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RNS

Final Results

Released 07:00 08-Feb-2019

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: 0131 275 2000

 

James Budden, Baillie Gifford & Co  

Tel: 0131 275 2816 or 07507 201208

 

Roland Cross, Director, Four Broadgate

Tel: 0203 697 4200 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

 

 

 

 

 

 

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.

 

 

 

 

 

 

 

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 -


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