Reconstruction of the Company

Securities Trust of Scotland PLC
23 May 2005


Securities Trust of Scotland plc

The Board of Securities Trust of Scotland plc (the 'Company') announces that it
has today posted to Shareholders a circular (the 'Circular') convening the
requisite extraordinary general meetings to consider recommended proposals for
the reconstruction of the Company.

Terms defined in the Circular have the same meanings in this announcement.

Introduction

On 10 March 2005, an unsolicited Offer was made by PIGIT for the Company but was
not supported by Shareholders and lapsed on 9 May 2005. In its response to the
Offer, the Board announced Proposals, which would be presented to Shareholders
for approval if the Offer failed, involving a members' voluntary liquidation and
reconstruction of the Company. As the Offer has now lapsed and, the Company
having obtained the relevant regulatory clearances, the Board is therefore now
bringing forward its Proposals to Shareholders for approval.

The Proposals

The Scheme will involve a members' voluntary liquidation of the Company under
which Shareholders will be able to choose one or more of the following options:

- to roll over their entire shareholding or part of their shareholding in the
  Company for New Securities Trust Shares; and/or

- to roll over their entire shareholding or part of their shareholding in the
  Company for Lowland Shares; and/or

- to realise all or part of their investment in the Company for cash.

Shareholders can make different elections in respect of different parts of their
holdings.  Shareholders (other than Overseas Holders) who do not make a valid
election under the Scheme will be deemed to have elected for New Securities
Trust Shares. Overseas Holders will be deemed to have elected for cash unless
the Directors are satisfied that an Overseas Holder may be issued New Securities
Trust Shares or Lowland Shares under the Scheme without breaching any relevant
securities laws.

In the event that the Scheme is not approved by Shareholders, the Company will
continue as an investment trust.

Information on New Securities Trust

New Securities Trust will be the Company's successor vehicle and will have a
similar investment objective and dividend policy to that of the Company. At the
first EGM, a special resolution will be proposed to change the name of the
Company to ''STOS plc''. This will allow the name of New Securities Trust to be
changed to ''Securities Trust of Scotland plc'' prior to the Effective Date.

New Securities Trust's investment objective will be to achieve rising income and
long-term capital growth through a balanced portfolio of investments in the
United Kingdom. The emphasis will be on companies with the potential for strong
earnings and dividend growth. Its dividend policy will be to achieve real
dividend growth over the medium term.

The listed share capital of New Securities Trust will comprise redeemable
ordinary shares. In terms of borrowings, the ratio of total assets to net assets
will not exceed 115 per cent. The ratio of cash to net assets will not exceed 15
per cent. Initially, it is anticipated that 90 per cent. of total assets will be
invested in equities at an average yield relative of 115 per cent. of that of
the FTSE All-Share index. 10 per cent. of total assets will be invested in fixed
interest securities - split roughly equally between preference shares and gilts;
and cash. The benchmark will be the FTSE All-Share index.

New Securities Trust will be managed by Ross Watson and Tom Maxwell of Martin
Currie. The basic investment management fee will be 0.4 per cent. per annum of
total assets, payable quarterly in arrears, and it is anticipated that proposals
for the introduction of a performance fee may be considered by the board of New
Securities Trust at a later date.

The directors of New Securities Trust are Neil Donaldson (Chairman), Charles
Berry, Anita Frew, Andrew Irvine and Edward Murray.

The board of New Securities Trust will seek to maintain a narrow discount for
the New Securities Trust Shares to the net asset value of New Securities Trust.
New Securities Trust will adopt a discount protection mechanism and will seek
and utilise extensive share buyback powers to maintain any share price discount
to net assets in single digits. In addition, a discount protection mechanism
will provide New Securities Trust shareholders with the opportunity to have
their shares repurchased by the Company annually if the average discount of the
share price to the net asset value exceeds 7.5 per cent. over the three month
period prior to the relevant year-end.

The Directors announced on 12 May 2005 that the Company would pay a second
interim dividend for the year ended 31 March 2005 of 2.70p per share. Together
with the first interim dividend of 2.00p per share paid on 17 December 2004,
this amounts in aggregate to 4.7p per share for the year ended 31 March 2005, an
increase of 3.3 per cent. on the 4.55p per share paid in respect of the year
ended 31 March 2004.

