Final Results

RNS Number : 3425P

Henderson Eurotrust PLC

30 September 2011

 

 

30 September 2011

This announcement contains regulated information.

HENDERSON EUROTRUST PLC

Annual Financial Report for the year ended 31 July 2011

	31 July 2011	31 July 2010	Change
	pence	pence	%
Net Asset Value
ordinary share	624.7	549.0	+13.8
Total Return
ordinary share	86.1	74.0	n/a
Revenue Return
ordinary share	17.6	12.1	+45.5
Dividends	15.0	11.0	+36.4
ordinary share

MANAGEMENT REPORT

Extracts from the Chairman's Statement

Results for the year ended July 2011 were again very good indeed in both absolute and relative terms, with the Company's net asset value total return of 15.8%.  Tim Stevenson, our manager, should be congratulated on beating our benchmark index, which rose by 12.6%, by a convincing 3.2%. Since the pricking of the dot-com bubble a decade ago he has outperformed the index in nine years of those ten and the sector average in eight. This is a commendably consistent record, especially as it was achieved over a period of changing market conditions, favouring different investment approaches at different times.

We have again analysed the source of our manager's relative performance in the table below.  The process of performance attribution necessarily makes assumptions about which decision - country or stock - came first, and we must treat the results with care therefore. However, as last year, the main sources of relative performance appear to have been the choice of individual security and the choice of country. In brief, our manager and his team have focussed on solid growth companies. These were found mainly, but not exclusively, in northern Europe. The significant underweighting in  financials also contributed  to relative performance. Other effects, such as those arising from share buybacks and gearing, were modest but still positive contributors.

- MORE -

2

HENDERSON EUROTRUST PLC

Annual Financial Report for the year ended 31 July 2011

MANAGEMENT REPORT Continued

ESTIMATED PERFORMANCE ATTRIBUTION
	%
Benchmark Return	12.6
Country Allocation	2.6
Stock Selection	0.8
Currency movements (relative to index)	0.7
Cash/gearing	0.3
Management Fees and Other Costs	-1.5
Effect of Share Buybacks	0.2
Net Asset Value Total Return	15.8
Change in Discount to NAV	-3.0
Share Price Total Return	12.8

Taken as a whole, the public and private finances of the Eurozone are healthier than those of the US, Japan or the UK, yet the region is seen more as a pariah than a poster child by international investors. We know why; the region's southern and western fringes continue to suffer from austerity policies forced on them by the weight of their accumulated indebtedness and their apparent inability to outgrow those liabilities. We can do little about such investor attitudes except to point out again and again that the companies we invest in are more often than not global leaders serving a global clientele, based in stable democracies with sound public finances whose economies do not rely on the vagaries of the commodity price cycle. Where else in the world can one find companies with such a mix of attributes?

The clearest signal that these companies are facing the future with confidence comes perhaps from their boards' decisions on dividends. Shareholders - both existing and prospective - in Henderson EuroTrust might note that our own company, as a listed UK investment trust, has relatively little flexibility with regard to dividend policy. Our dividend decisions mainly reflect the accumulation of decisions taken by the boards of directors of the dozens of companies in which we invest. Our proposed final dividend of 11.0p per share increases the full year payout by over a third. If our proposal is accepted at the forthcoming AGM, our dividend will have increased on average by about 19% per annum over the last decade.

- MORE -

3

HENDERSON EUROTRUST PLC

Annual Financial Report for the year ended 31 July 2011

MANAGEMENT REPORT Continued

Board Changes

Bob Bischof, who has served on the Board since 1996, stands down at the forthcoming AGM. Bob has lived and worked in the UK for many years, but was educated in Germany and frequently travels to continental Europe, where he has strong business connections. He has been an astute observer of trends in the region, his comments are always insightful and his input invaluable. We shall miss him greatly. We thank Bob for his service to the Board and wish him every success for the future.

We asked David Marsh CBE to join the Board earlier this year, to overlap with Bob. David is an expert on monetary affairs, and an authority on the history of the Euro. There can hardly have been a better moment in recent history to have David's counsel available to us.

Outlook

Storm clouds had begun to gather by the end of our financial year on 31 July and since then equity markets have fallen sharply. The main German index, the DAX, for example, representing some of Europe's most successful and globally-operating companies, opened on 1 August at over 7,250, yet as we write - just a few weeks later - it is trading at around 5,500. The reasons are manifold - European government bond crises, the US's downgrading from its unanimous triple A rating, a consequential slowdown in economic growth and the danger of a double dip recession; these have all contributed to unsettling investors all over the world. Not only has the sell-off been rapid, but it has been surprisingly indiscriminate in the manner in which it happened. 

In such market conditions, it is difficult to give a reasoned commentary on the outlook, we believe that, longer term, as confidence eventually returns, real value will be recognised again and the companies that our manager has picked will come through this turbulence intact.     

