European Assets
Trust PLC
Report and Accounts 2022
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.
Financial Calendar
First interim dividend paid for 2023 31 January 2023
Announcement of annual results 29 March 2023
Second interim dividend paid for 2023 28 April 2023
Annual General Meeting 18 May 2023
Third interim dividend paid for 2023 31 July 2023
Interim results for 2023 announced August 2023
Fourth interim dividend paid for 2023 31 October 2023
Report and Accounts 2022 | 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–Section 172 Statement
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 Flows 56
Notes to the Financial Statements 57
Other Information
Notice of Annual General Meeting 73
Other Financial Information (unaudited) 78
Shareholder Information 79
How to Invest 80
Ten Year Record (unaudited) 81
Alternative Performance Measures 82
Glossary of Terms 84
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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.
Visit our website at www.europeanassets.co.uk
Registered in England and Wales with company registration number 11672363. Legal Entity Identifier 213800N61H8P3Z4I8726
Report and Accounts 2022 | 3
Overview
Financial Highlights
for the year ended 31 December 2022
Ten Year Performance
∞
(rebased to 100 at 31 December 2012)
* Refer to Alternative Performance measures on pages 82 and 83.
‡
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).
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
The annualised ten year share price total return was 9.7%.
-28.4%
Share price
performance
The Company recorded a
Sterling Share Price total
return* of -28.4% for the
year ended 31 December
2022 in comparison to the
EMIX Smaller European
Companies (ex UK) Index
(the “Benchmark”) which
returned -17.7%.
-28.2%
Net Asset Vale per
share total return
The Sterling Net Asset Value
per share total return* was
-28.2% for the year ended
31 December 2022. Further
analysis of this performance
is provided in the Chairman's
Statement and Investment
Manager's Review.
5.80p
Dividend
The Board has declared
a total dividend for 2023
of 5.80 pence per share
(2022: 8.80 pence per
share) in accordance with
its aim to pay at a rate of
six per cent of the closing
Net Asset Value of the
preceding year.
1.03%
‡
Ongoing charges*
Due to the reduction in
net assets during 2022,
the ongoing charge of the
company has increased
to 1.03% from 0.89%.
However, since 2012 this
charge has been reduced
from 1.70%.
380
340
300
260
220
180
140
100
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
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)
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)
Source: Columbia Threadneedle Investments
4 | European Assets Trust PLC
Summary of Performance
Total Return for the year ended 31 December 2022 2021
Sterling Euro Sterling Euro
Net Asset Value per share* (28.2%) (32.0%) 16.3% 24.0%
Share Price* (28.4%) (32.3%) 23.2% 31.3%
EMIX Smaller European Companies (ex UK) Index
∞
(17.7%) (22.1%) 14.9% 22.5%
Capital Return for the year ended 31 December 2022 2021
Sterling Euro Sterling Euro
Net assets – millions £347.6 €391.8 £525.4 €625.8
Net Asset Value per share £0.97 €1.09 £1.46 €1.74
Share Price £0.92 €1.03
†
£1.40 €1.66
†
EMIX Smaller European Companies (ex UK) Index
∞
634.17
714.76 786.06
936.23
Dividend per share for the year ended 2022 2021
Sterling Sterling
Total dividends paid 8.80p 8.00p
* See Alternative Performance Measures on pages 82 and 83 for explanation. Source: Columbia Threadneedle Investments, 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 (pence) at 31 December
‡
‡
European Assets Trust NV prior to the migration on 16 March 2019.
Net Asset Value per share (pence) at 31 December
‡
Source: Columbia Threadneedle Investments
2019 2020 2021 2022
2018
2019 2021 202220202018
0.0
30.0
60.0
90.0
120.0
150.0
2019 2021 202220202018
Source: BMO GAM
2020 2022 20232021
2019
0.00
4.00
2.00
8.00
6.00
10.00
Source: BMO GAM
Source: Refinitive Eikon
Source: BMO GAM
0.0
30.0
60.0
90.0
120.0
150.0
1.20
1.00
0.80
0.60
0.40
0.20
0.00
2019 2020 2021 2022
2018
2019 2021 202220202018
0.0
30.0
60.0
90.0
120.0
150.0
2019 2021 202220202018
Source: BMO GAM
2020 2022 20232021
2019
0.00
4.00
2.00
8.00
6.00
10.00
Source: BMO GAM
Source: Refinitive Eikon
Source: BMO GAM
0.0
30.0
60.0
90.0
120.0
150.0
1.20
1.00
0.80
0.60
0.40
0.20
0.00
Source: Columbia Threadneedle Investments
Report and Accounts 2022 | 5
Overview
Ongoing charges (%)
*
‡
At 31 December
2022 2021
Discount to Net Asset Value* (5.1%) (4.4%)
(Net cash)/gearing* (1.3%) 3.2%
Ongoing Charges
*
1.03% 0.89%
2022 Year’s Highs/Lows
High Low
Net Asset Value per share 145.49p 84.14p
Share Price 140.25p 77.20p
Premium/(discount) to Net Asset Value 0.6% (10.8%)
* See Alternative Performance Measures on pages 83 and 84 for explanation. Source: Columbia Threadneedle Investments, Refinitiv Eikon
Net dividends paid/declared
^
per share - (pence)
‡
†
^
2023 Sterling dividends declared.
* See Alternative Performance Measures on pages 82 and 83 for explanation.
‡
EAT NV prior to migration on 16 March 2019.
†
Until 15 March 2019 dividends were paid by European Assets Trust NV net of Dutch
Withholding tax.
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
Source: Columbia Threadneedle Investments Source: Columbia Threadneedle Investments
2019 2020 2021 2022
2018
2019 2021 202220202018
0.0
30.0
60.0
90.0
120.0
150.0
2019 2021 202220202018
Source: BMO GAM
2020 2022 20232021
2019
0.00
4.00
2.00
8.00
6.00
10.00
Source: BMO GAM
Source: Refinitive Eikon
Source: BMO GAM
0.0
30.0
60.0
90.0
120.0
150.0
1.20
1.00
0.80
0.60
0.40
0.20
0.00
2019 2020 2021 2022
2018
2019 2021 202220202018
0.0
30.0
60.0
90.0
120.0
150.0
2019 2021 202220202018
Source: BMO GAM
2020 2022 20232021
2019
0.00
4.00
2.00
8.00
6.00
10.00
Source: BMO GAM
Source: Refinitive Eikon
Source: BMO GAM
0.0
30.0
60.0
90.0
120.0
150.0
1.20
1.00
0.80
0.60
0.40
0.20
0.00
6 | European Assets Trust PLC
Fellow Shareholders,
European Assets Trust PLC (“the Company”) recorded a Sterling Net
Asset Value (“NAV”) total return for the year ended 31 December 2022
of -28.2% (2021: 16.3%). This compares to the total return of its
benchmark, the EMIX Smaller European Companies (ex UK) Index, which
fell -17.7% (2021: 14.9%) during the same period. With the discount
widening from 4.4% as at 31 December 2021 to 5.1% at the year-end,
the Sterling share price total return for the year was -28.4% (2021:
23.2%).
The year was clearly very challenging. Almost all asset classes, with
the exception of commodities, registered large losses. Global themes
of rising inflation, central bank tightening and recession concerns
dominated for much of the year. In addition, Europe had to contend
with a war on its doorstep exacerbating the already difficult challenges
that policy makers faced with rising prices, declining personal incomes
and potential gas shortages in the region. Thankfully the worst fears of
gas rationing hitting European industrial production were not realised
as we entered a mild winter with full gas storage leading to lower
prices and better economic data than expected. This helped the year
end on a much more positive note with Europe leading global markets
higher, perhaps a timely reminder that for long term investors the most
challenging periods can lead to the best opportunities.
So while there are plenty of mitigating economic factors, the Company’s
poor relative performance in 2022 is clearly very disappointing. The
principal reason for this underperformance was the dramatic rotation
out of quality, growth stocks, into value areas. This created an unusual
market where normally stable and defensive areas, such as healthcare,
led the market down, while traditionally more volatile and economically
sensitive sectors, such as commodities significantly outperformed.
Given our quality, growth philosophy, this headwind was too much to
overcome. We also were hit by having stock specific exposure to an
under-pressure consumer and some ‘COVID-19 beneficiaries’ that
suffered from a normalisation of demand. A more detailed discussion
of performance attribution can be found in the Investment Managers
Review.
Dividend
The level of dividend paid each year is determined in accordance with
the Company’s distribution policy. The Company has stated that, barring
unforeseen circumstances, it will pay an annual dividend equivalent
to six per cent of its NAV at the end of the preceding year. As the
net asset value per share of the Company has decreased since 31
December 2021, the dividend has also decreased from 8.80 pence per
share in 2022 to 5.80 pence per share in 2023.
While this is unwelcome, it is worth highlighting that the Company’s
distribution policy offers Shareholders the opportunity of both growth
and a high yield from an asset class that comprises some of Europe’s
most dynamic companies that have significant long-term potential.
This 2023 dividend of 5.80 pence per share is payable in four equal
instalments of 1.45 pence on 31 January, 28 April, 31 July and 31
October 2023.
A dividend of 1.45 pence per share will be paid on 28 April 2023 to
Shareholders on the register on 11 April 2023 with ex-dividend date of
6 April 2023.
Ownership of the Manager
On 8 November 2021, BMO sold its asset management business in
Europe, the Middle East and Africa, (“BMO GAM EMEA”) to Columbia
Threadneedle Investments. Since November 2021, Columbia
Threadneedle Investments has been working to integrate both
organisations, focused on delivering the best possible outcomes for all
clients. The combined business has more than 2,500 staff, including
over 650 investment professionals based in North America, Europe and
Asia. At 31 December 2022 it managed £485 billion of client assets.
On 4 July 2022, the entire BMO GAM EMEA business was rebranded
as Columbia Threadneedle Investments. As part of this process, the
Company’s appointed Investment Manager, BMO Investment Business
Limited, was renamed Columbia Threadneedle Investment Business
Limited.
Throughout this process, the Board has sought and received
confirmation from senior management at Columbia Threadneedle
Investments of the importance of maintaining stability and continuity
of the teams which presently support your Company. The Board
welcomes these assurances and will keep Shareholders informed of
developments as this new relationship evolves.
Responsible Investment
As longstanding Shareholders will know, consideration of Environmental,
Social and Governance (“ESG”) issues have long been an important
part of the investment process. Following the acquisition of BMO GAM
EMEA your Manager has one of the largest and longest established
teams dedicated to ESG.
There is a detailed report on pages 24 to 27 of the Annual Report
which explains the Manager’s ESG policies, how these are implemented
in the management of the portfolio and its engagement with our
investee companies.
Directorate Change
European Assets Trust PLC (“EAT PLC”) was incorporated on 12
November 2018. It should though be remembered that EAT PLC is the
UK domiciled successor of the Company’s Dutch predecessor, European
Assets Trust NV (“EAT NV”) which was dissolved on 16 March 2019. All
of the directors of the Supervisory Board of EAT NV were appointed to
the Board of EAT PLC on the date of its incorporation. Although EAT PLC
and EAT NV were separate legal entities, for governance purposes, the
Board regards the date of first appointment to the Supervisory Board of
EAT NV as the date of appointment to the continuing business.
As part of the Board’s succession plan and in accordance with
corporate governance best practice, it is anticipated that Julia Bond,
the Company’s Senior Independent Director, will retire on 31 January
2024. Julia was appointed as a Director of the Supervisory Board of
the Company’s Dutch predecessor, European Assets Trust NV, in April
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
“Europe’s valuation metrics continue to look more
attractive both in relative and absolute terms. In a
very volatile environment there is the risk that any
pronouncement one day may look imprudent the
next. So, while recognising that risk, we still look
forward with a degree of tentative optimism.”
Report and Accounts 2022 | 7
Chairman’s Statement
2014 and upon retirement will have served nine years between both
entities. The Company has benefited immensely from Julia’s wide
ranging financial and market experience. On behalf of the Board and
Shareholders of the Company I thank Julia for her diligence and wise
counsel throughout her period of appointment. In advance of Julia’s
retirement, the Board will recruit a new Director.
I was also appointed to the Supervisory Board of the Company’s
predecessor in April 2014 and became its Chairman with effect from
April 2015. In accordance with corporate governance best practice,
and to allow a handover period, I announce my intention to retire from
the Board at the conclusion of the Company’s 2024 Annual General
Meeting.
Upon my retirement, Stuart Paterson, who was appointed to the Board
in July 2019 will become Chairman. Stuart has extensive sector
experience as a technology investor with over 25 years of equity
investing in European private companies. Stuart has also been
an exceptionally diligent and effective Chair of the Audit and Risk
Committee. I know that he will continue to serve the Company well.
As a further part of this plan, a search company was commissioned
to find a new Director for the Board. Following a thorough selection
process, Kevin Troup will be appointed to the Board and its committees
with effect from 19 May 2023.
Kevin is a qualified Chartered Accountant. He has worked in the fund
management industry since 1995 with senior investment roles at
Scottish Life, Martin Currie and Standard Life Investments. He is now
a non-executive director at Baring Fund Managers Limited, TPI Fund
Managers Limited and at Baillie Gifford Shin Nippon PLC. He is also a
charity Trustee at The Robertson Trust.
Following my retirement and Stuart Paterson’s assumption of the
Chairmanship, Kevin Troup will be appointed Chair of the Company’s
Audit and Risk Committee.
Benchmark
The Company’s stated investment policy allows the Manager to invest in
small and medium-sized European companies (excluding the UK) which
have a market capitalisation below that of the largest company in the
EMIX Smaller European Companies (ex UK) Index.
IHS Market Benchmark Administration has announced its intention to
cease calculation of its EMIX indices with effect from 31 July 2023.
The current benchmark of the Company, the EMIX Smaller European
Companies (ex UK) Index (Net Return) will therefore be discontinued.
The Board, together with its advisers have carefully considered
alternative benchmarks to replace the EMIX Smaller European
Companies (ex UK) Index and have concluded that the MSCI Europe
Ex UK SMID Cap Index, on a net return basis, represents the most
appropriate choice, noting, that this index has the greatest overlap of
those indices considered with the current portfolio, as well as a similar
number of constituents to the current benchmark.
The MSCI Europe Ex UK SMID Cap Index, which is composed of
European small and mid-cap companies, does have a broader range
of market capitalisation within its constituents which is relevant to the
upper size limit contained in the investment policy of the Company. The
adoption of the MSCI Europe Ex UK SMID Cap Index should therefore
be treated as a material change to the Company’s investment policy.
However, the Manager has confirmed that the selection of the new
benchmark does not imply that there will be any change to the existing
selection process for investments.
The Board is therefore seeking Shareholder approval for the material
change to the investment policy that this new benchmark represents
at the Annual General Meeting to be held on 18 May 2023 prior to its
adoption with effect from 1 June 2023.
Annual General Meeting
The Annual General Meeting (“AGM”) will be held at 3.00 pm on 18
May 2023 at the offices of Columbia Threadneedle Investments,
Exchange House, Primrose Street, London EC2A 2NY. This will be
followed by a presentation by the Investment Manager on the Company
and its investment portfolio.
For Shareholders who are unable to attend the meeting, any questions
they may have regarding the resolutions proposed at the AGM or the
performance of the Company can be directed to a dedicated email
account, eatagm@columbiathreadneedle.com, by Thursday 11 May
2023. The Board will endeavour to ensure that questions received
by such date will be addressed at the meeting. The meeting will be
recorded and will be available to view on the Company’s website,
www.europeanassets.co.uk shortly thereafter. All Shareholders that
cannot attend in person are encouraged to complete and submit their
Form of Proxy or Form of Direction in advance of the meeting to ensure
that their votes will count.
Outlook
After a strong start to the year, markets have weakened substantially
following the failure of Silicon Valley Bank, other smaller regional
banks in the US, and the sell-off of Credit Suisse in Europe. Although
investors have been encouraged by the recent bail out of Credit Suisse
by UBS and the Swiss authorities, there is clear concern over the
risk of contagion to the rest of the financial system and of a renewed
financial crisis. While it is too early to draw conclusions we believe that
regulators and central banks have reacted quickly and with substance.
This combined with more stringent regulation, particularly in Europe,
since the global financial crisis provides further support. We do hold
banks in the portfolio but these are conservatively run, well capitalised
and do not have any funding mismatches. Consequently, we believe
they will navigate through this period operationally well. We will however
continue to monitor the situation closely.
The market’s initial assessment of the impact of the banking crisis
is that credit conditions are likely to tighten impacting economic
growth and this may lower interest rate expectations. This more sober
outlook is frustrating given that European markets were leading global
markets higher on the combination of attractive valuations and a more
optimistic outlook. This view has not yet been completely derailed
and Europe’s valuation metrics continue to look more attractive both
in relative and absolute terms. In a very volatile environment there is
the risk that any pronouncement one day may look imprudent the next.
So, while recognising that risk, we still look forward with a degree of
tentative optimism.
Jack Perry CBE
Chairman
28 March 2023
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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 seeks investments in quoted small and
medium-sized companies in Europe, excluding the United Kingdom,
defined as those with a market capitalisation below that of the largest
company in the 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.
As noted on page 7, IHS Market Benchmark Administration
has announced its intention to cease calculation of the current
benchmark of the Company, the EMIX Smaller European Companies
(ex UK) Index. It is therefore proposed that, with effect from 1 June
2023, the replacement benchmark for the Company will be MSCI
Europe ex-UK SMID Cap Index.
As this will result in a material change to the investment policy of
the Company, resolution 12 in the Notice of the forthcoming Annual
General Meeting, seeks Shareholder approval for this change.
Business model
The Directors have a duty to promote the success of the Company.
As an investment company with no employees, the Board believes
that the optimum basis for doing this and achieving the Company’s
objective, and strategy is a strong working relationship with the
Company’s appointed manager, Columbia Threadneedle Investment
Business Limited (the “Manager”). Within policies set and overseen
by the Board, the Manager has been given overall responsibility for
the management of the Company’s assets, asset allocation, gearing,
stock selection and risk.
As an Investment Trust the Company is not constrained by asset
sales to meet redemptions and is well suited to investors seeking
longer term returns. The share capital structure provides the
flexibility to take a long-term view and stay invested while taking
advantage of illiquidity throughout normal and volatile market
conditions. All the Company’s investments are listed. Having the
ability to borrow to invest is a significant advantage over a number
of other investment fund structures.
The Board remains responsible for decisions over corporate
strategy; corporate governance; risk and internal control
assessment; setting policies as detailed on pages 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 the Manager part
of Columbia Threadneedle Investments. The Manager has been
appointed as Alternative Investment Fund Manager (“AIF Manager”).
The ultimate parent company of Columbia Threadneedle Investments
is Ameriprise Financial, Inc.
Sam Cosh is the lead portfolio manager appointed by the Manager
to the Company. He is assisted by Lucy Morris. Biographies of Sam
Cosh and Lucy Morris who are members of the Global Smaller team
at Columbia Threadneedle Investments are provided on page 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 for which 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 Columbia
Threadneedle Investments 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
Report and Accounts 2022 | 9
Strategic Report
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.
