Half Yearly Report

RNS Number : 6358B

Scottish Mortgage Inv Tst PLC

30 October 2009

 



SCOTTISH MORTGAGE INVESTMENT TRUST PLC

Half-Yearly Results to 30 September 2009

Scottish Mortgage Investment Trust PLC is a low cost investment trust that aims to maximise total return from a focused and actively managed portfolio of equities. It invests globally, looking for strong businesses with above-average returns and aims to achieve a greater return than the FTSE All World Index (in sterling terms) over a five year rolling period.

• Net asset value (NAV) per share rose very strongly, increasing by 48% over the period. The increase in the share price was 42%. The benchmark, the FTSE All World Index, rose by 28% in sterling terms.  

• Increases in share prices in the Scottish Mortgage portfolio were particularly marked amongst the larger holdings where prices had fallen to the greatest extent during the financial crisis. 

• An interim dividend of 5.5p represents a 3.8% increase after adjustment for last year's VAT recovery.

• The retirement of the Chairman, Sir Donald MacKay, has been announced.

The portfolio contains companies that are selected on their perceived long term merits with the long term global economic scenario in mind. There is an emphasis on countries outwith the mature developed world where there is likely to be significant and sustained growth in incomes and demand.  

Over the five years to the end of September 2009 NAV total return (capital and dividends) has been 68%, the share price total return, 81% and the FTSE All World Index total return, 48% in sterling terms. 

The Chairman Sir Donald MacKay said:

"It has been a positive six months for Scottish Mortgage with NAV per share rising by 48% and significantly outperforming the FTSE All World Index, which rose by 28% in sterling terms. 

"Increases in share prices in the Scottish Mortgage portfolio were particularly marked amongst the larger holdings where prices had fallen to the greatest extent during the financial crisis.  

"While stock markets conditions have improved, what is less clearly recognised is the potential scale of the consequences of the major shift of economic and political power from mature economies to rapidly growing ones. 

 "This new economic world order is likely to provide a large selection of companies with remarkable growth opportunities in China and other countries from which individual long term investments can be chosen. These will often be in companies at the early stages of rapid growth, a point from which the greatest returns can sometimes be won. Such investments may be volatile; some will fail but others may provide opportunities of historic magnitude.

"It has been a privilege to serve on the Scottish Mortgage Board over the past ten years and it is with some sadness that I announce my proposed retirement at the end of December this year. My replacement, John Scott, is well placed to take over as Chairman having been a Director since 2001."

James Budden, Marketing Director Wealth Management, Baillie Gifford, commented: 

"During his six years as Chairman, Sir Donald has steered Scottish Mortgage through a period of strong performance and considerable development. Baillie Gifford is extremely grateful for his considerable contribution over the years. A real advantage that the investment trust structure provides for shareholders is the opportunity to benefit from a strong and well led Board." 

This year Scottish Mortgage has been celebrating its Centenary Year and an impressive record has been established which shows an average 2.5% per annum NAV outperformance over 99 years.* 

30 October 2009

You can find up to date performance information about Scottish Mortgage on the Baillie Gifford website at www.scottishmortgageit.com.

For further information please contact:

James Budden, Baillie Gifford & Co	0131 275 2816 or 07507201208
Roland Cross, Broadgate Mainland	0207 776 0512 or 07831 401309

Your call may be recorded.

Notes to Editors: 

* Performance record based on 99 years to March 2009. Source: Baillie Gifford and Scottish Mortgage Investment Trust. Although the Trust was established in 1909, its shares were paid up in installments during its first year. Therefore, the financial record starts in 1910, when its balance sheet was first published. Prior to 1927, Scottish Mortgage's NAV per share is calculated on the book value of investments, rather than market value. Comparison to UK Equity Price Index and Cost of Living Index is based on figures for 99 years to December 2008. Source: Barclays Capital.

Sir Donald MacKay, is an economist with an extensive record in advising governments, organisations and companies. He was Professor of Political Economy at Aberdeen University and Professor of Economics at Heriot-Watt University. He is a former chairman of The Malcolm Group PLC and Scottish Enterprise and is currently a director of Edinburgh New Income Trust plc.

