European Assets
Trust PLC
Report and Accounts 2021

2 | 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 Board’s current view and on information
known to it at the date of this document. Nothing should be construed as a profit forecast.
Front cover image: Regensburg, Switzerland.
Financial Calendar
First interim dividend paid for 2022 31 January 2022
Announcement of annual results March 2022
Second interim dividend paid for 2022 29 April 2022
Annual General Meeting 17 May 2022
Third interim dividend paid for 2022 29 July 2022
Interim results for 2022 announced August 2022
Fourth interim dividend paid for 2022 31 October 2022

Report and Accounts 2021 | 1
•
Overview
Company Overview 2
Financial Highlights 3
Summary of Performance 4
•
Chairman’s Statement
6
•
Strategic Report
Purpose, Strategy and Business Model 8
Investment Managers 10
Investment Manager’s Review 11
Investment Manager’s Investment Philosophy and Process 14
Ten Largest Holdings 16
Investment Portfolio 17
Key Performance Indicators 19
Principal Policies 20
Promoting the Success of the Company 22
Sustainability and ESG 24
Principal Risks and Changes in the Year 28
•
Governance Report
Directors 30
Management and Advisers 31
Directors’ Report 32
Corporate Governance 37
Report of the Remuneration and Nomination Committee 40
Directors’ Remuneration Report 41
Report of the Audit and Risk Committee 43
Report of the Management Engagement Committee 45
Statement of Directors’ Responsibilities in Respect
of the Financial Statements 46
Contents
•
Auditors’ Report
Independent Auditors’ Report 47
•
Financial Statements
Statement of Comprehensive Income 53
Statement of Changes in Equity 54
Statement of Financial Position 55
Statement of Cash Flow 56
Notes to the Financial Statements 57
•
Other Information
Notice of Annual General Meeting 73
Other Financial Information 78
Shareholder Information 80
How to Invest 81
Ten Year Record 82
Alternative Performance Measures 83
Glossary of Terms 85
Timeline of the Company 88
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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2 | European Assets Trust PLC
Company Overview
European Assets Trust NV
• The Company’s objective is to achieve long-term growth of capital through investment in
quoted small and medium sized companies in Europe, excluding the United Kingdom. A high
distribution policy has been adopted with dividends paid out of current year revenue profits and
the Distributable Reserve.
• Through its aim to pay Shareholders a dividend of 6% based on the Net Asset Value (NAV) on
31 December each year, the Company has offered an attractive level of yield – both in absolute
terms and relative to other asset classes. Investors seeking long-term capital appreciation
meanwhile can choose to reinvest dividends in order to enhance their growth potential.
• The Board seeks to manage liquidity in the Company’s shares through its ability to issue or
buyback shares dependant on the extent of any share premium or discount. This is designed to
reduce the volatility of the Company’s share price relative to its Net Asset Value.
• With an Ongoing Charges ratio of 0.89%
†
the Company compares favourably with open-ended
investment companies and many other investment trusts. The cumulative benefits of low costs
are very significant for long-term investors.
Visit our website at www.europeanassets.co.uk
Registered in England and Wales with company registration number 11672363. Legal Entity Identifier 213800N61H8P3Z4I8726
† Year ended 31 December 2021 – calculated with reference to the basis recommended by the Association of Investment Companies (AIC).
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Report and Accounts 2021 | 3
O
verview
European Assets Trust NAV Total Return (Sterling)
EMIX Smaller European Companies (ex UK) Index Total Return (Sterling)
European Assets Trust Share Price Total Return (Sterling)
80
.0
0
120.
00
160.
00
200.
00
240.
00
280.00
360.
00
320.
00
400.
00
520.00
480.00
440.00
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Financial Highlights
for the year ended 31 December 2021
The Longer Rewards
∞
(rebased to 100 at 31 December 2011)
*
Refer to Alternative Performance measures on page 84.
‡
Calculated in accordance with the basis recommended by the AIC.
∞
With effect from 1 April 2021 the benchmark changed from EMIX Smaller European Companies (ex UK) Index (gross) to EMIX Smaller European Companies (ex UK) Index (net).
23.2% 8.80p16.3% 0.89%
‡
Share price performance
The Company recorded a Sterling
Share Price total return* of 23.2%
for the year ended 31 December
2021 in comparison to the EMIX
Smaller European Companies
(ex UK) Index (our 'Benchmark')
which returned 14.9%.
Dividend
The Board has declared a total
dividend for 2022 of 8.80 pence
per share in accordance with
its aim to pay six per cent of
the closing Net Asset Value
of the preceding year. This is
an increase of 10.0% from the
2021 dividend of 8.00 pence per
share.
NAV performance
The Sterling Net Asset Value per
share total return* was 16.3%
for the year ended 31 December
2021. Further analysis of this
performance is provided in
the Chairman's Statement and
Investment Manager's Review.
Ongoing charges
*
Ongoing charges have continued
to fall to a ten year low of 0.89%
for the year ended 31 December
2021.
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
The annualised ten year share price total return was 17.0%
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4 | European Assets Trust PLC
Summary of Performance
Total Return for the year ended 31 December 2021 2020
Sterling Euro
Sterling
Euro
Net Asset Value Total Return per share*
16.3% 24.0%
21.9%
15.4%
Share Price Total Return*
23.2% 31.3%
17.4%
11.1%
EMIX Smaller European Companies (ex UK) Index
∞
14.9% 22.5%
18.9%
12.6%
Capital Return at 31 December 2021 2020
Sterling Euro
Sterling
Euro
Net assets – millions
£525.4 €625.8
£478.0
€534.0
Net Asset Value per share
£1.46 €1.74
£1.33
€1.48
Share Price per share
£1.40 €1.66
†
£1.20
€1.34
†
EMIX Smaller European Companies (ex UK) Index
∞
786.06 936.23
693.83
775.14
Dividend per share for the year ended 2021 2020
Sterling Euro
Sterling
Euro
Total dividends paid
8.00p
n/a
7.02p
n/a
* See Alternative Performance Measures on page 84 for explanation.
Source: BMO GAM, Refinitiv Eikon
† Converted in to Euros using the relevant exchange rate at the balance sheet date.
∞
With effect from 1 April 2021 the benchmark changed from EMIX Smaller European Companies (ex UK) Index (gross) to EMIX Smaller European Companies (ex UK) Index (net).
Strategic Report
Investing in European small and medium sized companies to deliver income and capital growth
Share Price per share (pence) at 31 December
‡
2018 2019 2020 2021 2017
2018 2020 202120192017
50.0
70.0
90.0
110.0
130.0
150.0
2018 2020 202120192017
0.80
1.20
1.10
1.00
0.90
Source: BMO GAM
2019 2021 20222020 2018
0.00
3.00
2.00
1.00
4.00
7.00
6.00
5.00
9.00
8.00
Source: BMO GAM
Source: Refinitive Eikon
Source: BMO GAM
50.0
70.0
90.0
110.0
130.0
150.0
2018 2019 2020 2021 2017
2018 2020 202120192017
50.0
70.0
90.0
110.0
130.0
150.0
2018 2020 202120192017
0.80
1.20
1.10
1.00
0.90
Source: BMO GAM
2019 2021 20222020 2018
0.00
3.00
2.00
1.00
4.00
7.00
6.00
5.00
9.00
8.00
Source: BMO GAM
Source: Refinitive Eikon
Source: BMO GAM
50.0
70.0
90.0
110.0
130.0
150.0
‡
European Assets Trust NV prior to the migration on 16 March 2019.
Net Asset Value per share (pence) at 31 December
‡
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Report and Accounts 2021 | 5
Overview
Ongoing charges*
‡
- %
2018 2019 2020 2021 2017
2018 2020 202120192017
50.0
70.0
90.0
110.0
130.0
150.0
2018 2020 202120192017
0.80
1.20
1.10
1.00
0.90
Source: BMO GAM
2019 2021 20222020 2018
0.00
3.00
2.00
1.00
4.00
7.00
6.00
5.00
9.00
8.00
Source: BMO GAM
Source: Refinitive Eikon
Source: BMO GAM
50.0
70.0
90.0
110.0
130.0
150.0
At 31 December
2021
2020
Discount to Net Asset Value*
(4.4%)
(9.4%)
Gearing*
3.2%
5.0%
Ongoing Charges
*
0.89%
0.95%
2021 Year ’s Highs/Lows
High Low
Net Asset Value per share
157.14p 128.08p
Share Price
150.50p 116.50p
Discount to Net Asset Value
(2.8%) (12.2%)
* See Alternative Performance Measures on page 83 for explanation.
Source: BMO GAM, Refinitiv Eikon
Net dividends paid/declared^ per share - (pence)
‡
†
(adjusted for ten for one stock split effective 3 May 2018)
2018 2019 2020 2021 2017
2018 2020 202120192017
50.0
70.0
90.0
110.0
130.0
150.0
2018 2020 202120192017
0.80
1.20
1.10
1.00
0.90
Source: BMO GAM
2019 2021 20222020 2018
0.00
3.00
2.00
1.00
4.00
7.00
6.00
5.00
9.00
8.00
Source: BMO GAM
Source: Refinitive Eikon
Source: BMO GAM
50.0
70.0
90.0
110.0
130.0
150.0
^
2022 Sterling dividends declared.
*
See Alternative Performance Measures on page 83 for explanation.
†
Dividends were paid by European Assets Trust NV net of Dutch Withholding tax.
‡
EAT NV prior to migration on 16 March 2019.
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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6 | European Assets Trust PLC
Fellow Shareholders,
I am pleased to report that European Assets Trust PLC (“the Company”)
recorded a Sterling Net Asset Value (“NAV”) total return for the year
ended 31 December 2021 of 16.3% (2020: 21.9%). This compares to the
total return of its benchmark, the EMIX Smaller European Companies
(ex UK) Index, which rose 14.9% (2020: 18.9%) during the same period.
With the discount narrowing from 9.4% as at 31 December 2020 to 4.4%
at the year-end, the Sterling share price total return for the year was an
impressive 23.2% (2020: 17.4%).
As this report goes to press, we have all been following events in
Ukraine with a growing sense of foreboding. While the Company has
no interests in Russian equities and the vast majority of our invested
companies do not have any significant dependence on Russia or
Ukraine as markets or as part of their supply chains, all global markets
have been impacted by this war on European soil. At this stage it is
impossible to predict the outcome of this conflict and the resultant
effect on markets. As individuals, our thoughts are very much focused
on the human tragedy which is unfolding. As custodians of your
assets, we are maintaining a close watch on events in an effort to do
everything we can to preserve capital during this period of volatility.
The Manager and investee companies are also reviewing operations to
ensure that they are in compliance with any new sanctions which arise
as a result of the conflict.
Like many of you I am sure, I hoped 2021 would be the year that we
moved on from the COVID-19 pandemic. Alas, it continued to impact
our daily lives as well as markets over the last twelve months. Due to
the vaccine roll out we entered the year with optimism. This was soon
tempered by new variants placing a strain on healthcare systems once
again, resulting in governments having to respond with further stimulus
support and mobility restrictions. Equity markets, though, were able to
remain buoyant for most of the year yielding, strong returns overall. The
second half of the year was, however, more volatile as supply chains
were disrupted, inflation began to take hold and discussions around
how to withdraw from years of central bank sponsored liquidity were
initiated. These concerns have continued to negatively impact markets
so far in 2022.
During this volatile period, we have been pleased with the
performance of the Company. Our NAV total return was ahead of a
strong benchmark. The share price performance was stronger still
and we announced a substantial dividend increase. Performance was
primarily driven by stock selection, as we would expect, with our
technology names in particular performing well as the continued digital
transformation of our world continues at pace. After a higher than usual
portfolio turnover in 2020, as the Manager sought to take advantage
of opportunities afforded by the broad-based market correction at
the onset of the pandemic, turnover returned to more normal levels
this year. The performance of the select number of high-quality
growth companies added to the portfolio last year has been pleasing.
We continue to see substantial long-term opportunities for these
businesses. This is, of course, discussed in more detail in the Manager’s
Review.
Fiftieth Anniversary
This year the Company celebrates its fiftieth anniversary. The Company
was created in 1972 following the acquisition of a Dutch investment
company ‘Mijbeb NV’ by a consortium of United Kingdom institutional
investors and the appointment of a predecessor of BMO Investment
Business Limited as its Manager.
Initially the Company was listed solely on the Amsterdam Stock
Exchange. In 1983 its shares were also listed on the London Stock
Exchange. It is interesting to note that a Shareholder who invested
£1,000 in the Company in 1983 would have an investment of
approximately £41,000 as at 31 December 2021 on a total return basis.
Until 1982 the Company was called European Community Trust NV. It
was then renamed European Assets Trust NV and in 2019 following its
migration from the Netherlands to the United Kingdom and de-listing
from the Amsterdam Stock Exchange became, European Assets Trust PLC.
I would like to take this opportunity on behalf of the Board to thank
and remember the many individuals who have contributed to the
success of this Company during this 50 year period and to you, my
fellow Shareholders many of whom have been loyal and longstanding
investors in the Company.
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.
The 2022 dividend of £0.088 per share, which represents an increase
of 10.0% from the 2021 dividend of £0.080 per share, is payable in
four equal instalments of £0.022 on 31 January, 29 April, 29 July and 31
October 2022.
One consequence of the pandemic was a reduction in the dividend
income the Company received from its investment holdings. Many
of the companies held within the investment portfolio reduced or
cancelled the dividends they pay to their shareholders. While the
Company has seen some rebound in dividend receipts this year, this
remains subdued. The Board, however, is confident of the continuation
of the Company’s dividend policy. To fund its dividends the Company
can use a combination of current year profits and the Distributable
Reserve. As at 31 December 2021 the Company had a Distributable
Reserve of £322.7 million.
Chairman’s Statement
“2018 was a more challenging year for equity assets as investor optimism
at the beginning of the year gave way to multiple economic and political
concerns.”
Jack Perry CBE, Chairman
Chairman’s Statement
“During this volatile period, we have been pleased
with the performance of the Company. Our NAV
total return was ahead of a strong benchmark. The
share price performance was stronger still and we
announced a substantial dividend increase.”
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Report and Accounts 2021 | 7
Chairman’s Statement
Responsible Investment
The Board and the Manager have long recognised the importance
of high standards of Environmental, Social and Governance (“ESG”)
practice in assessing investments for inclusion within the Company’s
portfolio. Both believe that high standards of ESG practice can help to
deliver better and more sustainable long-term growth in returns for
shareholders. Indeed, the Manager has one of the largest and longest
established teams in the City dedicated to responsible investment.
Pages 24 to 27 explain in detail the Manager’s ESG policies and its
engagement during the year with the management of invested
companies within the Company’s portfolio.
Ownership of the Manager
On 12 April 2021, BMO announced that it had reached an agreement
to sell its asset management business in Europe, the Middle East
and Africa to Columbia Threadneedle, the global asset management
business of Ameriprise Financial, Inc. This acquisition completed on 8
November 2021.
During this acquisition process the Board has sought and received
confirmation from senior management at Columbia Threadneedle of the
importance of maintaining stability and continuity of the teams which
presently support your Company. The Board welcomes these assurances
and will ensure that Shareholders are kept informed of developments
as this new relationship develops.
Ongoing charges
For the year ended 31 December 2021 the ongoing charges of the
Company were 0.89%. This is the lowest rate ever recorded by the
Company and is a consequence of annual cost savings arising from
the migration of the Company from the Netherlands to the United
Kingdom coupled with the reduction in investment management fee
rates implemented from 1 April 2020. The Board will continue to actively
monitor costs to maintain the Company’s competitiveness.
Operations
Since March 2020 the Board had met by videoconference with
representatives of the Manager and with other advisers attending.
