Half-year Report

Legal Entity Identifier:  213800N1B1HCQG2W4V90

TR EUROPEAN GROWTH TRUST PLC

Unaudited results for the half-year ended 31 December 2018

This announcement contains regulated information

Investment Objective

The Company seeks capital growth by investing in smaller and medium sized companies which are quoted, domiciled, listed or have operations in Europe.

Performance for the six months to 31 December 2018

· Net Asset Value ('NAV') per share total return was -21.6% compared to a total return from the benchmark index of -13.2%

· Share price total return was -22.9% compared to the sector average of -17.9%

· The shares were trading at discount of 12.6% at the period end

· Interim dividend of 7.50p per ordinary share declared (2017: 5.00p)

Financial highlights

1. Net Asset Value ('NAV') per share total return (including dividends reinvested and excluding the cost of reinvestment)

2. Euromoney Smaller European Companies index (ex UK) expressed in Sterling

3. The sector is the AIC European Smaller Companies sector

4. Share price total return using mid-market closing price

Sources: Janus Henderson, Morningstar for the AIC, Datastream

INTERIM MANAGEMENT REPORT

CHAIRMAN'S STATEMENT

Performance

The first half of the Company's financial year has not been good for equities, and worse still for Europe, with rising US central bank interest rates and the European Central Bank having ended its quantitative easing programme in December 2018. Europe's economies continued to decelerate and estimates predicted that the German economy might even contract. Cyclical stocks posted 2018's biggest losses with investments in the Financial sector delivering double digit underperformances. Our exposure to micro-cap companies which contributed to significant outperformance in prior years - 18.2% ahead of the benchmark for the year ended 30 June 2017 - had the reverse effect as markets began slowing.

Over the six months to 31 December 2018 the Company produced a net asset value per share total return of -21.6% compared to the benchmark of -13.2%. The share price total return was -22.9%, as the shares moved to a wider discount partly reflecting the deterioration in the rating of European equities. However, performance over the five year period remained solid with the net asset value per share total return at 57.5%, outperforming the benchmark by 4.8% and the AIC European Smaller companies sector by 1.0%.

Interim dividend

Despite the challenging global markets, the Company has maintained the level of revenue generated by its portfolio and the Board was pleased to declare an interim dividend of 7.50p per ordinary share (2017: 5.00p). The dividend will be paid on 12 April 2019 to shareholders on the register on 15 March 2019.

Outlook

The backdrop of a slowing global economy, many years into an economic recovery has led to fears of recession and a flight from assets perceived to be more risky. However, valuations of European smaller companies have become far more appealing as a result.

We do not discount economic risk, but believe that it should not be overstated. A key benefit of close ended vehicles is the fact that we are not obliged to sell good companies in falling markets in order to meet redemptions. Our managers therefore have the opportunity to use the current contracting market to buy mispriced companies that have strong structural growth or self-help characteristics, and which our open-ended competitors may be compelled to sell as investors seek to place their funds elsewhere. Current conditions present interesting opportunities for the patient investor.

Audley Twiston-Davies

Chairman

Fund Manager's Report

The Company had a very disappointing six months, underperforming the benchmark by 8.4% in a turbulent period for stock markets. The underperformance resulted from too much cyclicality in the portfolio combined with gearing in a falling market. This was exacerbated by poor stock selection: being valuation aware in a market focused on 'earnings momentum at any price' was a disadvantage, as was our skew towards the lower end of the market capitalisation spectrum. We did, though, achieve our ambition of disposing of our unquoted investments, most notably with the sale of the Company's position in BrainLab.

We underestimated the extent to which a rising cost of capital, combined with an escalating trade war, would weigh on global markets. This left the portfolio exposed to fears of a recession which hit sentiment and stock prices. The political backdrop remained noisy, from President Trump's aggressive trade stance with China/Europe and Italy's belligerent position, to Brexit uncertainty. There were plenty of other less tangible concerns as well, with Germany undergoing political transition as Angela Merkel steps back from the Chancellorship, France once again showing herself to be very hard to govern and Sweden now months without a government. These factors combined with a fear that the US Federal Reserve and European Central Bank would implement quantitative tightening ('QT') too early.

