Annual Report and Accounts
Scottish Mortgage & Trust PLC
25 April 2003
THE SCOTTISH MORTGAGE AND TRUST PLC
Results for the year to 31 March 2003
Scottish Mortgage's final results were broadly in line with its benchmark while
the dividend was increased in real terms for the 21st consecutive year. Over the
21 year period a 523% increase in the dividend has far outstripped 126%
inflation, as measured by the Retail Price Index headline rate. The Company has
positioned itself to benefit from any improvement in capital values on world
stock markets.
• Performance broadly in line with benchmark. Net asset value per share declined by 32.6% compared to a
32.4% fall in the benchmark index comprised of 50% FTSE All-Share Index and 50% FTSE World Ex. UK Index
(in sterling terms). The negative effect of carrying gearing in declining markets was offset to a large
extent by good stock selection, especially in the core UK market, and by some exposure to fixed interest
markets.
• 21st consecutive dividend increase in real terms. The final dividend has been increased to 4.50p
bringing the total to 6.60p, an increase of 5.6%. The dividend is well covered by earnings of 7.43p.
• Second half results. During the second half net asset value fell by 2.9% compared to a 1.1% fall in the
benchmark.
• Outlook. While global economic problems will not be resolved easily, yields on many equities are now at
historically attractive levels. The Managers are finding sound investment opportunities at company level
in many parts of the world.
The Scottish Mortgage and Trust PLC aims to maximise total return to
shareholders at the same time as generating real dividend growth through
investment in UK and international markets. The trust has total assets of £1.1
billion. An ISA, Share Plan and Children's Savings Plan are available.
Scottish Mortgage is managed by Baillie Gifford & Co., the leading Edinburgh
based fund management group with over £20 billion under management and advice.
- ends -
For further information please contact:
James Anderson, Manager,
The Scottish Mortgage and Trust PLC 07730 412007
Mike Lord, Director,
Broadgate Marketing 020 7726 6111
Baillie Gifford & Co. is authorised and regulated by the Financial Services
Authority.
THE SCOTTISH MORTGAGE AND TRUST PLC
The following is the unaudited preliminary statement for the year to 31 March
2003 which was approved by the Board on 24 April 2003. The Board of The
Scottish Mortgage and Trust PLC is recommending to the Annual General Meeting of
the Company to be held on 3 July 2003 the payment of a final dividend of 4.50p
(4.25p last year) per ordinary share making 6.60p (6.25p last year) for the year
ended 31 March 2003.
STATEMENT OF TOTAL RETURN
(unaudited and incorporating the revenue account*)
For the year ended For the year ended
31 March 2003 31 March 2002
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Losses on investments - (421,063) (421,063) - (89,951) (89,951)
Currency (losses)/gains - (701) (701) - 3,447 3,447
Income (note 2) 33,909 - 33,909 36,377 - 36,377
Investment management fee (2,053) (2,053) (4,106) (2,695) (2,695) (5,390)
Other administrative expenses (1,185) - (1,185) (1,103) - (1,103)
Net return before finance costs
and taxation 30,671 (423,817) (393,146) 32,579 (89,199) (56,620)
Finance costs of borrowings (7,119) (7,119) (14,238) (7,396) (7,393) (14,789)
Return on ordinary activities
before taxation 23,552 (430,936) (407,384) 25,183 (96,592) (71,409)
Tax on ordinary activities (955) - (955) (970) - (970)
Return on ordinary activities
after taxation 22,597 (430,936) (408,339) 24,213 (96,592) (72,379)
Dividends in respect of equity
shares (19,730) - (19,730) (19,453) - (19,453)
Transfer to/(from) reserves 2,867 (430,936) (428,069) 4,760 (96,592) (91,832)
Return per ordinary share
(note 3) 7.43p (141.69p) (134.26p) 7.56p (30.17p) (22.61p)
Dividend per ordinary share
(note 4) 6.60p 6.25p
* The revenue column of this statement is the profit and loss account of the
Company.
All revenue and capital items in the above statement derive from continuing
operations.
