JANUS HENDERSON FUND MANAGEMENT UK LIMITED

HENDERSON OPPORTUNITIES TRUST PLC

LEGAL ENTITY INDENTIFIER (LEI):  2138005D884NPGHFQS77

13 February 2025

HENDERSON OPPORTUNITIES TRUST PLC

Annual Financial Report for the year ended 31 October 2024

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 primarily UK investments.

PERFORMANCE HIGHLIGHTS

Total Return Performance to 31 October 2024

* Comparative figures for the period ended 31 October 2023 have been restated due to the sub-division of each ordinary share of 25p into five ordinary shares of 5p each on 11 March 2024.

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

2 Share price total return (including dividends reinvested)

3 FTSE All-Share Index

4 AIC UK All Companies simple average

5 Alternative performance measure

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

7 This represents three interim dividends of 1.5p each, and one interim dividend of 2.6p, to be paid on 11 March 2025. See Chairman's Statement for more details. The dividend yield⁵ for the year ended 31 October 2024 was 3.3% (2023: 4.1%) based on the share price at the year end

Sources: Morningstar Direct, Janus Henderson, LSEG Datastream

A glossary of terms and alternative performance measures can be found in the Annual Report

CHAIRMAN'S STATEMENT

Result of the Requisitioned General Meeting

In December 2024, the Company received a requisition notice from Saba Capital Management L.P. ("Saba"), requesting the convening of a general meeting to consider resolutions to remove the current directors and to appoint two new directors to the Board. The requisitioned general meeting was held on 4 February 2025 and the resolutions put forward were defeated on a poll (approximately 65% of the total votes cast were voted against the resolutions).

The Board was very pleased to see a voting turnout of approximately 73.4%. The Board would like to extend its gratitude to all of the Company's shareholders for their support and participation in the vote.

Scheme of Reconstruction

At the Company's annual general meeting in March 2023, although shareholders voted in favour of the triennial resolution for the continuation of the Company, 24.2 per cent. of the votes cast were voted against. In response to shareholder feedback around the Company's size, its longer-term NAV and share price performance, the discount at which the shares traded and the limited share liquidity, the Board took various steps with a view to creating additional demand for the shares and enhancing value for shareholders. These included removing the performance fee, effecting a share split, reducing gearing and increasing the focus on marketing. Working with the Fund Managers, the Board also undertook a detailed review of the portfolio scrutinising risk, volatility and allocation. This resulted in a reduction in gearing and in the Company's exposure to AIM stocks.

Following the last continuation vote, the Board also started exploring strategic options for the future of the Company. These included a possible combination with another investment trust or a change of mandate. In November 2024, the Board concluded that, although in the most recent financial year ended 31 October 2024 the Company had seen some recovery and had modestly outperformed its benchmark, in the Board's view and taking into account the various challenges the Company continued to face, shareholders' interests would be best served through pursuit of a strategic option. Having assessed all available choices, the Board then determined that proposing a scheme of reconstruction - offering a full cash exit at NAV and/or the opportunity to roll into an open-ended fund - was the best achievable option.

The work to deliver this scheme had commenced prior to the receipt by the Company of the requisition notice from Saba and the Company published the circular relating to the Scheme of Reconstruction on 3 February 2025 (the "Circular"). The Circular sets out proposals to shareholders for the winding-up of the Company by way of a scheme of reconstruction pursuant to Section 110 of the Insolvency Act 1986 (the "Scheme"). Under the terms of the Scheme, shareholders will be offered the opportunity to roll over their investment into Janus Henderson UK Equity Income & Growth Fund (the "OEIC Sub-Fund"), a sub-fund of Janus Henderson UK & Europe Funds whose portfolio is also managed by Janus Henderson Investors UK Limited, or to receive cash in respect of their investment in the Company, or a combination of both (the "Proposals").

The OEIC Sub-Fund's individual fund managers are Laura Foll and James Henderson (who also currently manage the Company's portfolio). The OEIC Sub-Fund aims to provide a dividend income, with prospects for both income and capital growth over the long term (5 years or more). It invests at least 80 per cent. of its assets in shares of companies, in any industry, in the UK and will typically have a bias towards small and medium-sized companies. The OEIC Sub-Fund is larger than the Company, with net assets of around £165.56 million (as at 31 December 2024).

