HENDERSON VALUE TRUST PLC ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 SEPTEMBER 2013 13 January 2014 This announcement contains regulated information INVESTMENT OBJECTIVE The Company exploits global opportunities to provide long-term growth to shareholders via a diversified, international, multi-strategy portfolio which offers access also to specialist funds including hedge and private equity. FINANCIAL HIGHLIGHTS 30 September 30 September % 2013 2012 Change Net asset value per ordinary share 290.2p 279.8p +3.7 Market price per ordinary share 245.0p 253.5p -3.4 Total return per ordinary share 11.9p -40.9p Discount 15.6% 9.4% Ongoing charges 0.84% 0.93% Market capitalisation £117.0m £122.6m CHAIRMAN'S STATEMENT 2013 has marked a new departure for Henderson Value Trust (formerly SVM Global). Following the difficulties of 2012 the Board has made the fundamental changes to the operations of the Company promised in last year's Chairman's Statement. In January we held a beauty parade of fund managers bidding to manage the Company. After an exhaustive process - interviewing a dozen candidates - the Directors awarded the management contract to Henderson Global Investors. I would like to thank former managers, SVM Asset Management, for their two decades stewardship of the Company and to acknowledge their success in the earlier years. We selected Henderson because of its dynamic management reputation, its wide global reach, its universally respected brand and its rigorous risk controls. We were particularly impressed by the proven track record and the presentations of the Company's current joint managers, Ian Barrass and Paul Craig. We were keen to utilise the former's specialist knowledge of unlisted and illiquid stocks and to give shareholders an opportunity to benefit from the talents of the latter, demonstrated by his management of Henderson's highly successful Cirilium funds. At the AGM in March 2013 shareholders overwhelmingly approved the appointment of Henderson. At the same meeting they endorsed a change of name from SVM Global Fund plc to Henderson Value Trust plc. Simultaneously, the Directors had resolved to put the Company's external audit out to tender. We completed that process in October. After interviewing four firms we have decided, subject to shareholder approval at the AGM in February 2014, that Grant Thornton UK LLP be appointed the Company's auditor. I would like to thank Ernst & Young LLP for their service to the Company. At the last AGM I pledged to put forward a plan for refreshment of the Board. As an initial step in May the Board appointed Jamie Korner as a Director. I should like to welcome Jamie to the Board. We believe that the time is now right for further changes. As we have all served over nine years, the three longest-serving directors - Daniel Hodson, Peter Hulse and I - will make way for successors in 2014. Peter Hulse will stand down at the AGM in February. Daniel Hodson and I will step aside after the AGM in December 2014. During the coming year we will recruit a successor to Peter and select candidates for the positions of Chairman of the Board and of the Audit Committee. We will employ independent agencies to initiate the process in all three cases. Last year the Directors and I promised that the verdict on current progress and the future of the Company itself should be determined by the shareholders at an early date. Consequently we will hold a continuation vote at the December 2014 AGM. We believe that the promised continuation vote is the appropriate time for a handover by the Chairman and the Chairman of the Audit Committee. It is the Directors' intention that by December the portfolio will have been reconfigured to reap the rewards on which the Directors, Manager and shareholders are focused. We are determined that Henderson Value Trust will offer shareholders a future with a greatly improved potential of above average returns. Much of that hope hinges on a good investment performance. Initial signs encourage optimism that the setback in the Company's performance is already being reversed by the new team at Henderson. While the Company is still underperforming its peers, we have discouraged the new Managers from feeling pressurised into making short-term decisions in pursuit of ephemeral performance gains. We recognise that a significant number of the underperforming stocks which remain from the previous portfolio are illiquid or unquoted. We do not wish to encourage face-saving sales ahead of the continuation vote but to ensure that any latent value in these holdings is realised to the benefit of shareholders. In September last year, at the request of Henderson, the Board agreed some additional investment guidelines to provide a more structured framework for the Manager to maintain appropriate portfolio diversification. In each case the Board has been guided by the need for prudent monitoring of risk. The gearing limit remains at 20% of net assets. The Board has decided that these guidelines should now be incorporated into an amended investment policy. Accordingly, it is proposed that a resolution to approve amendment of the investment policy be put to shareholders at a General Meeting to be held after the Company's Annual General Meeting in February 2014. Shareholders will receive a separate circular setting out the current and amended investment policy and Notice of General Meeting. The Company's investment objective is unchanged. The Board is recommending a dividend of 1.5p per share. Although the proposed payment is 25% lower than last year, owing to the Company's reduced net income, it is higher than the minimum dividend of 0.44p per share required for the Company to maintain its investment trust status. The Directors have decided to draw on the Company's revenue reserve to pay this amount. While the Company intends to continue generating most of its return through capital growth, there is potential for a progressive dividend policy if Henderson is able, as planned, to increase the cash yield from the investment portfolio. In response to the Alternative Investment Fund Managers Directive (`AIFMD') being written into UK legislation with effect from 22 July 2013, the Board have agreed in principle that Henderson will be appointed the Company's Alternative Investment Fund Manager. The appointment of an independent depositary, which will provide an independent monitoring role to ensure the Company complies with the regulations of AIFMD, is currently being finalised. The Company will be fully compliant by the time the transitional period ends in July 2014. I would like to thank shareholders for the endorsement of our proposals for the future of the Company at the last AGM. We are determined to justify that vote of confidence following a difficult