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Henderson Smllr Cos (HSL)

  Print      Mail a friend       Annual reports

Monday 30 January, 2006

Henderson Smllr Cos

Interim Results

Henderson Smaller Cos Inv Tst PLC
30 January 2006

                                                                    Page 1 of 20
30 January 2006


              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
       Unaudited interim results for the half year ended 30 November 2005



Highlights



Performance:



•           Net asset value per share up 14.3%*
•           Share price up 17.5%*
•           Benchmark index up 17.3%*

*Total return for the half year ended 30 November 2005 (source: Datastream)





Extracts from the Chairman's Statement:

Your shares increased their net asset value by 14.3% for the half year.  The
equivalent return from our benchmark index was 17.3%. While this result is
disappointing in relative terms, I can report that since the half year much of
the gap has been closed.  In the past three years the overall increase in assets
is 129%, compared with a return of 104% from the benchmark.  Our fund managers,
Neil Hermon and Theresa Wat who joined us exactly three years ago, are
responsible for this excellent record.  We thank them for it, but will be
keeping up the pressure.



International Financial Reporting Standards ('IFRS')

In common with other UK companies that publish consolidated accounts, we adopted
IFRS last year.  These interim accounts reflect the new accounting standards for
the first time.  The notes to them include reconciliations of the figures for
the comparative periods to those reported previously.  There are a number of
changes but only two of the new requirements have an effect on the net asset
value per share.  First, our investments are now described as 'held at fair
value through profit or loss'.  As such they are valued at bid (or selling)
prices rather than at mid-market prices.  The effect on the valuation of the
portfolio at 30 November 2005 is minimal, being a reduction of £169,000 (or
0.07%).  Second, dividends are no longer included in the accounts as payable
until they have been approved.  Accordingly, the dividend payable in respect of
the year ended 31 May 2005 is added back to the assets at that date and shown as
paid, in the new Statement of Changes in Equity, in the half year ended 30
November 2005.


                                                                    Page 2 of 20



              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
       Unaudited interim results for the half year ended 30 November 2005



Extracts from the Chairman's Statement, continued





Outlook

The absolute returns achieved in 2005 were rather better than expected a year
ago. So we remain cautious and alert.  However, investor confidence is strong
and corporate activity continues to support the share prices of smaller and
mid-cap companies.  Wise stock selection remains the key to success.  We expect
our shareholders to benefit from our intimate knowledge of smaller companies in
the UK during the coming year.









                                                                    Page 3 of 20



              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
       Unaudited interim results for the half year ended 30 November 2005

Consolidated Income Statement
for the half year ended 30 November 2005


                                  (Unaudited)                       (Unaudited )                       (Audited)
                                Half year ended                   Half year ended                      Year ended
                               30 November 2005                  30 November 2004                    31 May 2005
                                                           Restated (note 6)                 Restated (note 5)
                       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        2,678          -      2,678       2,422           -      2,422      5,320          -      5,320
Other income                58          -         58         114           -        114        136          -        136
Gains on investments held
at fair value                -     29,460     29,460           -      26,654     26,654          -     39,946     39,946
 through profit or loss
                    ---------- ---------- ----------  ----------  ---------- ---------- ---------- ----------  ---------

Total income             2,736     29,460     32,196       2,536      26,654     29,190      5,456     39,946     45,402
Expenses
Management fees           (514)         -       (514)       (540)          -       (540)    (1,120)         -    (1,120)
Other expenses            (229)         -       (229)       (170)          -       (170)      (319)         -      (319)
                     --------- ---------- ---------- ----------- -----------  --------- ---------- ---------- ----------
Profit before finance    1,993     29,460     31,453       1,826      26,654     28,480      4,017     39,946     43,963
costs and tax
Finance costs           (1,166)         -     (1,166)     (1,270)          -     (1,270)    (2,454)         -    (2,454)
                     ---------   --------   --------    --------   ---------  ---------  ---------  ---------  ---------


Profit before tax          827     29,460     30,287         556      26,654     27,210      1,563     39,946     41,509
Taxation                     -          -          -           -           -          -          -          -          -
                     ---------   --------   --------    --------   ---------  ---------  ---------  ---------  ---------
Profit for the period      827     29,460     30,287         556      26,654     27,210      1,563     39,946     41,509
                        ======     ======     ======      ======      ======      =====     ======     ======     ======
Earnings per ordinary    0.81p     29.09p     29.90p       0.51p      24.22p     24.73p      1.44p     36.73p     38.17p
share (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 Trust 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 20



