3 MAY 1940, Page 29




THE annual ordinary general meeting of The Alliance Trust Company, Limited, was held in the Company's Registered Office, Meadow House, 6; Reform Street, Dundee, on Friday, April 26th.

Mr. James Prain, the chairman, in moving the adoption of the annual ri.port, said: It is now my duty to submit for your approval the ciirectors' report and accounts for the past year.

The revenue from our investments amounts to £668,000, as com- pared with £676,000 a year ago, a result which may be regarded as quite satisfactory in the circumstances. Although somewhat below the results of our peak year of 1937-38, when we raised our dividend to 25 per cent., revenue as a whole still shows an excellent return on the funds employed and enables us not only to maintain that late of dividend but, what is equally important, to set aside once again a substantial sum to contingency reserve. After making these appropriations the amount to be carried forward is /59,000, the surplus for the year being greater than that of a year ago by some £27,000. That it should be greater, notwithstanding the small decline in gross income, is due, of course, to the incidence of taxation from which the company has gained a temporary benefit in . the year under review.

Turning to the balance-sheet you will observe that the special taxation reserve no longer appears in the accounts. This reserve, you may remember, was set up following a decision of the Inland Revenue to make an alteration on our basis of taxation. The necessary adjust- ments are now completed and the balance of the income-tax reserve, amounting to £35,900, which is no longer required, has been trans- ferred to contingency ieserve. There is one matter, however, to which I must make reference, if only for the purposes of record. Our investments in the United States were placed at the disposal of the Treasury at the outbreak of war, in accordance with the provisions of the Defence Acts. As and when dollars are required to meet national requirements these securities will be taken from us. So far, two requisitions have been made, the company receiving the sterling equivalent of the market prices of the stocks taken over. We must anticipate a continuation of this process and envisage a time when all, or nearly all, our American bonds and stocks will have been taken from us. That, briefly, is a situation which is well known and no doubt familiar to you.

We have a large and varied portfolio of dollar bonds and stocks representing over 20 per cent. of our total funds. This has not been acquired in a day or in any haphazard manner, but is the result of many years' work of an experienced management whose efforts have been directed towards building up a sound investment in that field yielding a satisfactory income and not without potentialities. To a going concern, therefore, the liquidation of a large part of its earning assets cannot but be unwelcome and unprofitable and will tend towards a reduction in the earning power of the company.

It may suggest itself to you that we, together with other sim:lar institutions, who have acquired in the course of time valuable hold- ings in the United States, are being penalised rather than rewarded for our initiative in that field. That may be so. I see no satisfactory alternative, however, and I think we must accept this war measure as inevitable.

There are other war measures which if applied without consideration and understanding will tend to bear unfairly in some directions, and which I see no reason to accept as inevitable. I refer more particularly to the Excess Profits Tax. There are innumerable concerns which appear to be liable to an amount of this tax out of all proportion to the source and nature of their profits—companies which in recent ytars by enterprise and expansion, or for other reasons quite un- connected with war expenditure, have improved their position. Under the existing Finance Acts these companies will be penalised for their energy and efficiency, while those which have enjoyed a steady level of prosperity throughout are untouched. It is regrettable to my mind that companies suffering hardship should have to seek relief from a Board of Referees instead of from the terms of the Statute itself. No one will take exception to the main purpose of the tax but that this purpose will be achieved in an equitable way by the arbitrary selection of standard years I venture to doubt. I am glad to note, however, that the attention of the Chancellor of the Exchequer has been directed to the injustices involved and I trust that adequate provision will be made in this year's Finance Act.

It would be premature to comment on the various provisions of the new Finance Act which was introduced by the Chancellor this week, as the full implications of that measure have as yet to be examined rn detaiL One must acknowledge, however, the obvious desire and intention to spread the burden in an equitable manner and the instinc- tive urge to criticise, should the shoe happen to pinch too tightly here and there, must be tempered by the knowledge of the issues at stake and the difficulties involved in the collection of such vast sums. There is one proposal in the Chancellor's speech to which I might refer as it will have a direct bearing on our affairs here—the limitation or the rate of .dividends to be declared by public companies.

That, of course, will have some effect on our income as naturally WO have a number of investments which were purchased and continue to be held in the expectation of increasing returns. The proposal, a broadly stated by the Chancellor, would have undesirable and inequitable results in many cases, but I have no doubt he will make a'-• effort to meet such cases in the course of adjusting the exact p.ovisaons of the Bill.

rhe report and accounts were adopted.