REG-The Lindsell Train Investment Trust plc: Annual Financial Report for the year ended 31 March 2025
13/06/2025 07:02
Legal Entity Identifier: 213800VMBJH2TCFDZU08
13 June 2025
The Lindsell Train Investment Trust plc
(the “Company” or “LTIT”)
This announcement contains regulated information
Annual Financial Report for the year ended 31 March 2025
Financial Highlights for the Year
Performance Comparisons 2025 2024
Net Asset Value total return per Ordinary Share*^ -2.2% +2.1%
Share price total return per Ordinary Share*^ +9.0% -19.8%
MSCI World Index total return (Sterling) +4.8% +22.5%
UK RPI Inflation (all items) 3.2% 4.3%
* The Net Asset Value and the share price at 31 March 2025 have been
adjusted to include the Ordinary dividend of £51.50 paid on 13 September
2024, with the associated ex-dividend date of 8 August 2024.
^ Alternative Performance Measure (“APM”). See Glossary of Terms and
Alternative Performance Measures beginning on page 113 of the Annual Report.
Source: Morningstar and Bloomberg.
Five Year Historical Record
Net revenue Dividends Net Share
available for on Ordinary Dividends Asset Value price per
Gross Ordinary Shares per Ordinary per Ordinary Ordinary income Shares Cost Share Share Share
To 31 March £’000 £’000 £’000 £ £ £
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
2025 10,169 8,567 8,400 42.00 952.13 818.00
Principal Data
31 March 2025 31 March 2024 % Change
Shareholders’ funds (£’000) 190,426 205,285 -7.2%
NAV per Ordinary Share £952.13 £1,026.43 -7.2%
Discount to NAV^ 14.1% 22.0%
Share price per Ordinary Share £818.00 £801.00 +2.1%
Recommended final dividend per Ordinary Share £42.00 £51.50 -18.4%
Dividend yield^ 5.1% 6.4%
Ongoing Charges^ 0.8% 0.8%
(Loss)/Earnings per Ordinary Share – basic £(22.80) £20.97 -208.8%
Revenue £42.83 £51.07 -16.1%
Capital £(65.63) £(30.10) -118.1%
NAV total return^ † -2.2% +2.1%
Share price total return^ † +9.0% -19.8%
Benchmark (MSCI World Index in Sterling) † +4.8% +22.5%
^ Alternative Performance Measure (see Glossary beginning on page 113 of the
Annual Report).
† These are percentage change figures for the year to 31 March.
Please see Glossary of Terms beginning on page 113 of the Annual Report for an
explanation of terms used.
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 4, on page 104 of the Annual Report.
Performance and Benchmark
The performance and financial highlights are provided on pages 4 and 5 of the
Annual Report.
The Company compares its performance with and calculates its performance fee
relative to its benchmark, the MSCI World Index in Sterling.
Dividend
A final dividend of £42.00 per Ordinary Share (2024: a final dividend of
£51.50 per Ordinary Share) is proposed for the year ended 31 March 2025. If
this dividend is approved by shareholders at the Annual General Meeting, it
will be paid on Friday, 19 September 2025 to shareholders on the register at
close of business on Friday, 22 August 2025 (ex-dividend Thursday, 21 August
2025).
Annual General Meeting
The notice of the Annual General Meeting, scheduled for Thursday, 11 September
2025 at 11.00 a.m. at the Marlborough Suite, St Ermin’s Hotel, 2 Caxton
Street, London, SW1H 0QW, is provided on pages 105 to 110 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 on page
85 of the Annual Report.
Strategic Report
Business Review
The Directors present their Strategic Report for the Company for the year
ended 31 March 2025. 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 on pages 6 to 9 of the Annual Report
and the Manager’s Report on pages 12 to 13. The Company’s Investment
Objective and Investment Policy are set out on page 3 of the Annual 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 23.6%, 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 2025, 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 10
and 11 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.
Dividend Policy
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 2025 ordinary dividend.
All dividends have been distributed from revenue or revenue reserves.
Chairman’s Statement
The Company’s net asset value (‘NAV’) fell from £1,026.43 per share on
31 March 2024 to £952.13 per share on 31 March 2025, a fall of 7.2%. The NAV
total return of -2.2% was also negative but less so following the inclusion of
the dividend of £51.50 per share, paid in September 2024. The share price
total return was up 9.0% in the year to 31 March 2025, ahead of the MSCI World
Index’s total return of 4.8%, helped by the reduction of the share price
discount to the NAV from 22.0% to 14.1% over the 12-month period.
It has been disappointing to report that the Company’s NAV total return has
underperformed since the Company changed its benchmark to the MSCI World
Index. Against this background, it is important to remember that 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. Since the Company’s inception in 2001 long-term NAV total returns
were 12.2% per annum, well ahead of inflation of 3.5% per annum (measured by
the RPI index). However since 31 March 2021, the NAV total return was minus
0.4% per annum as compared with a rise of inflation of 7.4% per annum, which
indicates how much the Company’s short-term returns need to improve over
time in order to maintain its long-term record.
Three of the Company’s biggest quoted equity holdings, the London Stock
Exchange Group (‘LSEG’), Nintendo and RELX have driven performance over
the financial year in local currency with returns of 22%, 25% and 15%,
respectively. Such performance suggests that investors are beginning to
recognise the success that these companies have had in exploiting technology
to improve the products and services offered to their customers, in much the
same way as the so-called “Magnificent 7”, whose share price performances
have contributed so much to comparative index returns. Set against these
encouraging returns was the 29% negative total return from Diageo and, even
more significantly, the 16% negative total return from the holding in Lindsell
Train Limited (‘LTL’). LTL started the financial year at 33.6% of NAV and
ended it at 26.1%, after peaking at 48.7% in 2021 as indicated in the chart
below and was by far the biggest negative contributor to the Company’s
overall NAV total return performance. Further comments on the Company’s
quoted investment portfolio can be found in the Investment Manager’s Report
on pages 12 to 13 of the Annual Report.
As part of the Company’s ongoing efforts to engage with its shareholders,
QuotedData has been appointed to undertake independent third-party research at
the Company. This research offers an objective overview of the Company’s
performance, strategy, and outlook. It has been made available to both current
and prospective shareholders and can be accessed via the Company’s website.
Lindsell Train Limited
LTL’s valuation reflected a continued decline in its funds under management
(‘FUM’), from £15.2bn at 31 March 2024 to £11.4bn at 31 March 2025,
following client withdrawals. Consistent with the experience of your Company,
LTL’s clients have endured five years of cumulative underperformance and,
not surprisingly for a performance led business, some clients have sought
alternative strategies elsewhere. The attraction of passive index funds is
proving a particular competitive threat at a time when indices have
outperformed most active managers. In spite of these obvious headwinds, many
clients remain loyal, attracted by the consistency and rationality of the
investment approach and the performance track record prior to 2020 when
LTL’s strategies performed well for a number of years. Underpinning this
loyalty is the continued superior comparable business characteristics of
LTL’s investee companies, exemplified by higher returns on equity as well as
higher earnings and dividend growth. These features should in due course be
recognised and reflected in higher market values and better relative
performance.
Although LTL’s revenues and profits have fallen in its financial year to 31
January 2025, as shown in the review of LTL in Appendix 1 on page 93 of the
Annual Report, its operating profit margin has remained stable at 63%. This
shows how effective LTL’s salary and bonus cap has been in helping to
control LTL’s costs. Reflecting declining revenues, the dividends which LTL
paid to its shareholders fell by 17.2%. As LTL has retained 20% of its net
profits annually, it has built up cash reserves progressively, thereby
bolstering its financial security and flexibility. At 31 January 2025, LTL’s
net assets amounted to £108m, with £103m held as cash or in short-term
gilts/bonds less all liabilities and £9m invested in the Lindsell Train North
American Equity Fund. Such abundant financial resources not only contributed
12% to LTL’s profits before tax in the year to 31 January 2025, but also
give LTL the optionality to invest for future growth, for instance, with the
seeding of new fund products, as was the case with the launch of the North
American Equity Fund in 2020.
Whilst the co-founders, Nick Train and Michael Lindsell, remain committed to
LTL for at least the next seven years, as every year passes the contribution
to LTL from a new generation of successors rises. In recognition of this, LTL
incentivises these individuals with profit share and additional awards to
ensure that they build their ownership of LTL. The shares which they buy are
sold by the founders and your Company in the ratio of 75:25, which was the
original split of shareholdings immediately after LTL’s inception in 2000.
The Board views these sales as a vital investment in the future of LTL and
believes that in selling to LTL’s next generation, the Company will
ultimately create more value for the shares than the Company might give up
through reducing its shareholding. The LTL holding decreased from 6,378 to
6,301 shares in the year to 31 March 2025.
The Valuation of Lindsell Train Limited
The valuation methodology remains unchanged. 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 £50m as at 31 March 2025 (2024: £69m). As in previous years
the Board took professional advice in January 2025, which confirmed that the
methodology, first adopted in 2022, remained valid.
The Company’s Dividend
With dividends from LTL accounting for as much as 76% of the Company’s
revenues in its financial year to 31 March 2025, the quantum and trajectory of
the Company’s dividend is to a large extent determined by the fortunes of
LTL. Last year I wrote that, in order to sustain the Company’s annual
dividend, there needed to be evidence of a turnaround in LTL business. I am
sorry to say that has not happened. Indeed, LTL’s FUM have continued to
decline and even if the leading indicator of LTL’s fortunes, its
performance, were to turn around in the coming months, that trend would need
to be embedded for some time before we could have confidence that better
performance had translated into sustained net inflows.
