Annual Financial Report and Final Dividend
12/12/2024 07:00
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RNS Number : 7626P Henderson European Trust Plc 12 December 2024
JANUS HENDERSON FUND MANAGEMENT UK LIMITED
HENDERSON EUROPEAN TRUST PLC
LEGAL ENTITY IDENTIFIER: 213800GS89AL1DK3IN50
HENDERSON EUROPEAN TRUST PLC
Annual Report and Financial Statements for the year ended 30 September 2024
The Company's Annual Report and Financial Statements for the year ended 30
September 2024 is being published in hard copy format and an electronic copy
will shortly be available to view and download from the Company's website:
www.hendersoneuropeantrust.com (http://www.hendersoneuropeantrust.com) .
The Annual Report and Accounts, including the Notice of Annual General
Meeting, together with the form of proxy will shortly be uploaded to the
Financial Conduct Authority's National Storage Mechanism and will be available
for inspection at: https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .
Page numbers and cross references in the following announcement refer to page
numbers and cross references in the Annual Report and Accounts for the year
ended 30 September 2024.
INVESTMENT OBJECTIVE
The Company seeks to maximise total return from a portfolio of stocks
predominantly listed in Europe (excluding the UK).
PERFORMANCE HIGHLIGHTS
§ Net asset value(1) per share total return rose by 16.6%, ahead of
benchmark(2) by 1.3%
§ Share price total return(3) was 20.5%
§ NAV total return outperformed peer group averages: AIC Europe sector(4) was
15.4% and IA OEIC Europe ex-UK sector(5) was 14.6%
§ Maintained full-year dividend of 4.35p, with recommended final dividend of
1.30p per share and interim of 3.05p per share
§ NAV and share price outperformance of the benchmark index over 1, 3, 5, and
10 years
Total return performance to 30 September 2024
1 Year 3 Years 5 Years 10 Years
Company NAV(1) 16.6 25.8 63.3 167.6
Benchmark(2) 15.3 21.2 48.4 136.4
Share price(3) 20.5 25.8 68.1 146.2
AIC Europe sector NAV(4) 15.4 11.3 50.1 154.5
AIC Europe sector share price(5) 15.2 8.5 50.8 148.4
IA OEIC Europe ex-UK sector average(6) 14.6 14.5 44.7 126.5
(1) Net asset value ("NAV") per ordinary share with dividends reinvested and
excluding reinvestment costs
(2) FTSE World Europe (ex UK) index in sterling terms
(3) Share price using mid-market closing prices
(4) Simple average NAV for the AIC Europe sector which currently comprises six
investment trusts
(5) Average share price total return of the AIC Europe sector
(6) Investment Association ("IA") Europe (ex UK) sector for open-ended
investment companies ("OEICs"), which comprised 138 funds at the year end
Sources: Janus Henderson, Morningstar Direct, LSEG Datastream
FINANCIAL HIGHLIGHTS
At 30 September 2024 At 30 September 2023
Shareholders' funds
Net assets attributable to ordinary 663,534 378,997
shareholders (£'000)
NAV per ordinary share 201.4p 178.1p
Mid-market price per ordinary share 183.0p 157.0p
Year ended Year ended
30 September 2024 30 September 2023
Total return to equity shareholders
Net revenue return (£'000) 10,711 9,188
Net capital return (£'000) 44,590 66,105
----------- -----------
Net total return (£'000) 55,301 75,293
====== ======
Total return per ordinary share
Revenue return 4.43p 4.32p
Capital return 18.45p 31.07p
----------- -----------
Total return 22.88p 35.39p
( ) ====== ======
Ongoing charge for year 0.70% 0.80%
CHAIR'S STATEMENT
This has been an eventful year for the Company and I would like to begin by
welcoming former Henderson EuroTrust plc ("HNE") shareholders to Henderson
European Trust plc ("HET") and to thank shareholders of both HNE and Henderson
European Focus Trust plc ("HEFT") for their support in combining the two
companies in early July, effected by way of a scheme of reconstruction (the
"HEFT/HNE combination"). With circa £663.5 million in assets, promotion to
the FTSE250 Index, proven stock picking skills supplied by Co-Fund Managers
Tom O'Hara and Jamie Ross, improved liquidity in our shares and a lowered
management fee for shareholders, the Board believes the Company is well
positioned for its purpose of generating a good total return from investing in
Europe. It is critical that investment companies evolve and are 'fit for
purpose' to meet investor requirements - this was a driving force for the
boards of both HEFT and HNE and remains at the heart of what we hope to
achieve for HET's shareholders.
Reporting on our performance, it is notable that whilst we outperformed our
peers and the index over 12 months (see comparative figures below), our
performance was earned in the first six months of our financial year. The
gyrations in the markets since we reported our interim results in May have
been harder to navigate: heightened interest rate volatility amid concerns
about global politics, potential impact from a greater slowdown in the US
economy and problems in the Chinese property markets all ensured that the
rotation between stocks was cautious in nature, with the shares of 'defensive'
companies (those whose earnings prospects tend not to suffer much in
recessions) vastly outperforming those of the more economically sensitive
companies. Added to this, an episode of 'AI-angst' by investors after a period
of exceptional returns led to a correction in the European semiconductor
equipment shares that had been such strong long-term contributors to your
Company's returns.
Performance
Investment performance for the year was good: NAV total return was 16.6%,
outperforming the Company's benchmark index total return of 15.3%, with the
share price total return higher again at 20.5% reflecting a small narrowing of
the discount.
The long-term track record (which is that of HEFT, now HET) continues to be
strong, with NAV and share price total return outperforming the benchmark over
one, three, five, seven and ten years. Our results compare favourably with our
competitors, be they in the investment trust sector or the IA OEIC (open-ended
funds) sector. The average NAV total return of the AIC Europe investment
company sector (comprising six companies) was 15.4% in this period, and the
OEIC Europe (ex-UK) sector average (comprising 138 funds) was 14.6%.
Combination with Henderson EuroTrust plc
Having formally combined on 4 July 2024 (see page 28 for details of the
combination), the Board would like to thank all those involved in the
transaction, including Janus Henderson for their financial support to ensure
no costs to shareholders of either company, a reduction in ongoing management
fee rates and support in promoting the Company as a flagship European
investment trust.
As part of this transaction, the Company's name changed from 'Henderson
European Focus Trust plc' to 'Henderson European Trust plc'. The management
fee was reduced and more attractive tiered rates were put in place (see page
18 for more details). As a result, the expenses for the year to 30 September
2024 were 0.75% compared to 0.80% for HEFT and 0.79% for HNE in the year prior
to the combination, and the estimated ongoing charge for the year to 30
September 2025 is 0.70%, as detailed on pages 96-97.
Dividends
The Board is recommending a final dividend for the year of 1.30p per share
which, subject to shareholder approval at the Annual General Meeting ("AGM"),
will be paid on 3 February 2025 to shareholders on the register on 3 January
2025. When added to the interim dividend paid in June 2024, this will bring
the full-year dividend to 4.35p per share, which is the same total dividend as
that paid by HEFT for the 2023 full-year distribution. This proposed
distribution provides a yield of 2.4% on the year end share price of 183p.
HEFT declared a higher-than-normal dividend of 3.05p per share at the interim
stage. We explained that due to the HEFT/HNE combination, we needed to ensure
that all HEFT shareholders received the income which had been generated during
their tenure, and that the final dividend would be smaller to reflect the
lower amount of income received by the Company in the second half of the
financial year and the larger number of shares in issue following the
combination.
