Final Results
Henderson Smaller Cos Inv Tst PLC
23 July 2007
Page 1 of 9
23 July 2007
THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
Unaudited Preliminary Group Results for the year ended 31 May 2007
KEY POINTS
• Excellent performance
- NAV total return 40.6%
- Benchmark total return 32.7%
• Proposed dividend increased by 25.9% to 1.70p per share
• Continued confidence in the long term outlook for UK smaller companies
and in the ability of the Trust to outperform
Extracts from the Chairman's Statement:
I am delighted to report a further year of excellent investment performance.
The net asset value per share at our year end was 392.1p. This amount, which is
net of all our expenses for the year, is 39.8% higher than the figure of 280.4p
reported a year ago. In addition, shareholders received a dividend of 1.35p in
October 2006. These figures represent a total return of 40.6%. By comparison,
our benchmark index returned 32.7%. The attribution of our performance is
estimated as follows:
Year ended
31 May 2007
Net asset value per share total return 40.6%
Benchmark total return (note) 32.7%
--------
Relative performance 7.9%
--------
Made up:
Stock selection 3.2%
Gearing 3.6%
Share buy-backs 2.4%
Expenses
(including management and performance fees) -1.3%
---------
7.9%
---------
Note:
The benchmark is the Hoare Govett Smaller Companies (excluding investment
companies) Index.
In summary, the outperformance of the benchmark is attributed in almost equal
measure to stock selection and to the impact of gearing. The enhancement to the
net asset value per share arising from the buying in of our own shares more
than covered the expenses of running the Company.
Page 2 of 9
THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
Unaudited Preliminary Group Results for the year ended 31 May 2007
Extracts from the Chairman's Statement, continued
The revenue account has continued to strengthen. The revenue return per share
rose by 15.8% to 2.12p, reflecting the level of dividend growth from our
investment portfolio. All our expenses, including borrowing costs but excluding
the performance fee, are allocated prudently to revenue. Because the
performance fee is attributable to capital performance, the accounting rules
require us to allocate the figure against the capital return. We propose a
single and final dividend for the year of 1.70p per share, an increase of 25.9%
on that paid last year.
During the year we bought back and cancelled 13.6 million shares, equivalent to
about 13.5% of those in issue at 31 May 2006, at an average discount (calculated
by valuing the debenture stock at par) of just under 14%. Despite the volume of
share buy-backs, our Company remains one of the larger constituents of its
sector.
The stock market has moved ahead much further than most investors expected a
year ago, a result in part of a high level of corporate activity, and to that
extent a degree of caution is advisable. Nevertheless, valuations are
reasonable and companies' profitability, cash flows and balance sheets are in
good order. We consider that the Company has demonstrated again that active
investment management, well-executed within the transparent structure of an
investment trust company, can offer investors an attractive and efficient means
of adding value to their portfolio. We shall therefore be recommending our
shareholders to vote, at the Annual General Meeting in September,
for the Company to continue.
Page 3 of 9
THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
Unaudited Preliminary Group Results for the year ended 31 May 2007
Consolidated Income Statement
for the year ended 31 May 2007
Year ended 31 May 2007 Year ended 31 May 2006
Revenue Capital Revenue Capital
return return Total return return Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment income 6,654 - 6,654 5,743 - 5,743
Other income 148 - 148 151 - 151
Gains on investments held at fair
value - 97,162 97,162 - 65,745 65,745
through profit or loss
---------- ---------- ---------- ---------- ---------- ---------
Total income 6,802 97,162 103,964 5,894 65,745 71,639
Expenses
Management and performance fees (1,342) (2,350) (3,692) (1,120) (583) (1,703)
Other expenses (371) - (371) (377) - (377)
--------- ---------- --------- --------- ---------- ---------
Profit before finance costs and
taxation 5,089 94,812 99,901 4,397 65,162 69,559
Finance costs (3,133) - (3,133) (2,554) - (2,554)
--------- -------- -------- --------- -------- --------
Profit before taxation 1,956 94,812 96,768 1,843 65,162 67,005
Taxation - - - - - -
--------- -------- -------- --------- -------- --------
Profit for the year 1,956 94,812 96,768 1,843 65,162 67,005
====== ====== ===== ====== ====== =====
Earnings per ordinary share (note 2.12p 102.59p 104.71p 1.83p 64.62p 66.45p
2)
====== ====== ===== ====== ====== =====
The total column of this statement represents the Group's Income Statement,
prepared in accordance with IFRS.
