Interim Results

Henderson Smaller Cos Inv Tst PLC 22 January 2007 Page 1 of 12 22 January 2007 THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 November 2006 Highlights Performance: • Net asset value per share up 16.5%* • Share price up 18.8%* • Benchmark index up 13.2%*+ *Total return for the half year ended 30 November 2006 (source: Datastream) +The Hoare Govett Smaller Companies (excluding investment companies) Index Extracts from the Chairman's Statement: I am pleased to report a further period of strong investment performance. Over the half year, which ended on 30 November 2006, the net asset value per share increased by 16.5%, on a total return basis. By comparison our benchmark index returned 13.2%. This is an excellent result, in both absolute and relative terms. Gearing contributed to this performance, in what for much of the period has been a rising market. The Trust has both fixed debt (the debenture stock) and our short-term borrowing facility, which is used flexibly. Our share buy-back programme has also enhanced the net asset value per share. And, of course, a principal contribution to performance remains the proven ability of our fund management team at Henderson, Neil Hermon and Theresa Wat, to identify companies of quality in which to invest. The income from our investments has increased strongly, reflecting the growth in corporate earnings enjoyed by many UK companies. The additional income is comfortably ahead of the increase in our borrowing costs, all of which are set against revenue. The performance fee is set against capital, reflecting the fact that our investment outperformance is expected to come almost entirely from superior growth in capital return. As the performance fee payable to Henderson is based on performance over the full year and crystallises only at the year end, the figure shown in these accounts (£1.2 million) is merely an accrual. During the half year we bought back and cancelled close to eleven million shares, equivalent to about 10.8% of those in issue at 31 May 2006, at an average discount (calculated by valuing the debenture stock at par) of over 13%. We have negotiated with Henderson a cap on the performance fee arrangements. This means that any enhancement to net asset value resulting from Page 2 of 12 THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 November 2006 share buy-backs in excess of 5% of the opening issued share capital is excluded from the calculation of the performance fee for the year. The year 2006 proved to be a very positive one for equity investors. The absolute returns achieved have exceeded considerably the expectations of twelve months ago. The UK stockmarket moved ahead strongly in December 2006, with the share prices of smaller companies continuing to lead the way. Investor confidence is high but valuations, while reasonable, are not as attractive as they were. We expect to take a cautious approach. Nevertheless, corporate profitability, cash flows and balance sheets are in good order. The flow of mergers and acquisitions appears to be set to continue in the small and mid cap areas of the market in which we invest. We expect to make further progress in 2007 but at more modest rates than in the past four years. Page 3 of 12 THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 November 2006 Consolidated Income Statement for the half year ended 30 November 2006 (Unaudited) (Unaudited ) (Audited) Half year ended Half year ended Year ended 30 November 2006 30 November 2005 31 May 2006 Revenue Capital Revenue Capital Revenue Capital return return Total return return Total return return Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Investment income 3,202 - 3,202 2,678 - 2,678 5,743 - 5,743 Other income 99 - 99 58 - 58 151 - 151 Gains on investments held at fair value through profit or loss - 38,181 38,181 - 29,460 29,460 - 65,745 65,745 ---------- ---------- ---------- ---------- ---------- ---------- ---------- --------------- Total income 3,301 38,181 41,482 2,736 29,460 32,196 5,894 65,745 71,639 Expenses Management fees (660) - (660) (514) - (514) (1,120) - (1,120) Provision for performance - (1,167) (1,167) - - - - (583) (583) fee Other expenses (182) - (182) (229) - (229) (377) - (377) --------- ---------- ---------- --------- --------- --------- ---------- ---------- ---- Profit before finance costs and taxation 2,459 37,014 39,473 1,993 29,460 31,453 4,397 65,162 69,559 Finance costs (1,552) - (1,552) (1,166) - (1,166) (2,554) - (2,554) --------- -------- -------- --------- --------- -------- --------- --------- --- Profit before taxation 907 37,014 37,921 827 29,460 30,287 1,843 65,162 67,005 Taxation - - - - - - - - - --------- ---------- ---------- ---------- ---------- --------- --------- ------- ------ Profit for the period 907 37,014 37,921 827 29,460 30,287 1,843 65,162 67,005 ======= ====== ====== ======== ====== ====== ===== ====== ====== Earnings per ordinary share 0.94p 38.40p 39.34p 0.81p 29.09p 29.90p 1.83p 64.62p 66.45p (note 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 12 THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 November 2006 Consolidated Statement of Changes in Equity for the half year ended 30 November 2006 (Unaudited) Half year ended 30 November 2006 Ordinary Capital Other share redemption capital Retained capital reserve reserves earnings 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 (2,716) 2,716 (28,109) - (28,109) Profit for the period - - 37,014 907 37,921 Ordinary dividend paid - - - (1,337) (1,337) ---------- ---------- ---------- ---------- ---------- Balance at 30 November 2006 22,331 23,085 238,430 5,582 289,428 ========== ========== ========== ========== ========== (Unaudited) Half year ended 30 November 2005 Ordinary Capital Other share redemption capital Retained capital reserve reserves earnings 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 (220) 220 (1,674) - (1,674) Profit for the period - - 29,460 827 30,287 Ordinary dividend paid - - - (1,166) (1,166) ---------- ---------- ---------- ---------- ---------- Balance at 30 November 2006 25,194 20,222 195,111 4,991 245,518 ========== ========== ========== ========== ========== (Unaudited) Year ended 31 May 2006 Ordinary Capital Other share redemption capital Retained capital reserve reserves earnings 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 ========== ========== ========== ========== ========== Page 5 of 12 THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 November 2006 Consolidated Balance Sheet at 30 November 2006 (Unaudited) (Unaudited) (Audited) 30 November 30 November 31 May 2006 2005 2006 £'000 £'000 £'000 Non-current assets Investments held at fair value through 331,409 269,875 317,663 profit or loss ----------- ----------- ----------- Current assets Sales for future settlement 1,027 882 968 Taxation recoverable 12 8 10 Prepayments and accrued income 549 495 1,288 Cash and cash equivalents 614 1,890 958 Other debtors 7 - - ---------- ---------- ---------- 2,209 3,275 3,224 ---------- ---------- ---------- Total assets 333,618 273,150 320,887 ========== ========== ========== Current liabilities Purchases for future settlement 969 2,304 168 Accruals 1,712 419 757 Bank loans and overdrafts 21,500 4,900 19,000 ---------- ---------- ---------- 24,181 7,623 19,925 ---------- ---------- ---------- Total assets less current liabilities 309,437 265,527 300,962 Non-current liabilities (20,009) (20,009) (20,009) ----------- ----------- ----------- Net assets 289,428 245,518 280,953 =========== =========== =========== Equity attributable to equity shareholders Called up share capital 22,331 25,194 25,047 Capital redemption reserve 23,085 20,222 20,369 Other capital reserves 238,430 195,111 229,525 Retained earnings 5,582 4,991 6,012 ----------- ----------- ---------- Total equity 289,428 245,518 280,953 =========== =========== ========== Net asset value per ordinary share (note 5) 324.02p 243.63p 280.43p =========== =========== ========== Page 6 of 12 THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 November 2006 Consolidated Cash Flow Statement for the half year ended 30 November 2006 (Unaudited) (Unaudited) (Audited) Half year ended Half year ended Year ended 30 November 30 November 31 May 2006 2005 2006 £'000 £'000 £'000 Net cash inflow/(outflow) from operating activities 5 26,240 7,396 (6,355) ---------- ---------- ---------- Net cash inflow/(outflow) before