Law Debenture p l c : 2023 Half Yearly Report and Accounts

H A L F Y E A R LY R E P O R T

2023

The Law Debenture Corporation p.l.c.

A T A G L A N C E

Law Debenture is rare among investment trusts.

A PROUD HISTORY

134 years	of value creation for shareholders.
STRENGTH AND DIVERSITY OF INCOME
34%	1	of dividend funded by our Independent Professional Services business
	over the past ten years.
LONG-TERM DIVIDEND GROWTH
40+ years	in dividend over the ten years to 31 December 2022.
		of increasing or maintaining dividends to shareholders, with a 114% increase

CONSISTENT LONG-TERM OUTPERFORMANCE OF OUR BENCHMARK

51.3%

Key statistics

share price total return outperformance of our benchmark, the FTSE Actuaries All-Share Index over the ten years to 30 June 2023.

for the half year ended 30 June 2023

4.0%2	£1,009.1m3	8.5%4
Net Asset Value Total Return -	Net Asset Value - including	Independent Professional
including debt and IPS at fair value	debt and IPS at fair value	Services business growth
(year ended 31 December 2022:	(31 December 2022: £972.6m)	in profit before tax
0.6%)		(30 June 2022: 5.9%)

1.68%

Average premium in share price versus NAV (with debt and IPS at fair value)

(30 June 2022: 1.96%)

0.48%

Ongoing charges ratio - compared to industry average of 1.07%

(30 June 2022: 0.48% compared to industry average of 1.09%)

1.5%

Share Price Total Return (for the half year 30 June 2022: -3.8%)

1 Calculated for the 10 years ended 31 December 2022.

2 Total net assets per statement of financial position percentage increase 1.7% (year ended December 2022 decrease 9.08%). 3 Please refer to pages 19 and 20 for calculation of net asset value.

4 Calculated for the half year ended 30 June 2023.

lawdebenture.com

AT A GLANCE

Law Debenture: a unique combination of an award winning UK Income Investment Trust1 and a leading provider of Independent Professional Services

Investment	Independent Professional
Portfolio	Services (IPS) business
c. 79% of NAV	c. 21% of NAV
including IPS and long-term	including IPS and long-term
borrowings at fair value	borrowings at fair value

Managed by James Henderson and Laura Foll

of Janus Henderson

OBJECTIVE: LONG-TERM CAPITAL GROWTH IN REAL TERMS AND STEADILY INCREASING INCOME

▶  Focused on long-term returns

▶  Low ongoing charges ratio at 0.48%2 compared to industry average of 1.07%3

PENSIONS

The longest

established and

one of the largest UK providers of pension trustee services

CORPORATE

TRUST

1. leading independent corporate trustee across international

capital markets

CORPORATE

SERVICES

Range of

outsourced solutions to corporates internationally

▶  Contrarian investment style:

• High quality companies with strong competitive advantage at attractive valuations

• Out of favour equities standing at valuation discounts to their long- term historical average

▶  Selective, bottom-up approach

▶  Diversified portfolio by sector (predominant UK weighting)

INTERNATIONAL PRESENCE:

United Kingdom, New York, Ireland, Hong Kong, Delaware, Cayman Islands and Channel Islands

We believe that all divisions have potential for further growth in expanding markets.

Our plan to achieve this is by increasing our market share through better leveraging of technology, our strong relationships and our brand

Significant, consistent income contribution from IPS gives greater flexibility in stock selection

1. Winner of the AIC 2021 & 2022 UK equity income sector investment trust of the year; AJ Bell Fund and Investment Trust awards 2022; winner of Best UK Equity - active category.
2. Calculated based on data held by Law Debenture for the period ended 30 June 2023.
3. Source: Association of Investment Companies (AIC) industry average as at 30 June 2023.

1

A T A G L A N C E

Performance

	YTD	1 year	3 years	5 years	10 years
	%	%	%	%	%
NAV total return (with debt at par)1*	2.2	6.0	43.0	28.4	121.9
NAV total return (with debt at fair value)1*	4.0	11.1	60.9	38.9	136.4
FTSE Actuaries All-Share Index Total Return2	2.6	7.9	33.2	16.5	78.0
Share price total return2*	1.5	5.0	67.4	59.2	129.3
Change in Retail Price Index3	4.1	10.4	28.2	33.3	50.3

Consistent long-term
outperformance of benchmark4
FTSE Actuaries All-Share Index2
Share price total return2
NAV total return1							78%
300										129%	£10,000
									136%
250					17%					invested in
					59%
200					39%					Law Debenture
150											ten years ago
										would be worth
100
										£22,930
50					5 YEAR				10 YEAR
0											as at
-2013	-2014	-2015	-2016	-2017	-2018	-2019	-2020	-2021	-2022	-2023	30 June 20235
Jun	Jun	Jun	Jun	Jun	Jun	Jun	Jun	Jun	Jun	Jun

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.
4. The graph shows ten year performance data.
5. Calculated on a total return basis assuming dividend re-investment between 30 June 2013 and 30 June 2023.

• Items marked "*" are considered to be alternative performance measures and calculated using the published daily NAV. For a description of these measures, see page 152 of the annual report and financial statements for the year ended 31 December 2022.

Please remember that past performance does not predict future returns. The value of an investment and the income from it can rise as well as fall as a result of market and currency fluctuations, and you may not get back the amount originally invested.

2 lawdebenture.com

AT A GLANCE

Financial summary

	Six months	Six months	Twelve months
	30 June 2023	30 June 2022	31 December 2022
	£000	£000	£000
Net Asset Value - with debt and IPS at fair value*	1,009,140	917,365	972,566
Total Net Assets per the statement of financial position	812,578	787,932	799,067
	Pence	Pence	Pence
NAV per share at fair value1,2*	775.92	726.74	761.69
Revenue return per share:
Investment portfolio	13.29	13.66	24.06
Independent professional services	4.803	4.553	10.38
Group revenue return per share	18.09	18.21	34.44
Capital (loss)/return per share	(5.26)	(100.61)	(103.17)
Dividends per share4	7.625	7.25	30.50
Share price	767	760	771
	%	%	%
Ongoing charges5*	0.48	0.48	0.49
Net gearing*	13	11	12
Premium/(discount)*	(1.15)	4.58	1.22

1. Please refer to pages 19 and 21 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. Revenue per share is calculated using the weighted average shares in issue as at 30 June 2023.
4. The second interim dividend is not due to be announced until September 2023 and has not been factored in the calculation presented. The Board have indicated their intention to pay three interim dividends of 7.625p in respect of 2023, each representing a quarter of the total 2022 dividend declared of 30.5p. The final dividend will be declared in February 2024.
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.

• Items marked "*" are alternative performance measures ('APM') and calculated using the published daily NAV. For a description of these measures, see page 152 of the annual report and financial statements for the year ended 31 December 2022.

3