Interim Management Statement

RNS Number : 0492W

Foreign & Colonial Eurotrust PLC

21 July 2009

 



Date:          21 July 2009

Contact:    Peter Jarvis    

                    F&C Management Limited    

                    020 7628 8000    

Foreign & Colonial Eurotrust PLC

Interim Management Statement

for the quarter ended 30 June 2009

Objective

The objective of the Company is to achieve long-term growth through a diversified portfolio of Continental European securities.

Summary of results

Capital return Attributable to equity shareholders	30 June 2009	31 March 2009	% Change
Net assets	£227.31m	£215.89m	+5.3
Net asset value ('NAV') per share	487.79p	454.46p	+7.3
Share price	421.50p	381.25p	+10.6

Manager's review

Performance

Your Company's NAV per share rose by 7.3% during the quarter ended 30 June 2009, compared with a rise of 9.9% in the FTSE World Europe Index, excluding the UK and adjusted to sterling (the 'Benchmark'). The Company's share price rose by 10.6% from 381.25p to 421.50p. The discount narrowed slightly from 16.1% to 13.6%. During the quarter the Company bought back and cancelled 905,866 shares at a cost of £3,876,000. 

Review of markets

Equity markets rose during the quarter with strong leadership by industrial cyclicals, financials and some highly leveraged companies; this reflected on the whole an improvement in overall sentiment towards the economy and asset prices in general. Europe's economy is in recession with the latest growth forecasts from the ECB suggesting that eurozone GDP will shrink by 4.6% in 2009 - a much bigger contraction than previously forecast. Unemployment rose for the thirteenth consecutive month in April with nearly 400,000 people losing their jobs, bringing the number of people out of work to its highest level since 1999 (over 14.5 million). There are, however, signs that the prospects for economic recovery are improving and investors are seemingly more willing to focus on the positives. The manufacturing and services industries shrank at their slowest rate for nine months in June and surveys such as the IFO show an improvement in business confidence.  

Portfolio strategy

During the period we sold out of the Company's holdings in Digital Multimedia Technologies and GEK, post a strong recovery in performance from their recent lows. 

We initiated positions in Ingenico and Prosegur. The latter is a leading player in the security services market, its key markets being Spain, 35% market share, and Latin America (LATAM). Management has been building a strong position in LATAM through a fairly aggressive acquisition policy and sales there now represent more than 35% of the Group. The security business is fairly defensive in nature and the release of the first quarter numbers showed the company continues to post strong organic growth (+3.5%) and maintain margins despite the challenging economic environment. The strength of the Balance sheet should give Management scope for further M&A activity, particularly if the current economic backdrop presents opportunities.

Ingenico designs, manufactures and distributes electronic terminals, systems and related products for electronic payment transactions. Products include mobile GSM terminals and fixed terminals with pin pads. The company's terminals are used primarily in retail stores and petrol stations, operating on a global scale. Ingenico has a seemingly strong competitive position against the industry, good cashflow and a stong balance sheet. 

We have continued to add to selective financial stocks, such as BNP Paribas, with the belief that institutions with strong franchises will earn good profits over the long term. BNP is one of the world's largest banks with 73% of revenues in Western Europe and, post its acquisition of Fortis, is the largest deposit bank in the Eurozone.

Outlook

Broad market valuations are attractive for those with a medium to long-term view but despite tentative grounds for optimism we still believe the road to recovery will be a long and difficult one. With this in mind our emphasis on best-of-breed remains intact, especially on those capable of winning market share from weaker peers. Quality business models, low reliance of external funding, long-serving management and rising barriers to entry are all favourable characteristics.  

Peter Jarvis
Manager
21 July 2009

Ten largest equity holdings at 30 June 2009
30 June	31 March	Company	Sector (Country)	% of total
2009	2009			investments
1	4	Credit Suisse	Banks (Switzerland)	4.8
2	1	Total	Oil & gas producers (France)	4.7
3	-	BNP Paribas	Banks (France)	3.6
4	5	Nokia	Technology hardware & equipment (Finland)	3.5
5	8	Siemens	General industrial (Germany)	3.5
6	3	Roche	Pharmaceuticals & biotechnology (Switzerland)	3.3
7	2	Novartis	Pharmaceuticals & biotechnology (Switzerland)	3.3
8	10	Unilever	Food producers (Netherlands)	3.1
9	6	ENI	Oil & gas producers (Italy)	2.9
10	7	G4S	Support services (Denmark)	2.8
			Total	35.5

Industrial classification of investments

	30 June 2009 % of total investments	31 March 2009 % of total investments
Financials	25.9	19.5
Industrials	15.9	17.2
Consumer goods	13.4	10.3
Oil & gas	11.2	12.2
Technology	9.9	10.3
Healthcare	9.3	12.7
Consumer services	6.0	6.9
Telecommunications	5.3	6.2
Basic materials	3.1	2.1
Utilities	-	2.6

Further Information

Further information, including monthly factsheets and daily net asset values published since the end of the quarter, can be found on the www.foreignandcolonialeurotrust.com website.

The Board is not aware of any significant events or transactions that have occurred between 30 June 2009 and the date of publication of this statement which would have a material impact on the financial position of the Company.  

Disclaimer

This interim management statement has been prepared solely to provide information to meet the requirements of the UK Listing Authority's Disclosure and Transparency Rules.

By order of the Board

F&C Management Limited, Secretary

Exchange House, Primrose Street, London EC2A 2NY

21 July 2009

 

END

 

 

IMSILFSEDVILFIA