12 June 2024
The
Lindsell Train Investment Trust plc
(the
“Company” or “LTIT”)
This
announcement contains regulated information
Annual
Financial Report for the year ended 31 March
2024
Company
Summary
The
Company
The
Lindsell Train Investment Trust plc (the “Company” or “LTIT”) is a
listed investment company. Its shares are quoted on the premium
segment of the Official List and traded on the main market of the
London Stock Exchange. The Company is a member of the Association
of Investment Companies (“AIC”).
The
Company is a UK Alternative Investment Fund (“AIF”) under the
European Union Alternative Investment Fund Managers’ Directive
(“AIFMD”). The Board is the Small Registered UK Alternative
Investment Fund Manager (“AIFM”) of the Company.
Investment
Objective
The
objective of the Company is to maximise long-term total returns
with a minimum objective to maintain the real purchasing power of
Sterling capital.
Investment
Manager
Lindsell
Train Limited (“LTL”) acts as discretionary Investment Manager (the
“Manager”) of the Company’s assets. However, the Board retains
ultimate discretion over the investments in LTL and in the LTL
managed fund products. Decisions on these investments are based on
advice and information received from the Manager.
Further
details concerning the Agreements with the Company’s service
providers can be found in Appendix 3.
Performance
and Benchmark
The
performance and financial highlights are provided on pages 4 and 5
of the Annual Report.
The
Company compares its performance and calculates its performance fee
relative to its benchmark, the MSCI World Index in
Sterling.
Dividend
An
unchanged final dividend of £51.50 per Ordinary Share (2023: a
final dividend of £51.50 per Ordinary Share) is proposed for the
year ended 31 March 2024. If this
dividend is approved by shareholders at the Annual General Meeting,
it will be paid on Friday, 13 September
2024 to shareholders on the register at close of business on
Friday, 9 August 2024 (ex-dividend
Thursday, 8 August
2024).
Annual
General Meeting
The notice
of the Annual General Meeting, scheduled for Wednesday,
4 September 2024 at 2.30 p.m. at the Marlborough Suite, St Ermin’s
Hotel, 2 Caxton Street, London,
SW1H 0QW, is provided on pages 102 to 106 of the Annual
Report.
Capital
Structure
The
Company’s capital structure comprises 200,000 Ordinary Shares of
75 pence each. Details are given in
note 13 to the Financial Statements.
Business
Review
The
Directors present their Strategic Report for the Company for the
year ended 31 March 2024. The Report
contains: a review of the Company’s business model and strategy, an
analysis of its performance during the financial year and its
future developments as well as details of the principal risks and
challenges it faces. Its purpose is to inform shareholders and help
them to assess how the Directors have performed their duty to
promote the success of the Company.
Further
information on how the Directors have discharged their duty under
Section 172 of the Companies Act 2006 can be found on pages 21 to
23 of the Annual Report.
The
Strategic Report contains certain forward-looking statements. These
statements are made by the Directors in good faith based on the
information available to them up to the date of this Report and
such statements should be treated with caution due to the inherent
uncertainties, including both economic and business risk factors,
underlying any such forward-looking information.
Business
Model
The
objective of the Company is to maximise long-term total returns
with a minimum objective to maintain the real purchasing power of
Sterling capital.
The
Company’s strategy is to create value for shareholders through
achieving its investment objective.
As an
externally managed investment company the Company has no executive
directors, employees or internal operations. The Company delegates
its day-to-day management to third-parties.
The Board
is responsible for all aspects of the Company's affairs, including
the setting of parameters for and monitoring of the investment
strategy as well as the review of investment performance and
policy. It also has responsibility for all strategic issues and
corporate governance matters.
Reviews of
the financial year and commentary on the future outlook are
presented in the Chairman’s Statement and the Manager’s
Report.
Investment
Objective
The
objective of the Company is to maximise long-term total returns
with a minimum objective to maintain the real purchasing power of
Sterling capital.
Investment
Policy
The
Investment Policy of the Company is to invest
(i) in
a wide range of financial assets including equities, unlisted
equities, bonds, funds, cash and other financial investments
globally with no limitations on the markets and sectors in which
investment may be made, although there is likely to be a bias
towards equities and Sterling assets, consistent with a
Sterling-dominated investment objective. The Directors expect that
the flexibility implicit in these powers will assist in the
achievement of the investment objective;
(ii) in
LTL managed fund products, subject to Board approval, up to 25% of
its gross assets; and
(iii) in
LTL and to retain a holding, currently 23.9%, in order to benefit
from the expected long term growth of the business of the Company’s
Manager.
The
Company does not envisage any changes to its objective, its
investment policy or its management for the foreseeable future. The
current composition of the portfolio as at 31 March 2024, which may be changed at any time
(excluding investments in LTL and LTL managed funds) at the
discretion of the Manager within the confines of the policy stated
above, is shown on pages 9 and 10 of the Annual Report.
Diversification
The
Company expects to invest in a concentrated portfolio of securities
with the number of equity investments averaging fifteen companies.
The Company will not make investments for the purpose of exercising
control or management and will not invest in the securities of, or
lend to, any one company (or other members of its group) more than
15% by value of its gross assets at the time of investment. The
Company will not invest more than 15% of gross assets in other
closed-ended investment funds.
Gearing
The
Directors have discretion to permit borrowings up to 50% of the Net
Asset Value. However, the Directors have decided that it is in the
Company’s best interests not to use gearing. This is in part a
reflection of the size and risk associated with the Company’s
unlisted investment in LTL, but also in response to the additional
administrative burden required to adhere to the full scope regime
of the AIFMD.
Dividends
The
Directors’ policy is to pay annual dividends consistent with
retaining the maximum permitted earnings in accordance with
investment trust regulations, thereby building revenue
reserves.
In a year
when this policy would imply a reduction in the ordinary dividend
the Directors may choose to maintain the dividend by increasing the
percentage of revenue paid out or by drawing down on revenue
reserves. Revenue reserves are currently more than twice the annual
proposed 2024 ordinary dividend.
All
dividends have been distributed from revenue or revenue
reserves.
Financial
Highlights for the Year
Performance
Comparisons
|
2024
|
2023
|
Net Asset
Value total return per Ordinary Share*^
|
+2.1%
|
-0.4%
|
Share
price total return per Ordinary Share*^
|
-19.8%
|
-0.7%
|
MSCI World
Index total return (Sterling)
|
+22.5%
|
-1.0%
|
UK RPI
Inflation (all items)
|
4.3%
|
13.5%
|
* The Net
Asset Value and the share price at 31 March
2024 have been adjusted to include the Ordinary dividend of
£51.50 paid on 13 September 2023,
with the associated ex-dividend date of 8
August 2023.
^
Alternative Performance Measure (“APM”). See Glossary of Terms and
Alternative Performance Measures.
Source:
Morningstar and Bloomberg.
Five
Year Historical Record
|
|
Net
revenue
|
Dividends
|
Dividends
|
Net
|
Share
|
|
|
available
for
|
on
Ordinary
|
on
Ordinary
|
Asset
Value
|
price
per
|
|
Gross
|
Ordinary
|
Shares
|
Shares
|
per
Ordinary
|
Ordinary
|
|
income
|
Shares
|
Cost
|
Rate
|
Share
|
Share
|
To 31
March
|
£’000
|
£’000
|
£’000
|
(£)
|
(£)
|
(£)
|
2020
|
12,395
|
10,598
|
8,800
|
44.00
|
956.65
|
1,060.00
|
2021
|
13,782
|
12,002
|
10,000
|
50.00
|
1,185.58
|
1,420.00
|
2022
|
14,784
|
12,729
|
10,600
|
53.00
|
1,113.81
|
1,105.00
|
2023
|
14,135
|
12,211
|
10,300
|
51.50
|
1,056.95
|
1,052.50
|
2024
|
12,005
|
10,214
|
10,300
|
51.50
|
1,026.43
|
801.00
|
Principal
Data
|
31
March 2024
|
31 March
2023
|
%
Change
|
Shareholders’
funds (£’000)
|
205,285
|
211,390
|
-2.9%
|
NAV per
Ordinary Share
|
£1,026.43
|
£1,056.95
|
-2.9%
|
Discount
to NAV^
|
22.0%
|
0.4%
|
|
Share
price per Ordinary Share
|
£801.00
|
£1,052.50
|
-23.9%
|
Recommended
final dividend per Ordinary Share
|
£51.50
|
£51.50
|
–
|
Recommended
special dividend per Ordinary Share
|
–
|
–
|
–
|
Total
dividends recommended for the year
|
£51.50
|
£51.50
|
|
Dividend
yield^
|
6.4%
|
4.9%
|
|
Ongoing
Charges^
|
0.8%
|
0.9%
|
|
Earnings/(loss)
per Ordinary Share – basic
|
£20.97
|
£(3.85)
|
|
Revenue
|
£51.07
|
£61.06
|
|
Capital
|
£(30.10)
|
£(64.91)
|
|
NAV total
return^†
|
+2.1%
|
-0.4%
|
|
Share
price total return^†
|
-19.8%
|
-0.7%
|
|
Benchmark
(MSCI World Index in Sterling)†
|
+22.5%
|
-1.0%
|
|
^
Alternative Performance Measure (see Glossary).
† These are
percentage change figures for the year to 31 March.
Please see
Glossary of Terms for an explanation of terms used.
Chairman’s
Statement
At
31 March 2024, the Company’s NAV per
share was £1,026.43. It was down from £1,056.95 a year earlier but
when taking into account the payment of the annual dividend of
£51.50 per share in September 2023,
the total NAV return was a positive 2.1%. On the other hand the
Company’s share price ended the financial year at £801.00, down
materially from £1,052.50 on 31 March
2023. Whilst the dividend offset some of this decline, the
size of the fall resulted in a share price total return of minus
19.8% over the year. This was the result of the share price
discount to the NAV per share widening from 0.4% at 31 March 2023 to 22.0% at 31 March 2024. The sharp widening of the share
price discount to NAV was attributable to a combination of factors.
These include a lower rate of annualised NAV total returns achieved
since 31 March 2020 (6.4% per annum
versus 14.4% per annum from 31 March
2001 to 2020), heightened competitive pressures within the
fund management industry, outflows from LTL managed funds and a
general widening of discounts within the investment trust
sector.
The
benchmark index proved a tough comparator to beat for the fourth
successive year. Both the NAV and share price performances compared
unfavorably with the Company’s benchmark index, the MSCI World
Index in Sterling, which over the same period had a much better
total return of 22.5%.
During the
year to 31 March 2024, of the
Company’s quoted holdings, only RELX and Nintendo performed better
than the benchmark, achieving total returns of 33.6% and 41.1% in
Sterling, respectively. Even more significant than the
disappointing return from the remaining quoted portfolio holdings
was the total return of minus 7.1% generated by the Company’s 23.9%
unlisted investment in LTL. With the investment representing 33.6%
of NAV at 31 March 2024, it proved to
be the biggest detractor from the NAV’s performance over the year
and its fall in value also contributed to the Company’s widening
share price discount to the NAV.
Lindsell
Train Limited
For the
third time in four calendar years LTL’s core strategies, Global,
UK, Japan and North America, underperformed their
comparative benchmark indices. The market’s direction has
increasingly been dictated by a narrow range of technology
companies. This has played into the hands of passive strategies,
which have continued to take market share from all active managers
including LTL. Whilst there is no knowing how long this phase can
continue, we are reassured that the key business fundamentals of
LTL’s portfolios, such as the average underlying return on equity
of its companies, remains superior to the benchmark indices against
which it is compared. In time these fundamentals should win
through, bringing a sustained improvement in absolute and relative
performance. Until that happens, it is understandable that, in such
a competitive industry, some clients are attracted to today’s
better performing strategies.
These
pressures on LTL’s business have resulted in clients withdrawing
funds. All LTL’s pooled funds, except for North America, its smallest, have shrunk in
size and some segregated clients have terminated mandates. FUM
outflows over the year to 31 January
2024 amounted to £3.4bn (2023: £2.9bn) with funds under
management falling to £15.9bn. LTL now has 21 client relationships
(funds and segregated mandates) down from 22 at 31 January 2023. FUM has however fallen more
within LTL’s pooled funds that now make up 62% of FUM.
Whilst the
fall in FUM has led to a decline in revenues, it is reassuring to
see that the Company’s salary and bonus cap has helped to ensure
that overall costs have declined proportionately and operating
profit margins remain constant at above 65%. Over the year there
have been some important generational changes within the company. A
new leadership team is evolving at LTL with the appointment of
James Bullock, Jessica Cameron and Joss
Saunders as LTL directors. Nick
Train and Michael Lindsell
remain at the heart of the business but there is no doubting the
direction of travel. The future lies with a new generation of
leaders and their lieutenants. Reflecting these changes, variable
remuneration paid to Nick and Michael in the year to 31 January 2024 fell 66% and accounted for 16% of
LTL’s total remuneration. Profit share and one-off payments to
these new directors and other key staff increased 103% to 40% of
the overall remuneration. Half of these payments (virtually all of
them after accounting for tax) were mandated to fund the purchase
of LTL shares from Nick, Michael and the Company, helping to
accelerate the transfer of ownership to potential successors. From
LTL’s current financial year at least 17% of its net profits will
be paid in this way to seven members of this upcoming
generation.
The
changes outlined above represent part of a long-term plan to ensure
that the Company remains true to the investment and business
principles first enshrined by Nick and Michael. It is important
that clients who have committed their savings to LTL for multi-year
periods know that the approach they first accessed remains
consistent even if the personnel change. Certainly the Board, as a
client and co-investor in LTL, is reassured by the changes made,
the progress of succession and the constancy of how LTL
invests.
That
constancy, together with all the nuances surrounding it, is
outlined in Nick’s Manager Review that follows. In it he describes
an optimistic and encouraging outlook for the quoted assets which
the Company owns. It is self-evident that this optimism also
extends to LTL as similar assets underlie all its client
portfolios.
The
Valuation of Lindsell Train Limited
The
valuation methodology was last amended at 31
March 2022, having taken professional advice, and is
unchanged since. It is based on a percentage of LTL’s FUM, with the
percentage applied adjusted to reflect the ongoing profitability of
LTL. Using this methodology the Company’s holding in LTL was valued
at £69m as at 31 March 2024 (2023:
£85m). The Board took further professional advice in January 2024 which confirmed that the methodology
adopted in 2022 remains valid.
As part of
its regular valuation, the Board compares LTL’s value with other
quoted fund management companies. What stands out is LTL’s
profitability that in almost all cases is higher than its peers.
Furthermore, LTL retains considerable financial flexibility and
optionality with cash resources of £108m in addition to the £7.6m
invested in the LT North American Fund as at 31 January 2024.
The
Company’s Dividend
An
important consequence of the fall in LTL’s FUM and the contraction
of its business is the concomitant decline in LTL’s dividend paying
capacity. This is a risk my predecessor consistently warned about
in past annual statements. In the year to 31
March 2024 LTL’s dividend accounted for 80% of the Company’s
revenues, down slightly from 84% a year earlier. Such a significant
dependence on LTL, much more than the 33.6% (2023: 40.3%) which it
makes up of the Company’s NAV, means that it has an overwhelming
influence on the Company’s dividend paying potential.
In framing
its dividend policy, the Company has always assumed that retaining
as much net income as allowable within the Company is preferable
and more tax efficient for the Company’s shareholders. This
principle runs alongside the Board’s desire to see the Company’s
dividends grow as returns compound the increasing value of the
underlying investments.
In the
current year, owing to the decline in the Company’s net revenue
after taxation, the Board has decided to pay an unchanged ordinary
dividend of £51.50 per share. Like last year, the Company will omit
paying a special dividend as LTL earned no performance fees in the
year to 31 January 2024. In
maintaining the Company’s dividend, it will pay out all of its
retained earnings in the year to 31 March
2024 and will utilise £86,000 or just 0.4% of revenue
reserves earned in prior years.
To
maintain or grow the Company’s dividend in the future is likely to
require a combination of factors, notably a material improvement in
LTL’s relative performance, a stabilisation in LTL’s FUM and
consequent growth in its cash flow together with the continued
compounding of the Company’s investments. That will be asking a lot
over the next year and the Board will need to see evidence of this
materialising before utilising more revenue reserves in order to
maintain the Company’s dividend in 2025.
Board
Changes
During the
year the Board was delighted to welcome David MacLellan who was appointed Chairman of
the Audit Committee in August 2023
following a formal recruitment process. A resolution proposing his
election together with resolutions for those Directors standing for
re-election will be put to Shareholders at the forthcoming Annual
General Meeting.
Julian Cazalet resigned as the Chairman of Board in
December 2023 as part of the normal
succession process.
I would
like to take this opportunity to thank Julian for his considerable
contribution to the Company during his nine years as a director, of
which eight were as the Chairman of the Board. He brought an
in-depth knowledge of the investment trust sector, together with
extensive experience of wider financial markets, wisdom,
understanding and sound common sense to all his actions and
decisions whilst on the Board. We wish him well in the
future.
The Annual
General Meeting (“AGM”)
This year
the AGM will be held at 2.30 p.m. on
Wednesday, 4 September 2024,
at the Marlborough Suite, St Ermin's Hotel, 2 Caxton Street,
London, SW1H 0QW. As well as the
formal proceedings, there will be an opportunity for shareholders
to meet the Board and the Investment Manager who will give an
update on the Company’s strategy and its investments. Like last
year voting will be conducted via a poll and the Board encourages
all shareholders to exercise their right to vote and to register
their votes online in advance. Registering your vote in advance
will not restrict shareholders from attending and voting at the
meeting in person should they wish to do so. As investors we demand
high standards of corporate governance from the companies we own in
the Company’s portfolio and we urge all shareholders to follow suit
and vote on the resolutions proposed, as we the Directors intend to
do ourselves.
Considerations
for the Future
There is
no doubt that the challenges which the Company and LTL face are
considerable but they are not intractable. Throughout this
difficult period of performance LTL has kept true to its investment
disciplines. It owns a limited number of holdings in great
businesses which rarely, if ever change; this allows the underlying
companies to do the job of compounding earnings and value over
time. It is a differentiated approach that stands out against the
crowd and is one that has generated above average return for LTL’s
clients for significant periods of time in the past and the Board
believes will continue to do so in the future.
Roger
Lambert
Chairman
11 June 2024
Portfolio
Holdings at 31 March
2024
(All
ordinary shares unless otherwise stated)
|
|
|
%
of
|
Look through
|
|
|
Fair
value
|
net
|
basis % of
|
Holding
|
Security
|
£’000
|
assets
|
net assets†
|
6,378
|
Lindsell
Train Limited
|
69,002
|
33.6
|
33.6
|
235,000
|
London
Stock Exchange
|
22,302
|
10.9
|
11.1
|
12,500,000
|
WS
Lindsell Train North American
|
19,624
|
9.6
|
–
|
|
Equity
Fund Acc*
|
|
|
|
410,000
|
Nintendo
|
17,574
|
8.6
|
8.6
|
425,000
|
Diageo
plc
|
12,433
|
6.0
|
6.3
|
363,000
|
RELX
|
12,429
|
6.0
|
6.3
|
222,000
|
Unilever
|
8,825
|
4.3
|
4.5
|
149,980
|
Mondelez
International
|
8,306
|
4.0
|
4.4
|
1,263,393
|
A.G.
