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Henderson Smllr Cos (HSL)

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Monday 22 January, 2007

Henderson Smllr Cos

Interim Results

Henderson Smaller Cos Inv Tst PLC
22 January 2007

                                                                    Page 1 of 12



22 January 2007




              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
       Unaudited interim results for the half year ended 30 November 2006




Highlights


Performance:



•           Net asset value per share up 16.5%*

•           Share price up 18.8%*

•           Benchmark index up 13.2%*+



*Total return for the half year ended 30 November 2006 (source: Datastream)

+The Hoare Govett Smaller Companies (excluding investment companies) Index



Extracts from the Chairman's Statement:

I am pleased to report a further period of strong investment performance.  Over
the half year, which ended on 30 November 2006, the net asset value per share
increased by 16.5%, on a total return basis.  By comparison our benchmark index
returned 13.2%.  This is an excellent result, in both absolute and relative
terms.



Gearing contributed to this performance, in what for much of the period has been
a rising market.  The Trust has both fixed debt (the debenture stock) and our
short-term borrowing facility, which is used flexibly.  Our share buy-back
programme has also enhanced the net asset value per share.  And, of course, a
principal contribution to performance remains the proven ability of our fund
management team at Henderson, Neil Hermon and Theresa Wat, to identify companies
of quality in which to invest.



The income from our investments has increased strongly, reflecting the growth in
corporate earnings enjoyed by many UK companies.  The additional income is
comfortably ahead of the increase in our borrowing costs, all of which are set
against revenue.  The performance fee is set against capital, reflecting the
fact that our investment outperformance is expected to come almost entirely from
superior growth in capital return.  As the performance fee payable to Henderson
is based on performance over the full year and crystallises only at the year
end, the figure shown in these accounts (£1.2 million) is merely an accrual.



During the half year we bought back and cancelled close to eleven million
shares, equivalent to about 10.8% of those in issue at 31 May 2006, at an
average discount (calculated by valuing the debenture stock at par) of over 13%.
  We have negotiated with Henderson a cap on the performance fee arrangements.
This means that any enhancement to net asset value resulting from



                                                                    Page 2 of 12



              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
       Unaudited interim results for the half year ended 30 November 2006

share buy-backs in excess of 5% of the opening issued share capital is excluded
from the calculation of the performance fee for the year.



The year 2006 proved to be a very positive one for equity investors. The
absolute returns achieved have exceeded considerably the expectations of twelve
months ago.  The UK stockmarket moved ahead strongly in December 2006, with the
share prices of smaller companies continuing to lead the way.  Investor
confidence is high but valuations, while reasonable, are not as attractive as
they were.  We expect to take a cautious approach.  Nevertheless, corporate
profitability, cash flows and balance sheets are in good order. The flow of
mergers and acquisitions appears to be set to continue in the small and mid cap
areas of the market in which we invest.  We expect to make further progress in
2007 but at more modest rates than in the past four years.


                                                                    Page 3 of 12



              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
       Unaudited interim results for the half year ended 30 November 2006

Consolidated Income Statement
for the half year ended 30 November 2006


                                   (Unaudited)                      (Unaudited )                      (Audited)
                                 Half year ended                  Half year ended                     Year ended
                                 30 November 2006                 30 November 2005                   31 May 2006
                            Revenue    Capital               Revenue    Capital               Revenue    Capital
                             return     return      Total     return     return      Total     return     return Total
                              £'000      £'000      £'000      £'000      £'000      £'000      £'000      £'000 £'000

Investment income             3,202          -      3,202      2,678          -      2,678      5,743          -  5,743
Other income                     99          -         99         58          -         58        151          -    151
Gains on investments held
at fair value
  through profit or loss          -     38,181     38,181          -     29,460     29,460          -     65,745 65,745
                            ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------------

Total income                  3,301     38,181     41,482      2,736     29,460     32,196      5,894     65,745 71,639

