REG - Law Debenture Corp - Annual Financial Report
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RNS Number : 1186W Law Debenture Corp PLC 11 March 2026
The Law Debenture Corporation p.l.c.
11 March 2026
Strong Performance in 2025
The Law Debenture Corporation p.l.c. ("Law Debenture" or the "Company") today
published its results for the year ended 31 December 2025.
2025 was a very pleasing year for Law Debenture. We continue to perform
strongly against our objective of achieving long-term capital growth in real
terms and steadily increasing income, with outperformance over 1, 3, 5 and 10
years.
1 year 3 years 5 years 10 years
% % % %
NAV total return (with debt at par)(1) 29.2 58.6 78.8 184.5
NAV total return (with debt at fair value)(1) 28.4 59.1 96.6 200.8
FTSE Actuaries All-Share Index Total Return(2) 24.0 46.5 73.9 123.4
Share price total return(2) 22.2 53.1 85.0 212.4
Change in Retail Price Index(3) 3.4 13.2 37.3 55.6
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 of 2025
· Net asset value (NAV) total return with debt and Independent Professional
Services ("IPS") business at fair value outperformed the FTSE Actuaries
All-Share Index by over 4% with a total return of 28.4% in FY25 (29.2% with
debt at par).
· Share price total return of 22.2% for 2025, ahead of the UK Equity Income
weighted average of 20%.
· A solid performance from IPS, with net revenue increasing by 7.5%, underlying
profit before interest and tax up by 6.1% and valuation up 7.3% to £208.7
million (excluding net assets).
· The Company issued 1.3 million new Ordinary Shares at a premium to NAV during
2025 with net proceeds of £11.6 million.
Strong Long-Term Record
· Consistent NAV (with IPS and debt at fair value) outperformance of the
benchmark over one, three, five and ten years.
· Share price total return over 10 years of 212.4% (FTSE All-Share: 123.4%)
which compares favourably with UK Equity Income peers.
· Law Debenture has outperformed the FTSE All-Share Index (Total Return)
weighted average return in 21 of the past 26 years.
Dividend
· Proposed final dividend of 10.375 pence per Ordinary Share.
· Total annual dividend of 35.5 pence, fully covered by Group revenue return per
share of 37.26 pence.
47 years of increasing or maintaining dividends - with increases in 46 years.
·
Dividend yield of 3.1% based on our closing share price of 1,132
pence on 10 March 2026.
Investment Portfolio
· Portfolio managed by James Henderson and Laura Foll of Janus Henderson. 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.
· Almost 90% UK weighting, with blend of large, medium and small capitalisation
stocks.
·
Revenue from IPS allows portfolio to include attractive no or low yielding
· stocks.
Net capital gain on investments of £262.7 million (FY24: £76.3 million).
· Dividend income from the portfolio of £40.3 million (FY24: £34.7 million).
· Total ongoing charges of 0.56% (4).
IPS
· The Company's wholly-owned provider of professional services is a key
differentiator to other investment trusts and offers additional portfolio
flexibility.
· Accounts for 16% of 2025 NAV but has funded approximately one-third of
dividends in the last 10 years.
· IPS has delivered eight consecutive years of mid to high single digit growth,
with net revenues of £57.7 million (FY24: £53.7m) up 7.5% with underlying
profit before interest and tax up by 6.1%.
Robert Hingley, Chairman, said:
"I am very pleased with the performance Law Debenture has delivered in 2025.
Our long-term record of outperforming the benchmark remains strong, and our
47(th) year of maintaining or increasing dividends reflects a further positive
outcome for shareholders.
With a high-quality equity portfolio and the continued growth potential of
Independent Professional Services, Law Debenture is well positioned to build
further on this progress and the Board remains confident in the Group's
ability to deliver attractive long-term returns for our shareholders."
Denis Jackson, Chief Executive Officer, commented:
"2025 was another strong year for Law Debenture, reflecting the resilience and
consistency of our differentiated model. We delivered robust NAV and share
price growth, extended our 47-year record of maintaining or increasing our
dividend, and IPS recorded its eighth consecutive year of mid to high single
digit revenue and underlying profit growth.
Law Debenture's carefully constructed investment portfolio, together with the
reliable and diversified income streams generated by our IPS business,
continues to underpin our ability to perform through the cycle and we enter
2026 with confidence and strong momentum."
The Law Debenture Corporation +44 (0)20 7606 5451
Denis Jackson, Chief Executive Officer
Isla Pickering, Chief Financial Officer
Trish Houston, Chief Operating Officer
Teneo (Financial PR) +44 (0)20 7260 2700
Matt Thomlinson/Oscar Burnett lawdeb@teneo.com
( )
(1) NAV is calculated in accordance with the Association of Investment
Companies (AIC) methodology, based on performance data held by Law Debenture
including fair value of IPS business and long-term borrowings. NAV is shown
with debt measured at par and with debt measured at fair value.
(2) Share Price source: Refinitiv.
(3) Source: Office for National Statistics
(4) Calculated based on data held by Law Debenture for the period ended 31
December 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.
ANNUAL FINANCIAL REPORT
YEAR ENDED 31 DECEMBER 2025 (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 10.375 pence per share making a
total for the year of 35.50 pence per share. Subject to the approval of
shareholders, the final dividend will be paid on 29 April 2026 to holders on
the register at the record date of 20 March 2026. 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 2024 or 2025. Statutory
accounts for the years ended 31 December 2024 and 31 December 2025 have been
reported on by the Independent Auditor. The Independent Auditor's Reports on
the Annual Report and Financial Statements for 2024 and 2025 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 2024 have been filed with
the Registrar of Companies. The statutory accounts for the year ended 31
December 2025 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
2025. The principal accounting policies adopted are unchanged from those used
in the preparation of the statutory accounts for the year ended 31 December
2024.
Financial Summary
31 December 2025 31 December Change
2024
£000
%
£000
Net Asset Value - with debt and IPS at fair value(1)* 1,440,357 1,150,512 25.19%
Total Net Assets per the statement of financial position(~) 1,202,075 931,371 29.07%
Pence Pence
NAV per share at fair value(1)* 1,081.49 872.34 23.98%
Group statutory revenue return per share(†) 37.26 33.48 11.29%
Capital return per share 192.28 40.51 374.65%
Dividends per share 35.50 33.50 5.97%
Share price(4) 1,054 893 18.03%
% %
Ongoing charges(3)* 0.56% 0.51%
Gearing* 12% 11%
(Discount)/premium* at 31 December (2.5%) 2.4%
~ The comparative has been restated to reflect dividend removed from
shareholders' funds. Refer to note below.
† Underlying Group revenue return was 34.27 pence per share in 2024.
For reconciliation of NAV at fair value per the above to published year end
NAV please refer below.
Performance
1 year 3 years 5 years 10 years
% % % %
NAV total return (with debt at par)(2)* 29.2 58.6 78.8 184.5
NAV total return (with debt at fair value)(2)* 28.4 59.1 96.6 200.8
FTSE Actuaries All-Share Index Total Return(4) 24.0 46.5 73.9 123.4
Share price total return(4)* 22.2 53.1 85.0 212.4
Change in Retail Price Index(5) 3.4 13.2 37.3 55.6
Relative performance (NAV at FV) 4.4% 12.6% 22.7% 77.4%
Relative performance (Share Price) (1.8)% 6.6% 11.0% 88.9%
* Items marked "*" are considered to be alternative performance measures and
are described in more detail on pages 167 and 168 of the full annual report
and accounts.
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 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, currently charged at the annual rate of 0.30% of
the portfolio value. There is no performance related element to the fee.
Gearing is described in the Strategic Report below and in our alternative
performance measures on page 168 of the full annual report and accounts.
4 Source: LSEG, London Stock Exchange Group.
5 Source: Office for National Statistics.
Past performance is not a guide to future performance. Capital at risk.
EXTRACTS FROM THE STRATEGIC REPORT
Chairman's Statement
Performance
Law Debenture has achieved a very pleasing performance for the year ended 31
December 2025 in a period marked by modest economic growth, easing
inflationary pressures and continued political and geopolitical uncertainty.
While interest rates appear to have stabilised during the year, macroeconomic
and market volatility has remained a feature of the investment landscape.
2025 saw a strong recovery in UK equity performance, although UK valuations
remain attractive by historical and international standards. However, market
returns were increasingly concentrated in a relatively narrow group of stocks
and sectors benefitting from improving economic sentiment and short-term
momentum.
In this context, the combination of a diversified Investment Portfolio and
another good year of underlying performance for IPS has again enabled Law
Debenture to deliver capital growth and increased dividend income for
shareholders.
Law Debenture's long-term record of benchmark outperformance continues to be
robust. In 2025, Net Asset Value ('NAV') with debt and the Independent
Professional Services ('IPS') business at fair value delivered a strong return
of 28.4%, while share price total return of 22.2% outperformed the AIC UK
Equity Income sector weighted average return of 20.2%. Law Debenture has
outperformed the FTSE All Share Index (Total Return) weighted average return
in 21 of the past 26 years.
This performance reflects the continued strength of the Company's underlying
performance and highlights the benefits and importance of its disciplined
investment approach and diversified structure.
The Board is conscious that the wider investment trust sector is undergoing a
period of significant change. During 2025, there was a sharp increase in
corporate and shareholder activity across the industry, including greater use
of share buybacks, several proposals for consolidation, and heightened focus
on discounts to NAV. Share buybacks increased 36% in 2025 to £10.22b (vs
£7.51b in 2024), while there were 27 mergers, acquisitions and liquidations
across the sector, up from 24 in 2024.(1) This has been accompanied by more
active engagement from certain shareholders in parts of the sector, prompting
wider discussions around performance, governance and shareholder alignment.
The Board monitors developments across the investment trust sector closely and
remains attentive to matters relevant to Law Debenture. We believe the
Company's long-term investment approach, diversified structure and strong
governance leave us well placed to navigate this evolving environment
successfully in the best interests of shareholders.
Dividend income received from our Investment Portfolio, was up 16.1%, from
£34.7m in 2024 to £40.3m in 2025, driven by net investment during the year,
including specific sectors with dividend yields greater than the portfolio.
The net revenue from our IPS business increased 7.5%.
Overall, our statutory revenue profit before tax was up 13.3% and our
statutory revenue EPS was up 11.3%. The prior year was affected by £1.0m of
non-recurring costs. Excluding the impact of these, our underlying revenue
profit before interest and tax was up 10.8%, and our underlying EPS was up
8.7%.
1 Source: IFA Magazine "Investment Trust 2025 review: another record year for
corporate activity", 13 January 2026.
Awards
The Board was pleased to see the Company recognised again during the year.
Law Debenture was named Best for Long-Term Income-Active at the QuotedData
Awards and Income Company of the Year at the AJ Bell Investment Awards,
reflecting the strength and consistency of our income-focused investment
approach. The Company also received the Shareholder Initiative of the Year
Award at the Investment Week Investment Company of the Year Awards, reflecting
Law Debenture's commitment to meaningful and proactive shareholder engagement
and communication within a changing investment trust environment.
This recognition builds on the awards received in recent years and reinforces
the Company's standing within the AIC UK Equity Income sector.
Dividend
We are proud of Law Debenture's record of increasing or maintaining dividends,
which now extends to 47 consecutive years. This record continues to be
underpinned by the consistent cash generation of the IPS business, which
provides an important and stable source of income alongside dividends received
from the Investment Portfolio.
Subject to your approval, we propose paying a final dividend of 10.375 pence
per ordinary share. The final dividend will be paid on 29 April 2026 to
holders on the register on the record date of 20 March 2026. This will provide
shareholders with a total dividend of 35.50 pence per share for 2025, an
increase of 6.0% compared to 2024 and fully covered by earnings for the year.
The dividend increase is ahead of CPI and represents a dividend yield of 3.1%
based on our closing share price of 1,132 pence on 10 March 2026. Over the
last 10 years, we have increased the dividend by 119.1% in aggregate.
Our Portfolio
Our Investment Managers, Janus Henderson Investors, continue to manage a
differentiated portfolio of high-quality businesses with strong competitive
positions, resilient balance sheets and attractive long-term growth prospects.
The portfolio delivered strong overall returns in 2025.
Dividend income of £40.3m from the Portfolio was £5.6m higher than 2024,
alongside a total capital profit for the year of £255.2m, driven by movements
in the value of the Portfolio holdings.
The Board continues to support the Managers' disciplined approach, which
focuses on valuation, sustainability of earnings and cash generation, and
prudent capital allocation.
IPS
IPS remains a key differentiator for Law Debenture and an important
contributor to long-term NAV progression. In 2025, IPS continued to deliver
resilient earnings and cash flow, reinforcing its role as a stabilising
influence during periods of market volatility and a meaningful contributor to
shareholder returns.
Although accounting for only c.16% of our NAV at 31 December 2025 (with IPS
and Debt at Fair Value), the IPS business has funded around a third of our
dividends in the last 10 years and delivered a compound annual growth rate in
underlying profit before interest and tax of 6.4% over the last five years.
The value of IPS as a percentage of the Trust's NAV fluctuates from year to
year and is influenced both by the performance of the portfolio as well as
IPS. The benefit of the Trust's ownership of IPS is both the contribution that
IPS makes to income as well as the capital growth in IPS valuation.
IPS delivered another year of growth, supported by a degree of
counter-cyclicality in some of our businesses. Corporate Services and
Corporate Trust were the strongest performers, achieving net revenue growth of
12.2% and 9.3% respectively, with Pensions broadly flat.
The Board continues to have confidence in IPS' ability to deliver sustainable
growth, supported by ongoing investment in people, systems and technology.
Capital structure
In 2025, the Group issued 1.3 million new ordinary shares to existing and new
investors, with net proceeds of £11.6m to support ongoing investment. Shares
were issued at a premium to NAV to be accretive to existing shareholders. No
shares were bought back during the year.
Environmental, Social and Governance ('ESG')
The Board remains committed to high standards of governance and to embedding
environmental and social considerations across the business. The IPS business
is founded on the provision of independent governance services, and diversity
and inclusion remain central to this work. ESG considerations continue to form
an integral part of investment decision-making within the Portfolio. For
further details, please refer to our ESG section on pages 53 to 62 of the full
annual report and accounts.
The Board
There were no changes to the composition of the Board over the course of the
year.
Annual General Meeting ('AGM')
The AGM will be held Friday, 24 April 2026 at 11.00am. In order to welcome as
many of our shareholders as possible, we will hold the AGM at the offices of
our joint corporate broker Peel Hunt and not at our own office. Please join us
at Peel Hunt, 7th Floor, 100 Liverpool Street, London EC2M 2AT. The Board and
wider Law Debenture team value the chance to meet with our shareholders and
hear your thoughts about the Company, so we hope that you are able to join us
for the AGM and light lunch.
Looking forward
UK equity markets recorded a strong year in 2025, supported by improving
sentiment and a partial re-rating from historically depressed valuation
levels. That said, market returns were uneven and driven by a relatively
narrow group of stocks benefitting from improving economic expectations.
The wider market backdrop is improving, but uncertainty remains. By the end of
2025, inflation had receded from the elevated levels experienced in recent
years, but interest rates remain materially higher than those that prevailed
for much of the period following the global financial crisis in 2008/09.
Investors are increasingly able to look beyond the immediate challenge of
price instability, but uncertainty continues to influence valuations and
overall investor behaviour.
In this context, our Investment Managers continue to focus on identifying
high-quality businesses with strong competitive positioning, resilient balance
sheets and attractive long-term growth prospects, rather than seeking to
capture short-term market trends.
The great majority of the Investment Portfolio remains invested in UK
equities, although a significant proportion of underlying earnings is
generated outside the UK. Even after the market recovery seen in 2025, our
Investment Managers believe that a number of UK companies continue to trade at
valuations that do not fully reflect the quality of their businesses or their
long-term prospects, even if the timing of any re-rating remains uncertain.
Many companies continue to deploy surplus capital through share buy-backs and
disciplined investment, while M&A interest from overseas corporates and
private equity looks set to continue into 2026.
Law Debenture remains well-positioned with a long-term focus on a diversified
portfolio of conservatively managed businesses, often market leaders, that are
capable of generating sustainable earnings and cash flows across different
economic environments. Meanwhile, IPS continues to provide a stable and
growing source of earnings and cash flow. Its services remain well sought
after, its brand reputation is strong and opportunities to increase market
share remain considerable. All of this supports continued NAV and dividend
progression, while acting as a stabilising influence during periods of market
volatility.
