Annual Financial Report

RNS Number : 6468H

Henderson Smaller Cos Inv Tst PLC

02 August 2019

 

HENDERSON INVESTMENT FUNDS LIMITED

THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC

LEGAL ENTITY IDENTIFIER: 213800NE2NCQ67M2M998

THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC

ANNUAL FINANCIAL RESULTS FOR THE YEAR ENDED 31 MAY 2019

This announcement contains regulated information

INVESTMENT OBJECTIVE

The Company aims to maximise shareholders' total returns (capital and income) by investing in smaller companies that are quoted in the United Kingdom.

INVESTMENT POLICY¹

Smaller companies are defined as any company outside the FTSE 100 Index. Once a portfolio company enters the FTSE 100 Index the Fund Manager has, in normal circumstances, six months to sell the position.

Investments may include shares, securities and related financial instruments, including derivatives. The following investment ranges apply:

·      Equities: 80% - 100% of total gross assets

·      Fixed Income and Cash: 0% - 20%

The Company maintains a diversified portfolio and cannot:

·      Invest more than 5% of its total gross assets in any one holding; or

·      Hold more than 10% of an investee company's equity,

in each case measured at the time of investment (or additional investment). The Board may give approval to the Manager to exceed these limits to as far as 10% and 20% respectively but only in exceptional circumstances.

It is the stated investment policy of the Company to invest no more than 15% of its gross assets in other listed investment companies (including listed investment trusts).

Derivatives

The Company may use financial instruments known as derivatives for the purpose of efficient portfolio management.

Gearing

Net gearing (defined as all borrowings less cash balances and investments in cash funds) is limited by the Board to a maximum of 30% of shareholders' funds.

1 Following review of the wording of the investment policy and after consultation with the Company's Manager and corporate broker, the Board has taken the opportunity to make certain non-material amendments which are reflected above. The Board has been advised that these changes do not require shareholder approval.

PERFORMANCE

Total Return Performance for the period ended 31 May 2019
	1 year %	3 years %	5 years %	10 years %
NAV1	-6.4	39.6	67.2	480.9
Share Price2	-9.0	49.6	76.1	533.3
Benchmark3	-6.1	22.5	33.1	249.6
Average Sector NAV4	-4.9	33.7	55.9	345.8
Average Sector Share Price5	-4.7	32.6	57.4	386.4
FTSE All-Share Index	-3.2	28.4	29.3	149.4

Performance

	Year ended 31 May 2019	Year ended 31 May 2018
NAV per share at year end	958.7p	1,046.9p
Share price at year end	858.0p	966.0p
Discount at year end6	10.5%	7.7%
Gearing at year end	8.4%	8.5%
Dividend for the year	23.0p7	21.0p
Revenue return per share	23.59p	22.79p
Dividend yield8	2.7%	2.2%
Total net assets	£716m	£782m
Ongoing charge excluding performance fee	0.42%	0.42%
Ongoing charge including performance fee	0.42%	0.99%

1 Net Asset Value ("NAV") per ordinary share total return with income reinvested

2 Share price total return using mid-market closing price with income reinvested

3 Numis Smaller Companies Index (excluding investment companies) total return

4 Average NAV total return of the AIC UK Smaller Companies sector

5 Average share price total return of the AIC UK Smaller Companies sector

6 Calculated using published daily NAVs with debt at par including current year revenue

7 This represents an interim dividend of 6.5p and a proposed final dividend of 16.5p

8 Based on the ordinary dividends paid and payable for the year and the mid-market share price at the year end

A glossary of terms and explanations of alternative performance measures are included in the Annual Report

Sources: Morningstar for the AIC, Janus Henderson, Datastream

CHAIRMAN'S REPORT

During the past year your Company's net assets fell by 6.4%, underperforming our benchmark by 0.3% on a total return basis, and the share price fell by 9.0%. This is only the second year in the past 16 that your Fund Manager, Neil Hermon, and his team have underperformed the benchmark. Despite any disappointment with this year's marginal underperformance, the last ten years' annualised return to shareholders of 19.2% and outperformance of 5.9% per annum, clearly demonstrate that Neil and his team's thoughtful stock selection creates value. The quality of our portfolio companies' earnings allows us to report a 9.5% increase in the proposed total dividend for the year, making it our 16th consecutive year of dividend growth, as the companies continue to trade well, maintain strong balance sheets and grow their dividends.

On your behalf, I would like to make particular thanks to Neil, Indriatti van Hien, our Deputy Fund Manager, and Shiv Sedani, the team's Analyst, for all their endeavours and for 'keeping their heads' in what was a particularly bleak Christmas period for investors. I would like also to thank the staff at Janus Henderson, and make special mention of Rachel Peat, who looked after your Company as the representative of the corporate secretary for five years. Her guidance and assistance were highly valued, and we wish her luck with her future career. Her role has been taken by Johana Woodruff.

Board changes

At this year's Annual General Meeting ("AGM"), Beatrice Hollond, our Senior Independent Director and Chairman of the Audit Committee, will step down from the Board. I would like to thank her for the wise and professional advice and the great commitment she has given your Company over the last nine years. Beatrice's stable and insightful leadership of the Audit Committee was of constant reassurance to the Board, in a period where there was much change in the world of reporting. During the autumn we welcomed two new directors, Penelope Freer and Alexandra Mackesy. Alexandra will assume the Chair of the Audit Committee and David Lamb will assume the role of Senior Independent Director.

Discount and share buy-backs

During the year, the AIC UK Smaller Companies sector as a whole traded at an average discount of 10.2% to NAV, with highs and lows of 12.1% and 8.0% respectively. At the year end, the Company's shares traded at a discount of 10.5%. The Company's discount ranged from 14.2% to 5.6%, with the average discount over the year being 9.1%. The Board continues to monitor the discount and will consider the merits of buying back shares as markets evolve, though we do not currently believe that share buy-backs represent the most effective way of generating long-term shareholder value. During the reporting year, no shares in the Company were bought back.

Revenue and dividend

The revenue return per share was 23.6p, compared with 22.8p for the previous year. The Board is proposing a final dividend for the year of 16.5p per share, making a total dividend for the year of 23.0p (2018: 21.0p), as an interim dividend of 6.5p was paid in March. The final dividend is, of course, subject to shareholder approval at the AGM.

Ongoing charge

The Board regularly reviews the ongoing charge and monitors the expenses incurred by the Company. For the year ended 31 May 2019, the base ongoing charge was unchanged at 0.42%, with no performance fee payable. The total charge payable last year, including performance fee, was 0.99%. Further details of the ongoing charge can be found in the Annual Report.