Although this has worked well, I am pleased to report that since
July 2021, most Directors have been able to attend Board meetings
physically which I consider a welcome step towards a return to our pre-
pandemic practices.
Annual General Meeting
I am pleased to report that we intend to revert to normal practices for
the 2022 Annual General Meeting (“AGM”). The AGM will be held on
Tuesday 17 May 2022 at 3.00pm at Exchange House, Primrose Street,
London, EC2A 2NY, being the London offices of the Manager. The
meeting will include a presentation on the Company and its investment
portfolio from Sam Cosh and Lucy Morris.
However, as the situation with regards to the COVID-19 pandemic
remains uncertain, if circumstances change on or prior to 17 May 2022
so that laws, regulations or Government guidance no longer permit
physical Shareholders’ attendance, or if the Board should otherwise
determine Shareholders’ attendance at an open meeting to be
contrary to the safety and wellbeing of Shareholders, alterations may
be required to be made to the AGM format. In these circumstances,
the Company will communicate to Shareholders any changes to
arrangements by a London Stock Exchange announcement and through
updates to the Company’s website:
www.europeanassets.co.uk
.
The Board strongly advises all Shareholders to consider their personal
circumstances before deciding whether or not to attend the AGM
in person. Any Shareholders who choose not to attend can submit
questions regarding the resolutions proposed at the AGM, or the
performance of the Company, to the dedicated email account:
europeanassetsagm@bmogam.com
. Questions should be submitted
not later than Tuesday 10 May 2022. The Board will endeavour to
ensure that questions received by such date are addressed at the
meeting. In addition, so all Shareholders have an opportunity to view
the AGM, the meeting will be recorded and will be available to view
shortly thereafter on the Company’s website as detailed above.
To ensure that each Shareholder’s votes will count in the event that
they cannot attend in person, or that Shareholder attendance has
been restricted due to health and safety concerns, the Board would
encourage all Shareholders to complete and submit their Form of
Proxy or Form of Direction in advance of the AGM, in accordance with
the requirements contained in the AGM notice set out on pages 73 to
77. Further, should the AGM be restricted, Shareholders are strongly
encouraged to appoint the Chairman of the AGM as their proxy as any
other person so appointed may not be admitted to the AGM, resulting
in that Shareholder’s vote not being counted.
Outlook
As discussed in my opening paragraphs, events in Ukraine have
exacerbated what had already been a period of extreme volatility at
the beginning of the year. Initial optimism over a recovery from the
COVID-19 pandemic has been replaced with concern over not just the
war but spiking energy costs and other pressures on the cost of living.
Rapidly rising prices have prompted a more hawkish tone from the
US Federal Reserve and the expectation that the era of exceptionally
low interest rates may well be at its end. Not only has this caused
precipitous falls in equity markets but a rapid change in market
leadership with cheaper, perhaps, lower quality parts of the market
leading performance.
It is fair to say that this might not be the best environment for a
quality biased portfolio. We believe, however, the best counter to this
uncertainty is to ensure your investments are comprised of high-
quality dynamic growth businesses. Companies that hold important
positions in the value chain should be insulated from the worst effects
of inflation while their long-term opportunities should allow them to
continue to grow and prosper. Discipline around valuation is also vital
as a change in the interest rate regime will have a disproportionate
negative impact on expensive, long duration assets.
To help us reflect on the past 50 years, we have developed a ‘timeline’
to illustrate the major milestones not just in the Company’s life but
also in European and global history. This is reproduced on the inside
back cover of this report. As we now face a volatile geopolitical and
economic climate, it is worth remembering that European Assets Trust
has weathered many periods of extreme volatility and despite this has
over the longer term provided shareholders with an attractive income
stream and a growing net asset value. We cannot predict the outcome
of the present conflict but we will maintain our disciplined process and
philosophy. This has always been our approach to deliver long term
returns.
Jack Perry CBE
Chairman
21 March 2022
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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8 | European Assets Trust PLC
*Adjusted for ten for one stock split effective 3 May 2018.
Purpose, Strategy and Business Model
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 net 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 is to seek investments in 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 EMIX Smaller European Companies (ex UK) 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, BMO Investment Business Limited
*Adjusted for ten for one stock split effective 3 May 2018.
Company’s appointed manager, BMO Investment Business Limited
*Adjusted for ten for one stock split effective 3 May 2018.
(the “Manager”). Within policies set and overseen by the Board, the
*Adjusted for ten for one stock split effective 3 May 2018.
(the “Manager”). Within policies set and overseen by the Board, the
*Adjusted for ten for one stock split effective 3 May 2018.
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 20 and 21, setting limits on gearing and
asset allocation; monitoring investment performance; and monitoring
marketing performance.
Implementing the strategy
The investment management contract is with BMO Investment Business
Limited (‘the Manager’) a wholly owned subsidiary of BMO Global Asset
Management (Europe) Limited (‘BMO GAM’). The Manager has been
appointed as Alternative Investment Fund Manager (‘AIF Manager’).
BMO GAM is owned by Columbia Threadneedle UK International Limited
which has Ameriprise Financial, Inc as its ultimate parent company.
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 BMO
GAM are provided on page 10. Details of the Manager’s approach are
provided on pages 14 and 15.
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. A separate administration fee is charged. Details of
the management and administration fees payable to the Manager are
provided on page 35.
Environmental, Social and Governance (‘ESG’) Impact
Our ESG policies are set out on pages 24 to 27. 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 BMO GAM’s Responsible
Investment Approach as explained on pages 24 to 27.
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 45. 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.
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Report and Accounts 2021 | 9
S
trategic
R
eport
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 2021 the Company had drawn €30 million from its €45
million borrowing facility with RBSI and held cash balances of €9.9
million, resulting in gearing of 3.2%.
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; the Manager, Shareholders, suppliers and contractors.
As an investment trust the Company has no employees. With
approximately 83% 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 BMO Savings Plans.
The Company’s activities and performance are reported through the
publication of its financial statements but the majority of Shareholders
and BMO 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
.
In normal circumstances 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 Fund Manager.
Through the Manager, the Company also ensures that BMO 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 in promoting the
Company’s investment proposition. These meetings are reported
regularly to the Board. Any contact with the Company’s institutional
Shareholders is also reported. The Chairman and Senior Independent
Director are available to meet with major Shareholders.
Managing risks and opportunities
Like all businesses, investment opportunities do not come without 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 the Manager.
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 19.
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 28.
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 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 page 20,
whilst the Investment Manager’s review of activity in the year can be
found on page 11.
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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10 | European Assets Trust PLC
Sam Cosh,
Lead Manager
is a Director at
BMO GAM. Sam joined BMO GAM in 2010
from BNP Investment Partners and was
appointed Lead Manager for European
Assets Trust during 2011. Sam also manages
the European investments of BMO Global
Smaller Companies PLC. He has twenty years’
experience in European equities, principally
within small and mid cap mandates.
Investment Managers
Lucy Morris,
Manager
is a Director at BMO
GAM in the Global Smaller Companies Team.
Lucy joined the business in 2007, originally
working in the Performance Analytics team
before transferring to Equities in 2011.
She has worked on European Small Cap
mandates since that point which include
European Assets Trust as well as the
European investments of BMO Global Smaller
Companies PLC. She also manages the BMO
European Smaller Companies open ended
fund. Lucy holds the Investment Management
Certificate and is a CFA Charterholder.
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eport
Market Backdrop
Investors entered the year with confidence, the markets having rallied
on the back of the positive vaccine data announced towards the end
of 2020. 2021 was therefore supposed to see the end of COVID-19
and the recovery of the global economy. While this was not quite the
case, equities delivered good gains over the year, though most of the
returns occurred in the first half when optimism around an uninhibited
recovery was strongest. The second half was more challenging with the
emergence of new variants, firstly Delta and more recently Omicron,
putting a dampener on this optimism, albeit temporarily. In fact,
most of the year was characterised by wild swings in sentiment. As
COVID-19 variants emerged, the market lurched towards quality, growth
assets. However, this changed rapidly, with improving data relating to
hospitalisations and vaccination rates and their effectiveness.
The second half of the year also had to contend with the spectre of
rising inflation. Corporates were faced with significant supply chain
challenges. With improving demand, this led to component shortages
and rising input costs, with energy and raw material prices accelerating
higher towards the year end. Inflation data consequently increased
rapidly with, for example, the US Consumer Price Index in November
reaching its highest level for 39 years. This resulted in expectations of
more rapid monetary tightening from the Federal Reserve with bond
yields increasing, prompting market leadership to rotate towards more
value and cyclical areas of the market. These moves have accelerated
into the new year which we will discuss in more detail in the outlook
section.
Rising inflation can impact interest rate expectations and this in turn
can influence currency movements. The UK for example is further along
the monetary tightening cycle than Europe, which had lagged in its
vaccination rate and maintained more social restrictions, potentially
impacting the economy for longer. These factors help explain, at least
in part, why the Euro struggled against Pound Sterling (“GBP”). As we
translate the value of our assets back to our reporting currency, the
depreciation of the Euro against GBP, dampened our returns in 2021,
though as has been reported and as discussed below, we were still
able to deliver a strong year, both in absolute and relative terms, for
our shareholders.
Portfolio Performance/Attribution
We were pleased to report a very strong share price performance and
a NAV total return ahead of the benchmark. This performance allowed
the Company to announce a 10% increase in dividend.
Our technology holdings had an exceptional year leading our
performance, with good stock selection being the main driver.
Most of our positions in this area benefit from long term structural
trends such as digitalisation and while we are aware of significant
volatility in the sector currently with valuations under pressure,
we are confident in their long-term potential. For example, our
semiconductor holdings, Nordic Semiconductor and ASM International,
were the largest contributors. Nordic is the leading designer globally
of low power Bluetooth chips and is benefitting from the proliferation
of connected devices. In addition to Bluetooth, they have been
investing in two new business areas; power management integrated
circuits and cellular ‘internet of things’ microchips. Both areas saw
some promising progress last year. In total the company’s order
backlog improved by five times, which clearly bodes well for the
future.
ASM International produces semiconductor manufacturing equipment.
The semiconductor industry capital spend has increased dramatically
over the last few years, driven by huge demand for technology and
increased data consumption. The area has also become politically
sensitive as countries attempt to break free from the reliance
of extended supply chains. We therefore expect this demand to
continue. ASM International also benefits from the ever shrinking size
of semiconductors with their equipment being particularly relevant for
smaller chip manufacturing.
Other technology holdings of note that performed well were Lectra,
the French manufacturer of material cutting machines and related
software, and Alten, the French listed provider of engineering R&D
outsourcing. Both companies benefitted from expectations of an
economic recovery and saw better demand as the industrial sectors
that they depend on saw increased activity levels.
Our financial holdings also contributed well to performance.
Ringkjoebing Landbobank, the regional Danish bank, continued
its outstanding record of delivery and this year was no exception,
though the expectation of higher interest rates, something that has
been a headwind for the sector, provided an additional tailwind. This
similarly helped Sparebank, the local Norwegian bank, which also
benefitted from a rising energy market and the effect that this would
have on the local economy. Storebrand, the Norwegian life insurance
company, also performed well. Low interest rates have been a real
challenge for its legacy guaranteed life business, but the prospects
of higher rates, helps its transition to more profitable fee-based
business. This also brought forward expectation of higher dividends.
Investment Manager’s Review
“We continue to focus on companies that deliver good levels of profits and
cash flow, protect those cash flows from competition with strong business
models, and benefit from sensible capital allocation by their management
Sam Cosh, Lead Manager
“Our technology holdings had an exceptional year
leading our performance, with good stock selection
being the main driver.”
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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12 | European Assets Trust PLC
Strategic Report
Other stocks worthy of mention are MIPs, the Swedish safety
technology business, and IMCD, the Dutch listed specialist chemical
distributor. MIPs designs helmet inlays that improve injury outcomes
following crashes. They produced an exceptional operating
performance last year but also made good progress in growing in
the safety industry, a market which is bigger in terms of revenue
opportunity than the areas which they are currently exposed to.
IMCD also continued their excellent track record of earnings growth,
again beating market expectations. They also announced a series
of acquisitions which have improved their market position and
geographical reach.
Looking at where we suffered, we were a victim of a theme that
emerged in the second half of the year. E-commerce, or online
companies were de-rated en-masse as the market looked to sell
perceived COVID-19 winners to fund investments in the post-virus
recovery. Global Fashion Group was hurt particularly badly as, not
only did they suffer alongside their regional competitors, but they
also issued some disappointing results. A combination of a more
competitive market in Latin America and a weak trading period
towards the end of the year saw the shares sell off aggressively. We
think this has been overdone and believe the long-term investment
case remains intact, however, we acknowledge that whilst the
market focuses on the impact of higher interest rates, the shares will
struggle.
Just Eat Takeaway, the food delivery platform, had similar issues.
However, we decided to sell the stock as we felt that the competitive
position in key countries had deteriorated markedly. Although the
shares hurt us over the year the decision to sell was correct as
performance has continued to deteriorate. Mister Spex, an omni-
channel glasses retailer, which we bought during its IPO, also
struggled as COVID-19 related lockdowns impacted their bricks and
mortar revenues.
Another disappointing performer was Fjordkraft, the Norwegian
energy provider. Norwegian lockdowns impinged on their ability
to acquire new customers, whilst they struggled to pass on rising
energy prices on a timely basis. We sold our holding following a
reassessment of the quality of the business model.
Portfolio Activity
Shareholders will remember that 2020 was an unusual period of
activity for the Company, as we took advantage of the market related
sell off. 2021 was far more muted with activity returning to more
normalised levels. In addition to Mister Spex mentioned above, we
added three more positions.
We bought back into Tecan, the Swiss provider of healthcare
automation equipment for the molecular and invitro diagnostics
market. The shares had underperformed since we had sold the
position late in 2020 and had announced an attractive, value accretive
acquisition earlier in the year. Given the attractive growth outlook we
felt that the valuation was attractive enough to warrant re-purchase.
The Thule group, listed in Sweden, manufacture bike racks and
cargo carriers for vehicles, products for other active outdoor leisure
usage and have recently expanded into offering pushchairs and
strollers. They have established large market shares and a strong
brand reputation in most of their product categories which has led to
strong growth and attractive margins. The areas they operate in are
anticipated to grow strongly as outdoor pursuits become more popular
and populations become more active.
Lotus Bakeries, listed in Belgium, is best known for its famous
speculoos biscuits and spread sold under the Biscoff brand. They have
the opportunity to expand the global reach of their products into new
geographies, such as the United States, which provides an attractive
runway for growth whilst also utilising the brand and unique taste
to expand into adjacent categories such as ice cream and chocolate.
Alongside this the company also own well regarded “healthy snacking”
brands Nakd, Trek and Bear which provide an alternative path of
growth as they use their wide distribution network to expand their
reach beyond the UK market where they were created.
In addition to the disposal of Fjordkraft and Just Eat Takeaway
mentioned above, we have sold our holdings in Elekta, the equipment
manufacturer used in cancer therapies, and Remy Cointreau, the
Cognac brand owner. The former was sold due to concerns over their
competitive position and the latter due to concerns over valuation.
Outlook
The year has started with extreme volatility with significant falls across
most markets. Initially this was prompted by the US Federal Reserve’s
response to persistently high inflation data indicating a monetary
tightening programme beginning with an interest rate hike in March.
Higher interest rates are a valuation headwind for longer duration
assets, so it is no surprise that quality, growth areas of the market
have suffered. Healthcare and technology significantly underperformed
over this period and market leadership transitioned to value areas. We
have a quality biased portfolio with significant holdings in these areas,
so it is fair to say that it was a challenging start to the year for the
Company.
