TIDMSR.
SR EUROPE INVESTMENT TRUST PLC
HALF YEARLY REPORT
For the six months ended 30 June 2011
Investment objective
SR Europe Investment Trust plc invests in an actively managed portfolio of
quoted companies and debt instruments in the United Kingdom and continental
Europe, including emerging Europe, Russia and Turkey, with the objective of
generating capital growth without neglecting income.
Capital structure
Issued share capital at 30 June 2011 GBP
28,974,928 Ordinary shares of 10 pence 2,879,493
each
5,937,927 Subscription shares of 1 59,379
pence each
The Articles of Association of the Company provide that at the Annual General
Meeting of the Company held to approve the Company's financial statements in
respect of the financial year ending 31 December 2011, the Directors will
propose an Ordinary Resolution for the continuation of the Company in its
current form. If this resolution is passed, a similar resolution will be
proposed at every third Annual General Meeting thereafter.
If such a resolution is not passed, a General Meeting of the Company will be
convened within the following four months to consider proposals for the
liquidation, reorganisation or reconstruction of the Company.
Subscription shares
Registered holders of Subscription shares will have the opportunity to convert
their Subscription shares at a rate of 1 Ordinary share per Subscription share
and a conversion price of 244p in the thirty days preceding the Annual General
Meeting in 2012.
Investment policy
SR Europe Investment Trust plc invests in an actively managed portfolio of
quoted companies and, occasionally, debt instruments in the United Kingdom and
continental Europe, including emerging Europe, Russia and Turkey.
The objective is to generate capital growth without neglecting income rather
than holding a portfolio of shares to try to outperform the European equity
indices.
The portfolio will be made up of stocks priced mainly in Euros and Sterling,
but also in a variety of other currencies. The Investment Managers are
authorised to hedge against anticipated weakness in any of these currencies,
including Sterling, the currency in which we report.
Asset allocation and risk diversification
The Company's investment policy is to concentrate on sectors, investment themes
and individual companies that have a pan-European perspective, but including
companies operating outside Europe. The Investment Managers' initial
consideration is to identify reasonable absolute upside on any individual
investment, whilst also paying particular attention to possible absolute
downside risks, irrespective of potential return relative to an index.
Limited attention is paid to geographical weightings of the portfolio, either
in absolute terms or relative to the MSCI Europe (including UK) Total Return
Index. However, for risk purposes, the Investment Managers monitor individual
country allocations to ensure that these do not become unreasonably high.
Whilst there is no prescribed single country limit, outside of the core markets
of the UK, Germany and France, exposure to any single country would normally
not exceed 30% of the portfolio at the time of investment. In the case of
emerging markets, the comparable figure would be 20%.
Up to 5% of shareholders' funds at the time of investment may be committed to
companies quoted outside of Europe, as defined above. Some of the companies
selected in this category may not have substantial interests in Europe.
The Investment Managers' aim is to capture the upside in European equity
markets over longer time periods, whilst trying to avoid major loss of value
when medium-term market prospects are poor. They believe that risk reduction
and the delivery of attractive absolute returns over time are best achieved by
finding several independent and uncorrelated investment themes where valuations
look attractive. Whilst not specifically proscribed, it is unlikely that
exposure to any single investment sector will exceed 30% of the portfolio at
the time of acquisition.
The portfolio is invested across the full spectrum size of individual
companies, from small, higher risk emerging businesses up to the largest quoted
European multinationals. Maximum exposure to any single share is capped at 15%
of gross assets at the time of investment, though in practice it would not
normally exceed 7%.
Gearing
The Investment Managers enjoy a high degree of flexibility in balance sheet
deployment, individual stock choices and size of positions in the Company's
portfolio. They may reduce the exposure to equities, if they believe that
prospects for equity markets are unfavourable, by one or more of: increasing
the cash position, investing in bonds and using appropriate hedging strategies.
Investors should note that hedging activities may not be perfectly correlated
to the underlying portfolio's equity positions; hence undertaking hedging
positions is not a `risk free' exercise and can result in further losses if
both positions were to move in opposite directions. This ought to be a rare
event as the Investment Managers seek to use hedging instruments that
realistically match the portfolio and generally hedging positions are used only
at irregular intervals.