The Directors also declared a first interim dividend of 2.00p per share in
respect of the year that commenced on 1 April 2005. The Board of New Securities
Trust anticipates paying dividends totalling at least 2.70p per New Securities
Trust Share for the period ending 31 March 2006.

Information on Lowland

Lowland is a UK investment trust, established in 1960, which aims to give its
shareholders a higher than average income return with growth of both capital and
income over the medium to long term. Lowland's investment policy is to invest in
a broad spread of different sized UK companies with not more than half by value
coming from the largest 100 UK companies and the balance from small and medium
sized companies. Lowland is managed by Henderson Global Investors.

James Henderson has managed the Lowland portfolio since 1990. Lowland's
investment philosophy is based on buying shares in companies when the valuation
is low and selling when the future growth prospects are adequately reflected in
the share price. Dividend yield, price to book ratio and share price to turnover
are all tools used to evaluate companies held within the portfolio.

Lowland has a simple equity capital structure comprising ordinary shares.
Lowland shares are listed on the Official List and traded on the London Stock
Exchange. Lowland is geared by a £6 million (nominal) 11.25 per cent. debenture
stock maturing in 2010 and £31 million drawn down under term loan facilities. As
at 18 May 2005, Lowland had a market capitalisation of £137.01 million and net
assets of £144.65 million.

Lowland has an excellent performance record relative to its benchmark (the FTSE
All-Share Index) and its peer group (the UK Growth and Income sector).

The closing price of 642.5p per Lowland share as at 18 May 2005 represented a
discount of 5.3 per cent. to the net asset value per Lowland share as at that
date. Lowland shares have traded at an average discount of 0.4 per cent. to the
net asset value per Lowland share over the 12 months ended 18 May 2005, which
compares with the UK Income and Growth sector size-weighted average discount of
8.3 per cent. over the same period.

Lowland has pursued a progressive dividend policy and has grown its dividend at
a compound rate of 5.2 per cent. per annum over the past five years (source:
AITC MIS 30 April 2005).

Lowland does not have a limited life.

Information Relating to Lowland's Investment Manager

Henderson Global Investors, which is regulated in the conduct of investment
business by the Financial Services Authority, is a leading investment management
company, providing a wide range of investment products and services to
institutions and individuals in Asia, Europe and North America. Henderson Global
Investors manages assets of over £69.1 billion (as at 31 December 2004) and
employs around 900 people worldwide.

Henderson Global Investors is one of the UK's leading investment trust managers
with £3.4 billion of investment trust assets under management (as at 31 December
2004).

Henderson Global Investors and its associated companies and BNP Paribas Fund
Services UK Ltd provide investment management, accounting, secretarial,
administrative and custody services to Lowland for an annual management fee of
0.5 per cent. of the average of the aggregate net chargeable assets as defined
in the management agreement for Lowland.
                                                        
Costs and Expenses

Both the Company and Lowland will bear their own costs arising out of the
Proposals, save that the Company has agreed to contribute up to £250,000 in
respect of Lowland's costs should the Proposals succeed, and up to £75,000
should the Proposals fail to be implemented.

The total costs to the Company of the Proposals, before taking account of any
costs associated with the realisation and transfer of the Company's assets and
excluding any termination payment under the Management Agreement, are expected
to amount to approximately £17.4 million (including VAT and the liquidators'
retention of £50,000 and including £15 million in respect of repaying the
Company's debenture stock). These costs, to the extent they have not been paid
or accrued for, will be deducted from the net assets of the Company (calculated
on a going concern basis) when calculating the FAV.

Financial Effects of the Proposals

The number of New Securities Trust Shares or Lowland Shares or the amount of
cash to which a Shareholder electing for any of these options will become
entitled under the Proposals can only be determined on the Effective Date of the
Proposals.

By way of illustration only, however, had the Proposals become effective on 18
May 2005 (the latest practicable date prior to publication of the Circular),
based on the Company's calculation of its net asset value (on a going concern
basis) of 111.54p as at 18 May 2005 and the assumptions set out in the Circular,
the entitlements of a Shareholder on a per Share basis would have been as
follows:

                               Attributable net asset      Attributable market
                               value                       value
Election                       (p)                         (p)

New Securities Trust           106.16                      n/a
Lowland                        104.66                      104.24
Cash                           105.83                      105.83

The figures shown above are illustrative only, exclude Shareholders' entitlement
to the dividends announced on 12 May 2005, are calculated as at 18 May 2005 and
do not constitute forecasts. The figures resulting from the Proposals will
depend on the net assets of the Company at the time of implementation of the
Proposals and the factors identified in the assumptions set out in the Circular.
These figures do not include an estimate of any costs that may be incurred by
the Company in reorganising its portfolio and realising its investments.

