Interim Results
Henderson Smaller Cos Inv Tst PLC
13 January 2003
HENDERSON GLOBAL INVESTORS
THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
EMBARGOED FOR 7.00 AM ON MONDAY 13 JANUARY 2003
13 January 2003
THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
Unaudited interim results for the half year ended 30 November 2002
The Chairman's Statement:
In what was an extremely difficult period for equity markets globally, the
Trust's net asset value per share fell 40.6% in the six months to 30 November
2002, compared to a drop of 24.4% in the FTSE SmallCap Index (excluding
investment companies). The principal reason for this underperformance was the
high portfolio weighting in information technology and media companies. These
areas continued to suffer from poor trading conditions, weak business confidence
and de-rating from excessive valuation levels.
Following two years of underperformance, and recognising that market conditions
are likely to remain difficult for the foreseeable future, the Board decided
that a fresh approach was required to the management of the Trust. The principal
change was the appointment of Neil Hermon as Manager of the Trust in November
2002. He joined Henderson Global Investors from Morley Fund Management where,
over eight years, he was responsible for some extremely successful smaller
company funds. He is assisted by Theresa Wat who moved from Morley with him.
The appointment of a new Manager will result in a degree of change within the
composition of the portfolio. However, the Trust will continue to stick to its
philosophy of searching out smaller companies with above average growth
potential. Allied to this approach will be a more pragmatic attitude to
valuation, ensuring that this growth is bought at a reasonable price. The Trust
will focus on companies with solid business models, strong management, sound
financial structure and the potential to produce a positive earnings surprise.
In addition the Trust will have strong selling disciplines.
The Trust will continue its policy of buying back its own shares for
cancellation, to the benefit of shareholders generally. During the period 13.5
million shares were bought back at discounts to net asset value in excess of
17%.
Initial progress since the appointment of the new Manager has been encouraging.
During November the Trust's net asset value per share rose by 9.9%, compared to
a rise in the FTSE SmallCap Index (excluding investment companies) of 7.8%.
Significant re-structuring was undertaken in the month, with 18% by value of the
investments in the portfolio sold and reinvested. Principal changes included a
reduction in the proportion invested in the technology sector from 24% to 19%
and a rise in the proportion collectively invested in the construction, real
estate and insurance sectors from 6% to 14%.
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THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
Unaudited interim results for the half year ended 30 November 2002
At the annual general meeting on 27 September I announced a number of changes,
in addition to the appointment of Neil Hermon as Manager. The management fee
arrangements were amended with effect from 1 October 2002 so that the 0.4% per
annum rate remains but is applied to the total assets at the end of the
preceding quarter. The immediate result is to reduce our current expenses. With
effect from the annual general meeting to be held in 2004, and thereafter every
three years, shareholders will vote on the continued life of the Trust.
James Nelson joined the Board at the end of September. He has deep experience of
investments and investment management and is a former Chairman of the British
Venture Capital Association. John Alexander left the Board on 15 November 2002
after fifteen years as Manager. I am delighted to report that Dudley Fishburn
has agreed to succeed me as Chairman on 21 March 2003 when I shall retire as a
director.
We share the disappointment felt by shareholders but also feel that we have put
in place the building blocks to improve investment performance. It remains an
uncertain climate for smaller companies, but we believe that a carefully
selected portfolio of quality UK smaller companies can provide good long term
growth for investors.
P H G Cadbury
Chairman
10 January 2003
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THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
Unaudited interim results for the half year ended 30 November 2002
Group Statement of Total Return (incorporating the revenue account)+
for the half year ended 30 November 2002
Half year ended Half year ended Year ended
30 November 2002 30 November 2001 31 May 2002 (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Total
capital
losses from
investments - (100,987) (100,987) - (167,121) (167,121) - (240,230) (240,230)
Income from 1,869 - 1,869 2,101 - 2,101 4,592 - 4,592
fixed asset
investments
Other
interest
receivable
and similar
income 20 - 20 89 - 89 111 - 111
--------- --------- --------- --------- ---------- ---------- ---------- ---------- ---------
Gross 1,889 (100,987) (99,098) 2,190 (167,121) (164,931) 4,703 (240,230) (235,527)
revenue and
capital
losses
Management (796) - (796) (1,597) - (1,597) (2,734) - (2,734)
fee
Other (221) - (221) (204) - (204) (352) - (352)
administrative
expenses
Irrecoverable (145) - (145) (267) - (267) (416) - (416)
VAT
--------- --------- --------- --------- ---------- ---------- ---------- ---------- ---------
Net
return/(loss)
on
ordinary
activities
before
interest
payable
and taxation 727 (100,987) (100,260) 122 (167,121) (166,999) 1,201 (240,230) (239,029)
Interest (1,145) - (1,145) (1,141) - (1,141) (2,381) - (2,381)
payable
--------- --------- --------- --------- ---------- ---------- ---------- ---------- ---------
Net loss on
ordinary
activities (418) (100,987) (101,405) (1,019) (167,121) (168,140) (1,180) (240,230) (241,410)
before
taxation
Taxation on
net return
on ordinary
activities 1 - 1 - - - (1) - (1)
--------- --------- --------- --------- ---------- ---------- ---------- ---------- ---------
Net loss on
ordinary
activities (417) (100,987) (101,404) (1,019) (167,121) (168,140) (1,181) (240,230) (241,411)
after
taxation
Final 24 - 24 26 - 26 (654) - (654)
dividend:
0.50p (note
4)
--------- --------- --------- --------- ---------- ---------- ---------- ---------- ----------
Transfer (393) (100,987) (101,380) (993) (167,121) (168,114) (1,835) (240,230) (242,065)
from
reserves
========= ========= ========= ========= ========== ========== ========== ========== ==========
Loss per (0.33)p (80.18)p (80.51)p (0.66)p (107.93)p (108.59)p (0.77)p (157.34)p (158.11)p
ordinary
share (note
1) ========= ========= ========= ========= ========== ========== ========== ========== ==========
+ The revenue columns of this statement represent the consolidated revenue
accounts of the Group (see note 3).