              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
       Unaudited interim results for the half year ended 30 November 2005

Statement of Changes in Equity
for the half year ended 30 November 2005
                                                                 (Unaudited)
                                                       Half year ended 30 November 2005
                                          Ordinary         Capital         Other     Retained       Total
                                             share      redemption       capital     earnings
                                           capital         reserve      reserves
                                             £'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 2005                 25,194          20,222       195,111        4,991     245,518
                                            ======          ======        ======        =====      ======


                                                                 (Unaudited)
                                                      Half year ended 30 November 2004
                                                              Restated (note 6)
                                          Ordinary         Capital         Other    Retained       Total
                                             share      redemption       capital    earnings
                                           capital         reserve      reserves
                                             £'000           £'000         £'000       £'000       £'000
Balance at 31 May 2004                      28,691          16,725       148,210       4,862     198,488
Buy-backs of ordinary shares               (1,593)           1,593       (9,273)           -     (9,273)
Profit for the period                            -               -        26,654         556      27,210
Ordinary dividend paid                           -               -             -     (1,106)     (1,106)
                                        ----------      ----------    ----------  ----------  ----------
Balance at 30 November 2004                 27,098          18,318       165,591       4,312     215,319
                                            ======          ======        ======       =====      ======

                                                                 (Unaudited)
                                                           Year ended 31 May 2005
                                                              Restated (note 5)
                                          Ordinary         Capital         Other    Retained       Total
                                             share      redemption       capital    earnings
                                           capital         reserve      reserves
                                             £'000           £'000         £'000       £'000       £'000
Balance at 31 May 2004                      28,691          16,725       148,210       4,862     198,488
Buy-backs of ordinary shares               (3,277)           3,277      (20,831)           -    (20,831)
Profit for the period                            -               -        39,946       1,563      41,509
Ordinary dividend paid                           -               -             -     (1,095)     (1,095)
                                        ----------      ----------    ----------  ----------  ----------
Balance at 31 May 2005                      25,414          20,002       167,325       5,330     218,071
                                            ======          ======        ======       =====      ======



                                                                    Page 5 of 20



              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
       Unaudited interim results for the half year ended 30 November 2005

Consolidated Balance Sheet
at 30 November 2005

                                                                 (Unaudited)       (Unaudited)     (Audited)
                                                           30 November  2005  30 November 2004        31 May
                                                                                      Restated          2005
                                                                                      (note 6)      Restated
                                                                       £'000             £'000      (note 5)
                                                                                                       £'000

Non-current assets
Investments held at fair value through                               269,875           241,067       245,058
   profit or loss (note 1 (d))                                   -----------       -----------   -----------

Current assets
Sales for future settlement                                              882             1,127           278
Taxation recoverable                                                       8                 -             3
Prepayments and accrued income                                           495               371           865
Cash and cash equivalents                                              1,890             1,254             -
Other debtors                                                              -                 -            11
                                                                  ----------        ----------    ----------
                                                                       3,275             2,752         1,157
                                                                  ----------         ---------    ----------
Total assets                                                         273,150           243,819       246,215
                                                                      ======            ======        ======

Current liabilities
Purchases for future settlement                                        2,304             2,199           215
Accruals                                                                 419               292           345
Bank loans and overdrafts                                              4,900             6,000         7,575
                                                                  ----------        ----------    ----------
                                                                       7,623             8,491         8,135
                                                                  ----------        ----------    ----------


Total assets less current liabilities                                265,527           235,328       238,080
Non-current liabilities                                             (20,009)          (20,009)      (20,009)
                                                                 -----------       -----------   -----------
Net assets                                                           245,518           215,319       218,071
                                                                      ======            ======        ======

Equity attributable to equity shareholders

Called up share capital                                               25,194            27,098        25,414
Capital redemption reserve                                            20,222            18,318        20,002
Other capital reserves                                               195,111           165,591       167,325
Retained earnings                                                      4,991             4,312         5,330
                                                                 -----------       -----------    ----------
Total equity                                                         245,518           215,319       218,071
                                                                      ======            ======        ======
Net asset value per ordinary share  (note 4)                         243.63p           198.65p       214.52p
                                                                      ======            ======        ======




