TIDMEAT
RNS Number : 6710U
European Assets Trust PLC
03 August 2022
Date: 3 August 2022
Contact: Sam Cosh (Lead Investment Manager) / Scott McEllen
(Investment Company Secretary)
Columbia Threadneedle Investment Business Limited
020 7628 8000
LEI: 213800N61H8P3Z4I8726
European Assets Trust PLC
Unaudited Statement of Results
for the half-year ended 30 June 2022
Highlights for the half-year ended 30 June 2022:
-- Net Asset Value total return of -31.4% in comparison to the benchmark return of -21.0%.
-- Share price total return of -31.8%.
-- An annual dividend of 8.8p per share for 2022 representing a
dividend yield of 9.2% based on the Company's closing share price
of 95.7p on 1 August 2022.
"European smaller companies represent a large, diverse market,
composed of a collection of dynamic, entrepreneurial businesses
that through time are expected to navigate their way well through
challenging operational circumstances. These characteristics were
not rewarded in the first half. We are confident that they will be
over the long term."
Jack Perry CBE
Chairman
SUMMARY OF RESULTS
Half-year Half-year ended
ended 30 June 2021
30 June 2022
----------------------------------------- -------------- ----------------
Net Asset Value per share total return
(1) -31.4% 13.4%
Share price total return (1) -31.8% 17.6%
EMIX Smaller European Companies (ex UK)
Index total return -21.0% 10.5%
----------------------------------------- -------------- ----------------
Distributions per ordinary share
Dividends per share - as at 30 June (2) 4.40p 4.00p
Dividends announced for the year 8.80p 8.00p
----------------------------------------- -------------- ----------------
(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) The first interim dividend of 2.20p per share was paid on 31
January 2022, the second interim dividend of 2.20p per share on 29
April 2022 and the third interim dividend of 2.20p per share on 29
July 2022. The fourth interim dividend of 2.20p per share is
payable to eligible Shareholders on 31 October 2022.
The Chairman, commenting on the results, said:
This report is for the six-month period ended 30 June 2022.
European Assets Trust PLC ("the Company") recorded a Sterling
Net Asset Value ("NAV") total return during this period of -31.4%.
The Sterling share price return for the period was -31.8%. These
results compare to the total return of the Company's benchmark, the
EMIX Smaller European Companies (ex UK) Index of -21.0% for the
same period. At the period end the NAV was 96.0p (31 December 2021:
146.0p) and the share price was 92.0p (31 December 2021: 140.0p).
At 30 June 2022, the discount was 5.0% (31 December 2021:
4.4%).
This has been a difficult six months with markets falling across
the board. Rising inflation expectations have driven interest rates
higher causing an aggressive market sell-off that has been
exacerbated by a war in Eastern Europe and more recently by
recession fears in most major economies. Consumer income and
corporate profits are under pressure from both higher input and
borrowing costs as central banks look to fight inflation. This has
been particularly painful for our portfolio which has significantly
underperformed the benchmark. These higher rates have caused an
intra market rotation away from quality, growth stocks towards
value areas. Given our portfolio displays higher quality and better
growth characteristics than the benchmark, these factors have
largely been the drivers of our underperformance. We can, however,
take some reassurance that the operational performance of our
holdings, in aggregate, has been good and is meeting our
expectations. Unfortunately, market sentiment and the consequent
valuation compression has disproportionately affected the
portfolio.
Dividends
The 2022 dividend of 8.8p per share, which represents an
increase of 10.0% from the 2021 dividend of 8.0p per share, is
payable in four equal instalments of 2.2p. Dividends of 2.2p have
been paid on 31 January, 29 April and 29 July. A further instalment
of 2.2p will be paid on 31 October 2022.
As at 1 August 2022, the latest practicable date prior to
publication of this announcement, an annual dividend of 8.8p per
share represents a yield of 9.2% calculated with reference to the
Company's closing share price of 95.7p that day.