Expenses
Management fees               (660)          -      (660)      (514)          -      (514)    (1,120)          - (1,120)
Provision for performance         -    (1,167)    (1,167)          -          -          -          -      (583)   (583)
fee
Other expenses                (182)          -      (182)      (229)          -      (229)      (377)          -   (377)
                             --------- ---------- ----------  ---------  --------- ---------  ---------- ---------- ----
Profit before finance costs
and
taxation                      2,459     37,014     39,473      1,993     29,460     31,453      4,397     65,162  69,559
Finance costs               (1,552)          -    (1,552)    (1,166)          -    (1,166)    (2,554)          - (2,554)
                             ---------   --------   --------  ---------  ---------   --------  ---------  ---------  ---

Profit before taxation          907     37,014     37,921        827     29,460     30,287      1,843     65,162  67,005
Taxation                          -          -          -          -          -          -          -          -       -
                             --------- ---------- ---------- ---------- ----------  ---------  ---------  ------- ------
Profit for the period           907     37,014     37,921        827     29,460     30,287      1,843     65,162  67,005
                             =======    ======     ======     ========   ======     ======      =====     ======  ======
Earnings per ordinary share   0.94p     38.40p     39.34p      0.81p     29.09p     29.90p      1.83p     64.62p  66.45p
(note 2)
                             =======    ======     ======     ========   ======     ======      ======    ======  ======




The total column of this statement represents the Group's Income Statement,
prepared in accordance with IFRS.  The revenue return and capital return columns
are supplementary to this and are prepared under guidance published by the
Association of Investment Companies.



All items in the above statement derive from the continuing operations.



All income is attributable to the equity holders of The Henderson Smaller
Companies Investment Trust plc, the parent company.

There are no minority interests.


                                                                    Page 4 of 12



              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
       Unaudited interim results for the half year ended 30 November 2006


Consolidated Statement of Changes in Equity
for the half year ended 30 November 2006


                                                                 (Unaudited)
                                                       Half year ended 30 November 2006


                                          Ordinary         Capital         Other
                                             share      redemption       capital     Retained
                                           capital         reserve      reserves     earnings       Total
                                             £'000           £'000         £'000        £'000       £'000

Balance at 31 May 2006                      25,047          20,369       229,525        6,012     280,953
Buy-backs of ordinary shares               (2,716)           2,716      (28,109)            -    (28,109)
Profit for the period                            -               -        37,014          907      37,921
Ordinary dividend paid                           -               -             -      (1,337)     (1,337)
                                        ----------      ----------    ----------   ----------  ----------
Balance at 30 November 2006                 22,331          23,085       238,430        5,582     289,428
                                        ==========      ==========    ==========   ==========  ==========


                                                                 (Unaudited)
                                                      Half year ended 30 November 2005


                                          Ordinary         Capital         Other
                                             share      redemption       capital    Retained
                                           capital         reserve      reserves    earnings       Total
                                             £'000           £'000         £'000       £'000       £'000

Balance at 31 May 2005                      25,414          20,002       167,325       5,330     218,071
Buy-backs of ordinary shares                 (220)             220       (1,674)           -     (1,674)
Profit for the period                            -               -        29,460         827      30,287
Ordinary dividend paid                           -               -             -     (1,166)     (1,166)
                                        ----------      ----------    ----------  ----------  ----------
Balance at 30 November 2006                 25,194          20,222       195,111       4,991     245,518
                                        ==========      ==========    ==========  ==========  ==========

                                                                 (Unaudited)
                                                           Year ended 31 May 2006


                                          Ordinary         Capital         Other
                                             share      redemption       capital    Retained
                                           capital         reserve      reserves    earnings       Total
                                             £'000           £'000         £'000       £'000       £'000

Balance at 31 May 2005                      25,414          20,002       167,325       5,330     218,071
Buy-backs of ordinary shares                 (367)             367       (2,962)           -     (2,962)
Profit for the year                              -               -        65,162       1,843      67,005
Ordinary dividend paid                           -               -             -     (1,161)     (1,161)
                                        ----------      ----------    ----------  ----------  ----------
Balance at 31 May 2006                      25,047          20,369       229,525       6,012     280,953
                                        ==========      ==========    ==========  ==========  ==========



                                                                    Page 5 of 12



              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
       Unaudited interim results for the half year ended 30 November 2006


