STS Global Income & Growth Trust (LSE:STS) — Annual Results

0:00 Good afternoon, and welcome to the STS GLOBAL INCOME AND GROWTH TRUST PLC Annual Results Investor Presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged, and they can be submitted at any time using the q and a tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question or receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would

0:31 like to submit the following poll. And I would now like to hand you over to senior fund manager, James Harris. Good afternoon to you. Hello, everybody. I hope you can hear me okay, and thank you for joining us for the STS GLOBAL INCOME and GROWTH TRUST annual results. Thomas and I will take you through what's been going on, what we're thinking about, how we view markets at the moment, and, of course, we'll be happy to take questions. So at the risk of giving the whole presentation in one go, we continue to have a pretty cautious view of markets here at Troy. We are cognizant to the fact that we've seen interest rates go up faster and further than we've seen for forty years, and yet equity markets are still pretty fully valued. Now we have lagged the rising market recently as is often the case with TROWTH funds, particularly those that are conservatively managed and quality focused, particularly ones such as this, which has a... An income focus.

1:28 But we do expect the portfolio to be resilient in the event of an economic slowdown, which to us would be a logical conclusion from the rise in interest rates that we've seen. And we expect the, income growth to be robust over the long term. Ultimately, we want to be seen as the high quality, low volatility trust in the sector. We think both of those things matter. We think quality, drives, predictability and dependability. And volatility is important for those, shall we say, particularly what we consider to be a core cohort of Troy, those with irreplaceable income and in need of ink... Sorry, irreplaceable capital and in need of income. And those two things often coincide in retirement and, I think, sort of sketch out what we see as our core shareholder base.

2:15 You can see the team here at Troy. We're part of a broader team, and we run a number of strategies. Ultimately, we want to be investing in a portfolio of exceptional resilient businesses. When markets are rising quickly as they have been recently, particularly when we have such things as overexcitement about, arguably overexcitement about, artificial intelligence, This exceptional... This resiliency and predictability can be somewhat overlooked, and it has been a feature of our portfolio and our what... Our broader investment universe, if you like, businesses in which we want to invest, but we currently think it's too expensive. We've seen them as too expensive, and they've got more expensive. And that is somewhat frustrating, but we're patiently waiting them to come back to a a level where we think they're good value. We want the dividend to be backed by genuine surplus cash flow, and that's derived from businesses that have limited capital requirements and grow cash flow consistently.

3:08 And, ultimately, we want to generate above average returns with below average volatility over the long term, although that's been more challenging recently. So this is what I said. We've seen interest rates go up further or faster than we've seen for forty years. And yet, although short rates have gone up quickly, longer rates have been, have gone up rather slower, and this has led to this so called inversion of the yield curve. What that means is that short term interest rates are are higher than longer term interest rates, and that usually is a precursor to a slowdown or even possibly a recession. And yet on long term valuation measures, we're still towards the upper end, at least in The US, of the historic range, at least on this measure. We think those two things are unhappy bedfellows, if you like. We think that one of those things is likely to change. And it may well be that if we move into recession, then people will have to take down their earnings forecasts, and the resiliency of our portfolio will be a a decent place to be. Or it may be that inflation remains more resilient in the event of a more robust economic environment, in which case what you need is pricing power. And that's what we derive from the quality of our businesses and has been demonstrated in the last couple of years post COVID.

4:14 Yes. Now three or four years post COVID. Those of you who are familiar with Troy will know we choose companies from particular sectors and particular businesses. These are because we think they have long term competitive advantages, which give them sustainable high... Say sustainably high returns on capital. It's not because of where we think we necessarily are in markets. We have low turnover at Troy of approximately 10% per annum, which means we have ten plus year holding periods, which means that our portfolio is left in a place to compound, generally speaking, for longer than an economic cycle. Although the current one is very long in the tooth. And it would seem to us that if we are to have a slowdown, that's not such a heroic assumption. It's not such a heroic expectation.

4:59 Indeed, we haven't had an orthodox economic cycle for twenty five years. By that, I mean, inflation's a bit of a problem. Interest rates go up, causes us to slow down the economy, and yours to control inflation. If we do see that, we would expect our portfolio and our companies to be resilient and continue to compound capital and perform relatively well even in a more difficult difficult economic environment. And we continue to avoid those companies on the right here, which for us are either have low returns, are too cyclical, are too capital intensive, or businesses that, generally speaking, don't compound capital persistently over long periods of time.

