Half-yearly Report
Alliance Trust - Interim Results for the six months ended 31 July 2009
Highlights
Over the last six months Alliance Trust has:
* reiterated the focus on investment in equities by reducing cash and
increasing core equities exposure to 89% of net assets, adhering to its
long term conviction-based investment approach
* increased exposure to the UK, US and Asia
* increased Net Asset Value by 6.8%
* achieved total shareholder return of 8.8%
* ranked 36th of 44 Global Growth and Global Growth and Income Investment
Trusts for total shareholder return
Over the longer-term one year view, Alliance Trust has:
* delivered a total shareholder return which has outperformed both the Global
Growth Sector and the FTSE All-World Index
* ranked 16th of 44 Global Growth and Global Growth and Income Investment
Trusts for total shareholder return
Progressive dividend
* maintained progressive dividend policy and raised the payment by 1.25%
compared to the first half of 2008, at a time when over 40% of FTSE 100
companies have cut or held their dividend
* two further payments of 2.025p will be paid by the year end - intention is
to pay a final dividend of at least 2.025p in April 2010.
Discount to net asset value stabilised, ending the period at 15.2%
Commenting on the interim results, Katherine Garrett-Cox, Chief Executive,
said:
"Over the last six months, we have continued to deliver on our stated strategy
of investing in a balanced portfolio of well-managed quality companies with
strong balance sheets and a proven track record. During the period we have
steadily reinvested our cash position, ending the period modestly geared. We
look for a combination of capital growth and income from our investments - our
policy is to invest in companies and not share prices. This policy is helping
us to deliver a progressive dividend to our shareholders.
Looking forward, we expect the recovery of the global economy to be a long
process, but we strongly believe that with our long term conviction-based
investment approach, Alliance Trust is well-positioned to continue to deliver
superior returns to investors."
Contact Details:
Conor McClafferty and Clare Dundas, Finsbury Group, 020 7251 3801
Alliance Trust PLC
INTERIM REPORT FOR THE SIX MONTHS ENDED 31 JULY 2009
Statement of Investment Objective and Policy
Alliance Trust is a self-managed investment company with investment trust
status. Our objective is to be a core investment for investors seeking
increasing value over the long term.
We have no fixed asset allocation benchmark and we invest in a wide range of
asset classes throughout the world to achieve our objective. Our focus is to
generate a real return for shareholders over the medium to long term by a
combination of capital growth and a rising dividend.
We pursue our objective by:
• Investing in both quoted and unquoted equities across the globe in different
sectors and industries;
• Investing internationally in fixed income securities;
• Investing in other asset classes and financial instruments, either directly
or through investment vehicles; and
• Investing in subsidiaries and associated businesses which allow us to expand
into other related activities.
We are prepared to invest any proportion of the total corporate capital in any
of the above asset classes, subject only to the restrictions imposed on us by
the regulatory or fiscal regime within which we operate. However, we would
expect equities to comprise at least 50% of our portfolio. Changes to the asset
allocation will be dependent upon attractive investment opportunities being
available.
Where market conditions permit, we will use gearing of not more than 30% of our
net assets at any given time.
We can use derivative instruments to hedge, enhance and protect positions,
including currency exposures.
Company Statistics 31 July 31 January Change
2009 2009
Net Asset Value (basic) 338.3p 316.8p 6.8%
Net Asset Value 337.4p 315.9p 6.8%
(diluted)
Share Price* 286.8p 268.0p 7.0%
Discount to basic Net 15.2% 15.4%
Asset Value
Performance for 6 Capital Total
months to 31 July 2009 Return
Share Price 7.0% 8.8%
FTSE All-Share Index 13.2% 16.1%
FTSE All-World Index 12.1% 4.2%
(sterling adjusted)
Performance Relative to
Peer Group to 31 July 2009 (Total Return) **
6 months 1 year 3 years 5 years
Ranking*** 36/44 16/44 24/37 24/34
*Source: FactSet
** The peer group consists of the companies in the AIC Global Growth and Global
Growth and Income sectors and is listed in full in our annual report and
accounts for 2009. F&C Managed Portfolio - Growth and F&C Managed Portfolio -
Income were added to the peer group in the period.
*** Source: Thomson Financial, Fundamental Data, AIC and Cazenove
Performance Summary
This interim report sets out the results of Alliance Trust PLC for the six
months ended 31 July 2009.
Over the past six months the Company's basic net asset value per share
increased by 6.8%. The Total Shareholder Return (TSR) was 8.8% over the period.
The discount to net asset value was much more stable than in the preceding
six months ending at 15.2%, broadly in line with the discount at the start of
the financial year. The return for the period compares to a total return of
14.2% on the FTSE All-World Index.
The TSR is ranked at 16 out of a peer group of 44 Global Growth and Global
Growth and Income Investment Trusts over the last twelve months but has fallen
to 36 out of 44 when measured over the last six months. This reflects our
reluctance to commit aggressively shareholders' capital in a period of rapid,
but in many cases narrowly based, recovery in equity markets.
The last six months have been marked by an extreme rally in world markets which
during March and April saw increases of up to 30%. These increases for the most
part reflected changes in the share price of companies that had experienced the
greatest falls in the previous twelve months. We believe that in some cases
there has been no fundamental change to these companies and that the increase
in their share price is not necessarily reflective of any improvement in their
underlying value.
