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Henderson Smaller Cos Investment Trust PLC on Thursday reported a ‘disappointing’ annual performance but struck an upbeat tone on the outlook for UK smaller firms, pointing to improving fundamentals despite market noise. For the financial year that ended May 31, the trust reported a net asset value total return of negative 5.1%, swinging from a positive return of 14.5% in financial 2024. The performance lagged its benchmark, the Deutsche Numis Smaller Cos Index excluding investment companies, which delivered a positive 5.0% return. Net asset value per share fell 7.7% to 926.2 pence from 1,003.1p. The share price declined 5.3% to 841.0p at year-end, meaning the discount to NAV narrowed to 9.2% from 11.5%. Despite the weak returns, the board proposed a final dividend of 20.5p per share, up 5.1% from 19.5p, bringing the total dividend for the year to 28.0p, an increase from 27.00p a year prior. This marked the 22nd consecutive year of dividend growth. Underlying revenue income fell to £23.1 million from £24.8 million, and earnings per share slipped to 27.89p from 29.85p, reflecting a shift among portfolio companies towards share buybacks over cash dividends and portfolio repositioning. Chair Victoria Sant acknowledged a frustrating year for shareholders and attributed underperformance to cyclical positioning and specific stock issues. ‘The outlook for UK smaller companies continues to improve,’ she said, adding that refinements had been made to the investment process to enhance portfolio construction. The trust’s long-serving fund manager, Neil Hermon, will retire in September after 22 years. Co-Manager Indriatti van Hien, who was promoted in January, will continue to lead the strategy alongside a planned new hire. The company continued its share buyback programme, repurchasing over 6 million shares in the financial year and a further 2.1 million since July, enhancing NAV by 0.7%. While performance lagged peers this year, the trust noted that it has outperformed its benchmark in 16 of the past 22 years and delivered a cumulative excess NAV return of 385% since Hermon took over in 2002. Looking ahead, the board said the investment case for smaller UK companies remains compelling, citing attractive valuations, improving fundamentals and the advantages of the investment trust structure. A continuation vote will be held at the October annual general meeting, with the board recommending that shareholders vote in favour. Shares in the trust were up 3.0% at 884.00 pence in London on Thursday afternoon. Copyright 2025 Alliance News Ltd. All Rights Reserved.
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