THE EUROPEAN INVESTMENT TRUST PLC
HALF-YEARLY REPORT
FOR THE HALF-YEAR ENDED 31 MARCH 2017
The Directors announce the unaudited Half-Yearly Report for the half year ended 31 March 2017 as follows:
Copies of the Half-Yearly Report can be obtained from the following websites: www.theeuropeaninvestmenttrust.com and www.edinburghpartners.com.
FINANCIAL SUMMARY
| 31 March 2017 | 30 September 2016 | Change | |
| Shareholders' funds | £406.3m | £350.7m | 15.9% |
| Net asset value per ordinary share ("NAV") | 967.2p | 833.8p | 16.0% |
| Share price per ordinary share | 840.0p | 722.5p | 16.3% |
| Share price discount to NAV | 13.2% | 13.4% |
| Six months to 31 March 2017 | Year to 30 September 2016 | |
| Revenue return per ordinary share* | 8.9p | 19.0p |
| Capital return per ordinary share* | 146.3p | 88.6p |
| Total return per ordinary share* | 155.2p | 107.6p |
| Interim dividend per ordinary share | 8.0p | - |
| Special dividend per ordinary share | 1.5p | - |
| Total dividend per ordinary share | 9.5p | - |
| * Based on the weighted average number of shares in issue during the period. | ||
| PERFORMANCE | ||
| Six months to 31 March 2017 | Year to 30 September 2016 | |
| NAV Total Return | 18.8% | 14.9% |
| FTSE All-World Europe ex UK Index Total Return* | 12.8% | 21.8% |
| * In sterling. | ||
The NAV Total Returns are sourced from Edinburgh Partners Limited and include dividends reinvested. The index performance figures are sourced from Thomson Reuters Datastream and include dividends reinvested.
Past performance is not a guide to future performance.
OBJECTIVE AND INVESTMENT POLICY
Objective
The objective of The European Investment Trust plc (the "Company") is to achieve long-term capital growth through a diversified portfolio of Continental European securities.
Investment Policy
The Board believes that investment in the diverse and increasingly accessible markets of this region provides opportunities for capital growth over the long term. At the same time, it considers the structure of the Company as a UK-listed investment trust, with fixed capital and an independent Board of Directors, to be well suited to investors seeking longer-term returns.
The Board recognises that investment in some European countries can be riskier than in others. Investment risks are diversified through holding a wide range of securities in different countries and industrial sectors. No more than 10% of the value of the portfolio in aggregate may be held in securities in those countries which are not included in the FTSE All-World European indices.
The Board has the authority to hedge the Company's exposure to movements in the rate of exchange of currencies, principally the euro, in which the Company's investments are denominated, against sterling, its reporting currency. However, it is not generally the Board's practice to do this and the portfolio is not currently hedged.
No investments in unquoted stocks can be made without the prior approval of the Board. The level of gearing within the portfolio is agreed by the Board and should not exceed 20% in normal market conditions.
No more than 10% of the total assets of the Company may be invested in other listed investment companies (including investment trusts) except in such other investment companies which themselves have stated that they will invest no more than 15% of their total assets in other listed investment companies, in which case the limit is 15%.
The Investment Manager's compliance with the limits set out in the investment policy is monitored by the Board and the Alternative Investment Fund Manager.
Chairman's Statement
Results
The net asset value per ordinary share ("NAV") at 31 March 2017, the Company's half-year end, was 967.2p, an increase of 16.0% on the NAV at 30 September 2016 of 833.8p. After including the special and final dividends totalling 22.0p per share which were paid in January 2017, the NAV total return for the six-month period was 18.8%. This compares to the total return from the FTSE All-World Europe ex UK Index in sterling of 12.8%. As prospects for economic growth began to improve, the positioning of the portfolio in economically sensitive stocks led to improved relative performance.
Share price and discount
During the six months to 31 March 2017, the Company's share price increased by 16.3% from 722.5p to 840.0p. The share price total return was 19.5%. The share price discount to NAV narrowed from 13.4% to 13.2% during the period under review.
Revenue
The net revenue return per share in the six-month period to 31 March 2017 was 8.9p, an increase on the 2.1p received in the six months to 31 March 2016. In the period, the Company benefitted from the receipt of French withholding tax suffered during the calendar years 2009 to 2012 and, including interest, this contributed 3.2p of the net revenue return per share during the period. The vast majority of the receipt from the reclaim, a total of 3.0p per share, was included as part of the 22.0p per share dividend paid to shareholders in January 2017. In the year to 30 September 2016, the net revenue return per share was 19.0p.
