Report and Accounts 2023
European Assets
Trust PLC
Forward looking statements
This document may contain forward looking statements with respect to the financial condition, results of operations and business of the Company.
Such statements involve risk and uncertainty because they relate to future events and circumstances that could cause actual results to differ
materially from those expressed or implied by forward looking statements. The forward looking statements are based on the Directors’ current view
and on information known to them at the date of this document. Nothing should be construed as a profit forecast.
Front cover image: Zurich, Switzerland
Report and Accounts 2023 | 1
Overview
Company Overview 2
Financial Highlights 3
Summary of Performance 4
Chairman’s Statement 6
Strategic Report
Purpose, Strategy and Business Model 9
Investment Managers 12
Investment Manager’s Review 13
Investment Manager’s Investment Philosophy and Process 16
Ten Largest Holdings 18
Investment Portfolio 19
Key Performance Indicators 21
Principal Policies 22
Promoting the Success of the Company–Section 172
Statement 24
Sustainability and ESG 26
Principal Risks and Changes in the Year 32
Governance Report
Directors 34
Management and Advisers
36
Directors’ Report
37
Corporate Governance Statement
43
Report of the Remuneration and Nomination
Committee
47
Directors’ Remuneration Report
48
Report of the Audit and Risk Committee
51
Report of the Management Engagement Committee
53
Statement of Directors’ Responsibilities
in Respect of the Financial Statements 54
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the action you should take,
you are recommended to seek your own independent financial advice from your stockbroker, bank manager, solicitor, accountant or other
independent financial adviser authorised under the Financial Services and Markets Act 2000 if you are in the United Kingdom or, if not,
from another appropriately authorised financial adviser. If you have sold or otherwise transferred all your ordinary shares in European
Assets Trust PLC please forward this document, together with the accompanying documents, immediately to the purchaser or transferee
or to the stockbroker, bank or agent through whom the sale or transfer was effected for transmission to the purchaser or transferee. If you
have sold or otherwise transferred only part of your holding of shares, you should retain these documents.
Contents
Auditors’ Report 55
Financial Report
Statement of Comprehensive Income 61
Statement of Changes in Equity 62
Statement of Financial Position 63
Statement of Cash Flows 64
Notes to the Accounts 65
Notice of Annual General Meeting 83
Other Information
Other Financial Information (unaudited) 87
Shareholder Information 88
How to Invest 89
Ten Year Record (unaudited) 90
Alternative Performance Measures 91
Glossary of Terms 93
Financial calendar
First interim dividend paid for 2024 31 January 2024
Announcement of annual results 20 March 2024
Second interim dividend paid for 2024 30 April 2024
Annual General Meeting 17 May 2024
Third interim dividend paid for 2024 31 July 2024
Interim results for 2024 announced August 2024
Fourth interim dividend paid for 2024 31 October 2024
2 | European Assets Trust PLC
Company Overview
The easy way to access the growth of Europe’s most dynamic smaller companies
Europe’s hugely dynamic smaller companies have generated some of the strongest returns among
global stock markets over the past 15 years. Most investors ignore this market, which creates
a significant opportunity to discover and capture value. European Assets Trust gives you access
to the growth of some of Europe’s best and most exciting small and mid-cap companies, while
rewarding investors through the ups and downs with a market-leading dividend of 6% of net asset
value.
Our portfolio managers, backed by the global expertise of Columbia Threadneedle’s investment
team, search for smaller European companies that are under-researched and under-valued. We
seek out growing, profitable businesses which are globally competitive.
Investing in European Assets Trust is the easy way to benefit from the growth of Europe’s most
overlooked companies.
Visit our website at www.europeanassets.co.uk
Registered in England and Wales with company registration number 11672363. Legal Entity Identifier 213800N61H8P3Z4I8726
Potential investors are reminded that the value of investments and the income from them may go down as well as up and investors may
not receive back the full amount invested. Tax benefits may vary as a result of statutory changes and their value will depend on individual
circumstances.
European Assets Trust is suitable for retail investors in the UK, professionally advised private clients and institutional investors who seek
growth over the longer term in capital and income, and who understand and are willing to accept the risks and rewards of exposure to
equities.
Report and Accounts 2023 | 3
Overview
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chairman’s StatementOverview Auditors’ Report
Financial Highlights
for the year ended 31 December 2023
Share price performance
The Company recorded a Sterling Share Price total return* of 4.5% for the year ended
31 December 2023 in comparison to our Benchmark
(1)
Index which returned 9.8%.
4.5%
Net Asset Value per share total return
The Sterling Net Asset Value per share total return* was 8.2% for the year ended 31 December
2023 in comparison to our Benchmark
(1)
Index which returned 9.8%. Further analysis of this
performance is provided in the Chairman’s Statement and Investment Manager’s Review.
8.2%
Ongoing charges*
The ongoing charge of the Company during 2023 remained broadly static at 1.04% compared
to 1.03% for 2022.
1.04%
(3)
Dividend
The Board has declared a total dividend for 2024 of 5.90 pence per share (2023: 5.80
pence per share) in accordance with its aim to pay at a rate of six per cent of the closing
Net Asset Value of the preceding year.
5.90p
(1) At 1 April 2021 the Benchmark changed from EMIX Smaller European Companies (ex UK) Index (gross) to EMIX Smaller European Companies (ex UK) Index (net). With
effect from 1 June 2023 the Benchmark changed from EMIX Smaller European Companies (ex UK) Index (net) to MSCI Europe excluding United Kingdom Small Mid Cap
(Net Return) Index. A time apportioned composite of each indices has therefore been calculated and disclosed.
(2) European Assets Trust NV prior to migration on 16 March 2019.
(3) Calculated in accordance with the basis recommended by the AIC.
* See Alternative Performance Measures on pages 91 and 92 for explanation.
The annualised ten year share price total return was 6.0%.
Long Term Performance (rebased to 100 at 31 December 2013)
Source: Refinitiv Eikon
.
European Assets Trust
NAV Total Return (Sterling)
(2)
Benchmark Index Total Return
(Sterling)
(1)
European Assets Trust Share
Price Total Return (Sterling)
(2)
80
100
120
140
160
180
200
220
240
260
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
4 | European Assets Trust PLC
Summary of Performance
Total Return for the year ended 31 December 2023 2022
Sterling Euro Sterling Euro
Net Asset Value per share* 8.2% 10.8% (28.2%) (32.0%)
Share Price* 4.5% 7.0% (28.4%) (32.3%)
Benchmark Index
(1)
9.8% 12.4% (17.7%) (22.1%)
Source: Columbia Threadneedle Investments, Refinitiv Eikon
The easy way to access the growth of Europe’s most dynamic smaller companies
Capital Return for the year ended 31 December 2023 2022
Sterling Euro Sterling Euro
Net assets – millions £354.0 €408.5 £347.6 €391.8
Net Asset Value per share 98.3p 113.5c 96.5p 108.8c
Share Price 89.7p 103.5c
(2)
91.6p 103.7c
(2)
Dividend per share for the year ended 2023 2022
Sterling Sterling
Total dividends paid 5.80p 8.80p
(1) At 1 April 2021 the Benchmark changed from EMIX Smaller European Companies (ex UK) Index (gross) to EMIX Smaller European Companies (ex UK) Index (net). With effect from
1 June 2023 the Benchmark changed from EMIX Smaller European Companies (ex UK) Index (net) to MSCI Europe excluding United Kingdom Small Mid Cap (Net Return) Index. A
time apportioned composite of each indices has therefore been calculated and disclosed.
(2) Converted at the relevant exchange rate on the balance sheet date.
* See Alternative Performance Measures on pages 91 and 92 for explanation.
Share Price (pence) at 31 December‡ Net Asset Value per share (pence) at 31 December‡
‡ European Assets Trust NV prior to the migration on 16 March 2019.
0.0
30.0
60.0
90.0
120.0
150.0
20232022202120202019
0.0
30.0
60.0
90.0
120.0
150.0
20232022202120202019
Source: Columbia Threadneedle Investments Source: Columbia Threadneedle Investments
Report and Accounts 2023 | 5
Overview
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chairman’s StatementOverview Auditors’ Report
Source: Columbia Threadneedle Investments, Refinitiv Eikon
* See Alternative Performance Measures on pages 91 and 92 for explanation.
At 31 December 2023 2022
Discount to Net Asset Value* (8.8%) (5.1%)
Gearing/(net cash)* 6.8% (1.3%)
Ongoing Charges* 1.04% 1.03%
2023 Year’s Highs/Lows High Low
Net Asset Value per share 104.5p 82.8p
Share Price 97.2p 73.0p
Discount to Net Asset Value (3.7%) (11.8%)
Net dividends paid/declared^ per share - (pence) Ongoing charges (%)‡*
0.00
2.00
4.00
6.00
8.00
10.00
20242023202220212020
0.00
0.20
0.40
0.60
0.80
1.00
1.20
20232022202120202019
^ 2024 Sterling dividends declared.
‡ European Assets Trust NV prior to the migration on 16 March 2019.
* See Alternative Performance Measures on pages 91 and 92 for explanation.
Source: Columbia Threadneedle Investments Source: Columbia Threadneedle Investments
6 | CT UK Capital and Income Investment Trust PLC
Chairman’s Statement
Fellow Shareholders,
European Assets Trust PLC (“the Company”) recorded a Sterling Net
Asset Value (“NAV”) total return for the year ended 31 December
2023 of 8.2% (2022: -28.2%). This compares to the total return of its
Benchmark*, which rose 9.8% (2022: -17.7%) during the same period.
With the discount widening from 5.1% as at 31 December 2022 to
8.8% at the year-end, the Sterling share price total return for the year
was 4.5% (2022: -28.4%).
Market Backdrop
Markets produced a far more supportive backdrop for 2023, although
the tension between tighter Central Bank policy and economic growth
remained high. With investor focus on the latest pronouncements
from the US Federal Reserve, whose policy decisions have been the
predominant influence over market sentiment, there was significant
intra-year volatility. We can be reassured though that the rate of
inflation across the developed world has more than halved and
economic activity has remained relatively resilient in the face of
the significant monetary tightening of the last couple of years. The
softening inflation data and some weakness in the US jobs market
has led to expectations for interest rate cuts in 2024, driving a strong
finish to the year. Within this backdrop, the portfolio performance for
the year was on one hand satisfactory, in that it compared well with
the peer group and allowed us to announce an increase in dividend,
but also disappointing in that it lagged the Benchmark.
2023 was another year where European market leadership came from
value stocks, providing a headwind for our growth biased portfolio.
Smaller companies also struggled, for the second consecutive year,
when compared with larger companies, partly due to two of the
most significant investment themes of the year, generative artificial
intelligence (AI) and weight-loss drugs, that significantly boosted some
of the world’s largest listed businesses. We have benefited from
some exposure to these themes in our portfolio through holdings in
semiconductor equipment companies, which will provide the means of
production for AI powered microchips, and pharmaceutical packaging
companies, which will provide the delivery mechanisms for these
medicines. Health and wellness and digital transformation are two of
our most significant themes, alongside sustainability and emerging
growth, which we believe will drive asset value growth over the long
term. This should hold true, particularly when smaller companies come
back into favour to deliver the sort of performance that, for very good
fundamental reasons, they have in the past. If we look at what held
us back last year, in addition to the portfolio’s style tilt, our consumer
staples holdings were the main disappointment. This was principally
due to our holdings in drinks companies Remy Cointreau and Royal
Unibrew which both delivered worse earnings than expected in a more
challenging consumer environment.
Review of Investment Performance
Following the Company’s disappointing performance in 2022, the
Board initiated a review of the investment strategy, philosophy and
process adopted by the investment manager, with particular focus
given to the strengths and weaknesses of its performance over the
past ten years. This work was carried out by the investment managers
supported by the wider resources within Columbia Threadneedle
Investments.
Following this review, a number of changes were made to the
composition of the Company’s investment portfolio including an
increase in the number of stocks held, reflecting access to broader
“Following two years of smaller company underperformance versus larger companies,
valuations look attractive. History would suggest that these are good opportunities to
buy into the long-term favourable characteristics of smaller growth companies.”
Jack Perry CBE, Chairman
* With effect from 1 June 2023 the Benchmark changed from EMIX Smaller European Companies (ex UK) Index (net) to MSCI Europe excluding United Kingdom Small Mid Cap
(Net Return) Index. A time apportioned composite of each indices has therefore been calculated and disclosed.
Report and Accounts 2023 | 7
Chairman’s Statement
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chairman’s StatementOverview Auditors’ Report
a non-executive director at Baring Fund Managers Limited. He is also
a non-executive director and Chair of the Audit Committee at Baillie
Gifford Shin Nippon PLC. His other appointments include Chair of the
Risk, Audit and Compliance Committee at the BT Pension Scheme
Management Limited and he is a Director of Kintail Trustees Limited,
the corporate trustee of The Robertson Trust charity where he is chair
of the Investment Committee.
Kate is the chair of International Biotechnology Trust plc, and a
non-executive director of Finsbury Growth & Income Trust plc and
CC Japan Income & Growth Trust plc, where she is also chair of the
audit committee. Until recently Kate was the senior independent
non-executive director of Schroder Oriental Income Fund Limited.
Previously Kate worked for twelve years as a fund manager for Morgan
Stanley Investment Management, where she was managing director
and head of the global equity team.
As a further part of this succession plan Julia Bond retired from the
Board on 31 January 2024. Julia was appointed as a Director of the
Supervisory Board of the Company’s Dutch predecessor, European
Assets Trust NV, in April 2014 and upon retirement had served nine
years between both entities. On behalf of the Board and Shareholders
of the Company I thank Julia for her diligence and wise counsel
throughout her period of appointment.
Following the retirement of Julia Bond, Kate Cornish-Bowden has been
appointed the Company’s Senior Independent Director.
I was also appointed to the Supervisory Board of the Company’s
predecessor in April 2014 and became its Chairman with effect from
April 2015. As previously announced, I will retire from the Board at the
conclusion of the Company’s 2024 Annual General Meeting and Stuart
Paterson, who was appointed to the Board in July 2019 will become
Chairman. Following my retirement and Stuart Paterson’s assumption
of the Chairmanship, Kevin Troup will be appointed Chairman of the
Company’s Audit and Risk Committee.
My tenure has coincided with a period of continuous change. The
Company has experienced, amongst other events, the Eurozone Crisis,
the withdrawal of the United Kingdom from the European Union, the
COVID-19 pandemic and, more recently, Russian military action in
Ukraine. Many of these events still impact upon the social, macro-
economic and political environments in which this Company operates
and I wish to express my sincere thanks to my fellow Directors and the
Company’s advisers for their support in successfully navigating these
challenges.
research capabilities within Columbia Threadneedle Investments. The
implementation of these changes was coincident with the decision to
take advantage of market opportunities to increase gearing.
While it is early days since these changes were implemented, the
initial results in the final quarter of 2023 and the early part of 2024
are encouraging.
A further discussion of these changes, together with details of
performance drivers is made in the Investment Manager’s report. The
Board will continue to closely monitor the effectiveness of these and
future changes.
Dividend
The level of dividend paid each year is determined in accordance
with the Company’s distribution policy. The Company has stated that,
barring unforeseen circumstances, it will pay an annual dividend
equivalent to six per cent of its NAV at the end of the preceding year.
As the net asset value per share of the Company has increased since
31 December 2022, the dividend has also increased from 5.8 pence
per share in 2023 to 5.9 pence per share in 2024.
This 2024 dividend of 5.9 pence per share is payable in four equal
instalments of 1.475 pence on 31 January, 30 April, 31 July and
31 October 2024.
A dividend of 1.475 pence per share will be paid on 30 April 2024 to
Shareholders on the register on 5 April 2024 with an ex-dividend date
of 4 April 2024.
Directorate Change
European Assets Trust PLC (“EAT PLC”) was incorporated on
12 November 2018. It should though be remembered that EAT PLC
is the UK domiciled successor of the Company’s Dutch predecessor,
European Assets Trust NV (“EAT NV”) which was dissolved on
16 March 2019. All of the directors of the Supervisory Board of
EAT NV were appointed to the Board of EAT PLC on the date of its
incorporation. Although EAT PLC and EAT NV were separate legal
entities, for governance purposes, the Board regards the date of
first appointment to the Supervisory Board of EAT NV as the date of
appointment to the continuing business.
As part of the Board’s succession plan and following thorough
selection processes which included the services of a search company,
Kevin Troup and Kate Cornish–Bowden were appointed to the Board
with effect from 19 May 2023 and 2 January 2024 respectively.
Kevin is a qualified Chartered Accountant who has worked in the fund
management industry since 1995 with senior investment roles at
Scottish Life, Martin Currie and Standard Life Investments. He is now
8 | European Assets Trust PLC
Annual General Meeting
The Annual General Meeting (“AGM”) will be held at 3.00 pm on
17 May 2024 at the offices of Columbia Threadneedle Investments,
Cannon Place, 78 Cannon Street, London EC4N 6AG. This will be
followed by a presentation by the Investment Manager on the Company
and its investment portfolio.
For Shareholders who are unable to attend the meeting, any questions
they may have regarding the resolutions proposed at the AGM or the
performance of the Company can be directed to a dedicated email
account, eatagm@columbiathreadneedle.com, by 9.00am on Thursday
16 May 2024. The Board will endeavour to ensure that questions
received by such date will be addressed at the meeting. The meeting
will be recorded and will be available to view on the Company’s
website, www.europeanassets.co.uk shortly thereafter.
In addition, for the first time this year, the AGM and Investment
Manager presentation will be broadcast live on the Investor Meet
Company platform. This broadcast is open to all existing and potential
Shareholders to view. Questions can be submitted pre-event via the
Investor Meet Company dashboard up until 9.00am on Thursday
16 May 2024. Investors can sign up to Investor Meet Company for
free and add to meet European Assets Trust plc via:
www.investormeetcompany.com/european-assets-trust-plc/register-
investor. Investors who already follow European Assets Trust plc on the
Investor Meet Company platform will automatically be invited.
All Shareholders that cannot attend in person, including those
viewing the live broadcast on the Investor Meet Company platform
are encouraged to complete and submit their Form of Proxy or Form
of Direction in advance of the meeting to ensure that their votes will
count.
Outlook
It was probably inevitable that after such a strong finish to the year
we would enter 2024 with some volatility. The market had begun to
look forward to the attractive combination of lower inflation leading to
Central Bank easing, resilient economic growth and good corporate
profitability. This is potentially optimistic given that achieving this
balance is not without risks and has not often been achieved
historically. Nonetheless when we look at our area of the market,
European Small and Mid-cap companies, we think a positive outlook
is not being reflected. Following two years of smaller company
underperformance versus larger companies, valuations look attractive.
History would suggest that these are good opportunities to buy into
the long-term favourable characteristics of smaller growth companies.
The investment managers are now fully integrated within the large
Columbia Threadneedle Investment team and are benefitting from a
deep pool of research. Idea generation is therefore felt to be more
productive and is reflected in the higher portfolio turnover figures
seen in this report as these new holdings are incorporated. This also
helped provide the investment managers with the confidence to gear
the portfolio following the October market sell-off. We would expect
them to continue to do so as they find attractive opportunities using
the research talent at their disposal and given the strong long-term
outlook that our asset class has.
Jack Perry CBE
Chairman
19 March 2024
Report and Accounts 2023 | 9
Strategic Report
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chairman’s StatementOverview Auditors’ Report
Purpose and strategy
The purpose of the Company is to achieve long-term growth of capital.
A high distribution policy has been adopted with dividends paid out of
current year revenue profits and the Distributable Reserve.
The strategy is to invest in quoted small and medium-sized companies
in Europe, excluding the United Kingdom.
Investment policy and principal guidelines
The investment policy seeks investments in quoted small and medium-
sized companies in Europe, excluding the United Kingdom, defined as
those with a market capitalisation below that of the largest company in
the MSCI Europe excluding United Kingdom Small Mid Cap (Net Return)
Index.
The Company will not invest more than 20 per cent of its total assets
in any one company and does not take legal or management control of
any company in which it invests.
The Company does not restrict its investments to any specific industrial
or geographical sector; a diversified geographical spread is maintained.
The Company does not seek to create a portfolio to take advantage of
anticipated currency fluctuations.
The Company has the ability to undertake stock lending activities
but does not anticipate doing so and would need to enter into a new
agreement with its custodian before commencing.
The Company has the powers under its Articles to borrow an amount
up to 20 per cent of its securities portfolio.
It is the intention of the Company barring unforeseen circumstances,
to pay an annual dividend equivalent to six per cent of the NAV of the
Company at the end of the preceding year.
Business model
The Directors have a duty to promote the success of the Company.
As an investment company with no employees, the Board believes
that the optimum basis for doing this and achieving the Company’s
objective, and strategy is a strong working relationship with the
Company’s appointed manager, Columbia Threadneedle Investment
Business Limited (the “Manager”). Within policies set and overseen
by the Board, the Manager has been given overall responsibility for the
management of the Company’s assets, asset allocation, gearing, stock
selection and risk.
As an Investment Trust the Company is not constrained by asset
sales to meet redemptions and is well suited to investors seeking
longer term returns. The share capital structure provides the flexibility
to take a long-term view and stay invested while taking advantage of
illiquidity throughout normal and volatile market conditions. All the
Company’s investments are listed. Having the ability to borrow to invest
is a significant advantage over a number of other investment fund
structures.
The Board remains responsible for decisions over corporate strategy;
corporate governance; risk and internal control assessment; setting
policies as detailed on pages 22 and 23, setting limits on gearing and
asset allocation; monitoring investment performance; and monitoring
marketing performance.
Implementing the strategy
The investment management contract is with the Manager part of
Columbia Threadneedle Investments. The Manager has been
appointed as Alternative Investment Fund Manager (“AIF Manager”).
The ultimate parent company of Columbia Threadneedle Investments is
Ameriprise Financial, Inc.
Sam Cosh is the lead portfolio manager appointed by the Manager
to the Company. He is assisted by Lucy Morris. Biographies of Sam
Cosh and Lucy Morris who are members of the Global Smaller team at
Columbia Threadneedle Investments are provided on page 12. Details
of the Manager’s approach are provided on pages 16 and 17.
The fee that the Manager receives for its services is based on the
value of assets under management of the Company, thus aligning its
interests with those of the Shareholders. The ancillary functions of
secretarial and marketing services are also provided by the Manager.
The Manager is also responsible for the provision of administration
to the Company for which a separate administration fee is charged.
Purpose, Strategy and Business Model
10 | European Assets Trust PLC
Details of the management and administration fees payable to the
Manager are provided on page 41.
Environmental, Social and Governance (“ESG”) Impact
Our ESG policies are set out on pages 26 to 30. The direct impact of
our activities is minimal as the Company has no employees, premises,
physical assets or operations either as a producer or a provider of
goods or services. Its indirect impact occurs through the investments
that it makes and this is mitigated through Columbia Threadneedle
Investments responsible investment approach as explained on pages
26 to 30.
Manager evaluation
Investment performance and responsible ownership are fundamental
to delivering sustainable long-term growth in capital for the Company’s
Shareholders and therefore an important responsibility of the Board is
exercising a robust annual evaluation of the Manager’s performance.
This is conducted by the Management Engagement Committee of the
Board. This is an essential part of the strong governance that is carried
out by the Board, all the members of which are independent and non-
executive. The process for the evaluation for the year under review and
the basis on which the decision to reappoint the Manager for another
year are set out on page 53. As noted above, the management
fee is based on the value of assets under management of the
Company, thus fully aligning the Manager’s interests with those of
Shareholders.
Gearing strategy
The Company has the ability to borrow up to an amount of 20 per cent
of the value of its investment portfolio.
At 31 December 2023 the Company had drawn €30 million from its
€45 million borrowing facility with The Bank of Nova Scotia, London
Branch and held cash balances of £2.4 million, resulting in net gearing
of 6.8%.
Following the year end, the Company’s loan facility with The Bank of
Nova Scotia, London Branch expired. A new loan with a maximum
facility of €60 million with The Royal Bank of Scotland International,
London Branch has been entered into.
Liquidity management
The Company has share issuance and buy back authorities which are
designed to minimise the volatility of its share price relative to its Net
Asset Value (“NAV”).
Communication and marketing with key stakeholders
The Company fosters good working relationships with its key
stakeholders; Shareholders, suppliers, contractors and the manager.
The Company has no employees. With approximately 90% of the
shares held by retail investors, and savings or execution-only platforms
representing an increasingly significant and growing element of the
Shareholder base, the Company remains focused with its Manager on
promoting its success. All appropriate channels are used including the
internet and social media as well as the CT Savings Plans.
The Company’s activities and performance are reported through the
publication of its financial statements but the majority of Shareholders
and CT Savings Plan investors prefer not to receive such detailed
information. To avoid losing this essential line of communication,
the Company issues a short notification with the key highlights of its
half-yearly and annual results. The Company also issues a monthly
factsheet. All stakeholders can locate the full information on the
Company’s website, www.europeanassets.co.uk.
The Annual General Meeting (“AGM”) of the Company provides a forum,
both formal and informal for Shareholders to meet and discuss issues
with the Directors and Investment Managers. Through the Manager, the
Company also ensures that CT Savings Plan investors are encouraged
to attend and vote at annual general meetings in addition to those
who hold their shares on the main shareholder register. Details of the
proxy voting results on each resolution are published on the Company’s
website where there is also a link to the daily publication of the
Company’s NAV and its monthly factsheet.
The Manager also has in place a programme of meetings designed
to foster good relations with wealth managers and other institutional
investors in promoting the Company’s investment proposition. Feedback
from meetings is reported regularly to the Board. The Chairman is
available to meet with major Shareholders.
Managing risks and opportunities
Like all businesses, investment opportunities come with risks and
uncertainties and so the performance of the Manager is monitored
at each board meeting. In addition to managing the Company’s
investments, the ancillary functions of administration, secretarial,
accounting and marketing services are all carried out by Columbia
Threadneedle Investments.
The Board receives reports on the investment portfolios; the wider
portfolio structure; risks; income and expense forecasts; internal control
procedures; marketing; shareholder and other stakeholder issues,
including the Company’s share price premium or discount to NAV; and
accounting and regulatory updates.
Shareholders can assess the financial performance of the Company
from the Key Performance Indicators that are set out on page 21.
The Board has undertaken a robust assessment of the principal and
emerging risks facing the Company. The Principal Risks that the Board
considers the Company faces are detailed on page 32.
Report and Accounts 2023 | 11
Strategic Report
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chairman’s StatementOverview Auditors’ Report
The risk of not achieving the Company’s objective, or of consistently
underperforming the Benchmark or peer group, may arise from
any or all of inappropriate stock selection, asset allocation, poor market
conditions, ineffective or expensive gearing, poor cost control, loss of
assets and service provider governance issues. In addition to regularly
monitoring the Manager’s performance, their commitment and available
resources and their systems and controls, the Directors also review
the quality and value of services provided by other principal suppliers.
These include the Custodian and Depositary in their duties in respect
of the safeguarding of the assets.
The principal policies that support the strategy are set out on pages 22
and 23, whilst the Investment Manager’s review of activity in the year
can be found on pages 13 to 15.
Image: Stockholm, Sweden
12 | European Assets Trust PLC
Investment Managers
Sam Cosh, Lead Investment Manager
is a Director, at Columbia Threadneedle
Investments. Sam joined Columbia
Threadneedle Investments in 2010 from
BNP Investment Partners and was appointed
Lead Manager for European Assets Trust
during 2011. Sam also manages the
European investments of The Global
Smaller Companies Trust PLC. He has
over twenty years’ experience in European
equities, principally within small and mid-cap
mandates.
Lucy Morris, Investment Manager
is a Director at Columbia Threadneedle
Investments specialising in smaller
companies. Lucy joined the business in
2007, originally working in the Performance
Analytics team before transferring to Equities
in 2011. She has worked on the European
Small Cap mandates since that point which
include European Assets Trust as well as the
European investments of The Global Smaller
Companies Trust PLC. She also manages the
CT European Smaller Companies open ended
fund. Lucy holds the Investment Management
Certificate and is a CFA Charterholder.
Report and Accounts 2023 | 13
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Other Information
Chairman’s StatementOverview Auditors’ Report
Market Backdrop
While geopolitical events continued to cast a shadow over 2023,
macroeconomic factors were the predominant influence driving
market direction for better and for worse. A surge of investor optimism
ultimately pushed equities higher in the fourth quarter delivering a good
year for markets overall. In this context, European smaller companies
achieved an attractive return, however, it was the second year that
they have lagged their larger counterparts, something we would not
expect to be an ongoing trend. Indeed we believe this is an excellent
opportunity for long term investors with valuations looking particularly
appealing.
Inflation and its influence on Central Bank policy decisions were
the focus of investor attention as policy makers sought to balance
controlling rising prices with maintaining economic activity. In aggregate
the evidence so far suggests that they appear to have managed this
though Europe’s economy was weaker than the US whose robust labour
markets caused some concern that the Federal Reserve would have
to keep interest rates ‘higher for longer’. This caused an aggressive
sell off in equities and bonds in September and October. Sentiment
changed completely in November as better inflation data emerged
alongside the first sign of some softening of the US jobs markets,
leading to expectations that both the US Federal Reserve and the
European Central Bank would start cutting rates in 2024. This tension
between inflation, monetary policy and economic activity is likely to
continue to play a big role in driving market direction but we hope that
with inflation appearing more benign, markets may be more driven by
stock specific factors rather than macroeconomics.
Performance
While our performance compared well with our peer group and
we delivered an increase in dividend, our total return lagged the
Benchmark. This was partly because our growth biased portfolio faced
“Following two years of underperformance for smaller companies against
the larger market, we think this is an excellent opportunity for the creation
of long-term returns.”
Investment Manager’s Review
Sam Cosh, Lead Manager
the headwind of another year of the value style outperforming. We
detail some of the stock specifics below.
As discussed above macroeconomic factors featured strongly in stock
returns, however, the advent of Generative Artificial Intelligence (AI) and
a new class of weight loss drugs (GLP-1 agonists) provided a strong
thematic background for specific sectors and boosted some of our
holdings. For example, two of our best performing positions were Dutch
listed ASMI and BE Semiconductor Industries, both market leaders
in equipment used in the semiconductor manufacturing process.
Generative AI requires significant computing power which means both
a greater demand for semiconductor chips but also an acceleration of
the miniaturisation trend of those chips. The prospects for both ASMI
and BE Semiconductor Industries whose equipment is integral in the
production process of these products have therefore improved at the
same time as there appears to be improvements in the more cyclical
areas of demand.
Originally developed for diabetes, the new class of GLP-1 drugs are
a huge breakthrough in inducing significant weight loss, with mostly
manageable side-effects. This is potentially a seismic development
given the huge problem that obesity is for the Western World. Whilst we
do not own shares in the companies responsible for these medicines,
because they are amongst the biggest companies regionally, we
have exposure to the theme through Gerresheimer the German
pharmaceutical packaging company. The shares performed strongly
prior to the GLP-1 announcements and expectation of contract wins
related to these obesity drugs propelled their performance further.
Siegfried, the contract development and manufacturing organisation
that produces small molecules and drug products for pharmaceutical
companies also had a strong year. Whilst many in the sector struggled
due to weaker demand caused by excess inventories at customers
following the COVID-19 related healthcare boom, Siegfried executed
14 | European Assets Trust PLC
strongly with the shares getting an additional boost from hope that they
would also receive contracts related to weight loss drugs.
Automation and re-shoring of supply chains is another theme within
the portfolio that worked well for us in 2023. Recent years that have
been dominated by the COVID-19 pandemic and volatile geopolitics
have increased the risk of extended supply chains causing corporates
to look closer to home for key components and materials. With tight
labour markets, the need for greater automation is accelerating. One
of our best performers, Kardex, the Swiss listed leader in intra-logistics
solutions provides efficient storage solutions at a relatively low cost but
a higher return on investment. Kardex has benefitted from the need of
corporates to manage their operations more efficiently. Other stocks
that help improve their customers’ efficiency in the face of rising costs
and labour shortages are Engcon, the Swedish listed global leading
producer of tiltrotators, and Rational, the global leading manufacturer of
combi-steamer ovens. Both stocks had a good year.