The revenue return and capital return columns are supplementary to this and are
prepared under guidance published by the Association of Investment Companies.
All items in the above statement derive from the continuing operations.
All income is attributable to the equity holders of The Henderson Smaller
Companies Investment Trust plc, the parent company. There are no minority
interests.
Page 4 of 9
THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
Unaudited Preliminary Group Results for the year ended 31 May 2007
Consolidated and Parent Company Statements of Changes in Equity
for the year ended 31 May 2007
Consolidated
Year ended 31 May 2007
Called up Capital Other
share
redemption capital Revenue
capital
reserve reserves reserve Total
£'000
£'000 £'000 £'000 £'000
Balance at 31 May 2006 25,047 20,369 229,525 6,012 280,953
Buy-backs of ordinary shares (3,390) 3,390 (36,687) - (36,687)
Profit for the year - - 94,812 1,956 96,768
Ordinary dividend paid - - - (1,334) (1,334)
---------- ---------- ---------- ---------- ----------
Balance at 31 May 2007 21,657 23,759 287,650 6,634 339,700
====== ====== ====== ====== ======
Consolidated
Year ended 31 May 2006
Called up Capital Other
share
redemption capital Revenue
capital
reserve reserves reserve Total
£'000
£'000 £'000 £'000 £'000
Balance at 31 May 2005 25,414 20,002 167,325 5,330 218,071
Buy-backs of ordinary shares (367) 367 (2,962) - (2,962)
Profit for the year - - 65,162 1,843 67,005
Ordinary dividend paid - - - (1,161) (1,161)
---------- ---------- ---------- ---------- ----------
Balance at 31 May 2006 25,047 20,369 229,525 6,012 280,953
====== ====== ====== ====== ======
Company
Year ended 31 May 2007
Called up Capital Other
share
redemption capital Revenue
capital
reserve reserves reserve Total
£'000
£'000 £'000 £'000 £'000
Balance at 31 May 2006 25,047 20,369 231,792 3,745 280,953
Buy-backs of ordinary shares (3,390) 3,390 (36,687) - (36,687)
Profit for the year - - 94,812 1,956 96,768
Ordinary dividend paid - - - (1,334) (1,334)
---------- ---------- ---------- ---------- ----------
Balance at 31 May 2007 21,657 23,759 289,917 4,367 339,700
====== ====== ====== ====== ======
Company
Year ended 31 May 2006
Called up Capital Other
share
redemption capital Revenue
capital
reserve reserves reserve Total
£'000
£'000 £'000 £'000 £'000
Balance at 31 May 2005 25,414 20,002 169,594 3,061 218,071
Buy-backs of ordinary shares (367) 367 (2,962) - (2,962)
Profit for the year - - 65,160 1,845 67,005
Ordinary dividend paid - - - (1,161) (1,161)
---------- ---------- ---------- ---------- ----------
Balance at 31 May 2006 25,047 20,369 231,792 3,745 280,953
====== ====== ====== ====== ======
Page 5 of 9
THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
Unaudited Preliminary Group Results for the year ended 31 May 2007
Consolidated and Parent Company Balance Sheets
at 31 May 2007
Consolidated Consolidated Company Company 2006
2007 2006 2007 £'000
£'000 £'000 £'000
Non current assets
Investments held at fair value
through profit or loss 380,616 317,663 382,883 319,930
----------- ----------- ----------- -----------
Current assets
Other receivables 1,932 2,266 1,932 2,266
Cash and cash equivalents 1,360 958 1,360 958
---------- ---------- ---------- ----------
3,292 3,224 3,292 3,224
---------- ---------- ---------- ----------
Total assets 383,908 320,887 386,175 323,154
---------- ---------- ---------- ----------
Current liabilities
Other payables (4,153) (925) (6,420) (3,192)
Bank loans (20,046) (19,000) (20,046) (19,000)
---------- ---------- ---------- ----------