Shareholders should be aware that the revenue return for the half-year is not indicative of the full-year return, as many European companies pay their dividends between April and September, while the expenses of running the Company are incurred on a more even basis throughout the financial year.
Dividend
Previously the Company has only paid an annual dividend. Following a review by the Directors, it has been decided that it would be beneficial for shareholders to receive a dividend twice a year, an interim dividend in July and, as previously, a final dividend in January.
As a consequence, the Board has decided to pay an interim dividend of 8.0p per share. Following the receipt of a further French witholding tax reclaim, a special dividend of 1.5p per share will also be paid, giving a total of 9.5p per share. These dividends will be paid on 31 July 2017 to shareholders on the register at the close of business on 7 July 2017. The ex-dividend date will be 6 July 2017.
Share buybacks
During the six months to 31 March 2017 the Company bought back 46,781 shares for cancellation at a total cost of £353,000.
Borrowing
In February 2016, the Company entered into a €30 million overdraft credit facility agreement with The Northern Trust Company for the purpose of pursuing its investment objective. The facility is available until further notice. As at 31 March 2017, a total of €12.5 million, equivalent to £10.7 million, and a borrowing level of 2.6% of the Company's net assets, had been drawn down under the facility.
The Board
Douglas McDougall retired from the Board at the conclusion of the Annual General Meeting on 24 January 2017 and I succeeded him as Chairman of the Company. Michael Woodward was appointed Chairman of the Audit Committee. The management engagement responsibilities previously held by the Audit and Management Engagement Committee have been transferred to the Board.
Auditor
At the Annual General Meeting of the Company held on 24 January 2017, shareholders approved the appointment of BDO LLP as Auditors to the Company. This followed the decision of PricewaterhouseCoopers LLP not to seek re-appointment, as a consequence of the EU Audit Regulation and Directive which placed restrictions on auditors proving non-audit services to the Company.
Michael MacPhee
Chairman
23 May 2017
Past performance is not a guide to future performance.
Investment Manager's Review
Economic and market overview
The UK vote to leave the European Union ("EU") and the election of President Trump in the United States suggested that populist anger might threaten the integrity of the EU. However, in both the recent Dutch and French elections, the extremist parties did not achieve a breakthrough and there is increased confidence that the EU will continue to adapt and survive. Economic data across most of Europe continues to hold up and in some cases an improvement is being seen.
The second half of 2016 saw a shift in market sentiment with a focus on the improving prospects for economic growth and the anticipation of a transition away from ultra-low interest rates. As the fear of deflation receded, the premiums attached to stable growth businesses such as consumer staples began to fall. The corollary was that the valuations of economically sensitive stocks such as financials and industrials began to recover. We were well-placed for this shift and as a consequence performance improved significantly.
Portfolio strategy and activity
We have retained significant exposure to the financial sector, holding six banking stocks, which totalled 16.8% of net assets at the period end. During the period, we replaced Swedbank with Dutch-based ING which was trading on a much lower valuation. Our exposure to the industrial sector reduced to 19.0% of net assets, following the sale of cable manufacturer, Prysmian, and the trimming of a number of our holdings such as ball bearings manufacturer, SKF, and auto supplier, Leoni.
We increased our exposure to the healthcare sector during the period to 12.6% of net assets with the purchase of Swiss-based biotech specialist BB Biotech. We believe our healthcare holdings, including Novartis, Sanofi and Roche, are set for a period of growth from new products which will drive earnings growth.
The takeover of insurer, Delta Lloyd, was completed after the period end and this contributed to performance. The Dutch postal operator, PostNL, rejected the merger proposal from Belgian-based bpost and subsequently reinstated its dividend. PostNL is the Company's largest holding and the return to paying a dividend should underpin a valuation which remains undemanding.
After the strong performance from the Company's investments in late 2016, the valuation of the portfolio has risen to a level which is closer to fair value and hence warrants some caution. We retain a pro-cyclical bias within the portfolio, but at current valuation levels would not look to increase the overall cyclicality or to increase the use of the debt facility which we successfully deployed in early 2016.
Outlook
As the economic recovery becomes firmer, Central Banks are able to start withdrawing the monetary stimulus being applied through bond purchases and ultralow interest rates. The US has led the way with incremental rises in interest rates and it seems likely that Europe will follow suit in due course. We believe this change in the interest rate environment, which reflects an improving economic outlook, will continue to support a normalisation of valuations across equity markets.