Our investment philosophy is to focus on well-managed quality companies with
strong balance sheets and cashflow generation. Our selective approach in
investing only in companies which meet these criteria means that each portfolio
has a relatively small number of stocks in which we have a high level of
conviction. We firmly believe that this investment strategy will provide
greater value and lower risk for our shareholders over the long term.
We reinvested cash into stock markets in the early part of the year, increasing
our holdings in companies which fit our core philosophy. These are not the
type of companies which rallied so strongly at the start of the recovery. When
combined with our holdings of non-equity investments, this has meant that
during the period we have lost some ground against both the FTSE All-World
Index and our peers, although our performance since the main rally in March and
April has been broadly in line with the major indices.
We have allocated cash back into the UK and Asian markets and both these areas
have outperformed the FTSE All-World Index. In the UK we invested for income to
protect our dividend and in Asia for capital growth.
Over 40% of FTSE 100 companies have cut or held their dividend payments in the
last 12 months. We believe that our portfolio is structured to support a continued
and progressive dividend for the year to 31 January 2010.
In our Annual Report and Accounts we set three corporate targets and five key
priorities for the year. After six months, progress towards these is as
follows.
Corporate Targets
% Change in Net Asset Value relative to FTSE All-World Index
During the first six months we underperformed the index. Over the longer 1 year
view we have also underperformed. Much of this is attributable to being
underinvested in the stocks which recovered so sharply in March and April 2009.
TSR Rank vs Peer Group above median
Our share price performance has lagged the peer group and we are ranked in the
4th quartile over the first 6 months of the year. Over the longer 1 year view,
we are ranked 16th out of 44, which places the Company in the 2nd quartile.
Dividend Increase in excess of RPI
The two quarterly dividends paid for this year represent an increase of 1.25%
on the amounts paid for the same period last year and we intend to make two
further payments of at least 2.025p. Currently we have an earnings reserve of
over £92 million. We expect to achieve this target.
Key Priorities
To focus on investment in equities
Core equities represented 89% of net assets at 31 July 2009 compared to 77% at
the start of the period as we steadily allocated cash into our global equity
portfolios. With regard to other asset classes, our exposure to Private Equity,
Preference Stocks and Commercial Property was largely unchanged.
To continue to improve investment performance
There has been an improvement in our absolute performance compared to the first
six months of last year, albeit our return has been lower than the average of
our peer group.
To manage our cost base in line with market conditions
As a self-managed investment trust, we are acutely aware of the need to manage
the cost base of the Company. We have continued to apply tight control over
costs, making tough short term decisions which will deliver significant savings
in the longer term, only increasing expenditure where we believe it will
enhance our investment capability. Expenditure in the six month period was less
than for the equivalent period last year.
To develop our subsidiary businesses
Despite the constraints of our budgetary controls, we have managed to
strengthen the skills of our management team and have recruited key personnel
who will assist in the development of our subsidiary businesses.
To invest in the development of our people
Having relocated to our new headquarters in Dundee, we have seen significantly
improved communication within the business and this has, in turn, led to
improved efficiency.
Investment Overview
In the early part of the year stock markets were weak as the global outlook
was dominated by concerns over the length and depth of economic recession and
whether the policy responses of governments would be effective, thereby
preventing recession turning into depression. In February we identified a
number of good quality investments and invested some £110 million into the
market, increasing our equity exposure from 77% to 81%.
In March, we saw a very sudden change occur in investor sentiment. Share prices
of certain companies rose strongly and quickly from depressed levels, as stock
markets began to reflect the belief that the pace of economic decline was
slowing. We elected to remain consistent to our long term approach, continuing
to invest only in companies which we believe are strong and will generate both
sustainable capital growth and income rather than just short term gains. Our
performance benefited last year from not holding the weakest of the UK banking
stocks, but lagged through the middle of the period by not participating in the
dramatic share price rally in these same stocks. We remain of the view that
such stocks do not represent good long term value. These companies have, in
many instances, experienced substantial dividend cuts and do not meet our core
requirement for a strong recurring dividend payment. In general, we have placed
great emphasis on the sustainability of dividends in our investment decisions,
conscious of the market expectation that UK dividends will decline by around
20% in 2009.
Our cautious view of the speed of economic recovery also led to our being
underweight in mining and consumer goods, both of which performed well over the
period. Gradually, we have altered the bias in our regional equity portfolios
towards a more balanced approach, through the addition of some cyclical stocks
in areas where we expect to see early benefits emerging from a sustainable,
long term recovery.
Asset Allocation
% of net % of net
assets assets
January 2009 July 2009
UK 31.4 34.8
North America 19.7 20.3
Europe 9.2 9.7
Pan Asia 7.3 12.1
Global 9.4 12.4
Direct Property 3.2 2.7
Private Equity 2.6 2.9
Other investments 3.8 3.0
Preference Shares 0.8 1.0
Subsidiaries 1.7 1.6
Cash & Other Net Assets 10.9 (0.5)
Asset Allocation
Reflecting our belief in the strength of the Asian markets we committed an
additional £80 million to that region. We believe that Asia does not share the
fiscal problems of many developed economies. Asia's future expansion will not
be hampered by the large government debt burden faced by other economies. Our
Asian investments performed very strongly, their 28% rise in Sterling terms
representing the highest absolute return among our regional portfolios. We also
added to our Global, UK and North American portfolios, all of which showed
positive returns.
Active decisions on currencies are taken as part of our asset allocation
process as currency moves can significantly impact on our investment
performance. Our decision to hedge part of our European exposure at a Sterling/
Euro exchange rate of 1.12 in April, based on our forecast of a depreciating
Euro, proved a timely move with the Euro standing at 1.17 at the period end.
