## European Assets ## Trust PLC ## Report and Accounts 2022 #### Financial Calendar | First interim dividend paid for 2023 | 31 January 2023 | | --- | --- | | Announcement of annual results | 29 March 2023 | | Second interim dividend paid for 2023 | 28 April 2023 | | Annual General Meeting | 18 May 2023 | | Third interim dividend paid for 2023 | 31 July 2023 | | Interim results for 2023 announced | August 2023 | | Fourth interim dividend paid for 2023 | 31 October 2023 | #### Forward-looking statements This document 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 it at the date of this document. Nothing should be construed as a profit forecast. 2 | European Assets Trust PLC OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information ## Contents Overview Auditors’ Report Company Overview 2 Independent Auditors’ Report 47 Financial Highlights 3 Summary of Performance 4 Financial Statements Statement of Comprehensive Income 53 Chairman’s Statement 6 Statement of Changes in Equity 54 Statement of Financial Position 55 | | Strategic Report | | Statement of Cash Flows 56 | | | --- | --- | --- | --- | --- | | Purpose, Strategy and Business Model | | 8 | Notes to the Financial Statements 57 | | | Investment Managers | | 10 | | | | Investment Manager’s Review | | 11 | | Other Information | | Investment Manager’s Investment Philosophy and Process | | 14 | Notice of Annual General Meeting 73 | | | Ten Largest Holdings | | 16 | Other Financial Information (unaudited) 78 | | | Investment Portfolio | | 17 | Shareholder Information 79 | | | Key Performance Indicators | | 19 | How to Invest 80 | | | Principal Policies | | 20 | Ten Year Record (unaudited) 81 | | | Promoting the Success of the Company–Section 172 Statement | | 22 | Alternative Performance Measures 82 | | | Sustainability and ESG | | 24 | Glossary of Terms 84 | | | Principal Risks and Changes in the Year | | 28 | | | Governance Report Directors 30 Management and Advisers 31 Directors’ Report 32 Corporate Governance 37 Report of the Remuneration and Nomination Committee 40 Directors’ Remuneration Report 41 Report of the Audit and Risk Committee 43 Report of the Management Engagement Committee 45 Statement of Directors’ Responsibilities in Respect of the Financial Statements 46 Report and Accounts 2022 | 1 European Assets Trust NV ## Company Overview ### • The Company’s objective is to achieve long-term growth of capital through investment in ### quoted small and medium sized companies in Europe, excluding the United Kingdom. A ### high distribution policy has been adopted with dividends paid out of current year revenue ### profits and the Distributable Reserve. ### • Through its aim to pay Shareholders a dividend of 6% based on the Net Asset Value (NAV) ### on 31 December each year, the Company has offered an attractive level of yield – both in ### absolute terms and relative to other asset classes. Investors seeking long-term capital ### appreciation meanwhile can choose to reinvest dividends in order to enhance their growth ### potential. ### • The Board seeks to manage liquidity in the Company’s shares through its ability to issue ### or buyback shares dependant on the extent of any share premium or discount. This is ### designed to reduce the volatility of the Company’s share price relative to its Net Asset Value. ## Visit our website at www.europeanassets.co.uk Registered in England and Wales with company registration number 11672363. Legal Entity Identifier 213800N61H8P3Z4I8726 2 | European Assets Trust PLC OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information Overview ## Financial Highlights ## for the year ended 31 December 2022 ## ‡ | -28.4% | -28.2% | 5.80p | 1.03% | | --- | --- | --- | --- | | Share price | Net Asset Vale per | Dividend | Ongoing charges* | | performance | share total return | | | | | | The Board has declared | Due to the reduction in | | The Company recorded a | The Sterling Net Asset Value | a total dividend for 2023 | net assets during 2022, | | Sterling Share Price total | per share total return* was | of 5.80 pence per share | the ongoing charge of the | | return* of -28.4% for the | -28.2% for the year ended | (2022: 8.80 pence per | company has increased | | year ended 31 December | 31 December 2022. Further | share) in accordance with | to 1.03% from 0.89%. | | 2022 in comparison to the | analysis of this performance | its aim to pay at a rate of | However, since 2012 this | | EMIX Smaller European | is provided in the Chairman's | six per cent of the closing | charge has been reduced | | Companies (ex UK) Index | Statement and Investment | Net Asset Value of the | from 1.70%. | | (the “Benchmark”) which | Manager's Review. | preceding year. | | returned -17.7%. ∞ ## Ten Year Performance (rebased to 100 at 31 December 2012) 380 340 300 260 220 180 140 100 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 The annualised ten year share price total return was 9.7%. Source: Columbia Threadneedle Investments * Refer to Alternative Performance measures on pages 82 and 83. ‡ Calculated in accordance with the basis recommended by the AIC. ∞ With effect from 1 April 2021 the benchmark changed from EMIX Smaller European Companies (ex UK) Index (gross) to EMIX Smaller European Companies (ex UK) Index (net). Report and Accounts 2022 | 3 European Assets Trust Share Price Total Return (Sterling) European Assets Trust NAV Total Return (Sterling) EMIX Smaller European Companies (ex UK) Index Total Return (Sterling) European Assets Trust Share Price Total Return (Sterling) European Assets Trust NAV Total Return (Sterling) EMIX Smaller European Companies (ex UK) Index Total Return (Sterling) Strategic Report ## Summary of Performance ### Investing in European small and medium sized companies to deliver income and capital growth Total Return for the year ended 31 December 2022 2021 Sterling Euro Sterling Euro Net Asset Value per share* (28.2%) (32.0%) 16.3% 24.0% Share Price* (28.4%) (32.3%) 23.2% 31.3% ∞ EMIX Smaller European Companies (ex UK) Index (17.7%) (22.1%) 14.9% 22.5% Capital Return for the year ended 31 December 2022 2021 Sterling Euro Sterling Euro Net assets – millions £347.6 €391.8 £525.4 €625.8 Net Asset Value per share £0.97 €1.09 £1.46 €1.74 † † Share Price £0.92 €1.03 £1.40 €1.66 ∞ EMIX Smaller European Companies (ex UK) Index 634.17 714.76 786.06 936.23 Dividend per share for the year ended 2022 2021 Sterling Sterling Total dividends paid 8.80p 8.00p * See Alternative Performance Measures on pages 82 and 83 for explanation. Source: Columbia Threadneedle Investments, Refinitiv Eikon † Converted in to Euros using the relevant exchange rate at the balance sheet date. ∞ With effect from 1 April 2021 the benchmark changed from EMIX Smaller European Companies (ex UK) Index (gross) to EMIX Smaller European Companies (ex UK) Index (net). 150.0 120.0 90.0 60.0 30.0 0.0 2019 2021 202220202018 Source: BMO GAM ‡ ‡ Share Price (pence) at 31 December Net Asset Value per share (pence) at 31 December 150.0 10.00 120.0 120.0 8.00 90.0 90.0 6.00 60.0 60.0 4.00 30.0 30.0 2.00 0.0 0.0 0.00 2019 2021 202220202018 2018 2019 2020 2021 2022 2019 2020 2022 20232021 Source: BMO GAM Source: Columbia Threadneedle Investments Source: Columbia Threadneedle Investments ‡ European Assets Trust NV prior to the migration on 16 March 2019. 150.0 4 | European Assets Trust PLC Source: Refinitive Eikon Source: BMO GAM 10.00 1.20 8.00 1.00 6.00 0.80 4.00 0.60 | 0.40 | 2.00 | | | | --- | --- | --- | --- | | 0.20 | 0.00 | | | | | | 2019 | 2020 2022 20232021 | 0.00 Source: BMO GAM 2019 2021 202220202018 Source: BMO GAM 150.0 120.0 90.0 60.0 30.0 0.0 2018 2019 2020 2021 2022 Source: Refinitive Eikon 1.20 1.00 0.80 0.60 0.40 0.20 0.00 2019 2021 202220202018 Source: BMO GAM OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information Overview At 31 December 2022 2021 Discount to Net Asset Value* (5.1%) (4.4%) (Net cash)/gearing* (1.3%) 3.2% Ongoing Charges * 1.03% 0.89% 150.0 2022 Year’s Highs/Lows 120.0 High Low Net Asset Value per share 145.49p 84.14p 90.0 Share Price 140.25p 77.20p 60.0 Premium/(discount) to Net Asset Value 0.6% (10.8%) 30.0 * See Alternative Performance Measures on pages 83 and 84 for explanation. Source: Columbia Threadneedle Investments, Refinitiv Eikon 0.0 2019 2021 202220202018 Source: BMO GAM 10.00 8.00 6.00 4.00 2.00 0.00 2019 2020 2022 20232021 Source: BMO GAM ^ ‡ † * ‡ Net dividends paid/declared per share - (pence) Ongoing charges (%) 150.0 1.20 150.0 120.0 1.00 120.0 90.0 0.80 90.0 60.0 0.60 60.0 0.40 30.0 30.0 0.20 0.0 | | | 2018 | 2019 2020 2021 2022 | | 0.00 | | | --- | --- | --- | --- | --- | --- | --- | | | 0.0 | | | | | 2019 2021 202220202018 | | Source: Refinitive Eikon | | | | 2019 2021 202220202018 | | | Source: Columbia Threadneedle Investments Source: Columbia Threadneedle Investments Source: BMO GAM ^ 2023 Sterling dividends declared. * See Alternative Performance Measures on pages 82 and 83 for explanation. ‡ EAT NV prior to migration on 16 March 2019. † Until 15 March 2019 dividends were paid by European Assets Trust NV net of Dutch 10.00 Withholding tax. 8.00 6.00 4.00 Report and Accounts 2022 | 5 2.00 0.00 2019 2020 2022 20232021 Source: BMO GAM Source: BMO GAM 150.0 120.0 90.0 60.0 30.0 0.0 2018 2019 2020 2021 2022 Source: Refinitive Eikon 1.20 1.00 0.80 0.60 0.40 0.20 0.00 2019 2021 202220202018 Source: BMO GAM # Chairman's Statement ![img-0.jpeg](img-0.jpeg) Jack Perry CBE, Chairman ## Fellow Shareholders, European Assets Trust PLC ("the Company") recorded a Sterling Net Asset Value ("NAV") total return for the year ended 31 December 2022 of -28.2% (2021: 16.3%). This compares to the total return of its benchmark, the EMIX Smaller European Companies (ex UK) Index, which fell -17.7% (2021: 14.9%) during the same period. With the discount widening from 4.4% as at 31 December 2021 to 5.1% at the year-end, the Sterling share price total return for the year was -28.4% (2021: 23.2%). The year was clearly very challenging. Almost all asset classes, with the exception of commodities, registered large losses. Global themes of rising inflation, central bank tightening and recession concerns dominated for much of the year. In addition, Europe had to contend with a war on its doorstep exacerbating the already difficult challenges that policy makers faced with rising prices, declining personal incomes and potential gas shortages in the region. Thankfully the worst fears of gas rationing hitting European industrial production were not realised as we entered a mild winter with full gas storage leading to lower prices and better economic data than expected. This helped the year end on a much more positive note with Europe leading global markets higher, perhaps a timely reminder that for long term investors the most challenging periods can lead to the best opportunities. So while there are plenty of mitigating economic factors, the Company's poor relative performance in 2022 is clearly very disappointing. The principal reason for this underperformance was the dramatic rotation out of quality, growth stocks, into value areas. This created an unusual market where normally stable and defensive areas, such as healthcare, led the market down, while traditionally more volatile and economically sensitive sectors, such as commodities significantly outperformed. Given our quality, growth philosophy, this headwind was too much to overcome. We also were hit by having stock specific exposure to an under-pressure consumer and some 'COVID-19 beneficiaries' that suffered from a normalisation of demand. A more detailed discussion of performance attribution can be found in the Investment Managers Review. ## 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. As the net asset value per share of the Company has decreased since 31 December 2021, the dividend has also decreased from 8.80 pence per share in 2022 to 5.80 pence per share in 2023. While this is unwelcome, it is worth highlighting that the Company's distribution policy offers Shareholders the opportunity of both growth and a high yield from an asset class that comprises some of Europe's most dynamic companies that have significant long-term potential. This 2023 dividend of 5.80 pence per share is payable in four equal instalments of 1.45 pence on 31 January, 28 April, 31 July and 31 October 2023. "Europe's valuation metrics continue to look more attractive both in relative and absolute terms. In a very volatile environment there is the risk that any pronouncement one day may look imprudent the next. So, while recognising that risk, we still look forward with a degree of tentative optimism." A dividend of 1.45 pence per share will be paid on 28 April 2023 to Shareholders on the register on 11 April 2023 with ex-dividend date of 6 April 2023. ## Ownership of the 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 December 2022 it managed £485 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 Investment 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 keep Shareholders informed of developments as this new relationship evolves. ## Responsible Investment As longstanding Shareholders will know, consideration of Environmental, Social and Governance ("ESG") issues have long been an important part of the investment process. Following the acquisition of BMO GAM EMEA your Manager has one of the largest and longest established teams dedicated to ESG. There is a detailed report on pages 24 to 27 of the Annual Report which explains the Manager's ESG policies, how these are implemented in the management of the portfolio and its engagement with our investee companies. ## Directorate Change European Assets Trust PLC ("EAT PLC") was incorporated on 12 November 2018. It should though be remembered that EAT PLC is the UK domiciled successor of the Company's Dutch predecessor, European Assets Trust NV ("EAT NV") which was dissolved on 16 March 2019. All of the directors of the Supervisory Board of EAT NV were appointed to the Board of EAT PLC on the date of its incorporation. Although EAT PLC and EAT NV were separate legal entities, for governance purposes, the Board regards the date of first appointment to the Supervisory Board of EAT NV as the date of appointment to the continuing business. As part of the Board's succession plan and in accordance with corporate governance best practice, it is anticipated that Julia Bond, the Company's Senior Independent Director, will retire on 31 January 2024. Julia was appointed as a Director of the Supervisory Board of the Company's Dutch predecessor, European Assets Trust NV, in April 6 | European Assets Trust PLC Chairman's Statement 2014 and upon retirement will have served nine years between both entities. The Company has benefited immensely from Julia's wide ranging financial and market experience. On behalf of the Board and Shareholders of the Company I thank Julia for her diligence and wise counsel throughout her period of appointment. In advance of Julia's retirement, the Board will recruit a new Director. I was also appointed to the Supervisory Board of the Company's predecessor in April 2014 and became its Chairman with effect from April 2015. In accordance with corporate governance best practice, and to allow a handover period, I announce my intention to retire from the Board at the conclusion of the Company's 2024 Annual General Meeting. Upon my retirement, Stuart Paterson, who was appointed to the Board in July 2019 will become Chairman. Stuart has extensive sector experience as a technology investor with over 25 years of equity investing in European private companies. Stuart has also been an exceptionally diligent and effective Chair of the Audit and Risk Committee. I know that he will continue to serve the Company well. As a further part of this plan, a search company was commissioned to find a new Director for the Board. Following a thorough selection process, Kevin Troup will be appointed to the Board and its committees with effect from 19 May 2023. Kevin is a qualified Chartered Accountant. He has worked in the fund management industry since 1995 with senior investment roles at Scottish Life, Martin Currie and Standard Life Investments. He is now a non-executive director at Baring Fund Managers Limited, TPI Fund Managers Limited and at Baillie Gifford Shin Nippon PLC. He is also a charity Trustee at The Robertson Trust. Following my retirement and Stuart Paterson's assumption of the Chairmanship, Kevin Troup will be appointed Chair of the Company's Audit and Risk Committee. #### Benchmark The Company's stated investment policy allows the Manager to invest in small and medium-sized European companies (excluding the UK) which have a market capitalisation below that of the largest company in the EMIX Smaller European Companies (ex UK) Index. IHS Market Benchmark Administration has announced its intention to cease calculation of its EMIX indices with effect from 31 July 2023. The current benchmark of the Company, the EMIX Smaller European Companies (ex UK) Index (Net Return) will therefore be discontinued. The Board, together with its advisers have carefully considered alternative benchmarks to replace the EMIX Smaller European Companies (ex UK) Index and have concluded that the MSCI Europe Ex UK SMID Cap Index, on a net return basis, represents the most appropriate choice, noting, that this index has the greatest overlap of those indices considered with the current portfolio, as well as a similar number of constituents to the current benchmark. The MSCI Europe Ex UK SMID Cap Index, which is composed of European small and mid-cap companies, does have a broader range of market capitalisation within its constituents which is relevant to the upper size limit contained in the investment policy of the Company. The adoption of the MSCI Europe Ex UK SMID Cap Index should therefore be treated as a material change to the Company's investment policy. However, the Manager has confirmed that the selection of the new benchmark does not imply that there will be any change to the existing selection process for investments. The Board is therefore seeking Shareholder approval for the material change to the investment policy that this new benchmark represents at the Annual General Meeting to be held on 18 May 2023 prior to its adoption with effect from 1 June 2023. #### Annual General Meeting The Annual General Meeting ("AGM") will be held at 3.00 pm on 18 May 2023 at the offices of Columbia Threadneedle Investments, Exchange House, Primrose Street, London EC2A 2NY. This will be followed by a presentation by the Investment Manager on the Company and its investment portfolio. For Shareholders who are unable to attend the meeting, any questions they may have regarding the resolutions proposed at the AGM or the performance of the Company can be directed to a dedicated email account, eatagm@columbiathreadneedle.com, by Thursday 11 May 2023. The Board will endeavour to ensure that questions received by such date will be addressed at the meeting. The meeting will be recorded and will be available to view on the Company's website, www.europeanassets.co.uk shortly thereafter. All Shareholders that cannot attend in person are encouraged to complete and submit their Form of Proxy or Form of Direction in advance of the meeting to ensure that their votes will count. #### Outlook After a strong start to the year, markets have weakened substantially following the failure of Silicon Valley Bank, other smaller regional banks in the US, and the sell-off of Credit Suisse in Europe. Although investors have been encouraged by the recent bail out of Credit Suisse by UBS and the Swiss authorities, there is clear concern over the risk of contagion to the rest of the financial system and of a renewed financial crisis. While it is too early to draw conclusions we believe that regulators and central banks have reacted quickly and with substance. This combined with more stringent regulation, particularly in Europe, since the global financial crisis provides further support. We do hold banks in the portfolio but these are conservatively run, well capitalised and do not have any funding mismatches. Consequently, we believe they will navigate through this period operationally well. We will however continue to monitor the situation closely. The market's initial assessment of the impact of the banking crisis is that credit conditions are likely to tighten impacting economic growth and this may lower interest rate expectations. This more sober outlook is frustrating given that European markets were leading global markets higher on the combination of attractive valuations and a more optimistic outlook. This view has not yet been completely derailed and Europe's valuation metrics continue to look more attractive both in relative and absolute terms. In a very volatile environment there is the risk that any pronouncement one day may look imprudent the next. So, while recognising that risk, we still look forward with a degree of tentative optimism. **Jack Perry CBE** Chairman 28 March 2023 Chairman's statement S. Stuart S. Stuart S. Stuart S. Stuart S. Stuart Report and Accounts 2022 | 7 ## Purpose, Strategy and Business Model Purpose and strategy As an Investment Trust the Company is not constrained by asset The purpose of the Company is to achieve long-term growth of capital. sales to meet redemptions and is well suited to investors seeking longer term returns. The share capital structure provides the A high distribution policy has been adopted with dividends paid out flexibility to take a long-term view and stay invested while taking of current year net profits and the Distributable Reserve. advantage of illiquidity throughout normal and volatile market The strategy is to invest in quoted small and medium-sized conditions. All the Company’s investments are listed. Having the companies in Europe, excluding the United Kingdom. ability to borrow to invest is a significant advantage over a number of other investment fund structures. Investment policy and principal guidelines The Board remains responsible for decisions over corporate The investment policy seeks investments in quoted small and strategy; corporate governance; risk and internal control medium-sized companies in Europe, excluding the United Kingdom, assessment; setting policies as detailed on pages 20 and 21, defined as those with a market capitalisation below that of the largest setting limits on gearing and asset allocation; monitoring investment company in the EMIX Smaller European Companies (ex UK) Index. performance; and monitoring marketing performance. The Company will not invest more than 20 per cent of its total assets in any one company and does not take legal or management Implementing the strategy control of any company in which it invests. The investment management contract is with the Manager part The Company does not restrict its investments to any specific of Columbia Threadneedle Investments. The Manager has been industrial or geographical sector; a diversified geographical spread appointed as Alternative Investment Fund Manager (“AIF Manager”). is maintained. The ultimate parent company of Columbia Threadneedle Investments The Company does not seek to create a portfolio to take advantage is Ameriprise Financial, Inc. of anticipated currency fluctuations. Sam Cosh is the lead portfolio manager appointed by the Manager The Company has the ability to undertake stock lending activities to the Company. He is assisted by Lucy Morris. Biographies of Sam but does not anticipate doing so and would need to enter into a new Cosh and Lucy Morris who are members of the Global Smaller team agreement with its custodian before commencing. at Columbia Threadneedle Investments are provided on page 10. Details of the Manager’s approach are provided on pages 14 and The Company has the powers under its Articles to borrow an amount 15. up to 20 per cent of its securities portfolio. The fee that the Manager receives for its services is based on the It is the intention of the Company barring unforeseen circumstances, value of assets under management of the Company, thus aligning to pay an annual dividend equivalent to six per cent of the NAV of its interests with those of the Shareholders. The ancillary functions the Company at the end of the preceding year. of secretarial and marketing services are also provided by the As noted on page 7, IHS Market Benchmark Administration Manager. The Manager is also responsible for the provision of has announced its intention to cease calculation of the current administration to the Company for which a separate administration benchmark of the Company, the EMIX Smaller European Companies fee is charged. Details of the management and administration fees (ex UK) Index. It is therefore proposed that, with effect from 1 June payable to the Manager are provided on page 35. 2023, the replacement benchmark for the Company will be MSCI Europe ex-UK SMID Cap Index. Environmental, Social and Governance (“ESG”) Impact As this will result in a material change to the investment policy of *Adjusted for ten for one stock split effective 3 May 2018. Our ESG policies are set out on pages 24 to 27. The direct impact the Company, resolution 12 in the Notice of the forthcoming Annual of our activities is minimal as the Company has no employees, General Meeting, seeks Shareholder approval for this change. premises, physical assets or operations either as a producer or a provider of goods or services. Its indirect impact occurs through the Business model investments that it makes and this is mitigated through Columbia The Directors have a duty to promote the success of the Company. Threadneedle Investments responsible investment approach as As an investment company with no employees, the Board believes explained on pages 24 to 27. that the optimum basis for doing this and achieving the Company’s objective, and strategy is a strong working relationship with the Manager evaluation Company’s appointed manager, Columbia Threadneedle Investment Investment performance and responsible ownership are Business Limited (the “Manager”). Within policies set and overseen fundamental to delivering sustainable long-term growth in capital by the Board, the Manager has been given overall responsibility for for the Company’s Shareholders and therefore an important the management of the Company’s assets, asset allocation, gearing, responsibility of the Board is exercising a robust annual stock selection and risk. 8 | European Assets Trust PLC OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information Strategic Report evaluation of the Manager’s performance. This is conducted by Managing risks and opportunities the Management Engagement Committee of the Board. This is an Like all businesses, investment opportunities do not come without essential part of the strong governance that is carried out by the risks and uncertainties and so the performance of the Manager Board, all the members of which are independent and non-executive. is monitored at each board meeting. In addition to managing the The process for the evaluation for the year under review and the Company’s investments, the ancillary functions of administration, basis on which the decision to reappoint the Manager for another secretarial, accounting and marketing services are all carried out by year are set out on page 45. As noted above, the management the Manager. fee is based on the value of assets under management of the The Board receives reports on the investment portfolios; the wider Company, thus fully aligning the Manager’s interests with those of portfolio structure; risks; income and expense forecasts; internal Shareholders. control procedures; marketing; shareholder and other stakeholder issues, including the Company’s share price premium or discount to Gearing strategy NAV; and accounting and regulatory updates. The Company has the ability to borrow up to an amount of 20 per Shareholders can assess the financial performance of the Company cent of the value of its investment portfolio. from the Key Performance Indicators that are set out on page 19. At 31 December 2022 the Company had drawn €10 million from its The Board has undertaken a robust assessment of the principal €45 million borrowing facility with The Bank of Nova Scotia, London and emerging risks facing the Company. The Principal Risks that the Branch and held cash balances of €15.0 million, resulting in net Board considers the Company faces are detailed on page 28. cash of 1.3%. The risk of not achieving the Company’s objective, or of consistently Following the year end, the Company has agreed to renew its loan underperforming the Benchmark or peer group, may arise from facility with The Bank of Nova Scotia, London Branch. any or all of inappropriate stock selection, asset allocation, poor market conditions, ineffective or expensive gearing, poor cost Liquidity management control, loss of assets and service provider governance issues. The Company has share issuance and buy back authorities which In addition to regularly monitoring the Manager’s performance, are designed to minimise the volatility of its share price relative to their commitment and available resources and their systems and its Net Asset Value (“NAV”). controls, the Directors also review the quality and value of services provided by other principal suppliers. These include the Custodian Communication and marketing with key stakeholders and Depositary in their duties in respect of the safeguarding of the The Company fosters good working relationships with its assets. key stakeholders; the Manager, Shareholders, suppliers and The principal policies that support the strategy are set out on page contractors. As an investment trust the Company has no employees. 20, whilst the Investment Manager’s review of activity in the year With approximately 92% of the shares held by retail investors, and can be found on page 11. savings or execution-only platforms representing an increasingly significant and growing element of the Shareholder base, the Company remains focused with its Manager on promoting its success. All appropriate channels are used including the internet and social media as well as the CT Savings Plans. The Company’s activities and performance are reported through the publication of its financial statements but the majority of Shareholders and CT Savings Plan investors prefer not to receive such detailed information. To avoid losing this essential line of communication, the Company issues a short notification with the key highlights of its half-yearly and annual results. The Company also issues a monthly factsheet. All stakeholders can locate the full information on the Company’s website, www.europeanassets.co.uk. The Annual General Meeting (“AGM”) of the Company provides a forum, both formal and informal for Shareholders to meet and discuss issues with the Directors and Investment Managers. Through the Manager, the Company also ensures that CT Savings Plan investors are encouraged to attend and vote at annual general meetings in addition to those who hold their shares on the main shareholder register. Details of the proxy voting results on each resolution are published on the Company's website where there is also a link to the daily publication of the Company’s NAV and its monthly factsheet. The Manager also has in place a programme of meetings designed to foster good relations with wealth managers in promoting the Company’s investment proposition. These meetings are reported regularly to the Board. Any contact with the Company’s institutional Shareholders is also reported. The Chairman and Senior Independent Director are available to meet with major Shareholders. Report and Accounts 2022 | 9 ## Investment Managers | Sam Cosh, Lead Manager is a Director, at | Lucy Morris, Manager is a Director at | | --- | --- | | Columbia Threadneedle Investments. Sam | Columbia Threadneedle Investments | | joined Columbia Threadneedle Investments | specialising in smaller companies. Lucy | | in 2010 from BNP Investment Partners | joined the business in 2007, originally | | and was appointed Lead Manager for | working in the Performance Analytics | | European Assets Trust during 2011. Sam | team before transferring to Equities in | | also manages the European investments of | 2011. She has worked on the European | | The Global Smaller Companies Trust PLC. | Small Cap mandates since that point | | He has over twenty years’ experience in | which include European Assets Trust as | | European equities, principally within small | well as the European investments of The | | and mid-cap mandates. | Global Smaller Companies Trust PLC. She | also manages the CT European Smaller Companies open ended fund. Lucy holds the Investment Management Certificate and is a CFA Charterholder. 