period. We are optimistic that when we report next year, we will be able to recommend with confidence that you support the continuation vote due in December 2014. Shane Ross TD Chairman 10 January 2014 PORTFOLIO MANAGER'S REPORT Change of Investment Manager Henderson Global Investors Limited (`the Manager') assumed the role of the Company's investment manager with effect from 1 April 2013, exactly half-way though the Company's financial year. Our first six month period as Manager to 30 September 2013 saw good initial progress. We made significant early strides in analysing and re-positioning the Company's investment portfolio. These developments are described in more detail below. Also, the fund transition process was completed promptly and efficiently in relation to the Company's operational, accounting, administrative and company secretarial requirements. These are now being met by the Manager and its outsourced service providers. Company Performance The Company's overall performance for the full-year to 30 September 2013 was unsatisfactory compared with its FTSE World Index benchmark. On a total return basis, whilst the benchmark increased by 19.0%, the Company's net asset value (`NAV') per ordinary share increased by only 4.3%. In addition, the Company's discount widened from 9.4% to 15.6%. There were a number of reasons for the Company's underperformance against its benchmark. At a high level, global equities saw the strongest performance in developed markets such as the US, Japan and Europe, whereas the Company went into the financial year with relatively low asset weightings in these areas, particularly the US and Japan. In addition, the Company's traditionally heavier weightings to higher growth emerging markets, notably in Russia and Eastern Europe, were impacted by the sharp fall in emerging markets in the second half of the year. Finally, the Company entered the year with a significant exposure to the resources and commodities sector, which suffered a torrid period. It is important to recognise, however, that the Company's portfolio does not seek to replicate the FTSE World Index. It tends to focus on investments that are either specialist or niche in nature or, in some cases, have proved to be less liquid and prone to persistent discounts, even in rising markets. Despite this our view is that the FTSE World Index is still a reasonable benchmark for the Company. This is because over the medium to long-term the Company's specialist and alternative fund investment mandate should, given its overall risk profile, be expected to outperform global equity markets. Our goal is therefore to secure satisfactory returns from the Company's portfolio by gradually improving the quality of its investments through a rigorous and disciplined approach to fund selection and portfolio management. Whilst we appreciate the understandable desire of shareholders to see a significant and early improvement in performance, the benefits of changes to the portfolio may not realistically emerge in full until after the Company's next triennial continuation vote due at the end of 2014. This reflects that we are pursuing a measured approach to portfolio change. What this means in practice is taking care in both the selection and timing of disposals, retaining good quality holdings in the inherited portfolio and ensuring that new investments are of sufficient quality and value to provide attractive returns over a reasonable timeframe. With this in mind, whilst our investment selection and on-going portfolio management is driven heavily by our `bottom-up' analyses of fund quality, it must also be informed by our views on the impact of macro-economic and market conditions on the asset classes, geographies and sectors in which we choose to invest. Company Strategy We are strongly of the view that the Company has an exciting future as a specialist fund of funds and can provide its shareholders a differentiated investment opportunity. This can be achieved by adhering to the Company's mandate which we believe is to provide access to a global, diversified portfolio of mainly specialist and alternative asset funds. The Company's focus on listed and unlisted specialist and alternative asset funds is central to its raison d'être. The Company derives its differentiation from holding a significant portion of its portfolio in funds which are not regarded as widely-held, liquid, listed, mainstream investments. We recognise, however, that successful investment in such funds, which often have reduced liquidity and are specialist in nature, requires a strong focus on manager and asset quality and clarity on how and when value is likely to be generated for investors. Historically the Company has adopted an activist stance to realise value in certain investments. Even though this may have proved a successful strategy in the past, shareholders should be aware that this approach is not a priority of the new Manager. Going forward, by focusing on higher quality funds, situations requiring more activist-style engagement are less likely to either exist or arise. Portfolio Analysis On assuming the role of Manager we immediately undertook a full analysis of the Company's investment portfolio which, at 1 April 2013, contained 58 active holdings. As a priority, we completed a valuation review of the Company's unlisted/illiquid investments in conjunction with the Company's auditor, Ernst & Young, and Henderson Group plc's Fair Value Pricing Committee (`the Valuation Review'). The main purpose of this exercise was to provide comfort to shareholders that the valuation issues of the previous financial year have been fully addressed. The Valuation Review led to reductions in the valuations of the Company's investments in three emerging market property funds, being iO Adria Limited, Buena Vista Latin American Fund Limited and CEIBA Investments Limited. These valuation reductions totalled £4.0 million and were disclosed promptly to the market through the Company's weekly NAV announcements. They were also included in the Company's 31 March 2013 half-year financial statements. The Valuation Review also identified that the Company's investment in Zouk Solar Opportunities Limited (`Zouk') should in future be valued using Zouk's manager's fair valuation of Zouk's investments. Previously the Company's valuation of Zouk's investments had been based on Zouk's financial statements which accounted for its investments as fixed assets at cost in line with IFRS requirements. This change resulted in a £2.1 million uplift in the Company's valuation of its holding in Zouk. This was announced to the market in May 2013. Our analysis of the remainder of the Company's portfolio was designed to provide us with a thorough understanding of the quality of each investment