Final Results
Herald Investment Trust PLC
22 February 2001
PRELIMINARY STOCK EXCHANGE ANNOUNCEMENT
HERALD INVESTMENT TRUST plc
Results for the year to 31 December 2000
22 February 2001
BOARD STATEMENT
This is Herald Investment Trust's seventh statement, and in a disappointing
and difficult year the fund delivered a creditable performance. Diluted net
asset value per share has only declined by 12.7% during the year, although
this was alleviated, in share price terms, to a lesser decline of 3.9%,
reflecting an increase in the share price premium to assets. In contrast the
most relevant index, the Hoare Govett Smaller Companies Index, declined 2.2%.
In comparison, in 1999 the Trust outperformed this benchmark by 93.3%, and
has cumulatively outperformed by nearly 300%. The 2000 decline reflected the
hangover following a period of wild speculative froth in certain stocks
within our chosen remit. On balance we were lucky to use that bubble as an
opportunity to realise some supernormal profits on valuations that
fundamentals did not justify. The market is becoming much more rational. The
US index, which is most relevant to our US portfolio, is the Russell 2000
Technology Index, which fell 40.4%, albeit only 35.8% in £ terms. Overall we
are only 0.7% behind our hybrid benchmark index (2/3 Hoare Govett Smaller
Companies Index (extended capital gains ex. investment companies and 1/3
Russell 2000 (small cap) Technology Index (in sterling terms)).
The dividend of 0.85p per share is maintained on slightly improved profits.
We have continued with our policy of expensing all costs, and not charging
any fees to capital.
For long periods of the year the Trust achieved the distinction of being the
best performing Trust over 5 years in published performance tables. The Trust
no longer features in these tables because the AITC thought it was
inappropriate to be classified as a UK smaller companies Investment Trust.
About 60% of the equities held are UK small companies, and there remains a
stronger overlap in stock terms with these funds than the global technology
funds with which we are sometimes compared. This is evidenced by a much
stronger performance than any of the technology indices (techMARK -32.2%,
FTSE IT Index -44.3%, NASDAQ -39.3%). We remain of the view that we are
primarily a UK smaller companies Investment Trust, albeit only investing in a
subset of that remit. We believe that there are still opportunities to
perform in our defined remit. Some tangible problems remain but we continue
to believe there are opportunities to invest in solid growing businesses -
many more now than a year ago.
Martin Boase
Chairman
21 February 2001
Statistics and Performance Report
At 31 31 Capital Capital
inception December December Performance Performance
16 1999 2000 since 31 since
February December inception
1994 1999 (%) (%)
Basic NAV 98.7p* 517.4p 447.5p -13.5 +353.4
Diluted NAV 98.7p* 494.2p 431.4p -12.7 +337.1
(FRS14)
Fully diluted 98.7p* 494.4p 432.0p -12.6 +337.7
NAV
FTSE 100 3,417.7 6,930.2 6,223.2 -10.2 +82.1
FTSE All-share 1,717.8 3,242.1 2,983.8 -8.0 +73.7
FTSE Small cap 2,076.1 3,097.8 3,183.3 +2.8 +53.3
HGSC (ext. 1,750.0 2,762.9 2,702.2 -2.2 +54.4
cap gains ex
investment
co's)
Share price 90.9p 511.0p 491.0p -3.9 +440.2
Warrant price 45.5p 411.0p 382.5p -6.9 +740.7
Premium to diluted NAV (FRS14) per share as at 31 December 2000 13.8%
Number of Equity Holdings at 31 December 2000 249
* 100p is shareholders' subscription price before launch
costs of 1.3p
- ends -
For further information please contact:
Ms Katie Potts, Manager
Herald Investment Trust plc 020 7553 6300
Baillie Gifford & Co.
Secretaries 0131 222 4000
HERALD INVESTMENT TRUST plc
The following is the unaudited preliminary statement for the year to 31
December 2000 which was approved by the Board on 21 February 2001. The
Directors of Herald Investment Trust plc are recommending to the Annual
General Meeting of the Company to be held on 18 April 2001 the payment of a
final dividend of 0.85p net (0.85p net last year) per ordinary share for the
year ended 31 December 2000.
