Half-year Report

RNS Number : 5772E

European Opportunities Trust PLC

28 February 2020

 

European Opportunities Trust plc (the 'Company')

Legal Entity Identifier: 549300XN7RXQWHN18849

Half Yearly Financial Report for the six months to 30 November 2019 (unaudited)

Capital Performance

	30 November 2019	31 May 2019
Total assets less current liabilities (£'000)	954,162	927,482

  Ordinary Share Performance

	30 November 2019	31 May 2019
Share price (pence)	828.00	815.00
Net asset value (pence)	845.32	822.23
Discount to net asset value (%)	(2.1)	(0.9)
Ongoing charges figure (%)	0.93	0.90

Chairman's Statement

I am pleased to present your Company's interim report for the six months to 30 November 2019. As at 25 February 2020 your Company had total assets (with loans added back) of £1.1 billion, the NAV per share was 878.3p and the middle market price per share on the London Stock Exchange was 843.0p, representing a 4% discount to NAV.

Investment Performance

Over the six months to 30 November 2019 the total return on the NAV per share, with dividends added back, was +3.5%. This performance was behind the total returns on the Company's primary benchmark, the MSCI Europe Index and its secondary benchmark, the MSCI Europe ex-UK Index, of 7.1% and 8.1% respectively.

As at 25 February 2020 performance had improved and since the beginning of the financial year the total return on the NAV per share of your Company was 3.9%, which compares with the total returns on the MSCI Europe and the MSCI Europe ex-UK Indices of -2.6% and -2.1%, respectively.

The background to your Company's recent performance is considered in depth by our portfolio manager, Alexander Darwall, in his report overleaf. Despite the underperformance in the period under review, long term performance continues to be strong; since the Company's launch in November 2000 to 25 February 2020 the total return on the NAV per share, with dividends added back, was 875.3%, which compares with total returns of 166.2% and 191.3% from the Company's benchmarks, respectively.

Transition to Devon Equity Management

As announced following the Annual General Meeting last November, Devon Equity Management ("Devon") and FundRock Management Company ("FundRock") took over responsibility, with effect from 15 November 2019, for the Company's investment portfolio in their respective roles of Investment Manager and Alternative Investment Fund Manager ('AIFM').

This is the Company's first interim report following the transition to Devon and FundRock. The portfolio is managed by Alexander Darwall and his team in the same way as it was previously when they were at Jupiter Asset Management; and the Company's custody, administration and fund accounting arrangements remain the same. The Board pays particular attention to the control procedures and processes in place at Devon and FundRock to ensure that the investment management operations for the Company continue to be handled with the appropriate level of resource and professionalism.

FundRock Partners

In order to position the Company for any change in the regulatory environment in the United Kingdom post Brexit the Board proposes to switch the entity within the FundRock group that acts as its AIFM from FundRock Management Company SA (in Luxembourg) to FundRock's wholly owned and UK regulated entity, FundRock Partners Ltd. This appointment is subject to regulatory approval and is expected to become effective prior to the Company's financial year end. There will be no change in the terms of engagement or the fees payable to the AIFM.

Discount management

The Board implements a discount and premium policy under which it uses share buybacks and new issues of shares with the aim of avoiding much deviation between the market price of the Company's shares and the underlying NAV, in normal market conditions. The Board believes that this commitment to the active removal of discount and premium risk will improve liquidity for both buyers and sellers of the Company's shares.

Gearing

At the end of the period under review the gearing level on the Company's investments was 9.1%. The Investment Manager tends to increase gearing at times of perceived low valuations, while reducing it as markets recover. This approach has added sustained value over the course of your Company's history and we continue to encourage the Investment Manager to consider the use of gearing as a tactical tool to improve returns. The Company retains its loan facility which is drawable to a maximum amount of £135 million.

