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RNS
TR European Growth Trust PLC   -  TRG   

Half-year Report

Released 12:29 25-Feb-2020

RNS Number : 0799E
TR European Growth Trust PLC
25 February 2020
 

TR EUROPEAN GROWTH TRUST PLC

Unaudited results for the half-year ended 31 December 2019

 

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.

 

Performance highlights for the six months to 31 December 2019

·      Net asset value per share total return was 5.9% compared to a total return from the benchmark index of 4.0%

·      Share price total return was 10.3% compared to the sector average of 5.0%

·      The shares were trading at a discount1 of 10.9% at the period end, down from 14.2% at the full year

·      Interim dividend of 7.80p per ordinary share declared (2018: 7.50p)

 

Total return performance (including dividends reinvested and excluding transaction costs)

 

6 months

%

1 year

%

3 years

%

5 years

%

10 years

 %

NAV2

5.9

25.3

25.8

99.3

191.6

Benchmark index3

4.0

20.6

29.9

87.7

166.9

Average sector4 NAV

3.1

23.5

35.4

99.2

215.8

Share price5

10.3

28.2

32.3

105.5

188.4

Average sector4 share price

5.0

27.5

46.8

106.2

235.0

 

 

Financial highlights

 

at 31 December 2019

at 30 June 2019

Shareholders' funds

 

 

Net assets (£'000)

544,075

521,023

Net asset value per ordinary share

1,085.80p

1,039.79p

Mid-market price per ordinary share

970.50p

892.00p

 

 

 

 

Half-year ended

31 December 2019

£'000

Year ended

30 June 2019

£'000

Total return to equity shareholders

 

 

Revenue return after taxation

1,202

12,068

Capital return after taxation

29,116

(54,863)

 

-------------

-----------

Total return

30,318

(42,795)

 

=======

======

Total return per ordinary share

 

 

Revenue

2.40p

24.08p

Capital

58.11p

(109.49p)

 

-------------

-----------

Total return per ordinary share

60.51p

(85.41p)

 

=======

======

                                                                            

1.     The discount is calculated using published daily net asset values including current year revenue

2.     Net Asset Value ('NAV') per ordinary share total return (including dividends reinvested and excluding the cost of reinvestment)

3.     The benchmark index is the Euromoney Smaller European Companies index (ex UK) expressed in Sterling

4.     The sector is the AIC European Smaller Companies sector

5.     Share price total return using mid-market closing price

 

Sources: Janus Henderson, Morningstar, Refinitiv Datastream

 

 

INTERIM MANAGEMENT REPORT

 

Chairman's statement

 

Performance

Your Company has made a good start to the financial year, with the NAV total return performance for the six months to 31 December 2019 being 5.9%. This was 1.9% ahead of the benchmark and 2.8% ahead of the AIC sector average of 4.0% and 3.1% respectively. The share price total return was 10.3%, with the share price itself improving 8.8% to 970.50p from the year-end position of 892.00p.

 

There have been no shortages of challenges in the global economy and by extension the European economy in recent times: slowing global growth, Sino-American trade wars, and Brexit to name but three. Sector specific issues such as the accelerating shift away from internal combustion engine cars have impacted the important automotive sector in Europe dislocating many stock prices. The stock market has bifurcated into very expensive 'quality growth' names and very cheap 'value names' and expensive stocks have rarely looked so expensive. The sustainability of this trend is one we question. We take comfort from the fact that the portfolio has a combination of self-help cheap stocks and undervalued structural growth stories to navigate this dynamic.

 

Dividend

The Board was pleased to declare an interim dividend of 7.80p per ordinary share, representing a 4.0% increase on the interim dividend paid in the prior year. The interim dividend will be paid on 17 April 2020 to shareholders on the register on 27 March 2020.  The shares will trade ex-dividend on 26 March 2020.