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THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
Unaudited interim results for the half year ended 30 November 2002
Group Balance Sheet
at 30 November 2002
30 November 2002 30 November 2001 31 May 2002
(audited)
£'000 £'000 £'000
Fixed asset investments
Listed investments at market value 139,017 346,890 251,208
AIM investments at market value 8,657 25,615 20,248
Unquoted investments at 896 2,250 1,907
directors' valuation
---------- ---------- ----------
148,570 374,755 273,363
---------- ---------- ----------
Current assets
Debtors 6,103 1,155 1,815
Cash at bank and short term deposits 2,465 575 40
---------- ---------- ----------
8,568 1,730 1,855
Creditors : amounts falling due within
one year (5,397) (9,774) (8,935)
---------- ---------- ----------
Net current assets/(liabilities) 3,171 (8,044) (7,080)
---------- ---------- ----------
Total assets less current liabilities 151,741 366,711 266,283
Creditors: amounts falling due after
more than one year (20,000) (20,000) (20,000)
---------- ---------- ----------
Total net assets 131,741 346,711 246,283
---------- ---------- ----------
Capital and reserves
Called-up share capital 30,635 38,142 34,004
Other capital reserves 97,692 303,920 208,472
Revenue reserve 3,414 4,649 3,807
---------- ---------- ----------
Shareholders' funds (including non-
equity interests of £9,000
2001: £9,000) 131,741 346,711 246,283
========== ========== ==========
Net asset value per ordinary share 107.5p 227.3p 181.1p
========== ========== ==========
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THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
Unaudited interim results for the half year ended 30 November 2002
Group Cash Flow Statement
for the half year ended 30 November 2002
Half year ended Year ended
Half year ended 30 November 2001 31 May 2002
30 November 2002 £'000 (audited)
£'000 £'000
Net cash inflow from operating activities 1,691 846 1,282
Net cash outflow from servicing of finance (101) (1,139) (2,361)
Net tax recovered 1 - -
Net cash inflow/(outflow) from
financial investment 22,631 (2,048) 21,889
Equity dividends paid (656) (784) (784)
Management of liquid resources - 10,000 10,000
---------- ---------- ----------
Net cash inflow before financing 23,566 6,875 30,026
Net cash outflow from financing (21,143) (13,176) (36,863)
---------- ---------- ----------
Increase/(decrease) in cash 2,423 (6,301) (6,837)
========== ========== ==========
Reconciliation of net revenue return to net cash inflow from operating activities
Net revenue before interest payable and taxation 727 122 1,201
Decrease/(increase) in accrued income 793 683 (73)
Decrease in debtors 166 16 87
Increase in creditors 5 25 67
---------- ---------- ----------
Net cash inflow from operating activities 1,691 846 1,282
========== ========== ==========
Reconciliation of net cash flow to movement in net debt
Increase/(decrease) in cash as above 2,423 (6,301) (6,837)
Cash outflow/(inflow) from debt financing 8,000 (5,200) (8,000)
Cash inflow from management of liquid resources - (10,000) (10,000)
---------- ---------- ----------
Change in net debt resulting from cash flows 10,423 (21,501) (24,837)
Exchange movements 2 - 1
---------- ---------- ----------
Movement in net debt during the period 10,425 (21,501) (24,836)
Net debt at the beginning of the period (27,960) (3,124) (3,124)
---------- ---------- ----------
Net debt at the end of the period (17,535) (24,625) (27,960)
========== ========== ==========
Represented by:
Cash at bank and short term deposits 2,465 575 40
Debt falling due within one year - (5,200) (8,000)
Debt falling due after more than one year (20,000) (20,000) (20,000)
---------- ---------- ----------
(17,535) (24,625) (27,960)
========== ========== ==========
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THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
Unaudited interim results for the half year ended 30 November 2002
Notes
1. Loss per ordinary share
Revenue loss per ordinary share is based on the losses attributable to
the ordinary shares of £417,000 (half year ended 30 November 2001:
£1,019,000; year ended 31 May 2002: £1,181,000) and on the weighted
average number of ordinary shares in issue during the half year of
125,954,417 (half year ended 30 November 2001: 154,839,400; year ended
31 May 2002: 152,680,943).
Capital loss per ordinary share is based on the net capital losses for
the half year of £100,987,000 (half year ended 30 November 2001:
£167,121,000; year ended 31 May 2002: £240,230,000) and on the weighted
average number of ordinary shares in issue during the half year of
125,954,417 (half year ended 30 November 2001: 154,839,400; year ended
31 May 2002: 152,680,943).
2. Net asset value per ordinary share
The net asset value per ordinary share is based on the net assets
attributable to the ordinary shares of £131,732,000 (30 November 2001:
£346,702,000; 31 May 2002 £246,274,000) and on the 122,501,840 ordinary
shares in issue (30 November 2001: 152,530,880; 31 May 2002:
135,980,999).
3. Basis of consolidation
The Group accounts consolidate the accounts of the Company and of its
wholly owned subsidiary undertaking, Henderson Smaller Companies Finance
Limited.
4. Interim Dividend
No interim dividend has been declared (2001: nil).
The buy-backs of the Company's ordinary shares, after 31 May 2002 but
before the date of the final dividend for the year ended on that date,
resulted in a write-back of £24,000 (2001: £26,000) for dividends
accrued in the year ended 31 May 2002 (2001: year ended 31 May 2001) but
not in the event payable.
The final dividend accrued in respect of the year ended 31 May 2002, at
0.5p per ordinary share, amounted to £680,000. The £654,000 shown is the
sum of this figure and the £26,000 written back in respect of the year
ended 31 May 2001.
5. Accounts for the year ended 31 May 2002
The figures and financial information for the year ended 31 May
2002 are an extract from the latest published accounts of the Group 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 237(3) of the Companies Act
1985.
6. Interim Report
The full interim report will be posted to shareholders in February
2003 and copies will be available thereafter from the Secretary at the
Company's Registered Office, 4 Broadgate, London EC2M 2DA.
- 7 -
THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
Unaudited interim results for the half year ended 30 November 2002
Largest Investments
The 60 largest investments at 30 November 2002 were as follows:
Valuation at Valuation at
30 November 2002 30 November 2002
£'000 £'000
Galen 7,290 BTG 1,846
Informa 5,590 Abbot 1,758
Interserve 5,312 Rotork 1,704
Games Workshop 5,004 Parkman 1,669
Clinton Cards 4,476 Intec Telecom Systems 1,641
ITNET 4,388 Capital Radio 1,567
Helphire 3,342 *CODASciSys 1,567
Xansa 3,034 Goshawk Insurance 1,530
Pizza Express 2,965 Vardy 1,434
Metal Bulletin 2,756 Ultra Electronics 1,428
*PRI 2,727 Dicom 1,404
Fitness First 2,588 Marshalls 1,347
Game 2,585 Expro International 1,257
ICM Computer 2,519 Geest 1,241
Tribal 2,515 Parity 1,219
Diagonal 2,475 Mayborn 1,208
Taylor & Francis 2,475 Aga Foodservice 1,198
Selfridges 2,446 Enterprise Inns 1,109
Balfour Beatty 2,313 Bellway 1,092
N Brown 2,276 Meggitt 1,079
royalblue 2,228 Chrysalis 1,055
Bovis Homes 2,101 Topps Tiles 1,047
Westbury 2,089 Greene King 985
Spectris 2,054 Pillar Property 982
*Systems Union 1,998 Psion 961
Porvair 1,965 Euromoney 960
GWR 1,951 AMEC 940
Go-Ahead 1,926 SIG 922
Scipher 1,872 +Ubinetics 896
Grainger Trust 1,860 NHP 865
* Listed on the Alternative Investment Market
+ Unquoted
These investments total £127,031,000 or 85.5% of the portfolio.
- ENDS -
- 8 -
THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
Unaudited interim results for the half year ended 30 November 2002
For further information please contact:
Neil Hermon
The Henderson Smaller Companies Investment Trust plc
Telephone: 020 7818 4351
or
Stephen Westwood
Head of Investment Trusts
Henderson Global Investors
Telephone: 020 7818 5517
or
Stephen Phillips
Investor Relations Manager
Henderson Global Investors
Telephone: 020 7818 6417
or
Mark Vickery
Press Office
Henderson Global Investors
Telephone: 020 7818 4222
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