JPMorgan European Growth & Income plc (JEGI) Earnings Call Transcript & Summary

Ladies and gentlemen, good afternoon, and welcome to the 97th Annual General Meeting of the JPMorgan European Growth and Income plc. May I extend a very warm welcome to you all and say how delighted I am that you could attend this Annual General Meeting of the company. Arrangements have also been made for registered shareholders and other interested parties to view this meeting via webcast and ask questions to the investment managers and Board online. Let me start by introducing the members of your Board. My name is Ritu and I am the Chair of your company. The other members of the Board with me in person today are Andrew Robin, who is Chair of the Audit Committee; Guy Walker, who is our Senior Independent Director; Agande Lenard and Karen McKellar. Joining us on the table is Paul Winship, Company Secretary of the company on behalf of JPMorgan Funds Limited. In the front row, we have the investment managers, Agande Fitzalan Howard, Zane Saber and Tim Lewis. We're also joined by several representatives of JPMorgan Asset Management, led by Neil Martin, a client director from the JPMorgan Investment Trust Department and representatives of the company's auditors, brokers and registrar. Shareholders will have recently received the circular relating to the proposed combination of European opportunities to ask PLC and the general meeting to be held on the 28th of July 2026 to consider the proposals. The Board looks forward to discussing the proposals further with shareholders at that meeting. But suffice to say, the Board are very excited about the benefits of this transaction for our investors. The format of today's meeting will be as follows. Firstly, we will have a presentation by the company's investment managers Alexander Fitzalan Howard, [ Danaher ] and Tim Lewis. This will be followed by an opportunity for shareholders in the hall and online participants to ask questions of the investment managers and the Board. We will then deal with the full business of the meeting, as laid out in the notice of the Annual General Meeting on Pages 97 to 101 of the annual report. Finally, we will break Barton Tea, which will give you an opportunity to talk to your directors and the investment managers informally. In line with the practice of many public companies, voting for all resolutions during the AGM will be conducted by way of a poll rather than a show of hands. Calling a poll aids the smooth running of the AGM and is recommended by investor bodies since the process gives the opportunity for every shareholder to participate and it is deemed to give greater transparency on the boating figures. I will explain the poll procedures later in the meeting. I will now hand over the meeting to the company's investment managers.

Good afternoon, everyone, and thank you for joining us. My name is Zenah Shuhaiber, Portfolio Manager of JPMorgan, European Growth and Income Trust and I'm joined today by my colleagues and co-managers, Tim and Alexander. We're very pleased to be here. It's great to see so many familiar faces and also to welcome shareholders who are joining us for the first time. What we will cover today is a short review of the past year, a reminder of our investment approach with some stock examples and then move on to our outlook and positioning. First, to give a quick overview of what we are trying to achieve. There are 3 main highlights. One, our investment objective and approach to investing. Secondly, how we make use of the investment trust structure. -- with our dividend policy and approach to gearing. And last but not least, our performance track record. So to begin with, our aims to deliver a core portfolio for investors by selecting European stocks outside of the U.K. We focus on companies that as a group, are not only attractively valued, meaning they are cheaper than the broader market, but also demonstrate a higher quality and stronger momentum. To achieve this, we combine the strength of quantitative analysis and fundamental analysis. This dual approach allows us to invest confidently across all company sizes, from large established firms like ASML and Allianz the smaller businesses that you might not hear about every day like Don & Co and SCE. The result is a portfolio that is well diversified not just by stocks, but also by country, by sector, by investment style. This helps us manage risk and still have the ability to capture opportunities whenever they arise in the European market. Tim will come back to our process in more detail in the next section. Moving on to #2, how we make use of the investment trust structure. A key feature of our trust is our commitment to paying an annual dividend of 4% calculated on an NAV at the end of each fiscal year and pay quarterly. What's important for investors is that we can maintain this dividend policy without compromising our investment decisions. As portfolio managers, this means that we can really focus on finding the best companies from a total return perspective. rather than being forced to chase yield. Another way we take advantage of