In this environment, positive contributors to performance included French engineering tech firm Gaztransport et Technigaz, and Swedish firms Ambea and JM. Gaztransport et Technigaz continued to pick up orders as it benefited from the large potential market for Liquefied Natural Gas ('LNG') as a fuel. Ambea outperformed analyst forecasts and delivered a compelling acquisition to help drive shares up. JM added value as the Swedish housing market began to stabilise. Elsewhere, Dialog Semiconductor resolved its relationship with Apple, Finnish electronic invoicing software company Basware received a bid and Italian HVAC control software company Carel Industrial contributed positively after a successful initial public offering ('IPO').

Less positively, Finnish construction company Lehto suffered after shifting away from its core modular construction competency into loss-making refurbishment. Finnish mining service company Outotec fell after a troublesome legacy contract resurfaced. Norwegian sports retailer XXL saw sales impacted by bad weather compounded by self-inflicted management problems. Dutch oil services company Fugro was hit by market worries over its balance sheet and the pace of recovery in the oil market. Finally, German online lifestyle retailer Westwing performed poorly after a badly handled IPO, exaggerated by fears that mild weather would negatively affect sales.

We took a new position in Norwegian LNG shipper Flex LNG, which has the most technologically advanced LNG carrier fleet in an industry in the early stages of an enormous growth phase. We reopened a position in Portuguese paper company Navigator, which has terrific capital discipline and should benefit from a re-evaluation of US tariffs. We also added Italian non-performing loan servicer DoBank on valuation grounds.

We exited the position in XXL as we developed reservations about management's control of the business and the sustainability of the balance sheet. We closed the position in Finnish weather equipment business Vaisala as we took the view that management were not earning a sufficiently high return on research and development investment. German 3D printing machinery firm SLM Solutions was sold as the company persistently failed to deliver upon the growth they promised.

We consider the economic backdrop to be weak, but not that different to most of the period since the global financial crisis, where anaemic growth has been the norm. It is far from certain that the global economy will see a recession in 2019 or that the pace of interest rate rises and QT will be aggressive enough to be a policy mistake. A trade deal between the US and China seems probable. The backdrop for European smaller companies is not bad in such an environment, not least with valuations looking so appealing.

After recent market moves European smaller companies, especially towards the lower end of the market capitalisation spectrum, seem attractively valued. We believe this is particularly the case in our portfolio which contains (in our view) cheap stocks, generating healthy returns on exceedingly low multiples. In addition, the underlying dividend yield on the portfolio is extremely healthy. While pockets of the European economy have been faltering recently, we are confident, but not complacent, that there remains ample opportunity to deliver better performance in the coming months.

Ollie Beckett and Rory Stokes

Sector Exposure (% of portfolio excluding cash)

Geographical Exposure (% of 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:

· Investment activity and performance risks;

· Portfolio and market price risks;

· Tax and regulatory risks; and

· Operational risks.

Information on these risks and how they are managed is given in the Annual Report for the year ended 30 June 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.

Statement of Directors' Responsibilities

Each of the Directors (as set out in note 13) confirms, to the best of their knowledge, that:

· the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting', gives a true and fair view of the assets, liabilities, financial position and profit or loss of the Group as required by Disclosure Guidance and Transparency Rule ('DTR') 4.2.4 R;

· the interim management report includes a fair review of the information required:

- by DTR 4.2.7 R (indication of important events during the first six months and a description of principal risks and uncertainties for the remaining six months of the year); and

- by DTR 4.2.8 R (disclosure of related party transactions and changes therein).

For and on behalf of the Board

Audley Twiston-Davies

Chairman

Consolidated Statement of Comprehensive Income

The total column of this statement represents the Consolidated Statement of Comprehensive Income, prepared in accordance with IFRS, as adopted by the European Union. The revenue and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies.

All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the period.

All income is attributable to the equity holders of TR European Growth Trust PLC, the Parent Company. There are no minority interests.

