years of accumulated dividend growth · first half review 2017 fim capital limited. licensed by the...

First Half Review 2017

FIM Capital Limited. Licensed by the Financial Services Authority of the Isle of Man and authorised and regulated by the Financial Conduct Authority. A list of the names of directors and officers of the company is available for inspection at the registered office of the company. Company registered in the Isle of Man No 012651V.

Pound a Day Portfolio, IOMA House, Hope Street, Douglas, Isle of Man, IM1 1AP, British Isles+44 (0) 1624 [email protected]@PAD_Portfolio

Unilever was the strongest performing over the term, appreciating 26.2% with its results being driven by a stellar performance in emerging markets which account for 58% of group revenues. The share price came to life in February when Kraft Heinz launched a $143bn bid for the company causing it to rally by more than 13% in a single day. The bid was quickly withdrawn when it became apparent shareholders were mindful of the false promises made when it acquired Cadbury Schweppes and therefore an expensive fight would be inevitable. Shortly after, following a business review to increase shareholder value, the company announced that it would be exiting the Spreads market and combining Foods and Refreshment into one entity. Double digit returns were also delivered by Halma and Croda International during the period, with the share prices growing by 22.56% and 21.56% respectively.

The biggest detractor to performance on this occasion was WPP, which declined 11.12% after a strong H2 2016 where it had appreciated by 17%. The catalyst for the decline was the loss of contracts with AT&T and Volkswagen in addition to broader slowing sales. This could easily be seen as a short term set back back however operating profit exceeded £2 billion for the first time in 2016, reflecting a 21% increase on the prior year.

We are pleased to report no trading activity took place during the period under review.

Years of Accumulated Dividend GrowthThe Selective Portfolio appreciated by 8.85% on a total return basis over the first half of 2017 whilst in contrast the FTSE100 appreciated by 2.38%. This positive divergence over the year to date is a marked contrast to 2016 where the portfolio struggled to keep pace with the key UK benchmark index and this turnaround can be attributed to a weaker pound which has made UK investments more attractive from the overseas investor perspective. The concerns of last year are still

ongoing and whilst the longer term impact of Brexit is yet to be determined, it is worth noting that the portfolio has global reach even though all the holdings are all listed on the London Stock Exchange. By way of example, both Unilever and PZ Cussons have significant exposure to emerging markets, a sector that benefits from its lack of correlation to developed economies. The pound’s weakness also means several of the constituents could become vulnerable to a foreign takeover. For many investment managers this would be welcome, however our strict stock selection criteria means our overall stock universe is limited and we would prefer the current constituents remain in place providing they continue to deliver decent returns.

Average Price Growth: Average Total Return: Average Yield:

H1 2017 6.76% 8.50% 2.98%

Total Return (Excluding charges) H1 2017 2016 2015 2014 2013 2012 Compound AnnualisedSelective 8.50% 2.64% 11.06% 3.28% 17.06% 11.69% 67.01% 9.77%FTSE100 4.86% 19.15% -1.37% 0.72% 18.65% 10.02% 61.74% 9.14%FTSE250 8.55% 6.64% 11.17% 3.65% 32.27% 26.11% 122.50% 15.65%

Price Performance: 31st December 2016 - 30th June 2017

(11.12%) (6.44%)

(2.53%)

2.36% 4.22% 5.04% 5.06%

6.96% 8.96%

21.56% 22.56% 26.20%

WPP SSE

Derwent London

PZ Cussons

Micro Focus International Sage Whitbread

AB Foods Vodafone

Croda HALMA Unilever

Total Return Since Inception31 December 2011 - 30 June 2017

Weighted Average Return

HALMA

Serco WPP

-100%

-50%

0%

50%

100%

150%

200%

250%

300%

Dec 11 Apr 12 Aug 12 Dec 12 Apr 13 Aug 13 Dec 13 Apr 14 Aug 14 Dec 14 Apr 15 Aug 15 Dec 15 Apr 16 Aug 16 Dec 16 Apr 17

Whitbread (Interim)

SSE (Final)

Unilever (Interim)

January February March April May June July August September October November December

Vodafone(Interim)

Unilever (Final)

AB Foods (Final)

PZ Cussons(Interim)

Unilever (Interim)

Vodafone (Final)

PZ Cussons(Final)

Derwent London (Interim)

Derwent London (Final)

WPP(Interim)

WPP(Final)

Unilever (Interim)

Estimated Yearly Dividend Schedule - Selective

Whitbread (Final)

AB Foods (Interim)

Micro Focus (Final)

HALMA (Final)

