REG - Law Debenture Corp - Half-year Report
25/07/2025 07:00
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RNS Number : 5114S Law Debenture Corp PLC 25 July 2025
The Law Debenture Corporation p.l.c. today published its results for the
half-year ended 30 June 2025
A leading UK Equity income sector investment company with outperformance over
short, medium and longer term, with another strong overall performance
YTD 1 year 3 years 5 years 10 years
% % % % %
NAV total return (with debt at par)(1) 15.0 18.9 46.5 97.7 145.3
NAV total return (with debt at fair value)(1) 15.0 19.1 52.2 120.4 160.4
FTSE Actuaries All-Share Index Total Return(2) 9.1 11.2 35.5 67.3 92.7
Share price total return(2) 14.2 22.8 48.0 135.9 187.5
Change in Retail Price Index(3) 3.2 4.7 19.0 38.2 56.2
Past performance cannot be relied on as a guide to future performance. The
value of investments and any income from them can go down as well as up. Your
capital is at risk.
Highlights
· Share price total return comfortably outperformed the FTSE Actuaries
All-Share Index by over 5% with a total return of 14.2% for H1 2025.
· Net asset value (NAV) total return, with debt and Independent
Professional Services ("IPS") business at fair value, for H1 2025 delivered
a performance of 15.0% (15.0% with debt at par).
· Another robust performance from IPS, with net revenue increasing by
7.7%, profit before interest and tax up by 7.5% (compared to H1 2024) and
valuation up 4.8% to £203.8 million (compared to 31 December 2024).
· The Company issued 1.3 million new Ordinary Shares at a premium to
NAV during H1 with net proceeds of £11.6 million.
Strong Longer-Term Record
· Consistent share price and NAV (with IPS and debt at FV) outperformance
of the benchmark over one, three, five and ten years.
· Share price total return over 10 years of 187.5% (FTSE All-Share:
92.7%), which compares favourably with UK Equity Income peers.
Dividend Highlights
· Declared a first interim dividend of 8.375 pence per ordinary share,
paid in July 2025, representing an increase of 4.7% over the prior year's
first interim dividend.
· It is the Board's intention for each of the first three interim
dividends for 2025 to be equivalent to a quarter of Law Debenture's total 2024
dividend of 33.5 pence per ordinary share.
· Continued strong performance of the Portfolio and growth of the IPS
business supports the Board's intention to maintain or increase the total
dividend in 2025, enabling the Company to build on its' 46 years of increasing
or maintaining dividends to shareholders.
· Dividend yield of 3.4% based on our closing share price of 995
pence on 24 July 2025.
· Total dividend income from the portfolio of £22.5 million (H1
2024: £19.9 million).
Investment Portfolio Highlights
· Predominantly UK weighted investment style, with objective to deliver
long-term capital growth in real terms and steadily increasing income, managed
by James Henderson and Laura Foll of Janus Henderson.
· Net capital gain on investments of £132.4 million (H1 2024:
£59.5 million).
· Revenue from the portfolio of £22.5 million (H1 2024: £19.9
million).
· Total ongoing charges of 0.54% (4), compared to the industry
average of 1.01%.
IPS Highlights
· The Company's wholly-owned provider of professional services is a key
differentiator to other investment trusts and offers additional portfolio
flexibility.
· Accounts for 18% of NAV, but has funded approximately one-third of
dividends paid by the Company in the last 10 years.
· IPS enters its eighth consecutive year of mid to high single digit
growth, with net revenues of £28.2 million (H1 2024: £26.2m) up 7.7% with
profit before interest and tax up by 7.5% (compared to H1 2024).
Robert Hingley, Chairman, said:
"I am pleased with the excellent performance Law Debenture has delivered in
the first half of 2025, against a difficult market backdrop. The share price
total return of 14.2% exceeded our benchmark by over 5% and we are proud that
our long-term record of benchmark outperformance remains strong. We remain
confident that Law Debenture is well-positioned for further growth and to
deliver long-term returns for shareholders due to the diversified combination
of a high-quality equity portfolio and good growth potential for IPS."
Denis Jackson, Chief Executive Officer, commented:
"Law Debenture has once again demonstrated its resilience and ability to adapt
against a backdrop of elevated market turbulence and continued macroeconomic
uncertainty. Our unique combination of IPS with the investment portfolio has
meant we have been able to navigate these headwinds and continue delivering
outperformance of our benchmark. I am confident that our well-diversified
structure means we are capable of continuing to create value for our
shareholders over the long-term."
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 one of the leading providers of independent professional services,
built on three excellent foundations: our Pensions, Corporate Trust and
Corporate Services businesses. We operate internationally, 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.
The Law Debenture Corporation +44 (0)20 7606 5451
Denis Jackson, Chief Executive Officer
Isla Pickering, Chief Financial Officer
Trish Houston, Chief Operating Officer
Teneo (Financial PR) +44 (0)20 7260 2700
Jo Blackshaw/Oscar Burnett lawdeb@teneo.com
(1) NAV is calculated in accordance with the AIC methodology, based on
performance data held by Law Debenture including fair value of the IPS
business and long-term borrowings. NAV is shown with debt measured at par and
with debt measured at fair value and both total returns account for
shareholder returns through dividends.
(2) Source: Refinitiv.
(3) Source: Office for National Statistics published RPI, June 2025.
(4) Calculated based on data held by Law Debenture for the period
ended 30 June 2025.
Important information NAV performance is not the same as share price
performance and investors may not realise returns in line with NAV
performance. Tax assumptions and reliefs depend upon an investor's
particular circumstances and may change if those circumstances or the law
change. Nothing in this statement is intended to or should be construed as
advice. This statement is not a recommendation to sell or purchase
any investment. It does not form part of any contract for the sale or
purchase of any investment. Issued in the UK by The Law Debenture Corporation
p.l.c. The Law Debenture Corporation p.l.c. is registered in England and
Wales with company number 30397 and registered address at 8th Floor, 100
Bishopsgate, London, United Kingdom EC2N 4AG. It is authorised and regulated
by the Financial Conduct Authority as an internally managed AIF with firm
reference number 629081. This statement is directed at and for use only by
investors in the United Kingdom.
