Law Debenture delivers 'solid' overall first-half performance

The FTSE 250 company said its net asset value total return, including debt and IPS at fair value, was 9.7%, surpassing the FTSE All-Share Index benchmark return of 7.4%.

With debt at par, the NAV total return was 9.6%, while the share price total return marginally outperformed the benchmark, delivering a return of 7.7%.

The IPS business showed strong results, with an 8.8% increase in revenue and a 9.2% rise in profit before tax.

Law Debenture said the valuation of the IPS segment grew 4.9% to £221m from 30 December.

The company said it continued to maintain low ongoing charges of 0.48%, significantly lower than the industry average of 1.21%.

Law Debenture also declared a first interim dividend of 8p per share, representing a 4.9% increase from the prior year's first interim dividend.

The board said it intended for each of the first three interim dividends in 2024 to be equivalent to a quarter of the total 2023 dividend of 32p per share, with a continued intention to maintain or increase the total dividend.

It said its dividend yield stood at 3.6%, based on the closing share price of 889p on 24 July.

Total dividend income from the portfolio was £19.9m, up from £19.3m in June last year.

The IPS business, accounting for 20% of the first-half net asset value, had consistently funded around 34% of dividends over the last decade.

Law Debenture said the segment marked its seventh consecutive year of mid-to-high single-digit growth, with net revenues reaching £26.2m and profit before tax increasing to £24.1m.

The company noted that over the last 10 years, its share price total return was 137.2%, significantly outpacing the FTSE All-Share Index's 77.8%.

“Law Debenture has delivered a solid overall first half performance and succeeded in its aim to provide a steadily increasing income for our shareholders whilst achieving long-term capital growth in real terms,” said chairman Robert Hingley.

“The market backdrop has been relatively supportive though within the investment trust sector, there has been a widening of discounts.”

Hingley said against that background, the company was “pleased” that IPS had shown continued good growth, and that overall, the firm had outperformed its benchmark.

“We are confident that the combination of a well positioned equity portfolio and continued growth in our IPS business will deliver attractive long-term returns for our shareholders.”

At 1109 BST, shares in the Law Debenture Corporation were up 1.13% at 895p.

Reporting by Josh White for Sharecast.com.