Final Results

RNS Number : 8678G

Henderson Smaller Cos Inv Tst PLC

10 August 2016

 

THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC

ANNUAL FINANCIAL RESULTS FOR THE YEAR ENDED 31 MAY 2016

This announcement contains regulated information

Investment Objective

The Company's investment objective is to maximise shareholders' total returns by investing mainly in smaller companies that are quoted in the United Kingdom.

Total Return Performance for the periods ended 31 May 2016
	1 year %	3 years %	5 years %	10 years %
NAV1	-1.1	42.9	98.8	195.4
Share Price2	-8.1	44.4	112.0	211.6
Benchmark3	-1.6	29.4	66.4	140.2
Average Sector NAV5	1.6	39.2	76.9	168.7
Average Sector Share Price6	5.0	51.3	92.8	182.0
FTSE All-Share Index	-6.3	9.6	31.2	67.5
FTSE SmallCap Index (excluding investment companies)	0.3	34.9	78.6	67.7

Performance Highlights	31 May 2016	31 May 2015
NAV per share at year end	731.0p	754.1p
Share price at year end	616.5p	686.0p
Discount at year end4	15.7%	9.0%
Gearing at year end	9.1%	7.5%
Dividend for the year7	15.0p	13.5p
Dividend yield8	2.4%	2.0%
Ongoing Charge9	0.44%	0.46%
Total net assets	£546 million	£563 million

1 Net Asset Value per ordinary share total return with income reinvested for 1, 3 and 5 years and capital NAV plus income for 10 years

2 Share Price total return using mid-market closing price

3 Numis Smaller Companies Index (excluding investment companies)

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

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

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

7 This represents an interim dividend of 4.0p and a proposed final dividend of 11.0p.

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

9 Ongoing charge excluding performance fee. Ongoing charge including performance fee is 0.44% (2015: 0.88%)

Sources: Morningstar Funddata, Morningstar Direct, Henderson, Datastream

CHAIRMAN'S STATEMENT

Performance

This has been a difficult year for equity investment management and your Company has not been immune. The net assets of the Company declined by 1.1% in the reporting year, outperforming our benchmark, the Numis Smaller Companies Index (excluding investment companies), by 0.5%. However the Company's discount widened, so the share price fell by 8.1%.

Our Fund Manager, Neil Hermon, and his team have outperformed our benchmark, whether measured over three, five, or ten years. Over the ten years to 31 May 2016, our net asset value total return is 195.4%, versus a total return from the benchmark of 140.2%. This is an impressive compound annual return to shareholders of 11.4% and is continuing testimony to the skills of Neil and his team.

I would, as always, like to thank all the Henderson staff and my Board for their efforts throughout the year on behalf of shareholders. I would also like to congratulate Indriatti van Hien, who was appointed Deputy Fund Manager in June this year, having worked alongside Neil since January 2013.

Board Composition

Keith Percy will be retiring from the Board at the AGM in September. I am very grateful to Keith for his invaluable service to the Company over the past ten years. I would also like to take this opportunity to welcome Victoria Sant to the Board, who will be appointed on 23 September 2016 and will stand for appointment by shareholders. Victoria was an investment manager at the Wellcome Trust for ten years, where she was responsible for the out-sourced long-only equity portion of the £18bn endowment portfolio, and a Trustee Director of the pension scheme. She is currently a senior adviser at the Investor Forum, with an active role engaging with UK-listed companies on strategic and governance issues. She is also a member of the investment committee of the National Trust.

Revenue and Dividend

The revenue return per share has increased to 15.9p, compared with 15.0p for the previous year. The Board is proposing a final dividend for the year of 11.0p per share, making a total dividend for the year of 15.0p (2015: 13.5p), as an interim dividend of 4.0p was paid in March. The final dividend is, of course, subject to shareholder approval at the Annual General Meeting to be held in September. This marks our 13th consecutive year of dividend growth.

Discount and Share Buy-backs

During the year, the AIC UK Smaller Companies sector as a whole traded at an average discount of 9.1% to NAV, with highs and lows of 13.1% and 5.5% respectively. At the year end, the Company's shares traded at a discount of 15.7%. The Company's discount ranged from 17.1% to 4.3%, with the average discount over the year being 10.3%.

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 were bought back in the Company.

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 Annual General Meeting in September. The Henderson Smaller Companies Investment Trust plc has shown that active investment management, well-executed within the transparent and

low-cost structure of an investment trust company, is a highly effective means of gaining exposure to this class of equity. We are therefore recommending shareholders to vote for the Company to continue.

Outlook

After the most dramatic couple of months in British politics, the implications of the Brexit vote are yet to play out fully in markets. Uncertainty is the only certainty and it is clear that volatility will continue until investors feel confident that the way forward for the UK is resolved. We may also find that interest rates remain at the current very low levels for longer and this, together with the weakness in the exchange rate, is likely to affect valuations and investor sentiment over the coming months. Any move back to more normal conditions may therefore be sometime away. However, as always in markets, there will be some companies that do better than others. Exporters can take advantage of the lower value of the pound and companies looking to invest can take advantage of lower rates.

Our view remains that this is the time to stick to what we do best, and we remain confident that skilled active investing founded on the basic fundamentals of investing in quality growth at the right price will win through in these uncertain times. This has always been Neil's style and one that he will continue to adopt.