THE LAW DEBENTURE CORPORATION P.L.C. AND ITS SUBSIDIARIES
HALF YEARLY REPORT FOR THE SIX MONTHS TO 30 JUNE 2025 (UNAUDITED)
Financial summary
Six months Six months Twelve months
30 June 2025 30 June 2024 31 December 2024
£000 £000 £000
Net Asset Value - with debt and IPS at fair value* 1,310,044 1,120,611 1,150,512
Total Net Assets per the statement of financial position 1,064,710 913,156 920,764
Pence Pence Pence
NAV per share at fair value(1,2)* 983.63 857.88 872.34
Revenue return per share(3)
Investment portfolio 14.79 13.78 23.26
Independent professional services 5.36 5.22(3) 10.22
Statutory Group revenue return per share(4) 20.15 19.00 33.48
Capital return per share 96.91 43.78 40.51
Dividends per share(5) 8.375 8.00 33.50
Share price 1,000 845 893
% % %
Ongoing charges(6)* 0.54 0.48 0.51
Net gearing* 12 12 11
Premium/(discount)* 1.66 (1.50) 2.37
(1) Please refer 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. NAV is shown with debt measured at par and
with debt measured at fair value and both total returns account for
shareholder returns through dividends.
(3) Revenue per share is calculated using the weighted average shares in issue
as at 30 June 2025.
(4) Group revenue return per share on an underlying basis for the twelve
months 31 December 2024 was 34.27 pence. Refer page 133 of the annual report.
(5) The second interim dividend is not due to be announced until September
2025 and has not been factored in the calculation presented. The Board have
indicated their intention to pay three interim dividends of 8.375p in respect
of 2025, each representing a quarter of the total 2024 dividend declared of
33.5p. The final dividend will be declared in March 2026.
(6) 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.
* Items marked '*' are alternative performance measures ('APM'). For a
description of these measures, see page 159 of the annual report and financial
statements for the year ended 31 December 2024.
Half yearly management report
Introduction
The Law Debenture Corporation p.l.c. ('Law Debenture') continues to deliver
consistent levels of long-term capital growth together with steadily
increasing income for our shareholders. Our differentiated offering has
enabled us to deliver another solid performance in the first six months of the
year. I am pleased to report that, once again, the combination of our
well-diversified portfolio and a further positive result from our Independent
Professional Services ('IPS') business has enabled Law Debenture to generate a
total return of 14.2%, comfortably outperforming our benchmark, the FTSE
Actuaries All-Share Index.
Elevated levels of uncertainty persist across financial markets globally which
continue to impact the pace and timing of any macroeconomic recovery, and we
remain mindful of the considerable challenges that many of our stakeholders
face. Despite this backdrop, evidenced in elevated interest rates and
sustained inflationary pressures on the consumer, Law Debenture has
consistently demonstrated its resilience and ability to adapt and withstand a
changeable economic climate.
Our Investment Managers continue to build on their successful long-term record
of outperformance against our benchmark, and drivers of their performance are
covered in detail in their report. Our IPS business is now well into its 8th
year of consistent mid to high single digit growth, with net revenue up 7.7%
and profit before interest and tax up 7.5%.
Our IPS business accounts for 18% of Law Debenture's NAV but has funded
approximately one-third of dividends over the past decade. As a result, our
Investment Managers have increased flexibility in selecting what they feel are
strong business models and attractive valuation opportunities, which we
believe will continue to position the equity portfolio for future long-term
growth.
Dividend
We are pleased to continue building on our 46 year record of maintaining or
increasing dividends. We recently declared a first interim dividend of 8.375
pence per ordinary share, representing an increase of 4.7% over the prior
year's first interim dividend. This highlights the benefits of IPS's diverse
income streams.
This dividend was paid on 4 July 2025 to shareholders on the register at close
of business on 6 June 2025. Based on the closing share price on 24 July 2025
of 995 pence, the dividend yield per Law Debenture share is 3.4%(1).
Over the last 10 years, we have increased the dividend by 113%(2) in
aggregate, which compares favourably with our sector peers.
Shareholder approval was given at April's AGM to cancel the Company's share
premium account. The High Court of Justice subsequently approved the reduction
on 22 July 2025. On registration of the Court order by the Registrar of
Companies, this will result in an increase in the Company's distributable
reserves, thereby supporting the Company in achieving its objective of
increasing its dividend over time.
It is the Board's current intention to recommend that the total dividend in
relation to 2025 maintains or increases the total 2024 dividend of 33.5 pence
per ordinary share. Our shareholders will be asked to vote on the final
dividend at our AGM in 2026.
(1) Based on the total dividend paid in relation to 2024 of 33.5p per share.
(2) Based on the period 2014 to 2024.
Independent Professional Services
Net revenue(1) 30 June 2025 Net revenue(1) 30 June 2024 Growth 2024/2025
DIVISION £000 £000 %
Pensions 8,533 8,957 (4.7)%
Corporate Trust 7,903 6,720 17.6%
Corporate Services 11,806 10,551 11.9%
Total 28,242 26,228 7.7%
(1) Revenue shown is net of cost of sales. 2024 includes net revenue transfer
of £286k from Corporate Services to Corporate Trust to align with 2025.
Corporate Trust
The world is rarely a dull place and the last six months have thrown a lot at
us. 'Liberation Day' on 2 April led to a spike in market volatility which in
turn led to a decline in primary markets activity until markets had
established new levels. Subsequently, a number of new trade deals have been
signed, with many more at various stages of negotiation as the world's largest
economy looks to reset its trading relationships with the rest of the world.
Away from trade wars, conflict of the more conventional kind sadly continued
in Ukraine and more recently has escalated considerably in the Middle East.
Given this turbulent market and geopolitical back drop, it is perhaps not
surprising that, following strong growth in new debt issuance in Europe in
2024 (up 19%), new deal volume in Europe for the first half of 2025 was
broadly flat year on year. (Source Dealogic)
Despite this challenging landscape, encouragingly, we delivered net revenue
growth of 17.6% well ahead of the seven year compound revenue growth rate for
this business of 8.1%. The strength of our Corporate Trust business lies in
the diversified revenue streams contained within it.
Our addition of dedicated business development resource is beginning to pay
dividends. Given the investment made in expanding our Transaction Management
team last year, we were very pleased that, among the new deals we signed in
the first half, were bond issuances by Lottomatica, Santander, Aviva, and
Metrobank, on all of which we were appointed Trustee. We were also appointed
as Trustee for a number of new programmes, including an MTN programme with
Citibank, a repackaging programme with Credit Agricole and a Sukuk Trust
Certificates programme with PNC Investments LLC.
