European Assets Trust

EUROPEAN ASSETS TRUST PLC

Audited Statement of Results for the year ended 31 December 2023

LEI: 213800N61H8P3Z4I8726

20 March 2024

European Assets Trust PLC ("EAT" / "the Company") today announces its results for the year ended 31 December 2023.

Financial Highlights

·      The Sterling Net Asset Value per share total return was 8.2% for the year ended 31 December 2023.  This compares to 9.8% for the benchmark.

·      The Sterling Share Price total return was 4.5% for the year ended 31 December 2023.

·      A dividend of 5.90 pence per share has been declared for 2024 (2023: 5.80 pence per share).  This is equivalent to 6% of the closing Net Asset Value per share on 31 December 2023.  The 2024 dividend will be paid in four equal instalments.  The first interim dividend of 1.475 pence per share was paid in January 2024 with further dividends payable in April, July, and October. A dividend of 1.475 pence per share will be paid on 30 April 2024 to Shareholders on the register on 5 April 2024 with an ex-dividend date of 4 April 2024.

"We continue to have a positive outlook for the European Small and Mid-cap sector.  Following two years of smaller company underperformance versus larger companies, valuations look attractive."

Jack Perry CBE

Chairman

Chairman's Statement

Fellow Shareholders

European Assets Trust PLC ("the Company") recorded a Sterling Net Asset Value ("NAV") total return for the year ended 31 December 2023 of 8.2% (2022: -28.2%). This compares to the total return of its Benchmark, which rose 9.8% (2022: -17.7%) during the same period. With the discount widening from 5.1% as at 31 December 2022 to 8.8% at the year-end, the Sterling share price total return for the year was 4.5% (2022: -28.4%).

Market Backdrop

Markets produced a far more supportive backdrop for 2023, although the tension between tighter Central Bank policy and economic growth remained high. With investor focus on the latest pronouncements from the US Federal Reserve, whose policy decisions have been the predominant influence over market sentiment, there was significant intra-year volatility. We can be reassured though that the rate of inflation across the developed world has more than halved and economic activity has remained relatively resilient in the face of the significant monetary tightening of the last couple of years. The softening inflation data and some weakness in the US jobs market has led to expectations for interest rate cuts in 2024, driving a strong finish to the year. Within this backdrop, the portfolio performance for the year was on one hand satisfactory, in that it compared well with the peer group and allowed us to announce an increase in dividend, but also disappointing in that it lagged the Benchmark.

2023 was another year where European market leadership came from value stocks, providing a headwind for our growth biased portfolio. Smaller companies also struggled, for the second consecutive year, when compared with larger companies, partly due to two of the most significant investment themes of the year, generative artificial intelligence (AI) and weight-loss drugs, that significantly boosted some of the world's largest listed businesses. We have benefited from some exposure to these themes in our portfolio through holdings in semiconductor equipment companies, which will provide the means of production for AI powered microchips, and pharmaceutical packaging companies, which will provide the delivery mechanisms for these medicines. Health and wellness and digital transformation are two of our most significant themes, alongside sustainability and emerging growth, which we believe will drive asset value growth over the long term. This should hold true, particularly when smaller companies come back into favour to deliver the sort of performance that, for very good fundamental reasons, they have in the past. If we look at what held us back last year, in addition to the portfolio's style tilt, our consumer staples holdings were the main disappointment. This was principally due to our holdings in drinks companies Remy Cointreau and Royal Unibrew which both delivered worse earnings than expected in a more challenging consumer environment.

Review of Investment Performance

Following the Company's disappointing performance in 2022, the Board initiated a review of the investment strategy, philosophy and process adopted by the investment manager, with particular focus given to the strengths and weaknesses of its performance over the past ten years. This work was carried out by the investment managers supported by the wider resources within Columbia Threadneedle Investments.

Following this review, a number of changes were made to the composition of the Company's investment portfolio including an increase in the number of stocks held, reflecting access to broader research capabilities within Columbia Threadneedle Investments. The implementation of these changes was coincident with the decision to take advantage of market opportunities to increase gearing.

While it is early days since these changes were implemented, the initial results in the final quarter of 2023 and the early part of 2024 are encouraging.

A further discussion of these changes, together with details of performance drivers is made in the Investment Manager's report. The Board will continue to closely monitor the effectiveness of these and future changes.