Cash stood at just over 11% of net assets at the start of the period, but by 31
July 2009 we were fully invested and had moved to a position of net gearing of
1%. The high cash position held last year helped to protect the portfolio at
that time. However, as a global equity focused investment trust, we recognised
that this did not represent a sustainable, or indeed a low risk, position
for the long term. Cash returns remain at historically low levels. We partially
invested the cash into long term positions in quality investments ahead of the
rally which started in March. In July we also added further to income
generating UK holdings. We have the capability and willingness to increase
gearing further when we believe such a move is warranted by market prospects.
Equity Portfolio Statistics
From 31 January 2009 to 31 July 2009
Net Portfolio Benchmark Index Relative
Assets% Return% Return% Return%
UK 34.8 9.2 16.2 (6.0)
North 20.3 5.3 8.1 (2.6)
America
Europe ex UK 9.7 16.4 18.0 (1.3)
Pan Asia 12.1 28.3 36.2 (5.8)
Global 12.4 8.3 14.2 (5.2)
Equity Investment
We invested £80 million into our UK equity portfolio during the period in order
to support our commitment to a progressive dividend. We have in addition
rationalised the number of our UK holdings by combining the former UK Large Cap
and UK Mid Cap portfolios to create a single UK portfolio. Primarily, we have
reduced our number of Mid Cap holdings and created a more balanced portfolio,
retaining a bias towards companies with defensive characteristics, but with
exposure to some cyclical stocks where we can anticipate an improvement in
demand and have a degree of confidence in visibility of earnings. Holdings in
the banking group HSBC, which should benefit from its growth prospects in Asian
markets, and mining companies BHP Billiton and Xstrata are representative of
this theme.
The UK economy has experienced its sharpest contraction of the post-war period.
Having reduced interest rates to record lows, the government has initiated a
programme of quantitative easing in a bid to stimulate activity. This appears
to be having short term success in stabilising the financial system but
exacerbates concerns over the scale of government debt in the medium term. Many
UK companies, however, generate a large proportion of their earnings in
overseas markets which will help protect them from the weakness of the UK
economy.
Bank lending remains tight and asset sales are unattractive at current prices.
There have been a large number of rights issues and share placements by UK
companies over the period. We participated in a few of these rights issues
including the property investment and development company Great Portland
Estates. Underwriting commission was also beneficial to our revenue account.
Further equity issuance is likely as companies seek to strengthen their balance
sheets.
Following two years of very strong relative outperformance, our North American
portfolio lagged the benchmark index by 2.6% as higher risk companies, to which
we have little exposure, benefited most in the market recovery. Portfolio
activity was limited through the period. Our main energy-related investments,
InterOil and Petro-Canada, which has now merged with Suncor Energy, performed
well. We increased our holding in the waste disposal company, Republic
Services, which also performed strongly. Our financial holdings are biased
towards strong defensively positioned banks; these have performed poorly
against the strong rally in more highly leveraged banking stocks.
The unprecedented expansion of the Federal balance sheet has enabled credit
markets to ease from their state of extreme stress. Banks have managed to raise
fresh capital and, in some cases, have repaid money received from the
government's emergency support programme. Investors have been encouraged by the
belief that the worst of the financial crisis is past, even if economic
fragility persists. Much of the recovery from market lows, however, has been
eroded for Sterling investors by the relative strength of Sterling against the
US Dollar.
We have adopted a less defensive stance in our European portfolio, having
increased our weighting in the financial sector by adding to our holdings in
BNP Paribas and AXA. We have also initiated a holding in Zurich Insurance. We
consider these to be higher quality companies where valuations had fallen to
attractive levels. We remain cautious on the longer term outlook for
industrials where we consider valuations to be less appealing.
Expectations that European economies would fare better than those of the US and
the UK were dashed at the start of this year. Germany, in particular, saw a
collapse in its exports which had a knock-on effect on other European
economies. Governments were, however, proactive in introducing stimulus
measures such as car scrappage schemes. Although unemployment rates in some
countries reached exceptionally high levels, such as Spain at 18%, Germany was
less affected as its government introduced financial support for `short term
working'. Recent indications show that such measures are helping to bring
stability to economies, albeit at lower levels.
We have combined our Asia Pacific and Japan investment teams into a Pan Asian
capability. We took the opportunity to increase significantly our exposure to
Pan Asian equities as we believe that economic growth in this region will be
stronger than other major economies. We invested an additional £80 million in
the region, focusing on China, India and Indonesia. Our weighting stood at 12%
at 31 July against 7% at the previous year end. We added to holdings in
financials and consumer goods and in infrastructure companies in China. China's
large domestic stimulus package has offset the impact of declining export
demand. We have invested in high quality companies such as China Shenhua
Energy, the largest coal mining company in China. Our holding in Hon Hai
Precision, the largest electronics manufacturing services company in the world,
is benefiting from better than expected worldwide demand for computers.
The domestic economy in Japan is suffering as deflation has become entrenched.
Export companies are, however, benefiting from growth in Asian markets. We
increased our Japanese investments in the belief that industrial companies
would gain as manufacturing recovers. In Japan, we hold NIDEC Corporation, a
maker of precision motors and SUMCO Corporation which produces silicon wafers
for the semiconductor industry. We expect the slowdown in Asian economies to
bottom in 2009 and are optimistic on the outlook for the Pan Asia region.
