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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Tr European Growth Trust Plc | LSE:TRG | London | Ordinary Share | GB00BMCF8689 | ORD 1.5625P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 175.00 | 175.00 | 175.40 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
TIDMTRG
RNS Number : 9552P
TR European Growth Trust PLC
23 February 2021
Hot Features
Premium
Legal Entity Identifier: 213800N1B1HCQG2W4V90
TR EUROPEAN GROWTH TRUST PLC
Unaudited results for the half-year ended 31 December 2020
This announcement contains regulated information
Investment Objective
The Company seeks capital growth by investing in smaller and medium sized
companies which are quoted, domiciled, listed or have operations in Europe
(ex UK).
Performance highlights for the six months to 31 December 2020
* Net asset value per share total return(1) was 37.1%
compared to a total return from the benchmark
index(2) of 23.2%
* Share price total return(3) was 54.4% compared to the
sector average(4) of 41.2%
* The shares were trading at a discount(5) of 9.1% at
the period end, narrowing from 19.2% at 30 June 2020
* Interim dividend of 8.20 pence per ordinary share
declared (2019: 7.80p), an increase of 5.1%
Total return performance (including dividends reinvested and excluding
transaction costs)
6 months 1 year 3 years 5 years 10 years
% % % % %
---------------------------- ---------- -------- --------- -------- ---------
NAV(1) 37.1 33.2 26.0 116.3 230.9
Benchmark index(2) 23.2 18.9 25.2 90.4 168.2
Average sector(4) NAV 30.3 30.0 38.9 107.0 228.4
Share price(3) 54.4 36.4 14.5 115.9 277.5
Average sector(4) share
price 41.2 32.6 38.9 109.1 267.9
Financial highlights
at 31 December 2020 at 30 June 2020
-------------------------------------------- ----------------------- --------------------
Shareholders' funds
Net assets (GBP'000) 708,689 523,374
Net asset value per ordinary share 1,414.31p 1,044.48p
Mid-market price per ordinary share 1,285.00p 844.00p
Half-year ended Year ended
31 December 2020 30 June 2020(6)
GBP'000 GBP'000
Total return to equity shareholders
Revenue return after taxation 680 6,954
Capital return after taxation 191,750 6,571
------------- -----------
Total return 192,430 13,525
======= ======
Total return per ordinary share
Revenue 1.36p 13.88p
Capital 382.67p 13.11p
------------- -----------
Total return per ordinary share 384.03p 26.99p
======= ======
1. Net asset value per share total return (including dividends reinvested
and excluding the cost of reinvestment)
2. The benchmark index is the Euromoney Smaller European Companies Index
(ex UK) expressed in Sterling
3. Share price total return (with dividends reinvested) using mid-market
closing price
4. The sector is the AIC European Smaller Companies sector
5. The discount is calculated using published daily net asset values including
current year revenue
6. The figures have been prepared on a Company only basis following the
liquidation of the Company's subsidiary during the year ended 30 June
2020. These figures have previously been reported on a consolidated basis.
Sources: Janus Henderson, Morningstar Direct, Refinitiv Datastream
INTERIM MANAGEMENT REPORT
Chairman's statement
Performance
The six month period to 31 December 2020 has been a strong one for your
Company. The NAV total return performance for the period was 37.1% against
the benchmark of 23.2% for the same period. The share price increased
by 54.4% on a total return basis over the period, ending the calendar
year at GBP12.85 having started the six months at GBP8.44 per share.
The backdrop of the Covid-19 pandemic has dominated the period and sadly
a large second wave of infection swamped the Continent in the latter months
of the half-year. The stock market continued its bifurcation into very
expensive 'quality growth' names and cheap 'value' names, but with significant
bouts of style rotation occasionally happening. Our Fund Manager's balanced
approach to investing, with a combination of sensibly priced growth and
self-help cheap stocks has navigated these tricky waters very well.
Dividend
Having considered performance over the period, the Company's overall financial
position and the outlook for the remainder of the financial year, the
Board has declared an interim dividend of 8.20 pence per ordinary share.
This will be paid on 23 April 2021 to shareholders on the register on
26 March 2021, with shares trading ex-dividend on 25 March 2021.
Outlook
The opening weeks of 2021 showed some alarming developments in the progress
of Covid-19. Winter plus new and more infectious variants of the virus
have driven the substantial second wave of infection and a distressing
increase in deaths. However, with the advent of multiple vaccines potentially
offering a light out of the darkness of the pandemic, it is a reasonable
supposition that the market will increasingly begin to worry about the
inflationary effects of stimulus and that valuation may well matter once
again. A constructive US administration will make for a more stable backdrop.
