EUROPEAN ASSETS TRUST PLC

Audited Statement of Results for the year ended 31 December 2021

LEI: 213800N61H8P3Z4I8726

22 March 2022

European Assets Trust PLC ("EAT" / "the Company") today announces its results for the year ended 31 December 2021.

Financial Highlights

·      The Sterling Net Asset Value per share total return was 16.3% for the year ended 31 December 2021.  This compares to 14.9% for the benchmark, EMIX Smaller European Companies (ex UK) Index.

·      The Sterling Share Price total return was 23.2% for the year ended 31 December 2021.

·      For the ten years ended 31 December 2021 Sterling Net Asset Value per share total return was 333.2%.  The ten-year Sterling Share price total return was 381.1%.  These compare to 304.4% for the benchmark.

·      A dividend of 8.80 pence per share has been declared for 2022 an increase of 10.0% from the 2021 dividend of 8.00 pence per share.  This is equivalent to 6% of the closing Net Asset Value per share on 31 December 2021.  The 2022 dividend will be paid in four equal instalments.  The first interim dividend of 2.20 pence per share was paid in January 2022 with further dividends payable in April, July, and October.

The Chairman, Jack Perry, said:

"During this volatile period, we have been pleased with the performance of the Company. Our NAV total return was ahead of a strong benchmark. The share price performance was stronger still and we announced a substantial dividend increase."

Chairman's Statement

I am pleased to report that European Assets Trust PLC ("the Company") recorded a Sterling Net Asset Value ("NAV") total return for the year ended 31 December 2021 of 16.3% (2020: 21.9%). This compares to the total return of its benchmark, the EMIX Smaller European Companies (ex UK) Index, which rose 14.9% (2020: 18.9%) during the same period. With the discount narrowing from 9.4% as at 31 December 2020 to 4.4% at the year-end, the Sterling share price total return for the year was an impressive 23.2% (2020: 17.4%).

As this report goes to press, we have all been following events in Ukraine with a growing sense of foreboding.  While the Company has no interests in Russian equities and the vast majority of our invested companies do not have any significant dependence on Russia or Ukraine as markets or as part of their supply chains, all global markets have been impacted by this war on European soil.  At this stage it is impossible to predict the outcome of this conflict and the resultant effect on markets.  As individuals, our thoughts are very much focused on the human tragedy which is unfolding.  As custodians of your assets, we are maintaining a close watch on events in an effort to do everything we can to preserve capital during this period of volatility. The Manager and investee companies are also reviewing operations to ensure that they are in compliance with any new sanctions which arise as a result of the conflict.

Like many of you I am sure, I hoped 2021 would be the year that we moved on from the COVID-19 pandemic. Alas, it continued to impact our daily lives as well as markets over the last twelve months.  Due to the vaccine roll out we entered the year with optimism.  This was soon tempered by new variants placing a strain on healthcare systems once again, resulting in governments having to respond with further stimulus support and mobility restrictions.  Equity markets, though, were able to remain buoyant for most of the year yielding, strong returns overall. The second half of the year was, however, more volatile as supply chains were disrupted, inflation began to take hold and discussions around how to withdraw from years of central bank sponsored liquidity were initiated.  These concerns have continued to negatively impact markets so far in 2022. 

During this volatile period, we have been pleased with the performance of the Company.  Our NAV total return was ahead of a strong benchmark. The share price performance was stronger still and we announced a substantial dividend increase. Performance was primarily driven by stock selection, as we would expect, with our technology names in particular performing well as the continued digital transformation of our world continues at pace. After a higher than usual portfolio turnover in 2020, as the Manager sought to take advantage of opportunities afforded by the broad-based market correction at the onset of the pandemic, turnover returned to more normal levels this year. The performance of the select number of high-quality growth companies added to the portfolio last year has been pleasing.  We continue to see substantial long-term opportunities for these businesses.  This is, of course, discussed in more detail in the Manager's Review.

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 BMO 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.  It is interesting to note that a Shareholder who invested £1,000 in the Company in 1983 would have an investment of approximately £41,000  as at 31 December 2021 on a total return basis. 

