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Henderson Smllr Cos (HSL)

  Print      Mail a friend       Annual reports

Monday 14 July, 2003

Henderson Smllr Cos

Final Results

Henderson Smaller Cos Inv Tst PLC
14 July 2003




11 July 2003


       Unaudited Preliminary Group Results for the year ended 31 May 2003


  • Portfolio performance shows significant improvement in the second half of
    the financial year - strong outperformance of benchmark achieved in this

  • Portfolio restructured under new investment team - 50% of assets changed

  • Confidence in outlook for UK smaller companies and in the ability of the
    Trust to outperform


Comparative total return figures:

                                                  1 year  First Half Second Half

The Henderson Smaller Companies Investment Trust plc   -32.3    -40.4   13.6

FTSE SmallCap (ex ICs) Index                           -17.8    -24.4    8.8

Hoare Govett Small Companies (ex ICs) Index            -15.1    -22.9   10.1

The Chairman's Statement:

I am disappointed, in this my first statement as Chairman, to record a sharp
fall in the net asset value per share over the year under review. I am very
pleased to report, however, that during the second half of the year our
investment performance showed a marked improvement, both in absolute and in
relative terms. This was not enough to make up for earlier losses but is
confirmation that the Trust has turned around. There have been a number of
changes. We have a new manager, a new chairman and a new benchmark. We have
every confidence that we will perform well in the year ahead, giving our
investors a well-chosen exposure to Britain's smaller companies.


At the end of September the Board announced its agreement with the investment
manager, Henderson Global Investors, that Mr Neil Hermon, together with his
colleague Theresa Wat, would take responsibility for the management of the
Trust's portfolio early in November 2002.

We have retained the philosophy of searching out smaller companies with above
average growth potential. However, the new management team has broadened the
portfolio and has applied an analytical and disciplined approach to valuation to
ensure that growth is bought - and retained - only at a reasonable price. The
Board is very encouraged by the progress that our fund managers have made in the
months since their appointment.

                                     - 2 -


       Unaudited Preliminary Group Results for the year ended 31 May 2003


The Board has agreed to adopt the Hoare Govett Smaller Companies (excluding
investment companies) Index as the Trust's benchmark, with effect from 1 June
2003. This index is a more suitable measure of the performance of our portfolio.
We are continuing to show performance against the FTSE SmallCap (excluding
investment companies) Index in our annual report.

Revenue and Dividend

Our revenue account shows a positive earnings per share this year, partly
because the yield of our portfolio has increased and partly because the basis on
which the management fee has been calculated since 1 October 2002 has had the
effect of reducing our costs. We intend to continue our policy of charging all
management expenses and finance costs to revenue. Capital growth, not income,
remains our priority but we expect to at least maintain our dividend. We propose
again a single and final dividend for the year of 0.5p per share.

Share Buy-Backs

During the year we purchased 19 million shares for cancellation, representing
14% of those in issue at 31 May 2002. However, in recent months there has been
an encouraging interest in our shares from new investors and the discount at
which the shares trade has narrowed. We have not bought back any shares since
the beginning of March 2003 but we shall seek to renew the authority to do so at
the forthcoming annual general meeting.

Board Membership

James Nelson joined the Board at the end of September 2002, following the
retirement of Michael Meyer. John Alexander left the Board in November 2002 and
Peter Cadbury did so in March 2003. I should like to record my thanks to Peter
Cadbury. He steered the Board with patience and skill through times which were
far from easy for investors in growth companies. I also record with sadness that
Andrew Stack, who had been managing the portfolio with John Alexander, died from
cancer in April.


The recovery of our performance this year has been assisted by the investment of
our long-term borrowings and by a rebound in the share prices of many smaller
companies. The economic outlook is far from certain. However, we do expect our
Trust to outpace its peer group in the coming year.

There is a continuation vote scheduled for the annual general meeting in 2004.
Shareholders will decide then whether this Trust, with a distinguished history
lasting more than a century, should continue in business. We think we have
strong grounds for winning both that vote and our shareholders' confidence.