10 | European Assets Trust PLC OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information Strategic Report ## Investment Manager’s Review ## “We continue to focus on companies that deliver good levels of profits “In terms of stock picking the clear lesson from ### recent events is to avoid companies whose business ## and cash flow, protect those cash flows from competition with strong ### models have been supported by low rates and are ## business models, and benefit from sensible capital allocation by their ### challenged by the dramatic change in interest rate ## management ### regime that we have seen over the last year. There Sam Cosh, Lead Manager ### will be further casualties, but we believe our quality ### biased approach avoids such exposure.” Market Backdrop Performance 2022 was a challenging year for almost all asset classes and Our portfolio performed poorly last year, significantly European smaller companies were no exception, registering underperforming the index. The main reason was the dramatic significant falls. The initial sell-off, at the beginning of the year, rotation out of quality, growth stocks into value areas of the was precipitated by inflation data that caused bond yields to market. This was caused by interest rate rises which have a rise and expectations of an earlier and more aggressive interest detrimental impact on the valuation of companies whose value rate tightening cycle led by the US Federal Reserve. While this is derived from cash flows that grow over a long time frame. This theme dominated for most of the year, the bearish sentiment was rotation was exacerbated by the strong moves in commodities, exacerbated by Russia’s invasion of Ukraine in February. Energy the only major asset class that registered gains last year, driven and food prices spiked, adding further to inflation concerns, while by a rush towards energy security following the war in Ukraine. investors digested what a war on Europe’s doorstep would mean Our philosophy and portfolio style are biased towards growth for the region’s economic activity, with potential gas shortages the companies, so it is perhaps no surprise that we performed poorly, principal area of concern. Meanwhile, China’s zero COVID-19 policy however, we are clearly disappointed by the scale of our relative and regional lockdowns added to global supply chain restrictions underperformance. Within the portfolio, we had built some balance that were already under severe pressure, further fuelling rising input with exposure to rising interest rates, principally through our costs. In response, central banks became increasingly hawkish, holdings in financials, but this balance was overwhelmed by the prioritising the fight against inflation over supporting economic scale of sector rotation. activity. Geopolitical risks, rapidly rising interest rates and increasing The performance was also heavily impacted by some stocks that recessionary expectations therefore dominated markets for most of were exposed to a consumer whose disposable incomes were the year until the fourth quarter brought some much-needed respite. under pressure from rising costs. These stocks were also having Encouragingly, Europe finished the year particularly strongly, leading to contend with a period of softening demand as they digested global markets higher. While rates kept rising, US and European the hangover from some unusually strong COVID-19 years. inflation data came in below expectations, allowing investors to For example, MIPs, who supply technology for principally cycle ponder lower peak rates. Economic indicators, whilst still pointing helmets, and Thule, who sell stylish products for active families to activity softening, were also better than expected. In Europe this and outdoor enthusiasts, both announced disappointing trading was helped by the dramatic decline in natural gas prices due to the updates. Whilst neither of these companies are suffering from combination of a mild start to winter and full gas storage facilities. excess inventories of their products in the retail channel, nor a Despite a strong year end, however, 2022 was a poor year for demand problem, retailers are struggling with excess inventories investors. of other, low value items in their stores that need to be cleared Report and Accounts 2022 | 11 Strategic Report before they can restock with higher end products from MIPs and appreciated by the markets. Finally, another new addition, Schoeller Thule. Once this inventory is cleared, which may take some time, Bleckmann, performed strongly. Austrian listed, this company is the we would expect both companies see demand patterns in line with leading supplier of non-magnetic steel components to the oil and their long-term positive trajectory. Other consumer related stocks gas industry and, rose after its results outperformed on the back of that suffered from difficult comparisons with very strong trading in the scramble towards energy security caused by Russia’s invasion recent years were Fluidra, the swimming pool equipment suppliers, of Ukraine. and HelloFresh, the leading meal kit provider. We continue to hold Portfolio Activity these positions in anticipation of better demand trends later in Portfolio turnover was broadly in line with long-term averages. the year and because we believe in the long-term structural growth Trading was driven by a combination of executing our philosophy and opportunities for these businesses. process whilst recognising emerging priorities. On the latter, we are The technology sector was also an area that struggled from similar aware that energy security is a key geopolitical focus now. Following themes. Despite delivering good operational performance through a decade of underinvestment on the supply side we may be at the the year, our semiconductor stocks ASMI, the equipment provider, start of a new capital cycle in the sector. We have invested in quality and Nordic Semiconductor, the leading Bluetooth company, saw companies that are exposed to this; Schoeller Bleckman mentioned their valuations heavily de-rated through the year as investors sold above and TGS, the seismic analytics company. We also believe out of growth companies. Industrials also struggled, and while that tight labour markets and re-shoring of industrial production will we were underweight the sector, stock specifics overwhelmed lead to a greater investment in automation and so have started sector allocation. Forbo, the Swiss listed flooring company, and positions in Kardex, whose equipment optimises and automates Norma Group, the German listed autosupplier, both delivered poor logistical workflows, and Engcon, the Swedish listed market leader operational updates that caused us to sell these holdings. Wizz of tilt rotators that improve the productivity of excavators. The other Air, was another poor performer as it faced the twin headwinds characteristic of this market cycle is likely to be higher interest rates of higher fuel costs and a weaker consumer. We cut the position as core inflation remains high in contrast to the previous decade. significantly at the outset of the Ukrainian war, mitigating the We have expressed this view through our holdings in regional banks damage, before adding later in the year. This proved to be a good and life insurance, which was augmented by the decision to add decision with the shares recovering strongly into this year. Bank of Ireland early in the year. Turning to more positive outcomes, our best contributor to our We have also been cognisant that market falls usually provide performance in terms of sector came from healthcare. This opportunity. While we have not been as active in this regard was slightly peculiar because the sector, unusually in a down compared to what we executed during the outset of the COVID-19 market, was the worst performer, underperforming even consumer pandemic, following our process has meant that we have added discretionary at the index level. Our positive stock selection meant some new positions in addition to those mentioned earlier in this that this was the best contributor though, with Tecan, the Swiss commentary. Examples include Viscofan, the market leader in the listed diagnostics company, leading the way supported by an global synthetic sausage skin oligopoly, Siegfried, which holds a upgrade to guidance at their first half results. strong position as an outsourced manufacturer of small molecules The materials sector also yielded some good performance with for pharmaceutical companies, and Vidrala, the Spanish bottling both our sector allocation and stock selection being good. Of note company. were our holdings in Verallia, the French glass manufacturer, and Our sell decisions were driven by a more critical appraisal of SIG, the Swiss listed aseptic packaging supplier, both of which operational performance during a period when quality credentials consistently delivered strong operational results. One of our were tested. For example, following disappointing trading updates, new positions, Hexpol, the supplier of polymer compounds, also we sold, in addition to those mentioned above, holdings in performed well due partly to its large exposure to the strong dollar Cancom, the German IT reseller, Marr, the Italian food services but mainly due to encouraging results. business, Simcorp, the asset management software business, and Finally, in terms of sectors, our traditional financials contributed FlatexDegiro, the German listed, low-cost retail brokerage firm. well. Interest rates, a long-term headwind for the sector have finally turned supportive. Ringkjoebing Landbobank, listed in Denmark, Sparebank, listed in Norway, and Storebrand, the Norwegian life insurance company, all had strong years. Bank of Ireland, a new holding, was, however, the highlight being the best performer as investors began to appreciate the strong economic backdrop that Ireland offers, the cheap valuation, higher interest rates, a consolidated market and improving results. Other stocks worthy of mention include Lotus Bakeries, the owner of the Biscoff brand, whose consistent profit delivery was 12 | European Assets Trust PLC OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information Strategic Report Portfolio Split by Sector at 31 December 2022 Industrials 21.7% (22.5%) Financials 17.2% (19.0%) Consumer Discretionary 13.6% (15.4%) Technology 12.7% (19.3%) Consumer Staples 11.8% (8.9%) Healthcare 11.4% (9.7%) Basic Materials 7.3% (4.1%) Energy 3.0% (0.0%) Real Estate 1.3% (1.1%) Outlook The year had started strongly, with Europe pleasingly leading the way. This has, however, been derailed by the failure of Silicon Valley Bank (SVB) in the US and Credit Suisse in Europe. This has caused a significant sell-off across the market driven by the financial sector. The failure of any financial institution brings back memories of the Global Financial Crisis, however, we think, there are reasons to be less concerned this time. Financial regulation in terms of capital requirements and funding, particularly in Europe, are much more robust, whilst central banks and financial regulators have reacted quickly. There will, however, be some significant ramifications from this of which some will not be understood yet. Initially, it is fair to assume that credit conditions will be tighter, adding further to the challenging calculations that central bankers are having to make with regard to interest rate rises. In terms of stock picking the clear lesson from recent events is to avoid companies whose business models have been supported by low rates and are challenged by the dramatic change in interest rate regime that we have seen over the last year. There will be further casualties, but we believe our quality biased approach avoids such exposure. We are, however, looking closely at the opportunities that may present themselves as good businesses potentially get dragged down by recent events. Prior to the sell-off, Europe looked attractively valued both in absolute levels and relative to global markets. This provides an attractive backdrop to stock picking and future long-term returns. Sam Cosh Lead Investment Manager Columbia Threadneedle Investment Business Limited 28 March 2023 Report and Accounts 2022 | 13 Strategic Report ## Investment Manager’s Investment ## Philosophy and Process There are approximately 4,000 quoted European (ex-UK) small and or for worse. We want to invest alongside management teams who mid-cap companies. This is a large, diversified universe of exciting make good long-term decisions and are rewarded for doing so. This opportunities and is not necessarily well researched or understood often leads us to have a natural affinity towards family businesses, properly. This leads to ‘market inefficiency’ that we, as disciplined owner-operators, who are successful entrepreneurs, who tend to be stock pickers, can take advantage of to aim to deliver superior good guardians of capital and reinvest their profits intelligently. investment performance over the long term. While we believe the evolution of a company’s profits and cash Our philosophy is based on our belief that companies that can generation will be the principal determinant of shareholder returns, compound high returns over an enduring period tend to be we also believe the price that you pay for an asset is also crucial in undervalued by the market. We want to invest in these high- delivering long-term performance. Maintaining valuation discipline is quality companies, or those that have the business models that crucial to long-term returns and often requires patience. Companies will achieve quality characteristics in the future. Integral to this that reach our quality hurdle but do not appear reasonably valued are approach is understanding the competitive advantages, or moats, placed on our watch list. This allows us to execute quickly when the of these companies. After all this is what will allow a business to opportunity presents itself. defend or improve its market position delivering growing profits for Ultimately this approach should lead to a portfolio of quality smaller shareholders. companies with the following characteristics: While we do not necessarily target specific sectors, our philosophy - Proven business models that are defended by scale, intellectual will naturally lead us towards certain areas or themes where long- property, brand or market positions term growth of superior cash flow is more likely. This will result in a - Management teams that have the right balance of portfolio that is significantly differentiated against the benchmark. entrepreneurial flair and rational capital allocation, who are Integral to our assessment of quality is an analysis of Environmental, incentivised appropriately Social and Governance (“ESG”) issues that face the company and its - Higher growth rates, margins and returns on capital than the response to them. More details can be found on pages 24 to 27. market Management teams of smaller companies have a huge role to play in - Superior cash flow generation and strong balance sheets that the evolution of their businesses. How they are motivated, rewarded, provide stability and opportunity for value added deployment- and allocate capital is crucial in a company’s development, for better ## Continuous Monitoring Process ## u s m o n ## u o i t ## i n o ## t r i ## n n ## o g ## C ## > ### D ### w e ### e t ### i a ### v i l ### e e ### r d ### n r ### o Pre-defined e ### i s ### t ### e ### a review triggers ### a ### u ### l r ### c ### a ### Clear sell h ### V ### disciplines ## Peer review > ## > ### T ### h ### e s w ### i s r e v i e Source: Columbia Threadneedle Investments 14 | European Assets Trust PLC OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information Strategic Report ## The Investment Process Focuses on Three Aspects for Each Company • Attractive growth prospects • Enduring differentiation/ competitive advantages • Superiorprofitgenerators • Strong sustainability characteristics • Margin of safety • Proven management • Sustainable superior team returns • Entrepreneurial • Use of discounted • Consistent/proven cashflow execution & relative valuation • Responsible capital • ESG & Sustainability allocators score embedded in • Appropriate incentives/ proprietary valuation aligned interests method Having a disciplined process is essential in driving a consistent excessive valuation, or negative, if the assessment of the company’s application of our philosophy. We undertake our own research long-term value drivers deteriorates significantly. We believe this which is peer reviewed by the wider investment team prior to a approach gives us the best chance of delivering attractive long term purchase decision. This ensures the benefit of shared knowledge returns for our Shareholders. and experience is brought to bear on each investment. The original investment thesis is retested particularly if the company or its share price performs below expectations. Like all investors, we are having to make assessments about the Sam Cosh future and take decisions in the face of uncertainty. There is a real Lead Investment Manager possibility of being wrong. We believe we can mitigate this risk Columbia Threadneedle Investment Business Limited by following this long-term philosophy, emphasising a number of 28 March 2023 factors: thorough independent research; the need for a margin of safety on purchase; continuous monitoring; and diversification of the investment portfolio. Reasons to sell can be driven by positive or negative factors: positive if the value of the company has risen to an ### a l i t y b u ### q u s ### i n ### h e ### i g s ### s ### H ### t ### n ### e ### m ### e ### g ### a ### n ### a ### A m ### t g ### t n ### r r o ### a S t ### c ### t Report and Accounts 2022 | 15 ### i v ### e ### p ### r i ### c e # Ten Largest Holdings as at 31 December 2022 ## 1. Tecan (8) Switzerland Tecan is a leading global provider of automated laboratory instruments and solutions. Their systems and components improve productivity in a market that is growing strongly driven by increasingly personalised diagnostic needs. **4.5%** of net assets www.tecan.com **£15,486,156 value** ## 2. Ringkjoebing Landbobank (1) Denmark High quality regional Danish bank with a long track record of loyal customers, low loan losses and good returns on equity. They have a dominant position in their local region, and have been growing outside of this as they continue to take share from lower quality competitors. **4.4%** of net assets www.landbobanken.dk **£15,242,980 value** ## 3. Interpump (3) Italy Manufacturer of ultra high pressure pumps used for fluid movement and hydraulic components installed on vocational trucks and other machinery. Proven resilient operator as a result of diverse end markets and high quality product, highly cash generative and excellent capital allocation record. **3.7%** of net assets www.interpumpgroup.it **£12,694,769 value** ## 4. SIG Group (18) Switzerland Market leading system and solutions provider for aseptic packaging used for liquid dairy, non-carbonated soft drinks and liquid food packaging applications. They have a high proportion of recurring revenues as a result of selling the consumables linked to the use of their machines. **3.4%** of net assets www.sig.biz **£11,765,340 value** ## 5. Storebrand (6) Norway Leading Norwegian life insurer and asset manager. Returns are improving as the capital intensive guaranteed life book diminishes and their more profitable fee based business improves. This should lead to a higher rating and significant return of capital. **3.3%** of net assets www.storebrand.no **£11,420,801 value** ## 6. Karnov (19) Sweden Karnov is the clear market leader in provision of legal information in Denmark and Sweden. Through their online portal, they provide historic annotated case information, predominantly to lawyers. This information is low cost but integral to their customers daily operations. Margins should rise as they increase prices in Sweden, following the consolidation of the market, to levels that they achieve in Denmark. **3.1%** of net assets www.karnovgroup.com **£10,724,426 value** ## 7. Atea (14) Norway Largest IT infrastructure provider in the Nordic and Baltic region reselling hardware, software and value added services with a large exposure to the public sector who are investing in their 'digital transformation'. **3.0%** of net assets www.atea.com **£10,506,182 value** ## 8. SpareBank (16) Norway Regional bank with a strong franchise in Southern Norway, with particularly strong market shares in Rogaland, a wealthy area supported by oil and gas exploration and production. **3.0%** of net assets www.sparebank1.no **£10,287,454 value** ## 9. Lotus Bakeries (32) Belgium Belgium family run business active worldwide in the indulgent and natural snacking segment with brands such as Lotus Biscoff, Nakd, Trek and Bear. Biscoff is a unique product range based on speculoos (spiced shortcrust biscuit) taste that is gaining global traction offering excellent growth potential. **2.9%** of net assets www.lotusbakeries.com **£10,223,287 value** ## 10. IMCD (11) Netherlands Listed in the Netherlands, IMCD is a market leading specialist in chemical distribution. They formulate, sell and distribute products and ingredients for large chemical companies. They are improving their market share through both organic means and acquisitions. **2.8%** of net assets www.imcdgroup.com **£9,762,769 value** Note: Number in brackets is the position held in the portfolio as at 31 December 2021 16 | European Assets Trust PLC OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information Strategic Report ## Investment Portfolio as at 31 December 2022 | | | Valuation | | % of Net | | | Country of | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Company Nature of Business | | | £’000 | Assets | | Incorporation | | | | | Tecan | Automated Laboratory Instruments and Solutions | | 15,486 | | 4.5% | | Switzerland | | | | Ringkjoebing Landbobank | Regional Banking | | 15,243 | | 4.4% | | | Denmark | | | Interpump | Industrial Producer of Fluid Movement Pumps and Hydraulic Components | | 12,695 | | 3.7% | | | | Italy | | SIG Group | Systems and Consumables Provider for Aseptic Packaging | | 11,765 | | 3.4% | | Switzerland | | | | Storebrand | Long-term Savings and Insurance | | 11,421 | | 3.3% | | | Norway | | | Karnov | Mission Critical Information Provider to the Legal Industry | | 10,724 | | 3.1% | | | Sweden | | | Atea | Value Added IT Hardware and Software Reseller | | 10,506 | | 3.0% | | | Norway | | | SpareBank | Banking | | 10,287 | | 3.0% | | | Norway | | | Lotus Bakeries | Indulgent and Natural Snack Manufacturer | | 10,223 | | 2.9% | | | Belgium | | | IMCD | Speciality Chemical Distributer | | 9,763 | | 2.8% | | Netherlands | | | | Ten largest investments | | | 118,113 34.1% | | | | | | | | Sligro Food Group | Food and Beverage Provider | | 9,750 | | 2.8% | | Netherlands | | | | Bank of Ireland | National Bank Operating in a Consolidated Market | | 8,732 | | 2.5% | | | Ireland | | | Alten | Outsourced Engineering and R&D Provider | | 8,625 | | 2.5% | | | | France | | CTS Eventim | Concerts and Ticketing | | 8,543 | | 2.5% | | | Germany | | | Lectra | Provider to the Fashion, Automotive and Furniture Industries | | 8,311 | | 2.4% | | | | France | | ASM International | Semiconductor Equipment | | 8,224 | | 2.4% | | Netherlands | | | | Symrise | Speciality Chemicals | | 8,076 | | 2.3% | | | Germany | | | Coor | Provider of Integrated Facilities Management and Consulting Services | | 7,975 | | 2.3% | | | Sweden | | | Nordic Semiconductor | Market Leader in Low Power Bluetooth Semiconductor Design | | 7,871 | | 2.3% | | | Norway | | | Stratec | Manufacturer of Invitro Diagnostic Instrumentation and Consumables | | 7,484 | | 2.2% | | | Germany | | Twenty largest investments 201,704 58.3% | Verallia | Glass Bottle Manufacturer | 7,418 | 2.1% | France | | --- | --- | --- | --- | --- | | Cairn Homes | House Builder | 7,076 | 2.0% | Ireland | | Hexpol | Chemical Compounder | 6,862 | 2.0% | Sweden | | Royal Unibrew | Nordic and Baltic Beverage Producer | 6,852 | 2.0% | Denmark | | Gerresheimer | Glass and Plastic Containers | 6,707 | 1.9% | Germany | | Schoeller Bleckmann Oilfield Equipment | Oilfield Equipment Manufacturer | 6,621 | 1.9% | Austria | | Azimut | Asset Management | 6,612 | 1.9% | Italy | | Fluidra | Swimming Pool Equipment and Maintenance | 6,379 | 1.8% | Spain | | Viscofan | Artificial Casings for Meat Products | 6,273 | 1.8% | Spain | | MIPS | Helmet Safety | 5,767 | 1.7% | Sweden | Thirty largest investments 268,271 77.4% | Vidrala | Manufacturer and Supplier of Glass Containers | 5,544 | 1.6% | | Spain | | --- | --- | --- | --- | --- | --- | | Sdiptech | Industrial Consolidator Focused on Sustainability | 5,501 | 1.6% | | Sweden | | Siegfried | Contract Development Manufacturing Organisation | 5,437 | 1.5% | Switzerland | | | Rational | Specialist in Hot Food Preparation for Professionals | 4,934 | 1.4% | Germany | | | Dalata Hotel Group | Hotel Chain Operator | 4,855 | 1.4% | | Ireland | | Indutrade | Niche Industrial Conglomerate | 4,624 | 1.3% | | Sweden | | Avanza Bank | Swedish Savings and Investment Platform | 4,554 | 1.3% | | Sweden | | Glanbia | Global Nutrition Company | 4,484 | 1.3% | | Ireland | | Thule | Outdoor and Transportation Product Manufacturer | 4,297 | 1.2% | | Sweden | | Merlin Properties | Commercial Real Estate Owner | 4,284 | 1.2% | | Spain | Forty largest investments 316,785 91.2% Report and Accounts 2022 | 17 Strategic Report ### Investment Portfolio as at 31 December 2022 (continued) | | | Valuation | | % of Net | | | Country of | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Company Nature of Business | | | £’000 | Assets | | Incorporation | | | | Kardex | Intralogistics Solutions and Automated Storage Provider | | 3,997 | | 1.2% | | Switzerland | | | TGS | Geophysical Consulting and Contracting Services | | 3,593 | | 1.0% | | | Norway | | Carasent | Cloud Healthcare Software Provider | | 3,588 | | 1.0% | | | Norway | | Engcon | Tiltrotator Manufacturer | | 2,952 | | 0.9% | | | Sweden | | V Zug | Luxury Household Appliance Manufacturer and Service Provider | | 2,906 | | 0.8% | | Switzerland | | | HelloFresh | Home Meal Kit Provider | | 2,821 | | 0.8% | | | Germany | | Wizz Air | Budget Airline | | 2,194 | | 0.6% | | Switzerland | | | flatexDEGIRO | Online Broker | | 1,881 | | 0.5% | | | Germany | Total investments 340,717 98.0% Net current assets 6,910 2.0% Net assets 347,627 100.0% 18 | European Assets Trust PLC OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information Strategic Report ## Key Performance Indicators The Board recognises that it is longer term share price 1. Net Asset Value per share total return performance that is most important to the Company’s investors. 2. Share Price total return Underlying share price performance is driven by the performance 3. Premium / (discount) to Net Asset Value of the Net Asset Value. The overriding priority is to continue to 4. Ongoing charges strive for the consistent achievement of relative outperformance; 5. Shares issued / (bought back) adding value for Shareholders through Net Asset Value and Share Price Total Return; the management of the Company’s share Information in relation to these KPIs is set out in the tables below. price premium/discount; dividend yield; low and competitive Commentary can be found in the Chairman’s Statement and the ongoing charges; and effective marketing. The Board assesses Investment Manager’s Review. its performance in meeting the Company’s objective against the following key performance indicators (“KPIs”): ‡ Net Asset Value per share sterling total return performance at 31 December 2022 1 Year % 3 Years % 5 Years % 10 Years % European Assets Trust* (28.2) 1.8 3.1 142.8 ¥ EMIX Smaller European (ex UK) Companies Index (17.7) 12.4 18.4 184.5 Source: Columbia Threadneedle Investments, Refinitiv Eikon ‡ Share price sterling total return performance at 31 December 2022 1 Year % 3 Years % 5 Years % 10 Years % European Assets Trust* (28.4) 3.5 (0.9) 153.1 ¥ EMIX Smaller European (ex UK) Companies Index (17.7) 12.4 18.4 184.5 Source: Columbia Threadneedle Investments, Refinitiv Eikon | | ‡ | | ‡ | | --- | --- | --- | --- | | Average (discount)/premium | * | Ongoing charges as at 31 December | * % | | For the year ended 31 December % | | 2022 1.03 | | | 2022 (5.2) | | 2021 0.89 | | | 2021 (6.7) | | 2020 0.95 | | | 2020 (10.0) | | 2019 1.11 | | | 2019 (5.2) | | 2018 1.11 | | | 2018 (9.5) | | Source: Columbia Threadneedle Investments | | Source: Columbia Threadneedle Investments ‡ Shares issued during the year ended 31 December 2022 - 2021 - ∞ 2020 134,573 † 2019 179,383 † 2018 12,312,883 Source: Columbia Threadneedle Investments ‡ EAT NV prior to the migration on 16 March 2019. ¥ With effect from 1 April 2021 the benchmark changed from EMIX Smaller European Companies (ex UK) Index (gross) to EMIX Smaller European Companies (ex UK) Index (net). * See Alternative Performance Measures on pages 82 and 83 for explanation. ∞ Excludes issuance related to the migration on 16 March 2019. † Rebased for stock split of 3 May 2018. Report and Accounts 2022 | 19 Strategic Report ## Principal Policies Investment The Board declares dividends in sterling. This provides certainty of income for the overwhelming majority of the Company’s The Company is required to have a publicly available investment Shareholders who choose to receive their dividends in sterling policy from which Shareholders, prospective investors and rather than euros. To attempt to manage any sterling/euro stakeholders can understand the scope of its investment remit exchange rate exposure which may arise from the currency of the and constraints. Any material changes to this policy can only be dividend, the Company has entered into forward currency hedging made with the approval of Shareholders and the Financial Conduct contracts to cover this specific exposure. Authority (“FCA”). Details of the investment policy are provided on page 8. Taxation In the event of a breach of the Company’s investment policy, The Board’s policy towards taxation is one of full commitment to the Manager shall promptly inform the Board and if the Board complying with applicable legislation and statutory guidelines. It is considers the breach to be material, notification will be made by a essential that the Company always retains its investment trust tax regulatory information service to the London Stock Exchange. status by complying with Section 1158 of the Corporation Tax Act 2010 (“Section 1158”) such that it does not suffer UK Corporation Dividends Tax on capital gains. The Company has received approval from HMRC as an investment trust under Section 1158 and has since The level of dividend paid by the Company each year is determined continued to comply with the eligibility conditions. The Manager by the Board in accordance with the Company’s distribution also ensures that the Company submits correct taxation returns policy. It is the intention of the Company, barring unforeseen annually to HMRC; settles promptly any taxation due; and claims circumstances, to pay an annual dividend equivalent to six per cent back, where possible, all taxes suffered in excess of taxation treaty of the NAV of the Company at the end of the preceding year. The rates on non-UK dividend receipts. Company expects to pay the dividend in four equal instalments in January, April, July and October each year. Liquidity The Company will pay dividends on the shares only to the extent The Board recognises the need to address any sustained and that it has distributable reserves available for that purpose. significant imbalance of buyers and sellers which might otherwise Dividends are funded from current year revenue profits and the lead to shares trading at a material discount or premium to Distributable Reserve. NAV per share. While it has not adopted any formal discount The Board is mindful that many Shareholders reinvest their or premium targets which would dictate the point at which the dividends through schemes operated by savings plans and Company would seek to purchase shares or issue further shares, platforms. the Board is committed to utilising its share purchase and share issuance authorities where appropriate in such a way as to Borrowings mitigate the effects of any such imbalance. In considering whether The Company’s borrowings shall not (without the sanction of a buyback or issuance might be appropriate in any particular set general meeting of the Company) exceed an amount equal to the of circumstances, the Board will take into account: the prevailing aggregate of 20% of the book value of its securities portfolio and market conditions; the degree of NAV accretion that will result from its subsidiaries, if any. the buyback or issuance; the cash resources readily available to the Company; the immediate pipeline of investment opportunities Currency hedging open to the Company; and the working capital requirements of the Due to its investment focus on investing in companies in Europe, Company. the Company’s investments can be denominated and quoted in currencies other than euro. The Company does not seek to create a portfolio to take advantage of anticipated currency fluctuations and has no current intention of seeking to hedge any currency exposure which may arise from investing in non-euro denominated investments. 20 | European Assets Trust PLC OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information Strategic Report (1) Board diversity Board Ethnic Background as at 31 December 2022 The Board’s policy towards the appointment of non-executive Number of Directors is based on its belief in the benefits of having a diverse | | | Number of | Percentage of | | senior positions | | | --- | --- | --- | --- | --- | --- | --- | | range of experience, skills, length of service and backgrounds, | | | | | | (2) | | | Board Members | | | the Board | on the Board | | including gender. The policy is always to appoint the best person for the job and, by White British way of this policy statement it is confirmed that there will be no or other white (including 4 80% 2 discrimination on the grounds of gender, ethnicity, socio-economic minority-white background, religion, sexual orientation, age or physical ability. groups The overriding aim of the policy is to ensure that the Board Asian/Asian (3) is composed of the best combination of people to deliver the 1 20% – British Company's objective. The policy is applied for the purpose of appointing individuals that, together as a Board, will continue to (1) The Company has opted not to disclose against the number of Directors in achieve that aim as well as ensuring optimal promotion of the executive management as this is not applicable for an investment trust. (2) Composed of the Chair and the Senior Independent Director. Company’s investment proposition in the marketplace. (3) The Listing Rule 9(a) (iii) target is 1. The Board is conscious of the diversity targets set out in the FCA Listing Rules. Although the Company is not required to report against these targets under the Listing Rules until 31 December 2023, the Integrity and business ethics Board is disclosing this information on a voluntary basis. The Company applies a strict anti-bribery and anti-corruption policy In accordance with Listing Rule 9.8.6R (9), (10) and (11) the Board insofar as it applies to any directors or employee of the Manager has provided the following information in relation to its diversity. or of any other organisation with which it conducts business. The (1) Board also ensures that adequate procedures are in place and Board Gender as at 31 December 2022 followed in respect of third-party appointments, acceptance of gifts | | | | | | Number of | | and hospitality and similar matters. | | --- | --- | --- | --- | --- | --- | --- | --- | | | Number of | Percentage of | | senior positions | | | | | Board Members | | | the Board | | | (2) | | on the Board Prevention of the facilitation of tax evasion The Company is committed to compliance with the UK’s Criminal Men 3 60% 1 (3) Finances Act 2017, designed to prevent tax evasion in the Women 2 40% 1 jurisdictions in which it operates. The policy is based on a risk (1) The Company has opted not to disclose against the number of Directors in assessment undertaken by the Board and professional advice is executive management as this is not applicable for an investment trust. sought as and when deemed necessary. (2) Composed of the Chair and the Senior Independent Director in accordance with Listing Rule 9(a) (ii). Modern Slavery Act 2015 (3) The Listing Rule 9(a) (i) target is 40%. The Company is an investment company with no employees or customers and does not provide goods or services in the normal course of business. The Company has appointed the Manager to manage the investments, engage on ESG issues and to carry out administrative and secretarial services. The Company's own supply chain consists predominately of professional advisers and service providers in the financial services industry, which is highly regulated. The Board therefore believes that the potential for acts of modern slavery or human trafficking in the Company’s own environment is extremely low. On behalf of the Board Jack Perry Chairman 28 March 2023 Report and Accounts 2022 | 21 Strategic Report ## Promoting the Success of the Company ## –Section 172 Statement Under Section 172 of the Companies Act 2006, the Directors have The Manager also engages with the Company’s larger Shareholders a duty to act in a way they consider, in good faith, would be most and the outcome of these discussions are reported to the Board likely to promote the success of the Company for the benefit of its at the following Board Meeting. Shareholders are invited to members as a whole, and in doing so, have regard, amongst other communicate with the Board through the Chairman or Company matters, to: Secretary. Alternatively, issues can be discussed with the Company’s Senior Independent Director, who can be contacted at • the likely consequences of any decision in the long term; the Company’s registered office address detailed on page 31. • the interests of the Company’s Shareholders; Manager and Service Providers • the need to foster the Company’s business relationships with The Company’s primary working relationship is with the Manager. suppliers, customers and others; The portfolio activities undertaken by the Manager and the impact • the impact of the Company’s operations on the community and of decisions taken are set out in the Investment Manager’s Review environment; on pages 11 to 13. On pages 24 to 27 information is provided on the Company’s approach towards responsible investment. The • the desirability of the Company maintaining a reputation for high Directors are supportive of the Manager’s approach, which includes standards of business conduct; and engagement with the investee companies on ESG issues and how • the need to act fairly as between members of the Company. this links with the United Nations Sustainable Development Goals (“SDGs”). Further information on the annual evaluation of the The Stakeholders of the Company Manager, to ensure its continued appointment remains in the best As explained on page 8, the Company is an externally managed interests of Shareholders, is set out on page 45. investment company and has no employees, customers or Service providers such as, JP Morgan Chase Bank (“the Bank and premises. The key stakeholders are the Shareholders, the Manager, the Custodian”), JP Morgan Europe Limited (“the Depositary”), suppliers and service providers. Panmure Gordon (“the Broker”), The Bank of Nova Scotia, London The Board believes that the optimum basis for meeting its duty Branch ("the Lender") and Computershare Investor Services PLC to promote the success of the Company is by appointing and (“the Registrar”) are also considered key stakeholders. The Board managing third parties with the requisite performance records, receives regular reports from them and evaluates them to ensure resources, infrastructure, experience and control environments to expectations on service delivery are met. deliver the services required to achieve the investment objective and successfully operate the Company. By developing strong and 2022 – Key Board Decisions constructive working relationships with these parties, the Board The Company’s Stakeholders are always considered when the Board seeks to ensure high standards of business conduct are adhered makes decisions and key examples this year include: to at all times and service levels are enhanced whenever possible. This combined with the careful management of costs is for the Dividends benefit of all Shareholders who are also key stakeholders. The Board is aware that dividend income is important to Shareholders. A high distribution policy has been adopted with a Engagement with Shareholders stated aim to pay Shareholders a dividend of 6% based on the NAV The Directors value engagement with Shareholders. The Company’s on 31 December of the prior year. website www.europeanassets.co.uk is available to all Shareholders and key decisions are announced to the London Stock Exchange Despite the impact of the COVID-19 pandemic, inflationary concerns through a Regulatory News Service. and the war in Ukraine, the Directors have been able to maintain the Company’s high distribution policy as the dividend can be The Company holds an Annual General Meeting. The Shareholders funded from current year revenue profits and the Distributable are invited to attend, and this provides an open forum for them Reserve. The Distributable Reserve, which had a value of £296.9 to discuss issues and matters of concern with the Board and million as at 31 December 2022 was created during the migration representatives of the Manager and the Company’s advisors. of the Company from the Netherlands to the United Kingdom. 