BAILLIE GIFFORD EUROPEAN GROWTH TRUST PLC
THE EUROPEAN INVESTMENT TRUST PLC
Annual Financial Report for the year ended 30 September 2016
The full Annual Report and Financial Statements can be accessed via the
Company's website at www.theeuropeaninvestmenttrust.com or by contacting the
Company Secretary by telephone on 0131 270 3800.
COMPANY SUMMARY
Investment objective
To achieve long-term capital growth through a diversified portfolio of
Continental European securities. A detailed description of the Company's
investment policy is set out in the Strategic Report below.
Shareholders' funds
£350,659,000 at 30 September 2016.
Market capitalisation
£303,837,000 at 30 September 2016.
Capital structure
As at 30 September 2016, the Company had 42,053,550 ordinary shares of 25p each
in issue. As at 29 November 2016, the date of this report, there were
42,016,100 ordinary shares in issue.
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.
AIC
The Company is a member of the Association of Investment Companies ("AIC").
Alternative Investment Fund Manager
Edinburgh Partners AIFM Limited (the "AIFM").
Investment Manager
The AIFM has delegated the function of managing the Company's investment
portfolio to Edinburgh Partners Limited ("Edinburgh Partners" or the
"Investment Manager").
Management fee
0.55% per annum of the Company's equity market capitalisation payable monthly
in arrears.
Ten Year Record
Performance (rebased to 100 at 30 September 2006)
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
NAV per share
100.0 122.7 82.0 86.7 89.0 76.6 83.5 105.1 109.5 101.5 114.0
Share price 100.0 122.3 78.0 83.4 82.0 69.6 76.4 103.0 112.7 101.3 108.7
Earnings
per share 100.0 92.1 163.8 151.7 158.0 194.4 176.2 206.4 170.1 182.7 217.9
Dividends
per share 100.0 92.2 165.6 151.1 155.6 177.8 177.8 200.0 166.7 177.8 244.4
RPI 100.0 103.9 109.1 107.6 112.6 118.9 122.0 125.9 128.7 129.7 132.4
FINANCIAL SUMMARY
Results for year 30 September 30 September Change
2016 2015
Shareholders' funds £350.7m £312.2m 12.3%
Net asset value per ordinary 833.8p 742.2p 12.3%
share ("NAV")
Share price per ordinary share 722.5p 673.0p 7.4%
Share price discount to NAV 13.4% 9.3%
Year to Year to
30 September 30 September
2016 2015
Revenue return per ordinary share* 19.0p 16.0p
Capital return per ordinary share* 88.6p (59.2)p
Total return per ordinary share* 107.6p (43.2)p
Final dividend per ordinary share* 16.0p 14.0p
*
Special dividend per ordinary 6.0p 2.0p
share**
Total dividend per ordinary share* 22.0p 16.0p
*
* Based on the weighted average number of shares in issue during the year.
** Proposed dividend for the year.
Year to Year to
Year's high/low 30 September 2016 30 September
2015
NAV - high 848.3p 909.1p
- low 645.9p 729.1p
Share price - high 741.0p 843.5p
- low 594.5p 665.0p
Share price discount to NAV
- low 3.2% 1.7%
- high 18.1% 11.4%
Year to Year to
Performance 30 September 30 September
2016 2015
NAV Total Return 14.9% (5.5)%
FTSE All-World Europe ex UK Index 21.8% (1.8)%
Total Return*
* In sterling.
The NAV Total Returns are sourced from Edinburgh Partners and include dividends
reinvested. The index performance figures are sourced from Thomson Reuters
Datastream. Past performance is not a guide to future performance.
Year to Year to
Cost of running the Company 30 September 30 September
2016 2015
Ongoing charges* 0.62% 0.63%
* Based on total expenses, excluding finance costs and certain non-recurring
items for the year and average monthly net asset value.
PORTFOLIO OF INVESTMENTS
as at 30 September 2016
% of % of
Rank Rank Company Sector Country Valuation Net Assets Net Assets
2016 2015 £'000 2016 2015
1 5 PostNL Industrials Netherlands 17,971
5.1 3.4
2 14 Royal Dutch
Shell A Oil & Gas Netherlands 13,629 3.9
2.9
3 2 Roche* Health Care Switzerland 12,857
3.7 3.6
4 9 Total Oil & Gas France 12,782
3.6 3.2
5 1 BNP Paribas Financials France 12,739
3.6 3.7
6 16 Stora Enso Basic Materials Finland 11,937
3.4 2.7
7 4 Bayer Basic Materials Germany 11,577
3.3 3.5
8 6 Novartis Health Care Switzerland 11,526
3.3 3.4
9 12 Sanofi Health Care France 11,525
3.3 3.0
10 8 ENI Oil & Gas Italy 11,485
3.3 3.2
11 15 DIA Consumer Services Spain 11,396
3.3 2.7
12 - Ubisoft
Entertainment Consumer Goods France 11,395 3.2 -
13 - Nokia Technology Finland 11,374 -
3.2
14 21 Leoni Industrials Germany 10,968
3.1 2.6
15 - Adecco Industrials Switzerland 9,755 -
2.8
16 25 DNB Financials Norway 9,712
2.8 2.4
17 23 BBVA Financials Spain 9,608
2.7 2.5
18 - Michelin Consumer Goods France 9,469 -
2.7
19 - SKF Industrials Sweden 9,429 -
2.7
20 7 Ryanair Consumer Services Ireland 9,346
2.7 3.3
21 26 Rocket Financials Germany 9,101
Internet 2.6 2.4
22 - Airbus Industrials France 8,881 -
2.5
23 37 Ipsos Consumer Services France 8,670
2.5 1.5
24 17 Telecom Telecommunications Italy 8,650
Italia 2.5 2.7
25 - Siemens Industrials Germany 8,609 -
2.5
26 24 E.ON Utilities Germany 8,425
2.4 2.5
27 - Telefonica Telecommunications Spain 8,388 -
2.4
28 13 Prysmian Industrials Italy 7,633
2.2 3.0
29 34 Delta Lloyd Financials Netherlands 7,566
2.2 1.9
30 36 Outotec Industrials Finland 7,491
2.1 1.5
31 33 TDC Telecommunications Denmark 7,484
2.1 1.9
32 - Danske Bank Financials Denmark 7,458 -
2.1
33 22 Commerzbank Financials Germany 7,110
2.0 2.5
34 18 Swedbank A Financials Sweden 7,047
2.0 2.6
35 32 Piaggio Consumer Goods Italy 5,631
1.6 1.9
36 20 Unipol Financials Italy 5,548
1.6 2.6
37 28 Petroleum
Geo-Services Oil & Gas Norway 5,438 1.6 2.4
38 - Uniper Utilities Germany 1,455 -
0.4
Prior year investments sold during the year 23.2
Total equity investments 361,065 103.0 98.7
Cash and other net current (liabilities)/assets (190) (0.1) 1.3
Borrowings (10,216) (2.9) -
Net assets 350,659 100.0 100.0
* The investment is in non-voting preference shares.
Of the ten largest portfolio investments as at 30 September 2016, the
valuations at the previous year end, 30 September 2015, were PostNL £
10,732,000; Royal Dutch Shell A £8,999,000; Roche £11,253,000; Total £
10,021,000; BNP Paribas £11,399,000; Stora Enso £8,325,000; Bayer £10,880,000;
Novartis £10,649,000; Sanofi £9,373,000; ENI £10,037,000.
Distribution of Investments
as at 30 September 2016 (% of net assets)
Sector distribution
Sector %
Industrials 23.0
Financials 21.6
Oil and Gas 12.4
Health Care 10.3
Consumer Services 8.5
Consumer Goods 7.5
Telecommunications 7.0
Basic Materials 6.7
Technology 3.2
Utilities 2.8
Cash and other net
current liabilities (0.1)
Borrowings (2.9)
100
Geographical distribution
Country %
France 21.4
Germany 16.3
Italy 11.2
Netherlands 11.2
Switzerland 9.8
Finland 8.7
Spain 8.4
Sweden 4.7
Norway 4.4
Denmark 4.2
Ireland 2.7
Cash and other net
current liabilities (0.1)
Borrowings (2.9)
100
DIRECTORS
All of the Directors are non-executive and independent of the AIFM and the
Investment Manager.
Douglas C P McDougall OBE (Chairman)
William D Eason
Michael W M R MacPhee
Michael B Moule (Senior Independent Director)
Dr Michael T Woodward
STRATEGIC REPORT
The Strategic Report has been prepared in accordance with Section 414A of the
Companies Act 2006 (the "Act"). Its purpose is to inform members of the Company
and help them assess how the Directors have performed their legal duty under
Section 172 of the Act to promote the success of the Company.
CHAIRMAN'S STATEMENT
Results
After the negative returns seen in the prior year, the year under review was a
positive period for UK investors in European equities. The most significant
contribution to returns came from the weakness of sterling against the euro and
other European currencies following the UK referendum vote in June 2016 to
leave the European Union.
Over the year to 30 September 2016, the NAV per share increased by 12.3% from
742.2p to 833.8p. After taking account of dividends paid in the year of 16.0p
per share, the NAV total return was 14.9%. This compares with the total return
of 21.8% from the FTSE All-World Europe ex UK Index, adjusted to sterling. The
disappointing relative return follows from the continued lack of favour in the
markets for our value-based approach to stock selection.
