Half-year Report

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

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

Strong Longer-Term Record 

Dividend Highlights 

Investment Portfolio Highlights 

IPS Highlights

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. 

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

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.

Independent Professional Services

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:

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:

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

Geographical distribution of portfolio by value

Fifteen largest holdings: investment rationale

as at 30 June 2025

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.

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:

Group income statement

for the six months ended 30 June 2025 (unaudited)

Group statement of comprehensive income

for the six months ended 30 June 2025 (unaudited)

Group statement of financial position

as at 30 June 2025 (unaudited)

Group statement of cash flows

for the six months ended 30 June 2025 (unaudited)

Group statement of changes in equity

as at 30 June 2025 (unaudited)

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

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

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LEI number - 2138006E39QX7XV6PP21