22 | European Assets Trust PLC Overview Chairman's statement Strategy Report Business Report Budget Report Financial Statements Data Information ### Share issuance and buy-backs Ensuring that liquidity is maintained for the Company's shares is important to Shareholders. The Directors sought and received the authority from Shareholders at the 2022 AGM the power to issue and buyback shares. At each Board Meeting the Directors will consider the current level and direction of the discount that the Company's share price trades to its NAV. Representatives of the Company's broker, Panmure Gordon, will attend most Board meetings and provide an update on the demand for the Company's shares. During the year ended 31 December 2022 the Company did not buyback or issue shares. The discount as at 31 December 2022 was 5.1% (2021: 4.4%). ### Marketing Increasing demand for the Company's shares will improve their liquidity and attractiveness. In the shorter term it will reduce the level of the Company's share price discount. In the longer term it could lead to share issuance resulting in a larger Company against which fixed operating costs can be shared. During the year several marketing initiatives have been introduced to increase demand for the Company's shares. The Company's 50-year anniversary celebrations included Board attendance at the closing bell ceremony at the London Stock Exchange and an event attended by representatives from private wealth managers and the press. New communication platforms with retail investors have been introduced and the Company has recommitted to its pay-per-click internet advertising campaign. ### Board succession planning As part of an orderly succession plan, it is anticipated that Julia Bond, the Company's Senior Independent Director, will retire from the Board on 31 January 2024 having served nine years. In advance of Julia's retirement, the Board will recruit a new Director. Jack Perry was appointed in April 2014 and became Chairman with effect from April 2015. In accordance with corporate governance best practice, and to allow a handover period, he has announced his intention to retire from the Board at the conclusion of the Company's 2024 Annual General Meeting. Upon his retirement, Stuart Paterson, who was appointed to the Board in July 2019 will become Chairman. As a further part of this plan a search company was commissioned to identify a new Director for the Board. Following a thorough selection process, Kevin Troup will be appointed to the Board and its committees with effect from 19 May 2023. Following the retirement of Jack Perry and Stuart Paterson's assumption of the Chairmanship, Kevin Troup will be appointed Chair of the Company's Audit and Risk Committee. While the Company became operational in March 2019, the Board considers a Director's appointment to the Company's Dutch predecessor, European Assets Trust NV, as the beginning of their period of continuous service. Report and Accounts 2022 | 23 Strategic Report ## Sustainability and ESG ### As stewards of more than £347 million of assets, we support positive change. The Company ### benefits from the Manager’s leadership in this field. ### Our approach Environmental, Social and Governance (“ESG”) issues are the three reporting of wrongdoing, whether within the investee company itself, central factors in measuring sustainability and can present both or involving other parties, such as suppliers, customers, contractors opportunities and threats to the long-term investment performance or business partners. the Company aims to deliver to Shareholders. Although the Company The Manager is also a signatory to the United Nations Principles is not an ESG fund, the Board is committed to taking a responsible for Responsible Investment (“UNPRI”) under which signatories approach to ESG matters. There are two strands to this approach: contribute to the development of a more sustainable global financial • The Company’s own responsibilities on matters such as system. governance; As a signatory the Manager aims to incorporate ESG factors into its and investment processes. • The impact it has through the investments that are made on its ESG and the investment process behalf by its Manager. ESG issues are an integral part of the Manager’s investment process, The Company’s compliance with the revised AIC Code of Corporate forming part of the assessment of the Quality and Management Governance is detailed in the Corporate Governance Statement criteria for possible and ongoing investments. The Manager’s on pages 37 to 39. In addition, the Principal Policies statement ESG teams work closely with the portfolio managers to create an on pages 20 and 21 notes the Company’s policies towards board internally generated assessment of the relevant ESG issues for each diversity, integrity and business ethics, prevention of the facilitation company. As part of the review process, the Manager will also note of tax evasion and the Modern Slavery Act 2015. if the investment is aligned explicitly with any of the UN Sustainable The Board recognises that the most material way in which the Development Goals. Details of these goals can be found at Company can have an impact is through responsible ownership of its www.un.org/sustainabledevelopment/sustainable-development- investments. The Manager engages actively with the management goals/. of investee companies to encourage that high standards of ESG The Manager’s own ESG assessment is cross-referenced against practice are adopted. The Manager has long been at the forefront of external sources, for example MSCI ESG Research to check it is the investment industry in its consideration of these issues and has comprehensive. There are two main outcomes of this research. one of the longest established and largest teams focused solely on First, the research is used to initiate discussions with the investee ESG. company, to clarify the Manager’s understanding of the issues involved, to create a dialogue and to encourage higher standards Responsible ownership where appropriate. In this the Manager may join with other major Engaging actively with companies on significant ESG matters, to investors in order to be a yet more powerful force to drive change. reduce risk, improve performance, encourage best practice and Secondly, it is used to adjust the Manager’s assessment of the underpin long-term investor value forms a fundamental part of the weighted average cost of capital for the investee company; this is an Manager’s approach towards responsible investment. Engagement important component of the valuation model, such that companies in the first instance rather than simply divesting or excluding with higher ESG standards will warrant a lower cost of capital investment opportunities is also part of this approach. and in turn a higher valuation, and vice-versa. In these ways, ESG affects each of the cornerstones of the investment process, Quality, The Manager’s Corporate Governance Guidelines set out its Management and Valuation, as well as driving an ongoing dialogue expectations of the management of investee companies in terms between the Manager and the investee company. of good corporate governance. This includes the affirmation of responsibility for reviewing internal business ethics policies and ensuring that there is an effective mechanism for the internal 24 | European Assets Trust PLC OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information Strategic Report ## Engagement 2022 engagement analysis Corporate Governance 32% Climate Change 28% Labour Standards 16% Environmental Stewardship 16% Human Rights 8% Source: Columbia Threadneedle Investments Engagement examples in the reporting period Wizz Air The Manager held a call with senior company executives to discuss their approach to the Ukraine crisis and their climate change strategy. Wizz Air was the only European airline with a base in Ukraine. At the start of the conflict, the company had 4 aircraft and 200 people in Ukraine. The Manager was informed that the company continued to pay salaries and provided logistical and financial support to affected employees. It supported refugees to rebase to Wizz Air hubs in the UK and Italy. Wizz Air appears to have managed the crisis well. On climate, Wizz Air has set the most ambitious 2030 decarbonisation targets in the industry but is yet to set a net zero target. To reach their 2030 targets, around 90% of the company’s targeted 2030 decarbonisation will be driven by new aircraft, with the remainder coming from sustainable aviation fuels (“SAFs”). The Manager asked them to clearly disclose how ESG factors are included in their SAF procurement process. The Manager also asked for additional disclosures on offsets and climate lobbying. In a separate meeting, the Manager met the chair of the remuneration committee to discuss the implementation of the new pay policy approved at the prior AGM. The Manager had concerns with the scheme although recognised the significant changes made during the consultation process. ASM International During 2022, the Manager had an in-person meeting with Investor Relations at ASM’s offices in Almere, Netherlands. Given the fierce war of talent in the semiconductor industry and the increased costs of hiring and retraining new staff, the Manager probed the company’s efforts on employee engagement, diversity, and inclusion. In 2021, ASM welcomed a record-high number of new employees; however, it acknowledged that it is early in its journey on employee engagement and more work needs to be done. Other challenges it faced include the lack of female talent in the pipeline. The Manager recommended a focus on building the talent pipeline of women in STEM subjects, such as at the school level, setting targets in senior level positions, and inclusive hiring practices such as unconscious bias training. Report and Accounts 2022 | 25 Strategic Report Engagement examples in the reporting period (continued) Tecan The Manager has discussed with senior company representatives environmental and social issues. On the environmental front, the Manager asked about progress towards a measurable target to reduce waste and increase recycling. The Manager was informed that the results of Tecan’s survey on waste-related issues are pending and will prompt action plans. Furthermore, the company is looking into the possibility of a waste takeback scheme. On the social side, the Manager asked for the publication of a target for representation of women in management positions, insights into the results of the gender pay gap analyses and enhanced disclosure on parental leave. The Manager reiterated the importance of the Workforce Disclosure Initiative’s, WDI, survey. Overall, interactions are constructive, and the Manager remains pleased with the company’s positive progress. Voting on portfolio investments As noted previously, the Manager’s Corporate Governance Guidelines Two of the most contentious issues voted at meetings were set out expectations of the boards of investee companies in terms remuneration and the election of board directors. On these issues, of good corporate governance. The Board expects to be informed by an adverse vote was cast at the meeting by either abstaining or the Manager of any sensitive voting issues involving the Company’s voting against management resolutions. Remuneration matters investments. In the absence of explicit instructions from the Board, represented approximately 39% of these votes. The rationale centred the Manager is empowered to exercise discretion in the use of the on a number of issues which did not accord with best practice Company’s voting rights and reports at each meeting to the Board on including poor disclosure or a misalignment of pay with long-term its voting record. performance. With regards to the election of board directors, this represented approximately 43% of adverse votes, primarily We expect the Company’s shares to be voted on all holdings where because of independence, overboarding or concerns regarding board possible. During the year, the Manager voted at 35 meetings of composition. investee companies. The Manager did not support management’s recommendations on at least one resolution at approximately 88% of The Manager’s strategic approach to engagement helps to achieve all meetings. With respect to all items voted, the Manager supported positive outcomes, or ‘milestones’, relating to the targets that have over 85% of all management resolutions. been set under each of the Sustainable Development Goals. Two examples of milestones achieved in the reporting period are set out below. Milestone examples in the reporting period Dalata Hotel Group During the year, the board has carried out meaningful refreshment of the non-executive directors. The Manager had engaged with the company on this topic. This was becoming a critical issue given the long length of tenure served by the incumbent non-executives. Tecan Tecan participated in the Workforce Disclosure Initiative, WDI, survey for the first-time following engagement on the topic by the Manager. The WDI strives for relevant and material workforce-related disclosure, encompassing a wide range of topics, including health and safety practices, remuneration, freedom of association and employee engagement. 26 | European Assets Trust PLC Strategic Report Overview Chairman's statement Strategic Report Investment Report Budget Report Financial Statements Data Information ## Climate Change Of all the ESG issues the Manager considers, climate change is one of the most important both in terms of the scale of potential impact and in how widespread this impact could be across sectors and regions. The Company expects the Manager to incorporate considerations around climate change risks and opportunities in its investment processes. In this report, the Company discloses its assessment of the carbon footprint of its investments, in line with the recommendations of the Task Force on Climate-related Financial Disclosures. This measures the amount of greenhouse gas emissions produced by each investee company, per US$1m of revenue they generate. This is then aggregated for the Company as a whole, using the portfolio weights of the companies, and compared with the benchmark. The carbon footprint is a measure of the carbon intensity of the companies the Company invests in. Whilst it does not provide a full picture of climate risks – since it does not, for instance, capture the innovation that companies may be undertaking to find solutions – it is a valuable starting point both for analysis and for shareholder dialogue. The table highlights that the Company's portfolio of investments is significantly less carbon intensive than its benchmark. ![img-1.jpeg](img-1.jpeg) ### 2023 Last year, the Russian invasion of Ukraine and extreme weather events reinforced the importance of creating a more resilient future. Climate change, biodiversity loss and human rights are all issues that require urgent action. It is these areas that engagement focused on in 2022 and will continue to be of focus in 2023. Climate related engagement activity focuses on the phase-out of unabated coal generation by 2030 for developed markets, which is essential to achieve the Paris goals. The Manager will hold companies to account on net zero pledges, engaging with all portfolio companies, to ensure the thorough implementation of net zero strategies. The continuing loss of biodiversity will bring about significant economic loss, and impact food and water security, as well as human health and the spread of disease. The Manager has been part of the lead investor group setting up the Nature Action 100 collaborative engagement initiative, which had a soft launch at COP15. Investors will engage companies in key sectors to ensure they are taking timely and necessary actions to protect and restore nature and ecosystems. It also aims to engage policymakers on the outcomes of COP15. Effective supply chain management practices are essential to ensuring the protection of human rights and in 2023 the Manager will continue to engage with corporates on implementing due diligence across supply chains, as part of efforts to protect human rights, and enhance business continuity and general supply chain management practices. Report and Accounts 2022 | 27 # Principal Risks and Changes in the Year The Board has carried out a comprehensive robust assessment of the principal risks as well as a thorough process for the identification of emerging risks and reviewed the uncertainties that could threaten the Company's success. Most of the Company's principal risks are market-related and no different to those of other investment trusts investing in listed markets. 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 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. | Principal Risks | Mitigation | | --- | --- | | **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. ➔ No change in overall risk in year | 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, Parmure 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. | | **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. ➔ No change in overall risk in year | 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. | | **The Manager** Failure of the 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 Investments. ➔ No change in overall risk in year | The Board meets regularly with the management of Columbia Threadneedle Investments 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 Columbia Threadneedle Investments. | | **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. ➔ No change in overall risk in year | 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 adviser 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. | | **Service provider failure** Errors, fraud or control failures at service providers or loss of data through increasing cyber threats or business continuity failure could damage reputation or investors' interests or result in losses. ➔ No change in overall risk in year | The Board receives regular control reports from the Manager covering risk and compliance including oversight of third-party service providers. The Board has access to the Manager's Risk Manager and requires any significant issues directly relevant to the Company to be reported immediately. The Depository is specifically liable for loss of any of the Company's securities and cash held in custody. | | **Dividend policy** The Company's high distribution policy becomes unsustainable. ➔ No change in overall risk in year | The annual dividend is calculated as six per cent of the closing net asset value of the Company as at 31 December of the preceding year. As at 31 December 2022 the Distributable reserves of the Company was £296.9 million in comparison to a 2022 dividend cost of £31.7 million. | | **Geopolitical issues and their impact** Geopolitical issues including the possibility of prolonged recession in the United Kingdom and key economies in the EU and the impact of the war in Ukraine. ➔ Increase in overall risk in year | The Company has a clearly defined and approved strategy. The Board can hold additional board meetings at short notice to discuss the impact of significant changes in the macroeconomic and geopolitical environment. The Company maintains a portfolio of diversified stocks. Forward looking stress tests ranging from moderate to extreme scenarios are provided by the Manager to the Board to support the Viability and Going Concern Statements. | 28 | European Assets Trust PLC 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 beginning on page 67. Details of actions taken to reduce the potential impact of these risks is also provided. #### Actions taken in the year An annual strategy meeting of the Board is held to consider longer terms issues and opportunities for the Company. This includes a review of the Company's investment policy. Representatives of the Company's broker attended most Board meetings and update Directors with regard to changes in the demand for the Company's shares. During the year the Board sought and received from Shareholders at the Annual General Meeting held in May 2022 the powers to issue and buyback shares. At each meeting of the Board, the Directors consider and discuss the investment performance of the Company with the Company's Investment Managers. As noted above, the Board held its annual strategy meeting in November 2022. At each meeting of the Board representatives of the Manager provide an update on the integration of the former BMO GAM EMEA business into Columbia Threadneedle Investments. At the Board's annual strategy meeting held in November 2022, the Chief Investment Officer, EMEA and Global Head of Investment Solutions at Columbia Threadneedle Investments updated the Board with regard to the integration of the former BMO GAM EMEA business. A representative of the Depositary attended and reported to the Audit and Risk Committee in July 2022 on its activities during the previous 12 months. Members of the Responsible Investment team presented to the Board at the annual strategy meeting held in November 2022. The presentation included details of the voting undertaken on the Company's behalf, engagement with management of portfolio companies and milestones achieved. The Remuneration and Nomination Committee liaised with the external recruitment agent to develop a role specification for the Board vacancy. The Manager continues to strengthen and develop its Risk, Compliance and Internal Control functions including IT security. Supervision of third-party service providers has been maintained by the Manager and includes assurances regarding IT security and cyber threat. The Depositary oversees custody of investments and cash and reports to the Company in accordance with the Alternative Investment Fund Managers Directive. On 5 January 2023 the Board declared an annual dividend for 2023 of 5.80 pence per share. This was calculated as six per cent of the 31 December 2022 NAV of the Company. The reduction in the dividend for 2023 in comparison to that paid in 2022 reflects the fall in the NAV of the Company experienced in 2022. At each Board meeting during the year the Directors monitor the dividend yield of the Company. The Directors also monitor the Company's distributable reserves and the net asset value five years previously. At each meeting of the Board, the Directors consider and discuss the investment performance of the Company with the Company's Investment Managers. The Board held its annual strategy meeting in November 2022. In May 2022 the Chief Economist of the Manager presented to the Board on the global and European economy. At the March 2023 Audit and Risk Committee meeting, the Directors reviewed updated forward looking stress tests prepared by the Manager providing support for the Viability and Going Concern Statements disclosed on page 32. Overview Chairman's statement Strategic Report Investment Report Auditors' Report Financial Statements Risk Information Report and Accounts 2022 | 29 Governance Report ## Directors Left to right: Julia Bond OBE, Martin Breuer, Pui Kei Yuen, Jack Perry CBE, Stuart Paterson. Jack Perry CBE, Chairman and Chair of Management Engagement Committee is a portfolio non-executive director and has served on the Boards of FTSE 250 and other public and private companies. He is currently Chairman of ICG-Longbow Senior Secured UK Property Debt Investments Limited and a non-executive director and Chairman of the Audit and Risk Committee of Witan Investment Trust plc. In his executive career he was Chief Executive of Scottish Enterprise and prior to this, Managing Partner, Glasgow and a Regional Industry Leader for Scotland and Northern Ireland for Ernst and Young LLP. He is a member of the Institute of Chartered Accountants of Scotland and is a past Chairman of CBI Scotland. It is anticipated that Jack will retire from the Board at the conclusion of the Annual General Meeting of the Company to be held in 2024. Shared directorships with other Directors: None Julia Bond OBE, Senior Independent Director and Chair of Remuneration and Nomination Committee has 27 years’ experience of capital markets in the financial services sector, latterly at Credit Suisse where she led global client facing teams alongside leading One Bank Delivery. She has served on various listed and public boards and is currently a non-executive director of International Public Partnerships, Strategic Command and the British Foreign and Commonwealth Development Office. It is anticipated that Julia will retire from the Board on 31 January 2024. Shared directorships with other Directors: None, Stuart Paterson, Chair of Audit and Risk Committee is a co-founder and partner of Scottish Equity Partners (“SEP”), one of Europe’s leading technology growth equity investors with strong investment performance track record, managing more than £1bn of institutional capital over two decades. Stuart has over 25 years of equity investing in European private companies and has served on Boards in numerous sectors over the years including Enterprise Software, Semiconductors, Telecoms, Data centres, as well as consumer-focused e-commerce and digital on-line businesses. Notable early-stage investments of Stuart on behalf of SEP include Cambridge Silicon Radio plc which listed and became a FTSE 250 company, and Skyscanner the consumer internet business which became the world’s largest flight search business. Stuart trained with Ernst & Young and is a member of the Institute of Chartered Accountants of Scotland. He latterly worked in Corporate Finance for Ernst & Young before moving into equity investment. Shared directorships with other Directors: None Martin Breuer is Founder and CEO of 2M SRLS and Gruppo Glossip Srl, both companies active in the international beauty business. Previously he was an executive with Siemens, Chief Financial Officer of SEVES and Intercos Group. In addition, he has served as Chief Executive Officer for Intercos in Asia Pacific and Chief Executive Officer of Italian cosmetic manufacturer Gotha Cosmetics. Shared directorships with other Directors: None Pui Kei Yuen has over 25 years' experience in equities. Her roles have included UK institutional equity portfolio management and research at Mercury Asset Management, Pan European equity responsibilities at UBS and Bank of America Merrill Lynch, advising large institutional investors and hedge funds, and working with the Boards of earlier stage private companies. Pui Kei is also a Non-Executive Director of JPMorgan American Investment Trust PLC. Shared directorships with other Directors: None 30 | European Assets Trust PLC Report and Accounts 2022 | 31 OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information Governance Report ## Management and Advisers | Board | Brokers | | --- | --- | | Jack Perry (Chairman and Chair of the Management | Panmure Gordon (UK) Limited | | Engagement Committee) | 40 Gracechurch Street | | Julia Bond (Senior Independent Director and Chair of the | London EC3V 0BT | Remuneration and Nomination Committee) | Stuart Paterson (Chair of the Audit and Risk Committee) | Depositary | | --- | --- | | Martin Breuer | JP Morgan Europe Limited | | Pui Kei Yuen | 25 Bank Street | Canary Wharf All Directors are non-executive London E14 5JP Registered Office Exchange House Custodian Primrose Street JP Morgan Chase Bank London National Association, London Branch EC2A 2NY 25 Bank Street Canary Wharf Investment Manager, Secretary and AIF Manager London Columbia Threadneedle Investment Business Limited E14 5JP 6th Floor Quartermile 4 Independent Auditors 7a Nightingale Way PricewaterhouseCoopers LLP Edinburgh EH3 9EG 7 More London Riverside Tel No. 0131 718 1000 London SE1 2RT Registrar Computershare Investor Services PLC Lawyers The Pavilions Shepherd and Wedderburn LLP Bridgwater Road 1 Exchange Crescent Bristol BS99 6ZZ Conference Square Tel No. 0370 889 4094 Edinburgh EH3 8UL Loan Provider Tax Advisers The Bank of Nova Scotia, London Branch Ernst & Young LLP 201 Bishopsgate Atria One 6th Floor 144 Morrison Street London Edinburgh EC2M 3NS EH3 9EX Website www.europeanassets.co.uk 30 | European Assets Trust PLC Report and Accounts 2022 | 31 # Directors' Report The Directors submit the Report and Accounts of the Company for the year ended 31 December 2022. The Directors' biographies, the Corporate Governance Statement; the Reports of the Remuneration and Nomination Committee; the Audit and Risk Committee and the Management Engagement Committee; and the Directors' Remuneration Report form part of this Directors' Report. ## Statement regarding Report and Accounts The Directors consider that, following advice from the Audit and Risk, Management Engagement and Remuneration and Nomination Committees, the Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for Shareholders to assess the Company's position and performance, business model and strategy. The Audit and Risk Committee has reviewed the final draft Report and Accounts for the purposes of this assessment. The market outlook for the Company can be found on page 7. Principal risks can be found on page 28 with further information on page 67. ## Accounting Shareholders will be asked to approve the adoption of the Report and Accounts at the forthcoming AGM (Resolution 1). The financial statements, starting on page 53, comply with current International Financial Reporting Standards, supplemented by the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" ("SORP"). The significant accounting policies of the Company are set out in note 2 to the accounts. The auditor's unqualified opinion on the financial statements appears on pages 47 to 52. ## Results and dividends The results for the period are set out in the attached accounts. The Company's dividend payments during the year ended 31 December 2022 are set out below. | Dividends paid in the year ended 31 December 2022 | | | --- | --- | | First interim dividend for the year ended 31 December 2022 paid on 31 January 2022 | 2.20p | | Second interim dividend for the year ended 31 December 2022 paid on 29 April 2022 | 2.20p | | Third interim dividend for the year ended 31 December 2022 paid on 29 July 2022 | 2.20p | | Fourth interim dividend for the year ended 31 December 2022 paid on 31 October 2022 | 2.20p | As explained in the Chairman's Statement, the Board has resolved to pay a dividend of, in aggregate, 5.8 pence per share for 2023. The dividend for 2023 will be paid in four equal, quarterly instalments on 31 January, 28 April, 31 July and 31 October 2023 to registered holders of shares at an appropriate record time. The first quarterly dividend of 1.45 pence per share was paid on 31 January 2023 to Shareholders on the register of members on 13 January 2023 with an ex-dividend date of 12 January 2023. As the Company's current practice is to pay dividends quarterly at the end of January, April, July and October, the Company does not pay a final dividend that would otherwise require formal Shareholder approval at a General Meeting. In the absence of such a requirement for Shareholder approval of a final dividend, approval will be sought at the forthcoming 2023 Annual General Meeting ("AGM") to approve the Company's dividend policy as set out on page 20 of this report. (Resolution 2 in the Notice of AGM set out on pages 73 to 77). ## Company status The Company is a public limited company and an investment company as defined by section 833 of the Companies Act 2006. The Company is limited by shares and is registered in England and Wales with company registration number 11672363. It is subject to the Listing Rules of the UK Financial Conduct Authority, UK legislation and regulations including company law, financial reporting standards, taxation law and its own articles of association. ## Taxation As set out on page 20 and in note 9 to the accounts, the Company is exempt from UK Corporation Tax on its dividend income and from UK Corporation Tax on any capital gains arising from the portfolio of investments, provided it complies at all times with section 1158 of the Corporation Tax Act 2010. Dividends received from investee companies domiciled outside the UK are subject to taxation in those countries in accordance with relevant double taxation treaties. ## Viability and going concern statements 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. The Board considered that a number of characteristics of the Company's business model and strategy were relevant to this assessment: - The Company as an active investor looks to long-term outperformance compared to its Benchmark rather than short term opportunities. 32 | European Assets Trust PLC OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information Governance Report Governance Report • The Company is a closed-end investment company and as such comparison to a net asset value of €404.0 million. In accordance is not required to sell investments in a market downturn in order with its investment policy the Company is invested mainly in readily to fund investor redemptions. realisable listed securities. These can be realised if necessary, to • The Company’s investment objective, strategy and policy, which repay the loan facility and fund the cash requirements for future are subject to regular Board monitoring, mean that it is invested dividend payments. in realisable, listed securities and that the level of borrowings is These matters were assessed over a five-year period to March restricted. 