REG - European Assets Tst - Interim Results & Dividend Announcement
15/08/2025 07:00
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RNS Number : 4198V European Assets Trust PLC 15 August 2025
Date: 15 August 2025
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 2025
Highlights for the half-year ended 30 June 2025:
· Net Asset Value total return of 13.0% in comparison to the Benchmark
return of 19.3%.
· Share price total return of 18.9%.
· Fourth quarter dividend of 1.38p per share declared, providing an annual
dividend of 5.52p per share for 2025 representing a dividend yield of 5.8%
based on the Company's closing share price of 95.6p on 13 August 2025.
· On 23 June 2025, the Board announced that it is recommending a
combination of European Assets Trust PLC with The European Smaller Companies
Trust PLC to create the largest Trust in the AIC European Smaller Companies
sector.
SUMMARY OF RESULTS
Half-year ended Half-year ended
30 June 2025 30 June 2024
Net Asset Value per share total return((1)) 13.0% 3.5%
Share price total return((1)) 18.9% 0.1%
Benchmark((2)) 19.3% 3.1%
Dividends per share:
Dividends paid per share - as at 30 June((3)) 2.76p 2.95p
Dividends announced for the year 5.52p 5.90p
(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) MSCI Europe excluding United Kingdom Small Mid Cap (net return) Index.
(3) The first interim dividend of 1.38p per share was paid on 31 January
2025, the second interim dividend of 1.38p per share on 30 April 2025 and the
third interim dividend of 1.38p per share on 31 July 2025. A fourth interim
dividend of 1.38p per share will be paid on 24 September 2025 to shareholders
on the register on 5 September 2025 with an ex dividend date of 4 September
2025.
Chair's Statement
Dear Shareholder,
As announced on 23 June, the Board is recommending a combination of your
Company, European Assets Trust PLC (the "Company" or "EAT"), with The European
Smaller Companies Trust PLC ("ESCT") to create the largest Trust in the
Association of Investment Companies ("AIC") European Smaller Companies sector,
providing significant benefits for Shareholders.
EAT is currently managed by Columbia Threadneedle Investments and has
experienced a sustained period of investment underperformance. If the
combination is approved by Shareholders, the continuing entity will be ESCT,
under the management of Ollie Beckett at Janus Henderson Investors ("JHI").
The Board considers that his strong track record and significant experience
positions the Trust for future success.
The news of the proposed combination has been positively received by our
Shareholders, with a marked narrowing of the discount in our share price to
the underlying portfolio Net Asset Value ("NAV"). As such, if this combination
is approved in October 2025 by the Shareholders of EAT and ESCT, this will be
the last set of report and accounts for EAT. The proposed combination is
covered in more detail later in my report.
For the six-month period ended 30 June 2025, the Company recorded a sterling
Net Asset Value ("NAV") total return of 13.0%. However, despite this strong
six-month return, the performance was 6.3% below the Company's Benchmark of
19.3% for the period. The sterling share price total return for the period was
18.9%, reflecting the narrowing discount. As at 30 June 2025 the NAV was
100.76p (31 December 2024: 91.82p) and the share price was 93.00p (31 December
2024: 80.80p).
The six-month period began on a positive note. However, volatility rose when
the new US Administration announced the potential imposition of tariffs which
will have a significant impact on global trade. With little predictability
over what the final outcome would be, market sentiment was affected by
commentary (including from policymakers) and speculation. The potential impact
of tariffs on individual companies is often complex. Smaller companies,
typically more domestic in orientation, are likely to be less affected than
their larger peers. The escalation of hostilities between Israel and Iran and
the receding possibility of a ceasefire in Ukraine also impacted investor
confidence. DeepSeek's release of its latest AI app, which threatened the US's
dominance in this technology led to significant volatility in the share prices
of technology companies. Against this backdrop, European smaller companies did
better than European larger companies and Europe as a whole outperformed other
stock markets as measured by the MSCI World Index.
Performance
Over the six-month period, European markets performed strongly with the larger
company index (MSCI Europe ex UK) providing a total return of 13.5%. Europe
has seen a resurgent investor interest, supported by a strengthening currency,
and a broader appetite for equities. This shift may be a turning point for
European equities, which have lagged global peers in investor favour for some
years. American politics has proved to be highly volatile and this has created
risks for investors.
European smaller companies held their ground in a volatile market,
outperforming the large cap index for the first time in several years; the
Benchmark index for the Company returned 19.3%. In comparison the NAV total
return for the Company for the six-month period was 13.0%. The Company's NAV
underperformed the Benchmark in the first quarter of 2025 by -7.8%, which was
only partly offset by the second quarter NAV outperformance of 2.3%.