Other strong performers of note were our Irish holdings Cairn Homes,
Dalata Hotel Group, and Glanbia. Ireland is suffering from a severe
shortage of housing and as the largest, and only, volume producer
of note, Cairn Homes is benefitting from its large landbank to deliver
affordable homes in an attractive demand environment. Dalata
Hotel Group, a modern hotel operator, is enjoying the recovery in
the hospitality sector in a market where supply is constrained, and
competition is underwhelming. Glanbia, the nutritional business, simply
executed well, leveraging their strong global brand presence.
Conversely, our area of biggest disappointment as a sector was
consumer staples that did not provide the steady performance we
would normally expect. Particularly disappointing were our beverage
stocks Royal Unibrew and Remy Cointreau. Royal Unibrew is a Danish
brewer that manages strong local brands that are both alcoholic and
non-alcoholic drinks. They also operate as a bottler for Pepsi -Cola in
the region. Poor weather hampered sales in the key summer months,
and they downgraded their expected contribution from their recent
Dutch acquisition. These led to cuts to earnings that were compounded
by concerns around downtrading in a more challenging economic
environment.
The French cognac producer, Remy Cointreau, faced a perfect storm
last year. We initiated a holding early in the year in the knowledge
that one of their key growth engines, the US, was spluttering. We
believed however that China, the other growth engine, would pick up
the slack and the valuation was also attractive. Unfortunately, the US
deterioration was worse than expected, and China growth failed to
materialise. While hugely disappointing thus far, we believe that the
valuation is now at such a low level that investors are paying little more
than the realisable inventory value. Although the outlook is uncertain
over the short term, we believe there is a great deal of value here in
what is a unique asset.
I have highlighted some good returns from our healthcare holdings.
We did however suffer from poor performance from our diagnostics
equipment stocks, Swiss listed Tecan and German listed Stratec.
Tecan, which provides automated liquid handling solutions to the life
sciences and diagnostics markets, performed operationally well but
saw a substantial de-rating through the year. The share could not
withstand the multiple profit warnings amongst its peers which all
struggled with tough comparisons with the strong COVID-19 period, and
a weakening environment in the biotechnology space (which is itself
suffering from funding issues) as well as more tentative buying habits
in China. Tecan ended the year cheaper than it started and with no
deterioration in franchise, so we continue to hold the stock. Stratec,
on the other hand, struggled operationally. They produce machines
for diagnostics equipment companies who suffered from the industry
issues mentioned above. Additionally, they incurred higher costs
from customer specification changes. We felt that this represented a
deterioration of their market position and a loss in confidence with the
management team, so we sold the position.
Other poor performers of note include Coor, the Swedish listed
integrated facilities manager hit by two large contract losses and a
margin squeeze as they struggled to pass on higher costs. With some
significant client negotiations on the horizon, we decided to exit the
position. In contrast to our other semiconductor related companies,
Nordic Semiconductor had a poor year. The low power Bluetooth
provider’s principal end market is consumer electronics. With high
stock levels of Bluetooth chips at customers that were only slowly
being reduced because of deteriorating consumer demand, Nordic
Semiconductor recorded a significant sales and profit decline. We
are of the view that this, while painful, is temporary so continue to
hold the stock. Similarly, MIPs, the Swedish producer of helmet safety
technology struggled as weak bicycle markets were compounded by
high inventories. We do not believe the long-term growth rate or market
position is permanently impaired so also continue to hold the stock.
Review of investment performance
Following mixed performance in recent years, and at the Board’s
request, the investment team in conjunction with the Manager’s
investment risk and oversight function undertook a review of the
Company’s investment strategy, philosophy and process. While no
wholesale changes were recommended, we are evolving our investment
process and taking steps towards improvement in its execution. This
is supported by the significant resources available, both in terms of
research but also risk analysis, at Columbia Threadneedle Investments.
With the aim of reducing the volatility of returns, the portfolio will
increase its number of holdings and balance ‘style’ exposures. We
Report and Accounts 2023 | 15
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Other Information
Chairman’s StatementOverview Auditors’ Report
will continue to invest in high quality growth companies, but individual
holdings will be more systematically analysed on their risk and
style contribution in order to ensure that when we pay a premium to
the market that this valuation is supported by superior growth and
profitability characteristics. A portfolio that is more diversified will also,
where warranted by market opportunity, be supported with increased
gearing. These recommendations which were implemented towards the
end of the year, provide a strong basis on which to look forward.
Portfolio Activity
We are now embedded in the investment teams at Columbia
Threadneedle, and have a significantly larger pool of resources at our
disposal. The research capacity and the reach that we have to engage
with potential investee companies is by far the largest since we have
managed the Company. This is manifesting itself in more frequent and
productive idea generation. When combined with a volatile market
at the end of the third quarter, this led to higher portfolio turnover
and more holdings, in line with the evolution of our process. We
also took the opportunity provided by the market falls of September
and October 2023 to deploy gearing. In terms of sales, in addition
to those mentioned above, we exited positions in Alten, the French
R&D outsourcer, and Sparebank, the Norwegian regional bank, having
reached our fair values, thus taking profits. We also exited Sligro, the
Dutch food distributor and HelloFresh, the German listed meal kit
business, following operating disappointments sufficient to derail the
investment cases.
In terms of new additions, we diversified our large positions in
semiconductors by adding Melexis, which produces sensors for the
automotive market, and Inficon, which has leading positions in the
production of vacuum technology for both industrial and technology
markets. Within industrials, we added Elis, the European leader in
textile rental, Stabilus, the auto-supplier which is transforming to a
broader industrial automation exposed business, and Accelleron.
Accelleron is relatively new to the listed market having been spun out
of the large Swedish industrial ABB, so not necessarily broadly known.
They are the global market leader in turbochargers primarily for marine
and energy applications. These turbochargers provide substantial cost
efficiencies and reduce emissions, so offer good return on investments
for their clients. With 75% of revenues accounted for by services and
spare parts, they have predictable sales and high profit margins, which
demonstrate a high-quality business that is not priced as such by the
market.
Other new additions include KPN, the Dutch telecommunication company
whose cash generation is improving as they finalise their fibre network
roll-out, and Smurfit Kappa, the value-added packaging company, which
operates in an oligopoly that should benefit from a recovery in the end
markets.
Outlook
The outlook for inflation and its influence on interest rates are likely to
continue to dictate market direction, however, the debate has shifted
from when will rates stop rising, to how quickly will they fall. This should
provide a positive backdrop to investing, though we are aware that the
impact of the rapidly tightening liquidity environment of the last few
years has yet to fully impact the economy which may lead to a risk of
wider recession for this year. Nonetheless, the low valuation of European
smaller and mid-cap companies suggest much of this is priced in.
Following two years of underperformance for smaller companies against
the larger market, we think this is an excellent opportunity for the
creation of long-term returns. We expect to use any further volatility to
take advantage of this opportunity and gear the portfolio further.
Sam Cosh
Lead Investment Manager
Columbia Threadneedle Investment Business Limited
19 March 2024
Portfolio Split by Sector at 31 December 2023
Industrials 30.1% (2022: 21.7%)
Consumer Discretionary 13.6% (2022: 13.6%)
Financials 12.3% (2022: 17.2%)
Technology 11.7% (2022: 12.7%)
Health Care 9.4% (2022: 11.4%)
Consumer Staples 9.3% (2022: 11.8%)
Basic Materials 7.2% (2022: 7.3%)
Energy 2.8% (2022: 3.0%)
Real Estate 2.2% (2022: 1.3%)
Telecommunications 1.4% (2022: 0.0%)
16 | European Assets Trust PLC
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Continuous Monitoring Process
Investment Manager’s Investment
Philosophy and Process
There are approximately 4,000 quoted European (ex-UK) small and
mid-cap companies. This is a large, diversified universe of exciting
opportunities and is not necessarily well researched or understood
properly. This leads to ‘market inefficiency’ that we, as disciplined
stock pickers, can take advantage of to aim to deliver superior
investment performance over the long term.
Our philosophy is based on our belief that companies that can
compound high returns over an enduring period tend to be
undervalued by the market. We want to invest in these high-
quality companies, or those that have the business models that
will achieve quality characteristics in the future. Integral to this
approach is understanding the competitive advantages, or moats,
of these companies. After all, this is what will allow a business to
defend or improve its market position delivering growing profits for
shareholders.
While we do not necessarily target specific sectors, our philosophy
will naturally lead us towards certain areas or themes where long-
term growth of superior cash flow is more likely. This will result in a
portfolio that is significantly differentiated against the benchmark.
Integral to our assessment of quality is an analysis of Environmental,
Social and Governance (“ESG”) issues that face the company and
its response to them. More details can be found on pages 26 to 29.
Management teams of smaller companies have a huge role to play in
the evolution of their businesses. How they are motivated, rewarded,
and allocate capital is crucial in a company’s development, for better
or for worse. We want to invest alongside management teams who
make good long-term decisions and are rewarded for doing so. This
often leads us to have a natural affinity towards family businesses,
owner-operators, who are successful entrepreneurs, who tend to be
good guardians of capital and reinvest their profits intelligently.
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Chairman’s StatementOverview Auditors’ Report
While we believe the evolution of a company’s profits and cash
generation will be the principal determinant of shareholder returns,
we also believe the price that you pay for an asset is important.
Maintaining valuation discipline is crucial to long-term returns and
often requires patience. Companies that reach our quality hurdle but
do not appear reasonably valued are placed on our watch list. This
allows us to execute quickly when the opportunity presents itself.
Ultimately this approach should lead to a portfolio of quality smaller
companies with the following characteristics:
• Proven business models that are defended by scale, intellectual
property, brand or market positions
• Management teams that have the right balance of
entrepreneurial flair and rational capital allocation, who are
incentivised appropriately
• Higher growth rates, margins and returns on capital than the
market
• Superior cash flow generation and strong balance sheets that
provide stability and opportunity for value added deployment
Having a disciplined process is essential in driving a consistent
application of our philosophy. We undertake our own research
which is peer reviewed by the wider investment team prior to a
purchase decision. This ensures the benefit of shared knowledge
and experience is brought to bear on each investment. The original
investment thesis is retested particularly if the company or its share
price performs below expectations.
Like all investors, we are having to make assessments about the
future and take decisions in the face of uncertainty. There is a real
possibility of being wrong. We believe we can mitigate this risk
by following this long-term philosophy, emphasising a number of
factors: thorough independent research; the need for a margin of
safety on purchase; continuous monitoring; and diversification of the
investment portfolio. Reasons to sell can be driven by positive or
negative factors: positive if the value of the company has risen to an
excessive valuation, or negative, if the assessment of the company’s
long-term value drivers deteriorates significantly. We believe this
approach gives us the best chance of delivering attractive long term
returns for our Shareholders.
Sam Cosh
Lead Investment Manager
Columbia Threadneedle Investment Business Limited
19 March 2024
The Investment Process Focuses on Three Aspects for Each Company
• Attractive growth prospects
• Enduring differentiation/
competitive advantages
• Superior profit generators
• Strong sustainability
characteristics
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• Margin of safety
• Sustainable superior
returns
• Use of discounted cash
flow & relative valuation
• ESG & Sustainability score
embedded in proprietary
valuation method
• Proven management team
• Entrepreneurial
• Consistent/proven
execution
• Responsible capital
allocators
• Appropriate incentives/
aligned interests
18 | European Assets Trust PLC
Note: Number in brackets is the position held in the portfolio as at 31 December 2022
Ten Largest Holdings as at 31 December 2023
1. Ringkjoebing Landbobank (2)
Denmark
High quality regional Danish bank with a long track record of loyal
customers, low loan losses and good returns on equity. They have a
dominant position in their local region, and have been growing outside of
this as they take advantage of lower quality competitors.
3.4% of net assets £11,915,729 value
www.landbobanken.dk
2. Interpump (3)
Italy
Manufacturer of ultra high pressure pumps used for fluid movement and
hydraulic components installed on vocational trucks and other machinery.
Proven resilient operator as a result of diverse end markets and high
quality product, highly cash generative and excellent capital allocation
record.
3.3% of net assets £11,718,954 value
www.interpumpgroup.it
3. Tecan (1)
Switzerland
Tecan is a leading global provider of automated laboratory instruments and
solutions. Their systems and components improve productivity in a market
that is growing strongly driven by increasingly personalised diagnostic
needs.
3.0% of net assets £10,675,669 value
www.tecan.com
4. IMCD (10)
Netherlands
Listed in the Netherlands, IMCD is a market leading specialist in chemical
distribution. They formulate, sell and distribute products and ingredients
for large chemical companies. They are improving their market share
through both organic means and acquisitions.
3.0% of net assets £10,508,517 value
www.imcdgroup.com
5. Siegfried (33)
Switzerland
Leading CDMO (contract development and manufacturing organisation) for
small molecules used as ingredients in drug production and drug products
such as aseptic fill & finish syringes. Pharmaceutical companies are
increasingly outsourcing their production to companies such as Siegfried
providing a tailwind of growth.
2.9% of net assets £10,403,095 value
www.siegfried.ch
6. Cairn Homes (22)
Ireland
Cairn is the leading Irish housebuilder. They built up an unrivalled
landbank after the financial crisis that has enabled them to be the only
supplier of significant volume in a market that has a serious demand
supply imbalance. With little need for further meaningful investment in
land, cash generation is excellent and capital returns to shareholders will
be substantial.
2.8% of net assets £10,017,957 value
www.cairnhomes.com
7. CTS Eventim (14)
Germany
Europe’s leading provider of online ticketing solutions and event organiser,
CTS has pioneered the digitalisation of live entertainment. The shift from
paper to electronic ticketing has provided a good tailwind for their growth
but this has now been superseded by growth in live entertainment as
musicians increasingly generate their income from touring.
2.8% of net assets £9,982,752 value
www.eventim.de
8. Atea (7)
Norway
Largest IT infrastructure provider in the Nordic and Baltic region reselling
hardware, software and value added services with a large exposure to the
public sector who are investing in their ‘digital transformation’.
2.7% of net assets £9,389,993 value
www.atea.com
9. Vidrala (31)
Spain
Glass bottle manufacturer supplying products across Iberia and the UK to
beverage, food and cosmetic companies. Large market shares allow them
to benefit from economies of scale and generate industry leading margins
and returns. The high capital requirement of building a new furnace and the
inefficiency of transporting glass large distances make the entrance of new
competition unlikely. End markets demonstrate steady and stable growth.
2.6% of net assets £9,349,537 value
www.vidrala.com
10. Gerresheimer (25)
Germany
Leading global packaging supplier for medication and drug delivery. Has
a defendable strong market position as packaging forms part of the drug
approval process so changing suppliers is highly unusual. The industry
has high structural growth prospects due to an ageing and increasingly
wealthy population and margins should improve as we shift towards more
complex personalised medicines.
2.6% of net assets £9,240,309 value
www.gerresheimer.com
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Other Information
Chairman’s StatementOverview Auditors’ Report
Investment Portfolio as at 31 December 2023
Company Nature of Business
Valuation
£'000s
% of Net
Assets
Country of
Incorporation
Ringkjoebing Landbobank Regional Banking 11,916 3.4% Denmark
Interpump Industrial Producer of Fluid Movement Pumps and Hydraulic Components 11,719 3.3% Italy
Tecan Automated Laboratory Instruments and Solutions 10,676 3.0% Switzerland
IMCD Speciality Chemical Distributer 10,509 3.0% Netherlands
Siegfried Contract Development Manufacturing Organisation 10,403 2.9% Switzerland
Cairn Homes House Builder 10,018 2.8% Ireland
CTS Eventim Concerts and Ticketing 9,983 2.8% Germany
Atea Value Added IT Hardware and Software Reseller 9,390 2.7% Norway
Vidrala Manufacturer and Supplier of Glass Containers 9,350 2.6% Spain
Gerresheimer Glass and Plastic Containers 9,240 2.6% Germany
Ten largest investments 103,204 29.1%
Dalata Hotel Group Hotel Chain Operator 8,612 2.4% Ireland
Merlin Properties Commercial Real Estate Owner 8,389 2.4% Spain
Symrise Speciality Chemicals 8,225 2.3% Germany
Royal Unibrew Nordic and Baltic Beverage Producer 8,126 2.3% Denmark
Hexpol Chemical Compounder 8,070 2.3% Sweden
Bank of Ireland National Bank Operating in a Consolidated Market 8,065 2.3% Ireland
Sdiptech Industrial Consolidator Focused on Sustainability 8,002 2.3% Sweden
Azimut Asset Management 7,944 2.2% Italy
SIG Group Systems and Consumables Provider for Aseptic Packaging 7,890 2.2% Switzerland
Kardex Intralogistics Solutions and Automated Storage Provider 7,791 2.2% Switzerland
Twenty largest investments 184,318 52.0%
Rational Specialist in Hot Food Preparation for Professionals 7,769 2.2% Germany
Lectra Provider to the Fashion, Automotive and Furniture Industries 7,550 2.1% France
Carel Industries Producer of Control Solutions for Air Conditioning and Refrigeration 7,415 2.1% Italy
Storebrand Long-term Savings and Insurance 7,344 2.1% Norway
ASM International Semiconductor Equipment 7,270 2.0% Netherlands
Fluidra Swimming Pool Equipment and Maintenance 7,239 2.0% Spain
Accelleron Industries Market Leader of High Powered Turbo Chargers 6,773 1.9% Switzerland
Glanbia Global Nutrition Company 6,679 1.9% Ireland
Karnov Mission Critical Information Provider to the Legal Industry 6,555 1.9% Sweden
Indutrade Niche Industrial Conglomerate 6,412 1.8% Sweden
Thirty largest investments 255,324 72.0%
20 | European Assets Trust PLC
Company Nature of Business
Valuation
£'000s
% of Net
Assets
Country of
Incorporation
Remy Cointreau Cognac Producer 6,262 1.8% France
Stabilus Auto and Industrial Component Manufacturer 5,942 1.7% Germany
Schoeller Bleckmann
Oilfield Equipment Oilfield Equipment Manufacturer 5,773 1.6% Austria
Thule Outdoor and Transportation Product Manufacturer 5,767 1.6% Sweden
Elis European Market Leader in the Textile Rental Industry 5,649 1.6% France
Smurfit Kappa Paper Packaging Manufacturer 5,644 1.6% Ireland
Nordnet Scandinavian Savings Platform 5,640 1.6% Sweden
Nordic Semiconductor Market Leader in Low Power Bluetooth Semiconductor Design 5,524 1.6% Norway
Davide Campari Milano Branded Drinks Producer 5,511 1.6% Netherlands
Melexis Designer of Semiconductors for the Automotive Industry 5,445 1.5% Belgium
Forty largest investments 312,481 88.2%
Engcon Tiltrotator Manufacturer 5,340 1.5% Sweden
Verallia Glass Bottle Manufacturer 5,221 1.5% France
KPN Leading Dutch Telecommunication Provider 5,134 1.4% Netherlands
MIPS Helmet Safety 4,976 1.4% Sweden
Inficon Producer of Vacuum and Precision Control Components and Equipment 4,976 1.4% Switzerland
Avanza Bank Swedish Savings and Investment Platform 4,976 1.4% Sweden
BE Semiconductor
Industries Producer of Semiconductor Assembly Products 4,944 1.4% Netherlands
Wizz Air Budget Airline 4,927 1.4% Jersey
TGS Geophysical Consulting and Contracting Services 4,860 1.4% Norway
Technoprobe Producer of Semiconductor Probe Cards 4,102 1.2% Italy
Fifty largest investments 361,937 102.2%
Lotus Bakeries Indulgent and Natural Snack Manufacturer 3,975 1.1% Belgium
Viscofan Artificial Casings for Meat Products 3,898 1.1% Spain
Surgical Science Sweden Surgical Simulation Hardware and Software Provider 3,378 1.0% Sweden
Carasent Cloud Healthcare Software Provider 1,653 0.5% Norway
V Zug Luxury Household Appliance Manufacturer and Service Provider 225 0.1% Switzerland
Total investments 375,066 106.0%
Net current liabilities (21,070) (6.0%)
Total assets less current
liabilities 353,996 100.0%
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Other Information
Chairman’s StatementOverview Auditors’ Report
Net Asset Value per share sterling total return performance at 31 December 2023
(1)
1 Year % 3 Years % 5 Years % 10 Years %
European Assets Trust* 8.2 (9.6) 31.9 90.6
Benchmark Index
(2)
9.8 3.8 48.8 127.2
Source: Columbia Threadneedle Investments and Refinitiv Eikon
Share price sterling total return performance at 31 December 2023
(1)
1 Year % 3 Years % 5 Years % 10 Years %
European Assets Trust* 4.5 (7.8) 36.1 79.4
Benchmark Index
(2)
9.8 3.8 48.8 127.2
Source: Columbia Threadneedle Investments and Refinitiv Eikon
Average discount
(1)
*
For the year ended 31 December %
2023 (8.4)
2022 (5.2)
2021 (6.7)
2020 (10.0)
2019 (5.2)
Source: Columbia Threadneedle Investments
Shares issued during the year ended 31 December
(1)
2023 –
2022 –
2021 –
2020 134,573
2019
(3)
179,383
Source: Columbia Threadneedle Investments
Ongoing charges as at 31 December
(1)
*
%
2023 1.04
2022 1.03
2021 0.89
2020 0.95
2019 1.11
Source: Columbia Threadneedle Investments
Key Performance Indicators
The Board recognises that it is longer term share price performance that
is most important to the Company’s investors. Underlying share price
performance is driven by the performance of the Net Asset Value. The
overriding priority is to continue to strive for the consistent achievement
of relative outperformance. The Board assesses its performance in
meeting the Company’s objective against the following key performance
indicators (“KPIs”):
1. Net Asset Value per share total return
2. Share Price total return
3. Premium/(discount) to Net Asset Value
4. Ongoing charges
5. Shares issued/(bought back)
Information in relation to these KPIs is set out in the tables below.
Commentary can be found in the Chairman’s Statement and the
Investment Manager’s Review.
(1) European Assets Trust NV prior to the migration on 16 March 2019.
(2) At 1 April 2021 the Benchmark changed from EMIX Smaller European Companies (ex UK)
Index (gross) to EMIX Smaller European Companies (ex UK) Index (net). With effect from
1 June 2023 the Benchmark changed from EMIX Smaller European Companies (ex UK) Index
(net) to MSCI Europe excluding United Kingdom Small Mid Cap (Net Return) Index. A time
apportioned composite of each indices has therefore been calculated and disclosed.
(3) Excludes issuance related to the migration on 16 March 2019.
* See Alternative Performance Measures on pages 91 and 92 for explanation
22 | European Assets Trust PLC
Investment
The Company is required to have a publicly available investment policy
from which Shareholders, prospective investors and stakeholders can
understand the scope of its investment remit and constraints. Any
material changes to this policy can only be made with the approval of
Shareholders and the Financial Conduct Authority (“FCA”).
Details of the investment policy are provided on page 9.
In the event of a breach of the Company’s investment policy, the
Manager shall promptly inform the Board and if the Board
considers the breach to be material, notification will be made by a
regulatory information service to the London Stock Exchange.
Dividends
The level of dividend paid by the Company each year is determined by
the Board in accordance with the Company’s distribution policy. It is the
intention of the Company, barring unforeseen circumstances, to pay an
annual dividend equivalent to six per cent of the NAV of the Company
at the end of the preceding year. The Company expects to pay the
dividend in four equal instalments in January, April, July and October
each year.
The Company will pay dividends on the shares only to the extent that
it has distributable reserves available for that purpose. Dividends are
funded from current year revenue profits and the Distributable Reserve.
The Board is mindful that many Shareholders reinvest their dividends
through schemes operated by savings plans and platforms.
Borrowings
The Company’s borrowings shall not (without the sanction of a general
meeting of the Company) exceed an amount equal to the aggregate of
20% of the book value of its securities portfolio and its subsidiaries, if
any.
Currency hedging
Due to its investment focus on investing in companies in Europe, the
Company’s investments can be denominated and quoted in currencies
other than euro. The Company does not seek to create a portfolio to
take advantage of anticipated currency fluctuations and has no current
Principal Policies
intention of seeking to hedge any currency exposure which may arise
from investing in non-euro denominated investments.
The Board declares dividends in sterling. This provides certainty of
income for the overwhelming majority of the Company’s Shareholders
who choose to receive their dividends in sterling rather than euros. To
attempt to manage any sterling/euro exchange rate exposure which
may arise from the currency of the dividend, the Company has entered
into forward currency hedging contracts to cover this specific exposure.
Taxation
The Board’s policy towards taxation is one of full commitment to
complying with applicable legislation and statutory guidelines. It is
essential that the Company always retains its investment trust tax
status by complying with Section 1158 of the Corporation Tax Act
2010 (“Section 1158”) such that it does not suffer UK Corporation
Tax on capital gains. The Company has received approval from HMRC
as an investment trust under Section 1158 and has since continued
to comply with the eligibility conditions. The Manager also ensures
that the Company submits correct taxation returns annually to HMRC;
settles promptly any taxation due; and claims back, where possible,
all taxes suffered in excess of taxation treaty rates on non-UK dividend
receipts.
Liquidity
The Board recognises the need to address any sustained and
significant imbalance of buyers and sellers which might otherwise lead
to shares trading at a material discount or premium to NAV per share.
While it has not adopted any formal discount or premium targets which
would dictate the point at which the Company would seek to purchase
shares or issue further shares, the Board is committed to utilising
its share purchase and share issuance authorities where appropriate
in such a way as to mitigate the effects of any such imbalance. In
considering whether buyback or issuance might be appropriate in any
particular set of circumstances, the Board will take into account: the
prevailing market conditions; the degree of NAV accretion that will result
from the buyback or issuance; the cash resources readily available to
the Company; the immediate pipeline of investment opportunities open
to the Company; and the working capital requirements of the Company.
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Board diversity
The Board’s policy towards the appointment of non-executive Directors
is based on its belief in the benefits of having a diverse range of
experience, skills, length of service and backgrounds, including gender.
The Board’s policy is always to appoint the best person for the job
and, by way of this policy statement it is confirmed that there will be
no discrimination on the grounds of gender, ethnicity, socio-economic
background, religion, sexual orientation, age or physical ability.
The overriding aim of the appointment policy is to ensure that the
Board is composed of the best combination of people to deliver the
Company’s objective. The policy is applied for the purpose of appointing
individuals that, together as a Board, will continue to achieve that aim
as well as ensuring optimal promotion of the Company’s investment
proposition in the marketplace.
In accordance with Listing Rule 9.8.6R (9), (10) and (11) the Board has
provided the following information in relation to its diversity.
Board Gender as at 31 December 2023
(1)
Number of Board
Members
Percentage of
the Board
(2)
Number of
senior positions
on the Board
(3)
Men 4 67% 1
Women 2 33% 1
(1) The Company has opted not to disclose against the number of Directors in executive
management as this is not applicable for an investment trust.
(2) The Listing Rule 9.8.6R (9)(a)(i) target is 40% women. Following the planned retirement
of the Chairman on 17 May 2024, it is anticipated that the composition of the Board will
be 60% male, 40% female.
(3) Composed of the Chair and the Senior Independent Director in accordance with Listing
Rule 986R (9)(a)(ii).
Board Ethnic Background as at 31 December 2023
(1)
Number of Board
Members
(2)
Percentage of
the Board
Number of
senior positions
on the Board
(3)
White British
or other white
(including
minority-white
groups
5 83% 2
Asian/Asian
British
1 17% –
(1) The Company has opted not to disclose against the number of Directors in executive
management as this is not applicable for an investment trust.
(2) The Listing Rule 9.8.6R (9)(a)(iii) target is one individual from a minority ethnic
background.
(3) Composed of the Chair and the Senior Independent Director.
The information included in the above tables has been obtained
following confirmation from the individual Directors. The Board will
continue to take diversity into account as part of its succession
planning and recruitment process.
Integrity and business ethics
The Company applies a strict anti-bribery and anti-corruption policy
insofar as it applies to any directors or employee of the Manager and of
any other organisation with which it conducts business. The Board also
ensures that adequate procedures are in place and followed in respect
of third-party appointments, acceptance of gifts and hospitality and
similar matters.
Modern Slavery Act 2015
The Company is an investment company with no employees or
customers and does not provide goods or services in the normal
course of business. The Company has appointed the Manager to
manage the investments, engage on ESG issues and to carry out
administrative and secretarial services.
The Company’s own supply chain consists predominately of
professional advisers and service providers in the financial services
industry, which is highly regulated. The Board therefore believes that
the potential for acts of modern slavery or human trafficking in the
Company’s own environment is extremely low.
UK Financial Sanctions and Prevention of the Facilitation
of Tax Evasion
The Board is fully committed to complying with all legislation, regulation
and relevant guidelines including those relating to the UK financial
sanctions regime in the context of the Company’s business and also
the UK’s Criminal Finances Act 2017, designed to prevent tax evasion
and the facilitation of tax evasion in the jurisdictions in which the
Company operates. Professional advice is sought as and when deemed
necessary.
On behalf of the Board
Jack Perry
Chairman
19 March 2024
24 | European Assets Trust PLC
Under Section 172 of the Companies Act 2006, the Directors have a
duty to act in a way they consider, in good faith, would be most likely to
promote the success of the Company for the benefit of its members as
a whole, and in doing so, have regard, amongst other matters, to:
• the likely consequences of any decision in the long term;
• the interests of the Company’s Shareholders;
• the need to foster the Company’s business relationships with
suppliers, customers and others;
• the impact of the Company’s operations on the community and
environment;
• the desirability of the Company maintaining a reputation for high
standards of business conduct; and
• the need to act fairly as between members of the Company.
The Stakeholders of the Company
As explained on page 9, the Company is an externally managed
investment company and has no employees, customers or premises.
The key stakeholders are the Shareholders, the Manager, suppliers and
service providers.
The Board believes that the optimum basis for meeting its duty to
promote the success of the Company is by appointing and managing
third parties with the requisite performance records, resources,
infrastructure, experience and control environments to deliver the
services required to achieve the investment objective and successfully
operate the Company. By developing strong and constructive working
relationships with these parties, the Board seeks to ensure high
standards of business conduct are adhered to at all times and service
levels are enhanced whenever possible. This combined with the careful
management of costs is for the benefit of all Shareholders who are
also key stakeholders.
Engagement with Shareholders
The Directors value engagement with Shareholders. The Company’s
website www.europeanassets.co.uk is available to all Shareholders and
key decisions are announced to the London Stock Exchange through a
Regulatory News Service.
The Company holds an Annual General Meeting. The Shareholders are
invited to attend, and this provides an open forum for them to discuss
issues and matters of concern with the Board and representatives of
the Manager and the Company’s advisors.
The Manager also engages with the Company’s larger Shareholders
and the outcome of these discussions are reported to the Board at the
following Board Meeting. Shareholders are invited to communicate with
the Board through the Chairman or Company Secretary. They can be
contacted at the Company’s registered office address detailed on
page 36.
Manager and Service Providers
The Company’s primary working relationship is with the Manager.
The portfolio activities undertaken by the Manager and the impact of
decisions taken are set out in the Investment Manager’s Review on
pages 13 to 15. On pages 26 to 30 information is provided on the
Company’s approach towards responsible investment. The Directors
are supportive of the Manager’s approach, which includes engagement
with the investee companies on ESG issues and how this links with
the United Nations Sustainable Development Goals (“SDGs”). Further
information on the annual evaluation of the Manager, to ensure its
continued appointment remains in the best interests of Shareholders,
is set out on page 53.
