Interim Results
Henderson Eurotrust PLC
07 March 2006
HENDERSON EUROTRUST PLC
Unaudited Interim Results for the half year ended 31 January 2006
Henderson EuroTrust plc announces unaudited interim results for the half year
ended 31 January 2006.
Financial Highlights
(Audited and
(Unaudited and Restated)
(Unaudited) Restated) Year
Half year Half year ended
ended ended 31 July 2005
31 January 31 January in pence
2006 2005
in pence in pence
Net asset value per ordinary share 457.14 343.54 399.58
Dividends per ordinary share 2.00 2.00 5.00
Earnings/(loss) per ordinary share 0.25 (0.12) 4.34
Dividend
An interim dividend of 2.00p (2005: 2.00p) per ordinary share has been declared
payable on 12 April 2006 to shareholders on the register of the Company on 17
March 2006. The Company's shares will be quoted ex-dividend on 15 March 2006.
Extracts from the Chairman's Statement
It has been a strong six months for European markets and for Henderson
EuroTrust. On a total return basis the markets have risen by 12.6% (for the FTSE
World Europe (ex UK) Index), while the NAV of Henderson EuroTrust has provided a
total return of 16.0%. The share price has risen by 21.3% as the discount
narrowed.
The strong move in markets has been driven by confidence that the US economy
will remain stronger for longer, in spite of further increases in interest rates
over the last six months, and growing confidence that European economies are
also faring better than some had feared. Furthermore, company results have
exceeded expectations in many cases, and with the added spice of merger and
acquisition activity, the markets have at times been driven at a frenetic pace.
There is also growing conviction that the profits outlook for 2006 is better
than previously thought.
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HENDERSON EUROTRUST PLC
Unaudited Interim Results for the half year ended 31 January 2006
Chairman's Statement (continued)
In this environment our manager has been running the portfolio at least fully
invested and at times with modest gearing, which has helped the good returns.
The strategy has consistently been to seek out those companies with good growth
prospects, while keeping a close eye on valuation levels. There is a case that
can be made that the environment for equities could well become less positive in
2007, as the US economy slows - particularly if inflationary pressures return
due to high raw material prices. In this case the risk of sharp price falls is
that much greater where a highly valued growth stock departs from its high
growth curve. This is one reason prompting our manager to sell positions in both
Logitech and Ericsson. The position in Maersk, the Danish shipping company has
also been sold, having been in the portfolio for the best part of ten years. As
new capacity has been coming on line, there are signs that shipping rates are
beginning to fall. Whilst we are aware of these specific economic risks, the
overall outlook is certainly still a benevolent one for the European equity
markets for the time being.
The portfolio has benefited by having virtually no exposure to the
telecommunications sector, which has seen a series of profit warnings as
competition has intensified. The only position has been Portugal Telecom, which
recently has been approached by a potential buyer of the whole business,
presumably with a view to break it up into its component parts. This
demonstrates the diverse forces driving the European markets; large, incumbent
operators such as France Telecom and Deutsche Telekom struggle to maintain their
previously dominant positions, while other companies might be broken up.
In the Annual Report our manager discussed the gradual evolution of the
Company's strategy to focus on 'New Europe'. The thought behind this is to '
avoid the cobwebs of Old Europe', and to look for where real change was
happening throughout the region, and not just in the new European states. This
effort continues. It is also encouraging to see the increase in corporate
activity. This is partly due to the low cost of borrowing, which means that
virtually any deal can now be represented as being 'earnings enhancing'. But it
also reflects the fact that change in Europe is accelerating, at least in the
private sector. That bodes well for markets.
Earnings and Dividends
Over the first half of the year the revenue earnings of the Company amounted to
£63,000. The Board has declared an unchanged interim dividend of 2.00p per
share payable on 12 April 2006.
Revised UK Accounting Standards
These interim accounts reflect new accounting standards. The notes to the
accounts include reconciliations of the figures for comparative periods to those
reported previously. There are a number of changes but only two of the new
requirements have an effect on the net asset value per share. First, our
investments are now described as 'held at fair value through profit or loss'.
