Final Results
Alliance Trust PLC
Final results for the year ended 31 January 2009
Financial Highlights
Trust Performance for year to 31 January 2009
Price Total
Return
NAV Return * (21.2) (19.5)**
Share Price (20.7) (18.5)
FTSE All-Share Index (30.7) (27.8)
FTSE All-World Index (£) (22.5) (20.2)
Peer Group Ranking 1 year 3 years 5 years
Total Return Rank ^ 11/42 15/37 22/32
Company Statistics 31 Jan 09 31 Jan 08
Discount to Net Asset Value 15.4% 16.0%
Dividend 8.0p 7.9p
Special Dividend 0.5p -
Dividend Yield 3.2% 2.3%
* Figures quoted for basic NAV. Fully diluted numbers are 315.9p for 31
January 2009 and 401.7p for 31 January 2008
**Calculated as NAV including income with dividend reinvested on the XD date
^ Total Return Rank is shown relative to the performance of the Global
Growth and Global Growth and Income Investment Trusts
Highlights of the year
* Strong performance relative to global equity markets over last 12 months
* Total shareholder return for the year ranked 11th in peer group of 42
Global Growth and Global Growth and Income Investment Trusts - a rise from
our ranking of 25th out of 38 Trusts a year ago
* Outperformed main market indices due to prudent decision to raise cash
early in 2008 to peak of 21% of net assets at the end of November
* Principal regional quoted equity portfolios outperformed relevant local
benchmarks:
+ North America outperformed by 17.8%
+ Europe outperformed by 11.3%
+ UK Mid outperformed by 11.2%
+ UK Large outperformed by 4.2%
* Dividend increased for 42nd consecutive year to 8p per share
* Announced special dividend of 0.5p per share in light of exceptional income
earned
Commenting on the 2009 results, Katherine Garrett-Cox, Chief Executive, said:
"This has been one of the most testing periods in memory for investors but, by
raising cash early and by maintaining our strategy of investing in resilient,
well-run companies with good prospects of sustainable growth, we have delivered
improved investment performance relative to our peers.
We believe that we face a protracted recovery from the financial crisis and
that the global economy and markets will remain volatile in 2009. We have been
steadily reducing our cash holdings from last year's historic highs to increase
our exposure to global equities and to ensure that we are well-positioned for
market recovery. In 2009 we will continue to use our rigorous investment
process to identify quality companies with strong balance sheets which we
believe can create excellent long term value for shareholders."
For more information please contact:
James Leviton and Conor McClafferty
Finsbury Group
020 7251 3801
Jane Holligan
Media Relations, Alliance Trust
01382 306 064
Mobile: 07793 296813
Notes to editors
1. A FTSE 100 investment trust company, Alliance Trust PLC was founded in 1888
and has grown to become the UK's largest generalist investment trust. As at 31
January 2009, Alliance Trust managed assets of more than £2.1bn. Of the
company's net assets, under 2% was invested in its subsidiaries, which include
Alliance Trust Savings.
Dividend
Having paid three interim dividends of 2p for last year the Directors have
declared a fourth interim dividend of 2p per share payable on 30 April 2009.
The total dividend for the year, of 8p, is an increase of 1.3% on the 7.9p paid
for the previous year.
In the absence of any unforeseen developments, we expect to be able to
recommend quarterly interim dividends of 2.025p payable on or around 31 July
2009, 31 October 2009, 31 January 2010 and a fourth interim dividend of at
least 2.025p payable on or around 30 April 2010.
Special Dividend
The Directors have declared a special dividend for the year ended 31 January
2009 of 0.5p per share. This dividend is payable on 31 July 2009 to shareholders
on the register on 3 July 2009. The ex-dividend date is 1 July 2009. This special
dividend will allow shareholders to benefit from this year's exceptional
revenue returns and ensure that we meet the requirement for investment trusts
to distribute a significant proportion of each year's revenue.
Chairman's Statement
2008 has been one of the most testing periods in Alliance Trust's history.
The market turbulence I described last year has continued unabated as the
effects of the financial crisis continue to unfold. The inescapable conclusion
is that we are in a period of recession from which the timing and speed of
recovery are uncertain.
Despite this challenging environment, I am pleased to report that Alliance
Trust succeeded in delivering an improved performance relative to our peer
group in 2008. The Trust takes a long term view of investment and the benefits
of this philosophy are never more apparent than in difficult market conditions.
The defensive positioning of our portfolio ensured that we were less exposed
than others to the financial sector and cyclical industries and we maintained
a high cash weighting as conditions worsened. Both of these factors contributed
to our increasingly strong performance during the year.