We expect that dividends will return to a pattern of smaller interim and
larger final dividends in the future.
Share rating and discount management policy
Our discount to NAV at the end of the financial year of 9.1% was a small but
noteworthy improvement from the end of the previous year (30 September 2023:
11.9%). The average discount over the 12 months was 10.9%.
However, the discount at which the shares have traded to NAV in recent weeks
has been at the wider end of our 12-month range. We believe this reflects a
broader malaise affecting the whole investment company sector which, while we
very much hope will be temporary, continues to be driven by a variety of macro
factors that present challenges to buying demand. The Board considers share
buybacks when the discount is deemed excessive, which is assessed on absolute
and relative bases, and to that end 2,376,191 shares were bought back during
the financial year, to be held in treasury (representing 0.7% of share
capital). Since the year end (and as at 9 December 2024) a further 5,780,287
shares have been bought back (representing 1.6% of share capital), partly in
response to increased selling pressure driven by investors' concerns around
changes to capital gains tax ahead of the UK budget at the end of October.
The Board also reviewed the Company's discount management policy for the
medium term. In addition to potentially using share buybacks, the Board has
now introduced a five-yearly conditional performance-related tender of up to
25% of issued share capital (excluding treasury shares).
This will be made at a 2% discount to NAV less costs if, over the five years
to 30 September 2029 (and over subsequent five-year periods to 30 September
2034 and beyond), the NAV per share total return does not equal or exceed the
total return of the benchmark index. Any conditional tender offer would be
subject to shareholder approval and prevailing legal and regulatory
requirements.
Finally, after the initial three-year period following the combination of
assets, the Board will consider whether it would be in the interests of
shareholders to offer additional opportunities to realise some of their
investment, irrespective of net asset value return compared to benchmark, and
will exercise discretion on what form these might take, subject to market
circumstances at the time.
Capital structure and use of debt
The Company's total borrowing capacity remains at EUR 35 million in long-term
structural debt by way of private placement loan notes with a weighted average
interest rate of 1.57%, and an HSBC Bank overdraft facility of £30 million
(or 10% of net assets if lower). At the year end the Company had not drawn on
the overdraft and net gearing was approximately 4% of net assets.
We provide the Fund Managers with flexibility to manage actual gearing levels
in light of their view on the prevailing investment opportunity. The Fund
Managers' Report explains how they consider gearing, and the chart on page 99
provides further detail on month end gearing levels over the course of the
year.
Fund management changes
John Bennet retired during the year, not only from his portfolio management
role at HEFT, but also from leading the highly successful European team at
Janus Henderson and indeed from a lengthy and distinguished fund management
career. The Board would like to thank John for his tremendous stewardship of
HEFT over a ten-year period, his mentorship and development role of a now
11-strong team of portfolio managers, and for instilling in Tom and Jamie a
style and approach to active management in Europe that we expect to continue
to serve HET so well.
Board changes
The combination of HNE and HEFT required considerable oversight by both
boards. I would like to welcome Stephen King and Rutger Koopmans to the Board
of HET, previously directors at HNE. Stephen, as an economist, brings
macroeconomic expertise and market insight and Rutger brings European
perspective as well as corporate governance expertise from a long career in
financial services.
As part of the transition, Stephen Macklow-Smith from HEFT and Stephen White
from HNE stood down when the transaction completed and Katya Thomson (ex HNE)
stood down shortly after completion; Robin Archibald (ex HEFT), having
completed almost nine years, will not stand for re-election at the forthcoming
AGM. I would like to thank all respective directors for their significant
contributions, both during their tenure, and especially in the months leading
up to the combination.
Particularly noteworthy, Robin has been involved in HET since the early 1990s,
originally as an advisor and latterly as a non-executive director, Audit and
Risk Committee ("ARC") Chairman and Senior Independent Director ("SID"). We
are deeply grateful for Robin's tireless and valuable commitment to the
Company and the Board over the last nine years, with his wise counsel,
extensive knowledge of accounting and corporate issues and familiarity with
the investment trust sector.
Melanie Blake will be appointed ARC Chair when Robin Archibald stands down,
and an appointment of a SID will follow during the next year.
Governance, shareholder engagement and AGM
We are pleased to invite shareholders to attend the AGM in person at our
registered office on Wednesday, 29 January 2025 at 11.30 am and to join us
afterwards for refreshments. This is an opportunity to meet the Fund Managers
and the Board. Shareholders who prefer to join virtually may do so via Zoom.
There will be live voting only for those physically present at the AGM and we
would encourage all shareholders to have their say and vote their shares on
all resolutions put forward. All the resolutions are recommended and
supported by your directors. Shareholders holding their shares through
investor platforms are also encouraged to attend, and to vote, ahead of the
proxy voting deadline of Monday, 27 January 2025 through their nominee
platforms.
The HEFT/HNE combination created a large amount of share premium, through the
issuance of new shares. Shareholder approval is being sought at the AGM to
reclassify the share premium account as a distributable reserve. This will
provide flexibility in the future.
Please see pages 89-93 for the AGM Notice, more information on all the
resolutions and on joining the meeting and voting.
If you have questions for either the Board or the Fund Management team in
advance of the AGM - or indeed at any time of the year - please get in touch.
Visit our website at www.hendersoneuropeantrust.com
(http://www.hendersoneuropeantrust.com) where you can subscribe for updates.
Outlook
As 2024 draws to a close, market conditions are unusually volatile. The US
10-year Treasury yield - the benchmark for borrowing costs worldwide - is
midway between the last 12 months' high (4.7%) and low (3.6%). Fears
associated with a sustained outbreak of 'tariff wars' are higher than in many
a year. For European investors, additional challenges include Germany's 'sick
man of Europe' status, the war in Ukraine and the emergence of new, more
populist, political movements.
Yet Europe is replete with world-class companies. As Tom and Jamie, your Fund
Managers, highlight in their report, the companies in the Henderson European
Trust portfolio draw their revenues from geographically diversified sources.
Europe may be out of favour among many investors but, in circumstances where
European companies look remarkably cheap relative to their international
rivals, we believe, for those willing to recognise that corporate Europe is
not the same as the European economy, exposure to the region will reap
benefits.
Vicky Hastings
Chair of the Board
11 December 2024
FUND MANAGERS' REPORT
The combination of Henderson European Focus Trust plc ("HEFT") and Henderson
EuroTrust plc ("HNE") completed successfully in July 2024. The environment
since then has been anything but benign. We have navigated a market that seems
to be agitating for change; notably, a sudden sell-off in technology shares
over the summer and the corresponding race into the smaller and medium-sized
companies that would be expected to benefit from looming interest rate cuts.
Several big themes - and the uncertainty surrounding them - have dominated
share price behaviour.
In our view, the events of the last year can be broadly organised into three
core challenges:
1. An increasingly price-sensitive consumer
2. The structural challenges facing China's economy
3. A changeable interest rate cycle
We will also discuss how the participation of passive and short-termist
investors is impacting our market as a whole - spoiler: we believe it is a
positive for long-term, active investors like ourselves and it directly
informed our response to the market turnover in the summer.
