Final Results

Henderson Eurotrust PLC 22 September 2004 22 SEPTEMBER 2004 HENDERSON EUROTRUST PLC Preliminary Unaudited Results for the Year Ended 31 July 2004 * Net asset value total return increased by 10.2% (index 8.0%) * Earnings per share rise 3.2% * Encouraging start to current financial year Financial Highlights 31 July 2004 31 July 2003 Change pence pence % Net Asset Value ordinary share 292.04 267.75 +9.1 Earnings ordinary share 3.84 3.72 +3.2 Dividends ordinary dividend 3.00 2.50 n/a special dividend - 0.50 n/a Extracts from Chairman's Statement In some ways the twelve months to the end of July have been relatively straightforward: the US economy has recovered strongly, European economies, whilst lagging, are also doing better, and corporate profits have improved. Against that backdrop, markets have made slow progress, but in fits and starts. Indeed, since the end of January 2004, (i.e. during the second half of our financial year), markets have declined by just over 2.5%. Over the year the Company has produced a total return of 10.2%, ahead of the benchmark index (the FTSE World Europe excluding the UK) increase of 8.0%. The Company has beaten the index over one, three, five and ten years. For nearly ten years now the Board has backed the manager in his focused approach to the opportunities in European markets. There are numerous negatives weighing on European markets, the most vexing being the slowness of governments to carry out structural reforms. However the strategy of investing 'predominantly in large to medium sized companies which are perceived to be undervalued in view of their growth prospects or on account of significant changes in management or structure' holds as true today as ten years ago. -MORE- -2- HENDERSON EUROTRUST PLC Preliminary Unaudited Results for the Year Ended 31 July 2004 Revenue and Dividend Gross revenue for the year amounted to £1,644,000 (2003: £1,581,000). Net revenue on ordinary activities after tax and administration expenses reached £985,000 (2003: £954,000), producing earnings of 3.84p (2003: 3.72p) per share. An unchanged final dividend of 1.5p is being recommended, and if approved will be paid on 12 November 2004. Following the increase in the interim dividend to 1.5p, the total dividend for the year would then be 3.0p. Corporate Governance In my statement last year I spelt out the role of the Board in supervising the manager. This in many ways is quite a simple process in an investment trust, and the results are clearly visible in performance, revenue and dividend, and a comprehensive report from our auditors. Unfortunately, corporate scandals amongst some global companies have led to the promulgation of governance codes and best practice guidelines. In order to comply with all of these, your Board has taken the view that it is more important to keep the cost of managing the Company down than to tick boxes in areas which clearly are not designed or relevant for investment trusts. At the next Annual General Meeting, Mr Hoskin will be retiring from the Board. We would like to thank Mr Hoskin for his advice and tireless effort over the last twelve years and wish him all the best for his retirement. Expenses We have continued to try to limit unnecessary expenditure during the year, and these efforts will not cease. Management fee and administrative expenses, excluding VAT, as recorded in the accompanying accounts, amounted to £741,000 (2003: £652,000), equivalent to 0.99% (2003: 0.95%) of net asset value at the year end. Having outperformed the index, and reached the 'high water mark' net asset value, our management company has in addition earned a performance fee this year. Developments in the Investment Trust Industry Your Board shares the widespread frustration in the investment trust industry over the fact that discounts to net asset value in market quotations often persist and seem to bear no relationship to actual and relative performance. We spend a great deal of time considering this apparently entrenched weakness in our corporate model. Leaving aside industry wide problems of image, we believe two issues dominate: investment trusts have no natural distribution and no means of paying intermediaries. Furthermore limited liquidity, particularly in smaller trusts, makes market makers cautious and inclined to 'price down'. We cannot cure the first problem, but we have tried on several occasions to seek consolidation with another trust with similar investment objectives, in order to increase our size and liquidity. Our