Date:
8 August 2024
Contact:
Mine Tezgul (Lead
Investment Manager) / Scott McEllen (Investment Company
Secretary)
Columbia Threadneedle Investment Business
Limited
0131 573 8300
LEI:
213800N61H8P3Z4I8726
European Assets Trust
PLC
Unaudited Statement of
Results
for the half-year ended 30
June 2024
Highlights for the half-year ended 30 June
2024:
·
Net Asset Value total return of 3.5% in comparison
to the Benchmark return of 3.1%.
·
Share price total return of 0.1%.
·
An annual dividend of 5.9p per share for 2024
representing a dividend yield of 7.0% based on the Company's
closing share price of 84.4p on 6 August 2024.
"It was a positive period for the
Company's portfolio with NAV total return outperforming the
Benchmark as the investment manager's stock picking was rewarded.
We see opportunities in the current market. Mine and the team
favour companies that have a competitive advantage and pricing
power generated by brands, patented processes, regulatory barriers
to entry and strong market positions. As smaller companies come
back into favour later in the cycle we expect to see the
rewards."
Stuart Paterson
Chair
SUMMARY OF RESULTS
|
|
|
|
Half-year
ended
30 June
2024
|
Half-year
ended
30 June
2023
|
|
|
|
Net Asset Value per share total
return(1)
|
3.5%
|
5.2%
|
Share price total return(1)
|
0.1%
|
-0.3%
|
Benchmark(2)
|
3.1%
|
2.9%
|
|
|
|
Dividends per share:
|
|
|
Dividends paid per share - as at 30
June
|
(3)
2.95p
|
2.90p
|
Dividends announced for the
year
|
5.90p
|
5.80p
|
(1) Total Return - the return to Shareholders calculated on a per
share basis adding dividends paid in the period to the increase or
decrease in the Share Price or Net Asset Value in the period. The
dividends are assumed to have been re-invested in the form of
shares or net assets, respectively, on the date on which the shares
were quoted ex-dividend.
(2) With effect from 1 June 2023 the benchmark changed from EMIX
Smaller European Companies (ex UK) Index (net) to MSCI Europe
excluding United Kingdom Small Mid Cap (net return) Index.
For the six-month period ended 30 June 2023 a time-apportioned
composite of both indices has therefore been calculated and
disclosed.
(3) The first interim dividend of 1.475p per share was paid on 31
January 2024, the second interim dividend of 1.475p per share on 30
April 2024 and the third interim dividend of 1.475p per share on 31
July 2024. The fourth interim dividend of 1.475p per share is
payable to eligible Shareholders on 31 October 2024.
The
Chair, commenting on the results, said:
Dear Shareholder,
For the six-month period ended 30
June 2024, European Assets Trust PLC ("the Company") recorded a
sterling Net Asset Value ("NAV") total return of 3.5%. This
compares to the total return from the Company's Benchmark of 3.1%
for the same period. The sterling share price total return for the
period was 0.1%. At 30 June 2024 the NAV was 98.5p (31 December
2023: 98.3p) and the share price was 86.8p (31 December 2023:
89.7p).
It was a positive period for the
Company's portfolio with NAV total return outperforming the
Benchmark as the investment manager's stock picking was
rewarded.
The six-month period began on a
positive note with investment gains achieved mostly in the opening
months. Markets in Europe and elsewhere were dominated by volatile
interest rate expectations and politics. Against this backdrop
smaller companies did well to hold their ground, but underperformed
their larger counterparts.
Portfolio Manager Change
On the 2nd of May 2024, the Board
announced that following the further integration of the European
equities team by Columbia Threadneedle Investments ("the Manager"),
Mine Tezgul would succeed Sam Cosh as the Company's Lead Investment
Manager.
Mine is a portfolio manager in the
European equities team and Head of European Small Cap Equities.