As such they are valued at bid (or selling) prices rather than at mid-market
prices. Second, dividends are no longer included in the accounts as a current
liability. The impact of these changes is relatively minor and details can be
found in Note 1(b) attached.
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HENDERSON EUROTRUST PLC
Unaudited Interim Results for the half year ended 31 January 2006
Chairman's Statement (continued)
There are other presentational changes following our adoption of the revised
SORP, including the renaming of the Statement of Total Return to the Income
Statement and a new primary statement has been added, namely a Reconciliation of
Movements in Shareholders' Funds.
Outlook
There is a temptation when the markets are so strong to feel that, since matters
might be as good as they are likely to get, we should be encouraging our manager
to take a more cautious stance. However, the changes which began at grass roots
level in corporate Europe have the potential to influence further reforms at
government level, with consequent benefits to market sentiment. With earnings
growth likely to be good again in 2006, we feel that on balance it is too early
to adopt an overly cautious stance. Although gains in the second half of our
financial year may not be as high as in the first half, there is no reason at
this point why markets cannot make further progress.
For further information please contact :
Tim Stevenson
Henderson EuroTrust plc
Telephone: 020 7818 4342
James de Sausmarez
Head of Investment Trusts,
Henderson Global Investors
Telephone: 020 7818 3349
Sarah Gibbons-Cook
Investor Relations and PR Manager
Henderson Global Investors
Telephone: 020 7818 3198
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HENDERSON EUROTRUST PLC
Unaudited Interim Results for the half year ended 31 January 2006
Income Statement
for the half year ended 31 January 2006
(Unaudited) (Unaudited and Restated)* (Audited and Restated)*
Half year ended Half year ended Year ended
31 January 2006 31 January 2005 31 July 2005
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Gains from
investments held
at fair value
through profit or
loss - 16,538 16,538 - 14,009 14,009 - 28,271 28,271
Income from
investments held at
fair value through
profit or loss 238 - 238 145 - 145 1,914 - 1,914
Other interest
receivable and
similar income 34 - 34 22 - 22 53 - 53
---------- ---------- ----------- ----------- ----------- ----------- ----------- ----------- ---------
Gross revenue
and capital
gains 272 16,538 16,810 167 14,009 14,176 1,967 28,271 30,238
Management fee (92) (1,051) (1,143) (69) (635) (704) (148) (1,393) (1,541)
Other administrative
expenses (116) - (116) (129) - (129) (218) - (218)
---------- ---------- ----------- ----------- ----------- ----------- ----------- ----------- ---------
Net return/
(loss) on
ordinary
activities
before interest
payable and
taxation 64 15,487 15,551 (31) 13,374 13,343 1,601 26,878 28,479
Interest payable (1) (5) (6) - (1) (1) (1) (4) (5)
---------- ---------- ----------- ----------- ----------- ----------- ----------- ----------- ---------
Net return/(loss)
on ordinary
activities
before taxation 63 15,482 15,545 (31) 13,373 13,342 1,600 26,874 28,474
Taxation on net
return
on ordinary
activities - - - - - - (486) 250 (236)
---------- ---------- ----------- ----------- ----------- ----------- ----------- ----------- ---------
Net return/(loss)
attributable to
ordinary shares 63 15,482 15,545 (31) 13,373 13,342 1,114 27,124 28,238
====== ====== ====== ======= ======= ======= ======= ====== =======
Return/(loss) per 0.25p 60.32p 60.57p (0.12)p 52.10p 51.98p 4.34p 105.68p 110.02p
ordinary share
The total column of this statement represents the profit and loss account of the
Company.