Over the year, the Company's share price increased by 7.4% from 673.0p to
722.5p. The share price discount to NAV rose from 9.3% to 13.4%. The share
price total return was 9.8%.
From the appointment of Edinburgh Partners as Investment Manager on 1 February
2010, the share price total return to 30 September 2016 was 62.5% and the NAV
total return 58.7%. Over the same period, the total return on the FTSE
All-World Europe ex UK Index, adjusted to sterling, was 66.6%.
Revenue
The revenue return per share for the year to 30 September 2016 was 19.0p
compared with 16.0p in the previous year, an increase of 18.7%. Revenue
benefited from dividend growth, currency movements, utilisation of the
borrowing facility and a reduction in management fee, which is based on market
capitalisation. The ongoing charges ratio fell from 0.63% to 0.62%.
Dividends
The Board recommends a final dividend of 16.0p per share and a special dividend
of 6.0p per share (which includes 3.0p arising from the settlement of a
historic tax reclaim), giving a total of 22.0p per share. This compares with
the prior year total dividend of 16.0p per share, which comprised a final
dividend of 14.0p and a special dividend of 2.0p per share.
Our aim is to pay a final dividend which we regard as likely to be sustainable
and to distribute any further earnings by way of a special dividend. Subject to
the approval of shareholders at the forthcoming Annual General Meeting ("AGM"),
these dividends will be paid on 31 January 2017 to shareholders on the register
at the close of business on 6 January 2017. The ex-dividend date will be 5
January 2017.
Share buy backs
Against a background of a widening discount of the share price to NAV the
Company bought back shares for cancellation during the year under review and
subsequent to the year-end. Details of these purchases can be seen in the
Directors' Report in the full Annual Report and Financial Statements. The
Directors will propose at the forthcoming AGM that the Company's powers to make
purchases of up to 14.99% of its shares in issue be renewed.
Borrowings
In February 2016, the Company entered into a euro 30 million bank overdraft
credit facility with The Northern Trust Company, with the objective of using
gearing to enhance shareholder returns. As at 30 September 2016, a total of
euro 11,809,000, equivalent to 2.9% of net assets, had been drawn down under
the facility.
Portfolio activity
The most significant changes in the portfolio were an increase in the
industrial sector and a reduction in the technology sector. Geographically, the
main changes were a reduction in Switzerland and an increase in France. For
details of portfolio movements, please see the Investment Manager's Report
below.
The Board
I shall retire from the Board at the conclusion of the AGM on 24 January 2017,
when Michael MacPhee will succeed me as Chairman of the Company. I have every
confidence in the future of the Company under the direction of my colleagues.
Investment Manager
In August 2016, the Company announced that Edinburgh Partners had appointed
Craig Armour as portfolio manager for the Company in succession to Dale
Robertson. Craig joined Edinburgh Partners in 2009 after working for 18 years
in investment banking and private equity. He is an Investment Partner, has been
responsible for managing several European portfolios, and worked closely with
Dale Robertson for several years. The change of portfolio manager has not led
to any fundamental change in the style or composition of the portfolio.
Change of Auditors
The EU Audit Regulation and Directive, which came into force in the UK on 17
June 2016, introduced restrictions on the non-audit services which auditors can
provide to their clients. As explained in the Report of the Audit and
Management Engagement Committee in the full Annual Report and Financial
Statements, the Board and PricewaterhouseCoopers LLP ("PwC") have agreed that
PwC will be unable to continue as auditors whilst providing non-audit services.
As required, PwC have written a letter to the Company setting out their reasons
for not seeking re-appointment as Auditors, a copy of which is enclosed with
the full Annual Report and Financial Statements.
PwC and their predecessor companies have been Auditors since the Company's
launch in 1972 and I should like to thank them for their services to the
Company over that period.
In October 2016, the Audit and Management Engagement Committee carried out an
external audit tender process, details of which can be seen in the full Annual
Report and Financial Statements. Following this, the appointment of BDO LLP as
Auditors of the Company is recommended to shareholders for approval at the AGM.
Annual General Meeting
The AGM will be held at 11.00am on Tuesday, 24 January 2017 at Brewers' Hall,
Aldermanbury Square, London EC2V 7HR. I look forward to seeing as many as
possible of you there.
Outlook
The low interest rate policy and monetary easing being pursued by the European
Central Bank have resulted in high valuations being placed on stocks considered
by European equity investors to be low risk in terms of earnings progress. Our
managers have continued to invest in stocks where they believe valuations to be
too low, in the expectation that the undervaluation will at some point be
recognised by the market. There have been recent signs that investor sentiment
may have shifted slightly towards our style. Over the 6 months to 25 November
2016, the NAV rose by 16.3%, which compares with the total return of 13.3% from
the FTSE Europe All-World ex UK Index, adjusted to sterling.
Whilst there continue to be geo-political concerns, including the possibility
of increasing trade barriers following Brexit and the US presidential election,
the outlook for economic growth in Europe appears to be improving, which would
benefit the cyclically-sensitive sectors to which the Company has a high
exposure.
Douglas McDougall
Chairman
29 November 2016
INVESTMENT MANAGER'S REPORT
Economic and Market Overview
Since the financial crisis in 2008, the economic recovery has been supported by
monetary stimulus, with central banks adopting quantitative easing through bond
purchases alongside ultra-low interest rates. In Europe, the initial resistance
to this approach was overcome and the European Central Bank followed its
counterparts elsewhere in the developed world. While economic growth has been
subdued compared to the period prior to the crisis, the policies adopted appear
to have been largely successful in allaying fears of deflation and recession.
There have been periodic bouts of concern but the evidence points to a global
economy emerging intact from intensive care. Indeed there are tangible signs of
inflation, partly from the recovery in commodity prices, but also from labour
markets.
Recent years have been challenging for valuation-conscious investors. In an
environment where the discount rate is based on artificially suppressed
interest rates, the valuations of companies with stable and predictable
earnings have been boosted, in stark contrast to many cyclical stocks. This is
best captured by the premium rating of consumer staples relative to the rest of
the equity market, which during the year reached levels comparable with the
2008 financial crisis. We believe that this premium rating is unwarranted given
both ongoing economic growth and a subtle shift in the outlook for longer-term
interest rates. Towards the end of the year under review, there was evidence
that equity markets were starting to price in a restoration of more normal
financial conditions.
The one area of almost perpetual uncertainty in Europe is politics. An election
is always in sight at national level and the European Union as a collective
takes time to gather a consensus and react to issues as they arise. The latest
issue is of course Brexit, with the UK voting in June 2016 to leave the
European Union. The UK faces a real challenge in implementing the result of the
referendum without causing material damage to its economy. In that respect, the
European Union and the UK have a shared economic interest, but the European
Union is expected to resist an outcome which makes departure look attractive.
To date, the principal economic impact from Brexit appears to have been the
weakness of sterling, but a prolonged period of uncertainty will not be helpful
to economies or equity markets.
Portfolio Strategy and Activity
At Edinburgh Partners, our valuation framework ensures that we retain our
discipline through market cycles. In the prior year, we sold a number of stocks
which had performed well and were trading at valuations which fully captured
their growth prospects. In their place, we purchased stocks where the
valuations were significantly lower, often due to depressed expectations or
fear of a recession. In the current financial year, we have continued this
process and we have also introduced gearing to the portfolio, using part of the
euro 30 million bank overdraft facility to add to some of our most undervalued
holdings.
An area of the equity market which has been out of favour for some time has
been banking stocks. The challenges facing banks are well-known, including
regulatory pressure to hold more capital, tepid loan demand, litigation and
conduct charges and managing the transition to digital banking. Add in the
margin squeeze from low interest rates and the return on equity across the
sector has fallen substantially. However banks today have higher levels of
capital, are better funded with improved liquidity and have more appropriate
loan provisioning. Many of our holdings are trading at significant discounts to
book value and have solid dividend yields. While banking stocks made a small
positive contribution to performance during the year, the valuations remain
attractive and the portfolio exposure at the year-end was 15.2% of net assets.
Our oil and gas holdings performed well in aggregate during the year. Our
holdings in the major stocks such as Royal Dutch Shell and Total responded well
to the recovery in the oil price and to the efforts of the companies to cut
costs. Our holding in seismic testing company, Petroleum Geo-Services,
continued to struggle against this backdrop of cost-cutting and performed
poorly although, since the year-end, it has announced improved results,
indicating that exploration activity is starting to improve. We retain a
positive outlook on the sector which had a year-end portfolio weighting of
12.4% of net assets.
Our industrial stocks generally performed well, led by Dutch mail operator
PostNL. With a stronger balance sheet after disposing of its stake in TNT
Express, the company attracted bid interest from Belgian mail operator BPost.
Another strong performer in industrials was Swiss engineer ABB and we sold this
holding on valuation grounds.
We suffered a loss on our holding in asset manager GAM which issued a profit
warning. After reviewing the prospects for the range of funds managed by the
company and in particular, the outlook for performance fees from its flagship
funds, we decided to sell the holding.