Mine joined the Manager in 2018 as an equity analyst, and since
2019 has been lead portfolio manager of the Columbia Threadneedle
European Smaller Companies strategy and co-manager of the Columbia
Threadneedle Pan European Small Cap Opportunities strategy. Prior
to this, Mine spent over ten years as an equity analyst focused on
developed market equities, working at Lansdowne Partners, SAC
Global Investors and Highbridge Capital Management. Mine started
her career with Citigroup as a financial analyst in its investment
banking division and holds a BA in Economics with General Honours
from the University of Chicago and an MBA with Distinction from
INSEAD.
The Board believes that Mine's
experience is very well suited to deliver the Company's investment
objective for Shareholders in line with the revised investment
approach developed following the review of historic performance
which was conducted in the latter half of 2023.
Mine is supported by Philip Dicken.
Philip is Head of European Equities and International Equities at
Columbia Threadneedle Investments. He joined Columbia Threadneedle
in 2004 and has managed the Pan European Smaller Companies strategy
since launch in 2005.
The Board looks forward to working
with Mine and Phil. Following these changes the Board will continue
to monitor performance closely. The Company's investment policy and
objective remain unchanged.
The Board wishes to place on record
its thanks to Sam Cosh and Lucy Morris for their commitment to the
Company during their respective periods as Lead Investment Manager
and Investment Manager.
Share Price Discount
As at 30 June 2024 the share price
discount was 11.8%. This was in comparison to 8.8% as at 31
December 2023. The discount also widened relative to those reported
by the Company's peer group and resulted in a subdued share price
total return for investors for the six-month period. The Board
recognises the importance of movements in the Company's discount
upon the return that investors receive and is monitoring closely
the discount's absolute and relative levels.
Dividends
The 2024 dividend of 5.90p per share
is payable in four equal instalments of 1.475p. Three interim
dividends have been paid on 31 January, 30 April and 31 July with a
further instalment of 1.475p to be paid on 31 October
2024.
As at 6 August 2024, the latest
practicable date prior to publication of this announcement, an
annual dividend of 5.9p per share represented a yield of 7.0%
calculated with reference to the Company's closing share price of
84.4p. 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.
Investment Management Fee Amendment
On the 2nd of May 2024 the Board
also announced an amendment to the basis of calculation of the
investment management fee payable to the Manager.
Previously, the Manager received a
fee equal to 0.75% per annum of the value of funds under management
up to €400 million, and in cases where the value of funds under
management exceeded €400 million, the applicable rate over such
excess value was 0.6% per annum.
Following the amendment, which was
effective from 1 January 2024, the funds under management to which
the applicable rate of 0.75% is applied has been lowered from €400
million to €300 million. For funds under management in excess of
€300 million, the applicable rate has been reduced from 0.60% to
0.55% per annum. The basis of calculation for funds under
management remains unchanged.
Directorate Changes
The Company was incorporated on 12
November 2018. It should though be remembered that it is the UK
domiciled successor of its Dutch predecessor, European Assets Trust
NV ("EAT NV") which was dissolved on 16 March 2019. All Directors
of the Supervisory Board of EAT NV were appointed to the Board of
the Company on the date of its incorporation. Although they 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 a thorough selection process which included the
services of a search company, Kate Cornish-Bowden was appointed to
the Board with effect from 2 January 2024.
Julia Bond retired from the Board on
31 January 2024. Julia was appointed as a Director of the
Supervisory Board of EAT NV, in April 2014 and upon retirement had
served nine years between both entities. On behalf of the Board and
all Shareholders I thank Julia for her diligence and wise counsel
throughout her period of appointment.
Following the retirement of Julia
Bond, Kate Cornish-Bowden was appointed the Company's Senior
Independent Director.
The former Chair of the Company,
Jack Perry CBE, retired at the conclusion of the Annual General
Meeting ("AGM") held on 17 May 2024. He joined the Board of EAT NV,
in April 2014 and had served as Chair from April 2015. On behalf of
the Board and all Shareholders, I wish to thank Jack for his
dedicated leadership and commitment.
