TIDMLWDB
RNS Number : 1663U
Law Debenture Corp PLC
29 July 2022
The Law Debenture Corporation p.l.c. today published its results
for the half-year ended 30 June 2022
Resilience, continued outperformance and dividend growth against
the backdrop of turbulent global markets
Group Highlights:
-- NAV total return with debt and Independent Professional
Services (IPS) at FV for H1 2022 of -4.0%
-- Another period of strong performance from IPS with profit
before tax up by 5.9% and valuation up 4.9% to GBP178.4m
-- The Group has issued 3.8 (1) million new ordinary shares at a
premium to NAV, to existing and new investors, with net proceeds of
GBP30.4m to support ongoing investment
-- Continued low ongoing charges of 0.48 (2) %, compared to the industry average of 1.09 (3) %
-- Winner of Investment Week's UK Income Sector Investment Trust of the year for 2021
Dividend Highlights
-- Declared a first interim dividend of 7.25 pence per ordinary
share, paid in July 2022, representing an increase of 5.5% over the
prior year's first interim dividend
-- It is the Board's intention for each of the first three
interim dividends for 2022 to be equivalent to a quarter of Law
Debenture's total 2021 dividend of 29.0 pence per ordinary share.
Performance and growth in Independent Professional Services
business (IPS) continues to support the Board's intention to
maintain or increase the total dividend in 2022
-- Dividend yield of 3.8%(4)
-- 13.8% CAGR in dividends over the last four years(5)
Investment Portfolio Highlights:
-- Material outperformance of the benchmark over three, five and ten years
-- Strong long term record with Share price total return over 10
years of 180.8% (FTSE All-Share: 94.6%) and of 808.9% over 25 years
(FTSE All-Share: 312.5%)
-- Revenue return from the portfolio of GBP16.9m (June 2021:
GBP10.2m), representing growth of 65.6%
YTD 1 year 3 years 5 years 10 years
% % % % %
NAV total return (with debt at par) (6*) -8.4 -3.5 23.1 34.8 155.7
NAV total return (with debt at fair value) (6*) -4.0 0.4 28.5 40.6 157.5
FTSE Actuaries All-Share Index Total Return (7) -4.6 1.6 7.4 17.8 94.6
Share price total return (7*) -3.8 3.4 43.8 58.2 180.8
Change in Retail Price Index (8) 7.0 11.8 17.4 24.9 40.6
IPS Highlights:
-- Wholly-owned independent provider of professional services.
Accounts for 19% of H1 2022 NAV but has funded 36.4% of dividends
in the last 10 years (9)
-- IPS enters its fifth consecutive year of growth with net
revenues of GBP21.7m (June 2021: GBP19.5m) up 11.3%
Longer Term Record:
-- 133 years of value creation for shareholders
-- 114.8%(9) increase in the dividend over the last 10 years
-- Over 40 years of increasing or maintaining dividends to shareholders
Robert Hingley, Chairman, said:
"Law Debenture aims to provide a steadily increasing income for
our shareholders whilst achieving long-term capital growth in real
terms. The Group has an excellent long-term record for
outperformance, and we are encouraged by the relative capital
preservation and continued good performance from IPS in this
turbulent and challenging period of political and economic
uncertainty.
We are confident that, in the long term, the combination of a
robust and well-positioned equity portfolio and continued growth in
our IPS business will deliver attractive returns for our
shareholders. IPS benefits from strong recurring revenues, and the
team is investing to ensure the consistent growth delivered in the
last four years can be sustained over the longer term."
Denis Jackson, Chief Executive Officer, commented:
"Against a very challenging and uncertain political and economic
backdrop, with rising global inflation and interest rates, Law
Debenture has delivered another resilient performance. The Group
has maintained its consistent long-term benchmark outperformance.
The strong, consistent income from the IPS business offers our
portfolio managers greater flexibility in their investment
selection, helping set Law Debenture apart from other UK equity
income Trusts and underpinning our confidence in our ability to
continue to outperform in the long-term."
The Law Debenture Corporation +44 (0)20 7606 5451
Denis Jackson, Chief Executive denis.jackson@lawdeb.com
Officer
+44 (0) 777 193 7173
Tulchan Communications (Financial l awdebenture@tulchangroup.com
PR)
David Allchurch
Guy Bates
Company History:
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 has two distinct areas
of business.
Investment Portfolio:
Our portfolio of investments is managed by James Henderson and
Laura Foll 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
Total Return through investing in a diversified portfolio of
stocks.
Independent Professional Services:
We are a leading provider of independent professional services,
built on three foundations: our Pensions, Corporate Trust and
Corporate Services businesses. We operate globally, with offices in
the UK, New York, Ireland, Hong Kong, Delaware and the Channel
Islands.
Companies, agencies, organisations and individuals throughout
the world rely upon Law Debenture to carry out our duties with the
independence and professionalism upon which our reputation is
built.
(1) For the period from 1 January 2022 to 30 June 2022
(2) Calculated based on data held by Law Debenture for the period
ended 30 June 2022
(3) Source: Association of Investment Companies (AIC) industry
average as at 30 June 2022
(4) Calculated based on share price of 772p as at 27 July 2022,
using the total 2021 dividend paid of 29.0p per share
(5) Calculated for the 4 years ended 31 December 2021
(6) NAV is calculated in accordance with the Association of
Investment Companies (AIC) methodology, based on performance
data held by Law Debenture including the fair value of the
IPS business and long-term borrowings
(7) Source: Refinitiv
(8) Source: Office for National Statistics
(9) Calculated for the 10 years ended 31 December 2021
(*) Items marked "*" are considered to be alternative performance
measures and calculated using the published daily NAV
THE LAW DEBENTURE CORPORATION P.L.C. AND ITS SUBSIDIARIES
HALF YEARLY REPORT FOR THE SIX MONTHS TO 30 JUNE 2022
(UNAUDITED)
Financial summary
Six months Six months Twelve months
30 June 30 June 2021 31 December
2022 2021
GBP000 GBP000 GBP000
------------------------------------ ----------- -------------- --------------
Net Asset Value (NAV) - including
debt and IPS at fair value(1) 917,365 936,448 964,493
------------------------------------ ----------- -------------- --------------
Pence Pence Pence
NAV per share at fair value(1,2,*) 726.74 766.89 787.83
Revenue return per share:
Investment portfolio 13.66 8.48 18.09
Independent professional services 4.55(3) 4.39 10.00
Group revenue return per share 18.21 12.87 28.09
Capital (loss)/return per share (100.61) 79.92 94.60
Dividends per share(4) 7.25 6.875 29.00
Share price 760 750 799
------------------------------------ ----------- -------------- --------------
% % %
Ongoing charges(5*) 0.48 0.50 0.50
Gearing(*) 11 11 13
Premium/(discount)(*) 4.58 (2.20) 1.42
------------------------------------ ----------- -------------- --------------
* Items marked "*" are considered to be alternative performance
measures. For a description of these measures, see page 134 of the
annual report and financial statements for the year ended 31
December 2021.