Full details of the Proposals are set out in the Circular which can be found at www.hendersonopportunitiestrust.com.

As part of its campaign, Saba has publicly stated its aim to deliver substantial liquidity options for shareholders. The Scheme is designed to deliver full liquidity for shareholders. However, given Saba's current interest in over 25% of the Company's issued share capital Saba will be able to block the Scheme by voting against the Scheme resolutions should it decide to do so.

In the event that the resolutions required to approve the Scheme and the winding-up of the Company are not passed and the Scheme does not become effective, the Board will need to consider alternative proposals for the future of the Company that are in the best interests of shareholders as a whole.

Board Recommendation

Two general meetings will be held on 21 February 2025 at 9.00am and on 14 March 2025 at 9.30am at Janus Henderson's offices at 201 Bishopsgate, London EC2M 3AE to approve the Scheme and the winding up of the Company respectively.

Full details are set out in the Notices of Meetings in the Circular.

The Board is unanimously of the opinion that the proposals set out in the Circular are in the best interests of shareholders as a whole. Accordingly, the Board unanimously recommends that shareholders vote in favour of all of the resolutions to be proposed at the Scheme general meetings.

Shareholders on the main register should complete the Forms of Proxy sent to them on 3 February 2025. To be valid, the Forms of Proxy should be completed, signed and returned to the Company's Registrar, Computershare Investor Services PLC by post to The Pavilions, Bridgwater Road, Bristol BS99 6AH as soon as possible but in any event they must arrive no later than 9.00am on 19 February 2025 in respect of the first Scheme general meeting and 9.30am on 12 March 2025 in respect of the second Scheme general meeting. Alternatively, shareholders can submit their vote electronically by visiting Computershare's website (www.investorcentre.co.uk/eproxy). CREST members may utilise the CREST electronic proxy appointment service in accordance with the procedures set out in the notes to the Notices of General Meeting contained in the Circular.

If you are an institutional investor, you may be able to appoint a proxy electronically via the Proxymity platform, a process which has been agreed by the Company and approved by the Registrar. For further information regarding Proxymity, please go to www.proxymity.io.

Shareholders who hold their shares through an investment platform or other nominee service are encouraged to contact their investment platform provider or nominee as soon as possible to arrange for votes to be lodged on their behalf. Appointment of a proxy does not preclude you from attending the meeting and voting in person.

Performance review

As mentioned above, the year saw some recovery from the depressed levels of last year and the Company modestly outperformed its Benchmark, the FTSE All-Share Index. Over the longer term the Company lags the Benchmark and the Fund Managers' report looks at the reasons. The problem has been the over weight position in smaller companies compared to the Benchmark with much of the upward momentum of the Index coming from a select number of very large companies. The reasons for this are partly technical. Traditional shareholders have for a number of years been selling down their UK holdings. This has been particularly the case with pension funds that have reduced their equity exposure to derisk their portfolios and other shareholders with concerns about the UK economy moving funds overseas. The remaining buyers of UK stock tend to be large international investors who concentrate their interest in large international based UK companies. This trend has left a dearth of investors for UK smaller companies. The pick-up in takeover activity during the year as overseas companies made bids for UK-based companies and the realisation that the UK recession at the end of last year was short-lived both helped the portfolio. Both the Fund Managers and the Board recognised that, ahead of the October 2024 Budget, the AIM market was facing considerable uncertainty from tax changes. As a result of this uncertainty it was felt prudent to apply greater scrutiny to AIM holdings in particular, and a few were reduced and in a small number of cases, sold.

Dividend

A fourth interim dividend of 2.6p per share for the year ended 31 October 2024 and a first interim dividend of 1.5p per share for the year ended 31 October 2025 will be paid on 11 March 2025, to shareholders on the register at the close of business on 21 February 2025. The shares will go ex-dividend on 20 February 2025.

Gearing

Gearing was a modest positive contributor to returns during the financial year, as the Fund Managers show in the 'Attribution' section of their report. The Board continued to view gearing as one of the key advantages of the investment trust structure and gearing has, over the long term (as well as over one year), positively contributed to the Company's performance.

