BlackRock Greater Europe Investment Trust plc
LEI: 5493003R8FJ6I76ZUW55
Half Yearly Financial Report for the six months ended 28 February 2025
| Performance record | As at 28 February 2025 | As at 31 August 2024 |
| Net assets (£’000) | 620,574 | 640,300 |
| Net asset value per ordinary share (p) | 639.30 | 644.60 |
| Ordinary share price (mid-market) (p) | 596.00 | 601.00 |
| Discount to cum income net asset value2 | 6.8% | 6.8% |
| FTSE World Europe ex UK Index | 2321.09 | 2219.24 |
| Performance (with dividends reinvested) | For the 6 months ended 28 February 2025 | For the 6 months ended 29 February 2024 |
| Net asset value per share2 | 0.1% | 18.6% |
| Ordinary share price2 | 0.1% | 20.5% |
| FTSE World Europe ex UK Index | 4.6% | 9.6% |
| Performance since inception (with dividends reinvested) | For the period since inception to 28 February 2025 | For the period since inception to 29 February 2024 |
| Net asset value per share2 | 798.3% | 814.2% |
| Ordinary share price2 | 748.5% | 784.2% |
| FTSE World Europe ex UK Index | 486.9% | 431.2% |
| Revenue | For the 6 months ended 28 February 2025 | For the 6 months ended 29 February 2024 | Change % |
| Net (loss)/profit on ordinary activities after taxation (£’000) | (43) | 63 | -168.3% |
| Revenue (loss)/earnings per ordinary share (p)3 | (0.04) | 0.06 | -166.7% |
| Dividends | |||
| Interim dividend (p) | 1.75 | 1.75 | – |
1 The change in net assets reflects payments for shares repurchased into treasury, portfolio movements and dividends paid.
2 Alternative Performance Measures, see Glossary contained within the Half Yearly Financial Report.
3 Further details are given in the Glossary contained within the Half Yearly Financial Report.
Chairman’s Statement
Overview
The Company’s Net Asset Value (NAV) underperformed the reference index (the FTSE World Europe ex UK Index) over the six months under review, ending the period only marginally higher by 0.1% compared to a 4.6% increase in the reference index. Over the same period, the Company’s share price returned 0.1% (all percentages calculated in Sterling terms with dividends reinvested).
A potential ceasefire in Ukraine and increased fiscal spending to strengthen European defence programmes, resulted in narrow market leadership driven by only a few industries, particularly banks, defence companies and lower quality cyclicals. More broadly, this environment favoured domestically exposed businesses and value stocks which largely came at the expense of some of the best-in-class global leaders we own in this Company. Our portfolio managers provide a detailed description of the key contributors to and detractors from performance during the period in their report which follows.
Since the period end to 2 May 2025, the Company’s NAV has decreased by 5.9% compared with a rise in the FTSE World Europe ex UK Index of 1.1% over the same period. Whilst acknowledging that this recent short-term performance has been disappointing, your Board has a long-term investment approach based on investing in companies characterised by exceptional quality and enduring growth. Of late, we have witnessed extreme discounting of these companies, with European Growth underperforming European Value by 31%1 since the peak, larger than any historic drawdown in the last two decades. Your Board believes that this represents a material market dislocation which has caused shorter-term underperformance but can offer significant longer-term opportunities for investors to access these unique assets at compelling valuations. Over the 10 years ended 28 February 2025, the Company has delivered shareholders exceptionally strong long-term performance. Your Company has delivered a NAV total return of 191.6%, outperforming the reference index by 56.4%. The Company’s performance compares favourably with the AIC European peer group, with the NAV total return being first over the ten years to 28 February 2025. Since the Company launched in September 2004, the NAV total return has been 798.3%, 311.4% ahead of the reference index (an annualised outperformance of 7.2%).
1Source: BlackRock. Data from Bloomberg, March 2025. MSCI Europe Growth Index and MSCI Europe Value Index representing Growth and Value respectively.
Revenue earnings and dividends
The Company’s revenue return per share for the six-month period ended 28 February 2025 amounted to a loss of 0.04p compared with a profit of 0.06p for the corresponding period in 2024. The majority of the Company’s income typically is generated in the second half of the year when portfolio companies announce and pay dividends. The Board has taken this into account in considering the interim dividend payment level.
The Board has declared an interim dividend of 1.75p (2024: 1.75p) per share. The dividend will be paid on 18 June 2025 to shareholders on the Company’s register on 23 May 2025, the ex-dividend date being 22 May 2025.
The Company has consistently grown its regular dividends in all the 19 financial periods since its inception on 20 September 2004.