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 2022 the Company had drawn €10 million from its
€45 million borrowing facility with The Bank of Nova Scotia, London
Branch and held cash balances of €15.0 million, resulting in net
cash of 1.3%.
Following the year end, the Company has agreed to renew its loan
facility with The Bank of Nova Scotia, London Branch.
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 92% of the shares held by retail investors, and
savings or execution-only platforms representing an increasingly
significant and growing element of the Shareholder base, the
Company remains focused with its Manager on promoting its
success. All appropriate channels are used including the internet
and social media as well as the CT Savings Plans.
The Company’s activities and performance are reported through
the publication of its financial statements but the majority of
Shareholders and CT Savings Plan investors prefer not to receive
such detailed information. To avoid losing this essential line of
communication, the Company issues a short notification with the
key highlights of its half-yearly and annual results. The Company
also issues a monthly factsheet. All stakeholders can locate the full
information on the Company’s website, www.europeanassets.co.uk.
The Annual General Meeting (“AGM”) of the Company provides
a forum, both formal and informal for Shareholders to meet and
discuss issues with the Directors and Investment Managers.
Through the Manager, the Company also ensures that CT Savings
Plan investors are encouraged to attend and vote at annual general
meetings in addition to those who hold their shares on the main
shareholder register. Details of the proxy voting results on each
resolution are published on the Company's website where there
is also a link to the daily publication of the Company’s NAV and its
monthly factsheet.
The Manager also has in place a programme of meetings designed
to foster good relations with wealth managers 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 stock selection, asset allocation, poor
market conditions, ineffective or expensive gearing, poor cost
control, loss of assets and service provider governance issues.
In addition to regularly monitoring the Manager’s performance,
their commitment and available resources and their systems and
controls, the Directors also review the quality and value of services
provided by other principal suppliers. These include the Custodian
and Depositary in their duties in respect of the safeguarding of the
assets.
The principal policies that support the strategy are set out on 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
10 | European Assets Trust PLC
Sam Cosh, Lead Manager is a Director, at
Columbia Threadneedle Investments. Sam
joined Columbia Threadneedle Investments
in 2010 from BNP Investment Partners
and was appointed Lead Manager for
European Assets Trust during 2011. Sam
also manages the European investments of
The Global Smaller Companies Trust PLC.
He has over twenty years’ experience in
European equities, principally within small
and mid-cap mandates.
Investment Managers
Lucy Morris, Manager is a Director at
Columbia Threadneedle Investments
specialising in smaller companies. Lucy
joined the business in 2007, originally
working in the Performance Analytics
team before transferring to Equities in
2011. She has worked on the European
Small Cap mandates since that point
which include European Assets Trust as
well as the European investments of The
Global Smaller Companies Trust PLC. She
also manages the CT European Smaller
Companies open ended fund. Lucy holds
the Investment Management Certificate and
is a CFA Charterholder.
Report and Accounts 2022 | 11
Strategic Report
Market Backdrop
2022 was a challenging year for almost all asset classes and
European smaller companies were no exception, registering
significant falls. The initial sell-off, at the beginning of the year,
was precipitated by inflation data that caused bond yields to
rise and expectations of an earlier and more aggressive interest
rate tightening cycle led by the US Federal Reserve. While this
theme dominated for most of the year, the bearish sentiment was
exacerbated by Russia’s invasion of Ukraine in February. Energy
and food prices spiked, adding further to inflation concerns, while
investors digested what a war on Europe’s doorstep would mean
for the region’s economic activity, with potential gas shortages the
principal area of concern. Meanwhile, China’s zero COVID-19 policy
and regional lockdowns added to global supply chain restrictions
that were already under severe pressure, further fuelling rising input
costs. In response, central banks became increasingly hawkish,
prioritising the fight against inflation over supporting economic
activity. Geopolitical risks, rapidly rising interest rates and increasing
recessionary expectations therefore dominated markets for most of
the year until the fourth quarter brought some much-needed respite.
Encouragingly, Europe finished the year particularly strongly, leading
global markets higher. While rates kept rising, US and European
inflation data came in below expectations, allowing investors to
ponder lower peak rates. Economic indicators, whilst still pointing
to activity softening, were also better than expected. In Europe this
was helped by the dramatic decline in natural gas prices due to the
combination of a mild start to winter and full gas storage facilities.
Despite a strong year end, however, 2022 was a poor year for
investors.
Performance
Our portfolio performed poorly last year, significantly
underperforming the index. The main reason was the dramatic
rotation out of quality, growth stocks into value areas of the
market. This was caused by interest rate rises which have a
detrimental impact on the valuation of companies whose value
is derived from cash flows that grow over a long time frame. This
rotation was exacerbated by the strong moves in commodities,
the only major asset class that registered gains last year, driven
by a rush towards energy security following the war in Ukraine.
Our philosophy and portfolio style are biased towards growth
companies, so it is perhaps no surprise that we performed poorly,
however, we are clearly disappointed by the scale of our relative
underperformance. Within the portfolio, we had built some balance
with exposure to rising interest rates, principally through our
holdings in financials, but this balance was overwhelmed by the
scale of sector rotation.
The performance was also heavily impacted by some stocks that
were exposed to a consumer whose disposable incomes were
under pressure from rising costs. These stocks were also having
to contend with a period of softening demand as they digested
the hangover from some unusually strong COVID-19 years.
For example, MIPs, who supply technology for principally cycle
helmets, and Thule, who sell stylish products for active families
and outdoor enthusiasts, both announced disappointing trading
updates. Whilst neither of these companies are suffering from
excess inventories of their products in the retail channel, nor a
demand problem, retailers are struggling with excess inventories
of other, low value items in their stores that need to be cleared
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
“In terms of stock picking the clear lesson from
recent events is to avoid companies whose business
models have been supported by low rates and are
challenged by the dramatic change in interest rate
regime that we have seen over the last year. There
will be further casualties, but we believe our quality
biased approach avoids such exposure.”
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
12 | European Assets Trust PLC
Strategic Report
before they can restock with higher end products from MIPs and
Thule. Once this inventory is cleared, which may take some time,
we would expect both companies see demand patterns in line with
their long-term positive trajectory. Other consumer related stocks
that suffered from difficult comparisons with very strong trading in
recent years were Fluidra, the swimming pool equipment suppliers,
and HelloFresh, the leading meal kit provider. We continue to hold
these positions in anticipation of better demand trends later in
the year and because we believe in the long-term structural growth
opportunities for these businesses.
The technology sector was also an area that struggled from similar
themes. Despite delivering good operational performance through
the year, our semiconductor stocks ASMI, the equipment provider,
and Nordic Semiconductor, the leading Bluetooth company, saw
their valuations heavily de-rated through the year as investors sold
out of growth companies. Industrials also struggled, and while
we were underweight the sector, stock specifics overwhelmed
sector allocation. Forbo, the Swiss listed flooring company, and
Norma Group, the German listed autosupplier, both delivered poor
operational updates that caused us to sell these holdings. Wizz
Air, was another poor performer as it faced the twin headwinds
of higher fuel costs and a weaker consumer. We cut the position
significantly at the outset of the Ukrainian war, mitigating the
damage, before adding later in the year. This proved to be a good
decision with the shares recovering strongly into this year.
Turning to more positive outcomes, our best contributor to our
performance in terms of sector came from healthcare. This
was slightly peculiar because the sector, unusually in a down
market, was the worst performer, underperforming even consumer
discretionary at the index level. Our positive stock selection meant
that this was the best contributor though, with Tecan, the Swiss
listed diagnostics company, leading the way supported by an
upgrade to guidance at their first half results.
The materials sector also yielded some good performance with
both our sector allocation and stock selection being good. Of note
were our holdings in Verallia, the French glass manufacturer, and
SIG, the Swiss listed aseptic packaging supplier, both of which
consistently delivered strong operational results. One of our
new positions, Hexpol, the supplier of polymer compounds, also
performed well due partly to its large exposure to the strong dollar
but mainly due to encouraging results.
Finally, in terms of sectors, our traditional financials contributed
well. Interest rates, a long-term headwind for the sector have finally
turned supportive. Ringkjoebing Landbobank, listed in Denmark,
Sparebank, listed in Norway, and Storebrand, the Norwegian life
insurance company, all had strong years. Bank of Ireland, a new
holding, was, however, the highlight being the best performer as
investors began to appreciate the strong economic backdrop
that Ireland offers, the cheap valuation, higher interest rates, a
consolidated market and improving results.
Other stocks worthy of mention include Lotus Bakeries, the
owner of the Biscoff brand, whose consistent profit delivery was
appreciated by the markets. Finally, another new addition, Schoeller
Bleckmann, performed strongly. Austrian listed, this company is the
leading supplier of non-magnetic steel components to the oil and
gas industry and, rose after its results outperformed on the back of
the scramble towards energy security caused by Russia’s invasion
of Ukraine.
Portfolio Activity
Portfolio turnover was broadly in line with long-term averages.
Trading was driven by a combination of executing our philosophy and
process whilst recognising emerging priorities. On the latter, we are
aware that energy security is a key geopolitical focus now. Following
a decade of underinvestment on the supply side we may be at the
start of a new capital cycle in the sector. We have invested in quality
companies that are exposed to this; Schoeller Bleckman mentioned
above and TGS, the seismic analytics company. We also believe
that tight labour markets and re-shoring of industrial production will
lead to a greater investment in automation and so have started
positions in Kardex, whose equipment optimises and automates
logistical workflows, and Engcon, the Swedish listed market leader
of tilt rotators that improve the productivity of excavators. The other
characteristic of this market cycle is likely to be higher interest rates
as core inflation remains high in contrast to the previous decade.
We have expressed this view through our holdings in regional banks
and life insurance, which was augmented by the decision to add
Bank of Ireland early in the year.
We have also been cognisant that market falls usually provide
opportunity. While we have not been as active in this regard
compared to what we executed during the outset of the COVID-19
pandemic, following our process has meant that we have added
some new positions in addition to those mentioned earlier in this
commentary. Examples include Viscofan, the market leader in the
global synthetic sausage skin oligopoly, Siegfried, which holds a
strong position as an outsourced manufacturer of small molecules
for pharmaceutical companies, and Vidrala, the Spanish bottling
company.
Our sell decisions were driven by a more critical appraisal of
operational performance during a period when quality credentials
were tested. For example, following disappointing trading updates,
we sold, in addition to those mentioned above, holdings in
Cancom, the German IT reseller, Marr, the Italian food services
business, Simcorp, the asset management software business, and
FlatexDegiro, the German listed, low-cost retail brokerage firm.
Report and Accounts 2022 | 13
Strategic Report
Outlook
The year had started strongly, with Europe pleasingly leading the
way. This has, however, been derailed by the failure of Silicon Valley
Bank (SVB) in the US and Credit Suisse in Europe. This has caused
a significant sell-off across the market driven by the financial sector.
The failure of any financial institution brings back memories of the
Global Financial Crisis, however, we think, there are reasons to be
less concerned this time. Financial regulation in terms of capital
requirements and funding, particularly in Europe, are much more
robust, whilst central banks and financial regulators have reacted
quickly. There will, however, be some significant ramifications from
this of which some will not be understood yet. Initially, it is fair to
assume that credit conditions will be tighter, adding further to the
challenging calculations that central bankers are having to make
with regard to interest rate rises.
In terms of stock picking the clear lesson from recent events is to
avoid companies whose business models have been supported by
low rates and are challenged by the dramatic change in interest rate
regime that we have seen over the last year. There will be further
casualties, but we believe our quality biased approach avoids such
exposure. We are, however, looking closely at the opportunities
that may present themselves as good businesses potentially get
dragged down by recent events. Prior to the sell-off, Europe looked
attractively valued both in absolute levels and relative to global
markets. This provides an attractive backdrop to stock picking and
future long-term returns.
Sam Cosh
Lead Investment Manager
Columbia Threadneedle Investment Business Limited
28 March 2023
Industrials 21.7% (22.5%)
Financials 17.2% (19.0%)
Consumer Discretionary 13.6% (15.4%)
Technology 12.7% (19.3%)
Consumer Staples 11.8% (8.9%)
Healthcare 11.4% (9.7%)
Basic Materials 7.3% (4.1%)
Energy 3.0% (0.0%)
Real Estate 1.3% (1.1%)
Portfolio Split by Sector at 31 December 2022
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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 aim to deliver superior
investment performance over the long term.
Our philosophy is based on our belief that companies that can
compound high returns over an enduring period tend to be
undervalued by the market. We want to invest in these high-
quality companies, or those that have the business models that
will achieve quality characteristics in the future. Integral to this
approach is understanding the competitive advantages, or moats,
of these companies. After all this is what will allow a business to
defend or improve its market position delivering growing profits for
shareholders.
While we do not necessarily target specific sectors, our philosophy
will naturally lead us towards certain areas or themes where long-
term growth of superior cash flow is more likely. This will result in a
portfolio that is significantly differentiated against the benchmark.
Integral to our assessment of quality is an analysis of Environmental,
Social and Governance (“ESG”) issues that face the company and its
response to them. More details can be found on pages 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-
Continuous Monitoring Process
Source: Columbia Threadneedle Investments
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Report and Accounts 2022 | 15
Strategic Report
Having a disciplined process is essential in driving a consistent
application of our philosophy. We undertake our own research
which is peer reviewed by the wider investment team prior to a
purchase decision. This ensures the benefit of shared knowledge
and experience is brought to bear on each investment. The original
investment thesis is retested particularly if the company or its share
price performs below expectations.
Like all investors, we are having to make assessments about the
future and take decisions in the face of uncertainty. There is a real
possibility of being wrong. We believe we can mitigate this risk
by following this long-term philosophy, emphasising a number of
factors: thorough independent research; the need for a margin of
safety on purchase; continuous monitoring; and diversification of the
investment portfolio. Reasons to sell can be driven by positive or
negative factors: positive if the value of the company has risen to an
excessive valuation, or negative, if the assessment of the company’s
long-term value drivers deteriorates significantly. We believe this
approach gives us the best chance of delivering attractive long term
returns for our Shareholders.
Sam Cosh
Lead Investment Manager
Columbia Threadneedle Investment Business Limited
28 March 2023
The Investment Process Focuses on Three Aspects for Each Company
• Attractive growth prospects
• Enduring differentiation/
competitive advantages
• Superiorprofitgenerators
• 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
cashflow
& relative valuation
• ESG & Sustainability
score embedded in
proprietary valuation
method
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 2022
5. Storebrand (6)
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.
3.3% of net assets £11,420,801 value
www.storebrand.no
8. SpareBank (16)
Norway
Regional bank with a strong franchise in Southern Norway, with
particularly strong market shares in Rogaland, a wealthy area supported
by oil and gas exploration and production.
3.0% of net assets £10,287,454 value
www.sparebank1.no
7. Atea (14)
Norway
Largest IT infrastructure provider in the Nordic and Baltic region reselling
hardware, software and value added services with a large exposure to
the public sector who are investing in their ‘digital transformation’.
3.0% of net assets £10,506,182 value
www.atea.com
2. Ringkjoebing Landbobank (1)
Denmark
High quality regional Danish bank with a long track record of loyal
customers, low loan losses and good returns on equity. They have
a dominant position in their local region, and have been growing outside
of this as they continue to take share from lower quality competitors.
4.4% of net assets £15,242,980 value
www.landbobanken.dk
9. Lotus Bakeries (32)
Belgium
Belgium family run business active worldwide in the indulgent and
natural snacking segment with brands such as Lotus Biscoff, Nakd, Trek
and Bear. Biscoff is a unique product range based on speculoos (spiced
shortcrust biscuit) taste that is gaining global traction offering excellent
growth potential.
2.9% of net assets £10,223,287 value
www.lotusbakeries.com
3. Interpump (3)
Italy
Manufacturer of ultra high pressure pumps used for fluid movement and
hydraulic components installed on vocational trucks and other machinery.
Proven resilient operator as a result of diverse end markets and high
quality product, highly cash generative and excellent capital allocation
record.
3.7% of net assets £12,694,769 value
www.interpumpgroup.it
4. SIG Group (18)
Switzerland
Market leading system and solutions provider for aseptic packaging used
for liquid dairy, non-carbonated soft drinks and liquid food packaging
applications. They have a high proportion of recurring revenues as a
result of selling the consumables linked to the use of their machines.
3.4% of net assets £11,765,340 value
www.sig.biz
10. IMCD (11)
Netherlands
Listed in the Netherlands, IMCD is a market leading specialist in chemical
distribution. They formulate, sell and distribute products and ingredients
for large chemical companies. They are improving their market share
through both organic means and acquisitions.
2.8% of net assets £9,762,769 value
www.imcdgroup.com
6. Karnov (19)
Sweden
Karnov is the clear market leader in provision of legal information in
Denmark and Sweden. Through their online portal, they provide historic
annotated case information, predominantly to lawyers. This information
is low cost but integral to their customers daily operations. Margins
should rise as they increase prices in Sweden, following the
consolidation of the market, to levels that they achieve in Denmark.
3.1% of net assets £10,724,426 value
www.karnovgroup.com
1. Tecan (8)
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.
