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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Henderson European Focus Trust Plc | LSE:HEFT | London | Ordinary Share | GB00BLSNGB01 | ORD 5P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.50 | -0.28% | 180.50 | 180.50 | 182.50 | 181.50 | 181.50 | 181.50 | 204,779 | 16:35:29 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
Unit Inv Tr, Closed-end Mgmt | 79.72M | 75.29M | 0.3539 | 5.13 | 386.17M |
TIDMHEFT
RNS Number : 4548Y
Henderson European Focus Trust PLC
05 December 2017
HERSON EUROPEAN FOCUS TRUST PLC
Annual Financial Report for the year ended 30 September 2017
This announcement constitutes regulated information.
Investment Objective
The Company seeks to maximise total return from a focused portfolio of listed stocks, mainly in Continental Europe.
Performance highlights
-- The ordinary share price(1) total return (including dividends reinvested) was 35.9% (2016: 8.6%).
-- The net asset value ("NAV") per ordinary share total return(2) (including dividends reinvested) was 21.7% compared to a total return from the benchmark(3) of 22.7%.
-- The NAV per ordinary share total return (including dividends reinvested) for the five years ended 30 September 2017 was 129.7% compared to a total return from the benchmark of 100.1%.
-- Increased proposed annual dividend: interim and final dividends of 9.00p and 20.50p per ordinary share respectively making a total of 29.50p (2016: 26.4p).
-- Proposed special dividend of 1.40p per share.
-- The ordinary shares were trading at a premium to NAV of 1.3% (2016: -9.3%) as at 30 September 2017.
Total return performance for the year to 30 September 2017 (including dividends reinvested and excluding transaction costs) 1 year 3 years 5 years 10 years % % % % ----------------------------- ---------- ----------- ---------- ----------- NAV 21.7 54.0 129.7 162.8 Benchmark 22.7 46.8 100.1 85.0 Share price 35.9 55.3 167.7 183.5 AIC Europe sector(4) 22.8 54.0 113.8 129.9 ----------------------------- ---------- ----------- ---------- ----------- Ranking in sector 4 3 1 2
Financial highlights
At 30 September At 30 September 2017 2016 ------------------------------------- ---------------- ---------------- Shareholders' funds Net assets attributable to ordinary shareholders (GBP'000) 292,398 237,551 Net asset value per ordinary share 1,370.62p 1,153.12p Mid-market price per ordinary share 1,389.00p 1,045.50p Year ended Year ended 30 September 2017 30 September 2016 ------------------------------------------------------- ---------------- Total return to equity shareholders Net revenue return (GBP'000) 7,024 5,507 Net capital return (GBP'000) 34,679 43,535 ----------- ----------- 50,559 40,186 ====== ====== Total return per ordinary share Revenue return 33.81p 26.85p Capital return 209.55p 169.05p ----------- ----------- 243.36p 195.90p ====== ====== Ongoing charge for year 0.87% 0.90%
1 Share price total return using mid-market closing prices
2 Net Asset Value per ordinary share with income reinvested for one, three and five years and capital NAV per ordinary share plus income reinvested for ten years
3 FTSE World Europe ex UK index on a total return basis in Sterling terms
4 The AIC Europe sector is comprised of eight trusts
Sources: Morningstar Direct, Janus Henderson, Datastream
CHAIRMAN'S STATEMENT
Performance
In the financial year to 30 September 2017, the Company produced a share price total return per ordinary share of 35.9% (2016: 8.6%). The Company's net asset value ("NAV") total return for the year was 21.7% (2016: 20.4%) compared to the total return of the benchmark, the FTSE World Europe ex UK in Sterling terms, of 22.7% (2016: 21.1%). The NAV total return per ordinary share for the five year period to 30 September 2017 was 129.7% compared with 100.1% for the benchmark.
The Company's shares traded at a premium for most the year, enabling the Company to issue a total of 897,500 shares during the year and up to the date of this report, raising a total of GBP12,370,000.
Dividend
The Board is recommending a final dividend of 20.50p per ordinary share which, subject to shareholder approval at the 2018 Annual General Meeting ("AGM"), will be paid on 2 February 2018. When added to the interim payment of 9.00p (2016: 7.50p) this brings the full year dividend to 29.50p, an increase of 11.7% (2016: 7.1%) over last year's distribution.