The composition of our Global Equity portfolio accentuates the broader
investment team's highest conviction ideas on a globally diversified basis. The
portfolio now reflects expectations of an improvement in the economic
environment. This is likely to be driven by a degree of stability returning to
the financial system and industrial production recovering as Government
stimulus programs generate demand through infrastructure related projects.
The portfolio's exposure to oil and gas exploration has been increased given
the continued expectation of supply constraint over the medium term. Utility
weightings have been reduced as the regulatory environment has proved more
stringent.
Other Asset Classes
Our quoted Private Equity holdings experienced strong performance as discounts
to net asset values narrowed. Among the best performers were 3i, Electra and
Standard Life European Private Equity. We have not added significantly to our
commitment to lower to mid market private equity managers. We continue to
consider new pan-European fund opportunities but maintain a cautious outlook
while reducing our quoted private equity exposure.
The capital value of the Preference Stock portfolio increased by 20% from £13.7
million to £16.4 million over the past six months, as the UK financial sector
rose strongly from its depressed levels. The annual income yield on the
portfolio remains attractive at more than 9%.
We are delighted to have announced, after the period end, the appointment of a
new Fixed Income team of four highly experienced fixed income managers from
Scottish Widows Investment Partnership. In the present challenging environment,
the addition of fixed income expertise will provide greater flexibility in our
asset allocation, enhance the income earning potential of our portfolio and
help reduce our reliance on equity investments for income. The team will join
the Company in early 2010.
The value of our Commercial Property portfolio fell by 8.2% to £51.7 million
over the past six months. Gross rental income amounted to £2.0 million: currently
all properties are currently fully let. Our intention is to reduce our exposure to
this asset class, as and when disposals at realistic market valuations can be
achieved.
Financial Services Subsidiaries
Within Alliance Trust Savings, a rigorous programme of service and
administration improvements has been undertaken under the leadership of its new
Chief Executive, Robert Burgess. We are pleased to report that significant
progress has been made. Customer numbers and assets under administration remain
largely flat despite the market falls. The loss during the period largely reflects
the impact of the current low interest rate environment on the revenues of the
business.
Alliance Trust Asset Management launched its first two funds in February.
Initial market reaction has been encouraging but significant progress will take
time in this very competitive market. The two funds enable investors to access
directly the expertise of the Trust's UK and North American equity teams. The
North American Equity Fund has been awarded an "A" rating by Old Broad Street
Research, one of the UK's most influential fund rating agencies.
Outlook
Twelve months on from the events that led to the financial market crisis of
late 2008 it is a good time to look at the current state of the global economy
and the outlook for 2010. Several of the leading economic indicators which we
monitor closely are showing encouraging signs of recovery and we are more
optimistic on the prospects for the global economy than we were earlier in the
year. Confidence indicators are improving rapidly, particularly with regard to
financial markets and the corporate sector, suggesting that we are entering a
period of growth, but of questionable sustainability.
There have been many changes in the last quarter. Financial markets have
improved sharply, business confidence has returned and some major economies
have already exited recession. We expect this favourable trend to continue in
the short term while current fiscal and monetary policy remains unchanged, but
we are concerned about the sustainability of this recovery. Debt levels remain
high, particularly in the public sector, and fiscal and monetary stimulus will
have to be withdrawn at some stage. That implies higher interest rates and
taxes and cuts in government spending.
Inflation is expected to trough in the second half of the year and then begin
to increase from a low base. Low pricing power will lead companies to retain
strict control of costs. Currency volatility should be relatively low, although
we may see the US Dollar gaining some strength on speculation of higher US
interest rates in 2010 as the US economy strengthens.
We are hopeful that the global economy is entering a long term recovery phase
but we do not expect the recovery to be smooth or rapid.
Against this environment, our strategy for recommitting cash into equities is
to invest in a balanced portfolio of quality companies which are able to
demonstrate management capability and robust financial performance. We continue
to seek opportunities to invest to achieve our aim of providing a combination
of capital growth and a rising dividend with a moderate level of risk over the
medium to long term. We favour Asian markets as growth rates in the region
should remain higher than in other major economies and companies are in sound
financial health. In the US our holdings are positioned to benefit from a
recovery in the economy. Our relatively high exposure to the UK reflects the
income generating attributes of our portfolio.
Dividend
In accordance with our quarterly dividend policy the Company paid an interim
dividend of 2.025p per share on 31 July 2009. A second interim dividend of
2.025p per share will be paid on or around 2 November 2009 to shareholders on
the register on 2 October 2009. For the financial year ending 31 January 2010
and in the absence of any unforeseen developments, we expect to be able to
recommend a third interim dividend of 2.025p payable on or around 1 February
2010, and a fourth interim dividend of at least 2.025p payable on or around 30
April 2010.
Responsibility statement of the directors in respect of the half-yearly
financial report
We confirm that to the best of our knowledge
• The condensed set of financial statements has been prepared in accordance
with IAS 34 "Interim Financial Reporting" as adopted by the EU:
• The interim management report includes a fair review of the information
required by:
(a) DTR 4.2.7R of the "Disclosure and Transparency Rules", being an indication
of important events that have occurred during the first six months of the
financial year and their impact on the condensed set of financial statements;
and a description of the principal risks and uncertainties for the remaining
six months of the year; and
(b) DTR 4.2.8R of the "Disclosure and Transparency Rules", being related party
transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the entity during that period; and any changes in the related
party transactions described in the last annual report that could do so.
