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TR European Growth (TRG)

  Print      Mail a friend       Annual reports

Monday 13 August, 2001

TR European Growth

Final Results

TR European Growth Trust PLC
13 August 2001




                         TR EUROPEAN GROWTH TRUST PLC

                     Unaudited Preliminary Group Results

                       for the year ended 30 June 2001

                                                                10 August 2001

*   Fully diluted NAV decreased by 45.6% compared with FTSE World Europe ex-UK
    (down 18.4%) and HSBC Smaller Europe ex-UK (down 24.3%)
*   Fully diluted NAV over 2 years up 6.3% compared with FTSE World Europe
    ex-UK (up 0.8%) and HSBC Smaller Europe ex-UK (down 9.8%)
*   Dividend for the year 1.45p per share - an increase of 45%

Extracts from the Chairman's Statement

During the past year, stock markets around the world have been through a
particularly turbulent period reflecting anxieties about the effects of a
slowing US economy. Initial problems seemed to be focussed on an exceptional
technology sector but, increasingly, stock market reaction to the impact on
other sectors has been evident around the world.

Europe has been no exception to this trend as has been all too obvious from
newspaper headlines about the extent of profit warnings and corporate
restructuring. In short, the blue-sky of a year ago has been replaced with
black. Investment sentiment has become more sceptical, more nervous and more
risk averse.


It is of little comfort to note that the under-performance was less severe in
the second half year, or that over two exceptional years we have still
achieved positive results.

Share prices inevitably move in the same direction as performance but do so in
an exaggerated way.

One year's figures in isolation - good or bad - will not tell the whole story
and Investment Trust shares are for long term investors. Despite this bad
year, the Company's performance since launch and over the past decade has been

TREG is no longer the best performing European Investment Trust over shorter
time periods but it still retains the number one position over ten years and
since launch in 1990.



                         TR EUROPEAN GROWTH TRUST PLC

                     Unaudited Preliminary Group Results

                       for the year ended 30 June 2001

Revenue and Dividend

On a comparable basis, the gross revenue for the year fell 20% to £8.1m due
principally to lower investment income from our portfolio investments. Net
revenue after tax fell more steeply by 48% due to the burden of higher
borrowing costs.

We now charge 20% of our management and finance costs to our Revenue Account
and the remaining 80% to our Capital Account. We propose a dividend of 1.45p,
an increase in payment of 45% over last year's level of 1.0p.

Share Capital

No purchases of the Company's own shares or of warrants were made over the
past year. It was not appropriate to consider doing so at the relatively
modest level of share price discount which emerged from time to time. 2.1m new
shares were issued at the subscription price of £1.66 per share as a result of
warrant exercises last year. Nearly 18.9m warrants remain outstanding,
exercisable on 31 October 2001 and up to, and including, 2003.

At this year's Annual General Meeting, we are seeking renewed powers to buy
back shares. (The terms of issue of the warrants confer buy-back rights on the


Henderson Investment Trust Share Plan and Selection ISA continue to be
important sources of investment in the Company. I have commented previously
that TREG is one of the more popular investments through these successful
investment plans, which together account for 18.2% of our total shares.

Share Option Scheme

The Annual General Meeting will include consideration of a resolution to
create a Share Option Scheme from which Stephen Peak could benefit. It is
unusual to find such a scheme in an Investment Trust and I want to explain the
background to our proposal.

Stephen Peak has been responsible since the launch of TREG for its management
and his fellow Directors remain in no doubt about his key importance in the
Company's affairs. Although he is a Director of TREG he remains a full-time
employee of Henderson, for whom he also has other duties and who alone
determine his terms of employment. The Board is anxious to establish some form
of direct motivational and reward relationship with Stephen Peak which
reflects and gives substance to his very important influence in creating value
for TREG shareholders.



                         TR EUROPEAN GROWTH TRUST PLC

                     Unaudited Preliminary Group Results

                       for the year ended 30 June 2001

The proposals envisage a scheme which will last for ten years; permit the
Board (excluding, of course, Stephen Peak) to consider each year the
appropriateness of a grant of options - up to an annual maximum of 100,000; on
conditions which the Board will have discretion to determine; and subject to
an overall maximum during the ten years of 500,000 options. The Board does not
propose any grant of options in respect of the year just ended but seeks
approval of the Scheme at this year's AGM so that it can be used in future to
reward good performance - which we are confident will return.


Central bankers share the difficulty which lesser mortals have in discerning
the implications of optimistic consumer behaviour apparently disconnected from
fragile industrial confidence. The technology-led slowdown in the United
States has cast a long shadow over other economies and a wide range of
business activity. The macro economic circumstances for Europe currently seem
to be caught in no man's land. Recent news has been broadly discouraging but
we still believe that the increasing cohesiveness of national economies in
Europe will provide greater resilience than most other regions of the world.
The bearish tone of stock markets in Europe, as elsewhere, has undoubtedly
generated excessive reactions which create opportunities for TREG with its
commitment to selective stock-picking. We have had a very poor year but the
whole Board will support our Manager in his intention to deliver improved
results over the coming year and regain the hitherto outstanding record of the
Company in creating value for shareholders.

