Final Results

RNS Number : 6948L

Henderson Smaller Cos Inv Tst PLC

03 August 2011

 



Page 1 of 24

THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 May 2011

3 August 2011

This announcement contains regulated information

MANAGEMENT REPORT

Financial Highlights

	31 May 2011	31 May  2010
Total net assets	£298 million	£208 million
Net asset value per ordinary share	398.1p	277.1p
Net asset value per ordinary share on an alternative basis *	392.5p	269.7p
Market price per ordinary share	319.4p	216.0p
Total return per ordinary share	124.6p	79.3p
Revenue return per ordinary share	4.9p	4.6p
Dividend per ordinary share	4.2p	3.6p
Gearing †	8.7%	9.5%

*Calculated by deducting from the net assets the debt at its market value. 

†Defined here as the total market value of the Group's investments less shareholders' funds as a percentage of shareholders' funds.

Chairman's Statement

We have had a most excellent year. Our performance in the year ended 31 May 2011 was very strong indeed and a welcome continuation of the recovery that we enjoyed in the previous year. On a total return basis our net asset value per share rose by 45.3%, against 32.4% for the benchmark index. The greatest contributor to these results was strong stock selection, in particular the focus on industrial and technology companies that have proved their competitive strength in overseas markets. The other positive factor was the gearing, with our short-term borrowing facilities used to good effect alongside the fixed borrowings of £20 million. So strong has the performance been that the Manager has earned a performance fee of £1.6 million, the maximum possible under the terms of our management agreement. A full attribution analysis is given on page 3 below.

Revenue and dividend

The revenue return per share was 4.9p, compared with 4.6p for the previous year. Certain factors, such as the sharp fall in sub-underwriting income following the period of corporate fundraising in 2009, mask the strong growth in investment income behind these figures. We expect the dividend growth from our investment portfolio to continue in the coming year. We propose a final dividend for the year of 4.2p per share (2010: 3.6p). This is of course subject to shareholder approval at the Annual General Meeting in September.

Share buy-backs and discount

We did not buy back any shares during the year under review, the first year for over a decade in which the issued share capital has remained unchanged. We are pleased to welcome new investors to the register and some widening of interest in the Company, in part perhaps a reflection of good performance. Nevertheless, in common with the smaller companies sector as a whole, the discount to net asset value at which the shares trade remains wider than we would wish.  The Board continues to keep a close eye on the discount but does not believe that share buy-backs have a significant effect on the discount other than in the short term. 

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Annual Financial Report for the year ended 31 May 2011

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Outlook

Although there have been dips along the way as nervousness about the various threats to the global recovery has taken hold for a while, the stock market has continued its recovery from the low point reached in March 2009. Overall the share prices of small and mid-cap companies have moved ahead faster than those of large companies. At the company level, valuations are reasonable and profitability, cash flows and balance sheets are in many cases strong. All this continues to be in marked contrast to the financial position of many governments.  Despite some serious world issues, we remain optimistic about the medium-term outlook for equities as an asset class and for the relative merits of the small and mid-cap companies in which we invest, although the rate of growth may well be slower in the coming year.

Board composition

I am very pleased to welcome Jamie Cayzer-Colvin to the Board.  He is an executive director of Caledonia Investments plc, a large self-managed investment trust company, and he serves on the boards of a number of the companies in which Caledonia invests. His background adds further to the balance of skills and experience represented on our Board.

I shall retire as a director at the conclusion of the Annual General Meeting in September. The Board has chosen Jamie Cayzer-Colvin as my successor. Although new to this Company - he joined the Board in May - he is well experienced in investment and investment trust matters. I am pleased to be able to hand on the baton to him as a member of a younger generation. He will be well supported by the other members of our talented Board.

Company Secretary

For the past thirteen years the company secretarial affairs of the Trust have been in the hands of Geoffrey Rice.  He has never missed a Board meeting in that time.  In an Investment Trust, this job is all important.  He has kept us within the rules, of course.  But also ensured that the Board's decisions are accurately recorded, implemented and monitored.  Geoffrey retires in August 2011.  The Board, on behalf of all shareholders, would like to thank him for his exceptional service.

AGM

Our Annual General Meeting will be held at 11.30 am on Friday 30 September 2011 at the Registered Office, 201 Bishopsgate, London EC2M 3AE. The Notice of Meeting is set out in the accompanying circular to shareholders.

The Board recommends that the shareholders vote in favour of all the resolutions to be put to the Meeting, as the directors intend to do in respect of their own holdings. Even if you are unable to attend in person, I hope that you will support the resolutions by completing and returning the enclosed form of proxy.

J Dudley Fishburn

Chairman

3 August 2011

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Annual Financial Report for the year ended 31 May 2011

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Performance Attribution

		Year ended 31 May 2011
Net asset value per share total return		45.3
Benchmark total return		(32.4)
		--------
Relative performance		12.9
		--------
Made up:
Stock selection		12.3
Gearing		1.8
Expenses		(1.2)
		---------
		12.9
		---------

Notes:

1.         The benchmark is the Hoare Govett Smaller Companies Index (excluding investment companies).

2.         Source: Henderson Global Investors Limited. The table sets out the Manager's understanding of the movement, relative to the benchmark, between the net asset value per share at 31 May 2010 (277.1p) and the net asset value per share at 31 May 2011 (398.1p).