* See note 2 (a)
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HENDERSON EUROTRUST PLC
Unaudited Interim Results for the half year ended 31 January 2006
Balance Sheet
as at 31 January 2006
(Unaudited and (Audited and
Restated)* Restated)*
(Unaudited)
31 January 31 January 31 July
2006 2005 2005
£'000 £'000 £'000
Non current assets
Investments held at fair value through profit
or loss 118,212 88,476 102,591
---------- ---------- ----------
Current assets
Debtors 212 1,486 180
Cash at bank and short term deposits 564 104 3,826
---------- --------- ----------
776 1,590 4,006
---------- --------- ----------
Creditors: amounts falling due
within one year (1,654) (1,890) (4,038)
----------- ---------- ---------
Net current liabilities (878) (300) (32)
----------- ---------- ---------
Total net assets 117,334 88,176 102,559
======= ======= =======
Capital and reserves
Ordinary called up share capital 1,283 1,283 1,283
Share premium 33,814 33,814 33,814
Realised reserves 49,019 35,905 42,612
Unrealised reserves 32,500 16,381 23,425
Revenue reserve 718 793 1,425
----------- ----------- -----------
Equity shareholders' funds 117,334 88,176 102,559
======= ======= =======
Net asset value per ordinary share 457.14p 343.54p 399.58p
======= ======= =======
* See note 2 (b)
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HENDERSON EUROTRUST PLC
Unaudited Interim Results for the half year ended 31 January 2006
Reconciliation of Movements in Shareholders' Funds
as at 31 January 2006
Share Share Capital Revenue
capital premium reserve reserve Total
£'000 £'000 £'000 £'000 £'000
For the six months ended 31 January 2005
As at 31 July 2004 (as previously stated) 1,283 33,814 39,036 824 74,957
Restatement of investments to fair value - - (123) - (123)
Add back final dividend - - - 385 385
---------- ---------- ---------- ---------- ----------
As at 31 July 2004 as restated 1,283 33,814 38,913 1,209 75,219
Net return from ordinary activities - - 13,373 (31) 13,342
Final dividend for 2004 declared and paid - - - (385) (385)
---------- ---------- ---------- ---------- ----------
As at 31 January 2005 as restated 1,283 33,814 52,286 793 88,176
====== ====== ====== ====== ======
For the year ended 31 July 2005
As at 31 July 2004 (as previously stated) 1,283 33,814 39,036 824 74,957
Restatement of investments to fair value - - (123) - (123)
Add back final dividend - - - 385 385
---------- ---------- ---------- ---------- ----------
As at 31 July 2004 as restated 1,283 33,814 38,913 1,209 75,219
Net return from ordinary activities - - 27,124 1,114 28,238
Final dividend for 2004 declared and paid - - - (385) (385)
Interim dividend for 2005 declared and paid - - - (513) (513)
---------- ---------- ---------- ---------- ----------
As at 31 July 2005 as restated 1,283 33,814 66,037 1,425 102,559
====== ====== ====== ====== ======
For the six months ended 31 January 2006
As at 31 July 2005 as restated 1,283 33,814 66,037 1,425 102,559
Net return from ordinary activities - - 15,482 63 15,545
Final dividend for 2005 declared and paid - - - (770) (770)
---------- ---------- ---------- ---------- ----------
As at 31 January 2006 1,283 33,814 81,519 718 117,334
====== ====== ====== ====== ======
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HENDERSON EUROTRUST PLC
Unaudited Interim Results for the half year ended 31 January 2006
Cash Flow Statement
for the half year ended 31 January 2006
(Unaudited) (Unaudited) (Audited)
Half year ended Half year ended Year ended
31 January 2006 31 January 2005 31 July 2005
£'000
£'000 £'000
Net cash (outflow)/inflow from operating (1,126) (693) 269
activities
Servicing of finance (6) (1) (5)
Total tax recovered 12 70 92
Net cash outflow from financial investment (1,346) (4,870) (678)
Equity dividends paid (770) (385) (898)
---------- ----------- -----------
Net cash outflow before financing (3,236) (5,879) (1,220)
Net cash inflow from financing - 989 -
----------- ----------- -----------
