The Henderson Smaller Companies Investment Trust plc Update for the half-year ended 30 November 2020 0009960_H047066_Smaller Companies_Interim_V8a.indd 1 30/01/2021 00:07 The Henderson Smaller Companies Investment Trust plc Investment objective The Company aims to maximise shareholders’ total returns (capital and income) by investing in smaller companies that are quoted in the United Kingdom. This update contains material extracted from the unaudited half-year results of the Company for the six months ended 30 November 2020. The unabridged results for the half-year are available on the Company’s website: www.hendersonsmallercompanies.com 0009960_H047066_Smaller Companies_Interim_V8a.indd 102 29/01/2021 07:11 Update for the half-year ended 30 November 2020 Performance Performance for the six months to 30 November 2020 NAV1 Benchmark2 Share price3 Interim dividend4 20.6% 20.8% 27.7% 7.0p NAV per share at period end Share price at period end 30 Nov 2020 30 Nov 2020 1,017.4p 972.0p 31 May 2020 31 May 2020 859.1p 777.0p Net Assets 30 Nov 2020 31 May 2020 £760.0m £641.8m Total return performance (including dividends reinvested) 6 months 1 year 3 years 5 years 10 years % % % % % NAV¹ 20.6 3.1 13.6 55.4 278.9 Benchmark² 20.8 -3.1 -1.7 26.7 143.3 Share price3 27.7 2.4 26.6 66.4 354.5 Average sector NAV5 14.3 -0.5 -0.7 36.4 176.4 Average sector share price6 10.6 -8.5 -8.2 9.5 163.2 FTSE All-Share Index 6.9 -10.3 -1.9 22.1 77.3 Sources: Morningstar for the AIC, Janus Henderson, Refinitiv Datastream 1 Net asset value (‘NAV’) per ordinary share total return with income reinvested 2 Numis Smaller Companies Index (excluding investment companies) total return 3 Share price total return using mid-market closing price 4 The interim dividend has been maintained at 7.0p (2019: 7.0p) to be paid to shareholders on 8 March 2021 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 1 The Henderson Smaller Companies Investment Trust plc Financial Summary Half year ended 30 November 30 November 30 November 30 November 2020 2020 2020 2019 Extract from the Statement of Revenue return Capital return Total return Total return Comprehensive Income (unaudited) £’000 £’000 £’000 £’000 Investment income 4,555 – 4,555 9,354 Other income – – – 14 Gains on investments held at fair value through profit or loss – 128,062 128,062 47,876 Total income 4,555 128,062 132,617 57,244 Expenses, finance costs & taxation1 (822) (1,219) (2,041) (5,517) Profit for the period 3,733 126,843 130,576 51,727 Earnings per ordinary share 5.00p 169.80p 174.80p 69.24p ¹ Expenses, finance costs and taxation include provision for a performance fee when the relevant criteria have been met. There was no performance fee provision for the six months to 30 November 2020 (30 November 2019: £3,275,000; 31 May 2020: £nil). Any provision for a performance fee is charged 100% to capital. The actual performance fee, if any, payable to Janus Henderson for the year to 31 May 2021 will depend on outperformance over the full financial year, subject to a cap on the total fees paid to Janus Henderson of 0.9% of the average value of the net assets of the Company during the year. No performance fee is payable if on the last day of the accounting year the Company’s share price or NAV is lower than the share price and NAV at the preceding year-end. Details of the performance fee arrangements are set out in the Annual Report for the year ended 31 May 2020. Half year ended Half year ended Year 30 November 30 November ended Extract from Balance Sheet 2020 2019 31 May 2020 (unaudited except May 2020 figures) £’000 £’000 £’000 Investments held at fair value through profit or loss 834,939 824,007 712,330 Net current liabilities (45,065) (38,627) (40,711) Non current liabilities (29,828) (29,829) (29,823) Net assets 760,046 755,551 641,796 Net asset value per ordinary share 1,017.4p 1,011.4p 859.1p 2 0009960_H047066_Smaller Companies_Interim_V8a.indd 2 29/01/2021 07:11 Update for the half-year ended 30 November 2020 Chairman’s Statement In my statement in last year's annual report, I Board changes commented that it is extraordinary how quickly I am pleased to report that significant progress has things can change with a severe market correction been made in refreshing your Board in accordance following the rapid spread of Covid-19 across the with good corporate governance. Following a globe. I am pleased to report that over the six detailed review, Penny Freer will step up to succeed months under review and subsequently, your me as Chairman of the Board from the conclusion Company’s share price and net asset value have of our AGM in October 2021 when I retire