the investment trust structure is via gearing. Our approach to gearing is consistent with our core approach. We know markets go up over the longer term, so we want to be able to use this gearing facility, but we also don't want it to be the main driver of our returns. And therefore, we tend to keep it at a modest mid-single level. And finally, turning to performance as the chart shows. Our approach has delivered consistent outperformance over both shorter and longer periods. Shareholders would have generated over 21% return over the last year, and over 14% per annum over the last 5 years. We believe a key reason is that our process has historically worked in both value-led markets as well as growth-led markets, which is important when leadership changes across market cycles. Compared to our peers, we think it's our discipline and our diversification, which have been central to that consistency. In summary, JP offers a core diversified portfolio with a focus on quality value and momentum plus a reliable income stream. It offers a balanced portfolio that is diversified across countries, across sectors, company sizes and investment styles rather than a narrow bet on 1 theme or part of the market. Looking at the past year, it really has been a year of significant progress for European equities. With the market delivering a robust return of 15%. This performance is a testament to the underlying resilience of the European corporate sector, which managed to deliver despite a complex global backdrop. The year began with a period of testing as U.S. tariff announcements in April sparked initial caution. However, sentient shifted as clarity emerged around the trajectory of trade policy supported by legal constraints on executive authority. Confidence gradually returned and markets regain their footing. From there, we saw a very sustained rally. Growth consistently, the expectations filed by a favorable mix of falling interest rates and lower energy costs. However, the most significant catalyst was the paradigm shift in German fiscal policy. By moving away from strict debt rules to fund massive defense and infrastructure projects, Germany powered -- provided a powerful tailwind that we saw reflected in strengthening factory orders and construction data. Furthermore, the clear signal that Europe must shoulder more of its own defense cost has created a new long-term structural growth driver for the region. The steady climb was, of course, interrupted in early 2026, the geopolitical landscape shifted abruptly first with renewed trade threats regarding Greenland in January and then more critically, the start of the military operations against Iran in late February. The results and closure of the straight promote a choke point for about 20% of global oil since energy prices surging. This introduced fresh [ persecution ] and high energy costs, leading to the sharp correction in equity prices that closed out our financial year. In this context, Jaggi still outperformed the market with the share price appreciating by 21%. We will go through the full year in more detail shortly. But first, just briefly zooming out to a 10-year period, you can see the compounding effect of that performance in terms of both being invested through macro geopolitical and market volatility and also choosing our proposition to active management. So let's look back over the last year and highlight the key drivers of Jaggi's performance. Encouragingly, it was another year of broad-based outperformance with a number of sectors contributing. If you look at the chart on the top left, the yellow portion of the bars is larger than the blue. Put simply, that indicates that stock selection was a dominant driver of our returns rather than any sector allocation. That is done by design. The other point worth stressing is diversification. We're not relying on 1 or 2 names to drive outcomes, either positive or, of course, on the negative side. That comes through on the tables on the right-hand side in that far-right column. The individual numbers might look quite modest. But what matters is that in aggregate, the contributors outweigh the detractors. So starting with some of the detractors on this page, BBVA, a Spanish bank, and ENI, an Italian energy company were 2 stocks that we did not own that outperform the market. In banks where we had a wide opportunity set, we owned other names that also outperformed and the sector overall made a positive contribution. A similar dynamic play down in energy, albeit to a lesser extent, as oil prices rose sharply in the final month of the year, following the heightened tensions in the Middle East. Turning to individual names again. Argenx is a global immunology company focused on antibody therapies for severe immune -- autoimmune diseases, and that was led by its flagship XCRN Blocker Fit Guard. The share price, however, came under pressure as the market moved on from early commercial optimism to a period with fewer near-term catalysts and increasing competitive intensity. Process is a Dutch listed investment company with a major stake in the Chinese Internet and gaming