Annual Results

European Assets Trust NV
03 March 2003

To:            RNS

From:          European Assets Trust NV

Date:          3 March 2003

RESULTS FOR YEAR ENDED 31 DECEMBER 2002

Objective


The investment objective of the Company is to achieve growth of capital through
investment in quoted medium-sized companies in Europe, excluding the United
Kingdom. A high distribution policy has been adopted from 2001 and dividends
have been paid out of capital reserves.


Extracts from the Chairman's Statement:


Results


I had hoped to commence my 2002 Review of the financial markets on a more
positive note than this time last year. Unfortunately I have to report that 2002
was yet another year of poor equity returns. A desultory end to the year left
all major indices nursing double-digit percentage losses. In addition to concern
at the slowing pace of economic growth, investor sentiment was undermined by
further corporate misdeeds and rising geopolitical tension.


While outperforming their larger counterparts, European smaller companies' share
prices could not withstand the gloom. The HSBC Smaller Europe (ex UK) Index fell
by 17.0% in Sterling total return* terms in 2002. European Assets Trust's net
asset value declined by 22.5% in total return* terms over the same period. While
this result is disappointing, it is worth recording that since the portfolio
refocus at the end of 1997, the Company's net asset value total return* in
Sterling terms has been +17.1% compared to a fall of 9.0% for the Index.
European Assets Trust is the leading performer by some way in the AITC European
smaller companies sector over three years based on net asset value total return.
This positive longer-term performance record lends support to the Board's
continued view that there exists a strong investment case for the small and mid
capitalisation sector in Continental Europe. This segment of the market
continues to boast many companies with attractive growth profiles irrespective
of underlying economic conditions.

Dividend

The level of dividend paid by the Company each year is determined by the Board
in accordance with the Company's dividend policy. The amount of the annual
dividend is arrived at by taking the percentage yield level (which is set each
year by the Board) and applying it to the Company's net asset value at the end
of the preceding year. This is consistent with the policy adopted for the past
two years where dividends continue to be paid totally out of capital.


In determining the rate of dividend the Board has regard to the interests and
views of shareholders as a whole. The Board gives consideration to a number of
factors including:


  • continuing to offer a competitive dividend yield.


  • the Company's portfolio and capital structure.

  • the level of the Company's reserves. Dividends have been funded entirely
    from capital reserves.

  • prevailing market conditions. The Board regularly monitors market
    conditions, which have deteriorated over the past three years, and considers
    the effect of dividend funding requirements on the management of the
    Company's investments and the value and liquidity of the investment
    portfolio.

  • shareholders to be given a choice by having the opportunity to vote, as
    previously indicated, on the continuation of the Company by June 2006, with
    the objective that a distribution of assets could be made with minimum
    possible tax liabilities and realisation costs arising within the Company.


Based on present tax advice, the Board declared an advance dividend payment in
respect of the 2003 year. The amount of this advance dividend was Euro 0.25 per
share, equivalent to 4 per cent of net asset value at the end of 2002 and it was
made payable to shareholders at the start of January 2003. The advance dividend
was paid out of brought forward capital reserves.


The Board has determined to pay further dividends amounting to Euro 0.12 per
share for 2003, which, together with the advance dividend of Euro 0.25 per
share, will result in total dividends for 2003 of Euro 0.37 per share,
equivalent to a 6 per cent yield level on net assets at the end of 2002. Such
further dividend will be made payable in equal monthly instalments of Euro 0.02
per share from July 2003 to December 2003 inclusive. These dividends are
expected to be paid from capital.


Shareholders can elect to receive new shares in the Company in place of the cash
dividend. Details are provided in the ' Shareholder Information ' section of the
annual report.


The Boards, through their advisers, seek to achieve the most advantageous
possible treatment for the Company and its shareholders in respect of Dutch tax.
Details of the tax position for shareholders is set out in the 'Shareholder
Information' section of the annual report. Based on previous advice, from 2006
investment companies in The Netherlands should be able to distribute capital
from prior years without corporate taxes.

Gearing

The Company has banking facilities to allow the Managers to gear the portfolio
within the 20 per cent of assets level permitted under the Articles. The
facilities are Euro denominated and flexible, allowing the Managers to draw down
amounts for such periods as they wish on a fixed or variable rate basis. As a
result of the depressed market conditions, the Managers have only used these
facilities to a limited extent during the year and at the end of the year,
taking account of cash balances held, the Company had a small net geared
position of 3 per cent.


The Managers continue to search out buying opportunities in quoted small and
medium-sized companies across the European Continent. To seek to take advantage
of this and the recovery in markets when it occurs, gearing levels will be
increased gradually where opportunities arise.

Share Price and Discount

I reported last year on the narrowing in the Company's share price discount to
net asset value. In contrast, during 2002 the discount has widened to 22.5 per
cent in common with similar European investment trusts and reflects the
difficult market climate.

