Interim Management Statement
The European Investment Trust plc
Interim Management Statement
for the quarter ended 31 December 2013
The Board of The European Investment Trust plc (the "Company") announces its
Interim Management Statement for the period from 1 October 2013 to 31 December
2013. This statement is required by the UK Listing Authority's Disclosure and
Transparency Rules and should not be relied upon for any other purpose.
Objective
The objective of the Company is to achieve long-term capital growth through a
diversified portfolio of Continental European securities.
%
Financial summary 31 December 2013 30 September Change
2013
Net assets £352.29m £323.22m 9.0
Net asset value ("NAV") per share 837.41p 768.31p 9.0
Share price 745.00p 684.50p 8.8
Share price discount to net asset 11.0% 10.9%
value
Investment Manager's review
Review of Markets
The quarter under review was a relatively quiet period in terms of European
political and economic developments. The German election result and subsequent
formation of a coalition government should mean little material change to
Germany's policy towards the Eurozone. Recent economic indicators in Europe
have been mixed, consistent with our view that economic recovery when it comes
will be relatively anaemic. However, compared to the extreme volatility of
recent years, this return to economic growth will be welcome.
Portfolio Strategy
During the quarter, we completed the sale of two of our top performing stocks.
We had purchased Mediaset España and Metro when they were both firmly out of
favour. The strong upward movement in the share prices of both these stocks and
the corresponding valuation uplift is consistent with a significant recovery in
profits being priced in well ahead of the actual delivery of the profit
improvement. In our assessment, the risk-reward profile had turned negative for
both companies and the shares were sold.
During the quarter ended 31 December 2013, we purchased two further companies
that we considered to be out of favour, the oil major, Royal Dutch Shell, and
KPN, the Dutch telecom operator. Both these companies operate in sectors which
have been recently shunned by investors. In particular, the combination of low
valuation and two specific catalysts, namely, an improvement in regulation as
well as the possibility of consolidation within the sector, makes the telecom
sector one of the most attractive in Europe. Our total exposure to this sector
at the end of December 2013 was 14.9%.
Outlook
The calendar year 2013 has been a very good year for European equity markets.
As normally happens at this stage in the stock market cycle, equity markets
have anticipated economic recovery. For equity markets to continue this upward
momentum, amongst other factors, the corporate sector will have to deliver on
this implied profit improvement. However, we are still able to find a number of
interesting new investment opportunities in Europe on reasonable valuations.
Whilst we are still able to do this, we will continue to remain fully invested.
Portfolio of investments as at 31 December 2013
% of
Ranking Company Sector Country Net
Assets
1 PostNL Industrials Netherlands 3.3
2 Gerresheimer Health Care Germany 3.2
3 Banco Espirito Santo Financials Portugal 2.9
4 Piaggio Consumer Goods Italy 2.9
5 Ziggo Telecommunications Netherlands 2.9
6 Orange Telecommunications France 2.8
7 Indra Sistemas Technology Spain 2.8
8 ENI Oil & Gas Italy 2.7
9 Valeo Consumer Goods France 2.7
10 A.P. Moller-Maersk Industrials Denmark 2.7
11 Belgacom Telecommunications Belgium 2.6
12 Vivendi Consumer Services France 2.6
13 Aryzta Consumer Goods Switzerland 2.6
14 Danske Bank Financials Denmark 2.6
15 GEA Industrials Germany 2.5
16 BNP Paribas Financials France 2.5
17 Royal Dutch Shell Oil & Gas Netherlands 2.5
18 Volkswagen* Consumer Goods Germany 2.5
19 BBVA Financials Spain 2.5
20 Portugal Telecom Telecommunications Portugal 2.4
21 CAF Industrials Spain 2.4
22 Azimut Financials Italy 2.4
23 Prysmian Industrials Italy 2.4
24 Ahold Consumer Services Netherlands 2.4
25 Nutreco Consumer Goods Netherlands 2.3
26 Ipsos Consumer Services France 2.3
27 Ryanair Consumer Services Ireland 2.3
28 ABB Industrials Switzerland 2.3
29 Swedbank Financials Sweden 2.2
30 Michelin Consumer Goods France 2.2
31 Swatch Consumer Goods Switzerland 2.2
32 TDC Telecommunications Denmark 2.2
33 GAM Financials Switzerland 2.1
34 Heineken Consumer Goods Netherlands 2.0
35 Fresenius Medical Care Health Care Germany 2.0
36 Gazprom** Oil & Gas Russia 2.0
37 KPN Telecommunications Netherlands 2.0
38 Total Oil & Gas France 2.0
39 DCC Industrials UK 1.9
40 SAP Technology Germany 1.7
41 Feintool International Industrials Switzerland 1.2
42 Unipol Gruppo Financials Italy 1.2
Finanziario
Total equity investments 99.9
Cash and other net assets 0.1
100.0
* The investment is in non-voting preference shares.
**The investment is in American Depository Receipts.
Sector distribution
31 December 2013
% of Net Assets
Consumer Goods 19.4
Industrials 18.7
Financials 18.4
Telecommunications 14.9
Consumer Services 9.6
Oil & Gas 9.2
Health Care 5.2
Technology 4.5
Cash and other net 0.1
assets
100.0
Geographical distribution
31 December 2013
% of Net Assets
Netherlands 17.4
France 17.1
Germany 11.9
Italy 11.6
Switzerland 10.4
Spain 7.7
Denmark 7.5
Portugal 5.3
Belgium 2.6
Ireland 2.3
Sweden 2.2
Russia 2.0
United Kingdom 1.9
Cash and other net 0.1
assets
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
at:
www.theeuropeaninvestmenttrust.com and the Edinburgh Partners' website at:
www.edinburghpartners.com.
Past performance is not a guide to future performance.
The Board is not aware of any significant events or transactions that have
occurred between 31 December 2013 and the date of publication of this statement
which would have a material impact on the financial position of the Company.
14 January 2014
Enquiries:
Dale Robertson
Kenneth Greig
Edinburgh Partners Limited
27-31 Melville Street
Edinburgh EH3 7JF
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 Trust plc's website 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.
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