THE EASTERN EUROPEAN TRUST PLC: Interim Management Statement
THE EASTERN EUROPEAN TRUST PLC
Interim Management Statement - 3 months to 30 April 2013
To the members of The Eastern European Trust PLC
This interim management statement has been produced solely to provide additional information to shareholders as a body to meet the relevant requirements of the UK Listing Authority's Disclosure & Transparency Rules. It should not be relied on by any other party for any other reason.
This interim management statement relates to the period from 1 February 2013 to 30 April 2013, and contains information that covers this period, and up to the date of publication of this interim management statement.
The Company's objective is to achieve long-term capital growth by investing in companies that do business primarily in Eastern Europe, Russia, other Commonwealth of Independent States countries and Turkey.
One Three One Three Since
Month Months Year Years 30.04.09* Share Price -3.3% -5.8% 1.2% -8.7% 75.2% Net Asset Value undiluted -2.1% -5.2% 6.6% -4.0% 79.9% Net Asset Value diluted -1.7% -4.4% 4.8% -5.6% 76.9% MSCI EM Europe 10/40 (TR) -2.7% -4.3% 11.3% 2.3% 78.1%
* BlackRock took over the investment management of the Company with effect from 1 May 2009.
All performance figures are in sterling terms on a total return basis.
Ten Largest Equity Holdings at 30 April 2013
Company Country of Risk Total market
value % Sberbank Russia 10.4 Gazprom Russia 7.9 Turkiye Garanti Bankasi Turkey 6.0 Mobile Telesystems Russia 5.3 OTP Hungary 4.1 Mail Ru Russia 3.5 Surgutneftegaz Russia 3.4 Powszechna Kasa Oszzednosci Poland 3.4 Magnit Russia 3.0 Turkcell Iletism Hizmet Turkey 2.9
Financial position and performance as at 30 April 2013
At month end Net asset value - capital only 296.31p Net asset value (1) - cum income 301.49p Net asset value - cum income (diluted for subscription shares) 296.43p Share price 261.00p 2012 Subscription share price 2.50p Total assets (2) £122.6m Discount (share price to cum income diluted NAV) 13.4% Gross market exposure (3) 107.6% Net yield (4) 1.6% Ordinary shares in issue (5) 39,177,998 2012 Subscription shares 8,468,457
1. Includes year to date net revenue equal to 5.18p per share.
2. Total assets include current year revenue. 3. Long positions plus short positions as a percentage of net assets. 4. Based on a final dividend of 4.18p (6.50 cents) per share in respect of the year ended 31 January 2013. 5. Excluding 5,800,000 shares held in treasury. Material Events & Transactions Transaction in own shares The Company announced on 7 March 2013 that it had repurchased 150,000 shares for cancellation at a price of 281.05p per share. Annual Financial Report The Company announced its annual financial results for the year ended 31 January 2013 on 25 March 2013. Subscription Shares The third opportunity for shareholders to convert their subscription shares took place on 2 April 2013, when 64,571 subscription shares were converted into ordinary shares on 9 April 2013. It was announced on 3 April that the Company had published a shareholder circular and notice of General Meetings for Ordinary Shareholders and Subscription Shareholders, each of which will be held on 21 June 2013 following the conclusion or adjournment of the 2013 Annual General Meeting. The Company is seeking shareholder approval for the redesignation as Deferred Shares of all the Outstanding 2011 Subscription Shares and any Outstanding 2012 Subscription Shares in issue following the possible lapse of the Subscription Share Rights after the Final Subscription Date, the subsequent repurchase and cancellation of such Deferred Shares immediately following the redesignation, and the amendment of the Company's Articles to remove all references to the Subscription Shares with effect from such redesignation (together the "Proposals"). The purpose of the Proposals is to enable the Company to continue to be in a position to be approved as a UK investment trust should there be any Outstanding Subscription Shares following the lapse of the Subscription Share Rights. The Proposals do not affect the exercise of the Subscription Share Rights attaching to the 2012 Subscription Shares by the 2012 Subscription Shareholders on or prior to the Final Subscription Date or by the Final Subscription Trustee in accordance with the Articles. On 22 June 2011, the Company issued 10,044,906 2011 Subscription Shares. The Subscription Share Rights attaching to the 2011 Subscription Shares lapsed out of the money on 16 July 2012 and the listing of the remaining 10,023,846 2011 Subscription Shares has been suspended since 3 July 2012. Subsequently, the Company issued 8,456,454 2012 Subscription Shares on 27 July 2012. Each 2012 Subscription Share now gives the holder the right to subscribe for one Ordinary Share at an exercise price of 273 pence. The final date for the exercise of Subscription Share Rights attaching to the 2012 Subscription Shares by the 2012 Subscription Shareholders is 1 July 2013. As at 28 March 2013 (being the latest practicable date prior to the publication of the circular) the mid-market price of an Ordinary Share was 270 pence compared to the exercise price of the 2012 Subscription Shares of 273 pence and 8,533,028 2012 Subscription Shares were in issue. It is intended that the existing standard listing of the 2012 Subscription Shares will be suspended at 7.30 a.m. on 2 July 2013 and that a separate announcement concerning such suspension will be made shortly after such suspension. In the event that the Proposals are approved at the General Meetings, the standard listing of the 2011 Subscription Shares would be cancelled at 8.00 a.m. on 22 July 2013 and the standard listing of the 2012 