Fidelity European Trust Plc - Annual Financial Report
PR Newswire
LONDON, United Kingdom, March 18
Fidelity European TRUST PLC
Final Results for the year ended 31 December 2025
Financial Highlights:
- The Board of Fidelity European Trust PLC (the "Company") recommends a final dividend of 6.00 pence which together with the interim dividend payment of 3.90 pence per share (totalling 9.90 pence) represents an increase of 8.8% over the total dividend of 9.10 pence paid in the prior year.
- During the year ended 31 December 2025, the Company reported a net asset value (NAV) total return of +16.2% and a share price total return of +21.1%.
- The Company's Benchmark, the FTSE World Europe ex UK Index, rose by 27.9% over the same period.
- Positive contributors to performance included financial holdings and gearing.
- The Portfolio Managers believe equities remain attractively valued relative to US peers.
Contacts
For further information, please contact:
Smita Amin
Company Secretary
01737 836347
FIL Investments International
Chairman's Statement
This is my first Annual Report for the Company, having joined the Board of Directors in November 2024 and taken over as Chairman from Vivian Bazalgette at the last AGM in May 2025. On behalf of the Board and our shareholders, I would like to place on record our thanks to Vivian, who became Chairman following the 2016 AGM, for his strong leadership and invaluable contribution to the Company's strategy which has helped sustain its successful returns to shareholders over the long-term.
2025 proved to be another busy year, not just on the world political stage and in European financial markets, but also for your Company given the combination with Henderson European Trust plc ("HET"), which completed in late September. The considerable benefits of the combination are set out below, but first I would like to extend a very warm welcome to former HET shareholders, who I hope will remain happy shareholders of this Company for many years to come.
While European stock market performance in 2024 was muted as a result of geopolitical and macroeconomic concerns, 2025 saw strong returns despite some of the previous year's fears - notably, higher US trade tariffs - becoming reality. In a more fractious global environment, Europe turned to self-help measures, such as the European Central Bank (ECB) interest rate cuts and wide-ranging fiscal stimulus in Germany, leading to an appreciation in the Euro and a tailwind for more cyclically sensitive stocks. As discussed below and in the Portfolio Managers' Review that follows, the nature of the Company's investment philosophy is to seek companies based on four key criteria: attractive valuations, disciplined use of capital; cash generation; and strong balance sheets to ensure the ability to grow dividends. This means that periods characterised by sharp, momentum-led or cyclical rallies, such as those experienced in 2025, can act as a headwind for a portfolio that prioritises sustainable cash generation and downside resilience.
Performance
For the year ended 31 December 2025, your Company delivered a net asset value ("NAV") total return of 16.2% in sterling, which, while a good outcome in absolute terms, was significantly behind the 27.9% total return from the Benchmark Index, the FTSE World Europe ex UK Index in sterling terms. With the discount to NAV having narrowed appreciably during the year, the share price total return was higher, at 21.1%.
Sam and Marcel give a detailed picture of the contributors to and detractors from performance in their Portfolio Managers' Review below. In brief, however, some of the factors underlying the underperformance against the Benchmark Index include holding Danish pharmaceutical firm Novo Nordisk through a period of poor news flow; being underweight in defence stocks, which they see as more than pricing in increased European defence spending; and preferring France to more highly favoured Germany, albeit with a skew towards global companies that are less exposed to the French domestic economy. However, perhaps more important than all of these has been investor enthusiasm for a narrow number of stocks that do not necessarily share the combination of attractive starting valuations and long-term capital and income growth potential that your Portfolio Managers favour.
Over the longer-term, performance remains consistent, averaging 10-13% per annum for both the NAV and share price total return over three, five and 10 years, since Sam's appointment in 2011 and since the Company's launch in 1991. We have also matched or outperformed the Benchmark Index return over 10 years, as well as beating the average return of the AIC Europe peer group over three, five and 10 years (and in NAV terms over one year).
Combination with Henderson European Trust plc
Following the resignation of HET's portfolio managers in January 2025 and consultation with shareholders, the Board of HET (which itself was formed through the merger of Henderson EuroTrust plc ("HNE") and Henderson European Focus Trust plc ("HEFT") in 2024), undertook a comprehensive review of its options and a competitive pitch process, leading to the recommendation in June of a combination with Fidelity European Trust PLC ("FEV"). Through combining the two largest investment companies in the Association of Investment Companies' ("AIC") Europe sector, the proposal sought to create a market-leading European equity investment enjoying the benefits of scale and enhanced liquidity with continuity of investment style, given both trusts' focus on quality companies at attractive valuations. HET shareholders were offered the choice of new FEV shares or a cash exit of up to 33%, and it was pleasing to note that the cash option was undersubscribed, with less than 30% electing to take the cash element. The deal completed on 29 September 2025, resulting in the issuance of 111,902,155 shares in the Company.
The proposals for the combination were covered in detail in the Half Year Report for the six months ended 30 June 2025, but now that it has taken place, it is worth revisiting some of the benefits.
• Increased scale:Your company now has net assets of more than £2bn, placing it in the top 10 by assets of all equity investment companies. While this may seem to have limited relevance for individual shareholders, consolidation in the wealth management market - historically a key source of demand for investment trust shares - means investment companies now need significant scale to make it on to centralised buy lists, given the large sums at work and the need to maintain liquidity, which can be challenging for investors who account for a significant proportion of a company's share register. As one of the larger companies in the FTSE 250 Index, we can also enjoy greater demand from index-tracking funds.
• Lower management fees and ongoing charges:Fidelity agreed, with effect from completion of the HET deal, a reduction in its tiered annual management fee to: 0.70% on net assets up to £400m, 0.65% on net assets from £400m to £1.4bn and 0.55% on net assets in excess of £1.4bn. This revised fee has resulted in a blended annual management fee rate of 0.62% based on net assets as at 31 December 2025. The lower management fee, together with economies of scale (meaning fixed costs are spread over a larger base), is feeding into a reduced ongoing charges ratio ("OCR"). For the year under review, the OCR was 0.73% (2024: 0.76%) and reflecting the revised fee arrangement together with the economies of scale the OCR going forward is 0.68%.
• Enhanced discount management policy:The Board proposed an enhancement to the Company's discount management policy with the aim of maintaining any share price discount to NAV in mid-single digits (previously below 10%) in normal market conditions. The steps taken to manage the discount are discussed in a separate section below.
• Governance benefits:As part of the combination, we welcomed two new Directors to the Board: Vicky Hastings, formerly chairman of HET and its predecessor HEFT, and Rutger Koopmans, who was a director of HNE before joining the HET board. As well as providing continuity for former HET (as well as HEFT and HNE) shareholders, Vicky, with her strong investment management background, and Rutger, a Dutch national with a wealth of experience as a financial professional, are strong additions to the Company's Board.
Dividends
Sustainable and growing dividends are a key feature your Portfolio Managers seek when analysing potential holdings for your Company's portfolio. The Board has a policy whereby it seeks to deliver a progressive dividend in normal circumstances, paid twice yearly in order to smooth dividend payments for the reporting year. We understand that dividends are also important to our shareholders, which is why your Company has increased its annual payout for the past 14 years, placing it among the AIC's 'next generation of dividend heroes' (investment companies with more than 10 but fewer than 20 consecutive years of annual dividend growth).
In the year under review, the Company's revenue return was 11.30 pence per ordinary share (2024: 10.41 pence) and an interim dividend of 3.90 pence per share was paid on 23 October 2025 (an increase of 8.3% on the 3.60 pence paid for the same period in 2024). The Board is pleased to recommend a final dividend of 6.00 pence for the year ended 31 December 2025 (2024: 5.50 pence), bringing the total dividend for the year to 9.90 pence (2024: 9.10 pence), an increase of 8.8% and a 15th consecutive annual dividend increase.
Subject to approval by shareholders at the Annual General Meeting ("AGM") on 12 May 2026, the final dividend will be paid on 19 May 2026 to shareholders on the register at close of business on 27 March 2026 (ex-dividend date 26 March 2026). Shareholders may choose to reinvest their dividends for additional shares in the Company.
Discount Management and Treasury Shares
The success of the enhanced discount management policy (see Combination with HET above) can be seen in the narrowing of the discount to NAV during the year, from 8.0% at the beginning of the year to 4.1% as at 31 December 2025. Having previously sought to maintain the discount in single figures, the policy now is to maintain a maximum discount in the mid-single digits in normal market conditions. For the majority of 2025, even before the proposed combination with HET, the discount to NAV was in mid or low single digits, with a low of 0.2% in November, having seen a high of 9.9% at the start of the year.
During the year, a total of 9,286,723 shares were repurchased into Treasury (2024: nil), equal to 2.2% of the shares in issue at the beginning of the year.
To assist in managing the discount, the Board has shareholder approval to hold ordinary shares repurchased by the Company in Treasury, rather than cancelling them. Shares in Treasury (which numbered 17,004,110 at the year end) are then available to be reissued at NAV per ordinary share or at a premium to NAV per ordinary share, facilitating the management of and enhancing liquidity in the Company's shares. As buying back shares at a discount to NAV is accretive, the Board is seeking shareholder approval to renew this authority at the AGM on 12 May 2026.
Gearing
The Company continues to gear mainly through the use of derivative instruments, primarily contracts for difference (CFDs). However, as part of the combination with HET, the Company acquired a small amount of fixed gearing €35m at par value in the form of two very long-term private loan notes at a particularly attractive blended interest rate of only 1.57%. Having this element of structural gearing provides the Company with a degree of diversification in its counterparty risk, as well as potentially allowing Sam and Marcel to take a longer-term view on some of their geared positions.
The Portfolio Managers have flexibility to gear within the parameters set by the Board, the rationale being that over the longer-term carefully monitored levels of gearing will enhance returns from a rising market. The ability to do this is a key advantage of the investment company structure. As at 31 December 2025, the Company's gross gearing was 9.7% (2024: 11.3%), with net gearing also at 9.7% (2024: 11.3%). In the reporting year, gearing was maintained within the limits set by the Board and made a positive contribution to NAV performance, as can be seen from the Attribution Analysis table in the Annual Report.
The Board monitors the level of gearing and the use of derivative instruments carefully and has defined a risk control framework for this purpose which is reviewed at each Board meeting. It should be emphasised that all gearing is subject to the Portfolio Managers' confidence in identifying attractive investment opportunities, and to their remaining attractive.
Due diligence trip to Norway
Towards the end of the reporting year, the Board had the opportunity to visit Oslo with your Portfolio Managers, and we were privileged to be invited to observe a meeting with the senior management of DNB Bank, one of Norway's leading financial institutions. One of Fidelity's great strengths is the depth of its analyst team, with 38 analysts devoted to the European stock market. It was fascinating to see one of the analyst team interacting with Sam, Marcel and DNB, and gave us great confidence both in the calibre of the team and the respect they command in the market.
Board of Directors
As mentioned above, I joined the Company's Board in November 2024 and assumed the role of Chairman on the retirement of Vivian Bazalgette at the AGM in May 2025. Also new to the Board are Vicky Hastings and Rutger Koopmans, who joined as part of the combination with HET. Whilst Rutger has already served nine years, having been a director of HNE from 2016 until it merged with HEFT to become HET in 2024, the Board feels that it is important to extend his tenure to give him a full year of representing HET (and HNE) shareholders and the intention therefore is that Rutger will retire at the AGM in May 2027.
Paul Yates, Senior Independent Director, has served on your Company's Board since 2017, and will retire at the AGM on 12 May 2026. Paul has considerable experience in investment management and investment trusts, both valuable assets during his tenure and his contribution to the Board will be greatly missed. In respect of skills that we will lose when Paul retires, Vicky's appointment will give us continuity in this regard with her strong background in investment management.
Fleur Meijs, Chair of the Audit Committee, will have completed nine years on the Board in September 2026 and will therefore not seek re-election at the AGM in May 2027. A recruitment process to appoint her replacement will be conducted later this year.
Following the AGM at which Paul retires, the Board will reduce to six Directors and then become five following the 2027 AGM when Rutger and Fleur retire.
Annual General Meeting
The Company's AGM will be held at 11.00 am on 12 May 2026 at 4 Cannon Street EC4M 5AB and virtually via the online Lumi AGM meeting platform.
The AGM provides a great opportunity for shareholders to hear first-hand from your Portfolio Managers and to meet the Company's Directors, and of course, for us to meet you. We hope to see as many of you as possible on the day. Full details of the AGM are below.
Outlook
After a year of strong performance, with markets having risen significantly, many investors in Europe are looking for further progress supported by potential productivity gains, interest rate cuts, continued fiscal stimulus and a belief that 'the worst is over' in relation to US trade tariffs. This has led to a meaningful improvement in corporate earnings expectations from the flat outlook anticipated for 2025. While the path ahead may not be linear in these uncertain times, our team believe the portfolio is well positioned through its focus on high-quality, cash-generative businesses with strong balance sheets.
Davina Walter
Chairman
17 March 2026
ANNUAL GENERAL MEETING - TUESDAY, 12 MAY 2026 AT 11.00 AM
The AGM of the Company will be held at 11.00 am on Tuesday, 12 May 2026at 4 Cannon Street, London EC4M 5AB (nearest tube stations are St Paul's or Mansion House) and virtually via the online Lumi AGM meeting platform. Full details of the meeting are given in the Notice of Meeting in the Annual Report .
For those shareholders who are unable to attend in person, we will live-stream the formal business and presentations of the meeting online.