Performance
The Company generated NAV growth of 16.6% in the year to 30 September 2024,
1.3% ahead of the performance of the benchmark, the FTSE World Europe (ex UK)
Index. Readers of the Company's 2024 half-year report will recall a robust
performance period. For the second half of 2024 specifically (1 April to 30
September), we gave back some of this outperformance, lagging the +0.3%
benchmark return by 1.5%. This short period of underperformance will be
evaluated in the context of the themes outlined above.
Net gearing stood at 4.2% at the end of September, effectively a full
deployment of the long-term loan notes placed by HEFT in January 2022 at a
very favourable average interest rate of 1.57%. Over the year gearing was
mildly accretive to our performance (see the performance attribution table on
page 2). We have the flexibility to take gearing higher through use of an
overdraft facility, when we perceive a compelling stock, sector or market
opportunity. We consider our neutral stance to be our current position of
fully deploying our low-cost loan notes.
Finally, the combination of two companies required the two respective
portfolios be focused into one and that we raise cash to fund two partial
tender offers. As such, there is optically a significantly higher level of
portfolio activity during the period. However, the direct trading costs of
reorganising two portfolios into one formed of our 'best ideas' were minimal.
We consider that this was achieved successfully without adverse financial
impact on either company and demonstrated one of the key benefits of the
combination of the companies: the drawing together of two similar approaches
to obtaining returns from Continental European stocks.
A more selective consumer
As a rule, stocks tend to matter more than sectors in our investment process.
Nonetheless, at times events outside of our control can necessitate taking a
top-down view. Over the last year, the travails of the consumer have been one
such event.
The effects of inflation, following Covid and the Ukraine war, have continued
to impact both consumer and corporate behaviour.
The impact on pricing, though, has varied widely within the consumer space.
This variation has framed our perspective on consumer companies. We have
chosen to specifically focus on 'cumulative pricing' since pre-Covid, as a
metric through which we can usefully analyse how aggressive companies have
been with pricing and the tolerance of consumers to accept these price hikes.
The chart below [see page 9 of the Annual Report] offers an illustration of
the level of variation across a range of consumer product categories.
In addition to the product categories in the chart, we have observed luxury
goods companies pushing through significant price increases, of up to 40-60%
for core product lines. Yet, roughly-speaking, economy-wide inflation -
measured by CPI and wage growth - was closer to 15%. Consumers have
demonstrably been squeezed, and they know it.
A second metric we consider is gross profit margin, a company's revenues minus
the direct costs involved in production like ingredients, energy, factory
labour and so on. In LVMH's case, gross profit margins actually rose during
the inflationary spike. Many of its peers broadly maintained profitability.
This suggested to us that the price increases may be excessive and could
prompt a significant and lasting shift in consumer behaviour. We reduced our
luxury goods exposure and the sector fell around 14% over the second half of
our financial year.
On the contrary, beer companies were considerably, cheeringly kinder to their
consumers. We invest in global behemoth Anheuser-Busch InBev, which is
currently circa 2.7% of the portfolio. The company saw its gross margin
decline from over 60% pre-Covid to a low of less than 54% in 2024, due to its
costs rising in excess of its price increases. While this is a short-term
challenge to profitability, they should be able to raise prices and profit
margins steadily over the longer term - having avoided alienating consumers.
Of course, there is a level of loyalty to beer brands and taste profiles which
is a further positive for us as investors - people tend not to feel too
enticed by supermarket-branded beers, whatever the price.
Of course, not all consumer trends can be captured by the relationship between
profit margin and price increases. The streaming companies have been
universally hit by a surprise slowdown in music subscriptions earlier in the
year, despite prices barely rising over the last few years. This in turn hit
shares in Universal Music Group ("UMG") in dramatic fashion in July. While the
streamers are intending a rare moment of collaboration to reignite growth, the
uncertainty was not tenable given UMG's share price and we have fully exited
the stock.
China's economic challenges
Chinese companies and consumers have been a notable source of revenues for
European businesses over the last decade and a half. With that in mind, a
series of speedbumps in the road of Chinese growth has caused some concern for
investors. This has been most evident in the failure of 'cyclical' stock
prices to recover even as interest rates began to fall (historically, cyclical
stocks - those most sensitive to economic growth - have seen their fortunes
move in lockstep with rates).
At the same time, the Chinese government has made concerted efforts to
establish a presence in premium export markets - notably electric vehicles,
solar panels and wind turbines. These efforts have had the explicit goal of
counteracting the slowdown in growth driven by a faltering consumer market.
The prospect of further protectionism from Europe and the US therefore
prompted a direct response from the Chinese authorities in the form of late
September's stimulus package.
How do we navigate such a critical theme for the global economy? We have
generally avoided European automakers as the structural challenges from an
efficient, competitive Chinese auto-complex look genuine. As already
mentioned, we reduced our luxury goods exposure, where so much growth in
recent years has depended on Chinese wealth-creation. However, we took a
contrarian stance in buying elevator company, KONE, in January.
The company has been viewed as a China-proxy - but selling new elevators to
China is now only 15% of its profit (down from 50% in 2016). That means its
share price can reflect changes in sentiment regarding the Chinese economy,
even as its financial performance doesn't. Instead, the company derives
revenue from servicing elevators and is using new technology to anticipate
future servicing needs. Legacy HEFT readers may be familiar with the term 'Big
is Beautiful', our framework for assessing the ability of large incumbents to
further bolster their market-leadership through scale and expertise. Kone is a
classic example in this niche.
As for China, we expect it to be a key determinant of market behaviour in
2025. We lean towards an improvement in sentiment, which should benefit those
cyclical companies we own across industrials and materials, some of which have
been the biggest laggards in the 2024 financial year due to their direct or
indirect exposure to the country. We note some encouraging datapoints
suggesting there may be sizeable stimulus ammunition already in the pipeline.
Watch this space.
A changeable interest rate cycle
The catalyst for the summer turmoil in markets, or the 'rotation' to use the
market vernacular, started with the US Federal Reserve more overtly indicating
that interest rates could soon start coming down. Lower interest rates tend to
be taken as good news for markets, increasing risk appetite.
It is reckless to chase short-term momentum in the markets, especially when so
much of it is driven by short-term speculation, but we were certainly
cognisant of the potential for lower interest rates to fundamentally improve
the outlook for certain business models: those in which the cost of debt is a
key determinant of profitability and equity value. This environment informed
our decision to buy Spanish-listed telecommunication towers operator Cellnex
and UK-listed utility company National Grid. The latter appealed in part due
to the increased policy stability in the UK and the fact the company derives
half its revenues from the US.
Legacy HNE readers may recognise Cellnex as a previous holding: the pressure
on the share price of this company when interest rates started to rise in 2022
remains a vivid memory, but also reminds us that a similar reversal is
possible as rates start to ease again. It is also helpful that during the
interim, Cellnex has, in our view, seen an upgrade to its management,
governance and strategy. We expect it to be a very shareholder-friendly
company in the months ahead, through the initiation of share buybacks.
There is rampant speculation on the impact on the US interest rate cycle of
the recent re-election of Donald Trump as US president. We believe that his
sparse policy programme during campaigning provides limited evidence on which
to base assumptions. Instead, we will be watching, along with the world, to
see what emerges as his policy agenda in the early days of his presidency.