Subscription Shares would be cancelled at 8.00 a.m. on or by 5 August 2013. Full details of the background to, and details of, the Proposals, which require the approval of Ordinary Shareholders in general meeting and of Subscription Shareholders at separate class meetings and notices of the General Meetings are set out in the shareholder circular. The Company wrote to subscription shareholders on 24 May 2013 reminding them that the final opportunity for shareholders to convert their subscription shares would take place on 1 July 2013. Directors' Acquisition of Shares Mr Mark Bridgeman acquired 3,650 ordinary shares on 13 May 2013 and Mr Rory Landman acquired 40,000 ordinary shares on 29 May 2013. Proposed adoption of focused investment approach,change of nameand tender offer Following positive consultation with the Company's largest shareholders, the Board announced on 10 April 2013 that is was proposing that the Company's investment policy be changed to: seeking long term capital growth from investment in a focused portfolio of between 20-30 stocks which conduct the majority of their business in Eastern European markets. The size of portfolio holdings would be allocated without reference to their weightings in the benchmark, which would remain the MSCI Emerging Europe 10/40 Index. The composition of the benchmark index is currently dominated by a small number of large companies concentrated in the Energy and Financial sectors. Portfolio holding size would depend upon the Manager's conviction level, assessment of upside potential and liquidity. If shareholders approve the change in investment policy, the Company's name will change to BlackRock Emerging Europe plc. In connection with Shareholder approval of the change of investment policy, the Company will introduce a performance triggered tender offer for up to 25 per cent of the Company's shares in issue if, after 3 years, it has underperformed its benchmark by in excess of 3 per cent on a cumulative basis (measured on a NAV per share total return basis over the 3 year period following shareholder approval for the change in investment policy). Furthermore, at the fifth Annual General Meeting following the introduction of the revised investment policy, shareholders will have the opportunity to elect to receive Net Asset Value less applicable costs. Shareholder approval for the proposed change to the Company's investment policy will be sought at a General Meeting to be held following the EST Annual General Meeting on 21 June 2013. At that meeting shareholders will also be asked to approve a tender offer for up to 7.5% of the Company's shares in issue (excluding shares held in treasury) as at the record date at Formula Asset Value (being the cum income NAV less the costs of the tender offer) less a discount of 1%. Publication of circular It was announced on 24 May 2013 that further to the announcement of 10 April 2013, the Company has published a circular seeking Shareholder approval to amend the Company's investment policy and to conduct a tender offer for up to 7.5 per cent. of the Company's Ordinary Shares in issue (excluding treasury shares) as at the record date of 28 June 2013. If Shareholders approve the changes to the investment policy, the Company's name will change to BlackRock Emerging Europe plc, the investment objective will be amended and the Company's ticker will change to BEEP (such changes do not require Shareholder approval). The Board and the Manager have also agreed that, going forward, the Company will pay a fixed base fee but will no longer be charged a performance related fee. With effect from 1 July 2013, the management fee will be charged at 1 per cent. per annum of the value of the Company's average daily market capitalisation. This change does not require Shareholder approval. The circular sets out the proposed changes to the Company's investment policy, investment objective and name, gives further details of the revised management arrangements and discount control measures and contains the formal terms of the Tender Offer, together with details of how Shareholders can tender Ordinary Shares, if they wish to do so. Net asset value The Company announces its NAV on a daily basis, which can be accessed via http: //www.blackrock.co.uk/est, under the "Announcements" tab. The unaudited net asset values for The Eastern European Trust PLC at close of business on 30 May 2013 were: 297.92p per share (pence sterling) - Capital only, undiluted 302.71p per share (pence sterling) - Cum income, undiluted 293.49p per share (pence sterling) - Capital only, diluted 297.43p per share (pence sterling) - Cum income, diluted Material Events and transactions There were no other material events or transactions, except as disclosed, during the three months to 30 April 2013, nor was the Company involved in any other material transactions during the period except the purchase and sale of securities undertaken in the normal course of its business. The Board is not aware of any material events or transactions, except as disclosed herein, occurring between 30 April 2013 and the date of publication of this interim management statement which would have a material impact on the financial position of the Company. Contact details: Barbara Powley BlackRock Investment Management (UK) Limited, Company Secretary Tel: 020 7743 5610 3 June 2013 ENDS Please note that more detailed performance information is available on the Manager's website: www.blackrock.co.uk/est. Neither the contents of the Manager's website nor the contents of any website accessible from hyperlinks on the Manager's website (or any other website) is incorporated into, or forms part of, this announcement. -0- Jun/03/2013 09:34 GMT