Annual General Meeting

The Annual General Meeting of the Company will be held at 11.30am on Friday 23 September 2016 at the Registered Office, 201 Bishopsgate, London EC2M 3AE. The Notice of Meeting is set out in the accompanying circular to shareholders. We would encourage as many shareholders as possible to attend for the opportunity to meet the Board and to watch a presentation from Neil Hermon reviewing the year and looking forward to the year ahead.

The Company's AGM will be broadcast live on the internet. If you are unable to attend in person, you can watch the meeting as it happens by visiting www.henderson.com/trustslive.

Jamie Cayzer-Colvin

Chairman

FUND MANAGER'S REPORT

Market - year in review

The year under review was a poor one for equity markets. This was due to anaemic global economic growth despite supportive monetary policies from developed world central banks. Other problems included the slowing pace of Chinese economic growth, the collapse in oil and other commodity prices, the uncertainty provided by the EU referendum and the timing and pace of interest rate rises in the US. The fundamentals of the corporate sector remained robust. Companies continued to grow their dividends whilst balance sheets remained strong. Corporate earnings growth, though, was subdued as top line growth was hard to generate, profits in the commodity sector collapsed and the strength of sterling diluted the value of overseas earnings for UK companies.

Smaller companies outperformed larger companies over the year. The Numis Smaller Companies Index (excluding investment companies) has now outperformed the FTSE All-Share Index for the last eight years consecutively (and in 16 of the last 17 years).

Fund Performance

The Company had a reasonable year in performance terms - outperforming its benchmark but falling marginally in absolute terms. The net asset value fell 1.1%, on a total return basis. This compared to a decline of 1.6% (total return) from the Numis Smaller Companies Index (excluding investment companies). The outperformance came from a combination of underlying positive portfolio performance and a negative contribution from gearing in the Company. We have now outperformed the Numis Smaller Companies Index (excluding investment companies), in 12 of the past 13 years.

Gearing

Gearing started the year at 7.5% and ended it at 9.1%. In the year the company redeemed the £20 million 10.5% 2016 debenture and replaced it with a £30m 20-year unsecured loan notes at an interest rate of 3.33%. This facility was provided by MetLife, one of the largest life insurance companies in the world. The replacement of the debenture with the new loan notes will save the Company a significant amount annually in interest while providing committed long term debt at a low interest rate. The remainder of the Company's debt is provided by short term bank borrowings. Gearing was a negative contributor to performance in the year as markets fell but has been a significant positive over the 13 years I have managed the investment portfolio.

Attribution analysis

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

Principal contributors	12 month return %	Relative contribution %
NMC Health	+52.1	+0.9
Bellway	+20.4	+0.8
Paysafe	+46.8	+0.6
Informa	+20.8	+0.5
Sanne	+60.7	+0.5

NMC is a Middle Eastern based healthcare operation. Its main facilities are in the United Arab Emirates, particularly Dubai and Abu Dhabi. NMC has grown strongly since its IPO in 2012 through the building of new facilities and acquisitions. This growth is set to continue, particularly given the positive structural opportunities in the UAE, driven by an under provision of state provided healthcare, the continued roll-out of mandatory health insurance and positive demographics. Even after a strong share price performance in the last year the shares still look good value compared to the international peer group, especially considering the strong earnings growth forecast.

Bellway is a national UK housebuilder. The UK housing market has seen an impressive recovery in the recent past aided by improving consumer confidence, low interest rates and Government initiatives, particularly Help to Buy. Margins, volumes and profits have been rising strongly. Bellway is looking to exploit these conditions by expanding its national footprint, whilst maintaining a strong land-bank and balance sheet. The 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.

Paysafe is a provider of online and mobile payment solutions. The company offers the full spectrum of online payment services including; payment processing, digital wallets, pre-paid card, white label technology and value added services such as risk management and consulting. An investment in Paysafe provides exposure to the positive trends in growth in e-commerce and online gaming. This year a transformational and highly synergistic acquisition of competitor Skrill added scale and product to Paysafe's existing business which was taken well by the market. Strong share price performance can also be credited to a further professionalisation of the business, with a new CFO spearheading the company's successful transition from the AIM market to a main listing. Looking ahead, buoyant end market exposures should provide for strong revenue growth and forecast momentum has been on their side. This in conjunction with further consolidation in the industry continues to make it an attractive investment.

Informa is a leading business-to-business information group. Its activities include the provision of academic journals, books, data services, trade exhibitions and conferences. The company produced a very resilient profit performance during the downturn, helped by aggressive cost cutting. Also the balance sheet has been strengthened and cash generation has been strong. A new CEO has been appointed and he has significantly strengthened the management team. The aim is to re-invest in the areas that have struggled to deliver growth whilst expanding the fast growing exhibitions division by acquisition. The last year has seen positive momentum displayed in most parts of the business and over delivery against targets. This has led to a re-rating of the company which we feel has potential to continue.

Sanne is an independent and regulated provider of outsourced specialist corporate and fund administration and reporting services to alternative asset managers, financial institutions and other organisations. The specialism and complexity involved in the service it provides has historically allowed it to earn high margins which we view as sustainable in the medium run. Our investment in Sanne provides exposure to growing regulation in financial services, growth in alternative investments as an asset class, and continued trend of outsourcing back office functions. The company also benefits from a strong balance sheet, a sticky and diversified client base (90% of revenues are recurring) and plenty of M&A opportunities as larger administrators sell off non-core assets.

