Half-yearly report

Securities Trust of Scotland plc Half-yearly financial report Six months to 30 September 2009 Copies of the Half Yearly financial report for the six months ended 30 September 2009 have been submitted to the UK Listing Authority and will shortly be available for inspection at the UK Listing Authority's Document Viewing Facility situated at: Financial Services Authority 25 The North Colonnade Canary Wharf London E14 5HS A copy of this half-yearly financial report can be downloaded at www.securitiestrust.com Financial summary Key data As at As at % change 30 September 31 March 2009 2009 Net asset 100.07p 75.41p +32.7 value per share (cum- income) Net asset 98.46p 73.43p +34.1 value per share (ex- income) Benchmark* 2,634.79 1,984.17 +32.8 Share price 90.00p 66.25p +35.8 Discount** 10.06% 12.15% Total returns‡ Six months ended Six months ended 30 September 2009 30 September 2008 Net asset value 39.44% (16.5%) per share Benchmark* 35.69% (13.5%) Share price 41.00% (19.7%) Income Six months Six months % change ended ended 30 September 30 September 2009 2008 Revenue 2.76p 3.04p -9.2 return per share Total expenses Six months Year ended Six months ended 31 March ended 30 September 2009 30 September 2009 2008 As a percentage of shareholders' funds Excluding 0.8% 0.7% 0.5% performance fee Including 1.0% 0.7% 0.5% performance fee† *FTSE All-Share index **Discount calculated using net asset value (cum-income) ‡ The combined effect of any dividends paid, together with the rise or fall in the share price, net asset value or benchmark. † Details of the performance fees are shown in note 8 Annual total returns with dividends reinvested over 12 month periods to 30 September 2009 2008 2007 2006* Securities 6.9% -30.4% 10.7% 29.9% Trust share price FTSE All- 10.8% -22.3% 12.2% 25.7% Share index Securities 6.6% -28.8% 10.6% 27.7% Trust net asset value per share *since launch on 28 June 2005 Source: Fundamental Data INTERIM MANAGEMENT REPORT Chairman's statement Performance Welcome to the latest report covering the six months to 30 September 2009. It is encouraging to see equities bounce back so strongly after a difficult couple of years, and even more so to see Securities Trust of Scotland outperforming the broader market. This was due to good stock selection by our manager over the period. In the period under review the total return of the net asset value per share was 39.4%, compared to the total return of 35.7% in the FTSE All-Share index. The share price total return was 41.0% as the discount narrowed. Dividends The economic downturn has made it a challenging environment for income investors and, although it is encouraging that the outlook for dividends has brightened, the impact of the dividend cuts made by companies held within the portfolio is now reflected in the company's revenue estimate. The current revenue forecast does not cover the 5.45p per share paid in the year to 31 March 2009. Revenue reserves are modest because the company, in its current form, has been in existence for less than five years. Given this situation, the board considers it prudent to reduce the overall dividend payment for the year to 31 March 2010. A first interim dividend payment of 1.15p per share has already been paid for the financial year to 31 March 2010. Your Board has also declared a second interim dividend of 1.15p per share, also unchanged year-on-year. This will be paid on 18 December 2009 to shareholders on the register on 27 November 2009. The board expects to pay a third interim dividend of 1.15p per share, and a fourth interim dividend of at least 1.15p per share amounting to a total dividend of at least 4.6p per share. Dividends to 31 March each year 2010 2009 2008 2007 2006* 1st Interim 1.15p 1.15p 1.10p 1.05p n/a dividend 2nd Interim 1.15p 1.15p 1.10p 1.05p n/a dividend 3rd Interim Tbc 1.15p 1.10p 1.05p 1.00p divided 4th Interim Tbc 2.00p 2.15p 1.90p 1.85p dividend Total Tbc 5.45p 5.45p 5.05p 2.85p *since launch on 28 June 2005 Gearing On 30 June 2009, our previous loan facility for £20 million expired and was replaced with a new facility for £18 million. Whilst there has been an increase in lending margin for credit, this has been mitigated by the very low level of interest rates. At present the company is 10% geared, a prudent level of borrowing in the current environment. Looking to the future with confidence With the Bank of England's base rate remaining at its all time low of 0.5% - and likely to stay close to this figure for some time - deposit accounts and gilt yields offer limited attractions for income-seeking investors. On 30 September, with