Our Escrow product continues to build momentum and is increasingly well
diversified across Real Estate, M&A, Litigation, Ships, Aircraft, and
Sports and Entertainment. We have added staff to this team during the period.
Post-issue work, when a bond issuer runs into financial difficulty, can lead
to counter-cyclical incremental revenues for this business. When bonds
default, the work flow, risk and revenue profiles of our role can materially
change. A key duty of the bond trustee is to be the legal creditor of the
issuer on behalf of the bondholders. Our role in such default situations
requires material incremental work that, given a favourable outcome, can lead
to significant additional income for the firm. That said, defaults often take
years to play out and the results are uncertain. Over the six-month period,
our post-issue work picked up as pockets of the domestic economy found trading
conditions particularly challenging.
We have invested in new leadership and infrastructure to grow our Loan Agency
business and we are optimistic that, over time, we can build another
complementary new revenue stream in this growing market that leverages our
existing relationships.
We are pleased with our progress and confident of our future but are conscious
that our longer term growth expectations for this business should be anchored
in the mid to high single digits range that we strive for across IPS as a
whole, rather than the double digit net revenue growth seen in this period and
in 2024.
Pensions
The first half of 2025 reinforced the critical value of expert pension scheme
trusteeship and governance, though market activity continued to normalise
following the significant growth triggered by the LDI crisis response. With
the benefit of hindsight this exceptional period of demand for our products
and services ran from late 2022 into early 2024. Our 2023 revenues were up a
remarkable 21.3%. Our seven year compound revenue growth rate is a much more
sustainable 7.6% and very much in line with that of our portfolio of IPS
businesses. Our first-half result reduction in revenues of 4.7% must be viewed
against this back drop. Moreover, revenues for H1 2025 were over 10% higher
than those recorded in H2 2024.
We have changed the leadership of our business development efforts and our new
client momentum remained solid in the first half of 2025. Significant wins
included Fidelity Master Trust and the Combined Nuclear Pension Plan. The
Ireland operation continued its upwards trajectory with notable new clients
like National Staff Life Assurance (Dublin) Society. Strategic recruitment
into the Manchester Pensions team has significantly expanded our national
presence beyond London.
Enhanced funding positions across many schemes have sparked renewed corporate
sponsor interest in comprehensive 'end-game' strategies. Organisations are
actively exploring buy-in/buy-out options and evaluating the potential for
maintaining pension schemes with long- term surplus positions. This evolving
landscape continues to highlight the essential role of independent
professional pension expertise, particularly through corporate sole trustee
solutions that address succession challenges, resource optimisation and
specialised skill requirements.
Following a period of relative regulatory stability, significant developments
emerged with the introduction of the new Pensions Bill to Parliament in June
2025. This legislation, accompanied by comprehensive announcements covering
DC, DB, and Local Government Pension Schemes, positions pensions as a priority
government initiative. A key enhancement allows defined benefit pension
schemes streamlined access to surplus extraction, empowering both trustee
boards and corporate sponsors with greater flexibility. These changes are
expected to drive substantial demand for high quality, experienced
professional trustee services.
Our specialised Pegasus outsourced governance division continues to do well,
delivering comprehensive support to corporate sole trustee clients and
providing vital resource enhancement to capacity-constrained in- house teams.
This includes expert support for schemes navigating buy-out and wind-up
processes. During the first half, Pegasus has successfully secured several
larger secretarial mandates and expanded project work offerings, where
independent, expert project management ensures efficient and timely delivery.
Our market reputation for exceptional service quality remains a key
differentiator and we continue strategic hiring and investment in top-tier
talent capable of delivering outstanding client outcomes. Our win of Trustee
firm of the Year at the Pension Age Awards in March serves as a useful
third-party benchmarking of our business capabilities.
This is our 54th year of providing Pensions governance services. Over the
business cycle, our history informs us that this is an excellent business. As
we look ahead, we continue to see many opportunities to deliver great outcomes
to our clients.
Corporate Services
Our Corporate Services business reported net revenue growth of 11.9%.
Service of Process
This remains our business which has the least recurring revenues and is most
dependent on global macro- economic factors and activity in capital markets.
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 economic activity and capital markets new
issuance, the greater the demand for our product.
Given the dark economic and geopolitical clouds that dominated the horizon in
the first half and the tough comparator from a strong first half of last year,
we were delighted to finish the period with our noses marginally in front
year-on-year.
We are reaping rewards from dedicated business development resource, an
increasingly coordinated and active approach to our referral partner networks,
and an increasingly commercial mindset of the team members underpinned by
investment in various training initiatives.
Forward earnings visibility for this business is limited and comparators for
the full year are challenging. That said, our brand for this product is both
global and strong and our reputation for speed and quality of service
excellent.
Corporate Secretarial Services ('CSS')
We have been transparent in acknowledging that transforming this business
purchased in 2021 has cost more and taken longer than we thought at the time
of acquisition. That said, as mentioned in the most recent annual report, our
new leadership team established last year continues to build positive
momentum.
External metrics, including client feedback and new business pipeline,
continue to develop positively. We have more experienced, better, qualified
staff and a healthy number of partially qualified company secretaries
progressing through the organisation. We continue to use technology to upgrade
the quality and simplicity of our workflow management and to enhance our
client experience.
Our experience in our range of professional services products gives us
confidence that the combination of first- rate product knowledge, technology
enabled ease of use, and superior client outcomes will foster sustainable
growth in revenues over the long term in this growing market.
At the half year our revenues were slightly up, and we are increasingly
optimistic that record sales pipelines will begin to feed through as the year
progresses.
Structured Finance
A small business for us, but a solid first half. This business provides
accounting and administrative services to special purpose vehicles ('SPVs').
Typical buyers of our services are 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
and aircraft leases.
New deal enquiry was good in Q1 but post 'Liberation Day' has moderated. That
said, the Private Credit markets that we support continue to grow
significantly. Our client base remains very active with respect to new
opportunities and our strong execution capabilities have built strong
relationships that leave us well placed to compete for repeat business.
We will continue to grow our client base in this significant and growing
market.
