Interim Results

European Assets Trust NV
27 July 2004


To:          RNS

From:        European Assets Trust NV

Date:        27 July 2004


Embargoed until 7am on 27 July 2004




UNAUDITED INTERIM RESULTS - SIX MONTHS TO 30 JUNE 2004

  • The Company's sterling net asset value total return (capital performance
    with dividends added back) rose over the six months by 2.7 per cent (7.9 per
    cent in Euro terms)

  • Net asset value total return (capital performance with dividends added
    back) of 78.4 per cent since December 1997 when the portfolio was refocused,
    compared with 47.2 per cent for the benchmark index

  • In accordance with the Company's stated policy, dividends payable for the
    year of 6 per cent based on net asset value at the start of the year


Performance

Smaller Continental European stocks recorded strong gains in the first six
months of 2004. The HSBC Smaller Europe (ex UK) Index rose by 12.3% in Euro
total return* terms over the period, handsomely outperforming its larger
capitalisation counterpart which barely managed to remain in positive territory.
The share price gains were largely confined to the beginning and end of the
review period. The year began with a continuation of the previous year's rally
which had driven up economically sensitive stocks. Consumer cyclicals,
industrial goods and financial issues led the way. Healthcare, a laggard sector
throughout 2003, staged a strong recovery throughout January and healthcare
stocks also gave momentum to the index performance in June. In the intervening
period, the Madrid bombings reminded investors of the continuing threat of
terrorism. There were also concerns about the end to record low interest rates
in the US.

The net asset value of European Assets Trust registered a 7.9% increase in Euro
total return* terms over the first six months of 2004. The rise was less than
that of the benchmark index since the Company's portfolio remained
conservatively positioned throughout the review period. The Managers value
consistency in earnings above erratic, unpredictable cyclical upswings. This
approach was vindicated in the middle months of the review period when 'steady
earners' recorded strong returns. Indeed, several of these stocks easily
outpaced the rise in the index over the full six months. Irish industrial goods
distributor DCC delivered a gain of 38.6% in Euro terms, Italian electricity and
water utility Hera powered ahead by 40.2% and Swiss confectioner Lindt &
Sprungli registered a sweet 33.7% rise in its share price.

Despite lagging the index over the first six months of the year, the longer-term
track record of the Company remains intact. For the year ending June 2004 the
net asset value of European Assets Trust increased by 35.6% in sterling total
return terms while the HSBC Smaller Europe (ex UK) Index gained 34.1%. Since
December 1997 the NAV has risen by 78.4% in sterling total return terms compared
with 47.2% for the benchmark index.

*Capital performance with dividends added back



Outlook

In contrast to the late arrival of summer temperatures across many parts of
Europe, the lazy days of summer arrived early in the region's stock markets.
Trading volumes have dropped away quite dramatically and there is no consistent
direction in share prices. This mirrors a mood of uncertainty that has overtaken
institutional and private investors alike. European markets must face up to
slowing export growth momentum as the authorities in the US and China seek to
curb some of the excesses of these two major props of the worldwide economic
recovery. The pick-up in European domestic demand is not yet sufficiently well
established to compensate for any meaningful downturn in external trade volumes.
Set against this negative influence, company profits continue to power ahead
ensuring that stock price valuations return to more reasonable levels.

The 'frozen in the headlights' mentality of the stockmarkets plays into the
hands of active focused funds such as European Assets Trust. Despite the market
uncertainties, we are looking to increase weightings in portfolio holdings for
which the business outlook is still sound but which have been largely ignored in
the markets' current lack of direction. Indra is a case in point. The Spanish
specialist in Information Technology services registered a 10.3% increase in
revenues in the first three months of 2004 and improved net profits by 13.0%.
For the full year, management is anticipating sales growth of between 9% and 11%
and net profit at least 15% up on 2003 levels. The market judges this as
unspectacular in the context of an industry that is in an early recovery phase
after a three-year downturn. However Indra has consistently delivered this rate
of profits growth in each of the fallow years. We have also 'discovered' some
unfamiliar, under-researched names whose strong growth potential is not yet
reflected in share price valuations. One such is Pfleiderer, a German
manufacturer of laminated wood parts for items of furniture. The company is
building up a commanding position in its home market, in the process
revitalising a moribund industry sector. Pfleiderer has also become a leading
player in Poland and Russia where demand for well-engineered wooden furniture is
in its infancy. The stock price has soared by 87% since we initiated a holding
earlier this year. Other recent, lesser-known additions to the portfolio include
Miquel y Costas, a leading supplier of tobacco filter paper worldwide, and SBS
Broadcasting, the Luxembourg-domiciled owner of 10 free-to-air television
channels in the Nordic region and Benelux. The admission to the European Union
of 10 new member states predominantly from the former Soviet bloc also presents
investment opportunities. The few medium-sized companies that are already quoted
on the stockmarkets of the recent entrants have attained heady valuations. But
there are several interesting prospects to be found among Western European
companies well placed to supply desirable consumer goods and to benefit from
infrastructure projects financed by EU state aid. Pfleiderer is one such; other
examples include Merloni, arguably Europe's most innovative white goods
manufacturer, and the German company Vossloh, which enjoys a dominant position
in the manufacture of fastenings for railway sleepers.


