Final Results
Scottish Mortgage Inv Tst PLC
30 April 2004
SCOTTISH MORTGAGE INVESTMENT TRUST PLC
Results for the year to 31 March 2004
In a year of strong recovery in equity markets, Scottish Mortgage's net asset
value rose by 33.6% compared to a 24.7% rise in its Benchmark Index (50% FTSE
All-Share Index and 50% FTSE World Index Ex. UK - in sterling terms). This was
8.9 percentage points ahead of the benchmark.
The outperformance was attributable to:
- benefits from the investment of borrowings.
- asset allocation decisions - notably an increase in exposure to
Emerging Markets and Asia.
- generally good stock selection.
• The Asian (excluding Japan) and Emerging Markets content rose sharply from 8.8% to 14.4% of total assets.
The opportunities in many of these rapidly expanding economies are seen as more attractive over the longer
term than those available in the majority of developed countries.
• Short term borrowings were increased by £25m to take advantage of the prospects for a recovery in equity
markets. Net investment of £20m was made into equities funded largely through sales of fixed interest
holdings.
• Increase in dividend: the Board is recommending a final dividend of 0.4p which, together with the interim
of 2.2p and second interim of 4.4p makes a proposed total for the year of 7.0p, a 6.1% increase for the
year compared to a 2.6% rise in inflation (R.P.I.).
• Second half results: during the second half net asset value rose by 11.1% compared to a 6.9% rise in the
Benchmark Index.
• Outlook: while the buoyancy of the global economy has allowed stockmarkets to recover, further progress
will depend on the continuance of healthy and non-inflationary growth in America and China.
• The Chairman, Sir Donald MacKay, stated that 'the results reflect two enduring strengths of Scottish
Mortgage: its truly global perspective and the active approach taken by the Managers.'
Scottish Mortgage Investment 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 £1.4
billion (before deduction of debentures and short term borrowings of £228
million).
Scottish Mortgage is managed by Baillie Gifford & Co., the Edinburgh based fund
management group with around £29 billion under management and advice.
- ends -
For further information please contact:
Robert O'Riordan,
Baillie Gifford & Co. 07730 412007
Mike Lord, Director,
Broadgate Marketing 020 7726 6111
Baillie Gifford & Co. is authorised and regulated by the Financial Services
Authority.
30 April 2004
SCOTTISH MORTGAGE INVESTMENT TRUST PLC
PERFORMANCE ATTRIBUTION (in sterling terms)
for the year to 31 March 2004
Computed relative to the benchmark (50% FTSE All-Share Index and 50% FTSE World
Ex UK Index (in sterling terms)) with net income reinvested.
Contribution
attributable to:
Benchmark Scottish Mortgage Performance * Contribution
to relative Stock Asset +
return selection
Portfolio 01.04.03 31.03.04 01.04.03 31.03.04 SM Benchmark allocation
breakdown % % % % % % % % %
UK 50.0 50.0 54.9 50.5 32.4 31.0 0.7 0.6 0.1
Europe ex. UK 9.5 9.8 10.8 10.7 42.3 36.9 0.5 0.4 0.1
North America 32.5 30.5 29.4 26.1 17.3 16.8 0.4 0.1 0.4
Japan 4.3 5.4 5.5 6.8 46.3 46.5 0.2 - 0.2
Asia Pacific
ex. Japan
3.0 3.4 6.2 11.0 45.4 40.6 0.6 0.2 0.4
Other Emerging
Markets
0.7 0.9 4.7 6.3 75.9 54.0 1.7 1.0 0.7
Bonds - - 11.0 7.2 12.5 - (1.3) - (1.3)
Cash - - 0.9 1.0 12.1 - (0.4) - (0.4)
Debentures and
Loans
- - (23.4) (19.6) 4.1 - 4.4 - 4.4
Total 100.0 100.0 100.0 100.0 36.8 28.1 7.0 2.2 4.7
Past performance is no guarantee of future performance.
Source: HSBC/Baillie Gifford & Co.
* The above returns are calculated on a total return basis with net
income reinvested. Dividends and interest are reinvested on a cash basis,
unlike the NAV calculation where income is recognised on an accruals basis,
relative performance may differ as a result. Scottish Mortgage's figures
represent the returns on the Company's portfolio and the benchmark figures for
each geographical area represent the return on the appropriate FTSE index.
Contributions cannot be added together as they are geometric; for example to
calculate how a return of 36.8% against a benchmark return of 28.1% translates
into a relative return of 7.0%, divide the portfolio return of 136.8 by the
benchmark return of 128.1 and subtract one.
+ Asset allocation includes the contribution attributable to currency movements.
SCOTTISH MORTGAGE INVESTMENT TRUST PLC
The following is the unaudited preliminary statement for the year to 31 March
2004 which was approved by the Board on 29 April 2004. The Board of Scottish
Mortgage Investment Trust PLC is recommending to the Annual General Meeting of
the Company to be held on 1 July 2004 the payment of a final dividend of 0.40p
(4.50p last year) per ordinary share making 7.00p (6.60p last year) for the year
ended 31 March 2004.
