AGM Presentation April 2019 Agenda 1. 1. The he Law Debe - - PowerPoint PPT Presentation

AGM Presentation April 2019

Agenda

1. 1. The he Law Debe benture Mode del 2. Group Hig Highlights 3. 3. Inv nvest stment Por

• rtfo

folio io 4. 4. I Independent Profe fessi sional l Ser Servic ices 5. 5. Con

• nclu

lusi sion

• 1. Law Debenture: A highly differentiated and unique business model

Investment Tru Trust

• Eq

Equit ity po portfolio lio man anaged ed by by Jam James es Hen ende ders rson of Janu Janus s Hen ender erson, , as assis sisted ed by by Lau aura ra Foll

• Sel

elect ectiv ive, , bo bott ttom-up app appro roach, , di diver ersif ifie ied by by secto sector r and and geo geogr graphy

• Objec

bjectiv ive to to ac achie hieve long ng ter term ca capit pital l gr growth in n real al ter terms and and stea steadily ily in increasin ing income in excess of the Trust’s benchmark (FTS TSE E All-Share re Ind ndex)

• Reg

Regula lar r IPS rev even enues es cr crea eate gr grea eater r flexi exibilit ility in n st stock ck sel selec ection

Inde dependent Pro Professional Se Servi rvices s (IP IPS)

• Tr

Trust sted, , profes fessio ional l and and thir third part arty pr provid ider: r:

• Pen

ensio sions

• Corpora

rate Tr Trust

• Corpora

rate Ser ervic ices es

• Inte

ntern rnatio ional pr pres esence ce: : UK, , Caym ayman Isl slands, , Cha hannel el Isl slands, , De Delaware re, , Du Dubl blin in, , Hong ng Kong ng and and New ew York

• Incre

ncreases es the the abilit ability to to pay pay di divid iden ends to to sha share rehold lder ers

• Tax

Tax eff effici cient

To Tota tal l Sha Shareholder Re Retu turn rn

3

• 2. Group Highlights – Katie Thorpe, CFO

• 2. Group Highlights – Year Ended 31 December 2018

Inv nvestmen ent Tr Trust Highlig ights:

• NAV

AV to total l re return for for the the ye year ar was as -5. 5.8%, com

• mpare

red to to -9.5% re retu turned ed by y th the benchmark FT FTSE All ll-Shar are Index

• The

The port

• rtfolio

io ha has s bee een n sh shel elter ered ed from from ~4 ~40% of

• f mark

arket dec ecli line

• The

The tru trust ha has s cons

• nsistently ou
• utper

erformed ed its ts ben enchmark, , wit ith

• u
• utper

erforman ance e on

• n a

a one

• ne, thr

three ee, fi five ve an and ten ten ye year ar met etric ic

• £1

£10, 0,000 inv nves ested ed in n Law Law Deb eben enture re ten ten ye years ars ago ago would ld be e wor

• rth

£34,3501 at at the the en end of

• f 201

2018

• On

On-goin ing cha harges es re remai ain low

• w at

at 0.4 0.43% com

• mpare

red to to a a se sector r av aver erage e of

• f

1.21 1.21%

1 Calculated on a total return basis assuming dividend re-investment between 31 December 2008 and 31 December 2018

5

• 2. Group Highlights – Year Ended 31 December 2018

6

1 1 ye year 3 3 ye years rs 5 5 ye years rs 10 10 ye years rs NA NAV tota total retu eturn1

• 5.

5.8% 27. 7.3% 30.4 30.4% 199.0 199.0% FT FTSE Actu ctuaries All ll-Share Index Tota tal Re Retu turn rn2

• 9.

9.5% 19. 19.5% 22.1% 138 138.3 .3% Sha Share pr price e tota total retu eturn2

• 11.6

11.6% 19. 19.0% 18.8 18.8% 243 43.5 .5% Cha hange e in in Re Reta tail Price Index2 2.7% 9. 9.6% 6% 12 12.7% 34.1 34.1%

1 NAV is calculated in accordance with AIC methodology, based on performance data held by Law Debenture including the value of the IPS business and long term borrowings 2 Source: Bloomberg

Con

• nsistently ou
• utperformin

ing benchmark on

• n on
• ne, thr

three, fi five and te ten ye year r metr tric

• 2. Group Highlights – Year Ended 31 December 2018

Divid idend:

• To

Total l prop roposed divid idend of

• f 18

18.90p per r sh share re for for 20 2018 (20 2017: : 17 17.3 .30p), ), a 9.2 9.2% increase

• Annuali

lised divid idend gro growth of

• f 4.

