Regulatory Story
Go to market news section View chart   Print
RNS

Final Results

Released 15:54 02-Oct-2017

RNS Number : 4624S
TR European Growth Trust PLC
02 October 2017
 

TR EUROPEAN GROWTH TRUST PLC

Annual Financial Report for the year ended 30 June 2017

 

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 (excluding the UK).

 

Performance highlights

•           The net asset value ("NAV") total return1 (including dividends reinvested) was 54.0% compared to a total return from the benchmark index2 of 35.8%.

•           The share price3 total return (including dividends reinvested) was 75.5%.

•           Increased proposed annual dividend: final and special dividends of 11.50 pence and 3.00 pence per ordinary share respectively (2016: 9.00p and 2.50p respectively). 

•           The discount4 decreased from 18.0% to 6.5%.

 

Total return performance for the year to 30 June 2017

(including dividends reinvested and excluding transaction costs)

 

1 year

%

3 years

%

5 years

%

10 years

%

Since launch5 %

NAV1

54.0

84.2

232.4

129.2

3,094.4

Benchmark index2

35.8

54.5

159.6

109.2

2,170.2

Average sector6 NAV

36.7

67.5

177.0

124.2

3,102.6

Share price3

75.5

96.3

311.6

144.4

3,123.2

Average sector share price7

40.1

85.4

212.5

147.8

2,521.2

 

Financial highlights

 

At 30 June 2017

At 30 June 2016

Shareholders' funds

 

 

Net assets (£'000)

569,459

377,683

NAV

                  1,145.48p

755.73p

Share price

1,071.00p

620.00p

 

 

 

Year ended

30 June 2017

Year ended

30 June 2016

Profit for year

 

 

Net revenue profit (£'000)

Net capital profit (£'000)

8,509

191,031

6,739

38,043

 

-----------

-----------

 

199,540

44,782

 

======

======

Total return per ordinary share

 

 

Revenue

                       17.09p

13.48p

Capital

  383.67p

76.12p

 

-----------

-----------

 

400.76p

89.60p

 

======

======

Ongoing charge8

0.75%

0.79%

1 Net Asset Value per share total return (including dividends reinvested). This is based on preliminary estimates made by the AIC, which is the industry recognised source for performance data, and does not reflect any subsequent change in the year end NAVs reflected in this report

2 Euromoney European Smaller Companies Index (ex UK) expressed in Sterling

3 Share price total return using mid-market closing price

4 Calculated using published daily NAVs including current year revenue

5 Calculated from the end of September 1990 (the Company commenced business on 6 September 1990)

6 The sector is the AIC European Smaller Companies sector

7 Average share price for the AIC European Smaller Companies sector

8 The ongoing charge excludes the performance fee. The charge including the performance fee is 1.56% (2016: 1.20%)

Sources: Morningstar for the AIC, Janus Henderson, Datastream

Chairman's Statement

 

Performance

I am pleased to be able to report that over the year to 30 June 2017 our net asset value per share total return was 54.0% compared to a total return for our benchmark of 35.8%. The share price total return for the year was 75.5%.

 

Over the three year qualifying period for the performance fee, the Company has delivered a net asset value per share total return of 84.2% against a benchmark of 54.5%, and share price total return of 96.3%. As a consequence of the outperformance over the three year qualifying period we will be paying a performance fee to the Manager for the year of £3,800,000 (2016: £1,389,000). This is equal to 0.7% of net assets as at 30 June 2017 (2016: 0.4%).

 

Revenue and dividends

Revenue return per share was 17.09p (2016: 13.48p), a rise of 27%.  We are proposing, subject to shareholder approval at our Annual General Meeting, a final dividend per ordinary share of 11.50p, an increase of 27.8% over last year's final dividend of 9.00p. We are also proposing a special dividend of 3.00p (2016: 2.50p) per ordinary share, making a total dividend of 14.50p. This represents an overall increase of 26.1% in the dividends paid last year. 

 

During the year, the Board reviewed its approach to paying dividends. For the financial year ending 30 June 2018, it is our intention to move towards paying an interim and a final dividend.  This will enable the Company to distribute returns to shareholders on a more frequent basis.

 

Investment Objective and Policy

As part of its consideration of strategy, the Board reviewed the Investment Objective and Policy. Overall, we concluded these continued to appropriately reflect the securities held by the Company and the manner and jurisdictions in which it invests. In keeping with recommendations from the Financial Conduct Authority, we have clarified the wording used to define these, however, none of the changes were material.

 

Annual General Meeting

Shareholders are encouraged to attend the Annual General Meeting ("AGM") on Monday 27 November 2017 at 201 Bishopsgate, London, EC2M 3AE. The meeting will start at 12.30 pm, will include a presentation by the Fund Manager, Ollie Beckett, and will be followed by an opportunity for shareholders to meet the Board and management team. The Notice of Meeting and full details of the resolutions to be proposed are included in a separate document which will be posted to shareholders with the Annual Report. The Directors recommend that shareholders vote in favour of all of the proposed resolutions as they intend to do in respect of their own beneficial holdings.  The Company's AGM will be broadcast live on the internet. If you are unable to attend in person you can watch the meeting as it happens by visiting www.janushenderson.com/trustslive.