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.

I would like to take this opportunity on behalf of the Board to thank and remember the many individuals who have contributed to the success of this Company during this 50 year period and to you, my fellow Shareholders many of whom have been loyal and longstanding investors in the Company. 

Dividend

The level of dividend paid each year is determined in accordance with the Company's distribution policy. The Company has stated that, barring unforeseen circumstances, it will pay an annual dividend equivalent to six per cent of its NAV at the end of the preceding year.

The 2022 dividend of £0.088 per share, which represents an increase of 10.0% from the 2021 dividend of £0.080 per share, is payable in four equal instalments of £0.022 on 31 January, 29 April, 29 July and 31 October 2022.

One consequence of the pandemic was a reduction in the dividend income the Company received from its investment holdings. Many of the companies held within the investment portfolio reduced or cancelled the dividends they pay to their shareholders. While the Company has seen some rebound in dividend receipts this year, this remains subdued. The Board, however, is confident of the continuation of the Company's dividend policy. To fund its dividends the Company can use a combination of current year profits and the Distributable Reserve. As at 31 December 2021 the Company had a Distributable Reserve of £322.7 million.

Responsible Investment

The Board and the Manager have long recognised the importance of high standards of Environmental, Social and Governance ("ESG") practice in assessing investments for inclusion within the Company's portfolio. Both believe that high standards of ESG practice can help to deliver better and more sustainable long-term growth in returns for shareholders. Indeed, the Manager has one of the largest and longest established teams in the City dedicated to responsible investment.

Pages 24 to 27 of the Report and Accounts explain in detail the Manager's ESG policies and its engagement during the year with the management of invested companies within the Company's portfolio.

Ownership of the Manager

On 12 April 2021, BMO announced that it had reached an agreement to sell its asset management business in Europe, the Middle East and Africa to Columbia Threadneedle, the global asset management business of Ameriprise Financial, Inc.  This acquisition completed on 8 November 2021.

During this acquisition process the Board has sought and received confirmation from senior management at Columbia Threadneedle 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 develops.

Ongoing charges

For the year ended 31 December 2021 the ongoing charges of the Company were 0.89%.  This is the lowest rate ever recorded by the Company and is a consequence of annual cost savings arising from the migration of the Company from the Netherlands to the United Kingdom coupled with the reduction in investment management fee rates implemented from 1 April 2020. The Board will continue to actively monitor costs to maintain the Company's competitiveness. 

Operations

Since March 2020 the Board had met by videoconference with representatives of the Manager and with other advisers attending. Although this has worked well, I am pleased to report that since July 2021, most Directors have been able to attend Board meetings physically which I consider a welcome step towards a return to our pre-pandemic practices.

Annual General Meeting

I am pleased to report that we intend to revert to normal practices for the 2022 Annual General Meeting ("AGM"). The AGM will be held on Tuesday 17 May 2022 at 3.00pm at Exchange House, Primrose Street, London, EC2A 2NY, being the London offices of the Manager. The meeting will include a presentation on the Company and its investment portfolio from Sam Cosh and Lucy Morris.

However, as the situation with regards to the COVID-19 pandemic remains uncertain, if circumstances change on or prior to 17 May 2022 so that laws, regulations or Government guidance no longer permit physical Shareholders' attendance, or if the Board should otherwise determine Shareholders' attendance at an open meeting to be contrary to the safety and wellbeing of Shareholders, alterations may be required to be made to the AGM format. In these circumstances, the Company will communicate to Shareholders any changes to arrangements by a London Stock Exchange announcement and through updates to the Company's website: www.europeanassets.co.uk.

The Board strongly advises all Shareholders to consider their personal circumstances before deciding whether or not to attend the AGM in person. Any Shareholders who choose not to attend can submit questions regarding the resolutions proposed at the AGM, or the performance of the Company, to the dedicated email account: europeanassetsagm@bmogam.com. Questions should be submitted not later than Tuesday 10 May 2022. The Board will endeavour to ensure that questions received by such date are addressed at the meeting. In addition, so all Shareholders have an opportunity to view the AGM, the meeting will be recorded and will be available to view shortly thereafter on the Company's website as detailed above.