5:37 What does the portfolio look like? Well, it's been very consistent for a long period of time. Have a decent allocation to branded consumer goods. It's fair to say they got fairly fully valued a couple of years ago. They're now much better value than they were. And so although we don't we don't think the the business attributes or the bits... The the the reasons why consumer staples companies are good businesses has changed. The valuation has somewhat. Clearly, that's been costly in terms of performance in the short term, but does set us up reasonably well. We've got a number of platform businesses. Chicago Mercantile Exchange helps people hedge interest rate risk, inflation risk, volatility. IHG is a hotel group branding. It doesn't own hotels. It's a branding and software business and is benefiting from the post COVID continuing tailwind for people who want to travel. Nintendo has done pretty well. We love Nintendo.

6:23 We think it's an excellent business, and the launch of the new Switch Pro will be taken pretty well, we think, by the market. We've got a number of enterprise software businesses, and we have a collection of businesses we grouped together as historical with dependable income, but we think they're a a group of world class businesses. There are a number of businesses we've looked at, and I might bring Tomasz in here to talk about what we've looked at, what we've added, what we're thinking about. So, Tomasz, please please go ahead. Thank you, James. As investors in the trust know, we have low turnover, but low turnover doesn't mean no turnover. And in this slide, we try to present both potential ideas that we are considering for the trust and some of the most recent investments we have made.

7:08 If we start from the potential ideas, and here I'm looking at the top and the left hand side of the chart, we would really like to invest in three areas of the market if we're given the right valuation opportunity. The first one would be consumer discretionary businesses, and you can see on the slides a few example of of companies that belong to this sector like LVMH and Nestle or Luxoftica. Those businesses represent, categories and goods that consumers want and for which demand is resilient. But demand for these goods, for example, for STS GLOBAL INCOMETIA are still sensitive to the economic cycle. And given where we are in the cycle, but most importantly, how rich richly valued some of these businesses are, we wait patiently to be given an opportunity to invest at what we believe are attractive valuations.

7:59 The second sector is nonbank financials. James mentioned in the previous slide our investment in CME. Another example of a financial business we might like to invest is BlackRock. BlackRock, obviously, is a hell of a business, and it's a good way to get exposure to broader market valuation levels. However, as James said at the beginning of the presentation, we currently don't believe that markets are attractively valued, and therefore, we'll be inconsistent with our views to invest right now in BlackRock. But a company like BlackRock has higher margins and grow faster than the average listed company, and therefore, the right valuation, we believe it could be a very attractive investment opportunity. And last but not least, we want, over time, to increase our exposure to the industrial sector.

8:47 We identified a number of capital light businesses that are plugged into industrial processes, And these businesses face little competition, yet they are exposed to the growth in the real economy. And these businesses, most of them, have a very long history of dividend, paying to shareholders and dividend that increase through the economic cycle. So these are broadly speaking the three areas we would like to allocate more capital, in the trust by waiting for better valuation. And this is an important point because we constantly try to optimize three variables in the trust, quality, income, and growth. And every investment decision ideally aims to improve either the quality or the growth we can access without having to compromise on the income that we pay at the trust level. On the right hand side of the slides, you can see two of the latest investments we made. The first one is Pernod Ricard. Pernod Ricard complements very nicely our existing investment in Diageo.

9:56 The Pernod Ricard is a number two spirits company in the world. It has a portfolio that is slightly different from Diageo. Specifically, they have higher exposure to emerging markets, and they also have a slightly different product mix with stronger brands, for example, in the cognac category. The other investment we made is Amadeus. Amadeus is a business that might be less familiar to to our investors, but it's a software business for the airline industry, and it completely dominates the sector. Due to some due to some concerns on the distribution business of Amadeus, which we believe are misplaced, we were able to invest in the business at a very attractive valuation of 20 times earnings, which compares favorably to the valuation that this business attained pre COVID.

10:47 Of course, as we... As the world recovers from COVID, even four years in, airline,

10:54 capacity and travel is still recovering notably from China, but we believe that 2024 will be the final year of stabilization. And once investors get confidence on the underlying dynamics of the travel industry, we believe that Amadeo shares will start to perform and deliver the income growth we expect the business to be able to generate. So with that, James, I'm happy to hand over back to you. Thank you very much indeed, Thomas. So I think they're both really good examples of two businesses that we've patiently waited a very long time to buy, and now at levels where we think they are attractive in terms of valuation for that quality of business. In each case, they are essentially unique assets. You can't you can't find another business which has such a wonderful position in India and whiskey and and has such a wonderful position in China in cognac.