(1) Please see below for calculation of NAV.
(2) NAV is calculated in accordance with the AIC methodology,
based on performance data held by Law Debenture including the fair
value of the IPS business and long-term borrowings.
(3) This figure takes into account the new shares issued since
30 June 2021. Using the weighted average shares on issue at 30 June
2021, IPS revenue return per share would be 4.67 pence.
(4) The second interim dividend is not due to be announced until
September 2022 and has not been factored in the calculation
presented. The Board have indicated their intention to pay three
interim dividends of 7.25p in respect to 2022, each representing a
quarter of the total 2021 dividend declared of 29.0p. The final
dividend will be declared in February 2023.
(5) Ongoing charges are calculated based on AIC guidance, using
the administrative costs of the investment trust and include the
Janus Henderson investment management fee, charged at an annual
rate of 0.30% of the NAV of the investment portfolio. There is no
performance related element to the fee.
Half yearly management report
Introduction
There is a huge amount of uncertainty in financial markets
around the world as a result of the invasion of Ukraine and its
geopolitical fallout, the continued impact of inflationary
pressures not seen for 40 years and a potential severe global
economic slowdown. We are mindful of the challenges that all our
stakeholders face and continue to provide assistance where we can.
Despite these significant uncertainties, our diversified business
model has held up well.
It never feels good to report a reduced Net Asset Value for any
reporting period but we have preserved 96%(1) of shareholders'
capital and increased group earnings per share by 41.5%(2) in the
first half of the year. We believe that achieving these results in
the face of the material challenges highlighted above is an
acceptable result.
Our Investment Managers have continued to add to their
successful long-term record of outperformance against our
benchmark, the FTSE Actuaries All Share Index, and drivers of their
performance are covered in detail in their report. Our Independent
Professional Services business is now well into its fifth year of
growth, with net revenue up 11.3% and profit before tax up
5.9%.
Our Independent Professional Services business accounts for 19%
of Law Debenture's NAV but has funded 36% of dividends over the
past decade. As a result, our Investment Managers have increased
flexibility in selecting strong business models and attractive
valuation opportunities, which will continue to position the equity
portfolio for future longer-term growth.
(1) Calculated based on -4% YTD to 30 June 2022 NAV performance
with debt and IPS at fair value, resulting in 96% of preserved
shareholders' capital.
(2) Calculated based on increased group earnings per share of
12.87p at 30 June 2021 to 18.21p at 30 June 2022.
Dividend
We are pleased to continue building on our 43-year record of
maintaining or increasing dividends. We recently declared a first
interim dividend of 7.25 pence per ordinary share, representing an
increase of 5.5% over the prior year's first interim dividend. This
highlights the benefits of the IPS' stable and diversified income
streams, as well as our substantial revenue reserves.
This dividend was paid on 7 July 2022 to shareholders on the
register at close of business on 6 June 2022. Based on the current
share price, the dividend yield per Law Debenture share is 3.8%(3)
. Since the publication of our Annual Report at the end of February
2022, we have issued 3.8 million new ordinary shares to existing
and new investors, raising a total of GBP30.4 million.
It is the Board's current intention to recommend that the total
dividend in relation to 2022 is to maintain or increase on the
total 2021 dividend of 29.0p. Our shareholders will be asked to
vote on the final dividend at our AGM in March 2023.
(3) Calculated based on share price of 772p as at 27 July 2022,
using the total 2021 dividend paid of 29.0p per share.
IPS performance
We are pleased to report that all of our business lines grew
their revenues in the first half of 2022 and we have seen growth in
our profit before tax of 5.9%. Yet again, the diversification and
repeatable nature of many of our income streams served us well.
Nonetheless, in line with many other operating businesses, we have
suffered some margin compression.
Approximately a third of our administration costs are related to
our people. As the 'Great Resignation' and unwind of lockdowns have
played through, the demand for skilled employees in our sectors has
been the most intense for many years. We must compete to retain our
people who underpin the quality of service we deliver to our
clients. This was reflected in the uplift to our staff's
remuneration this year. These pay increases have an immediate
impact on our cost base and, while we have been able to pass on
some of these, as we highlight later in the report, there are
elements of our revenue streams where contracted inflation-linked
increases only feed through to our invoices over time.
We are active in the management of our cost base and are working
hard to ensure our profit margins are sustainable.
Independent Professional Services
DIVISION Revenue(1) Revenue(1) Growth
30 June 2022 30 June 2021 2021/2022
GBP000 GBP000 %
-------------------- ------------- ------------- ----------
Pensions 6,973 6,462 7.9%
Corporate Trust 5,185 4,937 5.0%
Corporate Services 9,515 8,069 17.9%
-------------------- ------------- ------------- ----------
Total 21,673 19,468 11.3%
-------------------- ------------- ------------- ----------
(1) Revenue shown is net of cost of sales
Pensions
The first half of 2022 has illustrated the value that can be
created from a well-planned investment strategy. Many asset classes
saw material adjustments and the large upward move in bond yields
fed through to significant revisions in scheme liabilities over the
reporting period. Schemes with appropriate levels of
asset/liability hedging have been well positioned to navigate these
movements.
Our Pensions business executed well on behalf of our clients and
achieved further growth. Revenues in the first half were up 7.9%.
Our compound revenue growth over the past four years has been
12.1%*. As I highlighted in our Annual Report, this growth is
underpinned by a drive by the regulator to improve Pension Scheme
governance. Given that most UK schemes still do not have
professional trustees, we believe that there continues to be a
growing market for our services.
We continue to win new clients. Notable wins in the first half
of this year for our Trustee business included Coca-Cola. Having
won our first mandate late last year in Ireland, we have added a
further three in the first half of the year. We will need to
continue to invest in our people in Ireland to service this
expanding book of business. We have also made additional hires in
Manchester to strengthen our regional footprint. Pegasus, our
Executive Pensions offering, expanded its client base with
companies including EY and the ICAEW.
The growth in our revenues from Master Trusts, Investment
Governance Committees, and Corporate Sole Trustee appointments is
particularly pleasing. We are increasingly involved in project
work, such as GMP equalisation and risk settlement, as an
increasing number of schemes execute partial or full buy outs.