2028. The Board of the Company will continue to assess viability • The Company’s business model and strategy is not time limited. over five-year rolling periods, taking account of foreseeable severe but plausible scenarios. A rolling five-year period represents the Also relevant were a number of aspects of the Company’s horizon over which the Board believes it can form a reasonable operational arrangements: expectation of the Company’s prospects, balancing its financial • It retains title to all assets held by the Custodian under the flexibility and scope with the current uncertain outlook for longer- terms of formal agreements with the Custodian and Depositary. term economic conditions affecting it and its shareholders. • The annual dividend declared by the Company is determined in Based on their assessment, and in the context of the Company’s accordance with the year-end net asset value. business model, strategy and operational arrangements set out above, the Board has a reasonable expectation that the Company • Revenue and expenditure forecasts of the Company are reviewed will be able to continue in operation and meet its liabilities as they by the Directors at each Board Meeting. fall due over the five-year period to March 2028. For this reason, In addition, the Board carried out a robust assessment of the the Board also considers it appropriate to continue adopting the principal risks which could threaten the Company’s objective, going concern basis in preparing the Report and Accounts. strategy, future performance, liquidity and solvency. These risks, mitigating actions in place to ensure the Company’s resilience and Statement as to disclosure of information to the the processes for monitoring risks are set out on page 28 and auditor in Note 22 of the accounts. These principal risks were identified Each of the Directors confirms that, so far he or she is aware, as relevant to the viability assessment. In undertaking this there is no information relevant to the preparation of the Report assessment, the Board took into account the following factors: and Accounts of which the auditor is unaware and that he or she • the liquidity of the Company’s portfolio; has taken all the steps that a Director ought to have taken to be aware of relevant audit information and to establish that the • the existence of a borrowing facility; auditor is aware of that information. • the effects of any significant future falls in investment values and income receipts on the ability to repay and re-negotiate Capital structure borrowings; As at 31 December 2022 there were 360,069,279 Ordinary • the maintenance of dividend payments and the retention of Shares in issue. As at 27 March 2023 (being the latest practicable investors; date before publication of this report) the number of Ordinary Shares in issue was 360,069,279. No Ordinary Shares were held • the potential need for more share issuance capacity in the event in treasury. of unexpected market demand; and All ordinary shares rank equally for dividends and distributions • minimising the discount between the Company’s share price and and carry one vote each. There are no restrictions concerning the net asset value. transfer of securities in the Company, no special rights with regard The Board gave careful consideration to the impact of the to control attached to securities, no agreements between holders COVID-19 pandemic, inflationary concerns and the war in Ukraine of securities regarding their transfer known to the Company and no and the resulting volatility in stockmarkets and economic agreement which the Company is party to that affects its control disruption when making this assessment. following a takeover bid. As discussed in note 23 to the financial report on page 72, the Details of the capital structure can be found in note 16 to the Company has a number of banking covenants and at present accounts. The revenue profits of the Company, together with the Company’s financial position does not suggest that any of the realised capital profits and the balance of the Distributable these are close to being breached. The primary risk is that there Reserve are available for distribution by way of dividends to the is a very substantial decrease in the net asset value of the holders of the Ordinary Shares. Company in the short to medium term. Financial modelling has Upon a winding-up, after meeting the liabilities of the Company, been undertaken to consider compliance with these covenants the surplus assets would be distributed to Shareholders pro-rata in several scenarios including the outcome of the 2008 Global to their holdings of Ordinary Shares. Full details are set out in the Financial Crisis. These extreme but plausible scenarios indicate Company’s articles of association. that the loan covenants would not be breached. In addition, the Directors have considered the remedial measures that are open to the Company if such a covenant breach appears possible. As at 27 March 2023, the latest practicable date before the publication of this report, borrowings amounted to €20 million. This is Report and Accounts 2021 | 33 ## Share capital At 31 December 2022 no notifications of significant voting rights had been received under the Financial Conduct Authority's Disclosure and Transparency Rules. CT Savings Plans owned 125,297,241 Ordinary Shares or 34.8 per cent of the issued share capital of the Company, at 31 December 2022. For non-contentious resolutions the nominee company holding these shares votes the shares held on behalf of planholders who have not returned their voting directions in proportion to the directions of those who have ("proportional voting"). Implementation of this arrangement is subject to a minimum threshold of 5% of the shares held in the CT Savings Plans being voted. A maximum limit of 50,000 shares that any one individual investor can vote, being approximately 1.0% of the relevant minimum threshold, also applies. Any individual voting directions received in excess of the maximum limit will remain valid but will not form part of the proportional voting basis. Planholders have the right to exclude their shares from the proportional voting arrangement. ## Borrowings In March 2022 the Company entered into a €45 million multi-currency revolving loan facility with The Bank of Nova Scotia, London Branch expiring March 2023. The loan covenants have all been met during the period. The interest rate on the amount drawn down and commitment fees payable on undrawn amounts are based on the commercial terms agreed with The Bank of Nova Scotia, London Branch. As at 31 December 2022 the loan facility was €10 million drawn. Following the year end, the Company has agreed to renew its facility with The Bank of Nova Scotia, London Branch on favourable terms. ## Remuneration Report The Directors' Remuneration Report, which can be found on page 41, provides detailed information on the remuneration arrangements for Directors of the Company, including the Directors' Remuneration Policy. Shareholders are asked to approve the policy at the AGM to be held on 18 May 2023. The policy is subject to approval by Shareholders every three years. There have been no changes to the policy since the last approval by Shareholders in 2020. Remuneration is set at a level commensurate with the skills and experience necessary for the effective stewardship of the Company and the expected contribution of the Board as a whole in continuing to achieve the investment objective. It is intended that this policy will continue for the three-year period ending at the AGM in 2026. Shareholders will be asked to approve the Directors' Remuneration Policy (**Resolution 3**). Shareholders will be asked to approve the Directors' Remuneration Report (**Resolution 4**). ## Appointment of auditors and auditor's remuneration **Resolutions 5 and 6** seek Shareholder approval, respectively, for the re-appointment of PricewaterhouseCoopers LLP as the auditor of the Company and to authorise the Audit and Risk Committee to determine their remuneration for the year ended 31 December 2023. ## Director re-elections The names of the Directors, along with their biographical details, are set out on page 30. All the Directors have held office throughout the year under review. All directors will stand for re-election by Shareholders at the AGM. Following a review of their performance, the Board believes that each of the Directors standing for election or re-election has and will continue to make a valuable and effective contribution to the Company. The skills and experience each Director brings to the Board for the long-term sustainable success of the Company are set out below. The Board recommends that Shareholders vote in favour of the election and re-elections of the Directors (**Resolutions 7 to 11**). **Resolution 7** concerns the re-election of Jack Perry, who has served the Company and its predecessor for over 8 years, 7 as Chairman. He has served on the Boards of FTSE 250 and other public and private companies and is a member of the Institute of Chartered Accountants of Scotland. He was Managing Partner for Scotland and Northern Ireland for Ernst and Young and is currently Chairman of one other investment company and non-executive director of another. It is anticipated that he will retire from the Board at the conclusion of the Company's 2024 AGM. **Resolution 8** concerns the re-election of Julia Bond, who has served the Company and its predecessor for over 8 years and has a strong financial sector background having held senior positions within Credit Suisse. She is currently a non-executive director of another investment trust, Strategic Command and the British Foreign and Commonwealth Development Office. It is anticipated that she will retire from the Board on 31 January 2024. **Resolution 9** concerns the re-election of Stuart Paterson who has served on the Board for over three years. He was a co-founder and is a partner of Scottish Equity Partners, one of Europe's leading technology growth equity investors. He is an experienced technology investor with over 25 years of equity investing in European private companies and is a member of the Institute of Chartered Accountants of Scotland. It is anticipated that he will become Chairman of the Company at the conclusion of the AGM in 2024. **Resolution 10** concerns the re-election of Martin Breuer, who has served the Company and its predecessor for over 6 years. He is a German national, currently based in Italy, with extensive industrial experience with Continental European companies. **Resolution 11** concerns the re-election of Pui Kei Yuen who has served the Company for two years. She has extensive experience in the fund management and investment banking industries at Mercury Asset Management, UBS and Bank of America Merrill Lynch. She is also currently a non-executive director of another investment trust. 34 | European Assets Trust PLC Governance Report ## Directors' interests and indemnification There were no contracts of significance to which the Company was a party and in which a Director is, or was, materially interested during the period. There are no agreements between the Company and its Directors concerning compensation for loss of office. The Company has granted deeds of indemnity to the Directors in respect of liabilities that may attach to them in their capacity as Directors of the Company. These deeds cover any liabilities that may arise to a third-party for negligence, default or breach of trust or duty. These deeds of indemnity are qualifying third-party provisions (as defined by section 234 of the Companies Act 2006) and have been in force throughout the period of review and remain in place at the date of this report. They are available for inspection at the Company's registered office during normal business hours and at the AGM. The Company also maintains directors' and officers' liability insurance. ## Safe custody of assets The Company's investments are held in safe custody by JP Morgan Chase Bank ("the Custodian"). Operational matters with the Custodian are carried out on the Company's behalf by the Manager in accordance with the provisions of the management agreement. The custodian is paid a variable fee dependent on the number of trades transacted and location of the securities held. ## Depositary JPMorgan Europe Limited acts as the Company's depositary, ("the Depositary") in accordance with the AIFMD. The Depositary's responsibilities, which are set out in an Investor Disclosure Document on the Company's website, include: cash monitoring; ensuring the proper segregation and safekeeping of the Company's financial instruments that are held by the custodian; and monitoring the Company's compliance with investment and leverage limits requirements. Although the Depositary has delegated the safekeeping of all assets held within the Company's investment portfolio to the Custodian, in the event of loss of those assets that constitute financial instruments under the AIFMD, the Depositary will be obliged to return to the Company financial instruments of an identical type, or the corresponding amount of money, unless it can demonstrate that the loss has arisen as a result of an external event beyond its reasonable control, the consequences of which would have been unavoidable despite all reasonable efforts to the contrary. ## The Manager's fee The Manager receives a fee equal to 0.75 per cent per annum of the value of funds under management up to the value of €400 million. Funds under management is calculated as the value of total assets less current liabilities (excluding borrowings) at the end of the preceding quarter. Where the value of funds under management exceeds €400 million, the applicable rate over such excess value is 0.6 per cent per annum. An additional fee of £100,000 per annum is payable by the Company to the Manager for the provision of administrative services. ## Benchmark The Company's stated investment policy allows the Manager to invest in small and medium-sized European companies (excluding the UK) which have a market capitalisation below that of the largest company in the EMIX Smaller European Companies (ex UK) Index. IHS Market Benchmark Administration has announced its intention to cease calculation of its EMIX indices with effect from 31 July 2023. The current benchmark of the Company, the EMIX Smaller European Companies (ex UK) Index (Net Return) will therefore be discontinued. The Board, together with its advisers have carefully considered alternative benchmarks to replace the EMIX Smaller European Companies (ex UK) Index and have concluded that the MSCI Europe Ex UK SMID Cap Index, on a net return basis, represents the most appropriate choice, noting, that this index has the greatest overlap of those indices considered with the current portfolio, as well as a similar number of constituents to the current benchmark. The MSCI Europe Ex UK SMID Cap Index, which is composed of European small and mid-cap companies, does have a broader range of market capitalisation within its constituents which is relevant to the upper size limit contained in the investment policy of the Company. The adoption of the MSCI Europe Ex UK SMID Cap Index should therefore be treated as a material change to the Company's investment policy. However, the Manager has confirmed that the selection of the new benchmark does not imply that there will be any change to the existing selection process for investments. **Resolution 12** therefore seeks Shareholder approval for the replacement of the existing benchmark with the new benchmark at the Annual General Meeting to be held on 18 May 2023 prior to its adoption with effect from 1 June 2023, as well as to provide flexibility in the terms of the investment policy for further changes to the benchmark to be made in the future should the Board consider this necessary. It is, however noted that, to the extent that any further change was material, this would again require approval of the Financial Conduct Authority and Shareholders under the Listing Rules. ## AGM The Notice of AGM to be held on 18 May 2023 at 3.00pm is set out on pages 73 to 77. ## Directors' authority to allot shares and disapplication of pre-emption rights The Directors are seeking to renew their authority to allot shares. **Resolution 13** in the Notice of AGM, which will be proposed as an ordinary resolution, seeks renewal of such authority to allot Ordinary Shares up to an aggregate nominal amount of £3,600,692 (being an amount equal to 10 per cent of the total issued share capital of the Company as at the date of this report). Under **Resolution 14**, which will be proposed as a special resolution, the Directors are also seeking to renew the authority to allot new Ordinary Shares and/or sell Ordinary Shares held by the Company as treasury shares for cash as if section 561 of the Overview Chapter's statement Earnings Report Governance Report Election Report Financial Statements Other Information Report and Accounts 2022 | 35 Companies Act 2006 did not apply. (This section requires that, when equity securities are allotted for cash, such new shares are first offered to existing equity shareholders in proportion to their existing holdings of shares, this entitlement being known as “pre-emption rights”). Allotments of Ordinary Shares pursuant to these authorities would enable the Directors to issue shares for cash and/or to sell equity securities held as treasury shares to take advantage of changes in market conditions that may arise, in order to increase the amount of the Company’s issued share capital. A likely purpose of such an increase would be to improve the liquidity of the market in the Company’s shares and to spread the fixed costs of administering the Company over a wider base. The Directors believe that this authority, if granted to the Directors, would provide the necessary flexibility permitted by investor protection guidelines to respond to market developments in the interest of existing Shareholders. Except where authorised by Shareholders, no shares will be issued or sold from treasury by the Directors at a price which (after costs and expenses) is less than the net asset value per share at the time of the issue or sale, unless the shares are first offered pro rata to shareholders on a pre-emptive basis. The Company has been authorised to sell any treasury shares held from time-to-time at below net asset value subject to the limitation on asset dilution set out below. The absolute level of dilution through the sale of treasury shares is restricted to 0.5% of Net Asset Value in any one year, and treasury shares which are sold at a discount to Net Asset Value will only be sold where the discount at which the shares are sold is lower than the average discount at which the shares have been acquired, and in addition the price at which shares are sold must not be less than the market bid price at time of sale. **Resolution 14**, if passed, will give the Directors power to allot for cash Ordinary Shares of the Company and to sell Ordinary Shares out of treasury up to a maximum nominal amount of £1,800,346 (being an amount representing 5 per cent of the total issued ordinary share capital of the Company as at the date of this report) without the application of the pre-emption rights described above. The calculation of the above figure is in accordance with the Investment Association Share Capital Management Guidelines and other applicable investor protection guidelines, and the Directors will not use the authority other than in accordance with those guidelines. The authorities contained in Resolutions 13 and 14 will continue until the AGM of the Company in 2024, and the Directors envisage seeking renewal of these authorities in 2024 and in each succeeding year, subject to such renewals again being in accordance with the applicable investor protection guidelines. ### Directors’ Authority to Buy Back Shares The current authority of the Company to make market purchases of up to 10 per cent of the issued Ordinary Shares expires at the end of the AGM and **Resolution 15**, as set out in the Notice of the AGM, seeks renewal of such authority. The renewed authority to make market purchases will be in respect of a maximum of 10 per cent of the issued Ordinary Shares as at the date of the passing of the resolution (approximately 36 million Ordinary Shares). The price paid for Ordinary Shares under this authority will not be less than the nominal value of 10p per Ordinary Share nor more than the highest of: - (i) 5 per cent above the average of the middle market values of those shares for the five business days before the shares are purchased; - (ii) the price of the last independent trade on the trading venue where the purchase is carried out; and - (iii) the highest current independent bid on that venue. This power will only be exercised if, in the opinion of the Directors, a purchase will result in an increase in net asset value per share of the Ordinary Shares and be in the interests of Shareholders as a whole. Purchases would only be made for cash at a cost which is below the prevailing net asset value per share. Any shares purchased under this authority will be cancelled or held in treasury for future re-issue. The effect of any cancellation would be to reduce the number of shares in issue. For most purposes, where held in treasury, shares are treated as if they had been cancelled (for example they carry no voting rights and do not rank for dividends). The purpose of holding some shares in treasury is to allow the Company to re-issue or sell these shares quickly and cost effectively, thus providing the Company with greater flexibility. The authority contained in Resolution 15, if passed, will continue until the AGM of the Company in 2024, and the Directors envisage seeking renewal of this authority in 2024 and in each succeeding year, subject to such renewals again being in accordance with the applicable investor protection guidelines. ### Recommendation The Board considers that the passing of the resolutions to be proposed at the AGM is in the interests of the Company and its Shareholders as a whole and they unanimously recommend that Shareholders vote in favour of all of them. ### Statement Regarding Report and Accounts Following a detailed review of the Report and Accounts by the Audit and Risk Committee, the Directors consider that taken as a whole it is fair, balanced and understandable and provides the information necessary for Shareholders to assess the Company’s performance, business model and strategy. In reaching this conclusion, the Directors have assumed that the reader of the Report and Accounts would have a reasonable level of knowledge of the investment industry in general and investment trusts in particular. By order of the Board **Columbia Threadneedle Investment Business Limited** Secretary 28 March 2023 36 | European Assets Trust PLC OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information Governance Report ## Corporate Governance Introduction be sought. All other matters, including strategy, investment and dividend policies, gearing, and corporate governance procedures The Company adheres to the principles and recommendations are reserved for the approval of the Board. With regard to these of the revised AIC Code of the Corporate Governance (the “AIC matters it is the responsibility of the Board to provide the Manager Code”) published in 2019. with general instruction and guidance. It is the responsibility of the The Board believes that the Company has complied with the current Manager to act and manage the Company in accordance with these recommendations of the AIC Code during the year under review and general directives and to report to the Board upon its corporate up to the date of this report and, except as regards the provisions management. set out below, has thereby complied with the relevant provisions During the period the performance of the Board, committees and of the 2018 revision to the UK Corporate Governance Code (“UK individual Directors was evaluated through a discussion process Code”): led by the Chairman. The performance of the Chairman was The UK Code includes provisions relating to: evaluated by the other Directors. • the role of the chief executive; Amongst other considerations, the performance evaluation • executive directors’ remuneration; and considered the balance of skills and diversity of the Board, as well • the need for an internal audit function. as the Board’s overall effectiveness. The Board believes it has an For the reasons set out in the AIC Corporate Governance Guide for appropriate balance of skills and experience, length of service and Investment Companies, the Board considers these provisions as knowledge of the Company. The Board does not consider that the use of external consultants to conduct this evaluation is likely to not being relevant to the Company, as it is an externally managed provide any meaningful advantage over the process adopted. The investment company. In particular, all of the Company’s day-to-day option is, however, kept under review. management and administrative functions have been delegated to the Manager. As a result, the Company has no executive Directors, The table on page 38 sets out the number of scheduled Board employees or internal operations. Therefore, with the exception and Committee meetings held during the year ended 31 December of the need for an internal audit function, which is addressed on 2022 and the number of meetings attended by each Director. page 44, the Company has not reported further in respect of these The Board also held a strategy meeting and three committee provisions. meetings during the year. Detailed information on the Directors’ Remuneration can be found Individual Directors may, at the expense of the Company, seek in the Directors’ Remuneration Report on pages 41 to 42 and in independent professional advice on any matter that concerns note 6 to the accounts. them in the furtherance of their duties. No such advice was sought during the period. The Company maintains appropriate Directors’ Copies of both codes may be found on the respective websites and Officers’ liability insurance and has granted deeds of indemnity theaic.co.uk and frc.org.uk. to the Directors in respect of liabilities that may attach to them in their capacity as Directors of the Company. AIFMD The Board receives full information on the Company’s investment The Company is defined as an Alternative Investment Fund (“AIF”) performance, assets, liabilities and other relevant information in under the AIFMD issued by the European Parliament, and which advance of Board meetings. The Board has direct access to the has been implemented into UK law. This requires that all AIFs must company secretarial advice and services provided by the Manager. appoint a Depositary and an Alternative Investment Fund Manager The proceedings at all Board meetings are fully recorded through (“AIFM”). The Board remains fully responsible for all aspects of the a process that allows Director’s concerns to be recorded in the Company’s strategy, operations and compliance with regulations. minutes. The Board has the power to appoint or remove the The Manager is the Company’s AIFM. Company Secretary. Articles of association Appointments and Succession Planning The Company’s articles of association may only be amended by The Board has established a Remuneration and Nomination special resolution at general meetings of Shareholders. Committee. This committee is responsible for the review of the re-appointment of Directors, as they fall due for re-election and to The Board make recommendations to the Board. The Board of the Company is entirely non-executive. The Company In order to comply with the spirit of the Code, the Directors consider has no employees. A management contract between the Company and the Manager sets out the matters over which the Manager that their period of office commenced with their appointment to the has authority and the limits above which Board approval must Board of European Assets Trust NV, the Company's predecessor. 36 | European Assets Trust PLC Report and Accounts 2022 | 37 Governance Report | | | Audit and Risk | Remuneration and | | | Management | | --- | --- | --- | --- | --- | --- | --- | | Year ended | Board meetings | Committee | Nomination Committee | | | Engagement | | 31 December 2022 | of Directors | Meetings | | Meetings | Committee Meetings | | Held Attended Held Attended Held Attended Held Attended Jack Perry CBE 5 4 3 3 2 1 1 1 | Julia Bond OBE | 5 5 3 3 2 2 1 1 | | --- | --- | | Stuart Paterson | 5 5 3 3 2 2 1 1 | | Martin Breuer | 5 5 3 3 2 2 1 1 | | Pui Kei Yuen | 5 5 2 2 2 2 1 1 | In addition, this committee is responsible for making Full details of the duties of a Director are provided at the time recommendations to the Board regarding the nomination of of their appointment. An induction process takes place for additional Directors, where appropriate, for approval by the General new appointees, who meet the Investment Manager, Company Meeting of Shareholders. Secretary and other key employees of the Manager and are given briefings on the workings and processes of the Company. In accordance with the AIC Code all Directors will now be subject to annual re-election at each AGM. Following the evaluation Directors are encouraged to attend relevant training courses process set on page 37, the Board confirms that the performances and seminars and receive regular updates on the industry and of all Directors continue to be effective and demonstrate changes to regulation from external advisors and the Company commitment to the role. The Board therefore believes that it is in Secretary. the interest of Shareholders that all Directors seeking re-election be re-elected. Independence of Directors All Directors are considered by the Board to be independent of the Appointments of all new Directors are made on a formal basis Manager. The Board does not consider that a Director’s tenure or using professional search consultants, with the Board agreeing other board memberships necessarily reduces his or her ability the selection criteria and the method of selection, recruitment and to act independently and, following performance evaluations, appointment. A Director role specification is prepared to assist believes that each Director is independent in character and with this process. Each appointment is subject to Shareholder judgement and that continuity and experience add to the strength approval at the subsequent AGM. of the Board. The length of tenure of the Chairman is determined by the UK Code’s nine-year limit subject to the AIC Code derogation. Factors Board committees that will be considered include board rotation and retention of The Board has appointed committees with sufficient expertise, in experience. The Board has an agreed succession plan for the accordance with the AIC Code in order to increase the efficiency orderly retirement of existing directors and to provide for the of the Board’s work. The respective chairs of the committees regular refreshment of skills and talent. Regular retirements of report to the Board on the work of the committees. The Company directors will take place ensuring that the Company complies with has established an Audit and Risk Committee, a Remuneration both the letter and spirit of the AIC Code. As part of this plan, and Nomination Committee and a Management Engagement it is anticipated that Julia Bond will retire from the Board on 31 Committee. January 2024. In advance of Julia’s retirement, the Board will recruit a new Director. Jack Perry has announced his intention to Audit and Risk Committee retire from the Board at the conclusion of the Company’s Annual The Company has established an Audit and Risk Committee General Meeting in 2024. Upon his retirement, Stuart Paterson will which is chaired by Stuart Paterson and is comprised of all become Chairman. the independent members of the Board. The Audit and Risk As a further part of this succession plan a search company was Committee meets at least twice a year. The Board considers that commissioned to identify a new Director for the Board. Details the members of the Audit and Risk Committee have the requisite regarding the search company are provided on page 40. Following skills and experience to fulfil the responsibilities of the Audit and a thorough selection process, Kevin Troup will be appointed to the Risk Committee. The Audit and Risk Committee is responsible Board and its committees with effect from 19 May 2023. for ensuring that the financial performance of the Company is properly reported on and monitored and provides a forum Following the retirement of Jack Perry and Stuart Paterson’s through which the Company’s external auditors may report to the assumption of the Chairmanship, Kevin Troup will be appointed Board. The Audit and Risk Committee reviews and recommends Chair of the Company’s Audit and Risk Committee. 38 | European Assets Trust PLC Report and Accounts 2022 | 39 OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information Governance Report to the Board on the annual and half yearly reports and financial Aside from situational conflicts, the Directors must also comply statements, financial announcements, internal control systems with the statutory rules requiring company directors to declare and procedures and accounting policies of the Company. any interest in an actual or proposed transaction or arrangement with the Company. In the year under review there have been no The Report of the Audit and Risk Committee is contained on pages instances of a Director being required to be excluded from a 43 and 44. discussion or abstain from voting because of a conflict of interest. Management Engagement Committee Relations with Shareholders The Company has established a Management Engagement The Company welcomes the views of Shareholders and places Committee, which is chaired by Jack Perry and consists of all the importance on communication with its members. The Managers independent members of the Board. The Management Engagement hold meetings with the Company’s largest Shareholders and report Committee meets at least once a year and its principal duties back to the Board on these meetings. Each year, the Company will are to review the terms and conditions of the appointment of hold an Annual General Meeting to be followed by a presentation the Manager and other significant service providers including the by the Investment Manager in London. Depositary and Custodian, corporate broker, administrator and legal counsel. Full consideration is given to the quality and value of In accordance with the UK Code, in the event that when votes the service received and recommendations are made to the Board of 20 per cent or more have been cast against a resolution at a on the appropriateness of all continuing appointments. General Meeting the Company will announce the actions it intends to take to consult Shareholders to understand the reasons behind The Report of Management Engagement Committee is contained the result. A further update will be published within six months. No on page 45. such votes were received during 2022. Remuneration and Nomination Committee Julia Bond, Senior Independent Director, is available to The Company has established a Remuneration and Nomination Shareholders if they have concerns which initial contact through Committee, which is chaired by the Senior Independent Director, the Chairman or Company Secretary has failed to resolve or for Julia Bond and consists of all the independent members of the which such contact is inappropriate. Shareholders wishing to Board. The Remuneration and Nomination Committee meets at communicate with the Chairman or other members of the Board least once a year. may do so by writing to European Assets Trust PLC, 6th Floor, Quartermile 4, 7a Nightingale Way, Edinburgh EH3 9EG. The Report of the Remuneration and Nomination Committee on page 40 includes details of its duties. By order of the Board Conflicts of interest Columbia Threadneedle Investment Business Limited A company director has a statutory obligation to avoid a situation Secretary in which he or she has, or potentially could have, a direct or indirect interest that conflicts with the interests of the Company (a 28 March 2023 “situational conflict”). The Board therefore has procedures in place for the authorisation and review of situational conflicts relating to the Company’s Directors. Other than the formal authorisation of the Directors’ other directorships and appointments, no authorisations have been sought. Stuart Paterson is a member of the Supervisory Board of Mister Spex SE, which was an investment of the Company, during part of the year and therefore was recused from Board discussions on that holding. 