consumer price inflation running at 1.6%, the two year gilt was yielding well under 1.0% and the five-year gilt was paying around 2.5%. In this environment, we believe that an equity-based investment trust is a compelling proposition for long-term, income-seeking investors. In the second quarter results season, relatively few companies disappointed the market, with early-cycle sectors such as steel and car producers showing improvement, helped in some cases by government incentives. And what of the outlook for equities? Since the low point in March, the UK stockmarket has performed strongly. This has been due primarily to a clear improvement in the global economic environment and I believe it may now be possible to draw a line under the level of dividend cuts by companies. After such a strong rise in the UK market, many UK stocks now look overbought, so some consolidation seems possible. The prospective price/earnings ratio has recovered to around 13 times. This means that profit estimates will need to rise from here if equity prices are to advance much further. Meanwhile, we believe that the importance of stock picking will come to the fore again. Recent research from Citi shows that, while macroeconomic factors are the main drivers of share prices in bear markets and early-stage recoveries, stock- specific drivers become much more important in generating investment returns. In the next phase of the market cycle this should suit Martin Currie's research- driven, stock-picking approach. Neil Donaldson Chairman 12 November 2009 Risk and mitigation The board closely monitors risk and has identified the following as key risks to the company. Specific mitigating measures have been implemented to reduce the probability and impact of each risk to the greatest extent possible. Loss of s842 status - In order to qualify as an investment trust, the company must comply with Section 842 of the Income and Corporation Taxes Act 1988. Section 842 qualification criteria are continually monitored by Martin Currie and the results reported to the board. Operational disruption at the manager's premises - Martin Currie has in place a full disaster recovery and business continuity plan which facilitates continued operation of the business should their premises be subject to operational disruption. The plan was last tested in November 2008 with successful results. Martin Currie maintains a fully operational off-site disaster recovery centre for use by key staff during any disruption. Regulatory, accounting/ internal control breach - The company must comply with the Companies Act 2006 and the UKLA Rules. The board relies on the services of its company secretary and its professional advisers to ensure compliance. Loss of investment team or portfolio manager - Martin Currie takes steps to reduce the likelihood of such an event by ensuring appropriate succession planning and the adoption of a team based approach, as well as special efforts to retain key personnel. Failure to manage the discount - The board regularly discusses discount policy and has set parameters for the manager and the company's broker to follow. Investment underperformance - The board manages the risk of investment underperformance by diversification of investments and through a set of investment restrictions and guidelines that are monitored and reported on by Martin Currie. The board monitors the implementation and results of the investment process with the portfolio manager, who attends all board meetings, and reviews data that show statistical measures of the company's risk profile. Gearing/interest rate risk From time to time the company finances its operations through bank borrowings. However, the board monitors such borrowings (gearing) closely and takes a prudent approach. At the period end bank borrowings were £12 million. In accordance with the investment policy the limit on gearing is 20% of total assets. Foreign exchange risk - The board regularly monitors the impact of the currency rate risk. In recent years the proportion of the company's revenue that is declared in US dollars has increased and currency fluctuations have meant that revenue forecasting has become more uncertain. In order to offset those fluctuations, the company has taken out forward contracts to hedge the expected revenue from a number of portfolio stocks. Counterparty risk - Martin Currie monitors counterparty relationships on behalf of Securities Trust of Scotland. This process includes identifying major counterparties, mapping exposure and analysing the risks through the company's risk, compliance, dealing, operations and