Final Results

RNS Number : 1552A

Henderson Eurotrust PLC

02 October 2009

 



2 October 2009

This announcement contains regulated information.

HENDERSON EUROTRUST PLC 

Annual Report and Financial Statements for the year ended 31 July 2009

	31 July 2009	31 July 2008	Change
	pence	pence	%
Net Asset Value
ordinary share	487.8	527.8	-7.6
Revenue Return
ordinary share	12.4	10.1	22.8
Dividends
ordinary dividend	9.0	8.0	12.5
special dividend	2.0	2.0	-

MANAGEMENT REPORT

Extracts from the Chairman's Statement 

Our Company's total return in sterling, at -5.7% for the year to end July 2009, may look modestly disappointing, but not unusual for an equity portfolio at this point in time, but investors will be aware of the drama that this summary figure hides. 

Shortly after our financial year began, the US authorities permitted the collapse of Lehman Brothers, having earlier engineered the absorption into larger banks of smaller entities endangered by the US sub-prime crisis. Allowing Lehman Brothers to go bankrupt shocked financial markets around the world. Equity markets are of course closely interlinked, and although the crisis was widely seen as 'Anglo-Saxon' in origin, European markets were not spared the resulting precipitous fall. By the Spring of 2009 our share price had fallen by more than a quarter from its level at the beginning of the financial year, but from that low point markets rallied strongly, supported by unprecedented fiscal and monetary stimuli, all which must of course one day be reversed.  

The total return of -5.7% includes the positive effects of both dividends (2.3%) and the positive currency effects of approximately 8%, since sterling was on average weak against the Euro. This analysis suggests that the average capital loss on our holdings, in their quoted currency, was still of the order of 16% in spite of their rebound in the March to July period.

The net figure for our total return compares well with our benchmark index, where the corresponding figure was -10.1%. What matters is that our Manager was indeed able to do better than the benchmark, but investors will also be interested in how that was achieved. Performance attribution is not an exact science, but the table below indicates the approximate breakdown of that relative performance. It is clear that our Portfolio Manager, Tim Stevenson, and his colleagues, have added value largely through stock selection. 

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HENDERSON EUROTRUST PLC 

Annual Report and Financial Statements for the year ended 31 July 2009

		%
FTSE World Europe (ex UK) Total Return Index		-10.1
Country allocation		-1.4
Stock selection		3.9
Currency movements (relative to index)		0.7
Cash/gearing		2.1
Management fees and other costs		-1.4
Effect of share buybacks		0.1
Effect of VAT recovery		0.4
AIC Net Asset Value total return		-5.7
Change in Discount to NAV		2.5
		-----
Share price total return		-3.2

At Board meetings we also compare performance against our peer group of competing investment trusts, and I am pleased to report that your Company has been one of the best performers in the sector having outperformed the benchmark for seven of the last eight years. This achievement is all the more remarkable in that it arose mainly from diligent research of companies, and not through leverage or excessive risk taking. From my conversations with shareholders, I know that this cautious approach is much appreciated. 

Revenue and Dividend

The Company's gross revenue for the year was £4,186,000, up from £3,562,000 a year earlier and net revenue on ordinary activities after taxation increased by 21.3 %, from £2,356,000 to £2,858,000. These figures include further repayments of VAT and interest, following the favourable outcome of the legal case that we mentioned last year. Your Board has therefore recommended a final dividend of 6.0 pence, which with the interim of 3.0 pence paid in May, makes a total ordinary dividend of 9.0 pence per share for the year. In addition, the Board recommends the payment of a special dividend of 2.0 pence per share, reflecting the non-recurring nature of the VAT and related interest repayments. 

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HENDERSON EUROTRUST PLC 

Annual Report and Financial Statements for the year ended 31 July 2009

Gearing

Our continued cautious stance has been generally rewarded this year, although obviously our lack of gearing caused us to lag our more aggressive competitors in the sharp rally between March and July. As of the end of our financial year the Company had no borrowings and about 2% of the assets were held in cash. However, we review our gearing and cash position with the Manager at every Board meeting, and maintain an open mind on this issue. 

Discount Management

You may recall that at the EGM in February 2007 we undertook to provide shareholders with an exit opportunity in 2010, should the shares trade at an average discount of more than 5% over a three month period to 31 December 2009. However, in the light of the excellent long term performance, we trust that shareholders will continue to support the Company, should an exit opportunity be triggered. 