 

Board changes

During the period, we said goodbye to Audley Twiston-Davies. Audley was the Chairman from 2002 and retired from the Board at the Annual General Meeting held on 25 November 2019. I would like to thank him for his very substantial contribution to the Company and its shareholders, and well appreciate that he has left some large shoes to fill.

 

We welcomed two new directors to the Board during the period, Ann Grevelius and Daniel (Dan) Burgess, on 23 September 2019 and 25 November 2019 respectively. Ann has substantial investment management experience and Dan brings with him extensive audit and accounting experience having been a partner at KPMG for twenty-three years. Dan became the Audit Committee Chairman on appointment.

 

Outlook

The economic backdrop remains sluggish and uncertain, albeit there are indications that things might improve. The Purchasing Managers' Index (PMI) look to be troughing and smaller companies typically outperform after such troughs. The Sino-American trade war seems to be less antagonistic which should offer relief to Europe where the economy is driven by global economic growth. Brexit stagnation appears to be lifting which should offer a further boost. In this context it is pleasing to see the upturn in performance in recent months and we remain optimistic that our managers can continue to find undervalued companies in which to invest the company's capital.

 

 

Christopher Casey

Chairman

 

 

 

Fund Manager's report

 

The first half of 2019 saw the Company outperform the benchmark in a market that was less turbulent and more sanguine on the economic outlook. A combination of some of our undervalued stocks rerating and growth in other holdings drove performance in an environment that remains heavily tilted towards earnings momentum at almost any price. This calmer market exposed some of our 'self-help' stories to the oxygen of recognition.

 

In the preceding year we had been too optimistic on the markets' interpretation of the US-China trade war, Brexit and European politics. We can hope that the political backdrop will be calmer in the year ahead. In reality, investors will need to get used to political volatility as Mr Trump is still President, UK-EU negotiations are still ongoing and Germany will need to transition from Chancellor Merkel's leadership. European smaller company investing is a noisy sector, but it is a space filled with innovative companies that are exposed to all the exciting change that is taking place in the world.

 

We endeavour to find stocks that are exposed to global fluctuations and complement them with investments in companies that are too cheap due to a misperception of their prospects. The positive contributors to performance reflect this mix. French cable manufacturer Nexans experienced a substantial rerating as the benefits of its restructuring programme coincided with a rebound in demand for their high voltage cables and a strong backdrop in the renewables market of offshore wind which they serve. Elsewhere, battery manufacturer Varta contributed strongly to performance as their microbatteries were included in Apple AirPods and they look to show considerable growth among other manufacturers. We have subsequently sold the position as we felt the valuation discounted too much growth and assumed little or no new competitors.

 

Detractors from performance were value companies that did not execute their plans well. French listed global manufacturer of floor coverings and artificial sports pitches, Tarkett, had a substantial profit warning in July and yet another in December. A weak trading backdrop in the US and Europe combined with mis-execution on a new Enterprise Resource Management system resulted in weak profitability. Online gambling service provider, Kindred, also detracted from performance as tighter regulations in Sweden, the UK and the Netherlands combined with poor corporate communication led to a profit warning. While many market participants view the environmental, social and governance ('ESG') criteria as a reason to sell the entire sector, Kindred is a market leader in responsible gaming and we remain invested as we do not believe that the derating of the equity offsets the opportunity of growth in the US. Both Tarkett and Kindred are substantially under-valued and have management teams that we continue to back to deliver on the self-help the companies require.

 

We opened new positions in Swiss software value added reseller SoftwareONE, which has a big opportunity as a purely cloud focused software vendor. We also opened a position in Spanish online travel company eDreams ODIGEO, which is beginning to reap the benefits of consolidating the market and transitioning to a new revenue model.

 

Meanwhile, we exited positions in Austrian manmade fibre company Lenzing as we had reservations about their large capital expenditure programme in an environment of falling prices for their underlying products. We also exited Swedish home builder, JM, taking profits as we felt that enthusiasm for the sector had overshot.

