Interim Results
25/07/2024 07:01
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Alliance Trust PLC (‘the Company’)
LEI: 213800SZZD4E2IOZ9W55
25 July 2024
Strong Investment Returns
Results for the six months ended 30 June 2024
Six months to 30 June 2024 Year to 31 December 2023 Change
Share Price 1,212.0p 1,112.0p 9.0%
Net Asset Value (NAV) per Share 1,273.9p 1,175.1p 8.4%
NAV Total Return 9.5% 21.6%
Share Price Total Return 10.2% 20.2%
MSCI ACWI 12.2% 15.3%
Discount to NAV at period end -4.9% -5.4%
Key Points
* NAV Total Return of 9.5% and Share Price Total Return of 10.2% vs 12.2% for
MSCI ACWI.
* Discount remains stable and is markedly narrower than the Association of
Investment Companies’ Global Sector average.
* Second interim dividend of 6.62p declared, the total of the first two
interim dividends declared for 2024 is 13.24p (2023: 12.52p), representing an
increase of 5.8% on the same payments for 2023.
* Combination with Witan Investment Trust to be approved by shareholders.
Dean Buckley, Chair of Alliance Trust PLC, commented:
"It has been an eventful period. Returns have been strong and we have
announced the Company's intention to combine with Witan Investment Trust plc
to create Alliance Witan PLC.”
About Alliance Trust PLC
Alliance Trust aims to be a core investment that beats inflation over the long
term through a combination of capital growth and a rising dividend. The
Company invests in listed, global equities across a wide range of different
sectors and industries to achieve its objective. Our investment manager,
Willis Towers Watson, blends the top stock selections of some of the world’s
best active managers into a single diversified portfolio designed to
outperform the market while carefully managing risk and volatility. Alliance
Trust is an AIC Dividend Hero with 57 consecutive years of rising dividends.
https://www.alliancetrust.co.uk
For more information, please contact:
Mark Atkinson, Senior Director – Client Management, Wealth & Retail Sarah Gibbons-Cook
Willis Towers Watson Quill PR
Tel: 07918 724303 Tel: 020 7466 5050 / sarah@quillpr.com
Interim Report for the six months ended 30 June 2024 (unaudited)
Our Performance - Financial Highlights as at 30 June 2024
Share Price Net Asset Value (‘NAV’) Per Share
1,212.0p 1,273.9p
Share Price Total Return (1) NAV Total Return (1)
+10.2% +9.5%
Discount to NAV (1) First Two Interim Dividends for 2024 (2)
-4.9% 13.24p
1. Alternative Performance Measure.
2. Total dividends declared in the period.
NAV Per Share including income with debt at fair value.
NAV Total Return based on NAV including income with debt at fair value and
after all costs.
Source: Morningstar and Juniper Partners Limited (‘Juniper’).
Chair’s Statement
I am pleased to present the Interim Report for the six months ended 30 June
2024. It has been an eventful period. Returns have been strong and we have
announced the Company’s intention to combine with Witan Investment Trust plc
(‘Witan’) to create Alliance Witan PLC.
Many of you will already have seen the details of the proposed transaction on
the London Stock Exchange’s regulatory news service or in the media. If not,
you can find the full announcement setting out the proposed terms on the
Company’s website at www.alliancetrust.co.uk.
The proposed transaction will not lead to any change in Alliance Trust’s
successful investment strategy, just a larger pool of assets for the
Company’s Investment Manager, Towers Watson Investment Management Limited
(referred to as `Willis Towers Watson’ or `WTW’), to manage in the same
way that it currently manages the existing portfolio. This will result in
economies of scale, meaning lower ongoing charges for shareholders, and a
higher profile for the Company which will hopefully attract additional
interest from potential investors. A significant contribution from WTW will
ensure that none of the transaction costs fall on Alliance Trust shareholders.
The proposed combination does, of course, need approval from both sets of
shareholders. We will soon be publishing further documentation relating to the
proposed transaction for you to consider, to be followed by a General Meeting,
expected to be held in Dundee in late September/ early October, when you will
have the chance to vote on the proposed combination. You will, of course, be
able to vote your shares in advance and attend virtually as per our Annual
General Meeting earlier in the year. Further details will be available on the
Company’s website In due course.
In the meantime, if you have any questions, I can be contacted via the
Company’s shareholder e-mail address: investor@alliancetrust.co.uk.