To steer the Company through these difficult times, in addition to her
responsibilities as Chief Investment Officer which she assumed in 2007, your
Board was delighted to appoint Katherine Garrett-Cox as Chief Executive in
August 2008. Her dual role reflects the importance of her expertise in a
Company which relies on the investment skills of its managers.
As Chief Executive, Katherine has moved quickly and decisively, undertaking a
comprehensive review of the Company's activities. This determined our strategic
priority to focus primarily on equities, drawing on the in-house stock
selection and investment management skills which we have assembled. She has
implemented a series of actions, the benefits of which can clearly be seen in
our outperformance of both the FTSE All-Share and FTSE All-World Indices in
2008 and our progression against our peer group over the year.
Shareholders expect the Alliance Trust to deliver good long term performance
from a relatively low cost base, and we are committed to our Total Expense
Ratio remaining in the lowest quartile of our peers.
The Chief Executive's Statement and Investment Review comment in more detail on
both investment performance and the activities of Alliance Trust Savings and
our other subsidiaries during the year.
Against the background of our renewed equity focus, your Board recognised that
an absolute return objective, which was designed to measure investment across a
much more diverse range of asset classes, was no longer appropriate. In future
we intend to report on our performance by comparing it to the other global
growth and global growth and income investment trusts.
Your Board believes we should incentivise management on that same basis. We
propose therefore to change the performance test for our long term incentive
plan to one which will reward performance exceeding the median of our peer
group. This is set out in more detail in the Notice of Annual General Meeting.
I am always struck by the dedication that our employees bring to their work and
this has been particularly evident this year. I would like to thank them warmly
for their efforts. Our new headquarters in Marketgait, Dundee will bring
together teams currently working in different locations in the city and will
improve our operational efficiency, internal communication and teamwork.
Dividend
We have continued to receive a strong flow of earnings from our equity
portfolio during the year and this has enabled us to maintain our longstanding
record of steady increases in the dividend, which has continued for 42
consecutive years. We declared a fourth interim dividend of 2.0p making a total
for the year of 8.0p (2008: 7.9p). In light of exceptional income earned last
year we have also declared a special dividend of 0.5p per share.
Board
Alan Harden, who joined Alliance Trust as Chief Executive in 2004, left the
Board in August when he resigned to take up an external position. David Deards
will stand down as Finance Director after the publication of the accounts. We
thank both of them for their contribution during their time at Alliance Trust
and wish them well for the future.
Annual General Meeting
We will, as always, be holding our Annual General Meeting in Dundee. This
year's meeting will be at the Apex Hotel on Friday 22 May. The meeting is an
excellent opportunity to find out more about the progress of your Company and
to meet members of the management team. I would encourage as many shareholders
as possible to attend.
Chief Executive's Statement
I am delighted to have been appointed to the role of Chief Executive of
Alliance Trust. I am proud to have been given the opportunity to be the ninth
Chief Executive of the Company, and the seventh person who has combined the
role with overall responsibility for management of the Company's investment
portfolio.
Performance Summary
Our priority is to continue to improve investment performance in order to
deliver increased shareholder value.
The Company's relative performance compares favourably to that of global equity
markets over the past 12 months, a period when the global economic and stock
market environment was among the worst in Alliance Trust's long history. In
local currency terms, many equity markets were down 30% to 40%. The Company's
share price fell by 20.7% and the discount to net asset value, whilst volatile
along with market conditions, ended the year at 15.4%, broadly in line with the
previous year end.
Our Total Shareholder Return ranked 11th in our peer group of 42 Global Growth
and Global Growth and Income Investment Trusts over the year. This improved
position compares to a ranking of 25th out of 38 one year ago.
Our long term investment philosophy and the depth of experience of our
investment team have helped to shield the Company's portfolio from the extremes
of equity market turbulence. The enhancements made to our investment process
over the past 18 months and the greater flexibility we deployed in our asset
allocation decision-making have been immediately put to the test. The reach of
the financial crisis and the pace at which it has moved are unprecedented. All
of the asset classes in which we invest have faced very tough trading
conditions.
Economic conditions deteriorated throughout the year and market volatility
increased as the magnitude of the repercussions of the financial crisis became
apparent. In both the US and the UK, financial companies succumbed to the
extreme pressures they were suffering. Rescue packages in the banking and US
insurance sectors were hurriedly arranged in a bid to restore stability and
confidence to global financial markets.
In our Interim Report, we indicated that central banks around the globe were
undertaking a concerted effort to ease the liquidity crisis in money markets.
By late 2008, however, the credit markets remained frozen and economic news was
becoming increasingly grim. By that stage we had already progressively reduced
our equity exposure and as a result increased our net cash balances. Our net
cash peaked at over 21% of net assets in the autumn, the highest cash position
held by the Trust in many years, before being reduced to over 11% of net assets
by the year end.
