Final Results

RNS Number : 4315P

Scottish American Investment Co PLC

08 February 2019

 

The Scottish American Investment Company P.L.C.

RNS Announcement: Preliminary Results

 Results for the year to 31 December 2018

Legal Entity Identifier code: 549300NF03XVC5IFB447

¾  Dividend - the full year dividend, including a recommended final dividend of 2.925p, is 11.50p per share. This is 3.6% higher than the 2017 dividend, extending the Company's record of dividend increases to thirty nine consecutive years. The increase is ahead of UK CPI inflation over the same period, which was 2.1%. The dividend is fully covered by earnings.

¾  Revenues - Investment income was £21.7m (2017 - £20.5m) and earnings per share were 11.75p (2017 - 11.33p).

¾  Total return* - Net Asset Value total return (capital and income) for the year was -2.4% (debenture at fair value), ahead of the total return from global equities of -3.4%. The share price total return was -1.6%. In a challenging year for markets returns were assisted by the strong operational performance of many of the companies in which SAINTS invests, and also by the performance of the Company's property investments.

¾  Outlook - In the current environment the Managers are continuing to focus on the resilience and dependability of the Company's holdings, as well as their long-term growth potential. The Board considers that a long-term approach based on investing for sustainable growth is the best route to continuing to grow its dividend ahead of inflation and its capital over time.

*      See Glossary of Terms and Alternative Performance Measures, note 10.

7 February 2019

SAINTS' objective is to deliver real dividend growth by increasing capital and growing income. Its policy is to invest mainly in equity markets, but other investments may be held from time to time including bonds, property and other asset classes.

The Company is managed by Baillie Gifford, the Edinburgh based fund management group with around £186 billion under management and advice as at 7 February 2019.

Past performance is not a guide to future performance. SAINTS is a listed UK company. As a result, the value of its shares and any income from those shares is not guaranteed and could go down as well as up. You may not get back the amount you invested. As SAINTS invests in overseas securities, changes in the rates of exchange may also cause the value of your investment (and any income it may pay) to go down or up. You can find up to date performance information about SAINTS on the SAINTS page of the Managers' website www.saints-it.com. Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

For further information please contact:

James Dow and Toby Ross, Managers, The Scottish American Investment Company P.L.C.

Tel: [phone]

James Budden, Baillie Gifford & Co  

Tel: [phone] or 07507 201208

Roland Cross, Director, Four Broadgate

Tel: [phone] or 07831 401309

 

Chairman's Statement

The Company's objective is to deliver real dividend growth by increasing capital and growing income. An increased dividend of 11.5p (2017: 11.1p) will extend the Company's record of raising its dividend to thirty nine consecutive years.

Overview

Markets made good progress for much of the year driven by continued growth in corporate profits and the global economy, both of which were notably strong. However, all of these gains were given up in the final quarter when a number of concerns came to the fore and tipped the balance of market sentiment, causing dramatic falls. For the year as a whole therefore global equities lost ground. Concerns included the deteriorating prospects for economic growth, the effects of rising interest rates and the outlook for corporate profits, all of which were intertwined with geopolitical risk and the prospect of an escalating trade war.

Whilst the economic background is a factor which can affect companies' prospects as well as market sentiment, neither it nor the short-term gyrations of the market will drive SAINTS' ability to achieve its objective over time. The Managers have continued to focus on investing in companies which can deliver both growing cashflows and dependable dividends, and the property managers have also continued to prioritise both dependability and the prospects of income growth. Overall this approach has worked well over the year. 

Dividend and Inflation

A final dividend of 2.925p is recommended which will take the full year dividend to 11.5p per share, 3.6% higher than the 2017 dividend of 11.1p. This year's increase is significantly above the annual rate of inflation of 2.1% as measured by CPI. Over the last ten years the Company's dividends have increased at well above the rate of inflation. The recommended dividend is fully covered by this year's earnings and permits a further addition to the Company's revenue reserves.

Revenues

Earnings per share have increased by 3.7% to 11.75p and investment income has risen to £21.7 m. Income from equities has been helped by operational progress at many of the Company's investments and by related increases in dividends. The rents from the Company's property investments have also increased modestly, helped by the high proportion of rents which are linked to inflation. Against this, the Company has reduced its investments in fixed income holdings, a move which the Board believes will be helpful to returns and revenue growth in the long-term but which has reduced the overall growth in revenues for the year.