Dividend

The level of dividend paid each year is determined in accordance with the Company's distribution policy. The Company has stated that, barring unforeseen circumstances, it will pay an annual dividend equivalent to six per cent of its NAV at the end of the preceding year. As the net asset value per share of the Company has increased since 31 December 2022, the dividend has also increased from 5.8 pence per share in 2023 to 5.9 pence per share in 2024.

This 2024 dividend of 5.9 pence per share is payable in four equal instalments of 1.475 pence on 31 January, 30 April, 31 July and 31 October 2024.

A dividend of 1.475 pence per share will be paid on 30 April 2024 to Shareholders on the register on 5 April 2024 with an ex-dividend date of 4 April 2024.

Directorate Change

European Assets Trust PLC ("EAT PLC") was incorporated on 12 November 2018. It should though be remembered that EAT PLC is the UK domiciled successor of the Company's Dutch predecessor, European Assets Trust NV ("EAT NV") which was dissolved on 16 March 2019. All of the directors of the Supervisory Board of EAT NV were appointed to the Board of EAT PLC on the date of its incorporation. Although EAT PLC and EAT NV were separate legal entities, for governance purposes, the Board regards the date of first appointment to the Supervisory Board of EAT NV as the date of appointment to the continuing business.

As part of the Board's succession plan and following thorough selection processes which included the services of a search company, Kevin Troup and Kate Cornish-Bowden were appointed to the Board with effect from 19 May 2023 and 2 January 2024 respectively.

Kevin is a qualified Chartered Accountant who has worked in the fund management industry since 1995 with senior investment roles at Scottish Life, Martin Currie and Standard Life Investments. He is now a non-executive director at Baring Fund Managers Limited. He is also a non-executive director and Chair of the Audit Committee at Baillie Gifford Shin Nippon PLC. His other appointments include Chair of the Risk, Audit and Compliance Committee at the BT Pension Scheme Management Limited and he is a Director of Kintail Trustees Limited, the corporate trustee of The Robertson Trust charity where he is chair of the Investment Committee.

Kate is the chair of International Biotechnology Trust plc, and a non-executive director of Finsbury Growth & Income Trust plc and CC Japan Income & Growth Trust plc, where she is also chair of the audit committee. Until recently Kate was the senior independent non-executive director of Schroder Oriental Income Fund Limited. Previously Kate worked for twelve years as a fund manager for Morgan Stanley Investment Management, where she was managing director and head of the global equity team.

As a further part of this succession plan Julia Bond retired from the Board on 31 January 2024. Julia was appointed as a Director of the Supervisory Board of the Company's Dutch predecessor, European Assets Trust NV, in April 2014 and upon retirement had served nine years between both entities. On behalf of the Board and Shareholders of the Company I thank Julia for her diligence and wise counsel throughout her period of appointment.

Following the retirement of Julia Bond, Kate Cornish-Bowden has been appointed the Company's Senior Independent Director.

I was also appointed to the Supervisory Board of the Company's predecessor in April 2014 and became its Chairman with effect from April 2015. As previously announced, I will retire from the Board at the conclusion of the Company's 2024 Annual General Meeting and Stuart Paterson, who was appointed to the Board in July 2019 will become Chairman. Following my retirement and Stuart Paterson's assumption of the Chairmanship, Kevin Troup will be appointed Chairman of the Company's Audit and Risk Committee.

My tenure has coincided with a period of continuous change. The Company has experienced, amongst other events, the Eurozone Crisis, the withdrawal of the United Kingdom from the European Union, the COVID-19 pandemic and, more recently, Russian military action in Ukraine. Many of these events still impact upon the social, macro-economic and political environments in which this Company operates and I wish to express my sincere thanks to my fellow Directors and the Company's advisers for their support in successfully navigating these challenges.

Annual General Meeting

The Annual General Meeting ("AGM") will be held at 3.00 pm on 17 May 2024 at the offices of Columbia Threadneedle Investments, Cannon Place, 78 Cannon Street, London EC4N 6AG. This will be followed by a presentation by the Investment Manager on the Company and its investment portfolio.

For Shareholders who are unable to attend the meeting, any questions they may have regarding the resolutions proposed at the AGM or the performance of the Company can be directed to a dedicated email account, [email protected], by 9.00am on Thursday 16 May 2024. The Board will endeavour to ensure that questions received by such date will be addressed at the meeting. The meeting will be recorded and will be available to view on the Company's website, www.europeanassets.co.uk shortly thereafter.