The stock with the greatest exposure to the UK is Ryanair, which earns around
25% of revenues in sterling. After a sharp fall in the aftermath of the vote in
June 2016, the share price has recovered as it continues to deliver strong
growth across its markets. As a low cost provider in a segment of the airline
market which continues to gain market share, we believe Ryanair remains a solid
long-term investment case.
We have continued to sell stocks where the valuations fully discount the
prospects and replace them with stocks where we believe the growth prospects
are not captured in the valuation. Examples include Swiss-based staffing
company, Adecco, and aircraft manufacturer, Airbus. In the case of Airbus,
which along with Boeing dominates the market, the long-term demand from Asia in
particular underpins demand, and the absence of any new models over the next
few years should benefit both margins and cash flow.
A steadily recovering economy in Europe remains our central case, supported by
the European Central Bank policy. The recent moves in longer-term interest
rates point to some normalisation of the valuation environment which would be
negative for bond prices and their stock market equivalents such as consumer
staples. It has been encouraging to see renewed takeover interest after the
year-end in two of our holdings, PostNL and Delta Lloyd, and the portfolio
retains a strong valuation focus.
Craig Armour
Edinburgh Partners
29 November 2016
Other Statutory Information
Objective
The objective of the Company is to achieve long-term capital growth through a
diversified portfolio of Continental European securities.
Strategy and business model
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 AIFM.
Investment strategy
Investments are selected for the portfolio only after extensive research, which
the Investment Manager believes to be key. The whole process through which an
equity must pass in order to be included in the portfolio is very rigorous.
Only a security where the Investment Manager believes that the price will be
significantly higher in the future will pass the selection process. The
Company's Investment Manager believes the key to successful stock selection is
to identify the long-term value of a company's shares and to have the patience
to hold the shares until that value is appreciated by other investors.
Identifying long-term value involves detailed analysis of a company's earnings
prospects over a five-year time horizon. The portfolio will normally consist of
around 40 investments.
Business and status of the Company
The principal activity of the Company is to carry on business as an investment
trust.
The Company is registered as a public limited company and is an investment
company within the terms of Section 833 of the Act. The Company has been
approved by HM Revenue & Customs ("HMRC") as an investment trust under Sections
1158 and 1159 of the Corporation Tax Act 2010 ("CTA"), subject to there being
no subsequent serious breaches of the regulations. In the opinion of the
Directors, the Company has directed its affairs so as to enable it to continue
to qualify for such approval.
The Company's shares have a premium listing on the Official List of the UK
Listing Authority and are traded on the main market of the London Stock
Exchange. The Company has a secondary listing and its shares are traded on the
New Zealand Stock Exchange.
The Company is a member of the AIC, a trade body which promotes investment
companies and also develops best practice for its members.
Portfolio analysis
A detailed review of how the Company's assets have been invested is contained
in the Investment Manager's Report above. A detailed list of all the Company's
investments is contained in the Portfolio of Investments above. The Portfolio
of Investments details that the Company held 38 investments, excluding cash and
other net current liabilities, as at 30 September 2016, with the largest
representing 5.1% of net assets, thus ensuring that the Company has a suitable
spread of investment risk. A sector and geographical distribution of
investments is shown above.
Results and dividends
The results for the year are set out in the Income Statement and the Statement
of Changes in Equity below.
For the year ended 30 September 2016, the net revenue return attributable to
shareholders was £8.0 million (2015: £6.7 million) and the net capital return
was £37.3 million (2015: -£24.9 million). Total shareholders' funds increased
by 12.3% to £350.7 million (2015: £312.2 million).
Details of the dividends recommended by the Board are set out above in the
Chairman's Statement and below.
Key performance indicators
At each Board meeting, the Directors consider a number of performance measures
to assess the Company's success in achieving its objective. The key performance
indicators used to measure progress and performance of the Company over time
are established industry measures and are as follows:
Net asset value
In the year to 30 September 2016, the net asset value per share increased by
12.3% from 742.2p to 833.8p. After taking account of dividends paid in the year
of 16.0p, the net asset value total return was 14.9%. This compares with the
total return of 21.8% from the FTSE All-World Europe ex UK Index, adjusted to
sterling.
The net asset value total return since the appointment of Edinburgh Partners as
Investment Manager on 1 February 2010 to 30 September 2016 was 58.7%. This
compares with the total return of 66.6% from the FTSE All-World Europe ex UK
Index, adjusted to sterling.
Share price
In the year to 30 September 2016, the Company's share price increased by 7.4%
from 673.0p to 722.5p. The share price total return, taking account of the
16.0p dividend paid in the year, was 9.8%.
Share price premium/discount to net asset value per share
The share price discount to net asset value per share widened from 9.3% to
13.4% in the year to 30 September 2016.
Revenue return per ordinary share
There was an increase in the revenue per share in the year to 30 September 2016
of 18.7% from 16.0p to 19.0p.
Dividends per ordinary share
The Directors are recommending a final dividend of 16.0p per ordinary share and
a special dividend of 6.0p per ordinary share (which includes 3.0p arising from
the settlement of a historic tax reclaim), making a total dividend of 22.0p per
ordinary share. This compares with the prior year total dividend of 16.0p per
ordinary share.
Ongoing charges
The Company continues to have low expenses. The ongoing charges ratio was 0.62%
(2015: 0.63%) in the year to 30 September 2016.
The longer-term records of the key performance indicators are shown in the Ten
Year Record in the full Annual Report and Financial Statements.
The Board also takes into consideration how the Company performs compared to
other investment trusts investing in Europe.
Management Agreement
In order to comply with the Alternative Investment Fund Managers' Directive
("AIFMD"), the Company appointed Edinburgh Partners AIFM Limited as its AIFM
with effect from 17 July 2014. Edinburgh Partners AIFM Limited has been
approved as an AIFM by the UK's Financial Conduct Authority ("FCA"). With the
approval of the Directors of the Company, the AIFM appointed Edinburgh Partners
as Investment Manager to the Company pursuant to a delegation agreement with
effect from 17 July 2014.
The AIFM receives a management fee of 0.55% per annum of the Company's equity
market capitalisation, payable monthly in arrears.
The Management Agreement may be terminated by either party giving three months'
written notice. No additional compensation is payable to the AIFM on the
termination of this agreement other than the fees payable during the notice
period. No performance fee will be paid. Further details relating to the
agreement are detailed in note 3 of the Financial Statements below.
Continuing appointment of the AIFM
The Board keeps the performance of the AIFM under review through the Audit and
Management Engagement Committee. As the AIFM has delegated the investment
management function to Edinburgh Partners, the performance of the Investment
Manager is also regularly reviewed. It is the opinion of the Directors that the
continuing appointment of the AIFM on the terms agreed is in the interests of
shareholders as a whole. The remuneration of the AIFM is reasonable both in
absolute terms and compared to that of managers of comparable investment
companies. The Directors believe that by paying the management fee calculated
on a market capitalisation basis, rather than a percentage of assets basis, the
interests of the AIFM are more closely aligned with those of shareholders.
AIFM remuneration disclosures
In accordance with the AIFMD, information in relation to the remuneration of
the Company's AIFM, Edinburgh Partners AIFM Limited, is required to be made
available to investors. The AIFM's remuneration policy is incorporated within a
group policy which is available at www.edinburghpartners.com. The disclosure
also includes those remuneration disclosures in respect of the AIFM's staff and
'Identified staff' for the reporting period, the year ended 29 February 2016.
Risk management by the AIFM
As required under the AIFMD, the AIFM has established and maintains a permanent
and independent risk management function to ensure that there is a
comprehensive and effective risk management policy in place and to monitor
compliance with risk limits. This risk policy covers the risks associated with
the management of the investment portfolio, and the AIFM reviews and approves
the adequacy and effectiveness of the policy on at least an annual basis,
including the risk management processes and controls and limits for each risk
area.
The AIFM sets risk limits that take into account the risk profile of the
Company's investment portfolio, as well as its investment objectives and
strategy. The AIFM monitors the risk limits, including leverage, and
periodically assesses the portfolio's sensitivity to key risks.
The AIFM reviews risk limit reports at regular meetings of its risk committee.
Principal risks and uncertainties
The Board considers that the following are the principal financial 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 and gearing risk. An
explanation of these risks and how they are managed and the policy and practice
with regard to financial instruments are contained in note 17 of the Financial
Statements below.
In addition, the Board also considers the following as principal risks:
Regulatory risk
Relevant legislation and regulations which apply to the Company include the
Act, the CTA, the Listing Rules and the Disclosure Guidance and Transparency
Rules of the FCA, and the AIFMD. A breach of the CTA could result in the
Company losing its status as an investment trust and becoming subject to
capital gains tax, whilst a breach of the Listing Rules of the FCA might result
in censure by the FCA and suspension of the listing of the Company's shares on
the London Stock Exchange.
At each Board meeting, the status of the Company is considered and discussed,
so as to ensure that all regulations are being adhered to by the Company and
its service providers.
The Board is not aware of any breaches of laws or regulations during the year
under review and up to the date of this report.
Operational risk
In common with most other investment companies, the Company has no employees.
The Company therefore relies upon the services provided by third parties. There
are a number of operational risks associated with the fact that third parties
undertake the Company's administration, depositary and custody functions. The
main risk is that the third parties may fail to ensure that statutory
requirements, such as compliance with the Act and the Listing Rules of the FCA,
are met.