As ever, there remain political risks, both within Europe and from the rest of the world. The Brexit negotiations and the implementation of President Trump's promise to put America first both have the potential to increase protectionism, cause disruption and restrict economic growth. However, our central case is that Europe will continue its economic recovery and that the prospects for European equities remain solid.
Craig Armour
Edinburgh Partners Limited
23 May 2017
Past performance is not a guide to future performance.
PORTFOLIO OF INVESTMENTS
as at 31 March 2017
Rank | Company | Sector | Country | Valuation £'000 | % of Net Assets | ||
| 2017 | 2016 | 2017 | 2016 | ||||
| 1 | 1 | PostNL | Industrials | Netherlands | 19,484 | 4.8 | 5.1 |
| 2 | 5 | BNP Paribas | Financials | France | 14,312 | 3.5 | 3.6 |
| 3 | 9 | Sanofi | Health Care | France | 14,253 | 3.5 | 3.3 |
| 4 | 8 | Novartis | Health Care | Switzerland | 13,903 | 3.4 | 3.3 |
| 5 | 7 | Bayer | Basic Materials | Germany | 13,810 | 3.4 | 3.3 |
| 6 | 27 | Telefonica | Telecommunications | Spain | 13,778 | 3.4 | 2.4 |
| 7 | 3 | Roche* | Health Care | Switzerland | 13,735 | 3.4 | 3.7 |
| 8 | 12 | Ubisoft Entertainment | Consumer Goods | France | 13,411 | 3.3 | 3.2 |
| 9 | 4 | Total | Oil & Gas | France | 13,169 | 3.2 | 3.6 |
| 10 | 17 | BBVA | Financials | Spain | 13,025 | 3.2 | 2.7 |
| 11 | 2 | Royal Dutch Shell** | Oil & Gas | Netherlands | 12,766 | 3.1 | 3.9 |
| 12 | 10 | ENI | Oil & Gas | Italy | 12,535 | 3.1 | 3.3 |
| 13 | 22 | Airbus | Industrials | France | 11,637 | 2.9 | 2.5 |
| 14 | 11 | DIA | Consumer Services | Spain | 11,081 | 2.7 | 3.3 |
| 15 | 20 | Ryanair | Consumer Services | Ireland | 11,043 | 2.7 | 2.7 |
| 16 | - | ING | Financials | Netherlands | 11,013 | 2.7 | - |
| 17 | 13 | Nokia | Technology | Finland | 10,929 | 2.7 | 3.2 |
| 18 | 16 | DNB | Financials | Norway | 10,595 | 2.6 | 2.8 |
| 19 | 33 | Commerzbank | Financials | Germany | 10,371 | 2.6 | 2.0 |
| 20 | - | Ahold Delhaize | Consumer Services | Netherlands | 10,129 | 2.5 | - |
| 21 | 14 | Leoni | Industrials | Germany | 10,051 | 2.5 | 3.1 |
| 22 | 37 | Petroleum Geo-Services | Oil & Gas | Norway | 10,045 | 2.5 | 1.6 |
| 23 | 30 | Outotec | Industrials | Finland | 9,811 | 2.4 | 2.1 |
| 24 | 15 | Adecco | Industrials | Switzerland | 9,791 | 2.4 | 2.8 |
| 25 | 29 | Delta Lloyd | Financials | Netherlands | 9,781 | 2.4 | 2.2 |
| 26 | 26 | E.ON | Utilities | Germany | 9,773 | 2.4 | 2.4 |
| 27 | 24 | Telecom Italia | Telecommunications | Italy | 9,763 | 2.4 | 2.5 |
| 28 | 18 | Michelin | Consumer Goods | France | 9,590 | 2.4 | 2.7 |
| 29 | - | BB Biotech | Health Care | Switzerland | 9,157 | 2.3 | - |
| 30 | 32 | Danske Bank | Financials | Denmark | 9,096 | 2.2 | 2.1 |
| 31 | - | Gemalto | Technology | Netherlands | 8,938 | 2.2 | - |
| 32 | 6 | Stora Enso | Basic Materials | Finland | 8,107 | 2.0 | 3.4 |
| 33 | 25 | Siemens | Industrials | Germany | 8,095 | 2.0 | 2.5 |
| 34 | 19 | SKF | Industrials | Sweden | 8,046 | 2.0 | 2.7 |
| 35 | 21 | Rocket Internet | Financials | Germany | 7,483 | 1.8 | 2.6 |
| 36 | 23 | Ipsos | Consumer Services | France | 7,109 | 1.8 | 2.5 |
| 37 | 31 | TDC | Telecommunications | Denmark | 6,857 | 1.7 | 2.1 |
| 38 | 35 | Piaggio | Consumer Goods | Italy | 6,247 | 1.5 | 1.6 |
| Prior year investments sold during the period | 6.2 | ||||||
| Total equity investments | 412,719 | 101.6 | 103.0 | ||||
| Cash and other net current assets | 4,210 | 1.0 | (0.1) | ||||
| Borrowings | (10,657) | (2.6) | (2.9) | ||||
| Net assets | 406,272 | 100.0 | 100.0 | ||||
The figures for 2017 represent the position at 31 March 2017 and the figures for 2016 represent the position as at 30 September 2016.