company, Tencent. Tencent's plans to increase AI investment materially, rising from around $2.5 billion in 2025 to over $5 billion in 2026, raised concerns around margin pressure and near-term profitability, which fed through to processes valuation. And then finally, Kongsberg Gruppen is a Norwegian defense, aerospace and maritime technology company, the market was disappointed by slower-than-expected conversion of its backlog into sales across its divisions. Now let's turn to some of the positives, which you can see on the top right-hand side of the chart as well as the top left-hand side on the sectors. Pharmaceuticals was 1 of the top contributor driven by broad-based stock selection. -- most notably are overweight on Novartis and the underweight in Sanofi. In capsule goods, ABB and Prysmian contributed strongly. Both are benefiting from sustained investment in grid infrastructure and electrification, supported by rising power demand as data centers and AI-related investments scale globally. We'll come back to ABB as an example on the next slide. Banks, as mentioned earlier, also had a very strong year. Returns were supported by structural hedges underpinning net interest income even as rates moved lower. Ongoing cost discipline, continued shareholder-friendly capital policies and early signs of improving loan growth. Danske Bank, the largest bank in Denmark was 1 of our top contributors. In addition to those sector tailwinds, a key driver was a successful resolution of the legacy compliance issues that the company was having previously. At the stock level ENGIE was the top contributor -- the company has consistently delivered ahead of its medium-term targets through a renewable build-out and disciplined asset rotation. That execution, combined with the acquisition of U.K. Power Networks, which adds regulated highly visible earnings has strengthened confidence in future cash flows and supports the rerating of the stock. And then finally, SBM Offshore is a Dutch-listed small cap that designs, builds and operates floating production systems for offshore oil and gas. Over the past 12 months, it has executed very well, including commissioning 3 of the world's largest and most complex deepwater production systems. Stronger delivery, a healthy pipeline of potential awards and an enhanced shareholder policy have all supported the share price. So let's turn now to a couple of the examples and explain why they were good candidates for the portfolio and why we continue to have them as 1 of our top active positions. ABB is an industrial automation and electrification company, benefiting from clear secular tailwinds, underappreciated improvements in business quality and a sustained pattern of earnings upgrades. Starting with quality. There has been a marked improvement in return on invested capital. The chart on the left shows a step change that began around 5 years ago. And this was driven by operational efficiencies, a shift towards high-return areas of restructuring their divisions and divesting from low-return areas and much stronger capital discipline. On valuation, ABB wouldn't naturally screen as cheap on headline metrics, whether that's relative to the market, or to its own history. That said, context matters. In the first half of that last decade, you can see that organic growth averaged roughly around 1% per annum, whereas over the last 5 years, it has averaged closer to the 9% per annum. So while the stock has rerated alongside structurally higher growth, we still consider the valuation attractively valued to the relative to the improved quality and growth profile of the business. And then finally, on momentum, which you can see on the right-hand chart, our conviction has been reinforced by repeated upward revisions to earnings expectations. With structural demand drivers in automation and electrification, coupled with the strong execution, ABB has continued to deliver results that have been surprising the market positively. Another example from our top holdings is French utility company ENGIE. This is also a business that has improved materially from a quality perspective, albeit from a much lower starting point. A new management team came in around 5 years ago and has addressed the legacy of poor capital allocation and weaker profitability. We have delivered cost savings, improved returns on equity and focused investments towards lower-risk assets, particularly renewables and networks, which offer a more predictable long duration growth. On valuation, the shares still trade at a modest discount to the wider market despite this improvement in the business mix and returns. And then finally, on momentum, management has tended to guide conservatively and then consistently beat expectations, driving earnings upgrades. A key catalyst recently was the transformational acquisition of U.K. Power Networks in February, which I had mentioned earlier. The deal was immediately earnings accretive and further pivoted energy towards a more stable regulated utility profile with increased exposure to power networks. I will now hand over to Tim for an overview of our investment approach.