Lotus Bakeries’ Biscoff Spread.
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eport
The more recent period has of course been dominated by the appalling
events in Ukraine. Not surprisingly the market sell off has accelerated
and European equities have borne the brunt of this and are now
heavily in negative territory. A more defensive bias has now prevailed,
and our portfolio has fared better relatively, though inevitably still
suffering large absolute losses.
We do not know how long the war will last or what the specific
long-term ramifications will be, but we acted quickly on outset of
hostilities. We reduced gearing moving to a small net cash position
and reduced holdings that have operating exposure to the region
or are over exposed to rising energy costs. None of our holdings are
listed or domiciled in Russia or Ukraine. We continue to closely assess
the portfolio in light of the current environment and will continue to
execute our philosophy and process identifying any quality companies
that fall to attractive levels as we did during the COVID-19 related
sell-off in early 2020. While we of course understand that this crisis is
very different and potentially more catastrophic and wide ranging we
believe that buying good quality assets at attractive prices is the best
way to deliver good long-term returns.
Sam Cosh
Lead Investment Manager
BMO Investment Business Limited
21 March 2022
Industrials 22.5% (23.8%)
Consumer Discretionary 19.3% (19.8%)
Technology 19.0% (15.0%)
Financials 15.4% (13.6%)
Healthcare 9.7% (8.8%)
Consumer Staples 8.9% (9.6%)
Basic Materials 4.1% (3.1%)
Utilities 1.1% (2.5%)
Real Estate 0.0% (3.8%)
Portfolio Split by Sector at 31 December 2021
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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14 | European Assets Trust PLC
Strategic Report
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 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 24 to 27.
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.
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 also crucial in
delivering long term performance. 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
-
Investments fit for the future with attractive ESG credentials
Continuous Monitoring Process
Source: BMO GAM
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eport
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
BMO Investment Business Limited
21 March 2022
The Investment Process Focuses on Three Aspects for Each Company
•
Attractive growth prospects
•
Enduring differentiation/competitive
advantages
•
Superior profit generators
•
Strong sustainability characteristics
•
Proven management team
•
Entrepreneurial
•
Consistent/proven execution
•
Responsible capital allocators
•
Appropriate incentives/aligned
interests
•
Margin of safety
•
Sustainable superior returns
•
Use of discounted cash flow
& relative valuation
•
ESG & Sustainability score
embedded in proprietary
valuation method
High quality
business
Strong
management
Attractive
price
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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16 | European Assets Trust PLC
Strategic Report
Ten Largest Holdings as at 31 December 2021
5. Cancom (17)
Germany
Leading value added IT hardware and software reseller who are helping
German SMEs with their digital transformation. Margins are improving as the
mix shifts towards software and cloud related services.
arted.
2.9%
of total investments
£15,515,821 value
www.cancom.com
8. Tecan (New)
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.
2.8%
of total investments
£15,262,319 value
www.tecan.com
7. MIPS (37)
Sweden
Safety techology company that have designed a Brain Protection System
that sits within helmets and improves injury outcomes following crashes.
They are penetrating the bicycle, MOTO, and snow market and significant
potential lies in the safety market.
o levels that they achieve in Denmark.
2.9%
of total investments
£15,282,134 value
www.mipscorp.com/en
2. Nordic Semiconductor (15)
Norway
Global leading designer of bluetooth semiconductors with additional
potential in power management integrated circuits and cellular internet of
things. Demand is driven by the growth in connected devices as the world
transforms digitally.
3.2%
of total investments
£17,081,453 value
www.nordicsemi.com
9. Stratec (18)
Germany
Manufacturer of analyser systems and instruments for global customers in
the field of invitro-diagnostics. Has strong customer/partner relationships
where they are fully embedded leading to durable and recurring revenues
and is exposed to fast growing end markets.
2.8%
of total investments
£14,885,226 value
www.stratec.com
3. Interpump (24)
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.
3.0%
of total investments
£16,159,317 value
www.interpumpgroup.it
4. Lectra (11)
France
Manufacturer of Computer Aided Design & Manufacturing (CAD/CAM)
software and hardware used for textile processing and cutting primarily by
the fashion, automotive and furniture industries. Attractive business model
characterised by high degree of recurring revenue leads to strong margins
and returns.
2.9%
of total investments
£15,748,899 value
www.lectra.com/en
10. flatexDEGIRO (4)
Germany
German listed online broker, flatex, recently became a pan-european broker
following its acquisition of Dutch company DeGiro. With a strong technology
proposition, low cost online brokers are taking share from the incumbents
who tend to be traditional banks.
2.7%
of total investments
£14,371,025 value
www.flatex.de/en
6. Storebrand (19)
Norway
Leading Norwegian life insurer and asset manager. Returns are improving
as the capital intensive guaranteed life book diminishes and their more
profitable fee based business improves. This should lead to a higher rating
and significant return of capital.
2.9%
of total investments
£15,459,738 value
www.storebrand.no
1. Ringkjoebing Landbobank (3)
Denmark
High quality regional Danish bank with a long track record of “sticky”
customers, low loan losses and good returns on equity. They have a
dominant position in their local region, and have been growing outside this
as they take advantage of lower quality competitors.
3.3%
of total investments
£17,985,225 value
www.landbobanken.dk
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Report and Accounts 2021 | 17
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trategic
R
eport
Investment Portfolio as at 31 December 2021
Company Nature of Business
Valuation
£’000
% of Total
Assets
Country of
Incorporation
Ringkjoebing Landbobank
Nordic Semiconductor
Interpump
Lectra
Cancom
Storebrand
MIPS
Tecan
Stratec
flatexDEGIRO
Regional Banking
Market Leader in Low Power Bluetooth Semiconductor Design
Industrial Producer of Fluid Movement Pumps and Hydraulic Components
Provider to the Fashion, Automotive and Furniture Industries
Information Technology Services Provider
Long-term Savings and Insurance
Helmet Safety
Automated Laboratory Instruments and Solutions
Manufacturer of Invitro Diagnostic Instrumentation and Consumables
Online Broker
17,985
17,081
16,159
15,749
15,516
15,460
15,282
15,262
14,885
14,371
3.4%
3.3%
3.1%
3.0%
3.0%
2.9%
2.9%
2.9%
2.8%
2.7%
Denmark
Norway
Italy
France
Germany
Norway
Sweden
Switzerland
Germany
Germany
Ten largest investments
157,750
30.0%
IMCD
Azimut
Alten
Atea
Gerresheimer
SpareBank
Wizz Air
SIG Combibloc
Karnov
ASM International
Speciality Chemical Distributer
Asset Management
Outsourced Engineering and R&D Provider
Value Added IT Hardware and Software Reseller
Glass and Plastic Containers
Banking
Budget Airline
Systems and Consumables Provider for Aseptic Packaging
Mission Critical Information Provider to the Legal Industry
Semiconductor Equipment
14,152
13,993
13,478
13,446
13,334
13,201
12,709
11,787
11,585
11,088
2.7%
2.7%
2.6%
2.6%
2.5%
2.5%
2.4%
2.2%
2.2%
2.1%
Netherlands
Italy
France
Norway
Germany
Norway
Switzerland
Switzerland
Sweden
Netherlands
Twenty largest investments
286,523
54.5%
Dometic
Thule
Sligro Food Group
Sdiptech
Forbo
Norma
Marr
Vidrala
Fluidra
Verallia
Manufacturer of Cooling Equipment
Outdoor and Transportation Product Manufacturer
Food and Beverage Provider
Industrial Consolidator Focused on Sustainability
Flooring, Adhesives and Conveyor Belts
Plastic and Metal Based Components
Food Service Provider
Manufacturer and Supplier of Glass Containers
Swimming Pool Equipment and Maintenance
Glass Bottle Manufacturer
11,083
11,063
11,020
11,002
10,793
10,681
10,606
10,546
10,472
10,208
2.1%
2.1%
2.1%
2.1%
2.1%
2.0%
2.0%
2.0%
2.0%
1.9%
Sweden
Sweden
Netherlands
Sweden
Switzerland
Germany
Italy
Spain
Spain
France
Thirty largest investments
393,997
74.9%
HelloFresh
Lotus Bakeries
Marel
CTS Eventim
SimCorp
Indutrade
Scout24
Amorim
Carasent
Avanza Bank
Home Meal Kit Provider
Indulgent and Natural Snack Manufacturer
Solutions for Poultry, Fish and Meat Processing Industries
Concerts and Ticketing
Provider of Highly Specialised Software for the Investment Management Industry
Niche Industrial Conglomerate
Digital Real Estate Marketplace
Cork Product Producer
Cloud Healthcare Software Provider
Swedish Savings and Investment Platform
9,716
9,370
9,357
9,133
9,019
8,968
8,896
8,649
8,535
8,137
1.9%
1.8%
1.8%
1.7%
1.7%
1.7%
1.7%
1.7%
1.6%
1.6%
Germany
Belgium
Iceland
Germany
Denmark
Sweden
Germany
Portugal
Norway
Sweden
Forty largest investments
483,777
92.1%
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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18 | European Assets Trust PLC
Strategic Report
Company Nature of Business
Valuation
£’000
% of Total
Assets
Country of
Incorporation
Symrise
Coor
Cairn Homes
Royal Unibrew
Patrizia
Global Fashion
Rational
Mister Spex
V Zug
Speciality Chemicals
Provider of Integrated Facilities Management and Consulting Services
House Builder
Nordic and Baltic Beverage Producer
Real Estate Asset Manager
Online Fashion Retailer
Specialist in Hot Food Preparation for Professionals
Omnichannel Eyewear Retailer
Luxury Household Appliance Manufacturer and Service Provider
7,927
7,904
7,567
7,449
6,124
5,951
5,849
3,667
3,541
1.5%
1.5%
1.4%
1.4%
1.2%
1.1%
1.1%
0.7%
0.7%
Germany
Sweden
Ireland
Denmark
Germany
Germany
Germany
Germany
Switzerland
Total investments
539,756
102.7%
Net current liabilities
(14,321)
(2.7%)
Net assets
525,435
100.0%
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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; adding value
for Shareholders through Net Asset Value and Share Price Total
Return; the management of the Company’s share price premium/
discount; dividend yield; low and competitive ongoing charges; and
effective marketing. The Board assesses its performance in meeting
the Company’s objective against the following key performance
indicators (“KPIs”):
Key Performance Indicators
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.
Net Asset Value per share Sterling total return performance at 31 December 2021
‡
1 Year % 3 Years % 5 Years % 10 Years %
European Assets Trust*
16.3
69.7
76.0
333.2
EMIX Smaller European (ex. UK) Companies Index
¥
14.9
64.8
77.4
304.4
Source: BMO GAM, Refinitiv Eikon
Share price sterling total return performance at 31 December 2021
‡
1 Year % 3 Years % 5 Years % 10 Years %
European Assets Trust*
23.2
81.9
88.0
381.1
EMIX Smaller European (ex. UK) Companies Index
¥
14.9
64.8
77.4
304.4
Source: BMO GAM, Refinitiv Eikon
Average (Discount)/Premium
‡
*
For the year ended 31 December %
2021
(6.7)
2020
(10.0)
2019
(5.2)
2018
(9.5)
2017
0.7
Source: BMO GAM
Ongoing charges as at 31 December
‡
*
%
2021
0.89
2020
0.95
2019
1.11
2018
1.11
2017
1.06
Source: BMO GAM
Shares issued during the year ended 31 December
‡
2021
-
2020
134,573
2019
∞
179,383
2018
†
12,312,883
2017
†
15,553,450
Source: BMO GAM
‡
EAT NV prior to the migration on 16 March 2019.
¥
With effect from 1 April 2021 the benchmark changed from EMIX Smaller European Companies (ex UK) Index (gross) to EMIX Smaller European Companies (ex UK) Index (net).
* See Alternative Performance Measures on page 83 for explanation.
∞
Excludes issuance related to the migration on 16 March 2019.
†
Rebased for stock split of 3 May 2018.
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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Strategic Report
Principal Policies
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.
Details of the investment policy are provided on page 8.
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. With effect from 1 January 2020 dividends have
been declared in Sterling rather than Euro.
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
intention of seeking to hedge any currency exposure which may arise
from investing in non Euro denominated investments.
Since January 2020 the Board has declared dividends in Sterling, a
change from the previous practice of declaring in Euro. This change
provides greater 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 this change in
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. The policy is
always to appoint the best person for the role and, by way of this
policy statement, it is confirmed that there will be no discrimination
on the grounds of gender, race, ethnicity, religion, sexual orientation,
age or physical ability.
The overriding aim of the policy is to ensure that the Board is
composed of the best combination of people for ensuring the delivery
of the Company's objective. In achieving gender diversity, the Board's
composition on 31 December 2021 of three male and two female
Directors met the target of 33% of women on FTSE 350 company
boards set under The Hampton-Alexander Review.
The Board is also compliant with the target of the Parker Review to
have at least one non-white director by 2021 for FTSE 100 and by 2024
for FTSE 250 companies.
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 or 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.
Prevention of the facilitation of tax evasion
The Company is committed to compliance with the UK’s Criminal
Finances Act 2017, designed to prevent tax evasion in the jurisdictions
in which it operates. The policy is based on a risk assessment
undertaken by the Board and professional advice is sought as and
when deemed necessary.
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.
On behalf of the Board
Jack Perry
Chairman
21 March 2022
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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Strategic Report
Promoting the Success of the Company
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 8, the Company is an externally managed
investment company and has no employees, customers or premises.
The key stakeholders are the Shareholders, the Manager, suppliers,
regulators 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. In normal
circumstances 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. Alternatively, issues can be discussed with the Company’s
Senior Independent Director, who can be contacted at the Company’s
registered office address detailed on page 31.
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 11 to 13. On pages 24 to 27 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 45.
Service providers such as, JP Morgan Chase Bank (“
the Bank
and
the
Custodian
”), JP Morgan Europe Limited (“
the Depositary
”), Panmure
Gordon (“
the Broker
”), The Bank of Nova Scotia, 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.
2021 – 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 each
year.
The economic impact of COVID-19 resulted in a reduction in the
portfolio income the Company receives from its investments. The
Directors have, however, been able to maintain the Company’s high
distribution policy as the dividend can be funded from current year
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revenue profits and the Distributable Reserve. The Distributable
Reserve, which had a value of £322.7 million as at 31 December
2021 was created during the migration of the Company from the
Netherlands to the United Kingdom.
Ongoing charges
The Board monitors closely the costs of the Company. The ongoing
charges for the year ended 31 December 2021 is 0.89%. This is the
lowest rate ever recorded by the Company and is a consequence
of annual cost savings arising from the migration of the Company
from the Netherlands to the United Kingdom coupled with the
reduction in investment management fee rates implemented from
1 April 2020.
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 2021 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 shares price trades to its NAV. 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 2021 the Company did
not buyback or issue shares. The discount as at 31 December 2021
was 4.4% (2020: 9.4%).
Board succession planning
With effect from 26 February 2021 Pui Kei Yuen was appointed
to the Board. Laurence Jacquot retired from the Board on 13
May 2021 having served nine years. These changes allowed for
the retirement of the Company’s longest serving Director while
maintaining an appropriate balance of skills and experience on the
Board.
A plan for the orderly succession for all directors has been
developed, commencing with the planned retirement of the
Chairman in 2024. The recruitment for this role, using external
consultants, will take place in late 2022/early 2023 with a view to
appointing a successor in Spring 2023. This will allow for a period
of overlap before the Chairman’s retirement.
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
Thule ProRide is the world’s best selling roof mounted bike carrier.
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Sustainability
and ESG
As stewards of more than £525 million of assets, we support positive change. The Company benefits from
the Manager’s leadership in this field.