| * | The investment is in non-voting shares. |
| ** | The investment is in A shares. |
DISTRIBUTION OF INVESTMENTS
as at 31 March 2017 (% of net assets)
| Sector distribution | % |
| Financials | 21.0 |
| Industrials | 19.0 |
| Health Care | 12.6 |
| Oil & Gas | 11.9 |
| Consumer Services | 9.7 |
| Telecommunications | 7.5 |
| Consumer Goods | 7.2 |
| Basic Materials | 5.4 |
| Technology | 4.9 |
| Utilities | 2.4 |
| Cash and other net current assets | 1.0 |
| Borrowings | (2.6) |
| 100.0 |
Geographical distribution | % |
| France | 20.6 |
| Netherlands | 17.7 |
| Germany | 14.7 |
| Switzerland | 11.5 |
| Spain | 9.3 |
| Finland | 7.1 |
| Italy | 7.0 |
| Norway | 5.1 |
| Denmark | 3.9 |
| Ireland | 2.7 |
| Sweden | 2.0 |
| Cash and other net current assets | 1.0 |
| Borrowings | (2.6) |
| 100.0 |
DIRECTORS' STATEMENT OF PRINCIPAL RISKS AND UNCERTAINTIES
The important events that have occurred during the period under review and the key factors influencing the Financial Statements are set out in the Chairman's Statement and the Investment Manager's Review above. The principal factors that could impact the remaining six months of the financial year are also detailed in the Investment Manager's Review.
The Board considers that the following are the principal risks associated with investing in the Company: investment and strategy risk, discount volatility risk, market risk (comprising interest rate risk, currency risk and price risk), liquidity risk, credit risk, gearing risk, regulatory risk, operational risk and other financial risk. These risks, and the way in which they are managed, are described in more detail under the heading "Principal risks and uncertainties" within the Strategic Report in the Company's Annual Report and Financial Statements for the year ended 30 September 2016. The Company's principal risks and uncertainties are unchanged since the date of that report.
DIRECTORS' STATEMENT OF RESPONSIBILITIES IN RESPECT OF THE FINANCIAL STATEMENTS
The Directors confirm that to the best of their knowledge:
| • | The condensed set of Financial Statements has been prepared in accordance with Financial Reporting Standard 104: "Interim Financial Reporting" and gives a true and fair view of the assets, liabilities, financial position and profit of the Company. | |
| • | This Half-Yearly Report includes a fair review of the information required by: | |
| a) | 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of Financial Statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and | |
| b) | 4.2.8R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Company during that period; and any changes in the related party transactions described in the last Annual Report that could do so. | |
The Half-Yearly Report was approved by the Board of Directors on 23 May 2017 and the above responsibility statement was signed on its behalf by Michael MacPhee, Chairman.