To support our growth in this market, we have hired dedicated
business development and bid support resource. We continue to
invest in the people and skills necessary to ensure that we provide
a first-class service to our expanding book of clients.
* For the four years ended 31 December 2021.
Corporate Trust
Following a challenging 2021, our deep relationships and broad
referral networks enabled us to grow our revenues by 5.0% in the
first half of 2022. This encouraging result was achieved in the
face of extremely challenging issuance conditions in Debt Capital
Markets. Half year European Debt Capital Market issuance levels
were down by 27% (source: Dealogic) with European High Yield Debt
issuance levels down by 69% (source: Dealogic). Such volatility in
new debt issuance is not uncommon and market conditions can change
rapidly.
While primary markets were weak in the first half of 2022, the
majority of the capital markets transactions that sit on our books,
built up over many decades, have contractual inflation-linked fee
increases for our services. These fee increases are applied on the
transaction anniversary. The longer that inflation remains at
elevated levels, the more these inflation-linked increases will
feed through to our book of business. It is likely that this will
be increasingly helpful as the year progresses.
Key to our success in this market is our ability to move fast
and use our domain expertise to consider non-standard transactions
as our clients' needs evolve. As lockdown took hold in 2020, we
used our Escrow Product to support NHS trusts sourcing PPE at short
notice, from around the world. More recently, in late April 2022,
our escrow product was even used to support the Tyson Fury vs.
Dillon White world title boxing event at Wembley Stadium.
An escrow arrangement is often used when two parties wish to
move or transfer an asset, subject to certain conditions being met.
The most widely understood example of this service is the role
played by the lawyer on completion of a house purchase. The lawyer
receives the monies and the deeds from each party. When the lawyer
is satisfied that all the conditions have been met and the
documentation is in order, the monies and legal title are
transferred between the buyer and the seller. Our longevity, large
capital base and strong reputation for independence make us well
placed to grow this business. We are increasingly involved in
escrows to support M&A, Corporate Disposals, Litigation, Global
Trading and Commercial Property transactions.
Post-issue work, when a bond issuer runs into financial
difficulty, can lead to incremental revenues for this business. As
the massive central bank and government support put into place
during the pandemic is removed and businesses adapt to an
inflationary environment, it would not be surprising to see
corporate bankruptcies increase from their recent modest levels
when compared with historical averages.
We are now in our 134(th) year of the provision of Corporate
Trust services to our clients. This long history tells us that it
produces good returns to our shareholders over time. We are pleased
to have grown our business in the first half of 2022 despite
challenging primary market conditions.
Corporate Services
Company Secretarial Services
We acquired the majority of our current Company Secretarial
Services business from Eversheds Sutherland (International) LLP on
29 January 2021. We remain confident that we have bought a business
which both complements our existing offerings and is able to grow
its market share in a growing market. The business is also
producing high-quality, repeatable revenue and we have been
investing heavily in the people, skills, training, technology and
infrastructure necessary to ensure our offering delivers the high
standards of client service expected from Law Debenture.
Half year revenues grew by 41.6%, although this is not
like-for-like, as the prior year period was only five months, given
the timing of the acquisition.
In our previous Annual Reports, I highlighted an acceleration in
outsourcing trends, partly brought about as a result of the
lockdowns, and this remains the case. Examples of new business wins
in the first half of 2022 include appointments by several Schroders
Investment Trusts and Rentokil Initial. We have a strong pipeline
of new business and we look forward to expanding our client base
further in the second half of the year.
Service of Process
This is our business which is most dependent on global
macro-economic factors. Major economies, such as the UK and US,
allow overseas businesses to sign legal documents subject to their
laws, provided that they have either a registered address or
appointed agent for service of process in the governing
jurisdiction. We act as the agent for service of process to
thousands of clients from all over the world each year. The greater
the amount of global trade and capital markets activity, the
greater the demand for our product. Given the current elevated
levels of economic uncertainty, we are particularly pleased that
Service of Process grew its revenues by 5.2% in the first half of
2022.
We have created significant capacity and enhanced operational
control with the roll-out last year of a new technology platform to
support this business. We have continued to invest in our business
development activities with a focused effort on our referral
partner networks. Our long history in this market tells us that
predicting revenues in the short term is difficult, but, over the
economic cycle, this business provides a critical service to our
clients and good returns to our shareholders.
Structured Finance
A small but important part of our product mix, this business
provides accounting and administrative services to special purpose
vehicles (SPVs). Typical buyers of our services are boutique asset
managers, hedge funds and challenger banks. They use SPV structures
to warehouse and provide long-term funding for real assets.
Examples include credit card receivables, mortgages, real estate or
aircraft leases.
In the first half of the year, we are delighted to have
supported new vehicles that have been structured by the likes of
LendInvest, Pepper and Avenue. We are proud too that Reinsurance
Group of America's structure, which we supported, won "Overall Deal
of the Year" at GlobalCapital's first Annual Securitization Awards
in London in March. The growth in our Loan Agency book of business
is also pleasing.
Revenues grew by 21.0% in the first half of the year and have
grown by 11.6% compound over the past four years.
Safecall
With oversight from Jo Lewis, who joined us in late August last
year, the new leadership team at Safecall have made an excellent
start to the year. They have been busy refreshing and
reinvigorating our whistleblowing business. In the first half of
the year, we signed up a record number of new clients, measured by
revenue. We are also pleased with the growth in the amount of
training that we are providing to our clients to support
whistleblowing issues. Examples of new clients signed up in the
first half of the year included Beazley Insurance, First Central
Group, The Royal Institute of British Architects and the RSPB. Our
recorded revenues for the reporting period were up 16.1%. After 23
years in the original offices, during June we have moved to larger
offices in Sunderland.
Like our other businesses, our whistleblowing business is based
on independence and trust. The quality of our product is its
differentiating factor. All whistleblowing issues are handled by
our highly trained team of former police officers. During the first
half of the year, we handled a record number of cases from our
existing client base. Given the growing demand for our services, it
is critical we invest to evolve our product offering and the first
phase of our new client portal is on track for delivery in the
second half of this year.
Central overview
The focus in the first half of the year has been on fully
embedding the investments we made during 2021. We are pleased to
report that our Manchester-based Shared Service Centre is now fully
operational. We also made significant investment in our people
function and launched our first 'Future Leaders of Law Debenture'
programme.
