Interim Results
May 12 2003 - 10:30AM
UK Regulatory
SCOTTISH VALUE TRUST CONTINUES TO OUTPERFORM
BENCHMARK INDEX
Unaudited Results for the six months to 31 March 2003
Key Points
* Over the six months to 31 March 2003, net asset value rose by 2.1% to
153.93 pence compared to the Company's benchmark index, the FTSE World
Index, increasing by 0.9%
* Net asset value increased by 22.3% compared to an increase of 4.3% in the
Trust's benchmark index, the FTSE World Index, over the last 5 years.
* Portfolio performance has benefited by a combination of good hedge fund and
specialist investment selection.
* Favoured areas of investment are Eastern Europe and Far East, particularly
Russia and China.
* Discount has continued to be stable over the last six months. Board will
continue to make share re-purchases as appropriate
* Unchanged interim dividend of 1p per share will be paid to shareholders on
11 July 2003.
End
For further information please contact:
Colin McLean/Donald Robertson SVM Asset Management 0131 226 6699
Roland Cross Broadgate 020 7726 6111
.
SCOTTISH VALUE TRUST PLC
Unaudited Results for the six months to 31 March 2003
Commenting on the results, Chairman, Simon McClean, said:
"I am pleased to announce that your Company has continued to outperform over
the last six months in the face of a challenging stockmarket environment. Over
the six months to 31 March 2003, on a total return basis, net asset value rose
by 2.1% to 153.93 pence compared to the Company's benchmark index, the FTSE
World Index, which increased by 0.9%. The Company continues to outperform over
the longer term with a rise of 22.3% against an increase of 4.3% in the
benchmark over 5 years. Since inception, the Company's asset value has risen by
297.9% compared to a rise in the benchmark of 89.2%. As at the close of
business on 9 May 2003, the net asset value had risen to 161.1 pence.
PORTFOLIO
We have continued with the investment themes outlined in the annual results in
November. The portfolio mixture of hedge funds and selected specialist
investments has enabled the Company to demonstrate continued growth with lower
volatility than the market as a whole. SVT typically has around 15% invested in
North America compared to in excess of 50% for the benchmark index. This
materially underweight position has allowed the Company to invest in the more
vibrant and perversely less volatile markets. The favoured areas include
Eastern Europe and in particular Russia and the Far East, especially China.
These two featured countries continue to deliver economic growth substantially
better than the developed markets at extremely attractive valuations. We
believe that the discrepancy between the valuations of developed and emerging
economies, which had widened to unprecedented levels in 2001, will continue to
narrow. SVT is well placed to benefit from this.
During the six months, a number of funds restructured. JF Japan OTC liquidated
and substantially all of the investment was returned in cash in February.
Fleming Russia restructured from a US$ denominated offshore fund into a
Sterling denominated investment trust. We rolled over our investment and added
to the position shortly after the reorganisation. In addition, the Russian
exposure was increased by the purchase of a holding in Siberian Investment
Company. Subsequently, the Russian equity market has risen on a number of
corporate takeovers / mergers including BP's investment in Russia's TNK. The
holding in Baring Emerging Europe warrants was realised for cash following a
restructuring proposal at the end of December. Finally Thompson Clive
Investments announced another tender offer that will return a further 10% in
cash.
GEARING
Although the Company's borrowings can magnify the impact on asset value of
underlying stockmarket moves, the Board believes that gearing has the potential
to enhance long term returns for shareholders even in times of market weakness.
The Company operates with a bank facility equivalent to 20% of gross assets and
gearing was 15% as at 31 March 2003. As slightly under 30% is invested in hedge
funds with little effective market exposure together with a number of
specialist investments that have low market sensitivity, the Investment
Managers estimate that the Company is effectively approximately 70% exposed to
overall stockmarket direction.
BUY-BACKS
I am pleased to report that the shareholder base has been very stable over the
last six months. The Company pioneered the serial buy-back program system back
in 1997 and in excess of 16.7 million shares have been retired over the last
six years.
During the six months under review, no shares were bought back. The discount
has remained at virtually the same level during the six months. We will
continue to make further share re-purchases as appropriate.
DIVIDENDS
This year's interim dividend, unchanged at 1 pence per share, will be paid on
11 July 2003 to shareholders on the Register at close of business on 6 June
2003 (ex dividend 4 June 2003). The principal investment objective of the
Company remains capital growth."
Simon McClean
Chairman
12 May 2003
.
Summarised Group Statement of Total Return
(unaudited)
6 months to 31 March 2003 6 months to 31 March
2002
Revenue Capital Total Revenue Capital Total
�'000 �'000 �'000 �'000 �'000 �'000
Gains / (losses) on - 2,388 2,388 - 18,286 18,286
investments
Income 184 - 184 193 - 193
Investment management fees (32) (287) (319) (36) (324) (360)
Other expenses (63) (30) (93) (104) - (104)
------- ------- ------- ------- ------- -------
Return before interest and 89 2,071 2,160 53 17,962 18,015
taxation
Bank overdraft interest (41) (369) (410) (93) (836) (929)
------- ------- ------- ------- ------- -------
Net return after taxation 48 1,702 1,750 (40) 17.126 17,086
------- ------- ------- ------- ------- -------
Dividends in respect of (542) - (542) (542) - (542)
equity shares
------- ------- ------- ------- ------- -------
Return per ordinary share 0.09p 3.14p 3.23p (0.07p) 31.55p 31.48p
Dividend per ordinary
share
Interim dividend 1.00p 1.00p 1.00p 1.00p
.
Summarised Group Balance Sheet
(unaudited)
as at as at
31 March 31 March
2003 2002
�'000 �'000
Fixed asset - investments 95,878 120,689
Net current liabilities (12,339) (15,491)
-------- --------
Ordinary shareholders' funds 83,539 105,198
-------- --------
Net asset value per ordinary share 153.93p 193.84p
Summarised Group Cash Flow Statement
(unaudited)
6 months 6 months
to to
31 March 31 March
2003 2002
�'000 �'000
Net cash flow from operating activities (134) 233
Returns on investment and servicing (410) (929)
finance
Capital expenditure and financial 2,678 (2,848)
investment
Equity dividends paid (678) (678)
-------- --------
Increase / (decrease) in cash 1,456 (4,222)
-------- --------
Notes
1 Returns per Ordinary Share are based on 54,269,546 shares in issue during the
period (31 March 2002 - 54,269,546). The number of shares in issue at 31 March
2003 was 54,269,546 (31 March 2002 - 54,269,546).
2. Investment management fees and bank overdraft interest has been allocated
10% to revenue and 90% to capital (2002: same). This allocation is in line with
the Board's expected long-term split of returns in the form of income and
capital gains respectively from the investment portfolio.
3. The above figures do not constitute full group accounts in terms of Section
240 of the Companies Act 1985. These results have been prepared in accordance
with the Statement of Recommended Practice (SORP) issued by the Association of
Investment Trust Companies. The accounts for the year to 30 September 2002,
which were unqualified, have been lodged with the Registrar of Companies. The
interim report will be mailed to shareholders towards the middle of May 2003.
Copies will be available for inspection at 7 Castle Street, Edinburgh, the
registered office of the Company.
END