Positively, the uncertainties of Brexit are largely behind us. There is
definite cause for cautious optimism. Although our Fund Manager is wary
of valuation in certain pockets of the market, his team continue to find
undervalued investment opportunities in which to invest your capital.
Christopher Casey
Chairman
22 February 2021
Fund Manager's report
The first half of the financial year saw the Company outperform the benchmark
in a market that was recovering from the shock of the Covid-19 pandemic,
aided by an enormous monetary and fiscal response. Performance was driven
by a combination of structural growth stories that have benefited from
the accelerant of the coronavirus, early cycle value names anticipating
a recovery, the rerating of hidden ESG stories in the portfolio and the
resolution of the Brexit dilemma.
The impact of the pandemic will be with us for some time to come. There
are, however, notes of optimism, despite the mixed handling of the health
crisis across Europe; the Next Generation EU recovery fund breaks the
taboo of fiscal transfers within the European Union, the mantra of austerity
economics has been dealt a serious blow which should provide relief to
southern EU members and the Trump Twitter account will no longer cause
the market volatility and trans-Atlantic trade tensions that characterised
much of the last few years. The strong technology offering in the European
small cap market has been highlighted by the discovery of the vaccine
by German (formerly) small cap BioNtech which, to our shame, we did not
own!
The volatility of 2020 has highlighted the benefits of investing across
the corporate lifecycle, with a mix of early stage growth businesses,
quality growth, mature cash cows and turnaround stories. Westwing, an
extremely cheap early stage growth investment in the portfolio saw a share
price increase of 352.9% in the period when its online interior living
offer saw enormous growth as consumers stayed at home and purchased online.
Similarly, more mature Swedish-listed online DIY and furniture store BHG
Group was a big contributor to performance as Covid-19 accelerated the
shift to online. The contribution of these growth names was supplemented
with good performance from the more value-oriented names in the portfolio.
Van Lanschot Kempen, a very attractively priced Dutch bank/wealth manager,
was a contributor to performance as the market rotated into more value
names and the potential prospect of inflation highlighted the attraction
of well capitalised financials. The end of the Brexit drama helped with
the rerating of Danish listed channel ferry operator, DFDS. Some of the
neglected 'hidden ESG' names in the portfolio saw substantial rerating
as the broader market woke up to the contribution made by stocks such
as circular economy waste recycling company Befesa.
Detractors from performance were a combination of stock specific errors
and not owning some of the winners in the period. While it is unusual
for non-holdings to impact performance to such a large extent, seven out
of ten of the biggest detractors in the portfolio versus the index were
names that we did not own. Of the seven, one (Swedish listed cloud communication
platform Sinch AB ) was a name that we held, but sold too soon. Two were active decisions which detracted from performance. German-listed specialist pharmaceutical distributor, Medios , which having historically been a source of terrific return for the Company, had a profit warning after struggling to access the drug ingredients it needed during the pandemic. The market has now looked past the one-off impact and the shares are back to where they were before the profit warning. VIA Optronics was a poorly executed initial public offering that fell dramatically but has subsequently recovered. We opened new positions in German-listed wind farm developer EnergieKontor , that has a materially undervalued pipeline of onshore projects to execute upon. We purchased Danish housebuilder HusCompagniet that is exploiting its scale economies to take market share in its domestic market. We reopened a position in Dutch-listed seismic data specialist, Fugro , that is increasingly being driven by the transition to renewable energy. We exited positions in French semiconductor materials supplier S.O.I.T.E.C and Swiss-listed online pharmacy Zur Rose due to valuation concerns. We sold into the takeover approaches for specialist paper manufacturer Ahlstrom-Munksjo , French-listed media company Mediawan and Italian capital equipment provider IMA . All three takeover bids were validation of our focus on valuation. As we head into 2021, we see opportunity in a vaccine-driven, stimulus loaded, global economic recovery, though have reservations about pockets of valuation in the market and the risk of unanticipated events relating to the Covid-19 virus. We continue to find exciting opportunities across the investment universe in which we operate, but remain disciplined on the price we pay for companies. Ollie Beckett and Rory Stokes 22 February 2021