middle office teams. The aim is to enable the board of Securities Trust of Scotland to determine an appropriate level of counterparty risk exposure, and to diversify or mitigate this, as required. This process is subject to continual monitoring and review with any recommendations being made to the board. Directors' responsibility In accordance with Chapter 4 of the Disclosure and Transparency Rules, and to the best of their knowledge, each director of Securities Trust of Scotland, confirms that the financial statements have been prepared in accordance with the applicable set of accounting standards and give a true and fair view of the assets, liabilities, financial position and net return of the company. Furthermore, each director certifies that the interim management report includes an indication of important events that have occurred during the first six months of the financial year, and their impact on the financial statements, together with a description of the principal risks and uncertainties that the company faces. In addition, each director of Securities Trust of Scotland confirms that there have been no related party transactions during the six months to 30 September 2009. By order of the board Neil Donaldson Chairman Edinburgh 12 November 2009 Manager's Review As confidence improved in the economic outlook for 2010 and beyond, this was a very strong period for the UK stockmarket. Over the six months to the end of September, the total return of the FTSE All-Share index was 35.7%. What prompted this was a growing acceptance that the British economy was emerging from recession. Many companies began to report first a stabilisation and then an improvement in demand, albeit often well below the levels of a year ago. The progress of the UK market fell into two distinct phases. As the rally that began in March ran out of steam, share prices went sideways until early July. But as global equity prices continued to rise steeply, this changed dramatically thereafter. With both life assurance and banks to the fore, financial sectors led the market. Engineering and oil equipment both did well too. The only surprise was the excellent performance of food producers, but this was helped by Kraft's bid for Cadbury. On the other side, it was no surprise that utilities underperformed such a strong rally. The general retail sector also lagged the market. Significantly, a number of recovery stocks here saw their earnings estimates upgraded but their share prices falling; the recovery had already been discounted. A continuing feature of the rally was the very strong outperformance of smaller companies. For the year as a whole, the Mid-250 index has outperformed the FTSE100 by a huge margin. As companies have sought to repair their balance sheets, rights issues have continued to be a big feature of the market. In most cases, these have been expected and have been priced to encourage support, so take-up levels have been around 95%. However, big issues, such as that by Rio Tinto, do appear to be causing some indigestion in the market. Income generation has continued to be difficult as the impact of numerous companies cutting their dividends is reflected in revenue forecasts. This process does appear to be easing and the recent reduction in dividend from Aviva will hopefully be the last such bad news to affect the portfolio. Predictably, investors have ignored solid defensive cashflows during this recovery, although there are some signs that this may be starting to change. Indeed, the breadth of the market has improved in recent weeks, with sectors other than banks and mining outperforming. This has been helpful for our portfolio, which has now outperformed the recovery in share prices since early March. For the six months under review, the portfolio's net asset value total return was 39.4% - significantly ahead of the 35.7% benchmark total return. Although the short-term economic outlook is better, the longer-term position is more difficult. The most recent UK public sector borrowing figures were very poor. The main political parties are now starting to talk about the problem, but hard action will have to wait until next year. In the short-term, purchases by both the Bank of England and the clearing banks have supported the gilt market. This means that other holders of gilts appear to have been net sellers - but this will have to change radically when the Bank of England stops buying. So far, gilt yields have remained stable, but some volatility is inevitable. Despite the extent of the rise in equity prices, the willingness of investors to look through the current economic