John Scott is a former international investment banker who maintains a number of interests in the investment trust sector. He is a former executive director of Lazard Brothers & Co., Limited. During his twenty years with Lazard, he was involved with the merchant bank's corporate advisory activities and its Asian businesses. He is currently a director of various companies including Martin Currie Pacific Trust plc, JP Morgan Claverhouse Investment Trust plc, Xaar plc, Miller Insurance, Schroder Japan Growth Fund plc and Alternative Asset Opportunities PCC Limited. In addition, he is chairman of Dunedin Income Growth Investment Trust PLC and deputy chairman of Endace Limited.

Based in Edinburgh, Scotland, Baillie Gifford is one of the UK's leading investment management firms. Baillie Gifford has around £53 billion under management and advice in active equity and bond portfolios for clients in the UK and throughout the world (as at 30 September 2009).

Baillie Gifford has been managing investment trusts since 1909 and is the manager of eight investment trusts with approximately £3.7bn of funds under management in these trusts (as at 30 September 2009). 

Further information about the investment trusts managed by Baillie Gifford can be found by visiting their website www.bailliegifford.com/investmenttrusts.

Past performance is not a guide to future performance. The value of a stock market investment and any income from it can fall as well as rise and investors may not get back the amount invested. Investments with exposure to overseas securities can be affected by changing stock market conditions and currency exchange rates.

Investment Trusts are UK public limited companies and are not authorised or regulated by the Financial Services Authority.

The following is the unaudited Half-Yearly Financial Report for the six months 

to 30 September 2009

SCOTTISH MORTGAGE INVESTMENT TRUST PLC

Half-Yearly Financial Report 30 September 2009

Responsibility Statement

We confirm that to the best of our knowledge:

a)  the condensed set of financial statements has been prepared in accordance with the Accounting Standards
     Board's statement 'Half-Yearly Financial Reports';

b)  the Half-Yearly Management Report includes a fair review of the information required by Disclosure and
     Transparency Rules 4.2.7R (indication of important events during the first six months, and their impact on the
     financial statements, and description of principal risks and uncertainties (note 13) for the remaining six
     months of the year); and

c)  the Half-Yearly Financial Report includes a fair review of the information required by Disclosure and
    Transparency Rules 4.2.8R (disclosure of related party transactions and changes therein - see note 3).

By order of the Board

Sir Donald MacKay

Chairman

     29 October 2009

SCOTTISH MORTGAGE INVESTMENT TRUST PLC

Half-Yearly Management Report

Six Month Results

Net asset value (NAV) per share rose very strongly, increasing by 48% over the six months to 30 September 2009. The increase in the share price was 42%. The benchmark, the FTSE All World Index, rose by 28% in sterling terms.  

Increases in share prices in the Scottish Mortgage portfolio were particularly marked amongst the larger holdings where prices had fallen to the greatest extent during the financial crisis. Included in this category are resources stocks such as Petrobras and Vale (both listed in Brazil) and engineering and manufacturing companies for example Sandvik, Atlas Copco and Meggitt. Other notable performers were Banco Santander (now the third largest equity holding) and PPR (the owner of a number of luxury brands including Gucci). The thirty largest holdings and their performance in the period are detailed within the report. We believe the portfolio remains well diversified by industry, location and also by the number of equity holdings (there are now around eighty). 

Earnings and Dividend

Earnings per share were 7.10p compared to an adjusted 7.58p in the corresponding period last year (adjusted to exclude 1.5p per share from the recovery of VAT and associated interest from HM Revenue and Customs).

The Board proposes an increased interim dividend of 5.5p per share which, on a like for like basis, is 3.8% up on last year's interim payment representing a real increase when compared to a 1.4% fall in the RPI measured on an annualised basis. 

The Board is aware that shareholders benefit from progressive increases in dividends and Scottish Mortgage has achieved this consistently. The dividend has increased in excess of inflation for 27 consecutive years. Although earnings have recently been weak, we see encouraging signs that this situation is close to ending. We therefore feel confident in our commitment to generating real dividend growth. Revenue reserves of over 20p per share do exist in case of any periodic shortfalls.

