Trust eyes more settled future as Elliott departs

RETURN: Alliance Trust’s progressive dividend record held for 50th year

Alliance Trust has maintained its record of progressive dividend payments for a 50th year as the restructured business declared it was now “well placed” to deliver growth.

Shares in the Dundee-headquartered group nudged ahead in early trading as the Trust capped one of the most turbulent periods in its 129-year history by revealing a positive trading performance for the year to December 31.

The group produced a total shareholder return of 26.4% for the period while Net Asset Value (NAV) total return came in at 21.5%.

The performance allowed the Trust – which has undergone a radical overhaul following the appointment of chairman Lord Robert Smith in January 2016 – to declare an ordinary dividend for the year up 16.4% to 12.774p.

The move represents the 50th consecutive year of progressive dividend payments from the Trust – one of the longest such streaks seen in UK corporate history.

The outcome was delivered despite much of the board’s time during the year being spent on a major review and restructuring of the Trust’s operations.

The review – initially prompted by major shareholder Elliott’s agitation ahead of the 2015 annual general meeting that eventually led to the downfall of former CEO Katherine Garrett-Cox’s regime – reported in December and proposed a radical shift to a new outsourced investment management function overseen by Willis Towers Watson.

The arrangement – which will see eight individual managers take responsibility for a portfolio of around 20 stocks each – was rubber-stamped by shareholders during a general meeting of the Trust in February.

The gathering also saw investors agree to allow the Trust to buy out Elliott’s 19.75% shareholding in the company – a move that came with a price tag of more than £600 million.

In his statement to the results, chairman Lord Smith confirmed the repurchase of Elliott’s stock had “now been completed” and the move had resulted in an uplift in NAV of approximately 1% for other shareholders.

At year end, the Trust’s discount to NAV was 4.4%, a considerable narrowing of the position from the previous year.

The group’s share price rose to 638p by year-end, a 23% uplift on 2015.

Lord Smith said the Trust was now in better shape and was positioned for new growth.

“The last two years have seen considerable change for Alliance Trust and we are very appreciative of the strength of support shareholders have shown.

“With a clear course of direction and a settled shareholder register, we believe that Alliance Trust is now well placed for the future.”

Shares closed up 1p at 686p.

David Shapiro and Craig Baker of Willis Towers Watson with Alliance Trust chairman Lord Smith, deputy chairman Gregor Stewart and non-executive director Clare Dobie during a shareholder forum in Dundee.