The Fund Managers, following discussion with the Board, reduced the gearing during the year, with the Company finishing the year with 5.3% gearing compared to 9.6% at the previous financial year end.

The discount level

During the year the discount relative to the Company's net asset value fluctuated between 5.9% and 17.8%, finishing the year at 10.0%. This was a lower discount than the 16.4% at the previous financial year end. The average discount for the Company during the year was 12.2%, compared to 10.5% for the AIC UK All Companies peer group and 15.4% for the AIC UK Smaller Companies group.

There were no shares bought back or issued during the financial year.

Annual General Meeting

The Company's 2025 AGM will only be scheduled in the event that shareholders do not approve the Scheme and it does not become effective. In this event, a separate notice of meeting for the AGM will be sent to shareholders in or around March 2025.

Wendy Colquhoun

Chairman

12 February 2025

FUND MANAGERS' REPORT

Overview

It was a difficult year for investors to have a clear view of what the economy had in store for companies. The last few months of 2023 saw the UK economy slip into recession, but it was shallow and the economy was back growing in early 2024. Rosier projections, however, proved short-lived and interest rates did not fall as fast as had been hoped, resulting in anaemic economic growth for much of the period.

Performance in the medium and smaller company area of the market was very mixed. Low valuations led to takeover approaches for a few companies and this buoyed some share prices, but there was no real pick-up in investor flows to the sector. Redemptions in trust portfolios investing in this sector continued, which meant there was a lack of real demand for shares. The demand there was would evaporate on the smallest concern about an individual company. This resulted in little appetite to take on risk so potential high growth early-stage companies were savagely sold down. The reliable, slower growing but cash generative business fared better as it was the sort of stock that could attract bid attention.

Attribution

While we are reporting on a year of strong absolute performance and modest relative outperformance, the majority of this has been driven by the holdings in larger companies (we go into more detail on the stock specific drivers below). The Company's weighting in AIM has continued to be a detractor from performance, with AIM underperforming the broader UK market. This means that over a three-year period, AIM has underperformed the FTSE All-Share by a staggering 55%, as the chart below shows:

Data illustrating the AIM performance over 3 years chart in the Annual Report is set out below:

Source: Bloomberg, total return, GBP, rebased to 100 as at 1 November 2021

In our view the material underperformance of the AIM market has come about for a number of reasons including fund managers' increasing desire for liquidity, weak sentiment resulting in outflows from UK equities and, increasingly ahead of the Budget in October 2024, concern about the future of inheritance tax relief on AIM shares.

As the table below shows, the Company's holdings in the FTSE 100 substantially outperformed (the FTSE 250 was approximately in line), while the holdings in AIM and the FTSE Small Cap Index underperformed (comparing the fourth and fifth columns of the table below).

Company and Benchmark weights are as at financial year end (31 October 2024)

Source: Factset, Morningstar Direct

When viewed though a different lens, stock selection has, overall, been positive (driven by the FTSE 100) but size allocation, and in particular the weight on AIM, has been a substantial detractor. In a rising market, the use of gearing was a modest positive contributor during the year:

Data illustrating the attribution returns chart in the Annual Report is set out below:

Source: Janus Henderson

Turning to stocks, three of the top ten absolute contributors to performance during the year were banks, as higher interest rates aided lending margins at a time when loan losses remained subdued.

Of the other best contributors, two (Rolls-Royce and Marks & Spencer) were driven by ongoing recovery. In the case of Rolls-Royce, under a new management team they have reduced costs and improved commercial delivery. In the case of Marks & Spencer, they are taking market share in both food and clothing under a new management team and a refreshed (and more competitively priced) offering. Smaller companies that performed well included Scottish housebuilder Springfield Properties, which has been successfully undertaking disposals in order to strengthen its balance sheet. Defence equipment provider Cohort benefited from a rising defence spending environment, while telecoms and utilities software provider IQGeo was taken over by private equity.

The top ten contributors to absolute return were:

Examining the detractors in more detail, three of the top ten were exposed to the North Sea (Jersey Oil & Gas, Serica and Deltic Energy). In our view, the share price falls in this area were largely as a result of uncertainty around the future fiscal regime. The lack of clarity around, for example, the ability to offset taxation with capital spend meant that it was difficult for large projects (such as the Buchan field) to reach final investment decision. This impacted the share price of Jersey Oil & Gas in particular. Elsewhere, the detractors tended to be early-stage companies (Surface Transforms, ITM Power, AFC Energy and Creo Medical) where in some cases, such as Surface Transforms, there have been operational issues with scaling to meet demand.

