Henderson Eurotrust - Half-year Report
22/03/2023 15:34
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RNS Number : 9073T Henderson Eurotrust PLC 22 March 2023
JANUS HENDERSON FUND MANAGEMENT UK LIMITED
HENDERSON EUROTRUST PLC
LEGAL ENTITY IDENTIFIER: 213800DAFFNXRBWOEF12
22 March 2023
HENDERSON EUROTRUST PLC
Unaudited results for the half year ended 31 January 2023
This announcement contains regulated information.
Performance
• During the period, the Company outperformed the benchmark(3) by 1.4%, having
delivered NAV(2) per share total return of 12.5% compared to a total return
from the benchmark(3) of 11.1%.
• Interim dividend of 0.8p per share.
(Audited)
(Unaudited) (Unaudited) Year
Half year Half year ended
ended ended 31 July
31 January 31 January 2022
2023 2022
NAV per share 156.3p 154.6p 142.1p
Share price 133.8p 141.3p 120.5p
Net assets £331.1m £327.5m 301.0m
Dividends 0.8p 0.8p 3.8p
Revenue return per share 0.3p 0.7p 3.9p
Discount(1) 14.4% 8.6% 15.2%
Total return performance to 31 January 2023
6 months 1 year 3 years 5 years
% % % %
NAV(2) 12.5 4.0 27.0 42.3
Benchmark(3) 11.1 4.7 28.5 36.3
Share price(4) 13.9 -1.7 19.5 24.2
Peer group NAV(5) 9.0 1.4 28.0 40.2
1. Calculated using the mid-market closing price
2. Net asset value ("NAV") per ordinary share total return (including
dividends reinvested)
3. FTSE World Europe (ex UK) Index in Sterling
4. Share price total return (including dividends reinvested)
5. Association of Investment Companies ("AIC") Europe sector (based on
cumulative fair net asset value returns)
Sources: Morningstar Direct, Janus Henderson, Refinitiv Datastream
Interim Management Report
Chairman's Statement
European stock markets have been in the vanguard of stock market performance
in the six months to 31 January 2023, and the Company's net asset value and
share price are ahead of a rising market.
Performance
In the period from our year end on 31 July 2022 to 31 January 2023, the
Company's NAV total return was 12.5% compared to the Company's benchmark, the
FTSE World Europe (ex UK) Index, which rose by 11.1%, whilst the peer group,
the AIC Europe sector, returned 9.0%. The share price was up 13.9%; the
discount to NAV remains high but narrowed slightly to 14.4% from 15.2%.
Over the 12 months to 31 January 2023, the NAV total return was 4.0% and the
share price total return -1.7%. Both the NAV and share price total returns
were below the benchmark index total return of 4.7%; however the NAV total
return of 4.0% was ahead of the of the peer group, where the average was 1.4%.
It is of course heartening that after three years of lacklustre returns in
absolute terms and underperformance versus the index, performance has been
much stronger in recent months. However, the war in Ukraine continues,
inflation is not yet under control, and interest rates appear set to rise
further; so, why the recovery?
A simple answer is that stock markets are forward looking; despite continued
concerns over recession in 2023, investors are anticipating a peak in interest
rates, perhaps before the end of 2023. Another reason, as explained more fully
in the Fund Manager's Report, is that there are a great many regional and
international companies within Europe which now look like surprisingly good
value. More generally, whilst the rise in interest rates has put pressure on
the share prices of highly rated companies, the dramatic swing from "growth"
companies to more cyclical or "value" companies has begun to broaden out to
encompass a more nuanced approach focusing on the merits of individual
companies. This has been a much better environment for the Company's
portfolio.
Gearing
In a highly volatile environment, gearing has been maintained at a marginally
positive level of between 1% and 2%. This has helped to ensure that there has
been no cash drag on performance over the period. The net impact of gearing,
net of costs, was 0.01%. At 31 January 2023 the portfolio had net cash of
0.1%. The decision to use gearing is taken by the Fund Manager and is driven
by his views on the individual holdings rather than a judgement on the
short-term direction of the market.
Dividend
The Board is pleased to declare a maintained interim dividend of 0.8p per
ordinary share payable on 28 April 2023 to shareholders on the Register of
Members on 11 April 2023; the shares will be quoted ex-dividend on 6 April
2023.
Environmental, Social and Governance ("ESG") Policy
The Board and the Fund Manager believe that an investment focus on long term
growth should give a portfolio a bias towards sustainability. A key focus for
us is ensuring we meet our commitments under Article 8 "Light Green" of the
Sustainable Financial Disclosure Regulation ("SFDR"), which includes a
commitment to holding at least 5% of the portfolio in investments aligned with
the UN Sustainable Development Goal of "Good Health & Wellbeing", and not
holding any securities in the lowest 5% of companies in the index when ranked
by carbon intensity.
During the period our Manager switched to MSCI as its third-party source of
information for ESG data. The portfolio has no exposure to ESG "Laggards" as
defined by MSCI. However, we are acutely aware of the shortcomings of data
provision on sustainability and ESG factors. Whilst we believe that having a
focused portfolio of approximately 40 stocks enables our Fund Manager to make
an assessment of corporate claims and the MSCI ratings, we are also aware of
the need to maintain a healthy scepticism regarding scoring metrics and
corporate claims.