Service providers such as, JPMorgan Chase Bank (“the Bank and the
Custodian”), JPMorgan Europe Limited (“the Depositary”), Panmure
Gordon (“the Broker”), The Royal Bank of Scotland International,
London Branch (“the Lender”) and Computershare Investor Services
PLC (“the Registrar”) are also considered key stakeholders. The Board
receives regular reports from them and evaluates them to ensure
expectations on service delivery are met.
2023 – Key Board Decisions
The Company’s Stakeholders are always considered when the Board
makes decisions and key examples this year include:
Dividends
The Board is aware that dividend income is important to Shareholders.
A high distribution policy has been adopted with a stated aim to pay
Shareholders a dividend of 6% based on the NAV on 31 December of
the prior year.
Promoting the Success of the Company
– Section 172 Statement
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Despite the effects of the war in Ukraine, recent events in the Middle
East and inflationary pressures, the Directors have been able to
maintain the Company’s high distribution policy as the dividend can be
funded from current year revenue profits and the Distributable Reserve.
The Distributable Reserve, which had a value of £281.6 million as at
31 December 2023 was created during the migration of the Company
from the Netherlands to the United Kingdom.
Review of Investment Performance
Following the Company’s disappointing investment performance in
2022, the Board initiated a review of investment strategy, philosophy
and process adopted by the Manager with particular focus given to the
strengths and weaknesses of its performance over the past ten years.
This work was carried out by the investment managers supported by
the wider Columbia Threadneedle Investment team. Following this
review, a number of changes were made to the composition of the
Company’s investment portfolio including an increase in the number of
stocks held.
Share issuance and buy-backs
Ensuring that liquidity is maintained for the Company’s shares is
important to Shareholders. The Directors sought and received the
authority from Shareholders at the 2023 AGM the power to issue and
buyback shares. At each Board Meeting the Directors will consider
the current level and direction of the discount that the Company’s
share price trades to its NAV and also those of its peer group.
Representatives of the Company’s broker, Panmure Gordon, will attend
most Board meetings and provide an update on the demand for the
Company’s shares. During the year ended 31 December 2023 the
Company did not buyback or issue shares. The discount as at 31
December 2023 was 8.8% (2022: 5.1%).
Marketing
Increasing demand for the Company’s shares will improve their liquidity
and attractiveness. In the shorter term it will reduce the level of the
Company’s share price discount. In the longer term it could lead to
share issuance resulting in a larger Company against which fixed
operating costs can be shared.
During the year, the Board engaged an external consultancy to
undertake a strategic marketing review of the Company. The objective
of the work was to differentiate the Company, making clear the benefits
of investing with it and to inform how to efficiently attract new investors.
The outcomes from this process will drive the Company’s marketing
strategy for future years.
Board succession planning
The Board is committed to ensuring that its composition is compliant
with best corporate governance practice under the revised AIC Code
including guidance on tenure.
As part of an orderly succession plan and following thorough selection
processes which included the services of a search company, Kevin
Troup and Kate Cornish-Bowden were appointed to the Board with
effect from 19 May 2023 and 2 January 2024 respectively.
As a further part of this plan, Julia Bond retired from the Board on
31 January 2024 having served nine years.
Following the retirement of Julia Bond, Kate Cornish-Bowden has been
appointed the Company’s Senior Independent Director.
Jack Perry was appointed in April 2014 and became Chairman with
effect from April 2015. In accordance with corporate governance best
practice, and to allow a handover period, he will retire from the Board at
the conclusion of the Company’s 2024 Annual General Meeting on
17 May 2024.
Upon his retirement, Stuart Paterson, who was appointed to the Board
in July 2019 will become Chairman.
Following the retirement of Jack Perry and Stuart Paterson’s
assumption of the Chairmanship, Kevin Troup will be appointed Chair of
the Company’s Audit and Risk Committee.
While the Company became operational in March 2019, the
Board considers a Director’s appointment to the Company’s Dutch
predecessor, European Assets Trust NV, as the beginning of their period
of continuous service.
26 | European Assets Trust PLC
Responsible Investment
We believe investing responsibly is fundamental to long-term wealth
creation. We have a Manager that integrates environmental, social
and governance (“ESG”) factors into its research and investment
process and encourages stronger ESG practices through its
engagement and voting activities.
Our approach
We believe that good financial outcomes are more likely to be
achieved if we fully understand the risks and opportunities that
relate to the markets in which we invest. More than ever, ESG is a
critical component of this understanding. We need to ensure we, and
the companies we invest in, have a robust approach to managing
environmental and social risks and opportunities. We also expect
good governance practices which we believe better positions investee
companies to manage risks, identify opportunities, and deliver
sustainable growth.
There are two strands to our approach to Responsible Investment:
• The Company’s own responsibilities on matters such as
governance; and
• The impact it has through the investments that are made on its
behalf by its Manager.
The Company’s compliance with the revised AIC Code of Corporate
Governance is detailed in the Corporate Governance Statement on
pages 43 to 46. In addition, the Principal Policies statement on pages
22 and 23 notes the Company’s policies towards board diversity,
integrity and business ethics, prevention of the facilitation of tax
evasion and the Modern Slavery Act 2015.
The Board recognises that the most material way in which the
Company can have an impact is through responsible ownership of its
investments. The Manager engages actively with the management
of investee companies to encourage high standards of ESG practice.
The Manager has long been at the forefront of the investment
industry in its consideration of these issues and has one of the
longest established and largest teams focused solely on ESG.
Responsible ownership
Engaging actively with companies on significant ESG matters, to
reduce risk, improve performance, encourage best practice and
underpin long-term investor value forms a fundamental part of our
Manager’s approach towards responsible investment. Engagement in
the first instance rather than simply divesting or excluding investment
opportunities is also part of this approach.
The Manager’s Corporate Governance Guidelines set out its
expectations of the management of investee companies in terms
of good corporate governance. This includes the affirmation of
responsibility for reviewing internal business ethics policies and
ensuring that there is an effective mechanism for the internal
reporting of wrongdoing, whether within the investee company itself,
or involving other parties, such as suppliers, customers, contractors
or business partners. The Manager is also a signatory to the United
Nations Principles for Responsible Investment (“UNPRI”) under which
signatories contribute to the development of a more sustainable
global financial system. As a signatory the Manager aims to
incorporate ESG factors into its investment processes.
ESG and the investment process
Understanding risks and opportunities is an integral part of the
Manager’s investment process. ESG factors are a critical component
of this understanding. Consideration of financially material ESG
factors forms an important part of the assessment of the Quality
and Management criteria for possible and ongoing investments. The
Manager’s Responsible Investment team and fundamental analysts
work closely with the portfolio managers to create an internally
generated assessment of financially material risks and opportunities
for each company.
During 2023, the Manager underwent an extensive project to join
all investment teams together on a single order management
system (“OMS”). Linked to this, the Manager continued to expand
the availability of its ESG integration tools, uploading these to the
combined OMS. These tools use data from many sources to enhance
and inform the integration of ESG considerations into investment
research, portfolio construction and risk monitoring, by giving a clear
As stewards of £354 million of assets, we support positive change. The Company benefits from the
Manager’s leadership in this field.
Sustainability and ESG
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picture of the ESG considerations that are financially relevant to
different investment opportunities. Key tools include:
• ESG materiality ratings
• Sustainable Development Goals (“SDG”) mapping tool
• Net Zero Framework
• Good governance model
• Exclusions framework
• Controversy rating
These tools mark a starting point for the Manager’s ESG assessment.
This research is used to adjust the Manager’s assessment of the
weighted average cost of capital for the investee company; this is an
important component of the valuation model, such that companies
with higher ESG standards will warrant a lower cost of capital
and in turn a higher valuation, and vice-versa. In these ways, ESG
affects each of the cornerstones of the investment process, Quality,
Management and Price, as well as driving an ongoing dialogue
between the Manager and the investee company. It is also used to
inform active ownership in the form of engagement and voting.
Engagement
Source: Columbia Threadneedle Investments
2023 engagement analysis
During the year ended 31 December 2023, the Manager’s
Responsible Investment team had 18 engagements with 13 investee
companies on a range of ESG topics. The team continued their focus
on more in-depth interactions with investee companies, with in-person
meetings or teleconference calls increasing further to 50% from
46% the previous year. The most common topics for discussion were
climate change, labour standards and corporate governance.
Climate Change 30%
Corporate Governance 27%
Labour Standards 24%
Environmental Stewardship 14%
Human Rights 5%
28 | European Assets Trust PLC
Examples in the reporting period
Smurfit Kappa
Engagement theme: Environmental Stewardship
Smurfit Kappa is an Ireland-based provider of paper-based packaging. It is the largest producer in Europe of corrugated packaging,
containerboard and ‘bag in box’. It is also the only pan-American producer of containerboard and corrugated packaging. The Manager had
two meetings with the company in 2023 and participated in their ESG materiality survey.
Biodiversity was a key focus for the discussions. Smurfit Kappa's primary operational impact on biodiversity is through its Colombian
forestry assets. It discloses the presence of threatened species and protected areas in the vicinity of operational sites but has not set
operational targets on biodiversity nor has it set wider biodiversity targets for its suppliers. The Manager flagged to Smurfit Kappa that:
several industry peers had now set explicit biodiversity targets covering operations and suppliers; and that there were an increasing
number of ways to collect data and have suppliers certified to improved standards. The company was receptive of the Manager’s views
and has followed up with additional guidance.
The Manager discussed the impact of the EU Deforestation Regulation. Smurfit Kappa has evolved its due diligence practices to meet the
requirements, but still has a considerable way to go to meet the geolocation requirement. The Manager encouraged Smurfit Kappa to set
top-level biodiversity targets for its Colombian and European operations that cover both set-aside areas for conservation and plantations,
and provided examples of targets the company could look to emulate. The Manager also encouraged the company to explore setting
biodiversity targets to cover the suppliers it procures from. The company also reached out to the Manager to request that it complete their
bi-annual ESG materiality assessment which was being carried out by a third-party consultant.
The Manager will continue its engagement with Smurfit Kappa on environmental stewardship in 2024 with a particular focus on water
usage.
Tecan
Engagement theme: Environmental, Social
Tecan is a Swiss company providing laboratory instruments and solutions in biopharmaceuticals, forensics, clinical diagnostics and
medical technology for pharmaceutical and biotechnology companies, university research departments, diagnostic laboratories and
clinics. The Manager continued its engagement with Tecan in 2023. The Manager spoke with Tecan’s Associate Director of Corporate
Communications and Sustainability and Head of Corporate Communications on a number of ESG topics. The Manager commended the
company for submitting Scope 1, 2 and 3 reduction targets to the Science-Based Targets Initiative (SBTi). While awaiting approval the
company is setting up internal processes to manage the data, especially from suppliers. Last year, Tecan received a C-score from the
Carbon Disclosure Project (CDP). The company is aiming to improve that score.
The Manager discussed the company’s first submission to the Workforce Disclosure Initiative (“WDI”) in 2022. The WDI strives
for relevant and material workforce-related disclosure, encompassing a wide range of topics, including health & safety practices,
remuneration, freedom of association and employee engagement. The Manager had encouraged Tecan to complete the WDI survey. Tecan
received a 60% score, which is considered good for a first submission and above the company’s own expectations. The company will
submit to the 2023 survey and aims to improve its disclosures on responsible sourcing.
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Voting on portfolio investments
As noted previously, the Manager’s Corporate Governance
Guidelines set out expectations of the boards of investee
companies in terms of good corporate governance. The Board
expects to be informed by the Manager of any sensitive voting
issues involving the Company’s investments. In the absence of
explicit instructions from the Board, the Manager is empowered to
exercise discretion in the use of the Company’s voting rights and
reports at each meeting to the Board on its voting record.
We expect the Company’s shares to be voted on all holdings where
possible. During the year, the Manager voted at 42 meetings of
investee companies. The Manager did not support management’s
recommendations on at least one resolution at approximately
56% of all meetings. With respect to all items voted, the Manager
supported over 85% of all management resolutions.
Two of the most contentious issues voted at meetings were
remuneration and the election of board directors. On these issues,
an adverse vote was cast at the meeting by either abstaining or
voting against management resolutions. Remuneration matters
represented approximately 30% of these votes. The rationale
centred on a number of issues which did not accord with best
practice including poor disclosure or a misalignment of pay with
long-term performance. The election of board directors represented
approximately 10% of adverse votes. Some of these votes were
linked to concerns over remuneration. However other issues
included independence, overboarding or concerns regarding board
composition. Boards should have a diverse representation of skills,
background, and expertise that can manifest in a variety of ways.
Non-executives should be primarily independent of the company,
although the Manager recognises that, in certain cases, connected
non-executives have a valuable role to play.
The Manager’s strategic approach to engagement helps to achieve
positive outcomes, or ‘milestones’, relating to the targets that have
been set under each of the Sustainable Development Goals. Two
examples of milestones achieved in the reporting period are set out
below.
Milestone examples in the reporting period
Cairn Homes
Engagement theme: Corporate Governance
The company enhanced its remuneration policy by increasing the level of stretch in its one-off long term incentive plan award. This
followed engagement by the Manager with the company on this matter.
ASM International
Engagement themes: Labour Standards, Corporate Governance
ASM International improved its workplace diversity from 15% to 17%; the company appears on track to reach its target of 20% by 2025.
It has established concrete goals to reach this target, has increased its female hiring rate from 14% to 19% in a year, and has almost
doubled the promotion of female employees. The Manager had previously engaged the company to formalise programmes to reach its
diversity and inclusion target.
The company improved oversight and accountability of ESG practices and performance by incorporating sustainability metrics in its
executive remuneration plan. 25% of short-term incentive is tied to non-financial metrics, specifically, leadership development and targets
submitted to the science-based Target initiative. The Manager engaged with the company to encourage linking ESG metrics to executive
compensation.
30 | European Assets Trust PLC
The Manager considers climate change to be one of the defining
issues of our generation, and fully supports the goals of the Paris
agreement. The Company expects the Manager to incorporate
considerations around climate change risks and opportunities in its
investment processes.
The Manager published its second climate change report in June
2023. The report details how the Manager manages climate-related
risks and opportunities, in line with the recommendations of the
Taskforce on Climate-related Financial Disclosures. This year, in
accordance with the deadline for complying with regulations set by
the Financial Conduct Authority, disclosure specific to the Company’s
portfolio will be published on the Manager’s website. The report
will provide data on the portfolio’s carbon footprint and the largest
2024
In 2024 the Manager will continue focusing on its priority
engagement themes: climate change; environmental stewardship;
public health; labour standards; human rights; corporate
governance and business conduct. The Manager will identify
and prioritise companies for engagement based on a number of
factors including: the impact of ESG risk and opportunity factors;
the investment team’s and research analysts’ judgement and
expertise; previous engagement track record and level of exposure.
Climate change
individual contributors to the carbon footprint by individual issuer and
sector as well as overall net zero alignment of the portfolio.
In line with this reporting, we disclose the portfolio weighted average
carbon intensity (“WACI”) of the Company’s investments. WACI
shows the emissions impact of companies as a proportion of sales.
It reports how companies generate revenue while emitting more or
lesser amounts of greenhouse gas (“GHG”). A low score means a
fund invests in more carbon-efficient companies. WACI is calculated
by dividing GHG emissions by the revenue generated by companies.
It is reported in GHG per $m of underlying revenues of holdings.
WACI, therefore, provides an indication of exposure to companies
with high emissions.
0
30
60
90
120
150
20222023
Tons CO2e/sales $m
European Assets Trust Benchmark Source: MSCI ESG
Please note with effect from 1 June 2023 the Benchmark changed from EMIX Smaller European Companies (ex UK) Index (net) to MSCI Europe excluding United Kingdom
Small Mid Cap (Net Return) Index.
The rise in WACI for 2023 in comparison to 2022 was due mainly to the increase in the Company’s positions in Wizz Air and Vidrala.
The largest contributor to WACI on an issuer level was European low-cost airline Wizz Air. Consistent with its engagement-led approach to
net zero targets, the Manager has been engaging with Wizz Air on its decarbonisation strategy. Wizz Air’s emissions are lower than peers
on a CO2e per passenger kilometre basis, and it is currently looking to meet the sustainable aviation fuel (‘SAF’) blending mandates in the
EU. While this is encouraging, the Manager has requested improved disclosures on the company’s SAF strategy, the implications of various
European climate policies, and for further details on Wizz Air’s carbon offset procurement approach.
Weighted average carbon intensity
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Image: Frankfurt, Germany
32 | European Assets Trust PLC
Most of the Company’s principal risks are market-related and no
different to those of other investment trusts investing in listed
markets.
The global economy continues to suffer considerable disruption due to
the effects of the war in Ukraine, recent events in the Middle East and
inflationary pressures. The Directors have reviewed the risk register,
which identifies the risks that the Company is exposed to, the controls
in place and the actions being taken to mitigate them. A description
of the principal ongoing risks and uncertainties currently faced by the
Company, and the controls and actions to mitigate those risks, follows.
In addition a detailed review of the risks of the Company’s investment
portfolio including market, credit, foreign currency and liquidity is
provided in note 22 beginning on page 76. Details of actions taken to
reduce the potential impact of these risks is also provided.
The Board has carried out a comprehensive
robust assessment of the principal risks as well
as a thorough process for the identification of
emerging risks and reviewed the uncertainties
that could threaten the Company’s success.
Principal Risks and
Changes in the Year
Increase in overall risk in year.
No change in overall risk in year.
No change in overall risk in year.
No change in overall risk in year.
No change in overall risk in year.
No change in overall risk in year.
Increase in overall risk in year.
Principal Risks Mitigation Actions taken in the year
Poor absolute and/or relative performance
Inappropriate stock selection, asset allocation and gearing levels result in poor
NAV and share price performance against Benchmark and/or peer group. Poor
performance results in reduced demand for the Company’s shares and a widening
share price discount.
At each Board meeting the Directors monitor performance
against Benchmark and peer group. The Manager attends each
regular board meeting and will discuss the reasons for any over
or underperformance.
The Company’s broker, Panmure Gordon, will provide market
intelligence at each meeting noting underlying demand for the
Company’s shares.
The Company has received the necessary authority from
Shareholders to regulate the premium or discount that the
Company’s shares may trade at by purchasing or issuing shares.
An annual strategy meeting of the Board is held to consider longer term issues and opportunities for the Company.
This includes a review of the Company’s investment policy. Representatives of the Company’s broker attended most
Board meetings and updated Directors with regard to changes in the demand for the Company’s shares.
During the year the Board sought and received from Shareholders at the Annual General Meeting held in May 2023
the powers to issue and buyback shares.
The Board initiated a review of investment strategy, philosophy and process adopted by the Manager with particular
focus given to the strengths and weaknesses of its performance over the past ten years. Following this review, a
number of changes were made to the composition of the Company’s investment portfolio including an increase in
the number of stocks held.
Relevance/attractiveness of the investment strategy and policy
An unattractive investment strategy, loss of cost competitiveness and/or a changing
investment product environment, including ESG, leads to a fall in demand for the
Company’s shares resulting in an increasing share price discount.
Investment policy and performance are reviewed by the Board
at each meeting. Rigorous individual stock reviews are regularly
performed by the Manager and action taken to either hold,
accumulate or sell. Cash, borrowing and gearing limits are set
and monitored regularly.
At each meeting of the Board, the Directors consider and discuss the investment performance of the Company with
the Company’s investment managers. As noted above, the Board held its annual strategy meeting in October 2023.
The Board initiated a review of investment strategy, philosophy and process adopted by the Manager with particular
focus given to the strengths and weaknesses of its performance over the past ten years. Following this review, there
was some tightening of the quality growth criteria, a number of changes to the composition of the Company’s
investment portfolio were made including an increase in the number of stocks held.
During the year, the Board engaged an external consultancy to undertake a strategic marketing review of the
Company. The objective of the work was to differentiate the Company, making clear the benefits of investing with
it and to inform how to efficiently attract new investors. The outcomes from this process will drive the Company’s
marketing strategy for future years.
The Manager
Failure of the Manager or loss of senior staff could cause reputational damage and/
or place the business in jeopardy.
Execution risk arising from the post-acquisition integration of BMO GAM EMEA with
Columbia Threadneedle Investments.
The Board meets regularly with the management of Columbia
Threadneedle Investments and receives an annual Audit
Assurance Faculty Report on its procedures. The Manager’s
appointment can be terminated at six months’ notice. Key man
risk is limited by the team approach adopted by the Global
Smaller team at Columbia Threadneedle Investments.
At each meeting of the Board representatives of the Manager provide an update on the integration of the former BMO
GAM EMEA business into Columbia Threadneedle Investments. In addition, during March 2024 the Chairman and the
Chair of the Audit and Risk Committee met with senior members of the management team at Columbia Threadneedle
Investments to discuss progress with regard to this integration process and its future plans to further develop its
investment trust business.
Regulatory and compliance (including ESG reporting)
To maintain its investment trust status, the Company is required to comply with
Section 1158 of the UK Corporation Taxes Act. The Company is also required to
comply with UK company law, is subject to the requirements of the AIFMD and
the relevant regulations of the London Stock Exchange and the Financial Conduct
Authority.
At each Board meeting the Company receives an update
from the Secretary on legal, regulatory and accounting
developments. The Company is a member of the Association of
Investment Companies which provides guidance on regulatory
developments. The Company has appointed EY LLP as its tax
advisor and Shepherd and Wedderburn as its legal counsel.
The Manager has a long established and highly regarded
Responsible Investment team which presents to the Board
annually.
During the year, members of the Board visited the offices of the Company’s Custodian and Depositary and met
representatives of these service providers.
The Remuneration and Nomination Committee liaised with the external recruitment agent to develop a role
specification for the Board vacancies.
Service provider failure
Errors, fraud or control failures at service providers or loss of data through
increasing cyber threats or business continuity failure could damage reputation or
investors’ interests or result in losses.
The Board receives regular control reports from the Manager
covering risk and compliance including oversight of third-party
service providers. The Board has access to the Manager’s Risk
Manager and requires any significant issues directly relevant
to the Company to be reported immediately. The Depositary is
specifically liable for loss of any of the Company’s securities and
cash held in custody.
The Manager continues to strengthen and develop its Risk, Compliance and Internal Control functions including IT
security. Supervision of third-party service providers has been maintained by the Manager and includes assurances
regarding IT security and cyber threat. The Depositary oversees custody of investments and cash and reports to the
Company in accordance with the Alternative Investment Fund Managers Directive.
During the year the Audit and Risk Committee met with members of the Manager’s internal audit function to discuss
the outcome of their recent reviews and planned activities.
Dividend policy
The Company’s high distribution policy becomes unsustainable.
The annual dividend is calculated as six per cent of the closing
net asset value of the Company as at 31 December of the
preceding year.
As at 31 December 2023 the Distributable reserves of the
Company was £281.6 million in comparison to a 2023 dividend
cost of £20.9 million.
On 4 January 2024 the Board declared an annual dividend for 2024 of 5.9 pence per share. This was calculated as
six per cent of the 31 December 2023 NAV of the Company.
At each Board meeting during the year the Directors monitor the dividend yield of the Company. The Directors also
monitor the Company’s distributable reserves and the net asset value five years previously.
Geopolitical issues and their impact
Geopolitical issues including the impact of the war in Ukraine and conflict in the
Middle East.
The Company has a clearly defined and approved strategy. The
Board can hold additional board meetings at short notice to
discuss the impact of significant changes in the macroeconomic
and geopolitical environment. The Company maintains a
portfolio of diversified stocks.
Forward looking stress tests ranging from moderate to extreme
scenarios are provided by the Manager to the Board to support
the Viability and Going Concern Statements.
At each meeting of the Board, the Directors consider and discuss the investment performance of the Company with
the Company’s investment managers. The Board held its annual strategy meeting in October 2023. During its annual
strategy meeting, the Board received a presentation from a Chief Economist of a brokerage house on the prospects
for the Irish economy.
In May 2023 the Chief Economist of the Manager presented to the Board on the global and European economy.
At the March 2024 Audit and Risk Committee meeting, the Directors reviewed updated forward looking stress tests
prepared by the Manager providing support for the Viability and Going Concern Statements disclosed on page 38.
Strategic Report
Report and Accounts 2023 | 33
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chairman’s StatementOverview Auditors’ Report
Principal Risks Mitigation Actions taken in the year
Poor absolute and/or relative performance
Inappropriate stock selection, asset allocation and gearing levels result in poor
NAV and share price performance against Benchmark and/or peer group. Poor
performance results in reduced demand for the Company’s shares and a widening
share price discount.
At each Board meeting the Directors monitor performance
against Benchmark and peer group. The Manager attends each
regular board meeting and will discuss the reasons for any over
or underperformance.
The Company’s broker, Panmure Gordon, will provide market
intelligence at each meeting noting underlying demand for the
Company’s shares.
The Company has received the necessary authority from
Shareholders to regulate the premium or discount that the
Company’s shares may trade at by purchasing or issuing shares.
An annual strategy meeting of the Board is held to consider longer term issues and opportunities for the Company.
This includes a review of the Company’s investment policy. Representatives of the Company’s broker attended most
Board meetings and updated Directors with regard to changes in the demand for the Company’s shares.
During the year the Board sought and received from Shareholders at the Annual General Meeting held in May 2023
the powers to issue and buyback shares.
The Board initiated a review of investment strategy, philosophy and process adopted by the Manager with particular
focus given to the strengths and weaknesses of its performance over the past ten years. Following this review, a
number of changes were made to the composition of the Company’s investment portfolio including an increase in
the number of stocks held.
Relevance/attractiveness of the investment strategy and policy
An unattractive investment strategy, loss of cost competitiveness and/or a changing
investment product environment, including ESG, leads to a fall in demand for the
Company’s shares resulting in an increasing share price discount.
Investment policy and performance are reviewed by the Board
at each meeting. Rigorous individual stock reviews are regularly
performed by the Manager and action taken to either hold,
accumulate or sell. Cash, borrowing and gearing limits are set
and monitored regularly.
At each meeting of the Board, the Directors consider and discuss the investment performance of the Company with
the Company’s investment managers. As noted above, the Board held its annual strategy meeting in October 2023.
The Board initiated a review of investment strategy, philosophy and process adopted by the Manager with particular
focus given to the strengths and weaknesses of its performance over the past ten years. Following this review, there
was some tightening of the quality growth criteria, a number of changes to the composition of the Company’s
investment portfolio were made including an increase in the number of stocks held.
During the year, the Board engaged an external consultancy to undertake a strategic marketing review of the
Company. The objective of the work was to differentiate the Company, making clear the benefits of investing with
it and to inform how to efficiently attract new investors. The outcomes from this process will drive the Company’s
marketing strategy for future years.
The Manager
Failure of the Manager or loss of senior staff could cause reputational damage and/
or place the business in jeopardy.
Execution risk arising from the post-acquisition integration of BMO GAM EMEA with
Columbia Threadneedle Investments.
The Board meets regularly with the management of Columbia
Threadneedle Investments and receives an annual Audit
Assurance Faculty Report on its procedures. The Manager’s
appointment can be terminated at six months’ notice. Key man
risk is limited by the team approach adopted by the Global
Smaller team at Columbia Threadneedle Investments.
At each meeting of the Board representatives of the Manager provide an update on the integration of the former BMO
GAM EMEA business into Columbia Threadneedle Investments. In addition, during March 2024 the Chairman and the
Chair of the Audit and Risk Committee met with senior members of the management team at Columbia Threadneedle
Investments to discuss progress with regard to this integration process and its future plans to further develop its
investment trust business.
Regulatory and compliance (including ESG reporting)
To maintain its investment trust status, the Company is required to comply with
Section 1158 of the UK Corporation Taxes Act. The Company is also required to
comply with UK company law, is subject to the requirements of the AIFMD and
the relevant regulations of the London Stock Exchange and the Financial Conduct
Authority.
At each Board meeting the Company receives an update
from the Secretary on legal, regulatory and accounting
developments. The Company is a member of the Association of
Investment Companies which provides guidance on regulatory
developments. The Company has appointed EY LLP as its tax
advisor and Shepherd and Wedderburn as its legal counsel.
The Manager has a long established and highly regarded
Responsible Investment team which presents to the Board
annually.
During the year, members of the Board visited the offices of the Company’s Custodian and Depositary and met
representatives of these service providers.
The Remuneration and Nomination Committee liaised with the external recruitment agent to develop a role
specification for the Board vacancies.
Service provider failure
Errors, fraud or control failures at service providers or loss of data through
increasing cyber threats or business continuity failure could damage reputation or
investors’ interests or result in losses.
The Board receives regular control reports from the Manager
covering risk and compliance including oversight of third-party
service providers. The Board has access to the Manager’s Risk
Manager and requires any significant issues directly relevant
to the Company to be reported immediately. The Depositary is
specifically liable for loss of any of the Company’s securities and
cash held in custody.
The Manager continues to strengthen and develop its Risk, Compliance and Internal Control functions including IT
security. Supervision of third-party service providers has been maintained by the Manager and includes assurances
regarding IT security and cyber threat. The Depositary oversees custody of investments and cash and reports to the
Company in accordance with the Alternative Investment Fund Managers Directive.
During the year the Audit and Risk Committee met with members of the Manager’s internal audit function to discuss
the outcome of their recent reviews and planned activities.
Dividend policy
The Company’s high distribution policy becomes unsustainable.
The annual dividend is calculated as six per cent of the closing
net asset value of the Company as at 31 December of the
preceding year.
As at 31 December 2023 the Distributable reserves of the
Company was £281.6 million in comparison to a 2023 dividend
cost of £20.9 million.
On 4 January 2024 the Board declared an annual dividend for 2024 of 5.9 pence per share. This was calculated as
six per cent of the 31 December 2023 NAV of the Company.
At each Board meeting during the year the Directors monitor the dividend yield of the Company. The Directors also
monitor the Company’s distributable reserves and the net asset value five years previously.
Geopolitical issues and their impact
Geopolitical issues including the impact of the war in Ukraine and conflict in the
Middle East.
The Company has a clearly defined and approved strategy. The
Board can hold additional board meetings at short notice to
discuss the impact of significant changes in the macroeconomic
and geopolitical environment. The Company maintains a
portfolio of diversified stocks.
Forward looking stress tests ranging from moderate to extreme
scenarios are provided by the Manager to the Board to support
the Viability and Going Concern Statements.
At each meeting of the Board, the Directors consider and discuss the investment performance of the Company with
the Company’s investment managers. The Board held its annual strategy meeting in October 2023. During its annual
strategy meeting, the Board received a presentation from a Chief Economist of a brokerage house on the prospects
for the Irish economy.
In May 2023 the Chief Economist of the Manager presented to the Board on the global and European economy.
At the March 2024 Audit and Risk Committee meeting, the Directors reviewed updated forward looking stress tests
prepared by the Manager providing support for the Viability and Going Concern Statements disclosed on page 38.
34 | European Assets Trust PLC
Directors
Jack Perry CBE, Chairman and Chair of
Management Engagement Committee
(appointed 1 July 2014)* is a portfolio non-
executive director and has served on the
Boards of FTSE 250 and other public and
private companies. He is currently Chairman
of ICG-Longbow Senior Secured UK Property
Debt Investments Limited and a non-executive
director and Chairman of the Audit and Risk
Committee of Witan Investment Trust plc. In
his executive career he was Chief Executive
of Scottish Enterprise and prior to this,
Managing Partner, Glasgow and a Regional
Industry Leader for Scotland and Northern
Ireland for Ernst and Young LLP. He is
a member of the Institute of Chartered
Accountants of Scotland and is a past
Chairman of CBI Scotland. Jack will retire
from the Board at the conclusion of the
Annual General Meeting of the Company
to be held on 17 May 2024. Shared
directorships with other Directors: None
Stuart Paterson, Chair of Audit and Risk
Committee (appointed 22 July 2019) is a
co-founder and partner of Scottish Equity
Partners (“SEP”), one of Europe’s leading
technology growth equity investors with a
strong investment performance track record,
managing more than £1 billion of institutional
capital over two decades. Stuart has over 25
years of equity investing in European private
companies and has served on Boards in
numerous sectors over the years. Notable
private company investments of Stuart on
behalf of SEP include Cambridge Silicon
Radio plc which listed and became a FTSE
250 company, and Skyscanner the consumer
internet business which became the world’s
largest flight search business. Stuart trained
with Ernst & Young and is a member of the
Institute of Chartered Accountants of Scotland.