The top ten detractors from absolute return were:

Portfolio activity

During the year a diverse mix of large, medium and small companies were purchased. Within larger companies, new holdings included BP, Sainsbury (J) and Glencore. These holdings bring ballast to the portfolio at sensible valuations. Within small and medium sized companies, new purchases included Shaftesbury Capital which is a portfolio of iconic London properties. It is seeing rental growth with high levels of occupancy, yet the shares trade at a substantial discount to the asset value.

The largest disposal was the holding in Rolls-Royce, the aerospace business. The company has made a remarkable recovery in operational share price returns over the last couple of years and its strengths are now better reflected in the share price.

Other large disposals were the result of the investee company being taken over, namely IQGeo and International Distribution Services. In smaller company investing, if a company does not grow over time as we thought it would at purchase, a hard decision needs to be made. We need to realise the mistake and the position should be sold. The sales of ZOO Digital and Dianomi were examples of this discipline. Certain small company holdings were reduced after strong share price appreciation for the overall balance of the portfolio. Examples of this would be Vertu Motors, Boku and Redde Northgate.

Income

Earnings per share fell during the year to 6.3p, down from 6.7p the previous year (adjusted for the 5 for 1 share split). Within this figure is a contribution of £229,000 from securities lending income (2023: £183,000). Investment income levels were impacted by the reduction in gearing of the Company (some of which consisted of reductions in some of the higher dividend yield shares, such as financials) as well as a trend across the UK market for companies to undertake share buybacks rather than pay special dividends.

Outlook

The Company announced a Scheme of Reconstruction on 3 February 2025 and the Company's future will be determined by shareholders at the Scheme General Meetings. Please see the Chairman's Statement for more information.

James Henderson and Laura Foll

Fund Managers

12 February 2025

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 primarily to investing in the shares of companies that are listed in the UK, 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 and emerging 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. "Shareholder base and voting on platforms" was added as a new category. "Decline in popularity of the investment trust sector and the UK equity market" was moved from emerging risks to a principal risk. The risk that shareholders may not approve the proposed Scheme of Reconstruction has been added as a new category of risk.

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 Investment Policy. These principal risks fall broadly under the following categories:

Details of how the Board monitors the services provided by Janus Henderson and its other suppliers, and the key elements designed to provide effective internal control, are explained further in the internal controls section of the Corporate Governance report and the Audit and Risk Committee report in the Annual Report.

Emerging risks

In addition to the principal risks facing the Company, the Board also regularly considers potential emerging risks, which are defined as potential trends, sudden events or changing risks which are characterised by a high degree of uncertainty in terms of the probability of them happening and the possible effects on the Company. Should an emerging risk become sufficiently clear, it may be moved to a substantial risk as was the case with the 'decline in popularity of the investment trust sector and the UK equity market'.

The Board has identified the following as potential emerging risks:

·          Demographic change

Increasing financial inequality, lack of knowledge, trend of passive investment and new trends in social attitudes.

·          Technological change

Artificial intelligence, sector disruption, changes to existing job roles, ethical oversight of technological change, autonomous vehicles, electrification and healthcare impact.

·          Environmental sustainability

Climate change, decarbonisation, extreme bad weather events, increasing legislation/political action, resource scarcity and reputational consequences.

·          Political and economic change

Tax risk (including impact on dividends paid by the Company to shareholders) and impact on performance if the UK were to remain out of favour.

The Company's emerging risks are macro-economic and political in nature and the Company has no control over these. These include ongoing heightened macro-economic uncertainty from political events such as Russia's invasion of Ukraine and the conflict in the Middle East. The Board monitors these emerging risks and, if specific action relating to the investments, or the Company's marketing approach were to arise, the Board would take appropriate action.

BORROWINGS

The Company has an unsecured loan facility in place which allows it to borrow as and when appropriate. £20m (2023: £30m) 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 £18.0m (2023: £18.2m), with borrowing costs for the year totalling £674,000 (2023: £817,000). £7.0m (2023: £10.2m) of the facility was in use at the year end. Net gearing at 31 October 2024 was 5.3% (2023: 9.6%) of net asset value.