In addition, for the first time this year, the AGM and Investment Manager presentation will be broadcast live on the Investor Meet Company platform. This broadcast is open to all existing and potential Shareholders to view. Questions can be submitted pre-event via the Investor Meet Company dashboard up until 9.00am on Thursday 16 May 2024. Investors can sign up to Investor Meet Company for free and add to meet European Assets Trust plc via: www.investormeetcompany.com/european-assets-trust-plc/registerinvestor. Investors who already follow European Assets Trust plc on the Investor Meet Company platform will automatically be invited.

All Shareholders that cannot attend in person, including those viewing the live broadcast on the Investor Meet Company platform are encouraged to complete and submit their Form of Proxy or Form of Direction in advance of the meeting to ensure that their votes will count.

Outlook

It was probably inevitable that after such a strong finish to the year we would enter 2024 with some volatility. The market had begun to look forward to the attractive combination of lower inflation leading to Central Bank easing, resilient economic growth and good corporate profitability. This is potentially optimistic given that achieving this balance is not without risks and has not often been achieved historically. Nonetheless when we look at our area of the market, European Small and Mid-cap companies, we think a positive outlook is not being reflected. Following two years of smaller company underperformance versus larger companies, valuations look attractive. History would suggest that these are good opportunities to buy into the long-term favourable characteristics of smaller growth companies.

The investment managers are now fully integrated within the large Columbia Threadneedle Investment team and are benefitting from a deep pool of research. Idea generation is therefore felt to be more productive and is reflected in the higher portfolio turnover figures seen in this report as these new holdings are incorporated. This also helped provide the investment managers with the confidence to gear the portfolio following the October market sell-off. We would expect them to continue to do so as they find attractive opportunities using the research talent at their disposal and given the strong long-term outlook that our asset class has.

Jack Perry CBE

Chairman

19 March 2024

Investment Manager's Review

Market Backdrop

While geopolitical events continued to cast a shadow over 2023, macroeconomic factors were the predominant influence driving market direction for better and for worse. A surge of investor optimism ultimately pushed equities higher in the fourth quarter delivering a good year for markets overall. In this context, European smaller companies achieved an attractive return, however, it was the second year that they have lagged their larger counterparts, something we would not expect to be an ongoing trend. Indeed we believe this is an excellent opportunity for long term investors with valuations looking particularly appealing.

Inflation and its influence on Central Bank policy decisions were the focus of investor attention as policy makers sought to balance controlling rising prices with maintaining economic activity. In aggregate the evidence so far suggests that they appear to have managed this though Europe's economy was weaker than the US whose robust labour markets caused some concern that the Federal Reserve would have to keep interest rates 'higher for longer'. This caused an aggressive sell off in equities and bonds in September and October. Sentiment changed completely in November as better inflation data emerged alongside the first sign of some softening of the US jobs markets, leading to expectations that both the US Federal Reserve and the European Central Bank would start cutting rates in 2024. This tension between inflation, monetary policy and economic activity is likely to

continue to play a big role in driving market direction but we hope that with inflation appearing more benign, markets may be more driven by stock specific factors rather than macroeconomics.

Performance

While our performance compared well with our peer group and we delivered an increase in dividend, our total return lagged the Benchmark. This was partly because our growth biased portfolio faced the headwind of another year of the value style outperforming. We detail some of the stock specifics below.

As discussed above macroeconomic factors featured strongly in stock returns, however, the advent of Generative Artificial Intelligence (AI) and a new class of weight loss drugs (GLP-1 agonists) provided a strong thematic background for specific sectors and boosted some of our holdings. For example, two of our best performing positions were Dutch listed ASMI and BE Semiconductor Industries, both market leaders in equipment used in the semiconductor manufacturing process. Generative AI requires significant computing power which means both a greater demand for semiconductor chips but also an acceleration of the miniaturisation trend of those chips. The prospects for both ASMI and BE Semiconductor Industries whose equipment is integral in the production process of these products have therefore improved at the same time as there appears to be improvements in the more cyclical areas of demand.

