Dunedin Smaller Investment : Cos Inv Tst PLC - Corporate Action

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LEI: 213800CI43OQT8KBKE03

21 june 2018

DUNEDIN SMALLER companies INVESTMENT trust plc

Result of Strategic Review

The Board of Dunedin Smaller Companies Investment Trust plc (the 'Company') has undertaken a strategic review of the Company and its position in the UK smaller companies sector. The Board is aware that the Company's size and the secondary market liquidity in its shares make it challenging to attract new investors in the Company. The Board also believes that these factors have contributed to the discount at which the Company's shares trade. In addition, the recent merger of the Company's manager Aberdeen Asset Management PLC with Standard Life plc has resulted in the Company being managed alongside a company with a very similar UK smaller companies mandate. As a consequence of these factors, the Board decided to undertake the strategic review.

Having considered a number of options and following consultation with the Company's largest shareholders, the Board believes that shareholders, as a whole, still wish to retain exposure to UK smaller companies via an investment trust with a similar mandate managed by the Company's manager, Aberdeen Standard Investments¹. Consequently, the Company has agreed, in principle, the terms of a merger with Standard Life UK Smaller Companies Trust plc ('SLS').

The Board believes that the merger of the Company and SLS would provide the Company's shareholders with an investment in a significantly larger investment trust, with a strong investment track record, a stronger rating, a robust discount control mechanism and substantially greater secondary market liquidity, all of which should appeal to a broader range of investors. In particular, the Board believes that a merger would result in a significant increase in the valuation of the Company's shareholders' investment (over the 12 months ended 19 June 2018, the shares of the Company and of SLS traded at average discounts of -17.4% and -3.8% respectively²).

The merger would be effected by way of a scheme of reconstruction of the Company under section 110 of the Insolvency Act 1986 resulting in the voluntary liquidation of the Company and shareholders rolling over their investment in the Company into SLS on the basis of an all-share, nil premium (to NAV) merger, save that the aggregate costs of the Company and SLS would be borne by the Company's shareholders. In accordance with customary practice for such transactions involving investment trusts, the City Code on Takeovers and Mergers will not apply to the transaction. The merger of the Company and SLS would be subject to, inter alia, approval by the shareholders of each of the Company and SLS

The Directors expect to declare, pre-merger, a final interim dividend. Although the merger of the Company and SLS is expected to result in a reduction in the aggregate annual dividends received by the Company's shareholders in the medium term, the final interim dividend is expected to be at least equivalent to the aggregate reduction for the 12 months following the merger³.

James Barnes, the Company's chairman, said: 'Dunedin Smaller Companies Trust's size and the secondary market liquidity in its shares makes it challenging to attract new investors. The proposed merger with Standard Life UK Smaller Companies Trust will resolve these issues, creating a merged trust with assets of over £550m and substantially greater secondary market liquidity. As Standard Life UK Smaller Companies Trust has consistently had a substantially stronger rating than the Company, the Board believes that the merger will result in the Company's shareholders benefiting from a significant increase in the market value of their investment.'

A circular convening a general meeting to approve the transaction is expected to be sent to the Company's shareholders in due course, together with a prospectus issued by SLS containing details of the SLS shares that the Company's shareholders will receive in exchange for their shares in the Company pursuant to the proposed merger.

Notes: ¹Aberdeen Standard Investments is a brand of the investment businesses of Aberdeen Asset Management and Standard Life Investments. ²Discounts are based on the respective net asset values (cum-income, with debt at fair value) and share prices of the Company and SLS over the 12 months ended 19 June 2018. ³Based on the dividends declared by the Company and SLS respectively during the 12 months prior to and ending on 19 June 2018.

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