inBrief Edition 6 | May 2022 by Seven Investment Management LLP

inBrief EDITION 7 | 2022

Wealth into words

Featuring... The secrets of the UK’s most successful female business leaders How to be a successful business woman in today’s climate

Using software to help plan your future Find out about our cashflow software that can help you plan for your future

Simpsons’ English Wine Estate An interview with the founders

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STEWARDSHIP

We are FRC UK Stewardship Code signatories We take sustainability and ESG endeavours seriously at 7IM, which is why we are proud to say we are embedding change across both our investment process and the way we run our business.

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Find out more about what we’re doing inside 7IM, www.7im.co.uk/inside-7im

The information and / or any reference to specific instruments contained in this document does not constitute an investment recommendation or tax advice. Capital at risk. The value of your investments and the income from them may go down as well as up, and you could get back less than you invested. Tax rules are subject to change and taxation will vary depending on individual circumstances. Past performance is not a guide to future performance.

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Welcome

04 Beating the Russian bear Written by Terence Moll, Head of Investment Strategy and ESG

08 The secrets of the UKs most successful female business leaders Written by Tamara Gillan, Founder & CEO, The WealthiHer Network

10 Using software to help plan your future Written by David Little, Financial Planning Director

Welcome to the latest edition of inBrief, our client-facing magazine dedicated to giving you an insight into what’s happening across our business and across the broader market. Before delving into the publication, I wanted to turn my attention to the ongoing conflict in Ukraine. At 7IM, we are unreservedly aware of what is taking place in Ukraine and of the challenges facing both President Zelensky and the rest of the nation. Our thoughts and prayers are with everyone impacted by the conflict. I’d like to take this opportunity to assure our clients that we are closely monitoring the situation. If you have any concerns, please don’t hesitate to contact your Private Client or Financial Planning Director. To kick things off, I wanted to highlight the results of our recent client satisfaction survey, conducted by our London team, where we received remarkably high scores compared to the benchmark. I’m pleased to see that our efforts to deliver an unrivalled experience are being recognised by many of our clients. Of course, we acknowledge that there is room for improvement and will strive to see these figures rise in our next survey. We recently welcomed several new yet experienced faces to our Private Client business, while also investing significantly in developing existing talent within the team. I’m remarkably proud of this team and what we have achieved so far, and I look forward to seeing how we can further support you as we continue on our journey to deliver an unrivalled experience and succeed together. I hope you enjoy this issue of inBrief and, as ever, please do get in touch if you have any questions or if we can help in any other way. We would be delighted to hear from you.

Contents

14 Simpsons’ English Wine Estate An interview with Ruth and Charles Simpson

Colin Rowe Managing Director, Private Clients Get in touch with your Private Client Manager or call us on 020 3823 8678 and we’ll be happy to answer any of your queries. @7IM_PRIVATE

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Beating the Russian bear

For those of us who grew up during the Cold War, the year 1990 was an immense relief. The collapse of the Soviet Union meant that the threat of nuclear war had been swept away (or so we thought) and we could suddenly be far more optimistic about our lives and humanity. However, the use of nuclear weapons has once again been raised, following Russia’s invasion of Ukraine on 24 February 2022, serving as a reminder that Europe and the world are still riven by immense tensions and enmities. War with a rogue nuclear state is not inconceivable anymore. All wars are human tragedies, above all. We empathise with the besieged people of Ukraine, the millions of Ukrainian refugees, and with the many Russians who do not support the war. At the time of writing, peace talks seem to be making some progress. While conflicts rarely end quickly, we hope this one is moving towards a tolerable outcome.

The surprises of war The first surprise of the war is that Russia’s military capabilities have been found wanting. In 2014, Russia swept up the Crimea without difficulty; but not this time. The bear is big and bad, but not invincible, partly because many of its soldiers lack motivation. Secondly, the invasion of Ukraine has brought old Western allies together. Europe and the USA responded to the invasion with a barrage of sanctions and promises to hike defence spending.

Even neutral Sweden and Finland have expressed interest in joining NATO, the North Atlantic Treaty Organization. Regardless of how the war turns out, formal and informal sanctions are likely to be applied to Russia for many years to come, with its people as the main victims. And thirdly, the Ukrainian resistance has been remarkable. Mr Putin seems to have made the classic dictator’s error of underestimating the commitment and capabilities of soldiers who are fighting for a democracy they believe in. This can be a costly mistake, as the leaders of Germany and Japan discovered during the Second World War.

