Half-yearly Report

PRELIMINARY ANNOUNCEMENT OF INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2007 (unaudited) The Directors recommend an interim dividend of 4.00p on the ordinary shares for the six months to 30 June 2007. The interim report including the unaudited results for the period was as follows: Company summary From its origins in 1889 Law Debenture has diversified to become a group with a unique range of activities in the financial services sector. The group divides into two distinct complementary areas of business. Investment trust We are a global growth investment trust, listed on the London Stock Exchange. Our portfolio of investments is managed by Henderson Global Investors Limited under a contract terminable by either side on 12 months' notice. Our objective is to achieve long term capital growth in real terms and steadily increasing income. The aim is to achieve a higher rate of total return than the FTSE All-Share Index through investing in a portfolio diversified both geographically and by industry. Trustee and related services We are a leading independent provider of professional trustee, fiduciary and related services (including structured finance administration, corporate services and agent for service of process) to the wholesale markets and to occupational pension schemes. We have offices in London, New York, Delaware, Hong Kong, the Channel Islands and the Cayman Islands. Individuals, companies, agencies and organisations throughout the world rely upon Law Debenture to carry out its duties with the independence and professionalism upon which its reputation is built. Financial summary of The Law Debenture Corporation p.l.c. Highlights At At At 30 June 30 June 31 December 2007 2006 2006 pence pence pence Share price 362.50 303.50 349.00 NAV per share 354.15 296.65 335.27 NAV per share after proposed 350.15 293.25 328.17 dividend Earnings per share - Investment trust 4.82 3.88 7.07 - Trustee and related services 3.05 2.16 5.11 Group earnings per share 7.87 6.04 12.18 Dividends per share 4.00 3.40 10.50 Performance to 30 June 2007 6 months 12 months % % Share price 3.9 19.4 NAV total return 7.9 20.8 FTSE All-Share Index total return 7.6 18.4 Basis of preparation The results for the period have been prepared in accordance with International Financial Reporting Standards. There have been no changes to the group's accounting policies during the period. 1. These are not statutory accounts in terms of section 240 of the Companies Act 1985 and are unaudited. The figures and financial information for the year end 31 December 2006 have been extracted from the 2006 report and accounts, which have been filed with the Registrar of Companies. Those accounts included an unqualified auditors' report and did not contain a statement under section 237 of the Companies Act 1985. 2. The calculations of NAV and earnings per share are based on: NAV: shares in issue at end of the period 117,066,384 (2006: 117,069,433) Income: average shares in issue during the period 117,072,235 (2006: 117,076,110) Management commentary Total return Over the six months to 30 June 2007, our net asset value total return was 7.9% compared to the FTSE All-Share Index total return of 7.6%. Earnings and dividends Earnings per ordinary share for the period were 7.87p, an increase of 30.3% over the corresponding period last year. The investment trust benefited from increased interest income following the reduction in equity exposure, and trustee services from a quite exceptional level of special fees. Earnings were reduced by an adjustment to prior years' tax of £386,000. The results do not include any potential recovery of VAT on management fees, as this is not yet certain. The board has declared an interim dividend of 4.0 p, which is an increase of 17.6% over the previous interim dividend of 3.4p. The dividend is payable on 12 September 2007 to shareholders on the register on 8 August 2007. Directors expect to recommend that the final dividend will at least equal that paid in respect of 2006, but the percentage increase in the interim dividend is not expected to be matched in the final dividend. Investment manager's report During the period, equity markets continued to make progress. Corporate results were generally better than expected, with impressive cash generation. This resulted in strong dividend growth, which together with increased interest income brought about an increase of 25.2% in investment trust profit before tax. There