REG - European Opps. Trust - Annual Financial Report
15/08/2025 07:00
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RNS Number : 4087V European Opportunities Trust PLC 15 August 2025
European Opportunities Trust plc (the 'Company')
Legal Entity Identifier: 549300XN7RXQWHN18849
Annual results for the year ended 31 May 2025
Highlights
· Net asset value total return of (3.7)% and share price total
return of (0.9)% for the financial year, compared with a total return of 8.0%,
for the Company's Benchmark, the MSCI Europe index.
· Since the year end the net asset value increased by 5.9% to
1,026p as at 31 July. This compares with a total return of 1.5% for the
Benchmark.
· Annual dividend of 2.0p per share payable on 28 October 2025
(2024:2.0p).
· Discount of 7.5% on at the financial year end (2024: 10.2%).
· 25% tender offer implemented in June 2025. Potential for a
further 25% tender offer, conditional upon performance, following the
continuation vote at the 2026 AGM.
· Reduction in management fees to 0.65% on the first £400m of net
assets, 0.60% on next £200m and 0.55% on excess above £600m agreed with
effect from 1 October 2025.
· Potential benefits for shareholders from the proposed merger of
Devon Equity Management Limited with River Global PLC.
31 May 2025 31 May 2024 % change
Net asset value per share (pence) 968.89 1,008.48 (3.9)%
Net asset value total return (3.7)%
Middle market share price (pence) 896.00 906.00 (1.1)%
Share price total return (0.9)%
MSCI Europe index, total return in GBP (Benchmark) 8.0%
Dividend per share (pence) in respect of financial year 2.0 2.0
Discount to net asset value at year end (%) (7.5) (10.2)
Ongoing charges ratio (%) 0.98 0.97
( )
Chair's Statement
I present the Company's twenty-fifth Annual Report and Accounts since launch,
covering the twelve months ended 31 May 2025.
During the period under review, the total return on the net asset value per
share of the Company was (3.7)% (with dividends reinvested). This compares
with the total return (again reflecting dividends reinvested) of 8.0% from our
Benchmark, the MSCI Europe index in GBP, and the total return on the price of
the Company's shares of (0.9)% during the same period.
Since the year end, and on a more pleasing note, the net asset value per share
has increased by 5.9% to 1,026.0p (as at 31 July 2025), outperforming the
Benchmark which increased by 1.5% over that period. The market price of the
Company's shares on that date was 937.0p, an increase of 4.6% since the
financial year end.
Whilst the Company's NAV total return has outperformed our Benchmark since
inception, its three, five and ten year NAV total returns are below the
Benchmark. The Board is acutely aware of the disappointment this entails for
shareholders. Through engagement with the Investment Manager, the Board is
persuaded that the consistency of commitment to a differentiated, high
conviction approach will be vindicated in the longer term. We are also
cognisant that shareholders will have an opportunity to vote on the
continuation of the Company at the Annual General Meeting to be held in 2026,
in accordance with the Company's articles of association.
Our Investment Manager's explanation of the contributors and detractors to
recent performance are set out below.
Tender Offer
As mentioned above, shareholders will have the opportunity to vote on the
continuation of the Company within the next 18 months. However, in view of
recent performance, the Board felt it appropriate to offer shareholders an
interim opportunity to realise part of their investment at close to NAV.
Consequently, on 7 February 2025, we announced that the Company would
undertake a tender offer for up to 25% of its issued share capital. The tender
offer was approved by shareholders at a General Meeting held on 3 June and was
concluded on 18 June. The effect of the tender offer was to reduce the
Company's net assets under management to £463 million as at the end of June.
This tender offer was in addition to the previously announced performance
related tender offer to be made as soon as is practicable after the Annual
General Meeting in 2026 if the Company's net asset value total return does not
equal or exceed the Benchmark total return over the three-year period
beginning 1 June 2023 and ending on 31 May 2026. The Company's performance
since 1 June 2023 is currently behind the Benchmark.
River Global PLC and our Investment Manager
It was announced on 30 June 2025 that our Investment Manager, Devon Equity
Management Limited, had entered into heads of terms to merge its business with
River Global PLC. The proposals are subject to contract and regulatory consent
from the FCA. Your Board has had extensive discussions with the senior
management of both River Global PLC and Devon to understand fully the
rationale and implications of the proposed combination. We thank them for the
time taken to respond to our enquiries. After careful consideration and having
received feedback from some shareholders, we take a positive view of the
proposal based on River Global's commitment to Investment Trusts, the expanded
portfolio management and analyst resource and the enhanced marketing and
distribution capability. We have also received reassurance of the continued
commitment of key staff at Devon and that the underlying investment philosophy
and process will be retained.
Revised Management Fee
The Board reviews the Company's management fee structure with the Investment
Manager each year to ensure that the terms of the fee are competitive and
reasonable for shareholders. I am pleased to inform shareholders that,
irrespective of the outcome of the ongoing negotiations between Devon and
River Global described above, the Board and the Investment Manager have agreed
a reduced management fee to become effective from 1 October 2025. Under the
new arrangements, Devon will be entitled to 0.65% per annum on net assets up
to £400 million; 0.60% per annum on any net assets between £400 million and
£600 million and 0.55% per annum on any net assets above £600 million.
Previously Devon was entitled to 0.80% per annum on any net assets up to £1
billion; 0.70% per annum on any net assets over £1 billion up to £1.25
billion; and 0.60% per annum on any net assets above £1.25 billion.
Annual dividend
The Company's investment objective is to achieve shareholder returns primarily
through capital growth. Accordingly the Board does not impose a specific
income objective on the Investment Manager in the management of the portfolio.
Consequently the revenue per share, and therefore the dividends paid, have
fluctuated from year to year.