situation to better times in 2010 and 2011 means that the rally can go further. But it is difficult to make a case for the market being cheap, and a number of more cyclical stocks need earnings upgrades to justify current valuations. There will be times when confidence in the economic recovery falters; inevitably, share prices will react to this. How the UK market copes with a large rights issue from Lloyds will be a test of investors' commitment. Ross Watson 12 November 2009 Portfolio summary Portfolio distribution By asset class As at As at 30 31 March September 2009 2009 % % Equities 107 106 Fixed interest 4 4 Cash 1 2 Less borrowings (12) (12) 100 100 By sector As at As at (excluding cash) 30 31 March September 2009 2009 % % Financials 24 17 Oil and gas 18 20 Industrials 12 10 Consumer goods 11 12 Consumer 8 10 services Healthcare 8 10 Basic materials 6 7 Telecommunications 6 6 Utilities 5 6 Technology 2 2 100 100 Largest holdings As at 30 September 2009 As at 31 March 2009 Market value % of Market % of total value total £000 portfolio £000 portfolio BP 9,631 8.53 8,212 9.83 Royal Dutch Shell 7,879 6.98 6,948 8.32 Vodafone 6,566 5.82 4,527 5.42 British American 6,141 5.44 5,046 6.04 Tobacco GlaxoSmithKline 5,667 5.02 5,012 6.00 HSBC 4,989 4.42 2,232 2.67 BHP Billiton 4,365 3.87 2,115 2.53 Aviva 3,723 3.30 1,796 2.15 AstraZeneca 3,588 3.18 3,136 3.76 Next 3,007 2.66 2,222 2.66 Imperial Tobacco 2,979 2.64 2,582 3.09 BAE Systems 2,964 2.63 2,839 3.40 Scottish and 2,785 2.47 2,633 3.15 Southern Energy National Grid 2,727 2.42 2,417 2.89 Friends Provident 2,438 2.16 96 0.12 Intermediate 2,274 2.01 508 0.61 Capital Melrose 2,261 2.00 1,291 1.55 Hiscox 2,252 1.99 1,096 1.31 Unilever 2,204 1.95 1,634 1.96 Halfords 1,880 1.66 967 1.16 Unaudited income statement Six months to (Restated)* 30 September 2009 Six months to 30 September 2008 Revenue Capital Total Revenue Capital Total Note £000 £000 £000 £000 £000 £000 Gains/ - 25,885 25,885 - (23,064) (23,064) (losses)on investments Currency 5 (3) 2 - - - gains/ (losses) Income 3 3,119 - 3,119 3,519 - 3,519 Investment (39) (73) (112) (50) (93) (143) management fee VAT 27 - 27 - - - recovered on investment management fee Performance - (175) (175) - - - fee Other (246) - (246) (224) - (224) expenses Net 2,866 25,634 28,500 3,245 (23,157) (19,912) return before finance costs and taxation Finance (47) (88) (135) (137) (254) (391) Costs Net 2,819 25,546 28,365 3,108 (23,411) (20,303) return on ordinary activities before taxation Taxation 5 - - - (5) - (5) on ordinary activities Return 2,819 25,546 28,365 3,103 (23,411) (20,308) attribut able to ordinary redeemable shareholders Return 2 2.76p 25.05p 27.81p 3.04p (22.96p) (19.92p) per ordinary redeemable share Unaudited income statement (Audited) (Restated)* Year to 31 March 2009 Revenue Capital Total Note £000 £000 £000 Gains/(Losses) on - (48,939) (48,939) investments Currency - (3) (3) gains/(loss es) Income 3 6,224 63 6,287 Investment management (83) (154) (237) fee VAT 54 148 202 recovered on investment management fee Performance - - - fee Other (453) - (453) expenses Net return before 5,742 (48,885) (43,143) finance costs and taxation Finance (219) (406) (625) costs Net return on ordinary 5,523 (49,291) (43,768) activities before taxation Taxation on ordinary 5 (5) - (5) activities Return attributable to 5,518 (49,291) (43,773) ordinary redeemable shareholders Return per ordinary 2 5.41p (48.34p) (42.93p) redeemable share The total columns of this statement are the profit and loss accounts of the company. The revenue and capital items are presented in accordance with the Association of Investment Companies (AIC) SORP. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued in 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. *for details of restatement please refer to notes 1 and 13. Unaudited balance sheet As at (Restated)* (Audited) 30 As at (Restated)* September 30 As at 2009 September 31 March 2008 2009 Note £000 £000 £000 £000 £000 £000 Non-current assets Investments at fair value through profit or loss Listed on Exchanges 112,642 115,080 83,407 in the UK Listed on Exchanges 265 - 105 abroad 6 112,907 115,080 83,512 Current assets Debtors and 7 608 717 1,031 receivables Cash at bank 911 1,233 3,198 1,519 1,950 4,229 Creditors Amounts falling due 8 (12,382) (14,345) (10,830) within one year Net current (10,863) (12,395) (6,621) liabilities Net assets 102,044 102,685 76,891 Capital and reserves Called up ordinary 1,019 1,019 1,019 share capital Capital redemption 62 62 62 reserve Special 111,145 111,145 111,145 distributable capital reserve Capital