 

Manager

Henderson Group plc merged with Janus Capital Group, Inc on 30 May 2017. I am pleased to confirm this will not lead to any change in personnel responsible for the day to day management of your Company.

 

Outlook

Despite the ongoing backdrop of fraught politics on both sides of the Atlantic, it has been another good year for European equity markets,  especially in the smaller company arena. In this context it has been welcome to see the performance of the Company in the past year reflected in a narrowing discount. At 30 June 2017 the Company's discount stood at 6.5% having been at 18% at 30 June the prior year in the wake of the unexpected outcome to the UK referendum to leave the European Union. More recently, at 29 September 2017, the discount stood at 5.6%, with the share price having been at a premium to NAV in preceding weeks.

 

Clearly there are serious issues that markets will need to navigate around in the coming year and no doubt the noisy political environment will periodically concern markets. A period of relative political stability within continental Europe would be most welcome, as would clarity around the expected shape of the UK relationship with the EU once the Article 50 period ends in March 2019. Our Fund Managers will continue to focus on finding undervalued stocks of companies that can thrive regardless of the political backdrop.  They will also monitor the economic environment, but we are confident that there is still a large pool of investment opportunities for them to exploit in European smaller companies to deliver good returns for our shareholders.

 

 

Audley Twiston-Davies

Chairman

2 October 2017

 

Fund Managers' report        

 

Introduction

The year to June 2017 has been another year of buoyant stock markets despite surprising political outcomes in the US and the UK.  Despite much worry being devoted to elections such as those in Austria, the Netherlands and France, continental European politics has provided less drama than we have become accustomed to, a vacuum comprehensively filled by the United States and President Trump.  Currency markets have been volatile with €1 being worth $1.11 at the start of the year before falling to $1.04 in December, giving a welcome boost to the European economy, before rallying to $1.14 by the end of the financial year (company downgrades/upgrades being largely driven by the US$). This appears to reflect market confidence in the Eurozone economy and an unwinding of the optimism that initially surrounded President Trump's policy agenda of tax cuts and infrastructure spending which has proved difficult to progress through the US Legislature. Certainly the optimism injected by President Macron into both France and the wider EU is helpful, as are his initial policy suggestions. There is scope for some of the unresolved issues in the construction of the Euro to be resolved following German elections in September which would further boost the optimism around the Eurozone. However, French presidents have been in this position before and struggled to deliver change and consensus on how to progress is far from certain. Furthermore, slightly softening economic data in the US and in China, a more hawkish Federal Reserve and volatile world political leadership give cause for mild caution. As we have observed many times in the past, ultimately European smaller companies growth is a function of global growth.  Overall we continue to believe that we are in the middle stages of a long protracted economic recovery, within which Europe has a significant distance to catch up with the rest of the world. 

 

The financial year to June 2017 was kind to the Company with the net asset value total return of 54.0% outperforming the benchmark by 18.2%. The fall in the value of the Pound versus the Euro over the period of 5% somewhat flatters the absolute return in the fund and it is important to understand that we do not hedge the currency exposure of the portfolio.

 

We continue to believe that European smaller companies provide earnings growth and value that is hard to capture in many other asset classes. Despite significant moves in markets we are still finding plenty of undervalued and neglected stocks in which to invest your capital.

 

The Portfolio

Portfolio Positioning

We have persisted in searching for stock specific ideas with valuation anomalies that can either deliver substantial growth or benefit from self-help in order to drive profitability. For instance we have built a position in Swedish online mid-range and premium fashion retailer Boozt that delivered 71% topline growth in 2016 and Bloomberg consensus forecasts sales growth of 39% in 2017.  This topline growth should deliver a substantial improvement in margins in the year to come. In contrast we built a position in troubled photovoltaic, semiconductor and optoelectronic industry machine supplier Meyer Burger, following a rescue rights issue.  New management have a clearly articulated plan to rebuild profitability assuming no help from a sales recovery, which, given the revived market interest in solar power and battery storage, provides opportunity.

 

Performance Attribution

The performance of the Company over the course of the year has come from a wide range of strong performing stocks offset by a relatively limited number of poorly performing ones. The largest contributor to return was outsourced research and development and drug discovery company Evotec. The Company, which returned 290% in the year after the stock market spotted the valuation disparity with the US listed peers, became excited about the internal drug discovery pipeline and understood the value accretion of recent mergers and acquisitions. Another strong contributor was our largest position Van Lanschot, a Dutch wealth manager that is tackling an inflated cost base, freeing up capital to return to shareholders and improving return on equity. Despite delivering a share price return of 50% last year the stock remains cheap and we are hopeful of further strong returns from our holding. There was also good contribution from: Lisi, a French manufacturer of fasteners for the automotive, aerospace and medical sector as recent years restructuring bore fruit; AMG, a Dutch listed producer of specialty metals including Lithium which is a key component for the batteries in electric vehicles; Lenzing, an Austrian listed global manufacturer of woven and non-woven viscose and specialty fibres that benefited from new managements actions to improve profitability and inflationary pricing in viscose.

 

The Company also benefited in the year from bids for 3D printing machine manufacturer SLM Solutions by General Electric (that subsequently fell away due to the actions of an activist hedge fund, but which highlighted the underlying and strategic value of the business); and Irish listed tropical fruit importer Fyffes by Sumitomo Corp.