efforts have been unsuccessful, and this perhaps shows that the inability of the industry to consolidate is one of the prime causes of discounts. -MORE- -3- HENDERSON EUROTRUST PLC Preliminary Unaudited Results for the Year Ended 31 July 2004 Gearing and Share Buy-Backs The Board regularly discusses gearing, share buy-backs and treasury shares and at the forthcoming Annual General Meeting permission in principle for both the latter will be requested. You will recall that in 2002 your Board announced that we would introduce a mechanism enabling shareholders to tender their shares every five years at a price close to net asset value. We remain committed to that proposal. Prospects There is an interesting two-way pull on the markets at the end of July 2004. The big economic picture is somewhat concerning, particularly in the US where Mr Greenspan is perhaps like the person asking for directions: he knows where he wants to go, but would prefer not to be starting from here. US interest rates are likely to rise further over the next few months. In Europe growth has only just returned, but just as we warned last year, this improvement should not be confused with a return to rapid growth. The end result of the market oscillations of the last twelve months has been a total return of 8.0% on the benchmark index. In a low growth, low inflation environment that could be the order of things for the next few years. While it is popular to criticise European economies and politics, the fact is that many European companies are clearly changing rapidly. Even within the mature, low growth and at best only slowly reforming macro economy that prevails in Europe, a new management generation with new ideas about creating shareholder value exists. It is this latter fact that provides the opportunities for our manager. - MORE - - 4 - HENDERSON EUROTRUST PLC Preliminary Unaudited Results for the Year Ended 31 July 2004 Statement of Total Return (incorporating the revenue account) for the year ended 31 July 2004 Year ended 31 July 2004 Year ended 31 July 2003 (unaudited) (audited) Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Total capital gains from investments - 6,583 6,583 - 9,497 9,497 Income from fixed asset investments 1,612 - 1,612 1,356 - 1,356 Other interest receivable and similar income 32 - 32 225 - 225 ---------- ---------- ---------- ---------- ---------- ---------- Gross revenue and capital gains 1,644 6,583 8,227 1,581 9,497 11,078 Management and performance fees (123) (725) (848) (135) (358) (493) Other administrative expenses (228) - (228) (209) (37) (246) ---------- ---------- ---------- ---------- ---------- ---------- Net return on ordinary activities before interest payable and taxation 1,293 5,858 7,151 1,237 9,102 10,339 Interest payable (1) (3) (4) - - - ---------- ---------- ---------- ---------- ---------- ---------- Net return on ordinary activities before taxation 1,292 5,855 7,147 1,237 9,102 10,339 Taxation on net return on ordinary activites (307) 163 (144) (283) 119 (164) ---------- ---------- ------------ ---------- ----------- ------------ Net return on ordinary activities after taxation 985 6,018 7,003 954 9,221 10,175 Capital gains attributable to zero dividend preference shares - - - - (368) (368) ---------- ---------- ---------- ---------- ---------- ---------- Net return attributable to ordinary Shareholders 985 6,018 7,003 954 8,853 9,807 ---------- ---------- ---------- ---------- ---------- ---------- Dividends - ordinary shares Interim paid 1.5p (2003: 1.0p) (385) - (385) (257) - (257) Final proposed 1.5p (2003: 1.5p) (385) - (385) (385) - (385) Special paid nil (2003: 0.5p) - - - (128) - (128) ---------- ---------- ---------- ---------- ---------- ---------- (770) - (770) (770) - (770) ---------- ---------- ---------- ---------- ---------- ---------- Transfer to reserves 215 6,018 6,233 184 8,853 9,037 ========== ========== ========== ========== ========== ========== Return per Zero dividend preference share - - - - 2.09p 2.09p Ordinary share 3.84p 23.45p 27.29p 3.72p 34.49p 38.21p ========== ========== ========== ========== ========== ========== The revenue columns of this statement represent the profit and loss accounts of the Company. - MORE - - 5 - HENDERSON EUROTRUST PLC Preliminary Unaudited Results for the Year Ended 31 July 2004 Balance Sheet at 31 July 2004 2004 2003 (unaudited) (audited) £'000 £'000 Fixed asset investments Listed overseas 72,898 68,629 ------------ ------------ Current assets Debtors 498 155 Cash at bank and short term