Principal detractors	12 month return %	Relative contribution %
Interserve	-43.3	-0.7
Victrex	-28.8	-0.6
e2v Technologies	-19.1	-0.5
JD Sports1	+61.2	-0.5
Spectris	-26.1	-0.4
1 Included in the benchmark index up to 31/12/15 but not owned by the Company (returns shown are those to 31/12/15)

Interserve is an international construction and support services group. Its major operations are focused in the UK and the Middle East. Interserve has been hit by a variety of problems in the last year. In support services the imposition of the minimum wage is hitting profits. The market has also become concerned by the exposure to the oil-revenue-dependent economies of the Middle East. In addition Interserve has announced substantial losses on three waste-to-energy construction contracts in the UK. These factors, combined with a leveraged balance sheet, have led to a severe fall in the share price. The shares now look very cheap and with the company exploring the potential sale of its equipment services division (which would remove concerns over the balance sheet and Middle East exposure) there is a strong potential for a sharp recovery in valuation.

Victrex is a manufacturer of a speciality thermoplastic PEEK. It is the world leader in its field with a dominant market share. Victrex has shown consistent long-term growth as demand for PEEK has grown as customers look to replace metals with lighter plastics with similar thermal properties. Although demand for PEEK is subject to the vagaries of the economic cycle, longer term its use will continue to increase. Additionally Victrex has developed a very successful medical business with PEEK used particularly in spinal and arthroscopy operations, which is growing independent of the economic cycle. The shares have performed poorly in the last year as its exposure to oil and gas and smartphone markets have proved to be a drag on volumes. An additional drag has been the strength of Sterling as Victrex is a major exporter. Victrex has recently expanded

capacity as there are significant opportunities for growth in the medical, oil and gas, aerospace and smartphone markets and longer term we believe the company will return to its growth path.

e2v Technologies manufactures high technology electronic components. Although e2v is a company with significant technology and high margins, it has historically struggled to deliver consistent growth. This led to an undervaluation of the business. The appointment of a new chairman and CEO has led to a re-focusing of the business with cost taken out, a new customer-focused approach and de-cluttering of the organisation's processes. The initial results of this new approach were highly encouraging and the shares enjoyed a significant re-rating. In the past year the company has continued to deliver operationally but the shares have fallen back on profit-taking and a de-rating of the industrial sector.

JD Sports is a UK retailer of sports and leisure wear. The company has delivered very strong growth in profitability driven by like for like sales growth and a store opening programme. The company has also benefited from strong support from its brand suppliers, its product being considered fashionable and a weak competitive offering. The Company has no holding in JD Sports.

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 sound, the management team is well respected and the balance sheet is strong. However

recent growth in profits has been muted due to softness in end markets and sterling strength. The industrial sector has also de-rated as global growth in industrial production has disappointed. Longer term the company is well positioned for growth, especially if it deploys its balance sheet on acquisitions.

Portfolio Activity

Trading activity in the portfolio was consistent with an average holding period of four years. Turnover was slightly higher than our typical average due to the high level of M&A and IPO activity in the portfolio and does not represent a shift in our approach, which 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. These included:-

Accesso provides leading edge queue management, point of sale and guest management and ticketing technology to over 1,000 attractions and venues across 25 countries. These include; theme parks, water parks, cultural attractions, live performance venues, sporting events and ski and snow parks. Customers include leading names in the leisure industry such as Merlin Entertainment, Universal Parks, Six Flags and Cedar Fair. The company's strategy is to become the premier technology partner within the leisure and entertainment market by providing innovative and secure e-commerce solutions that help deliver great guest experiences. Accesso is a platform business with the ability to show high operating leverage. The revenue model is designed to be disruptive (undercutting traditional ticket distributors) and the company's IP is patent protected. We believe this strong combination makes for an attractive investment case.

Charles Taylor is a specialist provider of services to the insurance industry. This includes the management of mutual insurance associations, loss adjusting and specialist support services. A new management team have substantially improved the business, rationalising operations and improving profitability. The company has also raised fresh capital giving it flexibility to make acquisitions. The valuation of the company appears low especially considering the cyclically depressed profitability of its loss adjusting business and Charles Taylor offers dependable growth with low sensitivity to global economic growth.

Gamma Communications supplies voice, data and mobile telephony products and services in the UK. The company has grown impressively, driven by a lack of legacy and declining services but also by providing excellent customer service to its core SME customer base. This is a competitive advantage against slow-moving incumbent providers. The company has had a history of exceeding expectations due to strong growth in cloud PBX and SIP trunk volumes. Future opportunities look bright, especially as Gamma is expanding its product range by launching a new mobile service.

Melrose is a diversified engineering group whose raison d'etre is to buy underperforming businesses, improve them and then sell the assets on. Essentially it is deploying a private equity model in the public markets. The company has had significant success in the past with its acquisitions of McKechnie, FKI and most recently Elster. We have owned Melrose in the past but sold it due to size considerations. However post a capital return to shareholders after the sale of Elster to Honeywell the market capitalisation has returned into our range and has given us the opportunity to re-invest in a management team who have a demonstrable track record of making money for shareholders.

RPC is a manufacturer of products principally for the plastic packaging industry. It is a broad based group operating principally in mainland Europe and the UK. Through scale efficiencies and natural consolidation in customer's supply chains RPC is growing turnover organically by low single digits. However this is being supplemented by acquisition activity as RPC looks to consolidate what is a fragmented industry. This is driving significant synergy benefits in raw material purchasing and site consolidation. The highly ambitious management team have established a strong track record in value creation and we expect them to grow RPC significantly in future years.