Fund Manager's Review

Analysis of the portfolio by sector	31 May 2011 %		31 May 2010 %
Support Services	18.2		20.0
Electronic & Electrical Equipment	11.8		9.7
Software & Computer Services	7.5		7.5
Chemicals	7.2		4.9
Media	6.9		8.0
Financial Services	6.8		6.7
Household Goods & Home Construction	4.8		3.6
Real Estate	4.6		5.5
Aerospace & Defence	4.5		5.3
Oil & Gas Producers	4.3		3.7
General Retailers	4.2		3.9
Construction & Materials	3.8		3.4
Industrial Engineering	3.3		4.7
Technology Hardware & Equipment	3.1		3.1
Travel & Leisure	2.5		3.1
Mining	1.9		1.4
Health Care Equipment & Services	1.4		2.1
Oil Equipment, Services & Distribution	1.3		1.4
Industrial Metals & Mining	0.9		1.4
Pharmaceuticals & Biotechnology	0.7		0.6
Food Producers	0.3		-
	-------		-------
	100.0		100.0
	-------		-------

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THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 May 2011

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Market - year in review

The year under review was another period of recovery in equity markets. Although macro economic conditions remained volatile, the fundamentals of the corporate sector continued to improve. Profit growth was excellent, balance sheet strength increased and mergers and acquisition activity saw improvement. Foreign corporates were particularly active in looking to acquire UK companies with strong domestic or international market niche positions. Additionally, it was a year to focus on UK companies with material overseas exposure, particularly exposure to emerging markets, as growth in these economies far outstripped a fairly moribund UK economy.

Smaller companies outperformed larger companies significantly over the year. In fact the Hoare Govett Smaller Companies Index has now outperformed the FTSE All-Share Index for the last three years consecutively (and in 10 of the last 11 years). The resurgence in mergers and acquisition activity and stronger profit recovery were the key reasons behind the outperformance in the year.

Fund performance

The Trust had a good year in performance terms - rising in absolute terms and significantly outperforming on a relative basis. The net asset value rose 45.3%, on a total return basis. This compares to a gain of 32.4% (total return) from the Hoare Govett Smaller Companies Index (excluding investment companies) and 23.1% (total return) from the FTSE SmallCap Index (excluding investment companies). The outperformance came from a combination of underlying positive portfolio performance and gearing in the Trust. The year under review is the seventh year of outperformance of our benchmark, the Hoare Govett Smaller Companies Index (excluding investment companies), in the last eight years.

Attribution analysis

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

Principal contributors

	12 month return %	Relative contribution %
e2v technologies	+151.3	+1.4
Oxford Instruments	+70.8	+1.3
Croda	+108.9	+1.1
Spectris	+97.2	+1.1
Scott Wilson	+261.9	+0.9

e2v technologies manufactures high technology electronic components. The company had a difficult recession as weakening demand and an over-leveraged balance sheet forced it into a rescue rights issue. With a strengthened management team, substantial cost reduction and improving end markets, profit recovery has been rapid.

Oxford Instruments produces advanced instrumentation equipment for industrial and scientific research markets. The company has benefited from a recovery in its end markets and substantial growth in Asia Pacific. China has been particularly strong with it now representing Oxford's largest end market. Margins have expanded significantly and the outlook is promising.

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Croda manufactures a range of chemicals, including oleochemicals and industrial chemicals. The company has an excellent track record over many years benefiting from pricing power, exposure to robust and growing end markets, a strong acquisitive record and excellent management. With strong profit growth forecast, the future continues to look bright for Croda.

Spectris manufactures, designs and markets products for the electronic control and process instrumentation sectors. The company has a number of subsidiaries which tend to be market leaders in global market niches. Cash generation is very sound, the management team is well respected and the balance sheet is strong. Recovering industrial markets mean profit growth is forecast to be robust.

Scott Wilson is an international engineering consultancy group. The shares performed exceptionally well in the year after the company received competing takeover bids from two large American companies - URS and CH2M Hill. URS finally came out the winner in the bidding war but not before Scott Wilson's share price had risen by over 250%.

Principal detractors

	12 month return %	Relative contribution %
WSP	+5.7	-0.7
Mouchel	-64.6	-0.6
Dana Petroleum*	+71.2	-0.5
Ferrexpo*	+73.4	-0.4
CPP Group	-50.6	-0.4
*Included in the benchmark index but not owned by the Trust.

WSP is an international engineering consultant, principally in the built environment. Although market conditions are tough, profits have held up well as the company has adjusted its cost base to match revenues. The share price made progress in the last year but it underperformed the market as investors became frustrated by the lack of profit progress. 2011 is likely to be a tough year for earnings and the company will benefit in future years from its international diversification (70% of revenues are from outside the UK) and we believe the shares have significant potential to re-rate from these levels.

Mouchel is a professional support service company providing highways management, local authority outsourcing and water consultancy services. Profitability has been under pressure from a lack of new contract wins and big cutbacks in public sector spending. The company received competing takeover bids from Costain and Interserve but both were rejected or were withdrawn. After two traumatic years, Mouchel needs to rehabilitate itself with the City by repairing a weakened balance sheet and delivering on profitability targets. If it can do this the valuation of Mouchel looks very attractive and offers significant share price upside.

Dana Petroleum is an international oil and gas explorer and producer. The share price rose significantly after the Korean National Oil Company made an agreed bid for the company. The Trust had no holding in this company.

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Annual Financial Report for the year ended 31 May 2011

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Ferrexpo's core business is the mining, processing and sale of iron ore. As the global economy recovered, the price of its products increased and the profitability of the business recovered sharply. The Trust had no holding in this company and its rapid share price rise cost us relative performance.

CPP Group offers credit card protection, identity protection and mobile phone protection. After a successful IPO and strong profit growth, the company was rocked by an investigation by the FSA into its methods of selling identity protection. The share price reacted very negatively to the announcement of this and has continued to languish in anticipation of the results of the FSA investigation.

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.

