Brexit blow to Alliance Trust’s half year results

Chairman hails progress with costs and profits in volatile markets

Investment performance at Dundeebased financial services group Alliance Trust has been hit by the UK’s vote to leave the EU.

The trust underperformed throughout June when its quoted equity holdings suffered, giving up the outperformance recorded over the first five months of the year.

The total shareholder return of 2.6% and Net Asset Value (NAV) – the value of assets minus the value of liabilities – of 6.6% was below the trust’s benchmark return of 12%.

In common with the sector, the discount between the trust’s share price and its NAV had widened to 11.4% at the period end compared to 7.9% in December. The trust’s share price rose to a high of 524p as at the six months ended June 30, compared to 484p per share during the same time last year.

By last night it had climbed even higher to 558p .

Presenting the results for half year, chairman Lord Smith of Kelvin said: “In volatile markets we continue to make good progress against the initiatives outlined last year to enhance shareholder value.

“Costs are coming down, Alliance Trust Investments (ATI) and Alliance Trust Savings (ATS) are making good strides towards profitability, and a fully non-executive board is in place.

“In addition, we announced during the period that the board has initiated a strategic review of the group, encompassing a broad range of potential courses of action. This review is progressing well and we will report back on the outcome later in the year.

“Investment performance in the period underperformed the benchmark, reflecting the turbulent market conditions around the EU referendum when the trust’s quoted equity portfolio gave up the outperformance it had recorded over the prior five months.

“However, since the period end Alliance Trust’s share price has reached new highs.”

ATI increased its assets to £5.2 billion at the end of June, with third party inflows of £25 million.

To improve profitability, ATI is implementing several programmes to reduce costs and focus on the investment proposition.

ATS completed the acquisition of Stocktrade from Brewin Dolphin.

Assets under administration rose by more than 40% and customer accounts by 31%, highlighted as the positive impact from the acquisition.

Total pre-tax profit for the six months to June for the group was £212.9m.

Lord Smith replaced Karin Forseke as chairman earlier this year.

Lord Smith said the trust’s share price has risen.