 

Going into 2020 we had anticipated neither a global economic recession or a dynamic recovery, but instead a period of anaemic global growth. At the time of writing, the Coronavirus has created huge uncertainty for the global economy. Like everyone else, we are unsure how long the impact will last. It seems reasonably certain that the first half of the calendar year will be weak; understandably leading to ever lower bond yields and a flight to safety. If the health scare can be contained in the coming weeks, we might see a v-shaped recovery and a rapid reversal in market leadership. This would be helpful for the performance of European smaller companies as Europe remains heavily geared to global growth.

 

 

Ollie Beckett and Rory Stokes

 

 

Sector Exposure (% of portfolio excluding cash)

 

 

at 31 December 2019

%

at 30 June 2019

%

Industrial Goods

25.2

Consumer Goods

17.7

Financial

13.8

Basic Materials

12.3

Technology

12.3

Business Providers

11.0

Retail Providers

6.7

Natural Resources

1.0

 

100.0

 

 

Geographical Exposure (% of portfolio excluding cash)

 

 

at 31 December 2019

%

at 30 June 2019

Austria

0.9

Belgium

5.2

Denmark

3.0

Finland

5.8

France

14.3

Germany

17.4

Greece

0.7

Ireland

2.2

Italy

8.6

Netherlands

9.6

Norway

4.5

Portugal

1.6

Spain

3.3

Sweden

12.6

Switzerland

10.3

 

100.0

 

 

Top 40 investments at 31 December 2019

Rank

Company

Sector

Geographical area

Valuation

£'000

Percentage of portfolio

1

DFDS

Business Providers

Denmark

15,297

2.6

2

Van Lanschot

Financial

Netherlands

12,462

2.1

3

TKH

Industrial Goods

Netherlands

11,578

1.9

4

Nexans

Industrial Goods

France

11,065

1.9

5

Conzzeta

Industrial Goods

Switzerland

9,356

1.6

6

Karnov

Consumer Goods

Sweden

9,192

1.5

7

Gaztransport et Technigaz

Industrial Goods

France

8,534

1.4

8

Banca Farmafactoring

Financial

Italy

7,574

1.3

9

Trigano

Consumer Goods

France

7,255

1.2

10

Mersen

Industrial Goods

France

7,229

1.2

 

10 largest

 

 

99,542

16.7

 

 

 

 

 

 

11

Dermapharmaceutical

Consumer Goods

Germany

7,222

1.2

12

Medios

Consumer Goods

Germany

7,199

1.2

13

Boskalis Westminster

Basic Materials

Netherlands

7,177

1.2

14

SAES Getters Di Risp

Technology

Italy

7,134

1.2

15

Aareal Bank

Financial

Germany

7,051

1.2

16

Deutz

Industrial Goods

Germany

6,959

1.2

17

Recticel

Basic Materials

Belgium

6,720

1.1

18

Anima

Financial

Italy

6,636

1.1

19

Bygghemma

Retail Providers

Sweden

6,214

1.0

20

SoftwareONE

Technology

Switzerland

6,137

1.0

 

20 largest

 

 

167,991

28.1

 

 

 

 

 

 

21

Almirall

Consumer Goods

Spain

5,999

1.0

22

Zur Rose

Retail Providers

Switzerland

5,893

1.0

23

Tarkett

Basic Materials

France

5,881

1.0

24

FLEX LNG

Natural Resources

Norway

5,843

1.0

25

Ambea

Consumer Goods

Sweden

5,768

1.0

26

Vetropack

Industrial Goods

Switzerland

5,751

1.0

27

S.O.I.T.E.C

Technology

France

5,637

0.9

28

Caverion

Basic Materials

Finland

5,630

0.9

29

PVA

Technology

Germany

5,532

0.9

30

Kindred

Retail Providers

Sweden

5,438

0.9

 

30 largest

 

 

225,363

37.7

 

 

 

 

 

 