 

Performance was weighed down by our investment in Petroleum Geo-Services, a Norwegian oilfield service company that provides images from beneath the ocean floor that oil companies rely on to find oil and gas reserves. A weaker oil price and more prolonged capex holidays by the oil majors has meant the investment has not delivered for the Company. This was also a factor that weighed on Dutch listed Fugro, which collects, processes and interprets geological data for the oil and other industries. Technicolor, a French producer of digital set top boxes for the cable industry, DVDs and digital film production services was also a detractor after a shortage of Dynamic Random Access Memory (DRAM) a key component in set top boxes which drove prices up dramatically causing profitability to suffer.

 

Geographical and Sector Distribution

Our investment process is fundamentally one of bottom up stock picking, rather than allocating capital to specific sectors or geographies, though we keep a keen eye on the overall portfolio structure in order to avoid risk concentrations. We do not use the benchmark as a guide to portfolio structure and are content to run the Company with substantial divergence from the benchmark. 

 

The portfolio has reduced its German exposure, but continues to be overweight in Germany as there continues to be a large number of superb companies that can be bought at attractive valuations. We have invested in a number of fast growing companies such as Va-Q-Tec that is the technology leader in advanced thermal insulation products, which is showing substantial growth in medical cold-chain packaging for the drugs market. We are also overweight in Finland where we have found a number of cheap stocks that are benefiting from the growing economic recovery. For instance we invested in Alma Media, an online classifieds business under-rated as a regional newspaper company by the stockmarket; electronic invoicing market leader Basware and leading retailer and eye surgery company Silmaasema. The Netherlands is a further substantial geographic overweight where we topped up on existing positions already mentioned such as Van Lanschot and Fugro, and took positions in companies such as Kendrion, a leading manufacturer of electromagnetic and mechatronic components into the automotive and other sectors. 

 

The portfolio is underweight in Sweden and Spain, which despite attractive macroeconomic fundamentals are sparse when it comes to appealingly valued stocks. 

 

The sector exposure of the portfolio is heavily overweight in Consumer Discretionary, a weighting that has increased over the year with the addition of stocks such as Alma Media, Boozt and Silmaasema, but also through the topping up of positions such as French housebuilder Kaufman & Broad, Italian compact and mobile refrigeration company Indel B and Italian electrical equipment retailer Unieuro. The portfolio also remains heavily overweight in Industrials with the addition of stocks such as Swedish "rack-and-pinion" lift producer Alimak and German producer of carbon and graphite materials for the automotive industry, SGL Carbon.

 

The portfolio is heavily underweight in Real Estate where we struggle to find compelling value and in Consumer Staples where elevated valuation multiples are matched with pedestrian earnings growth.

 

Other Purchases

Substantial purchases in the year include investing in Norwegian shipping and logistics services provider Wallenius Wilhelmsen which is cutting capacity in the industry and will hopefully also benefit from the recovery in the shipping of mining equipment. We also invested in Belgian producer of proton-beam cancer therapy machines Ion Beam Applications and in Portuguese cable and telecoms provider NOS.

 

Other Disposals

We fully exited our position in Irish insulation and building envelope provider Kingspan, Swedish bus operator Nobina and Dutch wind turbine foundation provider Sif, French IT service provider Sopra Steria and French housebuilder Nexity which after pleasing stock performances looked too expensive.

 

Brexit

The Company does not normally invest directly in UK listed businesses, however, a number of stocks within the portfolio do have substantial sales in the UK. Political fragility within the UK and the backdrop of Brexit negotiations will possibly drive some volatility within share prices and underlying economic fundamentals for these stocks. We continue to monitor the situation actively.

 

Gearing

Gearing levels varied between 7.1% and 13.9% over the year and was at 9.1% at the financial year end. It should be noted that 2.1% of the portfolio is in unquoted investments. We used the debt facility to maintain flexibility and freedom of action over the year as opportunities arose, rather than raising cash by selling assets quickly at bad prices. The gearing also offers the potential to enhance returns.

 

Market Capitalisation Range

We have continued to focus the portfolio towards small and medium sized companies, with a weighted average market capitalisation of £1.114bn as of 30 June 2017. The largest company in the portfolio was Puma at £4.447bn and the smallest was Softing at £77m.

 

Unquoted Investments

The Company has substantially reduced the exposure to unquoted investments over the course of the year from 4.1% of the portfolio to 2.1% with the final disposal and capital return of Doughty Hanson & Co. Fund III as well as substantial return of capital from French private equity fund 21 Centrale Partners III. The exposure is now largely concentrated on the holding in Brainlab, a global leader in software for high precision radiotherapy and image-guided surgery.  This is a good asset for which we continue to seek an exit for an appropriate value.

 

Outlook

The world provides no shortage of things to worry about: the threat of war in the Korean peninsula; Brexit; European migration, banking and integration crises; the sustainability of the Chinese economic model; and an absence of global political leadership to name just a few. Whilst these keep headline writers busy, so far they have failed to hinder global stock markets or global economic growth. 

 

As Europe has shaken off its reputation for being a crisis creation engine and the mantle has been taken on by the US and UK there has been a revival in interest in European equity. This has even begun to extend as far as European midcap equities. Multiples in the low volatility sectors that are rightly or (we believe) wrongly perceived as "quality companies" in the Consumer Staples and Health Care sectors have not attracted us. We have continued to search out and find undervalued companies across Europe. The stockmarket remains very focused on earnings momentum and whilst we are not blind to this factor, we continue to make value a key consideration in every decision.