Scapa is a manufacturer of technical tapes, adhesive films and compounds. The company has achieved a remarkable resurgence since a new management team was appointed in 2009. Margins have improved dramatically, the balance sheet has been transformed and inherited asbestos liabilities have been dealt with. The company has bright prospects driven by further margin improvements, through factory rationalisation, in its industrial division but more importantly strong organic growth in its healthcare division, where it is becoming a trusted preferred supplier to the major medical device companies. The company also has the ability to supplement this organic growth through selected acquisitions, focused on the healthcare market.

In addition to the companies mentioned above, we invested in a number of IPOs (initial public offerings) in the year. These included Countryside Properties, a UK housebuilder; Gym Group, the low cost gym chain; Ibstock, the leading UK brick manufacturer; Joules, a fashion retailer; Midwich, a leading European distributor of AV equipment; Motorpoint, a second hand automotive retailer; and Softcat, an IT re-seller for the small and medium sized business community.

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 Restaurant Group, the restaurant and pub operator, where the company has suffered from increased competition, a weakening brand profile and poor

operational delivery. We also disposed of our holding in Elementis, the speciality chemicals company, where growth has been disappointing due to weak oil and gas markets, slow Asian markets and increased competition in its chromium business. Other companies we sold due to a belief that they were structurally challenged or suffering from poor operational performance included Fenner, the conveyor belt and seals business; Countrywide, the UK estate agent; Speedy Hire, the plant hire company; Thomas Cook, the travel agency; and Ultra Electronics, the defence electronics business.

We benefited from a level of takeover activity in the year. Five portfolio companies received agreed bids. The clear similarity in these bids was the nature of the buyers, with the bidders being either foreign corporates or private equity groups. This reflects the open nature of the UK market, the strength of global corporate balance

sheets and the low cost of debt. Within our portfolio, takeover bids were received for Anite, a telecoms testing business, from Keysight Technologies; Chime Communications, a marketing services group, from private equity; Hellermann Tyton, a cable management solutions provider, from Delphi Automotive; ISG, a fit-out and construction group, from Cathexis Capital; and Quintain Estates, a property developer, from Lone Star.

Portfolio Outlook

The following table shows the Company's key stock positions versus the Numis Smaller Companies Index (excluding investment companies) at the end of May 2016.

Top ten active positions at 31 May 2016	Holding %	Index Weight %	Active Weight %
Bellway	3.6	-	3.6
NMC Health	2.8	-	2.8
Intermediate Capital	2.2	-	2.2
e2v Technologies	2.4	0.3	2.1
Howden Joinery	2.0	-	2.0
Playtech	1.8	-	1.8
Informa	1.7	-	1.7
WS Atkins	1.7	-	1.7
Victrex	1.6	-	1.6
Clinigen	1.6	-	1.6

A brief description of the largest active positions (excluding Bellway, e2v Technologies, Informa, NMC Health and Victrex which are covered earlier) follows:

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 are performing well but the primary growth engine of the business is the fund management operation where it is having real success in growing assets due to the strength of its performance, the quality of the team and underlying demand for its product in an income-hungry world. The management are also targeting an increase in the company's return on equity by returning substantial surplus capital.

Howden Joinery is a manufacturer and retailer of kitchens in the UK. From launch in 1990 it has grown organically to over 600 branches and taken a significant market share by providing a first-class service to its client, the jobbing builder, with keen prices and excellent stock availability. The company is also very cash

generative but in the past this cash has been consumed by pension and property liabilities inherited from its former parent, MFI. However  these problems have now been effectively worked through and Howden is starting to raise the dividend aggressively. With branch roll-out continuing and the kitchen market beginning to recover, Howden is well placed to grow profitability.

Playtech is one of the world's largest gaming and sports betting software suppliers. The company provides white-label software for online and mobile; casino, poker, bingo, sports betting and live dealer games; and has most recently made acquisitions in the spreadbetting market. Playtech benefits from operating in an industry with high barriers to entry and strong supplier power (platform migrations are very risky for online B2C businesses). This together with long-term contracts (five to seven years and increasing) and relatively low levels of competition makes the company well placed to benefit from global growth in online gaming. We expect returns from Playtech to be driven by continued strong earnings momentum and a growing dividend. However, we believe the greatest returns should be made from a market re-rating; driven primarily by an increase in the proportion of regulated earnings and more credit given for its high, sustainable and cash-backed margins.

WS Atkins is an international engineering consultant, with operations principally in the UK, USA, Middle East and Asia. A new management team has been re-structuring the company with low-margin activities sold and operations rationalised. With this restructuring mostly completed, the company is starting to see growth in profitability and future prospects look strong. The company also enjoys a cash-rich balance sheet and is looking to deploy this on acquisitions that will augment organic growth. The company announced the acquisition of a large nuclear engineering consultancy firm, PP&T, in 2015.

Clinigen is a global speciality pharmaceutical services business. Its core competencies are 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, which it thinks can perform better with 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 strength of the management team and the positive structural growth of its end markets.

Market Outlook

The surprise EU referendum result precipitated a sharp negative shock to markets around the globe. We have witnessed a seismic moment in UK political, social and economic history. The repercussions of the referendum will, however, only become clear over the coming years. For the moment, it is impossible to estimate the long-term political impacts for the UK and it is also very difficult to predict the future economic impact.