Both managers (Baillie Gifford and, for the Company's property investments, OLIM) continue at the Board's request to emphasise supporting the dependability and the future growth of the Company's dividend in line with its objective.

Total Return Performance

Over the year your investment in SAINTS delivered a share price total return of -1.6% and the net asset value total return (capital and income) was -2.4%. Global Equities fell 3.4% over 2018.  It is encouraging that, having outperformed a strong market last year, the Trust has more than held its own in the end-of-year downturn. As always however we would caution against reading too much into short term relative performance. The Managers and your Board have a long-term perspective and the Company's portfolio of investments differs markedly from the make-up of the global equity index against which performance is often compared. This differentiated portfolio is necessary and appropriate in order for the Company to deliver a high and growing income stream, as well as to deliver real growth in the Company's capital.

Nonetheless, it is worth highlighting that the Company's property investments have delivered both a high income and capital growth in a year when many parts of the property market have struggled. This is a notable outcome of the property managers' emphasis on strength of covenant and the consequent evolution of the portfolio away from the retail sector, and this latter shift should increase the resilience of the portfolio to any further weakness from the UK consumer. Pleasingly, SAINTS' equities held up relatively well in the troubled last quarter. And, as in previous years, returns over 2018 have been helped by the sound operational performance of the companies in which the portfolio is invested. The principal contributors to and detractors from performance and the changes to the equity, property and bond investments are explained in more detail in the Managers' Review.

Borrowings

SAINTS' borrowings take the form of a single £80m debenture which is due for repayment in April 2022.  During 2018, the borrowings continued to fund a range of higher yielding commercial property and, to a much lesser extent, some fixed income investments.

The book value of the debenture is £82.7m which, at the year end, was equivalent to approximately 17.1% of shareholders' funds. The estimated market or fair value of the debenture was £92.0m, a decrease from the previous year's value of £97.8m. The market value of the Company's borrowings will continue to fall over the coming years as the redemption date approaches.

Outlook

Last year I suggested that the likelihood of continued economic growth around the world seemed strong, but that concerns relating to valuations and rising interest rates made share price progress less than certain. This year the opposite may be the case, both because economic growth is likely to slow as the cycle progresses and trade wars loom large and because recent falls make equity valuations appear more reasonable. Appearances may be deceptive however, particularly if corporate earnings growth slows dramatically from the strong levels of 2018.

Wild cards such as Brexit, the extent of any slowdown in China, international trade relations and the broader geopolitical risk around China and the US make predictions challenging as quite different outcomes are entirely possible. Against this uncertain background, the Board and the Managers continue to view it as a strength that the Company's underlying investments are closely aligned with its long-term objectives. Holdings in companies which maintain dividends in troubled times, and which also grow cashflows and dividends ahead of inflation over the long term, should help SAINTS to do the same, and the resilience shown by the property portfolio also bodes well for the future.

The Board and the Managers remain alert to both potential opportunities and challenges. In the current environment the Managers are correctly focussed on the resilience and dependability of the Company's holdings, as well as their long-term growth potential, as is explained further in their report. As a Board, we remain of the view that a long-term approach based on investing for sustainable growth is the best route to achieving SAINTS' aim of growing the dividend over time. We have great confidence in the Managers' approach, and this confidence has been strengthened by another year of generally encouraging operational performance from the holdings in the portfolio.

Issuance

The Company has raised over £18 million from new issuance at a premium to net asset value in order to satisfy investor demand over the year. This is some way above the level of issuance last year and indicates that the merits of the Company's approach are increasingly appreciated. It also serves the interests of current shareholders by reducing costs per share and helping to further improve liquidity.

The Board and the Managers

Dame Mariot Leslie joined the Board on 1 January 2019, as announced in November 2018. As was also announced, Lord Kerr will be retiring from the Board at the forthcoming AGM and, subject to shareholders' approval, Karyn Lamont will be appointed as a Director.

