Henderson Eurotrust - Half-year Report
21/03/2024 07:00
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RNS Number : 6816H Henderson Eurotrust PLC 21 March 2024
JANUS HENDERSON FUND MANAGEMENT UK LIMITED
HENDERSON EUROTRUST PLC
LEGAL ENTITY IDENTIFIER: 213800DAFFNXRBWOEF12
21 March 2024
HENDERSON EUROTRUST PLC
Unaudited results for the half year ended 31 January 2024
This announcement contains regulated information.
Performance
During the period, the Company outperformed the benchmark(3) by 0.3%, having
delivered NAV(2) per share total return of 4.5% compared to a total return
from the benchmark(3) of 4.2%.
(Unaudited) (Unaudited) (Audited)
Half year Half year Year
ended ended ended
31 January 31 January 31 July
2024 2023 2023
NAV per share 165.2p 156.3p 161.3p
Share price 142.3p 133.8p 139.5p
Net assets £350.0m £331.1m £342.0m
Revenue return per share 0.2p 0.3p 3.2p
Discount(1) 13.9% 14.4% 13.5%
Total return performance to 31 January 2024
6 months 1 year 3 years 5 years
% % % %
NAV(2) 4.5 8.4 15.8 67.0
Benchmark(3) 4.2 8.8 29.5 60.8
Share price(4) 4.3 9.7 10.4 61.6
Peer group NAV(5) 4.2 9.6 23.7 65.6
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, LSEG Datastream
Interim Management Report
Chairman's Statement
Shareholders will have seen the announcement on 14 March 2024 of the proposed
merger of interests between the Company and Henderson European Focus Trust plc
("HEFT") to form Henderson European Trust plc, an enlarged flagship European
investment trust to be managed by Janus Henderson Investors. The proposed
merger will be effected by way of a scheme of reconstruction and winding up of
the Company under section 110 of the Insolvency Act 1986, and the associated
transfer of the Company's assets to HEFT in exchange for the issue of new
shares by HEFT under the recommended scheme of reconstruction (the
"Proposals"). As set out in the announcement, the portfolio for the continuing
company will be managed jointly by our portfolio manager, Jamie Ross, and his
counterpart at HEFT, Tom O'Hara, supported by Janus Henderson Investors' nine
other European equities specialists. If approved by shareholders in general
meetings currently expected to be held in June and July 2024, the intention is
that the larger combined company will bring together the portfolio managers'
respective expertise and proven track records of benchmark outperformance
under a single mandate, i.e. to maximise total return by investing in
companies predominately listed in Europe (excluding the UK).
The Company and HEFT have over 50% of common holdings by value and the
majority of Henderson European Trust plc's portfolio is expected to comprise
assets currently held by at least one of the companies.
The combined company is anticipated to have net assets of circa £750 million
(based on valuations as at 29 February 2024) and will benefit from a lower
management fee and reduced ongoing charge ratio which is expected to be less
than 0.70%, compared to the Company's current ongoing charge ratio of 0.79%.
Performance
In the period from our year end on 31 July 2023 to 31 January 2024, the
Company outperformed its benchmark, the FTSE World Europe (ex UK) Index, by
0.3%, having delivered a NAV total return of 4.5% compared to the Company's
benchmark and to the peer group, the AIC Europe sector, which both returned
4.2%. The share price had increased by 4.3%; the discount to NAV increased to
13.9% from 13.5%.
Over the twelve months to 31 January 2024, the NAV total return was 8.4% and
the share price total return was 9.7%. The NAV was slightly behind the
benchmark index total return of 8.8% and also behind the peer group average
NAV of 9.6%; however, the share price total return of 9.7% was ahead of both
the benchmark and peer group.
The share price ended the period close to the high for both the year and the
half year to 31 January 2024, despite major geo-political events including the
continuing war in Ukraine and the conflict in the Middle East. EU inflation
fell to 2.8% in January 2024 compared with 10.0% a year earlier. Although
there are still concerns over inflation it seems likely that 2024 will see
cuts in interest rates. This has been a broadly supportive background for
companies and stock markets. Nonetheless, there have been some quite big
swings in sentiment: for example in the latter part of 2023, cyclical stocks
gathered momentum in anticipation of interest rate cuts in 2024. Despite the
macro-economic background, appropriately for a stock-driven "bottom-up"
portfolio such as that of the Company, stock selection - as opposed to sector
allocation - has been responsible for the majority of the relative return over
the interim period. The Fund Manager's report contains more detailed
information on performance, together with market commentary.