He latterly worked in Corporate Finance for
Ernst & Young before moving into equity
investment. Stuart will become Chairman of
the Company at the conclusion of the Annual
General Meeting to be held on 17 May 2024.
Shared directorships with other Directors: None
Martin Breuer (appointed 10 May 2016)* is
Founder and CEO of 2M SRLS and CEO of
Carslan Italia Srl. He is also a non-executive
director of Gruppo Glossip Srl, SISME SpA
and MVP Holding SA. Previously he was
an executive with Siemens, Chief Financial
Officer of SEVES and Intercos Group. In
addition, he has served as Chief Executive
Officer for Intercos in Asia Pacific and
Chief Executive Officer of Italian cosmetic
manufacturer Gotha Cosmetics. Shared
directorships with other Directors: None
Pui Kei Yuen (appointed 26 February 2021)
has over 25 years’ experience in equities.
Her roles have included UK institutional
equity portfolio management and research
at Mercury Asset Management, Pan
European equity responsibilities at UBS and
Bank of America Merrill Lynch, advising large
institutional investors and hedge funds, and
working with the Boards of earlier stage
private companies. Pui Kei is also a non-
executive director of JPMorgan American
Investment Trust PLC. Shared directorships
with other Directors: None
*Appointed to the Company’s predecessor
European Assets Trust NV
Report and Accounts 2023 | 35
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chairman’s StatementOverview Auditors’ Report
Governance Report
Kevin Troup (appointed 19 May 2023) is
a qualified Chartered Accountant. He has
worked in the fund management industry
since 1995 with senior investment roles at
Scottish Life, Martin Currie and Standard
Life Investments. He is now a non-executive
director at Baring Fund Managers Limited.
He is also a non-executive director and Chair
of the Audit Committee of Baillie Gifford
Shin Nippon PLC. His other appointments
include Chair of the Risk, Audit and
Compliance Committee at the BT Pension
Scheme Management Limited and he is
a director of Kintail Trustees Limited, the
corporate trustee of The Robertson Trust
charity where he is chair of the Investment
Committee. Kevin will become Chair of the
Company’s Audit and Risk Committee at the
conclusion of the Annual General Meeting
to be held on 17 May 2024. Shared
directorships with other Directors: None
Kate Cornish-Bowden, Senior Independent
Director and Chair of the Remuneration and
Nomination Committee (appointed
2 January 2024) is the Chair of International
Biotechnology Trust plc, and a non-executive
director of Finsbury Growth & Income Trust
plc and CC Japan Income & Growth Trust
plc, where she is also chair of the Audit
Committee. Until recently Kate was the
senior independent non-executive director
of Schroder Oriental Income Fund Limited.
Previously Kate worked for twelve years
as a fund manager for Morgan Stanley
Investment Management, where she was
managing director and head of the global
equity team. Prior to Morgan Stanley she
worked as a research analyst at M&G. Kate
is a member of the Chartered Financial
Analyst Institute, holds a Masters in
Business Administration, and has completed
the Financial Times Non-Executive Director
Diploma. Shared directorships with other
Directors: None
36 | European Assets Trust PLC
Management and Advisers
Board
Jack Perry (Chairman and Chair of the Management Engagement
Committee)
Stuart Paterson (Chair of the Audit and Risk Committee)
Martin Breuer
Kate Cornish-Bowden (appointed 2 January 2024, Senior
Independent Director and Chair of the Remuneration and
Nomination Committee)
Kevin Troup (appointed 19 May 2023)
Pui Kei Yuen
All Directors are non-executive
Registered Office
Cannon Place
78 Cannon Street
London EC4N 6AG
Investment Manager, Secretary and AIF Manager
Columbia Threadneedle Investment Business Limited
6th Floor
Quartermile 4
7a Nightingale Way
Edinburgh EH3 9EG
Tel No. 0131 718 1000
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
Tel No. 0370 889 4094
Loan Provider
The Royal Bank of Scotland International, London Branch,
1 Princes Street
London
EC2R 8BP
Brokers
Panmure Gordon (UK) Limited
40 Gracechurch Street
London EC3V 0BT
Depositary
JPMorgan Europe Limited
25 Bank Street
Canary Wharf
London E14 5JP
Custodian
JPMorgan Chase Bank
National Association, London Branch
25 Bank Street
Canary Wharf
London E14 5JP
Independent Auditors
PricewaterhouseCoopers LLP
7 More London Riverside
London SE1 2RT
Lawyers
Shepherd and Wedderburn LLP
9 Haymarket Square
Edinburgh EH3 8FY
Tax Advisers
Ernst & Young LLP
Atria One
144 Morrison Street
Edinburgh EH3 9EX
Website
www.europeanassets.co.uk
Report and Accounts 2023 | 37
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chairman’s StatementOverview Auditors’ Report
Governance Report
Directors’ Report
The Directors submit the Report and Accounts of the Company for the year ended 31 December
2023. The Directors’ biographies, the Corporate Governance Statement; the Reports of the
Remuneration and Nomination Committee; the Audit and Risk Committee and the Management
Engagement Committee; and the Directors’ Remuneration Report form part of this Directors’ Report.
Statement regarding Report and Accounts
The Directors consider that, following advice from the Audit and
Risk, Management Engagement, and Remuneration and Nomination
Committees, the Report and Accounts, taken as a whole, is
fair, balanced and understandable and provides the information
necessary for Shareholders to assess the Company’s position and
performance, business model and strategy. The Audit and Risk
Committee has reviewed the final draft Report and Accounts for the
purposes of this assessment. The market outlook for the Company
can be found on page 8. Principal risks can be found on page 32
with further information in note 22 beginning on page 76.
Accounting
Shareholders will be asked to approve the adoption of the Report
and Accounts at the forthcoming AGM (Resolution 1).
The financial statements, starting on page 61, comply with current
UK-adopted International Accounting Standards, supplemented by
the Statement of Recommended Practice “Financial Statements of
Investment Trust Companies and Venture Capital Trusts” (“SORP”).
The significant accounting policies of the Company are set out in
note 2 to the accounts. The auditors’ unqualified opinion on the
financial statements appears on pages 55 to 60.
Results and dividends
The results for the period are set out in the attached accounts. The
Company’s dividend payments during the year ended 31 December
2023 are set out opposite.
Dividends paid in the year ended 31 December 2023
First interim dividend for the year ended 31 December 2023
paid on 31 January 2023
1.45p
Second interim dividend for the year ended 31 December 2023
paid on 28 April 2023
1.45p
Third interim dividend for the year ended 31 December 2023
paid on 31 July 2023
1.45p
Fourth interim dividend for the year ended 31 December 2023
paid on 31 October 2023
1.45p
As explained in the Chairman’s Statement, the Board has resolved
to pay a dividend of, in aggregate, 5.9 pence per share for
2024. The dividend for 2024 will be paid in four equal, quarterly
instalments on 31 January, 30 April, 31 July and 31 October 2024
to registered holders of shares at an appropriate
record time. The
first quarterly dividend of 1.475 pence per share was paid on
31 January 2024 to Shareholders on the register of members on
12 January 2024 with an ex-dividend date of 11 January 2024.
As the Company’s current practice is to pay dividends quarterly
at the end of January, April, July and October, the Company does
not pay a final dividend that would otherwise require formal
Shareholder approval at a General Meeting. In the absence of such
a requirement for Shareholder approval of a final dividend, approval
will be sought at the forthcoming 2024 Annual General Meeting
(“AGM”) to approve the Company’s dividend policy as set out on
page 22 of this report. (Resolution 2 in the Notice of AGM set out
on pages 83 to 86).
Company status
The Company is a public limited company and an investment
company as defined by section 833 of the Companies Act 2006.
The Company is limited by shares and is registered in England and
38 | European Assets Trust PLC
Wales with company registration number 11672363. It is subject
to the Listing Rules of the UK Financial Conduct Authority, UK
legislation and regulations including company law, financial reporting
standards, taxation law and its own articles of association.
Taxation
As set out on page 72 and in note 9 to the accounts, the Company
is exempt from UK Corporation Tax on its dividend income and from
UK Corporation Tax on any capital gains arising from the portfolio
of investments, provided it complies at all times with section 1158
of the Corporation Tax Act 2010. Dividends received from investee
companies domiciled outside the UK are subject to taxation in those
countries in accordance with relevant double taxation treaties.
Viability and going concern statements
The UK Corporate Governance Code requires a board to assess
the future prospects for a company, and report on the assessment
within the annual report.
The Board considered that a number of characteristics of the
Company’s business model and strategy were relevant to this
assessment:
• The Company as an active investor looks to long-term
outperformance compared to its Benchmark rather than short
term opportunities;
• The Company is a closed-end investment company and as such
is not required to sell investments in a market downturn in
order to fund investor redemptions;
• The Company’s investment objective, strategy and policy,
which are subject to regular Board monitoring, mean that it is
invested in realisable, listed securities and that the level of
borrowings is restricted; and
• The Company’s business model and strategy is not time
limited.
Also relevant were a number of aspects of the Company’s
operational arrangements:
• It retains title to all assets held by the Custodian under the
terms of formal agreements with the Custodian and Depositary;
• The annual dividend declared by the Company is determined in
accordance with the year-end net asset value; and
• Revenue and expenditure forecasts of the Company are
reviewed by the Directors at each Board Meeting.
In addition, the Board carried out a robust assessment of the
principal risks which could threaten the Company’s objective,
strategy, future performance, liquidity and solvency. These risks,
mitigating actions in place to ensure the Company’s resilience and
the processes for monitoring risks are set out on page 32 and
in note 22 of the accounts. These principal risks were identified
as relevant to the viability assessment. In undertaking this
assessment, the Board took into account the following factors:
• the liquidity of the Company’s portfolio;
• the existence of a borrowing facility;
• the effects of any significant future falls in investment values
and income receipts on the ability to repay and re-negotiate
borrowings;
• the maintenance of dividend payments and the retention of
investors;
• the potential need for more share issuance capacity in the
event of unexpected market demand; and
• minimising the discount between the Company’s share price
and net asset value.
The Board gave careful consideration to the effects of the war in
Ukraine, recent events in the Middle East, and inflationary pressures
and the resulting volatility in stockmarkets and economic disruption
when making this assessment.
As discussed in note 23 to the financial report on page 81, the
Company has a number of banking covenants and at present
the Company’s financial position does not suggest that any of these
are close to being breached. The primary risk is that there is a very
substantial decrease in the net asset value of the Company in the
short to medium term. Financial modelling has been undertaken
to consider compliance with these covenants in several scenarios.
These extreme but plausible scenarios indicate that the loan
covenants would not be breached. In addition, the Directors have
considered the remedial measures that are open to the Company
if such a covenant breach appears possible. As at 18 March 2024,
the latest practicable date before the publication of this report,
borrowings amounted to €35.0 million (£29.9 million). This is in
comparison to a net asset value of €409.5 million (£350.1 million).
In accordance with its investment policy the Company is invested
mainly in readily realisable listed securities. These can be realised if
necessary, to repay the loan facility and fund the cash requirements
for future dividend payments.
These matters were assessed over a five-year period to March
2029. The Board of the Company will continue to assess viability
over five-year rolling periods, taking account of foreseeable severe
but plausible scenarios. A rolling five-year period represents the
horizon over which the Board believes it can form a reasonable
expectation of the Company’s prospects, balancing its financial
flexibility and scope with the current uncertain outlook for longer-
term economic conditions affecting it and its Shareholders.
Report and Accounts 2023 | 39
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chairman’s StatementOverview Auditors’ Report
Governance Report
Based on their assessment, and in the context of the Company’s
business model, strategy and operational arrangements set out
before, the Board has 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 to March 2029. For this reason, the
Board also considers it appropriate to continue adopting the going
concern basis in preparing the Report and Accounts.
Statement as to disclosure of information to the auditors
Each of the Directors confirms that, so far he or she is aware, there
is no information relevant to the preparation of the Report and
Accounts of which the auditors are unaware and that he or she has
taken all the steps that a Director ought to have taken to
be aware of relevant audit information and to establish that the
auditors are aware of that information.
Capital structure
As at 31 December 2023 there were 360,069,279 Ordinary Shares
in issue. As at 18 March 2024 (being the latest practicable date
before publication of this report) the number of Ordinary Shares in
issue was 360,069,279. No Ordinary Shares were held in treasury.
All ordinary shares rank equally for dividends and distributions
and carry one vote each. There are no restrictions concerning the
transfer of securities in the Company, no special rights with regard
to control attached to securities, no agreements between holders
of securities regarding their transfer known to the Company and no
agreement which the Company is party to that affects its control
following a takeover bid.
Details of the capital structure can be found in note 16 to the
accounts. The revenue profits of the Company, together with
the realised capital profits and the balance of the Distributable
Reserve are available for distribution by way of dividends to the
holders of the Ordinary Shares.
Upon a winding-up, after meeting the liabilities of the Company,
the surplus assets would be distributed to Shareholders pro-rata
to their holdings of Ordinary Shares. Full details are set out in the
Company’s articles of association.
Share capital
At 31 December 2023 no notifications of significant voting
rights had been received under the Financial Conduct Authority’s
Disclosure and Transparency Rules.
Planholders of CT Savings Plans owned 128,538,644 Ordinary
Shares or 35.7 per cent of the issued share capital of the Company,
at 31 December 2023. For non-contentious resolutions the nominee
company holding these shares votes the shares held on behalf
of planholders who have not returned their voting directions in
proportion to the directions of those who have (“proportional
voting”). Implementation of this arrangement is subject to a
minimum threshold of 5% of the shares held in the CT Savings
Plans being voted. A maximum limit of 50,000 shares that any one
individual investor can vote, being approximately 1.0% of
the relevant minimum threshold, also applies. Any individual voting
directions received in excess of the maximum limit will remain valid
but will not form part of the proportional voting basis. Planholders
have the right to exclude their shares from the proportional voting
arrangement.
Borrowings
In March 2023 the Company entered into a €45 million multi-
currency revolving loan facility with The Bank of Nova Scotia, London
Branch expiring March 2024. The loan covenants have
all been met during the period. The interest rate on the amount
drawn down and commitment fees payable on undrawn amounts
are based on the commercial terms agreed with The Bank of Nova
Scotia, London Branch.
As at 31 December 2023 the loan facility was €30 million drawn.
Following the year end, the Company’s loan facility with The Bank of
Nova Scotia, London Branch expired. A new loan with a maximum
facility of €60 million with The Royal Bank of Scotland International,
London Branch has been entered into.
Remuneration Report
The Directors’ Remuneration Report, which can be found on
page 47, provides detailed information on the remuneration
arrangements for Directors of the Company, including the Directors’
Remuneration Policy.
Remuneration is set at a level commensurate with the skills
and experience necessary for the effective stewardship of the
Company and the expected contribution of the Board as a whole in
continuing to achieve the investment objective.
The policy is subject to approval by Shareholders every three years.
There have been no changes to the policy since the last approval by
Shareholders in 2023.
It is intended that the policy approved by Shareholders at the 2023
AGM will continue for the three-year period ending at the AGM in
2026.
Shareholders will be asked to approve the Directors’ Remuneration
Report (Resolution 3).
40 | European Assets Trust PLC
Appointment of auditors and auditor’s remuneration
Resolutions 4 and 5 seek Shareholder approval, respectively, for
the re-appointment of PricewaterhouseCoopers LLP as the auditors
of the Company and to authorise the Audit and Risk Committee
to determine their remuneration for the audit of the Report and
Accounts for the year ended 31 December 2024.
Director re-elections
The names of the Directors, along with their biographical details, are
set out on pages 34 and 35.
Kevin Troup was appointed to the Board on 19 May 2023. Since
31 December 2023, Kate Cornish-Bowden was appointed to the
Board on 2 January 2024. Julia Bond retired from the Board on
31 January 2024.
All current directors with the exception of Jack Perry will stand
for election or re-election by Shareholders at the AGM. Jack Perry
will retire from the Board at the conclusion of the Company’s
forthcoming AGM to be held on 17 May 2024.
Following a review of their performance, the Board believes that
each of the Directors standing for election or re-election has and
will continue to make a valuable and effective contribution to the
Company. The skills and experience each Director brings to the
Board for the long-term sustainable success of the Company are set
out below. The Board recommends that Shareholders vote in favour
of the election and re-elections of the Directors (Resolutions 6 to
10).
Resolution 6 concerns the re-election of Stuart Paterson who has
served on the Board for over four years. He was a co-founder and
is a partner of Scottish Equity Partners, one of Europe’s leading
technology growth equity investors. He is an experienced technology
investor with over 25 years of equity investing in European
private companies and is a member of the Institute of Chartered
Accountants of Scotland. He will become Chairman of the Company
at the conclusion of the forthcoming AGM to be held on 17 May
2024.
Resolution 7 concerns the re-election of Martin Breuer, who has
served the Company and its predecessor for over 7 years. He is a
German national, currently based in Italy, with extensive industrial
experience with Continental European companies.
Resolution 8 concerns the election of Kate Cornish-Bowden who
was appointed to the Board on 2 January 2024. She worked for
twelve years as a fund manager for Morgan Stanley Investment
Management, where she was managing director and head of
the global equity team. Prior to Morgan Stanley she worked as a
research analyst at M&G. Kate is currently Chair of one investment
trust, the Chair of Audit of another and a non-executive director of a
third.
Resolution 9 concerns the election of Kevin Troup who was
appointed to the Board on 19 May 2023. He has worked in the
fund management industry since 1995 with senior investment
roles at Scottish Life, Martin Currie and Standard Life Investments.
Among his current roles he is a non-executive director at Baring
Fund Managers Limited and chair of the Risk, Audit and Compliance
Committee at the BT Pension Scheme Management Limited. He is
also a non-executive director and Chair of the Audit Committee of
another investment trust. He is a qualified Chartered accountant.
Resolution 10 concerns the re-election of Pui Kei Yuen who has
served the Company for three years. She has extensive experience
in the fund management and investment banking industries at
Mercury Asset Management, UBS and Bank of America Merrill
Lynch. She is also currently a non-executive director of another
investment trust.
Directors’ interests and indemnification
There were no contracts of significance to which the Company was a
party and in which a Director is, or was, materially interested during
the period. There are no agreements between the Company and its
Directors concerning compensation for loss of office.
The Company has granted deeds of indemnity to the Directors
in respect of liabilities that may attach to them in their capacity as
Directors of the Company. These deeds cover any liabilities that may
arise to a third-party for negligence, default or breach of trust or
duty. These deeds of indemnity are qualifying third-party provisions
(as defined by section 234 of the Companies Act 2006) and have
been in force throughout the period of review and remain in place
at the date of this report. They are available for inspection at the
Company’s registered office during normal business hours and
at the AGM. The Company also maintains directors’ and officers’
liability insurance.
Safe custody of assets
The Company’s investments are held in safe custody by JPMorgan
Chase Bank (“the Custodian”). Operational matters with the
Custodian are carried out on the Company’s behalf by the Manager
in accordance with the provisions of the management agreement.
The custodian is paid a variable fee dependent on the number of
trades transacted and location of the securities held.
Depositary
JPMorgan Europe Limited acts as the Company’s depositary, (“the
Depositary”) in accordance with the AIFMD. The Depositary’s
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Chairman’s StatementOverview Auditors’ Report
Governance Report
responsibilities, which are set out in an Investor Disclosure
Document on the Company’s website, include: cash monitoring;
ensuring the proper segregation and safekeeping of the Company’s
financial instruments that are held by the Custodian; and monitoring
the Company’s compliance with investment and leverage limits
requirements.
Although the Depositary has delegated the safekeeping of all assets
held within the Company’s investment portfolio to the Custodian,
in the event of loss of those assets that constitute financial
instruments under the AIFMD, the Depositary will be obliged to
return to the Company financial instruments of an identical type,
or the corresponding amount of money, unless it can demonstrate
that the loss has arisen as a result of an external event beyond its
reasonable control, the consequences of which would have been
unavoidable despite all reasonable efforts to the contrary.
The Manager’s fee
The Manager receives a fee equal to 0.75 per cent per annum of
the value of funds under management up to the value of €400
million. Funds under management is calculated as the value of total
assets less current liabilities (excluding borrowings) at the end of
the preceding quarter. Where the value of funds under management
exceeds €400 million, the applicable rate over such excess value is
0.6 per cent per annum.
An additional fee of £100,000 per annum is payable by the
Company to the Manager for the provision of administrative
services.
AGM
The Notice of AGM to be held on 17 May 2024 at 3.00pm is set out
on pages 83 to 86.
Directors’ authority to allot shares and disapplication of
pre-emption rights
The Directors are seeking to renew their authority to allot shares.
Resolution 11 in the Notice of AGM, which will be proposed
as an ordinary resolution, seeks renewal of such authority to
allot Ordinary Shares up to an aggregate nominal amount of
£3,600,692 (being an amount equal to 10 per cent of the total
issued share capital of the Company as at the date of this report).
Under Resolution 12, which will be proposed as a special
resolution, the Directors are also seeking to renew the authority
to allot new Ordinary Shares and/or sell Ordinary Shares held by
the Company as treasury shares for cash as if section 561 of the
Companies Act 2006 did not apply. (This section requires that, when
equity securities are allotted for cash, such new shares are first
offered to existing equity shareholders in proportion to their existing
holdings of shares, this entitlement being known as ‘‘pre-emption
rights’’).
Allotments of Ordinary Shares pursuant to these authorities would
enable the Directors to issue shares for cash and/or to sell equity
securities held as treasury shares to take advantage of changes in
market conditions that may arise, in order to increase the amount
of the Company’s issued share capital. A likely purpose of such
an increase would be to improve the liquidity of the market in the
Company’s shares and to spread the fixed costs of administering
the Company over a wider base. The Directors believe that this
authority, if granted to the Directors, would provide the necessary
flexibility permitted by investor protection guidelines to respond
to market developments in the interest of existing Shareholders.
Except where authorised by Shareholders, no shares will be issued
or sold from treasury by the Directors at a price which (after costs
and expenses) is less than the net asset value per share at the
time of the issue or sale, unless the shares are first offered pro rata
to Shareholders on a pre-emptive basis. The Company has been
authorised to sell any treasury shares held from time-to-time at
below net asset value subject to the limitation on asset dilution set
out below.
The absolute level of dilution through the sale of treasury shares is
restricted to 0.5% of Net Asset Value in any one year, and treasury
shares which are sold at a discount to Net Asset Value will only be
sold where the discount at which the shares are sold is lower than
the average discount at which the shares have been acquired, and
in addition the price at which shares are sold must not be less than
the market bid price at time of sale.
Resolution 12, if passed, will give the Directors power to allot for
cash Ordinary Shares of the Company and to sell Ordinary Shares
out of treasury up to a maximum nominal amount of £1,800,346
(being an amount representing 5 per cent of the total issued
ordinary share capital of the Company as at the date of this report)
without the application of the pre-emption rights described above.
The calculation of the above figure is in accordance with the
Investment Association Share Capital Management Guidelines and
other applicable investor protection guidelines, and the Directors
will not use the authority other than in accordance with those
guidelines.
The authorities contained in Resolutions 12 and 13 will continue
until the AGM of the Company in 2025, and the Directors
envisage seeking renewal of these authorities in 2025 and in
each succeeding year, subject to such renewals again being in
accordance with the applicable investor protection guidelines.
42 | European Assets Trust PLC
Directors’ Authority to Buy Back Shares
The current authority of the Company to make market purchases
of up to 10 per cent of the issued Ordinary Shares expires at the
end of the AGM and Resolution 13, as set out in the Notice of the
AGM, seeks renewal of such authority. The renewed authority to
make market purchases will be in respect of a maximum of 10 per
cent of the issued Ordinary Shares as at the date of the passing
of the resolution (approximately 36 million Ordinary Shares). The
price paid for Ordinary Shares under this authority will not be less
than the nominal value of 10p per Ordinary Share nor more than the
highest of:
(i) 5 per cent above the average of the middle market values of
those shares for the five business days before the shares are
purchased;
(ii) the price of the last independent trade on the trading venue
where the purchase is carried out; and
(iii) the highest current independent bid on that venue.
This power will only be exercised if, in the opinion of the Directors,
a purchase will result in an increase in net asset value per share
of the Ordinary Shares and be in the interests of Shareholders as
a whole. Purchases would only be made for cash at a cost which
is below the prevailing net asset value per share. Any shares
purchased under this authority will be cancelled or held in treasury
for future re-issue. The effect of any cancellation would be to reduce
the number of shares in issue. For most purposes, where held
in treasury, shares are treated as if they had been cancelled (for
example they carry no voting rights and do not rank for dividends).
The purpose of holding some shares in treasury is to allow
the Company to issue or sell these shares quickly and cost
effectively, thus providing the Company with greater flexibility.
The authority contained in Resolution 13, if passed, will continue
until the AGM of the Company in 2025, and the Directors envisage
seeking renewal of this authority in 2025 and in each succeeding
year, subject to such renewals again being in accordance with the
applicable investor protection guidelines.
Recommendation
The Board considers that the passing of the resolutions to be
proposed at the AGM is in the interests of the Company and its
Shareholders as a whole and they unanimously recommend that
Shareholders vote in favour of all of them as the Directors intend to
do in respect of their beneficial holdings.
Statement Regarding Report and Accounts
Following a detailed review of the Report and Accounts by the Audit
and Risk Committee, the Directors consider that taken as a whole
it is fair, balanced and understandable and provides the information
necessary for Shareholders to assess the Company’s performance,
business model and strategy. In reaching this conclusion, the
Directors have assumed that the reader of the Report and Accounts
would have a reasonable level of knowledge of the investment
industry in general and investment trusts in particular.
By order of the Board
Columbia Threadneedle Investment Business Limited
Secretary
19 March 2024
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Chairman’s StatementOverview Auditors’ Report
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Company’s strategy, operations and compliance with regulations. The
Manager is the Company’s AIFM.
Articles of association
The Company’s articles of association may only be amended by
special resolution at general meetings of Shareholders.
The Board
The Board of the Company is entirely non-executive. The Company
has no employees. A management contract between the Company
and the Manager sets out the matters over which the Manager
has authority and the limits above which Board approval must
be sought. All other matters, including strategy, investment and
dividend policies, gearing, and corporate governance procedures
are reserved for the approval of the Board. With regard to these
matters it is the responsibility of the Board to provide the Manager
with general instruction and guidance. It is the responsibility of the
Manager to act and manage the Company in accordance with these
general directives and to report to the Board upon its corporate
management.
During the period the performance of the Board, committees and
individual Directors was evaluated through a discussion process led
by the Chairman. The performance of the Chairman was evaluated by
the other Directors.
Amongst other considerations, the performance evaluation
considered the balance of skills and diversity of the Board, as well
as the Board’s overall effectiveness. The Board believes it has an
appropriate balance of skills and experience, length of service and
knowledge of the Company. The Board does not consider that the
use of external consultants to conduct this evaluation is likely to
provide any meaningful advantage over the process adopted. The
option is, however, kept under review.
The table on page 44 sets out the number of scheduled Board and
Committee meetings held during the year ended 31 December 2023
and the number of meetings attended by each Director.
The Board also held a strategy meeting and five committee meetings
during the year.
Introduction
The Company adheres to the principles and recommendations
of the revised AIC Code of the Corporate Governance (the “AIC
Code”) published in 2019.
The Board believes that the Company has complied with the current
recommendations of the AIC Code during the year under review and
up to the date of this report and, except as regards the provisions
set out below, has thereby complied with the relevant provisions
of the 2018 revision to the UK Corporate Governance Code (“UK
Code”):
The UK Code includes provisions relating to:
• the role of the chief executive;
• executive directors’ remuneration; and
• the need for an internal audit function.
For the reasons set out in the AIC Corporate Governance Guide for
Investment Companies, the Board considers these provisions as
not being relevant to the Company, as it is an externally managed
investment company. In particular, all of the Company’s day-to-day
management and administrative functions have been delegated to
the Manager. As a result, the Company has no executive Directors,
employees or internal operations. Therefore, with the exception
of the need for an internal audit function, which is addressed on
page 52, the Company has not reported further in respect of these
provisions.
Detailed information on the Directors’ remuneration can be found in
the Directors’ Remuneration Report on pages 48 to 50 and in note 6
to the accounts.
Copies of both codes may be found on the respective websites
theaic.co.uk and frc.org.uk.
AIFMD
The Company is defined as an Alternative Investment Fund (“AIF”)
under the AIFMD issued by the European Parliament, and which
has been implemented into UK law. This requires that all AIFs must
appoint a Depositary and an Alternative Investment Fund Manager
(“AIFM”). The Board remains fully responsible for all aspects of the
Corporate Governance Statement
44 | European Assets Trust PLC
Individual Directors may, at the expense of the Company, seek
independent professional advice on any matter that concerns them
in the furtherance of their duties. No such advice was sought during
the period. The Company maintains appropriate Directors’ and
Officers’ liability insurance and has granted deeds of indemnity to
the Directors in respect of liabilities that may attach to them in their
capacity as Directors of the Company.
The Board receives full information on the Company’s investment
performance, assets, liabilities and other relevant information in
advance of Board meetings. The Board has direct access to the
company secretarial advice and services provided by the Manager.
The proceedings at all Board meetings are recorded in the minutes.
The Board has the power to appoint or remove the Company
Secretary.
Appointments and Succession Planning
The Board has established a Remuneration and Nomination
Committee. This committee is responsible for the review of the
re-appointment of Directors, as they fall due for re-election and to
make recommendations to the Board.
In order to comply with the spirit of the Code, the Directors consider
that their period of office commenced with their appointment to the
Board of European Assets Trust NV, the Company’s predecessor.
In addition, this committee is responsible for making recommendations
to the Board regarding the nomination of additional Directors, where
appropriate, for approval by the General Meeting of Shareholders.
In accordance with the AIC Code all Directors are subject to annual
re-election at each AGM. Following the evaluation process set on
page 43, the Board confirms that the performances of all Directors
continue to be effective and demonstrate commitment to the role.
The Board therefore believes that it is in the interest of Shareholders
that all Directors seeking election or re-election be elected or re-
elected.
Since 31 December 2023, Kate Cornish-Bowden was appointed to
the Board on 2 January 2024. Julia Bond retired from the Board on
31 January 2024.
Appointments of all new Directors are made on a formal basis
using professional search consultants, with the Board agreeing
the selection criteria and the method of selection, recruitment and
appointment. A Director role specification is prepared to assist with
this process. Each appointment is subject to Shareholder approval at
the subsequent AGM.
The length of tenure of the Chairman is determined by the UK Code’s
nine-year limit subject to the AIC Code derogation. Factors that will be
considered include board rotation and retention of experience. The
Board has an agreed succession plan for the orderly retirement of
existing directors and to provide for the regular refreshment of skills
and talent. Regular retirements of Directors will take place ensuring that
the Company complies with both the letter and spirit of the AIC Code.
As part of an orderly succession plan and following thorough selection
processes which included the services of a search company, Kevin
Troup and Kate Cornish-Bowden were appointed to the Board with
effect from 19 May 2023 and 2 January 2024 respectively. Details
regarding the search company are provided on page 47. As a further
part of this plan, Julia Bond retired from the Board on 31 January
2024 having served nine years.