Outlook

Since the period end there has been some renewed optimism for the outlook of the British economy and stockmarket. This is partly as a result of the uncertainty being removed now that the UK has legally left the European Union. There continue to be concerns around other European economies, which may result in ongoing volatility in European stockmarkets over the coming year. Now we have the additional uncertainty caused by the Coronavirus epidemic, concern about which has been largely responsible for the Company's share price closing at 779.0p as at today's date, but it is too early to assess the long-term implications of the epidemic on the companies held within our portfolio.

However, Alexander Darwall concentrates on picking the right individual stocks, rather than investing on the basis of political or macro-economic considerations. Provided that his long-term success in choosing investments continues this should assure long-term outperformance for your Company.

Andrew Sutch

Chairman

28 February 2020

Investment Adviser's Review

The total return on the NAV of the Company's ordinary shares during the six months to 30 November 2019 was 3.5%, behind the total returns on the Company's primary benchmark, the MSCI Europe Index and its secondary benchmark, MSCI Europe ex-UK Index, of 7.1% and 8.1% respectively. 

The Company's net borrowings were c. £80 million at the end of the reporting period, representing gearing of 9.1%. This is a slight increase on gearing of 7.5% at the start of the period. With rising prices gearing had a slightly positive effect on returns. We are not expecting to increase gearing at the current time. However, in the event of a sharp fall in equity markets, it might be that borrowings are increased in order to take advantage of good opportunities.

The MSCI World Index, sterling adjusted, improved by 10.6% during the period under review. The S&P 500 was the principal driver of this performance, rising by 12.6%, a reflection of the vibrant US economy. While trade disputes capture much attention, the US economy is performing well, exemplified by high employment levels, and 'onshoring' driven by deregulation and lower energy costs. US GDP grew at 2.4% in 2019, admittedly below the 'world' GDP growth forecast of 3.0% for 2019, but better than the European Union's 1.5%. Europe lacks the flexibility and low energy cost policies of the US. Further, its greater vulnerability to trade disputes is reflected in the German GDP growth number, estimated by the IMF at 0.5% in 2019. Indeed, the World Trade Organization (WTO) estimates that global trade in 2019 increased between 0.5% and 1.6%, a lower figure than global growth. Of this trade growth, the WTO estimates that Europe's growth is lower still. These challenges were reflected in European corporate earnings which, according to consensus industry forecasts, dipped in 2019; a rebound is expected in 2020. Interest rates in Europe remain at historically low levels. The ECB Main Refinancing rate is 0%; the benchmark 3-month Euribor rate was -0.401% at the period end, lower than a year earlier. The low interest rate policy (a consequence of Quantitative Easing) has had the effect of driving asset prices. It has also led to an increase in household debt, but the policy has not succeeded in driving fixed capital formation.

Your Company's relatively poor short-term performance during the period under review is almost wholly explained by the weak Wirecard share price; the large weighting compounded the negative impact. German-quoted Wirecard is a world leader in digital payments, offering acquiring, issuing and other payments services. The precipitous fall in the share price followed frequent reports by the Financial Times which cited 'anonymous whistle-blowers' who allege fraudulent accounting at the company. The Financial Times reporting style has itself played a part in fuelling suspicions of malfeasance. The company has consistently answered and rejected these allegations. The supervisory board of Wirecard has engaged KPMG to conduct an additional independent audit into the allegations. We trust the Wirecard management and believe that the company is exceptionally well placed to succeed in global, ecommerce payments. Indeed, the company's audited results continue to impress. We expect further significant operational progress; and we expect the company's actions to be vindicated by the KPMG report in due course. Accordingly, we believe that the shares are remarkably undervalued.