Gearing
The portfolio has been geared throughout the interim period, up to 5.1%, but
at 31 January 2024 the portfolio had net gearing of 1.4%. 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. Gearing contributed marginally to the total return in the interim
period.
Dividend
In line with the policy set out in our Annual Report for 2023, the Board
intended not to pay any interim dividend but only to pay a final dividend.
If, however, the Proposals are approved, a pre-liquidation dividend will be
paid prior to the Proposals becoming effective. Details of this are expected
to be announced in May 2024.
Outlook
Despite the Company's strong long-term performance, of 158.8% over ten years
(NAV total return as at 31 January 2024), we have been frustrated by the
Company's shares trading at a persistent discount versus their Net Asset
Value.
Your Board has considered the factors affecting the discount and has concluded
that investment performance alone cannot address this issue. We are therefore
pleased to recommend the proposed merger with HEFT, which brings together two
investment trusts with excellent long-term performance and highly regarded
portfolio managers. We strongly believe this combination will create a single
company which stands to be much more than the sum of its parts: enhanced scale
resulting in reduced ongoing charges and improved market liquidity; recognised
investment prowess backed by deep resources within the European team at Janus
Henderson; structured at no cost of combination to ongoing shareholders.
In my last report to shareholders, I stated my intention to retire from the
Board by the 2024 AGM in November. Following the announcement, I intend to
remain as Chairman until either the conclusion of the Proposals (likely July
2024) or the AGM in November 2024. This is an exciting new chapter for our
Company and I would like to thank shareholders for their support on this
journey.
Nicola Ralston
Chairman
20 March 2024
Fund Manager's Report
On 14 March 2024, the Board announced a proposed merger with HEFT. I see this
as being in the best interests of shareholders and I am very excited at the
prospect of combining with Tom O'Hara to co-manage Henderson European Trust
plc.
This has been a positive period for performance on both an absolute and
relative basis. The FTSE World Europe (ex-UK) Index rose 4.2% in total return
terms whilst our NAV increased by 4.5%. There was a significant shift in the
macro-economic environment in the final months of 2023. At the start of the
period, interest rates were rising whilst economic sentiment was weakening. By
the end of 2023, investors were anticipating rate cuts and the global economy
appeared to be heading for a 'soft landing'. These shifts in sentiment have
contributed to the positive performance from equity markets.
Our moderate outperformance was driven by stock specific factors. The most
significant driver of performance was our exposure to obesity, through our
positions in Novo Nordisk and Zealand Pharma, both Danish businesses. Since
the early part of the 20th century, Novo Nordisk, alongside the US company Eli
Lilly, has been at the forefront of drug development for diabetes and, more
recently, for obesity. Over the last hundred years, these two companies have
commercialised insulin production, have developed novel treatments including a
drug class known as GLP-1 and, as a result, have saved innumerable lives. We
are now in the foothills of another wave of drug adoption that will transform
millions of lives across the world. Once again, Novo Nordisk and Eli Lilly are
leading the way. Obesity is one of the greatest health issues in developed
countries. Societal factors, including ageing populations, more sedentary
lifestyles and the widespread consumption of ultra-processed-food have all had
their role to play. Novo Nordisk, through the commercialisation of their
weight-loss drug Wegovy, offers a way of reducing the prevalence and impact of
obesity. We first invested in Novo Nordisk in 2017 and although it has
performed well since, it has only really been in recent months that the market
has truly started to appreciate the company's long-term potential. We maintain
a large position.
In addition to our position in Novo Nordisk, we initiated a position in
Zealand Pharma at the start of the period. Zealand Pharma is approaching the
same problem through a slightly different drug-pathway and its drug
development is at a much earlier stage than Novo Nordisk's. Nonetheless, we
can see Zealand Pharma having a role to play in the obesity market in the
future. If excitement around the drug class continues to build, there is a
chance that Zealand Pharma may not be able to remain independent for long.