38 | European Assets Trust PLC Report and Accounts 2022 | 39 Governance Report ## Report of the Remuneration and ## Nomination Committee Role of the Committee the right balance of both continuity and the regular refreshment of talent as well as compliance with the requirements of the AIC The Committee met on two occasion during the year. The duties Code. of the Remuneration and Nomination Committee are: As part of this plan, it is anticipated that Julia Bond will retire • To periodically review the level of Directors’ fees and from the Board on 31 January 2024. In advance of Julia’s recommend any changes to the Board; retirement, the Board will recruit a new Director. Jack Perry • The annual Board evaluation process. has announced his intention to retire from the Board at the • To be responsible for reviewing and making conclusion of the Company’s Annual General Meeting in 2024. recommendations to the Board regarding nominating Upon his retirement, Stuart Paterson will become Chairman. candidates for the approval by the General Meeting of As a further part of this succession plan, search company Shareholders to fill vacancies on the Board of Directors; Cornforth Consulting, with no connection to the Company or an • To consider and review the composition and balance of individual director, was commissioned to find a new Director for the Board from time to time and, where appropriate, to the Board. Following a thorough selection process, Kevin Troup make recommendations to the Board; will be appointed to the Board and its committees with effect • To review the re-appointment of Directors, as they fall from 19 May 2023. due for re-election, under the terms of the Articles, and Following the retirement of Jack Perry and Stuart Paterson’s to make recommendations to the Board as considered assumption of the Chairmanship, Kevin Troup will be appointed appropriate; Chair of the Company’s Audit and Risk Committee. • To review actual or possible conflicts of interest in respect of each Director and any authorised conflicts; and Diversity • To consider other relevant topics, as defined by the The Board’s diversity policy, objective and progress in achieving it Board. are set out on page 21. Committee evaluation Composition of the Committee The activities of the committee were considered as part of All the Directors are members of the Committee the terms of the Board appraisal process completed in accordance with reference of which can be found on the website at standard governance arrangements as summarised on page www.europeanassets.co.uk. The Committee is chaired by the 37. The conclusion from the process was that the committee Senior Independent Director, Julia Bond. was operating effectively, with the right balance of membership, experience and skills. Succession planning Appointments of all new Directors are made on a formal basis, normally using professional search consultants, with the Remuneration and Nomination Committee agreeing the Julia Bond selection criteria and the method of recruitment, selection and Remuneration and Nomination Committee Chairman appointment. The Board has an agreed succession plan for the orderly 28 March 2023 retirement of existing Directors and to provide for the regular refreshment of skills and talent. Regular retirements of Directors will take place in the following years to ensure the Board enjoys 40 | European Assets Trust PLC Report and Accounts 2022 | 41 Governance Report # Directors' Remuneration Report ## Introduction This Directors' remuneration report covers the year ended 31 December 2022. ## Directors' Remuneration Policy The Board's policy is to set Directors' remuneration at a level commensurate with the skills and experience necessary for the effective stewardship of the Company and the expected contribution of the Board as a whole in continuing to achieve the investment objective. The policy aims to be fair and reasonable in relation to comparable investment trusts and other similar sized financial companies. Time committed to the Company's affairs and the role that individual Directors fulfil in respect of Board and committee responsibilities are taken into account. The policy also provides for the Company's reimbursement of all reasonable travel and associated expenses incurred by the Directors in attending Board and committee meetings, including those treated as a benefit in kind subject to tax and national insurance. The Directors are not eligible for pension benefits, share options, long-term incentive schemes or other benefits. This policy was last approved by Shareholders at the AGM held in May 2020 with 93.5% voting in favour and 6.5% against. The policy will next be put to Shareholders for approval at the AGM to be held in on 18 May 2023. It is intended that this policy will continue for the three-year period ending at the AGM in 2026. The Board has not received any views from Shareholders in respect of the levels of Director's remuneration. The Company's articles of association limit the aggregate fees payable to the Board to a total of £500,000 per annum. The Remuneration and Nomination Committee considers the level of Directors' fees at least annually. The Committee receives details of the fees paid to directors of commensurate companies. The Committee will then recommend to the Board a proposal for its approval. The fees are fixed and are payable in cash, quarterly in arrears. Following the latest review the Board agreed that with effect from 1 April 2023 the annual rates of remuneration will be increased to £48,000 for the Chairman, £38,000 for the Chairman of the Audit and Risk Committee, £37,000 for the Senior Independent Director and £32,750 for a Non-executive Director. These increases at less than 4% are lower than backdrop inflation. The Board is composed solely of non-executive Directors, none of whom has a service contract with the Company. Each new Director is provided with a letter of appointment. There is no provision for compensation upon early termination of appointment. In normal circumstances these letters of appointment are available for inspection at the Company's registered office during business hours and will be available for 15 minutes before and during the forthcoming AGM. Each Director's appointment is subject to election at the first AGM and continues thereafter subject to re-election at each subsequent AGM. All the Directors will stand for re-election at the AGM to be held on 18 May 2023. Fees for services to the Company for the year ended 31 December (audited) | Director | Fees (audited) | | Taxable Benefits^{(1)(2)} (audited) | | Total (audited) | | Fees (unaudited) | | --- | --- | --- | --- | --- | --- | --- | --- | | | 2022 £ | 2021 £ | 2022 £ | 2021 £ | 2022 £ | 2021 £ | 2023 £ | | Jack Perry CBE | 45,813 | 44,375 | 3,724 | 941 | 49,537 | 45,316 | 47,600 | | Stuart Paterson | 36,413 | 35,300 | 1,224 | 382 | 37,637 | 35,682 | 37,700 | | Julia Bond OBE | 35,413 | 34,300 | 1,009 | 888 | 36,422 | 35,188 | 36,700 | | Martin Breuer | 31,200 | 30,225 | 2,253 | 457 | 33,453 | 30,682 | 32,400 | | Pui Kei Yuen | 31,200 | 25,520 | 918 | 803 | 32,118 | 26,323 | 32,400 | | Kevin Troup^{(3)} | n/a | n/a | n/a | n/a | n/a | n/a | 20,300 | | Laurence Jacquot^{(4)} | n/a | 11,070 | n/a | 38 | n/a | 11,108 | n/a | | **Total** | **180,039** | **180,790** | **9,128** | **3,509** | **189,167** | **184,299** | **207,100** | (1) Comprises amounts reimbursed for expenses incurred in carrying out business for the Company which have been grossed up to include PAYE and NI contributions. (2) Increased year-on-year as a result of a return to normal business travel on behalf of the Company post COVID-19. (3) To be appointed on 19 May 2023. (4) Retired 13 May 2021. Report and Accounts 2022 | 41 Overview Chairman's statement Bringing Report Governance Report Election Report Financial Statements Final Information Governance Report Annual percentage change There has been no change to Directors’ shareholdings since The table below sets out the annual percentage change in fees for the year end. No Director held any interests in the issued share each director who served in the year under review. capital of the Company other than as stated above. Directors are encouraged but not required to hold shares in the Company. 2022 2021 2020 Director (audited) (audited) (audited) Relative importance of spending on pay Jack Perry CBE +3.2 +0.9 +4.8 The table below shows the actual expenditure in relation to Board (2) Stuart Paterson +3.2 +6.3 +155.6 remuneration, other expenses, Shareholder dividends and 31 Julia Bond OBE +3.2 +0.9 +3.0 December Net Asset Value: Martin Breuer +3.2 +0.8 +3.4 (1) 2022 2021 Pui Kei Yuen +22.3 n/a n /a £’000s £’000s % (1) Appointed as a Director with effect from 26 February 2021, increase reflects the Aggregate Board remuneration first full year with the Company. (2) (excluding taxable benefits) 180 181 -0.6% Appointed as a non-executive Director on 22 July 2019, became Audit and Risk Committee Chair with effect from 14 May 2020. Increase reflects the first full year Management and other expenses 3,863 4,513 -14.4% with the Company and the change in positions held. Dividends paid to Shareholders 31,688 28,804 +10.0% Policy implementation Net Asset Value 347,627 525,435 -33.8% The Directors’ Remuneration Report is subject to an annual advisory vote and therefore an ordinary resolution for its approval will be put to Shareholders at the forthcoming AGM. The results of Company performance this vote is made available on the Company’s website as soon as The Board is responsible for the Company’s investment strategy practicably possible afterwards. and performance. The management of the investment portfolio At the AGM held on 17 May 2022 Shareholders approved the is delegated to the Manager. An explanation of the performance Directors’ Remuneration Report in respect of the year ended of the Company is given in the Chairman’s Statement and 31 December 2021. 96.6% of votes were cast in favour of the Investment Manager’s Review. A comparison of the Company’s resolution and 3.4% against. performance over the required ten-year period is set out in the following graph. This shows the total return (assuming all Directors’ remuneration for the year dividends are re-invested) to ordinary Shareholders against the The Directors who served during the year received remuneration at Benchmark. the following annualised rates for services as non-executive Directors. Directors can expect to receive fees at the rates indicated for 2023 Share Price Total Return Performance as well as reimbursement for expenses necessarily incurred. (In sterling terms, rebased to 100 at 31 December 2012) The fees for specific responsibilities are set out below. 375 Annual fee rates for Board responsibilities 350 325 With effect With effect 300 from from 275 1 April 2023 1 April 2022 250 £ £ 225 Chairman 48,000 46,250 200 Chairman of Audit and Risk Committee 38,000 36,750 175 150 Senior Independent Director 37,000 35,750 125 Non-executive Director 32,750 31,500 100 75 Aggregate remuneration will rise during 2023 beyond the marginal 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 increases in rates to be implemented on 1 April 2023 due to the ‡ ∞ European Assets Trust EMIX Smaller European Countries (ex UK) Index temporary increase in the number of Directors during the year. This Source: Reuters Eikon temporary increase will ensure smooth handovers between Jack Perry, Stuart Paterson and Kevin Troup. It is envisaged that following ‡ European Assets Trust NV prior to migration on 16 March 2019. ∞ the Company's 2024 AGM the number of Directors will be reduced With effect from 1 April 2021 the benchmark changed from EMIX Smaller European Companies (ex UK) Index (gross) to EMIX Smaller European from six to five. Companies (ex UK) Index (net). Directors’ Share Number of shares held | interests (audited) | 2022 2021 | | | | --- | --- | --- | --- | | Jack Perry 86,903 81,606 | | On behalf of the Board | | | Julia Bond 99,609 91,428 | | | Jack Perry | Chairman Stuart Paterson 95,000 95,000 28 March 2023 Martin Breuer 114,300 90,000 Pui Kei Yuen 7,700 7,700 42 | European Assets Trust PLC Report and Accounts 2022 | 43 OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information Governance Report ## Report of the Audit and Risk Committee All of the Directors are members of the Committee. The Committee • The annual results announcements, and annual and half-yearly is chaired by Stuart Paterson. reports and accounts; The duties of the committee include reviewing the annual • The accounting policies of the Company; and interim Accounts, the system of internal controls, and • The principal risks faced by the Company and the effectiveness the terms of appointment and remuneration of the auditor, of the Company’s internal control environment; PricewaterhouseCoopers LLP (‘PwC’), including its independence • The effectiveness of the audit process and related non-audit and objectivity. It is also the forum through which the auditor services and the independence and objectivity of the auditor, reports to the Board of Directors. The terms of reference of their re-appointment, remuneration and terms of engagement; the Audit and Risk Committee can be found on the website at • The policy on the engagement of the auditor to supply non- www.europeanassets.co.uk. audit services; The committee meets at least twice-yearly including at least one • The implications of proposed new accounting standards and meeting with the auditor. regulatory changes; The Audit and Risk Committee met on three occasions during • The receipt of an internal controls report from the Manager; the year and the attendance of each of the members is set out and on page 38. In the course of its duties, the committee had direct • Whether the Annual Report and Accounts is fair, balanced and access to the auditor and senior members of the Manager’s understandable. fund management and investment trust teams. Amongst other things, the Audit and Risk Committee considered and reviewed the following matters and reported thereon to the Board: Significant issues considered by the Audit and Risk Committee for the year ended 31 December 2022 Matter Action Existence and valuation of investments The Company’s portfolio is invested in listed securities. Errors The Board reviews the full portfolio valuation at each Board in valuation could have a material impact on the Company’s net meeting and receives quarterly reports from the AIF Manager asset value per share. and the Depositary. The Board receives at each Board meeting analysis from the investment managers reviewing the liquidity of the portfolio. Appropriateness of viability assessment The Company discloses a viability assessment and statement Mindful of the guidance issued by the Financial Reporting Council, in accordance with the requirements of the UK Corporate when assessing viability, the Company’s cash position, availability Governance Code. of the loan facility and the operational resilience of its service providers were considered. Further analysis of the five-year viability assessment and the application of the going concern principle are detailed on page 32 and note 23 to the financial statements. Effectiveness of internal control environment On an annual basis the Audit and Risk Committee considers the The Audit and Risk Committee meeting considered the control Company’s internal control environment. reports and written assurances received from third party service providers with regard to the operation of internal controls during the year ended 31 December 2022. During the year, the Chair of the Committee met representatives of the Manager to discuss the control reports of a third party service provider. 42 | European Assets Trust PLC Report and Accounts 2022 | 43 As part of its review of the scope and results of the audit, during A formal annual review of these procedures is carried out by the period the Audit and Risk Committee considered and approved the Audit and Risk Committee and includes consideration of the auditor’s plan for the audit of the financial statements for the internal control reports issued by the Manager and other service year ended 31 December 2022. At the conclusion of the audit the providers. Such review procedures have been in place throughout auditor did not highlight any issues to the Audit and Risk Committee the financial year and up to the date of approval of the annual which would cause it to qualify its audit report nor did it highlight any report, and the Board is satisfied with their effectiveness. These fundamental internal control weaknesses. The auditor issued an procedures are designed to manage rather than eliminate unqualified audit report which is included on pages 47 to 52. risk and, by their nature, can only provide reasonable, but not absolute, assurance against material misstatement or loss. Following the implementation of the Statutory Audit Amending At each Board meeting the Board monitors the investment Disclosure, with effect from 1 January 2017, the auditor is unable to performance of the Company in comparison to its stated provide tax compliance and advisory services to the Company. objective, its peer group and its Benchmark index. The Board As part of the review of auditor independence and effectiveness, also reviews the Company’s activities since the previous Board PwC has confirmed that it is independent of the Company and has meeting to ensure that the Manager adheres to the agreed complied with relevant auditing standards. In evaluating the auditor, investment policy and approved investment guidelines. The the Audit and Risk Committee has taken into consideration the Depositary reports to the Board and carries out daily independent standing, skills and experience of the firm and the audit team. In checks on cost and investment transactions, annually verifies addition, the Audit and Risk Committee reviewed the FRC’s Audit asset ownership and has strict liability for the loss of Company’s and Quality review for PwC and discussed the findings with the financial assets in respect of which it has safe keeping duties. Company’s audit partner to determine if any of the indicators in the The Board has reviewed the need for an internal audit function. report had specific relevance to this year’s audit of the Company. It has decided that the systems and procedures employed by The Audit and Risk Committee discussed the audit plan and PwC’s the Manager, including its own internal audit function, provide final report and concluded that an effective external audit had sufficient assurance that a sound system of internal control, been conducted. PwC Netherlands was appointed auditors to the which safeguards Shareholders’ investments and the Company’s Company’s predecessor, European Assets Trust NV, on 24 April 2014. assets, is maintained. An internal audit function specific to the PricewaterhouseCoopers LLP UK was appointed auditors to the Company is therefore considered unnecessary but this decision Company on 17 May 2019. The Company is not required to tender will be kept under review. for auditors at least until after the audit in respect of the year ended 31 December 2029. It is the current intention of the Audit and Risk Committee not to tender for the audit until then. The Audit and Risk Committee, from direct observation and enquiry of the Manager, remains satisfied that the auditor continues to provide effective Stuart Paterson independent challenge in carrying out its responsibilities. Following Chairman of the Audit and Risk Committee professional guidelines, the audit partner rotates after five years. 28 March 2023 The current audit partner, Jennifer March, is in the second year of her appointment. On the basis of this assessment, the Audit and Risk Committee has recommended the continuing appointment of the auditor to the Board. The auditor’s performance will continue to be reviewed annually taking into account all relevant guidance and best practice. Internal Control The Board is responsible for the Company’s system of internal control and for reviewing its effectiveness. The Board has therefore established an ongoing process designed to meet the particular needs of the Company in managing the risks to which it is exposed. The process is based principally on the Manager’s existing risk-based approach to internal control whereby a matrix is created for the Company that include the key functions and activities carried out by the Manager and other service providers, the risks associated with these functions and activities and the controls employed to minimise these risks. These functions and activities include the financial reporting process. A residual risk rating is then applied. The matrix is regularly updated and reviewed by the committee and the Board. 44 | European Assets Trust PLC Report and Accounts 2022 | 45 OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information Governance Report ## Report of the Management ## Engagement Committee Duties of the Committee services provided which include company secretarial, accounting, administration and marketing. The length of notice of the investment The duties of the Management Engagement Committee are to management contract and fees payable to the Manager were also review the terms and conditions of the appointment and the reviewed. appropriateness of the continuing appointment of: Following this review, it is the Board’s opinion that the continuing • The Investment Manager, appointment of the Manager on the terms agreed is in the interests • Other significant service providers including the Depositary and of Shareholders as a whole. Custodian, corporate broker, administrator and legal counsel. The Management Engagement Committee also reviews the fees paid The Manager’s Fee during the year to all of the Company’s service providers. An important responsibility of the Committee is the review of the Manager’s fee. Details of the investment management fee are Composition of the Committee included in Note 5 to the Accounts. At each annual Committee The Management Engagement Committee is appointed by the Board meeting the Directors compare the basis of the remuneration of the from amongst the Board Directors of the Company. A quorum is two Manager against that of the peer group. members. Service providers The Chairman of the Management Engagement Committee is the At each meeting of the Committee the Directors consider the Chairman of the Board, Jack Perry. remuneration, quality of service provided and value for money Currently all members of the Board have been appointed to the received from each of the key service providers of the Company. Management Engagement Committee. Reporting Procedures The terms of reference of the Management Engagement Committee are available on the the Company’s website www.europeanassets. The Secretary circulates the minutes of meetings of the Management co.uk. Engagement Committee to all members of the Board at the next Board meeting following a Management Engagement Committee The Manager’s Evaluation Process Meeting. The Committee meets annually. Its most recent meeting was March A member of the Management Engagement Committee attends 2023 which included a formal evaluation of the performance and the Annual General Meeting and is available to answer questions remuneration of the Manager. At each Board meeting throughout on the Management Engagement Committee’s activities and the year the performance of the Company is reviewed. The Board responsibilities. receives detailed papers, reports and reviews from the Manager on performance at each regular Board meeting. These papers include details of portfolio attribution, asset and sector allocation, gearing Jack Perry and risk. These enable the Board to assess the success or failure of Chairman the Manager’s performance against the Key Performance Indicators 28 March 2023 determined by the Board. The Manager’s Re-appointment During March 2023, the Management Engagement Committee of the Board reviewed the appropriateness of the Manager’s continuing appointment. In carrying out the review, consideration was given to past investment performance and the ability of the Manager to produce satisfactory investment performance in the future. Consideration was also given to the standard of other 44 | European Assets Trust PLC Report and Accounts 2022 | 45 Financial Statements ## Statement of Directors’ Responsibilities ## in Respect of the Financial Statements The Directors are responsible for preparing the Report and Directors’ confirmations Accounts and the financial statements in accordance with Each of the Directors, whose names and functions are listed on applicable law and regulation. page 30 confirm that, to the best of their knowledge: Company law requires the Directors to prepare Financial • the Company financial statements, which have been prepared Statements for each financial year. Under that law the Directors in accordance with UK-adopted International Accounting have prepared the financial statements in accordance with UK- Standards, give a true and fair view of the assets, liabilities, adopted International Accounting Standards. financial position and profit of the Company; Under company law, Directors must not approve the financial • the Strategic Report includes a fair review of the development statements unless they are satisfied that they give a true and and performance of the business and the position of the fair view of the state of affairs of the Company and of the profit Company, together with a description of the principal risks and or loss of the Company for that period. In preparing the financial uncertainties that it faces; and statements, the Directors are required to: • the annual report and financial statements, taken as a • select suitable accounting policies and then apply them whole, are fair, balanced and understandable and provide consistently; the information necessary for Shareholders to assess the Company’s position and performance, business model and • state whether applicable UK-adopted International strategy. Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial In the case of each Director in office at the date the Directors’ statements; report is approved: • make judgements and accounting estimates that are • so far as the Director is aware, there is no relevant audit reasonable and prudent; and information of which the Company’s Auditors are unaware; and • prepare the financial statements on the going concern basis • they have taken all the steps that they ought to have taken as unless it is inappropriate to presume that the Company will a director in order to make themselves aware of any relevant continue in business. audit information and to establish that the Company’s Auditors are aware of that information. The Directors are responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are also responsible for keeping adequate On behalf of the Board accounting records that are sufficient to show and explain the Jack Perry Company’s transactions and disclose with reasonable accuracy Chairman at any time the financial position of the Company and enable them to ensure that the financial statements and the Directors’ 28 March 2023 Remuneration Report comply with the Companies Act 2006. The Directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. 46 | European Assets Trust PLC OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information Auditors’ Report ## Independent Auditors’ Report to the ## members of European Assets Trust PLC Our audit approach ## Report on the audit of the financial Overview ## statements Audit scope Opinion • The Company is a standalone Investment Trust Company and In our opinion, European Assets Trust PLC’s financial statements: engages Columbia Threadneedle Investment Business Limited (the "Investment Manager") to manage its assets. • give a true and fair view of the state of the Company’s affairs as at 31 December 2022 and of its loss and cash flows for the year • We conducted our audit of the financial statements using then ended; information from State Street Bank & Trust Company (the "Administrator") to whom the Investment Manager has, with • have been properly prepared in accordance with UK-adopted the consent of the Directors, delegated the provision of certain international accounting standards; and administrative functions. • have been prepared in accordance with the requirements of the • We tailored the scope of our audit taking into account the types Companies Act 2006. of investments within the Company, the involvement of the third We have audited the financial statements, included within the Report parties referred to above, the accounting processes and controls, and Accounts (the “Annual Report”), which comprise: the Statement and the industry in which the Company operates. of Financial Position as at 31 December 2022; the Statement of • We obtained an understanding of the control environment in Comprehensive Income, the Statement of changes in Equity and the place at both the Investment Manager and the Administrator Statement of Cash Flows for the year then ended; and the notes to and adopted a fully substantive testing approach using reports the financial statements, which include a description of the significant obtained from the Administrator. accounting policies. Our opinion is consistent with our reporting to the Audit and Risk Key audit matters Committee. • Valuation and existence of investments • Accuracy, occurrence and completeness of Income from Basis for opinion investments We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities Materiality under ISAs (UK) are further described in the Auditors’ responsibilities • Overall materiality: £3,476,270 (2021: £5,254,345) based on 1% for the audit of the financial statements section of our report. We of Net Asset Value (NAV). believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. • Performance materiality: £2,607,203 (2021: £3,940,759). Independence The scope of our audit We remained independent of the Company in accordance with the As part of designing our audit, we determined materiality and ethical requirements that are relevant to our audit of the financial assessed the risks of material misstatement in the financial statements in the UK, which includes the FRC’s Ethical Standard, as statements. applicable to listed public interest entities, and we have fulfilled our Key audit matters other ethical responsibilities in accordance with these requirements. Key audit matters are those matters that, in the auditors’ To the best of our knowledge and belief, we declare that non-audit professional judgement, were of most significance in the audit of services prohibited by the FRC’s Ethical Standard were not provided. the financial statements of the current period and include the most We have provided no non-audit services to the Company in the period significant assessed risks of material misstatement (whether or not under audit. due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit. Report and Accounts 2022 | 47 Financial Statements The key audit matters below are consistent with last year. Key audit matter How our audit addressed the key audit matter Valuation and existence of investments Our audit work on the valuation and existence of investments included the following: Refer to the Report of the Audit and Risk Committee (page 43), Significant accounting policies (page 58) and Notes to the • We tested the valuation of 100% of the listed equity investments Financial Statements (page 64). by agreeing the prices used in the valuation to independent third- party sources; and, The investment portfolio at the year-end comprised listed equity investments valued at £340.7m. • We tested the existence of the investment portfolio by agreeing investment holdings to an independent custodian confirmation. We focused on the valuation and existence of investments because investments represent the principal element of the net Based on the results of the audit procedures performed we are asset value as disclosed on the Statement of Financial Position in satisfied that the equity investments exist and that the valuation of the Annual Report. the equity investments is not materially misstated. Accuracy, occurence and completeness of income from investments We responded to this risk by performing the following audit procedures: Refer to the Report of the Audit and Risk Committee (page 43), Accounting policies (page 59) and Notes to the Financial • We obtained an understanding of the processes and controls Statements (page 60). around income recognition and classification of special dividends by reviewing the internal controls reports of the Administrator; and, ISAs (UK) presume there is a risk of fraud in income recognition because of the pressure management may feel to achieve a certain • We assessed the appropriateness of the classification of special objective. In this instance, we consider that ‘income’ refers to all dividends as revenue or capital by the Directors with reference to the Company’s income streams, both revenue and capital (including publicly available information. gains and losses on investments). We focused on the accuracy, For all dividends recorded by the Company, we performed our audit completeness and occurrence of dividend income recognition as procedures through the use of our proprietary testing tool Halo: incomplete or inaccurate income could have a material impact on • We tested the accuracy of dividend income by agreeing the the Company’s net asset value and dividend cover. dividend rates from investments to independent market data; We also focused on the accounting policy for income recognition • We tested occurrence by testing that all dividends recorded in the and its presentation in the Income Statement as set out in year had been declared in the market by investment holdings; the requirements of The Association of Investment Companies • We also tested the occurrence of realised gains by agreeing a Statement of Recommended Practice (the “AIC SORP”) as sample of gains recorded to supporting evidence such as bank incorrect application could indicate a misstatement in income statements and broker statements; and, recognition. • To test for completeness, we investigated that the appropriate In addition, the Directors are required to exercise judgement in dividends had been received in the year by reference to determining whether income receivable in the form of special independent data of dividends declared for all investment holdings dividends should be classified as ‘revenue’ or ‘capital’ in the held within the year. Statement of Comprehensive Income. We have no matters to report as a result of this testing. How we tailored the audit scope We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole, taking into account the structure of the Company, the accounting processes and controls, and the industry in which it operates. The Company’s accounting is delegated to the Administrator who maintains the Company’s accounting records and who has implemented controls over those accounting records. We obtained our audit evidence from substantive tests. However, as part of our risk assessment, we understood and assessed the internal controls in place at both the Manager and the Administrator to the extent relevant to our audit. This assessment of the operating and accounting structure in place at both organisations involved obtaining and analysing the relevant controls reports issued by the independent service auditor of the Manager and the Administrator in accordance with generally accepted assurance standards for such work. Following this assessment, we applied professional judgement to determine the extent of testing required over each balance in the financial statements. The impact of climate risk on our audit In conducting our audit, we made enquiries of the Directors and the Investment Manager to understand the extent of the potential impact of climate change risk on the Company's financial statements. The Directors and Investment Manager concluded that the impact on the measurement and disclosures within the financial statements is not material because the majority of the Company's investment portfolio is made up of level 1 quoted securities which are valued at fair value based on market prices. We found this to be consistent with our understanding of the Company's investment activities. We also considered the consistency of the climate change disclosures included in the Strategic Report and Investment Manager Report with the financial statements and our knowledge from our audit. 