How today's market structure informs our thinking
Fundamental active investors now account for only 10-20% of daily traded
volumes in the European equity market. As such, we are minority participants
in a market which is dominated by passive funds and hedge funds with very
short-term strategies. Neither of these are equipped to take the long-term
view, to take the other side of the trade when panic sets in. The result is
outsized reactions to economic, market or company news that are not reflective
of long-term prospects or value. Conversely though, that means there is
opportunity for those of us with the ability - the luxury - to express a
long-term view. Our summer purchase of Ryanair is a case in point. We bought
shares on the days when the numbers of sellers vastly outweighed the buyers.
We also believe that this is the lens through which we should view the
changeable fortunes of technology shares over the summer. For example, shares
in ASML - a major player in the AI supply chain and one of Europe's largest
companies - suddenly declined by 30%. This was despite so-called
'hyperscalers', the technology giants like Microsoft and Alphabet ploughing
billions into AI, indicating that they are planning to maintain or even grow
their expenditure on the technology.
As such, a narrative emerged explaining that the sell-off stemmed from concern
over a lack of return on investment for the hyperscalers. Our simple view is:
it is too early to tell what the return will be, but either way we do not
expect them to stop investing. That alone is sufficient to ensure plentiful
revenues flow to the supply chain, such as our investments across
semiconductor capital equipment, building materials and industrial equipment
(which collectively add up to over 15% of the Company's NAV). As for that
summer sell-off, it reaffirmed the 'blunt tool' that is the short-termism of a
majority of participants in the market.
Outlook
We believe that we are seeing the conditions for a catchup in those
underperforming cyclical areas of the equity market thanks to: 1) China's
recent efforts to stabilise its economy, 2) lower interest rates filtering
through the global economy, and 3) encouraging datapoints suggesting ongoing
vigour in the US economy. There is much geopolitical uncertainty across the
globe, but, sombre as it may sound, that has been a constant in recent years
and one that has, thus far, not constrained strong equity market performance.
Finally, a word on our home continent, which is suffering an identity crisis
of sorts relating to its role in the world, its poor demographics, its high
public debt levels and its lagging economic growth. While you may have
expected us to dwell in this commentary on the state of the European political
landscape at a time of great uncertainty, the impact of this on our portfolio
is relatively limited. This reflects the very nature of the companies we
invest in - global operators that happen to be listed in Europe. The most
pertinent factor is the geographies from which they draw revenues, which are
happily very diversified. As such, your Company is positioned to benefit from
any improvement in economic sentiment and activity.
Tom O'Hara and Jamie Ross
Fund Managers
11 December 2024
MANAGING RISKS
The Board, with the assistance of the Manager, has carried out a robust
assessment of the principal risks facing the Company, including those which
would threaten its business model, future performance, solvency, liquidity in
its shares and reputation. The assessment includes consideration of economic
and political risks, most of which are outside the Board's direct control. The
Board has drawn up a detailed matrix of risks facing the Company, together
with a strategic heat map charting the top ten risks, which it has distilled
into six categories of principal risks, as shown on pages 21-23. To assist in
mitigating the decision-taking risks as far as practicable, the Board has also
put in place a schedule of investment limits and restrictions, appropriate to
the Company's investment objective and policy, which it reviews at each board
meeting.
The Company's principal risks and mitigating steps are as follows:
Risk Risk Controls and mitigation
Market Investment risk is spread by holding a diversified portfolio of investee
companies, typically with strong balance sheets and good growth prospects. The
The Company's absolute performance in terms of NAV total return and share Company does not currently undertake any currency or market movement hedging
price total return is dependent on the performance of the investee companies strategies, though it has the ability to do so.
and markets in which the Company invests. Performance is also impacted by
currency and interest rate movements, as well as by political and economic
events, including changes to the fiscal environment for UK investors.
The Company's investment strategy is reviewed formally by the Board at least
annually, and takes into account shareholder views, developments in the
marketplace and how the structure of the Company is positioned to meet them.
Investment performance The Board is responsible for ensuring that the investment policy is met. The
day-to-day management of the Company's assets is delegated to the Manager
The relative performance of the Company against its benchmark and European under investment guidelines, with close monitoring of the guidelines.
open and closed-ended peers depends principally on asset allocation and stock
selection, which, in turn, require investment skills. In exercising these
skills, the Manager is responsible for adhering to the investment policy and
investment guideline restrictions set by the Board and amended from time to The Board meets the Manager on a regular basis and keeps investment
time. performance, in terms of both capital and income returns, under close review.
The Management Engagement Committee reviews the Manager's performance
annually. Although the Company is not invested against any income criteria,
the net income of the Company and the revenue reserves are monitored against
dividend pay-outs and anticipated future net income.
Investment performance is monitored over the short, medium and longer term
against the Company's benchmark and against a wider peer group of open and
closed-ended investment vehicles investing in listed European equities.
The Board also reviews the performance attribution analysis against benchmark
in detail, to understand the main drivers of performance in reporting periods.
The Fund Managers keep the global political and economic picture under review
as part of the investment process and provide the Board with frequent updates
to enable the directors to monitor and manage risks of geopolitical disruption
and global economic risks. Climate risk is assessed within the individual
stock selection process and is reported within quarterly Fund Manager board
reports.
Business strategy and market rating The Board monitors the Company's ordinary share price relative to NAV per
share and reviews changes in shareholdings in the Company to understand short
A number of factors, including the setting of an appropriate investment or longer-term trends in supply of and demand for the shares.
proposition, changing investor demand or investment performance may lead to an
increase or decrease in demand for and/or supply of the Company's shares and
will impact how the shares are priced in relation to the Company's underlying
NAV per share. The Company is able, when appropriate, to issue or to buy back shares to help
maintain an orderly secondary market in the Company's shares, but not against
any prescribed discount or premium levels, other than avoiding dilution to
existing shareholders' interests through share issuance at a discount or
buybacks at a premium. The Board also monitors the rating of the Company's
shares against other closed-ended investment companies in the sector.
The liquidity of the portfolio is monitored and is considered sufficient for
the purposes of a closed-ended fund, including where the Company buys back its
own shares. During the year and since the year end, the Company has bought
back shares to help manage the demand for and supply of shares and the market
rating.
As part of the HEFT/HNE combination in 2024, the Company has introduced the
prospect of a periodic tender offer to shareholders in the event that the
Company underperforms its benchmark. There will also be consideration of how
the Company's rating has performed relative to market in three years' time.
See pages 28-29 for more details.
Gearing The Company's investment policy sets a limit on borrowing of 20% of net assets
at the time the borrowing is assumed, and the Board monitors the level of
The Fund Managers have authority to use gearing in line with the Company's gearing at each meeting.
investment policy. In the event of a significant or prolonged fall in equity
markets, any gearing in place would exacerbate the effect of the falling
market on the Company's NAV and, consequently, its share price. Gearing would
have the opposite effect in the event of a significant or prolonged rise in The Manager makes active use of the Company's gearing with close oversight of
equity markets in which the Company is invested. borrowings and cash management from the Board when gearing is extended or
contracted in relation to different market conditions and as applied to
different investment and disinvestment opportunities.
Operational The Management Engagement Committee reviews each service provider at least
annually, and, in conjunction with the Audit and Risk Committee, considers
The Company is reliant on third-party service providers for all its reports on internal controls, including any reported breaches, throughout the
operational activities, including reliance on Janus Henderson as investment year, from all the service providers. This reporting covers such matters as
manager, corporate secretary and administrator to the Company. business resilience and cyber security risk as well as matters that are
subject to review as part of the annual audit of the Company.