In the year we have added a number of new positions to our portfolio. We increased our exposure to the oil and gas sector. We targeted companies that have strong experienced management and the ability to add significant value through exploration. Acquisitions in this area included Nautical Petroleum and Encore Oil, which both operate in the North Sea and are involved in the Catcher discovery, and Bowleven, which operates in Cameroon. To counter this we disposed of our holding in Xcite Energy where we felt the share price had become overheated on the potential for its Bentley oil discovery. We added to our exposure to the housing sector with the acquisition of positions in Aga Rangemaster and Howden. Transactions in the UK housing market are at multi-year lows and with slowly improving mortgage availability and good affordability we believe conditions could improve. Both companies are well placed to benefit from any recovery in transaction activity.

Other new additions to our portfolio included:

Ashtead - leading plant hire company in the US and the UK. The US market, which is where Ashtead earns most of its profits, is enjoying a strong structural and cyclical upswing with both hire rates and utilisation seeing marked improvement. This is having a dramatic effect on profitability and the company has seen earnings upgraded significantly throughout the year. Given a structural shift to rent rather than own, Ashtead is likely to see profits materially exceed previous peaks this economic cycle.

Carphone Warehouse - this company, through a joint venture with Best Buy Inc, owns 50% of the Carphone Warehouse retail operations in Europe, 50% of the Big Box electrical retailing roll-out and 25% of Best Buy Mobile, the US mobile phone retail operation. It also owns 47% of Virgin Mobile in France and some property interests. Though the retail operations in Europe offer strong growth through increased smartphone and tablet penetration, the real excitement is offered by Best Buy Mobile. From nowhere it has taken a 5% share of the US market and is poised for further dramatic growth in a huge market. This operation has the scope to drive strong earnings growth at Carphone for the medium term.

Filtrona - supplies speciality plastic and fibre products to international markets. The company has enjoyed a strong bounce in profitability from the recession and is well placed to see further growth. The investment proposition has been further strengthened by the appointment of Colin Day, previously Financial Director at Reckitt Benckiser, as Chief Executive Officer. He comes with a very strong reputation and is being backed to accelerate growth and improve returns at Filtrona.

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To balance the additions to our portfolio we have disposed of positions in companies which we felt were set for poor price performance. We disposed of our holding in Psion, the portable ruggedized computer manufacturer, where we believe the management are behind in their plans to restore respectable profitability. We also disposed of our holding in Headlam, the floorcoverings distributor, where the valuation appears rich considering the moribund state of the UK housing market, and International Ferro Metals, the ferrochrome producer, as a strong rand, rising input costs and production difficulties means the future looks very uncertain. We also sold our holding in Pace, the set-top box producer, on fears that its earnings forecasts were unachievable. It issued a significant profit warning after we had made our sales.

We benefited from a high level of takeover activity in the year.  As economic conditions improved, corporate confidence rebounded and acquisitive activity picked up. Overseas corporates were particularly active as they looked to acquire niche UK companies with an international presence. Within our portfolio takeover bids were received for Bluebay Asset Management, the credit fund manager from Royal Bank of Canada, Carluccio's, the restaurant group from Landmark, Intec Telecom Systems, the telecom billing company from CSG Systems, Scott Wilson, the engineering consultancy company from URS, Shed Media, the TV production company from Time Warner, and Wellstream, the flexible pipes for the oil industry business from GE.

We participated in three IPOs (initial public offerings) in the year.  These were:

AZ Electronics - a supplier of speciality chemicals to the semiconductor and consumer electronics industry. The company has a strong track record in delivering top-line growth and its margins are high and sustainable.

Jupiter Fund Management - the fund management group with a strong brand name, excellent track record and good management team. There is high alignment between the interests of shareholders and employees. Fund flows and the growth in profitability have been excellent.

Perform Group - a provider of on-line content to the betting and media industries. The company has exclusive rights to a multitude of sporting events and demand for this content is growing rapidly. The company has a global presence and is forecast to see exceptional growth in the coming years.

Portfolio outlook

The following table shows the Trust's key stock positions versus the Hoare Govett Smaller Companies Index (excluding investment companies) at the end of May 2011.

Top ten active positions at 31 May 2011	Holding %	Index Weight %	Active Weight %
Spectris	3.3	0.0	3.3
Croda	3.3	0.0	3.3
Informa	3.1	0.0	3.1
WSP	2.7	0.2	2.5
e2v technologies	2.6	0.2	2.4
Intermediate Capital	2.1	0.0	2.1
Domino Printing Sciences	2.5	0.5	2.0
Melrose	1.9	0.0	1.9
Premier Oil	1.8	0.0	1.8
Carillion	1.8	0.0	1.8

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Brief descriptions of Spectris, Croda, WSP and e2v technologies have been included earlier. A brief description of the remaining largest active positions follows:

Informa is a leading business to business information group. Its activities include the provision of academic journals, books, data services, trade exhibitions, conferences and training services.  The company produced a very resilient profit performance during the downturn, helped by aggressive cost cutting.  Additionally the balance sheet has been strengthened and the company is set for a return to growth in coming years. Given its

low valuation, we believe the share price is set for further gains.

Intermediate Capital is a leading provider of mezzanine finance to LBO markets. It also owns a highly successful mezzanine and credit fund management operation. Its portfolio of investments is performing well, the company is looking to grow its loan book and the fund management business has an ambition to double in the next four years. The valuation looks very appealing, trading at a discount to net assets.

Domino Printing Sciences is a manufacturer of industrial printing equipment. It is one of the leaders in its global market and a major exporter. As with many other UK companies, management responded quickly and aggressively to the downturn and took significant costs out of the business. As demand recovered, profits have seen a sharp recovery. Combined with a strong balance sheet, a well respected management team and a strong new product pipeline, we believe the shares will continue to outperform.

Melrose is an international engineering group with interests in power generation, lifting products and automotive components. The company is run by an excellent management team who have a record of adding significant value to shareholders by acquiring undermanaged and unloved businesses, improving and investing in them before selling for a substantial premium. We await their next deal with interest.