The Board is also recommending a special dividend of 1.40p per ordinary share which is the result of the successful return of withholding tax refunded by the French tax authority. If approved, the special dividend will be paid at the time of the final dividend.
Board changes
The Board was pleased to announce on 11 September 2017 that Eliza Dungworth would be succeeding Alexander Comba as Chairman of the Audit Committee with effect from the 2018 AGM. Alexander will remain as the Senior Independent Director of the Company and offers himself for re-election at the 2018 AGM.
The change forms part of the ongoing programme to refresh Board membership and to ensure that the Directors bring a diverse range of skills and experience to deliberations on the Company's business.
Investment Objective and Policy
As part of its considerations on strategy, the Board reviewed the Company's Investment Objective and Policy. In doing so, we were cognisant of the FCA's recommendations in terms of clarifying and simplifying the wording used in this type of documentation. We have taken the opportunity to enhance the Fund Manager's ability to focus the portfolio and have dropped the lower level of holdings to 45. We have also clarified the level of NAV which should be invested in Continental Europe. The updated Investment Objective and Policy is included in the resolutions which will be put to the 2018 AGM. We encourage shareholders to vote in favour of its adoption. Further details are provided in the Notice of Meeting.
Annual General Meeting ("AGM")
The AGM is due to be held on 25 January 2018 and the Directors will again be seeking to renew the authorities previously granted permitting the allotment and repurchase of the Company's ordinary shares. The Directors are also proposing a revised Remuneration Policy and amendments to the Company's Articles of Association.
Details on these resolutions are provided in the Notice of Meeting.
Manager
Henderson Group plc merged with Janus Capital Group, Inc. on 30 May 2017. I am pleased to confirm that this has not led to a change in the Fund Manager for your Company and the Board has been reassured that the strength of the European Equities team will be maintained.
Outlook
The period under review and extending back into 2016 has been dominated on the macro level by political concerns. There have been referenda and elections; most notably this year in the Netherlands, France and latterly Germany where the concerns of a comprehensive political upset have impacted the markets and, at the time of writing, remain unresolved. Notwithstanding that, it is clear that there are powerful discontents not far below the surface that will continue to have an influence on politics and policy making in Europe. In the last part of the financial year under review, there has been renewed unrest provoked by the Catalan "referendum", reminding everyone that the direction for Europe is far from settled. Although these events dominate the news and are clearly very important for the future of the Continent, accurately predicting every twist and turn and its impact on financial markets is, in our view, very unlikely. Consequently, as has always been the case, your Fund Manager combines a thematic approach to sector selection with a focus on a bottom up analysis of individual companies, their cash flows and trading prospects. Your portfolio is thus always a mix of stock and sector decisions based on the fundamental value of companies. It is our view that returns to financial assets fluctuate around a long run mean return made up of the real rate of interest and the relevant equity risk premium. Actual valuations often diverge significantly from their long run return and the process of adjustment back to the mean is often called mean reversion. In the light of our strongly held view that markets have an almost universal tendency to "revert to the mean", it is worth reflecting on the fact that there has been a very strong performance from all financial assets whether bond or equities, both in developed and emerging markets. Furthermore, this exceptional asset price performance has extended out to encompass real assets from real estate to the more exotic assets like fine art, fine wines and even vintage cars. There are a range of theories as to why this has occurred, but prime amongst those reasons must be the unprecedented central bank monetisation of debt.
European equities have been full beneficiaries of these favourable developments and in addition to this your Company has benefited from the weakness in Sterling, particularly when compared to the Euro, which came in the wake of widespread concerns expressed after the Brexit vote last year. The significant and long-lasting bull market that we have been enjoying has also contributed to the strong NAV and share price performance of the Company. It is your Fund Manager's opinion that this bull market is in a mature phase and that, as with all asset classes, eventually there will be a reversion to the mean. Exactly when that happens is not possible to forecast and it is worth remembering that periods of exuberance can be long-lasting and potentially extreme in nature. Whilst your Fund Manager will continue to seek opportunities to add value to the fund through careful stock and sector selection, vigilance for any indicators of impending reversion will be essential.
Rodney Dennis
Chairman
FUND MANAGER'S REPORT
In his statement the Chairman refers to the phenomenon of mean reversion. It has, of course, forever been something of a mug's game to attempt the art (luck) of market timing. Yet, we have always been informed by a belief that most things in the financial world have a tendency to revert to the mean. We find ourselves scratching our heads as we contemplate our faith at this juncture in economic and financial market history. Following a particularly lengthy American economic recovery, fuelled by a similarly ageless supply of easy money and associated domination of western world stock markets by "growth" stocks, our attention was grabbed by a recent research report asking the question "Is Mean Reversion Dead?"(1.)