Investment Performance
The Company produced very strong investment returns for the six months ended
30 June 2024, with a Net Asset Value (‘NAV’) Total Return of 9.5%. Over
this particular six-month period, we underperformed our benchmark index, the
MSCI All Country World Index (‘MSCI ACWI’), which returned 12.2% over the
same period.
Our underperformance against the index was primarily attributable to market
returns being highly concentrated in a narrow group of artificial intelligence
(‘AI’) related stocks. This has made it difficult for active managers to
outperform, but WTW is confident that the portfolio is well positioned for
long-term returns versus the index. The Company’s Share Price Total Return
was 10.2%, marginally underperforming the average Share Price Total Return of
the Association of Investment Companies (‘AIC’) Global Sector peer group
of 10.7%.
A full analysis of the Company’s investment performance can be found in the
Investment Manager’s Report.
Discount Management
One of the Board’s strategic objectives is to maintain a stable share price
discount to NAV, and where practicable, to facilitate our shares trading at
close to NAV. The Company’s average discount over the period was 4.8%, which
compares favourably to the average AIC Global Sector discount of 9.7%. As at
30 June 2024 the Company’s discount was 4.9%.
To support the stability of the share rating, 1,705,000 shares (equivalent to
0.6% of the number of shares in issue at the start of the period) were bought
back and placed in Treasury during the six months to 30 June 2024. These
shares held in Treasury can be re-issued by the Company at a premium to
estimated NAV when there is market demand.
Second Interim Dividend
We have announced a second interim dividend for 2024 of 6.62p per share (2023:
6.34p). The total of the first two interim dividends declared for 2024 is
13.24p (2023: 12.52p), representing an increase of 5.8% on the same payments
for 2023. This level of dividend is well supported by the Company’s
investment strategy and its significant distributable reserves, which stood at
over £3.5 billion as at 30 June 2024.
Barring any unforeseen circumstances, it is anticipated that the Company’s
third and fourth interim dividends will be at least equal to the first and
second interim dividends. This would result in a total dividend for the 2024
financial year of at least 26.48p per share which, based on the Company’s
share price of 1,212.0p as at 30 June 2024, would represent an annual dividend
yield of 2.2% and a 5.1% increase over dividends paid for the financial year
ended 31 December 2023.
As shareholders may be aware, in the event that the proposed combination with
Witan proceeds as expected, it is the intention of the Board to increase the
third and fourth interim dividends for the current financial year (which would
each be paid after completion of the combination) so that they are
commensurate with the interim dividend payments currently being paid to Witan
shareholders. Further information on this potential increase in dividend,
including illustrative figures by way of information, is provided in the full
transaction announcement made by the Company on 26 June 2024.
Shareholder Engagement
I am delighted to let you know that we will be holding an investor forum in
London at WTW’s offices in Lime Street on Friday, 25 October 2024, when
shareholders will be provided with an investment update from WTW and will hear
presentations from two of our stock pickers. An on-line live feed will also be
made available for shareholders unable to attend in person. Shareholders
wishing to attend the investor forum in person or view the live feed will need
to pre-register. Further details of the investor forum and how to register
will be made available on the Company’s website in due course.
The Company has invested in its brand and website to improve communication
with shareholders, raise the profile of the Company and attract new investors
to increase shareholder returns. You may have noticed that we launched our
refreshed brand in May with a new website and an advertising campaign. Having
carefully studied investor feedback, we concluded that, after a very volatile
last few years, what we offer fits very well with what many investors are
looking for – a comfortable balance between risk and return. So, we adapted
our messaging and the look and feel of our brand accordingly.
If you have not yet done so, I would encourage you to subscribe to receive the
quarterly newsletter, monthly factsheet and other news and events.
Outlook
The economic and political outlook remains uncertain. This is reflected in our
modest net gearing of 4.6%. Although any faint doubt about the result of the
general election in the UK has been removed, there is still the US
presidential election to come, and the global economy seems delicately
balanced between faster or slower growth. However, rather than attempting to
second-guess macroeconomic or political outcomes, our investment strategy will
continue to focus on a diversified but high conviction approach to stock
picking based on the fundamentals of individual businesses. It will not always
outperform the market in every discrete period, particularly when the market
is so concentrated, but we believe it will continue to add significant value
for shareholders in the long run.
I look forward to meeting as many of you as possible at the General Meeting in
Dundee or the investor forum in London.