Within our quoted equity portfolio, we achieved above benchmark index returns
in UK Large Cap, UK Mid Cap, North America and Europe. Foreign dividend income
was boosted by the decline in sterling during the year. Further details of our
asset allocation changes and of our investment activity over the year are given
later in the report.
We have invested a relatively small proportion of our total net assets in other
asset classes. Our quoted private equity portfolio experienced a difficult year
with discounts to net asset values increasing significantly. The UK commercial
property sector suffered from the economic slowdown and the freeze on bank
lending and valuations declined accordingly. We remained very cautious on the
property sector and did not add to our direct property portfolio during the
year. Rental income from our property portfolio increased to £4.2 million
against £4 million last year. Our US mineral interests continued to produce
good revenues, increasing to £2.2 million against £1.6 million, helped by the
high oil price in the first half of the year and the strength of the US dollar
against sterling.
Within our financial services subsidiaries, I am delighted to welcome Robert
Burgess as Managing Director of Alliance Trust Savings. Robert joined the
company on 16 February 2009. He has extensive leadership experience in financial
services. Robert will lead the next phase of Alliance Trust Savings' development
to ensure that it delivers long term value to our shareholders. During the year
client numbers continued to grow, but the fall in interest rates impacted on
income. Clients of Alliance Trust Savings held over 20% of the share capital of
Alliance Trust at the year end.
Alliance Trust Asset Management launched its first funds, the Alliance Trust UK
Equity Income Fund and the Alliance Trust North American Equity Fund, in
February 2009. We proceeded with the launch at that time in full recognition of
the turmoil in the financial markets. We expect Alliance Trust Asset Management
to deliver meaningful returns for shareholders over the medium to long term.
The funds are being managed consistently with the Trust's own assets in each
region and we are encouraged by the positive market response to our initial
proposition.
Business Review
In the second half of the year, against a backdrop of rapidly deteriorating
global economic and market conditions, we undertook a review of all aspects of
the Company's activities. The principal conclusions arising from the review,
together with the actions we have taken, are summarised below.
Our key strategic priority is to focus on equities as our core investments. We
will seek to deliver strong long term performance through investing primarily
in equities, and we will continue to operate on a self-managed basis with a low
cost base and low level of risk. We will retain a modest exposure to other
asset classes where we identify opportunities to provide enhanced returns for
shareholders relative to our core equity investments. We believe that our
private equity capability complements our quoted equity portfolio. Our team
will continue selectively to seek opportunities to invest in quality private
equity funds. Our operating subsidiaries, which together currently form less
than 2% of our total portfolio, must generate returns over the long term which
are at least comparable to those from our other investments.
The creation of a centralised investment team based in Scotland will allow for
a better exchange of ideas between portfolio managers and facilitate the move
towards a more cohesive global equity portfolio. As a result, the investment
management of our Asia-Pacific and Japan portfolios was transferred back to
Scotland in January and the Hong Kong office was closed.
We have undertaken a targeted cost reduction initiative to remove excessive
administration and support costs and to achieve staffing levels consistent with
our more focused business plan. This initiative resulted in the redundancy of
some 40 employees in Dundee, London and Hong Kong, representing 12% of our
workforce. With the exception of Hong Kong, none of these employees were
engaged in the day to day management of our investment portfolio. We expect
that the restructuring costs will be more than offset by the savings made in
the first year.
Outlook
We face considerable challenges over the next few months. Although markets
remain weak, since the year end we have been redeploying cash where we find
quality investments at good value.
In times of crisis equity markets tend to become backward looking, whereas in
normal times, as a discounting mechanism for future earnings and growth
prospects, they look 12-18 months ahead. Many of the leading indicators we
analyse are at all time lows and there are signs that consensus expectations of
corporate earnings are catching up with reality. We are closely monitoring a
number of potential key triggers which will help indicate to us when markets
are entering recovery. These include stability returning to credit markets as
banks start to lend to one another at LIBOR rates closer to official base
rates, early signs of a recovery in the US housing market, a rebound in
consumer confidence and a turnaround in labour markets.
We are committed to increasing value over the long term for our shareholders
and will retain our long term investment focus. We are continuing to refine and
to develop our investment process. We believe that the enhancements we have
made and our flexibility in implementation of asset allocation decisions will
serve us well. We are currently retaining a defensive bias to our portfolio;
however we continue to seek opportunities to commit cash to quality companies
with strong balance sheets, increasing our exposure to global equities to
ensure that we are well positioned for a market recovery.
Our key priorities for 2009 are:
* to focus on investment in equities
* to continue to improve investment performance
* to manage our cost base in line with market conditions
* to develop our subsidiary businesses
* to invest in the development of our people
Asset Allocation
A key priority is to increase the positive effect of our asset allocation.