Safecall
This business continues to grow the fastest within our IPS business portfolio
and had an excellent first half.
Yet again we provided a new record number of reports to our clients during the
period. Digital channels (as opposed to voice) continue to account for over
70% of the issues raised.
At the core of our value proposition is our ability to shine a light in a
thoughtful systematic way on malfeasance within an often-disparate corporate
environment. In turn, this can often provide the insight and facts that are
needed by management to properly get their arms around and address a
particular issue. The positive feedback we receive from our clients fuels our
desire to further invest in and grow this business.
Our business was built around SMEs in the UK and we continue to serve this
client base highly effectively. More recently, we have been encouraged by our
ability to evolve our product suite to provide excellent service to a broader
footprint of large international clients. We are growing our training and
investigations offerings too.
The overall market for whistleblowing services is growing and we continue to
grow our market share.
Central overview
As we noted in the most recent Annual Report, over the past 12 months we have
seen considerable investment in people, skills and systems as we look to
modernise our central support functions.
We have welcomed a new CFO, CTO, Head of Legal Risk and Compliance, and Head
of Operations. We have rolled out the first phase of our Professional Services
Automation ('PSA') platform.
These new people, new ways of working, and new technologies are all bedding in
nicely. Our new PSA platform is increasingly providing us with insight not
just numbers.
As we move from an underinvested infrastructure to a scalable, appropriately
controlled environment, it becomes increasingly clear that our future is one
of constant change. The concept of a finite business transformation (i.e. a
discrete start date and a discrete end date) is becoming more and more
outdated. The heartbeat of technological change continues to quicken. The
journey from emerging technology to obsolete technology continues to contract.
The foundations of Professional Service businesses have always been built on
the intellectual property that such businesses can successfully harness to
solve for the evolving needs of their clients. Best in class technology
platforms are increasingly the mechanism through which modern Professional
Services businesses deliver their intellectual power. Since inception, Law
Debenture has prided itself on its superior product expertise. We will
continue to invest heavily in this expertise but, concurrently, we must add to
the skills and experience required to lead and deliver this expertise through
digital channels.
While we are confident that our ways of working will change increasingly
rapidly, we are equally confident that our values will not. Independence and
trust are timeless.
Technology
Our Technology strategy remains focused on delivering robust, scalable
solutions through best-of-breed third-party applications, ensuring our systems
are straightforward to operate and maintain. Under Spencer Knightsbridge's
leadership as CTO, through additional investment, we have continued to advance
several key initiatives whilst strengthening our foundational capabilities.
Cyber security remains a top priority given the continually evolving global
threat landscape. We have achieved Cyber Essentials Plus certification for Law
Debenture, verified by independent third-party specialists. This milestone
reflects our ongoing investment in enhanced tooling, expanded capabilities,
additional resources, and comprehensive staff training across the
organisation, ensuring we meet evolving regulatory expectations for cyber
security and operational resilience. Whilst we cannot eliminate all risk, we
remain committed to maintaining robust defences and response capabilities.
We have taken a measured approach to AI adoption, providing training to all
staff to explore these technologies in a controlled, safe environment. Rather
than rushing implementation, we are carefully evaluating how AI can
revolutionise our work practices whilst maintaining appropriate governance and
security standards. We see a number of exciting opportunities ahead. Over the
next few years, we will need to add to our institutional knowledge and skills
base in order to optimise adoption of appropriate client-facing tools and more
efficient working practices.
Safecall has made significant progress in expanding its enterprise client
capabilities, partnering with key clients to develop new portal functionality
that will be rolled out to our broader client base. This enterprise-focused
approach continues to drive our strategic development.
Additionally, our digital solution for Director Verification as part of the
new Economic Crime and Corporate Transparency Act ('ECCTA') is now live,
enhancing our CSS service offering.
Outlook
Further elevated levels of geopolitical and macroeconomic risk persist and
perpetuate destabilising levels of uncertainty across the financial markets.
Whilst we remain aware of the pressure this backdrop continues to have on our
stakeholders, our confidence in Law Debenture's business model remains
underpinned by the deliberately diversified nature of our IPS business and its
degree of countercyclicality. We recognise fully the importance our
shareholders place on our delivery of regular and reliable income, and we
remain committed to continuing our strong record of maintaining or raising the
dividend.
To support our growth, we continue to invest in both talent and technology
across the business. These investments enable us to win new business and
increase market share, meaning we remain well-positioned to deliver growth
over the medium and long term in line with our mid to high single percentage
target.
I remain confident that the competitive advantages in our Investment Managers'
disciplined approach to capital allocation and the diversification of our
businesses position us well to seize opportunities as we move into the second
half of 2025.
Denis Jackson
Chief Executive Officer
24 July 2025
Investment managers' report
Overview
The portfolio had a strong six months, with the Trust's NAV rising 15.0% while
the benchmark, the FTSE Actuaries All-Share Index, rose 9.1%. The performance
review section below shows that two areas were primarily responsible for this.
One was the Industrials sector, particularly companies with defence-related
products as it is predicted spending in this area will increase over the
coming years. The other area was Financials, where banks are performing well
as the economy continues to grow in a subdued manner and bad debts remain low.
More generally, the real driver behind the returns has been the low valuation
across the portfolio of UK companies. This can be seen in the high number of
bids particularly from US buyers. It is possible for them to purchase UK
companies that have built good franchises over many years in their area of
operation at prices that do not reflect the cost of building that position. It
is frustrating, but, until there is a substantial rise in UK quoted equities,
the bid activity is likely to continue.
Activity
During the six months, we continued to be net investors in the UK, investing
c.£35m and maintaining a historically high weight of 89% in UK equities.
While UK equities have performed well this calendar year, we continue to see
attractive investment opportunities across the market. This is demonstrated in
the graph below by the substantial valuation discount of UK equities relative
to overseas. The valuation opportunity in the UK is also evident in the volume
of takeover activity, with takeover approaches in this portfolio in the last
six months for Spectris, Renold and Dowlais.
New purchases included conglomerate AB Foods, consumer goods company Reckitt
Benckiser, infrastructure and renewable investors Greencoat UK Wind and HICL
Infrastructure and asset manager Aberdeen. We also added to a number of
existing holdings including commercial property owner Great Portland Estates,
European semiconductor producer Infineon and automotive catalyst producer
Johnson Matthey.