The Company’s dividend policy is to retain as much net income as allowable
under Investment Trust regulations. However, following the policy this year
would have resulted in an outsized reduction in the annual dividend.
Consequently, the Board is proposing to pay a dividend equivalent to its net
income, which amounts to £42 per share, down 18.4% compared with 2024.
Share Split Proposal
Over the last decade the percentage of the Company’s shares held directly by
retail investors, as opposed to institutional investors, has increased. The
Board assumes that the number of individual holders has also increased because
investment platforms have accounted for a greater proportion of the
Company’s ownership. Having a share price with such a high denomination
militates against shareholders attempting to invest smaller amounts in the
Company. In order to improve the liquidity of the Company's shares the Board
proposes to split the Company’s shares on a 100-for-1 basis.
Following the share split, shareholders will receive 99 additional Ordinary
shares for each Ordinary Share held immediately prior to the split. The net
effect is that, following the split, shareholders will have 100 times as many
shares and the Company’s share price should, in theory, be 1/100th of what
it was previously. The share split will affect neither the value of any
shareholder’s overall investment in the Company, nor affect shareholder
rights. Shareholders will have the opportunity to vote on this proposal at the
forthcoming Annual General Meeting (‘AGM’), details of which can be found
under Notice of Meeting, on pages 105 to 110 of the Annual Report.
Articles of Association
In preparing for the Share Split, the Board is proposing to delete Article 5
of the Existing Articles. This will involve the removal of the concept of an
authorised share capital of the Company as well as the reference to the
Company’s share capital of £150,000 being divided into 200,000 Ordinary
Shares of 75p each.
A summary of the principal change to the Existing Articles can be found on
pages 37 and 38 of the Annual Report.
Board Changes
Since the year end the Board was delighted to welcome Sian Hansen, who was
appointed as a Director in June 2025 following a formal recruitment process. A
resolution proposing her election together with resolutions for those
Directors standing for re-election will be put to Shareholders at the
forthcoming AGM. As part of the normal succession planning Vivien Gould will
retire from the Board and as Senior Independent Director following the AGM.
In anticipation of her retirement, I would like to extend our thanks to Vivien
for her dedicated service. Throughout her tenure, her expertise, wealth of
knowledge and insightful guidance have been invaluable to the Board. We wish
Vivien all the best for the future. Helena Vinnicombe will succeed Vivien as
the Senior Independent Director.
The Annual General Meeting
This year’s AGM will be held at 11 a.m. on Thursday, 11 September 2025, 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 all companies in the 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
The unprecedented trade policies introduced by the US administration have
upended the assumptions embedded in the business strategy of most global
companies, as has been reflected in volatile stockmarkets. Companies will
develop responses as the new landscape becomes clearer. It is worth pointing
out that LTL’s investee companies sell more software or services than
tradeable goods. As such, LTL’s portfolios may be better placed to avoid the
full force of newly introduced tariffs. We also believe that ultimately the
utility of the products or services which our investee companies produce will
allow them to thrive, whatever tariff disruptions might be faced in the
immediate future. Durability and resilience are characteristics that we value
highly in all our companies, especially when it is found in less expected
places and therefore is more likely to be mispriced. Such characteristics have
arguably not been at the top of investors’ shopping lists in recent years.
If markets continue to exhibit heightened volatility in these uncertain times
perhaps that will change.
The performance of LTL’s investment strategies remains key to future
outcomes for your Company. Although the immediate past has been challenging
and the future is uncertain, the Board believes that LTL has the ability to
thrive once again and add significant value to your Company’s future
performance. This belief is based upon LTL’s consistent approach to
investment that has added value for investors in a differentiated way over 25
years, an increasingly experienced successor line-up, together with the
financial strength and flexibility referred to above.
Roger Lambert
Chairman
12 June 2025
Portfolio Holdings at 31 March 2025
(All ordinary shares unless otherwise stated)
% of Look through
Fair value net basis % of
Holding Security £’000 assets total assets†
6,301 Lindsell Train Limited 49,608 26.1 26.1
232,900 London Stock Exchange 26,679 14.0 14.3
410,000 Nintendo 21,464 11.3 11.3
12,500,000 WS Lindsell Train North American
Equity Fund Acc* 19,959 10.5 –
363,000 RELX 14,059 7.4 7.7
198,890 Unilever 9,169 4.8 5.1
425,000 Diageo 8,560 4.5 4.7
124,365 Mondelez International Inc. 6,537 3.4 3.7
1,043,800 A.G. Barr 6,398 3.4 3.4
94,220 PayPal 4,760 2.5 2.8
195,331 Universal Music Group 4,155 2.2 2.2
73,270 Heineken 4,099 2.1 2.2
420,000 Finsbury Growth & Income Trust PLC* 3,713 1.9 –
8,430 Thermo Fisher Scientific 3,250 1.7 2.0
39,099 Laurent Perrier 3,226 1.7 1.7
Indirect Holdings – – 10.2
Total Investments 185,636 97.5 97.4
Net Current Assets 4,790 2.5 2.6
Net Assets 190,426 100.0 100.0
† Look-through basis: Percentages held in each security is adjusted upwards
by the amount of securities held by Lindsell Train managed funds. 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 Lindsell Train funds.
* LTL managed funds
Leverage
We detail below the equity exposure of the Funds managed by LTL as at 31 March
2025:
Net Equity
Exposure
WS Lindsell Train North American Equity Fund Acc 99.8%
Finsbury Growth and Income Trust PLC 96.8%
Analysis of Investment Portfolio at 31 March 2025
Breakdown by Location of Listing(look-through basis)^
UK* 65.7%
USA 16.5%
Japan 11.6%
Europe excluding UK 6.2%
Rest of World 0.0%
Total 100.0%
Breakdown by Location of Underlying Company Revenues
(look-through basis)^
USA** 35.6%
Europe excluding UK** 23.7%
UK** 23.1%
Rest of World 13.5%
Japan 4.1%
100.0%
Breakdown by Sector
(look-through basis)^
Financials 47.2%
Consumer Staples 22.9%
Communication Services 15.8%
Industrials 9.3%
Information Technology 2.3%
Health Care 2.1%
Consumer Discretionary 0.4%
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 26.1% and is not listed.
** LTL accounts for 11 percentage points of the Europe figures, 12 percentage
points of the UK figures, 3 percentage points of the USA figures and 0
percentage point of the ROW figure.
Manager’s Report
Of course we are disappointed with our investment performance last year and,
indeed, the last few years. The reasons for the disappointing performance are
easily stated. We have not had enough exposure to the US technology bull
market and we have had too much in what have been in the past steadily growing
consumer brand-owning companies, but whose growth since Covid has slowed. We
have tried to digest these lessons and respond accordingly.
As to that, although we have added two new holdings over the last 18 months,
with the most recent, Thermo Fisher Scientific, discussed below, what we have
not done is make any radical changes to the portfolio. This is because we, by
and large, remain confident about the investment merits of the shape of the
portfolio and its constituents. But in addition, we know that any capitulation
– let’s say for instance: selling, Unilever to buy Nvidia – runs the
risk of transacting at the bottom and top prices respectively making things
even worse for shareholders.
Or, at least that was the case until the extraordinary events of the first
four months of 2025, that have triggered volatility in the NASDAQ tech-leaders
and US equity assets in general. Through this period it has been reassuring to
us that your portfolio of quoted investments (excluding the stake in unquoted
Lindsell Train Limited) has demonstrated some resilience. For instance, the
shares of a number of our longstanding consumer holdings such as AG Barr,
Heineken, Mondelez and Unilever have all gone up in 2025 year-to-date, as this
report is being written end of May 2025. It is important to state here that
the reason these consumer shares are up is that, so far, their businesses have
exhibited the kind of resilience and steady growth that made them successful
investments over previous decades. For instance, the most recent dividend
increases from the four listed above are 11.0%, 12.5%, 10.5% and 6.0%
respectively. Of late, such dividend growth has seemed pedestrian and almost
irrelevant to investors focused on tech capital gains. But if that dividend
growth can be maintained over time, driven by growing cash flows, their shares
will go up more. There are reasons to believe this will be the case.
Not every consumer stock in the portfolio has done well in 2025.
Laurent-Perrier is down 7% and Diageo 21%. These falls are explained by
investor concerns that consumers will cut back on consumption of premium
products, such as fine champagne and top-end spirits. It also results from
this pair being, exposed to tariffs. In our opinion, these concerns are
temporary and we expect the long-term trend of consumers drinking lower
volumes of alcohol, and instead drinking better quality products, will
reassert itself – to the benefit of both companies. Diageo has really been
in the eye of the storm, because the US is such an important market for it, at
nearly 50% of profits. But we think this profit share could be seen as a
strategic advantage again one day. All attention is on the malign effect of
tariffs, but little thought has been given, in our opinion, to the other side
of President Trump’s stated policy, which is for substantial tax cuts and a
strong domestic economy. A booming US economy would be a big positive for
Diageo.
Meanwhile, and even more encouraging, we think, the big holdings we have in
companies that offer participation in technology-led growth, which
demonstrated strong performance during 2024, have also held up or appreciated
in 2025 to date. This is notably true of the London Stock Exchange Group
(“LSEG”), Nintendo and RELX, make up nearly 45% of the quoted portfolio.
This is in part because none of the three are listed on NASDAQ and have, as a
result, not been caught up in the boom there. So there has been no reason for
them to fall. Yet, consider – LSEG has a promising joint venture with
Microsoft, Nintendo is using the current generation of Nvidia chips in its
latest console to enhance the gaming experience and RELX has been at the
forefront of actually making a commercial success of Artificial Intelligence.