Consolidated Balance Sheet
at 30 November 2006


                                                                 (Unaudited)       (Unaudited)     (Audited)
                                                                 30 November       30 November        31 May
                                                                        2006              2005          2006
                                                                       £'000             £'000         £'000
Non-current assets
Investments held at fair value through                               331,409           269,875       317,663
   profit or loss                                                -----------       -----------   -----------


Current assets
Sales for future settlement                                            1,027               882           968
Taxation recoverable                                                      12                 8            10
Prepayments and accrued income                                           549               495         1,288
Cash and cash equivalents                                                614             1,890           958
Other debtors                                                              7                 -             -
                                                                  ----------        ----------    ----------
                                                                       2,209             3,275         3,224
                                                                  ----------        ----------    ----------
Total assets                                                         333,618           273,150       320,887
                                                                  ==========        ==========    ==========

Current liabilities
Purchases for future settlement                                          969             2,304           168
Accruals                                                               1,712               419           757
Bank loans and overdrafts                                             21,500             4,900        19,000
                                                                  ----------        ----------    ----------
                                                                      24,181             7,623        19,925
                                                                  ----------        ----------    ----------


Total assets less current liabilities                                309,437           265,527       300,962

Non-current liabilities                                             (20,009)          (20,009)      (20,009)

                                                                 -----------       -----------   -----------
Net assets                                                           289,428           245,518       280,953
                                                                 ===========       ===========   ===========

Equity attributable to equity shareholders

Called up share capital                                               22,331            25,194        25,047
Capital redemption reserve                                            23,085            20,222        20,369
Other capital reserves                                               238,430           195,111       229,525
Retained earnings                                                      5,582             4,991         6,012
                                                                 -----------       -----------    ----------
Total equity                                                         289,428           245,518       280,953
                                                                 ===========       ===========    ==========
Net asset value per ordinary share  (note 5)                         324.02p           243.63p       280.43p
                                                                 ===========       ===========    ==========




                                                                    Page 6 of 12



              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
       Unaudited interim results for the half year ended 30 November 2006


Consolidated Cash Flow Statement
for the half year ended 30 November 2006



                                                                     (Unaudited)      (Unaudited)     (Audited)
                                                                Half year ended   Half year ended    Year ended
                                                                    30 November       30 November        31 May
                                                                           2006              2005          2006
                                                                          £'000             £'000         £'000

Net cash inflow/(outflow) from operating
activities                                               5               26,240             7,396       (6,355)
                                                                     ----------        ----------    ----------
Net cash inflow/(outflow) before use
  of financing                                                           26,240             7,396       (6,355)
Net cash (outflow)/inflow from
  financing activities                                                 (26,582)           (5,145)         7,674
                                                                     ----------        ----------   -----------
Net (decrease)/increase in cash and cash
  equivalents                                                             (342)             2,251         1,319
Cash and cash equivalents at the start
  of the period                                                             958             (361)         (361)
Exchange movements                                                          (2)                 -             -
                                                                       --------        ----------    ----------
Cash and cash equivalents at the
period end                                                                  614             1,890           958
                                                                       ========        ==========    ==========

Notes to the Accounts


1.     Accounting Policies - basis of preparation

      The consolidated financial information for the half year ended 30 November 2006 has been prepared using
      the accounting policies followed in the Group's annual accounts for the year ending 31 May 2006. These
      accounting policies will be based on International Financial Reporting Standards ('IFRS'), comprising
      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 Accounting Standards Committee ('IASC').

      The accounts have been prepared 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
      December 2005 is consistent with the requirements of IFRS, the directors have sought to prepare the
      financial statements on a basis compliant with the recommendations of the SORP.


                                                                    Page 7 of 12

              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
       Unaudited interim results for the half year ended 30 November 2006


Notes to the Accounts, continued


2.    Earnings per ordinary share

      The earnings per ordinary share figure is based on the net gain for the half year of £37,921,000 (half year
      ended 30 November 2005: £30,287,000; year ended 31 May 2006: £67,005,000) and on 96,379,521 (half year
      ended 30 November 2005: 101,282,566; year ended 31 May 2006: 100,827,720) ordinary shares, being the
      weighted average number of ordinary shares in issue during the period.