We have sharpened our asset allocation process by establishing a small team of
experienced individuals who focus on risks and returns from our portfolio,
interacting with our regional investment teams to move capital between asset
classes quickly and effectively.
Core equities represented 77% of our net assets at the year end, compared to
92% 12 months ago. The most important changes in asset allocation implemented
throughout the year were significant disposals across our geographic
portfolios. We have retained our focus on developed economies and have
benefited from our relative lack of exposure to emerging markets which have
fared particularly badly.
Our decision to reduce our equity holdings helped to protect us from the worst
of the market declines of the second half of the year.
We also actively managed our cash balances, primarily for security, initially
by investing in high quality money market funds as well as placing cash on
deposit. We then transferred into short term UK Government Treasury Bills, as
we sought to hold cash in a risk free form.
By December, our market risk assessment concluded that such a large cash
position was no longer appropriate and that we should be taking steps to
capitalise on some of the gains in our relative performance arising from this
prudent decision. Good quality companies with sound fundamentals had fallen in
the general market malaise to levels which we believed represented good medium
to long term opportunities. Returns available on cash had diminished.
Consequently we reinvested £200 million in our equity portfolio, reducing net
cash. We have continued to reinvest more of our cash following the year end.
While recognising the benefits of broad company diversification within our
portfolio, we have continued to focus our equity exposure by investing with
higher conviction in a reduced number of stocks than was historically the case.
We have also reduced our dependency on UK equities. Core UK equities accounted
for 31% of net assets at 31 January 2009 compared to 47% a year ago. We have
created a global equity portfolio which complements our regional portfolios by
deploying capital across equity markets. It draws on the expertise of our
regional managers by using their analysis and research to build a high
conviction portfolio of favoured stocks.
In last year's report, we stated that we had delivered a project to enable us
to make use of derivative instruments. During the year we successfully used
three small derivative instruments, with an aggregate exposure of around £30
million, which partially protected our US portfolio from market risk.
Investment Activity
The common theme we followed across our equity portfolio throughout the year
was risk reduction through reduced exposure to financial companies, banks in
particular, and divestment of cyclical companies, especially those reliant on
consumer spending. Our relative performance benefited from these moves as both
financials and cyclical companies underperformed.
Our focus has been to identify high quality companies with strong balance
sheets and experienced management who have led their business through previous
economic downturns. Market leadership, cash flow generation, pricing power and
the ability to grow dividends are among the key business attributes we look for
in this uncertain environment. We have also focused on our strength of
conviction in corporate earnings estimates. Companies announcing disappointing
results have seen dramatic falls in their share prices. The avoidance of such
negative "surprises" has helped the relative performance in our equity
portfolios. This approach meant that the portfolios adopted a large cap bias
and were defensively positioned.
We have enhanced the risk management information available to our investment
managers over the past year. These measures are highly useful additional tools
but risk management is more than a mathematical exercise: it is not a
substitute for the comprehensive due diligence and common sense approach to
portfolio management which our investment managers have developed through their
many years' experience of investing through different market cycles.
Investment Team
Over the year our focus has been on strengthening our investment team by
recruiting several highly experienced professionals. In addition to members of
our portfolio management team, we have also recruited to enhance our strategy
and asset allocation function.
Our long term perspective has also encouraged us to maintain our annual
graduate recruitment programme despite the weak economic environment. By
undertaking a structured training programme this small group of talented people
can aspire to become key members of our future management team.
Performance of Individual Portfolios for year ending 31 January 2009
Portfolio Performance Performance Relative
Benchmark Return
(sterling) (sterling) (%)
(%) (%)
UK (Large) (23.3) (26.4) 4.2
UK (Mid) (26.9) (34.3) 11.2
North America (1.2) (16.1) 17.8
Europe (17.7) (26.1) 11.3
Asia Pacific ex Japan (33.0) (31.3) (2.5)
Japan (3.0) (2.7) (0.3)
Global (since inception 3.7 0.9 2.8
December 2008)
Risk Factors
Alliance Trust has in place a risk management framework designed to ensure that
the risks inherent within the business are adequately assessed and monitored.
No business is without risk. This section explains our risk management
structure and highlights the main risks that we believe could impact on the
performance of the business.
Risk Management Structure
The Risk Management Committee comprises the Executive Director responsible for
Risk, the Head of Risk and various other senior managers representing legal,
investment, compliance, group projects, as well as representatives of Alliance
Trust Savings and Alliance Trust Asset Management.
The risk management framework categorises risk under four broad headings;
investment risk, operational risk, business risk and liquidity risk.