For further information please contact:

Stephen Peak


TR European Growth Trust PLC

Tel: 020 7410 4100

Stephen Westwood

Head of Investment Trusts

Henderson Global Investors

Tel: 020 7410 4100

Vicki Staveacre

Head of Corporate Affairs

Henderson Global Investors

Tel: 020 7410 4222



                         TR EUROPEAN GROWTH TRUST PLC

                     Unaudited Preliminary Group Results

                       for the year ended 30 June 2001

   Group Statement of Total Return (incorporating the consolidated revenue

for the year ended 30 June 2001

                      Year ended 30 June 2001         Year ended 30 June 2000
              Revenue         Capital   Total   Revenue        Capital   Total
                £'000           £'000   £'000     £'000          £'000   £'000

  Total             -       (361,746)(361,746)        -        396,589 396,589

  from investments                                                              
  Repurchase        -               -       -         -        (2,499)  (2,499)
  of warrants                                                               

  Income        7,814               -   7,814     9,050              -   9,050
  from fixed asset                                                              

  Other           313               -     313     1,160              -   1,160
  interest receivable                                                           
  and similar                                                                   
               ------       ---------  ------  --------      ---------  ------

  Gross         8,127       (361,746)(353,619)   10,210        394,090 404,300
  revenue and                                                                   
  Management    (862)         (3,448)  (4,310)    (639)        (2,557)  (3,196)

  Other         (804)               -   (804)     (787)              -   (787)
               ------       ---------  ------  --------      ---------  ------

  on ordinary                                                                   

  interest      6,461       (365,194)(358,733)    8,784        391,533 400,317
  and taxation                                                                  
  Interest     (1,409)        (5,634)  (7,043)    (678)        (2,712)  (3,390) 
               ------  ------       ---------  --------  ------       --------
  on ordinary                                                                   

  taxation      5,052       (370,828)(365,776)   8,106        388,821  396,927
  Taxation     (1,940)          1,182   (758)   (2,117)          1,154   (963)
  on net                                                                    
  return on                                                                   
               ------       ---------  ------  --------      ---------  ------

  on ordinary                                                                   

  after         3,112       (369,646)(366,534)   5,989        389,975  395,964
  Appropriations -                                                              
  Proposed     (2,340)              -  (2,340)  (1,593)              -  (1,593)
  final dividend                                                                
  1.45p (2000: 1.00p)                                                           
               ------       ---------  ------  --------      ---------  ------
  Transfer        772       (369,646)(368,874)    4,396        389,975 394,371
                =====          ======  ======     =====         ======  ======
  per ordinary                                                                  
  share (note 1)                                                                
  - Basic        1.94p       (230.05)p  (228.11)p  3.76p        244.89p 248.65p

  - Diluted      1.82p               -       -     3.52p        228.93p 232.45p
                =====          ======  ======     =====         ======  ======

The revenue column of this statement represents the consolidated revenue account
of the Group.

* Restated for the change in accounting policies (see note 2).

                                   - MORE -


                         TR EUROPEAN GROWTH TRUST PLC

                     Unaudited Preliminary Group Results

                       for the year ended 30 June 2001

Balance Sheets

at 30 June 2001
                                                (restated)*         (restated)*
                                          Group     Group   Company   Company
                                           2001      2000      2001      2000
                                          £'000     £'000     £'000     £'000
Fixed asset investments
Listed at market valuation - overseas   506,877   909,696   506,877   909,696
Unquoted - at directors' valuation       16,857     5,855    18,355     7,379
                                      --------- --------- --------- ---------
Total fixed assets                      523,734   915,551   525,232   917,075
                                      --------- --------- --------- ---------

Current assets
Debtors                                  23,447     3,159    23,447     3,157
Cash at bank                                627     7,127       624     6,443
                                      --------- --------- --------- ---------
                                         24,074    10,286    24,071     9,600

Creditors: amounts falling due within (139,811) (152,449) (141,306) (153,287)
one year
                                      --------- --------- --------- ---------
Net current liabilities               (115,737) (142,163) (117,235) (143,687)
                                      --------- --------- --------- ---------
Total net assets                        407,997   773,388   407,997   773,388
                                        =======    ======    ======    ======

Capital and reserves
Called up share capital                  20,174    19,912    20,174    19,912
Share premium                           115,414   112,193   115,414   112,193
Other capital reserves                  262,800   632,446   264,367   634,039
Revenue reserve                           9,609     8,837     8,042     7,244
                                      --------- --------- --------- ---------
Equity Shareholders' Funds              407,997   773,388   407,997   773,388
                                        =======    ======   =======    ======

Net asset value per ordinary share
Basic                                   252.79p   485.50p   252.79p   485.50p
Diluted                                 243.70p   448.30p   243.70p   448.30p

* Restated for the change in accounting policies (see note 2).