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. Should the NAV at 31 December 2022 be lower than
the NAV at the 2021 year end then the value of the dividend payable
in 2023 would be expected to be proportionately lower.
Investment Manager
On 8 November 2021, BMO sold its asset management business in
Europe, the Middle East and Africa, ("BMO GAM EMEA") to Columbia
Threadneedle Investments. Since November 2021, Columbia
Threadneedle Investments has been working to integrate both
organisations, focused on delivering the best possible outcomes for
all clients. The combined business has more than 2,500 staff,
including over 650 investment professionals based in North America,
Europe and Asia. At 31 March 2022 it managed GBP531 billion of
client assets.
On 4 July 2022, the entire BMO GAM EMEA business was rebranded
as Columbia Threadneedle Investments. As part of this process, the
Company's appointed manager, BMO Investment Business Limited, was
renamed Columbia Threadneedle Investment Business Limited.
Throughout this process, the Board has sought and received
confirmation from senior management at Columbia Threadneedle
Investments of the importance of maintaining stability and
continuity of the teams which presently support your Company. The
Board welcomes these assurances and will ensure that Shareholders
are kept informed of developments as this new relationship
evolves.
Fiftieth Anniversary
This year the Company celebrates its fiftieth anniversary. The
Company was created in 1972 following the acquisition of a Dutch
investment company 'Mijbeb NV' by a consortium of United Kingdom
institutional investors and the appointment of a predecessor of
Columbia Threadneedle Investment Business Limited as its
Manager.
Initially the Company was listed solely on the Amsterdam Stock
Exchange. In 1983 its shares were also listed on the London Stock
Exchange. Until 1982 the Company was called European Community
Trust NV. It was then renamed European Assets Trust NV and in 2019,
following its migration from the Netherlands to the United Kingdom
and de-listing from the Amsterdam Stock Exchange, became European
Assets Trust PLC.
A timeline of significant events in the Company's history is
provided beginning on page 30 of the Interim Report.
Outlook
The mood in the markets is obviously despondent. Europe is
heading into a winter with potential gas shortages presenting a
significant problem for all of Europe but particularly for its
major economy, Germany. Central banks are still trying to get to
grips with inflation and interest rate expectations are yet to
settle. With this level of macro-economic volatility, it is
sometimes easy to lose sight of the potential of our focus markets.
European smaller companies represent a large, diverse market,
composed of a collection of dynamic, entrepreneurial businesses
that through time are expected to navigate their way well through
challenging circumstances. So while the environment remains tough,
the operational performance of our portfolio of companies, in the
aggregate, is encouraging. These characteristics were not rewarded
in the first half. We are confident that they will be over the long
term.
Jack Perry CBE
Chairman
The Investment Manager, commenting on the results, said:
Market background
This has been a challenging six months for European smaller
companies, but they were not alone; developed market equities had
the worst first half for over 50 years. The initial market weakness
was precipitated by consistently rising inflation data, causing
expectations of a faster tightening cycle led by the US Federal
Reserve. This rapid reset of interest rate expectations caused
aggressive market moves and for equities a huge rotation out of
quality, growth areas into more value areas with energy being the
main beneficiary. The Russian invasion of Ukraine in February
exacerbated these trends with oil and food prices spiking.
Meanwhile, China's zero COVID-19 policy and regional lockdowns
added to supply chain restrictions further fuelling rising input
costs. In an effort to quell inflation, central banks have become
increasingly hawkish and this has increased recessionary
expectations, leading to further market declines.
Performance
The NAV has underperformed the benchmark significantly. The main
reason for this is the rotation away from growth stocks. The best
illustration of this is that Energy, a sector in which we are
underweight, was the outstanding performing sector of the benchmark
rising over 21% (in GBP) whilst Healthcare, a sector you would
expect to perform well during a market sell-off, being one of the
worst performers, falling over 30%. Other sectors to struggle were
Information Technology and perhaps not surprisingly Consumer
Discretionary.