Signed on behalf of the Board
Katherine Garrett-Cox Lesley Knox
Chief Executive Chairman
18 September 2009 18 September 2009
CONDENSED Consolidated Income Statement (Unaudited)
For the period ended 31 July 2009
6 months to 6 months to Year to
31 July 2009 31 July 2008 31 January 2009
(audited)
£000
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Revenue
Income 56,010 - 56,010 68,785 - 68,785 117,283 - 117,283
Gain/(Loss) on fair - 151,535 151,535 - (122,904) (122,904) - (551,495) (551,495)
value designated
investments
Loss on investment - (4,620) (4,620) - (15,645) (15,645) - (23,832) (23,832)
property held
-------- --------- --------- -------- -------- --------- -------- -------- ---------
Total revenue 56,010 146,915 202,925 68,785 (138,549) (69,764) 117,283 (575,327) (458,044)
Administrative (17,059) (931) (17,990) (18,850) (586) (19,436) (40,069) (1,981) (42,050)
expenses
Finance costs (301) (554) (855) (2,720) (2,019) (4,739) (4,322) (3,053) (7,375)
Impairment Losses - - - - - - (1,759) (9,074) (10,833)
Loss on revaluation - (969) (969) - - - - (6,786) (6,786)
of office premises
Foreign exchange - (3,873) (3,873) - (910) (910) (271) 8,221 7,950
(losses)/gains
-------- --------- ------------ -------- --------- --------- -------- --------- ---------
Profit/(loss) before 38,650 140,588 179,238 47,215 (142,064) (94,849) 70,862 (588,000) (517,138)
tax
Tax (4,524) 155 (4,369) (5,421) 560 (4,861) (10,552) 3,627 (6,925)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Profit/(loss) for 34,126 140,743 174,869 41,794 (141,504) (99,710) 60,310 (584,373) (524,063)
the period
======== ======== ======= ======== ======== ======== ======= ======== =======
Attributable to:
- Minority interest 124 403 527 25 (734) (709) 1 (866) (865)
- Equity holders of 34,002 140,340 174,342 41,769 (140,770) (99,001) 60,309 (583,507) (523,198)
the parent
-------- -------- -------- -------- -------- -------- -------- -------- --------
34,126 140,743 174,869 41,794 (141,504) (99,710) 60,310 (584,373) (524,063)
======== ======== ======= ======== ======== ======== ======= ======== =======
Earnings/(loss) per
share from
continuing
operations
attributable to
equity holders of
the parent
Basic (p per share) 5.07 20.94 26.01 6.23 (21.00) (14.77) 9.00 (87.06) (78.06)
Diluted (p per 5.06 20.89 25.95 6.22 (21.00) (14.78) 8.98 (87.06) (78.08)
share)
CONDENSED CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE(Unaudited)
6 months to 6 months to Year to
31 July 2009 31 July 2008 31 January 2009
(audited)
£000 Revenue Capital Total Revenue Capital Total Revenue Capital Total
Income and expenses
recognised directly in
equity:
Defined benefit plan - 421 421 - (3,339) (3,339) - (3,282) (3,282)
net actuarial gains/
(losses)
Retirement benefit - (118) (118) - 925 925 - 891 891
obligations deferred
tax
Loss on revaluation of - - - - (425) (425)
office premises
Exchange differences - 462 462 - - - - 984 984
on translation of
foreign subsidiary
Profit/(loss) for the 34,126 140,743 174,869 41,794 (141,504) (99,710) 60,310 (584,373) (524,063)
period
======= ======= ====== ======= ====== ====== ====== ====== ======
Total recognised 34,126 141,508 175,634 41,794 (143,918) (102,124) 60,310 (586,205) (525,895)
income and expense for
the period
Attributable to:
- Minority interest 124 403 527 25 (734) (709) 1 (866) (865)
- Equity holders of 34,002 141,105 175,107 41,769 (143,184) (101,415) 60,309 (585,339) (525,030)
the parent
======= ======= ====== ======= ====== ====== ====== ====== ======
34,126 141,508 175,634 41,794 (143,918) (102,124) 60,310 (586,205) (525,895)
CONDENSED CONSOLIDATED
BALANCE SHEET
(UNAUDITED)
As at 31 July 2009
31 July 31 July 31 January
2009 2008 2009
(audited)
£000
Non-current assets
Investments held at 2,206,147 2,191,391 1,820,763
fair value
Investment property 51,715 64,455 56,335
Property, plant and
equipment:
Office premises 6,375 6,718 6,375
Other fixed assets 6 57 8
Intangible assets 4,344 15,761 5,251
---------- ---------- ----------
2,268,587 2,278,382 1,888,732
Current assets
Other receivables 39,469 31,585 17,531
Withholding tax debtor 1,280 1,103 840
Corporation tax debtor 625 500 227
Cash and cash 269,795 559,204 507,033
equivalents
---------- ---------- ----------
311,169 592,392 525,631
Total assets 2,579,756 2,870,774 2,414,363
Current liabilities
Other payables (253,133) (236,676) (231,108)
Tax payable (2,854) (1,246) (1,595)
Bank overdrafts and (47,964) (50,000) (50,000)
loans
---------- ---------- ----------
(303,951) (287,922) (282,703)
Total assets less 2,275,805 2,582,852 2,131,660
current liabilities
Non-current
liabilities
Deferred tax (497) (1,501) (381)