Continuation

Our shareholders are asked every three years to vote for the continuation of the Company, and a resolution to this effect will be put to the AGM in October. Your Company has shown that active investment management, well executed within the transparent and low-cost structure of an investment trust, is a highly effective means of gaining exposure to this class of equity. We therefore recommend that shareholders vote for the Company to continue.

Outlook

Populism has never been a more dominant influence in the political leadership of Western countries, and yet economies continue to grow, albeit at a slow pace, and unemployment continues to fall, creating new opportunities for investors. Global markets have responded positively to the latest round of interest rate signals emerging from the US and the expectation now is for lower rates, rather than rate increases, in the world's largest economy. Whilst progress on talks between the US and China on global trade has been mixed, any move forward here is likely to provide further support for investors.

Against this background, it is critical that the Brexit process is concluded, one way or another, and that there is some clarity around the UK's trading position with Europe and the rest of the world. This will help to remove any lingering uncertainty. Many companies had planned for the March Brexit by increasing their stock, only to find this was a wasted exercise; we shouldn't make companies do so again. I really hope that next year I shall be commenting on post-Brexit events, but in the meantime enjoy our increased dividend and your Company will continue its policy of seeking out quality growth at the right price. Your Board remains confident that Neil and his team are the best people to do this.

Annual General Meeting

The Company's AGM will be held at 11.30am on Friday, 4 October 2019 at the Company's registered office. We would encourage as many shareholders as possible to attend for the opportunity to meet the Board and watch a presentation from Neil reviewing the year and looking forward to the year ahead.

Jamie Cayzer-Colvin

Chairman

FUND MANAGER'S REPORT

Fund performance

The Company had a disappointing year in performance terms - falling in absolute terms and marginally underperforming its benchmark. The share price fell by 9.0% and the net asset value by 6.4% on a total return basis. This compared to a fall of 6.1% (total return) from the Numis Smaller Companies Index (excluding investment companies). The underperformance came from a negative contribution from gearing and expenses in the Company, partially offset by a positive contribution through underlying positive portfolio performance. This year marks only the second year of underperformance of the benchmark in the 16 years in which I have managed the investment portfolio.

Market - year under review

The year under review was a negative one for equity markets. To use a sporting metaphor it was a 'game of two halves'. In the first half of the year UK equity markets fell sharply as Brexit negotiations made limited progress, trade hostilities between US and China escalated, the Federal Reserve raised interest rates and oil and commodities prices fell.

However, equity markets recovered sharply in 2019. Factors driving the market higher included optimism that there would be progress on US and Chinese trade negotiations, a rally in the oil price, and the Federal Reserve softening its commentary around future interest rate increases.

Brexit negotiations have failed to make conclusive progress. The current situation is that the EU has granted an extension on the date the UK is to leave the EU until 31 October 2019 but with a new leader of the Conservative Party only recently installed and Parliament unable to come to a consensus on what deal, if any, it would approve, all scenarios remain possible.

The fundamentals of the corporate sector remained robust. Companies continued to grow their dividends whilst balance sheets remained strong. UK corporate earnings saw growth, helped by generally robust economic conditions and the continued weakness of Sterling increasing the value of overseas earnings for UK companies.

Smaller companies underperformed larger companies over the year. This is the third year in a row that the Numis Smaller Companies Index (excluding investment companies) has underperformed the FTSE All-Share Index, albeit not by significant amounts.

Gearing

Gearing started the year at 8.5% and ended it at 8.4%. Debt facilities are a combination of £30 million 20-year unsecured loan notes at an interest rate of 3.33% and £60 million of short-term bank borrowings. As markets fell, the use of gearing was a negative contributor to performance in the year, a contrast with the significant positive contribution it has made over the 16 years I have managed the investment portfolio.

Attribution analysis

The tables below show the top five contributors to, and the top five detractors from, the Company's relative performance.

Principal contributors	12-month return %	Relative contribution %
RWS Holdings	+75.6	+0.9
Aveva	+58.3	+0.8
Intermediate Capital	+18.0	+0.7
Gamma Communications	+59.5	+0.7
John Laing	+23.2	+0.6

RWS Holdings is a translation services business with particular strengths in intellectual property, life sciences and technology. The company has demonstrated long-term sustainable growth through a combination of organic and acquisitive expansion which has generated substantial shareholder return over the long term. Over the last year the much-improved trading performance of the recent acquisition, Moravia, has accelerated earnings growth and led to significant share price performance.

Aveva is an international provider of software and services to the engineering industry, particularly the oil and gas, mining, marine and power industries. It merged with Schneider Electric's industrial software business in 2018, significantly expanding the global reach of its digital transformation solutions. In this process Schneider took a controlling 60% stake in the business. The markets that Aveva is supplying are seeing robust expansion and the digitalisation of industrial markets is providing a further fillip to growth. The merger with Schneider is also providing cost saving synergies which is boosting profitability.

Intermediate Capital is an alternative finance provider and asset manager. It is a leading provider of mezzanine finance to LBO markets. It also owns a highly successful mezzanine, property lending and credit fund management operation. Its portfolio of investments is performing well but the primary growth engine of the business is the fund management operation. This division is having real success in asset gathering due to the strength of its performance track record, the quality of the team and underlying demand for its product in an income-hungry world. The management have also boosted the company's return on equity by returning substantial surplus capital.

Gamma Communications is a UK-based telecoms operator offering voice, data, mobile and internet based products to small and medium sized enterprises. The company has performed strongly over the last few years as it has utilised the channel network in order to gain market share. Gamma has an exciting product set that provides customers with flexibility and scalability in an environment where products are moving to internet based services. 2018 was a strong year for the group as Gamma expanded overseas into the Netherlands and launched new products with extra functionality.

John Laing is an international originator, active investor and manager of infrastructure projects. Its business is focused on major transport, social and environmental infrastructure projects awarded under governmental public-private partnership ("PPP") programmes and renewable energy projects. It does this across a range of international markets including the UK, Europe, Asia Pacific and North America. Our investment in the company provides us with exposure to growing infrastructural expenditure globally. The company has a large and growing pipeline of opportunities and raised further equity in 2018 to capitalise on these opportunities. The company is delivering healthy NAV growth, driven by new projects, the discount rate unwind and an ability to improve project returns throughout their life.

Principal detractors	12-month return %	Relative contribution %
Greggs1	+110.8	-0.9
Victoria	-50.7	-0.6
Dunelm1	+72.1	-0.6
Just Group	-66.9	-0.5
Renishaw	-26.3	-0.5
1 Not owned by the Company.