The Board regularly receives and reviews management information from third
parties which the Company Secretary compiles. In addition, each of the third
parties provides a copy of its report on internal controls (ISAE 3402, SSAE 16
or equivalent) to the Board, through the Audit and Management Engagement
Committee, each year to evidence that adequate controls are in place and are
operating satisfactorily.
Other financial risk
It is possible that inappropriate accounting policies or failure to comply with
current or new accounting standards may lead to a breach of regulations.
The AIFM employs an independent administrator to prepare all financial
statements and the Audit and Management Engagement Committee meets with the
independent auditors at least once a year to discuss audit issues, including
appropriate accounting policies.
The Board undertakes a robust annual assessment and review of all the risks
stated above and in note 17 of the Financial Statements below, together with a
review of any new risks which may have arisen during the year, including those
that would threaten its business model, future performance, solvency or
liquidity. These risks are formalised within the Company's risk assessment
matrix.
Internal financial control
In accordance with guidance issued to directors of listed companies, the
Directors confirm that they have carried out a review of the effectiveness of
the systems of internal financial control during the year ended 30 September
2016, as set out in the full Annual Report and Financial Statements. There were
no matters arising from this review that required further investigation and no
significant failings or weaknesses were identified.
Leverage
Leverage is defined in the AIFMD as any method by which the Company increases
its exposure, whether through borrowing of cash or securities, or leverage
embedded in derivative positions or by any other means. As detailed in note 6
of the Financial Statements below, during the year ended and as at 30 September
2016, the Company had utilised a borrowing facility. The Company did not use
any derivative instruments during the year ended 30 September 2016.
In accordance with the detailed requirements of the AIFMD, leverage has been
measured in terms of the Company's exposure, and is expressed as a ratio of net
asset value. The AIFMD requires this ratio to be calculated in accordance with
both the Gross Method and the Commitment Method. Details of these methods of
calculation can be found by referring to the AIFMD. In summary, these methods
express leverage as a ratio of the exposure of debt, non-sterling currency,
equity or currency hedging and derivatives exposure against the net asset
value. The principal difference between the two methods is that the Commitment
Method enables derivative instruments to be netted off to reflect hedging
arrangements and the exposure is effectively reduced, while the Gross Method
aggregates the exposure.
The AIFMD introduced a requirement for the AIFM to set maximum levels of
leverage for the Company. The Company's AIFM has set a maximum limit of 1.20
for both the Gross and Commitment Methods of calculating leverage. However, the
AIFM anticipates that the figures are likely to be lower than this under normal
market conditions. At 30 September 2016, the Company's Gross ratio was 1.03 and
its Commitment ratio was 1.03. In accordance with the AIFMD, any changes to the
maximum level of leverage set by the Company will be communicated to
shareholders.
Depositary Agreement
The Board appointed Northern Trust Global Services Limited to act as its
depositary (the "Depositary") under an agreement dated 22 July 2014 (the
"Depositary Agreement"), to which the AIFM is also a party. The Depositary is
authorised by the Prudential Regulation Authority and regulated by the FCA and
the Prudential Regulation Authority. Custody services are provided by The
Northern Trust Company (as a delegate of the Depositary). A fee of 0.01% per
annum of the net assets of the Company, plus fees in relation to safekeeping
and other activities undertaken to facilitate the investment activity of the
Company, are payable to the Depositary. The Company and the Depositary may
terminate the Depositary Agreement at any time by giving six months' written
notice. The Depositary may only be removed from office when a new depositary is
appointed by the Company.
Main trends and future development
A review of the main features of the year and the outlook for the coming year
is to be found in the Chairman's Statement and the Investment Manager's Report
above. The Board's main focus is on the investment return and approach, with
attention paid to the integrity and success of the investment approach and on
factors which may have an impact on this approach.
Forward-looking statements
This Strategic 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. Factors that could cause
actual results to differ materially from those estimated by the forward-looking
statements include, but are not limited to:
* Global economic conditions and equity market performance and prices,
particularly those in Europe
* Changes in government policies and monetary and interest rate policies
worldwide, particularly those in Europe
* Changes to regulations and taxes worldwide, particularly in Europe
* Currency exchange rates
* Use of gearing
* The Company's success in managing its assets and business to mitigate the
impact of the above factors.
As a result, the Company's actual future condition, performance and results may
differ materially from the plans set out in the Company's forward-looking
statements. The Company undertakes no obligation to update the forward-looking
statements contained within this review or any other forward-looking statements
it makes.
Employees, human rights and community issues
The Board recognises the requirement under Section 414C of the Act to detail
information about employees, human rights and community issues, including
information about any policies it has in relation to these matters and the
effectiveness of these policies. These requirements do not apply to the Company
as it has no employees, all the Directors are non-executive and it has
outsourced all its functions to third party service providers. The Company has
therefore not reported further in respect of these provisions.
The Company is not within the scope of the Modern Slavery Act 2015 because it
has not exceeded the turnover threshold and therefore, no further disclosure is
required in this regard.
Gender diversity
As at 30 September 2016, the Board of Directors of the Company comprised five
male Directors. The appointment of any new Director is made on the basis of
merit.
Social, environmental and ethical policy
The Company seeks to invest in companies that are well-managed, with high
standards of corporate governance, as the Directors believe this creates the
proper conditions to enhance long-term value for shareholders. The Company
adopts a positive approach to corporate governance and engagement with
companies.
In pursuit of the above objective, the Directors believe that proxy voting is
an important part of the corporate governance process. It is the policy of the
Company to vote, as far as is practicable, at all shareholder meetings of
investee companies. The Company follows the relevant regulatory and legislative
requirements, with the guiding principles being to make proxy voting decisions
which favour proposals that will lead to maximising shareholder value while
avoiding any conflicts of interest. To this end, voting decisions take into
account corporate governance, including disclosure and transparency, board
composition and independence, control structures, remuneration, social and
environmental issues.
The day-to-day management of the Company's business has been delegated by the
AIFM to the Company's Investment Manager, Edinburgh Partners, which has an
Environmental, SRI and Corporate Governance ("ESG") policy in place, which can
be found on its website at www.edinburghpartners.com.
The assessment of the quality of investee companies in relation to
environmental considerations, socially responsible investment and corporate
governance is embedded in the Investment Manager's stock selection process.
On behalf of the Board
Douglas McDougall
Chairman
29 November 2016
EXTRACTS FROM THE DIRECTORS' REPORT
Share capital
As at 30 September 2016, the Company had 42,053,550 ordinary shares of 25p each
in issue. No shares were held in treasury during the year or as at the date of
this report as all shares purchased are cancelled.
At general meetings of the Company, ordinary shareholders are entitled to one
vote on a show of hands and on a poll, one vote for each ordinary share held.
Issue of shares
No shares were issued during the year.
Purchase of shares
The Board has continued to monitor the discount at which the ordinary shares of
the Company trade relative to the NAV per share. During the year ended 30
September 2016, the Company purchased in the stock market 15,821 ordinary
shares (nominal value of £3,955.25) for cancellation, at a total cost of £
113,000. This represented 0.04% of the issued share capital at 30 September
2015.
Subsequent to the year end, and up to the date of this report, the Company
purchased 37,450 ordinary shares (nominal value of £9,362.50) for cancellation,
at a total cost of £282,000, representing 0.09% of the issued share capital at
30 September 2016.
Going concern
The Company's business activities, together with the factors likely to affect
its future development, performance and position, are set out in the Strategic
Report above. In addition, notes 17 and 18 of the Financial Statements below
include the Company's objectives, policies and processes for managing its
capital; its financial risk management objectives; details of its financial
instruments; and its risk exposure. The Company's principal risks are detailed
in the Strategic Report above. The Company's 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
liabilities to creditors 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 Annual Report is approved. For this
reason, they have adopted the going concern basis in preparing the Financial
Statements.
Long-term Viability Statement
In accordance with the February 2015 revision to the AIC Code, the Directors
have assessed the prospects of the Company over a longer period than the one
year required by the 'Going Concern' provision of the Code. The Board considers
that, for a company with an investment objective to achieve long-term capital
growth through a diversified portfolio of Continental European securities, a
period of five years is an appropriate period to consider for the purpose of
the Long-term Viability Statement.
The Board has undertaken an assessment of its future prospects in order that
the Directors may state that they have a reasonable expectation that the
Company will be able to continue in operation and meet its liabilities as they
fall due over the period of their assessment.
In making its assessment, the Board considered a number of factors, including
those detailed below:
* the Company's current financial position;
* the principal risks the Company faces, as detailed above in the Strategic
Report;
* that the portfolio comprises principally of investments traded on major
European stock markets and that there is a satisfactory spread of
investments. There is no expectation that the nature of the investments
held within the portfolio will be materially different in the future;
* that the expenses of the Company are predictable and modest in comparison
with the assets and there are no capital commitments foreseen which would
alter that position;
* that the Company has no employees except for the Directors, who are all
non-executive and consequently do not have redundancy or other
employment-related liabilities or responsibilities;
* that European stock markets will continue to be a significant component of
international stock markets and that investors will still wish to have an
exposure to such investments;
* that there will continue to be a demand for closed-ended investment trusts
from investors;
* that regulation will not increase to a level that makes the running of the
Company uneconomical in comparison to other competitive products; and
* that, should the performance be less than the Board considers to be
acceptable, it has appropriate powers to replace the AIFM.