Dean Buckley
Chair
25 July 2024
Investment Manager’s Report
Global equities continued to rise in the first half of 2024, although
investors’ hopes at the start of the year for a rapid reduction in interest
rates to boost equity valuations and corporate profit margins were thwarted by
the surprising resilience of economic growth and the persistence of
inflationary pressures, including wage growth.
While market breadth continued to increase regionally, the US still dominated,
and returns by sector became extremely concentrated in information technology
as the half-year progressed due to investors’ enthusiasm for AI. Indeed,
almost a quarter (23%) of the MSCI ACWI’s 12.2% advance came from just one
stock, NVIDIA, whose valuation rose by an astonishing 151% in six months.
NVIDIA’s cutting-edge chips are at the epicentre of the AI boom and its
surging stock price meant that it briefly overtook Microsoft and Apple to
become the world’s most valuable company.
A Game of Two Quarters
It was a period of two distinct quarters for our portfolio, with
outperformance of the index in the first quarter due to good stock selection
across a variety of countries and industries. But we underperformed in the
second, largely because of our underweight positions in NVIDIA, and Apple
which rallied in the second quarter after announcing new AI features for its
phones.
Over the six-month period our portfolio delivered a robust absolute NAV Total
Return of 9.5% but lagged the MSCI ACWI by 2.7%. Our Share Price Total Return
was slightly higher than the NAV Total Return at 10.2%, due to a narrowing of
the discount from 5.4% to 4.9%. The table below shows the detailed
contribution analysis.
Contribution to Return Six Months to 30 June 2024 %
Benchmark Total Return 12.2
Asset Allocation -0.9
Stock Selection -2.2
Gearing and Cash 0.5
Investment Manager Impact -2.6
Portfolio Total Return 9.7
Share Buybacks 0.0
Fees/Expenses -0.3
NAV including Income, Debt at Par 9.4
Change in Fair Value of Debt 0.1
NAV including Income, Debt at Fair Value 9.5
Change in Discount 0.6
Share Price Total Return 10.2
Source: Performance and attribution data sourced from WTW, Juniper, MSCI,
FactSet and Morningstar as at 30 June 2024. Percentages may not add due to
rounding.
Against a highly concentrated index return, most of our managers struggled to
add value across the whole six months. Although GQG Partners (‘GQG’) stood
out as a stronger performer, Sands Capital (‘Sands’) and Vulcan Value
Partners were the only other two who modestly boosted relative returns. The
success of all three managers was in large part attributable to strong returns
from their technology holdings, especially NVIDIA, which was held by GQG and
Sands. The other seven managers were handicapped by not holding NVIDIA and by
having overall underweight positions relative to the index in giant tech
companies. Our average portfolio weight in NVIDIA was 2.2% versus 3% for the
index.
There were, however, several cases of stock selections which were costly over
the six-month period.
For example, the share prices of Diageo, the UK drinks giant, and Visa, the US
digital payments business, both of which are held by more than one manager,
and therefore represent two of our larger holdings, did not perform well,
though our managers continue to believe in their long-term prospects. Another
company to struggle was the airline Ryanair, which warned of softer ticket
pricing at the start of the holiday season, though Metropolis Capital
(‘Metropolis’), which owns the stock, says the long-term outlook for fares
and the business remains positive. Vinci, the French infrastructure group,
owned by Veritas Asset Management (‘Veritas’), also fell sharply.
Vinci’s share price decline followed threats from the French far-right
National Rally party to nationalise motorways, which is where its concessions
are the biggest source of profits. However, National Rally did not perform as
well as expected in the French general election, and Veritas says that
Vinci’s shares offer good value.
The detractors were partially offset by strong performance from a wide range
of our other holdings.
For example, we benefitted from:
* a 31% rise in Alphabet, which continues to enjoy strong earnings growth and
surprised investors with a stock buyback and its first dividend;
* a 36% rise in Ebara, the Japanese industrial group, which has exposure to
semiconductor manufacturing through its Precision Machinery Business;
* a 28% rise in Amazon.com, which reported a 221% year-on-year rise in
operating income as advertising spend increased and the company’s web
services division benefitted from customers modernising their tech
infrastructure and addressing AI;
* a 41% rise in Novo Nordisk, the Danish company which continues to excite
investors with its pioneering weight loss drugs; and
* a 57% increase in Hargreaves Lansdown, the UK investment platform, which
benefitted from a takeover bid.
