Final Results
November 03 2003 - 11:25AM
UK Regulatory
NEWS RELEASE
3 November 2003
SCOTTISH VALUE TRUST PLC
RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2003
Key Points
* SVT reports another year of outperformance. On a total return basis, the
net asset value increased by 28.1% to 191.8 pence against an increase in
the Company's benchmark index, the FTSE World Index of 19.3%.
* The Company continues to outperform over the long term with a net asset
value increase of 59.4% against a rise of 8.7% in the benchmark over five
years and a net asset value increase of 399.1% since inception (July 1990)
against a rise in the benchmark of 121.5%.
* The year has been a difficult and challenging one. The rally of late 2002
swiftly gave way to lower markets with the threat of conflict in the Middle
East. Since the war, markets have enjoyed an aggressive rally as investor
confidence returned. SVT did not suffer as much as the averages in the weak
markets and has managed to keep ahead in recent rallies.
* In 2001 a decision was made to invest a portion of the portfolio in
absolute performance or hedge investments, this has served well. In terms
of the 9% outperformance in the year, approximately 3% resulted from the
position in hedged investments.
* An unchanged dividend of 1.25p per share will be paid on 14 January.
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
Results for the year ended 30 September 2003
Commenting on the results, Chairman, Simon McClean, said:
"I am delighted to report to shareholders that Scottish Value Trust completed
another year of outperformance. Whereas last year I had to report on a
substantial outperformance in a down year, this year I am pleased to report
that your Company's asset value and share price rose and its outperformance of
the benchmark continued. Over the year to 30 September 2003, on a total return
basis, the net asset value increased by 28.1% to 191.8 pence. Over the same
period, the Company's benchmark index, the FTSE World Index, rose by 19.3%. The
Company continues to outperform over the longer term with an increase in the
net asset value of 59.4% against a rise of 8.7% in the benchmark over 5 years.
Since inception, the Company's net asset value has risen by 399.1% compared to
a rise in the benchmark of 121.5%. As at the close of business on 31 October,
the net asset value had risen to 201.26 pence.
Although the last year saw a positive return overall, this masked what has been
a most challenging environment for both professional and private investors
alike. The rally enjoyed in the final quarter of 2002 swiftly gave way to lower
markets as the conflict in the Middle East devastated investor confidence.
Global markets registered multi-year lows in March which coincided with the
start of hostilities in Iraq. Subsequently, markets have enjoyed an aggressive
rally as investor confidence has returned, coupled with increased US led
financial stimulus. The Company did not suffer as much as the averages in the
weak markets of early 2003 and has managed to keep ahead in the recent market
rally.
PORTFOLIO
The decision made in 2001 to invest a portion of the portfolio in absolute
performance or hedged investments, the material underweight position in assets
exposed to the US Dollar and favourable asset allocation has served well over
the year. In terms of the near 9% outperformance in the year, approximately 3%
resulted from the position in hedged investments, 2% in being underweight in US
Dollar assets and the balance in asset allocation. The Trust still maintains
its underweight position in the US, preferring to invest in economies where the
growth rates are attractive and combined with low valuations. Favoured regions
include Emerging Europe with specific focus on Russia and the Far East
especially China and Japan. During the year, we have increased exposure to
these regions and have benefited from their strong performance.
The level of corporate restructuring within the sector continued apace. The
Company was a beneficiary of a number including JF Japan OTC (liquidation),
Baring Emerging Europe (rollover), Asian Technology Trust (open ending) and
Fleming Russia, where the fund was restructured to become an investment trust.
The follow-on vehicle, JP Morgan Fleming Russia, has been one of the most
successful investments in the year, rising by more than 50% since the change.
In addition, two of the long-standing investments, Thompson Clive Investments
and Enterprise Capital Trust, both recently announced portfolio investment
flotations. We believe that there will be further cash repayments from both in
the next few months.
GEARING
The Board continues to believe that gearing has the potential to enhance long
term returns for shareholders and the Company has bank facilities equivalent to
approximately 20% of assets. The Company currently has gearing of approximately
16%, however with 26% in absolute performance investments, the Managers
estimate that effective exposure to equity markets is a little less than 90%.
This gives the opportunity for the Company to outperform both in falling as
well as rising markets.
DIVIDENDS, BUY-BACKS AND TREASURY SHARES
An unchanged final dividend of 1.25p per share will be paid on 14 January 2004
to shareholders on the Register at close of business on 12 December 2003 (ex
dividend date 10 December 2003). This brings the unchanged total dividend for
the year to 2.25p per share. Although the Company, being a capital growth
trust, earns a relatively small amount of income each year, the Board believes
that the current level of dividend should be maintained.
Although the Board has given the Managers the authorisation to buy back shares
where appropriate, no shares were repurchased during the year. The discount has
remained very stable over the year and compares favourably with most of its
peers. The Board and the Managers will continue to monitor the situation and
will make further share re-purchases as appropriate. Shareholders will be
requested at the Annual General Meeting to renew this authority for another
year.