Originally developed for diabetes, the new class of GLP-1 drugs are a huge breakthrough in inducing significant weight loss, with mostly manageable side-effects. This is potentially a seismic development given the huge problem that obesity is for the Western World. Whilst we do not own shares in the companies responsible for these medicines, because they are amongst the biggest companies regionally, we have exposure to the theme through Gerresheimer the German pharmaceutical packaging company. The shares performed strongly prior to the GLP-1 announcements and expectation of contract wins related to these obesity drugs propelled their performance further. Siegfried, the contract development and manufacturing organisation that produces small molecules and drug products for pharmaceutical companies also had a strong year. Whilst many in the sector struggled due to weaker demand caused by excess inventories at customers following the COVID-19 related healthcare boom, Siegfried executed strongly with the shares getting an additional boost from hope that they would also receive contracts related to weight loss drugs.

Automation and re-shoring of supply chains is another theme within the portfolio that worked well for us in 2023. Recent years that have been dominated by the COVID-19 pandemic and volatile geopolitics have increased the risk of extended supply chains causing corporates to look closer to home for key components and materials. With tight labour markets, the need for greater automation is accelerating. One of our best performers, Kardex, the Swiss listed leader in intra-logistics solutions provides efficient storage solutions at a relatively low cost but a higher return on investment. Kardex has benefitted from the need of corporates to manage their operations more efficiently. Other stocks that help improve their customers' efficiency in the face of rising costs and labour shortages are Engcon, the Swedish listed global leading producer of tiltrotators, and Rational, the global leading manufacturer of combi-steamer ovens. Both stocks had a good year.

Other strong performers of note were our Irish holdings Cairn Homes, Dalata Hotel Group, and Glanbia. Ireland is suffering from a severe shortage of housing and as the largest, and only, volume producer of note, Cairn Homes is benefitting from its large landbank to deliver affordable homes in an attractive demand environment. Dalata Hotel Group, a modern hotel operator, is enjoying the recovery in the hospitality sector in a market where supply is constrained, and competition is underwhelming. Glanbia, the nutritional business, simply executed well, leveraging their strong global brand presence.

Conversely, our area of biggest disappointment as a sector was consumer staples that did not provide the steady performance we would normally expect. Particularly disappointing were our beverage stocks Royal Unibrew and Remy Cointreau. Royal Unibrew is a Danish brewer that manages strong local brands that are both alcoholic and non-alcoholic drinks. They also operate as a bottler for Pepsi-Cola in the region. Poor weather hampered sales in the key summer months, and they downgraded their expected contribution from their recent Dutch acquisition. These led to cuts to earnings that were compounded by concerns around downtrading in a more challenging economic environment.

The French cognac producer, Remy Cointreau, faced a perfect storm last year. We initiated a holding early in the year in the knowledge that one of their key growth engines, the US, was spluttering. We believed however that China, the other growth engine, would pick up the slack and the valuation was also attractive. Unfortunately, the US deterioration was worse than expected, and China growth failed to materialise. While hugely disappointing thus far, we believe that the valuation is now at such a low level that investors are paying little more than the realisable inventory value. Although the outlook is uncertain over the short term, we believe there is a great deal of value here in what is a unique asset.

I have highlighted some good returns from our healthcare holdings. We did however suffer from poor performance from our diagnostics equipment stocks, Swiss listed Tecan and German listed Stratec. Tecan, which provides automated liquid handling solutions to the life sciences and diagnostics markets, performed operationally well but saw a substantial de-rating through the year. The share could not withstand the multiple profit warnings amongst its peers which all struggled with tough comparisons with the strong COVID-19 period, and a weakening environment in the biotechnology space (which is itself suffering from funding issues) as well as more tentative buying habits in China. Tecan ended the year cheaper than it started and with no deterioration in franchise, so we continue to hold the stock. Stratec, on the other hand, struggled operationally. They produce machines for diagnostics equipment companies who suffered from the industry issues mentioned above. Additionally, they incurred higher costs from customer specification changes. We felt that this represented a deterioration of their market position and a loss in confidence with the management team, so we sold the position.

Other poor performers of note include Coor, the Swedish listed integrated facilities manager hit by two large contract losses and a margin squeeze as they struggled to pass on higher costs. With some significant client negotiations on the horizon, we decided to exit the position. In contrast to our other semiconductor related companies, Nordic Semiconductor had a poor year. The low power Bluetooth provider's principal end market is consumer electronics. With high stock levels of Bluetooth chips at customers that were only slowly being reduced because of deteriorating consumer demand, Nordic Semiconductor recorded a significant sales and profit decline. We are of the view that this, while painful, is temporary so continue to hold the stock. Similarly, MIPs, the Swedish producer of helmet safety technology struggled as weak bicycle markets were compounded by high inventories. We do not believe the long-term growth rate or market position is permanently impaired so also continue to hold the stock.