Jack Perry was appointed in April 2014 and became Chairman with
effect from April 2015. In accordance with corporate governance best
practice, and to allow a handover period, he will retire from the Board
at the conclusion of the Company’s forthcoming AGM to be held on
17 May 2024.
Director attendance – year ended 31 December 2023
Year ended
31 December 2023
(1)
Board meetings
of Directors
Audit and Risk
Committee Meetings
Remuneration and Nomination
Committee Meetings
Management Engagement
Committee Meetings
Held Attended Held Attended Held Attended Held Attended
Jack Perry CBE
5
5
2
2
1
1
1
1
Julia Bond OBE
(2)
5
5
2
2
1
1
1
1
Martin Breuer
5
5
2
2
1
1
1
1
Stuart Paterson
5
5
2
2
1
1
1
1
Kevin Troup
(3)
2
2
1
1
–
–
–
–
Pui Kei Yuen
5
5
2
2
1
1
1
1
(1)
Since 31 December 2023, Kate Cornish-Bowden was appointed to the Board on 2 January 2024.
(2) Julia Bond retired from the Board on 31 January 2024.
(3) Appointed to the Board and committees on 17 May 2023.
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Following the retirement of Jack Perry and Stuart Paterson’s
assumption of the Chairmanship, Kevin Troup will be appointed Chair
of the Company’s Audit and Risk Committee.
Full details of the duties of a Director are provided at the time
of their appointment. An induction process takes place for
new appointees, who meet the Investment Manager, Company
Secretary and other key employees of the Manager and are given
briefings on the workings and processes of the Company.
Directors are encouraged to attend relevant training courses
and seminars and receive regular updates on the industry and
changes to regulation from external advisors and the Company
Secretary.
Independence of Directors
All Directors are considered by the Board to be independent of the
Manager. The Board does not consider that a Director’s tenure or
other board memberships necessarily reduces his or her ability to
act independently and, following performance evaluations, believes
that each Director is independent in character and judgement and
that continuity and experience add to the strength of the Board.
Board committees
The Board has appointed committees with sufficient expertise, in
accordance with the AIC Code in order to increase the efficiency of
the Board’s work. The respective chairs of the committees report
to the Board on the work of the committees. The Company has
established an Audit and Risk Committee, a Remuneration and
Nomination Committee and a Management Engagement Committee.
Audit and Risk Committee
The Company has established an Audit and Risk Committee which is
chaired by Stuart Paterson and is comprised of all the independent
members of the Board. The Audit and Risk Committee meets at least
twice a year. The Board considers that the members of the Audit and
Risk Committee have the requisite skills and experience to fulfil the
responsibilities of the Audit and Risk Committee. The Audit and Risk
Committee is responsible for ensuring that the financial performance
of the Company is properly reported on and monitored and provides
a forum through which the Company’s external auditors may report to
the Board. The Audit and Risk Committee reviews and recommends
to the Board on the annual and half yearly reports and financial
statements, financial announcements, internal control systems and
procedures and accounting policies of the Company.
Following the retirement of Jack Perry and Stuart Paterson’s
assumption of the Company’s Chairmanship, Kevin Troup will be
appointed Chair of the Company’s Audit and Risk Committee with
effect from the conclusion of the forthcoming AGM to be held on
17 May 2024.
The Report of the Audit and Risk Committee is contained on pages
51 and 52.
Management Engagement Committee
The Company has established a Management Engagement
Committee, which is chaired by Jack Perry and consists of all the
independent members of the Board. The Management Engagement
Committee meets at least once a year and its principal duties are to
review the terms and conditions of the appointment of the Manager
and other significant service providers including the Depositary
and Custodian, corporate broker, administrator and legal counsel.
Full consideration is given to the quality and value of the service
received and recommendations are made to the Board on the
appropriateness of all continuing appointments.
Following the retirement of Jack Perry and Stuart Paterson’s
assumption of the Company’s Chairmanship, Stuart will be appointed
Chair of the Company’s Management Engagement Committee with
effect from the conclusion of the forthcoming AGM to be held on
17 May 2024.
The Report of Management Engagement Committee is contained on
page 53.
Remuneration and Nomination Committee
The Company has established a Remuneration and Nomination
Committee, which is chaired by the Senior Independent Director,
and consists of all the independent members of the Board. Until her
retirement on 31 January 2024, the Remuneration and Nomination
Committee was chaired by Julia Bond. Following the retirement
of Julia Bond, Kate Cornish-Bowden has been appointed Senior
Independent Director and therefore Chair of this committee. The
Remuneration and Nomination Committee meets at least once a
year.
The Report of the Remuneration and Nomination Committee on page
47 includes details of its duties.
Conflicts of interest
A company director has a statutory obligation to avoid a situation
in which he or she has, or potentially could have, a direct or
indirect interest that conflicts with the interests of the Company (a
“situational conflict”). The Board therefore has procedures in place
for the authorisation and review of situational conflicts relating to the
Company’s Directors.
46 | European Assets Trust PLC
Other than the formal authorisation of the Directors’ other
directorships and appointments, no authorisations have been
sought.
Aside from situational conflicts, the Directors must also comply
with the statutory rules requiring company directors to declare any
interest in an actual or proposed transaction or arrangement with the
Company. In the year under review there have been no instances of a
Director being required to be excluded from a discussion or abstain
from voting because of a conflict of interest.
Relations with Shareholders
The Company welcomes the views of Shareholders and places
importance on communication with its members. The Managers hold
meetings with the Company’s largest Shareholders and report back
to the Board on these meetings. Each year, the Company will hold
an Annual General Meeting to be followed by a presentation by the
investment manager in London.
In accordance with the UK Code, in the event that when votes of 20
per cent or more have been cast against a resolution at a General
Meeting the Company will announce the actions it intends to take to
consult Shareholders to understand the reasons behind the result.
A further update will be published within six months. No such votes
were received during 2023.
Shareholders wishing to communicate with the Chairman or other
members of the Board may do so by writing to European Assets Trust
PLC, 6th Floor, Quartermile 4, 7a Nightingale Way, Edinburgh EH3
9EG.
By order of the Board
Columbia Threadneedle Investment Business Limited
Secretary
19 March 2024
Report and Accounts 2023 | 47
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Governance Report
As part of an orderly succession plan and following thorough selection
processes which included the services of the search company,
Cornforth Consulting, which has no connection to the Company or
an individual director, Kevin Troup and Kate Cornish-Bowden were
appointed to the Board with effect from 19 May 2023 and 2 January
2024 respectively.
To allow for an orderly handover period, the complement of directors
was temporarily increased to seven. Following the AGM on 17 May, the
number of directors will revert to its customary complement of five.
As a further part of this plan, Julia Bond retired from the Board on
31 January 2024 having served nine years.
Jack Perry was appointed in April 2014 and became Chairman with
effect from April 2015. In accordance with corporate governance
best practice, and to allow a handover period, it has been announced
previously that he will retire from the Board at the conclusion of the
Company’s forthcoming AGM to be held on 17 May 2024. Upon his
retirement Stuart Paterson will become Chairman.
Following the retirement of Jack Perry and Stuart Paterson’s
assumption of the Company’s Chairmanship, Kevin Troup will be
appointed Chair of the Company’s Audit and Risk Committee with
effect from the conclusion of the forthcoming AGM to be held on
17 May 2024.
Diversity
The Board’s diversity policy, objective and progress in achieving it
are set out on page 23.
Committee evaluation
The activities of the committee were considered as part of the Board
appraisal process completed in accordance with standard governance
arrangements as summarised on page 43. The conclusion from the
process was that the committee was operating effectively, with the
right balance of membership, experience and skills.
Kate Cornish-Bowden
Remuneration and Nomination Committee Chairman
19 March 2024
Role of the Committee
The Committee met once during the year. The duties of the
Remuneration and Nomination Committee are:
• To periodically review the level of Directors’ fees and recommend
any changes to the Board;
• The annual Board evaluation process;
• To be responsible for reviewing and making recommendations
to the Board regarding nominating candidates for the approval
by the General Meeting of Shareholders to fill vacancies on the
Board of Directors;
• To consider and review the composition and balance of the
Board from time to time and, where appropriate, to make
recommendations to the Board;
• To review the re-appointment of Directors, as they fall due
for re-election, under the terms of the Articles, and to make
recommendations to the Board as considered appropriate;
• To review actual or possible conflicts of interest in respect of
each Director and any authorised conflicts; and
• To consider other relevant topics, as defined by the Board.
Composition of the Committee
All the Directors are members of the Committee the terms of
reference of which can be found on the website at
www.europeanassets.co.uk. The Committee is chaired by the Senior
Independent Director. Following the retirement of Julia Bond, Kate
Cornish-Bowden has been appointed Senior Independent Director and
therefore Chair of the Committee. Until her retirement on 31 January
2024, the Remuneration and Nomination Committee was chaired by
Julia Bond.
Succession planning
Appointments of all new Directors are made on a formal basis,
normally using professional search consultants, with the Remuneration
and Nomination Committee agreeing the selection criteria and the
method of recruitment, selection and appointment.
The Board has an agreed succession plan for the orderly retirement
of existing Directors and to provide for the regular refreshment of
skills and talent. Regular retirements of Directors will take place in the
following years to ensure the Board enjoys the right balance of both
continuity and the regular refreshment of talent as well as compliance
with the requirements of the AIC Code.
Report of the Remuneration and
Nomination Committee
48 | European Assets Trust PLC
There have been no changes to the policy since this last approval
and it is intended that it will continue until the AGM in 2026.
The policy will next be put to Shareholders for approval at the
Company’s 2026 AGM. The Board has not received any views from
Shareholders in respect of the levels of Director’s remuneration.
The Company’s articles of association limit the aggregate fees
payable to the Board to a total of £500,000 per annum. The
Remuneration and Nomination Committee considers the level of
Directors’ fees at least annually. The Committee receives details
of the fees paid to directors of commensurate companies. The
Committee will then recommend to the Board a proposal for its
approval.
The fees are fixed and are payable in cash, quarterly in arrears.
Following the latest review the Board agreed that with effect from
1 April 2024 the annual rates of remuneration will be increased to
£49,000 for the Chairman, £38,750 for the Chairman of the Audit
and Risk Committee, £37,750 for the Senior Independent Director
and £33,500 for a Non-executive Director.
The Board is composed solely of non-executive Directors, none of
whom has a service contract with the Company. Each new Director
Introduction
This Directors’ remuneration report covers the year ended
31 December 2023.
Directors’ Remuneration Policy
The Board’s policy is to set Directors’ remuneration at a level
commensurate with the skills and experience necessary for
the effective stewardship of the Company and the expected
contribution of the Board as a whole in continuing to achieve the
investment objective. The policy aims to be fair and reasonable in
relation to comparable investment trusts and other similar sized
financial companies. Time committed to the Company’s affairs
and the role that individual Directors fulfil in respect of Board and
committee responsibilities are taken into account. The policy also
provides for the Company’s reimbursement of all reasonable travel
and associated expenses incurred by the Directors in attending
Board and committee meetings, including those treated as a
benefit in kind subject to tax and national insurance. The Directors
are not eligible for pension benefits, share options, long-term
incentive schemes or other benefits.
This policy was last approved by Shareholders at the AGM held
in May 2023 with 89.7% voting in favour and 10.3% against. The
policy is subject to approval by the Shareholders every three years.
Directors’ Remuneration Report
Fees for services to the Company for the year ended 31 December (audited)
Fees
(audited)
Taxable Benefits
(1)(2)
(audited)
Total
(audited)
Fees
(5)
(unaudited)
Director
2023
£
2022
£
2023
£
2022
£
2023
£
2022
£
2024
£
Jack Perry CBE 47,563 45,813 4,647 3,724 52,210 49,537 18,300
Stuart Paterson 37,688 36,413 3,174 1,224 40,862 37,637 45,100
Julia Bond OBE 36,688 35,413 69 1,009 36,757 36,422 3,100
Martin Breuer 32,438 31,200 6,312 2,253 38,750 33,453 33,300
Pui Kei Yuen 32,438 31,200 – 918 32,438 32,118 33,300
Kevin Troup
(3)
20,233 n/a 3,818 n/a 24,051 n/a 36,700
Kate Cornish-Bowden
(4)
n/a n/a n/a n/a n/a n/a 36,700
Total 207,048 180,039 18,020 9,128 225,068 189,167 206,500
(1) Comprises amounts reimbursed for expenses incurred in carrying out business for the Company which have been grossed up to include PAYE and NI contributions.
(2) Increased year on year as a result of the continuing return to normal business travel on behalf on the Company post COVID-19.
(3) Appointed 19 May 2023.
(4) Appointed 02 January 2024.
(5) The 2024 fees are based on expected tenures and incorporate the planned retirements of Julia Bond and Jack Perry in January 2024 and May 2024 respectively.
Report and Accounts 2023 | 49
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chairman’s StatementOverview Auditors’ Report
Governance Report
is provided with a letter of appointment. There is no provision for
compensation upon early termination of appointment. In normal
circumstances these letters of appointment are available for
inspection at the Company’s registered office during business
hours and will be available for 15 minutes before and during the
forthcoming AGM.
Each Director’s appointment is subject to election at the first AGM
and continues thereafter subject to re-election at each subsequent
AGM. All the Directors with the exception of Jack Perry will stand for
election or re-election at the AGM to be held on 17May 2024. Jack
Perry will retire from the Board at the conclusion of the forthcoming
AGM.
Annual percentage change
The table below sets out the annual percentage change in fees for
each director who served in the year under review.
Annual percentage change
Director
2023
(audited)
2022
(audited)
2021
(audited)
2020
(audited)
Jack Perry CBE
+3.8 +3.2 +0.9 +4.8
Stuart Paterson
+3.5 +3.2 +6.3 +155.6
(2)
Julia Bond OBE
+3.6 +3.2 +0.9 +3.0
Martin Breuer
+4.0 +3.2 +0.8 +3.4
Pui Kei Yuen
+4.0 +22.3
(1)
n/a n/a
Kevin Troup
(3)
n/a n/a n/a n/a
(1) Appointed as a Director with effect from 26 February 2021. Increase reflects
the first full year with the Company.
(2) Appointed as a non-executive Director on 22 July 2019, became Audit
Committee Chair with effect from 14 May 2020. Increase reflects the first full
year with the Company and the change in positions held.
(3) Appointed 19 May 2023.
Policy implementation
The Directors’ Remuneration Report is subject to an annual
advisory vote and therefore an ordinary resolution for its approval
will be put to Shareholders at the forthcoming AGM. The results of
this vote is made available on the Company’s website as soon as
practicably possible afterwards.
At the AGM held on 18 May 2023 Shareholders approved the
Directors’ Remuneration Report in respect of the year ended
31 December 2022. 91.6% of votes were cast in favour of the
resolution and 8.4% against.
Directors’ remuneration for the year
The Directors who served during the year received remuneration at
the following annualised rates for services as non-executive Directors.
Directors can expect to receive fees at the rates indicated for 2024 as
well as reimbursement for expenses necessarily incurred.
The fees for specific responsibilities are set out below.
Annual fee rates for Board Responsibilities
With effect
from 1 April
2024
£
With effect
from 1 April
2023
£
Chairman 49,000 48,000
Chairman of the Audit and Risk Committee 38,750 38,000
Senior Independent Director 37,750 37,000
Non-executive Director 33,500 32,750
Directors’ share interests (audited)
31 December 2023 31 December 2022
Number of shares held Number of shares held
Jack Perry CBE 86,903 86,903
Julia Bond OBE 99,609 99,609
Martin Breuer 121,000 114,300
Stuart Paterson 120,000 95,000
Kevin Troup
(1)
20,000 N/A
Pui Kei Yuen 17,700 7,700
(1) Appointed to the Board on 19 May 2023.
Since the year end Kate Cornish-Bowden was appointed to the
Board on 2 January 2024. As at 18 March 2024, being the last
practicable date before publication of this report, Kate Cornish-
Bowden held 50,000 shares in the Company. Julia Bond retired
from the Board on 31 January 2024. There have been no other
changes to Director shareholdings since the year end. No Director
held any interests in the issued share capital of the Company other
than as stated above. Directors are encouraged but not required to
hold shares in the Company.
Relative importance of spending on pay
The table below shows the actual expenditure in relation to Board
remuneration, other expenses, Shareholder dividends and
31 December Net Asset Value:
Relative importance of spending on pay
2023
£’000s
2022
£’000s
%
Change
Aggregate Board remuneration (excluding
taxable benefits)
207 180 +15.0%
Management and other expenses
3,572 3,863
-7.5%
Dividends paid to Shareholders
20,884 31,688 -34.1%
Net Asset Value
353,996 347,627 +1.8%
50 | European Assets Trust PLC
Share Price Total Return Performance
(In sterling terms, rebased to 100 at 31 December 2013)
Company performance
The Board is responsible for the Company’s investment strategy
and performance. The management of the investment portfolio is
delegated to the Manager. An explanation of the performance of
the Company is given in the Chairman’s Statement and Investment
Manager’s Review. A comparison of the Company’s performance over
the required ten-year period is set out in the following graph. This
shows the total return (assuming all dividends are re-invested) to
ordinary Shareholders against the Benchmark.
2013 2014 2015 2016 2017 20222018 2019 2020 2021
Benchmark Index Total Return (Sterling)
(2)
European Assets Trust
(1)
Source: Reuters Eikon
50
100
150
200
250
300
2023
On behalf of the Board
Jack Perry
Chairman
19 March 2024
(1) European Assets Trust NV prior to migration on 16 March 2019.
(2) At 1 April 2021 the Benchmark changed from EMIX Smaller European
Companies (ex UK) Index (gross) to EMIX Smaller European Companies (ex UK)
Index (net). With effect from 1 June 2023 the Benchmark changed from EMIX
Smaller European Companies (ex UK) Index (net) to MSCI Europe excluding
United Kingdom Small Mid Cap (Net Return) Index. A time apportioned
composite of each indices has therefore been calculated and disclosed.
Report and Accounts 2023 | 51
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chairman’s StatementOverview Auditors’ Report
Governance Report
The Audit and Risk Committee met on two occasions during
the year and the attendance of each of the members is set out
on page 44. In the course of its duties, the committee had direct
access to the auditor and senior members of the Manager’s fund
management and investment trust teams. Amongst other things,
the Audit and Risk Committee considered and reviewed the following
matters and reported thereon to the Board:
• The annual results announcements, and annual and half-yearly
reports and accounts;
• The accounting policies of the Company;
• The principal risks faced by the Company and the effectiveness
of the Company’s internal control environment;
• The effectiveness of the audit process and related non-audit
services and the independence and objectivity of the auditor, their
re-appointment, remuneration and terms of engagement;
• The policy on the engagement of the auditors to supply non-audit
services;
• The implications of proposed new accounting standards and
regulatory changes;
• The receipt of an internal controls report from the Manager; and
• Whether the Annual Report and Accounts is fair, balanced and
understandable.
Composition of the Committee
All of the Directors are members of the Committee. The Committee is
chaired by Stuart Paterson.
Following the retirement of Jack Perry and Stuart Paterson’s
assumption of the Company’s Chairmanship, Kevin Troup, who is
a qualified Chartered Accountant will be appointed Chair of this
Committee with effect from the conclusion of the forthcoming AGM to
be held on 17 May 2024.
Duties of the Committee
The duties of the committee include reviewing the annual and
interim accounts, the system of internal controls, risk management,
and the terms of appointment and remuneration of the auditors,
PricewaterhouseCoopers LLP (‘PwC’), including its independence and
objectivity. It is also the forum through which the auditors’ report to
the Board of Directors. The terms of reference of the Audit and Risk
Committee can be found on the website at www.europeanassets.co.uk.
The committee meets at least twice-yearly including at least one
meeting with the auditors.
Report of the Audit and Risk Committee
Significant issues considered by the Audit and Risk Committee for the year ended 31 December 2023
Matter Action
Existence and valuation of investments
The Company’s portfolio is invested
in listed securities. Errors in valuation
could have a material impact on the
Company’s net asset value per share.
The Board reviews the full portfolio valuation at each Board meeting and receives quarterly reports
from the AIF Manager and the Depositary.
The Board receives at each Board meeting analysis from the investment managers reviewing the
liquidity of the portfolio.
Appropriateness of viability assessment
The Company discloses a viability
assessment and statement in
accordance with the requirements of the
UK Corporate Governance Code.
Mindful of the guidance issued by the Financial Reporting Council, when assessing viability, the
Company’s cash position, availability of the loan facility and the operational resilience of its service
providers were considered. Further analysis of the five-year viability assessment and the application
of the going concern principle are detailed on page 38 and note 23 to the financial statements.
Effectiveness of internal control environment
On an annual basis the Audit and Risk
Committee considers the Company’s
internal control environment.
The Audit and Risk Committee meeting considered the control reports and written assurances
received from third party service providers with regard to the operation of internal controls during the
year ended 31 December 2023.
52 | European Assets Trust PLC
Company that include the key functions and activities carried out by
the Manager and other service providers, the risks associated with
these functions and activities and the controls employed to minimise
these risks. These functions and activities include the financial
reporting process. A residual risk rating is then applied. The matrix is
regularly updated and reviewed by the committee and the Board.
A formal annual review of these procedures is carried out by
the Audit and Risk Committee and includes consideration of internal
control reports issued by the Manager and other service providers.
Such review procedures have been in place throughout the financial
year and up to the date of approval of the annual report, and
the Board is satisfied with their effectiveness. These procedures
are designed to manage rather than eliminate risk and, by their
nature, can only provide reasonable, but not absolute, assurance
against material misstatement or loss. At each Board meeting the
Board monitors the investment performance of the Company in
comparison to its stated objective, its peer group and its Benchmark
index. The Board also reviews the Company’s activities since the
previous Board meeting to ensure that the Manager adheres to the
agreed investment policy and approved investment guidelines. The
Depositary reports to the Board and carries out daily independent
checks on cost and investment transactions, annually verifies asset
ownership and has strict liability for the loss of the Company’s
financial assets in respect of which it has safe keeping duties.
The Board has reviewed the need for an internal audit function.
It has decided that the systems and procedures employed by the
Manager, including its own internal audit function, provide sufficient
assurance that a sound system of internal control, which safeguards
Shareholders’ investments and the Company’s assets, is maintained.
An internal audit function specific to the Company is therefore
considered unnecessary but this decision will be kept under review.
Stuart Paterson
Chairman of the Audit and Risk Committee
19 March 2024
As part of its review of the scope and results of the audit, during
the period the Audit and Risk Committee considered and approved
the auditor’s plan for the audit of the financial statements for the
year ended 31 December 2023. At the conclusion of the audit the
auditor did not highlight any issues to the Audit and Risk Committee
which would cause it to qualify its audit report nor did it highlight any
fundamental internal control weaknesses. The auditors issued an
unqualified audit report which is included on pages 55 to 60.
Following the implementation of the Statutory Audit Amending
Disclosure, with effect from 1 January 2017, the auditors are unable
to provide tax compliance and advisory services to the Company.
As part of the review of auditor independence and effectiveness,
PwC has confirmed that it is independent of the Company and has
complied with relevant auditing standards. In evaluating the auditors,
the Audit and Risk Committee has taken into consideration the
standing, skills and experience of the firm and the audit team. In
addition, the Audit and Risk Committee reviewed the FRC’s Audit
and Quality review for PwC and discussed the findings with the
Company’s audit partner to determine if any of the indicators in the
report had specific relevance to this year’s audit of the Company.
The Audit and Risk Committee discussed the audit plan and PwC’s
final report and concluded that an effective external audit had
been conducted. PwC Netherlands was appointed auditors to the
Company’s predecessor, European Assets Trust NV, on 24 April 2014.
PricewaterhouseCoopers LLP UK was appointed auditors to the
Company on 17 May 2019. The Company is not required to tender
for auditors at least until after the audit in respect of the year ended
31 December 2029. It is the current intention of the Audit and Risk
Committee not to tender for the audit until then. The Audit and Risk
Committee, from direct observation and enquiry of the Manager,
remains satisfied that the auditors continue to provide effective
independent challenge in carrying out its responsibilities. Following
professional guidelines, the audit partner rotates after five years.
The current audit partner, Jennifer March, is in the third year of her
appointment. On the basis of this assessment, the Audit and Risk
Committee has recommended the continuing appointment of the
auditor to the Board. The auditors’ performance will continue to be
reviewed annually taking into account all relevant guidance and best
practice.
Internal Control
The Board is responsible for the Company’s system of internal
control and for reviewing its effectiveness. The Board has therefore
established an ongoing process designed to meet the particular
needs of the Company in managing the risks to which it is exposed.
The process is based principally on the Manager’s existing risk-based
approach to internal control whereby a matrix is created for the
Report and Accounts 2023 | 53
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chairman’s StatementOverview Auditors’ Report
Governance Report
Report of the Management
Engagement Committee
Duties of the Committee
The duties of the Management Engagement Committee are to
review the terms and conditions of the appointment and the
appropriateness of the continuing appointment of:
• The Manager,
• Other significant service providers including the Depositary
and Custodian, corporate broker, administrator and legal
counsel.
The Management Engagement Committee also reviews the fees
paid during the year to all of the Company’s service providers.
Composition of the Committee
The Management Engagement Committee is appointed by the
Board from amongst the Board Directors of the Company. A quorum
is two members.
The Chairman of the Management Engagement Committee is the
Chairman of the Board, Jack Perry.
All members of the Board have been appointed to the Management
Engagement Committee.
The terms of reference of the Management Engagement Committee
are available on the Company’s website www.europeanassets.co.uk.
The Manager’s Evaluation Process
The Committee meets annually. Its most recent meeting was March
2024 which included a formal evaluation of the performance and
remuneration of the Manager. At each Board meeting throughout
the year the performance of the Company is reviewed. The Board
receives detailed papers, reports and reviews from the Manager
on performance at each regular Board meeting. These papers
include details of portfolio attribution, asset and sector allocation,
gearing and risk. These enable the Board to assess the success or
failure of the Manager’s performance against the Key Performance
Indicators determined by the Board.
The Manager’s Re-appointment
During March 2024, the Management Engagement Committee
of the Board reviewed the appropriateness of the Manager’s
continuing appointment. In carrying out the review, consideration
was given to past investment performance and the ability of the
Manager to produce satisfactory investment performance in the
future. Consideration was also given to the standard of other
services provided which include company secretarial, accounting,
administration and marketing. The length of notice of the
investment management contract and fees payable to the Manager
were also reviewed.
Following this review, it is the Board’s opinion that the continuing
appointment of the Manager on the terms agreed is in the interests
of Shareholders as a whole.
The Manager’s Fee
An important responsibility of the Committee is the review of the
Manager’s fee. Details of the investment management fee are
included in note 5 to the Accounts. At each annual Committee
meeting the Directors compare the basis of the remuneration of
the Manager against that of the peer group.
Service providers
At each meeting of the Committee the Directors consider the
remuneration, quality of service provided and value for money
received from each of the key service providers of the Company.
Reporting Procedures
The Secretary circulates the minutes of meetings of the
Management Engagement Committee to all members of the Board
at the next Board meeting following a Management Engagement
Committee Meeting.
A member of the Management Engagement Committee attends
the Annual General Meeting and is available to answer questions
on the Management Engagement Committee’s activities and
responsibilities.
Jack Perry
Chairman
19 March 2024
54 | European Assets Trust PLC
Directors’ confirmations
Each of the Directors, whose names and functions are listed on
pages 34 and 35 confirm that, to the best of their knowledge:
• the Company financial statements, which have been prepared
in accordance with UK-adopted International Accounting
Standards, give a true and fair view of the assets, liabilities,
financial position and profit of the Company;
• the Strategic Report includes 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; and
• the annual report and financial statements, taken as a
whole, are fair, balanced and understandable and provide
the information necessary for Shareholders to assess the
Company’s position and performance, business model and
strategy.
In the case of each Director in office at the date the Directors’
report is approved:
• so far as the Director is aware, there is no relevant audit
information of which the Company’s Auditors are unaware; and
• they have taken all the steps that they ought to have taken as
a director in order to make themselves aware of any relevant
audit information and to establish that the Company’s Auditors
are aware of that information.
On behalf of the Board
Jack Perry
Chairman
19 March 2024
The Directors are responsible for preparing the Report and
Accounts and the financial statements in accordance with
applicable law and regulation.
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 UK-
adopted International Accounting Standards.
Under company law, 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 the financial
statements, the Directors are required to:
• select suitable accounting policies and then apply them
consistently;
• state whether applicable UK-adopted International
Accounting Standards have been followed, subject to any
material departures disclosed and explained in the financial
statements;
• make judgements and accounting estimates that are
reasonable and prudent; 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 safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The Directors are also 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 and the Directors’ Remuneration Report
comply with the Companies Act 2006.
The Directors are responsible for the maintenance and integrity
of the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Statement of Directors’ Responsibilities
in Respect of the Financial Statements
Report and Accounts 2023 | 55
Independent Auditors’ Report
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chairman’s StatementOverview Auditors’ Report
Independent auditors’ report to the
members of European Assets Trust PLC
Our audit approach
Overview
Audit scope
• The Company is a standalone Investment Trust Company and
engages Columbia Threadneedle Investment Business Limited
(the “Investment Manager”) to manage its assets.
• We conducted our audit of the financial statements using
information from State Street Bank & Trust Company (the
“Administrator”) to whom the Investment Manager has, with
the consent of the Directors, delegated the provision of certain
administrative functions.
• We tailored the scope of our audit taking into account the
types of investments within the Company, the involvement of
the third parties referred to above, the accounting processes
and controls, and the industry in which the Company operates.
• We obtained an understanding of the control environment in
place at both the Investment Manager and the Administrator
and adopted a fully substantive testing approach using reports
obtained from the Administrator.
Key audit matters
• Valuation and existence of investments
• Accuracy, occurrence and completeness of income from
investments.
Materiality
• Overall materiality: £3,539,960 (2022: £3,476,270) based on
1% of Net Asset Value (NAV).
• Performance materiality: £2,654,970 (2022: £2,607,203).
The scope of our audit
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements.
Key audit matters
Key audit matters are those matters that, in the auditors’
professional judgement, were of most significance in the audit of
the financial statements of the current period and include the most
significant assessed risks of material misstatement (whether or not
due to fraud) identified by the auditors, including those which had
Opinion
In our opinion, European Assets Trust PLC’s financial statements:
• give a true and fair view of the state of the Company’s affairs
as at 31 December 2023 and of its profit and cash flows for
the year then ended;
• have been properly prepared in accordance with UK-adopted
international accounting standards; and
• have been prepared in accordance with the requirements of the
Companies Act 2006.
We have audited the financial statements, included within the
Report and Accounts 2023 (the “Annual Report”), which comprise:
the Statement of Financial Position as at 31 December 2023; the
Statement of Comprehensive Income, the Statement of Changes
in Equity and the Statement of Cash Flows for the year then
ended; and the notes to the financial statements, which include a
description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit and Risk
Committee.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities under ISAs (UK) are further described in the
Auditors’ responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our
opinion.
Independence
We remained independent of the Company in accordance with the
ethical requirements that are relevant to our audit of the financial
statements in the UK, which includes the FRC’s Ethical Standard, as
applicable to listed public interest entities, and we have fulfilled our
other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit
services prohibited by the FRC’s Ethical Standard were not provided.
We have provided no non-audit services to the Company in the
period under audit.
Report on the audit of the financial statements
56 | European Assets Trust PLC
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the structure of the
Company, the accounting processes and controls, and the industry
in which it operates.
The Company’s accounting is delegated to the Administrator
who maintains the Company’s accounting records and who has
implemented controls over those accounting records. We obtained
our audit evidence from substantive tests. However, as part of
our risk assessment, we understood and assessed the internal
controls in place at both the Manager and the Administrator to
the extent relevant to our audit. This assessment of the operating
and accounting structure in place at both organisations involved
obtaining and analysing the relevant controls reports issued by the
independent service auditor of the Manager and the Administrator
in accordance with generally accepted assurance standards for
the greatest effect on: the overall audit strategy; the allocation of
resources in the audit; and directing the efforts of the engagement
team. These matters, and any comments we make on the results
of our procedures thereon, were addressed in the context of our
audit of the financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these
matters.
This is not a complete list of all risks identified by our audit.
The key audit matters below are consistent with last year.
