LetterOne LetterOne LetterOne

Chair’s review

Lord Davies of Abersoch

Emerging from a challenging period

I want to start with an issue that sits outside this report. Russia is waging an unjustifiable and abhorrent war against Ukraine that is causing untold damage to the lives of millions. The strong response by the West has implications for L1 that we are addressing directly and with complete transparency across the whole of our business.

When the war began, all of our founders were among the first to speak out against it. They were clear that they are non-political and solely business-focused. Nonetheless, four of our founders – Mikhail Fridman, German Khan, Petr Aven and Alexey Kuzmichev – are subject to sanctions in the UK and EU. They will contest these sanctions as unjust and unfounded.

While L1 is not sanctioned in any way, there
has, of course, been a profound impact on the business.

Throughout this time our focus has been on protecting the tens of thousands of jobs that our investments support in the UK, US and EU. We have taken clear and decisive action to achieve this and are starting to emerge from this challenging period with a new purpose and a bright future.

More information on the actions we have taken is available on our website. The team here are always available for discussions, but this is not the subject of this report, which focuses on 2021.

2021 was a strong year for L1.

If two words define 2021 for business, they must be uncertainty and ambiguity. The twists and turns of the pandemic; the rise of inflation; domestic and international politics; climate change; and the scourge of inequality all competed for our attention and shaped our decisions. Once again, the best leaders have not just risen to these challenges but have searched for solutions and relied on their values to guide their actions.

At L1, three things have been critical to our success.

Our people

I’ve been hugely impressed by the calm determination of people in L1 and in our businesses. I’m proud to have seen such high levels of emotional intelligence, the support offered to colleagues, family, customers; as well as an impressive ability to focus on the long-term when all around us is in constant flux. These skills and behaviours have delivered a strong 2021 and continue to be of real value to the business. I am grateful to all the many people working for L1 and our portfolio companies.

Our vision

Since L1 was founded, we have been clear: long-term investment in sectors that are fundamental to the future brings economic and social benefits.

Our long-term vision across Energy, Health, Technology and Retail has helped us see past the uncertainty. Our deep sectoral knowledge has helped us spot and develop talent while working closely with management teams as we make new investments. We have invested in some brilliant businesses with talented people that speak to our faith in the future, from Upp and Plastic Energy in the UK to Sun Wave Pharma in Romania.

Our governance

Our best-in-class governance has continued to be vital, ensuring that we have had a forum for robust and constructive debate on issues from diversity and inclusion to investment strategy and that we operate with complete transparency. This has been key to improving both our financial and social performance. Please see our Governance section for more details.

I’m confident that our financial performance will remain strong, despite the challenges of 2022, but more than that, I’m confident we can have an even greater impact on society through our economic contribution to communities, the jobs we create, our approach to ESG and, going forward, our decision to donate substantial profits to charity.

Whatever the challenges ahead, our commitment to our people, our businesses and society remains.

Lord Davies of Abersoch,
Non-Executive Chairman