Beiersdorf has been another successful investment. This German company, which
owns the skincare brand Nivea, has long been seen as inferior to its French
peer L'Oréal. Nivea hasn't attracted the same levels of demand growth as the
key L'Oréal brands, Beiersdorf has been slow to fully adopt the ecommerce
channel, and has not engaged with the all-important Chinese middle-classes. In
addition, family ownership has long attracted accusations of the poor
treatment of minority shareholders. However, when we invested in Beiersdorf a
few years ago, we considered that we were on the cusp of change. A new CEO
(ex-P&G and L'Oréal) came in with a clear message; he has reinvested
behind the core Nivea brand, increasing investment behind ecommerce and seems
to have had some success in persuading the family that M&A can be done in
a measured way, with room for additional dividends and buybacks for
shareholders. Over the past six months, the Nivea brand performed well and
Beiersdorf has outperformed L'Oréal whilst also delivering strong absolute
share price performance.
Finally, our position in UniCredit, the Italian bank, has performed well. As
with Beiersdorf, UniCredit has been a story of change. I have owned UniCredit
for the entire five-year period that I have managed the Company's portfolio
and it has outperformed the market by a very significant margin. UniCredit is
a transformed business compared to ten years ago. It lends in a more
conservative way, its balance sheet is far less leveraged, it has too much
rather than too little capital and it is managed for profit rather than for
pure lending-volume growth. Results continue to be strong.
The largest detractors from performance have included Pernod Ricard, SIG and
Grifols.
Pernod Ricard has underperformed for much of the past six months. The North
American market is slowing down and undergoing some wholesaler destocking
after an exceptionally strong period of growth under Covid conditions, whilst
the key Chinese market is not experiencing the strong recovery that was
expected on the lifting of Covid restrictions. We are willing to look through
these issues and focus on the longer-term picture. China and India are two
huge markets that remain extremely underpenetrated by Western-style spirits.
The opportunity presented by those and other markets will mean that Pernod
should be able to see strong revenue growth over the medium to long term. We
also see a significant margin opportunity as the company pays more attention
to cost efficiency.
We have owned SIG, the Swiss aseptic-packaging company, since IPO in 2018 and
it has been a good investment. However, in recent months, investors have
become concerned that growth in their food and beverage end markets is slowing
at a time when SIG has increased leverage following an acquisition. We share
these concerns, to an extent, but take a more sanguine view on long-term
prospects than on short-term oscillations in demand. We expect steady market
growth in the long term and we see an opportunity for SIG to gain share over
time.
Grifols, the Spanish blood-plasma company, has detracted value and we have
sold the position during the half year. The business struggled with plasma
collections during Covid; this hit their earnings and their ability to pay
down debt, resulting in heightened leverage just at the time when interest
rates have been rising. In January 2024 a well-known short seller, Gotham
City, released a report detailing several accounting-based accusations as well
as observations on the relationship between Grifols and a private family-owned
business called Scranton. Although we were already aware of most of the issues
raised, there is a high hurdle for maintaining a position in these
circumstances and we decided to sell our entire position.
In addition to our sale of Grifols, our most notable trades were complete
sales in Brenntag and Delivery Hero alongside new purchases in Kone, the
Finnish elevator company, and Infineon, the German semiconductor company.
We had purchased Brenntag at an opportune moment in 2022, just after the
company had controversially approached its US peer Univar. Part of our
investment thesis had been the potential that the new management team would
end up splitting the business into two parts: a specialty distribution
business and a bulk distribution business. At the time of our purchase, the
'split' in our view would have created a lot of value, but since our
investment, the shares have gone up materiality whilst peer companies' shares
have gone down, and the maths of the split therefore became much less
compelling. For these reasons, we sold this position and locked in the
profits.
Delivery Hero has been a poor investment for us and appears to be suffering
from slowing growth across its core markets. In a post-Covid world, there is
little growth in food delivery, which leads us to question whether and when a
satisfactory return on capital can be achieved. The position was therefore
sold.
Onto the two new positions I mentioned above. We like the fundamentals of
Kone's business model: it has "sticky customers"- a razor/razor blade business
model - and a global oligopoly position. The company has been held back in
recent years by a collapse in new build activity in China, but the issues in
this market are now well understood and have also diminished in importance,
now representing around 15% of the business compared to over one third a few
years ago. Infineon is a semi-conductor manufacturer. We have had success in
our investments in semi-conductor equipment companies over the past year, but
have taken profit in these shares and have now redistributed some of the
proceeds into Infineon. Infineon is exposed to auto and industrial markets and
is benefitting from the shift to digitalisation in industrial end markets and
to electrification in auto markets. The shares are currently inexpensive due
the short-term softness being seen in these end markets.