Outlook

While stock markets have improved, what is less clearly recognised is the potential scale and consequences of the movement of the balance of economic and political power from mature economies to rapidly growing ones. This major and fundamental shift is now well under way and its pace may well accelerate in the wake of what has been largely a Western financial crisis.  This new economic world order is likely to provide a large selection of companies with remarkable growth opportunities in China and other countries from which individual long term investments can be chosen. These will often be in companies at the early stages of rapid growth, a point from which the greatest returns can sometimes be won. Such investments may be volatile; some will fail but others may provide opportunities of historic magnitude.

The experience of the past eighteen months vividly illustrates the fact that Scottish Mortgage's portfolio, which bears little resemblance to the composition of the benchmark index, will have periods of considerable outperformance as well as underperformance. Scottish Mortgage is designed to appeal to long term investors who seek investment in a limited number of carefully selected companies chosen on their perceived long term merits with the long term global economic background in mind. Investment returns from Scottish Mortgage and the individual underlying investments are best judged over a five year span and not six monthly, or even annual, figures. The ability to have a long term perspective combined with a low cost base represents a distinct, valuable and increasingly rare advantage that the investment trust structure affords.  

Over the five years to end September 2009, Scottish Mortgage's NAV total return (capital and dividends) has been 68%, the share price total return, 81%, and the FTSE All Word Index total return, 48%.  

SCOTTISH MORTGAGE INVESTMENT TRUST PLC

INCOME STATEMENT 

(unaudited)

	For the six months ended 30 September 2009				For the six months ended 30 September 2008			For the year ended 31 March 2009
	Revenue £'000	Capital £'000		Total £'000	Revenue £'000	Capital  £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Gains/(losses) on sales of investments	-	16,349		16,349	-	13,747	13,747	-	(65,056)	(65,056)
Changes in fair value of investments	-	491,814		491,814	-	(369,190)	(369,190)	-	(626,298)	(626,298)
Currency gains/(losses)	-	7,295		7,295	-	(8,818)	(8,818)	-	(50,819)	(50,819)
Income from investments and interest  receivable	30,034	-		30,034	37,603	-	37,603	56,890	-	56,890
Other income	575	-		575	355	-	355	580	-	580
Investment management fee (note 3)	(1,376)	(1,376)		(2,752)	(1,672)	(1,672)	(3,344)	(2,821)	(2,821)	(5,642)
Recovered VAT (note 4)	-	-		-	3,850	1,816	5,666	3,850	1,816	5,666
Other administrative expenses	(1,094)	-		(1,094)	(839)	-	(839)	(1,885)	-	(1,885)
Net return before finance costs and taxation	28,139	514,082		542,221	39,297	(364,117)	(324,820)	56,614	(743,178)	(686,564)
Finance costs of borrowings	(4,192)	(4,192)		(8,384)	(5,785)	(5,785)	(11,570)	(10,786)	(11,548)	(22,334)
Net return on ordinary activities before taxation	23,947	509,890		533,837	33,512	(369,902)	(336,390)	45,828	(754,726)	(708,898)
Tax on ordinary activities	(4,647)	2,366		(2,281)	(8,709)	6,202	(2,507)	(11,257)	7,860	(3,397)
Net return on ordinary activities after taxation	19,300	512,256		531,556	24,803	(363,700)	(338,897)	34,571	(746,866)	(712,295)
Net return per ordinary share (note 5)	7.10p		188.46p	195.56p	9.08p‡	(133.12p)	(124.04p)	12.67p‡	(273.74p)	(261.07p)
Dividends paid and proposed per ordinary share (note 6)	5.50p				6.80p‡			12.30p‡

‡ Both revenue earnings and the interim dividend include a non-recurring 1.5p per share from the reimbursement of previous years' VAT and associated interest thereon.

 The total column of this statement is the profit and loss account of the Company.

 All revenue and capital items in this statement derive from continuing operations. No operations were acquired or discontinued during the year.

 A Statement of total Recognised Gains and Losses is not required as all gains and losses of the Company have been reflected in the above statement.