Sage (Final)

HALMA (Interim)

Sage (Interim)

Croda (Final)

Micro Focus(Interim)

SSE(Interim)

Croda (Interim)

Full year results to 1st April 2017 • Delivered its fourteenth consecutive year of record revenue (+19% to £962m) and profit (+17% to £194m). Return on sales of 20.2% well within targeted range of between 18% and 22%. • Widespread revenue growth in developed and developing regions. USA remained largest market with a revenue increase of 27%.• Delivered growth in all four sectors, with Medical being the largest profit sector for the first time with profit up by 29% to £66.7m. • Completed £22.7m acquisition of FluxData, a New York based manufacturer of advanced imaging systems for industrial and medical applications (among other markets). This builds on the company’s existing capabilities within its Environmental & Analysis sector. ‘We have a clear growth strategy, simple financial model and a unique organisational structure, which is customer-focused and enables us to adapt quickly to market changes.’ – Andrew Williams, Chief Executive Increased final dividend by 7.02% to 8.38p

Price Performance H1 2017 2016 2015 2014 2013 2012 2011 2010 2009 Compound22.56% 3.76% 25.82% 13.92% 31.37% 39.04% (7.97%) 47.74% 20.00% 327.16%

Past Dividend and Growth Uninterrupted dividend growth since 1973 (Yield 1.25%)2017 2016 2015 2014 2013 2012 2011 2010 2009 Compound13.71p 12.81p 11.96p 11.17p 10.43p 9.74p 9.1p 8.5p 7.93p 7.03% 7.11% 7.07% 7.09% 7.08% 7.03% 7.06% 7.19% 5.03% 81.59%

Half year results to 4th March 2017 • Achieved fifth consecutive year of operating cash generated in excess of £1 billion. First half revenue of £7.3bn was 19% ahead of last year, and adjusted operating profit £652m was 36% ahead. Strong positive impact on overseas results from sterling devaluation. • Completed two disposals: US herbs and spices and south China cane sugar operations, generating £255m profit, resulting in a 92% increase in profit before tax and 79% increase in EPS. • Sugar businesses were the largest single driver of the group’s underlying profit improvement, owing to higher sugar prices and savings generated by performance improvement. • Primark revenues up 12%, with 16 new stores with 0.8mn sq ft of selling space across 8 countries. ‘‘We achieved a more acceptable rate of return in Sugar and further good progress was made by our Ingredients and Grocery businesses.’ – George Weston, Chief Executive Increased interim dividend by 10.19% to 11.35p

Price PerformanceH1 2017 2016 2015 2014 2013 2012 2011 2010 2009 Compound6.96% (17.86%) 5.99% 28.96% 56.33% 41.28% (6.27%) 43.67% 12.60% 357.81%

Past Dividend and Growth Uninterrupted dividend growth since 1989 (Yield 1.30%)2017 2016 2015 2014 2013 2012 2011 2010 2009 Compound 37.8p 35.3p 34.3p 32.35p 29.35p 25.35p 24.1p 21.7p 20.4p 7.08% 2.92% 6.03% 10.22% 15.78% 5.19% 11.06% 6.37% 3.29% 91.39%

Full year results to 31st December 2016• Net rental income up 5.2% to £145.9m. Good interest cover of 3.7x and dividend cover of 1.5x. • Record year of lettings totalled £31.4m, on average 6.3% above December 2015 estimated rental value. • Despite talk of an exodus of London bankers, important global businesses continued to make major commitments to London notably Amazon, Apple, Expedia, Facebook, Google and Wells Fargo. ‘These results highlight how our business model of creating well-designed and innovative office space in improving locations can make meaningful progress even in less buoyant market conditions.’ – John Burns, Chief Executive Increased final dividend by 25.00% to 38.5p

Price Performance H1 2017 2016 2015 2014 2013 2012 2011 2010 2009 Compound(4.26%) (24.51%) 21.67% 20.96% 18.47% 35.00% (0.06%) 18.26% 82.07% 406.48%

Past Dividend and Growth Uninterrupted dividend growth since 1986 (Yield 1.98%)H1 2017 2016 2015 2014 2013 2012 2011 2010 2009 Compound38.5p 44.66p 40.6p 37.4p 34.5p 31.85p 29.75p 27.6p 24.5p 10.00% 8.56% 8.41% 8.32% 7.06% 7.79% 12.65% 5.83% 92.92%