Although the geopolitical backdrop remains turbulent, we believe that the
biggest risk facing investors today is the structure of the market index. The
index we compare ourselves to, MSCI ACWI, holds around 3,000 stocks, with an
average position size of 0.03%; but Microsoft, Apple, and NVIDIA each
represent around 4% of the index at the end of the six-month period, more than
110x the average stock position size. Volatility in companies that are so
large in the index creates significant distortions. When they move, the whole
index moves with them.
Owning large overweight stakes in such companies as their share prices rise
might help short-term performance but we believe it creates significant risks
to long-term returns if sentiment turns against them or they fail to deliver
expected profits. History shows that market concentration can persist for long
periods but ultimately ends with many market leaders falling by the wayside.
Remember Cisco, Intel and AOL, the fallen giants of the internet revolution in
the late 1990s. So, we are acutely aware of the need to actively manage our
exposures to achieve an acceptable balance between risk and reward.
Long Term Benefits of AI are Unclear
The stock market excitement around AI is understandable. It could be a
game-changing technology, with huge potential benefits for productivity. But
AI’s impact is still largely unknown. It is perhaps worth noting that, in
this high-tech gold rush, NVIDIA is providing picks and shovels to other
industries looking to improve their efficiency. But the long-term revenues and
profits of the technology are yet to emerge. They could be in farming,
healthcare, financial services, or consumer service industries, for example,
rather than the technology industry itself. And for the AI revolution to
succeed, it also requires investment in the background infrastructure, such as
data centres and electricity supply. We, therefore, prefer to spread our
investments both within technology and beyond.
Investment Journey as Important as Destination
We believe our more diverse positioning, across investment styles, regions,
industries, and stocks will serve shareholders well in the long term. For
investors in a core, long-term holding such as Alliance Trust, the journey is
just as important as the destination, and we aim to provide investors with a
much more comfortable ride than a single-manager portfolio that is skewed
towards a country or sector, which is more likely to experience higher peaks
and lower troughs.
In our view, the portfolio is well positioned with high quality companies in
every sector of the market.
Although changes of government generally do not make much difference to
long-term stock market returns, they can impact investor sentiment or sectors
in the short term, as the example of Vinci shows. So, with a new Labour
government in the UK, the possibility of a second Donald Trump term in the US,
ongoing wars in the Middle East and Ukraine, and no real clarity about the
future direction of global economic growth, the world remains a fragile and
uncertain place. More than ever, this emphasises the importance of staying
diversified and using skilled active managers to exploit mispriced
opportunities that arise out of the volatility that we are likely to continue
to see as the year progresses.
This diverse positioning across countries, sectors and styles should serve us
well in both a bullish scenario, where growth picks up as inflation and
interest rates come down and stock market returns broaden out, and a bearish
one, where inflation and interest rates remain stubbornly high and cause a
slow slide into recession.
New Manager Appointed
The main change we made to portfolio positioning in the first half of the year
was the replacement of Jupiter Asset Management (‘Jupiter’) with ARGA
Investment Management (‘ARGA’). As mentioned in our first-quarter
newsletter, this change followed Ben Whitmore’s decision to resign from
Jupiter to set up his own business. It was unrelated to performance. While we
continue to have high regard for Ben’s skill as an investor, his new
business arrangements represented potential risks and we will take time to
fully assess them. We decided to bring in a new manager with similar value
characteristics to ensure the portfolio remains balanced across styles.
ARGA’s appointment brought several new holdings into the portfolio, such as
Alaska Air, Tapestry, Boliden, and Société Générale. Alaska Air’s
valuation has come under pressure from the impending acquisition of Hawaiian
Airlines, but ARGA says Alaska Air has a strong balance sheet and the all-cash
deal will increase its market share at Honolulu International Airport from 10%
to 40%. Tapestry is a global luxury brand company. ARGA expects Tapestry to
benefit from the recovery in revenue from Kate Spade, which sells designer
handbags, clothing and accessories. In addition, Tapestry is in the process of
completing the acquisition of the global fashion group Capri Holdings, whose
brands include Versace, Jimmy Choo and Michael Kors. Boliden is a Swedish
miner which has been hit by a copper smelter fire and the closure of a
high-cost zinc mine, but ARGA says the company has plans to resolve these
temporary issues and hopes to receive a fire insurance payment. Société
Générale, the French bank, is expected to benefit from its exposure to
French retail network mergers, new cost initiatives and lower regulatory
costs.
In aggregate, stock turnover was 42% of the portfolio. The largest purchases
and sales undertaken by our managers during the last six months are listed in
the tables below.