Sam Morse and Marcel Stötzel, the Portfolio Managers, will be making a presentation to shareholders highlighting the achievements and challenges of the year past and the prospects for the year to come. They and the Board will be very happy to answer any questions that shareholders may have. Copies of their presentation can be requested by email at investmenttrusts@fil.comor in writing to the Secretary at FIL Investments International, Beech Gate, Millfield Lane, Lower Kingswood, Tadworth, Surrey KT20 6RP.
Properly registered shareholders joining the AGM virtually will be able to vote on the proposed resolutions. See Note 9 to the Notes to the Notice of Meeting in the Annual Report for details on how to vote virtually. Investors viewing the AGM online will be able to submit live written questions to the Board and the Portfolio Managers and we will answer as many of these as possible at an appropriate juncture during the meeting.
Further information and links to the Lumi platform may be found in Note 9 to the Notes to the Notice of Meeting in the Annual Report . On the day of the AGM, in order to join electronically and ask questions via the Lumi platform, shareholders will need to connect to the website https://web.lumiagm.com.
Please note that investors on platforms, such as Fidelity Personal Investing, Hargreaves Lansdown, Interactive Investor or AJ Bell Youinvest, will need to request attendance at the AGM in accordance with the policies of your chosen platform. They may request that you submit electronic votes in advance of the meeting. If you are unable to obtain a unique IVC and PIN from your nominee or platform, we will also welcome online participation as a guest. Once you have accessed https://meetings.lumiconnect.comfrom your web browser on a tablet or computer, you will need to enter the Lumi Meeting ID which is 100-968-191-255. You should then select the 'Guest Access' option before entering your name and who you are representing, if applicable. This will allow you to view the meeting and ask questions, but you will not be able to vote.
Further information on how to vote across the most common investment platforms is available at the following link: https://www.theaic.co.uk/how-to-vote-your-shares
Portfolio Managers' Review
Question
How has the Company performed over the year to 31 December 2025, both in absolute terms and relative to its Benchmark Index?
Answer
The Company delivered a positive double-digit return in absolute terms in 2025, but underperformed its Benchmark Index, the FTSE World Europe ex UK Index. Over the year to 31 December 2025, the net asset value ("NAV") rose 16.2%. Thanks to a narrowing of the discount, the total return to shareholders was 21.1% but this still lagged the Benchmark Index which climbed by 27.9% on a total return basis.
This outcome partly reflects the Company's investment approach, which means it can lag in strong, fast-moving 'risk-on' markets like we saw in 2025 following Germany's fiscal stimulus announcement. Periods characterised by sharp, momentum-led or cyclical rallies, can act as a headwind for our portfolio that prioritises sustainable cash generation and downside resilience.
Question
What were the principal drivers of performance in 2025, and to what extent was this driven by stock selection versus geographic or sector allocation?
Answer
After sustained outflows for the asset class between 2022 and 2024, European equity funds recorded renewed inflows in 2025, as investors diversified away from a US market which had become highly concentrated on a number of expensive technology stocks. A weaker US dollar further enhanced the appeal of non-US assets.
The Company's strategy is to be 'benchmark-aware', with relatively tight controls around sector exposures. As a result, we usually expect performance to be predominantly driven by stock selection rather than sector or geographic allocation, with relative returns largely determined by company-specific outcomes. In 2025, however, performance was influenced to some extent by the prevailing market environment, which favoured cyclical and value-oriented stocks following the announcement of fiscal stimulus in Germany. Unfortunately, the relative contribution from stock selection was also negative and so did not offset the stylistic headwinds. The Company's gearing contributed positively to absolute returns in a strong market (see the Attribution Analysis table in the Annual Report).
European equity markets were characterised by sharp, value-led and cyclical rallies, with areas such as defence, peripheral banks and German cyclicals leading the market. The Company's emphasis on quality businesses, sustainable dividend growth and downside resilience meant that it was underweight in many of these segments, and this acted as a drag on relative performance.
Limited exposure to defence stocks such as Rheinmetall detracted following announcements of increased European defence spending. In addition, holdings including health care company Novo Nordisk and chemicals producer Symrise, detracted on company-specific developments, while software businesses SAP and Dassault Systèmes came under pressure amid weaker software spending and uncertainty around the competitive implications of AI adoption. Despite these near-term headwinds, we believe the long-term fundamentals of most of these companies remain intact and valuations are now attractive relative to their prospects.
Stocks in the financials' sector, including Bankinter, ABN AMRO Bank, KBC Group, and Intesa Sanpaolo, were the top contributors to performance as they delivered strong earnings and re-rated amid rising European bond yields and German fiscal spending plans. However, not holding peripheral banks, including UniCredit, Banco Santander and BBVA, proved costly as were our investments in private equity holdings Partners Group Holding and 3i Group.
Below are the top five stock contributors and detractors to performance in the Company's reporting year.
Top 5 Stock Contributors (on a relative basis) | % |
Bankinter | +1.3 |
ABN AMRO Bank | +1.2 |
KBC Group | +0.7 |
Intesa Sanpaolo | +0.7 |
ASML | +0.6 |
========= |
Top 5 Stock Detractors (on a relative basis) | % | ||
Novo Nordisk | -1.7 | ||
Symrise | -1.3 | ||
Partners Group Holding | -1.1 | ||
SAP | -1.0 | ||
Dassault Systèmes | -1.0 | ||
========= | |||
Question
How was the combination with Henderson European Trust plc? What have been the key benefits for shareholders of the enlarged Company, and how smoothly was the integration of the portfolios and investment processes executed?
Answer
The combination with Henderson European Trust plc ("HET"), which became effective on 29 September 2025, followed a comprehensive and competitive review process initiated after the resignation of HET's co-portfolio managers earlier in the year. Supported by its advisers, the HET Board undertook a formal request-for-proposal process involving a wide range of potential managers and consolidation partners. Fidelity's proposal was ultimately selected as the option best positioned to deliver long-term value for shareholders, reflecting the strength of your Company's investment capabilities and strategic positioning.
Following the combination, Fidelity European Trust PLC has consolidated its position as the largest European equity investment trust, with a market capitalisation now exceeding £2 billion. We were delighted to have been chosen after a competitive tender process, not least for out bottom-up investment approach, ensuring continuity and stability for both existing and new shareholders.
The enlarged scale of the Company delivers clear shareholder benefits. A new tiered management fee structure and improved operating leverage have resulted in a material reduction in the ongoing charges ratio. Fidelity also made a significant contribution to the costs of the transaction, equivalent to a waiver of twelve months of management fees on the assets rolling over from HET, which is expected to fully offset the Company's direct transaction costs. The Board has also enhanced the Company's discount management policy, with the aim of maintaining the discount in mid-single digits in normal market conditions.
The integration of the portfolios and investment processes was executed smoothly and in an orderly manner, with assets aligned to the Company's established investment framework and risk controls. The enlarged Company continues to operate with its existing capital structure, including its approach to gearing and loan notes, which remain subject to Board oversight and are described in the Financial Statements. The aggregate exposure of the Company to equities, including from borrowing and the use of derivatives, but excluding hedging, will not exceed 130% of total net assets (a gearing level of 30%). As part of the combination with HET, the Company now has unsecured borrowings of 1.53% Series A senior notes 2047 and 1.66% Series B senior notes 2052 of €25m and €10m, respectively.
Question
For new shareholders, could you outline your bottom-up stock selection approach, and how this process contributed to performance over the past year?
Answer
We employ a bottom-up, fundamentally driven investment approach. The focus is on identifying high-quality European companies with durable business models, strong balance sheets and the ability to generate sustainable, and growing, cash flows and dividends over time.
As active Portfolio Managers, we seek attractively valued companies that exhibit good long-term structural growth prospects and can grow dividends sustainably over the next three to five years. We look for four key characteristics: positive fundamentals (exemplified by structural growth prospects, a proven business model, and disciplined use of capital); the ability to generate cash; a strong balance sheet; and a compelling valuation.
We invest cautiously, looking to manage the strategy's downside risk and build a balanced, fully invested portfolio that is benchmark aware. Turnover is low, reflecting the long-term approach. Risk is managed through diversification and disciplined position sizing.
This approach contributed to performance during the year through bank holdings such as Bankinter, ABN AMRO Bank, KBC Group, and Intesa Sanpaolo, which delivered strong earnings. French industrial group Legrand also performed well as it saw accelerated growth in its datacentre business, ongoing strength in underlying organic trends and positive contributions from recent acquisitions.
Question
European equities performed strongly in 2025, despite ongoing macroeconomic and geopolitical uncertainty. How are you assessing the ability of the companies in the portfolio to deliver sustainable earnings and dividend growth into 2026 and beyond?
Answer
Although European equities delivered strong absolute and relative performance in 2025, we are conscious that this occurred alongside earnings downgrades, valuation expansion and persistent macroeconomic and geopolitical uncertainty. As we look into 2026 and beyond, our assessment of the ability of companies in the portfolio to deliver sustainable earnings and dividend growth is firmly rooted in bottom-up fundamentals rather than extrapolating recent market strength. We focus on balance sheet resilience, cash flow durability, returns on invested capital and the ability of companies to maintain or grow dividends across the cycle. Indeed, at the time of writing, the escalation in the Middle East suggests that a cautious approach will be prudent.
While not cheap in absolute terms, European equities still look attractive relative to US equities. Valuations across nearly all sectors trade at a discount to US peers, often beyond what differences in growth, margins or returns can justify. This is also the case if we compare valuations on an equal weighted basis to remove the skew to the Mag 7 (Mag 7 are the Magnificent Seven major technology companies that have driven significant stock market growth over the past decade. The seven companies are Apple, Microsoft, Amazon, Alphabet, Meta, Nvidia and Tesla). The equal weight MSCI Europe Index forward price-earnings ratio trades at a 21.5% discount to the US, compared to a 25.7% discount on a market cap weighted basis. All European sectors, except communication services, trade at a forward price-earnings discount to their US counterparts on an equal weight basis. This creates an environment where expectations are low, and companies do not need especially bullish assumptions to deliver acceptable outcomes. In several sectors, including financials, health care, utilities and parts of industrials, European companies generate earnings and returns comparable to US peers, yet trade much cheaper, providing a meaningful margin of safety.
Within the portfolio, we continue to emphasise companies with strong free cash-flow generation and disciplined capital allocation, which supports sustainable dividends even when earnings growth is uneven. This is evident in holdings such as ASML, which can have cyclicality in its orders, but remains the world's leading supplier of photolithography equipment used in semiconductor manufacturing. More broadly, the portfolio yield, in aggregate, is now close to the market yield, which historically has been a favourable indicator of positive long-term returns relative to the Benchmark Index, although it is no guarantee in terms of absolute returns.
Question
Looking back over the year, were there any material developments or outcomes that surprised you? If so, did these lead to changes in portfolio positioning or investment theses?
Answer
Through 2025, several developments were more surprising than initially expected. At a market level, the resilience of European equities stood out, particularly given ongoing geopolitical tensions, renewed US-EU trade frictions and political uncertainty across the region. Despite these headwinds, markets were supported by a soft economic landing, easing inflation, ECB rate cuts and a meaningful fiscal pivot towards defence and infrastructure spending. The recovery in investor flows into European equity funds after several years of outflows was also notable, reflecting diversification away from relatively expensive and concentrated US equity exposure.
At the stock level, there were some unexpected outcomes that prompted reassessment of individual investment theses. The extent of the setbacks at Novo Nordisk, the leading global health care company, was one such example, with disappointing late-stage trial results, pricing actions in the US, a profit warning and a CEO change all occurring in quick succession. Given the failure of the latest clinical trial for the next-generation weight loss drug, our investment thesis - predicated on Novo's continued market dominance - no longer holds. As a result, we have exited the position.
Towards the end of the year, there was a brief slowdown in like-for-like sales at Action, the discount retailer owned by 3i Group, which was a surprise after a prolonged period of strong performance. However, the weakness was isolated to one geographic area over a one-month period, and other segments continued to report strong sales growth. As such, we are cautious to extrapolate this to a broader trend and remain constructive on the company.
In other areas, companies such as Symrise, Sika and Dassault Systèmes, were affected by cyclical weakness, cautious customer behaviour or softer guidance, which weighed on share prices. These developments did not result in wholesale changes to portfolio strategy, but they did lead to selective adjustments.
Where conviction in the long-term thesis weakened, positions were exited, including LVMH Moët Hennessy following a change in dividend policy and some management departures, as well as Sodexo and PUMA. Conversely, where near-term disappointment appeared to overshadow intact long-term fundamentals, we selectively added or maintained exposure, including in ASML, Dassault Systèmes and Symrise. Overall, surprises during the year reinforced the importance of disciplined stock selection and valuation awareness rather than prompting a change in investment philosophy.
Question
The dividend has increased for fourteen consecutive years, putting the Company on the AIC's 'next generation' of dividend heroes. How do you look at dividends versus growth when making an investment decision?
Answer
When making investment decisions, dividends are considered within the context of a company's overall cash-generation capability and financial strength, rather than as a standalone objective. The portfolio focuses on identifying attractively valued companies with strong long-term prospects for cash generation and dividend growth, supported by resilient business models and robust balance sheets. This reflects the belief that the ability to sustain and grow dividends over time is closely linked to the durability and quality of underlying earnings and cash flows.
