Proposed combination of The European Smaller Companies Trust plc with European Assets Trust plc

On 23 June 2025 the Boards of The European Smaller Companies Trust PLC (‘ESCT’) and of European Assets Trust PLC (‘EAT’) announced that they had agreed terms for a proposed combination of the assets of the two investment trusts. If approved by the shareholders of both ESCT and EAT, the combination will be effected by way of a scheme of reconstruction and members’ voluntary winding-up of EAT (the ‘Scheme’).

In connection with the Scheme, certain of the assets held by EAT will be transferred to ESCT and EAT shareholders will have the option to elect to receive new shares in ESCT or cash or a combination of both.

ESCT shareholders and EAT shareholders will have the opportunity to vote on whether or not the combination should go ahead. If either the ESCT shareholders or the EAT shareholders reject the proposals, the Scheme will not become effective and ESCT and EAT will continue as separate investment trusts.

Existing ESCT shareholders will continue to hold their ESCT shares in the same way as they currently do. ESCT’s investment objective and policy will remain unchanged and ESCT will continue to invest in European smaller companies. If the combination completes successfully, ESCT has committed to implement a new dividend policy – as further described in question 10 below.

Existing ESCT shareholders will have the opportunity to have a say on whether the combination should go ahead by voting on the resolution to allot the new ESCT shares that are required in order to facilitate the combination.

The directors believe that the proposals are in the best interests of shareholders as a whole and encourage all shareholders to vote in favour of the resolutions to be proposed at ESCT’s general meeting, to be held at 11.00 a.m. on 3 October 2025 at 201 Bishopsgate, London EC2M 3AE.

Upon successful completion of the combination ESCT is expected to have net assets of approximately £810 million. This would mean that ESCT would once again be the largest constituent in the AIC’s European Smaller Companies sector and the costs of operating ESCT will be spread across a larger investor base.

In addition, the Board has negotiated a reduction in the management fees payable by ESCT to its manager, subject to completion of the Scheme, from 0.55% per annum of net assets up to £800m, to 0.50% per annum of net assets up to £800m.

If the combination takes place, EAT shareholders will have the opportunity to elect for either, or a combination of both, of the following options:

• receive cash at a discount of 2% to the adjusted formula asset value of EAT, subject to the limit below; or
• otherwise receive new ESCT shares.

If an EAT shareholder makes no election for cash, they will (subject to any separate arrangements for overseas restricted shareholders) receive new ESCT shares in respect of their entire holding of EAT shares. To elect for cash, an EAT shareholder will need to complete and return a form of election (if their EAT shares are held in certificated form) or submit a TTE instruction in CREST (if their EAT shares are held in uncertificated form).

The total elections for cash are limited to 15% in aggregate of EAT’s shares. Each EAT shareholder may elect to receive cash in respect of more than 15% of its holding in EAT, with any election over 15% being subject to scaling back, dependent on the level of cash elections by other EAT shareholders.

EAT shareholders will be able to have a say on whether or not the combination should go ahead by voting their shares at the EAT general meetings convened for 3 October 2025 and 15 October 2025.

The EAT directors recommend that EAT shareholders vote in favour of the resolutions to be proposed at the EAT general meetings as the combined trust offers EAT shareholders a number of benefits.

The number of new ESCT shares to be issued will be based on the respective adjusted net asset values of each of EAT and ESCT calculated for the purposes of the Scheme and EAT shareholders are referred to paragraph 2 of Part 4 of the ESCT prospectus which sets out an illustration of the number of new ESCT shares they might have received if the adjusted net assets values had been calculated as at 5 September 2025.

For illustrative purposes only, had the Calculation Date been close of business on 5 September 2025 and assuming that no Shareholders had exercised their right to dissent from participation in the Scheme, assuming that the maximum number of Ordinary Shares is elected for the Cash Option, taking into account EAT’s 4th quarterly interim dividend of 1.38p per share and ESCT’s 2nd interim dividend in respect of the financial year to 30 June 2025 of 3.45 p per share:

• the EAT Rollover FAV per Share would have been 98.645013 pence and the ESCT FAV per Share would have been 223.204900 pence which, for the Rollover Option, would have produced a Conversion Ratio of 0.441948 and, in aggregate, 132,262,113 New ESCT Shares would have been issued to Shareholders who were deemed to have elected for the Rollover Option under the Scheme; and
• the EAT Cash FAV per Share would have been 96.414804 pence.