Annual General Meeting

The meeting will be held on Tuesday 15 November 2011 at 2.30pm at 201 Bishopsgate, London EC2M 3AE, and will be followed by afternoon tea. Full details of the business of the meeting will be set out in the Notice of the Meeting. Tim Stevenson will, as usual, make an  investment presentation and the Board will be pleased to answer any questions. All shareholders are most welcome to attend.

Mark Tapley

Chairman

30 September 2011

- MORE -

4

HENDERSON EUROTRUST PLC

Annual Financial Report for the year ended 31 July 2011

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 risk through diversification of investments in the portfolio.

• Regulatory

A breach of section 1158 of the Corporation Tax Act 2010 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 Act 2006 could lead to criminal proceedings, or financial or reputational damage. The Manager is 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.

• 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 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 and in Note 15 in the Annual Report.

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.

Related party transactions

The provision of investment management, accounting, company secretarial and administration services has been outsourced to Henderson Global Investors Limited ('Henderson' or the 'Manager').  This is the only related party arrangement currently in place.  Other than fees payable by the Company in the ordinary course of business, there have been no material transactions with the related party which have affected the financial position or performance of the Company during the year under review.

- MORE -

5

HENDERSON EUROTRUST PLC

Annual Financial Report for the year ended 31 July 2011

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 profit 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

30 September 2011

Twenty Largest Holdings

These twenty investments total £67,377,000 representing 53.1% by value of the total investments.

	Name of Investment	Country	Sub- sector	2011 Valuation £'000
1	Deutsche Post	Germany	Air Freight & Logistics	5,711
2	Fresenius	Germany	Healthcare	5,362
3	Swedish Match	Sweden	Tobacco Products	4,007
4	Amadeus	Spain	Transportation Infrastructure	3,849
5	Ericsson	Sweden	Telecommunications	3,636
6	BIC	France	Commercial Services & Supplies	3,453
7	Linde	Germany	Chemicals	3,423
8	SES Global	France	Media	3,368
9	Saipem	Italy	Oil Equipment	3,167
10	L'Oréal	France	Personal Goods	3,158
11	Roche	Switzerland	Pharmaceuticals & Biotechnology	3,017
12	Essilor	France	Ophthalmology	2,886
13	Deutsche Telekom	Germany	Telecommunications	2,866
14	Brenntag	Germany	Chemicals	2,846
15	Legrand	France	Electrical Installations	2,844
16	Fresenius Medical Care	Germany	Healthcare	2,834
17	Adecco	Switzerland	Professional Services	2,790
18	United Internet	Germany	Technology	2,783
19	Nestlé	Switzerland	Food Producer & Processor	2,695
20	Sodexo	France	Catering Services	2,682

-MORE-

6

HENDERSON EUROTRUST PLC

Annual Financial Report for the year ended 31 July 2011

Audited Income Statement

for the year ended 31 July 2011

	Year ended 31 July 2011			Year ended 31 July 2010
	Revenue return	Capital return	Total	Revenue     return	Capital  return	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Gains from investments held at fair value through profit or loss (note 2)	-	15,604	15,604	-	14,645	14,645
Investment income (note 3)	4,546	-	4,546	3,496	-	3,496
Other interest receivable and similar income	2	-	2	-	-	-
	---------	----------	---------	---------	----------	---------
Gross revenue and capital gains	4,548	15,604	20,152	3,496	14,645	18,141
Management and performance fees	(184)	(1,371)	(1,555)	(169)	(1,247)	(1,416)
Other administrative expenses	(325)	-	(325)	(288)	-	(288)
	---------	----------	----------	---------	----------	----------
Net return on ordinary activities before finance charges and taxation	4,039	14,233	18,272	3,039	13,398	16,437
Finance charges	(9)	(35)	(44)	(9)	(34)	(43)
	---------	----------	----------	---------	----------	----------
Net return on ordinary activities before taxation	4,030	14,198	18,228	3,030	13,364	16,394
Taxation on net return on ordinary activities	(373)	-	(373)	(414)	-	(414)
	---------	----------	----------	---------	---------	---------
Net return  on ordinary activities after taxation	3,657	14,198	17,855	2,616	13,364	15,980
	=====	=====	=====	=====	=====	=====
Return per ordinary share (note 4)	17.6p	68.5p	86.1p	12.1p	61.9p	74.0p
	=====	=====	=====	=====	=====	=====

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.