The net loss of the Parent Company for the half-year was £123,609,000 (31 December 2017: profit of £32,184,000; 30 June 2018: profit of £9,936,000).

The Group does not have any other comprehensive income and hence the net profit for the period as disclosed above is the same as the Group's total comprehensive income.

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

Consolidated Statement of Changes in Equity

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

Consolidated Balance Sheet

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

Consolidated Cash Flow Statement

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

Notes to the condensed financial statements

1. Accounting policies

a) Basis of preparation

The condensed consolidated financial statements comprise the unaudited results of the Company and its subsidiary, TREG Finance Limited, for the half-year ended 31 December 2018. They have been prepared on a going concern basis and in accordance with International Accounting Standard 34, "Interim Financial Reporting", as adopted by the European Union and with the Statement of Recommended Practice for Investment Trusts ("SORP") issued by the Association of Investment Companies in November 2014 and updated in February 2018, where the SORP is consistent with the requirements of IFRS. The Company has adopted IFRS 9 Financial Instruments, which is effective for periods beginning on or after 1 January 2018. This has had no impact on the accounting policies or disclosures in these unaudited half-year results.

For the period under review the Company's accounting policies have not varied from those described in the Annual Report for the year ended 30 June 2018. These financial statements have not been audited or reviewed by the Company's auditors.

The Group financial statements comprise the accounts of the Company and its subsidiary drawn up to the balance sheet date. The Statement of Comprehensive Income is only presented in consolidated form, as provided by Section 408 of the Companies Act 2006.

b) Basis of consolidation

The Group financial statements consolidate the financial statements of the Company and of its sole subsidiary undertaking, TREG Finance Limited.

2. Return per ordinary share

The return per ordinary share is based on the loss for the half-year of £123,609,000 (half-year ended 31 December 2017: profit £32,184,000; year ended 30 June 2018: profit £9,936,000) and on 50,108,397 ordinary shares (half-year ended 31 December 2017: 49,868,098; year ended 30 June 2018: 49,987,260), being the weighted average number of ordinary shares in issue during the period.

The return per ordinary share detailed above can be further analysed between revenue and capital, as below.

3. Share capital

At 31 December 2018 there were 50,108,397 ordinary shares in issue (31 December 2017 and 30 June 2018: 50,108,397).

During the half-year ended 31 December 2018 the Company did not issue any ordinary shares (31 December 2017 and 30 June 2018: 395,000 for a total consideration of £4,963,000).

In the current financial year to date, the Company has not repurchased any shares for cancellation.

4. Net asset value per ordinary share

The net asset value per ordinary share is based on the net assets attributable to equity shareholders of £443,967,000 (31 December 2017: £599,344,000; 30 June 2018: £574,591,000) and on 50,108,397 ordinary shares (31 December 2017 and 30 June 2018: 50,108,397), being the number of ordinary shares in issue at the period end.

5. Dividends

The Company has declared an interim dividend of 7.50p per ordinary share (31 December 2017: 5.00p) payable on 12 April 2019 to members on the register as at 15 March 2019. The ex-dividend date will be 14 March 2019.

A final dividend of 14.00p per ordinary share was paid on 30 November 2018 from the Company's revenue account in respect of the year ended 30 June 2018.

6. Transaction costs

Purchase transaction costs for the half-year ended 31 December 2018 were £148,000 (half-year ended 31 December 2017: £130,000; year ended 30 June 2018: £327,000). These comprise mainly stamp duty and commission. Sales transaction costs for the half-year ended 31 December 2018 were £79,000 (half-year ended 31 December 2017: £112,000; year ended 30 June 2018: £206,000).

7. Management and performance fees

The base management fee payable to the Manager for the first quarter of the year ending 30 June 2019 is 0.6% per annum, charged quarterly in arrears. With effect from 1 October 2018, the base fee for assets over £500m was reduced to 0.5%. Management fees are allocated 20% to revenue and 80% to capital.

The Manager may also be eligible to receive a performance related fee. In order to determine whether a performance is payable, performance is measured against, and expressed relative to, the benchmark, the Euromoney Smaller European Companies index (ex UK) expressed in Sterling. Performance of both the Company and the benchmark is measured on a NAV total return (with gross income reinvested) basis and is measured over three years.