                         TR EUROPEAN GROWTH TRUST PLC

                     Unaudited Preliminary Group Results

                       for the year ended 30 June 2001

Group Cash Flow Statement

For the year ended 30 June 2001
                                              2001      2001      2000     2000
                                             £'000     £'000     £'000    £'000

Net cash inflow from operating                           855              3,308

Servicing of finance
Interest paid                              (7,109)             (3,291)
                                         ------------           -----------
Net cash outflow from servicing of                   (7,109)            (3,291)

UK corporation tax recovered (including         78                 256
Withholding and income tax recovered         1,360               1,544
                                         ------------           -----------
Net tax recovered                                      1,438              1,800

Financial investment
Purchase of investments                  (292,838)           (430,960)
Sale of investments                        296,617             380,698
Repurchase of warrants                           -             (2,499)
                                         ------------           -----------
Net cash inflow/(outflow) from financial               3,779           (52,761)

Equity dividends paid                                (1,593)            (1,432)

Gross proceeds from issue of shares          3,483                 263
(Repayment)/drawdown of loans             (12,572)              57,394
                                         ------------           -----------
Net cash (outflow)/inflow from financing             (9,089)             57,657
                                                   ------------           ------
(Decrease)/increase in cash                         (11,719)              5,281
                                                     =======             ======
Reconciliation of net cash flow to
movement in

net debt
(Decrease)/increase in cash as above                (11,719)              5,281
Cash outflow/(inflow) from loans repaid/              12,572           (57,394)
                                                   ------------           ------
Change in net debt resulting from cash                   853           (52,113)
Exchange difference                                    2,648                 94
                                                   ------------           ------
Movement in debt in the year                           3,501           (52,019)
Net debt at 1 July                                 (139,966)           (87,947)
                                                   -----------           -------
Net debt at 30 June                                (136,465)           (139,966)
                                                     =======             ======

                                   - MORE -


                         TR EUROPEAN GROWTH TRUST PLC

                     Unaudited Preliminary Group Results

                       for the year ended 30 June 2001


1.    Return/(loss) per ordinary share

      Revenue return per ordinary share is based on earnings attributable to
      ordinary shares of £3,112,000 (2000: £5,989,000 as restated) and on the
      weighted average number of ordinary shares in issue during the year of
      160,682,587 (2000: 159,244,985).

      Capital return per ordinary share is based on net capital loss for the
      year of £369,646,000 (2000 gains: £389,975,000 as restated) and on the
      weighted average number of ordinary shares in issue during the year of
      160,682,587 (2000: 159,244,985).

      The calculation of the fully diluted revenue and capital returns per
      ordinary share are carried out in accordance with Financial Reporting
      Standard No.14, Earnings per Share, ('FRS14'). For the purposes of
      calculating diluted revenue and capital returns per ordinary share, the
      number of ordinary shares is the weighted average used in the basic
      calculation plus the number of ordinary shares deemed to be issued for no
      consideration on exercise of all warrants by reference to the average
      price of the ordinary shares during the year. The calculations indicate
      that the exercise of warrants would result in an increase in the weighted
      average number of ordinary shares of 10,509,664 (2000: 11,098,311). The
      calculation indicates that the warrants do not have a potentially
      dilutive effect on capital and total returns for this year.

2.    Change in accounting policies

              (i)     On the basis of the Board's expected long term split of
              returns between capital gains and income, the Company charges 80%
              of its interest payable and management fee to capital. This
              represents a change in accounting policy from prior periods in
              which management expenses and borrowing costs were charged wholly
              to revenue. The comparatives for the year ended 30 June 2000 have
              been restated. The effect of this change is that net revenue on
              ordinary activities after taxation for 30 June 2001 has increased
              by £7,900,000 (2000: £4,115,000). There is no effect on the net
              asset value per ordinary share.

      ii. In accordance with Financial Reporting Standard (FRS) 16 'Current
          Tax', investment income is shown net of the related tax credits. The
          comparative figures for the year ended 30 June 2000 have been
          restated accordingly. The effect of this change is that both income
          and taxation are reduced by £189,000 (2000: £463,000). However, there
          is no effect on the revenue or capital returns per share, nor on the
          net asset value per share.

3.    Dividend

      The final dividend, subject to approval at the AGM, will be payable on 1
      November 2001 to shareholders on the register at the close of business on
      28 September 2001. The ex dividend date will be 26 September 2001.



                         TR EUROPEAN GROWTH TRUST PLC

                     Unaudited Preliminary Group Results

                       for the year ended 30 June 2001

4.  2000 Accounts

    The figures and financial information for the year ended 30 June 2000 are
    an extract of the latest published accounts of the Group and do not
    constitute statutory accounts for that year. Those accounts have been
    delivered to the Registrar of Companies and included the Report of the
    Auditors which was unqualified and did not contain a statement either under
    section 237(2) or 237(3) of the Companies Act 1985.

5.  2001 Accounts

    The preliminary figures for the year ended 30 June 2001 have been extracted
    from the latest Group accounts. These accounts have not yet been delivered
    to the Registrar of Companies nor have the auditors yet reported on them.

6.  Annual General Meeting

    Copies of the Annual Report will be posted to shareholders in August.
    Further copies will be available from the Secretary at 4 Broadgate, London
    EC2M 2DA thereafter. The Annual General Meeting will be held on 21
    September 2001.

                                   - ENDS -


a d v e r t i s e m e n t