Hend.eur.focus Regulatory News (HEFT)

Legal Entity Identifier: 213800GS89AL1DK3IN50

HENDERSON EUROPEAN FOCUS TRUST PLC

Unaudited results for the half-year ended 31 March 2020

This announcement contains regulated information

Investment Objective

The Company seeks to maximise total return (a combination of income and capital growth) from a portfolio of stocks listed in Europe.

Performance for the half-year ended 31 March 2020

• Net asset value ("NAV") total return1 of -15.5% compared to the benchmark2 return of -16.7%

• Share price3 total return of -19.2%

• Interim dividend of 9.60p per share declared (2019: 9.60p)

Total return performance to 31 March 2020 (with dividends reinvested)

1 Net asset value ("NAV") total return per ordinary share (with dividends reinvested)

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

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

4 Association of Investment Companies ("AIC") Europe sector

Sources: Morningstar for the AIC, Refinitiv Datastream and Janus Henderson

Financial highlights

INTERIM MANAGEMENT REPORT

Chairman's Statement

When I took over as your Chairman immediately following the Annual General Meeting in January 2020 no one could have imagined the rapid spread of COVID-19 across the globe nor the impact it would have on the investment world. Global stock markets crashed in a way not seen since the financial crisis of 2008 with the consequent impact on your Company's share price, exacerbated by a widening of the discount to net asset value ("NAV") at which your Company's shares trade. It is at times like these that it pays to have an experienced investor from a major investment firm managing the portfolio who did not panic but focused on maintaining the quality of the portfolio by investing in companies with proper funding and robust balance sheets, cash-generative businesses and low leverage. Whilst the full impact of this crisis is not yet clear, your Company is well positioned to outperform through the recovery.

Performance

In the six months to 31 March 2020, the Company's NAV total return per ordinary share fell by 15.5%, compared to a fall of 16.7% in the Company's benchmark, the FTSE World Europe ex UK index, resulting in outperformance of the benchmark of 1.2%. The Company's share price fell by 19.2% to 990 pence, ending the period at a wider than normal 14.5% discount to NAV (30 September 2019: 10.5% discount). Gearing has been actively managed and was 2.1% of net assets at the period end. As at 26 May 2020, the share price had increased by 16.7% to 1155 pence, the discount had narrowed to 12.4% and gearing was 1.4% of net assets.

Revenue and dividend

As I expect you are very well aware the majority of companies are reviewing their dividends in the light of the COVID-19 situation. This may have a significant impact on the revenue generated from the portfolio. We are, however, well placed through our revenue reserves to smooth dividend payments should this be required. That said, it will be important to assess the likely longer-term revenue impact of this crisis.

In the light of these circumstances the Board has decided to declare a maintained interim dividend of 9.60 pence per ordinary share (2019: 9.60 pence). This will be paid on 26 June 2020 to shareholders on the register on 5 June 2020. The shares will be quoted ex-dividend on 4 June 2020. The Board will consider what final dividend to propose at the end of the year in the light of the relevant evidence available at that time.

Board and Fund Manager

Rodney Dennis, Alec Comba and Alain Dromer all retired as directors at the 2020 AGM. Rodney and Alec joined the Board together in November 2003, Rodney became Chairman in September 2006 and Alec was for many years Chairman of the Audit Committee and more recently Senior Independent Director. They steered your Company through some challenging times and each made a significant contribution to the development of the Company. Alain joined the Board in 2014 and was always generous in sharing his knowledge and experience. Our thanks and best wishes go to them all.

I am pleased to announce that Vicky Hastings has been appointed Senior Independent Director.

In January 2020, we were pleased to welcome Tom O'Hara as Co-Fund Manager of the portfolio alongside our lead Fund Manager John Bennett.

Outlook

Due to the COVID-19 situation we are now experiencing a period that for many of us will be the most challenging and uncertain that we have ever faced. The emergence of the pandemic has significantly increased many of the operational as well as the market risks to the Company's business. I would like to reassure shareholders that all operational aspects of your Company have continued to operate smoothly despite the necessary move to remote working by the Manager, the Fund Managers, other key third parties and indeed the Board itself. We have kept and will remain closely in touch with the key parties to ensure that this remains the case.

The outlook for European, and indeed global, economies is uncertain as the full consequences of the actions taken to fight the COVID-19 pandemic are not yet known. Europe is moving into a deep recession which will hopefully be brief but is presently of unknown duration. Whilst the fiscal and monetary responses from central authorities across the world have been dramatic the level of global cooperation to address a pandemic that respects no national boundaries has been weak. Against this background I consider that our Fund Managers' focus on cash generative companies with strong balance sheets and low leverage should serve shareholders well.