Board matters
As previously announced, Stephen White was appointed as Director of the
Company last December. Stephen brings a wealth of investment management and
European equities expertise to the Board.
Outlook
A year ago, I said that for a long-term investor, it was generally preferable
to remain invested even in highly uncertain times, despite warning of elevated
"event risk" and an expectation that valuations would come under pressure.
Valuations did indeed come under pressure and, having started at 120.5p on
31 July 2022 the share price has been as low as 106p (on 13 October 2022).
However, the share price ended the interim period at 133.8p, its high for the
twelve months, as markets began to look through the current interest rate
cycle.
Over the six months to 31 January 2023 European markets were leading global
markets, with the strongest performance of all the major geographical regions.
This outperformance confounds the perhaps comfortable assumption we sometimes
hear that there is no real need to own European stocks at all. Our view is
that the recent outperformance of European markets is not simply a brief blip
based on favourable short-term earnings projections, but also a response to a
changing environment. Investors are, for example, re-thinking globalisation -
in respect of geo-politics, supply chains and portfolio weightings. This may
result in a greater willingness to invest in a region with attractive
valuations, above average standards of regulation/governance and a wealth of
interesting companies. We believe that investing in European stock markets,
with a portfolio seeking to focus on high quality companies, is a worthwhile
endeavour.
In mid-March markets were digesting the events in the banking sector, where in
Europe Credit Suisse had to be absorbed by UBS Group AG orchestrated by the
Swiss government after investors lost confidence in this scandal-prone bank.
This removed a major, years-long overhang for Europe's banking industry which
remains strong in terms of its aggregate capital and liquidity position, as do
our portfolio companies.
Nicola Ralston
Chairman
Fund Manager's Report
European markets recovered strongly over the period. Concerns over potential
earnings downgrades seemed to be outweighed by increasingly attractive equity
valuations. "Value" outperformed "growth" and cyclicality trumped
defensiveness. I am pleased that we have managed to perform well in what
should have been a difficult environment for us given our long-standing bias
to quality growth. Our outperformance can be attributed to stock specific
factors outweighing stylistic headwinds. As tends to be typical in a recovery
environment, European equities outperformed US equities meaningfully. Our
reference benchmark, the FTSE World Europe (ex-UK) Index in Sterling, rose
11.1% in total return terms. We fared better than this, with our net asset
value rising by 12.5% over the same period.
Our best performing positions were either Financials (UniCredit, Munich Re,
Bawag), Cyclicals (Metso Outotec, Hermès, Safran) or Energy-related
(TotalEnergies).
Our Financials have been boosted by the general macro environment, where
inflation expectations remain elevated and monetary policy is being tightened,
as well as having stock-specific factors working in their favour. We had held
on to our large position in UniCredit, even through the early months of
Russia's invasion of Ukraine when the shares were punished heavily due to the
company having some Russian exposure. Our summary thesis is that the bank is
very generously capitalised, has a loan book with lower credit risk than has
been the case historically, has an opportunity to improve cost efficiency and
remains far too cheap. The operational performance of the bank has been very
strong for the last few years and the shares are finally starting to rerate.
The share price has now doubled since the 2022 lows and during January 2023,
UniCredit announced another robust set of results and a further return of
capital to shareholders. We believe there is a further equity rerating to go.
Munich Re, another long-standing position for us, has rerated meaningfully as
industry conditions improve. With the low interest rate years coming to an
end, the competitive environment has eased in reinsurance; large,
well-established businesses are benefitting from an exodus of competing
capital and pricing power is improving. We have reduced our holding in Munich
Re on the back of the equity rerating. Bawag has been a huge success story
when compared to other European banks. They have been managed consistently
well, continue to increase the efficiency of their already best-in-class cost
base and have returned substantial amounts of capital to shareholders. It is
rare to find a bank that has been able to generate a return on equity
consistently higher than their cost of capital; we have held Bawag since 2019
and it has been one of these companies.
Our cyclicals have also clearly benefited from improving macro sentiment.
Metso Outotec is currently seeing strong order trends as the mining capex
cycle remains robust. We particularly like the company's exposure to energy-
and water-efficient products. Their mining customers increasingly care about
these things, led by changing investor perceptions and associated cost
benefits. Hermès is a company that we have owned for around 9 years; we
continue to see them as best-in-class brand stewards; a company that
continuously prioritises long-term brand health over considerations of
short-term profitability. At the moment, investors are starting to price in
the likely powerful impact of the return of the Chinese customer after a
period of Covid-related disruption. Safran is a high-quality company, a large
player in the airplane engine production and maintenance business. The
business has several attractions, most notably in its "razor/razor-blade"
business model. Although our investment case is based around the long-term
value creation that we believe the company should deliver, in the short term
the environment is certainly improving, with flying hours on a steady
post-Covid recovery trend.
Energy has performed well over the past 6 months. Our position in
TotalEnergies has rallied over 19%, meaningfully outperforming the wider
market at a time when the oil price has fallen over 10%. This performance has
been driven by a valuation rerating from historically low levels but will
likely only be sustainable if the oil price stabilises.