On the political front, the Prime Minister has been replaced, the Leader of the Opposition is facing a leadership challenge, and the SNP is already talking about a second Scottish independence referendum. More broadly in Europe, the very future of the EU may be at stake. Meanwhile, we have no idea yet what shape Brexit will take and what will be the outcome of trade negotiations with the EU and the rest of the world.

In the weeks since the referendum, we have seen a sharp decline in the value of the pound. The FTSE 100 has been resilient, but that reflects the international nature of large UK corporates and the extent of their international earnings. The more domestically focused small and mid-cap indices have been harder hit. The general consensus is that the UK economy is set for a period of slowdown, if not recession.

In the corporate sector, conditions are intrinsically stronger than they were during the financial crisis of 2008-9. Balance sheets are robust and dividends are well supported. Although corporate profitability may come under pressure, companies are better placed to deal with the fall-out from an economic slowdown. In addition a large proportion of UK corporate earnings comes from overseas, even among smaller companies, and will be boosted by the de-valuation of sterling. In conclusion, the year under review has been a reasonable one for the Company. Relative performance was satisfactory and our portfolio companies have, overall, performed robustly. Our investments are generally trading well, soundly financed and attractively valued. Additionally, the smaller company market continues to throw up exciting growth opportunities in which the Company can invest. The short term is set to be very uncertain but we are confident that over the medium to longer term we can generate significant value from a consistent and disciplined investment approach.

Neil Hermon

Fund Manager

INVESTMENT PORTFOLIO at 31 May 2016

Company	Principal activities	Valuation £'000	Portfolio %
Bellway	housebuilder	21,181	3.55
NMC Health	healthcare provider	16,963	2.85
e2v Technologies	electronic components	14,418	2.42
Intermediate Capital	mezzanine finance	12,849	2.16
Howden Joinery	kitchen manufacturer and retailer	11,915	2.00
Playtech	internet gaming software	10,557	1.77
Paragon	buy to let mortgage provider	10,281	1.73
Informa	business to business information	10,200	1.71
WS Atkins	engineering consultancy	10,144	1.70
Victrex	speciality chemicals	9,668	1.62
10 largest		128,176	21.51
Clinigen1	pharmaceuticals	9,435	1.58
RPC	plastic packaging manufacturer	9,183	1.54
Paysafe	online payment processor	9,064	1.52
NCC	IT security	8,950	1.50
Balfour Beatty	international contractor	8,673	1.46
Renishaw	precision measuring and calibration equipment	8,380	1.41
Sanne	investment management services	8,081	1.36
John Laing	infrastructure investment	8,069	1.35
Grainger	residential property investor	7,988	1.34
Interserve	international contractor	7,937	1.33
20 largest		213,936	35.90
Capital & Regional	retail property investor	7,705	1.29
Laird	electronic products	7,695	1.29
Essentra	speciality plastic producer and distribution	7,636	1.28
Northgate	commercial vehicle hire	7,592	1.28
AA	roadside assistance	7,488	1.26
Esure	motor and property insurer	6,696	1.12
Ibstock	bricks manufacturer	6,634	1.11
OneSavings Bank	banks	6,632	1.11
Spectris	electronic control and process instrumentation	6,544	1.10
Synthomer	speciality chemicals	6,532	1.10
30 largest		285,090	47.84
Aveva Group	design software	6,456	1.08
Dechra Pharmaceuticals	veterinary pharmaceuticals	6,382	1.07
Ted Baker	clothing retailer	6,334	1.06
St Modwen Properties	real estate investment and services	6,204	1.04
Scapa1	technical tapes	6,172	1.04
Consort Medical	healthcare products	6,102	1.03
Senior	aerospace and automotive products	5,981	1.00
Aldermore	banks	5,940	1.00
Cineworld	cinema operator	5,917	0.99
Crest Nicholson	housebuilder	5,882	0.99
40 largest		346,460	58.14

Company	Principal activities	Valuation £'000	Portfolio %
Jupiter Fund Management	investment management company	5,749	0.97
Countryside	housebuilder	5,683	0.95
Oxford Instruments	advanced instrumentation equipment	5,470	0.92
DFS	furniture retailer	5,430	0.91
LSL Property Services	real estate services	5,325	0.89
Euromoney Institutional Investor	business to business information	5,319	0.89
Eurocell	building products	5,280	0.89
RWS1	patent translation services	5,060	0.85
Tarsus Group	exhibition organiser	5,012	0.84
Cairn Energy	oil & gas exploration and production	4,824	0.81
50 largest		399,612	67.06
Servelec	healthcare software provider	4,813	0.81
Gamma Communications1	telecommunication services	4,647	0.78
SSP	contract catering	4,548	0.76
GVC	online gaming operator	4,515	0.76
Dunelm	homewares retailer	4,486	0.75
Brown (N) Group	clothing retailer	4,482	0.75
WYG1	engineering consultancy	4,389	0.74
Tyman	building products	4,372	0.73
Firstgroup	bus and rail operator	4,324	0.73
EMIS1	healthcare IT services	4,301	0.72
60 largest		444,489	74.59
Hunting	oil equipment and services	4,182	0.70
Rotork	process control solutions	4,180	0.70
Vectura	respiratory pharmaceuticals	4,110	0.69
Exova	material testing	4,061	0.68
Keller	ground engineering services	3,959	0.67
Safestyle1	window replacement retailer	3,957	0.66
CLS	real estate investment and services	3,947	0.66
Lookers	automotive retailer	3,929	0.66
ITE Group	exhibition organiser	3,871	0.65
Brewin Dolphin	wealth manager	3,870	0.65
70 largest		484,555	81.31
Sherborne Investors	speciality finance	3,859	0.65
Safestore Holdings	self storage operator	3,843	0.65
Melrose Industries	engineering group	3,843	0.64
Unite Group	student accommodation investor	3,775	0.64
Polypipe	building products	3,660	0.61
Volution	building products	3,645	0.61
Xaar	electronic equipment	3,638	0.61
Conviviality1	beverage wholesaler	3,585	0.60
GB Group1	data intelligence services	3,450	0.58
Urban & Civic	real estate investment and services	3,401	0.57
80 largest		521,254	87.47