STATEMENT OF TOTAL RETURN
(unaudited and incorporating the revenue account*)
For the year ended For the year ended
31 December 2000 31 December 1999
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 (restated)+ £'000 (restated)+
£'000 £'000
(Losses)/gains - (55,069) (55,069) - 258,619 258,619
on
investments
Unrealised - 110 110 - (343) (343)
gain/(loss)
on loan
Currency - 79 79 - (53) (53)
gains/(losses)
Income (note 1) 6,508 - 6,508 3,658 - 3,658
Investment (5,230) - (5,230) (2,580) - (2,580)
management
fee
Other (390) - (390) (276) - (276)
administrative
expenses
Net return 888 (54,880) (53,992) 802 258,223 259,025
before
finance
costs and
taxation
Finance (84) - (84) (74) - (74)
costs of
borrowings
Return on 804 (54,880) (54,076) 728 258,223 258,951
ordinary
activities
before
taxation
Tax on (26) - (26) (11) - (11)
ordinary
activities
Return on 778 (54,880) (54,102) 717 258,223 258,940
ordinary
activities
after
taxation
Ordinary (713) - (713) (705) - (705)
dividend
payable
(note 2)
Transfer 65 (54,880) (54,815) 12 258,223 258,235
to/(from)
reserves
Return per
Ordinary
share (note 3)
Basic 0.93p (65.67p) (64.74p) 0.86p 311.33p 312.19p
Diluted 0.89p (63.03p) (62.14p) 0.83p 300.53p 301.36p
Dividend per 0.85p 0.85p
Ordinary
share
* The revenue column of this statement is the revenue account of the Company.
All revenue and capital items in the above statement derive from continuing
operations.
+Restated to comply with FRS16 'Current Tax'.
HERALD INVESTMENT TRUST plc
SUMMARISED BALANCE SHEET
at 31 December 2000
(unaudited)
31 December 2000 31 December 1999
£'000 £'000
NET ASSETS
Investments at market value 365,575 405,301
Net liquid assets 13,032 27,319
Total assets (before deduction of 378,607 432,620
bank loan)
Bank loan (note 4) (3,233) (3,343)
375,374 429,277
CAPITAL AND RESERVES
Called-up share capital 20,968 20,740
Capital reserves 352,694 406,890
Revenue reserve 1,712 1,647
EQUITY SHAREHOLDERS' FUNDS 375,374 429,277
Net asset value per ordinary share
(note 5)
Basic 447.55p 517.44p
Diluted (FRS14) 431.43p 494.22p
Fully diluted 431.98p 494.40p
Ordinary shares in issue 83,873,599 82,961,686
DISTRIBUTION OF ASSETS
at 31 December 2000
(unaudited)
31 December 2000 31 December 1999
% %
Equities: United Kingdom 55.7 62.9
Continental Europe 7.2 6.8
Americas 16.6 16.1
Japan 0.6 0.3
Asia Pacific 4.5 6.7
84.6 92.8
UK bonds 12.0 0.9
Net liquid assets 3.4 6.3
Total assets (before deduction of 100.0 100.0
bank loan)
HERALD INVESTMENT TRUST plc
SUMMARISED CASH FLOW STATEMENT
(unaudited)
Year to Year to
31 December 2000 31 December 1999
£'000 £'000 £'000 £'000
NET CASH INFLOW FROM 348 1,013
OPERATING ACTIVITIES
NET CASH OUTFLOW (83) (36)
FROM SERVICING OF
FINANCE
TOTAL TAX RECOVERED - 66
FINANCIAL INVESTMENT
Purchase of (212,244) (69,001)
investments
Sale of investments 196,392 87,198
Currency movement 79 (53)
NET CASH (15,773) 18,144
(OUTFLOW)/INFLOW
FROM FINANCIAL
INVESTMENT
EQUITY DIVIDEND PAID (705) (746)
NET CASH (16,213) 18,441
(OUTFLOW)/INFLOW
BEFORE USE OF LIQUID
RESOURCES AND
FINANCING
MANAGEMENT OF LIQUID
RESOURCES
Increase in term (4,000) -
deposits
FINANCING
Issue of Ordinary 912 60
shares
Currency loan - 3,000
NET CASH INFLOW FROM 912 3,060
FINANCING
(DECREASE)/INCREASE (19,301) 21,501
IN CASH
RECONCILIATION OF
NET CASH FLOW TO
MOVEMENT IN NET FUNDS
(Decrease)/increase (19,301) 21,501
in cash in period
Increase in short 4,000 -
term investments
Increase in bank loan - (3,000)
Exchange movement 110 (343)
MOVEMENT IN NET (15,191) 18,158
FUNDS IN PERIOD
NET FUNDS AT 1 24,188 6,030
JANUARY 2000
NET FUNDS AT 31 8,997 24,188
DECEMBER 2000
HERALD INVESTMENT TRUST plc
NOTES
31 December 2000 31 December 1999
£'000 £'000
1. Income
Income from investments and interest receivable 6,462 3,636
Other income 46 22
2. The interim dividend will be paid on 20 April 2001 to all shareholders on the
register at the close of business on 23 March 2001.