Premier Oil is an international oil and gas exploration and development company with producing interests in the United Kingdom, Pakistan and Indonesia. The company has benefited from the rising oil price and the acquisition of Oilex which has given the company additional production and substantial tax losses. Premier has also been successful with the drillbit and is involved in the largest oil discovery in the North Sea in recent years at the Catcher field. With strong production growth forecast, the future looks bright for Premier.

Carillion is a diversified construction and support services group with its major operations in the UK, the Middle East and Canada. The company has undergone a very successful transformation over the last five years, with rapid growth in its outsourcing activities and a staged reduction in its UK construction activities to a point where they only account for 10% of group profits. The increasing trend to outsource services by both the public and private sectors leaves Carillion well placed for future growth.

Market outlook

The year under review has seen equity markets enjoying another strong period of recovery from the financial crisis and economic recession of 2008 and 2009. However, in 2011 to date markets have been more volatile. Although economic statistics have been generally supportive, there are signs that the recovery in global growth is slowing. Additionally there are significant concerns over the state of public finances in peripheral Europe and the viability of the Euro. Meanwhile commodity prices remain high, with the oil price in particular being inflated by political tension and conflict in North Africa and the Middle East.

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The UK economy has made a modest recovery from recession. However, the need to rein in public spending and reduce the public sector deficit is forcing large cuts in government spending. This will dampen economic recovery and lead to problems for businesses that are focused on the public sector. The strength of the UK consumer and housing market is also being tested in this environment.

Despite these negative factors, there are plenty of reasons to be positive about equity markets. Valuations are low by historic standards and compare well to other asset classes. Corporate profitability has proved remarkably robust and earnings look set to see reasonable growth in the coming year. M&A activity has seen a pick-up with foreign corporates prominent in attempting to pick up cheap UK assets. With a weak currency, liberal markets and low valuations, UK assets are attractive to overseas companies. This is a trend which will help smaller companies in particular as mergers and acquisition activity tends to be focused in this area.

In conclusion, the year under review has been a good one for the equity market and even more so for the Trust. Performance was strong and our portfolio companies have, overall, performed robustly. Our investments are generally trading well, are soundly financed and attractively valued. Additionally, the small cap market continues to throw up exciting growth opportunities in which the Trust can invest.

Neil Hermon

Fund Manager

3 August 2011

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Annual Financial Report for the year ended 31 May 2011

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            Investment Portfolio

            as at 31 May 2011

Company	Main activity	Valuation as at 31 May 2011 £'000		% of portfolio
Spectris	electronic control and process instrumentation	10,867		3.35
Croda	speciality chemicals	10,708		3.30
Informa	business to business information	10,157		3.13
WSP	engineering consultancy	8,711		2.69
e2v technologies	electronic components	8,550		2.64
Victrex	speciality chemicals	8,149		2.52
Domino Printing Sciences	industrial printing equipment	8,083		2.49
Bellway	house building	6,832		2.11
Intermediate Capital	mezzanine finance	6,789		2.09
Oxford Instruments	advanced instrumentation equipment	6,405		1.98
10 largest		85,251		26.30
Melrose	diversified engineering	6,160		1.90
WS Atkins	engineering consultancy	6,109		1.89
Premier Oil	oil and gas	5,816		1.79
Carillion	international contractor and outsourcer	5,745		1.77
Northgate	commercial vehicle hire	5,412		1.67
Paragon	buy to let mortgage provider	5,156		1.59
Interserve	international contractor	4,801		1.48
Taylor Wimpey	house builder	4,752		1.47
Rotork	process control solutions	4,655		1.44
Renishaw	precision measuring and calibration equipment	4,571		1.41
20 largest		138,428		42.71
AZ Electronic Materials	special chemical manufacturer	4,564		1.41
Balfour Beatty	international contractor	4,507		1.39
Senior	aerospace and automotive products	4,495		1.38
Fidessa	financial software	4,376		1.35
Chemring	defence products	4,326		1.33
Restaurant Group	restaurants	4,150		1.28
Babcock International	defence outsourcer	4,023		1.24
John Menzies	news distributor and aviation services	3,829		1.18
Grainger	residential property investor	3,696		1.14
Ultra Electronics	specialised defence contractor	3,585		1.11
30 Largest		179,979		55.52
SIG	builders merchant	3,577		1.10
Chime Communications	public relations and media services	3,433		1.06
Euromoney Institutional Investor	business to business information	3,348		1.03
Aveva Group	design software	3,334		1.03
CSR	semi conductors	3,323		1.03
Filtrona	speciality plastic and fibre producer	3,302		1.02
Anite	telecommunications software	3,296		1.02
Shaftesbury	West End property investor	3,231		1.00
Spirent Communications	telecommunications testing	3,159		0.97
Kenmare Resources	titanium dioxide mining	3,062		0.95
40 largest		213,044		65.73

