Annual Report and Financial Statements 31 August 2024
| As at 31 August 2024 | As at 31 August 2023 | ||
| Net assets (£’000)1 | 640,300 | 565,710 | |
| Net asset value per ordinary share (pence) | 644.60 | 560.11 | |
| Ordinary share price (mid-market) (pence) | 601.00 | 527.00 | |
| Discount to cum income net asset value2 | 6.8% | 5.9% | |
| FTSE World Europe ex UK Index | 2219.24 | 1916.71 | |
| Performance (with dividends reinvested) | For the year ended 31 August 2024 | For the year ended 31 August 2023 | |
| Net asset value per share2 | 16.4% | 19.2% | |
| Ordinary share price2 | 15.5% | 17.1% | |
| FTSE World Europe ex UK Index | 15.8% | 15.8% | |
| Performance (with dividends reinvested) | For the period since inception4 to 31 August 2024 | For the period since inception4 to 31 August 2023 | |
| Net asset value per share2 | 797.6% | 671.0% | |
| Ordinary share price2 | 747.3% | 633.9% | |
| FTSE World Europe ex UK Index | 461.2% | 384.7% | |
| Revenue | For the year ended 31 August 2024 | For the year ended 31 August 2023 | Change % |
| Net profit on ordinary activities after taxation (£’000) | 7,379 | 6,920 | +6.6 |
| Revenue earnings per ordinary share (pence)3 | 7.35 | 6.85 | +7.3 |
| Dividends (pence) | |||
| Interim dividend | 1.75 | 1.75 | – |
| Final dividend | 5.25 | 5.00 | +5.0 |
| Total dividends payable/paid | 7.00 | 6.75 | +3.7 |
Performance record
1 The change in net assets reflects payments for shares repurchased into treasury, portfolio movements and dividends paid.
2 Alternative Performance Measures, see Glossary in the Annual Report and Financial Statements.
3 Further details are given in the Glossary in the Annual Report and Financial Statements.
4 20 September 2004.
Chairman’s Statement
Overview
The European economy entered 2024 on a weaker footing than previously expected after narrowly avoiding a technical recession in the second half of 2023. This was against a background of weak consumer demand. The European Central Bank maintained a tight monetary policy despite improving inflation, and adopted a cautious stance in light of persistent geopolitical instability and underlying inflationary risks. Despite the above, European equities delivered strong positive returns in the first half of 2024, as inflation figures continued their downward trend and in the expectation of further interest rate cuts by central banks.
Performance
Against this background, I am pleased to report that the portfolio performed well during the year, outperforming its reference index. The Company’s net asset value per share (NAV) returned +16.4% and the share price +15.5%. In comparison, the FTSE World Europe ex UK Index returned +15.8% over the same period (all percentages calculated in Sterling terms with dividends reinvested).
More details on this and the significant contributors to and detractors from performance during the year are given in the Investment Manager’s Report below. Since the financial year end and up to close of business on 1 November 2024, the Company’s NAV has decreased by 7.0% compared with a fall in the FTSE World Europe ex UK Index of 3.4% over the same period.
Outlook
There are uncertainties in the outlook based on events such as the recent elections both in the US and Europe, inflation and interest rates, as well as geo-politics. However, a combination of interest rates starting to trend downwards (the ECB has indicated a clear direction after easing policy twice since June) and signs of moderate but improving economic momentum, give reasons for cautious optimism for the European economy and its stock markets. European stocks are attractively valued both relative to their history and global markets, especially so in comparison to the US market. This could bring positive returns, helped by the macroeconomic environment, the potential for improvement in corporate earnings and the increased use of buybacks by European management teams returning capital to shareholders.