Following my assumption of the role
of Chair, Kevin Troup was appointed Chair of the Company's Audit
and Risk Committee.
As a further part of this plan it is
anticipated that Martin Breuer will retire from the Board at the
conclusion of the 2025 AGM.
Outlook
Following the invasion of Ukraine
and the impact on energy prices and inflation, central banks
underestimated the inflation problem forcing them to raise interest
rates rapidly. Tighter monetary policy is now taking effect and
inflation is falling. European economic growth is gradually
improving, although manufacturing continues to lag the services
sector.
After these falls in inflation, the
interest rate environment in both Europe and the US appears more
benign. The European Central Bank has begun to ease monetary
policy, as have Switzerland and Sweden; the US Federal Reserve is
expected to follow suit later this year. Lower interest rates have
historically benefited smaller companies to a greater extent than
larger companies. The improvement in the interest rate environment
should benefit European smaller companies which are currently
valued at historic lows.
A recession can be avoided, although
this is a delicate balancing act for central banks. Global
geopolitical tensions are a concern, as are the possible
repercussions for energy prices. There is also some political
uncertainty, including November's presidential election in the US.
The second round of voting in France has resulted in a hung
parliament, averting a hard-right victory.
In European small and mid-cap
equities, there are reasons to remain optimistic. Earnings have
been resilient despite higher interest rates and, over the
longer-term, share prices tend to follow earnings. Good companies
continue to grow, and we see opportunities in the current market.
The Managers' focus is on stock selection. Mine and the team favour
companies that have a competitive advantage and pricing power
generated by brands, patented processes, regulatory barriers to
entry and strong market positions. As smaller companies come back
into favour later in the cycle we expect to see the
rewards.
Stuart Paterson
Chair
The
Investment Manager, commenting on the results,
said:
Market Backdrop
Sentiment towards equities remained
strong over the first half of 2024, and optimism that major
economies would navigate a soft landing resulted in gains for
European markets. The Company's Benchmark index rose by 3.1% in
sterling terms; most of this was achieved in the first quarter. The
question of when interest rate cuts would be implemented continued
to preoccupy investors, leading to volatility. Geopolitical tension
in the Middle East boosted energy prices. Inflation in major
markets trended closer to central-bank targets but missed
expectations in some instances, so markets scaled back rate-cut
expectations. Central banks struck a dovish tone at meetings early
in the year but then backpedalled, citing concerns about services
inflation and wage growth. The European Central Bank implemented a
25-basis-point rate cut in June. Economic sentiment in the eurozone
dipped: June's preliminary composite purchasing managers' index
(PMI) fell: services growth slowed while the decline in
manufacturing output accelerated. Political uncertainty was key,
prompted by weak support for the French and German ruling parties
in the EU parliamentary elections. French equities were weak
following President Macron's decision to call a French
parliamentary election. The first round saw support for Marine Le
Pen's far-right party National Rally (RN), but the second round
resulted in a broad split between the three main blocs.
Performance
It is pleasing to report that Net
Asset Value per share performance was positive, and slightly ahead
of the index. Our technology stocks were strong contributors to
this performance. Karnov, the Swedish-based provider of online
legal information services, led the outperformance. The company
received a bid at a 28% premium to the prevailing share price from
two private equity groups, agreed by management. However the bid
was subsequently rejected by a number of the larger shareholders
who felt the level was insufficient, and as a result the private
equity groups retreated. Even though this caused some retracement
in the share price after the end of the period, the shares are
still trading higher than they were before the bid. Operational
results have been strong, with the company showing good growth and
gaining benefits from new acquisition synergies as well as
successful cost reductions. Cash flow generation will enable them
to reduce borrowings, which has been a concern for some investors
in the past.
Our holding in CTS Eventim has also
boosted returns. This German company is the world's leading
platform for event ticketing - for concerts, theatres, festivals
and sporting events for example. Covid lockdowns were a major
drawback for the business model, as ticket sales everywhere for all
events plummeted. That phase is now over, and the company is well
on the path to recovery, winning market share and new contracts.
