TIDMLWDB
RNS Number : 7923V
Law Debenture Corp PLC
26 July 2018
Law Debenture
The Law Debenture Corporation p.l.c. today published its results
for the half-year ended 30 June 2018.
Investment Trust Highlights:
-- NAV total return for the six months was 4.7%, compared to
1.7% returned by the benchmark FTSE All Share Index
-- The trust has consistently outperformed its benchmark, with
outperformance on a six month, one, five and ten year metric
-- The trust currently yields 3% which is one of the higher yields in the sector
-- On-going charges remain low at 0.43% compared to a sector average of 1.36%
-- The UK remained the central focus of the portfolio, key
contributors included GKN, Senior and Rolls Royce
Independent Professional Services (IPS) Highlights:
-- Leading wholly owned independent provider of professional
services, a key differentiator to other investment trusts
-- New CEO leading a strengthened senior management team, with a
clear mandate to grow profitability while maintaining the unique
brand and reputation of Law Debenture
-- Strengthened team has delivered a top line revenue increase
of 12.7% (net of cost of sales) and profit after tax of 10.7% on
prior period. We believe there is more we can do to drive
shareholder value from these businesses in the coming years.
Dividends:
-- Following approval at the AGM, a final dividend for 2017 of
11.8 pence per share was paid in April 2018
-- The Corporation attaches considerable importance to the
dividend, which it aims to increase annually
-- The Board declared an interim dividend of 6.0 pence per
share, an increase of 9.1% on prior year
-- This higher dividend has been supported by stronger performance from the IPS business
Commenting, Robert Hingley, Chairman, said:
"I am pleased with the progress we have seen from our IPS
businesses over the period. Driving increased revenues while
controlling costs has supported payment to our shareholders of a
dividend that is 9.1% higher than prior year. Our investment trust
has consistently outperformed its benchmark, with outperformance on
a six month, one, five and ten year metric. We continue to work
hard to drive shareholder value across our unique business."
Commenting, Denis Jackson, Chief Executive Officer, said:
"I took over the mantle of Chief Executive at the start of this
year with a clear mandate to drive growth across our IPS
businesses. I am delighted with the response from our business
heads and their teams who have achieved a 12.7% growth in income
(net of cost of sales) and a 10.7% growth in profit compared to
this time last year. We have made a positive start, but I believe
there is much more we can do to drive shareholder value from these
businesses in the coming years."
Contact Information
Denis Jackson Katie Thorpe
-------------------------------
Chief Executive Officer Chief Financial Officer
-------------------------------
Email: denis.jackson@lawdeb.com Email: katie.thorpe@lawdeb.com
-------------------------------
Tel: +44 (0) 207 606 5451 Tel: +44 (0) 207 606 5451
-------------------------------
The Law Debenture Corporation p.l.c. and its subsidiaries
Half yearly report for the six months to 30 June 2018
(unaudited)
The directors recommend an interim dividend of 6.0p on the
ordinary shares for the six months to 30 June 2018. The report
including the unaudited results for the period was as follows:
Group summary
We are a global investment trust and a leading provider of
independent professional services.
From its origins in 1889, Law Debenture has diversified to
become a group with a unique range of activities in the financial
and professional services sectors. The group divides into two
distinct areas of business.
Investment trust
Our portfolio of investments is managed by James Henderson of
Janus Henderson Investors*.
Our objective is to achieve long term capital growth in real
terms and steadily increasing income. The aim is to achieve a
higher rate of total return than the FTSE Actuaries All-Share Index
through investing in a portfolio diversified both geographically
and by industry.
Independent professional services
We are a leading provider of independent professional services.
Our activities are corporate trusts, pension trusts, corporate
services (including agent for service of process), whistle blowing
services and governance services. We have offices in the UK, Cayman
Islands, Channel Islands, Delaware, Dublin, Hong Kong and New
York.
Companies, agencies, organisations and individuals throughout
the world rely upon Law Debenture to carry out its duties with the
independence and professionalism upon which its reputation is
built.
Performance to 30 June 2018
6 months 1 year 5 years 10 years
% % % %
-------------------------- --------- ----------- ------------ ----------
NAV total return 1 4.7 10.3 70.2 168.8
-------------------------- --------- ----------- ------------ ----------
FTSE Actuaries All-Share
Index total return 1.7 9.0 52.8 111.2
-------------------------- --------- ----------- ------------ ----------
Share price total
return 1 (3.3) 7.3 44.1 203.0
-------------------------- --------- ----------- ------------ ----------
1 Net Asset Value at fair value calculated in accordance with
AIC methodology, based on performance data held by Law
Debenture.