The Board and our Investment Managers believe Law Debenture is well-positioned
to navigate a range of potential economic outcomes and to continue to deliver
attractive long-term returns across market cycles.
On behalf of the Board, I would like to thank our Investment Managers and
skilled workforce for their hard work, and our shareholders for their
continued support.
Robert Hingley
Chair of the Board
10 March 2026
Chief Executive Officer's Review
Introduction
2025 was a strong year for Law Debenture, with the Group again delivering
against our long-term investment proposition. Amid a mixed economic backdrop
and ongoing geopolitical uncertainty, we were able to deliver continued Net
Asset Value ('NAV') and share price growth, and increased income, for
shareholders, while further strengthening our IPS business.
I am pleased with our performance across all key measures. Law Debenture
delivered NAV total return with debt and Independent Professional Services
('IPS') at fair value of 28.4%. This is an exceptional outcome and reflective
of the hard work of our Investment Managers and colleagues.
Equity markets performed well during the year and this supported a share price
total return of 22.2%, above the AIC UK Equity Income sector weighted average
return of 20.2%. We are pleased that shareholders benefited from a year of
substantial value creation alongside continued dividend growth. Our record
over three, five and ten years continues to consistently outperform both the
benchmark and the majority of our key sector peers, and we are also proud to
report our 47th year of maintaining or increasing dividends, with a 6.0%
increase this year.
Our investment portfolio, run by Janus Henderson Investors, demonstrated the
effectiveness of our managers' valuation-focused, moderately contrarian
approach which aims to identify good quality, predominantly UK-listed
companies often trading on low valuations but positioned to benefit from
structural changes. In a year where UK stocks performed better than the major
American indices, the portfolio continued to benefit from UK holdings, most of
which generate revenues both at home and overseas.
This disciplined approach and the portfolio, which accounts for 84% of Law
Debenture's NAV with Debt at Fair Value, combines with our Independent
Professional Services business, representing 16% of NAV, to offer investors a
truly differentiated proposition that is underpinned by strong cashflows and a
robust balance sheet. The combination enhances resilience through the cycle, a
unique benefit among investment trusts, and continues to validate the strength
and durability of our business model and strategy.
The quality of our proposition was again recognised externally during the
year. We were delighted to be named Income‑Active Company of the Year at the
AJ Bell Investment Awards, Best for Income at the QuotedData Investors' Choice
Awards, and Shareholder Initiative of the Year award at the Investment Week
Investment Company of the Year Awards. These awards reflect not only
investment performance and continued delivery from our colleagues, but also a
strong focus on, and pride in, our engagement with our much valued
shareholders.
We delivered on our two main objectives, producing NAV growth and continuing
to increase income for shareholders
IPS delivered another year of progress, recording its eighth consecutive year
of mid to high single digit revenue and underlying profit growth. IPS business
net revenues (gross revenue less direct costs incurred) increased by 7.5% to
£57.7m (2024: £53.7m), and statutory profit before interest and tax ('PBIT')
was £16.7m. Excluding the impact of £1.0m of non-recurring costs in the
prior year, the underlying PBIT of IPS increased 6.1%. Statutory Profit Before
Tax ('PBT') increased 15.8% to £17.7m.
IPS remains a core differentiator for Law Debenture, with its reliable and
diversified income streams helping to underpin dividend growth and enhance the
stability of returns for shareholders. This has contributed to the Group
delivering a 119.1% increase in dividends over the last ten years. The steady
flow of income continues to give our investment managers greater flexibility
in portfolio construction, enabling investment across a wider set of value
opportunities than many of our sector peers further supporting the potential
for attractive long-term returns.
During the year we continued to place a strong emphasis on fostering a
collaborative and stimulating culture. My firm belief is that the quality of
our people is our greatest asset, and that investing in their development is
essential to the long-term health of the Group. This commitment was
recognised when Law Debenture won the award for Most Impact at the 2025 INSEAD
Alumni Balance in Business Initiative Awards, reflecting the progress we
continue to make in building a balanced and inclusive workplace.
The investment trust sector is itself going through a period of heightened
activity and change. The involvement of Saba Capital during 2025 and into
2026, and the repercussions felt across several investment trusts, is forcing
closed-end funds to be clear about their relevance and value proposition. We
view this environment as a positive catalyst that rewards clarity of purpose,
strong governance and well-differentiated propositions.
Against this backdrop, our focus remains wholeheartedly on the execution of
our business plan, and delivering against our objectives to achieve long-term
capital growth in real terms and steadily increasing income for shareholders.
Corporate Trust
Law Debenture was incorporated to act as a bond trustee in 1889. The role of a
bond trustee is to act as bridge between the issuer of a bond and the
individual bondholders. Our responsibilities as bond trustee can vary
materially whether servicing either performing or defaulted bond issues.
Normal obligations for the bond trustee to support performing issues could
include communication to the bond holders of financial or security data
together with the distribution and/or receipt of covenant information. For
completion of this 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.
Our role in such default situations requires material incremental work that,
given a favourable outcome, can lead to significant additional income for us.
That said, 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 be somewhat lumpy. However, such
post issuance work has strong economic counter cyclicality and has produced
sound returns for our shareholders over time.
Corporate Trust - Market dynamics
New issuance in debt capital markets has always been an important driver of
revenues. As well as receiving an ongoing (typically inflation-linked) annual
fee for our work, we also receive an upfront fee upon appointment to a role.
Following a very strong 2024 when primary market new issuance grew by 20%,
deal volume in Europe was up a more modest 10% year on year (source Dealogic)
in 2025. As we noted at the half year, 'Liberation Day' in early April led to
a spike in market volatility and decline in primary market activity until new
issuance levels were established. Sentiment steadily improved as the year
progressed and we finished the year with Corporate Bond spreads again hitting
new multi-year lows (source ICE Data Indices). Globally the interest rate
cutting cycle continued with The Bank of England, Federal Reserve and ECB
again all reducing borrowing rates during the year. Particularly pleasing to
see were appointments to support the allocation of new capital to emerging and
fast-growing areas of the economy such as construction of data centres and the
development of energy infrastructure.
Demand for our post-issuance work is hard to predict and is strongly
countercyclical. As has been widely reported, some elements of the UK economy
were weak in 2025. Consequently, across our portfolio of business, we did
complete several incremental workstreams relating to restructuring projects on
behalf of bondholders.
We are proud to have delivered a 119.1% increase in dividends per share over
the last ten years, with 47 years of increasing or maintaining dividends.
We have invested in new people and technology to support our Loan Agency
efforts. As the year progressed, we were pleased to achieve an increasing
number of appointments where we acted as both the Security Agent and Loan
Agent on a transaction. Private Credit as an asset class continues to grow
rapidly and market participants are increasingly using non-bank service
providers to support transactions. We will look to build further momentum in
this sizeable market.
Over the past five years or so we have made particularly pleasing progress
with respect to the expansion of our Escrow product and solutions. By way of
reminder, an escrow solution allows two parties the ability to transfer an
asset with a trusted independent middle-man ensuring that certain conditions
of the transaction have been met by both sides prior to completion. A key
market development has been the Solicitors Regulatory Authority ("SRA")
through recent consultations (late 2024/2025), signalling a shift away from
law firms holding client money. Our deep domain expertise coupled with our
ability to move fast and means to consider non-standard transactions gives us
our competitive advantage. During the year we provided escrows to support
transactions across a considerable range of sectors and had our busiest ever
month in December.
DIVISION Net revenue Net revenue Net revenue Net revenue Net revenue Growth
2021** 2022** 2023** 2024** 2025 2024/2025
£000 £000 £000 £000 £000 %
Corporate trust 10,025 11,077 13,027 14,555 15,912 9.3%
Pensions 13,060 14,343 17,396 16,694 16,615 (0.5)%
Corporate services 18,501 19,749 20,086 22,412 25,152 12.2%
Total 41,586 45,169 50,509 53,661 57,679 7.5%
* Total net revenue is calculated by reducing segment income of £66,699k by
cost of sales of £9,020k. Please refer to the IPS segmental analysis below.
** Comparative periods reflect transfer of loan agency business from Corporate
Services to Corporate Trust for comparability with 2025.
Corporate Trust - Highlights
Following very strong 17.6% growth in revenues in 2023, and 11.7% growth in
revenues in 2024, we are delighted to report revenue growth of 9.3% in 2025.
This is an excellent cumulative growth for what is a 136-year old business.
Why have we been able to achieve this?
The revenues for this business are underpinned by a very well diversified book
of long-term inflation linked fee-based transactions that have been built up
over many decades. This is hard won and has considerable franchise value, over
and above the cash flow value of the business, by virtue of the client and
referral partner networks that have created and continually renew it.
However, the business' revenue growth profile has not been and will never be
linear and, following such a strong period of cumulative growth, it is
reasonable to expect some sort of reversion to a long-term mean for revenue
growth (mid to high single digits) in 2026 and beyond.
The two main differentiating factors that have driven our growth in recent
years have been (i) the refresh and expansion of our expertise for products
and services and (ii) the addition of dedicated business development resource
and the introduction of an explicit business development metric(s) for each
team member. Law firms have always been crucial to our business and we have
made a consistent, systematic effort to reinvigorate these types of
relationship that are our bedrock.
We completed a number of notable new transactions during the year including
the establishment of an Medium Term Note programme for Magnum Ice Cream
Company following its demerger from Unilever, a structured debt instruments
issuance programme for Crédit Agricole Corporate and Investment Bank, the
issuance of subordinated notes by Hampshire Trust Bank plc, a sukuk issuance
where the underlying obligor is the Republic of Türkiye, and a JPY 200
billion convertible bond issuance by Nissan Motor Co., Ltd.
Corporate Trust - Outlook
We have had three years of above-trend revenue growth at a compound annual
rate of 12.8%. This is a great business but year-on-year revenue growth is
hard to predict. We believe realistic longer-term revenue growth expectations
should be in line with our broader ambitions for the IPS business (i.e mid to
high single digit growth).
We continue to invest in additional headcount to join our Treasury team, our
Loan Agency team, and have added incremental resource in Hong Kong.
Eliot Solarz was appointed to head our Corporate Trust business at the
beginning of 2018. Over the eight years since his appointment, we have grown
our revenues by a compound annual rate of 9.1%.
We have every confidence that this business will continue to produce solid
returns for our shareholders over time.
Pensions
We are the longest-serving and one of the largest independent providers of
pension trusteeship in the UK with approximately 250 appointments.
Our Pensions Governance (formerly Pegasus) offering of outsourced pensions
executive and governance solutions continues to be a leading provider in a
competitive market, developing new propositions that further support our
clients and demonstrate our investment and commitment to the industry.
Pensions - Market dynamics
Market Landscape and Opportunities
2025 underscored the critical importance of expert pension scheme trusteeship
and robust governance. Strengthened funding positions across many schemes have
reignited corporate sponsor interest in comprehensive "end-game" strategies.
Organisations are actively considering buy-in and buy-out options, alongside
evaluating the potential to retain schemes with long-term surplus positions.
This evolving environment reinforces the essential role of independent
professional pension expertise-particularly through corporate sole trustee
solutions. These models address succession challenges, optimise resource and
deliver the specialised skills required to navigate complex strategic
decisions.
Many schemes connected to the Pensions Dashboard which in turn initiated more
engagement with administrators and how they are supporting members and
clients.
Legislation and Regulation
After a period of relative regulatory stability, significant developments
emerged with the introduction of the new Pensions Bill to Parliament in June
2025. Accompanied by wide-ranging announcements covering Defined Benefit (DB),
Defined Contribution (DC), and Local Government Pension Schemes, this
legislation positions pensions firmly as a government priority. A key
enhancement enables DB schemes to access surplus extraction more efficiently,
providing trustee boards and corporate sponsors with greater flexibility.
These changes are expected to drive increased demand for premium professional
trustee services. While the Autumn 2025 Budget contained limited
pensions-specific measures, further developments are expected in 2026 and
beyond, with pensions remaining high on the government's agenda.
Independent Trusteeship
More than 50% of UK occupational pension schemes now have an independent
trustee-a clear recognition of the value of impartial oversight. The market
remains competitive, with a notable rise in tenders for trustee services and
growing interest in the Corporate Sole Trustee (CST) model. Our team-based
approach is well aligned with this trend, delivering resilience, continuity,
and deep expertise.
Pensions - Highlights
Unsurprisingly, as we have flagged previously, following an outstanding 2023
our revenues have normalised. Our broadly flat year-on-year revenues in 2025
mask what was a year of considerable progress for our Trustee and Pensions
Governance businesses. Over the past eight years, compound annual revenue
growth remains a healthy 9.1%. In our core Pensions business, we were
delighted to add incremental appointments that included names such as Combined
Nuclear Pension Plan, Whitbread, TPT Superfund and the Fidelity Master Trust.
Ireland continued to grow with new clients coming on board. In addition, we
won our first Corporate Sole Trustee ("CST") appointment which we also believe
is the first such appointment in Ireland. Our Manchester team continues to be
a leading presence for trusteeship and governance in the North of England. In
addition, Jersey also continues to be a focus where we have taken on more
appointments.
The Pension Governance business continues to see demand across a number of
different services areas, including support to stretched in‑house teams
(including those that face retention challenges on the road to buy-out,)
project management support, data/GMP projects, provider review and selection,
General Code support, and trustee effectiveness reviews.
We added new capabilities to our CST clients, embedding the General Code as
standard, and will continue to demonstrate the streamlining CST can bring to
the governance for all sizes of scheme.
In the last twelve months, we have helped deliver over seven material buy-in
transactions for our clients, including ArvinMeritor and Ultra Electronics.
Pensions - Outlook
We have added capacity to our team in anticipation that 2026 will be a busy
year. The implications of the measures included in the Pensions Bill will need
careful consideration alongside renewed engagement by many sponsors on future
pensions strategy. March 2026 will also be crucial for preparing schemes'
first Own Risk Assessments and evaluating how Pensions Dashboard Programme
connections have affected them.
As trustee boards and corporate sponsors continue to evaluate a range of
long-term options for their schemes, we remain strongly positioned to provide
both strategic insight and operational governance support. The pace of change
in funding levels and regulation is accelerating, reinforcing the need for
experienced, independent trusteeship and governance solutions.
Our expanding service model, spanning co-trustee roles, Corporate Sole Trustee
solutions, and governance frameworks, ensures we can meet these evolving
requirements with resilience and deep domain expertise. We expect sustained
growth in demand for professional trustee and governance services as schemes
navigate complex decisions around buyouts, run-on strategies, and surplus
management.
Corporate Services
Corporate Services consists of four well-diversified constituents. Structured
Finance Services, our whistleblowing division Safecall, Service of Process,
and our Corporate Secretarial Services business ("CSS"). In 2025 revenues were
up by a very healthy 12.2% and all parts of the business grew revenues
year-on-year. In particular, it was encouraging to see solid and
well-diversified growth across our CSS suite of products and solutions.
Service of Process ('SoP')
SoP - Market dynamics
This remains our business with the least recurring revenues. It has the
greatest dependency on global macro-economic factors and deal flow in capital
markets. Following a challenging first half of the year Investment Banking
revenues finished up a healthy 15% globally year-on-year in 2025 (source :
Dealogic). We participated well against this improving backdrop as the year
progressed.
SoP - Highlights
The heavy transaction volume in this business provides us with a rich data set
as to where/why we are/are not winning business. Consequently, we are able to
be increasingly systematic with our business development efforts.
Our global brand is hard won over many decades and needs to be constantly
refreshed. We place a lot of emphasis on continually expanding our networks
within all levels of law firms, but, in addition, are conscious of the need to
be more visible directly to corporates.
Investment in technology to improve our client experience remains a priority
along with investment in training and business development.
Earnings in SoP will always be variable and the changes in annual earnings
from the first half of this decade illustrate this well. We have extremely
limited ability to forecast revenues, but our history and excellent referral
partner and client networks give us confidence that this business will remain
a material contributor to our profits over financial market and economic
cycles.
