Final Results
September 12 2003 - 4:57AM
UK Regulatory
THE SECOND ALLIANCE TRUST PLC
FINAL RESULTS FOR THE YEAR TO 31 JULY 2003
FINANCIAL SUMMARY
Performance - years to 31 July
Year to Year to
31 July 03 31 July 02
Income
dividends interim paid 1 April 2003 24.0p 23.5p
proposed final dividend 29 October 2003 38.0p 37.5p
total 62.0p 61.0p
gross yield (dividend (1) / closing stock price) 3.0% 3.2%
total expense ratio (expenses / year end net asset value) (2) 0.28% 0.25%
Capital
net asset value per ordinary stock unit (at 31 July) �24.59 �24.14
price per ordinary stock unit (at 31 July) �22.85 �21.03
discount (at 31 July) 7.1% 12.9%
1 Year 10 Years
Returns
dividend growth 1.6% 4.7%
capital growth - Second Alliance Trust net asset value 1.9% 4.1%
capital growth - FTSE All-Share Index -0.2% 3.5%
total return - on Second Alliance Trust net assets (3) 4.6% 6.4%
total return - on Second Alliance Trust stock price (3) 12.0% 6.9%
total return - on FTSE All-Share Index (3) 3.4% 6.4%
annual rate of inflation (RPI) 3.1% 2.6%
Note: 1 Total dividend (including tax credit).
2 In the current year the total expense ratio before an additional pension
contribution was 0.26%.
3 These returns include income and capital movements and are approximately
equal to the annual compound movement in net assets/stock price/index, added
to the net yield on the portfolio/stock price/index.
They are produced in accordance with AITC rules and assume dividends are reinvested.
DIVIDENDS
The directors are recommending a final dividend of 38p making a total dividend for the year of
62p per ordinary stock unit, an increase of 1.6%. This will allow a small amount to be retained,
approximately equal to the extra income received this year from special one-off dividends, and
will help to ensure that a progressive dividend policy can be maintained with additional reserves
available to cover any temporary dips in future income.
Over the last few years, we have been reducing the disparity between the interim and final dividends
and have now decided to take this one step further. We intend to raise next year's interim dividend
payable on 30th March 2004 to 31p (24p), a level equivalent to one half of this year's total dividend.
This should allow charities, and those holding their stock through ISAs and PEPs, to receive more in
the form of tax credits before the ability to reclaim these is abolished after 5th April 2004.
Subject to approval by the stockholders the final dividend on the Company's ordinary stock is payable
on Wednesday, 29 October 2003 to stockholders registered on 10 October 2003. The dividend on the
Company's preference stock is also payable on 29 October 2003 to stockholders registered on 10 October
2003 and the ex-dividend date for all stocks is 8 October 2003.
CHAIRMAN'S STATEMENT
"On the long term record, a 3% gross yield and a 1.9% increase in net assets will probably look
unexceptional, but this result comes after a stormy year and at a time when interest rates have fallen
to their lowest levels for around half a century. At political and economic levels high risks have
been taken, causing extreme volatility in capital markets world-wide. Valuations have gyrated, with
the UK FTSE All-Share Index rising 28% from the low to which it fell in March in the face of extreme
uncertainty, lack of investment and much distressed selling. However, after two years of falling share
prices we are pleased to report a rise, albeit small, in assets, income, and stock price.
We attribute these rises, and our above average long term performance throughout the last 10 years and
beyond, to our concentration on quality, income-generating investments combined with our tight control
on costs and a philosophy of diversification and risk containment. These are fundamental tenets of our
investment philosophy and it is encouraging to see that they are again being more widely recognised as
a core requirement of a long term portfolio. The fall in our discount partly reflects this recognition,
especially against the background of a decline in UK savings and an equity market which can sometimes
look more like a lottery than a serious long term investment portal.
We see an improvement in the future investment scene - governments everywhere are trying to boost
economic growth, miscreant companies have been encouraged to put their houses in order and low interest
rates are helping to stimulate corporate activity. We expect to be fully invested should values and
yields remain attractive. However, substantial risks do remain and we are maintaining our relatively
cautious approach to stock selection and have no expensive gearing to shoulder in this environment.
Consumers have built up extreme levels of debt which will have to be repaid at some time; similarly
governments are letting trade and budget deficits expand and the time bomb of underfunded pensions,
which overhangs many personal, corporate and national balance sheets, continues to tick.
The last year has seen much talk and many words directed towards solving the UK savings gap. Ironically,
this has led to confusion, reasons for individuals to delay savings and investment decisions and, for
private sector employers, an opportunity to close defined benefit pension schemes. These factors,
together with the Iraq war, loss of confidence in the stock market and the possibility of recession,
reduced the flow of savings into equities. Alliance Trust Savings (ATS) has not been immune from this
trend but the lower rate of net cash inflow is more than explained by a fall in 'lump sum / single
premium' subscriptions. The rationale for disciplined long term saving in these times of uncertainty
and high volatility remains powerful. Regular flows of direct debits and income reinvestment into ATS
continue to increase. 24% of the Company's stock is now owned through its PEPs, ISAs pension and
investment plans.
This year David Deards joined the Board as finance director and Christopher Masters as a non-executive
director. They have already proved their worth and we are asking stockholders to approve these
appointments at the AGM, together with adjustments to the non-executive directors' fees as explained
in the Remuneration Report.
I extend a warm invitation to you to join us at Discovery Point, Dundee on 24th October."