Decrease in cash (3,236) (4,890) (1,220)
======= ======= =======
Reconciliation of operating revenue to net cash (outflow)
/inflow from operating activities
Net return/(loss) before interest payable and 64 (31) 1,601
taxation
(Increase)/decrease in prepayments and accrued (2) 11 (4)
income
(Decrease)/increase in creditors and accruals (98) (17) 424
Expenses charged to capital (1,051) (633) (1,393)
Tax on unfranked investment income deducted at
source (39) (23) (359)
----------- ----------- -----------
Net cash (outflow)/inflow from operating (1,126) (693) 269
activities
======= ======= =======
Reconciliation of net cash flow to movement in net funds
Decrease in cash as above (3,236) (4,890) (1,220)
Cash inflow from increase in debt - (989) -
Exchange movements (26) 148 197
----------- ----------- -----------
Movement of net funds/debt (3,262) (5,731) (1,023)
Net funds at beginning of the period 3,826 4,849 4,849
----------- ----------- -----------
Net funds/(debt) at end of the period 564 (882) 3,826
======= ======= =======
Represented by:
Cash at bank 564 104 3,826
Short term bank loans - (986) -
----------- ----------- -----------
564 (882) 3,826
======= ======= =======
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HENDERSON EUROTRUST PLC
Unaudited Interim Results for the half year ended 31 January 2006
Notes
1. Accounting policies
(a) Basis of accounting
The financial statements have been prepared under the historical cost convention, modified to include
the revaluation of investments and in accordance with applicable accounting standards and with the
Revised Statement of Recommended Practice 'Financial Statements of Investment Trust Companies' dated
December 2005 (the revised SORP).
(b) Changes in presentation
The Company has adopted the provisions of the revised SORP which has resulted in some changes to the
presentation of the Company's financial statements. The Statement of Total Return is now called the
Income Statement. Dividends payable to equity shareholders are no longer reflected in the Income
Statement, although they continue to be shown in the Reconciliation of Movements in Shareholders' Funds,
which is now presented as a primary statement.
The same accounting policies used for the year ended 31 July 2005 have been applied with the following
exceptions:
(i) Investments - Prior to 1 August 2005, listed investments were valued at mid-market prices.
Following the introduction of FRS 26 - Financial Instruments : Recognition and Measurement,
listed investments are now valued at fair value deemed to be bid market prices. Unlisted
investments are fair valued by the Board on the basis of the latest accounting and other
relevant information. The effect of this change is to decrease the value of listed investments at
31 January 2006 by £102,000 and to reduce the net return on ordinary activities after
taxation for the period by £49,000.
The comparative figures have been restated and the impact of this change in policy on
valuation is taken through the Income Statement. The accounts for the half year ended 31 January
2005 and the year ended 31 July 2005 have been restated as per note 2 below.
In accordance with FRS 26, transaction costs are separately disclosed. Purchase transaction
costs for the half year ended 31 January 2006 were £92,000 (half year ended 31 January 2005:
£77,000; year ended 31 July 2005: £194,000). These comprise mainly stamp duty and
commission. Sale transaction costs for the half year ended 31 January 2006 were £101,000
(half year ended 31 January 2005: £75,000; year ended 31 July 2005: £162,000).
(ii) In accordance with FRS 21 - Events after the balance sheet date, dividends payable are not
accrued in the accounts unless they have been approved before the balance sheet date.
Dividends are therefore recognised in the period in which they are declared and paid. As a
result of this change, the accounts for the half year ended 31 January 2005 and the year
ended 31 July 2005 have been restated as per note 2 below.