reserve (12,615) (12,281) (38,161) Revenue reserve 2,433 2,740 2,826 102,044 102,685 76,891 Net asset value per 2 100.07p 100.70p 75.41p ordinary redeemable share *for details of restatement please refer to notes 1 and 13 Unaudited statement of cash flow Six months (Restated)* (Audited) to Six months (Restated)* 30 September to Year to 2009 30 September 31 March 2008 2009 Note £000 £000 £000 £000 £000 £000 Net cash inflow 9 3,246 4,155 6,406 from operating activities Servicing of finance Finance costs (120) (339) (629) Taxation Overseas taxation - (5) (5) paid Net cash outflow - (5) (5) from taxation Capital expenditure and financial investment Payments to (12,374) (13,950) (19,632) acquire investments Receipts from 7,171 13,786 26,854 disposal of investments Net cash (5,203) (164) 7,222 (outflow)/inflow from investing activities Equity dividends (3,212) (3,365) (5,694) paid Net cash (outflow)/inflow (5,289) 282 7,300 before use of liquid resources and financing Financing Net movement in 3,000 500 (4,550) short-term borrowings Net cash 3,000 500 (4,550) inflow/(outflow) from financing (Decrease)/increase (2,289) 782 2,750 in cash for the period Reconciliation of 10 net cash flow to movements in net debt (Decrease)/increa (2,289) 782 2,750 se in cash as above (Drawdown)/repaym (3,000) (500) 4,550 ent of short term borrowings Change in net (5,289) 282 7,300 cash debt resulting from cash flows Foreign exchange 2 - (3) movements Movement in net (5,287) 282 7,297 debt in the period Opening net debt (5,802) (13,099) (13,099) Closing net debt (11,089) (12,817) (5,802) *for details of the restatement please refer to notes 1 and 13 Unaudited reconciliation of movements in shareholders' funds Called up Capital Special Capital Revenue Total ordinary redemption distributable reserve reserve share capital reserve capital reserve For the Note £000 £000 £000 £000 £000 £000 six months to 30 September 2009 As at 31 1,019 62 111,145 (38,161) 2,826 76,891 March 2009 Return - - - 25,546 2,819 28,365 attributab le to shareholde rs Equity 4 - - - - (3,212) (3,212) dividends paid Balance at 1,019 62 111,145 (12,615) 2,433 102,044 30 September 2009 For the six months to 30 September 2008 (restated)* As at 31 1,019 62 111,145 11,130 3,002 126,358 March 2008 Return - - - (23,411) 3,103 (20,308) attributabl e to shareholder s Equity 4 - - - - (3,365) (3,365) dividends paid Balance at 1,019 62 111,145 (12,281) 2,740 102,685 30 September 2008 For the year ended 31 March 2009 (audited) (restated)* As at 31 1,019 62 111,145 11,130 3,002 126,358 March 2008 Return - - - (49,291) 5,518 (43,773) attributable to shareholders Equity 4 - - - - (5,694) (5,694) dividends paid Balance at 1,019 62 111,145 (38,161) 2,826 76,891 31 March 2009 * The revenue reserve reflects the change in the treatment of equity dividends as detailed in notes 1 and 13. The revenue reserve represents the amount of the company's reserves distributable by way of dividend. Notes to the Financial Statements 1 Accounting policies (a) The financial statements have been prepared in accordance with applicable UK Accounting Standards and with the Statement of Recommended Practice `Financial Statements of Investment Trust Companies and Venture Capital Trusts' issued in January 2009. They have also been prepared on the assumption that approval as an investment trust will continue to be granted. Dividends - In accordance with FRS 21: "Events after the balance sheet date", dividends are included in the financial statements in the period in which they are paid. Functional currency - In accordance with FRS 23: "The effects of changes in foreign currency", the company is required to nominate a functional currency, being the currency in which the company predominately operates. The board has determined that sterling is the company's functional currency, which is also the currency in which these financial statements are prepared. (b) Income from equity investments is determined on the date on which the investments are quoted ex-dividend, or where no ex-dividend date is quoted, when the company's right to receive payment is established. Income from fixed interest securities is recognised on an effective yield basis. UK dividends received are accounted for at the amount receivable and are not grossed up for any tax credit. Other income includes any taxes deducted at source. Gains and losses arising from the translation of income denominated in foreign currencies are recognised in the revenue reserve. Scrip dividends are treated as unfranked investment income; any excess in value of shares received over the amount of the cash dividend is