(24,199) (19,925) (26,466) (22,192)
---------- ---------- ---------- ----------
Total assets less current liabilities 359,709 300,962 359,709 300,962
Non current liabilities
Financial liabilities (20,009) (20,009) (20,009) (20,009)
---------- ---------- ---------- ----------
Net assets 339,700 280,953 339,700 280,953
====== ====== ====== ======
Equity attributable to equity shareholders
Called up share capital 21,657 25,047 21,657 25,047
Capital redemption reserve 23,759 20,369 23,759 20,369
Retained earnings
Other capital reserves 287,650 229,525 289,917 231,792
Revenue reserve 6,634 6,012 4,367 3,745
---------- ---------- ----------- -----------
Total equity 339,700 280,953 339,700 280,953
====== ====== ====== ======
Net asset value per
ordinary share 392.1p 280.4p 392.1p 280.4p
====== ====== ====== ======
Page 6 of 9
THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
Unaudited Preliminary Group Results for the year ended 31 May 2007
Consolidated and Parent Company Cash Flow Statements
for the year ended 31 May 2007
Year ended Year ended
31 May 2007 31 May 2006
Consolidated Company Consolidated Company
£'000 £'000 £'000 £'000
Operating activities
Profit before taxation 96,768 96,768 67,005 67,005
Add: interest paid 3,128 3,128 2,557 2,557
Less: gains on investments held at fair value
through profit or loss (97,162) (97,162) (65,745) (65,743)
Less: net sales/(purchases) of investments held
at fair value though profit or loss 34,213 34,213 (6,860) (6,860)
Increase in other receivables (158) (158) (423) (423)
Decrease/(increase) in amounts due from brokers 494 494 (690) (690)
Increase in other payables 1,793 1,793 412 410
Increase/(decrease) in amounts due to brokers 1,363 1,363 (47) (47)
---------- --------- ---------- ---------
Net cash inflow/(outflow) from operating
activities before interest and taxation 40,439 40,439 (3,791) (3,791)
Interest paid (3,128) (3,128) (2,557) (2,557)
Taxation on investment income (2) (2) (7) (7)
--------- ---------- --------- ----------
Net cash inflow/(outflow) from operating activities 37,309 37,309 (6,355) (6,355)
===== ===== ===== =====
Financing activities
Equity dividend paid (1,334) (1,334) (1,150) (1,150)
Buy-backs of ordinary shares (36,615) (36,615) (2,962) (2,962)
Drawn down of loans 1,046 1,046 11,786 11,786
--------- -------- --------- --------
Net cash (outflow)/inflow from financing (36,903) (36,903) 7,674 7,674
===== ===== ===== =====
Increase in cash and cash equivalents 406 406 1,319 1,319
Cash and cash equivalents at the start of the year 958 958 (361) (361)
Exchange movements (4) (4) - -
--------- -------- --------- --------
Cash and cash equivalents at
the end of the year 1,360 1,360 958 958
===== ===== ===== =====
Page 7 of 9
THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
Unaudited Preliminary Group Results for the year ended 31 May 2007
Notes to the Accounts
1. Accounting Policies
(a) Basis of preparation
The consolidated financial information for the year ended 31 May 2007 has been prepared in
accordance with International Financial Reporting Standards ('IFRS'), and with those parts of the
Companies Act 1985 applicable to companies reporting under IFRS. These comprise standards and
interpretations approved by the International Accounting Standards Board ('IASB'), together with
interpretations of the International Accounting Standards and Standing Interpretations Committee
approved by the International Accounting Standards Committee ('IASC') that remain in effect, to
the extent that IFRS have been adopted by the European Union.