 

Notwithstanding this the portfolio has a good measure of companies exhibiting strong structural growth. We continue to be enthusiastic about online advertising optimisation company Criteo, despite the growth having not translated into the valuation multiple yet. Finnish online retailer Verkkokauppa continues to deliver the kind of sales growth to warrant a premium valuation. Likewise Swedish listed global market leader in metal-based mesh panels Troax has the growth and dominant market position to warrant our continued ownership despite a price appreciation of 100% over the financial year. Since the year end we have added Swiss listed leading European online pharmacy Zur Rose to the portfolio that we anticipate will be a key beneficiary of the previously closed German pharmacy market being opened by a European Court of Justice ruling.

 

We are neither complacent about nor desperately focused on the global risks. These are a feature of the market we operate in.  Whatever the eventual outcomes of the German elections, Brexit or even the seemingly imminent end to the period of extremely loose global monetary policy, there will continue to be management teams taking the right decisions to either fix or grow their businesses and we will continue to search these opportunities out in order to try and grow the value of the Company's capital.  The debate around the benefits and costs of quantitative easing is often heated and not a topic to be resolved here. However, global central banks have long been signalling an intention to normalise monetary policy which has the potential to induce bouts of volatility in global markets and if executed poorly, especially in Europe, poses risk to asset values. We suspect any unwinding of the extraordinary monetary policy of recent years will be slow and after the ECB policy mistakes of 2011, with the Trichet interest rate rises, will be handled carefully. This process may begin to raise questions about the prices of bond proxy equities with rich valuations. We are alive to this risk.  We have been careful about not overpaying for yield, though will happily accept strong income from companies with strong capital return disciplines such as French liquefied natural gas container technology company Gaztransport et Technigaz, there has to be more to the equity story than dividends.

 

Whilst European performance measurement indicators have picked up strongly in the last twelve months, US and Chinese economic data is more mixed, though overall we judge the global economic environment to be pretty benign. We keep one eye on the global macroeconomic environment and stay alert to any signs of euphoria in our markets. The deep pessimism surrounding European equities has clearly seen quite a reversal in the last year, but despite strong performance in our markets, valuations look anything but stretched, especially given the comparatively poor economic performance of Europe compared to the US and UK in recent years. There is clearly a substantial economic gap to close and this should show itself in the form of decent earnings growth in the coming years. We are confident that we will be able to search out the attractive investment opportunities in this environment and deliver solid returns for our

investors in the coming year.

 

 

Ollie Beckett and Rory Stokes

2 October 2017

 

 

Sector exposure at 30 June 2017

(% of portfolio excluding cash)

 

2017

%

2016

%

Industrial Goods

20.3

20.6

Technology

17.2

17.0

Business Providers

16.4

15.1

Financial

13.5

14.4

Basic Materials

13.4

12.8

Consumer Goods

10.2

12.5

Retail Providers

8.5

7.1

Natural Resources

0.5

0.5

 

Geographic exposure at 30 June 2017

(% of portfolio excluding cash)                                                                                                                    

 

2017

%

2016

%

Austria

1.4

2.1

Belgium

3.6

4.7

Denmark

3.5

3.5

Finland

9.3

5.6

France

12.2

15.2

Germany

21.2

22.9

Greece

1.0

1.4

Ireland

0.8

2.8

Italy

12.3

8.7

Netherlands

8.8

9.2

Norway

5.1

3.2

Portugal

1.6

-

Spain

3.0

2.7

Sweden

6.7

6.8

Switzerland

9.5

10.9

Other

-

0.3

 

 

 

Principal risks

The Board, with the assistance of the Manager, has carried out a robust assessment of the principal risks, and uncertainties, facing the Company that would threaten its business model, future performance, solvency and lidquidity.  A matrix of these risks has been drawn up and steps taken to mitigate these.  The principal risks and mitigating actions are as follows:

 

● Investment activity and performance risks

An inappropriate investment strategy (for example, in terms of asset allocation or the level of gearing) may result in under performance against the Company's benchmark index and the companies in its peer group.

 

The Board monitors investment performance at each Board meeting and regularly reviews the extent of its borrowings.

 

● Portfolio and market price risks

Although the Company invests almost entirely in securities that are listed on recognised markets, share prices may move rapidly. The companies in which investments are made may operate unsuccessfully, or fail entirely. Investments in European stock markets may be impacted by political events. A fall in the market value of the Company's portfolio would have an adverse effect on shareholders' funds.

 

The Fund Manager seeks to maintain a diversified portfolio to mitigate against this risk. The Board regularly reviews the portfolio, activities and performance.

 

● Tax and regulatory risks

A breach of Section 1158/1159 could lead to a loss of investment trust status, resulting in capital gains realised within the portfolio being subject to corporation tax.

 

A breach of the Listing Rules could result in suspension of the Company's shares, while a breach of the Companies Act 2006 could lead to criminal proceedings, or financial or reputational damage.

 

The Manager provides investment, company secretarial, administration and accounting services through qualified professionals. The Board receives internal control reports produced by the Manager on a quarterly basis, which confirm regulatory compliance.