4.5%1 ove

• ver

r 10 10 ye years rs

• Re

Rese serv rves pos

• sit

itio ion re remain ins str strong wit ith re reta tain ined earn rnin ings of

• f £50

50m at t the the end of

• f 20

2018

7

1 Calculated on an annualised basis on dividend payments made by accounting year between 31 December 2008 and 31 December 2018

• 2. Group Highlights – Year Ended 31 December 2018

Independent Profe rofessio ional l Se Serv rvic ices:

• Str

Strong perf rformance fro from the the business con

• ntinues to

to sup support divid idend gro growth

• Re

Reve venues incre reased 9.0 9.0% to to £29.6m (20 2017: £27.1m) ) foll followin ing stro strong perfo rformance from from all thr three divis isio ions

• Nor
• rmali

lised earn rnin ings per r sh share re increased by y 9.2 9.2% to to 7.8 7.87p (20 2017: : 7.2 7.21p)

• Increase in fair

fair va valu luation of

• f the

the IPS S busin iness of

• f 10

10.4% in 20 2018

8

• 3. Investment Portfolio – James Henderson, Laura Foll

& Charlotte Greville Janus Henderson

• Aim

im to to achieve a better re retu turn tha than the the FT FTSE All ll Sh Share

• Sto

Stock picking decis isio ions made on

• n a va

valu luatio ion base sed appro roach

• Ove

vers rseas hol

• ldings bri

ring exp xpos

• sure to

to op

• pportunit

ities tha that cannot be fou found in the the UK sto stock market

• Th

The equit uity por

• rtfoli

lio is s exp xpected to to prov rovid ide goo good divi vidend gro growth ove

• ver

r lon

• ng te

term

• Geari

ring 3% % at t 31 1 December 20 2018 18 (31 1 Dec 20 2017, , 1%) %)

• Sw

Swit itchin ing from from Global l to to UK se sector

• 3. Investment portfolio

10

The UK represents a value opportunity relative to history

80 90 100 110 120 130 140 150 160 170 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 UK World ex UK 50 100 150 200 250 300 350 400 450 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 UK World ex UK

Source: Datastream, as at 31 December 2018

The The UK m mark arket und nder erperfo rform rmance e si since nce EU EU refer eferendum The The UK m mark arket pe perform rmed rough ghly in n line ne with th the the world over er the the long ng ter term up p until ntil the the EU EU refer eferendum

11

The UK represents a value opportunity relative to history

2 2.5 3 3.5 4 4.5 5 5.5 6 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

FT FTSE All All Sha Share – 20 0 ye year r divi dividend yiel yield

%

Source: Datastream, as at 29th March 2019

12

2 4 6 8 10 12 14 16 18 20 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Dividend per share

Dividend yield of 3.3% vs. global trust sector of 1.4%

13

Source: Janus Henderson Investors, AIC, as at 31st December 2018

Source: Janus Henderson Investors, as at 31st December 2018 Note: Figures exclude cash

Se Sect ctor weightings (%)

Portfolio Sector breakdown at 31 December 2018

14

3.6 2.6 1.2 15.6 .6 7.6 8. 8.0 11.1 .1 12.9 .9 10.8 .8 26.6 .6 1.4 3.6 3.7 4.5 7.3 8. 8.9 7.4 10.8 .8 24.8 .8 27.6 .6

2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 Telecommunications Utilities Technology Consumer Goods Basic Materials Health Care Consumer Services Oil & Gas Industrials Financials Weight % Benchmark Weight %

Recent tra transactions - fi financial year 2019 to to date te

Purc urchases Sa Sales Royal Bank of Scotland Kier Carnival Marshalls Direct Line Becton Dickinson

Source: Janus Henderson, as at 29th March 2019

15

% 1 Royal Dutch Shell 4.4 2 GlaxoSmithKline 2.6 3 HSBC 2.6 4 BP 2.4 5 Rio Tinto 2.1 6 Rolls Royce 2.1 7 Stewart Investors Asia Pacific 2.0 8 Prudential 2.0 9 Relx 1.8 10 Hiscox 1.8 11 Senior 1.7 12 National Grid 1.6 13 AstraZeneca 1.6 14 Johnson Service 1.5 15 Microsoft (USA) 1.5

Portfolio: Top 15 15 holdings at: t: 31 31 December 2018

16

• Th

The UK is s ge genera rall lly ou

• ut of
• f fav

favour.