Environmental, Social and Governance (ESG)
This is the first year of the FTSE Women Leaders Review, which
is the third and successor phase to the Hampton-Alexander and
Davies Reviews. It is an independent, voluntary and business-led
initiative supported by the Government, aimed at increasing the
representation of women. We are delighted that LawDeb ranked 1st in
Financial Services (2nd overall) amongst the FTSE 250 in the
inaugural FTSE Women Leaders Review.
We continue to give consideration to ESG factors across both the
investment portfolio and the IPS business. We will be enhancing our
reporting on ESG in the 2022 Annual Report.
Outlook
The recent surge in geopolitical risk has the potential to upend
decades of relative international stability and increasing
globalisation. It is also putting significant upward pressure on
energy costs, at least in the short term. The economic outlook is
uncertain, with gilt yields having risen to the highest level in
six years and UK inflation at its highest level in almost 40 years.
Whilst we are alive to the risks this creates, we remain confident
in our ability to deliver for our shareholders over the longer
term. The competitive advantage of Law Debenture's unique offering
has proved itself many times through challenging periods.
We understand the importance shareholders place on us to deliver
regular and reliable income. We remain focused on continuing our
unbroken 43-year record of maintaining or raising the dividend. Our
confidence is underpinned by the diversified and recurring nature
of the revenues of our IPS business. The cash flows from IPS allow
James and Laura increased flexibility in portfolio construction to
continue to outperform the benchmark over the longer term. We
continue to look for opportunities to grow our business through
organic investment and disciplined acquisitions where
appropriate.
We are encouraged by the new senior hires and the good new
business momentum and continue to invest in talent and technology
to ensure we continue to gain market share and maintain our
longer-term growth. With the expertise we have within the business
and the momentum building, I am confident that we are on the right
path and will be able to navigate the wider macro uncertainties
facing the economy today.
The Board has great confidence in your Company's longer-term
future and appreciates the ongoing trust you place in us.
Denis Jackson
Chief Executive
28 July 2022
Investment managers' report
Overview
The economic backdrop is highly unusual. Interest rates are
going up to combat inflation, while recession is widely predicted
for later this year. The economy had, in 2021, staged a partial
recovery from the pandemic but it was uneven. Shortages of labour
and supply bottlenecks were evident in many areas but recessionary
conditions continued in others. Then the first quarter of this year
saw war break out in Europe, with Russia invading Ukraine. Whilst
we are witnessing the impact now, with the expansion of NATO,
Germany substantially increasing military spend and food shortages
stoking inflation, the consequences will be experienced for years.
The current uncertainties have dominated investor thinking, leading
to steep valuation declines that were largely concentrated in the
most cyclical areas of the market.
Despite the challenging backdrop, the performance of the
investment portfolio has generally been satisfactory during a time
when the median share in the UK has fallen substantially. As a
demonstration of this, while the FTSE All-Share fell 4.6% in the
six months, outperformance in the benchmark was highly concentrated
at the top end of the FTSE 100 (which is dominated by natural
resource companies as well as defensive sectors such as
pharmaceuticals), while the median share in the FTSE 350 fell
19.7%. This compares to Law Debenture's NAV fall (with debt at fair
value) of 4.0%. As can be seen more clearly in the portfolio
performance section below, the Trust's NAV decline was (to an
extent) mitigated by portfolio holdings in natural resources, which
were held partly for diversification reasons in case the current
backdrop of high commodity prices were to arise. While these
positions helped from a mitigation perspective, they were not
enough to fully offset the substantial share price declines seen
elsewhere in sectors such as retail.
Dividend growth has been coming through at the upper end of our
expectations, corporate balance sheets are conservatively
positioned to weather an economic slowdown and company outlook
statements, while acknowledging the uncertainties ahead, are
broadly positive. The substantial de-rating we have seen in much of
the UK equity market in the first half of this year may, to a large
extent, already reflect the current economic uncertainties. For
these reasons we have been net buyers of UK equities in the first
half of the year, concentrating purchases in the areas that have
seen the steepest valuation falls.
Portfolio performance and activity
At the portfolio level, the de-rating was the most severe among
consumer discretionary holdings (such as Marks & Spencer) and
early-stage companies (such as Accsys Technologies). There is more
detail of the individual drivers of performance in the tables
below.
Top five absolute detractors
The following five stocks produced the largest negative impact
on portfolio valuation in the first half of 2022:
Share price
Stock movement (%) Contribution (GBPm)
------------------------- -------------- --------------------
Accsys Technologies -38.3% -6.0
Marks & Spencer -41.8% -5.9
Ceres Power -45.1% -5.9
Herald Investment Trust -36.1% -5.4
IP Group -45.5% -4.9
Source: Performance data held by Law Debenture based on market
prices.
In the case of consumer discretionary companies, our holdings
are largely in those that have undergone significant 'self-help' in
recent years and where we do not think this improvement is
reflected in the current valuation. Marks & Spencer, for
example, has begun to address its legacy store estate and re-set
prices to the extent that both the food and clothing businesses are
gaining market share. While recent UK consumer confidence figures
are notably weak, there are pockets of consumers that have built up
substantial savings during the pandemic and this could mean
spending in some areas is relatively insulated. This appears to be
the case with, for example, repair, maintenance and improvement
('RMI') spend, which is holding up well. We do not think these
nuances in consumer spending are being fully reflected in company
valuations, where the sell-off in shares year-to-date has been
material and indiscriminate. As a result, we have, in a number of
cases, added to the holdings in this area during the last six
months.
In the case of early-stage companies, these are businesses that,
in our view, have the potential to be substantially bigger in time.
However, within the portfolio they present the greatest degree of
'binary' risk, as some of their technologies may not reach full
commercialisation or sales prospects may be smaller than hoped. At
a time when market sentiment is poor, and there is a retreat to the
relative safety of more defensive industries such as utilities and
healthcare, this area performed poorly, particularly in the absence
of meaningful company-specific news. Over the long term, this area
has been a good contributor to the investment portfolio's
performance and has acted as a diversifier in previous years, such
as 2020, as the prospects for these businesses are largely
independent of the economic cycle. Similar to the consumer
discretionary holdings, we have made some additions to early-stage
companies on share price weakness.
Top five absolute contributors
The following five stocks produced the largest absolute
contribution to performance in the first half of 2022:
Share price
Stock movement (%) Contribution (GBPm)
------------- -------------- --------------------
Shell 31.5% 6.4
BAE Systems 51.0% 5.0
HSBC 19.4% 3.8
i3 Energy 94.3% 3.5
BP 17.5% 3.3
Source: Performance data held by Law Debenture based on market
prices.
