Law Debenture Corp PLC · LSE:LWDB
Law Debenture — Investor Presentation (June 2020)
22 slides from Law Debenture's investor presentation, June 2020
Slide 1: June 2020
June 2020 aN
Slide 2: Agenda
Agenda 1. The Law Debenture Model 2. Key Statistics 3. Independent Professional Services 4. Investment Portfolio 5. Conclusion
Slide 3: Law Debenture: A highly differentiated and unique business model
1. Law Debenture: A highly differentiated and unique business model Total Shareholder Return Investment Portfolio Independent Professional Services (IPS) ~ 82% NAV ~ 18% NAV • Equity portfolio managed by James • Trusted, professional, independent third Henderson and Laura Foll of Janus party provide
Slide 4: Summary: Dividend Update
2. Summary: Dividend Update • Moving to quarterly dividends, creating greater regularity and predictability around dividend payments • Declaring a first interim dividend of 6.5 pence per ordinary share payable in July 2020 • Further interim dividends of 6.5 pence per ordinary share expected in Octob
Slide 5: Summary: Five key differentiating areas
2. Summary: Five key differentiating areas 1. Its global independent professional services business offers regular (and visible) flow of income, which augments the dividend income from the equity portfolio 2. A well-diversified portfolio of quality listed companies actively managed by proven team of
Slide 6: Independent Professional Services (IPS) – Denis Jackson, Chief Executive Officer
3. Independent Professional Services (IPS) – Denis Jackson, Chief Executive Officer
Slide 7: IPS: Overview
3. IPS: Overview Pensions Corporate Trust Corporate Services The longest established and A leading independent Highly regarded range of largest provider of corporate trustee across outsourced solutions to independent pension trustees international capital markets corporates in the UK • Trusted, prof
Slide 8: IPS: Pensions
3. IPS: Pensions • Our trustee team now support in excess of 200 clients, with oversight of over £350bn of assets, providing pension benefits to more than three million families • Following the launch of our outsourced administration service Pegasus in 2017, we have seen significant growth in the de
Slide 9: IPS: Corporate Trust
3. IPS: Corporate Trust • Income is generated by a mixture of up-front acceptance fees on new business and long term, annual annuity fees on existing business • Fought hard to maintain market share in a highly competitive market where capital market transaction volumes have fallen • Long-term nature
Slide 10: IPS: Corporate Services
3. IPS: Corporate Services • Our core corporate services business is performing well, winning clients and expanding the services to existing clients under difficult market conditions • Safecall, our whistleblowing business continues to grow, albeit at a slower rate • Service of Process has been impa
Slide 11: IPS: In Summary
3. IPS: In Summary • IPS has very attractive financial characteristics: – High margins and high return on capital – Proven track record of delivery in 2018 and 2019 (c. 8-9% top and bottom line growth) • Strong free cash flow offers bolt-on/cash reinvestment opportunities and supports the dividend •
Slide 12: Investment Portfolio – James Henderson & Laura Foll, Janus Henderson
4. Investment Portfolio – James Henderson & Laura Foll, Janus Henderson
Slide 13: Investment Portfolio: Investment Approach
4. Investment Portfolio: Investment Approach • Investment objective: long term capital growth in real terms and steadily increasing income • Selective, bottom-up approach, deliberately diversified by sector and geography • Valuation-driven process, aiming to identify high quality companies that are
Slide 14: Long Term Performance as at 31 May 2020
4. Investment Portfolio: Long Term Performance as at 31 May 2020 Strong performance track record – outperformance over 1, 3, 5, 10 years YTD 1 year 3 year 5 year 10 year NAV TR (fair ‐20.7 ‐11.8 ‐7.2 9.8 118.1 value) NAV TR (par) ‐19.0 ‐9.7 ‐5.3 14.6 131.4 FTSE All‐Share TR ‐18.8 ‐11.2 ‐8.4 6.9 80.2
Slide 15: UK has materially underperformed other global markets
4. Investment Portfolio: UK has materially underperformed other global markets 220 UK MSCI World MSCI Europe ex UK US 200 180 160 140 120 100 80 May‐15 Nov‐15 Jan‐16 May‐16 Nov‐16 Jan‐17 May‐17 Nov‐17 Jan‐18 May‐18 Nov‐18 Jan‐19 May‐19 Nov‐19 Jan‐20 May‐20 Jul‐15 Sep‐15 Mar‐16 Jul‐16 Sep‐16 Mar‐17 J
Slide 16: UK valuations look attractive on almost any metric
4. Investment Portfolio: UK valuations look attractive on almost any metric The UK looks lowly valued relative to other global equity markets And relative to other asset classes… 18% UK Price to Book relative to world, ex-financials 2.0 UK CAPE Yield 16% 1.8 10y UK Gilt Yield 14% 1.6 12% 10% 1.4 8%
Slide 17: Top holdings and geographic weightings
4. Investment Portfolio: UK valuations look attractive on almost any metric Top 20 holdings (%) Geographic weightings (%) GlaxoSmithKline 1.2 1.5 Ceres Power Rio Tinto Royal Dutch Shell Relx 7.3 National Grid Herald Investment Trust 10.3 Severn Trent Dunelm Astrazeneca HSBC Prudential 79.7 BP DS Smi
Slide 18: Current Opportunities, what are we buying?
4. Investment Portfolio: Current Opportunities, what are we buying? £36mn (net) has been invested calendar year to date, of which £41mn has been invested in the UK, £8mn invested in Europe and £13mn disinvested from North America (e.g. Microsoft, J&J) Recent purchases include: Anglo American (new po
Slide 19: Year to Date Attribution
4. Investment Portfolio: Year to Date Attribution Largest contributors Largest detractors 1. Ceres Power 1. Senior 2. ITM Power 2. Hammerson 3. Microsoft 3. International Personal Finance 4. Flutter Entertainment 4. Rolls-Royce 5. Herald Investment Trust 5. Hiscox Source: Janus Henderson Investors,
Slide 20: Investment Portfolio: Outlook
4. Investment Portfolio: Outlook • Law Debenture is well positioned for a global economic recovery and the vehicle allows flexibility to invest in lower yielding areas, while maintaining an attractive dividend yield for shareholders • The companies we hold have experienced management teams • Balance
Slide 21: Conclusion: Consistent Outperformance over 3, 5 and 10 years
5. Conclusion: Consistent Outperformance over 3, 5 and 10 years • Moving to quarterly dividends, creating greater regularity and predictability around dividend payments • Current dividend yield for Law Debenture shares of 4.9%1 • Unique model is a key value driver in achieving long-term capital grow
Slide 22: Janus Henderson Investors contact and important information
Janus Henderson Investors 201 Bishopsgate, London EC2M 3AE Tel: 020 7818 1818 Fax: 020 7818 1819 Before investing in an investment trust referred to in this document, you should satisfy yourself as to its suitability and the risks involved. Past performance is not a guide to future performance. The