There were two other noteworthy negative performers, Carnival and Ubisoft. Carnival is the biggest cruise company in the world. While recent results have been satisfactory, the company has warned about slower earnings growth. Though it is true that there are a lot more cruise ships being built, this is not in itself an explanation for the deteriorating outlook. Rather it is a problem particular to Carnival that they have not been sufficiently successful in stimulating fresh demand. We believe that this is a temporary setback and does not diminish our confidence in the industry. Whilst acknowledging the potential for longer term implications from the Coronavirus epidemic, we believe that the cruise business should continue to grow. The business characteristics are attractive, not least the very high barriers to entry. We have retained our holding in Carnival. The other poor performer was Ubisoft, the French video game company. The company issued a profits warning as two recently published games failed to impress gamers. Further, Ubisoft acknowledged mistakes in the development process and delayed the publication of three more games. These problems reflect the highly competitive conditions in the games publishing market. We decided to retain our holding in Ubisoft. There are many reasons underpinning this decision. Chief amongst them is our view that new technologies improve the quality of games thereby increasing its appeal: we believe that there is a lot of industry growth to come.

Of those companies which added to the portfolio's performance, the biggest contributor was Novo Nordisk, a long-standing holding. The company is the world leader in the treatment of diabetes and comorbidities such as obesity and cardiovascular diseases. Its recent good performance is explained by its leading position in the new class of drugs, GLP-1 agonists. Such is its leadership, we believe the company should maintain a dominant position for years to come. The addressable therapeutic area is vast and growing steadily. Another healthcare company, Grifols, also made a significant contribution. Principally a producer of blood plasma-based products, a field in which it is the European leader and largest worldwide, Grifols continues to benefit from increasing global demand for an array of proteins fractionated from blood plasma. New indications for these proteins are being approved and more are expected.  

Intermediate Capital Group (ICG), a manager of private debt and equity mainly in Europe, also contributed positively to returns. Major institutions are allocating more assets to private debt and equity at the expense of the public markets. ICG is a beneficiary of this trend. Experian, too, is a long-standing holding. It has been an excellent contributor over many years. Experian is the largest credit bureau in the world. Demand for its 'business to business' and consumer credit services continue to increase, fuelled by the opportunities and challenges of 'big data' and more regulations. It is a 'digital winner'. Finally, we highlight the UK listed Genus. Genus is a world-leading animal genetics company, breeding better pigs and cattle for farmers, thereby enabling farmers to produce better quality meat and milk more efficiently. Its success has been reflected in a strong share price. We expect further success as the company is leading attempts to use gene editing to tackle the major porcine viral disease, Porcine Reproductive and Respiratory Syndrome.

Portfolio turnover (defined as sales as a percentage of average assets over the period, annualised) was 13.8%, a low figure compared with our peers. There were no significant disposals. There were a few sales of small holdings. Of these, the sale of our investment in the London Stock Exchange Group was the most important. Though we acknowledge the company has a clear strategy and is led by an excellent management team, we considered the shares to be fully valued. We also sold the small holding in Christian Hansen following a profits warning. It was not obvious what new factors would change the pattern of lacklustre earnings growth. We sold our holding in Mowi (formerly Marine Harvest), the world's largest salmon farming company. This was a successful investment. Demand for salmon with its appeal to healthy eating, continues to increase worldwide. Mowi is the most integrated of its peers with farming, processing, value added products and retailing. This has not yet translated fully into superior profitability or growth rates. Moreover, attempts to develop a distinctive, high quality brand appear to have stalled.

There were a few new investments of which Neste and GTT were the largest. The former is a Finnish oil refining and marketing company. It is not a conventional oil company, being a global leader in renewable diesel for trucks and renewable jet fuel for aircraft. Tighter regulations are likely to increase demand for Neste's products. GTT is a French engineering company in containment systems for transport and storage of liquefied natural gas (LNG). It has dominant positions in the area of membrane technology. We believe that GTT will flourish as LNG production increases, thereby creating more opportunities for GTT.