11:42 And similarly, there isn't another business like Amadeus, which gives you high quality, high margin, high free cash flow generating exposure to a growing and attractive industry in the sense that people will continue to want to travel. It tends to grow slightly faster than world GDP. And as people get richer around the world, travel would increase. Of course, the problem with the travel industry is that companies like airlines aren't very good businesses, But Amadeus is a good business in terms of financial productivity and so on, and we're very pleased to be able to invest in it at this at this valuation.

12:17 So this shows the long term performance of of STS against our peers. You can see as recently as August 2022, we were top of the box. Since then, we've been somewhat pedestrian. We've gone broadly sideways. And particularly recently, others have done rather better. But if we are right that we are moving into a, shall we say, a little bit more of a challenging market, then we would expect that performance to to correct in the coming weeks, months, and years. You can see this again. This is the performance of the long... The the open ended strategy, the Trojan GLOBAL INCOME FUND, which has a longer term track record. The broader indexes run away from income funds. We know that. I suppose we remind investors that growth companies don't always lead the index, and they particularly don't in in in more challenging times.

13:09 But you can once again see the blue line here. We were looking very good on a risk risk adjusted basis on August 2022. Since then, we've gone sideways. Once again, if things were to change such that markets are more challenging, we would expect us to do relatively well. And one of the reasons I say that is you can see on this chart, which is both the return and the volatility of the return, that although we're somewhat behind our peers, we do have some of the lowest volatility in the sector. And what that means is in more difficult times, we tend to elicit both somewhat better relative performance, but also lower volatility. And on that basis, the star, which is showing our our funds, should and could, not guaranteed, obviously, track upwards into the left.

13:56 Why? Well, because in times of trouble, we tend to do relatively well. This is what Troy is known for. This is what builds our long term track record. And I guess it's one of the it's one of the difficulties or sadnesses, if you like, of being a a defensive or quality or low volatility income manager is that actually most of the time, you tend to underperform. And yet you then have periods of sharp outperformance. Over time, that generates good risk adjusted return. Now I can't tell you what the next difficult period will be, and it's too early to to write it into this chart. But if I was a... If if I was pushed, I would say that the recession that is a result of the rate shot we saw in 2022 that may be upon us in 2024 or 2025 could well be it. Who knows? We're not predicting recession, but it's something that would be perfectly understandable given the change in rates and the time it takes for that change to work its way through the economy.

14:52 You'll be aware that we have a discount control mechanism at Securities Trust and STS GLOBAL INCOME GROWTH TRUST as we do for our other investment trust, Troy. This means that the NAV and the share price track each other pretty closely, and it means that investors should have great deal of confidence if... When they come to sell. Now I know there are those who lament the fact that they aren't able to buy the trust at a discount, but we think that the benefits of being able to sell close to NAV outweighs the benefit of being able to buy at a discount to NAV as well as the benefits of having greater liquidity. And that in a nutshell is why we think a discount control mechanism is a good idea at Troy. The dividend's grown consistently since we were entrusted with the management of the company.

15:39 Longer term investors may recall we took the dividend down a little bit to what we felt was a sustainable level, and we... That's enabled us to grow up pretty consistently. And we're on track to do so again this year. What actually happened last year? Well, it was an interesting year in the sense that it was the was the opposite of the previous year. So if we looked at the attribution, this is March to March, not for any reason other than fact that we're... Where we were in... Are we in... Where we are in the year. If we look for similar numbers for for the year before, four of the five top performers would have been consumer staples businesses. But it having been a period where staples businesses were weak and where so called or perceived beneficiaries of AI were strong.

16:25 That's been the flip side in this this year. So what's done well are clear AI beneficiaries or perceived to be by the market, both Microsoft and Relics. And the other three are really quite idiosyncratic. Nintendo, we've mentioned the share prices, I think, anticipating the launch of the new Switch Pro. I see... It's cost center hotel group. People like to travel. It's interesting, actually. Thomas and I were talking about this recently. Business travel hasn't come back to the extent that others might have thought or that, you could have made a case for. There is a structural reduction in the amount people are traveling for business. Time will tell if that's forever. But it's more than offset by strength elsewhere in the business, and the shares have done very well. And finally, Admiral Group, we've spoken about before, has a dominant position in UK motor insurance.