To ensure that each Shareholder's votes will count in the event that they cannot attend in person, or that Shareholder attendance has been restricted due to health and safety concerns, the Board would encourage all Shareholders to complete and submit their Form of Proxy or Form of Direction in advance of the AGM, in accordance with the requirements contained in the AGM notice set out on pages 73 to 77 of the Report and Accounts. Further, should the AGM be restricted, Shareholders are strongly encouraged to appoint the Chairman of the AGM as their proxy as any other person so appointed may not be admitted to the AGM, resulting in that Shareholder's vote not being counted.

Outlook

As discussed in my opening paragraphs, events in Ukraine have exacerbated what had already been a period of extreme volatility at the beginning of the year.  Initial optimism over a recovery from the COVID-19 pandemic has been replaced with concern over not just the war but spiking energy costs and other pressures on the cost of living.  Rapidly rising prices have prompted a more hawkish tone from the US Federal Reserve and the expectation that the era of exceptionally low interest rates may well be at its end. Not only has this caused precipitous falls in equity markets but a rapid change in market leadership with cheaper, perhaps, lower quality parts of the market leading performance.

It is fair to say that this might not be the best environment for a quality biased portfolio. We believe, however, the best counter to this uncertainty is to ensure your investments are comprised of high-quality dynamic growth businesses. Companies that hold important positions in the value chain should be insulated from the worst effects of inflation while their long-term opportunities should allow them to continue to grow and prosper. Discipline around valuation is also vital as a change in the interest rate regime will have a disproportionate negative impact on expensive, long duration assets.  

To help us reflect on the past 50 years, we have developed a 'timeline' to illustrate the major milestones not just in the Company's life but also in European and global history.  This is reproduced on the inside back cover of the Report and Accounts.  As we now face a volatile geopolitical and economic climate, it is worth remembering that European Assets Trust has weathered many periods of extreme volatility and despite this has over the longer term provided shareholders with an attractive income stream and a growing net asset value. We cannot predict the outcome of the present conflict but we will maintain our disciplined process and philosophy.  This has always been our approach to deliver long term returns.

Jack Perry CBE

Chairman

21 March 2022

Manager's Review

Market backdrop

Investors entered the year with confidence, the markets having rallied on the back of the positive vaccine data announced towards the end of 2020. 2021 was therefore supposed to see the end of COVID-19 and the recovery of the global economy. While this was not quite the case, equities delivered good gains over the year, though most of the returns occurred in the first half when optimism around an uninhibited recovery was strongest. The second half was more challenging with the emergence of new variants, firstly Delta and more recently Omicron, putting a dampener on this optimism, albeit temporarily. In fact, most of the year was characterised by wild swings in sentiment. As COVID-19 variants emerged, the market lurched towards quality, growth assets. However, this changed rapidly, with improving data relating to hospitalisations and vaccination rates and their effectiveness.

The second half of the year also had to contend with the spectre of rising inflation. Corporates were faced with significant supply chain challenges. With improving demand, this led to component shortages and rising input costs, with energy and raw material prices accelerating higher towards the year end. Inflation data consequently increased rapidly with, for example, the US Consumer Price Index  in November reaching its highest level for 39 years. This resulted in expectations of more rapid monetary tightening from the Federal Reserve with bond yields increasing, prompting market leadership to rotate towards more value and cyclical areas of the market. These moves have accelerated into the new year which we will discuss in more detail in the outlook section.

Rising inflation can impact interest rate expectations and this in turn can influence currency movements. The UK for example is further along the monetary tightening cycle than Europe, which  had lagged in its vaccination rate and maintained more social restrictions, potentially impacting the economy for longer. These factors help explain, at least in part, why the Euro struggled against Pound Sterling ("GBP"). As we translate the value of our assets back to our reporting currency, the depreciation of the Euro against GBP,  dampened our returns in 2021, though as has been reported and as discussed below, we were still able to deliver a strong year, both in absolute and relative terms, for our shareholders.