Corporate Secretarial Services ('CSS')
CSS - Market dynamics
The global company secretarial services market continues to grow steadily
underpinned by increasing regulatory complexity, the rise of corporate
governance standards, and an increased use of outsourcing by clients to solve
for these constantly evolving needs.
We have been offering solutions in this sector for over twenty years and
operate in three main product areas:
Managed Services: Global Entity Management services ("GEMS") provide a single
outsourced point of contact to multinational corporations to ensure that their
legal entities are kept in good standing. 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
generally 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 continue to invest heavily here. Our team is based in our
Manchester office.
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
support to companies preparing for an IPO transaction including support post
listing. Our clients range from major Main Market and AIM listed companies
including investment trusts to leading UK operating subsidiaries of top global
brands. Our fees are often fixed annual fees for specifically scoped mandates
but can also be time or project based. Demand here is often for highly skilled
professionals with prior experience in a particular industry and/or governance
framework who can seamlessly transition work from being completed in-house.
This team is based in London.
Interim Resourcing: Here we provide immediate access to qualified governance
professionals whether on-site or remote, 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. This team is based in London.
CSS - Highlights
At the half year we noted that revenues were slightly up, and that we were
increasingly confident that our record sales pipelines would begin to feed
through as the year progressed. We are delighted to report this proved to be
the case and the positive momentum in terms of client experience, improvement
in our technology platform, and sales pipelines, continues to steadily build.
Revenues in this business grew faster than the average for IPS and profits by
even more as we continue to improve the efficiency of our workflows.
Our ability to move fast and build technology solutions to respond to emerging
client need was illustrated well during the year as we became an Approved
Corporate Service Provider to Companies House in relation to the provision of
Independent Director Verification services required under the UK's Economic
Crime and Corporate Transparency Act. We are increasingly working with clients
in using improving AI tools to enhance the efficiency of creating minutes.
Better use of technology frees up our professionals for more strategic and
advisory roles. For example, we now regularly provide Directors' Duties
training for our UK listed client base.
Our new leadership team established in 2024 has bedded in well.
We are increasingly confident that the significant investments that we have
made in people, skills, technologies and operational workflows will underpin
sustainable and controlled growth in this business over time.
Structured Finance Services
Structured Finance Services - Market dynamics
We operate in two main product areas:
Management of Special Purpose Vehicles ('SPV's') and other similar corporate
structures: We provide directors, accounting and day-to-day corporate
administrative services to entities set up to help financial institutions,
including challenger banks and boutique asset managers (Private Equity and
Hedge Funds), diversify their funding using securitisation techniques. The
SPV's are established to raise funds in the bond / loan markets which are then
used to acquire distinct pools of assets (including mortgages, receivables,
credit card debt, aircraft, whole businesses etc.) against which the funds are
secured. The funding is non-recourse meaning that the funds raised only have
recourse to the pool of assets on which they are secured and to no other
party.
Accounting services: We provide management and statutory accounting services
to corporate entities who wish to outsource this area or where they do not
have local accounting knowledge. We do not provide audit services to clients.
As we flagged in last year's annual report oversight for Facility and Paying
Agency services was transferred to our Corporate Trust business at the start
of 2025. Increasingly, we find that clients are seeking Security Trustee and
Loan Agency roles as a combined solution, so we have aligned our resources
accordingly.
We remain a small player in a large and growing market. We score very highly
for quality-of-service delivery and continue to build on these solid
foundations.
Structured Finance Services - Highlights
Following a broadly flat year in 2024, new issuance levels grew modestly
during 2025 and both our revenues and profits grew year‑on‑year.
We were particularly proud to be appointed to support The Climate Investment
Funds Capital Markets Mechanism. This is a G7 - backed, World Bank facilitated
vehicle that focuses on low carbon initiatives in Developing Countries.
We were delighted to support the first ever European Home Equity Line of
Credit ("HELOC") backed Residential Mortgage Backed Security ("RMBS") issued
by Waterfall Asset Management.
In addition to the innovative structures above, we again received repeat
appointments from a number of leading non-bank specialist lenders operating in
the sector including Pepper and Lendinvest.
Private Credit continues to build momentum as an asset class. The number of
non-bank, specialist lenders (e.g., in auto loans, consumer receivables, and
mortgages) continues to rise, bringing new and lesser-seen collateral types to
the public markets. Credit spreads ended the year near multi-year lows and,
with a general expectation of decreasing interest rates, market participants
expect conditions to remain positive in 2026.
With an increased emphasis on business development, we will compete
aggressively to grow our market share in this growing market.
Whistleblowing: Safecall
Safecall - Market dynamics
Whistleblowing is now firmly part of the governance lexicon.
Law makers continue to push this agenda. In the UK, new protections for
workers reporting sanctions-related misconduct came into effect in June 2025.
In December, the UK government's Anti-Corruption Strategy 2025 paper was
released. This recognises the vital role of corporate whistleblowers and
signalled a potential review of the existing legal framework by 2027. In the
United States, the Department of Justice (DOJ) launched a new Whistleblower
Rewards Pilot Program in May 2025, which is expected to increase the flow of
information to regulators and put pressure on companies to improve internal
reporting systems.
Investors too are increasingly demanding of appropriate whistleblowing
frameworks being in place. This is increasingly the case in developing markets
and we see great potential to help our clients attract capital in this regard.
As with all of our IPS businesses, what differentiates our offering is the
quality of our people. We are not a box ticker's product. All enquiries are
dealt with by our highly trained staff that continues to consist largely of
former police officers. The quality of the work that we do for our clients is
highlighted in client surveys and perhaps more encouragingly in regular
unsolicited positive client feedback. To the best of our knowledge, all of our
competitors in the sector run business models based off low-cost call centres.
We remain fully committed to being a premium provider of high-quality product.
Safecall - Highlights
Yet again we provided a record number of reports to our clients in 2025, up
52% on 2024. Revenues increased 24% year-on-year following 25% growth in 2024.
Following rapid growth over the previous five or so years, digital channels
(as opposed to voice) continued to account for over 70% of issues raised. That
said, the growth in the percentage of digital reports relative to voice has
started to slow somewhat. Increasingly, we are finding that in complex and
highly nuanced cases, the voice channel is the preferred choice of the
whistleblower. The voice reporting channel has always been a differentiating
competency of Safecall. We continue to invest in it with a new upgraded
telephone system installed during the year to support this critical client
need.
We also delivered increased client functionality via our portal in 2025 and
client feedback is encouraging. We are increasingly successful in our efforts
to effectively compete for larger mandates as they come up for renewal.
Our training and investigations offerings remain a work in progress and we
have increased ambitions here.
It is an exciting time to be a provider of solutions in this fast-growing
sector.
Central Functions
The larger and more consistent the earnings growth within IPS, the more
optionality it creates for the managers of the Investment Portfolio to deliver
on our objective of long-term capital gains and steadily increasing income. As
we have noted in past annual reports, we are making a significant investment
in modernising our operating model and central support functions to support
this growth.
We continue to plan for growth of mid to high single digits, and expect this
to be largely organic. We remain open to opportunities presented by
acquisitions where we believe this could add value to our clients and
shareholders.
Over recent years we have made significant investments in our operational
infrastructure, taking a group of businesses which were long underinvested in
and positioning them for growth in a coordinated and more streamlined way. The
change has been profound, whilst we have fiercely protected our essence:
independence, trust, and technical excellence. Day-to-day operations are
almost unrecognisable. This journey continues. We have moved away from
thinking about our business transformation as a rigid series of sequential
start‑and-end-date projects. Instead, we are building a business which
thrives in continual evolution, where agile adaptation is the new normal.
Having stabilised our operating infrastructure, we are now deliberately
shifting our focus to our people. In a professional services business, our
most valuable assets do not appear on the balance sheet. Unlike manufacturing
or capital-intensive businesses, our real value lies in the expertise,
relationships and capabilities of our colleagues. This is where we must invest
most heavily to build long-term value for our shareholders. Growing great
people is slow work, measured in years and decades rather than weeks and
months. It must be steady and sustainable, and when done well becomes a
scalable competitive advantage.
In 2025, we accelerated our people journey. Our new senior hires - Isla
Pickering (CFO), Spencer Knightsbridge (CTO) and Alex Ringer (Head of Legal,
Risk and Compliance) completed their first full year in post, using that time
to understand their teams and identify capability requirements. They have
developed clear visions and operating models for their respective areas within
the broader business and are now building the right teams around them. We have
deliberately recruited leaders with professional services experience who
understand what it means to coach and mentor their people and deliver peace of
mind for clients.
Alongside this, we began the second phase of transforming our HR capabilities.
We have built upon the strong foundational HR we established over the last few
years and moved towards a People team focused on development, enablement, and
high-performing teams. We have implemented a new competency framework, aligned
our career pathways with reward and incentive systems, and have begun shifting
our performance conversations from input to impact and accountability. We held
our fourth annual Culture Week, reinforcing our values of "believing it's
possible, making change happen, being better together and never stopping
learning". Our COO, Trish Houston, participated in the London Business School
Senior Executive Programme, deepening our strategic leadership capabilities,
while reinforcing our commitment to continuous learning at every level of the
organisation.
This investment in our people is critical. We operate in a world of
accelerating change where client needs are evolving faster than we have ever
known. Our business is built on independence and trust, and our clients need
us to be more than advisers. They need us to be trusted partners who are woven
into the fabric of their long-term strategy. We must embrace the changes
occurring around us and understand the governance implications of
technological advances, cultural shifts and regulatory change. Whether it is
supporting boards thinking about AI governance or navigating complex
restructuring, our people must be curious, market-aware, relentless about
quality and equipped with a professional services mindset.
In 2025, we laid the foundations of our Governance Academy and began to shift
our approach to talent development - complementing hiring in experienced
people with an increasing amount of home-grown talent. With increased People
team capacity and skills we are ready to quicken the pace of this journey. In
the year ahead, we will launch structured programmes focused on capability
building - both for our colleagues and, increasingly, for our clients. This
dual focus on developing our own people whilst supporting our clients in
building their capabilities positions us well for the competitive landscape
ahead.
Information Technology
Our technology strategy focuses on delivering robust, scalable solutions that
enable our businesses to serve clients effectively whilst maintaining
operational excellence and meeting regulatory standards. Under Spencer
Knightsbridge's leadership as Chief Technology Officer, who joined in
September 2024, we have made significant progress in strengthening our
foundations and advancing strategic capabilities.
Cyber security remains our top operational priority. We continue to invest in
enhanced tooling, expanded capabilities, additional resources, and
comprehensive staff training across the organisation to maintain our robust
security posture. The cyber threat landscape continues to evolve rapidly, with
increasingly sophisticated attacks targeting organisations of all sizes. We
recognise that whilst we cannot eliminate all risk, we must maintain vigilant
defences and effective response capabilities through continued investment in
our security infrastructure and practices.
Our artificial intelligence adoption has progressed from initial training and
exploration to practical implementation. We have deployed AI in specific use
cases across the organisation, carefully evaluating effectiveness whilst
maintaining appropriate governance frameworks and security standards. This
measured approach ensures we begin to harness the benefits of AI innovation
whilst managing associated risks responsibly.
Safecall has made significant progress in expanding its enterprise client
capabilities. Working in partnership with key clients, we have developed new
portal functionality that will be rolled out to our broader client base. This
enterprise-focused development approach continues to strengthen our market
position and builds on the portal enhancements delivered in previous years.
In CSS, our Identity Document Verification solution for ECCTA went live during
the year and continues to evolve with enhanced capabilities. This positions us
well to address growing regulatory requirements and client demand for robust
digital identity verification across our client base.
We continue to invest in our technology delivery capability, strengthening our
engineering functions to support increasingly sophisticated solution delivery,
supporting the business's growth objectives whilst maintaining the operational
excellence.
Prospects
Law Debenture enters 2026 with good momentum and our differentiated structure
continues to provide resilience in what is expected to remain an uncertain
external environment.
IPS is expected to deliver continued medium-term growth and maintain its
strategic importance within the Group, in line with our mid to high single
digit growth target. We continue to invest in key IPS growth areas, which
involves transforming and future-proofing our operating model through
technology and modernising of services to deliver even better outcomes for our
clients. This is intended to support sustained organic growth and help us gain
further market share.
From an equity market perspective, UK stocks remain attractively valued
relative to history and international peers. The recent recovery in UK equity
performance has been concentrated in a relatively narrow selection of stocks
and UK equity valuations remain broadly in line with long term averages.
Sentiment continues to be influenced by political and economic uncertainty,
but our investment managers believe that there is a wealth of UK companies
which continue to offer a compelling opportunity for both earnings growth and
valuation re-rating. There are many focused and well-managed businesses,
operating within a broadly stable backdrop, which are on track to deliver
growth and contribute to a revaluation of the UK market, with corresponding
capital appreciation for shareholders.
Law Debenture's strategy is built to perform through a range of market
conditions. We are confident that the Group remains well positioned to
continue delivering our objectives to achieve long-term capital growth in real
terms and steadily increasing income.
On behalf of the Board, I would like to thank my colleagues across the Group
for their continued commitment and professionalism, and our shareholders for
their ongoing support.
Denis Jackson
Chief Executive Officer
10 March 2026
IPS 5 Year Performance at a Glance
IPS net revenue and underlying PBIT - 5 year performance
Department 2020 2021 2022 2023 2024 2025 5yr Revenue 5yr Revenue
£000 £000 £000 £000 £000 £000 Variance Variance
£000 %
Pensions 11,479 13,060 14,343 17,396 16,694 16,615 5,136 44.7%
Corporate trust 10,960 10,025(3) 11,077(3) 13,027(3) 14,555(3) 15,912 4,952 45.2%
Corporate services 12,055 18,501(1, 3) 19,749(3) 20,086(3) 22,412(3) 25,152 13,097 108.6%
IPS net revenue 34,494 41,586 45,169 50,509 53,661 57,679(2) 23,185 67.2%
% Net Revenue growth 8.5% 20.6% 8.6% 11.8% 6.2% 7.5%
Statutory PBT 12,227 13,340 14,421 15,936 15,284 17,704 5,477 44.8%
Underlying PBIT 12,198 13,440(4) 14,459(4) 14,772(4) 15,700(4) 16,659 4,460 36.6%
% Underlying PBIT growth 8.4% 10.2% 7.6% 2.2% 6.3% 6.1%
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 £9.0m from gross revenue of £66.7m.
3 2021-4 comparative reflect transfer of loan agency revenue from Corporate
Services to Corporate Trust for comparability with 2025.
4 PBIT is stated on an underlying basis. Please refer to alternative
performance measures on page 169 of the full annual report and accounts for
reconciliation of statutory PBIT to underlying PBIT. Additionally, in 2025 net
interest on the defined benefit pension asset/liability has been included
within net interest below PBIT. In all prior years interest on the pension
asset/liability was presented within admin expenses. To aid comparability of
underlying PBIT across years, the net interest income/expense on the pension
asset/liability in prior years has also been represented within interest
income/expense in the APMs (refer to page 169 of the full annual report and
accounts), with prior years underlying PBIT represented on this basis. This
impacts APMs only. As the net pension interest is not material at the group
level, no adjustment has been made in the primary financial statements.
IPS valuation
2020 2021 2022 2023 2024 2025 5yr growth
£000 £000 £000 £000 £000 £000 %
Underlying EBITDA(1) 13,335 15,469 16,688 17,325 18,257 19,493 46.2%
Earnings multiple(1) 9.4 10.7 10.4 10.7 10.7 10.7 13.9%
IPS fair value (excl. net assets) 125,349 165,985 174,174 185,063 194,505 208,665 66.5%
NAV adjustment: total value less net assets already included 112,407 135,885 148,376 160,836 187,395 202,524 80.2%
1 Underlying EBITDA is restated for 2021-2024 to reflect impact of pension
credit interest. Refer APMs on page 170 of the full annual report and accounts
for further details.
Investment Managers' Review
Investment Strategy
The investment approach has not changed for many years, but it has hopefully
been improved with lessons learnt. There is a relatively long list of stocks
which allows for a blend of large, medium and small companies. There are
overseas holdings where a similar company cannot be found in the UK market or
the overseas company is cheaper. Nearly 90% of the portfolio is in UK quoted
companies at present, as this is where we are finding superior value despite
concerns about the UK economy. The belief behind portfolio construction is
that genuine diversity in the holdings is how capital is preserved in the long
term.
