RNS Number : 6362Z
Allianz Dresdr 2 Endw Policy TstPLC
22 July 2008
For immediate release 22nd July
2008
ALLIANZ DRESDNER SECOND ENDOWMENT POLICY TRUST plc
HALF-YEARLY FINANCIAL REPORT
For the six months ended 30th June 2008
Interim Management Report
Investment Review - 2009 Pool
The net asset value (*NAV*) has risen from 157.0p per 2009 Share at 31st December 2007 to 159.2p per 2009 Share at 30th June 2008, an
increase of 1.4%. This compares with a decline in the FTSE All-Share Index over the same period of 13.1%. Over this period the discount to
NAV at which the Company*s shares traded in the secondary market narrowed from approximately 13% to 10%.
The 2009 Pool currently has investments in policies valued at �28.6 million from a total of 51 with- profits funds. During the six month
period the 2009 Pool realised proceeds of policy maturities amounting to �4.4 million. The average annualised return on these policies was
5.97%, excluding benefits arising from demutualisation.
The Company has now repaid its bank borrowings in full and expects to invest the cash it generates over the remainder of its planned life to
31st December 2009 predominantly in short-dated gilt-edged securities.
Prudential has recently announced that it will not reattribute the value of the so-called *inherited estate* between shareholders and
policyholders. In February 2008 AVIVA announced that it would be making a special distribution to certain policyholders of �2.1 billion in
the form of additional bonuses spread over three years. This is likely only to have a modest impact on the Company's NAV.
The Company*s portfolio of endowment policies has exhibited defensive characteristics in the face of falling equity, credit and property
markets reflecting the fact that bonus rates and surrender values are only periodically reset. If the current market weakness persists more
life offices may well reduce bonus rates and surrender values in the second half of 2008. However, it is noteworthy that a substantial and
increasing proportion of the Company*s NAV is underpinned by accrued guaranteed benefits. Maturities will continue over the remainder of
the Company*s life as policies held in the Company*s portfolio continue reach the end of their terms.
Principal Risks and Uncertainties
The principal risks facing the Company were outlined in the Directors* Report on page 14 of the Annual Financial Report of the Company for
the year ended 31st December 2007. These risks fall broadly under the following categories: Level of Bonus Rate Declarations, Undue
Concentration of Investment, Gearing, Board Membership and Outsourcing of Management of the Company. In the opinion of the Board these
principal risks have not changed. However, a number of key financial markets, in particular those related to credit, remain under stress.
A further contraction in the credit available from the banking system could exacerbate the current slowdown anticipated in economic activity
and adversely affect bonus rate declarations by life offices of policies held in the Company*s portfolio over the forthcoming six months.
Material Events and Transactions
In the six month period ended 30th June 2008 the following material events and transactions have taken place.
At the Annual General Meeting of the Company held on 24th April 2008, all the resolutions put to shareholders were passed.
There were no related party transactions in the period.
Investment Trust Status
The Company operates as an approved investment trust within the meaning of Section 842 of the Income and Corporation Taxes Act 1988. Such
approval has been granted for the year ended 30th September 2006 and is expected to be granted for the year ended 31st December 2007.
Approval is expected to be granted under Section 842 of the Income and Corporation Taxes Act 1988 for the current accounting year. The
Company is not a close company.
Accrued guaranteed benefits
A significant proportion of shareholders* assets is now made up of guaranteed benefits * the total of sums assured and reversionary bonuses
declared to date. Projected final net asset value based on the value of guaranteed benefit accrued to date, after estimated costs and based
on current interest rates, is 127.3p for the 2009 Shares. This figure assumes no further bonuses, reversionary or terminal, from 30th June
2008 and takes into account future premium commitments, expenses and interest.
Projected final net asset values
The Company publishes projected final net asset values on a quarterly basis. The projections set out in the table below are based on
possible future bonus rate levels, which will reflect, inter alia, the investment returns earned by the underlying with-profits funds.
Projected final net asset values as at 30th June 2008 are given in the table below.
150% Current Bonus 120% Current Bonus 100% Current Bonus 80% Current Bonus No Further
Bonuses
Rates Rates Rates Rates
Projected final net asset 183.6p 172.0p 164.3p 156.7p
127.3p
value at 31st December 2009
(2009 Pool)
Projected final net asset values are calculated using the principal bases and assumptions set out on the last page of this announcement.
They provide an indication of the sensitivity of the projected final net asset values to bonus rate changes. They should not be taken as
forecasts of any particular degree of change in bonus rate levels.