Greggs is a UK based convenience retailer of bakery products. The Company had no holding in Greggs. The bakery company has performed strongly, aided by the appeal of its value-for-money offering and the publicity around its launch of vegan sausage rolls. Strong profit growth has combined with a substantial valuation re-rating leaving Greggs on expensive earnings multiples.

Victoria is a pan-European floor coverings manufacturer. The company has bought, rationalised and integrated a number of UK carpet manufacturers. It has more recently expanded into the ceramic market in Europe through acquisitions in Italy and Spain. This expansion combined with a slowdown in trading saw debt expand to uncomfortable levels and combined with negative commentary from short sellers meant the shares underperformed. Recognising these concerns we sold our position in Victoria.

Dunelm is a UK retailer of homewares products. The Company had no holding in Dunelm. After a number of years of poor operational delivery and subdued earnings growth, Dunelm has seen an improvement in its performance, led by a new management team. This has led to a substantial valuation re-rating.

Just Group is a provider of enhanced annuities. The company has been impacted by its regulator, the PRA, deciding that the company needs to hold more capital against its portfolio of lifetime mortgages. To satisfy this capital requirement Just Group issued fresh debt and equity to restore its solvency position to more acceptable levels. The shares now trade at a substantial discount to both its tangible book value and embedded value and we believe they are very vulnerable to predatory interest.

Renishaw designs, develops and manufactures high technology precision measuring and calibration equipment. The business is a global leader in its field with strong patent protection. The company invests heavily in research and development to maintain its market leading technological position. Over the medium term the organic growth delivered has been one of the strongest in the capital goods sector. It has expanded its operations by diversifying into healthcare and additive manufacturing markets, both of which offer long-term attractive growth. In the short term the company is suffering from weakness in Asian demand and, given short visibility and high operational gearing, profitability is under pressure. That said, Renishaw, with a very strong balance sheet and a well-invested production base, is superbly positioned for the long term.

Portfolio activity

Trading activity in the portfolio was consistent with an average holding period of five years. Our approach is to consider our investments as long term in nature and to avoid unnecessary turnover. The focus has been on adding stocks to the portfolio that have good growth prospects, sound financial characteristics and strong management, at a valuation level that does not reflect these strengths. Likewise we have been employing strong sell disciplines to cut out stocks that fail to meet these criteria.

During the year we have added a number of new positions to our portfolio. These include:

Alliance Pharma acquires, markets and sells pharmaceutical and consumer healthcare products. The company has over 90 brands which are predominantly sold in the UK, US, China, France and Ireland. Alliance Pharma is an acquisition-driven business: the company buys niche products from major pharmaceuticals companies and looks to improve sales through focused marketing and expansion into new geographies. The company has solid underlying growth with strong cash generation and there remains a number of opportunities for the business to deploy capital to expand into new products.

Future is a tech-enabled global platform for specialised media which targets both consumers and business-to-business ("B2B") brands across Europe, America and Asia Pacific. The company creates specialised content to attract and grow high value audiences. These audiences are then monetised through memberships and subscriptions, print and digital advertising, e-commerce sales and events. Future has both an organic and inorganic growth strategy. Management are focused on purchasing new brands and titles to leverage their scalable technology and drive digital growth using its revenue optimisation model.

Savills is a real estate services company offering retail and corporate sales, valuation, fund management, property facilities and consulting for a broad range of clients across Europe, America, Asia and Australia. It is a business that has significantly diversified over the years, reducing its exposure to transactional services towards more predictable revenue streams. Our investment in Savills provides us with a quality, diversified real estate business with a strong management team and opportunities for expansion through tactical acquisitions.

Serica Energy is a North Sea focused oil and gas exploration and production company. The company expanded significantly through the acquisition of the Bruce, Rhum and Keith fields from BP, Total, BHP and Marubeni. This deal, which solved ownership issues of the vendors, was achieved at a fantastic price for Serica and transformed it into one of the major independent oil and gas producers in the North Sea. The company will generate substantial free cash flow in the coming years leaving it well placed to do further value-enhancing deals.

Vitec is a leading manufacturer and supplier of specialist camera/video accessories, lighting and sound equipment. The company has a high market share in each of its product categories and continues to outperform its peers through new product innovation. Whilst the consumer camera market has shifted to the use of mobile phones, there still remains an active professional and amateur photographer market that buys high quality equipment. Our investment in Vitec provides exposure to a company with an improving demand cycle, increasing margins through efficient manufacturing and the potential for small acquisitions of other niche brands.

In addition to the companies mentioned above, we invested in a number of initial public offerings ("IPOs") in the year. These included AJ Bell, an investment platform business, Codemasters, a software games developer and publisher, Tekmar, a provider of subsea protection systems and engineering services and Watches of Switzerland, a retailer of luxury branded watches.

To balance the additions to our portfolio, we have disposed of positions in companies which we felt were set for poor price performance. We sold our holding in Elementis, a speciality chemicals group, where the company made a poorly judged and expensive acquisition of Mondo Chemicals, an industrial talc company. This boosted leverage to levels we were uncomfortable with. We also disposed of our holding in NCC, a cybersecurity consultancy and escrow services business, as the company warned that recruitment and retention of employees was proving difficult. In addition the software escrow business is seeing structural decline as software moves to the cloud. Other companies we sold due to a belief that they were structurally challenged or suffering from poor operational performance included: Playtech, a software and services provider to the gaming industry; Ricardo, a consultant serving the automotive, rail and environmental markets; XPS Pensions, a pensions consultant; Accesso, a queueing and ticketing software business; and Ted Baker, a clothing brand and retailer. We also sold our positions, in line with our stated policy, in GVC, a gaming company and Melrose, a diversified industrial group, as both were elevated to the FTSE 100.

We benefited from a level of takeover activity in the year, albeit at reduced levels compared to previous years. Three portfolio companies received agreed bids. Within our portfolio, takeover bids were received for: Faroe Petroleum, an oil and gas exploration and production company, from DNO; Tarsus, an international exhibitions company, from Charterhouse Private Equity; and WYG, an engineering consultancy, from Tetra Tech.

Portfolio outlook

The following table shows the Company's top 10 stock positions and their active positions versus the Numis Smaller Companies Index (excluding investment companies) at the end of May 2019.