Outlook

At the time of writing, difficult conditions still prevail in European equity
markets. While acknowledging the unhelpful backdrop of the current political and
military stand-off in the Middle East, the Board nevertheless retains its faith
in the medium term potential for Continental European small to mid
capitalisation equities. The Company wishes to be well positioned to benefit
from the upturn when markets eventually recover. The recent wave of selling has
been concentrated primarily on larger issues within the asset class. With this
in mind and to provide some more investment flexibility, the Board has
authorised the Managers to consider initial investment in companies capitalised
at up to Euro 2,500m. This ceiling currently exceeds the value (circa. Euro
1,800m) of the largest constituent in the benchmark HSBC Smaller Europe (ex UK)
Index. The Managers retain the option of implementing gearing (up to 20 per cent
of assets) as suitable investment opportunities arise.


The Company continues to offer a competitive dividend yield whilst at the same
time providing exposure to a portfolio of Continental European small to mid
capitalisation companies, with the focus on profitable, well financed businesses
having good capital growth potential. The Company should be well placed when
stock markets recover.


* capital performance with dividends added back.








FINAL FINAL RESULTS FOR 12 MONTHS TO 31 DECEMBER 2002


                                                                    31 December          31 December
BALANCE SHEET                                                              2002                 2001
                                              Note                        €'000                €'000

Investments
Securities                                      1                       114,127              176,167
Net current assets/(liabilities)                                          6,489              (5,386)

Total assets less current liabilities                                   120,616              170,781
Loan                                                                   (10,000)                    -

Equity shareholders' funds                                              110,616              170,781

Net asset value per share                       2                         €6.03                €9.35
Expressed in sterling                                                      392p                 569p


REVENUE ACCOUNT FOR YEAR ENDED
                                                                    31 December          31 December
                                                                           2002                 2001
                                                                          €'000                €'000

Income
Securities                                      3                         1,812                2,187
Deposit interest                                                            438                  224
Securities lending                                                          128                   70
Total income                                                              2,378                2,481

Expenses and interest
Administration expenses                                                   (312)                (749)
Interest charges                                                          (431)                (552)
Total expenses                                                            (743)              (1,301)

Net income                                                                1,635                1,180
Corporation tax surchargeAbsorbed by                                    (1,667)              (2,977)
dividends
Net income after corporation tax surcharge                                 (32)              (1,797)

Earnings per share                                                     (€0.002)             (€0.098)
Dividends per share                             4                         €0.90                €1.56






STATEMENT OF CASH FLOWS FOR THE YEAR ENDED
                                                                            31 December             31 December
                                                                                   2002                    2001
                                                                                  €'000                   €'000

Cash flow from investment activities
Interest, dividends and other income                                              2,141                   2,864
Purchases of shares                                                            (33,196)                (81,501)
Sales of shares                                                                  52,621                  95,793
Administrative expenses                                                         (3,229)                 (2,161)
Interest charges                                                                  (466)                   (550)
                                                                                 17,871                  14,445

Cash flows from financial activities
Dividends                                                                      (15,651)                (22,694)
Dividend withholding tax                                                        (3,897)                (25,887)
Loan facility                                                                    10,000                       -
                                                                                (9,548)                (48,581)

Cash at bank
Net increase/(decrease) for the year                                              8,323                (34,136)
Balance as at 1 January                                                           2,275                  36,411
Balance as at 31 December                                                        10,598                   2,275

Notes:


 1.     Securities are valued at market price.


 2.     Based on 18,350,056 shares in issue (2001 - 18,259,867*). During
        the year the Company issued 90,189 shares through its scrip dividend
        option.


 3.     Income is stated after deduction of irrecoverable withholding taxes.


 4.     An advance dividend of €0.25 has been announced for the year 2003
        and was paid in January 2003.


 5.     Expenses are allocated between revenue and capital reserves in
        the proportion 13:87 for 2002 in accordance with Dutch tax law (2001:
        25:75).


 6.     These are not the full accounts. The full accounts for the year
        to 31 December 2002 will be sent to shareholders and will be available
        for inspection at the Company's registered office, KAS BANK, Spuistraat
        172, 1012 VT Amsterdam and from the investment managers at, ISIS Asset
        Management, One Charlotte Square, Edinburgh, EH2 4DZ.



 7.     A General Meeting to receive the 2002 Report & aAccounts will be held on 
        2 May 2003.




For further information, please contact:

Crispin Longden, ISIS Asset Management plc, Fund Manager          0131 465 1000

Michael Campbell, ISIS Asset Management plc, Company Secretary* During the year
the Company bought in shares by tender offer and subsequently reissued 1,613,000
shares.     0131 465 1000


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