The Board's policy is to propose an annual dividend which is at least
sufficient to enable the Company to maintain its investment trust status with
HMRC. It has generally (but not exclusively) been the Board's practice to pay
a dividend covered by the revenue return per share of the year to which it
pertains. However, in view of the importance of income to many shareholders
and the Company's ample revenue reserves, the Board has decided to recommend a
final dividend of 2.0p (unchanged on 2.0p paid in 2024).
The ability to fund dividend payments out of revenue reserves is one of the
key advantages of investment trusts which, in contrast with open-ended funds
such as OEICs, can hold back some of the income generated in good years,
thereby building up revenue reserves that can be used to supplement dividends
during periods of lower revenue returns.
The dividend will be proposed at the Annual General Meeting and will be
payable on 28 October to shareholders on the Register of Members on 3 October
(the Record Date). The ex-dividend date is 2 October 2025.
A dividend reinvestment plan is available from the Company's registrars, MUFG
Corporate Markets, to shareholders who wish to re-invest their dividends in
the shares of the Company.
Discount management
The discount on the Company's shares was 7.5% at the year end (2024: 10.2%),
which compares with the average discount on that date of 5.4% for the
Company's peers in the AIC Europe sector. The average discount on the
Company's shares over the year was 10.7% (2024: 10.2%).
The Board has an active discount management policy, the primary purpose of
which is to reduce discount volatility. The Board seeks to maintain the
discount in single digits in normal market conditions. Buying shares at a
discount also results in a small enhancement to the NAV per continuing share.
A total of 2,879,195 shares were repurchased during the period under review,
with an aggregate value of £24.5 million. No further shares have been
repurchased since the financial year end aside from those repurchased in the
Tender Offer referred to above.
The Board believes that the Company should retain the power to buy back shares
during the current financial year and is therefore seeking to renew the annual
authority to repurchase up to 14.99% of the Company's shares in issue at the
forthcoming Annual General Meeting. The Board's current powers to buy back
shares, last renewed at the general meeting held on 3 June, expire at the
Annual General Meeting.
Gearing
The Board believes that borrowing can enhance returns to investors over the
long-term. The Board monitors the level of the Company's gearing carefully on
an ongoing basis and the level of gearing at any given time is a reflection of
the Investment Manager's confidence in identifying attractive investment
opportunities at the point of drawdown or renewal.
In August 2025, the Company renewed its longstanding multi-currency revolving
credit facility with The Bank of Nova Scotia, London Branch with a maximum
drawable amount of £70 million available until September 2026 (reduced from
£85 million in 2024/25), with credit approval for an additional `accordion'
amount available upon application for a further £50 million (unchanged on the
previous year). There was £70 million drawn down as at 31 May 2025, reduced
to £55 million as of the date of this report.
Directors' performance evaluation and annual re-elections
In order to review the effectiveness of the Board, its Committees and the
individual Directors, the Board has recently commissioned a formal independent
appraisal by an external consultant, Cyclico. Whilst the review, which
concluded in June, resulted in a number of minor operational recommendations
for the Board, the overall conclusion was that the Board as a whole, and its
Committees, were functioning effectively.
The Board considers that a tri-annual external appraisal process is a
constructive means of evaluating the contribution of individual Directors,
identifying ways to improve the functioning and performance of the Board and
its committees, building on collective strengths and identifying any training
needs.
In accordance with the UK Corporate Governance Code, all Directors who have
held office during the financial year are offering themselves for re-election
at the forthcoming Annual General Meeting.
I would like to thank my fellow Directors for their diligence and dedication
on your behalf over the last year.
Shareholder engagement
The Board believes that shareholder engagement is extremely important and aims
to maintain an open dialogue with shareholders. Over the course of the year,
we have continued to engage with a range of our shareholders representing in
aggregate the majority of the share register. The Board values the feedback it
has received and insights it has gained through the engagement process and we
thank the shareholders for their valuable contributions. We remain committed
to continued engagement with all shareholders.
2025 Annual General Meeting
The Company's Annual General Meeting will be held at 11:00 am on Wednesday, 8
October 2025.
I would like to take the opportunity to remind shareholders that they have the
right to attend and vote on matters that affect the Company. It is an
important aspect of an investment trust that shareholders can and are
encouraged to make their voices heard by voting on key business matters.
The Directors consider that all resolutions to be put to shareholders are in
their and the Company's best interests as a whole, and recommend that
shareholders vote in their favour.
In addition to the formal business, Alexander Darwall will provide a
presentation to shareholders on the performance of the Company over the past
year as well as an outlook for the future.
Should shareholders have questions for the Board or the Investment Manager, or
any queries as to how to vote, they are welcome, as always, to submit them by
email to enquiries@devonem.com or call 020 3985 0445.
Outlook
European equities are performing relatively well compared with the US equity
market this year. Trump turmoil has made European equities look relatively
attractive. This, together with lower oil and gas prices (a particular
positive for Europe), make for an encouraging backdrop for the Company's
investment strategy.
We acknowledge that the Company's returns relative to our Benchmark have been
below par in recent years but, albeit short term, we are pleased to note that
there have been some signs of recovery in the Company's performance in recent
months. As we approach the three yearly continuation vote at next year's
Annual General Meeting we will continue to keep the Company's performance, and
our Investment Manager, under close review on your behalf.
Your Board and I would like to express our thanks to all of our shareholders
for their continuing support.
Matthew Dobbs
Chair
14 August 2025
Investment Manager's Review
The total return on the net asset value of the Company's shares was (3.7)%
during the twelve months to 31 May 2025. This compares with a total return of
8.0% from our Benchmark, the MSCI Europe index in GBP.
Portfolio Review
Our portfolio, a collection of European companies which compete successfully
worldwide, has obvious advantages: a bigger global opportunity than one
restricted to Europe only and global success providing validation of our
companies' products and services. Whilst this strategy is challenged by the
policies of the Trump administration, we are well positioned to cope with US
tariffs as our companies typically provide services or have US based
operations, in both cases avoiding the worst effects of tariffs. However, we
must acknowledge that our strategy does not have a place for mainstream
financials, a strongly performing sector, which explains in part at least,
our disappointing performance.