There is deliberately no end-market commonality to these purchases - our aim
is to create a diverse portfolio that can work together as a blend to generate
good returns across different market environments. An attractive total return
can be achieved in different ways, depending on the nature of the holding. For
example, with Greencoat UK Wind and HICL, it is our view that the discounts to
net asset value are unjustifiably large and, in the meantime, we will be 'paid
to wait' via a healthy dividend yield. In the case of Aberdeen, it is our view
that the market is failing to reflect the value of retail investment platform
interactive investor within the group - this 'hidden' value may, at some
point, be realised (and in the meantime we are also paid an attractive
dividend yield). The composition of total return will look different depending
on the company - some holdings have the potential to generate faster earnings
and therefore capital growth, some will pay an attractive dividend yield and
act more defensively.
From a sales perspective, it is just as essential to maintain a valuation
discipline in portfolio sales as it is in purchases. During the period, the
holdings in Flutter Entertainment, Rolls-Royce and Babcock were reduced. These
positions had performed well for the portfolio, and in all cases had
benefitted from a combination of both earnings growth and higher valuations.
Elsewhere, we also sold positions in medical device producer Convatec (which
had moved to a higher valuation) and WPP (following disappointing operating
performance). It is important to keep refreshing the portfolio and use the
proceeds to invest in what we think are the next attractive valuation
opportunities.
Despite good portfolio performance in the first half of the year, at the end
of June the portfolio was on an estimated 12 month forward price/earnings
multiple of 11.7x, lower than that of the UK market at 12.6x.
Performance review
The top five absolute contributors to performance during the six months were:
Stock Appreciation % Appreciation
Rolls-Royce £15.3m 64.0
Babcock £10.4m 108.4
Barclays £8.0m 25.8
BAE Systems £6.6m 60.2
Kier £5.2m 40.5
Source: Law Debenture. Note % appreciation figures are share price only, not
total return.
Among the top five contributors, three have sizable exposure to rising UK
defence spending (Rolls-Royce, Babcock and BAE Systems). In each case the
businesses are, in our view, run considerably better under the current
management teams than they have been in many years, so an improved end-market
backdrop is coinciding with a period of 'self-help' This favourable backdrop
has, however, meant that both earnings forecasts and valuation levels have
moved higher. This has led to us taking profits in each of the holdings in the
first half of this year.
As an example of the investment process in action, between 2021 and 2024 we
added to the holding in Babcock at share prices between £3.04 and £4.50. At
the time the shares were trading on approximately 10x earnings, lower than the
wider UK equity market, but a new management team had arrived in late 2020 and
were refocussing the business on its core strengths in UK defence, reducing
costs and de-leveraging the balance sheet. As a result of their actions, the
margins on the business improved considerably, from roughly 4% to 7.5% in the
most recent year (and guided to reach 9% in the coming years). The balance
sheet has also been de-risked to the point where they have recently (modestly)
returned to paying a dividend and announcing a £200m share buyback. We have
begun reducing the holding this year at share prices between £8.24 and
£11.58. The shares now trade on a higher valuation than the broader UK market
(approximately 20x earnings), on a higher earnings base. We hope that this
demonstrates the potential in identifying companies where there is the
opportunity for both an earnings recovery and a valuation uplift.
The largest five absolute detractors from performance during the six months
were:
Stock Depreciation % Depreciation
Ceres Power (£4.1m) (48.8)
Toyota Motor (£2.9m) (22.2)
WPP (£2.2m) (31.0)
Morgan Advanced Materials (£2.2m) (18.6)
Cummins (£1.8m) (14.0)
Source: Law Debenture. Note % depreciation figures are share price only, not
total return.
The fall in the share price of Ceres Power was a result of the decision by
Bosch in February to end their strategic partnership with Ceres and divest
their stake in the company. While this update was disappointing, Ceres has a
number of other licensing deals with companies including Delta Electronics in
Taiwan and Denso in Japan, as well as a net cash balance sheet.
In a period where the global trading environment was uncertain, what largely
ties the remaining underperformers together is cyclicality (in other words a
degree of reliance on the global economy). In the case of Morgan Advanced
Materials, for example, which is a specialist materials producer, they lowered
earnings guidance for the current year as a result of subdued demand in
regions such as Europe and China. We added to the holding in small size as we
think the shares are not reflecting the company's longer term margin
potential. In the case of advertising agency WPP, organic sales growth
continued to look depressed, partly as a result of a lack of confidence from
corporates (advertising spend is an easy area to pull back on if the trading
environment is difficult). However, weak sales growth also seemed to be partly
self-inflicted, with WPP continuing to lose clients to global peers - for this
reason the small position was sold.
Portfolio income
Investment income received from the portfolio during the first half rose over
10%, from £19.9m last year to £22.5m in the current year. As a reminder, the
IPS business is the largest individual contributor to income within the Trust.
This allows us as portfolio managers to invest across the breadth of the UK
equity market (and selectively overseas), including in companies that pay no
(or a low) dividend. This greater investment flexibility has been a key driver
of the relative outperformance of the Trust, with many of the best performers
in this six month period (such as Rolls-Royce) currently paying a low dividend
yield.
Outlook
Companies and individuals have reduced their debt levels as a response to
global uncertainties. Therefore, the economy and investors are in a position
to absorb volatility. Low expectations are a good background for investing,
for, if events prove less bad, there is scope for relief and for share prices
to move up. The investment approach will be for us to selectively increase our
exposure to UK equities given the low valuations and good corporate management
disciplines that are in place.
Despite many macro concerns, it is expected that the global economy will keep
growing. Companies that have competitive products and services will experience
sales growth. The companies in the portfolio have strong cost disciplines,
which will mean operating margins can expand. Profit forecasts should
therefore increase at a time valuations are in cheap territory.