We hope this trio still offers a lot of growth and there remains the
possibility they could be “discovered” by global investors now looking
outside the US for growth companies.
It is clear to all of us at LTL that we must do better for shareholders in the
Company and, indeed, all our clients. We intend to do so by sticking with our
preferred investment and industry ideas – companies with Data or
Intellectual Property whose utility is enhanced by developments in technology,
and consumer brands that remain relevant and aspirational for consumers. The
portfolio is already well exposed to companies with these characteristics.
Nonetheless, we hope we can do better and will make changes where we deem
appropriate; for instance initiating holdings, funded by trimming existing
positions. Last year we added Universal Music Group, owner of some of the
world’s most valuable music copyrights. And recently Thermo Fisher
Scientific (“Thermo”). The investment case for the latter is outlined
below by my colleague Ben van Leeuwen.
“Thermo is a company we have long admired, and benefits from the same
industry tailwinds supporting the pharmaceutical industry (we all want to be
healthy, and well-funded R&D-driven drug discovery is likely the best way to
achieve this) without taking on the risk of patent approval and expiry. The
largest player in global life sciences tools and diagnostics, Thermo, provides
lab equipment, testing, and contracted research and manufacturing services to
the pharmaceutical industry, benefiting from the inexorable rise in government
and commercial healthcare spend. Historically this has seen R&D budgets expand
by at least 3-5% p.a. (at worst, during the financial crisis this was flat).
Whether aided by AI, or the shift to large molecule biologics (both putative
disruptors to the traditional prescription pharmaceutical model discussed
above), discovery, testing, and manufacture requirements grow as complexity
increases, to the benefit of Thermo. With ‘trusted partner’ status (some
customers spend over a billion dollars with them), regulatory support (certain
patent approvals even specify the use of Thermo’s products), and a high 80%+
weighting to recurring revenues, sales are sticky, whilst double-digit margins
and returns to equity are competitive and increasing with scale.
Thermo aspires to high-single-digit revenue growth (comprised of industry
growth boosted by ongoing share gains, positive pricing, and bolt-on
acquisitions) and mid-teens USD earnings growth (supported by c.50bps of
margin expansion and buybacks). Yet, a flat share price for the past five
years, as customers and shareholders alike digest the covid boom, leaves
Thermo on a low-20s earnings multiple, making this, we believe, an attractive
point to access the shares. Whilst the dividend yield is low, the 15% dividend
per share compound growth rate over this same five-year period is impressive
and a powerful underlying ingredient for the compounding we seek.”
Sometimes innovation and rapid growth are all that matter in equity markets.
We are invested in some innovative companies, like Thermo; innovation can be
found in some surprising places, such as Diageo’s Nitrosurge product which
is helping drive growth for Guinness. But there are other times when
durability and predictability become more highly prized. There are good
grounds for believing that Barr’s IRN-BRU, Heineken, Cadbury and
Unilever’s Dove franchise will continue to generate inflation-protected cash
flow growth for many decades to come. And that such durability is rare in the
corporate sector and deserves to be highly valued. Looking ahead our job is to
get the balance between innovation and durability right within the portfolio
and hope that will bring a return to more competitive absolute (and relative)
returns for your Company.
Nick Train
Investment Manager
Director, Lindsell Train Limited
12 June 2025
Performance
Whilst the Board is disappointed that the Company has underperformed in the
short term, the Investment Manager’s report explains why the Company’s
portfolio remains appropriate. The Board remains supportive of the Investment
Manager’s view. Please refer to the Chairman’s Statement beginning on page
6 of the Annual Report for further information.
Whilst performance is compared with the MSCI World Index in Sterling, the
Company’s portfolio is constructed and managed without reference to a stock
market index. The Investment Manager selects investments based on the
assessment of their long-term value, thereby seeking to achieve the investment
objective of the Company.
Prospects
The Board continues to support fully the Manager’s strategy and to believe
that it will 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 12.2% compared with a
total return from the Company's combined benchmark index of 5.3% both
calculated on an annualised basis.
The Directors provide an explanation in the Viability Statement on pages 20
and 61 of the Annual Report 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 uses certain financial and non-financial KPIs to monitor and assess
the performance of the Company in achieving its strategic aims.
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 (beginning on page 6 of
the Annual Report) and the Manager's Report (beginning on page 12 of the
Annual 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 2025 31 March 2024 % Change
NAV total return^ † -2.2% +2.1%
Share price total return^ † +9.0% -19.8%
Benchmark (MSCI World Index in Sterling) † +4.8% +22.5%
Recommended final dividend per Ordinary Share £42.00 £51.50 -18.4%
^ Alternative Performance Measure (see Glossary beginning on page 113 of the
Annual Report).
† These are percentage change figures for the year to 31 March.
Please see Glossary of Terms beginning on page 113 of the Annual Report 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.
31 March 2025 31 March 2024
Discount to NAV 14.1% 22.0%
Dividend yield 5.1% 6.4%
Ongoing charges 0.8% 0.8%
NAV total return -2.2% +2.1%
Share price total return +9.0% -19.8%
^ Further information on each of the Alternative Performance Measures and the
basis of their calculation can be found in the Glossary beginning on page 113
of the Annual Report.
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 Company's Approach to Risk Management
For each risk identified, during the year the Audit Committee considers both
the likelihood and impact of the risk and then assigns an inherent risk score.
The scoring of the risk is then reconsidered once the respective key
mitigations are applied and a residual risk score is assigned.
The Board’s policy on risk management has not materially changed during the
course of the reporting period and up to the year end.
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. 76% 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 portfolio concentration 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 32 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 beginning on page 87 of the Annual Report.
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
beginning on page 87 of the Annual Report.
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 UK 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 a 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 uncertainties and 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 and the threat of trade tariffs; • 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 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 beginning on page 6 of the Annual Report and the
Manager's Report beginning on page 12 of the Annual 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 73.9% of net assets. The other 26.1% is the unlisted
investment in LTL, which is not readily realisable.
• Based on historic analysis, excluding the holding in the LTL fund, the
Board believes that 96.2% of the current portfolio could be liquidated within
30 business days with 93.7% 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 0.8%, 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 six 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 23.6%, 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 be updated each year in the
Company’s Annual Report.
Engaging with the Company’s Stakeholders
The following ‘Section 172’ disclosure, 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.
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
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. • The Board has engaged the services of QuotedData to undertake independent third-party
research.
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 beginning on page 6 of the Annual Report and Appendix 4 beginning on page 104 of the Annual Report 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.
Other 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. The Audit Committee met with BDO LLP to review the audit plan for the year, agree their remuneration, review the outcome of the annual audit and to assess
the quality and effectiveness of the audit process. Please refer to the Audit Committee Report beginning on page 59 of the Annual Report for further information.
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 potential opportunities. The Board encourages the Company’s Manager to engage with companies and in doing so expects ESG issues to be an important 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 32 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. • The Board agreed to proceed with a share split of the Company’s shares which will be proposed for shareholder
approval at the forthcoming Annual General Meeting. • Further information can be found on pages 36, 37, 38 of the Annual Report and within the Notice of Meeting beginning on page 105 of the Annual Report.
• Board Composition. • The Board has in place a refreshment programme which is reviewed annually by the Nomination Committee. • Cornforth Consulting was appointed by the Board in January 2025 to assist with the appointment of Sian Hansen, who became a member of the Board on 4
June 2025 and will offer herself for election by shareholders at the forthcoming Annual General Meeting. • In accordance with the Board's Succession Plan Vivien Gould will retire at the conclusion of the forthcoming 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, MUFG Corporate Markets 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 UK Listing Rules requirement to report against the TCFD framework.
The Company’s TCFD Product Report can be found on the Company's website
together with a link to the Investment Manager’s TCFD Entity Report.
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, Lindsell Train Limited (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 prioritise 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 (RELX), or encouraging environmental progress and
developing best practice (e.g., Diageo, 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 a 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 less 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 LTL’s 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 which was approved by the IIGCC. LTL selected to use the Paris
Aligned Investment Initiative Net Zero Investment Framework (NZIF) target
setting approach. Of the four specific targets recommended by NZIF, LTL
believed it most appropriate to adopt a portfolio coverage target, given the
strategic nature of its investment approach and the well below average carbon
footprints of its portfolios. LTL has 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
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. During 2024, LTL published its TCFD Product Reports ahead of the FCA’s
deadline, including for the Lindsell Train Investment Trust. The report can be
found on LTL’s website, and includes analysis on the Company’s Scope 1, 2
& 3 emissions relative to the benchmark.
Further, using Morningstar’s carbon metrics calculations, LTL notes that
LTIT’s listed equity holdings have a significantly lower weighted average
carbon intensity than its comparable benchmark.
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.
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 31 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 annually, LTL has been able to identify
which portfolio companies should be prioritised for engagement on their
progress.
Key Engagement Case Studies
Company name: Unilever
Sector: Consumer Franchises
Engagement topics: Capital Allocation and Strategy
Date of engagements: July 2024 and March 2025
Engagement format: Calls
Reason for Engagement: Ongoing engagement regarding Unilever’s capital
allocation and strategy.
During Q3 2024, following news that Unilever will spin off its ice cream
business, we renewed our engagement with CFO, Fernando Fernandes, to review
capital allocation and strategic priorities. We were particularly interested
to understand why Unilever continues to maintain substantial debt on its
balance sheet. Fernandes reconfirmed Unilever’s capital allocation policy,
which remains unchanged, noting that the business priority remains focused on
increasing volume growth to ‡ 2%, up from 1% at present. From a strategic
perspective, the CFO is acutely alert to the need to be in premium segments
with global scalability and so future capital allocation will be fundamentally
concentrated in the US and India where the largest opportunities exist.