Thank you, Zenah, and good afternoon, everyone. I see a number of familiar faces in the audience today. So I know you're all well acquainted with our investment process. But for those of you who are newer to the trust or for those who just like your annual refresher, we thought I'd spend a few moments to remind people how we go about finding new investments for the trust and what it is that we're looking for in the companies that we invest in. So our process combines both quantitative and fundamental analysis. And we're very fortunate here at JPMorgan to have long established an impressive quantitative research capabilities and also a global team a fundamental sector specialist analysts. And we believe that to be 1 of our key strengths and a real differentiator for us. These quantitative tools allow us to assess over 1,000 companies daily in a rigorous and repeatable way. It helps us to screen for companies that may require further fundamental work. And really importantly, it also helps us to assess our own portfolio, our own holdings in another objective or rather in an objective and an emotional way. The fundamental research allows us to dig deeper. It helps us to better understand the why behind the numbers to be more forward-looking and more context here. So what are we looking for through this analysis? First of all, we want to invest in quality businesses, companies that generate good and sustainable returns on invested capital, companies where earnings per share translates into free cash flow and to invest behind management teams that we think are making sensible capital allocation decisions. And we need to assess how resilient these qualities are. However they are likely to remain as industries evolve as competitive dynamics shift and capital cycles turn. But that bit isn't really the complicated base. I think it's all well and good identifying the best quality companies in Europe. But if these are already priced for perfection, then there's no differentiated insights and the opportunity to make money has already passed. So we need to remain disciplined on valuation. Where is our research showing us idea that the market has incorrectly priced. We analyze companies using a combination of valuation methods, but with the primary focus on more tangible metrics such as free cash flow and near-term earnings. And lastly, in terms of momentum, we look at both operational and share price momentum of the company. In our experience, companies that are improving often continue to improve for a period of time and the opposite can also be true. Investors and sell-side analysts tend to underreact to new information. anchoring on prior views and slowly adjusting from that position even when the evidence points to a more meaningful shift in company performance. So to take the example of ENGIE, which is in to talk through the French utility, the quantitative tools first alert us to the hard evidence of changes in the business, the improving returns, the more consistent operational performance and the continuing valuation discount. We can take those as prompts to dig deeper into the fundamentals. Speaking with our internal analyst examining forecast, developing our own view that this improved capital allocation was lasting that there were roots for earnings to continue to surprise positively and that this improved outlook was still not reflected in the valuation. Ultimately, we then need to bring these ideas together to form a portfolio which balances our stock insights with appropriate risk management. So we combine proprietary and external tools to view our portfolio from multiple perspectives to manage macro exposures and run scenario analysis. As Zenah mentioned in her opening remarks, this helps us to build a portfolio that is well diversified, not just by stocks but also by country, by sector, by investment style or even underlying theme. Importantly, the intention of this is not to reduce risk per se, but it's to limit our incidental risk. So that your capital concentrates where we have real conviction that is investing in companies that display these characteristics that otherwise have different fundamental drivers and exposures. But much as we would like to talk about all 100-plus companies in our portfolio, I think that's better done over tea and sandwiches later. So for this presentation, we've limited ourselves to identifying a few themes coming through in our research that we see as opportunities today. Take Europe's fiscal plans, which represent a multiyear step-up in spending that should keep supporting European growth well through the end of the decade. But every new factory built under Europe's reindustrialization push, every upgraded port or new data center, none of it works without getting reliable power tools. So a critical part of achieving on those wider economic goals is that the underlying electrical infrastructure has to be rebuilt and expanded first. This is where ABB, the Swiss industrial that Zenah mentioned earlier comes in. They provide circuit breakers, switch gears, grid automation systems, the power distribution tech that sits between the national grid and anything that needs powering. At the results last week, ABB announced orders were up 28% versus last year, a clear signal of this growing demand. But in a completely different sector at a completely different valuation is a company like UniCredit, the Italian bank. More public spending means more activity, more lending, more fee income. And we are seeing that coming through in numbers. This is a bank with leading profitability, a leading capital position, returning over 8% of market cap a year through dividends and buybacks while still growing strongly. It has been a very strong performer for the trust over a number of years and remains a key holding. I think the area probably most in focus right now for the market is around developments in AI and the enormous capital spending that's happening behind these advancements. But to understand where that money flows, I think it helps to start at the very beginning of the supply chain. Before semiconductor chip can power an AI model, someone has to print this. And that process, printing the microscopic circuitry onto a piece of silicon requires 1 of the most complex machines ever made. That machine is almost