Law Debenture Corp PLC · LSE:LWDB
Law Debenture — Investor Presentation (October 2015)
25 slides from Law Debenture's investor presentation, Oct 1, 2015
Slide 1: Law Debenture Presentation October 2015
Law Debenture Presentation October 2015 1 October 2015
Slide 2: Presented by
Presented by Caroline Banszky The Managing Director Law Debenture Tim Fullwood Chief Financial Officer James Henderson Investment Manager Laura Foll Investment Manager 1
Slide 3: Introduction - News
Introduction - News On 25 September 2015, issued £75 million secured private placement for 30 years at 3.77%. Short term borrowings(c. £30 million) repaid. Additional £45 million available to invest in portfolio. If fully invested net gearing increases to 13% at 31 August 2015 values. Long term debt
Slide 4: Financial Summary Half Year
Financial Summary Half Year 30 June 30 June 31 December 2015 2014 2014 Pence Pence Pence Share price 510.50 518.50 530.00 NAV per share after proposed dividend 485.21 484.97 475.82 NAV per share after proposed dividend 476.80 478.12 465.62 with debt at fair value Revenue return per share • Investmen
Slide 5: Half Yearly Report 2015
Half Yearly Report 2015 Revenue return per share overall increase of 15.5% Investment trust Increased by 23.2% Due to significant increase in special dividends. Independent fiduciary services Increased by 0.9%. Revenue, net of cost of sales, which represents legal costs recharged to clients increase
Slide 6: Half Year Report (continued)
Half Year Report (continued) Interim dividend increased by 10.6%. Final dividend will be at least maintained. On going charges remain low at 0.46% Net gearing at 30 June 4.9% (31 August 2015 5.0%) Share premium at 30 June 5.9% (31 August 3.8%) 5
Slide 7: IFS Objectives
IFS Objectives • To grow the business safely. Management look for opportunities to stretch the brand, but are risk averse. • To help the investment trust grow earnings so that dividends to shareholders can increase. • To maintain the tax efficiency of the group to enhance the returns to shareholders
Slide 8: Corporate trust: UK, US, HK and Channel Is.
Corporate trust: UK, US, HK and Channel Is. • Our income is generated by acceptance fees on new business, annual trustee fees and fees for post –issuance work which may arise from restructurings, ratings down grades and other actions required by the trust deed. • Restructurings and post-issuance wor
Slide 9: Pensions trusts: UK
Pensions trusts: UK • Levels of work have increased in spite of the challenging environment for final salary schemes. • Increased focus on defined contribution schemes and continued growth of sole trustee business. • New appointments in the FTSE 250 and investment trust sectors. • Governance service
Slide 10: Corporate Services
Corporate Services: including agent for service of process UK, US, HK and Channel Islands • Our agent for service of process is dependent upon the level of international trade and continues to show solid performance. • The business is run as a global business with each office able to undertake the g
Slide 11: Safecall
Safecall • It is another good year for our external whistleblowing business with a further increase in the number of new appointments. • Demand for whistleblowing continues to remain strong both in the UK and across Europe, particularly in the manufacturing sector. 10
Slide 12: Conclusion
Conclusion • The markets in which we operate are generally quite active. However some areas remain below pre-recession levels. • We continue to experience downward pressure on pricing as competition remains fierce. • We remain committed to cost control and maintaining our professional standards. 11
Slide 13: Investment portfolio
Investment portfolio Objective Our objective is to achieve long term capital growth in real terms and steadily increase income. The aim is to achieve a higher rate of total return than the FTSE All-Share Index through investing in a portfolio diversified both geographically and by industry. Key char
