Final Results

RNS Number : 0285Q

Henderson Eurotrust PLC

08 October 2013

 



8 October 2013

This announcement contains regulated information

HENDERSON EUROTRUST PLC

Annual Financial Report for the year ended 31 July 2013

Financial Highlights
	31 July 2013 pence	31 July 2012 pence	Change%
Net Asset Value	778.0	580.2	34.1
Revenue Return	17.3	17.0	1.8
Dividends	17.0	16.5	3.0

MANAGEMENT REPORT

Extracts from the Chairman's Statement

Performance

The year to end July 2013 was characterised by extremely strong returns for our shareholders, with a share price total return of over 47%. The benchmark index rose by 36% and a narrowing of the discount to net asset value ("NAV") was also a significant factor. In addition, Tim Stevenson, our Portfolio Manager, has extended a long run of positive relative performance, adding almost 2% net of management fees and other ongoing charges. The table below summarises these influences on the total return.

Performance Attribution	%
Benchmark Return	36.0
Country Allocation	-0.2
Stock Selection	1.0
Currency movements (relative to index)	0.6
Effect of cash and gearing	1.1
Management fees and other costs	-0.9
	--------
NAV Total Return	37.6
Effect of narrowing discount to NAV	9.5
Share Price Total Return	47.1

Revenue and Dividends

The Board proposes a final dividend of 12.0p, taking the total distribution for the year to 17.0p, a 3% increase on last year. In the year under review no shares were bought back by the Company, reflecting our strong preference to pay dividends rather than to return capital via buybacks. However, we continue to monitor closely both our own discount and the discount management policies of other trusts in the sector.

Ongoing Charges and Fees

Ongoing charges, which are the management fee and other non-interest expenses as a percentage of shareholders' funds were 0.94% (2012: 0.91%) excluding the performance fee and 1.08% (2012: 1.76%) including the performance fee. A performance fee of £188,000 (wholly charged to capital) was paid in respect of the year to 31 July 2013. This fee, and the basic management fee of 0.7% of chargeable assets, were capped at 1.5% of total assets.

Page 2 of 14

HENDERSON EUROTRUST PLC

Annual Financial Report for the year ended 31 July 2013

Extracts from the Chairman's Statement (continued)

The management fee arrangements between your Company and Henderson Global Investors have been formally reviewed. In this regard your Board continue to believe that it is in the best interests of shareholders for there to be a performance fee element, subject to a high watermark provision, and a competitive base fee. Accordingly, (subject to regulatory approval) with effect from 1 August 2013 the base management fee has been reduced from 0.7% to 0.65% of net chargeable assets. In addition the performance fee arrangements have been amended by the introduction of a 1% hurdle before a performance fee becomes payable and a reduction in the cap on fees to be the lower of 1.3% of total assets and 4.99% of net assets. Any underperformance relative to the benchmark will be carried forward and must be made up before any further performance fee can be paid. Taking account of these improvements to our agreement, your Board has agreed to remove the provision whereby a performance fee was not paid in any year in which the NAV per share fell by more than 10%. Finally, the notice period has been reduced from twelve to six months to bring it into line with other investment trusts. Further details can be found in the Directors' Report in the Annual Report and Financial Statements. These changes will be subject to annual review in line with market developments.

Regulatory

The Board has noted that the Alternative Investment Fund Managers Directive has been written into UK legislation with effect from 22 July 2013. There is a transition period within which the Company must comply with the provisions of this directive, which include either acting as an Alternative Investment Fund Manager ("AIFM") or appointing an external party to be the AIFM and appointing a depositary, by 22 July 2014. The Board has agreed in principle that its Manager will be appointed as AIFM and will take the necessary actions to ensure that all documentation and processes to enable the Company to comply with these regulations are in place within the transition period.

Board Changes

I am pleased to report that Nicola Ralston was appointed to the Board with effect from 1 September 2013. Nicola has a wealth of experience in the investment industry, as an analyst, portfolio manager, investment consultant, board member and adviser to investment committees. She is a director and co-founder of PiRho Investment Consulting, which focuses on bespoke investment advice to a wide range of institutional funds. Nicola previously spent over 20 years in fund management at Schroders, where her roles included heading the UK institutional business, managing a number of public and private sector funds, and Head of Investment for the Schroder Group. She was also a former Director of the Edinburgh Investment Trust.