SCOTTISH MORTGAGE INVESTMENT TRUST PLC

BALANCE SHEET

 (unaudited)

	At  30 September 2009	At  30 September 2008	At  31 March 2009
	£'000	£'000	£'000
FIXED ASSETS
Investments held at fair value through profit or loss	1,898,035	1,911,846	1,361,987
CURRENT ASSETS
Debtors	7,761	5,708	9,073
Cash and short term deposits	2,749	10,933	35,774
	10,510	16,641	44,847
CREDITORS
Amounts falling due within one year
Bank loans (note 7)	(157,711)	(174,319)	(69,067)
Other creditors	(4,455)	(6,429)	(8,564)
	(162,166)	(180,748)	(77,631)
NET CURRENT LIABILITIES	(151,656)	(164,107)	(32,784)
TOTAL ASSETS LESS CURRENT LIABILITIES	1,746,379	1,747,739	1,329,203
CREDITORS
Amounts falling due after more than one year
Bank loans (note 7)	-	(122,288)	(97,161)
Debenture stocks	(151,628)	(151,771)	(151,705)
	(151,628)	(274,059)	(248,866)
	1,594,751	1,473,680	1,080,337
CAPITAL AND RESERVES
Called-up share capital	71,086	71,086	71,086
Capital redemption reserve	19,094	19,094	19,094
Capital reserve	1,428,771	1,303,283	918,702
Revenue reserve	75,800	80,217	71,455
SHAREHOLDERS' FUNDS	1,594,751	1,473,680	1,080,337

NET ASSET VALUE PER ORDINARY SHARE  (after deducting borrowings at fair value) (note 8)	567.8p	520.3p	383.8p
NET ASSET VALUE PER ORDINARY SHARE (after deducting borrowings at par)	589.4p	543.1p	399.3p
ORDINARY SHARES IN ISSUE (note 9)	271,564,897	272,489,897	272,089,987

SCOTTISH MORTGAGE INVESTMENT TRUST PLC

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

(unaudited)

For the six months ended 30 September 2009

	Share capital £'000	Capital redemption reserve £'000	Capital reserve† £'000	Revenue reserve £'000	Total shareholders' funds £'000
Shareholders' funds at 1 April 2009	71,086	19,094	918,702	71,455	1,080,337
Net return on ordinary activities after taxation	-	-	512,256	19,300	531,556
Shares bought back (note 9)	-	-	(2,187)	-	(2,187)
Dividends paid during the period (note 6)	-	-	-	(14,955)	(14,955)
Shareholders' funds at  30 September 2009	71,086	19,094	1,428,771	75,800	1,594,751

For the six months ended 30 September 2008

	Share capital £'000	Capital redemption reserve £'000	Capital reserve† £'000	Revenue reserve £'000	Total shareholders' funds £'000
Shareholders' funds at 1 April 2008	68,497	21,683	1,676,329	69,935	1,836,444
Adjustment to reserves*	2,589	(2,589)	-	-	-
Net return on ordinary activities after taxation	-	-	(363,700)	24,803	(338,897)
Shares bought back	-	-	(9,346)	-	(9,346)
Dividends paid during the period (note 6)	-	-	-	(14,521)	(14,521)
Shareholders' funds at  30 September 2008	71,086	19,094	1,303,283	80,217	1,473,680

For the year ended 31 March 2009

	Share capital £'000	Capital redemption reserve £'000	Capital reserve† £'000	Revenue reserve £'000	Total shareholders' funds £'000
Shareholders' funds at 1 April 2008	68,497	21,683	1,676,329	69,935	1,836,444
Adjustment to reserves*	2,589	(2,589)	-	-	-
Net return on ordinary activities after taxation	-	-	(746,866)	34,571	(712,295)
Shares bought back	-	-	(10,761)	-	(10,761)
Dividends paid during the year (note 6)	-	-	-	(33,051)	(33,051)
Shareholders' funds at  31 March 2009	71,086	19,094	918,702	71,455	1,080,337

*The adjustment to share capital and capital redemption reserve is to reflect that when shares have been bought back in prior years and held in treasury they should not have been treated as cancelled.

†  The Capital Reserve balance at 30 September 2009 includes a gain of £321,234,000 relating to the revaluation of investments

   (30 September 2008 - gain of £86,529,000 and 31 March 2009 -  loss of £170,580,000).