Review of Investment Performance

Following mixed performance in recent years, and at the Board's request, the investment team in conjunction with the Manager's investment risk and oversight function undertook a review of the Company's investment strategy, philosophy and process. While no wholesale changes were recommended, we are evolving our investment process and taking steps towards improvement in its execution. This is supported by the significant resources available, both in terms of research but also risk analysis, at Columbia Threadneedle Investments.

With the aim of reducing the volatility of returns, the portfolio will increase its number of holdings and balance 'style' exposures. We will continue to invest in high quality growth companies, but individual holdings will be more systematically analysed on their risk and style contribution in order to ensure that when we pay a premium to the market that this valuation is supported by superior growth and profitability characteristics. A portfolio that is more diversified will also, where warranted by market opportunity, be supported with increased gearing. These recommendations which were implemented towards the end of the year, provide a strong basis on which to look forward.

Portfolio Activity

We are now embedded in the investment teams at Columbia Threadneedle, and have a significantly larger pool of resources at our disposal. The research capacity and the reach that we have to engage with potential investee companies is by far the largest since we have managed the Company. This is manifesting itself in more frequent and productive idea generation. When combined with a volatile market at the end of the third quarter, this led to higher portfolio turnover and more holdings, in line with the evolution of our process. We also took the opportunity provided by the market falls of September and October 2023 to deploy gearing. In terms of sales, in addition to those mentioned above, we exited positions in Alten, the French R&D outsourcer, and Sparebank, the Norwegian regional bank, having reached our fair values, thus taking profits. We also exited Sligro, the Dutch food distributor and HelloFresh, the German listed meal kit business, following operating disappointments sufficient to derail the investment cases.

In terms of new additions, we diversified our large positions in semiconductors by adding Melexis, which produces sensors for the automotive market, and Inficon, which has leading positions in the production of vacuum technology for both industrial and technology markets. Within industrials, we added Elis, the European leader in textile rental, Stabilus, the auto-supplier which is transforming to a broader industrial automation exposed business, and Accelleron.

Accelleron is relatively new to the listed market having been spun out of the large Swedish industrial ABB, so not necessarily broadly known. They are the global market leader in turbochargers primarily for marine and energy applications. These turbochargers provide substantial cost efficiencies and reduce emissions, so offer good return on investments for their clients. With 75% of revenues accounted for by services and spare parts, they have predictable sales and high profit margins, which demonstrate a high-quality business that is not priced as such by the market.

Other new additions include KPN, the Dutch telecommunication company whose cash generation is improving as they finalise their fibre network roll-out, and Smurfit Kappa, the value-added packaging company, which operates in an oligopoly that should benefit from a recovery in the end markets.

Outlook

The outlook for inflation and its influence on interest rates are likely to continue to dictate market direction, however, the debate has shifted from when will rates stop rising, to how quickly will they fall. This should provide a positive backdrop to investing, though we are aware that the impact of the rapidly tightening liquidity environment of the last few years has yet to fully impact the economy which may lead to a risk of wider recession for this year. Nonetheless, the low valuation of European smaller and mid-cap companies suggest much of this is priced in. Following two years of underperformance for smaller companies against the larger market, we think this is an excellent opportunity for the creation of long-term returns. We expect to use any further volatility to take advantage of this opportunity and gear the portfolio further.

Sam Cosh

Lead Investment Manager

19 March 2024

Principal Risks and Future Prospects

The principal risks together with their mitigations are set out below. The Board's processes for monitoring them and identifying emerging risks are set out on pages 32 to 33 and in note 22 of the Report & Accounts.

Most of the Company's principal risks are market-related and no different to those of other investment trusts investing in listed markets. 

The global economy continues to suffer considerable disruption due to the effects of the war in Ukraine, recent events in the Middle East and inflationary pressures. The Directors have reviewed the risk register for the Company which identifies the risks that the Company is exposed to, the controls in place and the actions being taken to mitigate them. The principal ongoing risks and uncertainties currently faced by the Company, and the controls and actions to mitigate those risks, are described below.

In addition a detailed review of the risks of the Company's investment portfolio including market, credit, foreign currency and liquidity is provided in note 22 of the Report & Accounts beginning on page 76. Details of actions taken to reduce the potential impact of these risks is also provided.