Your Board needs flexibility in order to continue to operate a discount management programme, and we shall therefore again seek to renew the authority to buy back shares at the forthcoming AGM in November.

Outlook

As mentioned earlier, the economic backdrop to our new financial year is a legacy of government debt programmes and bloated money supplies in most of the major economies - though with some notable exceptions in continental Europe. At the same time, European share prices are down substantially from their peaks, and with the economic recovery gathering pace, prospects for European equity markets look better over the next year. 

The European region is often neglected by global investors, who see continental markets as 'unexciting' and lacking the growth prospects of emerging markets or the (alleged) dynamism of US companies. Yet the virtues of European solidity and stability have found new admirers in this rapidly de-leveraging world. We remain confident therefore that leading companies in the region will continue to find a ready market for their products and services both at home and abroad, and that our Portfolio Manager will continue to identify the best among them.

Annual General Meeting

The meeting will be held on Thursday 12 November 2009 at 2.30pm at 201 Bishopsgate, London EC2M 3AE, and will be followed by afternoon tea. Tim Stevenson, our Portfolio Manager, will make an investment presentation and the Board will be pleased to answer any questions. All shareholders are most welcome to attend. 

Mark Tapley 

Chairman

2 October 2009 

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HENDERSON EUROTRUST PLC 

Annual Report and Financial Statements for the year ended 31 July 2009

MANAGEMENT REPORT (continued)

Principal Risks and Uncertainties

The Board has drawn up a matrix of risks facing the Company and has put in place a schedule of investment limits and restrictions, appropriate to the Company's investment objective and policy, in order to mitigate these risks as far as practicable. The principal risks which have been identified and the steps taken by the Board to mitigate these are as follows:

• Investment activity and performance

An inappropriate investment strategy (for example, in terms of asset allocation or the level of gearing) may result in underperformance against the Company's benchmark index and the companies in its peer group. The Board monitors investment performance at each Board meeting and regularly reviews the extent of its borrowings.

• Portfolio and market

Although the Company invests almost entirely in securities that are quoted on recognised markets, share prices may move rapidly. The companies in which investments are made may operate unsuccessfully, or fail entirely. A fall in the market value of the Company's portfolio would have an adverse effect on shareholders' funds. The Board reviews the portfolio each month and mitigates this risk through diversification of investments in the portfolio.

• Regulatory risks

A breach of section 842 of the Income and Corporation Taxes Act 1988 could lead to a loss of investment trust status, resulting in capital gains realised within the portfolio being subject to corporation tax. A breach of the UKLA Listing Rules could result in suspension of the Company's shares, while a breach of the Companies Acts 1985 and 2006 could lead to criminal proceedings, or financial or reputational damage. The Manager has contracted to provide investment, company secretarial, administration and accounting services through qualified professionals. The Board receives internal control reports produced by the Manager on a quarterly basis, which confirm regulatory compliance.

• Financial

By its nature as an investment trust, the Company's business activities are exposed to market risk (including market price risk, currency risk and interest rate risk), liquidity risk, and credit and counterparty risk. Details of these risks and how they are managed are contained in the notes in the Annual Report.

• Operational

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

Details of the Company's compliance with corporate best practice, including information on relations with shareholders, and how the Board monitors the services provided by the Manager and its other suppliers, and the key elements designed to provide effective internal control, are explained further in the internal control section of the Corporate Governance Statement in the Annual Report.

Related Party Transactions

The Company has appointed a subsidiary of Henderson Global Investors (Holdings) plc ('Henderson') to provide investment management, accounting, company secretarial and administration services. In addition Henderson has provided the Company with marketing services. Custody Services are supplied to the Company by JPMorgan Chase. During the year there have been no material transactions with these related parties which have affected the financial position or performance of the Company during the year under review.

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HENDERSON EUROTRUST PLC 

Annual Report and Financial Statements for the year ended 31 July 2009

MANAGEMENT REPORT (Continued)

Statement of Directors' Responsibilities 

In accordance with Disclosure and Transparency Rule 4.1.12, the Directors confirm to the best of their knowledge that:

(a) 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 loss of the Company; and

(b) the Directors' Report in the Annual Report 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.

Signed for and on behalf of the Board

Mark Tapley

Director

2 October 2009 

Twenty Largest Holdings

These twenty investments total £59,060,000 representing 53.4% by value of the total investments. 