In aggregate, our weakest performance came from our Industrial
holdings. Whilst we are underweight the sector, our stocks
performed poorly. Wizz Air for example, a stock that is positively
exposed to the post COVID-19 travel recovery, suffered through its
exposure to Ukraine, rising fuel costs and airport staffing issues.
We did, however, react quickly as these headwinds appeared,
reducing the position aggressively at the outset of the invasion.
Other industrials that hurt us were Sdiptech, an infrastructure
technology consolidator, Interpump, the Italian component
manufacturer and Fluidra, the global leading swimming pool
equipment supplier, despite them all delivering good operating
results in the first half. In fact, this was the case for the whole
portfolio where operational delivery by our holdings, in aggregate,
was good, yet the shares were hit hard by valuation
compression.
As we have already discussed, growth stocks were significantly
out of favour and those also exposed to consumer spending had an
especially difficult time. For example, MIPS, the Swedish listed
designer of safety inlays for helmets, lost more than half its
value. Admittedly its full year results, released in February were
disappointing, with sales held back by supply issues in China. Q1
results were, however, well ahead of expectations, though this
wasn't enough to offset market rotation. This also impacted Nordic
Semiconductor, the global leading designer of Bluetooth
semiconductors, Thule, the Swedish outdoor equipment brand, and
flatexDEGIRO, the online broker which saw lower consumer trading
activity.
Our top performers were those that held up better than the
market and are perceived to have defensive qualities. For example,
Lotus Bakeries, a family run business that owns, among others, the
Biscoff, Nakd and Bear brands. This company performed well on the
view that though under pressure, its portfolio of quality branded
snacks remain well placed.
Coor Service Management, the integrated services management
company, also had a strong first half. They are emerging from
COVID-19 in a strong position and their long-term contract base
ensures that they have good visibility on their earnings.
Corticeira Amorim is also having a good year. The Portuguese global
leader in cork products, benefitted from stable end markets with
the support of a strong dollar which makes up a material part of
their revenues.
Our traditional financials also had a good first half.
Ringkjoebing Landbobank, one of our largest positions, continues to
deliver strong operational performance, whilst Storebrand, the
Norwegian life insurance company, and Sparebank, the regional
Norwegian bank, both outperformed the benchmark. Rising interest
rates now provide a tailwind for these companies, whilst our
Norwegian holdings are also getting the benefit of higher oil
prices which provides substantial support for the local
economy.
Other stocks that performed well were the Swedish listed
information supplier to the legal sector, Karnov, the French
industrial technology company, Lectra, the Irish home builder,
Cairn Homes, and the Dutch Food distributer, Sligro. We also
benefitted from having minimal weighting in Real Estate, a
relatively large and poorly performing component of our
benchmark.
Portfolio activity
As you would expect, we are maintaining our investment
philosophy and process. We therefore continue to run a portfolio
with better quality and growth characteristics than the benchmark.
We cannot, however, ignore the fact that 2022 has seen some seismic
events and we need to account for this in our positioning. For
example, the Ukrainian war has highlighted the challenge in trying
to transition to renewable energy whilst relying on the supply of
Russian gas. There has been a dearth of capital investment in
traditional energy supplies, which we know now is essential for
economic activity until renewable energies are of sufficient scale.
We believe this capital cycle is turning and will benefit energy
companies. We have therefore added to our holding in TGS, the
global leading seismic data company, and Schoeller Bleckmenn
Oilfield Equipment, the market leader in drill components sold to
the oil industry. We have also reduced our exposure to companies
that are hurt by rising energy costs, reducing significantly our
holding in Wizz Air as mentioned previously. We also sold Vidrala,
the Spanish glass bottling company, that utilises an energy intense
production process and has no protection from hedging.
We have also pared back our consumer discretionary exposure
which has involved trimming several positions and selling our
holding in Dometic, which sells components into the recreational
vehicle market. In addition to concern about potential weakness of
the end markets, we had concerns over the company's financial
leverage. Refinancing debt is becoming increasingly expensive, and
we think heavily indebted companies are to be avoided. Please note
that our portfolio holdings in aggregate have far less exposure to
debt than our benchmark.