Company	Principal activities	Valuation £'000	Portfolio %
Ascential	exhibition organiser and data services	3,322	0.56
Softcat	software reseller	3,185	0.53
Premier Oil	oil & gas exploration and production	3,179	0.53
Midwich1	AV equipment distributor	3,084	0.52
Costain	contractor	3,083	0.52
Gym Group	gym operator	2,899	0.49
Dairy Crest	food manufacturer and distributor	2,890	0.48
Marshall Motor1	automotive retailer	2,872	0.48
Charles Taylor	insurance management services	2,787	0.47
Tribal Group1	education support services & software	2,728	0.46
90 largest		551,283	92.51
Restore1	office service provider	2,691	0.45
SQS Software1	software testing	2,679	0.45
Joules1	clothing retailer	2,678	0.45
Digital Barriers1	digital security	2,668	0.44
SDL	language software service provider	2,548	0.43
Next Fifteen Communications1	PR and media services	2,546	0.43
Motorpoint	motor retailer	2,379	0.40
Carpetright	carpet retailer	2,317	0.39
Quantum Pharma1	speciality pharmaceuticals	2,312	0.39
Koovs1	online fashion retailer	2,299	0.38
100 largest		576,400	96.72
Abcam1	internet retailer of antibodies	2,242	0.38
Accesso1	leisure software provider	2,161	0.36
SCS	furniture retailer	2,057	0.35
Imagination Technologies	semi conductor intellectual property licensing	2,011	0.34
Blancco Technology1	data erasure software	1,980	0.33
Faroe Petroleum1	oil &  gas exploration and production	1,944	0.33
Ebiquity1	media agency	1,860	0.31
Equiniti	financial services outsourcer	1,815	0.30
Severfield	industrial engineering	1,741	0.29
RM	education software and services	1,716	0.29
Total equity investments		595,927	100.00

There were no convertible or fixed interest securities at 31 May 2016 (2015: None)

1 quoted on the Alternative Investment  Market

PRINCIPAL RISKS AND UNCERTAINTIES

The Board, with the assistance of Henderson, 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 Henderson'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 Henderson, the Board has drawn up a risk matrix which identifies the key risks to the Company. The Board policy on risk management has not materially changed from last year. The principal 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 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. Henderson 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 Henderson confirms its compliance with them each month. Henderson 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 reviews regularly data that monitors risk factors in respect of the portfolio. The Board reviews investment strategy at each Board meeting.

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. 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 Henderson 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 Guidance and Transparency Rules and the Prospectus 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.

Operational

Disruption to, or failure of, Henderson's accounting, dealing or payment systems or the Custodian's records could prevent the accurate reporting and monitoring of the Company's financial position. 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 Henderson 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 of 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. An analysis of these financial risks and the Company's policies for managing them are set out in the notes of the Annual Report.

VIABILITY STATEMENT

The Company is a long term investor; the Board believe it is appropriate to assess the Company's viability over a three year period in recognition of our long term horizon and what we believe to be investors' horizons, taking account of the Company's current position and the potential impact of the principal risks and uncertainties.

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 three 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 do not expect there to be any significant change in the current principal risks and adequacy of the mitigating controls in place. Also the Directors do not envisage any change in strategy or objectives or any events that would prevent the Company from continuing to operate over that period as the Company's assets

are liquid, its commitments are limited and the Company intends to continue to operate as an investment trust. Only a substantial financial crisis affecting the global economy could have an impact on this assessment. Whilst there is currently uncertainty in the markets following the UK referendum result 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.

The Board recognise that there is a continuation vote that is due to take place at the 2016 Annual General Meeting. The Directors support the continuation of the Company and expect that the Company will continue to exist for the foreseeable future, at least for the period of assessment. However, if such a vote were not passed, the Directors would follow the necessary provisions relating to the winding up of the Company and the realisation of its assets.

Based on this assessment, the Board have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the next three 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 Henderson. 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.

RELATED PARTY TRANSACTIONS

The Company's transactions with related parties in the year were with the Directors and Henderson. 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 expenses and remuneration for which there were no outstanding amounts payable at the year end. Directors' shareholdings are disclosed in the Annual Report.

In relation to the provision of services by Henderson, other than fees payable by the Company in the ordinary course of business and the provision of sales and marketing services there have been no material transactions with Henderson affecting the financial position of the Company during the year under review. More details on transactions with Henderson, including amounts outstanding at the year end, are given in the notes to the financial statements in the Annual Report.