The market was dominated by value considerations rather than growth, with
banks and defence stocks to the fore, and technology impacted by the Deepseek
news: the Chinese have potentially created serious competition, threatening US
hegemony in artificial intelligence. The performance of individual holdings in
the Company's portfolio reflected these developments.
The two best performing stocks were Rheinmetall (+204%) and Renk (+99%), both
German defence companies which the Company had purchased recently. These
stocks benefited from good results and a favourable backdrop, in particular,
the German government's decision to relax its debt brake to boost defence
spending. The Company's holdings in banks also benefited, notably Bank of
Ireland which rose +46% during the reporting period. Heidelberg Materials
(+68%) also benefited from the boost to infrastructure expenditure in Germany.
Less encouragingly, Smurfit Westrock (-26%) suffered as it was impacted by
uncertainty regarding US trade tariffs. The company manufactures packaging in
Mexico for the US market, with raw materials from Canada.
The other notable detractors to performance were Cairn Homes (-2%), an earlier
success story, which saw some profit-taking despite good results and Fluidra
(-6%), the Spanish based swimming pool supplies business which was impacted by
tariff concerns.
Chemical distributors also proved problematic. IMCD, where problems at a
competitor, sensitivity to the economic cycle and management changes impacted
the share price (-16%). Interpump (-13%) reported weak demand in its
hydraulics division, with revenues and profits falling during 2024.
Combination with The European Smaller Companies Trust PLC
On 23 June 2025, the Board announced that Heads of Terms had been agreed for a
combination of the Company and ESCT (the "Transaction"). The combination, if
approved by each company's shareholders, will be undertaken through a scheme
of reconstruction and members' voluntary winding-up of the Company under
section 110 of the Insolvency Act 1986 (the "Scheme"), under which the
Company's Shareholders will be entitled to receive new shares in ESCT.
Under the terms of the Scheme a cash exit equivalent to up to approximately
15% of NAV will be offered to the Company's Shareholders to provide them with
the option to realise part of their investment in the Company for cash at a 2%
discount to a formula asset value calculated in accordance with the terms of
the Scheme.
Prior to deciding to combine with ESCT the Board conducted a detailed review
of a number of possible alternative managers, and selected ESCT based on a
number of factors, including its superior past performance record.
Shareholders in the new, materially larger combined entity will benefit from
greater liquidity, lower ongoing costs and an enhanced discount management
policy. Subject to the Scheme becoming effective, ESCT will also adopt a new
dividend policy to target an annual distribution equal to at least 5% of its
prior year end NAV, payable on a quarterly basis (four dividends of 1.25%), to
be paid out of both income and capital returns and reserves. The Board
considers this combination to be in the best interests of continuing
Shareholders.
Further details of the rationale and benefits of the Transaction are set out
in the prior announcement of the Transaction. JHI will continue to manage the
enlarged ESCT's portfolio in accordance with ESCT's existing investment
objective and investment policy.
A circular to Shareholders of the Company, providing details of the Scheme and
convening general meetings to approve the Scheme, together with a prospectus
published by ESCT in respect of the issue of new ESCT shares in connection
with the Scheme, are expected to be published in September 2025. If approved,
the proposals are anticipated to become effective by the end of October 2025.
Fourth Quarter Dividend
The EAT 2025 dividend of 5.52p per share is, barring unforeseen circumstances,
payable in four equal instalments of 1.38p. Three interim dividends have been
paid on 31 January, 30 April and 31 July. Notwithstanding the proposed Scheme,
in order to ensure that the Company's normal dividend paying cycle is
maintained, the Board believe that it is
appropriate to honour its intention to pay a final instalment of 1.38p and
bring forward this payment to September 2025.
The Company is therefore declaring the fourth quarter dividend of 1.38p per
share, which will be paid on 24 September 2025 to shareholders on the register
on 5 September 2025, having an ex-dividend date of 4 September 2025.
Conclusion
The investment outlook across European markets continues to strengthen. The
proposed combination with ESCT represents a highly positive development for
Shareholders, creating an enlarged Trust that is well positioned to capitalise
on the attractive opportunities within the region. The Board wishes to thank
all Shareholders for their ongoing support.
Stuart Paterson
Chair
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 2024.
The principal risks identified in the Report and Accounts for the year ended
31 December 2024 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;
· Service provider failure;
· The sustainability of the Company's dividend policy;
· Geopolitical issues and their impact;
· Regulatory and compliance failure (including ESG reporting); and
· Cyber risk.
