The Law Debenture Corporation p.l.c. today published its results for the half-year ended 30 June 2023

Group Highlights:

• Net asset value (NAV) total return with debt and Independent Professional Services (IPS) business at fair value (FV) for H1 2023 delivered a modest outperformance of 4.0% compared to our benchmark, the FTSE All-Share Index, at 2.6%. With debt at par the return was 2.2%.
• IPS profit before tax up by 8.5% and valuation up 4.4% to £210m (compared to 30 December 2022).
• Since the publication of The Law Debenture Corporation p.l.c.’s (Law Debenture) Annual Report in February 2023, Law Debenture has issued 2 million new ordinary shares at a premium to NAV (to existing and new investors) with net proceeds of £16.6m to support ongoing investment. 
• Continued low ongoing charges of 0.48%, compared to the UK Equity Income industry average of 1.07%.

Winner of Investment Week's UK Equity Income Investment Trust of the Year for 2022 (second year running); winner in UK Equity – Active category at the AJ Bell Fund and Investment Awards 2022 and winner for Best Investment Trust for Income at the 2022 Shares Awards.

Dividend Highlights:

• Declared a first interim dividend of 7.625 pence per ordinary share, paid in July 2023, representing an increase of 5.17% over the prior year's first interim dividend.
• It is the Board's intention for each of the first three interim dividends for 2023 to be equivalent to a quarter of Law Debenture's total 2022 dividend of 30.5 pence per ordinary share. Performance and growth of the IPS business continues to support the Board's intention to maintain or increase the total dividend in 2023.
• Dividend yield of 3.8% based on our closing share price of 812 pence on 26 July 2023 (with a relatively strong reserves position).

Overall Highlights:

• Modest outperformance (with debt and IPS at FV) in first half of 2023.
• Long-term outperformance of the benchmark over three, five and ten years.
• Strong long-term record with share price total return over 10 years of 129.3% (FTSE All-Share: 78%).
• Total dividend income from the portfolio of £19.3m (June 2022: £18.4m).

[1] 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.

[2] Source: Refinitiv.

[3] Source: Office for National Statistics.

IPS Highlights:

• Wholly-owned independent provider of professional services. Accounts for 21% of H1 2023 NAV but has funded approximately 34% of dividends in the last 10 years.[1]
• IPS enters its sixth consecutive year of consistent growth with net revenues of £24.1m (June 2022: £21.7m) up 11.2% with profit before tax up by 8.5% (compared to 30 June 2022).

[1] Calculated for the 10 years ended 31 December 2022.

Longer Term Record:

• 134 years of history with a long-term track record of value creation for shareholders.

• £10,000 invested in Law Debenture ten years ago would be worth £22,930 as at 30 June 2023[1]. 

• Over 44 years of increasing or maintaining dividends to shareholders.

[1] Calculated on a total return basis assuming dividend re-investment between 30 June 2013 and 30 June 2023.

Law Debenture aims to provide a steadily increasing income for our shareholders whilst achieving long-term capital growth in real terms. The market backdrop has been difficult, with elevated levels of inflation proving more persistent than many economic commentators may have hoped and, within the investment trust sector, a marked widening of discounts. Against this background, we are pleased that IPS has shown continued growth and that, overall, we have modestly outperformed our benchmark. We are confident that the combination of a high-quality equity portfolio and growth in our IPS business will continue to deliver attractive long-term returns for our shareholders.

Robert Hingley, Chairman

Against a backdrop of continued macroeconomic uncertainty with high global inflation and interest rates, Law Debenture has delivered a solid performance in the first half of 2023. Our portfolio managers select investments based on an assessment of their long-term value and believe an undervalued UK stock market continues to offer investors the opportunity to own resilient, cash-generative and well-managed businesses at attractive valuation multiples. We believe the strong, predictable 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. Though the near-term economic outlook is not without its challenges, we feel our ongoing investment in IPS leaves it well positioned for medium-term growth in-line with our mid to high single percentage target.

Denis Jackson, CEO