THE EUROPEAN INVESTMENT TRUST PLC: Interim Management Statement
The European Investment Trust plc
Interim Management Statement
for the quarter ended 30 June 2012
The Board of The European Investment Trust plc ("the Company") announces its Interim Management Statement for the period from 1 April 2012 to 30 June 2012. This statement is required by the UK Listing Authority's Disclosure and Transparency Rules and should not be relied upon for any other purpose.
The objective of the Company is to achieve long-term capital growth through a diversified portfolio of Continental European securities.
Financial Summary 30 June 2012 31 March 2012 % Change
Net assets £241.43m £256.66m -5.9
Net asset value ("NAV") per share 573.88p 610.08p -5.9
Share price 481.00p 527.00p -8.7
Share price discount to net asset 16.2% 13.6% value
The NAV per share of the Company reduced from 610.08p to 573.88p during the quarter ended 30 June 2012, resulting in a total return of -5.9%. This compares with a total return of -7.2% in the FTSE All-World Europe ex UK Index in sterling. The Company's share price decreased by 8.7% from 527p to 481p in the three month period and as a consequence the share price discount to net asset value widened from 13.6% to 16.2%.
Review of markets
Much of the recovery in markets that was witnessed in the first quarter ebbed away in the second quarter. In large part this was due to the lack of movement towards any clear resolution of the problems within Europe and a refocusing by investors on the Greek election as well as the danger that Spain and Italy might leave the euro. These concerns caused a fairly savage reaction in markets which only began to reverse in the latter part of the quarter. Recent history suggests that we should be cautious about initial reactions to measures arising from European summits.
Since Edinburgh Partners was appointed as Investment Manager in February 2010 it has believed that a balanced portfolio strategy was appropriate. The portfolio consists of investments which have a degree of visibility and security in their profit growth, as well as a smaller number of investments where the visibility is lower but valuations, even on cautious assumptions, appear to be extremely low. It has primarily been stocks in this latter, out of favour, category, which have performed less well over the last few years as the market has continued to reward visibility of earnings.
In the quarter under review a number of new investments were made including Safran, Ipsos and Wirecard, all companies which have visible long-term growth characteristics on reasonable valuations. Two holdings, Adidas and Banque Cantonale Vaudoise, were sold as a result of strong performance and valuation targets being achieved. The Telecom Italia and Nokia positions were also sold as it became apparent that our initial investment case was not going to be fulfilled.
The reality that it will take a long period to resolve the structural and cyclical problems in Europe is becoming increasingly obvious. Nevertheless, many of our investments should continue to achieve market share gains in their own sectors and be able to deliver profit growth. Eventually the combination of profit growth and the current generally low valuations will lead to positive equity market returns. Forecasting the timing of this is not something we would be comfortable with and therefore we are left to conclude, as before, that having a fully invested European portfolio and displaying patience will be rewarded. The gearing facility has not yet been drawn down, as we await appropriate investment opportunities.
Ten largest investments at 30 June 2012
Ranking Company Sector Country % of
1 Sanofi Health Care France 3.1
2 Vivendi Consumer Services France 3.1
3 Gerresheimer Health Care Germany 3.1
4 ENI Oil & Gas Italy 2.9
5 Ryanair Consumer Services Ireland 2.9
6 Prysmian Industrials Italy 2.8
7 D'Ieteren Consumer Services Belgium 2.7
8 Swedbank Financials Sweden 2.7
9 Belgacom Telecommunications Belgium 2.7
10 Intesa Sanpaolo Financials Italy 2.7
28.7 Sector distribution 30 June 2012 % of Net Assets
Consumer Services 20.1
Consumer Goods 12.4
Health Care 8.4
Oil & Gas 7.7
Basic Materials 4.9
Cash and other net assets 2.6
100.0 Geographical distribution 30 June 2012 % of Net Assets
Cash and other net assets 2.6
100.0 Further Information Further information, including monthly factsheets and daily net asset values published since the end of the quarter, can be found on the Company's website: www.theeuropeaninvestmenttrust.com and the Edinburgh Partners' website: www.edinburghpartners.com. Past performance is not a guide to future performance. Other than as detailed above, the Board is not aware of any significant events or transactions that have occurred between 30 June 2012 and the date of publication of this statement which would have a material impact on the financial position of the Company. 19 July 2012 Enquiries: Dale Robertson Kenneth Greig Edinburgh Partners Limited, 12 Charlotte Square, Edinburgh EH2 4DJ Tel: 0131 270 3800 Registered Office of the Company: Beaufort House, 51 New North Road, Exeter EX4 4EP Neither the contents of The European Investment Trustplc'swebsite nor the contents of any website accessible from hyperlinks on the website (or any other website) is incorporated into, or forms part of, this announcement. END -0- Jul/19/2012 16:27 GMT