We also added to an existing holding in Bayer, the German manufacturer of pharmaceutical, healthcare and agricultural products. Its 2018 $63 billion acquisition of the US Monsanto has proved to be problematic as its most controversial product, Roundup (a glyphosate-based herbicide), is alleged to cause cancer. This is an extraordinary case. The relevant US federal regulator, the Environmental Protection Agency (EPA), considers Roundup to be safe; the product is still available for sale without hindrance; and there have been no 'label' changes. Yet the state courts have taken a different view and found against Bayer. It is not clear what the outcome will be though it is likely that the company will reach a satisfactory settlement at a much lower cost than might be inferred from the current valuation. At that point, we believe that Bayer's leadership in agricultural technology will be more properly valued. Notwithstanding our confidence in Bayer's future, we must acknowledge that this has been a poor investment thus far. We also increased our holding in the German semiconductor company, Infineon. As a leader in the field of 'power' semiconductors, it is particularly well placed to benefit from the increased use of electric power and the need for better energy efficiency.

Outlook

The success of your Company depends, in part, on the investing environment, where conventional challenges include the level of interest rates, trade conditions and energy costs, amongst others. The growing political and investor attention being given to environmental, social and governance (ESG) considerations adds to these challenges. Publicly quoted companies are now coming under pressure to divert their attention from the proper purpose of business, which we consider to be the provision of goods and services, in compliance with applicable laws, that customers want to buy.

Good corporate governance, where directors act in the best interests of their company, as distinct from acting to satisfy the agendas of outside parties, is vital to our investment process. The most important driver of your Company's success is individual company performance.

The Company's portfolio is a collection of 'special' companies. These are companies that have sustainable advantages which allow them to enjoy above average growth rates. We seek to identify these advantages across a broad spectrum of businesses. Innovation, flexibility, focus, and responsiveness to customer requirements are common characteristics of these companies. We eschew commodities and overly price-sensitive businesses, including utilities, where prices are regulated.

2020 is an important year for 'our' companies. We expect favourable outcomes on a range of important developments that affect them: innovations, research projects, legal and quasi-legal issues, authorisations and customer acceptance. The outlook depends to a great extent on whether we are right about these developments. Notwithstanding the uncertainty around the longer term impact of the Coronavirus epidemic, we remain confident that our portfolio companies have the qualities necessary for further significant success.

Alexander Darwall

Devon Equity Management Limited

28 February 2020

Investment Portfolio as at 30 November 2019

			30 November 2019			31 May 2019
			Market		Percentage	Market	Percentage
			value		of portfolio	value	of portfolio
Company		Country of Listing		£'000		£'000
Wirecard		Germany		116,676	11.2	142,113	14.3
Novo Nordisk 'B'		Denmark		91,932	8.8	74,065	7.4
RELX		United Kingdom		87,502	8.4	88,686	8.9
Experian		United Kingdom		83,751	8.1	81,611	8.2
Deutsche Boerse		Germany		71,640	6.9	69,831	7.0
Intermediate Capital Group		United Kingdom		57,423	5.5	47,970	4.8
adidas		Germany		56,881	5.5	48,823	4.9
Amadeus IT Group		Spain		53,811	5.2	54,297	5.5
Dassault Systemes		France		53,044	5.1	49,900	5.0
GRENKE		Germany		51,407	4.9	53,980	5.4
BioMerieux		France		47,514	4.6	43,962	4.4
Grifols		Spain		46,602	4.5	33,407	3.3
Carnival		United Kingdom		45,865	4.4	55,114	5.6
Edenred		France		32,852	3.2	26,615	2.7
Genus		United Kingdom		29,277	2.8	19,261	1.9
Bayer		Germany		19,728	1.9	10,483	1.1
Arrow Global Group		United Kingdom		15,795	1.5	15,460	1.6
Ubisoft Entertainment		France		11,503	1.1	15,217	1.6
Infineon Technologies		Germany		11,462	1.1	3,406	0.3
CGG		France		9,628	0.9	1,766	0.2
Barry Callebaut		Switzerland		9,084	0.9	9,064	0.9
doValue		Italy		6,104	0.6	-	-
Neste		Finland		5,898	0.6	-	-
Gaztransport Et Technigaz		France		5,459	0.5	-	-
Assa Abloy 'B'		Sweden		4,244	0.4	-	-
Ossur HF		Iceland		4,200	0.4	3,204	0.3
Oxford Instruments		United Kingdom		2,834	0.3	-	-
Network International Holdings		United Kingdom		2,316	0.2	-	-
Wolters Kluwer		Netherlands		1,944	0.2	1,935	0.2
ALK-Abello		Denmark		1,903	0.2	1,811	0.2
KWS Saat		Germany		1,048	0.1	3,555	0.4
Gaztransport Et Technigaz		France		5,459	0.5	-	-
Total Investments			1,039,327		100.0