In a period when "value" has outperformed meaningfully, it is unsurprising to
note that most of our weakest performing positions have been some of our
"growthiest" companies, including DSM, Partners Group and Cellnex. In the case
of DSM, there are concerns that the company's supplements business could see a
drop in profitability following a period, during Covid-19, when consumers
bought far more vitamins and supplements than usual. We have some sympathy
with this view, but we remain focused on the long-term attractions of the
investment case and have maintained a medium-sized position. Partners Group
has derated significantly as interest rates have risen and the environment for
the private equity asset class has deteriorated. Ultimately, the company
remains a strong play on an asset class that should see robust long-term
demand and revenue yields that should remain attractive and resilient when
compared to other asset classes. Finally, Cellnex performed poorly over the
period before rallying as interest picked up towards the end of the six
months. Having been a strong outperformer for a number of years, Cellnex has
struggled to perform ever since inflation expectations started to tick up in
2021 (Cellnex delivers very predictable, bond-like returns and so is
especially sensitive to changes in inflation expectations). However, a large
gap has recently emerged between the valuations of private telco tower
transactions (often greater than 20 times earnings before interest, taxes,
depreciation, and amortisation) and the equity valuation of Cellnex (less than
15 times). This is creating some debate in the market and during January 2023,
press articles began to emerge suggesting that American Tower Corp (AMT),
alongside Brookfield, could be working on a takeover bid for Cellnex. We see
strong rationale in such a deal, especially given the valuation context, and
in any case, the press coverage is a useful reminder of the investment merits
of Cellnex's shares. We have retained a full position.
The most notable trades we made during the period were to sell our positions
in Enel and CHNi, whilst buying new holdings in ASM International, Brenntag
and Euronext.
Enel is an Italian renewable energy company. We have been patient with this
position for two and a half years, but we became increasingly frustrated with
poor operational performance, government interference and the company's
unwillingness/inability to reduce debt levels. With CNHi, the tractor company
that we purchased towards the end of 2020, we have made significant money from
our investment, and we are becoming increasingly concerned by falling farmer
confidence levels in the US - often a leading indicator for tractor demand.
Although the business has some structural attractions, it can be very cyclical
and we do not want to overstay our welcome in what has been a successful
investment.
Our purchase of a small position in ASM International back in August 2022
reflected our desire to increase our exposure to the highest quality
semiconductor companies during a period of share price weakness and earnings
downgrades. ASM International is a market leader in advanced deposition
techniques (an essential stage in creating semi-conductors). They have a
greater than 60% market share in their core technology, generate strong
margins and returns and should see high levels of growth over the medium term.
We now own a full-sized position in ASML and two half-sized positions in ASM
International and Besi; we see these three companies as the three
highest-quality semi-conductor companies in Europe.
Brenntag is a specialist distributor of chemicals. There is an important
business model differential with the big, cyclical chemical producers.
Chemical producers are price-takers, and their earnings can be very volatile,
driven by supply/demand balances for the chemicals to which they are exposed,
even though volume trends tend to be fairly steady, driven by global growth.
Chemical distributors are much better businesses; they are not exposed to the
volatile activity of chemical production, and they simply act as
intermediaries between chemical producers and chemical buyers. They earn a
fixed US dollar per unit traded and are thus little impacted by the volatility
of chemical pricing. Volume growth tends to be steady, and this is a very
fragmented market where there are significant advantages for the larger
distributors who are consolidating the industry via natural share gain and
frequent bolt-on merger and acquisition. Brenntag is the largest player in the
global industry but has only a 5% market share; we expect continued industry
growth and further share gains for Brenntag. The timing of our purchase has
been driven by two factors. First, Covid caused huge supply disruption for the
industry, and this boosted the US dollar price per unit that the distributors
were able to charge for their services. This is now unwinding, and the share
price has underperformed as a result. However, we feel that the share price
unwind has overshot and a very bearish scenario is priced in. The second
factor concerned an early-stage approach that Brenntag made for their US
industry peer, Univar. This approach was taken very badly by the market as a
rights issue would theoretically be necessary. However, again, we felt that
the share price reaction was too negative and created an attractive entry
opportunity.
Euronext is a peer to Deutsche Börse. As a general rule, we like the
"platform economics" that exchange businesses display. They tend to be
stable businesses with high margins and return on invested capital. The key
attraction of Euronext has been its historic ability to consolidate the cash
equities industry in a sensible and value-accretive way. Its shares have
usually commanded a premium valuation reflecting this attraction. However,
over the course of 2022, this valuation premium unwound, whilst the valuation
of its peer Deutsche Börse increased significantly. We felt it prudent to
lock in some of our gains in Deutsche Börse and to reinvest the proceeds in
Euronext as a result.
I will continue to retain balance in our exposures by considering two types of
investment opportunities: first, in companies where we see high and
sustainable returns that are undervalued by the market and second, in
companies where I can see a material improvement in medium-term business
prospects.
Jamie Ross
Fund Manager
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks and uncertainties associated with the Company's business
can be divided into the following main areas:
• Investment activity and performance
• Portfolio and market
• Regulatory
• Operational and cyber
• ESG
Information on these risks and how they are managed is given in the Annual
Report for the year ended 31 July 2022. In the view of the Board, these
principal risks and uncertainties continue to apply and are as applicable to
the remaining six months of the financial year as they were to the six months
under review.