use of financing 26,240 7,396 (6,355) Net cash (outflow)/inflow from financing activities (26,582) (5,145) 7,674 ---------- ---------- ----------- Net (decrease)/increase in cash and cash equivalents (342) 2,251 1,319 Cash and cash equivalents at the start of the period 958 (361) (361) Exchange movements (2) - - -------- ---------- ---------- Cash and cash equivalents at the period end 614 1,890 958 ======== ========== ========== Notes to the Accounts 1. Accounting Policies - basis of preparation The consolidated financial information for the half year ended 30 November 2006 has been prepared using the accounting policies followed in the Group's annual accounts for the year ending 31 May 2006. These accounting policies will be based on International Financial Reporting Standards ('IFRS'), comprising 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'). The accounts have been prepared on the historical cost basis, except for the revaluation of certain financial instruments. 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 compliant with the recommendations of the SORP. Page 7 of 12 THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 November 2006 Notes to the Accounts, continued 2. Earnings per ordinary share The earnings per ordinary share figure is based on the net gain for the half year of £37,921,000 (half year ended 30 November 2005: £30,287,000; year ended 31 May 2006: £67,005,000) and on 96,379,521 (half year ended 30 November 2005: 101,282,566; year ended 31 May 2006: 100,827,720) ordinary shares, being the weighted average number of ordinary shares in issue during the period. The earnings per ordinary share figure detailed above can be further analysed between revenue and capital, as below. (Unaudited) (Unaudited) 30 November 2006 30 November 2005 (Audited) 31 May 2006 £'000 £'000 £'000 Net revenue gain 907 827 1,843 Net capital gain 37,014 29,460 65,162 ---------- ----------- ---------- Net total gain 37,921 30,287 67,005 ---------- ---------- --------- Weighed average number of ordinary shares in issue during the period 96,379,521 101,282,566 100,827,720 Pence Pence Pence Revenue earnings per ordinary share 0.94 0.81 1.83 Capital earnings per ordinary share 38.40 29.09 64.62 --------- --------- --------- Total earnings per ordinary share 39.34 29.90 66.45 --------- --------- --------- Page 8 of 12 THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 November 2006 Notes to the Accounts, continued 3. Interim dividend The Company has not declared an interim dividend (2005: nil). 4. Ordinary share capital At 30 November 2006 there were 89,323,030 ordinary shares in issue (30 November 2005: 100,776,282; 31 May 2006: 100,186,282). During the half year ended 30 November 2006 the Company bought 10,863,252 of its own issued ordinary shares in the market for cancellation (half year ended 30 November 2005: 880,000; year ended 31 May 2006: 1,470,000). The cost of the share buy-backs, including stamp duty, amounted to £28,109,000 (half year ended 30 November 2005: £1,674,000; year ended 31 May 2006: £2,962,000). 5. Net asset value per share The net asset value per ordinary share is based on the net assets attributed to equity shareholders of £289,428,000 (half year ended 30 November 2005: £245,518,000, year ended 31 May 2006; £280,953,000) and on 89,323,030 (half year ended 30 November 2005: 100,776,282; year ended 31 May 2006; 100,186,282) ordinary shares, being the number of ordinary shares in issue at the period end. Page 9 of 12 THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 November 2006 Notes to the Accounts, continued 6. Reconciliation of the profit before taxation to net cash inflow from operating activities (Unaudited) (Unaudited) Half year Half year (Audited) ended 30 ended 30 Year ended 31 November November May 2006 2005 2006 £'000 £'000 £'000 Profit before taxation 37,921 30,287 67,005 Gains on investments held at fair value through profit or loss (38,181) (29,460) (65,745) Increase/(decrease) in purchases for future settlement creditor 801 2,089 (47) Increase in sales/(purchases) for future settlements debtor (59) (604) (690) Net sales of investments 24,437 4,642 (6,860) Decrease/(increase) other receivables 739 370 (423) Increase/(decrease) in accruals 584 77 412 Taxation on investment (2) (5) (7) ---------- ---------- ---------- 26,240 7,396 (6,355) ---------- ---------- ---------- 7. Transaction costs Purchase transaction costs for the half year ended 30 November 2006 were £109,000 (half year ended 30 November 2005: £134,000; year ended 31 May 2006: £328,000). These comprise mainly stamp duty and commission. Sale transaction costs for the half year ended: 30 November 2006 were £67,000 (30 November 2005: £61,000; year ended 31 May 2006: £98,000). 