Portfolio Performance/Attribution

We were pleased to report a very strong share price performance and a NAV total return ahead of the benchmark. This performance allowed the Company to announce a 10% increase in dividend.

Our technology holdings had an exceptional year leading our performance, with good stock selection being the main driver. Most of our positions in this area benefit from long term structural trends such as digitalisation and while we are aware of significant volatility in the sector currently with valuations under pressure, we are confident in their long-term potential. For example, our semiconductor holdings, Nordic Semiconductor and ASM International, were the largest contributors. Nordic is the leading designer globally of low power Bluetooth chips and is benefitting from the proliferation of connected devices. In addition to Bluetooth, they have been investing in two new business areas; power management integrated circuits and cellular 'internet of things' microchips. Both areas saw some promising progress last year. In total the company's order backlog improved by five times, which clearly bodes well for the future.

ASM International produces semiconductor manufacturing equipment. The semiconductor industry capital spend has increased dramatically over the last few years, driven by huge demand for technology and increased data consumption. The area has also become politically sensitive as countries attempt to break free from the reliance of extended supply chains. We therefore expect this demand to continue. ASM International also benefits from the ever shrinking size of semiconductors with their equipment being particularly relevant for smaller chip manufacturing.

Other technology holdings of note that  performed well were Lectra, the French manufacturer of material cutting machines and related software, and Alten, the French listed provider of engineering R&D outsourcing. Both companies benefitted from expectations of an economic recovery and saw better demand as the industrial sectors that they depend on saw increased activity levels.

Our financial holdings also contributed well to performance. Ringkjoebing Landbobank, the regional Danish bank, continued its outstanding record of delivery and this year was no exception, though the expectation of higher interest rates, something that has been a headwind for the sector, provided an additional tailwind. This similarly helped Sparebank, the local Norwegian bank, which also benefitted from a rising energy market and the effect that this would have on the local economy. Storebrand, the Norwegian life insurance company, also performed well. Low interest rates have been a real challenge for its legacy guaranteed life business, but the prospects of higher rates, helps its transition to more profitable fee-based business. This also brought forward expectation of higher dividends.

Other stocks worthy of mention are MIPs, the Swedish safety technology business, and IMCD, the Dutch listed specialist chemical distributor. MIPs designs helmet inlays that improve injury outcomes following crashes. They produced an exceptional operating performance last year but also made good progress in growing in the safety industry, a market which is bigger in terms of revenue opportunity than the areas which they are currently exposed to. IMCD also continued their excellent track record of earnings growth, again beating market expectations. They also announced a series of acquisitions which have improved their market position and geographical reach.

Looking at where we suffered, we were a victim of a theme that emerged in the second half of the year. E-commerce, or online companies were de-rated en-masse as the market looked to sell perceived COVID-19 winners to fund investments in the post-virus recovery. Global Fashion Group was hurt particularly badly as, not only did they suffer alongside their regional competitors, but they also issued some disappointing results. A combination of a more competitive market in Latin America and a weak trading period towards the end of the year saw the shares sell off aggressively. We think this has been overdone and believe the long-term investment case remains intact, however, we acknowledge that whilst the market focuses on the impact of higher interest rates, the shares will struggle.

Just Eat Takeaway, the food delivery platform, had similar issues. However, we decided to sell the stock as we felt that the competitive position in key countries had deteriorated markedly. Although the shares hurt us over the year the decision to sell was correct as performance has continued to deteriorate. Mister Spex, an omni-channel glasses retailer, which we bought during its IPO, also struggled as COVID-19 related lockdowns impacted their bricks and mortar revenues.

Another disappointing performer was Fjordkraft, the Norwegian energy provider. Norwegian lockdowns impinged on their ability to acquire new customers, whilst they struggled to pass on rising energy prices on a timely basis. We sold our holding following a reassessment of the quality of the business model.

Portfolio activity

Shareholders will remember that 2020 was an unusual period of activity for the Company, as we took advantage of the market related sell off. 2021 was far more muted with activity returning to more normalised levels. In addition to Mister Spex mentioned above, we added three more positions.

