The Courier & Advertiser (Angus and Dundee)
Savings unit losses lead to questions at trust AGM
ALLIANCE: Chairman upbeat about group performance after fund management switch
Multi-million-pound losses racked up at Dundee-based Alliance Trust Savings was the focus of investor ire at its parent group’s annual meeting yesterday.
Chairman Lord Smith of Kelvin told shareholders gathered for the trust’s AGM at the Gardyne Theatre that ATS “remains challenging” after suffering a £19.3 million loss in 2017.
The savings unit had moved into profit in the prior year after a string of losses but a move to bring the entire business under one roof at the trust’s West Marketgait headquarters had led to a number of logistical problems.
The issue of poor customer service levels within ATS and the trust’s continued investment in the business when it is losing money was raised from the floor of the meeting.
One shareholder described the annual loss and the parent trust’s subsequent £23.5m write-down to the fair value of the business as “horrendous.”
Deputy chairman Gregor Stewart said it had been a “very difficult year” for ATS, with customer services levels slipping below agreed standards.
He said much of the problems stemmed from the business moving to a single site in Dundee and the integration of its Stocktrade platform.
Around 40 staff left the 300-employee strong businesses during the period.
“The transfer happened in the first half of 2017 but what we found was the integration of all of the elements was particularly problematic from an IT and processes standpoint, but also from a people standpoint,” Mr Stewart said.
He added: “It definitely impacted customer service – we saw that.”
To counter the issues, Mr Stewart said around 100 temporary staff were recruited and new investment made to ensure service levels returned to an appropriate position.
He said: “The good news is that we can report the investment is working.”
The main presentation was by Craig Baker, chief investment officer with Willis Towers Watson (WTW), the new external fund manager brought in last spring to run the trust’s main equity portfolio.
WTW oversees a further eight handpicked global investment managers who are each in charge of a proportion of trust funds.
Mr Baker told the AGM the new approach – which replaced an in-house fund management structure – had settled in quickly.
Despite market volatility caused by global political events and an equity market sell-off in February this year, Mr Baker said the new multi-manager system was outperforming its benchmarks.
Lord Smith said 2017 was a transformational year for Alliance Trust. “The new investment strategy is bedding down and has delivered an encouraging start.
“But as a 130-year-old institution, we are not getting too over excited by one year’s numbers. Our sights are firmly set on the future.”
Shares closed up one point at 716.00.