Earnings and dividend
The Company is managed with the objective of providing returns to investors entirely in the form of capital growth. The continuing deficit
on the Revenue Account is consistent with this objective. Consequently, no dividend will be payable.
Share buy backs
During the period under review no 2009 Shares were bought back for cancellation.
Responsibility Statement
The Directors confirm to the best of their knowledge that:
� the condensed set of financial statements contained within the half-yearly financial report has been prepared in accordance with
the Accounting Standards Board's Statement *Half-Yearly Financial Reports*; and
� the interim management report includes a fair review of the information required by Disclosure and Transparency Rule 4.2.7R, 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 financial year; and
� the interim management report includes a fair review of the information concerning related parties transactions as required by
Disclosure and Transparency Rule 4.2.8R.
The half-yearly financial report was approved by the Board on 22nd July 2008 and the above responsibility statement was signed on its behalf
by the Chairman.
By Order of the Board
J Clement
Chairman
155 Bishopsgate
London EC2M 3AD
2009 POOL ALLIANZ DRESDNER SECOND ENDOWMENT POLICY TRUST plc TWENTY LARGEST
HOLDINGS BY LIFE OFFICEAs at 30th June 2008
Life Office Value of Policies
�'000s % of Total Investments
Standard Life 8,972 29.8
Legal & General 3,790 12.6
Prudential (Scottish Amicable) 2,705 9.0
Scottish Widows 1,965 6.5
AVIVA (Norwich Union) 1,658 5.5
Prudential 1,612 5.3
Scottish Life 1,352 4.5
Clerical Medical 1,205 4.0
Scottish Provident 1,163 3.9
Friends Provident 487 1.6
Colonial 390 1.3
Royal & Sun Alliance (Royal Life) 257 0.9
Gresham Life 249 0.8
AVIVA (Provident Mutual) 211 0.7
Sun Life of Canada 207 0.7
Britannic Assurance 153 0.5
Pearl Assurance 131 0.4
Scottish Equitable 129 0.4
Royal & Sun Alliance (Sun Alliance) 126 0.4
AXA Sun Life 114 0.4
Total of twenty largest holdings 26,876 89.2
Others 1,750 5.8
Total holdings of endowment policies 28,626 95.0
Fixed Interest Holdings
Abbey 5.375% 30/12/09 499 1.7
UK Govt 5.75% 07/12/09 1,007 3.3
1,506 5.0
TOTAL OF INVESTED FUNDS 30,132 100.0
SUMMARY OF UNAUDITED RESULTS * 2009 POOL
INCOME STATEMENT
Six months ended 30th June 2008
Revenue Capital Total Return
�'000s �'000s �'000s
(Note 2)
Net gains on investments at fair value - 869 869
Income 50 - 50
Management and advisory fees (234) - (234)
Administration expenses (91) - (91)
Net return before finance costs andtaxation
(275) 869 594
Finance costs: interest payable and similar charges (159) - (159)
Net return on ordinary activities before taxation (434) 869 435
Taxation - - -
Net return attributable to 2009 Shareholders (434) 869 435
Return per 2009 Share (Note 1) (2.20)p 4.40p 2.20p
(basic and diluted)
BALANCE SHEET �'000s
As at 30th June 2008
Investments at fair value through profit or loss 30,132
Fair value of interest rate swaps (61)
Net current assets 1,361
Total Assets less Current Liabilities 31,432
Creditors: amounts falling due after more than one -
year
Total Net Assets 31,432
Called up Share Capital 197
Share Premium Account 18,925
Capital Redemption Reserve 3
Capital Reserves: Realised 22,583
Unrealised 10,830
Hedging Reserve 29
Revenue Reserve (21,135)
Equity Shareholders* Funds 31,432
Net asset value per 2009 Share 159.2p
The net asset value is based on 19,745,000 2009 Shares in issue.
Calculations of net asset value are based on recent open market transactions at auction, or surrender values in certain
cases.
