Evenlode Income Fund Update Webinar Hugh Yarrow and Chris Moore Wednesday 21st July 2021
FOR INVESTMENT PROFESSIONALS ONLY INTRODUCTION 2
Agenda
. Portfolio fundamentals and dividend update.
. Performance update.
. Portfolio changes.
. Topics from results.
. Questions. INTRODUCTION 3
Evenlode and the Investment Team
. Formed in 2009 with the launch of Evenlode Income. . Long-term, employee-ownership business model. . Based in Chipping Norton, Oxfordshire. . Assets under management of £5.0bn. . Evenlode Investment is a team of 25, which includes investment and operational teams.
Hugh Yarrow Ben Peters Chris Elliott James Knoedler Chris Moore
CEO & Fund Fund Manager & Fund Fund Head of Manager Director Manager Manager Research Joined 2009 Joined 2009 Joined 2015 Joined 2020 Joined 2018
Tom Weller Sawan Kumar Charlie Freitag Bethan Rose
Innovation Head of Stewardship Sustainable Analyst Stewardship Analyst Investment Joined 2019 Joined 2017 Joined 2020 Analyst Joined 2018
Robert Strachan Charlotte Lamb Cristina Dumitru Leon Cyril
Investment Investment Trainee Trainee Analyst Analyst Investment Analyst Investment Analyst Joined 2019 Joined 2019 Joined 2020 Joined 2020
Source: Evenlode Investment, 30th June 2021 INTRODUCTION 4
Evenlode Income Fund Team
Fund Hugh Yarrow Ben Peters Chris Moore Management Team CEO & Fund Fund Manager & Head of Manager Director Research Joined 2009 Joined 2009 Joined 2018
Stewardship Sawan Kumar Charlie Freitag Bethan Rose Team Head of Stewardship Sustainable Stewardship Analyst Investment Joined 2017 Joined 2020 Analyst Joined 2018
Investment Tom Weller Robert Strachan Charlotte Lamb Cristina Dumitru Leon Cyril Analysts Innovation Investment Investment Trainee Trainee Analyst Analyst Analyst Investment Analyst Investment Analyst Joined 2019 Joined 2019 Joined 2019 Joined 2020 Joined 2020 Portfolio Characteristics LONG-TERM RISK MANAGEMENT 6
Long-Term Risk Management
Individual Position Sizing Some Key Considerations at the Portfolio Level 1) Each holding has a maximum position size which is regularly updated by the investment team and is . High and sustainable free cash flow. determined with respect to the following nine risk factors: . Attractive, well covered dividend yield.
. Economic moat strength. . Good diversification by geography and sector. . Pricing Power . Long-term industry outlook. . A bedrock of portfolio cash flow from repeat-purchase . Economic sensitivity. business models. . Diversification. . Balance sheet strength. . Balance sheet strength. . Free cash flow strength relative to dividend yield. . Management quality. . ESG Risk. . Liquidity of shares.
2) Valuation, dividend yield and context within the overall portfolio are considered when determining current position size relative to this maximum position size. PORTFOLIO CHARACTERISTICS 7
Portfolio Characteristics - Overview
Evenlode Income FY1 FY2
Free Cash Flow Yield (%) 4.0 5.0
Dividend Yield (%) 2.6 2.7
Net Debt to EBITDA (x) 1.1 0.9
Source: Evenlode Investment, FactSet, 19th July 2021 COVID RECOVERY 8
Evenlode Income – Covid Recovery
Includes £ headwind 110
105
100
95 +18% 90 -11%
85 Performance rebased to 100 to rebased Performance
80
75 2019 2020 2021 2022 Revenue EBIT
Past performance is not a reliable indicator of future returns. Source: Evenlode Investment VALUATION MANAGEMENT 9
Forward Cash Returns
14.0
12.0
10.0
8.0 (%) 6.0
4.0
2.0
0.0 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 May-10 May-11 May-12 May-13 May-14 May-15 May-16 May-17 May-18 May-19 May-20 May-21
Portfolio Forward Cash Return Universe Forward Cash Return
Past performance is not a reliable indicator of future returns. Source: Evenlode Investment, 30th June 2021 Yield DIVIDENDS VS UK MARKET 11
Evenlode Income Rolling Quarterly Distributions
8 Evenlode 8 UK Market dividends UK Market Income (best case) . 2020: -38% underlying, -44% headline. 7 7 . 2021: +0.9% to +5.6%.
