Law Debenture says its Net Asset Value total return for the six months to 30 June 2016 was 1.5%, compared to a total return of 4.3% for the FTSE Actuaries All-Share Index. Most of this underperformance arose from the movement in fair value of our long term debt as a result of lower gilt yields. Net revenue per share was 10.49p, 2.4% lower than the corresponding period last year (2015:10.75p). The board has declared an interim dividend of 5.2p (2015: 5.2p). The current expectation of the directors is that the final dividend will be at least maintained.
Law Debenture’s portfolio benefitted from positive returns in sectors with predominantly overseas profits priced in dollars, such as mining and oil – the top 5 performers were Anglo American, Royal Dutch Shell, Glencore, Weir and BP. Our relatively high weight in mid-cap and small-cap UK companies, which are more reliant on the UK economy for their turnover and profit, suffered disproportionate price falls immediately after the Brexit vote as sterling devalued. The worst 5 performers were Interserve, IP Group, International Consolidated Airlines, Provident Financial and Marshalls. These have no common theme. We believe that these are all are good businesses, whose share prices should recover.
We began to sell off holdings in the Henderson Japan and Far East OEICs (and have completely realised these holdings post the period end) as we believe better value can be achieved in these regions by investing in good closed ended funds trading at a discount, such as Scottish Oriental Smaller Companies Investment Trust.
Within the fiduciary services business, revenue, net of cost of sales, which represents legal costs recharged to clients, decreased by 2.4% over the corresponding period last year. Administration costs decreased by 1.6%. Profit before tax decreased by 2.3%. They say performance in the first half was reasonable, notwithstanding uncertainties pre and post the Brexit vote, which had a negative impact on some of our markets. Post referendum, while there have been some transactions put on hold, overall there has not been an immediate adverse impact, although this may change as markets and wholesale capital investors react and adjust to the aftershocks that will inevitably be felt for some time to come. Michael Adams, the new Chief Executive, joins in August following the retirement of Caroline Banszky.
LWDB : Law Debenture swaps Henderson OEICs for Scottish Oriental Smaller Companies