Company Announcements

The Law Debenture Corporation p.l.c.

28 February 2023

Multiple award wins and share price outperformance over 1, 3, 5 and 10 years

The Law Debenture Corporation p.l.c. ("Law Debenture" or the "Company") releases its results for the year ended 31 December 2022.

Highlights:

 

·	Share price total return marginally outperformed the FTSE Actuaries All-Share Index with a total return of 0.4% for 2022.
·	NAV total return with debt and Independent Professional Services ("IPS") business at fair value for FY 2022 of 0.6% (-6.8% with debt at par).
·	Another period of consistent performance from IPS with net revenue increasing by 8.6%, profit before tax up by 8.1% and valuation up 18.7% to a record £201.7 million.
·	The Company issued 5.2 million new Ordinary Shares at a premium to NAV during 2022, to existing and new investors, with net proceeds of £41.4 million to support ongoing investment.
·	Continued low ongoing charges of 0.49%1, compared to the industry average of 1.04%2.

 

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

 

·	2022 full year dividend increased by 5.2% to 30.5 pence per Ordinary Share (2021: 29.0 pence per Ordinary Share).
·	Dividend yield of 3.7% (based on our closing share price of 827 pence on 24 February 2023), proposed Q4 dividend of 8.75 pence per Ordinary Share.
·	7.91% CAGR in dividends over last ten years reflecting strong IPS cashflow and good portfolio performance.

 

Investment Portfolio Highlights

·	Consistent share price and NAV (with IPS and debt at fair value) outperformance of the benchmark over three, five and ten years (see table below).
·	Strong long-term record with share price total return outperforming FTSE Actuaries All-Share over 1, 3, 5 and 10 years.
·	Revenue from the portfolio of £34.4m (December 2022: £26.2m), representing growth of 31%.

 

 

	1 year %	3 years %	5 years %	10 years %
NAV total return3 (with IPS at fair value and debt at par)	(6.8)	16.8	30.3	141.5
NAV total return3 (with IPS and debt at fair value)	0.6	26.0	39.9	154.6
FTSE Actuaries All-Share Index Total Return4	0.3	7.1	15.5	88.2
Share price total return4	0.4	37.7	51.6	161.2
Change in Retail Price Index5	13.4	23.5	29.6	46.0

 

Please note that 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.

 

IPS Highlights

 

·	The Company's leading wholly-owned independent provider of professional services is a key differentiator to other investment trusts.
·	Accounts for c.21% of 2022 NAV but has funded approximately 34% of dividends paid by the Company in the last 10 years.
·	IPS has now delivered five consecutive years of growth with a 5 year net PBT CAGR of 8.2% and a 2022 valuation of £201.7 million up 113% since 2017.

 

Longer Term Track Record

 

·	134 years of history with a long-term track record of valuation creation for shareholders.
·	114% aggregate increase in the dividend over the last 10 years (7.91% CAGR).
·	44 years of increasing or maintaining dividends to shareholders.

 

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 2022, we have continued to make progress, exemplified through an IPS valuation uplift and another good increase in our full-year dividend of 5.2%. I am pleased with the consistent long-term outperformance of the share price total return 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, commented:

 

"2022 has been a creditable overall year for Law Debenture despite the continued macroeconomic uncertainty. Capital has largely been preserved in a year when many global stock markets fell sharply, and we had our 44th year of maintaining or increasing dividends.

 

"Law Debenture is resilient by design. The combination of IPS with the Investment Portfolio offers strong flexibility in stock picking and is a well proven model. Though we are cognisant that 2023 will present challenges, I am cautiously optimistic about the Company's progress this year and beyond, and our ongoing investment in IPS leaves it well positioned for medium-term growth in-line with our mid to high single percentage target."

 

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 a leading provider 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.

 

The Law Debenture Corporation Denis Jackson, Chief Executive Officer Hester Scotton, Chief Financial Officer Trish Houston, Chief Operating Officer	+44 (0)20 7606 5451
Tulchan Communications (Financial PR) David Allchurch Stephanie Mackrell	+44 (0)20 7353 4200

 

¹ Calculated based on data held by Law Debenture for the year ended 31 December 2022.

² Source: Association of Investment Companies (AIC) industry average as at 31 December 2022.

³ 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.

⁴ Source: Refinitiv.

⁵ Source: Office for National Statistics.

 

ANNUAL FINANCIAL REPORT

 

YEAR ENDED 31 DECEMBER 2022 (AUDITED)

 

This is an announcement of the Annual Financial Report of The Law Debenture Corporation p.l.c. as required to be published under DTR 4 of the FCA Listing Rules.

 

The Directors recommend a final dividend of 8.75p per share making a total for the year of 30.5p. Subject to the approval of shareholders, the final dividend will be paid on 13 April 2023 to holders on the register of the record date of 10 March 2023. The Annual Financial Report has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the UK.

 

The financial information set out in this Annual Financial Report does not constitute the Company's statutory accounts for 2021 or 2022. Statutory accounts for the years ended 31 December 2021 and 31 December 2022 have been reported on by the Independent Auditor. The Independent Auditor's Reports on the Annual Report and Financial Statements for 2021 and 2022 were unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.

 

Statutory accounts for the year ended 31 December 2021 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 December 2022 will be delivered to the Registrar in due course.

 

The financial information in this Annual Financial Report has been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standards and Interpretations adopted for use in the UK (collectively Adopted IFRSs). The accounting policies adopted in this Annual Financial Report have been consistently applied to all the years presented and are consistent with the policies used in the preparation of the statutory accounts for the year ended 31 December 2022. The principal accounting policies adopted are unchanged from those used in the preparation of the statutory accounts for the year ended 31 December 2021.

