Law Debenture Corp PLC · LSE:LWDB
Law Debenture — FY2016 Earnings Presentation
26 slides from Law Debenture's earnings presentation, Mar 13, 2017
Slide 1: Law Debenture Annual Results 2016
Law Debenture Annual Results 2016 13 March 2017
Slide 2: Presented by
Presented by Law Debenture Michael Adams Chief Executive Officer James Henderson Investment Manager 1
Slide 3: Introduction
Introduction • Caroline Banszky retired at the end of August 2016 following 14 years at the helm. Michael Adams appointed as her replacement. • Michael Adams appointed to the board in August 2016. Formerly global head of structured finance services for TMF, where he spent four years. Prior to that,
Slide 4: NAV per share
Nav per share 31 December 31 December 2016 2015 Pence Pence NAV per share per financial statements 560.73 472.14 Fair value adjustment for independent fiduciary services 62.37 61.27 Debt fair value adjustment (24.62) (8.87) NAV per share at fair value 598.48 524.54 2016 2015 £000 £000 Fair value of
Slide 5: Financial summary
Financial summary Change 2016 2015 % Pence Pence Share price 530.00 498.00 6.4 NAV per share at fair value (1) 598.48 524.54 14.1 Revenue return per share - Investment trust 10.88 11.01 -1.1 - Independent fiduciary services 7.68 7.09 +8.3 - Group charges (2.60) - - Group revenue return per share 15.
Slide 6: Financial performance
Financial performance 2016 2015 2014 2013 2012 Share price total return (1) 10.1 (3.0) 3.1 28.3 32.0 NAV total return (2) 16.9 (0.3) 2.8 29.4 15.6 FTSE Actuaries 16.8 1.0 1.2 20.8 12.3 All-Share Index total return (1) Source Calculated in accordance with AIC methodology based on NAV including fair v
Slide 7: Long Term Performance
Long Term Performance 1 year 3 years 5 years 10 years % % % % NAV total return (1) 16.9 19.8 79.2 125.7 FTSE Actuaries All-share index total return (1) 16.8 19.3 61.8 71.8 Share price total return (1) 10.1 10.2 86.5 117.8 Change in retail price index (1) 1.9 4.8 10.9 31.0 Investment trusts (Global)
Slide 8: Summary of revenue returns 2016
Summary of revenue returns 2016 Independent Investment fiduciary Group portfolio services charges Total £000 £000 £000 £000 Income 20,551 30,886 - 51,417 Cost of sales - (3,565) - (3,565) Administration costs (2,739) (17,573) (464) (20,776) Provision for onerous contracts - - (3,031) (3,031) 17,812
Slide 9: Group charges
Group charges 2016 Group charges before taxation during the year comprised the following £000 Closure of US trust business Staff termination and legal costs incurred (437) Provision for onerous contracts (3,031) (3,468) Impairment of goodwill in Delaware Corporate Services Inc. (418) Past service cr
Slide 10: Investment trust
Investment trust 2016 2015 Change £000 £000 % Revenue UK dividends 17,299 16,456 5.1 Overseas dividends 3,178 2,549 24.7 Other 74 25 20,551 19,030 Expenses (2,739) (2,926) 6.4 17,812 16,104 Interest (165) (333) Debenture interest (5,278) (3,199) Inter-company interest 479 415 12,848 12,987 Tax - - T
Slide 11: Investment portfolio
Investment portfolio • Aim to achieve a better return than the FTSE All Share. • Stock picking valuation based approach. • Overseas holdings bring exposure to opportunities that cannot be found in the UK stock market. • The equity portfolio is expected to provide good dividend growth over long term.