Sector Exposure (% of portfolio excluding cash)
at 31 December at 30 June 2020
2020
% %
-------------------- --------------- ----------------
Industrial Goods 25.2 25.2
Consumer Goods 23.0 19.5
Technology 15.8 17.2
Financial 14.8 15.1
Business Providers 7.6 7.4
Basic Materials 6.8 8.6
Retail Providers 3.3 5.1
Natural Resources 2.6 1.1
Telecommunications 0.9 0.8
-------------------- --------------- ----------------
100.0 100.0
Geographical Exposure (% of portfolio excluding cash)
at 31 December at 30 June 2020
2020
% %
------------- --------------- -----------------
Austria 0.8 0.7
Belgium 4.0 4.3
Denmark 3.2 2.3
Finland 3.8 5.0
France 11.5 13.6
Germany 22.4 22.4
Greece 0.8 0.6
Ireland 3.7 1.5
Italy 8.8 10.6
Netherlands 9.0 9.1
Norway 4.8 3.5
Portugal 1.2 1.6
Spain 4.5 2.6
Sweden 12.9 12.0
Switzerland 8.6 10.2
100.0 100.0
Top 40 investments at 31 December 2020
Geographical Valuation Percentage
Rank Company Sector area GBP'000 of portfolio
----- --------------------- ------------------- ------------- ---------- --------------
1 Van Lanschot Kempen Financial Netherlands 18,746 2.5
2 DFDS Business Providers Denmark 17,714 2.3
3 TKH Industrial Goods Netherlands 16,458 2.1
4 Aareal Bank Financial Germany 15,451 2.0
5 Westwing Consumer Goods Germany 14,874 2.0
6 Recticel Basic Materials Belgium 12,802 1.7
7 Nexans Industrial Goods France 11,421 1.5
8 eDreams ODIGEO Consumer Goods Spain 11,290 1.5
9 HelloFresh Retail Providers Germany 10,682 1.4
10 Befesa Industrial Goods Germany 10,321 1.3
----- --------------------- ------------------- ------------- ---------- --------------
10 largest 139,759 18.3
11 Criteo Technology France 10,146 1.3
12 Kindred Retail Providers Sweden 9,737 1.3
Cerved Information
13 Solutions Industrial Goods Italy 9,660 1.3
14 Kaufman & Broad Consumer Goods France 9,648 1.3
15 Banca Farmafactoring Financial Italy 9,426 1.2
16 Deutz Industrial Goods Germany 9,401 1.2
17 PVA Technology Germany 8,788 1.2
18 Basware Technology Finland 8,766 1.1
19 Karnov Consumer Goods Sweden 8,660 1.1
20 Nobia Consumer Goods Sweden 8,067 1.1
----- --------------------- ------------------- ------------- ---------- --------------
20 largest 232,058 30.4
21 Conzzetta Industrial Goods Switzerland 7,879 1.0
22 Bonava Consumer Goods Sweden 7,678 1.0
23 OC Oerlikon Industrial Goods Switzerland 7,673 1.0
24 Boskalis Westminster Basic Materials Netherlands 7,661 1.0
25 EnergieKontor Natural Resources Germany 7,645 1.0
26 ALSO Business Providers Switzerland 7,475 1.0
27 Mersen Industrial Goods France 7,404 1.0
28 Credito Emiliano Financial Italy 7,176 1.0
Gaztransport et
29 Technigaz Industrial Goods France 7,127 0.9
30 Vertropack Industrial Goods Switzerland 7,000 0.9
----- --------------------- ------------------- ------------- ---------- --------------
30 largest 306,776 40.2
31 HusCompagniet Consumer Goods Denmark 6,929 0.9
32 Finecobank Financial Italy 6,767 0.9
33 Fugro Business Providers Netherlands 6,656 0.9
34 Manz Technology Germany 6,580 0.9
35 Grafton Technology Ireland 6,553 0.9
36 Daetwyler Industrial Goods Switzerland 6,403 0.8
37 Plastic Omnium Consumer Goods France 6,295 0.8
38 FLEX LNG Natural Resources Norway 6,154 0.8
39 Nobina Industrial Goods Sweden 6,128 0.8
40 Fjordkraft Industrial Goods Norway 6,076 0.8
----- --------------------- ------------------- ------------- ---------- --------------
40 largest 371,317 48.7
Principal Risks and Uncertainties
The principal risks facing the Company, and the action taken to mitigate
these, are set out below:
Investment strategy and objective
Risk: The investment objective or policy is not appropriate in the prevailing
market or sought by investors, leading to a wide discount and hostile
shareholders. Investment performance over an extended period of time is
poor.