We employ different approaches to how we look at potential investments. Around
50% of the portfolio is in FTSE 100 companies. These are, we believe, sound
long-term investments and they are often well-known companies that feature in
other portfolios with similar objectives. However, it is what you do
differently to others that makes you perform differently. Law Debenture's
unique structure of cash-generative operating companies (IPS) and an
investment portfolio gives the opportunity to have a wider range of
investments and still produce an attractive level of earnings. Therefore,
unusually for an income growth trust, there are investments that do not pay a
dividend. Early-stage small companies and operationally challenged large
companies feature. The small companies that succeed will give substantial
returns. Large companies with a recovery plan and determination to implement
it should, in time, return to paying dividends at a considerably higher share
price. The different strategies employed to look at companies result in real
diversification of underlying operating activities. It does mean there are
usually around 150 holdings and we do not go over 175. The absolute stock
specific risk is relatively low compared to the index, and we believe the
diverse blend of companies held will contribute, over time, to the better
performance of your Company.
Economic and market backdrop
The UK economy experienced slow but positive growth during the year, with the
second half virtually flat. This is not a bad background for equity investment
as it has allowed interest rates to fall as inflation pressures subsided. It
does make stock picking more demanding as the dull economy does not bail out
companies that are failing to compete satisfactorily. Falling interest rates
over time can help the economy as corporates become more confident about the
operating environment and therefore push forward with their expansion plans.
Lower rates can mean that consumers who are presently saving into deposit
accounts search for higher returns. It is a notable feature of the UK economy
that savings into deposit accounts are running at much higher levels than they
did pre-Covid. This changing consumer behaviour has been a dampener on
economic activity in recent years. The savings ratio can fall with further
interest rate cuts and as consumer confidence rebuilds. This can help the
earnings profiles of UK companies.
Group NAV total return 1 year 3 years 5 years 10 years
% % % %
NAV total return (with IPS at fair value and debt at par)(1) 29.2% 58.6% 78.8% 184.5%
NAV total return (with debt and IPS at fair value)(1) 28.4% 59.1% 96.6% 200.8%
FTSE Actuaries All-Share Index total return(2) 24.0% 46.5% 73.9% 123.4%
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 borrowings, whereas NAV
total return with debt at fair value includes the fair value adjustment (see
page 168 of the full annual report and accounts).
2 Source: LSEG, London Stock Exchange Group, all references to 'FTSE
All-Share' and 'benchmark' in this review refer to the FTSE Actuaries
All-Share Index total return.
The slow economic growth has made for a reluctant bull market. There is no
euphoria and investors are risk averse in their stock picking, preferring
large companies over smaller ones and those with a stable earnings outlook
over more cyclical companies. We have in recent years been building up the
smaller company exposure as valuations are undemanding. The high level of
corporate activity with agreed takeovers suggest that quoted smaller companies
are offering substantial value.
One Year Performance Review and Attribution
For the second year in a row, three of the top five absolute contributors to
performance were banks, as the sector continued to benefit from higher
interest rates boosting returns, while loan losses remained subdued. We have
taken modest profits in the sector, but it remains 13% of the portfolio, as we
see the potential for ongoing attractive shareholder returns via dividends and
share buybacks. Also among the best performers were aerospace and defence
suppliers Rolls-Royce and Babcock. In both cases, we have taken substantial
profits on valuation grounds. Babcock, for example, at calendar year end was
trading on a low 20s current year P/E. This would compare to a low teens P/E a
few years ago, on earnings per share that have also roughly doubled. While the
outlook for defence spending has undoubtedly changed in recent years, we see
this as now more priced into the shares at current levels.
The top five contributors to performance during the year (in absolute terms)
were:
Top five gains over one year
Stock £ Appreciation % Appreciation
Barclays £24.1m 77.5
Rolls-Royce £19.3m 80.7
HSBC £16.8m 49.3
Standard Chartered £12.4m 66.7
Babcock £11.3m 117.6
Source: Law Debenture.
Note: % appreciation figures are share price only, not total return.
Having been among the best performers in 2024, in 2025 Flutter Entertainment
was the largest individual detractor. Flutter are among the market leaders in
the fast growing (and large) US market, but the pace of legalisation has
disappointed and there are concerns that the prediction market, while
currently small in size, could eat into their addressable market over time. We
took profits in the holding early in the 2025 calendar year (at a higher share
price), but in the second half of the calendar year maintained the holding on
the view that the US market provides the potential for material earnings
growth over time.
Among the detractors, building materials suppliers Ibstock and Marshalls have
been impacted by subdued UK housing building activity. In both cases we
gradually added to the holdings during the year. Substantial fixed costs (for
example kilns in the case of Ibstock), mean that any disappointment on volumes
has a substantial impact on profitability. This can, however, work both ways
and, on any pick‑up in building activity, earnings could recover materially.
Morgan Advanced Materials was similarly impacted by weak trading in some of
its end markets, resulting in a low operating margin of approximately 10% in
2025, compared to a medium-term target of 12-14%. On a depressed earnings
number, the shares currently trade on a lower than historical average
valuation of approximately 12x 2025 earnings. As with Babcock, the best total
returns can be made when earnings and valuations recover. If we can buy a
company on a lower valuation than it historically trades at, on what we see as
depressed earnings, this presents the opportunity for a compelling total
return (although we will never be able to precisely forecast when end markets
will turn). We do, however, need to admit where we think we have got things
wrong and, in the case of advertising firm WPP, we sold the shares in April
for £5.7, realising a substantial loss. The shares ended the year at £3.38,
meaning the decision to sell limited realised losses. The reason for sale was
that WPP's topline was declining faster than peers, leading us to conclude
that there may be a structural reason why peers such as Publicis are taking
market share at WPP's expense.
The bottom five contributors to performance during the year (in absolute
terms) were:
Top five losses over one year
Stock Depreciation % Depreciation
Flutter Entertainment (£7.4m) (18.9)
Marshalls (£4.9m) (39.2)
Ibstock (£2.4m) (24.1)
Morgan Advanced Materials (£2.2m) (19.0)
WPP (no longer held) (£2.2m) (31.0)
Source: Law Debenture.
Note: % depreciation figures are share price only, not total return.
Medium Term Performance
One of the advantages of the Law Debenture structure, with the IPS business
making a sizable contribution to the Trust's overall income, is that it allows
us as portfolio managers to take a longer time horizon in investing. For
example, we have the flexibility to hold low or zero dividend yield shares
that we think have potential for substantial sales and earnings growth over
the medium term. The uniqueness of the Trust structure allows us to hold these
shares, and importantly remain patient with them over the following few years.
We therefore think in time horizons longer than a year and, while the focus of
an annual report tends to be on the past year, we also think it is important
to take a step back and examine medium-term performance (in this case we have
used three years).
Over the last three years, the Trust has generated a NAV total return of 59%
(with debt at par), compared to a 47% return from the FTSE All-Share
benchmark. If we examine what has driven that performance, what stands out is
that five of the top ten contributors paid low or no dividends for at least
some of the three-year period (Rolls-Royce, M&S, Kier, Babcock and
Flutter). We would therefore have struggled to hold them in size in a
traditional income fund structure, which was trying to meet or beat the
benchmark dividend yield from the portfolio alone. These lower dividend yield
holdings have generated substantial capital growth and, where we have taken
profits along the way, this recycled capital can then generate future income
growth for the portfolio. To give an example - the position in Rolls-Royce at
the end of December 2022 was worth £8.8m. As at the end of December 2025, the
holding was worth £18.7m - and along the way we have sold £62m worth of
shares.
The top ten absolute contributors over the last three years were:
Top ten contributors over three years
Stock Contribution to Share price
return (%) total return (%)
Rolls-Royce 9.5 1150
Barclays 4.4 237
HSBC 4.0 184
Marks & Spencer 2.7 174
Standard Chartered 2.1 218
Natwest 2.0 194
Kier 1.9 304
Babcock 1.9 350
Flutter Entertainment 1.6 43
Tesco 1.6 121
Source: Janus Henderson Investors, Bloomberg as at 31 December 2025.
Portfolio income
Investment income received grew from £34.7m in 2024, to £40.3m in 2025. This
growth was partially driven by net investment during the year, on which we
provide further detail in the portfolio activity section (below). Some of the
specific sectors that were added to, such as commercial property and
infrastructure, pay a dividend yield above that of the overall portfolio. We
continue to have a total return focus for the portfolio as a whole rather than
targeting a specific level of income generation.
Portfolio activity
During the year we were net investors of £53m. Despite this net investment,
the rise in the net asset value of the Company meant that gearing was little
changed on the year - it ended 2025 at 12%, compared to 11% as at the end of
2024.
The UK was the biggest source of investment, with net investment of £57m, as
this was where we continued to see the most value. This net investment took
the UK weight at year end to 89.9%, modestly higher than the 87.6% weight at
the end of 2024 (which was already a historically high level). While UK
equities performed well in 2025, they continue to trade at a substantial
valuation discount to overseas equities. As the chart on page 23 of the full
annual report and accounts shows, UK equities trade at an approximately 30%
valuation discount on a non-sector adjusted basis, and a roughly 20% discount
on a sector-adjusted basis (which largely reflects the lower weighting in the
technology sector in the UK market).
The valuation discount also impacts corporate activity, where we continue to
see heightened interest for UK companies from both financial and strategic
buyers. This year there were takeover offers for instrumentation equipment
producer Spectris, industrial chain manufacturer Renold, building materials
company Epwin and overseas consumer lender International Personal Finance. The
minimum takeover premium among these shares was around 25%, with the maximum
(Spectris) around 100%. With the exception of IPF (where the position remains
in the portfolio), corporate activity was often the driver of sales activity
during the year, with the positions in Spectris, Renold and Epwin all
subsequently sold. For as long as the valuation discount on UK equities
remains, we would expect further corporate activity in the year ahead.
The largest sale during the year was Rolls-Royce, which was reduced for
valuation reasons. A valuation metric we often use in the industrial space is
enterprise value (market capitalisation plus debt) compared to revenue. A few
years ago you could buy Rolls-Royce for roughly 1x its turnover, as there were
question marks around its ability to generate cash, its level of indebtedness
and, during Covid, severe weakness in its aerospace end-markets. Today,
Rolls-Royce trades on approximately 5x turnover. It is seen as better managed
and its end-markets have improved, but its valuation in our view now largely
reflects this.
The largest purchases of the year included several commercial property owners
such as British Land and Segro. We also added to several of the existing
holdings in the sector, such as Workspace and Hammerson. In our view, there is
currently a disconnect in the sector between the operating conditions, which
are generally strong with good levels of rental growth and (with a few
exceptions), low vacancies, and the share prices, which are often trading at
steep discounts to the latest book value. This disconnect is likely due to the
uncertainty surrounding government bond yields, however if we see interest
rates come down further in 2026 (which we expect), we would hope that the gap
between fundamentals and share prices begins to narrow. Another area that was
added to in 2025 was infrastructure trusts, with new holdings such as
Greencoat UK Wind and HICL, with a similar logic to commercial property -
shares were trading at substantial discounts while offering attractive
dividend yields.
Outlook
After the rise of last year, aggregate valuations for companies are obviously
not as low as they were. However, they are still below their long-term
averages. Perhaps, more importantly, expectations for earnings growth remain
undemanding. It is surpassing of expectations that drives valuations up.
Therefore, modest valuations and the possibility of better-than-expected
operating profits as a result of falling interest rates can counter the
concerns about geopolitical problems. The underlying macro-economic problem of
recent years has been inflation. Interest rate increases have been the
preferred Central Bank tool to fight inflation. There is increasing evidence
that inflation will fall as wage pressure subsides and that, in turn, will
allow interest rates to fall. Low expectations, falling interest rates and
modest valuations are a combination that can lead to strong share prices.
Therefore, the intention is to remain a buyer of a diverse range of equities
in coming months.
James Henderson and Laura Foll
Investment managers
10 March 2026
Portfolio by Sector and Value
Portfolio by sector
2025 2024
Oil and gas 8.6% Oil and gas 8.8%
Basic materials 6.1% Basic materials 5.0%
Industrials 20.4% Industrials 23.0%
Consumer goods 6.9% Consumer goods 8.4%
Health care 5.8% Health care 5.7%
Consumer services 9.6% Consumer services 13.9%
Telecommunications 1.9% Telecommunications 2.2%
Utilities 3.7% Utilities 3.5%
Financials 33.5% Financials 26.7%
Technology 1.5% Technology 1.8%
Sustainable energy 2.0%
Geographical distribution of Portfolio by value
2025 2024
United Kingdom 90.2% United Kingdom 87.6%
North America 4.4% North America 5.6%
Europe 4.5% Europe 5.5%
Japan 1.0% Japan 1.3%
Fifteen Largest Holdings: Investment Rationale
as at 31 December 2025
Rank Company Location % of Approx Valuation Purchases (Sales) Appreciation/ Valuation
2025 Portfolio Market Cap. 2024 £000 £000 (Depreciation) 2025
£000 £000 £000
1. Barclays UK 4.07 £66.09bn 31,105 - - 24,094 55,199
Barclays is one of the largest lenders in the UK as well as owning a global
investment bank. It trades at a lower valuation than many of its banking
sector peers because of scepticism that the investment bank can generate good
returns. On evidence of better execution, it has potential to re-rate further
from its current valuation.
2. HSBC UK 3.75 £200.19bn 34,055 - - 16,805 50,860
HSBC is a large global lender and financial services business. It provides
geographic diversification to the portfolio while becoming more focused on
geographies where they are among the market leaders.
3. Shell UK 2.52 £156.19bn 30,950 - - 3,294 34,244
Shell is a vertically integrated oil & gas company with significant
exposure to natural gas within its production mix. The business is highly cash
generative at current commodity prices, allowing attractive cash returns to
shareholders as well as funding significant capital expenditure.
4. Rio Tinto UK 2.32 £68.01bn 17,711 6,922 - 6,830 31,463
Rio Tinto is a diversified miner with significant exposure to iron ore, copper
and aluminium. As a result of its low position on the cost curve, it is able
to remain cash generative despite volatility in commodity prices and pays an
attractive dividend yield.
5. GlaxoSmithKline UK 2.2 £74.23bn 22,074 - - 7,848 29,922
GSK is a global pharmaceutical company that is among the market leaders in
areas such as vaccines and HIV. The shares trade at a valuation discount to
global pharmaceutical peers that in our view is unjustified.
6. Standard Chartered UK 2.06 £41.33bn 18,642 - (3,102) 12,425 27,965
A global bank providing international banking and financial services, with a
particular focus on emerging markets. The position provides geographic
diversification for the portfolio as well as being positively exposed to
higher global interest rates.
7. BP UK 1.82 £65.7bn 22,398 - - 2,269 24,667
BP is a vertically integrated oil & gas company. Similar to Shell it is
highly cash generative at current commodity prices, providing optionality for
the company to fund significant capital expenditure, return cash to
shareholders via an attractive dividend yield and pay down debt.
8. Flutter Entertainment UK 1.66 £27.57bn 39,368 - (9,336) (7,450) 22,582
Flutter is a global gambling provider and owner of brands such as Paddy Power
and Betfair. It is successfully rolling out in the US as states gradually
legalise gambling, providing a potential route to substantial earnings growth
in the long term.
9. Balfour Beatty UK 1.44 £3.53bn 12,572 - - 7,027 19,599
The Company provides civil and specialist engineering and management services.
They work on a range of projects including roads, railways, schools, military
housing and airports. The UK accounts for more than 50% of total revenues.
They are the leading company in their field of activity with strong management
disciplines which has seen them through in a volatile time.
10. National Grid UK 1.42 £56.86bn 16,051 - - 3,252 19,303
National Grid is a regulated utility company with operations in both the UK
and the US. The need to reduce global carbon emissions is likely to increase
demands on electricity networks and this could lead to faster regulated asset
growth in future, driven by the need to increase grid capacity. The position
brings defensive qualities and continues to pay an attractive dividend yield.
11. Rolls Royce UK 1.38 £89.69bn 23,881 - (24,464) 19,262 18,679
Rolls-Royce is a designer and manufacturer of engines for use across a number
of end markets, most materially civil aerospace. They have won significant
market share on the next generation of wide-bodied planes, where flying hours
have fully recovered (and now surpassed) pre Covid levels. Under the current
CEO they are reducing costs and have laid out ambitious medium-term goals for
cash generation.