 

Financial summary

 

	31 December 2022 £000	31 December 2021 £000	Change
Net Asset Value - with debt and IPS at fair value 1*	972,566	964,493	0.84%
Total Net Assets per the statement of financial position	799,067	878,837	(9.08%)
	Pence	Pence
Net Asset Value (NAV) per share at fair value 1*	761.69	787.83	(3.3%)
Revenue return per share
Investment Portfolio	24.06	18.09	33.0%
Independent professional services	10.38	10.00	3.8%
Group revenue return per share	34.44	28.09	22.6%
Capital return/(loss) per share	(103.17)	94.60	(209.1%)
Dividends per share	30.50	29.00	5.2%
Share price 4	771	799	(3.5%)
	%	%
Ongoing charges 3*	0.49%	0.50%
Gearing 3	12%	13%
Premium/(discount)*	1.22%	1.42%

 

Performance

 

	1 year %	3 years %	5 years %	10 years %
NAV total return2* (with IPS at fair value and debt at par)	(6.8)	16.8	30.3	141.5
NAV total return2* (with IPS and debt at fair value)	0.6	26.0	39.9	154.6
FTSE Actuaries All-Share Index Total Return4	0.3	7.1	15.5	88.2
Share price total return4*	0.4	37.7	51.6	161.2
Change in Retail Price Index5	13.4	23.5	29.6	46.0

 

* Items marked "*" are considered to be alternative performance measures and are described in more detail on page 152 of the Annual Report.

 

1 Please refer below for calculation of net asset value. Please note change in NAV per share in the financial summary does account for the effect of dividends on total return.

2 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.

3 Ongoing charges are calculated based on AIC guidance, using the administrative costs of the investment trust and include the Janus Henderson Investors' management fee, charged at the annual rate of 0.30% of the NAV. There is no performance related element to the fee. Gearing is described in the strategic report below and in our alternative performance measures in the annual report.

4 Source: Refinitiv.

5 Source: Office for National Statistics.

 

Chairman's statement

 

Performance

I am pleased to report that Law Debenture has performed creditably in the midst of the ongoing global economic uncertainty. Rising interest rates and inflation, combined with tumultuous domestic politics and the ongoing war in Ukraine, have resulted in market volatility and low risk appetite. Despite these headwinds, the combination of our diversified Portfolio and another good IPS performance have ensured that Law Debenture continues to deliver on its commitment to produce capital growth over the longer term and steadily increasing income to benefit all our shareholders.

 

Our benchmark, the FTSE Actuaries All-Share Index, delivered a 0.3% total return, and we are satisfied that the Company's share price total return marginally outperformed this with a total return of 0.4% for 2022. The Net Assets Value ('NAV') with debt and the independent professional services ('IPS') at fair value delivered a return of 0.6%.

 

The highlight was receiving recognition for all the hard work of our great team of people from the investment community in the shape of three awards. At the 2022 Shares Awards, we were recognised as the Best Investment Trust for Income, and it was also a great honour to be the recipient of the UK Equity Income Investment Trust of the Year award for the second year running. We also came out on top in the UK Equity - Active category at the AJ Bell Fund and Investment Awards. The triple success demonstrates the excellent short- and longer-term record of our investment managers, and the continued resilience, long-term outperformance and dividend growth offered by our Trust.

 

Dividend

We retain a proud record of increasing or maintaining our dividend payments for the 44th year in a row. The current climate has naturally affected yields from our Investment Portfolio, and it is likely that the enduring impact of the past year's difficulties will continue to affect dividends across capital markets. However, the consistent and reliable cash flows from our diversified IPS business have helped ensure that we can continue our strong dividend record.

 

Subject to your approval, we propose paying a final dividend of 8.75 pence per ordinary share. The dividend will be paid on 13 April 2023 to holders on the register on the record date of 10 March 2023. This will provide shareholders with a total dividend of 30.50 pence per share for 2022, an increase of 5.2% compared with 2021.¹ This represents a dividend yield of 3.7% based on our closing share price of 827 pence on 24 February 2023. Over the last 10 years, we have increased the dividend by 114% in aggregate.

 

Capital structure

In 2022, the Group issued 5.2 million new ordinary shares at a premium to NAV, to existing and new investors, with net proceeds of £41.4m to support ongoing investment. Shares were issued at a premium to NAV to be accretive to existing shareholders.

 

Our Investment Portfolio

Despite recessionary pressures and high inflation, James Henderson and Laura Foll, our investment managers, continue to invest in a differentiated selection of high-quality businesses with competitive advantage and good long-term growth prospects. We are pleased to report dividend income of £34.4m from the Portfolio, representing growth of 31% compared to the prior year. Stocks globally were buffeted over the past year resulting in an understandable, but disappointing, total capital loss for the year of £129.6m. Of this, £126.2m is unrealised as it relates to movements in the value of the holdings within Portfolio and is offset by the movement of £75m in the fair value of debt and £12.5m in the fair value uplift of IPS. However, we are confident that their disciplined approach of buying at attractive entry point valuations will continue to deliver over the longer term for our shareholders. The high-margin and revenue flows that IPS generates give James and Laura the opportunity to explore a more flexible portfolio that includes both income and growth-focused stocks.

 

Further detail on the Portfolio performance with a review from our investment managers may be found below.

 

IPS

Our professional services business, a unique offering that lends an advantage compared to other UK income funds, has grown from strength to strength in recent years with a compound annual growth in profit before tax of 8.2%² over the last five years. The turmoil caused by the 'mini budget' brought the pensions industry into widespread focus, and, while it was undoubtedly a difficult period, I am proud of how our Trustee business delivered for clients.

 

In a year where global uncertainty badly affected capital markets, the value of IPS for shareholders became more evident. Some of our businesses benefit from a degree of counter-cyclicality, which is, in part, why IPS had another year of mid-high single digit revenue and profit growth. This is underpinned by our specialist knowledge and record of providing excellent client service. The Board is pleased to see employee engagement and satisfaction scores improving and this ongoing investment in talent and technology, leaves us confident IPS should have the potential to sustain mid to high single digit growth over the medium term.

 

Environmental, Social and Governance (ESG)

Those with whom we have worked over the past few years will likely be aware of the cultural changes at Law Debenture. I want to give credit to our Executive Leadership team who have been instrumental in creating a working culture that encompasses our four values: Make Change Happen; Better Together; Believe It's Possible and Never Stop Learning.

 

Our IPS business is built upon the provision of independent governance services. A central tenet of this work is our commitment to diversity, and we are delighted that we have established a balanced gender pay gap position and have strong female representation both at Board and senior executive level, with women making up 47% of the senior leadership team. In 2022, we ranked 1st in the Financial Services category of the FTSE Women Leaders Review - an achievement that we are extremely proud of. Supporting our people is directly beneficial to our clients, with improved representation promoting broader perspectives, experiences, and skillsets.