INCOME STATEMENT (UNAUDITED)
for the six months to 31 March 2017
| Six months to 31March2017 | Six months to 31March2016 | Year to 30 September2016 | ||||||||
| Note | Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000 | |
| Gains on investments at fair value | - | 61,729 | 61,729 | - | 5,430 | 5,430 | - | 37,740 | 37,740 | |
| Foreign exchange (losses)/ gains | (11) | (266) | (277) | 70 | 440 | 510 | 240 | (479) | (239) | |
| Income | 2 | 4,289 | - | 4,289 | 1,985 | - | 1,985 | 10,357 | - | 10,357 |
| Management fee | (904) | - | (904) | (796) | - | (796) | (1,586) | - | (1,586) | |
| Other expenses | (231) | - | (231) | (223) | - | (223) | (434) | - | (434) | |
Net return before finance costs and taxation | 3,143 | 61,463 | 64,606 | 1,036 | 5,870 | 6,906 | 8,577 | 37,261 | 45,838 | |
| Finance costs | (38) | - | (38) | (18) | - | (18) | (51) | - | (51) | |
Net return on ordinary activities before taxation | 3,105 | 61,463 | 64,568 | 1,018 | 5,870 | 6,888 | 8,526 | 37,261 | 45,787 | |
| Taxation on ordinary activities | 3 | 639 | - | 639 | (142) | - | (142) | (523) | - | (523) |
Net return after taxation | 3,744 | 61,463 | 65,207 | 876 | 5,870 | 6,746 | 8,003 | 37,261 | 45,264 | |
| pence | pence | pence | pence | pence | pence | pence | pence | pence | ||
| Return per ordinary share* | 8.9 | 146.3 | 155.2 | 2.1 | 13.9 | 16.0 | 19.0 | 88.6 | 107.6 | |
The total column of the statement is the Profit and Loss Account of the Company. The revenue and capital columns are prepared under guidance published by the Association of Investment Companies ("AIC").
All revenue and capital items in the above statement derive from continuing operations.
A separate Statement of Recognised Gains and Losses has not been prepared as all such gains and losses are included in the Income Statement.
* The return per ordinary share for the six months to 31 March 2017 is based on the net revenue return after taxation of £3,744,000 (six months to 31 March 2016: £876,000; year to 30September 2016: £8,003,000) and the net capital return after taxation of £61,463,000 (six months to 31 March 2016: £5,870,000; year to 30September 2016: £37,261,000) and on 42,015,349 (six months to 31 March 2016: 42,069,371; year to 30 September 2016: 42,067,630) ordinary shares, being the weighted average number of ordinary shares in issue during the period.
BALANCE SHEET (UNAUDITED)
as at 31 March 2017
Note | 31 March 2017 £'000 | 31 March 2016 £'000 | 30 September 2016 £'000 | |
| Fixed asset investments | ||||
| Investments at fair value through profit or loss | 412,719 | 320,186 | 361,065 | |
| Current assets | ||||
| Debtors | 4,462 | 1,166 | 1,538 | |
| Cash at bank and short-term deposits | 62 | 60 | 105 | |
| 4,524 | 1,226 | 1,643 | ||
| Current liabilities | ||||
| Creditors | 314 | 381 | 1,833 | |
| Bank overdraft | 4 | 10,657 | 8,777 | 10,216 |
| 10,971 | 9,158 | 12,049 | ||
| Net current liabilities | (6,447) | (7,932) | (10,406) | |
| Net assets | 406,272 | 312,254 | 350,659 | |
| Capital and reserves | ||||
| Called-up share capital | 5 | 10,502 | 10,517 | 10,513 |
| Share premium account | 123,749 | 123,749 | 123,749 | |
| Capital redemption reserve | 8,309 | 8,294 | 8,298 | |
| Capital reserve | 256,948 | 164,560 | 195,838 | |
| Revenue reserve | 6,764 | 5,134 | 12,261 | |
| Total shareholders' funds | 406,272 | 312,254 | 350,659 | |
| pence | pence | pence | ||
| Net asset value per ordinary share | 7 | 967.2 | 742.2 | 833.8 |
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS (UNAUDITED)
for the six months to 31 March 2017
| Called-up share capital £'000 | Share premium account £'000 | Capital redemption reserve £'000 | Capital reserve £'000 | Revenue reserve £'000 | Total £'000 | |
| Six months to 31 March 2017 | ||||||
| At 1 October 2016 | 10,513 | 123,749 | 8,298 | 195,838 | 12,261 | 350,659 |
| Net return after taxation | - | - | - | 61,463 | 3,744 | 65,207 |
| Dividends paid | - | - | - | - | (9,241) | (9,241) |
| Shares purchased for cancellation | (11) | - | 11 | (353) | - | (353) |
At 31 March 2017 | 10,502 | 123,749 | 8,309 | 256,948 | 6,764 | 406,272 |
| Six months to 31 March 2016 | ||||||
| At 1 October 2015 | 10,517 | 123,749 | 8,294 | 158,690 | 10,989 | 312,239 |
| Net return after taxation | - | - | - | 5,870 | 876 | 6,746 |
| Dividends paid | - | - | - | - | (6,731) | (6,731) |
| At 31 March 2016 | 10,517 | 123,749 | 8,294 | 164,560 | 5,134 | 312,254 |
| Year ended 30 September 2016 | ||||||
| At 1 October 2015 | 10,517 | 123,749 | 8,294 | 158,690 | 10,989 | 312,239 |
| Net return after taxation | - | - | - | 37,261 | 8,003 | 45,264 |
| Dividends paid | - | - | - | - | (6,731) | (6,731) |
| Shares purchased for cancellation | (4) | - | 4 | (113) | - | (113) |
| At 30 September 2016 | 10,513 | 123,749 | 8,298 | 195,838 | 12,261 | 350,659 |
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
for the six months to 31 March 2017
1. Accounting policies
Basis of accounting
The Company applies Financial Reporting Standard ("FRS") 102: "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Statement of Recommended Practice as issued by the AIC.
