Investment trust Alliance Trust (LON:ATST) saw profits slide in 2015 in what its chairman, Lord Smith of Kelvin, admitted was an eventful year.
Profit before tax in 2015 tumbled to £145.0mln from £228.5mln in 2014 on the back of a decline in revenue to £200.2mln from £274.0mln.
Investment trust shareholders tend to focus on the net asset value (NAV) per share, however, and on this score the company made progress, with the NAV rising 2.9% from a year earlier to 562.4p, with a total return – which takes into account dividends – of 5.4%.
The share price, which rose 8.0% over the year to 517p, still lags the NAV but the year-end discount to NAV contracted to 8.1% from 12.4% at the end of 2014.
The investment trust racked up its 49th consecutive year of dividend increases, upping the full-year pay-out by 0.4% to 12.43p.
The Alliance Trust Investments (ATI) unit generated net inflows of £81mln, ending the year with third party assets under management (AUM) of £2.1bn. Losses reduced by 36% to £2.1mln, the company said.
The Alliance Trust Savings business saw assets under administration rise by 32% and customer accounts rose by 18%, reflecting strong organic growth and the initial benefits of the Stocktrade acquisition.
"2015 was an eventful year for Alliance Trust and highlighted that shareholders expected change. In order to deliver this, we set out a package of changes on 1 October to enhance shareholder value and the process to implement them is well under way,” Lord Smith said.
“We have already made good progress. In particular, the investment team is continuing to deliver improved investment returns, significantly outperforming the benchmark. At the same time the discount to NAV has narrowed and we are on target to achieve our cost cutting objectives," he added.
Having reshaped the board, resulting in the departure from the board of Susan Noble to chair ATI and Katherine Garrett-Cox, who will leave Alliance later this month, Lord Smith said he was acutely aware of the lack of gender diversity of the current board and said it was an issue he was determined to address.
“It’s been a turbulent year for Alliance Trust, as activist investor Elliot Associates challenged the trust’s strategy and ultimately forced change at the top. Improvements have been made to the structure of the board and management team, while a cost cutting programme is aiming to save £6 million across the business during 2016,” noted Richard Troue, head of Investment Analysis at Hargreaves Lansdown.
“Some progress has been made bringing the trust back to its roots – a core, low-cost global equity portfolio that is well diversified, capable of steady growth and a rising income. Shareholders will be pleased to see some out-performance, though one swallow doesn’t make a summer. It’s still early days for the investment team, but they are off to a positive start,” Troue opined.
The shares marginally under-performed the market in the morning session, rising 0.5% to 502.6p.