Investment Risk
This risk, which includes credit risk, concerns mainly the decisions being
taken over the investment of funds in different asset classes, and within the
different portfolios. During 2008 the Board created the Asset Allocation
Committee to replace the Asset, Liability and Income Committee. The purpose of
the Committee is to manage the allocation of the capital of the Company between
and among the asset classes approved by the Board and within the risk
parameters, policies and other limits and guidelines set by the Board from time
to time and with a view to the income derived from the Company's assets.
The committee's responsibilities include: asset allocation, cash and currency
management, risk management and allocation of the capital of the Company to
ensure adherence to the dividend policy set by the Board. Individual managers
are responsible for assessing the risks associated with each investment that
they make.
A Board approved derivatives policy is in place which formulates the basis
under which these financial instruments can be used. Derivatives may be used by
the Company to reduce the potential of loss or to enhance our ability to change
investments quickly. The use of such investments is centrally controlled.
Gearing risk also falls under this category. The risk here is that the value of
investments made with money which is borrowed does not increase sufficiently to
cover the borrowing and interest costs resulting in a loss. The Company intends
only to use gearing tactically where it identifies opportunities which will
provide a return, whilst at the same time managing the risk. The level of
gearing which may be used is set by the Board and the use of gearing is decided
by the Asset Allocation Committee.
Operational Risk
This is the risk of inadequate or failed processes or systems. The main
potential risk here is a failure of our systems for holding or administering
investments.
We have introduced enhanced management and oversight within investments,
including updates to the investment management process and associated standards
and procedures.
Our project framework ensures that we focus activity on those areas identified
as presenting our greatest potential risk exposure.
We look actively at data security and in the course of the year introduced a
new Information Security policy.
Business Risk
This risk category includes external factors such as changes in the political,
economic and regulatory environment as well as the risks arising from our
businesses and products, strategic acquisitions or business diversification.
The effect of legislation on the operation of our financial services
subsidiaries is high. We have a number of specialist staff to ensure compliance
with the legal and regulatory strictures affecting our operations.
Liquidity Risk
This risk category relates to the level of liquid funds, whether in cash or
easily realisable assets, that we keep to satisfy obligations for payments that
may arise. Our cash position is monitored daily across the organisation with
surplus funds invested to earn interest. The economic turbulence in the course
of the year exposed a number of weaknesses in the market which impacted on the
ability of some companies to obtain credit. The Company continues to be able to
secure funding when required from major banks at competitive rates.
Regulated Subsidiaries
The foregoing risks also apply to our regulated subsidiaries.
Within Alliance Trust Savings we have reviewed our operating processes and
introduced initiatives to enhance the effectiveness of our operations.
The programme to set up and launch Alliance Trust Asset Management was
undertaken within the project management framework.
Further information on financial instruments and risk as required by IFRS7 can
be found on pages 80 to 85 of the Report and Accounts.
Consolidated Income Statement
For the year ended 31 January 2009
2009 2008
£000 Revenue Capital Total Revenue Capital Total
Revenue
Income 117,283 - 117,283 102,199 - 102,199
Loss on fair value - (551,495) (551,495) - (118,889) (118,889)
designated
investments
Loss on investment - (23,832) (23,832) - (11,820) (11,820)
property held
-------- --------- --------- -------- -------- ---------
Total revenue 117,283 (575,327) (458,044) 102,199 (130,709) (28,510)
Administrative (40,069) (1,981) (42,050) (38,114) (1,234) (39,348)
expenses
Finance costs (4,322) (3,053) (7,375) (5,727) (2,681) (8,408)
Impairment Losses (1,759) (9,074) (10,833) - - -
Loss on revaluation - (6,786) (6,786) - - -