Top ten active positions at 31 May 2019	Holding %	Index Weight %	Active Weight %
Intermediate Capital	3.5	-	3.5
Bellway	3.1	-	3.1
Cineworld	2.9	-	2.9
Clinigen	2.8	-	2.8
John Laing	2.5	-	2.5
RWS Holdings	2.2	-	2.2
Paragon	2.2	0.8	1.4
Renishaw	2.1	-	2.1
Dechra Pharmaceuticals	2.0	-	2.0
Aveva	2.0	-	2.0

A brief description of the largest active positions (excluding Aveva, Intermediate Capital, John Laing, Renishaw and RWS Holdings which were covered earlier) follows:

Bellway is a national UK housebuilder. The UK new housing market is robust, due to low interest rates and Government initiatives, particularly Help to Buy. Bellway is looking to exploit these conditions by expanding its national footprint, whilst maintaining a strong land-bank and balance sheet. Operating margins are over 20% and volumes and profits are growing. The positive outlook for the sector is aided by: a benign land market, as the number of competitors has reduced from the previous cycle; the structural under-supply of housing in the UK; and the capital discipline Bellway and its peers are displaying.

Cineworld is an international cinema operator. The company has market leading positions in the UK, Israel, Eastern Europe and the USA. Historically growth has been driven by a rapid roll out of new capacity, particularly in Eastern Europe where cinema visits per capita markedly lag more developed economies. The company undertook significant expansion in 2018 by acquiring Regal Entertainment, a leading US cinema chain. Although the US is a mature market, Regal's valuation was depressed by poor 2017 financial results, which were a consequence of a weak film release schedule, particularly over the summer months. This provided Cineworld with an opportunity to acquire a good asset at a knockdown valuation. With a much stronger film slate, significant cost synergies and an opportunity to invest in a tired Regal asset base, the prospects for growth look good.

Clinigen is a global speciality pharmaceutical services business. Its core activity is providing comparator drugs and other services for clinical trials and providing market access for drugs that are difficult to obtain or yet to be licensed. It also has a speciality pharmaceutical division, which looks to acquire niche drugs from major pharmaceutical companies, where management think they can enhance performance through additional regulatory approval or increased targeted marketing. The company has seen strong growth since its IPO in 2012 and this is likely to continue given the positive structural growth of its end markets.

Paragon is principally a provider of buy-to-let mortgages. The company has changed its structure in the last few years by obtaining a banking licence, growing its lending in asset-backed car finance and specialist residential markets and diversifying its funding sources into the retail market. The company enjoys a very strong capital position, enabling it to pay higher dividends whilst buying back some of its own stock. The introduction of new regulations on complex underwriting should help the specialist lenders like Paragon grow market share, and at a modest premium to asset value, we believe Paragon represents good value.

Dechra Pharmaceuticals is an international specialist pharmaceuticals business that develops, manufactures and sells products exclusively for vets. It does this for companion animals, equine animals and food producing animals. Key product focus areas include dermatology, ophthalmology, endocrinology and antibiotics and vaccinations for food producing animals. Company strategy has been to grow the business both organically and inorganically and the long-standing CEO has successfully done this through growing the pipeline, diversifying geographically (most notably in the US) and undertaking some value accretive acquisitions. Our investment provides us with exposure to growing demand for veterinary pharmaceuticals as the trends of the humanisation of pets and increase in demand for protein continue.

As at 31 May 2019, the portfolio was weighted by company size as follows:

	Weighting %
	31 May 2019	31 May 2018
FTSE 100	0.0	2.5
FTSE 250	62.0	62.9
FTSE Small Cap	21.3	21.5
FTSE AIM	25.1	21.6
Gearing	-8.4	-8.5

Market outlook

The UK economy is showing anaemic growth. Brexit deliberations stumble on, with intermittent progress. There is clearly a range of outcomes but what deal, if any, the UK will end up with is, at this point, unclear. Extra complication is added by the weak position of the minority Conservative Government and that Boris Johnson has replaced Theresa May as Prime Minister. The battle to replace her and the Summer Parliamentary recess accounts for a significant proportion of the time before we are due to leave the EU. This political uncertainty is likely to weigh on consumer and business confidence and delay and postpone investment and purchasing decisions, further dampening economic growth.

Outside the UK, economic conditions are robust, but slowing. Europe, in particular, is showing signs of economic slowdown. Escalating trade tensions are providing additional negative commentary and after what seemed to be good progress between the US and China, recent rhetoric and actions have seen an increase in volatility of relations between the two countries. The rise in US interest rates in 2018 flagged to investors that loose global monetary conditions were reversing. However, commentary from the Federal Reserve has softened recently and the expectation is that there will be cuts in US rates in 2019.

In the corporate sector, conditions are intrinsically stronger than they were during the financial crisis of 2008-9. Balance sheets are more robust and dividends are growing. In addition, a large proportion of UK corporate earnings come from overseas, even among smaller companies, and should be boosted by the relative weakness of Sterling.

In terms of valuations, the equity market is now trading below long-term averages. Mergers and acquisitions ("M&A") remains a supportive feature for smaller companies. If corporate confidence does not deteriorate, M&A will increase, especially as little or no return can currently be generated from cash and the cost of debt is historically low. We have seen interest in UK corporates from abroad and from private equity and, given the relatively low valuation of UK equities and a weak currency, we expect this trend to continue. However, a return to a more vibrant M&A market depends on a Brexit resolution and clarity around the UK's trading position with Europe and the rest of the world.

In conclusion, the year under review has been a disappointing one for the Company. Absolute and relative performance were both negative. However, our portfolio companies have performed robustly, are soundly financed and attractively valued. Additionally, the smaller companies market continues to throw up exciting growth opportunities in which the Company can invest. We remain confident in our ability to generate significant value from a consistent and disciplined investment approach.