THE SCOTTISH MORTGAGE AND TRUST PLC
SUMMARISED BALANCE SHEET
at 31 March 2003
(unaudited)
31 March 2003 31 March 2002
£'000 £'000
NET ASSETS
Fixed asset investments 1,050,748 1,493,041
Net liquid assets 797 16,846
Total assets (before deduction of loans and debentures) 1,051,545 1,509,887
Loans and debentures (note 5) (207,225) (206,899)
844,320 1,302,988
CAPITAL AND RESERVES
Called-up share capital 74,501 77,296
Capital reserves 718,930 1,177,670
Revenue reserve 50,889 48,022
Equity shareholders' funds 844,320 1,302,988
NET ASSET VALUE PER ORDINARY SHARE
(after deduction of prior charges at par) 285.5p 423.6p
Ordinary shares in issue (note 6) 298,005,115 309,184,688
DISTRIBUTION OF ASSETS
at 31 March 2003
(unaudited)
31 March 2003 31 March 2002
% %
Equities: United Kingdom 44.8 45.9
Continental Europe 8.8 12.7
North America 24.0 24.2
Japan 4.5 4.4
Asia Pacific 5.0 4.1
Other Emerging Markets 3.8 2.6
Total equities 90.9 93.9
United Kingdom bonds 6.3 2.8
European bonds 2.4 2.2
North American bonds 0.3 -
Net liquid assets 0.1 1.1
Total assets (before deduction of loans and debentures) 100.0 100.0
THE SCOTTISH MORTGAGE AND TRUST PLC
SUMMARISED CASH FLOW STATEMENT
(unaudited)
For the year ended For the year ended
31 March 2003 31 March 2002
£'000 £'000 £'000 £'000
NET CASH INFLOW FROM OPERATING ACTIVITIES 27,837 29,925
NET CASH OUTFLOW FROM SERVICING OF FINANCE (14,287) (15,012)
TOTAL TAX PAID (1,009) (1,032)
FINANCIAL INVESTMENT
Acquisitions of investments (347,442) (495,639)
Disposals of investments 371,734 539,802
Realised currency loss (323) (552)
NET CASH INFLOW FROM FINANCIAL INVESTMENT 23,969 43,611
EQUITY DIVIDENDS PAID (19,460) (19,791)
NET CASH INFLOW BEFORE FINANCING 17,050 37,701
FINANCING
Shares purchased for cancellation (31,414) (67,249)
Loans repaid - (79,350)
Loans drawn down - 94,423
Realised currency loss on multi-currency loans - (26)
NET CASH OUTFLOW FROM FINANCING (31,414) (52,202)
DECREASE IN CASH (14,364) (14,501)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Decrease in cash in the period (14,364) (14,501)
Increase in bank loans - (15,047)
Exchange movement (378) 3,999
Other non-cash changes 52 42
MOVEMENT IN NET DEBT IN THE PERIOD (14,690) (25,507)
NET DEBT AT 1 APRIL (188,620) (163,113)
NET DEBT AT 31 MARCH (203,310) (188,620)
THE SCOTTISH MORTGAGE AND TRUST PLC
NOTES
1. The financial statements for the year to 31 March 2003 have been prepared on the basis of the accounting
policies set out in the Company's financial statements as at 31 March 2002.
31 March 2003 31 March 2002
£'000 £'000
2. Income
Income from investments and interest receivable 33,727 36,368
Other income 182 9
3. Return per ordinary share
Revenue return 22,597 24,213
Capital return (430,936) (96,592)
Return per ordinary share is based on the above returns and on 304,134,148 (2002 - 320,181,479)
ordinary shares, being the weighted average number of ordinary shares in issue during the year.
4. The total cost of the dividend for the year is £19,730,000 (2002 - £19,453,000). If approved the
final dividend will be paid on 9 July 2003 to all shareholders on the register at the close of
business on 13 June 2003.
5. Loans and debentures include Y5,900 million drawn down under a three year multi-currency loan
facility and Y4,400 million under a short term yen loan facility (2002 - Y5,900 million and Y4,400
million, drawn down under the three year and the short term facilities).
Net asset value per share with debenture stocks at market value was 268.0p (2002 - 409.4p). The
market value of debenture stocks at 31 March 2003 was £197,936,000 (2002- £189,398,000).
6. At the Annual General Meeting on 4 July 2002 the Company renewed its authority to purchase shares in
the market, in respect of 46,065,722 ordinary shares (equivalent to 14.99% of its issued share
capital at that date). In the year to 31 March 2003 a total of 11,179,573 (2002 - 19,533,200)
ordinary shares with a nominal value of £2,795,000 were bought back at a total cost of £30,599,000
(2002 - £69,469,000). At 31 March 2003 the Company had authority to buy back a further 36,761,149
ordinary shares.
7. The financial information set out above does not constitute the Company's statutory accounts for the
year ended 31 March 2003. The financial information for 2002 is derived from the statutory accounts
for 2002 which have been delivered to the Registrar of Companies. The Auditors have reported on the
2002 accounts, their report was unqualified and did not contain a statement under section 237(2) or
(3) of the Companies Act 1985. The statutory accounts for 2003 are unaudited, however it is expected
that the Auditors will issue an unqualified opinion. The statutory accounts for 2003 will be
finalised on the basis of the financial information presented in this preliminary announcement and
will be delivered to the Registrar of Companies following the Company's Annual General Meeting.
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