6 6 . Forward yield: 2.6% to 2.8%.
5 5 Evenlode Income dividends 4 4 . -26% to Feb 2021.
3 3 . Low/mid teens dividend growth expected in year to Feb 2022.
Rolling Dividends (pence Dividends (pence Rolling share) per 2 2 . Forward yield: 2.6% to 2.7%.
Comparative Equivalent (Link Dividend Monitor) . Real dividend growth expected over 1 1 medium/long-term.
0 0 Jun 11 Jun Dec 11 Jun 17 Jun Jun 15 Jun Jun 12 Jun Jun 21 Jun 13 Jun Dec 17 18 Jun Jun 14 Jun Dec 15 Jun 16 Jun Jun 19 Jun Dec 12 Dec 21 Dec 13 Dec 18 Dec 14 Dec 16 Dec 19 Jun 22 Dec 10 Jun 20 Dec 20
Evenlode Income UK Market (Link Dividend Monitor)
Forward distribution and yield estimates are forecasts and are not guaranteed. Past performance is not a reliable indicator of future returns. Source: Link Q2 2021 Dividend Monitor, Evenlode Investment, 30th June 2021 DIVIDENDS UK INCOME 12
Dividend Summary
No Disruption Announced (%) Disruption Announced Unilever 9.1 Diageo 7.7 2020 Reinstatement (%) Post-2020 Resumption (%) RELX 7.6 Bunzl 3.9 Hays 2.3 Reckitt Benckiser 6.4 Smiths Group 3.3 Page Group 2.0 GlaxoSmithKline 5.0 Spectris 2.3 Compass 1.9 Sage Group 4.9 Victrex 1.3 Savills 1.5 Procter & Gamble 2.9 Rotork 0.9 Informa 1.3 Cisco Systems 2.6 % of Portfolio 11.7 Howden Joinery 1.1 Schroders 2.3 Burberry 1.1 AstraZeneca 2.2 % of Portfolio 11.3 Ashmore Group 2.2 PepsiCo 2.2 Reduced Dividend (%) Hargreaves Lansdown 2.1 WPP 2.4 Microsoft 2.0 Euromoney 1.6 Smith & Nephew 1.9 AB InBev 1.0 Moneysupermarket 1.6 IMI 0.1 Highlighted companies have net Roche 1.5 % of Portfolio 5.2 cash on their balance sheets Intertek Group 1.4 Daily Mail & Gen. Tst. 1.3 Wolters Kluwer 1.2 LSE 1.1 EMIS Group 0.9 SGS 0.9 % of Portfolio 71.1 Source: Evenlode Investment, 30th June 2021 Performance RETURN & DRAWDOWNS 14
Evenlode Income FTSE All-Share Index
Periods of contraction shown are drawdowns of more than -10%
Past performance is not a reliable indicator of future returns. Source: Morningstar Direct, Evenlode Income B Acc GBP, 19th October 2009 – 20th July 2021 PERFORMANCE 15
Evenlode Income Relative Performance Since Launch
Past performance is not a reliable indicator of future returns. Source Morningstar, relative to FTSE All Share Index, Total Return GBP, 19th October 2009 – 20th July 2021 PERFORMANCE 16
Calendar Year Returns Since Launch
Year Evenlode Income FTSE All Share TR Relative (B Acc) (%) (%) (%) 2009* +3.2 +2.3 +0.9 2010 +20.1 +14.5 +5.6 2011 +2.6 -3.5 +6.1 2012 +12.5 +12.3 +0.2 2013 +26.7 +20.8 +5.9 2014 +8.2 +1.2 +7.0 2015 +8.4 +1.0 +7.4 2016 +17.1 +16.8 +0.3 2017 +15.2 +13.1 +2.1 2018 +0.4 -9.5 +9.9 2019 +24.3 +19.2 +5.1 2020 -7.4 -9.8 +2.4 2021 YTD +9.2 +8.3 +0.9 Total Cumulative +270.1 +121.7 +148.4 Total Annualised +11.8 +7.0 +4.8
*19th October - 31st December 2009 Past performance is not a reliable indicator of future returns. Source: Morningstar GBP TR B Acc, 20th July 2021 Portfolio Nudge SETTING THE SCENE 18
The Pendulum of Investor Sentiment March 2020 June 2021
. Economic consensus: recession, deflation . Economic consensus: Strong prolonged worries. recovery, inflation a concern.