 

As an organisation, we believe that long-term growth is underpinned by sustainability. This presents opportunities for investment within the Portfolio. The IPS has a relatively small carbon-footprint and, over the years, we have taken steps to further reduce this. As part of our commitment to the ESG agenda, Law Debenture has voluntarily chosen to adopt the Task Force on Climate-Related Financial Disclosures ('TCFD'). This can be found on page 51 of the Annual Report.

 

Our investment managers are committed to investing in businesses that have a sustainable business model and carefully take ESG into consideration when making investment decisions. For more details please see page 50 of the Annual Report.

 

The Board

During the course of 2022, Mark Bridgeman stepped down as Chair of the Audit and Risk Committee and from the Board, having served nine years. I would like to thank him for his significant contribution to the Board and the Company over the years.

 

Pars Purewal, who joined the Board in December 2021, was appointed as our new Chair of the Audit and Risk Committee. Pars brings extensive Audit and Risk experience, having been a Senior Partner and worked in the PwC Audit Practice for 35 years.

 

Following Mark's departure, Clare Askem has taken over as Workforce Engagement Director and has already invested time in hosting listening groups with our staff to provide feedback to our Executive Leadership team and the Board.

 

Looking forward

The beginning of 2023 has brought some tentative optimism from investors that inflation and the cost-of-living crisis will perhaps subside sooner than first thought. While I welcome a more optimistic outlook on UK market valuations, particularly with the more stable environment that we are now seeing, there is still some way to go, and it is reasonable to expect much of this year to follow the current trends. The majority of the Portfolio is invested in UK equities, although many of the earnings are derived from outside the UK. James and Laura continue to believe that UK market valuations are too low and offer some attractive longer-term growth opportunities with a lot of bad news already priced in.

 

The Board and our investment managers remain confident in our future performance, due to the diversified and resilient nature of our Portfolio and the good growth potential for IPS. Its services are well sought after and the market share opportunities are considerable.

 

During these challenging times, our consistent delivery has only been possible due to the hard work of our talented people and, on behalf of the Board, I would like to thank them all.

 

Robert Hingley

Chairman of the Board

27 February 2023

 

(1) Refer to financial summary above.

(2) Calculated using the published PBT of the IPS business over the past 5 years.

 

Chief Executive Officer's review

 

Introduction

2022 has been an encouraging year overall for Law Debenture, despite the continued macroeconomic uncertainty we have seen. Markets have been difficult across the world and the UK saw political volatility which exacerbated the turbulence in financial markets. Despite this, Law Debenture's performance reflected well on the Group's ability to adapt to a changeable economic climate and navigate short-term headwinds. Law Debenture delivered on its two main objectives; producing some, albeit modest, share price growth and continuing to steadily increase income for shareholders.

 

The sharp jump in inflation and interest rates and overall challenging economic environment for businesses has not been easy for our investment managers to navigate. The median share price for the UK was down 18% over the course of the year and so I am pleased with our total share price performance, which was very marginally up. Capital has been preserved in a year when many global stock markets fell sharply and we had our 44^th year of maintaining or increasing dividends.

 

James Henderson and Laura Foll have continued to perform creditably in difficult market conditions. The Group takes great pride in our long-term record over one, three, five and ten years, with consistent outperformance of the benchmark, the FTSE Actuaries All Share Index. James and Laura have a consistent and proven valuation-driven process which aims to identify market-leading, high-quality companies that are undervalued at the point of purchase. It is a testament to the continued outperformance and the investment team that Law Debenture has won three prestigious investment trust awards this year.

 

Our IPS business has shown its fifth consecutive year of middle to high single digit growth. For 134 years, we have stuck to our principles of independence, trust and excellence. Our investment for growth over the last five years has positioned us well for the future. The acquisition of Eversheds Sutherland (International) LLP's Corporate Secretarial Services ('CSS') business in 2021 has strengthened its client offering. I am very proud of our strong client relationships and approximately two-thirds of our business is repeated year on year. As we face a complex macro-economic environment in 2023, our aim is that IPS should continue to provide an element of counter cyclical revenue that will support our overall performance. High-quality governance should remain core to our clients, regardless of the economic cycle.

 

IPS business net revenues (gross revenue less direct costs incurred) for the full year 2022 were up 8.6% at £45.2m (2021: £41.6m) and profit before tax was up 8.1%. The diversification of our income streams again served us well, but we have had to compete with the challenging recruitment environment to retain our people who underpin the quality of service we deliver. However, we are active in the management of our cost base and are working hard to ensure our profit margins are sustainable.

 

We are proud to have delivered a 114% increase in dividend over the last ten years. This is supported by the diversified nature of IPS, which makes Law Debenture a unique investment trust. The flow of income from IPS has funded around 34% of dividends over that period and gives James and Laura the flexibility to invest in a broader and higher-growth portfolio than many sector peers, helping to position the equity portfolio for future longer-term growth.

 

Corporate trust

Law Debenture was incorporated to act as a bond trustee in 1889. The role of a bond trustee is to act as a bridge between the issuer of a bond and the individual bondholders. Our responsibilities as bond trustee can vary materially, whether servicing or performing or defaulted bond issues.

 

DIVISION	Net revenue 2018 £000	Net revenue 2019 £000	Net revenue 2020 £000	Net revenue 2021 £000	Net revenue 2022 £000	Growth 2021/2022 %
Corporate trust	8,362	9,024	10,789	9,771	10,620	8.7%
Pensions	9,488	10,598	11,479	13,060	14,343	9.8%
Corporate services	11,734	12,167	12,226	18,755	20,206	7.7%
Total	29,584	31,789	34,494	41,586	45,169*	8.6%

*Total net revenue is calculated by reducing segment income of £53,452k by cost of sales of £8,283k.

Corporate services: 2021 includes additional revenue arising from the acquisition of the CSS business from Eversheds Sutherland (International) LLP.

