Alliance Trust AGM: Angry shareholders round on bosses over ATS tech debacle

The crippling problems stem from Britain’s oldest investment trust’s £14 million acquisition of Brewin Dolphin’s stockbroking business Stocktrade three years ago.

Issues encountered while consolidating the businesses led ATS to report in March a £19 million operating loss for 2017.

The persistent and costly difficulties led one shareholder attending yesterday’s AGM to ask the trust’s board when investors “are going to see some benefit” from ATS before making the appeal: “Can you promise us that next year we won’t have to ask these questions again?”

Responding to the criticism, Gregor Stewart, deputy chairman of Alliance Trust and a director of ATS, which has its own board, said the problems mainly stemmed from Stocktrade being based in Edinburgh and ATS being in Dundee.

“That meant there was duplication of functions and corporate events and transfers happened twice,” Mr Stewart said.

“The intention was to consolidate and integrate all the ATS business into the Dundee headquarters.

“The transfer started in the first half of 2017 but we found the integration of those two elements was particularly problematic from an IT standpoint and also from a people standpoint.

“We had fewer than 40 redundancies but, in terms of getting the right people doing the right job for us here in Dundee, it took longer than expected.

“That definitely impacted on customer service – we saw that in the level of complaints.”

Mr Stewart said that the business has taken on “well over 100 people”, mostly on a temporary basis, to help deal with the issues and has also ploughed more cash into its IT systems.

“The investment is working,” he said. “We can see that in terms of the delays on the phone lines reducing very significantly and the level of complaints is dramatically down.”

That said, Mr Stewart added that he did not “want to promise that we will be reporting a profit this year”.

“The objective is to be in a position of monthly profitability by the end of this year,” he said.

This week Alliance Trust announced a first interim dividend for the year ending 31 December 2018 of 3.389 pence per share payable on 2 July 2018 to shareholders on the register on 8 June 2018. The ex-dividend date is 7 June 2018.

Playing down the impact of the problems afflicting ATS, Alliance Trust chairman Lord Smith of Kelvin, who pointed out that ATS makes up just 1.3 per cent of the trust’s portfolio, noted that the trust itself had performed well since adopting a multi-manager approach last April.