Neil Hermon

Fund Manager

INVESTMENT PORTFOLIO at 31 May 2019

Company	Principal activities	Valuation £'000	Portfolio %
Intermediate Capital	Mezzanine finance	25,426	3.28
Bellway	Housebuilder	21,928	2.82
Cineworld	Cinema operator	20,445	2.63
Clinigen1	Pharmaceuticals	20,160	2.60
John Laing	Infrastructure investor	17,885	2.30
RWS1	Patent translation services	15,500	2.00
Paragon	Buy-to-let mortgage provider	15,415	1.99
Renishaw	Precision measuring and calibration equipment	15,053	1.94
Dechra Pharmaceuticals	Veterinary pharmaceuticals	14,322	1.84
Aveva	Design software	14,230	1.83
10 largest		180,364	23.23
Sanne	Investment management services	13,324	1.72
Gamma Communications1	Telecommunication services	12,548	1.62
GB Group1	Data intelligence services	12,536	1.61
Victrex	Speciality chemicals	12,419	1.60
Burford Capital1	Litigation finance	12,335	1.59
Oxford Instruments	Advanced instrumentation equipment	12,033	1.55
OneSavings Bank	Banks	11,457	1.48
Ultra Electronics	Defence and aerospace products	11,160	1.44
St Modwen Properties	Real estate investment and services	10,872	1.40
SIG	Building materials distributor	10,238	1.32
20 largest		299,286	38.56
TI Fluid Systems	Automotive supplier	10,225	1.32
Balfour Beatty	International contractor	10,217	1.32
IntegraFin	B2B financial platform	10,118	1.30
Vesuvius	Materials technology for steel and foundry industry	9,988	1.29
Euromoney Institutional Investor	B2B information	9,979	1.29
Ibstock	Bricks manufacturer	9,758	1.26
Synthomer	Speciality chemicals	9,725	1.25
Learning Technologies Group1	E-learning	9,664	1.24
Softcat	Software reseller	9,550	1.23
Tarsus Group	Exhibition organiser	9,266	1.19
30 largest		397,776	51.25
Coats	Global threads provider	8,812	1.14
Midwich1	Audio-visual equipment distributor	8,596	1.11
Jupiter Fund Management	Investment management company	8,556	1.10
Ascential	Exhibition organiser and data services	8,535	1.10
Scapa1	Technical tapes	8,379	1.08
Cairn Energy	Oil & gas exploration and production	8,305	1.07
Impax Asset Management1	SRI investment management company	8,186	1.05
Hunting	Oil equipment and services	8,128	1.05
Countryside	Housebuilder	8,019	1.03
Premier Oil	Oil & gas exploration and production	7,874	1.01
40 largest		481,166	61.99
Brewin Dolphin	Wealth management	7,756	1.00
Grainger	Residential property investor	7,724	1.00
Vitec	Broadcast and camera systems	7,718	0.99
Spectris	Electronic control and process instrumentation	7,694	0.99
Northgate	Commercial vehicle hire	7,464	0.96
Computacenter	IT reseller	7,327	0.94
CLS	Real estate investment and services	6,967	0.90
Consort Medical	Healthcare products	6,900	0.89
Alpha Financial Markets1	Investment management consultancy	6,840	0.88
Team171	Games software developer	6,837	0.88
50 largest		554,393	71.42
Codemasters1	Games software developer	6,588	0.85
Rotork	Process control solutions	6,469	0.83
Avon Rubber	Defence and dairy industry products	6,211	0.80
Savills	Property transactional consulting services	6,141	0.79
SDL	Language software service provider	5,859	0.75
ITE Group	Exhibition organiser	5,802	0.75
DFS	Furniture retailer	5,789	0.75
Helical	Office property investor and developer	5,619	0.72
Gocompare.com	Price comparison website	5,615	0.72
Just Group	Enhanced annuity provider	5,600	0.72
60 largest		614,086	79.10
Hollywood Bowl Group	Ten-pin bowling operator	5,468	0.70
Restore1	Office service provider	5,390	0.69
Polypipe	Building products	5,366	0.69
Unite Group	Student accommodation investor	5,317	0.68
Howden Joinery	Kitchen manufacturer and retailer	5,275	0.68
Tyman	Building products	5,273	0.68
Eurocell	Building products	5,189	0.67
Safestore Holdings	Self-storage operator	5,171	0.67
SThree	Recruitment company	5,168	0.67
XP Power	Electrical power products	5,104	0.66
70 largest		666,807	85.89
Bodycote	Engineering group	5,057	0.65
Crest Nicholson	Housebuilder	4,857	0.63
Next Fifteen Communications1	PR and media services	4,735	0.61
Luceco	Electrical products	4,720	0.61
Watches of Switzerland	Luxury watch retailer	4,657	0.60
Lookers	Automotive retailer	4,510	0.58
Tribal Group1	Education support services and software	4,507	0.58
Future	Specialist internet, website and magazine company	4,464	0.57
Alliance Pharma1	Pharmaceutical products	4,385	0.56
Urban & Civic	Real estate investment and services	4,238	0.55
80 largest		712,937	91.83
Smart Metering Systems1	Energy smart meters	4,076	0.52
Aptitude Software	Software retailer	3,938	0.51
Safestyle1	Window replacement retailer	3,876	0.50
RM	Education software and services	3,743	0.48
Serica Energy1	Oil and gas exploration and production	3,594	0.46
Joules1	Clothing retailer	3,510	0.45
Marshall Motor1	Automotive retailer	3,441	0.44
AA	Roadside assistance	3,215	0.41
Blue Prism1	Robot processing automation	3,185	0.41
Gym Group	Gym operator	3,159	0.41
90 largest		748,674	96.42
Blancco Technology1	Data erasure software	2,960	0.38
Costain	Contractor	2,835	0.37
Tekmar1	Offshore wind protection systems	2,762	0.36
Sherborne Investors (Guernsey) C	Speciality finance	2,601	0.34
Severfield	Industrial engineering	2,520	0.32
Spire Healthcare	Hospital operator	2,385	0.31
Capital & Regional	Retail property investor	2,374	0.31
WYG1	Engineering consultancy	2,160	0.28
Thruvision1	Detection technology	1,747	0.23
AJ Bell	B2B and B2C investment platform	1,672	0.22
100 largest		772,690	99.54
Charles Taylor	Insurance management services	1,624	0.21
Xaar	Electronic equipment	1,239	0.16
AB Dynamics1	Automotive testing and measurement products	680	0.09
Total Equity Investments		776,233	100.00

There were no convertible or fixed interest securities at 31 May 2019 (2018: None)

¹ Quoted on the Alternative Investment Market

PRINCIPAL RISKS AND UNCERTAINTIES

The Board, with the assistance of the Manager, has carried out a robust assessment of the principal risks facing the Company which relate to the activity of investing in the shares of smaller companies that are listed (or quoted) in the United Kingdom. In carrying out this assessment, the Board has considered the market uncertainty arising from the result of the UK referendum to leave the European Union. Although the Company invests almost entirely in securities that are quoted on recognised markets, share prices may move rapidly and it may not be possible to realise an investment at the Manager's assessment of its value. The companies in which investments are made may operate unsuccessfully, or fail entirely, such that shareholder value is lost. The Company is also exposed to the operational risk that one or more of its contractors or sub-contractors may not provide the required level of service.