 

Normal obligations for the bond trustee to support performing issues include communication to the bondholders of financial or security data, together with the distribution of covenant information. For this type of work, we are typically paid an annual fee throughout the lifetime of the bond. This fee is inflation linked for the majority of our existing book of business. When an amendment to bond documentation is required, we can also earn additional revenues to complete the necessary changes.

 

When bonds default, the workflow, 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. We never wish our clients to suffer bad fortune, but our role in such default situations requires material incremental work that, given a favourable outcome, can lead to significant additional income for the firm. Defaults often take years to play out and the results are uncertain. Given this long-dated and fluctuating backdrop, our revenues for this work in any specific calendar year can fluctuate. However, such post issuance work has strong economic countercyclicality and has produced sound returns for our shareholders over time.

 

Highlights

Following a difficult 2021, when we reported a 9.4% decrease in revenues for the Corporate Trust business, we are pleased to report revenue growth of 8.7% in 2022, despite challenging market conditions.

 

As noted at the half year, the majority of the capital markets transactions that sit on our books have been built up over many decades and have contractual inflation-linked fee increases for our services. These fee increases are applied on each transaction anniversary. As 2022 progressed and inflation remained at elevated levels, the more such inflation-linked increases fed through to our book of business.

 

Despite the extremely tough primary market conditions, under the leadership of Eliot Solarz, we completed some notable new transactions, including an appointment Trustee for the Real Estate Investment Trust, SEGRO plc's €1.15 billion senior unsecured Green Bond issue. The proceeds of the issue will principally be used to finance and/or refinance Eligible Green Projects as outlined in the SEGRO Green Finance Framework, as well as providing funding for general corporate purposes. Later in the year we were also appointed as Trustee on the €750 million senior unsecured Green bond issue for the SEGRO European Logistics Partnership ('SELP') joint venture.

 

Our escrow business continues to build momentum and broaden its diversification of use. During 2022 we were appointed to a range of roles that included M & A, litigation, commercial real estate, sporting events, sales of ships, and to support global trade in commodities.

 

Our business is built on trust and independence, our domain expertise, and our ability to move fast.

 

Outlook for our corporate trust business

Levels of primary market activity are difficult to predict. Growth in European primary debt issuance revenues over the past four years illustrate this well at -14% for 2019, +21% for 2020, +1% for 2021 and -23% for 2022 respectively (source; Dealogic). Our post-issuance work is equally difficult to predict, but historically has had a strong economic countercyclicality.

 

We continue to increase our range of products and broaden and deepen our relationships with clients, law firms and financial institutions that underpin activity in this market. We have hired extra business development resource to help to grow this business and we are increasingly raising our profile within the marketplace for our services. Even if year-on-year revenue growth can be somewhat lumpy, we are confident that, over time, we can continue to grow this business.

 

Pensions

We are one of the largest independent providers of Pension Trustees in the UK and, throughout 2022, continued to support our clients as the pensions landscape evolved.

 

Our Pegasus offering of outsourced pensions executive solutions is a leading provider in the UK in a fast-growing market.

 

Market dynamics

While many large pension schemes have a professional trustee appointed to their board, around 50% of schemes in the UK have not yet appointed a professional trustee - these are mainly small to medium-sized schemes.

 

In 2022, the DWP published its consultation on new funding and investment regulations, with a focus on having a longer-term strategy for all pension schemes. Together with the new code of practice on funding due to be in force in 2023, this will push schemes to consider investment strategies and their "end-game" planning in more detail. We expect that this will continue the trend of sponsors and schemes to look to strengthen the level of professional expertise on their pension scheme trustee boards.

 

In addition to these regulatory developments, the gilt market and associated LDI crises in late September and October 2022 further highlighted the need for professionalism, good governance and the need to react quickly to significant market events.

 

The UK regulator will also, in 2023, introduce a single combined code of practice, focusing on improving governance and requiring schemes to assess the risks being run in their schemes. These new requirements will encourage schemes to identify gaps in governance. Any resulting resourcing issues may encourage more to outsource.

 

Highlights

As I announced in the 2021 Annual Report, Vicky Paramour was appointed as Managing Director for our Pensions business, with Sankar Mahalingham heading up the fast-growing Pegasus side of the business. 2022 was another strong year for our Pensions and Pegasus business with growth in revenues of 9.8%. Over the past five years, compound revenue growth is a healthy 12%. In our core Trustee business, we were delighted to add incremental appointments that included names such as Riverstone, SEI Master Trust and Invesco.

 

We recognise that revenue growth is driven by investing in the best people and we remain committed to continuing to do so. During the year, we continued to invest in our trustee team both at the director level as well as professional trustees with a specific focus on broad pension industry and pensions' management skillsets, to service our increasing portfolio of smaller to medium sized schemes. We also continued to invest in regional and international talent. In Manchester, we hired our first pensions trustees alongside our Pegasus employees to service a large pool of potential clients based in this region and we will continue to add to this capability. We also expanded our capability in Ireland, to cover increasing opportunities in the Irish market from both local and international companies.

 

During the year, Pegasus continued to grow, with more full outsourced pension management wins, alongside interim resource and project support. Pegasus offers a range of services from simple pension scheme secretarial services through to fully outsourced pensions management and professional sole trustee solutions. After five years, this business now has revenues of approximately £4m per annum. We have a broad product range and client base and we see increasing demand for our expertise to independently support projects such as GMP equalisation and de-risking. We also continue to invest in hiring professionals with buy in, buy out and wind-down experience which is of value to a growing number of schemes.

 

Outlook for our Pensions business

The increasing governance burden for UK pensions schemes means that there are more opportunities for providing independent professional support to schemes of all sizes. For example:

·      The knock-on effects of the LDI crisis in 2022 are likely to give added impetus to the appointment of professional trustees

·      New funding and investment regulations are likely to require greater support and challenge from trustee boards, including negotiations with sponsors

·   Corporate sponsors will consider to what extent the efficient processes associated with professional corporate sole trustee models will ensure value for money while helping schemes manage their risks

·      Schemes moving towards full de-risking solutions are likely to need to call on greater professional expertise and experience.