. UK Market: down –35% in two months. . UK Market: Hitting all time highs.
. Sentiment: Bearish, fearful . Sentiment: Bullish, Fear of Missing Out.
. Volatility: High. . Volatility: Low.
. M & A environment: Non existent. . M & A environment: Frothy.
. Equity issuance. . Buy-backs resuming.
. Resilience: Desirable. . Resilience: Unfashionable. PERFORMANCE ATTRIBUTION 19
Performance Attribution October 2020 to June 2021
Major Contributors Detractors
Company Tot. Return Contribution Company Tot. Return Contribution (%) (%) (%) (%)
Diageo 30.9 1.9 Reckitt Benck. -15.7 -1.2 WPP 63.6 1.1 Unilever -9.6 -1.0 RELX 13.4 1.0 Sage Group -2.5 -0.3 Spectris 35.2 0.8 Intertek Group -12.0 -0.3 Schroders 31.1 0.8 P&G -8.1 -0.2 Hays 40.4 0.8 Kone Oyj -6.4 -0.1 Cisco Systems 29.2 0.7 Bunzl -1.0 -0.1 PageGroup 49.3 0.7 Moneysupermkt. -1.4 -0.0 IMI 64.4 0.6 Smiths Group 16.8 0.6
Source: FactSet, 1st October 2020 – 30th June 2021 UNFASHIONABLE RESILIENCE 20
Relative Performance Since Onset of Crisis
Vaccine FCF Yield = 4.7% rally Dividend Yield = 2.7%
Vaccine rally FCF Yield = 4.1% Dividend Yield = 2.1%
Vaccine rally FCF Yield = 6.1% Dividend Yield = 2.2%
Source: Evenlode, Financial Express, FactSet, 20th July 2021 PORTFOLIO CHANGES 21
Main Portfolio Changes Year to Date
New Positions SGS March 2021 Wolters Kluwer March 2021 London Stock Exchange April 2021
Exits IBM April 2021 Intel Corporation April 2021 PayPoint June 2021 IMI July 2021
Source: Evenlode Investment INVESTMENT PROCESS – 22 VALUATION DISCIPLINE
Detailed Valuation Framework
Mean FER Mean FCR FER Quartiles
Source: Evenlode Investment, 30th June 2021 Topics From Results TOPICS FROM RESULTS 24
Topics From Results
. Inflation and pricing power.
. Shape of recovery in impacted sectors.
. Lasting effects of the pandemic? . Digitalisation. . Flexible working. . Supply chain considerations. . Health and hygiene trends.
. Investing for resilience and flexibility.
. Sustainability. Questions ? Appendix PORTFOLIO CHARACTERISTICS 27
Balance Sheets and Economic Sensitivity
Evenlode Economic Net Debt to EBITDA % of Portfolio Sensitivity Score (x)
A (Very Low) 48 1.6
B (Quite Low) 24 2.6
C (Average) 11 -0.3
D (Quite High) 11 -1.8
E (Very High) 6 -3.4
Source: Evenlode Investment, 30th June 2021 PORTFOLIO 28
Sectors Revenues by Region
Travel and Cash Chemicals Technology Leisure 1% 1% UK 12% 2% North America 17% 34% Consumer Support Goods Services 30% 10%
Asia-Pacific 18%
Media 17% Engineering Middle East 7% and Africa 6% Financials Health Care Latin America Europe 9% 11% 6% 19%
Source: Evenlode Investment, FactSet, 30th June 2021 KEY PORTFOLIO CHANGES 29
Portfolio Turnover
Source: Evenlode Investment, quarterly data, 1st July 2020 – 30th June 2021 FUND OVERLAP 30
Overlap Between Funds
Evenlode Evenlode Global Income Income (min. 80% UK Equities)
EVN Global Income EVN Income Overlap Weight Overlap Universe 99 77 37 N/A Portfolio 38 39 12 33%
Source: Funds Data, 30th June 2021 REVENUE SOURCES 31
Revenue Source Comparison
Portfolio Revenue Exposures 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Africa & Middle East N.America L.America Asia/Pacific UK Europe ex. UK
Evenlode Global Income Evenlode Income
Source: Evenlode Investment, FactSet GeoRev, 30th June 2021 INVESTABLE UNIVERSE 32
Investable Universe
FTSE Sector Portfolio Universe
Chemicals Victrex Croda International, Givaudan
Consumer Goods Anheuser-Busch-Inbev, Burberry, Domino’s Pizza Group, Fevertree Drinks PLC, Diageo, PepsiCo, Procter & Gamble, Games Workshop, Heineken, L’Oreal, LVMH Reckitt Benckiser Group, Unilever Moet Hennessy Louis Vuitton, Nestlé, Nike
Engineering IMI, Rotork, Smiths Group, Spectris Halma, Kone, Renishaw, Spirax-Sarco Engineering
Financials Ashmore Group, Hargreaves AJ Bell Holdings Limited, IntegraFin, Marsh & Lansdown, London Stock Exchange McLennan, St James’s Place, Visa Group plc, Savills, Schroders