The Board considers regularly the principal risks facing the Company in order to mitigate them as far as practicable. The Board has drawn up a risk matrix which identifies the substantial risks to which the Company is exposed. The Board has also put in place a schedule of investment limits and restrictions, appropriate to the Company's investment objective and policy. The principal risks fall broadly under the following categories:

Risk	Controls and mitigation
Investment activity and strategy Poor long-term investment performance (significantly below agreed benchmark or market/industry average) Loss of the Fund Manager or management team	The Board reviews investment strategy at each board meeting. An inappropriate investment strategy (for example, in terms of asset allocation or the level of gearing) may lead to underperformance against the Company's benchmark and the companies in its peer group; it may also result in the Company's shares trading at a wider discount to the net asset value per share. The Board manages these risks by ensuring a diversification of investments and a regular review of the extent of borrowings. The Manager operates in accordance with investment limits and restrictions determined by the Board; these include limits on the extent to which borrowings may be used. The Board reviews its investment limits and restrictions regularly and the Manager confirms its compliance with them each month. The Manager provides the directors with management information, including performance data and reports and shareholder analysis. The Board monitors the implementation and results of the investment process with the Fund Manager, who attends all board meetings, and regularly reviews data that monitor portfolio risk factors. The Board obtains assurances from the Manager that the UK Smaller Companies team is suitably resourced and the Fund Manager is appropriately remunerated and incentivised in this role. The Board also considers the succession plan for the Fund Management team on an annual basis.
Accounting, legal and regulatory Loss of investment trust status Brexit and other UK political risk Breach of company law or Listing Rules resulting in suspension	In order to qualify as an investment trust the Company must comply with section 1158 of the Corporation Tax Act 2010. A breach of section 1158 could result in the Company losing investment trust status and, as a consequence, capital gains realised within the Company's portfolio would be subject to corporation tax. The section 1158 criteria are monitored by the Manager and the results are reported to the directors at each board meeting. The Company must comply with the provisions of the Companies Act 2006 and, as the Company has a premium listing on the London Stock Exchange, the Company must comply with Listing, Prospectus and Disclosure Guidance and Transparency Rules of the UK Listing Authority ("UKLA"). A breach of the Companies Act could result in the Company and/or the directors being fined or becoming the subject of criminal proceedings. Breach of the UKLA Rules could result in the suspension of the Company's shares which would in turn lead to a breach of section 1158. The Board relies on its company secretary and its professional advisers to ensure compliance with the Companies Act and UKLA Rules. The Board reviews the potential impact of Brexit and other fundamental political infrastructure change as an integral part of investment risks and will continue to assess the portfolio.
Operational Failure of a key third-party service provider Cyber-crime leading to loss of confidential data Breach of internal controls	Disruption to, or failure of, the Manager's accounting, dealing or payment systems or the custodian's records could prevent the accurate reporting and monitoring of the Company's financial position. Janus Henderson has contracted some of its operational functions, principally those relating to trade processing, investment administration and accounting, to BNP Paribas Securities Services. Details of how the Board monitors the services provided by Janus Henderson and its other suppliers, and the key elements designed to provide effective internal control, are explained further in the Annual Report. Cyber security is closely monitored by the Audit Committee as part of quarterly internal controls reports, and the Audit Committee receives an annual presentation from Janus Henderson's Head of Information Security.
Financial instruments and the management of risk	By its nature as an investment trust, the Company is exposed in varying degrees to market risk (comprising market price risk, currency risk and interest rate risk), liquidity risk and credit and counterparty risk. An analysis of these financial risks and the Company's policies for managing them are set out in the Notes to the financial statements within the Annual Report.

VIABILITY STATEMENT

The Company is a long-term investor. The Board believes it is appropriate to assess the Company's viability over a five-year period in recognition of the Company's long-term horizon and what the Board believes to be investors' horizons, taking account of the Company's current position and the potential impact of the principal risks and uncertainties as documented above and in the Annual Report. The assessment has considered the impact of the likelihood of the principal risks and uncertainties facing the Company, in particular investment strategy and performance against benchmark, whether from asset allocation or the level of gearing, and market risk, in severe but plausible scenarios, and the effectiveness of any mitigating controls in place.

The Board took into account the liquidity of the portfolio and the borrowings in place when considering the viability of the Company over the next five years and its ability to meet liabilities as they fall due. This included consideration of the duration of the Company's loan and borrowing facilities and how a breach of any covenants could impact on the Company's net asset value and share price. The Board does not expect there to be any significant change in the current principal risks and adequacy of the mitigating controls in place, and nor does the Board envisage any change in strategy or objective or any events that would prevent the Company from continuing to operate over that period - the Company's assets are liquid, its commitments are limited and the Company intends to continue to operate as an investment trust. Only a sustained financial crisis affecting the global economy could have an impact on this assessment. Whilst there is currently uncertainty in the markets due to the UK's negotiations to leave the European Union, the Board does not believe that this will have a long-term impact on the viability of the Company and its ability to continue in operation.

We are conscious that the continuation of the Company is due to be considered by shareholders at the forthcoming annual general meeting ("AGM"). This is the sixth such time the continuation vote has been put to shareholders, and the resolution has been successfully passed on each occasion. The Board supports the continuation of the Company and expects that it will continue to exist for the foreseeable future, being ideally suited for long-term investment in UK-listed/quoted smaller companies. If, however, such a vote were not passed, the directors would follow the provisions in the articles of association to wind up the Company's assets.

Based on this assessment, the Board has a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the next five-year period.

FUTURE DEVELOPMENTS

The future success of the Company is dependent primarily on the performance of its investments, which will to a significant degree reflect the performance of the stock market and the Manager.

While the Company invests in companies that are listed (or quoted) in the United Kingdom, the underlying businesses of those companies are affected by various external factors, many of an international nature. The Board's intention is that the Company will continue to pursue its stated investment objective and strategy, as explained in the Annual Report. The Chairman's Report and the Fund Manager's Report give commentary on the outlook for the Company.

RELATED-PARTY TRANSACTIONS

The Company's transactions with related parties in the year were with the directors and the Manager. There have been no material transactions between the Company and its directors during the year and the only amounts paid to them were in respect of remuneration, for which there were no outstanding amounts payable at the year end. The directors did not claim any expenses during the years to 31 May 2019 or 31 May 2018. Directors' shareholdings are disclosed in the Annual Report.

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 material transactions with the Manager affecting the financial position of the Company during the year under review. More details on transactions with the Manager, including amounts outstanding at the year end, are giving in the Notes to the financial statements in the Annual Report.