It is thirteen years since I was appointed to the Board and six years since I became Chairman. With this in mind, Nicola Ralston has agreed to take on the role of Chairman from the end of March 2014, when I intend to retire form the Board. I have thoroughly enjoyed my experience on the Board both as a director and more recently as Chairman and would like to thank our shareholders, all the staff of our Manager Hendersons, and my colleagues on the Board for their support during this time.

I am permitted perhaps a valedictory remark on whether I have learned anything from my long association with the Company. One thing in particular comes to mind: in investing, beware the consensus and the obvious conclusion. For most of the last decade, continental Europe has suffered from a poor image. Indeed for most of the Company's twenty-year life, consensus opinion has been in thrall to the economic growth prospects of the emerging markets; 'BRICs' has been one of the most commonly used acronyms of the time. Yet the charts which appear in the Annual Report and Financial Statements suggest that a wedge has been driven between the locus of economic growth and the locus of equity market returns. China's GDP in current dollars has multiplied nearly twenty-fold since Henderson EuroTrust was founded; the Eurozone's has not even doubled.

Page 3 of 14

HENDERSON EUROTRUST PLC

Annual Financial Report for the year ended 31 July 2013

Extracts from the Chairman's Statement (continued)

On the other hand, Europe's equity markets have provided reasonable returns, while China's equity market has floundered.

The strongest explanation for this state of affairs is that, as a result of globalisation of trade and investment, many excellent European industrial and service enterprises (including those in which the Company is invested) have benefited from China's growth without suffering the downside risks to which China based companies are exposed.

Annual General Meeting

Our meeting will be held on Thursday 14 November 2013 at 2.30pm at Henderson's offices at 201 Bishopsgate, London EC2M 3AE. Full details of the business of the meeting are set out in the Notice which has been sent to shareholders with the Annual Report and Financial Statements. Tim Stevenson will make an investment presentation after the formal business has been concluded and the Board will be pleased to answer questions from shareholders.

Outlook

The strong returns of the last twelve months reflect in a large part, the sense of relief that greeted Mario Draghi's statement in late July 2012, that the European Central Bank ("ECB") would do "whatever it takes" to maintain the existing membership structure of the Eurozone. The recovery in markets does not imply however that the outlook is without risk. In the countries of southern Europe there is a long and daunting road ahead to establish control over government finances, to implement the structural reforms that are necessary for sustainable growth, and to build resilience to unforeseen setbacks in the global economy. These challenges will test the patience of electorates and the ingenuity of their political leaders across the region.

Our Company is now into the third decade of its life, and for eighteen of those years, its assets have been managed by Tim Stevenson. He has shown ability to add value in rising and falling markets. With Tim as Portfolio Manager, and under the stewardship of a strong Board, I am confident that the Company's assets are in good hands.

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 at each meeting and mitigates risk through diversification of investments in the portfolio.

Page 4 of 14

HENDERSON EUROTRUST PLC

Annual Financial Report for the year ended 31 July 2013

Principal risks and uncertainties (continued)

• 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 in the Annual Report and Financial Statements.

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 and Financial Statements.

Related party transactions (transactions with the Manager)

The provision of investment management, accounting, company secretarial and administration services has been outsourced to Henderson Global Investors Limited ("Henderson").  Other than the relationship between the Company and its directors, this is the only related party arrangement currently in place.  Other than fees payable 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.

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 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

Mark Tapley

Chairman

8 October 2013

Page 5 of 14

HENDERSON EUROTRUST PLC

Annual Financial Report for the year ended 31 July 2013

Portfolio Manager's Report

Overview

European markets have had a strong recovery over the last twelve months, having been reassured that the Euro was not about to collapse, and more recently on growing optimism that the worst may have passed for European economies. In a rising market we have kept ahead of the index on a total return basis by 1.6 percentage points, with the assets appreciating by 37.6% in the year to 31 July 2013, compared with the FTSE World Europe (ex UK) Index rising by 36.0%. Good stock selection and the use of much of our £15m borrowing facility have both helped.

In last year's report I mentioned the quality of European companies, and it would appear that both global and local investors have started to look more closely at this and have begun to rebuild their equity weightings in this sector. After running equity weights down and bond weights up for at least ten years, this rebuilding could last a long time.

