European Assets UK migration almost complete – European Assets generated an NAV total return for the year ended 31 December 2018 of -15.4%. This compares to the total return of its benchmark the EMIX Smaller European Companies (ex UK) Index of -12.7%. The discount was 9.5% at the year end in comparison to a small premium of 0.7% as at 31 December 2017. That meant that the share price return for the year was -23.9%.
[At a time when many Brits seem to be rediscovering their European ancestry in search of an alternative nationality, European Assets is coming the other way] – EAT NV has been a Dutch company since 1931 but, on 27 November 2018, EAT NV announced it would move from the Netherlands to the United Kingdom and this was approved by shareholders on 9 January. Application has been made for the EAT Plc shares to be admitted to the premium segment of the Official List and to trading on the premium segment of the Main Market of the London Stock Exchange, with expected admission to trading at 8.00 a.m. on 18 March 2019. EAT Plc will not be listed in the Netherlands.
2019’s dividends will be paid in four installments on 31 January, 15 March, 31 July and 31 October 2019.
Extract from the manager’s report
Perhaps the most disappointing aspect of last year’s performance, sector wise, was a negative contribution from healthcare. We like a lot of the characteristics of healthcare in that it generally isn’t cyclically sensitive, and the profits can be protected from competition by high barriers to entry. We would also expect our holdings in the sector to hold up well during more challenging market conditions. This was not the case last year. Two of our positions, Gerresheimer, the German pharmaceutical packaging company, and Diasorin, the Italian immunodiagnostics testing company, underperformed the benchmark. Gerresheimer suffered following a period of soft organic growth driven by de-stocking from their end clients in response to uncertainty relating to the US government’s intervention in the sector. We believe that organic growth should improve this year and we therefore continue to hold the position. There was not any company specific news for Diasorin, they did however get caught in the selloff in Italian stocks in response to the country’s political ructions with the European Union. We continue to like the stock.
Turning to more positive contributors, our outstanding performer for the year was Tomra, the Norwegian recycling company. They have a dominant market share in reverse vending machines, which aid the recycling of plastic bottles. Plastic pollution is attracting increasing attention and legislators are beginning to address the challenge. Recycling rates where countries have implemented reverse vending systems are high and this has encouraged the Scottish and UK governments to announce implementation of the system. With still relatively few countries following this approach, the expectation is that the addressable market is increasing and the shares performed well on the back of this.
Other performers of note were Coor Service Management, the Swedish provider of integrated facilities management, who performed well following stronger growth pointing to further evidence that their integrated approach was taking share. IMCD the specialist chemical distributer also performed well through a combination of strong organic growth and sensible acquisitions that improved their market position further. Our two regional banks, Denmark’s Ringkjoebing Landbobank, and Norway’s Sparebank also did well. The former continued to show good loan growth whilst also announcing an acquisition of a small bank in an adjacent region, while Sparebank’s level of profitability continued to improve as loan losses were reported better than expected.
EAT : European Assets UK migration almost complete