The Company depends on the diligence, skill and judgement of the Manager's
investment team. Continuity of service of the team and individuals in the team Janus Henderson has a strong European Equities team, which supports the Fund
could impact the future success of the Company. Managers in the management of the Company's portfolio. Constructive challenge,
succession and continuity planning are key elements of the management of the
team and are reported closely to the Board with consultation on any major
changes.
Failure of third parties' operational or internal control systems could
prevent the accurate reporting or monitoring of the Company's financial
position. Janus Henderson subcontracts some of the operational functions
(principally those relating to trade processing, investment administration and The Board reviews the internal control structure and reporting for the Company
accounting) to BNP Paribas. from all agents and meets with their representatives throughout the year to
make enquiry on the systems and controls. The Board considers climate and
environmental risk in respect of operational capability in its review meetings
with service providers.
Failure of controls could also impact the Company meeting its regulatory
obligations.
Regulatory and reporting The Board is apprised regularly of impending regulatory and reporting changes
and monitors closely, through its various agents, the Company's adherence to
The Company operates in a highly regulated environment which could inter alia existing requirements, including maintaining investment trust and listed
affect the listing of the Company's shares and the Company's tax status, as company status. The Board is also kept aware of fiscal and other developments
well as how the Company conducts its affairs in the market more generally. that might affect shareholders' interests.
The Company has strict reporting requirements that need to be adhered to both The Board is kept informed of corporate governance developments and, as far as
internally and externally to the market. practicable, adheres to corporate governance guidelines that are applicable to
an investment company.
THE COMPANY'S VIABILITY
The AIC Code of Corporate Governance includes a requirement for the Board to
assess the future prospects for the Company, and to report on that assessment
within the Annual Report. The Board considers that certain characteristics of
the Company's business model and strategy are relevant to this assessment:
§ the Board aims for the Company to deliver long-term performance;
§ the Company's investment objective, strategy and policy, which are subject
to regular Board monitoring, mean that the Company is invested mainly in
readily realisable, listed securities and that the level of borrowings is
restricted; and
§ the Company is a closed-ended investment company and therefore does not
suffer from liquidity issues arising from unexpected redemptions.
Also relevant were a number of aspects of the Company's operational
agreements:
§ the Company retains title to all assets held by the custodian under the
terms of formal agreements with the custodian and depositary;
§ revenue and expenditure forecasts are reviewed by the directors at each
board meeting; and
§ cash is held with approved banks.
In addition, the directors carried out a robust assessment of the principal
risks and uncertainties which could threaten the Company's business model,
including future performance, liquidity and solvency, and climate change, and
considered emerging risks that could have a future impact on the Company. The
Board takes into account the liquidity of the portfolio, short-term and
structural gearing, the income stream from the portfolio, and the Company's
ability to meet its liabilities as they fall due. This includes consideration
of how the forecast income stream, expenditure and levels of reserves could
impact the Company's ability to pay dividends to shareholders. Detailed income
and expense forecasts are made over a shorter time frame. The nature of the
Company's business means that such forecasts are equally valid to be
considered over the longer five-year period as a means of assessing whether
the Company can continue in operation.
The directors assess viability over five-year rolling periods, taking account
of foreseeable severe but plausible scenarios. This includes consideration of
the duration of the Company's loan notes and borrowing facility and how a
breach of any covenants could impact the Company's NAV and share price. The
Board has assessed the risks associated with geopolitical, economic and health
crises in recent years, including the escalating conflict in the Middle East
and the ongoing war in Ukraine, and has concluded that these events have not
affected the long-term viability of the Company, and its ability to continue
in operation, notwithstanding any short-term uncertainty they have caused in
the markets.
In common with investment companies generally, the viability statement does
not take into account corporate events which might be initiated by the Company
or to which the Company might be subject, and where the Company's
circumstances might be dramatically changed. An investment company has
relatively liquid assets, compared to industrial or commercial companies, and
can, therefore, be subject to major and unexpected strategic change. No such
event or change affecting the Company's viability is known or currently in
contemplation by the Company and the application of periodic tender offers
does not affect that assessment.
The directors believe that a rolling five-year period best balances the
Company's long-term objective, its financial flexibility and scope with the
difficulty in forecasting economic conditions affecting the Company and its
shareholders.
Following completion of the HEFT/HNE combination in July 2024, the Board has
introduced a five-yearly conditional performance-related tender offer, and an
additional discretionary tender mechanism following the year ending 30
September 2027. See pages 28-29 for more details.
Based on their assessment, and in the context of the Company's business model,
strategy and operational arrangements above, the directors have a reasonable
expectation that the Company will be able to continue in operation and meet
its liabilities as they fall due over the five-year period to September 2029.
The directors have also concluded that the Company has adequate resources to
continue in operational existence for at least 12 months from the date of
approval of these financial statements, being 31 December 2025, and it is
therefore appropriate to prepare these financial statements on a going concern
basis.
RELATED-PARTY TRANSACTIONS
The Company's transactions with related parties in the year were with the
directors and the Manager. There were no material transactions between the
Company and its directors during the year other than amounts paid to them in
respect of remuneration and expenses, for which there were no outstanding
amounts payable at the year end. Details of fees paid to directors are
included in the Directors' Remuneration Report on page 55. Directors'
shareholdings in the Company are disclosed on page 54.
Janus Henderson facilitates marketing activities with third parties which are
recharged to the Company. Total amounts paid to Janus Henderson in respect of
sales and marketing, including VAT, for the period ended 30 September 2024
amounted to £48,000 (2023: £84,000). As part of the HEFT/HNE combination,
the Manager has committed to additional spending on marketing activities in
the coming year.
The Company and HNE both bore their own costs in relation to the combination.
These were reflected in the formula applied to the respective net asset values
of the two companies when they were compared to calculate the number of shares
in HET to be issued to HNE shareholders.
Janus Henderson contributed £1.55m to the costs of the proposals to make sure
that they were cost neutral for shareholders continuing, irrespective of the
results of the combination. Direct costs borne by both HNE and HET were fully
covered by both the contribution by Janus Henderson, and the financial impact
of the tender offer in the Company and the cash exit in HNE, both being at a
small discount to the prevailing net asset values when the HEFT/HNE
combination completed. Those discounts resulted in a modest asset uplift for
ongoing shareholders. The adjustment to the dividend payment profile for the
Company during the year, protected the Company's existing shareholders from
the impact of the issuance of shares and the relatively short period to earn
income on the enlarged share capital. As a result, shareholders were protected
from any adverse capital or income impact arising from the combination. Janus
Henderson had also agreed to protect the Company from any costs, had the
transaction not proceeded to completion.
STATEMENT OF DIRECTORS' RESPONSIBILITIES UNDER DTR 4.1.12
Each director, as listed below, confirms that, to the best of their knowledge:
§ the financial statements, which have been prepared in accordance with
United Kingdom Generally Accepted Accounting Practice (United Kingdom
Accounting Standards comprising FRS 102 and applicable law) give a true and
fair view of the assets, liabilities, financial position and return of the
Company; and
§ the Strategic Report includes a fair review of the development and
performance of the business and the position of the Company, together with a
description of the principal risks and uncertainties that it faces.