The above figures are for illustrative purposes only and do not represent forecasts. The EAT Rollover FAV per Share, ESCT FAV per Share, EAT Cash FAV per Share and Shareholders' entitlements under the Scheme may materially change up to the Effective Date as a result of, inter alia, changes in the value of investments. For the avoidance of doubt, the illustrative EAT Rollover FAV per Share does not take into account any portfolio realisation costs as they are unquantified as at 5 September 2025.

CT Savings Plans participants (i.e. those holding their EAT shares in the CT Savings Plans) will be offered the same options as all other EAT shareholders (see question 3). The CT Savings Plans administrator will write to CT Savings Plans participants explaining what is happening and setting out the choices available to them. The deadlines for voting on the proposed resolutions, and choosing if you wish to receive cash, will be earlier than the dates in the EAT circular so please ensure you action the request as soon as possible.

Holders of EAT shares via the CT Savings Plans will need to take further action following the combination in order to continue to hold any ESCT shares they received, further details of which are set out in Question 6.

CT Savings Plans participants should be aware that they will not be able to keep their holdings of New ESCT shares in the CT Savings Plans long term. CT Savings Plans participants will have the option of transferring their ESCT shares to another share dealing platform such as Hargreaves Lansdown, AJ Bell, interactive investors or similar, and must do so by before 14 January 2026.

Any new ESCT shares still held in the CT Savings Plans by 14 January 2026 will automatically be sold, potentially triggering a liability to capital gains tax where not held in an HMRC approved tax wrapper.

How to transfer shares from Columbia Threadneedle Savings Plans to new ESCT shares to a share dealing platform

Yes, all shareholders in ESCT and EAT are encouraged by their respective Boards to vote in favour of the resolutions to be proposed at their respective general meetings, as set out in the ESCT circular and EAT circular.

ESCT’s general meeting will be held at 11.00 a.m. on 3 October 2025 meaning ESCT shareholders should ensure that they vote their shares online, via CREST or return their proxy form to the ESCT registrars by the deadline set out in the ESCT circular.

EAT will hold its two general meetings on 3 October 2025 and 15 October 2025, respectively, meaning EAT shareholders should ensure that they vote their shares online, via CREST or return their proxy forms to the EAT registrars by the relevant deadlines set out in the EAT circular.

ESCT shareholders

Shareholders on the main register can logon to www.shareview.com and follow the instructions, or complete the form of proxy, returning this to ESCT’s registrars in accordance with the instructions printed thereon in the pre-paid envelope.

Individual shareholders holding their ESCT shares through investor platforms will need to contact their platform in order to register their vote.  The deadlines for voting through platforms will be earlier than ESCT’s proxy voting deadline.  Shareholders may find this link on how to vote on the various platforms useful:  www.theaic.co.uk/how-to-vote-your-shares

Shareholders may also vote via CREST using the electronic proxy appointment service and for institutional shareholders, via Proximity.

EAT shareholders

Shareholders on the main register can logon to www.investorcentre.co.uk/eproxy and follow the instructions, or complete the forms of proxy, returning them to EAT’s registrars in the pre-paid envelope.

Individual shareholders holding their EAT shares through investor platforms will need to contact their platform in order to register their vote.  The deadlines for voting through platforms will be earlier than EAT's proxy voting deadlines.  Shareholders may find this link on how to vote on the various platforms useful:  www.theaic.co.uk/how-to-vote-your-shares .

Shareholders may also vote via CREST using the electronic proxy appointment service and for institutional shareholders, via Proximity.

As set out above the CT Savings Plans administrator will write to plan participants explaining how they may vote.

ESCT shareholders

As the combination is due to complete before the annual general meeting in November when ESCT shareholders are typically invited to vote on the final dividend, a second interim dividend of 3.45p per ordinary share will be paid in lieu of the final dividend for the year ended 30 June 2025. This brings the total dividend for the financial year to 30 June 2025 to 4.90p per ordinary share, being a 2.1% increase on the prior year.