17:13 It's it's managed this very tricky post COVID cycle extremely well, and the shares have reflected that. In terms of underperformance, have a number of staples businesses,

17:24 and we'll... We could talk more about about this, but some of that is a sectoral effect. Clearly, people have felt that the invention of circle GLP one drugs, these weight loss drugs, may affect long term and broadly the extent to which there is demand for businesses such as this or the products that these businesses

17:48 produce. We're not... We're less convinced long term that people's behavior will be changed so radically. But in the short term, these companies have come down partly because they are expensive and partly because of GLP one risks. And finally, there's an idiosyncratic problem at Reykjat Benkisa relating to both, a minor accounting problem in The Middle East, but also a a litigation issue in The States. We think both of them have been over discounted by the share price. It's led to unperformed over this period, but the shares do appear to have begun to recover, we expect that ultimately to to to to be the case. This is the portfolio. We view it as a group of long term, world class, high quality global franchises. If you squint into this slide, you can see that we have about 31% in The UK.

18:33 That for us is quite a big allocation in the sense that it's the highest it's been since I've been managing on this money on this money on this basis for what is now sixteen or seventeen years. But we do perceive there to be a notable unusual geographic specific discount relating to The UK, allowing us to buy particularly good global businesses at very attractive valuations. But that doesn't mean that it's not a global portfolio. So if we look over the page on, the next slide on an underlying revenue basis, we have relatively limited exposure to The UK. We have Domino's Pizza and Admiral. They're the only kind of UK UK businesses we own. And otherwise, we have a broad spread of businesses across the globe, again, on an underlying revenue basis, which is the way we think about it, half the portfolio is in The States.

19:19 So I always say, always think that this is the most important slide in the deck in some ways because we are generating a 5.6 free cash flow yield, and we've grown the dividend sustainably or consistently at around five and a bit percent too. And if you think about it on a forward expected return basis, absent a rerating or derating, if you take a five and a half percent free cash flow, you're growing at 5%, you should expect kind of high single digit, low double digit returns from portfolios such as this. Particularly, as you can see on the right hand side that we have a collection of really high quality businesses.

19:51 And so although we have lagged recently, we do view the future with confidence. We can control what businesses we own, what valuation we pay, and the likelihood of them compounding capital over time. We can't control what goes on around us and how those businesses are valued over the shorter term. But we do think if we do continuously compound capital on an underlying basis, that will inevitably be realized by the market in time. So that's all I was gonna say.

20:22 We have had a pretty amazing period in markets. We have had a fifteen... At least fifteen... Well, fifteen year, sixteen year bull market. One or two interruptions, but effectively an upward drop for a very long period of time. It's been an incredibly benign period for equity investing. We started a very low level or at least low valuations, not very low in 2008, And we went through a period of zero interest rates and very supportive monetary policy in the form of QE, which is now handed off to a manage... Fiscal policy boom, particularly in The States, plus an, an AI excitement, right at the end of it. But, ultimately, we do worry that this very long period is at an end. We are now in a time where inflation has returned somewhat, where we are no longer, in a period of zero interest rates, where policy is much less supportive,

21:14 and indeed the fiscal impulse impulse is probably receding rather than improving at this point, and where valuations remain ever very elevated. And therefore, you could make an argument that fixed income markets have quite materially repriced as a result of what's going on, but equity markets have yet to. We think, therefore, it may not be such a stupid thing for a cert... For certain crave auto investors, particularly those with a replaceable capital in need of income, to take some of those amazing gains and to secure for themselves a long growing dependable income stream. We don't know what's gonna happen to inflation. I'm not sure people... Many people... Anyone really does with any certainty. We think either way we'll do okay, as I've said before. Inflation may come down in a recession, in which case you want resiliency, and we have that. Or maybe inflation is more sticky, in which case you want pricing power, and we have that too.

