ATS reports £19m loss to slow Alliance Trust recovery

Dundee-based platform Alliance Trust Savings has today reported a £19 million operating loss for 2017, as parent company Alliance Trust reduced its investment in the business.

Britain’s oldest investment trust wrote down the value of its Alliance Trust Savings subsidiary by £23.5 million after problems bedding down the Stocktrade business it bought in 2016.

According to the results statement, the directors’ value of Alliance Trust’s investment in ATS was reduced to £38 million from £61.5 million in 2016.

The results show ATS reduced the value of the intangible assets related to Stocktrade, an execution only platform, which resulted in a £13.2 million exceptional charge.

ATS moved Stocktrade from Edinburgh to Dundee, where the rest of ATS is based, in the first half of last year.

In its statement today, Alliance Trust admits moving the service led to bad customer service and an increase in complaints from customers. It says it incurred costs in the second half of last year addressing these issues.

The unit is worth about 1.3 per cent of Alliance’s £2.5 billion portfolio, and deputy chairman, Gregor Stewart, said: “The writedown is small in the grand scheme of things.”

ATS’s replatforming project was also delayed during the second half of last year. The company had been expecting the project to increase revenues.

In 2016, ATS reported an operating profit of £1.2 million.

ATS ended 2017 with assets under administration of £15.8 billion, compared to £13.6 billion in 2016.

Last year’s hit wiped out a £10 million gain made on Alliane Trust’s share sale of its investment unit to Liontrust.

However, the overall impact of Alliance’s change of strategy appears to be paying off, with the trust delivering 9.8 per cent between April and December.