Themes in the portfolio include 'productivity' (through technology advances);
'disruption' (through technology and new business models); 'defence'; and
'electrification'. The productivity plays include healthcare companies like
Novo Nordisk and Camurus where successful clinical trials and, in the case of
Camurus, significant new deals vindicate our confidence in their technology.
Companies like Wise and Ryanair continue to disrupt industries where
incumbents are handicapped by their legacy systems. Our defence holdings are
plays on the acknowledged need to increase spending. As for electrification,
as part of that the transition to the 'electric economy', demand for natural
gas is rising. GTT in providing engineering services to Liquified Natural Gas
carriers is a clear beneficiary of this trend. Other 'winners' in the electric
economy include Prysmian, a leading supplier of electric cables, and Infineon,
the world leader in power semiconductors.
Performance
We discuss the key contributors and detractors below.
Top five contributors
Price performance 12 months to 31 May 2025 (%)
Portfolio weight as at 31 May 2025 (%) Benchmark weight as at 31 May 2025 (%) Relative contribution to portfolio return* (%)
Security
Deutsche Bӧrse 7.3 0.4 54.6 3.3
RELX 7.7 0.8 18.8 1.4
Gaztransport & Technigaz 3.7 0.0 26.7 1.1
Thales 1.6 0.2 61.2 0.9
Genus 5.2 0.0 13.5 0.9
The biggest positive contributor to our performance in the period under review
was Deutsche Börse. Turmoil in financial markets tend to be good for the
company and there has been turmoil in abundance. Management had the foresight
to invest substantially over recent years and the company is now enjoying the
fruits of that strategy. RELX continued to contribute to returns as the
company reports higher growth rates on the back of its use of artificial
intelligence (AI). GTT shares gained, steadily matching increasing demand for
their natural gas related engineering services. Thales, BAE Systems and
Exosens, three defence companies, all performed well. The prospect of
multi-year increases in European and international defence spending provides
good earnings visibility. Shares in Genus also contributed following the FDA's
approval for their unique gene editing technology. This is potentially
transformational for the company's prospects although it will take time to see
the full benefits. bioMérieux was another positive contributor, as it
continued to build on its leading position in in vitro diagnostics.
Top five detractors
Price performance 12 months to 31 May 2025 (%)
Portfolio weight as at 31 May 2025 (%) Benchmark weight as at 31 May 2025 (%) Relative contribution to portfolio return* (%)
Security
Novo Nordisk 10.4 3.0 (50.8) (6.7)
Edenred 4.7 0.1 (35.6) (2.0)
Worldline 1.2 0.0 (58.3) (0.9)
Dassault Systèmes 7.3 0.2 (11.5) (0.8)
Oxford Instruments 2.4 0.0 (27.9) (0.8)
* Price performance and relative contribution to portfolio returns have been
calculated on a total return basis by reference to each portfolio transaction.
Over the period from close on 31 May 2024 to 31 May 2025. These calculations
include the impact of foreign currency rates and are based on Bloomberg
securities and FX pricing sources and Bloomberg's estimation of the
portfolio's total market value. Relative contribution to portfolio return is
measured against the MSCI Europe total return index in GBP. Source: Devon,
Bloomberg.
The standout detractor from our performance was Novo Nordisk. Competitive
developments in the burgeoning market for anti-obesity drugs explain the sharp
fall in the share price. Whilst Novo Nordisk was the trail blazer with their
GLP-1 drugs, such is the scale of the market opportunity that many new
entrants have been attracted to this space: the stockmarket's concern is that
their 'first mover advantage' is not an enduring advantage. Recent clinical
trial results from their 'next generation' drug underwhelmed investors.
However, on both points we are more positive. The anti-obesity opportunity is
vast and the diverse needs of the patient population means that many different
drugs will be required. Novo Nordisk has many advantages including a strong
portfolio of drugs and a strong pipeline, with good 'real world' performance,
huge scale and attendant economies, and global reach. Edenred shares fell
sharply as the threat of regulatory changes in their key markets unsettled
investors. Edenred has navigated previous changes successfully and, for as
long as employee benefits remain part of governments' policies (and all the
signs are positive), we expect the company to build on its excellent record.
Worldline has been a bad investment; our analysis was wrong, and we have since
sold the holding. Another detractor was Dassault Systèmes. The company has
reported lower growth rates as their main customer base, the automotive
industry, reacted to the 'tariff turmoil' by pausing investment. The company's
CAD/CAM (computer aided design and manufacture) offering is compelling, and we
remain confident that the company has a bright future. Oxford Instruments
shares drifted on little news other than a concern that they would suffer from
US tariffs. Of the other detractors we note ICG, the private equity and debt
company. Results have been good with strong fund raising underpinning a
confident outlook.
Portfolio Activity
During the period under review, we raised approximately £38.3 million net
cash. We sold £137.6 million of stocks and reinvested £99.3 million,
representing a turnover ratio of 20% of the Company's average net assets
during the year (2024: 71%). We increased the number of holdings from 27 to
28. There were four new investments and three complete sales during the period
under review.
The biggest complete sale from the portfolio in the period was Darktrace,
which was taken over by an American private equity company. We reduced the
weighting of Deutsche Börse on the back of good performance. We sold the
entirety of the holding in S.O.I.T.E.C. because their unique semiconductor
wafer technology failed to gain traction in new areas. We also reduced the
weighting in RELX, again, on the back of good performance. In addition, we
lightened the holding in Novo Nordisk, recognising that it was an outsized
weighting.
We established four new positions: Universal Music Group (UMG), Exosens, Wise
and VAT Group.