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors (as listed in note 12) confirm that, to the best of their
knowledge:
(a) the condensed financial statements for the half year ended 31 January 2023
have been prepared in accordance with FRS 104 Interim Financial Reporting and
give a true and fair view of the assets, liabilities, financial position and
profit or loss of the Company;
(b) the interim management report and condensed financial statements include a
fair review of the information required by Disclosure Guidance and
Transparency Rule 4.2.7R (indication of important events during the first six
months and description of principal risks and uncertainties for the remaining
six months of the year); and
(c) the interim management report includes a fair review of the information
required by the Disclosure Guidance and Transparency Rule 4.2.8R (disclosure
of related party transactions and changes therein).
On behalf of the Board
Nicola Ralston
Chairman
Investment portfolio as at 31 January 2023
Valuation % of portfolio
Investment Country Sector £'000
TotalEnergies France Oil, Gas and Coal 17,752 5.4
Novo Nordisk Denmark Pharmaceuticals and Biotechnology 17,599 5.3
Nestlé Switzerland Food Producers 16,464 5.0
Roche Switzerland Pharmaceuticals and Biotechnology 14,347 4.3
UniCredit Italy Banks 14,010 4.2
Sanofi France Pharmaceuticals and Biotechnology 13,336 4.0
ASML Netherlands Technology Hardware and Equipment 11,988 3.6
LVMH Möet Hennessy Louis Vuitton France Personal Goods 11,436 3.5
ABB Switzerland Electronic and Electrical Equipment 10,664 3.2
Hermès France Personal Goods 10,509 3.2
Top 10 138,105 41.7
Airbus France Aerospace and Defence 10,283 3.1
Bawag Austria Banks 10,141 3.1
Koninklijke DSM Netherlands Food Producers 9,807 3.0
Cellnex Spain Telecommunications Services Providers 9,408 2.8
Safran France Aerospace and Defence 8,774 2.7
SAP Germany Software and Computer Services 8,642 2.6
Amundi France Investment Banking and Brokerage 8,464 2.6
Beiersdorf Germany Personal Care, Drug and Grocery Stores 8,160 2.5
Munich Re. Germany Non-life Insurance 8,134 2.5
Universal Music Netherlands Media 7,715 2.3
Top 20 227,633 68.9
Partners Group Switzerland Investment Banking and Brokerage 7,528 2.3
Deutsche Börse Germany Investment Banking and Brokerage 7,256 2.2
BNP Paribas France Banks 6,918 2.1
Pernod Ricard France Beverages 6,646 2.0
Arkema France Chemicals 6,627 2.0
Moncler Italy Personal Goods 6,259 1.9
Metso Outotec Finland Industrial Engineering 5,996 1.8
ASM International Netherlands Technology Hardware and Equipment 5,707 1.7
EDP Renovaveis Portugal Electricity 5,438 1.6
Allfunds Netherlands Finance and Credit Services 5,364 1.6
Top 30 291,372 88.1
SIG Switzerland General Industrials 4,973 1.5
Euronext Netherlands Investment Banking and Brokerage 4,925 1.5
Kion Germany Industrial Engineering 4,080 1.2
Adidas Germany Personal Goods 3,531 1.1
Brenntag Germany Chemicals 3,457 1.0
Besi Netherlands Technology Hardware and Equipment 3,196 1.0
Danone France Food Producers 3,070 0.9
Delivery Hero Germany Consumer Services 2,885 0.9
Grifols Spain Pharmaceuticals and Biotechnology 2,877 0.9
Sartorius Germany Medical Equipment and Services 2,380 0.7
Top 40 326,746 98.8
Brockhaus Capital Management Germany Investment Banking and Brokerage 2,308 0.7
Hellofresh Germany Personal Care, Drug and Grocery Stores 1,737 0.5
Total 330,791 100.0
In addition to the above, the Company has a nil value position in OW Bunker.
OW Bunker is unquoted.