Crispin Longden

Investment Manager

ISIS Asset Management plc






Balance Sheet                                                                  30 June          31 December
                                                                                  2004                 2003
                                                         Note                 Euro 000             Euro 000

Investments

Securities                                               5                     145,803              141,575

Net current assets                                                               2,776                1,430

Total assets less current liabilities                                          148,579              143,005

Equity shareholders' funds                                                     148,579              143,005



Net asset value per share                                6                   Euro 8.07            Euro 7.78

Expressed in sterling                                                             541p                  548p

based on 18,410,637 shares in issue (31 December 2003 - 18,386,067)




Revenue Account - six months to                                                30 June             30 June
                                                                                  2004                2003
                                                          Note                Euro 000            Euro 000
Income from investments

Securities                                                                       1,503               1,461

Deposit interest                                                                    38                 106

Securities lending                                                                  63                  75


Total income from investments                             1                      1,604               1,642


Realised and unrealised                                                         10,530               5,252
movements on investments


Total income                                                                    12,134               6,894


Expenses and interest

Administration expenses                                   4                      (966)               (893)

Interest                                                                          (96)               (196)

Net income                                                2                     11,072               5,805


Distributed by dividends                                  3                      5,498               4,436

Earnings per share                                        Euro                    0.60                0.32

Dividends per share                                       Euro                    0.31                0.25






Statement of Cash Flows - six months to

                                                                               30 June            30 June
                                                                                  2004               2003
                                                                              Euro 000           Euro 000

Cash flow from investment activities

Interest, dividends and other income                                             1,583              1,810

Purchases of shares                                                           (33,889)           (19,906)

Sales of shares                                                                 42,019             29,715               
          
Administrative expenses and interest charges                                     (958)            (1,132)

                                                                                 8,755             10,487


Cash flows from financial activities

Dividends paid                                                                 (5,498)            (4,436)


Refund of dividend withholding tax                                               3,357                  -


Loan facility                                                                        -           (10,000)


                                                                               (2,141)           (14,436)

                                                            
Cash at bank

Net increase/(decrease) for the period                                           6,614            (3,949)


Balance as at 31 December
                                                                                 (991)             10,598
                                                                           
                                                                  

Balance as at 30 June
                                                                                 5,623              6,649
                                                                           


Notes

    1.   Income is stated after deduction of irrecoverable withholding taxes 
         of Euro 194,615 (2003 - Euro 130,257).


    2.   Income for the six months period should not be taken as an indication 
         of the income for the full year.


    3.   Two dividends of Euro 0.155 per share each have been paid in January 
         and May 2004 respectively, a further dividend of Euro 0.155 per share 
         will be paid in August 2004. These dividends are mostly funded from 
         accumulated capital gains.

    4.   The total expense ratio, based on average shareholders' funds for the 
         first half of the year amounted to 1.33 per cent annualised (first half 
         year 2003 - 1.60 per cent annualised). Based on Dutch regulations, the 
         expenses ratio over the first half of the financial year which, within 
         the scope of the Investment Institutions Supervision Act (Wet toezicht 
         beleggingsinstellingen) should be reported by investment institutions, 
         amounts to 1.47 per cent annualised (first half year 2003 - 2.12 per 
         cent annualised).

    5.   The securities are valued at market price.

    6.   24,570 shares were issued during the period via the scrip dividend 
         option.

    7.   The accounting policies applied in preparing the half-year figures at 
         30 June 2004 are consistent with those underling the 2003 annual 
         accounts except for the presentation of net income which is taken up in 
         conformity with the revised Dutch Reporting Guideline (Richtlijn 615). 
         For the financial year 2004 the Company has implemented the revised 
         Richtlijn 615. The impact of implementing the revised guideline is that 
         all realised and unrealised movements on investments as well as the 
         costs charged to the capital reserves are now included in net income. 
         In previous years, these items were directly charged or credited to the 
         Company's reserves. As a consequence of this change in accounting 
         principles, the model of the income statement has been changed and the 
         comparative figures have been adjusted accordingly. The implementation 
         of the new guideline does not have an effect on the Company's 
         shareholders' equity. The net financial impact on net income for the 
         six months ended 30 June 2004 is an increase of Euro 9,738,000; the
         impact on net income for the six months ended 30 June 2003 is an 
         increase of Euro 4,582,000.



For further information, please contact:


Crispin Longden

ISIS Asset Management, Investment Managers          0131 465 1000





Michael Campbell

ISIS Asset Management, Company Secretary          0131 465 1000



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