Many sponsors of pension schemes continue to face resourcing issues, for example where:

·      In-house administration is outsourced for the first time

·      Succession planning issues become relevant as pension managers and their teams retire

·      Increased governance requirements put stress on already under-resourced teams

Rather than continue to operate with full in-house teams, there are likely to be an increasing number who will look to outsource all or part of their functions to third parties. This provides opportunities for the Pegasus business to grow substantially by taking on these large, outsourced mandates.

 

In addition, given the highlighted market dynamics, driving the increased professionalisation of pension governance and complex pensions laws that require expert navigation, we believe that the market for our expanding range of pension governance services will continue to increase steadily over time.

 

Corporate services

Corporate Services has four well-diversified constituents: Corporate Secretarial Services ('CSS'), our whistleblowing division, Safecall, Structured Finance Services and Service of Process. Pleasingly, all businesses grew or maintained their revenue during the year, although the total increase in revenues, up 7.7%, was affected by CSS. In the prior year, the CSS result was for an 11-month period, the acquisition having completed at the end of January 2021.

Corporate Secretarial Services

 

CSS - Market dynamics

We operate in three main product areas.

 

Managed services: We deliver Global Entity Management services to over 350 clients, acting as a single point of contact to ensure that overseas legal entities are kept in good standing for international compliance. Client appointments vary in scale and coverage, ranging from a single legal entity in one country at its simplest to over 300 subsidiaries in 50 countries at its most complex. We are paid a fixed annual fee to deliver annual compliance and corporate records maintenance. We may also earn incremental revenues from additional projects such as incorporations and dissolutions, the co-ordination of global corporate change projects and performing entity validation work. Excellent workflow management and use of technology is critical to compete effectively in this space and we are investing heavily here. Our team is based in our London and Manchester offices.

 

Corporate governance services: This work stream covers all aspects of board and committee support, from full outsourced company secretarial support to attending and minuting meetings. We also provide practical company secretarial, governance and listing rules support to companies preparing for an IPO, including support post listing. Our clients range from major Main Market and AIM listed companies, including investment trusts, to UK operating subsidiaries of top global brands. Our fees vary between fixed annual fees for specifically scoped mandates but can also be time or project-based. Demand here is often for skilled professionals with prior experience in a particular industry and/or governance framework who can seamlessly transition work from being completed inhouse. This team in based in London.

 

Interim resourcing: Here we provide immediate access to qualified governance professionals, whether on-site or remote, and full time or part time, as required by the client. Typically, we are paid on a time spent basis, but also complete certain work on a fixed fee basis. This team is based in London.

 

Corporate Governance standards are being elevated worldwide and our evidence is that outsourcing growth trends have been accelerated by the pandemic. Large in-house company secretarial departments are typically decreasing in number and are suffering from underinvestment. We have been offering solutions in this sector for over twenty years, have critical mass and are confident of our ability to increase our market share over time in a growing market.

 

We continue to strive to provide services to which support our clients' needs. In response to changes in legislation, we have become authorised to act as a verifier for the Register of Overseas Entities, providing an essential service for overseas clients and contacts acquiring property in the UK.

 

CSS - Highlights

Frustratingly, we were unable to expand our client base as much as we would have liked during the year because the demand for our products and services in 2022 exceeded our ability to offer appropriate resourcing, particularly in the interim and corporate governance services areas.

 

Increasing our capability with appropriately qualified people is something that we are continuing to address. We transferred across 46 people at the time of the acquisition in 2021 and, at 2022 year end, our headcount in this business was 64. We will continue to hire and develop the right people, skills, technology and infrastructure that we require in order to deliver a first-class service.

 

We have also invested in the leadership of this business. Upon her return from maternity leave in late summer 2022, our COO and Executive Director, Trish Houston, took on the responsibility for the day-to-day running of this growing business. Trish brings renewed rigour to ensure that this business can grow sustainably over time and take full advantage of the opportunities that exist in this growing market.

 

Despite the capacity constraints referred to above, we added to our client roster, winning work to support several Investment Trusts managed by Schroders, as well as the LXI REIT. It is pleasing too that there have been a number of new clients on the Managed Service side, including several FTSE 100 and Fortune 500 groups and FTSE 250 groups on the corporate governance services side.

 

Whistleblowing: Safecall - Market dynamics

The emerging regulatory frameworks and standards that we have highlighted for some time now continue to accelerate throughout the developed world. The whistleblowing concept is understood and widely discussed, and we are seeing a growing demand for our products and services. Several 2022 news headlines on a national level were driven by some sort of whistleblowing activity. Early adopters of independent whistleblowing services were often larger entities, but increasingly smaller and mid-sized employers are adopting this emerging best practice.

 

Unsurprisingly, competition is increasing in this growing market. As with all of our IPS business, what differentiates us is the quality of our people. All enquiries are dealt with by our highly trained staff that consists of former police officers. Time and again, the quality of the work that we do for our clients receives high praise.

 

Whistleblowing: Safecall - Highlights

Yet again we provided a record number of reports to our clients in 2022, up 20% on 2021. Increasingly, digital channels are being used to raise and manage issues, so we were delighted to have rolled out our new client portal during the year. In order to compete more effectively, we will invest in further digital capability throughout 2023.

 

Under new leadership of Joanna Lewis, who joined us at the end of August 2021, we have expanded our sales team and invested in an expanded account management set up. Results to date have been encouraging, with increasing demand from existing clients for our training and investigations offerings. During the course of 2023, we will look to expand these offerings.

 

Revenues from new clients were again a record and among the 134 new clients we took on in 2022 were EDF Renewables, WHSmith, The Entertainer Ltd and CFC Underwriting.

 

In order to build on our momentum, we will be investing further across all aspects of the business in 2023. As well as investment in our technology platform, we will add further capacity to our operations team, expertly managed by Tim Smith. Moreover, we will add further headcount to our sales, account management and marketing initiatives in order to accelerate our growth.

 

Structured finance services - Market dynamics

This business is based on providing accounting and corporate administrative services mainly to Special Purpose Vehicles ('SPV's') and other similar corporate structures. Typical buyers would include financial institutions that wish to gain risk exposure to a particular asset type- for example Aircraft Leases or Mortgages or companies being established as part of a corporate acquisition. These buyers regularly access third-party outsource providers to help them with the servicing of the assets. Boutique asset managers (Private Equity and Hedge Funds) and challenger banks are growing users of these services together with overseas businesses acquiring companies in the jurisdictions we serve.