was a high level of corporate activity, from which the portfolio benefited. However, we have been using the strength in the stock market during the period to reduce equity exposure further, from 95% to 91%. The reason for this is that interest rate increases will make operating conditions for many companies more difficult. Problems are emerging in housing markets with defaults in US sub-prime lending and lending margins being squeezed in the UK. A setback in the housing market would affect consumer confidence, but might not reduce inflation because of high raw material prices. Trustee and related services Trustee and related services increased revenue by 25.7% and profit before tax by 70.2% as a result of continued growth in most areas of the business arising from high levels of corporate activity, and a concentration of non-recurring special fees both in the UK and US. Law Debenture continues to be involved in a wide variety of capital markets transactions: existing clients have appointed us to new debt issues and treasury management has seen a number of new opportunities, particularly as facility agent and escrow agent. Our structured finance administration business, which commenced in August 2006, has had a very encouraging six months and we have won our first appointments. Law Debenture's service of process business is highly regarded and is recognised for its quality of service. Its growth during the period has been driven by the high level of corporate transactions. Our corporate services business has had a good start to the year, continuing to win appointments both in structured finance and more widely in other capital market transactions. Our pension trustee business has had numerous new business enquiries, resulting in several new appointments in the first half of the year. Law Debenture Trust Company of New York achieved significant growth in income and profit. We continue to generate fees from successor trustee appointments. On 31 January 2007, we acquired Delaware Corporate Services Inc, for an expected total consideration of $1.6 million, to increase our range of corporate services in the US. In Hong Kong, we have seen an increase in the number of escrow transactions mostly relating to inward investment. The Channel Islands business continues to make good progress. Group income statement For the period ended 30 June 2007 (unaudited) 2007 2006 Revenue Capital Total Revenue Capital Total £000 £000 £000 £000 £000 £00 UK dividends 5,065 - 5,065 5,338 - 5,338 UK special dividends 94 - 94 19 - 19 Overseas dividends 1,259 - 1,259 1,117 - 1,117 Interest from securities 51 - 51 85 - 85 6,469 - 6,469 6,559 - 6,559 Bank deposit interest 2,247 - 2,247 554 - 554 Trustee and other related 17,244 - 17,244 13,401 - 13,401 fees Other income 14 - 14 324 - 324 Total Revenue 25,974 - 25,974 20,838 - 20,838 Net gain on investments - 21,591 21,591 - 8,092 8,092 held at fair value through profit or loss Gross income and capital 25,974 21,591 47,565 20,838 8,092 28,930 gains Cost of sales (4,674) - (4,674) (4,522) - (4,522) Administrative expenses (8,664) (170) (8,834) (7,153) (91) (7,244) Operating profit 12,636 21,421 34,057 9,163 8,001 17,164 Finance costs Interest payable (1,227) - (1,227) (1,229) - (1,229) Profit before taxation 11,409 21,421 32,830 7,934 8,001 15,935 Taxation (2,194) - (2,194) (868) - (868) Profit for period 9,215 21,421 30,636 7,066 8,001 15,067 Return per ordinary share 7.87 18.30 26.17 6.04 6.83 12.87 (pence) Diluted return per 7.81 18.16 25.97 6.02 6.82 12.84 ordinary share (pence) Statement of total recognised income and expense For the period ended 30 June 2007 (unaudited) 30 June 2007 30 June 2006 Revenue Capital Total Revenue Capital Total £000 £000 £000 £000 £000 £000 Profit for the period 9,215 21,421 30,636 7,066 8,001 15,067 Foreign exchange (113) - (113) (197) - (197) Total income and expense 9,102 21,421 30,523 6,869 8,001 14,870 relating to the period Balance sheet Group net assets 30 June 2007 30 June 2006 31 December 2006 (unaudited) (unaudited) (audited) £000 £000 £000 Assets Non current assets Goodwill 788 - - Intangible assets 67 94 67 Property, plant and equipment 699 711 694 Investments held at fair value 375,499 366,430 365,114 through profit or loss Deferred tax assets 470 1,644 705 Total non current assets 377,523 368,879 366,580 Current assets Trade and other receivables 15,232 7,327 12,009 Other accrued income and prepaid 3,571 2,262 2,751 expenses Cash and cash equivalents 