Admittedly lumbered for life with a curmudgeonly scepticism for the "this time it's different" refrain (which usually accompanies the euphoric stage of bull markets) we had to take notice. The research drew some very reasonable conclusions, essentially arguing that mean reversion has not been allowed to function since the crisis of 2008, as central bankers have kept the foot to the pedal of the money printing machine. It is hard to argue with the contention that higher Return on Equity (ROE) businesses, far from seeing their returns eroded as competitive capital has come in to drive down returns, have enjoyed unusually persistent profitability. Similarly, it is hard to contest that low return companies have been allowed to stay in existence, courtesy of the extend and pretend approach to debt financing that accompanies near zero interest rates.
In essence, the above argues that Quantitative Easing policies have not only distorted asset prices, but have short circuited one of the principle rules of capitalism: mean reversion. Were we to engage in debate over this topic we would undoubtedly fall on the side of those who believe that mean reversion has been delayed rather than cancelled. At the risk of missing out on trees that grow to heaven (or Unicorns or Cryptocurrencies) we would rather hold onto a belief in mean reversion and express that belief via the stocks and sectors we commit capital to. Just one stock example serves to highlight our way of thinking:
Carlsberg
Carlsberg is a company operating in a mature sector: beer is not a growth industry (if measured by the top line). Historically we have avoided owning shares in Carlsberg, not because the industry was mature but because of the company's strategy: Carlsberg previously thought it could be a high growth company in a low growth industry. This often results in overreach, usually via acquisitions. Bankers often make the same mistake. In our view that very mistake, fuelled by leverage, is what led the banking system into trouble in the past. It is notable that our ownership of bank stocks is concentrated in those banks who are not in the business of overreaching, neither for yield nor growth, but are happy to stay "boring". This means they stay largely in their domestic markets, as they prioritise profits over revenue.
Having met with the management of Carlsberg earlier this year we became comfortable that here was a brewer finally ready to focus on profits rather than revenue.
Taken from the company's recent Capital Markets Day, Carlsberg's margins are a shadow of its competitors'. This is where the mean reversionist gets interested. It is not necessary to believe that Carlsberg can approach the eye watering profitability of Anheuser-Busch InBev ('ABInBev'). Indeed, the key reason that we have avoided owning ABInBev is that it sports optimised profit margins and a valuation to match.
We need only get comfort that Carlsberg has a decent chance of nearing the profitability of Heineken. Indeed we firmly believe that this is what is, belatedly, driving the company's management. Only in the hands of the right management team will our thesis have a chance of playing out. In that regard it is worth highlighting that the CEO and CFO are newcomers to the group and recent meetings with both have confirmed that the nettle has been grasped.
Unlike investors in Unicorns, Bitcoin or Tesla the investor in Carlsberg is not required to believe in new paradigms. And unlike such apparently alluring stories, beer is an industry that is unlikely to face existential or technological shocks. We need, therefore, only believe that the "iron law" of mean reversion will assert itself to the profit margins of Carlsberg. We need also to remind ourselves, however, that the commodity most precious to the mean reversionist is the commodity in short supply in modern financial markets: patience. We shall enjoy a glass of Grimbergen, a monastery beer dating from the year 1128 and now owned by Carlsberg, while we wait.
Medium Sized Companies
Once again the Company's year was influenced by a number of mid cap holdings. Particularly strong share price performance came from Interpump (73.5%), Tessenderlo (38.4%), IMA (36.0%) and IMCD (32.8%). We retain positions in each of these companies.
At the year end the portfolio's commitment to companies capitalised at less than EUR10 billion stood at 38.6%. We will always endeavour to be stock specific but we see the mid cap end of the market as a continuing source of alpha for the portfolio.
Outlook
Forever aware that market timing is best left to others, we are nevertheless somewhat cautious for near term prospects. As valuation conscious investors we struggle to contend that value is in plentiful supply across our markets. Rather, we believe that stock selection will be particularly crucial in the year ahead. It is no coincidence that portfolio gearing has been lowered and stands at 0.9% at the time of writing.
Personal Holding
As at 30 September 2017 my beneficial interest in the Company amounted to 314,850 shares.