Since the publication of the Report and Accounts for the year ended 31
December 2024, the Directors have added execution risk for the proposed
combination with The European Smaller Companies Trust, the Scheme, as a
principal risk.
At present the global economy continues to suffer considerable disruption due
to the war in Ukraine, events in the Middle East, and the threat of US trade
tariffs. 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 2025 is
included within the Chair's Statement.
· The Company has a multi-currency loan with a maximum potential facility
of €60 million with The Royal Bank of Scotland International (London
Branch). As at 30 June 2025 €35.0 million was drawn down, which represents
gearing of 3.9%.
· Note 2 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
14 August 2025
Directors' Statement of Responsibilities in Respect of the Half-Yearly
Financial Report
We confirm that to the best of our 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 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 is a fair review of the principal risks and uncertainties; 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
14 August 2025
Condensed Statement of Comprehensive Income
Half-year ended Half-year ended
30 June 2025 30 June 2024
(Unaudited) (Unaudited)
Revenue Capital Total Revenue Capital Total
£'000s £'000s £'000s £'000s £'000s £'000s
Gains on investments held at fair value through profit or loss - 26,488 26,488 - 14,656 14,656
Foreign exchange gains/(losses) 3 (142) (139) (24) 398 374
Income 6,592 - 6,592 7,447 - 7,447
Management fees (248) (993) (1,241) (261) (1,045) (1,306)
Other expenses (548) (26) (574) (554) (21) (575)
Profit before finance costs and taxation 5,799 25,327 31,126 6,608 13,988 20,596
Finance costs (102) (409) (511) (146) (584) (730)
Profit before taxation 5,697 24,918 30,615 6,462 13,404 19,866
Taxation (542) - (542) (618) - (618)
Profit for the period and total comprehensive income 5,155 24,918 30,073 5,844 13,404 19,248
Earnings per share - pence 1.43 6.92 8.35 1.62 3.73 5.35
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 Other Comprehensive Income
Half-year ended Half-year ended
30 June 2025 30 June 2024
(Unaudited) (Unaudited)
Revenue Capital Total Revenue Capital Total
£'000s £'000s £'000s £'000s £'000s £'000s
Cumulative translation adjustment (35) 12,094 12,059 (276) (7,832) (8,108)
Total other comprehensive income (35) 12,094 12,059 (276) (7,832) (8,108)
The Statement of Other Comprehensive Income has been prepared in accordance
with UK-adopted International Accounting Standard, IAS 21 'The Effects of
Changes in Foreign Exchange Rates'. There is no restatement required to prior
period comparatives as a result of this additional disclosure.
Condensed Statement of Changes in Equity
Cumulative Total
Half-year ended 30 June 2025 Share Capital Distributable Reserve Capital Reserve Revenue Reserve Translation Reserve Shareholders' Funds
(Unaudited) £'000s £'000s £'000s £'000s £'000s £'000s
Balance at 31 December 2024 37,506 266,788 45,000 - (18,685) 330,609
Movements during the half-year ended 30 June 2025
Interim dividends paid - (8,373) - (1,565) - (9,938)
Total comprehensive income - - 24,918 5,155 - 30,073
Total other comprehensive income - - - - 12,059 12,059
Balance at 30 June 2025 37,506 258,415 69,918 3,590 (6,626) 362,803
Half-year ended 30 June 2024
(Unaudited)
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
Total other comprehensive income - - - - (8,108) (8,108)
Balance at 30 June 2024 37,506 273,881 51,419 2,946 (11,238) 354,514
Condensed Statement of Financial Position
30 June 2025 30 June 2024 31 December 2024
(Unaudited) (Unaudited) (Audited)
£'000s £'000s £'000s
Non-current assets
Investments at fair value through profit or loss 377,478 372,735 344,724
Current assets
Other receivables 5,723 2,897 2,502
Derivative financial instruments held at fair value through profit or loss - 252 -
Cash and cash equivalents 15,655 8,538 12,544
Total current assets 21,378 11,687 15,046
Current liabilities
Other payables (5,998) (234) (223)
Derivative financial instruments held at fair value through profit or loss (74) - -
Bank Loan (29,981) (29,674) (28,938)
Total current liabilities (36,053) (29,908) (29,161)
Net current liabilities (14,675) (18,221) (14,115)
Net assets 362,803 354,514 330,609
Capital and reserves
Share capital 37,506 37,506 37,506
Distributable reserve 258,415 273,881 266,788
Capital reserve 69,918 51,419 45,000
Revenue reserve 3,590 2,946 -
Cumulative translation reserve (6,626) (11,238) (18,685)
Total Shareholders' funds 362,803 354,514 330,609
Net Asset Value per ordinary share - pence 100.76 98.46 91.82
Condensed Statement of Cash Flows
Half-year ended Half-year ended
30 June 2025 30 June 2024
(Unaudited) (Unaudited)
£'000s £'000s
Cash flows from operating activities before dividends and interest received (1,750) (1,855)
and interest paid