SUMMARY OF UNAUDITED RESULTS * 2009 POOL
INCOME STATEMENT
Six months ended 30th June 2007
Revenue Capital Total Return
�'000s �'000s �'000s
(Note 2)
Net gains on investments at fair value - 1,188 1,188
Income 38 - 38
Management and advisory fees (262) - (262)
Administration expenses (82) - (82)
Net return before finance costs and
taxation (306) 1,188 882
Finance costs: interest payable and similar charges (197) - (197)
Net return on ordinary activities before taxation (503) 1,188 685
Taxation - - -
Net return attributable to 2009 Shareholders (503) 1,188 685
Return per 2009 Share (Note 1) (2.55)p 6.02p 3.47p
(basic and diluted)
BALANCE SHEET �'000s
As at 30th June 2007
Investments at fair value through profit or loss 33,839
Fair value of interest rate swaps (39)
Net current assets 835
Total Assets less Current Liabilities 34,635
Creditors: amounts falling due after more than one (4,425)
year
Total Net Assets 30,210
Called up Share Capital 197
Share Premium Account 18,925
Capital Redemption Reserve 3
Capital Reserves: Realised 7,052
Unrealised 11,549
Hedging Reserve 44
Revenue Reserve (7,560)
Equity Shareholders* Funds 30,210
Net asset value per 2009 Share 153.0p
The net asset value is based on 19,745,000 2009 Shares in issue.
Calculations of net asset value are based on recent open market transactions at auction, or surrender values in certain cases.
SUMMARY OF UNAUDITEDRESULTS * 2009 POOL
INCOME STATEMENT
Year ended 31st December 2007
Revenue Capital Total Return
�'000s �'000s �'000s
(Note 2)
Net gains on investments at fair - 2,256 2,256
value
Income 87 - 87
Management and advisory fees (507) - (507)
Administration expenses (170) - (170)
Net return before finance costs and
taxation (590) 2,256 1,666
Finance costs: interest payable and (179) - (179)
similar charges
Net return on ordinary activities (769) 2,256 1,487
before taxation
Taxation - - -
Net return attributable to 2009 (769) 2,256 1,487
Shareholders
Return per 2009 Share (Note 1) (3.90)p 11.43p 7.53p
(basic and diluted)
BALANCE SHEET �'000s
As at 31st December 2007
Investments at fair value through 32,847
profit or loss
Fair value of interest rate swaps 78
Net current assets 707
Total Assets less Current 33,632
Liabilities
Creditors: amounts due after more (2,625)
than one year
Total Net Assets 31,007
Called up Share Capital 197
Share Premium Account 18,925
Capital Redemption Reserve 3
Capital Reserves: Realised 7,940
11,729
Unrealised
Hedging Reserve 39
Revenue Reserve (7,826)
Equity Shareholders* Funds 31,007
Net asset value per 2009 Share 157.0p
The net asset value is based on 19,745,000 2009 Shares in issue.
Calculations of net asset value are based on recent open market
transactions at auction, or surrender values in certain cases.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS* FUNDS * 2009 POOL
For the six months ended 30th June 2008 and comparative periods
Called SharePremiumAccount( Capital CapitalReserveRealis
CapitalReserveUnreal HedgingReserve( Revenue Total(�000s)
upShareCapital( �000s) RedemptionReserve( ed(�000s) ised(�000s)
�000s) Reserve(�000s)
�000s) �000s)
Six months ended 30th June
2008
Net Assets at 31st December 18,925 3 7,940
11,729 39 (7,826) 31,007
2007 197
Amortisation of Hedging - - - -
- (10) - (10)
Reserve
Revenue Return - - - -
- - (434) (434)
Capital Return - - - 1,768
(899) - - 869
Transfer from 2006 Pool - - - 12,875
- - (12,875) -
Net Assets at 30th June 2008 197 18,925 3 22,583
10,830 29 (21,135) 31,432
Six months ended 30th June
2007
Net Assets at 31st December 197 18,925 3 6,325
11,088 49 (7,057) 29,530
2006
Amortisation of Hedging - - - -
- (5) - (5)
Reserve
Revenue Return - - - -
- - (503) (503)
Capital Return - - - 727
461 - - 1,188
Net Assets at 30th June 2007 197 18,925 3 7,052
11,549 44 (7,560) 30,210
Year ended 31st December 2007
Net Assets at 31st December 197 18,925 3 6,325
11,088 49 (7,057) 29,530
2006
Amortisation of Hedging - - - -
- (10) - (10)
Reserve
Revenue Return - - - -
- - (769) (769)
Capital Return - - - 1,615
641 - - 2,256
Net Assets at 31st December 197 18,925 3 7,940
11,729 39 (7,826) 31,007
2007
CASH FLOW STATEMENT * 2009 POOL
Six Months to30th Six Months to30th Year to31st
June2008 June2007 December2007
�*000s �*000s �*000s
Net cash outflow from (244) (258) (556)
operating activities
Return on investments and
servicing of finance
Interest paid (46) (114) (245)
Taxation
UK income tax repaid - - -
Capital expenditure and
financial investment
Purchases of fixed asset (1,354) (393) (770)
investments
Sales of fixed asset 4,765 2,176 4,601
investments
Net cash inflow from capital 3,831
expenditure and financial 3,411 1,783
investment
Net cash inflow before 3,121 1,411 3,030
financing
Financing
Decrease in medium term loan (2,625) (875) (2,675)