Barr
|
7,353
|
3.6
|
3.6
|
89,000
|
Heineken
|
5,688
|
2.8
|
2.8
|
96,800
|
PayPal
|
5,131
|
2.5
|
2.8
|
39,099
|
Laurent
Perrier
|
4,011
|
1.9
|
1.9
|
420,000
|
Finsbury
Growth & Income Trust*
|
3,612
|
1.8
|
–
|
117,191
|
Universal
Music Group
|
2,792
|
1.4
|
1.4
|
|
Indirect
Holdings
|
–
|
–
|
9.6
|
|
Total
Investments
|
199,082
|
97.0
|
96.9
|
|
Cash &
Other net current assets
|
6,203
|
3.0
|
3.1
|
|
Net
Assets
|
205,285
|
100.00
|
100.00
|
† Look-through
basis: Percentages held in each security are adjusted upwards by
the amount of securities held by LTL managed funds owned by the
Company. A downward adjustment is applied to the fund‘s holdings to
take into account the underlying holdings of these funds. It
provides shareholders with a measure of stock specific risk by
aggregating the direct holdings of the Company with the indirect
holdings held within LTL managed funds.
* LTL
managed funds.
Leverage^
We detail
below the equity exposure of the Funds managed by LTL as at
31 March 2024:
|
Net Equity
Exposure |
WS
Lindsell Train North American Equity Fund Acc
|
98.7%
|
Finsbury
Growth & Income Trust PLC
|
101.1%
|
^ See
glossary.
Analysis
of Investment Portfolio at 31 March
2024
Breakdown
by Location of Listing
(look-through
basis)^
UK*
|
66.0%
|
USA
|
16.1%
|
Japan
|
8.6%
|
Europe
excluding UK
|
6.2%
|
Rest of
World
|
0%
|
Cash &
Other net current assets
|
3.1%
|
|
100.0%
|
Breakdown
by Location of Underlying Company Revenues
(look-through
basis)^
USA**
|
31.3%
|
Europe
excluding UK**
|
25.1%
|
UK**
|
24.7%
|
Rest of
World
|
12.5%
|
Japan
|
3.3%
|
Cash &
Other net current assets
|
3.1%
|
|
100.0%
|
Breakdown
by Sector
(look-through
basis)^
Financials
|
49.8%
|
Consumer
Staples
|
25.4%
|
Communication
Services
|
11.5%
|
Industrials
|
7.4%
|
Information
Technology
|
2.3%
|
Consumer
Discretionary
|
0.4%
|
Health
Care
|
0.1%
|
Cash &
Other net current assets
|
3.1%
|
|
100.0%
|
^
Look-through basis: this adjusts the percentages held in each asset
class, country or currency by the amount held by LTL managed funds.
It provides shareholders with a more accurate measure of country
and currency exposure by aggregating the direct holdings of the
Company with the indirect holdings held by the LTL
funds.
* LTL
accounts for 33.6% and is not listed.
** LTL
accounts for 14 percentage points of the Europe figures, 15 percentage points of the UK
figures, 4 percentage points of the USA figures and 0 percentage point of the RoW
figure.
Manager’s
Report
At the
half year I gave a review of the strategic investment case for ten
of these direct equity holdings. Rather than repeat those reviews
in this report, I instead give an update on developments for each
holding over the most recent six-month period, including an account
of why we initiated a new position in Universal Music Group. With
one exception (Laurent-Perrier) each of the eleven is also a
holding in our Global and/or UK strategies. This means their
performance is important not just for your portfolio but, more
broadly, for the rest of LTL.
Over the
six months to 31 March 2024, two of
the eleven were down, with the worst faller down c.4%, two were
effectively unchanged and the remainder up between c.5 and 30%.
Overall, rather encouraging.
The two
fallers were Diageo (-3.6%) and Unilever (-2.1%).
Diageo
unpleasantly surprised investors including us, in Q4 2023 with news
that its Latin American business (c.11% revenues) was suffering an
unexpected and marked contraction. Six months later the situation
there seems to be stabilising. What has proven a longer-lasting
drag on Diageo’s share price is the slowing growth in its biggest
geography, the United States. Here
consumers have felt the pinch from higher interest rates and, at
the margin, traded down their spirits consumption to more “value”
brands. This has impinged on Diageo, given its strong growth in the
US since Covid-19 had been driven by its higher price and higher
profit margin premium brands. Nonetheless, it is important to note
here that, at the global level, Diageo’s revenues were
c.$15 billion in 2020. This year, a
“disappointing” year, we expect they should be over $20 billion. In other words, Diageo has grown
notably since 2020 and will continue to grow. Just not in a
straight line. We are also sure that this orientation of Diageo’s
product portfolio towards premium brands is beneficial for
investors over anything but the short term and look to US consumer
confidence to rebuild as that economy grows.
Unilever’s
price fall is, we think, a sign of investors’ doubts about the
willingness or ability of its board to take actions to unlock the
value that most observers, including us, see in its global brands
and distribution networks. Notwithstanding the share price
weakness, we are encouraged by the air of urgency and competence
being displayed by Unilever’s new CEO, CFO and Chairman (all
appointed in 2023) and hope that they can deploy the company’s
strong balance sheet and cash flows in a way that reignites growth
and restores investor confidence, including improving the current
lowly rating of its shares.
The two
effectively unchanged share prices were Laurent-Perrier and
Mondelez.
Laurent-Perrier’s
current year revenues are forecast to be barely up year-on-year,
for similar reasons to Diageo – in 2023/4 consumers are, at the
margin, drinking less highest quality alcoholic beverages. But also
like Diageo, it is important to consider that Laurent-Perrier’s
revenues this year will be still c.25% higher than those of 2020.
The trend towards global consumers drinking lower volumes of
alcohol, but instead drinking more premium, high quality products
continues and should be beneficial for the owners of iconic premium
brands like Laurent-Perrier or Johnnie
Walker.
Mondelez
has continued to meet or exceed most analysts’ expectations for
business and earnings growth (and our own expectation). Last year
organic revenues were up over 14%, reported adjusted earnings per
share grew at 19% and the dividend was up 10%. More growth is
forecast for this year. Perhaps the current 20x earnings might be
considered a fair valuation for Mondelez shares and this explains
the dull recent share price. To us, however, the reliability of the
brands and the growing cash they generate argues for a higher
valuation. We would not consider selling an asset of this calibre
below 30x!
The shares
that made money for their owners in local currency terms over the
last six months were Heineken (4.8%), PayPal (14.6%), London Stock
Exchange Group (“LSEG”) (15.3%), A.G. Barr (18.5%), RELX (23.4%)
and Nintendo (31.6%).
Confidence
in Heineken’s earnings power is gradually recovering, as commodity
prices subside, but we expect there will need to be an acceleration
in beer consumption across the company’s emerging market footprint,
particularly in its Asian strongholds, before the shares really
rerate.
PayPal
shares have recovered from recent lows, but are still ostensibly
lowly valued at 12x estimated forward earnings. It is reassuring to
see the board responding to that low valuation by retiring shares;
buying back $5 billion last year and
proposing to match that figure in 2024. Those are sizable sums in
the context of PayPal’s current c.$67
billion market capitalisation. For us to add to our holding,
however, we need to see more evidence of the success of the new
products PayPal is bringing to market – tools to streamline
e-commerce transactions for vendors and consumers. We continue to
monitor PayPal closely.
LSEG’s
shares have also recovered from their lows of 2022, up nearly 50%
since then, but are still a few per cent below the all-time high
they hit in 2021, just before the completion of its merger with
Refinitiv. That merger has gone well and we hope LSEG’s shares can
hit new highs, particularly once the benefits of its recent joint
venture with Microsoft become apparent, with product launches due
in the second half of 2024.
A.G.
Barr’s shares have rallied after a period of torpor; they had gone
sideways since 2019. The rally reflects a number of factors. Most
important, this well-run soft drinks manufacturer generates steady
operating margins and a Return on Capital in the mid-teens – 16%
and 18% respectively at the recent interim results. These returns
allow the company to generate cash, on top of its existing net cash
and debt free balance sheet. That cash has been used to support
existing brands, but also to acquire new ones, which can benefit
from the company’s manufacturing and distribution capabilities and
its marketing nous. The departing CEO, Roger White, has done an outstanding job for
shareholders. If his successor can build on this legacy of growing,
profitable brands and a pristine balance sheet, investors can hope
the shares will build on their recent gains.
RELX
continues to impress investors with the consistency not only of its
growth, but its adherence to a clearly articulated strategy. That
strategy is making RELX data services ever more valuable to the
global scientific, legal and insurance industries. This is one of
the biggest holdings we have at LTL and we believe it can be a big
driver of returns for both our Global and UK portfolios.
Nintendo’s
share price reflects mingled excitement and impatience about the
timing of the launch of its next gaming console – probably to be
released in early 2025. Sales of the current one, Switch, have
exceeded all expectations and its success has allowed Nintendo to
sell more copies of its first-party game software (which is where
it earns the richest profits) than ever before. As with Apple,
there is always a degree of apprehension before the release of a
next generation device – can it possibly match or beat the success
of its predecessor? All one can say are that the portents are good.
Nintendo shares have proven to be a good proxy for the multi-decade
increase in popularity of interactive entertainment. As each
generation of gamers grows in size and with the promise of
technology enhancing the gaming experience even more, Nintendo’s
centrality to the industry looks ever more strategically valuable
to us. A P/E of 18x for this franchise seems modest.
Universal
Music Group’s (“UMG”) share price also rose over the last six
months, up 12.7%, while we continued to accumulate a holding. The
paragraph that follows provides our summary justification for
making this investment. The shares have now moved back toward the
upper end of their post-IPO trading range, but that means all the
potential alluded to below remains still to come.
UMG stands
out for its impressive oligopolistic position (which importantly is
effectively global). As the world’s leading record label, built
through a generation of consolidation (MCA and Decca, arguably
UMG’s predecessors, were founded in 1924 and 1929 respectively),
UMG controls roughly a third of the planet’s recorded music (ahead
of the other two ‘majors’ Sony on c.23% and Warner on c.16%),
curating, producing, and promoting artists. On top of this, as a
publisher, UMG holds nearly a quarter of all written songs (just
behind Sony’s c.25%, and ahead of Warner’s 12%). Spun out from
Vivendi as an independent listed entity in 2021, backed by major
strategic shareholders such as Tencent and Bill
Ackman/Pershing Square, the shares languished for three
years. Despite a torrent of good news (including enhanced
distribution agreements) they still trade near their 2021 IPO
price.
This
perhaps reflects over-optimism at float. However, estimated FY23
sales and operating profit were c.50% higher than in FY19, taking
UMG’s adjusted forward P/E ratio to a mid-20s level. Music is
ingrained and integral to the daily life of swathes of humanity,
with engagement levels rising as new distribution channels widen
access. Monetisation (though not consumption) has eluded the
industry at times in the past, but these issues appear well
resolved by growing subscription services, with new markets (such
as video games or social media) also emerging. As core content
owners and market leaders UMG holds a uniquely strong hand. The
importance of this dominance is clear, given that globally the top
1% of artists represent 90% of music streams. If management can
embrace these tailwinds and execute on analyst expectations for low
double-digit growth, this should prove an attractive entry
point.
In
summary, we believe your portfolio (and by extension other LTL
portfolios) comprise a combination of companies remarkable for
their strong consumer brands or unique intellectual property. Such
companies have generated attractive investment returns for patient
owners over many decades and we see no reason to expect coming ones
to be any different.
Nick
Train
Investment
Manager
Director,
Lindsell
Train Limited
11 June 2024
Performance
and Prospects
The Board
continues to support fully the Manager's strategy and firmly
believes that it will continue to deliver strong investment returns
over the long term.
This is
supported by the Company's performance since inception
(21 January 2001) with a net asset
value per share total return^ of 12.7% compared with a total return
from the Company's combined benchmark index of 7.1% both calculated
on an annualised basis.
The
Directors provide an explanation in the Viability Statement as to
how they have assessed the prospects of the Company, over what
period they have done so and why they consider that period to be
appropriate.
Key
Performance Indicators (“KPIs”)
The Board
reviews the performance of the portfolio in detail and is presented
with the views of the Manager at each meeting. Information on the
Company’s performance is provided in the Chairman’s Statement and
the Manager's Report. This performance is assessed against the
following KPIs: Net Asset Value Total Return, Share Price Total
Return and Dividend per Ordinary Share. The KPIs are unchanged from
the prior year.
Net Asset
Value Total Return^ and Share Price Total Return^ are compared with
the benchmark and provide the key performance indicators for
assessing the development and performance of the
Company.
|
31
March 2024
|
31 March
2023
|
%
Change
|
NAV total
return^†
|
+2.1%
|
-0.4%
|
|
Share
price total return^†
|
-19.8%
|
-0.7%
|
|
Benchmark
(MSCI World Index in Sterling)†
|
+22.5%
|
-1.0%
|
|
Recommended
final dividend per Ordinary Share
|
£51.50
|
£51.50
|
–
|
Recommended
special dividend per Ordinary Share
|
–
|
–
|
–
|
^
Alternative Performance Measure (see Glossary).
† These are
percentage change figures for the year to 31 March.
Please see
Glossary of Terms for an explanation of terms used.
Alternative
Performance Measures (“APMs”)
The Board
believes that each of the APMs, which are typically used within the
Investment Trust Sector, provides additional useful information to
shareholders in order to assess the Company’s performance between
reporting periods and against its peer group. The measures used for
the year under review have remained consistent with the prior
year.
Discount/premium
to NAV^
The Board
regularly reviews the level of the discount/premium of the
Company’s share price to the net asset value per share and
considers ways in which share price performance may be enhanced,
including the effectiveness of share buybacks, where appropriate.
Any decision to repurchase shares is at the discretion of the
Board.
Dividend
Yield^
The
Directors regard the Company’s dividend yield to be a key indicator
of performance. The dividend yield measures the gross income
receivable based on the payment of the historic dividend per share
expressed as a percentage of the Company’s current share
price.
Ongoing
Charges^
Ongoing
charges represent the costs that shareholders can reasonably expect
to pay from one year to the next, under normal circumstances. The
Board continues to be conscious of expenses and works hard to
maintain a sensible balance between high quality service and the
cost of provision.
NAV Total
Return^
The
Directors regard the Company’s net asset value per share total
return as being the overall measure of value delivered to
shareholders over the long term. The Board considers the principal
comparator to be the MSCI World Index Total Return (Sterling
adjusted).
Share
Price Total Return^
The
Directors also regard the Company’s share price total return to be
a key indicator of performance. This reflects share price growth of
the Company which the Board recognises is important to
investors.
^ Further
information on each of the Alternative Performance Measures and the
basis of their calculation can be found in the Glossary.
|
31
March 2024
|
31 March
2023
|
Discount
to NAV
|
22.0%
|
0.4%
|
Dividend
yield
|
6.4%
|
4.9%
|
Ongoing
charges
|
0.8%
|
0.9%
|
NAV total
return
|
+2.1%
|
-0.4%
|
Share
price total return
|
-19.8%
|
-0.7%
|
Principal
Risks, Emerging Risks and Risk Management
The Board
is responsible for managing the risks faced by the Company. Through
delegation to the Audit Committee, the Board has established
procedures to manage risk, to review the Company’s internal control
framework and to establish the level and nature of the principal
risks the Company is prepared to accept in order to achieve its
long-term strategic objective. At least once a year the Audit
Committee carries out a robust assessment of the principal and
emerging risks. Further information is provided in the Audit
Committee Report beginning on page 59 of the Annual Report. These
principal risks and the ways they are managed or mitigated are set
out below.
The
Board’s policy on risk management has not materially changed during
the course of the reporting period and up to the year
end.
The
Company's Approach to Risk Management
Change in
inherent risk assessment over the last financial year: No change,
Decreased, Increased and New risk included during the
year.
Change
|
Principal
Risks and Uncertainties
|
Key
Mitigations
|
|
Corporate
Strategy
The Board
may have to reduce the Company’s dividend.
80% of the
Company’s income is represented by dividends from LTL. If LTL’s
funds under management fall the Company’s dividend paying potential
could be negatively impacted.
|
The Board
reviews at every Board meeting the investment portfolio, income
forecasts and levels of available revenue reserves prepared by the
Company Secretary.
Sufficient
dividends are paid to maintain investment trust status.
The
Company has retained revenue reserves, which can be used to
supplement dividend payments in the event of a short-term reduction
in net revenue.
In the
event of a sustained fall in LTL’s FUM and its dividend paid to the
Company, the Company’s dividend would have to be adjusted
downwards.
|
|
The
Company’s share price may differ materially from the NAV per share
resulting in the shares trading at either a premium or a discount
to NAV.
|
Regular
consideration is given to the share price premium or discount to
NAV per share and the Company has authority to buy back shares and
hold in treasury.
|
|
Investment
Strategy and Activity
The
departure of a key individual at the Manager may affect the
Company’s performance.
|
The Board
keeps the investment management arrangements under continual
review. In turn, the Manager reports on developments at LTL,
including succession and business continuity plans. The Board meets
with other members of the wider team employed by the
Manager.
Key-man
insurance has been secured by the Company to help mitigate this
risk. The Board is also encouraged by the continued development of
the investment management team at LTL who are now taking on greater
responsibility at a more senior level.
|
|
The
investment strategy adopted by the Manager, the high degree of
concentration of the investment and other factors, may lead to a
long-term investment return that is materially lower than the
Company’s comparator benchmark index, and a possible failure to
achieve the Company’s investment objective.
|
The Board
regularly discusses with the Manager the structure of the
portfolio, including asset allocation and portfolio
concentration.
The Board
reviews the performance of the portfolio against the benchmark at
every meeting.
|
|
The
adverse impact of climate change on the portfolio companies’
operational performance.
|
The Board
receives quarterly ESG updates, which include an update on any
climate change related engagement, from the Manager. The Board
monitors the Manager on ESG matters to ascertain that the portfolio
companies are acting in accordance with the Manager’s ESG
approach.
The
Manager is a signatory to the UK Stewardship Code and actively
engages with portfolio companies on ESG matters including climate
change.
LTL
developed its own methodology to assess the carbon impact of the
portfolio. LTL became a signatory of Net Zero Asset Managers
(“NZAM”) in December 2021. This reflects LTL's enhanced efforts as
a firm to support the goal of net zero greenhouse gas emissions by
2050.
Details of
the Company’s and Manager’s ESG policies together with the weighted
average carbon intensity of the portfolio companies are set out on
pages 26 to 31 of the Annual Report.
|
|
The
investment in LTL becomes an even greater proportion of the overall
value of the Company’s portfolio.
|
The Board
holds quarterly discussions with the Manager at each Board meeting.