Key audit matter How the scope of our audit addressed the key audit matter
Valuation and existence of investments
Refer to the Report of the Audit and Risk Committee (page 51),
Significant accounting policies (page 65) and Notes to the Financial
Statements (page 70).
The investment portfolio at the year-end comprised listed equity
investments valued at £375.1m.
We focused on the valuation and existence of investments because
investments represent the principal element of the net asset value as
disclosed on the Statement of Financial Position in the Annual Report.
Our audit work on the valuation and existence of investments included the following:
• We tested the valuation of 100% of the listed equity investments by agreeing the
prices used in the valuation to independent third-party sources; and,
• We tested the existence of the investment portfolio by agreeing investment
holdings to an independent custodian confirmation.
Based on the results of the audit procedures performed we are satisfied that the equity
investments exist and that the valuation of the equity investments is not materially
misstated.
Accuracy, occurrence and completeness of income from
investments.
Refer to the Report of the Audit and Risk Committee (page 51),
Accounting policies (page 65) and Notes to the Financial Statements
(page 70).
ISAs (UK) presume there is a risk of fraud in income recognition because
of the pressure management may feel to achieve a certain objective.
In this instance, we consider that ‘income’ refers to all the Company’s
income streams, both revenue and capital (including gains and losses on
investments). We focused on the accuracy, completeness and occurrence
of dividend income recognition as incomplete or inaccurate income could
have a material impact on the Company’s net asset value and dividend
cover.
We also focused on the accounting policy for income recognition and its
presentation in the Income Statement as set out in the requirements of
The Association of Investment Companies Statement of Recommended
Practice (the “AIC SORP”) as incorrect application could indicate a
misstatement in income recognition.
In addition, the Directors are required to exercise judgement in
determining whether income receivable in the form of special dividends
should be classified as ‘revenue’ or ‘capital’ in the Statement of
Comprehensive Income.
We responded to this risk by performing the following audit procedures:
• We obtained an understanding of the processes and controls around income
recognition and classification of special dividends by reviewing the internal
controls reports of the Administrator; and,
• We assessed the appropriateness of the classification of special dividends as
revenue or capital by the Directors with reference to publicly available information.
For all dividends recorded by the Company, we performed our audit procedures through
the use of our proprietary testing tool Halo:
• We tested the accuracy of dividend income by agreeing the dividend rates from
investments to independent market data;
• We tested occurrence by testing that all dividends recorded in the year had been
declared in the market by investment holdings;
• We also tested the occurrence of realised gains by agreeing a sample of gains
recorded to supporting evidence such as bank statements and broker statements;
and
• To test for completeness, we investigated that the appropriate dividends had been
received in the year by reference to independent data of dividends declared for all
investment holdings held within the year.
We have no matters to report as a result of this testing.
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Chairman’s StatementOverview Auditors’ Report
such work. Following this assessment, we applied professional
judgement to determine the extent of testing required over each
balance in the financial statements.
The impact of climate risk on our audit
In conducting our audit, we made enquiries of the Directors
and the Investment Manager to understand the extent of the
potential impact of climate change risk on the Company’s financial
statements. The Directors and Investment Manager concluded that
the impact on the measurement and disclosures within the financial
statements is not material because the majority of the Company’s
investment portfolio is made up of level 1 quoted securities which
are valued at fair value based on market prices. We found this to
be consistent with our understanding of the Company’s investment
activities. We also considered the consistency of the climate
change disclosures included in the Strategic Report and Investment
Manager Report with the financial statements and our knowledge
from our audit.
Materiality
The scope of our audit was influenced by our application of
materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to
determine the scope of our audit and the nature, timing and extent
of our audit procedures on the individual financial statement
line items and disclosures and in evaluating the effect of
misstatements, both individually and in aggregate on the financial
statements as a whole.
Based on our professional judgement, we determined materiality for
the financial statements as a whole as follows:
Overall Company materiality £3,539,960 (2022: £3,476,270).
How we determined it 1% of Net Asset Value (NAV)
Rationale for benchmark applied We have applied this benchmark, which is generally accepted auditing practice for investment trust audits, in
the absence of indicators that an alternative benchmark would be appropriate and because we believe this
provides an appropriate and consistent year-on-year basis for our audit.
We use performance materiality to reduce to an appropriately
low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds overall materiality. Specifically,
we use performance materiality in determining the scope of our
audit and the nature and extent of our testing of account balances,
classes of transactions and disclosures, for example in determining
sample sizes. Our performance materiality was 75% (2021: 75%) of
overall materiality, amounting to £2,654,970 (2022: £2,607,203)
for the Company financial statements.
In determining the performance materiality, we considered a
number of factors - the history of misstatements, risk assessment
and aggregation risk and the effectiveness of controls - and
concluded that an amount at the upper end of our normal range
was appropriate.
We agreed with the Audit and Risk Committee that we would report
to them misstatements identified during our audit above £176,998
(2022: £173,814) as well as misstatements below that amount
that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the Directors’ assessment of the Company’s
ability to continue to adopt the going concern basis of accounting
included:
• evaluating the Directors’ updated risk assessment and
considering whether it addressed relevant threats;
• evaluating the Directors’ assessment of potential operational
impacts, considering their consistency with other available
information and our understanding of the business and
assessed the potential impact on the financial statements;
• reviewing the Directors’ assessment of the Company’s
financial position in the context of its ability to meet future
expected operating expenses, their assessment of liquidity
as well as their review of the operational resilience of the
Company and oversight of key third-party service providers;
and,
• assessing the implication of significant reductions in net asset
value as a result of a severe but plausible downside in the
market’s performance on the ongoing ability of the Company to
operate.
58 | European Assets Trust PLC
Based on the work we have performed, we have not identified
any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the
Company’s ability to continue as a going concern for a period of
at least twelve months from when the financial statements are
authorised for issue.
In auditing the financial statements, we have concluded that the
Directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate.
However, because not all future events or conditions can be
predicted, this conclusion is not a guarantee as to the Company’s
ability to continue as a going concern.
In relation to the Directors’ reporting on how they have applied the
UK Corporate Governance Code, we have nothing material to add
or draw attention to in relation to the Directors’ statement in the
financial statements about whether the Directors considered it
appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with
respect to going concern are described in the relevant sections of
this report.
Reporting on other information
The other information comprises all of the information in the Annual
Report other than the financial statements and our auditors’ report
thereon. The Directors are responsible for the other information.
Our opinion on the financial statements does not cover the other
information and, accordingly, we do not express an audit opinion or,
except to the extent otherwise explicitly stated in this report, any
form of assurance thereon.
In connection with our audit of the financial statements, our
responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in
the audit, or otherwise appears to be materially misstated.
If we identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude
whether there is a material misstatement of the financial
statements or a material misstatement of the other information. If,
based on the work we have performed, we conclude that there is
a material misstatement of this other information, we are required
to report that fact. We have nothing to report based on these
responsibilities.
With respect to the Strategic Report and Directors’ Report, we also
considered whether the disclosures required by the UK Companies
Act 2006 have been included.
Based on our work undertaken in the course of the audit, the
Companies Act 2006 requires us also to report certain opinions
and matters as described below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the
audit, the information given in the Strategic Report and Directors’
Report for the year ended 31 December 2023 is consistent with
the financial statements and has been prepared in accordance with
applicable legal requirements.
In light of the knowledge and understanding of the Company and its
environment obtained in the course of the audit, we did not identify
any material misstatements in the Strategic Report and Directors’
Report.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to
be audited has been properly prepared in accordance with the
Companies Act 2006.
Corporate governance statement
The Listing Rules require us to review the Directors’ statements
in relation to going concern, longer-term viability and that part of
the corporate governance statement relating to the Company’s
compliance with the provisions of the UK Corporate Governance
Code specified for our review. Our additional responsibilities
with respect to the corporate governance statement as other
information are described in the Reporting on other information
section of this report.
Based on the work undertaken as part of our audit, we have
concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial
statements and our knowledge obtained during the audit, and we
have nothing material to add or draw attention to in relation to:
• The Directors’ confirmation that they have carried out a robust
assessment of the emerging and principal risks;
• The disclosures in the Annual Report that describe those
principal risks, what procedures are in place to identify
emerging risks and an explanation of how these are being
managed or mitigated;
• The Directors’ statement in the financial statements about
whether they considered it appropriate to adopt the going
concern basis of accounting in preparing them, and their
identification of any material uncertainties to the Company’s
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Chairman’s StatementOverview Auditors’ Report
statements in accordance with the applicable framework and for
being satisfied that they give a true and fair view. The Directors
are also responsible for such internal control as they determine is
necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible
for assessing the Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the Directors
either intend to liquidate the Company or to cease operations, or
have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether
the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an
auditors’ report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial
statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements
in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud,
is detailed below.
Based on our understanding of the Company and industry, we
identified that the principal risks of non-compliance with laws
and regulations related to breaches of section 1158 of the
Corporate Tax Act 2010, and we considered the extent to which
non-compliance might have a material effect on the financial
statements. We also considered those laws and regulations
that have a direct impact on the financial statements such
as the Companies Act 2006. We evaluated management’s
incentives and opportunities for fraudulent manipulation of the
financial statements (including the risk of override of controls),
and determined that the principal risks were related to posting
inappropriate journal entries to increase revenue (investment
income and capital gains) or to increase net asset value, and
management bias in accounting estimates. Audit procedures
performed by the engagement team included:
ability to continue to do so over a period of at least twelve
months from the date of approval of the financial statements;
• The Directors’ explanation as to their assessment of the
Company’s prospects, the period this assessment covers and
why the period is appropriate; and
• The Directors’ statement as to whether 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 its assessment, including any related
disclosures drawing attention to any necessary qualifications
or assumptions.
Our review of the Directors’ statement regarding the longer-term
viability of the Company was substantially less in scope than
an audit and only consisted of making inquiries and considering
the Directors’ process supporting their statement; checking that
the statement is in alignment with the relevant provisions of the
UK Corporate Governance Code; and considering whether the
statement is consistent with the financial statements and our
knowledge and understanding of the Company and its environment
obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit,
we have concluded that each of the following elements of the
corporate governance statement is materially consistent with the
financial statements and our knowledge obtained during the audit:
• The Directors’ statement that they consider the Annual Report,
taken as a whole, is fair, balanced and understandable,
and provides the information necessary for the members to
assess the Company’s position, performance, business model
and strategy;
• The section of the Annual Report that describes the review
of effectiveness of risk management and internal control
systems; and
• The section of the Annual Report describing the work of the
Audit and Risk Committee.
We have nothing to report in respect of our responsibility to
report when the Directors’ statement relating to the Company’s
compliance with the Code does not properly disclose a departure
from a relevant provision of the Code specified under the Listing
Rules for review by the auditors.
Responsibilities for the financial
statements and the audit
Responsibilities of the Directors for the financial statements
As explained more fully in the Statement of Directors’
Responsibilities in Respect of the Financial Statements, the
Directors are responsible for the preparation of the financial
60 | European Assets Trust PLC
• holding discussions with the Manager and the Audit and Risk
Committee, including consideration of known or suspected
instances of non-compliance with laws and regulation and
fraud;
• understanding the controls implemented by the Manager and
the Administrator designed to prevent and detect irregularities;
• reviewing relevant meeting minutes, including those of the
Audit and Risk Committee;
• assessing the Company’s compliance with the requirements
of section 1158 of the Corporation Tax Act 2010, including
recalculation of numerical aspects of the eligibility conditions;
• identifying and testing journal entries, in particular year-
end journal entries posted by the Administrator during the
preparation of the financial statements; and,
• designing audit procedures to incorporate unpredictability
around the nature, timing or extent of our testing.
There are inherent limitations in the audit procedures described
above. We are less likely to become aware of instances of non-
compliance with laws and regulations that are not closely related
to events and transactions reflected in the financial statements.
Also, the risk of not detecting a material misstatement due to fraud
is higher than the risk of not detecting one resulting from error, as
fraud may involve deliberate concealment by, for example, forgery or
intentional misrepresentations, or through collusion.
Our audit testing might include testing complete populations of
certain transactions and balances, possibly using data auditing
techniques. However, it typically involves selecting a limited number
of items for testing, rather than testing complete populations.
We will often seek to target particular items for testing based on
their size or risk characteristics. In other cases, we will use audit
sampling to enable us to draw a conclusion about the population
from which the sample is selected.
A further description of our responsibilities for the audit of the
financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and
only for the Company’s members as a body in accordance with
Chapter 3 of Part 16 of the Companies Act 2006 and for no other
purpose. We do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if,
in our opinion:
• we have not obtained all the information and explanations we
require for our audit; or
• adequate accounting records have not been kept by the
Company, or returns adequate for our audit have not been
received from branches not visited by us; or
• certain disclosures of Directors’ remuneration specified by law
are not made; or
• the financial statements and the part of the Directors’
Remuneration Report to be audited are not in agreement with
the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the Audit and Risk Committee,
we were appointed by the members on 17 May 2019 to audit the
financial statements for the year ended 31 December 2019 and
subsequent financial periods. The period of total uninterrupted
engagement is five years, covering the years ended 31 December
2019 to 31 December 2023.
Jennifer March (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
19 March 2024
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Other Information
Chairman’s StatementOverview Auditors’ Report
Financial Report
Statement of Comprehensive Income
for the year ended 31 December
Revenue
£’000s
Capital
£’000s
2023
Total
£’000s
Revenue
£’000s
Capital
£’000s
2022
Total
£’000s
12
Gains/(losses) on investments held at fair value
through profit or loss
– 32,185 32,185 – (177,223) (177,223)
Foreign exchange gains/(losses) 2 (17) (15) (25) (86) (111)
3
Income 7,874 – 7,874 8,527 – 8,527
5 5
Management fees (550) (2,200) (2,750) (610) (2,438) (3,048)
6 6
Other expenses (969) (60) (1,029) (958) (37) (995)
Profit/(loss) before finance costs and taxation 6,357 29,908 36,265 6,934 (179,784) (172,850)
8 8
Finance costs (141) (564) (705) (51) (206) (257)
Profit/(loss) before taxation 6,216 29,344 35,560 6,883 (179,990) (173,107)
9 9
Taxation (672) – (672) (944) – (944)
Profit/(loss) for the year and total
comprehensive income/(expense)
5,544 29,344 34,888 5,939 (179,990) (174,051)
11 11
Earnings per share (basic and diluted) – pence 1.54 8.15 9.69 1.65 (49.99) (48.34)
The total column of this statement represents the Company’s Statement of Comprehensive Income, prepared in accordance with UK-adopted International Accounting Standards. The
supplementary revenue return and capital return columns are both prepared under guidance published by the Association of Investment Companies.
All revenue and capital items in the above statement derive from continuing operations.
Revenue notes
Capital notes
The accompanying notes on pages 65 to 82 are an integral part of these financial statements.
62 | European Assets Trust PLC
Statement of Changes in Equity
for the year ended 31 December 2023
Notes
Share
capital
£’000s
Distributable
reserve*
£’000s
Capital
reserve*
£’000s
Revenue
reserve*
£’000s
Cumulative
translation
reserve
£’000s
Total
Shareholders’
funds
£’000s
Balance as at 31 December 2022 37,506 296,945 8,671 – 4,505 347,627
Movement during the year ended 31 December 2023
10
Interim dividends distributed – (15,340) – (5,544) – (20,884)
Total comprehensive income – – 29,344 5,544 – 34,888
Cumulative translation adjustment – – – – (7,635) (7,635)
Balance as at 31 December 2023 37,506 281,605 38,015 – (3,130) 353,996
for the year ended 31 December 2022
Notes
Share
capital
£’000s
Distributable
reserve*
£’000s
Capital
reserve*
£’000s
Revenue
reserve*
£’000s
Cumulative
translation
reserve
£’000s
Total
Shareholders’
funds
£’000s
Balance as at 31 December 2021 37,506 322,694 188,661 – (23,426) 525,435
Movement during the year ended 31 December 2022
10
Interim dividends distributed – (25,749) – (5,939) – (31,688)
Total comprehensive income – – (179,990) 5,939 – (174,051)
Cumulative translation adjustment – – – – 27,931 27,931
Balance as at 31 December 2022 37,506 296,945 8,671 – 4,505 347,627
*These reserves include balances that are distributable by way of dividend, as disclosed in note 2(k).
The accompanying notes on pages 65 to 82 are an integral part of these financial statements.
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Other Information
Chairman’s StatementOverview Auditors’ Report
Financial Report
Statement of Financial Position
at 31 December
Notes
2023
£’000s
2022
£’000s
Non-current assets
12
Investments at fair value through profit or loss 375,066 340,717
Current assets
13
Other receivables 3,063 3,247
Cash and cash equivalents 2,089 13,317
Total current assets 5,152 16,564
Current liabilities
14
Other payables (226) (782)
15
Bank Loan (25,996) (8,872)
Total current liabilities (26,222) (9,654)
Net current (liabilities)/assets (21,070) 6,910
Net assets 353,996 347,627
Capital and reserves
16
Share capital 37,506 37,506
17
Distributable reserve 281,605 296,945
18
Capital reserves 38,015 8,671
18
Revenue reserve – –
Cumulative translation reserve (3,130) 4,505
Total Shareholders' funds 353,996 347,627
19
Net Asset Value per ordinary share - pence 98.31 96.54
The notes on pages 65 to 82 form an integral part of the financial statements.
Approved by the Board and authorised for issue on 19 March 2024 and signed on its behalf of by:
Jack Perry, Chairman
64 | European Assets Trust PLC
Statement of Cash Flows
for the year ended 31 December
Notes
2023
£’000s
2022
£’000s
20
Cash flows from operating activities before interest and dividends received and interest paid (4,328) (3,353)
Dividends received 7,388 6,990
Interest received 321 34
Interest paid (654) (257)
Cash flows from operating activities 2,727 3,414
Investing activities
Purchase of investments (138,453) (107,060)
Sale of investments 128,176 156,430
Other capital expenses (60) (37)
Cash flows from investing activities (10,337) 49,333
Cash flows before financing activities (7,610) 52,747
Financing activities
10
Equity dividends distributed (20,884) (31,688)
15, 21
Drawdown of bank loan 26,293 –
15, 21
Repayment of bank loan (8,589) (17,173)
Cash flows from financing activities (3,180) (48,861)
Net movement in cash and cash equivalents (10,790) 3,886
Cash and cash equivalents at the beginning of the year 13,317 8,342
Effect of movement in foreign exchange (15) (111)
Translation adjustment (423) 1,200
Cash and cash equivalents at the end of the year 2,089 13,317
Represented by:
Cash at bank 18 9
Short term deposits 2,071 13,308
2,089 13,317
The notes on pages 65 to 82 form an integral part of the financial statements.
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Other Information
Chairman’s StatementOverview Auditors’ Report
Financial Report
1. General information
European Assets Trust PLC is an investment company incorporated in England (UK) with a premium listing on the London Stock Exchange. The
Company registration number is 11672363 and the registered office is Cannon Place, 78 Cannon Street, London, EC4N 6AG, England.
The Company has conducted its affairs so as to qualify as an investment trust under the provisions of Section 1158 of the Corporation Tax
Act 2010. Approval of the Company under Section 1158 has been received. The Company intends to conduct its affairs so as to enable it to
continue to comply with the requirements. Such approval exempts the Company from UK Corporation Tax on gains realised in the relevant year
on its portfolio of fixed asset investments.
The accounting policies have been applied consistently throughout the year ended 31 December 2023, with no significant changes, as set out in
note 2 below.
2. Significant accounting policies
(a) Basis of preparation
The financial statements of the Company have been prepared on a going concern basis under the historical cost convention modified to
include fixed asset investments and derivatives at fair value, and in accordance with the Companies Act 2006, UK-adopted International
Accounting Standards, which comprise standards and interpretations approved by the International Accounting Standards Board (the
“IASB”).
Where presentational guidance set out in the 2018 amended Statement of Recommended Practice “Financial Statements of Investment
Trust Companies and Venture Capital Trusts” (“SORP”) for investment trusts issued by the Association of Investment Companies (“AIC”)
is consistent with the requirements of UK-adopted International Accounting Standards, the Directors have sought to prepare the financial
statements on a basis compliant with the recommendations of the SORP.
All of the Company’s operations are of a continuing nature. The functional currency of the Company is the euro and presentational
currency is the pound sterling as the Board believe this will provide clarity of the Company’s financial statements for its Shareholders, the
overwhelming majority of whom are located in the United Kingdom.
The Board confirms that no other significant accounting judgements or estimates have been applied to the financial statements and
therefore there is no significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year.
As referred to in the Directors’ Report on page 37 and note 23 to the accounts the Directors believe that it is appropriate for the accounts
to be prepared on a going concern basis.
(b) New and revised Accounting Standards
The Company adopted the following amended standard and interpretation during the year however the Board does not expect the
change to have an effect on the Company’s accounts:
• IAS 8 Amendments - Definition of Accounting Estimates (effective 1 January 2023) The amendments define accounting
estimates as “monetary amounts in financial statements that are subject to measurement uncertainty”. The amendments also
clarify the interaction between an accounting policy and an accounting estimate. The amendments are not expected to have a
Notes to the Accounts
66 | European Assets Trust PLC
material impact on the Company’s financial statements;
• IAS 12 Amendments - Deferred Tax related to Assets and Liabilities arising from a Single Transaction (effective 1 January
2023). The amendments require entities with certain assets to recognise deferred tax on particular transactions that, on initial
recognition, give rise to equal amounts of taxable and deductible temporary differences. The amendments are not expected to
have a material impact on the Company’s financial statements;
• IFRS 17 Amendments – Insurance contracts (effective 1 January 2023). The IASB has issued this new standard as a
replacement for IFRS 4, which currently allows a range of accounting treatments for insurance contracts. IFRS 17 will
fundamentally change the accounting for insurance and investment contracts by all entities with discretionary participation
features. The amendments are not expected to have a material impact on the Company’s financial statements;
Other new standards, amendments and interpretations issued by the International Accounting Standards Board (“IASB”) but not
effective for the current financial year and not early adopted by the Company include:
• IAS 1 Amendments - Classification of Liabilities as Current or Non-Current (effective date amended to 1 January 2024). The
amendments specify the requirements for classifying liabilities as current or non-current;
• IAS 1 Amendments - Disclosure of Accounting Policies (effective 1 January 2024). The amendments require an entity to disclose
its material accounting policy information instead of its significant accounting policies. The amendments contain guidance and
examples on identifying material accounting policy information;
• IAS 1 Amendments - Non-current Liabilities with Covenants (effective 1 January 2024). The amendments require disclosure of
information when there is a right to defer settlement of a liability for at least twelve months.
• IAS 7 Amendments - Supplier Finance Arrangements (effective 1 January 2024). The amendments require an entity to provide
additional disclosures about its supplier finance arrangements to provide users of financial statements with information to
enable them to assess how supplier finance arrangements affect an entity’s liabilities and cash flows and to understand the
effect of supplier finance arrangements on an entity’s exposure to liquidity risk and how the entity might be affected if the
arrangements were no longer available to it.
• IFRS 16 Amendments - Lease Liability in a Sale and Leaseback (effective 1 January 2024). The amendments require an entity to
add subsequent measurement requirements for sale and leaseback transactions.
• IAS 21 Amendments - Lack of Exchangeability (effective 1 January 2025). The amendments require an entity to apply a
consistent approach to assessing whether a currency is exchangeable into another currency and, when it is not, to determining
the exchange rate to use and the disclosures to provide.
The IASB have issued a number of other new standards, amendments and interpretations that are not yet effective for the current
financial year end and are not expected to be relevant or material to the Company’s operations. They are therefore not expected to
have an impact on the Company’s financial statements when they become effective.
(c) Presentation of Statement of Comprehensive Income
In order to reflect better the activities of an investment trust company and in accordance with guidance issued by the AIC,
supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and capital nature
has been presented alongside the Statement of Comprehensive Income. The net revenue return is the measure the Directors believe
appropriate in assessing the Company’s compliance with certain requirements set out in section 1158 Corporation Tax Act 2010.
2. Significant accounting policies (continued)
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Other Information
Chairman’s StatementOverview Auditors’ Report
Financial Report
(d) Financial instruments
Investments are recognised and derecognised on the trade date where a purchase or sale is under a contract whose terms require
delivery within the timeframe established by the market concerned, and are measured at fair value.
Investments are classified as fair value through profit or loss. As the entity’s business is investing in financial assets with a view to
profiting from their total return in the form of interest, dividends or increases in fair value, listed equities and fixed income securities
are designated as fair value through profit or loss on initial recognition.
Financial assets designated as at fair value through profit or loss are measured at subsequent reporting dates at fair value, which
is either the bid price or the last traded price, depending on the convention of the exchange on which the investment is quoted.
Unlisted investments are valued at fair value by the Directors on the basis of all information available to them at the time of
valuation.
Where securities are designated upon initial recognition as fair value through profit or loss, gains and losses arising from changes in
fair value are included in net profit or loss for the period as a capital item.
Accounting standards recognise a hierarchy of fair value measurements for financial instruments which gives the highest priority to
unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs
(Level 3). The classification of financial instruments depends on the lowest significant applicable input, as follows:
Level 1 – quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2 – other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either directly
or indirectly.
Level 3 – techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable
market data.
(e) Receivables
Receivables do not carry any interest and are short term in nature and are accordingly stated at their nominal value as reduced by
appropriate allowances for estimated irrecoverable amounts. Receivables are recognised initially at fair value based on contractual
settlement amounts and subsequently measured at amortised cost using the effective interest rate method. The Company records
any impairment allowance on financial assets at amortised cost using the expected credit loss model under the simplified method.
(f) Cash and cash equivalents
Cash at banks and short term deposits that are held to maturity are carried at cost. Cash and cash equivalents consist of cash at
bank and short term deposits with an original maturity of three months or less.
(g) Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An
equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.
Financial liabilities and equity instruments are initially recorded at the proceeds received, net of issue costs.
(h) Bank borrowings
Interest-bearing bank loans and overdrafts are recorded at the proceeds received. Finance charges, including premiums payable on
settlement or redemption and direct issue costs, are accounted for on an accruals basis in the Statement of Comprehensive Income
using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in
the period in which they arise.
(i) Derivative financial instruments
Derivatives are classified as fair value through profit or loss – held for trading and are held at fair value and changes in fair value are
recognised in the capital return column of the Statement of Comprehensive Income.
68 | European Assets Trust PLC
(j) Payables
Payables are not interest bearing and are recognised initially at fair value based on contractual settlement amounts and
subsequently measured at amortised cost using the effective interest rate method.
(k) Share capital and reserves
(i) Share capital is held at the year end as Sterling denominated ordinary Shares.
(ii) Distributable reserve – Created by cancellation of the Share Premium Account. This reserve is available as distributable profits
and may be used for the payment of dividends and the repurchase of Company shares.
(iii) Capital Reserves
Capital reserves – arising on investments sold and distributable by way of a dividend.
The following are accounted for in this reserve:
• gains and losses on the disposal of fixed asset investments and derivatives;
• settled foreign exchange differences of a capital nature; and
• other capital charges and credits charged or credited to this account in accordance with the above policies.
Capital reserves – arising on investments held and are non-distributable
The following are accounted for in this reserve:
• increases and decreases in the valuation of fixed asset investments and derivatives held at the year-end; and
• unsettled foreign exchange valuation differences of a capital nature.
(iv) Revenue reserve – The revenue reserve represents accumulated revenue profits retained by the Company that have not currently
been distributed to Shareholders as a dividend.
(v) Cumulative translation reserve
This reserve comprises all foreign exchange differences arising from the translation from the Company’s functional currency, the
euro, to the reporting currency, pound sterling. The figure represents:
• the differences arising from translation of transactions made by the Company at the exchange rate on the date of execution;
• the translation of assets and liabilities held at the Statement of Financial Position (SOFP) date at the exchange rate prevailing
on that date; and,
• the translation of brought forward assets translated at the exchange rate prevailing on the SOFP date and brought forward
capital and reserves at prior period exchange rates.
(l) Income
Dividends are recognised as income on the date that the related investments are marked ex-dividend.
Dividends receivable on equity shares where no ex-dividend date is quoted are brought into account when the Company’s right to
receive payment is established.
Special dividends of a non-capital nature are recognised through the revenue column of the Statement of Comprehensive Income.
Where the Company has elected to receive its dividends in the form of additional shares rather than cash, an amount equal to the
cash dividend is recognised as income.
Interest income from fixed interest securities is accrued on a time apportioned basis, by reference to the principal outstanding and at
the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life
of the financial asset to that asset’s net carrying amount. Other investment income and deposit interest are included on an accruals
basis.
2. Significant accounting policies (continued)
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(m) Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on taxable profit for the period. Taxable profit differs from profit before tax as reported in the
Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other periods
and it further excludes items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the balance sheet date.
(n) Deferred taxation
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets
are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences
can be utilised.
Investment trusts which have approval under section 1158 Corporation Tax Act 2010 are not liable for taxation on capital gains.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is
realised.
Deferred tax is charged or credited in the Statement of Comprehensive Income, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also dealt with in equity.
(o) Expenses and interest
All expenses are accounted for on an accruals basis. Expenses are charged through the revenue column of the Statement of
Comprehensive Income except those incurred in connection with the maintenance or enhancement of the value of the Company’s
investment portfolio taking account of the expected long term split of returns as follows:
• Management fees and finance costs have been allocated 20 per cent to revenue and 80 per cent to capital.
(p) Foreign currency
Foreign currency monetary assets and liabilities are expressed in Sterling at rates of exchange ruling at the Balance Sheet date.
Purchases and sales of investment securities, dividend income, interest income and expenses are translated at the rates of
exchange prevailing at the respective dates of such transactions. Exchange profits and losses on fixed assets investments are
included within the changes in fair value in the Capital Reserve. Exchange profits and losses on other currency balances are
separately credited or charged to the Capital Reserve except where they relate to revenue items.
Rates of exchange as at 29 December (with regard to Sterling) 2023 2022
Danish Krone 8.60279 8.38163
Norwegian Krone 12.94648 11.84977
Euro 1.15403 1.12710
Swedish Krona 12.84724 12.53362
Swiss Franc 1.07294 1.11292
(q) Use of judgements, estimates and assumptions
The presentation of the financial statements in accordance with accounting standards require the Board to make judgements,
estimates and assumptions that effect the accounting policies and reported amounts of assets, liabilities, income and expenses.
70 | European Assets Trust PLC
Estimates and judgements are continually evaluated and are based on perceived risks, historical experience, expectations of
plausible future events and other factors. Actual results may differ from these estimates.
The areas requiring the most significant judgement and estimation in preparation of the financial statements are: recognising and
classifying unusual or special dividends received as either revenue or capital in nature; and setting the level of dividends paid and
proposed in satisfaction of both the Company’s long-term objective and its obligations to adhere to Investment Trust status rules
under Section 1158 of the Corporation Tax Act 2010.
Dividends received which appear to be unusual in size or circumstance are assessed on a case-by-case basis, based on
interpretation of the investee companies’ relevant statements, to determine their allocation in accordance with the SORP to either
the Revenue Account or Capital Reserves. Dividends which have clearly arisen out of the investee company’s reconstruction or
reorganisation are usually considered to be capital in nature and allocated to Capital Reserves. Investee company dividends which
appear to be paid in excess of current year profits may nevertheless still be considered to be wholly revenue in nature unless
evidence suggests otherwise. The value of dividends received in the year treated as capital in nature is disclosed in note 18 to the
Accounts. The value of special dividends receivable in any period cannot be foreseen as such dividends are declared and paid by
investee companies without prior reference to the Company.
3. Income
2023
£’000s
2022
£’000s
Dividend income
(1)
from listed investments in:
- Austria 236 46
- Belgium 66 76
- Denmark 313 416
- France 586 495
- Germany 539 622
- Iceland – 84
- Ireland 928 492
- Italy 515 755
- Netherlands 441 378
- Norway 1,305 1,673
- Portugal – 159
- Spain 865 896
- Sweden 1,235 1,883
- Switzerland 524 518
Total dividend income 7,553 8,493
Other income:
Interest on cash and cash equivalents 321 34
Total income 7,874 8,527
(1) Dividend income includes special dividends classified as revenue in nature in accordance with note 2(q) of £107,000 (2022: £218,000).