Outlook
The outlook for the European economy is challenging. The region
is facing a winter with potentially severe gas shortages and
consumers and corporates are facing significantly increased costs.
In fact, a recession in the UK, Europe and US is now expected
though this economic weakness is expected to be relatively mild.
Corporate inventories are low, consumer and corporate balance
sheets are in good shape, and the banking sector looks robust.
Markets have also moved quickly and now look to be good value,
particularly in Europe which has suffered the main effects of the
Ukraine conflict. This aggressive compression in valuations now
provides opportunities. Good quality growth stocks do not look
expensive, and we would expect to add some new holdings from our
watchlist through the second half of the year. We believe that good
franchises will have pricing power and therefore the potential for
revenue and margin growth. In an environment of rising and volatile
costs we would expect them to deliver better operational results
than the market and would expect such performance to be rewarded
once interest rate expectations settle down.
Sam Cosh
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 2021.
The principal risks identified in the Report and Accounts for
the year ended 31 December 2021 were:
-- Poor absolute and/or relative performance;
-- Relevance/attractiveness of the investment strategy and policy;
-- Failure of the manager or the loss of key investment management staff;
-- Regulatory and compliance failure (including ESG reporting); and
-- Service provider failure.
At present the global economy continues to suffer considerable
disruption due to the effects of the COVID-19 pandemic,
inflationary concerns and the war in Ukraine. The Directors
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
2022 is included within the Chairman's Statement and the Investment
Manager's Review above.
-- The Company has a EUR45 million multi-currency loan facility
with The Bank of Nova Scotia (London branch). As at 30 June 2022
EUR20.0 million was drawn down.
-- 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
Jack Perry CBE
Chairman
2 August 2022
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 has been prepared
in accordance with applicable UK-adopted International Accounting
Standards on a going concern basis, and gives a true and fair view
of the assets, liabilities, financial position and net return of
the Company;
-- the Chairman's Statement, Investment Manager's Review and the
Directors' Statement of Principal Risks and Uncertainties 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
Jack Perry CBE
Chairman
2 August 2022
Condensed Statement of Comprehensive Income
Half-year ended Half-year ended
30 June 2022 30 June 2021
(Unaudited) (Unaudited)
Revenue Capital Total Revenue Capital Total
GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
---------------------------------------------- --------- ---------- ---------- --------- --------- ---------
(Losses)/gains on investments held at fair
value through profit or loss - (178,269) (178,269) - 78,711 78,711
Foreign exchange (losses)/gains (20) (365) (385) 7 824 831
Income 6,391 - 6,391 5,778 - 5,778
Management fees (348) (1,391) (1,739) (357) (1,427) (1,784)
Other expenses (482) (14) (496) (496) (4) (500)
---------------------------------------------- --------- ---------- ---------- --------- --------- ---------
Profit / (loss) before finance costs and
taxation 5,541 (180,039) (174,498) 4,932 78,104 83,036
Finance costs (24) (99) (123) (21) (87) (108)
---------------------------------------------- --------- ---------- ---------- --------- --------- ---------
Profit / (loss) before taxation 5,517 (180,138) (174,621) 4,911 78,017 82,928
Taxation (684) - (684) (731) - (731)
---------------------------------------------- --------- ---------- ---------- --------- --------- ---------
Profit / (loss) for the period 4,833 (180,138) (175,305) 4,180 78,017 82,197
---------------------------------------------- --------- ---------- ---------- --------- --------- ---------
2 Earnings per share - pence 1.34 (50.03) (48.69) 1.16 21.67 22.83
---------------------------------------------- --------- ---------- ---------- --------- --------- ---------
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
Share Distributable Capital Revenue Translation Shareholders'
Half-year ended 30 June 2022 Capital Reserve Reserve Reserve Reserve Funds
(Unaudited) GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s GBP'000s
-------------------------------------- --------- -------------- ---------- --------- ------------ --------------
Balance at 31 December 2021 37,506 322,694 188,661 - (23,426) 525,435
Movements during the half-year ended
30 June 2022
Interim dividends distributed and
reinvested - (11,011) - (4,833) - (15,844)
Total comprehensive income - - (180,138) 4,833 - (175,305)
Cumulative translation adjustment - - - - 13,071 13,071
-------------------------------------- --------- -------------- ---------- --------- ------------ --------------
