The Law Debenture Corporation p.l.c.
25 February 2022
Strong track record for consistent long-term outperformance and dividend growth continues
The Law Debenture Corporation p.l.c. (“Law Debenture”) today published its results for the year ended 31 December 2021.
Group Highlights
- NAV total return with debt and IPS at FV for 2021 of 25.1%, outperforming the FTSE Actuaries All-Share Index by 6.8%
- Another year of strong performance from the Independent Professional Services business (IPS) with profit before tax up by 9.1% and valuation up 32.4%2 to £166m
- The capital structure has been reviewed to support further investment, resulting in the issuance of 4.5 million new ordinary shares at a premium to NAV, to existing and new investors, with net proceeds of £32.9m. Two tranches of long-term debt, with a total value of £50m, were also issued, with an average coupon of 2.54%
- Continued low ongoing charges of 0.50%, compared to the industry average of 1.05%
- Winner of Investment Week's UK Income Sector Investment Trust of the year
Dividend Highlights
- 2021 FY dividends increased by 5.5% to 29.0 pence per ordinary share (2020: 27.5p)
- Dividend yield of 3.7%i, Q4 dividend of 8.375 pence per ordinary share
- 13.8% CAGR in dividends over last four years
Investment Highlights
- Law Debenture has consistently outperformed its benchmark on short- and longer-term performance measures
|
|
1 year % |
3 years % |
5 years % |
10 years % |
|
NAV total return (with debt at par) |
23.1 |
49.3 |
59.7 |
199.2 |
|
NAV total return (with debt at fair value) |
25.1 |
47.3 |
59.4 |
187.7 |
|
FTSE Actuaries All-Share Index Total Return |
18.3 |
27.2 |
30.2 |
110.7 |
|
Share price total return |
19.2 |
67.6 |
81.2 |
237.0 |
|
Change in Retail Price Index |
7.5 |
11.2 |
18.9 |
32.7 |
IPS Highlights
- The Group's leading wholly-owned independent provider of professional services is a key differentiator to other investment trusts
- Profits before tax are up 9.1% and earnings per share are up 7.0% on prior period, reflecting consistent growth under new management team, funding over a third of the increased 2021 full year dividend
- IPS CAGR of 8.5% for EPS over last four years
- Fair value of the IPS business increased by 32.4% in 2021 to 166m and by 114.5% 2017-21
- IPS accounts for 18% of 2021 NAV but has contributed 36% of cashflows over last 10 years
- Board's ambition to continue to grow IPS at mid to high single digits
Longer-Term Record
- 133 years of value creation for shareholders
- 43 years of increasing or maintained dividends to shareholders
- 104% increase to dividends over last 10 years
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. In 2021, we have continued to realise these ambitions, exemplified through a significant IPS valuation uplift and another good increase in our full-year dividend of 5.5%. I am pleased at the consistent long-term outperformance of our benchmark.
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.”
Denis Jackson, Chief Executive Officer, said:
“2021 marked another strong year of all round progress for Law Debenture. I am particularly encouraged that IPS has now built a proven record with four consecutive years of at least mid to high single digit growth. We have invested significantly in our people, bolstering our team and capabilities and we look forward to capturing the opportunities ahead.
I am confident that our Investment Managers' focus on selecting strong business models and attractive valuation opportunities will enable them to continue to position the equity portfolio for future longer-term growth and outperformance.
I remain optimistic in Law Debenture's longer-term outlook. We are committed to growing and developing the IPS business and continuing our unbroken 43-year record of maintaining or raising the dividend.”