In an environment of benign economic conditions and falling interest rates,
equity markets should be well positioned to perform strongly. We have and will
maintain our quality bias, but in recent months, we have made some moves to
increase our exposure to some more cyclical growth areas of the market, such
as semi-conductors, as mentioned above, to benefit from this environment. We
are confident in our positioning and will remain focused on delivering an
attractive long term total return to our shareholders.
Jamie Ross
Fund Manager
20 March 2024
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 2023. 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 (whilst also acknowledging the
going concern and material uncertainty statement below) as they were to the
six months under review.
Going Concern and Material Uncertainty
The Board announced a proposed combination of the assets of the Company with
the assets of HEFT, subject to shareholder approval, through a tax efficient
scheme of reconstruction under section 110 of the Insolvency Act 1986 (the
"Proposals"). More detail can be found in the Chairman's Statement and in the
RNS announcement dated 14 March 2024.
The Board believes that the Proposals are in the best interests of
shareholders as a whole and recommends that shareholders vote in favour of the
resolutions required to effect the Proposals. The Proposals will be effected
by way of a scheme of reconstruction and winding up of the Company's under
section 110 of the Insolvency Act 1986, and the associated transfer of the
Company's assets to HEFT in exchange for the issue of new shares by HEFT under
the recommended scheme. This would result in the voluntary liquidation of the
Company. Due to the requirement for the Proposals to receive approval from the
shareholders of both the Company and HEFT there remains material uncertainty
as to the future of the Company.
However, should the Proposals not receive the necessary shareholder approvals
or any of the other conditions to the Proposals not be satisfied, the Board
believes that the Company would remain a going concern. Accordingly, the Board
has prepared the financial statements in this report for the half year ended
31 January 2024 ("Half Year Report") on a going concern basis.
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 2024
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 (whilst also acknowledging the going concern and
material uncertainty statement below and that the Company may be placed into
voluntary liquidation before 31 July 2024)); 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
20 March 2024
Investment portfolio at 31 January 2024
Valuation % of portfolio
Investment Country Sector £'000
Novo Nordisk Denmark Pharmaceuticals & Biotechnology 26,210 7.4
TotalEnergies France Oil & Gas Producers 18,689 5.3
Nestlé Switzerland Food Producers 16,778 4.7
Roche Switzerland Pharmaceuticals & Biotechnology 16,693 4.7
ASML Netherlands Technology Hardware and Equipment 15,763 4.4
Sanofi France Pharmaceuticals & Biotechnology 13,857 3.9
SAP Germany Software & Computer Services 12,818 3.6
Safran France Aerospace & Defence 11,524 3.3
SGS Switzerland Support Services 11,513 3.2
Airbus France Aerospace & Defence 10,589 3.0
Top 10 154,434 43.5
Schneider Electric France Electronic & Electrical Equipment 10,186 2.9
LVMH Moët Hennessy Louis Vuitton France Personal Goods 10,149 2.9
Beiersdorf Germany Personal Goods 9,910 2.8
Munich Re. Germany Insurance 9,646 2.7
DSM Firmenich Switzerland Food Producer 9,579 2.7
UniCredit Italy Banks 9,322 2.6
Deutsche Börse Germany Financial Services 8,861 2.5
Amundi France Bank and Asset Manager 7,777 2.2
BNP Paribas France Banks 6,865 1.9
Infineon Technologies Germany Technology Hardware and Equipment 6,561 1.8
Top 20 243,290 68.5
Hermès France Luxury Goods 6,552 1.8
Alcon Switzerland Health Care Equipment & Services 6,440 1.8
Euronext Netherlands Financial Services 6,384 1.8
Moncler Italy Luxury Goods 6,228 1.8
Pernod Ricard France Beverages 6,173 1.7
Allfunds Netherlands Finance and Credit Services 5,770 1.6
ASM International Netherlands Technology Hardware and Equipment 5,422 1.5
Universal Music Netherlands Media 5,417 1.5
Partners Group Switzerland Private Equity Asset Manager 5,328 1.5
Cellnex Spain Mobile Telecommunications 5,297 1.5
Top 30 302,301 85.0
Metso Finland Industrial Engineering 5,291 1.5
Heineken Netherlands Beverages 5,175 1.5
SIG Switzerland Containers and Packaging 4,950 1.4
Danone France Food Producer 4,937 1.4
Bawag Austria Banks 4,876 1.4
EDP Renovaveis Portugal Alternative Energy 4,093 1.2
Arkema France Chemicals 4,060 1.1
Kone Finland Industrial Engineering 3,601 1.0
Besi Netherlands Technology Hardware and Equipment 3,386 1.0
Brockhaus Capital Management Germany Financial Services 2,778 0.8
Top 40 345,448 97.3
Sartorius Germany Medical Equipment and Services 2,561 0.7
Adidas Germany Personal Goods 2,413 0.7
Zealand Pharma Denmark Pharmaceuticals & Biotechnology 2,096 0.6
Puma Germany Personal Goods 1,662 0.5
Industrie De Nora Italy Electronic & Electrical Equipment 803 0.2
Total 354,983 100.0
In addition to the above, the Company has a nil value position in OW Bunker.