The Board, and I personally, would like to reiterate our thanks to Lord Kerr for his considerable contribution to the Board over many years. His commitment to the Company has been unwavering and his insight has proved to be invaluable. We wish him all the best. We are delighted that Mariot has joined the Board and that Karyn will do so shortly. We are confident that their knowledge and abilities will be of great benefit to SAINTS in the years ahead. The Board has asked Lord Macpherson to take on the role of senior non-executive director from Lord Kerr after the AGM and I am pleased to say that he has accepted.

These changes are part of an ongoing Board refreshment exercise which will take the number of Directors to six. The Board believes that the pace of change should be measured, so that careful succession planning can allow a desirable mix of old and new hands, and also of knowledge, experience and background, on the Board. It is worth highlighting that after Karyn's appointment men and women will be equally represented on the Board, for the first time in our 136 year history.

Toby Ross and James Dow have completed their first full year as joint managers of the Company, and the Board is very pleased with their achievements and application over the year.

AGM

The AGM will be held at 11am on Thursday 4 April 2019 at Baillie Gifford's offices at Calton Square, 1 Greenside Row, Edinburgh. The Managers will make a presentation on the investment portfolio and there will also be an opportunity to ask questions. The Directors and the Managers look forward to meeting you there.

Peter Moon

Chairman

7 February 2019

For a definition of terms see Glossary of Terms and Alternative Performance Measures, note 10.

Past performance is not a guide to future performance.
 

Income Statement (unaudited)

The following is the unaudited preliminary statement for the year to 31 December 2018 which was approved by the Board on 7 February 2019. The Board of The Scottish American Investment Company P.L.C. is recommending to the Annual General Meeting of the Company to be held on 4 April 2019 the payment of a final dividend of 2.925p (2.825p last year) per ordinary share making a total of 11.50p (11.10p last year) paid and proposed for the year ended 31 December 2018.

	For the year ended 31 December 2018			For the year ended 31 December 2017
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Net (losses)/gains on investments - securities	-	(31,218)	(31,218)	-	56,191	56,191
Net gains on investments - property	-	3,181	3,181	-	4,845	4,845
Currency (losses)/gains	-	(159)	(159)	-	558	558
Income (note 2)	21,743	-	21,743	20,484	-	20,484
Management fees	(926)	(1,720)	(2,646)	(893)	(1,659)	(2,552)
Other administrative expenses	(1,073)	-	(1,073)	(1,086)	-	(1,086)
Net return before finance costs and taxation	19,744	(29,916)	(10,172)	18,505	59,935	78,440
Finance costs of borrowings	(1,986)	(3,688)	(5,674)	(2,001)	(3,715)	(5,716)
Net return on ordinary activities before taxation	17,758	(33,604)	(15,846)	16,504	56,220	72,724
Tax on ordinary activities	(1,528)	464	(1,064)	(1,291)	515	(776)
Net return on ordinary activities after taxation	16,230	(33,140)	(16,910)	15,213	56,735	71,948
Net return per ordinary share (note 3)	11.75p	(23.99p)	(12.24p)	11.33p	42.24p	53.57p

The total column of the Income Statement is the profit and loss account of the Company. The supplementary revenue and capital columns are prepared under guidance published by the Association of Investment Companies.

All revenue and capital items in this statement derive from continuing operations.

A Statement of Comprehensive Income is not required as there is no other comprehensive income.

 

Balance Sheet (unaudited)

	At 31 December 2018		At 31 December 2017
	£'000	£'000	£'000	£'000
Fixed assets
Investments - securities	476,497		495,645
Investments - property	83,500		84,950
		559,997		580,595
Current assets
Debtors	1,739		1,222
Cash and cash equivalents	7,464		2,894
	9,203		4,116
Creditors
Amounts falling due within one year	(3,046)		(3,345)
Net current assets		6,157		771
Total assets less current liabilities		566,154		581,366
Creditors
Amounts falling due after more than one year		(82,701)		(83,428)
Net assets		483,453		497,938
Capital and reserves
Share capital		35,233		33,994
Share premium account		27,694		10,744
Capital redemption reserve		22,781		22,781
Capital reserve		380,492		413,632
Revenue reserve		17,253		16,787
Shareholders' funds		483,453		497,938
Net asset value per ordinary share		343.0p		366.2p
Ordinary shares in issue (note 6)		140,930,943		135,975,943

Statement of Changes in Equity (unaudited)