30 June
2018
%
------------------- --------
Ongoing charges 2 0.43
--------------------- --------
Gearing 2 5
--------------------- --------
Ongoing charges are stated as at 31 December 2017 and are based
on the costs of the investment trust, including
the Janus Henderson Investors management fee of 0.30% of NAV for
the investment trust. There is no performance element related to
the fee.
2 Source: AIC
* Managed under a contract terminable by either side on six
months' notice.
Financial summary
30 June 30 June 31 December
2018 2017 2017
pence pence pence
----------------------------- -------- -------- ----------------
Net revenue return per
share:
- Investment trust 8.28 8.11 11.61
- Independent professional
services 3.60 3.26 9.93
Group charges - - 0.12
----------------------------- -------- -------- ----------------
Group net revenue return
per share 11.88 11.37 21.66
----------------------------- -------- -------- ----------------
Capital return per share 4.78 39.49 67.10
Dividends per share 6.00 5.50 17.30
Share price 596.00 572.00 629.00
NAV per share at fair value
1 688.29 641.10 669.53
----------------------------- -------- -------- ----------------
% % %
----------------------------- -------- -------- ----------------
(Discount) (13.4) (10.8) (6.1)
----------------------------- -------- -------- ----------------
1 Net Asset Value at fair value calculated in accordance with
AIC methodology, based on performance data held by Law
Debenture
including fair value of the IPS business and long term
borrowings.
NAV per share
30 June 30 June 31 December
2018 2017 2017
pence pence pence
----------------------------- ------------ ---------- ------------
NAV per share per financial
statements 638.21 599.96 633.28
Fair value adjustment for
IPS 70.08 65.99 61.57
Debt fair value adjustment (20.00) (24.85) (25.32)
----------------------------- ------------ ---------- ------------
NAV per share as disclosed
with debt at fair value 688.29 641.10 669.53
----------------------------- ------------ ---------- ------------
Fair valuation of the independent professional services
businesses
The fair valuation of the independent professional services
businesses (IPS) is based upon the historic earnings before
interest, taxation, depreciation and amortisation (EBITDA), an
appropriate multiple and the surplus net assets of the business at
their underlying fair value. The multiple applied in valuing the
IPS is from comparable companies sourced from market data, with
appropriate adjustments to reflect the difference between the
comparable companies and the IPS in respect of growth, margin, size
and liquidity.
30 June 30 June 31 December
2018 2017 2017
GBP000 GBP000 GBP000
------------------------- -------- -------- ------------
EBITDA at a multiple of
8.4
(30 June 2017: 8.3; 31
December 2017: 7.9) 87,696 82,004 77,396
Surplus net assets 22,800 16,730 17,176
------------------------- -------- -------- ------------
110,496 98,734 94,572
------------------------- -------- -------- ------------
An increase or decrease of 1 in the multiple would give rise to
a GBP10.4 million change in the fair valuation of the IPS. The
adjustment to NAV to reflect the IPS fair value is an increase of
70.08p per share (30 June 2017: 65.99p; 31 December 2017:
61.57p).
Half yearly management report
Performance
Our Net Asset Value total return for the six months to 30 June
2018 was 4.7%, compared to a total return of 1.7% for the FTSE
Actuaries All-Share Index. Net revenue per share was 11.88p, 4.5%
higher than the corresponding period last year (2017: 11.37p).
Dividend
The board has declared an interim dividend of 6.0p (2017: 5.5p).
The dividend will be paid on 7 September 2018 to holders on the
record date of 10 August 2018. The current expectation of the
directors is that the final dividend will be at least
maintained.
Investment trust review
Although the first six months of the year was one of significant
change in the global economic environment, it did not fundamentally
alter the picture regarding equities. The potential for equity
market disruption from the onset of a trade war between the US and
other countries, combined with a rise in the US bond yield, were
countered by a pick-up in US economic activity which drove better
corporate operating performance and margin growth. The result has
been strong earnings and cash generation.
At a stock level the biggest contributor was GKN which was
purchased by Melrose. Two other aerospace related stocks, Senior
and Rolls Royce, were also large contributors. The aerospace
industry in the UK is an area of excellence. It should continue to
be a good investment area as the number of miles flown globally is
growing at over twice the level of the increase in GDP. However,
the proceeds from the GKN takeover have not yet been directed back
into this segment as we monitor the potential impact of Brexit.
The detractors included Cummins, the US diesel engine
manufacturer, which had been a strong contributor last year but
subsequently suffered some share price weakness this year as
investor concerns rose over the effect of tariffs between the US
and China.
During the period under review we continued to look for
opportunities to refresh the portfolio and remain on the lookout
for new investments. As an example we undertook to support the
capital raising for Ceres Power, a fuel cell company that may be on
the cusp of achieving substantial orders after its joint venture
tie up with a major Chinese bus maker.