22:03 Ultimately, therefore, Troy's approach of producing high quality and resilient portfolios that we think will produce decent returns on a risk adjusted basis over the full market cycle whenever that might be... Remains intact. And we want ultimately the GLOBAL INCOME GREAT TRUST to be seen as the high quality, low volatility trust in the sector. So I'm very happy to hand it back now, and, Thomas and I will be, of course, happy to take any questions that may have arisen. That's great, James. Thomas, thank you very much indeed for your presentation. Ladies and gentlemen, please do continue to submit your questions using the Q and A tab situated on the top right corner of your screen. While the company take a few moments to review those questions submitted today, I would like to remind you that a recording of this presentation along with a copy of the slides and the published Q and A can be accessed via investor dashboard.

22:49 James, Thomas, Antonia, as you can see, we have received a number of questions throughout today's presentation. And Antonia, if I may now hand back to you and kindly ask you to read out the questions to the team where appropriate to do so, and I'll pick up from you at the end. Thank you very much. Thank you, James and Thomas, and thank you everyone for joining us this afternoon for your questions. So James, I think we will start with a question for you. What is your criteria for selecting new investments?

23:15 Yeah. So ultimately, Troy, what we're trying to do is is find high quality businesses that we think have sustainable competitive advantages, allowing them to compound... To to to sustain those high returns and compound compound capital and free free cash flow over time. We've got a pretty clear idea of of Troy what sort of businesses those are. Once we found them, then we do, you know, on... In in our case, a deep piece of due diligence by Tomash on the global income team or by one of the analysts or portfolio managers on one of the other teams that are trying to discern why those crites... Why those return... Those competitive advantages exist, what they've been, whether identifiable, whether they're sustainable, what returns have been, whether they like to continue to be good, how capital is being allocated in the business, how the management team are incentivized.

24:04 And ultimately, then we present that, Tomasz and I, to the invest... The whole investment team, and we try and decide at that point whether it's a good enough business to go into our investment universe. If it is, then it's available to be bought across the funds, and we will ultimately, hopefully, have an opportunity to to to buy that business at some point. So a combination of... It's a combination... It's it's essentially how good is the business at the point of entry into the investment universe, what's the value of the business when we put it into the portfolio. Thank you, James. Tomasz, one for you. What are your thoughts on dividend payouts in the future? Thank you, Antonio. I think I will tackle this question in two ways. First of all, the intention of the TRUST is to grow dividend every year, and we aim to do that by letting our underlying companies to grow earnings and dividends. And therefore, the dividend growth you... Investors would see in the TRUST will be a reflection of what our underlying companies are doing.

25:09 So the second way to address the question is therefore to look at what our underlying companies are doing. And there we feel quite comfortable about both the sustainability of the dividends that these companies are paying and the growth trajectory. Since we've run the global income strategy at Troy, in the last seven years, the dividend at the fund level has compounded at around 5%. And this includes 2020, a year where many companies struggle to maintain their dividends. And most importantly, as James before was mentioning some of the criteria we have for selecting investments, We want to avoid companies that are over distributing dividends at the expenses of investments back into their own businesses. So we have to give an answer. I think the payout level and the sustainability of the income we have at the TRUST level is very healthy because the underlying businesses themselves are in a healthy position to grow the dividends in good and bad economic time.

26:11 Thank you, Thomas. James, there are a couple of questions that you might combine on the recent merger with Triumph and Growth Trust. So firstly, are you able to give an update on the merger? And then secondly, should investors expect more turnover as you work through the trust's recent merger? Okay. So, yes, first of all, thank you for all those who voted and supported the the merger. It completed at the end of March. We were very pleased that a very material proportion of the shareholders of Troy Income and Growth Trust came across to join us at the STS GLOBAL INCOME and Growth Trust. We, of course, now have a company that has greater scale, slightly over £300,000,000.

26:55 The fee has come down a little bit also as a result of the merger, and we have two of the directors from Troy Company Trust who's also joined STS. Two of our directors in time will step down so the overall side... Size of the board won't increase over the longer term. So that's... We're obviously very pleased with the transaction. I'm very grateful for the support, and and that's where we are with it. The second part is we did the entire restructuring effectively on the first day. We... There are some... There was some crossover clearly between Troy and GROWTH and STS because not only do we have quite a substantial allocation by our standards of the global portfolio to The UK, but also, of course, it's a Troy portfolio. So we're all looking for very similar types of company. So we did some restructuring both in the... We were we were very careful not to overburden either group of shareholders in terms of cost during the restructuring.