Mitigation: The Board with the assistance of the Manager periodically
reviews the investment objective and policy in line with best practice
and taking account of investor appetites. The Board maintains oversight
of performance and investor sentiment by reviewing the Key Performance
Indicators, movements on the share register and the brokers report at
each Board meeting. The Board also receives updates on professional and
retail investor activity and interest. The Fund Manager maintains a diversified
portfolio with a view to spreading risk and balancing performance.
Operational
Risk: Failure of, disruption to or inadequate service levels provided
by principal third-party service providers leading to loss of shareholder
value or reputational damage.
Mitigation: The Board engages reputable third-party service providers
and formally evaluates their performance, and terms of appointment, at
least annually. The Manager provides dedicated professionals to coordinate
the provision of services provided by the Company's third-party service
providers, monitoring delivery to agreed service levels and flagging issues
to the Board for decision.
Legal & regulatory
Risk: Loss of approved investment trust status or changes to existing
tax regimes leading to loss of shareholder value. Breach of the Companies
Act 2006, Listing Rules, Prospectus Rules and/or Disclosure Guidance and
Transparency Rules leading to criminal proceedings, suspension of the
Company's shares and/or financial and reputational damage.
Mitigation: The Manager provides investment, company secretarial, marketing,
sales and day-to-day administration services, as well as fund accounting
and administration services through qualified professionals and to agreed
service levels. The Board maintains oversight of the control environment
in place at third-party service providers by reviewing the independently
audited reports on the effectiveness of these controls and receives quarterly
reports on the operation of the Manager's internal control environment.
Financial
Risk: Market risk (market price risk, currency risk, interest rate risk),
credit risk and valuation risk leading to loss of shareholder value.
Mitigation: The Board determines the investment parameters within the
Company's overall risk appetite and monitors compliance with these at
each meeting. The Board reviews the portfolio liquidity, the Company's
financial position and the valuation of the portfolio at each meeting.
The Board, supported by the Audit Committee, receives regular reporting
from the Company's principal third-party service providers on the effectiveness
of the internal controls in place which seek to ensure that transactions
are undertaken with reputable counterparties and the Company's assets
are appropriately valued.
Statement of Directors' Responsibilities
Each director (as set out in note 16) confirms, to the best of their knowledge,
that:
* the condensed set of financial statements has been
prepared in accordance with International Accounting
Standard 34 'Interim Financial Reporting' and gives a
true and fair view of the assets, liabilities,
financial position and profit or loss of the Company
as required by Disclosure and Transparency Rule
('DTR') 4.2.4 R;
* the interim management report includes a fair review
of the information required:
* by DTR 4.2.7 R (indication of important events during
the first six months and a description of principal
risks and uncertainties for the remaining six months
of the year); and
* by DTR 4.2.8 R (disclosure of related party
transactions and changes therein).
For and on behalf of the Board
Christopher Casey
Chairman
Statement of Comprehensive Income
Half-year ended Half-year ended Year ended
31 December 2020 31 December 2019 30 June 2020
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
return return return return return return return return return
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- ----------- ------------- ------------- ----------- ------------- ------------- ---------- ----------- -----------
Investment
income 1,640 - 1,640 3,078 - 3,078 9,123 - 9,123
Other income - - - - - - 1 - 1
Gains on
investments
held at fair
value through
profit or
loss - 194,547 194,547 - 29,701 29,701 - 9,464 9,464
---------- ------------ ------------ ---------- ----------- ----------- --------- ---------- ----------
Total income 1,640 194,547 196,187 3,078 29,701 32,779 9,124 9,464 18,588
---------- ----------- ----------- ---------- ----------- ----------- --------- --------- ---------
Expenses
Management and
performance
fees
(note 7) (371) (2,539) (2,910) (312) (1,248) (1,560) (582) (2,329) (2,911)
Other
operating
expenses (367) - (367) (373) - (373) (716) - (716)
---------- ----------- ----------- ---------- ----------- ----------- --------- --------- ---------
Profit before
finance costs
and taxation 902 192,008 192,910 2,393 28,453 30,846 7,826 7,135 14,961
Finance costs (63) (258) (321) (76) (306) (382) (141) (564) (705)
---------- ------------ ------------ ---------- ------------ ------------ --------- -------- ---------
Profit before
taxation 839 191,750 192,589 2,317 28,147 30,464 7,685 6,571 14,256
Taxation (159) - (159) (146) - (146) (731) - (731)
---------- ------------ ------------ ---------- ------------ ------------ --------- --------- ----------
Profit for the
period and
total
comprehensive
income 680 191,750 192,430 2,171 28,147 30,318 6,954 6,571 13,525
====== ====== ====== ====== ====== ====== ===== ===== ======
Return per
ordinary
share - basic
and diluted
(note 2) 1.36p 382.67p 384.03p 4.33p 56.18p 60.51p 13.88p 13.11p 26.99p
The total column of this statement represents the Statement of Comprehensive
Income, prepared in accordance with IFRS, as adopted by the European Union.
