Final Results

BFS SMALL COMPANIES DIVIDEND TRUST PLC PRELIMINARY ANNOUNCEMENT OF UNAUDITED RESULTS The Directors announce the unaudited statement of consolidated results for the year 1 May 2002 to 30 April 2003 as follows: CONSOLIDATED STATEMENT OF TOTAL RETURN (*incorporating the revenue account) 1 May 2002 to 1 May 2001 to 30 April 2003 30 April 2002 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 (Losses)/gains on - (4,460) (4,460) - 5,159 5,159 investments Dividends and interest 2,180 - 2,180 2,104 - 2,104 Other income 8 - 8 - - - Investment management - - - - (888) (888) performance fee Investment management (120) (180) (300) (130) (194) (324) fee Other expenses (215) (4) (219) (194) (4) (198) Net return before finance costs and 1,853 (4,644) (2,791) 1,780 4,073 5,853 taxation Interest payable and (143) (215) (358) (153) (230) (383) similar charges Appropriations in respect of: - Zero Dividend - (628) (628) - (582) (582) Preference shares - Preference shares - (3) (3) - (3) (3) Issue costs of Zero Dividend Preference - (31) (31) - (31) (31) shares Return on ordinary activities before and after 1,710 (5,521) (3,811) 1,627 3,227 4,854 taxation First interim dividend (347) - (347) (339) - (339) paid of 2.20p (2002: 2.15p) Second interim (346) - (346) (338) - (338) dividend paid of 2.20p (2002: 2.15p) Third interim dividend (347) - (347) (339) - (339) paid of 2.20p (2002: 2.15p) Fourth interim (535) - (535) (520) - (520) dividend declared of 3.40p (2002: 3.30p) Transfer to/ (from) 135 (5,521) (5,386) 91 3,227 3,318 reserves Return per: pence pence pence pence pence pence Ordinary share 10.86 (35.05) (24.19) 10.32 20.49 30.81 Zero Dividend - 10.05 10.05 - 9.30 9.30 Preference share Preference share - 10.05 10.05 - 9.30 9.30 * The revenue column of this statement is the revenue account of the Group. CONSOLIDATED BALANCE SHEET As at As at 30 April 30 April 2003 2002 £'000 £'000 Investments 30,060 35,915 Current assets Debtors 632 610 Cash at bank 309 1 941 611 Current liabilities Creditors 899 2,192 Bank overdraft 7,491 6,999 8,390 9,191 Net current liabilities (7,449) (8,580) Total assets less current liabilities 22,611 27,335 Creditors - amounts falling due after more than one year (8,397) (7,735) 14,214 19,600 Share capital and reserves Share capital 3,938 3,938 Share premium 11,126 11,126 Capital reserve (1,461) 4,060 Revenue reserve 611 476 Shareholders funds 14,214 19,600 Net asset value per: Ordinary share 90.25p 124.44p Zero Dividend Preference share 133.67p 123.13p Preference share 135.69p 125.64p CONSOLIDATED STATEMENT OF CASHFLOWS 1 May 2002 to 1 May 2001 to 30 April 2003 30 April 2002 £'000 £'000 Net cash inflow from operating activities 695 1,565 Servicing of finance Interest paid (328) (390) Net cash outflow from servicing of (328) (390) finance Taxation recovered 5 8 Capital expenditure and financial investment Purchase of investments (6,007) (13,812) Sale of investments 7,010 14,212 Net cash inflow from capital expenditure and financial investment 1,003 400 Equity dividends paid (1,559) (1,520) Net cash (outflow) /inflow (184) 63 (Decrease)/ increase in cash (184) 63 Chairman's Statement RESULTS This Report covers the twelve months to 30th April 2003. This has been in a difficult year for World equity markets and the UK market has experienced steep falls and high volatility. Notwithstanding the ongoing worldwide political tensions the UK market appears to have recently recovered to a sustainable level and in this recent recovery small quoted companies have outperformed. The Company's net asset value per Ordinary share at 30th April 2003 was 90.25p (2002 - 124.44p), a decrease over the year of 27.5%. During this period the FTSE All-Share Index fell by 24.7%, the FTSE Small-Cap Index fell by 28.7% and the FTSE Fledgling Index fell by 19.8%. Since Listing, on 12 May 1999, the FTSE All-Share has fallen by 36.2% and the net asset value per Ordinary share has fallen by 5.9%. Since the year-end the net asset value per Ordinary share has risen to 99.20p as at 22 May 2003. The Board has declared a final dividend of 3.4p per Ordinary share (2002 - 3.3p) which, when added to the three quarterly interim dividends of 2.2p, equates to a total dividend for the year of 10p per Ordinary Share (2002 - 9.75p), an increase of 2.6% over the previous year. The Board is particularly pleased to be able to increase the dividend at a time when many other income funds are reducing their dividends. BACKGROUND Over the past twelve months the worldwide economic slowdown has continued with international markets generally showing large losses. The markets of the UK, USA and Europe have been further depressed as a result of the uncertainty caused by the build up and duration of the war in Iraq. Since the war ended sentiment regarding the investment markets has been more positive and share prices have recovered some of these losses. However, the economic forecasts remain uncertain and it is hard to see a continuing improvement in the short-term. With inflation at low levels, interest rates at forty year lows and demand constrained it would be unreasonable to expect dramatic progress, indeed investors need to adjust their expectation of