Cross Holdings in other Investment Companies

As at 30 November 2019 and 31 May 2019, none of the Company's assets were invested in the securities of other listed closed-ended investment companies.

Statement of Directors' Responsibilities in Relation to the Financial Statements

Going Concern

The Half Yearly Financial Report has been prepared on a going concern basis. The directors consider that this is the appropriate basis as they have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. In considering this, the directors took into account the Company's investment objective, risk management policies and capital management policies, the diversified portfolio of readily realisable securities which can be used to meet short-term funding commitments and the ability of the Company to meet all of its liabilities and ongoing expenses. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

The Directors continue to adopt the going concern basis of accounting in preparing the financial statements while recognising that the Articles of the Company require a continuation vote at every third AGM.

Directors' Responsibility Statement

We, the directors of European Opportunities Trust PLC, confirm to the best of our knowledge that:

(a)  The condensed set of financial statements have been prepared in accordance with the Accounting Standards Board's statement 'Half Yearly Financial Reports' and give a true and fair view of the assets, liabilities, financial position and profit of the Company for the period ended 30 November 2019;

(b)  The Half-Yearly Financial Report includes a fair review of the information required by Disclosure and Transparency Rule 4.2.7R; and

(c)  The Half-Yearly Financial Report includes a fair review of the information required by Disclosure and Transparency Rule 4.2.8R on related party transactions.

The Half-Yearly Financial Report has not been audited or reviewed by the Company's auditors.

By Order of the Board

Andrew Sutch

Chairman

28 February 2020

Statement of Comprehensive Income  

	Six months ended 30 November 2019 (unaudited)			Six months ended 30 November 2018 (unaudited)
Revenue		Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Gain/(loss) on investments held
at fair value through profit or loss	-	30,299	30,299	-	(34,080)	(34,080)
Currency exchange loss	-	(36)	(36)	-	(119)	(119)
Income	7,278	-	7,728	6,533	-	6,533
Total income/(loss)	7,278	30,263	37,541	6,533	(34,199)	(27,666)
Investment management fee	(3,912)	-	(3,912)	(3,661)	-	(3,661)
Other expenses	(582)	-	(582)	(444)	-	(444)
Total expenses	(4,494)	-	(4,494)	(4,105)	-	(4,105)
Net return/(loss) before finance costs and taxation	2,784	30,263	33,047	2,428	(34,199)	(31,771)
Finance costs	(607)	-	(607)	(594)	-	(594)
Return/(loss) before taxation	2,177	30,263	32,440	1,834	(34,199)	(32,365)
Taxation	(201)	-	(201)	(31)	-	(31)
Net return/(loss) after taxation	1,976	30,263	32,239	1,803	(34,199)	(32,396)
Return/(loss) per ordinary share	1.75p	26.81p	28.56p	1.60p	(30.43)p	(28.83)p

The total column of this statement is the income statement of the Company prepared in accordance with International Financial Reporting Standards (IFRS). The supplementary revenue return and capital return columns are both prepared under guidance produced by the Association of Investment Companies (AIC).

All items in the above statement derive from continuing operations.

The return/(loss) after taxation is also the total comprehensive profit/(loss) for the year.