The portfolio is constructed using a bottom-up approach, with investment decisions driven by company-specific fundamentals rather than short-term macroeconomic considerations. Growth opportunities are therefore assessed alongside capital discipline and balance-sheet resilience. Companies such as ASML illustrate this approach: despite having a low absolute dividend yield, the dividend has grown for many years thanks to a strong business model given a monopolistic position in Extreme Ultraviolet (EUV) lithography machines which are critical for making the most advanced semiconductors.
The Company's record of fourteen consecutive years of dividend growth is a consequence of this disciplined focus on cash generation and financial strength, rather than pursuing high yields at the expense of long-term growth. This discipline has been a key contributor to our long-term record of income growth and total return, with the AIC also ranking the Company 13th overall, and the highest placed European strategy in its list of investment trusts that "would have made an ISA Millionaire".
Question
How would you describe the outlook for continental Europe and does this correlate with your thoughts on the individual companies you invest in?
Answer
European equity markets have demonstrated resilience, supported by accommodative monetary policy, attractive relative valuations and a gradual improvement in investor sentiment. Looking ahead, Europe has the potential to close its productivity gap with the US by focusing on technology and innovation and by simplifying business regulations, as outlined in the Draghi report, although progress towards greater European integration is expected to be slow.
Investor expectations for earnings growth have increased, with markets anticipating an improvement driven by interest rate reductions, fiscal stimulus - particularly in Germany - and a belief that the worst of the tariff-related uncertainty is over. However, there is still tariff uncertainty, inflation remains stubborn and rising long-term bond yields may offset some of the benefits of fiscal stimulus. Expectations are high so markets appear vulnerable to disappointment from policy slippage or renewed geopolitical instability. As a result, we remain cautious on the broader market outlook.
This macro view does not directly correlate with our assessment of individual companies. European companies are not simple proxies for the domestic economy, with roughly two-thirds of revenues generated outside the region. This global footprint has long been supportive, and any improvement in domestic European conditions could provide an additional source of upside. Our investment philosophy remains unchanged and is anchored in stock selection, a long-term perspective and capital preservation. The portfolio is balanced across sectors, with positioning driven by bottom-up opportunities rather than macro developments.
We continue to focus on attractively valued companies with good long-term prospects for cash generation and dividend growth. Defensive quality is not expensive on a relative basis, and the portfolio yield is close to the market yield. Higher rates and extreme factor rotations have weighed on many of the high-quality, stable-growing businesses we favour, bringing valuations closer to the market and creating opportunities. We have also made a measured increase in exposure to domestic European revenue streams, reflecting improved structural momentum around fiscal investment, integration and competitiveness reform, while remaining consistent with our bottom-up framework and valuation discipline.
Question
What is the advantage of investing in Fidelity European Trust PLC?
Answer
The Company's investment discipline provides resilience, in absolute terms, across different market environments. While this disciplined positioning, which is focused on sustainable dividend growth, can result in periods of relative underperformance when markets are more exuberant, it is designed to deliver more consistent long-term outcomes. The Company's aim is to outperform its Benchmark Index by one to two percent per annum post fees over the long-term. This is supported by the breadth and depth of Fidelity's research platform, which provides a consistent pipeline of high-quality investment ideas and enables the construction of a fully diversified portfolio across the market cycle. In addition, the Portfolio Managers bring deep experience, and Fidelity's private ownership allows the firm to take a long-term view in maintaining organisational stability and supporting shareholders' investment objectives.
Question
Looking ahead to 2026 and beyond, which sectors, themes or regions within Europe are you most optimistic about, and where do you see the greatest potential for long-term outperformance?
Answer
Looking ahead to 2026 and beyond, our optimism is selective rather than thematic or region wide. The greatest potential for long-term outperformance lies in areas where Europe's valuation discount appears most disconnected from current fundamentals and where confidence can continue to rebuild without requiring a strong macro uplift.
Financials are a clear example. European banks are fundamentally stronger than at any point since the Global Financial Crisis, with significantly higher capital ratios, de-risked balance sheets, improved cost efficiency and structurally higher net interest income. Returns on tangible equity are now broadly in line with the wider market, and in some cases, comparable with US peers, yet valuations continue to reflect historical distrust. As confidence in the sustainability of these returns grows, financials offer meaningful upside through dividend, buybacks and potential valuation normalisation.
More broadly, we see opportunity in high-quality European companies with strong global franchises, pricing power and resilient cash flows, particularly where short-term cyclical weakness or sentiment has created attractive entry points. This includes selective industrials, software and health care names, where long-term structural drivers remain intact, but valuations have adjusted. The potential for Europe to gradually close its productivity gap with the US through technology, innovation and regulatory simplification, as outlined in the Draghi report, also supports selective exposure to companies enabling efficiency and digitalisation, even if progress is slow.
At the same time, we remain cautious on areas where valuations already discount optimistic assumptions around fiscal stimulus, rate cuts or easing trade tensions. Overall, we do not rely on a broad European re-rating to generate returns. Instead, we believe long-term outperformance will come from disciplined stock selection, exploiting valuation gaps created by entrenched pessimism and focusing on companies with durable business models, strong balance sheets and the ability to compound cash flows and dividends over time.
Sam MorseMarcel Stötzel
Portfolio Manager Portfolio Manager
17 March 2026 17 March 2026
Strategic Report
RISK FRAMEWORK
Principal Risks and Uncertainties and Risk Management
As required by provisions 28 and 29 of the 2024 UK Corporate Governance Code ("UK Code"), the Board has a robust ongoing process for identifying, evaluating and managing the principal risks and uncertainties faced by the Company, including those that could threaten its business model, future performance, solvency or liquidity. The Board will implement the new requirement under provision 29 of the 2024 UK Code for reporting periods from 1 January 2026, of a Board declaration on the effectiveness of material risk management and internal controls in the Company's next reporting year.
The Board, with the assistance of the Alternative Investment Fund Manager (FIL Investment Services (UK) Limited/the "Manager"), has developed a risk matrix which, as part of the risk management and internal controls process, identifies the key existing and emerging risks and uncertainties that the Company faces.
Emerging Risks
The Audit Committee continues to identify emerging risks that may arise from existing risks or new situations and take any action necessary to mitigate their potential impact. The risks identified are placed on the Company's risk matrix and graded appropriately. This process, together with the policies and procedures for the mitigation of existing and emerging risks, is updated and reviewed regularly in the form of comprehensive reports by the Audit Committee. The Board determines the nature and extent of any risks it is willing to take in order to achieve the Company's strategic objectives.
Globally, climate change (large scale shift in the planet's weather patterns and average temperatures) effects are already being experienced in the form of changing weather patterns. Extreme weather events can potentially impact the operations of investee and potential investee companies, their supply chains and their customers. Climate change continues to be a key principal as well as an emerging risk. The Board notes that the Manager includes ESG considerations, including climate change, into the Company's investment process. The Board will continue to monitor how this may impact the Company as a risk to investment valuations and potentially shareholder returns.
The Board, together with the Manager, is also monitoring the emerging risks posed by the rapid advancement of artificial intelligence ("AI") and technology and how it may threaten the Company's activities and its potential impact on the portfolio and investee companies. AI can provide asset managers powerful tools, such as enhancing data analysis risk management, trading strategies, operational efficiency and client servicing, all of which can lead to better investment outcomes and more efficient operations. However, with these advances in computing power, there are risks from its increasing use and manipulation with the potential to harm, including a heightened threat to cybersecurity.
Other emerging risks may continue to evolve from unforeseen geopolitical and economic events. There are currently a number of geopolitical factors that could mean greater stock market risks and heightened macro-economic changes such as inflation, interest rates, currency fluctuations, energy costs and an increased regulatory environment.
Emerging Risks - Manager's Role
The Manager also has responsibility for risk management for the Company. It works with the Board to identify and manage the principal and emerging risks and uncertainties and to ensure that the Board can continue to meet its UK corporate governance obligations.
Annual Review of the Risk Register
The Company has a full risk register which includes less material risks which the Board reviews at least annually.
The Board considers the risks listed below as the principal risks and uncertainties faced by the Company.
1. Economic, Geopolitical and Market Risks | |
Trend:Increased | |
Description and Impact | Mitigation |
|
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2. Investment Performance Risk (including Gearing Risk) | |
Trend:Increased | |
Description and Impact | Mitigation |
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3. Cybercrime and Information Security Risks | |
Trend:Increased | |
Description and Impact | Mitigation |
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4. Changes in Legislation, Taxation or Regulation | |
Trend:Stable | |
Description and Impact | Mitigation |
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|
5. Competition Risks and Marketplace Threats Impacting Business Growth | |
Trend:Stable | |
Description and Impact | Mitigation |
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6. Business Continuity and Crisis Management | |
Trend:Stable | |
Description and Impact | Mitigation |
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7. Operational Risks | |
Trend:Stable | |
Description and Impact | Mitigation |
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8. Discount Control Risk | |
Trend:Stable | |
Description and Impact | Mitigation |
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9. Key Person Risk and Operational Support Risks | |
Trend:Stable | |
Description and Impact | Mitigation |
|
|
Continuation Vote
A continuation vote takes place every two years. The last continuation vote was at the AGM held on 8 May 2025, and 93.85% of shareholders voted in favour of the continuation of the Company. The next continuation vote will take place at the AGM in 2027.
Viability Statement
In accordance with provision 31 of the 2024 UK Corporate Governance Code, the Directors have assessed the prospects of the Company over a longer period than the twelve month period required by the "Going Concern" basis. The Company is an investment trust with the objective of achieving long-term growth in both capital and income. The Board considers that five years is an appropriate investment horizon to assess the viability of the Company, although the life of the Company is not intended to be limited to this or any other period.
In making an assessment on the viability of the Company, the Board has considered the following:
• The ongoing relevance of the investment objective in prevailing market conditions;
• The Company's level of gearing;
• The Company's NAV and share price performance compared to its Benchmark Index;
• The principal and emerging risks and uncertainties facing the Company and their potential impact, as set out above;
• The likely future demand for the Company's shares;
• The Company's share price discount to the NAV and the Board's discount management policy;
• The liquidity of the Company's portfolio;
• The level of income generated by the Company; and
• Future income and expenditure forecasts.
The Company's performance for the five year reporting period to 31 December 2025 was a NAV total return of 63.3% and an ordinary share price total return of 63.5% compared to the Benchmark Index total return of 66.5%.
The Board regularly reviews the investment policy to consider whether it remains appropriate.
The Board has concluded that there is a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the next five years based on the following additional considerations:
• The Investment Manager's compliance with the Company's investment objective and policy, its investment strategy and asset allocation;
• The portfolio mainly comprises readily realisable securities which can be sold to meet funding requirements if necessary;
• The Board's discount management policy; and
• The ongoing processes for monitoring operating costs and income which are considered to be reasonable in comparison to the Company's total assets.
In preparing the Financial Statements, the Directors have considered the continued impact of climate change and potential emerging risks from the use of artificial intelligence as detailed above. The Board has also considered the impact of regulatory changes, unforeseen market events, geopolitical concerns and the ongoing global implications of the war in Ukraine, and more recently the war in the Middle East, and how this may affect the Company.
In addition, the Directors' assessment of the Company's ability to operate in the foreseeable future is included in the Going Concern Statement below.
Going Concern Statement
The Directors have considered the Company's investment objective, risk management policies, liquidity risk, credit risk, capital management policies and procedures, the nature of its portfolio and its expenditure and cash flow projections. The Directors, having considered the liquidity of the Company's portfolio of investments (being mainly securities which are readily realisable) and the projected income and expenditure, including the loan notes, are satisfied that the Company is financially sound and has adequate resources to meet all of its liabilities and ongoing expenses and continue in operational existence for the foreseeable future. The Board has, therefore, concluded that the Company has adequate resources to continue to adopt the going concern basis for the period to 31 March 2027 which is at least twelve months from the date of approval of the Financial Statements. This conclusion also takes into account the Board's assessment of the ongoing risks from significant geopolitical and market events and regulatory changes that could impact the Company's performance, prospects and operations.
Accordingly, the Financial Statements of the Company have been prepared on a going concern basis.
The prospects of the Company over a period longer than twelve months can be found in the Viability Statement above.
PROMOTING THE SUCCESS OF THE COMPANY
Under Section 172(1) of the Companies Act 2006, the Directors of a company must act in a way they consider, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to the likely consequences of any decision in the long-term; the need to foster relationships with the Company's suppliers, customers and others; the impact of the Company's operations on the community and the environment; the desirability of the Company maintaining a reputation for high standards of business conduct; and the need to act fairly as between members of the Company.
As an externally managed investment company, the Company has no employees or physical assets, and a number of the Company's functions are outsourced to third parties. The key outsourced function is the provision of investment management services by the Manager, but other professional service providers support the Company by providing administration, custodial, banking, accounting and audit services. The Board considers the Company's key stakeholders to be the existing and potential shareholders, the externally appointed Manager (FIL Investment Services (UK) Limited) and other third-party professional service providers. The Board considers that the interest of these stakeholders is aligned with the Company's objective of delivering long-term capital growth to investors, in line with the Company's stated objective and strategy, while providing the highest standards of legal, regulatory and commercial conduct.
The Board, with the Portfolio Managers, sets the overall investment strategy and reviews this at an annual strategy day which is separate from the regular cycle of board meetings. In order to ensure good governance of the Company, the Board has set various limits on the investments in the portfolio, whether in the maximum size of individual holdings, the use of derivatives and bank loans, the level of gearing and others. These limits and guidelines are regularly monitored and reviewed and are set out in the Annual Report.