12. Lloyds Banking Group UK 1.37 £56.34bn 5,478 5,619 - 7,569 18,666
The Company provides retail banking, mortgages, pensions, asset management,
insurance and treasury services. It is focused in the UK with branches and
offices across the nation. The balance of different banking activities brings
a greater consistency of earnings than usually associated with banking.
13. NatWest UK 1.37 £52.27bn 13,068 - (1,907) 7,415 18,576
The Bank, formerly known as the Royal Bank of Scotland, is the largest
commercial bank in the UK. They offer a comprehensive range of banking
products. The strong management disciplines place them well to grow and use
their financial strength.
14. Cummins USA 1.31 £44.3bn 13,089 - - 4,713 17,802
The Company designs, manufactures, distributes and services diesel and natural
gas engines as well as power generation systems used, for example, in data
centres where demand is growing strongly. 55% of the Company's revenues come
from the US with the rest spread around the globe. They are the global leader
in their field of activity.
15. Aviva UK 1.3 £20.44bn 12,058 - - 5,549 17,607
The Company provides all classes of general and life assurances including
fire, motor, marine, aviation and transport insurance. They also offer a
variety of financial services including long-term savings and fund management.
They recently bought Direct Line and will bring their strong underwriting
disciplines and marketing to the expanded group.
Company Overview
Who we are
From its origins in 1889, Law Debenture has diversified to become a Group
which provides our shareholders, clients and people with a unique combination
of a Portfolio and an Independent Professional Services ('IPS') business.
Our purpose and objective
Our purpose is to deliver peace of mind for our shareholders, clients and
people. This is central to our strategy, both at the Portfolio and IPS levels,
and underpins the way we think and behave every day.
Our objective as an investment trust 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 through investing in a
diversified portfolio of stocks and ownership of the IPS business.
To our IPS clients we are trusted, independent experts who have 136 years of
experience to call on in delivering vital aspects of their business cycle.
Our purpose and objective are underpinned by our corporate values of:
● We believe it's possible.
● We make change happen.
● We are better together.
● We never stop learning.
Our culture
Our purpose and values are central to our objective. They are reinforced by
our culture as a business, which is one of excellence, independence and trust.
The Board endorses our purpose and values and is responsible for ensuring that
our culture is aligned with our strategy by assessing, monitoring and
challenging the same where appropriate. The Board discharges this duty by
reviewing the relevant policies, practices and behaviours throughout the
business including its own conduct as a Board and of its individual directors
and by ensuring our stated purpose, values and objectives are reflected in its
discussions and decision-making.
Some of the ways in which the Board monitors the Group's culture, with the
assistance of its Committees, senior managers and external advisers, are by
reviewing:
● reports on the results of our quarterly eNPS surveys;
● reports on stakeholder engagement as described on page 48 of the
full annual report and accounts and our Section 172(1) Statement on pages 48
to 51 of the full annual report and accounts;
● reports on risk management, internal controls, internal audits,
compliance, anti-bribery and whistleblowing arrangements;
● cyclical presentations from our Business and Department Heads at
each Board meeting;
● feedback from our key external advisers such as our external
auditors and investment managers on their relationship with the relevant teams
within the business;
● reports on the diversity and inclusion of the Board and the IPS
business and oversight of the statistics set out in the ESG section on page 56
and 57 of the full annual report and accounts; and
● Board, Committee and individual directors' performance
evaluations, the process and outcome of which is set out on page 77 of the
full annual report and accounts.
We continue to hold annual culture weeks to embed, share and celebrate our
values as a business.
We believe the culture of the Group is strong and a contributing factor to our
consistent performance in challenging market conditions.
Our strategy - implementation
Our strategy is centred around the unique combination of the Portfolio and our
IPS business. Whilst overseen by the Board, the IPS business operates
independently from the Portfolio.
The IPS business provides a reliable source of revenue to the investment
trust. This supports the dividend and ensures our investment managers are not
constrained to choosing stocks solely based on yield. Instead, the investment
managers benefit from increased flexibility in stock selection supporting the
delivery of long-term capital growth.
Our unique structure is also tax efficient as some tax relief, arising from
excess costs and interest payments which would otherwise be unutilised, can be
passed from the Portfolio to the UK via Group Relief business reducing the tax
liability for the Group and increasing shareholder returns.
The way in which we implemented the investment strategy during 2025 is
described in more detail in the investment managers' review above.
Annual performance is set out on pages 2 to 33 of the full annual report and
accounts, which contain tables, charts and data to explain performance both
during the year under review and over the long-term. Performance against KPIs
is discussed on page 38 of the full annual report and accounts.
Our business model
Our business model is designed to position the Company for optimal performance
in the AIC UK Equity Income investment trust sector.
Law Debenture's shares are intended for private investors in the UK (retail
investors), professionally advised private clients and institutional
investors. When choosing an equity focused investment trust, shareholders
typically accept the risk of exposure to equities but hope that the pooled
nature of an investment trust portfolio will give some protection from the
volatility in share price movements that can affect individual equities.
Total Shareholder Return
PORTFOLIO
● Invests in a diverse equity portfolio
● Earns capital returns and dividends
● Low ongoing charges
INDEPENDENT PROFESSIONAL SERVICES
● Trusted provider of independent governance services, generating
recurring revenue.
● Profits provide the investment trust with an additional revenue
stream.
● Tax efficient
PORTFOLIO
● The Portfolio will typically contain over 70 and up to 175 stocks,
the maximum permitted.
● The Portfolio is diversified in order to spread investment risk
with no obligation to hold shares in any particular type of company or
industry.
● The IPS business does not form part of the Portfolio.
Whilst performance is measured against the FTSE Actuaries All-Share Index, the
composition of the index does not influence the construction of the Portfolio.
As a consequence, it is expected that the Portfolio and performance will
deviate from the comparator index.
INDEPENDENT PROFESSIONAL SERVICES
Operating through a number of wholly owned subsidiary companies (see note 13
in the full annual report and accounts), we provide pension trustee
executives, outsourced pension services, corporate trust services and
corporate services to companies, agencies, organisations and individuals
throughout the world. The services are provided through offices in the UK,
Dublin, New York, Delaware, Hong Kong and the Channel Islands.
Group employees are employed by L.D.C. Trust Management Limited ('LDCTM') and
Safecall Limited (in the UK) or a locally incorporated entity (in the overseas
jurisdictions). As part of their duties, a number of the employees provide
services to the investment trust and a proportion of their time and related
overheads are recharged to the trust, forming part of the ongoing charges.
More details about the performance of the IPS business in 2025 are given in
the Chief Executive Officer's review above.
Our strategy - guidelines
The Board sets the investment strategy and actively monitors both the
investment managers' and Executive Leadership team's adherence through a
series of guidelines and parameters in each scheduled Board meeting. The
strategy is reviewed periodically to ensure we deliver on our objective.
Investments Permitted types of investments are: Restrictions:
● Equity Shares ● Trading is not permitted in suspended shares or short positions
● Cash/Liquid Assets ● No more than 15% of gross assets will be invested in other UK listed
investment trusts
● No more than 175 stocks
● No investment may be made which raises the aggregate value of the
largest 20 holdings, excluding holdings in collective investment vehicles that
give exposure to Japan, Asia/Pacific or emerging market regions, to more than
40% of the Portfolio, including gilts and cash
● The value of a new acquisition in any one holding may not exceed 5% of
the total Portfolio value (including cash) at the time the investment is made
● Further additions shall not cause a single holding to exceed 5%, and
Executive approval must be sought (to be reported at the next Board meeting),
to retain a holding should its value increase above the 5% limit
● No investment in any investment vehicle managed or advised by Janus
Henderson shall be made without prior Board approval
● No investment other than in equity shares quoted on a major
international Stock Exchange (including AIM for the avoidance of doubt) or
instruments convertible into the same may be made without prior Executive
approval
● The Company may not make investments in unlimited liability companies
The current regional parameters are: Minimum Maximum
% %
United Kingdom 55 100
North America 0 20
Continental Europe 0 20
Japan 0 10
Asia/Pacific 0 10
Other (including South America) 0 10
Derivatives May be used with prior authorisation of the Board
Hedging Currency hedges may be put in place with Board approval to protect against
foreign exchange movements on the capital and income accounts
Stock-lending Up to 30% of the market value of the Portfolio may be lent
Gearing A ceiling on net gearing of 50% is applied. Typically net gearing, (i.e.
gearing net of cash), is between 10% and 20% of the total Trust value. The
Board retains the ability to reduce equity exposure so that net cash is above
10% if deemed appropriate. Refer to page 168 of the full annual report and
accounts for calculation of gearing
Daily dealing limit Net purchases in any dealing day are to be limited to £30 million unless
prior Executive approval is obtained
Underwriting Permitted capital at risk up to 5% of the value of the Portfolio
Corporate approval Where indicated, the investment managers must obtain prior approval to exceed
permitted limits either through Board or Executive approval. Executive
approval shall be the approval of either the Board Chair or the Chief
Executive Officer. The Board may make non-material adjustments or changes to
the investment policy from time to time. Any changes to the investment policy,
which the Board deem to be material, require prior shareholder approval
Agreement with the investment managers
The appointed investment managers are Janus Henderson Investors (JHI). James
Henderson and Laura Foll are the individuals from JHI that deal with the day
to day portfolio management.
On a fully discretionary basis, our investment managers are responsible for
implementing the Company's investment strategy. The contract is terminable by
either side on six months' notice.
The agreement with Janus Henderson does not cover custody, which is the
responsibility of the depositary (see section on regulatory compliance in the
Directors' Report, page 67 of the full annual report and accounts). It also
does not cover the preparation of data associated with investment performance
or record keeping, both of which remain the responsibility of the Company.
Fee structure and ongoing charges
Investment trusts are required to publish their ongoing charges ratio. This is
the cost of operating the trust and includes the investment management fee,
depositary and custody fees, investment performance data, accounting, company
secretary and related back office administrative people and insurance costs.
The Group continues to have one of the more competitive fee structures in the
UK Equity Income Sector. The investment management fee is charged at 0.30%
p.a. of the net assets of the Group (excluding the net assets of IPS),
calculated on the basis adopted in the audited financial statements. The
management charge reduces to 0.275% for net assets over £1.5bn and 0.25% for
assets over £2.5bn. The ongoing charges are 0.56%.
No performance fee is paid to the investment manager.
Reappointment of the investment managers
On an annual basis, at a minimum, the Board assesses whether the investment
managers should be reappointed. The key criterion for assessment is the
long-term performance of the Portfolio.
Given Janus Henderson's proven record of performance, and the competitive fee
arrangements in place, the Board has concluded that the continued appointment
of our existing investment managers remains in the interests of our
shareholders.
Gearing and long-term borrowing
Investment trusts have the benefit of being able to 'gear' their portfolios
according to market conditions. This means that they can raise debt (either
short or long-term) to generate funds for further investment. These funds can
be used to increase the size of the Portfolio. Alternatively, assets from
within the Portfolio can be sold to reduce debt and the Portfolio can even be
'negatively geared'. This means selling assets to hold cash so that less than
100% of the Company's assets are invested in equities. At 31 December 2025,
our gearing was 12% (2024: 11%) (refer to page 168 of the full annual report
and accounts).
The Group has four debentures (long dated sterling denominated financing)
details of which are on page 157 of the full annual report and accounts. The
weighted average interest payable on the debentures is 3.96% (2024: 3.96%).
During the year, the Group made arrangements to put in place a £50m term loan
and £50m revolving credit facility for a 3-year term. Interest is charged at
Sterling Overnight Index Average ('SONIA') plus 140bp margin.
The fair value of borrowings held by the Group is disclosed in note 20 in the
full annual report and accounts. The fair value calculation of all borrowings
benchmarks the Group debt against A-rated UK corporate bond yields.
Valuation of our IPS business
Accounting standards require us to consolidate the income, costs and taxation
of the IPS business into the Consolidated Statement of Profit or Loss below.
The assets and liabilities of the business are also consolidated into the
Group column of the statement of financial position below. A segmental
analysis is provided in note 6 (pages 140 and 141 of the full annual report
and accounts) to these accounts which shows a detailed breakdown of the split
between the Portfolio and the IPS business.
Consolidating the value of the IPS business in this way does not fully
recognise the value created for shareholder by the IPS business in the NAV. To
address this, the NAV we publish for the Group includes the fair value for the
standalone IPS business.
In determining the calculation basis for the fair valuation of the IPS
business, the Board continues to take appropriate external professional advice
from PwC.
From 31 December 2024, an income-based valuation approach was adopted that
follows a discounted cashflow ("DCF") analysis based on business forecasts
These are adjusted to reflect fair value assumptions a hypothetical
third-party would apply in valuing the business. An appropriate cost of equity
is determined through consideration of comparable entities to build a discount
rate and applied to the discrete forecast period and projected free cashflows
in estimating the terminal value. PwC provide a valuation range from which the
Board select a value.
The calculation of the IPS valuation and methodology used is described in note
13 in the full annual report and accounts. As a cross check, the implied
multiples for 31 December 2024 and 2025 are calculated by dividing the DCF IPS
valuation by the underlying EBITDA (see APM on page 170 of the full annual
report and accounts).
Valuation guidelines require that the fair value of the IPS business be
established on a stand-alone basis. Therefore, the valuation does not reflect
the value of Group tax relief applied from the investment trust to the IPS
business.
It is hoped that our continued initiatives to achieve growth into the IPS
business will result in a corresponding increase in valuation over time. As
stated above, management is again aiming to achieve mid to high single
percentage growth in 2026. The total valuation (excluding surplus net assets)
of the business has increased by £130m/166% since the first valuation of the
business as at 31 December 2015. The uplift reflects the IPS business
delivering revenue and underlying profit growth.
In order to assist investors, the fair value of the IPS business for the last
ten years is provided in the Annual Report within the 10-year record on page
41 of the full annual report and accounts.
Calculation of NAV per share
The table below shows how the NAV at fair value is calculated. The value of
assets already included within the NAV per the Group statement of financial
position that relate to the IPS business have been removed (£30.5m) and
substituted with the calculation of the fair value and surplus net assets of
the business £233.0m. An adjustment of (£11.2m) is made to reflect the third
interim dividend unpaid at the year-end and included in reported NAV. A
further adjustment of £47.0m 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 31 December 2025 of £1,440.4m or 1,081.49 pence per
share.
31 December 2025 31 December 2024
£000 Pence per share £000 Pence per share
Net asset value (NAV) per Group statement of financial position* 1,202,075 902.58 931,371 706.18
Fair valuation of IPS 208,665 156.68 194,505 147.48
IPS Net Assets attributable to IPS valuation 24,378 18.30 18,811 14.26
Fair value of IPS business 233,043 174.98 213,316 161.74
Removal of IPS net assets included in Group net assets (30,517) (22.91) (25,921) (19.65)
Fair value uplift for IPS business 202,526 152.07 187,395 142.09
3(rd) Interim dividend, announced but unpaid at 31 December* (11,216) (8.42) (10,607) (8.04)
Debt fair value adjustment 46,972 35.27 42,353 32.11
NAV at fair value 1,440,357 1,081.49 1,150,512 872.34
NAV attributable to IPS 233,041 16% 213,316 19%
See commentary for the breakdown of the assets already included in the NAV per
the financial statements.
The NAV at fair value per Annual Report is calculated above. This differs to
the 'published' NAV at fair value for 31 December 2025 (year end NAV released
by RNS on 2 January 2026). As such, please see below for a reconciliation:
31 December 2025
£000 Pence per share
Reconciliation of Published NAV to Annual Report NAV:
NAV cum income with debt at FV - published 1,436,253 1,078.41
Reconciliation of shareholders' funds to net assets:
Published NAV (1,192,598) (895.46)
Annual Report NAV* 1,202,075 902.58
Revised IPS valuation uplift:
Published NAV (valuation per 30 June 2025) (196,705) (147.70)
Annual Report NAV 202,526 152.07
Revised Fair Value of Debentures:
Published NAV (46,950) (35.25)
Annual Report NAV 46,972 35.27
3(rd) Interim dividend, announced but unpaid at 31 December* (11,216) (8.42)
Total NAV at fair value per Annual Report 1,440,357 1,081.49
* The comparative has been restated to reflect dividend restatement removed
from shareholders' funds. Refer to note below. The basis of the NAV at fair
value is unchanged (Refer to APM on page 167 of the full annual report and
accounts).
