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26 July 2004

The Scottish Investment Trust Debt Repayment

The Scottish Investment Trust PLC has today arranged repayment of £75m of unlisted debentures as follows:-

As a result of these repayments:

• Potential gearing falls from 132% to 122% - actual gearing becomes 114% (with debt valued at par).



• NAV per share is reduced by 1.2% from 330.9p to 326.9p (based on the new AITC standard of carrying debt at fair value).



• Cash flow, at current interest rates, is expected to rise by 1.1p per share.

(All changes estimated, based on values at 23 July 2004; debentures valued with reference to appropriate gilts).

As a result of the company's accounting policy of charging interest and expenses partially to capital, there is likely to be a positive impact on the capital account and a smaller, negative impact on the revenue account.  The estimated net effect of these changes is shown in the cash flow figure above. The company's dividend-paying policy is unlikely to be affected.

The company retains £150m nominal (book value £145.7m; market value £141.9m) of long term gearing through its 5.75% secured bonds which mature in 2030 and a further £2.1m nominal (book value £2.1m; market value £1.7m) through its perpetual debentures.

After the repayment, the company's asset distribution is as follows:

Chairman Douglas McDougall commented:

"The board recognised that, following the repurchases of shares in recent years, the company's potential gearing was too high and this could hinder the efficient management of the investment portfolio. The board has set a strategic ceiling for actual gearing of 120%.  Following these debt repayments the company's available capital is more closely aligned with its expected needs."