Similarly, prestige beauty represents one third of growth in Health &
Wellbeing and will be c.8% of revenue once the ice cream business has been
sold. This is a strong business which has grown for 14 consecutive quarters,
but management is aiming for it to be a £10bn business and so ensuring
adequate capital allocation to priority segments such as this is important.
Next steps: The engagement regarding Unilever’s capital allocation and
strategy has been productive and insightful. But as with all our companies we
will continue to monitor progress closely and engage with management on
aspects of their corporate strategy on an ongoing basis.
Company name: Mondelez
Sector: Consumer Franchises
Engagement topic: Human Rights / Modern Slavery
Date of engagement: May 2024
Engagement format: Call
Reason for Engagement: Discussion of two shareholder resolutions
We have engaged regularly with Mondelez on the matter of Modern Slavery, as
well as shareholder pressure to create an Independent Chair role.
On the latter, in general we have a preference for the Chair to be independent
and hence we abstained on this resolution. Our reticence to vote against,
reflects on our understanding that management view the existing set-up as
appropriate for their business, a position with which we have sympathy.
With regards to modern slavery, our engagement during the second quarter also
centred on a shareholder proposal requesting that the company adopt and report
on targets to eliminate child labour in its cocoa supply chain by 2025. Having
sought further clarification from Mondelez, as per last year, we voted against
this resolution on the basis that the company has provided significant
disclosure in this regard and our belief that the target is unrealistic.
Next steps: Engagement complete.
Company name: Sage
Sector: Information Technology
Engagement topic: Modern Slavery
Date of engagement: June and November 2024
Engagement format: In person and call
Reason for Engagement: Modern Slavery score
We engaged with the management of Sage during June 2024 in collaboration with
Find It, Fix it, Prevent it, to encourage Sage to enhance their approach to
modern slavery given they had scored poorly against the Modern Slavery UK
Benchmark which was launched in November 2023. Sage confirmed that they had
taken several steps to enhance their approach to modern slavery, including
strengthening their supply chain due diligence process, introducing systems to
implement a sustainable supply chain strategy and upskilling staff.
Following publication of CCLA’s 2024 Modern Slavery UK Benchmark report in
November, we were disappointed to find that Sage had not improved its rating.
In November 2024, we continued our engagement with the company and met with
the CEO and CFO to understand the reasons why Sage’s modern slavery score
remained unchanged. Management explained that this is due to the company’s
publications being out of sync with CCLA’s monitoring schedule. Sage’s
disclosures happen in December, whilst Find it, Fix it, Prevent it, publish
their report in October, meaning the changes were not captured this year. This
is disappointing but not indicative of no progress and Sage’s management
have every expectation that these improvements will be reflected in their
revised score when the Benchmark is republished later in 2025.
Next steps: This engagement is ongoing.
Company name: Burberry
Sector: Consumer Discretionary
Engagement topic: Strategy, Personnel
Date of engagement: July and September 2024
Engagement format: Calls
Reason for Engagement: To understand the future direction of the company
2024 was a challenging year for Burberry. To recap, the company has parted
with its chief executive, Jonathan Akeroyd and its board is under intense
scrutiny, having made several strategic missteps. In addition Burberry will
make a loss in its half year and the balance sheet will shift from net cash to
net debt. In response, our team has continued to engage with both the Board
and management, which in Q3 included meeting with a Senior Independent
Director as well as the new CEO, Joshua Schulman.
In response to what we and Burberry hope will be a period of temporary
constraint, the company has embarked on an aggressive cost-saving plan and has
pre-emptively chosen to pass the dividend, saving itself c.£220m pa. The CFO
speaks confidently about containing leverage at c2.0x EBITDA this year and has
raised £300m of liquidity via a bond issue, dated 2030 and with a far from
“junk bond” coupon of 5.75% - signalling that bond investors aren’t
anticipating a liquidity crisis. Current, much reduced, profit forecasts
suggest Burberry’s interest cover will be 4x for 2024/5 assuming this year
is the low point in its fortunes. We would of course prefer Burberry to have
zero debt, but a closer inspection of the 2.0x figure reveals that its net
debt figure includes lease liabilities – which in fact make up the bulk of
the total debt, with financial leverage a minimal amount. We have done a lot
of work on this and believe that lease liabilities pose a smaller threat than
‘true’ financial leverage: Burberry’s leases are generally of good
quality, meaning that in most cases finding a replacement tenant and exiting
the lease would be possible, if such a thing needed to happen. That said, we
continue to monitor debt levels closely.
The question now is whether the brand has been irreversibly tarnished by the
recent mismanagement. We don’t think so. We retain the view that we have
invested our clients’ capital in an enduring and unique brand, that has
generated attractive financial returns in the past and can do so again.
Accordingly we have not sold. Instead, since early 2024 we have worked to
protect the value of the investment by engaging with the board and its
corporate advisers. We encouraged the early passing of the dividend, in order
to protect the balance sheet and, we hope, avoid a dilutive new capital raise.
We have also forcibly pointed out that there has been a lack of substantive
luxury experience amongst Burberry’s non-executive directors and perhaps
missteps might have been avoided with such luxury experience on the board. We
believe there will be further changes to the membership of the board.
Our Q3 2024 meeting with new CEO Joshua Schulman was an important one. He
gives the impression of being highly commercial and shareholder
value-oriented. Whilst it was too early for him to provide his strategic
vision for the company, which will come in November, Schulman has a clear
diagnosis of what caused the “crisis” and recognises that decisive action
will be needed to remedy the situation. According to Burberry’s chairman,
Schulman has already tabled a plan to the board that will first stabilize the
business then return it to growth. Certainly Schulman was able to articulate
to us that he has taken the job because he believes in the brand and
understands that Burberry’s history and functional purpose (protection from
the weather) is an irreplaceable component of its brand value. All is yet to
be proven, but if Schulman is able to execute better than his predecessors,
the turnaround for Burberry is likely to be very rewarding. Customers and
shareholders have been promised a return to “classic”, “timeless”
Burberry styles and colours, and while it’s of course early days, we note
that the new products appearing online and in its stores have rowed back from
the alienating, high fashion concepts of the last 18 months and there appears
to be a renewed focus on the core outerwear which is so emblematic of the
brand. We look forward to hearing more in November, and will be looking for
evidence that the new CEO has a credible, rational strategy to build on this
tentative step in the right direction.
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 Shareholder Total
Proposals Proposals Proposals
With Management 237 5 242
Against Management 2 0 2
Abstain 1 1 2
Totals 240 6 246
Source: Glass Lewis. 1 April 2024 – 31 March 2025.
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 encourages) 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.
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, as set out on page 3 of the
Annual Report. 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
12 June 2025
Extract of the Directors Report
Share Split
The price of the Company’s existing Ordinary Shares of 75p each (“Existing
Ordinary Shares”) since its inception, has experienced significant growth,
reflecting the Company’s investment strategy and market conditions. As at 31
March 2025, the share price stood at £818.00. This represents an increase
from the initial price of £100 per share at launch, indicating a substantial
appreciation over the years and, as at 10 June 2025 (being the latest
practicable date prior to publication of this document), the closing share
price was £837.00. To assist monthly savers, those who reinvest their
dividends and those who are looking to invest smaller amounts, the Directors
believe that it is appropriate to propose the sub-division of each Existing
Ordinary Share into 100 new Ordinary Shares of 0.75p each ("New Ordinary
Shares"). The Directors believe that the sub-division (the “Share Split")
may also improve the liquidity of the Company’s shares, which would benefit
all shareholders.
Following the Share Split, each shareholder will hold 100 New Ordinary Shares
for each Existing Ordinary Share they held immediately prior to the Share
Split. Whilst the Share Split will increase the number of Ordinary Shares the
Company has in issue, upon the Share Split becoming effective the net asset
value, share price and dividend per share can be expected to become
one-hundredth of their respective values immediately preceding the Share
Split. A holding of New Ordinary Shares following the Share Split will
represent the same proportion of the issued Ordinary Share capital of the
Company as the corresponding holding of Existing Ordinary Shares immediately
prior to the Share Split. The Share Split will not affect, therefore, the
overall value of a shareholder’s holding in the Company. By way of example,
taking the net asset value as at 6 June 2025 (being the latest practical date
prior to publication) and price as at 10 June 2025 of £968.63 and £837.00
respectively per Existing Ordinary Share, if the Share Split had become
effective as at that date, each holder of one Existing Ordinary Share would
receive 100 New Ordinary Shares with an aggregate net asset value and price of
£968.63 and £837.00 respectively immediately following the Share Split.
The New Ordinary Shares will rank pari passu with each other and will carry
the same rights and be subject to the same restrictions as the Existing
Ordinary Shares, including the same rights to participate in dividends paid by
the Company. Communication preferences and mandates and other instructions for
the payment of dividends in paper form or via CREST will, unless and until
revised, continue to apply to the New Ordinary Shares.
The following comments do not constitute tax advice. They are intended only as
a general guide based on UK law and HMRC’s published practice as at the date
of this notice. Both law and practice may change at any time. These comments
relate only to shareholders who are, and have at all relevant times been,
resident for tax purposes solely in the UK. Shareholders are advised to seek
their own professional tax advice.