liabilities
Pension scheme deficit (1,144) (1,686) (1,565)
---------- ---------- ----------
Net assets 2,274,164 2,579,665 2,129,714
Equity
Share capital 16,798 16,798 16,798
Capital reserves 1,525,272 1,820,368 1,378,674
Translation reserve 1,446 - 984
Merger reserve 645,335 645,335 645,335
Revaluation reserve 183 608 183
Capital redemption 2,200 2,200 2,200
reserve
Revenue reserves 76,443 87,071 78,806
--------- ---------- ----------
Equity attributable to 2,267,677 2,572,380 2,122,980
equity holders of the
parent
Minority interest 6,487 7,285 6,734
Total equity 2,274,164 2,579,665 2,129,714
Net Asset Value per
ordinary share
attributable to equity
holders of the parent
Basic (£) 3.38 3.84 3.17
Diluted (£) 3.37 3.83 3.16
CONDENSED
CONSOLIDATED CASH
FLOW (unaudited)
For the period 6 months 6 months Year
ended 31 July 2009 to to to
31 July 31 July 31 January
2009 2008 2009
(audited)
£000
Cash flows from
operating
activities
Profit/(Loss) 179,238 (94,849) (517,138)
before tax
Adjustments for:
(Gains)/Losses on (146,915) 138,549 575,327
investments
Foreign exchange 3,873 910 (7,950)
losses/(gains)
Scrip dividends - (541) (590)
Depreciation 2 27 71
Amortisation of 913 1,335 1,734
intangibles
Impairment losses - - 10,833
Loss on 969 - 6,786
revaluation of
office premises
Share based 302 459 742
payment expense
Interest 855 4,284 7,375
--------- --------- ---------
Operating cash 39,237 50,174 77,190
flows before
movements in
working capital
Increase in 25,617 20,079 5,963
amounts due to
depositors
(Increase)/ (15,470) (10,003) 9,948
decrease in
receivables
Decrease in (8,717) (4,295) (15,510)
payables
--------- --------- ---------
Net cash flow from 40,667 55,955 77,591
operating
activities before
income taxes
Taxes paid (3,950) (2,484) (4,784)
--------- --------- ---------
Net cash inflow 36,717 53,471 72,807
from operating
activities
========= ========= =========
Cash flows from
investing
activities
Proceeds on 482,523 1,062,185 1,644,311
disposal of fair
value through
profit and loss
investments
Purchases of fair (717,152) (635,860) (1,272,384)
value through
profit and loss
investments
Purchase of plant - (48) (43)
and equipment
Purchase of (6) (333) (1,055)
intangible assets
Purchases in (969) (2,834) (9,702)
respect of new
head office
--------- --------- ---------
Net cash (outflow) (235,604) 423,110 361,127
/inflow from
investing
activities
========= ========= =========
Cash flows from
financing
activities
Dividends paid - (30,312) (28,159) (41,534)
Equity
Purchase of own - (2,587) (2,587)
shares
Repayment of - (109,000) (109,000)
borrowing
Minority interest (1,275) (90) 223
investment in
PATIF/ATIF*
Interest payable (855) (4,284) (9,606)
--------- --------- ---------
Net cash outflow (32,442) (144,120) (162,504)
from financing
activities
Net (decrease)/ (231,329) 332,461 271,430
increase in cash
and cash
equivalents
Cash and cash 507,033 227,653 227,653
equivalents at
beginning of
period
Effect of foreign (5,909) (910) 7,950
exchange rate
changes
--------- --------- ---------
Cash and cash 269,795 559,204 507,033
equivalents at end
of period
========= ========= =========
*Premier Alliance Trust Investment Funds and Alliance Trust Investment Funds
Notes to the Financial Statements
1 General Information
The information for the period ended 31 July 2009 does not constitute statutory
accounts as defined in section 435 of the Companies Act 2006. A copy of the
statutory accounts for the year ended 31 January 2009 has been delivered to the
Registrar of Companies. The auditors' report on those accounts was not qualified
and did not contain statements under section 237(2) or (3) of the Companies Act 1985.
The interim results are unaudited. They should not be taken as a guide to the
full year and do not constitute the statutory accounts.
2 Accounting Policies
The annual financial statements were prepared using accounting policies
consistent with International Financial Reporting Standards (IFRS) as adopted
for use in the EU. The condensed set of financial statements included in this
half yearly financial report have been prepared in accordance with IAS 34
`Interim Financial Reporting', as adopted by the EU.
The same accounting policies, presentations and methods of computation are
followed in these financial statements as are applied in the Group's latest
annual audited financial statements, other than the inclusion for the first
time of additional disclosures as required by IFRS 8 `Operating Segments'.
No material changes in accounting policy are anticipated in the forthcoming
financial statements for the year ended 31 January 2010.
