Interim Results - 6 Months to 31 October 1999

Henderson Technology Trust PLC 22 December 1999 HENDERSON TECHNOLOGY TRUST PLC Unaudited Interim Results for the six months ended 31 October 1999 - Group Net Assets increased by 32.6% over the half year and have subsequently increased by a further 45.9%. - Strong demand for high technology stocks reflected in dramatic and almost unprecedented outperformance. - By the Company's third anniversary, 13 December 1999, £1,000 invested at launch had grown to £3,875. - The Board remains very optimistic about the long term prospects for technology. - Technology remains the best-positioned industry within the global economy as we enter the new millennium. Extracts from Chairman's Statement The Company and technology investors in general, enjoyed an excellent half year to 31 October. Net assets climbed by almost a third and the share price by over 40%. The scale of the technology sector's outperformance was almost unprecedented with the World Index rising by just 3.2% (in Sterling) over the same period. However, the half year has merely proved an appetiser for the feast to follow. November, the first month of our second half year, produced an acceleration in both the absolute and relative outperformance, and December has also got off to a strong start. By 17 December, our net assets had climbed to over £543m (£372.6m at 31 October 1999) amidst an intensity of media interest in the industry that goes well beyond anything this Board can recall. As shareholders will be aware, we and our predecessors have been preaching the gospel of technology investment for well over a decade but for the most (indeed almost all) of that period have been regarded as little more than occasionally troublesome heretics. It has therefore been somewhat bewildering to watch the rate of conversion accelerate to levels of which even the most successful missionary would be proud. Not only have we discovered a whole new generation of believers but it would now appear that many of the most sceptical disbelievers were in fact true to the faith all this time. -2- HENDERSON TECHNOLOGY TRUST PLC Unaudited Interim Results for the six months ended 31 October 1999 At our year end in April, we were concerned about the level of exuberance evident in the market for technology and, in particular, for internet stocks. Our reservations about the internet frenzy proved correct as we witnessed a collapse of 40% - 50% in these shares over the following few months. However, our worry that a precipitous sell-off in the internet area might prove to be a catalyst for a broader based technology correction was only partially correct. The technology sector did indeed undergo a sharp fall in the summer but it recovered rapidly with the mantle of share price leadership being assumed by semiconductor companies. These enjoyed a tremendous surge in orders as recovery in the components industry gathered momentum. It is a testament to the breadth and diversity of the technology industry that a collapse in the primary leadership group (in this case the internet stocks) could occur without triggering an indiscriminate sell-off across the whole industry. The same would not have been the case even eighteen months ago. The liquidity that we raised in March and April had been reinvested by the latter part of October and, until a few weeks ago, we had maintained a very modest level of gearing. Our disposal of the vast majority of our consumer oriented internet holdings proved timely. However, the internet weighting was rebuilt over the autumn albeit with a particular focus on the business infrastructure rather than the consumer internet shares. We also enjoyed very strong returns from the substantial bet made during the summer on the semiconductor cycle although we might have done even better had we moved our internet weighting directly into semiconductors rather than first into cash, and then into cyclical technology. The scale of the Company's and indeed the industry's outperformance since April needs to be seen in the context of the market as a whole. Technology stock performance is a reflection not just of the outstanding performance of technology companies but also of the paucity of earnings growth elsewhere. In other words we are, as technology investors, benefiting from a virtuous cycle. Not only is the sector's relative growth self- fuelling, but also the premium that investors are willing to pay for growth in an environment where growth is in dwindling supply, is rising exponentially. Technology, and the internet specifically, are also transforming the 'buy' side of the investment landscape. On-line, inexpensive share dealing is empowering a constituency of investors whose presence has never before been felt. For investors such as ourselves who have been schooled in a different environment and with different valuation parameters, it is critical both to be aware of this development and pragmatic about its implications. The last few months has not been a period in which experience has been a prerequisite for stock market success, rather the reverse. -3- HENDERSON TECHNOLOGY TRUST PLC Unaudited Interim Results for the six months ended 31 October 1999 Valuations in many, but by