and the overall construction of the portfolio. With regard to individual investments, each holding was subjected to a qualitative and quantative analysis resulting in the formulation of an initial view on whether to hold or sell at some future point. The key areas of evaluation for each holding were, and continue to be, the quality of manager, the quality of underlying assets, the attractiveness of the relevant asset class, geography or sector and the estimated timing and quantum of returns. Whilst this exercise identified some clear candidates for early disposal (see below), it also showed that the portfolio included a significant number of good quality investments which should be capable, over time, of providing satisfactory returns. Our analysis of the Company's portfolio construction has helped us to identify ways of providing more detail and clarity to shareholders regarding the type, classification and diversification of the Company's holdings. It has also allowed us to devise an expanded set of informal investment guidelines which can be found in the section headed Investment Guidelines. These guidelines, which have been approved by the Company's Board, provide a more structured and balanced framework for maintaining portfolio diversification without creating unnecessary constraints. The Board has decided that these guidelines should now be incorporated into an amended investment policy as referred to in the Chairman's Statement. Portfolio Activity Shareholders can follow our latest portfolio activity by reading the monthly Manager commentary on the Company's website. The address of the website is www.hendersonvaluetrust.com Sales, Redemptions and Capital Returns Portfolio activity between 1 October 2012 and 31 March 2013 was the responsibility of the Company's previous investment manager, with activity being focused mainly on investment disposals in the first quarter of the financial year. Most notably, the previous manager reduced the Company's exposure to Russia and Eastern Europe by partial redemptions of holdings in Firebird New Russia Fund Limited and Firebird Republics Fund Limited and full redemption of the Company's investment in Ukrainian Investment Fund Limited. During the half-year following our appointment as Manager on 1 April 2013, the Company received £13.0 million from sales or redemptions and a further £7.9 million from capital returns. Seven of the Company's holdings were the subject of sales or redemptions during the second half-year period. These changes were made for a variety of reasons encompassing unsatisfactory historical performance, the potential for further underperformance or unattractive geographic or sector exposures. In addition, it was also considered desirable to take profits on certain holdings which we believed had performed well but had reached an attractive exit point. The largest cash receipt of £4.7 million arose from the redemption of the Company's entire holding in the Maya Market Neutral Fund, an automated quantitative hedge fund designed to deliver market neutral returns. This decision reflected the fund's under-performance during 2012 and also the fact that such a strategy was unlikely to meet our minimum target return requirements for the Company's investments. £3.6 million was generated by the sale of the Company's holding in Tag Immobilien AG, a Frankfurt-listed German residential property company. The sale followed a sustained period of positive share price performance. The Company's investment in Cambium Global Timberland Limited, a poor-performing AIM-listed forestry fund, was sold for £2.0 million. Having undertaken a review of the outlook for the value of the fund's assets, it was concluded that satisfactory NAV recovery was unlikely in the foreseeable future. The Company's holding in Strategic Equity Capital plc, a UK-listed investor in UK small caps with an engagement focus, was reduced through two separate sales into a strengthening share price and narrowing discount. These sales generated cash of £1.9 million. £377k was raised through the partial sale of the Company's CFD position in Advance Frontier Markets Fund Limited, a UK-listed fund of funds focused on frontier markets. Again this followed a period of good price performance. The Company's CFD holding in STXE 600 Euro Banks index fund was sold at a profit of £249k. This reflected our preference to invest in actively managed funds rather than index-based products. Finally, sales or redemptions during the second half-year period were completed by a 25% reduction in the Company's holding in Juridica Investments Limited, a UK-listed litigation fund. This followed strong news flow and a narrowing discount. This generated £218k of cash. Capital returns, via compulsory redemptions or tender offers, were received from six of the Company's investments. The largest of these was received from Baring Vostok Investments Limited, a Russian private equity vehicle listed on the Channel Islands Stock Exchange. £2.6 million of cash was received by the Company by way of a compulsory redemption following the realisation of a further block of shares in the fund's highly successful investment in Yandex Inc., the Russian equivalent of Google, which is now listed on NASDAQ. Zouk Solar Opportunities Limited, an unlisted vehicle with a good quality portfolio of operational solar energy investments in the UK and Italy, returned £2.5 million following the successful sale of part of its UK assets. We took the fullest advantage possible of a tender offer by Value Catalyst Fund Limited, an unlisted fund with a property bias, in order to create further liquidity. £1.2 million was received following the successful tender of 80% of the Company's holding. Prosperity Voshkod Fund Limited, a UK-listed fund which invests in Russian equities returned £0.9 million as part of its newly adopted realisation strategy. South African Property Opportunities plc, a UK-listed investor in South African real estate, rewarded long-suffering shareholders with a capital return which produced £0.4 million for the Company. Trading Emissions plc, a poor-performing UK-listed investor in environmental markets returned £167k. The Manager also took advantage of a small tender offer by Strategic Equity Capital plc to generate a further £176k. Further sales, redemptions and capital returns have occurred since the year end. These have generated cash of £2.5 million. Several other holdings have also been identified for disposal. These are, however, currently being retained until improved exit prices can be achieved. In addition, it is also important for shareholders to note that 14 of the Company's investments are currently in some form of realisation or run-off process. At the 30 September 2013 year end these represented 22% of the