Final Results

Cairngorm B.S. Inv Tst PLC
23 May 2000


THE CAIRNGORM BUILDING SOCIETIES INVESTMENT TRUSTS 
 
Financial Highlights 
 
                                 Year ended 31        Year ended 31  Change   
                                   March 2000           March 1999   (%)      
                                    (pence per           (pence per           
                              ordinary share)      ordinary share)            
  Net asset value                      128.27               155.83   (17.69)  
  Dividends - Interim                    1.40                 1.40            
  paid                                   3.20                 3.20            
  Final proposed                                                              
  Total                                  4.60                 4.60   0.00     
  Earnings                               4.93                 4.73            
  Capital (loss)/gain                  -27.78                16.15            
  Total return                         -22.85                20.88            
 
Dividends 
 
An interim dividend of 1.4p net (1999 1.4p) per ordinary share was paid on 4
December 1999. A final dividend of 3.2p net (1999 3.2p) per ordinary share
has been proposed, payable on 23 June 2000 to shareholders on the register on
5 June 2000. The Trust's shares will be quoted ex dividend on 30 May 2000. 
 
 
Chairman's Statement 

Results
 
The year to March 31 2000 has been a period when interest rates have changed
six times. Base rate started at 5.5% and, after two reductions, a steady
increase in rates took place leaving the level at 6% at the year-end. This
has had a depressing impact on the prices of securities that the Trust owns,
as they are all interest rate sensitive. Over the year the net asset value
per share has moved to 128.27p from 155.83p - a 17.69% decline. 
 
Earnings for the year, 4.93p, are slightly higher than last year's 4.73p, and
this has allowed the dividend to remain constant both at the interim and
final stages. The Board of directors is recommending a final dividend of 3.2p
giving a total of 4.6p for the year (1999 4.6p). Depending on the precise
timing of further moves into equities there could be an impact on the revenue
of the Trust as equities generally offer lower dividend income than
equivalent amounts invested in bonds. Historically equities have offered
greater capital growth than bonds over the long term as well as greater
volatility.  
 
The share price of the Trust moved to 72.5p from 112.25p over the year. This
decline of 35.4%, which is at a rate greater than the decline of net asset
value, reflects the negative sentiment towards the financial sector which has
persisted whilst interest rates have been increasing. The share price
discount to net asset value stood at over 43% at the year-end. Whilst the
expansion of this discount is disappointing, it does present a very
attractive investment opportunity which Cairngorm Asset Management are taking
steps to publicise. 
 

Investment policy

 
At the interim stage I mentioned the broadening of the investment policy to
allow the Trust to invest in securities of European financial institutions.
At that stage equities represented 27% of the total portfolio. This process
has continued and equities now represent 31% of the portfolio. I would remind
shareholders that your Board believes that, currently, no more than 50% of
the portfolio should be invested in equities for reasons of prudence and to
mitigate the impact on dividend paying capacity of the Trust. 
 

Demutualisation

 
Our investment managers, Cairngorm Asset Management, monitor the performance
of Building Societies especially those that de-mutualise and they are
convinced that demutualisation is in the best interests of members and,
later, shareholders. The process of demutualisation has recently been
re-ignited by action taken at several insurance companies - notably Standard
Life, Scottish Provident and Friends Provident. Satisfactory progress there
may well draw attention back to the Building Society sector where there are
still some attractive opportunities for demutualisation. 
 

Directors

 
There were no changes in the composition of the board in the period under
review. 
 

Investment Trusts

 
We wholeheartedly support the 'its' campaign initiative of the Association of
Investment Trust Companies. The Investment Manager of the Trust is also
increasing its efforts to communicate the attractions of the Trust to a wider
audience. 
 

Savings scheme

 
May I take the opportunity to remind shareholders of the merits of our low
cost savings plan as a cost-effective way to invest in the Trust. No
commission is payable on purchases made through the savings plan. We believe
that the shares of the Trust, which currently stand on a discount to net
asset value, offer excellent value and we hope that many of you will use the
Savings Plan to add to your shareholdings. Should you require any information
on the Cairngorm Savings Plan, please phone our Investment Manager on 0131
226 6040. 
 

Outlook

 
Our Investment Manager expects that interest rates will begin to fall in the
autumn, which should help bond and equity prices make positive progress at
that time. The main risks for stockmarkets lie in higher inflation caused by
high economic growth and upward pressure on costs. There is also a concern
about the negative impact on sentiment, which may be provoked by collapses in
the share prices of companies in the Technology, Media and Telecoms sectors. 
 
Over the next few months the government should receive substantial amounts of
money from the sale of mobile phone licences and if they use this to reduce
government debt this will further improve the attractiveness of corporate
bonds and Permanent Interest Bearing shares in which this trust is
predominantly invested. 
 
As Chairman, I am confident that the Trust is making good progress toward its
medium term aims and I would like to finish by thanking you for your support.
I look forward to welcoming shareholders to the Annual General Meeting on 22
June 2000. 
 