• r. Th

This is wil ill l lead to to op

• pportunit

itie ies

• Divid

idend gro growth is s com

• ming thr

through fro from a go good sta startin ing leve vel

• La

Law Debenture has s distin inct adva vantages for for a manager ove

• ver

r oth

• ther Tr

Trusts

Investment outl tlook

17

• 4. Independent Professional Services – Denis Jackson, CEO

• 4. Independent Professional services (IPS) - Overview
• Trus

Trusted, , pro profe fessi ssional and nd ind independent t

• Hig

High qua quali lity rep eput utatio ion and nd br brand stre strength in in cor core mark rkets

• Exc

Excell llent reco ecord of

• f custo

customer r ret etentio ion

• St

Stro rong rep epeat rev evenues, s, tw two

• thi

third rds s fr from

• m on
• n-going cont

contractua ual com commitments s

• Cos
• st

t ba base se kept kept unde under con contro rol

• Pro

Profi fits s give give a divi dividend stre stream whi hich inc incre rease ses s the the abil bility to to pa pay y divi dividends s to to sha share reholders

19

Pensions

The longest established and largest provider of independent pension trustees in the UK

Corporate Trust

A leading independent corporate trustee across international capital markets

Corporate Services

Highly regarded range of

• utsourced solutions to

corporates

• 4. IPS Update by Business Area – Pensions

20

201 018 hig highlights: s:

• Sta

Starte ted to to see see ret eturn rns s fr from

• m ou
• ur

acce ccele lerated inve invest stment in in pe people le, , with ith top top li line ne rev evenues up p 14. 14.7% fr from

• m £8.

8.3m to to £9. 9.5m

• Sig

Signifi ficant wins ins of f blu blue chip chip com company pe pensi sion sche scheme e bu busin siness s in in the the pe perio riod

• Fo

Foll llowing the the lau launc nch of

• f ou
• ur
• u
• utso

tsourced adm dminist stration ser servic ice Peg egasus in in 201 017, we e ha have e see seen sign signif ific icant gr growth in in the the de demand fo for the these se serv servic ices in in 201 018 201 019 pr prio iorit ities: s:

• Re

Recruitm itment continues for r our ur Pegas asus busi usiness wit ith a a vi view to to sig signifi ificantly sc scalin aling ove ver the the next xt fiv ive year years

• Curr

urrently act act for r 20 200 of the the 5, 5,500 DB DB sc schemes in in the the UK - stre strength of our ur bran rand and and qual uality of our ur people pro rovid ides a a compellin ing opportunity to to exp xpand our ur

• ffe

ferin ing

• Re

Recruiti iting hig igh qua ualit lity ind indiv ividuals s to to sup support exp xpansio ion, wit ith a a focus on div iversi sity

• Contin

tinue to to bui uild ld re referral part artnerships, s, focussi sing on tho those that that driv rive busi usiness gro rowth

• Use

se tec technology to to cre reate sm smarter work rkin ing prac ractices and and max aximise re revenue

NB: Percentages quoted throughout this section of the presentation are extracted from the 2018 Annual Report, based on calculations in £000, some rounding differences to values quoted in £m may occur

• 4. IPS Update by Business Area – Corporate Trust

21

201 018 hig highlights: s:

• Re

Revenue gre rew by y 5. 5.8% fro rom £7.9m to to £8.4m

• Inc

Income is is generated by y a a mixt ixture of up up- fro ront acc acceptance fees on new busin usiness s an and lon long te term, an annual an annuity fees on exi xistin ing busi usiness ss

• More

re than than 2/3 2/3rds s of

• f re

reve venue contracted at at sta start of 20 2018 18, wit ith over verall inf inflatio ionary inc increase se of 1. 1.5% 5% on 20 2017 17 re revenue

• 19.5

19.5% re reve venue earn arned fro rom sp special fees s for r su subsequent issu issues su such as as re restr structurings, s, rat ratings down-grades s and and othe ther acti actions re required by y the the trus trust deed

• New busi

usiness ss fees earn arned 24 24% hig igher than than for r 20 2017 17 - se second hig ighest re recorded sinc since the the fina inancial l cris risis is

201 019 pr prio iorit ities: s:

• Posit

sitio ioning our ur offe fer aro around what at cus ustomers want ant to to buy uy rat rather than than what at we want ant to to se sell ll

• De

Deepening exi xistin ing re relat lationship ips wit ith ban anks ks an and la law fir irms s to to bett tter leve leverage our ur netw twork

• Engag

agin ing wit ith bout utique pla layers to to exp xpand our ur cust ustomer base ase

• De

Developin ing ad additi itional l ag agency se serv rvices in in multi ltiple le loc locations , e.g. Hong Kong, wit ith tw two se senio ior hire ires re recently se secured