Slide 14: Investing the Debenture
Investing the Debenture • Be opportunistic: – Add to over-sold areas e.g. commodities/emerging markets – Add to diversified areas e.g. healthcare – Adding to smaller companies 13
Slide 15: Performance as at 31 August 2015
Performance as at 31 August 2015 1 year (%) 3 years (%) 5 years (%) Net Asset Value 0.0 42.2 89.7 FTSE All-Share (2.3) 28.1 51.4 Share Price (5.9) 33.0 90.5 Source: Morningstar for the AIC, as at 31 August 2015 Note: Cumulative figures, total return, in GBP, based on debt at fair value 14
Slide 16: Discrete year performance
Discrete year performance 8 months 2015 2014 2013 2012 2011 2010 Share price total return (1) (6.1) 3.1 28.3 32.0 (2.9) 30.5 NAV total return (1) 1.2 2.6 28.6 19.7 (1.6) 24.8 FTSE Actuaries (0.1) 1.2 20.8 12.3 (3.5) 14.5 All-Share Index total return (1) Source AIC, including reinvestment of dividend
Slide 17: Market cap split at 31 August 2015
Market cap split at 31 August 2015 FTSE All-Share Index (%) Law Debenture (%) FTSE All-Share Index (%) 6.4% 2.1% 1.4% 3.9% 3.4% Greater than 20bn 18.7% Greater than 20bn 11.1% £10bn - £20bn 10.1% £10bn - £20bn £5bn-£10bn £5bn-£10bn 7.8% £3bn-£5bn £3bn-£5bn £1bn-£3bn £1bn-£3bn £500m-£1bn £500m-£1bn 9
Slide 18: Geographic split at 31 August 2015
Geographic split at 31 August 2015 4.0% 1.6% FTSE All-Share 6.0% Index (%) 73.5% 6.5% UK North America 8.4% Europe Other Pacific Japan Other Source: Law Debenture, as at 31 August 2015 17
Slide 19: Investment equity portfolio asset breakdown
Investment equity portfolio Asset breakdown at 31 August 2015 FTSE All-Share Index (%) Industrials Financials Pooled Equity Investments Consumer Goods Consumer Services Health Care Oil & Gas Basic Materials Utilities Technology 0 5 10 15 20 25 30 18
Slide 20: 10 Major contributors to performance for 8 months 2015
10 Major contributors to performance for 8 months 2015 Rank Company Increase in value Portfolio valuation £000 % 1 Redrow 4,065 1.70 2 Marshalls 3,271 1.79 3 Betfair 2,461 0.42 4 Bellway 2,306 1.49 5 Henderson Japan Capital Growth 2,295 2.89 6 Smith (DS) 2,030 1.86 7 Hill & Smith 1,963 1.77 8 Johnso
Slide 21: 10 Major detractors to performance for 8 months 2015
10 Major detractors to performance for 8 months 2015 Rank Company Decrease in value Portfolio valuation £000 % 1 Glencore (3,791) 0.78 2 Velocys (3,418) 0.84 3 Royal Dutch Shell (3,159) 1.75 4 Applied Materials (USA) (2,796) 0.89 5 Rio Tinto (2,601) 1.73 6 Greenko (2,473) 0.59 7 GKN (2,366) 2.25 8 T
Slide 22: Fifteen largest holdings at 31 August 2015
Fifteen largest holdings at: 31 August 2015 % of assets 1 Henderson Japan Opportunities 2.5 2 Senior 2.4 3 GKN 2.0 4 Amlin 1.9 5 BP 1.9 6 IP Group 1.8 7 Henderson Asia Pacific Capital Growth 1.8 8 Baillie Gifford Overseas Growth Funds 1.7 9 First State Asia Pacific Leaders 1.6 10 Smith (DS) 1.6 11 M
Slide 23: Key Characteristics
Key Characteristics • Unconstrained investment approach across market caps • Diversification of underlying holdings • Exposed to areas of strength in the UK – industrials, science 22
Slide 24: Risk characteristics as at 31 August 2015
Risk characteristics as at 31 August 2015 No. of stocks (excluding holdings=0%) 132 Predicted 12 month tracking error 3.7 3 year annualised tracking error 5.0 Active risk* 76.2 Beta 0.85 Source: BARRA, Factset, as at 31 August 2015 *Active risk/stance = (sum of absolute deviation from benchmark)/2 2
Slide 25: Important information
Important information Henderson Global Investors 201 Bishopsgate, London EC2M 3AE Tel: 020 7818 1818, Fax: 020 7818 1819 This document is intended solely for the use of professionals, defined as Eligible Counterparties or Professional Clients, and is not for general public distribution. Before inves