4.5% of net assets £15,486,156 value
www.tecan.com
Note: Number in brackets is the position held in the portfolio as at 31 December 2021
Report and Accounts 2022 | 17
Strategic Report
Investment Portfolio as at 31 December 2022
Company Nature of Business
Valuation
£’000
% of Net
Assets
Country of
Incorporation
Tecan
Ringkjoebing Landbobank
Interpump
SIG Group
Storebrand
Karnov
Atea
SpareBank
Lotus Bakeries
IMCD
Automated Laboratory Instruments and Solutions
Regional Banking
Industrial Producer of Fluid Movement Pumps and Hydraulic Components
Systems and Consumables Provider for Aseptic Packaging
Long-term Savings and Insurance
Mission Critical Information Provider to the Legal Industry
Value Added IT Hardware and Software Reseller
Banking
Indulgent and Natural Snack Manufacturer
Speciality Chemical Distributer
15,486
15,243
12,695
11,765
11,421
10,724
10,506
10,287
10,223
9,763
4.5%
4.4%
3.7%
3.4%
3.3%
3.1%
3.0%
3.0%
2.9%
2.8%
Switzerland
Denmark
Italy
Switzerland
Norway
Sweden
Norway
Norway
Belgium
Netherlands
Ten largest investments
118,113 34.1%
Sligro Food Group
Bank of Ireland
Alten
CTS Eventim
Lectra
ASM International
Symrise
Coor
Nordic Semiconductor
Stratec
Food and Beverage Provider
National Bank Operating in a Consolidated Market
Outsourced Engineering and R&D Provider
Concerts and Ticketing
Provider to the Fashion, Automotive and Furniture Industries
Semiconductor Equipment
Speciality Chemicals
Provider of Integrated Facilities Management and Consulting Services
Market Leader in Low Power Bluetooth Semiconductor Design
Manufacturer of Invitro Diagnostic Instrumentation and Consumables
9,750
8,732
8,625
8,543
8,311
8,224
8,076
7,975
7,871
7,484
2.8%
2.5%
2.5%
2.5%
2.4%
2.4%
2.3%
2.3%
2.3%
2.2%
Netherlands
Ireland
France
Germany
France
Netherlands
Germany
Sweden
Norway
Germany
Twenty largest investments 201,704 58.3%
Verallia
Cairn Homes
Hexpol
Royal Unibrew
Gerresheimer
Schoeller Bleckmann Oilfield Equipment
Azimut
Fluidra
Viscofan
MIPS
Glass Bottle Manufacturer
House Builder
Chemical Compounder
Nordic and Baltic Beverage Producer
Glass and Plastic Containers
Oilfield Equipment Manufacturer
Asset Management
Swimming Pool Equipment and Maintenance
Artificial Casings for Meat Products
Helmet Safety
7,418
7,076
6,862
6,852
6,707
6,621
6,612
6,379
6,273
5,767
2.1%
2.0%
2.0%
2.0%
1.9%
1.9%
1.9%
1.8%
1.8%
1.7%
France
Ireland
Sweden
Denmark
Germany
Austria
Italy
Spain
Spain
Sweden
Thirty largest investments 268,271 77.4%
Vidrala
Sdiptech
Siegfried
Rational
Dalata Hotel Group
Indutrade
Avanza Bank
Glanbia
Thule
Merlin Properties
Manufacturer and Supplier of Glass Containers
Industrial Consolidator Focused on Sustainability
Contract Development Manufacturing Organisation
Specialist in Hot Food Preparation for Professionals
Hotel Chain Operator
Niche Industrial Conglomerate
Swedish Savings and Investment Platform
Global Nutrition Company
Outdoor and Transportation Product Manufacturer
Commercial Real Estate Owner
5,544
5,501
5,437
4,934
4,855
4,624
4,554
4,484
4,297
4,284
1.6%
1.6%
1.5%
1.4%
1.4%
1.3%
1.3%
1.3%
1.2%
1.2%
Spain
Sweden
Switzerland
Germany
Ireland
Sweden
Sweden
Ireland
Sweden
Spain
Forty largest investments 316,785 91.2%
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
18 | European Assets Trust PLC
Strategic Report
Company Nature of Business
Valuation
£’000
% of Net
Assets
Country of
Incorporation
Kardex
TGS
Carasent
Engcon
V Zug
HelloFresh
Wizz Air
flatexDEGIRO
Intralogistics Solutions and Automated Storage Provider
Geophysical Consulting and Contracting Services
Cloud Healthcare Software Provider
Tiltrotator Manufacturer
Luxury Household Appliance Manufacturer and Service Provider
Home Meal Kit Provider
Budget Airline
Online Broker
3,997
3,593
3,588
2,952
2,906
2,821
2,194
1,881
1.2%
1.0%
1.0%
0.9%
0.8%
0.8%
0.6%
0.5%
Switzerland
Norway
Norway
Sweden
Switzerland
Germany
Switzerland
Germany
Total investments 340,717 98.0%
Net current assets 6,910 2.0%
Net assets
347,627 100.0%
Investment Portfolio as at 31 December 2022 (continued)
Report and Accounts 2022 | 19
Strategic Report
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 2022
‡
1 Year % 3 Years % 5 Years % 10 Years %
European Assets Trust* (28.2) 1.8 3.1 142.8
EMIX Smaller European (ex UK) Companies Index
¥
(17.7) 12.4 18.4 184.5
Source: Columbia Threadneedle Investments, Refinitiv Eikon
Share price sterling total return performance at 31 December 2022
‡
1 Year % 3 Years % 5 Years % 10 Years %
European Assets Trust* (28.4) 3.5 (0.9) 153.1
EMIX Smaller European (ex UK) Companies Index
¥
(17.7) 12.4 18.4 184.5
Source: Columbia Threadneedle Investments, Refinitiv Eikon
Average (discount)/premium
‡
*
For the year ended 31 December %
2022 (5.2)
2021 (6.7)
2020 (10.0)
2019 (5.2)
2018 (9.5)
Source: Columbia Threadneedle Investments
Ongoing charges as at 31 December
‡
* %
2022 1.03
2021 0.89
2020 0.95
2019 1.11
2018 1.11
Source: Columbia Threadneedle Investments
Shares issued during the year ended 31 December
‡
2022 -
2021 -
2020
∞
134,573
2019
†
179,383
2018
†
12,312,883
Source: Columbia Threadneedle Investments
‡
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 pages 82 and 83 for explanation.
∞
Excludes issuance related to the migration on 16 March 2019.
†
Rebased for stock split of 3 May 2018.
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20 | European Assets Trust PLC
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 (“FCA”).
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.
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.
The Board declares dividends in sterling. This provides certainty
of income for the overwhelming majority of the Company’s
Shareholders who choose to receive their dividends in sterling
rather than euros. To attempt to manage any sterling/euro
exchange rate exposure which may arise from the currency of the
dividend, the Company has entered into forward currency hedging
contracts to cover this specific exposure.
Taxation
The Board’s policy towards taxation is one of full commitment to
complying with applicable legislation and statutory guidelines. It is
essential that the Company always retains its investment trust tax
status by complying with Section 1158 of the Corporation Tax Act
2010 (“Section 1158”) such that it does not suffer UK Corporation
Tax on capital gains. The Company has received approval from
HMRC as an investment trust under Section 1158 and has since
continued to comply with the eligibility conditions. The Manager
also ensures that the Company submits correct taxation returns
annually to HMRC; settles promptly any taxation due; and claims
back, where possible, all taxes suffered in excess of taxation treaty
rates on non-UK dividend receipts.
Liquidity
The Board recognises the need to address any sustained and
significant imbalance of buyers and sellers which might otherwise
lead to shares trading at a material discount or premium to
NAV per share. While it has not adopted any formal discount
or premium targets which would dictate the point at which the
Company would seek to purchase shares or issue further shares,
the Board is committed to utilising its share purchase and share
issuance authorities where appropriate in such a way as to
mitigate the effects of any such imbalance. In considering whether
buyback or issuance might be appropriate in any particular set
of circumstances, the Board will take into account: the prevailing
market conditions; the degree of NAV accretion that will result from
the buyback or issuance; the cash resources readily available to
the Company; the immediate pipeline of investment opportunities
open to the Company; and the working capital requirements of the
Company.
Report and Accounts 2022 | 21
The Board’s policy towards the appointment of non-executive
Directors is based on its belief in the benefits of having a diverse
range of experience, skills, length of service and backgrounds,
including gender.
The policy is always to appoint the best person for the job and, by
way of this policy statement it is confirmed that there will be no
discrimination on the grounds of gender, ethnicity, socio-economic
background, religion, sexual orientation, age or physical ability.
The overriding aim of the policy is to ensure that the Board
is composed of the best combination of people to deliver the
Company's objective. The policy is applied for the purpose of
appointing individuals that, together as a Board, will continue to
achieve that aim as well as ensuring optimal promotion of the
Company’s investment proposition in the marketplace.
The Board is conscious of the diversity targets set out in the FCA
Listing Rules. Although the Company is not required to report against
these targets under the Listing Rules until 31 December 2023, the
Board is disclosing this information on a voluntary basis.
In accordance with Listing Rule 9.8.6R (9), (10) and (11) the Board
has provided the following information in relation to its diversity.
Board Gender as at 31 December 2022
(1)
Number of
Board Members
Percentage of
the Board
Number of
senior positions
on the Board
(2)
Men 3 60% 1
Women 2 40%
(3)
1
(1) The Company has opted not to disclose against the number of Directors in
executive management as this is not applicable for an investment trust.
(2) Composed of the Chair and the Senior Independent Director in accordance
with Listing Rule 9(a) (ii).
(3) The Listing Rule 9(a) (i) target is 40%.
Number of
Board Members
Percentage of
the Board
Number of
senior positions
on the Board
(2)
White British
or other white
(including
minority-white
groups
4 80% 2
Asian/Asian
British
1
(3)
20% –
(1) The Company has opted not to disclose against the number of Directors in
executive management as this is not applicable for an investment trust.
(2) Composed of the Chair and the Senior Independent Director.
(3) The Listing Rule 9(a) (iii) target is 1.
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
28 March 2023
Strategic Report
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Board Ethnic Background as at 31 December 2022
(1)
Board diversity
22 | European Assets Trust PLC
Strategic Report
Promoting the Success of the Company
–Section 172 Statement
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 and service providers.
The Board believes that the optimum basis for meeting its duty
to promote the success of the Company is by appointing and
managing third parties with the requisite performance records,
resources, infrastructure, experience and control environments to
deliver the services required to achieve the investment objective
and successfully operate the Company. By developing strong and
constructive working relationships with these parties, the Board
seeks to ensure high standards of business conduct are adhered
to at all times and service levels are enhanced whenever possible.
This combined with the careful management of costs is for the
benefit of all Shareholders who are also key stakeholders.
Engagement with Shareholders
The Directors value engagement with Shareholders. The Company’s
website www.europeanassets.co.uk is available to all Shareholders
and key decisions are announced to the London Stock Exchange
through a Regulatory News Service.
The Company holds an Annual General Meeting. The Shareholders
are invited to attend, and this provides an open forum for them
to discuss issues and matters of concern with the Board and
representatives of the Manager and the Company’s advisors.
The Manager also engages with the Company’s larger Shareholders
and the outcome of these discussions are reported to the Board
at the following Board Meeting. Shareholders are invited to
communicate with the Board through the Chairman or Company
Secretary. 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.
2022 – Key Board Decisions
The Company’s Stakeholders are always considered when the Board
makes decisions and key examples this year include:
Dividends
The Board is aware that dividend income is important to
Shareholders. A high distribution policy has been adopted with a
stated aim to pay Shareholders a dividend of 6% based on the NAV
on 31 December of the prior year.
Despite the impact of the COVID-19 pandemic, inflationary concerns
and the war in Ukraine, the Directors have been able to maintain
the Company’s high distribution policy as the dividend can be
funded from current year revenue profits and the Distributable
Reserve. The Distributable Reserve, which had a value of £296.9
million as at 31 December 2022 was created during the migration
of the Company from the Netherlands to the United Kingdom.
Report and Accounts 2022 | 23
Strategic Report
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 2022 AGM the power to
issue and buyback shares. At each Board Meeting the Directors
will consider the current level and direction of the discount that
the Company’s share price trades to its NAV. 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 2022 the Company
did not buyback or issue shares. The discount as at 31 December
2022 was 5.1% (2021: 4.4%).
Marketing
Increasing demand for the Company’s shares will improve their
liquidity and attractiveness. In the shorter term it will reduce the
level of the Company’s share price discount. In the longer term it
could lead to share issuance resulting in a larger Company against
which fixed operating costs can be shared.
During the year several marketing initiatives have been introduced
to increase demand for the Company’s shares. The Company’s
50-year anniversary celebrations included Board attendance at the
closing bell ceremony at the London Stock Exchange and an event
attended by representatives from private wealth managers and the
press. New communication platforms with retail investors have
been introduced and the Company has recommitted to its pay-per-
click internet advertising campaign.
Board succession planning
As part of an orderly succession plan, it is anticipated that Julia
Bond, the Company’s Senior Independent Director, will retire
from the Board on 31 January 2024 having served nine years. In
advance of Julia’s retirement, the Board will recruit a new Director.
Jack Perry was appointed in April 2014 and became Chairman with
effect from April 2015. In accordance with corporate governance
best practice, and to allow a handover period, he has announced
his intention to retire from the Board at the conclusion of the
Company’s 2024 Annual General Meeting.
Upon his retirement, Stuart Paterson, who was appointed to the
Board in July 2019 will become Chairman.
As a further part of this plan a search company was commissioned
to identify a new Director for the Board. Following a thorough
selection process, Kevin Troup will be appointed to the Board and
its committees with effect from 19 May 2023.
Following the retirement of Jack Perry and Stuart Paterson’s
assumption of the Chairmanship, Kevin Troup will be appointed
Chair of the Company’s Audit and Risk Committee.
While the Company became operational in March 2019, the
Board considers a Director’s appointment to the Company’s Dutch
predecessor, European Assets Trust NV, as the beginning of their
period of continuous service.
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24 | European Assets Trust PLC
Strategic Report
Sustainability and ESG
As stewards of more than £347 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. Although the Company
is not an ESG fund, the Board is 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.
Report and Accounts 2022 | 25
Strategic Report
Corporate Governance 32%
Climate Change 28%
Labour Standards 16%
Environmental Stewardship 16%
Human Rights 8%
Source: Columbia Threadneedle Investments
2022 engagement analysis
Engagement
Engagement examples in the reporting period
Wizz Air
The Manager held a call with senior company executives to discuss their approach to the Ukraine crisis and
their climate change strategy. Wizz Air was the only European airline with a base in Ukraine. At the start
of the conflict, the company had 4 aircraft and 200 people in Ukraine. The Manager was informed that the
company continued to pay salaries and provided logistical and financial support to affected employees. It
supported refugees to rebase to Wizz Air hubs in the UK and Italy. Wizz Air appears to have managed the
crisis well.
On climate, Wizz Air has set the most ambitious 2030 decarbonisation targets in the industry but is
yet to set a net zero target. To reach their 2030 targets, around 90% of the company’s targeted 2030
decarbonisation will be driven by new aircraft, with the remainder coming from sustainable aviation
fuels (“SAFs”). The Manager asked them to clearly disclose how ESG factors are included in their SAF
procurement process. The Manager also asked for additional disclosures on offsets and climate lobbying.
In a separate meeting, the Manager met the chair of the remuneration committee to discuss the
implementation of the new pay policy approved at the prior AGM. The Manager had concerns with the
scheme although recognised the significant changes made during the consultation process.
ASM International
During 2022, the Manager had an in-person meeting with Investor Relations at ASM’s offices in Almere,
Netherlands. Given the fierce war of talent in the semiconductor industry and the increased costs of hiring
and retraining new staff, the Manager probed the company’s efforts on employee engagement, diversity,
and inclusion. In 2021, ASM welcomed a record-high number of new employees; however, it acknowledged
that it is early in its journey on employee engagement and more work needs to be done. Other challenges
it faced include the lack of female talent in the pipeline. The Manager recommended a focus on building
the talent pipeline of women in STEM subjects, such as at the school level, setting targets in senior level
positions, and inclusive hiring practices such as unconscious bias training.
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26 | European Assets Trust PLC
Strategic Report
Engagement examples in the reporting period (continued)
Tecan
The Manager has discussed with senior company representatives environmental and social issues. On the
environmental front, the Manager asked about progress towards a measurable target to reduce waste and
increase recycling. The Manager was informed that the results of Tecan’s survey on waste-related issues
are pending and will prompt action plans. Furthermore, the company is looking into the possibility of a
waste takeback scheme.
On the social side, the Manager asked for the publication of a target for representation of women in
management positions, insights into the results of the gender pay gap analyses and enhanced disclosure
on parental leave. The Manager reiterated the importance of the Workforce Disclosure Initiative’s, WDI,
survey. Overall, interactions are constructive, and the Manager remains pleased with the company’s
positive progress.
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 35 meetings of
investee companies. The Manager did not support management’s
recommendations on at least one resolution at approximately 88% of
all meetings. With respect to all items voted, the Manager supported
over 85% of all management resolutions.
Two of the most contentious issues voted at meetings were
remuneration and the election of board directors. On these issues,
an adverse vote was cast at the meeting by either abstaining or
voting against management resolutions. Remuneration matters
represented approximately 39% of these votes. The rationale centred
on a number of issues which did not accord with best practice
including poor disclosure or a misalignment of pay with long-term
performance. With regards to the election of board directors,
this represented approximately 43% of adverse votes, primarily
because of independence, overboarding or concerns regarding board
composition.
The Manager’s strategic approach to engagement helps to achieve
positive outcomes, or ‘milestones’, relating to the targets that have
been set under each of the Sustainable Development Goals. Two
examples of milestones achieved in the reporting period are set out
below.
Milestone examples in the reporting period
Dalata Hotel Group During the year, the board has carried out meaningful refreshment of the non-executive directors. The
Manager had engaged with the company on this topic. This was becoming a critical issue given the long
length of tenure served by the incumbent non-executives.
Tecan Tecan participated in the Workforce Disclosure Initiative, WDI, survey for the first-time following
engagement on the topic by the Manager. The WDI strives for relevant and material workforce-related
disclosure, encompassing a wide range of topics, including health and safety practices, remuneration,
freedom of association and employee engagement.
Report and Accounts 2022 | 27
Strategic Report
Climate Change
2022
50
100
150
200
250
European Assets Trust
EMIX Smaller European Companies (ex UK) Index
Source: MSCI ESG
Tons CO2e/sales $m
2021
2020
2023
Last year, the Russian invasion of Ukraine 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. It is these areas that engagement
focused on in 2022 and will continue to be of focus in 2023.
Climate related engagement activity focuses on the phase-out
of unabated coal generation by 2030 for developed markets,
which is 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.
The continuing loss of biodiversity will bring about significant
economic loss, and impact food and water security, as well as
human health and the spread of disease. The Manager has been
part of the lead investor group setting up the Nature Action 100
collaborative engagement initiative, which had a soft launch at
COP15. Investors will engage companies in key sectors to ensure
they are taking timely and necessary actions to protect and restore
nature and ecosystems. It also aims to engage policymakers on the
outcomes of COP15.
Effective supply chain management practices are essential to
ensuring the protection of human rights and in 2023 the Manager
will continue to 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.
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.
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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.
The global economy continues to suffer considerable
disruption due to the effects of the COVID-19 pandemic,
inflationary concerns and the war in Ukraine. 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.
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.
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
2022 the powers to issue and buyback 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.
At each meeting of the Board, the Directors consider and discuss the investment performance of the Company
with the Company’s Investment Managers. As noted above, the Board held its annual strategy meeting in
November 2022.
The Manager
Failure of the Manager or loss of senior staff could cause reputational damage and/or
place the business in jeopardy.
Execution risk arising from the acquisition of BMO GAM EMEA by Columbia
Threadneedle Investments.
No change in overall risk in year
The Board meets regularly with the management of Columbia Threadneedle Investments and
receives an annual Audit Assurance Faculty Report on its procedures. The Manager’s appointment
can be terminated at six months’ notice. Key man risk is limited by the team approach adopted by
the Global Smaller team at Columbia Threadneedle Investments.
At each meeting of the Board representatives of the Manager provide an update on the integration of the
former BMO GAM EMEA business into Columbia Threadneedle Investments.
At the Board’s annual strategy meeting held in November 2022, the Chief Investment Officer, EMEA and
Global Head of Investment Solutions at Columbia Threadneedle Investments updated the Board with regard
to the integration of the former BMO GAM EMEA business.
