Alliance : Response to Requisitioned Resolutions

20 March 2015
Regulatory News Service
Alliance Trust PLC

On 16 March, 2015, Alliance Trust PLC ("Alliance Trust" or the "Company") announced that it had received a requisition notice from Elliott Advisors (UK) Ltd. ("Elliott"), an affiliate of a US based activist hedge fund manager, requiring the Company to put forward additional resolutions at its forthcoming Annual General Meeting. These resolutions propose that Anthony Brooke, Peter Chambers and Rory Macnamara be elected as directors of the Company. Having given these resolutions and the statement which accompanied them due consideration, the Board of Alliance Trust has decided to unanimously recommend that shareholders vote against all of the resolutions, for the reasons set out below.

Alliance Trust has clear and established processes in place to identify and appoint Non-Executive Directors to the Board who will act in the best interests of all shareholders. In contrast, Elliott instructed the search firm which identified the three proposed directors, and Elliott subsequently nominated them to be directors of Alliance Trust. Given that process, the Board is of the view that the nominees cannot be judged to be independent and is concerned that Elliott may seek to exert undue influence.
As part of its ordinary course Board planning, the Board had already planned to initiate a search for a new truly independent Non-Executive Director in the summer. In line with our usual approach, this will be based on a careful and thorough assessment of the needs and challenges of the business and include a broad, transparent and rigorous search drawing upon the support of external search firms.

Alliance Trust has maintained a regular dialogue with Elliott since it declared it was a shareholder in the Company in March 2011. Based on this interaction, the Board considers that, having nominated directors to the Company's Board, Elliott would pursue a short-term agenda aimed at facilitating an exit from its shareholding in the Company. Given the size of its position, this would involve disruptive actions which are not in the long-term interests of our shareholders. For instance, Elliott has repeatedly proposed that Alliance Trust should launch a tender offer for 40% of its outstanding shares at a very narrow discount, which would require a significant liquidation of the Company's assets. The Board considers that this type of action potentially threatens the very existence of the Company, and rides roughshod over our long-term shareholders, our customers and our over 250 employees.

Elliott has previously made clear to us that they see little or no value in the Company's dividend distributions. In stark contrast, we understand from our regular meetings with shareholders that an increasing share price together with dividend income are the most important factors for the vast majority and are the key drivers of total shareholder returns ("TSR"), the metric used to measure our investment performance by our shareholders and market experts.

With this strategy in place, and with positive results already coming through, the Company expects to deliver the following for shareholders:

 Outperformance of the equity portfolio against its benchmark, delivered using a clear and differentiated investment strategy focused on sustainable investment from a team with a proven long term track record of outperformance

 Additional value drivers in other asset classes, including the subsidiaries

 A secure and consistently growing dividend

 Ongoing strict cost management

As a Company focused on sustainable investing for the long term, we take corporate governance considerations extremely seriously. The Board maintains strong oversight of the executive team and is pleased with the Company's recent performance. We are also proud of the diversity of our current Board, which is more than 40% female.
We are fully aware of a company's need to address its shareholders' concerns, and we absolutely refute the suggestion that we have not provided meaningful responses to Elliott on the matters it has raised. Alliance Trust is committed to ongoing shareholder engagement, maintaining regular dialogue with both our institutional shareholders and our retail shareholders through investor forums, our CEO's blog and other shareholder communication channels. However, Elliott's implication that internal management appointments need to be discussed and approved by shareholders is not common industry practice.