Cash elections

The Company will, on the Calculation Date, calculate the Cash Entitlement of
Shareholders who elect for cash. Shareholders who elect for cash will receive an
amount equal to the Cash FAV (being the FAV less their pro rata share of the
costs of termination of the Management Agreement) as at the Calculation Date.

Cheques in respect of the cash amounts due to Shareholders who elect for cash
are expected to be despatched on 28 June 2005. Shareholders who hold their
Shares in CREST will receive their Cash Entitlement through the CREST system on
28 June 2005.

Apportionment of the Company's Net Assets on Liquidation

The undertaking and assets of the Company will be appropriated on the
Calculation Date into four pools: the New Securities Trust Pool, the Lowland
Pool, the Cash Pool and the Liquidation Pool. The Liquidation Pool will be
allocated sufficient cash and other assets from the Company's assets to cover
the payment of the Company's liabilities, payment of the costs of the Proposals
and an amount for contingencies. There shall be appropriated to the Liquidation
Pool from the Cash Pool an amount equal to the termination costs in respect of
the Management Agreement attributable to the relevant value of the Cash Pool as
set out in the Circular.

The size of the New Securities Trust Pool, the Lowland Pool and the Cash Pool
will be computed by valuing the Company's investments, then adding all of its
other assets and deducting the amount of the Liquidation Pool, and finally
multiplying the resultant net total by the proportion of Shares in respect of
which Elections for each option are received or deemed to be received.
                                                 
In relation to Shares in respect of which Elections for New Securities Trust
Shares are made, the Company's net assets attributable to such Shares will be
calculated as at the Calculation Date. New Securities Trust Shares will be
issued at an issue price which is the same as the FAV on the Calculation Date.
The number of New Securities Trust Shares to be issued to each relevant
Shareholder will therefore be exactly the same as the number of Shares in
respect of which such Shareholder has elected to receive New Securities Trust
Shares.

In relation to Shares in respect of which Elections for Lowland Shares are made,
the Company's net assets attributable to such Shares will be calculated as at
the Calculation Date and any costs of transferring the assets to Lowland will be
deducted. Lowland Shares will be issued at the Lowland Roll-over Price. The
number of Lowland Shares to be issued to each relevant Shareholder will be such
number as have a value, at the Lowland Roll-over Price, equivalent to the
Lowland Pool FAV attributable to the Shares in respect of which such Shareholder
has elected to receive Lowland Shares.

Dealings in Shares on the London Stock Exchange

The Register of Shareholders will be closed and the Shares will be disabled in
CREST on 13 June 2005. The last day for trading in the Shares on the London
Stock Exchange for normal settlement (in order to enable settlement prior to the
Record Date) will be 8 June 2005. As from 8 June 2005, dealings should be for
cash settlement only and will be registered in the normal way if the transfer,
accompanied by documents of title, is received by the Registrar by 5.00 p.m. on
13 June 2005. The Record Date, being the date for determining which Shareholders
are entitled to participate in the Scheme, is the close of business on 13 June
2005. The Register of Shareholders in respect of the Reclassified Shares is
expected to open at 8.00 a.m. on 24 June 2005.

Extraordinary General Meetings

Both the First EGM and the Second EGM will be held at the offices of Martin
Currie Investment Management Limited at Saltire Court, 20 Castle Terrace,
Edinburgh, EH1 2ES.

First EGM

The First EGM will be held at 10.00 a.m. on 16 June 2005.

The first special resolution to be proposed at the First EGM will, if passed,
amend the Articles for the purposes of the Scheme, approve the Scheme and
authorise its implementation by the Liquidators. An explanation and details of
the required amendments to the Articles are set out in the Circular. This
special resolution will require the approval of at least 75 per cent. of the
votes cast in respect of it. The Scheme will not become effective until the
first and second resolutions to be proposed at the Second EGM have also been
passed.