Our approach
Environmental, Social and Governance (
“ESG”
) issues are the three
central factors in measuring sustainability and can present both
opportunities and threats to the long-term investment performance
the Company aims to deliver to Shareholders. The Board is therefore
committed to taking a responsible approach to ESG matters. There are
two strands to this approach:
•
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 37 to 39. In addition, the Principal Policies statement on pages 20
and 21 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 that high standards of ESG practice
are adopted. 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 the
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
ESG issues are an integral part of the Manager’s investment process,
forming part of the assessment of the Quality and Management criteria
for possible and ongoing investments. The Manager’s ESG teams work
closely with the portfolio managers to create an internally generated
assessment of the relevant ESG issues for each company. As part of the
review process, the Manager will also note if the investment is aligned
explicitly with any of the UN Sustainable Development Goals. Details of
these goals can be found at
www.un.org/sustainabledevelopment/sustainable-development-goals/.
The Manager’s own ESG assessment is cross-referenced against external
sources, for example MSCI ESG Research to check it is comprehensive.
There are two main outcomes of this research. First, the research is
used to initiate discussions with the investee company, to clarify the
Manager’s understanding of the issues involved, to create a dialogue and
to encourage higher standards where appropriate. In this the Manager
may join with other major investors in order to be a yet more powerful
force to drive change. Secondly, it 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 Valuation, as well as driving an ongoing dialogue
between the Manager and the investee company.
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Labour Standards 30%
Corporate Governance 29%
Environmental Stewardship 22%
Climate Change 19%
Source:
BMO Investment Business Limited
2021 engagement analysis
Sustainability Leader examples in the reporting period
Storebrand
The Manager considers Storebrand to have a strong commitment to
responsible investment practices and is an industry leader against
peers. In addition to being a signatory to the UNPRI, it also engages
proactively with investee companies on sustainable business practices.
Wizz Air
Wizz Air have set a target to reduce its CO2 emissions by 25% by 2030,
with a focus on fuel efficiency and a modern fleet. These factors would
make it the lowest carbon airline in Europe by some way. It also has
the most ambitious Transition Pathway Initiative plans in the sector.
Engagement
During the year ended 31 December 2021, the Responsible Investment team engaged with
28
investee companies on a range of ESG topics. The
most common topics for discussion were climate change, corporate governance, labour standards and environmental stewardship. Analysis of this
engagement follows.
Investing in sustainability leaders
ESG issues present opportunities as well as risks. The Company has investments in a number of companies which the Manager has identified as
being leaders in providing sustainable solutions, through the products and services they provide.
sEngagement examples in the reporting period
Tecan
Following Tecan’s Global Leadership Conference, during which the Manager gave a presentation, the Manager
discussed with senior company representatives Tecan’s progress on integrating sustainability considerations into
its corporate planning and board oversight. The Manager also discussed Tecan’s approach to reducing its carbon
emissions. The company’s global carbon footprint (including Scope 3 emissions) is currently being evaluated,
and Tecan has committed to set carbon emission reduction targets in 2022. Additional disclosure on its waste
strategy has also been requested. The Manager continues to be impressed by the company’s willingness to
make progress on a range of environmental and social issues.
Cairn Homes
The Manager held a call with the chair and remuneration committee chair to discuss executive pay. It
specifically discussed the increase to annual bonus postponed from last year and the inclusion of the CEO in the
long-term plan. The CEO has historically participated in a founder share scheme that has seen him receive in
excess of EUR 10 million additional pay. Meanwhile the share price has halved and now the company seeks to
include the CEO in the conventional long-term scheme. The Manager considered the timing of the move to be
inappropriate and asked for additional consideration to be given.
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sEngagement examples in the reporting period (continued)
Marel
The Manager met the board members of Marel to discuss its composition and succession planning,
executive pay structures and its sustainability strategy. The Manager shared its view on the incoming chair’s
independence given his long association with the company. The Manager was pleased that the company
published a 2020 remuneration report and, having listened to investor concerns, was committed to continued
improvement of pay disclosure, with an emphasis on KPIs and target setting including around ESG metrics. The
issue of external auditor rotation was also raised. It highlighted areas of disclosure that need improvement and
hopes to see this in future publications.
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
40
meetings of
investee companies. The Manager did not support management’s
recommendations on at least one resolution at approximately
83%
of
all meetings. With respect to all items voted, the Manager supported
over
91%
of all management resolutions. One of the most contentious
voting issues remained remuneration. Either by voting against or
abstaining, the Manager did not support
26%
of all management
resolutions relating to pay, often due to either poor disclosure or a
misalignment of pay with long-term performance.
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.
sMilestone examples in the reporting period
Symrise
Symrise has responded to the Workforce Disclosure Initiative’s (‘
WDI’
) annual survey. The WDI is a multi-
stakeholder initiative calling for enhanced workforce data that allows investors to better assess companies'
workforce initiatives and engage on specific topics. The participation, still not common, is an important step to
enhancing the management of workforce-related issues.
Cairn Homes
The company has updated its tender process to require that timber products are sourced from certified
renewable sources. Sustainable timber sourcing is now ensured, helping address deforestation-related risks
and opportunities. The Manager has been engaging on this topic for more than a year.
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Climate Change
2021
50
100
150
200
250
European Assets Trust
EMIX Smaller European Companies (ex UK) Index
Source: MSCI ESG
Tons CO2e/sales $m
2020
2019
2022
Last year, the ongoing Covid-19 pandemic and extreme weather events
reinforced the importance of creating a more resilient future. Climate
change, biodiversity loss and human rights are all issues that require
urgent action and it is these areas that engagement focused on in 2021.
It is these areas that will continue to be of focus in 2022.
Climate related engagement activity focuses on the phase-out of
unabated coal generation by 2030 for developed markets, and 2050
for developing markets, both of which are essential to achieve the
Paris goals. The Manager will hold companies to account on net zero
pledges, engaging with all portfolio companies, to ensure the thorough
implementation of net zero strategies.
Effective supply chain management practices are essential to ensuring
the protection of human rights and in 2022 the Manager will engage
with corporates on implementing due diligence across supply chains, as
part of efforts to protect human rights, and enhance business continuity
and general supply chain management practices.
Furthermore, with an over-reliance on social audit firms to assess
supplier compliance, the Manager’s Responsible Investment team will
focus on ensuring audit quality, and for companies in apparel, retail and
service sectors, on appropriately fulfilling their human rights and labour
standards obligations.
Of all the ESG issues the Manager considers, climate change is one of
the most important both in terms of the scale of potential impact and
in how widespread this impact could be across sectors and regions. The
Company expects the Manager to incorporate considerations around
climate change risks and opportunities in its investment processes.
In this report, the Company discloses its assessment of the carbon
footprint of its investments, in line with the recommendations of the
Task Force on Climate-related Financial Disclosures. This measures
the amount of greenhouse gas emissions produced by each investee
company, per US$1m of revenue they generate. This is then aggregated
for the Company as a whole, using the portfolio weights of the
companies, and compared with the benchmark.
The carbon footprint is a measure of the carbon intensity of the
companies the Company invests in. Whilst it does not provide a full
picture of climate risks – since it does not, for instance, capture the
innovation that companies may be undertaking to find solutions – it is
a valuable starting point both for analysis and for shareholder dialogue.
The table highlights that the Company’s portfolio of investments is
significantly less carbon intensive than its benchmark.
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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28 | 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.
Since the beginning of 2020, the global economy has suffered
considerable disruption due to the effects of the COVID-19 pandemic.
The Directors have reviewed the risk register for the Company which
identifies the risks that the Company is exposed to, the controls in place
and the actions being taken to mitigate them. The principal ongoing
risks and uncertainties currently faced by the Company, and the controls
and actions to mitigate those risks, are described below.
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 67. 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
Strategic 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.
Failing performance results in reduced demand for the Company’s shares and
a widening share price discount.
No change in overall risk in year
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.
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.
No change in overall risk in year
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.
The Manager
Failure of Investment Manager or loss of senior staff could cause reputational
damage and/or place the business in jeopardy.
Execution risk arising from the acquisition of BMO GAM EMEA by Columbia
Threadneedle.
No change in overall risk in year
The Board meets regularly with the management of BMO 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 BMO.
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. In future years it is anticipated that the Company
will be subject to increasing ESG related reporting.
No change in overall risk in year
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.
Service provider failure
Error, fraud or control failures at service providers or loss of data through
cyber-attack or business continuity failure could damage reputation or result
in loss of assets.
No change in overall risk in year
The Board receives regular reports from the Investment Manager on oversight of third
party service providers, together with annual ISAE 3402 reports on controls.
The Depositary oversees custody of investments and cash in accordance with the
requirements of the AIFMD. The Custodian also provides an annual ISAE 3402 report.
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Report and Accounts 2021 | 29
Strategic Report
Principal Risks Mitigation Actions taken in the year
No change in overall risk in year
An annual strategy meeting of the Board is held to consider longer terms 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
update 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 2021 the powers to issue and buyback shares.
No change in overall risk in year
Share price total return (23.2 per cent in Sterling) and net asset value total return (16.3
per cent in Sterling)
exceeding the benchmark, the EMIX Smaller European Companies
(ex UK) Index (14.9 per cent) over the year.
The share price discount of the Company has fallen to 4.4% as at 31 December 2021
(2020: 9.4%). This is a reflection of increased demand for the Company’s shares.
Sustainability and ESG disclosures are included on pages 24 to 27.
No change in overall risk in year
At the Board’s annual strategy meeting held in November 2021, the CEO of Columbia
Threadneedle Investments EMEA updated the Board with regard to the acquisition of
BMO GAM EMEA. In addition, the Chairman met the CEO earlier in the year when the
acquisition was first announced.
Following the onset of the COVID-19 pandemic home working arrangements have
been implemented at the Manager without any impact upon service delivery and
operations.
No change in overall risk in year
The Company has lodged its 2020 Annual Report with Companies House. It has also
submitted its 2021 tax return to HMRC.
At the Board’s annual strategy meeting held in November 2021, the Manager
presented an update on the latest investment trust developments on ESG reporting.
The 2021 Annual General Meeting of the Company was held on 13 May 2021. Due to
travel and gathering restrictions arising from the COVID-19 pandemic, Shareholders
were not able to attend in person. However, Shareholders were able to view online
a presentation by the Company’s Investment Manager and participate in a live
question and answer session with him and the Chairman.
No change in overall risk in year
The Investment Manager continues to strengthen and develop its Risk, Compliance
and Internal Control functions including IT security. Supervision of BMO GAM’s third
party service providers has been maintained by BMO GAM and includes assurances
regarding IT security and cyber-attack prevention. The Depositary oversees custody of
investments and cash and reports to the Board in accordance with the AIFMD.
Following the onset of the COVID-19 pandemic home working arrangements have
been implemented at many of the Company’s service providers without any impact
upon service delivery and operations.
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
Rational’s range of combi-steamer ovens reduce costs, energy consumption and
improve the quality of the prepared food.
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Directors
Governance Report
Julia Bond OBE
Senior Independent Director and Chair of
Remuneration and Nomination Committee
has 29 years’ experience of capital markets in the
financial services sector, most recently at Credit
Suisse where she led global client facing teams
alongside leading One Bank Delivery. She has served
on various boards and is currently a non-executive
director of International Public Partnerships, Strategic
Command and the British Foreign and Commonwealth
Development Office. Julia was formerly Vice Chair of
the Royal Academy of Dance.
Shared directorships with other Directors: None
Jack Perry CBE
Chairman and Chair of Management Engagement
Committee
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.
Shared directorships with other Directors: None
Martin Breuer
is Founder and CEO of 2M SRLS and Gruppo Glossip
Srl, both companies active in the international beauty
business. 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
has worked for over 25 years in equities. Her roles
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 more recently working
with earlier stage private companies.
She was appointed to the Board on 26 February 2021.
Shared directorships with other Directors: None
Stuart Paterson
Chair of Audit and Risk Committee
is a co-founder and partner of Scottish Equity
Partners, one of Europe’s leading technology growth
equity investors. He is an experienced technology
investor with over 20 years of equity investing and
board positions in European private companies. He is
a member of the Institute of Chartered Accountants
of Scotland.
Shared directorships with other Directors: None
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overnance
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eport
Management and Advisers
Board
Jack Perry (Chairman and Chair of the Management
Engagement Committee)
Julia Bond (Senior Independent Director and Chair of the
Remuneration and Nomination Committee)
Stuart Paterson (Chair of the Audit and Risk Committee)
Martin Breuer
Pui Kei Yuen (appointed 26 February 2021)
All Directors are non-executive
Registered Office
Exchange House
Primrose Street
London
EC2A 2NY
Investment Manager, Secretary and AIF Manager
BMO 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
Email: webqueries@computershare.com
Loan Provider
The Bank of Nova Scotia,
London Branch
201 Bishopsgate
6th Floor
London
EC2M 3NS
Brokers
Panmure Gordon (UK) Limited
One New Change
London EC4M 9AF
Depositary
JP Morgan Europe Limited
25 Bank Street
Canary Wharf
London
E14 5JP
Custodian
JP Morgan 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
1 Exchange Crescent
Conference Square
Edinburgh EH3 8UL
Tax Advisers
Ernst & Young LLP
Atria One
144 Morrison Street
Edinburgh
EH3 9EX
Website
www.europeanassets.co.uk
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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32 | European Assets Trust PLC
Governance Report
Directors’ Report
The Directors submit the Report and Accounts of the Company for the year ended 31 December 2021.
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 7. Principal risks can be found on page 28 with further
information on page 67. There are no instances where the Company is
required to make disclosures in respect of Listing Rule 9.8.4R.
The Company is exempt from Streamlined Energy and Carbon
Reporting Disclosures as it has consumed less than 40,000 kilowatts
of energy in the United Kingdom during the year.
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 53, comply with current
International Financial Reporting 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 auditor’s unqualified opinion on the
financial statements appears on pages 47 to 52.
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
2021 are set out below.
Dividends paid in the year ended 31 December 2021
First interim dividend for the year ended
31 December 2021 paid on 29 January 2021
2.00p
Second interim dividend for the year ended
31 December 2021 paid on 30 April 2021
2.00p
Third interim dividend for the year ended
31 December 2021 paid on 30 July 2021
2.00p
Fourth interim dividend for the year ended
31 December 2021 paid on 29 October 2021
2.00p
As explained in the Chairman’s Statement, the Board has resolved
to pay an interim dividend of, in aggregate, 8.80 pence per share
for 2022. The interim dividend for 2022 will be paid in four equal,
quarterly instalments on 31 January, 29 April, 29 July and 31 October
2022 to registered holders of shares at an appropriate record time.
The first quarterly dividend of 2.20 pence per share was paid on
31 January 2022 to Shareholders on the register of members on 14
January 2022 with an ex-dividend date of 13 January 2022.
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 2022 Annual General Meeting
(“
AGM
”) to approve the Company’s dividend policy as set out on
page 20 of this report. (
Resolution 2
in the Notice of AGM set out
on pages 73 to 77).
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
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 20 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.
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Report and Accounts 2021 | 33
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overnance
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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 17 March 2022, the latest practicable
date before the publication of this report, borrowings amounted
to €30 million. This is comparison to a net asset value of €508.5
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 2027.
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.
Based on their assessment, and in the context of the Company’s
business model, strategy and operational arrangements set out
above, 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 2027. 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 auditor
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 auditor is 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 auditor is aware of that
information.
Appointment of auditors and auditor’s remuneration
Resolutions 4 and 5
seek shareholder approval, respectively, for
the re-appointment of PricewaterhouseCoopers LLP as the auditor
of the Company and to authorise the Audit and Risk Committee to
determine their remuneration for the year ended 31 December 2022.