Company's NAV. This maturing tranche of the portfolio, which contains a number of the Company's less liquid holdings, is likely to generate substantial cash for redeployment over the next two to three years. Each of these holdings will, however, continue to be under review to the extent that we determine at any point that it would be more financially beneficial to sell or redeem rather than await cash returns. Purchases As alluded to above, under the circumstances the previous manager engaged in very limited new purchase activity in the first half of the financial year. During the half-year following our appointment as Manager on 1 April 2013, nine new purchases were completed for a total cash consideration of £21.0 million. The nine investments covered a number of our current themes and preferences. Three of our new investments were in parts of the private equity sector which, we believe, still offer good value. Three investments were also made in specialist credit funds which, following a period of outstanding performance over the last few years, are still capable of providing attractive normalised returns including a significant cash component. We also made three investments in specialist funds focused on areas that we believe have good return dynamics, being South Korean preference shares, renewable energy and the global banking and insurance sector. More generally, it should be noted that a number of these new investments have increased the Company's exposure to US based assets in an attempt to capture more of the benefit of the improvement in US economic performance. In addition, some of them will contribute significantly to increasing the cash yield within the portfolio which may in future facilitate a more progressive dividend policy. Our three private equity investments are described below. First, we invested £2.6 million in NB Private Equity Partners Limited, a vehicle listed in the UK and on Euronext Amsterdam. Purchased on a discount of over 20%, NB Private Equity Partners Limited has a cash generative relatively mature fund of funds portfolio which is benefiting from the strong selling conditions for good quality corporate assets in the US and Europe. The fund's strategy is to close its discount by increasing dividends and redeploying cash receipts towards potentially higher-returning direct private equity investments. In addition, since the Company invested, a large stock overhang has been considerably reduced. Secondly, we invested £2.8 million in Standard Life European Private Equity Trust plc, a UK-listed private equity fund of funds with a portfolio of cash generative mature funds which, like NB Private Equity Partners Limited, is benefiting from good selling conditions for its underlying fund investments which should translate into NAV growth. This purchase was also made at an attractive discount of over 20%. Our third private equity investment related to the Company's existing holding in Baring Vostok Investments Limited (`BVIL'). In July we took the opportunity to participate in the restructuring of this vehicle, which has historically proved to be one of the Company's best performing investments. Previously BVIL had a commitment to only one of Baring Vostok's unlisted Russian private equity funds which now has only three remaining investments. The restructuring involved assets from two other unlisted Baring Vostok funds being transferred into BVIL in consideration for new BVIL `Core' shares. In addition, a $32 million placement raised funding for BVIL to make co-investments alongside Baring Vostok's latest unlisted fund. The Company subscribed for $3.0 million (£2.0 million) in the placement. In addition, existing investors in BVIL such as the Company were issued with new BVIL `Cell' shares in order to ring-fence future cash returns from Yandex Inc., the most successful investment in the original BVIL vehicle. The combination of improved portfolio diversification, co-investment rights and the ring-fencing of future returns in relation to Yandex Inc. represented a compelling and exciting opportunity to protect and extend the Company's relationship with one of Russia's consistently top-performing private equity managers. Our three new credit fund investments were made across a variety of credit strategies. £2.8 million was invested in Tetragon Financial Group Limited (`Tetragon'), a closed-end vehicle listed on Euronext Amsterdam which owns a large portfolio of maturing and cash-generative US Collateralised Loan Obligations that provide the basis for attractive dividend flows. In addition, the Company's entry discount of over 35% and Tetragon's development of new fund management platforms for secured loans, real estate debt and hedge funds also provide further scope for returns over the medium term. We also invested £2.4 million in the NB Distressed Debt Investment Fund Limited - Extended Life Shares. This UK-listed vehicle invests in mainly US corporate distressed debt and recently created a new class of extended life shares to March 2015 to take advantage of a number of exciting opportunities which are now available in distressed debt markets. Initial NAV growth has been strong and the outlook for returns from this experienced manager appears positive. Real Estate Credit Investments PCC Limited (`RECI') is a UK-listed vehicle managed by Cheyne Capital which focuses on UK and European property lending, particularly in specialist opportunities where traditional bank funding is no longer available. We initially invested £0.9 million in RECI during September and then a further £1.6 million shortly after the year end through a new share issue which reduced the vehicle's gearing and increased its investment capacity. RECI currently offers a cash dividend yield of up to 7% and also has potential for NAV accretion over the medium term. The three other specialist funds described below complete our list of new purchases up to 30 September 2013. We considered these to be attractive UK IPOs run by experienced, good quality managers who have been able to deploy capital promptly. A £2.5 million investment was made in Weiss Korea Opportunity Fund Limited, a fixed-life fund dedicated to investing in heavily discounted listed preference shares in South Korea. £2.5 million was invested in Polar Capital Global Financials Trust plc, another fixed-life vehicle focused on opportunities in the global banking and insurance sectors. Finally, £2.4 million was invested in The Renewables Infrastructure Group Limited, an investor in operational wind farms in the UK and France offering a stable cash yield with potential for modest NAV accretion. Separately, it should also be noted that in July the Company received shares in Parkmead Group plc (`Parkmead'), a UK-listed independent oil and gas company