The Board receives regular reports from the Company's Broker which covers market activity, how the Company compares with peers in the AIC Europe and European Smaller Companies sectors on performance, discount and share repurchase activity, an analysis of the Company's share register and market trends.
The Board places great importance on communication with shareholders. The Annual General Meeting ("AGM") provides the key forum for the Board and the Portfolio Managers to present to the shareholders on the Company's performance and future plans and the Board encourages all shareholders to attend in person or virtually and raise any questions or concerns. The Chairman and other Board members are available to meet shareholders as appropriate. Shareholders may also communicate with Board members at any time by writing to them at the Company's registered office at FIL Investments International, Beech Gate, Millfield Lane, Tadworth, Surrey KT20 6RP or via the Company Secretary at the same address or by email at investmenttrusts@fil.com.
The Portfolio Managers meet with major shareholders, potential investors, stock market analysts, journalists and other commentators throughout the year. These communication opportunities help inform the Board in considering how best to promote the success of the company over the long-term.
The Board seeks to engage with the Manager and other service providers and advisers in a constructive and collaborative way, promoting a culture of strong governance, while encouraging open and constructive debate, in order to ensure appropriate and regular challenge and evaluation. This aims to enhance service levels and strengthen relationships with service providers, with a view to ensuring shareholders' interests are best served, by maintaining the highest standards of commercial conduct while keeping cost levels competitive.
Whilst the Company's direct operations are limited, the Board recognises the importance of considering the impact of the Company's investment strategy on the wider community and environment and considers the Manager's Environmental, Social and Governance (ESG) approach.
In addition to ensuring that the Company's investment objective was being pursued, key decisions and actions taken by the Board during the reporting year, and up to the date of this report, have included:
• As part of the Board's succession plan, appointing Davina Walter as Chairman of the Board to replace Vivian Bazalgette as Chairman of the Board when he stepped down at the conclusion of the AGM on 8 May 2025;
• Holding multiple ad hoc Board meetings between March and September 2025 in the lead up to combining assets with Henderson European Trust plc ("HET");
• The decision to combine assets with those of HET on 29 September 2025 (see further details in the Chairman's Statement above and also in the Notes to the Financial Statements below). As part of the combination, appointing Vicky Hastings and Rutger Koopmans to the Company's Board.
• Following the combination of assets with HET, agreeing a lower management fee with the Manager with effect from 29 September 2025. This is made up of: 0.70 per cent of net assets up to and including £400 million; 0.65 per cent of net assets in excess of £400 million and up to £1.4 billion; and 0.55 per cent of net assets in excess of £1.4 billion.
• The decision to pay an interim dividend of 3.90 pence per ordinary share and a final dividend of 6.00 pence per ordinary share (a total of 9.90 pence per ordinary share), to maintain the Board's policy to pay progressive dividends in normal circumstances. Subject to shareholder approval, the Company will have paid an increased dividend for 15 years in a row;
• Authorising the repurchase of 9,286,723 shares into Treasury in the reporting year as part of the Board's discount management policy. Since the year ended 31 December 2025 and up to the latest practicable date of this report, a further 2,219,500 shares have been repurchased into Treasury;
• Meetings with some of the Company's key shareholders during the reporting year; and
• The decision once again to hold a hybrid AGM in 2026 in order to make the AGM more accessible to those shareholders who are unable to or prefer not to attend in person.
Statement of Directors' Responsibilities
The Directors are responsible for preparing the Annual Report and Financial Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial period. Under that law, the Directors have elected to prepare the Financial Statements in accordance with UK Generally Accepted Accounting Practice (UK Accounting Standards and applicable law), including Financial Reporting Standard FRS 102: The Financial Reporting Standard applicable in the UK and Republic of Ireland ("FRS 102"). Under company law, the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss for the reporting period.
In preparing these Financial Statements, the Directors are required to:
• Select suitable accounting policies in accordance with Section 10 of FRS 102 and then apply them consistently;
• Make judgements and accounting estimates that are reasonable and prudent;
• Present information, including accounting policies, in a fair and balanced manner that provides relevant, reliable, comparable and understandable information;
• State whether applicable UK Accounting Standards, including FRS 102, have been followed, subject to any material departures disclosed and explained in the Financial Statements; and
• Prepare the Financial Statements on a going concern basis, unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy, at any time, the financial position of the Company and enable them to ensure that the Company and the Financial Statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, a Directors' Report, a Corporate Governance Statement and a Directors' Remuneration Report which comply with that law and those regulations.
The Directors have delegated the responsibility for the maintenance and integrity of the corporate and financial information included on the Company's pages of the Manager's website at www.fidelity.co.uk/europeto the Manager. Visitors to the website need to be aware that legislation in the UK governing the preparation and dissemination of the Financial Statements may differ from legislation in their own jurisdictions.
The Directors confirm that to the best of their knowledge:
• The Financial Statements, prepared in accordance with UK Generally Accepted Accounting Practice, including FRS 102, give a true and fair view of the assets, liabilities, financial position and profit of the Company;
• The Annual Report, including the Strategic Report, includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties it faces; and
• The Annual Report and Financial Statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company's performance, business model and strategy.
The Statement of Directors' Responsibilities was approved by the Board on 17 March 2026 and signed on its behalf by:
Davina Walter
Chairman
INCOME STATEMENT
for the year ended 31 December 2025
Year ended 31 December 2025 | Year ended 31 December 2024 | ||||||
Notes | Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000 | |
Gains/(losses) on investments | 10 | - | 207,231 | 207,231 | - | (47,301) | (47,301) |
Gains on derivative instruments | 11 | - | 27,618 | 27,618 | - | 35,423 | 35,423 |
Income | 3 | 57,618 | - | 57,618 | 53,670 | - | 53,670 |
Investment management fees | 4 | (2,418) | (7,253) | (9,671) | (2,878) | (8,634) | (11,512) |
Other expenses | 5 | (1,079) | - | (1,079) | (1,063) | - | (1,063) |
Foreign exchange gains/(losses) | - | 1,889 | 1,889 | - | (2,956) | (2,956) | |
--------------- | --------------- | --------------- | --------------- | --------------- | --------------- | ||
Net return/(loss) on ordinary activities before finance costs and taxation | 54,121 | 229,485 | 283,606 | 49,729 | (23,468) | 26,261 | |
Finance costs | 6 | (1,771) | (5,314) | (7,085) | (2,770) | (8,309) | (11,079) |
--------------- | --------------- | --------------- | --------------- | --------------- | --------------- | ||
Net return/(loss) on ordinary activities before taxation | 52,350 | 224,171 | 276,521 | 46,959 | (31,777) | 15,182 | |
Taxation on return/(loss) on ordinary activities | 7 | (3,165) | - | (3,165) | (4,422) | - | (4,422) |
--------------- | --------------- | --------------- | --------------- | --------------- | --------------- | ||
Net return/(loss) on ordinary activities after taxation for the year | 49,185 | 224,171 | 273,356 | 42,537 | (31,777) | 10,760 | |
========= | ========= | ========= | ========= | ========= | ========= | ||
Return/(loss) per ordinary share | 8 | 11.30p | 51.50p | 62.80p | 10.41p | (7.78p) | 2.63p |
========= | ========= | ========= | ========= | ========= | ========= | ||
The Company does not have any other comprehensive income. Accordingly, the net return/(loss) on ordinary activities after taxation for the year is also the total comprehensive income for the year and no separate Statement of Comprehensive Income has been presented.
The total column of this statement represents the Income Statement of the Company. The revenue and capital columns are supplementary and presented for information purposes as recommended by the Statement of Recommended Practice issued by the AIC.
On 26 September 2025, the Company combined assets with Henderson European Trust plc ("HET"), following a scheme of reconstruction. No other operations were acquired or discontinued during the year.
The Notes below form an integral part of these Financial Statements.
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2025
Notes | Share capital £'000 | Share premium account £'000 | Capital redemption reserve £'000 | Capital reserve £'000 | Revenue reserve £'000 | Total shareholders' funds £'000 | |
Total shareholders' funds at 31 December 2024 |
| 10,411 | 58,615 | 5,414 | 1,440,810 | 47,879 | 1,563,129 |
Net return on ordinary
| - | - | - | 224,171 | 49,185 | 273,356 | |
New ordinary shares issued in respect of the transaction with HET | 16 | 2,798 | 458,644 | - | - | - | 461,442 |
Expenses in respect of the transaction with HET | - | - | - | (406) | - | (406) | |
Repurchase of ordinary shares into Treasury | 15 | - | - | - | (38,097) | - | (38,097) |
Dividends paid to shareholders | 9 | - | - | - | - | (38,194) | (38,194) |
--------------- | --------------- | --------------- | --------------- | --------------- | --------------- | ||
Total shareholders' funds at 31 December 2025 |
| 13,209 | 517,259 | 5,414 | 1,626,478 | 58,870 | 2,221,230 |
========= | ========= | ========= | ========= | ========= | ========= | ||
Total shareholders' funds at 31 December 2023 |
| 10,411 | 58,615 | 5,414 | 1,472,587 | 40,452 | 1,587,479 |
Net (loss)/return on ordinary activities after taxation for the year | - | - | - | (31,777) | 42,537 | 10,760 | |
Dividends paid to shareholders | 9 | - | - | - | - | (35,110) | (35,110) |
--------------- | --------------- | --------------- | --------------- | --------------- | --------------- | ||
Total shareholders' funds at 31 December 2024 | 10,411 | 58,615 | 5,414 | 1,440,810 | 47,879 | 1,563,129 | |
========= | ========= | ========= | ========= | ========= | ========= |
The Notes below form an integral part of these Financial Statements.
BALANCE SHEET
as at 31 December 2025
Company number 2638812
Notes | 31 December 2025 £'000 | 31 December 2024 £'000 | |
Fixed assets | |||
Investments | 10 | 2,189,231 | 1,487,772 |
========= | ========= | ||
Current assets |
| ||
Derivative instruments | 11 | 2,333 | - |
Debtors | 12 | 11,316 | 9,506 |
Amounts held at futures clearing houses and brokers | 2,814 | 10,078 | |
Cash and cash equivalents | 47,710 | 63,042 | |
--------------- | --------------- | ||
64,173 | 82,626 | ||
========= | ========= | ||
Current liabilities |
| ||
Derivative instruments | 11 | - | (5,796) |
Other creditors | 13 | (1,613) | (1,473) |
--------------- | --------------- | ||
(1,613) | (7,269) | ||
========= | ========= | ||
Net current assets | 62,560 | 75,357 | |
Non current liabilities |
| ||
Loan notes (unsecured) | 14 | (30,561) | - |
--------------- | --------------- | ||
(30,561) | - | ||
========= | ========= | ||
Net assets | 2,221,230 | 1,563,129 | |
Capital and reserves |
| ||
Share capital | 15 | 13,209 | 10,411 |
Share premium account | 16 | 517,259 | 58,615 |
Capital redemption reserve | 16 | 5,414 | 5,414 |
Capital reserve | 16 | 1,626,478 | 1,440,810 |
Revenue reserve | 16 | 58,870 | 47,879 |
--------------- | --------------- | ||
Total shareholders' funds | 2,221,230 | 1,563,129 | |
========= | ========= | ||
Net asset value per ordinary share | 17 | 434.39p | 382.44p |
| ========= | ========= |
The Financial Statements above and below were approved by the Board of Directors on 17 March 2026 and were signed on its behalf by:
Davina Walter
Chairman
The Notes below form an integral part of these Financial Statements.
NOTES TO THE FINANCIAL STATEMENTS
1PRINCIPAL ACTIVITY
Fidelity European Trust PLC is an Investment Company incorporated in England and Wales that is listed on the London Stock Exchange. The Company's registration number is 2638812, and its registered office is Beech Gate, Millfield Lane, Lower Kingswood, Tadworth, Surrey KT20 6RP. The Company has been approved by HM Revenue & Customs as an Investment Trust under Section 1158 of the Corporation Tax Act 2010 and intends to conduct its affairs so as to continue to be approved.
2ACCOUNTING POLICIES
The Company has prepared its Financial Statements in accordance with UK Generally Accepted Accounting Practice ("UK GAAP"), including FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland", issued by the Financial Reporting Council ("FRC"). The Financial Statements have also been prepared in accordance with the Statement of Recommended Practice: Financial Statements of Investment Trust Companies and Venture Capital Trusts ("SORP") issued by the Association of Investment Companies ("AIC") in July 2022. The Company is exempt from presenting a Cash Flow Statement as a Statement of Changes in Equity is presented and substantially all of the Company's investments are highly liquid and are carried at market value.
(a) Basis of accounting
The Financial Statements have been prepared on a going concern basis and under the historical cost convention, except for the measurement at fair value of investments and derivative instruments. The Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence up to 31 March 2027 which is at least twelve months from the date of approval of these Financial Statements. In making their assessment the Directors have reviewed income and expense projections and the loan agreement, reviewed the liquidity of the investment portfolio, stress testing performed and considered the Company's ability to meet liabilities as they fall due. This conclusion also takes into account the Director's assessment of the risks faced by the Company as detailed in the Going Concern Statement above.
In preparing these Financial Statements the Directors have considered the impact of climate change risk as an emerging and a principal risk as set out above, and have concluded that there was no further impact of climate change to be taken into account as the investments are valued based on market pricing. In line with FRS 102, investments are valued at fair value, which for the Company are quoted bid prices for investments in active markets at the balance sheet date and therefore reflect the market participants view of climate change risk on the investments held by the Company.