The Company has prepared the Financial Statements for the six months to 31 March 2017 in accordance with FRS 104: "Interim Financial Reporting" and in line with the same accounting policies as set out in the Company's Annual Report and Financial Statements for the year ended 30 September 2016. As permitted by FRS 102, the Company has elected to remove the Cash Flow Statement from the Half-Yearly Report.
Investments
The valuation techniques used by the Company remain unchanged from those disclosed in the Company's Annual Report and Financial Statements for the year ended 30 September 2016.
All of the Company's financial instruments are considered to be Level 1, being valued at quoted prices in active markets. Further details can be found in note 9 of the Company's Annual Report and Financial Statements for the year ended 30 September 2016.
Segmental reporting
The Directors are of the opinion that the Company is engaged in a single segment of business, being investment business. The Company primarily invests in listed companies.
2. Income
| Six months to 31 March 2017 £'000 | Six months to 31 March 2016 £'000 | Year to 30 September 2016 £'000 | |
| Income from investments | |||
| Overseas dividends | 4,010 | 1,985 | 10,357 |
| Interest on withholding tax reclaim | 279 | - | - |
| Total income | 4,289 | 1,985 | 10,357 |
3. Taxation
| Six months to 31 March 2017 £'000 | Six months to 31 March 2016 £'000 | Year to 30 September 2016 £'000 | |
| UK corporation tax | - | - | - |
| Overseas withholding tax | 416 | 142 | 523 |
| Overseas withholding tax reclaim | (1,055) | - | - |
| Net taxation (reclaimed)/charged | (639) | 142 | 523 |
In October 2016, the Company received an overseas withholding tax refund of £1,055,000 in relation to a successful reclaim of French withholding tax suffered during the calendar years 2009 to 2012. The interest received on the reclaim is detailed in note 2, with the total reclaim, including interest, amounting to £1,334,000.
4. Borrowings
| 31 March 2017 £'000 | 31 March 2016 £'000 | 30 September 2016 £'000 | |
| Bank overdraft | 10,657 | 8,776 | 10,216 |
In February 2016, the Company entered into a €30,000,000 overdraft credit facility agreement with The Northern Trust Company for the purpose of pursuing its investment objective. As at 31 March 2017, €12,459,000, equivalent to £10,657,000 (31 March 2016: €11,069,000, equivalent to £8,776,000; 30 September 2016: €11,809,000, equivalent to £10,216,000) had been drawn down under the facility. The facility is uncommitted.
5. Share capital
| Allotted, called-up and fully paid | ||
| Number of shares | £'000 | |
| Equity share capital | ||
| Ordinary shares of 25p each | ||
| Balance at 30 September 2016 | 42,053,550 | 10,513 |
| Shares issued | - | - |
| Shares cancelled | (46,781) | (11) |
| Balance at 31 March 2017 | 42,006,769 | 10,502 |
During the six months to 31 March 2017, 46,781 ordinary shares were purchased and cancelled at a total cost of £353,000 (six months to 31 March 2016: no ordinary shares were issued or purchased and cancelled; year to 30 September 2016: 15,821 ordinary shares were purchased and cancelled at a total cost of £113,000).