Investment trust outlook
Although companies have achieved strong earnings growth,
valuations have drifted lower. Dividends produced by equities
continue to grow substantially faster than inflation. The yield on
the portfolio is running at a higher level than the yield on gilts.
This could mean a small increase in investor confidence will lead
to a strong upward movement in share prices as investors reallocate
back to UK equities, which are currently unpopular with investors.
Concerns remain about the health of the economy, but, with our
investment in a collection of good dynamic businesses, we believe
in aggregate they can find a way to prosper going forward. We do
not believe this is reflected in valuations and for this reason, we
have been a net buyer of equities, with gearing moving up a modest
amount to 5% at the period end.
Independent professional services review
Our wholly owned IPS businesses are leading providers of
independent professional services, providing Law Debenture with a
key differentiator to other investment trusts. As indicated in the
2017 annual report, our new CEO is leading a strengthened senior
management team, with a clear mandate to grow profitability, while
maintaining the unique brand and reputation of Law Debenture.
This strengthened team has delivered a topline revenue increase
of 12.7% (net of cost of sales) and profit after tax has increased
by 10.7% compared to the prior period. We are pleased that this
increase in profitability has supported an increase in dividend
payment to our shareholders of 9.1% compared to the prior
period.
The fair value of our IPS businesses has increased by 17% over
the first half of this year, which reflects a combination of higher
market multiples for relevant comparators and improved
profitability. We believe there is more we can do to drive
shareholder value from these businesses in the coming years.
Group income statement
for the six months ended 30 June (unaudited)
30 June 2018 30 June 2017
------------------------------ -----------------------------------
Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------------- --------- -------- --------- ---------- ------------ ---------
UK dividends 10,618 - 10,618 10,135 - 10,135
UK special dividends 669 - 669 743 - 743
Overseas dividends 2,251 - 2,251 2,537 - 2,537
Overseas special
dividends 90 - 90 50 - 50
13,628 - 13,628 13,465 - 13,465
Interest income 165 - 165 47 - 47
Independent
professional
services fees 16,010 - 16,010 14,669 - 14,669
Other income 69 - 69 220 - 220
Total income 29,872 - 29,872 28,401 - 28,401
Net gain on
investments
held
at fair value
through profit
or loss - 5,939 5,939 - 46,828 46,828
---------------------- --------- -------- --------- ---------- ------------ ---------
Gross income
and capital
gains 29,872 5,939 35,811 28,401 46,828 75,229
Cost of sales (1,548) - (1,548) (1,838) - (1,838)
Administrative
expenses (11,321) (289) (11,610) (10,287) (178) (10,465)
---------------------- --------- -------- --------- ---------- ------------ ---------
Operating profit 17,003 5,650 22,653 16,276 46,650 62,926
Finance costs
Interest payable (2,386) - (2,386) (2,322) - (2,322)
---------------------- --------- -------- --------- ---------- ------------ ---------
Profit before
taxation 14,617 5,650 20,267 13,954 46,650 60,604
Taxation (578) - (578) (521) - (521)
Profit for period 14,039 5,650 19,689 13,433 46,650 60,083
---------------------- --------- -------- --------- ---------- ------------ ---------
Return per ordinary
share (pence) 11.88 4.78 16.66 11.37 39.49 50.86
---------------------- --------- -------- --------- ---------- ------------ ---------
Diluted return
per ordinary
share (pence) 11.88 4.78 16.66 11.37 39.49 50.86
---------------------- --------- -------- --------- ---------- ------------ ---------
Statement of comprehensive income
for the six months ended 30 June (unaudited)
30 June 2018 30 June 2017
-------------------------------------------- ----------------------------------------------
Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ -------------- ------------- ------------- ---------------- ------------- -------------
Profit for the
period 14,039 5,650 19,689 13,433 46,650 60,083
Foreign exchange
on translation
of foreign operations - 136 136 - (119) (119)
------------------------ -------------- ------------- ------------- ---------------- ------------- -------------
Total comprehensive
income for the
period 14,039 5,786 19,825 13,433 46,531 59,964
------------------------ -------------- ------------- ------------- ---------------- ------------- -------------
Group statement of financial position
30 June 30 June 31 December
2018 2017 2017
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
Assets
Non current assets
Goodwill 1,932 1,941 1,920
Property, plant and equipment 99 136 129
Other intangible assets 154 145 161
Investments held at fair
value through profit or
loss 771,982 735,791 735,872
Retirement benefit asset 754 - 300
Deferred tax assets 639 1,076 614