While there has been a clear improvement in sentiment towards the Euro and economic growth over the last twelve months, there should be no complacency. Politics remain very tense in the "peripheral" countries, especially in Spain and Italy, although, there are clear signs that their economies have started to recover from very low levels and unemployment has started to decline. Growth needs to become firmly established for the electorates to accept that the pain of complying with the strict rules of Euro membership is truly worth it. It is interesting that fears over the budget deficit in the US from a year ago have now been replaced by optimism. The growth coming through in the US economy may be enough to reduce government borrowing significantly in 2014, hence showing an ability to grow their way out of debt. Expanding on this, if (as expected) Europe's economies do start showing a recovery in the second half of 2013 and into 2014, then Eurozone debt will also start to decline. So, the combination of an increase in buying of previously neglected European markets and better economic and earnings growth may support further positive sentiment for our markets.

Portfolio changes and approach

Over the course of the past twelve months, it has become more apparent that ECB president Mario Draghi has done enough, for now, to avert the Euro crisis. The debate has also moved on from an obsession with "austerity" and "spending cuts", to a widespread agreement that a modern, open and developed economy has to be run along fairly strict guidelines (also known as "The Maastricht Criteria" about twenty years ago). Once that was widely accepted, the emphasis changed, and there is now a distinct possibility that Europe may start to see a period of sustained growth, albeit at a very low level. Put another way, this might be the start of a virtuous circle (better growth, lower unemployment, greater tax receipts, lower government deficits) after the nasty vicious circle (austerity measures, higher unemployment, low confidence, negative growth) of the last few years. However, there will continue to be hordes of naysayers, and the inevitable "bumps in the road" as the Euro experiment continues.

The tricky thing about this expected recovery is that it may well leave industrials and cyclicals behind. Intense global competition combined with competitive devaluations (the Yen has fallen 26% against the Euro) could mean that profits will remain under pressure. For this reason, amongst others, we have sold our position in a number of the more cyclical names, such as Saipem and ABB. In the case of the latter, there have also been some management changes over the last two years, and I suspect this may be related to how difficult this industry is becoming. We have always tried to find companies that either already have or might achieve market leadership and pricing power. It is interesting to note that two of our long held positions, Deutsche Post and Maersk, are both economically sensitive and have been working hard to reduce their underlying cost base while also building the growth parts of their businesses. Deutsche Post is already showing the benefits of this, (parcels for example, are growing well, helped by innovative solutions for delivery), while Maersk is expected to start showing good progress over the next few years.

Page 6 of 14

HENDERSON EUROTRUST PLC

Annual Financial Report for the year ended 31 July 2013

Portfolio Manager's Report (continued)

The dividend flow from our holdings has also continued to be good, and the revenue account is in good shape. Our primary objective remains capital growth, but it is a reflection of the attractive valuation level of European companies that we once again have been able to increase the final dividend, and increase the revenue reserve by a small amount. This has been helped by the use of our borrowing facility, which has at times during the year been almost fully utilised. The total interest and non-utilisation fees during the year amounted to £121,550.

We have added 21 new positions to the portfolio this year (and have completely sold 20 positions). The number of holdings has risen to 52 from 51 a year ago. Turnover (as measured by the lower of purchases or sales as a percentage of average assets) was 72.3%, compared with 66.5% the previous year.

The biggest sector change over the past twelve months has been the significant increase in our exposure to financials. Some of these are looking like becoming top quality, global leaders in their field (UBS or Nordea for example), while others are still quite stressed. In the latter category, Commerzbank, is struggling to reduce its exposure to some disastrous forays of recent years into shipping and property; as ever in such a case, if they succeed, the potential is good due to their strong exposure to the renowned German 'Mittelstand' companies. I would also mention ING, which has been selling some of its insurance assets and focusing on banking. Some of these turnaround situations require time and patience, but the returns could be good at the end of that wait. The core of the Henderson EuroTrust portfolio has, for over twenty years, been good quality, consistent, reliable companies and that will remain the case. However, we must also look for opportunities where a company might not have those credentials today, but could perhaps achieve them in a year or so. This is a demonstration of why patience is one of our key attributes.

A few of our holdings have now been in the portfolio for over ten years, and continue to look attractive. Fresenius, is an "underperformer" relative to the FTSE World Europe (ex UK) Index over the last year, but, its sales and earnings have increased by 16% in 2012 and an estimated 9% in 2013. Essilor also has not been a strong performer in terms of share price, but the business continues to build potential for earnings and dividend growth in the years to come. The same can also be said for Inditex, which could soon be achieving more sales from the Chinese market than from Spain.