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Terence Moll Head of Investment Strategy & ESG

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Impact on financial markets We have been following the situation in Ukraine closely and considering what it might mean for our portfolios. While the Russian and Ukrainian economies are small, they are large producers of commodities, led by oil, natural gas and coal, iron and steel, and wheat and maize. To the extent that if these products are taken out of world markets by sanctions and war, we can expect ongoing market bottlenecks and inflationary

pressures – just when it seemed the post-COVID-19 pressures were beginning to ease. We have observed many wars and geopolitical crises over the years and found that financial markets often react in similar ways. This is illustrated in the chart, which refers to four major wars and geopolitical events since 1990, plus the Russian invasion of Ukraine. >>

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Beating the Russian bear Continued

S&P 500 index (crisis day = 100) 114 112

Wars have curiously little impact on markets in the long run. This chart shows average S&P 500 returns over the two months leading up to four major wars since 1990, and the six months after. US equities fall after the crisis but recover quickly and are usually up by 3 – 6 months later. The four wars are: Iraq invasion of Kuwait, 2 August 1990; 9/11; the 2003 Iraq War, beginning 20 March 2003; the Russian annexation of Crimea, beginning 27 February 2014. Source: Bloomberg Finance L.P.

Russian invasion of Ukraine 2022

110 108 106 104

102 Average of four wars

100 98 96 94

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-2 months

-1 month

Crisis Day

+1 month

+2 months

+3 months

Before the crisis, equity markets tend to do nothing much. If the crisis or war has been priced in beforehand, similar to what happened this time around with Russia’s invasion of Ukraine, then the markets tend to fall. Then the war begins. Markets usually plunge for about 5–15 trading days after that, but they level out shortly after, usually while the war or crisis is still on the go, and continue to perform well thereafter. If you look back after a year or two, it’s often hard to see the effect of the war or geopolitical crisis, relative to the many other forces driving equity markets.

+4 months

+5 months

+6 months

9/11 was a prime example. Two planes were flown into the World Trade Centre towers early that Tuesday morning, and markets were closed for the rest of the week. They opened the following Monday and by the Friday, the S&P 500 had lost 11.6%. Then it began bouncing and made all the money back by 11 October. Why do equity markets work this way? The main reason is simple. In the long run, the value of a company should be determined largely by the dividends and share buybacks that it generates for many years into the future.

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If you look back after a year or two, it’s often hard to see the effect of the war or geopolitical crisis, relative to the many other forces driving equity markets.”

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What next? As shown in the graph, the S&P 500 reached a low 13 days after the Russian invasion and has bounced since. At the time of writing, it’s about 10% above its 17 March low. The worst might not be over. If the war continues, possibly even worsens, then Russian oil and gas could be banned from world markets, boosting energy prices and inflation. You can imagine scenarios in which oil reaches $200. Sooner or later, much of the world might plunge into recession. Our view, though, is that firms, governments and consumers will probably be able to adapt to whatever lies ahead. Last year proved to be a great case study in adapting to difficult economic and financial conditions: most of the world came through pretty well. The path ahead might be rough, but we don’t expect roaring inflation and growth will probably remain healthy, as we’ve been saying for the last year.

In short, most geopolitical crises don’t affect economic growth or company performance in the long term. Think of Apple, for example. Though 9/11 and the Russian annexation of the Crimea in 2004 were major geopolitical events, did they affect Apple production, sales and earnings over the next decade or two? They did not. Apple’s big markets in the USA, Europe and Greater China were largely unaffected. Fortunately, it is rare that the large economies declare war on one another. The last war that affected company sales and earnings across the world was the Second World War.

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The secrets of the UK’s most successful female business leaders

Tamara Gillan Founder & CEO, The WealthiHer Network

Anya Hindmarch, the iconic British designer, launched her business in the middle of the ‘80s recession. Of all the challenges faced since then, Anya told me that the pandemic has forced her to think “more bravely than ever before”. And she did amidst retail chaos, launching not one new store but a five-store village, with stores dedicated to a few of her favourite things, from the art of organising to recycled plastics and a Village Hall.