---------------------------------- ------------- ------------- ------------
Total non current assets 775,560 739,089 738,996
---------------------------------- ------------- ------------- ------------
Current assets
Trade and other receivables 5,335 6,910 6,417
Other accrued income and
prepaid expenses 6,892 6,068 5,003
Derivative financial instruments - 1,017 -
Cash and cash equivalents 105,247 94,462 134,011
---------------------------------- ------------- ------------- ------------
Total current assets 117,474 108,457 145,431
---------------------------------- ------------- ------------- ------------
Total assets 893,034 847,546 884,427
---------------------------------- ------------- ------------- ------------
Liabilities
Current liabilities
Trade and other payables 11,629 11,534 11,649
Corporation tax payable 456 23 -
Other taxation including
social security 800 597 570
Deferred income 3,978 3,871 3,942
Derivative financial instruments 3,021 - 299
---------------------------------- ------------- ------------- ------------
Total current liabilities 19,884 16,025 16,460
---------------------------------- ------------- ------------- ------------
Non current liabilities
and deferred income
Long term borrowings 114,090 114,046 114,068
Retirement benefit obligations - 1,863 -
Deferred income 3,811 4,199 3,974
Provision for onerous contracts 1,128 2,551 1,667
---------------------------------- ------------- ------------- ------------
Total non current liabilities 119,029 122,659 119,709
---------------------------------- ------------- ------------- ------------
Total net assets 754,121 708,862 748,258
---------------------------------- ------------- ------------- ------------
Equity
Called up share capital 5,918 5,918 5,918
Share premium 8,790 8,753 8,787
Own shares (1,056) (1,034) (1,033)
Capital redemption 8 8 8
Translation reserve 1,797 2,037 1,661
Capital reserves 693,994 655,727 688,344
Retained earnings 44,670 37,453 44,573
Total equity 754,121 708,862 748,258
---------------------------------- ------------- ------------- ------------
Group statement of cash flows
31 December
30 June 30 June 2017
2018 (unaudited) 2017 (unaudited) (audited)
GBP000 GBP000 GBP000
--------------------------------- ------------------ ------------------ --------------
Operating activities
Operating profit before
interest payable and taxation 22,653 62,926 111,037
(Gains) on investments (5,650) (46,650) (79,267)
(Profit) on sale of unlisted
investment - - (3,275)
Foreign exchange (gains) (12) (11) (13)
Depreciation of property,
plant and equipment 51 49 101
Amortisation of intangible
assets 41 21 61
(Increase) in receivables (807) (1,695) (137)
Increase/(decrease) in payables 105 (1,659) (2,000)
Transfer from capital reserves (114) (40) (142)
Normal pension contributions
in excess of cost (454) (437) (800)
--------------------------------- ------------------ ------------------ --------------
Cash generated from operating
activities 15,813 12,504 25,565
--------------------------------- ------------------ ------------------ --------------
Taxation (147) (262) (1,035)
Operating cash flow 15,666 12,242 24,530
--------------------------------- ------------------ ------------------ --------------
Investing activities
Acquisition of property,
plant and equipment (21) (27) (74)
Expenditure on intangible
assets (34) (96) (149)
Purchase of investments (66,829) (38,385) (80,356)
Sale of investments 36,529 45,442 120,089
Sale of unlisted investment - - 3,318
Cash flow from investing
activities (30,355) 6,934 42,828
--------------------------------- ------------------ ------------------ --------------
Financing activities
Derivative financial instrument 1,812 (1,148) 1,698
Interest paid (2,925) (2,888) (5,916)
Dividends paid (13,942) (13,582) (20,081)
Proceeds of increase in
share capital 3 32 66
Purchase of own shares (23) 163 164
--------------------------------- ------------------ ------------------ --------------
Net cash flow from financing
activities (15,075) (17,423) (24,069)
--------------------------------- ------------------ ------------------ --------------
Net (decrease)/increase
in cash and cash equivalents (29,764) 1,753 43,289
--------------------------------- ------------------ ------------------ --------------
Cash and cash equivalents
at beginning of period 134,011 94,804 94,804
Foreign exchange gains/(losses)
on cash and cash equivalents 1,000 (2,095) (4,082)
--------------------------------- ------------------ ------------------ --------------
Cash and cash equivalents
at end of period 105,247 94,462 134,011
--------------------------------- ------------------ ------------------ --------------
Cash and cash equivalents
comprise
Cash and cash equivalents 105,247 94,462 134,011
Group statement of changes in equity
Share Share Own Capital Translation Capital Retained
capital premium shares redemption reserve reserves earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------- ------------ --------- ------------ ------------ ------------ ---------- ---------- ----------