Alliance Trust's total shareholder returns are top quartile since the new equities leadership team was put in place almost six months ago and are above median over 1 and 5 year periods. Since we first became aware of Elliott's shareholding in the Company four years ago, Alliance Trust has delivered a 66% TSR, ahead of the Global sector's 57% return. Underlying this performance, in that timeframe, Alliance Trust has also delivered a 52% NAV total return, in line with the Global sector. Furthermore, since Katherine Garrett-Cox took over as Chief Executive in 2008, Alliance Trust has generated a TSR of 92%, materially outperforming the Global sector average return of 76%. A key driver behind this has been the strong downward trend in Alliance Trust's discount to NAV for the last four years, from 15.8% in 2011 to 12.5% in 2014. Alliance Trust continues to manage its cost base and reduced its ongoing charge ratio ("OCR") to 0.60% in 2014 from 0.75% in 2013. This compares favourably with the average OCR for investment trusts in the Sector of 0.75% and places Alliance Trust in the bottom quartile of the peer group for this measure. Our OCR is calculated
entirely in accordance with industry guidelines.
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Alliance Trust's subsidiary businesses provide valuable growth opportunities which the Board is confident will translate into significant shareholder value over the long-term. Alliance Trust Savings has grown assets under administration by over 50% since December 2011 to nearly £7bn today. Alliance Trust Savings has a distinctive flat fee charging model and is well placed to grow rapidly following recent and forthcoming changes in the savings and pensions market. Alliance Trust Investments has seen third party funds grow from £125m in December 2011 to £2bn today. The Alliance Trust Investments Sustainable Future fund range, successfully overseen by our new Head of Equities for the last 13 years, continues to perform impressively with seven of the eight funds ranking in the first or second quartile over a three year timeframe to date.
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Alliance Trust's Chair, Karin Forseke, said:
"Elliott's proposed resolutions are completely unacceptable. The Board believes that they are a pre- cursor for further disruptive actions from Elliott which are likely to focus solely on engineering an exit from their shareholding and would not be in the interests of all of our shareholders. We do not consider their proposed directors to be independent and believe that Alliance Trust's current Board is diverse, dynamic and more than fit for purpose. We pride ourselves on our transparency and honesty with all our shareholders, and as a Board we will not lie down and allow one shareholder to dictate the future of Alliance Trust. Our focus is on delivering returns to all our shareholders through a combination of strong investment performance and the development of our subsidiary businesses, which we believe will lead to a sustainable narrowing of the discount.
The Board is unanimous in strongly recommending that shareholders vote AGAINST all of the proposed resolutions."
Katherine Garrett-Cox, Alliance Trust's Chief Executive, said:
"Alliance Trust continues to generate strong returns for all of its shareholders. Our share price reached an all-time high earlier this month and we announced a dividend increase of 14% for the
2014 financial year, marking our 48th consecutive year of dividend growth. The changes we made to
our investment team in 2014 have already had a strong positive impact, with encouraging performance versus our peers. The Company is performing well and we believe our strategy of responsible investment is creating long term value for our shareholders."
The Company will issue a circular to all of its shareholders at the earliest possible opportunity, providing further details and rationale for the Board's recommendation that shareholders vote against all of Elliott's resolutions.
Note: Total Shareholder Return data as at 18 March 2015. Shareholder enquiries:
Alliance Trust PLC: Evan Bruce-Gardyne, 01382 321 169
Helpline: 0800 923 1527 (The operators of the helpline are unable to give financial advice.)
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Media enquiries:
Finsbury: Conor McClafferty / Clare Dundas / Michael Turner, 020 7251 3801

This press release contains "forward-looking statements" regarding the belief or current expectations of Alliance Trust PLC, its Directors and other members of its senior management about Alliance Trust PLC's businesses, financial performance and results of operations. These forward-looking statements are not guarantees of future performance. Rather, they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors, many of which are outside the control of Alliance Trust PLC and are difficult to predict, that may cause actual results, performance or developments to differ materially from any future results, performance or developments expressed or implied by the forward-looking statements. These forward-looking statements speak only as at the date of this press release. Except as required by applicable law, Alliance Trust PLC makes no representation or warranty in relation to them and expressly disclaims any obligation to update or revise any forward-looking statements contained herein to reflect any change in Alliance Trust PLC's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Any information contained in this press release on the price at which shares or other securities in Alliance Trust PLC have been bought or sold in the past, or on the yield on such shares, should not be relied upon as a guide to future performance.

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