- MORE -

7

HENDERSON EUROTRUST PLC

Annual Financial Report for the year ended 31 July 2011

Audited Reconciliation of Movements in Shareholders' Funds

for the years ended 31 July  2011 and 31 July 2010

	Called up share capital	Share premium account	Capital redemption reserve	Capital reserves	Revenue reserve	Total
Year ended 31 July 2011	£'000	£'000	£'000	£'000	£'000	£'000
At 31 July 2010	1,044	33,814	239	76,555	2,958	114,610
Net return from ordinary activities after taxation	-	-	-	14,198	3,657	17,855
Repurchase of ordinary shares	(18)	-	18	(1,979)	-	(1,979)
Final dividend paid in respect of  the year ended 31 July 2010 (paid 22 November 2010)	-	-	-	-	(1,460)	(1,460)
Interim dividend paid in respect of  the year ended 31 July 2011 (paid 28 April 2011)	-	-	-	-	(828)	(828)
	---------	----------	---------	---------	---------	--------
At 31 July 2011	1,026	33,814	257	88,774	4,327	128,198
	=====	=====	=====	=====	=====	=====
	Called up share capital	Share premium account	Capital redemption reserve	Capital reserves	Revenue reserve	Total
Year ended 31 July 2010	£'000	£'000	£'000	£'000	£'000	£'000
At 31 July 2009	1,148	33,814	135	73,934	3,016	112,047
Net return from ordinary activities after taxation	-	-	-	13,364	2,616	15,980
Repurchase of ordinary shares	(104)	-	104	(10,743)	-	(10,743)
Final dividend paid in respect of  the year ended 31 July 2009 (paid 17 November 2009)	-	-	-	-	(1,376)	(1,376)
Special dividend paid in respect of  the year ended 31 July 2009 (paid 17 November 2009)	-	-	-	-	(458)	(458)
Interim dividend paid in respect of  the year ended 31 July 2010 (paid 30 April 2010)	-	-	-	-	(840)	(840)
	---------	----------	---------	---------	---------	--------
At 31 July 2010	1,044	33,814	239	76,555	2,958	114,610
	=====	=====	=====	=====	=====	=====

- MORE -

8

HENDERSON EUROTRUST PLC

Annual Financial Report for the year ended 31 July 2011

Audited Balance Sheet

at 31 July 2011

	2011 £'000	2010 £'000
Fixed asset investments held at fair value through profit or loss
Listed at market value  -  overseas	126,907	112,859
	----------	----------
Current assets
Debtors	1,194	492
Cash at bank	2,044	3,808
	---------	---------
	3,238	4,300
Creditors: amounts falling due within one year	(1,947)	(2,549)
	-------	---------
Net current assets	1,291	1,751
	-------	---------
Total net assets	128,198	114,610
	=====	=====
Capital and reserves
Called up share capital (note 7)	1,026	1,044
Share premium account	33,814	33,814
Capital redemption reserve	257	239
Capital reserves	88,774	76,555
Revenue reserve	4,327	2,958
	----------	----------
Shareholders' funds	128,198	114,610
	======	======
Net asset value per ordinary share (note 6)	624.7p	549.0p
	=====	=====

- MORE -

9

HENDERSON EUROTRUST PLC

Annual Financial Report for the year ended 31 July 2011

Audited Cash Flow Statement

for the year ended 31 July 2011

	2011		2010
	£'000	£'000	£'000	£'000
Net cash inflow from operating activities		2,169		1,124
Servicing of finance
Interest paid	(45)		(41)
	--------		--------
Net cash outflow from servicing of finance		(45)		(41)
Taxation
UK Corporation Tax paid	-		(278)
Overseas tax recovered	302		176
	--------		--------
Net tax recovered/(paid)		302		(102)
Financial investment
Purchases of investments	(78,167)		(96,729)
Sales of investments	78,774		108,903
	--------		---------
Net cash inflow from financial investment		607		12,174
Equity dividends paid		(2,288)		(2,674)
		--------		--------
Net cash inflow before financing		745		10,481
Financing
Repurchase of own shares	(1,979)		(10,743)
(Repayment)/drawdown of loans	(806)		1,346
Net cash outflow from financing		(2,785)		(9,397)
		--------		--------
(Decrease)/increase in cash		(2,040)		1,084
		=====		=====
Reconciliation of net cash flow to movement in net funds
(Decrease)/increase in cash as above		(2,040)		1,084
Exchange movements		276		169
Net cash inflow/(outflow) from decrease/( increase) in loans		806		(1,346)
		--------		--------
Change in net funds resulting from cash flows		(958)		(93)
Net funds at 1 August		2,477		2,570
		--------		--------
Net funds at 31 July		1,519		2,477
		=====		=====