UMG, as the owner of a huge catalogue of recorded music, benefits from digital
technology which enables them to monetise their assets better. Exosens, a
manufacturer of night vision goggles, is a play on increasing defence
spending. Wise, a London based global payments technology company, is building
a world leading FX platform for cross- border movements of money. VAT Group, a
Swiss technology company, is a key supplier to the growing semiconductor
industry. We increased positions in Edenred and Genmab on share price
weakness; we bought more shares in Genus as the FDA's approval of their gene
editing technology transforms their prospects.
Outlook
Two factors, capricious policy making by the Trump administration, and the
impact of wars in Eastern Europe and Middle East, overshadow the near-term
outlook.
As to the first, we are confident that most of our companies can avoid the
worst effects of tariffs. With its tariff policy, the Administration is
encouraging international companies to do more in America. Oil prices have
climbed in response to worsening conflicts around the world but are not yet at
levels that are thought to damage economic growth to any great extent.
The disruption to the US economy from the tariff policies is the prime reason
why asset allocators are turning their attention, and funds, away from US
equities to European equities again after years of neglect. Further, Germany's
strong fiscal position stands in stark contrast to the dire US public
finances. This allowed Germany to amend its constitutional debt brake thereby
permitting the government to spend more on defence and security. Defence
spending is expected to increase rapidly, reaching 3.5% of GDP in 2029. At the
same time it created a new €500 billion fund for additional infrastructure
investment. This stimulus will be felt throughout Europe and underpins a much
more encouraging medium-term outlook.
The longer-term case for our strategy rests on our conviction that our
companies will continue to benefit from growing global demand for their
products and services. We try to identify companies that provide critical
goods or services and where they have a good degree of pricing power. In such
cases, we believe these companies can enjoy good demand growth, neutralising
the worst of any potential tariff effects. Moreover, many of our companies
reported breakthrough developments in recent months, paving the way for
transformational profits growth. Genus, Camurus and Novo Nordisk have all
reported clinical trials and approvals that will lead to significant profits;
Infineon is increasing its design 'wins' in the Chinese automotive market,
again, giving good visibility to significant profits growth; and Dassault
Systèmes has launched its AI product which should boost its earnings power
considerably.
Typically, our companies also have less debt than most European listed
companies, which we regard as prudent.
Our collection of 'special' companies, ones that can thrive in a range of
economic scenarios, is well set to reap the rewards of their efforts. In a
range of activities we have companies that are well positioned to succeed in
their particular areas of activity, and this gives us great confidence for the
future.
Alexander Darwall
Devon Equity Management Limited
14 August 2025
Investment Activity
During the year ended 31 May 2025
Value at 31 May 2024 Value at 31 May 2025
Security % of Portfolio Purchases Change* in Value £'000 £'000 % of Portfolio
£'000 £'000 Sales
£'000
Deutsche Bӧrse 42,863 6.0 - (20,072) 21,501 44,292 6.9
RELX 54,652 7.7 - (14,805) 8,117 47,964 7.4
Gaztransport Et Technigaz 19,920 2.8 6,972 (5,490) 6,160 27,562 4.3
Thales 9,944 1.4 - - 5,813 15,757 2.4
Genus 33,799 4.8 5,688 - 5,327 44,814 7.0
bioMérieux 22,749 3.1 2,871 (2,475) 4,789 27,935 4.3
BAE Systems 6,957 1.0 5,307 - 4,374 16,638 2.6
Exosens - - 2,513 (678) 2,887 4,722 0.7
CTS Eventim 5,450 0.8 4,396 - 2,820 12,666 2.0
Universal Music Group - - 9,633 - 2,132 11,765 1.8
Ryanair Holdings 19,585 2.8 2,258 - 1,851 23,694 3.7
Wise - - 7,223 - 1,569 8,792 1.4
Experian 46,891 6.6 3,631 (3,942) 1,416 47,996 7.4
Air Liquide 6,923 1.0 2,958 - 791 10,672 1.7
Grenke 6,660 0.9 - (7,307) 647 - 0.0
Grenke (preference shares) 2,936 0.4 51 - 274 3,261 0.5
Darktrace 31,767 4.5 - (31,927) 160 - 0.0
Grifols 21,761 3.4 - - 46 21,807 3.4
VAT Group - - 4,225 - 7 4,232 0.7
BE Semiconductor - - 4,395 (4,340) (55) - 0.0
BFF Bank 7,403 1.0 508 - (76) 7,835 1.2
Prysmian 26,081 3.7 3,797 - (1,488) 28,390 4.4
Yubico - - 3,986 (2,495) (1,491) - 0.0
Camurus 23,941 3.2 4,042 (2,012) (1,791) 24,180 3.8
Bachem 6,906 1.0 501 - (2,369) 5,038 0.8
Infineon Technologies 32,898 4.6 329 (4,310) (2,393) 26,524 4.1
S.O.I.T.E.C. 19,786 2.8 - (17,129) (2,657) - 0.0
Genmab 8,871 1.2 5,802 - (3,336) 11,337 1.8
Intermediate Capital Group 39,270 5.5 - (2,015) (5,159) 32,096 5.0
Oxford Instruments 18,659 2.6 661 (2,093) (5,486) 11,741 1.8
Dassault Systèmes 52,111 7.3 736 (1,622) (6,095) 45,130 7.0
Worldline 8,782 1.2 3,980 - (6,372) 6,390 1.0
Edenred 31,553 4.5 9,593 - (14,292) 26,854 4.2
Novo Nordisk 100,780 14.2 3,207 (14,898) (44,846) 44,242 6.9
Total Investment 709,898 100 99,262 (137,607) (27,227) 644,326 100
* Change in value reflects the value of the holding at the end of the period
less the value at the beginning of the period less the net effect of trading
activity during the year.