Balance
at 1 January
2018 5,918 8,787 1,033) 8 1,661 688,344 44,573 748,258
--------------- ------------ --------- ------------ ------------ ------------ ---------- ---------- ----------
Profit - - - - - 5,650 14,039 19,689
Foreign
exchange - - - - 136 - - 136
--------------- ------------ --------- ------------ ------------ ------------ ---------- ---------- ----------
Total
comprehensive
income for
the period - - - - 136 5,650 14,039 19,825
Issue of
shares - 3 - - - - - 3
Movement
in own shares - - (23) - - - - (23)
Dividend
relating
to 2017 - - - - - - (13,942) (13,942)
Total equity
at 30 June
2018 5,918 8,790 (1,056) 8 1,797 693,994 44,670 754,121
--------------- ------------ --------- ------------ ------------ ------------ ---------- ---------- ----------
Group segmental analysis
Independent professional
Investment trust services Group charges Total
------------------------------------------ ------------------------------------- --------------------------------- -------------------------------------
30 30 31 30 30 31 30 30 31
June June Dec June June Dec June June Dec 30 June 30 June 31 Dec
2018 2017 2017 2018 2017 2017 2018 2017 2017 2018 2017 2017
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------- ------------- ---------- --------------- ---------- ---------- ------------- -------- -------- ------------- ----------- ----------- -----------
Revenue
Segment income 13,628 13,465 21,463 16,012 14,669 31,021 - - - 29,640 28,134 52,484
Net gain
on investments - - - - - 3,275 - - - - - 3,275
Other income 67 63 95 2 157 249 - - - 69 220 344
Cost of sales - - - (1,548) (1,838) (3,875) - - - (1,548) (1,838) (3,875)
Administration
costs (1,665) (1,661) (3,274) (9,658) (8,626) (17,658) - - - (11,323) (10,287) (20,842)
Release onerous
contracts - - - - - - - - 245 - - 245
----------------
12,030 11,867 18,284 4,808 4,362 13,102 - - 245 16,838 16,229 31,631
Interest
(net) (2,249) (2,280) (4,561) 28 5 (85) - - - (2,221) (2,275) (4,646)
---------------- ------------- ---------- --------------- ---------- ---------- ------------- -------- -------- ------------- ----------- ----------- -----------
Return,
including
profit on
ordinary
activities
before
taxation 9,781 9,587 13,723 4,836 4,367 13,017 - - 245 14,617 13,954 26,985
Taxation - - - (578) (521) (1,287) - - (104) (578) (521) (1,391)
---------------- ------------- ---------- --------------- ---------- ---------- ------------- -------- -------- ------------- ----------- ----------- -----------
Return,
including
profit
attributable
to
shareholders 9,781 9,587 13,723 4,258 3,846 11,730 - - 141 14,039 13,433 25,594
---------------- ------------- ---------- --------------- ---------- ---------- ------------- -------- -------- ------------- ----------- ----------- -----------
Revenue
return
per ordinary
share (pence) 8.28 8.11 11.61 3.60 3.26 9.93 - - 0.12 11.88 11.37 21.66
---------------- ------------- ---------- --------------- ---------- ---------- ------------- -------- -------- ------------- ----------- ----------- -----------
Assets 821,211 784,123 816,595 71,596 63,070 67,613 227 353 227 893,034 847,546 884,435
Liabilities (93,876) (96,025) (90,152) (43,909) (40,108) (44,358) (1,128) (2,551) (1,667) (138,913) (138,684) (136,177)
---------------- ------------- ---------- --------------- ---------- ---------- ------------- -------- -------- ------------- ----------- ----------- -----------
Total net
assets 727,335 688,098 726,443 27,687 22,962 23,255 (901) (2,198) (1,440) 754,121 708,862 748,258
---------------- ------------- ---------- --------------- ---------- ---------- ------------- -------- -------- ------------- ----------- ----------- -----------
The capital element of the income statement is wholly
attributable to the investment trust.
Analysis of the investment portfolio
By geographical location
Valuation Valuation
31 December Costs Sales Appreciation 30 June
2017 Purchases of proceeds /(depreciation) 2018
GBP000 GBP000 acquisition GBP000 GBP000 GBP000 %
GBP000
United
Kingdom 532,923 47,621 (213) (27,051) 11,023 564,303 73.1
North America 68,796 - - (698) (1,009) 67,089 8.7
Europe 61,119 19,208 (30) (6,136) (3,010) 71,151 9.2
Japan 15,484 - - - (95) 15,389 2.0
Other Pacific 39,618 - - (2,644) (73) 36,901 4.8
Other 17,932 - - - (783) 17,149 2.2
--------------- ------------- ------------ ------------------ ----------- ----------------- ---------- --------
735,872 66,829 (243) (36,529) 6,053 771,982 100.0
--------------- ------------- ------------ ------------------ ----------- ----------------- ---------- --------
By sector (excluding
cash)
As at As at
30 June 31 December
2018 2017
% %
Oil & gas 11.0 9.4
Basic materials 6.9 7.1
Industrials 25.5 28.2
Consumer goods 3.8 5.9
Health care 8.2 7.5
Consumer services 8.3 8.5
Telecommunications 1.4 1.2
Utilities 3.3 1.5
Financials 28.6 28.8
Technology 3.0 1.9
100.0 100.0
---------------------- -------------------------- -------------
Investment portfolio valuation
as at 30 June 2018
UK unless otherwise stated.