 

● Operational risks

Disruption to, or failure of, the Manager's accounting, dealing or payment systems or the custodian's records could prevent the accurate reporting and monitoring of the Company's financial position. The Company is exposed to the operational risk that one or more of its service providers may not provide the required level of service.

 

The Board monitors the services provided by its third-party service providers and receives reports on the key elements in place to provide effective internal control.

 

Viability Statement

The Board considers the Company's viability 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 facing the Company materialising in severe, but plausible, scenarios. In particular, the Board considers the investment strategy, market risk, level of gearing, specifically the duration of the Company's borrowing facilities and how a breach of any covenants could impact on the Company's net asset value and share price, and the liquidity of the portfolio. The evaluation of the mitigating controls currently in place, and their effectiveness, forms part of the assessment.

 

The Board concluded that the Company's assets are liquid, its commitments are limited and the Company intends to continue operating as an investment trust. No significant changes to the current principal risks and the mitigating controls in place are anticipated. The Board does not currently envisage any material change in the Investment Objective or Policy, and are 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 meet its liabilities as they fall due over the next three year period.

 

In conjunction with this exercise, the Board considered the appropriateness of using the going concern approach to the preparation of the financial statements.

 

Related party transactions

The Company's transactions with related parties in the year were with the Directors, the subsidiary and the Manager, Janus Henderson. There have been no material transactions between the Company and its Directors during the year. The only amounts paid to them were 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 the Manager, other than fees payable by the Company in the ordinary course of business, there have been no material transactions affecting the financial position of the Company during the year under review.

 

Directors' responsibility STATEMENTS

Each of the Directors confirms that, to the best of his or her knowledge:

 

·     the Group financial statements prepared in accordance with IFRSs adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit and loss of the issuer and the undertakings included in the consolidation taken as a whole; and

 

·     the Strategic Report includes a fair review of the development and performance of the business and the position of the Group and Parent Company, together with a description of the principal risks and uncertainties that it faces.

 

 

For and on behalf of the Board

Christopher Casey

Director

2 October 2017

 

 

 

Consolidated Statement of Comprehensive Income

 

 

Year ended 30 June 2017

Year ended 30 June 2016

 

Revenue return £'000

Capital return  £'000

Total

return

£'000

Revenue return £'000

Capital

return

 £'000

Total

return

£'000

Investment income

10,656

-

10,656

8,215

-

8,215

Other income

-

-

-

43

-

43

Gains on investments held at fair value through profit or loss

-

197,673

197,673

-

41,583

41,583

 

---------

----------

-----------

---------

----------

-----------

Total income

10,656

197,673

208,329

8,258

41,583

49,841

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

Management and performance fee (note 2)

(597)

(6,186)

(6,783)

(427)

(3,099)

(3,526)

Other operating expenses

(582)

-

(582)

(591)

-

(591)

 

---------

----------

----------

---------

----------

----------

Profit before finance costs and taxation

9,477

191,487

200,964

7,240

38,484

45,724

 

 

 

 

 

 

 

Finance costs

(114)

(456)

(570)

(110)

(441)

(551)

 

---------

--------

---------

---------

--------

---------

Profit before taxation

9,363

191,031

200,394

7,130

38,043

45,173

 

 

 

 

 

 

 

Taxation

(854)

-

(854)

(391)

-

(391)

 

---------

---------

----------

---------

---------

----------

Profit for the year and total comprehensive income

8,509

191,031

199,540

6,739

38,043

44,782

 

=====

======

======

=====

======

======

 

 

 

 

 

 

 

Return per ordinary share - basic and diluted (note 3)

17.09p

383.67p

400.76p

13.48p

76.12p

89.60p

 

======

======

======

======

======

======

 

 

 

 

 

 

 

The total column of this statement represents the Consolidated Statement of Comprehensive Income, prepared in accordance with IFRSs, as adopted by the European Union.

 

The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies.

 

All income is attributable to the equity holders of TR European Growth Trust PLC, the Parent Company.

 

The net profit of the Parent Company for the year was £199,540,000 (2016: £44,782,000).   

 

 

Consolidated Statement of Changes in Equity

 

 

Year ended 30 June 2017

 

Called up share capital

£'000

Share

premium account

£'000

Capital redemption

reserve

£'000

Other capital reserves

£'000

Revenue reserve £'000

Total

£'000

Total equity at 1 July 2016

6,247

115,451

13,931

218,118

23,936

377,683

Total comprehensive income:

 

 

 

 

 

 

Profit for the year

-

-

-

191,031

8,509

199,540

Transactions with owners, recorded directly to equity:

 

 

 

 

 

 

Ordinary dividends paid

-

-

-

-

(5,717)

(5,717)

Buy back of Ordinary shares for cancellation

(33)

-

33

(2,047)

-

(2,047)

 

-------

----------

---------

----------

---------

----------

Total equity at 30 June 2017

6,214

115,451

13,964

407,102

26,728

569,459

 

====

======

=====

======

=====

======

 

 

 

 

 

Year ended 30 June 2016

 

Called up share capital

£'000

Share

premium account

£'000

Capital redemption

reserve

£'000

Other capital reserves

£'000

Revenue reserve £'000

Total

£'000

Total equity at 1 July 2015

6,247

115,451

13,931

180,075

21,941

337,645

Total comprehensive income:

 

 

 

 

 

 

Profit for the year

-

-

-

38,043

6,739

44,782

Transactions with owners, recorded directly to equity:

 

 

 

 

 

 

Ordinary dividends paid

-

-

-

-

(4,748)

(4,748)

Refund of unclaimed dividends     over 12 years old

-

-

-

-

4

4

 

--------

----------

---------

----------

---------

----------

Total equity at 30 June 2016

6,247

115,451

13,931

218,118

23,936

377,683

 

=====

======

=====

======

=====

======

 

 

 

 

Parent Company Statement of Changes in Equity

 

 

Year ended 30 June 2017

 

Called up share capital

£'000

Share

premium account

£'000

Capital redemption

reserve

£'000

Other capital reserves

£'000

Revenue reserve £'000

Total

£'000

Total equity at 1 July 2016

6,247

115,451

13,931

219,161

22,893

377,683

Total comprehensive income:

 

 

 

 

 

 

Profit for the year

-

-

-

191,029

8,511

199,540

Transactions with owners, recorded directly to equity:

 

 

 

 

 

 

Ordinary dividends paid

-

-

-

-

(5,717)

(5,717)

Buy back of Ordinary shares for cancellation

(33)

-

33

(2,047)

-

(2,047)

 

--------

----------

---------

----------

---------

----------

Total equity at 30 June 2017

6,214

115,451

13,964

408,143

25,687

569,459

 

====

======

=====

======

=====

======

 

 

 

 

 

 

 

 

 

 

Year ended 30 June 2016

 

Called up share capital

£'000

Share

premium account

£'000

Capital redemption

reserve

£'000

Other capital reserves

£'000

Revenue reserve £'000

Total

£'000

Total equity at 1 July 2015

6,247

115,451

13,931

181,120

20,896

337,645

Total comprehensive income:

 

 

 

 

 

 

Profit for the year

-

-

-

38,041

6,741

44,782

Transactions with owners, recorded directly to equity:

 

 

 

 

 

 

Ordinary dividends paid

-

-

-

-

(4,748)

(4,748)

Refund of unclaimed dividends    over 12 years old

-

-

-

-

4

4

 

-------

----------

---------

----------

---------

----------

Total equity at 30 June 2016

6,247

115,451

13,931

219,161

22,893

377,683

 

====

======

=====

======

=====

======

 

 

 

 

Consolidated and Parent Company Balance Sheets

 

 

At 30 June 2017 Consolidated

£'000

At 30 June

2016 Consolidated

£'000

At 30 June 2017 Company

£'000

At 30 June 2016 Company

£'000

Non current assets

 

 

 

 

Investments held at fair value through profit or loss

621,237

413,379

622,209

414,353

 

-----------

-----------

-----------

-----------

 

 

 

 

 

Current assets

 

 

 

 

Receivables

3,711

1,442

3,711

1,442

Cash and cash equivalents

57

73

54

70

 

----------

----------

----------

----------

 

3,768

1,515

3,765

1,512

 

----------

----------

----------

----------

Total assets

625,005

414,894

625,974

415,865

 

----------

----------

----------

----------

 

 

 

 

 

Current liabilities

 

 

 

 

Payables

(6,360)

(3,686)

(7,329)

(4,657)

Bank overdrafts

(49,186)

(33,525)

(49,186)

(33,525)

 

----------

----------

----------

----------

 

(55,546)

(37,211)

(56,515)

(38,182)

 

----------

----------

----------

----------

Net assets

569,459

377,683

569,459

377,683

 

======

======

======

======

 

 

 

 

 

Equity attributable to equity shareholders of the parent company

 

 

 

 

Called up share capital

6,214

6,247

6,214

6,247

Share premium account

115,451

115,451

115,451

115,451

Capital redemption reserve

13,964

13,931

13,964

13,931

Retained earnings:

 

 

 

 

Other capital reserves

407,102

218,118

408,143

219,161

Revenue reserve

26,728

23,936

25,687

22,893

 

----------

----------

-----------

-----------

Total equity (note 4)

569,459

377,683

569,459

377,683

 

======

======

======

======

 

 

 

 

 

Net asset value per ordinary share - basic and diluted (note 4)

1,145.48p

755.73p

1,145.48p

755.73p

 

=======

======

=======

======

 

 

 

 

 

 

Consolidated and Parent Company Cash Flow Statements

 

 

Year ended 30 June 2017

Year ended 30 June 2016

 

Consolidated

 £'000

Company £'000

Consolidated

 £'000

Company

£'000

Operating activities

 

 

 

 

Profit before taxation

200,394

200,394

45,173

45,173

Add back: interest payable

570

570

551

551

Less: gains on investments held at fair  value through profit or loss

(197,673)

(197,670)

(41,583)

(41,580)

Sales of investments held at fair value through profit

or loss

286,750

286,750

246,136

246,136

Purchases of  investments held at fair value through

profit or loss

(295,407)

(295,407)

(232,013)

(232,013)

Withholding tax on dividends deducted at source

(1,304)

(1,304)

(990)

(990)

Increase in prepayments and accrued income

(173)

(173)

(89)

(89)

(Increase)/decrease in amounts due from brokers

(2,025)

(2,025)