                                                                    Page 6 of 20



              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
       Unaudited interim results for the half year ended 30 November 2005

Consolidated Cash Flow Statement
for the half year ended 30 November 2005


                                                                    (Unaudited)        (Unaudited)     (Audited)
                                                                Half year ended    Half year ended    Year ended
                                                               30 November 2005   30 November 2004        31 May
                                                                                          Restated          2005
                                                                                          (note 6)      Restated
                                                                          £'000              £'000      (note 5)
                                                                                                           £'000

Net cash inflow from operating activities (note 8)                        7,396             12,645        21,374
                                                                      ---------          ---------     ---------
Net cash inflow before use of financing                                   7,396             12,645        21,374
Net cash outflow from financing activities                              (5,145)           (11,879)      (22,223)
                                                                     ----------         ----------    ----------
Net increase/(decrease) in cash and cash
  equivalents                                                             2,251                766         (849)
Cash and cash equivalents at the start of the period                      (361)                488           488
                                                                     ----------         ----------    ----------
Cash and cash equivalents at the period end                               1,890              1,254         (361)
                                                                         ======             ======        ======




Notes to the Accounts


1.     Accounting Policies

      (a)   Basis of preparation

            The consolidated financial information for the half year ended 30 November 2005 has been prepared
            using the accounting policies expected to be used 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') that remain in effect, to the extent that IFRS have been adopted by
            the European Union, for the Group's year ending 31 May 2006.



            The accounts have been prepared on the historical cost basis, except for the revaluation of
            certain financial instruments.  The principal accounting policies adopted are set out below.
            Where presentational guidance set out in the Statement of Recommended Practice ('the SORP') for
            investment trusts issued by the Association of Investment Trust Companies ('the AITC') in January
            2003 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 20



              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
       Unaudited interim results for the half year ended 30 November 2005

Notes to the Accounts, continued


1.     (b)   First time adoption of IFRS

             The date of transition to IFRS for the Group is 1 June 2005.  The IFRS accounting policies set out
             herein have been applied retrospectively to the opening balance sheet as at 1 June 2004 and all
             subsequent periods. The disclosures required by First-time Adoption of International Financial
             Reporting Standards  ('IFRS 1') concerning the transition from UK GAAP to IFRS are given in notes 5,
             6 and 7.


1.     (c)  Basis of consolidation

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


1.     (d)   Investments held at fair value through profit or loss

             All investments are designated upon initial recognition as held at fair value through profit or
             loss. Assets are de-recognised at the trade date of the disposal. Proceeds will be measured at fair
             value, which will be regarded as the proceeds of sale less any transaction costs. The fair value of
             the financial instruments is based on their quoted bid price at the balance sheet date, without
             deduction for the estimated future selling costs. Unquoted investments are valued by the directors
             using primary valuation techniques such as earnings, multiples, recent transactions and net assets.
             Where fair value cannot reliably be measured the investment will be carried at the previous
             reporting date value unless there is evidence that the investment has since been impaired, in which
             case the value will be reduced.

             Changes in the fair value of investments held at fair value through profit and or loss and gains and
             losses on disposal are recognised in the Income Statement as 'Gains or losses on investments held at
             fair value through profit or loss'.  Also included within this caption are transaction costs in
             relation to the purchase or sale of investments, including the difference between the purchase price
             of an investment and its bid price at the date of purchase.


1.     (e)  Presentation of Income Statement

            In order to better reflect the activities of an investment trust company, and in accordance with
            guidance issued by the Association of Investment Trust Companies ('AITC'), supplementary information
            which analyses the Income Statement between items of a revenue and capital nature has been presented
            alongside the Income Statement. In accordance with the Company's status as a UK investment company
            under section 266 of the Companies Act 1985, net capital returns may not be distributed by way of
            dividend.  Additionally, the net revenue is the measure the directors believe appropriate in
            assessing the Group's compliance with certain requirements set out in section 842 of the Income and
            Corporation Taxes Act 1988.






                                                                    Page 8 of 20



              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC

       Unaudited interim results for the half year ended 30 November 2005



Notes to the Accounts, continued


1.     (f)  Income

            Dividends receivable on equity shares are recognised as revenue for the year on an ex-dividend basis.
              Special dividends are treated as income or as capital, depending on the facts of each individual
            case. Income from fixed interest debt securities is recognised using the effective interest rate
            method. The trading profits of the subsidiary undertaking, which represent realised gains and losses
            on the sale of current asset investments, are dealt with in the revenue column of the Income
            Statement as a revenue item. Bank deposit interest is accounted for on an accruals basis.