8. Comparative information The financial information contained in these interim results does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The financial information for the half years ended 30 November 2006 and 30 November 2005 has not been audited. The information for the year ended 31 May 2006 has been extracted from the latest published audited accounts. The audited accounts for the year ended 31 May 2006 have been filed with the Registrar of Companies. The report of the auditors on those accounts contained no qualification or statement under either section 237(2) or (3) of the Companies Act 1985. Page 10 of 12 THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 November 2006 Notes to the Accounts, continued 9. Interim Report The full interim report will be posted to shareholders in early February 2006 and copies will be available thereafter from the Secretary at the Company's Registered Office, 4 Broadgate, London EC2M 2DA. Page 11 of 12 THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 November 2006 Investment Portfolio at 30 November 2006 Valuation at Valuation at 30 November 30 November 2006 % of 2006 % of £'000 portfolio £'000 portfolio Informa 14,690 4.43 Robert Walters 3,320 1.00 W S Atkins 14,000 4.22 Forth Ports 3,023 0.91 Bellway 10,359 3.13 Dana Petroleum 2,914 0.88 WSP 8,815 2.66 Rotork 2,905 0.88 Capital & Regional RPS Group 2,862 0.86 Properties 7,676 2.32 royalblue 2,850 0.86 Spectris Group 6,880 2.08 Greene King 2,844 0.86 Domino Printing 6,768 2.04 Renishaw 2,832 0.85 Balfour Beatty 6,448 1.95 VT Group 2,806 0.85 Interserve 6,127 1.85 Ultra Electronic Savills 6,031 1.82 Holdings 2,700 0.81 ---------- -------- -------- ---------- 10 largest 87,794 26.50 40 largest 204,808 61.78 Bovis Homes 5,892 1.78 Gyrus 2,683 0.81 Grainger Trust 5,633 1.70 Victrex 2,666 0.80 Carillion 5,376 1.62 Meggitt 2,594 0.78 Anite 5,184 1.56 Aberdeen Asset Enodis 4,908 1.48 Management 2,580 0.78 Shaftesbury 4,593 1.39 Quintain Estates 2,475 0.75 Intermediate Capital 4,570 1.38 Expro International 2,470 0.75 Carter & Carter 4,358 1.31 Isotron 2,330 0.70 Laird 4,356 1.31 Umbro Holdings 2,271 0.69 Erinaceous 4,257 1.28 London Merchant --------- -------- Securities 2,244 0.68 20 largest 136,921 41.31 CSR 2,191 0.66 ------------ ----------- Charter 4,116 1.24 50 largest 229,312 69.18 Restaurant Group 4,095 1.24 Mouchel Parkman 4,080 1.23 Melrose 2,150 0.65 SIG 4,057 1.22 Go-Ahead 2,117 0.64 Big Yellow Group 4,020 1.21 *RWS 2,065 0.62 Premier Oil 3,983 1.20 *Inspico 2,063 0.62 BSS Group 3,848 1.16 Euromoney E2V Holdings 3,776 1.14 Institutional 2,048 0.62 Investor Paragon 3,468 1.05 *IBS Opensystems 1,949 0.59 Headlam 3,388 1.02 Chime ----------- -------- Commuications 1,936 0.58 30 largest 175,752 53.02 Countrywide 1,930 0.58 DTZ Holdings 1,928 0.58 Venture Production 1,916 0.58 --------- ----------- 60 largest 249,414 75.24 ========= =========== * quoted on the Alternative Investment Market Page 12 of 12 THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC Unaudited interim results for the half year ended 30 November 2006 For further information please contact: Neil Hermon The Henderson Smaller Companies Investment Trust plc Telephone: 020 7818 4351 or Theresa Wat The Henderson Smaller Companies Investment Trust plc Telephone: 020 7818 4644 or James de Sausmarez Head of Investment Trusts Henderson Global Investors Telephone: 020 7818 3349 or Sarah Gibbons-Cook Investor Relations and PR Manager Henderson Global Investors Telephone: 020 7818 3198 This information is provided by RNS The company news service from the London Stock Exchange

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