Alliance Trust PLC - 2018 Final Results

Financial Highlights

As at 31 Dec 2018 (p)

As at 31 Dec 2017 (p)

Year-on-year change (%)

 

 

 

 

Share price

688.0

746.5

-7.8

NAV per share

723.6

777.7

-7.0

Total dividend

13.55

13.16

 3.0

 Full Year 2018 Performance Highlights

-     The Trust's Total Shareholder Return1 for 2018 was -6.1% (2017: 19.2%) and its share price at 31 December 2018 was 688.0p, down 7.8% compared to 746.5p at 31 December 2017

-     The Trust's NAV Total Return1 for 2018 was -5.4% (2017:18.5%) and its Net Asset Value (NAV)2 per share at 31 December 2018 was 723.6p, down 7.0% from 777.7p at 31 December 2017

-     The Trust's Equity Portfolio Total Return remains ahead of its benchmark since the adoption of the current investment approach on 1 April 2017, outperforming the MSCI All Country World Index (MSCI ACWI) by a cumulative 1% (5.1% compared to 4.1% by the MSCI ACWI). Its performance in 2018 was -4.2%* against the MSCI ACWI at -3.3%

-     Ongoing Charges Ratio (OCR)1 for 2018 was 0.65%. The increase versus the previous year reflects a full year of WTW's fees and fixed costs rising as a proportion of a smaller asset base

-     The Trust bought back 14.0m shares in 2018. This compares to 145.1m shares in 2017 (which included the purchase of 95.5m shares from Elliott)

-     The year began with the Trust's shares trading at a discount of 4.0% and ended at a discount of 4.9%

-     The Trust raised its total ordinary dividend for 2018 by 3.0% to 13.55p, compared with a total ordinary dividend for 2017 of 13.16p, marking the 52nd consecutive annual increase

Lord Smith of Kelvin, Chairman of Alliance Trust PLC commented:

"2018 was a challenging year for global equities with most markets falling and many active managers struggling to outperform. Like others, we trailed our benchmark, partly due to market returns during much of the year having been driven by a narrow group of very large companies.

"Our strategy of appointing a number of managers with different styles and approaches to select their best stocks means we will never have a very concentrated exposure to one segment of the market. By investing more broadly across companies, countries and sectors, we should avoid the short-term performance highs and lows driven by particular market factors. In the long run, though, we expect our portfolio to outperform the market.

"Meanwhile, we continued to provide investors with income by increasing our dividend, which has now risen every year for 52 consecutive years.

"During the year, we made further progress towards simplifying our business by disposing of many of our remaining non-core investments, and we are in the process of selling, subject to regulatory approval, our subsidiary, Alliance Trust Savings, to Interactive Investor Limited. The rationalisation of our holdings will enable us to focus on global equities which at year-end represented over 97% of our assets. We are clear on the direction of the Trust and that it will continue to prove a wise choice as a core investment for the long term"

CHAIRMAN'S STATEMENT

2018 was a challenging year for global equities, with most markets falling and many active investment managers struggling to outperform. Like others, we trailed our benchmark, partly due to market returns during much of the year having been driven by a narrow group of very large companies. Although a number of our eight managers owned some of these companies and benefited from their share prices appreciating, others avoided them because they thought they were overvalued.

Our strategy of appointing a number of managers with different styles and approaches to select their best stocks means we will never have a very concentrated exposure to one segment of the market. By investing more broadly across companies, countries and sectors, we should avoid the short-term performance highs and lows driven by particular market factors. In the long run, though, we expect our portfolio to outperform the market. Since we adopted our investment approach in April 2017, the equity portfolio has beaten its benchmark. During the year, we made further progress in the disposal of our remaining non-core investments. This will enable us to focus on our equity portfolio which we are confident is well positioned for future gains.

DIVIDEND

We are very proud of our dividend track record and the Board is delighted to continue the Trust's progressive dividend policy. We have now increased our dividend for 52 consecutive years. This year we have used £4.2m from our £107.7m of revenue reserves and we retain 25 years dividend cover assuming our current dividend level and an unchanged level of income from our equity portfolio.

OUTLOOK

I cannot end my statement without reference to Brexit. We have considered the implication for the Trust and we have in place a contingency plan to change our Irish Alternative Investment Fund Manager, if required. We do not consider that Brexit, regardless of how it finally materialises, will have a significant impact on the operation of the Trust.

Despite the political uncertainties, we are clear on the direction of the Trust and that it will continue to prove a wise choice as a core investment for the long term.

Lord Smith of Kelvin

Chairman