certainly made by ASML, a Dutch company with a complete monopoly on the most advanced machines or the most advanced versions of these machines. Each machine cost upwards of $200 million takes months to assemble and has waiting list stretching into years. ASML, therefore, sits at the critical bottleneck for the entire AI infrastructure building, making it 1 of the most structurally exposed companies to the long-term growth in AI capital spending. Below that, we have La Grande probably a company that fewer people have heard of. But if you have ever been inside a data center, you would have been surrounded by their products. So La Grande is a French industrial that makes the physical infrastructure that keeps data centers running. So for example, that's the rocks that hold the servers, the units that distribute power to them, the systems that stop them from overheating. Think of it as the plumbing and wiring behind the AI revolution. It's certainly at the left glamorous end than ASML, but it's still essential and it's growing strongly at attractive valuations. And finally, alongside AI, I think the energy transition remains 1 of the most structurally significant investment themes in Europe, driven by high-level decarbonization targets the electrification of transport and heat and the need to fundamentally rebuild energy infrastructure that in many case, hasn't seen investment in decades. So for example, having stepped back from power generation, E.ON, the utility, has repositioned itself as Europe's largest distribution network operator. So this is the company responsible for insurance, electricity can actually reach homes and businesses, EV chargers and heat pumps reliably and efficiently. That task is growing in complexity, grids designed from one-way power flows from large centralized plants now need to manage millions of decentralized inputs. So E.ON is having to invest billions to modernize and digitalize this infrastructure and it earns a stable return for that investment. But the energy transition doesn't only create opportunities at the network ownership level. Someone must physically build, install and maintain that infrastructure and that is where Speed comes in. Speed is a French technical services company. So where E.ON owns and operates the grid, speed provides the engineering hands that build is, upgrade us installing cable, connecting renewable assets, maintaining substations and rolling out the EV charging infrastructure that the transition demands. So where E.ON is a $50 billion market cap couple intensive, defensive name with regulated returns, Speed is less than 1/5 of the size as a company. It's capital light, it's more cyclical, but they are both being boosted by the energy transition. Giving us a diversified way of gaining exposure to that theme. So I'll now hand over to Alexander to speak through our outlook and positioning.

Thank you, Tim and Zenah, welcome, everybody. As Tim said, I'm going to make a few remarks about the macro background and how GE is positioned. And then we'll try and answer any questions that you might have. Last year, I highlighted the release of Germany's fiscal break as a key turning point for Europe, and Zenah has mentioned it already this morning -- earlier this afternoon, I should say. You can see on the left-hand part of the slide that the Eurozone shown in green and particularly Germany, in purple, have significantly less government debt than either the U.S. or the U.K. And essentially, this means that they have the firepower to increase government spending as they have stated they will do so. This time last year, the main concern is really how quickly they would be able to deploy that spending. In Germany's case, you can see that the purple line has started to turn upwards and German factory orders rose sharply towards the end of last year. The right-hand part of the slide shows government investment in the Eurozone lags behind the U.S. for most of the last 25 years. But again, this is changing, and it will be supportive of growth going forward. Jim and Zenah has already mentioned some of the sectors defense and infrastructure in the widest sense and companies that Jaggi's invested in that will benefit from this trend. ABB Le Grand Speed, for example. Another key component of European growth is the consumer. Unemployment remains at record low levels in Europe. This, in turn, has helped wage growth to stay real wage both to stay in positive territory. So again, the firepower is in place. The more difficult question, I think, is whether the consumer has the confidence to spend. On this chart, the gray line shows the recovery in retail sales since COVID. The blue line shows consumer confidence. Here, I think the jury is out a bit confidence clearly took a big step down when the Iran conflict broke out and then has started to recover a bit. We need to watch this closely and we'll be monitoring the results from companies like the retailers, Inditex and Class Olson in Sweden for any signs of slowdown or hopefully, reacceleration. Those are both companies that we own at the moment. Leaving aside any geopolitical concerns, inflation is the 1 immediate issue resulting from the Iran conflict. You can see the tick up in headline inflation caused by higher energy prices. But -- and I think this is important. So far, the underlying core inflation rate has barely moved. In both Europe and the U.S. and indeed the U.K. this morning, the latest inflation figures have been lower than feared. While we've got no insight into what the outcome will be or how long the conflict will last, what has surprised us is how quickly the oil price came down when it looked as though there was a sieze fire, and indeed, how little it has gone a up again since the conflict has broken out again. So far, markets have pretty much taken this in its stride. That leads on to central bank policy and interest rates. At the moment, the market is currently discounting 2 rate hikes this year from the ECB, so 50 basis points. The ECB has stated very clearly that it will be reactive to inflationary pressures. But for now, it's happy to stand pat. We would start to be concerned if it looked as the rates were going to go up more than that. But for now, I don't think there's any reason to panic. Incidentally, on the right-hand side