of office premises
Foreign exchange (271) 8,221 7,950 28 1,786 1,814
(losses)/gains
-------- --------- ------------ -------- --------- ---------
Profit/(loss) before 70,862 (588,000) (517,138) 58,386 (132,838) (74,452)
tax
Tax (10,552) 3,627 (6,925) (3,052) 274 (2,778)
-------- -------- -------- -------- -------- --------
Profit/(loss) for the 60,310 (584,373) (524,063) 55,334 (132,564) (77,230)
period
======== ======== ======== ======== ======== ========
Attributable to:
- Minority interest 1 (866) (865) (10) (658) (668)
- Equity holders of 60,309 (583,507) (523,198) 55,344 (131,906) (76,562)
the parent
-------- -------- -------- -------- -------- --------
60,310 (584,373) (524,063) 55,334 (132,564) (77,230)
======== ======== ======== ======== ======== ========
Earnings/(loss) per
share from continuing
operations
attributable to
equity holders of the
parent
Basic (p per share) 9.00 (87.06) (78.06) 8.25 (19.65) (11.40)
Diluted (p per share) 8.98 (87.06) (78.08) 8.24 (19.65) (11.41)
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
2009 2008
£000 Revenue Capital Total Revenue Capital Total
Income and expenses
recognised directly in
equity:
Defined benefit plan net - (3,282) (3,282) - 1,404 1,404
actuarial (loss)/ gain
Retirement benefit - 891 891 - (399) (399)
obligations deferred tax
Loss on revaluation of - (425) (425) - - -
office premises
Exchange differences on - 984 984 - - -
translation of foreign
subsidiary
Profit/(loss) for the 60,310 (584,373) (524,063) 55,334 (132,564) (77,230)
period
======= ======== ======== ======= ======== ========
Total recognised income 60,310 (586,205) (525,895) 55,334 (131,559) (76,225)
and expense for the period
Attributable to:
- Minority interest 1 (866) (865) (10) (658) (668)
- Equity holders of the 60,309 (585,339) (525,030) 55,344 (130,901) (75,557)
parent
======= ======== ======== ======= ======== ========
60,310 (586,205) (525,895) 55,334 (131,559) (76,225)
COMPANY INCOME STATEMENT
For the year ended 31 January 2009
2009 2008
£000 Revenue Capital Total Revenue Capital Total
Revenue
Income 95,299 - 95,299 82,620 - 82,620
Loss on fair value - (560,066) (560,066) - (127,520) (127,520)
designated
investments
Loss on investment - (23,832) (23,832) - (11,820) (11,820)
property held
-------- -------- -------- -------- -------- --------
Total revenue 95,299 (583,898) (488,599) 82,620 (139,340) (56,720)
Administrative (15,168) (1,632) (16,800) (14,092) (935) (15,027)
expenses
Finance costs (1,543) (3,053) (4,596) (1,354) (2,681) (4,035)
Loss on revaluation - (6,786) (6,786) - - -
of office premises
Foreign exchange - 8,221 8,221 - 1,786 1,786
gains
-------- -------- -------- -------- -------- --------
Profit/(loss) before 78,588 (587,148) (508,560) 67,174 (141,170) (73,996)
tax
Tax (9,094) 1,255 (7,839) (5,648) 274 (5,374)
-------- -------- -------- -------- -------- --------
Profit/(loss) for 69,494 (585,893) (516,399) 61,526 (140,896) (79,370)
the period
-------- -------- -------- -------- -------- --------
Attributable to:
Equity shareholders 69,494 (585,893) (516,399) 61,526 (140,896) (79,370)
Earnings/(loss) per
share from
continuing
operations
attributable to
equity shareholders
Basic (p per share) 10.37 (87.42) (77.05) 9.17 (20.99) (11.82)
Diluted (p per 10.34 (87.42) (77.08) 9.16 (20.99) (11.83)
share)
COMPANY STATEMENT OF RECOGNISED INCOME AND EXPENSE
2009 2008
£000 Revenue Capital Total Revenue Capital Total
Income and expenses
recognised directly in
equity:
Defined benefit plan net - (3,282) (3,282) - 1,404 1,404
actuarial (loss)/ gain
Retirement benefit - 891 891 - (399) (399)
obligations deferred tax
Loss on revaluation of - (425) (425) - - -
office premises
Profit/(loss) for the 69,494 (585,893) (516,399) 61,526 (140,896) (79,370)
period
======= ======== ======== ======= ======== ========
Total recognised income 69,494 (588,709) (519,215) 61,526 (139,891) (78,365)
and expense for the period
Attributable to:
- Equity shareholders 69,494 (588,709) (519,215) 61,526 (139,891) (78,365)
BALANCE SHEETS
As at 31 January 2009 GROUP GROUP COMPANY COMPANY
£000 2009 2008 2009 2008
Non-current assets
Investments held at 1,820,763 2,729,397 1,841,092 2,741,812
fair value
Investment property 56,335 80,100 56,335 80,100
Property, plant and
equipment:
Office premises 6,375 3,884 6,375 3,884
Other fixed assets 8 36 6 5
Intangible assets 5,251 16,763 1,123 1,474
Retirement benefit - 1,617 - 1,617
surplus
---------- ---------- ---------- ----------
1,888,732 2,831,797 1,904,931 2,828,892
Current assets
Other receivables 17,531 48,171 8,615 33,492