Market capitalisation at 31 January 2023
Excluding cash
Market cap % Portfolio Weight % Benchmark Weight
>€20bn 69.3 72.3
€10bn - €20bn 13.9 13.9
€5bn - €10bn 8.7 8.9
€1bn - €5bn 7.4 4.8
<€1bn 0.7 0.1
Total 100.0 100.0
Sources: Morningstar Direct, Janus Henderson, Refinitiv Datastream
Performance drivers over the six months ended 31 January 2023
%
Benchmark return 11.1
Sector allocation -0.7
Stock selection 1.8
Currency movements (relative to index) 0.7
Effect of cash and gearing 0.0
Effect of ongoing charge -0.4
NAV total return 12.5
Sources: Morningstar Direct, Janus Henderson, Refinitiv Datastream
Classification of holdings at 31 January 2023
Compounders(1) Improvers(2) Company Index
average average average average
Market capitalisation (£m) 113,997 44,625 90,650 79,258
Price/book (x) 3.5 1.5 2.4 1.9
Trailing 12 month dividend yield (%) 2.2 2.7 2.4 2.9
Trailing 12 month price/earnings (x) 23.1 12.7 18.1 13.6
Forward 2023 price/earnings (x) 17.5 11.6 15.0 13.3
Historical 3-year earnings per share growth per annum (%) 14.7 11.8 13.7 14.4
Return on equity (%) 30.0 12.1 24.0 20.5
Operating margin (%) 27.4 21.3 25.4 18.7
Long-term debt to capital (%) 31.7 36.4 33.3 34.2
Number of securities 28 14 42 554
Weight (%)(3) 66.6 33.8
Fundamentals are based on weighted averages at the stock level, excluding net
cash/borrowing
1 Compounders - high-return businesses
2 Improvers - companies whose return profile should materially improve over
time
3 The weight percentages of Compounders and Improvers are shown including net
cash/borrowing
Net cash/(borrowing) was -0.4% at 31 January 2023
OW Bunker, a nil value position, is not included in the analysis
Source: Factset/Fundamentals in Sterling and Janus Henderson
Top ten contributors to and detractors from absolute performance
%
Top ten contributors
UniCredit 2.8
Munich Re. 2.2
TotalEnergies 1.5
Bawag 1.2
Novo Nordisk 1.0
Safran 0.9
Hermès 0.9
Metso Outotec 0.9
LVMH Möet Hennessy Louis Vuitton 0.8
SAP 0.7
Top ten detractors
Koninklijke KPN -0.2
Allfunds -0.2
Enel -0.2
Kion -0.3
Sartorius -0.3
Roche -0.4
EDP Renovaveis -0.4
Partners Group -0.5
Cellnex -0.6
Koninklijke DSM -1.0
Condensed Income Statement
(Unaudited) (Unaudited) (Audited)
Half year ended Half year ended Year ended
31 January 2023 31 January 2022 31 July 2022
Revenue Capital Revenue Capital Revenue Capital
return £'000 return £'000 Total return £'000 return £'000 Total return return £'000 return £'000 Total return
return £'000 £'000
£'000
Gains/(losses) from investments held at fair value through profit or loss - 36,619 36,619 - (24,074) (24,074) - (54,923) (54,923)
Investment income 1,273 - 1,273 1,941 - 1,941 9,298 - 9,298
Other income 33 - 33 - - - 1 1
_____ _____ _____ _____ _____ _____ _____ _____ _____
Gross revenue and capital gains/(losses) 1,306 36,619 37,925 1,941 (24,074) (22,133) 9,299 (54,923) (45,624)
Management fee (note 4) (192) (767) (959) (221) (884) (1,105) (410) (1,642) (2,052)
Other administrative expenses (304) - (304) (265) - (265) (553) - (553)
_____ _____ _____ _____ _____ _____ _____ _____ _____
Net return/(loss) before finance costs and taxation 810 35,852 36,662 1,455 (24,958) (23,503) 8,336 (56,565) (48,229)
Finance costs (17) (69) (86) (12) (49) (61) (17) (67) (84)
_____ _____ _____ _____ _____ _____ _____ _____ _____
Net return/(loss) before taxation 793 35,783 36,576 1,443 (25,007) (23,564) 8,319 (56,632) (48,313)
Taxation on net return (167) - (167) (57) - (57) (69) (11) (80)
_____ _____ _____ _____ _____ _____ _____ _____ _____
Net return/(loss) after taxation 626 35,783 36,409 1,386 (25,007) (23,621) 8,250 (56,643) (48,393)
===== ===== ===== ===== ===== ===== ===== ===== =====
Return/(loss) per ordinary share - basic and diluted (note 2) 0.30p 16.89p 17.19p 0.65p (11.80p) (11.15p) 3.90p (26.70p) (22.80p)
===== ===== ===== ===== ===== ===== ===== ===== =====
The total return columns of this statement represent the Condensed Income
Statement of the Company, prepared in accordance with FRS 104. All revenue and
capital items in the above statement derive from continuing operations. The
revenue and capital return columns are supplementary to this and are prepared
under guidance published by the Association of Investment Companies. The
Company had no recognised gains or losses other than those disclosed in the
Condensed Income Statement and the Condensed Statement of Changes in Equity.
The accompanying notes are an integral part of the condensed financial
statements.
Condensed Statement of Changes in Equity
Half year ended 31 January 2023 (Unaudited)
Called up
share Share Capital redemption reserve Other capital Total shareholders' funds
capital
premium
£'000
reserves Revenue reserve
£'000
£'000
£'000 account £'000
£'000
As at 1 August 2022 1,060 41,032 263 251,065 7,590 301,010
Net return after taxation - - - 35,783 626 36,409
Final dividend for 2022 paid - - - - (6,356) (6,356)
-------- --------- -------- ----------- -------- -----------
As at 31 January 2023 1,060 41,032 263 286,848 1,860 331,063
===== ====== ===== ====== ===== =======
Half year ended 31 January 2022 (Unaudited)
As at 1 August 2021 1,060 41,032 263 307,722 4,633 354,710
Net return/(loss) after taxation - - - (25,007) 1,386 (23,621)
Costs relating to sub-division of shares - - - (14) - (14)
Final dividend for 2021 paid in respect of year ended 31 July 2021 - - - - (3,602) (3,602)
-------- --------- -------- ----------- -------- -----------
As at 31 January 2022 1,060 41,032 263 282,701 2,417 327,473
===== ===== ===== ====== ===== ======
Year ended 31 July 2022 (Audited)
As at 1 August 2021 1,060 41,032 263 307,722 4,633 354,710
Net (loss)/return after taxation - - - (56,643) 8,250 (48,393)
Costs relating to sub-division of shares - - - (14) - (14)
Final dividend for 2021 paid in respect of year ended 31 July 2021 - - - - (3,602) (3,602)
Interim dividend for 2022 paid in respect of the year ended 31 July 2022 - - - - (1,695) (1,695)
Refund of unclaimed dividends over 12 years old - - - - 4 4
-------- --------- -------- ----------- --------- ----------
As at 31 July 2022 1,060 41,032 263 251,065 7,590 301,010
===== ===== ===== ====== ===== ======
The accompanying notes are an integral part of the condensed financial
statements.
