | 1.52 |
| & Co | | | | | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| DnB NOR | Ordinary | 45,098 | Banks | Norway | 309 | 1.51 |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| HISCOX | Ordinary | 90,914 | Non-Life | United | 307 | 1.50 |
| | | | Insurance | Kingdom | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| Marsh & | Ordinary | 19,835 | General | USA | 298 | 1.45 |
| McLennan | | | Financial | | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| RSA Insurance | Preference | 300,000 | Fixed-Income | United | 291 | 1.42 |
| Group 7.375% | | | | Kingdom | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| GAM Holding | Ordinary | 37,737 | General | Switzerland | 275 | 1.34 |
| | | | Financial | | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| Ameritrade | Ordinary | 22,444 | General | USA | 274 | 1.34 |
| Holding | | | Financial | | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| Evercore | Ordinary | 11,799 | General | USA | 264 | 1.29 |
| Partners Inc | | | Financial | | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| VZ Holdings | Ordinary | 4,842 | General | Switzerland | 239 | 1.17 |
| | | | Financial | | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| Man Group | Ordinary | 102,767 | General | United | 239 | 1.17 |
| | | | Financial | Kingdom | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| Sparebank 1 SMN | Ordinary | 50,374 | Banks | Norway | 238 | 1.16 |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| Protector | Ordinary | 235,602 | Non-Life | Norway | 225 | 1.10 |
| Forsikring | | | Insurance | | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| Psource | Ordinary | 440,000 | General | United | 224 | 1.10 |
| Structured Debt | | | Financial | Kingdom | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| Standard Life | Bond | 330,000 | Fixed-Income | United | 222 | 1.08 |
| 5.314% | | | | Kingdom | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| Hartford | Ordinary | 12,161 | General | USA | 210 | 1.02 |
| Financial | | | Financial | | | |
| Services | | | | | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| Witan | Preference | 399,000 | Fixed-Income | United | 209 | 1.02 |
| Investment | | | | Kingdom | | |
| Trust 3.4% | | | | | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| Manulife | Ordinary | 16,937 | General | Canada | 197 | 0.96 |
| Financial Corp | | | Financial | | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| Credit Agricole | Bond | 250,000 | Fixed-Income | United | 195 | 0.95 |
| 5.136% | | | | Kingdom | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| Helvetia | Ordinary | 1,033 | General | Switzerland | 190 | 0.93 |
| Holding | | | Financial | | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| Total (40) | | | | | 14,012 | 68.41 |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| Other holdings | | | | | 6,469 | 31.59 |
| (62) | | | | | | |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
| | | | | | 20,481 | 100.00 |
+------------------+-------------+---------+--------------+-------------+-----------------------+-----------+
For further information please contact:
Emily Adderson, Henderson Global Investors Limited
Telephone: 020 7818 6005
James de Sausmarez
Head of Investment Trusts, Henderson Global Investors
Telephone: 020 7818 3349
Sarah Gibbons-Cook
Investor Relations and PR Manager, Henderson Global Investors
Telephone: 020 7818 3198
This information is provided by RNS
The company news service from the London Stock Exchange
END
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