Consideration is given during a strategy meeting to the prospects
of LTL and subsequent impact on the Company.
The Board
receives monthly compliance reports from the Company Secretary
which monitor compliance with the investment
restrictions.
|
|
Operational
Adverse
reputational impact of one or more of the Company’s key service
providers which, by association, causes the Company reputational
damage.
|
The Board
has appointed reputable service providers who are well experienced
in the investment trust sector. Individual Directors are well
connected in the investment market and investment company sector
and thereby keep themselves appraised of developments in the
sector. The Manager and the Company Secretary provide regular news
updates on all matters affecting the Company.
The Board
undertakes an annual review of the level of service provision of
the service providers.
|
|
Financial
Fraud
(including unauthorised payments and cyber fraud) occurs leading to
a loss.
|
The
Manager and the Company Secretary have in place robust compliance
and risk monitoring programmes.
The Board
receives monthly compliance reviews and quarterly expenses
analysis.
An annual
statement is obtained by the Audit Committee from all service
providers giving representations that there have been no instances
of fraud or bribery.
|
|
The
Company is exposed to credit risk.
|
The
Manager is responsible for undertaking reviews of the
creditworthiness of the counterparties that it uses.
All
business with respect to portfolio activity is conducted through
selected brokers on a delivery versus payment basis thereby
minimising exposure to broking counterparties.
Further
information on financial instruments and risk can be found in note
17 to the Financial Statements.
|
|
The
Company is exposed to market price risk.
|
The
Directors acknowledge that market risk is inherent in the
investment process as the Manager maintains a concentrated
portfolio of securities. The Board has imposed guidelines within
its investment policy to limit exposure to individual
holdings.
The
Company Secretary reports to the Board with respect to compliance
with investment guidelines on a monthly basis. The Manager provides
the Board with regular updates on market movements. No investment
is made in derivative instruments and no currency hedging is
undertaken.
Further
information on financial instruments and risk can be found in note
17 to the Financial Statements.
|
|
Accounting,
Legal and Regulatory
The
Company and/or the Directors fail(s) to comply with its legal
requirements in relation to FCA dealing rules/handbook procedures,
the Listing Rules, the Companies Act 2006, relevant accounting
standards, the Bribery Act 2010, the Criminal Finances Act 2017,
the Association of Investment Companies (“AIC”) Statement of
Recommended Practice (“SORP”), GDPR, tax regulations or any other
applicable regulations.
|
The Board
monitors regulatory changes with the assistance of the Company
Secretary, the Manager and external professional advisers to ensure
compliance with applicable laws and regulations.
The Board
reviews compliance reports and internal control reports provided by
its service providers, as well as the Company’s Financial
Statements and revenue forecasts.
The
Company Secretary presents a quarterly report on changes in the
regulatory environment and how and when changes are to be
addressed.
As a
member of the AIC, the Board receives regular technical updates
which highlight forthcoming compliance obligations and regulatory
issues.
|
|
The
regulatory environment in which the Company operates changes,
affecting the Company's business model.
|
The Board
monitors the regulatory environment with the assistance of its
Company Secretary, Manager and external professional advisers to
ensure that the Board is aware of any likely changes in the
regulatory environment and will be able to adapt as
required.
|
|
The
Company’s valuation of its investment in LTL is materially
misstated.
|
The Board
approves the monthly valuation of the Company's
Investment.
An audit
of LTL’s valuation is conducted annually by a leading independent
external audit firm.
J.P.
Morgan Cazenove Ltd undertook an independent review of the
Company’s valuation methodology applied to its unlisted investment
in LTL during 2022. The appropriateness of the valuation
methodology was reviewed by the Board and J.P. Morgan Cazenove Ltd
during the year.
The
Manager and the Company Secretary report to the Board at every
meeting. An internal controls report is produced by the Company
Secretary on an annual basis covering controls over valuation and
release of weekly net asset value per share.
|
|
|
|
|
Emerging
Risks
The Audit
Committee regularly reviews the risk register. Mitigations, the
scoring of each risk and any emerging risks are discussed in detail
as part of this process to ensure that emerging as well as known
risks are identified and, so far as practicable
mitigated.
The
experience and knowledge of the Directors is useful in these
discussions, as are update papers and advice received from the
Board's key service providers such as the Manager and the Company
Secretary. In addition, the Company is a member of the AIC, which
provides regular technical updates as well as drawing members'
attention to forthcoming industry and/or regulatory issues and
advising on compliance obligations.
Current
identified emerging risks are as follows:
Emerging
Risks and Uncertainties
|
Key
Mitigations
|
Emerging
Risks
Geopolitical
and macroeconomic conflicts, whether they be political, economic or
military, introduce new risks and exacerbate existing risks. such
as:
disruptions
to supply chains, operations and markets for investee companies
both as a direct result of conflict and as result of economic
sanctions;
prolonged
inflation and elevated interest rates, slowing global economic
growth and the fear or presence of recession;
increased
market volatility and reduced investor risk appetites; and
increased threat of state sponsored cyberattacks.
While
presenting investment opportunities, the rapid development of new
technologies, such as artificial intelligence, may disrupt the
markets and operating models of the companies in which the Company
invests, damaging their potential investment returns.
|
The
Manager monitors portfolio construction, performance and liquidity
to assess and manage the impact of increased market volatility on
the listed portfolio and on the Company’s holding in
LTL.
The
Manager monitors the impact of the continued war in Ukraine and the
effect of sanctions against Russia; the conflict in the Middle East
and tensions between China and the West.
The
Company’s investment approach means that it owns companies with
strong brand equity and pricing power making them more able to pass
on cost increases and mitigate the effects of inflation on
portfolio holdings.
The Board
reviews regular internal control reports from its key service
providers that include cyber defences and other mitigants against
unauthorised network access.
In view of
the number of extraordinary and unpredictable events in recent
years, the Board considered that the likelihood of the emerging
risks identified due to geopolitical and macroeconomic conflicts
had increased.
|
The Audit
Committee will continue to review newly emerging risks that arise
from time to time to ensure that the implications for the Company
are properly assessed and mitigating controls introduced where
necessary.
Future
Developments
The
Board’s primary focus is on LTL’s investment approach and
performance both as the Company’s Manager and as an investment. The
subject is thoroughly discussed at every Board meeting.
In
addition, the Company Secretary updates the Board on investor
feedback, as well as wider investment company issues.
An outline
of performance, investment activity and strategy, and market
background during the year, as well as the outlook, is provided in
the Chairman's Statement and the Manager's Report.
It is
expected that the Company’s strategy will remain unchanged in the
coming year.
Long-Term
Viability Statement
The
Directors have carefully assessed the Company’s financial position
and prospects as well as the principal risks facing the Company and
have formed a reasonable expectation that the Company will be able
to continue in operation and meet its liabilities as they fall due
over the next five financial years.
To make
this assessment and in reaching this conclusion, the Audit
Committee has considered the Company’s financial position and its
ability to liquidate its portfolio and meet its liabilities as they
fall due and notes the following:
• The
Company has a liquid investment portfolio of UK and internationally
listed securities and funds, and has some short-term cash on
deposit. These liquid assets represent 66.4% of net assets. The
other 33.6% is the unlisted investment in LTL, which is not readily
realisable.
• Based
on historic analysis, excluding the holding in the LTL fund, 95.9%
of the current portfolio could be liquidated within 30 business
days with 92.4% in five business days. There is no expectation that
the nature of the investments held within the portfolio will be
materially different in the future.
• With
an ongoing charges ratio of 0.83%, the expenses of the Company are
predictable and modest in comparison with its assets and there are
no capital commitments currently foreseen which would alter that
position.
• Revenue
expenses of the Company are covered more than five times by
investment income.
• The
closed-ended nature of the Company means that, unlike an open-ended
fund, it does not need to realise investments when shareholders
wish to sell their shares.
• The
founder directors of LTL, in which the Company holds 23.9%, have
given their verbal assurance that they remain committed to LTL for
at least seven years on a rolling basis.
• The
Company has decided not to use gearing.
• The
Company has no employees, only its non-executive Directors.
Consequently it does not have any potential redundancy or other
employment related liabilities or responsibilities.
The
Directors, as well as considering the potential impact of the
principal risks and various severe but plausible downside
scenarios, have also made the following assumptions in considering
the Company’s longer-term viability:
• The
Board and the Investment Manager will continue to adopt a long-term
view when making investments, and anticipated holding periods will
be at least five years.
• Regulation
will not increase to a level that makes running the Company
uneconomical.
The
Board’s long-term view of viability will, of course, be updated
each year in the Company’s Annual Report.
Stakeholder
Interests and Board Decision Making (Section 172 of the Companies
Act 2006)
The
following disclosure, which is required by the Companies Act 2006
and the AIC Code, describes how the Directors have had regard to
the views of the Company's stakeholders in their decision
making.
Stakeholder
Group
|
The
benefits of engagement with the Company's
stakeholders
|
How
the Board, the Manager and the Company Secretary have engaged with
the Company's stakeholders
|
Investors
|
The Board
recognises the importance of communication with
shareholders.
Clear
communication of the Company’s strategy and the performance against
the Company’s objective can help maintain demand for the Company’s
shares.
|
The Board
and the Manager receive shareholder feedback directly from
shareholders or from the appointed broker.
An
analysis of the Company’s shareholder register is provided to the
Directors at each Board meeting.
Shareholders
have access to the Board, directly and via the Company Secretary,
throughout the year. These communications help the Board make
informed decisions when considering how to promote the success of
the Company for the benefit of shareholders over the long
term.
Key
mechanisms of engagement include:
• The
Annual General Meeting.
• The
Board will explain in its announcement of the results of the Annual
General Meeting the actions it intends to take to consult
shareholders in order to understand the reasons behind any
significant votes against. Following the consultation, an update
will be published no later than six months after the Annual General
Meeting and the Annual Report will detail the impact the
shareholder feedback has had on any decisions the Board has taken
and any actions or resolutions proposed.
• The
Company’s website which hosts monthly reports and Annual and
Half-year Reports.
• One-on-one
investor meetings as required.
• Group
meetings with professional investors as required.
|
Manager
|
Engagement
with the Company’s Manager is necessary to evaluate its performance
against the Company’s stated strategy and to understand any risks
or opportunities this may present.
The Board
monitors the Manager’s approach to environmental, social and
governance (“ESG”) issues.
Engagement
also helps ensure that investment management costs are closely
monitored and remain competitive.
The
Chairman’s Statement and Appendix 3 describe the key decisions
taken during the year relating to LTL.
|
The Board
meets regularly with the Company’s Manager throughout the year both
formally at the quarterly Board meetings and informally as needed.
The Board and Manager communicate regularly outside these meetings
to ensure a collegiate approach.
Furthermore,
Michael Lindsell is a Director of both the Company and of the
Manager. The aim is to maintain a strong relationship between the
Board and Manager when considering the interests of the Company’s
stakeholders, whilst upholding the Company’s values.
The
Manager’s attendance at each Board meeting also provides the
opportunity for the Manager and Board to further reinforce their
mutual understanding of what is expected from both
parties.
The
Manager’s performance is evaluated informally on a regular basis,
with a formal review carried out on an annual basis by the
Management Engagement Committee. The Investment Management
Agreement is reviewed as part of this process.
The Audit
Committee review the Manager's internal controls and governance
policies on an annual basis.
|
Service
Providers
|
As an
externally managed investment company, the Company has no
employees, customers, operations or premises. Therefore, the
Company's key stakeholders (other than its shareholders) are
considered to be its service providers.
The
Company contracts with third- parties for other services including:
Company Secretary and Administrator, Registrar and Custodian. The
Company ensures that the third-parties to whom the services have
been outsourced complete their roles in line with their service
level agreements and are able to continue to provide these
services, thereby supporting the Company in its success and
ensuring compliance with its obligations.
|
The Board
and the Company Secretary engage regularly with other service
providers both in one- to-one meetings and via regular written
reporting. This regular interaction provides an environment where
topics, issues and business development needs can be dealt with
efficiently and collegiately.
The Board
maintains regular contact with the Company’s key service providers
as well as carrying out a review of the service providers’ business
continuity plans and additional cyber security
provisions.
The key
service providers’ performance is evaluated by the Management
Engagement Committee on an annual basis, or more often if
appropriate. The terms and conditions underlying the relationship
between the service providers are reviewed as part of this process.
This approach is taken to enhance service levels and strengthen
relationships between the Company and its providers to ensure the
interests of the Company’s stakeholders are best served by
maintaining a high level of service whilst keeping costs
proportionate.
|
Portfolio
companies
|
The
Manager invests in a concentrated portfolio of durable business
franchises with the intention of holding these positions for a
considerable time.
The
Manager engages with the management of these companies on a
periodic basis and reports its impressions on the prospects of the
companies to the Board.
Gaining a
deeper understanding of the portfolio companies and their
strategies as well as incorporating consideration of ESG factors
into the investment process assists in understanding and mitigating
risks of investments as well as identifying future potential
opportunities.
|
The Board
encourages the Company’s Manager to engage with companies and in
doing so expects ESG issues to be a key consideration.
The Board
receives an update on LTL's engagement activities within a
dedicated quarterly ESG report together with quarterly updates
concerning the prospects of the portfolio companies.
Details of
LTL's approach to responsible ownership can be found on pages 26 to
31 of the Annual Report.
|
Regulators
|
The Board
ensures compliance with rules and regulations as relevant to the
Company.
|
The
Company Secretary reports to the Board on a monthly basis and at
each Board meeting.
|
KEY
AREAS OF ENGAGEMENT
|
MAIN
DECISIONS AND ACTIONS TAKEN
|
• Ongoing
dialogue with shareholders concerning the strategy of the Company,
performance and the portfolio.
• The
impact of market volatility caused by certain geopolitical events
in the portfolio.
• Share
price performance and the Company's and wider investment trust
sector discounts.
|
• The
Manager meets with shareholders as required and at the Annual
General Meeting.
• Shareholders
are provided with performance updates via the Company's website as
well as the usual financial reports and monthly manager
reports.
• The
Board continued to monitor share price movements closely and
concluded that it was not in shareholders' best interests to
utilise the share buy-back facility.
|
• Board
Composition.
|
• The
Board has in place a refreshment programme which is reviewed
annually by the Nomination Committee. During the year Julian
Cazalet retired as the Chairman of the Board and Management
Engagement Committee and was replaced by Roger Lambert.
• Cornforth
Consulting was appointed by the Board in April 2023 to assist with
the appointment of a new Audit Committee Chairman. This resulted in
the appointment of David MacLellan, who joined the Board on 30
August 2023 and will offer himself for election by shareholders at
the 2024 Annual General Meeting.
• To
assist with succession planning and to ensure Board continuity
Vivien Gould will seek re-election at the forthcoming Annual
General Meeting and will retire at the conclusion of Annual General
Meeting due to be held in September 2025.
In
accordance with the Board's Succession Plan Vivien was previously
scheduled to retire at the conclusion of the 2024 Annual General
Meeting.
|
LTIT’s
Responsible Investment Policy
The Board
believes that consideration of ESG factors is important to
shareholders and other stakeholders, and has the potential to
protect and enhance investment returns.
In its
Responsible Engagement & Investment Policy, the Manager states
that its evaluation of ESG factors is an inherent part of the
investment process and best practice in this area is encouraged by
the Board. These factors include, but are not limited to:
“corporate strategy, operating performance, competitive
positioning, governance, environmental factors (including climate
change), social factors, remuneration, reputation and litigation
risks, deployment of capital, regulation and any other risks or
issues facing the business”.
The Board
has delegated authority to the Manager to vote the shares owned by
the Company that are held on its behalf by its Custodian. The Board
has instructed that the Manager submits votes for such shares
wherever possible and practicable. The Manager is required to refer
to the Board on any matters of a contentious nature.
The
Manager’s Responsible Investment and Engagement Policy has been
reviewed and endorsed by the Board. The Manager is a signatory to
the United Nations Principles for Responsible Investment and a
signatory of the 2021 UK Stewardship Code.
LTL became
a signatory of Net Zero Asset Managers Initiative in December 2021.
Modern
Slavery Act
The
Company does not provide goods or services in the normal course of
business, and as a financial investment vehicle, does not have
customers. Therefore, the Directors do not consider that the
Company is required to make a statement under the Modern Slavery
Act 2015 in relation to slavery or human trafficking. The Company’s
suppliers are typically professional advisers and the Company’s
supply chains are considered to be low risk in this
regard.
UK
Sanctions
The Board
has made due diligence enquiries of the service providers that
process the Company’s shareholder data to ensure the Company’s
compliance with the UK sanctions regime. The relevant service
providers have confirmed that they check the Company’s shareholder
data against the UK sanctions list on a daily basis. At the date of
this report, no sanctioned individuals had been identified on the
Company’s shareholder register. The Board notes that stockbrokers
and execution-only platforms also carry out their own due
diligence.
Common
Reporting Standard ("CRS")
CRS is a
global standard for the automatic exchange of information
commissioned by the Organisation for Economic Cooperation and
Development and incorporated into UK law by the International Tax
Compliance Regulations 2015. CRS requires the Company to provide
certain additional details to HMRC in relation to certain
shareholders. The reporting obligation began in 2016 and is an
annual requirement.
The
Registrar, Link Group, has been engaged to collate such information
and file the reports with HMRC on behalf of the Company.
Taskforce
for Climate Related Financial Disclosures (“TCFD”)
The
Company notes the TCFD recommendations on climate related financial
disclosures. The Company is an investment company and, as such, it
is exempt from the Listing Rules requirement to report against the
TCFD framework.
Climate
reporting, at both the LTL and LTIT level, will be available from
30 June 2024 via the LTL
website.
Global
Greenhouse Gas Emissions
The
Company is an investment trust, with neither employees nor
premises, nor has it any financial or operational control of the
assets which it owns. It has no greenhouse gas emissions to report
from its operations, nor does it have responsibility for any other
emissions producing sources under the Companies Act 2006 (Strategic
Reports and Directors’ Reports) Regulations 2013 or the Companies
(Directors’ Report) and Limited Liability Partnerships (Energy and
Carbon Report) Regulations 2018, including those within the
Company’s underlying investment portfolio.
The
Company consumed less than 40,000 kWh of energy during the year in
respect of which the Directors’ Report is prepared and therefore is
exempt from the disclosures required under the Streamlined Energy
and Carbon Reporting criteria.
The Board
is aware of the continued emphasis on ESG matters in recent years.
The Manager engages with all the companies in the portfolio to
understand their ESG approach and has developed its own methodology
to assess the carbon impact of the portfolio.
LTL's
Approach to Responsible Ownership
ESG
integration
Seeking
Sustainability
As a
long-term investor, LTL aims to identify companies that can
generate long-term sustainable high returns on capital. LTL has
historically found that such companies tend to exhibit
characteristics associated with good corporate governance and
responsible business practices. Indeed, LTL believes that companies
which observe such standards, and that are serious in their
intention of addressing environmental and social factors, will not
only become more durable but will likely prove to be superior
investments over time.