83,218 33,747 74,555 102,021 43,336 89,315 Total assets 479,544 412,215 455,895 Current liabilities Trade and other payables 10,659 7,351 9,541 Short term borrowings 60 11 34 Corporation tax payable 1,342 318 848 Other taxation including social 461 440 430 security Deferred income 4,259 4,379 4,026 Total current liabilities 16,781 12,499 14,879 Non current liabilities Long term borrowings 39,270 39,243 39,257 Retirement benefit obligations 833 4,828 1,073 Deferred income 8,067 8,359 8,041 Total non current liabilities 48,170 52,430 48,371 Total net assets 414,593 347,286 392,645 Group cash flow statement For the period ended 30 June 2007 30 June 31 December 30 June 2007 2006 2006 (unaudited) (audited) (unaudited) £000 £000 £000 Operating activities Cash generated from operating 9,687 13,794 8,644 activities Taxation (1,465) (1,199) (517) Interest paid (1,227) (2,458) (1,229) Pension special contribution - (1,615) (1,615) Operating cash flow 6,995 8,522 5,283 Investing activities Capital expenditure (58) (114) (42) Expenditure on intangible assets - (9) (9) Purchase of investments (40,348) (35,038) (17,416) Sale of investments 51,383 98,967 39,734 Other movements - 22 18 Acquisition of subsidiary undertaking (630) - - Cash flow from investing activities 10,347 63,828 22,285 Financing activities Dividends paid (8,311) (10,945) (6,963) Proceeds of increase in share capital 26 183 92 Purchase of own shares (307) (363) (363) Net cash flow from financing (8,592) (11,125) (7,234) activities Net increase in cash and cash 8,750 61,225 20,334 equivalents Cash and cash equivalents at 74,521 13,599 13,599 beginning of period Exchange losses on cash and cash (113) (303) (197) equivalents Cash and cash equivalents at end of 83,158 74,521 33,736 period Cash and cash equivalents comprise Cash and cash equivalents at end of 83,218 74,555 33,747 period Bank overdrafts (60) (34) (11) 83,158 74,521 33,736 Analysis of the investment portfolio by geographical location United North Europe Japan Pacific Total Kingdom America £000 £000 £000 £000 £000 £000 Valuation at 31 268,125 908 48,709 18,210 29,162 365,114 December 2006 Purchases 29,699 - 10,649 - - 40,348 Cost of acquisition (151) - (19) - - (170) Sales proceeds (40,101) - (5,201) - (6,081) (51,383) Appreciation/ 13,494 (27) 4,719 (871) 4,276 21,591 (depreciation) Valuation at 30 June 271,066 881 58,857 17,339 27,357 375,500 2007 Per cent of total 72.2 0.2 15.7 4.6 7.3 100.0 By Sector (excluding cash) As at As at 30 June 31 December 2007 2006 % % Oil & gas 10.4 8.4 Basic materials 1.8 1.5 Industrials 19.4 18.2 Consumer goods 12.0 12.2 Health care 8.7 6.2 Consumer services 9.4 11.2 Telecommunications 4.4 3.9 Utilities 2.9 3.5 Financials 20.7 23.7 Pooled equity investments 10.3 11.2 100.0 100.0 Statement of changes in equity Share Share Own Capital Share Foreign Capital Retained Total capital premium shares redemption based exchange reserves earnings payment £000 £000 £000 £000 £000 £000 £000 £000 £000 Balance at 1 5,886 7,410 (1,326) 8 167 (230) 357,024 23,706 392,645 January 2007 Net profit - - - - - - 21,421 9,215 30,636 Foreign exchange - - - - - (113) - - (113) Total income and (113) 21,421 9,215 30,523 expenditure Movement in own - - (307) - - - - - (307) shares Issue of shares 1 25 - - - - - - 26 Dividend - - - - - - (8,311) - (8,311) relating to 2006 Share based - - - - 17 - - - 17 payment Total equity 5,887 7,435 (1,633) 8 184 (343) 370,134 32,921 414,593 shareholders' funds at 30 June 2007 Segmental analysis Investment trust Trustee and related Total services 30 Jun 30 31 Dec 30 Jun 30 Jun 31 Dec 30 Jun 30 Jun 31 Dec 2007 Jun 2006 2007 2006 2006 2007 2006 2006 2006 £000 £000 £000 £000 £000 £000 £000 £000 £000 Segment revenue 6,469 6,559 11,480 17,258 13,725 26,741 23,727 20,284 38,221 Other income - - 30 - - 114 - - 114 Segmental costs Cost of sales - - - (4,674) (4,522) (8,465) (4,674) (4,522) (8,465) Administration (1,131) (925) (1,804) (7,533) (6,228) (11,719) (8,664) (7,153) (13,523) costs 5,338 5,634 9,706 5,051 2,975 6,671 10,389 8,609 16,377 Interest (net) 491 (979) (1,260) 529 304 1,276 1,020 (675) 16 Profit for the 5,829 4,655 8,446 5,580 3,279 7,947 11,409 7,934 16,393 period before taxation Taxation (183) (119) (168) (2,011) (749) (1,961) (2,194) (868) (2,129) Profit for the 5,646 4,536 8,278 3,569 2,530 5,986 9,215 7,066 14,264 period Return per ordinary 4.82 3.88 7.07 3.05 2.16 5.11 7.87 6.04 12.18 share (pence)

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