Final Results

DUNEDIN SMALLER COMPANIES INVESTMENT TRUST PLC The objective of Dunedin Smaller Companies Investment Trust is the achievement of long-term capital growth from a portfolio of smaller companies in the United Kingdom, at a higher rate than the FTSE SmallCap Index (excluding Investment Companies). PRELIMINARY RESULTS FOR YEAR ENDED 31 OCTOBER 2002 ·Net asset value fell by 28.1% compared to a 22.6% fall by the benchmark index ·Share price fell from 391p to 264p - a decrease of 32.5% ·Revenue return for the year was 9.92p per share (2001 - 13.43p) ·The Board is recommending a final dividend of 8.9p which, when combined with the interim dividend, makes a total dividend for the year of 12.9p (2001 - 12.9p) For further information, please contact :- Andrew Paisley, Fund Manager Edinburgh Fund Managers plc 0131 313 1000 Iain Beattie, Deputy Chief Investment Officer Edinburgh Fund Managers plc 0131 313 1000 Please note that past performance is not necessarily a guide to the future and that the value of investments and the income from them may fall as well as rise. Investors may not get back the amount they originally invested. CHAIRMAN'S STATEMENT I am disappointed to report a significant fall in the net asset value of your trust. Share prices of many smaller companies have been badly affected by the difficult stockmarket environment with technology and other economy sensitive sectors suffering sharp falls. The equity portfolio fell 24.2% but due to the effects of gearing the net asset value fell 28.1% compared to a fall of 22.6% in the FTSE SmallCap Index (excluding investment companies) The share price fell from 391.0p to 264.0p, a decrease of 32.5%. The discount to net asset value widened reflecting the current uncertainty in equity markets and smaller company shares in particular. Background Investors in smaller company shares, once again, endured a difficult period as the UK economy experienced below average levels of growth. Apart from the housing market, which enjoyed high activity levels and rising prices, most sectors of the economy faced problems in terms of the demand for and prices achieved by their products. Technology companies in particular, faced an environment of low demand and high supply resulting in pressure on profitability. With activity remaining subdued the Bank of England kept interest rates at low levels which gave homeowners the opportunity to remortgage property thus boosting disposable income. This supported consumption resulting in the service sector holding up quite well. Overall the situation is very similar to previous years with manufacturing output falling and consumer expenditure remaining buoyant. Price rises and hence profits growth has been hard to achieve and cost cutting has been the key to company profitability and survival. In this difficult environment the trust intends to reinforce its investment emphasis on a combination of core quality companies with consistent earnings allied to selective value situations and emerging growth companies. Many companies have continued to operate profitably over the last twelve months, but share prices have not reflected the underlying business strength. The manager neutralised the gearing in the autumn and the trust will remain ungeared until the outlook for corporate profitability becomes clearer and market sentiment improves. Revenue The revenue return for the year amounted to 9.92p per share (2001 - 13.43p). A number of companies have taken the opportunity to reduce or omit dividend payments in order to conserve cash and improve balance sheets in the current environment. The board is recommending a final dividend of 8.9p which will be paid on 14 February 2003 to shareholders on the register on 17 January 2003. When combined with the interim dividend of 4.0p the total dividend paid for the year will amount to 12.9p, unchanged from last year. Although the dividend was not covered by earnings in the current year we have been able to maintain the dividend level by using part of the reserve which has been accumulated over many years. Share Buy Backs Shareholders have given the board authority to purchase the company's shares for cancellation. During the year the company bought back 150,000 shares. A special resolution proposing an extension to this facility will be put to shareholders at the annual general meeting. Corporate Governance As a Stock Exchange listed company, this trust is required to consider the degree to which it complies with the guidelines emanating from the Combined Code. In line with best practice, your board meets regularly with the manager, auditors and other advisors and is in compliance with its corporate governance responsibilities. Marketing Initiatives The board also continues to promote the company through the AITC's and manager's marketing initiatives which provide a range of savings schemes through which investors are able to invest in Dunedin Smaller Companies at a low cost and in a convenient manner. More information on these savings products is available on the manager's website, www.edfd.com. Outlook Recent economic data suggests that the UK economy is unable to shrug off the effects of slowdown elsewhere in the world. The manufacturing sector has to contend with poor conditions in the UK as well as weakness in its main export markets of the United States and Europe as capital investment continues to be cut back. The onus for keeping the economy moving forward will once again fall on the consumer with some