• Exp

xpanding esc scrow offe ferin ing to to pro rovide cli lients wit ith a a re return on cash ash

• 4. IPS Update by Business Area – Corporate Services

22

201 018 hig highlights: s:

• Re

Reve venue gr grew 6. 6.9% 9% to to £11. 11.7m fr from £11.0 11.0m in in 201 017

• SO

SOP rev evenue up p 2% % glo globally and nd 6. 6.6% 6% in in Lo Lond ndon

• Corporate Se

Services up p 4. 4.8%

• Safe

Safecall ll cont continued its its stro strong gr growth tr trajectory, , wit ith 15. 15.4% inc incre rease se in in rev evenue (4 (44% ov

• ver

er the the pa past st thre three ye years rs)

• 80

80% of f ne new bu busi siness ss was s dr driven by by new new web ebsi site, , whi hich was s re-launched in in H1 H1 201 018 201 019 pr prio iorit ities: s:

• Sm

Smart use se of

• f tec

technolo logy to to inc incre rease autom tomation and nd im impro rove ef effici ficiency

• Capit

italis ise e on

• n reg

egional l of

• ffices

fices and nd law law fir firm rela elationships s to to gr grow pr presence in in Latin tin Americ ica and nd Asia sia

• Be

Bett tter r leve levera rage gr group rela elatio ionsh ships

• Fir

First t mov

• ver adva

dvantage in in Insu nsurance SPV SPV mark rket

• Fu

Further development of Safecall’s pro product offe ffering wit ith co continued

• rg
• rganic gr

growth and nd hir hire of

• f new

new Lo London ba base sed sa sales les reso esourc rce

• 4. Independent Professional Services – Outlook
• We

e are e fo focus cusing on

• n ou
• ur stre

strengths s – the the qu qualit ity of

• f ou
• ur ser

servic ice, , ou

• ur

pe peop

• ple,

, ou

• ur rep

eputati tion and nd ou

• ur cli

clien ents – wit ith inc incre rease sed and nd mor

• re

pr proactive pr promot

• tion of
• f ou
• ur bu

busin siness sses s and nd a fo focus cus on

• n new

new pr products

• We

e cont continue to to str strengthen ou

• ur tea

team to to su suppo pport ou

• ur gr

growth ob

• bjec

ectives, s, with ith an n ey eye e alw lways to to the the bo bott ttom li line ne

• In

n Q4 4 we e hire hired a new new CTO TO Davi vid Wil illi liams s (ex (ex CTO TO of

• f Marsh

rshall Wace ce LL LLP and nd Tib Tibra ra Tra Trading). . W We e are e inve invest sting in in tech technol

• logy – ena

enabli ling ou

• ur

pe peop

• ple to

to do do mor

• re,

e, fa faste ster

• We

e wil ill l be be pr pro-active in in ou

• ur eng

engagement with ith ou

• ur sta

stake keholders rs, , enh enhancing ou

• ur com

communic ication and nd im impro roving tr transparency to to be bette ter te tell ll the the Law Debe benture sto story

• We

e are e fo forecast sting rev evenue e gr growth of

• f mid

id to to hig high sing single le digi digits s fo for 201 019

23

• 5. Conclusion – Denis Jackson, CEO

• 5. Conclusion - Consistent Outperformance over 1, 3, 5 and 10 years
• Uniq

Unique mod

• del

l is is a key key va value lue dr driver in in ach chie ieving lon long-te term cap capit ital gr growth and nd stea steadily inc incre reasi sing inco income – all llow

• ws inc

incre reased flexib flexibilit ity in in po portfo foli lio co const struction

• Inv

nvest stment Manager ha has s a pr proven tr track rec ecord rd of

• f iden

identify fying qu qualit ity com companies es at t a fa favo vourable va valua luation at t an n op

• pport

rtune po point in in the the cycle cycle

• Propose

sed mov

• ve to

to a UK UK secto sector r AI AIC cate category ry fr from

• m the

the cur curre rent glo global secto sector class classif ific ication, , to to be bette ter ref efle lect po port rtfo foli lio cons construction

• On

On-going cha charges s remain low low at t 0. 0.43% co compared to to a se secto ctor ave verage of f 1. 1.21%

• IPS bu

busin siness s gr grew well ell in in 201 018 – ambi bition to to achi chieve e sim simil ilar r gr growth in in 201 019

• Con
• nfident we

e can can gr grow IPS consi considerably ov

• ver

er tim time, , su supp pporti ting bo both th inco income and nd ca capit ital gro growth objec bjectives

25