48 | European Assets Trust PLC OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information Auditors’ Report Materiality The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole. Based on our professional judgement, we determined materiality for the financial statements as a whole as follows: Overall Company £3,476,270 (2021: £5,254,345) materiality How we 1% of Net Asset Value (NAV) determined it Rationale for We have applied this benchmark, which is generally accepted auditing practice for investment trust audits, in benchmark applied the absence of indicators that an alternative benchmark would be appropriate and because we believe this provides an appropriate and consistent year-on-year basis for our audit. We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance materiality was 75% (2021: 75%) of overall materiality, amounting to £2,607,203 (2021: £3,940,759) for the Company financial statements. In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of our normal range was appropriate. We agreed with the Audit and Risk Committee that we would report to them misstatements identified during our audit above £173,814 (2021: £262,717) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons. Conclusions relating to going concern Our evaluation of the directors’ assessment of the Company’s ability to continue to adopt the going concern basis of accounting included: • evaluating the Directors’ updated risk assessment and considering whether it addressed relevant threats, including Russia’s invasion of Ukraine, inflationary pressures and the wider macroeconomic uncertainty; • evaluating the Directors’ assessment of potential operational impacts, considering their consistency with other available information and our understanding of the business and assessed the potential impact on the financial statements; • reviewing the Directors’ assessment of the Company’s financial position in the context of its ability to meet future expected operating expenses, their assessment of liquidity as well as their review of the operational resilience of the Company and oversight of key third-party service providers; and, • assessing the implication of significant reductions in net asset value as a result of a severe but plausible downside in the market’s performance on the ongoing ability of the Company to operate. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the Company's ability to continue as a going concern. In relation to the Directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the Directors’ statement in the financial statements about whether the Directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report. Report and Accounts 2022 | 49 Financial Statements Reporting on other information The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon. The Directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on these responsibilities. With respect to the Strategic Report and Directors' Report, we also considered whether the disclosures required by the UK Companies Act 2006 have been included. Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as described below. Strategic Report and Directors’ Report In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and Directors' Report for the year ended 31 December 2022 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements. In light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we did not identify any material misstatements in the Strategic Report and Directors' Report. Directors’ Remuneration In our opinion, the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006. Corporate Governance Statement The Listing Rules require us to review the Directors’ statements in relation to going concern, longer-term viability and that part of the corporate governance statement relating to the Company’s compliance with the provisions of the UK Corporate Governance Code specified for our review. Our additional responsibilities with respect to the corporate governance statement as other information are described in the Reporting on other information section of this report. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is materially consistent with the financial statements and our knowledge obtained during the audit, and we have nothing material to add or draw attention to in relation to: • The Directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks; • The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks and an explanation of how these are being managed or mitigated; • The Directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis of accounting in preparing them, and their identification of any material uncertainties to the Company’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements; • The Directors’ explanation as to their assessment of the Company’s prospects, the period this assessment covers and why the period is appropriate; and • The Directors’ statement as to whether they have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions. Our review of the Directors’ statement regarding the longer-term viability of the Company was substantially less in scope than an audit and only consisted of making inquiries and considering the Directors’ process supporting their statement; checking that the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the statement is consistent with the financial statements and our knowledge and understanding of the Company and its environment obtained in the course of the audit. In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is materially consistent with the financial statements and our knowledge obtained during the audit: • The Directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides the information necessary for the members to assess the Company's position, performance, business model and strategy; • The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and • The section of the Annual Report describing the work of the Audit and Risk Committee. We have nothing to report in respect of our responsibility to report when the Directors’ statement relating to the Company’s compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review by the auditors. 50 | European Assets Trust PLC OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information Auditors’ Report Responsibilities for the financial statements and the audit Responsibilities of the directors for the financial statements As explained more fully in the Statement of Directors' Responsibilities in Respect of the Financial Statements, the Directors are responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The Directors are also responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. Auditors’ responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below. Based on our understanding of the Company and industry, we identified that the principal risks of non-compliance with laws and regulations related to breaches of section 1158 of the Corporate Tax Act 2010, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the financial statements such as the Companies Act 2006. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to increase revenue (investment income and capital gains) or to increase net asset value, and management bias in accounting estimates. Audit procedures performed by the engagement team included: • holding discussions with the Manager and the Audit and Risk Committee, including consideration of known or suspected instances of non- compliance with laws and regulation and fraud; • understanding the controls implemented by the Manager and the the Administrator designed to prevent and detect irregularities; • reviewing relevant meeting minutes, including those of the Audit and Risk Committee; • assessing the Company’s compliance with the requirements of section 1158 of the Corporation Tax Act 2010, including recalculation of numerical aspects of the eligibility conditions; • identifying and testing journal entries, in particular year-end journal entries posted by the Administrator during the preparation of the financial statements; and, • designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing. There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected. A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/ auditorsresponsibilities. This description forms part of our auditors’ report. Use of this report This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. Report and Accounts 2022 | 51 ## Other required reporting Companies Act 2006 exception reporting Under the Companies Act 2006 we are required to report to you if, in our opinion: • we have not obtained all the information and explanations we require for our audit; or • adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not visited by us; or • certain disclosures of Directors’ remuneration specified by law are not made; or • the financial statements and the part of the Directors' Remuneration Report to be audited are not in agreement with the accounting records and returns. We have no exceptions to report arising from this responsibility. Appointment Following the recommendation of the Audit and Risk Committee, we were appointed by the members on 17 May 2019 to audit the financial statements for the year ended 31 December 2019 and subsequent financial periods. The period of total uninterrupted engagement is four years, covering the years ended 31 December 2019 to 31 December 2022. ## Other matter In due course, as required by the Financial Conduct Authority Disclosure Guidance and Transparency Rule 4.1.14R, these financial statements will form part of the ESEF-prepared annual financial report filed on the National Storage Mechanism of the Financial Conduct Authority in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditors’ report provides no assurance over whether the annual financial report will be prepared using the single electronic format specified in the ESEF RTS. Jennifer March (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors London 28 March 2023 52 | European Assets Trust PLC OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information Financial Statements ## Statement of Comprehensive Income | | | | For the year ended | | | | | Year ended | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | | 31 December 2022 | | | | 31 December 2021 | | | | | | | Revenue | | Capital | Total | Revenue | | | Capital | Total | | Revenue Notes | Capital Notes | £’000s | | £’000s | £’000s | £’000s | | | £’000s | £’000s | | | 13 (Losses)/gains on investments held at fair | | | | | | | | | | - (177,223) (177,223) - 102,892 102,892 valuethroughprofitorloss Foreign exchange (losses)/gains (25) (86) (111) 8 469 477 | 3 | Income 8,527 - 8,527 8,157 - 8,157 | | --- | --- | | 5 5 | Management fees (610) (2,438) (3,048) (739) (2,954) (3,693) | | 6 6 | Other expenses (958) (37) (995) (995) (7) (1,002) | Profit/(loss) before finance costs and 6,934 (179,784) (172,850) 6,431 100,400 106,831 taxation 8 8 Finance costs (51) (206) (257) (50) (201) (251) Profit/(loss) before taxation 6,883 (179,990) (173,107) 6,381 100,199 106,580 9 9 Taxation (944) - (944) (937) - (937) Profit/(loss) for the year and total 5,939 (179,990) (174,051) 5,444 100,199 105,643 comprehensive income 11 11 Earnings per share (basic and diluted) 1.65 (49.99) (48.34) 1.51 27.83 29.34 – pence 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. The accompanying notes on pages 57 to 72 are an integral part of these financial statements. Report and Accounts 2022 | 53 Financial Statements ## Statement of changes in Equity | | | | | | | Cumulative | | | Total | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Share | Distributable | | Capital | Revenue | translation | | Shareholders' | | | | capital | | reserve* | reserve* | reserve* | | reserve | | funds | | Notes For the year ended 31 December 2022 | £’000s | | £‘000s | £’000s | £’000s | | £’000s | | £’000s | Balance at 31 December 2021 37,506 322,694 188,661 – (23,426) 525,435 Movement during the year ended 31 December 2022 10 Interim dividends distributed – (25,749) – (5,939) – (31,688) Total comprehensive income – – (179,990) 5,939 – (174,051) Cumulative translation adjustment – – – – 27,931 27,931 Balance as at 31 December 2022 37,506 296,945 8,671 – 4,505 347,627 | | | | | | | Cumulative | | | Total | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Share | Distributable | | Capital | Revenue | translation | | Shareholders' | | | | capital | | reserve* | reserve* | reserve* | | reserve | | funds | | For the year ended 31 December 2021 | £’000s | | £’000s | £’000s | £’000s | | £’000s | | £’000s | Balance at 31 December 2020 37,506 346,054 88,462 – 5,982 478,004 Movement during the year ended 31 December 2021 10 Interim dividends distributed and reinvested – (23,360) – (5,444) – (28,804) Total comprehensive income – – 100,199 5,444 – 105,643 Cumulative translation adjustment – – – – (29,408) (29,408) Balance as at 31 December 2021 37,506 322,694 188,661 – (23,426) 525,435 *These reserves include balances that are distributable by way of dividend, as disclosed in note 2(k). The accompanying notes on pages 57 to 72 are an integral part of these financial statements. 54 | European Assets Trust PLC OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information Financial Statements ## Statement of Financial Position | 31 December | | 31 December | | | --- | --- | --- | --- | | | 2022 | | 2021 | | | £’000s | | £’000s | Notes Non-current assets 12 Investments at fair value through profit or loss 340,717 539,756 Current assets 13 Other receivables 3,247 2,680 Cash and cash equivalents 13,317 8,342 Total current assets 16,564 11,022 Current liabilities 14 Other payables (782) (155) 15 Bank loan (8,872) (25,188) Total current liabilities (9,654) (25,343) Net current assets/(liabilities) 6,910 (14,321) Net assets 347,627 525,435 Capital and reserves | 16 | Share capital 37,506 37,506 | | --- | --- | | 17 | Distributable reserve 296,945 322,694 | | 18 | Capital reserve 8,671 188,661 | | 18 | Revenue reserve – – | Cumulative translation reserve 4,505 (23,426) Total Shareholders’ funds 347,627 525,435 19 Net Asset Value per ordinary share – pence 96.54 145.93 The notes on pages 57 to 72 form an integral part of the financial statements. Approved by the Board and authorised for issue on 28 March 2023 and signed on its behalf of by: Jack Perry, Chairman. The accompanying notes on pages 57 to 72 are an integral part of these financial statements. Report and Accounts 2022 | 55 Financial Statements ## Statement of Cash Flows | | 2022 | 2021 | | --- | --- | --- | | Notes For the year ended 31 December | £’000s | £’000s | | 20 Cash flows from operating activities before interest and dividends received and interest paid (3,353) (4,660) | | | Dividends received 6,990 6,842 Interest received 34 – Interest paid (257) (271) Cash flows from operating activities 3,414 1,911 Investing activities Purchase of investments (107,060) (107,481) Sale of investments 156,430 139,299 Other capital expenses (37) (7) Cash flows from investing activities 49,333 31,811 Cash flows before financing activities 52,747 33,722 Financing activities | 10 | Equity dividends paid (31,688) (28,804) | | --- | --- | | 15,21 | Drawdown of bank loan – 8,538 | | 15,21 | Repayment of bank loan (17,173) (8,500) | Cash flows from financing activities (48,861) (28,766) Net movement in cash and cash equivalents 3,886 4,956 Cash and cash equivalents at the beginning of the year 8,342 2,950 Effect of movement in foreign exchange (111) 477 Translation adjustment 1,200 (41) Cash and cash equivalents at the end of the year 13,317 8,342 Represented by: Cash at bank 9 13 Short term deposits 13,308 8,329 13,317 8,342 The accompanying notes on pages 57 to 72 are an integral part of these financial statements. 56 | European Assets Trust PLC Financial Statements # Notes to the Financial Statements ## 1. General Information European Assets Trust PLC is an investment company incorporated in England (UK) with a premium listing on the London Stock Exchange. The Company registration number is 11672363 and the registered office is Exchange House, Primrose Street, London, EC2A 2NY, England. The Company has conducted its affairs so as to qualify as an investment trust under the provisions of Section 1158 of the Corporation Tax Act 2010. Approval of the Company under Section 1158 has been received. The Company intends to conduct its affairs so as to enable it to continue to comply with the requirements. Such approval exempts the Company from UK Corporation Tax on gains realised in the relevant year on its portfolio of fixed asset investments. The accounting policies have been applied consistently throughout the year ended 31 December 2022, with no significant changes, as set out in note 2 below. ## 2. Significant accounting policies ### a) Basis of Preparation The financial statements of the Company have been prepared on a going concern basis under the historical cost convention modified to include fixed asset investments and derivatives at fair value, and in accordance with the Companies Act 2006, UK-adopted International Accounting Standards, which comprise standards and interpretations approved by the International Accounting Standards Board (the "IASB"), and International Accounting Standards and Standing Interpretations Committee interpretations approved by the International Accounting Standards Committee ("IASC") that remain in effect, and to the extent that they have been adopted by the European Union. Where presentational guidance set out in the 2018 amended Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts" ("SORP") for investment trusts issued by the Association of Investment Companies ("AIC") is consistent with the requirements of UK-adopted International Accounting Standards, the Directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP. 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. The Board confirms that no other significant accounting judgements or estimates have been applied to the financial statements and therefore there is no significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. As referred to in the Directors' Report on page 32 and note 23 to the accounts the Directors believe that it is appropriate for the accounts to be prepared on a going concern basis. ### b) New and revised Accounting Standards The Company adopted the following amended standard and interpretation during the year however the Board do not expect the change to have an effect on the Company's accounts: - IFRS 16 Amendments - COVID-19 Related Rent Concessions (effective 1 April 2021) the May 2020 amendments, which introduced an optional practical expedient that simplifies how a lessee accounts for rent concessions that are a direct consequence of COVID-19, have been extended to lease payments originally due on or before 30 June 2022; Other new standards, amendments and interpretations issued by the International Accounting Standards Board ("IASB") but not effective for the current financial year and not early adopted by the Company include: - IAS 1 Amendments - Classification of Liabilities as Current or Non-Current (effective date amended to 1 January 2023). The amendments specify the requirements for classifying liabilities as current or non-current. The amendments are not expected to have a material impact on the Group's financial statements. - IAS 1 Amendments - Disclosure of Accounting Policies (effective 1 January 2023). The amendments require an entity to disclose its material accounting policy information instead of its significant accounting policies. The amendments contain guidance and examples on identifying material accounting policy information. The amendments are not expected to have a material impact on the Group's financial statements. - IAS 8 Amendments - Definition of Accounting Estimates (effective 1 January 2023) The amendments define accounting estimates as "monetary amounts in financial statements that are subject to measurement uncertainty". The amendments also clarify the interaction between an accounting policy and an accounting estimate. The amendments are not expected to have a material impact on the Group's financial statements. - IAS 12 Amendments - Deferred Tax related to Assets and Liabilities arising from a Single Transaction (effective 1 January 2023). The amendments require entities with certain assets to recognise deferred tax on particular transactions that, on initial recognition, give rise to equal amounts of taxable and deductible temporary differences. - IFRS 17 Amendments - Insurance contracts (effective 1 January 2023). The IASB has issued this new standard as a replacement for IFRS 4, which currently allows a range of accounting treatments for insurance contracts. IFRS 17 will fundamentally change the accounting for insurance and investment contracts by all entities with discretionary participation features. The IASB have issued a number of other new standards, amendments and interpretations that are not yet effective for the current financial year end and are not expected to be relevant or material to the Company's operations. They are therefore not expected to have an impact on the Company's financial statements when they become effective. Overview Chalmers' statement Savage Report Insurance Report Insured Report Finance Statement Risk Information Report and Accounts 2022 | 57 2. Significant accounting policies (continued) c) Presentation of Statement of Comprehensive Income In order to reflect better the activities of an investment trust company and in acc ordance with guidance issued by the AIC, supplementary information which analyses the Statement of Comprehensive Income between items of a revenue and capital nature has been presented alongside the Statement of Comprehensive Income. The net revenue return is the measure the Directors believe appropriate in assessing the Company’s compliance with certain requirements set out in section 1158 Corporation Tax Act 2010. d) Financial instruments Investments are recognised and derecognised on the trade date where a purchase or sale is under a contract whose terms require delivery within the timeframe established by the market concerned, and are measured at fair value. Investments are classified as fair value through profit or loss. As the entity’s business is investing in financial assets with a view to profiting from their total return in the form of interest, dividends or increases in fair value, listed equities and fixed income securities are designated as fair value through profit or loss on initial recognition. Financial assets designated as at fair value through profit or loss are measured at subsequent reporting dates at fair value, which is either the bid price or the last traded price, depending on the convention of the exchange on which the investment is quoted. Unlisted investments are valued at fair value by the Directors on the basis of all information available to them at the time of valuation. Accounting standards recognise a hierarchy of fair value measurements for financial instruments which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The classification of financial instruments depends on the lowest significant applicable input, as follows: Level 1 – quoted (unadjusted) prices in active markets for identical assets or liabilities. Level 2 – other techniques for which all inputs that have a significant effect on the recorded fair value are observable, either directly or indirectly. Level 3 – techniques that use inputs that have a significant effect on the recorded fair value that are not based on observable market data. e) Receivables Receivables do not carry any interest and are short term in nature and are accordingly stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts. Receivables are recognised initially at fair value based on contractual settlement amounts and subsequently measured at amortised cost using the effective interest rate method. The Company records any impairment allowance on financial assets at amortised cost using the expected credit loss model under the simplified method. f) Cash and cash equivalents Cash at banks and short term deposits that are held to maturity are carried at cost. Cash and cash equivalents consist of cash at bank and short term deposits with an original maturity of three months or less. g) Financial liabilities and equity Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities. Financial liabilities and equity instruments are initially recorded at the proceeds received, net of issue costs. h) Bank borrowings Interest-bearing bank loans and overdrafts are recorded at the proceeds received. Finance charges, including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accruals basis in the Statement of Comprehensive Income using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. i) Derivative financial instruments Derivatives are classified as fair value through profit or loss – held for trading and are held at fair value and changes in fair value are recognised in the capital return column of the Statement of Comprehensive Income. j) Payables Payables are not interest bearing and are recognised initially at fair value based on contractual settlement amounts and subsequently measured at amortised cost using the effective interest rate method. k) Share capital and reserves (i) Share capital is held at the year end as Sterling denominated ordinary Shares. (ii) Distributable reserve – Created by cancellation of the Share Premium Account. This reserve is available as distributable profits and may be used for the payment of dividends and the repurchase of Company shares. (iii) Capital reserves Capital reserves – arising on investments sold and distributable by way of a dividend. The following are accounted for in this reserve: • gains and losses on the disposal of fixed asset investments and derivatives; • settled foreign exchange differences of a capital nature; and • other capital charges and credits charged or credited to this account in accordance with the above policies. 58 | European Assets Trust PLC OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information STRATEGIC REPORT Financial Statements 2. Significant accounting policies (continued) k) Share capital and reserves (continued) Capital reserves – arising on investments held and are non-distributable The following are accounted for in this reserve: • increases and decreases in the valuation of fixed asset investments and derivatives held at the year-end; and • unsettled foreign exchange valuation differences of a capital nature. (iv) Revenue Reserve The revenue reserve represents accumulated revenue profits retained by the Company that have not currently been distributed to Shareholders as a dividend. (v) Cumulative translation reserve This reserve comprises all foreign exchange differences arising from the translation from the Company’s functional currency, the euro, to the reporting currency, pound sterling. The figure represents: - the differences arising from translation of transactions made by the Company at the exchange rate on the date of execution; - t he translation of assets and liabilities held at the Statement of Financial Position (“SOFP”) date at the exchange rate prevailing on that date; and, - the translation of brought forward assets translated at the exchange rate prevailing on the SOFP date and brought forward capital and reserves at prior period exchange rates. l) Income Dividends are recognised as income on the date that the related investments are marked ex-dividend. Dividends receivable on equity shares where no ex-dividend date is quoted are brought into account when the Company’s right to receive payment is established. Special dividends of a non-capital nature are recognised through the revenue column of the Statement of Comprehensive Income. Where the Company has elected to receive its dividends in the form of additional shares rather than cash, an amount equal to the cash dividend is recognised as income. Interest income from fixed interest securities is accrued on a time apportioned basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount. Other investment income and deposit interest are included on an accruals basis. m) Taxation The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on taxable profit for the period. Taxable profit differs from profit before tax as reported in the Statement of Comprehensive Income 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 balance sheet date. n) Deferred taxation Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements 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 recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Investment trusts which have approval under section 1158 Corporation Tax Act 2010 are not liable for taxation on capital gains. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the Statement of Comprehensive Income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. o) Expenses and interest All expenses are accounted for on an accruals basis. Expenses are charged through the revenue column of the Statement of Comprehensive Income except those incurred in connection with the maintenance or enhancement of the value of the Company’s investment portfolio taking account of the expected long term split of returns as follows: – Management fees and finance costs have been allocated 20 per cent to revenue and 80 per cent to capital. Report and Accounts 2022 | 59 ## 2. Significant accounting policies (continued) ### p) Foreign currency Foreign currency monetary assets and liabilities are expressed in Sterling at rates of exchange ruling at the Balance Sheet date. Purchases and sales of investment securities, dividend income, interest income and expenses are translated at the rates of exchange prevailing at the respective dates of such transactions. Exchange profits and losses on fixed assets investments are included within the changes in fair value in the Capital Reserve. Exchange profits and losses on other currency balances are separately credited or charged to the Capital Reserve except where they relate to revenue items. | Rates of exchange as at 30 December (with regard to Sterling) | 2022 | 2021 | | --- | --- | --- | | Danish Krone | 8.38163 | 8.85844 | | Norwegian Krone | 11.84977 | 11.94395 | | Euro | 1.12710 | 1.19104 | | Swedish Krone | 12.53362 | 12.26299 | | Swiss Franc | 1.11292 | 1.23411 | ### q) Use of judgements, estimates and assumptions The presentation of the financial statements in accordance with accounting standards require the Board to make judgements, estimates and assumptions that effect the accounting policies and reported amounts of assets, liabilities, income and expenses. Estimates and judgements are continually evaluated and are based on perceived risks, historical experience, expectations of plausible future events and other factors. Actual results may differ from these estimates. The areas requiring the most significant judgement and estimation in preparation of the financial statements are: recognising and classifying unusual or special dividends received as either revenue or capital in nature; and setting the level of dividends paid and proposed in satisfaction of both the Company's long-term objective and its obligations to adhere to Investment Trust status rules under Section 1158 of the Corporation Tax Act 2010. Dividends received which appear to be unusual in size or circumstance are assessed on a case-by-case basis, based on interpretation of the investee companies' relevant statements, to determine their allocation in accordance with the SORP to either the Revenue Account or Capital Reserves. Dividends which have clearly arisen out of the investee company's reconstruction or reorganisation are usually considered to be capital in nature and allocated to Capital Reserves. Investee company dividends which appear to be paid in excess of current year profits may nevertheless still be considered to be wholly revenue in nature unless evidence suggests otherwise. The value of dividends received in the year treated as capital in nature is disclosed in note 18 to the Accounts. The value of special dividends receivable in any period cannot be foreseen as such dividends are declared and paid by investee companies without prior reference to the Company. ## 3. Income | | 2022 £'000s | 2021 £'000s | | --- | --- | --- | | Dividend income^{(1)} from listed investments in: | | | | - Austria | 46 | - | | - Belgium | 76 | - | | - Denmark | 416 | 414 | | - Finland | - | - | | - France | 495 | 607 | | - Germany | 622 | 1,023 | | - Iceland | 84 | 108 | | - Ireland | 492 | 180 | | - Italy | 755 | 850 | | - Netherlands | 378 | 171 | | - Norway | 1,673 | 2,477 | | - Portugal | 159 | 213 | | - Spain | 896 | 187 | | - Sweden | 1,883 | 1,566 | | - Switzerland | 518 | 361 | | **Total dividend income** | **8,493** | **8,157** | | Other income: | | | | Interest on cash and cash equivalents | 34 | - | | | 34 | - | | **Total income** | **8,527** | **8,157** | $^{(1)}$ Dividend income includes special dividends classified as revenue in nature in accordance with note 2(q) of £218,000 (2021: £147,000). 60 | European Assets Trust PLC OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information Financial Statements 4. Operating Segments The Board has considered the requirements of IFRS 8 ‘Operating Segments’. The Board is of the view that the Company is engaged in a single segment of business, of investing in equity and that therefore the Company has only a single operating segment. The Board of Directors, as a whole, has been identified as constituting the chief operating decision maker of the Company. 5. Management fee 2022 2021 Revenue Capital Total Revenue Capital Total £’000 £’000 £’000 £’000 £’000 £’000 Management fee 610 2,438 3,048 739 2,954 3,693 The Manager receives a fee equal to 0.75 per cent per annum of the value of funds under management up to the value of €400 million. Funds under management is calculated as the value of total assets less current liabilities (excluding borrowings) at the end of the preceding quarter. Where the value of funds under management exceeds €400 million, the applicable rate over such excess value is 0.6 per cent per annum. Detailed regulatory disclosures including those on the AIF Manager’s remuneration policy and costs are available on Company’s website or from Columbia Threadneedle Investments on request. 6. Other expenses | | | | | | 2022 | | | | | 2021 | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Revenue | | Capital | | Total | Revenue | | Capital | | Total | | | £’000s | | £’000s | | £’000s | £’000s | | £’000s | | £’000s | | Depositary and custody fees | | 120 | | – | 120 | | 163 | | – | 163 | (1) | Remuneration of Directors | 180 | – | 180 | 181 | – | 181 | | --- | --- | --- | --- | --- | --- | --- | | Travel expenses | 8 | – | 8 | 2 | – | 2 | | Indemnity insurance costs | 15 | – | 15 | 11 | – | 11 | Independent auditors' remuneration (2) | – for audit services | 56 | – | 56 | 46 | – | 46 | | --- | --- | --- | --- | --- | --- | --- | | Legal, secretarial and accounting | 129 | – | 129 | 119 | – | 119 | | Broker fees | 36 | – | 36 | 36 | – | 36 | | Marketing, advertising and printing costs | 200 | – | 200 | 242 | – | 242 | (3) Other expenses 214 37 251 195 7 202 Total other expenses 958 37 995 995 7 1,002 All expenses are stated gross of irrecoverable VAT, where applicable. (1) See the Directors’ Remuneration Report on page 41. (2) Total Auditors’ remuneration for audit services, exclusive of VAT amounts to £42,900 (2021: £39,000). There were no non-audit services paid to PwC in the year (2021: none). (3) Other expenses include Registrar fees, listing fees, Loan non-utilisation fees and subscriptions. 