STATEMENT OF TOTAL RETURN
(unaudited and incorporating the revenue account*)
For the year ended For the year ended
31 March 2004 31 March 2003
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Gains/(losses) on investments - 285,687 285,687 - (421,063) (421,063)
Currency gains/(losses) - 5,980 5,980 - (701) (701)
Income (note 2) 35,829 - 35,829 33,909 - 33,909
Investment management fee (2,276) (2,276) (4,552) (2,053) (2,053) (4,106)
Other administrative expenses (1,404) - (1,404) (1,185) - (1,185)
Net return before finance costs
and taxation 32,149 289,391 321,540 30,671 (423,817) (393,146)
Finance costs of borrowings (7,290) (7,303) (14,593) (7,119) (7,119) (14,238)
Return on ordinary activities
before taxation 24,859 282,088 306,947 23,552 (430,936) (407,384)
Tax on ordinary activities (928) - (928) (955) - (955)
Return on ordinary activities
after taxation 23,931 282,088 306,019 22,597 (430,936) (408,339)
Dividends in respect of equity
shares (20,779) - (20,779) (19,730) - (19,730)
Transfer to/(from) reserves 3,152 282,088 285,240 2,867 (430,936) (428,069)
Return per ordinary share
(note 3) 8.05p 94.86p 102.91p 7.43p (141.69p) (134.26p)
Dividend per ordinary share
(note 4) 7.00p 6.60p
* 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.
SCOTTISH MORTGAGE INVESTMENT TRUST PLC
SUMMARISED BALANCE SHEET
at 31 March 2004
(unaudited)
31 March 2004 31 March 2003
£'000 £'000
NET ASSETS
Fixed asset investments 1,338,496 1,050,748
Net liquid assets 16,845 797
Total assets (before deduction of loans and debentures) 1,355,341 1,051,545
Loans and debentures (note 5) (227,560) (207,225)
1,127,781 844,320
CAPITAL AND RESERVES
Called-up share capital 74,326 74,501
Capital reserves 999,414 718,930
Revenue reserve 54,041 50,889
Equity shareholders' funds 1,127,781 844,320
NET ASSET VALUE PER ORDINARY SHARE
(after deduction of prior charges at par) 381.5p 285.5p
Ordinary shares in issue (note 6) 297,305,115 298,005,115
DISTRIBUTION OF ASSETS
at 31 March 2004
(unaudited)
31 March 2004 31 March 2003
% %
Equities: United Kingdom 42.0 44.8
Continental Europe 8.9 8.8
North America 21.7 24.0
Japan 5.7 4.5
Asia Pacific 9.2 5.0
Other Emerging Markets 5.2 3.8
Total equities 92.7 90.9
United Kingdom bonds 4.3 6.3
European bonds 1.5 2.4
North American bonds 0.2 0.3
Net liquid assets 1.3 0.1
Total assets (before deduction of loans and debentures) 100.0 100.0
SCOTTISH MORTGAGE INVESTMENT TRUST PLC
SUMMARISED CASH FLOW STATEMENT
(unaudited)
For the year ended For the year ended
31 March 2004 31 March 2003
£'000 £'000 £'000 £'000
NET CASH INFLOW FROM OPERATING ACTIVITIES 31,040 27,837
NET CASH OUTFLOW FROM SERVICING OF FINANCE (14,431) (14,287)
TOTAL TAX PAID (895) (1,009)
FINANCIAL INVESTMENT
Acquisitions of investments (378,635) (347,442)
Disposals of investments 376,127 371,734
Realised currency loss (111) (323)
NET CASH (OUTFLOW)/INFLOW FROM FINANCIAL INVESTMENT (2,619) 23,969
EQUITY DIVIDENDS PAID (19,919) (19,460)
NET CASH (OUTFLOW)/INFLOW BEFORE FINANCING (6,824) 17,050
FINANCING
Shares purchased for cancellation (3,184) (31,414)
Loans repaid (46,844) -
Loans drawn down 73,331 -
NET CASH INFLOW/(OUTFLOW) FROM FINANCING 23,303 (31,414)
INCREASE/(DECREASE) IN CASH 16,479 (14,364)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Increase/(decrease) in cash in the period 16,479 (14,364)
Increase in bank loans (26,487) -
Exchange movement 6,091 (378)
Other non-cash changes 61 52
MOVEMENT IN NET DEBT IN THE YEAR (3,856) (14,690)
NET DEBT AT 1 APRIL (203,310) (188,620)
NET DEBT AT 31 MARCH (207,166) (203,310)
SCOTTISH MORTGAGE INVESTMENT TRUST PLC
NOTES
1. The financial statements for the year to 31 March 2004 have been prepared on the basis of the accounting
policies set out in the Company's financial statements as at 31 March 2003.
31 March 2004 31 March 2003
£'000 £'000
2. Income
Income from investments and interest receivable 35,699 33,727
Other income 130 182
3. Return per ordinary share
Revenue return 23,931 22,597
Capital return 282,088 (430,936)
Return per ordinary share is based on the above returns and on 297,361,946 (2003 - 304,134,148)
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 £20,779,000 (2003 - £19,730,000). If approved the
final dividend will be paid on 7 July 2004 to all shareholders on the register at the close of
business on 11 June 2004.
5. Loans and debentures include Y5,900 million drawn down under a three year multi-currency loan
facility and US$41.8 million and US$40 million drawn down under a short term facilities (31 March
2003 - 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 362.8p (2003 - 268.0p). The
market value of debenture stocks at 31 March 2004 was £201,270,000 (2003- £197,936,000).
6. At the Annual General Meeting on 3 July 2003 the Company renewed its authority to purchase shares in
the market, in respect of 44,566,036 ordinary shares (equivalent to 14.99% of its issued share
capital at that date). In the year to 31 March 2004 a total of 700,000 (2003 - 11,179,573) ordinary
shares with a nominal value of £175,000 were bought back at a total cost of £1,779,000 (2003 -
£30,599,000). At 31 March 2004 the Company had authority to buy back a further 44,566,036 ordinary
shares.
7. The financial information set out above does not constitute the Company's statutory accounts for the
year ended 31 March 2004. The financial information for 2003 is derived from the statutory accounts for 2003
which have been delivered to the Registrar of Companies. The Auditors have reported on the 2003
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 2004 are unaudited, however it is expected that
the Auditors will issue an unqualified opinion. The statutory accounts for 2004 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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