valued at £0.3 million in consideration for its holding in Lochard Energy Group plc. This followed the latter's successful takeover by Parkmead, a company with superior growth prospects and better share liquidity. Since the year end a further £12.3 million has been invested in new purchases. Liquidity At 30 September 2013 the Company held freely accessible cash and cash equivalents of £13.1 million. A further £8.8 million of cash was required to be held in a restricted account in connection with the Company's six CFD holdings. Discount Control The Company operates a fully flexible share buy-back policy. We currently believe, however, that improved investment performance combined with effective marketing is the most likely short-term catalyst for narrowing the Company's discount. Reducing the Company's size through the use of discount control mechanisms is, we believe, likely to be counter-productive as it may actually reduce the attractiveness of the Company to those investors who apply minimum size criteria to their closed-end investment portfolios. Outlook With regard to the global macro-economy over the coming year and its implications for our approach to asset allocation, we believe that we have entered a period of more stable developed economy performance, particularly in relation to the US. We may therefore seek further opportunities to increase the Company's historically low exposure to US based assets. The prospects for Europe and Japan may be less clear, although any market setbacks in these areas may offer interesting opportunities to increase exposures to the right managers and assets. The outlook for emerging markets is likely to remain uncertain whilst the timing of tapering of US Quantative Easing remains outstanding. Our main task during the year with regard to the Company's emerging market exposure will be to ensure that it is sufficiently diversified across our preferred markets and managers. Finally, we made a conscious decision not to crystallise certain losses within the Company's resources and commodities exposure during the second half of the Company's financial year. Given the general trend back towards global growth and the apparent resilience of the Chinese economy we believe that retaining this exposure may prove beneficial for the portfolio. Key Priorities The first six months of our tenure as the Company's Manager to 30 September 2013 have been an extremely busy time, and we believe in this short period we have made considerable initial progress in creating the foundations for a recovery in the Company's performance. Looking forward to the year ahead, we are focused on two key priorities. Our first priority is to continue to deploy the Company's capital in a measured way into good quality funds which should, over time, contribute positively to improved portfolio performance. The cash for this deployment will come from the Company's existing liquid resources, some further disposals and also cash receipts from the significant number of inherited investments which are now in some form of realisation or run-off. As part of this process, and as our confidence grows that the Company has a solid `core' portfolio, we will look to utilise the full flexibility of the Company's mandate to broaden our search into areas of the fund market where access is more difficult to obtain, notably in the unlisted markets. Our second priority is to increase significantly our marketing activities with the aim of generating renewed interest in the Company's shares amongst existing and new shareholders. We look forward to reporting on further progress during the course of 2014. Ian Barrass and Paul Craig Co-Portfolio Managers 10 January 2014 INVESTMENT PORTFOLIO at 30 September 2013 Market % of Value portfolio Investments (excluding CFDs) Sector £'000 Oryx International Growth Fund Limited# Specialist Sector 7,891 6.8 Baring Vostok Investments Limited cell~ Private Equity 6,031 5.1 Blackrock World Mining Trust Plc# Specialist Sector 5,679 4.8 Baring Vostok Investments Limited core~ Private Equity 5,632 4.8 Specialist Value Partners China Greenchip Limited* Geography 5,370 4.6 Eurovestech plc~ Private Equity 4,393 3.7 Specialist Prospect Japan Fund Limited# Geography 3,870 3.3 Century Capital Partners IV L.P.** Private Equity 3,849 3.3 Metage Emerging Markets Opportunities Fund* Hedge 3,570 3.0 Specialist Firebird Republics Fund Limited* Geography 3,429 2.9 Ten largest 49,714 42.3 CEIBA Investments Limited** Property 3,324 2.8 SW Mitchell Small Cap European Fund* Hedge 3,019 2.6 Standard Life European Private Equity Trust Plc# Private Equity 2,970 2.5 Specialist Prosperity Voskhod Fund Limited# Geography 2,941 2.5 Zouk Solar Opportunities Limited** Specialist Sector 2,853 2.4 ASM Asian Recovery Fund* Hedge 2,825 2.4 Specialist Weiss Korea Opportunity Fund Limited# Geography 2,729 2.3 Specialist Firebird New Russia Fund Limited* Geography 2,672 2.3 Polar Capital Global Financials Trust plc# Specialist Sector 2,544 2.2 NB Private Equity Partners Limited# Private Equity 2,501 2.1 Twenty largest 78,092 66.4 The Renewables Infrastructure Group Limited# Specialist Sector 2,430 2.1 NB Distressed Debt Investment Fund Limited - Extended Life Shares# Specialist Sector 2,380 2.0 Tetragon Financial Group Limited# Specialist Sector 2,380 2.0 City Natural Resources High Yield Trust plc# Specialist Sector 2,351 2.0 Specialist IP Fund SPC - VBF Segregated Portfolio - Class A* Geography 2,314 2.0 Eclectica Fund* Hedge 2,108 1.8 BP Marsh & Partners plc# Private Equity 1,960 1.7 Northern Investors Company plc# Private Equity 1,626 1.4 Crystal Amber Fund Limited# Specialist Sector 1,623 1.4 South African Property Opportunities plc# Property 1,620 1.4 Thirty largest 98,884 84.2 Specialist IP Fund SPC - VBF Segregated Portfolio - Class C* Geography 1,569 1.3 Specialist Firebird Republics Fund SPV** Geography 1,406 1.2 Amber Trust SCA** Private Equity 1,380 1.2 Ludgate Environmental Fund Limited# Specialist Sector 1,187 1.0 Strategic Equity Capital plc# Private Equity 1,156 1.0 Eclectica Credit Fund* Hedge 1,010 0.9 Real Estate Credit Investments PCC Limited# Specialist Sector 942 0.8 International Oil & Gas Technology Limited# Specialist Sector 908 0.8 Baker Steel Resources Trust Limited# Specialist Sector 857 0.7 Denholm Hall Russia Arbitrage Fund B - Investment** Hedge 837 0.7 Forty largest 110,136 93.8 INVESTMENT PORTFOLIO (continued) at 30 September 2013 Market % of Value portfolio Investments (excluding CFDs) Sector £'000 EPE Special Opportunities plc (CULS)~ Private Equity 784 0.7 Acheron Portfolio Corporation (A Shares)~ Specialist Sector 766 0.7 iO Adria Limited~ Property 724 0.6 Juridica Investments Limited# Specialist Sector 666 0.6 Forterra Trust (formerly Treasury China Trust)# Property 605 0.5 EPE Special Opportunities plc (Ordinary)# Private Equity 437 0.4 Steel Partners China Access I L.P.