Regulatory and compliance (including ESG reporting)
To maintain its investment trust status, the Company is required to comply with
Section 1158 of the UK Corporation Taxes Act. The Company is also required to
comply with UK company law, is subject to the requirements of the AIFMD and the
relevant regulations of the London Stock Exchange and the Financial Conduct Authority.
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.
A representative of the Depositary attended and reported to the Audit and Risk Committee in July 2022 on its
activities during the previous 12 months.
Members of the Responsible Investment team presented to the Board at the annual strategy meeting held
in November 2022. The presentation included details of the voting undertaken on the Company’s behalf,
engagement with management of portfolio companies and milestones achieved.
The Remuneration and Nomination Committee liaised with the external recruitment agent to develop a role
specification for the Board vacancy,
Service provider failure
Errors, fraud or control failures at service providers or loss of data through increasing
cyber threats or business continuity failure could damage reputation or investors’
interests or result in losses.
No change in overall risk in year
The Board receives regular control reports from the Manager covering risk and compliance
including oversight of third-party service providers. The Board has access to the Manager’s Risk
Manager and requires any significant issues directly relevant to the Company to be reported
immediately. The Depositary is specifically liable for loss of any of the Company’s securities and
cash held in custody.
The Manager continues to strengthen and develop its Risk, Compliance and Internal Control functions
including IT security. Supervision of third-party service providers has been maintained by the Manager
and includes assurances regarding IT security and cyber threat. The Depositary oversees custody of
investments and cash and reports to the Company in accordance with the Alternative Investment Fund
Managers Directive.
Dividend policy
The Company’s high distribution policy becomes unsustainable.
No change in overall risk in year
The annual dividend is calculated as six per cent of the closing net asset value of the Company
as at 31 December of the preceding year.
As at 31 December 2022 the Distributable reserves of the Company was £296.9 million in
comparison to a 2022 dividend cost of £31.7 million.
On 5 January 2023 the Board declared an annual dividend for 2023 of 5.80 pence per share. This was
calculated as six per cent of the 31 December 2022 NAV of the Company. The reduction in the dividend for
2023 in comparison to that paid in 2022 reflects the fall in the NAV of the Company experienced in 2022.
At each Board meeting during the year the Directors monitor the dividend yield of the Company. The
Directors also monitor the Company's distributable reserves and the net asset value five years previously.
Geopolitical issues and their impact
Geopolitical issues including the possibility of prolonged recession in the United
Kingdom and key economies in the EU and the impact of the war in Ukraine.
Increase in overall risk in year
The Company has a clearly defined and approved strategy. The Board can hold additional board
meetings at short notice to discuss the impact of significant changes in the macroeconomic and
geo-political environment. The Company maintains a portfolio of diversified stocks.
Forward looking stress tests ranging from moderate to extreme scenarios are provided by the
Manager to the Board to support the Viability and Going Concern Statements.
At each meeting of the Board, the Directors consider and discuss the investment performance of the
Company with the Company’s Investment Managers. The Board held its annual strategy meeting in
November 2022.
In May 2022 the Chief Economist of the Manager presented to the Board on the global and European
economy. At the March 2023 Audit and Risk Committee meeting, the Directors reviewed updated forward
looking stress tests prepared by the Manager providing support for the Viability and Going Concern
Statements disclosed on page 32.
Report and Accounts 2022 | 29
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.
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.
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
2022 the powers to issue and buyback 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.
At each meeting of the Board, the Directors consider and discuss the investment performance of the Company
with the Company’s Investment Managers. As noted above, the Board held its annual strategy meeting in
November 2022.
The Manager
Failure of the Manager or loss of senior staff could cause reputational damage and/or
place the business in jeopardy.
Execution risk arising from the acquisition of BMO GAM EMEA by Columbia
Threadneedle Investments.
No change in overall risk in year
The Board meets regularly with the management of Columbia Threadneedle Investments and
receives an annual Audit Assurance Faculty Report on its procedures. The Manager’s appointment
can be terminated at six months’ notice. Key man risk is limited by the team approach adopted by
the Global Smaller team at Columbia Threadneedle Investments.
At each meeting of the Board representatives of the Manager provide an update on the integration of the
former BMO GAM EMEA business into Columbia Threadneedle Investments.
At the Board’s annual strategy meeting held in November 2022, the Chief Investment Officer, EMEA and
Global Head of Investment Solutions at Columbia Threadneedle Investments updated the Board with regard
to the integration of the former BMO GAM EMEA business.
Regulatory and compliance (including ESG reporting)
To maintain its investment trust status, the Company is required to comply with
Section 1158 of the UK Corporation Taxes Act. The Company is also required to
comply with UK company law, is subject to the requirements of the AIFMD and the
relevant regulations of the London Stock Exchange and the Financial Conduct Authority.
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.
A representative of the Depositary attended and reported to the Audit and Risk Committee in July 2022 on its
activities during the previous 12 months.
Members of the Responsible Investment team presented to the Board at the annual strategy meeting held
in November 2022. The presentation included details of the voting undertaken on the Company’s behalf,
engagement with management of portfolio companies and milestones achieved.
The Remuneration and Nomination Committee liaised with the external recruitment agent to develop a role
specification for the Board vacancy,
Service provider failure
Errors, fraud or control failures at service providers or loss of data through increasing
cyber threats or business continuity failure could damage reputation or investors’
interests or result in losses.
No change in overall risk in year
The Board receives regular control reports from the Manager covering risk and compliance
including oversight of third-party service providers. The Board has access to the Manager’s Risk
Manager and requires any significant issues directly relevant to the Company to be reported
immediately. The Depositary is specifically liable for loss of any of the Company’s securities and
cash held in custody.
The Manager continues to strengthen and develop its Risk, Compliance and Internal Control functions
including IT security. Supervision of third-party service providers has been maintained by the Manager
and includes assurances regarding IT security and cyber threat. The Depositary oversees custody of
investments and cash and reports to the Company in accordance with the Alternative Investment Fund
Managers Directive.
Dividend policy
The Company’s high distribution policy becomes unsustainable.
No change in overall risk in year
The annual dividend is calculated as six per cent of the closing net asset value of the Company
as at 31 December of the preceding year.
As at 31 December 2022 the Distributable reserves of the Company was £296.9 million in
comparison to a 2022 dividend cost of £31.7 million.
On 5 January 2023 the Board declared an annual dividend for 2023 of 5.80 pence per share. This was
calculated as six per cent of the 31 December 2022 NAV of the Company. The reduction in the dividend for
2023 in comparison to that paid in 2022 reflects the fall in the NAV of the Company experienced in 2022.
At each Board meeting during the year the Directors monitor the dividend yield of the Company. The
Directors also monitor the Company's distributable reserves and the net asset value five years previously.
Geopolitical issues and their impact
Geopolitical issues including the possibility of prolonged recession in the United
Kingdom and key economies in the EU and the impact of the war in Ukraine.
Increase in overall risk in year
The Company has a clearly defined and approved strategy. The Board can hold additional board
meetings at short notice to discuss the impact of significant changes in the macroeconomic and
geo-political environment. The Company maintains a portfolio of diversified stocks.
Forward looking stress tests ranging from moderate to extreme scenarios are provided by the
Manager to the Board to support the Viability and Going Concern Statements.
At each meeting of the Board, the Directors consider and discuss the investment performance of the
Company with the Company’s Investment Managers. The Board held its annual strategy meeting in
November 2022.
In May 2022 the Chief Economist of the Manager presented to the Board on the global and European
economy. At the March 2023 Audit and Risk Committee meeting, the Directors reviewed updated forward
looking stress tests prepared by the Manager providing support for the Viability and Going Concern
Statements disclosed on page 32.
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30 | European Assets Trust PLC Report and Accounts 2022 | 31
Governance Report
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. It is anticipated that Jack will retire from the Board at the conclusion of the Annual General
Meeting of the Company to be held in 2024. Shared directorships with other Directors: None
Julia Bond OBE, Senior Independent Director and Chair of Remuneration and Nomination Committee has 27 years’ experience of capital
markets in the financial services sector, latterly at Credit Suisse where she led global client facing teams alongside leading One Bank
Delivery. She has served on various listed and public boards and is currently a non-executive director of International Public Partnerships,
Strategic Command and the British Foreign and Commonwealth Development Office. It is anticipated that Julia will retire from the Board
on 31 January 2024. 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
Stuart Paterson, Chair of Audit and Risk Committee
is a co-founder and partner of Scottish Equity Partners (“SEP”), one of Europe’s
leading technology growth equity investors with strong investment performance track record, managing more than £1bn of institutional
capital over two decades. Stuart has over 25 years of equity investing in European private companies and has served on Boards in
numerous sectors over the years including Enterprise Software, Semiconductors, Telecoms, Data centres, as well as consumer-focused
e-commerce and digital on-line businesses. Notable early-stage investments of Stuart on behalf of SEP include Cambridge Silicon Radio
plc which listed and became a FTSE 250 company, and Skyscanner the consumer internet business which became the world’s largest flight
search business. Stuart trained with Ernst & Young and is a member of the Institute of Chartered Accountants of Scotland. He latterly
worked in Corporate Finance for Ernst & Young before moving into equity investment. Shared directorships with other Directors:
None
Directors
Pui Kei Yuen has over 25 years' experience in equities. Her roles have included UK institutional equity portfolio management and research
at Mercury Asset Management, Pan European equity responsibilities at UBS and Bank of America Merrill Lynch, advising large institutional
investors and hedge funds, and working with the Boards of earlier stage private companies. Pui Kei is also a Non-Executive Director of
JPMorgan American Investment Trust PLC. Shared directorships with other Directors: None
Left to right: Julia Bond OBE, Martin Breuer, Pui Kei Yuen, Jack Perry CBE, Stuart Paterson.
30 | European Assets Trust PLC Report and Accounts 2022 | 31
Governance Report
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
All Directors are non-executive
Registered Office
Exchange House
Primrose Street
London
EC2A 2NY
Investment Manager, Secretary and AIF Manager
Columbia Threadneedle Investment Business Limited
6th Floor
Quartermile 4
7a Nightingale Way
Edinburgh EH3 9EG
Tel No. 0131 718 1000
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
Tel No. 0370 889 4094
Loan Provider
The Bank of Nova Scotia, London Branch
201 Bishopsgate
6th Floor
London
EC2M 3NS
Brokers
Panmure Gordon (UK) Limited
40 Gracechurch Street
London EC3V 0BT
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
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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
2022. 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.
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 2022 are set out below.
Dividends paid in the year ended 31 December 2022
First interim dividend for the year ended
31 December 2022 paid on 31 January 2022
2.20p
Second interim dividend for the year ended
31 December 2022 paid on 29 April 2022
2.20p
Third interim dividend for the year ended
31 December 2022 paid on 29 July 2022
2.20p
Fourth interim dividend for the year ended
31 December 2022 paid on 31 October 2022
2.20p
As explained in the Chairman’s Statement, the Board has
resolved to pay a dividend of, in aggregate, 5.8 pence per share
for 2023. The dividend for 2023 will be paid in four equal,
quarterly instalments on 31 January, 28 April, 31 July and 31
October 2023 to registered holders of shares at an appropriate
record time. The first quarterly dividend of 1.45 pence per share
was paid on 31 January 2023 to Shareholders on the register
of members on 13 January 2023 with an ex-dividend date of 12
January 2023.
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 2023 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.
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.
Governance Report
Report and Accounts 2021 | 33
Governance Report
comparison to a net asset value of €404.0 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
2028. 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 2028. 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.
Capital structure
As at 31 December 2022 there were 360,069,279 Ordinary
Shares in issue. As at 27 March 2023 (being the latest practicable
date before publication of this report) the number of Ordinary
Shares in issue was 360,069,279. No Ordinary Shares were held
in treasury.
All ordinary shares rank equally for dividends and distributions
and carry one vote each. There are no restrictions concerning the
transfer of securities in the Company, no special rights with regard
to control attached to securities, no agreements between holders
of securities regarding their transfer known to the Company and no
agreement which the Company is party to that affects its control
following a takeover bid.
Details of the capital structure can be found in note 16 to the
accounts. The revenue profits of the Company, together with
the realised capital profits and the balance of the Distributable
Reserve are available for distribution by way of dividends to the
holders of the Ordinary Shares.
Upon a winding-up, after meeting the liabilities of the Company,
the surplus assets would be distributed to Shareholders pro-rata
to their holdings of Ordinary Shares. Full details are set out in the
Company’s articles of association.
• 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 the
COVID-19 pandemic, inflationary concerns and the war in Ukraine
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 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
27 March 2023, the latest practicable date before the publication
of this report, borrowings amounted to €20 million. This is
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34 | European Assets Trust PLC Report and Accounts 2022 | 35
Governance Report
Share capital
At 31 December 2022 no notifications of significant voting
rights had been received under the Financial Conduct Authority’s
Disclosure and Transparency Rules.
CT Savings Plans owned 125,297,241 Ordinary Shares or 34.8
per cent of the issued share capital of the Company, at 31
December 2022. For non-contentious resolutions the nominee
company holding these shares votes the shares held on behalf
of planholders who have not returned their voting directions in
proportion to the directions of those who have (“proportional
voting”). Implementation of this arrangement is subject to a
minimum threshold of 5% of the shares held in the CT Savings
Plans being voted. A maximum limit of 50,000 shares that any
one individual investor can vote, being approximately 1.0% of
the relevant minimum threshold, also applies. Any individual
voting directions received in excess of the maximum limit will
remain valid but will not form part of the proportional voting
basis. Planholders have the right to exclude their shares from the
proportional voting arrangement.
Borrowings
In March 2022 the Company entered into a €45 million multi-
currency revolving loan facility with The Bank of Nova Scotia,
London Branch expiring March 2023. The loan covenants have
all been met during the period. The interest rate on the amount
drawn down and commitment fees payable on undrawn amounts
are based on the commercial terms agreed with The Bank of Nova
Scotia, London Branch.
As at 31 December 2022 the loan facility was €10 million drawn.
Following the year end, the Company has agreed to renew 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 the AGM to
be held on 18 May 2023. The policy is subject to approval by
Shareholders every three years. There have been no changes to
the policy since the last approval by Shareholders in 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 this policy will continue for the three-year period
ending at the AGM in 2026.
Shareholders will be asked to approve the Directors’ Remuneration
Policy (Resolution 3).
Shareholders will be asked to approve the Directors’ Remuneration
Report (Resolution 4).
Appointment of auditors and auditor’s remuneration
Resolutions 5 and 6 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
2023.
Director re-elections
The names of the Directors, along with their biographical details,
are set out on page 30.
All the Directors have held office throughout the year 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 election or re-election has and
will continue to make a valuable and effective contribution to
the Company. The skills and experience each Director brings to
the Board for the long-term sustainable success of the Company
are set out below. The Board recommends that Shareholders
vote in favour of the election and re-elections of the Directors
(Resolutions 7 to 11).
Resolution 7 concerns the re-election of Jack Perry, who has
served the Company and its predecessor for over 8 years, 7 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. It is anticipated the he will retire from the
Board at the conclusion of the Company’s 2024 AGM.
Resolution 8 concerns the re-election of Julia Bond, who has
served the Company and its predecessor for over 8 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. It is anticipated
that she will retire from the Board on 31 January 2024.
Resolution 9 concerns the re-election of Stuart Paterson who has
served on the Board for over three years. He was a co-founder
and is a partner of Scottish Equity Partners, one of Europe’s
leading technology growth equity investors. He is an experienced
technology investor with over 25 years of equity investing in
European private companies and is a member of the Institute of
Chartered Accountants of Scotland. It is anticipated that he will
become Chairman of the Company at the conclusion of the AGM in
2024.
Resolution 10 concerns the re-election of Martin Breuer, who has
served the Company and its predecessor for over 6 years. He is a
German national, currently based in Italy, with extensive industrial
experience with Continental European companies.
Resolution 11 concerns the re-election of Pui Kei Yuen who has
served the Company for two years. She has extensive experience
in the fund management and investment banking industries at
Mercury Asset Management, UBS and Bank of America Merrill
Lynch. She is also currently a non-executive director of another
investment trust.
34 | European Assets Trust PLC Report and Accounts 2022 | 35
Governance Report
Directors’ interests and indemnification
There were no contracts of significance to which the Company was
a party and in which a Director is, or was, materially interested
during the period. There are no agreements between the Company
and its Directors concerning compensation for loss of office.
The Company has granted deeds of indemnity to the Directors
in respect of liabilities that may attach to them in their capacity
as Directors of the Company. These deeds cover any liabilities
that may arise to a third-party for negligence, default or breach of
trust or duty. These deeds of indemnity are qualifying third-party
provisions (as defined by section 234 of the Companies Act 2006)
and have been in force throughout the period of review and remain
in place at the date of this report. They are available for inspection
at the Company’s registered office during normal business hours
and at the AGM. The Company also maintains directors’ and
officers’ liability insurance.
Safe custody of assets
The Company’s investments are held in safe custody by 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.
Benchmark
The Company’s stated investment policy allows the Manager to
invest in small and medium-sized European companies (excluding
the UK) which have a market capitalisation below that of the largest
company in the EMIX Smaller European Companies (ex UK) Index.
IHS Market Benchmark Administration has announced its intention
to cease calculation of its EMIX indices with effect from 31 July
2023. The current benchmark of the Company, the EMIX Smaller
European Companies (ex UK) Index (Net Return) will therefore be
discontinued.
The Board, together with its advisers have carefully considered
alternative benchmarks to replace the EMIX Smaller European
Companies (ex UK) Index and have concluded that the MSCI Europe
Ex UK SMID Cap Index, on a net return basis, represents the most
appropriate choice, noting, that this index has the greatest overlap
of those indices considered with the current portfolio, as well as a
similar number of constituents to the current benchmark.
The MSCI Europe Ex UK SMID Cap Index, which is composed of
European small and mid-cap companies, does have a broader
range of market capitalisation within its constituents which is
relevant to the upper size limit contained in the investment policy
of the Company. The adoption of the MSCI Europe Ex UK SMID
Cap Index should therefore be treated as a material change to
the Company’s investment policy. However, the Manager has
confirmed that the selection of the new benchmark does not imply
that there will be any change to the existing selection process for
investments.
Resolution 12 therefore seeks Shareholder approval for the
replacement of the existing benchmark with the new benchmark
at the Annual General Meeting to be held on 18 May 2023 prior
to its adoption with effect from 1 June 2023, as well as to provide
flexibility in the terms of the investment policy for further changes
to the benchmark to be made in the future should the Board
consider this necessary.
It is, however noted that, to the extent that any further change was
material, this would again require approval of the Financial Conduct
Authority and Shareholders under the Listing Rules.
AGM
The Notice of AGM to be held on 18 May 2023 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 13 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 14, 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
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
36 | European Assets Trust PLC Report and Accounts 2022 | 37
Governance Report
Companies Act 2006 did not apply. (This section requires that,
when equity securities are allotted for cash, such new shares are
first offered to existing equity shareholders in proportion to their
existing holdings of shares, this entitlement being known as ‘‘pre-
emption rights’’).