after ten steadily recovered thanks to renewed optimism years on the Board. Her skills and experience in the from the roll-out of vaccines, a Brexit deal being investment world make her very well suited for the agreed and a consensus view that the UK role. In addition, two new directors will be appointed economy is well placed for recovery. to the Board in 2021: Michael Warren will be appointed with effect from 1 March 2021 and Kevin Performance Carter will join the Board on 1 May 2021. Both have Over the six months under review, the net asset had distinguished careers in the asset management value total return per ordinary share rose 20.6%, industry. Michael in particular has expertise in the just behind our benchmark Numis Smaller areas of sales and marketing whilst Kevin is a Companies Index which increased by 20.8%. This former CEO of Old Mutual Asset Managers with was 6.3% better than the average of our peers in a background in asset management consulting and the AIC UK Smaller Companies sector due to the a wealth of experience as a non-executive director strength of our fund management team, their of investment trusts. disciplined approach and stock-picking ability. The share price rose by 27.7% on a total return Outlook basis, reflecting strong performance with the Looking forward into 2021, I think there are many discount narrowing from 9.6% at 31 May 2020 to reasons to be optimistic about the prospects for 4.5% at 30 November 2020. UK smaller companies. The roll out of the Covid-19 vaccines may result in a return to some sort of Dividend normality and the Brexit free trade deal means that The Board has decided to maintain the interim business can continue with Europe, albeit with an dividend at 7.0p per share (30 November 2019: increase in paperwork. Strength of franchise, 7.0p). The income from your Company’s investment market positioning and balance sheet will determine portfolio has inevitably been adversely hit by the winners from the losers in the post Covid-19 dividend cuts as our investee companies seek to world and, thanks to the diligence of our Fund manage their businesses in these extraordinary Managers, these companies are well represented times. However, investment trust companies have in our portfolio. the benefit of being able to build revenue reserves Jamie Cayzer-Colvin in the good years which can be used to support Chairman dividend payments in years where income from the 26 January 2021 portfolio falls. Your Board will consider dipping into these reserves if necessary, but will not decide the level of final dividend until the year end when the trajectory of the current economic recovery is better known. 3 0009960_H047066_Smaller Companies_Interim_V8a.indd 3 02/02/2021 09:34 The Henderson Smaller Companies Investment Trust plc Fund Manager’s Report Market Review – the benchmark index but not held by the Company. Six Months to 30 November 2020 These have an effect on relative performance. UK and global equity markets rallied strongly in the 6 month Relative period. Despite a summer marked by increasing virus return contribution caseloads globally which saw the re-imposition of Top five contributors % % local lockdowns, news that three separate vaccine Centamin* -30.3 +0.8 trials had passed the first efficacy and safety hurdles Renishaw +45.4 +0.5 marked a turning point in the world’s fight against Impax Asset Covid-19. Value stocks rallied at the expense of Management +50.8 +0.5 growth stocks and oil and commodity prices rose. Codemasters +63.5 +0.5 At the virtually held annual Jackson Hole meeting, the Team17 +41.4 +0.4 Federal Reserve stated that it was willing to tolerate inflation above the 2% target in a signal that rates 6 month Relative were likely to stay lower for longer. After a protracted return contribution vote count in the US, Joe Biden was proclaimed the Top five detractors % % winner of the presidential election which raised hopes Clinigen -24.9 -1.2 of further fiscal stimulus. Elsewhere the UK and EU William Hill* +100.8 -0.8 continued their trade negotiations with a deal signed S4 Capital* +107.8 -0.8 just before the end of the transition period of RWS Holdings -12.9 -0.8 31 December 2020. AO World* +155.1 -0.8 Smaller companies outperformed larger companies over the period. This was driven principally by a * In benchmark index but not held by the Company recovery from the significant underperformance of smaller companies during the initial phase of the Principal Contributors Covid-19 crisis as investors took a more positive view Centamin is an Egyptian gold miner; Renishaw is a on the likelihood of an economic recovery in 2021.