The Company's Going Concern Statement above takes account of all events and conditions up to 31 March 2027 which is at least twelve months from the date of approval of these Financial Statements.
Issue of Ordinary Shares in respect of the transaction with Henderson European Trust plc ("HET")
On 29 September 2025, the Company issued new ordinary shares which were provided to shareholders of HET, in connection with the combination of the assets of the Company with the assets of HET.
The Directors have considered the substance of the assets and activities of HET in determining whether the acquisition represents the acquisition of a business. In this case, the acquisition is not considered to be an acquisition of a business, and therefore, has not been treated as a business combination. Rather, the cost to acquire the assets and liabilities of HET has been allocated between the acquired identifiable assets and liabilities based on their relative fair values on the acquisition date without attributing any amount to goodwill or to deferred taxes. Net assets transferred comprised investments, cash, loans, payables and HET contribution to the transaction. A total of £462,717,000 of assets were acquired as a result of the transaction with HET. This comprised: investments of £478,394,000, cash of £13,631,000, loan notes of -£30,522,000, payables of -£74,000 and a HET contribution to the transaction of £1,288,000.
Transaction costs of £892,000 in relation to the combination of HET have been recognised in the Income Statement in Note 10. Costs of £406,000 in relation to issuing new shares have been recognised in the Statement of Changes in Equity.
Fidelity has agreed to make a material contribution by means of a waiver of the management fees that would otherwise be payable, under the AIFM Agreement and the Investment Management Agreement, in respect of the net assets transferred by HET to the Company following the combination of assets for the 12 month period immediately following the effective date. Fidelity's total contribution was £2,537,000 allocated £634,000 against Revenue and £1,903,000 against Capital.
Since 26 September 2025, the base investment management fee has been charged at an annual rate of 0.70% (previously 0.85%) on the first £400 million of net assets, 0.65% (previously 0.65%) on net assets above £400 million and up to £1.4 billion, and 0.55% on net assets in excess of £1.4 billion. Fees are payable monthly in arrears and are calculated on a daily basis.
b) Significant accounting estimates and judgements
The Directors make judgements and estimates concerning the future. Estimates and judgements are continually evaluated and are based on historical experience and other factors, such as expectations of future events, and are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The Company's Financial Statements contain no key sources of estimation or uncertainty.
c) Segmental reporting
The Company is engaged in a single segment business and, therefore, no segmental reporting is provided.
d) Presentation of the Income Statement
In order to better reflect the activities of an investment company and in accordance with guidance issued by the AIC, supplementary information which analyses the Income Statement between items of a revenue and capital nature has been prepared alongside the Income Statement. The net revenue return/(loss) after taxation for the year is the measure the Directors believe appropriate in assessing the Company's compliance with certain requirements set out in Section 1159 of the Corporation Tax Act 2010.
e) Income
Income from equity investments is accounted for on the date on which the right to receive the payment is established, normally the ex-dividend date. Overseas dividends are accounted for gross of any tax deducted at source. Amounts are credited to the revenue column of the Income Statement. Where the Company has elected to receive its dividends in the form of additional shares rather than cash, the amount of the cash dividend foregone is recognised in the revenue column of the Income Statement. Any excess in the value of the shares received over the amount of the cash dividend is recognised in the capital column of the Income Statement. Special dividends are treated as a revenue receipt or a capital receipt depending on the facts and circumstances of each particular case.
Derivative instrument income received from dividends on long contracts for difference ("CFDs") is accounted for on the date on which the right to receive the payment is established, normally the ex-dividend date. The amount net of tax is credited to the revenue column of the Income Statement.
Interest received on CFDs, bank deposits, collateral and money market funds is accounted for on an accruals basis and credited to the revenue column of the Income Statement. Interest received on CFDs represent the finance costs calculated by reference to the notional value of the CFDs.
f) Investment management fees and other expenses
Investment management fees and other expenses are accounted for on an accruals basis and are charged as follows:
• The investment management fee is allocated 25% to revenue and 75% to capital in line with the Board's expected long-term split of revenue and capital return from the Company's portfolio of investments; and
• All other expenses are allocated in full to revenue with the exception of those directly attributable to share issues or other capital events.
g) Functional currency and foreign exchange
The functional and reporting currency of the Company is UK sterling, which is the currency of the primary economic environment in which the Company operates. Transactions denominated in foreign currencies are reported in UK sterling at the rate of exchange ruling at the date of the transaction. Assets and liabilities in foreign currencies are translated at the rates of exchange ruling at the Balance Sheet date. Foreign exchange gains and losses arising on translation are recognised in the Income Statement as a revenue or a capital item depending on the nature of the underlying item to which they relate.
h) Finance costs
Finance costs comprises interest on the unsecured loans notes, overdrafts and finance costs paid on CFDs, which are accounted for on an accruals basis. Finance costs are allocated 25% to revenue and 75% to capital in line with the Board's expected long-term split of revenue and capital from the Company's portfolio of investments.
i) Taxation
The taxation charge represents the sum of current taxation and deferred taxation.
Current taxation is taxation suffered at source on overseas income less amounts recoverable under taxation treaties. Taxation is charged or credited to the revenue column of the Income Statement, except where it relates to items of a capital nature, in which case it is charged or credited to the capital column of the Income Statement. Where expenses are allocated between revenue and capital any tax relief in respect of the expenses is allocated between revenue and capital returns on the marginal basis using the Company's effective rate of corporation tax for the accounting period. The Company is an approved Investment Trust under Section 1158 of the Corporation Tax Act 2010 and is not liable for UK taxation on capital gains.
Deferred taxation is the taxation expected to be payable or recoverable on timing differences between the treatment of certain items for accounting purposes and their treatment for the purposes of computing taxable profits. Deferred taxation is based on tax rates that have been enacted or substantively enacted when the taxation is expected to be payable or recoverable. Deferred tax assets are only recognised if it is considered more likely than not that there will be sufficient future taxable profits to utilise them.
j) Dividend paid
Dividends payable to equity shareholders are recognised when the Company's obligation to make payment is established.
k) Investments
The Company's business is investing in financial instruments with a view to profiting from their total return in the form of income and capital growth. This portfolio of investments is managed and its performance evaluated on a fair value basis, in accordance with a documented investment strategy, and information about the portfolio is provided on that basis to the Company's Board of Directors. Investments are measured at fair value with changes in fair value recognised in profit or loss, in accordance with the provisions of both Section 11 and Section 12 of FRS 102. The fair value of investments is initially taken to be their cost and is subsequently measured as follows:
• Listed investments are valued at bid prices, or last market prices, depending on the convention of the exchange on which they are listed.
In accordance with the AIC SORP, the Company includes transaction costs, incidental to the purchase or sale of investments, within gains/(losses) on investments in the capital column of the Income Statement and has disclosed these costs in Note 10 below.
l) Derivative instruments
When appropriate, permitted transactions in derivative instruments are used. Derivative transactions into which the Company may enter include long and short CFDs and futures. Derivatives are classified as other financial instruments and are initially accounted and measured at fair value on the date the derivative contract is entered into and subsequently measured at fair value as follows:
• Long and short CFDs - the difference between the strike price and the value of the underlying shares in the contract; and
• Futures - the difference between the contract price and the quoted trade price.
Where transactions are used to protect or enhance income, if the circumstances support this, the income and expenses derived are included in net income in the revenue column of the Income Statement. Where such transactions are used to protect or enhance capital, if the circumstances support this, the income and expenses derived are included in gains/(losses) on derivative instruments in the capital column of the Income Statement. Any positions on such transactions open at the year end are reflected on the Balance Sheet at their fair value within current assets or current liabilities.
m) Debtors
Debtors include accrued income, taxation recoverable and other debtors and prepayments incurred in the ordinary course of business. If collection is expected in one year or less (or in the normal operating cycle of the business, if longer) they are classified as current assets. If not, they are presented as non-current assets. They are recognised initially at fair value and, where applicable, subsequently measured at amortised cost using the effective interest rate method.
n) Amounts held at futures clearing houses and brokers
These are amounts held in segregated accounts on behalf of brokers as collateral against open derivative contracts. These are carried at amortised cost.
o) Cash and cash equivalents
Cash and cash equivalents may comprise cash at bank and money market funds which are short-term, highly liquid and are readily convertible to a known amount of cash. These are subject to an insignificant risk of changes in value.
p) Loan notes (unsecured)
Loan notes are initially included in the Financial Statements at cost, being the fair value of the consideration received net of any issue costs relating to the borrowing. After initial recognition, the loans are measured at amortised cost using the effective interest rate method. The amortised cost is calculated by taking into account any issue costs and any discount or premium on settlement.
q) Other creditors
Other creditors include amounts payable on investment management fees and other creditors and expenses accrued in the ordinary course of business. If payment is due within one year or less (or in the normal operating cycle of the business, if longer), they are classified as current liabilities. If not, they are presented as non-current liabilities. They are recognised initially at fair value and, where applicable, subsequently measured at amortised cost using the effective interest rate method.
r) Capital reserve
The following are accounted for in the capital reserve:
• Gains and losses on the disposal of investments and derivative instruments;
• Changes in the fair value of investments and derivative instruments held at the year end;
• Foreign exchange gains and losses of a capital nature;
• 75% of investment management fees and finance costs;
• Dividends receivable which are capital in nature; and
• Cost of repurchasing shares.
Technical guidance issued by the Institute of Chartered Accountants in England and Wales in TECH 02/17BL, guidance on the determination of realised profits and losses in the context of distributions under the Companies Act 2006, states that changes in the fair value of investments which are readily convertible to cash, without accepting adverse terms at the Balance Sheet date, can be treated as realised. Capital reserves realised and unrealised are shown in aggregate as capital reserve in the Statement of Changes in Equity and the Balance Sheet. At the Balance Sheet date, the portfolio of the Company consisted of investments listed on a recognised stock exchange and derivative instruments contracted with counterparties having an adequate credit rating, and the portfolio was considered to be readily convertible to cash.
3INCOME
Year ended 31 December 2025 £'000 | Year ended 31 December 2024 £'000 | |
Investment income | ||
Overseas dividends | 50,142 | 42,870 |
UK dividends | 2,182 | 1,654 |
Interest on securities | 230 | - |
--------------- | --------------- | |
52,554 | 44,524 | |
========= | ========= | |
Derivative income |
| |
Income recognised from futures contracts | 1,842 | 2,468 |
Dividends received on long CFDs | 2,229 | 3,972 |
Interest received on CFDs | - | 329 |
--------------- | --------------- | |
4,071 | 6,769 | |
--------------- | --------------- | |
Investment and derivative income | 56,625 | 51,293 |
========= | ========= | |
Other income |
| |
Interest received on collateral, bank deposits and money market funds | 993 | 2,323 |
Interest received on tax reclaims | - | 54 |
--------------- | --------------- | |
993 | 2,377 | |
========= | ========= | |
Total income | 57,618 | 53,670 |
========= | ========= |
No special dividends have been recognised in capital during the year (2024: £1,271,000).
4INVESTMENT MANAGEMENT FEES
Year ended 31 December 2025 | Year ended 31 December 2024 | |||||
Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000 | |
Investment management fees | 3,052 | 9,156 | 12,208 | 2,878 | 8,634 | 11,512 |
Fee waived in respect of the transaction with HET | (634) | (1,903) | (2,537) | - | - | - |
--------------- | --------------- | --------------- | --------------- | --------------- | --------------- | |
Total | 2,418 | 7,253 | 9,671 | 2,878 | 8,634 | 11,512 |
========= | ========= | ========= | ========= | ========= | ========= | |
FIL Investment Services (UK) Limited is the Company's Alternative Investment Fund Manager and has delegated portfolio management to FIL Investments International ("FII"). Both companies are Fidelity group companies.
Fidelity has agreed to make a material contribution by means of a waiver of the management fees that would otherwise be payable, under the AIFM Agreement and the Investment Management Agreement, in respect of the net assets transferred by HET to the Company following the combination of assets for the 12 month period immediately following the effective date.
Since 26 September 2025, the base investment management fee has been charged at an annual rate of 0.70% (previously 0.85%) on the first £400 million of net assets, 0.65% (previously 0.65%) on net assets above £400 million and up to £1.4 billion, and 0.55% on net assets in excess of £1.4 billion. Fees are payable monthly in arrears and are calculated on a daily basis.
Investment management fees have been allocated 75% to capital reserve in accordance with the Company's accounting policies.
5OTHER EXPENSES
Year ended 31 December 2025 £'000 | Year ended 31 December 2024 £'000 | |
AIC fees | 25 | 24 |
Custody fees | 100 | 90 |
Depositary fees | 54 | 63 |
Directors' fees 1 | 219 | 186 |
Legal and professional fees | 79 | 120 |
Marketing expenses | 214 | 221 |
Printing and publication expenses | 182 | 191 |
Registrars' fees | 104 | 91 |
Fees payable to the Company's Independent Auditor for the audit of the Financial Statements | 72 | 50 |
Other expenses | 30 | 27 |
--------------- | --------------- | |
1,079 | 1,063 | |
========= | ========= |
1 Details of the breakdown of Directors' fees are disclosed in the Directors' Remuneration Report in the Annual Report .
6FINANCE COSTS
Year ended 31 December 2025 | Year ended 31 December 2024 | |||||
Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000 | |
Interest paid on collateral, unsecured loan notes and overdrafts | 79 | 236 | 315 | 15 | 43 | 58 |
Interest paid on CFDs | 1,318 | 3,956 | 5,274 | 2,122 | 6,367 | 8,489 |
Costs recognised from futures contracts | 374 | 1,122 | 1,496 | 633 | 1,899 | 2,532 |
--------------- | --------------- | --------------- | --------------- | --------------- | --------------- | |
1,771 | 5,314 | 7,085 | 2,770 | 8,309 | 11,079 | |
========= | ========= | ========= | ========= | ========= | ========= | |
Finance costs have been allocated 75% to capital reserve in accordance with the Company's accounting policies. At the year end, interest payable on the unsecured loan notes amounted to £200,000 (2024: £nil).