For the year ended 31 December 2018

	Share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Capital reserve* £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 January 2018	33,994	10,744	22,781	413,632	16,787	497,938
Shares issued	1,239	16,950	-	-	-	18,189
Net return on ordinary activities after taxation	-	-	-	(33,140)	16,230	(16,910)
Dividends paid in the year (note 4)	-	-	-	-	(15,764)	(15,764)
Shareholders' funds at 31 December 2018	35,233	27,694	22,781	380,492	17,253	483,453

For the year ended 31 December 2017

	Share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Capital reserve* £'000	Revenue reserve £'000	Shareholders' funds £'000
Shareholders' funds at 1 January 2017	33,349	2,131	22,781	356,897	16,352	431,510
Shares issued	645	8,613	-	-	-	9,258
Net return on ordinary activities after taxation	-	-	-	56,735	15,213	71,948
Dividends paid in the year (note 4)	-	-	-	-	(14,778)	(14,778)
Shareholders' funds at 31 December 2017	33,994	10,744	22,781	413,632	16,787	497,938

 

*      The capital reserve balance as at 31 December 2018 includes investment holding gains of £111,702,000 (31 December 2017 - £147,461,000).

Cash Flow Statement (unaudited)

	Year Ended 31 December 2018		Year Ended 31 December 2017
	£'000	£'000	£'000	£'000
Cash flows from operating activities
Net return on ordinary activities before taxation	(15,846)		72,724
Net losses/(gains) on investments - securities	31,218		(56,191)
Net gains on investments - property	(3,181)		(4,845)
Currency losses/(gains)	159		(558)
Finance costs of borrowings	5,674		5,716
Overseas withholding tax	(1,053)		(810)
Changes in debtors and creditors	(828)		51
Other non-cash changes	(83)		(25)
Cash from operations		16,060		16,062
Interest paid		(6,400)		(6,400)
Net cash inflow from operating activities		9,660		9,662
Cash flows from investing activities
Acquisitions of investments	(85,644)		(129,531)
Disposals of investments	78,288		123,551
Forward currency contracts	-		469
Net cash outflow from investing activities		(7,356)		(5,511)
Cash flows from financing activities
Equity dividends paid	(15,764)		(14,778)
Shares issued	18,189		9,258
Net cash inflow/(outflow) from financing activities		2,425		(5,520)
Increase/(decrease) in cash and cash equivalents		4,729		(1,369)
Exchange movements		(159)		89
Cash and cash equivalents at 1 January		2,894		4,174
Cash and cash equivalents at 31 December*		7,464		2,894

*      Cash and cash equivalents represent cash at bank and short term money market deposits repayable on demand.

 

*      

Asset Allocation

	At 31 December 2018 %		At 31 December 2017 %
Quoted equities	79.9		79.6
Bonds	4.3		5.7
Direct property	14.7		14.6
Net liquid assets	1.1		0.1
Total assets	100.0		100.0

 