Outlook

World economies look to be in a much better state than was the case a year ago, even though it has to be noted that any improvements are quite superficial so far. Unemployment levels, particularly amongst younger people, are still very high. Debt levels too have barely moved, but ECB president Mario Draghi's commitment to do "whatever it takes" to save the Euro, has been enough so far, to keep interest rates at tolerable spreads over the benchmark German levels. The next steps, however, must be to see deeper underlying improvements instructural reforms such as labour markets and banking. The stress involved with such measures could cause some turbulence at a macro level, but in the meantime, European companies continue to build their quality and in many cases global leadership. This has begun to be recognised by global investors, and is the flip side of the "poor macro, good micro" European coin. The renewed interest in the markets has led valuations higher, and the expectation now (realistic in my view) is for earnings to increase in 2014, which should enable markets to continue to gradually appreciate from current levels.

Tim Stevenson

Portfolio Manager

Page 7 of 14

HENDERSON EUROTRUST PLC

Annual Financial Report for the year ended 31 July 2013

Twenty Largest Holdings

These twenty investments total £85,407,000 representing 51.8% by value of the total investments.

	Name of Investment	Country	Sub-sector	2013 Valuation £'000
1	Deutsche Post	Germany	Air Freight & Logistics	9,467
2	UBS	Switzerland	Banks	5,731
3	Novartis	Switzerland	Pharmaceuticals & Biotechnology	5,149
4	Fresenius	Germany	Health Care	4,887
5	Roche	Switzerland	Pharmaceuticals & Biotechnology	4,209
6	Partners Group	Switzerland	Financial Services	4,200
7	A P Møller-Maersk	Denmark	Marine	4,059
8	Adecco	Switzerland	Professional Services	4,054
9	Deutsche Börse	Germany	Financial Services	3,987
10	Amadeus	Spain	Support Services	3,938
Top Ten Investments				49,681

The Top Ten Investments by value account for 30.1% of the total value of investments (2012: 30.5%).

	Name of Investment	Country	Sub-sector	2013 Valuation £'000
11	Essilor	France	Ophthalmology	3,936
12	Linde	Germany	Chemicals	3,813
13	Talanx	Germany	Nonlife Insurance	3,709
14	AXA	France	Insurance	3,612
15	Pandora	Denmark	Personal Goods	3,608
16	Sodexo	France	Catering Services	3,529
17	Legrand	France	Electrical Installations	3,390
18	Valeo	France	Automobiles & Parts	3,385
19	Nordea	Sweden	Banks	3,373
20	Koninklijke Philips	Netherlands	General Industrials	3,371
Top Twenty Investments				85,407

The Top Twenty Investments by value account for 51.8% of the total value of investments (2012: 52.3%).

Page 8 of 14

HENDERSON EUROTRUST PLC

Annual Financial Report for the year ended 31 July 2013

Audited Income Statement

for the year ended 31 July 2013

	Year ended 31 July 2013			Year ended 31 July 2012
	Revenue return £'000	Capital return £'000	Total £'000	Revenue     return £'000	Capital  return £'000	Total £'000
Gains/(losses) on investments held at fair value through profit or loss (note 2)	-	41,270	41,270	-	(7,819)	(7,819)
Investment income (note 3)	4,530	-	4,530	4,374	-	4,374
	---------	----------	---------	---------	----------	---------
Gross revenue and capital gains/(losses)	4,530	41,270	45,800	4,374	(7,819)	(3,445)
Management and performance fees	(207)	(1,018)	(1,225)	(161)	(1,614)	(1,775)
Other administrative expenses	(276)	-	(276)	(288)	-	(288)
	---------	----------	---------	---------	----------	----------
Net return/(loss) on ordinary activities before finance charges and taxation	4,047	40,252	44,299	3,925	(9,433)	(5,508)
Finance charges	(19)	(75)	(94)	(8)	(32)	(40)
	---------	----------	---------	---------	----------	----------
Net return/(loss) on ordinary activities before taxation	4,028	40,177	44,205	3,917	(9,465)	(5,548)
Taxation on net return/(loss) on ordinary activities	(503)	-	(503)	(437)	-	(437)
	---------	----------	---------	---------	----------	----------
Net return/(loss) on ordinary activities after taxation	3,525	40,177	43,702	3,480	(9,465)	(5,985)
	=====	=====	=====	=====	=====	=====
Return/(loss) per ordinary share basic and diluted (note 4)	17.3p	197.0p	214.3p	17.0p	(46.3)p	(29.3)p
	=====	=====	=====	=====	=====	=====

The total column of this statement represents the Profit and Loss Account 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.

There is no material difference between the return/(loss) on ordinary activities before taxation and the return/(loss) for the financial year stated above and their historical cost equivalents. 