The revenue and capital return columns are supplementary to this and are
prepared under guidance published by the Association of Investment Companies.
All items in the above statement derive from continuing operations. No
operations were acquired or discontinued during the period.
All income is attributable to the equity holders of the Company.
The Company does not have any other comprehensive income and hence the
net profit for the period as disclosed above is the same as the Company's
total comprehensive income.
The figures have been prepared on a Company only basis following the liquidation
of the Company's subsidiary during the year ended 30 June 2020. For the
year ended 30 June 2020 and half-year ended 31 December 2019, these figures
have previously been reported on a consolidated basis.
The accompanying notes are an integral part of these condensed financial
statements.
Statement of Changes in Equity
Called
up Share Other
Half-year ended share premium capital
31 December 2020 Capital
redemption Revenue
capital account reserve reserves reserve Total
(unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ----------- ------------ ------------ ------------- ------------- -------------
Total equity at 1 July
2020 6,264 120,364 13,964 358,759 24,023 523,374
Total comprehensive income:
Profit for the period - - - 191,750 680 192,430
Transactions with owners
recorded
directly to equity:
Ordinary dividends paid - - - - (7,115) (7,115)
---------- ---------- ---------- ---------- ---------- -----------
Total equity at 31 December
2020 6,264 120,364 13,964 550,509 17,588 708,689
====== ====== ====== ====== ====== ======
Called
up Share Other
Half-year ended share premium capital
31 December 2019 Capital
redemption Revenue
capital account reserve reserves reserve Total
(unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ----------- ------------ ------------ ------------- ------------- -------------
Total equity at 1 July
2019 6,264 120,364 13,964 352,188 28,243 521,023
Total comprehensive income:
Profit for the period - - - 28,147 2,171 30,318
Transactions with owners
recorded
directly to equity:
Ordinary dividends paid - - - - (7,266) (7,266)
---------- ---------- ---------- ---------- ---------- -----------
Total equity at 31 December
2019 6,264 120,364 13,964 380,335 23,148 544,075
====== ====== ====== ====== ====== ======
Share Other
Called
up share premium capital
Capital
redemption Revenue
Year ended 30 June 2020 capital account reserve reserves reserve Total
(audited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- ----------- ------------ ------------ ------------- ------------- -------------
Total equity at 1 July
2019 6,264 120,364 13,964 352,188 28,243 521,023
Total comprehensive income:
Profit for the year - - - 6,571 6,954 13,525
Transactions with owners
recorded directly to equity:
Ordinary dividends paid - - - - (11,174) (11,174)
--------- ----------- ----------- ------------ ------------ ------------
Total equity at 30 June
2020 6,264 120,364 13,964 358,759 24,023 523,374
===== ======= ====== ======= ======= =======
The accompanying notes are an integral part of these condensed financial
statements.
