Interim Results for 6 Months to 30 September 1999

SCOTTISH MORTGAGE & TRUST PLC 29 October 1999 The Scottish Mortgage & Trust PLC Results for the six months to 30 September 1999 The Scottish Mortgage & Trust PLC (Scottish Mortgage) 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 £1.9 billion. An ISA and Share Plan are available. Scottish Mortgage is managed by Baillie Gifford & Co., the leading Edinburgh based fund management group with £18 billion under management. Salient points * NAV up 0.8% to 461.0p, compared with a fall of 2.4% in the All Share Index and a rise of 1.7% in the World Index (sterling terms). * Interim dividend up 2.9% to 1.80p. The board remains confident that the full year dividend will be increased at least in line with inflation. * Asset allocation shifted towards Asia. The Asian stake rose from 7.7% of net assets to 13.9% while the pan-European stake fell from 74.5% to 68.0%. This reflects the greater relative improvement in Asian economic conditions and the prospect of rising interest rates in Europe. * Outstanding stock selection in Japan made an important contribution to the trust's overall performance. Stock selection was also good in continental Europe and the Asia Pacific region. * 5 million shares bought back at an average discount of 14%. The board remains committed to buying in shares to enhance the NAV for shareholders. * Major supporters of the AITC's 'its' campaign. Scottish Mortgage has contributed to 'its' and is increasing its marketing to derive maximum spin-off advantage. Increased enquiries have already been noted. * The board remains confident in the long term prospects for a geographically diversified portfolio of high quality equities. For further information please contact: Max Ward, Manager The Scottish Mortgage & Trust PLC 0131 222 4000 Gill Meekison, Director Baillie Gifford & Co 0131 222 4000 Mike Lord, Director Broadgate Marketing 0171 726 6111 Baillie Gifford & Co. is regulated by IMRO. The Scottish Mortgage & Trust PLC Interim Statement October 1999 Over the six months to 30 September, the Company's net asset value rose by 0.8%; over the same period, the All Share Index fell by 2.4% and the World Index rose by 1.7% in sterling terms. Prospects for the global economy have improved steadily throughout the period as forecasts of economic growth for most regions of the world have been revised progressively upwards. Apart from a rise in the prices of some commodities (most notably oil), there are as yet few signs of any general increase in inflationary pressures, but already pre-emptive action on the part of the UK and US central banks has led to some tightening of global monetary policy. Western bond yields have risen significantly in response to this tightening, but equity markets have generally been more resilient: those of Europe and America were little changed over the period while most Asian markets made strong progress. The main thrust of our transacting since 31 March has been to shift the emphasis of the portfolio more in favour of Asia at the expense of the UK and continental Europe. Between 31 March and 30 September, the Asian stake rose from 7.7% of net assets to 13.9% while the pan European stake fell from 74.5% to 68.0%. This shift reflects both the greater relative improvement in Asian economic conditions and the more imminent prospect of rising interest rates in Europe. We have made net purchases of £24m in Japan and of £37m in the rest of Asia, which have been largely offset by net sales of £26m in the UK and of £25m in the rest of Europe. We have also made net purchases of £12m in the USA and net sales of £3m in Latin America. Earnings of 2.80p for the six months are in line with those for the same period last year. However, the combination of a net investment in equities during the period and a switch within the portfolio to lower yielding markets such as Japan makes it probable that earnings for the full year will be below those of last year. We are paying an interim dividend of 1.80p (1.75p) and remain confident of maintaining the real value of the full year dividend. Our primary motivation in seeking permission to buy back shares was to take advantage of the opportunity to enhance net asset value for continuing shareholders by buying in at a discount. It is therefore encouraging to report that we have bought in five million shares during the period at an average discount of over 14%. We are committed to continuing this programme until the discount falls to levels that remove the attractions of buying in. Our trade association, the AITC, has undertaken a major marketing campaign to draw attention to the attractions of investment trusts; we are substantial supporters of this campaign. We shall also be stepping up our own marketing activity to derive the maximum spin-off benefit from the generic advertising. As ever, the immediate outlook for markets is clouded in uncertainty. However, our confidence in the long term prospects for a geographically diversified portfolio of high quality equities remains high. The following is the interim statement for the six months ended 30 September 1999 which has been neither reviewed nor audited by the auditors. This statement is being printed and will be sent to all shareholders on 15 November 1999. Copies will be available for inspection at the Registered Office of the Company or may be obtained on request from the Managers and Secretaries after that date. THE SCOTTISH MORTGAGE & TRUST PLC STATEMENT OF TOTAL RETURN (unaudited and incorporating the revenue account*) for the six months ended 30 September 1999 Revenue Capital Total £'000 £'000 £'000 Realised gains on investments - 93,028 93,028 Unrealised gains/(losses) on investments - (85,554) (85,554) Currency (losses) - (274) (274) Income (note 1) 24,973 - 24,973 Investment management fee (3,053) - (3,053) Other administrative expenses (708) - (708) Net return before finance costs and taxation 21,212 7,200 28,412 Finance costs of borrowings (9,044) - (9,044) Return on ordinary activities before taxation 12,168 7,200 19,368 Tax on ordinary activities (2,112) - (2,112) Return on ordinary activities after taxation 10,056 7,200 17,256 Dividends in respect of equity shares (6,402) - (6,402) Transfer to/(from) reserves 3,654 7,200 10,854 Return per ordinary share (note 2) 2.80p 2.01p 4.81p Dividend per ordinary share (note 3) 1.80p * 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. for the six months ended 30 September 1998 Revenue Capital Total £'000 £'000 £'000 Realised gains on investments - 31,243 31,243 Unrealised gains/(losses) on investments - (295,765) (295,765) Currency (losses) - (1,561) (1,561) Income (note 1) 26,286 - 26,286 Investment management fee (2,470) - (2,470) Other administrative expenses (427) - (427) Net return before finance costs and taxation 23,389 (266,083) (242,694) Finance costs of borrowings (10,666) - (10,666) Return on ordinary activities before taxation 12,723 (266,083) (253,360) Tax on ordinary activities (2,633) - (2,633) Return on ordinary activities after taxation 10,090 (266,083) (255,993) Dividends in respect of equity shares (6,313) - (6,313) Transfer to/(from) reserves 3,777 (266,083) (262,306) Return per ordinary share (note 2) 2.80p (73.77p) (70.97p) Dividend per ordinary share (note 3) 1.75p for the year ended 31 March 1999 Revenue Capital Total £'000 £'000 £'000 Realised gains on investments - 69,351 69,351 Unrealised gains/(losses) on investments - 3,731 3,731 Currency (losses) - (1,700) (1,700) Income (note 1) 48,483 - 48,483 Investment management fee (5,116) - (5,116) Other administrative expenses (953) - (953) Net return before finance costs and taxation 42,414 71,382 113,796 Finance costs of borrowings (17,787) - (17,787) Return on ordinary activities before taxation 24,627 71,382 96,009 Tax on ordinary activities (4,364) - (4,364) Return on ordinary activities after taxation 20,263 71,382 91,645 Dividends in respect of equity shares (19,840) - (19,840) Transfer to/(from) reserves 423 71,382 71,805 Return