The second special resolution to be proposed at the First EGM will be to change
the name of the Company to ''STOS plc''. This will allow New Securities Trust to
adopt the name ''Securities Trust of Scotland plc'' prior to the Effective Date.
This special resolution will require the approval of at least 75 per cent. of
the votes cast in respect of it.

Second EGM

The Second EGM will be held at 11.00 a.m. on 27 June 2005. The first resolution
(a special resolution) will be to wind up the Company voluntarily and appoint
the Liquidators. The first resolution is conditional on the conditions set out
in the Circular being fulfilled prior to the Second EGM. The second resolution
(an extraordinary resolution) will authorise the Liquidators to exercise certain
powers for which the express sanction of Shareholders is required, such as
repaying classes of creditors in full. The first and second resolutions to be
proposed at the Second EGM will require the approval of at least 75 per cent. of
the votes cast in respect of each of them.

General
                          
Implementation of the Scheme is conditional, inter alia, upon the first special
resolution at the First EGM and both resolutions at the Second EGM being passed.
In the event that these conditions are not satisfied, the Scheme will not be
implemented.

Dividends

As announced on 12 May 2005, the Company will pay a second interim dividend in
respect of the financial year ended 31 March 2005 of 2.7p per Share on 17 June
2005 to Shareholders on the register on 20 May 2005.

Together with the first interim dividend of 2.0p per share paid on 17 December
2004, this amounts in aggregate to 4.7p per share for the year ended 31 March
2005, an increase of 3.3 per cent. on the 4.55p per share paid in respect of the
year ended 31 March 2004.

In addition, the Company announced on 12 May 2005 that it will pay a special
dividend of 2.0p per Share on 17 June 2005 for the period commencing from 1
April 2005 to Shareholders on the register on 20 May 2005.

Directors' Elections

Each of the Directors who holds shares in the Company intends to elect for New
Securities Trust Shares in respect of their entire beneficial holdings of
Shares.

Expected Timetable


Latest time and date for receipt of Forms of Election from            5.00 p.m. on 13 June 2005
Shareholders

Company's register of members in respect of holdings of Shares closed close of business on 13 June 2005
and Record Date for Shareholders' entitlements under the Scheme

Latest time and date for receipt of Forms of Proxy for the First EGM  10.00 a.m. on 14 June 2005

First EGM                                                             10.00 a.m. on 16 June 2005

Dealings in Reclassified Shares(1) commence on the London Stock       8.00 a.m. on 24 June 2005

Exchange

Calculation Date                                                      close of business on 24 June 2005

Latest time and date for receipt of Forms of Proxy for the Second EGM 11.00 a.m. on 25 June 2005

Dealings in Reclassified Shares suspended                             8.00 a.m. on 27 June 2005

Second EGM                                                            11.00 a.m. on 27 June 2005

Effective Date for implementation of the Proposals and commencement   27 June 2005
of the liquidation

Dealings commence in New Securities Trust Shares on the London Stock  8.00 a.m. on 28 June 2005
Exchange

Dealings commence in Lowland Shares on the London Stock Exchange      8.00 a.m. on 28 June 2005

Cheques despatched to Shareholders in respect of any cash elections   28 June 2005

CREST accounts credited in respect of any cash elections              28 June 2005

New Securities Trust Shares issued in uncertificated form under the   28 June 2005
Scheme credited to accounts of Shareholders entitled thereto
Lowland Shares issued in uncertificated form under the Scheme         28 June 2005
credited to accounts of Shareholders entitled thereto

Definitive certificates in respect of New Securities Trust Shares     week commencing 4 July 2005
issued in certificated form despatched to Shareholders entitled
thereto

Definitive certificates in respect of Lowland Shares issued in        week commencing 4 July 2005
certificated form despatched to Shareholders entitled thereto


Enquiries

For further information please contact:
Mike Woodward                                              0131 229 5252
Martin Currie Investment Management Ltd
[e-mail]

Angus Gordon Lennox                                        020 7588 2828

JPMorgan Cazenove Limited

END

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     (1)  The Reclassified Shares are a technical requirement and will be created by
     the resolution proposed at the First EGM.  It is the intention of the
     Liquidators to maintain the listing of the Reclassified Shares for a period 
     of 12 months after the Effective Date following which the listing will be
     cancelled.


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            The company news service from the London Stock Exchange