Interim Results
Henderson Smaller Cos Inv Tst PLC
15 January 2001
HENDERSON GLOBAL INVESTORS
THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
15 January 2001
THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
Unaudited interim results for the half year ended 30 November 2000
Financial Highlights (unaudited)
30 November 2000 30 November 1999 31 May 2000
(audited)
Total net assets £ 629 million £ 780 million £ 722 million
Net asset value per 369.5p 457.7p 423.8p
ordinary share
FTSE SmallCap Index 3,157.7 2,815.5 3,141.8
(excluding
Investment companies)
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THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
Unaudited interim results for the half year ended 30 November 2000
The Chairman's Statement:
It has been a turbulent time with many growth and technology stocks giving up
a significant part of the gains made last year. In the six month period under
review the Trust's net asset value per share fell by 12.8% compared with a
rise of 0.5% in the FTSE SmallCap Index (excluding investment companies),
reflecting the Trust's 70% weighting in Technology, Media and
Telecommunications (TMT). Our confidence in the long term potential of
investing in TMT and other growth stocks remains undiminished. Shareholders
do need to bear in mind, however, that the area we invest in is likely to
remain vulnerable to continued volatility. In this difficult period there
have been some successes, notably Shire Pharmaceuticals which was our sixth
company to reach the FTSE 100 and the shares were sold well. Importantly we
have been re-seeding our nursery and have benefited by being almost wholly
ungeared during this vicious stockmarket correction as stockmarkets adjust to
the shock of decelerating growth after a record length of economic expansion
in the US.
Our aim is unchanged. We will continue to search out smaller companies with
real long term growth potential and to 'run our winners'. These companies
retain most of their earnings to fund growth. Shareholders should therefore
not expect any increase in last year's final dividend of 0.5p. After a phase
of indiscriminate selling, we believe that investors will seek out these high
growth companies and opportunities to buy near the bottom should prove
attractive. This is the time to continue our policy of holding well managed
companies that have a scalable business proposition, can compete globally,
enjoy a close relationship with their customer base, are rich in intellectual
property, and are well funded. Whatever happens, Tech is not going away and
we believe well managed growth companies still offer scope for excellent long
term performance. This policy has served shareholders well over the long term
and we remain confident that it will continue to do so.
P H G Cadbury
Chairman
15 January 2001
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THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
Unaudited interim results for the half year ended 30 November 2000
Group Statement of Total Return (incorporating the revenue account)+
for the half year ended 30 November 2000
Half Year ended Half Year ended
30 November 2000 30 November 1999*
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Total
capital
(losses)/gains
from
Investments - (92,345) (92,345) - 245,606 245,606
Income from 2,114 - 2,114 2,874 - 2,874
fixed asset
investments
Other
interest
receivable
and similar
Income 686 - 686 175 - 175
-------- -------- --------- --------- --------- ---------
Gross
revenue and
capital
(losses)/
Gains 2,800 (92,345) (89,545) 3,049 245,606 248,655
Management (1,451) - (1,451) (1,014) - (1,014)
fee
Other (206) - (206) (201) - (201)
administrative
expenses
Irrecoverable (251) - (251) (57) - (57)
VAT
-------- -------- --------- --------- --------- ---------
Net
return/(loss)
on ordinary
activities
before
interest
payable
and taxation 892 (92,345) (91,453) 1,777 245,606 247,383
Interest (1,051) - (1,051) (1,109) - (1,109)
payable and
similar
charges
-------- -------- --------- --------- -------- --------
Net (loss)/
return on
ordinary
activities (159) (92,345) (92,504) 668 245,606 246,274
before
taxation
Taxation on
net return
on ordinary
activities - - - (56) - (56)
-------- -------- --------- --------- --------- ---------
Net
(loss)/return on
ordinary
activities (159) (92,345) (92,504) 612 245,606 246,218
after taxation
Interim - - - - - -
dividend:
nil (1999: nil)
Final - - - - - -
dividend:
0.50p
(1999: 2.45p)
Over - - - 127 - 127
accrual re prior year
(note 4)
-------- -------- --------- --------- --------- ---------
Transfer (159) (92,345) (92,504) 739 245,606 246,345
(from)/to
reserves
======= ======= ======= ======= ======= =======
(Loss)/return (0.09)p (54.20)p (54.29)p 0.35p 141.19p 141.54p
per ordinary
share
======= ======= ======= ======= ======= =======
Year ended
31 May 2000 (audited)
Revenue Capital Total
£'000 £'000 £'000
Total capital
(losses)/gains from
Investments - 187,318 187,318
Income from fixed asset 5,630 - 5,630
investments
Other interest receivable
and similar
Income 1,589 - 1,589
---------- ---------- ---------
Gross revenue and capital
(losses)/
Gains 7,219 187,318 194,537
Management fee (2,400) - (2,400)
Other administrative (405) - (405)
expenses
Irrecoverable VAT (248) - (248)
---------- ---------- ---------
Net return/(loss) on
ordinary
activities before interest
payable
and taxation 4,166 187,318 191,484
Interest payable and (2,177) - (2,177)
similar charges
---------- ---------- ---------
Net (loss)/return on
ordinary
activities before taxation 1,989 187,318 189,307
Taxation on net return on
ordinary
activities (30) - (30)
---------- ---------- ---------
Net (loss)/return on
ordinary
activities after taxation 1,959 187,318 189,277
Interim dividend: nil - - -
(1999: nil)
Final dividend: 0.50p (852) - (852)
(1999: 2.45p)
Over accrual re prior year 127 - 127
(note 4)
---------- ---------- ---------
Transfer (from)/to reserves 1,234 187,318 188,552
======= ======= ======
(Loss)/return per ordinary 1.14p 108.80p 109.94p
share
======= ======= ======
+ The revenue columns of this statement represent the consolidated revenue
accounts of the Group (see note 3).