James Henderson and Laura Foll
Investment Managers
24 July 2025
Sector distribution of portfolio by value
30 June 2025 31 December 2024
Oil and gas 8.8% 8.8%
Basic materials 4.2% 5.0%
Industrials 23.9% 23.0%
Consumer goods 7.9% 8.4%
Health care 5.7% 5.7%
Consumer services 10.9% 13.9%
Telecommunications 2.2% 2.2%
Utilities 4.2% 3.5%
Financials 30.5% 26.7%
Technology 1.7% 1.8%
Geographical distribution of portfolio by value
30 June 2025 31 December 2024
United Kingdom 89.4% 87.6%
North America 4.5% 5.6%
Europe 5.0% 5.5%
Japan 0.9% 1.3%
Others 0.2% 0.0%
Fifteen largest holdings: investment rationale
as at 30 June 2025
Rank Company Location % of portfolio Approx Market Cap. Valuation Purchases Sales Appreciation/ (Depreciation) Valuation
2025 Dec 2024 £000 £000 £000 June 2025
£000 £000
1 Barclays UK 3.23 £49.57bn 31,105 - - 8,016 39,121
2 HSBC UK 3.16 £163.29bn 34,055 - - 4,181 38,236
3 Shell UK 2.63 £152.93bn 30,950 - - 969 31,919
4 Rolls Royce UK 2.41 £83.93bn 23,881 - (9,893) 15,276 29,264
5 Flutter Entertainment UK 2.38 £39.53bn 39,368 - (9,336) (1,136) 28,896
6 GlaxoSmithKline UK 1.88 £54.53bn 22,074 - - 714 22,788
7 BP UK 1.72 £63.14bn 22,398 - - (1,553) 20,845
8 Tesco UK 1.68 £27.68bn 18,609 - - 1,662 20,271
9 Standard Chartered UK 1.54 £31.00bn 18,642 - (3,102) 2,996 18,536
10 Kier UK 1.49 £0.93bn 12,799 - - 5,184 17,983
11 National Grid UK 1.49 £52.90bn 16,051 - - 1,899 17,950
12 Boku UK 1.41 £0.61bn 12,585 1,815 - 2,592 16,992
13 BT Group UK 1.40 £19.80bn 14,045 - (1,523) 4,431 16,953
14 Senior UK 1.37 £0.82bn 14,415 - - 2,185 16,600
15 Kingfisher UK 1.34 £4.84bn 11,310 2,429 - 2,393 16,132
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 on page 22. The assets and
liabilities of the business are also consolidated into the Group Statement of
Financial Position on page 23. A Group segmental analysis is provided on page
26 of these accounts, which shows a detailed breakdown of the split between
the Investment Portfolio and IPS business.
Consolidating the value of the IPS business in this way does not fully
recognise the value created for the shareholder by the IPS business in the
NAV. To address this, the NAV published for the Group includes the fair value
for IPS as a standalone business. The Board continues to take appropriate
external professional advice from PwC in determining this.
Historically, the fair value of the IPS business has been calculated based
upon maintainable earnings before interest, taxation, depreciation and
amortisation ('EBITDA'), with an appropriate multiple applied. Due to concerns
by the Board over the reliability of adopting this approach, due to the
reducing number of companies with a strong degree of comparability, from 31
December 2024 an income based approach has been adopted that follows a
discounted cashflow ('DCF') analysis.
This approach considers business forecasts adjusted to consider the fair value
a hypothetical third-party would apply when viewing the forecasts. An
appropriate cost of equity was determined through consideration of comparable
entities to guide on discount rate and applied to the discrete forecast period
and projected free cashflows to estimate the terminal value. PwC provided a
range from which the Board selected a value.
As a cross check, the implied multiple was calculated by dividing the DCF IPS
valuation by the 30 June 2025 EBITDA deriving a multiple of 10.6x. This
compares to the 10.5x multiple applied in all periods from 2022 in valuing the
business. EBITDA is reached by taking the maintainable return, including
profit before interest and tax and adding back the depreciation charge for
property, plant and equipment and right-of-use assets and amortisation of
intangible assets.
It is hoped that our continued initiatives to achieve growth in the IPS
business will result in a corresponding increase in valuation over time. As
stated in the half yearly management report, Management aim to achieve mid to
high single digit growth in 2025. The total valuation (excluding surplus net
assets) of the business has increased by £125m/160% since the first valuation
of the business at 31 December 2015.
In order to assist investors, the Company restated its historical NAV in 2015
to include the fair value of IPS for the last ten years. This information is
provided in the Annual Report within the 10-year record.
Long-term borrowings
The methodology of fair valuing all long-term unquoted 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
net assets already included within the NAV per the Group statement of
financial position that relates to the IPS business have been removed
(£33.2m) and substituted with the calculation of the fair value and surplus
net assets of the business (£229.9m). An adjustment of £48.6m is then made
to show the Group's debt at fair value, rather than the amortised cost that is
included in the NAV per the Group statement of financial position. This
calculation shows a NAV fair value for the Group as at 30 June 2025 of
£1,310.0m or 983.63 pence per share.
30 June 2025 31 December 2024
£000 Pence per share £000 Pence per share
Net asset value (NAV) per Group statement of financial position 1,064,710 799.42 920,764 698.14
Fair valuation of IPS 203,796 153.02 194,505 147.48
IPS net assets attributable to IPS valuation 26,153 19.64 18,811 14.26
Fair value of IPS business 229,949 172.66 213,316 161.74
Removal of IPS net assets included in Group net assets (33,244) (24.96) (25,921) (19.65)
Fair value uplift for IPS business 196,705 147.70 187,395 142.09
Debt fair value adjustment 48,629 36.51 42,353 32.11
NAV at fair value 1,310,044 983.63 1,150,512 872.34
NAV attributable to IPS 229,949 18% 213,316 19%
See commentary for the breakdown of the assets already included in the NAV per
the financial statements.