Net cash outflow from (2,625) (875) (2,675)
financing
Increase in cash 496 536 355
Reconciliation of Return on
OrdinaryActivities before
Taxation to Net Cash Flow from
Operating Activities
Total Return before taxation 435 685 1,487
Add: Finance costs: interest 159 197 179
payable and similar charges
Less: Net gains on investments (869) (1,188) (2,256)
at fair value
Less: UK income tax suffered - - (1)
(275) (306) (591)
Decrease in debtors 6 37 49
Increase (Decrease) in 25 11 (14)
creditors
Net cash outflow from (244) (258) (556)
operating activities
Reconciliation of net cash
flow to movement in net funds
Net cash inflow 496 536 355
Repayment of bank loan 2,625 875 2,675
Movement in net funds 3,121 1,411 3,030
Net debt brought forward (1,883) (4,913) (4,913)
Net funds (debt) carried 1,238 (3,502) (1,883)
forward
Note 1
The Returns per 2009 Share have been calculated using a weighted average number of shares in issue during the period of 19,745,000 (30th
June 2007 19,745,000; 31st December 2007 19,745,000).
Note 2
The Company consisted of the 2006 and 2009 Pools. The reconstruction of the 2006 Pool and the subsequent repayment of the 2006 Shares were
completed on 6th October 2006. The remaining 2006 Pool balances at 31st December 2007 of Capital Reserves, Realised �12,874,878 and
Revenue Reserve (�12,874,878) were transferred into the 2009 Pool during the accounting period. At 30th June 2008, no assets remain within
the 2006 Pool. The 2009 Pool therefore represents all assets and liabilities attributable to the Company.
The total return columns on pages 5 to 7 are the profit and loss accounts of the 2009 Pool. All revenue and capital items derive from
continuing operations. No operations were acquired or discontinued in the period. A Statement of Total Recognised Gains and Losses is not
required as all gains and losses of the Company have been reflected in the Income Statement.
Note 3
Endowment policies, listed investments and interest rate swaps are held at fair value through profit or loss in accordance with FRS 26
*Financial Instruments: Recognition and Measurement*. Listed investments and interest rate swaps are valued at bid market prices.
Note 4
This half-yearly financial report has been neither audited nor reviewed by the Company*s auditors.
The half-yearly financial report has been prepared using the same accounting policies as those adopted in the annual financial statements
for the year ended 31st December 2007.
The non-statutory financial statements for the year to 31st December 2007 are an extract from the latest published financial statements of
the Company which have been delivered to the Registrar of Companies. The auditors* opinion on those financial statements was unqualified and
did not contain a statement under Section 237(2) or (3) of the Companies Act 1985.
In accordance with recently introduced changes to the UK's disclosure requirements for listed companies, the Company is now required to make
limited additional and updated disclosures, mainly relating to the first and third quarters of the financial year. These Interim Management
Statements will be released via the Regulatory News Service and posted on the Company's website www.allianzglobalinvestors.co.uk on or
shortly before 19th May and 19th November each year.
The half-yearly financial report will be sent to shareholders and made available to the public at the Registered Office of the Company, 155
Bishopsgate, London EC2M 3AD.
Principal bases and assumptions used in projecting the final net asset values on page 2.
The final net asset values for the 2009 Pool have been calculated at 31st December 2009 on the basis that:
1) All policies are held to maturity, no death claims or demutualisation benefits arise and no further purchases or disposals of
policies are made;
2) The latest reversionary and terminal bonus rates declared at 30th June 2008 continue to apply until maturity or are reduced
immediately by 20% or 100%, or increased by 20% or 50%;
3) The estimated mid-market gross redemption yields as at 30th June 2008, for policies of differing remaining terms, are assumed
to remain unchanged;
4) Annual expenses are assumed to be in line with recent experience, and future annual inflation is assumed to be 3%. Interest
rates over the Company's remaining life are assumed to be consistent with the shape of the swap rate yield curve at 30th June 2008;
5) No further shares are issued or repurchased, nor are any dividends paid;
6) They do not account for any likely costs of liquidation.
For further information, please contact
Simon White, RCM (UK) Limited
Tel: 020 7065 1539
This information is provided by RNS
The company news service from the London Stock Exchange
END
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