We bought back into Tecan, the Swiss provider of healthcare automation equipment for the molecular and invitro diagnostics market. The shares had underperformed since we had sold the position late in 2020 and had announced an attractive, value accretive acquisition earlier in the year. Given the attractive growth outlook we felt that the valuation was attractive enough to warrant re-purchase.

The Thule group, listed in Sweden, manufacture bike racks and cargo carriers for vehicles, products for other active outdoor leisure usage and have recently expanded into offering pushchairs and strollers.  They have established large market shares and a strong brand reputation in most of their product categories which has led to strong growth and attractive margins.  The areas they operate in are anticipated to grow strongly as outdoor pursuits become more popular and populations become more active.

Lotus Bakeries, listed in Belgium, is best known for its famous speculoos biscuits and spread sold under the Biscoff brand.  They have the opportunity to expand the global reach of their products into new geographies, such as the United States, which provides an attractive runway for growth whilst also utilising the brand and unique taste to expand into adjacent categories such as ice cream and chocolate.  Alongside this the company also own well regarded "healthy snacking" brands Nakd, Trek and Bear which provide an alternative path of growth as they use their wide distribution network to expand their reach beyond the UK market where they were created.

In addition to the disposal of Fjordkraft and Just Eat Takeaway mentioned above, we have sold our holdings in Elekta, the equipment manufacturer used in cancer therapies, and Remy Cointreau, the Cognac brand owner. The former was sold due to concerns over their competitive position and the latter due to concerns over valuation.

Outlook

The year has started with extreme volatility with significant falls across most markets. Initially this was prompted by the US Federal Reserve's response to persistently high inflation data indicating a monetary tightening programme beginning with an interest rate hike in March. Higher interest rates are a valuation headwind for longer duration assets, so it is no surprise that quality, growth areas of the market have suffered. Healthcare and technology significantly underperformed over this period and market leadership transitioned to value areas. We have a quality biased portfolio with significant holdings in these areas, so it is fair to say that it was a challenging start to the year for the Company.

The more recent period has of course been dominated by the appalling events in Ukraine. Not surprisingly the market sell off has accelerated and European equities have borne the brunt of this and are now heavily in negative territory. A more defensive bias has now prevailed, and our portfolio has fared better relatively, though inevitably still suffering large absolute losses.

We do not know how long the war will last or what the specific long-term ramifications will be, but we acted quickly on outset of hostilities. We reduced gearing moving to a small net cash position and reduced holdings that have operating exposure to the region or are over exposed to rising energy costs. None of our holdings are listed or domiciled in Russia or Ukraine. We continue to closely assess the portfolio in light of the current environment and will continue to execute our philosophy and process identifying any quality companies that fall to attractive levels as we did during the COVID-19 related sell-off in early 2020. While we of course understand that this crisis is very different and potentially more catastrophic and wide ranging we believe that buying good quality assets at attractive prices is the best way to deliver good long-term returns.

Sam Cosh

Lead Investment Manager

21 March 2022

Principal Risks and Future Prospects

The principal risks together with their mitigations are set out below. The Board's processes for monitoring them and identifying emerging risks are set out on pages 28 to 29 and in note 22 of the Report & Accounts.

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

Since the beginning of 2020, the global economy has suffered considerable disruption due to the effects of the COVID-19 pandemic. The Directors have reviewed the risk register for the Company which identifies the risks that the Company is exposed to, the controls in place and the actions being taken to mitigate them. The principal ongoing risks and uncertainties currently faced by the Company, and the controls and actions to mitigate those risks, are described below.

In addition a detailed review of the risks of the Company's investment portfolio including market, credit, foreign currency and liquidity is provided in note 22 of the Report & Accounts beginning on page 67. Details of actions taken to reduce the potential impact of these risks is also provided.

·      Risk description: Poor absolute and/or relative performance

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

Ø No change in overall risk in year 

Mitigation: At each Board meeting the Directors monitor performance against benchmark and peer group. The Manager attends each regular board meeting and will discuss the reasons for any over or underperformance.