Name of Investment	Country	Sub- sector	2009 Valuation  £'000
Fresenius Medical Care	Germany	Healthcare	4,017
Fresenius	Germany	Healthcare	3,712
Munich Re.	Germany	Insurance	3,406
Syngenta	Switzerland	Chemicals	3,360
Roche	Switzerland	Pharmaceuticals & Biotechnology	3,175
Grifols	Spain	Pharmaceuticals & Biotechnology	3,135
Vivendi Universal	France	Media	3,113
Linde	Germany	Chemicals	2,967
Bureau Veritas	France	Support Services	2,895
Synthes	Switzerland	Healthcare	2,894
Essilor	France	Healthcare	2,859
UBS	Switzerland	Banks	2,822
Inditex	Spain	General Retailers	2,751
Deutsche Börse	Germany	Financial Services	2,687
Heineken	Netherlands	Beverages	2,677
Zurich Financial Services	Switzerland	Financial Services	2,597
Banco Santander	Spain	Banks	2,551
Nokia	Finland	Technological Hardware & Equipment	2,511
Beiersdorf	Germany	Personal Goods	2,480
Sampo OYJ	Finland	Insurance	2,451

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HENDERSON EUROTRUST PLC 

Annual Financial Report for the year ended 31 July 2009

Audited Income Statement 

for the year ended 31 July 2009

	Year ended 31 July 2009			Year ended 31 July 2008
	Revenue  return	Capital  return	Total	Revenue  return	Capital  return	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Losses from investments held at fair value through profit or loss (note 2)	-	(8,789)	(8,789)	-	(6,790)	(6,790)
Investment income (note 3)	3,783	-	3,783	3,303	-	3,303
Other interest receivable and  similar income (including interest on VAT refund)	403	-	403	259	-	259
	---------	----------	---------	---------	-----------	-----------
Gross revenue and capital (losses)/gains	4,186	(8,789)	(4,603)	3,562	(6,790)	(3,228)
Management and performance fees	(151)	(1,530)	(1,681)	(179)	(1,026)	(1,205)
Write-back of prior years' VAT	129	110	239	163	731	894
Other administrative expenses	(201)	-	(201)	(207)	-	(207)
	---------	----------	----------	---------	-----------	-----------
Net return/(loss) on ordinary activities before finance charges and taxation	3,963	(10,209)	(6,246)	3,339	(7,085)	(3,746)
Finance charges	-	-	-	-	(1)	(1)
	---------	----------	----------	---------	-----------	-----------
Net return/(loss) on ordinary  activities before taxation	3,963	(10,209)	(6,246)	3,339	(7,086)	(3,747)
Taxation on net return on ordinary activities	(1,105)	376	(729)	(983)	516	(467)
	---------	---------	---------	---------	-----------	-----------
Net return /(loss) on ordinary  activities after taxation	2,858	(9,833)	(6,975)	2,356	(6,570)	(4,214)
	=====	=====	=====	=====	======	======
Return/(loss) per ordinary share (note 4)	12.4p	(42.7)p	(30.3)p	10.1p	(28.2)p	(18.1)p
	=====	=====	=====	=====	======	======

The total column of this statement represents the Income Statement of the Company. All revenue and capital items in the above statement derive from continuing operations. The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. The Company had no recognised gains or losses other than those disclosed in the Income Statement and Reconciliation of Movements in Shareholders' Funds. 