Allotments of Ordinary Shares pursuant to these authorities would
enable the Directors to issue shares for cash and/or to sell equity
securities held as treasury shares to take advantage of changes in
market conditions that may arise, in order to increase the amount
of the Company’s issued share capital. A likely purpose of such
an increase would be to improve the liquidity of the market in the
Company’s shares and to spread the fixed costs of administering
the Company over a wider base. The Directors believe that this
authority, if granted to the Directors, would provide the necessary
flexibility permitted by investor protection guidelines to respond
to market developments in the interest of existing Shareholders.
Except where authorised by Shareholders, no shares will be issued
or sold from treasury by the Directors at a price which (after costs
and expenses) is less than the net asset value per share at the
time of the issue or sale, unless the shares are first offered pro
rata to shareholders on a pre-emptive basis. The Company has
been authorised to sell any treasury shares held from time-to-time
at below net asset value subject to the limitation on asset dilution
set out below.
The absolute level of dilution through the sale of treasury shares is
restricted to 0.5% of Net Asset Value in any one year, and treasury
shares which are sold at a discount to Net Asset Value will only be
sold where the discount at which the shares are sold is lower than
the average discount at which the shares have been acquired, and
in addition the price at which shares are sold must not be less
than the market bid price at time of sale.
Resolution 14, if passed, will give the Directors power to allot for
cash Ordinary Shares of the Company and to sell Ordinary Shares
out of treasury up to a maximum nominal amount of £1,800,346
(being an amount representing 5 per cent of the total issued
ordinary share capital of the Company as at the date of this report)
without the application of the pre-emption rights described above.
The calculation of the above figure is in accordance with the
Investment Association Share Capital Management Guidelines and
other applicable investor protection guidelines, and the Directors
will not use the authority other than in accordance with those
guidelines.
The authorities contained in Resolutions 13 and 14 will continue
until the AGM of the Company in 2024, and the Directors
envisage seeking renewal of these authorities in 2024 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 15, 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 15, if passed, will continue
until the AGM of the Company in 2024, and the Directors envisage
seeking renewal of this authority in 2024 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
Columbia Threadneedle Investment Business Limited
Secretary
28 March 2023
36 | European Assets Trust PLC Report and Accounts 2022 | 37
Governance Report
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
Corporate Governance
Introduction
The Company adheres to the principles and recommendations
of the revised AIC Code of the Corporate Governance (the “AIC
Code”) published in 2019.
The Board believes that the Company has complied with the current
recommendations of the AIC Code during the year under review and
up to the date of this report and, except as regards the provisions
set out below, has thereby complied with the relevant provisions
of the 2018 revision to the UK Corporate Governance Code (“UK
Code”):
The UK Code includes provisions relating to:
• the role of the chief executive;
• executive directors’ remuneration; and
• the need for an internal audit function.
For the reasons set out in the AIC Corporate Governance Guide for
Investment Companies, the Board considers these provisions as
not being relevant to the Company, as it is an externally managed
investment company. In particular, all of the Company’s day-to-day
management and administrative functions have been delegated to
the Manager. As a result, the Company has no executive Directors,
employees or internal operations. Therefore, with the exception
of the need for an internal audit function, which is addressed on
page 44, the Company has not reported further in respect of these
provisions.
Detailed information on the Directors’ Remuneration can be found
in the Directors’ Remuneration Report on pages 41 to 42 and in
note 6 to the accounts.
Copies of both codes may be found on the respective websites
theaic.co.uk and frc.org.uk.
AIFMD
The Company is defined as an Alternative Investment Fund (“AIF”)
under the AIFMD issued by the European Parliament, and which
has been implemented into UK law. This requires that all AIFs must
appoint a Depositary and an Alternative Investment Fund Manager
(“AIFM”). The Board remains fully responsible for all aspects of the
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 Board
and Committee meetings held during the year ended 31 December
2022 and the number of meetings attended by each Director.
The Board also held a strategy meeting and three committee
meetings during the year.
Individual Directors may, at the expense of the Company, seek
independent professional advice on any matter that concerns
them in the furtherance of their duties. No such advice was sought
during the period. The Company maintains appropriate Directors’
and Officers’ liability insurance and has granted deeds of indemnity
to the Directors in respect of liabilities that may attach to them in
their capacity as Directors of the Company.
The Board receives full information on the Company’s investment
performance, assets, liabilities and other relevant information in
advance of Board meetings. The Board has direct access to the
company secretarial advice and services provided by the Manager.
The proceedings at all Board meetings are 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.
38 | European Assets Trust PLC Report and Accounts 2022 | 39
Governance Report
Full details of the duties of a Director are provided at the time
of their appointment. An induction process takes place for
new appointees, who meet the Investment Manager, Company
Secretary and other key employees of the Manager and are given
briefings on the workings and processes of the Company.
Directors are encouraged to attend relevant training courses
and seminars and receive regular updates on the industry and
changes to regulation from external advisors and the Company
Secretary.
Independence of Directors
All Directors are considered by the Board to be independent of the
Manager. The Board does not consider that a Director’s tenure or
other board memberships necessarily reduces his or her ability
to act independently and, following performance evaluations,
believes that each Director is independent in character and
judgement and that continuity and experience add to the strength
of the Board.
Board committees
The Board has appointed committees with sufficient expertise, in
accordance with the AIC Code in order to increase the efficiency
of the Board’s work. The respective chairs of the committees
report to the Board on the work of the committees. The Company
has established an Audit and Risk Committee, a Remuneration
and Nomination Committee and a Management Engagement
Committee.
Audit and Risk Committee
The Company has established an Audit and Risk Committee
which is chaired by Stuart Paterson and is comprised of all
the independent members of the Board. The Audit and Risk
Committee meets at least twice a year. The Board considers that
the members of the Audit and Risk Committee have the requisite
skills and experience to fulfil the responsibilities of the Audit and
Risk Committee. The Audit and Risk Committee is responsible
for ensuring that the financial performance of the Company
is properly reported on and monitored and provides a forum
through which the Company’s external auditors may report to the
Board. The Audit and Risk Committee reviews and recommends
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,
it is anticipated that Julia Bond will retire from the Board on 31
January 2024. In advance of Julia’s retirement, the Board will
recruit a new Director. Jack Perry has announced his intention to
retire from the Board at the conclusion of the Company’s Annual
General Meeting in 2024. Upon his retirement, Stuart Paterson will
become Chairman.
As a further part of this succession plan a search company was
commissioned to identify a new Director for the Board. Details
regarding the search company are provided on page 40. Following
a thorough selection process, Kevin Troup will be appointed to the
Board and its committees with effect from 19 May 2023.
Following the retirement of Jack Perry and Stuart Paterson’s
assumption of the Chairmanship, Kevin Troup will be appointed
Chair of the Company’s Audit and Risk Committee.
Year ended
31 December 2022
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 4 3 3 2 1 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
5 5 2 2 2 2 1 1
38 | European Assets Trust PLC Report and Accounts 2022 | 39
Governance Report
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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 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, which was an investment of the Company, during part of
the year and therefore was recused from Board discussions on
that 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. 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 2022.
Julia Bond, 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
Columbia Threadneedle Investment Business Limited
Secretary
28 March 2023
40 | European Assets Trust PLC Report and Accounts 2022 | 41
Governance Report
Report of the Remuneration and
Nomination Committee
the right balance of both continuity and the regular refreshment
of talent as well as compliance with the requirements of the AIC
Code.
As part of this plan, it is anticipated that Julia Bond will retire
from the Board on 31 January 2024. In advance of Julia’s
retirement, the Board will recruit a new Director. Jack Perry
has announced his intention to retire from the Board at the
conclusion of the Company’s Annual General Meeting in 2024.
Upon his retirement, Stuart Paterson will become Chairman.
As a further part of this succession plan, search company
Cornforth Consulting, with no connection to the Company or an
individual director, was commissioned to find a new Director for
the Board. Following a thorough selection process, Kevin Troup
will be appointed to the Board and its committees with effect
from 19 May 2023.
Following the retirement of Jack Perry and Stuart Paterson’s
assumption of the Chairmanship, Kevin Troup will be appointed
Chair of the Company’s Audit and Risk Committee.
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
28 March 2023
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
40 | European Assets Trust PLC Report and Accounts 2022 | 41
Governance Report
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 2022.
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 on 18 May 2023. It is intended that this policy will
continue for the three-year period ending at the AGM in 2026.
The Board has not received any views from Shareholders in
respect of the levels of Director’s remuneration.
The Company’s articles of association limit the aggregate fees
payable to the Board to a total of £500,000 per annum. The
Remuneration and Nomination Committee considers the level of
Directors’ fees at least annually. The Committee receives details
Directors’ Remuneration Report
of the fees paid to directors of commensurate companies. The
Committee will then recommend to the Board a proposal for its
approval.
The fees are fixed and are payable in cash, quarterly in arrears.
Following the latest review the Board agreed that with effect from
1 April 2023 the annual rates of remuneration will be increased to
£48,000 for the Chairman, £38,000 for the Chairman of the Audit
and Risk Committee, £37,000 for the Senior Independent Director
and £32,750 for a Non-executive Director. These increases at less
than 4% are lower than backdrop inflation.
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 18May 2023.
Fees for services to the Company for the year ended 31 December (audited)
Fees TaxableBenefits
(1)(2)
Total Fees
(audited) (audited) (audited) (unaudited)
2022 2021 2022 2021 2022 2021 2023
Director £ £ £ £ £ £ £
Jack Perry CBE 45,813 44,375 3,724 941 49,537 45,316 47,600
Stuart Paterson 36,413 35,300 1,224 382 37,637 35,682 37,700
Julia Bond OBE 35,413 34,300 1,009 888 36,422 35,188 36,700
Martin Breuer 31,200 30,225 2,253 457 33,453 30,682 32,400
Pui Kei Yuen 31,200 25,520 918 803 32,118 26,323 32,400
Kevin Troup
(3)
n/a n/a n/a n/a n/a n/a 20,300
Laurence Jacquot
(4)
n/a 11,070 n/a 38 n/a 11,108 n/a
Total 180,039 180,790 9,128 3,509 189,167 184,299 207,100
(1)
Comprises amounts reimbursed for expenses incurred in carrying out business for the Company which have been grossed up to include PAYE and NI contributions.
(2)
Increased year-on-year as a result of a return to normal business travel on behalf of the Company post COVID-19.
(3)
To be appointed on 19 May 2023.
(4)
Retired 13 May 2021.
42 | European Assets Trust PLC Report and Accounts 2022 | 43
Annual percentage change
The table below sets out the annual percentage change in fees for
each director who served in the year under review.
2022 2021 2020
Director (audited) (audited) (audited)
Jack Perry CBE +3.2 +0.9 +4.8
Stuart Paterson +3.2 +6.3 +155.6
(2)
Julia Bond OBE +3.2 +0.9 +3.0
Martin Breuer +3.2 +0.8 +3.4
Pui Kei Yuen +22.3
(1)
n/a n /a
(1)
Appointed as a Director with effect from 26 February 2021, increase reflects the
first full year with the Company.
(2)
Appointed as a non-executive Director on 22 July 2019, became Audit and Risk
Committee Chair with effect from 14 May 2020. Increase reflects the first full year
with the Company and the change in positions held.
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 17 May 2022 Shareholders approved the
Directors’ Remuneration Report in respect of the year ended
31 December 2021. 96.6% of votes were cast in favour of the
resolution and 3.4% against.
Directors’ remuneration for the year
The Directors who served during the year received remuneration at
the following annualised rates for services as non-executive Directors.
Directors can expect to receive fees at the rates indicated for 2023
as well as reimbursement for expenses necessarily incurred.
The fees for specific responsibilities are set out below.
Aggregate remuneration will rise during 2023 beyond the marginal
increases in rates to be implemented on 1 April 2023 due to the
temporary increase in the number of Directors during the year. This
temporary increase will ensure smooth handovers between Jack
Perry, Stuart Paterson and Kevin Troup. It is envisaged that following
the Company's 2024 AGM the number of Directors will be reduced
from six to five.
Governance Report
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.
Annual fee rates for Board responsibilities
With effect With effect
from from
1 April 2023 1 April 2022
£ £
Chairman 48,000 46,250
Chairman of Audit and Risk Committee 38,000 36,750
Senior Independent Director 37,000 35,750
Non-executive Director 32,750 31,500
‡
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
28 March 2023
There has been no change to Directors’ shareholdings since
the year end. No Director held any interests in the issued share
capital of the Company other than as stated above. Directors are
encouraged but not required to hold shares in the Company.
Relative importance of spending on pay
The table below shows the actual expenditure in relation to Board
remuneration, other expenses, Shareholder dividends and 31
December Net Asset Value:
2022 2021
£’000s £’000s %
Aggregate Board remuneration
(excluding taxable benefits) 180 181 -0.6%
Management and other expenses 3,863 4,513 -14.4%
Dividends paid to Shareholders 31,688 28,804 +10.0%
Net Asset Value 347,627 525,435 -33.8%
Directors’ Share Number of shares held
interests (audited)
2022 2021
Jack Perry 86,903 81,606
Julia Bond 99,609 91,428
Stuart Paterson 95,000 95,000
Martin Breuer 114,300 90,000
Pui Kei Yuen 7,700 7,700
375
350
325
300
275
250
225
200
175
150
125
100
75
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
European Assets Trust
‡
EMIX Smaller European Countries (ex UK) Index
∞
Source: Reuters Eikon
Share Price Total Return Performance
(In sterling terms, rebased to 100 at 31 December 2012)
42 | European Assets Trust PLC Report and Accounts 2022 | 43
Governance Report
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.
Significant issues considered by the Audit and Risk Committee for the year ended 31 December 2022
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 were 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 2022.
During the year, the Chair of the Committee met representatives
of the Manager to discuss the control reports of a third party
service provider.
44 | European Assets Trust PLC Report and Accounts 2022 | 45
As part of its review of the scope and results of the audit, during
the period the Audit and Risk Committee considered and approved
the auditor’s plan for the audit of the financial statements for the
year ended 31 December 2022. 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 tender
for auditors at least until after the audit in respect of the year ended
31 December 2029. It is the current intention of the Audit and Risk
Committee not to tender for the audit until then. The Audit and Risk
Committee, from direct observation and enquiry of the Manager,
remains satisfied that the 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 second 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
28 March 2023
44 | European Assets Trust PLC Report and Accounts 2022 | 45
Governance Report
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
2023 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 2023, 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
28 March 2023
46 | European Assets Trust PLC
Financial Statements
Statement of Directors’ Responsibilities
in Respect of the Financial Statements
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
28 March 2023
Report and Accounts 2022 | 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 2022 and of its loss 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 2022; the Statement of
Comprehensive Income, the Statement of changes in Equity and the
Statement of Cash Flows for the year then ended; and the notes to
the financial statements, which include a description of the significant
accounting policies.
Our opinion is consistent with our reporting to the Audit and Risk
Committee.
Basis for opinion
We conducted our audit in accordance with International Standards
on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities
under ISAs (UK) are further described in the Auditors’ responsibilities
for the audit of the financial statements section of our report. We
believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Independence
We remained independent of the Company in accordance with the
ethical requirements that are relevant to our audit of the financial
statements in the UK, which includes the FRC’s Ethical Standard, as
applicable to listed public interest entities, and we have fulfilled our
other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit
services prohibited by the FRC’s Ethical Standard were not provided.
We have provided no non-audit services to the Company in the period
under audit.
Our audit approach
Overview
Audit scope
•
The Company is a standalone Investment Trust Company and
engages Columbia Threadneedle Investment Business Limited (the
"Investment Manager") to manage its assets.
•
We conducted our audit of the financial statements using
information from State Street Bank & Trust Company (the
"Administrator") to whom the Investment Manager has, with
the consent of the Directors, delegated the provision of certain
administrative functions.
•
We tailored the scope of our audit taking into account the types
of investments within the Company, the involvement of the third
parties referred to above, the accounting processes and controls,
and the industry in which the Company operates.
•
We obtained an understanding of the control environment in
place at both the Investment Manager and the Administrator
and adopted a fully substantive testing approach using reports
obtained from the Administrator.
Key audit matters
•
Valuation and existence of investments
•
Accuracy, occurrence and completeness of Income from
investments
Materiality
• Overall materiality: £3,476,270 (2021: £5,254,345) based on 1%
of Net Asset Value (NAV).
• Performance materiality: £2,607,203 (2021: £3,940,759).
The scope of our audit
As part of designing our audit, we determined materiality and
assessed the risks of material misstatement in the financial
statements.
Key audit matters
Key audit matters are those matters that, in the auditors’
professional judgement, were of most significance in the audit of
the financial statements of the current period and include the most
significant assessed risks of material misstatement (whether or not
due to fraud) identified by the auditors, including those which had
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.
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
48 | European Assets Trust PLC
Financial Statements
The key audit matters below are consistent with last year.
The impact of climate risk on our audit
In conducting our audit, we made enquiries of the Directors and the Investment Manager to understand the extent of the potential impact
of climate change risk on the Company's financial statements. The Directors and Investment Manager concluded that the impact on the
measurement and disclosures within the financial statements is not material because the majority of the Company's investment portfolio
is made up of level 1 quoted securities which are valued at fair value based on market prices. We found this to be consistent with our
understanding of the Company's investment activities. We also considered the consistency of the climate change disclosures included in the
Strategic Report and Investment Manager Report with the financial statements and our knowledge from our audit.
Key audit matter
Valuation and existence of investments
Refer to the Report of the Audit and Risk Committee (page
43), Significant accounting policies (page 58) and Notes to the
Financial Statements (page 64).
The investment portfolio at the year-end comprised listed equity
investments valued at £340.7m.
We focused on the valuation and existence of investments
because investments represent the principal element of the net
asset value as disclosed on the Statement of Financial Position in
the Annual Report.
Accuracy, occurence and completeness of income from investments
Refer to the Report of the Audit and Risk Committee (page
43), Accounting policies (page 59) and Notes to the Financial
Statements (page 60).
ISAs (UK) presume there is a risk of fraud in income recognition
because of the pressure management may feel to achieve a certain
objective. In this instance, we consider that ‘income’ refers to all
the Company’s income streams, both revenue and capital (including
gains and losses on investments). We focused on the accuracy,
completeness and occurrence of dividend income recognition as
incomplete or inaccurate income could have a material impact on
the Company’s net asset value and dividend cover.
We also focused on the accounting policy for income recognition
and its presentation in the Income Statement as set out in
the requirements of The Association of Investment Companies
Statement of Recommended Practice (the “AIC SORP”) as
incorrect application could indicate a misstatement in income
recognition.
In addition, the Directors are required to exercise judgement in
determining whether income receivable in the form of special
dividends should be classified as ‘revenue’ or ‘capital’ in the
Statement of Comprehensive Income.