per ordinary share (note 2) 5.62p 19.79p 25.41p Dividend per ordinary share (note 3) 5.50p THE SCOTTISH MORTGAGE & TRUST PLC SUMMARISED BALANCE SHEET at 30 September 1999 (unaudited) 30 September 1999 31 March 1999 £'000 £'000 NET ASSETS Fixed asset investments 1,890,582 1,862,816 Net liquid assets 17,728 5,512 Total assets (before deduction of loans and debentures) 1,908,310 1,868,328 Loans and debentures (note 4) (272,414) (222,427) 1,635,896 1,645,901 CAPITAL AND RESERVES Called-up share capital 88,920 90,180 Capital reserves 1,513,957 1,526,356 Revenue reserve 33,019 29,365 EQUITY SHAREHOLDERS'FUNDS 1,635,896 1,645,901 NET ASSET VALUE PER ORDINARY 461.Op 457.3p SHARE (after deducting prior charges at par) Ordinary shares in issue (note 5) 355,680,000 360,720,000 THE SCOTTISH MORTGAGE & TRUST PLC TWENTY LARGEST HOLDINGS at 30 September 1999 Market value % of total Name Business £'000 assets Vodafone Airtouch Mobile telecommunication services 100,660 5.3 BP Amoco International oil 75,011 3.9 Lloyds TSB Retail banking and insurance 67,950 3.6 Glaxo Wellcome Pharmaceuticals 48,169 2.5 National Westminster Bank Banking 43,948 2.3 HSBC Banking 40,229 2.1 NTT Mobile Mobile telecommunications 40,122 2.1 Communications British Telecom Telecommunications 34,941 1.8 Mannesmann Mobile telecommunications and engineering 33,692 1.8 Shell Transport and Trading International oil 30,418 1.6 Gallaher Tobacco 28,333 1.5 Baillie Gifford British Small company unit trust 26,552 1.4 Smaller Companies Fund CGU Insurance 26,009 1.4 Prudential Life assurance 25,658 1.3 Alliance & Leicester Retail banking 23,196 1.2 Imperial Tobacco Tobacco 21,750 1.1 Schering-Plough Pharmaceuticals 21,191 1.1 Nokia Mobile telecommunications 20,644 1.1 Wolseley Distributor of building materials and plumbing equipment 18,968 1.0 Shohkoh Fund Business finance 18,363 1.0 745,804 39.1 DISTRIBUTION OF ASSETS at 30 September 1999 30 September 1999 31 March 1999 % % Equities: United Kingdom 50.5 55.7 Continental Europe 17.5 18.8 North America 10.7 10.6 Latin America 1.4 1.5 Japan 9.4 5.4 Asia Pacific 4.5 2.3 Total equities* 94.0 94.3 United Kingdom bond 1.0 1.1 Argentine bonds 4.1 4.3 Net liquid assets 0.9 0.3 Total assets (before deduction of loans and debentures) 100.0 100.0 * Total equities include 0.3% (31 March 1999 - 1.2%) of convertible issues. THE SCOTTISH MORTGAGE & TRUST PLC NOTES 30 September 1999 30 September 1998 31 March 1999 £'000 £'000 £'000 1. Income Income from investments and interest receivable 24,973 26,286 48,346 Other income Nil Nil 137 2. Return per ordinary share Revenue return 10,056 10,090 20,263 Capital return 7,200 (266,083) 71,382 Return per ordinary share is based on the above totals of revenue and capital and on 358,901,120 (30 September 1998 and 31 March 1999 - 360,720,000) ordinary shares, being the weighted average number of ordinary shares in issue during the period. 3. The interim dividend will be paid on 1 December 1999 to all shareholders on the register at the close of business on 12 November 1999. 4. Loans and debentures include £120 million drawn down under short term multi-currency loan facilities (31 March 1999 - £70 million). 5. On 11 February 1999 authority was granted to the Company to buy back 54,071,928 ordinary shares (equivalent to 14.99% of its issued share capital at that date). Between 11 June and 30 September 1999 a total of 5,040,000 ordinary shares were bought back at a total cost of £20,859,000. At 30 September 1999 the Company had authority to buy back further 49,031,928 ordinary shares. 6. The financial information for the year ended 31 March 1999 has been extracted from the full accounts which have been filed with the Registrar of Companies and which contain an unqualified Auditors' Report. 7. The accounting policies applied in calculating the interim figures are consistent with those used in the Annual Financial Statements. The Interim Report was approved by the Board on 28 October 1999.

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