Capital structure
As at 31 December 2021 there were 360,069,279 Ordinary Shares in
issue. As at 17 March 2022 (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
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.
•
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.
•
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 28 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 impact of COVID-19 and
the resulting volatility in stockmarkets and economic disruption when
making this assessment.
As discussed in note 23 to the financial report on page 72, 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
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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34 | European Assets Trust PLC Report and Accounts 2021 | 35
Governance Report
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 2021 the Company had received notification of the
following holding of voting rights (under the FCA’s Disclosure and
Transparency Rules):
Ordinary Shares
Held
% of Ordinary
Shares Held
1607 Capital Partners LLC
18,152,817
5.04%
Since 31 December 2021, 1607 Capital Partners LLC has notified the
Company that its holding has been reduced to 17,873,069 shares.
BMO Retail Products owned 116,289,634 Ordinary Shares or 32.3 per
cent of the issued share capital of the Company, at 31 December 2021.
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 BMO 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 2021 the Company entered in to a €45 million multi-currency
revolving loan facility with Royal Bank of Scotland International
expiring March 2022. 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 Royal Bank of Scotland International.
As at 31 December 2021 the loan facility was €30 million drawn.
Following the year end, the Company has agreed to refinance its facility
with The Bank of Nova Scotia, London Branch on favourable terms.
Remuneration Report
The Directors’ Remuneration Report, which can be found on page 41,
provides detailed information on the remuneration arrangements
for Directors of the Company, including the Directors’ Remuneration
Policy.
Shareholders are asked to approve the policy at an AGM every three
years. There have been no changes to the policy since approval by
Shareholders in 2020.
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. It is intended that the policy
approved by Shareholders at the 2020 AGM will continue for the
three-year period ending at the AGM in 2023.
Shareholders will be asked to approve the Directors’ Remuneration
Report (
Resolution 3
).
Director re-elections
The names of the Directors, along with their biographical details, are
set out on page 30.
With the exception of Pui Kei Yuen, who was appointed on 26
February 2021, all the Directors held office throughout the period
under review.
All directors will stand for re-election by Shareholders at the AGM.
Following a review of their performance, the Board believes that
each of the Directors standing for 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 Jack Perry, who has served
the Company and its predecessor for over 7 years, 6 as Chairman. He
has served on the Boards of FTSE 250 and other public and private
companies and is a member of the Institute of Chartered Accountants
of Scotland. He was Managing Partner for Scotland and Northern
Ireland for Ernst and Young and is currently Chairman of one other
investment company and non-executive director of another.
Resolution 7
concerns the re-election of Julia Bond, who has served
the Company and its predecessor for over 7 years and has a strong
financial sector background having held senior positions within
Credit Suisse. She is currently a non-executive director of another
investment trust, Strategic Command and the British Foreign and
Commonwealth Development Office.
Resolution 8
concerns the re-election of Stuart Paterson who has
served on the Board for over two 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 20 years of equity investing in European private
companies and is a member of the Institute of Chartered Accountants
of Scotland.
Resolution 9
concerns the re-election of Martin Breuer, who has
served the Company and its predecessor for over 5 years. He is a
German national, currently based in Italy, with extensive industrial
experience with Continental European companies.
Resolution 10
concerns the re-election of Pui Kei Yuen, who was
appointed to the Board on 26 February 2021. She has extensive
experience in the fund management and investment banking
industries at Mercury Asset Management, UBS and Bank of America
Merrill Lynch.
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.
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overnance
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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 JP Morgan
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
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
AGM The Notice of AGM to be held on 17 May 2022 at 3.00pm is set
out on pages 73 to 77.
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 NAV 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 NAV 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.
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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The authorities contained in Resolutions 11 and 12 will continue
until the AGM of the Company in 2023, and the Directors envisage
seeking renewal of these authorities in 2023 and in each succeeding
year, subject to such renewals again being in accordance with the
applicable investor protection guidelines.
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 re-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 2023, and the Directors envisage seeking
renewal of this authority in 2023 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.
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
BMO Investment Business Limited
Secretary
21 March 2022
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Corporate Governance
Introduction
The Company is committed to high standards of corporate
governance and accordingly adheres, in so far as they are relevant to
an investment trust the requirements of the 2018 revised Corporate
Governance Code (“
the Code
”) of the Financial Reporting Council
(“
FRC
”). The Association of Investment Companies (“
the AIC
”) has
issued its own revised Code (“
the AIC Code
”). Both revised codes are
effective for accounting periods beginning on or after 1 January 2019.
The Company has adopted corporate governance arrangements which
follow the general principles of the AIC Code. Significant differences
in actual practice are detailed below.
Since all Directors are non-executive, the provisions on the role of the
chief executive and on Directors’ remuneration are not relevant to the
Company (except in so far as they apply to non-executive Directors)
and are therefore not reported on further.
In view of its non-executive nature and the requirement of the
Articles of Association that all in accordance are subject to retirement
by rotation, the Board does not consider it appropriate for the
Directors to be appointed for a specified term. The Articles of
Association require the Directors to retire by rotation at least every
three years, and the Board has agreed that in accordance with the AIC
Code all directors will retire annually.
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
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 38 sets out the number of scheduled and adhoc
Board and Committee meetings held during the year ended 31
December 2021 and the number of meetings attended by each
Director.
At the Annual General Meeting held on 13 May 2021 all Directors
attended the online investor presentation. Three Directors attended
the closed formal business of this meeting.
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.
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 fully recorded through
a process that allows Director’s concerns to be 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.
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Governance Report
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.
The Report of the Audit and Risk Committee is contained on pages
43 and 44.
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
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 will now be subject to
annual re-election at each AGM. Following the evaluation process set
on page 37, 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 re-election be re-elected.
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 this plan Pui Kei Yuen was appointed to the Board
with effect from 26 February 2021. Laurence Jacquot retired at the
conclusion of the AGM of the Company held on 13 May 2021.
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
Year ended
31 December 2021
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
3
3
2
2
1
1
Julia Bond OBE
5
5
3
3
2
2
1
1
Stuart Paterson
5
5
3
3
2
2
1
1
Martin Breuer
5
5
3
3
2
2
1
1
Pui Kei Yuen
(1)
4
4
2
2
1
1
1
1
Laurence Jacquot
(2)
3
3
2
2
2
2
1
1
(1)
Appointed 26 February 2021.
(2)
Retired 13 May 2021.
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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.
The Report of Management Engagement Committee is contained on
page 45.
Remuneration and Nomination Committee
The Company has established a Remuneration and Nomination
Committee, which is chaired by the Senior Independent Director, Julia
Bond and consists of all the independent members of the Board. The
Remuneration and Nomination Committee meets at least once a year.
The Report of the Remuneration and Nomination Committee on page
40 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.
Other than the formal authorisation of the Directors’ other
directorships and appointments, no authorisations have been sought.
Stuart Paterson is a member of the Supervisory Board of Mister Spex
SE, an investment of the Company, and therefore is recused from
Board discussions on this holding.
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. In normal circumstances, 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 2021.
Julia Bond has been appointed Senior Independent Director. The
Senior Independent Director is available to Shareholders if they
have concerns which initial contact through the Chairman or
Company Secretary has failed to resolve or for which such contact
is inappropriate. 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
BMO Investment Business Limited
Secretary
21 March 2022
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Governance Report
Report of the Remuneration and
Nomination Committee
Following a rigorous selection process Pui Kei Yuen was appointed
to the Board with effect from 26 February 2021. Laurence Jacquot
retired from the Board at the AGM held on 13 May 2021.
It is planned that the Chairman of the Company will retire in 2024.
The recruitment for this role, using external consultants, will take
place in late 2022/early 2023 with a view to appointing a successor
in Spring 2023. This will allow for a period of overlap before the
Chairman’s retirement.
Diversity
The Board’s diversity policy, objective and progress in achieving it
are set out on page 21.
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 37. The
conclusion from the process was that the committee was operating
effectively, with the right balance of membership, experience and
skills.
Julia Bond
Remuneration and Nomination Committee Chairman
21 March 2022
Role of the Committee
The Committee met on two occasion 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, 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.
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OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
Introduction
This Directors’ remuneration report covers the year ended
31 December 2021.
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 2020 with 93.5% voting in favour and 6.5% against. The policy
will next be put to Shareholders for approval at the AGM to be held
in 2023.
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.
Directors’ Remuneration Report
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 2022 the annual rates of remuneration will be increased by
approximately 4% to £46,250 for the Chairman, £36,750 for the
Chairman of the Audit and Risk Committee, £35,750 for the Senior
Independent Director and £31,500 for a Non-executive Director.
As disclosed in the Report and Accounts 2019, during the year ended
31 December 2020 and in line with the recommendations of external
consultants, Trust Associates, the Directors received a one-off fee of
£5,000 each to compensate for the additional work involved in the
migration. The one-off fee for the senior independent director was
£7,500 and £10,000 in the case of the Chairman. As Stuart Paterson
and Pui Kei Yuen joined the Board following the completion of the
migration it is confirmed that neither were eligible for a one-off fee.
The Board is composed solely of non-executive Directors, none of
whom has a service contract with the Company. Each new Director
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 will stand for re-election at the AGM to be held on
17May 2022.
Fees for services to the Company for the year ended 31 December (audited)
Fees
Taxable Benefits
(1)
Total
Fees
(audited)
(audited)
(audited)
(unaudited)
2021
2020
(2)
2021
2020
2021
2020
(2)
2022
Director
£
£
£
£
£
£
£
Jack Perry CBE
44,375
54,000
941
1,687
45,316
55,687
45,810
Stuart Paterson
35,300
33,223
382
–
35,682
33,223
36,410
Julia Bond OBE
34,300
41,500
888
45
35,188
41,545
35,410
Martin Breuer
30,225
35,000
457
585
30,682
35,585
31,200
Laurence Jacquot
(3)
11,070
35,000
38
686
11,108
35,686
n/a
Pui Kei Yuen
(4)
25,520
n/a
803
n/a
26,323
n/a
31,200
Professor Robert van der Meer
(5)
n/a
17,969
n/a
725
n/a
18,694
n/a
Total
180,790
216,692
3,509
3,728
184,299
220,420
180,030
(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)
Includes one-off payment per additional work in relation to the migration.
(3)
Retired 13 May 2021.
(4)
Appointed 26 February 2021.
(5)
Retired 14 May 2020
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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.
(1)
Appointed 26 February 2021.
(2)
Retired 13 May 2021.
Since the year end Martin Breuer has purchased 10,000 shares. 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.
Directors’ Share
2021 2020
interests (audited)
Jack Perry
81,606
77,168
Julia Bond
91,428
91,428
Stuart Paterson
95,000
95,000
Martin Breuer
90,000
90,000
Pui Kei Yuen
(1)
7,700
n/a
Laurence Jacquot
(2)
n/a
25,000
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 13 May 2021 Shareholders approved the Directors’
Remuneration Report in respect of the year ended 31 December 2020.
95.1% of votes were cast in favour of the resolution and 4.9% 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 2022 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
With effect
from
from
1 April 2022
1 April 2021
£
£
Chairman
46,250
44,500
Chairman of Audit and
Risk Committee
36,750
35,400
Senior Independent Director
Senior Independent Director Senior Independent Director
35,750
34,400
Non-executive Director
Non-executive Director Non-executive Director
31,500
30,300
Dec 11 Dec 12
Dec 13
Dec 14
Dec 18
Dec 19
Dec 20
Dec 21
Dec 17
Dec 16 Dec 15
Source: Reuters Eikon
European Assets Trust
EMIX Smaller European Companies (ex UK) Index
∞
Share Price Total Return Performance
‡
(in Sterling terms, rebased to 100 at 31 December 2011)
525
500
475
450
425
400
375
350
325
300
275
250
225
200
175
150
125
100
75
‡
European Assets Trust NV prior to migration on 16 March 2019.
∞
With effect from 1 April 2021 the benchmark changed from EMIX Smaller
European Companies (ex UK) Index (gross) to EMIX Smaller European Companies
(ex UK) Index (net).
On behalf of the Board
Jack Perry
Chairman
21 March 2022
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:
*
2020 Includes one-off payment for additional work in relation to the migration.
2021 2020
£’000s £’000s %
Aggregate Board remuneration
(excluding taxable benefits)
*
181
217
-16.6
Management and other expenses
4,513
3,714
+21.5
Dividends paid to Shareholders
28,804
25,272
+14.0
Year end Net Asset Value
525,435
478,004
+9.9
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42 | European Assets Trust PLC Report and Accounts 2021 | 43
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overnance
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eport
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
Report of the Audit and Risk Committee
All of the Directors are members of the Committee. The Committee is
chaired by Stuart Paterson.
The duties of the committee include reviewing the annual
and interim Accounts, the system of internal controls, and
the terms of appointment and remuneration of the auditor,
PricewaterhouseCoopers LLP (‘PwC’), including its independence
and objectivity. It is also the forum through which the auditor
reports 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 auditor.
The Audit and Risk Committee met on three occasions during the
year and the attendance of each of the members is set out on page
38. 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 auditor 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.
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
Significant issues considered by the Audit and Risk Committee for the year ended 31 December 2021
Appropriateness of viability assessment
Effectiveness of internal control environment
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 Company discloses a viability assessment and statement in
accordance with the requirements of the UK Corporate Governance
Code.
On an annual basis the Audit and Risk Committee considers the
Company’s internal control environment.
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.
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
was considered. Further analysis of the five year viability assessment
and the application of the going concern principle are detailed on page
32 and note 23 to the financial statements.
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 2021.
During the year, the Chair of the Committee met representatives of
the Manager to discuss the control reports of a third party service
provider.
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44 | European Assets Trust PLC Report and Accounts 2021 | 45
auditor’s plan for the audit of the financial statements for the year ended
31 December 2021. 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 auditor issued an unqualified audit report which
is included on pages 47 to 52.
Following the implementation of the Statutory Audit Amending
Disclosure, with effect from 1 January 2017, the auditor is 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 auditor, 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 change its auditors at least until after the audit in
respect of the year ended 31 December 2024. It is the current intention
of the Audit and Risk Committee not to change the auditor until then.
The Audit and Risk Committee, from direct observation and enquiry of
the Manager, remains satisfied that the auditor continues 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 first 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 auditor’s 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
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 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
21 March 2022
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overnance
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OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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 Investment 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.
Currently 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 the Company’s website
www.europeanassets.co.uk
.
The Manager’s Evaluation Process
The Committee meets annually. Its most recent meeting was March
2022 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 2022, 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
21 March 2022
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46 | European Assets Trust PLC
Financial Statements
Statement of Directors’ Responsibilities in
Respect of the Financial Statement
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.
Directors’ confirmations
Each of the Directors, whose names and functions are listed on page
30 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
21 March 2022
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Report and Accounts 2021 | 47
Auditors’ Report
Report on the audit of the financial statements
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 2021 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 (the ‘Annual Report’) which comprise: the Statement of Financial
Position as at 31 December 2021; the Statement of Comprehensive Income, the Statement of Cash Flow and the Statement of changes in Equity 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.
Our audit approach
Overview
Audit scope
•
The Company is a standalone Investment Trust Company and engages BMO Investment Business Limited (the "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
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 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: £5,254,345 (2020: £4,780,044) based on 1% of Net Asset Value (NAV).
•
Performance materiality: £3,940,759 (2020: £3,585,033).
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.
Independent Auditors’ Report
To the members of European Assets Trust PLC
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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48 | European Assets Trust PLC
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 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.
'Consideration of impacts of COVID-19' and 'Change in presentational currency', which were key audit matters last year, are no longer included because
of reduced uncertainty of the impact of COVID-19 in the current year as markets and economies continue to recover and the completion of the work to
change the presentational currency of the Trust from Euros to Pounds Sterling in the prior year. Otherwise, the key audit matters below are consistent
with last year.