The Company's broker, Panmure Gordon, will provide market intelligence at each meeting noting underlying demand for the Company's shares.

The Company has received the necessary authority from shareholders to regulate the premium or discount that the Company's shares may trade at by purchasing or issuing shares.

·      Risk description: Relevance/attractiveness of the investment strategy and policy

An unattractive investment strategy, loss of cost competitiveness and/or a changing investment product environment, including ESG, leads to a fall in demand for the Company's shares resulting in an increasing share price discount.

Ø No change in overall risk in year 

Mitigation: Investment policy and performance are reviewed by the Board at each meeting. Rigorous individual stock reviews are regularly performed by the Manager and action taken to either hold, accumulate or sell. Cash, borrowing and gearing limits are set and monitored regularly.

·      Risk description: The Manager

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

Ø No change in overall risk in year 

Mitigation: The Board meets regularly with the management of BMO and receives an annual Audit Assurance Faculty Report on its procedures. The Manager's appointment can be terminated at six months' notice. Key man risk is limited by the team approach adopted by the Global Smaller team at BMO.

·      Risk description: Regulatory and compliance (including ESG reporting)

To maintain its investment trust status, the Company is required to comply with Section 1158 of the UK Corporation Taxes Act. The Company is also required to comply with UK company law, is subject to the requirements of the AIFMD and the relevant regulations of the London Stock Exchange and the Financial Conduct Authority. In future years it is anticipated that the Company will be subject to increasing ESG related reporting.

Ø No change in overall risk in year 

Mitigation: At each Board meeting the Company receives an update from the Secretary on legal, regulatory and accounting developments. The Company is a member of the Association of Investment Companies which provides guidance on regulatory developments. The Company has appointed EY LLP as its tax advisor and Shepherd and Wedderburn as its legal counsel. The Manager has a long established and highly regarded Responsible Investment team which presents to the Board annually.

·      Risk description: Service provider failure

Error, fraud or control failures at service providers or loss of data through cyber-attack or business continuity failure could damage reputation or result in loss of assets.

Ø No change in overall risk in year 

Mitigation: The Board receives regular reports from the Investment Manager on oversight of third party service providers, together with annual ISAE 3402 reports on controls. The Depositary oversees custody of investments and cash in accordance with the requirements of the AIFMD. The Custodian also provides an annual ISAE 3402 report.

Five Year Horizon

Through a series of connected stress tests ranging from moderate to extreme scenarios and based on historical  information, but forward looking over the five years commencing 1 January 2022, the Board assessed the risks of:

·      the liquidity of the Company's portfolio;

·      the existence of a borrowing facility;

·      the effects of any significant future falls in investment values and income receipts on the ability to repay and re-negotiate borrowings;

·      the maintenance of dividend payments and the retention of investors;

·      the potential need for more share issuance capacity in the event of unexpected market demand; and

·      minimising the discount between the Company's share price and net asset value.

The UK Corporate Governance Code requires a board to assess the future prospects for a company, and report on the assessment within the annual report.

Based on their assessment, and in the context of the Company's business model, strategy and operational arrangements set out

above, the Board has a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the five year period to March 2027. For this reason, the Board also considers it appropriate to continue adopting the going concern basis in preparing the Report and Accounts.

Statement of Directors' Responsibilities in Respect of the Financial Statement

The Directors confirm, that to the best of their knowledge:

·      the Company financial statements, prepared in accordance with UK adopted International Accounting Standards give a true and fair view of the assets, liabilities, financial position and profit of the Company;

·      the Strategic Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that they face; and

·      the annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for Shareholders to assess the Company's position and performance, business model and strategy.

On behalf of the Board

Jack Perry

Chairman

21 March 2022

Statement of Comprehensive Income

The total column of this statement represents the Company's Statement of Comprehensive Income, prepared in accordance with UK-adopted International Accounting Standards. The supplementary revenue return and capital return columns are both prepared under guidance published by the Association of Investment Companies.

All revenue and capital items in the above statement derive from continuing operations.

Statement of Changes in Equity

Statement of Financial Position

Statement of Cash Flows

Notes

1    Translation

The functional currency of the Company is the Euro and presentational currency is Pound Sterling.