To that
end LTL’s initial analysis and ongoing company engagement strategy
seeks to incorporate all sustainability factors that they believe
will affect the company’s ability to deliver long-term value to
shareholders. Such factors may include but are not limited to;
environmental (including climate change), social and employee
matters (including turnover and culture) and governance factors
(including remuneration and capital allocation), cyber resilience,
responsible data utilisation, respect for human rights,
anti-corruption and anti-bribery, and any other risks or issues
facing the business and its reputation. This work is catalogued in
a proprietary database of risk factors in order to centralise and
codify the team’s views, as well as to prioritize LTL’s ongoing
research and engagement work and is cross-referenced with the SASB
Materiality Map ©.
If, as a
result of this assessment, LTL believes that an ESG factor is
likely to materially impact a company’s long-term business
prospects (either positively or negatively) then this will be
reflected in the long-term growth rate that is applied in the
investment team’s valuation of that company, which alongside the
team’s more qualitative research will influence any final portfolio
decisions (for example, whether LTL starts a new position or sell
out of an existing holding).
Positive/Negative
Screening
As a
product of LTL’s investment philosophy, it does not invest in the
following industries:
– capital
intensive industries (energy, commodities or mining) or any
companies involved in the extraction and production of coal, oil or
natural gas; and
– industries
that LTL judges to be sufficiently detrimental to society that they
may be exposed to burdensome regulation or litigation that could
impinge on financial returns (e.g. tobacco, gambling or arms
manufacturers).
Similarly,
LTL’s investment approach has steered Nick
Train and the investment team to invest in a number of
companies that play an important positive social or environmental
role, for example through providing access to educational
information (e.g. RELX) or encouraging environmental progress and
developing best practice (e.g., Diageo and Mondelez). LTL believes
that such positive benefits for society should be consistent with
its aim to generate competitive long-term returns, thus helping it
meet its clients’ investment objectives.
Climate
Change
The risks
associated with climate change represent the great issue of our era
and the transition to a low-carbon economy will affect all
businesses, irrespective of their size, sector or geographic
location. Therefore, no company’s revenues are immune and the
assessment of such risks must be considered within any effective
investment approach, particularly one like LTL’s that seeks to
protect its clients’ capital for decades to come.
As a
relatively small company with a single office location and fewer
than 30 employees, LTL’s climate exposure comes predominantly from
the investment portfolios that it manages on behalf of its clients.
LTL recognises the systemic risk posed by climate change and the
potential financial impacts associated with a transition to a
low-carbon economy.
To help
address this, LTL became a signatory of the Net Zero Asset Managers
(NZAM) initiative in December 2021,
which affirms its commitment to support the goal of net zero
greenhouse gas emissions by 2050 or sooner. In line with this
ambition, LTL published a 2030 interim target in
Q4 2022
which has since been approved by the Institutional Investors Group
on Climate Change (‘IIGCC’). LTL felt it was most appropriate to
set a Portfolio Coverage Target and has duly targeted 55% of its
asset-weighted committed1
assets to
be considered Aligned2
by 2030,
as set out by the PAII Net Zero Investment Framework. This
represents a circa 50% improvement from its baseline of 36% of
assets being Aligned as of 2022, consistent with a fair share of
the 50% global reduction in CO2
identified
as a requirement in the Intergovernmental Panel on Climate Change
(‘IPCC’) special report on global warming of 1.5°C.
LTL also
supports the recommendations of the Task Force on Climate-Related
Financial Disclosures (“TCFD”) and its efforts to encourage
companies to report their climate related disclosures and data in a
uniform and consistent way. Further information on LTL’s TCFD
related disclosures can be found in its 2023 TCFD Report, which can
be found on LTL’s website:
www.lindselltrain.com.
1 Committed
assets are currently 94% of LTL's total AUM. The assets that were
excluded relate to segregated clients that either declined to have
their assets included at this time or did not respond by the
required deadline. There is scope to increase the level of
committed assets over time.
2 Aligned
status, as set out by the PAII Net Zero Framework, has prescribed
requirements of the portfolio companies, including; 1) Setting
short and medium term emission reduction targets, 2) Monitoring
emission intensity performance relative to those targets, and 3)
Disclosure of scope 1, 2 and 3 emissions. For higher impact
sectors, further criteria are required to be categorised as
Aligned.
Further,
using Morningstar’s carbon metrics calculations, LTL is pleased to
note that LTIT’s listed equity holdings have a significantly lower
weighted average carbon intensity than its comparable
benchmark.
Stewardship
Engagement
Engaging
with and monitoring investee companies on matters relating to
stewardship has always been an essential element of LTL’s
investment strategy. Its long-term approach generally leads it to
be supportive of company management. However, where LTL disagrees
with a company’s actions, it will
try to influence management on specific matters or policies if LTL
believe it is in the best interests of its clients. Constructive
dialogue has more often than not resulted in satisfactory outcomes,
thus limiting the need for escalation. However, where this is not
the case, LTL will consider escalating its engagement and
stewardship activities.
During the
year, on a look-through basis (i.e. including positions held by LTL
managed funds owned by the Company), LTL engaged with 27 companies
held within the Company’s portfolio on a wide range of
environmental, societal and governance related issues, as detailed
in the chart below. Moreover, to ensure that the 2030 net zero
interim target remains achievable, LTL continues to engage
proactively with the management of companies it holds across its
portfolios, the aim being to understand each company’s individual
goals and, where appropriate, to provide the team’s thoughts on
their road maps, with the overall ambition of reaching an absolute
reduction in global carbon emissions. Using the data gathered to
set the 2030 interim target, LTL has been able to identify which
portfolio companies should be prioritised for engagement on their
progress. LTL has engaged with management at a number of companies
in recent months and will continue to engage with all portfolio
companies to understand how they align with LTL’s net zero goals.
This includes encouraging them to set science-based targets where
possible. This initiative has been led by Madeline Wright, Deputy Portfolio Manager and
Head of Investment ESG. The information gathered from this exercise
is stored, assessed, and monitored within Sentinel, LTL’s
proprietary ESG database.
Engagement
by Topic
Source:
Lindsell Train. 1 April 2023 to
31 March 2024. 53 topics raised with
27 companies (on a look through basis).
Key
Engagement Case Studies:
Company
name: Unilever
Sector:
Consumer
Franchises
Engagement
topics: Strategy, Reputation, Environmental claims
Date
of engagements:
August 2023, October 2023 and
December 2023
Engagement
format: Calls
Reason
for Engagement: In a call
with CFO Graeme Pitkethly, the LTL
investment team discussed Unilever’s decision to retain its
presence in Russia. It sought
justification for this decision and, whilst the team recognises
that there is no easy choice, LTL conveyed its expectation that
management would keep the situation under active review with the
hope of finding the ‘least worst’ outcome.
In
October, LTL followed up with Ian
Meakins, Designate Chairman. Topics covered included their
retained interest in Russia,
Nelson Peltz’s presence on the Board, as well as strategic
priorities and M&A. On Russia,
Ian Meakins agreed that clarity and
haste are needed. From a strategic perspective, the focus will be
on SKU rationalisation, bolstering existing high-performing brands
and targeted geographic expansion, before any more deals are done.
Unilever admit that it has overinvested in some emerging markets,
in some cases at the expense of some developed markets, and hence a
more targeted approach, with due consideration given to the
translation of local currency earnings, is required.
Further
engagement took place in December when the LTL team spoke with
Unilever IR regarding the Competition & Markets Authority’s
('CMA') investigation into its green claims. Whilst Unilever was
“surprised and disappointed”, it is not against the purpose of the
exercise, in that it upholds the need for higher standards against
claims which could mislead the consumer. Unilever have been in
discussions with the CMA for some time regarding specific claims
for a small number of products, and so it was surprised by the
announcement of a formal investigation specifically targeting only
Unilever. The investigation is focussed on the use of vague and
broad language in marketing materials as well as claims about
ingredients that might exaggerate how ‘natural’ a product is. As a
result, there is unlikely to be a binary outcome. Nonetheless, it
is an opportunity for Unilever to refute claims that its new CEO,
Hein Schumacher, is giving up on
sustainability and instead focus consumer and investor attention on
progress made on its four sustainability priorities (plastic,
climate, nature and livelihoods).
Next
steps: The
engagement regarding Unilever’s presence in Russia and CMA claims is ongoing.
Company
name: Mondelez
Sector:
Consumer
Franchises
Engagement
topic: Human Rights / Modern Slavery Date of
engagement:
May 2023
Engagement
format: Call
Reason
for Engagement: LTL spoke
with the management of Mondelez ahead of its AGM, which included a
contentious shareholder proposal relating to the eradication of
child labour from the cocoa supply chain. The team has regularly
engaged with Mondelez on this issue and so were eager to hear
management’s views on the resolution, and also receive an update on
the progress the company is making on this specific initiative.
Management communicated that whilst it is entirely supportive of
the aims and intentions of the shareholder proposal, the company is
already working towards these exact goals and believes that the
current strategy continues to be the right one to achieve them.
It confirmed
that significant progress has been made: 74% of the company’s
supply chain is now covered by its Cocoa Life programme, up from
28% in 2020. Like Mondelez, LTL recognises that eradicating child
labour from the cocoa supply chain is a systemic issue that
requires wide-scale collaboration and so LTL voted in line with
management, as it believes it is unproductive to expect Mondelez to
solve this wider issue on its own.
Next
steps: This
engagement is ongoing. While LTL accepts that Mondelez cannot solve
this wider issue on its own, as the number 2 chocolate brand in the
world LTL would like to see the company continuing to set the
agenda. LTL would like the percentage of the company’s supply chain
covered by the Cocoa Life programme to continue to increase to full
coverage, with credible and sustainable ongoing monitoring firmly
in place as this is not a ‘set and forget’ issue.
Company
name: Nintendo
Sector:
Media
Engagement
topic: Capital Allocation Date of
engagement:
September 2023 Engagement
format:
Call
Reason
for Engagement: Like many
Japanese companies, Nintendo could be accused of maintaining an
overly conservative balance sheet. Currently the company has ¥2
trillion of cash to guard against technology change and for future
growth investments. As a rule, we are supportive of our companies
maintaining net cash balances and, indeed, would be concerned by
any significant levels of net debt, however we recognise that
Nintendo could manage its balance sheet more efficiently. As such,
during Q3 we had the opportunity to share with company management
that we would encourage the Board to review its capital allocation
and the uses of its retained earnings. If it was decided to return
funds to shareholders we expressed our preference for a share
buyback at an accretive share price rather than a special
dividend.
Next
steps: This
engagement is ongoing.
Proxy
Voting
The
primary voting policy of LTL is to protect or enhance the economic
value of its investments on behalf of its clients. LTL has
appointed Glass Lewis to aid the administration of proxy voting and
provide additional support in this area. However, the Manager
maintains decision making responsibility based on its detailed
knowledge of the investee companies. It is LTL’s policy to exercise
all voting rights which have been delegated to LTL by its
clients.
Voting
record:
|
Management
Proposals
|
Shareholder
Proposals
|
Total
Proposals
|
With
Management
|
199
|
7
|
206
|
Against
Management
|
2
|
0
|
2
|
Abstain
|
1
|
1
|
2
|
Totals
|
202
|
8
|
210
|
Source:
Glass Lewis. 1 April 2023 to
31 March 2024.
Votes
against management and abstentions have typically been in the low
single-digit range. The main reason for this is that LTL’s
long-term approach to investment generally leads it to be
supportive of company management and, where required, LTL will try
to influence management through its engagement activities. Given
LTL often builds up large, long-term stakes in the businesses in
which it invests, LTL finds that management is open to (and very
often encourage) engagement with LTL. Furthermore, it is LTL’s aim
to be invested in ‘exceptional’ companies with strong corporate
governance and hence it ought to be rare that LTL finds itself in a
position where it is voting against management.
In the
majority of cases where LTL has voted against management it has
been on matters relating to remuneration. Where LTL does not
believe that a company’s compensation policy is aligned with the
long-term best interests of the shareholders it will write to
management to inform them of LTL’s intention to vote against such
policies.
Regulatory
Update on ESG
During the
year, regulators around the world remained active on defining and
classifying ESG investing and curbing greenwashing. The UK
Financial Conduct Authority (‘FCA’) released its final Policy
Statement on Sustainability Disclosure Requirements (‘SDR’) and
investment labels on 28 November
2023. The UK SDR, which applies to all FCA-regulated firms,
introduces a set of sustainability-related product labels, product
and entity-level disclosures, and anti-greenwashing rules for
sustainable investing in the UK. While the Investment Manager
considers ESG issues to be important when selecting investments,
the Company does not have explicit sustainability objectives in its
investment policy and the Company will not seek to apply a
sustainability label under SDR.
Integrity
and Business Ethics
The
Company is committed to carrying out business in an honest and fair
manner. The Board has adopted a zero tolerance approach to
instances of bribery and corruption. Accordingly, it expressly
prohibits any Director or associated persons when acting on behalf
of the Company from accepting, soliciting, paying, offering or
promising to pay or authorise any payment, public or private, in
the United Kingdom or abroad to
secure any improper benefit from themselves or for the
Company.
The Board
applies the same standards to its service providers in their
activities for the Company. A copy
of the Company’s Anti Bribery and Corruption Policy can be found in
the Board and Policies section of the Company's website. The policy
is reviewed annually by the Audit Committee.
In
response to the implementation of the Criminal Finances Act 2017,
the Board adopted a zero-tolerance approach to the criminal
facilitation of tax evasion. A copy of the Company’s policy on
preventing the facilitation of tax evasion can be found in the
Board and Policies section of the Company's website. The policy is
reviewed annually by the Audit Committee.
The
Company’s culture is driven by its values of integrity, knowledge
and frank and courteous conduct. It focusses on achieving returns
for shareholders in line with the Company’s Investment Objective.
In carrying out its activities, the Company aims to conduct itself
responsibly, ethically and fairly, including in relation to social
and human rights issues. As an investment company with limited
internal resource, the Company has little direct impact on the
environment. The Company believes that high standards of ESG make
good business sense and have the potential to protect and enhance
investment returns. Consequently, the Manager’s investment criteria
ensure that ESG and ethical issues are taken into account and best
practice is encouraged. The Board's expectations are that its
principal service providers have appropriate governance policies in
place.
By order
of the Board
Roger Lambert
Chairman
11 June 2024
Governance
Statement
of Directors’ responsibilities in respect of the Financial
Statements
The
Directors are responsible for preparing the Annual Report and the
Financial Statements in accordance with applicable law and
regulation.
Company
law requires the Directors to prepare Financial Statements for each
financial year. Under that law the Directors have prepared the
Financial Statements in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting Standards,
comprising FRS 102 “The Financial Reporting Standard applicable in
the UK and Republic of Ireland”, and applicable law).
Under
company law the Directors must not approve the Financial Statements
unless they are satisfied that they give a true and fair view of
the state of affairs of the Company and of the profit or loss of
the Company for that period.
In
preparing the Financial Statements the Directors are required
to:
• select
suitable accounting policies and then apply them
consistently;
• state
whether applicable UK Accounting Standards, comprising FRS 102,
have been followed, subject to any material departures disclosed
and explained in the Financial Statements;
• make
judgments and estimates that are reasonable and prudent;
• prepare
the Financial Statements on a going concern basis unless it is
inappropriate to presume that the Company will continue in
business; and
• prepare
a directors' report, a strategic report and a directors'
remuneration report which comply with the requirements of the
Companies Act 2006.
The
Directors are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
They are
responsible for such internal control as they determine is
necessary to enable the preparation of Financial Statements that
are free from material misstatement, whether due to fraud or error,
and have general responsibility for taking such steps as are
reasonable to them to safeguard the assets of the Company and to
prevent and detect fraud and other irregularities.
The
Directors have delegated responsibility to the Administrator for
the maintenance and integrity of the corporate and financial
information included on the Company’s website. Legislation in the
United Kingdom governing the
preparation and dissemination of Financial Statements may differ
from legislation in other jurisdictions.
Responsibility
Statement of the Directors in respect of the Annual Financial
Report
The
Directors consider that the Annual Report and Financial Statements,
taken as a whole, are fair, balanced and understandable and provide
the information necessary for shareholders to assess the Company’s
position and performance, business model and strategy.
Each of
the Directors, whose names and functions are listed in the ‘Board
of Directors’ on pages 32 and 33 of the Annual Report confirms
that, to the best of their knowledge:
• the
Company Financial Statements, which have been prepared in
accordance with United Kingdom Accounting Standards, comprising FRS
102 “The Financial Reporting Standard applicable in the UK and
Republic of Ireland”, and applicable law (United Kingdom Generally
Accepted Accounting Practice), give a true and fair view of the
assets, liabilities, financial position and loss of the Company;
and
• the
Strategic Report includes a fair review of the development and
performance of information required by the FCA's Disclosure
Guidance and Transparency Rules.
The
Directors also confirm that the Financial Statements, taken as a
whole, are fair, balanced and understandable, and provide the
information necessary for shareholders to assess the Company's
position, performance, business model and strategy.
Approved
by the Board of Directors and signed on its behalf by
Roger
Lambert
Chairman
11 June 2024
Note to
those who wish to access this document by electronic means:
The Annual
Report for the year ended 31 March
2024 has been approved by the Board of The Lindsell Train
Investment Trust plc. Copies of the Annual Report are circulated to
shareholders and, where possible, to investors through other
providers’ products and nominee companies (or written notification
is sent when they are published online). It is also made available
in electronic format for the convenience of readers. Printed copies
are available from the Company’s Registered Office in London.
Financial
Statements
Income
Statement for the year ended 31 March
2024
|
|
2024
|
2023
|
|
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
|
Notes
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
Losses on
investments held at fair value
|
10
|
–
|
(6,014)
|
(6,014)
|
–
|
(12,978)
|
(12,978)
|
Exchange
losses on currency balances
|
|
–
|
(4)
|
(4)
|
–
|
(3)
|
(3)
|
Income
|
2
|
12,005
|
–
|
12,005
|
14,135
|
–
|
14,135
|
Investment
management fees
|
3
|
(976)
|
–
|
(976)
|
(1,138)
|
–
|
(1,138)
|
Other
expenses
|
4
|
(715)
|
(1)
|
(716)
|
(690)
|
(1)
|
(691)
|
Net
return/(loss) before taxation
|
|
10,314
|
(6,019)
|
4,295
|
12,307
|
(12,982)
|
(675)
|
Taxation
|
7
|
(100)
|
–
|
(100)
|
(96)
|
–
|
(96)
|
Return/(loss)
after taxation for the financial year
|
|
10,214
|
(6,019)
|
4,195
|
12,211
|
(12,982)
|
(771)
|
Return/(loss)
per Ordinary Share
|
9
|
£51.07
|
£(30.10)
|
£20.97
|
£61.06
|
£(64.91)
|
£(3.85)
|
All
revenue and capital items in the above statement derive from
continuing operations.
The total
columns of this statement represent the profit and loss account of
the Company. The revenue and capital return columns are
supplementary to this and are prepared under the guidance published
by the Association of Investment Companies.