4. Operating segments
The Board has considered the requirements of IFRS 8 ‘Operating Segments’. The Board is of the view that the Company is engaged in a single
segment of business, of investing in listed equity securities and that therefore the Company has only a single operating segment. The Board of
Directors, as a whole, has been identified as constituting the chief operating decision maker of the Company.
2. Significant accounting policies (continued)
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5. Management fee
2023 2022
Revenue
£’000s
Capital
£’000s
Total
£’000s
Revenue
£’000s
Capital
£’000s
Total
£’000s
Management fee 550 2,200 2,750 610 2,438 3,048
The Manager receives a fee equal to 0.75 per cent per annum of the value of funds under management up to the value of €400 million. Funds
under management is calculated as the value of total assets less current liabilities (excluding borrowings) at the end of the preceding quarter.
Where the value of funds under management exceeds €400 million, the applicable rate over such excess value is 0.6 per cent per annum.
Detailed regulatory disclosures including those on the AIF Manager’s remuneration policy and costs are available on Company’s website or from
Columbia Threadneedle Investments on request.
6. Other expenses
2023 2022
Revenue
£’000s
Capital
£’000s
Total
£’000s
Revenue
£’000s
Capital
£’000s
Total
£’000s
Depositary and custody fees 74 – 74 120 – 120
Remuneration of Directors
(1)
207 – 207 180 – 180
Travel expenses 23 – 23 8 – 8
Indemnity insurance costs 14 – 14 15 – 15
Independent auditors' remuneration
– for audit services
(2)
55 – 55 56 – 56
Legal, secretarial and accounting 125 – 125 129 – 129
Broker fees 37 – 37 36 – 36
Marketing, advertising and printing costs 202 – 202 200 – 200
Other expenses
(3)
232 60 292 214 37 251
Total other expenses 969 60 1,029 958 37 995
All expenses are stated gross of irrecoverable VAT, where applicable.
(1) See the Directors’ Remuneration Report on page 48.
(2) Total Auditors’ remuneration for audit services, exclusive of VAT amounts to £46,150 (2022: £42,900). There were no non-audit services paid to PwC in the year (2022: none).
(3) Other expenses include Registrar fees, listing fees, Loan non-utilisation fees and subscriptions.
7. Directors fees
The emoluments of the Chairman, the highest paid Director, were at the rate of £48,000 per annum (2022: £46,250).
Other Directors’ emoluments amounted to £32,750 (2022: £31,500) each per annum, with the chairman of the Audit and Risk Committee receiving
an additional £5,250 (2022: £5,250) per annum and the Senior Independent Director an additional £4,250 (2022: £4,250). Full details are
provided in the Directors’ Remuneration Report on pages 48 to 50.
8. Finance costs
2023 2022
Revenue
£’000s
Capital
£’000s
Total
£’000s
Revenue
£’000s
Capital
£’000s
Total
£’000s
Loan interest 140 561 701 35 141 176
Bank interest charges 1 3 4 16 65 81
Total finance cost 141 564 705 51 206 257
Finance costs have been allocated 80% to capital reserve in accordance with the Company’s accounting policies.
72 | European Assets Trust PLC
9. Taxation
(a) Analysis of tax charge for the year
2023 2022
Revenue
£’000s
Capital
£’000s
Total
£’000s
Revenue
£’000s
Capital
£’000s
Total
£’000s
Overseas taxation 672 – 672 944 – 944
Total taxation (see note 9(b)) 672 – 672 944 – 944
The tax assessed for the year is lower (2022: lower) than the standard rate of corporation tax in the UK.
(b) Factors affecting the current tax charge for the year
2023 2022
Revenue
£’000s
Capital
£’000s
Total
£’000s
Revenue
£’000s
Capital
£’000s
Total
£’000s
Net profit/(loss) on ordinary activities before taxation 6,216 29,344 35,560 6,883 (179,990) (173,107)
Net Return on ordinary activities multiplied by the standard rate of corporation tax of
23.5% (2022: 19%) 1,461 6,896 8,357 1,308 (34,197) (32,889)
Effects of:
Dividends* (1,776) – (1,776) (1,614) – (1,614)
Capital returns* – (7,564) (7,564) – 33,672 33,672
Currency losses – 4 4 5 16 21
Expenses not utilised in the year 315 664 979 301 509 810
Overseas taxation not relieved 672 – 672 944 – 944
Total taxation (see note 9(a)) 672 – 672 944 – 944
* These items are not subject to corporation tax in an investment trust company.
No deferred tax asset in respect of unutilised expenses at 31 December 2023 (2022: same) has been recognised as it is uncertain that there
will be taxable profits from which the future reversal of a deferred tax asset could be deducted.
10. Dividends
The level of dividend paid by the Company each year is determined in accordance with the Company’s distribution policy. The Company has
stated that, barring unforeseen circumstances, it will pay an annual dividend equivalent to 6 per cent of the net asset value at the end of
the preceding year. The dividend is funded from a combination of current year net profits and the Distributable Reserve.
The Company distributed the following interim dividends to Shareholders:
Register date Payment date
2023
£’000s
2022
£’000s
First of four interims for the year ended 31 December 2022 of 2.20 pence per share 14 Jan 22 31 Jan 22 – 7,922
Second of four interims for the year ended 31 December 2022 of 2.20 pence per share 08 Apr 22 29 Apr 22 – 7,922
Third of four interims for the year ended 31 December 2022 of 2.20 pence per share 08 Jul 22 29 Jul 22 – 7,922
Fourth of four interims for the year ended 31 December 2022 of 2.20 pence per share 07 Oct 22 31 Oct 22 – 7,922
First of four interims for the year ended 31 December 2023 of 1.45 pence per share 13 Jan 23 31 Jan 23 5,221 –
Second of four interims for the year ended 31 December 2023 of 1.45 pence per share 11 Apr 23 28 Apr 23 5,221 –
Third of four interims for the year ended 31 December 2023 of 1.45 pence per share 07 Jul 23 31 Jul 23 5,221 –
Fourth of four interims for the year ended 31 December 2023 of 1.45 pence per share 06 Oct 23 31 Oct 23 5,221 –
20,884 31,688
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2023
£’000s
Net revenue return attributable to Shareholders 5,544
First of four interims for the year ended 31 December 2023 of 1.45 pence per share (5,221)
Second of four interims for the year ended 31 December 2023 of 1.45 pence per share (5,221)
Third of four interims for the year ended 31 December 2023 of 1.45 pence per share (5,221)
Fourth of four interims for the year ended 31 December 2023 of 1.45 pence per share (5,221)
Shortfall paid from distributable reserves (15,340)
11. Earnings per share
The net return is equivalent to profit after tax per the Statement of Comprehensive Income. The return per share figure is based on the
net profit or loss for the year and on the weighted average number of shares in issue during the year. The return per share amount can be
further analysed between revenue and capital, as follows:
2023 2022
Revenue Capital Total Revenue Capital Total
Net return attributable to equity Shareholders – £’000s 5,544 29,344 34,888 5,939 (179,990) (174,051)
Return per share – pence 1.54 8.15 9.69 1.65 (49.99) (48.34)
Both the revenue and capital returns per share are based on a weighted average of 360,069,279 ordinary shares in issue during the year
(2022: 360,069,279).
12. Investments held at fair value through profit or loss
2023
Total
(Level 1)
£’000s
2022
Total
(Level 1)
£’000
Cost brought forward 306,742 368,841
Unrealised gains brought forward 33,975 170,915
Fair value of investments at 1 January 340,717 539,756
Movements in the period:
Purchases at cost 138,453 107,060
Sales proceeds (128,176) (156,430)
Gains/(losses) on investments sold in the year 10,559 (12,729)
Movement in unrealised gains/(losses) on investments held at the year end 21,626 (164,494)
Translation Adjustment (8,113) 27,554
Fair value of investments at 31 December 375,066 340,717
Cost at 31 December 327,578 306,742
Unrealised gains carried forward 47,488 33,975
Fair value of investments at 31 December 375,066 340,717
2023
£’000s
2022
£’000s
Gains/(losses) on investments sold in the year 10,559 (12,729)
Movement in unrealised Gains/(losses) on investments held at the year end 21,626 (164,494)
Total gains/(losses) in year 32,185 (177,223)
All assets held by the Company were classified as Level 1 in nature as described in note 2(d) and includes investments and derivatives listed on any recognised stock exchange.
74 | European Assets Trust PLC
Investments sold during the year have been revalued over time since their original purchase, and until they were sold any unrealised
gains/losses was included in the fair value of the investments.
Included within the capital reserve movement for the year are £270,000 (2022: £278,000) of transaction costs including stamp duty on
purchases of investments and £69,000 (2022: £74,000) of transaction costs on sales of investments.
Listed equities designated at fair value through profit or loss on initial recognition, incorporated in:
2023
£’000s
2022
£’000s
- Austria 5,773 6,621
- Belgium 9,420 10,223
- Denmark 20,042 22,095
- France 24,682 24,354
- Germany 41,158 40,446
- Ireland 39,018 25,147
- Italy 31,180 19,306
- Jersey 4,927 2,194
- Netherlands 33,369 27,737
- Norway 28,771 47,267
- Spain 28,875 22,480
- Sweden 59,117 53,256
- Switzerland 48,734 39,591
375,066 340,717
The investment portfolio is set out on page 19.
13. Other receivables
2023
£’000s
2022
£’000s
Prepayments 32 30
Overseas taxation recoverable 3,031 3,217
3,063 3,247
14. Other payables
2023
£’000s
2022
£’000s
Management fee – 602
Loan interest 58 7
Accruals 168 173
226 782
15. Borrowings
In March 2022 the Company entered into at €45 million multi-currency revolving loan facility with The Bank of Nova Scotia, London Branch,
expiring March 2023. The covenants for this facility have all been met during the period. The interest rate on amounts drawn down and
commitment fees payable on undrawn amounts are based on commercial terms agreed with The Bank of Nova Scotia.
Following the year end, the Company’s loan facility with The Bank of Nova Scotia, London Branch expired. A new loan with a maximum facility of
€60 million with The Royal Bank of Scotland International, London Branch has been entered into. As at 31 December 2023 the Company had
drawn down €30.0 million (£26.0 million) of the loan facility.
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16. Share capital
2023
Issued, allotted and fully paid
2022
Issued, allotted and fully paid
Number £’000s Number £’000s
Ordinary shares of £0.10 each
Balance brought forward and carried forward at 31 December 360,069,279 37,506 360,069,279 37,506
17. Distributable reserve
2023
£’000s
2022
£’000s
Balance brought forward 296,945 322,694
Dividends paid from distributable reserve (15,340) (25,749)
Balance carried forward 281,605 296,945
18. Capital & Revenue Reserves
Capital reserve
– realised
£’000s
Capital reserve
– unrealised
£’000s
Capital reserve
– total
£’000s
Revenue
reserve
£’000s
Movements in the year:
Gains on investments sold in year 10,559 – 10,559 –
Gains on investments held at year end – 21,626 21,626 –
Foreign exchange losses (9) (8) (17) –
Management fee (see note 5) (2,200) – (2,200) –
Finance costs (see note 9) (564) – (564) –
Other capital charges (see note 6) (60) – (60) –
Revenue return – – – 5,544
Return attributable to Shareholders 7,726 21,618 29,344 5,544
Dividends paid in year (see note 10) – – – (5,544)
Balance at 31 December 2022 (23,302) 31,973 8,671 –
Balance at 31 December 2023 (15,576) 53,591 38,015 –
There were no dividends recognised as capital during the year (2022: £nil).
19. Net Asset Value per ordinary share
The net asset value per share is based on the net assets attributable to the ordinary shares in issue as at 31 December:
2023 2022
Net asset value per share – pence 98.31 96.54
Net assets attributable at the year end – £'000s 353,996 347,627
Number of ordinary shares in issue at the year end 360,069,279 360,069,279
76 | European Assets Trust PLC
20. Reconciliation of total return before taxation to net cash flows from operating activities
2023
£’000s
2022
£’000s
Net return on ordinary activities before taxation 35,560 (173,107)
Adjustments for non-cash flow items, dividend income and interest expense:
(Gains)/losses on investments (32,185) 177,223
Foreign exchange movements 15 111
Non-operating expenses of a capital nature 60 37
Dividend income receivable (7,553) (8,493)
Interest receivable (321) (34)
Interest payable 705 257
(Increase)/decrease in other debtors (2) 25
(Decrease)/increase in other creditors (607) 628
(39,888) 169,754
Cash flows from operating activities before interest and dividends received and interest paid (4,328) (3,353)
21. Reconciliation of liabilities arising from financing activities
Bank loans
£’000s
2023
Total
£’000s
Bank loans
£’000s
2022
Total
£’000s
Financial liabilities brought forward 8,872 8,872 25,188 25,188
Cash flows:
Drawdown of bank loans 26,293 26,293 – –
Repayment of bank loans (8,589) (8,589) (17,173) (17,173)
Non-cash:
Translation adjustment (580) (580) 857 857
Financial liabilities carried forward 25,996 25,996 8,872 8,872
22. Financial Risk Management
The Company is an investment company, listed on the London Stock Exchange, and conducts its affairs so as to qualify in the United
Kingdom (“UK”) as an investment trust under the provisions of section 1158 of the CTA. In so qualifying, the Company is exempted in the
UK from corporation tax on capital gains on its portfolio of investments.
The Company invests in equities in order to achieve its investment objective, which is to achieve growth of capital through investment in
quoted small and medium-sized companies in Europe, excluding the United Kingdom. In pursuing this objective, the Company is exposed
to financial risks which could result in a reduction in the Company’s value of the net assets and profits available for distribution by way
of dividend. These financial risks are principally related to the market (currency movements, interest rate changes and security price
movements), liquidity and credit.
The Company’s use of leverage and borrowings can increase its exposure to these risks, which in turn can also increase the potential
returns it can achieve. The Company has specific limits on these instruments to manage the overall potential exposure. These limits
include the ability to borrow against the assets of the Company up to a level of 20 per cent of assets as permitted under the Articles of
Association.
The Board, together with the Manager, is responsible for the Company’s risk management, as set out in detail in the Strategic Report and
Directors’ Report. The Directors’ policies and processes for managing the financial risks are set out in (a), (b) and (c) on the following
pages.
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The accounting policies which govern the reported Balance Sheet carrying values of the underlying financial assets and liabilities, as well
as the related income and expenditure, are set out in note 2. The policies are in compliance with UK-adopted International accounting
standards and best practice. The Company does not make use of hedge accounting rules.
(a) Market risks
The fair value of equity and other financial securities including derivatives held in the Company’s portfolio fluctuates with changes in
market prices. Prices are themselves affected by movements in currencies and interest rates and by other financial issues, including the
market perception of future risks. The Board sets policies for managing these risks within the Company’s objective and meets regularly
to review full, timely and relevant information on investment performance and financial results. The Manager minimises the price risk
by making a balanced selection of companies with regard to distribution across the European countries, sectors and individual stocks,
assessing exposure to market risks when making each investment decision and monitors the ongoing market risk within the portfolio.
Details of the geographical exposure of investments can be found in note 12, the table below is a summary of the sector concentrations
with the portfolio:
2023
%
2022
%
Company's securities portfolio:
Industrials 30.1 21.7
Consumer Discretionary 13.6 13.6
Financials 12.3 17.2
Technology 11.7 12.7
Health Care 9.4 11.4
Consumer Staples 9.3 11.8
Basic Materials 7.2 7.3
Energy 2.8 3.0
Real Estate 2.2 1.3
Telecommunications 1.4 –
100.0 100.0
Based on the portfolio of investments held at each Balance Sheet date, and assuming other factors, including the management charge,
remain constant, an increase or decrease in the fair value of the portfolio in sterling terms by 20% would have had the following
approximate effects on the net capital return attributable to Shareholders and on the NAV per share:
Increase
in value
2023
Decrease
in value
Increase
in value
2022
Decrease
in value
Capital return – £’000s 75,013 (75,013) 68,143 (68,143)
NAV per share – pence 20.83 (20.83) 18.93 (18.93)
78 | European Assets Trust PLC
(b) Currency risk
The Company invests in securities denominated in European currencies other than the euro which gives rise to currency risk. It is not the
Company’s policy to hedge this risk. The table below is a summary of the Company currency exposure:
2023
£’000s
2022
£’000s
Danish Krone 20,043 22,095
Norwegian Krone 28,771 47,266
Pound Sterling 4,927 2,194
Swedish Krona 59,117 53,257
Swiss Franc 48,734 39,591
Total 161,592 164,403
Based on the financial assets and liabilities held and the exchange rates applying at the Balance Sheet date, a weakening or
strengthening of the euro against other currencies by 10% would have the following approximate effect on returns attributable to
Shareholders and on the NAV per share.
Weakening of the euro by 10% against other currencies
2023
£’000s
2022
£’000s
Net revenue return attributable to Shareholders 325 485
Net capital return attributable to Shareholders 16,228 18,349
Net total return attributable to Shareholders 16,553 18,834
NAV per share - pence 4.60 5.23
Strengthening of the euro by 10% against other currencies
2023
£’000s
2022
£’000s
Net revenue return attributable to Shareholders (325) (397)
Net capital return attributable to Shareholders (16,228) (15,013)
Net total return attributable to Shareholders (16,553) (15,410)
NAV per share - pence (4.60) (4.28)
These effects are representative of the Company’s activities although the level of the Company’s exposure to the other currencies
fluctuates in accordance with the investment and risk management processes. As this analysis only reflects financial assets and liabilities,
it does not include the impact of currency exposures on the management fee.
As discussed in note 2(a) the functional currency of the Company is the euro. Income earned in foreign currencies is therefore converted
to the euro on receipt. The Board regularly monitors the effects of movements in foreign exchange rates on net revenues, interest earned
on deposits and paid on gearing.
During the year, the Company entered in to Forward Currency Contracts for the purpose of hedging the euro to pound sterling exposure
as a result of the differing functional currency and dividend payment currency. These forward currency contracts resulted in a net gain of
£277,000 (2022: loss of £403,000).
22. Financial Risk Management (continued)
Report and Accounts 2023 | 79
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chairman’s StatementOverview Auditors’ Report
Financial Report
The fair values of the Company’s assets and liabilities at 31 December by currency are shown below:
2023
Short-term
debtors
£’000s
Cash and cash
equivalents
£’000s
Short-term
creditors
- other
£’000s
Short-term
creditors
- loans
£’000s
Net monetary
(liabilities)/
assets
£’000s
Investments
£’000s
Net exposure
£’000s
Euro 2,215 2,089 (73) (25,996) (21,765) 213,474 191,709
Danish Krone 256 – – – 256 20,043 20,299
Norwegian Krone 328 – – – 328 28,771 29,099
Pound Sterling 31 – (153) – (122) 4,927 4,805
Swedish Krona – – – – – 59,117 59,117
Swiss Franc 233 – – – 233 48,734 48,967
Total 3,063 2,089 (226) (25,996) (21,070) 375,066 353,996
2022
Short-term debtors
£’000s
Cash and cash
equivalents
£’000s
Short-term
creditors
- other
£’000s
Short-term
creditors
- loans
£’000s
Net monetary
assets/
(liabilities)
£’000s
Investments
£’000s
Net exposure
£’000s
Euro 2,336 13,317 (609) (8,872) 6,172 176,314 182,486
Danish Krone 309 – – – 309 22,095 22,404
Norwegian Krone 357 – – – 357 47,266 47,623
Pound Sterling 30 – (173) – (143) 2,194 2,051
Swedish Krona 23 – – – 23 53,257 53,280
Swiss Franc 192 – – – 192 39,591 39,783
Total 3,247 13,317 (782) (8,872) 6,910 340,717 347,627
(c) Interest rate risk
Interest rate risk is the risk that the value of a financial instrument will fluctuate as a result of changes in interest rates. When the
Company retains cash balances, the cash is held with approved banks, usually on overnight deposit. In addition, the Company has a loan
facility which is exposed to floating interest rate risk. Interest received or paid on cash balances and bank overdrafts is at market rates
and is monitored and reviewed by the investment manager and the board.
The exposure of the financial assets and liabilities to interest rate movements at 31 December was:
2023 2022
Within
one year
£’000s
More than
one year
£’000s
Total
£’000s
Within
one year
£’000s
More than
one year
£’000s
Total
£’000s
Exposure to floating rates:
Cash and cash equivalents 2,089 – 2,089 13,317 – 13,317
Loans (25,996) – (25,996) (8,872) – (8,872)
Net exposure (23,907) – (23,907) 4,445 – 4,445
The Company had no exposure to fixed interest rates at the year end.
Exposures vary throughout the year as a consequence of changes in the composition of the net assets of the Company arising out of the
investment and risk management processes.
80 | European Assets Trust PLC
Based on the financial assets and liabilities held and the interest rates ruling at each balance sheet date, an increase or decrease in interest
rates of 2% would have the following approximate effects on the Income Statement revenue and capital returns after tax and on the NAV per
share:
Increase
in rate
£’000s
2023
Decrease
in rate
£’000s
Increase
in rate
£’000s
2022
Decrease
in rate
£’000s
Revenue return (96) 96 18 (18)
Capital return (447) 383 53 (71)
Total return (543) 479 71 (89)
NAV per share – pence (0.151) 0.133 0.020 (0.025)
(d) Credit risk and counterparty exposure
Credit and Counterparty risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it
has entered into with the Company. The Company has in place a monitoring procedure in respect of counterparty risk which is reviewed on an
ongoing basis. The carrying amounts of financial assets best represent the maximum credit risk exposure at the balance sheet date.
Credit risk arising on transactions with brokers relates to transactions awaiting settlement. Risk relating to unsettled transactions is
considered to be small due to the short settlement period involved and the financial stability and credit quality of the brokers used, which
are monitored on an ongoing basis by the investment manager. The investment manager also monitors the quality of service provided by the
brokers used to further mitigate this risk.
The Company has an ongoing contract with its custodian for the provision of custody services. The contract is reviewed regularly. Details
of securities held in custody on behalf of the Company are received and reconciled monthly. The Company’s Depositary, JPMorgan Europe
Limited, has regulatory responsibilities relating to segregation and safe keeping of the Company’s financial assets, amongst other duties, as
set out in the Directors’ Report. The Board has direct access to the Depositary and receives regular reports from it via the Manager.
To the extent that the Manager carries out management and administrative duties (or causes similar duties to be carried out by third parties)
on the Company’s behalf, the Company is exposed to counterparty risk. The Board assesses this risk through regular meetings with the
management of Columbia Threadneedle Investments (including the Fund Manager) and with its Risk Management function. In reaching its
conclusions, the Board also reviews Columbia Threadneedle Investments annual Audit and Assurance Faculty Report.
In summary, compared to the amounts held at the balance sheet date of £nil, the maximum exposure to credit risk during the year was £nil
(2022: Balance Sheet: same; maximum exposure: same).
None of the Company’s financial liabilities is past its due date or impaired.
(e) Liquidity risk
The Company is required to raise funds to meet commitments associated with financial instruments and share buybacks. These funds
may be raised either through the realisation of assets or through increased borrowing. The risk of the Company not having sufficient
liquidity at any time is not considered by the Board to be significant, given: the number of quoted investments held in the Company’s
portfolio (100% at 31 December 2023 and 100% at 31 December 2022); the liquid nature of the portfolio of investments; the industrial
and geographical diversity of the portfolio (see pages 19 to 20); and the existence of an ongoing loan and overdraft facility agreement.
All investments are realisable within one year and therefore no detailed maturity analysis has been included. Cash balances are held with
approved banks, usually on overnight deposit. The Manager reviews liquidity at the time of making each investment decision. The Board
reviews liquidity exposure at each meeting.
22. Financial Risk Management (continued)
Report and Accounts 2023 | 81
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chairman’s StatementOverview Auditors’ Report
Financial Report
The Company has a €45 million unsecured revolving floating rate credit facility available until March 2023. Following the year end, the
Company’s loan facility with The Bank of Nova Scotia, London Branch expired. A new loan with a maximum facility of €60 million with The Royal
Bank of Scotland International, London Branch has been entered into.
(f) Fair values of financial assets and liabilities
IFRS 13 requires disclosures relating to fair value measurements using a three-level hierarchy. The level within which the fair value
measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value
measurement. Assessing the significance of a particular input requires judgement, considering factors specific to the asset or liability.
The assets and liabilities of the Company are, in the opinion of the Directors, reflected in the Balance Sheet at fair value, or at a reasonable
approximation thereof. Borrowings under loan and overdraft facilities do not have a value materially different from their capital repayment
amount.
(g) Capital risk management
The objective of the Company is stated as being to achieve growth of capital through investment in quoted small and medium-sized
companies in Europe, excluding the United Kingdom. In pursuing this 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 other distributable
reserves.
Changes to ordinary share capital are set out in note 16, dividend payments in note 10 and details of loans in note 21.
23. Going Concern
In assessing the going concern basis of accounting the Directors have had regard to the guidance issued by the Financial Reporting
Council. They have also considered the Company’s objective, strategy and policy, the current cash position of the Company, the availability
of the loan facility and compliance with its covenants and the operational resilience of the Company and its service providers.
At present the global economy is suffering disruption due to the effects of the war in Ukraine, recent events in the Middle East and
inflationary pressures and the Directors have given serious consideration to the consequences for this Company. As at 31 December
2023, the Company has a €45 million multi-currency loan facility with the Bank of Nova Scotia, London Branch, which was due to expire
on 12 March 2024, of which €30.0 million was drawndown. Following the year end, the Company’s loan facility with The Bank of Nova Scotia,
London Branch expired. A new loan with a maximum facility of €60 million with The Royal Bank of Scotland International, London Branch has been
entered into.
The Company has a number of banking covenants and at present the Company’s financial position does not suggest that any of these are
close to being breached. The primary risk is that there is a very substantial decrease in the net asset value of the Company in the short to
medium term.
Financial modelling has been undertaken to consider compliance with these covenants in several scenarios including the outcome of the
2008 Global Financial Crisis. These extreme but plausible scenarios indicate that the loan covenants would not be breached. In addition,
the Directors have considered the remedial measures that are open to the Company if such a covenant breach appears possible. As at
18 March 2024, the latest practicable date before the publication of this report, borrowings amounted to €35.0 million (£29.9 million).
This is in comparison to a net asset value of €409.5 million (£350.1 million). In accordance with its investment policy the Company is
invested mainly in readily realisable listed securities. These can be realised if necessary, to repay the loan facility and fund the cash
requirements for future dividend payments.
The Company operates within a robust regulatory environment. The Company retains title to all assets held by the Custodian. Cash is held
with banks approved and regularly reviewed by the Manager and the Board.
82 | European Assets Trust PLC
The Company’s annual dividend, which is declared in sterling, is determined by reference to the year-end net asset value. The Company
manages any sterling/euro exchange rate exposure which may arise from the declaration of a sterling denominated dividend by entering
into specific matched forward currency hedging contracts. As at 31 December 2023 the Company had a Distributable Reserve of £281.6
million.
As at 31 December 2023 the Company had net current liabilities of £21.1 million. The Company invests in listed securities which can be
realised to fund any short term cash shortfall that may arise.
Based on this information the Directors believe that the Company has the ability to meet its financial obligations as they fall due for a
period of at least twelve months from the date of approval of these financial statements. Accordingly, these financial statements have
been prepared on a going concern basis.
24. Related party transactions
The Directors of the Company are considered a related party. There are no transactions with the Board other than aggregated
remuneration for services as Directors as disclosed in the Directors’ Remuneration Report on pages 48 to 50 and as set out in note 7 to
the financial statements.
There are no outstanding balances with the Board at the year end.
The beneficial interests of the Directors in the Ordinary shares of the Company are disclosed on page 49.
25. Transactions with the Manager
Transactions between the Company and Columbia Threadneedle Investments are detailed in note 5 on management fees. The existence of
an independent Board of Directors demonstrated that the Company is free to pursue its own financial and operating policies and therefore
under the AIC SORP, the Manager is not considered a related party.
Report and Accounts 2023 | 83
Notice of Meeting
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chairman’s StatementOverview Auditors’ Report
5. To authorise the Audit and Risk Committee to determine the
remuneration of the auditor for the audit of the Report and
Accounts for the year ended 31 December 2024.
6. To re-elect Stuart Paterson to the Board of European Assets Trust
PLC.
7. To re-elect Martin Breuer to the Board of European Assets Trust
PLC.
8. To elect Kate Cornish-Bowden to the Board of European Assets
Trust PLC.
9. To elect Kevin Troup to the Board of European Assets Trust PLC.
10. To re-elect Pui Kei Yuen to the Board of European Assets Trust PLC.
11. That, in accordance with section 551 of the Companies Act 2006
(the “Act”), the Directors be and they are hereby generally and
unconditionally authorised to allot shares in the Company to an
aggregate nominal amount of £3,600,692 equal to 10 per cent
of the total issued share capital of the Company as at 18 March
2024. Unless previously varied, revoked or renewed, this authority
shall expire at the conclusion of the Annual General Meeting of
the Company in 2025, save that the Company may, before the
expiry of any authority contained in this resolution, make an offer
or agreement which would or might require shares to be allotted or
rights to be granted after such expiry and the Directors may allot
shares or grant rights in pursuance of such offer or agreement as
if the authority conferred hereby had not expired. This authority is
in substitution for all previous unexercised authorities conferred on
the Directors in accordance with section 551 of the Act.
Special Resolutions:
12. That, subject to the passing of resolution 11, the directors
be empowered pursuant to section 570 of the Companies
Act 2006 (the “Act”) to allot equity securities (as defined
in section 560 of the Act) for cash pursuant to the general
authority conferred on them by resolution 11 and/or to sell
equity securities held as treasury shares for cash pursuant to
section 727 of the Act 2006, in each case as if section 561
of the Act did not apply to any such allotment or sale, provided
that this power shall be limited to:
a) any such allotment and/or sale of equity securities in
connection with an offer or issue by way of rights or other
pre-emptive offer or issue, open for acceptance for a period
THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE
ATTENTION
If you are in any doubt as to any aspect of the proposals referred to
in this document or as to the action you should take, you should seek
your own advice from a stockbroker, solicitor, accountant, or other
independent professional adviser immediately. If you have sold
or otherwise transferred all of your shares, please pass this document
together with the accompanying documents to the purchaser or
transferee, or to the person who arranged the sale or transfer, so they
can pass these documents to the person who now holds the shares.
European Assets Trust PLC
(incorporated in England and Wales under the Companies Act 2006 with
registered number 11672363)
Notice is hereby given that the sixth Annual General Meeting of
Shareholders of European Assets Trust PLC, the “Company”, will be held
on Friday, 17 May 2024 at 3.00 pm at Cannon Place, 78 Cannon Street,
London EC4N 6AG, to transact the following business.
The resolutions to be proposed to the meeting are set out below.
Resolutions 1 to 11 will be proposed as ordinary resolutions, meaning
that for each of those resolutions to be passed, more than half the
votes cast must be in favour. Resolutions 12 to 13 will be proposed as
special resolutions, meaning that for either of those resolutions to be
passed, at least three-quarters of the votes cast must be in favour.
Ordinary Resolutions:
1. To receive and adopt the Directors’ report and accounts for the
year ended 31 December 2023 together with the Independent
Auditor’s Report thereon (the “2023 Report and Accounts”).
2. To approve the Company’s dividend policy with regard to quarterly
payments as set out on page 22 of the Report and Accounts 2023.
3. To approve the Directors’ Remuneration Report for the year ended
31 December 2023 set out on pages 48 to 50 of the 2023 Report
and Accounts.