7. Directors fees The emoluments of the Chairman, the highest paid Director, were at the rate of £46,250 per annum (2021: £44,500). Other Directors' emoluments amounted to £31,500 (2021: £30,300) each per annum, with the chairman of the Audit and Risk Committee receiving an additional £5,250 (2021: £5,100) per annum and the Senior Independent Director an additional £4,250 (2021: £4,100). Full details are provided in the Directors' Remuneration Report on pages 41 and 42. Report and Accounts 2022 | 61 Financial Statements 8. Finance costs | | | | | | 2022 | | | | | 2021 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Revenue | | Capital | | Total | Revenue | | Capital | | Total | | | | £’000s | | £’000s | | £’000s | £’000s | | £’000s | | £’000s | | | Loan interest | | 35 | | 141 | 176 | | 41 | | 164 | | 205 | | Bank interest charges | | 16 | | 65 | 81 | | 9 | | 37 | | 46 | Total finance cost 51 206 257 50 201 251 Finance costs have been allocated 80% to capital reserve in accordance with the Company's accounting policies. 9. Taxation | (a) Analysis of tax charge / (credit) for the year | | | 2022 | | | 2021 | | --- | --- | --- | --- | --- | --- | --- | | | Revenue | Capital | Total | Revenue | Capital | Total | | | £’000s | £’000s | £’000s | £’000s | £’000s | £’000s | Overseas taxation 944 – 944 937 – 937 Total taxation (see note 9(b)) 944 – 944 937 – 937 The tax assessed for the year is lower (2021: lower) than the standard rate of corporation tax in the UK. | (b) Factors affecting the tax charge for the year | | | 2022 | | | 2021 | | --- | --- | --- | --- | --- | --- | --- | | | Revenue | Capital | Total | Revenue | Capital | Total | | | £’000s | £’000s | £’000s | £’000s | £’000s | £’000s | Net profit/(loss) on ordinary activities before taxation 6,883 (179,990) (173,107) 6,381 100,199 106,580 Net Return on ordinary activities multiplied by the standard rate of corporation tax of 19% (2021: 19%) 1,308 (34,197) (32,889) 1,212 19,038 20,250 Effects of: Dividends* (1,614) – (1,614) (1,549) – (1,549) Capital returns* – 33,672 33,672 – (19,550) (19,550) Currency losses/(gains) 5 16 21 (2) (89) (91) Expenses not utilised in the year 301 509 810 339 601 940 Overseas taxation not relieved 944 – 944 937 – 937 Total taxation (see note 9(a)) 944 – 944 937 – 937 *These items are not subject to corporation tax in an investment trust company. No deferred tax asset in respect of unutilised expenses at 31 December 2022 (2021: same) has been recognised as it is uncertain that there will be taxable profits from which the future reversal of a deferred tax asset could be deducted. 62 | European Assets Trust PLC OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information Financial Statements STRATEGIC REPORT 10. Dividends The level of dividend paid by the Company 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 6 per cent of the net asset value at the end of the preceding year. The dividend is funded from a combination of current year net profits and the Distributable Reserve. The Company distributed the following interim dividends to Shareholders: | | Register | | Payment | | 2022 | | 2021 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | | date | | date | £’000s | | £’000s | | | First of four interims for the year ended 31 December 2021 of 2.000 pence per share | 15 Jan 21 | | 29 Jan 21 | | | – | 7,201 | | | Second of four interims for the year ended 31 December 2021 of 2.000 pence per share | 09 Apr 21 | | 30 Apr 21 | | | – | 7,201 | | | Third of four interims for the year ended 31 December 2021 of 2.000 pence per share | 09 Jul 21 | | 30 Jul 21 | | | – | 7,201 | | | Fourth of four interims for the year ended 31 December 2021 of 2.000 pence per share | 08 Oct 21 | | 29 Oct 21 | | | – | 7,201 | | | First of four interims for the year ended 31 December 2022 of 2.200 pence per share | 14 Jan 22 | | 31 Jan 22 | | 7,922 | | | – | | Second of four interims for the year ended 31 December 2022 of 2.200 pence per share | 08 Apr 22 | | 29 Apr 22 | | 7,922 | | | – | | Third of four interims for the year ended 31 December 2022 of 2.200 pence per share | 08 Jul 22 | | 29 Jul 22 | | 7,922 | | | – | | Fourth of four interims for the year ended 31 December 2022 of 2.200 pence per share | 07 Oct 22 | | 31 Oct 22 | | 7,922 | | | – | 31,688 28,804 2022 £’000s Net revenue return attributable to Shareholders 5,939 First of four interims for the year ended 31 December 2022 of 2.200 pence per share (7,922) Second of four interims for the year ended 31 December 2022 of 2.200 pence per share (7,922) Third of four interims for the year ended 31 December 2022 of 2.200 pence per share (7,922) Fourth of four interims for the year ended 31 December 2022 of 2.200 pence per share (7,922) Shortfall paid from distributable reserves (25,749) 11. Earnings per share The net revenue results is equivalent to profit before tax per the Statement of Comprehensive Income. The return per share figure is based on the net profit or loss for the period or year and on the weighted average number of shares in issue during the period or year. The return per share amount can be further analysed between revenue and capital, as follows: | | | 2022 | | | 2021 | | --- | --- | --- | --- | --- | --- | | Revenue | Capital | Total | Revenue | Capital | Total | | £’000s | £’000s | £’000s | £’000s | £’000s | £’000s | Net return attributable to equity Shareholders 5,939 (179,990) (174,051) 5,444 100,199 105,643 Return per share – pence 1.65 (49.99) (48.34) 1.51 27.83 29.34 Both the revenue and capital returns per share are based on a weighted average of 360,069,279 ordinary shares in issue during the year (2021: 360,069,279). Report and Accounts 2022 | 63 Financial Statements 12. Investments at fair value through profit or loss | | | 2022 | | 2021 | | --- | --- | --- | --- | --- | | | Level 1 | | | Level 1 | | | | Total | | Total | | | £’000s | | | £’000s | | Cost brought forward | 368,841 | | 361,025 | | | Unrealised gains brought forward | 170,915 | | 138,921 | | | Fair value of investments at 1 January | 539,756 | | 499,946 | | Movements in the period: Purchases at cost 107,060 107,287 Sales proceeds (156,430) (139,299) (Losses)/gains on investments sold in the year (12,729) 39,828 Movement in unrealised gains on investments held at the year end (164,494) 63,064 Translation adjustment 27,554 (31,070) Fair value of investments at 31 December 340,717 539,756 Cost at 31 December 306,742 368,841 Unrealised gains carried forward 33,975 170,915 Fair value of investments at 31 December 340,717 539,756 | | | 2022 | 2021 | | --- | --- | --- | --- | | | | £’000s | £’000s | | (Losses)/gains on investments sold in the year | (12,729) | | 39,828 | | Movement in unrealised gains on investments held at the year end | (164,494) | | 63,064 | Total (losses)/gains on investments (177,223) 102,892 All assets held by the Company were classified as Level 1 in nature as described in note 2(d) and includes investments and derivatives listed on any recognised stock exchange. Investment sold during the year have been revalued over time since their original purchase, and until they were sold any unrealised gains/ losses was included in the fair value of the investments. Included within the capital reserve movement for the year are £278,000 (2021: £94,000) of transaction costs including stamp duty on purchases of investments and £74,000 (2021: £69,000) of transaction costs on sales of investments. | | 2022 | | | 2021 | | | --- | --- | --- | --- | --- | --- | | Listed equities designated at fair value through profit or loss on initial recognition, incorporated in: | £’000s | | £’000s | | | | - Austria | 6,621 | | | | – | | - Belgium | 10,223 | | | 9,370 | | | - Denmark | 22,095 | | 34,453 | | | | - France | 24,354 | | 39,435 | | | | - Germany | 40,446 | | 126,050 | | | | - Iceland | | – | | 9,357 | | | - Ireland | 25,147 | | | 7,567 | | | - Italy | 19,306 | | 40,758 | | | | - Netherlands | 27,737 | | 36,259 | | | | - Norway | 47,267 | | 67,723 | | | | - Portugal | | – | | 8,649 | | | - Spain | 22,480 | | 21,018 | | | | - Sweden | 53,256 | | 85,024 | | | | - Switzerland | 41,785 | | 54,093 | | | 340,717 539,756 The investment portfolio is set out on pages 17 and 18. 64 | European Assets Trust PLC OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information Financial Statements 13. Other receivables | | 2022 | 2021 | | --- | --- | --- | | | £’000s | £’000s | | Prepayments | 30 | 55 | | Overseas taxation recoverable | 3,217 | 2,625 | 3,247 2,680 14. Other payables | | 2022 | | 2021 | | | --- | --- | --- | --- | --- | | | £’000s | | £’000s | | | Management fee | 602 | | | – | | Loan Interest | | 7 | | 8 | | Accruals | 173 | | 147 | | 782 155 15. Borrowings In March 2022 the Company entered into at €45 million multi-currency revolving loan facility with The Bank of Nova Scotia, (London Branch), expiring March 2023. The covenants for this facility have all been met during the period. The interest rate on amounts drawn down and commitment fees payable on undrawn amounts are based on commercial terms agreed with The Bank of Nova Scotia. Following the year end, the Company has agreed to renew its loan facility with The Bank of Nova Scotia, London Branch. As at 31 December 2022 the Company had drawn down €10 million (£8.9 million) of the loan facility. 16. Share capital | | 2022 | | 2021 | | --- | --- | --- | --- | | issued, allotted | | issued, allotted | | | and fully paid | | and fully paid | | Number £’000s Number £’000s Ordinary shares of £0.10 each Balance brought forward and carried forward at 31 December 360,069,279 37,506 360,069,279 37,506 17. Distributable reserve | | | 2022 | | 2021 | | --- | --- | --- | --- | --- | | | £’000s | | £’000s | | | Balance brought forward | 322,694 | | 346,054 | | | Dividends paid from distributable reserve | (25,749) | | (23,360) | | Balance carried forward 296,945 322,694 Report and Accounts 2022 | 65 Financial Statements 18. Capital & Revenue Reserves | Capital | | Capital | Capital | | | --- | --- | --- | --- | --- | | reserve | | reserve | reserve | Revenue | | - realised | - unrealised | | - Total | reserve | | £’000s | | £’000s | £’000s | £’000s | Movements in the year: | Losses on investments sold in year | (12,729) | | | | – | (12,729) | | | – | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Losses on investments held at year end | | | – | (164,494) | | (164,494) | | | – | | Foreign exchange losses | | (74) | | | (12) | | (86) | | – | | Management fee (see note 5) | (2,438) | | | | – | (2,438) | | | – | | Finance costs (see note 8) | | (206) | | | – | | (206) | | – | | Other capital charges (see note 6) | | (37) | | | – | | (37) | | – | | Revenue return | | | – | | – | | – | 5,939 | | | Return attributable to shareholders | (15,484) | | | (164,506) | | (179,990) | | 5,939 | | | Dividends paid in year (see note 10) | | | – | | – | | – | (5,939) | | | Balance at 31 December 2021 | (7,818) | | | 196,479 | | 188,661 | | | – | Balance at 31 December 2022 (23,302) 31,973 8,671 – There were no special dividends recognised as capital during the year (2021: £nil). 19. Net asset value per ordinary share The net asset value per share is based on the net assets attributable to the ordinary shares in issue as at 31 December: 2022 2021 | Net asset value per share - pence | | | 96.54 | | 145.93 | | --- | --- | --- | --- | --- | --- | | Net assets attributable at the year end - (£'000s) | | 347,627 | | | 525,435 | | Number of ordinary shares in issue at the year end | 360,069,279 | | | 360,069,279 | | 20. Reconciliation of total return before taxation to net cash flows from operating activities 2022 2021 £’000s £’000s Net return on ordinary activities before taxation (173,107) 106,580 Adjustments for non-cash flow items, dividend income and interest expense: | Losses/(gains) on investments | 177,223 | | (102,892) | | | | --- | --- | --- | --- | --- | --- | | Foreign exchange movements | | 111 | | (477) | | | Non-operating expenses of a capital nature | | 37 | | | 7 | | Dividend income receivable | (8,493) | | | (8,157) | | | Interest receivable | | (34) | | | – | | Interest payable | | 257 | | 251 | | | Decrease / (increase) in other debtors | | 25 | | (26) | | | Increase in other creditors | | 628 | | | 54 | 169,754 (111,240) Net cash outflows from operating activities before interest and dividends received and interest paid (3,353) (4,660) 66 | European Assets Trust PLC OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information Financial Statements 21. Reconciliation of liabilities arising from financing activities | | | | 2022 | | | 2021 | | --- | --- | --- | --- | --- | --- | --- | | | Bank loans | | Total | Bank loans | | Total | | | | £’000s | £’000s | | £’000s | £’000s | | Financial liabilities brought forward | | 25,188 | 25,188 | | 26,853 | 26,853 | Cash-flows: Drawdown of bank loans – – 8,538 8,538 Repayment of bank loans (17,173) (17,173) (8,500) (8,500) Non-cash: Translation adjustment 857 857 (1,703) (1,703) Financial liabilities carried forward 8,872 8,872 25,188 25,188 22. 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 invests in equities in order to achieve its investment objective, which is to achieve 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 in the Company's value of the net assets and 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 Company's use of leverage and borrowings can increase its exposure to these risks, which in turn can also increase the potential returns it can achieve. The Company has specific limits on these instruments to manage the overall potential exposure. These limits include the ability to borrow against the assets of the Company up to a level of 20 per cent of assets as permitted under the Articles of Association. The Board, together with the Manager, is responsible for the Company’s risk management, as set out in detail in the Strategic Report and Directors’ Report. The Directors’ policies and processes for managing the financial risks are set out in (a), (b) and (c) on the following pages. The accounting policies which govern the reported Balance Sheet carrying values of the underlying financial assets and liabilities, as well as the related income and expenditure, are set out in note 2. The policies are in compliance with UK-adopted International accounting standards and best practice. The Company does not make use of hedge accounting rules. (a) Market risks The fair value of equity and other financial securities including derivatives held in the Company’s portfolio fluctuates with changes in market prices. Prices are themselves affected by movements in currencies and interest rates and by other financial issues, including the market perception of future risks. The Board sets policies for managing these risks within the Company’s objective and meets regularly to review full, timely and relevant information on investment performance and financial results. The Manager minimises the price risk by making a balanced selection of companies with regard to distribution across the European countries, sectors and individual stocks, assessing exposure to market risks when making each investment decision and monitors the ongoing market risk within the portfolio. Report and Accounts 2022 | 67 Financial Statements 22. Financial risk management (continued) (a) Market risks (continued) Details of the geographical exposure of investments can be found in note 12, the table below is a summary of the sector concentrations with the portfolio: 2022 2021 % % Company's securities portfolio: | Industrials | 21.7 | 22.5 | | | --- | --- | --- | --- | | Financials | 17.2 | 19.0 | | | Consumer Discretionary | 13.6 | 15.4 | | | Technology | 12.7 | 19.3 | | | Consumer Staples | 11.8 | 8.9 | | | Health Care | 11.4 | 9.7 | | | Basic Materials | 7.3 | 4.1 | | | Energy | 3.0 | | – | | Real Estate | 1.3 | 1.1 | | 100.0 100.0 Based on the portfolio of investments held at each Balance Sheet date, and assuming other factors, including the management charge, remain constant, an increase or decrease in the fair value of the portfolio in euro terms by 20% would have had the following approximate effects on the net capital return attributable to Shareholders and on the NAV per share: | | | 2022 | | | 2021 | | --- | --- | --- | --- | --- | --- | | Increase | Decrease | | Increase | Decrease | | | in value | in value | | in value | in value | | | £’000s | | £’000s | £’000s | | £’000s | Capital return 68,143 (68,143) 107,951 (107,951) NAV per share – pence 18.93 (18.93) 29.98 (29.98) (b) Currency risk The Company invests in securities denominated in European currencies other than the euro which gives rise to currency risk. It is not the Company's policy to hedge this risk. The table below is a summary of the Company currency exposure: | | 2022 | 2021 | | --- | --- | --- | | | £’000s | £’000s | | Danish Krone | 22,095 | 34,453 | | Norwegian Krone | 47,266 | 67,723 | | Pound Sterling | 2,194 | 12,709 | | Swedish Krona | 53,257 | 85,024 | | Swiss Franc | 39,591 | 41,384 | Total 164,403 241,293 68 | European Assets Trust PLC OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information Financial Statements 22. Financial risk management (continued) (b) Currency risk (continued) Based on the financial assets and liabilities held and the exchange rates applying at the Balance Sheet date, a weakening or strengthening of the euro against other currencies by 10% would have the following approximate effect on returns attributable to Shareholders and on the NAV per share. | | 2022 | 2021 | | --- | --- | --- | | Weakening of euro by 10% against other currencies | £’000s | £’000s | | Net revenue return attributable to Shareholders | 485 | 472 | | Net capital return attributable to Shareholders | 18,349 | 26,887 | Net total return attributable to Shareholders 18,834 27,359 NAV per share – pence 5.23 7.60 | | 2022 | 2021 | | --- | --- | --- | | Strengthening of euro by 10% against other currencies | £’000s | £’000s | | Net revenue return attributable to Shareholders | (397) | (386) | | Net capital return attributable to Shareholders | (15,013) | (21,998) | Net total return attributable to Shareholders (15,410) (22,384) NAV per share – pence (4.28) (6.22) These effects are representative of the Company’s activities although the level of the Company’s exposure to the other currencies fluctuates in accordance with the investment and risk management processes. As this analysis only reflects financial assets and liabilities, it does not include the impact of currency exposures on the management fee. As discussed in Note 2(a) the functional currency of the Company is the euro. Income earned in foreign currencies is therefore converted to the euro on receipt. The Board regularly monitors the effects of movements in foreign exchange rates on net revenues, interest earned on deposits and paid on gearing. During the year, the Company entered in to Forward Currency Contracts for the purpose of hedging the euro to pound sterling exposure as a result of the differing functional currency and dividend payment currency. These forward currency contracts resulted in a net loss of £403,000 (2021: gain of £763,000). The fair values of the Company’s assets and liabilities at 31 December by currency are shown below: | | | | | | Cash | | Short-term | | | Short-term | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Short-term | | | and cash | | | creditors | | | creditors | | | | Net monetary | | | | | | Net | | | | debtors | | equivalents | | | | - other | | | - loans | | assets/(liabilities) | | | | Investments | | exposure | | | 2022 | | £’000s | | | £’000s | | | £’000s | | | £’000s | | | | £’000s | | | £’000s | £’000s | | | Euro | | 2,336 | | 13,317 | | | | (609) | | | (8,872) | | | | 6,172 | | | 176,314 | 182,486 | | | Danish Krone | | | 309 | | | – | | | – | | | – | | | | 309 | | 22,095 | 22,404 | | | Norwegian Krone | | | 357 | | | – | | | – | | | – | | | | 357 | | 47,266 | 47,623 | | | Pound Sterling | | | 30 | | | – | | (173) | | | | – | | | | (143) | | 2,194 | | 2,051 | | Swedish Krona | | | 23 | | | – | | | – | | | – | | | | 23 | | 53,257 | 53,280 | | | Swiss Franc | | | 192 | | | – | | | – | | | – | | | | 192 | | 39,591 | 39,783 | | Total 3,247 13,317 (782) (8,872) 6,910 340,717 347,627 Report and Accounts 2022 | 69 Financial Statements 22. Financial risk management (continued) (b) Currency risk (continued) | | | | | | Cash | | Short-term | | | Short-term | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Short-term | | | and cash | | | | creditors | | | creditors | | | Net monetary | | | | | | Net | | | | debtors | | equivalents | | | | - other | | | - loans | | (liabilities)/assets | | | | Investments | | exposure | | | 2021 | | £’000s | | £’000s | | | | £’000s | | | £’000s | | | | £’000s | | | £’000s | £’000s | | | Euro | | 1,840 | | | 8,342 | | | | (8) | | (25,188) | | | | (15,014) | | | 298,463 | 283,449 | | | Danish Krone | | | 242 | | | – | | | – | | | – | | | | 242 | | 34,453 | 34,695 | | | Norwegian Krone | | | 355 | | | – | | | – | | | – | | | | 355 | | 67,723 | 68,078 | | | Pound Sterling | | | 56 | | | – | | (147) | | | | – | | | | (91) | | 12,709 | 12,618 | | | Swedish Krona | | | 24 | | | – | | | – | | | – | | | | 24 | | 85,024 | 85,048 | | | Swiss Franc | | | 163 | | | – | | | – | | | – | | | | 163 | | 41,384 | 41,547 | | Total 2,680 8,342 (155) (25,188) (14,321) 539,756 525,435 (c) Interest rate risk Interest rate risk is the risk that the value of a financial instrument will fluctuate as a result of changes in interest rates. When the Company retains cash balances, the cash is held with approved banks, usually on overnight deposit. In addition, the Company has a loan facility which is exposed to floating interest rate risk. Interest received or paid on cash balances and bank overdrafts is at market rates and is monitored and reviewed by the investment manager and the board. The exposure of the financial assets and liabilities to interest rate movements at 31 December was: | Within | More than | | 2022 | Within | More than | 2021 | | --- | --- | --- | --- | --- | --- | --- | | one year | | one year | Total | one year | one year | Total | | £’000s | | £’000s | £’000s | £’000s | £’000s | £’000s | Exposure to floating rates: Cash and cash equivalents 13,317 – 13,317 8,342 – 8,342 Loans (8,872) – (8,872) (25,188) – (25,188) Net exposure 4,445 – 4,445 (16,846) – (16,846) The Company had no exposure to fixed interest rates at the year end. Exposures vary throughout the year as a consequence of changes in the composition of the net assets of the Company arising out of the investment and risk management processes. Based on the financial assets and liabilities held and the interest rates ruling at each balance sheet date, an increase or decrease in interest rates of 2% would have the following approximate effects on the Income Statement revenue and capital returns after tax and on the NAV per share: | | | | | 2022 | | | | 2021 | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | Increase | | Decrease | | Increase | | Decrease | | | | | in rate | | | in rate | in rate | | | in rate | | | | £’000s | | | £’000s | £’000s | | | £’000s | | | Revenue return | | 18 | | (18) | | 33 | | | 67 | | Capital return | | 53 | | (71) | | (447) | | 270 | | Total return 71 (89) (414) 337 NAV per share – pence 0.020 (0.025) (0.115) 0.094 70 | European Assets Trust PLC OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information Financial Statements 22. Financial risk management (continued) (d) Credit risk and counterparty exposure Credit and Counterparty risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company. The Company has in place a monitoring procedure in respect of counterparty risk which is reviewed on an ongoing basis. The carrying amounts of financial assets best represent the maximum credit risk exposure at the balance sheet date. Credit risk arising on transactions with brokers relates to transactions awaiting settlement. Risk relating to unsettled transactions is considered to be small due to the short settlement period involved and the financial stability and credit quality of the brokers used, which are monitored on an ongoing basis by the investment manager. The investment manager also monitors the quality of service provided by the brokers used to further mitigate this risk. The Company has an ongoing contract with its custodian for the provision of custody services. The contract is reviewed regularly. Details of securities held in custody on behalf of the Company are received and reconciled monthly. The Company’s Depositary, JP Morgan Europe Limited, has regulatory responsibilities relating to segregation and safe keeping of the Company’s financial assets, amongst other duties, as set out in the Directors’ Report. The Board has direct access to the Depositary and receives regular reports from it via the Manager. To the extent that the Manager carries out management and administrative duties (or causes similar duties to be carried out by third parties) on the Company’s behalf, the Company is exposed to counterparty risk. The Board assesses this risk through regular meetings with the management of Columbia Threadneedle Investments (including the Fund Manager) and with its Risk Management function. In reaching its conclusions, the Board also reviews Columbia Threadneedle Investments annual Audit and Assurance Faculty Report. In summary, compared to the amounts held at the balance sheet date of £nil, the maximum exposure to credit risk during the year was £nil (2021: Balance Sheet: £nil; maximum exposure: £nil). None of the Company’s financial liabilities is past its due date or impaired. (e) Liquidity risk The Company is required to raise funds to meet commitments associated with financial instruments and share buybacks. These funds may be raised either through the realisation of assets or through increased borrowing. The risk of the Company not having sufficient liquidity at any time is not considered by the Board to be significant, given: the number of quoted investments held in the Company’s portfolio (100% at 31 December 2022 and 100% at 31 December 2021); the liquid nature of the portfolio of investments; the industrial and geographical diversity of the portfolio (see pages 17 to 18); and the existence of an ongoing loan and overdraft facility agreement. All investments are realisable within one year and therefore no detailed maturity analysis has been included. Cash balances are held with approved banks, usually on overnight deposit. The Manager reviews liquidity at the time of making each investment decision. The Board reviews liquidity exposure at each meeting. The Company has a €45 million unsecured revolving floating rate credit facility available until March 2023. Following the year end the Company has agreed to renew its facility with The Bank of Nova Scotia, London Branch on favourable terms. (f) Fair values of financial assets and liabilities IFRS 13 requires disclosures relating to fair value measurements using a three-level hierarchy. The level within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement. Assessing the significance of a particular input requires judgement, considering factors specific to the asset or liability. The assets and liabilities of the Company are, in the opinion of the Directors, reflected in the Balance Sheet at fair value, or at a reasonable approximation thereof. Borrowings under loan and overdraft facilities do not have a value materially different from their capital repayment amount. (g) Capital risk management The objective of the Company is stated as being to achieve growth of capital through investment in quoted small and medium-sized companies in Europe, excluding the United Kingdom. In pursuing this objective, the Board has a responsibility for ensuring the Company’s ability to continue as a going concern. It must therefore maintain an optimal capital structure through varying market conditions. This involves the ability to: issue and buy back share capital within limits set by the Shareholders in general meeting; borrow monies in the short and long term; and pay dividends to Shareholders out of current year revenue earnings as well as out of other distributable reserves. Changes to ordinary share capital are set out in note 16, dividend payments in note 10 and details of loans in note 15. Report and Accounts 2022 | 71 ### 23. Going Concern In assessing the going concern basis of accounting the Directors have had regard to the guidance issued by the Financial Reporting Council. They have also considered the Company's objective, strategy and policy, the current cash position of the Company, the availability of the loan facility and compliance with its covenants and the operational resilience of the Company and its service providers. At present the global economy is suffering considerable disruption due to the effects of the COVID-19 pandemic, inflationary concerns and the war in Ukraine and the Directors have given serious consideration to the consequences for this Company. The Company has a €45 million multi-currency loan facility with The Bank of Nova Scotia, London Branch which will expire on 14 March 2023. As at 31 December 2022 €10.0 million was drawdown. Following the year end the Company has agreed to renew its facility with The Bank of Nova Scotia, London Branch on favourable terms. The Company has a number of banking covenants and at present the Company's financial position does not suggest that any of these are close to being breached. The primary risk is that there is a very substantial decrease in the net asset value of the Company in the short to medium term. Financial modelling has been undertaken to consider compliance with these covenants in several scenarios including the outcome of the 2008 Global Financial Crisis. These extreme but plausible scenarios indicate that the loan covenants would not be breached. In addition, the Directors have considered the remedial measures that are open to the Company if such a covenant breach appears possible. As at 27 March 2023 the latest practicable date before the publication of this report, borrowings amounted to €20.0 million. This is comparison to a Net Asset Value of €404.0 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. The Company's annual dividend, which is declared in sterling, is determined by reference to the year-end Net Asset Value. The Company manages any sterling/euro exchange rate exposure which may arise from the declaration of a sterling denominated dividend by entering into specific matched forward currency hedging contracts. As at 31 December 2022 the Company had a Distributable Reserve of £296.9 million. The Company in common with many investment companies has, as a result of the pandemic, suffered a reduction in dividend income. The amount of this reduction, while significant, has not had a material impact on either Net Asset Value or distributable reserves. As at 31 December 2022 the Company had net current assets of £6.9 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. ### 24. Related party transactions The Directors of the Company are considered a related party. There are no transactions with the Board other than aggregated remuneration for services as Directors as disclosed in the Directors' Remuneration Report on pages 41 to 42 and as set out in note 7 to the financial statements. There are no outstanding balances with the Board at the year end. The beneficial interests of the Directors in the Ordinary shares of the Company are disclosed on page 42. ### 25. Transactions with the Manager Transactions between the Company and Columbia Threadneedle Investments are detailed in note 5 on management fees. The existence of an independent Board of Directors demonstrated that the Company is free to pursue its own financial and operating policies and therefore under the AIC SORP the Manager is not considered a related party. 72 | European Assets Trust PLC Other Information # Notice of Annual General Meeting of European Assets Trust PLC ## THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in any doubt as to any aspect of the proposals referred to in this document or as to the action you should take, you should seek your own advice from a stockbroker, solicitor, accountant, or other independent professional adviser immediately. If you have sold or otherwise transferred all of your shares, please pass this document together with the accompanying documents to the purchaser or transferee, or to the person who arranged the sale or transfer, so they can pass these documents to the person who now holds the shares. ### European Assets Trust PLC (incorporated in England and Wales under the Companies Act 2006 with registered number 11672363) Notice is hereby given that the fifth Annual General Meeting of Shareholders of European Assets Trust PLC, the “Company”, will be held on Thursday, 18 May 2023 at 3.00 pm at Exchange House, Primrose Street, London, EC2A 2NY, to transact the following business. The resolutions to be proposed to the meeting are set out below. Resolutions 1 to 13 will be proposed as ordinary resolutions, meaning that for each of those resolutions to be passed, more than half the votes cast must be in favour. Resolutions 14 to 15 will be proposed as special resolutions, meaning that for either of those resolutions to be passed, at least three-quarters of the votes cast must be in favour. ### Ordinary Resolutions 1. 1. To receive and adopt the Directors' report and accounts for the year ended 31 December 2022 together with the Independent Auditor's Report thereon (the “2022 Report and Accounts”). 2. 2. To approve the Company's dividend policy with regard to quarterly payments as set out on page 20 of the Report and Accounts 2022. 3. 3. To approve the Directors' Remuneration Policy set out on page 41 of the 2022 Report and Accounts. 4. 4. To approve the Directors' Remuneration Report for the year ended 31 December 2022 set out on pages 41 to 42 of the 2022 Report and Accounts. 5. 5. To re-appoint PricewaterhouseCoopers LLP as auditor to European Assets Trust PLC, to hold office from the conclusion of the meeting until the conclusion of the next general meeting at which accounts are laid before the Company. 6. 6. To authorise the Audit and Risk Committee to determine the remuneration of the auditor. 7. 7. To re-elect Jack Perry to the Board of European Assets Trust PLC. 8. 8. To re-elect Julia Bond to the Board of European Assets Trust PLC. 9. 9. To re-elect Stuart Paterson to the Board of European Assets Trust PLC. 10. 10. To re-elect Martin Breuer to the Board of European Assets Trust PLC. 11. 11. To re-elect Pui Kei Yuen to the Board of European Assets Trust PLC. 12. 12. That the amendments proposed to the Company's investment policy, as struck out and highlighted in bold and red below, be and are hereby approved with effect from 1 June 2023: The first paragraph under the heading “Investment Policy and Strategy” is amended as follows: “The investment policy seeks investments in quoted small and medium-sized companies in Europe, excluding the United Kingdom, defined as those with a market capitalisation below that of the largest company in the benchmark index adopted by the Company from time to time, for this purpose currently the MSCI Europe Ex UK SMID Cap Index EMX-Smaller European Companies (ex UK) Index.” 13. 