List of Investments at 31 December 2018

Name	Business		Value £'000	% of total assets
Coca Cola	Beverage manufacturer		14,616	2.6
Deutsche Boerse	Securities exchange owner/operator		12,440	2.2
Procter & Gamble	Household product manufacturer		12,115	2.1
Fastenal	Distribution and sales of industrial supplies		11,901	2.1
CH Robinson	Delivery & logistics		11,848	2.1
Edenred	Voucher programme outsourcer		11,377	2.0
Microsoft	Computer software		11,323	2.0
Anta Sports Products	Sportswear manufacturer and retailer		10,889	1.9
Sonic Healthcare	Laboratory testing		10,709	1.9
Admiral	Car insurance		10,580	1.9
Wolters Kluwer	Information services and solutions provider		10,406	1.8
Experian	Credit scoring and marketing services		10,054	1.8
Analog Devices	Integrated circuits		9,973	1.8
McDonald's	Fast food restaurants		9,793	1.7
Roche Holdings	Pharmaceuticals		9,424	1.7
Pepsico	Snack and beverage manufacturer		9,262	1.6
B3 S.A.	Securities exchange owner/operator		8,819	1.6
Prudential	Life insurer		8,580	1.5
GlaxoSmithKline	Pharmaceuticals, vaccines and consumer healthcare		8,579	1.5
Total	Integrated oil company		8,493	1.5
Taiwan Semiconductor Manufacturing	Semiconductor manufacturer		8,434	1.5
Hiscox	Property and casualty insurance		8,222	1.4
AVI	Staple foods manufacturer		8,143	1.4
Partners Group	Asset management		7,833	1.4
China Mobile	Mobile telecommunication services		7,696	1.4
Nestlé	Food producer		7,684	1.4
United Parcel Service	Courier services		7,090	1.3
RPM International	Sealants, coatings and adhesives manufacturers		6,879	1.2
Apple	Computer technology		6,861	1.2
Kering	Luxury brand conglomerate		6,781	1.2
Scottish & Southern Energy	Electricity utility		6,775	1.2
National Instruments	Electronic test and measurement systems		6,619	1.2
Sumitomo Mitsui Trust Holdings	Trust bank and investment manager		6,459	1.1
Kimberly-Clarke De México	Paper-based household products		6,428	1.1
Bankinter	Corporate and retail bank		6,250	1.1
Greencoat UK Wind	UK wind farms		6,162	1.1
Arthur J Gallagher	Insurance broker		6,157	1.1
Cochlear	Hearing aids		6,130	1.1
Svenska Handelsbanken	Banking		6,009	1.1
Albemarle	Producer of speciality and fine chemicals		5,681	1.0
Hong Kong Exchanges and Clearing	Securities exchange owner/operator		5,631	1.0
Atlas Copco	Engineering		5,590	1.0
Sandvik	Engineering		5,540	1.0
United Overseas Bank	Commercial banking		5,521	1.0
Rio Tinto	Mining		5,462	1.0
Novo Nordisk	Pharmaceutical company		5,300	0.9
Signify NV	Light manufacturing company		5,285	0.9
Brambles	Pallet pool operator		5,278	0.9
Ambev	Brewing		4,915	0.9
Want Want	Snacks and milk-based products		4,838	0.9
Dolby Laboratories	Multimedia software		4,793	0.8
British American Tobacco	Cigarette manufacturer		4,521	0.8
Alphabet Class A	Online search engine		4,517	0.8
SAP	Business software developer		4,417	0.8
Cullen/Frost Bankers	Provides banking services throughout the state of Texas		4,337	0.8
Johnson and Johnson	Pharmaceuticals and healthcare products		4,014	0.7
Zenkoku Hoshu	Speciality finance		3,900	0.7
Apache	Oil exploration and production		3,493	0.6
Aberforth Split Level Income Trust	UK small-cap equities fund		3,366	0.6
Man Wah	Sofa designer and manufacturer		3,091	0.5
Li & Fung	Supply chain management services company		2,761	0.5
Doric Nimrod Air Two	Aircraft leasing		2,747	0.5
WPP	Advertising agency		1,686	0.3
Cambium Global Timberland	Forestry investment fund		1,411	0.2
Terra Catalyst Fund*	Fund of European property funds		265	-
Total Equities			452,153	79.9
Direct Property
Direct Property	See table below		83,500	14.7
Bonds
Euro denominated	Aryzta Finance 4.5% 2019 Perpetual		4,637	0.8
US dollar denominated	Alibaba Convertible 5.75% 2019		5,855
	Athena Debt Opportunities Fund		7,982
			13,837	2.5
Brazilian real denominated	Brazil CPI Linked 15/05/2045		5,870	1.0
Total Bonds			24,344	4.3
Total Investments			559,997	98.9
Net Liquid Assets			6,157	1.1
Total Assets			566,154	100.0
(before deduction of debenture)

*         Delisted.

