Lindsell Train has announced results for the year ended 31 March 2016. In a year when the company’s net asset value total return per share increased by 11.9%, the share price (adjusted to include dividends) was up by 35.6%. This resulted in a significant increase in the share price premium to NAV, up from 5.9% to 28.6%. Both the performance of the share price and of the NAV not only well exceeded the return on the Company’s Benchmark, but also world equity markets. The Benchmark was up 4.0% and the MSCI World Index (Sterling) was down 0.3% over the year to 31st March 2016. The Directors propose a rise in the company’s total dividends of 29% to GBP8.90 per share, made up of an ordinary dividend of GBP8.10 and a special dividend of GBP0.80 per share.
The overwhelming contributor to this return over the last year, and indeed since inception, has been the rise in the value of the company’s holding in Lindsell Train Limited (“LTL”). In 2001 this investment represented just 0.3% of NAV. By the end of this financial year, it had risen to 32.5% of NAV. Last year, LTL’s dividends accounted for 68% of the company’s revenue.
Lindsell Train say it is the pressures created by technological change that pose the biggest threat to the companies held in the portfolio. There were just two holdings in the portfolio that registered negative returns last year – Nintendo (-9%) and Pearson (-40%). The reason, in both cases, was that other investors fear that changes in technology will undermine their longstanding business models sufficiently to damage future returns. The investment manager on the other hand takes the opposite view, believing that technological advances have just as much chance of boosting returns and raising barriers to entry, if these companies successfully embrace change.
LTI : Lindsell Train powers ahead driven by management company