How our audit addressed the key audit matter
Our audit work on the valuation and existence of investments
included the following:
• We tested the valuation of 100% of the listed equity investments
by agreeing the prices used in the valuation to independent third-
party sources; and,
• We tested the existence of the investment portfolio by agreeing
investment holdings to an independent custodian confirmation.
Based on the results of the audit procedures performed we are
satisfied that the equity investments exist and that the valuation of
the equity investments is not materially misstated.
We responded to this risk by performing the following audit
procedures:
• We obtained an understanding of the processes and controls
around income recognition and classification of special dividends
by reviewing the internal controls reports of the Administrator; and,
• We assessed the appropriateness of the classification of special
dividends as revenue or capital by the Directors with reference to
publicly available information.
For all dividends recorded by the Company, we performed our audit
procedures through the use of our proprietary testing tool Halo:
• We tested the accuracy of dividend income by agreeing the
dividend rates from investments to independent market data;
• We tested occurrence by testing that all dividends recorded in the
year had been declared in the market by investment holdings;
• We also tested the occurrence of realised gains by agreeing a
sample of gains recorded to supporting evidence such as bank
statements and broker statements; and,
• To test for completeness, we investigated that the appropriate
dividends had been received in the year by reference to
independent data of dividends declared for all investment holdings
held within the year.
We have no matters to report as a result of this testing.
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.
Report and Accounts 2022 | 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:
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature
and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our
performance materiality was 75% (2021: 75%) of overall materiality, amounting to £2,607,203 (2021: £3,940,759) 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 £173,814 (2021:
£262,717) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the Company’s ability to continue to adopt the going concern basis of accounting included:
• evaluating the Directors’ updated risk assessment and considering whether it addressed relevant threats, including Russia’s invasion of
Ukraine, inflationary pressures and the wider macroeconomic uncertainty;
• evaluating the Directors’ assessment of potential operational impacts, considering their consistency with other available information and
our understanding of the business and assessed the potential impact on the financial statements;
• reviewing the Directors’ assessment of the Company’s financial position in the context of its ability to meet future expected operating
expenses, their assessment of liquidity as well as their review of the operational resilience of the Company and oversight of key third-party
service providers; and,
• assessing the implication of significant reductions in net asset value as a result of a severe but plausible downside in the market’s
performance on the ongoing ability of the Company to operate.
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.
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
£3,476,270 (2021: £5,254,345)
1% of Net Asset Value (NAV)
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.
Overall Company
materiality
How we
determined it
Rationale for
benchmark applied
50 | European Assets Trust PLC
Financial Statements
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report
thereon. The Directors are responsible for the other information. Our opinion on the financial statements does not cover the other information
and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance
thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to
be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to
conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based
on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that
fact. We have nothing to report based on these responsibilities.
With respect to the Strategic Report and Directors' Report, we also considered whether the disclosures required by the UK Companies Act
2006 have been included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as
described below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and Directors' Report
for the year ended 31 December 2022 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 Company was substantially less in scope than an audit and
only consisted of making inquiries and considering the Directors’ process supporting their statement; checking that the statement is in
alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the statement is consistent with the
financial statements and our knowledge and understanding of the Company and its environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate
governance statement is materially consistent with the financial statements and our knowledge obtained during the audit:
• The Directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides the
information necessary for the members to assess the Company's position, performance, business model and strategy;
• The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and
• The section of the Annual Report describing the work of the Audit and Risk Committee.
We have nothing to report in respect of our responsibility to report when the Directors’ statement relating to the Company’s compliance with
the Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review by the
auditors.
Report and Accounts 2022 | 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. 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:
• holding discussions with the Manager and the Audit and Risk Committee, including consideration of known or suspected instances of non-
compliance with laws and regulation and fraud;
• understanding the controls implemented by the Manager and the the Administrator designed to prevent and detect irregularities;
• reviewing relevant meeting minutes, including those of the Audit and Risk Committee;
• assessing the Company’s compliance with the requirements of section 1158 of the Corporation Tax Act 2010, including recalculation of
numerical aspects of the eligibility conditions;
• identifying and testing journal entries, in particular year-end journal entries posted by the Administrator during the preparation of the financial
statements; and,
• designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing.
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with
laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a
material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment
by, for example, forgery or intentional misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques.
However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to
target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a
conclusion about the population from which the sample is selected.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of Part
16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent
in writing.
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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 four
years, covering the years ended 31 December 2019 to 31 December 2022.
Other matter
In due course, as required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial statements
will form part of the ESEF-prepared annual financial report filed on the National Storage Mechanism of the Financial Conduct Authority in
accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditors’ report provides no assurance over whether the annual
financial report will be prepared using the single electronic format specified in the ESEF RTS.
Jennifer March (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
28 March 2023
Report and Accounts 2022 | 53
Financial 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 2022
Year ended
31 December 2021
Revenue
£’000s
Capital
£’000s
Total
£’000s
Revenue
£’000s
Capital
£’000s
Total
£’000s
13
(Losses)/gains on investments held at fair
valuethroughprofitorloss
- (177,223) (177,223) - 102,892 102,892
Foreign exchange (losses)/gains (25) (86) (111) 8 469 477
3
Income 8,527 - 8,527 8,157 - 8,157
5 5
Management fees (610) (2,438) (3,048) (739) (2,954) (3,693)
6 6
Other expenses (958) (37) (995) (995) (7) (1,002)
Profit/(loss) before finance costs and
taxation
6,934 (179,784) (172,850) 6,431 100,400 106,831
8 8
Finance costs (51) (206) (257) (50) (201) (251)
Profit/(loss) before taxation 6,883 (179,990) (173,107) 6,381 100,199 106,580
9 9
Taxation (944) - (944) (937) - (937)
Profit/(loss) for the year and total
comprehensive income
5,939 (179,990) (174,051) 5,444 100,199 105,643
11 11
Earnings per share (basic and diluted)
– pence
1.65 (49.99) (48.34) 1.51 27.83 29.34
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
54 | European Assets Trust PLC
Financial Statements
Statement of changes in Equity
Notes
For the year ended 31 December 2022
Share
capital
£’000s
Distributable
reserve*
£‘000s
Capital
reserve*
£’000s
Revenue
reserve*
£’000s
Cumulative
translation
reserve
£’000s
Total
Shareholders'
funds
£’000s
Balance at 31 December 2021 37,506 322,694 188,661 – (23,426) 525,435
Movement during the year ended
31 December 2022
10
Interim dividends distributed – (25,749) – (5,939) – (31,688)
Total comprehensive income – – (179,990) 5,939 – (174,051)
Cumulative translation adjustment – – – – 27,931 27,931
Balance as at 31 December 2022 37,506 296,945 8,671 – 4,505 347,627
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
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).
For the year ended 31 December 2021
Share
capital
£’000s
Distributable
reserve*
£’000s
Capital
reserve*
£’000s
Revenue
reserve*
£’000s
Cumulative
translation
reserve
£’000s
Total
Shareholders'
funds
£’000s
Report and Accounts 2022 | 55
Financial 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 28 March 2023 and signed on its behalf of by:
Jack Perry, Chairman.
Notes
31 December
2022
£’000s
31 December
2021
£’000s
Non-current assets
12
Investments at fair value through profit or loss 340,717 539,756
Current assets
13
Other receivables 3,247 2,680
Cash and cash equivalents 13,317 8,342
Total current assets 16,564 11,022
Current liabilities
14
Other payables (782) (155)
15
Bank loan (8,872) (25,188)
Total current liabilities (9,654) (25,343)
Net current assets/(liabilities) 6,910 (14,321)
Net assets 347,627 525,435
Capital and reserves
16
Share capital 37,506 37,506
17
Distributable reserve 296,945 322,694
18
Capital reserve 8,671 188,661
18
Revenue reserve – –
Cumulative translation reserve 4,505 (23,426)
Total Shareholders’ funds 347,627 525,435
19
Net Asset Value per ordinary share – pence 96.54 145.93
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
The notes on pages 57 to 72 form an integral part of the financial statements.
56 | European Assets Trust PLC
Notes
For the year ended 31 December
2022
£’000s
2021
£’000s
20
Cash flows from operating activities before interest and dividends received and interest paid (3,353) (4,660)
Dividends received 6,990 6,842
Interest received 34 –
Interest paid (257) (271)
Cash flows from operating activities 3,414 1,911
Investing activities
Purchase of investments (107,060) (107,481)
Sale of investments 156,430 139,299
Other capital expenses (37) (7)
Cash flows from investing activities 49,333 31,811
Cash flows before financing activities 52,747 33,722
Financing activities
10
Equity dividends paid (31,688) (28,804)
15,21
Drawdown of bank loan – 8,538
15,21
Repayment of bank loan (17,173) (8,500)
Cash flows from financing activities (48,861) (28,766)
Net movement in cash and cash equivalents 3,886 4,956
Cash and cash equivalents at the beginning of the year 8,342 2,950
Effect of movement in foreign exchange (111) 477
Translation adjustment 1,200 (41)
Cash and cash equivalents at the end of the year 13,317 8,342
Represented by:
Cash at bank 9 13
Short term deposits 13,308 8,329
13,317 8,342
Financial Statements
Statement of Cash Flows
The accompanying notes on pages 57 to 72 are an integral part of these financial statements.
Report and Accounts 2022 | 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 2022, 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 2018 amended Statement of Recommended Practice “Financial Statements of Investment Trust
Companies and Venture Capital Trusts” (“SORP”) for investment trusts issued by the Association of Investment Companies (“AIC”) is consistent
with the requirements of UK-adopted International Accounting Standards, the Directors have sought to prepare the financial statements on a
basis compliant with the recommendations of the SORP.
All of the Company's operations are of a continuing nature. The functional currency of the Company is the euro and presentational currency is the
pound sterling as the Board believe this will provide clarity of the Company's financial statements for its Shareholders, the overwhelming majority
of whom are located in the United Kingdom.
The Board confirms that no other significant accounting judgements or estimates have been applied to the financial statements and therefore
there is no significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
As referred to in the Directors’ Report on page 32 and note 23 to the accounts the Directors believe that it is appropriate for the accounts to be
prepared on a going concern basis.
b) New and revised Accounting Standards
The Company adopted the following amended standard and interpretation during the year however the Board do not expect the change to have an
effect on the Company’s accounts:
• IFRS 16 Amendments - COVID-19 Related Rent Concessions (effective 1 April 2021) the May 2020 amendments, which introduced an
optional practical expedient that simplifies how a lessee accounts for rent concessions that are a direct consequence of COVID-19, have been
extended to lease payments originally due on or before 30 June 2022;
Other new standards, amendments and interpretations issued by the International Accounting Standards Board (“IASB”) but not effective for the
current financial year and not early adopted by the Company include:
• IAS 1 Amendments - Classification of Liabilities as Current or Non-Current (effective date amended to 1 January 2023). The amendments
specify the requirements for classifying liabilities as current or non-current. The amendments are not expected to have a material impact on
the Group's financial statements.
• IAS 1 Amendments - Disclosure of Accounting Policies (effective 1 January 2023). The amendments require an entity to disclose its material
accounting policy information instead of its significant accounting policies. The amendments contain guidance and examples on identifying
material accounting policy information. The amendments are not expected to have a material impact on the Group's financial statements.
• IAS 8 Amendments - Definition of Accounting Estimates (effective 1 January 2023) The amendments define accounting estimates as
"monetary amounts in financial statements that are subject to measurement uncertainty". The amendments also clarify the interaction
between an accounting policy and an accounting estimate. The amendments are not expected to have a material impact on the Group's
financial statements.
• IAS 12 Amendments - Deferred Tax related to Assets and Liabilities arising from a Single Transaction (effective 1 January 2023). The
amendments require entities with certain assets to recognise deferred tax on particular transactions that, on initial recognition,
give rise to equal amounts of taxable and deductible temporary differences.
• IFRS 17 Amendments – Insurance contracts (effective 1 January 2023). The IASB has issued this new standard as a replacement for IFRS
4, which currently allows a range of accounting treatments for insurance contracts. IFRS 17 will fundamentally change the accounting for
insurance and investment contracts by all entities with discretionary participation features.
The 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.
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58 | European Assets Trust PLC
2. Significant accounting policies (continued)
c) Presentation of Statement of Comprehensive Income
In order to reflect better the activities of an investment trust company and in acc
ordance 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.
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.
Accounting standards recognise a hierarchy of fair value measurements for financial instruments which gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The
classification of financial instruments depends on the lowest significant applicable input, as follows:
Level 1 – quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2 – other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either directly or indirectly.
Level 3 – techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable market data.
e) Receivables
Receivables do not carry any interest and are short term in nature and are accordingly stated at their nominal value as reduced by appropriate
allowances for estimated irrecoverable amounts. Receivables are recognised initially at fair value based on contractual settlement amounts and
subsequently measured at amortised cost using the effective interest rate method. The Company records any impairment allowance on financial
assets at amortised cost using the expected credit loss model under the simplified method.
f) Cash and cash equivalents
Cash at banks and short term deposits that are held to maturity are carried at cost. Cash and cash equivalents consist of cash at bank and short
term deposits with an original maturity of three months or less.
g) Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity
instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Financial liabilities
and equity instruments are initially recorded at the proceeds received, net of issue costs.
h) Bank borrowings
Interest-bearing bank loans and overdrafts are recorded at the proceeds received. Finance charges, including premiums payable on settlement or
redemption and direct issue costs, are accounted for on an accruals basis in the Statement of Comprehensive Income using the effective interest
method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.
i) Derivative financial instruments
Derivatives are classified as fair value through profit or loss – held for trading and are held at fair value and changes in fair value are recognised
in the capital return column of the Statement of Comprehensive Income.
j) Payables
Payables are not interest bearing and are recognised initially at fair value based on contractual settlement amounts and subsequently measured
at amortised cost using the effective interest rate method.
k) Share capital and reserves
(i) Share capital is held at the year end as Sterling denominated ordinary Shares.
(ii) Distributable reserve – Created by cancellation of the Share Premium Account. This reserve is available as distributable profits and may
be used for the payment of dividends and the repurchase of Company shares.
(iii) Capital reserves
Capital reserves – arising on investments sold and distributable by way of a dividend.
The following are accounted for in this reserve:
• gains and losses on the disposal of fixed asset investments and derivatives;
• settled foreign exchange differences of a capital nature; and
• other capital charges and credits charged or credited to this account in accordance with the above policies.
STRATEGIC REPORT
Report and Accounts 2022 | 59
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.
(v) Cumulative translation reserve
This reserve comprises all foreign exchange differences arising from the translation from the Company’s functional currency, the
euro, to the reporting currency, pound sterling. The figure represents:
- the differences arising from translation of transactions made by the Company at the exchange rate on the date of execution;
- t
he 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 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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Financial Statements
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) 2022 2021
Danish Krone 8.38163 8.85844
Norwegian Krone 11.84977 11.94395
Euro 1.12710 1.19104
Swedish Krona 12.53362 12.26299
Swiss Franc 1.11292 1.23411
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
2022
£’000s
2021
£‘000s
Dividend income
(1)
from listed investments in:
- Austria 46 -
- Belgium 76 -
- Denmark 416 414
- Finland - -
- France 495 607
- Germany 622 1,023
- Iceland 84 108
- Ireland 492 180
- Italy 755 850
- Netherlands 378 171
- Norway 1,673 2,477
- Portugal 159 213
- Spain 896 187
- Sweden 1,883 1,566
- Switzerland 518 361
Total dividend income 8,493 8,157
Other income:
Interest on cash and cash equivalents 34 –
34 _
Total income 8,527 8,157
(1)
Dividendincomeincludesspecialdividendsclassifiedasrevenueinnatureinaccordancewithnote2(q)of£218,000(2021:£147,000).
Financial Statements
Report and Accounts 2022 | 61
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
2022 2021
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Management fee 610 2,438 3,048 739 2,954 3,693
The Manager receives a fee equal to 0.75 per cent per annum of the value of funds under management up to the value of €400 million. Funds
under management is calculated as the value of total assets less current liabilities (excluding borrowings) at the end of the preceding quarter.
Where the value of funds under management exceeds €400 million, the applicable rate over such excess value is 0.6 per cent per annum.
Detailed regulatory disclosures including those on the AIF Manager’s remuneration policy and costs are available on Company’s website or from
Columbia Threadneedle Investments on request.
6. Other expenses
Revenue
£’000s
Capital
£’000s
2022
Total
£’000s
Revenue
£’000s
Capital
£’000s
2021
Total
£’000s
Depositary and custody fees
Remuneration of Directors
(1)
Travel expenses
Indemnity insurance costs
Independent auditors' remuneration
– for audit services
(2)
Legal, secretarial and accounting
Broker fees
Marketing, advertising and printing costs
Other expenses
(3)
120
180
8
15
56
129
36
200
214
–
–
–
–
–
–
–
–
37
120
180
8
15
56
129
36
200
251
163
181
2
11
46
119
36
242
195
–
–
–
–
–
–
–
–
7
163
181
2
11
46
119
36
242
202
Total other expenses 958 37 995 995 7 1,002
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 £42,900 (2021: £39,000). There were no non-audit services paid
to PwC in the year (2021: none).
(3)
Other expenses include Registrar fees, listing fees, Loan non-utilisation fees and subscriptions.
7. Directors fees
The emoluments of the Chairman, the highest paid Director, were at the rate of £46,250 per annum (2021: £44,500).
Other Directors' emoluments amounted to £31,500 (2021: £30,300) each per annum, with the chairman of the Audit and Risk Committee
receiving an additional £5,250 (2021: £5,100) per annum and the Senior Independent Director an additional £4,250 (2021: £4,100). Full
details are provided in the Directors' Remuneration Report on pages 41 and 42.
Financial Statements
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62 | European Assets Trust PLC
8. Finance costs
Revenue
£’000s
Capital
£’000s
2022
Total
£’000s
Revenue
£’000s
Capital
£’000s
2021
Total
£’000s
Loan interest
Bank interest charges
35
16
141
65
176
81
41
9
164
37
205
46
Total finance cost 51 206 257 50 201 251
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
2022
Total
£’000s
Revenue
£’000s
Capital
£’000s
2021
Total
£’000s
Overseas taxation 944 – 944 937 – 937
Total taxation (see note 9(b)) 944 – 944 937 – 937
The tax assessed for the year is lower (2021: lower) than the standard rate of corporation tax in the UK.