52p Special Dividends

Full year results to 31st December 2016 • Record profit delivered, with profit growth in all Core Business sectors. Adjusted profit before tax up 13.2% at £288.3m. • Robust sales growth, up 15%, driven by Incotex, Croda’s seed enhancement business, as well as innovation and progress in high value markets and positive currency translation. • Relentless innovation creating more IP-protected business across all sectors, with sales of New & Protected Products up 20% to 27.4% of total sales.• Excellent margin and return on capital retained, with return on sales of 24% and ROIC at 19.3%. ‘Our innovation pipeline is exciting, with sales of New and Protected Products increase for the fourth consecutive year.’- Steve Foots, Chief Executive Increased final dividend by 8.55% to 41.25p

Price PerformanceH1 2017 2016 2015 2014 2013 2012 2011 2010 2009 Compound21.56% 1.44% 14.27% 8.34% 3.41% 31.71% 11.63% 102.00% 53.99% 485.56%

Past Dividend and Growth Uninterrupted dividend growth since 1993 (Yield 1.91%)H1 2017 2016 2015 2014 2013 2012 2011 2010 2009 Compound41.25p 70.75p 67p 65p 61.75p 57p 50p 24.75p 20.05p 5.60% 3.08% 5.26% 8.33% 14.00% 102.02% 23.44% 17.94% 316.18%

100p Special Dividends

Founded in 1935

Market Cap (Millions) £19,308.93

Founded in 1925


Founded in 1913


HALMAFounded in 1894


Full year results to 30th April 2017 • Acquisition of HPE’s software business to close in September. Existing shareholders will be entitled to receive a return of value totalling $500m, to be declared immediately prior to completion. • Delivered 185 product releases or significant enhancements in FY17 with each sub-portfolio improving the levels of engagement and cadence of product delivery. • Group revenue 0.9% lower to $1,380.7m, comprising 78% Micro Focus Portfolio and 22% SUSE product portfolio (2016: 82%:18%). ‘Over the last six years we have completed and successfully integrated 10 acquisitions and on completion of the HPE Software transaction will have increased the revenue of the business approximately ten fold since 2011.’ – Kevin Loosemore, Executive Chairman Increased interim dividend by 108.36% to 23.94p

Full year results to 31st May 2017• Brand shares maintained or grown in all of the Group’s main markets and categories.• All businesses in Nigeria traded well despite significant currency devaluation and poor liquidity.• Strong second half performance in Asia driven by continued improvement of results in Australia.• Robust performance in UK washing and bathing division underpinned by product renovation and despite competitive market conditions. ‘Our strategy of ongoing brand innovation and renovation continues to underpin the Group’s ability to maintain or grow our market shares.’ - Caroline Silver, Chair Increased final dividend by 2.00% to 5.61p

Price Performance H1 2017 2016 2015 2014 2013 2012 2011 2010 2009 Compound2.36% 17.38% (6.93%) (18.73%) (1.34%) 9.03% (12.65%) 48.41% 66.41% 75.53%

Past Dividend and Growth Uninterrupted dividend growth since 1974 (Yield 2.42%) 2017 2016 2015 2014 2013 2012 2011 2010 2009 Compound8.28p 8.11p 8p 7.76p 7.39p 6.717p 6.61p 5.9p 5.27p 2.10% 1.37% 3.09% 5.01% 10.02% 1.62% 12.03% 11.95% 12.13% 76.17%

Price Performance H1 2017 2016 2015 2014 2013 2012 2011 2010 2009 Compound5.04% 8.53% 29.59% 15.36% 30.40% 0.03% 7.61% 24.27% 29.41% 237.47%

Past Dividend and Growth Uninterrupted dividend growth since 1990 (Yield 2.14%) H1 2017 2016 2015 2014 2013 2012 2011 2010 2009 Compound5.22p 14.15p 13.10p 12.12p 11.13p 10.15p 9.75p 7.80p 7.43p 8.02% 8.09% 8.89% 9.66% 4.10% 25.00% 4.98% 3.05% 96.26%

17.1p Special Dividends

Full year results to 31st March 2017 • Sage One, an account and invoicing software for small businesses, saw its annual recurring revenue increase by 88% to £22m with an average annual contract value of £70. • Sage Live, a real-time accounting product now has 889 customers, with an average annual contract value of £1,800.• Cloud accounting products being rolled out in major geographies, with 52 launches planned in 2017.‘We are focused on Sage continuing to invest in growth, predominantly through new customer acquisition with cloud-products, and supported by bolt-on acquisitions that accelerate the strategy.’ – Stephen Kelly, Chief Executive Increased interim dividend by 8.75% to 5.22p