The best performers during the six months tended to be companies
with earnings either positively exposed to rising commodity prices
(natural resource companies such as Shell, i3 Energy and BP), the
potential for higher defence spending (BAE Systems), or rising
interest rates (HSBC). We took profits in some of these areas
following good performance. The positions in mining companies BHP
and Glencore, for example, were sold, as was the position in US oil
services company Schlumberger.
During the period we were modest net sellers, divesting GBP12m
(net) and, within this, investing GBP30m (net) in the UK while
divesting from Europe and the US. This meant the UK weighting
within the portfolio rose to 85% at the end of June (compared to
83% at the end of 2021). It continues to be our view that the UK
market offers the most attractive valuation opportunities. Within
the UK market, the starkest de-rating in recent years has been
among domestically exposed businesses, where we added to several
positions during the first half, such as building materials
companies Marshalls and Ibstock, retailers Kingfisher, Halfords and
Vertu Motors and a new position in free-to-air broadcaster ITV.
These additions were partially funded by sales of positions that
were trading on high valuations versus their own history, such as
logistics property owner Urban Logistics and information services
provider Relx.
Income
Dividends during the period came in at the upper end of our
expectations, with investment income rising materially to GBP18.4m
(compared to GBP11.8m in the same period in 2021). This increase in
income is partially a result of us being net investors within the
UK, which continues to pay a higher dividend yield on average than
elsewhere.
At the stock level we have seen some holdings, such as Irish
Continental, return to dividend payments for the first time since
the pandemic, and have seen healthy dividend increases from sectors
such as banks (the three UK domestic banks held all more than
doubled their final dividends year-on-year). We have also seen a
notable trend of UK companies announcing share buybacks this year,
where Boards see their share prices as undervalued.
ESG
We continue to think that interaction and engagement with
companies, both at the board and executive levels, provides the
most accurate insights into whether companies are aiming to be (for
example) best in class with regards to their environmental
footprint. During the first half, we have challenged a number of
company management teams about the ambitiousness of their net zero
targets. In most cases, the answers are nuanced; some industrial
processes, for example, rely on very high temperatures that cannot
yet be replicated outside of using fossil fuels. We need to
continue to ask questions and challenge where we think companies
could move faster, but we also need to recognise that the ability
to achieve environmental goals varies hugely by industry.
Outlook
Inflation and interest rates will rise further in the short term
but there are signs that the supply bottlenecks are easing. In a
year's time, as the large jump in energy costs work their way out,
inflation will likely retreat. Once this is clearly seen, the
upward trend in interest rates will cease. Company operating
performances may come to be seen as surprisingly robust given the
backdrop. Portfolio valuations are low on any historic perspective.
These are the ingredients for a share price recovery and is the
reason we are a net buyer of UK equities for the portfolio. We
continue to see opportunities across a wide range of companies,
buying stocks on weak days in a diversified list of well-run
companies that have strong management and low valuations.
James Henderson and Laura Foll
Investment Managers
28 July 2022
Sector distribution of portfolio by value
30 June 2022 31 December 2021
-------------------- ------------- -----------------
Oil and gas 11.1% 10.1%
Basic materials 7.0% 9.7%
Industrials 20.3% 20.7%
Consumer goods 7.9% 7.4%
Health care 10.7% 7.2%
Consumer services 7.6% 8.8%
Telecommunications 3.3% 2.6%
Utilities 4.5% 4.4%
Financials 27.0% 27.5%
Technology 0.6% 1.6%
Geographical distribution of portfolio by value
30 June 2022 31 December 2021
------------------------ -----------------------
United Kingdom 84.7% United Kingdom 82.6%
North America 5.4% North America 5.4%
Europe 8.7% Europe 10.0%
Japan 1.2% Japan 1.1%
Other Pacific 0.7%
Other 0.2%
Fifteen largest holdings: investment rationale
at 30 June 2022
Approx Valuation Appreciation/ Valuation
Rank % of Market 2021 Purchases Sales (Depreciation) 2022
2022 Company portfolio Cap. GBP000 GBP000 GBP000 GBP000 GBP000
------ ------------------- ----------- ----------- ---------- ---------- -------- ---------------- ----------
1 GlaxoSmithKline 3.47 GBP89.8bn 26,911 - - 2,659 29,570
2 Shell 3.13 GBP157bn 20,280 - - 6,395 26,675
3 HSBC 2.72 GBP107.4bn 19,454 - - 3,769 23,223
4 BP 2.59 GBP74.4bn 18,839 - - 3,294 22,133
5 Barclays 2.21 GBP25.3bn 20,196 2,355 - (3,717) 18,834
6 Rio Tinto 2.16 GBP83.3bn 18,345 - - 92 18,437
7 NatWest 1.79 GBP22.8bn 14,100 1,724 - (543) 15,281
8 BAE Systems 1.75 GBP26.2bn 9,896 - - 5,048 14,944
Direct Line
9 Insurance 1.74 GBP3.3bn 13,950 2,220 - (1,320) 14,850
10 National Grid 1.61 GBP38.4bn 14,934 - 1,218 50 13,766
11 Tesco 1.59 GBP19.2bn 13,488 1,697 - (1,642) 13,543
12 Anglo American 1.55 GBP39.3bn 13,572 - - (355) 13,217
Lloyds Banking
13 Group 1.49 GBP29.2bn 14,340 - - (1,647) 12,693
14 Vodafone 1.41 GBP35.5bn 10,657 - - 1,374 12,031
15 Standard Chartered 1.37 GBP18.4bn 8,456 - - 3,205 11,661
Calculation of net asset value (NAV) per share
Valuation of our IPS business
Accounting standards require us to consolidate the income, costs
and taxation of our IPS business into the Group income statement
below. The assets and liabilities of the business are also
consolidated into the Group column of the statement of financial
position below. A segmental analysis is provided of these accounts,
which shows a detailed breakdown of the split between the
investment portfolio, IPS business and Group charges.
Consolidating the value of the IPS business in this way fails to
recognise the value created for shareholders by the IPS business.
To address this, since December 2015, the NAV we have published for
the Group has included a fair value for the standalone IPS
business.
The current fair value of the IPS business is calculated based
on historical earnings before interest, taxation, depreciation and
amortisation (EBITDA) for the second half of 2021, and the EBITDA
for the half year to 30 June 2022, with an appropriate multiple
applied.
The calculation of the IPS valuation and methodology used to
derive it are included in the previous annual report at note 14. In
determining a calculation basis for the fair valuation of the IPS
business, the Directors have taken external professional advice,
from PwC LLP. The multiple applied in valuing IPS is from
comparable companies sourced from market data, with appropriate
adjustments to reflect the difference between the comparable
companies and IPS in respect of size, liquidity, margin and growth.