The Investment Managers try to be pragmatic in their balance sheet positioning,
taking into account the general global outlook and liquidity environment. The
Company has authority to borrow up to a maximum of 50% of shareholder's funds,
but the Directors and Investment Managers have for the time being agreed a
maximum figure of 22% at the time the borrowings are made (though any cash
margin held may be offset against borrowings).
Even in negative market conditions a minimum gross level of equity exposure of
at least 40% is likely to be maintained, although the net exposure could be
reduced by, for example, hedging in extreme circumstances. Shareholders will
not be immune to weak markets and currencies, or to poor stock selection, but
the overall aim is to cushion the worst effects.
Financial summary
1 January 2011 1 January 2010 1 January 2010
to to to
30 June 2011 30 June 2010 31 December 2010
Revenue:
Net return after taxation GBP772,000 GBP713,000 GBP842,000
Return per Ordinary share - 2.64p 2.41p 2.86p
basic and fully diluted
Dividend declared/paid in 1.00p 1.00p 2.40p
respect of period
Capital:
Net return after taxation GBP477,000 GBP(9,246,000) GBP(2,442,000)
Return per Ordinary share - 1.63p (31.28)p (8.29)p
basic and fully diluted
As at As at As at
30 June 2011 30 June 2010 31 December 2010
Assets (investments valued
at bid-market prices):
Net assets GBP68,440,000 GBP61,722,000 GBP68,362,000
Net asset value per Ordinary
share (`NAV')
-basic and fully diluted 236.20p 210.46p 233.10p
Middle market quotation:
Ordinary shares 211.25p 183.00p 194.50p
Subscription shares 3.50p 13.50p 9.00p
Discount to basic NAV:
Ordinary shares 10.56% 13.05% 16.56%
1 January 2011 1 January 2010 1 January 2010
to to to
30 June 2011 30 June 2010 31 December 2010
SR Europe Total Return * 1.87% (12.12)% (2.21)%
MSCI Europe (including UK) 6.35% (9.67)% 8.22%
Total Return Index
* includes dividends reinvested as at the ex-dividend date.
Investment Manager's Report
In the first half of 2011 the NAV rose by 1.33% in Sterling terms, against a
background characterised by macro risk, volatility and sector rotation. In the
past six months markets have seemingly lurched from crisis to crisis: an
inflationary scare in the emerging world (impacting global growth stocks); a
brief but substantial rally in financials in the early part of the year which
then gave way to continued underperformance as concerns about the
capitalisation of the sector returned to the fore; a tragic natural disaster in
Japan causing fears for the global supply chain and changing the outlook for
power generation the world over; hopes for economic recovery in the US wavering
as data began to indicate further weakness in housing and persistent
unemployment; and finally renewed fears about the Sovereign debt crisis in the
Eurozone, the health of the Eurozone's banking system and the sustainability of
the single currency project. In local currencies, European markets retreated
marginally in the first half, offset in Sterling terms by the declining value
of the UK's currency. Against this backdrop, we have focused on bottom-up stock
selection with some use of derivative overlays to hedge the portfolio at times
of stress.
The top five performers for the Company in the period have been:
Alcatel-Lucent, Michelin, Edenred, BMW and Adidas, which contributed a combined
6.46%. Alcatel started 2011 as an out of favour stock which had performed
poorly for years following a badly executed merger and ferocious competition in
the telecoms equipment market driven by the entry of the Chinese. The change,
not properly understood by the market, was the need for significant network
infrastructure upgrades driven by increased Smartphone penetration and data
usage, coupled by a convergence of fixed and mobile network technologies onto
common, IP-based fibre infrastructure. This shift put Alcatel in a structurally
stronger position and, combined with new management finally executing on the
merger and cutting costs, enabled the company to return to profit. The stock
price has doubled in the year to date and the Company has now exited its
position. Michelin, Edenred, BMW and Adidas all remain core holdings.
The bottom five performers were: Temenos, Aixtron, Assa Abloy, Credit Suisse
and Antofagasta, losing a combined 3.96%. The main drag was Temenos, a leading
provider of software solutions for banks. This should be an exciting market.
