Scot.American Investment Trust - Final Results

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.

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.

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.


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.


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.


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.


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


February 2019

Balance Sheet (unaudited)



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Ordinary shares in issue (note 6)