As a consequence of its assessment, the Board considers that there is a
reasonable expectation that the Company will be able to continue in operation
and meet its liabilities as they fall due over the five year period of their
assessment.
The full Annual Report and Financial Statements contain the following
statements regarding responsibility for the Annual Report and Financial
Statements.
MANAGEMENT REPORT AND STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RELATION TO
THE ANNUAL REPORT AND FINANCIAL STATEMENTS
Management report
Listed companies are required by the FCA's Disclosure Guidance and Transparency
Rules (the "Rules") to include a management report within their annual report
and financial statements.
The information required to be included in the management report for the
purpose of these Rules is detailed in the Strategic Report above, including the
Chairman's Statement and the Investment Manager's Report. Therefore no separate
management report has been included.
Statement of Directors' responsibilities
The Directors are responsible for preparing the Annual Report and the Financial
Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Financial Statements for each
financial year. Under that law, the Directors have prepared the Financial
Statements in accordance with United Kingdom Generally Accepted Accounting
Practice (United Kingdom Accounting Standards, comprising Financial Reporting
Standard (FRS) 102 "The Financial Reporting Standard applicable in the UK and
Republic of Ireland" and applicable law). Under company law, the Directors must
not approve the Financial Statements unless they are satisfied that they give a
true and fair view of the state of affairs of the Company and of the profit or
loss of the Company for that period. In preparing these Financial Statements,
the Directors are required to:
* select suitable accounting policies and then apply them consistently;
* make judgements and accounting estimates that are reasonable and prudent;
* state whether applicable UK Accounting Standards, comprising FRS 102, have
been followed, subject to any material departures disclosed and explained
in the Financial Statements respectively;
* notify the Company's shareholders in writing about the use of disclosure
exemptions in FRS 102, used in the preparation of the Financial Statements;
and
* prepare the Financial Statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the Financial Statements comply with the Act and
include the information required by the Listing Rules of the FCA. They are also
responsible for safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and other
irregularities.
Each of the Directors, whose names are set out above, confirms that, to the
best of his knowledge:
* the Financial Statements, which have been prepared in accordance with UK
Accounting Standards, give a true and fair view of the assets, liabilities,
financial position and net return of the Company; and
* the Strategic Report and the Directors' Report include a fair review of the
development and performance of the business and the position of the
Company, together with a description of the principal risks and
uncertainties that it faces.
The Annual Report and Financial Statements, taken as a whole, are considered by
the Board to be fair, balanced and understandable and provide the information
necessary for shareholders to assess the Company's position and performance,
business model and strategy.
On behalf of the Board
Douglas McDougall
Chairman
29 November 2016
NON-STATUTORY ACCOUNTS
The financial information set out below does not constitute the Company's
statutory Financial Statements for the year ended 30 September 2016 but is
derived from those Financial Statements. Statutory Financial Statements for the
year ended 30 September 2016 will be delivered to the Registrar of Companies in
due course. The Auditors have reported on those Financial Statements; their
report was (i) unqualified, (ii) did not include a reference to any matters to
which the Auditors drew attention by way of emphasis without qualifying their
report and (iii) did not contain a statement under Section 498 (2) or (3) of
the Companies Act 2006. The text of the Auditors' report can be found in the
Company's full Annual Report and Financial Statements on the Company's website
at www.theeuropeaninvestmenttrust.com and on the website of Edinburgh Partners
at www.edinburghpartners.com.
INCOME STATEMENT
for the year ended 30 September 2016
2016 2015
Revenue Capital Total Revenue Capital Total
Notes £'000 £'000 £'000 £'000 £'000 £'000
Gains/(losses) on investments at fair 10 - 37,740 37,740 - (23,876) (23,876)
value
Foreign exchange gains/(losses) 240 (479) (239) (41) (1,012) (1,053)
Income 2 10,357 - 10,357 9,540 - 9,540
Management fee 3 (1,586) - (1,586) (1,785) - (1,785)
Other expenses 4 (434) - (434) (417) - (417)
Net return before finance costs and 8,577 37,261 45,838 7,297 (24,888) (17,591)
taxation
Finance costs 5 (51) - (51) (16) - (16)
Net return before taxation 8,526 37,261 45,787 7,281 (24,888) (17,607)
Tax on ordinary activities 7 (523) - (523) (573) - (573)
Net return attributable to shareholders 8,003 37,261 45,264 6,708 (24,888) (18,180)
pence pence pence pence pence pence
Return per ordinary share* 9 19.0 88.6 107.6 16.0 (59.2) (43.2)
* Based on the weighted average number of shares in issue during the year. The
return per ordinary share is both the basic and diluted return per ordinary
share.
All revenue and capital items in the above statement derive from continuing
operations.
The total column of this statement is the Profit and Loss Account of the
Company. The revenue and capital columns are prepared under guidance published
by the AIC.
There were no items of other comprehensive income in the year and therefore the
profit/(loss) for the year is also the comprehensive income/(loss) for the
year.
The notes below form part of these Financial Statements.
BALANCE SHEET
as at 30 September 2016
2016 2015
Notes £'000 £'000
Fixed asset investments:
Investments at fair value through profit 10 361,065 308,228
or loss
Current assets:
Debtors 12 1,538 2,722
Cash at bank and short-term deposits 105 8,451
1,643 11,173
Current liabilities:
Creditors 13 1,833 7,162
Bank overdraft 6 10,216 -
12,049 7,162
Net current (liabilities)/assets (10,406) 4,011
Net assets 350,659 312,239
Capital and reserves:
Called-up share capital 14 10,513 10,517
Share premium account 123,749 123,749
Capital redemption reserve 8,298 8,294
Capital reserve 195,838 158,690
Revenue reserve 12,261 10,989
Total shareholders' funds 350,659 312,239
pence pence
Net asset value per ordinary share 15 833.8 742.2
The Financial Statements were approved and authorised for issue by the Board of
Directors of The European Investment Trust plc on 29 November 2016 and were
signed on its behalf by:
Douglas McDougall
Chairman
Registered in England and Wales No. 1055384
The notes below form part of these Financial Statements.
STATEMENT OF CHANGES IN EQUITY
for the year ended 30 September 2016
Called-up Share Capital
share premium redemption Capital Revenue
capital account reserve reserve reserve Total
Notes £'000 £'000 £'000 £'000 £'000 £'000
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 for the year - - - 37,261 8,003 45,264
Dividends paid 8 - - - - (6,731) (6,731)
Shares purchased for cancellation 14 (4) - 4 (113) - (113)
At 30 September 2016 10,513 123,749 8,298 195,838 12,261 350,659
Year ended 30 September 2015
At 1 October 2014 10,517 123,749 8,294 183,578 10,591 336,729
Net return after taxation for the year - - - (24,888) 6,708 (18,180)
Dividends paid 8 - - - - (6,310) (6,310)
At 30 September 2015 10,517 123,749 8,294 158,690 10,989 312,239
The notes below form part of these Financial Statements.
NOTES TO THE FINANCIAL STATEMENTS
at 30 September 2016
1 Accounting policies
Basis of accounting
These Financial Statements are prepared in accordance with the AIC SORP. The
Company has adopted FRS 102 "The Financial Reporting Standard applicable in the
UK and Republic of Ireland" for the year ended 30 September 2016, the date of
transition being 1 October 2015. Adoption of FRS 102 has not materially
impacted the Company's Financial Statements or the accounting policies as set
out in this note 1, and the comparative figures for the year ended 30 September
2015 remain unchanged.
Following the adoption of FRS 102, the Company has elected to remove the Cash
Flow Statement from the Annual Report for the year ended 30 September 2016.
The principal accounting policies detailed below have been applied consistently
throughout the period. As detailed above, the Directors consider that it is
appropriate for the Financial Statements to be prepared on a going concern
basis.
Income recognition
Dividend and other investment income is included as revenue (except where, in
the opinion of the Directors, its nature indicates it should be recognised as
capital) on the ex-dividend date or, where no ex-dividend date is quoted, when
the Company's right to receive payment is established. Income arising on
holdings of fixed income securities is recognised on a time apportionment basis
so as to reflect the effective interest rate on that security. Deposit interest
is included on an accruals basis.
Dividends are accounted for on the basis of income actually receivable, without
adjustment for the tax credit attaching to the dividends. Dividends from
overseas companies are shown gross of withholding tax.
Where the Company has elected to receive its dividends in the form of
additional shares rather than in cash (scrip dividends), the amount of the cash
dividend foregone is recognised as income. Any excess in the value of the
shares received over the amount of the cash dividend foregone is recognised in
the capital reserve.
Borrowings
Loans and overdrafts are recorded at the proceeds received, net of issue costs,
irrespective of the duration of the instrument.
Finance costs, including interest, are accrued using the effective interest
rate method. See below for allocation of finance costs within the Income
Statement.
Expenses and finance costs
All expenses are accounted for on an accruals basis. All operating expenses
including finance costs and management fees are charged through revenue in the
Income Statement except costs that are incidental to the acquisition or
disposal of investments, which are charged to capital in the Income Statement.
Transaction costs are included within the gains and losses on investment sales,
as disclosed in the Income Statement. No performance fees are charged by the
AIFM.
