The Courier & Advertiser (Angus and Dundee)
Trust praise for investors after years of turmoil
FINANCE: Chairman thanks shareholder base for standing by Alliance Trust during major upheaval and realignment of business
The chairman of Alliance Trust has thanked thousands of small shareholders for standing by the business as it underwent major reforms.
Speaking at the Dundee-headquartered trust’s AGM at the Gardyne Theatre in Dundee, Lord Smith of Kelvin took the unusual step to praise investors for sticking with the business during one of the most turbulent periods in the group’s 129-year history.
He was referencing the trust’s bruising public battle with major shareholder Elliott in 2015 that ultimately brought to a close the tenure of long-term chief executive Katherine Garrett-Cox and her chairman Karin Forseke.
Lord Smith said when he addressed the 2016 AGM as newly appointed chairman last year, he noted that a “great deal had happened” at the trust in the prior months.
However, he said the pace of change had actually increased in the past year as the trust reformed its management structure, sold off its Alliance Trust Investments (ATI) subsidiary, moved to a new outsourced fund management model managed by Willis Towers Watson (WTW) and commenced a major share buyback programme in an effort to drive in the discount.
In February, investors gave their backing to a £600m-plus deal to buy out Elliott’s shareholding.
Thanking the small investor base for their patience, Lord Smith said: “At last year’s AGM I said a great deal had happened in the previous year.
“The 12 months since have certainly been no different, but I am delighted to report a great deal of progress has been achieved and we have a clear and compelling investment approach for the trust.”
He continued: “Alliance Trust Savings was profitable and is better positioned for future growth and Alliance Trust Investments was sold to Liontrust.
“And, for the first time in many years, we have a stable shareholder register, all of which leaves Alliance Trust well positioned for the future.”
Despite the restructuring, shareholders heard the trust had managed to maintain its now 50-year record of increasing dividends in the financial year to December 31.
The discount to net asset value has narrowed significantly to around 5% since share buybacks began in December and in the past year the share price has climbed steadily from around 500 pence to around 690p yesterday.
Investor presentations by two of the eight new fund managers appointed by Willis Towers Watson followed the meeting.
Craig Baker, WTW’s global chief investment officer, was among the audience at the AGM and took a number of questions from the floor about the WTW’s role and the costs associated with its appointment.
Lord Smith was also questioned about his commitment to Alliance Trust, given his imminent appointment as chairman of the new British Business Bank.
He told investors that he would not take on the new role until his chairmanship of the Green Investment Bank concluded in around six weeks’ time and promised that his role at the trust would not change.
Lord Smith said WTW’s mandate to provide a 2% return on investment above the benchmark MSCI All World Index meant was Alliance Trust was more focused than it had been in many years.
He added: “With the new investment approach and the shareholders’ register settled, the core focus of the board and WTW is to generate a real return for shareholders through a combination of capital growth and rising dividends.”
Shares closed down 0.8% at 684p after yesterday’s trading session.