Source - PRN

All information is at31 May 2017 and unaudited.

Performance at month end with net income reinvested

(20 Sep 04)
Net asset value (undiluted) 4.5% 10.4% 27.9% 37.4% 318.3%
Net asset value* (diluted) 4.5% 10.4% 27.9% 38.1% 318.7%
Share price 7.2% 13.7% 33.0% 37.2% 311.2%
FTSE World Europe ex UK 5.5% 11.4% 35.7% 36.9% 235.5%

* Diluted for treasury shares and subscription shares.
Sources: BlackRock and Datastream

At month end

Net asset value (capital only): 327.57p
Net asset value (including income): 329.99p
Net asset value (capital only)1: 327.57p
Net asset value (including income)1: 329.99p
Share price: 321.75p
Discount to NAV (including income): 2.5%
Discount to NAV (including income)1: 2.5%
Net gearing: 1.6%
Net yield2: 1.6%
Total assets (including income): £318.4m
Ordinary shares in issue3: 95,295,953
Ongoing charges4: 1.07%

1  Diluted for treasury shares.
2  Based on a final dividend of 3.65p per share for the year ended 31 August 2016 and an interim dividend of 1.75p per share declared on 26 April 2017.
3  Excluding 15,032,985 shares held in treasury.
4  Calculated as a percentage of average net assets and using expenses, excluding interest costs, after relief for taxation, for the year ended 31 August 2016.

Sector Analysis Total 
Country Analysis Total 
Industrials 24.3  France 17.4 
Financials 17.1  Netherlands 16.8 
Consumer Services 13.2  Germany 11.7 
Consumer Goods 11.7  Denmark 11.4 
Health Care 10.9  Switzerland 9.8 
Technology 8.6  Russia 5.3 
Basic Materials 6.9  Sweden 5.2 
Oil & Gas 3.6  Finland 4.5 
Telecommunications 2.7  Ireland 4.3 
Energy 1.4  Spain 3.2 
Net current liabilities (0.4) Belgium 2.9 
----- Luxembourg 2.0 
100.0 Poland 2.0 
==== Ukraine 1.7 
Turkey 1.6 
Italy 0.6 
Net current liabilities (0.4)


Ten Largest Equity Investments
Company Country % of
Total Assets
RELX Netherlands 3.5
Bayer Germany 3.4
Inditex Spain 3.2
Compagnie Financière Richemont Switzerland 3.0
Vinci France 3.0
Lonza Group Switzerland 2.9
Ahold Netherlands 2.9
ASML Netherlands 2.8
DSV Denmark 2.8
KPN Netherlands 2.7

Commenting on the markets, Vincent Devlin, representing the Investment Manager noted:

During the month, the Company’s NAV rose by 4.5% and the share price increased by 7.2%. For reference, the FTSE World Europe ex UK Index was up 5.5% during the period.

The European ex UK market rallied in May backed by improving earnings momentum in the region. Macro data, including the Purchasing Manager’s Index and consumer confidence, remains positive with the April PMI print recording a 6-year high. Sentiment also improved for the region as France headed to the polls for the second round of the French presidential election, with Independent, and market friendly, candidate Emmanuel Macron comfortably beating far right rival Marine Le Pen. The European Central Bank left all policy unchanged over the month with Draghi reiterating that “extraordinary” measures were still needed to stablise inflation, even as economic growth continues to gather pace. Both core and headline inflation have fallen in recent prints.

The Company underperformed the reference index over the month. The index was primarily led higher by large-cap stocks and particularly those which are more defensive in nature. In this regard, one of the largest detractors to relative returns was not owning large benchmark constituent Nestlé.

Given the outperformance of defensive stocks, the lower weighting towards utilities detracted from performance. The higher weighting held in the industrials sector also detracted. However, positively, the lower allocation to financials aided relative returns as the sector, and in particular banks, fell back over the month.

Stock selection in the technology sector proved the most challenging over the month with positions in ASML and Hexagon detracting. The former pulled back after a period of strong performance given investor concerns around inventory build.

The largest detractor to performance came from a holding in Russian energy supplier Gazprom. The company’s stock, along with much of the rest of the energy and commodities space, was weak as OPEC decided to maintain production cuts at the same level, rather than furthering them as many market participants had hoped.

A number of positions within industrials, including Wartsila and CRH, also detracted following a period of exceptionally strong performance. A holding in shale exposed Tenaris also proved negative for performance as commodity prices weakened over the period.

Strong performance came from a holding in hearing aid manufacturer GN Store Nord. The company delivered strong revenue growth for the first quarter of 15%, driven by success in their 5th generation audio link product which is significantly differentiated from competitors.

A holding in KPN also contributed positively to returns, rallying after a period of weak performance. The company announced a share buy-back which was taken positively by the market.  A greater potential for consolidation in the Netherlands mobile market is also supportive for the share price.


A combination of fading political risk and a turn in earnings has helped sentiment. We saw investors starting to come back to the asset class, in particular, post the French elections. The synchronised global expansion is helpful for Europe, as evidenced by the strong first-quarter reporting season, which has been the best in several years. The pick-up in sales growth has led to a clear recovery in profits. We have seen improvement in employment and the credit backdrop is supportive, with lending conditions remaining favourable. In terms of valuation, European equities are not expensive relative to other regions, in particular against the US, while still offering attractive yields versus bonds. Europe’s domestic recovery is progressing positively, the political landscape is more optimistic, aided by the new French president Emmanuel Macron who appears to be getting support to implement a much needed reform agenda. Overall, the asset class remains under-owned and Europe continues to surprise on the upside.
20 June 2017


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