Property Portfolio

Location	Type	Tenant	2018 Value £'000		2018 %  of total assets		2017 Value £'000
Basingstoke	Warehouse	G4S Cash Solutions (UK) Ltd	3,500		0.6		3,450
Biggleswade	Warehouse	Quest Automotive Products UK Limited	5,200		0.9		4,800
Bishops's Stortford†	Restaurant	Prezzo Limited	-		-		1,250
Cleathorpes	Public House	Stonegate Pub Company Limited	1,000		0.2		900
Crawley	Petrol Station and Convenience Store	Co-operative Food Stores Limited	3,750		0.7		3,750
Denbigh*	Supermarket	Aldi Stores Limited	5,000		0.9		5,900
Dundee	Public House	JD Wetherspoons Plc	1,300		0.2		1,300
Earley	Public House	Spirit Pub Company (Managed) Limited	3,200		0.6		3,250
Kenilworth	Nursing Home	Care UK Community Partnerships Limited	7,200		1.3		7,200
Luton	Public House	Stonegate Pub Company Limited	3,400		0.6		3,150
Milton Keynes	Data Centre	TalkTalk Communications Limited	16,700		2.9		16,000
New Romney	Holiday Village	Park Resorts Ltd	13,200		2.3		11,500
Newport Pagnell	Car Showroom	Pendragon Plc	4,000		0.7		4,000
Otford	Public House	Spirit Pub Company (Managed) Limited	2,100		0.4		2,250
Pagham†	Convenience Store	Co-operatve Food Stores Limited	1,300		0.2		1,300
Portsmouth	Public House	JD Weatherspoon Plc	2,600		0.5		2,600
Prestatyn	Public House	Stonegate Pub Company Limited	1,800		0.3		1,600
Sale†	Public House	Stonegate Pub Company Limited	-		-		750
Southend-on-Sea	Warehouse	Giant Booker Limited	8,250		1.4		8,600
Torquay†	Public House	Mitchells & Butlers Retail Limited	-		-		1,400
			83,500		14.7		84,950

*       Peacocks Stores Limited and Poundland Retail Limited units sold during the year.

†      Property sold during the year.

Notes (unaudited)

1.	The Financial Statements for the year to 31 December 2018 have been prepared in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland and on the basis of the accounting policies set out in the Annual Report and Financial Statements for the year ending 31 December 2018.
2.	Income				2018 £'000			2017 £'000
	Income from investments
	UK dividends				3,333			3,243
	Overseas dividends				12,063			10,648
	Overseas interest				1,170			1,426
					16,566			15,317
	Other income
	Deposit interest				19			10
	Rental income				5,133			5,120
	Other income				25			37
					5,177			5,167
	Total income				21,743			20,484
	Total income comprises
	Dividends from financial assets designated at fair value through profit or loss				15,396			13,891
	Interest from financial assets designated at fair value through profit or loss				1,170			1,426
	Interest from financial assets not at fair value through profit or loss				19			10
	Other income not from financial assets				5,158			5,157
					21,743			20,484
3.	Net return per ordinary share	2018				2017
		Revenue	Capital	Total		Revenue	Capital		Total
	Net return per ordinary share	11.75p	(23.99p)	(12.24p)		11.33p	42.24p		53.57p
	Revenue return per ordinary share is based on the net revenue on ordinary activities after taxation of £16,230,000 (2017 - £15,213,000) and on 138,152,888 (2017 - 134,296,614) ordinary shares of 25p, being the weighted average number of ordinary shares in issue during the year. Capital return per ordinary share is based on the net capital loss for the financial year of £33,140,000 (2017 - net capital gain of £56,735,000), and on 138,152,888 (2017 - 134,296,614) ordinary shares, being the weighted average number of ordinary shares in issue during the year. There are no dilutive or potentially dilutive shares in issue.

Notes (unaudited)