The company is a major contractor to the Paris Olympic and
Paralympic games, and more recently has signed for Los Angeles in
2028. Recent results have beaten expectations, with the Adele tour
and other events providing a welcome fillip.
Ringkjoebing Landbobank was another
strong contributor to the portfolio's performance over the period.
Reluctance by central banks to lower interest rates at too fast a
rate opens the door to improved margins. Deposit margins remain
low, and this area is not too competitive. But lending margins have
been expanding, and this is likely to continue to drive profits.
Even in the tougher times, when interest rates were low or
negative, the quality of the bank's operations was sufficient to
ensure enviable and sustainable returns for many years - growth has
exceeded 8% per annum since the global financial crisis in
2007/8.
Cairn, the Irish housebuilder,
continued to outperform, as their results reflected ongoing higher
demand in the real estate market, together with limited supply
which is boosting values. Cairn as one of the largest builders in
the Irish market with a substantial landbank is well placed to
benefit from its strong market position. The stock pays an
attractive and growing dividend which has provided further support
for the shares. Dalata Hotels has in contrast suffered owing to
shortterm weakness in the hotel trade in Ireland, coupled with more
hotel openings creating an excess of supply. The company expects
this to reverse as the summer approaches, and the shares look
attractively valued after recent falls.
Our industrials performed less well,
in a reversal of the previous trend. Carel Industries, which is an
Italian-based supplier of technology for heating, ventilation and
air conditioning (HVAC) suffered as the demand for heat pumps has
faltered, with less governmental support in for example Germany;
customer destocking also hampered demand compared to a strong
period the previous year. The market for their refrigeration
products has stagnated, but we are confident that the worst is
over, and Carel is experiencing strong demand from computer data
centres, where temperature control is critical to their operation,
and where AI is boosting the underlying market. Stabilus, which
provides gas springs and motion control products (for example the
device that controls the opening of car boots and tailgates),
published disappointing results and a profits warning owing to
weaker demand for high-end cars. We have been in frequent contact
with management, and it is clear that the problems are
geographically limited - the company sees good growth in China and
Asia more generally, and many of the challenges are limited to the
American market.
Remy Cointreau has been a
disappointing performer. The spirits sector is challenged by the
threat of tariffs, particularly in the key Chinese market, and
slowing global demand. Remy also has significant exposure to the US
market, where the political backdrop poses threats to importers,
and sales are already under pressure. The shares have warranted a
premium rating owing to the value of the brands and of the capital
stock, but this now means that there is little valuation support
and other areas of the luxury goods market offer greater
attractions.
Portfolio Activity
Portfolio turnover is in line with
long term averages and idea generation continues to be aided by the
greater research capabilities at Columbia Threadneedle.
In addition, since the second half
of 2023 the level of gearing employed has increased to take
advantage of market opportunities. As at 30 June 2024 the level of
gearing employed was 6.0% (30 June 2023: 1.4%).
We bought new positions in Prysmian,
Moncler and CVC. Prysmian is a provider of cables for the energy
and telecommunications industries; the company benefits from its
oligopolistic position and strength in the high-margin subsea
market (which benefits from growth in offshore wind power).
Prysmian is a leader in highvoltage direct current (HVDC) electric
power transmission, where demand exceeds supply, giving the company
pricing power and a strong order book. Moncler is a company which
is well known to the Columbia Threadneedle team and boasts brand
strength; the company is performing strongly in the Chinese market,
where its retail presence is key. The Stone Island sportswear
acquisition continues to boost returns, with a restructured
collection and greater focus on events to drive future sales. CVC
is one of the world's leading private equity houses, and the recent
IPO gave us a rare opportunity to gain exposure to this sector. The
shares continue to trade at a healthy premium to the issue
price.
We sold our position in Merlin
Properties, as the share price had been strong and the valuation no
longer reflected the risks to property valuations posed by higher
levels of interest rates, particularly for retail shopping centres.