Most banks are running antiquated and often segregated software platforms, a
legacy of past consolidation, and these platforms frequently are not compatible
with new regulatory standards, requiring a much deeper knowledge of customers,
exposures and management of risk. However, the crisis has meant banks
postponing investment and Temenos has issued disappointing results for three
consecutive quarters. Coupled with management change and some inconsistent
comment from the company, this causes concern and a loss of conviction, so we
have exited the position.
The net revenue after tax increased to GBP772,000 in the first half of 2011
against GBP713,000 in the comparable period in 2010, resulting in an earnings per
share of 2.64p against 2.41p. The Directors have declared an interim dividend
of 1.00p per Ordinary share payable on 30 September 2011 to shareholders on the
register on 19 August 2011.
We continue to find many good quality, global leading businesses in Europe with
good prospects, in our view not properly understood by the market, and at cheap
valuations. However, real macro concerns remain. Inflationary pressures and
excess growth in emerging economies combined with lacklustre growth and high
unemployment in much of the OECD as well as a continuing debt and currency
crisis in the Eurozone provide a challenging backdrop for markets.
In response we have reduced our balance sheet exposure to about 50% at the time
of writing, concentrating the portfolio further from around 30 stocks to circa
20 names in which we have high conviction. We will continue to focus on
bottom-up stock selection and use derivative overlays to hedge the portfolio in
times of stress.
Sloane Robinson LLP
10 August 2011
Interim management report and responsibility statement of the Directors
Interim management report
The important events that have occurred during the period under review, the key
factors influencing the financial statements and principal uncertainties for
the remaining six months of the financial year are all set out in the
Investment Manager's report.
The principal risks facing the Company are substantially unchanged since the
date of the annual report for the year ended 31 December 2010 and continue to
be as set out in that report. Risks faced by the Company include, but are not
limited to, liquidity/marketability risk, interest rate risk, gearing risk,
currency risk, maturity risk, market price and discount volatility risk, risks
associated with non-compliance with Section 1158/9 of the Corporation Tax Act
2010, risks associated with hedging, credit risk and risks associated with the
engagement of third parties.
Responsibility Statement
The Directors confirm that to the best of their knowledge:
- the condensed set of financial statements has been prepared in accordance
with IAS 34 `Interim Financial Reporting' and gives a true and fair view of the
assets, liabilities, financial position and profit of the Company and the
subsidiary undertaking included in the consolidation taken as a whole; and
- this Half Yearly Financial Report includes a fair review of the information
required by:
a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of
important events that have occurred during the first six months of the
financial year and their impact on the condensed set of financial statements;
and a description of the principal risks and uncertainties for the remaining
six months of the year; and
b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the Company during that period; and any changes in the related
party transactions described in the last annual report that could do so.
This Half Yearly Financial Report was approved by the Board of Directors on 10
August 2011 and the above responsibility statement was signed on its behalf by
Martin Riley, Chairman.
CONSOLIDATED INCOME STATEMENT
(unaudited) for the six months ended 30 June 2011
1 January 2011 1 January 2010 1 January 2010
to to to
30 June 2011 30 June 2010 31 December 2010
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income and
capital
profits/
(losses)
Net gains/ - 643 643 - (8,731) (8,731) - (2,020) (2,020)
(losses) on
investments
at fair
value
through
profit or
loss
Foreign - 247 247 - 1,131 1,131 - 1,586 1,586
exchange
gains on
capital
items
Losses on - (948) (948) - (1,486) (1,486) - (1,719) (1,719)
forward
foreign
exchange
contracts
Dividends 2 1,171 685 1,856 1,140 - 1,140 1,569 - 1,569
and other
income
Return 1,171 627 1,798 1,140 (9,086) (7,946) 1,569 (2,153) (584)
before
expenses,
finance
costs and
taxation
Expenses
Investment 3 (137) (137) (274) (136) (136) (272) (272) (272) (544)
Manager's
fee
Other (134) - (134) (170) - (170) (307) - (307)
expenses
Return 900 490 1,390 834 (9,222) (8,388) 990 (2,425) (1,435)
before
finance
costs and
taxation
Finance 3 (13) (13) (26) (24) (24) (48) (26) (26) (52)
costs
Return on 887 477 1,364 810 (9,246) (8,436) 964 (2,451) (1,487)
ordinary
activities
before
taxation
Taxation 4 (115) - (115) (97) - (97) (122) 9 (113)
Return to 5 772 477 1,249 713 (9,246) (8,533) 842 (2,442) (1,600)
Equity
Shareholders
for the
period
pence pence pence pence pence pence pence pence pence
Return per
Ordinary
share
- Basic and 5 2.64 1.63 4.27 2.41 (31.28) (28.87) 2.86 (8.29) (5.43)
fully
diluted
The Group does not have any income or expenses that are not included in the
return for the period, and therefore the "Return to Equity Shareholders for the
period" is also the "Total comprehensive income for the period", as defined in
International Accounting Standard (`IAS') 1 (revised). All of the return for
the period and the total comprehensive income for the period is attributable to
the Shareholders of the Group.