1.     (g)   Expenses

             All expenses and interest payable are accounted for on an accruals basis. All administration
             expenses, including the management fee and interest payable, are charged to the revenue column of
             the Income Statement. Expenses which are incidental to the purchase or sale of an investment are
             charged to the capital column of the Income Statement and allocated to the other capital reserves.



             Purchase and sale transaction costs for the half year ended 30 November 2005 were £195,000 (half
             year ended 30 November 2004: £135,000; year ended 31 May 2005: £366,000).  These comprise mainly
             stamp duty and commission.



             Any performance fees payable are allocated wholly to capital, reflecting the fact that, although
             they are calculated on a total return basis, they are expected to be attributed largely, if not
             wholly, to capital performance.

1.     (h)   Deferred taxation

             Deferred taxation is provided on all taxable temporary differences that have originated but not
             reversed by the balance sheet date, other than those differences regarded as permanent.  Any
             liability to deferred tax is provided at the average rate of tax expected to apply, based on tax law
             that had been enacted or substantially enacted by the balance sheet date.  A deferred tax asset is
             recognised only to the extent that it is considered probable that sufficient taxable profits will be
             available to allow the deferred tax benefit of that asset to be utilised.  Deferred tax assets and
             liabilities are not discounted to reflect the time value of money.


1.     (i)  Foreign currency

            For the purposes of the consolidated accounts, the results and financial position of each entity is
            expressed in pounds sterling, which is the functional currency of the Company and the presentational
            currency of the Group.  Sterling is the functional currency because it is the currency of the
            primary economic environment in which the Group operates.



            Transactions recorded in overseas currencies during the year are translated into sterling at the
            appropriate daily exchange rates. Assets and liabilities denominated in overseas currencies at the
            balance sheet date are translated into sterling at the exchange rates ruling at the date.




                                                                    Page 9 of 20



              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC

       Unaudited interim results for the half year ended 30 November 2005



Notes to the Accounts, continued


1.     (j)  Cash and cash equivalents

            Cash comprises cash in hand and demand deposits.  Cash equivalents are short-term, highly liquid
            investments that are readily convertible to known amounts of cash and that are subject to an
            insignificant risk of changes in value.


1.     (k)  Bank borrowings

            Interest-bearing bank loans and overdrafts are recorded as the proceeds received, net of direct
            issues costs. Finance charges, including premiums payable on settlement or redemption and direct
            issue costs, are accounted for on an accruals basis in the Income Statement using the effective
            interest rate method and are added to the carrying amount of the instrument to the extent that they
            are not settled in the period in which they arise.


2.     Earnings per ordinary share

       The earnings per ordinary share figure is based on the net gain for the half year of £30,287,000 (half
       year ended 30 November 2004: £27,210,000; year ended 31 May 2005: £41,509,000) and on 101,282,566 (half
       year ended 30 November 2004: 110,044,125; year ended 31 May 2005: 108,747,775) 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)               (Audited)
                                                 30 November 2005      30 November 2004    31 May 2005 Restated
                                                                      Restated (note 6)                (note 5)
                                                            £'000                 £'000                   £'000
       Net revenue gain                                       827                   556                   1,563
       Net capital gain                                    29,460                26,654                  39,946
                                                       ----------             ---------                --------
       Net total gain                                      30,287                27,210                  41,509
                                                            =====                 =====                   =====

       Weighed average number of
         ordinary shares in issue during
         the period                                   101,282,566           110,044,125             108,747,775

                                                            pence                 pence                   pence
       Revenue earnings per ordinary
         share                                               0.81                  0.51                    1.44
       Capital earnings per ordinary
         share                                              29.09                 24.22                   36.73
                                                         --------               -------                 -------
       Total earnings per ordinary share                    29.90                 24.73                   38.17
                                                            =====                 =====                   =====




                                                                   Page 10 of 20



              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
       Unaudited interim results for the half year ended 30 November 2005



Notes to the Accounts, continued



3.     Ordinary share capital

       At 30 November 2005 there were 100,776,282 ordinary shares in issue (30 November 2004: 108,391,840; 31
       May 2005: 101,656,282). During the half year ended 30 November 2005 the Company bought 880,000 of its own
       issued ordinary shares in the market for cancellation (half year ended 30 November 2004: 6,370,000; year
       ended 31 May 2005: 13,105,558). The cost of the share buy-backs, including stamp duty, amounted to
       £1,674,000 (half year ended 30 November 2004: £9,273,000; year ended 31 May 2005: £20,831,000).