John Bennett
Fund Manager
(1) Alliance Bernstein September 2017
Principal risks and uncertainties
The Board, with the assistance of the Manager, has carried out a robust assessment of the principal risks facing the Company including those that would threaten its business model, future performance, solvency or liquidity. The assessment included consideration of the market uncertainty arising as a result of the UK referendum to leave the European Union. The Board has drawn up a matrix of risks facing the Company and has put in place a schedule of Investment Limits and Restrictions, appropriate to the Company's Investment Objective and Policy, in order to mitigate these risks as far as practicable. The principal risks and mitigating steps are as follows:
-- Market risk
The Company's performance is dependent on the performance of the companies and markets in which it invests.
Investment risk is spread by holding a diversified portfolio of companies with strong balance sheets and above average growth prospects.
The Board considers this risk to have remained unchanged throughout the year under review.
-- Gearing
The Fund Manager has authority to use gearing in line with the Company's Investment Policy. In the event of a significant or prolonged fall in equity markets gearing would exacerbate the effect of the falling market on the Company's NAV and, consequently, its share price.
The Board has set a limit on gearing of 20% of net assets and monitors the level of gearing at each meeting.
The Board considers this risk to have remained unchanged throughout the year under review.
-- Other financial risks
The financial risks faced by the Company include market price risk, interest rate risk, liquidity risk, currency risk and credit and counterparty risk.
The Company minimises the risk of a counterparty failing to deliver securities or cash by dealing through organisations that have undergone due diligence by the Manager. The Company holds its liquid funds, which are mostly denominated in Euros, almost entirely in interest bearing bank accounts in the UK or on short-term deposit. This, together with a portfolio which comprises mainly investments in large and medium-sized companies, mitigates the Company's exposure to liquidity risk.
The majority of the Company's assets and liabilities are denominated in currencies other than Sterling. No hedging of the currency exposure is undertaken. Consequently, exchange rate fluctuations reduce or enhance returns for Sterling based investors.
The Board considers this risk to have remained unchanged throughout the year under review.
-- Operational risks
Disruption to, or the failure of, the Manager's accounting, dealing or payment systems or the custodian's records could prevent the accurate reporting or monitoring of the Company's financial position. Janus Henderson contracts some of the operational functions (principally those relating to trade processing, investment administration and accounting) to BNP.
The Board receives regular reports on the internal controls in place at Janus Henderson, BNP and the Depositary, HSBC Bank Plc (which appoints the custodian) to mitigate the risk of failure of the systems. These include reports on business continuity planning and the procedures in place in relation to cyber risk.
The Board monitors the services provided by its third-party service providers and receives reports on the key elements in place to provide effective control.
-- Key man risk
The Company depends on the diligence, skill and judgement of the Manager's investment team. The continued service of these individuals could impact the future success of the Company.
The Board has been assured by the Manager that the Fund Manager and the European Equities team are appropriately remunerated and incentivised in their roles in a manner consistent with industry best practice and the applicable FCA regulation. The Company's performance fee provides an additional incentive. Janus Henderson has a strong European Equities team which supports the Fund Manager in the management of the Company's portfolio and looks to develop managers with the capability to succeed him in the fullness of time.
The Board considers this risk to have remained unchanged throughout the year under review.
VIABILITY STATEMENT
The Board considers it is appropriate to assess the viability of the Company over a three-year period. The Directors believe this is a reasonable period reflecting the longer term investment horizon of the Company, as well as that of its investors, and the inherent shorter term uncertainties in equity markets.
The Board considers the Company's viability as part of their continuing programme of monitoring risk. In carrying out their assessment the Board takes account of the likely impact of the principal risks and uncertainties facing the Company materialising in severe, but plausible scenarios. The effectiveness of any mitigating controls currently in place is considered as part of the process.
The Board takes into account the liquidity of the portfolio, the gearing and 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 on the Company's ability to pay dividends to shareholders over that period. Detailed forecasts are made over a shorter time frame, however, the nature of the Company's business means that such forecasts are equally valid to be considered over the longer three-year period as a means of assessing whether the Company can continue in operation.
The Board concluded that the Company's assets are liquid, its commitments are limited and that the Company intends to continue operating as an investment trust. No significant changes to the Company's principal risks, or the mitigating controls in place, are anticipated over the period, and the Board is not aware of any events that would prevent the Company from continuing to operate in its current capacity.