27:50 So we did some restructuring before the merger, some of after, but now it's completely done. So you shouldn't see any increased turnover following that initial restructuring. Thank you, James. And one more for you, James, on liquidity. What is your approach to managing liquidity within the portfolio under the current market conditions?

28:13 So it's a very liquid portfolio. And there's only really one company where you could even begin to think that there was any degree of illiquidity in the underlying portfolio, and that is Domino's Pizza. It's the only company that's somewhat smaller in the portfolio. We really like it as an investment. It's done well. We like the the the pizza business model returns on capital they generate, what that business is doing in terms of the underlying operations and its position in The UK marketplace. So we're happy to to to... It's a bit of an exception in the portfolio, but we're very happy to have the the investment. Otherwise, it's a very liquid portfolio. So that enables us to also have a great deal of liquidity at the company level because of the discount control mechanism. So we will buy back stock at a small discount or issue stock at a small premium should there be demand for for that to be the case.

29:02 And therefore, investors should be able to invest with confidence both buying and selling in the trust, particularly now it's somewhat bigger and because of the discount control mechanism. Thank you, James. Thomas, one for you. What are your views on the magnificent seven?

29:18 Thank you, Antonio. I'm not going to stand here and say that these aren't great businesses because they are. The reality is that even though they're reaching scale that is unprecedented, I think, in the history of investing, these are very good business models that are exposed to all the good trends we read about cloud AI. And in these markets, actually, scale does matter. So it's hard to really say something negative about these businesses as of today. What I would say, though, is that usually growth doesn't lead forever, and that's something that we need to remind ourselves. And, also, the the the the other point is that most of these investments are unavailable to us because they either don't pay a dividend or they started paying dividends very recently at a level which is not attractive and supporting supporting for the overall trust.

30:17 Now, one of the max seven will report today, NVIDIA, which feels like a, you know, a life defining moment. So we'll see what what what will happen. But overall, what I would say is that even though we can get exposure to some of these max seven and the market themselves have been supported by the incredible rise of these businesses, we still believe that if we look at our under... Our underlying portfolio, we have a collection of businesses that although might not capture headlines, they're steadily compounding year over year, increasing their dividends, increasing their earnings. And we feel that over the medium term, the sustainability and the constant growth of our businesses will eventually translate to good risk adjusted returns as James described during the main presentation.

31:07 Thank you, Thomas. James, please can you share your current views on valuations in the market?

31:13 Well, I think as I mentioned, we think that markets are pretty fully valued. They're towards the upper end of that historic range on a number of measures. And as of... Some have heard me say before, that doesn't tell you very much about what the market... Fact, doesn't tell you anything about what the market's gonna do in the short term. But it has been pretty robust in history about deciding what returns are likely to be longer term. And from this level of valuation, they tend to be fairly constrained. And so that's where we come back to our point about a five five and a half percent free cash flow yield growing at five. If we can deliver anything like that kind of return over the next few years, broken down between income and capital, Well, I think that'll be a really good result. It made it rather pedestrian today, but I think on a forward looking basis, it it rather better. Thank you, James. Tomasz, what are your views on inflation? That's another good macro question. I think I think no one... You know, people people will have their own views on inflation. I I believe no one really knows what is going on.

32:11 I can only comment on what we've seen, which is a sharp spike in inflation and then supply chains responding, inflation coming down. Who knows at which level it will settle? I think the important point is that we don't manage the trust with with any specific views on inflation, and we think that our companies will do well in both a lower inflation environment or in a higher for longer environment. And let me explain why. If inflation turns out to be stickier than everyone expects, then we have a collection of businesses that have good brands and good pricing power that will allow them to price for an inflation environment which is higher than what we expect. And despite 2023 being a tough year for some of our staple businesses, we should not forget that 2022 was actually a fantastic environment for many of our staple businesses.

33:07 So in that environment, in an environment where inflation is stickier, we believe we'll do just fine. If inflation was to come down realistically because of economic slowdown that will then trigger a a lower rates environment, Again, we have businesses that have really fantastic economic modes that will probably benefit from lower rates and will be able in a tough economic environment to do fine because the products that they sell are embedded in our everyday lives. So with a cover that I don't really know, and therefore, I I don't have a view that I'm willing to share or bet on it, The good news is that we don't rely on any specific outcome for our trust to do well.