Condensed Statement of Financial Position
(Unaudited) (Unaudited) (Audited)
31 January 31 January 31 July
2023 2022 2022
£'000 £'000 £'000
Fixed asset investments held at fair 330,791 327,695 308,398
value through profit or loss
----------- ----------- -----------
Current assets
Debtors 2,390 2,316 6,192
Cash at bank and in hand 7,532 3,222 2,482
----------- ----------- -----------
9,922 5,538 8,674
Creditors: amounts falling due (9,650) (5,760) (16,062)
within one year
----------- ----------- -----------
Net current assets/(liabilities) 272 (222) (7,388)
----------- ----------- -----------
Net assets 331,063 327,473 301,010
======= ======= =======
Capital and reserves
Called up share capital 1,060 1,060 1,060
Share premium account 41,032 41,032 41,032
Capital redemption reserve 263 263 263
Capital reserves 286,848 282,701 251,065
Revenue reserve 1,860 2,417 7,590
------------ ------------ ------------
Equity shareholders' funds 331,063 327,473 301,010
======= ======= =======
Net asset value per ordinary share 156.3p 154.6p 142.1p
- basic and diluted (note 3)
======= ======= =======
The accompanying notes are an integral part of the condensed financial
statements.
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies
The condensed set of financial statements has been prepared in accordance with
FRS 104 Interim Financial Reporting, FRS 102 the Financial Reporting Standard
applicable in the UK and Republic of Ireland and the Statement of Recommended
Practice for "Financial Statements of Investment Trust Companies and Venture
Capital Trusts", issued in April 2021.
For the period under review the Company's accounting policies have not varied
from those described in the annual report for the year ended 31 July 2022.
These financial statements have been neither audited nor reviewed by the
Company's auditors.
As an investment fund, the Company is not presenting a cash flow statement. A
cash flow statement is not required when an investment fund meets all the
following conditions: substantially all the entity's investments are highly
liquid and are carried at market value, and where a statement of changes in
equity is provided.
2. Return per ordinary share
The return per ordinary share is based on the following figures:
(Unaudited) (Unaudited) (Audited)
Half year ended Half year ended Year ended
31 January 2023 31 January 2022 31 July
£'000 £'000 2022
£'000
Revenue return 626 1,386 8,250
Capital return/(loss) 35,783 (25,007) (56,643)
---------- ---------- ----------
Total 36,409 (23,621) (48,393)
====== ====== ======
Weighted average number of ordinary shares (excluding treasury shares) 211,855,410 211,855,410 211,855,410
Revenue return per ordinary share 0.30p 0.65p 3.90p
Capital return/(loss) per ordinary share 16.89p (11.80p) (26.70p)
----------- ----------- -----------
Total return/(loss) per ordinary share 17.19p (11.15p) (22.80p)
====== ====== ======
The Company has no securities in issue that could dilute the return per
ordinary share. Therefore, the basic and diluted return per ordinary share
are the same.
3. Net asset value per ordinary share
Net asset value per ordinary share is based on 211,855,410 (half year ended 31
January 2022: 211,855,410; year ended 31 July 2022: 211,855,410) ordinary
shares in issue, excluding treasury shares.
4. Management fees
Management fees are charged in accordance with the terms of the management
agreement and provided for when due. The base management fee is calculated at
the rate of 0.65% per annum of net assets up to £300 million and 0.55% for
net assets above £300 million, payable quarterly in arrears.
5. Investments held at fair value through profit or loss
The table below analyses fair value measurements for investments held at fair
value through profit or loss. These fair value measurements are categorised
into different levels in the fair value hierarchy based on the valuation
techniques used and are defined as follows under FRS 102:
Level 1: the unadjusted quoted price in an active market for identical assets
or liabilities that the entity can access at the measurement
date
Level 2: inputs other than quoted prices included within Level 1 that are
observable (i.e. developed using market data) for the asset or liability,
either directly or indirectly
Level 3: inputs are unobservable (i.e. for which market data is unavailable)
for the asset or
liability
Financial Assets held at fair value through profit or loss at 31 January 2023 Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Equity investments 328,483 2,308 - 330,791
Total financial assets carried at fair value 328,483 2,308 - 330,791
Financial Assets held at fair value through profit Level 1 Level 2 Level 3 Total
or loss at 31 July 2022 £'000 £'000 £'000 £'000
Equity investments 306,515 1,883 - 308,398
Total financial assets carried at fair value 306,515 1,883 - 308,398
Financial Assets held at fair value through profit Level 1 Level 2 Level 3 Total
or loss at 31 January 2022 £'000 £'000 £'000 £'000
Equity investments 325,279 2,416 - 327,695
Total financial assets carried at fair value 325,279 2,416 - 327,695
The valuation techniques used by the Company are explained in the accounting
policies notes 1 (c) and 15.5 in the Company's Annual Report for the year
ended 31 July 2022.