7TAXATION ON RETURN/(LOSS) ON ORDINARY ACTIVITIES
Year ended 31 December 2025 | Year ended 31 December 2024 | |||||
Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000 | |
a) Analysis of the taxation charge for the year |
|
|
|
|
|
|
Overseas taxation | 3,165 | - | 3,165 | 4,422 | - | 4,422 |
--------------- | --------------- | --------------- | --------------- | --------------- | --------------- | |
Taxation charge for the year (see Note 7b) | 3,165 | - | 3,165 | 4,422 | - | 4,422 |
========= | ========= | ========= | ========= | ========= | ========= | |
b)Factors affecting the taxation charge for the year
The taxation charge for the year is lower than the standard rate of UK corporation tax for an investment trust company of 25% (2024: 25%). A reconciliation of the standard rate of UK corporation tax to the taxation charge for the year is shown below:
Year ended 31 December 2025 | Year ended 31 December 2024 | |||||
Revenue £'000 | Capital £'000 | Total £'000 | Revenue £'000 | Capital £'000 | Total £'000 | |
Net return/(loss) on ordinary activities before taxation | 52,350 | 224,171 | 276,521 | 46,959 | (31,777) | 15,182 |
--------------- | --------------- | --------------- | --------------- | --------------- | --------------- | |
Net return/(loss) on ordinary activities before taxation multiplied by the standard rate of UK corporation tax of 25% (2024: 25%) | 13,088 | 56,043 | 69,131 | 11,740 | (7,944) | 3,796 |
Effects of: |
|
|
| |||
Capital (gains)/losses not taxable 1 | - | (59,185) | (59,185) | - | 3,709 | 3,709 |
Income not taxable | (13,081) | - | (13,081) | (11,131) | - | (11,131) |
Expenses not deductible | - | 1,329 | 1,329 | - | 2,077 | 2,077 |
Excess management expenses | (7) | 1,813 | 1,806 | (609) | 2,158 | 1,549 |
Overseas taxation | 3,165 | - | 3,165 | 4,422 | - | 4,422 |
--------------- | --------------- | --------------- | --------------- | --------------- | --------------- | |
Total taxation charge for the year (see Note 7a) | 3,165 | - | 3,165 | 4,422 | - | 4,422 |
========= | ========= | ========= | ========= | ========= | ========= | |
1 The Company is exempt from UK taxation on capital gains as it meets the HM Revenue & Customs criteria for an investment company set out in Section 1159 of the Corporation Tax Act 2010.
c)Deferred taxation
A deferred tax asset of £20,482,000 (2024: £18,676,000), in respect of excess expenses of £76,426,000 (2024: £69,202,000) and excess loan interest of £5,505,000 (2024: £5,505,000), has not been recognised as it is unlikely that there will be sufficient future taxable profits to utilise these expenses.
8RETURN/(LOSS) PER ORDINARY SHARE
Year ended 31 December 2025 | Year ended 31 December 2024 | |
Revenue return per ordinary share | 11.30p | 10.41p |
Capital return/(loss) per ordinary share | 51.50p | (7.78p) |
--------------- | --------------- | |
Total return per ordinary share | 62.80p | 2.63p |
========= | ========= |
The return/(loss) per ordinary share is based on the net return/(loss) on ordinary activities after taxation for the year divided by the weighted average number of ordinary shares held outside of Treasury during the year, as shown below:
£'000 | £'000 | |||||
Net revenue return on ordinary activities after taxation | 49,185 | 42,537 | ||||
Net capital return/(loss) on ordinary activities after taxation | 224,171 | (31,777) | ||||
--------------- | --------------- | |||||
Total return on ordinary activities after taxation | 273,356 | 10,760 | ||||
========= | ========= | |||||
Number | Number | |||||
Weighted average number of ordinary shares held outside of Treasury | 435,250,229 | 408,730,523 | ||||
========= | ========= | |||||
9DIVIDENDS PAID TO SHAREHOLDERS
Year ended 31 December 2025 £'000 | Year ended 31 December 2024 £'000 | |
Dividends paid | ||
Interim dividend of 3.90 pence per ordinary share paid for the year ended 31 December 2025 | 15,714 | - |
Final dividend of 5.50 pence per ordinary share paid for the year ended 31 December 2024 | 22,480 | - |
Interim dividend of 3.60 pence per ordinary share paid for the year ended 31 December 2024 | - | 14,714 |
Final dividend of 4.99 pence per ordinary share paid for the year ended 31 December 2023 | - | 20,396 |
--------------- | --------------- | |
38,194 | 35,110 | |
========= | ========= | |
Dividends proposed |
| |
Final dividend of 6.00 pence per ordinary share proposed for the year ended 31 December 2025 | 30,548 | - |
Final dividend of 5.50 pence per ordinary share proposed for the year ended 31 December 2024 | - | 22,480 |
--------------- | --------------- | |
Total dividend proposed | 30,548 | 22,480 |
========= | ========= |
The Directors have proposed the payment of a final dividend for the year ended 31 December 2025 of 6.00 pence per ordinary share which is subject to approval by shareholders at the Annual General Meeting on 12 May 2026 and has not been included as a liability in these Financial Statements. The dividend will be paid on 19 May 2026 to shareholders on the register at the close of business on 27 March 2026 (ex-dividend date 26 March 2026).
10INVESTMENTS
31 December 2025 £'000 | 31 December 2024 £'000 | |
Investments held at fair value | 2,189,231 | 1,487,772 |
========= | ========= | |
Opening book cost | 1,005,206 | 943,460 |
Opening investment holding gains | 482,566 | 575,415 |
--------------- | --------------- | |
Opening fair value | 1,487,772 | 1,518,875 |
========= | ========= | |
Movements in the year |
| |
Purchases at cost | 761,976 | 185,382 |
Assets acquired in respect of the transaction with HET 1 | 478,394 | - |
Costs in respect to the transaction with HET 1 | 892 | - |
Sales - proceeds | (747,034) | (169,184) |
Gains/(losses) on investments | 207,231 | (47,301) |
--------------- | --------------- | |
Closing fair value | 2,189,231 | 1,487,772 |
========= | ========= |
|
Closing book cost | 1,607,792 | 1,005,206 |
Closing investment holding gains | 581,439 | 482,566 |
--------------- | --------------- | |
Closing fair value | 2,189,231 | 1,487,772 |
========= | ========= |
1 See Accounting Policy 2 (a) above for further details.
The Company received £747,034,000 (2024: £169,184,000) from investments sold in the year. The book cost of these investments when they were purchased was £637,784,000 (2024: £123,636,000). These investments have been revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments.
Investment transaction costs
Transaction costs incurred in the acquisition and disposal of investments, which are included in the gains/(losses) on investments above, were as follows:
Year ended 31 December 2025 £'000 | Year ended 31 December 2024 £'000 | |
Purchases transaction costs | 1,388 | 488 |
Sales transaction costs | 176 | 70 |
--------------- | --------------- | |
1,564 | 558 | |
========= | ========= |
11DERIVATIVE INSTRUMENTS
Year ended 31 December 2025 £'000 | Year ended 31 December 2024 £'000 | |||
Gains on derivative instruments | ||||
Gains on long CFD positions closed | 20,597 | 41,187 | ||
Losses on short CFD positions closed | (6,325) | (8,418) | ||
Gains on futures contracts closed | 5,217 | 5,815 | ||
Movement in investment holding gains/(losses) on long CFDs | 6,603 | (2,246) | ||
Movement in investment holding losses on short CFDs | - | (142) | ||
Movement in investment holding gains/(losses) on futures | 1,526 | (773) | ||
--------------- | --------------- | |||
27,618 | 35,423 | |||
========= | ========= | |||
31 December 2025 Fair value £'000 | 31 December 2024 Fair value £'000 | |||
Derivative instruments recognised on the Balance Sheet | ||||
Derivative instrument assets | 2,333 | - | ||
Derivative instrument liabilities | - | (5,796) | ||
--------------- | --------------- | |||
2,333 | (5,796) | |||
========= | ========= | |||
31 December 2025 | 31 December 2024 | |||
Fair value £'000 | Asset exposure £'000 | Fair value £'000 | Asset exposure £'000 | |
At the year end the Company held the following derivative instruments | ||||
Long CFDs | 1,928 | 200,209 | (4,675) | 196,659 |
Long futures | 405 | 47,039 | (1,121) | 54,743 |
--------------- | --------------- | --------------- | --------------- | |
2,333 | 247,248 | (5,796) | 251,402 | |
========= | ========= | ========= | ========= | |
12DEBTORS
31 December 2025 £'000 | 31 December 2024 £'000 | |
Accrued income | 1,930 | 618 |
Taxation recoverable | 9,014 | 8,807 |
Other debtors and prepayments | 372 | 81 |
--------------- | --------------- | |
11,316 | 9,506 | |
========= | ========= |
13OTHER CREDITORS
31 December 2025 £'000 | 31 December 2024 £'000 | |
Creditors and accruals | 1,613 | 1,473 |
========= | ========= |
14LOAN NOTES (UNSECURED)
31 December 2025 £'000 | 31 December 2024 £'000 | |
1.53% unsecured loan notes 2047 (Euro) | 21,829 | - |
1.66% unsecured loan notes 2052 (Euro) | 8,732 | - |
--------------- | --------------- | |
30,561 | - | |
========= | ========= |
The Euro 25,000,000 1.53% unsecured loan notes 2047 were issued by HET on 31 January 2022 and are redeemable at par on 31 January 2047. They are shown on the balance sheet on the effective interest basis. HET issued the unsecured loan notes net of issuance costs totalling £124,000.
The Euro 10,000,000 1.66% unsecured loan notes 2052 were issued by HET on 31 January 2022 and are redeemable at par on 31 January 2052. They are shown on the balance sheet on the effective interest basis. HET issued the unsecured loan notes net of issuance costs totalling £50,000.
The issue costs for both series of loan notes are amortised over their respective terms. See Note 18 for more details on the estimate of the fair value of the unsecured loan notes.
15SHARE CAPITAL
31 December 2025 | 31 December 2024 | |||
Number of shares | Nominal value £'000 | Number of shares | Nominal value £'000 | |
Issued, allotted and fully paid | ||||
Ordinary shares of 2.5 pence each held outside of Treasury | ||||
Beginning of the year | 408,730,523 | 10,218 | 408,730,523 | 10,218 |
Ordinary shares repurchased into Treasury | (9,286,723) | (232) | - | - |
New ordinary shares issued in respect of the transaction with HET | 111,902,155 | 2,798 | - | - |
--------------- | --------------- | --------------- | --------------- | |
End of the year | 511,345,955 | 12,784 | 408,730,523 | 10,218 |
========= | ========= | ========= | ========= | |
|
|
| ||
Ordinary shares of 2.5 pence each held in Treasury1 |
|
| ||
Beginning of the year | 7,717,387 | 193 | 7,717,387 | 193 |
Ordinary shares repurchased into Treasury | 9,286,723 | 232 | - | - |
End of the year | 17,004,110 | 425 | 7,717,387 | 193 |
--------------- | --------------- | --------------- | --------------- | |
Total share capital |
| 13,209 | 10,411 | |
|
| ========= | ========= | |
1 Ordinary shares held in Treasury carry no rights to vote, to receive a dividend or to participate in a winding up of the Company.
On 26 September 2025, the Company acquired £462.7 million of net assets from HET, in consideration for the issue of 111,902,155 new shares to HET shareholders as part of the combination of assets.
During the year, the Company repurchased 9,286,723 (2024: nil) ordinary shares and held them in Treasury. The cost of repurchasing these shares of £38,097,000 (2024: £nil) was charged to the Capital Reserve.