STATEMENT UNDER DISCLOSURE GUIDANCE AND TRANSPARENCY RULE 4.1.12

Each of the directors confirms that, to the best of his or her knowledge:

·      the financial statements, which have been prepared in accordance with IFRS as adopted by the European Union on a going concern basis, give a true and fair view of the assets, liabilities, financial position and profit of the Company; and

·      the Strategic Report and financial statements in the Annual Report include a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

For and on behalf of the Board

Jamie Cayzer-Colvin

Chairman

AUDITED STATEMENT OF COMPREHENSIVE INCOME

		Year ended 31 May 2019			Year ended 31 May 2018
Notes		Revenue return £'000	Capital return £'000	Total £'000	Revenue return £'000	Capital return £'000	Total £'000
2	Investment income	19,431	-	19,431	18,662	-	18,662
3	Other income	80	-	80	138	-	138
	(Losses)/gains on investments held at fair value through profit or loss	-	(64,758)	(64,758)	-	97,561	97,561
	Total income	19,511	(64,758)	(45,247)	18,800	97,561	116,361
	Expenses
4	Management and performance fees	(736)	(1,719)	(2,455)	(723)	(5,772)	(6,495)
	Other expenses	(723)	-	(723)	(622)	-	(622)
	Profit/(loss) before finance costs and taxation	18,052	(66,477)	(48,425)	17,455	91,789	109,244
	Finance costs	(431)	(1,006)	(1,437)	(433)	(1,010)	(1,443)
	Profit/(loss) before taxation	17,621	(67,483)	(49,862)	17,022	90,779	107,801
	Taxation	-	-	-	-	-	-
	Profit/(loss) for the year and total comprehensive income	17,621	(67,483)	(49,862)	17,022	90,779	107,801
5	Earnings per ordinary share - basic and diluted	23.59p	(90.34p)	(66.75p)	22.79p	121.52p	144.31p

The total columns of this statement represent the Statement of Comprehensive Income, prepared in accordance with IFRS as adopted by the European Union.

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

AUDITED STATEMENT OF CHANGES IN EQUITY

		Year ended 31 May 2019
		Retained earnings
Notes		Share capital £'000	Capital redemption reserve £'000	Capital reserves £'000	Revenue reserve £'000	Total equity £'000
	Total equity at 1 June 2018	18,676	26,745	713,788	22,859	782,068
	Total comprehensive income: (Loss)/profit for the year	-	-	(67,483)	17,621	(49,862)
	Transactions with owners, recorded directly to equity:
6	Ordinary dividends paid	-	-	-	(16,061)	(16,061)
	Total equity at 31 May 2019	18,676	26,745	646,305	24,419	716,145
		Year ended 31 May 2018
		Retained earnings
Notes		Share capital £'000	Capital redemption reserve £'000	Capital reserves £'000	Revenue reserve £'000	Total equity £'000
	Total equity at 1 June 2017	18,676	26,745	623,009	20,030	688,460
	Total comprehensive income: Profit for the year	-	-	90,779	17,022	107,801
	Transactions with owners, recorded directly to equity:
6	Ordinary dividends paid	-	-	-	(14,193)	(14,193)
	Total equity at 31 May 2018	18,676	26,745	713,788	22,859	782,068

AUDITED BALANCE SHEET

Notes			At 31 May 2019 £'000	At 31 May 2018 £'000
	Non-current assets
	Investments held at fair value through profit or loss		776,233	848,330
	Current assets
	Receivables		3,215	3,334
	Tax recoverable		19	19
	Cash and cash equivalents		872	4,889
			4,106	8,242
	Total assets		780,339	856,572
	Current liabilities
	Payables		(5,284)	(8,612)
	Bank loans		(29,087)	(36,079)
			(34,371)	(44,691)
	Total assets less current liabilities		745,968	811,881
	Non-current liabilities
	Financial liabilities		(29,823)	(29,813)
	Net assets		716,145	782,068
	Equity attributable to equity shareholders
7	Share capital		18,676	18,676
	Capital redemption reserve		26,745	26,745
	Retained earnings:
	Capital reserves		646,305	713,788
	Revenue reserve		24,419	22,859
	Total equity		716,145	782,068
8	Net asset value per ordinary share		958.7p	1,046.9p

AUDITED STATEMENT OF CASH FLOWS

	Year ended
	31 May 2019 £'000	31 May 2018 £'000
Operating activities
(Loss)/profit before taxation	(49,862)	107,801
Add back interest payable	1,437	1,443
Losses/(gains) on investments held at fair value through profit or loss	64,758	(97,561)
Purchases of investments	(135,343)	(196,351)
Sales of investments	142,682	197,318
Decrease/(increase) in receivables	207	(21)
(Increase)/decrease in amounts due from brokers	(14)	866
Increase in accrued income	(74)	(418)
(Decrease)/increase in payables	(3,646)	774
Increase/(decrease) in amounts due to brokers	323	(1,480)
Net cash inflow from operating activities before interest1	20,468	12,371
Interest paid	(1,432)	(1,428)
Net cash inflow from operating activities	19,036	10,943
Financing activities
Equity dividends paid	(16,061)	(14,193)
(Repayment)/drawdown of bank loans	(6,992)	4,310
Net cash outflow from financing activities	(23,053)	(9,883)
(Decrease)/increase in cash and cash equivalents	(4,017)	1,060
Cash and cash equivalents at the start of the year	4,889	3,829
Cash and cash equivalents at the end of the year	872	4,889

¹ In accordance with IAS 7.31, cash flow from dividends was £19,357,000 (2018: £18,263,000) and cash inflow from interest was £6,000 (2018: £1,000).

