Final Results
Scottish American Investment Co PLC
10 February 2005
THE SCOTTISH AMERICAN INVESTMENT COMPANY P.L.C.
Results for the year to 31 December 2004
SAINTS had an encouraging year, with a share price total return of 16.5%.
• The dividend (fully covered by earnings) is to be increased by 6.2% setting
a new base for the progressive dividend policy.
• Investment performance improved with NAV total return, including the cost
of the portfolio reorganisation, in line with the Benchmark.
• The discount narrowed.
• The transition to the new managers, Baillie Gifford & Co., went well.
The level of absolute returns reflect the generally healthy performance of
equity, bond and property markets during 2004. The UK equity portfolio benefited
from good stock selection while there was a robust contribution from the
directly held commercial property investments.
Setting a new base for the progressive dividend policy, a final dividend of
1.59p is proposed (1.42p) to give a total of 6.00p (5.65p), substantially ahead
of inflation. Earnings per share were 6.37p (5.82p) and revenue reserves per
share stand at 8.4p (8.0p).
With the debenture valued at its market price, the discount narrowed from 17.9%
to 14.6% during the period.
In the second half the NAV total return was 10.3% with the debenture priced at
market, while the Benchmark total return was 8.4%.
The total return for the year, with the debenture valued at its market price,
was 11.3% (while at the lower book value, it was 13.8%). These figures compare
to an 11.3% total return on the Benchmark (70% FTSE All-Share Index and 30% FTSE
World Ex-UK Index) and include the cost of reorganising the portfolio at the
start of the year, estimated at 0.64% of net asset value.
While economic growth is unlikely to be as rapid this year as last year, the
Managers are confident that profits and dividends will rise faster than
inflation.
The Chairman, Brian Ivory CBE CA, said: 'I am pleased to report that the three
objectives of better investment performance, progressive growth in the dividend
and narrowing the discount of share price to net asset value were achieved in
2004. The Board looks forward to seeing further improvement in 2005.'
SAINTS offers private investors a diversified portfolio invested predominantly
in the UK. It includes property holdings and a spread of international
equities. It aims to provide a valuable income stream that should grow steadily
over time together with long-term capital growth.
SAINTS is managed by Baillie Gifford & Co., the Edinburgh based fund management
group with around £33 billion under management and advice.
- ends -
For further information please contact:
Patrick Edwardson, Manager,
The Scottish American Investment Company P.L.C. 0131 275 2133
07812 537316
Robert O'Riordan,
Baillie Gifford & Co. 07730 412007
Mike Lord, Director,
Broadgate Marketing 020 7726 6111
THE SCOTTISH AMERICAN INVESTMENT COMPANY P.L.C.
The following is the unaudited preliminary statement for the year to 31 December
2004 which was approved by the Board on 9 February 2005. 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 24 March 2005 the payment of a
final dividend of 1.59p (1.42p last year) per ordinary share making a total of
6.00p (5.65p last year) for the year ended 31 December 2004.
STATEMENT OF TOTAL RETURN
(unaudited and incorporating the revenue account*)
for the year ended for the year ended
31 December 2004 31 December 2003
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Gains on investments - 27,151 27,151 - 34,029 34,029
Currency gains/(losses) - 388 388 - (88) (88)
Income (note 2) 13,739 - 13,739 11,412 - 11,412
Management fees (812) (813) (1,625) (14) 550 536
Other administrative expenses (887) - (887) (839) - (839)
Net return before finance costs and
taxation 12,040 26,726 38,766 10,559 34,491 45,050
Finance costs of borrowings (2,947) (2,946) (5,893) (1,473) (4,420) (5,893)
Return on ordinary activities before
taxation 9,093 23,780 32,873 9,086 30,071 39,157
Tax on ordinary activities (623) 480 (143) (1,173) 1,064 (109)
Return on ordinary activities after
taxation 8,470 24,260 32,730 7,913 31,135 39,048
Dividends in respect of equity (7,918) - (7,918) (7,643) - (7,643)
shares
Transfer to reserves 552 24,260 24,812 270 31,135 31,405
Return per ordinary share
(note 3) 6.37p 18.23p 24.60p 5.82p 22.90p 28.72p
Dividends per ordinary share
(note 4) 6.00p 5.65p
* The revenue column of this statement is the profit and loss account of the
Company.