RESULTS
2003 2002
total earnings per ordinary stock unit 63.91p 63.39p
dividend per ordinary stock unit 62.0p 61.0p
net asset value per ordinary stock unit �24.59 �24.14
Revenue Return �000 �000
investment income 13,987 13,453
other income 909 1,109
----------- -----------
14,896 14,562
----------- -----------
return before taxation 13,539 13,396
taxation (1,233) (1,189)
----------- -----------
return after taxation 12,306 12,207
dividends on preference stock - non-equity (36) (36)
----------- -----------
return attributable to equity stockholders 12,270 12,171
----------- -----------
amount absorbed by ordinary dividend (11,904) (11,712)
Balance Sheet �000 �000
investments at valuation 462,950 449,475
net current assets 10,495 15,313
----------- -----------
total assets less current liabilities 473,445 464,788
----------- -----------
long term liabilities 482 482
ordinary stockholders' funds 472,163 463,506
net asset value per ordinary stock unit �24.59 �24.14
Cash Flow Statement �000 �000
net cash inflow from operating activities 13,134 12,672
dividends from related company 213 425
servicing of finance (60) (60)
taxation paid (1,161) (1,000)
investment purchases settled (44,968) (58,636)
investment sales settled 40,065 50,458
equity dividends paid (11,808) (11,712)
management of liquid resources 5,707 7,097
----------- -----------
increase(decrease) in cash 1,122 (756)
----------- -----------
The revenue return statement is the profit and loss account of the Company.
The financial information set out above does not constitute the Company's statutory accounts
for the years ended 31 July 2003 or 2002 but is derived from those accounts.
Number of Issued Stock Units
Ordinary stock units of 25p 19,200,000
4.5% Cum. Pref. Stock 800,000
4.5% Debenture Stock 1956 or After 482,183
Statutory accounts for 2002 have been delivered to the Registrar of Companies and those for
2003 will be delivered following the Company's Annual General Meeting. The auditor has reported
on those accounts. The reports were unqualified and did not contain statements under
Section 237 (2) or (3) of the Companies Act 1985.
The Report and Accounts will be available on the Company's website www.alliancetrusts.com on
12 September 2003 and will be posted to stockholders on 19 September 2003. 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 registrar, Computershare Investor Services PLC,
Owen House, 8 Bankhead Crossway North, Edinburgh EH11 4BR on and after that date.
The Company's Annual General Meeting will be held on Friday, 24 October 2003 at 11.30 a.m.
at Discovery Point, Discovery Quay, 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 our website.
The press release summarising these results follows and questions should be addressed to Gavin
Suggett or Alan Young (telephone 01382 201700, extension 2402).
PRESS RELEASE
Issued Friday, 12 September 2003
The Second Alliance Trust PLC
Final Results for the Year Ended 31 July 2003
Final dividend 38p
Total dividend for year increased by 1.6% to 62p
Year end assets at �473m outperformed FTSE All-Share Index
Continued growth of Alliance Trust Savings
With these results The Second Alliance Trust PLC, which this year is marking its 120th anniversary,
continues to deliver consistent long term performance as a core investment vehicle.
Commenting on the results Gavin Suggett, Chief Executive, said:
"The increase in the final dividend of 1.6% allows a small amount to be retained and will help to ensure
that a progressive dividend policy can be maintained. Over the last few years, we have been reducing the
disparity between the interim and final dividends and have now decided to take this one step further. We
intend to raise next year's interim dividend, payable on 30 March 2004, to 31p, a level equivalent to one
half of this year's total dividend. This should allow charities, and those holding their stock through ISAs
and PEPs, to receive more in the form of tax credits before the ability to reclaim these is abolished
after 5 April 2004.
We are still seeing net new investment in the savings plans provided by Alliance Trust Savings despite
extremely difficult conditions in the savings and investment markets over the last year. 24% of the
Company's ordinary stock is now held in these savings plans."
Alan Young, Investment Director added:
"Overall our net asset performance has exceeded the FTSE All-Share Index over each period from one to ten
years and against our peer group of Global Growth investment trusts, most of whom are geared, our
performance was also good.
There is much wider confidence now about the economic outlook, which should
ultimately be reflected in company profits. We have invested almost all of the cash we held earlier,
remaining committed to quality stocks which can perform over the longer term in a volatile environment."
The announcement to the Stock Exchange, containing the full results, is on www.alliancetrusts.com
Ends 12 September 2003
Issued by Citigate SMARTS on behalf of The Second Alliance Trust PLC. For further information or
photography, please contact:
Karen Morrison at Citigate SMARTS on 0141 229 7634/07816 848105
Rachael Collins at Citigate SMARTS on 0141 229 7635/07970 213956
Gavin Suggett, Chief Executive on 01382 201700
Alan Young, Investment Director on 01382 201700
or visit the website: www.alliancetrusts.com
Notes to Editors
1. The Second Alliance Trust was incorporated in 1883 as the Western and Hawaiian Investment Company
by a group of Dundee businessmen to invest in land mortgages in Hawaii and the Western Territories
and States of the USA. It changed its name to the Second Alliance Trust in 1923 at the time it came
out of the mortgage business and moved into fixed interest, and then equity investment. This October
is the 120th anniversary of its incorporation. It employs its own staff and has assets of �473m.
2. In recognition of its origins, the seal of the Second Alliance Trust still bears the emblem of a
coconut palm.
3. Together with the Alliance Trust, the Second Alliance Trust owns Alliance Trust Savings, their
banking and financial services company which provides the Select range of PEPs, ISAs, pensions and
investment plans. ATS holds over �1 bn. of assets for all its customers and each customer is a
stockholder in either the Second Alliance Trust or the Alliance Trust.
4. The AGM of the Second Alliance Trust will be held on Friday, 24 October at 11.30 a.m. at Discovery Point,
Dundee.
ENDS