4.     Net asset value per share

       The net asset value per ordinary share is based on the net assets attributed to equity shareholders of
       £245,518,000 (half year ended 30 November 2004: £215,319,000 as restated; year ended 31 May 2005;
       £218,071,000 as restated)  and on 100,776,282 (half year ended 30 November 2004: 108,391,840; year ended
       31 May 2005; 101,656,282) ordinary shares, being the number of ordinary shares in issue at the period
       end.


5.     (a)   Restatement of balances as at and for the year ended 31 May 2005

             As at 1 June 2005 the Company adopted International Financial Reporting Standards.  In accordance
             with IFRS 1 (First-time Adoption of International Financial Reporting Standards) the following is a
             reconciliation of the results as at and for the year ended 31 May 2005, previously reported under
             the applicable UK Accounting Standards and the SORP, to the restated IFRS results.





                                                                   Page 11 of 20



              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
       Unaudited interim results for the half year ended 30 November 2005



Notes to the Accounts, continued


                                                                    (Audited)        Effect of  Restated 31 May
                                                       Previously reported 31    transition to             2005
                                                                                          IFRS
                                                                     May 2005            £'000
                                                                        £'000                             £'000
                                               Note
           Investments                         1                      245,227            (169)          245,058
           Current assets                                               1,157                -            1,157
           Creditors: amounts falling due
             within one year                   2                      (9,304)            1,169          (8,135)
                                                                   ----------         --------       ----------
           Total assets less current
              liabilities                                             237,080            1,000          238,080
           Creditors: amounts falling due
             after one year                    3                     (20,000)              (9)         (20,009)
                                                                   ----------         --------       ----------
                                                                      217,080              991          218,071
                                                                       ======            =====           ======

           Capital and reverses
           Called up share capital:
             ordinary shares                                          25,414                -           25,414
             preference stock                3                             9              (9)                -
           Capital redemption reserve                                 20,002                -           20,002
           Capital reserve - realised        1, 4                    123,221        (123,221)                -
           Capital reserve - unrealised/
             revaluation reserve             1, 4                     44,273         (44,273)                -
           Other capital reserves            1, 4                          -          167,325          167,325
           Revenue reserve/Retained
             earnings                        2                         4,161            1,169            5,330
                                                                  ----------         --------       ----------
                                                                     217,080              991          218,071
                                                                      ======            =====           ======

           Notes to the reconciliation

           1.         Investments are classified as held at fair value through profit or loss under IFRS and
           are carried at bid prices which total their fair value of £245,058,000. Previously, under UK GAAP,
           they were carried at mid prices.  The aggregate difference, being a revaluation downwards of
           £169,000, also decreases other capital reserves.

           2.         No provision has been made for the final dividend on the ordinary shares for the year
           ended 31 May 2005 of £1,169,000. Under IFRS, the final dividend is not recognised until approved by
           the shareholders.

           3.         Under IFRS the Company's preference stock is classified as debt.

           4.         The 'capital reserve - realised' and the 'capital reserve - unrealised' are now
           reclassified as 'other capital reserves'.




                                                                   Page 12 of 20



              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
       Unaudited interim results for the half year ended 30 November 2005

Notes to the Accounts, continued


5.   (b)   Reconciliation of the Statement of Total Return to the Income Statement for the year ended 31 May
           2005

           Under IFRS the Income Statement is the equivalent of the Statement of Total Return as reported
           previously.
                                                                                           2005           EPS
                                                                                                       impact
                                                                        Note              £'000         pence
           Net return on ordinary activities after taxation
             per Statement of Total Return                                               41,484             -
           Change from mid to bid basis at 31 May 2004                     1                194          0.18
           Change from mid to bid basis at 31 May 2005                     1              (169)        (0.16)
                                                                                       --------       -------
           Net gain per Income Statement                                                 41,509          0.02
                                                                                          =====          ====




            Notes to the reconciliation

           1.         The portfolio valuations at 31 May 2004 and 31 May 2005 are valued at fair value under
           IFRS.  These values are lower than the previous valuations by £194,000 and £169,000 respectively.


