Interim Management Statement

RNS Number : 6335X

Securities Trust of Scotland PLC

11 February 2013

 



SECURITIES TRUST OF SCOTLAND PLC

INTERIM MANAGEMENT STATEMENT

COVERING THE PERIOD FROM 1 OCTOBER TO 31 DECEMBER 2012

Manager's commentary

In the fourth quarter, the MSCI World and MSCI World High Dividend Yield indices rose 2.0% and 1.5%, respectively. Europe, Asia and Japan were the strongest regional markets, while North America brought up the rear. At the sector level, financials, industrials and materials did best. Sectors perceived as defensive generally underperformed - notably telecoms.

Rising 0.3% over the three months, the Trust's NAV lagged its benchmark. Two key detractors from performance were Australian engineering company Worley Parsons and Japanese convenience-store operator Lawson. Worley Parsons disappointed the market with a cautious outlook statement on growth. Lawson, a strong performer in 2012 overall, weakened in quarter four as the focus in Japan shifted to more economically sensitive areas. Other notable outperformers included a trio of stocks at the more defensive end of the US market: Abbott Laboratories, the pharmaceuticals and healthcare company, AT&T, the telco, and Philip Morris International, the tobacco giant.

On the other side, the three biggest positive contributors were French companies: Schneider Electric, an engineer specialising in electric energy transmission; Safran, the aerospace equipment and services company, and Sanofi, the pharmaceuticals company. All three rose after releasing strong results. HSBC was also among our top contributors, as the market continued to reward its cost-cutting efforts, and we benefited from not holding German pharmaceutical company Merck, which announced that it was halting a major clinical trial.

Key purchases during the quarter included new positions in BHP Billiton, the global diversified miner, TeliaSonera, a high-yielding Scandinavian telecoms company with key associates in Russia and Turkey, International Paper (IP), a US-listed industrial-packaging company benefiting from greater consolidation in the North American containerboard market, and Roche, the Swiss healthcare giant. Among the notable sales were telecoms companies BT Group in the UK and NTT DoCoMo in Japan, UK publishing group Pearson, and British/Swedish pharmaceuticals firm AstraZeneca.

Alan Porter

PROFILE

Objective       To achieve rising income and long-term capital growth by investment in global equities.

Benchmark    MSCI World High Dividend Yield index

Sector             Global Growth & Income

Launch           28 June 2005

PORTFOLIO

Asset class	30 Sept	31 Dec
Equities	109.5%	108.9%
Cash	1.5%	1.7%
Gearing	(11.0%)	(10.6%)

Equity allocation

	30 Sept	31 Dec
Healthcare	20.3%	20.3%
Consumer goods	15.3%	15.2%
Financials	13.3%	13.9%
Oil & gas	12.8%	12.2%
Industrials	10.9%	10.9%
Telecommunications	11.4%	10.3%
Consumer services	10.5%	9.2%
Basic materials	2.2%	4.9%
Technology	1.5%	1.6%
Utilities	1.8%	1.5%

Regional allocation

	30 Sept	31 Dec
Europe	47.1%	48.2%
North America	41.9%	42.0%
Asia Pacific ex Japan	5.5%	5.5%
Emerging markets	2.8%	2.9%
Japan	2.7%	1.4%

Top 10 equity holdings (36.4% of total portfolio)

Pfizer	4.6%
Chevron	4.1%
Royal Dutch Shell	3.7%
Sanofi	3.7%
AT&T	3.6%
Nestlé	3.6%
Total	3.4%
Abbott Laboratories	3.3%
Novartis	3.2%
Philip Morris International	3.2%

Number of holdings              48

Number of countries             13

Key facts

Total Assets                                         £146.1m

Share price (p)                                    125.6

Net asset value per share (p)             122.3

Discount (premium)                          (2.7%)

Net yield                                             3.7%

The NAV stated in our reporting is inclusive of current year revenue.

PERFORMANCE

Discrete performance over 12 months to 31 December

	2012	2011	2010	2009	2008
Share Price	14.8%	10.4%	21.3%	19.6%	(31.1%)
NAV	8.1%	5.0%	18.4%	29.9%	(37.7%)
Benchmark	8.3%	3.5%	14.5%	30.1%	(29.9%)

Cumulative performance over periods to 31 December 2012

	One month	Three months	Six months	One year	Three years	Five years
Share Price	0%	(0.6)%	5.3%	14.8%	53.6%	26.5%
NAV	(0.6)%	0.3%	4.9%	8.1%	34.4%	8.7%
Benchmark	0.1%	1.5%	5.2%	8.3%	28.5%	17.1%

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.

Prior to 1 August 2011, the Trust's benchmark was the FTSE All-Share index and the MSCI World High Dividend Yield index thereafter. 

Past performance is not a guide to future returns.

Capital structure

Ordinary shares 108,009,771*

*Source: Martin Currie as at 31 December 2012.

Board of directors

Neil Donaldson (chairman)

Andrew Irvine

Charles Berry

Edward Murray

Rachel Beagles

Material events and transactions

The second interim dividend for the year to 31 March 2013 of 1.15p was paid on 13 December 2012 to shareholders on the register on 23 November 2012.

The Trust issued 4,500,000 new ordinary shares during this period.

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 1 April 2012†          0.6%

On-going charges as at 31 March 2012*                  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
2012	122.0p	119.8p	(1.9%)	4.70p

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.

Changes in the rates of exchange may cause the value of investments to go up or down.

The trust invests in emerging markets which tend to be more volatile than mature markets and the value of your investment could move sharply up or down. In some circumstances the underlying investments may become illiquid which may constrain the investment manager's ability to realise some or all of the portfolio. The registration and settlement arrangements in emerging markets may be less developed than in more mature markets so the operational risks of investing are higher. Political risks and adverse economic circumstances are more likely to arise putting the value of your investment at risk.

 

END

 

 

IMSMMGMZVMFGFZM