The market for real estate for data centres, their other area of
specialisation, is more resilient, but capital investment will be
required to capitalise on this.
We reduced the holdings in
Ringkjoebing Landbobank and Karnov following share price strength,
and entirely disposed of our position in Remy Cointreau.
Outlook
Europe suffered a worse energy shock
than the US from the Ukraine war. Inflation soared resulting in
real incomes falling significantly. However, natural gas prices
have now fallen approximately 90% from the highs of mid-2022. A
cautious European Central Bank cut interest rates by only 25 basis
points in June, as evidence begins to emerge that inflation has
been brought under control, and real wages have begun to recover.
To further assist consumption, European households still retain
post-pandemic savings, equivalent to 12.5% of GDP.
This improving macroeconomic
backdrop should support a recovery in European equities, and
smaller companies in particular.
There are reasons for some caution
as the political backdrop is far from stable. Support for Ukraine,
and US relations with China, which is critical for European trade,
remain contentious, and will be dependent on the outcome of the US
Presidential election in November. A Trump victory could bring
threats of US tariffs for European companies exporting to China and
increase global trade tension more generally. European domestic
politics also faces uncertainties. The hung election result in
France means no government has yet been formed. Both the left and
right wing in France want to increase spending even though debt
remains high across Europe: France has a debt-to-GDP ratio of 112%,
Italy 137%. France's public sector deficit will be 5% in 2024 and
2025.
Cyclical factors could also benefit
European stocks. Capital expenditure is refocusing from China to
closer to home. Tax cuts and subsidies including the €270 billion
from Europe's Green Deal Industrial Plan, will provide a welcome
boost. Labour markets have held up well, and while they may look
less rosy if interest rate cuts are too slow, this is more of a
concern in the US than in Europe.
European smaller companies have
underperformed in the recent difficult backdrop and are now very
cheap relative to history and to larger companies. Many investors
have shunned the sector and are now underweight. We are cautiously
optimistic for the future, and looking to exploit the opportunities
as the economic environment improves.
Mine
Tezgul
Lead Investment Manager
Columbia Threadneedle Investment
Business Limited
Forward -looking statements
This interim report 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 them at the date of this report.
Nothing should be construed as a profit forecast.
Directors' Statement of Principal Risks and
Uncertainties
Most of the Company's principal
risks and uncertainties are market related and no different from
those of other investment trusts investing in listed equities. They
are described in more detail under the heading "Principal Risks and
Changes in the Year" within the Strategic Report in the Company's
Report and Accounts for the year ended 31 December 2023.
The principal risks identified in
the Report and Accounts for the year ended 31 December 2023
were:
· Poor absolute and/or relative performance;
· Relevance/attractiveness of the investment strategy and
policy;
· Risk of failure of the Manager's business or loss of senior
staff;
· Regulatory and compliance failure (including ESG
reporting);
· Service provider failure;
· The sustainability of the Company's dividend policy;
and
· Geopolitical issues and their impact.
Since the publication of the Report
and Accounts for the year ended 31 December 2023, the Directors
have upgraded cyber related business interruption to a principal
risk.
At present the global economy
continues to suffer considerable disruption due to the war in
Ukraine, events in the Middle East, disputes in the South China Sea
and the after-effects of a high inflation environment. The
Directors continue to review the key 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.
It is also noted that:
·
An analysis of the performance of the Company
since 1 January 2024 is included within the Chair's Statement and
the Investment Manager's Review above.
·
The Company has a multi-currency loan with a
maximum facility of €60 million with The Royal Bank of Scotland
International (London Branch). As at 30 June 2024 €35.0 million was
drawn down, which represents gearing of 6.0%.
·
Note 4 below details the Board's consideration for
the continued applicability of the principle of Going Concern when
preparing this report.