** Private Equity 320 0.3 Parkmead Group plc# Specialist Sector 315 0.3 Denholm Hall Russia Arbitrage Fund B - Redemption** Hedge 202 0.2 Geiger Counter Limited# Specialist Sector 188 0.2 Fifty largest 115,143 98.3 Trading Emissions plc# Specialist Sector 185 0.2 Value Catalyst Fund Limited** Specialist Sector 155 0.1 Armadillo Investments Limited Liquidation 132 0.1 Polar Capital Global Financials Trust - Subscription Shares# Specialist Sector 75 0.1 Low Carbon Accelerator Limited Liquidation 36 0.0 China CDM Exchange Centre Limited~ Specialist Sector 1 0.0 Intrinsic Value plc Liquidation 0 0.0 Shimoda Resources Holdings Inc Liquidation 0 0.0 PSource Structured Debt Limited Liquidation 0 0.0 Buena Vista Latin America Fund Limited** Property 0 0.0 Sixty largest 115,727 98.8 Exbus Industries Liquidation 0 0.0 Strathdon Investments Plc Liquidation 0 0.0 Thompson Clive Investments Plc Liquidation 0 0.0 Buena Vista Latin American Fund (CULS)** Property 0 0.0 Jubilee Investment Trust Plc Liquidation 0 0.0 Total Investments (excluding CFDs) 115,727 98.8 #Listed on Major market ~Listed on Minor market *Unlisted investment - with redemption rights ** Unlisted investment - without redemption rights #Major market includes: London Stock Exchange (full listing & AIM), Frankfurt Stock Exchange and the Singapore Stock Exchange ~Minor market includes: Luxembourg Stock Exchange, Channel Islands Stock Exchange, Bermuda Stock Exchange, ISDX and LMMX INVESTMENT PORTFOLIO (continued) Gross Fair market value of CFD Assets Sector exposure CFD % of £'000 £'000 Portfolio Jupiter European Opportunities Trust Specialist Plc# Geography 6,999 2,266 1.9 Specialist JP Morgan Russian Securities plc# Geography 1,254 726 0.6 Specialist Advance Frontier Markets Fund Limited# Geography 1,128 296 0.3 Ecofin Water and Power Opportunities plc# Specialist Sector 2,697 176 0.2 12,078 3,464 3.0 Total Investments (excluding CFDs) 115,727 98.8 Total CFD Assets 3,464 3.0 Total Investments 119,191 101.8 CFD Liabilities Gold Bullion Securities Limited# Specialist Sector 3,714 (690) (0.6) ETFS Metal Securities Limited Physical Silver# Specialist Sector 1,932 (1,350) (1.2) Total CFD liabilities 5,646 (2,040) (1.8) Total Portfolio 117,151 100.0 # Listed on major market which includes London Stock Exchange (full listing & AIM), Frankfurt Stock Exchange and the Singapore Exchange. Principal Risks and Uncertainties The principal risks facing the Company are market related and include market price, foreign exchange, interest rate, liquidity and credit risk. Market risk exists where there are changes in share prices, equity valuations, interest rates and the liquidity of financial instruments. The Company addresses this risk by owning a diversified portfolio of investments covering a range of market capitalisation, sectors and geographic regions. Market price risk management is part of the Company management process and is typical of equity related investment. The portfolio is managed so as to minimise the effects of adverse price movements and results from detailed and continuing analysis with an objective of maximising overall returns to shareholders. Liquidity risk exists where the Company is a forced seller of its investments at times where there may not be sufficient demand for these assets. Although some holdings are unlisted or trade on illiquid markets and are by their nature less liquid than larger companies, the Company maintains a long term investment view and is rarely required to sell its investments in a forced manner. In addition, the Company maintains an overdraft facility to ensure that the Company is not a forced seller of its investments. Interest rate risk exists where the returns generated from the investments are less than the cost of borrowing. This risk has been mitigated by operating with a relatively small level of gearing at most times. The level will only be increased where an opportunity exists to add to net asset value performance. Credit risk exists where a counterparty fails to discharge an obligation or commitment entered into with the Company. The Managers monitor counterparty risk as part of the overall investment management process. This risk is reduced by using counterparties that are substantial, well financed organisations which are reviewed on a regular basis. Most investment transactions are conducted on-market and are delivery versus payment. The Company's principal counterparties are bankers State Street, money market funds provider Deutsche Bank and CFD provider UBS. The Managers only use for trade execution broker organisations that are authorised by the Financial Conduct Authority. Some of the Company's investments are in funds, some of which are unquoted, exposed to less developed markets and may be seen as carrying a higher degree of risk. The Board believe that these risks are mitigated through portfolio diversification, in-depth analysis, and the experience of the Managers and a rigorous internal control culture. The use of CFDs involves counterparty risk exposure. Additional risks faced by the Company are summarised below: - Investment Strategy The performance of the portfolio may not match the performance of the benchmark through divergent geographic, sector or stock selection. In addition, the Company may be affected by economic conditions. The Manager has a clearly defined investment philosophy and manages a broadly diversified portfolio to mitigate this risk. - Discount The level of the discount varies depending upon performance, market sentiment and investor appetite. The Company has the ability to issue and purchase shares which can reduce discount volatility. - Regulatory/Operational Failure to comply with applicable legal and regulatory requirements could lead to a suspension of the Company's shares, fines or a qualified audit report. A breach of Section 1158 of the Corporation Tax Act 2010 could lead to the Company being subject to corporation tax on realised capital gains. Failure of the Manager or third party service providers could prevent accurate reporting and monitoring of the Company's financial position. The Board regularly considers the risks associated with the Company and receives both formal and regular reports from the Manager and third party service providers addressing these risks. STATEMENT OF DIRECTORS' RESPONSIBILITIES (UNDER DTR 4.1.12) Each of the Directors confirms that, to the best of their knowledge: - the financial statements, which have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice United Kingdom Accounting Standards and applicable law), give a true and fair view of the assets, liabilities, financial position and profit of the Company; and - the Report and Financial