Page 9 of 14

HENDERSON EUROTRUST PLC

Annual Financial Report for the year ended 31 July 2013

Audited Reconciliation of Movements in Shareholders' Funds

for the years ended 31 July  2013 and 31 July 2012

Year ended 31 July 2013	Called up share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Capital reserves £'000	Revenue reserve £'000	Shareholders' funds total £'000
At 1 August 2012	1,020	33,814	263	78,676	4,534	118,307
Net return on ordinary activities   after taxation	-	-	-	40,177	3,525	43,702
Final dividend paid in respect of   the year ended 31 July 2012   (paid 20 November 2012)	-	-	-	-	(2,344)	(2,344)
Interim dividend paid in respect of   the year ended 31 July 2013   (paid 26 April 2013)	-	-	-	-	(1,020)	(1,020)
	----------	-----------	----------	-----------	----------	------------
At 31 July 2013	1,020	33,814	263	118,853	4,695	158,645
	======	======	======	=======	======	=======
Year ended 31 July 2012	Called up share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Capital reserves £'000	Revenue reserve £'000	Shareholders' funds total £'000
At 1 August 2011	1,026	33,814	257	88,774	4,327	128,198
Net (loss)/ return on ordinary activities after taxation	-	-	-	(9,465)	3,480	(5,985)
Repurchase of ordinary shares	(6)	-	6	(633)	-	(633)
Final dividend paid in respect of   the year ended 31 July 2011   (paid 20 November 2011)	-	-	-	-	(2,253)	(2,253)
Interim dividend paid in respect of   the year ended 31 July 2012   (paid 27 April 2012)	-	-	-	-	(1,020)	(1,020)
	---------	----------	---------	----------	---------	------------
At 31 July 2012	1,020	33,814	263	78,676	4,534	118,307
	=====	======	=====	======	=====	=======

Page 10 of 14

HENDERSON EUROTRUST PLC

Annual Financial Report for the year ended 31 July 2013

Audited Balance Sheet

at 31 July 2013

	2013 £'000	2012 £'000
Fixed asset investments held at fair value through   profit or loss
Listed at market value  -  overseas	164,956	119,696
	----------	----------
Current assets
Debtors	334	383
Cash at bank and in hand	3,520	2,014
	---------	---------
	3,854	2,397
Creditors: amounts falling due within one year	(10,165)	(3,786)
	---------	---------
Net current liabilities	(6,311)	(1,389)
	---------	---------
Total net assets	158,645	118,307
	======	======
Capital and reserves
Called up share capital (note 7)	1,020	1,020
Share premium account	33,814	33,814
Capital redemption reserve	263	263
Capital reserves	118,853	78,676
Revenue reserve	4,695	4,534
	-----------	----------
Total shareholders' funds	158,645	118,307
	======	======
Net asset value per ordinary share   (basic and diluted) (note 6)	778.0p	580.2p
	======	======

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HENDERSON EUROTRUST PLC

Annual Financial Report for the year ended 31 July 2013

Audited Cash Flow Statement

for the year ended 31 July 2013

	2013		2012
	£'000	£'000	£'000	£'000
Net cash inflow from operating activities		1,651		1,995
Servicing of finance
Interest paid	(92)		(40)
	--------		--------
Net cash outflow from servicing of finance		(92)		(40)
Taxation
Overseas tax recovered	251		186
	--------		--------
Net tax recovered		251		186
Financial investment
Purchases of investments	(101,312)		(79,581)
Sales of investments	98,724		79,693
	----------		----------
Net cash (outflow)/inflow from financial investment		(2,588)		112
Equity dividends paid		(3,364)		(3,273)
		---------		---------
Net cash outflow before financing		(4,142)		(1,020)
Financing
Repurchase of own shares	-		(633)
Drawdown of loans	6,263		1,441
	--------		--------
Net cash inflow from financing		6,263		808
		--------		---------
Increase/(decrease) in cash		2,121		(212)
		=====		======
Reconciliation of net cash flow to movement in net (debt)/funds		2013 £'000		2012 £'000
Increase/(decrease) in cash as above		2,121		(212)
Exchange movements		(615)		182
Net cash inflow from increase in loans		(6,263)		(1,441)
		---------		---------
Change in net (debt)/funds resulting from cash flows		(4,757)		(1,471)
Net funds at 1 August		48		1,519
		---------		--------
Net (debt)/funds at 31 July		(4,709)		48
		======		=====
Represented by:
Cash and cash equivalents		3,520		2,014
Bank loans		(8,229)		(1,966)
		---------		--------
		(4,709)		48
		======		=====