J D Fishburn

11 July 2003

                                     - 3 -


       Unaudited Preliminary Group Results for the year ended 31 May 2003

Group Statement of Total Return (incorporating the consolidated revenue account) 

                                                      Year ended 31 May 2003             Year ended 31 May 2002
                                              Revenue     Capital      Total     Revenue     Capital      Total
                                                £'000       £'000      £'000       £'000       £'000      £'000

Total capital losses from investments               -     (85,899)   (85,899)          -    (240,230)  (240,230)

Income from fixed asset investments             4,042           -      4,042       4,592           -      4,592

Other interest receivable and similar              98           -         98         111           -        111
                                        ----------- ----------- ------------- ------------- ------------- ----------
Gross revenue and capital losses                4,140     (85,899)   (81,759)      4,703    (240,230)  (235,527)

Management fee                                (1,078)           -     (1,078)     (2,734)          -     (2,734)

Other administrative expenses                   (408)           -       (408)       (352)          -       (352)

Irrecoverable VAT                               (202)           -       (202)       (416)          -       (416)
                                        ----------- ----------- ------------ ------------- ------------ -------------
Net return/(loss) on ordinary
before interest payable and taxation            2,452     (85,899)   (83,447)       1,201   (240,230)   (239,029)

Interest payable                              (2,208)           -     (2,208)      (2,381)          -     (2,381)
                                        ----------- ---------- ------------- ------------- ------------- ------------
Net return/(loss) on ordinary
before taxation                                   244     (85,899)   (85,655)      (1,180)   (240,230)   (241,410)

Taxation on net return on ordinary                  1           -          1           (1)          -          (1)
                                        ----------- ---------- ------------ ------------- ------------- -------------
Net return/(loss) on ordinary
after taxation                                    245      (85,899)   (85,654)      (1,181)  (240,230)   (241,411)

                                        ------------ ----------- ----------- ------------- ------------- -----------
Dividends - ordinary shares (note 3)
Final: 0.50p (2002: 0.50p)                      (561)             -      (561)        (654)         -        (654)

                                        ------------- ----------- ----------- ------------- ------------ -----------

Transfer from reserves                          (316)      (85,899)   (86,215)      (1,835)  (240,230)   (242,065)
                                              =======       =======    =======      =======   =======     =======

Return/(loss) per ordinary share (note          0.20p      (69.35)p    (69.15)p     (0.77)p  (157.34)p   (158.11)p
                                              =======       =======    =======      =======   =======     =======

The revenue columns of this statement represent the consolidated revenue
accounts of the Group.

                                    - MORE -

                                     - 4 -


       Unaudited Preliminary Group Results for the year ended 31 May 2003

Balance Sheets                                                   Group         Group          Company       Company
                                                                  2003          2002             2003          2002
                                                                 £'000         £'000            £'000         £'000
Fixed asset investments
United Kingdom listed investments at market value              153,434       251,208          153,434       251,208
AIM investments at market value                                  7,368        20,248            7,368        20,248
Unquoted investments at directors' valuation                       896         1,907              896         1,907
Subsidiary undertaking                                               -             -            2,271         2,272
                                                         ------------- -------------    ------------- -------------
                                                               161,698       273,363          163,969       275,635
                                                         ------------- -------------    ------------- -------------
Current assets
Debtors                                                          1,571         1,815            1,571         1,815
Cash at bank and short term deposits                             2,719            40            2,718            38
                                                         ------------- -------------    ------------- -------------
                                                                 4,290         1,855            4,289         1,853
Creditors: amounts falling due within one year                 (3,498)       (8,935)          (5,768)      (11,205)
                                                         ------------- -------------    ------------- -------------
Net current assets/(liabilities)                                   792       (7,080)          (1,479)       (9,352)
                                                         ------------- -------------    ------------- -------------
Total assets less current liabilities                          162,490       266,283          162,490       266,283

Creditors: amounts falling due after more than one year       (20,000)      (20,000)         (20,000)      (20,000)
                                                         ------------- -------------    ------------- -------------
Total net assets                                               142,490       246,283          142,490       246,283
                                                              ========      ========         ========      ========
Capital and reserves
Called-up share capital                                         29,248        34,004           29,248        34,004
Other capital reserves                                         109,751       208,472          112,022       210,744
Revenue reserve                                                  3,491         3,807            1,220         1,535
                                                         ------------- -------------    ------------- -------------
Shareholders' funds (including non-equity
interests of £9,000; 2002: £9,000)                             142,490       246,283          142,490       246,283
                                                              ========      ========         ========      ========

Net asset value per ordinary share                              121.8p        181.1p           121.8p        181.1p
                                                              ========      ========         ========      ========


                                     - 5 -


       Unaudited Preliminary Group Results for the year ended 31 May 2003

Group Cash Flow Statement                                           2003          2003          2002            2002
                                                                   £'000         £'000         £'000           £'000

Net cash inflow from operating activities                                        2,797                         1,282

Servicing of finance
Debenture interest paid                                          (1,050)                     (2,100)
Bank overdraft and loan interest paid                              (111)                       (261)
                                                           -------------               -------------
Net cash outflow from servicing of finance                                     (1,161)                       (2,361)