The Share Split should not itself give rise to any liability to UK income tax
(or corporation tax on income) for shareholders. For the purposes of UK
taxation of chargeable gains, the Share Split should be treated as a
reorganisation of the share capital of the Company. To this extent, a
shareholder’s holding of New Ordinary Shares will be treated as the same
asset as the shareholder’s Existing Ordinary Shares and as having been
acquired at the same time, and for the same consideration, as the Existing
Ordinary Shares. To the extent that this reorganisation treatment applies, the
Share Split will not be treated as itself giving rise to a disposal of a
shareholder's Existing Ordinary Shares for the purpose of UK taxation of
chargeable gains.
The Share Split requires the approval of shareholders and, accordingly,
resolution 13 seeks such approval. The Share Split is conditional on the New
Ordinary Shares being admitted to the Official List of the Financial Conduct
Authority and to trading on the main market of the London Stock Exchange.
Applications for such admissions will be made and, if they are accepted, it is
proposed that the last day of dealings in the Existing Ordinary Shares will be
23 September 2025 (with the record date for the Share Split being 6.00pm on
that date) and that dealings in the New Ordinary Shares will commence on 24
September 2025. If resolution 13 is passed, the Share Split will become
effective on admission of the New Ordinary Shares to the Official List, which
is expected to be at 8.00am on 24 September 2025. The aggregate nominal value
of the Company’s issued share capital as at 12 June 2025 was £150,000,
comprising 200,000 Ordinary Shares of 75p each (no shares were held in
treasury). If the Share Split is applied to the issued share capital as at
24 September 2025, the total aggregate nominal value of the share capital
will remain at £150,000 but will comprise 20 million Ordinary Shares of 0.75p
each.
The New Ordinary Shares may be held in certificated or uncertificated form.
Following the Share Split becoming effective, share certificates in respect of
the Existing Ordinary Shares will cease to be valid and will be cancelled. New
certificates in respect of the New Ordinary Shares will be issued to those
shareholders who hold their Existing Ordinary Shares in certificated form and
are expected to be dispatched by 8 October 2025. No temporary documents of
title will be issued. Transfers of New Ordinary Shares between 24 September
2025 and the dispatch of new certificates will be certified against the
Company’s register of members held by the Company’s Registrars. It is
expected that the ISIN (GB0031977944) of the Existing Ordinary Shares will be
disabled in CREST at the close of business on 23 September 2025 and the New
Ordinary Shares will be credited to CREST accounts on 24 September 2025.
Articles of Association removal of restriction on authorised share capital
The Existing Articles were adopted in September 2021 to permit the Company to
hold virtual and/or hybrid Shareholder meetings, including AGMs.
In preparing for the Share Split, the Board is proposing to delete Article 5
of the Existing Articles. This will involve the removal of the concept of an
authorised share capital of the Company as well as the reference to the
Company’s share capital of £150,000 being divided into 200,000 Ordinary
Shares of 75p each. This amendment is required as following the Share Split
the ordinary shares will have a nominal value of 0.75p (not 75p). In addition,
the Directors believe that it is in the best interest of the Company and the
Shareholders for the concept of authorised share capital to be removed in the
Amended Articles as this would afford the Company greater flexibility.
This summary is intended only to highlight the principal amendments which the
Directors consider are likely to be of interest to Shareholders. It is not
intended to be exhaustive and should not be relied upon to identify all
amendments or issues which may be of interest to Shareholders. Therefore, this
summary is not a substitute for Shareholders’ reviewing the full terms of
the Amended Articles for themselves.
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report and the
Financial Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Financial Statements for each
financial year. Under that law, the Directors are required to prepare 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;
• make judgements and accounting estimates that are reasonable and prudent;
and
• state whether they have been prepared in accordance with applicable
United Kingdom Accounting Standards, comprising FRS 102, subject to any
material departures disclosed and explained in the Financial Statements;
• prepare the Financial Statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
• prepare a Directors’ Report, a Strategic Report and Directors’
Remuneration Report which comply with the requirements of the Companies Act
2006.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and to
ensure that the Financial Statements comply with the Companies Act 2006.
The Directors are also responsible for safeguarding the assets of the Company
and for taking reasonable steps for the prevention and detection of fraud and
other irregularities. The Directors are responsible for ensuring 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, performance, business model and strategy.
Website Publication
The Directors are responsible for ensuring the Annual Report and the Financial
Statements are made available on a website.
Financial statements are published on the Company’s website in accordance
with legislation in the United Kingdom governing the preparation and
dissemination of Financial Statements, which may vary from legislation in
other jurisdictions. The maintenance and integrity of the Company’s website
is the responsibility of the Directors.
The Directors’ responsibility also extends to the ongoing integrity of the
Financial Statements contained therein.
Responsibility Statement of the Directors in respect of the Annual Report
Each of the Directors, whose names and functions are listed in the ‘Board of
Directors’ section on pages 33 and 34 of the Annual Report, confirms that,
to the best of their knowledge:
• the Company's Financial Statements, have been prepared in accordance with
United Kingdom Accounting Standards and give a true and fair view of the
assets, liabilities, financial position of the Company for the year ended 31
March 2025; and
• the Annual Report includes a review of the development and performance of
the business and the position of the Company, together with a description of
the principal risks and uncertainties that it faces.
The Directors consider the Annual Report, taken as a whole, is fair, balanced
and understandable and provides the information necessary for Shareholders to
assess the Company's position and performance, business model and strategy.
On behalf of the Board
Roger Lambert
Chairman
12 June 2025
Note to those who access this document by electronic means:
The Annual Report for the year ended 31 March 2025 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 2025
2025 2024
Revenue Capital Total Revenue Capital Total
Notes £’000 £’000 £’000 £’000 £’000 £’000
Losses on investments held at fair value 10 – (13,121) (13,121) – (6,014) (6,014)
Exchange losses on currency balances – (5) (5) – (4) (4)
Income 2 10,169 – 10,169 12,005 – 12,005
Investment management fees 3 (819) – (819) (976) – (976)
Other expenses 4 (695) – (695) (715) (1) (716)
Net return/(loss) before taxation 8,655 (13,126) (4,471) 10,314 (6,019) 4,295
Taxation 7 (88) – (88) (100) – (100)
Return/(loss) after taxation for the financial year 8,567 (13,126) (4,559) 10,214 (6,019) 4,195
Return/(loss) per Ordinary Share 9 £42.83 £(65.63) £(22.80) £51.07 £(30.10) £20.97
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 loss
for the year disclosed above represents the Company’s total comprehensive
income.
No operations were acquired or discontinued during the year.
The notes on pages 77 to 92 of the Annual Report form part of these Financial
Statements.
Statement of Changes in Equity for the year ended 31 March 2025
Share Special Capital Revenue
capital reserve reserve reserve Total
2025 2025 2025 2025 2025
£’000 £’000 £’000 £’000 £’000
At 1 April 2024 150 19,850 161,981 23,304 205,285
(Loss)/return for the financial year – – (13,126) 8,567 (4,559)
Dividends paid for the year ended 31 March 2024 (see note 8) – – – (10,300) (10,300)
At 31 March 2025 150 19,850 148,855 21,571 190,426
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 23,390 211,930
(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
The notes on pages 77 to 92 of the Annual Report form part of these Financial
Statements.
Statement of Financial Position at 31 March 2025
2025 2024
Notes £’000 £’000 £’000 £’000
Fixed assets
Investments held at fair value
through profit or loss 10 185,636 199,082
Current assets
Other receivables 11 417 478
Cash at bank 4,582 6,028
4,999 6,506
Creditors: amounts falling due within one year
Other payables 12 (209) (303)
Net current assets 4,790 6,203
Net assets 190,426 205,285
Called up share capital 13 150 150
Special reserve 14 19,850 19,850
Capital reserve 14 148,855 161,981
Revenue reserve 21,571 23,304
Equity Shareholders' funds 190,426 205,285
Net asset value per Ordinary Share 15 £952.13 £1,026.43
The Financial Statements on pages 73 to 92 of the Annual Report were approved
by the Board on 12 June 2025 and were signed on its behalf by:
Roger Lambert
Chairman
The Lindsell Train Investment Trust plc
Registered in England & Wales, No: 4119429
The notes on pages 77 to 92 of the Annual Report form part of these Financial
Statements.
Statement of Cash Flows for the year ended 31 March 2025
2025 2024
Notes £’000 £’000
Operating Activities
Net cash inflow from operating activities 16 8,534 10,294
Investing activities
Purchase of investments held at fair value (5,134) (2,845)
Sale of investments held at fair value 5,459 873
Net cash inflow/(outflow) from investing activities 325 (1,972)
Financing activities
Equity dividends paid 8 (10,300) (10,300)
Net cash outflow from financing activities (10,300) (10,300)
Decrease in cash and cash equivalents (1,441) (1,978)
Cash and cash equivalents at beginning of year* 6,028 8,010
Loss on exchange movements* (5) (4)
Cash and cash equivalents at end of year* 4,582 6,028
Cash flows from operating activities includes dividend income received of
£9,841,000 (2024: £11,809,000) and deposit interest of £138,000 (2024:
£190,000).
* Comprises solely cash held at bank.
The notes on pages 77 to 92 of the Annual Report 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 2025, the Company held £116,069,000 (2024: £110,456,000) in
listed investments and £69,567,000 (2024: £88,626,000) in an unlisted
investment and an unlisted fund. The total operating expenses for the year
ended 31 March 2025 were £1,514,000 (2024: £1,692,000).
It is estimated that 64.1% of the investment portfolio, (93.7% 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 2025
the Board sought external advice to verify its approach. Please refer to note
1(j) for further information.
The investment in LTL (representing 23.6% 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) on pages 87 to 91 of the Annual Report 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 Income
Statement 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 and may be distributable by way
of dividend.