6. Dividends
Payment date | Six months to 31 March 2017 £'000 | Six months to 31 March 2016 £'000 | Year to 30 September 2016 £'000 | |
| Final dividend for the year ended 30 September 2016 of 16.0p | 31 January 2017 | 6,721 | - | - |
| Special dividend for the year ended 30 September 2016 of 6.0p | 31 January 2017 | 2,520 | - | - |
| Final dividend for the year ended 30 September 2015 of 14.0p | 29 January 2016 | - | 5,890 | 5,890 |
| Special dividend for the year ended 30 September 2015 of 2.0p | 29 January 2016 | - | 841 | 841 |
| 9,241 | 6,731 | 6,731 |
7. Net asset value per ordinary share
| 31 March 2017 | 31 March 2016 | 30 September 2016 | |
| Net assets attributable at the period end | £406,272,000 | £312,254,000 | £350,659,000 |
| Number of ordinary shares in issue at the period end | 42,006,769 | 42,069,371 | 42,053,550 |
| Net asset value per ordinary share | 967.2p | 742.2p | 833.8p |
8. Exchange rates
Detailed below are the exchange rates against sterling used in the preparation of the Financial Statements.
| 31 March 2017 | 31 March 2016 | 30 September 2016 | |
| Euro | 1.1691 | 1.2613 | 1.1559 |
| Swiss franc | 1.2516 | 1.3764 | 1.2593 |
| Swedish krona | 11.1644 | 11.6518 | 11.1290 |
| Norwegian krone | 10.7400 | 11.8883 | 10.3820 |
| Danish krone | 8.6941 | 9.3970 | 8.6072 |
| NZ dollar | 1.7888 | 2.0702 | 1.7863 |
9. Financial information
The financial information for the six months to 31 March 2017 and for the six months to 31March2016has not been audited or reviewed by the Company's Auditors pursuant to the Auditing Practices Board guidance on such reviews. The financial information contained in this report does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006.
The latest published audited Financial Statements which have been delivered to the Registrar of Companies are the Annual Report and Financial Statements for the year ended 30 September 2016; the report of the independent Auditors thereon was unqualified and did not contain a statement under Section 498 of the Companies Act 2006. The information for the year ended 30 September 2016 is an extract from that Annual Report and Financial Statements.
10. Status of the Company
It is the intention of the Directors to conduct the affairs of the Company so that it continues to satisfy the conditions for approval as an investment trust company as set out in Sections 1158 and 1159 of the Corporation Tax Act 2010.
11. Going concern
The Company's business activities, together with factors likely to affect its future development, performance and financial performance, are set out in the Investment Manager's Review and Directors' Statement of Responsibilities. The Company's principal risks are listed above. Its assets consist principally of a diversified portfolio of listed European equity shares, which in most circumstances are realisable within a short period of time and exceed its current liabilities by a significant amount. The Directors have concluded that the Company has adequate resources to continue in operational existence for the foreseeable future, being a period of at least 12 months from the date this Half-Yearly Report is approved. For this reason, they have adopted the going concern basis in preparing the Financial Statements.
12. Related party transactions
There were no related party transactions during the period.
13. Post balance sheet events
Subsequent to the half-year end, in May 2017, the Company received €747,000, including interest, equivalent to £631,000, in relation to a successful reclaim for French withholding tax suffered during the calendar years 2013 and 2014, which was not anticipated at the period end.
SHAREHOLDER INFORMATION
Investing in the Company
The Company's ordinary shares are traded on the London Stock Exchange and the New Zealand Stock Exchange and can be bought or sold through a stockbroker or financial adviser. The ordinary shares are eligible for inclusion in ISAs and SIPPs. The Company's shares are also available on various share trading platforms.
Frequency of NAV publication
The Company's NAV is released daily to the London Stock Exchange and the New Zealand Stock Exchange and published on the Company's website at www.theeuropeaninvestmenttrust.com and on the website of Edinburgh Partners at www.edinburghpartners.com.
Portfolio updates
The Company's portfolio holdings report, detailing a list of all investments, including sectoral and geographical analyses, is released on a monthly basis to the London Stock Exchange and the New Zealand Stock Exchange. It is also published on the Company's website at www.theeuropeaninvestmenttrust.com and on the website of Edinburgh Partners at www.edinburghpartners.com.
Share price and sources of other information
The Company's share price is quoted daily in the Financial Times, the Daily Telegraph and The Times under "Investment Companies". Investors in New Zealand can obtain share prices from leading newspapers in that country. Previous day closing price, daily NAV and other portfolio information is published on the Company's website at www.theeuropeaninvestmenttrust.com and on the website of Edinburgh Partners Limited at www.edinburghpartners.com. Other useful information on investment trusts, such as prices, NAVs and company announcements, can be found on the websites of the London Stock Exchange at www.londonstockexchange.com and the AIC at www.theaic.co.uk.