OW Bunker is unquoted.
Market capitalisation at 31 January 2024
Excluding cash
Market cap % Portfolio Weight % Benchmark Weight
>€20bn 79.1 74.6
€10bn - €20bn 9.0 11.8
€5bn - €10bn 6.8 9.7
€1bn - €5bn 4.3 3.7
<€1bn 0.8 0.2
Total 100.0 100.0
Sources: Morningstar Direct, Janus Henderson, LSEG Datastream
Performance drivers over the six months ended 31 January 2024
%
Benchmark return 4.2
Sector allocation 0.2
Stock selection 0.5
Currency movements (relative to index) 0.0
Effect of cash and gearing 0.1
Effect of ongoing charge -0.4
Residual (due to timing and rounding) -0.1
NAV total return 4.5
Sources: Morningstar Direct, Janus Henderson, LSEG Datastream
Characteristics of holdings at 31 January 2024
Company Index
average average
Market capitalisation (£m) 109,249 91,009
Price/book (x) 2.6 2.0
Trailing 12-month dividend yield (%) 2.4 3.0
Trailing 12-month price/earnings (x) 19.5 14.9
Forward 2024 price/earnings (x) 16.1 13.4
Historical 3-year earnings per share growth per annum (%) 18.8 28.5
Forecast next 12-month earnings per share growth (%) 12.2 11.6
Return on equity (%) 27.3 21.9
Operating margin (%) 22.3 19.9
Long-term debt to capital (%) 30.5 32.9
Number of securities 45 571
Fundamentals are based on weighted averages at the stock level, excluding net
cash/borrowing
Net cash/(borrowing) was -1.8% at 31 January 2024
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 relative performance
%
Top ten contributors
Novo Nordisk 1.1
Zealand Pharma 0.7
Partners Group 0.4
Bayer (not held) 0.4
SAP 0.3
UniCredit 0.3
Beiersdorf 0.2
Adyen (not held) 0.2
Safran 0.2
TotalEnergies 0.2
Top ten detractors
Pernod Ricard -0.5
Grifols -0.4
Puma -0.4
SIG -0.4
Moncler -0.3
HelloFresh (not held at 31 January 2024) -0.3
UBS (not held) -0.3
Roche -0.3
EDP Renovaveis -0.2
Sanofi -0.2
Condensed Income Statement
(Unaudited) (Unaudited) (Audited)
Half year ended Half year ended Year ended
31 January 2024 31 January 2023 31 July 2023
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 from investments held at fair value through profit or loss - 15,454 15,454 - 36,619 36,619 - 43,816 43,816
Investment income 1,013 - 1,013 1,273 - 1,273 8,877 - 8,877
Other income 76 - 76 33 - 33 71 - 71
_____ _____ _____ _____ _____ _____ _____ _____ _____
Gross revenue and capital gains 1,089 15,454 16,543 1,306 36,619 37,925 8,948 43,816 52,764
Management fee (note 4) (218) (870) (1,088) (192) (767) (959) (407) (1,628) (2,035)
Other administrative expenses (400) - (400) (304) - (304) (553) - (553)
_____ _____ _____ _____ _____ _____ _____ _____ _____
Net return before finance costs and taxation 471 14,584 15,055 810 35,852 36,662 7,988 42,188 50,176
Finance costs (85) (344) (429) (17) (69) (86) (43) (174) (217)
_____ _____ _____ _____ _____ _____ _____ _____ _____
Net return before taxation 386 14,240 14,626 793 35,783 36,576 7,945 42,014 49,959
Taxation on net return (34) - (34) (167) - (167) (1,120) - (1,120)
_____ _____ _____ _____ _____ _____ _____ _____ _____
Net return after taxation 352 14,240 14,592 626 35,783 36,409 6,825 42,014 48,839
===== ===== ===== ===== ===== ===== ===== ===== =====
Return per ordinary share - basic and diluted (note 2) 0.17p 6.72p 6.89p 0.30p 16.89p 17.19p 3.22p 19.83p 23.05p
===== ===== ===== ===== ===== ===== ===== ===== =====
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 2024 (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 2023 1,060 41,032 263 293,079 6,364 341,798