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Company	Main Activity	Valuation as at 31 May 2011 £'000		% of portfolio
Kofax	electronic capture software	3,059		0.94
GlobeOp Financial Services	hedge fund administrator	2,990		0.92
Synergy Healthcare	healthcare support services	2,977		0.92
ITE Group	exhibition organiser	2,974		0.92
Persimmon	UK housebuilder	2,935		0.90
Greene King	pub operator	2,935		0.90
Laird	electronic products	2,905		0.90
LSL Property Services	estate agent and surveyor	2,902		0.90
Carphone Warehouse	cellular telephone retailer	2,810		0.87
Aberdeen Asset Management	investment management	2,623		0.81
50 largest		242,154		74.71
*RWS	patent translation services	2,534		0.78
Debenhams	department stores	2,431		0.75
Ashtead	hire of plant	2,376		0.74
Costain	contractor	2,364		0.73
Dunelm	homewares retailer	2,363		0.73
*Kentz	oil and gas contractor	2,345		0.72
Capital & Regional	retail property investor	2,280		0.70
NCC Group	IT security	2,247		0.69
*Lupus Capital	coupling manufacturer	2,244		0.69
Meggitt	aerospace products	2,210		0.68
60 largest		265,548		81.92
Hyder Consulting	engineering consultancy	2,187		0.67
Howden Joinery	manufacturer and retailer of kitchens	2,160		0.67
*Playtech	internet gaming software	2,086		0.64
Halfords	automotive retailer	1,843		0.57
*London Mining	iron ore mining	1,742		0.54
CPP Group	credit card and identity protector insurance	1,740		0.54
John Wood	oil and gas services	1,728		0.53
*Abcam	internet retailer of antibodies	1,713		0.53
Norcros	shower and tile manufacturer	1,705		0.53
Jupiter Fund Management	investment management	1,666		0.51
70 largest		284,118		87.65
*Majestic Wine	wine warehouse	1,635		0.50
Ted Baker	clothing retailer	1,588		0.49
*LXB Retail Properties	retail property investment	1,579		0.49
Heritage Oil	oil and gas explorer	1,570		0.48
Keller	ground engineering	1,562		0.48
*Avocet Mining	gold mining	1,560		0.48
Telecity Group	internet infrastructure	1,492		0.46
*Digital Barriers	digital security	1,486		0.46
*Nautical Petroleum	oil explorer	1,480		0.46
Phoenix	IT services	1,451		0.45
80 largest		299,521		92.40

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Company	Main activity	Valuation as at 31 May 2011 £'000		% of portfolio
Rathbone Brothers	private client asset management	1,451		0.45
F&C Asset Management	investment management	1,413		0.43
Hansteen	industrial property investor	1,352		0.42
Perform	digital sports rights	1,344		0.41
RM	education software	1,328		0.41
Consort Medical	healthcare products	1,228		0.38
Speedy Hire	tool hire	1,219		0.38
*Rockhopper Exploration	oil and gas explorer	1,155		0.36
*Kalahari Minerals	uranium mining	1,145		0.35
*Valiant Petroleum	oil and gas explorer	1,064		0.33
90 largest		312,220		96.32
*Next Fifteen Communications	PR and media services	971		0.30
Topps Tiles	tile retailer	940		0.29
Aga Rangemaster	heating and stove manufacturer	936		0.29
*Goals Soccer Centres	five-a-side soccer centres	925		0.29
*Asian Plantations	palm oil plantations	841		0.26
*Bowleven	oil and gas explorer	829		0.26
*Ncondezi Coal	coal explorer	806		0.25
*Encore Oil	oil and gas explorer	729		0.22
*GGG Resources	gold explorer	726		0.22
Mouchel	support services	689		0.21
100 largest		320,612		98.91
*Chariot Oil & Gas	oil and gas explorer	667		0.20
*IQE	semiconductor manufacturer	649		0.20
*Oilex	oil and gas explorer	635		0.19
Tribal	health and education support services	569		0.18
*Proximagen	biotechnology	506		0.16
*Caretech Holdings	residential care services	382		0.12
Southern Cross Healthcare	nursing homes	117		0.04
Critical Information	shell company	6		0.00
Total investments		324,143		100.00
		======		=====

There were no convertible or fixed interest securities at either 31 May 2011 or 31 May 2010.

*quoted on the Alternative Investment Market

Page 13 of 24

THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 May 2011

MANAGEMENT REPORT continued 

Principal Risks and Uncertainties

The principal risks and uncertainties facing the Company relate to the activity of investing in the shares of smaller companies that are listed (or quoted) in the United Kingdom. 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 suppliers 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.

A fuller description of the principal risks and uncertainties follows.

With the assistance of the Manager the Board has drawn up a risk matrix which identifies the key risks to the Company. These key risks fall broadly under the following categories:

Investment Activity and Strategy

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 index 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 analyses. The Board monitors the implementation and results of the investment process with the Fund Manager, who attends all Board meetings, and reviews regularly data that monitors risk factors in respect of the portfolio. The Board reviews investment strategy at each Board meeting.

Portfolio and Market

Market risk arises from uncertainty about the future prices of the Company's investments.

Accounting, Legal and Regulatory

In order to qualify as an investment trust the Company must comply with section 1158 of the Corporation Tax Act 2010 ("section 1158"). 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 ("the Companies Act"), and, as the Company's shares are listed for trading on the London Stock Exchange, the Company must comply with the UK Listing Authority's Listing Rules and Disclosure and Transparency Rules ("UKLA Rules"). 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.

Corporate Governance and Shareholder Relations

Details of the Company's compliance with corporate governance best practice, including information on relations with shareholders, are set out in the Corporate Governance Statement in the Annual Report.

Page 14 of 24

THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 May 2011

MANAGEMENT REPORT continued

Operational

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. The Manager 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 the Manager and its other suppliers, and the key elements designed to provide effective internal control, are explained further in the internal control section of the Corporate Governance Statement in the Annual Report.

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.

Going Concern

The Company's shareholders are asked every three years to vote on the continuation of the Company. An ordinary resolution to this effect was put to the Annual General Meeting on 24 September 2010 and passed by a substantial majority of the shareholders.  A similar resolution will be put in 2013.  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 the foreseeable future. For these reasons, the Board has decided that it is appropriate for the financial statements to be prepared on a going concern basis. In reviewing the position as at the date of this report, the Board has considered the guidance on this matter issued by the Financial  Reporting Council.