A range of multiples is then provided by PwC, from which the Board
selects an appropriate multiple to apply. The make-up of our IPS
business is unique meaning we do not have a like for like
comparator group to benchmark ourselves against. We believe our
core comparators remain as Sanne Group, Intertrust, Link
Administration Holdings and JTC. However, each of these companies
have specific factors which limit their usability for a market
multiples-based valuation approach. Sanne Group and Intertrust are
under offer and experiencing no share price movement, Link is in
ongoing mergers and acquisitions discussions and JTC is a highly
acquisitive group.
These company-specific factors restrict their usability when
monitoring market movements, but the transaction multiples
themselves do provide benchmark data points for consideration.
However, given these limitations, PwC have also considered the
wider, less comparable companies listed below, but only to broadly
assess market movements in the relevant and complimentary service
sectors.
The table below shows a summary of performance of our
comparators:
Revenue
Revenue CAGR FY18 EBITDA
LTM* LTM EV/EBITDA - margin
Company (GBPM) 30 June 2022 LTM 2022 LTM
------------------------------ -------- -------------- ----------- --------
Law Deb IPS 46 10.5x 12% 33%
SEI Investments 1,555 10.1x 5% 33%
SS&C Technologies Holdings
Inc. 3,889 10.4x 10% 37%
EQT Holdings 58 12.0x 4% 38%
Perpetual 403 7.8x 8% 25%
JTC 148 18.2x 25% 17%
Sanne Group 204 22.6x 16% 29%
Link Administration Holdings 621 11.6x -2% 10%
Begbies Traynor Group 99 12.6x 17% 10%
Christie Group 61 N/A -5% 5%
Intertrust N.V. 489 12.5x 2% 28%
*LTM refers to the trailing 12 months 'results' which are
publicly available. Source: Capital IQ.
The multiple selected for the current period is 10.5x, which
represents a discount of 19.8% on the mean multiple of the
comparator group. The multiple selected is marginally down on the
full year multiple of 10.8x to reflect the current market
conditions.
It is hoped that our initiatives to inject growth into the IPS
business will result in a corresponding increase in valuation over
time. As stated above, management is aiming to achieve mid to high
single digit growth in 2022. The valuation of the IPS business has
increased by GBP88m/97% since the first valuation of the business
as at 31 December 2015.
Valuation guidelines require the fair value of the IPS business
be established on a stand-alone basis. The valuation does not
therefore reflect the value of Group tax relief from the investment
portfolio to the IPS business.
In order to assist investors, the Company restated its
historical NAV in 2015 to include the fair value of the IPS
business for the last ten years. This information is provided in
the annual report within the 10-year record.
Long-term borrowing
The methodology of fair valuing all long-term borrowings is to
benchmark the Group debt against A rated UK corporate bond
yields.
Calculation of NAV per share
The table below shows how the NAV at fair value is calculated.
The value of assets already included within the NAV per the Group
statement of financial position that relates to IPS is removed
(GBP44.4m) and substituted with the calculation of the fair value
and surplus net assets of the business (GBP133.9m). The fair value
of the IPS business has increased by 4.9% due to higher surplus net
assets being available. An adjustment of GBP4.5m is then made to
show the Group's debt at fair value, rather than the book cost that
is included in the NAV per the Group statement of financial
position. This calculation shows NAV fair value for the Group as at
30 June 2022 of GBP917.4m or 726.74 pence per share:
30 June 2022 31 December 2021
Pence per Pence per
GBP000 share GBP000 share
------------------------------------ --------- ---------- --------- ----------
Net asset value (NAV) per Group
statement of financial position 787,932 624.20 878,837 717.86
Fair valuation of IPS: EBITDA
at a multiple of 10.5x (June
2021: 10.1x) 163,317 129.38 165,985 135.58
Surplus net assets 15,067 11.94 4,041 3.31
Fair value of IPS business 178,384 141.32 170,026 138.89
Removal of assets already included
in NAV per financial statements (44,420) (35.19) (34,141) (27.89)
Fair value uplift for IPS business 133,964 106.13 135,885 111.00
Debt fair value adjustment (4,531) (3.59) (50,229) (41.03)
NAV at fair value 917,365 726.74 964,493 787.83
------------------------------------ --------- ---------- --------- ----------
Group income statement
for the six months ended 30 June 2022 (unaudited)
30 June 2022 30 June 2021
Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------------------- --------- ---------- ---------- --------- --------- ---------
UK dividends 15,921 - 15,921 10,050 - 10,050
UK special dividends - 3,442 3,442 - - -
Overseas dividends 2,487 - 2,487 1,789 - 1,789
Overseas special dividends - - - - - -
------------------------------------------- --------- ---------- ---------- --------- --------- ---------
Total dividend income 18,408 3,442 21,850 11,839 - 11,839
Interest income 14 - 14 - - -
Independent professional services fees 25,691 - 25,691 23,047 - 23,047
Other income 216 - 216 302 - 302
------------------------------------------- --------- ---------- ---------- --------- --------- ---------
Total income 44,329 3,442 47,771 35,188 - 35,188
------------------------------------------- --------- ---------- ---------- --------- --------- ---------
Net (loss)/gain on investments held
at fair value through profit or loss - (124,238) (124,238) - 99,170 99,170
------------------------------------------- --------- ---------- ---------- --------- --------- ---------
Total income and capital (losses)/gains 44,329 (120,796) (76,467) 35,188 99,170 134,358
------------------------------------------- --------- ---------- ---------- --------- --------- ---------
Cost of sales (4,061) - (4,061) (3,579) - (3,579)
Administrative expenses (16,288) (996) (17,284) (14,826) (1,105) (15,931)
------------------------------------------- --------- ---------- ---------- --------- --------- ---------
Operating (loss)/profit 23,980 (121,792) (97,812) 16,783 98,065 114,848
Finance costs
Interest payable (818) (2,454) (3,272) (660) (1,979) (2,639)
------------------------------------------- --------- ---------- ---------- --------- --------- ---------
(Loss)/profit before taxation 23,162 (124,246) (101,084) 16,123 96,086 112,209
Taxation (669) - (669) (650) - (650)
------------------------------------------- --------- ---------- ---------- --------- --------- ---------
(Loss)/profit for the period 22,493 (124,246) (101,753) 15,473 96,086 111,559
------------------------------------------- --------- ---------- ---------- --------- --------- ---------
Return per ordinary share (pence) 18.21 (100.61) (82.40) 12.87 79.92 92.79
Diluted return per ordinary share (pence) 18.21 (100.58) (82.37) 12.87 79.92 92.79
------------------------------------------- --------- ---------- ---------- --------- --------- ---------
Group statement of comprehensive income
for the six months ended 30 June 2022 (unaudited)
30 June 2022 30 June 2021
Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------------------------------------ -------- ---------- ---------- -------- -------- --------
(Loss)/profit for the period 22,493 (124,246) (101,753) 15,473 96,086 111,559
------------------------------------------------------ -------- ---------- ---------- -------- -------- --------
Foreign exchange on translation of foreign operations - (112) (112) - (20) (20)
------------------------------------------------------ -------- ---------- ---------- -------- -------- --------
Total comprehensive (loss)/income for the period 22,493 (124,358) (101,865) 15,473 96,066 111,539
------------------------------------------------------ -------- ---------- ---------- -------- -------- --------
Group statement of financial position
Unaudited Unaudited Audited
30 June 2022 30 June 2021 31 December 2021
GBP000 GBP000 GBP000
------------------------------------------------------- ------------- ------------- -----------------
Non-current assets
Goodwill 18,973* 20,122 18,973
Property, plant and equipment 1,901 2,202 1,974
Right-of-use asset 5,253 5,591 5,542
Other intangible assets 3,177 620 3,516
Investments held at fair value through profit or loss 853,231 945,471 992,478
Retirement benefit asset 7,085 - 6,577
Deferred tax assets - 771 -
------------------------------------------------------- ------------- ------------- -----------------
Total non-current assets 889,620 974,777 1,029,060
------------------------------------------------------- ------------- ------------- -----------------
Current assets
Trade and other receivables 24,213 12,979 20,466
Contract assets 8,720 9,759 6,611
Cash and cash equivalents 71,979 9,885 35,880
------------------------------------------------------- ------------- ------------- -----------------
Total current assets 104,912 32,623 62,957
------------------------------------------------------- ------------- ------------- -----------------
Total assets 994,532 1,007,400 1,092,017
------------------------------------------------------- ------------- ------------- -----------------
Current liabilities
Trade and other payables 19,854 25,490 29,329
Lease liability 356 250 287
Corporation tax payable 1,387 763 925
Deferred tax liability 1,060 - 1,060
Other taxation including social security 2,561 670 1,543
Contract liabilities 7,504 5,305 5,620
------------------------------------------------------- ------------- ------------- -----------------
Total current liabilities 32,722 32,478 38,764
------------------------------------------------------- ------------- ------------- -----------------
Non-current liabilities and deferred income
------------------------------------------------------- ------------- ------------- -----------------
Long-term borrowings 164,267 114,214 164,245
Contract liabilities 3,463 3,234 4,054
Lease liability 6,148 5,881 6,117
Retirement benefit liability - 2,354 -
------------------------------------------------------- ------------- ------------- -----------------
Total non-current liabilities 173,878 125,683 174,416
------------------------------------------------------- ------------- ------------- -----------------
Total net assets 787,932 849,239 878,837
------------------------------------------------------- ------------- ------------- -----------------
Equity
Called up share capital 6,371 6,123 6,145
Share premium 72,042 38,346 41,865
Own shares (3,128) (2,003) (3,215)
Capital redemption 8 8 8
Translation reserve 2,544 1,982 2,656
Capital reserves 665,177 770,677 789,423
Retained earnings 44,918 34,106 41,955
------------------------------------------------------- ------------- ------------- -----------------
Total equity 787,932 849,239 878,837
------------------------------------------------------- ------------- ------------- -----------------
Total equity pence per share(+) 624.20 695.47 717.86
------------------------------------------------------- ------------- ------------- -----------------
* Note the decrease in goodwill is due to part of this balance
being re-classified as 'other intangible assets' in the 2021 annual
accounts.
(+) Please see above for calculation of total equity pence per
share.
Group statement of cash flows
Unaudited Unaudited Audited
30 June 2022 30 June 2021 31 December 2021
GBP000 GBP000 GBP000
-------------------------------------------------------------- ------------- ------------- -----------------
Operating activities
Operating (loss)/profit before interest payable and taxation (97,812) 114,848 155,320
Losses/(gains) on investments 124,238 (98,066) (121,170)
Depreciation of property, plant and equipment 152 181 220
Depreciation of right-of-use assets 349 354 858
Interest on lease liability 339 257 -
Amortisation of intangible assets 340 - 490
(Increase)/decrease in receivables (5,856) (80) (4,419)
(Decrease)/increase in payables (8,183) (1,931) 1,920
Transfer from capital reserves - (800) -
Normal pension contributions in excess of cost (509) (486) (940)
-------------------------------------------------------------- ------------- ------------- -----------------
Cash generated from operating activities 13,058 14,277 32,279
-------------------------------------------------------------- ------------- ------------- -----------------
Taxation 811 (125) (307)
-------------------------------------------------------------- ------------- ------------- -----------------
Operating cash flow 13,869 14,152 31,972
-------------------------------------------------------------- ------------- ------------- -----------------
Investing activities
Acquisition of property, plant and equipment (79) (1,295) (1,075)
Expenditure on intangible assets (60) (1) -
Cash consideration transferred in relation to acquisition - (18,208) (18,214)
Purchase of investments (77,296) (112,370) (200,096)
Sale of investments 92,327 77,980 140,440
-------------------------------------------------------------- ------------- ------------- -----------------
Cash flow from investing activities 14,892 (53,894) (78,945)
-------------------------------------------------------------- ------------- ------------- -----------------
Financing activities
Interest paid (3,272) (2,639) (5,277)
Dividends paid (19,530) (18,021) (34,923)
Payment of lease liability (239) (212) (371)
Proceeds of increase in share capital 30,403 29,269 32,810
Proceeds of issuance of long-term borrowings - - 50,000
Purchase of own shares 87 (542) (1,754)
-------------------------------------------------------------- ------------- ------------- -----------------
Net cash flow from financing activities 7,449 7,855 40,485
-------------------------------------------------------------- ------------- ------------- -----------------
Net increase/(decrease) in cash and cash equivalents 36,210 (31,887) (6,488)
-------------------------------------------------------------- ------------- ------------- -----------------
Cash and cash equivalents at beginning of period 35,880 41,762 41,762
Foreign exchange (losses)/gains on cash and cash equivalents (111) 10 606
-------------------------------------------------------------- ------------- ------------- -----------------
Cash and cash equivalents at end of period 71,979 9,885 35,880