Net return after taxation - - - 14,240 352 14,592
Final dividend for 2023 paid - - - - (6,356) (6,356)
Refund of unclaimed dividends over 12 years old - - - - 2 2
-------- --------- -------- ----------- -------- -----------
As at 31 January 2024 1,060 41,032 263 307,319 362 350,036
===== ====== ===== ====== ===== =======
Half year ended 31 January 2023 (Unaudited)
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 in respect of year ended 31 July 2022 - - - - (6,356) (6,356)
-------- --------- -------- ----------- -------- -----------
As at 31 January 2023 1,060 41,032 263 286,848 1,860 331,063
===== ===== ===== ====== ===== ======
Year ended 31 July 2023 (Audited)
As at 1 August 2022 1,060 41,032 263 251,065 7,590 301,010
Net return after taxation - - - 42,014 6,825 48,839
Final dividend for 2022 paid in respect of year ended 31 July 2022 - - - - (6,356) (6,356)
Interim dividend for 2023 paid in respect of the year ended 31 July 2023 - - - - (1,695) (1,695)
-------- --------- -------- ----------- --------- ----------
As at 31 July 2023 1,060 41,032 263 293,079 6,364 341,798
===== ===== ===== ====== ===== ======
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
2024 2023 2023
£'000 £'000 £'000
Fixed asset investments held at fair 354,983 330,791 357,406
value through profit or loss
----------- ----------- -----------
Current assets
Debtors 2,286 2,390 3,445
Cash at bank and in hand 2,244 7,532 2,687
----------- ----------- -----------
4,530 9,922 6,132
Creditors: amounts falling due (9,477) (9,650) (21,740)
within one year
----------- ----------- -----------
Net current (liabilities)/assets (4,947) 272 (15,608)
----------- ----------- -----------
Net assets 350,036 331,063 341,798
======= ======= =======
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 307,319 286,848 293,079
Revenue reserve 362 1,860 6,364
------------ ------------ ------------
Equity shareholders' funds 350,036 331,063 341,798
======= ======= =======
Net asset value per ordinary share 165.2p 156.3p 161.3p
- 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 July 2022.
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 2023.
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 2024 31 January 2023 31 July
£'000 £'000 2023
£'000
Revenue return 352 626 6,825
Capital return 14,240 35,783 42,014
---------- ---------- ----------
Total 14,592 36,409 48,839
====== ====== ======
Weighted average number of ordinary shares (excluding treasury shares) 211,855,410 211,855,410 211,855,410
Revenue return per ordinary share 0.17p 0.30p 3.22p
Capital return per ordinary share 6.72p 16.89p 19.83p
----------- ----------- -----------
Total return per ordinary share 6.89p 17.19p 23.05p
====== ====== ======
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 2023: 211,855,410; year ended 31 July 2023: 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 2024 Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Equity investments 352,205 2,778 - 354,983
Total financial assets carried at fair value 352,205 2,778 - 354,983
Financial Assets held at fair value through profit Level 1 Level 2 Level 3 Total
or loss at 31 January 2023 £'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 2023 £'000 £'000 £'000 £'000
Equity investments 354,852 2,554 - 357,406
Total financial assets carried at fair value 354,852 2,554 - 357,406
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 2023.