All income is attributable to the equity holders of European Opportunities Trust PLC.

Statement of Financial Position

	30 November	31 May
	2019	2019
	(unaudited)	(audited)
	£'000	£'000
Non current assets
Investments held at fair value through profit or loss	1,039,327	993,246
Current assets
Other receivables	3,312	5,384
Cash and cash equivalents	4,953	16,526
	8,265	21,910
Total assets	1,047,592	1,015,156
Current liabilities
Other payables	(93,430)	(87,674)
Total assets less current liabilities	954,162	927,482
Capital and reserves
Called up share capital	1,129	1,128
Share premium	204,133	203,485
Special reserve	33,687	33,687
Capital redemption reserve	45	45
Retained earnings	715,168	689,137
Total shareholders' funds	954,162	927,482
Net asset value per ordinary share	845.32p	822.23p

Statement of Changes in Equity

				Capital
For the six months to 30 November 2019 (unaudited)	Share Capital £'000	Share Premium £'000	Special Reserve £'000	Redemption Reserve £'000	Retained Earnings £'000	Total £'000
Balance at 1 June 2019	1,128	203,485	33,687	45	689,137	927,482
Net return for the period	-	-	-	-	32,239	32,239
Ordinary shares issued	1	648	-	-	-	649
Dividends declared	-	-	-	-	(6,208)	(6,208)
Balance at 30 November 2019	1,129	204,133	33,687	45	715,168	954,162
For the six months to	Share	Share	Special	Capital Redemption	Retained
30 November 2018 (unaudited)	Capital £'000	Premium £'000	Reserve £'000	Reserve £'000	Earnings £'000	Total £'000
Balance at 1 June 2019	1,121	197,506	33,687	45	640,836	873,195
Net loss for the period	-	-	-	-	(32,396)	(32,396)
Ordinary shares issued	7	5,979	-	-	-	5,986
Dividends declared	-	-	-	-	(7,332)	(7,332)
Balance at 30 November 2018	1,128	203,485	33,687	45	601,108	839,453

Cash Flow Statement

	Six months ended 30 November 2019	Six months ended 30 November 2018
	(unaudited) £'000	(unaudited) £'000
Cash flows from operating activities
Investment income received (gross)	9,197	7,248
Deposit interest received	1	-
Investment management fee paid	(3,879)	(3,749)
Investment performance fee paid	(7,185)	(13,084)
Other cash expenses	(563)	(482)
Net cash outflow from operating activities before taxation and interest	(2,429)	(10,067)
Interest paid	(609)	(569)
Taxation	(52)	(62)
Net cash outflow from operating activities	(3,090)	(10,698)
Cash flows from investing activities
Purchases of investments	(76,017)	(99,270)
Sales of investments	56,921	94,214
Net cash outflow from investing activities	(19,096)	(5,056)
Cash flows from financing activities
Ordinary shares issued	649	5,986
Drawdown of loan	10,000	-
Net cash inflow from financing activities	10,649	5,986
Decrease in cash	(11,537)	(9,768)
Cash and cash equivalents at start of period	16,526	17,255
Realised loss on foreign currency	(36)	(119)
Cash and cash equivalents at end of period	4,953	7,368

Notes to the Financial Statements

1.  Accounting Policies

The Accounts comprise the unaudited financial results of the Company for the period to 30 November 2019. The functional and reporting currency of the Company is pound sterling because that is the currency of the prime economic environment in which the Company operates.

The Accounts have been prepared in accordance with International Financial Reporting Standards (IFRS), which comprise standards and interpretations approved by the International Accounting Standards Board (IASB) and International Accounting Standards Committee (IASC), as adopted by the European Union (EU). Where presentational guidance set out in the Statement of Recommended Practice (SORP) for Investment Trusts issued by the Association of Investment Companies (AIC) in November 2014 (as amended in February 2018 and again in October 2019) is consistent with the requirements of IFRS, the directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP. These accounts have also been prepared in accordance with the disclosure and Transparency Rules issued by the Financial Conduct Authority (FCA).

