Interim Results - 6 Months to 30 November 1999

Henderson Smaller Cos Inv Tst PLC 20 December 1999 THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 November 1999 - We only like Smaller Companies as long as they don't stay small - We like 'thinking businesses', rich in intellectual property - We will continue to run the winners Performance over periods ended 30 November 1999 6 months 1 year 5 years Net asset value total 47.3% 69.2% 153.8% return FTSE SmallCap Index (excluding investment 13.2% 43.8% 86.3% companies) total return THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 November 1999 'Growth, Consistency, Liquidity' Financial Highlights (unaudited) 30 November 1999 30 November 1998 31 May 1999 Total net assets £780 million £ 488 million £555 million Net asset value per 457.7p 273.5p 311.8p ordinary share Performance over periods ended 30 November 1999 6 months 1 year 5 years Net asset value total 47.3% 69.2% 153.8% return FTSE SmallCap Index (excluding investment 13.2% 43.8% 86.3% companies) total return Source: AITC Services Limited THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 November 1999 Extracts from the Chairman's Statement In the six month period under review the Trust's net asset value total return was 47.3%, showing very satisfactory outperformance compared with a return of 13.2% from the FTSE SmallCap Index (excluding investment companies). The UK portfolio represented 90% of the Trust's assets at the period end. At the end of October the Board announced that, following a review of the Company's investment mandate, it intends to increase the weighting in UK listed smaller companies close to 100%. By giving sharper focus, the Company can have a wider appeal to investors, and the board is pleased to observe a strong rise in the Trust's share price and that the Trust's discount to net asset value has narrowed significantly since making the announcement. The Association of Investment Trust Companies has confirmed that the Trust will be included in its Smaller Companies: UK sector. I have for some time been emphasising that the investment policy has been to concentrate on small companies that have the potential to become big companies. These growth companies need to retain most of their earnings to fund their future growth, and hence the earnings per share of your Company has continued to fall. In accordance with previous indications, the Board has decided that there will be no interim dividend and shareholders should expect a dividend of not more than 0.5p for the full year which will be partly funded from revenue reserves. In future years it is quite possible that no dividends will be paid while we concentrate on total return to investors. The UK portfolio has continued to be highly focused, and at the period end had 84 holdings. We have been looking to sectors offering long term growth, resulting in large weightings in Information Technology, Telecommunications and Media. We read a great deal about the convergence of voice, data and media and our portfolio has a weighting in this area of some 58%. The techMARK indices were launched on 4 November 1999 by the London Stock Exchange, to highlight the importance of emerging UK technology companies as a sector group in their own right. We have been heavily weighted in the technology area for a number of years, and some 50% of the portfolio is in the new techMARK All-Share Index. We have holdings in many exciting growth companies and Colt Telecommunications, our largest investment and a constituent of the FTSE 100 Index for some time, has now been joined in the Index by two of our other top ten holdings, namely ARM and CMG. Overall the portfolio is very heavily weighted in services, as the momentum in the world economy continues to shift decisively away from transactional businesses towards ones that require the creation of lasting customer relationships. Our companies tend to be 'thinking businesses' and are rich in intellectual capital. There continues to be very little pricing power in the traded goods area which we have largely avoided. We only like small companies if they don't stay small. We like to run our winners and want to see more of our investments moving from small beginnings into the FTSE 100 Index as the Trust itself moves forward. P H G Cadbury Chairman 20 December 1999 THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 November 1999 Group Statement of Total Return (incorporating the revenue account) for the half year ended 30 November 1999 Half year ended Half year ended 30 November 1999 30 November (unaudited) 1998 unaudited) Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 Total capital gains/(losses) on Investments - 245,606 245,606 - (125,510) (125,510) Income from fixed 3,147 - 3,147 5,643 - 5,643 asset investments Other interest receivable and similar income 175 - 175 205 - 205 ------ ------ ------ ------ ------ ----- Gross revenue and capital gains/(losses) 3,322 245,606 248,928 5,848 (125,510)(119,662) Management fee (1,071) - (1,071) (1,045) - (1,045) Other administrative (201) - (201) (255) - (255) expenses ------ ------ ------ ------ ------ ------ Net return/(loss) on ordinary activities before interest payable and taxation 2,050 245,606 247,656 4,548 (125,510) (120,962) Interest payable (1,109) - (1,109) ( 1,180) - (1,180) ------ ------ ------ ------- ------ ------ Net return/(loss)on ordinary Activities before 941 245,606 