Key audit matter
Valuation and existence of investments
The investment portfolio at the year-end comprised listed equity
investments valued at £539.8m. 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 within the financial statements.
Accuracy, occurence and completeness of income from investments
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). Income from investments comprised dividend income.
We focused on the accuracy, occurrence and completeness 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.
How our audit addressed the key audit matter
We tested the valuation of 100% of the listed equity investments by
agreeing the prices used in the valuation to independent third-party
sources.
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 listed equity investments exist and that the valuation of listed
equity investments is not materially misstated.
We tested the accuracy of dividend receipts 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.
To test for completeness, we tested that the appropriate dividends had
been received in the year by reference to independent data of dividends
declared for all dividends during the year.
In addition, we tested dividend receipts by agreeing the dividend rates
from all investments to independent third party sources.
We tested the allocation and presentation of dividend income, including
special dividends, between income and capital by agreeing treatments
to third party sources.
We assessed the accounting policy for dividend income recognition for
compliance with accounting standards and the AIC SORP and performed
testing to check that income had been accounted for in accordance with
this stated accounting policy.
We found that the accounting policies implemented were in accordance
with accounting standards and the AIC SORP, and that income has been
accounted for in accordance with the stated accounting policy.
No misstatements were identified which required reporting to those
charged with governance.
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 such work.
Following this assessment, we applied professional judgement to determine the extent of testing required over each balance in the financial
statements.
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Report and Accounts 2021 | 49
Auditors’ Report
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
£5,254,345 (2020: £4,780,044).
How we determined it
1% of Net Asset Value.
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% (2020: 75%) of overall materiality, amounting to £3,940,759 (2020: £3,585,033) 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 £262,717 (2020:
£239,002) 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 Director’s updated risk assessment and considering whether it addressed the relevant threats presented by Covid-19;
•
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 NAV as a result of a severe but plausible downside in the market’s performance on the
ongoing ability of the Company to operate.
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
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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50 | European Assets Trust PLC
Financial Statements
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 2021 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 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 group 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.
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Report and Accounts 2021 | 51
Auditors’ Report
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 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 and Chapter 15 of the UK Listing Rules applicable to Closed-Ended Investment Funds. 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:
•
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;
•
Reviewing relevant meeting minutes, including those of the Audit and Risk Committee;
•
Assessment of 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 any journals with unusual account combinations; 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.
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52 | European Assets Trust PLC
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 3 years,
covering the years ended 31 December 2019 to 31 December 2021.
Jennifer March
(Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
21 March 2022
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Report and Accounts 2021 | 53
F
inancial Statements
Statement of Comprehensive Income
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
For the year ended
31 December 2021
Year ended
31 December 2020
Revenue
£’000s
Capital
£’000s
Total
£’000s
Revenue
£
’000s
Capital
£
’000s
Total
£
’000s
12
Gains on investments held at fair
value through profit or loss
– 102,892 102,892
–
63,376
63,376
Foreign exchange gains/(losses)
8 469 477
134
(1,464)
(1,330)
3
Income
8,157 – 8,157
3,934
–
3,934
5
5
Management fees
(739) (2,954) (3,693)
(582)
(2,329)
(2,911)
6
6
Other expenses
(995) (7) (1,002)
(904)
(116)
(1,020)
Profit before finance costs and taxation
6,431 100,400 106,831
2,582
59,467
62,049
8
8
Finance costs
(50) (201) (251)
(19)
(76)
(95)
Profit before taxation
6,381 100,199 106,580
2,563
59,391
61,954
9
Taxation
(937) – (937)
(413)
–
(413)
Profit for the year and total
comprehensive income
5,444 100,199 105,643
2,150
59,391
61,541
11
Earnings per share basic and diluted –
pence
1.51 27.83 29.34
0.60
16.49
17.09
The accompanying notes on pages 57 to 72 are an integral part of these financial statements.
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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54 | European Assets Trust PLC
Financial Statements
Statement of changes in Equity
Notes
For the year ended 31 December 2021
Share
capital
£
‘000s
Distributable
reserve*
£
‘000s
Capital
reserve*
£
‘000s
Revenue
reserve*
£
‘000s
Cumulative
translation
reserve
£
‘000
Total
Shareholders'
funds
£
‘000s
Balance at 31 December 2020
37,506
346,054
88,462
–
5,982
478,004
Movement during the year ended
31 December 2021
10
Interim dividends distributed and reinvested
–
(23,360)
–
(5,444)
–
(28,804)
Total comprehensive income
–
–
100,199
5,444
–
105,643
Cumulative translation adjustment
–
–
–
–
(29,408)
(29,408)
Balance as at 31 December 2021
37,506
322,694
188,661
–
(23,426)
525,435
Notes
For the year ended 31 December 2020
Share
capital
£
‘000s
Distributable
reserve*
£
‘000s
Capital
reserve*
£
‘000s
Revenue
reserve*
£
‘000s
Cumulative
translation
reserve
£
‘000
Total
shareholders'
funds
£
‘000s
Balance at 31 December 2019
37,493
369,191
28,942
–
(17,484)
418,142
Movement during the year ended
31 December 2020
10
Interim dividends distributed and reinvested
13
(23,122)
129
(2,150)
–
(25,130)
Total comprehensive income
–
–
59,391
2,150
–
61,541
17
Costs associated with share issues
–
(15)
–
–
–
(15)
Cumulative translation adjustment
–
–
–
–
23,466
23,466
Balance as at 31 December 2020
37,506
346,054
88,462
–
5,982
478,004
The accompanying notes on pages 57 to 72 are an integral part of these financial statements.
*These reserves include balances that are distributable by way of dividend, as disclosed in note 2(k).
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Report and Accounts 2021 | 55
F
inancial Statements
The accompanying notes on pages 57 to 72 are an integral part of these financial statements.
Statement of Financial Position
Approved by the Board and authorised for issue on 21 March 2022 and signed on its behalf of by:
Jack Perry, Chairman
.
Notes
31 December
2021
£’000s
31 December
2020
£’000s
Non-current assets
12
Investments at fair value through profit or loss
539,756
499,946
Current assets
13
Other receivables
2,680
2,276
Cash and cash equivalents
8,342
2,950
Total current assets
11,022
5,226
Current liabilities
14
Other payables
(155)
(315)
15
Bank loan
(25,188)
(26,853)
Total current liabilities
(25,343)
(27,168)
Net current liabilities
(14,321)
(21,942)
Net assets
525,435
478,004
Capital and reserves
16
Share capital
37,506
37,506
17
Distributable reserve*
322,694
346,054
18
Capital reserves*
188,661
88,462
18
Revenue reserve*
–
–
Cumulative translation reserve
(23,426)
5,982
Total Shareholders’ funds
525,435
478,004
19
Net Asset Value per ordinary share – pence
145.93
132.75
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
*These reserves include balances that are distributable by way of dividend, as disclosed in note 2(k).
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56 | European Assets Trust PLC
for the year ended 31 December
Notes
2021
£’000s
2020
£’000s
20
Cash flows from operating activities before dividends received and interest paid
(4,660)
(3,785)
Dividends received
6,842
3,431
Interest paid
(271)
(67)
Cash flows from operating activities
1,911
(421)
Investing activities
Purchase of investments
(107,481)
(204,728)
Sale of investments
139,299
195,377
Other capital expenses
(7)
(116)
Cash flows from investing activities
31,811
(9,467)
Cash flows before financing activities
33,722
(9,888)
Financing activities
10
Equity dividends paid
(28,804)
(25,130)
Costs associated with share issues
–
(15)
15,21
Drawdown of bank loan
8,538
26,853
15,21
Repayment of bank loan
(8,500)
–
Cash flows from financing activities
(28,766)
1,708
Net movement in cash and cash equivalents
4,956
(8,180)
Cash and cash equivalents at the beginning of the year
2,950
11,516
Effect of movement in foreign exchange
477
(1,330)
Translation adjustment
(41)
944
Cash and cash equivalents at the end of the year
8,342
2,950
Represented by:
Cash at bank
13
811
Short term deposits
8,329
2,139
8,342
2,950
Financial Statements
Statement of Cash Flow
The accompanying notes on pages 57 to 72 are an integral part of these financial statements.
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Report and Accounts 2021 | 57
Financial Statements
Notes to the Financial Statements
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 Exchange House, Primrose Street, London, EC2A 2NY, 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 2021, 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”), and International
Accounting Standards and Standing Interpretations Committee interpretations approved by the International Accounting Standards Committee
(“IASC”) that remain in effect, and to the extent that they have been adopted by the European Union.
Where presentational guidance set out in the 2021 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.
All transactions during the year are translated on the date of execution and the Statement of Financial Position as at the year end date.
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 33 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 or new standards and interpretations during the year, none of which the Board expect to have a
significant effect on the Company’s accounts:
•
IAS 1 Amendment – Presentation of Financial Statements;
•
IAS 8 Amendment – Accounting Policies, Changes in Accounting Estimates and Errors.
•
IFRS 9, IAS 39 and IFRS 7 Amendments – Interest Rate Benchmark Reform.
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:
•
Amendments to IFRS 17 – 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 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.
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.
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58 | European Assets Trust PLC
2. Significant accounting policies (continued)
d) Financial instruments (continued)
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 receivable 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.
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 reserve
Capital reserves – arising on investments sold and distributable by way of a dividend in accordance with the Companies Act sections
830(2), 832, and 833.
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.
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Report and Accounts 2021 | 59
Financial Statements
2. Significant accounting policies (continued)
k) Share capital and reserves (continued)
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 as defined by the Institute of Chartered Accountants in England and Wales and the Institute of Chartered
Accountants in Scotland technical guidance TECH 02/17BL.
(v)
Cumulative translation reserve
This reserve comprises all foreign exchange differences arising from the translation from the Company’s functional currency, Euros, 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.
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 as a consequence of the migration and where 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.
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60 | European Assets Trust PLC
2. Significant accounting policies (continued)
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 30 December (with regard to Sterling)
2021
2020
Danish Krone
8.85844
8.31584
Norwegian Krone
11.94395
11.70375
Euro
1.19104
1.11720
Swedish Krona
12.26299
11.22614
Swiss Franc
1.23411
1.20831
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. 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 2021
£’000s
2020
£‘000s
Dividend income
(1)
from listed investments in:
- Austria
- Denmark
- France
- Germany
- Iceland
- Ireland
- Italy
- Netherlands
- Norway
- Portugal
- Spain
- Sweden
- Switzerland
–
414
607
1,023
108
180
850
171
2,477
213
187
1,566
361
297
647
212
683
135
–
360
233
268
152
292
341
314
Total income
8,157
3,934
(1)
Dividend income includes special dividends classified as revenue in nature in accordance with note 2(q)
of £147,000 (2020: £892,000).
Financial Statements
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Financial Statements
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 equity 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.
5. Management fee
2021
2020
Revenue Capital Total
Revenue
Capital
Total
£’000 £’000 £’000
£’000
£’000
£’000
Management fee
739 2,954 3,693
582
2,329
2,911
The Manager receives a fee equal to 0.75 per cent per annum of the value of funds under management up to €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
BMO on request.
6. Other expenses
Revenue
£’000s
Capital
£’000s
2021
Total
£’000s
Revenue
£’000s
Capital
£’000s
2020
Total
£’000s
Depositary and custody fees
Remuneration of Directors
(1)
– additional remuneration relating to migration
Travel expenses
Indemnity insurance costs
Independent auditors' remuneration
– for audit services
Legal, secretarial and accounting
Broker fees
Marketing, advertising and printing costs
Other expenses
163
181
–
2
11
46
119
36
242
195
–
–
–
–
–
–
–
–
–
7
163
181
–
2
11
46
119
36
242
202
112
184
33
14
12
51
131
37
149
181
–
–
–
–
–
–
–
–
–
116
112
184
33
14
12
51
131
37
149
297
Total other expenses
995 7 1,002
904
116
1,020
All expenses are stated gross of irrecoverable VAT, where applicable.
(1)
See the Directors’ Remuneration Report on page 41.
(2)
Total Auditors’ remuneration for audit services, exclusive of VAT amounts to £39,000 (2020: £45,700). There were no non-audit services paid to PwC in
the year (2020: none).
7. Directors fees
The emoluments of the Chairman, the highest paid Director, were at the rate of £44,500 per annum (2020: £44,000).
Other Directors' emoluments amounted to £30,300 (2020: £30,000) each per annum, with the chairman of the Audit and Risk Committee
receiving an additional £5,100 (2020: £5,000) per annum and the Senior Independent Director an additional £4,100 (2020: £4,000). Full details
are provided in the Directors' Remuneration Report on pages 41 and 42.
As a result of additional work required for the migration of the Company from the Netherlands to the United Kingdom, consultants
recommended that the Board of Directors received an additional one-off payment of £33,000 in total, paid in 2020.
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8. Finance costs
Revenue
£’000s
Capital
£’000s
2021
Total
£’000s
Revenue
£’000s
Capital
£’000s
2020
Total
£’000s
Loan interest
Bank interest charges
41
9
164
37
205
46
10
9
39
37
49
46
Total finance cost
50 201 251
19
76
95
Finance costs have been allocated 80% to capital reserve in accordance with the Company's accounting policies.
9. Taxation
(a) Analysis of tax charge / (credit) for the year
Revenue
£’000s
Capital
£’000s
2021
Total
£’000s
Revenue
£’000s
Capital
£’000s
2020
Total
£’000s
Overseas taxation
937 – 937
413
–
413
Total taxation (see note 9(b))
937 – 937
413
–
413
The tax assessed for the year is lower (2020: lower) than the standard rate of corporation tax in the UK.
(b) Factors affecting the current tax charge for the year
Revenue
£’000s
Capital
£’000s
2021
Total
£’000s
Revenue
£’000s
Capital
£’000s
2020
Total
£’000s
Net profit on ordinary activities before taxation
6,381 100,199 106,580
2,563
59,391
61,954
Net profit on ordinary activities multiplied by the standard
rate of corporation tax of 19% (2020: 19%)
Effects of:
Dividends*
Capital returns*
Currency (gains)/losses
Expenses not utilised in the year
Overseas taxation not relieved
1,212
(1,549)
–
(2)
339
937
19,038
–
(19,550)
(89)
601
–
20,250
(1,549)
(19,550)
(91)
940
937
487
(748)
–
(25)
286
413
11,284
–
(12,041)
278
479
–
11,771
(748)
(12,041)
253
765
413
Total taxation (see note 9(a))
937 – 937
413
–
413
*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 2021 (2020: 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.