5.    (c)   Reconciliation of the Cash Flow Statement for the year ended 31 May 2005


                                                                      (Audited)     Effect of         Adjusted
                                                                     Previously transition to       cash flows          
                                                                       reported          IFRS             2005
                                                                cash flows 2005         £'000
                                                  Note                    £'000                          £'000
            Net cash inflow from operating
               activities                         1                       4,410        16,964           21,374
            Returns on investments and
              servicing of finance                1                     (3,503)         3,503                -
            Taxation                                                          -             -                -
            Net cash inflow from financial
              investment                                                 20,467      (20,467)                -
            Equity dividends paid                 2                     (1,106)         1,106                -
                                                                      ---------     ---------        ---------
            Net cash inflow before
              financing                           1, 2                   20,268         1,106           21,374
            Financing                             1, 2                 (21,117)       (1,106)         (22,223)
                                                                       --------       -------         --------
            Decrease in cash                                              (849)             -            (849)
                                                                          =====          ====            =====






                                                                   Page 13 of 20



              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
       Unaudited interim results for the half year ended 30 November 2005

Notes to the Accounts, continued


            Notes to the reconciliation

            1.         Servicing of finance, taxation and net cash inflow from financial investment have now been
            analysed within operating activities.

            2.         Equity dividends paid on equity shares are now analysed within financing.


6.    (a)   Restatement of balances as at and for the half year ended 30 November 2004

            As at 1 June 2005 the Company adopted International Financial Reporting Standards. In accordance with
            IFRS 1 the following is a reconciliation of the results as at and for the half year ended 30 November
            2004, previously reported under the applicable UK Accounting Standards and the SORP, to the restated
            IFRS results.


                                                               (Unaudited)       Effect of             Restated
                                                       Previously reported   transition to     30 November 2004
                                                          30 November 2004            IFRS     
                                                                     £'000           £'000                £'000
                                            Note
          Investments                       1                      241,239           (172)              241,067
          Current assets                                             2,752               -                2,752
          Creditors: amounts falling
             due within one year                                   (8,491)               -              (8,491)
                                                                 ---------        --------           ----------
          Total assets less current
            liabilities                                            235,500           (172)              235,328
          Creditors: amounts falling
            due after one year              2                     (20,000)             (9)             (20,009)
                                                               -----------        --------          -----------
                                                                   215,500           (181)              215,319
                                                                    ======           =====               ======


           Capital and reserves
           Called up share capital:
                ordinary shares                                     27,098               -              27,098
                preference stock             2                           9             (9)                   -
           Capital redemption reserve                               18,318               -              18,318
           Capital reserve - realised        1, 3                  120,939       (120,939)                   -
           Capital reserve - unrealised/
              revaluation reserve            1, 3                   44,824        (44,824)                   -
           Other capital reserves            1, 3                        -         165,591             165,591
           Revenue reserve/Retained
              earnings                                               4,312               -               4,312
                                                                ----------       ---------          ----------
                                                                   215,500           (181)             215,319
                                                                    ======           =====              ======




                                                                   Page 14 of 20



              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
       Unaudited interim results for the half year ended 30 November 2005


Notes to the Accounts, continued

           Notes to the reconciliation

           1.         Investments are classified as held at fair value through profit or loss under IFRS and are
           carried at bid prices which total their fair value of £241,067,000. Previously, under UK GAAP, they
           were carried at mid prices. The aggregate difference, being a revaluation downwards of £172,000, also
           decreases other capital reserves.

           2.         Under IFRS the Company's preference stock is classified as debt.

           3.         The 'capital reserve - realised' and the 'capital reserve - unrealised' are now
           reclassified as 'other capital reserves'.


6.    (b)   Reconciliation of the Statement of Total Return to the Income Statement for the half year ended 30
            November 2004

            Under IFRS the Income Statement is the equivalent of the Statement of Total Return as reported
            previously.