The
Company does not have any other recognised gains or losses. The net
return for the year disclosed above represents the Company’s total
comprehensive income.
No
operations were acquired or discontinued during the
year.
The notes
form part of these Financial Statements.
Statement
of Changes in Equity for the year ended 31
March 2024
|
Share
|
Special
|
Capital
|
Revenue
|
|
|
capital
|
reserve
|
reserve
|
reserve
|
Total
|
|
2024
|
2024
|
2024
|
2024
|
2024
|
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
At 1 April
2023
|
150
|
19,850
|
168,000
|
23,390
|
211,390
|
(Loss)/return
for the financial year
|
–
|
–
|
(6,019)
|
10,214
|
4,195
|
Dividends
paid for the year ended 31 March 2023 (see note 8)
|
–
|
–
|
–
|
(10,300)
|
(10,300)
|
At 31
March 2024 |
150 |
19,850 |
161,981 |
23,304 |
205,285 |
For
the year ended 31 March
2023
|
Share
|
Special
|
Capital
|
Revenue
|
|
|
capital
|
reserve
|
reserve
|
reserve
|
Total
|
|
2023
|
2023
|
2023
|
2023
|
2023
|
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
At 1 April
2022
|
150
|
19,850
|
180,982
|
21,779
|
222,761
|
(Loss)/return
for the financial year
|
–
|
–
|
(12,982)
|
12,211
|
(771)
|
Dividends
paid for the year ended 31 March 2022 (see note 8)
|
–
|
–
|
–
|
(10,600)
|
(10,600)
|
At
31 March 2023
|
150
|
19,850
|
168,000
|
23,390
|
211,390
|
The notes
form part of these Financial Statements.
Statement
of Financial Position at 31 March
2024
|
|
2024
|
2023
|
|
Notes
|
£’000
|
£’000
|
£’000
|
£’000
|
Fixed
assets |
|
|
|
|
|
Investments
held at fair value through profit or loss
|
10
|
|
199,082
|
|
203,128
|
Current
assets |
|
|
|
|
|
Other
receivables
|
11
|
478
|
|
491
|
|
Cash at
bank
|
|
6,028
|
|
8,010
|
|
|
|
6,506
|
|
8,501
|
|
Creditors:
amounts falling due within one year
|
|
|
|
|
|
Other
payables
|
12
|
(303)
|
|
(239)
|
|
Net
current assets |
|
|
6,203 |
|
8,262 |
Net
assets
|
|
|
205,285
|
|
211,390
|
Called up
share capital
|
13
|
|
150
|
|
150
|
Special
reserve
|
14
|
|
19,850
|
|
19,850
|
|
|
|
20,000
|
|
20,000
|
Capital
reserve
|
14
|
|
161,981
|
|
168,000
|
Revenue
reserve
|
|
|
23,304
|
|
23,390
|
Equity
Shareholders’ funds |
|
|
205,285 |
|
211,390 |
Net
Asset Value per Ordinary Share
|
15
|
|
£1,026.43
|
|
£1,056.95
|
The
Financial Statements were approved by the Board on 11 June 2024 and were signed on its behalf
by:
Roger
Lambert
Chairman
The
Lindsell Train Investment Trust plc
Registered
in England & Wales, No: 4119429
The notes
form part of these Financial Statements.
Statement
of Cash Flows for the year ended 31 March
2024
|
|
2024
|
2023
|
|
Notes
|
£’000
|
£’000
|
Net
cash inflow from operating activities
|
16
|
10,294
|
12,243
|
Investing
activities
|
|
|
|
Purchase
of investments held at fair value
|
|
(2,845)
|
(339)
|
Sale of
investments held at fair value
|
|
873
|
1
|
Net cash
outflow from investing activities |
|
(1,972) |
(338) |
Financing
activities |
|
|
|
Equity
dividends paid
|
8
|
(10,300)
|
(10,600)
|
Net cash
outflow from financing activities |
|
(10,300) |
(10,600) |
(Decrease)/increase
in cash and cash equivalents
|
|
(1,978)
|
1,305
|
Cash and
cash equivalents at beginning of year*
|
|
8,010
|
6,708
|
Loss on
exchange movements
|
|
(4)
|
(3)
|
Cash
and cash equivalents at end of year*
|
|
6,028
|
8,010
|
Cash
flows from operating activities includes dividend income received
(gross) of £11,809,000 (2023: £14,156,000) and deposit interest of
£190,000 (2023: £36,000).
* Comprises
solely cash held at bank.
The notes
form part of these Financial Statements.
Notes
to the Financial Statements
1
Accounting policies
A summary
of the principal accounting policies, all of which have been
applied consistently throughout the year, is set out
below:
(a) Basis
of accounting
The
Financial Statements of the Company have been prepared under the
historical cost convention modified to include the revaluation of
fixed assets in accordance with United Kingdom Company law, FRS 102
‘The Financial Reporting Standard applicable in the UK and Ireland’
and with the Statement of Recommended Practice (“SORP”) “Financial
Statements of Investment Trust Companies and Venture Capital
Trusts”, issued by the Association of Investment Companies in
July 2022.
Going
concern
The
Financial Statements have been prepared on the going concern
basis.
The
Directors have a reasonable expectation, after considering a
schedule of the Company’s current financial resources and
liabilities, that the Company has adequate resources to continue in
existence for at least 12 months from the approval of the Financial
Statements; and that it is appropriate to prepare the Financial
Statements on a going concern basis.
The
Company does not have a fixed life.
As at
31 March 2024, the Company held
£110,456,000 (2023: £100,547,000) in listed investments and
£88,626,000 (2023: £102,581,000) in an unlisted investment and an
unlisted fund. The total operating expenses for the year ended
31 March 2024 were £1,692,000 (2023:
£1,829,000). It is estimated that 56.6% of the investment
portfolio, (92.4% of the portfolio, excluding the holding in LTL),
could be liquidated within five business days based on 20% of the
90 days’ average trading volumes obtained from
Bloomberg.
(b)
Reporting currency
The
Financial Statements are presented in Sterling which is the
functional currency of the Company because it is the currency of
the primary economic environment in which the Company
operates.
(c)
Dividends
Under
Section 32 of FRS 102, final dividends should not be accrued in the
Financial Statements unless they have been approved by shareholders
before the balance sheet date.
Dividends
payable to shareholders are recognised in the Statement of Changes
in Equity when they have been approved by shareholders and have
become a liability of the Company. Interim dividends are recognised
in the Financial Statements in the period in which they are
paid.
(d)
Valuation of fixed asset investments
The
Company’s investments are classified as held at fair value through
profit or loss in accordance with Section 11 and 12 of FRS 102 and
are managed and evaluated on a fair value basis in accordance with
its investment strategy.
When a
purchase or sale is made under a contract, the terms of which
require delivery within the time frame of the relevant market, the
investments concerned are recognised or derecognised on the trade
date.
Listed
investments are held through profit or loss and accordingly are
valued at fair value, deemed to be bid or last market prices
depending on the convention of the exchange on which they are
listed. As the Company’s business is investing in financial assets
with a view to profiting from their total return in the form of
interest, dividends or increases in fair value quoted, investments
are held through profit or loss on initial recognition at fair
value. The Company manages and evaluates the performance of these
investments on a fair value basis in accordance with its investment
strategy, and information about the Company is provided internally
on this basis to the Board.
Lindsell
Train fund products are valued daily using prices supplied by the
administrator of these funds.
The
unlisted investment in LTL is valued by the Directors at fair value
using a valuation methodology adopted by the Board. The formula is
monitored by the Board to ensure its ongoing appropriateness. At
the most recent update in 2024 the Board sought external advice to
verify its approach. Please refer to note 1(j) for further
information.
The
investment in LTL (representing 23.9% of the Manager) is held as
part of the investment portfolio. Accordingly, the shares are
accounted for and disclosed in the same way as other investments in
the portfolio. The valuation of the investment (see note 17) is
calculated at the end of each month on the basis of fair value as
determined by the Directors of the Company. The valuation process
in effect from 31 March 2022 remains unchanged and is based upon a
methodology that uses a percentage of LTL’s funds under management,
with the percentage applied being reviewed monthly and adjusted to
reflect the ongoing profitability of LTL.
Categorisation
within the hierarchy has been determined on the basis of the lowest
level input that is significant to the fair value measurement of
the relevant asset as follows:
-
Level 1 –
The unadjusted quoted price in an active market for identical
assets or liabilities that the entity can access at the measurement
date.
-
Level 2 –
Inputs other than quoted prices included within Level 1 that are
observable (i.e. developed using market data) for the asset or
liability, either directly or indirectly.
-
Level 3 –
Inputs are unobservable (i.e. for which market data is unavailable)
for the asset or liability.
(e)
Income
Dividends
are credited to the revenue column of the Income Statement on an
ex-dividend basis. Where an ex-dividend date is not available,
dividends are recognised when the Company’s right to receive
payment is established. The fixed return on a debt security is
recognised on a time apportionment basis so as to reflect the
effective interest rate on the debt security. Bank and deposit
interest is accounted for on an accruals basis.
(f)
Expenses
All
expenses are accounted for on an accruals basis. Finance costs are
accounted for on an accruals basis using the effective interest
rate method. Expenses are charged through the revenue column of the
Income Statement except as follows:
-
expenses
which are incidental to the acquisition or disposal of an
investment are charged to the capital column of the Income
Statement;
-
expenses
are charged to the realised capital reserve, via the capital column
of the Income Statement, where a connection with the maintenance or
enhancement of the value of the investments can be
demonstrated;
-
the non
allocation approach has been taken and charged 100% of the
management fees to revenue; and
-
performance
fees payable to the Manager are charged 100% to
capital.
(g)
Taxation
Deferred
taxation is provided on all differences which have originated but
not reversed by the balance sheet date, calculated at the rate at
which it is anticipated the timing differences will reverse.
Deferred tax assets are recognised only when, on the basis of
available evidence, it is more likely than not that there will be
taxable profits in the future against which the deferred tax asset
can be recovered.
In line
with recommendations of the SORP, the allocation method used to
calculate tax relief on expenses presented in the capital column of
the Statement of Comprehensive Income is the marginal basis. Under
this basis if taxable income is capable of being offset entirely by
expenses presented in the revenue column of the Income Statement
then no tax relief is transferred to the capital column.
(h)
Foreign currency
Transactions
denominated in foreign currencies are recorded in the local
currency at the actual exchange rates as at the date of the
transaction. Assets and liabilities denominated in foreign
currencies at the year end are reported at the rate of exchange
prevailing at the year end. Any gain or loss arising from a change
in exchange rates subsequent to the date of the transaction is
included as an exchange gain or loss in the capital or revenue
column of the Income Statement depending on whether the gain or
loss is of a capital or revenue nature.
(i)
Capital reserve
The
following are taken to this reserve:
-
gains or
losses on the disposal of investments;
-
exchange
differences of a capital nature;
-
expenses,
together with the related taxation effect, allocated to this
reserve in accordance with the above policies; and
-
investment
holding gains or losses, being the increase or decrease in the
valuation of investments held at the year end.
Revenue
reserve
The
revenue reserve reflects all income and expenditure which are
recognised in the revenue column of the income
statement.
Special
reserve
The
special reserve arose following Court approval in September 2002 to
transfer £19,850,000 from the share premium account. This reserve
can be used to finance the redemption and/or purchase of shares in
issue.
In
accordance with the Company’s Articles of Association, the capital
reserve and special reserve may not be distributed by way of a
dividend but may be utilised for the purposes of share buybacks.
The Company may only distribute by way of dividend accumulated
revenue profits within the revenue reserve.
(j)
Significant judgments and estimates
The key
significant estimate to report is the valuation of the investment
in LTL where material judgments are made. Please refer to notes
1(d) and 17 for details of how this holding is valued.
Other than
this, in the course of preparing the Financial Statements, no
material judgments have been made in the process of applying the
Company’s accounting policies, except those that involve
estimations.
2
Income
|
2024
£’000
|
2023
£’000
|
Income
from investments
|
|
|
Overseas
dividends
|
862
|
833
|
UK
dividends
|
|
|
– Lindsell
Train Limited
|
9,410
|
11,875
|
– Other UK
dividends
|
1,543
|
1,391
|
|
11,815
|
14,099
|
Other
income
|
|
|
Deposit
Interest
|
190
|
36
|
|
190
|
36
|
Total
income comprises:
|
|
|
Dividends
|
11,815
|
14,099
|
Interest
|
190
|
36
|
|
12,005
|
14,135
|
3.
Management fees
|
2024
|
2023
|
|
£’000
|
£’000
|
Investment
management fee
|
1,099
|
1,255
|
Rebate of
investment management fee (see below)
|
(123)
|
(117)
|
Total
management fee
|
976
|
1,138
|
In
accordance with an Investment Management Agreement dated 21
December 2000 (last revised in November 2020) between the Company
and LTL, LTL has been providing investment management services to
the Company. For its services, LTL receives an annual fee of 0.6%,
calculated on the lower of the Adjusted Market Capitalisation and
the Adjusted Net Asset Value of the Company, calculated using
weekly data and payable in arrears in respect of each calendar
month. The amount charged during the year is shown above. £139,623
(2023: £94,893) of the fee for the year was outstanding as at the
Balance Sheet date.
A
performance fee is payable at the rate of 10 per cent of the value
of any positive relative performance versus the Benchmark (the MSCI
World Index Total Return (Sterling adjusted)), in a financial year.
Relative performance is measured by taking the lower of the NAV or
Average Market Price, taking into account dividends, at the end of
each financial year and comparing the percentage annual change with
the total return of the Benchmark. A performance fee will only be
paid out if the annual change is both above the Benchmark and is a
positive figure. Relative performance will be carried forward in
years where the Manager is not eligible for a performance fee based
on these two criteria. The Company has twelve month performance
periods, ending on 31 March in each year. The performance fee is
payable in arrears in respect of each performance
period.
The
performance fee payable to the Manager for the year to 31 March
2024 was £nil (2023: £nil).
For the
avoidance of double charging management fees, the Manager has
agreed to rebate any periodic management fee that it receives from
the Company by the amount of fees receivable by it from LTL managed
fund products and other fund products where LTL is the Manager. The
amounts rebated on the Investment Management fee are shown above,
of which £107,585 (2023: £101,725) relates to the Company’s
investment in Lindsell Train North American Equity Fund and £15,656
(2023: £15,065) relates to the Company’s investment in the Finsbury
Growth & Income Trust PLC.
4 Other
expenses
|
2024
£’000
|
2023
£’000
|
Directors’
emoluments
|
178
|
151
|
Company
Secretarial and Administration fee
|
192
|
195
|
Auditor’s
remuneration*†
|
55
|
55
|
Tax
compliance fee
|
4
|
6
|
Safe
custody fees
|
19
|
18
|
Printing
fees
|
36
|
40
|
Registrars’
fees
|
32
|
35
|
Listing
fees
|
13
|
14
|
Legal
fees
|
7
|
5
|
Employer’s
National Insurance
|
11
|
11
|
Directors’
liability insurance
|
13
|
13
|
Key man
insurance
|
45
|
47
|
Director
recruitment costs
|
25
|
40
|
Sundry
|
76
|
60
|
VAT
irrecoverable
|
9
|
–
|
|
715
|
690
|
Capital
charges
|
1
|
1
|
|
716
|
691
|
* Excluding
VAT.
† Remuneration
for the audit of the Financial Statements of the
Company.
5
Directors’ emoluments
These are
reflected in the table below:
|
2024
£’000
|
2023
£’000
|
Directors’
fees
|
178
|
151
|
Since 1
January 2024, the Chairman of the Board, Chairman of the Audit
Committee, and other Directors receive set fees at rates of
£43,000, £36,000 and £29,000 respectively per annum, and have no
entitlement to any performance fees. Directors’ fees amounting to
£29,000 (2023: £27,000) have been waived by Michael Lindsell in
view of his connection with the Manager.
There were
no pension contributions paid or payable.
6
Disclosure of interests
As at 31
March 2024 the Company held 12,500,000 shares in WS Lindsell Train
North American Equity Fund with a fair value of £19,624,000 and a
cost of £12,912,000.
LTL is
also the Portfolio Manager of Finsbury Growth & Income Trust
PLC in which the Company has an investment of 420,000 shares with a
fair value of £3,612,000 at a cost of £759,000.
LTL’s
appointment as Manager to the Company is subject to termination by
either party on twelve months’ notice.
7
Taxation
The tax
charge on the loss on ordinary activities for the year was as
follows:
|
2024
|
2023
|
|
Revenue
|
Capital
|
Total
|
Revenue
|
Capital
|
Total
|
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
£’000
|
UK
corporation tax
|
–
|
–
|
–
|
–
|
–
|
–
|
Overseas
tax
|
114
|
–
|
114
|
102
|
–
|
102
|
Overseas
tax recoverable
|
(14)
|
–
|
(14)
|
(6)
|
–
|
(6)
|
Tax charge
per accounts
|
100
|
–
|
100
|
96
|
–
|
96
|
The
current taxation charge for the year is different from the standard
rate of corporation tax in the UK of 25% (2023: 19%). The
differences are explained below:
|
2024
£’000
|
2023
£’000
|
Net
gains/(loss) on ordinary activities before taxation
|
4,295
|
(675)
|
Theoretical
tax at UK Corporation tax rate of 25% (2023: 19%)
|
1,074
|
(128)
|
Effects
of:
|
|
|
– UK
dividends which are not taxable
|
(2,738)
|
(2,521)
|
– Overseas
dividends which are not taxable
|
(215)
|
(158)
|
–
Non-taxable loss on investments
|
1,504
|
2,466
|
– Current
year excess expenses
|
375
|
341
|
– Overseas
tax suffered
|
114
|
102
|
– Overseas
tax recoverable
|
(14)
|
(6)
|
Actual
current tax charge
|
100
|
96
|
As an
Investment Trust, the Company is not subject to UK taxation on
capital gains as long as it maintains exemption under Sections 1158
and 1159 of the Corporation Tax Act 2010. In the opinion of the
Directors, the Company has complied with the requirements of
Sections 1158 and 1159 of the Corporation Tax Act 2010.
Factors
that may affect future tax charges
As at 31
March 2024, the Company had unutilised management expenses of
£31,533,000 (2023: £30,032,000). These expenses could only be
utilised if the Company were to generate taxable profits in the
future. As a result, the Company has not recognised a deferred tax
asset of £7,883,250 (2023: £7,508,000) arising from management
expenses exceeding taxable income based on the prospective
corporation tax rate of 25% (2023: 19%).