investment returns to reflect the current environment. As part of this adjustment a greater appreciation of the importance of dividend income as part of a total investor return will be beneficial for the underlying investments of the fund and the fund itself. Following the decline in the level of corporate activity in the second half of last year, it is not surprising that the trend continued into this year, with only two takeovers: one for shares and for one cash. Once the venture capitalists have resolved their problems in their technology investments they will return to the undervalued small quoted company sector for opportunities. SPLIT CAPITAL SECTOR I am pleased to announce that the Company recently won 'The Investment Week' - Best Performing Split Capital Trust for 2002at the Investment Trust of the Year Awards. I would like to thank David Horner and team at Chelverton Asset Management for their efforts, which produced a similar award for 2001. Whilst there have been a number of well publicised failures in this sector it is also true to say that there are a number of successful Split Capital Trusts whose performance compares very favourably with conventional geared investment trusts. PROSPECTS The Company's investments have recovered strongly in the past two months and it is encouraging that this improvement has been across many of the investments, indicating that smaller quoted companies have been undervalued. As the effects of a strengthening Euro, a further reduction in interest rates beginning to take effect and the anticipated gradual improvement in the World economy over the next year, the environment for many of our investee companies will be much improved. The Board believes that prospects for the Company's investments look encouraging and that in the absence of any unexpected negative influences we should see further progress in the asset value and dividend per Ordinary share. BN Lenygon 29 May 2003 NOTE 1. The above unaudited financial information for the year ended 30 April 2003 which does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985 has been prepared on the basis of the accounting policies set out in the statutory accounts of the Group for the year ended 30 April 2002. The comparative financial information is based on the statutory financial statements for the year ended 30 April 2002. The auditors have reported on those accounts; their report was unqualified and did not contain a statement under section 237 (2) or (3) of the Companies Act 1985. The April 2002 statutory accounts have been delivered to the Registrar of Companies. Statutory financial statements for the year ended 30 April 2003 will be delivered to the Registrar. 2. The Directors have declared a fourth dividend of 3.40p (2002: 3.30p) per Ordinary share, payable on 30 June 2003 to the holders of Ordinary shares on the Register at 6 June 2003. 3. The revenue return per Ordinary share is based on earnings of £1,710,000 (2002: £1,627,000) and on 15,750,000 (2002: 15,750,000) Ordinary shares, being the weighted average number of Ordinary shares in issue during the year. 4. The capital return per Ordinary share is based on net capital losses of £ 5,521,000 (2002: profits of £3,227,000) and on 15,750,000 (2002: 15,750,000) Ordinary shares, being the weighted average number of Ordinary shares in issue during the year. 5. An amount of £399,000 (2002: £1,316,000) has been charged to capital in respect of management fees, investment management performance fees, other expenses and interest in accordance with the Company's accounting policy. 6. The Company has conducted its affairs so that it satisfies the conditions for approval as an investment trust company set out in section 842 of the Income and Corporation Tax Act 1988. It is the intention of the Directors that the Company continues to meet these conditions. 7. There are 31,260 Preference and 6,250,000 Zero Dividend Preference shares in issue. They each have an initial capital entitlement of 100p per share, growing to 184.63p on 30 April 2007. As at 30 April 2003 the final entitlements of the Preference shares and the Zero Dividend Preference shares were fully covered. The accrued entitlement as at 30 April 2003 calculated in accordance with the provisions of FRS4, was 133.67p per Zero Dividend Preference share (2002: 123.13p) and 135.69p per Preference share (2002: 125.64p). A total amount of £ 631,000 (2002: £585,000) has been charged to capital during the period. 8. The net assets attributable and the net asset value per share are calculated under the provisions of FRS4. Shareholders funds shown in the balance sheet are also in accordance with FRS4. 9. The Group's funds are invested principally in companies with a market capitalisation of less than £100 million. The Group's portfolio comprises companies listed on the official list and companies admitted to trading on AIM. The Group may also invest up to 5% of its portfolio in unquoted securities. Whilst the majority of the Group's funds are invested in ordinary shares of companies, up to 30% may be invested in convertible securities. The Group does not invest in other investment trusts.

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