UK tax recovered                                                       4                           -
Overseas tax recovered                                                 1                           -
                                                           -------------               -------------
Net tax recovered                                                                    5                             -

Financial investment
Purchases of investments                                        (69,041)                   (115,920)
Sales of investments                                              96,294                     137,809
                                                           -------------               -------------
Net cash inflow from financial investment                                       27,253                        21,889

Equity dividends paid                                                            (656)                         (784)

Management of liquid resources
Cash withdrawn from deposit                                                          -                        10,000

Purchase of own shares                                          (17,560)                    (44,863)
(Repayment)/drawdown of loans                                    (8,000)                       8,000
                                                           -------------               -------------
Net cash outflow from financing                                               (25,560)                      (36,863)
                                                                         -------------                 -------------
Increase/(decrease) in cash                                                      2,678                       (6,837)
                                                                              ========                      ========
Reconciliation of net cash flow to movements in net debt
Increase/(decrease) in cash as above                                             2,678                       (6,837)
Cash inflow from management of liquid resources                                      -                      (10,000)
Cash outflow/(inflow) from debt financing                                        8,000                       (8,000)
                                                                         -------------                 -------------
Change in net debt resulting from cash flows                                    10,678                      (24,837)
Exchange movements                                                                   1                             1
                                                                         -------------                 -------------
Movement in net debt in the year                                                10,679                      (24,836)
Net debt at 1 June                                                            (27,960)                       (3,124)
                                                                         -------------                 -------------
Net debt at 31 May                                                            (17,281)                      (27,960)
                                                                              ========                      ========


                                     - 6 -


       Unaudited Preliminary Group Results for the year ended 31 May 2003


        1.     Return/(loss) per ordinary share

             The revenue return per ordinary share is based on the earnings
        attributable to the ordinary shares of £245,000 (2002: losses of
        £1,181,000) and on the weighted average number of ordinary shares in
        issue during the year of 123,856,800 (2002: 152,680,943).

        The capital loss per ordinary share is based on the net capital losses
        for the year of £85,899,000 (2002: losses of £240,230,000) and on the
        weighted average number of ordinary shares in issue during the year of
        123,856,800 (2002: 152,680,943).

2.     Issued share capital

        There were 116,956,840 ordinary shares in issue at 31 May 2003 (31 May
        2002: 135,980,999).

3.     Dividend

             The recommended final dividend of 0.5p per ordinary share, subject
        to approval at the annual general meeting, will be paid on 1 October
        2003 to shareholders on the register of members at the close of business
        on 5 September 2003.

        The final dividend accrued in respect of the year ended 31 May 2003, at
        0.5p per ordinary share, amounts to £585,000. The buy-backs of the
        Company's ordinary shares, after 31 May 2002 but before the record date
        of the final dividend for the year ended on that date, resulted in a
        write-back of £24,000 for dividends accrued in respect of the year ended
        31 May 2002 but not in the event payable. The £561,000 shown is the sum
        of these two figures.

4.     Basis of consolidation

             The Group accounts consolidate the accounts of the Company and of
        its wholly owned subsidiary undertaking, Henderson Smaller Companies
        Finance Limited.

5.     2003 accounts

             The preliminary figures for the year ended 31 May 2003 are an
        extract from the Group's accounts for that year. These accounts have not
        yet been delivered to the Registrar of Companies, nor have the auditors
        yet reported on them.

6.     2002 accounts

             The figures and financial information for the year ended 31 May
        2002 are an extract of the latest published accounts and do not
        constitute the statutory accounts for that year. Those 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 section 237(3) of the Companies Act 1985.


                                     - 7 -


           Unaudited Preliminary Group Results for the year ended 31 May 2003

7.     Annual General Meeting

             The full annual report and accounts will be posted to shareholders
        in late August 2003 and copies will be available thereafter from the
        Secretary at the Company's Registered Office, 4 Broadgate, London EC2M
        2DA. The Annual General Meeting will be held on Friday 26 September 2003
        at 2.00 pm.

                                    - ENDS -

        For further information please contact :

        Neil Hermon

        Fund Manager

        The Henderson Smaller Companies Investment Trust plc

        Telephone: 020 7818 4351

        Stephen Westwood

        Head of Investment Trusts

        Henderson Global Investors

        Telephone: 020 7818 5517

        Stephen Phillips

        Investor Relations Manager

        Henderson Global Investors

        Telephone: 020 7818 6417

        Vicki Staveacre

        Director of Corporate Affairs

        Henderson Global Investors

        Telephone: 020 7818 4222

                      This information is provided by RNS
            The company news service from the London Stock Exchange