Law Debenture’s results for 2015 show its net asset value total return for the year to 31 December 2015 was down 0.3%, compared to a total return of 1.0% for the FTSE Actuaries All-Share Index. Net revenue return per share was 18.1p, an increase of 6.8% over the previous year, as a result of a 9.2% increase in the investment trust and a 3.2% increase in independent fiduciary services. The board is recommending a final dividend of 11.0p which together with the interim dividend of 5.2p gives a total dividend of 16.2p (2014: 15.7p).
The Board has decided to publish an additional net asset value that values the fiduciary business at fair value rather than at book cost. At the year end this had the effect of adding 52.4p to its NAV (11.4%) and, carrying this forward to today, would mean that it is trading on about an 8% discount. They can’t include this within the normal NAV they publish daily for accounting reasons so we expect them to update the number at least annually in the accounts, maybe at the interim stage too.
Investment performance in 2015, in terms of Net Asset Value total return, was slightly behind that of the FTSE All-Share Index for the first time since 2008. Revenues and profits of the IFS businesses were flat in 2015.
The five largest increases in value within the equity portfolio came from Amlin, Redrow, Bellway, Marshalls and Provident Financial which together added £16.6m to the NAV. By contrast, holdings in Glencore, Velocys, Rio Tinto, Royal Dutch Shell and Senior cost the fund £25.7m. Amlin received an agreed cash offer from Mitsui Sumitomo at a substantial premium, while Redrow and Bellway benefitted from the strength of the UK housing market. The four largest detractors were all hurt by the fall in commodity prices.
Within the fiduciary business, wider economic uncertainties began to filter through to the capital and debt markets, meaning that transaction volumes tailed off somewhat. They say they are in a prolonged period of downward pressure on fees. Competition for new appointments remains fierce, exacerbated in 2015 by competitor consolidations in some of their markets. Some sectors, such as pensions, did well and Safecall, their whistleblowing service, again had a very good year. Market share remained generally satisfactory. Corporate trusts had a reasonable year, with some interesting and prestigious appointments. The pension trusteeship service had another good year in a market environment that continues to change. In the corporate services business a number of new appointments were secured for clients including Virgin Money and Blackrock. In non-structured finance markets, they continued to win new customers with company secretarial, M&A and corporate governance appointments.
LWDB : Law Debenture puts a value on the fiduciary business