On behalf of the Board
Vicky Hastings
Chair of the Board
11 December 2024
PORTFOLIO INFORMATION
Top 10 investments at 30 September 2024
Company Sector Country of listing Valuation £'000 Percentage of portfolio
Novo Nordisk Pharmaceuticals and Biotechnology Denmark 41,930 6.07
ASML Technology Hardware and Equipment Netherlands 34,798 5.03
SAP Software and Computer Services Germany 31,184 4.51
TotalEnergies Oil, Gas and Coal France 24,622 3.56
Siemens General Industrials Germany 23,147 3.35
UniCredit Banks Italy 23,012 3.33
Deutsche Boerse Investment Banking and Brokerage Services Germany 19,999 2.89
Munich Re Non-life Insurance Germany 19,512 2.82
Anheuser-Busch InBev Beverages Belgium 18,885 2.73
CRH Construction and Materials Ireland 18,877 2.73
------------ ---------
Total (10 largest) 255,966 37.02
======= =====
Sector exposure 2024 2023
at 30 September as a percentage of the investment portfolio excluding cash % %
Industrials 27.3 26.7
Health Care 17.4 11.6
Technology 13.7 8.9
Financials 13.2 6.2
Consumer Discretionary 9.6 12.0
Consumer Staples 7.0 6.5
Energy 3.5 8.9
Basic Materials 2.5 14.1
Utilities 2.3 -
Telecommunications 1.9 -
Real Estate 1.6 -
UK Government Bonds - 5.1
Geographic exposure 2024 2023
at 30 September as a percentage of the investment portfolio excluding cash % %
France 22.4 30.5
Germany 20.8 16.8
Switzerland 13.8 5.0
Netherlands 7.8 11.2
Denmark 7.4 6.0
United Kingdom 7.4 6.8
Ireland 6.1 -
Belgium 4.0 6.2
Spain 3.6 1.4
Italy 3.3 1.4
Finland 1.8 8.4
Austria 1.6 -
Norway - 2.9
Sweden - 3.4
INCOME STATEMENT
Year ended Year ended
30 September 2024 30 September 2023
Revenue Capital Total Revenue Capital Total
return return return return return return
£'000 £'000 £'000 £'000 £'000 £'000
Gains on investments held at fair value through profit or loss - 46,078 46,078 - 63,293 68,293
Exchange gains/(losses) on currency transactions - 1,093 1,093 - (5) (5)
Income from investments (note 2) 11,558 - 11,558 11,206 - 11,206
Other income 515 - 515 224 - 224
---------- ---------- ---------- ---------- ---------- ----------
Gross revenue and capital gains 12,073 14,171 59,244 11,430 68,288 79,718
Management fee (note 6) (735) (2,204) (2,939) (587) (1,762) (2,349)
Other administration expenses (656) (22) (678) (639) - (639)
---------- ---------- ---------- ---------- ---------- ----------
Net return before finance costs and taxation 10,682 44,945 55,627 10,204 66,526 76,730
Finance costs (118) (355) (473) (129) (385) (514)
---------- ---------- ---------- ---------- ---------- ----------
Net return before taxation 10,564 44,590 55,154 10,075 66,141 76,216
Taxation on net return (note 7) 147 - 147 (887) (36) (923)
---------- ---------- ---------- ---------- ---------- ----------
Net return after taxation 10,711 44,590 55,301 9,188 66,105 75,293
====== ====== ====== ====== ====== ======
Return per ordinary share (note 8) 4.43p 18.45p 22.88p 4.32p 31.07p 35.39p
====== ====== ====== ====== ====== ======
The 'Total' columns of this statement represent the Income Statement of the
Company.
The revenue return and capital return columns are supplementary to this and
are prepared under guidance published by the Association of Investment
Companies.
All revenue and capital items in the above statement derive from continuing
operations.
The Company had no recognised gains or losses other than those disclosed in
the Income Statement.
STATEMENT OF CHANGES IN EQUITY
Year ended Called-up share capital Share premium account £'000 Capital Revenue Other reserves Total
reserve
reserve
30 September 2024 £'000
£'000 £'000
£'000 £'000
At 30 September 2023 10,819 41,995 217,076 12,496 96,611 378,997
Cancellation of share premium account - (41,995) - - 41,995 -
Issue of ordinary shares on HEFT/HNE combination 7,550 302,753 - - - 310,303
Issue costs in respect of the HEFT/HNE combination - (1,453) - - - (1,453)
Contribution from JHI towards the HEFT/HNE combination - - 1,550 - - 1,550
Tender offer of ordinary shares for treasury - - - - (63,907) (63,907)
Net return after taxation - - 44,590 10,711 - 55,301
Buyback of ordinary shares for treasury (note 4) - - - - (4,279) (4,279)
Ordinary dividends paid (note 4) - - - (12,978) - (12,978)
---------- ---------- ---------- ---------- ---------- ----------
At 30 September 2024 18,369 301,300 263,216 10,229 70,420 663,534
====== ====== ====== ====== ====== ======
Year ended Called-up share capital Share premium account £'000 Capital Revenue Other reserves Total
reserve
reserve
30 September 2023 £'000
£'000 £'000
£'000 £'000
At 30 September 2022 10,819 41,995 151,154 13,840 96,611 314,419
Net return after taxation - - 66,105 9,188 - 75,293
Buyback of ordinary shares for treasury (note 4) - - (183) - - (183)
Ordinary dividends paid (note 4) - - - (10,532) - (10,532)
---------- ---------- ---------- ---------- ---------- ----------
At 30 September 2023 10,819 41,995 217,076 12,496 96,611 378,997
====== ====== ====== ====== ====== ======
STATEMENT OF FINANCIAL POSITION
2024 2023
£'000 £'000
Fixed assets
Investments held at fair value through profit or loss 691,497 384,249
------------- -------------
Current assets
Debtors 14,032 11,745
Cash at bank 3,113 15,857
------------- -------------
17,145 27,602
Creditors: amounts falling due within one year (16,143) (2,655)
------------- -------------
Net current assets 1,002 24,947
------------- -------------
Total assets less current liabilities 692,499 409,196
Creditors: amounts falling due after one year (28,965) (30,199)
------------- -------------
Net assets 663,534 378,997
======== ========
Capital and reserves
Called-up share capital 18,369 10,819
Share premium account 301,300 41,995
Capital reserve 263,216 217,076
Revenue reserve 10,229 12,496
Other reserves 70,420 96,611
------------- -------------
Shareholders' funds 663,534 378,997
======== ========
Net asset value per ordinary share (note 9) 201.39p 178.13p
======== ========
CASH FLOW STATEMENT
Year ended Year ended
30 September 2024 30 September 2023 £'000
£'000
Cash flows from operating activities
Net return before taxation 55,154 76,216
Add back: finance costs 473 514
Gains on investments held at fair value through profit or loss (46,078) (68,293)
(Gains)/losses on foreign exchange (1,093) 5
Taxation paid (257) (1,389)
Increase in debtors (232) (163)
Increase in creditors 438 1,099
------------- -------------
Net cash inflow from operating activities* 8,405 7,989
------------- -------------
Cash flows from investing activities
Sales of investments held at fair value through profit or loss 461,678 288,351
Purchases of investments held at fair value through profit or loss (405,566) (290,172)
------------- -------------
Net cash inflow/(outflow) from investing activities 56,112 (1,821)
------------- -------------
Cash flows from financing activities
Buyback of ordinary shares for treasury (3,044) (183)
Equity dividends paid (12,978) (10,532)
Costs associated with the HEFT/HNE combination (1,225) -
Net cash acquired and received following the HEFT/HNE combination 4,512 -
Total cash paid in tender offer (including costs) (63,907) -
Interest paid (471) (863)
------------- -------------
Net cash outflow from financing activities (77,113) (11,578)
------------- -------------
Net decrease in cash and equivalents (12,596) (5,410)
Cash and cash equivalents at beginning of period 15,857 21,272
Losses on foreign exchange (148) (5)
------------- -------------
Cash at bank at end of period 3,113 15,857
------------- -------------
Comprising:
Cash at bank 3,113 15,857
======== ========
* Cash inflow from dividends was £10,442,000 (2023: £9,394,000) and cash
inflow from interest was £535,000 (2023: £213,000)
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies
(a) Basis of preparation
The Company is a registered investment company as defined in s833 Companies
Act 2006 and is incorporated in the United Kingdom. It operates in the United
Kingdom and is registered at the address below.