Our approach to risk
The Board has carried out a robust assessment of the principal and emerging
risks and uncertainties facing the Group, including those that could threaten
its business model, future performance, solvency, liquidity or reputation. The
Group's risk management and internal control framework is embedded in everyday
operations and subject to ongoing enhancements to ensure it remains effective
and responsive to the evolving risk landscape.
During the year, the Board has evolved its risk management approach to
facilitate more strategic, holistic oversight of risks across both the
Investment Portfolio and the IPS business. This evolution represents a shift
from compliance-focused risk oversight towards a comprehensive framework that
concentrates on the risks most critical to the success of Law Debenture.
The objective of our risk management framework is not to eliminate all risks
but to understand, appropriately mitigate and actively manage them while
seeking to deliver on our strategic objectives. A mature risk management
approach enables us to anticipate potential challenges, identify opportunities
to support informed decision-making, and pursue growth and innovation while
maintaining appropriate safeguards for the protection of shareholder value.
Governance and Oversight
The Audit and Risk Committee assists the Board by providing oversight of the
Group's risk management framework and internal controls. The Committee's
responsibilities include reviewing principal and emerging risks to the Group,
assessing the adequacy of controls in place to mitigate those risks, receiving
quarterly reports from the Group Risk team, and ensuring the risk management
framework remains relevant and effective.
Group risk summary and mitigating actions
PRINCIPAL GROUP RISKS CHANGES TO RISK IN 2025 MITIGATING FACTORS
1. Investment Performance and Market Risk
The risk of the Portfolio failing to deliver and/or failing to consider and UNCHANGED · Market risk is an accepted risk given the nature of the Portfolio. To
react to market conditions to deliver the strategic objectives to:
manage this inherent risk, the Board regularly reviews the investment
Continued geopolitical tensions present elements of uncertainty, and global managers' report including risk indicators, MI, and other financial
economic pressures continue to have an unfavourable impact on global markets information. The Board engages in open dialogue, robust discussion and
and therefore the Portfolio. High global inflation in the year undermines the provides challenge to the investment managers on their approach and
value of investment returns. performance, seeking explanations from the investment managers where
performance is not in line with our objectives.
· Achieve long-term capital growth.
· Deliver steadily increasing income
· Achieve a rate of return greater than the FTSE Actuaries All-Share Index, · The investment trust is closed ended and therefore does not have to sell
our benchmark. investments to provide liquidity to shareholders who wish to sell. This
enables our investment managers to invest for the long-term.
The principal risk is a material decline in the value of the NAV and · To mitigate leverage risk, all borrowings require the prior approval of
under-performance against the benchmark. Investment performance and market the Board and gearing ratios are kept under close review by the Board. We have
risk are the largest risks to which the Group is exposed. substantial headroom on all of our debt covenants.
Our investment risk includes market risk, gearing risk, credit risk, leverage
risk and liquidity risk.
2. Cyber, Technology and Systems Risk
The threat of unauthorised or malicious attacks on our IT systems is an INCREASED · The Group is Cyber Essentials Plus certified, the highest level of
ongoing risk. We rely on a set of critical IT systems which are fundamental to
certification offered under the Government-backed, industry-supported Cyber
the day-to-day running of the business, as in any technology-enabled business. Cyber threats continue to evolve, requiring ongoing vigilance and investment Essentials scheme.
in resilience measures. We continue to strengthen our security posture through
implementing enhanced access controls and data protection capabilities.
Failures in these systems could lead to reduced revenue, increased costs, · All staff trained on cyber security risks including phishing training and
liability claims, or harm to our reputation or competitive position. The testing.
systems of Janus Henderson, our investment managers, are also considered under
this risk type.
· We are continually investing in our IT security framework including
working with industry-recognised best-in-class security providers.
· We have an information security governance structure to help identify and
mitigate threats.
· As part of our ongoing oversight of Janus Henderson's control environment,
Law Debenture's Group Risk team have specifically reviewed their information
security and business continuity/disaster recovery plans.
· Industry standard cyber insurance is in place to mitigate financial loss.
3. IPS Concentration Risk
The unique setup of the Group as a Portfolio alongside an unquoted IPS UNCHANGED · The IPS business comprises a diversified range of services with little
business, which represents 16% of NAV and accounted for 30.9% of revenue
client concentration risk.
return per share in 2025, creates an illiquid concentration risk. The IPS business includes some counter-cyclical services which may help to
counteract any adverse market conditions for other business lines.
Failure to deliver on the IPS strategy could result in a significant reduction · The CEO and COO are accountable for the day-to-day running and operation
in valuation of the Group's largest asset, thereby putting pressure on our of the IPS business with independent oversight and challenge from the
ability to meet our stated objective of long-term capital growth, and steadily Non-Executive Directors. The performance of the IPS business is reviewed at
increasing income. all Board meetings.
IPS Concentration Risk also includes aggregation of litigation, compliance, · The annual IPS budget is subject to review and approval by the Board which
regulatory and internal control failures and people risk. provides robust scrutiny and challenge on IPS strategic plans.
· Any significant IPS investment requires Board approval. This reduces the
risk of unplanned concentration risk.
· Valuation of the IPS business takes into account the illiquid nature of
the holding. This is reviewed and approved by the Audit and Risk Committee.
· The Audit and Risk Committee has oversight of internal control findings
from second/third line and external audit.
Emerging risks
Emerging risks are those identified by Law Debenture, where the potential
impact and/or likelihood is not yet fully known. The firm monitors the
evolution of these risks and associated mitigants.
Artificial Intelligence Adoption: The principal risk relating to artificial
intelligence is the failure to adopt and integrate AI capabilities
effectively. Organisations that do not develop appropriate AI strategies risk
operational inefficiencies, reduced competitive positioning, and missed
opportunities to enhance decision-making and risk management capabilities. Law
Debenture continues to assess where AI can deliver meaningful value across the
investment portfolio and IPS business, whilst developing appropriate
governance frameworks to support effective implementation.
Viability Statement
The Board has considered the Group's current financial position and the
potential impact of its principal risks and uncertainties, and have a
reasonable expectation that the Group will be able to continue in operation
and meet its liabilities as they fall due for a period of five years from the
date of in the full annual report and accounts.
In assessing the viability of the Group over the review period, the Board have
considered a number of key factors, including:
Our business model & strategy
• The Board seeks to ensure that the Group delivers long-term performance.
The closed ended nature of the investment trust creates a stable capital basis
which enables our Investment Manager's to take a longer term view in their
construction and management of the portfolio. This mitigates the risk to the
Group of potential liquidity issues should shareholders wish to sell their
shares, avoiding any untimely requirements to sell down the portfolio.
• As an Investment Trust, we benefit from the unique structure of a
predominately UK-based equity portfolio with a diversified revenue stream
arising from the IPS business. As demonstrated by our long-term performance,
the combination of the Investment Portfolio and the IPS revenue streams
provide protection to the long-term viability of the Group. Over a five year
period, the share-price total return is 85.0%. The NAV total return with debt
at FV is 96.6% compared to the FTSE Actuaries All-Index Total Return of 73.9%.
• One of the principal group risks relates to investment strategy and
market performance. Part of the risk to the Group is that a breach of our debt
covenants resulting in a requirement for the Group to repay the debentures at
short notice, potentially requiring the sale of assets during a market
downturn. Whilst the Board acknowledges this risk, the uncertainty arising due
to the Covid pandemic and more recently the macroeconomic environment
demonstrates the Group's ability to navigate these challenges. At the height
of market decline on 23 March 2020, the Group maintained significant headroom
on all covenants.
• The IPS business currently holds enough working capital to meet any
short-term requirements of the Group and our book of clients provides a
steady, largely reoccurring, flow of income. There has been a concerted focus
on debtor management which has enhanced IPS cashflow over the past year,
improving our working capital cycle.
Furthermore, the majority of the portfolio is invested in UK listed securities
which are traded on major stock exchanges, providing the Group with the
ability to quickly liquidate assets, should the need arise.
• The investment Trust has an ongoing charge of 0.56% (2024: 0.51%). This
is the fifth lowest OCR in the UK Equity Income sector(1).
1 Source: The AIC Compare investment companies | The AIC at 31/12/2025
Our Business Operations
· The investment trust retains ownership of all assets held by the Custodian
under the terms of formal agreements with the Custodian and Depositary. This
supports our ability to meet our Legal and Regulatory requirements and acts as
a control to both verify the existence of our assets and further safeguard the
interests of our Shareholders.
· The Group's cash is all held with banks approved by the Board. The Group's
cash balance, including money market funds, as at 31 December 2025 amounted to
£43.8m (31 December 2024: £38.4m) of which, IPS held £17.7m. Cash is
treated as a fungible across the Group and it is deployed on a basis of need
with periodic clear down of inter-company balances via an intra-group net-off
agreement.
· There is long term borrowing in place comprising four debentures.
Maturity date Par Value Interest
2034 £40m 6.125%
2041 £20m 2.54%
2045 £75m 3.77%
2050 £30m 2.53%
Total £165m (weighted average) 3.96%
The weighted average cost of borrowing is 3.96%. Each debenture is subject to
a formal agreement, including financial covenants which the Group has complied
with in full during the year. As at the end of December, net gearing was 12%
which is well within the typical operating range of 10%-20% of the Investment
Trust sector.
· During December 2025, the Group decided to put in place a £50m term loan
and £50m revolving credit facility ("RCF") with RBSI, both for a 3-year term.
The £50m unsecured overdraft facility previously held with HSBC was
terminated. The RCF is currently undrawn and provides further mitigation
against liquidity risk.
· The Board reviews the Portfolio performance including revenue forecasts,
along with other key metrics such as gearing at each Board Meeting and
receives monthly financial reporting to monitor and manage the principal risk
relating to investment performance.
In addition to this, the Board carries out an assessment of our principal
risks and uncertainties which could threaten the Group's business model. This
assessment has been shared separately and is presented as part of the annual
report. As part of this exercise, the Board has assessed the emerging risks
which may impact the operations of the Group and will continue to actively
review the likely impact of these potential risks. This is set out above.
The Board do not consider any ongoing geo-political events will have material
impact on the long-term viability of the Group, given the headroom identified
in the risk sensitivities from the far more extreme scenarios.
In light of the current conditions, the Board has considered the Group's
current financial position and the potential impact of its principal risks and
uncertainties, and has a reasonable expectation that the Group will be able to
continue in operation and meet its liabilities as they fall due for a period
of five years from the date of this report.
Balance sheet resilience
As at the 31 December 2025, Law Debenture Corporation held total investments,
including cash and the IPS business of £1.60bn (31 December 2024: £1.30bn).
With the exception of the IPS business, the majority of these assets are
liquid and could be sold down within a short period of time, i.e. less than 10
working days.
The Board and the Executive Leadership team have actively monitored the cash
position across the Group throughout the year, mindful of our commitment to
pay quarterly dividends to shareholders. As of 31 December 2025, the Group
holds cash of £43.8m (31 December 2024: £38.4m). In addition to this, the
Group has an undrawn RCF facility of £50m to protect against any significant
reduction in cash inflows.
Extracts from the Directors' Report
Repurchase and issue of shares
At the 2025 AGM, the Directors were given power to buy back up to 19,876,103
ordinary shares or, if less, the number of shares equal to 14.99% of the
Company's issued share capital at that date. During the year, the Company did
not repurchase any of its shares for cancellation. This authority will expire
at the 2026 AGM. The Company intends to seek shareholder approval to renew its
powers to repurchase shares for cancellation up to 14.99% of the Company's
issued share capital if circumstances are appropriate, at the 2026 AGM.
The Directors were also given power to allot up to 26,519,150 ordinary shares
at the 2025 AGM. From the 2025 AGM to 9 March 2026 the Company issued a total
of 1,300,324 ordinary shares under its share issuance programme and its SAYE
scheme. The authority will expire at the 2026 AGM at which the Company intends
to seek shareholder approval to renew its powers to issue shares up to 20% of
the Company's share capital in issue at 9 March 2026.
Donations
The Company made charitable donations totalling £1,200 (2024: £1,750 to
Place2Be) to Mind Mental Health Charity, Marie Curie and Samaritans. The
Company did not make any political donations (2024: £nil).
Share capital and significant shareholdings
The Company's share capital is made up of ordinary shares with a nominal value
of 5 pence each. The voting rights of the shares on a poll are one vote for
every share held. There are no restrictions on the transfer of the Company's
ordinary shares or voting rights and no shares which carry specific rights
with regard to the control of the Company. There are no other classes of share
capital and none of the Company's issued shares are held in treasury. As at 31
December 2025, there were 133,921,079 ordinary shares in issue with
133,921,079 voting rights. Note 17 in the full annual report and accounts
includes details of share capital changes in the year.
As at 31 December 2025, there were no shareholders that had notified the
Company of a beneficial interest of 3% or more of the issued share capital.
Additionally, no such disclosures had been made to the Company as at 10 March
2026. Share information as required by section 992 of the Companies Act 2006
appears at pages 37 and 150 of the full annual report and accounts.
Directors' responsibility statement pursuant to DTR4
The Directors confirm to the best of their knowledge that:
• the financial statements have been prepared in accordance with
international financial reporting standards adopted pursuant to Regulation
(EC) No 1606/2002 as it applies in the European Union and give a true and fair
view of the assets, liabilities, financial position and profit and loss of the
Group; and
• the Annual Report includes a fair review of the development and
performance of the business and the financial position of the Group, together
with a description of the principal risks and uncertainties that they face.
Extract from the Audit and Risk Committee Report
Significant financial issues relating to the 2025 accounts
The UK Corporate Governance Code requires the Committee to describe any
significant issues considered in relation to the 2025 financial statements and
how those issues were addressed.
The significant issues and judgements considered by the Committee include the
valuation of IPS, IPS revenue recognition, debtor recoverability and
discussions around the control environment.
In November 2025, Law Debenture received a letter from the Financial Reporting
Council (FRC), as part of its regular review and assessment of corporate
reporting in the UK, requesting further information in relation to the 2024
Annual Report and Accounts. The matters raised through this review were
considered by the Committee, and all agreed changes have been incorporated
into the 2025 financial statements, including the restatement of prior year
comparatives, related to our incorrect inclusion of a liability for our third
interim dividend at 31 December 2024, as set out in the note below. The
Committee welcomed the FRC's review and its contribution to our shared
objective of continually enhancing the quality and transparency of our
corporate reporting.
No new significant issues arose during the course of the external audit. There
continued to be a focus on embedding improved Finance operations and we have
continued to make investments in this area to support the strategy for long
term growth. We are pleased with the progress made and the improved control
environment.
The Committee is satisfied that the judgements made by management are
reasonable and that appropriate disclosures have been included in the
accounts. The Committee was able to conclude and report to the Board that the
financial statements themselves and the Annual Report as a whole are fair,
balanced and understandable and provide the necessary information for
shareholders to assess the Company and Group's position and performance,
business model and strategy.