3. Return per ordinary share
Revenue return 778 717
Capital return (54,880) 258,223
The basic return per ordinary share is based on the above totals of revenue
and capital and on 83,571,294 ordinary shares (1999 - 82,941,828) being the
weighted average number of ordinary shares in issue during the year.
The diluted returns per ordinary share are calculated on the above totals of
revenue and capital and the weighted average number of warrants in issue
during the year adjusted by the difference between the average price of the
ordinary shares during the year and the subscription price of 100p, giving a
weighted average of 87,065,313 (1999 - 85,921,489) shares.
4. A five year loan was arranged with The Royal Bank of Scotland plc in 1999.
The loan expires on 7 January 2004. At 31 December 2000 and 1999 there were
outstanding drawings of yen 551,550,000.
5. Net asset value per ordinary share is based on net assets of £375,374,000
(1999 - £429,277,000) and 83,873,599 (1999 - 82,961,686) ordinary shares,
being the number of ordinary shares in issue at each date.
The diluted net asset per ordinary share, calculated in accordance with
Financial Reporting Standard 14 (FRS 14) is 431.43p (1999 - 494.22p). This is
based on net assets of £375,374,000 (1999 - £429,277,000) and on 87,006,178
(1999 - 86,859,078) ordinary shares, being the number of ordinary shares in
issue at the year end plus the notional number of ordinary shares that would
have been issued for no consideration using a year end share price of 491.0p
(1999 - 511.0p).
The fully diluted net asset value per ordinary share has been calculated on
the assumption that the warrants in issue were fully exercised at the year
end at 100p each resulting in net assets of £379,308,000 (1999 -
£434,123,000) and 87,807,349 (1999 - 87,807,349) ordinary shares in issue.
During the year 911,913 warrants were exercised at 100p. The number of
outstanding warrants at 31 December 2000 was 3,933,750 (1999 - 4,845,663).
6. At the Annual General Meeting held in April 2000 the Company was granted
authority to purchase up to 12,435,956 ordinary shares (equivalent to 14.99%
of its then issued share capital). No Ordinary shares were bought back during
the year and therefore at 31 December 2000 the Company's authority to buy
back shares remained unchanged at 12,435,956.
HERALD INVESTMENT TRUST plc
NOTES (Ctd)
7. Change in Accounting Policy
The financial statements for the year to 31 December 2000 have been prepared
on the basis of the accounting policies set out in the Company's financial
statements at 31 December 1999, except for the adoption of FRS16 'Current
Tax'.
The change introduced by FRS16 accounting for UK dividend income net of tax
has been reflected in the 2000 financial statements with corresponding
changes to the comparative figures. In the year to 31 December 2000 this
reduced gross income and taxation equally by £209,000 (1999 - £244,000); the
net effect has no impact on the revenue return attributable to equity
shareholders.
8. The financial information set out above does not constitute the Company's
statutory accounts for the year ended 31 December 2000. The financial
information for 1999, is derived from the statutory accounts for 1999 which
have been delivered to the Registrar of Companies. The Auditors have reported
on the 1999 accounts, their report was unqualified and did not contain a
statement under section 237(2) or (3) of the Companies Act 1985. The
statutory accounts for 2000 will be finalised on the basis of the financial
information presented in this preliminary announcement and will be delivered
to the Registrar of Companies following the Company's Annual General Meeting.
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