Slide 12: Investment equity portfolio asset breakdown
Investment equity portfolio Asset breakdown at 28 February 2017 % UK 71 Europe 8 USA 12 Japan 2 Far East 5 Other 2 Total 100 Equity Gearing 9.6 Total Gearing 7.3 11
Slide 13: Major contributors to performance for 2016
Major contributors to performance for 2016 Biggest rises by value Value Portfolio Company appreciation valuation £ % 1 Royal Dutch Shell 8.6m 3.7 2 Anglo American 7.1m - 3 Rio Tinto 6.2m 2.4 4 Applied Materials 6.0m 1.2 5 Glencore 5.9m - Biggest falls by value Value Portfolio Company depreciation va
Slide 14: UK portfolio sector breakdown
UK portfolio Sector breakdown of direct equity holdings at: 28 February 2017 Size biases Law Debenture % Industrials 31 Financials 22 Basic Materials 10 Oil & Gas 10 Consumer Services 10 Consumer Goods 7 Health Care 6 Utilities 2 Technology (including Herald) 1 Telecommunications 1 Total 100 13
Slide 15: UK portfolio ten largest holdings
UK portfolio (cont’d) Ten largest holdings at: 28 February 2017 % 1 Royal Dutch Shell 3.3 2 Rio Tinto 2.4 3 HSBC 2.4 4 GKN 2.3 5 Rolls Royce 2.2 6 BP 2.0 7 GlaxoSmithKline 1.7 8 Prudential 1.6 9 BAE Systems 1.6 10 Relx 1.6 14
Slide 16: Investment outlook
Investment outlook • Diversity of holdings is key • Corporates continue to be highly cash generative with conservative balance sheets • Continued environment of moderate global economic growth, with pockets of weakness and pockets of strength 15
Slide 17: IFS Objectives
IFS Objectives • Very strong brand in the market. High quality services. Remarkable level of client satisfaction • Extremely well known in it’s current market, but relatively unknown in emerging sectors • Looking to extend the client base, extend the range of services and extend the range of jurisdi
Slide 18: Independent fiduciary services summary
Independent fiduciary services summary • Underlying income flat relative to 2015. • Costs remain stable and controlled. • Overall profit before tax up 2.8% from 2015. • Effective tax rate of 4.3%, benefitting from relief of investment trust costs and reduction in UK tax rate (2015: 9.2%). • Revenue
Slide 19: Independent fiduciary services
Independent fiduciary services 2016 2015 Change £000 £000 % Revenue 30,886 30,555 1.1 Cost of sales (3,565) (3,461) 3.0 Underlying income 27,321 27,094 0.8 Administration costs (17,573) (17,485) 0.5 9,748 9,609 Interest (net) (275) (390) Return, including profit on ordinary activities before taxatio
Slide 20: Corporate trust: UK, US, HK and Channel Islands
Corporate trust: UK, US, HK and Channel Islands • 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. • New business in UK Corporate tru
Slide 21: Pensions trusts and Governance services: UK
Pensions trusts and Governance services: UK • Our pension trusteeship service had another good year in a market environment that continues to change. • An increased focus on defined contribution schemes and the continued refinement of the needs of final salary schemes provided an increasing demand f
Slide 22: Corporate Services: including agent for service of process
Corporate Services: including agent for service of process UK, US, HK and Channel Islands. • Our long established and highly regarded service of process business had another solid year. • The corporate services business (provision of corporate directors, company secretary, accounting and administrat
Slide 23: Safecall
Safecall • Our external whistleblowing service had another successful year with a considerable number of new appointments. • As pressure increases from regulators, both in the UK and around the world, more and more organisations are looking to enhance their compliance programmes. This has been parti
Slide 24: Conclusion
Conclusion • We expect that 2017 will be similar for our core activities. • Focusing on our strengths – quality service, our people, our reputation, our experience, our clients – with increased and more proactive promotion of our businesses and a focus on new products, should enable us to win a high
Slide 25: Important information
Henderson Global Investors Important information 201 Bishopsgate, London EC2M 3AE Tel: 020 7818 1818, Fax: 020 7818 1819 This document is solely for the use of professionals and is not for general public distribution. This document is solely for the use of professionals, defined as Eligible Counterp
Slide 26: End
End