4. To re-appoint PricewaterhouseCoopers LLP as auditors to European
Assets Trust PLC, to hold office from the conclusion of the meeting
until the conclusion of the next general meeting at which accounts
are laid before the Company.
Notice of Annual General Meeting
84 | European Assets Trust PLC
fixed by the directors, to holders of shares (other than the
Company) on the register on any record date fixed by the
directors in proportion (as nearly as may be) to the respective
number of shares deemed to be held by them, subject to such
exclusions or other arrangements as the directors may deem
necessary or expedient in relation to fractional entitlements,
legal or practical problems arising in any overseas territory, the
requirements of any regulatory body or stock exchange or any
other matter whatsoever; and
b) any such allotment and/or sale, otherwise than
pursuant to sub-paragraph (a) above, of equity securities
having an aggregate nominal value not exceeding the sum of
£1,800,346 (being an amount equal to 5 per cent of the total
issued share capital of the Company as at 18 March 2024,
being the latest practicable date before the publication of this
notice).
This authority shall expire, unless previously varied, revoked or
renewed by the Company in general meeting, at the conclusion
of the Annual General Meeting of the Company in 2025, except
that the Company may before such expiry make any offer or
agreement which would or might require equity securities to
be allotted or equity securities held as treasury shares to
be sold after such expiry and the directors may allot equity
securities and/or sell equity securities held as treasury shares
in pursuance of such an offer or agreement as if the power
conferred by this resolution had not expired.
13. That the Company be and it is hereby authorised in accordance
with section 701 of the Companies Act 2006 (the “Act”) to
make market purchases (within the meaning of section 693(4)
of the Act) of ordinary shares of 10 pence each in the capital
of the Company (“Ordinary Shares”) provided that:
(i) the maximum number of Ordinary Shares authorised
to be purchased shall be 10 per cent of the number of the
Ordinary Shares in issue at the date on which this resolution is
passed;
(ii) the minimum price (exclusive of expenses) which may be
paid for an Ordinary Share shall be 10p;
(iii) the maximum price (exclusive of expenses) which may be
paid for an Ordinary Share shall not be more than the highest
of:
(a) 5 per cent above the average of the middle market
quotations of Ordinary Shares as derived from the London
Stock Exchange Daily Official List for the five business days
immediately preceding the date of purchase;
(b) the price of the last independent trade on the trading
venue where the purchase is carried out; and
(c) the highest current independent purchase bid for any of
the Ordinary Shares on that venue.
(iv) unless previously varied, revoked or renewed, the
authority hereby conferred shall expire at the conclusion of the
Annual General Meeting of the Company in 2025, save that
the Company may, prior to such expiry, enter into a contract
to purchase Ordinary Shares under such authority which will
or might be executed wholly or partly after the expiration of
such authority and may make a purchase of Ordinary Shares
pursuant to any such contract.
By order of the Board
Columbia Threadneedle Investment Business Limited
6th Floor
Quartermile 4
7a Nightingale Way
Edinburgh EH3 9EG
19 March 2024
A member who is entitled to attend and vote at this meeting is
entitled to appoint one or more proxies to attend and, on a poll,
vote on his/her behalf. Such a proxy need not also be a member of
the Company.
A Form of Proxy for use by Shareholders is enclosed with this
Report. Completion of the Form of Proxy will not prevent a
Shareholder from attending the meeting and voting in person.
Notes:
1. A member of the Company at the time set out in note 7 below is
entitled to appoint one or more proxies to exercise all or any of
the member’s rights to attend, speak and vote at the meeting. A
proxy need not be a member of the Company but must attend the
meeting for the member’s vote to be counted. If a member appoints
more than one proxy to attend the meeting, each proxy must be
appointed to exercise the rights attached to a different share or
shares held by that member.
A member who wishes to attend the AGM in person should arrive
at the venue for the AGM in good time to allow their attendance
to be registered. As they may be asked to provide evidence of
their identity prior to being admitted to the AGM, it is advisable for
members to have some form of identification with them.
2. Any person holding 3% or more of the voting rights in the Company
who appoints a person other than the Chairman as their proxy will
need to ensure that both he and such person complies with their
respective disclosure obligations under the Disclosure Guidance
and Transparency Rules.
3. A Form of Proxy is provided with this notice for members. If a
member wishes to appoint more than one proxy and so requires
Report and Accounts 2023 | 85
Notice of Meeting
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chairman’s StatementOverview Auditors’ Report
meeting in respect of the number of shares registered in their
name at that time. If the meeting is adjourned to a time not more
than 48 hours after the Specified Time, that time will also apply for
the purpose of determining the entitlement of members to attend
and vote (and for the purposes of determining the number of votes
they may cast) at the adjourned meeting. Changes to the register
of members after the relevant deadline shall be disregarded in
determining the rights of any person to attend and vote at the
meeting.
8. If you are an institutional investor you may be able to appoint a
proxy electronically via the Proxymity platform, a process which has
been agreed by the Company and approved by the Registrar. For
further information regarding Proxymity, please go to www.proxymity.
io. Your proxy must be lodged by 3.00 p.m. on 15 May 2024 in
order to be considered valid.
Before you can appoint a proxy via this process you will need to
have agreed to Proxymity’s associated terms and conditions. It is
important that you read these carefully as you will be bound by
them and they will govern the electronic appointment of your proxy.
CREST members who wish to appoint a proxy or proxies through
the CREST electronic proxy appointment service may do so for the
meeting and any adjournment(s) thereof by using the procedures
described in the CREST Manual. CREST Personal Members or other
CREST sponsored members, and those CREST members who have
appointed a voting service provider(s), should refer to their CREST
sponsor or voting service provider(s), who will be able to take the
appropriate action on their behalf.
9. In order for a proxy appointment or instruction made using the
CREST service to be valid, the appropriate CREST message (a
“CREST Proxy Instruction”) must be properly authenticated in
accordance with Euroclear UK & Ireland Limited’s specifications
and must contain the information required for such instruction,
as described in the CREST Manual (available via www.euroclear.
com/CREST). The message, regardless of whether it constitutes
the appointment of a proxy or is an amendment to the instruction
given to a previously appointed proxy must, in order to be valid, be
transmitted so as to be received by the issuer’s agent (ID number
3RA50) by the latest time(s) for receipt of proxy appointments
specified in notes 3 and 4. For this purpose, the time of receipt will
be taken to be the time (as determined by the time stamp applied
to the message by the CREST Application Host) from which the
issuer’s agent is able to retrieve the message by enquiry to CREST
in the manner prescribed by CREST. After this time, any change
of instructions to proxies appointed through CREST should be
communicated to the appointee through other means.
10. CREST members and, where applicable, their CREST sponsors
or voting service provider(s) should note that Euroclear UK &
Ireland Limited does not make available special procedures in
CREST for any particular messages. Normal system timings and
limitations will therefore apply in relation to the input of CREST
Proxy Instructions. It is the responsibility of the CREST member
concerned to take (or, if the CREST member is a CREST personal
member or sponsored member or has appointed a voting service
provider(s), to procure that his CREST sponsor or voting service
provider(s) take(s)) such action as shall be necessary to ensure
that a message is transmitted by means of the CREST system by
any particular time. In this connection, CREST members and, where
applicable, their CREST sponsors or voting service provider(s)
additional proxy forms, the member should contact Computershare
Investor Services PLC on 0370 889 4094. To be valid, the Form of
Proxy and any power of attorney or other authority under which it
is signed (or a notarially certified copy of such authority) must be
received by post or (during normal business hours only) by hand
at the Company’s Registrar, Computershare Investor Services PLC,
The Pavilions, Bridgwater Road, Bristol BS99 6ZZ, not less than
48 hours before the time of the holding of the meeting or any
adjournment thereof. Amended instructions must also be received
by the Company’s Registrar by the deadline for receipt of Forms of
Proxy.
4. Alternatively, members may register the appointment of a proxy
for the meeting electronically, by accessing the website www.
eproxyappointment.com where full instructions for the procedure
are given. The Control Number, Shareholder Reference and PIN as
printed on the Form of Proxy will be required in order to use the
electronic proxy appointment system. This website is operated
by Computershare Investor Services PLC. The proxy appointment
and any power of attorney or other authority under which the proxy
appointment is made must be received by Computershare Investor
Services PLC not less than 48 hours before the time for holding
the meeting or adjourned meeting or (in the case of a poll taken
otherwise than at or on the same day as the meeting or adjourned
meeting) for the taking of the poll at which it is to be used. If you
want to appoint more than one proxy electronically please contact
Computershare Investor Services PLC on 0370 889 4094.
5. Investors holding shares in the Company through the CT Investment
Trust ISA, Lifetime ISA, Junior ISA, Child Trust Fund, General
Investment Account and/or Junior Investment Account should
ensure that forms of direction are returned to Computershare
Investor Services PLC not later than 3.00 p.m. on 10 May 2024.
Alternatively, voting directions can be submitted electronically at
www. eproxyappointment.com by entering the Control Number,
Shareholder Reference Number and PIN as printed on the form of
direction. Voting directions must be submitted electronically no
later than 3.00 p.m. on 10 May 2024.
6. Any person receiving a copy of this notice as a person nominated by
a member to enjoy information rights under section 146 of the Act
(a “Nominated Person”) should note that the provisions in notes 3
and 4 concerning the appointment of a proxy or proxies to attend
the meeting in place of a member do not apply to a Nominated
Person as only Shareholders have the right to appoint a proxy.
However, a Nominated Person may have a right under an agreement
between the Nominated Person and the member by whom he or
she was nominated to be appointed, or to have someone else
appointed, as a proxy for the meeting.
If a Nominated Person has no such proxy appointment right or does
not wish to exercise it, he/she may have a right under such an
agreement to give instructions to the member as to the exercise of
voting rights at the meeting.
7. Pursuant to Regulation 41(1) of the Uncertificated Securities
Regulations 2001 (as amended) and for the purposes of section
360B of the Act, the Company has specified that only those
members registered on the register of members of the Company at
3 p.m. on 15 May 2024 (the “Specified Time”) (or, if the meeting
is adjourned to a time more than 48 hours after the Specified
Time, by 3 p.m. on the day which is two days prior to the time of
the adjourned meeting) shall be entitled to attend and vote at the
86 | European Assets Trust PLC
are referred, in particular, to those sections of the CREST Manual
concerning practical limitations of the CREST system and timings
(www.euroclear.com/CREST).
11. The Company may treat as invalid a CREST Proxy Instruction in the
circumstances set out in Regulation 35(5)(a) of the Uncertificated
Securities Regulations 2001 (as amended).
12. Any corporation which is a member can appoint one or more
corporate representatives who may exercise on its behalf all of its
powers as a member provided that, if it is appointing more than
one corporate representative, it does not do so in relation to the
same shares. It is therefore no longer necessary to nominate a
designated corporate representative.
13. Under section 527 of the Act, members meeting the threshold
requirements set out in that section have the right to require the
Company to publish on a website a statement setting out any
matter relating to:
(a) the audit of the Company’s Accounts (including the auditors’
report and the conduct of the audit) that are to be laid before the
meeting; or
(b) any circumstances connected with an auditor of the Company
ceasing to hold office since the previous meeting at which annual
Accounts and Reports were laid in accordance with section 437 of
the Act.
14. The Company may not require the members requesting any such
website publication to pay its expenses in complying with sections
527 or 528 of the Act. Where the Company is required to place
a statement on a website under section 527 of the Act, it must
forward the statement to the Company’s auditor not later than the
time when it makes the statement available on the website. The
business which may be dealt with at the meeting includes any
statement that the Company has been required under section 527
of the Act to publish on a website.
15. Any member permitted to attend the meeting has the right to ask
questions. The Company must cause to be answered any question
relating to the business being dealt with at the meeting put by a
member attending the meeting.
However, members should note that no answer need be given in the
following circumstances:
(a) if to do so would interfere unduly with the preparation of the
meeting or would involve a disclosure of confidential information;
(b) if the answer has already been given on a website in the form
of an answer to a question; or
(c) if it is undesirable in the interests of the Company or the
good order of the meeting that the question be answered.
16. As at 18 March 2024, being the latest practicable date before the
publication of this notice, the Company’s issued capital consisted
of 360,069,279 ordinary shares of 10 pence each carrying one
vote each.
Therefore, the total voting rights in the Company as at 18 March
2024 were 360,069,279. No shares are held in treasury.
17. This notice, together with information about the total number of
shares in the Company in respect of which members are entitled
to exercise voting rights at the meeting as at 18 March 2024 being
the latest practicable date prior to the printing of this notice and,
if applicable, any members’ statements, members’ resolutions or
members’ matters of business received by the Company after the
date of this notice, will be available at www.europeanassets.co.uk.
18. Copies of the letters of appointment, which do not constitute
contracts of employment, between the Company and its Directors;
a copy of the Articles of Association of the Company; the register
of Directors’ holdings; and a deed poll relating to Directors’
indemnities will be available for inspection at the registered office
of the Company during usual business hours on any weekday
(Saturdays, Sundays and Bank Holidays excluded) until the date of
the meeting and also on the date and at the place of the meeting
from 15 minutes prior to the commencement of the meeting to the
conclusion thereof.
19. Under sections 338 and 338A of the Act, members meeting the
threshold requirements in those sections have the right to require
the Company:
(a) to give, to members of the Company entitled to receive notice
of the meeting, notice of a resolution which may properly be moved
and is intended to be moved at the meeting, and/or
(b) to include in the business to be dealt with at the meeting any
matter (other than a proposed resolution) which may be properly
included in the business.
20. Such a request may be in hard copy form or in electronic form, and
must identify the resolution of which notice is to be given or the
matter to be included in the business, must be authorised by the
person or persons making it, must be received by the Company not
later than six clear weeks before the meeting, and (in the case of a
matter to be included in the business only) must be accompanied
by a statement setting out the grounds for the request.
Report and Accounts 2023 | 87
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chairman’s StatementOverview Auditors’ Report
Other Information
Other Financial Information (unaudited)
Securities financing transactions (“SFTR”)
The Company has not, in the year to 31 December 2023 (2022:
same), participated in any: repurchase transactions; securities
lending or borrowing; buy-sell back transactions; margin lending
transactions; or total return swap transactions (collectively called
SFT). As such, it has no disclosure to make in satisfaction of the
UK regulations on transparency of SFT, issued in November 2015.
Alternative Investment Fund Managers (‘AIFM’) Directive
In accordance with the AIFM Directive, information in relation to the
Company’s leverage and the remuneration of the Company’s AIFM,
Columbia Threadneedle Investment Business Limited, is required
to be made available to investors. Detailed regulatory disclosures
including those on the AIFM’s remuneration policy and costs are
available on the Company’s website or from Columbia Threadneedle
Investments on request.
The Company’s Articles of Association allow borrowings up to a
maximum of 20% of its book value of the securities portfolio. The
Company can only exceed this level of borrowing with the prior
approval of shareholders at a general meeting.
The maximum gross leverage is therefore 125% (equivalent to 20%
of the book value of its securities portfolio).
The Company’s maximum and actual leverage levels authorised by
the Financial Conduct Authority (“FCA”) at 31 December 2023 are
shown below:
Leverage
Gross
method
Commitment
method
Maximum limit 200% 200%
Actual 106% 107%
For the purposes of the AIFM Disclosure, leverage is any method
which increases the Company’s exposure, including the borrowing
of cash and the use of derivatives. It is expressed as a percentage
of the Company’s exposure to its net asset value and is calculated
on both a gross and commitment method.
Under the gross method, exposure represents the sum of the
Company’s positions after deduction of cash balances, without
taking account of any hedging or netting arrangements. Under the
commitment method, exposure is calculated without the deduction
of cash balances and after certain hedging and netting positions
are offset against each other.
An Investor Disclosure Document is available on
www.europeanassets.co.uk.
88 | European Assets Trust PLC
Shareholder Information
Warning to Shareholders – Beware of Share Fraud.
Fraudsters use persuasive and high-pressure tactics to lure investors into scams. They may offer to sell to you shares that turn out to be worthless or
non-existent, or to buy your shares at an inflated price in return for an upfront payment following which the proceeds are never received.
If you receive unsolicited investment advice or requests:
• Check the Financial Services Register from fca.org.uk to see if the person or firm contacting you is authorised by the FCA
• Call the Financial Conduct Authority (“FCA”) on 0800 111 6768 if the firm does not have contact details on the Register or you are told they are out
of date
• Search the list of unauthorised firms to avoid at fca.org.uk/scams
• Consider that if you buy or sell shares from an unauthorised firm you will not have access to the Financial Ombudsman Service or Financial Services
Compensation Scheme
• Think about getting independent financial and professional advice
If you are approached by fraudsters please tell the FCA by using the share fraud reporting form at fca.org.uk/scams where you can find out more
about investment scams. You can also call the FCA Consumer Helpline on 0800 111 6768. If you have already paid money to share fraudsters you
should contact Action Fraud on 0300 123 2040.
Dividends
Shareholders who wish to have dividends paid directly into a
bank account rather than by cheque to their registered address
can complete a mandate form for the purpose. Mandates may be
obtained from Computershare Investor Services PLC, The Pavilions,
Bridgewater Road, Bristol, BS99 6ZZ on request. Where dividends
are paid to Shareholders’ bank accounts, dividend tax vouchers are
sent directly to Shareholders’ registered addresses.
Share Price
The Company’s shares are listed on the London Stock Exchange.
Prices are published daily in the Financial Times and other
newspapers and are available on the Company’s website
www.europeanassets.co.uk.
Change of Address
Communications with Shareholders are mailed to the address held
on the share register. In the event of a change of address or other
amendment this should be notified to Computershare Investor
Services PLC under the signature of the registered holder.
Website
Additional information regarding the Company may be found at its
website address which is: www.europeanassets.co.uk
Report and Accounts 2023 | 89
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chairman’s StatementOverview Auditors’ Report
Financial promotion
How to Invest
Charges
Annual management charges and other charges apply according to the
type of Savings Plan, these can be found on the relevant product Pre-
sales Cost & Charges disclosure on our website www.ctinvest.co.uk.
Annual account charge
ISA/LISA: £60+VAT
GIA: £40+VAT
JISA/JIA/CTF: £25+VAT
You can pay the annual charge from your account, or by direct debit (in
addition to any annual subscription limits).
Dealing charges
£12 per fund (reduced to £0 for deals placed through the online
Columbia Threadneedle Investor Portal) for ISA/GIA/LISA/JIA and JISA.
There are no dealing charges on a CTF.
Dealing charges apply when shares are bought or sold but not on the
reinvestment of dividends or the investment of monthly direct debits.
Government stamp duty of 0.5% also applies on the purchase of shares
(where applicable).
The value of investments can go down as well as up and you may
not get back your original investment. Tax benefits depend on your
individual circumstances and tax allowances and rules may change.
Please ensure you have read the full Terms and Conditions, Privacy
Policy and relevant Key Features documents before investing. For
regulatory purposes, please ensure you have read the Pre-sales Cost &
Charges disclosure related to the product you are applying for, and the
relevant Key Information Documents (KIDs) for the investment trusts you
want to invest in, these can be found at www.ctinvest.co.uk/documents.
How to Invest
To open a new Columbia Threadneedle Savings Plan, apply online at
www.ctinvest.co.uk Online applications are not available if you are
transferring an existing Savings Plan with another provider to Columbia
Threadneedle Investments, or if you are applying for a new Savings Plan in
more than one name but paper applications are available at www.ctinvest.
co.uk/documents or by contacting Columbia ThreadneedleInvestments.
New Customers:
Call: 0345 600 3030** (9.00am – 5.00pm, weekdays)
Email: invest@columbiathreadneedle.com
Existing Savings Plan Holders:
Call: 0345 600 3030** (9:00am – 5:00pm, weekdays)
Email: investor.enquiries@columbiathreadneedle.com
By post: Columbia Threadneedle Management Limited
PO Box 11114
Chelmsford CM99 2DG
You can also invest in the trust through online dealing platforms for private
investors that offer share dealing and ISAs. Companies include: Barclays
Stockbrokers, EQi, Halifax, Hargreaves Lansdown, HSBC, Interactive Investor, Lloyds
Bank, The Share Centre
One of the most convenient ways to invest in European Assets Trust PLC is through one of the Savings Plans run by Columbia Threadneedle
Investments.
CT Individual Savings Account (ISA)
You can use your ISA allowance to make an annual tax efficient
investment of up to £20,000 for the current tax year with a lump sum
from £100 or regular savings from £25 a month. You can also transfer
any existing ISAs to us whilst maintaining the tax benefits.
CT Junior Individual Savings Account (JISA)*
A tax efficient way to invest up to £9,000 per tax year for a child.
Contributions start from £100 lump sum or £25 a month. JISAs or
CTFs with other providers can be transferred to Columbia Threadneedle
Investments.
CT Lifetime Individual Savings Account (LISA)
For those aged 18-39, a LISA could help towards purchasing your first
home or retirement in later life. Invest up to £4,000 for the current
tax year and receive a 25% Government bonus up to £1,000 per year.
Invest with a lump sum from £100 or regular savings from £25 a
month.
CT General Investment Account (GIA)
This is a flexible way to invest in our range of Investment Trusts. There
are no maximum contributions, and investments can be made from
£100 lump sum or £25 a month.
CT Junior Investment Account (JIA)
This is a flexible way to save for a child in our range of Investment
Trusts. There are no maximum contributions, and the plan can easily
be set up under bare trust (where the child is noted as the beneficial
owner) or kept in your name if you wish to retain control over the
investment. Investments can be made from a £100 lump sum or £25 a
month per account. You can also make additional lump sum top-ups at
any time from £100 per account.
CT Child Trust Fund (CTF)*
If your child already has a CTF, you can invest up to £9,000 per birthday
year, from £100 lump sum or £25 a month. CTFs with other providers
can be transferred to Columbia Threadneedle Investments.
Capital at risk.
The material relates to an investment trust and its Ordinary Shares are traded on the main market of the London Stock Exchange.
The Investor Disclosure Document, Key Information Document (KID), latest annual or interim reports and the applicable terms & conditions are available from Columbia Threadneedle Investments Cannon Place, 78 Cannon Street,
London EC4N 6AG, your financial advisor and/or on our website www.columbiathreadneedle.com. Please read the Investor Disclosure Document before taking any investment decision.
This material should not be considered as an offer, solicitation, advice or an investment recommendation. This communication is valid at the date of publication and may be subject to change without notice. Information from external
sources is considered reliable but there is no guarantee as to its accuracy or completeness.
In the UK: Issued by Columbia Threadneedle Management Limited, No. 517895, registered in England and Wales and authorised and regulated in the UK by the Financial Conduct Authority.
© 2024 Columbia Threadneedle Investments. WF560250 (01/24) UK. Expiration Date: 31/01/2025
To find out more,
visit ctinvest.co.uk
0345 600 3030, 9.00am – 5.00pm,
weekdays, calls may be recorded or
monitored for training and quality purposes.
*The CTF and JISA accounts are opened by parents in the child’s name and they have
access to the money at age 18. **Calls may be recorded or monitored for training and
quality purposes.
90 | European Assets Trust PLC
Ten Year Record (Unaudited)
As at/for the
year ended
31 December
Market price
per share
Pence
Market price
per share
Euro
Net asset
value per
share
Pence
Net asset
value per
share
Euro
Dividends/
distributions
per share
Euro
Dividends/
distributions
per share
Pence
Euro Total Return Sterling Total Return
Net asset
value per
share
%
Benchmark
%
Net asset
value per
share
%
Benchmark
%
2014*
∞
98.7 1.272 98.05 1.263 0.07221
†
n/a 15.3 5.2 7.6 (1.9)
2015*
∞
112.7 1.529 112.01 1.520 0.07743
†
n/a 26.9 23.5 20.5 17.2
2016*
∞
102.2 1.197 112.19 1.314 0.09429
†
n/a (7.3) 6.4 7.4 23.3
2017*
∞
130.8 1.474 129.85 1.463 0.08220
†
n/a 18.0 18.6 22.6 23.3
2018*
∞
93.0 1.036 102.73 1.140 0.09298
†
n/a (16.3) (13.6) (15.4) (12.7)
2019 110.0 1.300 116.17 1.370 0.07136
†
n/a 26.9 27.8 19.8 20.6
2020 120.3 1.343 132.75 1.480 n/a 7.02 15.4 12.6 21.9 18.9
2021 139.5 1.662 145.93 1.740 n/a 8.00 24.0 22.5 16.3 14.9
2022 91.6 1.032 96.54 1.088 n/a 8.80 (32.0) (22.1) (28.2) (17.7)
2023 89.7 1.035 98.31 1.135 n/a 5.80 10.8 12.4 8.2 9.8
* European Assets Trust NV prior to the migration on 16 March 2019.
∞ For comparison purposes, historical values have been adjusted for the ten for one stock split effective 3 May 2018.
† Dividends prior to 16 March 2019 are shown gross of Dutch withholding tax.
Report and Accounts 2023 | 91
Other Information
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chairman’s StatementOverview Auditors’ Report
Alternative Performance Measures
The Company uses the following Alternative Performance Measures (“APMs”). APMs do not have a standard meaning prescribed by GAAP
and therefore may not be comparable to similar measures presented by other entities. No new APMs have been identified or added since
the prior year end.
Discount or Premium – the share price of an Investment Company is derived from buyers and sellers trading their shares on the stock
market. This price is not identical to the net asset value (“NAV”) per share of the Company. If the share price is lower than the NAV per
share, the shares are trading at a discount. This usually indicates that there are more sellers of shares than buyers. The discount is
shown as a percentage of the NAV per share. Shares trading at a price above NAV per share are deemed to be at a premium.
31 December
2023
pence
31 December
2022
pence
Net Asset Value per share (a) 98.31 96.54
Share price per share (b) 89.70 91.60
Premium or (Discount) (c= (b-a)/a) (c) (8.8%) (5.1%)
Gearing – this is the ratio of the borrowings of the Company to its net assets. Borrowings have a “prior charge” over the assets of a
company, ranking before ordinary Shareholders in their entitlement to capital and/or income. They may include: preference shares;
debentures; overdrafts and short and long-term loans from banks; and derivative contracts. If the Company has cash assets, these may
be assumed either to net off against borrowings, giving a “net” or “effective” gearing percentage, or to be used to buy investments, giving
a “gross” or “fully invested” gearing figure. Where cash assets exceed borrowings, the Company is described as having “net cash”. The
Company’s maximum permitted level of gearing is set by the Board and is described within the Strategic Report and Directors’ Report.
31 December
2023
£’000
31 December
2022
£’000
Loan 25,996 8,872
Less cash and cash equivalents (2,089) (13,317)
Total (a) 23,907 (4,445)
Net Asset Value (b) 353,996 347,627
Gearing (c = a/b) (c) 6.8% (1.3%)
Ongoing Charges – all operating costs expected to be incurred in future and that are payable by the Company, expressed as a proportion
of the average net assets of the Company over the reporting year. The costs of buying and selling investments and derivatives are
excluded, as are interest costs, taxation, non-recurring costs and the costs of buying back or issuing shares.
92 | European Assets Trust PLC
Ongoing charges calculation
31 December
2023
£’000
31 December
2022
£’000
Management fees 2,750 3,048
Other expenses 969 958
Ad-hoc non-recurring expenses (86) (120)
Total (a) 3,633 3,886
Average daily net assets (b) 347,688 377,305
Ongoing charges (c = a/b)
(c) 1.04% 1.03%
Total Return – the theoretical return to shareholders calculated on a per share basis by adding dividends paid in the period to the
increase or decrease in the Share Price or NAV in the period. The dividends are assumed to have been re-invested in the form of shares or
net asset, respectively, on the date on which the shares were quoted ex-dividend.
Net Asset Value Share price
NAV/Share price per share at 31 December 2022 (pence) 96.54 91.60
NAV/Share price per share at 31 December 2023 (pence) 98.31 89.70
Change in the year 1.8% (2.1%)
Impact of dividend reinvestments 6.4% 6.6%
Total return for the year 8.2% 4.5%
Report and Accounts 2023 | 93
Other Information
Strategic Report Governance Report Financial Report Notice of Meeting
Other Information
Chairman’s StatementOverview Auditors’ Report
AIC – Association of Investment Companies, is the UK trade body for closed-end investment companies (www.theaic.co.uk).
AIFMD – Alternative Investment Fund Managers Directive requires that all investment vehicles (AIF – Alternative Investment Fund) must
appoint a Depositary and an Alternative Investment Fund Manager. The Directors of the Company nevertheless, remains fully responsible
for all aspects of the Company’s strategy, operations and compliance with regulations.
AIF Manager – The AIF Manager, Columbia Threadneedle Investment Business Limited, is responsible for the provision of investment
management services to the Company.
Benchmark – This is a measure against which the Company’s performance is compared. With effect from 1 June 2023 the benchmark
changed from EMIX Smaller European Companies (ex UK) Index (net) to MSCI Europe excluding United Kingdom Small Mid Cap (Net
Return) Index. For the year ended 31 December 2023 a time-apportioned composite of each indices has therefore been calculated and
disclosed.
Custodian – A specialised financial institution responsible for safeguarding worldwide the listed securities and certain cash assets of the
Company, as well as the income arising therefrom, through provision of custodial, settlement and associated services. The Company’s
custodian is JPMorgan Chase Bank.
Depositary – Under AIFMD rules, the Company must appoint a depositary, whose duties in respect of investments, cash and similar
assets include: safekeeping; verification of ownership and valuation; and cash monitoring. Under AIFMD regulations, the depositary has
strict liability for the loss of the Company’s financial assets in respect of which it has safekeeping duties. The depositary’s oversight
duties include, but are not limited to dividend payments and adherence to investment limits. The Company’s depositary is JPMorgan
Chase Bank.
Dividend – The income from an investment. The Company currently pays dividends to shareholders four times per year in January, April,
July and October. The rate of the dividend is announced in January each year and is set at an annual yield of six per cent to the net
asset value at the end of the preceding year. Since January 2020 the Board has declared the Company’s annual dividend in sterling. The
previous practice was to declare in euros.
Gearing – The Company has the ability to borrow to invest within pre-determined limits. This term is used to describe the level of
borrowings that the Company has undertaken, and is stated as a percentage of total assets less current liabilities. The higher the level of
borrowings, the higher the gearing ratio.
Leverage – As defined under AIFMD rules, leverage is any method by which the exposure of an AIF is increased through borrowing of cash
or securities or leverage embedded in derivative positions. Leverage is broadly equivalent to Gearing, but is expressed as a ratio between
the assets (excluding borrowings) and the net assets (after taking account of borrowing). Under the gross method, exposure represents
the sum of the Company’s positions after deduction of cash balances, without taking account of any hedging or netting arrangements.
Under the commitment method, exposure is calculated without the deduction of cash balances and after certain hedging and netting
positions are offset against each other.
Market Capitalisation – The stock market value of a company is determined by multiplying the number of shares in issue, excluding those
shares held in treasury, by the market price of the shares.
Glossary of Terms
94 | European Assets Trust PLC
Net Assets (or Shareholders’ Funds) – This is calculated as the value of the investments and other assets of the Company, plus cash and
debtors, less borrowings and any other creditors. It represents the underlying value of the Company at a point in time.
Ordinary Shares – Shareholders are entitled to their share of both income, in the form of dividends paid by the Company and any capital
growth. The Company has only Ordinary Shares in issue.
Share Price – The value of a share at a point in time as quoted on a stock exchange. The Company’s Ordinary Shares are quoted on the
London Stock Exchange.
European Assets Trust PLC
Report and Accounts
31 December 2023
To find out more visit columbiathreadneedle.com
© 2024 Columbia Threadneedle Investments. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies.
Contact us
Registered office:
Cannon Place, 78 Cannon Street, London EC4N 6AG
0131 573 8300
europeanassets.co.uk
invest@columbiathreadneedle.com
Registrars:
Computershare Investor Services PLC
The Pavilions, Bridgwater Road
Bristol BS99 6ZZ
0370 889 4094
computershare.com
web.queries@computershare.co.uk