Top 10 largest net purchases – Six Months to 30 June 2024 % of Equity Portfolio purchased Net value of stock purchased (£m)
Synopsys 1.4 49.0
Apple 0.8 29.9
Coca Cola 0.7 26.5
Philip Morris 0.7 26.3
Diageo 0.7 26.1
Skyworks Solutions 0.7 24.7
Kerry Group 0.6 22.3
Qualcomm 0.6 21.5
Tencent Holdings 0.6 21.1
Southern Company 0.6 21.1
Top 10 largest net sales – Six Months to 30 June 2024 % of Equity Portfolio sold Net value of stock sold (£m)
NVIDIA 1.4 52.2
Alphabet 0.9 34.6
Adani Enterprises 0.8 30.5
AIA Group 0.7 28.4
Stericycle 0.6 24.2
MercadoLibre 0.6 24.1
Astrazeneca 0.6 22.0
Molson Coors 0.6 21.7
Glencore 0.5 21.0
Microsoft 0.5 20.3
Source: Juniper.
Further changes to portfolio positioning can be expected in the second half of
the year if shareholders approve the combination with Witan. Up to that point,
it will be business as usual, with us actively managing our allocations to
each stock picker. However, the combination with Witan will give us the
opportunity to consider whether to change the manager line up. We have two
managers in common, GQG and Veritas, but Witan has other managers that we rate
highly, and we have always said that the optimal number is between 8 and 12.
We will be using the services of a specialist transition manager to combine
the portfolios. It should be noted too that there will be some less liquid
holdings that come across from Witan. These are high quality assets, and it
would not make sense in the short term to dispose of them. We are, therefore,
likely to continue holding them for some time until a sale looks materially
more attractive with proceeds being passed to the managers in place at the
time.
Craig Baker, Stuart Gray, Mark Davis
Willis Towers Watson
Investment Manager
Responsible Investment
In the six months to 30 June 2024, EOS at Federated Hermes engaged with 95
companies held in the portfolio on a range of over 439 issues and objectives.
Key areas of engagement included board effectiveness, climate change, human
and labour rights, human capital, biodiversity, digital rights and AI. Over
the same period, the Company’s Stock Pickers cast 2,717 votes at 184 company
meetings. They voted on all the proposals that could be voted on in the
period. The Company’s Stock Pickers voted against management on 320
proposals and abstained on 38 proposals. Of the votes exercised against
company management, the most frequently recurring themes were compensation and
director election.
Task Force on Climate Related Financial Disclosures (‘TCFD’)
The 2023 Product Level TCFD Report for the Company as prepared by WTW is
available in the AIFM Disclosures & Policies section of the Company’s
website www.alliancetrust.co.uk
Principal and Emerging Risks
In common with other financial services organisations, the Company’s
business model results in inherent risks.
The Directors have carried out a robust assessment of the principal and
emerging risks facing the Company and how these are continuously monitored and
managed.
In pursuit of its strategic objectives, the Company faces the following
principal risks:
* Investment – Market, Investment Performance, Strategy and Market Rating,
Capital Structure and Financial
* Operational – Cybercrime, IT Systems Failure, Inadequacy of Oversight and
Controls, Climate Risk, and Ineffective Disaster Recovery Planning.
* Legal and Regulatory Non‑Compliance
These risks, and the way in which they are managed, are described in more
detail within the How We Manage Our Risks section on pages 31 to 34 of the
Annual Report for the year ended 31 December 2023, which is available on the
Company’s website at www.alliancetrust.co.uk. The Board believes these
principal risks and uncertainties are applicable to the remaining six months
of the financial year, as they were to the six months ended 30 June 2024.
Emerging risks facing the Company have largely remained unchanged since those
detailed in the Annual Report for the year ended 31 December 2023, namely
geopolitical tension, governmental elections, global monetary policy,
inflation and interest rate pressures.
These emerging risks are considered by the Board alongside its principal
risks. The Board remains of the view that active management of the
concentrated ‘best ideas’ approach employed by the Company will be able to
take advantage of any volatility as it creates opportunities. The Board
believes that the Company’s globally diversified multi-manager portfolio
will be less volatile and, hopefully, a more rewarding investment.
Related Party Transactions
There were no transactions with related parties during the six months ended 30
June 2024 which had a material effect on the results or the financial position
of the Company.