6. Bank loan
At 31 January 2023, the Company had drawn down £8,842,000 (half year ended
31 January 2022: £4,178,000; year ended 31 July 2022: £12,593,000) of its
£25 million multi-currency loan facility.
7. Going concern
The assets of the Company consist of securities that are primarily readily
realisable and, accordingly, the Directors believe that the Company has
adequate resources to continue in operational existence for at least 12 months
from the date of approval of the Financial Statements. Having assessed these
factors and the principal risks, as well as considering the impact of the rise
in inflation and the specific risks related to the invasion of Ukraine by
Russia, the Directors consider it appropriate to adopt the going concern basis
of accounting in preparing the financial statements.
8. Related party transactions
The Company's transactions with related parties in the period under review
were with its Directors and the Manager. There were no material transactions
between the Company and its Directors during the half year and the only
amounts paid to them were in respect of expenses and remuneration for which
there were no outstanding amounts payable at the half-year end. Directors'
shareholdings are disclosed in the Annual Report.
In relation to the provision of services by the Manager, other than fees
payable by the Company in the ordinary course of business and the facilitation
of marketing activities with third parties, there were no material
transactions with the Manager affecting the financial position of the Company
during the half year under review.
9. Dividends
An interim dividend of 0.8p (2022: 0.8p) per ordinary share has been declared
payable from revenue on 28 April 2023 to shareholders on the Register of
Members on 11 April 2023. The Company's shares will be quoted ex-dividend on
6 April 2023. Based on the number of shares in issue on 21 March 2023, the
cost of the dividend will be £1,695,000.
10. Share capital
At 31 January 2023 there were 212,055,410 shares in issue of which 200,000
were held in treasury, resulting in 211,855,410 shares entitled to a dividend.
During the half-year period ended 31 January 2023, no shares were issued or
repurchased (half year ended 31 January 2022 and year ended 31 July 2022: no
shares were issued or repurchased). No shares have been issued or repurchased
since 31 January 2023.
11. Comparative information
The financial information contained in this half-year report does not
constitute statutory accounts as defined in section 434 of the Companies Act
2006. The financial information for the half years ended 31 January 2023 and
31 January 2022 has not been audited or reviewed by the Company's auditor. The
figures and financial information for the year ended 31 July 2022 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 498(2) or 498(3) of the
Companies Act 2006. A glossary of terms and details of alternative
performance measures can be found in the Annual Report for the year ended 31
July 2022.
12. General information
Company status
Henderson EuroTrust plc
Registered as an investment company in England and Wales
Registration Number: 02718241
Registered Office: 201 Bishopsgate, London EC2M 3AE
SEDOL Number: BP6QR38
ISIN number: GB00BP6QR382
London Stock Exchange (TIDM) Code: HNE
Global Intermediary Identification Number (GIIN): P560WP.99999.SL.826
Legal Entity Identifier (LEI) Number: 213800DAFFNXRBWOEF12
Directors and Corporate Secretary
The Directors of the Company are Nicola Ralston (Chairman), Katya Thomson
(Chairman of the Audit and Risk Committee), Stephen King, Rutger Koopmans and
Stephen White. 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 and data, copies of
announcements, reports and details of general meetings can be found at
www.hendersoneurotrust.com
(https://www.janushenderson.com/en-gb/investor/product/henderson-eurotrust-plc/)
.
13. Half-Year Report
The Half-Year Report will be available on the Company's website,
www.hendersoneurotrust.com
(https://www.janushenderson.com/en-gb/investor/product/henderson-eurotrust-plc/)
or from the Company's registered office. An abbreviated version, the 'Update',
will be circulated to shareholders in early April.
The Company has no securities in issue that could dilute the return per
ordinary share. Therefore, the basic and diluted return per ordinary share
are the same.
3.
Net asset value per ordinary share
Net asset value per ordinary share is based on 211,855,410 (half year ended 31
January 2022: 211,855,410; year ended 31 July 2022: 211,855,410) ordinary
shares in issue, excluding treasury shares.
4.
Management fees
Management fees are charged in accordance with the terms of the management
agreement and provided for when due. The base management fee is calculated at
the rate of 0.65% per annum of net assets up to £300 million and 0.55% for
net assets above £300 million, payable quarterly in arrears.
5.