31

Tikehau

Financial

France

5,435

0.9

32

eDreams ODIGEO

Retail Providers

Spain

5,386

0.9

33

Fjordkraft

Industrial Goods

Norway

5,340

0.9

34

Befesa

Industrial Goods

Germany

5,131

0.9

35

CFE

Basic Materials

Belgium

5,131

0.9

36

Swissquote

Financial

Switzerland

5,054

0.8

37

Navigator

Basic Materials

Portugal

4,970

0.8

38

Credito Emiliano

Financial

Italy

4,939

0.8

39

OC Oerlikon

Industrial Goods

Switzerland

4,929

0.8

40

Kaufman & Broad

Basic Materials

France

4,925

0.8

 

40 largest

 

 

276,603

46.2

 

 

Principal Risks and Uncertainties

The principal risks and uncertainties associated with the Company's business can be divided into the following main areas:

 

·      Investment activity and performance risks;

·      Portfolio and market price risks;

·      Tax and regulatory risks; and

·      Operational risks.

 

Information on these risks and how they are managed is given in the annual report for the year ended 30 June 2019. In the view of the Board these principal risks and uncertainties were unchanged over the last six months and are as applicable to the remaining six months of the financial year as they were to the six months under review.

 

Statement of Directors' Responsibilities

Each of the directors (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 IAS 34 'Interim Financial Reporting', gives a true and fair view of the assets, liabilities, financial position and profit or loss of the Group 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

 

 

Consolidated Statement of Comprehensive Income

 

 

Half-year ended

31 December 2019

(unaudited)

Half-year ended

 31 December 2018

(unaudited)

Year ended

30 June 2019

(audited)

 

Revenue

return

£'000

Capital

return

£'000

Total

return

£'000

Revenue

return

£'000

Capital

return

£'000

Total

return

£'000

Revenue

return

£'000

Capital

return

£'000

Total

return

£'000

 

 

 

 

 

 

 

 

 

 

Investment income

2,109

-

2,109

1,543

-

1,543

14,657

-

14,657

Other income

-

-

-

-

-

-

1

-

1

Gains/(losses) on investments held at fair value through profit or loss

-

30,670

30,670

-

(122,836)

(122,836)

-

(51,954)

(51,954)

 

----------

------------

------------

----------

------------

------------

---------

----------

-----------

Total income/(expense)

2,109

30,670

32,779

1,543

(122,836)

(121,293)

14,658

(51,954)

(37,296)

 

----------

------------

------------

----------

------------

------------

---------

---------

---------

Expenses

 

 

 

 

 

 

 

 

 

Management and performance fees (note 7)

(312)

(1,248)

(1,560)

 

(302)

(1,208)

(1,510)

(600)

(2,399)

(2,999)

Other operating expenses

(373)

-

(373)

(334)

-

(334)

(653)

-

(653)

 

----------

------------

------------

----------

------------

------------

---------

----------

----------

Profit/(loss) before finance costs and taxation

1,424

29,422

30,846

907

(124,044)

(123,137)

13,405

(54,353)

(40,948)

 

 

 

 

 

 

 

 

 

 

Finance costs

(76)

(306)

(382)

(65)

(260)

(325)

(128)

(510)

(638)

 

----------

------------

------------

----------

------------

------------

---------

--------

---------

Profit/(loss) before taxation

1,348

29,116

30,464

842

(124,304)

(123,462)

13,277

(54,863)

(41,586)

 

 

 

 

 

 

 

 

 

 

Taxation

(146)

-

(146)

(147)

-

(147)

(1,209)

-

(1,209)

 

----------

------------

------------

----------

------------

------------

---------

---------

----------

Profit/(loss) for the period and total comprehensive income

1,202

29,116

30,318

695

(124,304)

(123,609)

12,068

(54,863)

(42,795)

 

======

=======

=======

======

=======

=======

=====

======

======

 

 

 

 

 

 

 

 

 

 

Return per ordinary share - basic and diluted

(note 2)

2.40p

58.11p

60.51p

1.39p

(248.07p)

(246.68p)

24.08p

(109.49p)

85.41p

 

The total column of this statement represents the Consolidated 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 TR European Growth Trust PLC, the Parent Company. There are no minority interests.