Price PerformanceH1 2017 2016 2015 2014 2013 2012 2011 2010 2009 Compound4.22% 36.61% 47.69% 30.57% 21.81% 20.56% (0.64%) (14.70%) 61.31% 287.13%

Past Dividend and Growth Uninterrupted dividend growth since 2006 (Yield 2.77%) 2017 2016 2015 2014 2013 2012 2011 2010 2009 Compound23.94p 48.97p 31.66p 26.69p 25.31p 20.03p 14.6p 13.97p 9.91p 54.67% 18.62% 5.45% 26.36% 37.19% 4.51% 40.97% 39.19% 587.78% 60p 60p 50p 45p Special Dividends

Full year results to 31st March 2017 • Adjust EPS up 5.2% to 125.7p. Adjusted dividend cover at 1.38x, which is towards the top of the expected range.• On market share buybacks totalled £131m in the period, plus an additional £65m in April 2017.• Investment and capital expenditure up 6.6% to £1.7bn. • In Wholesale, SSE is partnering with Siemens and Mitsubishi UK to develop wind turbines that are larger, more efficient and capable of supporting offshore wind projects in deeper waters.‘With a strong and growing asset base, and significant index-linked revenues, we remain committed to delivering annual dividend growth that at least keeps pace with inflation.’ – Alistair Phillips-Davies, Chief Executive Increased final dividend by 2.24% to 63.9p

Price PerformanceH1 2017 2016 2015 2014 2013 2012 2011 2010 2009 Compound(6.44%) 1.64% (5.80%) 18.39% (3.39%) 9.84% 5.39% 5.51% (4.60%) 25.55%

Past Dividend and Growth Uninterrupted dividend growth since 1992 (Yield 6.24%)2017 2016 2015 2014 2013 2012 2011 2010 2009 Compound91.3p 89.4p 88.4p 86.7p 84.2p 80.1p 75p 70p 66p 2.13% 1.13% 1.96% 2.97% 5.12% 6.80% 7.14% 6.06% 9.09% 50.91%

Founded in 1879

Founded in 1981

Founded in 1998




Geographic Spread (Revenues)

Emerg

ing M

arkets

6.27

%

Europ

e Inc

. UK

63.91

%

Ameri

cas 1

5.61%

Rest

of W

orld 1

.86%

Asia

12..36

%

Founded in 1976


It should be noted that investment involves risk. The price (or value) of investments can go down as well as up (and the investor may not necessarily receive back the original amount invested). When investments are made in overseas securities, movements in exchange rates may have an effect that is unfavourable as well as favourable. Past performance is not necessarily a guide to future performance. Rates of tax are those prevailing at the current time. These are subject to change without prior notice. Any tax reliefs referred to are those currently available and their value depends on the individual circumstances of the investor. Clients should always seek appropriate tax advice from their financial adviser before committing funds for management. The opinions expressed are based on information that we believe to be accurate and reliable. However, these opinions may change without notice. FIM Capital Limited does not guarantee the timelines, accuracy or suitability of such information in any way and anyone who acts on this information does so entirely at their own risk.

Edited by Michael Craine

Interim

Final

Average year on year dividend growth since 2009: 21.32%Dividend Per Share Growth (Pence)

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

AB Foods Croda Derwent London HALMA Micro Focus PZ Cussons Sage SSE Unilever Vodafone Whitbread WPP

11.3

5p

32.7

5p

13.8

6p

5.33

p

23.9

4p

2.67

p

5.22

p

27.4

p

€0.6

402

4.01

5p

29.9

p

19.5

5p

26.4

5p

41.2

5p

38.5

p

8.38

p

5.61

p 9.35

p

63.9

p

€0.6

402

8.69

p

65.0

9p

37.0

5p

37.4

7p

Full year results to 31st December 2016 • Exceed £2bn in operating profit for the first time in 2016 with £2.063bn, reflecting a 21.8% increase on the previous year (7.2% in constant currency). • Like-for-like sales growth in all regions, led by strong growth in Western Continental Europe and Asia Pacific, Latin America, Africa & the Middle East and Central & Eastern Europe. • Completed 56 transactions in the year, 20 acquisitions and investments in new markets, 38 in quantitative and digital, and 10 were driven by individual client or agency needs.Increased final dividend by 28.74% to 37.05p

Price PerformanceH1 2017 2016 2015 2014 2013 2012 2011 2010 2009 Compound(11.12%) 16.19% 16.21% (2.54%) 55.41% 31.46% (14.44%) 29.53% 51.43% 288.32%