Income Statement
for the year ended 31 May 2025
Year ended Year ended
31 May 2025 31 May 2024
Revenue Capital Total Revenue Capital Total
Notes £'000 £'000 £'000 £'000 £'000 £'000
(Loss)/gain on investments - (27,227) (27,227) - 99,737 99,737
Other currency gain/(loss) - 153 153 - (80) (80)
Income from investments 2 9,878 - 9,878 11,573 - 11,573
Other income 2 51 - 51 84 - 84
Total income 9,929 (27,074) (17,145) 11,657 99,657 111,314
Investment management fee (4,903) - (4,903) (6,409) - (6,409)
Other expenses 3 (1,034) (7) (1,041) (1,359) (1,466) (2,825)
Total expenses (5,937) (7) (5,944) (7,768) (1,466) (9,234)
Net return before finance costs and taxation 3,992 (27,081) (23,089)
3,889 98,191 102,080
Finance costs 4 (4,022) - (4,022) (2,735) - (2,735)
Return on ordinary activities before taxation (30) (27,081) (27,111)
1,154 98,191 99,345
Taxation 5 (807) - (807) (897) - (897)
Net return after taxation* (837) (27,081) (27,918) 257 98,191 98,448
Earnings per ordinary share (basic and diluted) 6 (1.32)p (42.76)p (44.08)p
0.30p 113.08p 113.38p
* There is no other comprehensive income and therefore the 'Net return after
taxation' is the total comprehensive income for the financial year.
The total column of this statement is the income statement of the Company,
prepared in accordance with UK adopted International Accounting Standards.
The supplementary revenue return and capital return columns are both prepared
under guidance produced by the Association of Investment Companies (AIC). All
items in the above statement derive from continuing operations.
No operations were acquired or discontinued during the year.
Statement of Financial Position
as at 31 May 2025
2025 2024
£'000 £'000
Fixed Assets
Investments 644,326 709,898
Current assets
Debtors 5,280 2,882
Cash and cash equivalents 25,444 5,615
30,724 8,497
Total assets 675,050 718,395
Current liabilities
Creditors - amounts falling due within 1 year (72,277) (61,957)
Total assets less current liabilities 602,773 656,438
Capital and reserves
Called up share capital 888 888
Share premium 204,133 204,133
Special reserve 33,687 33,687
Capital redemption reserve 286 286
Reserves 363,779 417,444
Total shareholders' funds 602,773 862,938
Net asset value per ordinary share 968.89p 1,008.48p
Statement of Changes in Equity
For the year ended 31 May 2025
For the year ended Notes Share capital Share premium Special reserve Capital redemption reserve Reserves Total
31 May £'000 £'000 £'000 £'000 £'000 £'000
2025
Balance as at 1 June 2024 888 204,133 33,687 286 417,444 656,438
Net return after taxation - - - - (27,918) (27,918)
Repurchase of shares into treasury - - - - (24,482) (24,482)
Dividends declared and paid* 7 - - - - (1,265) (1,265)
Balance at 31 May 2025 888 204,133 33,687 286 363,779 602,773
For the year ended Share capital Share premium Special reserve Capital redemption reserve Reserves Total
31 May Notes £'000 £'000 £'000 £'000 £'000 £'000
2025
Balance as at 1 June 2023 1,129 204,133 33,687 45 623,944 862,938
Net return after taxation - - - - 98,448 98,448
Repurchase of shares into treasury - - - - (79,450) (79,450)
Repurchase of shares for cancellation - -
(241) 241 (222,123) (222,123)
Dividends declared and paid* 7 - - - - (3,375) (3,375)
Balance at 31 May 2024 888 204,133 33,687 286 417,444 656,438
* Dividends paid during the financial year were paid out of revenue reserves.
Cash flow statement for the year ended 31 May 2025
Notes 2025 2024
£'000 £'000
Cash flows from operating activities
Investment income received (gross) 9,826 12,086
Deposit interest received 51 84
Investment management fee (4,994) (7,084)
paid
Other cash expenses (1,267) (1,225)
Net cash inflow from operating activities before taxation and 3,616
interest 3,861
Interest paid (3,339) (3,309)
Overseas tax incurred (880) (796)
Net cash outflow from operating activities (603) (244)
Cash flows from investing activities
Purchases of investments (99,262) (280,274)
Sales of investments 135,295 605,717
Net cash inflow from investing activities 36,033 325,443
Cash flows from financing activities
Repurchase of shares into treasury (24,482) (84,491)
Repurchase of shares for cancellation - (222,123)
Tender (7) (1,466)
cost
Equity dividends paid 7 (1,265) (3,375)
Repayment of (20,000) (75,000)
loan
Drawdown of 30,000 60,000
loan
Net cash outflow from financing activities (15,754) (326,455)
Increase/(decrease) in cash 19,676 (1,256)
Cash and cash equivalents at start of year 5,615 6,951
Realised gain/(loss) on foreign currency 153 (80)
Cash and cash equivalents at end of year 25,444 5,615
Selected notes to the Financial Statements
1. Material Accounting Policies
The Accounts comprise the financial results of the Company for the year to 31
May 2025. The functional and reporting currency of the Company is pounds
sterling because that is the currency of the prime economic environment in
which the Company operates. The Accounts were authorised for issue in
accordance with a resolution of the Directors on 14 August 2025. All values
are rounded to the nearest thousand pounds (£'000) except where indicated.
The Accounts have been prepared in accordance with UK-adopted International
Accounting Standards and the requirements of the Companies Act 2006.
Where presentational guidance set out in the Statement of Recommended Practice
for Investment Trusts issued by the Association of Investment Companies in
April 2021 (the 'AIC SORP') is consistent with the requirements of UK-adopted
International Accounting Standards in conformity with the Companies Act 2006,
the Directors have sought to prepare the financial statements on a basis
compliant with the recommendations of the AIC SORP. The Accounts have also
been prepared in accordance with the Disclosure and Transparency Rules issued
by the Financial Conduct Authority. The Accounts have been prepared under the
historic cost convention, modified by revaluation of financial assets and
financial liabilities held at fair value through profit and loss. The
accounting policies have been consistently applied throughout the year ended
31 May 2025 and in the prior year other than where new policies have been
adopted.
The Board continues to adopt the going concern basis in the preparation of the
financial statements.