On behalf of the Board
Stuart Paterson
Chair
7 August 2024
Directors' Statement of Responsibilities in Respect of the
Half-Yearly Financial Report
In accordance with Chapter 4 of the
Disclosure and Transparency Rules the Directors confirm, that to
the best of their knowledge:
·
the condensed set of financial statements have
been prepared in accordance with applicable UK-adopted
International Accounting Standards on a going concern basis and
give a true and fair view of the assets, liabilities, financial
position and return of the Company;
·
the Chair's Statement, Investment Manager's Review
and the Directors' Statement of Principal Risks and Uncertainties
(together constituting the Interim Management Report) include a
fair review of the information required by the Disclosure Guidance
and Transparency Rule ('DTR') 4.2.7R, being an indication of
important events that have occurred during the first six months of
the financial year and their impact on the financial
statements;
·
the Directors' Statement of Principal Risks and
Uncertainties shown above is a fair review of the principal risks
and uncertainties for the remainder of the financial year;
and
·
the half-yearly report includes a fair review of
the information required by DTR 4.2.8R, being related party
transactions that have taken place in the first six months of the
current financial year and that have materially affected the
financial position or performance of the Company during the period,
and any changes in the related party transactions described in the
last Annual Report that could do so.
On behalf of the Board
Stuart Paterson
Chair
7 August 2024
Condensed Statement of Comprehensive Income
Half-year
ended
30 June
2024
(Unaudited)
|
Half-year
ended
30 June
2023
(Unaudited)
|
|
|
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
|
|
£'000s
|
£'000s
|
£'000s
|
£'000s
|
£'000s
|
£'000s
|
|
|
|
|
|
|
|
|
|
Gains on investments held at fair
value through profit or loss
|
-
|
14,656
|
14,656
|
-
|
25,944
|
25,944
|
|
Foreign exchange
(losses)/gains
|
(24)
|
398
|
374
|
1
|
300
|
301
|
|
Income
|
7,447
|
-
|
7,447
|
5,883
|
-
|
5,883
|
|
Management fees
|
(261)
|
(1,045)
|
(1,306)
|
(285)
|
(1,139)
|
(1,424)
|
|
Other expenses
|
(554)
|
(21)
|
(575)
|
(465)
|
(28)
|
(493)
|
|
Profit before finance costs and taxation
|
6,608
|
13,988
|
20,596
|
5,134
|
25,077
|
30,211
|
|
Finance costs
|
(146)
|
(584)
|
(730)
|
(58)
|
(230)
|
(288)
|
|
Profit before taxation
|
6,462
|
13,404
|
19,866
|
5,076
|
24,847
|
29,923
|
|
Taxation
|
(618)
|
-
|
(618)
|
(551)
|
-
|
(551)
|
|
Profit for the period and total comprehensive
income
|
5,844
|
13,404
|
19,248
|
4,525
|
24,847
|
29,372
|
|
Earnings per share - pence
|
1.62
|
3.73
|
5.35
|
1.26
|
6.90
|
8.16
|
|
|
|
|
|
|
|
|
| |
The total column of this statement
represents the Company's Income Statement and Statement of
Comprehensive Income, prepared in accordance with UK-adopted
International Accounting Standards. The supplementary revenue 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.