16CAPITAL AND RESERVES
Share capital £'000 | Share premium account £'000 | Capital redemption reserve £'000 | Capital reserve £'000 | Revenue reserve £'000 | Total shareholders' funds £'000 | |
At 1 January 2025 | 10,411 | 58,615 | 5,414 | 1,440,810 | 47,879 | 1,563,129 |
Gains on investments (see Note 10) | - | - | - | 207,231 | - | 207,231 |
Gains on derivative instruments (see Note 11) | - | - | - | 27,618 | - | 27,618 |
Foreign exchange gains | - | - | - | 1,889 | - | 1,889 |
Investment management fees (see Note 4) | - | - | - | (7,253) | - | (7,253) |
Finance costs (see Note 6) | - | - | - | (5,314) | - | (5,314) |
New ordinary shares issued in respect of the transaction with HET | 2,798 | 458,644 | - | - | - | 461,442 |
Expenses in respect of the transaction with HET 1 | - | - | - | (406) | - | (406) |
Repurchase of ordinary shares (see Note 15) | - | - | - | (38,097) | - | (38,097) |
Revenue returns after taxation for the year | - | - | - | - | 49,185 | 49,185 |
Dividends paid to shareholders (see Note 9) | - | - | - | - | (38,194) | (38,194) |
--------------- | --------------- | --------------- | --------------- | --------------- | --------------- | |
At 31 December 2025 | 13,209 | 517,259 | 5,414 | 1,626,478 | 58,870 | 2,221,230 |
========= | ========= | ========= | ========= | ========= | ========= |
1 See Accounting Policy 2 (a) above for further details.
Share capital £'000 | Share premium account £'000 | Capital redemption reserve £'000 | Capital reserve £'000 | Revenue reserve £'000 | Total shareholders ' funds £'000 | |
At 1 January 2024 | 10,411 | 58,615 | 5,414 | 1,472,587 | 40,452 | 1,587,479 |
Losses on investments (see Note 10) | - | - | - | (47,301) | - | (47,301) |
Gains on derivative instruments (see Note 11) | - | - | - | 35,423 | - | 35,423 |
Foreign exchange losses | - | - | - | (2,956) | - | (2,956) |
Investment management fees (see Note 4) | - | - | - | (8,634) | - | (8,634) |
Finance costs (see Note 6) | - | - | - | (8,309) | - | (8,309) |
Revenue return on ordinary activities after taxation for the year | - | - | - | - | 42,537 | 42,537 |
Dividends paid to shareholders (see Note 9) | - | - | - | - | (35,110) | (35,110) |
--------------- | --------------- | --------------- | --------------- | --------------- | --------------- | |
At 31 December 2024 | 10,411 | 58,615 | 5,414 | 1,440,810 | 47,879 | 1,563,129 |
========= | ========= | ========= | ========= | ========= | ========= |
The capital reserve balance at 31 December 2025 includes investment holding gains of £581,439,000 (2024: gains of £482,566,000) as detailed in Note 10. See Note 2 (r) for further details. The revenue and capital reserves are distributable by way of dividends.
17NET ASSET VALUE PER ORDINARY SHARE
The calculation of the net asset value per ordinary share is based on the total shareholders' funds divided by the number of ordinary shares held outside of Treasury.
31 December 2025 | 31 December 2024 | |
Total shareholders' funds | £2,221,230,000 | £1,563,129,000 |
Ordinary shares held outside of Treasury at year end | 511,345,955 | 408,730,523 |
--------------- | --------------- | |
Net asset value per ordinary share | 434.39p | 382.44p |
========= | ========= |
It is the Company's policy that shares held in Treasury will only be reissued at net asset value per ordinary share or at a premium to net asset value per ordinary share and, therefore, shares held in Treasury have no dilutive effect.
18FINANCIAL INSTRUMENTS
Management of risk
The Company's investing activities in pursuit of its investment objective involve certain inherent risks. The Board confirms that there is an ongoing process for identifying, evaluating and managing the risks faced by the Company. The Board with the assistance of the Manager, has developed a risk matrix which, as part of the internal control process, identifies the risks that the Company faces. Risks are identified and graded in this process, together with steps taken in mitigation, and are updated and reviewed on an ongoing basis. These risks and how they are identified, evaluated and managed are shown in the Strategic Report above.
This note refers to the identification, measurement and management of risks potentially affecting the value of financial instruments. The Company's financial instruments may comprise:
• Equity shares held in accordance with the Company's investment objective and policies;
• Derivative instruments which comprise CFDs and futures on equity indices;
• Cash, liquid resources and short-term debtors and creditors that arise from its operations; and
• Bank borrowings
The risks identified arising from the Company's financial instruments are market price risk (which comprises interest rate risk, foreign currency risk and other price risk), liquidity risk, counterparty risk, credit risk and derivative instrument risk. The Board reviews and agrees policies for managing each of these risks, which are summarised below. These policies are consistent with those followed last year.
Market price risk
Interest rate risk
The Company finances its operations through its share capital and reserves. In addition, the Company has gearing through the use of derivative instruments and on unsecured fixed rate loan facilities of Euro 25m expiring on 31 January 2047 and Euro 10m expiring on 31 January 2052. The level of gearing is reviewed by the Board and the Lead Portfolio Manager.
Interest rate risk exposure
The values of the Company's financial instruments that are exposed to movements in interest rates are shown below:
31 December 2025 £'000 | 31 December 2024 £'000 | |
Exposure to financial instruments that bear interest | ||
Long CFDs - exposure less fair value | 198,281 | 201,334 |
Unsecured loan notes | 30,561 | - |
--------------- | --------------- | |
228,842 | 201,334 | |
========= | ========= | |
Exposure to financial instruments that earn interest |
| |
Amounts held at futures clearing houses and brokers | 2,814 | 10,078 |
Cash and cash equivalents | 47,710 | 63,042 |
--------------- | --------------- | |
50,524 | 73,120 | |
========= | ========= | |
Net exposure to financial instruments that bear interest | 178,318 | 128,214 |
========= | ========= |
Foreign currency risk
The Company's net return/(loss) on ordinary activities after taxation for the year and its net assets can be affected by foreign exchange rate movements because the Company has income, assets and liabilities which are denominated in currencies other than the Company's functional currency which is UK sterling. The Company can also be subject to short-term exposure from exchange rate movements, for example, between the date when an investment is purchased or sold and the date when settlement of the transaction occurs.
Three principal areas have been identified where foreign currency risk could impact the Company:
• Movements in exchange rates affecting the value of investments and derivative instruments;
• Movements in exchange rates affecting short-term timing differences; and
• Movements in exchange rates affecting income received.
Currency exposure of financial assets
The currency profile of the Company's financial assets is shown below:
31 December 2025 | |||||
Currency | Investments held at fair value £'000 | Long exposure to derivative instruments £'000 | Debtors1 £'000 | Cash and cash equivalents2 £'000 | Total £'000 |
Euro | 1,392,580 | 196,947 | 5,975 | 47,067 | 1,642,569 |
Swiss franc | 483,482 | - | 4,103 | - | 487,585 |
Danish krone | 66,619 | - | 316 | 60 | 66,995 |
Swedish krona | 117,415 | - | - | - | 117,415 |
US dollar | - | 50,301 | - | - | 50,301 |
Norwegian krone | 37,683 | - | - | - | 37,683 |
UK sterling | 91,452 | - | 3,736 | 583 | 95,771 |
--------------- | --------------- | --------------- | --------------- | --------------- | |
2,189,231 | 247,248 | 14,130 | 47,710 | 2,498,319 | |
========= | ========= | ========= | ========= | ========= | |
1 Debtors include amounts held at futures clearing houses and brokers.
2 Cash and cash equivalent are made up of £4,660,000 cash at bank and £43,050,000 held in Fidelity Institutional Liquidity Fund.
31 December 2024 | |||||
Currency | Investments held at fair value £'000 | Long exposure to derivative instruments £'000 | Debtors 1 £'000 | Cash and cash equivalents 2 £'000 | Total £'000 |
Euro | 917,732 | 213,759 | 4,309 | 63,042 | 1,198,842 |
Swiss franc | 295,505 | - | 3,752 | - | 299,257 |
Danish krone | 85,263 | - | 341 | - | 85,604 |
Swedish krona | 92,286 | - | - | - | 92,286 |
US dollar | - | 37,643 | - | - | 37,643 |
Norwegian krone | 25,629 | - | - | - | 25,629 |
UK sterling | 71,357 | - | 11,182 | - | 82,539 |
--------------- | --------------- | --------------- | --------------- | --------------- | |
1,487,772 | 251,402 | 19,584 | 63,042 | 1,821,800 | |
========= | ========= | ========= | ========= | ========= | |
1 Debtors include amounts held at futures clearing houses and brokers.
2 Cash and cash equivalent are made up of £3,460,000 cash at bank and £59,582,000 held in Fidelity Institutional Liquidity Fund.
Currency exposure of financial liabilities
The currency profile of the Company's financial liabilities is shown below:
31 December 2025 | |||
Currency | Unsecured loan notes £'000 | Other creditors £'000 |
Total £'000 |
Euro | 30,561 | 107 | 30,668 |
US dollar | - | 87 | 87 |
UK sterling | - | 1,419 | 1,419 |
--------------- | --------------- | --------------- | |
30,561 | 1,613 | 32,174 | |
========= | ========= | ========= | |
31 December 2024 | |||
Currency | Unsecured loan notes £'000 | Other creditors £'000 | Total £'000 |
Euro | - | 200 | 200 |
US dollar | - | 78 | 78 |
UK sterling | - | 1,195 | 1,195 |
--------------- | --------------- | --------------- | |
- | 1,473 | 1,473 | |
========= | ========= | ========= | |
Other price risk
Other price risk arises mainly from uncertainty about future prices of financial instruments used in the Company's business. It represents the potential loss the Company might suffer through holding market positions in the face of price movements. The Board meets quarterly to consider the asset allocation of the portfolio and the risk associated with particular industry sectors within the parameters of the investment objective. The Portfolio Managers are responsible for actively monitoring the existing portfolio selected in accordance with the overall asset allocation parameters described above and seek to ensure that individual stocks also meet an acceptable risk/reward profile.
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulties in meeting obligations associated with financial liabilities. The Company's assets mainly comprise readily realisable securities and derivative instruments which can be sold easily to meet funding commitments if necessary. Short-term flexibility is achieved by the use of a bank overdraft, if required. The Company has the current borrowing of Euro 25m expiring 31 January 2047 and Euro 10m expiring 31 January 2052.
Liquidity risk exposure
At 31 December 2025, contractual maturities of the financial liabilities at the year end, based on the earliest date on which payment can be required are as follows:
31 December 2025 | |||
Within one year £'000 | More than one year £'000 | Total £'000 | |
Creditors and accruals | 1,613 | - | 1,613 |
1.53% unsecured loan notes 2047 (Euro) 1 | 334 | 21,829 | 22,163 |
1.66% unsecured loan notes 2052 (Euro) 1 | 145 | 8,732 | 8,877 |
--------------- | --------------- | --------------- | |
2,092 | 30,561 | 32,653 | |
========= | ========= | ========= | |
|
|
| |
1 Acquired by the Company, as part of the combination with HET on 26 September 2025.
31 December 2024 | |||
Within one year £'000 | More than one year £'000 | Total £'000 | |
Derivative instruments | 5,796 | - | 5,796 |
Creditors and accruals | 1,473 | - | 1,473 |
--------------- | --------------- | --------------- | |
7,269 | - | 7,269 | |
========= | ========= | ========= | |
Counterparty risk
Certain derivative instruments in which the Company invests are not traded on an exchange but instead will be traded between counterparties based on contractual relationships, under the terms outlined in the International Swaps and Derivatives Association's ("ISDA") market standard derivative legal documentation. These are known as Over The Counter ("OTC") trades. As a result, the Company is subject to the risk that a counterparty may not perform its obligations under the related contract. In accordance with the risk management process which the Manager employs, this risk is minimised by only entering into transactions with counterparties which are believed to have an adequate credit rating at the time the transaction is entered into, by ensuring that formal legal agreements covering the terms of the contract are entered into in advance, and through adopting a counterparty risk framework which measures, monitors and manages counterparty risk by the use of internal and external credit agency ratings and by evaluating derivative instrument credit risk exposure
31 December 2025 | 31 December 2024 | |||
Collateral received £'000 | Collateral pledged £'000 | Collateral received £'000 | Collateral pledged £'000 | |
J.P. Morgan Securities plc | 1,600 | - | - | 5,025 |
UBS AG | - | 2,814 | 50 | 5,053 |
--------------- | --------------- | --------------- | --------------- | |
1,600 | 2,814 | 50 | 10,078 | |
========= | ========= | ========= | ========= | |
Credit risk
Financial instruments may be adversely affected if any of the institutions with which money is deposited suffer insolvency or other financial difficulties. All transactions are carried out with brokers that have been approved by the Manager and are settled on a delivery versus payment basis. Limits are set on the amount that may be due from any one broker and are kept under review by the Manager. Exposure to credit risk arises on unsettled security transactions and derivative instrument contracts and cash at bank.
Derivative instrument risk
The risks and risk management processes which result from the use of derivative instruments, are set out in a documented Risk Management Process Document. Derivative instruments are used by the Manager for the following purposes:
• to gain unfunded long exposure to equity markets, sectors or single stocks. Unfunded exposure is exposure gained without an initial flow of capital; and
• to position short exposures in the Company's portfolio. These uncovered exposures benefit from falls in the prices of shares which the Portfolio Managers believe to be overvalued. These positions, therefore, distinguish themselves from other short exposures held for hedging purposes since they are expected to add risk to the portfolio.
RISK SENSITIVITY ANALYSIS
Interest rate risk sensitivity analysis
Based on the financial instruments held and interest rates at 31 December 2025, an increase of 1.00% in interest rates throughout the year, with all other variables held constant, would have decreased the net return on ordinary activities after taxation for the year and decreased the net assets of the Company by £1,478,000 (2024: increased the net loss and increase the net assets by £1,282,000). A decrease of 1.00% in interest rates throughout the year would have had an equal but opposite effect.