shows bank lending growth and refers back to UniCredit and the other banking holdings that we have. Banks are 1 of our big overweight positions in the fund. Turning to corporate earnings, which are - absolutely central to what we're trying to do. The interesting bit on this slide is really the right and the right-hand half of it. The green line shows how earnings expectations normally change during the year. On average, we start expecting 10%, maybe 12% earnings growth. And gradually during the year, that gets whittled down and we end up with something like 5% by the end of the year. Expectations for 2026, shown in blue on this chart started with the usual low double-digit growth, about 12%. But interestingly, this has been revised up. Some of this is because of higher energy prices boosting the oil majors. And you can see the spike in the blue line in the spring when the Iran conflict and energy prices went up. But what's interesting is that the general trend in the blue line started before then, and it has continued after the oil price came back down. The main contributors to this apart from energy are the technology and financial sectors. As Tim has discussed, changes in earnings expectations are a key signal for us, and we monitor them extremely closely. The other key input is valuation. In absolute terms, on the left-hand side, the valuation of European equities is just above average. So not obviously cheap, but not clearly overvalued either sort of okay. I think more interesting is the right-hand side, which shows the discount to the U.S. equivalent for each sector in the European market. There are still some big gaps here, which suggests that there is still real value in Europe. And for us, that means there are lots of stock picking opportunities. So overall, the macro backdrop is broadly supportive with strong government spending on defense and infrastructure, plenty of consumer firepower and for now at least, core inflation, relatively modest. So turning to the portfolio. How is Jaggi positioned at the end of the financial year. This shows the overall shape of the portfolio at the end of March. And I'd like to highlight a few things on the slide. First of all, 107 holdings, Beta of 1.06, which includes a small amount of gearing and a tracking error of 2.6. I think all appropriate for that core balanced diversified portfolio that Tim and Zenah have both said is what we're aiming for. Secondly, we had just over 13% of the portfolio in non-benchmark names. This is European smaller companies that are not in the index. Companies like [ can homes ], an Irish homebuilder, SBM Offshore, which was mentioned earlier, which is a Dutch company making floating platforms for the energy sector or Vienna Insurance, which is self-explanatory. Our investment process allows us to get right down the market cap scale. It allows us to cover this huge range of companies. And as we go down the market cap scale, that opens up a lot of opportunities for us. Lastly, the bottom left side of the slide confirms that the portfolio as a whole is cheaper than the market with better quality characteristics and better momentum, this is central to the way that we build the portfolio and it should always look like this. Turning to the sector breakdown. The active positions at a sector level are small. This is because we want to take risk at the stock level and not at the sector level or indeed at the country level. We pick stocks from the bottom up, we don't go and say, we want to be overweight a certain sector and then start looking for stocks in it. It's all driven by the -- from the bottom up. You can see in the overall shape that the portfolio was less cyclical than this time last year. For example, the top 2 sectors with telecoms and utilities with holdings in companies like Deutsche Telekom and ENGIE, which was mentioned earlier. At the same time, we were underweight some of the more cyclical areas in the market like autos, transportation and materials. Since the year-end, the 2 main changes that we have rebuilt our bank's position by buying for example, FinecoBank in Italy and Raiffeisen in Austria, and semiconductors have moved into the top 5 sectors. This was funded primarily by trimming from the telco sector and utilities, for example, reducing our position in KPN, Dutch Telecom Company and E.ON, again, which was mentioned earlier. We're still overweight both, but not to such a degree. We just trim back a bit, and we're still overweight energy given the uncertainty in the Middle East that continues. So in conclusion, we continue to believe that Jaggi should be your core European equity holding. It's diversified and balanced portfolio aims to generate and have delivered good performance in different market conditions. We use the benefits of the new investment trust structure which allow us to gear the portfolio modestly and to invest further down the market cap scale. But perhaps most importantly, Jaggi pays a 4% dividend based on the year-end NAV, so shareholders get a decent yield and with good visibility. The trust structure means this can be paid from reserves if necessary, so we do not have to compromise the prospects for capital growth within the portfolio in order to deliver that. We can invest on a total return basis. Lastly, the Chair mentioned the proposed combination with European opportunities trust in our opening remarks. And we hope that as many as possible of their shareholders will choose Jaggi as their preferred option. But I just wanted to say for existing shareholders of Jaggi, I want to emphasize that there will be no change in the way that we run the portfolio, and there will be no change to the dividend policy. But the combination will have 2 clear benefits. First, because we have a tiered fee structure, if the trust grows in size, the average fee will be lower for all shareholders, which obviously will benefit all shareholders. And secondly, as the trust grows in signs, it should become liquid enough for some of the bigger wealth managers to get involved and this extra demand should help to keep the discount tight. We look forward to welcoming those OTE shareholders who choose Jaggi when the transaction completes in a couple of weeks. So with that, I think we would like to try and answer any questions that you might have.