Withholding tax 840 1,013 840 1,013
debtor
Corporation tax 227 875 - 500
debtor
Cash and cash 507,033 227,653 297,046 30,328
equivalents
---------- ---------- ---------- ----------
525,631 277,712 306,501 65,333
Total assets 2,414,363 3,109,509 2,211,432 2,894,225
Current liabilities
Other payables (231,108) (236,796) (36,342) (33,738)
Tax payable (1,595) - (527) (2,379)
Bank overdrafts and (50,000) (159,000) (50,000) (159,000)
loans
---------- ---------- ---------- ----------
(282,703) (395,796) (86,869) (195,117)
Total assets less 2,131,660 2,713,713 2,124,563 2,699,108
current liabilities
Non-current
liabilities
Deferred tax (381) (1,546) (407) (168)
liabilities
Pension scheme (1,565) - (1,565) -
deficit
---------- ---------- ---------- ----------
Net assets 2,129,714 2,712,167 2,122,591 2,698,940
Equity
Share capital 16,798 16,798 16,798 16,798
Capital reserves 1,378,674 1,966,300 1,372,536 1,962,892
Translation reserve 984 - - -
Merger reserve 645,335 645,335 645,335 645,335
Revaluation reserve 183 608 183 608
Capital redemption 2,200 2,200 2,200 2,200
reserve
Revenue reserves 78,806 73,550 85,539 71,107
--------- ---------- ---------- ----------
Equity attributable 2,122,980 2,704,791 2,122,591 2,698,940
to equity holders of
the parent
Minority interest 6,734 7,376 - -
Total equity 2,129,714 2,712,167 2,122,591 2,698,940
Net Asset Value per
ordinary share
attributable to
equity holders of the
parent
Basic (£) £3.17 £4.03 £3.17 £4.02
Diluted (£) £3.16 £4.03 £3.16 £4.02
CASH FLOW STATEMENT
For the year ended 31 January 2009
GROUP GROUP COMPANY COMPANY
£000 2009 2008 2009 2008
Cash flows from
operating activities
Loss before tax (517,138) (74,452) (508,560) (73,996)
Adjustments for:
Losses on investments 575,327 130,709 583,898 139,340
Foreign exchange gains (7,950) (1,814) (8,221) (1,786)
Scrip dividends (590) (311) (590) (311)
Depreciation 71 45 9 9
Amortisation of 1,734 1,562 392 391
intangibles
Impairment losses 10,833 - - -
Loss on revaluation of 6,786 - 6,786 -
office premises
Share based payment 742 885 389 563
expense
Interest 7,375 8,408 4,596 4,035
--------- --------- --------- ---------
Operating cash flows 77,190 65,032 78,699 68,245
before movements in
working capital
Increase in amounts due 5,963 50,526 - -
to depositors
Decrease/(increase) in 9,948 358 523 (34)
receivables
(Decrease)/increase in (15,510) 10,613 2,744 2,296
payables
--------- --------- --------- ---------
Net cash flow from 77,591 126,529 81,966 70,507
operating activities
before income taxes
Taxes paid (4,784) (3,594) (7,888) (5,641)
--------- --------- --------- ---------
Net cash inflow from 72,807 122,935 74,078 64,866
operating activities
========= ========= ========= =========
Cash flows from
investing activities
Proceeds on disposal of 1,644,311 1,382,985 1,641,725 1,382,985
fair value through
profit and loss
investments
Purchases of fair value (1,272,384) (1,690,930) (1,288,772) (1,699,837)
through profit and loss
investments
Purchase of investment - (24,775) - (24,775)
properties
Purchase of plant and (43) (49) (10) -
equipment
Purchase of intangible (1,055) (570) (41) (351)
assets
Purchases in respect of (9,702) (2,984) (9,702) (2,984)
new head office
--------- --------- --------- ---------
Net cash inflow/ 361,127 (336,323) 343,200 (344,962)
(outflow) from investing
activities
========= ========= ========= =========
Cash flows from
financing activities
Dividends paid - Equity (41,534) (51,334) (41,534) (51,334)
Purchase of own shares (2,587) (3,640) (2,587) (3,640)
New bank loans raised - 159,000 - 159,000
Repayment of borrowing (109,000) (5,188) (109,000) -
Minority interest 223 2,226 - -
investment in PATIF*
Interest payable (9,606) (8,408) (5,660) (4,035)
--------- --------- --------- ---------
Net cash (outflow)/ (162,504) 92,656 (158,781) 99,991
inflow from financing
activities
Net increase/(decrease) 271,430 (120,732) 258,497 (180,105)
in cash and cash
equivalents
Cash and cash 227,653 346,571 30,328 208,647
equivalents at beginning
of period
Effect of foreign 7,950 1,814 8,221 1,786
exchange rate changes
--------- --------- --------- ---------
Cash and cash 507,033 227,653 297,046 30,328
equivalents at end of
period
========= ========= ========= =========
* Premier Alliance Trust Investment Funds
The income statement is the profit and loss account of the Company and the
Group.
The financial information set out above does not constitute the Company's or
Group's statutory accounts for the years ended 31 January 2009 or 2008 but is
derived from those accounts.