The financial statements have been prepared in accordance with the Companies
Act 2006, FRS 102 - The Financial Reporting Standard applicable in the UK and
Republic of Ireland and with the Statement of Recommended Practice: Financial
Statements of Investment Trust Companies and Venture Capital Trusts (the
"SORP") amended in July 2022 by the Association of Investment Companies.
The principal accounting policies applied in the presentation of these
financial statements are set out in the Annual Report. These policies have
been consistently applied to all the years presented.
The financial statements have been prepared under the historical cost basis
except for the measurement of investments at fair value. In applying FRS102,
financial instruments have been accounted for in accordance with s11 and 12 of
the Standard. All the Company's operations are of a continuing nature.
Issue of shares pursuant to the HEFT/HNE combination
On 4 July 2024, the Company issued new ordinary shares to shareholders of HNE
in consideration for the receipt by the Company of assets pursuant to a scheme
of reconstruction and liquidation of HNE. The directors have considered the
substance of the assets and activities of HNE in determining whether this
represents the acquisition of a business. In this case the combination is not
judged to be an acquisition of a business, and therefore has not been treated
as a business combination in accounting terms. Rather, the cost to acquire the
assets and liabilities of HNE has been allocated between the acquired
identifiable assets and liabilities based on their relative fair values on the
acquisition date without attributing any amount to goodwill or to deferred
taxes. Investments and cash were transferred from HNE. All assets were
acquired at their fair value. The value of the assets received, in exchange
for shares issued by the Company, have been recognised in share capital and
share premium, as shown in Statement of Changes in Equity. Direct costs,
including professional costs, in respect of the shares issued have been
recognised in the share premium account. As part of the HEFT/HNE combination,
JHI contributed to £1.55m to the costs of the proposals and further details
are included in note 23 in the Annual Report.
(b) Going concern
The assets of the Company consist of securities that are readily realisable
and, accordingly, the directors believe that the Company has adequate
resources to continue in operational existence for at least twelve months from
the date of approval of these financial statements being 31 December 2025. In
coming to this conclusion, the directors have considered the nature of the
portfolio, being that the securities held are readily realisable, the strength
of its distributable reserves, and the ongoing costs of the Company. The
directors have also reviewed the revenue forecast and size of the Company's
long-term debt and stress-tested its financial covenants.
As part of their usual assessment of risks facing the Company, the directors
have further considered the continued macroeconomic and geopolitical
uncertainty with the escalating conflict in the Middle East, the ongoing war
in Ukraine, heightened tensions between the US and China, the impact of these
on supply chains and the possible impact of climate change risk on the value
of the portfolio. The directors have concluded that the Company is able to
meet its financial obligations, including the interest payments for its loan
notes, as they fall due for a period of at least twelve months from the date
of this report.
2. Income from investment
2024 2023
£'000 £'000
Listed investments:
Overseas dividends 10,746 10,143
UK dividends 481 969
UK fixed-income interest 331 94
--------- ---------
11,558 11,206
===== =====
Special dividends received in the year amounted to £104,000 (2023:
£358,000), of which £104,000 is classified as revenue (2023: £358,000) and
nil (2023: nil) classified as capital.
3. Dividend
The Board recommends a final dividend of 1.30p per share. When added to the
interim dividend of 3.05p, this will bring the full-year dividend to 4.35p per
share (2023: 4.35p). Subject to approval at the AGM on 29 January 2025, the
final dividend will be payable on 3 February 2025 to shareholders on the
register at close of business on 3 January 2025. The shares will be quoted
ex-dividend on 2 January 2025.
4. Dividends paid and payable on ordinary shares
Dividends on ordinary shares Record date Payment date 2024 2023
£'000 £'000
Final dividend (3.15p) for the year ended 30 September 2022 6 January 2023 6 February 2023 - 6,702
Special dividend (0.50p) for the year ended 30 September 2022 6 January 2023 6 February 2023 - 1,064
Interim dividend (1.30p) for the year ended 30 September 2023 2 June 2023 27 June 2023 - 2,766
Final dividend (3.05p) for the year ended 30 September 2023 5 January 2024 5 February 2024 6,489 -
Interim dividend (3.05p) for the year ended 30 September 2024 7 June 2024 28 June 2024 6,489 -
---------- -----------
12,978 10,532
====== ======
The final dividend for the year ended 30 September 2024 has not been included
as a liability in these financial statements. The total dividend payable in
respect of the financial year, which forms the basis of the retention test
under s1158 Corporation Tax Act, is set out below.
2024 2023
£'000 £'000
Revenue available for distribution by way of dividend for the year 10,711 9,188
Interim dividend (3.05p) for the year ended 30 September 2024 (6,489) -
(based on 212,768,122 ordinary shares in issue at 7 June 2024)
Final dividend (1.30p) for the year ended 30 September 2024 (4,208) -
(based on 323,697,014 ordinary shares in issue at 9 December 2024)]
Interim dividend (1.30p) for the year ended 30 September 2023 - (2,766)
(based on 212,768,122 ordinary shares in issue at 2 June 2023)
Final dividend (3.05p) for the year ended 30 September 2023 - (6,489)
(based on 212,768,122 ordinary shares in issue at 5 January 2024)
------------ -------------
Undistributed revenue for s1158 purposes 14 (67)
======= =======
All dividends have been paid or will be paid out of revenue profits or revenue
reserves.
5. Called-up share capital
Number of shares entitled to dividend Shares held in treasury Total number of shares Nominal value of shares
£'000
At 30 September 2023 212,768,122 3,621,788 216,389,910 10,819
Issue of new ordinary shares 151,000,587 - 151,000,587 7,550
Tender offer or ordinary shares for treasury (31,915,217) 31,915,217 - -
Buyback into treasury of 2,376,191 shares (2,376,191) 2,376,191 - -
----------------- ---------------- ------------------ -----------
At 30 September 2024 329,477,301 37,913,196 367,390,497 18,369
========== ========= ========== ======
At 30 September 2022 212,913,122 3,476,788 216,389,910 10,819
Buyback into treasury of 145,000 shares (145,000) 145,000 - -
---------------- ------------ ----------------- ----------
At 30 September 2023 212,768,122 3,621,788 216,389,910 10,819
========== ======== ========== ======
On 4 July 2024 the Company issued 151,000,587 new shares to HNE shareholders
in consideration of the £310,303,000 of net assets acquired from HNE in
accordance with the HEFT/HNE combination. As announced on 25 June 2024,
31,915,217 shares were bought back pursuant to the tender offer at a total
cost of £63,907,000 representing 198.846970p per share paid to shareholders
plus stamp duty and commission. All shares repurchased will be held in
treasury.
