Henderson Strata Investments plc - Henderson Global Investors

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The text below profiles the Company as at 14 December 2006. The Company’s name and investment objective will change if the proposals, referred to in the Chairman’s Statement on page 3, are adopted by the shareholders. Accordingly, this annual report should be read in conjunction with the prospectus that will be posted to shareholders with it. Henderson Strata Investments plc seeks to achieve above average capital growth from investment in a portfolio of UK micro cap companies. Background Strategy Stocks Henderson Strata was established in 1985 to invest in smaller companies across the international markets. Until 10 February 2005 the benchmark was the FTSE SmallCap (excluding investment companies) Index. On 10 February 2005 the investment policy was changed to focus on UK micro cap companies and the benchmark was changed to the FTSE Fledgling (excluding investment companies) Index. New investments are made in UK listed companies with a market capitalisation of £100 million or less at the time of initial investment. Investments are sold after becoming part of the FTSE 250 Index (or when their market capitalisation reaches the equivalent level). As a result, the portfolio includes investments in companies that are constituents of the FTSE Fledgling Index, the FTSE SmallCap Index and the FTSE AIM Index. Shareholders have the opportunity to vote every three years on the continued life of Henderson Strata; the next vote is scheduled for February 2008. The focus of the portfolio has been on growth stocks, chosen on an individual basis. Short-term bank borrowings may be used to increase the funds available for investment when market conditions are deemed by the Manager and the Board to be propitious; but the Board’s policy is that borrowings shall never exceed 20% of the value of the Company’s total net assets. The investment style has been to select individual stocks which have most or all of the following characteristics: – a strong business franchise – a clear strategy for growth – the capability to make significant profits – sound cash generation – strong management – a reasonable valuation. The current maximum market capitalisation of new investments is £100 million.
Highlights Financialof the Year Highlights Performance to 31 October 2006 Performance Chairman’s Comment Henderson Strata Investments plc Report & Accounts 2006 1 Year ended Year ended 31 October 31 October 2006 2005 Net asset value per share 709.32p 540.30p Share price 646.5p 496.0p Revenue return per share 5.29p 1.48p* Dividend per share nil nil Gearing† 15.2% 7.6% †Defined here as the total market value of the investments less shareholders’ funds as a percentage of shareholders’ funds. *Not adjusted for the change, with effect from 1 November 2005, in the allocation of management and finance costs (see note 1g on page 28). 6 months 1 year 2 years % % % Net asset value total return FTSE Fledgling (excluding investment 5.9 31.3 50.0 companies) Index total return* 5.0 26.8 37.0 FTSE All-Share Index total return* 3.7 21.7 45.7 Share price total return† 8.7 30.3 64.5 Total return assumes net dividends are reinvested and excludes transaction costs. *Source: Datastream. †Source: Fundamental Data. The FTSE Fledgling (excluding investment companies) Index is the Company’s benchmark. Prior to 10 February 2005 the benchmark was the FTSE SmallCap (excluding investment companies) Index. I am pleased to report excellent results. The net asset value per share rose by 31.3% in the year ended 31 October 2006 and the share price by 30.3%. Over the same period the FTSE Fledgling (excluding investment companies) Index returned 26.8% while the FTSE All-Share Index returned 21.7%. These figures include income. Despite the achievement of the Company’s stated discount control objective and the strong performance of the Company’s fund manager, Colin Hughes, against his benchmark, the Board has concluded that the requirement for share repurchases is such as to jeopardise the viability of the Company in its current form. As a result, we announced on 24 November 2006 proposals for a new investment strategy which we believe will have a strong appeal for current and potential investors and we shall be circulating full details to shareholders with this document. George Burnett, Chairman
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Henderson Strata Investments plc - Henderson Global Investors

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