Interim Management Statement

RNS Number : 1230Y

European Assets Trust NV

13 May 2016

 

European Assets Trust NV

Interim Management Statement

For the three month period from 31 December 2015 to 31 March 2016

Investment Objective

The investment objective of the Company is to achieve 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 and dividends have been paid mainly out of other reserves.

Total return#	Three month period ended 31 March 2016		Year ended 31 December 2015
	Euro	Sterling	Euro	Sterling
Net asset value per share	-7.4%	-0.4%	26.9%	20.5%
Market price per share	-7.7%	-0.7%	26.8%	20.4%
Euromoney European Smaller Companies (ex UK) Index	-4.9%	2.3%	23.4%	17.2%

Dividends

The Board has announced dividends of Euro 0.912 per share for the year to 31 December 2016 payable in three instalments in January, May and August.  The January dividend was paid on 29 January 2016 and amounted to Euro 0.304 per share (£0.234 per share in Sterling terms).  The May dividend has been announced at a rate of Euro 0.304 per share and will be paid on 31 May 2016.

Capital return	As at  31 Mar  2016 Euro	As at 31 Dec 2015 Euro	As at  31 Mar  2016 Sterling	As at 31 Dec 2015 Sterling
Net assets (shareholders' funds)	€450.8m	€483.9m	£357.4m	£356.6m
Net asset value per share	€13.77	€15.20	1,091.5p	1,120.1p
Market price per share			1,095.0p	1,127.0p
Euromoney European Smaller Companies (ex UK) Index	525.64	553.88	416.75	408.24
Premium to net asset value			0.3%	0.6%
Gearing (100% = nil geared position)‡			101%	98%

Sources: F&C Investment Business Limited, Datastream.

‡ - Gearing: The gearing ratio is total assets (less cash and cash equivalents) divided by shareholders' funds expressed as a percentage.

# - Total return means capital performance with dividends reinvested.

Review of the period to 31 March 2016

The first quarter of 2016 has been challenging for equity investors with the year starting with an aggressive sell off driven by deteriorating global economic news, with a particular focus on the Chinese economy and further deterioration in the oil price. Much of this weakness was however not felt in its entirety by Sterling holders of Euro denominated assets, as the Pound weakened in reaction to the UK's potential exit from the European Union. Overall though, it was a disappointing quarter for European Assets Trust.

The market weakness has, nevertheless, provided opportunities for new investments. Towards the end of 2015 we had looked at a number of high quality companies but did not invest as they were too expensive. We have used the first quarter to add a number of these names as their prices became more attractive. Examples include Marr, the Italian food distributor, IMCD, the Dutch specialist chemical distributor, and IMA, the Italian manufacturer of packaging machines. We have also, through our systematic review process, cast a critical eye on areas of the portfolio that have been struggling. Our new buys have been funded by a combination of increased gearing and the sale of one of our position, EFG, the Swiss private bank.

Our philosophy, process and outlook remains unchanged. We see the European equity market as finely balanced with the slow improvement in economic activity in Europe not yet translating into meaningful profit growth. Valuations look reasonable to us, but we would be more comfortable in aggregate if we had more confidence in corporate Europe's earnings recovery.

Over the three month period ended 31 March 2016 the Company issued 900,000 new Ordinary Shares for a total consideration of £9.4 million representing 2.8% of the Ordinary Shares in issue at 31 December 2015.  During the period the Company also issued 9,178 Ordinary Shares via scrip dividend. To facilitate this issuance the Company published a prospectus in July 2015. This prospectus allows the Company to issue up to 9 million new Ordinary shares at an issue price of at least net asset value and a premium to cover the commissions of issuance.   Of this amount, as at 31 March 2016, 5,318,124 shares have been issued.

Top Ten Holdings

Company	Country	31 March 2016 percentage of net assets
Irish Continental	Ireland	4.2
Gerresheimer	Germany	3.7
CTT Correios de Portugal	Portugal	3.6
Forbo	Switzerland	3.6
Amer Sports	Finland	3.5
Origin Enterprises	Ireland	3.5
Plastic Omnium	France	3.5
Cerved Information Solutions	Italy	3.5
Glanbia	Ireland	3.3
Grafton Group	Ireland	3.0
Total		35.4

Geographical Analysis

Country	31 Mar 2016 percentage of net assets		31 Dec 2015 percentage of net assets
Ireland	20.7		21.3
Germany	17.9		17.6
Italy	12.6		12.3
Spain	8.5		8.1
Sweden	7.4		6.6
Denmark	7.2		7.1
Switzerland	6.4		7.6
Norway	5.0		4.9
Netherlands	5.0		2.2
Portugal	3.6		3.1
Finland	3.6		3.4
France	3.5		3.7
Net (current liabilities includes borrowings)/ assets	(1.4)		2.1
Total	100.0		100.0

Summarised Balance Sheet

	31 Mar 2016 €million (unaudited)		31 Dec 2015 €million (audited)
Investments	456.6		473.8
Net current assets/(liabilities)	(5.8)		10.1
Net assets (shareholders' funds)	450.8		483.9
Shareholders' funds comprising of:
Issued share capital	15.1		14.6
Share premium and other reserves*	435.7		469.3
Total shareholders' funds	450.8		483.9

* Share premium and other reserves are freely distributable

Daily and Key Information

Since 1 April 2016 the Company has issued a further 205,000 Ordinary Shares for a total consideration of £2.2 million.  Of the prospectus capacity of 9 million shares as at 11 May 2016 3.5 million remain available for issuance.

The Boards are not aware of any other significant events or transactions which have occurred since 31 March 2016 and the date of publication of this statement which would have a material impact on the financial position of the Company.

Further information regarding the Company, including daily net asset values published since the end of the period and monthly factsheets, can be found at the Company's website www.europeanassets.eu, or at www.fandc.com.

For further information please contact:

Sam Cosh (Fund Manager)

Tel: [phone]

Scott McEllen (Company Secretary)

Tel: [phone]

Wilbert van Twuijver (representing the Management Board Director)

Tel [phone]

 

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