Balance at 30 June 2022 37,506 311,683 8,523 - (10,355) 347,357
-------------------------------------- --------- -------------- ---------- --------- ------------ --------------
Half-year ended 30 June 2021
(Unaudited)
-------------------------------------- --------- -------------- ---------- --------- ------------ --------------
Balance at 31 December 2020 37,506 346,054 88,462 - 5,982 478,004
Movements during the half-year ended
30 June 2021
Interim dividends distributed and
reinvested - (10,222) - (4,180) - (14,402)
Total comprehensive income - - 78,017 4,180 - 82,197
Cumulative translation adjustment - - - - (19,408) (19,408)
-------------------------------------- --------- -------------- ---------- --------- ------------ --------------
Balance at 30 June 2021 37,506 335,832 166,479 - (13,426) 526,391
-------------------------------------- --------- -------------- ---------- --------- ------------ --------------
Condensed Statement of Financial Position
30 June 2022 30 June 2021 31 December
2021
(Unaudited) (Unaudited) (Audited)
GBP'000s GBP'000s GBP'000s
------------------------------------ --------------- --------------- --------------
Non-current assets
Investments at fair value through
profit or loss 341,166 540,751 539,756
------------------------------------ --------------- --------------- --------------
Current assets
Other receivables 3,315 2,745 2,680
Derivative financial instruments - 547 -
held at fair value through profit
or loss
Cash and cash equivalents 20,731 8,196 8,342
------------------------------------ --------------- --------------- --------------
Total current assets 24,046 11,488 11,022
------------------------------------ --------------- --------------- --------------
Current liabilities
Other payables (204) (94) (155)
Derivative financial instruments (434) - -
held at fair value through profit
or loss
Bank Loan (17,217) (25,754) (25,188)
------------------------------------ --------------- --------------- --------------
Total current liabilities (17,855) (25,848) (25,343)
------------------------------------ --------------- --------------- --------------
Total current assets/(liabilities) 6,191 (14,360) (14,321)
------------------------------------
Net assets 347,357 526,391 525,435
------------------------------------ --------------- --------------- --------------
Capital and reserves
Share capital 37,506 37,506 37,506
Distributable reserve 311,683 335,832 322,694
Capital reserve 8,523 166,479 188,661
Revenue reserve - - -
Cumulative translation reserve (10,355) (13,426) (23,426)
Total Shareholders' funds 347,357 526,391 525,435
------------------------------------ --------------- --------------- --------------
Net Asset Value per ordinary
share - pence 96.47 146.19 145.93
------------------------------------ --------------- --------------- --------------
Condensed Statement of Cash Flows
Half-year ended Half-year ended
30 June 2022 30 June 2021
(Unaudited) (Unaudited)
GBP'000s GBP'000s
----------------------------------------------- ---------------- ----------------
Cash flows from operating activities before
dividends received and
interest paid (2,167) (2,288)
----------------------------------------------- ---------------- ----------------
Dividends received 5,276 2,334
Interest paid (126) (101)
----------------------------------------------- ---------------- ----------------
Cash flows from operating activities 2,983 (55)
----------------------------------------------- ---------------- ----------------
Investing activities
Purchase of investments (60,211) (50,123)
Sale of investments 93,280 67,634
Increase / (decrease) in securities purchased
for future settlement 434 (547)
Other capital expenses (14) (4)
----------------------------------------------- ---------------- ----------------
Cash flows from investing activities 33,489 16,960
----------------------------------------------- ---------------- ----------------
Cash flows before financing activities 36,472 16,905
----------------------------------------------- ---------------- ----------------
Financing activities
Equity dividends distributed (net) (15,844) (14,402)
Repayment of bank loan (8,452) -
----------------------------------------------- ---------------- ----------------
Cash flows from financing activities (24,296) (14,402)
----------------------------------------------- ---------------- ----------------
Net movement in cash and cash equivalents 12,176 2,503
Cash and cash equivalents at the beginning
of the period 8,342 2,950
Effect of movement in foreign exchange (385) 831
Translation adjustment 598 1,912
----------------------------------------------- ---------------- ----------------
Cash and cash equivalents at the end of
the period 20,731 8,196
----------------------------------------------- ---------------- ----------------
Represented by:
----------------------------------------------- ---------------- ----------------
Cash at bank 19 6
Short term deposits 20,712 8,190
20,731 8,196
----------------------------------------------- ---------------- ----------------
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 2021.