Going Concern Statement
As at 30 June 2024, while there have been market changes over the period, the
Board does not consider that in relation to its ability to continue as a going
concern that there have been any significant changes to these factors. The
Directors, who have reviewed budgets, forecasts and sensitivities, consider
that the Company has adequate financial resources to enable it to continue in
operational existence for the foreseeable future.
Accordingly, the Directors believe it is appropriate to continue to adopt the
going concern basis.
The factors impacting on going concern are set out in detail in the
Company’s Viability Statement on pages 54 and 55 of the Annual Report for
the year ended 31 December 2023. Factors considered included Financial
Strength, Investment, Liquidity, Dividends, Reserves, Discount, Significant
Risks, Borrowings, Reserves, Security and Operations.
Responsibility Statement
We confirm to the best of our knowledge that:
* The condensed set of financial statements which have been prepared in
accordance with IAS 34 “Interim Financial Reporting” as adopted by the UK,
give a true and fair view of the assets, liabilities, financial position and
profit or loss of the Company as required by DTR 4.2.4 of the Disclosure,
Guidance and Transparency Rules;
* The interim management report includes a fair review of the information
required by:
(a) DTR 4.2.7R of the Disclosure Guidance 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 Guidance 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 Company during that period, and any changes in
the related party transactions described in the Annual Report for the year
ended 31 December 2023 that could have a material effect on the financial
position or performance of the Company in the first six months of the current
financial year.
Signed on behalf of the Board
Dean Buckley
Chair
25 July 2024
Financial Statements
Condensed Income Statement (unaudited) for the period ended 30 June 2024
6 months to 30 June 2024 6 months to 30 June 2023 Year to 31 December 2023 (audited)
£000 Revenue Capital Total Revenue Capital Total Revenue Capital Total
Income 35,554 320 35,874 42,102 – 42,102 69,591 1,678 71,269
Gain on investments held at fair value through profit or loss – 298,729 298,729 – 289,726 289,726 – 578,715 578,715
Profit/(loss) on fair value of debt – 8,627 8,627 – 2,765 2,765 – (11,371) (11,371)
Total 35,554 307,676 343,230 42,102 292,491 334,593 69,591 569,022 638,613
Investment management fees (2,786) (6,435) (9,221) (2,451) (5,438) (7,889) (5,074) (11,228) (16,302)
Administrative expenses (1,786) (121) (1,907) (1,239) (200) (1,439) (2,558) (344) (2,902)
Finance costs (1,376) (4,127) (5,503) (1,063) (3,190) (4,253) (2,380) (7,141) (9,521)
Foreign exchange losses – (1,580) (1,580) – (3,284) (3,284) – (3,737) (3,737)
Profit before tax 29,606 295,413 325,019 37,349 280,379 317,728 59,579 546,572 606,151
Taxation (2,872) (5,933) (8,805) (3,323) (185) (3,508) (6,231) (251) (6,482)
Profit for the period/year 26,734 289,480 316,214 34,026 280,194 314,220 53,348 546,321 599,669
All profit for the period/year is attributable to equity holders.
Earnings per share attributable to equity holders 9.42 101.99 111.41 11.71 96.41 108.12 18.55 189.98 208.53
The Company does not have any other comprehensive income and hence profit for
the period/year, as disclosed above, is the same as the Company’s total
comprehensive income.
Condensed Statement of Changes in Equity (unaudited) for the period ended 30
June 2024
Distributable reserves
£000 Share capital Capital redemption reserve Realised capital reserve Unrealised capital reserve Revenue reserve Total distributable reserves Total
Balance at 1 January 2023 7,314 11,684 2,669,933 103,754 102,334 2,876,021 2,895,019
Total Comprehensive income:
Profit for the year – – 75,430 470,891 53,348 599,669 599,669
Transactions with owners, recorded directly to equity:
Ordinary dividends paid – – – – (71,378) (71,378) (71,378)
Unclaimed dividends returned – – – – 14 14 14
Own shares purchased (208) 208 (86,636) – – (86,636) (86,636)
Balance at 31 December 2023 (audited) 7,106 11,892 2,658,727 574,645 84,318 3,317,690 3,336,688
Balance at 1 January 2023 7,314 11,684 2,669,933 103,754 102,334 2,876,021 2,895,019
Total Comprehensive income:
Profit for the period – – 42,673 237,521 34,026 314,220 314,220
Transactions with owners, recorded directly to equity:
Ordinary dividends paid – – – – (35,347) (35,347) (35,347)
Own shares purchased (143) 143 (57,287) – – (57,287) (57,287)
Balance at 30 June 2023 7,171 11,827 2,655,319 341,275 101,013 3,097,607 3,116,605
Balance at 1 January 2024 7,106 11,892 2,658,727 574,645 84,318 3,317,690 3,336,688
Total Comprehensive income:
Profit for the period – – 254,730 34,750 26,734 316,214 316,214
Transactions with owners, recorded directly to equity:
Ordinary dividends paid – – – – (36,802) (36,802) (36,802)
Unclaimed dividends returned – – – – 9 9 9
Own shares purchased – – (20,427) – – (20,427) (20,427)
Balance at 30 June 2024 7,106 11,892 2,893,030 609,395 74,259 3,576,684 3,595,682
The £609.4m of Unrealised capital reserve (£341.3m at 30 June 2023 and
£574.6m at 31 December 2023) arising on the revaluation of investments is
subject to fair value movements and may not be readily realisable at short
notice. As such it may not be entirely distributable. The Unrealised capital
reserve includes unrealised gains on the fixed rate loans of £14.1m (£19.6m
as at 30 June 2023 and £5.5m at 31 December 2023) which are not
distributable.