Investments
All investments held by the Company are classified as 'fair value through
profit or loss'. Investments are initially recognised at cost, being the fair
value of the consideration given. Interest accrued on fixed interest rate
securities at the date of purchase or sale is accounted for separately as
accrued income, so that the value or purchase price or sale proceeds is shown
net of such items.
After initial recognition, investments are measured at fair value, with changes
in the fair value of investments and impairment of investments recognised in
the Income Statement and allocated to capital. Gains and losses on investments
sold are calculated as the difference between sales proceeds and cost.
For investments actively traded in organised financial markets, fair value is
generally determined by reference to stock exchange quoted market bid prices at
the close of business on the Balance Sheet date, without adjustment for
transaction costs necessary to realise the asset. Investments which are not
quoted or which are not frequently traded are stated at Directors' best
estimate of fair value, using the guidelines on valuation published by the
International Private Equity and Venture Capital Association. This represents
the Directors' view of the amount for which an asset could be exchanged between
knowledgeable willing parties in an arm's length transaction. This does not
assume that the underlying business is saleable at the reporting date or that
its current shareholders have any intention to sell their holding in the near
future. Where no reliable fair value can be estimated, investments may be
carried at cost less any provision for impairment.
Cash at bank and short-term deposits
Cash at bank and short-term deposits comprise cash in hand and demand deposits
that mature within three months. The carrying value of cash at bank and
short-term deposits is equal to its fair value.
Foreign currency
The functional and presentational currency of the Company is sterling because
that is the currency of the primary economic environment in which the Company
operates.
Transactions denominated in foreign currencies are converted to sterling at the
actual exchange rate as at the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies at the year end are reported at
the rate of exchange to sterling at the Balance Sheet date. Any gain or loss
arising from a change in exchange rate subsequent to the date of the
transaction is included as an exchange gain or loss in the capital reserve or
in revenue depending on whether the gain or loss is of a capital or revenue
nature.
Taxation
The charge for taxation is based on the net return for the year and takes into
account taxation deferred or accelerated because of timing differences between
the treatment of certain items for accounting and taxation purposes. Full
provision for deferred taxation is made under the liability method, without
discounting, on all timing differences that have arisen but not been reversed
by the Balance Sheet date, unless such provision is not permitted by FRS 102.
This is subject to deferred tax assets only being recognised if it is
considered more likely than not that there will be suitable profits from which
the future reversal of the underlying timing differences can be deducted.
Timing differences are differences arising between the Company's taxable
profits and its results as stated in the Financial Statements which are capable
of reversal in one or more subsequent years.
Capital redemption reserve
The nominal value of ordinary share capital purchased and cancelled is
transferred out of called-up share capital and into the capital redemption
reserve on the relevant trade date.
Capital reserve
The following are accounted for in this reserve:
* gains and losses on the realisation of investments;
* increases and decreases in the valuation of investments held at the year
end;
* realised foreign exchange differences of a capital nature;
* unrealised foreign exchange differences of a capital nature;
* costs of professional advice (including related irrecoverable VAT) relating
to the capital structure of the Company;
* other capital charges and credits charged or credited to this account in
accordance with the above policies; and
* costs of purchasing ordinary share capital.
Revenue reserve
The revenue reserve is distributable by way of a dividend.
Dividends payable to shareholders
Final and special dividends are recognised as a liability in the year in which
they have been approved by shareholders in a general meeting.
2 Income
2016 2015
£'000 £'000
Income from investments:
Overseas dividends 10,357 9,538
Other income - 2
Total income 10,357 9,540
3 Management fee
2016 2015
£'000 £'000
Management fee 1,586 1,785
On 17 July 2014, the Company appointed Edinburgh Partners AIFM Limited as its
AIFM. Under the Management Agreement, the AIFM is entitled to a fee paid
monthly in arrears at a rate of 0.55% per annum of the equity market
capitalisation of the Company. Under the Management Agreement no performance
fee is payable.
During the year ended 30 September 2016, the management fees payable to the
AIFM totalled £1,586,000 (2015: £1,785,000). At 30 September 2016, there was £
137,000 outstanding payable to the AIFM (2015: £141,000) in relation to
management fees.
At 30 September 2016, there was £nil (2015: £4,000) outstanding to Edinburgh
Partners in relation to expenses incurred on behalf of the Company. This cost
is included in other expenses as detailed in note 4 of these Financial
Statements.
4 Other expenses
2016 2015
£'000 £'000
Audit services 22 20
Directors' remuneration* 107 92
Other 305 305
434 417
* See the Directors' Remuneration Report in the full Annual Report and
Financial Statements.
5 Finance costs
2016 2015
£'000 £'000
Negative interest on cash balances 9 16
Bank overdraft arrangement fee 6 -
Bank overdraft interest 36 -
51 16
6 Borrowings
2016 2015
£'000 £'000
Bank overdraft 10,216 -
In February 2016, the Company entered into a euro 30,000,000 bank overdraft
credit facility agreement with The Northern Trust Company for the purpose of
pursuing its investment objective. As at 30 September 2016, euro 11,809,000
equivalent to £10,216,000 had been drawn down under the facility. The facility
is uncommitted.
7 Tax on ordinary activities
a) Analysis of charge for 2016 2015
the year
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Current tax:
UK corporation tax - - - - - -
Overseas tax suffered 523 - 523 573 - 573
Total tax charge for the 523 - 523 573 - 573
year
The Company has no corporation tax liability for the year ended 30 September
2016 (2015: nil).
b) The standard rate of corporation tax in the UK ("corporation tax rate") was
20% in the year to 31 March 2016 and is 20% in the year to 31 March 2017.
Accordingly, the Company's profits for the year ended 30 September 2016 are
taxed at an effective rate of 20% (2015: 20.5%). The corporation tax rate is
expected to reduce to 19% for the year beginning 1 April 2017 and, as a
consequence, the effective rate of corporation tax for the Company for the year
ending 30 September 2017 would be 19.5%.
The taxation charge for the Company for the year ended 30 September 2016 is
lower (2015: lower) than the effective rate of 20% (2015: 20.5%). The
differences are explained below:
2016 2015
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Net return before taxation 8,526 37,261 45,787 7,281 (24,888) (17,607)
Theoretical tax at UK 1,705 7,452 9,157 1,493 (5,102) (3,609)
corporation tax rate of
20% (2015: 20.5%)
Effects of:
- Foreign dividends that (2,073) - (2,073) (1,895) - (1,895)
are not taxable
- Non-taxable investment - (7,452) (7,452) - 5,102 5,102
(gains)/losses
- Disallowable expenses 1 - 1 1 - 1
- Unrelieved management 368 - 368 401 - 401
expenses
- Overseas tax suffered 523 - 523 573 - 573
- Accrued income taxable (1) - (1) - - -
on receipt
523 - 523 573 - 573
c) Factors that may affect future tax charges
At 30 September 2016, the Company had unrelieved management expenses of £
8,152,000, (30 September 2015: £6,312,000) that are available to offset future
taxable revenue. A deferred tax asset of £1,630,000 (2015: £1,262,000) has not
been recognised because the Company is not expected to generate sufficient
taxable income in future periods in excess of the available deductible expenses
and accordingly, the Company is unlikely to be able to reduce future tax
liabilities through the use of existing surplus losses.
Deferred tax is not provided on capital gains and losses arising on the
revaluation or disposal of investments because the Company meets (and intends
to continue for the foreseeable future to meet) the conditions for approval as
an Investment Trust company.
d) Contingent assets
The Company is currently pursuing a number of potential reclaims of tax. The
first relates to Franked Investment Group (FII GLO) computational based claims,
filed on the basis that the tax treatment of dividends received from
EU-resident companies is contrary to Article 43 (freedom of establishment) and/
or Article 56 (free movement of capital and payments) of the European Community
Treaty. The second relates to a reclaim of VAT charged on investment management
fees: Commissioners for Her Majesty's Revenue and Customs (Appellant) v
Investment Trust Companies (In Liquidation) and others (Respondents). The third
relates to retrospective reclaims for overseas withholding tax suffered above
treaty rates. In relation to the last of these, a reclaim was received
subsequent to the year end as detailed in note 21 of these Financial Statements
below. Potential tax reclaims which remain outstanding are treated as
contingent assets. Contingent assets have not been recognised in these
Financial Statements as in all instances at the balance sheet date the amounts
receivable were not certain.
8 Dividends
2016 2015
Declared and paid Payment date £'000 £'000
Final dividend for the year ended 30 September 31 January 2016 5,889 -
2015 of 14.0p
Special dividend for the year ended 30 September 31 January 2016 842 -
2015 of 2.0p
Final dividend for the year ended 30 September 31 January - 5,889
2014 of 14.0p 2015
Special dividend for the year ended 30 September 31 January 2015 - 421
2014 of 1.0p
6,731 6,310
The Directors recommend a final dividend in respect of the year ended 30
September 2016 of 16.0p and a special dividend of 6.0p payable on 31 January
2017 to all shareholders on the register at the close of business on 6 January
2017, a total of 22.0p (2015: 16.0p). The ex-dividend date will be 5 January
2017. The recommended final dividend and special dividend are subject to
approval by shareholders at the Annual General Meeting to be held on 24 January
2017. At the date of this report, the total dividend payment will amount to £
9,244,000 as detailed below.