Holdings in italics were acquired since
31 December 2017
GBP000 %
--------- -------
Oil & gas
Oil & gas producers
Royal Dutch Shell 33,919 4.39
BP 18,506 2.40
Indus Gas 5,697 0.74
Tullow Oil 4,898 0.63
Gibson Energy (Can) 4,662 0.60
Total (Fra) 2,503 0.32
Premier Oil 1,606 0.21
Providence Resources 366 0.05
----------------------------- --------- -------
72,157 9.34
----------------------------- --------- -------
Oil equipment & services
& distribution
Ceres Power 5,160 0.67
Schlumberger (USA) 4,062 0.53
Velocys 1,931 0.25
National Oilwell Varco
(USA) 1,643 0.21
Now (USA) 126 0.02
12,922 1.68
----------------------------- --------- -------
Total oil & gas 85,079 11.02
----------------------------- --------- -------
Basic materials
Chemicals
Croda 8,114 1.05
Elementis 5,353 0.69
Koninklijke DSM (Net) 2,086 0.27
Linde (Ger) 1,811 0.23
Brenntag (Ger) 1,446 0.19
Carclo 1,001 0.13
19,811 2.56
----------------------------- --------- -------
Forestry & paper
Mondi 8,196 1.06
8,196 1.06
----------------------------- --------- -------
Mining
Rio Tinto 15,752 2.04
BHP Billiton 9,381 1.22
25,133 3.26
----------------------------- --------- -------
Total basic materials 53,140 6.88
----------------------------- --------- -------
Industrials
Construction & materials
Marshalls 7,772 1.01
Ibstock 5,808 0.75
Balfour Beatty 5,713 0.74
Accsys Technologies 5,535 0.72
Geberit (Swi) 2,197 0.28
Assa Abloy (Swe) 1,837 0.24
28,862 3.74
----------------------------- --------- -------
Aerospace & defence
Senior 17,431 2.26
Rolls Royce 16,305 2.11
BAE Systems 11,642 1.51
Embraer (Bra) 6,474 0.84
Meggitt 4,933 0.64
56,785 7.36
----------------------------- --------- -------
General industrials
Smith (DS) 11,527 1.49
11,527 1.49
----------------------------- --------- -------
Electronic & electrical equipment
Spectris 11,088 1.44
Morgan Advanced Materials 9,786 1.27
TT Electronics 3,516 0.46
Legrand (Fra) 1,996 0.26
26,386 3.43
----------------------------- --------- -------
Industrial engineering
Hill & Smith 8,652 1.12
Caterpillar (USA) 7,193 0.93
Cummins (USA) 6,044 0.78
IMI 4,948 0.64
Deere (USA) 4,134 0.54
Weir Group 4,000 0.52
Renold 1,757 0.23
Severfield 715 0.09
37,443 4.85
----------------------------- --------- -------
Industrial transportation
Eddie Stobart Logistics 5,250 0.68
Deutsche Post (Ger) 3,012 0.39
AP Moller-Maersk (Den) 1,329 0.17
Wincanton 1,211 0.16
10,802 1.40
----------------------------- --------- -------
Support services
Johnson Service 12,410 1.61
Babcock 8,145 1.06
SGS (Swi) 2,519 0.33
Interserve 1,689 0.22
Augean 377 0.05
25,140 3.27
----------------------------- --------- -------
Total industrials 196,645 25.54
----------------------------- --------- -------
Consumer goods
Automobiles & parts
Toyota Motor (Jap) 8,039 1.04
General Motors (USA) 6,714 0.87
14,753 1.91
----------------------------- --------- -------
Beverages
Pernod-Ricard (Fra) 2,321 0.30
2,321 0.30
----------------------------- --------- -------
Food producers
Nestlé (Swi) 2,584 0.33
2,584 0.33
----------------------------- --------- -------
Household goods & home construction
Watkin Jones 7,088 0.92
7,088 0.92
----------------------------- --------- -------
Personal goods
L'Oreal (Fra) 2,476 0.32
2,476 0.32
----------------------------- --------- -------
Total consumer goods 29,222 3.78
----------------------------- --------- -------
Health care
Health care equipment & services
Becton Dickinson (USA) 9,072 1.18
Smith & Nephew 6,571 0.85
Spire Healthcare 5,004 0.65
Fresenius (Ger) 2,770 0.36
Philips Electronics (Net) 2,346 0.30
Fresenius Medical Care
(Ger) 2,247 0.29
28,010 3.63
----------------------------- --------- -------
Pharmaceuticals & biotechnology
GlaxoSmithKline 16,063 2.08
AstraZeneca 5,253 0.68
Pfizer (USA) 4,122 0.53
Johnson & Johnson (USA) 3,217 0.42
Novartis (Swi) 2,728 0.35
Novo-Nordisk (Den) 2,347 0.30
Roche (Swi) 1,581 0.20
35,311 4.56
----------------------------- --------- -------
Total health care 63,321 8.19
----------------------------- --------- -------
Consumer services
General retailers
Dunelm 3,282 0.43
Findel 2,542 0.33
Inditex (Spa) 1,252 0.16