1,181

1,181

Increase/(decrease) in accruals and deferred income

2,742

2,739

(291)

(294)

Decrease in amounts due to brokers

(148)

(148)

(153)

(153)

 

----------

----------

----------

----------

Net cash (outflow)/inflow from operating activities

before interest and taxation

(6,274)

(6,274)

17,922

17,922

 

----------

----------

----------

----------

Interest paid

(570)

(570)

(551)

(551)

Taxation recovered

459

459

482

482

 

----------

----------

----------

----------

Net cash (outflow)/inflow from operating activities

(6,385)

(6,385)

17,853

17,853

 

----------

----------

----------

----------

Financing activities

 

 

 

 

Equity dividends paid (net of refund of unclaimed

Dividends - see note 5)

(5,717)

(5,717)

(4,744)

(4,744)

Buy back of ordinary shares for cancellation

(2,047)

(2,047)

-

-

 

----------

----------

----------

----------

Net cash outflow from financing

(7,764)

(7,764)

(4,744)

(4,744)

 

----------

----------

----------

----------

(Decrease)/increase in cash and cash equivalents

(14,149)

(14,149)

13,109

13,109

Cash and cash equivalents at the start of year

(33,452)

(33,455)

(40,325)

(40,328)

Exchange movements

(1,528)

(1,528)

(6,236)

(6,236)

 

----------

----------

----------

----------

Cash and cash equivalents at the end of year

(49,129)

(49,132)

(33,452)

(33,455)

 

======

======

======

======

Comprising:

 

 

 

 

Cash at bank

57

54

73

70

Bank overdrafts

(49,186)

(49,186)

(33,525)

(33,525)

 

----------

----------

----------

----------

 

(49,129)

(49,132)

(33,452)

(33,455)

 

======

======

======

======

 

Notes to the Financial Statements 

 

1.

Accounting policies

TR European Growth Trust PLC is a company incorporated and domiciled in the United Kingdom under the Companies Act 2006.  The consolidated and Parent Company financial statements for the year ended 30 June 2017 have been prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union and with those parts of the Companies Act 2006 (the "Act") applicable to companies reporting under IFRSs. IFRSs comprise standards and interpretations approved by the International Accounting Standards Board ("IASB"), together with interpretations of the International Accounting Standards and Standing Interpretation Committee approved by the IFRS Interpretations Committee ("IFRS IC") that remain in effect to the extent that IFRSs have been adopted by the European Union. The accounting policies have been consistently applied in the current and previous year.

 

The financial statements have been prepared on a going concern basis and on the historical cost basis, except for the revaluation of certain financial instruments at fair value through profit and loss. Where presentational guidance set out in the Statement of Recommended Practice ("SORP") for investment trusts issued by the Association of Investment Companies ("AIC") in November 2014 and updated in January 2017 with consequential amendments is consistent with the requirements of IFRSs, the Directors have sought to prepare the financial statements on a basis consistent with the recommendations of the SORP.

 

 

 

Going concern

The Group's shareholders are asked every three years to vote for the continuation of the Company. An ordinary resolution to this effect was put to the Annual General Meeting ("AGM") held on 21 November 2016 and passed by the substantial majority of the shareholders. The next such resolution will be put to the shareholders at the AGM in 2019. The assets of the Group consist mainly entirely of securities that are listed and readily realisable and, accordingly, the Directors believe that the Group has adequate resources to continue in operational existence for at least twelve 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 decided that it is appropriate for the financial statements to be prepared on a going concern basis.

 

 

2.

Management and performance fee

 

 

 

2017

2016

 

Revenue

 return

 £'000

Capital

 return

 £'000

Total

 return

 £'000

Revenue

 return

 £'000

Capital

 return

 £'000

Total

 return

 £'000

Management fee

597

2,386

2,983

427

1,710

2,137

Performance fee

-

3,800

3,800

-

1,389

1,389

 

-----

-------

-------

-----

-------

-------

Total

597

6,186

6,783

427

3,099

3,526

 

===

====

====

===

====

====

 

 

 

 

3.

Return per ordinary share

The return per ordinary share figure is based on the net profit for the year of £199,540,000 (2016: £44,782,000) and on the weighted average number of ordinary shares in issue during the year of 49,790,368 (2016: 49,975,897).

 

The return per ordinary share figure detailed above can be further analysed between revenue and capital, as below. 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.

 

 

 

 

 

2017

£'000

2016

£'000

 

 

Net revenue profit

8,509

6,739

 

 

Net capital profit

191,031

38,043

 

 

 

----------

----------

 

 

Net profit

199,540

44,782

 

 

 

======

=====

 

 

Weighted average number of ordinary shares in issue during the year

49,790,368

49,975,897

 

 

 

 

 

 

 

 

2017

Pence

2016

Pence

 

 

Revenue return per ordinary share

17.09

13.48

 

 

Capital return per ordinary share

383.67

76.12

 

 

 

--------

-------

 

 

Total return per ordinary share

400.76

89.60

 

 

 

=====

====

 

 

 

4.

Net asset value per ordinary share

The NAV per ordinary share is based on the net assets attributable to the ordinary shares of £569,459,000 (2016: £377,683,000) and on the 49,713,397 ordinary shares in issue at 30 June 2017 (2016: 49,975,897). The Company has no securities in issue that could dilute the NAV per ordinary share (2016: same). The NAV per ordinary share at 30 June 2017 was 1,145.48p (2016: 755.73p).