No performance fee has been accrued as at 31 December 2018 (31 December 2017: £2,694,000; 30 June 2018: £1,300,000).

8. Financial instruments

At the period end the carrying value of financial assets and financial liabilities approximates their fair value.

Financial instruments carried at fair value

Fair value hierarchy

The table below analyses recurring fair value measurements for financial assets and financial liabilities. These fair value measurements are categorised into different levels in fair value hierarchy based on the inputs to valuation techniques used. Categorisation within the hierarchy has been determined on the basis of the lowest level of input that is significant to the fair value measurement of the relevant asset or liability. The different levels are defined as follows:

Level 1: Valued using quoted prices in active markets for identical assets;

Level 2: Valued by reference to valuation techniques using observable inputs other than quoted prices included within Level 1; and

Level 3: Valued by reference to valuation techniques that are not based on observable market data.

The valuation techniques used by the Company are explained in the accounting policies set out in the Company's annual report for the year ended 30 June 2018.

There have been no transfers between levels of fair value hierarchy during the period. Transfers between levels of fair value hierarchy are deemed to have occurred at the date of the event or change in circumstances that caused the transfer.

9. Going concern

Having reassessed the principal risks and uncertainties, the Directors consider that it is appropriate to continue to adopt the going concern basis and confirm that there are no material uncertainties of which they are aware. The assets of the Group consist mainly of securities, most of which are readily realisable and, accordingly, the Group has adequate financial resources to continue in operational existence for at least twelve months from the date of approval of the financial statements.

10. Related party transactions

The Company's transactions with related parties in the period were with the Directors, the subsidiary and Janus Henderson. There have been no material transactions between the Company and its Directors during the period and the only amounts paid to them were 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 Janus Henderson, other than fees payable by the Company in the ordinary course of business and the provision of sales and marketing services there have been no material transactions with Janus Henderson affecting the financial position of the Company during the period under review.

11. Post balance sheet event

The Company, as a past shareholder in Fortis (now renamed Ageas), took part in a class action lawsuit seeking damages based on alleged violations of the U.S. securities laws. In January 2019, the Company received confirmation from the recovery agents that €469,000 will be received as compensation. No provision for the receipt of these funds has been made in these condensed financial statements.

12. Comparative information

The financial information contained in this half-year report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The financial information for the half-years ended 31 December 2018 and 31 December 2017 have not been audited or reviewed by the Company's auditors. The figures and financial information for the year ended 30 June 2018 are an extract based on the latest published accounts and do not constitute statutory accounts for that year. Those accounts have been delivered to the Registrar of Companies and included the Independent Auditors' Report which was unqualified and did not contain a statement under either section 498(2) or 498(3) of the Companies Act 2006.

13. General

Company Status

TR European Growth Trust PLC is registered in England and Wales, No. 2520734, has its registered office at 201 Bishopsgate, London EC2M 3AE and is listed on the London Stock Exchange.

SEDOL/ISIN: 0906692/GB0009066928

London Stock Exchange (TIDM) code: TRG

Global Intermediary Identification Number (GIIN): JX9KYH.99999.SL.826

Legal Entity Identifier (LEI): 213800N1B1HCQG2W4V90

Directors and Secretary

The Directors of the Company are Audley Twiston-Davies (Chairman), Christopher Casey (Chairman of the Audit Committee), Andrew Martin Smith, Alexander Mettenheimer and Simona Heidempergher. The Corporate Secretary is Henderson Secretarial Services Limited.

Website

Details of the Company's share price and net asset value, together with general information about the Company, monthly factsheets and data, copies of announcements, reports and details of general meetings can be found at www.treuropeangrowthtrust.com

Half-year Report

The half-year report will be available in typed format on the Company's website or from the Company's registered office, 201 Bishopsgate, London EC2M 3AE. An update extracted from the Company's report for the half-year ended 31 December 2018, will be posted to shareholders in March and will be available on the website thereafter.

For further information please contact:

Top 40 investments as at 31 December 2018

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.