Law Debenture continues index outperformance in 2021

The Law Debenture Corporation reported a net asset value total return of 25.1% in its 2021 results on Friday, outperforming the FTSE Actuaries All-Share Index by 6.8%.

It described “another year of strong performance” from the Independent Professional Services (IPS) business, with profit before tax up 9.1% for the 12 months ended 31 December, and its valuation growing 32.4% to £166m.

The FTSE 250 company said it had reviewed its capital structure to support further investment, which led to the issue of 4.5 million new shares at a premium to net asset value to existing and new investors, with net proceeds of £32.9m.

Two tranches of long-term debt, with a total value of £50m, were also issued, with an average coupon of 2.54%.

Law Debenture said its ongoing charges remained low at 0.5%, compared to the industry average of 1.05%.

The board increased the company’s full-year dividends by 5.5% to 29p per ordinary share, making for a dividend yield of 3.7%.

It declared a fourth quarter dividend of 8.375p per share, and noted the 13.8% compound annual growth rate in distributions to shareholders over the last four years.

“Law Debenture aims to provide a steadily increasing income for our shareholders whilst achieving long-term capital growth in real terms,” said chairman Robert Hingley.

“In 2021, we have continued to realise these ambitions, exemplified through a significant IPS valuation uplift and another good increase in our full-year dividend of 5.5%.

“I am pleased at the consistent long-term outperformance of our benchmark.”

Hingley said the company was “confident” that in the long term, the combination of a “robust and well-positioned” equity portfolio and continued growth in the IPS business would deliver “attractive returns” for shareholders.

Chief executive officer Denis Jackson added that 2021 was “another strong year” of progress for Law Debenture.

“I am particularly encouraged that IPS has now built a proven record with four consecutive years of at least mid to high single digit growth,” Jackson said.

“We have invested significantly in our people, bolstering our team and capabilities and we look forward to capturing the opportunities ahead.”

Denis Jackson said the company was “confident” that the investment manager’s focus on selecting strong business models and attractive valuation opportunities would enable them to continue to position the equity portfolio for future longer-term growth and outperformance.

“I remain optimistic in Law Debenture's longer-term outlook.

“We are committed to growing and developing the IPS business and continuing our unbroken 43-year record of maintaining or raising the dividend.”

At 1020 GMT, shares in the Law Debenture Corporation were up 2.67% at 770p.