-------------------------------------------------------------- ------------- ------------- -----------------
Group statement of changes in equity
Share Share Own shares Capital Translation Capital Retained Total
capital premium redemption reserve reserves earnings
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------- ----------- ----------- ----------- ----------- ------------ ----------- ---------- ----------
Balance at 1
January 2022 6,145 41,865 (3,215) 8 2,656 789,423 41,955 878,837
--------------- ----------- ----------- ----------- ----------- ------------ ----------- ---------- ----------
Net
gain/(loss)
for the
period - - - - - (124,246) 22,493 (101,753)
Foreign
exchange - - - - (112) - - (112)
--------------- ----------- ----------- ----------- ----------- ------------ ----------- ---------- ----------
Total
comprehensive
loss for the
period - - - - (112) (124,246) 22,493 (101,865)
Issue of
shares 226 30,177 - - - - - 30,403
Movement in
own shares - - 87 - - - - 87
Dividend
relating to
2021 - - - - - - (10,396) (10,396)
Dividend
relating to
2022 - - - - - - (9,134) (9,134)
--------------- ----------- ----------- ----------- ----------- ------------ ----------- ---------- ----------
Total equity
at 30 June
2022 6,371 72,042 (3,128) 8 2,544 665,177 44,918 787,932
--------------- ----------- ----------- ----------- ----------- ------------ ----------- ---------- ----------
Group segmental analysis
Independent Professional
Investment Portfolio Services Group charges Total
---------------------------------- ------------------------------- ------------------------- -----------------------------------
30 June 30 June 31 30 June 30 June 31 30 30 31 Dec 30 June 30 June 31
2022 2021 Dec 2021 2022 2021 Dec June June 2021 2022 2021 Dec 2021
2021 2022 2021
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
---------------- ---------- ---------- ---------- --------- --------- --------- ------- ------- ------- ---------- ----------- ----------
Revenue
Segment income 18,408 11,839 26,259 25,691 23,047 49,513 - - - 44,099 34,886 75,772
Other income 216 299 551 - 3 - - - - 216 302 551
Cost of sales (43) - (110) (4,018) (3,579) (7,927) - - - (4,061) (3,579) (8,037)
Administration
costs (898) (1,289) (3,434) (15,390) (13,537) (28,246) - - - (16,288) (14,826) (31,680)
17,683 10,849 23,266 6,283 5,934 13,340 - - - 23,966 16,783 36,606
Interest
payable
(net) (804) (660) (1,319) - - - - - - (804) (660) (1,319)
Return,
including
profit on
ordinary
activities
before
taxation 16,879 10,189 21,947 6,283 5,934 13,340 - - - 23,162 16,123 35,287
Taxation - - - (669) (650) (1,210) - - - (669) (650) (1,210)
Return,
including
profit
attributable
to
shareholders 16,879 10,189 21,947 5,614 5,284 12,130 - - - 22,493 15,473 34,077
Return per
ordinary
share (pence) 13.66 8.48 18.09 4.55 4.39 10.00 - - - 18.21 12.87 28.09
Assets 910,116 952,257 1,020,114 84,416 55,122 71,903 - 21 - 994,532 1,007,400 1,092,017
Liabilities (166,604) (123,977) (175,418) (39,996) (34,184) (37,762) - - - (206,600) (158,161) (213,901)
Total net
assets 743,512 828,280 844,696 44,420 20,938 34,141 - 21 - 787,932 849,239 878,837
The capital element of the income statement is wholly
attributable to the investment portfolio.
Principal risks and uncertainties
The principal Group risks include investment performance and
market risk, financial reporting, and cyber and technology risks.
The principal risks specific to the IPS business include meeting
its strategic and financial objectives, change management, and
financial crime. Emerging risks include ESG factors, and the
prominence of an increasingly digital IPS competitor landscape.
These top risks are explained along with mitigating actions in
the Risk Management section of the Annual Report for the year ended
31 December 2021. In the view of the Board these risks and
uncertainties are as applicable to the remaining six months of the
financial year as they were to the period under review. As part of
ongoing risk management to identify new risks and developments, the
Board continues to review and assess risks, uncertainties and
impacts during the course of the year.
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 for the year ended 31 December
2021.
Directors' responsibility statement
We confirm that to the best of our knowledge:
-- the condensed set of financial statements have been prepared
in accordance with IAS 34 Interim Financial Reporting as adopted
by the UK 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 Guidance and Transparency Rules,
being an indication of important events that have occurred
during the first six months of the current 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 Guidance 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
28 July 2022
Notes to the condensed consolidated financial statements
1. Basis of preparation
The condensed set of financial statements included in this
half yearly financial report has been prepared in accordance
with International Accounting Standard (IAS) 34 Interim Financial
Reporting, as adopted for use in the UK.
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 2021 annual financial statements, except for those
that relate to new standards effective for the first time for
periods beginning on (or after) 1 January 2022, and will be
adopted in the 2022 annual financial statements.
2. Presentation of financial information
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 2021
have been filed with the Registrar of Companies. The independent
auditor's report on the annual report and financial statements
for 2021 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.
3. Calculations of NAV and earnings per share
The calculations of NAV and earnings per share are based on:
NAV: shares at end of the period 126,230,289 (30 June 2021:
122,109,313; 31 December 2021: 122,424,129) being the total
number of shares on issue less shares acquired by the ESOT
in the open market.
Income: average shares during the period 123,497,103 (30 June
2021: 120,226,033; 31 December 2021: 121,308,792) being the
weighted average number of shares on issue after adjusting
for shares held by the ESOT.
4. Listed investments
Listed investments are all traded on active markets and as
defined by IFRS 13 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 the underlying net assets
of the instruments.
5. Portfolio investments
A full list of investments is included on the website each
month.
6. Half yearly report 2022
The half yearly report 2022 will be available on the website
in early August via the following link:
https://www.lawdebenture.com/investment-trust/shareholder-information/annual-reports-and-half-yearly-reports
Registered office:
8th Floor, 100 Bishopsgate, London, EC2N 4AG Telephone: 020 7606
5451
(Registered in England - No. 00030397)
LEI number - 2138006E39QX7XV6PP21
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.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR FLFVDDRITFIF
(END) Dow Jones Newswires
July 29, 2022 02:00 ET (06:00 GMT)
Law Debenture (LSE:LWDB)
Historical Stock Chart
From Jun 2024 to Jul 2024
Law Debenture (LSE:LWDB)
Historical Stock Chart
From Jul 2023 to Jul 2024
