Value & Income Trust AGM Presentation Patrick Harrington OLIM - - PowerPoint PPT Presentation

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Patrick Harrington OLIM Investment Management 5th July 2019

Value & Income Trust

AGM Presentation

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Agenda

• Year to 31/3/19 review
• Performance highlights
• Top 10 stocks
• Dividend outlook
• Market outlook

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Market Review – FTSE All Share Index (capital Return)

Source: Bloomberg, data to 30/6/19

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Market Review – World Markets

Capital Only – 31/3/18 – 31/3/19 Local Currency GBP

UK - FTSE All Share Index

2.2% 2.2%

FTSE World Index ($)

0.6% 8.2% USA – S&P 500 ($) 7.3% 15.4%

Germany – Dax (Euro)

• 4.7%

2.4%

France – CAC 40 (Euro)

3.5% 11.3%

Japan – Nikkei (Yen)

• 1.2%

6.3%

FTSE Emerging Markets Index

• 8.1%
• 1.2%

Source: Bloomberg

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Market Review – World Markets

31/3/18 31/3/19 GBP/USD 1.40 1.30 GBP/EUR 1.14 1.16 10 Yr Gilt yield 1.4% 1.0% 20 Yr Gilt Yield 1.7% 1.5% US 10 Yr Yield 2.7% 2.4% Oil Price ($) $70.27 $68.39

Source: Bloomberg

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Economics Review Two distinct periods – 9 mths to 31/12/18 and thereafter First period – global

Tightening monetary conditions China/USA trade war rhetoric deteriorates Economic growth expectations fall

First period - UK

Growth reasonable driven by high levels of job creation Continuing fiscal & monetary squeeze Brexit

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Economics Review Two distinct periods – 9 mths to 31/12/18 and thereafter Second period – global

US Federal Reserves halts tightening, now moving towards easing China/USA trade war rhetoric still a concern Iran

Second period - UK

Bank of England has stopped raising rates – inflation at target Growth still OK but slowing Continuing fiscal squeeze, Brexit

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Performance Review

VIT Equity Portfolio Total Return +5.5% FTSE All Share Index Total Return +6.4% Stock selection positive, asset allocation between sectors negative Sectors Positives: U/W Banks, Tobacco Negatives: U/W Mining, Oil & Gas, O/W Life Assurance Stocks Positives: Cineworld, Legal & General, Go-Ahead, Croda International Negatives: Restaurant Group, Babcock, Beazley, N Brown

Source: Bloomberg

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Portfolio Changes

Purchases: £21m Sales: £22m Complete Sales: Halma, British Land, N Brown, Wood Group, Daily Mail & General Principal Reductions: Beazley, Informa, Unilever, Cineworld New Holdings: Phoenix Group, DS Smith, Devro, Lloyds Banking Group, ITV Additions: Marston’s, Restaurant Group

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Top 10 Stocks

Stock % of Equity Portfolio* Forecast Dividend Yield** Forecast Dividend Growth Unilever 6.0 3.3% 6.9% Beazley 5.6 2.2% 5.1% BP 5.4 5.9% 2.5% GlaxoSmithKline 4.8 5.0% 0.0% Croda 4.8 1.8% 8.0% Royal Dutch Shell 4.2 5.5% 0.0% HSBC 3.8 6.2% 0.0% Spectris 3.8 2.3% 8.0% Legal & General 3.7 6.6% 7.2% Cineworld 3.2 5.5% 16.5%

• As at 31/3/19, ** As at 26/6/19

Source: OLIM

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Outlook

• Economic growth slowing
• UK reasonably robust, Brexit notwithstanding
• £ should act as a safety valve in the event of a difficult Brexit
• Real dividend growth expected
• UK shares have lagged world markets
• Significant income opportunity in UK equities

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Outlook

Source: Capita UK Dividend Monitor

40 50 60 70 80 90 100 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

UK Dividends Paid

UK Dividends Paid (£bn)

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Outlook

• 5.0%

0.0% 5.0% 10.0% 15.0% 20.0% 1987 1992 1997 2002 2007

FTSE All Share Index Ten Year Annual Compound Total Return

FTSE All Share Index Ten Year Annual Compound Total Return

Source: Bloomberg

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Outlook

Source: Bloomberg

1.0% 2.0% 3.0% 4.0% 5.0% 6.0%

• 2.0%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 1987 1992 1997 2002 2007

Returns versus Dividend Yield

FTSE All Share Index Ten Year Annual Compound Total Return FTSE All Share Index Dividend Yield (%) (RHS)

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Outlook

Source: Bloomberg

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0%

• 5.0%

0.0% 5.0% 10.0% 15.0% 20.0% Starting Dividend Yield 10 Yr. Annual Compound Return

FTSE All Share Index Ten Year Returns

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Outlook

Source: Bloomberg

2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 1985 1990 1995 2000 2005 2010 2015

UK Stock Market Dividend Yield

FTSE All Share Index Dividend Yield

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Outlook

Source: BNP Paribas

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0

1987 1992 1997 2002 2007 2012 2017

Value & Income Trust Plc Annual Dividend

Dividend (p) RPI (re-based)

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Outlook

Value & Income Trust income opportunity:

• Modest real underlying dividend growth
• Portfolio recycling
• Brexit inspired sterling weakness
• Property rental growth
• Refinancing of 11% 2021 debenture

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Disclaimer

This document is issued by OLIM Limited. Past performance is not a reliable indicator of future

• results. The value of investments can fall as well as rise and an investor may not get back the original

amount invested. OLIM is portfolio manager for the Fund and nothing in this presentation constitutes investment advice. OLIM Limited is authorised and regulated by the Financial Conduct Authority.

Data

All data is for periods ending 31 March 2019 unless otherwise stated.

Contact

Patrick Harrington, OLIM Ltd, 1 Benjamin Street London EC1M 5QL (0)20 7367 5660 patrick.harrington@olim.co.uk www.olim.co.uk