Based on this assessment, the Board has a reasonable expectation that the Company will be able to continue in operation and meets it liabilities as they fall due over the next three-year period.
RELATED PARTY TRANSACTIONS
The Company's transactions with related parties in the year were with the Directors and the Manager. There have been no material transactions between the Company and its Directors during the year other than amounts paid to them in respect of expenses and remuneration for which there were no outstanding amounts payable at the year end. In relation to the provision of services by Janus Henderson, other than fees payable by the Company in the ordinary course of business and the provision of sales and marketing services, there have been no transactions with the Manager affecting the financial position of the Company during the year under review.
STATEMENT OF DIRECTORS' RESPONSIBILITIES UNDER DTR 4.1.12
Each of the Directors confirms that, to the best of his or her 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 profit 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.
For and on behalf of the Board
Alexander Comba
Director
Top 10 investments as at 30 September 2017
Country Valuation Percentage Company Sector of listing GBP'000 of portfolio Autoliv Automobiles & Parts Sweden 10,846 3.43 Nestlé Food Producers Switzerland 10,649 3.37 Novartis Pharmaceuticals & Biotechnology Switzerland 10,114 3.20 Carlsberg Beverages Denmark 9,847 3.12 Bayer Chemicals Germany 9,618 3.05 United Internet Software & Computer Services Germany 9,436 2.99 Tessenderlo Chemicals Belgium 9,203 2.91 Galp Energia Oil & Gas Producers Portugal 9,121 2.89 ABN Amro Banks Netherlands 8,950 2.83 ING Banks Netherlands 8,141 2.58 ---------- ---------- Total (10 largest) 95,925 30.37 ====== ======
Sector exposure as at 30 September 2017
(as a percentage of the investment portfolio excluding cash)
%
Financials 28.1 Industrials 16.5 Consumer goods 15.1 Health care 12.9 Basic materials 10.1 Technology 7.5 Oil & gas 5.1 Consumer services 3.1 Utilities 1.6 Telecommunications -
Geographic exposure as at 30 September 2017
(as a percentage of the investment portfolio excluding cash)
%
Germany 17.1 Netherlands 11.7 Italy 10.6 France 10.5 Sweden 9.8 Switzerland 8.9 Denmark 6.3 Belgium 6.2 Finland 6.0 Spain 3.3 Portugal 2.9 Norway 2.4 United Kingdom 2.1 Ireland 1.2 Austria 1.0
Income Statement
Year ended Year ended 30 September 2017 30 September 2016 Revenue Capital Total Revenue Capital Total return return return return return return GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 ----------------------------- ----------- ------------- ----------- ----------- ------------- ----------- Gains on investments held at fair value through profit or loss - 46,560 46,560 - 37,048 37,048 Exchange losses on currency transactions - (1,214) (1,214) - (906) (906) Income from investments (note 3) 8,770 - 8,770 7,139 - 7,139 Other income 229 - 229 1 - 1 ---------- ---------- ---------- ---------- ---------- ---------- Gross revenue and capital gains 8,999 45,346 54,345 7,140 36,142 43,282 Management fee (note 4) (441) (1,324) (1,765) (359) (1,077) (1,436) Performance fee (note 4) - - - - - - Other fees and expenses (557) - (557) (472) - (472) ---------- ---------- ---------- ---------- ---------- ---------- Net return on ordinary activities before finance costs and taxation 8,001 44,022 52,023 6,309 35,065 41,374 Finance costs (247) (487) (734) (129) (386) (515) ---------- ---------- ---------- ---------- ---------- ---------- Net return on ordinary activities before taxation 7,754 43,535 51,289 6,180 34,679 40,859 Taxation on net return on ordinary activities (note 5) (730) - (730) (673) - (673) ---------- ---------- ---------- ---------- ---------- ----------
Net return on ordinary activities after taxation 7,024 43,535 50,559 5,507 34,679 40,186 ====== ====== ====== ====== ====== ====== Return per ordinary share (note 6) 33.81p 209.55p 243.36p 26.85p 169.05p 195.90p ====== ====== ====== ====== ====== ======
The total columns of this statement represents 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 other comprehensive income other than that disclosed in the Income Statement. The net return is both the profit for the year and the total comprehensive income.
