Law Debenture Corporation p Half-year Report

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 £178.4m

·   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 £30.4m 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 years⁵

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 £16.9m (June 2021: £10.2m), representing growth of 65.6%

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 £21.7m (June 2021: £19.5m) 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.”