The accounts have been prepared on the historical cost basis, except for the revaluation of
certain financial instruments. The principal accounting policies adopted are those used for the
year ended 31 May 2006. Where presentational guidance set out in the Statement of Recommended
Practice ('the SORP') for investment trusts issued by the Association of Investment Companies ('
the AIC') in December 2005 is consistent with the requirements of IFRS, the directors have sought
to prepare the financial statements on a basis consistent with the recommendations of the SORP.
1. (b) Basis of consolidation
The Group accounts consolidate the accounts of the Company and of its wholly owned subsidiary
undertaking, Henderson Smaller Companies Finance Limited. The inter-group balances are eliminated on
consolidation.
Page 8 of 9
THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
Unaudited Preliminary Group Results for the year ended 31 May 2007
Notes to the Accounts, continued
2. Earnings per ordinary share
The earnings per ordinary share figure is based on the net gains for the year of £96,768,000 (2006:
£67,005,000) and on 92,418,217 (2006: 100,827,720) ordinary shares, being the weighted average number of
ordinary shares in issue during the year.
The earnings per ordinary share figure detailed above can be further analysed between revenue and
capital, as below.
The Company has no securities in issue that could dilute the return per ordinary share. Therefore the
basic and diluted earnings per ordinary share are the same.
31 May 31 May
2007 2006
£'000 £'000
Net revenue profit 1,956 1,843
Net capital profit 94,812 65,162
-------- --------
Net total profit 96,768 67,005
===== =====
Weighed average number of
ordinary shares in issue during
the year 92,418,217 100,827,720
pence pence
Revenue earnings per ordinary
share 2.12 1.83
Capital earnings per ordinary
share 102.59 64.62
--------- ---------
Total earnings per
ordinary share 104.71 66.45
===== =====
3. Ordinary share capital
At 31 May 2007 there were 86,626,030 ordinary shares in issue (2006: 100,186,282). During the year ended
31 May 2007 the Company bought 13,560,252 of its own issued ordinary shares in the market for
cancellation (2006: 1,470,000).
4. Net asset value per share
The net asset value per ordinary share is based on the net assets attributed to the ordinary shares of
£339,700,000 (2006: £280,953,000) and on the 86,626,030 ordinary shares in issue at 31 May 2007 (2006:
100,186,282).
Page 9 of 9
THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
Unaudited Preliminary Group Results for the year ended 31 May 2007
5. Dividend
Subject to approval at the annual general meeting, the recommended final dividend of 1.70p per ordinary
share will be paid on 5 October 2007 to shareholders on the register of members at the close of business
on 31 August 2007.
6. 2007 accounts
The preliminary figures for the year ended 31 May 2007, which do not constitute statutory accounts, are an
extract from the Group's draft accounts for the year. These accounts have not yet been delivered to the
Registrar of Companies, nor have the auditors yet reported on them.
7. 2006 accounts
The figures and financial information for the year ended 31 May 2006 are an extract of the latest
published accounts and do not constitute the statutory accounts for that year. Those 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.
8. Annual report and AGM
The full annual report and accounts will be posted to shareholders in mid-August 2007 and copies will be
available thereafter from the Secretary at the Company's Registered Office,
4 Broadgate, London EC2M 2DA.
The Annual General Meeting will be held on Friday 28 September 2007 at 2.00 pm.
For further information please contact:
Neil Hermon
Fund Manager
The Henderson Smaller Companies Investment Trust plc
Telephone: 020 7818 4351
Theresa Wat
Deputy Fund Manager
The Henderson Smaller Companies Investment Trust plc
Telephone: 020 7818 4644
James de Sausmarez
Head of Investment Trusts
Henderson Global Investors
Telephone: 020 7818 3349
Sarah Gibbons-Cook
Investor Relations and PR Manager
Henderson Global Investors
Telephone: 020 7818 3198
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