·      Risk description: Poor absolute and/or relative performance

Inappropriate stock selection, asset allocation and gearing levels result in poor NAV and share price performance against Benchmark and/or peer group. Poor performance results in reduced demand for the Company's shares and a widening share price discount.

Ø Increase in overall risk in year.

Mitigation: 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.

·      Risk description: 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.

Ø No change in overall risk in year.

Mitigation: 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.

·      Risk description: The Manager

Failure of the Manager or loss of senior staff could cause reputational damage and/or place the business in jeopardy. Execution risk arising from the post-acquisition integration of BMO GAM EMEA with Columbia Threadneedle Investments.

Ø No change in overall risk in year.

Mitigation: 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.

·      Risk description: 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.

Ø No change in overall risk in year.

Mitigation: 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.

·      Risk description: 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.

Ø No change in overall risk in year.

Mitigation: 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.

·      Risk description: Dividend Policy

The Company's high distribution policy becomes unsustainable.

Ø No change in overall risk in year.

Mitigation: The annual dividend is calculated as six per cent of the closing net asset value of the Company as at 31 December of the preceding year.

As at 31 December 2023 the Distributable reserves of the Company was £281.6 million in comparison to a 2023 dividend cost of £20.9 million.

·      Risk description: Geopolitical issues and their impact

Geopolitical issues including the impact of the war in Ukraine and conflict in the Middle East.

Ø Increase in overall risk in year.

Mitigation: The Company has a clearly defined and approved strategy. The Board can hold additional board meetings at short notice to discuss the impact of significant changes in the macroeconomic and geopolitical environment. The Company maintains a portfolio of diversified stocks.

Forward looking stress tests ranging from moderate to extreme scenarios are provided by the Manager to the Board to support the Viability and Going Concern Statements.

Five Year Horizon

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.

Through a series of connected stress tests ranging from moderate to extreme scenarios and based on historical  information, but forward looking over the five years commencing 1 January 2024, the Board assessed the risks of:

·      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.

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 2029. For this reason, the Board also considers it appropriate to continue adopting the going concern basis in preparing the Report and Accounts.

Statement of Directors' Responsibilities in Respect of the Financial Statement

Each of the Directors, whose names and functions are listed on pages 34 and 35 of the Report & Accounts, confirm that, to the best of their knowledge:

·      the Company financial statements, 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.

On behalf of the Board

Jack Perry

Chairman

19 March 2024

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.

Statement of Changes in Equity

Statement of Financial Position

Statement of Cash Flows

Notes

1    Basis of preparation

The functional currency of the Company is the euro and presentational currency is 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.

2    Earnings per ordinary share

Revenue return

The revenue return per share of 1.54p (2022: 1.65p) is based on the revenue return attributable to Shareholders of £5,544,000 profit (2022: £5,939,000 profit).

Capital return

The capital return per share of 8.15p (2022: -49.99p) is based on the capital return attributable to Shareholders of £29,344,000 profit (2022: £179,990,000 loss).

Total return

The total return per share of 9.69p (2022: -48.34p) is based on the total return attributable to Shareholders of £34,888,000 profit (2022: £174,051,000 loss).

Weighted average ordinary shares in issue

The returns per share are based on a weighted average of 360,069,279 (2021: 360,069,279) ordinary shares in issue during the year.

3    Dividends

The Board has declared a total dividend for 2024 of 5.90 (2023: 5.80) pence per share in accordance with its aim of paying at a rate of six per cent of the closing Net Asset Value of the preceding year.  

4    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's investment objective is to achieve long-term 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 of either or both of the value of the net assets and the 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 Board, together with the Manager, is responsible for the Company's risk management. The full details of financial risks are contained in note 22 of the Report and Accounts.

5      Annual general meeting

The 2024 AGM will be held on 17 May 2024 at 3.00pm at Cannon Place, 78 Cannon Street, London EC4N 6AG. The Notice of the AGM is set out on pages 83 to 86 of the annual report.

6      Report and accounts

The report and accounts for the year ended 31 December 2023 will be posted to Shareholders and made available on the website www.europeanassets.co.uk shortly. Copies may also be obtained by mailing the Company's registered office, Cannon Place, 78 Cannon Street, London EC4N 6AG.

By order of the Board

Columbia Threadneedle Investment Business Limited, Secretary

19 March 2024