Proposed 2016 2015
£'000 £'000
2016 final dividend of 16.0p (2015: 14.0p) per ordinary share* 6,723 5,889
2016 special dividend of 6.0p (2015: 2.0p) per ordinary share* 2,521 842
9,244 6,731
* Based on 42,016,100 shares in issue at 29 November 2016.
9 Return per ordinary share
2016 2015
Net Ordinary Per Net Ordinary Per
return shares* share return shares* share
£'000 pence £'000 pence
Net revenue return after 8,003 42,067,630 19.0 6,708 42,069,371 16.0
taxation
Net capital return after 37,261 42,067,630 88.6 (24,888) 42,069,371 (59.2)
taxation
Total return 45,264 42,067,630 107.6 (18,180) 42,069,371 (43.2)
* Weighted average number of ordinary shares in issue during the year.
10 Listed investments
2016 2015
£'000 £'000
Analysis of investment portfolio
movements
Opening book cost 331,813 307,072
Opening investment holding (losses)/ (23,585) 26,624
gains
Opening valuation 308,228 333,696
Movements in the year:
Purchases at cost 119,219 135,962
Sales - proceeds (104,122) (137,554)
- realised gains on sales 22,725 26,333
Investment holding gains/(losses) 15,015 (50,209)
Closing valuation 361,065 308,228
Closing book cost 369,635 331,813
Closing investment holding (losses)/ (8,570) (23,585)
gains
361,065 308,228
2016 2015
£'000 £'000
Analysis of capital gains and losses
Gains on sales 22,725 26,333
Investment holding gains/(losses) 15,015 (50,209)
Gains/(losses) on investments 37,740 (23,876)
Fair value hierarchy
In accordance with FRS 102, the Company must disclose the fair value hierarchy
that classifies financial instruments measured at fair value at one of three
levels according to the relative reliability of the inputs used to estimate the
fair values.
Classification Input
Level 1 Valued using quoted prices in active markets for identical
assets
Level 2 Valued by reference to valuation techniques using observable
inputs other than quoted prices included within Level 1
Level 3 Valued by reference to valuation techniques using inputs that
are not based on observable market data
Categorisation within the hierarchy has been determined on the basis of the
lowest level input that is significant to the fair value measurement of the
relevant asset. The valuation techniques used by the Company are explained in
note 1 of these Financial Statements, above. All of the Company's financial
instruments fall into Level 1, being valued at quoted prices in active markets.
Transaction costs
During the year ended 30 September 2016, the Company incurred transaction costs
of £145,000 (2015: £173,000) and £102,000 (2015: £171,000) on purchases and
sales of investments respectively. These amounts are included in gains/(losses)
on investments at fair value, as disclosed in the Income Statement above.
11 Significant holdings
The Company had no holdings of 3% or more of the share capital of any portfolio
companies.
12 Debtors
2016 2015
£'000 £'000
Due from brokers - 1,687
Taxation recoverable 1,286 886
Prepayments and accrued income 252 149
1,538 2,722
13 Creditors
2016 2015
£'000 £'000
Due to brokers 1,542 6,874
Other creditors and accruals 157 147
Management fee accrued 134 141
1,833 7,162
14 Called-up share capital
2016 2015
£'000 £'000
Allotted, called-up and fully paid:
Brought forward 10,517 10,517
Cancelled shares of 25p (4) -
42,053,550 (2015: 42,069,371) ordinary shares of 25p 10,513 10,517
each
During the year ended 30 September 2016, 15,821 ordinary shares were purchased
and cancelled at a total cost of £113,000 (2015: no ordinary shares were issued
or purchased and cancelled).
Duration of the Company
The Company neither has a termination date nor the requirement for any periodic
continuation votes.
15 Net asset value per ordinary share
2016 2015
pence pence
Net asset value per ordinary share 833.84 742.20
The net asset value per ordinary share is based on net assets of £350,659,000
(2015: £312,239,000) and on 42,053,550 (2015: 42,069,371) ordinary shares,
being the number of ordinary shares in issue at the year end.
16 Analysis of financial assets and liabilities
Interest rate and currency profile
The interest rate and currency profile of the Company's financial assets and
liabilities were:
2016 2015
Cash Cash
No flow No flow
interest interest interest interest
rate rate risk rate rate risk
exposure exposure Total exposure exposure Total
£'000 £'000 £'000 £'000 £'000 £'000
Equity shares
Euro 280,359 - 280,359 226,654 - 226,654
Swiss franc 34,138 - 34,138 45,235 - 45,235
Swedish krona 16,476 - 16,476 15,512 - 15,512
Norwegian krone 15,150 - 15,150 14,882 - 14,882
Danish kroner 14,942 - 14,942 5,945 - 5,945
Cash at bank and
short-term deposits
Euro - 45 45 - 8,376 8,376
Sterling - 60 60 - 75 75
Debtors
Euro 905 - 905 2,376 - 2,376
Swiss franc 318 - 318 127 - 127
Norwegian krone 178 - 178 129 - 129
Danish kroner 70 - 70 59 - 59
Sterling 59 - 59 25 - 25
New Zealand dollar 8 - 8 6 - 6
Borrowings
Euro - (10,216) (10,216) - - -
Creditors
Euro (1,542) - (1,542) (5,632) - (5,632)
Swiss franc - - - (573) - (573)
Swedish krona - - - (670) - (670)
Sterling (290) - (290) (287) - (287)
New Zealand dollar (1) - (1) - - -
360,770 (10,111) 350,659 303,788 8,451 312,239
2016 2015
Foreign exchange rates
Euro 1.1559 1.3570
Swiss franc 1.2593 1.4801
Swedish krona 11.1290 12.7043
Norwegian krone 10.3820 12.9208
Danish kroner 8.6072 10.1235
NZ dollar 1.7863 2.3679
17 Risk analysis
The Company is an investment company, whose shares are traded on the London
Stock Exchange and the New Zealand Stock Exchange. It conducts its affairs so
as to qualify in the UK as an investment trust under the provisions of Sections
1158 and 1159 of the CTA. In so qualifying, the Company is exempted in the UK
from corporation tax on capital gains on its portfolio of investments.
As an investment trust, the Company invests in equities and makes other
investments so as to achieve its investment objective of long-term capital
growth through a diversified portfolio of Continental European securities. In
pursuing its investment objective, the Company is exposed to risks which could
result in a reduction of either or both of the value of the net assets and the
profits available for distribution by way of dividend. The Board, together with
the AIFM, is responsible for the Company's risk management, as set out above in
the Strategic Report.
The principal risks the Company faces are:
* Investment and strategy risk
* Discount volatility risk
* Market risk (comprising: interest rate risk, currency risk and price risk)
* Liquidity risk
* Credit risk
* Gearing risk
The AIFM monitors the risks affecting the Company on an ongoing basis within
the policies and guidelines determined by the Board. The Directors receive
financial information, which is used to identify and monitor risk, quarterly.
The Company may enter into derivative contracts to manage risk but has not done
so to date. A description of the principal risks the Company faces is detailed
below and in the Strategic Report above.
Investment and strategy risk
There can be no guarantee that the objective of the Company will be achieved
due to poor stock selection or as a result of being geared in a falling market.
The Investment Manager meets regularly with the Board to discuss the portfolio
performance and strategy. The Board receives regular reports from the
Investment Manager detailing all portfolio transactions and any other
significant changes in the market or stock outlooks. Details of the investment
policy are given in the Strategic Report above.
Discount volatility risk
The Board recognises that it is in the long-term interests of shareholders to
reduce discount volatility and believes that the prime driver of discounts over
the longer term is investment performance. The Company is permitted to employ
gearing, a process whereby funds are borrowed principally for the purpose of
purchasing securities, should the Board consider that it is appropriate to do
so. The use of gearing can magnify discount volatility.
The Board actively monitors the discount at which the Company's shares trade
but it does not intend to issue a precise discount target at which shares will
be bought back as it believes that the announcement of specific targets is
likely to hinder rather than help the successful execution of a buy back
policy. Equally, the Company will issue shares in order to meet demand as it
arises.
The Board's commitment to allot or repurchase ordinary shares is subject to the
Directors being satisfied that any offer to allot or to purchase shares is in
the best interests of shareholders of the Company as a whole.
During the year ended 30 September 2016, 15,821 ordinary shares were purchased
and cancelled at a total cost of £113,000 (2015: no ordinary shares were issued
or purchased and cancelled). Subsequent to the year ended 30 September 2016 and
up to 29 November 2016, the date of this report, 37,450 shares were bought back
for cancellation at a total cost of £282,000.
Market Risk
Interest rate risk
The Company's assets and liabilities, excluding short-term debtors and
creditors, may comprise financial instruments which include investments in
fixed interest securities.
Details of the Company's interest rate exposure as at 30 September 2016 are
disclosed in note 16 of these Financial Statements.
The majority of the Company's assets were non-interest bearing during the year
ended and as at 30 September 2016. Some of the Company's cash at bank and
short-term deposits were subject to a negative interest charge during the year
ended and as at 30 September 2016. There was exposure to interest bearing
liabilities during the year ended and as at 30 September 2016 through the bank
overdraft credit facility agreement.