(b) Factors affecting the tax charge for the year
Revenue
£’000s
Capital
£’000s
2022
Total
£’000s
Revenue
£’000s
Capital
£’000s
2021
Total
£’000s
Net profit/(loss) on ordinary activities before taxation 6,883 (179,990) (173,107) 6,381 100,199 106,580
Net Return on ordinary activities multiplied by the
standard rate of corporation tax of 19% (2021: 19%) 1,308 (34,197) (32,889) 1,212 19,038 20,250
Effects of:
Dividends* (1,614) – (1,614) (1,549) – (1,549)
Capital returns* – 33,672 33,672 – (19,550) (19,550)
Currency losses/(gains) 5 16 21 (2) (89) (91)
Expenses not utilised in the year 301 509 810 339 601 940
Overseas taxation not relieved 944 – 944 937 – 937
Total taxation (see note 9(a)) 944 – 944 937 – 937
*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 2022 (2021: 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
STRATEGIC REPORT
Report and Accounts 2022 | 63
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
2022
£’000s
2021
£’000s
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
First of four interims for the year ended 31 December 2022 of 2.200 pence per share
Second of four interims for the year ended 31 December 2022 of 2.200 pence per share
Third of four interims for the year ended 31 December 2022 of 2.200 pence per share
Fourth of four interims for the year ended 31 December 2022 of 2.200 pence per share
15 Jan 21
09 Apr 21
09 Jul 21
08 Oct 21
14 Jan 22
08 Apr 22
08 Jul 22
07 Oct 22
29 Jan 21
30 Apr 21
30 Jul 21
29 Oct 21
31 Jan 22
29 Apr 22
29 Jul 22
31 Oct 22
–
–
–
–
7,922
7,922
7,922
7,922
7,201
7,201
7,201
7,201
–
–
–
–
31,688 28,804
2022
£’000s
Net revenue return attributable to Shareholders
First of four interims for the year ended 31 December 2022 of 2.200 pence per share
Second of four interims for the year ended 31 December 2022 of 2.200 pence per share
Third of four interims for the year ended 31 December 2022 of 2.200 pence per share
Fourth of four interims for the year ended 31 December 2022 of 2.200 pence per share
5,939
(7,922)
(7,922)
(7,922)
(7,922)
Shortfall paid from distributable reserves (25,749)
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
2022
Total
£’000s
Revenue
£’000s
Capital
£’000s
2021
Total
£’000s
Net return attributable to equity Shareholders 5,939 (179,990) (174,051) 5,444 100,199 105,643
Return per share – pence 1.65 (49.99) (48.34) 1.51 27.83 29.34
Both the revenue and capital returns per share are based on a weighted average of 360,069,279 ordinary shares in issue during the year
(2021: 360,069,279).
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Financial Statements
64 | European Assets Trust PLC
12. Investments at fair value through profit or loss
2022
Level 1
Total
£’000s
2021
Level 1
Total
£’000s
Cost brought forward
Unrealised gains brought forward
368,841
170,915
361,025
138,921
Fair value of investments at 1 January
Movements in the period:
Purchases at cost
Sales proceeds
(Losses)/gains on investments sold
in the year
Movement in unrealised gains on
investments held at the year end
Translation adjustment
539,756
107,060
(156,430)
(12,729)
(164,494)
27,554
499,946
107,287
(139,299)
39,828
63,064
(31,070)
Fair value of investments at 31 December 340,717 539,756
Cost at 31 December
Unrealised gains carried forward
306,742
33,975
368,841
170,915
Fair value of investments at 31 December 340,717 539,756
2022
£’000s
2021
£’000s
(Losses)/gains on investments sold in the year
Movement in unrealised gains on investments held at the year end
(12,729)
(164,494)
39,828
63,064
Total (losses)/gains on investments (177,223) 102,892
All assets held by the Company were classified as Level 1 in nature as described in note 2(d) and includes investments and derivatives
listed on any recognised stock exchange.
Investment 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 £278,000 (2021: £94,000) of transaction costs including stamp duty on
purchases of investments and £74,000 (2021: £69,000) of transaction costs on sales of investments.
Listed equities designated at fair value through profit or loss on initial recognition, incorporated in:
2022
£’000s
2021
£’000s
- Austria
- Belgium
- Denmark
- France
- Germany
- Iceland
- Ireland
- Italy
- Netherlands
- Norway
- Portugal
- Spain
- Sweden
- Switzerland
6,621
10,223
22,095
24,354
40,446
–
25,147
19,306
27,737
47,267
–
22,480
53,256
41,785
–
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
340,717 539,756
The investment portfolio is set out on pages 17 and 18.
Financial Statements
Report and Accounts 2022 | 65
Financial Statements
13. Other receivables
2022
£’000s
2021
£’000s
Prepayments
Overseas taxation recoverable
30
3,217
55
2,625
3,247 2,680
14. Other payables
2022
£’000s
2021
£’000s
Management fee
Loan Interest
Accruals
602
7
173
–
8
147
782 155
15. Borrowings
In March 2022 the Company entered into at €45 million multi-currency revolving loan facility with The Bank of Nova Scotia, (London
Branch), expiring March 2023. The covenants for this facility have all been met during the period. The interest rate on amounts drawn
down and commitment fees payable on undrawn amounts are based on commercial terms agreed with The Bank of Nova Scotia.
Following the year end, the Company has agreed to renew its loan facility with The Bank of Nova Scotia, London Branch.
As at 31 December 2022 the Company had drawn down €10 million (£8.9 million) of the loan facility.
16. Share capital
2022
issued, allotted
and fully paid
2021
issued, allotted
and fully paid
Number £’000s Number £’000s
Ordinary shares of £0.10 each
Balance brought forward and carried forward at 31 December 360,069,279 37,506
360,069,279
37,506
17. Distributable reserve
2022
£’000s
2021
£’000s
Balance brought forward
Dividends paid from distributable reserve
322,694
(25,749)
346,054
(23,360)
Balance carried forward 296,945 322,694
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66 | European Assets Trust PLC
18. Capital & Revenue Reserves
Capital
reserve
- realised
£’000s
Capital
reserve
- unrealised
£’000s
Capital
reserve
- Total
£’000s
Revenue
reserve
£’000s
Movements in the year:
Losses on investments sold in year
Losses on investments held at year end
Foreign exchange losses
Management fee (see note 5)
Finance costs (see note 8)
Other capital charges (see note 6)
Revenue return
(12,729)
–
(74)
(2,438)
(206)
(37)
–
–
(164,494)
(12)
–
–
–
–
(12,729)
(164,494)
(86)
(2,438)
(206)
(37)
–
–
–
–
–
–
–
5,939
Return attributable to shareholders
Dividends paid in year (see note 10)
Balance at 31 December 2021
(15,484)
–
(7,818)
(164,506)
–
196,479
(179,990)
–
188,661
5,939
(5,939)
–
Balance at 31 December 2022 (23,302) 31,973 8,671 –
There were no special dividends recognised as capital during the year (2021: £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:
2022 2021
Net asset value per share - pence
Net assets attributable at the year end - (£'000s)
Number of ordinary shares in issue at the year end
96.54
347,627
360,069,279
145.93
525,435
360,069,279
20. Reconciliation of total return before taxation to net cash flows from operating activities
2022
£’000s
2021
£’000s
Net return on ordinary activities before taxation (173,107) 106,580
Adjustments for non-cash flow items, dividend income and interest expense:
Losses/(gains) on investments
Foreign exchange movements
Non-operating expenses of a capital nature
Dividend income receivable
Interest receivable
Interest payable
Decrease / (increase) in other debtors
Increase in other creditors
177,223
111
37
(8,493)
(34)
257
25
628
(102,892)
(477)
7
(8,157)
–
251
(26)
54
169,754 (111,240)
Net cash outflows from operating activities before interest and dividends received and interest paid (3,353) (4,660)
Financial Statements
Report and Accounts 2022 | 67
Financial Statements
21. Reconciliation of liabilities arising from financing activities
Bank loans
£’000s
2022
Total
£’000s
Bank loans
£’000s
2021
Total
£’000s
Financial liabilities brought forward
Cash-flows:
Drawdown of bank loans
Repayment of bank loans
Non-cash:
Translation adjustment
25,188
–
(17,173)
857
25,188
–
(17,173)
857
26,853
8,538
(8,500)
(1,703)
26,853
8,538
(8,500)
(1,703)
Financial liabilities carried forward 8,872 8,872 25,188 25,188
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 UK-adopted International accounting
standards and best practice. The Company does not make use of hedge accounting rules.
(a) Market risks
The fair value of equity and other financial securities including derivatives held in the Company’s portfolio fluctuates with changes in market
prices. Prices are themselves affected by movements in currencies and interest rates and by other financial issues, including the market
perception of future risks. The Board sets policies for managing these risks within the Company’s objective and meets regularly to review
full, timely and relevant information on investment performance and financial results. The Manager minimises the price risk by making
a balanced selection of companies with regard to distribution across the European countries, sectors and individual stocks, assessing
exposure to market risks when making each investment decision and monitors the ongoing market risk within the portfolio.
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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:
2022
%
2021
%
Company's securities portfolio:
Industrials
Financials
Consumer Discretionary
Technology
Consumer Staples
Health Care
Basic Materials
Energy
Real Estate
21.7
17.2
13.6
12.7
11.8
11.4
7.3
3.0
1.3
22.5
19.0
15.4
19.3
8.9
9.7
4.1
–
1.1
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
2022
Decrease
in value
£’000s
Increase
in value
£’000s
2021
Decrease
in value
£’000s
Capital return 68,143 (68,143) 107,951 (107,951)
NAV per share – pence 18.93 (18.93) 29.98 (29.98)
(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:
2022
£’000s
2021
£’000s
Danish Krone
Norwegian Krone
Pound Sterling
Swedish Krona
Swiss Franc
22,095
47,266
2,194
53,257
39,591
34,453
67,723
12,709
85,024
41,384
Total 164,403 241,293
Financial Statements
Report and Accounts 2022 | 69
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 the euro against other currencies by 10% would have the following approximate effect on returns attributable to
Shareholders and on the NAV per share.
Weakening of euro by 10% against other currencies
2022
£’000s
2021
£’000s
Net revenue return attributable to Shareholders
Net capital return attributable to Shareholders
485
18,349
472
26,887
Net total return attributable to Shareholders 18,834 27,359
NAV per share – pence 5.23 7.60
Strengthening of euro by 10% against other currencies
2022
£’000s
2021
£’000s
Net revenue return attributable to Shareholders
Net capital return attributable to Shareholders
(397)
(15,013)
(386)
(21,998)
Net total return attributable to Shareholders (15,410) (22,384)
NAV per share – pence (4.28) (6.22)
These effects are representative of the Company’s activities although the level of the Company’s exposure to the other currencies
fluctuates in accordance with the investment and risk management processes. As this analysis only reflects financial assets and liabilities,
it does not include the impact of currency exposures on the management fee.
As discussed in Note 2(a) the functional currency of the Company is the euro. Income earned in foreign currencies is therefore converted
to the euro on receipt. The Board regularly monitors the effects of movements in foreign exchange rates on net revenues, interest earned
on deposits and paid on gearing.
During the year, the Company entered in to Forward Currency Contracts for the purpose of hedging the euro to pound sterling exposure
as a result of the differing functional currency and dividend payment currency. These forward currency contracts resulted in a net loss of
£403,000 (2021: gain of £763,000).
The fair values of the Company’s assets and liabilities at 31 December by currency are shown below:
2022
Short-term
debtors
£’000s
Cash
and cash
equivalents
£’000s
Short-term
creditors
- other
£’000s
Short-term
creditors
- loans
£’000s
Net monetary
assets/(liabilities)
£’000s
Investments
£’000s
Net
exposure
£’000s
Euro
Danish Krone
Norwegian Krone
Pound Sterling
Swedish Krona
Swiss Franc
2,336
309
357
30
23
192
13,317
–
–
–
–
–
(609)
–
–
(173)
–
–
(8,872)
–
–
–
–
–
6,172
309
357
(143)
23
192
176,314
22,095
47,266
2,194
53,257
39,591
182,486
22,404
47,623
2,051
53,280
39,783
Total 3,247 13,317 (782) (8,872) 6,910 340,717 347,627
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70 | European Assets Trust PLC
Financial Statements
22. Financial risk management (continued)
(b) Currency risk (continued)
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
(c) Interest rate risk
Interest rate risk is the risk that the value of a financial instrument will fluctuate as a result of changes in interest rates. When the
Company retains cash balances, the cash is held with approved banks, usually on overnight deposit. In addition, the Company has a loan
facility which is exposed to floating interest rate risk. Interest received or paid on cash balances and bank overdrafts is at market rates
and is monitored and reviewed by the investment manager and the board.
The exposure of the financial assets and liabilities to interest rate movements at 31 December was:
Within
one year
£’000s
More than
one year
£’000s
2022
Total
£’000s
Within
one year
£’000s
More than
one year
£’000s
2021
Total
£’000s
Exposure to floating rates:
Cash and cash equivalents
Loans
13,317
(8,872)
–
–
13,317
(8,872)
8,342
(25,188)
–
–
8,342
(25,188)
Net exposure 4,445 – 4,445 (16,846) – (16,846)
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
2022
Decrease
in rate
£’000s
Increase
in rate
£’000s
2021
Decrease
in rate
£’000s
Revenue return
Capital return
18
53
(18)
(71)
33
(447)
67
270
Total return 71 (89) (414) 337
NAV per share – pence 0.020 (0.025) (0.115) 0.094
Report and Accounts 2022 | 71
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 Columbia Threadneedle Investments (including the Fund Manager) and with its Risk Management function. In
reaching its conclusions, the Board also reviews Columbia Threadneedle Investments annual Audit and Assurance Faculty Report.
In summary, compared to the amounts held at the balance sheet date of £nil, the maximum exposure to credit risk during the year was
£nil (2021: 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 2022 and 100% at 31 December 2021); the liquid nature of the portfolio of investments; the industrial
and geographical diversity of the portfolio (see pages 17 to 18); and the existence of an ongoing loan and overdraft facility agreement.
All investments are realisable within one year and therefore no detailed maturity analysis has been included. Cash balances are held with
approved banks, usually on overnight deposit. The Manager reviews liquidity at the time of making each investment decision. The Board
reviews liquidity exposure at each meeting.
The Company has a €45 million unsecured revolving floating rate credit facility available until March 2023. Following the year end the
Company has agreed to renew its facility with The Bank of Nova Scotia, London Branch on favourable terms.
(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.
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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, inflationary concerns and
the war in Ukraine and the Directors have given serious consideration to the consequences for this Company. The Company has a €45
million multi-currency loan facility with The Bank of Nova Scotia, London Branch which will expire on 14 March 2023. As at 31 December
2022 €10.0 million was drawndown. Following the year end the Company has agreed to renew 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 27
March 2023 the latest practicable date before the publication of this report, borrowings amounted to €20.0 million. This is comparison to
a Net Asset Value of €404.0 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.
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 2022 the Company had a Distributable Reserve of £296.9
million.
The Company in common with many investment companies has, as a result of the pandemic, 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 2022 the Company had net current assets of £6.9 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 Columbia Threadneedle Investments are detailed in note 5 on management fees. The existence of
an independent Board of Directors demonstrated that the Company is free to pursue its own financial and operating policies and therefore
under the AIC SORP, the Manager is not considered a related party.
Report and Accounts 2022 | 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 fifth Annual General Meeting of Shareholders of European Assets Trust PLC, the “Company”, will be held on
Thursday, 18 May 2023 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 13 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 14 to 15 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 2022 together with the Independent
Auditor’s Report thereon (the “2022 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 2022.
3. To approve the Directors’ Remuneration Policy set out on page 41 of the 2022 Report and Accounts.
4. To approve the Directors’ Remuneration Report for the year ended 31 December 2022 set out on pages 41 to 42 of the 2022 Report
and Accounts.
5. 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.
6. To authorise the Audit and Risk Committee to determine the remuneration of the auditor.
7. To re-elect Jack Perry to the Board of European Assets Trust PLC.
8. To re-elect Julia Bond to the Board of European Assets Trust PLC.
9. To re-elect Stuart Paterson to the Board of European Assets Trust PLC.
10. To re-elect Martin Breuer to the Board of European Assets Trust PLC.
11. To re-elect Pui Kei Yuen to the Board of European Assets Trust PLC.
12. That the amendments proposed to the Company’s investment policy, as struck out and highlighted in bold and red below, be and are
hereby approved with effect from 1 June 2023:
The first paragraph under the heading “Investment Policy and Strategy” is amended as follows: “The investment policy seeks
investments in quoted small and medium-sized companies in Europe, excluding the United Kingdom, defined as those with a market
capitalisation below that of the largest company in the benchmark index adopted by the Company from time to time, for this purpose
currently the MSCI Europe Ex UK SMID Cap Index EMIX Smaller European Companies (ex UK) Index.”
13. 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 27 March 2023. Unless previously varied, revoked or renewed, this authority shall
expire at the conclusion of the Annual General Meeting of the Company in 2024, 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
14. That, subject to the passing of resolution 13, 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 13 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:
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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 27 March 2023, 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 2024, 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.
15. 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 2024, save that the Company may, prior to such expiry, enter into a contract to purchase Ordinary
Shares under such authority which will or might be executed wholly or partly after the expiration of such authority and may make a
purchase of Ordinary Shares pursuant to any such contract.
By order of the Board
Columbia Threadneedle Investment Business Limited
6th Floor
Quartermile 4
7a Nightingale Way
Edinburgh EH3 9EG
28 March 2023
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.
Report and Accounts 2022 | 75
Other Information
1. A member of the Company at the time set out in note 7 below is entitled to appoint one or more proxies to exercise all or any of the
member’s rights to attend, speak and vote at the meeting. A proxy need not be a member of the Company but must attend the meeting
for the member’s vote to be counted. If a member appoints more than one proxy to attend the meeting, each proxy must be appointed
to exercise the rights attached to a different share or shares held by that member.
A member who wishes to attend the AGM in person should arrive at the venue for the AGM in good time to allow their attendance to be
registered. As they may be asked to provide evidence of their identity prior to being admitted to the AGM, it is advisable for members to
have some form of identification with them.
2. Any person holding 3% or more of the voting rights in the Company who appoints a person other than the Chairman as their proxy will
need to ensure that both he and such person complies with their respective disclosure obligations under the Disclosure Guidance and
Transparency Rules.
3. A Form of Proxy is provided with this notice for members. If a member wishes to appoint more than one proxy and so requires additional
proxy forms, the member should contact Computershare Investor Services PLC on 0370 889 4094. To be valid, the Form of Proxy and
any power of attorney or other authority under which it is signed (or a notarially certified copy of such authority) must be received by
post or (during normal business hours only) by hand at the Company’s Registrar, Computershare Investor Services PLC, The Pavilions,
Bridgwater Road, Bristol BS99 6ZZ, not less than 48 hours before the time of the holding of the meeting or any adjournment thereof.
Amended instructions must also be received by the Company’s Registrar by the deadline for receipt of Forms of Proxy.
4.
Alternatively, members may register the appointment of a proxy for the meeting electronically, by accessing the website www.
eproxyappointment.com where full instructions for the procedure are given. The Control Number, Shareholder Reference and PIN as
printed on the Form of Proxy will be required in order to use the electronic proxy appointment system. This website is operated by
Computershare Investor Services PLC. The proxy appointment and any power of attorney or other authority under which the proxy
appointment is made must be received by Computershare Investor Services PLC not less than 48 hours before the time for holding
the meeting or adjourned meeting or (in the case of a poll taken otherwise than at or on the same day as the meeting or adjourned
meeting) for the taking of the poll at which it is to be used. If you want to appoint more than one proxy electronically please contact
Computershare Investor Services PLC on 0370 889 4094.