 

The net profit of the Parent Company for the half-year was £30,318,000 (31 December 2018: loss of £123,609,000; 30 June 2019: loss of £42,795,000).

 

The Group does not have any other comprehensive income and hence the net profit for the period as disclosed above is the same as the Group's total comprehensive income.

 

The accompanying notes are an integral part of these condensed financial statements.

 

 

 

Consolidated Statement of Changes in Equity

 

 

Half-year ended

31 December 2019

(unaudited)

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 2019

6,264

120,364

13,964

351,150

29,281

521,023

Total comprehensive income:

Profit for the period

-

-

-

29,116

1,202

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

380,266

23,217

544,075

 

======

======

======

======

======

======

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Half-year ended

31 December 2018

(unaudited)

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 2018

6,264

120,364

13,964

406,013

27,986

574,591

Total comprehensive income:

(Loss)/profit for the period

-

-

-

(124,304)

695

(123,609)

Transactions with owners recorded

directly to equity:  

Ordinary dividends paid

-

-

-

-

(7,015)

(7,015)

 

----------

----------

----------

----------

---------

-----------

Total equity at 31 December 2018

6,264

120,364

13,964

281,709

21,666

443,967

 

======

======

======

======

=====

======

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended 30 June 2019

(audited)

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 2018

6,264

120,364

13,964

406,013

27,986

574,591

Total comprehensive income:

(Loss)/profit for the year

-

-

-

(54,863)

12,068

(42,795)

Transactions with owners recorded directly to equity:

 

 

 

 

 

 

Ordinary dividends paid

-

-

-

-

(10,773)

(10,773)

 

---------

-----------

-----------

------------

------------

------------

Total equity at 30 June 2019

6,264

120,364

13,964

351,150

29,281

521,023

 

=====

=======

======

=======

=======

=======

 

The accompanying notes are an integral part of these condensed financial statements.

 

 

Consolidated Balance Sheet

 

at 31 December 2019

(unaudited)

£'000

 

 at 31 December 2018

(unaudited)

£'000

 

at 30 June 2019

(audited)

£'000

 

 

 

 

Non-current assets

 

 

 

Investments held at fair value through profit or loss

595,572

505,818

580,396

 

-----------

-----------

-----------

Current assets

 

 

 

Receivables

1,700

1,989

4,625

Cash and cash equivalents

-

3

3

 

-----------

-----------

-----------

 

1,700

1,992

4,628

 

-----------

-----------

-----------

Total assets

597,272

507,810

585,024

 

-----------

-----------

-----------

Current liabilities

 

 

 

Payables

(1,146)

(1,957)

(6,721)

Bank overdrafts

(52,051)

(61,886)

(57,280)

 

-----------

-----------

-----------

 

(53,197)

(63,843)

(64,001)

 

-----------

-----------

-----------

Net assets

544,075

443,967

521,023

 

======

======

======

 

 

 

 

 

 

 

 

Equity attributable to equity shareholders of the parent company

 

 

 

 

 

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

380,266

281,709

351,150

Revenue reserve

23,217

21,666

29,281

 

-----------

-----------

-----------

Total equity

544,075

443,967

521,023

 

======

======

======

 

 

 

 

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

 

1,085.80p

 

886.01p

 

1,039.79p

 

========

=======

=======

 

The accompanying notes are an integral part of these condensed financial statements.