SCOTTISH MORTGAGE INVESTMENT TRUST PLC

CONDENSED CASH FLOW STATEMENT (unaudited)
	Six months to 30 September 2009 £'000	Six months to 30 September 2008 £'000	Year to 31 March 2009 £'000
Net cash inflow from operating activities	28,588	43,056	56,685
Net cash outflow from servicing of finance	(10,505)	(11,018)	(21,862)
Total tax suffered	(2,349)	(2,480)	(3,401)
Net cash (outflow)/inflow from financial investment	(31,615)	(6,859)	212,646
Equity dividends paid (note 6)	(14,955)	(14,521)	(33,051)
NET CASH (OUTFLOW)/INFLOW BEFORE USE OF LIQUID RESOURCES AND FINANCING	(30,836)	8,178	211,017
Shares bought back (note 9)	(2,187)	(9,346)	(10,761)
Net cash outflow from bank loans (note 7)	(2)	(929)	(177,512)
(DECREASE)/INCREASE IN CASH	(33,025)	(2,097)	22,744
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
(Decrease)/increase in cash in the period	(33,025)	(2,097)	22,744
Decrease in bank loans (note 7)	2	929	177,512
Exchange movement on bank loans	8,515	(9,747)	(55,951)
Other non-cash changes	77	67	133
MOVEMENT IN NET DEBT IN THE PERIOD	(24,431)	(10,848)	144,438
NET DEBT AT START OF THE PERIOD	(282,159)	(426,597)	(426,597)
NET DEBT AT END OF THE PERIOD	(306,590)	(437,445)	(282,159)
RECONCILIATION OF NET RETURN BEFORE FINANCE COSTS AND TAXATION TO NET CASH INFLOW FROM OPERATING ACTIVITIES
Net return on ordinary activities before finance costs and  taxation	542,221	(324,820)	(686,564)
Net (gains)/losses on investments - securities	(508,163)	355,443	691,354
Currency (gains)/losses	(7,295)	8,818	50,819
Amortisation of fixed income book cost	(34)	28	(103)
Changes in debtors and creditors	1,859	3,587	1,179
NET CASH INFLOW FROM OPERATING ACTIVITIES	28,588	43,056	56,685

SCOTTISH MORTGAGE INVESTMENT TRUST PLC

THIRTY LARGEST EQUITY HOLDINGS AND EQUITY PERFORMANCE (unaudited)
Name	Business	Fair value at 30 Sept 2009 £'000	% of total assets	Performance†
				Absolute %	Relative %
Petrobras	Oil producer	110,181	5.8	45.6	11.7
Atlas Copco	Engineering	92,792	4.9	60.1	22.9
Banco Santander	Banking	88,650	4.7	118.7	67.9
Amazon.com	Online retailer	70,764	3.7	14.1	(12.5)
Vale (CVRD)	Iron ore and nickel mining	61,666	3.2	66.1	27.5
Google	Online search engine	57,260	3.0	27.7	(2.0)
Nintendo	Games consoles and software	48,185	2.5	(18.8)	(37.7)
Sandvik	Engineering	43,944	2.3	82.3	40.0
Walgreen	Pharmacy chain	41,188	2.2	30.2	-
China Mobile	Mobile telecommunications	40,300	2.1	3.7	(20.4)
Porsche Pref	Automobiles	39,772	2.1	50.2	15.3
Standard Chartered	Banking	36,689	1.9	79.3	37.6
First Solar	Solar energy technology	36,227	1.9	3.2	(20.8)
PPR	Luxury goods producer and retailer	35,670	1.9	87.5	43.9
Taiwan Semiconductor    Manufacturing	Semiconductor manufacturer	34,780	1.8	13.6	(12.8)
Gazprom	Gas production and distribution	34,587	1.8	41.1	8.3
Vestas Windsystems	Wind power	33,945	1.8	48.6	14.1
Deere	Farm machinery	32,156	1.7	18.3	(9.2)
Progressive Ohio	Property and casualty insurance	30,544	1.6	10.6	(15.1)
Berkshire Hathaway	Insurance	28,978	1.5	5.6	(18.9)
ABB	Electronic and electrical equipment	26,741	1.4	31.6	1.0
Schlumberger	Oil services	26,054	1.4	32.7	1.9
Meggitt	Aerospace equipment and systems	23,433	1.2	84.3	41.5
Brown-Forman	Wine and spirits producer	22,579	1.2	12.5	(13.7)
Canon	Printers, copiers and cameras	21,803	1.1	29.5	(0.6)
Wal Mart Stores	General retailer	21,454	1.1	(6.6)*	(19.5)*
Rockwell Automation	Industrial automation providers	21,288	1.1	77.1	36.0
Xstrata	Mining	20,922	1.1	97.4	51.5
Hero Honda Motors	Motorcycles and scooter   manufacturer	19,998	1.1	51.7	16.4
Novozymes	Enzyme manufacturer	19,636	1.0	16.7	(10.4)
		1,222,186	64.1