(a) Segmental reporting
The Company is engaged in a single segment business and, therefore, no
segmental reporting is provided.
(b) Income recognition
Ordinary dividends from investments are recognised when the investment is
quoted ex-dividend on or before the date of the Statement of Financial
Position. All overseas dividend income is disclosed net of withholding tax.
Ordinary dividends receivable from equity shares are taken to the revenue
return column of the Income Statement.
Deposit and other interest receivable are accounted for on an accruals basis.
These are classified within operating activities in the Cash Flow Statement.
Special dividends are reviewed on a case by case basis to determine if the
dividend is to be treated as revenue or capital.
(c) Presentation of Income Statement
In order to better reflect the activities of an investment trust company and
in accordance with guidance issued by the Association of Investment Companies
(AIC), supplementary information which analyses the Income Statement between
items of a revenue and capital nature has been presented. In accordance with
the Company's Articles of Association, net capital returns may not be
distributed by way of dividend. An analysis of reserves broken down into
revenue (distributable) items, and capital (non-distributable) items is given
in Note 13.
(d) Basis of valuation of investments
Investments are recognised and derecognised on a trade date where a purchase
or sale of an investment is under contract whose terms require delivery of the
investment within the timeframe established by the market concerned.
Investments are included initially at fair value which is taken to be their
cost, excluding expenses incidental to purchase which are written off to
capital at the time of acquisition.
All investments are classified as held at fair value through profit or loss.
All investments are measured at fair value with changes in their fair value
recognised in the Income Statement in the period in which they arise. The fair
value of listed investments is based on their quoted bid price at the
reporting date without any deduction for estimated future selling costs.
Foreign exchange gains and losses on fair value through profit or loss
investments are included within the changes in the fair value of the
investment.
For investments that are not actively traded and/or where active stock
exchange quoted bid prices are not available, fair value is determined by
reference to a variety of valuation techniques.
These techniques may draw, without limitation, on one or more of: the latest
arm's length traded prices for the instrument concerned; financial modelling
based on other observable market data; independent broker research; or the
published accounts relating to the issuer of the investment concerned.
(e) Cash and cash equivalents
Cash comprises cash in hand and demand deposits. Cash equivalents are
short-term, highly liquid investments that are readily convertible to known
amounts of cash and that are subject to insignificant risks of changes in
value.
(f) Foreign currencies
Transactions in currencies other than pounds sterling are recorded at the
rates of exchange prevailing on the dates of the transactions. At the
reporting date, monetary assets and liabilities that are denominated in
foreign currencies are retranslated at the rates prevailing on that date.
Non-monetary assets and liabilities carried at fair value that are denominated
in foreign currencies are translated at the rates prevailing at the date when
the fair value was determined. Gains and losses arising on retranslation are
included in the Income Statement with the revenue or capital column depending
on the nature of the underlying item.
(g) Borrowing and finance costs
Interest bearing bank loans and overdrafts are recorded at the proceeds
received, net of direct issue costs and subsequently measured at amortised
cost.
* Interest on the loan facility is accrued at the rate contractually agreed with
the lender.
* Bank interest is recognised in the Income Statement in the period in which it
is incurred.
* All finance costs are directly charged to the revenue column of the Income
Statement.
(h) Expenses
Expenses are accounted for on an accruals basis. Management fees,
administration and other expenses are charged fully to the revenue column of
the Income Statement. Expenses which are incidental to the purchase or sale of
an investment are charged to capital, along with any foreign exchange gains
and losses.
In accordance with the AIC SORP, the Board has allocated all expenses, other
than expenses incidental to purchase or sale of investments and issue costs,
to revenue. Tender offer related costs are charged to capital. The Board will
keep the allocation of expenses under review.
(i) Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax. All tax costs are charged to revenue.
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the Income Statement because it
excludes items of income or expense that are taxable or deductible in other
periods and it further excludes items that are never taxable or deductible.
The Company's liability for current tax is calculated using tax rates that
have been enacted or substantively enacted by the date of the Statement of
Financial Position.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the Accounts and the
corresponding tax bases used in the computation of taxable profit, and is
accounted for using the balance sheet liability method. Deferred tax
liabilities are generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is probable that
taxable profit will be available against which deductible temporary
differences can be utilised.
Investment trusts which have approval under Section 1158 of the Corporation
Tax Act 2010 are not liable for taxation of capital gains.
Irrecoverable VAT is included in the expense on which it has been suffered.
Recoverable VAT is calculated using the partial exemption method based on the
proportion of zero rated supplies to total supplies.
(j) Future accounting developments
At the date of authorisation of the financial statements, there are no future
amendments to the UK adopted International Accounting Standards (IAS) and
interpretations are considered to be relevant to the Company.
(k) Significant accounting judgements, estimates and assumptions
Management have not applied any significant accounting judgements, estimates
and assumptions which would have a significant impact on this set of Accounts
or those of the prior financial year.
In preparing these Accounts, the Directors have considered the impact of
climate change as an emerging risk and have concluded that there was no
further impact of climate change to be considered as the investments are
valued based on market pricing. In line with UK adopted International
Accounting Standards the investments are valued at fair value, which for the
Company are the bid prices quoted on the relevant stock exchange at the date
of the Statement of Financial Position and therefore reflect market
participants' views of climate change risk on the investments held.
2. Income
Year ended 31 May 2025 Year ended 31 May 2024
Income from investments
Dividends from United Kingdom companies 3,199 3,794
Dividends from overseas companies 6,679 7,779
Other income
Deposit interest 51 84
9,929 11,657
3. Other expenses*
Description Year ended 31 May 2025 (£'000) Year ended 31 May 2024 (£'000)
Auditors' remuneration 57 55
VAT on Auditors' remuneration 11 11
Subtotal 68 66
Directors' remuneration 188 188
Administration fees 157 183
Safe custody charges 54 73
Legal and professional fees 45 97
Registrar's fee 40 70
Brokerage fees 73 61
Other professional fees 176 219
Depository's fee 117 144
FCA fees 40 31
Printing & publication of reports to shareholders 26 20
Other administrative expenses 50 207
Subtotal 1,034 1,293
Tender related cost** 7 1,466
Total 1,041 2,825
* Each including VAT where applicable, other than Auditor's remuneration.