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About Tamara Tamara is an entrepreneur, change-agent and champion for female empowerment and equality. As a single mother Tamara has had to fight for her own success and passionately believes women deserve to be recognised. By leveraging the power of collaborative action and bringing together 15 leading financial organisations, Tamara created the WealthiHer Network on International Women’s Day 2019 to drive the economic advancement of women globally. The network’s mission is to arm and equip women with the knowledge, tools and confidence they need to prosper and build a more equal world.

Indeed, the Covid-19 crisis demanded bravery and innovation from all business owners. Not only have the last two years been extremely challenging to navigate, but the ongoing paths to recovery are also unclear against an ever-evolving economic backdrop. Personally, Covid has tested me in every corner of my life, as an entrepreneur, a female business leader, a single mother and the daughter of a geographically divided family. Resilience, ingenuity, and humility has been learnt and required at every turn. Despite the hardship, I’ve also witnessed exceptional leadership and success under pressure.

And it is important to keep highlighting the success of break-through leaders, their persistence in the face of challenges, their ingenuity in seizing opportunity; and to identify where more support is needed. So, what are the secret success ingredients to this female-led business growth? Access to funding First up, and perhaps the hardest to achieve, access to funding. While figures show female entrepreneurial participation could boost global GDP by 3-6%, we still see a lack of funding as an issue, with just 2.3% of funding having gone to female founders. Despite this, many women missed out on critical funding opportunities through the pandemic, particularly earlystage funding.

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An enduring mission Louise Hill, Co-Founder and Chief Operating Officer of gohenry, emphasises the importance of staying true to a business’ mission and values. Founder’s must be their company’s biggest advocate, and they shouldn’t be afraid to ask the tough questions. “A good founder has the company’s best interests at heart and is constantly questioning what the company needs.” Confident leadership Olivia Wollenberg, Founder and Chief Executive Officer of Livia’s, shares that importance of delegation and trust. “I’ve taught myself to hire, delegate, and trust the experts,” she says. “There are so many people who can do many things better than I can, and it is very important to acknowledge that as a founder.” Or as Executive Coach, Lynn Scott wisely advised me: “hire people that terrify you.”

For more information, visit: www.wealthihernetwork.com

Determination Finally, from an investor’s perspective, Jeevan Sunner of Playfair Capital points to resilience as a key quality founders should possess. “A willingness to overcome hurdles is what we look for in founders. Those with resilience and determination get us excited. I know that if a woman is sitting in front of you, she is going to be someone special… they believe in what they are doing so much more because they have had to fight.” Thank-you to the special, brave, inspiring, big-thinking, and game-changing female leaders who lead the way.

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Big thinking Successful business leaders and founders think big from the outset and plan for growth. Anne Boden implores women to think bigger. “Some surveys suggest that women aren’t thinking about starting businesses or planning for outsized success early enough,” she says. “And when they do, they aren’t dreaming big enough.” Joining a growth accelerator, such as the Business Growth Programme or Entrepreneurial Spark, can help super-charge aspirations and

possibilities. 37% of the top female-powered businesses attended an accelerator, compared to 19% of high-growth businesses.

As Anne Boden, Founder and Chief Executive Officer of Starling Bank comments: “when women founders do get funded, expectations are different. They do not get given the permission or privilege to lose a billion every quarter. There’s no ‘PayPal mafia’ for women who can support female founders, rally behind them, and push through their success.” With investment, women are often forced to overcome hurdles and to pivot and pursue less traditional funding options, such as crowding funding to great effect; platforms including Crowdcube and Seedrs, account for three of the top-five investors in female-powered companies.

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ARTICLE

Using software to help plan your future

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How do you know if the financial choices you are making today, will have the desired future impact on your financial goals and objectives?

If you are accumulating wealth, are you making the most of the various tax allowances? Should you be putting more into your ISA or your pension? If you have a young family, how financially secure would they be in the event of your death? If retirement is on the horizon, could you retire earlier than planned? How much capital do you need from your business sale to secure a retirement that you desire? Can you afford to start gifting money to heirs now, and reduce your estate’s future liability to inheritance tax?

All of these questions can be explored by using cashflow planning software, a fantastic tool that helps financial planners create ‘scenarios’ where we can test the limits of a client’s finances – without any immediate real-world consequences – and look into a financial ‘crystal ball’.