deposits 4,849 584 ------------ ------------ 5,347 739 Creditors: amounts falling due within one year (3,288) (644) ------------ ------------ Net current assets 2,059 95 ------------ ------------ Total assets less current liabilities 74,957 68,724 ------------ ------------ Total net assets 74,957 68,724 ============ ============ Capital and reserves Called-up share capital 1,283 1,283 Share premium account 33,814 33,814 Other reserves Capital reserves - realised 32,340 27,973 Capital reserves - unrealised 6,696 5,045 Revenue reserve 824 609 ------------ ------------ Equity shareholders' funds 74,957 68,724 ============ ============ Net asset value Ordinary shares 292.04p 267.75p ============ ============ - MORE - - 6 - HENDERSON EUROTRUST PLC Preliminary Unaudited Results for the Year Ended 31 July 2004 Cash Flow Statement for the year ended 31 July 2004 2004 2004 2003 2003 (unaudited) (unaudited) (audited) (audited) £'000 £'000 £'000 £'000 Net cash inflow from operating activities 709 564 Servicing of finance Bank interest paid (4) - ------------ ---------- Net cash outflow from servicing of finance (4) - Taxation Overseas tax recovered 112 68 ------------ ---------- Net tax recovered 112 68 Financial investment Purchase of investments (56,824) (40,407) Sale of investments 61,251 42,077 ------------ ---------- Net cash inflow from financial investment 4,427 1,670 Equity dividends paid (898) (514) Management of liquid resources - 6,000 Cash withdrawn from deposit ------------ ---------- - 6,000 ------------ ----------- Net cash inflow before financing 4,346 7,788 Financing Redemption of zero dividend preference shares - (12,311) Expenses paid in respect of share issue - (372) ------------ ---------- - (12,683) ------------ ----------- Increase/(decrease) in cash 4,346 (4,895) ============ =========== Reconciliation of net cash flow to movement in net funds Increase/(decrease) in cash as above 4,346 (4,895) Cash inflow from liquid resources - (6,000) Exchange movements (81) 296 ------------ ----------- Movement of net funds 4,265 (10,599) Net funds at 1 August 584 11,183 ------------ ----------- Net funds at 31 July 4,849 584 ============ =========== - MORE - - 7 - HENDERSON EUROTRUST PLC Preliminary Unaudited Results for the Year Ended 31 July 2004 Notes : 1. Return per share Return per zero dividend preference share reflects the predetermined growth in capital entitlement for the year ended 31 July 2003 of £368,000 and on the 17,587,348 zero dividend preference shares which were in issue prior to the redemption on 31 October 2002. Revenue return per ordinary share is based on earnings attributable to ordinary shares of £985,000 (2003: £954,000) and on the number of ordinary shares in issue throughout the year being 25,667,005 (2003: 25,667,005). Capital return per ordinary share is based on the net capital gains of £6,018,000 (2003: £8,853,000, less the deduction of the zero dividend capital entitlement) and on the same number of ordinary shares in issue as above. 2. 2003 Accounts The figures and financial information for the year ended 31 July 2003 are extracted from the latest published accounts and do not constitute the 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 Section 237(2) or Section 237(3) of the Companies Act 1985. 3. 2004 Accounts The preliminary figures for the year ended 31 July 2004 are an extract from the latest accounts of the Company. These accounts have not yet been delivered to the Registrar of Companies, nor have the auditors yet reported on them. 4. Dividend The final dividend of 1.5p per ordinary share, is being recommended, and if approved, will be paid on 12 November 2004 to holders of ordinary shares on the register of members at close of business on 8 October 2004. The Company's shares will be quoted ex-dividend on 6 October 2004. Following the increase in the interim dividend to 1.5p, the total dividend for the year would then be 3.0p. 5. Annual General Meeting Copies of the Annual Report will be posted to shareholders in early October 2004 in time for the Annual General Meeting on 9 November 2004 and will be available from the Secretary at 4 Broadgate, London EC2M 2DA thereafter. - ENDS - For further information please contact: Tim Stevenson, Henderson EuroTrust plc Telephone: 020 7818 4100 Stephen Westwood Head of Investment Trusts, Henderson Global Investors Telephone: 020 7818 5517 This information is provided by RNS The company news service from the London Stock Exchange

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