Interim Management Statement

RNS Number : 9312K

Securities Trust of Scotland PLC

22 July 2011

 



SECURITIES TRUST OF SCOTLAND PLC

INTERIM MANAGEMENT STATEMENT

COVERING THE PERIOD FROM 1 APRIL TO 30 JUNE 2011

Manager's commentary

Macro concerns weighed heavily on world markets over the quarter. Rising inflation around the world, the sovereign-debt crisis in Europe, and supply-chain disruption following the Japanese earthquake all contributed to a climate of unease. The fund outperformed its benchmark, with the NAV gaining 4.5% against the benchmark's 1.9%.

The best-performing sectors in the market over the review period included healthcare, which was the strongest, and general retail which performed well despite increasingly tough conditions for the UK consumer. Oil and gas, telecommunications and basic materials were weak, with financials also lagging the market in light of continuing uncertainty over future regulation and required capital levels.

We added Rio Tinto to the portfolio. This mining company was trading on an attractive rating. Although it offers only a low yield, it has excellent potential to increase dividends because of the strength of its cashflow. We funded the purchase by reducing Croda. This chemical stock had been an excellent performer but, despite a sharp increase in dividend, the prospective yield is low. We also reduced our holding in Savills and in Lloyd's preference shares.

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

Please see material events and transactions section for information on changes to the trust.

Portfolio

Asset class            31 Mar     30 Jun

Equities                    107.5%   107.5%

Fixed interest               3.4%       2.3%

Cash                            1.1%       1.2%

Borrowings              (12.0%)   (11.0%)

Equity allocation 31 Mar     30 Jun

Financials                24.3%      23.1%

Industrials                13.7%      13.4%

Oil & gas                 13.5%       13.1%

Consumer goods     11.8%      12.4%

Basic materials           8.8%        9.6%

Healthcare                 6.9%        7.5%

Consumer services    7.1%        7.4%

Telecommunications   6.9%        6.5%

Utilities                        5.3%        5.4%

Technology               1.6%        1.6%

Top 10 equity holdings (45.1% of total portfolio)

Royal Dutch Shell 7.2%

BP 5.9%

British American Tobacco 5.9%

Vodafone 5.0%

BHP Billiton 4.6%

GlaxoSmithKline 4.5%

HSBC 4.0%

AstraZeneca 3.0%

Imperial Tobacco 2.5%

Melrose 2.5%

Number of holdings 54

Change in equity allocation

Financials (1.2%)

Industrials (0.3%)

Oil & gas (0.4%)

Consumer goods +0.6%

Basic Materials +0.8%

Healthcare +0.6%

Consumer Services +0.3%

Telecommunications (0.4)%

Utilities +0.1%

Technology 0.0%

Key facts

Net assets £122.3m

Share price (p) 115.5

Net asset value per share (p)* 121.9

Discount (premium) 5.3%

Net yield 4.0%

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

Performance

Discrete performance over 12 months to 30 June

	2011	2010	2009	2008	2007
Share Price	37.5%	16.9%	(16.0%)	(22.5%)	17.5%
NAV	32.2%	25.8%	(27.2%)	(20.4%)	20.2%
Benchmark	25.6%	21.1%	(20.5%)	(13.0%)	18.4%

Cumulative performance over periods to 30 June 2011

	One month	Three months	Six months	One year	Three years	Five years
Share Price	(1.9%)	8.0%	9.7%	37.5%	35.0%	22.8%
NAV	0.0%	4.5%	6.0%	32.2%	21.0%	15.8%
Benchmark	(0.5%)	1.9%	3.0%	25.6%	21.0%	24.6%

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. Past performance is not a guide to future returns.

Capital structure

Ordinary shares 100,259,771*

*Source: Martin Currie as at 30 June 2011.

Board of directors

Neil Donaldson (chairman)

Andrew Irvine

Charles Berry

Edward Murray

Rachel Beagles

Material events and transactions

Gearing at the end of the period was 11.0% (12.0% as at 31 March 2011).

The fourth interim dividend of 1.20p was paid on 30 June 2011 to shareholders on the register as at 3 June 2011.

At the EGM on 19 July 2011, shareholders voted to change the trust from a UK income trust to a global income trust.

From 1 August 2011 the following changes will take effect:

-     The manager will change and Alan Porter will take over from Ross Watson.

-     The benchmark will change from FTSE All-Share index to MSCI World High Dividend Yield index.

-     The sector will change from UK Growth and Income to Global Growth and Income.

-     The objective will change from investing in the UK to investing globally.

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, December

Annual management fee as at 31 March 2011† 0.3%

Total expense ratio 31 March 2011* 0.7%

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
2011	108.0p	117.4p	8.0%	4.65p

 

END

 

 

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