Statements includes 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 Shane Ross TD Chairman 10 January 2014 INCOME STATEMENT for the year ended 30 September 2013 Year ended Year ended 30 September 2013 30 September 2012 Revenue Capital Revenue Capital Return Return Total Return Return Total £'000 £'000 £'000 £'000 £'000 £'000 Net gains/(losses) on investments at fair value through profit or loss - 6,347 6,347 - (20,423) (20,423) Exchange differences - 49 49 - 7 7 Net gains/(losses) on investments - 6,396 6,396 - (20,416) (20,416) Investment income 1,214 - 1,214 1,474 - 1,474 Investment management fees (82) (735) (817) (113) (1,011) (1,124) Other expenses (687) (56) (743) (290) (24) (314) Net return/(loss) before interest and taxation 445 5,605 6,050 1,071 (21,451) (20,380) Finance costs - interest (34) (310) (344) (47) (424) (471) Net return/(loss) on ordinary activities before taxation 411 5,295 5,706 1,024 (21,875) (20,851) Taxation (6) - (6) - - - Net return/(loss) on ordinary activities after taxation 405 5,295 5,700 1,024 (21,875) (20,851) Return/(loss) per ordinary share 0.85p 11.07p 11.92p 2.01p (42.89)p (40.88)p The total column of this statement represents the profit and loss account of the Company. The Company had no recognised gains or losses other than those recognised in the Income Statement. No operations were acquired or discontinued in the year. All revenue and capital items in the above statement derive from continuing operations. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS for the year ended 30 September 2013 Year ended 30 September 2013 Capital Share Share Redemption Capital Revenue capital premium reserve reserve reserve Total £'000 £'000 £'000 £'000 £'000 £'000 Balance at 1 October 2012 12,093 10,966 6,360 104,501 1,281 135,201 Return attributable to shareholders - - - 5,295 405 5,700 Ordinary dividends - - - - (955) (955) Cancellation of treasury shares (14) - 14 - - - Share buy backs (141) - 141 (1,366) - (1,366) Balance at 30 September 2013 11,938 10,966 6,515 108,430 731 138,580 Year ended 30 September 2012 Capital Share Share Redemption Capital Revenue capital premium reserve reserve reserve Total £'000 £'000 £'000 £'000 £'000 £'000 Balance at 1 October 2011 13,252 10,966 5,201 139,370 1,293 170,082 Return attributable to shareholders - - - (21,875) 1,024 (20,851) Ordinary dividends - - - - (1,036) (1,036) Share buy backs (1,159) - 1,159 (12,994) - (12,994) Balance at 30 September 2012 12,093 10,966 6,360 104,501 1,281 135,201 The revenue reserve represents the amount of the Company's reserves distributable by way of dividend. BALANCE SHEET at 30 September 2013 Restated 2013 2012 £'000 £'000 Fixed Assets Investments at fair value through profit or loss 119,191 122,531 Current assets Cash at bank 1,381 2,338 Money market funds 11,672 - Cash held as a CFD margin deposit 8,773 10,868 Debtors 26 3,007 Total current assets 21,852 16,213 Creditors: amounts falling due within one year (2,463) (3,543) Net current assets 19,389 12,670 Total assets less current liabilities 138,580 135,201 Capital and reserves Share capital 11,938 12,093 Share premium 10,966 10,966 Capital redemption reserve 6,515 6,360 Capital reserve 108,430 104,501 Revenue reserve 731 1,281 Total equity shareholders' funds 138,580 135,201 Net asset value per ordinary share (pence) 290.21 279.83 The financial statements were approved by the Board of Directors and authorised for issue on 10 January 2014 and were signed on its behalf by: Shane Ross TD Chairman CASH FLOW STATEMENT for the year ended 30 September 2013 Restated 2013 2012 £'000 £'000 Reconciliation of revenue before interest and taxation to net cash flows from operating activities Net return/(loss) before interest and taxation 6,050 (20,380) Net (gains)/losses on investments (6,396) 20,416 Transaction costs 56 24 Movement in creditors (266) 515 Movement in debtors (26) (1,396) Net cash outflow from operating activities (582) (821) Returns on investment and servicing of finance Finance costs paid (344) (471) Capital expenditure and financial investment Purchases of fixed asset investments (29,362) (10,976) Sales of fixed asset investments 43,546 36,556 14,184 25,580 Equity dividends paid (955) (1,036) Management of liquid resources Purchases of money market funds (27,052) - Sales of money market funds 15,380 - Net cash outflow from management of liquid resources (11,672) - Net cash inflow before financing 631 23,252 Financing Share buy backs (1,366) (12,994) (Decrease)/increase in cash (735) 10,258 Reconciliation of net cash flow to movement in net cash Movement in cash in the year (735) 10,258 Net cash at start of the year 10,840 575 Net change in liquid resources 11,672 - Exchange rate differences 49 7 Net cash at end of the year 21,826 10,840 Net cash at the end of the year comprises cash held at bank of £1,381,000 cash held at UBS related to CFD transactions of £8,773,000 and balances held at money market funds of £11,672,000. NOTES TO THE FINANCIAL STATEMENTS 1 Accounting policies - Basis of preparation The accounts are prepared in accordance with UK Generally Accepted Accounting Practice (`UK GAAP') and with the 2009 Statement of Recommended Practice `Financial Statements of Investment Trust Companies and Venture Capital Trusts' (`SORP'). They have also been prepared on the assumption that approval as an investment trust will continue to be granted. The financial statements have been prepared on a going concern basis. The Directors believe this is appropriate for the reasons outlined in the Report. Restatements of prior year The 2012 column of the Balance Sheet, Cash Flow Statement and related notes have been restated to take account of the following: (i) CFD positions are now split between assets and liabilities, having been netted off in prior years on the grounds that they were immaterial. These derivative positions are now shown gross as a matter of policy, irrespective of materiality. (ii) In the prior year, restricted cash and receivables held with the Company's CFD broker were split between cash at bank and investments. These are now shown as a separate line in current assets referring to cash held as the CFD margin deposit. Neither of these changes results in a restatement of the Company's net assets or income. 