Financial Statements
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Financial Statements
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
2021
£’000s
2020
£’000s
First of four interims for the year ended 31 December 2020 of 1.755 pence per share
Second of four interims for the year ended 31 December 2020 of 1.755 pence per share
Third of four interims for the year ended 31 December 2020 of 1.755 pence per share
Fourth of four interims for the year ended 31 December 2020 of 1.755 pence per share
First of four interims for the year ended 31 December 2021 of 2.000 pence per share
Second of four interims for the year ended 31 December 2021 of 2.000 pence per share
Third of four interims for the year ended 31 December 2021 of 2.000 pence per share
Fourth of four interims for the year ended 31 December 2021 of 2.000 pence per share
17 Jan 20
14 Apr 20
10 Jul 20
9 Oct 20
15 Jan 21
9 Apr 21
9 Jul 21
8 Oct 21
31 Jan 20
30 Apr 20
31 Jul 20
30 Oct 20
29 Jan 21
30 Apr 21
30 Jul 21
29 Oct 21
–
–
–
–
7,201
7,201
7,201
7,201
6,317
6,318
6,318
6,319
–
–
–
–
28,804
25,272
2021
£’000s
Net revenue return attributable to Shareholders
First of four interims for the year ended 31 December 2021 of 2.000 pence per share
Second of four interims for the year ended 31 December 2021 of 2.000 pence per share
Third of four interims for the year ended 31 December 2021 of 2.000 pence per share
Fourth of four interims for the year ended 31 December 2021 of 2.000 pence per share
5,444
(7,201)
(7,201)
(7,201)
(7,201)
Shortfall paid from distributable reserves
(23,360)
11. Earnings per share
The net revenue results is equivalent to profit before tax per the Statement of Comprehensive Income. The return per share figure is based on
the net profit or loss for the period or year and on the weighted average number of shares in issue during the period or year. The return per
share amount can be further analysed between revenue and capital, as follows:
Revenue
£’000s
Capital
£’000s
2021
Total
£’000s
Revenue
£’000s
Capital
£’000s
2020
Total
£’000s
Net return attributable to equity Shareholders
5,444 100,199 105,643
2,150
59,391
61,541
Return per share – pence
1.51 27.83 29.34
0.60
16.49
17.09
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 (2020:
360,012,510).
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64 | European Assets Trust PLC
12. Investments held at fair value through profit or loss
2021
Total
(Level 1)
£’000s
2020
Total
(Level 1)
£’000s
Cost brought forward
Unrealised gains brought forward
361,025
138,921
329,967
74,623
Fair value of investments at 1 January
Movements in the period:
Purchases at cost
Sales proceeds
Gains on investments sold in the year
Movement in unrealised gains on investments held at the year end
Translation adjustment
499,946
107,287
(139,299)
39,828
63,064
(31,070)
404,590
204,922
(195,377)
21,512
41,864
22,435
Fair value of investments at 31 December
539,756
499,946
Cost at 31 December
Unrealised gains carried forward
368,841
170,915
361,025
138,921
Fair value of investments at 31 December
539,756
499,946
2021
£’000s
2020
£’000s
Gains on investments sold in the year
Movement in unrealised gains on investments held at the year end
39,828
63,064
21,512
41,864
Total gains on investments
102,892
63,376
All assets held by the Company were classified as Level 1 in nature as described in note 2(d) and includes investments and when applicable,
derivatives, listed on any recognised stock exchange.
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 £94,000 of transaction costs including stamp duty on purchases of investments
(2020: £169,000) and £69,000 of transaction costs on sales of investments (2020: £104,000).
Listed equities designated at fair value through profit or loss on initial recognition, incorporated in:
2021
£’000s
2020
£’000s
- Austria
- Belgium
- Denmark
- France
- Germany
- Iceland
- Ireland
- Italy
- Netherlands
- Norway
- Portugal
- Spain
- Sweden
- Switzerland
–
9,370
34,453
39,435
126,050
9,357
7,567
40,758
36,259
67,723
8,649
21,018
85,024
54,093
10,326
-
33,788
25,455
127,663
12,365
6,925
42,327
40,645
53,144
9,434
26,305
71,033
40,536
539,756
499,946
The investment portfolio is set out on pages 17 and 18.
Financial Statements
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Financial Statements
13. Other receivables
2021
£’000s
2020
£’000s
Prepayments
Overseas taxation recoverable
55
2,625
29
2,247
2,680
2,276
14. Other payables
2021
£’000s
2020
£’000s
Investments purchased awaiting settlement
Loan Interest
Accruals
–
8
147
194
28
93
155
315
15. Borrowings
In March 2021 the Company entered into a €45 million multi-currency revolving loan facility with RBS Internaltional expiring March 2022 and
subject to compliance with loan covenants. These Covenants have all been met during the year. The interest rate on the amount drawn down
and commitment fees payable on undrawn amounts are based on commercial terms agreed with RBS International.
As at 31 December 2021 the Company had drawn down €30 million of the loan facility.
Following the year end, the Company has agreed to refinance its loan facility with The Bank of Nova Scotia, London Branch.
16. Share capital
2021
issued, allotted
and fully paid
2020
issued, allotted
and fully paid
Number £’000s
Number
£’000s
Ordinary shares of £0.10 each
Balance brought forward
Issued as scrip
360,069,279
–
37, 506
–
359,934,706
134,573
37,493
13
Balance at 31 December
360,069,279 37, 506
360,069,279
37, 506
No further shares have been bought back or issued since the year end.
17. Distributable reserve
2021
£’000s
2020
£’000s
Balance brought forward
Dividends paid from distributable reserve
Costs associated with share issues
346,054
(23,360)
–
369,191
(23,122)
(15)
Balance carried forward
322,694
346,054
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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
Gains on investments held at year end
Foreign exchange gains
Management fee (see note 5)
Finance costs (see note 8)
Other capital charges (see note 6)
Revenue return
39,828
–
453
(2,954)
(201)
(7)
–
–
63,064
16
–
–
–
–
39,828
63,064
469
(2,954)
(201)
(7)
–
–
–
–
–
–
–
5,444
Return attributable to shareholders
Dividends paid in year (see note 10)
Balance at 31 December 2020
37,119
–
(44,937)
63,080
–
133,399
100,199
–
88,462
5,444
(5,444)
–
Balance at 31 December 2021
(7,818) 196,479 188,661 –
There were no special dividends recognised as capital during the year (2020: £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:
2021
2020
Net asset value per share - pence
Net assets attributable at the year end - (£'000s)
Number of ordinary shares in issue at the year end
145.93
525,435
360,069,279
132.75
478,004
360,069,279
20. Reconciliation of total return before taxation to net cash flows from operating activities
2021
£’000s
2020
£’000s
Net return on ordinary activities before taxation
106,580
61,954
Adjustments for non-cash flow items, dividend income and interest expense:
Gains on investments
Foreign exchange movements
Non-operating expenses of a capital nature
Dividend income receivable
Interest payable
(Increase) / decrease in other debtors
Increase in other creditors
(102,892)
(477)
7
(8,157)
251
(26)
54
(63,376)
1,330
116
(3,934)
95
12
18
(111,240)
(65,739)
Net cash outflows from operating activities (before dividends received and interest paid)
(4,660)
(3,785)
Financial Statements
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Financial Statements
21. Reconciliation of liabilities arising from financing activities
Bank loans
£’000s
2021
Total
£’000s
Bank loans
£’000s
2020
Total
£’000s
Financial liabilities brought forward
Cash-flows:
Drawdown of bank loans
Repayment of bank loans
Non-cash:
Effect of movement in foreign exchange
26,853
8,538
(8,500)
(1,703)
26,853
8,538
(8,500)
(1,703)
–
26,853
–
–
–
26,853
–
–
Financial liabilities carried forward
25,188 25,188
26,853
26,853
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.
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 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.
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68 | European Assets Trust PLC
22. Financial risk management (continued)
(a) Market risks (continued)
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:
2021
%
2020
%
Company's securities portfolio:
Industrials
Technology
Consumer Discretionary
Financials
Health Care
Consumer Staples
Basic Materials
Real Estate
Utilities
22.5
19.0
19.3
15.4
9.7
8.9
4.1
1.1
–
23.8
15.0
19.8
13.6
8.8
9.6
3.1
3.8
2.5
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 Euro 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
£’000s
2021
Decrease
in value
£’000s
Increase
in value
£’000s
2020
Decrease
in value
£’000s
Capital return
107,951 (107,951)
99,989
(99,989)
NAV per share – pence
29.98 (29.98)
27.77
(27.77)
Income earned on foreign currencies is converted to Euros on receipt. The Board regularly monitors the effects on net revenue of interest earned
on deposits and paid on gearing.
(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:
2021
£’000s
2020
£’000s
Danish Krone
Norwegian Krone
Pound Sterling
Swedish Krona
Swiss Franc
34,453
67,723
12,709
85,024
41,384
33,788
53,144
13,268
71,033
27,268
Total
241,293
198,501
Financial Statements
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Financial Statements
22. Financial risk management (continued)
(b) Currency risk (continued)
Based on the financial assets and liabilities held and the exchange rates applying at the Balance Sheet date, a weakening or strengthening of
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 Euro by 10% against other currencies
2021
£’000s
2020
£’000s
Net revenue return attributable to Shareholders
Net capital return attributable to Shareholders
472
26,887
158
22,097
Net total return attributable to Shareholders
27,359
22,255
NAV per share – pence
7.6 0
6.18
Strengthening of Euro by 10% against other currencies
2021
£’000s
2020
£’000s
Net revenue return attributable to Shareholders
Net capital return attributable to Shareholders
(386)
(21,998)
(129)
(18,079)
Net total return attributable to Shareholders
(22,384)
(18,208)
NAV per share – pence
(6.22)
(5.06)
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.
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. See page 20 for further details.
The fair values of the Company’s assets and liabilities at 31 December by currency are shown below:
2021
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
Danish Krone
Norwegian Krone
Pound Sterling
Swedish Krona
Swiss Franc
1,840
242
355
56
24
163
8,342
–
–
–
–
–
(8)
–
–
(147)
–
–
(25,188)
–
–
–
–
–
(15,014)
242
355
(91)
24
163
298,463
34,453
67,723
12,709
85,024
41,384
283,449
34,695
68,078
12,618
85,048
41,547
Total
2,680 8,342 (155) (25,188) (14,321) 539,756 525,435
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70 | European Assets Trust PLC
Financial Statements
22. Financial risk management (continued)
(b) Currency risk (continued)
2020
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
Danish Krone
Norwegian Krone
Pound Sterling
Swedish Krona
Swiss Franc
1,641
207
186
27
25
190
2,950
–
–
–
–
–
(53)
–
(191)
(71)
–
–
(26,853)
–
–
–
–
–
(22,315)
207
(5)
(44)
25
190
301,445
33,788
53,144
13,268
71,033
27,268
279,130
33,995
53,139
13,224
71,058
27,458
Total
2,276
2,950
(315)
(26,853)
(21,942)
499,946
478,004
(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 bank loan facility
which is exposed to a 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:
Within
one year
£’000s
More than
one year
£’000s
2021
Net total
£’000s
Within
one year
£’000s
More than
one year
£’000s
2020
Net total
£’000s
Exposure to floating rates:
Cash and cash equivalents
Loans
8,342
(25,188)
–
–
8,342
(25,188)
2,950
(26,853)
–
–
2,950
(26,853)
Net exposure
(16,846) – (16,846)
(23,903)
–
(23,903)
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.
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
2021
Decrease
in rate
£’000s
Increase
in rate
£’000s
2020
Decrease
in rate
£’000s
Revenue return
Capital return
33
67
(447)
270
(60)
96
(468)
382
Total return
100 (177)
36
(86)
NAV per share – pence
0.028 (0.049)
0.010
(0.024)
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Financial Statements
22. Financial risk management (continued)
(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, JP Morgan 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 BMO GAM (including the Fund Manager) and with its Risk Management function. In reaching its conclusions, the Board also
reviews BMO GAM's 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
(2020: Balance Sheet: £nil; maximum exposure: £nil).
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 2021 and 100% at 31 December 2020); the liquid nature of the portfolio of investments; the industrial and geographical diversity of
the portfolio (see pages 64 and 68); and the existence of a loan 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.
The Company has a €45 million unsecured revolving floating rate credit facility with RBS International, available until March 2022. From this
date, the Company has agreed to refinance its credit facility with The Bank of Nova Scotia, London Branch until March 2023.
(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 15.
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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72 | European Assets Trust PLC
Financial Statements
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 considerable disruption due to the effects of the COVID-19 pandemic and the Directors have given
serious consideration to the consequences for this Company. The Company has a €45 million multi-currency loan facility with RBSI which will
expire on 18 March 2022. As at 31 December 2021 €30.0 million was drawndown. Following the year end the Company has agreed to refinance
its facility with The Bank of Nova Scotia, London Branch on favourable terms.
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 17 March 2022, the
latest practicable date before the publication of this report, borrowings amounted to €30.0
million. This is comparison to a net asset value of
€508.5 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. The Directors have noted that home working arrangements have been
implemented at the Manager and many of the Company’s key suppliers without any impact upon service delivery and operations.
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 2021 the Company had a Distributable Reserve of £322.7 million.
Since the onset of the COVID-19 pandemic, the Company in common with many investment companies has suffered a reduction in dividend
income. The amount of this reduction, while significant, has not had a material impact on either net asset value or distributable reserves.
As at 31 December 2021 the Company had net current liabilities of £14.3 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 41 to 42 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 42.
25. Transactions with the Manager
Transactions between the Company and BMO Investment Business Limited are detailed in note 5 on management fees. The existence of an
independent Board of Directors demonstrates 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.
26. Subsequent Events
Subsequent to the year end, investment valuations have fallen as a result of market reaction to the Russian invasion of Ukraine. As at 17 March
2022 (being the latest practicable date before publication of this report), this had resulted in an decrease in Net Asset Value of 18.4% to 119.2p
and the Company's share price closing 19.3% lower at 113.0p compared to the Balance Sheet date.
These movements relate to post year-end activity and will be reported in the Company's Report and Accounts for the year ended 31 December
2022.
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Report and Accounts 2021 | 73
Other Information
Notice of Annual General Meeting of European
Assets Trust PLC
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 fourth Annual General Meeting of Shareholders of European Assets Trust PLC, the “Company”, will be held on
Tuesday, 17 May 2022 at 3.00 pm at Exchange House, Primrose Street, London, EC2A 2NY, 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 and 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 2021 together with the Independent Auditor’s
Report thereon (the “2021 Report and Accounts”).
2.
To approve the Company’s dividend policy with regard to quarterly payments as set out on page 20 of the Report and Accounts 2021.
3.
To approve the Directors’ Remuneration Report for the year ended 31 December 2021 set out on pages 41 to 42 of the 2021 Report and
Accounts.
4.
To re-appoint PricewaterhouseCoopers LLP as auditor 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.
5.
To authorise the Audit and Risk Committee to determine the remuneration of the auditor.
6.
To re-appoint Jack Perry to the Board of European Assets Trust PLC.
7.
To re-appoint Julia Bond to the Board of European Assets Trust PLC.
8.
To re-appoint Stuart Paterson to the Board of European Assets Trust PLC.
9.
To re-appoint Martin Breuer to the Board of European Assets Trust PLC.
10.
To re-appoint 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 17 March 2022. Unless previously varied, revoked or renewed, this authority shall expire
at the conclusion of the Annual General Meeting of the Company in 2023, 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:
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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74 | European Assets Trust PLC
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 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
17 March 2022, 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 2023, 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 2023, 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
BMO Investment Business Limited
6th Floor
Quartermile 4
7a Nightingale Way
Edinburgh EH3 9EG
21 March 2022
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.
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Report and Accounts 2021 | 75
Other Information
1.
If law or Government guidance so requires at the time of the meeting, or the Board otherwise determines that to do so would be in the
best interest of the safety and wellbeing of the Shareholders, the Chairman may, in his sole discretion, limit the number of individuals in
attendance at the meeting on health and safety grounds. Should any Shareholder not be permitted to attend the Annual General Meeting on
such grounds, all of the notes to this notice and, in particular, any reference to attendance at the Meeting, whether by a Shareholder, its proxy
or its corporate representative, shall be construed accordingly. Where any such limitation or restriction is put in place prior to the meeting,
Shareholders are strongly advised to appoint the chairman of the meeting as their proxy, as a third party proxy holder may not be admitted
to the meeting. In addition, the Company may impose entry restrictions on certain persons wishing to attend the meeting in order to secure
the orderly and proper conduct of the business in the accordance with the Articles.
2.
A member of the Company at the time set out in note 8 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.
3.
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.
4.
A Form of Proxy is provided with this notice for members. If a member wishes to appoint more than one proxy and so requires 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.