With effect from 1 December 2003, the Companies Acts have been amended to
permit your Company to hold up to 10% of its own shares in treasury as an
alternative to cancelling such shares. The Board has given the Managers
permission to use this authority. The Managers will also be permitted to sell
treasury shares for the Company subject to obtaining approval from its
shareholders. Accordingly, two resolutions will be put forward as Special
Business at the AGM.
Resolution 8 will be proposed as a Special Resolution to enable the Company to
sell shares held in treasury without having to make a general offer to all
shareholders. The number of shares that can be issued this way has been limited
to 5% in any one year and 7.5 % in any rolling three year period.
Resolution 9 will be proposed as an Ordinary Resolution to obtain approval from
shareholders to allow those shares to be sold for cash at less than net asset
value. This is required as the shares are trading in the market at less than
net asset value. However, it is intended that if any treasury shares are to be
sold then the price obtained for the shares will be not less than the market
bid quotation for the shares on the London Stock Exchange at the time of sale.
CORPORATE GOVERNANCE
The Board has considered the various reports on corporate governance issued
during the year. It is our intention to comply with the AITC Code and have
taken action to implement the requirements of the Combined Code within the
specified timetable.
The Board has decided to recommend the reappointment of Ernst & Young as
auditors. The Audit Committee has considered the potential conflicts of
interest in Ernst & Young's position, not only as auditors to Scottish Value
Trust but also as auditors to SVM Asset Management and other associated
companies. The Board does not believe that an immediate change of auditors
would be in the best interests of shareholders, but mindful of the potential
conflict of interest, has resolved to keep the reappointment of Ernst & Young
under annual review.
AGM
The Company's Annual General Meeting will be held in London on 8 December 2003
and details of the resolutions to be proposed are given in the Notice of
Meeting. The AGM will be at 12.30 p.m. and will be preceded at 12 Noon by a
presentation from the Managers, who will review the portfolio and investment
policy, and answer questions from shareholders. Copies of the presentation will
be available upon request to all shareholders and will be put on the Managers'
website (www.svmonline.co.uk). We will repeat the practice of making a
presentation to shareholders in Scotland in May 2004."
Simon McClean
Chairman
3 November 2003
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Scottish Value Trust plc
Summarised Unaudited Group Statement of Total Return
Year to 30 September 2003 Year to 30 September 2002
Revenue Capital Total Revenue Capital Total
�'000 �'000 �'000 �'000 �'000 �'000
Gains / (losses) on - 24,715 24,715 - (4,101) (4,101)
investments
Income 568 - 568 691 - 691
Investment management fees (65) (587) (652) (75) (672) (747)
Other expenses (207) (729) (936) (244) - (244)
-------- -------- -------- -------- -------- --------
Return before interest and 296 23,399 23,695 372 (4,773) (4,401)
taxation
Bank overdraft interest (70) (633) (703) (70) (630) (700)
-------- -------- -------- -------- -------- --------
Return on ordinary 226 22,766 22,992 302 (5,403) (5,101)
activities before taxation
Taxation - - - - - -
-------- -------- -------- -------- -------- --------
Return on ordinary 226 22,766 22,992 302 (5,403) (5,101)
activities after taxation
Dividends in respect of (1,221) - (1,221) (1,221) - (1,221)
equity shares
-------- -------- -------- -------- -------- --------
Transfer from reserves (995) 22,766 21,771 (919) (5,403) (6,322)
-------- -------- -------- -------- -------- --------
Return per ordinary Share 0.42p 41.95p 42.37p 0.56p (9.96p) (9.40p)
Dividend per ordinary share
Interim dividend 1.00p - 1.00p 1.00p - 1.00p
Final dividend 1.25p - 1.25p 1.25p - 1.25p
.
Unaudited Group Balance Sheet as at as at
30 30
September September
2003 2002
�'000 �'000
Fixed assets - investments 120,493 96,185
Net current liabilities (16,390) (13,853)
---------- ----------
Ordinary shareholders funds 104,103 82,332
---------- ----------
Net asset value per ordinary share 191.83p 151.71p
Unaudited Group Cash Flow Statement
Year to Year to
30 30
September September
2003 2002
�'000 �'000
Net cash outflow from operating (276) (305)
activities
Returns on investment and servicing (703) (700)
of finance
Taxation - 128
Capital expenditure and net 390 (1,152)
financial investment
Equity dividends paid (1,221) (1,221)
---------- ----------
Decrease in cash (1,810) (3,250)
---------- ----------
.
Notes
1. The results reflect the adoption in the accounts of the Statement of
Recommended Practice (SORP) issued by the Association of Investment Trust
Companies.
2. Returns per Ordinary Share are based on 54,269,546 shares in issue during
the year (30 September 2002 - same). The number of shares in issue at 30
September 2003 was 54,269,546. (30 September 2002 - same).
3. Investment management fees and bank overdraft interest have 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.
4. The above figures do not constitute full group accounts in terms of Section
240 of the Companies Act 1985. The accounts for the year to 30 September 2002,
which were unqualified, have been lodged with the Registrar of Companies. The
annual report and accounts will be mailed to shareholders and will be lodged
with the Registrar of Companies during November 2003. Copies will be available
for inspection at 7 Castle Street, Edinburgh, the registered office of the
Company.
ENDS
END