VIABILITY STATEMENT AND GOING CONCERN

The Directors have assessed the viability of the Company taking account of the Company's current position and the potential impact of the principal risks and uncertainties documented in the Strategic Report in the Annual Report.

The assessment considered the impact and likelihood of the principal risks and uncertainties facing the Company. Key areas of focus were the shareholder base and voting on platforms in the light of the Requisitioned General Meeting, shareholders not approving the proposed Scheme of Reconstruction which the Directors believe is in the best interests of shareholders as a whole, investment strategy and performance against benchmark, including a consideration of the risks around asset allocation, stock selection and gearing. Market risk was also assessed in terms of the impact of severe but plausible scenarios and the effectiveness of the 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 the ability to renew such facilities, consideration of the impact of rising interest rates and how a breach of any covenants could impact the Company's net asset value and share price. The Board has reviewed three additional model scenarios which evaluate the impact on the revenue forecast and reserves. These range from a worst case scenario which includes a 5% reduction in income and net assets, through to a scenario where there is no income growth and no reduction in income or net assets. Increasing dividends to shareholders could continue under all three scenarios, although the Company would need to use its capital reserves in some cases. None of the results of the scenarios used would therefore threaten the viability of the Company.

The Directors do not expect there to be any significant change to the principal risks and adequacy of the mitigating controls in place. Large cap stocks are held as ballast for the portfolio and for liquidity, and the percentage of the portfolio holding of these stocks generally exceeds the gearing percentage. The Board actively monitors investment performance and considers factors such as significant falls in the NAV, ongoing heightened macro-economic uncertainty from political events such as Russia's invasion of Ukraine and the conflict in the Middle East. Any recent experience has not materially affected the long-term viability of the Company. The Board is therefore confident that significant market collapses would not impact the Company's viability. 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 majority of the Company's assets are liquid, its commitments are limited, and, subject to the outcome of the Scheme (referred to below), the Company intends to continue to operate as an investment trust. In coming to this conclusion, the Board has considered the factors aforementioned and does not believe that they 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.

The Directors recognise that a circular relating to a Scheme of Reconstruction has been issued to shareholders. The Directors currently believe that the Company will continue to exist for the foreseeable future, and at least for the period of assessment if the shareholders were not to approve the Scheme of Reconstruction (subject to the outcome of a continuation vote that is due to take place at the AGM in 2026). If the Scheme were to be approved, then the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due until such date that the Company is put into liquidation and the Scheme is completed.

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.

Due to the uncertainty arising from the proposed Scheme of Reconstruction, the Directors have disclosed a material uncertainty in respect of adopting the going concern basis of accounting in preparing the Financial Statements (see the Annual Report for further details).

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 to the Financial Statements in 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 Note 13, confirms that, to the best of his or her knowledge:

On behalf of the Board

Wendy Colquhoun

Chairman

   12 February 2025

Twenty largest holdings at 31 October 2024

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

At 31 October 2024 these investments totalled £44,222,000 or 45.0% of the portfolio.

* Not in the top 20 largest investments last year

¹ Quoted on AIM

Portfolio by sector

As a percentage of the investment portfolio excluding cash

Portfolio by index

As a percentage of the investment portfolio excluding cash

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 2024

A glossary of terms can be found in the Annual Report

Sources: Morningstar Direct, Janus Henderson, LSEG Datastream

INCOME STATEMENT

*Comparative figures have been restated due to the sub-division of each ordinary share of 25p into five ordinary shares of 5p each on 11 March 2024.

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.

STATEMENT OF CHANGES IN EQUITY

STATEMENT OF FINANCIAL POSITION

*Comparative figure for the period ended 31 October 2023 has been restated due to the sub-division of each ordinary share of 25p into five ordinary shares of 5p each on 11 March 2024.

STATEMENT OF CASH FLOWS

¹ Cash inflow from dividends was £2,942,000 (2023: £3,211,000) and cash inflow from interest was £57,000 (2023: £52,000)

NOTES TO THE FINANCIAL STATEMENTS

For further information, please contact:

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