The total column of this statement is the statement of comprehensive income of
the Group which incorporates the trading subsidiary, Frankrate Limited,
prepared under International Financial Reporting Standards (`IFRS'). The
supplementary revenue and capital return columns are presented for information
purposes as recommended by the Statement of Recommended Practice (`SORP')
issued by the Association of Investment Companies (`AIC'). All revenue and
capital items in the above statement derive from continuing operations. These
accounts are unaudited and are not the Group's statutory accounts.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(unaudited) for the six months ended 30 June 2011
Capital
Share Share redemption Capital Retained
capital premium reserve reserves earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
For the six months
ended 30 June 2011
(unaudited)
31 December 2010 2,992 26,127 36 37,216 1,991 68,362
Total - - - 477 772 1,249
comprehensive
income for the
period
Shares purchased (35) - 35 (761) - (761)
for cancellation
Dividends paid:
Final dividend for - - - - (410) (410)
the year ended
31 December 2010
(1.40p)
30 June 2011 2,957 26,127 71 36,932 2,353 68,440
For the six months
ended 30 June 2010
(unaudited)
31 December 2009 3,028 26,127 - 40,441 2,407 72,003
Total - - - (9,246) 713 (8,533)
comprehensive
income for the
period
Shares purchased (36) - 36 (783) - (783)
for cancellation
Dividends paid:
Second interim - - - - (965) (965)
dividend for the
year ended
31 December 2009
(3.25p)
30 June 2010 2,992 26,127 36 30,412 2,155 61,722
For the year ended
31 December 2010
(audited)
31 December 2009 3,028 26,127 - 40,441 2,407 72,003
Total - - - (2,442) 842 (1,600)
comprehensive
income for the
year
Shares purchased (36) - 36 (783) - (783)
for cancellation
Dividends paid:
Second interim - - - - (965) (965)
dividend for the
year ended
31 December 2009
(3.25p)
First interim - - - - (293) (293)
dividend for the
year ended
31 December 2010
(1.00p)
31 December 2010 2,992 26,127 36 37,216 1,991 68,362
CONSOLIDATED BALANCE SHEET
(unaudited) as at 30 June 2011
30 June 30 June 31 December
2011 2010 2010
(unaudited) (unaudited) (audited)
Note GBP'000 GBP'000 GBP'000
Non-current assets
Investments
Fair value through profit 52,242 50,770 65,385
or loss
Current assets
Amount due on derivative 469 2,238 435
financial instruments
Other receivables 564 3,788 2,764
Cash and cash equivalents 15,989 16,065 391
17,022 22,091 3,590
Total assets 69,264 72,861 68,975
Current liabilities
Amount due on derivative (18) - (424)
financial instruments
Bank overdraft - (10,906) -
Other payables (806) (233) (189)
Current and total (824) (11,139) (613)
liabilities
Net assets 68,440 61,722 68,362
Shareholders' equity
Share capital 6 2,957 2,992 2,992
Share premium 26,127 26,127 26,127
Capital redemption reserve 71 36 36
Capital reserves 36,932 30,412 37,216
Retained earnings 2,353 2,155 1,991
Total Shareholders' equity 68,440 61,722 68,362
pence pence pence
Net asset value per
Ordinary share
Basic 8 236.20 210.46 233.10
Diluted 8 236.20 210.46 233.10
The consolidated balance sheet incorporates the trading subsidiary, Frankrate
Limited.