Page 12 of 14

HENDERSON EUROTRUST PLC

Annual Financial Report for the year ended 31 July 2013

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 through profit or loss.  The financial statements have been prepared in accordance with applicable accounting standards in the United Kingdom and with those parts of the Companies Act 2006 applicable to companies reporting under the standards and with the Statement of Recommended Practice ("SORP") for investment trusts issued by the Association of Investment Companies ("the AIC") in January 2009.  The Company's accounting policies are consistent with the prior year.
2.	Gains/(losses) from investments held at fair value through profit or loss
			2013 £'000	2012 £'000
	Gains on the sale of investments based on historical cost		14,251	607
	Less: revaluation gains recognised in previous years		(4,702)	(9,298)
			----------	----------
	Gains/(losses) on investments sold in the year based on carrying value at the previous balance sheet date		9,549	(8,691)
	Revaluation of investments held at 31 July		32,310	717
	Exchange (losses)/gains		(589)	155
			----------	----------
			41,270	(7,819)
			======	======
3.	Investment income		2013 £'000	2012 £'000
	Overseas dividend income		4,530	4,374
			=====	=====
4.	Return/(loss) per ordinary share
	The total return per ordinary share is based on the net return attributable to the ordinary shares of £43,702,000 (2012: loss of £5,985,000) and on 20,390,541 ordinary shares (2012: 20,429,558) being the weighted average number of shares in issue during the year.
	The total return can be further analysed as follows:
		2013 £'000		2012 £'000
	Revenue return	3,525		3,480
	Capital return/(loss)	40,177		(9,465)
		----------		----------
	Total return/(loss)	43,702		(5,985)
		========		========
	Weighted average number of ordinary shares	20,390,541		20,429,558
	Revenue return per ordinary share	17.3p		17.0p
	Capital return/(loss) per ordinary share	197.0p		(46.3)p
		----------		----------
	Total return/(loss) per ordinary share	214.3p		(29.3)p
		======		=====

Page 13 of 14

HENDERSON EUROTRUST PLC

Annual Financial Report for the year ended 31 July 2013

5.	Dividend
	Subject to shareholder approval at the Annual General Meeting on 14 November 2013, the proposed final dividend of 12.0p per ordinary share will be paid on 20 November 2013 to shareholders on the register of members at the close of business on 18 October 2013. The shares will be quoted ex-dividend on 16 October 2013.
						2013 £'000
	Revenue available for distribution by way of dividend for the year					3,525
	Interim dividend of 5.0p paid 26 April 2013					(1,020)
	Proposed final dividend for the year ended 31 July 2013 of 12.0p (based on 20,390,541 ordinary shares in issue at 8 October 2013)					(2,447)
						-----------
	Undistributed revenue for section 1158 purposes*					58
						======
	*Undistributed revenue comprises 1.3% of the income from investments of £4,530,000 (see note 3).
6.	Net asset value per ordinary share
	The net asset value per ordinary share of 778.0p is based on the net assets attributable to the ordinary shares of £158,645,000 (2012: £118,307,000) and on 20,390,541 (2012: 20,390,541) ordinary shares in issue at the year end.  There were no shares held in Treasury at the year end (2012: 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 - authorised			75,000,000	3,750
				========	=====
	Balance at start and end of the year		20,390,541	20,390,541	1,020
			========	========	=====
	During the year no ordinary shares were repurchased (2012: 131,134).  Since the year end no shares have been repurchased.
8.	Going Concern Statement
	The directors believe that 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.

Page 14 of 14

HENDERSON EUROTRUST PLC

Annual Financial Report for the year ended 31 July 2013

9.	2013 Financial information
	The figures and financial information for the year ended 31 July 2013 are extracted from the Company's annual financial statements for that period and do not constitute statutory financial statements for that period. The Company's annual financial statements for the year ended 31 July 2013 have been audited but have not yet been delivered to the Registrar of Companies. The Auditors' report on the 2013 financial statements was unqualified, did not include a reference to any matter to 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.	2012 Financial information
	The figures and financial information for the year ended 31 July 2012 are compiled from an extract of the published financial statements of the Company 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 for the year ended 31 July 2013 will be posted to shareholders in October 2013 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 Thursday 14 November 2013 at 2.30 pm. The Notice of the Annual General Meeting will be posted to shareholders with the Annual Report and Financial Statements.

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.

- ENDS -

 

END

 

 

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