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
2025 2024
£’000 £’000
Income from investments
Overseas dividends 881 862
UK dividends
– Lindsell Train Limited 7,717 9,410
– Other UK dividends 1,433 1,543
10,031 11,815
Other income
Deposit Interest 138 190
138 190
Total income comprises:
Dividends 10,031 11,815
Interest 138 190
10,169 12,005
3 Management fees
2025 2024
£’000 £’000
Investment management fee 957 1,099
Rebate of investment management fee (see below) (138) (123)
Total management fee 819 976
In accordance with the Investment Management Agreement dated 21 December 2000
(last revised in June 2024) 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. An amount of £72,552
(2024: £139,623) 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 2025 was
£nil (2024: £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 held by the Company where LTL is the Manager. The amounts rebated on
the Investment Management fee are shown above, of which £121,781 (2024:
£107,585) relates to the Company’s investment in Lindsell Train North
American Equity Fund and £15,903 (2024: £15,656) relates to the Company’s
investment in the Finsbury Growth & Income Trust PLC.
4 Other expenses
2025 2024
£’000 £’000
Directors’ emoluments 166 178
Company Secretarial and Administration fee 186 192
Auditor’s remuneration* † 60 55
Tax compliance fee 4 4
Safe custody fees 20 19
Printing fees 36 36
Registrars’ fees 35 32
Listing fees 14 13
Legal fees 11 7
Employer’s National Insurance 12 11
Directors’ liability insurance 13 13
Key man insurance 20 45
Director recruitment costs 10 25
Sundry 90 76
VAT irrecoverable 18 9
695 715
Capital charges – 1
695 716
* Excluding VAT.
† Remuneration for the audit of the Financial Statements of the Company.
5 Directors’ emoluments
These are reflected in the table below:
2025 2024
£’000 £’000
Directors’ fees 166 178
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 (2024: £29,000)
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 2025 the Company held 12,500,000 shares in WS Lindsell Train
North American Equity Fund with a fair value of £19,959,000 (2024:
£19,624,000) and a cost of £13,055,000 (2024: £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
£3,713,000 (2024: £3,612,000) at a cost of £759,000 (2024: £759,000) (see
page 10 of the Annual Report).
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:
2025 2024
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
UK corporation tax – – – – – –
Overseas tax 104 – 104 114 – 114
Overseas tax recoverable (16) – (16) (14) – (14)
Tax charge per accounts 88 – 88 100 – 100
The current taxation charge for the year is different from the standard rate
of corporation tax in the UK of 25% (2024: 25%). The differences are explained
below:
2025 2024
£’000 £’000
Net (loss)/gain on ordinary activities before taxation (4,471) 4,295
Theoretical tax at UK Corporation tax rate of 25% (2024: 25%) (1,118) 1,074
Effects of:
– UK dividends which are not taxable (2,287) (2,738)
– Overseas dividends which are not taxable (220) (215)
– Non-taxable loss on investments 3,280 1,504
– Current year excess expenses 345 375
– Overseas tax suffered 104 114
– Overseas tax recoverable (16) (14)
Actual current tax charge 88 100
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 2025, the Company had unutilised management expenses of
£32,909,000 (2024: £31,533,000). 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 £8,227,000 (2024:
£7,883,250) arising from management expenses exceeding taxable income based
on the corporation tax rate of 25% (2024: 25%).
8 Dividends paid and payable
2025 2024
£’000 £’000
Final dividend for the year ended 31 March 2024 of £51.50 per Ordinary share (2023: £51.50 per Ordinary Share) 10,300 10,300
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:
2025 2024
£’000 £’000
FinaI dividend for the year ended 31 March 2025 of £42.00 per Ordinary share (2024: £51.50 per Ordinary Share) 8,400 10,300
9 Return/(loss) per Ordinary Share
2025 2024
Total (loss)/return per Ordinary share
Total (loss)/return £(4,559,000) £4,195,000
Weighted average number of Ordinary Shares in issue during the year 200,000 200,000
Total (loss)/return per Ordinary share £(22.80) £20.97
The total (loss)/return per Ordinary share shown above can be further analysed
between revenue and capital, as below:
2025 2024
Revenue return per Ordinary Share
Revenue return £8,567,000 £10,214,000
Weighted average number of Ordinary Shares in issue during the year 200,000 200,000
Revenue return per Ordinary Share £42.83 £51.07
Capital loss per Ordinary Share
Total return £(13,126,000) £(6,019,000)
Weighted average number of Ordinary Shares in issue during the year 200,000 200,000
Capital loss per Ordinary Share £(65.63) £(30.10)
10 Investments held at fair value through profit or loss
2025 2024
£’000 £’000
Investments listed on a recognised investment exchange 116,070 110,456
Unlisted investment and Fund 69,566 88,626
Valuation at year end 185,636 199,082
Opening book cost 45,428 42,591
Opening investment holding gains 153,654 160,537
Opening Fair Value 199,082 203,128
Movements in the year:
Purchases at cost 5,134 2,845
Sales – proceeds (5,459) (877)
Losses on investments (13,121) (6,014)
Closing Fair Value 185,636 199,082
Closing book cost 48,943 45,428
Closing investment holding gains 136,693 153,654
Closing Fair Value 185,636 199,082
Realised gains on investments 3,839 869
Decrease in investment holding gains for the year (16,960) (6,883)
Losses on investments held at fair value (13,121) (6,014)
The Company received proceeds of £5,459,000 (2024: £877,000) from
investments sold in the year. The book cost of these investments when they
were purchased was £1,620,000 (2024: £7,729). 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 2025 amounted to £1,946 and £1,006 respectively (2024:
£805 and £9 respectively). During the year the investment holding loss
attributable to the Company’s holding in LTL amounted to £19,394,000 (2024
loss: £16,218,000). See note 17 on pages 87 and 91 of the Annual Report 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 2025.
Investments Country of registration Class of % of
or incorporation capital class held
Lindsell Train Limited* England Ordinary Shares of £100 23.6%
* As at 31 January 2025, the latest year end for LTL, its audited aggregate
capital and reserves amounted to £108,162,000, (2024: £103,519,000) and the
profit for that year amounted to £36,902,000 (2024: profit of £44,597,000).
The total amount of dividends paid during the year was £32,259,000 (2024:
£38,967,000) equating to dividends of £1,210 per share (2024: £1,462 per
share). The earnings per share were £1,384 (2024: £1,673 per share). The
cost of the Company’s investment in LTL was £63,010 (2024: £64,500).
See note relating to the 2025 and 2024 results under the tables in Appendix 1
on pages 98 and 99 of the Annual Report.
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
2025 2024
£’000 £’000
Amounts due from brokers – 5
VAT recoverable 8 27
Prepayments and accrued income 409 446
417 478
12 Other payables
2025 2024
£’000 £’000
Accruals and deferred income 209 303
13 Share capital
2025 2024
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
2025.
14 Reserves
Capital reserve
The capital reserve includes investment holding gains of £136,693,000 (2024:
£153,654,000).
Revenue reserve
The revenue reserve reflects all income and expenditure which are recognised
in the revenue column of the income statement. This reserve is distributable
by way of dividend.
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
2025 2024 2025 2024
£ £ £’000 £’000
952.13 1,026.43 190,426 205,285
The movements during the year of the assets attributable to the Ordinary
Shares were as follows:
2025 2024
Ordinary Ordinary
Shares Shares
£’000 £’000
Total Net Assets attributable at beginning of year 205,285 211,390
Total recognised (loss)/profit for the year (4,559) 4,195
Dividends paid during the year (10,300) (10,300)
Total Net Assets attributable at the end of year 190,426 205,285
The Net Asset Value per Ordinary Share is based on net assets of £190,426,000
(2024: £205,285,000) and on 200,000 Ordinary Shares (2024: 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
2025 2024
£’000 £’000
Net (loss)/return before finance costs and taxation (4,471) 4,295
Losses on investments held at fair value 13,121 6,014
Loss on exchange movements 5 4
Decrease in other receivables 19 32
Decrease/(increase) in accrued income 41 (15)
(Decrease)/increase in other payables (93) 64
Taxation on investment income (88) (100)
Net cash inflow from operating activities 8,534 10,294
(b) Analysis of cash flows
At At
1 April Exchange 31 March
2024 Cash Flow Movement 2025
£’000 £’000 £’000 £’000
Cash at bank 6,028 (1,441) (5) 4,582
Total 6,028 (1,441) (5) 4,582
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
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 these include the continued uncertainty created by the
increase in global inflation and rising interest rates, international trade
tariffs, together with the consequences of the wars in Ukraine and the effect
of sanctions against Russia; tensions between China and the West; as well as
subsequent long-term effects on economies and international relations.
At 31 March 2025, the fair value of the Company’s assets exposed to market
price risk was £185,636,000 (2024: £199,082,000). 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 2025
US$ Euro JPY Total
£’000 £’000 £’000 £’000
Short-term debtors 41 39 155 235
Foreign currency exposure on net monetary items 41 39 155 235
Investments (equities and funds) held at fair value 34,506* 11,481 21,464 47,492
Foreign currency exposure 34,547 11,520 21,619 47,727
* This includes the holding in WS Lindsell Train North American Equity Fund of
£19,959,000.
Foreign currency exposure as at 31 March 2024
US$ Euro JPY Total
£’000 £’000 £’000 £’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.
Over the year Sterling strengthened against the US Dollar by 2.18% (2024:
strengthened by 2.2%), strengthened against the Euro by 2.15% (2024:
strengthened by 2.9%) and strengthened against the Japanese Yen by 0.96%
(2024: strengthened by 16.6%).