                                                                              2004                          EPS
                                                                                                         impact
                                                       Note                  £'000                        Pence
            Net return on ordinary activities after
              taxation per Statement of Total
              Return                                                        27,188                            -
            Change from mid to bid basis at 31
              May 2004                                 1                       194                         0.18
            Change from mid to bid basis at 30
              November 2004                            1                     (172)                       (0.16)
                                                                          --------                     --------
            Net gain per Income Statement                                   27,210                         0.02
                                                                             =====                        =====


            Notes to the reconciliation

            1.         The portfolio valuations at 31 May 2004 and 30 November 2004 are valued at fair value
            under IFRS. These values are lower than the previous valuations by £194,000 and £172,000
            respectively.












                                                                   Page 15 of 20



              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
       Unaudited interim results for the half year ended 30 November 2005



Notes to the Accounts, continued


6.     (c)    Reconciliation of the Cash Flow Statement for the half year ended 30 November 2004

                                                                   (Unaudited)     Effect of         Adjusted
                                                                    Previously transition to
                                                                 reported cash          IFRS  cash flows 2004
                                                                    flows 2004
                                                                         £'000         £'000            £'000

                                                         Note
           Net cash inflow from operating
             activities                                     1            2,665         9,980           12,645
           Returns on investments and servicing
             of finance                                     1          (2,321)         2,321                -
           Taxation                                                          -             -                -
           Net cash inflow from financial
             investment                                                 12,301      (12,301)                -
           Equity dividends paid                            2          (1,106)         1,106                -
                                                                      --------      --------         --------
           Net cash inflow before financing                             11,539         1,106           12,645
           Financing                                     1, 2         (10,773)       (1,106)         (11,879)
                                                                      --------      --------         --------
           Increase in cash                                                766             -              766
                                                                         =====          ====            =====


            Notes to the reconciliation

            1.         Servicing of finance, taxation and net cash inflow from financial investment have now been
            analysed within operating activities.

            2.         Equity dividends paid are now analysed within financing.


7.    Restatement of opening balances as at 31 May 2004

      As at 1 June 2005 the Company adopted International Financial Reporting Standards.  In accordance with IFRS
      1 the following is a reconciliation of the results as at and for the year ended 31 May 2004, previously
      reported under the applicable UK Accounting Standards and the SORP, to the restated IFRS results.



                                                                   Page 16 of 20



              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
       Unaudited interim results for the half year ended 30 November 2005



Notes to the Accounts, continued


                                                     (Audited) Previously          Effect of           Restated
                                                     reported 31 May 2004      transition to        31 May 2004
                                                                    £'000               IFRS
                                                                                      £'000
                                      Note                                                                £'000
     Investments                      1                           226,669              (194)            226,475
     Current assets                                                 1,894                  -              1,894
     Creditors: amounts falling
       due within one year            2                          (11,020)              1,148            (9,872)
                                                               ----------         ----------         ----------
     Total assets less current
       liabilities                                                217,543                954            218,497
     Creditors: amounts falling       3
       due after one year                                        (20,000)                (9)           (20,009)
                                                               ----------           --------         ----------
                                                                  197,543                945            198,488
                                                                   ======               ====             ======

     Capital and reserves
     Called up share capital
          ordinary shares                                        28,691                  -             28,691
          preference stock           3                                9                (9)                  -
     Capital redemption reserve                                  16,725                  -             16,725
     Capital reserve - realised      4                          121,809          (121,809)                  -
     Capital reserve - unrealised/
        revaluation reserve          4                           26,595           (26,595)                  -
     Other capital reserves          1, 4                             -            148,210            148,210
     Revenue reserve/Retained
        earnings                     2                            3,714              1,148              4,862
                                                            ----------         ----------         ----------
                                                                197,543                945            198,488
                                                                 ======             ======             ======


       Notes to the reconciliation

       1.         Investments are classified as held at fair value under IFRS and are carried at bid prices
       which total their fair value of £226,475,000. Previously, under UK GAAP, they were carried at mid
       prices.  The aggregate difference, being a revaluation downwards of £194,000, also decreases other
       capital reserves.

       2.         No provision has been made for the final dividend on the ordinary shares for the year ended
       31 May 2004 of £1,148,000. Under IFRS, the final dividend is not recognised until approved by the
       shareholders.

       3.         Under IFRS the Company's preference stock is classified as debt.

       4.         The 'capital reserve - realised' and the 'capital reserve - unrealised' are now
       reclassified as 'other capital reserves'.