13. That, in accordance with section 551 of the Companies Act 2006 (the “Act”), the Directors be and they are hereby generally and unconditionally authorised to allot shares in the Company to an aggregate nominal amount of £3,600,692 equal to 10 per cent of the total issued share capital of the Company as at 27 March 2023. Unless previously varied, revoked or renewed, this authority shall expire at the conclusion of the Annual General Meeting of the Company in 2024, save that the Company may, before the expiry of any authority contained in this resolution, make an offer or agreement which would or might require shares to be allotted or rights to be granted after such expiry and the Directors may allot shares or grant rights in pursuance of such offer or agreement as if the authority conferred hereby had not expired. This authority is in substitution for all previous unexercised authorities conferred on the Directors in accordance with section 551 of the Act. ### Special Resolutions 14. That, subject to the passing of resolution 13, the directors be empowered pursuant to section 570 of the Companies Act 2006 (the “Act”) to allot equity securities (as defined in section 560 of the Act) for cash pursuant to the general authority conferred on them by resolution 13 and/or to sell equity securities held as treasury shares for cash pursuant to section 727 of the Act 2006, in each case as if section 561 of the Act did not apply to any such allotment or sale, provided that this power shall be limited to: Report and Accounts 2022 | 73 Overview Chairman's statement Bringing Report Insurance Report Auditors' Report Financial Statements Other Information a) any such allotment and/or sale of equity securities in connection with an offer or issue by way of rights or other pre-emptive offer or issue, open for acceptance for a period fixed by the directors, to holders of shares (other than the Company) on the register on any record date fixed by the directors in proportion (as nearly as may be) to the respective number of shares deemed to be held by them, subject to such exclusions or other arrangements as the directors may deem necessary or expedient in relation to fractional entitlements, legal or practical problems arising in any overseas territory, the requirements of any regulatory body or stock exchange or any other matter whatsoever; and b) any such allotment and/or sale, otherwise than pursuant to sub-paragraph (a) above, of equity securities having an aggregate nominal value not exceeding the sum of £1,800,346 (being an amount equal to 5 per cent of the total issued share capital of the Company as at 27 March 2023, being the latest practicable date before the publication of this notice). This authority shall expire, unless previously varied, revoked or renewed by the Company in general meeting, at the conclusion of the Annual General Meeting of the Company in 2024, except that the Company may before such expiry make any offer or agreement which would or might require equity securities to be allotted or equity securities held as treasury shares to be sold after such expiry and the directors may allot equity securities and/or sell equity securities held as treasury shares in pursuance of such an offer or agreement as if the power conferred by this resolution had not expired. 15. That the Company be and it is hereby authorised in accordance with section 701 of the Companies Act 2006 (the “Act”) to make market purchases (within the meaning of section 693(4) of the Act) of ordinary shares of 10 pence each in the capital of the Company (“Ordinary Shares”) provided that: (i) the maximum number of Ordinary Shares authorised to be purchased shall be 10 per cent of the number of the Ordinary Shares in issue at the date on which this resolution is passed; (ii) the minimum price (exclusive of expenses) which may be paid for an Ordinary Share shall be 10p; (iii) the maximum price (exclusive of expenses) which may be paid for an Ordinary Share shall not be more than the highest of: (a) 5 per cent above the average of the middle market quotations of Ordinary Shares as derived from the London Stock Exchange Daily Official List for the five business days immediately preceding the date of purchase; (b) the price of the last independent trade on the trading venue where the purchase is carried out; and (c) the highest current independent purchase bid for any of the Ordinary Shares on that venue. (iv) unless previously varied, revoked or renewed, the authority hereby conferred shall expire at the conclusion of the Annual General Meeting of the Company in 2024, save that the Company may, prior to such expiry, enter into a contract to purchase Ordinary Shares under such authority which will or might be executed wholly or partly after the expiration of such authority and may make a purchase of Ordinary Shares pursuant to any such contract. By order of the Board Columbia Threadneedle Investment Business Limited 6th Floor Quartermile 4 7a Nightingale Way Edinburgh EH3 9EG 28 March 2023 A member who is entitled to attend and vote at this meeting is entitled to appoint one or more proxies to attend and, on a poll, vote on his/her behalf. Such a proxy need not also be a member of the Company. A Form of Proxy for use by Shareholders is enclosed with this Report. Completion of the Form of Proxy will not prevent a shareholder from attending the meeting and voting in person. 74 | European Assets Trust PLC OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information Other Information ## Notes ## to the Notice of Annual General Meeting 1. A member of the Company at the time set out in note 7 below is entitled to appoint one or more proxies to exercise all or any of the member’s rights to attend, speak and vote at the meeting. A proxy need not be a member of the Company but must attend the meeting for the member’s vote to be counted. If a member appoints more than one proxy to attend the meeting, each proxy must be appointed to exercise the rights attached to a different share or shares held by that member. A member who wishes to attend the AGM in person should arrive at the venue for the AGM in good time to allow their attendance to be registered. As they may be asked to provide evidence of their identity prior to being admitted to the AGM, it is advisable for members to have some form of identification with them. 2. Any person holding 3% or more of the voting rights in the Company who appoints a person other than the Chairman as their proxy will need to ensure that both he and such person complies with their respective disclosure obligations under the Disclosure Guidance and Transparency Rules. 3. A Form of Proxy is provided with this notice for members. If a member wishes to appoint more than one proxy and so requires additional proxy forms, the member should contact Computershare Investor Services PLC on 0370 889 4094. To be valid, the Form of Proxy and any power of attorney or other authority under which it is signed (or a notarially certified copy of such authority) must be received by post or (during normal business hours only) by hand at the Company’s Registrar, Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZZ, not less than 48 hours before the time of the holding of the meeting or any adjournment thereof. Amended instructions must also be received by the Company’s Registrar by the deadline for receipt of Forms of Proxy. 4. Alternatively, members may register the appointment of a proxy for the meeting electronically, by accessing the website www. eproxyappointment.com where full instructions for the procedure are given. The Control Number, Shareholder Reference and PIN as printed on the Form of Proxy will be required in order to use the electronic proxy appointment system. This website is operated by Computershare Investor Services PLC. The proxy appointment and any power of attorney or other authority under which the proxy appointment is made must be received by Computershare Investor Services PLC not less than 48 hours before the time for holding the meeting or adjourned meeting or (in the case of a poll taken otherwise than at or on the same day as the meeting or adjourned meeting) for the taking of the poll at which it is to be used. If you want to appoint more than one proxy electronically please contact Computershare Investor Services PLC on 0370 889 4094. 5. Investors holding shares in the Company through the CT Investment Trust ISA, Lifetime ISA, Junior ISA, Child Trust Fund, General Investment Account and/or Junior Investment Account should ensure that forms of direction are returned to Computershare Investor Services PLC not later than 3.00 p.m. on 11 May 2023. Alternatively, voting directions can be submitted electronically at www. eproxyappointment.com by entering the Control Number, Shareholder Reference Number and PIN as printed on the form of direction. Voting directions must be submitted electronically no later than 3.00 p.m. on 11 May 2023. 6. Any person receiving a copy of this notice as a person nominated by a member to enjoy information rights under section 146 of the Act (a “Nominated Person”) should note that the provisions in notes 3 and 4 concerning the appointment of a proxy or proxies to attend the meeting in place of a member do not apply to a Nominated Person as only Shareholders have the right to appoint a proxy. However, a Nominated Person may have a right under an agreement between the Nominated Person and the member by whom he or she was nominated to be appointed, or to have someone else appointed, as a proxy for the meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may have a right under such an agreement to give instructions to the member as to the exercise of voting rights at the meeting. 7. Pursuant to Regulation 41(1) of the Uncertificated Securities Regulations 2001 (as amended) and for the purposes of section 360B of the Act, the Company has specified that only those members registered on the register of members of the Company at 3 p.m. on 16 May 2023 (the “Specified Time”) (or, if the meeting is adjourned to a time more than 48 hours after the Specified Time, by 3 p.m. on the day which is two days prior to the time of the adjourned meeting) shall be entitled to attend and vote at the meeting in respect of the number of shares registered in their name at that time. If the meeting is adjourned to a time not more than 48 hours after the Specified Time, that time will also apply for the purpose of determining the entitlement of members to attend and vote (and for the purposes of determining the number of votes they may cast) at the adjourned meeting. Changes to the register of members after the relevant deadline shall be disregarded in determining the rights of any person to attend and vote at the meeting. Report and Accounts 2022 | 75 8. If you are an institutional investor you may be able to appoint a proxy electronically via the Proxymity platform, a process which has been agreed by the Company and approved by the Registrar. For further information regarding Proxymity, please go to www.proxymity. io. Your proxy must be lodged by 3.00 p.m. on 16 May 2023 in order to be considered valid. Before you can appoint a proxy via this process you will need to have agreed to Proxymity’s associated terms and conditions. It is important that you read these carefully as you will be bound by them and they will govern the electronic appointment of your proxy. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the meeting and any adjournment(s) thereof by using the procedures described in the CREST Manual. CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. 9. In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s specifications and must contain the information required for such instruction, as described in the CREST Manual (available via www.euroclear.com/CREST). The message, regardless of whether it constitutes the appointment of a proxy or is an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the issuer’s agent (ID number 3RA50) by the latest time(s) for receipt of proxy appointments specified in notes 3 and 4. For this purpose, the time of receipt will be taken to be the time (as determined by the time stamp applied to the message by the CREST Application Host) from which the issuer’s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means 10. CREST members and, where applicable, their CREST sponsors or voting service provider(s) should note that Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service provider(s) are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings (www.euroclear.com/CREST). 11. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001 (as amended). 12. Any corporation which is a member can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a member provided that, if it is appointing more than one corporate representative, it does not do so in relation to the same shares. It is therefore no longer necessary to nominate a designated corporate representative. 13. Under section 527 of the Act, members meeting the threshold requirements set out in that section have the right to require the Company to publish on a website a statement setting out any matter relating to: (a) the audit of the Company’s Accounts (including the auditors’ report and the conduct of the audit) that are to be laid before the meeting; or (b) any circumstances connected with an auditor of the Company ceasing to hold office since the previous meeting at which annual Accounts and Reports were laid in accordance with section 437 of the Act. 14. The Company may not require the members requesting any such website publication to pay its expenses in complying with sections 527 or 528 of the Act. Where the Company is required to place a statement on a website under section 527 of the Act, it must forward the statement to the Company’s auditor not later than the time when it makes the statement available on the website. The business which may be dealt with at the meeting includes any statement that the Company has been required under section 527 of the Act to publish on a website. 76 | European Assets Trust PLC Other Information Overview Chairman's statement Bringing Report Insurance Report Auditors' Report Financial Statements Other Information 15. Any member permitted to attend the meeting has the right to ask questions. The Company must cause to be answered any question relating to the business being dealt with at the meeting put by a member attending the meeting. However, members should note that no answer need be given in the following circumstances: (a) if to do so would interfere unduly with the preparation of the meeting or would involve a disclosure of confidential information; (b) if the answer has already been given on a website in the form of an answer to a question; or (c) if it is undesirable in the interests of the Company or the good order of the meeting that the question be answered. 16. As at 27 March 2023, being the latest practicable date before the publication of this notice, the Company's issued capital consisted of 360,069,279 ordinary shares of 10 pence each carrying one vote each. Therefore, the total voting rights in the Company as at 27 March 2023 were 360,069,279. No shares are held in treasury. 17. This notice, together with information about the total number of shares in the Company in respect of which members are entitled to exercise voting rights at the meeting as at 27 March 2023 being the latest practicable date prior to the printing of this notice and, if applicable, any members' statements, members' resolutions or members' matters of business received by the Company after the date of this notice, will be available at www.europeanassets.co.uk. 18. Copies of the letters of appointment, which do not constitute contracts of employment, between the Company and its Directors; a copy of the Articles of Association of the Company; the register of Directors' holdings; and a deed poll relating to Directors' indemnities will be available for inspection at the registered office of the Company during usual business hours on any weekday (Saturdays, Sundays and Bank Holidays excluded) until the date of the meeting and also on the date and at the place of the meeting from 15 minutes prior to the commencement of the meeting to the conclusion thereof. 19. Under sections 338 and 338A of the Act, members meeting the threshold requirements in those sections have the right to require the Company: (a) to give, to members of the Company entitled to receive notice of the meeting, notice of a resolution which may properly be moved and is intended to be moved at the meeting, and/or (b) to include in the business to be dealt with at the meeting any matter (other than a proposed resolution) which may be properly included in the business. 20. Such a request may be in hard copy form or in electronic form, and must identify the resolution of which notice is to be given or the matter to be included in the business, must be authorised by the person or persons making it, must be received by the Company not later than six clear weeks before the meeting, and (in the case of a matter to be included in the business only) must be accompanied by a statement setting out the grounds for the request. Report and Accounts 2022 | 77 ## Other Financial Information (unaudited) Alternative Investment Fund Managers (‘AIFM’) Directive In accordance with the AIFM Directive, information in relation to the Company’s leverage and the remuneration of the Company’s AIFM, Columbia Threadneedle Investment Business Limited, is required to be made available to investors. Detailed regulatory disclosures including those on the AIFM's remuneration policy and costs are available on the Company's website or from Columbia Threadneedle Investments on request. The Company's Articles of Association allow borrowings up to a maximum of 20% of its book value of the securities portfolio. The Company can only exceed this level of borrowing with the prior approval of shareholders at a general meeting. The maximum gross leverage is therefore 125% (equivalent to 20% of the book value of its securities portfolio). The Company’s maximum and actual leverage levels authorised by the Financial Conduct Authority (“FCA”) at 31 December 2022 are shown below: | | Gross | Commitment | | | --- | --- | --- | --- | | | method | | method | | Maximum limit | 200% | | 200% | | Actual | 98% | | 102% | For the purposes of the AIFM Disclosure, leverage is any method which increases the Company's exposure, including the borrowing of cash and the use of derivatives. It is expressed as a percentage of the Company's exposure to its net asset value and is calculated on both a gross and commitment method. Under the gross method, exposure represents the sum of the Company's positions after deduction of cash balances, without taking account of any hedging or netting arrangements. Under the commitment method, exposure is calculated without the deduction of cash balances and after certain hedging and netting positions are offset against each other. An Investor Disclosure Document is available on www.europeanassets.co.uk. Securities financing transactions ("SFTR") The Company has not, in the year to 31 December 2022 (2021: same), participated in any: repurchase transactions; securities lending or borrowing; buy-sell back transactions; margin lending transactions; or total return swap transactions (collectively called SFT). As such, it has no disclosure to make in satisfaction of the UK regulations on transparency of SFT, issued in November 2015. 78 | European Assets Trust PLC OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information ## Shareholder Information Dividends Change of Address Shareholders who wish to have dividends paid directly into a bank account rather than by cheque to their registered address Communications with Shareholders are mailed to the address held can complete a mandate form for the purpose. Mandates may be on the share register. In the event of a change of address or other obtained from Computershare Investor Services PLC, The Pavilions, amendment this should be notified to Computershare Investor Bridgewater Road, Bristol, BS99 6ZZ on request. Where dividends Services PLC under the signature of the registered holder. are paid to Shareholders’ bank accounts, dividend tax vouchers are sent directly to Shareholders’ registered addresses. Website Additional information regarding the Company may be found at its Share Price website address which is: www.europeanassets.co.uk The Company’s shares are listed on the London Stock Exchange. Prices are published daily in the Financial Times and other newspapers and is available on the Company’s website www.europeanassets.co.uk. Warning to Shareholders – Beware of Share Fraud Fraudsters use persuasive and high-pressure tactics to lure investors into scams. They may offer to sell shares that turn out to be worthless or non-existent, or to buy shares at an inflated price in return for an upfront payment. If you receive unsolicited investment advice or requests: • Check the Financial Services Register at www.fca.org.uk to see if the person or firm contacting you is authorised by the Financial Conduct Authority (“FCA”) • Call the FCA on 0800 111 6768 if the firm does not have contact details on the Register or you are told they are out of date • Search the list of unauthorised firms to avoid at www.fca.org.uk/scams • Consider that if you buy or sell shares from an unauthorised firm you will not have access to the Financial Ombudsman Service or Financial Services Compensation Scheme • Think about getting independent financial and professional advice If you are approached by fraudsters please tell the FCA by using the share fraud reporting form at www.fca.org.uk/scams where you can find out more about investment scams. You can also call the FCA Consumer Helpline on 0800 111 6768. If you have already paid money to share fraudsters you should contact Action Fraud on 0300 123 2040. Report and Accounts 2022 | 79 Financial promotion # How to Invest One of the most convenient ways to invest in European Assets Trusts PLC is through one of the savings plans run by Columbia Threadneedle Investments. CT Individual Savings Account (ISA) You can use your ISA allowance to make an annual tax efficient investment of up to £20,000 for the current tax year with a lump sum from £100 or regular savings from £25 a month. You can also transfer any existing ISAs to us whilst maintaining the tax benefits. CT Junior Individual Savings Account (JISA)* A tax efficient way to invest up to £9,000 per tax year for a child. Contributions start from £100 lump sum or £25 a month. JISAs or CTFs with other providers can be transferred to Columbia Threadneedle Investments. CT Lifetime Individual Savings Account (LISA) For those aged 18-39, a LISA could help towards purchasing your first home or retirement in later life. Invest up to £4,000 for the current tax year and receive a 25% Government bonus up to £1,000 per year. Invest with a lump sum from £100 or regular savings from £25 a month. CT Child Trust Fund (CTF)* If your child already has a CTF, you can invest up to £9,000 per birthday year, from £100 lump sum or £25 a month. CTFs with other providers can be transferred to Columbia Threadneedle Investments. CT General Investment Account (GIA) This is a flexible way to invest in our range of Investment Trusts. There are no maximum contributions, and investments can be made from £100 lump sum or £25 a month. CT Junior Investment Account (JIA) This is a flexible way to save for a child in our range of Investment Trusts. There are no maximum contributions, and the plan can easily be set up under bare trust (where the child is noted as the beneficial owner) or kept in your name if you wish to retain control over the investment. Investments can be made from a £100 lump sum or £25 a month per account. You can also make additional lump sum top-ups at any time from £100 per account. Charges Annual management charges and other charges apply according to the type of plan. Annual account charge ISA/LISA: £60+VAT GIA: £40+VAT JISA/JIA/CTF: £25+VAT You can pay the annual charge from your account, or by direct debit (in addition to any annual subscription limits). Dealing charges £12 per fund (reduced to £0 for deals placed through the online Columbia Threadneedle Investor Portal) for ISA/GIA/LISA/JIA and JISA. There are no dealing charges on a CTF. Dealing charges apply when shares are bought or sold but not on the reinvestment of dividends or the investment of monthly direct debits. Government stamp duty of 0.5% also applies on the purchase of shares (where applicable). The value of investments can go down as well as up and you may not get back your original investment. Tax benefits depend on your individual circumstances and tax allowances and rules may change. Please ensure you have read the full Terms and Conditions, Privacy Policy and relevant Key Features documents before investing. For regulatory purposes, please ensure you have read the Pre-sales Cost & Charges disclosure related to the product you are applying for, and the relevant Key Information Documents (KIDs) for the investment trusts you want to, these can be found at ctinvest.co.uk/documents. How to Invest To open a new Columbia Threadneedle Investments plan, apply online at ctinvest.co.uk Online applications are not available if you are transferring an existing plan with another provider to Columbia Threadneedle Investments, or if you are applying for a new plan in more than one name but paper applications are available at ctinvest.co.uk/documents or by contacting Columbia Threadneedle Investments. New Customers Call: 0800 136 420** (8.30am – 5.30pm, weekdays) Email: invest@columbiathreadneedle.com Existing Plan Holders Call: 0345 600 3030** (9.00am – 5.00pm, weekdays) Email: investor.enquiries@columbiathreadneedle.com By post: Columbia Threadneedle Management Limited, PO Box 11114, Chelmsford, CM99 2DG You can also invest in the trust through online dealing platforms for private investors that offer share dealing and ISAs. Companies include: A J Bell, Barclays Stockbrokers, EQi, Halifax, Hargreaves Lansdown, HSBC, Interactive Investor, Lloyds Bank, The Share Centre *The CTF and JISA accounts are opened by parents in the child's name and they have access to the money at age 18. **Calls may be recorded or monitored for training and quality purposes. To find out more, visit ctinvest.co.uk 0345 600 3030, 9.00am – 5.00pm, weekdays, calls may be recorded or monitored for training and quality purposes. © 2022 Columbia Threadneedle Investments. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies. Financial promotions are issued for marketing and information purposes by Columbia Threadneedle Management Limited, authorised and regulated in the UK by the Financial Conduct Authority. 195600 (06/22) UK ![img-2.jpeg](img-2.jpeg) 80 | European Assets Trust PLC OverviewOverview Chairman’s statement Strategic Report Governance Report Auditors’ Report Financial Statements Other Information Other Information ## Ten Year Record (unaudited) Euro Total Return Sterling Total Return Market Market Net asset Net asset Dividends Dividends Net asset Net asset price price value value declared declared value per value per † per share per share per share per share per share per share share Benchmark share Benchmark 31 December Pence Euro Pence Euro Euro Pence % % % % | | ∞ | † | | --- | --- | --- | | 2013* | 96.4 1.159 96.86 1.164 0.05757 | n/a 34.4 34.0 37.8 37.5 | | | ∞ | † | | 2014* | 98.7 1.272 98.05 1.263 0.07221 | n/a 15.3 5.2 7.6 (1.9) | | | ∞ | † | | 2015* | 112.7 1.529 112.01 1.520 0.07743 | n/a 26.9 23.5 20.5 17.2 | | | ∞ | † | | 2016* | 102.2 1.197 112.19 1.314 0.09429 | n/a (7.3) 6.4 7.4 23.3 | | | ∞ | † | | 2017* | 130.8 1.474 129.85 1.463 0.08220 | n/a 18.0 18.6 22.6 23.3 | | | ∞ | † | | 2018* | 93.0 1.036 102.73 1.140 0.09298 | n/a (16.3) (13.6) (15.4) (12.7) | † 2019 110.0 1.300 116.17 1.370 0.07136 n/a 26.9 27.8 19.8 20.6 2020 120.3 1.343 132.75 1.480 n/a 7.020 15.4 12.6 21.9 18.9 2021 139.5 1.662 145.93 1.740 n/a 8.000 24.0 22.5 16.3 14.9 2022 91.6 1.032 96.54 1.088 n/a 8.800 (32.0) (22.1) (28.2) (17.7) * European Assets Trust NV prior to the migration on 16 March 2019. ∞ For comparison purposes, historical values have been adjusted for the ten for one stock split effective 3 May 2018. † Dividends prior to 16 March 2019 are shown gross of Dutch withholding tax. Report and Accounts 2022 | 81 # Alternative Performance Measures The Company uses the following Alternative Performance Measures ("APMs"). APMs do not have a standard meaning prescribed by GAAP and therefore may not be comparable to similar measures presented by other entities. No new APMs have been identified or added since the prior year end. **Discount or Premium** – the share price of an Investment Company is derived from buyers and sellers trading their shares on the stock market. This price is not identical to the net asset value ("NAV") per share of the Company. If the share price is lower than the NAV per share, the shares are trading at a discount. This usually indicates that there are more sellers of shares than buyers. The discount is shown as a percentage of the NAV per share. Shares trading at a price above NAV per share are deemed to be at a premium. | | | 31 December 2022 Pence | 31 December 2021 Pence | | --- | --- | --- | --- | | Net Asset Value per share | (a) | 96.54 | 145.93 | | Share price per share | (b) | 91.60 | 139.50 | | **Discount (c = (b-a)/a)** | (c) | **(5.1%)** | **(4.4%)** | **Gearing** – this is the ratio of the borrowings of the Company to its net assets. Borrowings have a "prior charge" over the assets of a company, ranking before ordinary Shareholders in their entitlement to capital and/or income. They may include: preference shares; debentures; overdrafts and short and long-term loans from banks; and derivative contracts. 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 and Directors' Report. | | | 31 December 2022 £'000 | 31 December 2021 £'000 | | --- | --- | --- | --- | | Loan | | 8,872 | 25,188 | | Less Cash and cash equivalents | | (13,317) | (8,342) | | Total | (a) | **(4,445)** | **16,846** | | Net Asset Value | (b) | **347,627** | **525,435** | | **(Net cash)/gearing (c = a/b)** | (c) | **(1.3%)** | **3.2%** | **Ongoing Charges** – all operating costs expected to be incurred in future and that are payable by the Company, expressed as a proportion of the average net assets of the Company over the reporting year. The costs of buying and selling investments and derivatives are excluded, as are interest costs, taxation, non-recurring costs and the costs of buying back or issuing shares. | | | 31 December 2022 £'000 | 31 December 2021 £'000 | | --- | --- | --- | --- | | **Ongoing charges calculation** | | | | | Management fees | | 3,048 | 3,693 | | Other expenses | | 958 | 995 | | Less loan commitment/arrangement fees | | – | (1) | | Less ad-hoc non-recurring expenses | | (120) | (93) | | Total | (a) | **3,886** | **4,594** | | Average net assets | (b) | **377,305** | **515,419** | | **Ongoing charges (c = a/b)** | (c) | **1.03%** | **0.89%** | 82 | European Assets Trust PLC Other Information Overview Chairman's statement Strategic Report Governance Report Aviation Report Financial Statements Other Information **Total Return** – 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 NAV in the period. The dividends are assumed to have been re-invested in the form of shares or net asset, respectively, on the date on which the shares were quoted ex-dividend. | | Net Asset Value | Share price | | --- | --- | --- | | NAV/share price per share at 31 December 2021 (pence) | 145.93 | 139.50 | | NAV/share price per share at 31 December 2022 (pence) | 96.54 | 91.60 | | Change in the year | (33.8%) | (34.3%) | | Impact of dividend reinvestments | 5.6% | 5.9% | | **Total return for the year** | **(28.2%)** | **(28.4%)** | Report and Accounts 2022 | 83 ## Glossary of Terms AIC – Association of Investment Companies, is the UK trade body for closed-end investment companies (www.theaic.co.uk). AIFMD – Alternative Investment Fund Managers Directive requires that all investment vehicles (AIF – Alternative Investment Fund) must appoint a Depositary and an Alternative Investment Fund Manager. The Directors of the Company nevertheless, remains fully responsible for all aspects of the Company’s strategy, operations and compliance with regulations. AIF Manager – The AIF Manager, Columbia Threadneedle Investment Business Limited, is responsible for the provision of investment management services to the Company. Benchmark – This is a measure against which the Company’s performance is compared. The Company’s benchmark is the EMIX Smaller European Companies (ex UK) Index. Custodian – A specialised financial institution responsible for safeguarding worldwide the listed securities and certain cash assets of the Company, as well as the income arising therefrom, through provision of custodial, settlement and associated services. The Company’s custodian is JP Morgan Chase Bank. Depositary – Under AIFMD rules, the Company must appoint a depositary, whose duties in respect of investments, cash and similar assets include: safekeeping; verification of ownership and valuation; and cash monitoring. Under AIFMD regulations, the depositary has strict liability for the loss of the Company’s financial assets in respect of which it has safekeeping duties. The depositary’s oversight duties include, but are not limited to dividend payments and adherence to investment limits. The Company’s depositary is JP Morgan Chase Bank. Dividend – The income from an investment. The Company currently pays dividends to shareholders four times per year in January, April, July and October. The rate of the dividend is announced in January each year and is set at an annual yield of six per cent to the net asset value at the end of the preceding year. Since January 2020 the Board has declared the Company’s annual dividend in Sterling. The previous practice was to declare in Euros. Gearing – The Company has the ability to borrow to invest within pre-determined limits. This term is used to describe the level of borrowings that the Company has undertaken, and is stated as a percentage of total assets less current liabilities. The higher the level of borrowings, the higher the gearing ratio. Leverage – As defined under AIFMD rules, leverage is any method by which the exposure of an AIF is increased through borrowing of cash or securities or leverage embedded in derivative positions. Leverage is broadly equivalent to Gearing, but is expressed as a ratio between the assets (excluding borrowings) and the net assets (after taking account of borrowing). Under the gross method, exposure represents the sum of the Company’s positions after deduction of cash balances, without taking account of any hedging or netting arrangements. Under the commitment method, exposure is calculated without the deduction of cash balances and after certain hedging and netting positions are offset against each other. Market Capitalisation – The stock market value of a company is determined by multiplying the number of shares in issue, excluding those shares held in treasury, by the market price of the shares. Net Assets (or Shareholders’ Funds) – This is calculated as the value of the investments and other assets of the Company, plus cash and debtors, less borrowings and any other creditors. It represents the underlying value of the Company at a point in time. Ordinary Shares – Shareholders are entitled to their share of both income, in the form of dividends paid by the Company and any capital growth. The Company has only Ordinary Shares in issue. Share Price – The value of a share at a point in time as quoted on a stock exchange. The Company’s Ordinary Shares are quoted on the London Stock Exchange. 84 | European Assets Trust PLC 85 | European Assets Trust PLC ## European Assets Trust PLC ## Report and Accounts 31 December 2022 Registeredoffice: Registeredoffice: Exchange House, Exchange House, Primrose Street, Primrose Street, London London EC2A 2NY EC2A 2NY 0207 628 8000 Tel No. 020 7628 8000 europeanassets.co.uk www.europeanassets.co.uk Registrars: Info@bmogam.com Computershare Investor Services PLC The Pavilions, Bridgewater Road, Bristol BS99 6ZZ Registrars: 0370 889 4094 computershare.com ### Computershare Investor Services PLC web.queries@computershare.com The Pavilions Bridgewater Road Bristol BS99 6ZZ Tel No. 0370 889 4094 computershare.com webqueries@computershare.com ## Tofindoutmorevisit columbiathreadneedle.com © 2023 Columbia Threadneedle Investments. Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies. CT EAT/AnRpt/22