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HENDERSON EUROTRUST PLC 

Annual Financial Report for the year ended 31 July 2009

Audited Reconciliation of Movements in Shareholders' Funds

for the years ended 31 July 2009 and 31 July 2008

	Called up share capital	Share premium account	Capital  redemption reserve	Capital reserves	Revenue reserve	Total
Year ended 31 July 2009	£'000	£'000	£'000	£'000	£'000	£'000
At 31 July 2008	1,153	33,814	130	84,176	2,464	121,737
Net (loss)/return from ordinary  activities after taxation	-	-	-	(9,833)	2,858	(6,975)
Repurchase of ordinary shares	(5)	-	5	(409)	-	(409)
Final dividend paid in respect of  the year ended 31 July 2008  (paid 18 November 2008)	-	-	-	-	(1,153)	(1,153)
Special dividend paid in respect of  the year ended 31 July 2008  (paid 18 November 2008)	-	-	-	-	(462)	(462)
Interim dividend paid in respect of  the year ended 31 July 2009  (paid 1 May 2009)	-	-	-	-	(691)	(691)
	---------	----------	---------	---------	---------	--------
At 31 July 2009	1,148	33,814	135	73,934	3,016	112,047
	=====	=====	=====	=====	=====	=====
	Called up share capital	Share premium account	Capital redemption reserve	Capital reserves	Revenue reserve	Total
Year ended 31 July 2008	£'000	£'000	£'000	£'000	£'000	£'000
At 31 July 2007	1,283	33,814	-	91,928	1,737	128,762
Net (loss)/return from ordinary  activities after taxation	-	-	-	(6,570)	2,356	(4,214)
Repurchase of ordinary shares	-	-	-	(1,182)	-	(1,182)
Cancellation of ordinary shares held  in Treasury	(130)	-	130	-	-	-
Final dividend paid in respect of  the year ended 31 July 2007  (paid 9 November 2007)	-	-	-	-	(932)	(932)
Interim dividend paid in respect of  the year ended 31 July 2008  (paid 2 May 2008)	-	-	-	-	(697)	(697)
	---------	---------	---------	---------	---------	---------
At 31 July 2008	1,153	33,814	130	84,176	2,464	121,737
	=====	=====	=====	=====	=====	=====

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HENDERSON EUROTRUST PLC 

 Annual Financial Report for the year ended 31 July 2009

Audited Balance Sheet

at 31 July 2009

	2009 £'000	2008 £'000
Fixed asset investments held at fair value through  profit or loss
Listed at market value - overseas	110,571	115,961
	----------	----------
Current assets
Debtors	556	1,173
Cash at bank and short term deposits	2,570	5,360
	---------	----------
	3,126	6,533
Creditors: amounts falling due within one year	(1,650)	(757)
	----------	----------
Net current assets	1,476	5,776
	----------	----------
Total net assets	112,047	121,737
	======	======
Capital and reserves
Called up share capital (note 7)	1,148	1,153
Share premium account	33,814	33,814
Capital redemption reserve	135	130
Capital reserves	73,934	84,176
Revenue reserve	3,016	2,464
	--------	----------
Equity shareholders' funds	112,047	121,737
	======	======
Net asset value per ordinary share (note 6)	487.8p	527.8p
	=====	======

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HENDERSON EUROTRUST PLC 

Annual Financial Report for the year ended 31 July 2009

Audited Cash Flow Statement

for the year ended 31 July 2009

	2009		2008
	£'000	£'000	£'000	£'000
Net cash inflow from operating activities		3,079		2,167
Servicing of finance
Interest paid	-		(1)
	-------		---------
Net cash outflow from servicing of finance		-		(1)
Taxation
UK Corporation Tax paid	(75)		-
Overseas tax recovered	39		25
	---------		----------
Net tax (paid)/recovered		(36)		25
Financial investment
Purchases of investments	(83,046)		(90,245)
Sales of investments	79,462		90,094
	----------		--------
Net cash outflow from financial investment		(3,584)		(151)
Equity dividends paid		(2,306)		(1,629)
		---------		---------
Net cash (outflow)/inflow before financing		(2,847)		411
Financing
Repurchase of own shares	(409)		(1,182)
	---------		---------
Net cash outflow from financing		(409)		(1,182)
		---------		---------
Decrease in cash		(3,256)		(771)
		=====		=====
Reconciliation of net cash flow to  movement in net funds
Decrease in cash as above		(3,256)		(771)
Exchange movements		466		506
		--------		--------
Change in net funds resulting from cash flows		(2,790)		(265)
Net funds at 1 August		5,360		5,625
		--------		--------
Net funds at 31 July		2,570		5,360
		=====		=====

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HENDERSON EUROTRUST PLC 

Annual Financial Report for the year ended 31 July 2009

Notes:

1.	Accounting Policies
	Basis of accounting
	The financial statements have been prepared on a going concern basis and under the historical cost basis of accounting, modified to include the revaluation of investments at fair value. The financial statements have been prepared in accordance with applicable accounting standards and with the Statement of Recommended Practice ('SORP') for investment trusts issued by the Association of Investment Companies ('the AIC') in January 2009. All of the Company's operations are of a continuing nature.
2.	Losses from investments held at fair value through profit or loss
			2009	2008
			£'000	£'000
	(Losses)/gains on the sale of investments based on historical cost		(5,055)	9,517
	Less: revaluation gains recognised in previous years		(6,210)	(14,181)
			----------	---------
	Losses on investments sold in the year based on carrying value at the previous balance sheet date		(11,265)	(4,664)
	Revaluation of investments held at 31 July		2,010	(2,632)
	Exchange gains		466	506
			----------	---------
			(8,789)	(6,790)
			----------	---------
3.	Investment income
		2009		2008
		£'000		£'000
	Unfranked - listed investments
	Dividend income	3,783		3,303
		-------		-------
4.	Return per ordinary share
	The total return per ordinary share is based on the net loss attributable to the ordinary shares of £6,975,000 (2008: £4,214,000) and on 23,048,948 ordinary shares (2008: 23,242,213) being the weighted average number of shares in issue during the year.