NOTES TO THE FINANCIAL STATEMENTS

1	Accounting policies a) Basis of preparation The Henderson Smaller Companies Investment Trust plc (the "Company") is a company incorporated and domiciled in the United Kingdom under the Companies Act 2006. The financial statements of the Company for the year ended 31 May 2019 have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. These comprise standards and interpretations approved by the International Accounting Standards Board ("IASB"), together with interpretations of the International Accounting Standards and Standing Interpretations Committee approved by the IFRS Interpretations Committee ("IFRS IC") that remain in effect, to the extent that IFRS have been adopted by the European Union. The financial statements have been prepared on a going concern basis and on the historical cost basis, except for the revaluation of certain financial instruments held at fair value through profit or loss. The principal accounting policies adopted are set out below. These policies have been applied consistently throughout the year. Where presentational guidance set out in the Statement of Recommended Practice (the "SORP") for investment trusts issued by the Association of Investment Companies (the "AIC") in November 2014 and updated in February 2018 with consequential amendments is consistent with the requirements of IFRS. The directors have sought to prepare the financial statements on a basis consistent with the recommendations of the SORP. b) Going concern The Company's shareholders are asked every three years to vote for the continuation of the Company. An ordinary resolution to this effect was put to the Annual General Meeting held on 23 September 2016 and passed by a substantial majority of the shareholders. The assets of the Company consist almost entirely of securities that are listed (or quoted on AIM) and, accordingly, the directors believe that the Company has adequate financial resources to continue in operational existence for at least twelve months from the date of approval of the financial statements. Having assessed these factors, the principal risks and other matters discussed in connection with the Viability Statement, the Board has decided that it is appropriate for the financial statements to be prepared on a going concern basis.
2	Investment income
							2019 £'000		2018 £'000
	Income from companies listed or quoted in the United Kingdom:
	Dividends						17,154		15,954
	Special dividends						1,827		2,133
	Property income distributions						450		575
	Total investment income						19,431		18,662
3	Other income
							2019 £'000		2018 £'000
	Bank and other interest						6		2
	Underwriting income (allocated to revenue)1						74		136
							80		138
	1 None of the income receivable from sub-underwriting commitments was allocated to capital during the year (2018: £nil)
4	Management and performance fees
		2019			2018
		Revenue return £'000	Capital return £'000	Total return £'000	Revenue return £'000		Capital return £'000		Total return £'000
	Management fee	736	1,719	2,455	723		1,686		2,409
	Performance fee	-	-	-	-		4,086		4,086
		736	1,719	2,455	723		5,772		6,495
	A summary of the Management Agreement is given in the Annual Report.
5	Earnings per ordinary share The earnings per ordinary share figure is based on the net loss for the year of a £49,862,000 (2018: net profit of £107,801,000) and on 74,701,796 (2018: 74,701,796) ordinary shares, being the weighted average number of ordinary shares in issue during the year. The earnings per ordinary share figure detailed above can be further analysed between revenue and capital, as below: The Company has no securities in issue that could dilute the return per ordinary share. Therefore the basic and diluted earnings per ordinary share are the same.
						2019 £'000		2018 £'000
	Net revenue profit					17,621		17,022
	Net capital (loss)/profit					(67,483)		90,779
	Net total (loss)/profit					(49,862)		107,801
	Weighted average number of ordinary shares in issue during the year					74,701,796		74,701,796
						2019		2018
	Revenue earnings per ordinary share					23.59p		22.79p
	Capital earnings per ordinary share					(90.34p)		121.52p
	Total earnings per ordinary share					(66.75p)		144.31p

6	Ordinary dividends
		Record Date	Pay date	2019 £'000		2018 £'000
	Final dividend: 15.0p (2017: 13.0p) for the year ended 31 May 2018	31 August 2018	28 September 2018	11,205		9,711
	Interim dividend: 6.5p (2018: 6.0p) for the year ended 31 May 2019	15 February 2019	8 March 2019	4,856		4,482
				16,061		14,193
	Subject to approval at the Annual General Meeting, the proposed final dividend of 16.5p per ordinary share will be paid on 8 October 2019 to shareholders on the register of members at the close of business on 9 August 2019. The shares will be quoted ex-dividend on 8 August 2019. The proposed final dividend for the year ended 31 May 2019 has not been included as a liability in these financial statements. Under IFRS, the final dividend is not recognised until approved by the shareholders. All dividends have been paid or will be paid out of revenue profits. The total dividends payable in respect of the financial year which form the basis of the test under section 1158 of the Corporation Tax Act 2010 are set out below:
					2019 £'000	2018 £'000
	Revenue available for distribution by way of dividends for the year				17,621	17,022
	Interim dividend for the year ended 31 May 2019: 6.5p (2018: 6.0p) per ordinary share				(4,856)	(4,482)
	Final dividend for the year ended 31 May 2018: 15.0p (based on 74,701,796 shares in issue at 6 August 2018)				-	(11,205)
	Proposed final dividend for the year ended 31 May 2019: 16.5p (based on 74,701,796 shares in issue at 1 August 2019)				(12,326)	-
					439	1,335
7	Share capital
					2019 £'000	2018 £'000
	Allotted, issued authorised and fully paid:
	74,701,796 ordinary shares of 25p each (2018: 74,701,796)				18,676	18,676
	During the year the Company made no purchases of its own issued ordinary shares (2018: nil). Since 31 May 2019 the Company has not purchased any ordinary shares.
8	Net asset value per ordinary share
	The net asset value per ordinary share is based on the net assets attributable to the ordinary shares of £716,145,000 (2018: £782,068,000) and on the 74,701,796 ordinary shares in issue at 31 May 2019 (2018: 74,701,796). The Company has no securities in issue that could dilute the net asset value per ordinary share. The movement during the year of the net assets attributable to the ordinary shares was as follows:
				2019 £'000		2018 £'000
	Net assets attributable to the ordinary shares at 1 June			782,068		688,460
	Net (losses)/gains for the year			(49,862)		107,801
	Ordinary dividend paid in the year			(16,061)		(14,193)
	Net assets attributable to the ordinary shares at 31 May			716,145		782,068
9	2019 financial information
	The figures and financial information for the year ended 31 May 2019 are compiled from an extract of the latest financial statements of the Company and do not constitute the statutory accounts for that year. Those financial statements include the report of the auditor which is unqualified and does not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006. They have not yet been delivered to the Registrar of Companies.
10	2018 financial information
	The figures and financial information for the year ended 31 May 2018 are compiled from an extract of the published financial statements of the Company and do not constitute the statutory accounts for that year. Those financial statements have been delivered to the Registrar of Companies and included the report of the auditor which was unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006.
11	Annual Report
	The Annual Report for the year ended 31 May 2019 will be posted to shareholders in August 2019 and will be available on the Company's website: www.hendersonsmallercompanies.com. Copies will be available thereafter from the corporate secretary at the Company's registered office, 201 Bishopsgate, London EC2M 3AE.
12	Annual general meeting ("AGM") The AGM will be held at the registered office on Friday 4 October 2019 at 11.30 am. The Notice of AGM will be posted to shareholders with the Annual Report. 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.

For further information please contact:

Neil Hermon Fund Manager  The Henderson Smaller Companies Investment Trust plc Telephone: [phone]	James de Sausmarez Director and Head of Investment Trusts Janus Henderson Investors Telephone: [phone]
Laura Thomas Investment Trust PR Manager Janus Henderson Investors Telephone: [phone]

 

END

 

 

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