Foreign currency risk sensitivity analysis
Based on the financial instruments held and currency exchange rates at the Balance Sheet date, a 10% strengthening of the UK sterling exchange rate against foreign currencies, with all other variables held constant, would have decreased the Company's net return on ordinary activities after taxation for the year and decreased the Company's net assets (2024: decreased the net loss and decreased the net assets) by the following amounts:
Currency | 31 December 2025 £'000 | 31 December 2024 £'000 |
Euro | 146,536 | 108,967 |
Swiss franc | 44,326 | 27,205 |
Swedish krona | 10,674 | 8,390 |
Danish krone | 6,090 | 7,782 |
US dollar | 4,565 | 3,415 |
Norwegian krone | 3,426 | 2,330 |
--------------- | --------------- | |
215,617 | 158,089 | |
========= | ========= |
Based on the financial instruments held and currency exchange rates at the Balance Sheet date, a 10% weakening of the UK sterling exchange rate against foreign currencies, with all other variables held constant, would have increased the Company's net return on ordinary activities after taxation for the year and increased the Company's net assets (2024: increased the net loss and increased the net assets) by the following amounts:
Currency | 31 December 2025 £'000 | 31 December 2024 £'000 |
Euro | 179,100 | 133,182 |
Swiss franc | 54,176 | 33,251 |
Swedish krona | 13,046 | 10,254 |
Danish krone | 7,444 | 9,512 |
US dollar | 5,579 | 4,174 |
Norwegian krone | 4,187 | 2,848 |
--------------- | --------------- | |
263,532 | 193,221 | |
========= | ========= |
Other price risk - exposure to investments sensitivity analysis
Based on the investments held and share prices at 31 December 2025, an increase of 10% in share prices, with all other variables held constant, would have increased the Company's net return on ordinary activities after taxation for the year and increased the net assets of the Company by £218,923,000 (2024: increased the net loss and increased the net assets by £148,777,000). A decrease of 10% in share prices would have had an equal and opposite effect.
Other price risk - net exposure to derivative instruments sensitivity analysis
Based on the derivative instruments held and share prices at 31 December 2025, an increase of 10% in the share prices underlying the derivative instruments, with all other variables held constant, would have increased the Company's net return on ordinary activities after taxation for the year and increased the net assets of the Company by £24,725,000 (2024: increased the net loss and increased the net assets by £25,140,000). A decrease of 10% in share prices of the investments underlying the derivative instruments would have had an equal and opposite effect.
Fair Value of Financial Assets and Liabilities
Financial assets and liabilities are stated in the Balance Sheet at values which are not materially different to their fair values. As explained in Notes 2 (k) and (l), investments and derivative instruments are shown at fair value. In the case of cash and cash equivalents, book value approximates to fair value due to the short maturity of the instruments. The exception are the Euro unsecured bank loans, their fair value having been calculated by discounting future cash flows at current Euro interest rates.
31 December 2025 | ||
At fair value £'000 | At amortised cost £'000 | |
1.53% unsecured loan notes 2047 (Euro) | 21,433 | 21,829 |
1.66% unsecured loan notes 2052 (Euro) | 8,481 | 8,732 |
--------------- | --------------- | |
Total | 29,914 | 30,561 |
========= | ========= | |
The unsecured loan notes were acquired as a result of the transaction with HET.
In order to comply with fair value accounting disclosures only, the fair value of the unsecured loan notes has been estimated to be £29,914,000 (2024: £nil) and is categorised as Level 3 in the fair value hierarchy as described below. However, for the purpose of the daily NAV announcements, the unsecured loan notes are valued at par in the NAV because they are not traded and the Directors expect them to be held to maturity and, accordingly, the directors have assessed that this is the most appropriate value to be applied for this purpose.
The estimate of the fair value of each unsecured loan note is calculated by aggregating the discounted value of future cash flows, being the contractual interest payments and the repayment of capital at maturity as each note falls due. The discount rate used for each note is based on the yield of the reference instrument that was used in the pricing of each loan note plus the same credit spread applied at the issue. The net assets including the unsecured loan notes at fair value would have been £2,221,877,000 at 31 December 2025 (compared to £2,221,230,000 with the unsecured loan notes at par value), equivalent to a net asset value per ordinary share of 434.52p (compared to 434.39p with loan notes at par value).
Fair Value Hierarchy
The Company is required to disclose the fair value hierarchy that classifies its financial instruments measured at fair value at one of three levels, according to the relative reliability of the inputs used to estimate the fair values.
Classification | Input |
Level 1 | Valued using quoted prices in active markets for identical assets |
Level 2 | Valued by reference to inputs other than quoted prices included in level 1 that are observable (i.e. developed using market data) for the asset or liability, either directly or indirectly |
Level 3 | Valued by reference to valuation techniques using inputs that are not based on observable market data |
Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset. The valuation techniques used by the Company are explained in Notes 2 (k) and (l). The table below sets out the Company's fair value hierarchy.
31 December 2025 | ||||
Financial assets at fair value through profit or loss | Level 1 £'000 | Level 2 £'000 | Level 3 £'000 | Total £'000 |
Investments | 2,189,231 | - | - | 2,189,231 |
Derivative instrument assets | 405 | 1,928 | - | 2,333 |
--------------- | --------------- | --------------- | --------------- | |
2,189,636 | 1,928 | - | 2,191,564 | |
========= | ========= | ========= | ========= | |
Financial liabilities at fair value through profit or loss |
|
|
|
|
Derivative instrument liabilities | - | - | - | - |
========= | ========= | ========= | ========= | |
31 December 2024 | ||||
Financial assets at fair value through profit or loss | Level 1 £'000 | Level 2 £'000 | Level 3 £'000 | Total £'000 |
Investments | 1,487,772 | - | - | 1,487,772 |
Derivative instrument assets | - | - | - | - |
--------------- | --------------- | --------------- | --------------- | |
1,487,772 | - | - | 1,487,772 | |
========= | ========= | ========= | ========= | |
Financial liabilities at fair value through profit or loss | ||||
Derivative instrument liabilities | (1,121) | (4,675) | - | (5,796) |
========= | ========= | ========= | ========= | |
In the event that the Company decided to pay back the loan notes earlier than the maturity date, the loan note agreements include certain clauses that may require additional payments to be made. These clauses are primarily to protect the lender from any losses suffered from early repayment. Such 'make-whole amounts' are based on any excess of the discounted value of the remaining scheduled payments over the life of the unsecured loan notes above the value of the principal. The make-whole amount cannot be less than zero. The directors have assessed that the likelihood of early repayment is considered to be highly unlikely to occur.
19CAPITAL RESOURCES AND GEARING
The Company does not have any externally imposed capital requirements. The financial resources of the Company comprise its share capital and reserves, as disclosed in the Balance Sheet above, and any gearing, which is managed by the use of derivative instruments. Financial resources are managed in accordance with the Company's investment policy and in pursuit of its investment objective, both of which are detailed in the Strategic Report in the Annual Report. The principal risks and their management are disclosed in the Strategic Report above and in Note 18.
The Company's gross gearing and net gearing at the year end is set out below:
31 December 2025 | ||||
Gross gearing | Net gearing | |||
Asset exposure £'000 | %1 | Asset exposure £'000 | %1 | |
Investments | 2,189,231 | 98.6 | 2,189,231 | 98.6 |
Long CFDs | 200,209 | 9.0 | 200,209 | 9.0 |
Long futures | 47,039 | 2.1 | 47,039 | 2.1 |
Total long exposures | 2,436,479 | 109.7 | 2,436,479 | 109.7 |
Gross asset exposure/net market exposure | 2,436,479 | 109.7 | 2,436,479 | 109.7 |
========= | ========= | ========= | ========= | |
Shareholders' funds | 2,221,230 |
| 2,221,230 |
|
========= |
| ========= |
| |
|
|
|
| |
Gearing 2 |
| 9.7 |
| 9.7 |
| ========= |
| ========= | |
1
Asset exposure to the market expressed as a percentage of shareholders' funds.
2
Gearing is the amount by which gross asset exposure/net market exposure exceeds shareholders' funds expressed as a percentage of shareholders' funds.
31 December 2024 | ||||
Gross gearing | Net gearing | |||
Asset exposure £'000 | % 1 | Asset exposure £'000 | % 1 | |
Investments | 1,487,772 | 95.2 | 1,487,772 | 95.2 |
Long CFDs | 196,659 | 12.6 | 196,659 | 12.6 |
Long futures | 54,743 | 3.5 | 54,743 | 3.5 |
Total long exposures | 1,739,174 | 111.3 | 1,739,174 | 111.3 |
Gross asset exposure/net market exposure | 1,739,174 | 111.3 | 1,739,174 | 111.3 |
========= | ========= | ========= | ========= | |
Shareholders' funds | 1,563,129 | 1,563,129 | ||
========= |
| ========= |
| |
Gearing 2 | 11.3 | 11.3 | ||
| ========= |
| ========= | |
1 Asset exposure to the market expressed as a percentage of shareholders' funds.
2 Gearing is the amount by which gross asset exposure/net market exposure exceeds shareholders' funds expressed as a percentage of shareholders' funds.
20TRANSACTIONS WITH THE MANAGERS AND RELATED PARTIES
FIL Investment Services (UK) Limited is the Company's Alternative Investment Fund Manager and has delegated portfolio management and the role of company secretary to FIL Investments International ("FII"). Both companies are Fidelity group companies.
Details of the current fee arrangements are given in the Directors' Report in the Annual Report. During the year, the following expenses were payable to FII:
31 December 2025 £'000 | 31 December 2024 £'000 | |
Management fees | 12,208 | 11,512 |
Marketing services | 214 | 221 |
========= | ========= |
At the Balance Sheet date, the following balances payable to FII were accrued and included in other creditors:
31 December 2025 £'000 | 31 December 2024 £'000 | |
Management fees | 1,237 | 972 |
Marketing services | - | 53 |
========= | ========= |
As at 31 December 2025, the Board consisted of seven non-executive Directors, all of whom are considered to be independent by the Board. None of the Directors have a service contract with the Company.
Disclosures of the Directors' interests in the ordinary shares of the Company and Directors' fees and taxable expenses relating to reasonable travel expenses paid to the Directors are given in the Directors' Remuneration Report in the Annual Report. In addition to the fees and taxable expenses disclosed in the Directors' Remuneration Report, £21,000 (2024: £20,000) of Employers' National Insurance Contributions was also paid by the Company. As at 31 December 2025, Directors' fees of £25,000 (2024: £22,000) were accrued and payable.
ALTERNATIVE PERFORMANCE MEASURES
The Company uses the following as Alternative Performance Measures and these are all defined in the Glossary of Terms in the Annual Report.
Discount/Premium
Details of the Company's discount are on the Financial Highlights page in the Annual Report.
Gearing
See Note 19 above for details of the Company's gearing (both gross and net).
Net Asset Value ("NAV") per Ordinary Share
See the Balance Sheet and Note 17 above for further details.
Ongoing Charges Ratio
The ongoing charges ratio has been calculated in accordance with guidance issued by the AIC as the total of management fees and other expenses expressed as a percentage of the average net assets throughout the year.
31 December 2025 | 31 December 2024 | |
Investment management fees (£'000) | 12,208 | 11,512 |
Other expenses (£'000) | 1,079 | 1,063 |
Ongoing charges (£'000) | 13,287 | 12,575 |
Fee waivers in respect of the transaction with HET (£'000) | (2,537) | - |
Ongoing charges ratio | 0.73% | 0.76% |
Ongoing charges ratio including fee waivers | 0.59% | 0.76% |
========= | ========= |
Revenue, Capital and Total Returns per Share
See the Income Statement and Note 8 above for further details.
Total Return Performance
The NAV per ordinary share total return performance includes reinvestment of the dividend in the NAV of the Company on the ex-dividend date. The ordinary share price total return performance includes the reinvestment of the net dividend in the month that the share price goes ex-dividend.
The tables below provide information relating to the NAV per ordinary share and the ordinary share price of the Company, the impact of the dividend reinvestments and the total returns for the years ended 31 December 2025 and 31 December 2024.
2025 | Net asset value per ordinary share | Ordinary share price |
31 December 2024 | 382.44p | 352.00p |
31 December 2025 | 434.39p | 416.50p |
Change in year | +13.6% | +18.3% |
Impact of dividend reinvestments | +2.6% | +2.8% |
Total return for the year | +16.2% | +21.1% |
========= | ========= | |
2024 | Net asset value per ordinary share | Ordinary share price |
31 December 2023 | 383.39p | 360.00p |
31 December 2024 | 382.44p | 352.00p |
Change in year | -1.5% | -2.2% |
Impact of dividend reinvestments | +2.0% | +2.1% |
Total return for the year | +0.5% | -0.1% |
========= | ========= |
The Annual Financial Report Announcement is not the Company's statutory accounts. The above results for the year ended 31 December 2025 are an abridged version of the Company's full Annual Report and Financial Statements, which have been approved and audited with an unqualified report. The 2024 and 2025 statutory accounts received unqualified reports from the Company's Auditor and did not include any reference to matters to which the Auditor drew attention by way of emphasis without qualifying the reports and did not contain a statement under s.498 of the Companies Act 2006. The financial information for 2024 is derived from the statutory accounts for 2024 which have been delivered to the Registrar of Companies. The 2025 Financial Statements will be filed with the Registrar of Companies in due course.
A copy of the Annual Report will shortly be submitted to the National Storage Mechanism and will be available for inspection at: www.morningstar.co.uk/uk/NSM
The Annual Report will be posted to shareholders later this month and additional copies will be available from the registered office of the Company and on the Company's website: www.fidelity.co.uk/europe where up to date information on the Company, including daily NAV and share prices, factsheets and other information can also be found.
Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.
ENDS
