The fallout from the budget cannot be underestimated on UK businesses whether micro or massive. The rise in National Insurance Contributions is going to cost every business. At one end of the scale, Tesco face a bill of over £1bn over the next four years, according to analysts at Morgan Stanley. Whilst Young’s, who’s CEO we met at the end of November, has forecasted a bill of c.£11m as  a result of the increased NIC and increase in the real living wage. At this moment in time, it is hard to see where domestic growth is going to come from.

However, all is not lost for the UK investor. As is well known, the FTSE 100 is a majoritively US dollar earning index and the last couple of months have thrown out a few opportunities. We initiated in one of these, Sage Group, in November.  Sage is a Newcastle-upon-Tyne based (like our top 10 holding, Greggs), multinational enterprise software company, and one of the largest tech companies in the UK. After Oracle and SAP, it is the worlds third largest supplier of enterprise resource planning software (payroll, finance and accounting for the layman) and the largest supplier to small businesses worldwide. With attractive fundamentals, it has delivered strong sales growth and increased profit margins despite its competitive sector. It highlighted that once a customer is fully embedded onto the Sage software it would be very long, complicated, and tedious, to switch to a competitor, hence recurring revenues are so strong (97%).   We initiated in the business just below £10 in late October and early November, and they have since gained back their year-to-date losses after a strong results statement at the end of the month, where they maintained revenue growth and maintained guidance, but delivered strong beats in operating margin.

On our Christmas wishlist for 2025, we’re hoping that the Trump administration doesn’t come in all guns-blazing across many aspects. We would love it if the regulator would help the UK market and most of all we wish for a much more peaceful and happier 2025, than the previous year.

Many thanks to all investors for their support and we’re looking forward to getting out on the road in the spring. Mery Christmas. 
 

The above article has been prepared for investment professionals. Any other readers should note this content does not constitute advice or a solicitation to buy, sell, or hold any investment. We strongly recommend speaking to an investment adviser before taking any action based on the information contained in this article.

Please also note the value of investments and the income you get from them may fall as well as rise, and there is no certainty that you will get back the amount of your original investment. You should also be aware that past performance may not be a reliable guide to future performance.