Investments held at fair value through profit or loss
The table below analyses fair value measurements for investments held at fair
value through profit or loss. These fair value measurements are categorised
into different levels in the fair value hierarchy based on the valuation
techniques used and are defined as follows under FRS 102:
Level 1: the unadjusted quoted price in an active market for identical assets
or liabilities that the entity can access at the measurement
date
Level 2: inputs other than quoted prices included within Level 1 that are
observable (i.e. developed using market data) for the asset or liability,
either directly or indirectly
Level 3: inputs are unobservable (i.e. for which market data is unavailable)
for the asset or
liability
Financial Assets held at fair value through profit or loss at 31 January 2023 Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Equity investments 328,483 2,308 - 330,791
Total financial assets carried at fair value 328,483 2,308 - 330,791
Financial Assets held at fair value through profit Level 1 Level 2 Level 3 Total
or loss at 31 July 2022 £'000 £'000 £'000 £'000
Equity investments 306,515 1,883 - 308,398
Total financial assets carried at fair value 306,515 1,883 - 308,398
Financial Assets held at fair value through profit Level 1 Level 2 Level 3 Total
or loss at 31 January 2022 £'000 £'000 £'000 £'000
Equity investments 325,279 2,416 - 327,695
Total financial assets carried at fair value 325,279 2,416 - 327,695
The valuation techniques used by the Company are explained in the accounting
policies notes 1 (c) and 15.5 in the Company's Annual Report for the year
ended 31 July 2022.
6.
Bank loan
At 31 January 2023, the Company had drawn down £8,842,000 (half year ended
31 January 2022: £4,178,000; year ended 31 July 2022: £12,593,000) of its
£25 million multi-currency loan facility.
7.
Going concern
The assets of the Company consist of securities that are primarily readily
realisable and, accordingly, the Directors believe that the Company has
adequate resources to continue in operational existence for at least 12 months
from the date of approval of the Financial Statements. Having assessed these
factors and the principal risks, as well as considering the impact of the rise
in inflation and the specific risks related to the invasion of Ukraine by
Russia, the Directors consider it appropriate to adopt the going concern basis
of accounting in preparing the financial statements.
8.
Related party transactions
The Company's transactions with related parties in the period under review
were with its Directors and the Manager. There were no material transactions
between the Company and its Directors during the half year and the only
amounts paid to them were in respect of expenses and remuneration for which
there were no outstanding amounts payable at the half-year end. Directors'
shareholdings are disclosed in the Annual Report.
In relation to the provision of services by the Manager, other than fees
payable by the Company in the ordinary course of business and the facilitation
of marketing activities with third parties, there were no material
transactions with the Manager affecting the financial position of the Company
during the half year under review.
9.
Dividends
An interim dividend of 0.8p (2022: 0.8p) per ordinary share has been declared
payable from revenue on 28 April 2023 to shareholders on the Register of
Members on 11 April 2023. The Company's shares will be quoted ex-dividend on
6 April 2023. Based on the number of shares in issue on 21 March 2023, the
cost of the dividend will be £1,695,000.
10.
Share capital
At 31 January 2023 there were 212,055,410 shares in issue of which 200,000
were held in treasury, resulting in 211,855,410 shares entitled to a dividend.
During the half-year period ended 31 January 2023, no shares were issued or
repurchased (half year ended 31 January 2022 and year ended 31 July 2022: no
shares were issued or repurchased). No shares have been issued or repurchased
since 31 January 2023.
11.
Comparative information
The financial information contained in this half-year report does not
constitute statutory accounts as defined in section 434 of the Companies Act
2006. The financial information for the half years ended 31 January 2023 and
31 January 2022 has not been audited or reviewed by the Company's auditor. The
figures and financial information for the year ended 31 July 2022 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 498(2) or 498(3) of the
Companies Act 2006. A glossary of terms and details of alternative
performance measures can be found in the Annual Report for the year ended 31
July 2022.
12.
General information
Company status
Henderson EuroTrust plc
Registered as an investment company in England and Wales
Registration Number: 02718241
Registered Office: 201 Bishopsgate, London EC2M 3AE
SEDOL Number: BP6QR38
ISIN number: GB00BP6QR382
London Stock Exchange (TIDM) Code: HNE
Global Intermediary Identification Number (GIIN): P560WP.99999.SL.826
Legal Entity Identifier (LEI) Number: 213800DAFFNXRBWOEF12
Directors and Corporate Secretary
The Directors of the Company are Nicola Ralston (Chairman), Katya Thomson
(Chairman of the Audit and Risk Committee), Stephen King, Rutger Koopmans and
Stephen White. 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 and data, copies of
announcements, reports and details of general meetings can be found at
www.hendersoneurotrust.com
(https://www.janushenderson.com/en-gb/investor/product/henderson-eurotrust-plc/)
.
13.
Half-Year Report
The Half-Year Report will be available on the Company's website,
www.hendersoneurotrust.com
(https://www.janushenderson.com/en-gb/investor/product/henderson-eurotrust-plc/)
or from the Company's registered office. An abbreviated version, the 'Update',
will be circulated to shareholders in early April.
For further information please contact:
Jamie Ross Dan Howe
Fund Manager Head of Investment Trusts
Henderson EuroTrust plc Janus Henderson Investors
Telephone: 020 7818 5260 Telephone: 020 7818 4458
Harriet Hall
Investment Trust PR Manager
Janus Henderson Investors
Tel: 020 7818 2919
Neither the contents of the Company's website nor the contents of any website
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incorporated into, or form part of, this announcement.
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