 

The competitive landscape is dominated by the larger providers with long-established relationships. We are a small player in the sector but, thanks to Mark Filer and his team, receive strong praise from our clients.

 

Structured finance services - Highlights

Despite capital markets new issuance levels being particularly challenged during 2022, we were delighted to receive repeat appointments from a number of names operating in the sector. Quotes for new business and wins were both new records. Our challenge is to raise our profile with a broader universe of clients.

 

Our paying agency business also grew steadily during the year to record levels and we were pleased to see the number of professional firms referring business to us continuing to increase.

 

A particular highlight was being asked to take over an appointment from a competitor on a new innovative protective cell company structure for the London insurance markets. These structures are in their infancy and have been created with the aim of keeping reinsurance in London rather than in offshore centres.

 

Another win, was the appointment to undertake operational accounting work for one of our CSS clients. We believe that this is a potential area of growth for our business.

 

Service of process - Market dynamics

Under the leadership of Anne Hills, this remains our highest volume business. We have well over 50,000 appointments on our books and typically enter into over 10,000 new appointments each year. Of all of the IPS business, its results are most correlated to levels of global economic activity.

 

Service of process - Highlights

Following an encouraging first half of the year, the surge in inflation and interest rates and the corresponding slowdowns reported in GDP growth around the world unsurprisingly made for a much tougher second half of the year. We ended the year essentially flat to 2021. Given the significant reduction in primary capital markets activity (a key source of appointments), we believe this is a result with which we can be satisfied.

 

Our upgraded technology, together with our increased headcount, has built capacity. We are more outward looking and better coordinated with our business development and sales activities and so well-positioned for future growth.

 

Outlook - for our corporate services business

We are pleased to have grown revenues in all four businesses in our Corporate Services reporting segment in 2022.

 

It is an important advantage in these sectors to be an integral part of a well-capitalised, 134 year old, listed organisation willing to invest for the long term. Many of our competitors are private equity owned and subject to different operating demands.

 

The markets in which we operate are growing and we believe we are well placed to exploit future opportunities.

 

Support functions

Over the last few years, we have made a significant investment in modernising our central support functions. With oversight from our CFO, Hester Scotton, we have now fully embedded our shared service centre in Manchester to support our Accounts Payable, Accounts Receivable and Debtor management operations. We have grown our HR team, with a new approach to appraisals and objectives, put in place career frameworks to provide visibility and support to our staff as they look to develop their roles and rolled out the first two of our "Future Leaders" training programmes.

 

We launched new healthcare and pensions arrangements across the firm at the start of 2022. We also made a one-off payment of £1,000 to support our lowest-paid employees navigate the cost-of-living crisis. We have added expertise in Finance, Risk, Legal and Compliance, and, under the leadership of Suzy Walls, boosted our Business Development resource. These investments are essential to be able to grow our businesses sustainably. While we will selectively add resource in these areas in 2023, at this point, from a headcount perspective, we consider much of the significant incremental investment to have been completed.

 

Information Technology

Our IT capability has radically changed over the past few years. Thanks to David Williams and his team, we now have a cloud-based infrastructure, our employees (circa 300 colleagues) can be fully remote or office based as required, and an IT team of 17, whose proactive role is to deliver new software solutions for our businesses and clients in a controlled, scalable manner.

 

In last year's Annual Report, we wrote that professional services firms' success will be increasingly defined by their commercial offerings' "ease of use". We made solid progress here in 2022. Among our accomplishments were delivery of a new client portal for Safecall, implementation of a new client and supplier onboarding portal and roll-out of an invoice payment portal for clients.

 

Nonetheless , we still have further work to do and will continue to accelerate our technology improvements. Our main deliverables in 2023 will include rolling out new modules for our Safecall clients and establishing an improved workflow management infrastructure for our CSS business.

 

Prospects

Law Debenture is resilient by design. The combination of IPS with the Investment Portfolio is a well proven model and I am cautiously optimistic about the Group's progress in 2023 and beyond. I think that IPS is well positioned for medium-term growth in line with our mid to high single percentage target. We continue to look for opportunities to grow IPS through organic investment and disciplined acquisitions, where appropriate. We are encouraged by recent senior hires, good new business momentum and continue to invest to ensure we gain market share and maintain longer-term growth.

 

On behalf of the Board, I want to thank my colleagues for their outstanding dedication to developing Law Debenture's client service. I am also very grateful for the continued support of shareholders.

 

We are cognisant that 2023 will present challenges but I am confident that the people, investment and significant actions we have taken mean that we are well positioned to take advantage of longer-term growth opportunities and maintain our 44-year record of maintaining or raising the dividend.

 

Denis Jackson

Chief Executive Officer

27 February 2023

 

IPS net revenue and PBT - 5 year performance

 

Department	2018 £000	2019 £000	2020 £000	2021 £000	2022 £000	5yr Revenue Variance £000	5yr Revenue Variance %
Pensions	9,488	10,598	11,479	13,060	14,343	4,855	51%
Corporate trust	8,362	9,024	10,789	9,771	10,620	2,258	27%
Corporate services	11,734	12,167	12,226	18,7551	20,206	8,472	72%
IPS net revenue	29,584	31,789	34,494	41,586	45,1692	15,585	53%
% Revenue growth	9%	7%	9%	21%	9%
Profit before tax	10,481	11,465	12,227	13,340	14,422	3,941	38%
% growth in PBT	8%	9%	7%	9%	8%

1 Includes revenue from the acquisition of the Company Secretarial Services business from Eversheds Sutherland (International) LLP.

2 This figure is included in the income statement by subtracting cost of sales of £8.2m from gross revenue of £53.4m.

 

IPS Valuation

 

	31.12.2018 £000	31.12.2019 £000	31.12.2020 £000	31.12.2021 £000	31.12.2022 £000	5yr growth %
EBITDA	10,424	11,515	13,335	15,369	16,588	59%
Multiple	8.4	9.2	9.4	10.8	10.5	25%
IPS fair value (excluding net assets)	87,562	105,938	125,349	165,985	174,174	99%
NAV adjustment: total value less net assets already included	78,439	91,860	112,407	135,885	148,376	89%

 

Investment managers' review

 

Our investment strategy

Over the long term it is our view that the diversification in our underlying holdings aids consistency of performance and protects capital. That said, in 2022, as we explore in the performance section below, this worked against us to some degree. There is no common theme to the stocks held other than they are good at what they do and, we believe, have forward-thinking, dynamic management teams. They cover a wide variety of activities. They are all sizes (in market capitalisation terms). We try and blend the different risk profiles they have within the Portfolio. For instance, we have conventional energy stocks as well as alternative energy suppliers.