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. Although the Company invests in companies that are listed or quoted in the United Kingdom, the underlying businesses of those companies are affected by various economic factors, many of an international nature. The Board's intention is that the Company will continue to pursue its investment objective in accordance with its investment policy. Further comment on the outlook for the Company is given in the Chairman's Statement and in the Fund Manager's Review above.

Related Party Transactions

Investment management, accounting, administrative and company secretarial services are provided to the Company by Henderson Group plc ('Henderson' or the 'Manager').  Some of the administration and accounting services are carried out, on behalf of Henderson, by BNP Paribas Securities Services.  The relationship with Henderson is the only related party arrangement currently in place.  Other than fees payable by the Company in the ordinary course of business, there have been no material transactions with this related party affecting the financial position or performance of the Company during the year under review.

Page 15 of 24

THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 May 2011

MANAGEMENT REPORT continued

Statement of Directors' Responsibilities (under DTR 4.1.12)

Each of the directors confirm that to the best of their knowledge:

•  the Group financial statements, which have been prepared in accordance with IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and

• the management report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.

For and on behalf of the Board

J D Fishburn

Chairman

3 August 2011

Page 16 of 24

THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 May 2011

Consolidated Statement of Comprehensive Income (audited)

   for the year ended 31 May 2011

	Year ended 31 May 2011			Year ended 31 May 2010
	Revenue return £'000	Capital return £'000	Total £'000	Revenue return £'000	Capital return £'000	Total £'000
Investment income  (note 2)	7,088	-	7,088	5,961	-	5,961
Other income (note 3)	35	-	35	627	-	627
Gains on investments held   at fair value through profit or loss	-	91,312	91,312	-	56,091	56,091
	----------	----------	----------	----------	----------	----------
Total income	7,123	91,312	98,435	6,588	56,091	62,679
Expenses
Management and performance fees (note 4)	(906)	(1,644)	(2,550)	(679)	-	(679)
Write-back of VAT	-	-	-	44	-	44
Other expenses	(407)	-	(407)	(373)	-	(373)
	---------	----------	---------	---------	----------	---------
Profit before finance costs  and taxation	5,810	89,668	95,478	5,580	56,091	61,671
Finance costs	(2,132)	-	(2,132)	(2,129)	-	(2,129)
	---------	---------	----------	---------	---------	----------
Profit before taxation	3,678	89,668	93,346	3,451	56,091	59,542
Taxation	(4)	-	(4)	(2)	-	(2)
	---------	----------	----------	---------	----------	----------
Net profit for the year and   total comprehensive income	3,674	89,668	93,342	3,449	56,091	59,540
	======	======	======	======	======	======
Earnings per ordinary share (note 5)	4.91p	119.70p	124.61p	4.59p	74.70p	79.29p
	======	=======	=======	======	=======	======

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

The Group does not have any Other Comprehensive Income and hence the net profit, as disclosed above, is the same as the Group's Total Comprehensive Income.

All items in the above statement derive from continuing operations.

The net profit for the year of the Company was £93,342,000 (2010: £59,540,000).

All income is attributable to the equity shareholders of The Henderson Smaller Companies Investment Trust plc. There are no non-controlling interests.

Page 17 of 24

THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 May 2011

Consolidated and Parent Company Statements of Changes in Equity (audited)

for the year ended 31 May 2011

	Consolidated Year ended 31 May 2011
	Called up share capital £'000	Capital  redemption reserve  £'000	Retained earnings
			Capital reserves £'000	Revenue reserve £'000	Total £'000
Total equity at 31 May 2010	18,727	26,694	151,870	10,242	207,533
Total comprehensive income:
Profit for the year	-	-	89,668	3,674	93,342
Transactions with owners, recorded   directly to equity:
Ordinary dividends paid	-	-	-	(2,696)	(2,696)
Dividends unclaimed after 12 years	-	-	-	5	5
	----------	----------	----------	----------	----------
Total equity at 31 May 2011	18,727	26,694	241,538	11,225	298,184
	======	======	======	======	======
	Consolidated Year ended 31 May 2010
	Called up share capital £'000	Capital  redemption reserve  £'000	Retained earnings
			Capital reserves £'000	Revenue  reserve £'000	Total £'000
Total equity at 31 May 2009	19,343	26,078	99,930	10,998	156,349
Total comprehensive income:
Profit for the year	-	-	56,091	3,449	59,540
Transactions with owners, recorded   directly to equity:
Ordinary dividends paid	-	-	-	(4,205)	(4,205)
Buy-backs of ordinary shares	(616)	616	(4,151)	-	(4,151)
	----------	----------	----------	----------	----------
Total equity at 31 May 2010	18,727	26,694	151,870	10,242	207,533
	======	======	======	======	======
	Company Year ended 31 May 2011
	Called up share capital £'000	Capital  redemption reserve  £'000	Retained earnings
			Capital reserves £'000	Revenue reserve £'000	Total £'000
Total equity at 31 May 2010	18,727	26,694	154,133	7,979	207,533
Total comprehensive income:
Profit for the year	-	-	89,667	3,675	93,342
Transactions with owners, recorded   directly to equity:
Ordinary dividends paid	-	-	-	(2,696)	(2,696)
Dividends unclaimed after 12 years	-	-	-	5	5
	----------	----------	----------	----------	----------
Total equity at 31 May 2011	18,727	26,694	243,800	8,963	298,184
	======	======	======	======	======
	Company Year ended 31 May 2010
	Called up share capital £'000	Capital  redemption reserve  £'000	Retained earnings
			Capital reserves £'000	Revenue reserve £'000	Total £'000
Total equity at 31 May 2009	19,343	26,078	102,194	8,734	156,349
Total comprehensive income:
Profit for the year	-	-	56,090	3,450	59,540
Transactions with owners, recorded   directly to equity:
Ordinary dividends paid	-	-	-	(4,205)	(4,205)
Buy-backs of ordinary shares	(616)	616	(4,151)	-	(4,151)
	----------	----------	----------	----------	----------
Total equity at 31 May 2010	18,727	26,694	154,133	7,979	207,533
	======	======	======	======	======