The Board continues to adopt the going concern basis in the preparation of the financial statements.

2.  Gains/(losses) on investments

	Six months to	Six months to
	30 November 2019	30 November 2018
	£'000	£'000
Net gains realised on sale of investments	19,691	40,531
Movement in unrealised gains/(losses)	10,608	(74,611)
Gains/(losses) on investments	30,299	(34,080)

3.  Return/(loss) per ordinary share

	Six months to	Six months to
	30 November 2019	30 November 2018
	£'000	£'000
Net revenue profit	1,976	1,803
Net capital profit/(loss)	30,263	(34,199)
Net total profit/(loss)	32,239	(32,396)
Weighted average number of ordinary
shares in issue during the period	112,865,905	112,397,462
Revenue return per ordinary share (p)	1.75	1.60
Capital return/(loss) per ordinary share (p)	26.81	(30.43)
Total return/(loss) per ordinary share (p)	28.56	(28.83)

4.  Net Asset Value per Ordinary share

The NAV per ordinary share is based on the net assets attributable to the ordinary shareholders of £954,162,000 (31 May 2019: £927,482,000) and on 112,875,331 (31 May 2019: 112,800,331) ordinary shares, being the number of ordinary shares in issue at the period end.

5.  Transactions with the manager and related parties

With effect from midnight on 14 November 2019 the Company appointed FundRock Management Company SA ('FundRock') as its Alternative Investment Fund Manager ('AIFM') in place of Jupiter Unit Trust Managers Limited ('JUTM'). Devon Equity Management Limited ('Devon') was appointed as delegated Investment Manager to FundRock in substitution for the Company's former investment manager, Jupiter Asset Management Limited.

JUTM was previously contracted to provide investment management services to the Company for quarterly base management fee of 0.1875% (equivalent to 0.75% per annum) of the total assets of the Company (including drawn down borrowings under the Company's loan facilities) plus an annual performance fee equal to 15% of the outperformance of the then benchmark index (subject to a high water mark and an annual cap). Under the early termination arrangements agreed with Jupiter, the base management fee will continue to accrue and be payable to Jupiter after termination but only up until 31 May 2020. It has also been agreed that Jupiter will waive any entitlement to a performance fee from the termination date. No performance fee was accrued in relation to the period 1 June 2019 to 30 November 2019.

The investment management fee payable to JUTM for the period 1 June 2019 to 30 November 2019 was £3,912,000 (30 November 2018: £3,661,000) with £1,817,000 (30 November 2018: £1,687,000) outstanding at period end.

In the period from 15 November 2019 up to and including 31 May 2020, in addition to the fee payable to Jupiter, the Company has agreed to pay a fee of 0.03% per annum of net assets to FundRock, as AIFM, and also a management fee of 0.10% per annum of net assets to Devon.

The fee payable to Devon for the period 15 November 2019 to 30 November 2019 was £39,105 with the full amount outstanding at period end. The fee payable to FundRock for the period 15 November 2019 to 30 November 2019 was £11,731 with the full amount outstanding at period end.

Under the new management arrangements, with effect from 1 June 2020, Devon and FundRock will be paid aggregate management fees of 0.90% per annum of net assets (i.e. excluding drawn down borrowings under the Company's loan facilities) up to £1 billion and 0.80% per annum on any net assets over this amount. No performance fee will be payable to either Devon or FundRock.

Availability of Half Yearly Financial Report

The Half Yearly Financial Report will shortly be available for download from the Company's website www.europeanopportunitiestrust.com

By order of the Board

Devon Equity Management Limited

123 Victoria Street

London SW1E 6DE

28 February 2020

For further information, please contact:

Devon Equity Management Limited

Company Secretaries to European Opportunities Trust PLC

Richard Pavry

020 3985 0445

[e-mail]    

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