* Restated for the change in accounting policy (see note 2).
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THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
Unaudited interim results for the half year ended 30 November 2000
Balance Sheets
at 30 November 2000
30 November 2000 30 November 1999 31 May 2000
Group Group (audited) Group
£'000 £'000 £'000
Fixed asset
investments
Listed investments
at market value:
United Kingdom 599,133 697,177 663,334
Overseas 35 76,959 2,705
---------- ---------- ----------
599,168 774,136 666,039
AIM investments at 39,979 9,796 40,825
market value
Unquoted investments at
directors'
valuation 4,500 129 5,100
Subsidiary - - -
undertaking
---------- ---------- ----------
Total fixed asset 643,647 784,061 711,964
investments
---------- ---------- ----------
Current assets
Investments - 58 -
Debtors 3,140 12,027 6,730
Cash at bank and 10,005 19,764 32,654
short term deposits
---------- ---------- ----------
13,145 31,849 39,384
Creditors :
amounts falling
due within
one year (7,326) (16,145) (9,378)
---------- ---------- ----------
Net current assets 5,819 15,704 30,006
---------- ---------- ----------
Total assets less 649,466 799,765 741,970
current
liabilities
Creditors: amounts
falling due after
more than one year (20,000) (20,000) (20,000)
---------- ---------- ----------
Total net assets 629,466 779,765 721,970
---------- ---------- ----------
Capital and
reserves
Called-up share 42,602 42,602 42,602
capital
Other capital 580,002 730,637 672,347
reserves
Revenue reserve 6,862 6,526 7,021
---------- ---------- ----------
Shareholders'
funds (including
non-
equity interests
of £9,000;
1999: £11,000) 629,466 779,765 721,970
====== ====== ======
Net asset value 369.5p 457.7p 423.8p
per ordinary share
====== ====== ======
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THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
Unaudited interim results for the half year ended 30 November 2000
Group Cash Flow Statement
for the half year ended 30 November 2000
Half year ended Year ended
Half year ended 30 November 31 May 2000
30 November 1999* (audited)
2000 £'000 £'000
£'000
Net cash inflow from 1,225 2,161 4,271
operating activities
Net cash outflow from (1,891) (1,947) (2,176)
servicing of finance
Net tax recovered 39 134 210
Net cash
(outflow)/inflow from
financial investment (21,168) 29,949 40,989
Equity dividends paid (852) (4,235) (4,234)
Management of liquid 15,000 (4,000) (10,000)
resources
---------- ---------- ----------
Net cash (7,647) 22,062 29,060
(outflow)/inflow before
financing
Net cash outflow from - (21,589) (21,589)
financing
---------- ---------- ----------
(Decrease)/increase in (7,647) 473 7,471
cash
====== ====== ======
Reconciliation of
operating revenue to net
inflow
From operating activities
Net revenue before 892 1,777 4,166
interest payable and
taxation
Decrease in investment - 115 173
dealing assets
Decrease in accrued 349 464 139
income
Increase in debtors (28) (22) (46)
Increase/(decrease) in 12 (78) (32)
creditors
UK income tax deducted - (5) (11)
at source
Overseas withholding tax - (90) (118)
suffered
---------- ---------- ----------
Net cash inflow from 1,225 2,161 4,271
operating activities
====== ====== ======
Reconciliation of net
cash flow to movement in
net (debt)/funds
(Decrease)/increase in (7,647) 473 7,471
cash as above
Cash (inflow)/outflow (15,000) 4,000 10,000
from management of
liquid resources
---------- ---------- ----------
Change in net (22,647) 4,473 17,471
(debt)/funds resulting
from cash flows
Exchange movements (2) (212) (320)
---------- ---------- ----------
Movement in net (22,649) 4,261 17,151
(debt)/funds during the
period
Net funds/(debt) at the 12,654 (4,497) (4,497)
beginning of the period
---------- ---------- ----------
Net (debt)/funds at the (9,995) (236) 12,654
end of the period
====== ====== ======
Represented by:
Cash at bank and short 10,005 19,764 32,654
term deposits
Debt falling due after (20,000) (20,000) (20,000)
more than one year
---------- ---------- ----------
(9,995) (236) 12,654
====== ====== ======
* Restated for the change in accounting policy (see note 2).