Management of share rating
The Board monitors the discount to NAV closely and receives regular updates from the Manager and our corporate broker, Cavendish Securities. In the Board’s opinion, it is important to consider the discount in the context of wider market conditions, with investor sentiment and discounts being influenced by various external factors, including the war in Ukraine, US politics, US exceptionalism and trade war fears. Over the six-month period, the Company’s shares traded at an average discount of 7.1% and, following consultation with the Manager and Company’s broker, it was determined that it was in shareholders’ interests to buy back shares with the objective of ensuring that an excessive discount to NAV did not arise.
As part of this programme, the Company repurchased 2,261,528 shares (representing 1.9% of the issued share capital) for a total consideration of £13,209,000 over the six months under review. Since 28 February 2025 and up to the latest practicable date of 2 May 2025 a further 825,222 shares have been bought back for a total consideration of £4,635,000. As at this date, the Company’s shares were trading at a discount of 5.5%.
All shares were bought back at a discount to the prevailing NAV and the buy backs were therefore accretive to existing shareholders. All shares bought back have been placed in treasury for future reissue.
There are several factors which influence the level of premium/discount at which a Company’s shares trade in the market, many of which are outside of the Board’s direct scope of control or influence, not least the pervasive selling in the investment trust sector we have witnessed since early 2022 which has depressed share prices across the closed end funds sector. It is important to view the Company’s share rating in the wider market context, noting that the Investment Trust sector average discount at 28 April 2025 had widened to 14.5% compared to 12.8% at the end of 2023 and 10.7% at the end of 2022, remaining correlated with gilt yields. Buy back activity has been significantly elevated across the sector as a whole as boards grappled with selling pressure. In total, the sector saw £7.5 billion of shares bought back (nearly double the sum in 2023 which had previously represented a record year).
Overall, the Board believes that the share buyback activity undertaken in the period has been beneficial in reducing the volatility of our share rating and maintaining the discount at the narrowest end of the peer group. Your Board will continue to monitor the Company’s share rating and may deploy its powers to support it by issuing or buying back the Company’s shares where it believes that it is in shareholders’ long-term best interests to do so.
Tender offers
The Directors of the Company have the discretion to make semi-annual tender offers at the prevailing NAV less 2%, for up to 20% of the issued share capital in May and November of each year. The Board announced on 23 September 2024 that it had decided not to proceed with a tender offer in November 2024 and on 17 March 2025 that the tender offer in May 2025 would also not be implemented.
Despite a challenging period for discounts, it is pleasing that the Company’s share rating has been relatively stable versus the market and peer group and the Board believes that the buyback activity undertaken has been beneficial in reducing the volatility of the Company’s share rating and in shareholders’ interests. As the Company’s discount was trading at 6.1% on 14 March 2025 and was trading at one of the narrowest discounts within its peer group, the Board concluded that it was not in the interests of shareholders as a whole to implement the May 2025 semi-annual tender offer.
The Board will continue to monitor the Company’s discount and may use the Company’s share buyback powers to ensure that the share price does not go to an excessive discount to the underlying NAV. The Board remains committed to supporting the share price to a narrow discount or premium to its NAV.
Board composition
I am delighted to welcome Andrew Impey to the Board. As announced on 12 March 2025, Andrew was appointed as a non-executive Director of the Company with effect from 28 April 2025. He brings a wealth of both fund management and investment trust experience, having been a lead manager on a broad range of funds including a sovereign wealth mandate, unit trusts and several investment trusts. He is currently non-executive chair of the Pacific Assets Trust plc.
As previously advised in last year’s Annual Report, it is my intention to step down from the Board in due course, subject to a suitable successor being identified. As at 6 May 2025, the Board consisted of six independent non-executive Directors. As part of its succession planning, the Board regularly considers its composition to ensure that a suitable balance of skills, knowledge and experience is achieved to enable the Board to discharge its duties most effectively.
Outlook
For years, European equities have been overshadowed by the US, but the start of 2025 saw a shift in this trend as European markets initially outperformed the US. However, more recently, concerns over developments in US trade policy have generated exceptional volatility, making it difficult to predict the economic impact for Europe in the near to medium term. Notwithstanding these headwinds, your Board believes that there is cause for optimism over the longer term. In particular, post-election changes in Germany, with a new government releasing fiscal constraints to stimulate the economy, stabilisation measures in China and the potential for further interest rate cuts by the European Central Bank, should provide a positive backdrop for European equities over time.
Despite the challenges facing the region, our portfolio managers believe that Europe offers some compelling valuation opportunities making it an appealing proposition (more details are set out in the Investment Manager’s Report below). Opportunities also remain in Europe’s highest quality, fastest growing companies, irrespective of their size and geography, given these are often global leading companies that are listed in Europe and dominating their respective sectors. Against this backdrop, our portfolio managers remain constructive on the outlook for European equities.
ERIC SANDERSON
6 May 2025