2    Earnings per ordinary share

Revenue return

The revenue return per share of 1.51p (2020: 0.60p) is based on the revenue return attributable to Shareholders of £5,444,000 profit (2020: £2,150,000 profit).

Capital return

The capital return per share of 27.83p (2020: 16.49p) is based on the capital return attributable to Shareholders of £100,199,000 profit (2020: £59,391,000 profit).

Total return

The total return per share of 29.34p (2020: 17.09p) is based on the total return attributable to Shareholders of £105,643,000 profit (2020: £61,541,000 profit).

Weighted average ordinary shares in issue

The returns per share are based on a weighted average of 360,069,279 (2020: 360,012,510) ordinary shares in issue during the year.

3    Dividends

The Board has declared a total dividend for 2022 of 8.80 pence per share in accordance with its aim of paying at a rate of six per cent of the closing Net Asset Value of the preceding year. This is an increase of 10.0% from the 2021 dividend of 8.00 pence per share.  

4    Financial risk management

The Company is an investment company, listed on the London Stock Exchange, and conducts its affairs so as to qualify in the United Kingdom ("UK") as an investment trust under the provisions of section 1158 of the CTA. In so qualifying, the Company is exempted in the UK from corporation tax on capital gains on its portfolio of investments.

The Company's investment objective is to achieve long-term growth of capital through investment in quoted small and medium sized companies in Europe, excluding the United Kingdom. In pursuing this objective, the Company is exposed to financial risks which could result in a reduction of either or both of the value of the net assets and the profits available for distribution by way of dividend. These financial risks are principally related to the market (currency movements, interest rate changes and security price movements), liquidity and credit. The Board, together with the Manager, is responsible for the Company's risk management.

The full details of financial risks are contained in note 22 of the Report and Accounts.

5      Annual general meeting

The 2022 AGM will be held on 17 May 2022 at 3.00pm at Exchange House, Primrose Street, London, EC2A 2NY. The Notice of the AGM is set out on pages 73 to 77 of the Report and Accounts. The situation with regards to the COVID-19 pandemic remains uncertain, if circumstances change on or prior to 17 May 2022 so that laws, regulations or Government guidance no longer permit physical Shareholders' attendance, or if the Board should otherwise determine Shareholders' attendance at an open meeting to be contrary to the safety and wellbeing of Shareholders, alterations may be required to be made to the AGM format. In these circumstances, the Company will communicate to Shareholders any changes to arrangements by a London Stock Exchange announcement and through updates to the Company's website: www.europeanassets.co.uk.

The Board strongly advises all Shareholders to consider their personal circumstances before deciding whether or not to attend the AGM in person. Any Shareholders who choose not to attend can submit questions regarding the resolutions proposed at the AGM, or the performance of the Company, to the dedicated email account: europeanassetsagm@bmogam.com. Questions should be submitted not later than Tuesday 10 May 2022. The Board will endeavour to ensure that questions received by such date are addressed at the meeting. In addition, so all Shareholders have an opportunity to view the AGM, the meeting will be recorded and will be available to view shortly thereafter on the Company's website as detailed above.

To ensure that each Shareholder's votes will count in the event that they cannot attend in person, or that Shareholder attendance has been restricted due to health and safety concerns, the Board would encourage all Shareholders to complete and submit their Form of Proxy or Form of Direction in advance of the AGM, in accordance with the requirements contained in the AGM notice set out on pages 73 to 77 of the Report and Accounts. Further, should the AGM be restricted, Shareholders are strongly encouraged to appoint the Chairman of the AGM as their proxy as any other person so appointed may not be admitted to the AGM, resulting in that Shareholder's vote not being counted.

6      Report and accounts

The report and accounts for the year ended 31 December 2021 will be posted to Shareholders and made available on the website www.europeanassets.co.uk shortly. Copies may also be obtained by mailing the Company's registered office, Exchange House, Primrose Street, London EC2A 2NY.

By order of the Board

BMO Investment Business Limited, Secretary

21 March 2022