During the year to 30 September 2024, the Company repurchased 2,376,191 (2023:
145,000) ordinary shares at a cost of £4,279,000 including expenses (2023:
£183,000). Since the year end and as at 9 December 2024, 5,780,287 shares
have been repurchased to be held in treasury. The ordinary shares held in
treasury total 43,693,483 as at 9 December 2024 and have no voting rights and
are not entitled to dividends.
6. Management fee
30 September 2024 30 September 2023
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Management fee 735 2,204 2,939 587 1,762 2,349
==== ===== ===== ==== ===== =====
A description of the basis for calculating the management fee is given in the
Business Model on page 18. Management fees are allocated 25% to revenue and
75% to capital in the Income Statement.
7. Taxation
(a) Analysis of charge for the year
Year ended Year ended
30 September 2024 30 September 2023
Revenue return Capital return Total Revenue return Capital return Total
£'000 £'000 £'000 £'000 £'000 £'000
Overseas tax (received)/suffered (147) - (147) 887 36 923
---------- ---------- ---------- ---------- ---------- ----------
Total taxation for the year (147) - (147) 887 36 923
====== ====== ====== ====== ====== ======
b) Factors affecting the tax charge for the year
Year ended Year ended
30 September 2024 30 September 2023
Revenue Capital Total Revenue return Capital return Total
return return £'000 £'000 £'000 £'000
£'000 £'000
Return before taxation 10,564 44,590 55,154 10,075 66,141 76,216
---------- ---------- ---------- ---------- ---------- ----------
Corporation tax at an effective rate of 25.0% (2023: 22.0%) 2,641 11,148 13,789 2,217 14,551 16,768
Effects of:
Non-taxable capital profits - (11,793) (11,793) - (15,023) (15,023)
Non-taxable overseas income (2,807) - (2,807) (2,445) - (2,445)
Expenses not deductible for tax purposes 1 5 6 - - -
Current-year expenses not utilised 165 640 805 228 472 700
Overseas tax (147) - (147) 887 36 923
---------- ---------- ---------- ---------- ---------- ----------
(147) - (147) 887 36 923
====== ====== ====== ====== ====== ======
The UK corporation tax is an effective rate of 25.0% (2023: 22.0%). The tax
charge for the year is lower than the corporation tax rate.
No provision for deferred tax has been made in the current or prior accounting
year. At the period end, after offset against income taxable on receipt, there
is a potential deferred tax asset of £9,199,000 (2023: £8,389,000) in
relation to surplus management expenses. It is unlikely that the Company will
generate sufficient taxable profits in the future to utilise these amounts and
therefore no deferred tax asset has been recognised.
8. Return per ordinary share
The return per ordinary share is based on the net return attributable to the
ordinary shares of £55,301,000 (2023: £75,293,000) and on 241,688,916
ordinary shares (2023: 212,776,067) being the weighted average number of
ordinary shares in issue during the year excluding shares held in treasury.
The return per ordinary share can be further analysed between revenue and
capital as below.
2024 2023
£'000 £'000
Net revenue return 10,711 9,188
Net capital return 44,590 66,105
------------ ------------
Net total return 55,301 75,293
======= =======
Weighted average number of ordinary shares in issue during the year 241,688,916 212,776,067
Revenue return per ordinary share 4.43p 4.32p
Capital return per ordinary share 18.45p 31.07p
---------- ------------
Total return per ordinary share 22.88p 35.39p
====== =======
The Company does not have any dilutive securities and therefore the basic and
diluted returns per share are the same.
9. Net asset value per share
The NAV per ordinary share is based on the net assets attributable to the
ordinary shares of £663,534,000 (2023: £378,997,000) and on 329,477,301
(2023: 212,768,122) shares in issue on 30 September 2024, excluding treasury
shares.
The movements during the year of the assets attributable to the ordinary
shares were as follows:
2024 2023
£'000 £'000
Total net assets at start of year 378,997 314,419
Net return for the year after tax 55,301 75,293
Buyback of ordinary shares for treasury (4,279) (183)
Dividends paid on ordinary shares (12,978) (10,532)
Issue of ordinary shares on HEFT/HNE combination 310,303 -
Issue costs in respect of the HEFT/HNE combination (1,453) -
Contribution from JHI towards the HEFT/HNE combination 1,550 -
Tender offer of ordinary shares for treasury (63,907) -
----------- -----------
Net assets attributable to the ordinary shares at 30 September 663,534 378,997
====== ======
10. 2024 financial information
The figures and financial information for 2024 are extracted from the Annual
Report for the year ended 30 September 2024 and do not constitute statutory
accounts. The Company's Annual Report for the year ended 30 September 2024
has been audited but has not yet been delivered to the Registrar of Companies.
The Independent Auditor's Report on the 2024 Annual Report is unqualified,
does not include a reference to any matter to which the auditor draws
attention without qualifying the report, and does not contain any statements
under s498 Companies Act 2006 (the "Act").
11. 2023 financial information
The figures and financial information for 2023 are extracted from the
published Annual Report for the year ended 30 September 2023 and do not
constitute statutory accounts for that year. The 2023 Annual Report has been
delivered to the Registrar of Companies and includes an unqualified
Independent Auditor's Report, does not include a reference to any matter to
which the auditor draws attention without qualifying the report, and does not
contain a statement under s498 of the Act.
12. Annual Report 2024
The Annual Report for the year ended 30 September 2024 will be posted to
shareholders and an electronic copy will shortly be available at
www.hendersoneuropean.com (http://www.hendersoneuropeanfocus.com/) and in
hard-copy format from the registered office at 201 Bishopsgate, London, EC2M
3AE. The Annual Report includes the Notice of Annual General Meeting, which
will be held at 11.30 am on Wednesday, 29 January 2025 at 201 Bishopsgate,
London EC2M 3AE.
13. General information
Company status
Henderson European Trust plc is registered in England and Wales (company
number 00427958), has its registered office at 201 Bishopsgate, London EC2M
3AE and is listed on the main market of the London Stock Exchange.
SEDOL/ISIN: Ordinary shares: BLSNGB0/GB00BLSNGB01
London Stock Exchange ("TIDM") Code: HET
Global Intermediary Identification Number ("GIIN"): THMNPN.99999.SL.826
Legal Entity Identifier ("LEI") number: 213800GS89AL1DK3IN50
Directors and secretary
The directors of the Company are Vicky Hastings (Chair), Robin Archibald
(Senior Independent Director and Chairman of the Audit and Risk Committee),
Marco Maria Bianconi, Melanie Blake, Stephen King and Rutger Koopmans. The
Corporate Secretary is Janus Henderson Secretarial Services UK Limited.
Website
Details of the Company's share price and net asset value, together with
general information about the Company, monthly factsheets, insights,
announcements, reports and details of general meetings can be found at
www.hendersoneuropean.com (http://www.hendersoneuropeanfocus.com/) .
For further information, please contact:
Vicky Hastings Dan Howe
Chair of the Board Head of Investment Trusts
Henderson European Trust plc Janus Henderson Investors
Telephone: 020 7818 2220 Telephone: 020 7818 4458
Tom O'Hara Harriet Hall
Fund Manager PR Director, Investment Trusts
Janus Henderson Investors Janus Henderson Investors
Telephone: 020 7818 2197 Telephone: 020 7818 2919
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) are
incorporated into, or form part of, this announcement.
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