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 £2,386,000 or 1.25% of Net Asset Value (2024: £3,170,000
or 1.5% 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 2025 would have increased or decreased by
£18,564,000 or £92.82 per share (2024: £19,908,000 or £99.54 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 2025, 64.1% (2024: 56.6%) of the investment portfolio (93.7%
(2024: 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
Statement of Financial Position was £4,999,000 (2024: £6,506,000).
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
Level 1 Level 2 Level 3 Total
At 31 March 2025 £’000 £’000 £’000 £’000
Investments 116,069 19,959 49,608 185,636
116,069 19,959 49,608 185,636
Level 1 Level 2 Level 3 Total
At 31 March 2024 £’000 £’000 £’000 £’000
Investments 110,456 19,624 69,002 199,082
110,456 19,624 69,002 199,082
Note: Within the above tables, the entirety of level 1 comprises all the
Company’s 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 Annal Report.
LTL Valuation Methodology
The current methodology was adopted and applied to monthly valuations of the
Company from 31 March 2022. J. P. Morgan Cazenove undertook a review of the
methodology in January 2025 and confirmed its continued validity. 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 profits 1 /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%
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 31 March 2025 LTL’s annualised notional net profits were
£20.7m (2024: £29.4m) and its FUM was £11.3bn (2024: £15.2bn). The ratio
between the two as a percentage was calculated as 0.182% (2024: 0.193%)
resulting in a percentage of FUM of 1.85% (2024:1.90%) and a valuation of LTL
of £7,872.98 (2024: £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 31 March 2025
The two tables below show the impact on the LTL valuation if:
(i) in Table 1 a different % was applied to 31 March 2025 FUM; and
(ii) in Table 2 different Price / Earnings (‘P/E’) ratios were applied to
LTL’s March 2025 notional net profits.
Table 1 – varying the % of FUM
LTL FUM Valuation
as at 31 March 2025 Valuation per share
(£’000) % of FUM (£’000) (£)
11,345,602 0.50% 56,728 2,127.83
11,345,602 0.75% 85,092 3,191.75
11,345,602 1.00% 113,456 4,255.66
11,345,602 1.25% 141,820 5,319.58
11,345,602 1.50% 170,184 6,383.50
11,345,602 1.75% 198,548 7,447.41
11,345,602 1.85% 209,894 7,872.98
11,345,602 2.00% 226,912 8,511.33
11,345,602 2.25% 255,276 9,575.25
11,345,602 2.50% 283,640 10,639.16
11,345,602 2.75% 312,004 11,703.08
11,345,602 3.00% 340,368 12,766.99
11,345,602 3.25% 368,732 13,830.91
Table 2 – varying the P/E ratio
LTL notional net profits Valuation
as at 31 March 2025 Valuation per share
(£’000) P/E ratio (£’000) (£)
20,680 6.00 124,079 4,654.13
20,680 7.00 144,759 5,429.81
20,680 8.00 165,439 6,205.50
20,680 9.00 186,118 6,981.19
20,680 9.86 203,987 7,651.44
20,680 10.15 209,894 7,872.98
20,680 11.00 227,478 8,532.56
20,680 12.00 248,158 9,308.25
20,680 13.00 268,838 10,083.94
20,680 14.00 289,518 10,859.63
20,680 15.00 310,197 11,635.31
LTL Valuation per share using differing valuation scenarios 31 March 2024
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 Valuation Valuation
as at 31 March 2024 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 Valuation Valuation
as at 31 March 2024 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 2025 and 31
March 2024. 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
2025 2024
£’000 £’000
Opening fair value 69,002 85,220
Purchases at cost – –
Sales proceeds (662) (846)
Realised gains on investments 662 846
Decrease in investment holding gains for the year (19,394) (16,218)
Closing fair value 49,608 69,002
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 (2024: None).
19 Ongoing charges (APM)
2025 2024
£’000 % £’000 %
Total operating expenses 1,514 0.8 1,692 0.8
Total operating expenses are included after a management fee waiver of
£138,000 (2024: £123,000) (see note 3).
The above total expense ratios are based on the average Shareholders’ Funds
of £197,043,000 (2024: £203,091,000) calculated at the end of each week
during the year.
It should be noted that administrative expenses borne by the LTL managed funds
are excluded from the above.
See Glossary on page 113 of the Annual Report 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 54 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 UK Listing Rules.
The amendment and restatement of the Investment Management Agreement amounted
to a small related party transaction to which certain provisions of Chapter 11
of the UK 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 its
Financial year end of 31 January 2025
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 consisted of the two founders Michael Lindsell and
Nick Train, Michael Lim (Company Secretary), Joss Saunders (Chief Operating
Officer), James Bullock (Portfolio Manager), Jessica Cameron (Head of
Marketing & Client Services) and three non-executive directors, two of which
are independent; Rory Landman, Julian Bartlett and Jane Orr.
LTL’s executive staff (27) increased by two from the year prior. 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 whilst 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 2025.
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 60% of FUM at end of
January, down from 62% the year before. The fall resulted from a greater
proportion of net outflows emanating from open-ended pooled products.
Additionally, LTL managed 11 separate client relationships, five fewer than a
year ago. The largest pooled fund (the Lindsell Train Global Equity Fund)
represented 32% of total FUM and the largest segregated portfolio accounted
for 12%.
In the year to 31 January 2025, LTL’s total FUM fell by 20% from £15.9bn to
£12.8bn. This represented net outflows of £4.8bn, broken down by strategy as
Global (-£2,614m), Japan (-£96m) and UK (-£2,128m).
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 long-lasting franchises with deep moats and the
ability to reinvest at high rates of return for extended periods of time, and
then hold onto them for the long term. Recognising the concentrated nature of
its portfolios, and with very low annual turnover, this inevitably means that
at any given time there will be a vast number of names that LTL do not own,
amongst which there are bound to be some exceptional performers. The unusual
feature is that the influence of some of these ‘un-owned’ names have
continued to reach new extremes, and their omission is therefore felt more
keenly.
To illustrate this point, LTL conducted an analysis of the decomposition of
the return drivers of its Global Equity strategy and its benchmark, the MSCI
World Index. Over the past three years the strategy has experienced a headwind
from valuation multiple (P/E) contraction, while the Index has benefitted from
valuation multiple expansion. Encouragingly the overall operating performance
of the companies within the strategy, measured by earnings per share growth,
has remained consistent with expectations and better than that of the Index,
and yet the impact of the internal compounding has been tempered by the
opposing comparative valuation compression.
However, this current phenomenon has not changed how LTL invests. It remains
focused on optimising the bottom-up credentials of its highly concentrated,
idiosyncratic portfolios, and LTL do not believe that paying any extra
attention to the index will result in a higher likelihood of outperformance
(if anything, one might expect the opposite).
Reflecting on the long term, LTL’s investment approach has shown it can
generate excess returns, as shown in the table below, though given the high
active share of its strategies, there will inevitably be periods of strong
underperformance and outperformance.
To 31 January 2025 Relative Return Inception date Benchmark
UK Equity Fund (GBP) +3.6% p.a. July 2006 FTSE All Share
Global Equity Fund (GBP) +0.8% p.a. March 2011 MSCI World
Japanese Equity Fund (Yen) -0.2% p.a. January 2004 TOPIX
North American Equity Fund -6.2% p.a. April 2020 MSCI North
(GBP) America
Returns based on NAV. WS 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; WS 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 11% of
total FUM, and South Africa, 6%. LTL’s funds are also widely represented on
the major UK retail and IFA platforms.
Financials
In the year to 31 January 2025 LTL’s total revenues fell 20%. Annual
management fees make up the lion’s share of total revenues, at 98.6%, 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 grew marginally to £5m from £4.6m the
year prior. Operating profits were down 16%, registering a margin on sales of
63%.
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
2025 were £1,210 per share, down from £1,462 per share in the previous year.
At 31 January 2025 LTL’s balance sheet was made up of shareholders’ funds
of £108m including £100m 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 five years of cumulative underperformance, that the company is
seeing net outflows as clients are attracted to other investment approaches
that may 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 added uncertainties caused by the imposition of tariffs by the
US administration; 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 66 and 65, 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 2025 unless stated otherwise. The period from 31 January to
31 March 2025 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 2025 Jan 2024
£m £m
UK 5,154 6,729
Global 7,496 8,956
Japan 58 154
North America 44 37
Total 12,752 15,876
Largest Client Accounts
Jan 2025 Jan 2024
% of FUM % of FUM
Largest Pooled Fund Asset 32% 29%
Largest Segregated Account 12% 11%
* LTL’s year end figures are based on published financial statements.
Lindsell Train Fund Performance
1 Year 3 Year 5 Years 10 Years
Annualised data to 31 January 2025 % % % %
GBP UK Equity Fund (Accumulation) 9.1 4.3 3.6 7.2
FTSE All Share 17.1 7.9 6.6 6.5
GBP Global Equity Fund (B share) 15.3 7.8 6.2 12.1
MSCI World 24.4 12.4 13.4 12.6
JPY Japanese Equity Fund (A share) 1.7 5.5 1.7 6.9
TOPIX 11.9 16.6 13.3 9.5
GBP North American Equity Fund
(Accumulation) 16.1 8.8
MSCI North American 29.1 13.9
Source: Morningstar Direct
Note: all figures above show total returns.
