Final Results
29 November 2003 - 3:41AM
UK Regulatory
RNS Number:6490S
Scottish Investment Trust PLC
28 November 2003
THE SCOTTISH INVESTMENT TRUST PLC
PRELIMINARY FIGURES FOR THE YEAR TO 31 OCTOBER 2003
* Equity markets start to recover
* NAV increased by 8.7%
* Dividend increased by 4.0%
The Scottish Investment Trust invests internationally and is independently
managed. Its objectives are to achieve, over the longer term, asset growth in
excess of the trust's stated composite benchmark index and dividend growth ahead
of inflation.
Over the year to 31 October 2003, net asset value per share rose by 8.7%.
Though this was a welcome change of direction after two years of sharp declines
in equity markets, it was a disappointing outcome in relation to our benchmark,
which rose by 11.5%. Over the first half of the year our invested assets
performed broadly in line with the benchmark. We aim to run well diversified
portfolios biased towards stable businesses which demonstrate good returns on
capital and whose shares are reasonably valued. In recent years our stock
selection has been good but towards the end of our year, we did not fully
participate in the sharp price rises in many cyclical recovery shares. This
phase in the market may now have run its course and we see good relative value
in many high quality companies whose shares have lagged in the recovery.
The board is recommending an increase of 4.0% in the dividend for the year which
compares with UK inflation of 2.6%. We have increased our regular
dividend in each of the last twenty years and the objective of the board is that
the dividend should rise by more than the rate of inflation in the UK.
Over the year we had on average approximately #110m of our long term borrowings
of #222.6m invested in equities. The effect of our gearing on performance was
slightly positive, after taking account of interest costs, having been negative
in our two prior years. The weighted average cost of our borrowings is 6.9% and
the directors believe that, over the long term, equities can produce a combined
return of dividends and capital growth which will exceed this cost.
For many years the discount of SIT's share price to NAV remained within a
relatively stable band. It is disappointing that the discount rose towards 18%
in October 2002 and that it has remained around this level over the last year.
The directors recognise the importance for the discount of NAV performance and
are reviewing the approach to the management of the portfolio in order to
improve this.
Stockholders will be aware that Sir Angus Grossart retired as chairman of SIT on
6 October 2003 and the board extends its thanks to him for his commitment and
leadership over many years. I am pleased that Mr Hamish Buchan was appointed to
the board on 17 November 2003. Mr Buchan has had a long and distinguished
career in the investment trust industry. I am also pleased to announce the
appointment of a new manager, John Kennedy, who is presently head of investment.
Ian McLeish will retire as manager with effect from 31 December, 2003.
- 2 -
OUTLOOK
Led by the USA, the major world economies appear to have turned the corner and
growth in 2004 is expected to accelerate to levels higher than were being
forecast a few months ago. Companies have cut costs and restructured so that
improving sales are flowing through strongly to profits.
However, risks are being taken with the US economy. The budget and the current
account deficits are at record levels which has led to a loss of confidence in
the US dollar. It may be difficult for the US authorities to restore the
appropriate balance in the economy without a further decline in the value of the
currency. Furthermore, US personal borrowing is still very high and further
growth in consumer spending is dependent on a continuation of low interest rates
and further tax rebates.
2004 is an election year in the USA and the continued growth of the economy will
remain a priority of the Bush administration. This, and China's continued
growth, should help to promote expansion globally. Meanwhile, the shares of
many strong companies are selling at reasonable valuations by past standards.
We are therefore prepared to continue with our present level of gearing despite
the imbalances in the world's leading economy.
Note:
SIT's benchmark index is made up of 50% FTSE Actuaries UK All Share Index
and 50% FTSE World ex UK Index Series. TM
For further information, please contact:-
Ian McLeish, Manager 0131-225 7781
John Kennedy, Head of Investment 0131-225 7781
THE SCOTTISH INVESTMENT TRUST PLC
SUMMARY OF RESULTS (UNAUDITED)
For the year ended 31 October 2003
CAPITAL 2003 2002
#'m #'m Change %
Total assets less current liabilities 942.1 893.9 + 5.4
Equity stockholders' funds 719.5 671.4 + 7.2
Net asset value per ordinary unit 342.1p 314.8p + 8.7
Market price per ordinary unit 281.0p 259.0p + 8.5
INCOME 2003 2002
#'000 #'000
Total income 27,587 28,099 - 1.8
Earnings per ordinary unit 9.28p 8.24p *
Dividend per ordinary unit: 7.80p 7.50p + 4.0
* Earnings per ordinary stock unit for 2003 have been increased by 0.90p due to
an accounting change relating to the allocation of tax relief on interest and
expenses between revenue and capital required by the revised Statement of
Recommended Practice: Financial Statements of Investment Trust Companies.