STATEMENT OF DIRECTORS' RESPONSIBILITIES (UNDER DTR 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 includes 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

STATEMENT OF COMPREHENSIVE INCOME

		Year ended 31 May 2016			Year ended 31 May 2015
Notes		Revenue return £'000	Capital return £'000	Total £'000	Revenue return £'000	Capital return £'000	Total £'000
2	Investment income	13,621	-	13,621	12,838	-	12,838
3	Other income	91	-	91	207	-	207
	(Losses)/gains on investments held at fair value through profit or loss	-	(15,596)	(15,596)	-	89,494	89,494
	Total income/(expense)	13,712	(15,596)	(1,884)	13,045	89,494	102,539
	Expenses
4	Management and performance fees	(565)	(1,319)	(1,884)	(538)	(3,256)	(3,794)
	Other expenses	(487)	-	(487)	(472)	-	(472)
	Profit/(loss) before finance costs and taxation	12,660	(16,915)	(4,255)	12,035	86,238	98,273
	Finance costs	(755)	(1,764)	(2,519)	(789)	(1,841)	(2,630)
	Profit/(loss) before taxation	11,905	(18,679)	(6,774)	11,246	84,397	95,643
	Taxation	(9)	-	(9)	(12)	-	(12)
	Profit/(loss) for the year and total comprehensive income/(expense)	11,896	(18,679)	(6,783)	11,234	84,397	95,631
5	Earnings per ordinary share - basic and diluted	15.92p	(25.00p)	(9.08p)	15.04p	112.98p	128.02p

The total column of this statement represents 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.

 

STATEMENT OF CHANGES IN EQUITY

		Year ended 31 May 2016
		Retained earnings
Notes		Share capital £'000	Capital redemption reserve £'000	Capital reserves £'000	Revenue reserve £'000	Total equity £'000
	Total equity at 1 June 2015	18,676	26,745	501,974	15,926	563,321
	Total comprehensive income: (Loss)/profit for the year	-	-	(18,679)	11,896	(6,783)
	Transactions with owners, recorded directly to equity:
6	Ordinary dividends paid	-	-	-	(10,458)	(10,458)
	Total equity at 31 May 2016	18,676	26,745	483,295	17,364	546,080
		Year ended 31 May 2015
		Retained earnings
		Share capital £'000	Capital redemption reserve £'000	Capital reserves £'000	Revenue reserve £'000	Total equity £'000
	Total equity at 1 June 2014	18,676	26,745	417,577	13,283	476,281
	Total comprehensive income:
	Profit for the year	-	-	84,397	11,234	95,631
	Transactions with owners, recorded directly to equity:
6	Ordinary dividends paid	-	-	-	(8,591)	(8,591)
	Total equity at 31 May 2015	18,676	26,745	501,974	15,926	563,321

 

BALANCE SHEET

Notes		At 31 May 2016 £'000	At 31 May 2015 £'000
	Non current assets
	Investments held at fair value through profit or loss	595,927	605,776
	Current assets
	Receivables	2,612	2,734
	Tax recoverable	23	12
	Cash and cash equivalents	10,224	10,183
		12,859	12,929
	Total assets	608,786	618,705
	Current liabilities
	Payables	(791)	(3,179)
	Financial liabilities	-	(20,000)
	Bank loans	(32,107)	(32,201)
		(32,898)	(55,380)
	Total assets less current liabilities	575,888	563,325
	Non current liabilities
	Financial liabilities	(29,808)	(4)
	Net assets	546,080	563,321
	Equity attributable to equity shareholders
7	Share capital	18,676	18,676
	Capital redemption reserve	26,745	26,745
	Retained earnings:
	Capital reserve	483,295	501,974
	Revenue reserve	17,364	15,926
	Total equity	546,080	563,321
8	Net asset value per ordinary share	731.0p	754.1p

 CASH FLOW STATEMENT

	Year ended
	31 May 2016 £'000	31 May 2015 £'000
Operating activities
(Loss)/profit before taxation	(6,774)	95,643
Add back interest payable	2,519	2,630
Losses/(gains) on investments held at fair value through profit or loss	15,596	(89,494)
Purchases of investments	(158,484)	(135,283)
Sales of investments	152,700	138,553
Increase in receivables	(150)	(696)
Decrease in amounts due from brokers	61	640
Decrease in accrued income	211	9
(Decrease)/increase in payables	(2,350)	1,517
(Decrease)/increase in amounts due to brokers	(242)	584
Taxation on investment income	(20)	(7)
Net cash inflow from operating activities before
interest and taxation	3,067	14,096
Interest paid	(2,511)	(2,647)
Net cash inflow from operating activities	556	11,449
Financing activities
Equity dividends paid	(10,458)	(8,591)
(Repayment)/drawdown of bank loans	(94)	6,171
Repayment of 10.5% Debenture Stock	(20,000)	-
Issue of Unsecured Loan Notes	30,000	-
Net cash outflow from financing activities	(552)	(2,420)
Increase in cash and cash equivalents	4	9,029
Cash and cash equivalents at the start of the year	10,183	1,154
Exchange movements	37	-
Cash and cash equivalents at the end of the year	10,224	10,183

 