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THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
Unaudited interim results for the half year ended 30 November 2000
Notes
1. (Loss)/return per ordinary share
Capital return per ordinary share is based on net capital losses for the half
year of £92,345,000 (half year ended 30 November 1999: net capital gains of
£245,606,000; year ended 31 May 2000: net capital gains of £187,318,000) and
on the number of ordinary shares in issue during the half year of 170,371,070
(half year ended 30 November 1999: weighted average number of ordinary shares
173,955,687; year ended 31 May 2000: weighted average number of ordinary
shares 172,168,289).
Revenue loss per ordinary share is based on the losses attributable to the
ordinary shares of £159,000 (half year ended 30 November 1999: earnings of
£612,000; year ended 31 May 2000: earnings of £1,959,000) and on the number
of ordinary shares in issue during the half year of 170,371,070 (half year
ended 30 November 1999: weighted average number of ordinary shares
173,955,687; year ended 31 May 2000: weighted average number of ordinary
shares 172,168,289).
2. Change in accounting policy
In accordance with Financial Reporting Standard 16 Current Taxation
('FRS 16'), which became effective for accounting periods ending on or after
23 March 2000, franked investment income is now shown net of the related tax
credits. The comparative figures for the half year ended 30 November 1999
have been restated accordingly. Adoption of FRS 16 has no effect on the
revenue or capital returns per ordinary share, nor on 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. Interim Dividend
No interim dividend has been declared (1999: nil).
In respect of the comparative figures, the buy-backs 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, resulted in a write-back of
dividends accrued in the previous financial year.
5. Accounts for the year ended 31 May 2000
The figures and financial information for the year ended 31 May 2000 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.
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THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
Unaudited interim results for the half year ended 30 November 2000
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 conduct 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 Group is presented in a statement of total return in which the revenue
column is the profit and loss account of the Group. The revenue column
excludes net profits on disposals of investments, calculated by reference to
their previous carrying amount of £36,900,000 (half year ended 30 November
1999: £24,060,000; year ended 31 May 2000: £107,567,000).
Since the Company was not 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 Group, 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.
In September 2000 the Company's Articles of Association were amended to
reflect the changes made in November 1999 to the Companies Act 1985 and in
October 2000 the Company gave notice of its intention to carry on business as
an investment company within the meaning of section 266 of the Act.
7. Interim Report
The full interim report will be posted to shareholders in February 2001
and copies will be available thereafter from the Secretary at the Company's
Registered Office, 4 Broadgate, London EC2M 2DA.
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THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
Unaudited interim results for the half year ended 30 November 2000
Largest Investments
The 60 largest investments as at 30 November 2000 were as follows:
Valuation as Valuation as
at at
30 November 30 November
2000 2000
£'000 £'000
BTG 51,644 Highbury House 6,619
Communications
Colt Telecommunications 33,275 Ashstead 6,450
Informa 26,100 Firstgroup 6,178
Fitness First 25,804 Parthus 6,140
Technologies
The Innovation Group 22,411 N Brown 6,000
Taylor & Francis 21,438 Imagination 5,958
Technologies
Galen 20,813 Porvair 5,910
Guardian IT 20,672 royalblue 5,790
FI 19,847 Mentmore Abbey 5,685
Euro Sales Finance 18,069 ITE 5,037
Taylor Nelson Sofres 13,770 Torotrak 4,991
Tilbury Douglas 13,640 Scottish Radio 4,820
GWR 13,331 Trafficmaster 4,738
Pizza Express 13,010 Arc International 4,669
RM 10,997 NXT 4,571
Diagonal 10,455 +Ubinetics 4,500
Sportsworld Media 9,805 Axon 4,432
Trinity Mirror 9,370 Helphire 4,374
Capital Radio 9,123 Coffee Republic 3,975
Metal Bulletin 8,473 Wilmington 3,938
Claims Direct 8,374 *Gameplay 3,923
Trifast 8,370 Penna 3,850
London Bridge Software 8,167 Clinton Cards 3,818
Psion 8,155 ICM Computer 3,625
Parity 8,100 Orchestream 3,606
Intec Telecom Systems 7,132 Telework 3,600
Scipher 7,103 Itnet 3,587
*Transense Technologies 7,015 Kewill Systems 3,290
*Tenon 6,959 *Iomart 3,277
Knowledge Support 6,890 Staffware 3,125
Systems
*Listed on the Alternative Investment Market
+Unquoted
These investments total £588,788,000 or 91.48% of the portfolio.
- ENDS -
For further information please contact : Or:
John Alexander/Stephen Westwood Vicki Staveacre
The Henderson Smaller Companies Investment Trust Henderson Press Office
plc Telephone: 020 7410 4222
Telephone : 020 7410 4340/020 7477 5517
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