Balance Sheet
at 31 December at 31 December at 30 June 2020
2020 2019
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------------------------------ -------------- ------------------ ----------------
Non-current assets
Investments held at fair value
through profit or loss 762,635 595,572 573,086
----------- ----------- -----------
Current assets
Receivables 3,730 1,700 4,453
Cash and cash equivalents - - 57
----------- ----------- -----------
3,730 1,700 4,510
----------- ----------- -----------
Total assets 766,365 597,272 577,596
----------- ----------- -----------
Current liabilities
Payables (4,511) (1,146) (5,941)
Bank overdrafts (53,165) (52,051) (48,281)
----------- ----------- -----------
(57,676) (53,197) (54,222)
----------- ----------- -----------
Net assets 708,689 544,075 523,374
====== ====== ======
Equity attributable to equity shareholders
Called up share capital (note
3) 6,264 6,264 6,264
Share premium account 120,364 120,364 120,364
Capital redemption reserve 13,964 13,964 13,964
Retained earnings:
Other capital reserves 550,509 380,335 358,759
Revenue reserve 17,588 23,148 24,023
----------- ----------- -----------
Total equity 708,689 544,075 523,374
====== ====== ======
Net asset value per ordinary
share - basic and diluted (note
4) 1,414.31p 1,085.80p 1,044.48p
======== ======== =======
The accompanying notes are an integral part of these condensed financial statements.
Cash Flow Statement
Half-year ended Half-year ended Year ended
31 December 31 December
2020 2019 30 June 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------------------------------------- ---------------- --------------- --------------
Operating activities
Profit before taxation 192,589 30,464 14,256
Add back: interest payable 321 382 705
Less: gains on investments held at
fair value through profit or loss (194,547) (30,670) (10,433)
Sales of investments held at fair value
through profit or loss 220,075 153,981 341,928
Purchases of investments held at fair
value through profit or loss (215,858) (142,072) (324,358)
Withholding tax on dividends deducted
at source (232) (225) (1,354)
Decrease/(increase) in prepayments
and accrued income 578 525 (35)
Decrease in amounts due from brokers 138 2,488 559
Increase/(decrease) in accruals and
deferred income 1,506 (34) 687
Decrease in amounts due to brokers (2,936) (5,537) (1,464)
---------- ---------- -----------
Net cash inflow from operating activities
before interest and taxation 1,634 9,302 20,491
---------- ---------- -----------
Interest paid (321) (382) (705)
Taxation recovered 2 (42) 271
---------- ---------- -----------
Net cash inflow from operating activities 1,315 8,878 20,057
---------- ---------- -----------
Financing activities
Equity dividends paid (net of refund
of unclaimed dividends) (7,115) (7,266) (11,174)
Net drawdown/(repayment) of bank overdraft 5,743 (1,612) (8,826)
---------- ---------- -----------
Net cash outflow from financing activities (1,372) (8,878) (20,000)
---------- ---------- -----------
(Decrease)/increase in cash and cash
equivalents (57) - 57
Cash and cash equivalents at the start
of the period 57 - -
---------- ---------- ---------
Cash and cash equivalents at the period
end - - 57
====== ====== ======
The accompanying notes are an integral part of these condensed financial statements.
Notes to the condensed financial statements
1. Accounting policies
a) Basis of preparation
The condensed financial statements comprise the unaudited results of the
Company, for the half-year ended 31 December 2020. They have been prepared
on a going concern basis and in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', as adopted by the European
Union and with the Statement of Recommended Practice for Investment Trusts
("SORP"), 'Financial Statements of Investment Trust Companies and Venture
Capital Trusts', issued in October 2019 where the SORP is consistent with
the requirements of IFRS.
For the period under review the Company's accounting policies have not
varied from those described in the annual report for the year ended 30
June 2020. These financial statements have not been audited or reviewed
by the Company's auditors.
The figures have been prepared on a Company only basis following the liquidation
of the Company's subsidiary during the year ended 30 June 2020. For the
year ended 30 June 2020 and half-year ended 31 December 2019, these figures
have previously been reported on a consolidated basis .
2. Return per ordinary share
The return per ordinary share is based on the profit for the half-year
of GBP192,480,000 (half-year ended 31 December 2019: profit of GBP30,318,000;
year ended 30 June 2020: profit of GBP13,525,000) and on 50,108,397 ordinary
shares (half-year ended 31 December 2019 and year ended 30 June 2020:
same), being the weighted average number of ordinary shares in issue during
the period.
The return per ordinary share detailed above can be further analysed between
revenue and capital, as below.