Page 18 of 24

THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 May 2011

Consolidated and Parent Company Balance Sheets (audited)

at 31 May 2011

	Consolidated 2011 £'000	Consolidated 2010 £'000	Company 2011 £'000	Company 2010 £'000
Non current assets
Investments held at fair value through      profit or loss	324,143	227,323	326,405	229,586
	----------	----------	----------	----------
Current assets
Other receivables	1,633	1,431	1,633	1,431
Cash and cash equivalents	642	1,097	642	1,097
	----------	----------	---------	---------
	2,275	2,528	2,275	2,528
	----------	----------	---------	---------
Total assets	326,418	229,851	328,680	232,114
	----------	----------	----------	----------
Current liabilities
Other payables	(2,230)	(311)	(4,492)	(2,574)
Bank loans	(6,000)	(2,003)	(6,000)	(2,003)
	--------	--------	---------	---------
	(8,230)	(2,314)	(10,492)	(4,577)
	--------	--------	---------	---------
Total assets less current liabilities	318,188	227,537	318,188	227,537
Non current liabilities
Financial liabilities	(20,004)	(20,004)	(20,004)	(20,004)
	----------	----------	----------	----------
Net assets	298,184	207,533	298,184	207,533
	======	======	======	======
Equity attributable to equity    shareholders
Called up share capital (note 7)	18,727	18,727	18,727	18,727
Capital redemption reserve	26,694	26,694	26,694	26,694
Retained earnings
Capital reserves	241,538	151,870	243,800	154,133
Revenue reserve	11,225	10,242	8,963	7,979
	----------	----------	-----------	-----------
Total equity	298,184	207,533	298,184	207,533
	======	======	======	======
Net asset value per ordinary share (note 8)	398.1p	277.1p	398.1p	277.1p
	=====	=====	=====	======

Page 19 of 24

THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 May 2011

Consolidated and Parent Company Cash Flow Statements (audited)

for the year ended 31 May 2011

	Year ended 31 May 2011		Year ended 31 May 2010
	Consolidated £'000	Company £'000	Consolidated £'000	Company £'000
Operating activities
Profit before taxation	93,346	93,346	59,542	59,542
Add: interest payable	2,132	2,132	2,129	2,129
Less: gains on investments held at fair   value through profit or loss	(91,312)	(91,311)	(56,091)	(56,090)
Purchases of investments	(54,186)	(54,186)	(41,534)	(41,534)
Sales of investments	48,678	48,678	44,534	44,534
(Increase)/decrease in other receivables	(88)	(88)	846	846
Decrease/(increase) in amounts due from brokers	563	563	(51)	(51)
(Increase)/decrease in accrued income	(675)	(675)	622	622
Increase in other payables	1,524	1,523	112	111
Increase/(decrease) in amounts due to brokers	395	395	(773)	(773)
Taxation on investment income	(6)	(6)	4	4
	---------	---------	---------	---------
Net cash inflow from operating activities   before interest and taxation	371	371	9,340	9,340
Interest paid	(2,132)	(2,132)	(2,124)	(2,124)
	---------	----------	---------	----------
Net cash (outflow)/inflow from operating activities	(1,761)	(1,761)	7,216	7,216
	---------	----------	---------	----------
Financing activities
Equity dividends paid	(2,696)	(2,696)	(4,205)	(4,205)
Dividends unclaimed after 12 years	5	5
Buy-backs of ordinary shares	-	-	(4,151)	(4,151)
Drawdown of bank loans	3,997	3,997	2,003	2,003
	----------	----------	----------	----------
Net cash inflow/(outflow) from financing	1,306	1,306	(6,353)	(6,353)
	----------	----------	----------	----------
(Decrease)/increase in cash and cash equivalents	(455)	(455)	863	863
Cash and cash equivalents at the start of the year	1,097	1,097	234	234
	---------	--------	---------	--------
Cash and cash equivalents at the end of the year	642	642	1,097	1,097
	=====	=====	=====	=====

Page 20 of 24

THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 May 2011

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 consolidated financial statements of the Company for the year ended 31 May 2011 comprise the Company and its subsidiary, Henderson Smaller Companies Finance Limited, together referred to as the 'Group'.  The consolidated and parent company financial statements for the year ended 31 May 2011 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 International Financial Reporting Standards Committee ("IFRSC") 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. 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 January 2009 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)	Basis of consolidation The Group financial statements consolidate the financial statements of the Company and of its sole wholly owned subsidiary undertaking, Henderson Smaller Companies Finance Limited. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits from its activities. The inter-group balances and transactions are eliminated on consolidation. The investment in the subsidiary is recognised at fair value in the financial statements of the Company. The directors have reviewed the structure of the Group and the role of the subsidiary company within it and have agreed that Henderson Smaller Companies Finance Limited should be wound up and its assets distributed to the parent company.  Henderson Smaller Companies Finance Limited has not traded for many years.
2.	Investment income		2011	2010
			£'000	£'000
	Franked income from companies listed or quoted in the United Kingdom:
	Dividends		6,454	5,761
	Special dividends		399	122
	Unfranked income from companies listed or quoted in the United Kingdom:
	Dividends		149	44
	Property income distributions		86	34
			--------	--------
	Total investment income		7,088	5,961
			=====	=====
	All investment income for the Group is from UK investments.