Condensed Balance Sheet (unaudited) as at 30 June 2024
£000 30 June 2024 30 June 2023 31 December 2023 (audited)
Non-current assets
Investments held at fair value through profit or loss 3,750,562 3,254,091 3,482,329
3,750,562 3,254,091 3,482,329
Current assets
Outstanding settlements and other receivables 14,716 11,721 9,321
Cash and cash equivalents 115,546 63,702 84,974
130,262 75,423 94,295
Total assets 3,880,824 3,329,514 3,576,624
Current liabilities
Outstanding settlements and other payables (14,983) (9,033) (9,792)
Bank loans (45,716) (63,500) –
(60,699) (72,533) (9,792)
Total assets less current liabilities 3,820,125 3,256,981 3,566,832
Non-current liabilities
Fixed rate loan notes held at fair value (206,517) (140,376) (215,144)
Bank loans (15,000) – (15,000)
Deferred tax provision (2,926) – –
(224,443) (140,376) (230,144)
Net assets 3,595,682 3,116,605 3,336,688
Equity
Share capital 7,106 7,171 7,106
Capital redemption reserve 11,892 11,827 11,892
Capital reserve 3,502,425 2,996,594 3,233,372
Revenue reserve 74,259 101,013 84,318
Total equity 3,595,682 3,116,605 3,336,688
All net assets are attributable to equity holders.
Net asset value per ordinary share attributable to equity holders (£) 12.74 10.87 11.75
Condensed Cash Flow Statement (unaudited) for the period ended 30 June 2024
£000 6 months to 30 June 2024 6 months to 30 June 2023 Year to 31 December 2023 (audited)
Cash flows from operating activities
Profit before tax 325,019 317,728 606,151
Adjustments for:
Gains on investments (298,729) (289,726) (578,715)
(Gains)/losses on fair value of debt (8,627) (2,765) 11,371
Foreign exchange losses 1,580 3,284 3,737
Finance costs 5,503 4,253 9,521
Operating cash flows before movements in working capital 24,746 32,774 52,065
Decrease/(increase) in receivables 837 (913) 1,599
Increase/(decrease) in payables 94 (1,303) (36)
Net cash inflow from operating activities before tax 25,677 30,558 53,628
Taxes paid (6,221) (3,713) (6,654)
Net cash inflow from operating activities 19,456 26,845 46,974
Cash flows from investing activities
Proceeds on disposal of investments 2,270,716 791,489 1,600,165
Purchases of investments (2,244,807) (743,307) (1,489,643)
Net cash inflow from investing activities 25,909 48,182 110,522
Net cash inflow before financing 45,365 75,027 157,496
Cash flows from financing activities
Dividends paid – equity (36,802) (35,347) (71,378)
Unclaimed dividends returned 9 – 14
Purchase of own shares (16,801) (56,654) (88,060)
Repayment of bank debt (59,000) – (63,500)
Drawdown of bank debt 104,874 – 15,000
Issue of loan notes – – 60,632
Finance costs paid (5,335) (4,904) (10,357)
Net cash outflow from financing activities (13,055) (96,905) (157,649)
Net increase/(decrease) in cash and cash equivalents 32,310 (21,878) (153)
Cash and cash equivalents at beginning of period/year 84,974 88,864 88,864
Effect of foreign exchange rate changes (1,738) (3,284) (3,737)
Cash and cash equivalents at the end of period/year 115,546 63,702 84,974
Notes to the Financial Statements
1. General information
The information contained in this Interim Report for the period ended 30 June
2024 does not constitute statutory accounts as defined in section 434 of the
Companies Act 2006. A copy of the statutory accounts for the year ended 31
December 2023 has been delivered to the Registrar of Companies. The
auditor’s report on those financial statements was prepared under s495 and
s496 of the Companies Act 2006. The Interim Report was not qualified, did not
contain an emphasis of matter paragraph and did not contain statements under
section 498(2) or (3) of the Companies Act.