David Little Financial Planning Director

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Accumulation 42 44

47 49

52 54

Events and goals We start by building a timeline. Here Mr and Mrs Smith have an ‘accumulation phase’, a period of active retirement where they anticipate higher spending on leisure activities and finishing with a retirement phase, where aging will likely decrease their leisure expenditure. We add capital events, such as gifts to their children, a big family holiday when Mr Smith reaches age 60, and an anticipated inheritance, together with periods of additional expenditure, such educational costs for their children. >>

57 59

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67 69

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Retirement 77 79

82 84

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Active Retirement

Cashflow software allows financial planners to explore the best ways to help clients meet their financial goals, creating sometime complex scenarios in the background, but always presenting simple solutions to clients!” @7IM_PRIVATE

David Little Financial Planning Director

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Using software to help plan your future Continued

Cashflow Once we have a timeline of events, we can start bringing the cashflow to life, adding income, expenditure, assets and liabilities. Is an expenditure a basic need, such as household bills and food? Or a luxury, such as Mr Smith’s 60th birthday family holiday? Our cashflow chart shows in a very user-friendly way, whether basic expenditure or the total expenditure is achieved over Mr and Mrs Smith’s lifetime and is much easier to interpret compared to multiple spreadsheets!

Once we have this ‘base plan’, we can look at areas that might need improvement. Would higher pension contributions, and lower ISA contributions, be affordable and help to meet later life expenditure? Will the children need to take on some debt to attend university? Perhaps lifetime gifting isn’t achievable, and an inheritance will have to wait until the distribution of Mr and Mrs Smith’s estate? Our cashflow plan tool can also take into account downsizing, which would allow Mr and Mrs Smith to calculate how much capital they would need to generate from a house sale to finance their lifestyle for a certain number of years.

Get in touch and speak to one of our Financial Planning Directors about how our cashflow software can help you better plan for your future.

After discussing with the client where there may be room for change, we can build alternative plans to show the effect that these changes might make.

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and an annual update allows us to consider whether current plans for creating wealth, or spending it, need to be adjusted. Cashflow software allows financial planners to explore the best ways to help clients meet their financial goals, creating sometime complex scenarios in the background, but always presenting simple solutions to clients! If you’d like to speak to one of our Financial Planning Directors and find out more about how our cashflow software can help you better plan for your future, please do get in touch. @7IM_PRIVATE

Insights Cashflow planning allows us to look at a snapshot of a client’s financial circumstances and plan accordingly. If one spouse were to die today, how would the rest of the family survive financially? Does a life cover policy taken out some time ago to pay off an old mortgage, meet the family’s needs today? Is there an inheritance tax liability? As clients approach retirement, we can consider the most tax-efficient ways to use the last few years of wealth building opportunities, and then structure withdrawals tax efficiently in retirement. Are there enough assets to spend more than anticipated? If there isn’t enough room in the budget to meet all financial goals, is leisure spending going to depend on investment returns? Updating the cashflow plan annually allows us to look back over the previous year and assess how investments performed, consider unexpected income or expenditure, and understand if there are any changes to a client’s financial goals and objectives. Legislation and regulation also change,

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INTERVIEW

Simpsons’ English Wine Estate We have been making award-winning wines at our stunning, southern French winery, Domaine de Sainte Rose, since 2002. In 2012, we brought our expertise and savoir-faire back to the UK, establishing Simpsons’ Wine Estate in Barham, with an aspiration to create the finest quality English wines.

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Ruth Simpson & Charles Simpson Owners and Founders

This shared undertaking to secure environmental sustainability at the heart of UK wine production continues into our winery, where we are working to reduce our water and nonrenewable energy consumption.”

With 30 hectares of vineyards now established on the iconic chalk terroir of the North Downs and a state-of-the-art winery located within walking distance of the vines, we saw our first harvest in 2016. With a strong focus on provenance, Simpsons Wine Estate now produces a highly acclaimed range of exclusively estate grown still and sparkling wines, including the Roman Road Chardonnay 2018, which won Best in Show and a Platinum Medal in the 2020 Decanter World Wine Awards and Chalklands Classic Cuvee 2016, which won a gold medal in the 2019 Champagne and Sparkling Wine World Championships. We now offer a diverse range of vineyard and winery tours and events, which are held in the elegant Glass House Tasting Room with the world’s first winery helter-skelter slide!