no means all, parts of the technology sector have ascended to celestial levels. Enthusiasm for the 'New Economy' knows no bounds and technology funds are, for the first time since the early 1980s, all the rage in the UK. These developments provide strong grounds for adopting a more cautious stance. The risk of doing so has, however, been highlighted by the extraordinarily sharp rise in the technology sector since our year end. The industry's fundamentals remain outstanding and, relative to the rest of the market, are better than this Board can remember. Technology, as we have said before, remains one of the few, if not the only industry, on the right side of the change that the internet brings. It remains hard to see what will break this virtuous, self sustaining circle that the technology industry has created. It is perhaps less difficult to see what might unsettle the balance of demand for and supply of technology growth stocks given the extraordinary acceleration in the rate of technology start-ups. Nevertheless, a flood of new equity is unlikely before February or March. There is, however, a genuine possibility that, given the extent of the stock market's recent polarisation, we will at some point, perhaps very soon, see a dramatic but ultimately unsustainable switch back into value and cyclical stocks. With 'greed' clearly in the ascendancy and 'fear' a distantly remembered emotion, we anticipate taking profits in some of the more extremely valued companies over the next few weeks while looking to rebalance the portfolio towards a lower level of risk. The Board remain enthused about the long term prospects for the industry. However, the Company has always tried to focus on delivering strong absolute returns for investors and on trying to balance our pursuit of capital growth with the management of risk. Up to now shareholders have enjoyed extraordinary returns and the Board has now felt it appropriate to raise some liquidity. The objective when launching this Company was to drive our shares to a premium rating through both limiting the supply of new shares and stimulating demand for existing shares by delivering strong absolute returns. £1,000 invested at the Company's launch has grown to £3,875 in three years and our shares now stand at a premium to their underlying net asset value. Delighted though we are to be in this position, the Board feels it appropriate to warn shareholders that, not only are such high returns rare but also that it is unusual for an investment trust to maintain more than a very modest premium rating for any length of time. As we approach the new year, the Board continue to believe that no other industry within the global economy is better positioned for the challenges of the new millennium. -4- HENDERSON TECHNOLOGY TRUST PLC Unaudited Interim Results for the six months ended 31 October 1999 Group Statement of Total Return (incorporating the revenue account) for the half-year ended 31 October 1999 Half-year ended 31 Half-year ended 31 October 1999 October Unaudited 1998 Unaudited Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Note: Total capital gains/(losses) - 97,30 97,30 - (14,303)(14,303) from investments Repurchase of warrants - (85) (85) - - - Income from fixed asset 1,123 - 1,123 444 - 444 investments Other interest receivable and 1,299 - 1,299 850 - 850 similar income ---- ----- ----- ---- ----- ----- Gross revenue and capital 2,422 97,215 99,637 1,294 (14,303)(13,009) gains/(losses) 1 Management fee (6,950) - (6,950) (915) (915) Other administrative expenses (290) - (290) 112) (112) ------ ----- ----- ------ ----- ----- ---- ----- ----- ---- ----- ----- Net (loss)/return on ordinary activities before interest payable and taxation (4,818) 97,215 92,397 267 (14,303 (14,036) Interest payable (108) - (108) (54) (54) ------ ----- ----- ------ ----- ----- ---- ----- ----- ---- ----- ----- Net (loss)/return on ordinary (4,926) 97,215 92,289 213 (14,303)(14,090) activities before taxation Taxation on net return on (63) - (63) (61) - (61) ordinary activities ------ ----- ----- ------ ----- ----- ---- ----- ----- ---- ----- ----- Net (loss)/return on ordinary (4,989) 97,215 92,226 152 (14,303) (14,151) activities after taxation ====== ===== ===== ====== ===== ===== 2 (Loss)/return per ordinary share Undiluted (3.39p)66.01p 62.62p 0.10p (9.71p)(9.61p) ====== ===== ===== ====== ===== ===== Fully diluted (3.08p) 59.99p 56.91p 0.10p (9.53)p (9.43)p ====== ===== ===== ====== ===== ===== Summary of Group Net Assets (as at 31 October 1999) (unaudited) (unaudited) (audited) 31October 31 October 30 April 1999 1999 1998 £'000 £'000 £'000 Fixed asset investments 379,791 184,865 289,275 Net current assets 7,416 10,069 3,679 387,207 194,934 292,954 Creditors: amounts falling due after more than one year (14,599) (7,174) (13,008) - Bank loans 372,608 187,760 279,946 3 Net asset value per 252.27p 127.54p 190.16p ordinary share (undiluted) 3 Net asset value per 227.68p 122.97p 175.29p ordinary share (fully diluted) Number of ordinary shares 147,702,603 147,219,206 147,219,206 in issue Number of warrants in issue 28,438,218 29,296,615 29,071,615 -5- HENDERSON TECHNOLOGY TRUST PLC Unaudited Interim Results for the six months ended 31 October 1999 Notes: 1 Management Fee Half year Half year ended ended 31 October 1998 31 October £'000 1999 £'000 Regular management 1,293 881 fee Performance related 5,344 - fee Irrecoverable VAT 313 34 _______ _______ 6,950 915 _______ _______ The performance related fee is an accrual based on the extent to which the aggregate net asset value of the ordinary shares exceeds the FT/S&P Actuaries World Index over the relevant performance period. The actual fee payable for the year ending 30 April 2000, will be determined by the relative outperformance to 30 April 2000. 