Interim Results

European Assets Trust NV
25 July 2003

To:          RNS

From:        European Assets Trust NV

Date:        25 July 2003


UNAUDITED INTERIM RESULTS - SIX MONTHS TO 30 JUNE 2003

  • The Company's sterling net asset value total return (capital performance
    with dividends added back) rose over the six months by 12.5 per cent (4.0
    per cent in Euro terms)

  • Net asset value total return (capital performance with dividends added
    back) of 31.6 per cent since December 1997 when the portfolio was refocused,
    compared with 9.7 per cent for the benchmark index

  • Dividends continue to be funded from capital reserves

Performance

The sustained recovery in European stock prices that characterised the second
quarter of 2003 was scarcely foreseeable even in mid-March. The long-simmering
stand-off with Iraq had finally boiled over into an edgy war, alienating the
majority of European governments in the process. Economic statistics, clouded by
the uncertainty over developments in the Middle East, gave no hint of imminent
recovery. Consumer spending was showing signs of faltering while companies'
capital investment intentions remained muted. At least reported corporate
earnings for the 2002 financial year were broadly satisfactory but only because
expectations had been repeatedly revised downwards earlier last year.


The sour mood lifted abruptly at the end of March. After some initial set-backs,
the prosecution of the war in Iraq went according to the 'game' plan and the
regime collapsed swiftly giving initial impetus to stockmarkets. Post-war
optimism was not restricted to market observers, companies too began to sound
more confident. Outside Europe, forward-looking economic data such as new order
flows and capital expenditure intentions showed an improvement on previous
depressed levels. Meanwhile monetary authorities in the US and in Europe
endeavoured to sustain consumer spending with further generous reductions in
interest rates. Such was the extent of the recovery in share prices towards the
end of the review period that the HSBC Smaller Europe (ex UK) Index was able to
post a very respectable 13.0% increase in Euro total return terms over the first
six months of 2003.


A notable feature of the period covered by this report was the resurgence in the
value of the Euro against almost all major currencies and in particular the US
dollar. There were two main reasons for this development. Firstly, interest
rates in the US currently stand at only half the level prevailing in 'Euroland'.
Secondly, serious concerns are being raised at the enormity of the twin current
account and budget deficits in the US. With the Euro also strengthening
significantly against sterling, the net asset value of European Assets Trust
registered a healthy 12.5% increase in sterling total return terms in the six
months to end June 2003. Over this same period the HSBC Smaller Europe (ex UK)
Index returned a heady 20.6% to sterling-based investors. The disproportionate
rise in the Index was driven principally by a sharp rebound in the prices of
lower quality, highly cyclical companies. These types of stocks are
intentionally under-represented in your Company's portfolio of investments. In
this regard, it is encouraging to report that the Company retains its leading
performer status in the AITC European Smaller Companies Sector over the past
three year period of poor stockmarket returns.


Outlook

European markets have been rising on the coat-tails of the US. In contrast to
the US, the UK and even Japan, economic statistics in continental Europe -
whether forward or backward looking - continue to disappoint. Germany is
technically in recession and growth is slowing alarmingly in other key European
countries such as France and Italy. The rise in the value of the Euro has the
advantage of reducing the risk of inflation but this benefit is outweighed by
the negative impact on exports. Forthcoming earnings expectations for leading
European companies remain unrealistically high and the large capitalisation
indices are consequently overvalued.


Well-run smaller companies possess the ability to grow sales and profits even in
the most trying of business conditions. This has allowed the small
capitalisation segment of the market once again to record a strong measure of
outperformance in the first six months of 2003. However, the valuation discount
of smaller companies to the broader market has all but disappeared leaving us
cautious on the outlook for our asset class at least for the summer months.
Gearing, which reached a peak of around 8% of asset value in March 2003, was
removed entirely during May. The facility, up to 20% of assets, remains
available for investment in stocks which have been overlooked in the markets'
indiscriminate rise. The Company's portfolio is firmly skewed towards companies
with a strong and growing business franchise and with well-structured balance
sheets serviced by sustainable cashflows. It is precisely these companies which
will retain the pricing power so vital to generate turnover and profits growth
in a low inflation environment.


ISIS Asset Management plc

Investment Managers

Balance Sheet                                                                  30 June                       31 December
                                                                                  2003                              2002
                                                         Note                 Euro 000                          Euro 000

Investments

Securities                                               5                     109,541                           114,127
Net current assets                                                               2,444                             6,489

Total assets less current liabilities                                          111,985                           120,616

Loan                                                                                 -                          (10,000)

Equity shareholders funds                                                      111,985                           110,616

Net asset value per share -                              6                   Euro 6.09                         Euro 6.03

Expressed in sterling                                                             422p                              392p

based on 18,375,202 shares in issue (31 December 2002 - 18,350,056)

Revenue Account - six months to                                                30 June             30 June
                                                                                  2003                2002
                                                          Note                Euro 000            Euro 000

Income

Securities                                                                       1,461               1,588
Deposit Interest                                                                   106                  40
Securities lending                                                                  75                  92

Total Income                                              1                      1,642               1,720

Expenses and interest
Administration expenses                                   4                      (223)               (318)
Interest                                                                         (196)               (109)

Net Income                                                2                      1,223               1,293

Absorbed by dividends                                     3                      4,436               7,820

Earnings per share                                        Euro                    0.07                0.07
Dividends per share                                       Euro                    0.25                0.45


Statement of Cash Flows - six months to


                                                                                30 June                  30 June
                                                                                   2003                     2002
                                                                               Euro 000                 Euro 000


Cash flow from investment activities

Interest, dividends and other income                                              1,810                    1,390

Purchases of shares                                                            (19,906)                 (17,562)

Sales of shares                                                                  29,715                   22,872

Administrative expenses and interest charges                                    (1,132)                  (1,705)

                                                                                 10,487                    4,995

Cash flows from financial activities

Dividends and tax paid                                                          (4,436)                 (11,719)

Loan facility                                                                  (10,000)                        -
                                                                            -----------              -----------
                                                                               (14,436)                 (11,719)

Cash at bank

Net decrease for the period                                                     (3,949)                  (6,724)

Balance as at 31 December                                                        10,598                    2,275

Balance as at 30 June                                                             6,649                  (4,449)

Notes

    1. Income is stated after deduction of irrecoverable withholding taxes of Euro 130,257 (2002 - Euro
       224,020)


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


    3. Monthly dividends of Euro 0.02 per share will be paid to shareholders from July until December
       2003. These dividends are funded from capital reserves.


    4. The expenses ratio over the first half of the financial year which, within the scope of the
       Investment Institutions Supervision Act (Wet toezicht belegginginstellingen) should be reported by
       investment institutions, amounts to 2.12 per cent annualised (first half year 2002 - 1.65 per cent
       annualised).

    5. The securities are valued at market price.

    6. 25,146 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 2003 are consistent
       with those underlying the 2002 annual accounts.


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


                      This information is provided by RNS
            The company news service from the London Stock Exchange