Robert Jeens

Chairman

28 May 2020

Fund Managers' Report

It hardly needs saying that the overwhelming factor for all of us during the period under review and, indeed, at the time of writing, has been the global pandemic known as COVID-19. As this virus has spread west, so has its effect on financial markets. Here in Europe, the month of March 2020 saw quite astonishing levels of volatility and severe strain within the financial system. For example, the EuroStoxx 50 index sold off by 30% to begin the month, before rebounding by 19% from trough to peak. As ever, headline indices rarely tell the full story and we have seen wild swings at the individual stock level, often intra-day. Not for the first time, extreme volatility has been aggravated by forced liquidation of excess leverage: leveraged corporates, leveraged funds, whether managed by computer or by human, have found themselves in the crosshairs.

The banking system, courtesy of much tougher regulation since the global financial crisis, seems better prepared than usual. That preparation now includes the forced 'postponement' or cancellation of dividends. Shareholders in banks are now relegated further down the pecking order, more than a decade after what many saw as the great bailout of 'greedy bankers' at the expense of the wider workforce. It is the latter that governments are desperate to be seen to protect this time around. Governments have decided that it is time to try - the emphasis is on try - to favour one factor of production over another: labour over capital. They know they will be judged on this, as well as on protecting the health of their voters. The era of big government has truly arrived. We would remind investors that we sold out of the banking sector, a large component of most European indices, in early 2019. A prime reason for that decision was that we saw the industry headed inexorably toward regulated social utility status: recent events have probably guaranteed that.

The extraordinary monetary and fiscal stimulus unleashed worldwide should provide the necessary credit and liquidity to get through this recession. While this cannot reduce the severity of the economic crash in the very near term, it is at least hoped that it shortens its duration.

Portfolio

We often remind ourselves of the saying "if you're going to panic, panic early". We have felt no urge to panic during this crash. Instead, we have seen fit to utilise the Company's flexibility to accommodate gearing. During the savage sell-off in March 2020 we tactically increased portfolio gearing to some 10%. Subsequently, in the strong rally of the second half of March, we restored gearing to a negligible level of 2.1%. It is fair to say that we rarely get tactical in this fashion but were prepared to do so in such market conditions.

Whilst we are now starting to see some lockdown restrictions easing, we are expecting to see a very different backdrop and level of economic activity over at least the next 6 to 12 months to the ones we have been used to. We have been reviewing the Company's holdings, and in particular their balance sheets, to assess whether they would be able to survive several months of shutdown, whether they have had to access COVID 19-related state support and the resultant recessionary phase which could follow, reassessing how companies are likely to fare in these uncertain times and whether they will come out of the current crisis stronger. Our focus remains on looking beyond the news headlines and focusing instead on individual businesses and their fundamentals.

Away from tactics, it is at times such as this that our innate preference for well capitalised, cash generative businesses comes to the fore. Any business entering this crisis in an over-leveraged state finds itself much weakened, some terminally so. As with all crises, the situation will pass, recovery will take hold and it is those businesses, with strong market shares, talented management teams and strong balance sheets, who will emerge as the winners. It is our belief that your Company is a portfolio of just such businesses.

John Bennett and Tom O'Hara

Fund Managers

28 May 2020

Principal Investments as at 31 March 2020

Country of listing (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

· Investment performance

· Business strategy and market rating

· Gearing

· Operational

· Regulatory and reporting

Information on these risks and how they are managed is given in the Annual Report to 30 September 2019. In the view of the Board, these principal risks and uncertainties at the year-end remain and are as applicable to the remaining six months of the financial year as they were to the six months under review.

There are a number of risks stemming from the COVID-19 pandemic and the uncertainty that this has created in global markets, both economically and politically, that may impact the operation of the Company, as referenced in the Chairman's Statement. The Fund Managers will continue to review carefully the composition of the Company's portfolio and be proactive in taking investment decisions where necessary.  Janus Henderson (the "Manager") and the Company's other third-party service providers remain fully operational and have implemented appropriate business continuity plans to ensure that there has been no change in service while the majority of staff are working from home.

Related Party Transactions

The Company's transactions with related parties in the period were with the directors and 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 facilitation of marketing activities with third parties, 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 condensed financial statements for the half-year to 31 March 2020 have 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 of the Company;

(b) the Interim Management Report and condensed financial statements include 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

Robert Jeens

Chairman

28 May 2020

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.