Move to England still on for Alliance Trust

"This was an unsettling period for shareholders and customers." - Katherine Garrett-Cox. Picture: Jane Barlow

"This was an unsettling period for shareholders and customers." - Katherine Garrett-Cox. Picture: Jane Barlow

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ALLIANCE Trust yesterday made clear it could yet transfer some of its business to England pending the outcome of devolution negotiations, as it hiked its dividend and hailed the success of its new sustainable investment policy.

Chief executive Katherine Garrett-Cox told The Scotsman that the English-registered companies the trust set up as a precautionary measure ahead of last year’s independence referendum remained “on the shelf”.

She said: “We have those contingency plans in place, these issues have in many cases not gone away, and if we need to adapt and move forward we have those contingency plans in place and are not afraid to use them if required.”

Dundee-based Alliance Trust set up English subsidiaries for its main savings and investments arms early last year, and Garrett-Cox said “it was not a wasted effort” and had cost a minimal amount.

Her comments came after the group reported an 8.1 per cent rise in net asset value (NAV) per share over the course of 2014. Total shareholder return, its other key metric, was 9 per cent higher as the gap closed slightly on NAV.

The firm said it was “a solid performance that ranked the trust in the second quartile of all global trusts”.

It announced a special dividend of 2.546p, meaning that the total pay-out to investors increased by 14.3 per cent, cementing the 48th year of consecutive dividend increases from Alliance.

But it added: “Politically, 2014 was dominated by the referendum on Scottish independence and the decision by voters to remain within the United Kingdom. This was an unsettling period for many of our shareholders and customers, particularly those in other parts of the UK, and inevitably we, along with other Scottish-based companies, were affected.

“While the debate over the extent of future devolution continues, we would urge all participants to recognise that an extended period of uncertainty is not in the interests either of business or the economy as a whole and we remain ready to act as necessary to protect our shareholders’ and customers’ interests.”

Garrett-Cox said it was hard to quantify the effect of the referendum on business, but there was evidence that some retail customers had avoided Alliance Trust Savings because of worries over the potential ramifications.

The three days following the No vote in September were the busiest of the year in terms of new business from England, she said.

But she added: “We always try to highlight the risks in markets every year, because I think as an investment business people would expect us to be mindful of the external environment, Having said that, unsurprisingly we see those points of inflexion and weakness as moments of opportunity. Our real strategy is to find good companies and invest in them for many years.”

Alliance Trust Investments ended the year with third-party assets under management of £1.9 billion, generating net inflows of £88 million and reducing losses by 23 per cent to £3.2m.

Assets at its savings arm ended the year at £6.4bn, as its flat-fee charging structure proved appealing to customers who were shopping around following major changes to the pensions system.

The group reduced its ongoing charges ratio by a fifth, to 0.6 per cent, and has been placing greater emphasis on “responsible investing”, taking environmental and social factors into account. Both moves were helping to attract both retail and adviser customers, Garrett-Cox said.

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