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 Half-year ended
ended 30 June 2021
30 June 2022 GBP'000s
GBP'000s
---------------------------------- --------------- ------------------
Revenue return 4,833 4,180
Capital return (180,138) 78,017
---------------------------------- --------------- ------------------
Total return (175,305) 82,197
---------------------------------- --------------- ------------------
Number Number
Weighted average ordinary shares
in issue 360,069,279 360,069,279
Earnings per share - pence (48.69) 22.83
---------------------------------- --------------- ------------------
3 Dividend
The fourth interim dividend of 2.20p per share in respect of the
year ending 31 December 2022 will be paid on 31 October 2022 to
eligible Shareholders on the register. The total cost of this
dividend based on 360,069,279 shares in issue is GBP7,922,000.
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, high
distribution 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 effects of the COVID-19 pandemic inflationary concerns and
the war in Ukraine, the Directors have given careful consideration
to the consequences for this Company. The Company has a EUR45
million multi-currency loan facility with The Bank of Nova Scotia
(London branch). As at 30 June 2022 EUR20.0 million (GBP17.2
million) was drawn down, resulting in undrawn debt facilities of
EUR25 million (GBP21.5 million). In addition to the undrawn debt
facility, as at 30 June 2022, the Company had a robust cash
position of EUR24.1 million (GBP20.7 million) held at bank.
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
further significant decrease in the Net Asset Value of the Company
in the short to medium term.
As at 1 August 2022, the latest practicable date before the
publication of this report, borrowings amounted to EUR20.0 million
(GBP16.7 million). This is compared to a Net Asset Value of
GBP362.3 million. In accordance with its investment policy the
Company is invested mainly in readily realisable listed securities.
These can be realised if necessary, to repay the loan facility and
fund the cash requirements for future dividend payments.
The Company operates within a robust regulatory environment. The
Company retains title to all assets held by the Custodian. Cash is
held with banks approved and regularly reviewed by the Manager and
the Board.
The Company's annual dividend, which is declared in Sterling, is
determined by reference to the prior 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 2022 the Company had a Distributable Reserve of
GBP311.7 million.
As at 30 June 2022 the Company had current liabilities of
GBP17.9 million. The Company invests in listed securities which can
be realised to fund any short-term cash shortfall that may
arise.
Based on this information the Directors believe that the Company
has the ability to meet its financial obligations as they fall due
for a period of at least twelve months from the date of approval of
these financial statements. Accordingly, these financial statements
have been prepared on a going concern basis.
5 Results
The results for the half-year ended 30 June 2022 and 30 June
2021, 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 2021; the report of
the independent auditors thereon was unqualified and did not
contain a statement under Section 498 of the Companies Act 2006.
The abridged financial statements shown above for the year ended 31
December 2021 are an extract from those accounts.
6 Half-yearly report and accounts
The Company's report and accounts will be available shortly on
the internet at www.europeanassets.co.uk. Printed copies may be
obtained by writing to the Company Secretary at Exchange House,
Primrose Street, London EC2A 2NY.
By order of the Board
Columbia Threadneedle Investment Business Limited, Secretary
Exchange House,
Primrose Street,
London EC2A 2NY
2 August 2022
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