 

 

 

 

 

The movements during the year in assets attributable to the ordinary shares were as follows:

 

 

 

 

 

 

2017

£'000

2016

£'000

 

 

Net assets attributable to ordinary shares at 1 July 2016

377,683

337,645

 

 

Profit for the year

199,540

44,782

 

 

Dividends paid in the year

(5,717)

(4,748)

 

 

Buy back of ordinary shares for cancellation

(2,047)

-

 

 

Refund of unclaimed dividends over 12 years old

-

4

 

 

 

-----------

-----------

 

 

Net assets at 30 June

569,459

377,683

 

 

 

======

======

 

 

 

5.

Dividends

 

2017

£'000

2016

£'000

Amounts recognised as distributions to equity holders in the year:

 

 

Final dividend of 9.00p and special dividend of 2.50p per ordinary share for the year ended 30 June 2016 (2015: final dividend of 7.00p and special dividend of 2.50p per ordinary share for the year ended 30 June 2015)

 

 

5,717

 

 

4,748

 

-----

---------

The final divided of 9.00p and the special dividend of 2.50p per ordinary share in respect of the year ended 30 June 2016 were paid on 5 December 2016 to shareholders on the register of members at the close of business on 4 November 2016.  The total dividend paid amounted to £5,717,000.

 

Subject to approval at the AGM in November 2017, the proposed final dividend of 11.50p and a special dividend of 3.00p per ordinary share will be paid on 30 November 2017 to shareholders on the register of members at the close of business on 3 November 2017. The shares will be quoted ex-dividend on 2 November 2017.

 

The total dividends payable in respect of the financial year which form the basis of the test under Section 1158 are set out below:

 

The proposed final and special dividends for the year ended 30 June 2017 have not been included as a liability in these financial statements. Under IFRSs, these dividends are not recognised until approved by shareholders.

 

During the year the Company received a refund of £nil of unclaimed dividends over 12 years old (2016: £4,000).

 

The total dividends payable in respect of the financial year which form the basis of Section 1158 are set out below:

 

 

 

        Consolidated

       Company

 

2017

£'000

2016

£'000

2017

£'000

2016

£'000

Revenue available for distribution by way of dividends for the year

 

8,509

 

6,739

 

8,511

 

6,741

Proposed total dividend for the year ended 30 June 2017 - 14.50p (2016: 11.50p) (comprising a final dividend of 11.50p and a special dividend of 3.00p) (based on 49,713,397 shares in issue at 2 October 2017)

(7,208)

 

 

 

 

             (5,739)

(7,208)

 

 

 

 

 

(5,739)

 

----------

----------

----------

----------

Revenue surplus

1,301

1,000

1,303

1,002

 

======

======

======

======

 

For section 1158 purposes the Company's undistributed revenue represents 13.5%  (2016: 13.0%) of total income.

 

 

 

6.

Called up share (Group & Company)

 

 

2017

2016

number of shares

 

£'000

number of shares

 

£'000

Allotted, issued and fully paid

Ordinary shares of 12.5p

 

49,713,397

 

6,214

 

49,975,897

 

6,247

 

During the year 262,500 ordinary shares (2016: no ordinary shares) were bought back for cancellation at a cost of £2,047,000 (2016: £nil). In the current financial year ending 30 June 2018, the Company has has not repurchased any shares.

 

 

               

7.   2017 financial information

The figures and financial information for 2017 are extracted from the Annual Report for the year ended 30 June 2017 and do not constitute the statutory accounts for the year. The Annual Report includes the Report of the Independent Auditors which is unqualified and does not contain a statement under either Section 498(2) or Section 498(3) of the Companies Act 2006. The Annual Report has not yet been delivered to the Registrar of Companies.

      

8.   2016 financial information

       The figures and financial information for 2016 are extracted from the Annual Report for the year ended 30 June 2016 and do not constitute the statutory accounts for the year. The Annual Report includes the Report of the Independent Auditors which is unqualified and does not contain a statement under either Section 498(2) or Section 498(3) of the Companies Act 2006. The Annual Report has been delivered to the Registrar of Companies.

                                                                                                                                               

9.    Annual report

The Annual Report will be posted to shareholders in mid-October 2017 and will be available on the Company's website (www.treuropeangrowthtrust.com) or in paper copy format from the Company's registered office, 201 Bishopsgate, London EC2M 3AE thereafter.

 

10.  Annual General Meeting

The Annual General Meeting will be held on Monday 27 November 2017 at 12.30 pm at the registered office address.

 

For further information please contact:

 

Ollie Beckett/Rory Stokes

Fund Managers

TR European Growth Trust PLC

Telephone: 020 7818 4331/3997

Sarah Gibbons-Cook

Investor Relations and PR Manager

Janus Henderson Investors

Telephone: 020 7818 3198

 

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
 
 
FR UUVSRBOARRAA
Close


London Stock Exchange plc is not responsible for and does not check content on this Website. Website users are responsible for checking content. Any news item (including any prospectus) which is addressed solely to the persons and countries specified therein should not be relied upon other than by such persons and/or outside the specified countries. Terms and conditions, including restrictions on use and distribution apply.

 


Final Results - RNS