Company Announcements

Legal Entity Identifier: 213800GS89AL1DK3IN50

HENDERSON EUROPEAN FOCUS TRUST PLC

(the 'Company')

Unaudited results for the half-year ended 31 March 2019

Investment Objective

The Company seeks to maximise total return from a portfolio of stocks listed in Europe.

Performance for the half-year ended 31 March 2019

•      Net Asset Value ('NAV') total return¹ of -6.5% compared to a total return from the benchmark² of -3.8%

•      Share price³ total return of -7.5%

•      Interim dividend of 9.60p per share declared (2018: 9.50p)

Total return performance to 31 March 2019 (including dividends reinvested and excluding costs of reinvestment)

1 Net asset value ('NAV') total return per ordinary share with income and dividends reinvested

2 FTSE World Europe ex UK Index on a total return basis in Sterling terms

3 Share price total return (including dividends reinvested) using mid-market closing price

4 AIC Europe sector

Sources: Morningstar Direct, Datastream and Janus Henderson

Financial highlights

INTERIM MANAGEMENT REPORT

Chairman's Statement

Performance

The net asset value ('NAV') per ordinary share total return over the half-year period ended 31 March 2019 was ‑6.5%, with the NAV total return for the benchmark, the FTSE World Europe ex UK Index in Sterling terms, being ‑3.8%. Over the same period, the share price total return was ‑7.5%. The gearing level at the end of the period was 0.7%.

Revenue and dividend

The Board has declared an interim dividend of 9.60p per ordinary share (2018: 9.50p). This is an increase of 1.1% over the interim dividend for the prior year and is intended to maintain an appropriate balance between the interim and final dividends. The dividend will be paid on 28 June 2019 to shareholders on the register on 7 June 2019. The shares will be marked ex-dividend on 6 June 2019.

Outlook

Equity markets have staged a strong rebound from the lows of December 2018. The basis for this has been renewed monetary accommodation by central banks, as the US Federal Reserve, the European Central Bank and the People's Bank of China have sought to reassure markets and/or stimulate their respective economies. This has encouraged the view that a rebound in both economies and corporate earnings will follow in the second half of 2019. Pulling the other way are bond markets, which signify a continuing disinflationary environment and so the tug of war between bonds and equities continues. The European equities market remains deeply out of favour among investors. However, the Company believes there are opportunities in the market and the current negligible portfolio gearing brings the capacity to capitalise on those opportunities should we see a repeat of last year's sell-off.

Rodney Dennis

Chairman

30 May 2019

Fund Manager's Report

The Chairman's statement referenced the sell-off in markets in the latter stages of 2018. During that period, our small-mid-cap positions were particularly harshly punished, perhaps signifying an element of panic-selling among investors. While this contributed much to the portfolio's underperformance versus the Company's benchmark, we remain committed to an overweight stance in this section of the market. There are two main reasons for this: first, there continues to be greater market inefficiency relative to large-cap stocks; second, it is here we are able to identify and commit to entrepreneurial and/or family-backed companies. It is axiomatic yet forever striking how those with skin in the game act as principals rather than agents. Arguably, no sector exemplifies the latter behaviour more than the banking sector, where we continue to see management teams act as agents, often continuing to plod on in highly paid positions, 'leading' sprawling, unwieldy empires, while shareholders are left hoping that these behemoths will one day generate an acceptable return on equity. This is only one reason why we largely avoid this industry. The 'risk' in shunning the sector is, of course, that it remains a large portion of mainstream European equity indices. Thus, any rally in the sector tends to create a headwind for the relative performance of the Company. Our stance is that we simply have to accept that as an occupational hazard and the necessary 'cost' of steering our investors' capital away from industries where we see no long-term opportunity. The difficulty with taking the long-term view is always in dealing with the shorter-term periods where one's stance is 'wrong'. As I've often said to clients, were the banking sector 3% of the index, we wouldn't even talk about it. Perhaps one day it will get there.

Lastly, shareholders should note that we have continued to focus the list of stocks, which has now come below 50 names. This too may well create an element of greater volatility of returns versus a benchmark index. Yet, again, we believe it is the right thing to do if we are to offer our investors a portfolio of ideas differentiated from mainstream indices, which are, of course, so easily accessed by passive vehicles. Just like many of the industries we study, we, too, as active asset managers, are in the crosshairs of disruption. An investment trust structure is, in our view, ideally positioned to take the long view, face that disruption and demonstrate specialism and differentiation.

John Bennett

Fund Manager

30 May 2019

Principal Investments as at 31 March 2019

Geographical exposure (as a percentage of the portfolio excluding cash)

Sector exposure (as a percentage of the portfolio excluding cash)

Principal Risks and Uncertainties

The principal risks and uncertainties associated with the Company's business can be divided into the following main areas:

·    Market risk

·    Gearing

·    Other financial risks

·    Operational and regulatory risks

·    Key man risk

Information on these risks and how they are managed is given in the Annual Report to 30 September 2018. In the view of the Board, these principal risks and uncertainties were unchanged over the last six months and are as applicable to the remaining six months of the financial year as they were to the six months under review. 

Related Party Transactions

The Company's transactions with related parties in the period were with the directors and Janus Henderson (the 'Manager'). There have been no material transactions between the Company and its directors during the period other than amounts paid to them in respect of expenses and remuneration for which there were no outstanding amounts payable at the period end. In relation to the provision of services by the Manager, other than fees payable by the Company in the ordinary course of business and the provision of marketing services, there have been no transactions with the Manager affecting the financial position of the Company during the period under review.

Statement of Directors' Responsibilities

The directors confirm that, to the best of their knowledge:

(a)      the set of financial statements for the half-year to 31 March 2019 has been prepared in accordance with 'FRS 104 Interim Financial Reporting', and gives a true and fair view of the assets, liabilities, financial position and profit or loss;

(b)      the Interim Management Report includes a fair review of the information required by Disclosure Guidance and Transparency Rule 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

(c)      the Interim Management Report includes a fair review of the information required by the Disclosure Guidance and Transparency Rule 4.2.8R (disclosure of related-party transactions and changes therein).

For and on behalf of the Board

Rodney Dennis

Chairman

30 May 2019

CONDENSED Income Statement

The total columns of this statement represent the Income Statement of the Company prepared in accordance with FRS 104.

The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies.  

All revenue and capital items in the above statement derive from continuing operations. The Company had no recognised gains or losses other than those disclosed in the Income Statement and the Statement of Changes in Equity.

The accompanying notes are an integral part of the condensed financial statements.           

CONDENSED Statement of Changes in Equity

The accompanying notes are an integral part of the condensed financial statements.

CONDENSED Statement of Financial Position

The accompanying notes are an integral part of the condensed financial statements.

CONDENSED Cash Flow Statement

The accompanying notes are an integral part of these financial statements

Notes to the condensed financial statements

For further information, please contact:

Laura Thomas

Investment Trust PR Manager

Janus Henderson Investors

Tel: 020 7818 2636

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) are incorporated into, or form part of, this announcement.