Statement of Changes in Equity
Year ended Called Special Share Capital 30 up share distributable premium Merger redemption Capital Revenue September capital reserve account reserve reserve reserve reserve Total 2017 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 ------------ ----------- --------------- ---------- ---------- ------------ ----------- ----------- ----------- At 30 September 2016 10,371 25,846 30,074 61,344 9,421 89,306 11,189 237,551 Net return on ordinary activities after taxation - - - - - 43,535 7,024 50,559 Shares issued 366 - 9,683 - - - - 10,049 Ordinary dividends paid - - - - - - (5,761) (5,761) ---------- ---------- --------- --------- ---------- ---------- ---------- ---------- At 30 September 2017 10,737 25,846 39,757 61,344 9,421 132,841 12,452 292,398 ====== ====== ===== ===== ====== ====== ====== ====== Called up share Special Share Capital capital distributable premium Merger redemption Capital Revenue Year ended GBP'000 reserve account reserve reserve reserve reserve Total 30 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 September 2016 ------------ ----------- --------------- ---------- ---------- ------------ ----------- ----------- ----------- At 30 September 2015 9,996 25,846 22,820 61,344 9,421 54,627 10,860 194,914 Net return on ordinary activities after taxation - - - - - 34,679 5,507 40,186 Shares issued 375 - 7,260 - - - - 7,635 Share issue cost - - (6) - - - - (6) Ordinary dividends paid - - - - - - (5,178) (5,178) ---------- ---------- --------- --------- ---------- ---------- ---------- ---------- At 30 September 2016 10,371 25,846 30,074 61,344 9,421 89,306 11,189 237,551 ====== ====== ===== ===== ====== ====== ====== ======
Statement of Financial Position
At 30 September At 30 September 2017 2016 GBP'000 GBP'000 ------------------------------------------ ------------------ ------------------ Fixed assets Investments at fair value through profit or loss 315,841 252,102 ---------- ---------- Current assets Debtors 3,536 7,969 Cash at bank 21,362 16,575 ---------- ---------- 24,898 24,544 Creditors: amounts falling due within one year (48,341) (39,095) ---------- ---------- Net current liabilities (23,443) (14,551) ---------- ---------- Net assets 292,398 237,551 ====== ====== Capital and reserves Called up share capital 10,737 10,371 Special distributable reserve 25,846 25,846 Share premium account 39,757 30,074 Merger reserve 61,344 61,344 Capital redemption reserve 9,421 9,421 Capital reserve 132,841 89,306 Revenue reserve 12,452 11,189 ---------- ---------- Shareholders' funds 292,398 237,551 ====== ====== Net asset value per ordinary share (note 7) 1,370.62p 1,153.12p ======= =======
Cash flow statement
Year ended 30 Year ended 30 September 2017 September 2016 GBP'000 GBP'000 ------------------------------------------------ --------------- --------------- Cash flows from operating activities Net return on ordinary activities before taxation 51,289 40,859 Add back: finance costs 734 515 Less gains on investments held at fair value through profit or loss (46,560) (37,048) Stock dividend - (274) Taxation paid (383) (673) Increase in debtors (308) (274) Increase/(decrease) in creditors 169 (1,173) ---------- ---------- Net cash inflow from operating activities* 4,941 1,932 ---------- ---------- Cash flows from investing activities Sales of investments held at fair value through profit or loss 336,042 239,936 Purchases of investments held at fair value through profit or loss (347,278) (252,055) ------------ ------------ Net cash outflow from investing activities (11,236) (12,119) ------------ ------------ Cash flows from financing activities Issue of new ordinary shares 10,049 7,635 Share issue expenses - (126) Equity dividends paid (5,761) (5,178) Drawdown/(repayment) of bank overdraft 7,190 (42) Interest paid (396) (566) -------- -------- Net cash inflow from financing activities 11,082 1,723 -------- -------- Net increase/(decrease) in cash and equivalents 4,787 (8,464) Cash and cash equivalents at beginning of period 16,575 25,039 --------- --------- Cash and cash equivalents at end of period 21,362 16,575 --------- --------- Comprising: Cash at bank 21,362 16,575 ===== =====
*Cash inflow from dividends net of taxation was GBP8,387,000 (2016: GBP6,166,000) and cash inflow from interest was GBP229,000 (2016: GBP1,000).