FINANCIAL STATEMENTS
Consolidated Statement of Profit or Loss
For the year ended 31 December 2025
Note in the Annual Report 2025 2024
Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
UK dividends 37,172 - 37,172 32,328 - 32,328
UK special dividends 457 589 1,046 - 1,432 1,432
Overseas dividends 2,655 - 2,655 2,373 - 2,373
Total dividends income 40,284 589 40,873 34,701 1,432 36,133
Interest income 5 1,263 - 1,263 739 - 739
Independent professional service fees 6 66,699 - 66,699 61,659 - 61,659
Other Income 2,752 - 2,752 1,204 - 1,204
Total income 110,998 589 111,587 98,303 1,432 99,735
Net gain on investments held at fair value through P&L 2 - 262,650 262,650 - 76,301 76,301
Total income and capital gains 110,998 263,239 374,237 98,303 77,733 176,036
Cost of sales (9,569) - (9,569) (8,212) - (8,212)
Goodwill impairment 10 - - - - (17,037) (17,037)
Administrative expenses 3 (47,265) (3,120) (50,385) (42,685) (2,706) (45,391)
Operating profit 54,164 260,119 314,283 47,406 57,990 105,396
Interest payable 5 (2,306) (4,908) (7,214) (1,640) (4,908) (6,548)
Profit before taxation 6 51,858 255,211 307,069 45,766 53,082 98,848
Taxation 7 (2,399) - (2,399) (1,897) - (1,897)
Profit for the year 6 49,459 255,211 304,670 43,869 53,082 96,951
Return per ordinary share (pence) 9 37.26 192.28 229.54 33.48 40.51 73.99
Diluted return per ordinary share (pence) 9 37.26 192.24 229.50 33.48 40.51 73.99
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2025
2025 2024
GROUP Note in the AnnualReport Revenue Capital Total Revenue Capital Total
£000 £000 £000 £000 £000 £000
Profit for the period 49,459 255,211 304,670 43,869 53,082 96,951
Foreign exchange (loss) on translation of foreign operations (488) (66) (554) (219) (4,541) (4,760)
Pension actuarial gains 23 1,718 - 1,718 2,738 - 2,738
Taxation 7 (529) - (529) (499) - (499)
Other Comprehensive income/ (loss) for the year 701 (66) 635 2,020 (4,541) (2,521)
Total comprehensive income for the period 50,160 255,145 305,305 45,889 48,541 94,430
Statement of Financial Position
As at 31 December 2025
Non current assets Note in the Annual Report GROUP COMPANY
31 Dec 2025 Restated* Restated* 31 Dec 2025 Restated* Restated*
£000 31 Dec 2024 1 Jan 2024 £000 31 Dec 2024 1 Jan 2024
£000 £000 £000 £000
Goodwill 10 1,937 1,976 19,006 - - -
Property, plant and equipment 11 1,480 1,958 2,267 - - -
Right-of-use assets 22 3,233 3,822 4,131 - - -
Other intangible assets 12 1,831 2,631 3,034 16 16 16
Investments held at fair value through profit or loss 13 1,357,645 1,042,039 965,226 1,357,645 1,041,938 965,126
Investments in subsidiary undertakings 13 - - - 61,071 61,176 61,368
Retirement benefit asset 23 12,531 10,475 7,440 - -
Total non-current assets 1,378,657 1,062,901 1,001,104 1,418,732 1,103,130 1,026,510
Current assets
Trade and other receivables 14 14,647 17,758 21,496 4,003 2,700 3,014
Contract assets 14 7,239 6,659 8,604 246 4 -
Corporation tax receivable 1,263 - - - - -
Cash and cash equivalents 15 43,775 38,354 31,439 26,047 26,453 12,382
Total current assets 66,924 62,771 61,539 30,296 29,157 15,396
Total assets 1,445,581 1,125,672 1,062,643 1,449,028 1,132,287 1,041,906
Current liabilities
Amounts owed to subsidiary undertakings 19 - - - 29,186 25,537 18,558
Trade and other payables 16 9,786 8,382 12,550 1,909 1,182 1,020
Lease liability 22 708 1,018 1,025 - - -
Corporation tax payable - 2,297 2,198 - - -
Other taxation including social security 1,815 2,266 1,842 - 25 839
Contract liabilities 16 7,696 8,996 8,000 11 10 8
Total current liabilities 20,005 22,959 25,615 31,106 26,754 20,425
Non-current liabilities and deferred income
Borrowings 20 213,918 163,868 163,889 174,313 124,295 124,343
Contract liabilities 16 3,481 1,866 2,403 - - -
Deferred tax liability 7 2,572 1,418 1,788 - - -
Lease Liability 22 3,530 4,190 4,716 - - -
Total non-current liabilities 223,501 171,342 172,796 174,313 124,295 124,343
Total net assets 1,202,075 931,371 864,232 1,243,609 981,238 897,138
Equity
Called up share capital 17 6,696 6,626 6,557 6,696 6,626 6,557
Share premium 11,144 119,449 107,110 11,144 119,449 107,110
Special Reserve (Non-Distributable) 160 - - 160 - -
Own shares 17 (5,770) (5,156) (3,926) - - -
Capital redemption 8 8 8 8 8 8
Translation reserve 7,197 7,197 2,659 - - -
Capital reserves 18 997,962 742,817 694,276 1,065,136 810,265 740,145
Retained earnings 184,678 60,430 57,548 160,465 44,890 43,318
Total equity 1,202,075 931,371 864,232 1,243,609 981,238 897,138
Total equity pence per share 902.58 706.18 661.73
* Restated as per note below.
As permitted by Section 408 of the Companies Act 2006, the Company has not
presented its own income statement. However, its profit for the year was
£297,507k (2024: profit £114,793k). The financial statements were approved
by the Board of Directors and authorised for issue on 10 March 2026. They were
signed on its behalf by:
R. Hingley, Board Chair | D. Jackson, Chief Executive Officer
Consolidated Statement of Changes in Equity
As at 31 December 2025
Group Statement of Changes in Equity Share Share Own Special Capital Translation Capital Retained Total
capital premium shares Reserve redemption reserve reserves earnings £000
£000 £000 £000 (Not Dist.) £000 £000 £000 £000
£000
Balance at 1 January 2025 (Restated) 6,626 119,449 (5,156) - 8 7,197 742,817 60,430 931,371
Profit for the period - - - - - - 255,211 49,459 304,670
Foreign exchange & other - - - - - - (66) (488) (554)
Actuarial gain on pension scheme (net of tax) - - - - - - - 1,189 1,189
Total comprehensive profit for the period - - - - - - 255,145 50,160 305,305
Issue of shares 70 11,573 (614) - - - - - 11,029
Dividends relating to 2024 - - - - - - - (23,203) (23,203)
Dividends relating to 2025 - - - - - - - (22,427) (22,427)
Transfer from share premium - (119,878) - 160 - - - 119,718 -
Total equity at 31 December 2025 6,696 11,144 (5,770) 160 8 7,197 997,962 184,678 1,202,075
Group Statement of Changes in Equity Share Share Own Special Capital Translation Capital Retained Total
capital premium shares Reserve redemption reserve reserves earnings £000
£000 £000 £000 (Not Dist.) £000 £000 £000 £000
£000
Balance at 1 January 2024 6,557 107,110 (3,926) - 8 2,659 694,276 47,545 854,229
Effect of accrued dividend restatement (Note 29) - - - - - - - 10,003 10,003
Balance at 1 January 2024 (Restated) 6,557 107,110 (3,926) - 8 2,659 694,276 57,548 864,232
Profit for the period - - - - - - 53,082 43,869 96,951
Deconsolidation of liquidated entities - - - - - 4,538 (4,538) - -
Foreign exchange & other - - - - - - (3) (219) (222)
Actuarial gain on pension scheme (net of tax) - - - - - - - 2,239 2,239
Total comprehensive profit for the period - - - - - 4,538 48,541 45,889 98,968
Issue of shares 69 12,339 (1,230) - - - - - 11,178
Dividends relating to 2023 (Restated) - - - - - - - (21,974) (21,974)
Dividends relating to 2024 (Restated) - - - - - - - (21,033) (21,033)
Total equity at 31 December 2024 6,626 119,449 (5,156) - 8 7,197 742,817 60,430 931,371
Capital reserves comprise realised and unrealised gains and losses on
investments held at fair value (see note 18 in the full annual report and
accounts).
Please refer to Note 8 in the full annual report and accounts for details of
dividends paid.
Please refer to note below for restatement of retained earnings.
Statement of Changes in Equity
As at 31 December 2025
Company Statement of Changes in Equity Share Share Special Capital Capital Retained Total
capital premium Reserve redemption reserves earnings £000
£000 £000 (Not Dist.) £000 £000 £000
£000
Balance at 1 January 2025 (Restated) 6,626 119,449 - 8 810,264 44,890 981,238
Profit for the period - - - - 255,211 42,296 297,507
Foreign exchange & other - - - - (339) (809) (1,149)
Total comprehensive profit for the period - - - - 254,871 41,487 296,358
Issue of shares 70 11,573 - - - - 11,643
Dividend relating to 2024 - - - - - (23,203) (23,203)
Dividends relating to 2025 - - - - - (22,427) (22,427)
Transfer from Share Premium - (119,878) 160 - - 119,718 -
Total equity at 31 December 2025 6,696 11,144 160 8 1,065,136 160,465 1,243,609
Company Statement of Changes in Equity Share Share Special Capital Capital Retained Total
(Restated) capital premium Reserve redemption reserves earnings £000
£000 £000 (Not Dist.) £000 £000 £000
£000
Balance at 1 January 2024 6,557 107,110 - 8 740,146 33,315 887,135
Effect of accrued dividend restatement (Note 29) - - - - - 10,003 10,003
Balance at 1 January 2024 (Restated) 6,557 107,110 - 8 740,146 43,318 897,138
Profit for the period - - - - 70,119 44,674 114,793
Foreign exchange & other - - - - - (95) (95)
Total comprehensive profit for the period - - - - 70,119 44,579 114,698
Issue of shares 69 12,339 - - - - 12,408
Dividend relating to 2023 (Restated) - - - - - (21,974) (21,974)
Dividends relating to 2024 (Restated) - - - - - (21,033) (21,033)
Total equity at 31 December 2024 6,626 119,449 - 8 810,265 44,890 981,238
Capital reserves comprise realised and unrealised gains and losses on
investments held at fair value (see note 18 in the full annual report and
accounts).
Please refer to note 8 in the full annual report and accounts for details of
dividends paid.
Please refer to note below for restatement of retained earnings.
Cash Flow Statement
For the year ended 31 December 2025
Notes in Annual Report GROUP COMPANY
2025 2024 2025 2024
£000 £000 £000 £000
Cash flows from operating activities 28 16,937 11,070 (6,640) (6,319)
Cash dividends received 39,568 36,578 47,772 50,828
Interest received 5 647 - 146 -
Taxation paid (5,332) (770) - -
Cash generated from operating activities 51,820 46,878 41,278 44,509
Investing activities
Acquisition of property, plant and equipment 11 (155) (268) - -
Expenditure on intangible assets 12 (337) (275) - -
Purchase of investments (less cost of acquisition) 13 (185,522) (193,394) (185,522) (193,394)
Sale of investments 13 132,566 192,881 132,566 192,881
Interest received 5 - 739 - 449
Cash flow from investing activities (53,448) (317) (52,956) (64)
Financing activities
Interest paid (7,131) (6,294) (7,240) (6,652)
Dividends paid 8 (45,630) (43,012) (45,630) (43,012)
Payment of lease liabilities 22 (1,256) (1,295) - -
Proceeds from issuance of share capital 11,643 12,408 11,643 12,408
Purchase of own shares 17 (614) (1,230) -
Proceeds from new loans 50,000 - 50,000 -
Movement in amounts owed to subsidiary undertakings - - 2,501 6,977
Net cash flow from financing activities 7,012 (39,423) 11,274 (30,279)
Net increase/(decrease) in cash and cash equivalents 5,384 7,138 (404) 14,166
Cash and cash equivalents at beginning of year 38,354 31,439 26,453 12,382
Foreign exchange gains/(losses) on cash and cash equivalents 37 (223) (2) (95)
Cash and cash equivalents at end of period 43,775 38,354 26,047 26,453
Extracts from the Notes to the Accounts
Going concern
The Directors have considered the impact of the current economic uncertainty,
across the Group, including cash flow forecasting, balance sheet review at
entity level, a review of covenant compliance including the headroom above the
covenants and an assessment of the liquidity of the Portfolio. Whilst the
debentures held are subject to covenants, the Directors are comfortable that
the risk of breach is minimal, and the current economic environment does not
create material uncertainty for the Group.
The assets of the Group consist largely of securities that are readily
realisable, and it will be able to meet its financial obligations, including
the repayment of the debenture interest, as they fall due for a period of at
least twelve months from the date of approval of the financial statements.
Accordingly, the Directors believe that the Group has adequate resources to
continue in operational existence for at least twelve months from the date of
approval of the financial statements.
Having assessed these factors and the principal risks, the Directors are not
aware of any other material uncertainties that cast significant doubt on the
Group's ability to continue as a going concern.
Segment analysis
Group Segmental Analysis Investment Portfolio IPS Total
2025 2024* 2025 2024 2025 2024*
£000 £000 £000 £000 £000 £000
Revenue
Dividend income 40,284 34,701 - - 40,284 34,701
IPS Revenue:
Corporate Services - - 30,968 28,260 30,968 28,260
Corporate Trust - - 18,984 16,524 18,984 16,524
Pensions - - 16,747 16,875 16,747 16,875
Segment Income 40,284 34,701 66,699 61,659 106,983 96,360
Other Income 2,752 1,204 - - 2,752 1,204
Cost of sales (549) (214) (9,020) (7,998) (9,569) (8,212)
Administration costs (note 3) (6,245) (4,025) (41,020) (38,660) (47,265) (42,685)
Profit before interest and tax 36,242 31,666 16,659 15,001 52,901 46,667
Interest payable (net) (note 5) (2,088) (1,184) 1,045 283 (1,043) (901)
Profit before tax 34,154 30,482 17,704 15,284 51,858 45,766
Income Tax - - (2,399) (1,897) (2,399) (1,897)
Profit for the year 34,154 30,482 15,305 13,387 49,459 43,869
Revenue return per ordinary share (pence) 25.73 23.26 11.53 10.22 37.26 33.48
Assets 1,388,001 1,071,082 57,581 54,590 1,445,582 1,125,672
Liabilities (216,443) (165,632) (27,064) (28,669) (243,507) (194,301)
Total net assets 1,171,558 905,450 30,517 25,921 1,202,075 931,371
*2024 comparative liabilities have been restated refer to note below for
further detail.
The table below shows the segment results adjusted for the goodwill impairment
and non-recurring administration expenses, in IPS for FY24 only.
Adjusted profit before interest and tax 36,242 31,666 16,659 16,037 52,901 47,703
Adjusted profit before tax 34,154 30,482 17,704 16,320 51,858 46,802
Adjusted profit after tax 34,154 30,482 15,305 14,423 49,459 44,905
Adjusted revenue return per share 25.73 23.26 11.53 11.01 37.26 34.27
Geographic location of revenue: Approximately 92% of revenue is based in the
UK. Geographic location is based on the jurisdiction in which the contracting
legal entity is based.
Major customers: Due to the diverse nature of the IPS revenue streams, there
is no single customer or concentration of customers that represents more than
3% of gross revenue streams.
Capital element: The capital element of the income statement comprises wholly
gains and losses relating to investments held at fair value through profit and
loss (2025: gains £262,650k; 2024: gains £76,301k), administrative expenses
(2025: £3,120k; 2024: £2,706k), interest payable (2025: £4,908k; 2024:
£4,908k) and a capital dividend received of 2025: £589k; 2024: £1,432k,
which corresponds to amounts classified as capital in nature in accordance
with the SORP are shown in the capital column of the income statement above.
Investment Portfolio Independent Professional Services Total
31 December 31 December 31 December 31 December 31 December 31 December
2025 2024 2025 2024 2025 2024
£000 £000 £000 £000 £000 £000
Other Information
Capital expenditure - - 492 912 492 912
Depreciation and amortisation - - 1,740 1,584 1,740 1,584
Depreciation - right-of-use assets - - 885 719 885 719
Financial instruments
The principal risks facing the Group in respect of its financial instruments
remain unchanged from 2024 and are:
Market risk
Price risk, arising from uncertainty in the future value of financial
instruments. The Board maintains strategy guidelines whereby risk is spread
over a range of investments, the number of holdings normally being between 70
and 175. In addition, the stock selections and transactions are actively
monitored throughout the year by the investment manager, who reports to the
Board on a regular basis to review past performance and develop future
strategy. The Portfolio is exposed to market price fluctuation: if the
valuation at 31 December 2025 fell or rose by 10%, the impact on the Group's
total capital reserves for the year would have been £135.8m (2024: £104.2m).
Corresponding 10% changes in the valuation of the Portfolio on the Company's
total capital reserves for the year would have been £135.8m (2024: £104.2m).
10% has been used based on historic trends, however we will continue to
revisit this on a periodic basis.