recognised in capital reserves. (c) Interest receivable and payable and management expenses are treated on an accruals basis. (d) The management fee and interest costs are allocated 65% to capital and 35% to revenue in accordance with the Board's expected long-term split of returns in the form of capital gains and income, respectively. The performance fee is wholly allocated to capital. (e) Gains and losses on the sale of investments and changes in the fair values of investments held are transferred to the capital reserve. (f) Foreign currencies are translated at the rates of exchange ruling on the balance sheet date. Investments are recognised initially as at the trade date of a transaction. Subsequent to this, the disposal of an investment is accounted for once again as at the trade date of a transaction. (g) Revenue received and interest paid in foreign currencies are translated at the rates of exchange ruling on the transaction date. Any exchange differences relating to revenue items are taken to the revenue account. (h) The company's investments are classified as "financial assets at fair value through profit or loss" and are therefore valued at bid price. Gains and losses arising from changes in fair value are included in the capital return for the period. (i) All financial assets and liabilities are recognised in the financial statements. (j) Deferred tax is recorded in accordance with Financial Reporting Standard 19 (Deferred Tax). Deferred tax is provided on all timing differences that have originated but not reversed by the balance sheet date. A deferred tax asset is only recognised to the extent that it is regarded as recoverable. Due to the company's status as an investment trust company, and the intention to continue meeting the conditions required to obtain approval in the foreseeable future, the company has not provided for deferred tax on any capital gains and losses arising on the revaluation or disposal of investments. (k) Transaction costs incurred on the purchase and disposal of investments are recognised as a capital item in the income statement. (l) Shareholders funds - Under amended FRS25 `Financial Instruments: Disclosure and Presentation', where shares meet certain conditions, they may be treated as equity. Previously the shares in Securities Trust of Scotland have been treated as debt, however they now meet all the conditions required to allow them to be treated as equity and the board have decided that the early adoption of the amended FRS 25 will be implemented in the current financial year and as a result the shares will be treated as equity and previous year's results have been restated to reflect this. For further information and restatements please refer to note 13. (m) Share buy backs are funded through the capital reserve. 2. Six months to Six months to Year to 31 30 September 30 September March 2009 2009 2008 Returns and net asset value Revenue £2,819,000 £3,103,000 £5,518,000 return attributable to ordinary shareholders Average 101,970,223 101,970,223 101,970,223 number of shares in issue during the period Revenue 2.76p 3.04p 5.41p return per ordinary redeemable share Capital return Capital £25,546,000 (£23,411,000) (£49,291,000) return attributable to ordinary redeemable shareholders Average 101,970,223 101,970,223 101,970,223 number of shares in issue during the period Capital 25.05p (22.96p) (48.34p) return per ordinary redeemable share Total return Total return 27.81p (19.92p) (42.93p) per ordinary redeemable share Net asset value per share Net assets £102,044,000 £102,685,000 £76,891,000 attributable to shareholders Number of 101,970,223 101,970,223 101,970,223 shares in issue at period end Net asset 100.07p 100.70p 75.41p value per ordinary redeemable share Exclusion of (1.61p) (1.89p) (1.98p) undistributed current period revenue Net asset 98.46p 98.81p 73.43p value per share excluding income 3. Six months to Six months to Year to 31 30 September 30 September March 2009 2009 2008 £000 £000 £000 Income From listed investments Franked 2,700 2,801 5,075 income - equities Franked 147 147 293 income - fixed interest and convertibles Unfranked 139 471 660 income - equities Unfranked 38 38 76 income - fixed interest and convertibles 3,024 3,457 6,104 Other income Interest on 4 37 75 deposits Interest 19 - - received on VAT recovered Underwriting 63 25 45 commission Option income 9 - - 3,119 3,519 6,224 During the six months to 30 September 2009 the company received no capital dividends (six months to 30 September 2008 - nil, year to 31 March 2009 - £63,000 from NR Nordic and Russia Properties). 