34:00 Thanks so much. James, anything you wanted to add to that? No. I think I answered pretty well. I mean, it gets back to this point that it's a really uncertain outlook. There are lots of things that are structurally changed, but that doesn't necessarily turn into necessarily we're gonna have more or less inflation. I do think the period of zero interest rates is is probably over, and the experimental policy, hopefully, is in the rearview mirror. Who knows?

34:25 But it's this point that if inflation comes down, it's probably coming down fast because we've got an economic slowdown. We'll do okay. If it doesn't, it's probably because we've got a bit more inflation, and I think we'll do okay. So either way, I think we're okay. Thank you, James. And one final question then, which is around geopolitical risk. How might this impact the portfolio? Well, I'll take this one. I mean, answer is it's very... It's really hard to say. It's always possible to to extrapolate geopolitical risk to Armageddon effectively, and I know it feels particularly like that today. But you can't manage a portfolio based upon geopolitical risk and trying to sort of guess where the chess pieces are gonna land. What I would say is that it does somewhat put... Probably put some upward pressure on risk premia.

35:11 It is true that we're now in a a more dangerous world, and we can all see the fracturing between, if you like, the the the arc of authoritarianism as as as Jay Stiltonberg at at NATO said and and and and what used to be defined as the West or, you know, liberal democracies. That is... That does appear to be a a change, and the ability and the willingness of America to suppress conflict around the world is undoubtedly diminished somewhat. So that is a change, but we're not managing the portfolio based on that. But it does... We were cautious before. It doesn't make us any less cautious. That's great. James, Tomasz, Antonia, thank you for addressing those questions for investors today. And, of course, the company can review all questions submitted today, and we'll publish those responses on the Investor Meet company platform.

35:58 But before we direct the investors to provide you with their feedback, which I know is particularly important to the company, James, could I please ask you for a few closing comments?

36:06 Certainly. I guess one of the things one we haven't really addressed is is is clearly we have lagged a rising market recently. There are a number there are a number of reasons for that. But I do think there's a couple of reasons why things might change at some point. We've seen this amazing exuberance relating to auspicious intelligence. It's very hard to know exactly how that will pay out. It's a pretty profound effect. But if history is any guide, it may well be that the the building out of the AI infrastructure we're currently seeing may not then seamlessly be followed by the deployment of AI into the real economy. And if we do see a gap between those two things, then the current exuberance may, at the margin, turn out to have been somewhat overexuberant. Allied to that, clearly, we don't have a lot of exposure to those sorts of businesses.

36:53 We we could do on the far side of a more of a more challenging period. The second is the GLP one drugs I know... I mentioned. We're... We we we wonder if they'll turn out quite to be the wonder drugs that they are currently thought to be.

37:08 It may well be that they can't be taken without side effect. It may well be that over long periods of time, they're not just all good news. There may be some other less good news. And ultimately, as I mentioned, we're somewhat skeptical about the extent to which it changes forever consumer behavior. If that is the case, then we can see, and we have begun to see, I think, as evidenced by the beginning... A better performance of our consumer staples businesses, that things could be better. We have an overweight to The UK. Goodness me. The UK has been in the doghouse for... In terms of international investors for a very long time. That does seem to be changing. The currency has been a bit stronger. We've seen some some some corporate activity, and we've just begun to see The UK begin to perform. Obviously, it's actually perform pretty well this year. Until recently, The UK had actually outperformed the Nasdaq, which is pretty remarkable.

38:02 It it isn't currently, but there was one point that it... When it was. And finally, if we do have an economic slowdown, then that would play to Troy's investment process, I think. So I'm not forecasting that all these four things, UK improving, GLP one despondency being a bottoming, AI exuberance beginning to top, and an economic cycle beginning to unfold. But if if any of those or all of those happen, then our performance can improve really quite rapidly. So that's the sort of environment in which we'll do better. In terms of closing remarks, I think I've said what what we need to say. We want to be building an exceptional portfolio of resilient companies. We think we'll do reasonably well in a more challenging period, which may be in prospect.

38:49 And we want to be seen as the high quality, low dividend... Low volatility trust in the sector with a with a healthy underlying growth in free cash flow and ultimately dividends. So thank you very much everybody for listening. Thanks, Thomas and Antonio. And I think that's all we need to say. Fantastic. James, Thomas, Antonio, thank you once again for updating investors today. Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback in order that the board can better understand your views and expectations? This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of management team of STS GLOBAL INCOME AND GROWTH TRUST PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.