8
Dividends paid and payable
|
2023
£’000
|
2022
£’000
|
Final
dividend for the year ended 31 March 2023 of £51.50 per Ordinary
share (2022: £51.12 per Ordinary Share)
|
10,300
|
10,224
|
The total
dividend forming the basis of Sections 1158 and 1159 of the
Corporation Tax Act 2010 payable in respect of the financial year
is set out below:
|
2024
£’000
|
2023
£’000
|
FinaI
dividend for the year ended 31 March 2024 of £51.50 per Ordinary
share (2023: £51.50 per Ordinary Share)
|
10,300
|
10,300
|
9
Return/(loss) per Ordinary Share
|
2024 |
2023 |
Total
return/(loss) per Ordinary share |
|
|
Total
return/(loss)
|
£4,195,000
|
£(771,000)
|
Weighted
average number of Ordinary Shares in issue during the
year
|
200,000
|
200,000
|
Total
return/(loss) per Ordinary share
|
£20.97
|
£(3.85)
|
The total
return/(loss) per Ordinary share shown above can be further
analysed between revenue and capital, as below:
|
2024
|
2023
|
Revenue
return per Ordinary Share
|
|
|
Revenue
return
|
£10,214,000
|
£12,211,000
|
Weighted
average number of Ordinary Shares in issue during the
year
|
200,000
|
200,000
|
Revenue
return per Ordinary Share
|
£51.07
|
£61.06
|
Capital
loss per Ordinary Share |
|
|
Total
return
|
£(6,019,000)
|
£(12,982,000)
|
Weighted
average number of Ordinary Shares in issue during the
year
|
200,000
|
200,000
|
Capital
loss per Ordinary Share
|
£(30.10)
|
£(64.91)
|
10
Investments held at fair value through profit or loss
|
2024
£’000
|
2023
£’000
|
|
Investments
listed on a recognised investment exchange
|
110,456
|
100,547
|
|
Unlisted
investment and Fund
|
88,626
|
102,581
|
|
Valuation
at year end
|
199,082
|
203,128
|
|
Opening
book cost
|
42,591
|
42,252
|
|
Opening
investment holding gains
|
160,537
|
173,516
|
|
Opening
Fair Value
|
203,128
|
215,768
|
|
Movements
in the year:
|
|
|
|
Purchases
at cost
|
2,845
|
339
|
|
Sales –
proceeds
|
(877)
|
(1)
|
|
Losses on
investments
|
(6,014)
|
(12,978)
|
|
Closing
Fair Value |
199,082 |
203,128 |
Closing
book cost
|
45,428
|
42,591
|
Closing
investment holding gains
|
153,654
|
160,537
|
Closing
Fair Value
|
199,082
|
203,128
|
Realised
gains on investments
|
869
|
1
|
Decrease
in investment holding gains for the year
|
(6,883)
|
(12,979)
|
Losses on
investments held at fair value |
(6,014) |
(12,978) |
|
|
|
|
The
Company received proceeds of £877,000 (2023: £1,000) from
investments sold in the year. The book cost of these investments
when they were purchased was £7,729 (2023: £400). These investments
have been revalued over time and until they were sold any
unrealised gains/losses were included in the fair value of the
investments.
Investment
transaction costs on purchases and sales of investments during the
year to 31 March 2024 amounted to £805 and £9 respectively (2023:
£85 and £nil respectively).
During the
year the investment holding loss attributable to the Company’s
holding in LTL amounted to £16,218,000 (2023 loss: £11,690,000).
See note 17 for further details.
Significant
holdings
Included
in the above are the following investments in which the Company has
an interest exceeding 10% of the nominal value of the shares of
that class in the investee company as at 31 March 2024.
Investments
|
Country
of registration
or
incorporation
|
Class
of
capital
|
%
of
class
held
|
Lindsell
Train Limited*
|
England
|
Ordinary
Shares of £100
|
23.9%
|
* As at 31
January 2024, the latest year end for LTL, its audited aggregate
capital and reserves amounted to £103,519,000, (2023: £97,680,000)
and the profit for that year amounted to £44,596,000 (2023:
£54,315,000). The total amount of dividends paid during the year
was £38,967,000 (2023: £48,876,000) equating to dividends of £1,462
per share (2023: £1,841 per share). The earnings per share were
£1,673 (2023: £2,038). The cost of the Company’s investment in LTL
was £64,500.
See
note relating to the 2024 and 2023 results under the tables in
Appendix 1.
LTL is a
related undertaking of the Company. LTL’s registered office address
is 66 Buckingham Gate, London SW1E 6AU.
LTL has
been accounted for as an investment in accordance with the
accounting policy in note 1(d).
The
Company has arrangements in place with the Manager to avoid double
charging of fees and expenses on investments made in other LTL
managed funds (see note 3).
11 Other
receivables
|
2024
|
2023
|
|
£’000
|
£’000
|
Amounts
due from brokers
|
5
|
1
|
VAT
recoverable
|
27
|
34
|
Prepayments
and accrued income
|
446
|
456
|
|
478
|
491
|
12 Other
payables
|
2024
|
2023
|
|
£’000
|
£’000
|
Accruals
and deferred income
|
303
|
239
|
13 Share
capital
|
2024
|
2023
|
|
No.
of shares
|
|
No. of
shares
|
|
|
000’s |
£’000 |
000’s |
£’000 |
Allotted
and fully paid:
|
|
|
|
|
Ordinary
Shares of 75p each
|
200
|
150
|
200
|
150
|
There has
been no change in the capital structure during the year to 31 March
2024.
14
ReservesCapital
reserve
The
capital reserve includes investment holding gains of £153,654,000
(2023: £160,537,000).
Revenue
reserve
The
revenue reserve reflects all income and expenditure which are
recognised in the revenue column of the income
statement.
Special
reserve
The
special reserve arose following Court approval in September 2002 to
transfer £19,850,000 from the share premium account. This reserve
can be used to finance the redemption and/or purchase of shares in
issue.
In
accordance with the Company’s Articles of Association the capital
reserve and special reserve may not be distributed by way of a
dividend but may be utilised for the purposes of share buybacks.
The Company may only distribute by way of dividend accumulated
revenue profits within the revenue reserve.
The
Institute of Chartered Accountants in England and Wales has issued
guidance stating that profits arising out of a change in fair value
of assets, recognised in accordance with Accounting Standards, may
be distributed provided the relevant assets can be readily
convertible into cash. Securities listed on a recognised stock
exchange are generally regarded as being readily convertible into
cash. In accordance with the Company’s Articles of Association the
capital reserve and special reserve may not be distributed by way
of dividend but may be utilised for the purposes of share buybacks
and the Company may only distribute by way of dividend accumulated
revenue profits.
15 Net
Asset Value per share
The Net
Asset Value per Ordinary Share and the Net Asset Value at the year
end calculated in accordance with the Articles of Association were
as follows:
Net
Asset Value per share attributable
|
Net
Asset Value attributable
|
2024
|
2023
|
2024
|
2023
|
£
|
£
|
£’000
|
£’000
|
1,026.43
|
1,056.95
|
205,285
|
211,390
|
The
movements during the year of the assets attributable to the
Ordinary Shares were as follows:
|
2024
Ordinary
Shares
£’000
|
2023
Ordinary
Shares
£’000
|
Total Net
Assets attributable at beginning of year
|
211,390
|
222,761
|
Total
recognised profit/(loss) for the year
|
4,195
|
(771)
|
Dividends
paid during the year
|
(10,300)
|
(10,600)
|
Total Net
Assets attributable at the end of year
|
205,285
|
211,390
|
The Net
Asset Value per Ordinary Share is based on net assets of
£205,285,000 (2023: £211,390,000) and on 200,000 Ordinary Shares
(2023: 200,000), being the number of Ordinary Shares in issue at
the year end.
16
Statement of Cash Flows
(a)
Reconciliation of operating return to net cash inflow from
operating activities
|
2024
£’000
|
2023
£’000
|
Net
return/(loss) before finance costs and taxation
|
4,295
|
(675)
|
Losses on
investments held at fair value
|
6,014
|
12,978
|
Loss on
exchange movements
|
4
|
3
|
Decrease/(increase)
in other receivables
|
32
|
(34)
|
(Increase)/decrease
in accrued income
|
(15)
|
56
|
Increase
in other payables
|
64
|
11
|
Taxation
on investment income
|
(100)
|
(96)
|
Net cash
inflow from operating activities
|
10,294
|
12,243
|
(b)
Analysis of cash flows
|
At
|
|
|
At
|
|
1
April
|
|
Exchange
|
31
March
|
|
2023
|
Cash
Flow
|
Movement
|
2024
|
|
£’000
|
£’000
|
£’000
|
£’000
|
Cash at
bank
|
8,010
|
(1,978)
|
(4)
|
6,028
|
Total
|
8,010
|
(1,978)
|
(4)
|
6,028
|
|
|
|
|
|
|
At
1
April
2022
|
Cash
Flow
|
Exchange
Movement
|
At
31
March
2023
|
|
£’000
|
£’000
|
£’000
|
£’000
|
Cash at
bank
|
6,708
|
1,305
|
(3)
|
8,010
|
Total
|
6,708
|
1,305
|
(3)
|
8,010
|
17
Financial instruments and capital disclosures
Risk
management policies and procedures:
The
investment objective of the Company is to maximise long-term total
returns with a minimum objective to maintain the real purchasing
power of Sterling capital. In pursuit of this objective, the
Company may be exposed to various forms of risk, as described
below.
The Board
sets out its principal risks on pages 16 to 20 of the Annual Report
and its investment policy including its policy on gearing (bank
borrowing), diversification and dividends on page 3 of the Annual
Report.
The Board
and its Manager consider and review the number of risks inherent
with managing the Company’s assets which are detailed
below:
Market
risk
The
Company’s portfolio is exposed to fluctuations in market prices in
the regions in which it invests. Market-wide uncertainties which
have caused increased volatility include the continued impact of
war in Ukraine and the effect of sanctions against Russia; tensions
between China and the West; the conflict in the Middle East; and
the threat of prolonged inflation and elevated interest rates
slowing economic growth, and the fear or presence of
recession.
At 31
March 2024, the fair value of the Company’s assets exposed to
market price risk was £199,082,000 (2023: £203,128,000). The
Company’s exposure to market price fluctuations is reviewed by the
Board on a quarterly basis and monitored on a continuous basis by
the Manager in pursuance of the investment objective.
Market
price risk comprises three elements – foreign currency risk,
interest rate risk and other price risk.
Foreign
currency risk
Foreign
currency exposure as at 31 March 2024
|
US$
£’000
|
Euro
£’000
|
JPY
£’000
|
Total
£’000
|
Short-term
debtors
|
49
|
23
|
210
|
282
|
Foreign
currency exposure on net monetary items
|
49
|
23
|
210
|
282
|
Investments
held at fair value through profit or loss that are
equities
|
33,061*
|
12,492
|
17,574
|
63,127
|
Foreign
currency exposure
|
33,110
|
12,515
|
17,784
|
63,409
|
* This
includes the holding in WS Lindsell Train North American Equity
Fund of £19,624,000.
Foreign
currency exposure as at 31 March 2023
|
US$
£’000
|
Euro
£’000
|
JPY
£’000
|
Total
£’000
|
Short-term
debtors
|
41
|
12
|
216
|
269
|
Foreign
currency exposure on net monetary items
|
41
|
12
|
216
|
269
|
Investments
held at fair value through profit or loss that are
equities
|
31,818*
|
10,634
|
12,828
|
55,280
|
Foreign
currency exposure
|
31,859
|
10,646
|
13,044
|
55,549
|
* This
includes the holding in WS Lindsell Train North American Equity
Fund of £17,361,000.
Over the
year Sterling strengthened against the US Dollar by 2.2% (2023:
weakened by 6.2%), strengthened against the Euro by 2.9% (2023:
weakened by 4.0%) and strengthened against the Japanese Yen by
16.6% (2023: strengthened by 2.6%).
A 5.0%
decline or rise of Sterling against foreign currency denominated
(i.e. non Sterling) assets held at the year end would have
increased/decreased the Net Asset Value by £3,170,000 or 1.5% of
Net Asset Value (2023: £2,777,000 or 1.3% of Net Asset
Value).
Interest
rate risk
There is
no direct exposure to interest rate risk.
Other
price risk
Other
price risk may affect the value of the quoted
investments.
If the
fair value of the Company’s investments at the Statement of
Financial Position date increased or decreased by 10%, whilst all
other variables remained constant, the capital return and net
assets attributable to shareholders as at 31 March 2024 would have
increased or decreased by £19,908,000 or £99.54 per share (2023:
£20,313,000 or 101.56p per share).
Liquidity
risk
Liquidity
risk is not considered significant under normal market conditions
in relation to the Company’s investments which are listed on
recognised stock exchanges and are, for the most part, readily
realisable securities which can be easily sold to meet funding
commitments if necessary. The Company’s unlisted investment in LTL
is not readily realisable.
As at 31
March 2024, 56.6% (2023: 51.0%) of the investment portfolio (92.4%
of the listed portfolio) could be liquidated within five business
days, based on 20% of the 90 days’ average daily trading volumes
obtained from Bloomberg. The Company would be able to sell all of
its listed holdings within five business days, with the exception
of two securities representing 5.5% of NAV.
Credit
risk
Cash at
bank and other debtors of the Company at the year end as shown on
the Balance Sheet was £6,506,000 (2023: £8,501,000).
Counterparty
risk
The
Northern Trust Company (the “Bank”) is the appointed custodian of
the Company. It provides securities clearing, safe-keeping, foreign
exchange, advance credits and overdrafts, and cash deposit
services. The Bank has a credit rating for long-term deposits/debt
of Aa2 from Moody’s, AA- from Standard & Poor’s and AA from
Fitch Ratings.
As cash
placed at the Bank is deposited in its capacity as a banker not as
a trustee, in line with usual banking practice, such cash is not
held in accordance with the Financial Conduct Authority’s client
money rules.
Fair
values of financial assets and financial
liabilities
The tables
below set out fair value measurements of financial instruments as
at the year end, by the level in the fair value hierarchy into
which the fair value measurement is categorised.
Financial
assets/liabilities at fair value through profit or
loss
At
31 March 2024
|
Level
1
£’000
|
Level
2
£’000
|
Level
3
£’000
|
Total
£’000
|
Investments
|
110,456
|
19,624
|
69,002
|
199,082
|
|
110,456
|
19,624
|
69,002
|
199,082
|
|
|
|
|
|
At 31 March
2023
|
Level
1
£’000
|
Level
2
£’000
|
Level
3
£’000
|
Total
£’000
|
Investments
|
100,547
|
17,361
|
85,220
|
203,128
|
|
100,547
|
17,361
|
85,220
|
203,128
|
Note:
Within the above tables, the entirety of level 1 comprises all the
Company’s ordinary equity investments, level 2 represents the
investment in LF Lindsell Train North American Equity Fund and
level 3 represents the investment in LTL.
The
valuation techniques used by the Company are explained on pages 5
to 7 of the Annual Report.
LTL
Valuation Methodology
The
current methodology was approved and applied to monthly valuations
of the Company from 31 March
2022. J. P. Morgan Cazenove undertook an independent review of the
methodology in January 2024, which confirmed that the methodology
adopted in 2022 remains valid. The methodology seeks to capture the
changing economics and prospects for LTL’s business. It is designed
to be as transparent as possible so that shareholders can
themselves calculate how any change to the inputs would affect the
resultant valuation.
The
methodology has a single component based on a percentage of LTL’s
funds under management (‘FUM’), with the percentage applied being
reviewed monthly and adjusted to reflect the ongoing profitability
of LTL. At the end of each month the ratio of LTL’s notional
annualised net profits1
to LTL’s
FUM is calculated and, depending on its result, the percentage of
FUM is adjusted according to the table below.
Notional
annualised net profits1/FUM
(%)
|
Valuation
of LTL – Percentage of FUM
|
0.15 –
0.16
|
1.70%
|
0.16 –
0.17
|
1.75%
|
0.17 –
0.18
|
1.80%
|
0.18 –
0.19
|
1.85%
|
0.19
– 0.20
|
1.90%
|
0.20 –
0.21
|
1.95%
|
0.21 –
0.22
|
2.00%
|
0.22 –
0.23
|
2.05%
|
0.23 –
0.24
|
2.10%
|
1 LTL’s
notional net profits are calculated by applying a fee rate
(averaged over the last six months) to the most recent end-month
FUM to produce annualised fee revenues excluding performance fees.
Notional staff costs of 45% of revenues, annualised fixed costs and
tax are deducted from revenues to then produce notional annualised
net profits.
For
instance at 31st
March 2024
LTL’s annualised notional net profits were £29.4m and its FUM was
£15.2bn. The ratio between the two as a percentage was calculated
as 0.193% resulting in a percentage of FUM of 1.90% and a valuation
of LTL of £10,818.76 per share.
The
valuation of the investment in LTL continues to be reviewed at the
end of each month by the Company’s Directors, with the methodology
reviewed by the Board at its quarterly meetings.
LTL
Valuation per share using differing valuation scenarios
The two
tables below show the impact on the LTL valuation if:
(i) in
Table 1 a different % was applied to 31 March 2024 FUM;
and
(ii) in
Table 2 different Price / Earnings (‘P/E’) ratios were applied to
LTL’s March 2024 notional net profits.
Table
1 – varying the % of FUM
LTL
FUM
as
at 31 March 2024
|
|
Valuation
|
Valuation
per
share
|
(£’000)
|
%
of FUM
|
(£’000)
|
(£)
|
15,180,432
|
1.00%
|
151,804
|
5,694.09
|
15,180,432
|
1.25%
|
189,755
|
7,117.61
|
15,180,432
|
1.50%
|
227,706
|
8,541.13
|
15,180,432
|
1.75%
|
265,658
|
9,964.65
|
15,180,432
|
1.90%
|
288,428
|
10,818.76
|
15,180,432
|
2.00%
|
303,609
|
11,388.17
|
15,180,432
|
2.25%
|
341,560
|
12,811.69
|
15,180,432
|
2.50%
|
379,511
|
14,235.21
|
15,180,432
|
2.75%
|
417,462
|
15,658.73
|
Table
2 – varying the P/E ratio
LTL
notional net profits
as
at 31 March 2024
|
|
Valuation
|
Valuation
per
share
|
(£’000)
|
P/E
ratio
|
(£’000)
|
(£)
|
29,240
|
7.00
|
204,682
|
7,677.48
|
29,240
|
8.00
|
233,922
|
8,774.27
|
29,240
|
9.00
|
263,162
|
9,871.05
|
29,240
|
9.86
|
288,428
|
10,818.76
|
29,240
|
10.00
|
292,402
|
10,967.84
|
29,240
|
11.00
|
321,643
|
12,064.62
|
29,240
|
12.00
|
350,883
|
13,161.40
|
There were
no transfers between levels for financial assets and financial
liabilities during the year recorded at fair value as at 31 March
2024 and 31 March 2023. A reconciliation of fair value measurements
in Level 3 is set out below.
Level 3
Financial assets at fair value through profit or loss at 31
March
|
2024
£’000
|
2023
£’000
|
Opening
fair value
|
85,220
|
96,910
|
Purchases
at cost
|
–
|
–
|
Sales
proceeds
|
(846)
|
–
|
|
|
|
Realised
gains on investments
|
846
|
–
|
Decrease
in investment holding gains for the year
|
(16,218)
|
(11,690)
|
Closing
fair value
|
69,002
|
85,220
|
Capital
management policies and procedures
The
Company’s capital management objectives are:
• to
ensure that it will be able to continue as a going concern;
and
• to
maximise long-term total returns with a minimum objective to
maintain the real purchasing power of Sterling capital through an
appropriate balance of equity capital and debt. The Directors have
discretion to permit borrowings up to 50% of the Net Asset Value.