5.
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.
6.
Investors holding shares in the Company through the BMO 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 2022. 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 9 May 2022.
7.
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 2, 4 and 5 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.
8.
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 13 May 2022 (the
“Specified Time”) (or, if the meeting is adjourned to a time more than 48 hours after the Specified Time, by 11 p.m. on the day which is two
Notes
to the Notice of Annual General Meeting
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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76 | European Assets Trust PLC
days prior to the time of the adjourned meeting) shall be entitled to attend and vote at the 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.
9.
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 13 May 2022 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.
10.
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 4 and 5. 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
11.
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)
are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings (
www.
euroclear.com/CREST
).
12.
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).
13.
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.
14.
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.
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Report and Accounts 2021 | 77
Other Information
15.
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.
16.
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.
17.
As at 17 March 2022, 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 17 March 2022 were 360,069,279. No shares are held in treasury.
18.
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 17 March 2022 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
.
19.
Copies of the letters of appointment 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.
20.
No Director has a service agreement with the Company.
21.
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.
22.
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.
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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78 | European Assets Trust PLC
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, BMO
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 BMO 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 at 31 December 2021 are shown below:
Gross
method
Commitment
method
Maximum limit
Actual
200%
103%
200%
104%
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
.
Securities financing transactions ("SFTR")
The Company has not, in the year to 31 December 2021 (2020: 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 EU regulations on transparency of SFT, issued in November 2015.
Other Financial Information (unaudited)
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Report and Accounts 2021 | 79
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
Frankfurt, Germany
A Shareholder who
invested £1,000 in the
Company in 1983, when it
listed on the London Stock
Exchange, would have an
investment of £41,000 as
at 31 December 2021 on a
total return basis.
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80 | 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 shares that turn out to be worthless or
non-existent, or to buy shares at an inflated price in return for an upfront payment.
If you receive unsolicited investment advice or requests:
•
Check the Financial Services Register at
www.fca.org.uk
to see if the person or firm contacting you is authorised by the Financial Conduct
Authority (‘FCA’)
•
Call the 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
www.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
www.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.
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
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Report and Accounts 2021 | 81
Other Information
How to Invest
O
ne of the most convenient ways to invest in European Assets Trust PLC is through one of the savings plans run by BMO.
BMO 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.
BMO Junior ISA (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 BMO.
BMO Lifetime ISA (LISA)
For those aged 18-39, a Lifetime ISA 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.
BMO 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 BMO.
BMO 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.
BMO 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.
*The CTF and JISA accounts are opened by parents in the child’
s name
*The CTF and JISA accounts are opened by parents in the child’s name*The CTF and JISA accounts are opened by parents in the child’
and the
y have access to the money at age 18. **Calls may be recorded or
monitored for training and quality purposes.
Charges
Annual management charges and other charges apply according to
the type of plan.
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 BMO
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 into.
How to Invest
To open a new BMO plan, apply online at
bmogam.com/apply
Online applications are not available if you are transferring an existing
plan with another provider to BMO, or if you are applying for a new
plan in more than one name but paper applications are available at
bmoinvestments.co.uk/documents or by contacting BMO.
New Customers
Call:
0800 136 420** (8.30am – 5.30pm, weekdays)
Email:
info@bmogam.com
Existing Plan Holders
Call:
0345 600 3030** (9.00am – 5.00pm, weekdays)
Email:
investor.enquiries@bmogam.com
By post:
BMO Administration Centre
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
bmoinvestments.co.uk
facebook.com/bmoinvestmentsuk
0
345 600 3030, 9.00am – 5.00pm, weekdays, calls may be
recorded or monitored for training and quality purposes.
BMO Asset Management Limited
©2021 BMO Asset Management Limited is authorised and regulated by the Financial Conduct Authority. BMO Asset Management Limited is a wholly owned subsidiary of Columbia Threadneedle
Investments UK International Limited, whose direct parent is Ameriprise Inc., a company incorporated in the United States. BMO Asset Management Limited was formerly part of BMO Financial
Group and is currently using the “BMO” mark under licence.
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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82 | European Assets Trust PLC
Ten Year Record
Euro Total Return
Sterling Total Return
Market
Market
Net asset
Net asset
Dividends/
Dividends/
Movement
Net asset
Net asset
price
price
value
value
distributions
distributions
from previous
value per
value per
per share
per share
per share
per share
per share
†
per share
year
share
Benchmark
share
Benchmark
31 December
Pence
Euro
Pence
Euro
Euro
Pence
%
%
%
%
%
2012*
∞
69.2
0.854
74.34
0.917
0.04698
†
n/a
(12.0)
32.0
20.4
28.2
17.0
2013*
∞
96.4
1.159
96.86
1.164
0.05757
†
n/a
22.5
34.4
34.0
37.8
37. 5
2014*
∞
98.7
1.272
98.05
1.263
0.07221
†
n/a
25.4
15.3
5.2
7.6
(1.9)
2015*
∞
112.7
1.529
112.01
1.520
0.07743
†
n/a
7. 2
26.9
23.5
20.5
17. 2
2016*
∞
102.2
1.197
112.19
1.314
0.09429
†
n/a
21.8
( 7. 3)
6.4
7.4
23.3
2017*
∞
130.8
1.474
129.85
1.463
0.08220
†
n/a
(12.8)
18.0
18.6
22.6
23.3
2018*
∞
93.0
1.036
102.73
1.140
0.09298
†
n/a
13.1
(16.3)
(13.6)
(15.4)
(12.7)
2019
110.0
1.300
116.17
1.370
0.07136
†
n/a
(23.3)
26.9
27.8
19.8
20.6
2020
120.3
1.343
132.75
1.480
0.07947
7.020
11.4
15.4
12.6
21.9
18.9
2021
139.5
1.662
145.93
1.740
0.09285
8.000
16.8
24.0
22.5
16.3
14.9
* 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.
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Other Information
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
31 December
2021
2020
Pence
Pence
Net Asset Value per share
(a)
145.93
132.75
Share price per share
(b)
139.50
120.25
Discount (c = (b-a)/a)
(c)
(4.4%)
(9.4%)
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
31 December
2021
2020
£’000
£’000
Loan
25,188
26,853
Less Cash and cash equivalents
(8,342)
(
2,950)
Total
(a)
16,846
23,903
Net Asset Value
(b)
525,435
478,004
Gearing/(net cash) (c = a/b)
(c)
3.2%
5.0%
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 (see Historic Record). 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.
31 December
31 December
2021
2020
Ongoing charges calculation £’000
£’000
Management fees
3,693
2,911
Other expenses
995
904
Less loan commitment/arrangement fees
(1)
(26)
Less ad-hoc non-recurring expenses
(93)
(11)
Total
(a)
4,594
3,778
Average net assets
(b)
515,419
397,769
Ongoing charges (c = a/b)
(c)
0.89%
0.95%
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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84 | European Assets Trust PLC
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 2020 (pence)
132.75 120.30
NAV/share price per share at 31 December 2021 (pence)
145.93 139.50
Change in the year
9.9% 16.0%
Impact of dividend reinvestments
6.4% 7. 2 %
Total return for the year
16.3% 23.2%
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Other Information
Glossary of Terms
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. Issued by the European Parliament in 2012 and 2013, the Directive requires that all investment
vehicles (AIF – Alternative Investment Fund) in the European Union must have appointed a Depositary and an Alternative Investment Fund manager on
or before 22 July 2014. 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, BMO 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. The Company’s benchmark is the EMIX Smaller European
Benchmark – This is a measure against which the Company’s performance is compared. The Company’s benchmark is the EMIX Smaller European Benchmark
Companies (ex UK) Index.
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 JP Morgan Chase Bank NA.
Depositary
– Under AIFMD rules applying from July 2014, 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 JP Morgan Chase Bank NA.
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. In January 2020 the Board announced that the Company would declare its 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.
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.
Scrip Dividend
– Historically Shareholders could elect to receive dividends by way of further shares in the Company rather than cash. Where shareholders
so elect, they will receive shares based on the net asset value of the Company; the shares may trade in the market at a discount or premium to net asset
value. The scrip dividend scheme was discontinued following the payment of the October 2020 dividend.
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.
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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86 | European Assets Trust PLC
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Other Information
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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88 | European Assets Trust PLC
Other Information
2006
2014
2010
2018
1990
1998
1994
2002
2008
2016
2012
2020
1992
2000
1996
2004
2022
1972
1980
1976
1984
1974
1982
1978
1986
1988
Pre-1972: Mijbeb investment trust owned by C&A family
Sister vehicle
Continental
Assets Trust
launched
Trust's
shares
listed
on LSE
Peter Hadden
appointed lead
investment
manager
Launch
of EU’s
Investment
Plan for
Europe
Louvre
Pyramid
opens in
Paris
Disneyland
Paris opens
Civil war
in the
Balkans
European
Economic Area
established
EEA
First
Eurostar
passenger
train
Fall of
Berlin Wall
Single
Market
launched
Maastricht
Treaty
Euro
adopted
in 12 EU
countries
Cyprus,
Czechia,
Estonia,
Hungary,
Latvia,
Lithuania,
Malta,
Poland,
Slovakia &
Slovenia
join EU
Jean-Claude
Trichet
becomes ECB
President
Angela
Merkel
becomes
Chancellor
of Germany
Good
F
riday
Agr
eement
Croatia
joins EU
Romania
& Bulgaria
join EU
Brent crude
oil price
breaches
US$140pb
Domain name “.eu” opens
for all EU residents
.eu
Treaty of
Lisbon -
including
Article 50
- becomes
law
Global
Financial
Crisis
Mario Draghi
delivers
“whatever
it takes”
speech
pledging
support for
the euro
EU wins
Nobel
Peace Prize
Onset of
sovereign
debt crisis
Paris
Agreement
on climate
change
German
10-yr bond
yield turns
negative for
first time
UK votes
to leave
the EU
Brent crude
oil price
falls below
US$20pb
UK leaves EU
Covid-19 pandemic
Sir John
Ward CBE
appointed
Chairman
Austria,
Finland &
Sweden join
the EU
Millar Law
appointed lead
investment
manager
Paris Anand appointed
lead investment manager;
Sam Cosh appointed
fund manager
Lucy Morris
appointed
alternate fund
manager
Jenni
fer Bacarisse
appoi
nted lead
inves
tment
man
ager
Crispin Longden
appointed lead
investment
manager
Mike Woodward
appointed lead
investment
manager
European Assets
Trust introduces
High Dividend
Policy
ECB begins
quantitative
easing
measures
Jack Perry
CBE appointed
Chairman
Christine Lagarde
becomes ECB
President
Trade war
European Assets Trust
introduces quarterly
dividends and has
ten-for-one stock split
European
Assets Trust
reaches £500m
in total assets
UK and
EU agree
post-
Brexit
trade deal
Eur
opean Central
B
ank established
under the
Pr
esidency of
Wim Duisenberg
ECB
European Assets Trust launched as European
Community Trust NV to address the challenges
posed by the UK’s dollar premium account
OPEC
oil price
shock
Ernö Rubik
invents
Rubik’s Cube
UK, Ireland
& Denmark
join European
Communities
Spain holds 1
st
democratic elections
for 41 years
First European
in space
European
Council
founded
Nadia Comaneci is
first Olympic gymnast
to receive a perfect 10
European Community
Trust NV renamed
European Assets Trust NV
Pascal De Salaberry
appointed
lead investment
manager
Schengen
Agreement Black Monday
Team Europe
wins Ryder
Cup for the
first time
Single
European Act
European flag
raised for the
first time
Abolition of 25%
investment currency
premium account
Centre
Pompidou
opens in Paris
Sam Cosh appointed
lead investment
manager
Proudly managed by
Initial portfolio mostly
Dutch companies with
a bias towards oil
Roger
Inglis
appointed
Chairman
European Assets Trust moves domicile
from Netherlands to UK; delists from
Amsterdam Stock Exchange;
renamed European Assets Trust PLC
Timeline of the Company
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89 | European Assets Trust PLC
2006
2014
2010
2018
1990
1998
1994
2002
2008
2016
2012
2020
1992
2000
1996
2004
2022
1972
1980
1976
1984
1974
1982
1978
1986
1988
Pre-1972: Mijbeb investment trust owned by C&A family
Sister vehicle
Continental
Assets Trust
launched
Trust's
shares
listed
on LSE
Peter Hadden
appointed lead
investment
manager
Launch
of EU’s
Investment
Plan for
Europe
Louvre
Pyramid
opens in
Paris
Disneyland
Paris opens
Civil war
in the
Balkans
European
Economic Area
established
EEA
First
Eurostar
passenger
train
Fall of
Berlin Wall
Single
Market
launched
Maastricht
Treaty
Euro
adopted
in 12 EU
countries
Cyprus,
Czechia,
Estonia,
Hungary,
Latvia,
Lithuania,
Malta,
Poland,
Slovakia &
Slovenia
join EU
Jean-Claude
Trichet
becomes ECB
President
Angela
Merkel
becomes
Chancellor
of Germany
Good
Friday
Agreement
Croatia
joins EU
Romania
& Bulgaria
join EU
Brent crude
oil price
breaches
US$140pb
Domain name “.eu” opens
for all EU residents
.eu
Treaty of
Lisbon -
including
Article 50
- becomes
law
Global
Financial
Crisis
Mario Draghi
delivers
“whatever
it takes”
speech
pledging
support for
the euro
EU wins
Nobel
Peace Prize
Onset of
sovereign
debt crisis
Paris
Agreement
on climate
change
German
10-yr bond
yield turns
negative for
first time
UK votes
to leave
the EU
Brent crude
oil price
falls below
US$20pb
UK leaves EU
Covid-19 pandemic
Sir John
Ward CBE
appointed
Chairman
Austria,
Finland &
Sweden join
the EU
Millar Law
appointed lead
investment
manager
Paris Anand appointed
lead investment manager;
Sam Cosh appointed
fund manager
Lucy Morris
appointed
alternate fund
manager
Jennifer Bacarisse
appointed lead
investment
manager
Crispin Longden
appointed lead
investment
manager
Mike Woodward
appointed lead
investment
manager
European Assets
Trust introduces
High Dividend
Policy
ECB begins
quantitative
easing
measures
Jack Perry
CBE appointed
Chairman
Christine Lagarde
becomes ECB
President
Trade war
European Assets Trust
introduces quarterly
dividends and has
ten-for-one stock split
European
Assets Trust
reaches £500m
in total assets
UK and
EU agree
post-
Brexit
trade deal
European Central
Bank established
under the
Presidency of
Wim Duisenberg
ECB
European Assets Trust launched as European
Community Trust NV to address the challenges
posed by the UK’s dollar premium account
OPEC
oil price
shock
Ernö Rubik
invents
Rubik’s Cube
UK, Ireland
& Denmark
join European
Communities
Spain holds 1
st
democratic elections
for 41 years
First European
in space
European
Council
founded
Nadia Comaneci is
first Olympic gymnast
to receive a perfect 10
European Community
Trust NV renamed
European Assets Trust NV
Pascal De Salaberry
appointed
lead investment
manager
Schengen
Agreement Black Monday
Team Europe
wins Ryder
Cup for the
first time
Single
European Act
European flag
raised for the
first time
Abolition of 25%
investment currency
premium account
Centre
Pompidou
opens in Paris
Sam Cosh appointed
lead investment
manager
Proudly managed by
Initial portfolio mostly
Dutch companies with
a bias towards oil
Roger
Inglis
appointed
Chairman
European Assets Trust moves domicile
from Netherlands to UK; delists from
Amsterdam Stock Exchange;
renamed European Assets Trust PLC

European Assets Trust PLC
Report and Accounts 31 December 2021
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