Interim Management Statement

RNS Number : 9800P

Securities Trust of Scotland PLC

27 July 2010

 



SECURITIES TRUST OF SCOTLAND PLC

INTERIM MANAGEMENT STATEMENT

COVERING THE PERIOD FROM 1 APRIL TO 30 JUNE 2010

Manager's commentary

Until well into April, confidence about the economic outlook had sustained a rally in world equity markets that began more than a year ago. By the end of May, however, there were clear signs that the momentum was fading and the selling pressure continued into June, leaving the FTSE All Share down by 11.8% for the second quarter.

The Trust fared relatively well in these tough conditions; its NAV was down 10.8% and the share price fell 10.2%. This was a decent result given that nearly 10% of the portfolio was in BP at the start of the quarter; the well-publicised oil spill nearly halved the company's value. What helped the Trust's relative performance were the cyclical mining and banks sectors, which led the correction in equity markets. The low yield offered by miners and banks means that the Trust is under-represented here.

The big issue now is income concentration. We are working on how to generate sufficient income with limits on the concentration, not of assets, but of income from individual stocks. The bigger picture, however, is that world economic growth continues to be supportive for profits and equity prices. This should ensure that markets can rise from here.

Ross Watson

Profile

Objective - To achieve rising income and long-term capital growth by investment in the UK.

Benchmark - FTSE All-Share index

Sector - UK Growth & Income

Launch - 28 June 2005

Portfolio

Asset class            31 Mar     30 Jun

Equities                    108.3%   110.2%

Fixed interest               3.5%       3.8%

Cash                            0.9%       0.8%

Borrowings              (12.7%)   (14.7%)

Equity allocation 31 Mar     30 Jun

Financials                23.4%      24.3%

Consumer goods     12.0%      13.5%

Industrials                11.7%      12.8%

Oil and gas              16.0%      12.7%

Consumer Services   9.0%      10.0%

Healthcare                 8.0%        9.1%

Utilities                       5.7%        6.9%

Telecommunications  5.2%         5.5%

Basic Materials           7.5%        3.4%

Technology               1.5%        1.7%

Note: Changes due to market movements

Top 10 equity holdings (47.3% of total portfolio)

Royal Dutch Shell 7.3%

British American Tobacco 6.5%

Vodafone 5.5%

BP 5.4%

GlaxoSmithKline 5.1%

HSBC 4.2%

AstraZeneca 4.0%

Next 3.3%

National Grid 3.0%

Imperial Tobacco 3.0%

Number of holdings 45

Key facts

Net assets £96.8m

Share price (p) 87.8

Net asset value per share (p)* 96.1

Discount (premium) 8.7%

Net yield † 5.3%

*Following a recent review by the AIC, the NAV stated in our reporting is inclusive of current year revenue.

†The fourth interim dividend of 1.20p per share for the year to 31 March 2010 was paid on 30 June 2010 to shareholders on the register on 4 June 2010.  

Performance

Discrete performance over 12 months to 30 June

	2010	2009         2008		2007	2006
Share Price	16.9%	(16.0%)	(22.5%)	17.5%	15.4%
NAV	25.8%	(27.2%)	(20.4%)	20.2%	20.0%
Benchmark	21.1%	(20.5%)	(13.0)%	18.4%	19.7%

Cumulative performance over periods to 30 June 2010

	One  month	Three months	Six        One Months       year		Three years	Five years	Since Launch**
Share Price	(4.7%)	(10.2%)	(3.3%)	16.9%	(23.9%)	3.1%	8.2%
NAV	(3.0%)	(10.8%)	(5.1%)	25.8%	(27.1%)	5.2%	5.6%
Benchmark	(4.6%)	(11.8%)	(6.1%)	21.1%	(16.2%)	18.7%	19.3%

Source: Martin Currie and Morningstar. Bid to bid basis with net income reinvested over the periods shown in sterling terms. These figures do not include the costs of buying and selling shares in an investment trust. If these were included, performance figures would be reduced. **Launched on 28 June 2005. Past performance is not a guide to future returns.

Capital structure

Ordinary shares 100,776,771*

*Source: Martin Currie as at 30 June 2010.

Board of directors

Neil Donaldson (chairman)

Andrew Irvine

Charles Berry

Edward Murray

Rachel Beagles (appointed 20 July 2010)

Material events and transactions

Gearing at the end of the period was 14.7% (12.7% as at 31 March 2010).

The fourth interim dividend of 1.20p was paid on 30 June 2010 to shareholders on the register on 4 June 2010.

A first interim dividend of 1.15p for the year ended 31 March 2011 has been declared and will be paid on 3 September 2010 to shareholders on the register on 13 August 2010.

Website

The trust has its own website at www.securitiestrust.com. There you will find further details about the trust, information on Martin Currie, daily share prices (and associated risks), and you can access regular webcasts by the manager.

Key information

Year end 31 March

Annual general meeting July

Interim dividends paid March, June, September and December

Annual management fee as at 31 March 2010† 0.3%

Total expense ratio 31 March 2010* 0.8%

Epic code STS

Reuters code STS.L

†Percentage of net assets.

*Percentage of shareholders' funds. Includes annual management fee.

Net asset value and dividend history

As at 31 March	Share price	NAV per share	Discount/ (premium)	Dividend per share
2006	125.5p	135.6p	7.4%	2.85p
2007	141.3p	148.4p	4.8%	5.05p
2008	116.0p	121.5p	3.8%	5.45p
2009	66.3p	75.4p	12.2%	5.45p
2010	99.0p	109.4p	9.5%	4.65p

Past performance is not a guide to future returns.

*Following a recent review by the AIC, the NAV stated in our reporting is inclusive of current year revenue.

Risk factors

Please note that, as the shares in investment trusts are traded on a stockmarket, the share price will fluctuate in accordance with supply and demand and may not reflect the underlying net asset value of the shares.

Depending on market conditions and market sentiment, the spread between the purchase and sale price can be wide. As with all stock exchange investments the value of investment trust shares purchases will immediately fall by the difference between the buying and selling prices, the bid-offer spread.

Investment trusts may also borrow money in order to make further investments. This is known as "gearing" and can enhance shareholder returns in rising markets but, conversely, can reduce them in falling markets.

The value of investments and the income from them may go down as well as up and is not guaranteed. An investor may not get back the amount originally invested.

The majority of charges will be deducted from the capital of the trust. This will constrain the capital growth of the trust in order to maintain the income streams.

Exposure to a single country market increases potential volatility.

www.securitiestrust.com

 

END

 

 

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