However, the Directors have decided it is in the best interests of
the Company not to use gearing.
The Board,
with the assistance of the Manager, monitors and reviews the broad
structure of the Company’s capital on an ongoing basis.
The
Company’s objectives, policies and processes for managing capital
are unchanged from last year.
The
Company is subject to externally imposed capital
requirements:
• as
a public company, the Company has a minimum share capital of
£50,000; and
• in
order to be able to pay dividends out of profits available for
distribution, the Company has to be able to meet one of the two
capital restriction tests imposed on investment companies by UK
company law.
These
requirements are unchanged since last year and the Company has
complied with them at all times.
At the
next Annual General Meeting the Company intends to renew its
authority to repurchase shares at a discount to Net Asset
Value.
18
Guarantees, financial commitments and contingent liabilities
There were
no financial commitments or contingent liabilities outstanding at
the year end (2023: None).
19 Ongoing
charges (APM)
|
2024
|
2023
|
|
£’000
|
%
|
£’000
|
%
|
Total
operating expenses
|
1,692
|
0.8
|
1,829
|
0.9
|
Total
operating expenses are included after a management fee waiver of
£123,000 (2023: £117,000) (see note 3).
The above
total expense ratios are based on the average Shareholders’ Funds
of £203,091,000 (2023: £211,310,000) calculated at the end of each
month during the year.
It should
be noted that administrative expenses borne by the LTL managed
funds are excluded from the above.
See
Glossary for other cost disclosures.
20 Related
party disclosures
LTL acts
as Investment Manager of the Company. The amounts paid to the
Investment Manager are disclosed in note 3 and further details of
the relationship between the Company and the Investment Manager are
set out in note 6. Full details of Directors’ interests are set out
on page 53 of the Annual Report.
On 5 June
2024, the Company and LTL entered into an amended and restated
Investment Management Agreement, to incorporate changes made, and
announced, in June 2021 and June 2022 and additional non-material
changes. LTL is considered to be a related party of the Company
under the Listing Rules. The amendment and restatement of the
Investment Management Agreement amounted to small related party
transaction to which certain provisions of Chapter 11 of the
Listing Rules do not apply in accordance with LR 11.1.6
R.
21
Subsequent events
There are
no significant events that have occurred after the end of the
reporting period to the date of this report which require
disclosure.
Appendices
(unaudited)
DISCLAIMER
The
information contained in these Appendices has not been audited by
the Auditor and does not form part of the financial statements. The
appendices are for information purposes and should not be regarded
as any offer or solicitation of an offer to buy or sell shares in
the Company.
Appendix 1
Annual Review of Lindsell Train Limited (‘LTL’) at 31 January
2024
Background
LTL was
established in 2000 by Michael Lindsell and Nick Train and was
founded on the shared investment philosophy that developed while
they worked together during the 1990s. The company’s aim is to
foster a work environment in which the investment team can manage
capital consistent with this philosophy, which entails managing
concentrated portfolios, invested strategically in durable
franchises. Essential to success is maintaining a relatively simple
business structure encompassing an alignment of interests between
on one side LTL’s clients and on the other its founders and
employees.
People
LTL’s
board of directors consists of the two founders Michael Lindsell
and Nick Train, Michael Lim who was the Chief Operating Officer and
is now the Company Secretary, Joss Saunders (Chief Operating
Officer), and three non-executive directors,; Rory Landman, Julian
Bartlett and Jane Orr, two of which are independent. Rory was
appointed to the LTL Board following the retirement of James
Alexandroff in March 2023. Rory served as a non-executive director
of the Lindsell Train Investment Trust from 2011 to 2020, and
Julian is a former partner of Grant Thornton LLP. Jane retired from
her executive responsibilities at LTL in March 2023, having
previously led the Marketing & Client Services team and was an
executive director of the board, appointed in 2010. After 14 years
at LTL, Keith Wilson retired from the company and left the Board on
31 January 2024. James Bullock and Jessica Cameron were both
appointed to the Board in May 2024.
LTL’s
executive staff reduced by three from 28 to 25 the last 12 months,
which includes the retirements of Jane Orr and Keith Wilson. All
staff are based in the UK other than LTL’s North American Marketing
and Client Services representative, who works out of Texas. LTL’s
board recognises that key employees should share in the ownership
of the company, furthering the alignment of interests between them,
LTIT and the founders. This is achieved by acquiring shares from
LTL’s major stakeholders either directly or through a dedicated
profit share scheme.
Business
LTL’s
strategy is to build excellent long-term performance records for
its funds in a way that is consistent with its investment
principles and that meet the aims of its clients. Long-term
performance is detailed below. Success in achieving satisfactory
investment performance should allow the company to expand its FUM
in its four key product areas: UK, Global, Japanese, and North
American equities. LTL aspires to manage multiple billions of
pounds in each product area, whilst recognising that there will be
a size per product above which their ability to achieve clients’
performance objectives may be compromised. LTL thinks this growth
is possible without significantly expanding the investment team,
which numbered six at 31 January 2024.
To achieve
this growth in a manageable way, LTL looks to direct new business
flows into LT badged pooled funds and to limit the number of
separately managed accounts. The open-ended pooled funds
represented 62% of FUM at end of January, down from 65% the year
before. The fall resulted from a greater proportion of net outflows
emanating from open-ended pooled products.
Additionally,
LTL managed 16 separate client relationships, one fewer than a year
ago. The largest pooled fund (the Lindsell Train Global Equity
Fund) represented 29% of total FUM and the largest segregated
portfolio accounted for 11%.
In the
year to 31 January 2024, LTL’s total FUM fell by 15% from £18.6bn
to £15.9bn. This represented net outflows of £3.4bn, broken down by
strategy as Global (£1,993m), Japan (£380m) and UK
(£1,038m).
All four
strategies generated positive absolute returns over the twelve
months, however each underperformed relative to their corresponding
benchmarks. LTL’s process is simple and remains the same as it
always has been, with LTL seeking to find companies that own
long-lasting franchises with deep moats and the ability to reinvest
returns at relatively high rates of return for extended periods of
time. To capture these characteristics LTL portfolios are
relatively concentrated with large average position sizes which
rarely change. It also means that at any given time there will be a
large number of quoted companies that LTL do not own, amongst which
there are bound to be some exceptional performers. The unusual
feature today is that the performance of some of these companies
has reached new extremes, which makes their omission felt more
keenly.
However,
this current phenomenon has not, and will not change how LTL
invests. It remains focused on exploiting the credentials of its
highly concentrated, idiosyncratic portfolios.
The
relative returns of the LTL funds representing each strategy since
their inception are shown below:
To
31 January 2024
|
Relative
Return
|
Inception
date
|
Benchmark
|
UK Equity
Fund (GBP)
|
+4.2%
p.a.
|
July
2006
|
FTSE All
Share
|
Global
Equity Fund (GBP)
|
+1.6%
p.a.
|
March
2011
|
MSCI
World
|
Japanese
Equity Fund (Yen)
|
+0.2%
p.a.
|
January
2004
|
TOPIX
|
North
American Equity Fund (GBP)
|
-4.4%
p.a.
|
April
2020
|
MSCI North
America
|
Returns
based on NAV. LF Lindsell Train UK Equity Fund Acc share class;
Lindsell Train Global Equity Fund B share class; Lindsell Train
Japanese Equity Fund A Yen share class; LF Lindsell Train North
American Equity Fund Acc share class.
The
Marketing and Client Services team is in contact with institutional
clients both directly and through investment consultants, primarily
in the UK, South Africa and the USA. FUM derived from North America
makes up over 14% of total FUM. LTL’s funds are also widely
represented on the major UK retail and IFA platforms.
Financials
In the
year to 31 January 2024 LTL’s total revenues fell 11%. Annual
management fees make up the lion’s share of total revenues, at
98.9%, with interest income the remainder; there were no
performance fees earned in the year. LTL’s biggest cost item,
direct staff remuneration, is capped at 25% of fees (other than
those earned from The Lindsell Train Investment Trust plc), as
governed by LTL’s Shareholders’ Agreement. Employer National
Insurance costs are excluded from the restriction. Total staff
remuneration, including employer National Insurance, amounted to
30% of fee revenue, the same as last year. Fixed overheads remained
constant at £4.6m. Operating profits were down 12%, registering a
margin on sales of 67%. Net profits fell more, by 18% to £44.6m, on
account of the rise in the effective tax rate from 19% to
25%.
LTL
intends to distribute to shareholders dividends equivalent to 80%
of its net profits in respect of each accounting year-end, subject
to retaining sufficient working, fixed and regulatory capital to
enable it to continue its business in a prudent manner. Total
dividends paid in the year to 31 January 2024 were £1,462 per
share, down from £1,841 per share in the previous year.
At 31
January 2024 LTL’s balance sheet was made up of shareholders’ funds
of £103.5m including £96.2m of net current assets.
The
Future
LTL
believes it has plenty of headroom to grow its FUM, with a
continued focus on its stable of pooled funds. LTL’s investment
approach is applied uniformly across all its products and remains
differentiated and appealing to a wide range of clients. A crucial
part of that appeal is the ability for LTL to demonstrate
investment results that meet clients’ objectives. Over most of
LTL’s history this has been achieved, but recently the investment
approach has faced several difficult years. Most clients will
tolerate short periods of underperformance, especially in a
strategy that is so concentrated and committed to its constituent
companies. However, it is not surprising, following four years of
cumulative underperformance, that the company is seeing some net
outflows as clients are attracted to other investment approaches
that have exhibited better short-term investment
results.
LTL is
confident that by remaining committed to its differentiated
investment approach that targets companies earning higher returns
on capital than average, and with the support of a stable and
dedicated team, and a still competitive longer-term performance
track record, it can stay positive about its future. But it is
fully aware that there are risks ahead which could have a material
impact on the value of LTL and its dividend paying potential. These
risks include increasing pressure on the active management
industry; continued pressures on global equity markets from
inflation, higher interest rates and conflict; the growth of ESG
designated investment funds; and, the underperformance from LTL’s
strategies. Perhaps the greatest risk in relation to LTL’s
reputation however remains the withdrawal of either of the
founders. They are currently aged 65 and 64, in good health and
remain strongly committed to LTL. They are supported by
increasingly mature and experienced investment professionals,
currently numbering four, all of whom are taking on more
responsibility and contributing more to investment decisions as
their careers progress with the company. The clearer articulation
of the firm’s succession planning and the accelerated transfer of
ownership of LTL shares to key individuals should also help
mitigate the risk if either founder withdraws.
Data to 31
January 2024 unless stated otherwise. The period from 31 January to
31 March 2024 has been reviewed by the Board and there are no
significant matters to highlight other than those detailed in this
Appendix.
Funds
Under Management*
FUM
by Strategy
|
|
|
|
Jan
2024
|
Jan
2023
|
|
£m
|
£m
|
UK
|
6,729
|
7,690
|
Global
|
8,956
|
10,352
|
Japan
|
154
|
554
|
North
America
|
37
|
30
|
Total
|
15,876
|
18,626
|
Largest
Client Accounts
|
Jan
2024
|
Jan
2023
|
|
%
of FUM
|
% of
FUM
|
Largest
Pooled Fund Asset
|
29%
|
30%
|
Largest
Segregated Account
|
11%
|
10%
|
* LTL 's
year end 2024 and year end 2023 figures above are based on
published financial statements. LTL 's year end 2023 figures in L
TIT'S Annual Report last year were based on unaudited management
accounts. This therefore results in differences when compared with
L TIT's Annual Report last year, as last year's Report contained
LTL unaudited management account numbers for year ending 31 January
2023, which in this year's Annual Report are using numbers based on
published Financial Statements.
Lindsell
Train Fund Performance
Annualised
data to 31 January 2024
|
1
Year
%
|
3
Years
%
|
5
Years
%
|
10
Years
%
|
GBP
|
UK Equity
Fund (Accumulation)
|
1.4
|
3.4
|
5.3
|
7.9
|
|
FTSE All
Share
|
1.9
|
8.4
|
5.5
|
5.5
|
GBP
|
Global
Equity Fund (B share)
|
6.1
|
2.1
|
6.2
|
12.7
|
|
MSCI
World
|
13.1
|
10.8
|
12.1
|
12.0
|
JPY
|
Japanese
Equity Fund (A share)
|
6.9
|
1.3
|
3.7
|
8.3
|
|
TOPIX
|
32.4
|
14.9
|
13.0
|
10.1
|
GBP
|
North
American Equity Fund
|
|
|
|
|
|
(Accumulation)
|
10.3
|
8.5
|
|
|
|
MSCI North
American
|
15.8
|
12.3
|
|
|
Source:
Morningstar Direct
Note: all
figures above show total returns.
Financials*
|
Jan
2024
|
Jan
2023
|
%
|
Profit
& Loss
|
£’000
|
£’000
|
Change
|
Fee
Revenue
|
|
|
|
Investment
Management fee
|
86,146
|
96,542
|
-10.8%
|
Performance
Fee
|
0
|
0
|
|
|
86,146
|
96,542
|
-10.8%
|
Bank
Interest & Other Income
|
997
|
299
|
|
|
87,143
|
96,841
|
|
Staff
Remuneration**
|
(25,864)
|
(29,104)
|
-11.1%
|
Fixed
Overheads
|
(4,578)
|
(4,622)
|
-1.0%
|
FX
Currency Translation (losses)/gains
|
(676)
|
3,878
|
|
Investment
Unrealised Gain
|
2,733
|
46
|
|
Operating
Profit
|
58,758
|
67,039
|
-12.4%
|
Taxation
|
(14,162)
|
(12,724)
|
|
Net
Profit
|
44,596
|
54,315
|
-17.9%
|
Dividends
|
(38,967)
|
(48,876)
|
|
Retained
profit
|
5,629
|
5,439
|
|
Balance
Sheet |
|
|
|
Fixed
Assets
|
51
|
75
|
|
Investments
|
7,672
|
6,960
|
|
Assets
(inc cash at bank and investment in Gilts & Bonds)
|
118,354
|
107,524
|
|
Liabilities
|
(22,558)
|
(16,879)
|
|
Net
Assets
|
103,519
|
97,680
|
|
Capital
& Reserves |
|
|
|
Called up
Share Capital
|
267
|
267
|
|
Share
Premium***
|
57
|
57
|
|
Share
Discount***
|
(494)
|
(416)
|
|
Treasury
Share Reserve†
|
0
|
(288)
|
|
Profit
& Loss Account
|
103,689
|
98,060
|
|
Shareholders'
Funds
|
103,519
|
97,680
|
|
*
LTL 's year
end 2024 and year end 2023 figures above are based on published
financial statements. LTL 's year end 2023 figures in L TIT'S
Annual Report last year were based on unaudited management
accounts. This therefore results in differences when compared with
L TIT's Annual Report last year, as last year's Report contained
LTL unaudited management account numbers for year ending 31 January
2023, which in this year's Annual Report are using numbers based on
published Financial Statements.
** Staff
costs include permanent staff remuneration, social security,
temporary apprentice levy, introduction fees and other staff
related costs. No more than 25% of fees (other than those earned
from LTIT) can be paid as permanent staff remuneration.
*** The
Share Premium and Share Discount account for the difference in the
cost and resale of shares that were held in Treasury.
† The
Treasury Share Reserve accounts for the difference between the cost
and current value of the remaining shares held in
Treasury.
Five
Year History*
|
Jan
2024
|
Jan
2023
|
Jan
2022
|
Jan
2021
|
Jan
2020
|
Operating
Profit Margin
|
64%
|
69%
|
66%
|
66%
|
65%
|
Earnings
per share (£)
|
1,673
|
2,038
|
2,463
|
2,340
|
2,237
|
Dividends
per share (£)
|
1,462
|
1,841
|
1,994
|
1,817
|
1,619
|
Total
Staff Cost as % of Fee Revenue
|
30%
|
30%
|
32%
|
30%
|
31%
|
Opening
FUM (£m)
|
18,626
|
21,215
|
22,802
|
21,450
|
16,260
|
Changes in
FUM (£m)
|
(2,751)
|
(2,589)
|
(1,587)
|
1,352
|
5,190
|
–
of market movement
|
657
|
338
|
331
|
1,200
|
2,781
|
–
of net new fund (outflows)/inflows
|
(3,408)
|
(2,927)
|
(1,918)
|
152
|
2,409
|
Closing
FUM (£m)
|
15,875
|
18,626
|
21,215
|
22,802
|
21,450
|
LT Open
ended funds as % of total
|
62%
|
65%
|
70%
|
73%
|
73%
|
* LTL’s
year end figures above are based on published financial statements.
LTL’s year end 2023 figures in LTIT’s Annual Report last year were
based on unaudited management accounts. This therefore results in
differences when compared with LTIT’s Annual Report last year, as
last year’s Report contained LTL unautited management account
numbers for year ending 31 January 2023, which in this year’s
Annual Report are using numbers based on published Financial
Statements.
|
Jan
2024
|
Jan
2023
|
Jan
2022
|
Jan
2021
|
Jan
2020
|
Client
Relationships
|
|
|
|
|
|
– Pooled
funds
|
5
|
5
|
5
|
5
|
4
|
– Separate
accounts
|
16
|
17
|
18
|
17
|
17
|
Ownership
|
Jan
2024
|
Jan
2023
|
Jan
2022
|
Michael
Lindsell and spouse
|
9,578
|
9,650
|
9,650
|
Nick Train
and spouse
|
9,578
|
9,650
|
9,650
|
The
Lindsell Train Investment Trust plc
|
6,378
|
6,450
|
6,450
|
Other
Directors/employees
|
1,126
|
893
|
778
|
|
26,660
|
26,643
|
26,528
|
Treasury
Shares
|
0
|
17
|
132
|
|
26,660
|
26,660
|
26,660
|
Board
of Directors
Rory
Landman Independent
Non-Executive
Julian
Bartlett Independent
Non-Executive
James
Bullock* Director
Jessica
Cameron** Director
Michael
Lim Director,
IT & Company Secretarial
Michael
Lindsell Chief
Executive Officer & Portfolio Manager
Jane
Orr Non-Executive
Joss
Saunders Chief
Operating Officer
Nick
Train Chairman
and Portfolio Manager
* Appointed
as a Director on 29 May 2024
**
Appointed as a Director on 27 May 2024
Employees
|
Jan
2024
|
Jan
2023
|
Investment
Team (including three Portfolio Managers)
|
6
|
7
|
Client
Servicing and Marketing
|
7
|
9
|
Operations
and Administration
|
10
|
11
|
Fixed Term
Contractors
|
2
|
1
|
Total
Employees
|
25
|
28
|
Non-Executive
directors
|
3
|
2
|
Total
Headcount
|
28
|
30
|
LTIT
Directors’ valuation of LTL
|
31
Mar 2024
|
31 Mar
2023
|
Notional
annualised net profits (A)* (£’000)
|
29,240
|
35,554
|
Funds
under Management less LTIT holdings (B) (£’000)
|
15,180,432
|
18,530,045
|
Normalised
notional net profits as % of FUM A/B = (C)
|
0.193%
|
0.192%
|
% of FUM
(D) (see table below to view % corresponding to C)
|
1.90%
|
1.90%
|
Valuation
(E) i.e. B x D (£’000)
|
288,428
|
352,071
|
Number of
shares (F)^
|
26,660
|
26,647
|
Valuation
per share in LTL i.e. E / F
|
10,818.76
|
13,212.40
|
* Notional
annualised net profits are made up of:
–
annualised fee revenue, based on 6-mth average fee rate applied to
most recent month-end unaudited AUM
–
annualised fee revenue excludes performance fees
–
annualised interest income, based on 3-mth average
– notional
staff costs of 45% of annualised fee revenue
–
annualised operating costs (excluding staff costs), based on 3-mth
normalised average
^ The
increase in share in issue is due to the sale of shares from LTL's
Treasury to LTL's employees; these Treasury shares had been
purchased in prior years from other LTL employees.