Dividends received 5,949 7,119
Interest received 108 134
Interest paid (521) (720)
Cash flows from operating activities 3,786 4,678
Investing activities
Purchase of investments (100,097) (61,745)
Sale of investments 109,172 70,451
Derivative financial instruments purchased for future settlement 74 (252)
Other capital expenses (26) (21)
Cash flows from investing activities 9,123 8,433
Cash flows before financing activities 12,909 13,111
Financing activities
Equity dividends paid (9,938) (10,622)
Drawdown of bank loan - 4,301
Cash flows from financing activities (9,938) (6,321)
Net movement in cash and cash equivalents 2,971 6,790
Cash and cash equivalents at the beginning of the period 12,544 2,089
Effect of movement in foreign exchange (139) 374
Translation adjustment 279 (715)
Cash and cash equivalents at the end of the period 15,655 8,538
Represented by:
Cash at bank 22 42
Short term deposits 15,633 8,496
15,655 8,538
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, notwithstanding the material uncertainty
set out below.
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
2024.
2 Material uncertainty in relation to going concern
The Directors note that on 23 June 2025, it was announced that heads of terms
had been agreed for a combination of the Company with The European Smaller
Companies Trust PLC. The combination will be undertaken through a scheme of
reconstruction of the Company under section 110 of the Insolvency Act 1986.
Under the scheme the Company's Shareholders will be entitled to receive new
shares in The European Smaller Companies Trust PLC or to elect for cash which
on an aggregate basis will be limited to 15% of the Company's shares in issue
(excluding treasury shares, if any).
The scheme of reconstruction ("the Scheme") is subject to shareholder approval
and a number of other conditions. If the resolutions approving the Scheme and
placing the Company into liquidation are passed and the other conditions to
the Scheme are satisfied, the Company will not continue as a going concern.
If the resolutions are not passed and/or the other conditions to the Scheme
are not satisfied, the Directors having considered the Company's financial
position, the principal risks, and broader macroeconomic factors are satisfied
that the Company could continue in operational existence for at least 12
months from the date of approval of these financial statements.
In coming to this conclusion, 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, and the threat of US trade tariffs and the
Directors have given careful consideration to the consequences for this
Company.
The Company has a multi-currency loan with a maximum potential facility of
€60.0 million with Royal Bank of Scotland International (London Branch). As
at 30 June 2025 €35.0 million (£30.0 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 13 August 2025, the latest practicable date before the publication of
this report, borrowings amounted to €35 million (£30 million). This is in
comparison to a Net Asset Value of €428 million (£369 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 2025 the Company had a Distributable
Reserve of £258.4 million.
The Company's ability to continue as a going concern is dependent upon whether
Shareholders support the resolutions approving the proposed Scheme and
subsequent liquidation. This approval is not guaranteed and therefore
indicates that a material uncertainty exists that may cast doubt on the
Company's ability to continue as a going concern.
Based on this assessment, the Directors consider that, although there is a
material uncertainty due to the upcoming Shareholder votes in respect of the
Scheme, the Company would otherwise remain a going concern for a period of at
least 12 months from the date of approval of these financial statements and
have therefore prepared them on a going concern basis. The financial
statements do not include any adjustments that would result from the basis of
preparation being inappropriate.
3 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 Half-year ended
30 June 2025 30 June 2024
£'000s £'000s
Revenue return 5,155 5,844
Capital return 24,918 13,404
Total return 30,073 19,248
Number Number
Weighted average ordinary shares in issue 360,069,279 360,069,279
Earnings per share - pence 8.35 5.35
4 Results
The results for the half-year ended 30 June 2025 and 30 June 2024, 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
2024; 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 2024
are an extract from those accounts.
5 Half-yearly report and accounts
The report and accounts for the half-year ended 30 June 2025 will be made
available on the website www.europeanassets.co.uk shortly.
By order of the Board
Columbia Threadneedle Investment Business Limited, Secretary
6th Floor, Quartermile 4, 7a Nightingale Way, Edinburgh EH3 9EG
14 August 2025
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