 

This diversification does not stop us making strong views about an individual company count in the portfolio. It is an approach focused on stocks. We believe that, by paying attention to what is happening at companies, value can be added. It is better to do it this way rather than having a Portfolio built around large macro- economic views. There are too many variables and unknowns to have conviction at a macro level. However, if we are paying proper attention to companies, investments can be made in businesses that can produce results, almost regardless of what is happening in the wider economy. While there are fewer variables and unknowns at the micro level, they do still exist and this is the reason for long lists and diversification.

 

Unusually for a portfolio that is in the equity income sector, there are a number of zero dividend-paying shares. The contribution from the Independent Professional Services business to the revenue pool means the Portfolio can hold these shares without affecting the level of income generated overall. This is a significant advantage Law Debenture has over other investment trusts in our peer group and means we have a larger choice of investment opportunities than most other funds in the income sector. We take advantage of this freedom by buying some recovery shares before they become dividend payers and young, immature companies we believe will be significant businesses of the future. It is fundamentally important to grow the capital value of the Portfolio if long-term income growth is to be achieved. The recovery and small company element of the Portfolio can help to provide long-term capital growth. When successful small company and recovery investments can be recycled into income-producing investments, underpinning longer-term dividend growth.

 

Alternative Performance Measures	1 year %	3 years %	5 years %	10 years %
NAV total return (with IPS at fair value and debt at par)1	(6.8)	16.8	30.3	141.5
NAV total return (with debt and IPS at fair value)1	0.6	26.0	39.9	154.6
FTSE Actuaries All-Share Index total return2	0.3	7.1	15.5	88.2

 

(1) NAV is calculated in accordance with AIC methodology, based on performance data held by Law Debenture including fair value of IPS business. NAV total return with debt at par excludes the fair value of long-term borrowings, whereas NAV total return with debt at fair value includes the fair value adjustment.

 

(2) Source: Refinitiv Datastream, all references to 'FTSE All-Share' and 'benchmark' in this review refer to the FTSE Actuaries All-Share Index total return.

 

Investment process

Different valuation metrics are used in different sectors. The investment approach has a valuation filter because the entry price a stock is bought at matters, as even the best companies are likely, over time, to mature and decline. The life cycle for many businesses is getting shorter as the global economy is competitive, with new entrants always likely to challenge the established order. Therefore, high valuations are vulnerable because of the pace of this economic change.

 

We visit and meet potential investments, looking for companies that are in a strong competitive position with management teams that have the qualities needed to grow the business. There is no blueprint for this other than drive and a degree of flexibility. The Portfolio turnover is usually around 20% per annum, so a relatively long-term time horizon is fundamental to the process.

 

Performance

We always aim to outperform the benchmark over one, three, five and ten years. Whilst we continue to outperform in the medium and long term, this last year has been challenging with the Portfolio declining in value by ~10%. This has been offset by the fair valuation of debt and the increase in the fair value of the IPS business. The under-performance of the Portfolio was driven by holding a larger weighting in smaller size companies relative to the benchmark. In comparison, the benchmark is heavily weighted in the largest 20 stocks in the UK market. As illustrated by the table below, the FTSE 100 top 20 made positive returns during the year. It is within the FTSE 100 top 20 that the very large oil and resource companies reside. For instance BP, Shell and Glencore all made very good share price progress as a result of the Ukraine war leading to the appreciation of raw material prices. At the same time the rise in the price of oil and gas has hurt energy using companies and this led to a slowdown in UK economic activity. In the largest 20 companies in the UK FTSE 100 index more than 80% of their earnings are derived from overseas. The smaller quoted companies are more closely tied to the fortunes of the UK economy. During the year, funds with a broad list of companies large, medium and small were very likely to underperform when virtually only a select few very large international companies could prosper.

 

Index	Full Year 2022 %
FTSE All-Share	0.34
FTSE 100	4.70
- FTSE 100 top 20	15.70
- FTSE 100 bottom 80	-17.20
FTSE 250	-17.39
Numis Smaller Companies Index (excluding Its)	-17.87
FTSE AIM All-Share	-30.67

 

Stock attribution

 

Given the ramifications of the Russia Ukraine war, it is not surprising that the best performers were oil and resource stocks, such as BP and Glencore, as well as a manufacturer of defence equipment, BAE. The detractors are a mixed group. Accsys, a company that focuses on the sustainable transformation of wood, was a large positive contributor in the past. However, it has had problems building and commissioning a new plant. Therefore, although the demand for its products is growing, the growth of the company has been severely held back. It is hoped that the new plant will come on stream and the company will again progress. Ceres Power was the largest contributor to the fund in 2020 and considerable profits were taken but, unfortunately, we did not sell the entire holding. The share price had got ahead of what has actually been achieved and this has unwound. The company may play a real role in the move away from fossil fuels with its fuel cell technology. The company appears to be making progress even if this is happening at a slower pace than investors had hoped so, on the share price fall, we are buying back some of the stock we sold.

 

Top five gains

The five largest gains during the year were:

 

Stock	£ Appreciation	% Appreciation
BP	8,230,800	43.69%
BAE Systems	5,375,563	54.32%
Glencore	3,854,182	58.74%
Rio Tinto	3,397,500	18.52%
Standard Chartered	3,281,142	38.80%

 

Top five losses

The five largest losses during the year were:

 

Stock	£ Depreciation	% Depreciation
Accsys Technologies	(10,689,194)	(67.98%)
Ceres Power	(8,842,543)	(67.72%)
Marks & Spencer	(6,752,893)	(47.84%)
IP Group	(6,188,997)	(54.89%)
Watkin Jones	(5,973,819)	(61.74%)

 

Portfolio income

The income that was generated by the portfolio rose from £26.3m in 2021 to £34.4m for 2022, an increase of 31%. There are several reasons behind this. Some companies returned to paying dividends having stopped paying during the pandemic. The level of special dividends was particularly high, the most notable being NatWest Bank of £1.2m, and a distribution of capital from Aviva of £3.4m. There was underlying good repeatable dividend growth across our holdings. The reduction of the US holdings and the increased exposure to the UK has also benefitted the income account. The dividend yield on the UK market is substantially higher than other major stock markets. We think it is likely the dividend growth from the underlying stocks will continue in 2023.

