Alliance Trust net asset value rises

Alliance Trust PLC, announced today that the net asset value of the Company rose 3.1% to £2,915m in the six months to 31 July 2007.

Consolidated profit before tax for the period rose to £117m, made up of a £81.5m net capital appreciation on the group’s assets as well as net revenue of £35.5m. This compares with a figure of £33.0m for the same period in the last financial year, made up of £2.4m net capital appreciation and £30.6m of net revenue

Gains on stock market investments boosted capital income although our decision last year to reduce equity exposure dampened short-term gains. The value of the quoted equity portfolio rose 3.4% led by strong absolute gains in Asia-Pacific, up 15.3%, and UK Small Cap, which climbed 4.2%. This was offset by a drop in Japan of 4.8% and during the period the company cut its exposure to Japan from 7.1% to 1.1% of net assets. Increased revenue included rental income from our increased property portfolio and fees from asset management activities in private equity and Asia-Pacific subsidiaries.

The Company continued to diversify assets across different asset classes over the half year. At the end of the period, 86.5% of the Company’s assets were invested in quoted equities, with 4.2% in private equity, 3.5% in property, 3.3% in cash and other net assets, 0.9% in fixed income and 1.6% in subsidiaries.

Chief Executive Alan Harden said, “We enjoyed steady growth over the six months despite some sharp moves on the stock market in late February and late July. More importantly, we acted boldly as value started to emerge in the quoted equity markets where we were a decisive and active buyer, particularly at the end of the period and afterwards. We also made good progress in our objective of diversification, increasing our exposure to private equity and property. We continued to invest in our people and our business to build even stronger, complementary income streams and drive improved performance over the long-term.”

“We remain convinced the best use of company capital is to continue seeking diversification of our assets beyond quoted equities into areas such as commercial property with strong rental yield, venture capital or private equity partnerships with prospects for medium and long-term growth and returns, and our fast-growing subsidiaries, which can generate fees and revenue that are not directly correlated with the stock markets. Investing in our financial services businesses and building up specialist teams in asset classes such as property and private equity is a long-term strategy. Although markets are still struggling with uncertainty, we are confident that this strategy is positioning our group well for long-term growth with a solid portfolio of quality stocks and specialist investment opportunities.”

Chief Investment Officer Katherine Garrett-Cox said, “Fairly flat returns for equity markets over the period masked periods of extreme volatility. We took decisive action as opportunities emerged and investors began pricing risk back into the market. We reinvested some of the cash we generated by reducing our equity exposure last year, when we anticipated this sea-change in attitudes to risk, cutting our cash holding in the company from over 7% of net assets at the start of the period to just over 3% at the end. We have since moved further, taking gearing of up to 5% to acquire stocks we believe present real long-term value. Since our objective is to provide real growth we have the flexibility to pinpoint exactly those assets we believe will deliver real long-term growth in income and capital. We used the freedom this gives us to cut our holding in Japan from 7.1% to 1.1% of net assets and switch into Asia-Pacific and Europe.”