Financials*
Jan 2025 Jan 2024 %
Profit & Loss £’000 £’000 Change
Fee Revenue
Investment Management fee 69,109 86,146 -20%
Performance Fee 0 0
Total Revenue 69,109 86,146 -20%
Staff Remuneration** (20,774) (25,864) -20%
Fixed Overheads (5,011) (4,578) 9%
Exchange gains/(loss) 15 (676)
Operating Profit 43,339 55,028 -21%
Gains on fixed asset investment 1,232 713
Gains on current asset investments 3,625 2,020
Interest receivable and similar income 1,028 998
Profit before tax 49,224 58,759 -16%
Tax on profit (12,322) (14,162)
Net Profit 36,902 44,597 -17%
Dividends (32,259) (38,967)
Retained profit 4,643 5,630
Balance Sheet
Fixed Assets 21 51
Investments 8,904 7,672
Current Assets (inc cash at bank and
investment in Gilts & Bonds) 112,683 118,354
Liabilities (13,446) (22,558)
Net Assets 108,162 103,519
Capital & Reserves
Called up Share Capital 267 267
Share Premium*** 57 57
Share Discount*** (494) (494)
Profit & Loss Account 108,332 103,689
Shareholders' Funds 108,162 103,519
* LTL’s year end figures are 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 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.
Five Year History*
Jan 2025 Jan 2024 Jan 2023 Jan 2022 Jan 2021
Operating Profit Margin 63% 64% 69% 65% 65%
Earnings per share (£) 1,384 1,673 2,038 2,463 2,340
Dividends per share (£) 1,210 1,462 1,841 1,994 1,817
Total Staff Cost as % of Fee Revenue 30% 30% 30% 32% 30%
Opening FUM (£m) 15,876 18,626 21,215 22,802 21,450
Changes in FUM (£m) (3,124) (2,751) (2,589) (1,587) 1,352
– of market movement 1,713 657 338 331 1,200
– of net new fund (outflows)/inflows (4,837) (3,408) (2,927) (1,918) 152
Closing FUM (£m) 12,752 15,875 18,626 21,215 22,802
LT Open ended funds as % of total 60% 62% 65% 70% 73%
* LTL’s year end figures are based on published financial statements.
Jan 2025 Jan 2024 Jan 2023 Jan 2022 Jan 2021
Client Relationships
– Pooled funds 5 5 5 5 4
– Separate accounts 11 16 17 18 17
Ownership
Jan 2025 Jan 2024 Jan 2023
Michael Lindsell and spouse 9,510 9,578 9,650
Nick Train and spouse 9,510 9,578 9,650
The Lindsell Train Investment Trust plc 6,333 6,378 6,450
Other Directors/employees 1,307 1,126 893
26,660 26,660 26,643
Treasury Shares 0 0 17
26,660 26,660 26,660
Board of Directors as at 31 January 2025
Rory Landman Independent Non-Executive
Julian Bartlett Independent Non-Executive
Jane Orr Non-Executive
Michael Lindsell Chief Executive Officer & Portfolio Manager
Nick Train Chairman & Portfolio Manager
Michael Lim Director, IT & Company Secretarial
Joss Saunders Director, Chief Operating Officer
James Bullock Director, Portfolio Manager
Jessica Cameron Director, Head of Marketing & Client Services
Employees
Jan 2025 Jan 2024
Investment Team (including three Portfolio Managers) 6 6
Client Servicing and Marketing 8 7
Operations and Administration 12 10
Fixed Term Contractors 1 2
Total Employees 27 25
Non-Executive directors 3 3
Total Headcount 30 28
LTIT Directors' valuation of LTL
31 Mar 2025 31 Mar 2024
Notional annualised net profits (A)* (£'000) 20,680 29,240
Funds under Management less LTIT holdings (B) (£'000) 11,345,602 15,180,432
Normalised notional net profits as % of FUM A/B = (C) 0.182% 0.193%
% of FUM (D) (see table below to view % corresponding to C) 1.85% 1.90%
Valuation (E) i.e. B x D (£'000) 209,894 288,428
Number of shares (F) 26,660 26,660
Valuation per share in LTL i.e. E / F 7,872.98 10,818.76
* 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
– tax deducted at 25% of profits before tax
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%
LTL’s Salary and Bonus Cap
LTL’s salary and bonus expenses are 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. 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 41%, with the salary to revenue of peers with
FUM equivalent to LTL is slightly higher at 43%. 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.
LTL valuation methodology
During the reporting year 2022, the Board appointed J.P. Morgan Cazenove Ltd
to undertake an independent review of the Company’s valuation methodology
applied to its unlisted investment in LTL. It was agreed that a new
methodology be applied to monthly valuations from 31 March 2022 onwards.
In adopting the new methodology the Board 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 new methodology is simpler as it has a single component based on a
percentage of LTL’s FUM (as opposed to two components in the old
methodology, see below), with the percentage applied being reviewed monthly
and adjusted to reflect the ongoing profitability of LTL. After the end of
each month the ratio of LTL’s notional annualised net profits* to LTL’s
FUM is calculated and, depending on its result, the percentage of FUM is
adjusted according to the table on page 98 of the Annual Report.
The Board determined that a change from the old methodology was necessary as
in the years preceding 2022, the valuation difference between its two
components used previously had widened considerably. This reflected the effect
of the operating leverage in LTL’s business as its FUM increased.
The old methodology was a simple average of two components:
1.5% of LTL’s most recent FUM; and LTL’s net profits (adjusted for a
notional increase in staff costs to 45% of revenues excluding performance
fees) calculated with reference to LTL’s most recent end month’s FUM,
divided by the annual average redemption yield on the longest dated UK
government fixed rate bond, which was at the time UK Treasury 1.625% 2071,
calculated using weekly data, plus a premium of 0.5%, subject to a minimum
yield of 4%, plus an equity risk premium of 4.5%.
In making this change, the Board noted that the new methodology correlated
closely to the result of the old one (when the average of the two components
in the old methodology is expressed as a percentage of FUM) both on the date
of change (31 March 2022) and historically.
In summary, it is the Board’s view that the new methodology simplifies the
valuation of LTL whilst capturing the changing operating leverage of the
business and is also historically consistent with results from the old one.
* 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.
Appendices (unaudited)
Appendix 2
WS Lindsell Train North American Equity Fund
Portfolio Holdings at 31 March 2025
(All ordinary shares unless otherwise stated)
Fair Value % of
Holding Security £'000 total assets
11,200 Visa 3,040 7.7
1,877 Fair Isaac 2,680 6.8
11,600 American Express 2,419 6.1
5,900 S&P Global 2,323 5.9
18,225 Alphabet 2,182 5.5
18,100 TKO Group 2,144 5.4
19,200 Oracle 2,080 5.3
10,300 Equifax 1,942 4.9
24,910 Walt Disney 1,904 4.8
3,800 Intuit 1,807 4.6
8,600 CME Group 1,767 4.5
7,300 Verisk Analytics 1,683 4.3
20,100 Colgate-Palmolive 1,460 3.7
10,800 PepsiCo 1,255 3.2
3,110 Thermo Fisher Scientific 1,199 3.0
21,100 Coca-Cola 1,171 3.0
21,350 Mondelez International 1,122 2.8
3,560 Adobe 1,058 2.7
20,440 PayPal 1,033 2.6
20,400 Nike 1,004 2.5
12,000 T Rowe Price 854 2.2
14,425 Estee Lauder 738 1.9
26,601 Brown-Forman 690 1.8
5,100 Hershey 675 1.7
12,150 Canadian Pacific 661 1.7
3,300 Madison Square Garden Sports 498 1.3
Total Investments 39,388 99.8
Net Current Assets 93 0.2
Net Assets 39,481 100.0
Breakdown by Sector
Financials 29.0%
Information Technology 19.3%
Consumer Staples 18.0%
Communication Services 17.0%
Industrials 10.9%
Health Care 3.0%
Consumer Discretionary 2.5%
Cash & Equivalents 0.2%
100.0%
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
2025 2024
£ £
Share Price 818.00 801.00
Net Asset Value per Share 952.13 1,026.43
Discount to Net Asset Value per Share 14.1% 22.0%
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:
2025 2024
Total Dividends declared per Ordinary Share (a) £42.00 £51.50
Closing price per Ordinary Share on 31 March (b) £818.00 £801.00
Dividend Yield (a) ÷ (b) 5.1% 6.4%
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:
2025 2024
‘000 ‘000
Net Asset Value (a) £190,426 £205,285
Ordinary Shares in issue (b) 200 200
Net Asset Value per Ordinary Share (a) ÷ (b) £952.13 £1,206.43
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:
2025 2024
£'000 £'000
Total operating expenses (a) 1,514 1,692
Average Net Asset Value (b) 197,043 203,091
Ongoing Charges excluding synthetic costs (a) ÷ (b) 0.8% 0.8%
Ongoing Charges including the charges of the underlying funds 0.9% 0.9%
(WS Lindsell Train North American Fund) synthetic costs
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 2025
LTIT NAV LTIT Share Price
NAV/Share Price at 31 March 2025 a £952.13 £818.00
Dividend Adjustment Factor* b 1.239 1.067
Adjusted closing NAV/Share Price c = a x b £1,179.89 £873.09
NAV/Share Price at 31 March 2024 d £1,206.43 £801.00
Total return ((c/d)-1)) x100 (2.2)% 9.0%
* 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 2024 a £10,819
Valuation at 31 March 2025 b £7,893
Dividends paid during the year c £1,210
Total return {((b-a)+c)/a}x100 -15.9%
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.
2025 Accounts
The figures and financial information for 2025 are extracted from the Annual
Report and financial statements for the year ended 31 March 2025 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.
2024 Accounts
The figures and financial information for 2024 are extracted from the
published Annual Report and financial statements for the period ended 31
March 2024 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 2025 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 2025 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 Thursday, 11 September 2025.
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
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