3 Revenue
£000 6 months 6 months Year
to to to
31 July 31 July 31 January
2009 2008 2009
Deposit 1,492 8,614 16,189
Interest
Dividend 46,868 51,889 79,212
Income
Mineral rights 833 932 2,170
income
Property 2,057 2,189 4,197
income
Other 4,760 5,161 15,515
operating
income
--------- -------- --------
56,010 68,785 117,283
--------- -------- --------
4 Finance Costs
£000
6 months to 6 months to Year to
31 July 2009 31 July 2008 31 January 2009
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Interest
payable
Payable to 23 - 23 1,710 - 1,710 2,772 - 2,772
depositors
Bank loans and 278 554 832 1,010 2,019 3,029 1,550 3,053 4,603
overdrafts
--------- -------- -------- --------- -------- -------- --------- -------- --------
Total finance 301 554 855 2,720 2,019 4,739 4,322 3,053 7,375
costs
--------- -------- -------- --------- -------- -------- --------- -------- --------
5 Dividends
£000 6 months 6 months Year
to to to
31 July 31 July 31 January
2009 2008 2009
Fourth interim dividend for the year ended 31 - 14,758 14,758
January 2008 of 2.20p per share
First interim dividend for the year ended 31 - 13,401 13,401
January 2009 of 2.00p per share
Second interim dividend for the year ended 31 - - 13,401
January 2009 of 2.00p per share
Third interim dividend for the year ended 31 - - 13,401
January 2009 of 2.00p per share
Fourth interim dividend for the year ended 31 13,401 - -
January 2009 of 2.00p per share
Special dividend for the year ended 31 January 3,350 - -
2009 of 0.50p per share
First interim dividend for the year ended 31 13,570 - -
January 2010 of 2.025p per share
6 Earnings per share
From continuing operations
The calculation of the basic and diluted earnings per share is based on the
following data:
6 months 6 months Year
to to to
31 July 31 July 31 January
2009 2008 2009
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Ordinary
Shares
Earnings for 34,002 140,340 174,342 41,769 (140,770) (99,001) 60,309 (583,507) (523,198)
the purposes
of basic
earnings per
share being
net profit/
(loss)attributable
to equity
holders of
the parent
(£000)
Number of
shares
Weighted 670,114,650 670,223,550 670,227,004
average
number of
ordinary
shares for
the purposes
of basic
earnings per share
Weighted 671,909,760 671,909,760 671,909,760
average
number of
ordinary
shares for
the purposes
of diluted
earnings per
share
The weighted average number of ordinary shares is arrived at by excluding 1,770,197
(1,856,020 at 31 July 2008 and 1,842,670 at 31 January 2009)ordinary shares acquired
by the Trustee of the Employee Benefit Trust with funds provided by the Company.
IAS 33 requires that shares should only be treated as dilutive if they decrease
earnings per share or increase the loss per share. The earnings/(loss) per
share figures on the income statement reflect this.
7 Pension Schemes
The Group sponsors two pension arrangements.
The Alliance Trust Companies' Pension Fund (`the Scheme') is a funded defined
benefit pension scheme which is now closed to new entrants. Members continue to
accrue benefits under the Scheme.
Employees who joined the Group pursuant to an offer made after 1 March 2005 are
not entitled to join the Scheme but are entitled to receive contributions into
their own Self Invested Personal Pension (`SIPP') provided by Alliance Trust
Savings Limited.
Defined Benefit Scheme
The net actuarial loss made in the period and recognised in the statement of
recognised income and expense (`SORIE') was £303,000 (31 July 2008 net
actuarial loss of £2,414,000, 31 January 2009 net actuarial loss of
£2,391,000).
Certain actuarial assumptions have been used to arrive at the retirement
benefit scheme deficit of £1.1m as at 31 July 2009 (31 July 2008 deficit of
£1.7m, 31 January 2009 deficit of £1.6m). These are set out below:
31 July 31 July 31 January
2009 2008 2009
%per annum %per annum %per annum
Inflation 3.40 3.90 3.40
Salary increases 4.40 4.90 4.40
Rate of discount 6.30 6.00 6.20
Allowance for pension in payment increases of 3.40 3.90 3.40
RPI or 5% p.a. if less
Allowance for revaluation of deferred pensions 3.40 3.90 3.40
of RPI or 5% p.a. if less
8 Net Asset Value Per Ordinary Share
The calculation of the net asset value is based on the following:
31 July 31 July 31 January
2009 2008 2009
Equity shareholder funds (£000) 2,267,677 2,572,380 2,122,980
Number of shares at period end - Basic 670,139,563 670,053,740 670,067,090
Number of shares at period end - Diluted 671,909,760 671,909,760 671,909,760
The number of ordinary shares has been reduced by 1,770,197
(1,856,020 at 31 July 2008 and 1,842,670 at 31 January 2009)ordinary shares held
by the Trustee of the Employee Benefit Trust in order to arrive at the Basic figures
above.
9 Segmental Reporting
Alliance Trust PLC's operating segments are strategic business units that offer
different products and services. They are managed separately because of the
differences in the products and services provided. They are however all
complementary to the core business of investing in various asset classes to
generate increasing value over the long term.
Alliance Trust PLC's primary operating segments are the Company and Alliance
Trust Savings Limited (`ATS').
The Company is a self managed investment company with investment trust status.
ATS provides share dealing and pension administration services.
The accounting policies of the operating segments are the same as those
described in the summary of significant accounting policies.
Alliance Trust PLC evaluates performance based on the operating profit before
tax. Intersegment sales and transfers are accounted for on an arms length
basis, i.e. market price.