The record date for the second interim dividend will be 19 September 2025, with the shares trading ex-dividend on 18 September 2025. Payment will be made on 8 October 2025. EAT shareholders receiving new ESCT shares in connection with the Scheme will not be entitled to receive ESCT’s second interim dividend but their new ESCT shares will rank equally for all dividends thereafter.

EAT shareholders

On 15 August 2025, EAT declared the fourth quarter dividend of 1.38p per ordinary share. This dividend will be paid on 24 September 2025 to shareholders on the EAT register on 5 September 2025. The EAT shares traded ex-dividend on 4 September 2025.

If the combination goes ahead, ESCT will implement a new dividend policy with the intention of paying quarterly dividends in respect of each financial year targeting a total of at least 5% of the NAV per share at the end of the previous financial year end. Payments will usually be made in November, February, May and August for each financial year, although in the first year, only three interim dividends will be declared.

The first dividend under the new policy is due to be paid in February 2026 in respect of the second quarter of the financial year ending 30 June 2026, followed by further payments in May and August. Based on a NAV per share of 224.40p as at 30 June 2025 (unaudited), it is expected that dividends of at least 2.81p per share will be paid in February, May and August 2026, totalling 8.43p per share in respect of the financial year to 30 June 2026. No dividend will be paid in respect of the first quarter for the financial year to 30 June 2026.

If the combination goes ahead, Stuart Paterson and Kate Cornish-Bowden will become ESCT directors on the effective date of the Scheme, which is expected to be 15 October 2025.

Stuart has more than 25 years’ experience of equity investing in European private companies and Kate is a former global equities fund manager with extensive investment trust experience. The ESCCT Board believes that their backgrounds will strengthen the skills on the ESCT Board and ensure that EAT shareholders joining ESCT will have some continuity in terms of directors representing their interests. Subject to completion of the Scheme, Stuart and Kate will stand for election by all shareholders at ESCT’s annual general meeting in November 2025.

To accommodate the appointment of the two new directors, and also to provide sufficient head room for future fee increases, ESCT shareholders are being asked, at ESCT’s general meeting, to approve an increase to the overall aggregate limit for directors’ fees from £250,000 to £500,000 per annum. This increase will bring the aggregate cap on the directors’ fees in line with directors’ fee caps applicable to other investment trusts of a similar size to ESCT.

ESCT’s share premium account is a non-distributable reserve and is therefore not available to use for distributions to shareholders, including dividends, or in making purchases of its own shares. The Companies Act does, however, allow ESCT to cancel or reduce its share premium account and credit the resulting sum to ESCT’s distributable reserves so that it may be used for these purposes.

ESCT shareholders are therefore also being asked, at ESCT’s general meeting, to approve the cancellation of ESCT’s share premium account.

The ESCT directors recommend that ESCT shareholders vote in support of this resolution.

If the combination goes ahead, ESCT and EAT will each pay their own costs. ESCT is expecting to pay £1.1m of direct transaction costs, inclusive of any applicable VAT, and will also pay listing fees in respect of the new ESCT shares and stamp duty and/or transfer taxes in acquiring the EAT assets being transferred to ESCT. If the combination completes, ESCT’s manager will make a contribution to the costs of the Scheme equal to up to nine months of the new management fee that would otherwise be payable on the value of the EAT’s assets being transferred to ESCT, which may be settled by way of offset against the management fees payable to it under the management agreement with ESCT.

Existing ESCT shareholders should contact ESCT’s registrar, Equiniti at:

Telephone:  0371 384 2472 (lines open from 8.30 am to 5.30pm UK time)

Post:  Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA

Alternatively, you can contact Janus Henderson Investors at:

Email:    ITSecretariat@janushenderson.com

EAT shareholders should contact EAT’s registrar, Computershare, at

Telephone: +44 (0)370 703 0128

Post: Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol, BS99 6AH

CT Savings Plans holders should contact the administrator at

Telephone: +44 (0) 345 600 3030
Lines are open Monday to Friday 9 a.m. – 5 p.m.