help from increased government spending. As long as interest rates remain low and employment high, the economy should be capable of growing, albeit at a lower rate than previously. The resultant modest increase in corporate profits should allow some progress in smaller companies' shares from current levels but, until overall confidence in the economy improves, share price gains are likely to be limited. STATEMENT OF TOTAL RETURN (AUDITED) Year to 31 October 2002 Revenue Capital Total £000 £000 £000 Realised losses on investments - (10,766) (10,766) Unrealised losses on investments - (9,905) (9,905) Income from investments 1,933 - 1,933 Interest receivable on short term 390 - 390 deposits Other income 15 - 15 Investment management fee (105) (314) (419) Other administrative expenses (270) - (270) Net Return before Finance Costs and 1,963 (20,985) (19,022) Taxation Interest payable and similar charges (316) (949) (1,265) Return on Ordinary Activities before 1,647 (21,934) (20,287) Taxation Taxation - - - Return on Ordinary Activities after 1,647 (21,934) (20,287) Taxation Dividends in respect of equity (2,135) - (2,135) shares (488) (21,934) (22,422) RETURN PER ORDINARY SHARE 9.92p (132.09p) (122.17p) STATEMENT OF TOTAL RETURN (AUDITED) Year to 31 October 2001 Revenue Capital Total £000 £000 £000 Realised losses on investments - (131) (131) Unrealised losses on investments - (30,684) (30,684) Income from investments 2,571 - 2,571 Interest receivable on short term 370 - 370 deposits Other income 15 - 15 Investment management fee (142) (802) (944) Other administrative expenses (253) - (253) Net Return before Finance Costs and 2,561 (31,617) (29,056) Taxation Interest payable and similar charges (316) (949) (1,265) Return on Ordinary Activities before 2,245 (32,566) (30,321) Taxation Taxation (2) - (2) Return on Ordinary Activities after 2,243 (32,566) (30,323) Taxation Dividends in respect of (2,154) - (2,154) equity shares 89 (32,566) (32,477) RETURN PER ORDINARY SHARE 13.43p (195.01p) (181.58p) BALANCE SHEET (AUDITED) At At 31 October 31 October 2002 2001 £000 £000 FIXED ASSETS Investments 56,331 83,006 CURRENT ASSETS Debtors 408 568 UK Treasury Bills 4,975 9,932 AAA Money Market Funds 8,000 - Cash and short term deposits 4,693 9,430 18,076 19,930 CREDITORS: Amounts falling due within one (2,365) (7,896) year NET CURRENT ASSETS 15,711 12,034 TOTAL ASSETS LESS CURRENT LIABILITIES 72,042 95,040 CREDITORS: Amounts falling due after more (14,818) (14,809) than one year 57,224 80,231 CAPITAL AND RESERVES Called up share capital - equity 4,138 4,175 Capital reserve - realised 79,333 91,947 - unrealised (28,704) (18,799) Capital redemption reserve 487 450 Revenue reserve 1,970 2,458 TOTAL EQUITY SHAREHOLDERS' FUNDS 57,224 80,231 Net asset value per 25p ordinary share 344.67p 479.28p CASHFLOW STATEMENT (AUDITED) For the year ended 31 October 2002 2002 2001 2001 £000 £000 £000 £000 Net cash inflow from operating 1,690 1,653 activities Servicing of finance Interest paid (1,256) (1,256) Net cash outflow from servicing (1,256) (1,256) of finance Taxation Overseas tax paid - (4) Total tax paid - (4) Financial investment Purchase of investments (32,502) (24,937) Sales of investments 33,107 38,803 Net cash inflow from financial 605 13,866 investment Equity dividends paid (2,148) (2,154) Net cash (outflow)/inflow before use of liquid resources and (1,109) 12,105 financing Net cash outflow from management of liquid resources (3,043) (5,003) Financing Buyback of ordinary shares (585) - (Decrease)/increase in cash (4,737) 7,102 Notes: 1. The directors have proposed a final dividend of 8.9p per ordinary share (2001 - 8.9p) for the year ended 31 October 2002. The final dividend will be paid on 14 February 2003 to shareholders on the register on 17 January 2003. The ex dividend date is 15 January 2003. 2.The financial information for the year ended 31 October 2001 has been extracted from the Annual Report and Accounts of the company which has been filed with the Registrar of Companies and on which the auditor's report was unqualified. 3. The statement of total return (incorporating the revenue account), balance sheet and cashflow statement set out above do not represent full accounts in accordance with Section 240 of the Companies Act 1985. The accounts have been prepared in accordance with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies'. 4. The accounts have been prepared under the same accounting policies used for the year to 31 October 2001. The statutory accounts for 2002 contain an unqualified audit report and will be delivered to the Registrar of Companies following the company's Annual General Meeting which will be held at Tayforth House, 9 Luna Place, Technology Park, Dundee on Thursday 13 February 2003 at 12 noon. 5.The annual report will be posted to shareholders on 6 January 2003 and copies will be available at the head office of the Secretary - Donaldson House, 97 Haymarket Terrace, Edinburgh EH12 5HD. Please note that past performance is not necessarily a guide to the future and that the value of investments and the income from them may fall as well as rise and may be affected by exchange rate movements. Investors may not get back the amount they originally invested. For Dunedin Smaller Companies Investment Trust PLC Edinburgh Fund Managers plc, SECRETARY ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2002/12/17/20021217BIT01040/wkr0001.doc http://www.waymaker.net/bitonline/2002/12/17/20021217BIT01040/wkr0002.pdf