Half Yearly Report -2-
July 06 2010 - 4:45AM
UK Regulatory
growing areas of medical imaging and digital projectors. On the latter, the
global move towards digital and 3D cinema solutions is stimulating significant
growth in digital projectors where Barco is the global leader. Such
restructuring and focus has resulted in a positive re-rating which has driven
strong share price appreciation.
A couple of stocks in the media sector also provided a strong positive
contribution to performance. One of these is Publicis, a global leading
advertising agency headquartered in France. With a proven management team and
strong positions in digital and emerging markets, Publicis is beginning to
deliver excellent growth enhanced by the cyclical pick up in corporate spending.
In the mid cap area, the Trust also had exposure to GfK, a German based company
with a powerful position in specialist market research areas which are
experiencing structural growth. Excellent results and a low valuation provided
the backdrop to strong share price appreciation.
In the area of satellite communication, the Trust benefitted from another year
of outperformance from Eutelsat. This is a first class business which has many
of the investment characteristics we favour at this stage of the economic and
stock market cycle. It has structural growth opportunities, high barriers to
entry and a business model that is not solely dependent on overall rates of
economic growth.
We have continued to use the flexibility afforded by the mandate to select a
number of attractive UK companies, and these represented 14.6% of total assets
at the half year end.
There were few substantial negative contributors to performance; a feature which
is critical to delivering outperformance in a concentrated portfolio. However of
these the largest negative contributor was Unicredit, the Italian bank, which
suffered from negative sentiment to the sector as well as concerns over its
Central European exposure. We regard Unicredit as well capitalised, strongly
managed and regard exposure to countries such as Poland as attractive for medium
term growth.
M Lovett
N P S Dwane
Portfolio Managers
5th July 2010
CHARTER EUROPEAN TRUST plc
TOP 20 HOLDINGS AS AT 31st MAY 2010
+--------------------------+-----------+----------+---------------------------+
| | Valuation | % of | |
| | 31st May | Total | |
| | 2010 | Assets* | Principal Activities |
| | GBP'000s | | |
+--------------------------+-----------+----------+---------------------------+
| Credit Suisse | 3,044 | 5.52 | Banks |
+--------------------------+-----------+----------+---------------------------+
| Eutelsat Communications | 3,024 | 5.48 | Media |
+--------------------------+-----------+----------+---------------------------+
| International Personal | 2,927 | 5.31 | Financial Services |
| Finance | | | |
+--------------------------+-----------+----------+---------------------------+
| ASM International | 2,923 | 5.30 | Technology Hardware and |
| | | | Equipment |
+--------------------------+-----------+----------+---------------------------+
| Flsmidth & Co. | 2,735 | 4.96 | Construction & Materials |
+--------------------------+-----------+----------+---------------------------+
| Barco | 2,695 | 4.89 | Electronic & Electrical |
| | | | Equipment |
+--------------------------+-----------+----------+---------------------------+
| GfK | 2,653 | 4.81 | Media |
+--------------------------+-----------+----------+---------------------------+
| Sanofi-Aventis | 2,380 | 4.32 | Pharmaceuticals and |
| | | | Biotechnology |
+--------------------------+-----------+----------+---------------------------+
| Unicredit | 2,338 | 4.24 | Banks |
+--------------------------+-----------+----------+---------------------------+
| BNP Paribas | 2,279 | 4.13 | Banks |
+--------------------------+-----------+----------+---------------------------+
| Fresenius Medical Care | 2,174 | 3.94 | Healthcare Equipment and |
| | | | Services |
+--------------------------+-----------+----------+---------------------------+
| Swatch Group | 2,077 | 3.77 | Personal Goods |
+--------------------------+-----------+----------+---------------------------+
| Sodexo | 2,074 | 3.76 | Travel and Leisure |
+--------------------------+-----------+----------+---------------------------+
| Intermediate Capital | 2,068 | 3.75 | Financial Services |
| Group | | | |
+--------------------------+-----------+----------+---------------------------+
| Michelin | 1,936 | 3.51 | Automobiles & Parts |
+--------------------------+-----------+----------+---------------------------+
| BG Group | 1,920 | 3.48 | Oil and Gas Producers |
+--------------------------+-----------+----------+---------------------------+
| EVS Broadcast | 1,880 | 3.41 | Electronic & Electrical |
| | | | Equipment |
+--------------------------+-----------+----------+---------------------------+
| Publicis Groupe | 1,875 | 3.40 | Media |
+--------------------------+-----------+----------+---------------------------+
| Atlas Copco | 1,532 | 2.78 | Industrial Engineering |
+--------------------------+-----------+----------+---------------------------+
| Compagnie Financière | 1,528 | 2.77 | Personal Goods |
| Richemont | | | |
+--------------------------+-----------+----------+---------------------------+
| | 46,062 | 83.53 | |
+--------------------------+-----------+----------+---------------------------+
* Total assets are stated net of current liabilities
PORTFOLIO ANALYSIS AS AT 31st MAY 2010
+------------------------+-----------+---------+-----------+
| | Valuation | % of |Benchmark |
| | 31st May | Total | % |
| | 2010 | Assets* | (FTSE |
| | GBP'000s | | World |
| | | | Europe |
| | | | (ex UK) |
+------------------------+-----------+---------+-----------+
| Basic Materials | - | - | 7.36 |
+------------------------+-----------+---------+-----------+
| Consumer Goods | 7,605 | 13.79 | 16.32 |
+------------------------+-----------+---------+-----------+
| Consumer Services | 9,625 | 17.45 | 5.43 |
+------------------------+-----------+---------+-----------+
| Financials | 16,266 | 29.50 | 23.61 |
+------------------------+-----------+---------+-----------+
| Health Care | 4,554 | 8.26 | 9.40 |
+------------------------+-----------+---------+-----------+
| Industrials | 11,215 | 20.34 | 13.70 |
+------------------------+-----------+---------+-----------+
| Oil and Gas | 3,197 | 5.80 | 6.93 |
+------------------------+-----------+---------+-----------+
| Technology | 2,923 | 5.30 | 3.76 |
+------------------------+-----------+---------+-----------+
| Utilities | 1,032 | 1.87 | 6.99 |
+------------------------+-----------+---------+-----------+
| Telecommunications | - | - | 6.50 |
+------------------------+-----------+---------+-----------+
| Net Current Assets | (1,273) | (2.31) | - |
+------------------------+-----------+---------+-----------+
| | 55,144 | 100.00 | 100.00 |
+------------------------+-----------+---------+-----------+
* Total assets are stated net of current liabilities
SUMMARY OF UNAUDITED RESULTS
INCOME STATEMENT
for the six months ended 31st May 2010
+----------------------------------+----------+-----------+-----------+
| | Revenue | Capital | Total |
| | | | Return |
+----------------------------------+----------+-----------+-----------+
| | GBP'000s | GBP'000s | GBP'000s |
+----------------------------------+----------+-----------+-----------+
| | | | (Note 2) |
+----------------------------------+----------+-----------+-----------+
| Net losses on investments at | - | (1,620) | (1,620) |
| fair value | | | |
+----------------------------------+----------+-----------+-----------+
| Net gains on foreign currencies | - | 198 | 198 |
+----------------------------------+----------+-----------+-----------+
| Income | 1,186 | - | 1,186 |
+----------------------------------+----------+-----------+-----------+
| Investment management fee | (64) | (313) | (377) |
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