 

 

Consolidated Cash Flow Statement

 

 

Half-year ended

31 December 2019

(unaudited)

£'000

Half-year ended

31 December 2018

(unaudited)

£'000

Year ended

30 June

2019

(audited)

£'000

Operating activities

 

 

 

Profit/(loss) before taxation

30,464

(123,462)

(41,586)

Add back: interest payable

382

325

638

Less: (gains)/losses on investments held at fair value through profit or loss

(30,670)

122,836

51,954

Sales of investments held at fair value through profit or loss

153,981

195,527

350,500

Purchases of investments held at fair value through profit or loss

(142,072)

(196,863)

(355,397)

Withholding tax on dividends deducted at source

(225)

(175)

(1,865)

Decrease/(increase) in prepayments and accrued income

525

245

(159)

Decrease/(increase) in amounts due from brokers

2,488

2

(1,675)

Decrease in accruals and deferred income

(37)

(784)

(1,466)

(Decrease)/increase in amounts due to brokers

(5,537)

(4,886)

560

 

----------

----------

-----------

Net cash inflow/(outflow) from operating activities before interest and taxation

9,299

(7,235)

1,504

 

----------

----------

-----------

Interest paid

(382)

(325)

(638)

Taxation recovered

(42)

24

35

 

----------

----------

-----------

Net cash inflow/(outflow) from operating activities

8,875

(7,536)

901

 

----------

----------

-----------

 

 

 

 

Financing activities

 

 

 

Equity dividends paid (net of refund of unclaimed dividends)

(7,266)

(7,015)

(10,773)

Net (repayment)/drawdown of bank overdraft

(1,612)

14,433

9,754

 

----------

----------

-----------

Net cash (outflow)/inflow from financing activities

(8,878)

7,418

(1,019)

 

----------

----------

-----------

Decrease in cash and cash equivalents

(3)

(118)

(118)

Cash and cash equivalents at the start of the period

3

121

121

 

----------

----------

---------

Cash and cash equivalents at the period end

-

3

3

 

======

======

======

 

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 consolidated financial statements comprise the unaudited results of the Company and its subsidiary, TREG Finance Limited, for the half-year ended 31 December 2019. 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 2019.  These financial statements have not been audited or reviewed by the Company's auditors.

 

The Group financial statements comprise the accounts of the Company and its subsidiary drawn up to the balance sheet date.  The Statement of Comprehensive Income is only presented in consolidated form, as provided by Section 408 of the Companies Act 2006.

 

b) Basis of consolidation

The Group financial statements consolidate the financial statements of the Company and of its sole subsidiary undertaking, TREG Finance Limited.

 

2.   Return per ordinary share

The return per ordinary share is based on the profit for the half-year of £30,318,000 (half-year ended 31 December 2018: loss of £123,609,000; year ended 30 June 2019: loss of £42,795,000) and on 50,108,397 ordinary shares (half-year ended 31 December 2018 and year ended 30 June 2019: 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

31 December 2019

(unaudited)

£'000

Half-year ended

31 December 2018

(unaudited)

£'000

Year ended

30 June 2019

(audited)

£'000

Net revenue profit

1,202

695

12,068

Net capital profit/(loss)

29,116

(124,304)

(54,863)

 

----------

----------

----------

Net profit/(loss)

30,318

(123,609)

(42,795)

 

======

======

======

 

 

 

 

Weighted average number of ordinary shares in issue during the period

50,108,397

50,108,397

50,108,397

 

 

 

Half-year ended

31 December 2019

(unaudited)

pence

Half-year ended

31 December 2018

(unaudited)

pence

Year ended

30 June 2019

(audited)

pence

Revenue return per ordinary share

2.40

1.39

24.08

Capital return per ordinary share

58.11

(248.07)

(109.49)

 

----------

----------

----------

Total return per ordinary share

60.51

(246.68)

(85.41)

 

======

======

======

 

3.   Share capital

At 31 December 2019 there were 50,108,397 ordinary shares in issue (31 December 2018 and 30 June 2019: same).