DISTRIBUTION OF TOTAL ASSETS
LESS CURRENT LIABILITIES
At 31 October 2003 2003 2002
% %
Equities
UK 45.7 45.8
Europe 9.6 10.1
USA 23.9 24.7
Japan 3.3 3.2
Pacific (ex Japan) 6.1 4.7
Total equities 88.6 88.5
Net current assets 11.4 11.5
100.0 100.0
THE SCOTTISH INVESTMENT TRUST PLC
STATEMENT OF TOTAL RETURN (UNAUDITED)
for the year to 31 October 2003
(incorporating the revenue account*)
-------- --------- --------- -------- --------- ---------
2003 2002
Revenue Capital Total Revenue Capital Total
#'000 #'000 #'000 #'000 #'000 #'000
Net gains/
(losses) on
investments &
currencies - 65,236 65,236 - (183,654) (183,654)
Income 27,587 - 27,587 28,099 - 28,099
Expenses ( 1,957) ( 2,172) ( 4,129) ( 2,143) ( 2,415) ( 4,558)
-------- --------- --------- -------- --------- ---------
Net Return
before Finance
Costs and
Taxation 25,630 63,064 88,694 25,956 (186,069) (160,113)
Interest ( 5,160) (10,321) (15,481) ( 5,160) ( 10,320) ( 15,480)
payable
-------- --------- --------- -------- --------- ---------
Return on
Ordinary
Activities
before Tax 20,470 52,743 73,213 20,796 (196,389) (175,593)
Tax on
ordinary
activities ( 933) - ( 933) ( 2,780) 1,691 ( 1,089)
-------- --------- --------- -------- --------- ---------
Return
attributable
to Equity
Stockholders 19,537 52,743 72,280 18,016 (194,698) (176,682)
Dividends on
ordinary
stock: (16,259) - (16,259) (16,076) - ( 16,076)
-------- --------- --------- -------- --------- ---------
Transfer to 3,278 52,743 56,021 1,940 (194,698) (192,758)
Reserves
-------- --------- --------- -------- --------- ---------
Return per 9.28p 25.06p 34.34p 8.24p (89.04)p (80.80)p
Ordinary Stock
Unit
-------- --------- --------- -------- --------- ---------
Weighted
average number
of ordinary
stock units
during the
year in
issue 210,489,029 218,671,178
* The revenue column of this statement is the profit and loss account of the
company
THE SCOTTISH INVESTMENT TRUST PLC
SUMMARY BALANCE SHEET (UNAUDITED)
31 October 31 October
2003 2002 %
#'m #'m change
Equity investments 834.4 791.0 +5.5
Net current assets 107.7 102.9
Total assets less current liabilities 942.1 893.9 +5.4
Less: Borrowings 222.6 222.5
Equity stockholders' funds 719.5 671.4 +7.2
Net asset value per ordinary stock 342.1p 314.8p +8.7
unit
SUMMARY CASH FLOW STATEMENT (UNAUDITED)
31 31
October October
2003 2002
#'m #'m
Net cash inflow from operating 20.5 21.3
activities
Servicing of finance (15.3) (15.3)
Taxation 0.5 0.1
Investing activities 19.1 62.7
Equity dividends paid (16.0) (18.3)
Net cash inflow before use of liquid
resources and financing
8.8 50.5
Management of liquid resources 1.5 (13.4)
Financing:
Share buybacks ( 8.0) (43.9)
Increase/(decrease) in cash 2.3 ( 6.8)
NOTES:
The directors recommend a final dividend of 5.20p per ordinary stock unit which,
together with the interim dividend of 2.60p per unit paid on 17 July 2003, makes a
total of 7.80p for the year. The final dividend absorbs #10,936,000 and is payable
on 10 February 2004 to stockholders registered at 9 January 2004.
The income figure is made up as follows:
-
2003 2002
#'000 #'000
Dividends 23,316 24,620
Interest 4,266 3,469
Underwriting commission etc 5 10
27,587 28,099
The weighted average number of ordinary stock units in issue throughout the year
was 210,489,029 and this figure has been used to calculate the return per ordinary
stock unit shown in the statement of total return. The net asset value per
ordinary stock unit at 31 October 2003 has been calculated using the number of
ordinary stock units in issue on that date which was 210,304,399.
The financial information set out in the announcement does not constitute the
company's statutory accounts for the years ended 31 October 2003 or 2002. The
financial information for the year ended 31 October 2002 is derived from the
statutory accounts for that year which have been delivered to the Registrar of
Companies. The auditors reported on those accounts; their report was unqualified
and did not contain a statement under s237(2) or (3) Companies Act 1985. The
statutory accounts for the year ended 31 October 2003 will be finalised on the
basis of the financial information presented by the directors in this preliminary
announcement and will be delivered to the Registrar of Companies following the
company's annual general meeting.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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