5. Investors holding shares in the Company through the CT Investment Trust ISA, Lifetime ISA, Junior ISA, Child Trust Fund, General
Investment Account and/or Junior Investment Account should ensure that forms of direction are returned to Computershare Investor
Services PLC not later than 3.00 p.m. on 11 May 2023. 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 11 May 2023.
6. Any person receiving a copy of this notice as a person nominated by a member to enjoy information rights under section 146 of the Act
(a “Nominated Person”) should note that the provisions in notes 3 and 4 concerning the appointment of a proxy or proxies to attend
the meeting in place of a member do not apply to a Nominated Person as only Shareholders have the right to appoint a proxy. However,
a Nominated Person may have a right under an agreement between the Nominated Person and the member by whom he or she was
nominated to be appointed, or to have someone else appointed, as a proxy for the meeting.
If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may have a right under such an
agreement to give instructions to the member as to the exercise of voting rights at the meeting.
7. Pursuant to Regulation 41(1) of the Uncertificated Securities Regulations 2001 (as amended) and for the purposes of section 360B
of the Act, the Company has specified that only those members registered on the register of members of the Company at 3 p.m. on
16 May 2023 (the “Specified Time”) (or, if the meeting is adjourned to a time more than 48 hours after the Specified Time, by 3 p.m.
on the day which is two days prior to the time of the adjourned meeting) shall be entitled to attend and vote at the 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.
Notes
to the Notice of Annual General Meeting
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76 | European Assets Trust PLC
8. If you are an institutional investor you may be able to appoint a proxy electronically via the Proxymity platform, a process which has
been agreed by the Company and approved by the Registrar. For further information regarding Proxymity, please go to www.proxymity.
io. Your proxy must be lodged by 3.00 p.m. on 16 May 2023 in order to be considered valid.
Before you can appoint a proxy via this process you will need to have agreed to Proxymity’s associated terms and conditions. It is
important that you read these carefully as you will be bound by them and they will govern the electronic appointment of your proxy.
CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the
meeting and any adjournment(s) thereof by using the procedures described in the CREST Manual. CREST Personal Members or other
CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST
sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.
9. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a “CREST
Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s specifications and must
contain the information required for such instruction, as described in the CREST Manual (available via www.euroclear.com/CREST).
The message, regardless of whether it constitutes the appointment of a proxy or is an amendment to the instruction given to a
previously appointed proxy must, in order to be valid, be transmitted so as to be received by the issuer’s agent (ID number 3RA50) by
the latest time(s) for receipt of proxy appointments specified in notes 3 and 4. For this purpose, the time of receipt will be taken to
be the time (as determined by the time stamp applied to the message by the CREST Application Host) from which the issuer’s agent
is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of instructions to
proxies appointed through CREST should be communicated to the appointee through other means
10. CREST members and, where applicable, their CREST sponsors or voting service provider(s) should note that Euroclear UK & Ireland
Limited does not make available special procedures in CREST for any particular messages. Normal system timings and limitations
will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to
take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to
procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is
transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their
CREST sponsors or voting service provider(s) are referred, in particular, to those sections of the CREST Manual concerning practical
limitations of the CREST system and timings (www.euroclear.com/CREST).
11. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated
Securities Regulations 2001 (as amended).
12. Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of its
powers as a member provided that, if it is appointing more than one corporate representative, it does not do so in relation to the
same shares. It is therefore no longer necessary to nominate a designated corporate representative.
13. Under section 527 of the Act, members meeting the threshold requirements set out in that section have the right to require the
Company to publish on a website a statement setting out any matter relating to:
(a) the audit of the Company’s Accounts (including the auditors’ report and the conduct of the audit) that are to be laid before the
meeting;
or
(b) any circumstances connected with an auditor of the Company ceasing to hold office since the previous meeting at which annual
Accounts and Reports were laid in accordance with section 437 of the Act.
14. The Company may not require the members requesting any such website publication to pay its expenses in complying with sections
527 or 528 of the Act. Where the Company is required to place a statement on a website under section 527 of the Act, it must
forward the statement to the Company’s auditor not later than the time when it makes the statement available on the website. The
business which may be dealt with at the meeting includes any statement that the Company has been required under section 527 of
the Act to publish on a website.
Report and Accounts 2022 | 77
Other Information
15. Any member permitted to attend the meeting has the right to ask questions. The Company must cause to be answered any question
relating to the business being dealt with at the meeting put by a member attending the meeting.
However, members should note that no answer need be given in the following circumstances:
(a) if to do so would interfere unduly with the preparation of the meeting or would involve a disclosure of confidential information;
(b) if the answer has already been given on a website in the form of an answer to a question; or
(c) if it is undesirable in the interests of the Company or the good order of the meeting that the question be answered.
16. As at 27 March 2023, 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 27 March 2023 were 360,069,279. No shares are held in treasury.
17. This notice, together with information about the total number of shares in the Company in respect of which members are entitled to
exercise voting rights at the meeting as at 27 March 2023 being the latest practicable date prior to the printing of this notice and,
if applicable, any members’ statements, members’ resolutions or members’ matters of business received by the Company after the
date of this notice, will be available at www.europeanassets.co.uk.
18. Copies of the letters of appointment, which do not constitute contracts of employment, between the Company and its Directors;
a copy of the Articles of Association of the Company; the register of Directors’ holdings; and a deed poll relating to Directors’
indemnities will be available for inspection at the registered office of the Company during usual business hours on any weekday
(Saturdays, Sundays and Bank Holidays excluded) until the date of the meeting and also on the date and at the place of the meeting
from 15 minutes prior to the commencement of the meeting to the conclusion thereof.
19. Under sections 338 and 338A of the Act, members meeting the threshold requirements in those sections have the right to require the
Company:
(a) to give, to members of the Company entitled to receive notice of the meeting, notice of a resolution which may properly be moved
and is intended to be moved at the meeting, and/or
(b) to include in the business to be dealt with at the meeting any matter (other than a proposed resolution) which may be properly
included in the business.
20. Such a request may be in hard copy form or in electronic form, and must identify the resolution of which notice is to be given or the
matter to be included in the business, must be authorised by the person or persons making it, must be received by the Company not
later than six clear weeks before the meeting, and (in the case of a matter to be included in the business only) must be accompanied
by a statement setting out the grounds for the request.
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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,
Columbia Threadneedle Investment Business Limited, is required to be made available to investors. Detailed regulatory disclosures
including those on the AIFM's remuneration policy and costs are available on the Company's website or from Columbia Threadneedle
Investments on request.
The Company's Articles of Association allow borrowings up to a maximum of 20% of its book value of the securities portfolio. The
Company can only exceed this level of borrowing with the prior approval of shareholders at a general meeting.
The maximum gross leverage is therefore 125% (equivalent to 20% of the book value of its securities portfolio).
The Company’s maximum and actual leverage levels authorised by the Financial Conduct Authority (“FCA”) at 31 December 2022 are
shown below:
Gross
method
Commitment
method
Maximum limit
Actual
200%
98%
200%
102%
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 2022 (2021: same), participated in any: repurchase transactions; securities lending or
borrowing; buy-sell back transactions; margin lending transactions; or total return swap transactions (collectively called SFT). As such, it
has no disclosure to make in satisfaction of the UK regulations on transparency of SFT, issued in November 2015.
Other Financial Information (unaudited)
Report and Accounts 2022 | 79
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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 and is available on the Company’s website
www.europeanassets.co.uk.
Change of Address
Communications with Shareholders are mailed to the address held
on the share register. In the event of a change of address or other
amendment this should be notified to Computershare Investor
Services PLC under the signature of the registered holder.
Website
Additional information regarding the Company may be found at its
website address which is: www.europeanassets.co.uk
80 | European Assets Trust PLC
CT Individual Savings Account (ISA)
You can use your ISA allowance to make an annual tax
efficient investment of up to £20,000 for the current tax year
with a lump sum from £100 or regular savings from £25 a
month. You can also transfer any existing ISAs to us whilst
maintaining the tax benefits.
CT Junior Individual Savings Account (JISA)*
A tax efficient way to invest up to £9,000 per tax year for
a child. Contributions start from £100 lump sum or £25 a
month. JISAs or CTFs with other providers can be transferred
to Columbia Threadneedle Investments.
CT Lifetime Individual Savings Account (LISA)
For those aged 18-39, a LISA could help towards purchasing
your first home or retirement in later life. Invest up to £4,000
for the current tax year and receive a 25% Government bonus
up to £1,000 per year. Invest with a lump sum from £100 or
regular savings from £25 a month.
CT Child Trust Fund (CTF)*
If your child already has a CTF, you can invest up to £9,000
per birthday year, from £100 lump sum or £25 a month.
CTFs with other providers can be transferred to Columbia
Threadneedle Investments.
CT General Investment Account (GIA)
This is a flexible way to invest in our range of Investment
Trusts. There are no maximum contributions, and investments
can be made from £100 lump sum or £25 a month.
CT Junior Investment Account (JIA)
This is a flexible way to save for a child in our range of
Investment Trusts. There are no maximum contributions, and
the plan can easily be set up under bare trust (where the
child is noted as the beneficial owner) or kept in your name
if you wish to retain control over the investment. Investments
can be made from a £100 lump sum or £25 a month per
account. You can also make additional lump sum top-ups at
any time from £100 per account.
How to Invest
One of the most convenient ways to invest in European Assets Trusts PLC is through one of the savings
plans run by Columbia Threadneedle Investments.
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
Columbia Threadneedle Investor Portal) for ISA/GIA/LISA/JIA and
JISA. There are no dealing charges on a CTF.
Dealing charges apply when shares are bought or sold but not
on the reinvestment of dividends or the investment of monthly
direct debits. Government stamp duty of 0.5% also applies on the
purchase of shares (where applicable).
The value of investments can go down as well as up and you may
not get back your original investment. Tax benefits depend on
your individual circumstances and tax allowances and rules
may change. Please ensure you have read the full Terms and
Conditions, Privacy Policy and relevant Key Features documents
before investing. For regulatory purposes, please ensure you
have read the Pre-sales Cost & Charges disclosure related to
the product you are applying for, and the relevant Key Information
Documents (KIDs) for the investment trusts you want to, these
can be found at ctinvest.co.uk/documents.
How to Invest
To open a new Columbia Threadneedle Investments plan, apply
online at ctinvest.co.uk Online applications are not available if
you are transferring an existing plan with another provider to
Columbia Threadneedle Investments, or if you are applying for
a new plan in more than one name but paper applications are
available at ctinvest.co.uk/documents or by contacting Columbia
ThreadneedleInvestments.
New Customers
Call: 0800 136 420** (8.30am – 5.30pm, weekdays)
Email: invest@columbiathreadneedle.com
Existing Plan Holders
Call: 0345 600 3030** (9.00am – 5.00pm, weekdays)
Email: investor.enquiries@columbiathreadneedle.com
By post: Columbia Threadneedle Management Limited, PO Box
11114, Chelmsford, CM99 2DG
You can also invest in the trust through online dealing platforms
for private investors that offer share dealing and ISAs. Companies
include: A J Bell, Barclays Stockbrokers, EQi, Halifax, Hargreaves
Lansdown, HSBC, Interactive Investor, Lloyds Bank, The Share
Centre
© 2022 Columbia Threadneedle Investments. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies. Financial promotions are issued for marketing
and information purposes by Columbia Threadneedle Management Limited, authorised and regulated in the UK by the Financial Conduct Authority. 195600 (06/22) UK
*The CTF and JISA accounts are opened by parents in the child’s name
and they have access to the money at age 18. **Calls may be recorded
or monitored for training and quality purposes.
To find out more, visit ctinvest.co.uk
0345 600 3030, 9.00am – 5.00pm, weekdays, calls may be recorded or
monitored for training and quality purposes.
Financial promotion
195600_CTI BD1_How to Invest L56_v7.indd 1195600_CTI BD1_How to Invest L56_v7.indd 1 21/07/2022 11:29:4121/07/2022 11:29:41
Report and Accounts 2022 | 81
Other Information
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
Ten Year Record (unaudited)
Euro Total Return Sterling Total Return
Market Market Net asset Net asset Dividends Dividends Net asset Net asset
price price value value declared declared value per value per
per share per share per share per share per share
†
per share share Benchmark share Benchmark
31 December Pence Euro Pence Euro Euro Pence % % % %
2013*
∞
96.4 1.159 96.86 1.164 0.05757
†
n/a 34.4 34.0 37.8 37.5
2014*
∞
98.7 1.272 98.05 1.263 0.07221
†
n/a 15.3 5.2 7.6 (1.9)
2015*
∞
112.7 1.529 112.01 1.520 0.07743
†
n/a 26.9 23.5 20.5 17.2
2016*
∞
102.2 1.197 112.19 1.314 0.09429
†
n/a (7.3) 6.4 7.4 23.3
2017*
∞
130.8 1.474 129.85 1.463 0.08220
†
n/a 18.0 18.6 22.6 23.3
2018*
∞
93.0 1.036 102.73 1.140 0.09298
†
n/a (16.3) (13.6) (15.4) (12.7)
2019 110.0 1.300 116.17 1.370 0.07136
†
n/a 26.9 27.8 19.8 20.6
2020 120.3 1.343 132.75 1.480 n/a
7.020 15.4 12.6 21.9 18.9
2021 139.5 1.662 145.93 1.740 n/a 8.000 24.0 22.5 16.3 14.9
2022 91.6 1.032 96.54 1.088 n/a 8.800 (32.0) (22.1) (28.2) (17.7)
* 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.
82 | European Assets Trust PLC
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
2022 2021
Pence Pence
Net Asset Value per share (a) 96.54 145.93
Share price per share (b) 91.60 139.50
Discount (c = (b-a)/a) (c) (5.1%) (4.4%)
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
2022 2021
£’000 £’000
Loan 8,872 25,188
Less Cash and cash equivalents (13,317) (8,342)
Total (a) (4,445) 16,846
Net Asset Value (b) 347,627 525,435
(Net cash)/gearing (c = a/b) (c) (1.3%) 3.2%
Ongoing Charges – all operating costs expected to be incurred in future and that are payable by the Company, expressed as a proportion
of the average net assets of the Company over the reporting year. The costs of buying and selling investments and derivatives are
excluded, as are interest costs, taxation, non-recurring costs and the costs of buying back or issuing shares.
31 December 31 December
2022 2021
Ongoing charges calculation £’000 £’000
Management fees 3,048 3,693
Other expenses 958 995
Less loan commitment/arrangement fees – (1)
Less ad-hoc non-recurring expenses (120) (93)
Total (a) 3,886 4,594
Average net assets (b) 377,305 515,419
Ongoing charges (c = a/b) (c) 1.03% 0.89%
Report and Accounts 2022 | 83
Other Information
OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information
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 2021 (pence) 145.93 139.50
NAV/share price per share at 31 December 2022 (pence) 96.54 91.60
Change in the year (33.8%) (34.3%)
Impact of dividend reinvestments 5.6% 5.9%
Total return for the year (28.2%) (28.4%)
84 | European Assets Trust PLC
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 requires that all investment vehicles (AIF – Alternative Investment Fund) must appoint a
Depositary and an Alternative Investment Fund Manager. The Directors of the Company nevertheless, remains fully responsible for all aspects of the
Company’s strategy, operations and compliance with regulations.
AIF Manager – The AIF Manager, Columbia Threadneedle Investment Business Limited, is responsible for the provision of investment management
services to the Company.
Benchmark – This is a measure against which the Company’s performance is compared. The Company’s benchmark is the EMIX Smaller European
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.
Depositary – Under AIFMD rules, the Company must appoint a depositary, whose duties in respect of investments, cash and similar assets include:
safekeeping; verification of ownership and valuation; and cash monitoring. Under AIFMD regulations, the depositary has strict liability for the loss
of the Company’s financial assets in respect of which it has safekeeping duties. The depositary’s oversight duties include, but are not limited to
dividend payments and adherence to investment limits. The Company’s depositary is JP Morgan Chase Bank.
Dividend – The income from an investment. The Company currently pays dividends to shareholders four times per year in January, April, July and
October. The rate of the dividend is announced in January each year and is set at an annual yield of six per cent to the net asset value at the end of
the preceding year. Since January 2020 the Board has declared the Company’s annual dividend in Sterling. The previous practice was to declare in
Euros.
Gearing – The Company has the ability to borrow to invest within pre-determined limits. This term is used to describe the level of borrowings that
the Company has undertaken, and is stated as a percentage of total assets less current liabilities. The higher the level of borrowings, the higher the
gearing ratio.
Leverage – As defined under AIFMD rules, leverage is any method by which the exposure of an AIF is increased through borrowing of cash or
securities or leverage embedded in derivative positions. Leverage is broadly equivalent to Gearing, but is expressed as a ratio between the assets
(excluding borrowings) and the net assets (after taking account of borrowing). Under the gross method, exposure represents the sum of the
Company’s positions after deduction of cash balances, without taking account of any hedging or netting arrangements. Under the commitment
method, exposure is calculated without the deduction of cash balances and after certain hedging and netting positions are offset against each
other.
Market Capitalisation – The stock market value of a company is determined by multiplying the number of shares in issue, excluding those shares
held in treasury, by the market price of the shares.
Net Assets (or Shareholders’ Funds) – This is calculated as the value of the investments and other assets of the Company, plus cash and debtors,
less borrowings and any other creditors. It represents the underlying value of the Company at a point in time.
Ordinary Shares – Shareholders are entitled to their share of both income, in the form of dividends paid by the Company and any capital growth. The
Company has only Ordinary Shares in issue.
Share Price – The value of a share at a point in time as quoted on a stock exchange. The Company’s Ordinary Shares are quoted on the London
Stock Exchange.
85 | European Assets Trust PLC
Registeredoffice:
Exchange House,
Primrose Street,
London
EC2A 2NY
Tel No. 020 7628 8000
www.europeanassets.co.uk
Info@bmogam.com
Registrars:
Computershare Investor Services PLC
The Pavilions
Bridgewater Road
Bristol
BS99 6ZZ
Tel No. 0370 889 4094
computershare.com
webqueries@computershare.com
© 2023 Columbia Threadneedle Investments. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies.
Tofindoutmorevisit columbiathreadneedle.com
European Assets Trust PLC
Report and Accounts 31 December 2022
Registeredoffice:
Exchange House,
Primrose Street,
London EC2A 2NY
0207 628 8000
europeanassets.co.uk
Registrars:
Computershare Investor Services PLC
The Pavilions,
Bridgewater Road,
Bristol BS99 6ZZ
0370 889 4094
computershare.com
web.queries@computershare.com
CT EAT/AnRpt/22