£000 6 months to 31 July
2009
Revenue Company ATS Other Total
External customers - 4,925 160 5,085
Investment income 49,216 - 24 49,240
Investment gains/ 139,050 (14) - 139,036
(losses)
Intersegment - - 1,065 1,065
--------- -------- -------- --------
Segment Revenue 188,266 4,911 1,249 194,426
--------- -------- -------- --------
Segment profit/ 178,312 (3,579) (1,029) 173,704
(loss) before tax
£000 6 months to 31 July
2008
Revenue Company ATS Other Total
External customers - 8,585 328 8,913
Investment income 57,503 - 100 57,603
Investment losses (141,080) (15) - (141,095)
Intersegment - - 28 28
--------- -------- -------- --------
Segment Revenue (83,577) 8,570 456 (74,551)
--------- -------- -------- --------
Segment loss (95,716) (454) (1,822) (97,992)
before tax
£000 Year to 31 January
2009
Revenue Company ATS Other Total
External customers - 16,386 341 16,727
Investment income 95,299 - 278 95,577
Investment(losses/ (583,898) 10 - (583,888)
gains
Intersegment - - 1,187 1,187
--------- -------- -------- --------
Segment Revenue (488,599) 16,396 1,806 (470,397)
--------- -------- -------- --------
Segment loss (508,560) (1,550) (3,279) (513,389)
before tax
Reconciliation of reportable segment revenues and profit/(loss) to consolidated
amounts
£000 6 months 6 months Year
to to to
31 July 31 July 31 January
Revenues 2009 2008 2009
Total revenues for reportable segments 194,426 (74,551) (470,397)
ATS interest payable 24 1,711 2,772
Elimination of intersegment revenues (1,065) (28) (1,187)
Elimination of movement in investment in 9,540 3,104 10,768
subsidiaries
--------- -------- --------
Consolidated revenue 202,925 (69,764) (458,044)
--------- -------- --------
£000 6 months 6 months Year
to to to
31 July 31 July 31 January
Profit/(Loss) 2009 2008 2009
Total profit/(loss) for reportable segments 173,704 (97,992) (513,389)
Elimination of movement in investment in 5,534 3,143 (3,749)
subsidiaries
--------- -------- --------
Consolidated profit/(loss) before tax 179,238 (94,849) (517,138)
--------- -------- --------
Total net assets
£000 6 months to 31 July
2009
Company ATS Other Total
Total net assets 2,267,148 12,270 5,537 2,284,955
6 months to 31 July
2008
Company ATS Other Total
Total net assets 2,566,297 18,408 7,588 2,592,293
Year to 31 January
2009
Company ATS Other Total
Total net assets 2,122,592 13,704 6,546 2,142,842
Reconciliation of reportable segment total net assets to consolidated amounts
£000 As at As at As at
Total net assets 31 July 31 July 31 January
2009 2008 2009
Total net assets for reportable segments 2,284,955 2,592,293 2,142,842
Elimination of subsidiaries (10,791) (12,628) (13,128)
--------- -------- --------
Consolidated total net assets 2,274,164 2,579,665 2,129,714
--------- -------- --------
10 Related Party Transactions
There are no significant changes in the type or nature of related party
transactions from those disclosed in the accounts for the year to 31 January
2009.
11 Financial Commitments
As at 31 July 2009 the Group and Company had financial commitments, which have
not been accrued, totalling £152.4m (£219.3m at 31 January 2009 and £76.9m at
31 July 2008). Of this amount £152.4m (£157.8m at 31 January 2009 and £76.9m at
31 July 2008) was in respect of uncalled subscriptions in investments
structured as limited partnerships of which £140.5m (£150.1m at 31 January 2009
and £76.9m at 31 July 2008) relates to investments in our private equity
portfolio. This is the maximum amount that the Company may be required to
invest. These Limited Partnership commitments may be called at any time up to
an agreed contractual date. The Company may choose not to fulfil individual
commitments but may suffer a penalty should it do so, the terms of which vary
between investments.
12 Share Based Payments
The group operates three share based payment schemes. Full details of these
schemes are disclosed in the 2009 annual report and financial statements and
the basis of measuring fair value is consistent with that disclosed therein.
In the period to 31 July 2009 participating employees applied a proportion of
their annual cash bonuses for the year ended 31 January 2009 to purchase
288,730 (197,247 at 31 July 2008 and 31 January 2009) Company shares at a
weighted average price of £2.84 (£3.51 at 31 July 2008 and 31 January 2009) per
share. Matching awards of up to 527,449 (376,672 at 31 July 2008 and 31 January
2009) shares, and performance awards of up to 650,544 (958,560 at 31 July 2008
and 31 January 2009) shares were granted.
Matching awards and performance awards made during the period were valued at
£903,627 (£444,232 at 31 July 2008 and 31 January 2009) and £1,114,070
(£1,048,086 at 31 July 2008 and 31 January 2009) respectively. The fair value of
the awards was calculated using a binomial methodology.
The cumulative charge to the income statement during the period for the cost of
the awards referred to above was £302,111 (£459,090 at 31 July 2008, £741,975
at 31 January 2009) for the Group. Per IFRS 2 the costs of matching awards for
each plan are expensed over the three year performance period.
These costs are adjusted if certain vesting conditions are not met, for example
if a participant leaves before the end of the three year vesting period.
13 Principal Risks and Uncertainties
As an investment trust the Company invests in both quoted and unquoted
equities, fixed income securities, its subsidiary businesses, other asset
classes and financial instruments for the long term in order to achieve its
investment objectives. Its principal risks are therefore market risk
(comprising currency risk, interest rate risk and other price risk), liquidity
risk and credit risk.
Other risks faced by the Company include regulatory, reputational, operational
and financial risks. These risks, and the way in which they are managed, are
described in more detail within the Business Review in the Company's Annual
Report and Accounts for the year ended 31 January 2009. The nature of the
Company's principal risks and uncertainties has not changed materially since
the date of that report.
Note on Audit
This half-yearly financial report has not been audited or reviewed by our
auditors pursuant to the Auditing Practice Board guidance on Review of Interim
Financial Information.
Friday, 22nd November 2024
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