There were no non-audit fees payable in the years to 31 May 2025 and 31 May
2024.
** Tender offer implemented in 2024, unrelated to the tender offer described
in the Chair's statement.
4. Finance Costs
Description Year ended 31 May 2025 (£'000) Year ended 31 May 2024 (£'000)
Interest on short-term loan 3,894 2,616
Commitment fees 123 117
Bank charges 5 2
Total 4,022 2,735
All finance costs are charged to revenue.
5. Taxation
(a) Analysis of charge in year Year ended 31 May 2025 (£'000) Year ended 31 May 2024 (£'000)
Foreign tax incurred 807 897
(b) Factors affecting current tax charge for the year
The tax charge for the period is higher than (2024: lower) the Company's
applicable rate of corporation tax of 25.0% (2024: 25.0%). The calculation of
the tax charge is set out below:
Year ended 31 May 2025 (£'000) Year ended 31 May 2024 (£'000)
Net return before taxation (27,111) 99,345
Corporation tax at 25.0% (2024: 25.0%) (6,777) 24,836
Effects of:
Tax free capital (loss)/gain in investments 6,768 (24,914)
Exempt dividend income (2,470) (2,893)
Foreign tax incurred 807 897
Excess expenses for the year 1,986 2,809
Disallowed interest 493 162
Total tax charged for the year 807 897
Due to the Company's status as an investment trust and the intention to
continue meeting the conditions required to obtain approval in the foreseeable
future, the Company has not provided deferred tax on any capital gains and
losses arising on the revaluation or disposal of investments.
There is an unrecognised deferred tax asset of £40 million (2024: £37
million) which relates to unutilised excess expenses. The rate of Corporation
Tax of 25% has been used to calculate the potential deferred tax asset. This
would only be recovered if the Company were to generate sufficient profits to
utilise these expenses. It is considered highly unlikely that this will occur
and therefore, no deferred tax asset has been recognised.
6. Returns per share
The return per share figure can be analysed between revenue and capital, as
below:
Description Year ended 31 May 2025 (£'000) Year ended 31 May 2024 (£'000)
Net revenue return (837) 257
Net capital return (27,081) 98,191
Net total return (27,918) 98,448
Weighted average number of shares in issue during the year 63,339,331 86,830,217
Revenue return per share (1.32)p 0.30p
Capital return per share (42.76)p 113.08p
Return per share (44.08)p 113.38p
7. Dividends paid to shareholders
Description Year ended 31 May 2025 (£'000) Year ended 31 May 2024 (£'000)
2024 final dividend 2.0p paid on 63,232,586 shares (2023 final dividend 3.5p 1,265 3,375
paid on 96,429,891 shares)
Set out below is the total dividend proposed in respect of the financial year
under review, which is the basis on which the requirements of Section 1158 of
the Corporation Tax Act 2010 are considered:
Description Year ended 31 May 2025 (£'000)
2025 final dividend of 2.0p 933*
* Based on the number of shares in issue as at 31 July 2025, the latest
practicable date prior to the publication of the Annual Report and Accounts.
Subject to shareholder approval at the 2025 Annual General Meeting, a final
dividend of 2.0p per share will be paid on 28 October 2025 to those
shareholders on the register of shareholders on 3 October 2025 (the Record
Date).
Glossary of Terms and Alternative Performance Measures ('APM')
Alternative Investment Fund - an Alternative Investment Fund ('AIF') is
defined as a collective investment undertaking, including investment
compartments of such an undertaking, which (1) raises capital from a number of
investors, with a view to investing it in accordance with a defined investment
policy for the benefit of those investors; and (2) does not require
authorisation under the UCITS regime. The Company is an AIF.
AIFM/Alternative Investment Fund Manager - an Alternative Investment Fund
Manager ('AIFM') is an entity that provides certain investment services to an
AIF, including portfolio and risk management services. Devon Equity Management
Limited is the Company's AIFM.
Alternative Investment Fund Managers Directive - a European Union Directive to
provide a harmonised framework for monitoring and supervising risks posed by
AIFMs and the AIFs they manage, and for strengthening the internal market in
alternative funds. This directive was transitioned into UK law pursuant to The
UK Alternative Investment Fund Managers Regulations 2013, and remains in force
following Brexit.
Alternative Performance Measures - The European Securities and Markets
Authority ('ESMA') published its guidelines on Alternative Performance
Measures ('APMs'). APMs are defined as being a 'financial measure of
historical or future financial performance, financial position, or cash flows,
other than a financial measure defined or specified in the applicable
accounting framework.'
Benchmark - The Company's primary Benchmark Index, against which its
performance is measured, is MSCI Europe index, total return in GBP.
Discount or Premium* - The share price of the Company is derived from buyers
and sellers trading its shares on the stock market. The share price is not
identical to the net asset value per share of the Company. If the share price
is lower than NAV per share, the shares are trading at a discount. The
discount is shown as a percentage of the net asset value per share. Shares
trading at a price above net asset value per share are deemed to be at a
premium.
31 May 2025 31 May 2024
pence pence
Net asset value per share (a) 968.9 1,008.5
Share price (b) 896.0 906.0
(Discount) or premium (c = (b-a)/a) (c) (7.5)% (10.2)%
Discount management - Discount management is the process of the buyback or
issuance of the Company's own shares by the Company, to and from its own
holding or into 'treasury' with the intention of managing any imbalance
between supply and demand for the Company's shares and thereby the market
price. The aim is that, in normal market conditions, the market price of the
Company's shares will not materially vary from its net asset value per share.