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


                                                      (Unaudited)           (Unaudited)
                                                 30 November 2006      30 November 2005               (Audited)
                                                                                                    31 May 2006
                                                            £'000                 £'000                   £'000

       Net revenue gain                                       907                   827                   1,843
       Net capital gain                                    37,014                29,460                  65,162
                                                       ----------           -----------              ----------
       Net total gain                                      37,921                30,287                  67,005
                                                       ----------            ----------               ---------
       Weighed average number of
       ordinary shares in issue during
       the period                                      96,379,521           101,282,566             100,827,720

                                                            Pence                 Pence                   Pence

       Revenue earnings per ordinary
         share                                               0.94                  0.81                    1.83
       Capital earnings per ordinary
         share                                              38.40                 29.09                   64.62
                                                        ---------             ---------               ---------
       Total earnings per ordinary share                    39.34                 29.90                   66.45
                                                        ---------             ---------               ---------


                                                                    Page 8 of 12



              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
       Unaudited interim results for the half year ended 30 November 2006



Notes to the Accounts, continued


3.     Interim dividend

       The Company has not declared an interim dividend (2005: nil).

4.     Ordinary share capital

       At 30 November 2006 there were 89,323,030 ordinary shares in issue (30 November 2005: 100,776,282; 31 May
       2006: 100,186,282). During the half year ended 30 November 2006 the Company bought 10,863,252 of its own
       issued ordinary shares in the market for cancellation (half year ended 30 November 2005: 880,000; year
       ended 31 May 2006: 1,470,000). The cost of the share buy-backs, including stamp duty, amounted to
       £28,109,000 (half year ended 30 November 2005: £1,674,000; year ended 31 May 2006: £2,962,000).

5.     Net asset value per share

       The net asset value per ordinary share is based on the net assets attributed to equity shareholders of
       £289,428,000 (half year ended 30 November 2005: £245,518,000, year ended 31 May 2006; £280,953,000)  and
       on 89,323,030 (half year ended 30 November 2005: 100,776,282; year ended 31 May 2006; 100,186,282)
       ordinary shares, being the number of ordinary shares in issue at the period end.

                                                                    Page 9 of 12



              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
       Unaudited interim results for the half year ended 30 November 2006



Notes to the Accounts, continued


6.     Reconciliation of the profit before taxation to net cash inflow from operating
       activities





                                                                (Unaudited)     (Unaudited)
                                                                  Half year       Half year        (Audited)
                                                                   ended 30        ended 30    Year ended 31
                                                                   November        November              May
                                                                       2006            2005             2006
                                                                      £'000           £'000            £'000

       Profit before taxation                                        37,921          30,287           67,005
       Gains on investments held at fair value
           through profit or loss                                  (38,181)        (29,460)         (65,745)
       Increase/(decrease) in purchases for future
       settlement creditor                                              801           2,089             (47)
       Increase in sales/(purchases) for future
            settlements debtor                                         (59)           (604)            (690)
       Net sales of investments                                      24,437           4,642          (6,860)
       Decrease/(increase) other receivables                            739             370            (423)
       Increase/(decrease) in accruals                                  584              77              412
       Taxation on investment                                           (2)             (5)              (7)
                                                                 ----------      ----------       ----------
                                                                     26,240           7,396          (6,355)
                                                                 ----------      ----------       ----------


7.    Transaction costs
      Purchase transaction costs for the half year ended 30 November 2006 were £109,000 (half

      year ended 30 November 2005: £134,000; year ended 31 May 2006: £328,000). These comprise mainly stamp duty
      and commission. Sale transaction costs for the half year ended: 30 November 2006 were £67,000 (30 November
      2005: £61,000; year ended 31 May 2006: £98,000).


8.    Comparative information
      The financial information contained in these interim results does not constitute statutory accounts as
      defined in section 240 of the Companies Act 1985.  The financial information for the half years ended 30
      November 2006 and 30 November 2005 has not been audited.



      The information for the year ended 31 May 2006 has been extracted from the latest published audited
      accounts. The audited accounts for the year ended 31 May 2006 have been filed with the Registrar of
      Companies.  The report of the auditors on those accounts contained no qualification or statement under
      either section 237(2) or (3) of the Companies Act 1985.