                                                                   Page 17 of 20



              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC

       Unaudited interim results for the half year ended 30 November 2005



Notes to the Accounts, continued

8.     Reconciliation of profit before taxation to net cash inflow from operating activities


                                                       (Unaudited)             (Unaudited)            (Audited)
                                                   Half year ended      Half year ended 30    Year ended 31 May
                                                  30 November 2005           November 2004                 2005
                                                                                  Restated             Restated
                                                                                  (note 6)             (note 5) 
                                                             £'000                   £'000                £'000
      Profit before taxation                                30,287                  27,210               41,509
      Gains on investments held at fair
        value through profit or loss                      (29,460)                (26,654)             (39,946)
      Increase/(decrease) in purchases
        for future settlement creditor                       2,089                   1,090                (894)
      Increase in sales for future
        settlement debtor                                    (604)                   (851)                  (2)
      Net sales of investments                               4,642                  12,062               21,363
      Decrease in accrued income                               428                     655                  188
      (Increase)/decrease in other debtors
      Increase/(decrease) in accruals                         (58)                     104                   77
      Taxation on investment                                    77                   (971)                (918)
                                                               (5)                       -                  (3)
                                                         ---------                --------             --------
                                                             7,396                  12,645               21,374
                                                             =====                   =====                =====


9.    Interim dividend

      The Company has not declared an interim dividend (2004: nil)

10.   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 2005 and 30 November 2004 (as restated) has not been audited.



      The information for the year ended 31 May 2005 has been extracted from the latest published audited accounts
      and restated to comply with IFRS (see note 5). The audited accounts for the year ended 2005 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 18 of 20



              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
       Unaudited interim results for the half year ended 30 November 2005



Notes to the Accounts, continued


11.   Interim Report

      The full interim report will be posted to shareholders in February 2006 and copies will be available
      thereafter from the Secretary at the Company's Registered Office, 4 Broadgate, London EC2M 2DA.




                                                                   Page 19 of 20



              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
       Unaudited interim results for the half year ended 30 November 2005



Investment Portfolio
at 30 November 2005


                                      Valuation at                                                Valuation at
                                       30 November                                                 30 November
                                              2005                                                        2005
                                             £'000                                                       £'000
W S Atkins                                  12,288      Hedlam                                           2,567
T & F Informa                               12,262      Forth  Ports                                     2,562
Bellway                                      8,252      Restaurant Group                                 2,537
Balfour Beatty                               6,384      VT Group                                         2,503
Domino Printing                              6,300      Dana Petroleum                                   2,500
WSP                                          6,069      Charter                                          2,500
Bovis Homes                                  5,804      Umbro                                            2,398
Interserve                                   5,440      CSR                                              2,362
Savills                                      5,324      Spectris                                         2,312
Capital & Regional Properties                5,261      Ultra Electronics                                2,275
Grainger Trust                               4,560      Rotork                                           2,248
ICG Intermediate Capital                     4,379      Chrysalis                                        2,189
Erinaceous                                   4,230      RPS Group                                        2,168
Laird                                        4,090      Big Yellow Group                                 2,153
Carillion                                    3,775      Topps Tiles                                      2,145
SIG                                          3,575      Robert Walters                                   2,032
Meggitt                                      3,515      Victrex                                          2,008
Enodis                                       3,402      *Fun Technologies                                1,967
Anite                                        3,393      Intec Telecom Systems                            1,955
Paragon                                      3,360      Greggs                                           1,915
Carter & Carter                              3,270      London Merchant Securities                       1,884
Renishaw                                     3,238      Melrose                                          1,874
Burren Energy                                2,834      E2V Holdings                                     1,873
Greene King                                  2,815      Ricardo                                          1,859
Shaftesbury                                  2,800      House of Fraser                                  1,856
Premier Oil                                  2,785      Halford                                          1,792
Mouchel Parkman                              2,782      Euromoney Institutional Investor                 1,786
royalblue                                    2,668      Isotron                                          1,767
BSS Group                                    2,666      Ulster Television                                1,680
Gyrus Group                                  2,623      *IBS OPENSystems                                 1,672



* quoted on the Alternative Investment Market



These investments total £203,483,000 or 75.4% of the portfolio.





                                                                   Page 20 of 20



              THE HENDERSON SMALLER COMPANIES INVESTMENT TRUST PLC
       Unaudited interim results for the half year ended 30 November 2005



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