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited) for the six months ended 30 June 2011
Six months ended Six months ended Year to 31
30 June 2011 30 June 2010 December 2010
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Cash flows from operating
activities
Net return before taxation 1,364 (8,436) (1,487)
Adjustments to reconcile:
Less: (gains)/losses on (643) 8,731 2,020
investments
Less: dividends reinvested - (19) (35)
Realised exchange gains (247) (1,131) (1,586)
Losses on forward foreign 948 1,486 1,719
exchange contracts
Realised exchange (gains)/ (18) 19 2
losses on income
Plus: finance costs 26 48 52
Decrease in other 2 200 214
receivables
(Decrease)/increase in (2) (8) 2
other payables
Tax deducted from (237) (202) (227)
unfranked income
Cash generated from 1,193 688 674
operations
Overdraft interest paid (34) (50) (62)
Tax credits recovered on 29 - 8
unfranked income
Corporation tax paid - - (6)
Net cash flows generated 1,188 638 614
from operating activities
Cash flows from investing
activities
Purchases of investments (67,531) (72,971) (126,555)
Sales of investments 83,758 95,112 142,751
Exchange (losses)/gains on (71) 18 6
settlement
Exchange losses on (638) (566) (375)
currency
Exchange gains/(losses) on 26 (94) (54)
futures contracts
Losses on index futures (81) (1,057) (1,081)
contracts
Open futures and option 118 (759) 540
contracts deposits
Net cash flows from 15,581 19,683 15,232
investing activities
Cash flows used in
financing activities
Shares repurchased for (761) (783) (783)
cancellation
Equity dividends paid (410) (965) (1,258)
Net cash flows used in (1,171) (1,748) (2,041)
financing activities
Net increase in cash and 15,598 18,573 13,805
cash equivalents for
period
Cash and cash equivalents 391 (13,414) (13,414)
at start of period
Cash and cash equivalents 15,989 5,159 391
at end of period
NOTES TO THE HALF YEARLY REPORT
for the six months ended 30 June 2011
1. Basis of preparation and accounting policies
The half year condensed consolidated financial statements for the six months
ended 30 June 2011 have been prepared in accordance with the Disclosure and
Transparency Rules (`DTR') of the Financial Services Authority and with IAS 34
'Interim Financial Reporting'. The half year condensed consolidated financial
statements do not include all the information and disclosures required in the
annual financial statements and should be read in conjunction with the Group's
annual financial statements as at 31 December 2010, which have been prepared in
accordance with IFRSs as adopted by the European Union. This condensed
consolidated half year financial information does not comprise statutory
accounts within the meaning of Section 434 of the Companies Act 2006. Statutory
accounts for the year ended 31 December 2010 were approved by the Board of
Directors on 6 April 2011 and delivered to the Registrar of Companies. The
report of the auditors on those accounts was unqualified, did not contain an
emphasis of matter paragraph and did not contain any statement under Section
498 of the Companies Act 2006. The half year condensed consolidated financial
statements for the six months ended 30 June 2011 have not been audited or
reviewed by the auditors pursuant to the Auditing Practices Board guidance on
Review of Interim Financial Information.
The Company has considerable financial resources together with assets that
consist principally of a diversified portfolio of listed equity shares which
are readily realisable and exceed its liabilities by a significant amount. As a
consequence, the Directors believe the Company is well placed to manage its
business risks successfully.
After making enquiries and in accordance with the FRC's "Going Concern and
Liquidity Risk: Guidance for Directors of UK Companies 2009", the Directors
have a reasonable expectation that the Company has adequate resources to
continue in operational existence for the foreseeable future. Accordingly, they
continue to adopt the going concern basis in preparing the half year condensed
consolidated financial statements.