The Financial Statements NAV at fair value calculated above differs to the
published NAV at fair value for 30 June 2025 (half year NAV released by RNS on
1 July 2025). As such, please see below for a reconciliation:
Reconciliation of published NAV to results NAV: £000 Pence per share
Performance NAV cum income with debt at fair value 1,301,534 977.24
Reconciliation of shareholders' funds to net assets:
Performance NAV (1,068,070) (801.95)
Financial Statements NAV 1,064,710 799.42
Revised IPS valuation uplift:
Performance NAV (valuation per 31 December 2024) (187,395) (140.70)
Financial Statements NAV 196,705 147.70
Revised Fair Value of Debentures:
Performance NAV (46,069) (34.59)
Financial Statements NAV 48,629 36.51
Total NAV at fair value per results 1,310,044 983.63
Group income statement
for the six months ended 30 June 2025 (unaudited)
30 June 2025 30 June 2024
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
UK dividends 20,197 - 20,197 18,322 - 18,322
UK special dividends 457 - 457 - 1,432 1,432
Overseas dividends 1,796 - 1,796 1,552 - 1,552
Overseas special dividends - - - - - -
Dividends received from subsidiaries - - - - - -
Total dividend income 22,450 - 22,450 19,874 1,432 21,306
Interest income 603 - 603 397 - 397
Independent professional services fees† 32,508 - 32,508 30,178 - 30,178
Other income 501 - 501 562 - 562
Total income 56,062 - 56,062 51,011 1,432 52,443
Net gain/(loss) on investments held at fair value through profit or loss
- 132,405 132,405 - 59,528 59,528
Total income and capital gains/(losses) 56,062 132,405 188,467 51,011 60,960 111,971
Cost of sales (4,366) - (4,366) (4,062) - (4,062)
Administrative expenses (22,944) (1,625) (24,569) (20,687) (1,318) (22,005)
Operating profit/(loss) 28,752 130,780 159,532 26,262 59,642 85,904
Finance costs
Interest payable (921) (2,454) (3,375) (818) (2,454) (3,272)
Profit/(loss) before taxation 27,831 128,326 156,157 25,444 57,188 82,632
Taxation (1,151) - (1,151) (631) - (631)
Profit/(loss) for the period 26,680 128,326 155,006 24,813 57,188 82,001
Return per ordinary share (pence) 20.15 96.91 117.06 19.00 43.78 62.78
Diluted return per ordinary share (pence) 20.14 96.88 117.02 18.98 43.77 62.75
† IPS fees are presented gross.
Group statement of comprehensive income
for the six months ended 30 June 2025 (unaudited)
30 June 2025 30 June 2024
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Profit/(loss) for the period 26,680 128,326 155,006 24,813 57,188 82,001
Foreign exchange (loss) on translation of foreign operations (349) (85) (434) (390) (217) (607)
Pension actuarial gains/(losses) 1,542 - 1,542 - - -
Total comprehensive income/(loss) for the period 27,873 128,241 156,114 24,423 56,971 81,394
Group statement of financial position
as at 30 June 2025 (unaudited)
Unaudited Unaudited Audited
30 June 2025 30 June 2024 31 December 2024
£000 £000 £000
Non-current assets
Goodwill 1,929 19,009 1,976
Property, plant and equipment 1,641 2,265 1,958
Right-of-use asset 3,664 3,727 3,822
Other intangible assets 2,226 2,948 2,631
Investments held at fair value through profit or loss 1,207,371 1,000,911 1,042,039
Retirement benefit asset 12,223 7,597 10,475
Total non-current assets 1,229,054 1,036,457 1,062,901
Current assets
Trade and other receivables 19,735 30,988 17,758
Contract assets 5,339 15,558 6,659
Cash and cash equivalents 1,936 27,260 38,354
Total current assets 27,010 73,806 62,771
Total assets 1,256,064 1,110,263 1,125,672
Current liabilities
Trade and other payables 7,683 5,585 18,989
Lease liability 1,018 792 1,018
Corporation tax payable - 1,773 2,297
Other taxation including social security 1,872 2,330 2,266
Contract liabilities 9,920 14,039 8,996
Total current liabilities 20,493 24,519 33,566
Non-current liabilities and deferred income
Long-term borrowings 163,896 163,911 163,868
Contract liabilities 1,866 2,373 1,866
Deferred tax liability 1,418 1,788 1,418
Lease liability 3,681 4,516 4,190
Total non-current liabilities 170,861 172,588 171,342
Total net assets 1,064,710 913,156 920,764
Equity
Called up share capital 6,694 6,557 6,626
Share premium 131,023 107,110 119,449
Own shares (5,156) (3,926) (5,156)
Capital redemption 8 8 8
Translation reserve 7,197 2,659 7,197
Capital reserves 871,058 751,247 742,817
Retained earnings 53,886 49,501 49,823
Total equity 1,064,710 913,156 920,764
Total equity pence per share† 795.24 696.03 694.42
† Please refer to page 21 of the half year report for calculation of total
equity pence per share.
Group statement of cash flows
for the six months ended 30 June 2025 (unaudited)
Unaudited Unaudited Audited
30 June 2025 30 June 2024 31 December 2024
£000 £000 £000
Cash flows from operating activities (before dividends received and taxation 7,026 3,112 11,070
paid)
Cash dividends received 20,717 20,057 36,578
Taxation paid (3,376) (770) (770)
Cash generated from operating activities 24,367 22,399 46,878
Investing activities
Acquisition of property, plant and equipment (2) (274) (268)
Acquisition of right of use assets - - -
Expenditure on intangible assets (56) (303) (275)
Purchase of investments (less cost of acquisition) (104,978) (91,809) (193,394)
Sale of investments 69,950 102,107 192,881
Interest received 321 397 739
Cash flow from investing activities (34,765) 10,118 (317)
Financing activities
Interest paid (3,270) (3,272) (6,294)
Dividends paid (34,415) (32,470) (43,012)
Payment of lease liability (590) (623) (1,295)
Proceeds of increase in share capital 11,642 - 12,408
Purchase of own shares - - (1,230)
Net cash flow from financing activities (26,633) (36,365) (39,423)
Net (decrease)/increase in cash and cash equivalents (37,031) (3,848) 7,138
Cash and cash equivalents at beginning of period 38,354 31,439 31,439
Foreign exchange losses on cash and cash equivalents 613 (331) (223)
Cash and cash equivalents at end of period 1,936 27,260 38,354
Group statement of changes in equity
as at 30 June 2025 (unaudited)
Share capital Share premium Own shares Capital redemption Translation reserve Capital reserves Retained earnings Total
£000
£000 £000 £000 £000 £000 £000 £000 £000
Balance at 1 January 2025 6,626 119,449 (5,156) 8 7,197 742,817 49,823 920,764
Profit/(loss) for the period - - - - - 128,326 26,680 155,006
Foreign exchange - - - - - (85) (349) (434)
Pension actuarial gains/(losses) - - - - - - 1,542 1,542