246,547 3,368 (125,510) (122,142) taxation Taxation on net return on Ordinary (328) - (328) (896) - (896) activities ------ ------ ------ ------ ------ ------ Net return/(loss)on ordinary Activities after 613 245,606 246,219 2,472 (125,510) (123,038) taxation Appropriations-dividends Cumulative preference - - - (14) - (14) stock ------ ------ ------ ------ ------ ------ Net return/(loss) attributable to the ordinary 613 245,606 246,219 2,458 (125,510) (123,052) shareholders Dividend - ordinary shares Interim of nil (1998: - - - (2,673) - (2,673) 1.50p) Overprovision in 126 - 126 - - - prior year ------ ------ ------ ------- ------ ------ Transfer to/(from) 739 245,606 246,345 (215) (125,510) (125,725) reserves ====== ====== ====== ====== ========= ======== Return/(loss)per 0.35p 141.19p 141.54p 1.38p (70.43p) (69.05p) ordinary share ====== ====== ====== ===== ====== ====== The revenue columns of this statement represent the revenue accounts of the Group. THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 November 1999 Summary of Group Net Assets at 30 November 1999 30 30 November 31 May 1999 November 1998 1999 unaudited) (unaudited) (audited) £'000 £'000 £'000 Fixed asset investments 784,061 488,350 563,157 at valuation Net current assets 15,704 19,953 11,850 ---------- ---------- ---------- Total assets less 799,765 508,303 575,007 current liabilities Creditors: amounts falling due after More than one year (20,000) (20,000) (20,000) ---------- ---------- ----------- Total net assets 779,765 488,303 555,007 Preference stock (11) (875) (19) ---------- ---------- ----------- Net assets attributable to the ordinary Shares 779,754 487,428 554,988 ======== ======== ======= Net asset value per ordinary share after deducting prior 457.7p 273.5p 311.8p charges at par Number of ordinary 170,371,070 178,200,000 178,000,000 shares in issue Notes 1. Return per ordinary share Capital return per ordinary share is based on net capital gains for the half year of £245,606,000 (1998: net capital losses of £125,510,000) and on the weighted average number of ordinary shares in issue during the half year of 173,955,687 (1998: 178,200,000). Revenue return per ordinary share is based on the earnings attributable to the ordinary shares of £613,000 (1998: £2,458,000) and on the weighted average number of ordinary shares in issue during the half year of 173,955,687 (1998: 178,200,000). 2. Share Buybacks During the period the Group made market purchases for cancellation of 7,628,930 of its own issued ordinary shares, leaving a balance of 170,371,070 for the purposes of the calculation of the net asset value per ordinary share. 3. Basis of consolidation The Group accounts consolidate the accounts of the Company and its wholly owned subsidiary undertaking, Henderson Smaller Companies Finance Limited. 4. Accounts for the year ended 31 May 1999 The figures and financial information for the year ended 31 May 1999 are an extract of the latest published accounts of the Group 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 237(3) of the Companies Act 1985. 5. Interim Dividend No interim dividend has been declared (1998: 1.50p per ordinary share). The buy back 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, has resulted in a write back of £126,000 for dividends accrued in the previous financial year. 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 conducts its affairs as an investment trust for taxation purposes under Section 842 of the Income and Corporation Taxes Act 1988, and the Articles 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 £24,060,000 (1998: losses of £15,658,000). 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. Interim Report The full interim report will be posted to shareholders in February 2000 and copies will be available thereafter from the Secretary at the Company's Registered Office, 3 Finsbury Avenue, London EC2M 2PA. THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 November 1999 Largest Investments The 50 largest investments as at 30 November 1999 were as follows: Market value Market value 30 November 30 November 1999 1999 £'000 £'000 Colt Telecommunications 71,010 Trafficmaster 10,944 ARM 36,954 Capital Radio 10,880 Fitness First 23,065 Admiral 10,752 Psion 21,666 Financial Objects 10,415 BTG 20,562 Taylor & Francis 10,330 CMG 20,238 Shire Pharmaceutical 10,027 London Bridge Software 20,047 Filtronic 9,150 FI Group 19,361 Torotrak 8,859 Informa 17,501 Kewill Systems 8,812 Druid 16,575 Ashtead 8,700 Taylor Nelson Sofres 15,690 Tilbury Douglas 7,700 RM 15,550 Firstgroup 6,966 Diagonal 15,175 ITE Group 6,896 Helphire 14,865 Baltimore Technologies 6,754 Parity 13,425 ICM Computer 6,533 Euro Sales Finance 13,406 Games Workshop 6,181 GWR 13,331 Metal Bulletin 6,131 Clinton Cards 12,832 Exchange Holdings 5,980 Holmes Place 12,541 N Brown 5,800 Pizza Express 11,542 Infobank 5,231 Luminar 11,207 Redstone Telecom 5,174 Galen 11,156 British Borneo Oil&Gas 5,049 Itnet 11,130 Trifast 5,025 Guardian IT 11,050 Mentmore Abbey 4,605 Trinity Mirror 10,990 Kunick 4,302 These investments total £648,065,000 or 82.65% of the portfolio. For further information please contact : John Alexander/Stephen Westwood The Henderson Smaller Companies Investment Trust plc Telephone : 0171 410 4340/0171 477 5517 or Vicki Staveacre/Martin Wade Henderson Press Office Telephone: 0171 410 4222

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