 
Philip Court 
Chairman
22 May 2000 
 


Statement of Total Return 
(incorporating the revenue account)  
for the year ended 31 March 2000 

                                                                              
                                                 2000                    1999 
                        Notes Revenue Capital  Total  Revenue Capital  Total
                                  (£)   (£)     (£)     (£)     (£)     (£) 
Capital gains/(losses)                                                      
on investments                                                              
Net                             -    153,984  153,984     -     8,881   8,881
realised                                                      
gains                                                                       
Movement in unrealised                                                      
gains/(losses)                                                              
 on                       14     -  (537,443)(537,443)   -   241,952 241,952
 investments                      
Total capital                  -  (383,459)(383,459)   -   250,833 250,833
 gains/(losses) on                   
 investments                                                                 
Income from investments  2 181,398     -    181,398  191,616    -  191,616
                               
Other interest               2,815     -      2,815    2,968    -    2,968
 receivable                                                                  
Gross revenue and          184,213 (383,459)(199,246) 194,584 250,833 445,417
 capital gains             
Administrative expenses  3 (47,904) (7,619)  (55,523) (49,063)(9,111)(58,174)
Net return on ordinary                                                      
  activities                                                                  
  before interest payable  136,309 (391,078)(254,769) 145,521 241,722 387,243
  and taxation                
Interest payable         4 (45,229)(15,076) (60,305) (52,473) (17,491)(69,964)
Net return on ordinary                                                      
  activities                                                                  
  before                    91,080 (406,154)(315,074) 93,048  224,231 317,279
  taxation                        
Taxation on net revenue 5  (20,126)  6,205   (13,921)(25,150)   7,475 (17,675)
  on ordinary activities        
Net return attributable                                                     
  to ordinary                                                                 
  shareholders              70,954 (399,949) (328,995) 67,898  231,706 299,604
                          
Dividends declared     6                                                 
Interim    paid(1999       (20,174)      -  (20,174)(20,129)     -   (20,129)
dividend of   - 1.4p)          
    1.4p                                                                        
Final        proposed     (46,113)      -  (46,113) (46,009)     -   (46,009)
dividend of  1999 -            
 3.2p          3.2p)                                                         
                          (66,287)     -   (66,287)(66,138)     -   (66,138)
                            
Transfer to                4,667 (399,949)(395,282)  1,760  231,706 233,466
  reserves                              
Return per ordinary        4.93p  (27.78)p  (22.85)p  4.73p  16.15p  20.88p
  share - undiluted                                        
  - fully diluted          4.93p  (27.78)p  (22.85)p  4.63p  15.81p  20.44p
                                                                 
The Revenue column of this                                                  
  statement represents the revenue                                            
  account of the Company.                                                     
  All revenue and capital items in                                            
  the above statement derive from                                             
  continuing operations.                                                      
                                                                              
 
 
Balance Sheet 
at 31 March 2000 
 
                                           2000            1999 
                             Notes     (£)     (£)     (£)     (£) 
 
Fixed assets                    8                          
Equity investments                           772,461            573,439 
Non - equity
investments                                1,737,623          2,593,049 
                                           
                                           2,510,084          3,166,488 
 
Current assets 
Debtors                    9         58,617          82,897 
Cash at bank                         94,942          54,888 

                                    153,559         137,785 
Creditors: amounts falling due 
within one year           10      (815,186)      (1,063,764)           
 
Net current
liabilities                                (661,627)          (925,979) 
 
Net assets                                1,848,457          2,240,509 
 
Capital and reserves 
Called-up share
capital                    12               144,102            143,779 
Share premium
account                    13             1,166,491          1,162,815 
Other reserves             14      
Capital reserve -
realised                                             142,267             4,773 
Capital reserve - unrealised                306,598            844,041 
Warrant reserve                              63,846             64,615 
Revenue reserve                              25,153             20,486 
 
Ordinary shareholders'
funds                     15                       1,848,457          2,240,509 
 
Net asset value per ordinary share -
undiluted                                    128.27p           155.83p 
                                         
Net asset value per ordinary share - fully
diluted                                             123.84p          146.96p 
 
Cash Flow Statement  
for the year ended 31 March 2000 
                        Notes               2000           1999 
                                        (£)     (£)     (£)     (£) 
Operating activities 
Cash received from
investments                                           158,629          142,598 
Interest received                              3,261             2,569 
Investment management and 
secretarial fees paid                        (34,538)          (33,654) 
Cash paid to and on behalf of
Directors                                     (2,700)           (2,700) 
Other cash payments                          (18,039)          (20,308) 
                                         
Net cash inflow from operating
activities               16                  106,613            88,505 
 
Servicing of finance 
Interest paid                                (59,451)          (71,058) 
 
Taxation 
Tax recovered                                 32,900            11,037 
 
Capital expenditure and financial 
investment 
Purchase of investments             (319,317)        (484,376) 
Sale of investments                  592,262           26,875 
                                    
                                             272,945          (457,501) 
 
Equity dividends paid                        (66,183)          (63,020) 
      
Management of liquid resources 
Cash taken off deposit                             -            30,000 
 
Financing 
Proceeds from share issue              3,230           7,887 
Borrowings (repaid)/drawn
down                                (250,000)        500,000      
                                         
                                            (246,770)          507,887 
                                              
Increase in cash          16                  40,054            45,850 
                                         
 
Notes : 
 
The financial information set out above does not constitute full
accounts within the meaning of section 240 of the Companies Act 1985. Full
accounts for the Trusts for the year , on which the auditors of the Companies
have given an unqualified report within the meaning of section 235 of the Act
and which will not contain a statement under sections 237(2) or (3) of the
Act, will be posted to shareholders on or about 30 May 2000 and will be
delivered to the Registrar of Companies.

 
2     Return per ordinary share 
                                                 2000     1999 
The return per ordinary share is based 
upon the following figures: 
Revenue return                                           £ 70,954     £67,898 
Capital return                                (£399,949) £231,706 
Weighted average of ordinary shares in issue 
during year - undiluted                                 1,439,943   1,435,093 
Weighted average of ordinary shares in issue
 during year - fully diluted                            1,439,943   1,465,616 
 
The difference between the undiluted and fully diluted number of ordinary
shares is derived from the total number of warrants in issue multiplied by a
factor based on the average price of the ordinary shares in the year and the
exercise price of the warrants, as required by FRS 14. No dilution occurred
in the current year as the warrant exercise price exceeded the average market
price of one share during the year.