Past Dividend and Growth Uninterrupted dividend growth since 1988 (Yield 3.52%) H1 2017 2016 2015 2014 2013 2012 2011 2010 2009 Compound37.05p 48.33p 42.49p 35.27p 30.27p 25.94p 19.28p 16.25p 15.47p 13.74% 20.47% 16.52% 16.69% 34.54% 18.65% 5.04% 8.03% 237.50%

Full year results to 31st December 2016 • Overall sales growth of 3.7%, with all four categories (Personal Care, Foods, Home Care, Refreshment) delivering progress against their strategic Priorities. Core EPS grew by 3.1% to €1.88. • Emerging markets grew by 6.5% mainly driven by volume growth in Asia and price growth in Latin America. • Following a failed takeover bid by Kraft Heinz, Unilever underwent a business review to create value for shareholders, this includes the decision to exit Spreads and combine Foods and Refreshment into one business.‘We have again grown ahead of our markets, driven by strong innovations that support our category strategies.’ – Paul Polman, Chief Executive Increased interim dividend by 5.99% to €0.6402

Price Performance H1 2017 2016 2015 2014 2013 2012 2011 2010 2009 Compound26.20% 12.51% 11.36% 5.88% 4.90% 9.39% 10.19% (1.55%) 26.28% 85.34%

Past Dividend and Growth Uninterrupted dividend growth since 1979 (Yield 2.73%) H1 2017 2016 2015 2014 2013 2012 2011 2010 2009 Compound€0.717 € 1.28 € 1.19 € 1.12 € 1.05 € 0.95 € 0.88 € 0.82 € 0.78 7.51% 5.96% 7.05% 10.06% 8.04% 7.81% 5.00% 2.63% 68.47%

Full year results to 31st March 2017 • Foreign exchange movements had a negative impact on group revenues, decreasing by 4.4% to €47.6 billion. Adjusted EPS from continuing operations up 17%. • Data traffic grew by 62% in Q4. 75 million 4G customers across 21 countries. 62% of active European data users taking 4G services, up from 49% 12 months earlier. • Announced merger between Vodafone India and Idea Cellular to create India’s largest telecoms operator, with 400 million customers, 35% customer market share and 41% revenue market share. ‘Our focus on excellence in customer experience has enabled further improvements in our overall commercial and financial performance during the year.’ – Vittorio Colao, Chief Executive Increased final dividend by 11.84% to 8.69p

Full year results to 2nd March 2017 • Group total sales growth of 8.2% (Premier Inn +9%, Costa +10.7%) and profit before tax up 6.2% to £565.2 million. • Premier Inn opened 3,816 new UK rooms during the year, achieving a high occupancy of 80.2%. • Costa underlying profit up 5.3% to £158 million. Driven by UK LFL sales growth of 2%, 255 new stores worldwide and an acceleration in the roll-out of Costa Express machines, with 1,585 new installations.‘We are very aware of our responsibilities to ensure that this great British company continues to thrive and, as such, we are focused on driving growth while managing risk and demonstrating excellent corporate governance.’ – Richard Baker, Chairman Increased final dividend by 6.55% to 65.9p

Price Performance H1 2017 2016 2015 2014 2013 2012 2011 2010 2009 Compound5.06% (14.20%) (7.74%) 27.17% 53.29% 56.46% (12.63%) 26.86% 53.87% 379.93%

Past Dividend and Growth Uninterrupted dividend growth since 1984 (Yield 2.46%) 2017 2016 2015 2014 2013 2012 2011 2010 2009 Compound95.8p 90.35p 82.15p 68.8p 57.4p 51.25p 44.5p 38p 36.55p 6.03% 9.98% 19.40% 19.86% 12.00% 15.17% 17.11% 3.97% 1.53% 166.11%

Price Performance H1 2017 2016 2015 2014 2013 2012 2011 2010 2009 Compound8.96% (9.57%) (0.74%) (24.60%) 53.45% (13.67%) 7.90% 15.38% 3.38% 27.61%

Past Dividend and Growth Uninterrupted dividend growth since 1991 (Yield 5.85%) 2017 2016 2015 2014 2013 2012 2011 2010 2009 Compound12.705p 11.45p 11.22p 11p 10.19p 9.52p 8.9p 8.31p 7.77p 10.96% 2.05% 2.00% 7.95% 7.04% 6.97% 7.10% 6.95% 3.46% 69.17%

54.14p 7.33p Special Dividend

Founded in 1871

Founded in 1930

Founded in 1991

Founded in 1742





years of accumulated dividend growth · first half review 2017 fim capital limited. licensed by the...

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