Statutory accounts for 2008 have been delivered to the Registrar of Companies
and those for 2009 will be delivered following the Company's Annual General
Meeting. The auditor has reported on those accounts. The report was
unqualified.
Notes to the Financial Statements
1. Revenue
GROUP COMPANY
£000 2009 2008 2009 2008
Income from investments*
Listed dividends- UK 50,878 46,851 49,784 45,362
Unlisted dividends- UK 24 - 24 -
Listed - - 518 401
dividends-subsidiaries
Unlisted dividends- - - - 1,000
subsidiaries
Listed dividends- overseas 28,273 25,109 26,832 24,903
Unlisted dividends- 37 23 37 23
overseas
Interest on fixed income 413 741 203 -
securities
Scrip dividends 590 311 590 311
--------- -------- -------- --------
80,215 73,035 77,988 72,000
--------- -------- -------- --------
Other income
Property income 4,197 4,016 4,197 4,016
Mineral rights income 2,170 1,633 2,170 1,633
Deposit interest 16,189 14,184 5,992 4,968
Other interest 4,363 - 4,363 -
Savings and pension plan 8,773 8,288 - -
charges
Other income 1,376 1,043 589 3
-------- -------- ------- -------
37,068 29,164 17,311 10,620
-------- -------- ------- -------
Total Income 117,283 102,199 95,299 82,620
-------- -------- ------- -------
Investment income
comprises
Listed UK 50,878 46,851 50,302 45,763
Listed Overseas 28,273 25,109 26,832 24,903
Unlisted 61 23 61 1,023
Other 1,003 1,052 793 311
------- ------- ------- -------
80,215 73,035 77,988 72,000
------- ------- ------- -------
* Designated at fair value through profit and loss on initial recognition
2. Expenses comprise £16,800,000 (£15,027,000) incurred by the Company, and
£25,250,000 (£24,321,000) incurred by subsidiary companies. Taking guidance from
the Statement of Recommended Practice "Financial Statements of Investment Trust
Companies and Venture Capital Trusts" the cost of the Senior Management Equity
Incentive Plan and Long Term Incentive Plan deemed to be related to the capital
performance of the Company has been treated as a capital expense of £1,632,000
(£935,000).
3. The diluted earnings per share is calculated using the weighted average
number of ordinary shares, which is arrived at by taking account of 1,842,670
(1,108,624) ordinary shares acquired by the Trustee of the Employee Benefit
Trust ("EBT") with funds provided by the Company. The basic earnings per share
is calculated by adding back these shares.
The Net Asset Value per share excludes, for the purpose of these disclosures,
the 1,842,670 (1,108,624) ordinary share acquired by the Trustee of the EBT
with funds provided by the Company.
4. All expenses are accounted for on an accruals basis. In respect of the
analysis between revenue and capital items presented within the income
statement, all expenses have been presented as revenue items except as follows:
- Expenses which are incidental to the acquisition of an investment are
included within the cost of that investment.
- Expenses which are incidental to the disposal of an investment are deducted
from the disposal proceeds of the investment.
- The Directors have determined to allocate annual bonus and Senior Management
Equity Incentive Plan costs which relate to the achievement of investment
manager performance objectives and total stockholder return performance
objectives against capital profits and those that relate to the achievement of
job performance objectives against revenue profits.
- The Directors have determined to allocate two thirds of the cost of bank
indebtedness incurred to finance investment against capital profits with the
balance being allocated against revenue profits.
Number of Issued Shares
Ordinary Shares of 2.5p 671,909,760
Posting Arrangements
The Report and Accounts will be posted to shareholders on Wednesday, 22 April
2009 and will be available on the Company's website www.alliancetrust.co.uk on
Thursday 23 April 2009. It will also be made available to the public at the
Company's registered office, Meadow House, 64 Reform Street, Dundee DD1 1TJ and
at the offices of the Company's Registrar, Computershare Investor Services PLC,
Lochside House, 7 Lochside Avenue, Edinburgh Park, Edinburgh EH12 9DJ on and
after Thursday 23 April 2009.
Annual General Meeting
The Company's Annual General Meeting will be held on Friday, 22 May 2009 at
11.00 am at the Apex City Quay Hotel, Dundee.
In addition to the full annual report, up-to-date performance data, details of
new initiatives and other information about the Company can be found on the
Company's website.
Directors' Responsibility Statement
We confirm that to the best of our knowledge:
• the financial statements, prepared in accordance with the applicable set of
accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company and the undertakings
included in the consolidation taken as a whole; and
• the Directors' report includes a fair review of the development and
performance of the business and the position of the Company and the
undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they face.
Lesley Knox Katherine Garrett-Cox
Chairman Chief Executive
17 April 2009 17 April 2009
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