2013 2012 2 Investment Income £'000 £'000 Income from equity shares and securities UK investment income 754 851 Overseas income 444 623 1,198 1,474 Other income Interest from money market funds 16 - Total income 1,214 1,474 2013 2012 3 Investment Management Fees £'000 £'000 Revenue Investment management fee 82 113 Capital Investment management fee 735 1,011 Total 817 1,124 2013 2012 4 Taxation £'000 £'000 Net return/(loss) on ordinary activities before taxation 5,706 (20,851) The tax assessed for the year is different from the standard rate of corporation tax in the UK. The differences are noted below: Corporation tax 23.5% (2012 - 25%) 1,341 (5,213) Non-taxable dividends (189) (237) Non-taxable (gains)/losses on investments (1,490) 5,884 Disallowed expenses - 6 Write-off of withholding tax no longer reclaimable 6 - Movement in unutilised management expenses 338 (440) Total taxation charge for the year 6 - The Company is subject to taxation on gains arising from the realisation of investments in non-qualifying offshore funds but is otherwise exempt from taxation on chargeable gains. Excess management expenses are available to be offset against future taxable profits including any profits on the disposal of interests in non-qualifying offshore funds. The position as at the year end is as follows: 2013 2012 £'000 £'000 Excess management expenses 19,819 18,562 Unrealised appreciation on non-qualifying offshore funds (6,174) (14,216) Excess management expenses 13,645 4,346 No deferred tax asset on excess management expenses has been recognised as they are unlikely to be utilised against taxable profits within the foreseeable future. 2013 2012 5 Dividends on equity shares £'000 £'000 2012 final dividend 2.0p (2011 - 2.0p) 955 1,036 The proposed final dividend of 1.5p per share is subject to shareholder approval at the Annual General Meeting and has not been included as a liability in these financial statements. This dividend of £716,000 (2012: £955,000) is the basis on which the requirements of Section 1158 of the Corporation Tax Act 2010 are considered. The revenue available for distribution by way of dividend for the year is £405,000 (2012: £1,024,000). 6 Returns/Net asset value per share Returns per share are based on a weighted average of 47,811,425 (2012: 51,007,688) ordinary shares in issue during the year. Total return per ordinary share is based on the total return for the year of £5,700,000 (2012: loss of £20,851,000). Capital return per ordinary share is based on the net capital return for the year of £5,295,000 (2012: loss of £21,875,000). Revenue return per ordinary share is based on revenue after taxation for the year of £405,000 (2012: £1,024,000). The net asset values per share are based on the net assets of £138,580,000 (2012: £135,201,000) divided by the number of shares in issue at the year end of 47,751,404 (2012: 48,315,546). 2013 2012 7 Share capital £'000 £'000 Authorised 63,739,320 ordinary 25p shares 15,935 15,935 Allotted, issued and fully paid 47,751,404 (2012 - 48,373,470) ordinary 25p shares 11,938 12,093 Every shareholder has the right to one vote for each share held. Of the above shares in issue, the movements in the ordinary 25p shares held in treasury were as follows: As at start of year 14 - Purchased during the year: - 769 Cancelled during the year: (14) (755) As at end of year: - 14 564,142 shares (2012 - 1,618,000) were bought back for immediate cancellation during the year at a cost of £1,366,000 (2012 - £4,513,000). In addition 57,924 shares held in treasury were cancelled during the year. During the year ended 30 September 2013, the consideration for the shares bought back for treasury and then cancelled was £8,334,000 and the consideration for shares held in treasury for that year was £147,000. 8 Related Party Transactions The following are considered related parties: the Board of Directors, Henderson Global Investors Limited (`Henderson'); SVM Asset Management Limited (`SVM') were a related party until 31 March 2013. SVM earned £817,000 in respect of investment management fees, of which £169,000 (2012: £524,000) was outstanding at the year end. There are no transactions with the Board other than remuneration for services as Directors as disclosed in the Directors' Remuneration Report as set out in the accounts. 9 Going Concern Having considered the Company's investment objective, risk management and capital management policies, the nature of the portfolio and expenditure projections, the Directors believe that the Company has adequate resources and an appropriate financial structure in place to continue in operational existence for the foreseeable future. As discussed in the Chairman's Statement, the combination of visible short-term improvements from the restructured arrangements with a positive long-term outlook for the Company's portfolio gives the Board a reasonable expectation of recommending the Company's continuation to shareholders. For these reasons, they consider that there is reasonable evidence to continue to adopt the going concern basis in preparing the financial statements. 10 2013 financial statements The figures and financial information for the year ended 30 September 2013 are compiled from an extract of the latest financial statements of the Company and do not constitute the statutory accounts for that year. Those financial statements included the report of the auditors which was unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006. They have not yet been delivered to the Registrar of Companies. 11 2012 financial statements The figures and financial information for the year ended 30 September 2012 are compiled from an extract of the published financial statements of the Company and do not constitute the statutory accounts for that year. Those financial statements have been delivered to the Registrar of Companies and included the report of the auditors which was unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006. 12 Annual report and financial statements The Report and Financial Statements for the year ended 30 September 2013 will be posted to shareholders in January 2014 and copies will be available thereafter from the Secretary at the correspondence address, Henderson Global Investors Limited, 201 Bishopsgate, London EC2M 3AE. The Annual General Meeting will be held on Monday 24 February 2014 at 2.00 pm. The General Meeting to approve amendments to the investment policy will be held on Monday 24 February 2014 at 2.30pm (or, if later, immediately after the Annual General Meeting). 13 Website This document, and the Report and Financial Statements for the year ended 30 September 2013, will be available on the following website: www.hendersonvaluetrust.com 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. For further information please contact: Ian Barrass James de Sausmarez Co-Portfolio Manager Head of Investment Trusts Henderson Value Trust plc Henderson Global Investors Telephone: 020 7818 2964 Telephone: 020 7818 3349 Paul Craig Sarah Gibbons-Cook Co-Portfolio Manager Investor Relations and PR Manager Henderson Value Trust plc Henderson Global Investors Telephone: 020 7818 3527 Telephone: 020 7818 3198 END -0- Jan/13/2014 07:00 GMT
HENDERSON VALUE TRUST PLC: Final Results
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