Interim Management Statement

RNS Number : 5038L

Securities Trust of Scotland PLC

12 August 2013

 



SECURITIES TRUST OF SCOTLAND PLC

INTERIM MANAGEMENT STATEMENT

COVERING THE PERIOD FROM 1 APRIL TO 30 JUNE 2013

Manager's commentary

In the second quarter, the MSCI World High Dividend Yield index fell 0.9%. The positive momentum enjoyed by global equity markets from the start of the year carried on until the end of May, but then petered out with June being a weak month. The strongest regions during the period were Japan and North America and the weakest were Asia and the emerging markets.

The Trust's NAV fell 0.4%, but outperformed the benchmark over the three months. The key detractors from performance were two Australian companies; WorleyParsons, the engineering consultancy firm, and Woolworths, the supermarket chain. WorleyParsons is suffering in the short term because resource-services markets are being impacted by project by project delays and reviews. Woolworths is facing a tough and competitive retail environment in Australia but is performing well within it, while improving market share and its customer offering. On the other side, key positive contributors included; Lockheed Martin, the US defence company; Safran, the French aircraft-engine manufacturer; and Allianz, the German insurance company. All three companies reported encouraging earning and positive outlook.

During the quarter, we made one new purchase - Kinder Morgan, the US pipeline operator. We like the company because of its attractive legacy assets, the appeal of its future growth opportunities, the relatively low-risk nature of the business, and its combination of dividend yield (approximately 4%) and dividend growth (approximately 10% CAGR expected). On the sales side, we fully exited Prosieben, the German TV-channel operator. The stock reached its target price in April; we had been reducing our position into strength before completing the exit.

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	31 Mar	30 Jun
Equities	104.3%	104.8%
Cash	2.1%	1.6%
Gearing	(6.4%)	(6.4%)

Equity allocation

	31 Mar	30 Jun
Healthcare	19.4%	20.5%
Consumer goods	15.4%	14.6%
Financials	14.4%	13.7%
Oil & gas	12.1%	13.2%
Telecommunications	10.7%	10.6%
Consumer services	11.9%	10.6%
Industrials	9.2%	9.8%
Basic materials	4.3%	4.4%
Utilities	1.7%	1.7%
Technology	0.9%	0.9%

Regional allocation

	31 Mar	30 Jun
Europe	49.3%	47.8%
North America	40.1%	42.2%
Asia Pacific ex Japan	5.7%	5.0%
Japan	2.9%	3.0%
Emerging markets	2.0%	2.0%

Top 10 equity holdings (38.7% of total portfolio)

AT&T	5.1%
Pfizer	4.9%
Chevron	4.2%
Sanofi	3.9%
Novartis	3.9%
Nestlé	3.6%
Royal Dutch Shell	3.5%
Roche	3.4%
Philip Morris International	3.2%
Total	3.0%

Number of holdings     50

Number of countries    13

Key facts

Total Assets                                         £156.5m

Share price (p)                                    148.0

Net asset value per share (p)             140.5*

Discount (premium)                          (5.3%)

Net yield                                             3.2%**

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

**Source: State street as at 30 June 2013. The historic yield reflects dividends declared over the past 12 months as a percentage of the mid-market share price, as at the date shown. Investors may be subject to tax on their dividends.

PERFORMANCE

Discrete performance over 12 months to 30 June

	2013	2012	2011	2010	2009
Share Price	26.1%	9.7%	37.5%	16.9%	(16.0%)
NAV	22.3%	2.1%	32.2%	25.8%	(27.2%)
Benchmark	21.3%	3.6%	25.6%	21.1%	(20.5%)

Cumulative performance over periods to 30 June 2013

	One month	Three months	Six months	One year	Three years	Five years
Share Price	(3.1%)	2.1%	19.8%	26.1%	90.2%	86.8%
NAV	(1.9%)	(0.4%)	16.6%	22.3%	65.1%	51.1%
Benchmark	(2.4%)	(0.9%)	15.3%	21.3%	57.8%	52.0%

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 111,344,771*

*Source: Martin Currie as at 30 June 2013.

Board of directors

Neil Donaldson (chairman)

Andrew Irvine

Charles Berry

Edward Murray

Rachel Beagles

Material events and transactions

The fourth interim dividend for the year to 31 March 2013 of 1.3p per share was paid on 28 June 2013 to shareholders on the register on 7 June 2013 making a total for the year of 4.75p

The Trust issued 985,000 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 31 March 2013†       0.6%

On-going charges as at 31 March 2013*                   1.0%

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
2013	146.3p	141.8p	(3.2%)	4.75p

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.

High exposure to a single country market increases potential volatility. 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 the entire 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 your investment at risk.

Funds which invest in smaller and/or medium sized companies are specialist funds and as such are likely to carry higher risks than a more widely invested fund.

 

END

 

 

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