Topps Tiles 401 0.05
7,477 0.97
----------------------------- --------- -------
Media
Relx 12,169 1.58
Sky 8,038 1.04
Daily Mail & General Trust 3,814 0.49
Mirriad Advertising 660 0.09
24,681 3.20
----------------------------- --------- -------
Travel & leisure
International Consolidated
Airlines 7,468 0.97
Irish Continental (Ire) 5,423 0.70
Greene King 4,889 0.63
Fastjet 4,374 0.57
Carnival 4,347 0.56
Marstons 2,168 0.28
Ryanair (Ire) 2,097 0.27
Paddy Power Betfair 830 0.11
31,596 4.09
----------------------------- --------- -------
Total consumer services 63,754 8.26
----------------------------- --------- -------
Telecommunications
Mobile telecommunications
Vodafone 6,433 0.83
Deutsche Telekom (Ger) 2,114 0.27
Inmarsat 1,994 0.26
Total telecommunications 10,541 1.36
----------------------------- --------- -------
Utilities
Electricity
SSE 4,063 0.53
Simec Atlantis Energy 1,886 0.24
5,949 0.77
----------------------------- --------- -------
Gas, water & multiutilities
National Grid 10,976 1.42
Severn Trent 8,908 1.15
19,884 2.57
----------------------------- --------- -------
Total utilities 25,833 3.34
----------------------------- --------- -------
Financials
Banks
HSBC 18,738 2.43
Standard Chartered 8,905 1.15
ING Group (Net) 1,535 0.20
UBS (Swi) 1,374 0.18
Permanent TSB (Ire) 7 -
30,559 3.96
----------------------------- --------- -------
Nonlife insurance
Hiscox 11,293 1.46
RSA Insurance 9,506 1.23
Direct Line Insurance 4,286 0.56
Muenchener Rueckver (Ger) 2,000 0.26
Allianz (Ger) 1,435 0.19
28,520 3.70
----------------------------- --------- -------
Life insurance/assurance
Prudential 12,731 1.65
Aviva 3,955 0.51
Chesnara 3,754 0.49
20,440 2.65
----------------------------- --------- -------
Real estate investments & services
St Modwen Properties 7,777 1.01
7,777 1.01
----------------------------- --------- -------
Real estate investment
trusts
Land Securities 9,077 1.18
Urban Logistics REIT 8,126 1.05
Mucklow (A&J) Group 4,125 0.53
Hammerson 2,610 0.34
23,938 3.10
----------------------------- --------- -------
Financial services
IP Group 7,555 0.98
Provident Financial 6,196 0.80
Allied Minds 4,200 0.54
Oxford Sciences Innovation
(unlisted) 3,700 0.48
International Personal
Finance 3,465 0.45
Standard Life Aberdeen 2,442 0.32
Amundi (Fra) 2,369 0.31
Deutsche Börse (Ger) 2,194 0.28
32,121 4.16
----------------------------- --------- -------
Equity and collective investment
instruments
Stewart Investors Asia
Pacific 16,477 2.13
Baillie Gifford Pacific 13,129 1.70
Herald Investment Trust 11,348 1.47
Templeton Emerging Markets
Investment Trust 10,675 1.38
Schroder Japan Growth Fund
(Jap) 7,350 0.95
Scottish Oriental Smaller
Company Trust 7,295 0.95
John Laing Infrastructure
Fund 3,546 0.46
Foresight Solar 3,255 0.42
Syncona 2,889 0.37
Better Capital (2012) 1,300 0.17
77,264 10.00
----------------------------- --------- -------
Total financials 220,619 28.58
----------------------------- --------- -------
Technology
Software & computer services
Microsoft (USA) 11,203 1.45
SAP (Ger) 2,764 0.36
Amadeus IT (Spa) 2,364 0.31
16,331 2.12
----------------------------- --------- -------
Technology hardware & equipment
Applied Materials (USA) 4,897 0.63
ASML (Net) 2,087 0.27
----------------------------- --------- -------
6,984 0.90
----------------------------- --------- -------
Total technology 23,315 3.02
----------------------------- --------- -------
Other
----------------------------- --------- -------
Other 213 0.03
----------------------------- --------- -------
Total other 213 0.03
----------------------------- --------- -------
Total investments 771,982 100.00
----------------------------- --------- -------
Principal risks and uncertainties
The principal risks of the Corporation relate to the investment
activities and include market price risk, foreign currency risk,
liquidity risk, interest rate risk and credit risk. These are
explained in the notes to the annual accounts for the year ended 31
December 2017. In the view of the board these risks are as
applicable to the remaining six months of the financial year as
they were to the period under review.