If interest rates had reduced by 0.25% (2015: 0.25%) from those obtained as at
30 September 2016, it would have the effect, with all other variables held
constant, of increasing the net revenue return before taxation and therefore
increasing net assets on an annualised basis by £26,000 (2015: reducing the net
revenue return before taxation by £21,000). If there had been an increase in
interest rates of 0.25% (2015: 0.25%), there would have been an equal and
opposite effect in the net revenue return before taxation. The calculations are
based on cash at bank, short-term deposits and bank overdrafts as at 30
September 2016 and these may not be representative of the year as a whole. This
level of change is considered to be reasonable based on observation of current
market conditions.
Currency risk
The base currency of the Company is sterling. The international nature of the
Company's investment activities gives rise to a currency risk which is inherent
in the performance of its overseas investments. The Company's overseas income
is also subject to currency fluctuations.
It is not the Company's policy to hedge this risk on a continuing basis.
Details of the Company's foreign currency risk exposure as at 30 September 2016
are disclosed in note 16 of these Financial Statements.
If sterling had strengthened by 10% against all other currencies on 30
September 2016, with all other variables held constant, it would have had the
effect of reducing the net capital return before taxation by £35,085,000 (2015:
£31,243,000) and the net revenue return before taxation by £1,055,000 (2015: £
952,000) and therefore would have reduced net assets by £36,140,000 (2015: £
32,195,000). If sterling had weakened by 10% against all other currencies,
there would have been an equal and opposite effect on both the net capital
return and net revenue return before taxation. This level of change is
considered to be reasonable based on observation of current market conditions.
Price risk
The Company is exposed to market risk due to fluctuations in the market prices
of its investments. Market price risk arises mainly from uncertainty about
future prices of financial instruments used in the Company's business. It
represents the potential loss the Company might suffer through holding market
positions in the face of price movements. The Investment Manager monitors the
prices of financial instruments held by the Company on an ongoing basis.
The Investment Manager actively monitors market and economic data and reports
to the Board, which considers investment policy on a regular basis. The net
asset value per share of the Company is issued daily to the London Stock
Exchange and the New Zealand Stock Exchange and is also available on the
Company's website at www.theeuropeaninvestmenttrust.com and on the website of
Edinburgh Partners at www.edinburghpartners.com.
Fixed asset investments are valued at their fair value. Details of the
Company's investment portfolio as at 30 September 2016 are disclosed above. In
addition, an analysis of the investment portfolio by sector and geographical
distribution is detailed above.
The maximum exposure to price risk at 30 September 2016 is the fair value of
investments of £361,065,000 (2015: £308,228,000).
If the investment portfolio valuation fell by 20% from the amount detailed in
the Financial Statements as at 30 September 2016, it would have the effect,
with all other variables held constant, of reducing the net capital return
before taxation and therefore reducing net assets by £72,213,000 (2015: £
61,646,000). An increase of 20% in the investment portfolio valuation would
have an equal and opposite effect on the net capital return before taxation.
The calculations are based on the Company's price risk at 30 September 2016 and
may not be representative of the year as a whole. This level of change is
considered to be reasonable based on observation of current market conditions.
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in
meeting obligations associated with financial liabilities. The Company's policy
with regard to liquidity is to ensure continuity of funding. Short-term
flexibility is achieved through cash management and increased borrowing,
including the use of overdraft facilities.
Liquidity risk is not considered significant as the Company's assets comprise
of readily realisable securities which are industrially and geographically
diverse and which can be sold freely to meet funding requirements if necessary.
Securities listed on a recognised stock exchange have been valued at bid prices
and exchange rates ruling at the close of business on 30 September 2016. In
certain circumstances, the market prices at which investments are valued may
not represent the realisable value of those investments, taking into account
both the size of the Company's holding and the frequency with which such
investments are traded. The Company does not normally invest in derivative
products. The Investment Manager reviews liquidity at the time of making each
investment decision. The Board reviews liquidity exposure at each meeting.
Credit risk
Credit risk is the risk of financial loss to the Company if the contractual
party to a financial instrument fails to meet its contractual obligations.
The carrying amounts of financial assets best represent the maximum credit risk
exposure at the Balance Sheet date. There are no financial assets which are
either past due or impaired.
The Company's listed investments are held on its behalf by The Northern Trust
Company acting as the Company's custodian. Bankruptcy or insolvency of the
custodian may cause the Company's rights with respect to securities held by the
custodian to be delayed. The Board monitors the Company's risk by reviewing the
custodian's internal controls reports.
Investment transactions are carried out with a large number of brokers whose
creditworthiness is reviewed by the Investment Manager. Transactions are
ordinarily undertaken on a delivery versus payment basis whereby the Company's
custodian ensures that the counterparty to any transaction entered into by the
Company has delivered in its obligations before any transfer of cash or
securities away from the Company is completed.
Cash is only held at banks that have been identified by the Board as reputable
and of high credit quality. As at 30 September 2016, The Northern Trust Company
London Branch had a long-term rating from Standard and Poor's of AA-.
The maximum exposure to credit risk as at 30 September 2016 was £362,708,000
(2015: £319,401,000). The calculation is based on the Company's credit risk
exposure as at 30 September 2016 and this may not be representative of the year
as a whole.
Gearing risk
The aim of gearing is to enhance long-term returns to shareholders by investing
borrowed funds in equities and other assets. The Company is permitted to employ
gearing should the Board consider it appropriate to do so. The Board's policy
is that the level of gearing should not exceed 20% in normal market conditions.
The use of gearing can cause both gains and losses in the asset value of the
Company to be magnified.
As detailed in note 6, during the year ended and as at 30 September 2016, the
Company had utilised a borrowing facility.
The Board undertakes an annual assessment and review of all the risks stated in
this note 17 and in the Strategic Report together with a review of any new
risks which may have arisen during the year. These risks are formalised within
the Company's risk assessment matrix.
18 Capital management policies
The objective of the Company is to achieve long-term capital growth through a
diversified portfolio of Continental European securities. In pursuing this
long-term objective, the Board has a responsibility for ensuring the Company's
ability to continue as a going concern. It must therefore maintain an optimal
capital structure through varying market conditions. This involves the ability
to: issue and buy back share capital within limits set by the shareholders in
general meeting; borrow monies in the short and long term; and pay dividends to
shareholders out of current year revenue earnings as well as out of
brought-forward revenue reserves.
The Company is subject to externally imposed capital requirements, including
the requirement as a public company to have a minimum share capital of £50,000,
which have been met throughout the year.
Any changes to the ordinary share capital are set out in note 14 of these
Financial Statements. Dividend payments are set out in note 8 of these
Financial Statements.
The Company's capital comprises:
2016 2015
£'000 £'000
Called-up share capital 10,513 10,517
Share premium account 123,749 123,749
Capital redemption reserve 8,298 8,294
Capital reserve 195,838 158,690
Revenue reserve 12,261 10,989
Total shareholders' funds 350,659 312,239
The capital reserve consists of realised capital reserves of £204,414,000 and
unrealised capital losses of £8,576,000 (2015: realised capital reserves of £
182,277,000 and unrealised capital losses of £23,587,000). The unrealised
capital losses consist of unrealised investment holding losses of £8,570,000
(2015: losses of £23,585,000) and unrealised foreign exchange losses of £6,000
(2015: losses of £2,000).
The Company's objectives for managing capital are the same as the previous year
and have been complied with throughout the year.
19 Transactions with the AIFM and the Investment Manager
Information with respect to transactions with the AIFM and the Investment
Manager is detailed in note 3 of these Financial Statements and in the
Strategic Report above.
20 Related parties
The Directors' fees for the year are detailed in the Directors' Remuneration
Report in the full Annual Report and Financial Statements. Under the AIC SORP,
an investment manager is not considered to be a related party of the Company.
21 Post balance sheet events
Subsequent to the year end, on 14 October 2016, the Company received euro
1,479,000, including interest, equivalent to £1,334,000, in relation to a
successful claim for the receipt of French withholding tax suffered during the
calendar years 2009 to 2012, which was not anticipated at the year end.
As disclosed in note 17 of these Financial Statements above, subsequent to the
year end of 30 September 2016 and up to the date of this report, 37,450 shares
were bought back for cancellation at a cost of £282,000.
Annual General Meeting
The Company's forty-fourth Annual General Meeting will be held at 11.00am on
Tuesday, 24 January 2017 at Brewers' Hall, Aldermanbury Square, London EC2V
7HR.
National Storage Mechanism
A copy of the Annual Report and Financial Statements 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.
A copy of the Annual Report and Financial Statements and Notice of Annual
General Meeting will be delivered to shareholders shortly and can also be found
on the Company's website at www.theeuropeaninvestmenttrust.com and on the
website of Edinburgh Partners at www.edinburghpartners.com.
Enquiries:
Craig Armour
Kenneth J Greig
Edinburgh Partners AIFM Limited
Telephone: 0131 270 3800
The Company's registered office address is:
Beaufort House
51 New North Road
Exeter
EX4 4EP
29 November 2016
Neither the contents of the Company's website and the Edinburgh Partners'
website nor the contents of any website accessible from hyperlinks on this
announcement (or any other website) is incorporated into, or forms part of this
announcement.
EUROPEAN INVESTMENT TRUST : Annual Financial Report
November 30, 2016 at 02:01 am EST
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