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HENDERSON EUROTRUST PLC 

 Annual Financial Report for the year ended 31 July 2009

4.	Return per ordinary share (continued)
	The total return per ordinary share can be further analysed as follows:
		2009 £'000		2008 £'000
	Revenue return	2,858		2,356
	Capital loss	(9,833)		(6,570)
		----------		---------
	Total loss	(6,975)		(4,214)
		----------		---------
	Weighted average number of  ordinary shares	23,048,948		23,242,213
	Revenue return per ordinary share	12.4p		10.1p
	Capital loss per ordinary share	(42.7)p		(28.2)p
		---------		----------
	Total loss per ordinary share	(30.3)p		(18.1)p
		=====		=====
	The Company does not have any dilutive securities.
5.	Dividend
	Subject to shareholder approval at the Annual General Meeting on 12 November 2009, the proposed final dividend of 6.0p per ordinary share and a special dividend of 2.0p per ordinary share will be paid on 17 November 2009 to shareholders on the register of members at the close of business on 16 October 2009. The shares will be quoted ex-dividend on 14 October 2009.
					2009
					£'000
	Revenue available for distribution by way of dividend for the year				2,858
	Interim dividend of 3.0p paid 1 May 2009				(691)
	Proposed final dividend for the year ended 31 July 2009 of 8.0p (includes 2.0p special)
	(based on 22,968,063 ordinary shares in issue at 2 October 2009)				(1,837)
					---------
	Undistributed revenue for section 842 purposes*				330
					=====
	*Undistributed revenue comprises 8.7% of the income from investments  of £3,783,000 (see note 3).
6.	Net asset value per ordinary share
	The net asset value per ordinary share is based on the net assets attributable to the ordinary shares of £112,047,000 (2008: £121,737,000) and on 22,968,063 (2008: 23,066,063) ordinary shares in issue at the year end. There were no shares held in Treasury at the year end (2008: nil).

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HENDERSON EUROTRUST PLC 

 Annual Financial Report for the year ended 31 July 2009

7.	Called up share capital
			Number of shares entitled to dividend	Total number of shares in issue	Nominal value of shares in issue  £'000
	Ordinary shares of 5p each
	Authorised		-	75,000,000	3,750
			-------------	--------------	-------
	Issued - balance brought forward		23,066,063	23,066,063	1,153
	Repurchase of ordinary shares		(98,000)	(98,000)	(5)
			--------------	--------------	-------
	Balance carried forward		22,968,063	22,968,063	1,148
			========	========	====
	During the year 98,000 (2008: 237,000) ordinary shares were repurchased at a total cost of £409,000 (2008: £1,182,000) and subsequently cancelled. Since the year end there have been no further shares repurchased.
8.	2009 Financial information
	The figures and financial information for the year ended 31 July 2009 are compiled from an extract of the latest financial statements and do not constitute statutory financial statements. These financial statements included the report of the auditors which was unqualified and did not contain a statement under section 498 of the Companies Act 2006.  These financial statements have not yet been delivered to the Registrar of Companies.
9.	2008 Financial information
	The figures and financial information for the year ended 31 July 2008 are compiled from an extract of the latest published financial statements and do not constitute the statutory financial statements 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 237(2) or section 237(3) of the Companies Act 1985.
10.	Annual Report
	The Report and Financial Statements will be posted to shareholders on 9 October 2009 and copies will be available on the Company's website (www.hendersoneurotrust.com) or in hard copy format from the Company's Registered Office, 201 Bishopsgate, London EC2M 3AE.

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For further information please contact:

Tim Stevenson

Portfolio Manager, Henderson EuroTrust plc 

Telephone: [phone]

James de Sausmarez

Head of Investment Trusts, Henderson Global Investors

Telephone: [phone]

Sarah Gibbons-Cook

Investor Relations and PR Manager, Henderson Global Investors

Telephone: [phone]

 

END

 

 

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