Half-year ended Half-year ended Year ended
31 December 31 December
2020 2019 30 June 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Net revenue profit 680 2,171 6,954
Net capital profit/(loss) 191,750 28,147 6,571
---------- ---------- ----------
Net profit/(loss) 192,430 30,318 13,525
====== ====== ======
Weighted average number of
ordinary shares in issue during
the period 50,108,397 50,108,397 50,108,397
Half-year ended Half-year ended Year ended
31 December 31 December
2020 2019 30 June 2020
(unaudited) (unaudited) (audited)
pence pence pence
Revenue return per ordinary
share 1.36 4.33 13.88
Capital return per ordinary
share 382.67 56.18 13.11
---------- ---------- ----------
Total return per ordinary share 384.03 60.51 26.99
====== ====== ======
3. Share capital
At 31 December 2020 there were 50,108,397 ordinary shares in issue (31
December 2019 and 30 June 2020: same).
During the half-year ended 31 December 2020 the Company did not issue
any ordinary shares (31 December 2019 and 30 June 2020: same).
In the current financial year to date, the Company has not repurchased
any shares for cancellation.
4. Net asset value per ordinary share
The net asset value per ordinary share is based on the net assets attributable
to equity shareholders of GBP708,739,000 (31 December 2019: GBP544,075,000;
30 June 2020: GBP523,374,000) and on 50,108,397 ordinary shares (31 December
2019 and 30 June 2020: same), being the number of ordinary shares in issue
at the period end.
5. Dividends
The Company has declared an interim dividend of 8.20 pence per ordinary
share (31 December 2019: 7.80p) payable on 23 April 2021 to members on
the register as at 26 March 2021. The shares will trade ex-dividend on
25 March 2021.
A final dividend of 14.20p per ordinary share was paid on 27 November
2020 from the Company's revenue account in respect of the year ended 30
June 2020.
6. Transaction costs
Purchase transaction costs for the half-year ended 31 December 2020 were
GBP275,000 (half-year ended 31 December 2019: GBP132,000; year ended 30
June 2020: GBP282,000). These comprise mainly stamp duty and commission.
Sales transaction costs for the half-year ended 31 December 2020 were
GBP86,000 (half-year ended 31 December 2019: GBP60,000; year ended 30
June 2020: GBP131,000).
7. Management and performance fees
The base management fee payable to Janus Henderson Investors is 0.6% of
net assets up to GBP500m, reducing to 0.5% thereafter. Fees are charged
quarterly in arrears. Management fees are allocated 20% to revenue and
80% to capital.
The Manager may also be eligible to receive a performance related fee.
In order to determine whether a performance fee is payable, performance
is measured against, and expressed relative to, the benchmark, the Euromoney
Smaller European Companies Index (ex UK) expressed in Sterling. Performance
of both the Company and the benchmark is measured on a NAV total return
(with gross income reinvested) basis and is measured over three years.
In any given year in which a performance fee is payable, the performance
fee rate is 15% of the positive difference between the average annual
NAV total return and the average annual total return of the benchmark.
The upper limit on the total fee, including the base fee and any performance
fee, for any given accounting year is 2.0% of the NAV of the Company as
at the last day of the relevant calculation period. A performance fee
hurdle over the benchmark of 1.0% has to be reached before any performance
fee can be earned. For clarity, performance is measured solely on the
basis of NAV total return relative to the total return of the benchmark
index; no account is taken of whether the NAV grows or shrinks in absolute
terms. Any performance fee payable is allocated to capital.
A performance fee of GBP1,055,000 has been accrued as at 31 December 2020
(31 December 2019: GBPnil; 30 June 2020: GBPnil).
8. Financial instruments
At the period end the carrying value of financial assets and financial
liabilities approximates their fair value.
Financial instruments carried at fair value
Fair value hierarchy
The table below analyses recurring fair value measurements for financial
assets and financial liabilities. These fair value measurements are categorised
into different levels in fair value hierarchy based on the inputs to valuation
techniques used. Categorisation within the hierarchy has been determined
on the basis of the lowest level of input that is significant to the fair
value measurement of the relevant asset or liability. The different levels
are defined as follows:
Level 1: Valued using quoted prices in active markets for identical assets;
Level 2: Valued by reference to valuation techniques using observable
inputs other than quoted prices included within Level 1; and
Level 3: Valued by reference to valuation techniques that are not based
on observable market data.