†Absolute and relative performance has been calculated on a total return basis over the period 1 April 2009 to 30 September 2009. Absolute performance is in sterling terms; relative performance is against the benchmark: FTSE All World Index (in sterling terms).

* Figures relate to part period returns.

Source: Baillie Gifford & Co/StatPro.

Past performance is not a guide to future performance.

SCOTTISH MORTGAGE INVESTMENT TRUST PLC 

DISTRIBUTION OF ASSETS 

(unaudited)

			At  30 September 2009 %	At 30 September 2008 %	At  31 March 2009 %
Equities:	United Kingdom		11.5	10.9	9.0
	Continental Europe		25.2	25.3	23.6
	North America		26.1	27.4	28.1
	Japan		4.0	5.1	5.7
	Asia Pacific		12.8	8.8	11.0
	Emerging Markets		14.4	17.8	14.4
Total equities			94.0	95.3	91.8
Sterling denominated bonds			0.7	0.7	0.3
Euro denominated bonds			0.1	0.2	0.2
US$ denominated bonds			-	0.1	-
Brazilian real denominated bonds			4.9	3.2	5.1
Net liquid assets			0.3	0.5	2.6
Total assets (before deduction of loans and debentures)			100.0	100.0	100.0

SCOTTISH MORTGAGE INVESTMENT TRUST PLC

Notes to the condensed financial statements (unaudited)

	The condensed financial statements for the six months to 30 September 2009 comprise the statements set out in the previous pages together with the related notes below. They have been prepared on the basis of the same accounting policies as set out in the Company's Annual Financial Statements at 31 March 2009 and in accordance with the ASB's Statement 'Half-Yearly Financial Reports' and have not been audited or reviewed by the Auditors pursuant to the Auditing Practices Board Guidance on 'Review of Interim Financial Information'.
2.	The financial information contained within this Half-Yearly Financial Report does not constitute statutory accounts as defined in sections 434 and 436 of the Companies Act 2006. The financial information for the year ended 31 March 2009 has been extracted from the statutory accounts which have been filed with the Registrar of Companies. The Auditors' Report on those accounts was not qualified and did not contain statements under the sections 237(2) or (3) of the Companies Act 1985.
3.	Baillie Gifford & Co are employed by the Company as investment managers and secretaries under a management agreement which can be terminated on not less than 12 months' notice, or on shorter notice in certain circumstances. The fee in respect of each quarter is 0.08% of total assets less current liabilities (excluding short term borrowings for investment purposes).
4.	Recovered VAT In 2007 the European Court of Justice ruled that investment management fees should be exempt from VAT. During the year to 31 March 2009 the Company received a reimbursement of £5,666,000 which has been allocated to revenue and capital in the manner in which it had originally been charged, plus £1,910,000 interest thereon.
		Six months to  30 September 2009 £'000		Six months to  30 September  2008 £'000	Year to  31 March  2009 £'000
5.	Net return per ordinary share
	Revenue return	19,300		24,803	34,571
	Capital return	512,256		(363,700)	(746,866)
	Total return	531,556		(338,897)	(712,295)
	Weighted average number of ordinary shares in issue	271,817,766		273,212,424	272,833,733
	Net return per ordinary share figures are based on the above totals of revenue and capital and the weighted average number of ordinary shares in issue during each period. There are no dilutive or potentially dilutive shares in issue.
		Six months to  30 September 2009 £'000	Six months to  30 September  2008 £'000			Year to  31 March  2009 £'000
6.	Dividends
	Amounts recognised as distributions in the period:
	Previous year's final dividend of 5.50p (2008 - 5.30p), paid 1 July 2009	14,955	14,521			14,521
	Interim dividend for the year ended 31 March 2009 of 6.80p, paid 28 November 2008	-	-			18,530
		14,955	14,521			33,051