4.	Ordinary Dividends	2018	2017		2018 £'000	2017 £'000
	Amounts recognised as distributions in the year:
	Previous year's final (paid 12 April 2018)	2.825p	2.725p		3,848	3,635
	First interim (paid 22 June 2018)	2.825p	2.725p		3,892	3,644
	Second interim (paid 21 September 2018)	2.85p	2.75p		3,953	3,694
	Third interim (paid 19 December 2018)	2.90p	2.80p		4,071	3,805
		11.40p	11.00p		15,764	14,778
	We also set out below the total dividends paid and proposed in respect of the financial year, which is the basis on which the requirements of section 1159 of the Corporation Tax Act 2010 are considered. The revenue available for distribution out of current year profits by way of dividend for the year is £16,230,000 (2017 - £15,213,000).
		2018		2017	2018 £'000	2017 £'000
	Dividends paid and payable in respect of the year:
	First interim (paid 22 June 2018)	2.825p		2.725p	3,892	3,644
	Second interim (paid 21 September 2018)	2.85p		2.75p	3,953	3,694
	Third interim (paid 19 December 2018)	2.90p		2.80p	4,071	3,805
	Current year's proposed final dividend (payable 11 April 2019)	2.925p		2.825p	4,122	3,841
		11.50p		11.10p	16,038	14,984
	If approved the final dividend of 2.925p will be paid on 11 April 2019 to all shareholders on the register at the close of business on 8 March 2019. The ex-dividend date is 7 March 2019. The Company's Registrar offers a Dividend Reinvestment Plan and the final date for the receipt of elections for reinvestment of this dividend is 21 March 2019.
5.	The fair value of the 8% Debenture Stock 2022 at 31 December 2018 was £92.0m (2017 - £97.8m).
6.	During the year, 4,955,000 (2017 - 2,580,000) shares were issued at a premium to net asset value raising proceeds of £18,189,000 (2017 - £9,258,000). At 31 December 2018 the Company had authority to buy back 20,397,783 ordinary shares and to allot 13,607,592 ordinary shares without application of pre-emption rights in accordance with the authorities granted at the AGM in April 2018. No shares were bought back during the year.
7.	Transaction costs incurred on the purchase and sale of investments are added to the purchase cost or deducted from the sale proceeds, as appropriate. During the year, transaction costs on purchases amounted to £193,000 (2017 -£2,027,000) and £204,000 (2017 - £254,000) respectively. Of the gains on sales during the year of £7,722,000 (2017 - gains of £41,605,000) a net gain of £19,352,000 (2017 - gain of £24,861,000) was included in investment holding gains at the previous year end.
8.	The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 2018 or 2017. The financial information for 2017 is derived from the statutory accounts for 2017 which have been delivered to the Registrar of Companies. The auditor has reported on the 2017 accounts; the report was   (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report and (iii) did not contain a statement under sections 498 (2) or 498(3) of the Companies Act 2006. The statutory accounts for 2018 will be finalised on the basis of the financial information presented in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's Annual General Meeting.
9.	The Report and Accounts will be available on the SAINTS page of the Managers' website www.saints-it.com‡ on or around 1 March 2019.
10.	Glossary of Terms and Alternative Performance Measures (APM) Total Assets Total assets less current liabilities, before deduction of all borrowings. Net Asset Value Net Asset Value (NAV) is the value of total assets less liabilities (including borrowings). The NAV per share is calculated by dividing this amount by the number of ordinary shares in issue. Net Asset Value (Debentures at Fair Value) (APM) Borrowings are valued at an estimate of their market worth. Net Asset Value (Debentures at Book Value) Borrowings are valued at adjusted net issue proceeds. Book value approximates amortised cost. 31 December 2018 31 December 2017 Shareholders’ funds (debenture at book value) £483,453  £497,938  Add: book value of debenture £82,701  £83,428  Less: fair value of debenture (£92,000) (£97,832) Shareholders’ funds (debenture at fair value) £474,154  £483,534  Shares in issue at year end 140,930,943  135,975,943  Net Asset Value per ordinary share (debenture at fair value) 336.4p 355.6p Discount/Premium (APM) As stockmarkets and share prices vary, an investment trust's share price is rarely the same as its NAV. When the share price is lower than the NAV per share it is said to be trading at a discount. The size of the discount is calculated by subtracting the share price from the NAV per share and is usually expressed as a percentage of the NAV per share. If the share price is higher than the NAV per share, this situation is called a premium. Performance Attribution (APM) Analysis of how the Company achieved its performance relative to its benchmark. Total Return (APM) The total return is the return to shareholders after reinvesting the net dividend on the date that the share price goes ex-dividend.
	Net Asset Value 2018 2017 Opening NAV per share (debenture at book value) at 1 January 366.2p 323.5p Closing NAV per share (debenture at book value) 31 December 343.0p 366.2p (a) Total dividend adjustment factor* 1.031195% 1.030924% (b) Adjusting closing NAV per share (c = a x b) 353.7p 377.5p (c) Total return on net assets with debenture at book value (3.4%) 16.7% *      The dividend adjustment factor is calculated on the assumption that the dividends paid out by the Company are reinvested into the shares of the Company at the cum income NAV at the ex-dividend date. Share Price 2018 2017 Opening share price at 1 January 368.0p 324.0p Closing share price at 31 December 351.0p 368.0p (a) Total dividend adjustment factor† 1.031624% 1.031793% (b) Adjusting closing NAV per share (c = a xb) 362.1p 379.7p (c) Total return on share price (1.6%) 17.2% †      The dividend adjustment factor is calculated on the assumption that the dividends paid out by the Company are reinvested into the shares of the Company at the last traded price quoted at the ex-dividend date. Gearing (APM) At its simplest, gearing is borrowing. Just like any other public company, an investment trust can borrow money to invest in additional investments for its portfolio. The effect of the borrowing on the shareholders' assets is called 'gearing'. If the Company's assets grow, the shareholders' assets grow proportionately more because the debt remains the same. But if the value of the Company's assets falls, the situation is reversed. Gearing can therefore enhance performance in rising markets but can adversely impact performance in falling markets. Gearing represents borrowings at book less cash and cash equivalents expressed as a percentage of shareholders' funds. Potential gearing is the Company's borrowings expressed as a percentage of shareholders' funds. Equity gearing is the Company's borrowings adjusted for cash, bonds and property expressed as a percentage of shareholders' funds.
	Leverage (APM) For the purposes of the Alternative Investment Fund Managers (AIFM) Directive, leverage is any method which increases the Company's exposure, including the borrowing of cash and the use of derivatives. It is expressed as ratio between the Company's exposure and its net asset value and can be calculated on a gross and a commitment method. Under the gross method, exposure represents the sum of the Company's positions after the deduction of sterling cash balances, without taking into account any hedging and netting arrangements. Under the commitment method, exposure is calculated without the deduction of sterling cash balances and after certain hedging and netting positions are offset against each other.