The accounting policies and presentation applied to the half yearly figures are
consistent with those applied in the statutory accounts for the year to
31 December 2010.
2. Dividends and other income
Six months Six months Year
to to to
30 June 30 June 31 December
2011 2010 2010
GBP'000 GBP'000 GBP'000
Income from listed investments:
UK dividends 207 241 322
UK dividends reinvested - 19 35
Overseas dividends 935 740 865
Fixed interest 8 191 366
Other income:
Dealing losses of subsidiary - (28) (31)
Interest on short-term bank 2 8 21
deposits
Other 19 (31) (9)
Total income 1,171 1,140 1,569
3. Management fees and interest payable
Management fees and interest charged on borrowings are allocated 50% to revenue
and 50% to capital in the income statement. The performance fee (when payable)
is allocated 100% to capital. Tax relief in respect of such allocations is
credited to capital to the extent that such relief can be utilised in reducing
the Company's overall liability to taxation.
4. Taxation
The estimated effective corporation tax rate is 0% as investment gains are
exempt from tax owing to the Company's status as an investment trust and there
is expected to be an excess of management expenses over taxable income. The
total tax assessed is however higher than 0% due to irrecoverable withholding
tax paid on overseas investment income.
5. Group return per Ordinary share
Six months ended Six months ended Year ended
30 June 2011 30 June 2010 31 December 2010
Weighted Weighted Weighted
average average average
number of number of number of
Net Ordinary Per Net Ordinary Per Net Ordinary Per
return shares share return shares share return shares share
GBP'000 pence GBP'000 pence GBP'000 pence
Basic and
diluted
Revenue
Return per 772 29,261,533 2.64 713 29,561,130 2.41 842 29,443,221 2.86
share
Capital
Return per 477 29,261,533 1.63 (9,246) 29,561,130 (31.28) (2,442) 29,443,221 (8.29)
share
Total 1,249 29,261,533 4.27 (8,533) 29,561,130 (28.87) (1,600) 29,443,221 (5.43)
6. Called-up share capital
30 June 30 June 31 December
2011 2010 2010
Allotted, called-up and fully-paid:
Number of Ordinary shares of 10p each 28,974,928 29,327,234 29,327,234
in issue with full voting rights
Number of Subscription shares of 1p 5,937,927 5,937,927 5,937,927
each in issue with no voting rights
34,912,855 35,265,161 35,265,161
GBP'000 GBP'000 GBP'000
Nominal value of Ordinary shares of 2,898 2,933 2,933
10p each in issue with full voting
rights
Nominal value of Subscription shares 59 59 59
of 1p each in issue with no voting
rights
2,957 2,992 2,992
During the six-month period to 30 June 2011, the Company repurchased 352,306
Ordinary shares at a cost of GBP761,000. No Ordinary shares were held in treasury
during the period or at the period end.
Since the period end the Company has purchased 136,336 Ordinary shares for
cancellation at a cost of GBP288,000 and representing 0.47% of the Company's
issued Ordinary share capital as at 30 June 2011.
7. Dividends
In accordance with International Accounting Standard 10: Events After the
Balance Sheet Date, dividends are not accounted for until paid. The following
table summarises the amounts recognised as distributions to Equity holders in
the relevant period:
Six months ended Six months ended Year ended
30 June 30 June 31 December
2011 2010 2010
GBP'000 GBP'000 GBP'000
2010 Final dividend of 410 - -
1.40p paid on 31 May 2011
2010 First interim dividend - - 293
of 1.00p paid on 30
September 2010
2009 Second interim - 965 965
dividend of 3.25p paid on 1
April 2010
410 965 1,258
The Directors have declared an interim dividend for 2011 of 1.00p per Ordinary
share, to be paid on 30 September 2011 to shareholders on the register on
19 August 2011.
8. Net asset value (`NAV') per share
30 June 30 June 31 December
2011 2010 2010
(unaudited) (unaudited) (audited)
pence pence pence
Ordinary share
- Basic 236.20 210.46 233.10
- Fully diluted 236.20 210.46 233.10
The NAVs per share have been calculated in accordance with the Articles of
Association and are based on:
GBP'000 GBP'000 GBP'000
Net assets attributable to Ordinary 68,440 61,722 68,362
shareholders
Number of Ordinary shares in issue at 28,974,928 29,327,234 29,327,234
the period end
Subscription shares outstanding at the 5,937,927 5,937,927 5,937,927
period end
The fully diluted NAVs are shown as the same figure as the basic NAV because
the conversion price of the Subscription shares of 244p is above the basic NAV
per Ordinary share.