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies Basis of preparation The Company is a registered investment company as defined in Section 833 of the Companies Act 2006 and is incorporated in the United Kingdom. It operates in the United Kingdom and is registered at 201 Bishopsgate, London EC2M 3AE. 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, which is effective for periods commencing on or after 1 January 2015, and with the Statement of Recommended Practice: Financial Statements of Investment Trust Companies and Venture Capital Trusts (the 'SORP') issued in November 2014 and updated in January 2017 with consequential amendments. The Company has early adopted the amendments to FRS 102 in respect of fair value hierarchy disclosures as published in March 2016. The principal accounting policies applied in the presentation of these financial statements are set out below. These policies have been consistently applied to all the years presented. The accounts have been prepared under the historical cost basis except for the measurement at fair value of investments. In applying FRS 102, financial instruments have been accounted for in accordance with Sections 11 and 12 of the standard. All of the Company's operations are of a continuing nature. The preparation of the Company's financial statements on occasion requires the Directors to make judgements, estimates and assumptions that affect the reported amounts in the primary financial statements and the accompanying disclosures. These assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in the current and future periods, depending on circumstance. The Directors do not believe that any accounting judgements or estimates have been applied to this set of financial statements that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year. 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 12 months from the date of approval of the financial statements. Having assessed these factors, the principal risks and other matters discussed in connection with the viability statement, the Board has determined that it is appropriate for the financial statements to be prepared on a going concern basis. 2. Dividend The Board is recommending a final dividend of 20.50p per ordinary share which, subject to shareholder approval at the 2017 Annual General Meeting ("AGM"), will be paid on 2 February 2018. The shares will be marked ex-dividend on 4 January 2018. When added to the interim payment of 9.00p (2016: 7.50p) this brings the full year dividend to 29.50p, an increase of 11.7% (2016: 7.1%) over last year's distribution. The Board is also recommending a special dividend of 1.40p per ordinary share which is the result of the successful return of withholding tax refunded by the French tax authority. If approved, the special dividend will be paid at the time of the final dividend. 3. Income from investments 2017 2016 GBP'000 GBP'000 ------------------------------------- ------------------ ----------------- Listed investments: Overseas dividends 8,703 6,618 UK dividends 67 247 Stock dividends - 274 --------- --------- 8,770 7,139 ===== ===== 2017 2016 Management and Revenue Capital Total Revenue Capital Total 4. performance fees GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 ------------------ ---------- ---------- ----------- ---------- ---------- ----------- Management fee 441 1,324 1,765 359 1,077 1,436 Performance fee - - - - - - ---------- ---------- ---------- ---------- ---------- ---------- 441 1,324 1,765 359 1,077 1,436 ====== ====== ===== ====== ====== ===== Management fees are allocated 25% to revenue and 75% to capital in the Income Statement. The performance fee (when payable) is allocated 100% to capital. Year ended 30 September Year ended 30 September 2017 2016 Revenue Capital Total Revenue Capital Total Taxation on net return return return return return return return 5. on ordinary activities GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 ----------------------------- ---------- ---------- ---------- ---------- ---------- ---------- a) Analysis of charge for the year Corporation tax payable due to refund of French withholding tax 347 - 347 - - - Overseas tax suffered 885 - 885 673 - 673 Refund of French withholding tax (502) - (502) - - - ---------- ---------- ---------- ---------- ---------- ---------- Total tax charge for the year 730 - 730 673 - 673 ====== ====== ====== ====== ====== ====== Year ended 30 September Year ended 30 September 2017 2016 b) Factors affecting Revenue Capital Total Revenue Capital Total the tax charge for return return return return return return the year GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 ----------------------------- ---------- ---------- ---------- ---------- ---------- ---------- Return on ordinary activities before taxation 7,754 43,535 51,289 6,180 34,679 40,859 ---------- ---------- ---------- ---------- ---------- ---------- Corporation tax at 19.5% (2016: 20.0%) 1,512 8,489 10,001 1,236 6,936 8,172 Effects of: Non-taxable capital profits - (8,842) (8,842) - (7,229) (7,229) Non-taxable income (1,658) - (1,658) (1,364) - (1,364) Current year expenses not utilised 146 353 499 128 293 421 Overseas tax 885 - 885 673 - 673 Refund of French withholding tax (502) - (502) - - - Corporation tax payable due to refund of French withholding tax 347 - 347 - - - ---------- ---------- ---------- ---------- ---------- ---------- Total tax charge 730 - 730 673 - 