Share register enquiries
The register for the ordinary shares is maintained by Computershare Investor Services PLC. In the event of queries regarding your holding, please contact the Registrar on 0370 889 4086 or email: web.queries@computershare.co.uk. Changes of name and/or address must be notified in writing to the Registrar, at the relevant address detailed below. You can check your shareholding and find practical help on transferring shares or updating your details at www.investorcentre.co.uk.
| Key dates | |
| Company's year end | 30 September |
| Annual results announced | November |
| Annual General Meeting | January |
| Final dividend paid | January |
| Company's half-year end | 31 March |
| Half-yearly results announced | May |
| Interim dividend paid | July |
Association of Investment Companies
The Company is a member of the AIC, which publishes monthly statistical information in respect of member companies. For further details, please contact the AIC on 02072825555, enquiries@theaic.co.uk or visit the website: www.theaic.co.uk.
RISK FACTORS
This document is not a recommendation, offer or invitation to buy, sell or hold shares of the Company. If you wish to deal in shares of the Company, you may wish to contact an authorised professional investment adviser.
An investment in the Company should be regarded as long term and is only suitable for investors who are capable of evaluating the risks and merits of such investment and who have sufficient resources to bear any loss which might result from such investment.
The market value of, and the income derived from, the ordinary shares can fluctuate. The Company's ordinary share price may go down as well as up. Past performance is not a guide to future performance. There is no guarantee that the market price of the ordinary shares will fully reflect their underlying net asset value. Fluctuations in exchange rates will affect the value of overseas investments (and any income received) held by the Company. Investors may not get back the full value of their investment. There can be no guarantee that the investment objective of the Company will be met. The levels of, and reliefs from, taxation may change.
This Half-Yearly Report contains "forward-looking statements" with respect to the Company's plans and its current goals and expectations relating to its future financial condition, performance and results. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events that are beyond the Company's control. As a result, the Company's actual future financial condition, performance and results may differ materially from the plans, goals and expectations set forth in the Company's forward-looking statements. The Company undertakes no obligation to update the forward-looking statements contained within this Half-Yearly Report or any other forward-looking statements it makes.
The Company is a public company. It is registered in England and Wales and its shares are traded on the London Stock Exchange and the New Zealand Stock Exchange. The Company is not regulated or authorised by the Financial Conduct Authority.
The Directors of the Company, the directors of Edinburgh Partners AIFM Limited and the directors and employees of Edinburgh Partners Limited may (subject to applicable laws and regulations) hold shares in the Company and may buy, sell or offer to deal in the Company's shares from time to time.
Corporate Information
| Directors (all non-executive) | Registrar - New Zealand |
| Michael W M R MacPhee (Chairman) William D Eason Michael B Moule Dr Michael T Woodward | Computershare Investor Services Limited Private Bag 92119, Victoria Street West Auckland 1142, New Zealand Level 2, 159 Hurstmere Road, Takapuna Auckland 0622, New Zealand |
| Company Secretary and Registered Office | Solicitors |
| Kenneth J Greig Beaufort House 51 New North Road Exeter EX4 4EP | Dickson Minto W.S. 16 Charlotte Square Edinburgh EH2 4DF |
| Alternative Investment Fund Manager | Depositary |
| Edinburgh Partners AIFM Limited 27-31 Melville Street Edinburgh EH3 7JF | Northern Trust Global Services Limited 50 Bank Street Canary Wharf London E14 5NT |
| Investment Manager | Custodian |
| Edinburgh Partners Limited 27-31 Melville Street Edinburgh EH3 7JF | The Northern Trust Company 50 Bank Street Canary Wharf London E14 5NT |
| Independent Auditors | Stockbroker |
| BDO LLP 55 Baker Street London W1U 7EU | J.P. Morgan Securities plc 25 Bank Street Canary Wharf London E14 5JP |
| Registrar - UK | Bankers |
| Computershare Investor Services PLC The Pavilions Bridgwater Road Bristol BS99 6ZZ | J.P. Morgan Chase Bank, NA 1 Chaseside Bournemouth BH7 7DA |
Registered in England and Wales No. 1055384
An investment company as defined under Section 833 of the Companies Act 2006
The Company is a member of the Association of Investment Companies
Enquiries
Craig Armour0131 270 3800
Kenneth J Greig 0131 270 3800
Edinburgh Partners AIFM Limited
27-31 Melville Street
Edinburgh EH3 7JF
23 May 2017
National Storage Mechanism
A copy of the Half-Yearly Report will be submitted shortly to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated at: www.morningstar.co.uk/uk/nsm.
END
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.