9. Related party transactions
Transactions between the Company and its subsidiary, Frankrate Limited, which
is a related party, have been eliminated on consolidation and are not disclosed
in this note.
The Investment Manager, Sloane Robinson LLP, is regarded as a related party of
the Company. The total charge to the Company for investment management fees and
performance fees is disclosed in the consolidated income statement. Amounts
payable to the Investment Manager as at 30 June 2011 for investment management
fees totalled GBP136,000 (30 June 2010: GBP124,000) (31 December 2010: GBP139,000).
Amounts payable in respect of the performance fee totalled GBPnil (30 June 2010:
GBPnil) (31 December 2010: GBPnil).
A performance fee is payable in 2012 based on performance over a period of
approximately 5 1/4 years. With assets only marginally increasing in the six
months, there is no performance fee owing at 30 June 2011.
PORTFOLIO OF INVESTMENTS
as at 30 June 2011
Company Country Sector Market % of total
value investments
GBP'000
Fiat Industrial Italy Industrials 3,991 7.64
International Power United Kingdom Utilities 3,520 6.74
SAP Germany Information 3,459 6.62
Technology
Bayer Motoren Werk Germany Consumer 3,434 6.57
Discretionary
Michelin France Consumer 3,375 6.46
Discretionary
Virgin Media United Kingdom Consumer 3,356 6.42
Discretionary
Edenred France Industrials 3,355 6.42
Novo-Nordisk Denmark Healthcare 3,237 6.20
Adidas Germany Consumer 3,059 5.85
Discretionary
GEA Group Germany Industrials 2,977 5.70
Publicis Groupe France Consumer 2,921 5.59
Discretionary
ENI Italy Energy 2,659 5.09
Temenos Group Switzerland Information 2,569 4.92
Technology
Prudential United Kingdom Financials 2,339 4.48
Amadeus Global Spain Information 2,300 4.40
Technology
Swatch Group Switzerland Consumer 2,292 4.39
Discretionary
Wirecard Germany Information 2,004 3.84
Technology
Thyssenkrupp Germany Materials 1,395 2.67
Total investments 52,242 100.00
There were no holdings in the subsidiary as at 30 June 2011.
TOTAL PORTFOLIO INVESTMENTS
as at 30 June 2011
Portfolio breakdown*
Country %
Denmark 6.2
France 18.5
Germany 31.3
Italy 12.7
Spain 4.4
Switzerland 9.3
UK 17.6
100.0
Sector breakdown*
Sector %
Consumer Discretionary 35.3
Information Technology 19.8
Industrials 19.7
Utilities 6.7
Healthcare 6.2
Energy 5.1
Financials 4.5
Materials 2.7
100.0
* as a percentage of the total portfolio of investments at 30 June 2011:
GBP52,242,000.
DIRECTORS AND ADVISERS
Directors
M R Riley (Chairman)*
I C S Barby*
D S Boyle*
T W N Guinness*
H P Sloane
* Independent of the Investment Manager
Secretary and Registered Office
Capita Sinclair Henderson Limited
(trading as Capita Financial Group - Specialist Fund Services)
Beaufort House
51 New North Road
Exeter EX4 4EP
Telephone: 01392 412122
Investment Manager
Sloane Robinson LLP
Den Norske Bank Building
20 St Dunstan's Hill
London EC3R 8ND
Telephone: 0207 929 2771
Registered Auditor
Grant Thornton UK LLP
30 Finsbury Square
London EC2P 2YU
Stockbrokers
J.P. Morgan Cazenove Limited
20 Moorgate
London EC2R 6DA
Registrars
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS13 6ZZ
Telephone: 0870 707 1313
Custodian
Morgan Stanley & Co. International plc
Canary Wharf
25 Cabot Square
London E14 4QA
Registered in England
Company Number 04223875
An investment company as defined under Section 833 of the Companies Act 2006
AIC
The Company is a member of the Association of Investment Companies
A copy of the SR Europe Investment Trust plc Half Yearly Report for the period
ended 30 June 2011 can be found on the Company's website, www.sreit.co.uk
END
Neither the contents of the Company's 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.
END
Sr Europe Investment Trust (LSE:SR.)
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