 

During the half-year ended 31 December 2019 the Company did not issue any ordinary shares (31 December 2018 and 30 June 2019: 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 £544,075,000 (31 December 2018: £443,967,000; 30 June 2019: £521,023,000) and on 50,108,397 ordinary shares (31 December 2018 and 30 June 2019: same), being the number of ordinary shares in issue at the period end.

 

5.   Dividends

The Company has declared an interim dividend of 7.80p per ordinary share (31 December 2018: 7.50p) payable on 17 April 2020 to members on the register as at 27 March 2020. The ex-dividend date will be 26 March 2020. 

 

A final dividend of 14.50p per ordinary share was paid on 29 November 2019 from the Company's revenue account in respect of the year ended 30 June 2019.

 

6.   Transaction costs

Purchase transaction costs for the half-year ended 31 December 2019 were £132,000 (half-year ended 31 December 2018: £148,000; year ended 30 June 2019: £287,000). These comprise mainly stamp duty and commission. Sales transaction costs for the half-year ended 31 December 2019 were £60,000 (half-year ended 31 December 2018: £79,000; year ended 30 June 2019: £144,000).

 

7.   Management and performance fees

The base management fee payable to the Manager for the first quarter of the year ended 30 June 2019 was 0.6% per annum, charged quarterly in arrears.  With effect from 1 October 2018, the base fee for assets over £500m was reduced to 0.5%. 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.

 

No performance fee has been accrued as at 31 December 2019 (31 December 2018 and 30 June 2019: £nil).

 

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 at fair value

Level 1

Level 2

Level 3

Total

through profit or loss at 31 December 2019

£'000

£'000

£'000

£'000

Investments including derivatives:

 

 

 

 

Equity securities designated at fair value through profit or loss

595,500

-

72

595,572

 

----------

----------

-----------

----------

Total financial assets and liabilities carried

at fair value

595,500

-

72

595,572

 

======

======

======

======

 

Level 3 investments at fair value through profit or loss

 

 

 

£'000

Opening balance

 

 

 

104

Acquisitions

 

 

 

-

Disposal proceeds

 

 

 

(22)

Transferred into Level 3

 

 

 

-

 

 

 

 

---------

 

 

 

 

82

 

 

 

 

---------

Total losses included in the Statement of Comprehensive Income

 

 

 

 

On assets sold

 

 

 

-

On assets held at period end

 

 

 

(10)

 

 

 

 

---------

 

 

 

 

(10)

 

 

 

 

---------

Closing balance

 

 

 

72

 

 

 

 

=====

 

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

Having reassessed the principal risks and uncertainties, the directors consider that it is appropriate to continue to adopt the going concern basis of preparation and confirm that there are no material uncertainties of which they are aware. The assets of the Group consist mainly of securities, most of which are readily realisable and, accordingly, the Group has adequate financial resources to continue in operational existence for at least twelve months from the date of approval of the financial statements.

 

10.   Related party transactions

The Company's transactions with related parties in the period were with the directors, the subsidiary and Janus Henderson. There have been no material transactions between the Company and its directors during the period and the only amounts paid to them were 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, 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 material transactions with Janus Henderson affecting the financial position of the Company during the period under review.  During the period, the wholly owned subsidiary, TREG Finance Limited, paid a dividend to the Parent Company of £969,000 from its reserves. 

 

11. Post balance sheet event

The subsidiary shareholder has approved the liquidation and a liquidator was appointed with effect from 24 February 2020.

 

12.   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 2019 and 31 December 2018 have not been audited or reviewed by the Company's auditors. The figures and financial information for the year ended 30 June 2019 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.

 

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 half-year report will be available in typed format on the Company's website. An update extracted from the Company's report for the half-year ended 31 December 2019, will be posted to shareholders in March 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                                                     Laura Thomas

Fund Manager                                                  Investment Trust PR Manager

TR European Growth Trust PLC                      Janus Henderson Investors

Telephone: 020 7818 4331                              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) is incorporated into, or forms part of, this announcement.

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
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Half-year Report - RNS