NOTES TO THE FINANCIAL STATEMENTS

1	Accounting policies - 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 2016 have been prepared in accordance with International Financial Reporting Standards ("IFRSs") 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 in the Notes in the Annual Report. 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 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.
2	Investment income						2016 £'000		2015 £'000
	Franked income from companies listed or quoted in the United Kingdom:
	Dividends						11,740		10,873
	Special dividends						443		1,499
	Unfranked income from companies listed or quoted in the United Kingdom:
	Dividends						914		411
	Property income distributions						524		55
	Total investment income						13,621		12,838
3	Other Income						2016 £'000		2015 £'000
	Bank and other interest						1		2
	Underwriting income (allocated to revenue)1						90		205
							91		207
	1 None of the income receivable from sub-underwriting commitments was allocated to capital during the year (2015: £nil).
		2016			2015
4	Management and performance fees	Revenue return £'000	Capital return £'000	Total return £'000	Revenue return £'000		Capital return £'000		Total return £'000
	Management fee	565	1,319	1,884	538		1,256		1,794
	Performance fee	-	-	-	-		2,000		2,000
		565	1,319	1,884	538		3,256		3,794
	A summary of the Management Agreement is given in the Strategic Report of the Annual Report.
5	Earnings per ordinary share The earnings per ordinary share figure is based on the net loss for the year of £6,783,000 (2015: gain of £95,631,000) and on 74,701,796 (2015: 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.
						2016 £'000		2015 £'000
	Net revenue profit					11,896		11,234
	Net capital (loss)/profit					(18,679)		84,397
	Net total (loss)/profit					(6,783)		95,631
	Weighted average number of ordinary shares in issue during the year					74,701,796		74,701,796
						Pence		Pence
	Revenue earnings per ordinary share					15.92		15.04
	Capital earnings per ordinary share					(25.00)		112.98
	Total earnings per ordinary share					(9.08)		128.02

6	Dividends	Record Date	Pay date		2016 £'000		2015 £'000
	Final dividend: 10.0p (2014:8.0p) for the year ended 31 May 2015	21 September 2015	9 October 2015		7,470		5,976
	Interim dividend: 4.0p (2015:3.5p) for the year ended 31 May 2016	15 February 2016	4 March 2016		2,988		2,615
					10,458		8,591
	The final dividend of 10.0p per ordinary share in respect of the year ended 31 May 2015 was paid on 9 October 2015 to shareholders on the register of members at the close of business on 21 September 2015. The dividend paid amounted to £7,470,000 in total. Subject to approval at the Annual General Meeting, the proposed final dividend of 11.0p per ordinary share will be paid on 30 September 2016 to shareholders on the register of members at the close of business on 2 September 2016. The proposed final dividend for the year ended 31 May 2016 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:
						2016 £'000		2015 £'000
	Revenue available for distribution by way of dividends for the year					11,896		11,234
	Interim dividend for the year ended 31 May 2016: 4.0p (2015: 3.5p) per ordinary share					(2,988)		(2,615)
	Final dividend for the year ended 31 May 2015: 10.0p (based on 74,701,796 shares in issue at 3 August 2015)					-		(7,470)
	Proposed final dividend for the year ended 31 May 2016: 11.0p (based on 74,701,796 shares in issue at 9 August 2016)					(8,217)		-
	Retained revenue for year					691		1,149
7	Share capital			2016 £'000			2015 £'000
	Allotted, issued authorised and fully paid:
	74,701,796 ordinary shares of 25p each (2015: 74,701,796)			18,676			18,676
	During the year the Company made no purchases of its own issued ordinary shares (2015: nil) at a total cost of £nil (2015: £nil). Since 31 May 2016 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 £546,080,000 (2015: £563,321,000) and on the 74,701,796 ordinary shares in issue at 31 May 2016 (2015: 74,701,796). An alternative net asset value per ordinary share can be calculated by deducting from the total assets less current liabilities of the Company, the Preference Stock, Debenture Stock and the Unsecured Loan Notes at their market (or fair) values rather than at their par (or book) value. The net asset value per ordinary share at 31 May 2016 calculated on this basis was 731.0p (2015: 752.1p). Since the redemption of the Debenture Stock, these net asset values are identical because there is no difference between the carrying value and fair value of the remaining debt liabilities. 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:
					2016 £'000		2015 £'000
	Net assets attributable to the ordinary shares at 1 June				563,321		476,281
	Net (losses)/gains for the year				(6,783)		95,631
	Ordinary dividend paid in the year				(10,458)		(8,591)
	Net assets attributable to the ordinary shares at 31 May				546,080		563,321
9	Post Balance Sheet event On 23 June 2016 the UK electorate voted to leave the European Union. This decision commences a process that is likely to take a minimum of two years to complete, and during this time the UK remains a member of the European Union. There will be a resulting period of uncertainty for the UK economy with increased volatility expected in financial markets. This does not impact the fair value of assets and liabilities reported at the balance sheet date of 31 May 2016. As at the close of business on the balance sheet date, the net asset value per ordinary share was 731.0p. The net asset value per ordinary share on 5 August 2016 was 713.5p. This represents a decrease of 2.4% compared to the year end net asset value per ordinary share.
10	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 ("AGM") held on 4 October 2013 and passed by a substantial majority of the shareholders. The assets of the Company consist almost entirely of securities that are listed (or listed 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.
11	2016 Financial Statements
	The figures and financial information for the year ended 31 May 2016 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 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.
12	2015  Financial Statements
	The figures and financial information for the year ended 31 May 2015 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 auditors which was unqualified and did not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006.
13	Annual Report and Financial Statements
	The Annual Report for the year ended 31 May 2016 will be posted to shareholders in September 2016 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 23 September 2016 at 11.30 am.
14	Website
	This document, and the Annual Report for the year ended 31 May 2016, will be available on the following website: www.hendersonsmallercompanies.com.

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]	Sarah Gibbons-Cook Investor Relations and PR Manager Henderson Global Investors Telephone: [phone]
James de Sausmarez Director and Head of Investment Trusts Henderson Global Investors Telephone: [phone]

 

END

 

 

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