                                                                   Page 10 of 12





              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
       Unaudited interim results for the half year ended 30 November 2006



Notes to the Accounts, continued


9.    Interim Report

      The full interim report will be posted to shareholders in early February 2006 and copies will be available
      thereafter from the Secretary at the Company's Registered Office, 4 Broadgate, London EC2M 2DA.




                                                                   Page 11 of 12



              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
       Unaudited interim results for the half year ended 30 November 2006



Investment Portfolio

at 30 November 2006
                                Valuation at                                    Valuation at          
                                 30 November                                     30 November     
                                        2006       % of                                 2006          % of
                                       £'000       portfolio                           £'000     portfolio

Informa                               14,690       4.43 Robert Walters                 3,320          1.00
W S Atkins                            14,000       4.22 Forth Ports                    3,023          0.91
Bellway                               10,359       3.13 Dana Petroleum                 2,914          0.88
WSP                                    8,815       2.66 Rotork                         2,905          0.88
Capital & Regional                                      RPS Group                      2,862          0.86
  Properties                           7,676       2.32 royalblue                      2,850          0.86
Spectris Group                         6,880       2.08 Greene King                    2,844          0.86
Domino Printing                        6,768       2.04 Renishaw                       2,832          0.85
Balfour Beatty                         6,448       1.95 VT Group                       2,806          0.85
Interserve                             6,127       1.85 Ultra Electronic
Savills                                6,031       1.82   Holdings                     2,700          0.81
                                  ----------   --------                             --------    ----------
10 largest                            87,794      26.50 40 largest                   204,808         61.78

Bovis Homes                            5,892       1.78 Gyrus                          2,683          0.81
Grainger Trust                         5,633       1.70 Victrex                        2,666          0.80
Carillion                              5,376       1.62 Meggitt                        2,594          0.78
Anite                                  5,184       1.56 Aberdeen Asset
Enodis                                 4,908       1.48   Management                   2,580          0.78
Shaftesbury                            4,593       1.39 Quintain Estates               2,475          0.75
Intermediate Capital                   4,570       1.38 Expro International            2,470          0.75
Carter & Carter                        4,358       1.31 Isotron                        2,330          0.70
Laird                                  4,356       1.31 Umbro Holdings                 2,271          0.69
Erinaceous                             4,257       1.28 London Merchant
                                   ---------   -------- Securities                     2,244          0.68
20 largest                           136,921      41.31 CSR                            2,191          0.66
                                                                                ------------   -----------
Charter                                4,116       1.24 50 largest                   229,312         69.18
Restaurant Group                       4,095       1.24
Mouchel Parkman                        4,080       1.23 Melrose                        2,150          0.65
SIG                                    4,057       1.22 Go-Ahead                       2,117          0.64
Big Yellow Group                       4,020       1.21 *RWS                           2,065          0.62
Premier Oil                            3,983       1.20 *Inspico                       2,063          0.62
BSS Group                              3,848       1.16 Euromoney
E2V Holdings                           3,776       1.14  Institutional                 2,048          0.62
                                                        Investor
Paragon                                3,468       1.05 *IBS Opensystems               1,949          0.59
Headlam                                3,388       1.02 Chime
                                 -----------   --------  Commuications                 1,936          0.58
30 largest                           175,752      53.02 Countrywide                    1,930          0.58
                                                        DTZ Holdings                   1,928          0.58
                                                        Venture Production             1,916          0.58
                                                                                   ---------   -----------
                                                        60 largest                   249,414         75.24
                                                                                   =========   ===========

* quoted on the Alternative Investment Market




                                                                   Page 12 of 12



              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
       Unaudited interim results for the half year ended 30 November 2006



For further information please contact:



Neil Hermon
The Henderson Smaller Companies Investment Trust plc
Telephone: 020 7818 4351


or


Theresa Wat
The Henderson Smaller Companies Investment Trust plc
Telephone: 020 7818 4644


or


James de Sausmarez
Head of Investment Trusts
Henderson Global Investors
Telephone: 020 7818 3349


or


Sarah Gibbons-Cook
Investor Relations and PR Manager
Henderson Global Investors
Telephone: 020 7818 3198




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