All revenue and capital items in this statement derive from continuing
operations.
THE SCOTTISH AMERICAN INVESTMENT COMPANY P.L.C.
SUMMARISED BALANCE SHEET
at 31 December 2004
(unaudited)
31 December 2004 31 December 2003
£'000 £'000
FIXED ASSETS
Investments 360,666 298,383
CURRENT ASSETS
Debtors 2,076 1,266
Cash and deposits 3,912 46,721
5,988 47,987
CREDITORS
Amounts falling due within one year (6,235) (5,824)
NET CURRENT (LIABILITIES)/ASSETS (247) 42,163
TOTAL ASSETS LESS CURRENT LIABILITIES 360,419 340,546
Debenture stock (note 5) (88,753) (89,260)
271,666 251,286
SHARE CAPITAL AND RESERVES
Called-up share capital 33,121 33,818
Capital Redemption reserve 22,781 22,084
Capital reserve - realised 166,731 171,622
Capital reserve - unrealised 37,900 13,181
Revenue reserve 11,133 10,581
Equity shareholders' funds 271,666 251,286
NET ASSET VALUE PER ORDINARY SHARE:
After deduction of debenture at book value 205.1p 185.8p
After deduction of debenture at market value 196.1p 181.9p
Ordinary shares in issue (note 6) 132,485,943 135,270,943
ASSET ALLOCATION
at 31 December 2004
(unaudited)
31 December 31 December
2004 2003
% %
UK Quoted Equities 56.5 51.9
Global (Ex UK) Quoted Equities 22.5 23.4
Unquoted 1.6 1.9
Quoted Fixed Interest 10.1 1.5
Properties 9.4 8.9
Net Liquid (Liabilities)/Assets (0.1) 12.4
100.0 100.0
THE SCOTTISH AMERICAN INVESTMENT COMPANY P.L.C.
SUMMARISED CASH FLOW STATEMENT
(unaudited)
Restated
Year to Year to
31 December 2004 31 December 2003
£'000 £'000
Net cash inflow from operating activities 10,943 11,667
Net cash outflow from servicing of finance (6,400) (6,400)
Total tax paid (142) (144)
Net cash (outflow)/inflow from financial investment (35,085) 17,940
Equity dividends paid (7,693) (7,687)
NET CASH (OUTFLOW)/INFLOW BEFORE USE OF LIQUID RESOURCES AND FINANCING (38,377) 15,376
Net cash inflow/(outflow) from use of liquid resources 40,000 (10,015)
Net cash outflow from financing (4,432) (3,183)
(DECREASE)/INCREASE IN CASH (2,809) 2,178
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
(Decrease)/increase in cash in the period (2,809) 2,178
(Decrease)/increase in short term deposits (40,000) 10,015
Other non-cash charges 507 507
MOVEMENT IN NET DEBT IN THE YEAR (42,302) 12,700
NET DEBT AT 1 JANUARY (42,539) (55,239)
NET DEBT AT 31 DECEMBER (84,841) (42,539)
RECONCILIATION OF OPERATING REVENUE TO NET CASH
INFLOW FROM OPERATING ACTIVITIES
Net revenue before finance costs and taxation 12,040 10,559
Management fees charged to capital (813) 550
Changes in debtors and creditors (284) 558
NET CASH INFLOW FROM OPERATING ACTIVITIES 10,943 11,667
THE SCOTTISH AMERICAN INVESTMENT COMPANY P.L.C.