The principal risks of the independent professional services
business arise during the course of defaults, potential defaults
and restructurings where we have been appointed to provide
services. To mitigate these risks we work closely with our legal
advisers and, where appropriate, financial advisers, both in the
set up phase to ensure that we have as many protections as
practicable, and at all other stages whether or not there is a
danger of default.
Related party transactions
There have been no related party transactions during the period
which have materially affected the financial position or
performance of the group. During the period transactions between
the Corporation and its subsidiaries have been eliminated on
consolidation. Details of related party transactions are given in
the notes to the annual accounts.
Directors' responsibility statement
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted by
the EU and gives a true and fair view of the assets, liabilities,
financial position and profit of the group as required by DTR
4.2.4R;
-- the half yearly report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being
an indication of important events that have occurred during the
first six months of the financial year and their impact on the
condensed set of financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period.
On behalf of the board
Robert Hingley
Chairman
25 July 2018
Basis of preparation
The results for the period have been prepared in accordance with
International Financial Reporting Standards (IAS 34 - Interim
financial reporting).
The financial resources available are expected to meet the needs
of the group for the
foreseeable future. The financial statements have therefore been
prepared on a going concern basis.
The group's accounting policies during the period are the same
as in its 2017 annual financial statements, except for those that
relate to new standards effective for the first time for periods
beginning on (or after) 1 January 2018, and will be adopted in the
2018 annual financial statements. New standards impacting the group
that will be adopted in the annual financial statements for the
year ended 31 December 2018 are IFRS 9 Financial Instruments and
IFRS 15 Revenue from Contracts with Customers.
Details of the impacts are as follows:
-- IFRS 9 Financial Instruments has replaced IAS 39 Financial
Instruments: Recognition and Measurement and has not materially
impacted the results. The replacement of the 'incurred loss' model
with a forward looking 'expected credit loss' model has resulted in
an increase in the impairment provision of GBP49,000. There are no
changes to the classification of financial assets and no impact to
the fair value of long term borrowings. The group has elected to
continue to apply the hedge accounting requirements of IAS 39.
-- IFRS 15 Revenue from Contracts with Customers has had no
impact on the financial results. Revenue is measured based on the
consideration specified in a contract with a customer and is
recognised by the group when it transfers control over a service to
a customer. Each of the revenue streams generated by the IPS
businesses has been assessed and no amendment to the current
revenue recognition policy is required.
Notes
1. The financial information presented herein does not amount to
full statutory accounts within the meaning of Section 435 of the
Companies Act 2006 and has neither been audited nor reviewed
pursuant to guidance issued by the Auditing Practices Board. The
annual report and financial statements for 2017 have been filed
with the Registrar of Companies. The independent auditors' report
on the annual report and financial statements for 2017 was
unqualified, did not include a reference to any matters to which
the auditor drew attention by way of emphasis without qualifying
the report, and did not contain a statement under section 498(2) or
(3) of the Companies Act 2006.
2. The calculations of NAV and earnings per share are based on:
NAV: shares at end of the period 118,162,191 (30 June 2017:
118,152,259; 31 December 2017: 118,160,055).
Income: average shares during the period 118,160,332 (30 June
2017: 118,134,437; 31 December 2017: 118,136,983).
3. Listed investments are all traded on active markets and as
defined by IFRS 7 are level 1 financial instruments. As such they
are valued at unadjusted quoted bid prices. Unlisted investments
are Level 3 financial instruments. They are valued by the directors
using unobservable inputs including underlying net assets of the
instruments.
Registered office
Fifth Floor
100 Wood Street
London EC2V 7EX
Telephone: 020 7606 5451
Facsimile: 020 7606 0643
(Registered in England No - 30397)
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR LLFERDTIEFIT
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