As entrepreneurs, what were the biggest challenges you came across when starting the business? Where do you see it in 10 years’ time? The British climate is the biggest challenge! A lot of people talk about climate change as being the only reason that any wine can be successfully produced in the UK. We would have to qualify this and say that successful wine production is only possible in very specific sites within the UK and that regardless, we are still on the very fringes of viable viticulture. The most important criteria for all successful wine production, but particularly still wine production in the UK is site selection. The site must be south facing, preferably with decent slope, below 100m and preferably with protection from the wind. With all these factors working in your favour, to maximise the sunshine hours and heat accumulation during the day over the key harvest period, the hope is that your carefully selected clones pick up enough natural sugars and flavours to reach a potential alcohol and concentration worthy of making still wine.

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This shared undertaking to secure environmental sustainability at the heart of UK wine production continues into our winery, where we are working to reduce our water and non-renewable energy consumption. In 2021, we successfully achieved one of these goals with the installation of a 30kw solar PV array, which at optimum production, covers all normal office and winery functionality. We also subscribe to the Walpole Sustainability Manifesto, which in addition to its pledge to safeguard the environment and natural resources, advocates equal rights and respectful working conditions, promotes the transition towards a circular economy and encourages businesses to work with ‘responsible’ suppliers who can provide traceability across their supply chain. We apply these principles to all product development, with particular emphasis on packaging recyclability. >>

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How important is it to you to be a responsible business? In line with the Sustainable Wines of Great Britain (SWGB) certification scheme, our objectives in the vineyard are to maintain and improve soil health, to conserve the vineyard environment and promote biodiversity, to reduce pesticide and fertiliser inputs and to reduce our carbon footprint per hectare. We are members of SWGB and are currently undergoing our first audit for full certification.

Pictured: Charles & Ruth Simpson 15

What legacy does Simpsons’ Wine Estate want to leave? We would like to see English wine become as highly regarded globally as areas such as Champagne and Burgundy and Simpsons Wine Estate recognised as one of the leading producers. We have an enduring commitment to protect and respect the environment and have this at the forefront of our thinking as we continue to develop both the vineyards and the winery. We have an ongoing commitment to create and retain jobs in the rural community, to develop young people and to champion diversity and inclusion in our industry. People are therefore very important to us! We have a very international, quality-focused team, who have gained experience all over the world and have come from a very diverse range of work environments. Attracted by the huge potential of English wine, they are all fully committed to pioneering new styles and further enhancing its reputation. Their combined expertise and belief in this exciting area is an inspirational formula.

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Simpsons’ English Wine Estate Continued

How have you seen the wine industry change over the last few years? The desire to be part of an emerging and evolving area, brought us back to the UK in 2012 (after producing wine in France for 10 years), with an aspiration to help drive the extraordinary development that has seen England and Wales grow from being a little known and insignificant wine producer, to the most exciting and dynamic wine producing area in the world. After 10 years, we feel we have contributed to this development, building a reputation for doing things a little differently and launching a range of still wines that allowed us to get our product and our name out into the marketplace earlier than if we had focused entirely on method traditional sparkling wines. The fact that English and Welsh wines are now winning the highest accolades in all the global wine competitions is proof of how far the industry has come, along with the significant growth in national and export sales. There is now even more diversification in the styles of wine being created as well as an enormous increase in the quantity and quality of wine tourism offerings available. What is also interesting is the influx of young aspiring international winemakers and viticulturalists, who view the UK as a must-have on their CVs.

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What do you enjoy the most about what you do? We enjoy the fact that no two days are ever the same! Wine production covers areas as varied as Viticulture, Winemaking, Sales, Marketing, Design and Logistics and it is this that makes our industry so interesting and engaging.

For more information, visit: www.simpsonswine.com

Can you tell us more about your latest Chalklands N.V. release? Created from Estate grown Pinot Noir, Chardonnay and Pinot Meunier grapes, our Great British Classic Method Classic Cuvée is the epitome of English elegance and poise. Pale gold in colour, with a delicate mousse, it has a delightfully fresh nose with notes of crisp green apple and flint. These flavours are amplified on the palate, which has linear precision and impressive structure and length. This is the first year we have released Chalklands as a Non-Vintage sparkling wine, having built up several years of base wines in order to create this consistent and exceptional style.

Seven Investment Management LLP is authorised and regulated by the Financial Conduct Authority, the Jersey Financial Services Commission and the Guernsey Financial Services Commission. Member of the London Stock Exchange. Registered office: 55 Bishopsgate, London EC2N 3AS. Registered in England and Wales number OC378740.