Interim Management Statement

RNS Number : 3615A

Securities Trust of Scotland PLC

31 January 2011

 



SECURITIES TRUST OF SCOTLAND PLC

INTERIM MANAGEMENT STATEMENT

COVERING THE PERIOD FROM 1 OCTOBER TO 31 DECEMBER 2010

Manager's commentary

UK equities performed well in the last quarter of 2010. The FTSE All-Share rose 7.4% to finish the year at its highest point. It wasn't a smooth upward journey, though. A decent October (+2.5%) was followed by a weak November (-2.3%). Almost all of the quarter's gains came in December (+7.1%), when confidence about the strength of the global economy lifted shares in cyclical sectors like automobiles, chemicals and mining. The focus shifted from worries over growth to worries over inflation, which again exceeded the Bank of England's 2% target.

It was good period for the Trust, which outperformed the market to return 8.2%. In line with the cyclical theme mentioned above, the top contributor was Elementis, a speciality chemicals company. Energy giant Royal Dutch Shell and miner BHP Billiton were also among the Trust's best performers. By the same token, the portfolio is underweight in miners (because of the low yields on offer in the sector), and this was the main detractor from relative performance.

During the quarter we sold Informa Telecoms & Media and bought educational publisher Pearson and the newly listed AZ Electronic Materials, which supplies chemical materials for the electronics industry.

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

Portfolio

Asset class            30 Sep    31 Dec

Equities                    106.7%   108.1%

Fixed interest               3.7%       3.3%

Cash                            2.1%       0.6%

Borrowings              (12.8%)   (12.0%)

Equity allocation 30 Sep    31 Dec

Financials                25.0%      24.1%

Industrials                13.6%      14.2%

Oil & gas                 12.9%      13.7%

Consumer Goods    12.1%      11.8%

Basic materials           7.7%        9.7%

Healthcare                 8.1%        7.3%

Consumer services    8.1%        6.6%

Utilities                        5.8%        5.7%

Telecommunications 5.2%          5.2%

Technology               1.7%        1.6%

Top 10 equity holdings (46.2% of total portfolio)

Royal Dutch Shell 7.4%

BP 6.3%

British American Tobacco 5.9%

Vodafone 5.2%

BHP Billiton 5.0%

GlaxoSmithKline 4.4%

HSBC 3.5%

Elementis 2.9%

AstraZeneca 2.9%

National Grid 2.7%

Number of holdings 53

Change in equity allocation

From 31 September to 31 December

Financials (0.9%)

Industrials +0.6%

Oil & gas +0.8%

Consumer goods (0.3%)

Basic Materials +2.0%

Healthcare (0.8%)

Consumer Services (1.5%)

Utilities (0.1%)

Telecommunications 0.0%

Technology (0.1%)

Key facts

Net assets £117.6m

Share price (p) 107.5

Net asset value per share (p)* 116.7

Discount (premium) 7.9%

Net yield 4.3%

*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 31 December

	2010	2009	2008	2007	2006
Share Price	21.3%	19.6%	(31.1%)	(6.1%)	26.1%
NAV	18.4%	29.9%	(37.7%)	(0.4%)	21.9%
Benchmark	14.5%	30.1%	(29.9%)	5.3%	16.8%

Cumulative performance over periods to 31 December 2010 

	One month	Three months	Six months	One year	Three years	Five years
Share Price	6.2%	9.5%	25.4%	21.3%	(0.2%)	18.1%
NAV	8.1%	8.2%	24.7%	18.4%	(4.3%)	16.2%
Benchmark	7.1%	7.4%	22.0%	14.5%	4.4%	28.4%

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 100,776,771*

*Source: Martin Currie as at 31 December 2010.

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 12.0% (12.8% as at 30 September 2010).

The second interim dividend of 1.15p was paid on 17 December 2010 to shareholders on the register as at 26 November 2010.

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 2010† - 0.3%

Total expense ratio 31 March 2010* - 0.8%

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

Past performance is not a guide to future returns.

Risk factors

Please note that, as the shares in investment trusts are traded on a stockmarket, the share price will fluctuate in accordance with supply and demand and may not reflect the underlying net asset value of the shares.

Depending on market conditions and market sentiment, the spread between the purchase and sale price can be wide. As with all stock exchange investments the value of investment trust shares purchases will immediately fall by the difference between the buying and selling prices, the bid-offer spread.

Investment trusts may also borrow money in order to make further investments. This is known as "gearing" and can enhance shareholder returns in rising markets but, conversely, can reduce them in falling markets.

The value of investments and the income from them may go down as well as up and is not guaranteed. An investor may not get back the amount originally invested.

The majority of charges will be deducted from the capital of the trust. This will constrain the capital growth of the trust in order to maintain the income streams.

Exposure to a single country market increases potential volatility.

 

END

 

 

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