Thank you, Alexander. And yes, thank you for reiterating the EOT transaction. That's fantastic. So ladies and gentlemen, before we turn to the formal business of the meeting, the Board and the investment manager will be pleased to answer shareholder questions about the company's investments and strategy and any questions concerning the reports and financial statements and the resolutions put before the meeting. In the interest of ensuring that as many shareholders as possible have an opportunity to participate I would ask that shareholders to limit themselves to 2 questions initially. And if time permits, we'll be happy to return to shareholders or we can discuss further over to Participants of the webcast will see on their screens and options to ask a question. Please do type your question into the box, click submit, and it will make its way to us. We will do our best to answer as many questions as we can in the time available. So can we start with any questions from attendees in the room, please.

Good afternoon. Congratulations on the investment team before we're knocking it out of the park for about the fourth year since the change of the strategy. I've got a question regarding the investment strategy, particularly with the forthcoming merger. We describe our objective as Continental Europe, but everything seems to be on the Western side of Continental Europe, largely mirroring what's in the benchmark, although I don't think looking at some of the comments in the annual report, we that's tied to the benchmark, and it says we can go plus or minus 5% for each country. The question I've got is that some of the Eastern European countries like Poland, Czechoslovakia, Hungary, et cetera. Team have had accorded to the stuff I read, exceptional performance on their exchanges. I just wondered whether there's any likelihood that some of these countries might be included within the trust going forward or whether they're just going to stick to Western Europe?

I think on the manager's point of view, Board may have another view. But we -- I mean, our index is basically Western Europe, and we stick to that. And I think it's fair to say that we do have an investment trust that we'll invest in emerging markets and Eastern Europe and can get exposure there through that. But for us, we're going to stick to Western Europe at the moment, yes. If Poland or whatever was to become part of the MSCI Europe ex-U.K. index, then that would open it up to us, but they're not going to venture further afield. Plenty of exciting things to do in Western Europe.

I've got 1 question for the Board and 1 for the managers. First, for the Board, if the merger goes ahead, what do you anticipate the size of the company in terms of asset value to be and the revised management fee to be. You must have some extrapolation?

We do, but that's not something we're disclosing. We obviously want to be optimistic and hope as many EOT shareholders will come over -- but given the nature of the transaction, given the 3-way option, that's not something we can predict. So it's something we're comfortable disclosing. But you're absolutely right, we modeled out different levels of rollover into and the implications for the fee and the fee comes down, obviously the more assets that come over to us.

Okay. And for the managers, you don't invest in U.K. companies. Is that because of the mandate? Or you just I mean, can that be changed? Because I mean there are some very good value U.K. companies.

Absolutely. But again, we have 2, 3 investment trusts that invest just in the U.K. and if you want exposure there, that's fantastic and you can get it -- and we're just doing Europe ex-U.K. and we stick to that? Doesn't mean we think U.K. is bad, but it's just not not what we do in this trust.

Do we have any further questions.