Page 21 of 24

THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 May 2011

Notes to the Financial Statements continued

3.	Other income	2011	2010
		£'000	£'000
	Bank interest	6	4
	Interest on the refund of VAT	-	236
	Underwriting income (allocated to revenue)*	29	387
		-------	-------
		35	627
		-------	--------
	* None of the income receivable from sub-underwriting commitments was allocated to capital during the year (2010: £4,000 was allocated to capital, in addition to the amount shown as income).

4.	Management and performance fees
		2011 Revenue return £'000	2011 Capital return £'000	2011 Total £'000	2010 Revenue return £'000	2010 Capital return £'000	2010 Total £'000
	Management fee	906	-	906	679	-	679
	Performance fee	-	1,644	1,644	-	-	-
	Write-back of VAT	-	-	-	(44)	-	(44)
		---------	--------	--------	---------	--------	--------
		906	1,644	2,550	635	-	635
		=====	=====	=====	=====	=====	=====

Page 22 of 24

THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 May 2011

Notes to the Financial Statements continued

5.	Earnings per ordinary share The earnings per ordinary share figure is based on the net gains for the year of £93,342,000 (2010: £59,540,000) and on 74,906,796 (2010: 75,089,586) 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.
		2011	2010
		£'000	£'000
	Net revenue profit	3,674	3,449
	Net capital profit	89,668	56,091
		----------	----------
	Net total profit	93,342	59,540
		======	======
	Weighed average number of ordinary shares   in issue during the year	74,906,796	75,089,586
		========	========
		Pence	Pence
	Revenue earnings per ordinary share	4.91	4.59
	Capital earnings per ordinary share	119.70	74.70
		----------	-----------
	Total earnings per ordinary share	124.61	79.29
		======	======
6.	Dividends	2011 £'000	2010 £'000
	Amounts recognised as distributions to equity holders in the year:
	Final dividend for the year ended 31 May 2010 of 3.60p
	(2009: 3.00p) per ordinary share	2,696	2,252
	Special dividend for the year ended 31 May 2010 of nil
	(2009: 2.60p) per ordinary share	-	1,953
		--------	--------
		2,696	4,205
		=====	=====
	The final dividend of 3.60p per ordinary share in respect of the year ended 31 May 2010 was paid on 8 October 2010 to shareholders on the register of members at the close of business on 17 September 2010. The dividend paid amounted to £2,696,000 in total. Subject to approval at the Annual General Meeting, the proposed final dividend of 4.20p per ordinary share will be paid on 7 October 2011 to shareholders on the register of members at the close of business on 16 September 2011.

Page 23 of 24

THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 May 2011

Notes to the Financial Statements continued

Dividends continued The proposed final dividend for the year ended 31 May 2011 has not been included as a liability in these financial statements. Under IFRS, the final dividend is not recognised until approved by the shareholders.  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:

			2011 £'000
	Revenue available for distribution by way of dividends for the year		3,674
	Proposed final dividend for the year ended 31 May 2011:  4.20p   (based on the 74,906,796 shares in issue at 2 August 2011)		(3,146)
			---------
	Undistributed revenue for section 1158 purposes*		528
			=====
	*Undistributed revenue comprises 7.4% of the income from investments of £7,088,000 (see note 2).
7.	Called up share capital	2011 £'000	2010 £'000
	Allotted, issued and fully paid:
	74,906,796 ordinary shares of 25p each (2010: 74,906,796)	18,727	18,727
		=====	=====
	During the year the Company made no market purchases for cancellation of its own issued ordinary shares (2010: 2,463,500) at a total cost of £nil (2010: £4,151,000). No shares have been bought back since 31 May 2011.

8.

Net asset value per ordinary share (Group and Company) The net asset value per ordinary share is based on the net assets attributable to the ordinary shares of £298,184,000 (2010: £207,533,000) and on the 74,906,796 ordinary shares in issue at 31 May 2011 (2010: 74,906,796). An alternative net asset value per ordinary share can be calculated by deducting from the total assets less current liabilities of the Group the preference stock and the debenture stock at their market (or fair) values rather than at their par (or book) values.  The net asset value per ordinary share at 31 May 2011 calculated on this basis was 392.5p (2010: 269.7p). 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:

		£'000
	Net assets attributable to the ordinary shares at 1 June 2010	207,533
	Net profit for the year	93,342
	Ordinary dividend paid in the year	(2,696)
	Dividends unclaimed after 12 years	5
		----------
	Net assets attributable to the ordinary shares at 31 May 2011	298,184
		======

Page 24 of 24

THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC

Annual Financial Report for the year ended 31 May 2011

Notes to the Financial Statements continued

9.	2011 financial statements The figures and financial information for the year ended 31 May 2011 are compiled from an extract of the latest financial statements of the Group and do not constitute the statutory accounts for that year.  Those financial statements included the report of the auditors which was unqualified and did 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.	2010 financial statements The figures and financial information for the year ended 31 May 2010 are compiled from an extract of the published financial statements of the Group 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 auditors 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 and AGM The Report and Financial Statements for the year ended 31 May 2011 will be posted to shareholders in the second half of August 2011 and copies will be available thereafter from the Secretary at the Company's Registered Office, 201 Bishopsgate, London EC2M 3AE. The Annual General Meeting will be held on Friday 30 September 2011 at 11.30 am.
12.	Website This document, and the Report and Financial Statements for the year ended 31 May 2011, will be available on the following website: www.hendersonsmallercompanies.com.
ENDS
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.

For further information please contact:

Neil Hermon

Fund Manager

The Henderson Smaller Companies Investment Trust plc                           

Telephone: [phone]

James de Sausmarez

Head of Investment Trusts

Henderson Global Investors

Telephone: [phone]

Sarah Gibbons-Cook

Investor Relations and PR Manager

Henderson Global Investors

Telephone: [phone]

 

END

 

 

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