Financial assets and financial liabilities Level Level Level
at fair value 1 2 3 Total
through profit or loss at 31 December
2020 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------------- ----------- ----------- ------------ -----------
Investments including derivatives:
Equity securities designated at fair
value through profit or loss 762,560 - 75 762,635
---------- ---------- ----------- ----------
Total financial assets and liabilities
carried
at fair value 762,560 - 75 762,635
====== ====== ====== ======
Level 3 investments at fair value through
profit or loss GBP'000
------------------------------------------- ----------
Opening balance 77
Acquisitions -
Disposal proceeds -
Transferred into Level 3 -
---------
77
---------
Total losses included in the Statement
of Comprehensive Income
On assets sold -
On assets held at period end (2)
---------
(2)
---------
Closing balance 75
=====
There have been no transfers between levels of fair value hierarchy during
the period. Transfers between levels of fair value hierarchy are deemed
to have occurred at the date of the event or change in circumstances that
caused the transfer.
9. Going concern
The assets of the Company consist of securities that are readily realisable.
The directors have considered the impact of the Covid-19 pandemic, including
cash flow forecasting, a review of covenant compliance covering the headroom
above the most restrictive covenants and an assessment of the liquidity
of the portfolio. Having done so, the directors have concluded that the
Company has adequate resources to meet its financial obligations, including
the repayments of the bank overdraft, as they fall due for a period of
at least twelve months from the date of approval of the financial statements.
Taking account of these factors and the principal risks, the Board has
determined that it is appropriate for the financial statements to be prepared
on a going concern basis and confirm that there are no uncertainties of
which they are aware that should be conveyed to shareholders.
10. Related party transactions
The Company's transactions with related parties in the period were with
the directors and Janus Henderson Investors. There were no material transactions
between the Company and its directors during the period, with the only
amounts paid to them being in respect of expenses and remuneration for
which there were no outstanding amounts payable at the period end.
In relation to the provision of services by Janus Henderson Investors,
other than fees payable by the Company in the ordinary course of business
and the provision of marketing services there have been no material transactions
with Janus Henderson Investors affecting the financial position of the
Company during the period under review.
During the year to 30 June 2020, the wholly owned subsidiary, TREG Finance
Limited, paid a dividend to the Company of GBP969,000 from its reserves
prior to being placed in liquidation.
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 December
2020 and 31 December 2019 have not been audited or reviewed by the Company's
auditors. The figures and financial information for the year ended 30
June 2020 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 Independent Auditors'
Report which was unqualified and did not contain a statement under either
section 498(2) or 498(3) of the Companies Act 2006.
12. Voting at Annual General Meeting
At the 30(th) Annual General Meeting held on 23 November 2020, the Company
received votes against Resolution 5, relating to the reappointment of
Mr Christopher Casey, representing 23.8% of the shares voted at the meeting
and 10.3% of the voting rights in issue. At that time, the Board stated
that it understood the majority of the votes against this resolution were
from a single shareholder and related to the number of directorships held
by the Chairman of the Board. The Board has engaged with this shareholder
to understand its concerns and explained that the Board is aware of the
Chairman's other commitments, all of which are non-executive and the majority
of which relate to investment company board positions, and believe that
he has sufficient capacity to devote to the Company's affairs. The Board
has agreed to continue to engage with this shareholder in advance of the
next annual general meeting and will provide a further update in the Company's
next annual report.
13. 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.treuropeangrowthtrust.com
14. Half-year report
The Company's half-year report will be available on the Company's website.
An update extracted from the Company's report for the half-year ended
31 December 2020, will be posted to shareholders in March 2021 and will
be available on the website thereafter.
15. Company status
TR European Growth Trust PLC is registered in England and Wales, No. 2520734,
has its registered office at 201 Bishopsgate, London EC2M 3AE and is listed
on the London Stock Exchange.
SEDOL/ISIN: 0906692/GB0009066928
London Stock Exchange (TIDM) code: TRG
Global Intermediary Identification Number (GIIN): JX9KYH.99999.SL.826
Legal Entity Identifier (LEI): 213800N1B1HCQG2W4V90
16. Directors and Secretary
At the date of this report, the directors of the Company are Christopher
Casey (Chairman), Daniel Burgess (Chairman of the Audit Committee), Ann
Grevelius, Simona Heidempergher, Andrew Martin Smith and Alexander Mettenheimer.
The Corporate Secretary is Henderson Secretarial Services Limited.
For further information please contact:
Ollie Beckett, Fund Manager Laura Thomas, Investment Trust PR
TR European Growth Trust PLC Manager
Telephone: 020 7818 4331 Janus Henderson Investors
Telephone: 020 7818 2636
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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END
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