PERFORMANCE ATTRIBUTION
for the year ended 31 December 2004 (in sterling terms)
(unaudited)
Average allocation Total return* Contribution
SAINTS Benchmark SAINTS Benchmark to total return
% % % % %
UK Quoted Equities 73.1 70.0 16.0 12.8 11.7
Global (ex UK) Quoted Equities 30.6 30.0 5.0 7.9 1.5
Quoted Fixed Interest 15.0 - 6.9 - 1.0
Properties 12.0 - 18.8 - 2.3
Unquoted 2.4 - (1.2) - -
Deposits and forward contracts 2.1 - 3.9 - 0.2
Portfolio Total Return 16.7
Finance costs (35.2) - (6.6) - (2.3)
Management fees and other expenses - - - - (1.0)
Share buy backs - - - - 0.3
Other - - - - 0.1
NAV Total Return (at book value) 13.8
Change in market value of debentures (2.5)
NAV Total Return (at market value) 11.3
* The above returns are calculated on a total return basis with net income
reinvested.
TWENTY LARGEST HOLDINGS
at 31 December 2004
(unaudited)
Market % of
value total
Name Business £'000 assets
Vodafone Telecommunication services 15,313 4.3
Royal Bank of Scotland Banks 13,055 3.6
GlaxoSmithKline Pharmaceuticals and biotechnology 12,477 3.5
Barclays Banks 11,613 3.2
HSBC Holdings Banks 9,962 2.8
British American Tobacco Tobacco 8,347 2.3
Imperial Tobacco Tobacco 7,306 2.0
Aviva Life assurance 7,178 2.0
Milton Keynes Property - hotel 6,500 1.8
Diageo Beverages 6,132 1.7
BOC Chemicals 5,190 1.4
Moody's Specialty and other finance 5,089 1.4
Hilton Group Leisure and hotels 4,788 1.3
Altria Tobacco 4,745 1.3
Allied Domeq Beverages 4,622 1.3
Man Group Specialty and other finance 4,507 1.2
BP Oil and gas 4,332 1.2
Nottingham Property - public house/restaurant 4,300 1.2
United Utilities Other utilities 4,171 1.2
Travis Perkins Construction and building materials 4,166 1.2
143,793 39.9
THE SCOTTISH AMERICAN INVESTMENT COMPANY P.L.C.
NOTES
1. The financial statements for the year to 31 December 2004 have been prepared on the basis of the
accounting policies set out in the Company's financial statements as at 31 December 2003. The format of
the Cash Flow Statement has been changed to comply with FRS1 (Revised 1996): Cash Flow Statements; the
comparative figures have been restated accordingly. With effect from 1 January 2004 the allocation
method applying to investment and property management fees and finance costs has been changed to 50%
revenue/50% capital. Previously, investment management fees and finance costs were allocated 25% revenue
/75% capital and property management fees were allocated 100% revenue.
None of the view expressed in this document should be construed as advice to buy or sell a particular
investment.
31 December 2004 31 December 2003
£'000 £'000
2. Income
Income from investments 11,082 8,146
Rental income 2,486 2,365
Other income 171 901
13,739 11,412
3. Return per ordinary share
Revenue return 8,470 7,913
Capital return 24,260 31,135
Return per ordinary share is based on the above returns and on 133,075,233 (2003 - 135,955,116)
ordinary shares, being the weighted average number of ordinary shares in issue during the year.
4. If approved the final dividend of 1.59p will be paid on 4 April 2005 to all shareholders on the
register at the close of business on 11 March 2005.
5. The market value of the 8% Debenture Stock 2022 at 31 December 2004 was £100.6m (31 December 2003 -
£94.6m)
6. During the year under review the Company bought back 2,785,000 ordinary shares with a nominal value
of £696,250 for a total consideration of £4,432,000. At 31 December 2004 the Company had the
authority to buy back a further 19,311,328 shares.
7. The financial information set out above does not constitute the Company's statutory accounts for the
year ended 31 December 2004. The financial information for 2003 is derived from the statutory accounts
for 2003 which have been delivered to the Registrar of Companies. The Auditors have reported on the
2003 accounts, their report was unqualified and did not contain a statement under section 237(2) or (3)
of the Companies Act 1985. The statutory accounts for 2004 are unaudited, however it is expected that
the Auditors will issue an unqualified opinion. The statutory accounts for 2004 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.
This information is provided by RNS
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