Foreign currency risk, arising from movements in currency rates applicable to
the Group's investment in equities and fixed interest securities and the net
assets of the Group's overseas subsidiaries denominated in currencies other
than sterling. The Group's financial assets denominated in currencies other
than sterling were:
2025 2024
GROUP Investments Net monetary assets Total currency exposure Investments Net monetary assets Total currency exposure
£000 £000 £000 £000 £000 £000
US Dollar 48,461 2,848 51,309 41,391 4,101 45,492
Canadian Dollar 6,334 1 6,335 6,329 - 6,329
Euro 49,769 321 50,090 44,247 410 44,657
Danish Krone - - - 4,935 - 4,935
Swiss Franc 9,386 - 9,386 5,268 - 5,268
Hong Kong Dollar - 317 317 - 311 311
Japanese Yen 13,111 - 13,111 13,190 - 13,190
South African Rand 3,553 - 3,553 - - -
Total 130,614 3,487 134,101 115,360 4,822 120,182
The Group US dollar net monetary assets is that held by the US operations of
£1.6m (2024: £2.0m) together with £1.3m (2024: £1.4m) held by non-US
operations.
2025 2024
COMPANY Investments Net monetary assets Total currency exposure Investments Net monetary assets Total currency exposure
£000 £000 £000 £000 £000 £000
US Dollar 48,461 - 48,461 41,391 - 41,391
Canadian Dollar 6,334 - 6,334 6,329 - 6,329
Euro 49,769 - 49,769 44,247 - 44,247
Danish Krone - - - 4,935 - 4,935
Swiss Franc 9,386 - 9,386 5,268 - 5,268
Japanese Yen 13,111 - 13,111 13,190 - 13,190
South African Rand 3,553 3,553
Total 130,614 - 130,614 115,360 - 115,360
The holding in Scottish Oriental Smaller Companies Trust is denominated in
sterling but has underlying assets in foreign currencies equivalent to £8.7m
(2024: £9.4m). Investments made in the UK and overseas have underlying assets
and income streams in foreign currencies which cannot easily be determined and
have not been included in the sensitivity analysis. If the value of all other
currencies at 31 December 2025 rose or fell by 10% against sterling, the
impact on the Group's total profit or loss for the year would have been
£14.5m and £11.9m respectively (2024: £12.8m and £10.5m). Corresponding
10% changes in currency values on the Company's total profit or loss for the
year would have been the same. The calculations are based on the Portfolio at
the respective year end dates and are not representative of the year as a
whole.
Interest rate risk, arising from movements in interest rates on borrowing,
deposits and short-term investments. The Board reviews the mix of fixed and
floating rate exposures and ensures that gearing levels are appropriate to the
current and anticipated market environment. The Group's interest rate profile
was:
2025
GROUP COMPANY
Sterling HK Dollars US Dollars Euro AU Dollars £000 Sterling US Dollars Euro
£000 £000 £000 £000 £000 £000 £000
Floating rate assets 40,223 358 2,848 321 25 26,047 - -
2024
GROUP COMPANY
Sterling HK Dollars US Dollars Euro AU Dollars £000 Sterling US Dollars Euro
£000 £000 £000 £000 £000 £000 £000
Floating rate assets 33,484 311 4,101 410 - 26,453 - -
The Group holds cash and cash equivalents on short-term bank deposits and
money market funds. Interest rates tend to vary with bank base rates. The
Portfolio is not directly exposed to interest rate risk.
GROUP COMPANY
2025 2024 2025 2024
Sterling Sterling Sterling Sterling
£000 £000 £000 £000
Fixed rate liabilities 163,919 163,868 124,313 124,295
Weighted average fixed rate for the year 3.96% 3.96% 3.27% 3.27%
GROUP COMPANY
2025 2024 2025 2024
Sterling Sterling Sterling Sterling
£000 £000 £000 £000
Floating rate liabilities 50,000 - 50,000 -
Weighted average fixed rate for the year 5.13% - 5.13% -
If interest rates during the year were 1.0% higher the impact on the Group's
total profit or loss for the year would have been £300,000 credit (2024:
£256,000 credit). It is assumed that interest rates are unlikely to fall
below the current level.
The Company holds cash and cash equivalents on short-term bank deposits and
money market funds, it also has borrowings. Amounts owed to subsidiary
undertakings include £40m at a fixed rate. Interest rates on cash and cash
equivalents and amounts due to subsidiary undertakings at floating rates tend
to vary with bank base rates. A 1.0% increase in interest rates would have
affected the Company's profit or loss for the year by £197,000 credit (2024:
£145,000 credit). The calculations are based on the balances at the
respective year end dates and are not representative of the year as a whole.
Liquidity risk
Is the risk arising from any difficulty in realising assets or raising funds
to meet commitments associated with any of the above financial instruments. To
minimise this risk, the Board's strategy largely limits investments to
equities and fixed interest securities quoted in major financial markets. In
addition, cash balances are maintained commensurate with likely future
settlements. The maturity of the Group's existing borrowings is set out in
note 20 in the full annual report and accounts. The interest on borrowings is
paid bi-annually on March and September for the 2045 secured senior notes,
April and October for the 2034 secured bonds and May and November for the 2041
and 2050 senior secured notes. Interest on term loan is paid quarterly on
March, June, September and December. Refer to note 20 in the full annual
report and accounts for details of financial covenants attached to the loan
notes.
Credit risk
Credit risk is the risk arising from the failure of another party to perform
according to the terms of their contract.
The Group's maximum exposure to credit risk arising from financial assets is
£58.4m (2024: £56.1m). The Company's maximum exposure to credit risk arising
from financial assets is £30.0m (2024: £29.2m).
Cash and cash equivalents are held with banks which are rated "A-" or higher
by Standard & Poor's Rating Services. The credit risk on liquid funds and
borrowings is limited because the counterparties are banks with high
credit-ratings assigned by international credit rating agencies.
Credit risk arises on outstanding trade receivables, principally from clients
in the IPS business. The Group manages credit risk through a combination of
upfront client due diligence, contractual payment terms and ongoing monitoring
of outstanding balances. Additionally, the Group's client base is diversified
across multiple sectors and jurisdictions, which mitigates concentration risk.
Reviews are undertaken to ensure that on an ongoing basis no client accounts
for a significant proportion of revenue and trade receivables.
Specific provisions are made when there is evidence that the Group will not be
able to collect the debts from the customer and the Group writes off a trade
receivable when there is information indicating that there is no realistic
prospect of recovery. The ageing of trade receivables and the expected credit
loss at the reporting date are disclosed on page 156 in the full annual report
and accounts.
Stock lending
Stock lending agreements are transactions in which the Group lends securities
for a fee and receives cash as collateral. The Group continues to recognise
the securities in their entirety in the statement of financial position
because it retains substantially all of the risks and rewards of ownership.
Because as part of the lending arrangement the Group sells the contractual
rights to the cash flows of the securities, it does not have the ability to
use the transferred assets during the term of the arrangement.
Stock lending transactions are carried out with a number of approved
counterparties. Details of the value of securities on loan at the year end can
be found in note 27 in the full annual report and accounts. In summary, the
Group only transacts with counterparties that it considers to be credit
worthy.
Trade and other receivables
The ageing profile of the carrying value of trade receivables past due is as
follows:
GROUP COMPANY
2025 2024 2025 2024
£000 £000 £000 £000
Between 31 and 60 days 1,055 2,474 - -
Between 61 and 90 days 561 2,476 - -
More than 91 days 2,167 5,125 3 36
Total 3,783 10,075 3 36
IFRS 9 credit loss rates
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses using a lifetime expected credit loss provision for trade receivables
and contract assets. To measure expected credit losses trade receivables are
grouped based on similar risk characteristics including business area and
business geography and ageing.
The expected loss rates are estimated using the Group's historical credit
losses experienced over a three-year period prior to the year end. The
historical loss rates are adjusted for current and forward-looking information
on macroeconomic factors affecting the Group's customers. The Group has
identified gross domestic product (GDP) and unemployment trends act as key
economic indicators which may impact our customers' future ability to pay
debt.
The below table displays the gross carrying amount against the expected credit
loss provision and specific provisions. Specific provisions relate to certain
balances 91+ days overdue and the Group writes off a trade receivable when
there is information indicating that the debtor is in severe financial
difficulty and there is no realistic prospect of recovery.
The total specific and credit loss provision at 31 December 2025 is
£1,576,000 (2024: £1,975,000).
The loss allowance as at 31 December 2025 was determined as follows:
Trade receivables - days past due
Current 1 - 30 days overdue 31 - 60 days overdue 61 - 90 days overdue 91+ days overdue Total
£000 £000 £000 £000 £000 £000
31 December 2025
Expected loss rate 1.01% 1.52% 1.03% 1.04% 3.02% 1.50%
Gross carrying amount 4,952 1,533 1,055 561 2,064 10,165
Expected credit loss provision (50) (23) (11) (6) (62) (152)
Specific provision - - - - (1,423) (1,423)
Net carrying amount 4,902 1,510 1,044 555 579 8,590
The loss allowance as at 31 December 2024 was determined as follows:
Trade receivables - days past due
Current 1 - 30 days overdue 31 - 60 days overdue 61 - 90 days overdue 91+ days overdue Total
£000 £000 £000 £000 £000 £000
31 December 2024
Expected loss rate 2.94% 3.10% 3.42% 3.48% 4.35% 3.60%
Gross carrying amount 1,541 4,089 2,474 2,476 5,125 15,705
Expected credit loss provision (45) (127) (85) (86) (223) (566)
Specific provision - - - - (1,409) (1,409)
Net carrying amount 1,496 3,962 2,389 2,390 3,493 13,730
Trade and other payables
GROUP COMPANY
2025 Restated 2024 2025 Restated 2024
£000 £000 £000 £000
Due in less than one month 9,786 8,382 1,909 1,182
Due in more than one month and less than three months - - - -
Total 9,786 8,382 1,909 1,182
Fair value
The Directors are of the opinion that the fair value of financial assets and
liabilities of the Group is not materially different from their carrying
values in the statement of financial position, with the exception of the
borrowings (see note 20 in the full annual report and accounts).
Derecognition - financial assets
The Group enters into stock lending transactions whereby it transfers assets
recognised on its statement of financial position, but retains either all or
substantially all of the risks and rewards of the transferred assets or a
portion of them. In such cases, the transferred assets are not derecognised.
Related party transactions
GROUP
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation.
COMPANY
The related party transactions between the Company and its wholly owned
subsidiary undertakings are summarised as follows:
2025 2024
£000 £000
Dividends from subsidiaries 8,200 14,250
Interest on intercompany balances charged by subsidiaries 721 721
Management charges from subsidiaries 2,095 1,000
The ultimate parent entity is The Law Debenture Corporation p.l.c.
Amounts owed to subsidiary undertakings represent intercompany loans which are
unsecured, interest-free and repayable on demand. These are presented net due
to the intercompany netting agreement (see accounting policies in the full
annual report and accounts).
Key management personnel costs The key management personnel are the Directors
of the Company and are those persons having authority and responsibility for
planning, directing and controlling the activities of the entity. Details of
their compensation are included in note 4 to the accounts on page 139 of the
full annual report and accounts and in Parts 2-4 of the Remuneration Report on
page 89 to 101 of the full annual report and accounts. Key management
personnel costs are £2,201k (2024: £1,879k).
Prior year restatement
Following a routine review by the Financial Reporting Council (FRC) during the
year, the Group received correspondence from the FRC requesting further
information relating to the Group's 2024 Annual Report and Financial
Statements. The FRC's review is limited to the published Annual Report and
Financial Statements and does not involve a detailed examination of underlying
transactions, nor does it provide assurance that the Annual Report and
Financial Statements are correct in all material respects. As a result of this
enquiry, the Group and Company's Statement of financial position as at 31
December 2024 were restated to remove the liability previously recognised for
the 2024 third interim dividend (£10,607k), which was announced on 12
December 2024, but unpaid as at 31 December 2024. The related opening balances
as at 1 January 2024 were also restated to remove the liability for the 2023
third interim dividend (£10,003k), which was announced on 14 December 2023
but unpaid as at 31 December 2023. As at 31 December 2024, this resulted in an
increase in Retained Earnings of £10,607k and a corresponding increase in
Total Net Assets. This restatement has been made to align the accounting
treatment for interim dividends with the Group's accounting policy for
dividends as set out in Note 1, whereby interim dividends are only recognised
when they are paid. Consistent treatment, in line with the Group's accounting
policy has been applied at 31 December 2025 and will be applied in future
reporting periods. The financial statement line items affected in the prior
years are as follows:
Group Company
2024 Increase/ 31 Dec 2024 (restated) 2024 Increase/ 31 Dec 2024 (restated)
£000 (decrease) £000 £000 £000 (decrease) £000 £000
Statement of Financial Position Trade and other payables 18,989 (10,607) 8,382 11,789 (10,607) 1,182
Total net assets 920,764 10,607 931,371 970,631 10,607 981,238
Total equity 920,764 10,607 931,371 970,631 10,607 981,238
Statement of Changes in Equity Retained earnings 1 January 2024 47,545 10,003 57,548 33,315 10,003 43,318
Total equity 1 January 2024 854,229 10,003 864,232 887,135 10,003 897,138
Dividend relating to 2023 (11,971) (10,003) (21,974) (11,971) (10,003) (21,974)
Dividend relating to 2024 (31,640) 10,607 (21,033) (31,640) 10,607 (21,033)
Retained earnings 31 December 2024 49,823 10,607 60,430 34,283 10,607 44,890
Total equity 920,764 10,607 931,371 970,631 10,607 981,238
Group Company
1 Jan 2024 Increase/ 1 Jan 2024 (restated) 1 Jan 2024 Increase/ 1 Jan 2024 (restated)
£000 (decrease) £000 £000 £000 (decrease) £000 £000
Statement of Financial Position Trade and other payables: Current 22,553 (10,003) 12,550 11,023 (10,003) 1,020
Total Net Assets 854,229 10,003 864,232 887,135 10,003 897,138
Total equity 854,229 10,003 864,232 887,135 10,003 897,138
Annual General Meeting (AGM)
The 136(th) AGM will be held in-person at the offices of Peel Hunt, 7th Floor,
100 Liverpool Street, London EC2M 2AT on 24 April 2026 at 11.00am. Further
details are included in the Notice of AGM included in the full annual report
and accounts.
Access to the Annual Report
The annual report and accounts will shortly be available for download from the
National Storage Mechanism
at https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism) .
CORPORATE INFORMATION
Company Advisers and Information
Directors Investment portfolio manager
Robert Hingley(*+) Janus Henderson Global Investors
Pars Purewal(#) 201 Bishopsgate, London EC2M 3AE
Claire Finn(~)
Clare Askem Investment managers
Maarten Slendebroek James Henderson and Laura Foll are joint managers. They also manage Lowland
Investment Company plc and the Henderson UK Equity Income & Growth Fund.
Denis Jackson
Trish Houston
James joined Henderson Global Investors (now Janus Henderson Investors) in
1983 and has been an investment trust portfolio manager since 1990. He first
became involved in the management of Law Debenture's portfolio in 1994 and
(*)Chairman of the Board took over lead responsibility for management of the portfolio in June 2003.
(+)Chairman of the Nomination Committee
(~) Chairman of the Remuneration Committee Laura joined Janus Henderson Investors in 2009 and has held the position of
portfolio manager on the Global Equity Income team since 2014. She first
(#)Chairman of the Audit and Risk Committee became involved with Law Debenture's portfolio in September 2011 and became
joint portfolio manager in 2020.
Website
https://www.lawdebenture.com (https://www.lawdebenture.com/)
Registrar
Computershare Investor Services PLC
The Pavilions, Bridgwater Road, Bristol BS99 6ZZ
T: 0370 707 1129
Auditors
Deloitte LLP, 110 Queen Street, Glasgow, G1 3BX
Alternative Investment Fund Manager
The Law Debenture Corporation p.l.c.
Authorised and regulated by the Financial Conduct Authority as an internally
managed Alternative Investment Fund. Firm Reference Number: 629081
Global custodian
HSBC Bank plc (under delegation by the depositary)
8 Canada Square, London E14 5HQ
Joint brokers
J.P. Morgan Securities PLC
25 Bank Street, London E14 5JP
Peel Hunt LLP
100 Liverpool Street, London, EC2M 2AT
Depositary
NatWest Trustee and Depositary Services Limited
250 Bishopsgate, London EC2M 4AA
The Law Debenture Corporation p.l.c. is registered in England, company
registration number 30397. LEI number - 2138006E39QX7XV6PP21
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