- MORE -

10

HENDERSON EUROTRUST PLC

Annual Financial Report for the year ended 31 July 2011

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 in the United Kingdom 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. The Company's accounting policies are consistent with the prior year.
	2.	Gains from investments held at fair value through profit or loss
			2011	2010
			£'000	£'000
		Gains on the sale of investments based on historical cost	8,495	8,903
		Less: revaluation gains recognised in previous years	(4,453)	(4,587)
			----------	----------
		Gains on investments sold in the year based on carrying value at the previous balance sheet date	4,042	4,316
		Revaluation of investments held at 31 July	11,286	10,160
		Exchange gains	276	169
			----------	----------
			15,604	14,645
			----------	----------
	3.	Investment income
			2011	2010
			£'000	£'000
		Overseas dividend income	4,546	3,496
			-------	-------
	4.	Return per ordinary share
		The total return per ordinary share is based on the net return attributable to the ordinary shares of £17,855,000 (2010: £15,980,000) and on 20,737,127 ordinary shares (2010: 21,606,893) being the weighted average number of shares in issue during the year.
		The total return can be further analysed as follows:
			2011 £'000	2010 £'000
		Revenue return	3,657	2,616
		Capital return	14,198	13,364
			----------	----------
		Total return	17,855	15,980
			======	======
		Weighted average number of ordinary shares	20,737,127	21,606,893
		Revenue return per ordinary share	17.6p	12.1p
		Capital return per ordinary share	68.5p	61.9p
			----------	---------
		Total return per ordinary share	86.1p	74.0p
			=====	=====
		The Company does not have any dilutive securities.

- MORE -

11

HENDERSON EUROTRUST PLC

Annual Financial Report for the year ended 31 July 2011

5.	Dividend
	Subject to shareholder approval at the Annual General Meeting on 15 November 2011, the proposed final dividend of 11.0p per ordinary share will be paid on 18 November 2011 to shareholders on the register of members at the close of business on 14 October 2011. The shares will be quoted ex-dividend on 12 October 2011.
					2011
					£'000
	Revenue available for distribution by way of dividend for the year				3,657
	Interim dividend of 4.0p paid 28 April 2011				(828)
	Proposed final dividend for the year ended 31 July 2011 of 11.0p (based on 20,478,541 ordinary shares in issue at 30 September 2011)				(2,253)
					--------
	Undistributed revenue for section 1158 purposes*				576
					====
	*Undistributed revenue comprises 12.7% of the income from investments    of £4,546,000 (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 £128,198,000 (2010: £114,610,000) and on 20,521,675 (2010: 20,876,925) ordinary shares in issue at the year end.  There were no shares held in Treasury at the year end (2010: nil).
7.	Called up share capital
			Number of shares entitled to dividend	Total number of shares	Nominal value of shares £'000
	Ordinary shares of 5p each		-	75,000,000	3,750
			-------------	-------------	-------
	Issued - balance brought forward		20,876,925	20,876,925	1,044
	Repurchase and cancellation of ordinary shares		(355,250)	(355,250)	(18)
			--------------	--------------	-------
	Balance carried forward		20,521,675	20,521,675	1,026
			========	========	====
	During the year 355,250 (2010: 2,091,138) ordinary shares were repurchased at a total cost of £1,979,000 (2010: £10,743,000) and subsequently cancelled.  Since the year end a further 43,134 shares have been repurchased.
8.	Going Concern Statement
	The Directors believe it is appropriate to continue to adopt the going concern basis in preparing the financial statements as the assets of the Company consist mainly of securities which are readily realisable and, accordingly, the Company has adequate financial resources to continue in operational existence for the foreseeable future. In reviewing the position as at the date of this statement, the Board has considered the 'Going Concern and Liquidity Risk: Guidance for Directors of UK Companies 2009' published by the Financial Reporting Council in October 2009.

- MORE -

12

HENDERSON EUROTRUST PLC

Annual Financial Report for the year ended 31 July 2011

9.	Financial information
	The figures and financial information for the year ended 31 July 2011 are extracted from the Company's annual financial statements for that period and do not constitute statutory financial statements. The Company's annual financial statements for the year ended 31 July 2011 have been audited but have not yet been delivered to the Registrar of Companies. The Auditors' report on the 2011 financial statements was unqualified, did not include a reference to any matter which the Auditors drew attention without qualifying the report, and did not contain any statements under sections 498(2) and 498(3) of the Companies Act 2006.

10.	2010 Financial information
	The figures and financial information for the year ended 31 July 2010 are compiled from an extract of the published financial statements for that year and do not constitute statutory financial statements for that year. The Company's annual 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) and 498(3) of the Companies Act 2006.
11.	Annual Report and Financial Statements and Annual General Meeting
	The Report and Financial Statements will be posted to shareholders on 10 October 2011 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. The Annual General Meeting will be held at the registered office on Tuesday 15 November 2011 at 2.30 pm. The Notice of the Annual General Meeting will be posted to shareholders with the Annual Report.

- ENDS -

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]

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

 

END

 

 

FR DKKDQQBKDKCN