Total comprehensive profit/(loss) for the period
6,626 119,449 (5,156) 8 7,197 871,058 77,696 1,076,878
Issue of shares 68 11,574 - - - - - 11,642
Dividend relating to 2024 - - - - - - (12,598) (12,598)
Dividend relating to 2025 - - - - - - (11,212) (11,212)
Total equity at 30 June 2025 6,694 131,023 (5,156) 8 7,197 871,058 53,886 1,064,710
Group segmental analysis
Investment Portfolio Independent Professional Services Total
30 June 30 June 2024 31 Dec. 2024 30 June 30 June 2024* 31 Dec. 2024*† 30 June 30 June 2024* 31 Dec. 2024*†
2025 2025 2025
£000 £000 £000 £000 £000 £000 £000 £000 £000
Revenue
Dividend income 22,450 19,874 34,701 - - - 22,450 19,874 34,701
IPS revenue*†
Corporate Services - - - 14,791 12,833 27,757 14,791 12,833 27,757
Corporate Trust - - - 9,144 8,365 17,027 9,144 8,365 17,027
Pensions - - - 8,573 8,980 16,875 8,573 8,980 16,875
Segment income 22,450 19,874 34,701 32,508 30,178 61,659 54,958 50,052 96,360
Other income 501 562 1,204 - - - 501 562 1,204
Cost of sales (100) (112) (214) (4,266) (3,950) (7,998) (4,366) (4,062) (8,212)
Administration costs (2,500) (1,712) (4,025) (20,444) (18,975) (38,660) (22,944) (20,687) (42,685)
Return before interest and tax 20,351 18,612 31,666 7,798 7,253 15,001 28,149 25,865 46,667
Interest payable (net) (767) (614) (1,184) 449 193 283 (318) (421) (901)
Return, including profit on ordinary activities before taxation
19,584 17,997 30,482 8,247 7,447 15,284 27,831 25,444 45,766
Taxation - - - (1,151) (631) (1,897) (1,151) (631) (1,897)
Return, including profit attributable to shareholders 19,584 17,997 30,482 7,096 6,816 13,387 26,680 24,813 43,869
Return per ordinary share (pence) 14.79 13.78 23.26 5.36 5.22 10.22 20.15 19.00 33.48
Assets 1,197,597 1,027,295 1,071,082 58,467 82,968 54,590 1,256,064 1,110,263 1,125,672
Liabilities (166,131) (166,203) (176,239) (25,223) (30,904) (28,669) (191,354) (197,107) (204,908)
Total net assets 1,031,466 861,092 894,843 33,244 52,064 25,921 1,064,710 913,156 920,764
*Divisional IPS revenues are restated by £286k (H1 2024) and £503k (FY 2024)
to reflect a business line transfer from Corporate Services to Corporate Trust
for comparability with 2025.
†The second half of 2024 includes non-recurring administration expenses of
£1,036k, increasing 'Return before interest and tax', 'Return, including
profit on ordinary activities before taxation' and 'Return, including profit
attributable to shareholders' by equivalent amount on an underlying basis.
Please refer page 133 of the annual report for further details.
The capital element of the consolidated statement of profit and loss is wholly
attributable to the investment portfolio.
Principal risks and uncertainties
The principal Group risks include investment performance and market risk,
cyber, technology and systems risk and IPS concentration risk.
These top risks are explained along with mitigating actions in the Risk
Management section of the Annual Report for the year ended 31 December 2024.
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 2024.
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
24 July 2025
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
Standards ('IASs') in conformity with the requirements of the Companies Act
2006 and in accordance with International Financial Reporting Standards
('IFRS') as adopted and endorsed by 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 2024
annual financial statements, except for those that relate to new standards
effective for the first time for periods beginning on (or after) 1 January
2025, and will be adopted in the 2025 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 2024 have been
filed with the Registrar of Companies. The independent auditor's report on the
annual report and financial statements for 2024 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 per share is calculated based on 133,184,585 (30 June 2024: 130,626,088;
31 December 2024: 131,888,540) shares, being the total number of shares in
issue of 133,885,755 (30 June 2024: 131,194,367; 31 December 2024:
£132,594,209), less 701,170 (30 June 2024: 568,279; 31 December 2024:
705,669) shares, acquired by the ESOT in the open Market. The net asset value
of £1,310,044,000 (30 June 2024: £1,120,611,000: 31 December 2024:
£1,150,512,000) comprises the NAV per the balance sheet of £1,064,710,000
(30 June 24: £913,156,000: 31 December 2024: £920,764,000) plus the fair
value adjustment to for the IPS business of £196,705,000 (30 June 2024:
£169,070,000; 31 December 2024: 187,395,000) less the fair value adjustment
for the debt of £48,629,000 (30 June 2024: £33,385,000; 31 December 2024:
£42,353,000).
Income: average shares during the period 132,420,058 (30 June 2024:
130,615,834; 31 December 2024: 131,022,927) 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. Note to the statement of cash flows
Unaudited Unaudited Audited
30 June 2025 30 June 2024 31 December 2024
£000 £000 £000
Operating profit/(loss) before interest and taxation 158,929 85,507 104,657
Adjust for non-cash flow items:
(Gains)/losses on investments (132,405) (59,528) (76,301)
Movement in amortised cost of borrowings 28 22 (21)
Depreciation of property, plant and equipment 319 276 566
Depreciation of right-of-use assets 447 405 719
Amortisation of intangible assets 542 499 1,046
Goodwill impairment - - 17,037
Decrease/(increase) in receivables 52 (2,307) 5,683
(Decrease)/increase in payables (699) (7,559) (4,387)
(Increase)/decrease in deferred income 924 6,009 459
(Decrease)/increase in other taxation payable (394) 2 (1,473)
Normal pension contributions in excess of cost - (157) (337)
Dividends receivable (20,717) (20,057) (36,578)
Cash flows from operating activities (before dividends received and taxation 7,026 3,112 11,070
paid)
6. Investments
A full list of investments is included on the website each month.
7. Half yearly report 2025
The 2025 half yearly report will be available on the website shortly via the
following link:
https://www.lawdebenture.com/investment-trust/shareholder-information
(https://www.lawdebenture.com/investment-trust/shareholder-information)
Registered office:
8th Floor, 100 Bishopsgate, London, EC2N 4AG Telephone: 020 7606 5451
(Registered in England - No. 00030397)
LEI number - 2138006E39QX7XV6PP21
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