4. Equity dividends paid Six months to Six months to Year to 31 30 September 30 September March 2009 2009 2008 £000 £000 £000 Year ended 31 - 2,192 2,192 March 2008 - fourth interim dividend of 2.15p Year ended 31 - 1,173 1,173 March 2009 - first interim dividend of 1.15p Year ended 31 - - 1,173 March 2009 - second interim dividend of 1.15p Year ended 31 - - 1,173 March 2009 - third interim dividend of 1.15p Year ended 31 2,039 - - March 2009 - fourth interim dividend of 2.00p Year ended 31 1,173 - - March 2010 - first interim dividend of 1.15p Refund of - - (17) unclaimed dividends by the registrar 3,212 3,365 5,694 These finance costs have been reclassified from debt to shareholders' funds in line with note 1(l). 5. Taxation Six months to Six months to Year to 31 30 September 30 September March 2009 2009 2008 £000 £000 £000 Withholding - 5 5 tax on income from overseas investments 6. Investments As at As at As at 30 September 30 September 31 March 2009 2008 2009 £000 £000 £000 Fair value through profit or loss Opening 83,512 137,823 137,823 valuation Opening 34,217 7,510 7,510 investment holding losses Opening cost 117,729 145,333 145,333 Add: 10,681 13,801 21,176 additions at cost Less: (7,171) (13,480) (26,611) disposal proceeds received Less: (9,255) (5,320) (22,169) realised losses on disposal Closing cost 111,984 140,334 117,729 Closing 923 (25,254) (34,217) investment holding gains/(losses) Closing 112,907 115,080 83,512 valuation Gains/(losses) on investments Losses on (9,255) (5,320) (22,169) realisation of investments at fair value Capital - - (63) dividend received Movement in 35,140 (17,744) (26,707) investment holding gains and losses 25,885 (23,064) (48,939) Transaction costs During the period expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss. These have been expensed through capital and are included within gains and losses on investments in the income statement. The total costs were as follows: Six months to 30 Six months to 30 Year to 31 September 2009 September 2008 March 2009 £000 £000 £000 Acquisi- 47 53 87 tions Disposals 9 20 39 56 73 126 7. As at 30 As at 30 As at 31 September September March 2009 2009 2008 £000 £000 £000 Debtors and receivables Dividends 512 648 749 receivable Interest 30 33 32 accrued Tax recoverable 31 12 21 Other debtors 35 24 229 608 717 1,031 8. As at 30 As at 30 As at 31 September September March 2009 2009 2008 £000 £000 £000 Creditors - amounts falling due within one year Interest 27 68 12 accrued Due to brokers - - 1,693 Sterling bank 12,000 14,050 9,000 loan Other creditors 355 227 145 12,382 14,345 10,850 The company has a £18,000,000 loan facility with Lloyds TSB which expires in June 2010. Under this agreement £12,000,000 was drawn at 30 September 2009 at a rate of 2.3634%. On 14 October 2009 the loan was rolled-over at a rate of 2.3634% with a maturity date of 16 November 2009. The fair value of the sterling loan is not materially different from its carrying value. The interest rate is set at each roll-over date at LIBOR plus a margin. Included in other creditors is a performance fee of £175,000 (30 September 2008 and 31 March 2009: nil). Martin Currie is entitled to a performance-related investment management fee calculated in respect of each financial year to 31 March (the measurement period) and payable in arrears. The fee is to be 0.15% of net assets for each percentage point by which the percentage performance of the company's ex-income net asset value per share, adjusted for share buybacks, exceeds the percentage capital return of the FTSE All-Share Index over the relevant measurement period. If the net asset value per share falls in a measurement period, the share of any out-performance is reduced by 50%. The fee is subject to a cap of 0.75% of the year end net assets. In addition to the above a peer group performance fee of 0.25% of year end net assets may also be earned. The performance fee is wholly allocated to capital. 9. Reconciliatio Six months to Six months to Year to 31 n of net 30 September 30 September March 2009 return before 2009 2008 £000 finance costs £000 £000 and taxation to net cash inflow from operating activities Net return 28,500 (19,912) (43,143) before finance costs and taxation Decrease in 433 976 671 accrued income and other debtors Increase/(dec 210 32 (50) rease) in creditors Currency (2) - 3 movements Net (25,885) 23,064 48,939 (gains)/losse s on investments Taxation (10) (5) (14) withheld from income on investments Net cash 3,246 4,155 6,406 inflow from operating activities 10. 