New challenge for Katherine the Great
Chief executive commits herself to maximising best prospects for Alliance
ONE of Scotland’s top businesswomen insisted she will remain boss despite her investment firm suffering a disappointing half-year performance.
But Alliance Trust chief executive officer Katherine Garrett-Cox warned uncertainty in Greece and China will continue to affect equity markets.
The Trust spent about £3 million defending an aggressive campaign from activist investor Elliott Advisors to get new non-executive directors on to the board ahead of its annual general meeting in April. Ms Garrett-Cox’s pay package and the trust’s performance were criticised by the US hedge fund.
ALLIANCE Trust chief executive K ather ine Ga r r et t- C o x ha s confirmed she is keen to remain at the business as the under-pressure group unveiled a “disappointing” half-year performance.
Ms Garrett-Cox warned uncertainty over Greece and China will affect equity markets for “some time to come”.
The Dundee investment group said it had provided a total shareholder return of 2.7 per cent in the period and a net asset value (NAV) of 1.4 per cent.
The NAV figure put it 29th out of 36 among its peer group for the first six months of this year with the one-year figure, of 8.8 per cent, giving it a ranking of 21st. However, Alliance said the equity team has outperformed its benchmark since taking over the portfolio in September last year.
Ms Garrett-Cox, who has been at the trust since 2008, said it would be fairer to judge performance over a longer term rather than the first six months of this year while also pointing out performance had rebounded in July.
The results come after the board of Alliance spent about £3 million defending an aggressive campaign from activist investor Elliott Advisors to get new non-executive directors on to the board of the trust ahead of its annual general meeting in April. Ms Garrett-Cox’s pay package and the performance of the trust relative to its peers were criticised by the US hedge fund.
Alliance eventually agreed to two directors, Anthony Brooke and Rory Macnamara, joining the board.
Chairman Karin Forseke said yesterday: “The first half of 2015 was a particularly challenging period for Alliance Trust. In the run-up to our AGM a significant proportion of our shareholder base indicated that they sought change.
“The board has listened to these concerns and is actively engaged in addressing them. The board anticipates announcing, in the autumn, the changes that it intends to make.”
Ms Garrett-Cox stated she remains committed to the business and said: “I have invested a significant amount of time and energy in Alliance Trust.
“It is a fantastic opportunity. As I look at financial services in aggregate there are very few companies that stand out and genuinely do the right thing by customers. I want to be here so we can maximise together the true prospects of this business.”
The trust said it has continued to reduce the number of holdings it has and those now stand at a “historically low” 68. Its biggest holdings are in consumer goods firm CVS Health, pharmaceuticals company Pfizer, Visa, Walt Disney and insurer Prudential.
During the period it started investments in Chinese technology platform Tencent, financial services software company SS&C, Technologies and disk-drive provider Seagate. With that it took shares in oil services company Statoil and increased its position in Total while also adding Chinese clean power distributor ENN Energy. It also invested in TJX Companies, operator of the TK Maxx retail brand, and switched its position in Diageo into Brazil-based drinks business Ambev.
Ms Garrett-Cox said: “We really want to look through short-term market noise. We view periods of volatility as moments we can top up holdings we like and get exposure to things we were looking at but were perhaps overpriced.
“So we felt it important to make some commentary on Greece and China as they have been such dominant features of markets in recent months. The bottom line is we have zero exposure to Greece other than contagion risk and in China we have fairly modest direct exposure. We recognise that these are things that will cause people concern.”
Alliance Trust Investments narrowed half-year pre-tax losses from £1.6m to £1.1m as it recorded net inflows of £59m in the six months. Third party assets under management edged upwards from £1.9 billion at the start of the year to £2bn by the end of June.
The Alliance Trust Savings arm also trimmed losses from £2.7m to £1.1m as it reported growth in assets under administration and a rise in customer accounts. Assets by the end of June stood at £7.2bn, up from £5.9bn at the same point in 2014 and £6.4bn in December last year.
Ms Garrett-Cox said: “We absolutely understand we need to get these businesses to meaningful profitability as soon as we can and are very minded to achieve that.”