Healthcare AstraZeneca, GlaxoSmithKline, Coloplast, Johnson & Johnson, Medtronic, Roche, Smith & Nephew Novartis, Sanofi
Source: Evenlode Investment, 30th June 2021 INVESTABLE UNIVERSE 33
Investable Universe
FTSE Sector Portfolio Universe
Media Daily Mail and General Trust, Ascential, Auto-Trader Group, Rightmove, Euromoney, Informa, Moneysupermarket.com, RELX, Wolters Kluwer, WPP
Support Services Bunzl, Hays, Howden Joinery Automatic Data Processing Inc, Bureau Vertias, Group, Intertek, Page Group; SGS Diploma, Experian, FDM Group, Paychex, Inc., RWS Holdings
Technology Cisco Systems, EMIS Group, Group, Accenture, AVEVA, International Business Microsoft Corporation, Sage Group Machines
Travel & Leisure Compass Intercontinental Hotel Group
Source: Evenlode Investment, 30th June 2021 FUND DETAILS 34
Evenlode Income Fund
Fund Managers Hugh Yarrow & Ben Peters Fund Launch 19th October 2009 IA Sector UK All Companies To generate real income growth and long-term capital growth by Investment Objective investing primarily in UK equities Investment Universe UK equities and up to 20% in overseas stocks No of Holdings 30-50 Fund Size £3,605m B Units: 87bps Periodic Charge C Units: 77bps (£10m minimum investment)
Source: Evenlode Investment, 30th June 2021 INVESTMENTS FOR LIFE 35
Using careful thought, stewardship and expertise, we invest consistently for the long-term, to maximise positive impact for all.
Client Focused and Long-Term Evenlode aims to be the asset management company that we as a team would like to entrust our savings to over the long-term, were we not industry professionals.
Team-Based Investment Management Platform Evenlode has a clear equity investment process, run by one collegiate team and utilising its own integrated investment management platform.
Purpose-Led Organisation Evenlode aims to have a positive impact on all its stakeholders, including clients, partners, and the wider community/society in which it operates.
Legal Structure Management Philosophy Shared Values Independently owned by and Autonomous. Long-term focus. on behalf of its employees. Accountable. Collective ownership Co-operative. as a long-term home. RISK WARNINGS 36
Disclaimer This presentation is for Professional clients only. TB Evenlode Income is a sub-fund of the TB Evenlode Investment Funds ICVC. Full details of the TB Evenlode Investment Funds, including risk warnings, are published in the TB Evenlode Investment Funds ICVC Prospectus, the TB Evenlode Supplementary Information Document (SID) and the TB Evenlode Key Investor Information Documents (KIIDs) which are available on request and at www.evenlodeinvestment.com.
The TB Evenlode Investment Funds are subject to normal stock market fluctuations and other risks inherent in such investments. Past performance is not a reliable indicator of future returns. The value of your investment and the income derived from it can go down as well as up, and you may not get back the money you invested. You should therefore regard your investment as medium-to long term. As a concentrated portfolio of typically less than 40 investments Evenlode Income may carry more stock-specific risk than a fund spread over a larger number of stocks. The fund has the ability to invest in derivatives for the purposes of efficient portfolio management, which may restrict gains in a rising market.
Investments in overseas equities will be affected by changes in exchange rates, which could cause the value of your investment to increase or diminish. Every effort is taken to ensure the accuracy of the data used in this document but no warranties are given. Evenlode is a trading brand of Evenlode Investment Management Limited. Evenlode Investment Management Limited is authorised and regulated by the Financial Conduct Authority, No. 767844. T. Bailey Fund Services Limited is authorised and regulated by the Financial Conduct Authority, No. 190293.