673 ====== ====== ====== ====== ====== ====== The Company's profit for the accounting year is taxed at an effective rate of 19.5% (2016: 20.0%). The standard rate of corporation tax has been 19.0% since 1 April 2017. No provision for deferred taxation has been made in the current or prior accounting year. The Company has not provided for deferred tax on capital gains or losses arising on the revaluation and disposal of investments as it is exempt from tax on these items because of its investment trust status. The Company has not recognised a deferred tax asset totalling GBP2,811,000 (2016: GBP2,370,000) based on a prospective corporation tax rate of 17% (2016: 17%). The deferred tax asset arises as a result of having unutilised management expenses and unutilised non-trade loan relationship deficits. These expenses will only be utilised, to any material
extent, if the Company has profits chargeable to corporation tax in the future because changes are made either to the tax treatment of the capital gains made by investment trusts or to the Company's investment profile which require or enable them to be used. During the year the Company received a refund of French withholding tax of GBP502,000 with an additional interest amount of GBP229,000 relating to tax suffered in 2007 and 2008. This may result in an element of these amounts being payable to HMRC as both corporation tax payable and an interest payment there on. The Company has therefore recognised the net of these amounts totalling GBP299,000 as income available for distribution to shareholders as a dividend in the current year. 6. Return per ordinary share The return per ordinary share is based on the net return attributable to the ordinary shares of GBP50,559,000 (2016: net return of GBP40,186,000) and on 20,775,686 ordinary shares (2016: 20,513,466) being the weighted average number of ordinary shares in issue during the year. The return per ordinary share can be further analysed between revenue and capital as below. 2017 2016 GBP'000 GBP'000 -------------------------------------------- --------------- --------------- Net revenue return 7,024 5,507 Net capital return 43,535 34,679 --------- --------- Net total return 50,559 40,186 ===== ===== Weighted average number of ordinary shares in issue during the year 20,775,686 20,513,466 Revenue return per ordinary share 33.81p 26.85p Capital return per ordinary share 209.55p 169.05p ---------- ---------- Total return per ordinary share 243.36p 195.90p ====== ====== The Company does not have any dilutive securities, therefore the basic and diluted returns per share are the same. 7. Net Asset Value ("NAV") per ordinary share The NAV per ordinary share is based on the net assets attributable to the ordinary shares of GBP292,398,000 (2016: GBP237,551,000) and on 21,333,261 (2016: 20,600,761) shares in issue on 30 September 2017, excluding Treasury shares. The movements during the year of the assets attributable to the ordinary shares were as follows: 2017 2016 GBP'000 GBP'000 ------------------------------------------------ ------------ ------------ Total net assets at 1 October 237,551 194,914 Total net return on ordinary activities after tax 50,559 40,186 Issue of new ordinary shares 10,049 7,629 Net dividends paid in the year: Ordinary shares (5,761) (5,178) ----------- ----------- Net assets attributable to the ordinary shares at 30 September 292,398 237,551 ====== ====== 8. 2017 financial information The figures and financial information for 2017 are extracted from the annual report for that period and do not constitute the statutory accounts. The Company's annual report for the year ended 30 September 2017 has been audited but has not yet been delivered to the Registrar of Companies. The Independent Auditor's Report on the 2017 annual report was unqualified, did not include a reference to any matter to which the auditor drew attention without qualifying the report, and did not contain any statements under Section 498 of the Companies Act 2006 (the "Act"). 9. 2016 financial information The figures and financial information for 2016 are extracted from the published annual report and financial statements for the year ended 30 September 2016 and do not constitute the statutory accounts for that year. The 2016 annual report and financial statements have been delivered to the Registrar of Companies and included the Independent Auditor's Report which was unqualified and did not contain a statement under Section 498 of the Act. 10. Annual Report Copies of the Annual Report will be posted to shareholders in December 2017 and will be available on the Company's website www.hendersoneuropeanfocus.com or in hard copy format from the Registered Office, 201 Bishopsgate, London EC2M 3AE. 11. Annual General Meeting The Company's Annual General Meeting will be held on Thursday 25 January 2018 at 2.30pm at 201 Bishopsgate, London EC2M 3AE.
For further information contact:
James de Sausmarez Sarah Gibbons-Cook Director and Head of Investment Investor Relations and PR Manager Trusts Janus Henderson Investors Janus Henderson Investors Tel: 020 7818 3198 Tel: 020 7818 3349
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) is incorporated into, or forms part of, this announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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(END) Dow Jones Newswires
December 05, 2017 09:30 ET (14:30 GMT)
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