Condensed Statement of Changes in
Equity
|
|
|
|
|
Cumulative
|
Total
|
Half-year ended 30 June 2024
|
Share
Capital
|
Distributable
Reserve
|
Capital
Reserve
|
Revenue
Reserve
|
Translation
Reserve
|
Shareholders'
Funds
|
(Unaudited)
|
£'000s
|
£'000s
|
£'000s
|
£'000s
|
£'000s
|
£'000s
|
Balance at 31 December 2023
|
37,506
|
281,605
|
38,015
|
-
|
(3,130)
|
353,996
|
Movements during the half-year ended 30 June
2024
|
|
|
|
|
|
|
Interim dividends paid
|
-
|
(7,724)
|
-
|
(2,898)
|
-
|
(10,622)
|
Total comprehensive
income
|
-
|
-
|
13,404
|
5,844
|
-
|
19,248
|
Cumulative translation
adjustment
|
-
|
-
|
-
|
-
|
(8,108)
|
(8,108)
|
Balance at 30 June 2024
|
37,506
|
273,881
|
51,419
|
2,946
|
(11,238)
|
354,514
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Half-year ended 30 June 2023
(Unaudited)
|
|
|
|
|
|
|
Balance at 31 December 2022
|
37,506
|
296,945
|
8,671
|
-
|
4,505
|
347,627
|
Movements during the half-year ended 30 June
2023
|
|
|
|
|
|
|
Interim dividends paid
|
-
|
(8,015)
|
-
|
(2,427)
|
-
|
(10,442)
|
Total comprehensive
income
|
-
|
-
|
24,847
|
4,525
|
-
|
29,372
|
Cumulative translation
adjustment
|
-
|
-
|
-
|
-
|
(11,341)
|
(11,341)
|
Balance at 30 June 2023
|
37,506
|
288,930
|
33,518
|
2,098
|
(6,836)
|
355,216
|
|
|
|
|
|
|
|
Condensed Statement of Financial Position
|
30 June
2024
|
30 June
2023
|
31
December 2023
|
|
(Unaudited)
|
(Unaudited)
|
(Audited)
|
|
£'000s
|
£'000s
|
£'000s
|
Non-current assets
|
|
|
|
Investments at fair value through
profit or loss
|
372,735
|
354,437
|
375,066
|
Current assets
|
|
|
|
Other receivables
|
2,897
|
5,714
|
3,063
|
Derivative financial instruments
held at fair value through profit or loss
|
252
|
342
|
-
|
Cash and cash equivalents
|
8,538
|
12,097
|
2,089
|
Total current assets
|
11,687
|
18,153
|
5,152
|
Current liabilities
|
|
|
|
Other payables
|
(234)
|
(211)
|
(226)
|
Bank Loan
|
(29,674)
|
(17,163)
|
(25,996)
|
Total current liabilities
|
(29,908)
|
(17,374)
|
(26,222)
|
Net
current (liabilities)/assets
|
(18,221)
|
779
|
(21,070)
|
Net
assets
|
354,514
|
355,216
|
353,996
|
|
|
|
|
Capital and reserves
|
|
|
|
Share capital
|
37,506
|
37,506
|
37,506
|
Distributable reserve
|
273,881
|
288,930
|
281,605
|
Capital reserve
|
51,419
|
33,518
|
38,015
|
Revenue reserve
|
2,946
|
2,098
|
-
|
Cumulative translation
reserve
|
(11,238)
|
(6,836)
|
(3,130)
|
Total Shareholders' funds
|
354,514
|
355,216
|
353,996
|
Net
Asset Value per ordinary share - pence
|
98.46
|
98.65
|
98.31
|
Condensed Statement of Cash Flows
|
|
|
|
Half-year
ended
30 June
2024
|
Half-year
ended
30 June
2023
|
|
(Unaudited)
£'000s
|
(Unaudited)
£'000s
|
Cash flows from operating activities before dividends and
interest received and interest paid
|
(1,855)
|
(2,489)
|
Dividends received
|
7,119
|
5,309
|
Interest received
Interest paid
|
134
(720)
|
146
(263)
|
Cash flows from operating activities
|
4,678
|
2,703
|
Investing activities
|
|
|
Purchase of investments
|
(61,745)
|
(63,040)
|
Sale of investments
|
70,451
|
61,532
|
Derivative financial instruments
purchased for future settlement
|
(252)
|
(342)
|
Other capital expenses
|
(21)
|
(28)
|
Cash flows from investing activities
|
8,433
|
(1,878)
|
Cash flows before financing activities
|
13,111
|
825
|
Financing activities
|
|
|
Equity dividends paid
|
(10,622)
|
(10,442)
|
Drawdown of bank loan
|
4,301
|
8,879
|
Cash flows from financing activities
|
(6,321)
|
(1,563)
|
Net movement in cash and cash
equivalents
|
6,790
|
(738)
|
Cash and cash equivalents at the
beginning of the period
|
2,089
|
13,317
|
Effect of movement in foreign
exchange
|
374
|
301
|
Translation adjustment
|
(715)
|
(783)
|
Cash and cash equivalents at the end of the
period
|
8,538
|
12,097
|
|
|
|
Represented by:
|
|
|
Cash at bank
|
42
|
6
|
Short term deposits
|
8,496
|
12,091
|
|
8,538
|
12,097
|
|
|
|
|
|
|
Notes
1 Basis of
preparation
These condensed financial
statements, which are unaudited, have been prepared on a going
concern basis in accordance with the Companies Act 2006, UK-adopted
International Accounting Standards and the Statement of Recommended
Practice "Financial Statements of Investment Trust Companies and
Venture Capital Trusts" ("SORP") issued by the AIC.