The interim financial results are unaudited and have not been reviewed by the
Company’s auditors. They should not be taken as a guide to the full year.
2. Accounting policies
Basis of preparation
These condensed interim financial statements for the six months to 30 June
2024 have been prepared in accordance with IAS 34 ‘Interim financial
reporting’ and also in accordance with the measurement and recognition
principles of UK adopted international accounting standards (‘IASs’) but
are not the Company’s statutory accounts. They include comparators extracted
from the Company’s statutory accounts but do not include all of the
information required for full annual financial statements and should be read
in conjunction with the 2023 Annual Report, which were prepared in accordance
with the requirements of the Companies Act 2006 and in accordance with
UK-adopted international accounting standards. Those accounts have been
reported on by the Company’s auditors and delivered to the Registrar of
Companies. The report of the auditor was (i) unqualified, (ii) did not include
a reference to any matters to which the auditor drew attention by way of
emphasis without qualifying their report and (iii) did not contain a statement
under section 498(2) or (3) of the Companies Act 2006.
The Association of Investment Companies (‘AIC’) issued a Statement of
Recommended Practice: Financial Statements of Investment Companies
(‘SORP’) in July 2022. The Directors have sought to prepare the financial
statements in accordance with the AIC SORP where the recommendations are
consistent with IFRS. The Company qualifies as an investment entity.
Going concern
The Directors having assessed the principal and emerging risks of the Company
have, at the time of approving the financial statements, a reasonable
expectation that the Company has adequate resources to continue in operational
existence for at least 12 months from date of approval. The Company’s
assets, the majority of which are investments in quoted equity securities and
are readily realisable, significantly exceed its liabilities. They therefore
continue to adopt the going concern basis of accounting in preparing the
financial statements. The Company’s business activities, together with the
factors likely to affect its future development and performance are set out in
the Strategic Report of the Annual Report for the financial year ended 31
December 2023.
Segmental reporting
The Company has identified a single operating segment, the investment trust,
which aims to maximise shareholders returns. As such no segmental information
has been included in these financial statements.
Application of accounting policies
The same accounting policies, presentations and methods of computation are
followed in these financial statements as were applied in the Company’s
annual audited financial statements for the financial year ended 31 December
2023.
3. Income
£000 6 months to 30 June 2024 6 months to 30 June 2023 Year to 31 December 2023
Revenue:
Income from investments
Listed dividends – UK 4,651 6,527 12,836
Listed dividends – Overseas 30,083 35,059 55,761
34,734 41,586 68,597
Other income
Other interest 798 515 987
Other income 22 1 7
820 516 994
Total allocated to revenue 35,554 42,102 69,591
Capital:
Income from investments
Listed dividends – UK 23 – –
Listed dividends – Overseas 297 – 1,678
Total allocated to capital 320 – 1,678
Total income 35,874 42,102 71,269
4. Investment management fees
The fee includes £8,580,000 for investment management services, which is
allocated 25% to revenue and 75% to capital, and £641,000 for distribution
services, which is recorded directly to revenue.
5. Dividends paid
£000 6 months to 30 June 2024 6 months to 30 June 2023 Year to 31 December 2023
2022 fourth interim dividend of 6.00p per share – 17,498 17,498
2023 first interim dividend of 6.18p per share – 17,849 17,849
2023 second interim dividend of 6.34p per share – – 18,028
2023 third interim dividend of 6.34p per share – – 18,003
2023 fourth interim dividend of 6.34p per share 18,003 – –
2024 first interim dividend of 6.62p per share 18,799 – –
Total 36,802 35,347 71,378
Availability of Interim Report
The Interim Report will shortly be available to view on the Company's website
at www.alliancetrust.co.uk
A copy of the Interim Report will shortly be submitted to the Financial
Conduct Authority’s National Storage Mechanism and will be available for
inspection at
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
END