Notional
annualised net profits*/FUM (%)
|
Valuation
of LTL - Percentage of FUM
|
0.15 to
0.16
|
1.70%
|
0.16 to
0.17
|
1.75%
|
0.17 to
0.18
|
1.80%
|
0.18 to
0.19
|
1.85%
|
0.19
to 0.20
|
1.90%
|
0.20 to
0.21
|
1.95%
|
0.21 to
0.22
|
2.00%
|
0.22 to
0.23
|
2.05%
|
0.23 to
0.24
|
2.10%
|
LTL’s
Salary and Bonus Cap
LTL’s
salary and bonus expenses are capped at 25% of fees (other than
those earned from LTIT as governed by LTL’s Shareholders’
Agreement. Employer national insurance costs are excluded from the
restriction. This cap has been in place since the inception of both
LTL and LTIT which, alongside LTL’s intent to distribute to
shareholders dividends equivalent to 80% of its retained profits in
respect of each accounting year (subject to retaining sufficient
working and fixed and regulatory capital to enable LTL to continue
its business in a prudent manner) ensures LTL shareholders earn a
tangible reward from their investment in LTL.
The Board
has long recognised that it is important that LTL has the ability
to sufficiently reward potential successors, or, if it became
necessary to replace the founders, to recruit suitable outside
talent. As a consequence, since 2007 the Board has judged it
necessary to apply a higher notional salary cost of 45% of revenues
in calculating LTL’s net profits when determining the valuation of
LTL.
To put
this in context, LTL’s total salary and bonus expenses (including
employer national insurance payments) have averaged 36% of revenues
since 2001. Currently a peer group of quoted fund managers exhibits
an average remuneration costs to revenue of 42%, with the salary to
revenue of peers with FUM equivalent to LTL is slightly higher at
44%. The Board therefore believes that a notional salary to revenue
ratio of 45% makes sufficient allowance for the eventualities
described above.
Whilst the
25% salary and bonus cap remain in place for now, both the LTL and
LTIT Boards recognise that it may be necessary to review this limit
in the future.
Appendix
2
Share
Capital
At 31
March 2024 and 31 March 2023, and up to the date of this report,
the Company had an authorised and issued share capital comprising
200,000 Ordinary Shares of 75p nominal value each. At 31 March 2024
the Ordinary Share price was £801.00 (31 March 2023:
£1,052.50).
Income
entitlement
The
Company’s revenue earnings are distributed to holders of Ordinary
Shares by way of such dividends (if any) as may from time to time
be declared by the Directors and approved by the
shareholders.
Capital
entitlement
On a
winding up of the Company, after settling all liabilities of the
Company, holders of Ordinary Shares are entitled to a distribution
of any surplus assets in proportion to the respective amounts paid
up or credited as paid up on their shares.
Voting
entitlement
Subject to
any rights or restrictions attached to any shares, on a show of
hands, every member who is present in person has one vote and every
proxy present who has been duly appointed has one vote. However, if
the proxy has been duly appointed by more than one member entitled
to vote on the resolution, and is instructed by one or more of
those members to vote for the resolution and by one or more others
to vote against it, or is instructed by one or more of those
members to vote in one way and is given discretion as to how to
vote by one or more others (and wishes to use that discretion to
vote in the other way) he or she has one vote for and one vote
against the resolution. Every corporate representative present who
has been duly authorised by a corporation has the same voting
rights as the corporation. On a poll, every member present in
person or by duly appointed proxy or corporate representative has
one vote for every share of which they are the holder or in respect
of which their appointment as proxy or corporate representative has
been made.
A member,
proxy or corporate representative entitled to more than one vote
need not, if they vote, use all their votes or cast all the votes
they use the same way. In the case of joint holders, the vote of
the senior who tenders a vote shall be accepted to the exclusion of
the votes of the other joint holders, and seniority shall be
determined by the order in which the names of the holders stand in
the register of members. A member is entitled to appoint another
person as his proxy to exercise all or any of their rights to
attend and to speak and vote at a meeting of the
Company.
The
appointment of a proxy shall be deemed also to confer authority to
demand or join in demanding a poll. Delivery of an appointment of
proxy shall not preclude a member from attending and voting at the
meeting or at any adjournment of it. A proxy need not be a member.
A member may appoint more than one proxy in relation to a meeting,
provided that each proxy is appointed to exercise the rights
attached to a different share or shares held by them.
Transfers
There are
no restrictions on transfers of Ordinary Shares except: a) dealings
by Directors, Persons Discharging Managerial Responsibilities and
their connected persons which may constitute insider dealing or are
otherwise prohibited by the rules of the FCA; b) transfers to more
than four joint holders; c) transfers to US persons other than as
specifically permitted by the Directors; d) if, in the Directors’
opinion, the assets of the Company might become “plan assets” for
the purposes of US ERISA 1974; and e) transfers which in the
opinion of the Directors would cause material legal, regulatory,
financial or tax disadvantage to the Company.
Appendix
3
Agreements
with Service Providers
Investment
Management Agreement
In
accordance with an Investment Management Agreement ('IMA')
originally dated 21 December 2000 (last revised in June 2024)
between the Company and LTL, LTL has been providing investment
management services to the Company.
Fees
The
Investment Management Fee is payable at the annual rate of 0.60 per
cent. of the lower of (a) the Market Capitalisation of the Company
and (b) the Net Asset Value of the Company, calculated
daily.
The
Performance Fee is calculated as 10% of the value of any positive
relative performance versus the benchmark in a financial year.
Relative performance is measured by taking the lower of the NAV or
Average Market Price (defined as the average price over the last
month of the performance period), taking into account dividends, at
the end of each financial year and comparing the percentage annual
change with the total return of the benchmark. A performance fee
will only be paid out if the annual change is both above the
benchmark and is a positive figure. Relative performance will be
carried forward in years where the Manager is not eligible for a
performance fee based on these two criteria.
During the
year the Directors reviewed the performance of the Manager and
consider that the continued engagement of LTL under the existing
terms is in the best interests of the Company and shareholders.
Michael Lindsell did not participate in the review as he is an
employee and shareholder of the Manager.
In
addition to the day to day management of investments, the Manager
advises the Board on liquidity and borrowings and liaises with
major shareholders. The Manager has a stated policy on stewardship
and engagement with investee companies, which the Board has
reviewed and endorses, and provides verbal reports to the Board
where any concerns or issues have been raised.
Administration,
Company Secretarial and Management Services Agreement
Accounting,
company secretarial and administrative services are provided by
Frostrow Capital LLP (“Frostrow”) pursuant to an agreement dated 30
October 2020. With effect from 1 November 2020, Frostrow is
entitled to receive from the Company an annual fee of 0.11 per
cent. of the Company’s Net Asset Value up to £150 million plus 0.05
per cent. of that part of the Company’s Net Asset Value in excess
of £150 million. The agreement is terminable by either party on not
less than six months’ notice.
Details of
the fees paid to Frostrow are given in note 4 to the Financial
Statements. The services provided by Frostrow since their
appointment were also reviewed during the year and the Board
considered it to be in the best interests of the Company to
continue Frostrow’s appointment under the existing
terms.
Other
third-party service providers
In
addition to the Manager and Administrator, the Company has engaged
Link Group to maintain the share register of the Company, and The
Northern Trust Company, London Office as the Company’s custodian.
The agreements for these services were entered into after careful
consideration of their terms and their cost-effectiveness for the
Company.
Additional
Shareholder Information (unaudited)
Glossary
of Terms and Alternative Performance Measures (“APM”)
(unaudited)
AIC
Association
of Investment Companies.
Alternative
Investment Fund Managers Directive (“AIFMD”)
The
Alternative Investment Fund Managers Directive (the “Directive”) is
a European Union Directive that entered into force on 22 July 2013.
The Directive regulates EU fund managers that manage alternative
investment funds (this includes investment trusts).
Alternative
Performance Measure (“APM”)
An
alternative performance measure is a financial measure of
historical or future financial performance, financial position or
cash flow that is not prescribed by the relevant accounting
standards. The Company’s APMs are the discount and premium,
dividend yield, share price and NAV total return and ongoing
charges as defined within this Glossary. The Directors believe that
these measures enhance the comparability of information between
reporting periods and aid investors in understanding the Company’s
performance. The measures used for the year under review have
remained consistent with the prior year.
Benchmark
With
effect from 1 April 2021 the Company’s comparator benchmark is the
MSCI World Index total return in Sterling.
Prior to 1
April 2021 the benchmark was the annual average redemption yield on
the longest- dated UK government fixed rate (1.625% 2071)
calculated using weekly data, plus a premium of 0.5%, subject to a
minimum yield of 4.0%.
Discount
and premium (APM)
If the
share price of an investment trust is higher than the Net Asset
Value (NAV) per share, the shares are trading at a premium to NAV.
In this circumstance the price that an investor pays or receives
for a share would be more than the value attributable to it by
reference to the underlying assets. The premium is the difference
between the share price (based on share prices) and the NAV,
expressed as a percentage of the NAV.
A discount
occurs when the share price is below the NAV. Investors would
therefore be paying less than the value attributable to the shares
by reference to the underlying assets.
A premium
or discount is generally the consequence of supply and demand for
the shares on the stock market.
The
discount or premium is calculated by dividing the difference
between the share price and the NAV by the NAV.
|
As
at
|
As
at
|
|
31
March
|
31
March
|
|
2024
|
2023
|
|
£
|
£
|
Share
Price
|
801.00
|
1,052.50
|
Net Asset
Value per Share
|
1,026.43
|
1,056.95
|
Discount
to Net Asset Value per Share
|
22.0%
|
0.4%
|
Dividend
yield (APM)
A
financial ratio that indicates how much a company pays out in
dividends each year relative to its share price. Dividend yield is
represented as a percentage and can be calculated by dividing the
value of dividends paid in a given year per share held by the share
price.
The
figures disclosed on pages 5, 14 and 15 of the Annual Report have
been calculated as shown below:
|
2024
|
2023
|
Total
Dividends declared per Ordinary Share (a)
|
£51.50
|
£51.50
|
Closing
price per Ordinary Share on 31 March (b)
|
£801.00
|
£1,052.50
|
Dividend
Yield (a) ÷ (b)
|
6.4%
|
4.9%
|
ESG
Environmental,
social and governance.
Leverage
The AIFMD
leverage definition is slightly different from the Association of
Investment Companies’ method of calculating gearing and is defined
as follows: any method by which the AIFM increases the exposure of
an AIF it manages whether through borrowing of cash or securities,
or leverage embedded in derivative positions.
For the
purposes of the AIFMD, leverage is any method which increases the
Company’s exposure, including the borrowing of cash and the use of
derivatives. It is expressed as a ratio between the Company’s
exposure and its net asset value.
The
MSCI requires the Company to include the following statement in the
Annual Report.
MSCI World
Index total return in Sterling (the Company's comparator
Benchmark)
The MSCI
information (relating to the Benchmark) may only be used for your
internal use, may not be reproduced or redisseminated in any form
and may not be used as a basis for or a component of any financial
instruments or products or indices. None of the MSCI information is
intended to constitute investment advice or a recommendation to
make (or refrain from making) any kind of investment decision and
may not be relied on as such. Historical data and analysis should
not be taken as an indication or guarantee of any future
performance analysis, forecast or prediction. The MSCI information
is provided on an “as is” basis and the user of this information
assumes the entire risk of any use made of this information. MSCI,
each of its affiliates and each other person involved in or related
to compiling, computing or creating any MSCI information
(collectively, the “MSCI Parties”) expressly disclaims all
warranties (including, without limitation, any warranties of
originality, accuracy, completeness, timeliness, non-infringement,
merchantability and fitness for a particular purpose) with respect
to this information. Without limiting any of the foregoing, in no
event shall any MSCI Party have any liability for any direct,
indirect, special, incidental, punitive, consequential (including,
without limitation lost profits) or any other damages.
(www.msci.com).
Net Asset
Value (“NAV”) per Ordinary Share
The NAV
per Ordinary Share is Shareholders’ funds expressed as an amount
per individual share. Equity Shareholders’ funds are the total
value of all the Company’s assets, at current market value, having
deducted all current and long-term liabilities and any provision
for liabilities and charges.
The NAV
per Ordinary Share of the Company is announced to the market
weekly.
The
figures disclosed on pages 5, 14 and 15 of the Annual Report have
been calculated as shown below:
|
2024
|
2023
|
‘000
|
‘000
|
Net Asset
Value (a)
|
|
£205,285
|
£211,390
|
Ordinary
Shares in issue (b)
|
|
200
|
200
|
Net Asset
Value per Ordinary Share (a) ÷ (b)
|
|
£1,206.43
|
£1,056.95
|
Ongoing
charges (APM)
Ongoing
charges are expenses of a type that are likely to recur in the
foreseeable future, whether charged to capital or revenue, and
which relate to the operation of the Company as an investment
trust, excluding the costs of acquisition or disposal of
investments, financing costs and gains or losses arising on
investments. Ongoing charges are based on costs incurred in the
year as being the best estimate of future costs and include the
annual management charge but not the performance fee. The
calculation methodology is set out by the Association of Investment
Companies.
The
figures disclosed on pages 5 and 15 of the Annual Report have been
calculated as shown below:
|
2024
|
2023
|
£'000
|
£'000
|
Total
operating expenses (a)
|
1,692
|
1,829
|
Average
Net Asset Value (b)
|
203,091
|
211,310
|
Ongoing
Charges excluding synthetic costs (a) ÷ (b)
|
0.8%
|
0.9%
|
Ongoing
Charges including the charges of the underlying funds (Ws Lindsell
Train North American Fund) synthetic costs
|
0.9%
|
0.9%
|
Revenue
return per Share
The
revenue return per share is the revenue return profit for the year
divided by the weighted average number of ordinary shares in issue
during the year.
SASB
The
Sustainability Accounting Standards Board.
SASB
Materiality Map©
The
Materiality Map was developed by the SASB. It ranks issues by
industry based on two types of evidence: evidence that investors in
the industry are interested in the issue, and evidence that the
issue has the ability to impact companies within the
industry.
Share
price and NAV total return (APM)
These are
the returns on the share price and NAV respectively taking into
account both the rise and fall of share prices and valuations and
the dividends paid to Shareholders.
Any
dividends received by a Shareholder are assumed to have been
reinvested in either additional shares (for share price total
return) or the Company’s assets (for NAV total return).
The share
price and NAV total return are calculated as the returns to
Shareholders after reinvesting the net dividend in additional
shares on the date that the share price goes
ex-dividend.
The
figures disclosed on pages 5, 14 and 15 of the Annual Report have
been calculated at shown below:
|
|
Year Ended
31 March 2024
|
|
|
LTIT
NAV
|
LTIT
Share Price
|
NAV/Share
Price at 31 March 2024
|
a
|
£1,206.43
|
£801.00
|
Dividend
Adjustment Factor*
|
b
|
1.02
|
0.80
|
Adjusted
closing NAV/Share Price
|
c = a x
b
|
1,231.77
|
642.40
|
NAV/Share
Price at 31 March 2023
|
d
|
£1,056.95
|
£1,052.50
|
Total
return
|
((c/d)-1))
x100
|
+2.1%
|
-19.8%
|
* The
dividend adjustment factor is calculated on the assumption that the
dividends of £51.50 paid by the Company during the year were
reinvested into shares or assets of the Company at the cum income
NAV per share/share price, as appropriate, at the ex-dividend
date.
LTL total
return performance
The total
return performance for LTL is calculated as the return after
receiving but not reinvesting dividends received over the
year.
The figure
disclosed on page 5 of the Annual Report has been calculated as
shown below:
|
|
LTL
valuation
|
Valuation
at 31 March 2023
|
a
|
£13,212
|
Valuation
at 31 March 2024
|
b
|
£10,819
|
Dividends
paid during the year
|
c
|
£1,462
|
Total
return
|
{((b-a)+c)/a}x100
|
-7.0%
|
TCFD
Task Force
on Climate-Related Financial Disclosures.
Treasury
Shares
Shares
previously issued by a company that have been bought back from
Shareholders to be held by the company for potential sale or
cancellation at a later date. Such shares are not capable of being
voted and carry no rights to dividends.
2024 Accounts
The
figures and financial information for 2024 are
extracted from the Annual Report and financial statements for the
year ended 31
March 2024 and
do not constitute the statutory accounts for the
year.
The
Annual Report and financial statements include the Report of the
Independent Auditor which is unqualified and does not contain a
statement under either section 498(2) or section 498(3) of the
Companies Act 2006.
The
Annual Report and financial statements have not yet been delivered
to the Registrar of Companies.
2023 Accounts
The
figures and financial information for 2023 are
extracted from the published Annual Report and financial statements
for the period ended 31
March 2023
and do not constitute the statutory accounts for that
year.
The
Annual Report and financial statements have been delivered to the
Registrar of Companies and included the Report of the Independent
Auditor which was unqualified and did not contain a statement under
either section 498(2) or section 498(3) of the Companies Act
2006.
Annual report and financial
statements
Copies
of the Annual Report and financial statements will be posted to
shareholders in
mid June 2024 and will
be available on the Company’s website shortly and in hard copy
format from the Company Secretary.
The
Company's Annual Report
for the period ended 31
March 2024 has
been submitted to the Financial Conduct Authority and will shortly
be available for inspection on the National Storage Mechanism (NSM)
via https://data.fca.org.uk/#/nsm/nationalstoragemechanism.
The
Annual General Meeting will be held
on Wednesday, 4 September 2024.
Neither
the contents of the Company's website nor the contents of any
website accessible from hyperlinks on the Company's website (or any
other website) is incorporated into, or forms part of, this
announcement.
-
END
-
For
further information please contact
Victoria
Hale
Company
Secretary
For and on
behalf of Frostrow Capital LLP
020 3170
8732