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HENDERSON EUROTRUST PLC
Unaudited Interim Results for the half year ended 31 January 2006
2. Restatement in respect of changes to accounting policies for valuing investments and accounting for
dividends payable
(a) Income Statement
Per share
Six months ended 31 January 2005 £'000 pence
Total transfer to reserve per Statement of Total 12,771 49.75
Return
Add back dividend proposed 513 2.00
Change from mid to bid basis at 31 July 2004 123 0.48
Change from mid to bid basis at 31 January 2005 (65) (0.25)
----------- ------------
Total transfer to reserve per Income Statement as
restated
13,342 51.98
======= ========
Per share
Year ended 31 July 2005 £'000 pence
Total transfer to reserve per Statement of Total 26,885 104.75
Return
Add back dividends paid and proposed 1,283 5.00
Change from mid to bid basis at 31 July 2004 123 0.48
Change from mid to bid basis at 31 July 2005 (53) (0.21)
------------- ------------
Total transfer to reserve per Income Statement
as restated 28,238 110.02
======== ========
(b) Balance Sheet
Balance sheet as at 31 January 2005 Previously Restated
reported 31
January 2005 31 January
£'000 Adjustments 2005
£'000 £'000
Non current assets 88,541 (65) 88,476
Current assets 1,590 - 1,590
Creditors: amounts falling due within one year (2,403) 513 (1,890)
-------------- ------------ ------------
Net current liabilities (813) 513 (300)
------------- ------------ -----------
Total net liabilities 87,728 448 88,176
======== ======== ========
Capital and reserves
Ordinary called up share capital 1,283 - 1,283
Share premium 33,814 - 33,814
Realised reserves 35,905 - 35,905
Unrealised reserves 16,446 (65) 16,381
Revenue reserve 280 513 793
------------- ------------- ------------
Equity shareholders' funds 87,728 448 88,176
======== ======== ========
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HENDERSON EUROTRUST PLC
Unaudited Interim Results for the half year ended 31 January 2006
2. (b) Balance Sheet (continued)
Previously Restated
reported
31 July 2005
31 July 2005
Balance sheet as at 31 July 2005 Adjustments £'000
£'000
£'000
Non current assets 102,644 (53) 102,591
Current assets 4,006 - 4,006
Creditors: amounts falling due within one year (4,808) 770 (4,038)
------------- ------------ ------------
Net current liabilities (802) 770 (32)
------------- ------------ ------------
Total net assets 101,842 717 102,559
======= ======= =======
Capital and reserves
Ordinary called up share capital 1,283 - 1,283
Share premium 33,814 - 33,814
Realised reserves 42,612 - 42,612
Unrealised reserves 23,478 (53) 23,425
Revenue reserve 655 770 1,425
------------ ------------ -----------
Equity shareholders' funds 101,842 717 102,559
======= ======= =======
3. Return/(loss) per share
Revenue return per ordinary share is based on the net return attributable to the ordinary shares of
£63,000 (half year ended 31 January 2005: loss of £31,000; year ended 31 July 2005: return of
£1,114,000) and on the 25,667,005 shares in issue throughout all three periods.
Capital return per ordinary share is based on net capital gains as adjusted (see notes 1 and 2 above)
for the half year ended 31 January 2006 of £15,482,000 (half year ended 31 January 2005: £13,373,000;
year ended 31 July 2005: £27,124,000) and on the 25,667,005 shares in issue.
4. Net asset value per ordinary share
Net asset value per ordinary share is based on the 25,667,005 ordinary shares in issue.
5. Management and performance fees
Management and performance fees are charged in accordance with the terms of the management agreement.
Performance fees have been provided for, based on the outperformance of the Company against the
FTSE World Europe (ex UK) Index.
For the half year ended 31 January 2006, the provision was £687,000 (half year ended 31 January 2005:
£356,000 and year ended 31 July 2005: £804,000). All amounts are inclusive of irrecoverable VAT.
6. Interim dividend
An interim dividend of 2.00p will be paid on 12 April 2006 to shareholders on the Register of Members
on 17 March 2006. The Company's shares will be quoted ex-dividend on 15 March 2006.
7. Comparative information
The figures and financial information for the year ended 31 July 2005 are an extract based on the
latest published accounts 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 under either section 237 (2) or 237 (3) of the Companies
Act 1985. The interim accounts have been neither audited nor reviewed by the auditors.
8. Interim Report
The interim report will be posted to shareholders in March and will be available from the Registered
Office at 4 Broadgate, London EC2M 2DA thereafter.
- ENDS -
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