The holding in OW Bunker is included in Level 3 and is currently valued at
£nil (half year ended 31 January 2023: £nil; year ended 31 July 2023:
£nil).
6. Bank loan
At 31 January 2024, the Company had drawn down £8,561,000 (half year ended 31
January 2023 £8,842,000; year ended 31 July 2023: £8,569,000) of its EUR 30
million multi-currency loan facility.
7. Going concern and material uncertainty
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 in this Half Year
Report. The Board has also assessed the principal risks (set out in the Annual
Report for the year ended 31 July 2023), as well as the impact of the ongoing
geo-political events on the Company.
As detailed in Principal Risks and Uncertainties, the board announced a
proposed combination of the assets of the Company with the assets of HEFT,
subject to, amongst other things, shareholder approval, through a tax
efficient scheme of reconstruction under section 110 of the Insolvency Act
1986 (the "Proposals"). This would result in the voluntary liquidation of the
Company. Due to the requirement for the Proposals to receive approval from the
shareholders of both the Company and HEFT there remains a material uncertainty
as to the future of the Company. More detail on the Proposals can be found in
the Chairman's Statement and in the RNS announcement dated 14 March 2024.
However, should the Proposals not receive the necessary shareholder approvals
or the conditions to the Proposals not be satisfied, the Board believes that
the Company would remain a going concern. Accordingly, the Board has prepared
the financial statements in this Half Year Report on a going concern basis.
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 2023: 211,855,410; year ended 31 July 2023: 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 2024 Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Equity investments 352,205 2,778 - 354,983
Total financial assets carried at fair value 352,205 2,778 - 354,983
Financial Assets held at fair value through profit Level 1 Level 2 Level 3 Total
or loss at 31 January 2023 £'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 2023 £'000 £'000 £'000 £'000
Equity investments 354,852 2,554 - 357,406
Total financial assets carried at fair value 354,852 2,554 - 357,406
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 2023.
The holding in OW Bunker is included in Level 3 and is currently valued at
£nil (half year ended 31 January 2023: £nil; year ended 31 July 2023:
£nil).
6.
Bank loan
At 31 January 2024, the Company had drawn down £8,561,000 (half year ended 31
January 2023 £8,842,000; year ended 31 July 2023: £8,569,000) of its EUR 30
million multi-currency loan facility.
7.
Going concern and material uncertainty
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 in this Half Year
Report. The Board has also assessed the principal risks (set out in the Annual
Report for the year ended 31 July 2023), as well as the impact of the ongoing
geo-political events on the Company.
As detailed in Principal Risks and Uncertainties, the board announced a
proposed combination of the assets of the Company with the assets of HEFT,
subject to, amongst other things, shareholder approval, through a tax
efficient scheme of reconstruction under section 110 of the Insolvency Act
1986 (the "Proposals"). This would result in the voluntary liquidation of the
Company. Due to the requirement for the Proposals to receive approval from the
shareholders of both the Company and HEFT there remains a material uncertainty
as to the future of the Company. More detail on the Proposals can be found in
the Chairman's Statement and in the RNS announcement dated 14 March 2024.
However, should the Proposals not receive the necessary shareholder approvals
or the conditions to the Proposals not be satisfied, the Board believes that
the Company would remain a going concern. Accordingly, the Board has prepared
the financial statements in this Half Year Report on a going concern basis.
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
The Chairman advised in the Annual Report for the year ended 31 July 2023 that
the Company will pay a final dividend only, and no interim dividend. If,
however, the Proposals (see the Chairman's Statement for more detail) are
approved, a pre-liquidation dividend will be paid prior to the Proposals
becoming effective.
10. Share capital
At 31 January 2024 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 2024, no shares were issued or
repurchased (half year ended 31 January 2023 and year ended 31 July 2023: no
shares were issued or repurchased). No shares have been issued or repurchased
since 31 January 2024.
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 2024 and
31 January 2023 has not been audited or reviewed by the Company's auditor. The
figures and financial information for the year ended 31 July 2023 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 2023.
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 White (Senior Independent
Director), 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 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 and will also be available
on the Company's website.
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
PR Director, Investment Trusts
Janus Henderson Investors
Tel: 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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.
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