All of the Company's operations are
of a continuing nature. The functional currency of the Company is
the euro and presentational currency is the pound sterling as the
Board believe this will provide clarity of the Company's financial
statements for its Shareholders, the overwhelming majority of whom
are located in the United Kingdom.
All transactions during the period
are translated on the date of execution and the Statement of
Financial Position as at the period end date.
The accounting policies applied in
the condensed set of financial statements are set out in the
Company's annual report for the year ended 31 December
2023.
2 Earnings per
share
Earnings per ordinary share
attributable to Shareholders reflects the overall performance of
the Company in the period. Net revenue recognised in the
first six months is not necessarily indicative of the total likely
to be received in the full accounting year.
|
Half-year
ended
30 June
2024
£'000s
|
Half-year
ended
30 June
2023
£'000s
|
Revenue return
|
5,844
|
4,525
|
Capital return
|
13,404
|
24,847
|
Total return
|
19,248
|
29,372
|
|
|
|
|
Number
|
Number
|
Weighted average ordinary shares in
issue
|
360,069,279
|
360,069,279
|
Earnings per share -
pence
|
5.35
|
8.16
|
3 Dividend
The fourth interim dividend of
1.475p per share in respect of the year ending 31 December 2024
will be paid on 31 October 2024 to eligible Shareholders on the
register. The total cost of this dividend based on 360,069,279
shares in issue is £5,311,000.
4 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
continues to suffer disruption due to the war in Ukraine, events in
the Middle East, disputes in the South China Sea and the
after-effects of a high inflation environment and the Directors
have given careful consideration to the consequences for this
Company.
The Company has a multi-currency
loan with a maximum facility of €60.0 million with Royal Bank of
Scotland International (London Branch). As at 30 June 2024 €35.0
million (£29.7 million) was drawn down.
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.
As at 6 August 2024, the latest
practicable date before the publication of this report, borrowings
amounted to €35.0 million (£30.1 million). This is in comparison to
a Net Asset Value of €396.4 million (£341.0 million). In accordance
with its investment policy the Company is invested mainly in
readily realisable listed securities. These can be sold if
necessary, to repay the loan facility and fund the cash
requirements for future dividend payments.
The Company operates within a robust
regulatory environment. The Company retains title to all assets
held by the Custodian. Cash is held with banks approved and
regularly reviewed by the Manager and the Board.
The 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 30 June 2024 the Company had a
Distributable Reserve of £273.9 million.
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.
5 Results
The results for the half-year ended
30 June 2024 and 30 June 2023, which are unaudited, constitute
non-statutory accounts within the meaning of Section 434 of the
Companies Act 2006. The latest published accounts which have been
delivered to the Registrar of Companies are for the year ended 31
December 2023; the report of the independent auditors thereon was
unqualified and did not contain a statement under Section 498 of
the Companies Act 2006. The condensed financial statements shown
above for the year ended 31 December 2023 are an extract from those
accounts.
6 Half-yearly report and
accounts
The report and accounts for the
half-year ended 30 June 2024 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
6th Floor, Quartermile 4, 7a Nightingale Way,
Edinburgh EH3 9EG
7 August 2024