Final Results

Henderson Smaller Cos Inv Tst PLC 31 July 2000 THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC Unaudited Preliminary Group Results for the year ended 31 May 2000 'Growth, Consistency, Liquidity' Highlights * Net asset value rises by 36% * Focus on growth companies and running our winners Extracts from the Chairman's Statement: This year has fully tested our philosophy of investing in smaller companies with outstanding growth potential and running our winners. We remain comfortably ahead of our benchmark index but many of our 'winners' fell back sharply with the shake-out in the techMARK index. It is important to re- emphasize that we remain confident in our approach, and by picking the right stocks in the right sectors we continue to offer shareholders outstanding prospects for long term capital growth. At the same time we must warn shareholders that stockmarket volatility is something we are having to learn to live with. Over 60% of the Trust's portfolio is in the three rapidly converging areas of information technology, media and telecommunications, with the balance concentrated in fast growing areas like outsourcing, consumer roll-outs on the back of strong brands, and pharmaceuticals. We are not a technology trust but naturally see this area as one which can fit well with our investment philosophy. By running our winners, many of our successful investments have grown from being smaller companies into constituent members of the FTSE mid 250 index and even the FTSE 100 index. A major change during the year was our decision to liquidate our overseas portfolio and concentrate on investing in UK domiciled companies. This focuses the Trust's investment mandate. Instead of allocating our investments on a geographical basis, we approach our investing on a 'bottom-up' basis by searching out those companies which offer outstanding growth and, where appropriate, staying with them. Many successful UK companies are, of course, exploiting international markets. THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC Unaudited Preliminary Group Results for the year ended 31 May 2000 Share Buy-Backs During the year the Trust purchased 7,628,930 shares for cancellation at favourable discount levels, thereby enhancing the Trust's net asset value. We will continue to monitor our discount. Dividend As explained previously, our policy is to achieve capital growth for shareholders and not to pay dividends of significance. However, and chiefly to retain the Trust's status as an investment trust, we propose to pay a single and final dividend for this year of 0.5p. Most of the growth companies we invest in tend to retain the bulk of their earnings. Prospects Valuations now look more realistic after the recent setback in the technology sector. Our challenge is to build on our track record of re-stocking our nursery of sapling companies and nurture the winners as they grow. This is becoming an increasingly competitive area of investment attention but, building on our record, we remain confident that we can serve our shareholders well in this regard. P H G Cadbury Chairman 28 July 2000 THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC Unaudited Preliminary Group Results for the year ended 31 May 2000 Group Statement of Total Return (incorporating the consolidated revenue account) (Restated*) Year ended 31 May 2000 Year ended 31 May 1999 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Total capital - 187,318 187,318 - (54,791) (54,791) gains/(losses) from investments Income from fixed asset 5,630 - 5,630 7,783 - 7,783 investments Other interest receivable 1,589 - 1,589 1,458 - 1,458 and similar income ------- ------- ------- ------- ------- ------- Gross revenue and capital 7,219 187,318 194,537 9,241 (54,791) (45,550) gains/(losses) Management fee (2,400) - (2,400) (1,969) - (1,969) Other administrative (405) - (405) (416) - (416) expenses Irrecoverable VAT (248) - (248) (234) - (234) ------- ------- ------- ------- ------- ------- Net return/(loss) on ordinary activities before interest payable 4,166 187,318 191,484 6,622 (54,791) (48,169) and taxation Interest payable (2,177) - (2,177) (2,232) - (2,232) ------- ------- ------- ------- ------- ------- Net return/(loss) on ordinary activities before taxation 1,989 187,318 189,307 4,390 (54,791) (50,401) Taxation on net return on (30) - (30) (200) - (200) ordinary activities ------- ------- ------- ------- ------- ------- Net return/(loss) on ordinary activities after taxation 1,959 187,318 189,277 4,190 (54,791) (50,601) Dividends - cumulative - - - (33) - (33) preference stock ------- ------- ------- ------- ------- ------- Net return/(loss) attributable to ordinary shareholders 1,959 187,318 189,277 4,157 (54,791) (50,634) ------- ------- ------- ------- ------- ------- Dividends - ordinary shares (note 4) Interim: nil (1999: - - - (2,673) - (2,673) 1.50p) Final: 0.50p (1999: (852) - (852) (4,361) - (4,361) 2.45p) Over accrual re prior 127 - 127 - - - year ------- ------- ------- ------- ------- ------- (725) - (725) (7,034) - (7,034) ------- ------- ------- ------- ------- ------- Transfer to/(from) 1,234 187,318 188,552 (2,877) (54,791) (57,668) reserves ===== ===== ===== ===== ===== ===== Return/(loss) per 1.14p 108.80p 109.94p 2.33p (30.75)p (28.42)p ordinary share (note 1) ===== ===== ===== ===== ===== ===== The revenue columns of this statement represents the consolidated revenue accounts of the Group. * Restated for the change in accounting policy (see note 3) THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC Unaudited Preliminary Group Results for the year ended 31 May 2000 Group Balance Sheet: 31 May 2000 31 May 1999 £'000 £'000 Fixed asset investments Listed investments at market value: United Kingdom 663,334 414,049 Overseas 2,705 144,041 ------------ ---------- 666,039 558,090 AIM investments at market value 40,825 4,383 Unquoted investments at directors' 5,100 684 valuation ----------- ----------- 711,964 563,157 ----------- ---------- Current assets Investments - 173 Debtors 6,730 1,924 Cash at bank and short term deposits 32,654 15,503 ----------- ---------- 39,384 17,600 Creditors: amounts falling due within (9,378) (5,750) one year ---------- ---------- Net current assets 30,006 11,850 ---------- ---------- Total assets less current liabilities 741,970 575,007 Creditors: amounts falling due after (20,000) (20,000) more than one year ---------- ---------- Total net assets 721,970 555,007 ====== ====== Capital and reserves Called up share capital 42,602 44,519 Other capital reserves 672,347 504,701 Revenue reserve 7,021 5,787 ---------- ---------- Shareholders' funds (including non- equity interests of £9,000; 1999: £19,000) 721,970 555,007 ====== ====== Net asset value per ordinary share 423.8p 311.8p ====== ====== THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC Unaudited Preliminary Group Results for the year ended 31 May 2000 Notes: 1. Return per ordinary share Capital return per ordinary share is based on net capital gains for the year of £187,318,000 (1999: net capital losses of £54,791,000) and on the weighted average number of ordinary shares in issue during the year of 172,168,289 (1999: 178,194,520). Revenue return per ordinary share is based on the earnings attributable to the ordinary shares of £1,959,000 (1999: £4,157,000) and on the weighted average number of ordinary shares in issue during the year of 172,168,289 (1999: 178,194,520). 2. Issued Share Capital There were 170,371,070 ordinary shares of 25p in issue at 31 May 2000 (31 May 1999: 178,000,000). 3. Change in accounting policy The Company has adopted Financial Report Standard (FRS) 16 Current Tax under which UK franked dividend income should be accounted for net of the attributable tax credits. The comparative figures for the year ended 31 May 1999 have been restated accordingly. The effect of this change is that both income and taxation are reduced by £566,000 (1999: £1,210,000). However, there is no effect on the revenue or capital returns per share, nor on the net asset value per share. 4. Dividend The recommended final dividend of 0.5p per ordinary share, subject to approval at the Annual General Meeting, will be paid on 2 October 2000 to shareholders on the register at the close of business on 8 September 2000. The buy-backs of the Company's ordinary shares in the market, prior to the ex-dividend date of the final dividend for the year ended 31 May 1999, resulted in a write back of £127,000 for dividends accrued in the previous financial year. 5. Basis of consolidation The Group accounts consolidate the accounts of the Company and its wholly owned subsidiary undertaking, Henderson Smaller Companies Finance Limited. 6. Loss of investment company status A technical consequence of the Company's share buy-backs is that the Company ceased to be an investment company within the meaning of section 266 of the Companies Act 1985. However, it continued to conduct its affairs as an investment trust for taxation purposes under section 842 of the Income and Corporation Taxes Act 1988, and the Articles of Association of the Company prohibit capital profits from being distributed by way of dividend. As such the directors consider it necessary to continue to present the accounts in accordance with the Statement of Recommended Practice Financial Statements of Investment Trust Companies (the 'SORP'). Under the SORP, the financial performance of the Company is presented in a statement of total return in which the revenue column is the profit and loss account of the Company. The revenue column excludes net profits on disposals of investments, calculated by reference to their previous carrying amount of £107,567,000 (1999: net losses of £61,084,000). Since the Company is no longer an investment company, the Companies Act and/or FRS3 would ordinarily require this amount to be included in the profit and loss account. In the opinion of the directors the inclusion of this item in the profit and loss account would be misleading because it would obscure and distort both the revenue and capital performance of the Company, and would not show clearly the revenue profits emerging to be distributable by way of dividend. The directors therefore consider that these departures from the specific provisions of Schedule 4 of the Companies Act relating to the form and content of accounts for companies other than investment companies and these departures from accounting standards are necessary to give a true and fair view. The departures have no effect on total return or on the balance sheet. 7. 2000 Accounts The preliminary figures for the year ended 31 May 2000 are an extract from the Group's accounts for that period. These accounts have not yet been delivered to the Registrar of Companies, nor have the auditors yet reported on them. 8. 1999 Accounts The figures and financial information for the year ended 31 May 1999 are an extract of the latest published accounts and do not constitute the statutory accounts for that year. These accounts have been delivered to the Registrar of Companies and included the report of the auditors which was unqualified and did not contain a statement under either section 237(2) or section 237(3) of the Companies Act 1985. 9. Annual General Meeting The full annual report and accounts will be posted to shareholders in late August 2000 and copies will be available thereafter from the Secretary at the Company's Registered Office, 3 Finsbury Avenue, London EC2M 2PA. The Annual General Meeting will be held on Friday 29 September 2000 at 12.00 noon. For further information please contact : John Alexander or Vicki Staveacre The Henderson Smaller Companies Investment Trust plc Henderson Press Office Telephone: 020 7410 4340 Telephone: 020 7410 4222 Stephen Westwood Henderson Investors Telephone: 020 7477 5517

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