31 March Cash Exchange 30 2009 flow movements September £000 £000 £000 2009 £000 Analysis of debt Cash at bank 3,198 (2,289) 2 911 Bank borrowings (9,000) (3,000) - (12,000) - sterling loan Net debt (5,802) (5,289) 2 (11,089) 11 VAT recoverable On 5 November 2007 the European Court of Justice ruled that management fees should be exempt from VAT. The manager submitted a claim to HMRC for VAT charged on investment management fees for the period 15 April 2005 to 30 June 2007. A refund of £229,000 and interest of £19,000 has now been received from HMRC and repaid to the company. This repayment has been allocated to capital and revenue in line with the accounting policy of the company for the periods in which the VAT was charged. The interest has been allocated to revenue. The only remaining part of our claim is for compound rather than simple interest. 12 Interim report The financial information contained in this half-yearly financial report does not constitute statutory accounts as defined in Sections 434 - 436 of the Companies Act 2006. The financial information for the six months ended 30 September 2009 and 30 September 2008 has not been audited. The information for the year ended 31 March 2009 has been extracted from the latest published audited financial statements which have been filed with the Registrar of Companies. These financial statements have been restated for FRS 25 as detailed in notes 1 and 13. The report of the auditors on those accounts contained no qualification or statement under Section 237 (2) or (3) of the Companies Act 1985. 13 Explanation of prior year adjustments As per note 1 these financial statements have incorporated the amended requirements of FRS 25 `Financial Instruments' Disclosure and Presentation'. 101,970,223 ordinary shares have been reclassified from debt to equity during the period. This represents the entire ordinary shares in issue of the company. Debt of £99,945,000 and £74,065,000 as at 30 September 2008 and 31 March 2009 respectively have been reclassified as equity. Shareholders can redeem their shares at net asset value (less costs) if the average discount exceeds 7.5% in the 12 weeks prior to financial year end. More details of the redemption opportunity are given in the company's prospectus, which is available on the company's website. Reconciliation of As previously Effect of As restated income statement reported 31 change in 31 March 2009 for the year ended March 2009 policy £000 31 March 2009 £000 £000 Income statement Net losses on (48,939) - (48,939) investments Net currency (3) - (3) losses Income 6,287 - 6,287 Investment (237) - (237) management fee VAT recoverable on 202 - 202 investment management fees Other expenses (453) - (453) Net return before (43,143) - (43,143) finance costs and taxation Finance costs: (625) - (625) debt Finance costs: (5,694) 5,694 - shareholders' funds Net return on (49,462) 5,694 (43,768) ordinary activities before taxation Taxation on (5) - (5) ordinary activities Return (49,467) 5,694 (43,773) attributable to shareholders Reconciliation of As previously Effect of As restated income statement reported 30 change in 30 September for the six months September 2008 policy 2008 ended 30 September £000 £000 £000 2008 Income statement Net losses on (23,064) - (23,064) investments Income 3,519 - 3,519 Investment (143) - (143) management fee Other expenses (224) - (224) Net return before (19,912) - (19,912) finance costs and taxation Finance costs: (391) - (391) debt Finance costs: (3,365) 3,365 - shareholders' funds Net return on (23,668) 3,365 (20,303) ordinary activities before taxation Taxation on (5) - (5) ordinary activities Return (23,673) 3,365 (20,308) attributable to shareholders Dividends paid during the period ended 30 September 2008 of £3,365,000 and year ended 31 March 2009 of £5,694,000 have been reclassified in the cash flow statements from servicing of finance to equity dividends paid. The movement in the revenue reserve in the reconciliation of movement in shareholders' funds has been updated to reflect the change in the treatment of equity dividends. The revenue and capital returns per share as detailed in note 2, remain unaltered for each reporting period as the `Finance costs: shareholders' funds' were adjusted for in the calculation of the returns. Such costs were reported and recognised as dividends as detailed in note 4. `Finance costs: shareholders' funds' were allocated to the revenue reserve and therefore there is no effect on the balance sheet. The net assets attributable to shareholders as detailed in note 2, remain unaltered for each reporting period

Companies

Securities Trust of Scotland (STS)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today