The authority to repurchase or issue the Company's own shares is voted upon by
the shareholders at each Annual General Meeting.
Gearing - Gearing is the borrowing of cash to buy more assets for the
portfolio with the aim of making a gain on those assets larger than the cost
of the loan. However, if the portfolio doesn't perform well the gain might not
cover the costs. The more an investment company gears, the higher the risk.
Gearing is typically expressed as a percentage of net asset value.
Borrowings have a prior charge over the assets of the Company, ranking before
shareholders in their entitlement to capital and/or income. Borrowings may
include preference shares; debentures; overdrafts and short and long-term
loans from banks. If the Company has cash assets, these may be assumed either
to net off against borrowings, giving a 'net' or 'effective' gearing
percentage, or to be used to buy investments, giving a 'gross' or 'fully
invested' gearing figure. Where cash assets exceed borrowings, the Company is
described as having 'net cash'. The Company's maximum permitted level of
gearing is set by the Board and is described within the Strategic Report of
the Annual Report.
31 May 2025 31 May 2024
£'000 £'000
Loan 70,000 60,000
Less cash and cash equivalents† (26,420) (4,601)
Total (a) 43,580 55,399
Net asset value (b) 602,772 656,438
Gearing (c = a/b)†† (c) 7.2% 8.4%
† Includes unsettled transactions as at 31 May 2025 of £976,000 (2024:
unsettled transaction resulted in a temporary creditors of £1,014,000).
†† Gross (unadjusted for cash and cash equivalents) gearing at year end
was 11.6% (2024: 9.1%).
Leverage
For the purposes of the UK Alternative Investment Fund Managers (AIFM)
Regulations, leverage is any method which increases the Company's exposure,
including the borrowing of cash. It is expressed as a ratio between the
Company's exposure and its net asset value and can be calculated on a gross
and a commitment method. Under the gross method, exposure represents the sum
of the Company's positions after the deduction of sterling cash balances,
without taking into account any hedging and netting arrangements. Under the
commitment method, exposure is calculated without the deduction of sterling
cash balances and after certain hedging and netting positions are offset
against each other.
The Board has set maximum levels of leverage that it considers to be
reasonable. Devon has implemented systems to calculate and monitor compliance
against these limits and has ensured that the limits have been complied with
at all times.
· The maximum permitted leverage calculated on the gross basis is
1.5 times. As at 31 May 2025 gross leverage calculated on the gross basis was
1.07 times (2024: 1.09 times); and
· The maximum permitted leverage calculated on the commitment basis
is 2.0 times. As at 31 May 2025 leverage calculated on the commitment basis
was 1.12 times (2024: 1.09 times).
Middle market price - The mid-market price is the mid-point between the buy
and the sell prices.
Net asset value - The net asset value in relation to the Company is the market
value of its assets less its liabilities (and is sometimes also referred to as
Shareholders' Funds). The market value is usually determined by the price at
which an investor can redeem a share. For valuation purposes it is common to
express the net asset value on a per share basis.
Ongoing charges ratio* - Ongoing charges are the total expenses including both
the investment management fee and other costs. The costs of buying and selling
investments are excluded, as are interest costs on the Company's loan
facility, taxation, non-recurring costs and the costs of buying back or
issuing shares. The ongoing charges ratio is calculated in line with the AIC's
recommended methodology and is expressed as a percentage of net asset value.
31 May 2025 31 May 2024
£'000 £'000
Management fee 4,903 6,409
Other expenses 1,034 1,359
Total (a) 5,937 7,768
Average daily net assets (b) 608,018 798,568
Ongoing charges c= (a/b)*100 (c) 0.98 0.97
Return - The return generated in a given period from the investments:
· Revenue return - reflects the dividend and interest from
investments and other income net of expenses, finance costs and taxation;
· Capital return - reflects the capital gain or loss, excluding any
revenue return; and
· Total return* - reflects the aggregate of revenue and capital
returns and is the theoretical return to shareholders calculated on a per
share basis by adding dividends paid in the period to the increase or decrease
in the share price or 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.
Net asset value Share price
Net asset value/share price per share at 31 May 2024 (pence) 1008.5 906.0
Net asset value/share price per share at 31 May 2025 (pence) 968.9 896.0
Change in the period under review (3.9)% (1.1)%
Impact of dividend reinvested on payment date 0.2% 0.2%
Total return for the year (3.7)% (0.9)%
Treasury shares - Shares of the Company that have been repurchased by the
Company and not cancelled but held in Treasury. These shares do not pay
dividends, have no voting rights and are excluded from the net asset value per
share calculation.
* An Alternative Performance Measure.
Availability of Annual Report and Accounts
The Annual Report and Accounts will be posted to those shareholders who have
elected to receive hard copies.
An electronic version of the Annual Report and Accounts will shortly be
available on the Company's website at: www.europeanopportunitiestrust.com and
on the National Storage Mechanism at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
Monthly newsletter
Please use the following link to be added to the distribution list for the
Company's monthly newsletter and factsheet:
https://www.devonem.com/newsletter-sign-up/
For further information, please contact:
Devon Equity Management Limited enquiries@devonem.com (mailto:enquiries@devonem.com)
Richard Pavry +44 (0)20 3985 0445
Singer Capital Markets - Corporate broker
Mark Bloomfield / James Todd (Investment Banking) +44 (0)20 7496 3000
Alan Geeves / James Waterlow / Sam Greatrex (Sales)
Buchanan Communications - PR Adviser eot@buchanancomms.co.uk (mailto:eot@buchanancomms.co.uk)
Henry Wilson +44 (0)7788 528143
Helen Tarbet +44 (0)7872 604453
Nick Croysdill +44 (0)7815 823412
www.europeanopportunities.com (http://www.europeanopportunities.com)
Neither the Company's website nor the content of any website accessible from
hyperlinks on it (or any other website) is (or is deemed to be) incorporated
into, or forms (or is deemed to form) part of this announcement.
END
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