2 (Loss)/return per share The basic capital return per ordinary share is based on net capital gains of £97,215,000 (1998: losses of £14,303,000) and on 147,279,630 ordinary shares being the weighted average number of shares in issue for the period (1998: 147,200,236 ordinary shares). The basic revenue return per ordinary share is based on the net loss on ordinary activities after taxation of £4,989,000 (1998: gains of £152,000) and on the weighted average number of ordinary shares stated above. Fully diluted revenue and capital returns per share are calculated in accordance with FRS14. The calculation is based on the revenue and capital returns as stated above and an adjusted weighted average number of shares of 162,044,951 (1998: 150,045,767). -6- HENDERSON TECHNOLOGY TRUST PLC Unaudited Interim Results for the six months ended 31 October 1999 3 Net asset value per share Basic net asset value per ordinary share is based on net assets attributable to the ordinary shares of £372,608,000 (31 October 1998: £187,760,000; 30 April 1999: £279,946,000) and on 147,702,603 (31 October 1998 and 30 April 1999: 147,219,206) ordinary shares, being the number of ordinary shares in issue at the end of the period. Diluted net asset value per share is calculated on the assumption that the 28,438,218 warrants in issue at 31 October 1999 (31 October 1998: 29,296,615; 30 April 1999: 29,071,615) were converted into ordinary shares at the exercise price of 100p. Dilution is assumed to occur only if the undiluted net asset value is greater than the conversion price of 100p. 4 Dividend In accordance with stated policy no interim dividend has been declared for the period (1998: nil). 5 Accounts for the year ended 30 April 1999 The figures and financial information for the year ended 30 April 1999 are extracted from the latest published accounts of the Group and do not constitute 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. 6 Year 2000 Henderson plc and its subsidiaries ('Henderson') which provides investment management, UK custodial, accounting, administrative and company secretarial services to Henderson Technology Trust PLC, has undertaken a corporate action programme, under Henderson board supervision, to establish the precise scope of the risks posed to Henderson Technology Trust PLC by the consequences of the Year 2000 date change and to address those risks. Henderson's strategy is to validate that its computer systems achieve Year 2000 conformity (as defined by the British Standards Institute in its paper DISC PD2000- 1), and to require both its suppliers and the suppliers to Henderson Technology Trust PLC to ensure that their computer systems achieve the same or an equivalent standard. Costs relating to the Year 2000 project are to be borne by Henderson. -7- HENDERSON TECHNOLOGY TRUST PLC Unaudited Interim Results for the six months ended 31 October 1999 7 Investment Company Status Prior to the commencement of the period, the trust ceased to be an investment company within the meaning of s266, Companies Act 1985. However, it continued to conduct its affairs as an investment trust for taxation purposes under s842 of the Income and Corporation Taxes Act 1988, and the Articles of the Company prohibit capital profits from being distributed by way of dividend. 8 Interim Report The interim report will be posted to shareholders on 13 January 2000 and will be available thereafter from the Secretary at the Registered Office, 3 Finsbury Avenue, London, EC2M 2PA. -8- HENDERSON TECHNOLOGY TRUST PLC Appendix to the Unaudited Interim Results for the six months ended 31 October 1999 Largest Investments at 31 October 1999 The 30 largest equity investments at 31 October 1999 are shown below: Valuation Stock £'000 Psion 7,410 12 Technologies 7,216 Xilinx 7,187 JDS Uniphase 6,620 ARM 6,394 Texas Instruments 6,345 America Online 6,331 Filtronic 5,989 Sherwood 5,875 Siebel Systems 5,822 Nokia 5,638 Yahoo! 5,456 CMG 5,324 General Instruments 5,247 Sapient 5,065 RM 5,063 BEA 4,866 Nortel Networks 4,681 Broadcom 4,674 Kyocera 4,672 Applied Materials 4,661 Verisign 4,659 Sun Microsystems 4,514 KLA 4,343 Murata 4,304 Scientific Atlanta 4,187 Motorola 4,151 Disco 4,064 Metromedia Fibre Network 4,030 Cisco 4,016 The valuation of these investments total £158,804,000 or 41.8% of the fixed assets of the Company. Also included in the portfolio are UK Treasury Bills with a total value of £6,990,000. For further information please contact : Brian Ashford-Russell Henderson Technology Trust PLC Tel : 0171 410 4100 Mobile: 0370 855557 Issued on behalf of Henderson Technology Trust PLC

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