Third Party Data Provider Disclaimer

No third party data provider ('Provider') makes any warranty, express or implied, as to the accuracy, completeness or timeliness of the data contained herewith nor as to the results to be obtained by recipients of the data. No Provider shall in any way be liable to any recipient of the data for any inaccuracies, errors or omissions in the index data included in this document, regardless of cause, or for any damages (whether direct or indirect) resulting therefrom.

No Provider has any obligation to update, modify or amend the data or to otherwise notify a recipient thereof in the event that any matter stated herein changes or subsequently becomes inaccurate.

Without limiting the foregoing, no Provider shall have any liability whatsoever to you, whether in contract (including under an indemnity), in tort (including negligence), under a warranty, under statute or otherwise, in respect of any loss or damage suffered by you as a result of or in connection with any opinions, recommendations, forecasts, judgments, or any other conclusions, or any course of action determined, by you or any third party, whether or not based on the content, information or materials contained herein.

FTSE Index Data

Source: FTSE International Limited ('FTSE') © FTSE 2019. 'FTSE®' is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under licence. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data and no party may rely on any FTSE indices, ratings and/or data underlying data contained in this communication. No further distribution of FTSE Data is permitted without FTSE's express written consent. FTSE does not promote, sponsor or endorse the content of this communication.

Automatic Exchange of Information In order to fulfil its legal obligations under UK tax legislation relating to the automatic exchange of information, The Scottish American Investment Company P.L.C. is required to collect and report certain information about certain shareholders. The legislation requires investment trust companies to provide personal information to HMRC on certain investors who purchase shares in investment trusts. Accordingly, The Scottish American Investment Company P.L.C. will have to provide information annually to the local tax authority on the tax residencies of a number of non-UK based certificated shareholders and corporate entities. Shareholders, excluding those whose shares are held in CREST, who come on to the share register will be sent a certification form for the purposes of collecting this information.

For further information, please see HMRC's Quick Guide: Automatic Exchange of Information - information for account holders https://www.gov.uk.government/publications/exchange-of-information-account-holders

Regulated Information Classification: Additional regulated information required to be disclosed under the laws of a Member State of the European Union.

‡    Neither the contents of the Managers' website nor the contents of any website accessible from hyperlinks on the Managers' website (or any other website) is incorporated into, or forms part of, this announcement.

None of the views expressed in this document should be construed as advice to buy or sell a particular investment.

- ends -

 

END

 

 

FR UBUBRKKAURAR