SCOTTISH MORTGAGE INVESTMENT TRUST PLC

Notes to the condensed financial statements (unaudited) (Ctd)

		Six months to  30 September 2009 £'000	Six months to  30 September  2008 £'000	Year to  31 March  2009 £'000
6.	Dividends (Ctd)
	Dividends paid and proposed in the period:
	Interim dividend for the year ending 31 March 2010 of 5.50p (2009 - 6.80p†)	14,936	18,530	18,530
	Final dividend for the year ended 31 March 2009	-	-	14,965
	Adjustment to provision for previous year's final dividend re shares bought back	(10)	-	-
		14,926	18,530	33,495
	The interim dividend was declared after the period end date and has therefore not been included as a liability in the balance sheet. It is payable on 27 November 2009 to shareholders on the register at the close of business on 13 November 2009. The ex dividend date is 11 November 2009. † The interim dividend for the year to 31 March 2009 includes a non-recurring 1.5p per share.
7.	The bank loans falling due within one year comprise ¥8,500 million, US$99 million and CHF60.5 million (30 September 2008 - ¥8,230 million, US$99 million, €73 million and CHF35.5 million; 31 March 2009 - US$99 million).  There were no bank loans falling due in more than one year at 30 September 2009 (30 September 2008 - ¥8,500 million, US$30 million and CHF121 million; 31 March 2009 - ¥8,500 million and CHF60.5 million).  During the period a bank loan of US$99 million was repaid and a loan of US$99 million was drawn down.
8.	The fair value of borrowings at 30 September 2009 was £362,075,000 (30 September 2008 - £504,236,000; 31 March 2009 - £353,959,000).
		At 30 September 2009 £'000	At 30 September  2008 £'000	At 31 March  2009 £'000
9.	Share capital: Ordinary shares of 25p each
	Allotted, called-up and fully paid	271,564,897	272,489,897	272,089,897
	Treasury shares	12,781,279	11,856,279	12,256,279
		284,346,176	284,346,176	284,346,176
	In the six months to 30 September 2009 a total of 525,000 ordinary shares with a nominal value of £131,000 were bought back at a total cost of £2,187,000 and held in treasury. At 30 September 2009 the Company had authority to buy back a further 40,140,043 ordinary shares.
10.	Transaction costs on purchases amounted to £225,000 (30 September 2008 - £393,000; 31 March 2009 - £596,000) and transaction costs on sales amounted to £190,000 (30 September 2008- £424,000; 31 March 2009 - £811,000).
11.	None of the views expressed in this document should be construed as advice to buy or sell a particular investment.

SCOTTISH MORTGAGE INVESTMENT TRUST PLC

Notes to the condensed financial statements (unaudited) (Ctd)

12.

Shareholders will be notified on or around 9 November 2009 that the Half-Yearly  Financial  Report has been published and will be available on the Scottish Mortgage page of the Managers' website www.scottishmortgageit.com.

13.

Principal Risks and Uncertainties The principal risks facing the Company relate to the Company's investment activities. These risks are market risk (comprising currency risk, interest rate risk and other price risk), liquidity risk and credit risk. An explanation of these risks and how they are managed is contained in note 23 of the Company's full Annual Report and Accounts for the year to 31 March 2009. The principal risks and uncertainties have not changed since the publication of the Annual Report which can be obtained free of charge from Baillie Gifford & Co and is available on the Scottish Mortgage page of the Managers' website: www.scottishmortgageit.com. Other risks facing the Company include the following: gearing risk (the use of borrowings can magnify the impact of falling markets) and regulatory risk (that the loss of investment trust status or a breach of the UKLA Listing Rules, could have adverse financial consequences and cause reputational damage).

 

END

 

 

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