 

Portfolio activity

The relative low turnover of stocks and value bias approach has been behind the activity.

 

The valuation on US stocks, particularly early on in the year, looked stretched, so holdings in Applied Materials and Schlumberger were sold. They are both excellent companies; the issue was valuation. Applied Materials fell as economic slowdown concerns surfaced. The fall was substantial and has allowed us to buy the stock back towards the end of the year. High valuations among the select few companies in favour in the UK meant the holding in Relx was sold. It has been in the Portfolio for many years adding considerable value, but the valuation meant we believed we could recycle into other UK stocks. Among the new purchases within the Portfolio were Cranswick which produces and supplies meat products. It has been a consistently successful company and this is expected to continue. A holding in Castings was added. It is a UK foundry business that has weathered recessionary conditions many times. There is a lack of foundry capacity in the UK, which should mean it will keep performing well in operational terms and this is not reflected in the valuation.

 

The Portfolio in recent years has benefited from an exposure to alternative energy stocks. During the year, we made a purchase in an unquoted company, Britishvolt, that intended to manufacture batteries for EV cars. Britishvolt had been seen as a landmark project to boost the country's production of EV components. The project was saved from administration in November 2022 after securing additional funding, only to re-enter administration in January 2023. We wrote the investment down to zero before the year end. It illustrates the problems facing the alternative energy sector and the lack of access to meaningful amounts of capital which will be needed if EV car manufacturing is to flourish in the UK. The only other unquoted investment of note in the Portfolio is Oxford Science Innovation. This is a company that helps early-stage businesses that come out of Oxford University. It has been a successful investment since we invested in it in 2015 with the NAV up over 60%. The unquoted exposure in the Portfolio will remain small. The low level of valuations has led to corporate activity, with companies taking the opportunity to take over quoted companies. The notable example during the year for the Portfolio was Euromoney that received a successful cash bid.

 

The number of stocks in the Portfolio has risen and the Board has given authority for the maximum number to be 175. This is because we often start by buying a small holding in developing companies and adding when they have good projects that need more capital. This feature of the overall Portfolio differentiates us from other funds in our sector and, we believe, has added value over time.

 

Economic background

The major event in the global economy during the period was the upward move in interest rates, as a result of inflation breaking out everywhere. The catalyst was the Russian attack on Ukraine, forcing up oil prices as well as agricultural products. Prices in other products and services responded by increasing at rates not seen for forty years. However, inflationary pressures had been building before the Russian attack. The effect of Covid-related restrictions led to supply issues in many product areas. The monetary expansion required to alleviate the worst effects the pandemic had in many areas was always likely to stimulate inflation.

 

The upward move in interest rates, as illustrated by the chart above, after a prolonged period of unnaturally low rates led to a number of foreseeable consequences. Property prices fell, as did other alternative asset classes, as investors demanded higher yields. However, the fall in the economy generally has not so far been as marked as some predicted, the reason being that, although interest rates were very low, this had not resulted in high levels of bank borrowing overall in the economy. The regulations brought in after the banking crisis had made accessing the low rates difficult for many. Therefore, the rapid rise in interest rates has slowed the economy, but not brought about deep recessionary conditions. This can be evidenced in the UK by the continued low level of unemployment. Inflation, as well as meaning interest rates rise, has put an upward pressure on wages, leading to public sector strikes. The debate rages about how entrenched inflation has become.

 

We remain mindful of this difficult economic backdrop, but the Portfolio is invested in individual companies not in "UK plc". The businesses we regularly see are dealing with the cost pressures and achieving price increases for their products, which is resulting in a preservation of operating margin.

 

Portfolio update and gearing

During the year we reduced the exposure to US stocks by around £16m and increased the holdings in the UK by about £40m. The UK market is not only relatively attractive but is on a cheap valuation, as can be seen in the chart above. The overall gearing on the portfolio fell from 13.3% to 11.8% by year end as a result of share issuances, which brought in £41.4m over the year. This gives us the ability to remain active net buyers of equity as opportunities present themselves. It will allow us to keep the Portfolio refreshed.

 

Outlook

The intention is to be a net buyer of equities. Investors' macro concerns have meant that valuation levels for companies are at historical lows. This is particularly the case with UK shares. There are opportunities to add positions for the Portfolio in companies that fulfil our investment criteria and we will continue to add to the Portfolio. The purchases will be in a diverse range of companies, as the testing economic conditions will mean some companies disappoint expectations. However, the dynamism and strengths to be found in some UK companies is not being recognised but, we are confident, it will become so, as some of the economic concerns are slowly resolved.

 

James Henderson and Laura Foll

Investment managers

27 February 2023

 

Portfolio by sector and value

 

Portfolio by sector 2022
Oil and gas	10.9%
Basic materials	8.7%
Industrials	21.7%
Consumer goods	7.7%
Health care	8.1%
Consumer services	9.0%
Telecommunications	2.0%
Utilities	3.2%
Financials	27.4%
Technology	1.3%

 

Portfolio by sector 2021
Oil and gas	10.1%
Basic materials	9.7%
Industrials	20.7%
Consumer goods	7.4%
Health care	7.2%
Consumer services	8.8%
Telecommunications	2.6%
Utilities	4.4%
Financials	27.5%
Technology	1.6%

 

Geographical distribution of portfolio by value 2022
United Kingdom	83.2%
North America	5.1%
Europe	10.6%
Japan	1.1%

 

Geographical distribution of portfolio by value 2021
United Kingdom	82.6%
North America	5.4%
Europe	10.0%
Japan	1.1%
Other Pacific	0.7%
Other	0.2%