Half-year Report

RNS Number : 9491L

Law Debenture Corp PLC

25 July 2017

 

The Law Debenture Corporation p.l.c. and its subsidiaries

HALF YEARLY REPORT FOR THE SIX MONTHS TO 30 JUNE 2017 (unaudited)

The directors recommend an interim dividend of 5.5p on the ordinary shares for the six months to 30 June 2017. The report including the unaudited results for the period was as follows:

Group summary

From its origins in 1889, Law Debenture has diversified to become a group with a unique range of activities in the financial and professional services sectors.  The group divides into two distinct areas of business.

Investment trust

We are a global investment trust, listed on the London Stock Exchange.

Our portfolio of investments is managed by Henderson Global Investors Limited and the fund manager is James Henderson under a contract terminable by either side on six 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 Actuaries All-Share Index through investing in a portfolio diversified both geographically and by industry.

Independent professional services

We have decided to rename our businesses, better to reflect the nature of the services that we provide. We are a leading provider of independent professional services. Our activities are corporate trusts, pension trusts, corporate services (including agent for service of process), whistle blowing services and governance services. We have offices in London, Sunderland, Dublin, New York, Delaware, Hong Kong, the Channel Islands and the Cayman Islands.

Companies, agencies, organisations and individuals throughout the world rely upon Law Debenture to carry out its duties with the independence and professionalism upon which its reputation is built.

Registered office

Fifth Floor

100 Wood Street

London EC2V 7EX

Telephone: [phone]

Facsimile:   020 7606 0643

(Registered in England No 30397)

Performance to 30 June 2017

	6 months	1 year	5 years	10 years
	%	%	%	%
Share price total return 1	10.2	21.3	78.0	126.6
NAV total return 1	9.3	25.9	82.1	129.0
FTSE All-Share Index total return	5.5	18.1	65.2	68.5

1 Calculated in accordance with AIC methodology based on NAV at fair value

			30 June 2017
			%
Ongoing charges1			0.43
Gearing1			6

 Ongoing charges are based on the costs of the investment trust and include the Henderson management fee

 of 0.30% of NAV for the investment trust. There is no performance element related to the fee.

1 Source: AIC

Financial summary 

	30 June 2017	30 June 2016	31 December 2016
	pence	pence	pence
Net revenue return per share: - Investment trust	8.11	7.05	10.88
- Independent professional services	3.26	3.44	7.68
- Group charges	-	-	(2.60)
Group net revenue return per share	11.37	10.49	15.96
Capital return per share	39.49	13.30	89.30
Dividends per share	5.50	5.20	16.70
Share price	572.00	486.50	530.00
NAV per share 1	641.10	519.18	598.48
	%	%	%
(Discount)	(10.8)	(6.3)	(11.4)

1 Calculated in accordance with AIC methodology based on NAV including fair value of IPS businesses and long term borrowings

NAV per share

	30 June 2017	30 June 2016	31 December 2016
	pence	pence	pence
NAV per share per financial statements	599.96	485.56	560.73
Fair value adjustment for IPS	65.99	56.48	62.37
Debt fair value adjustment	(24.85)	(22.86)	(24.62)
NAV per share as disclosed with debt at fair value	641.10	519.18	598.48

Fair valuation of the independent professional services businesses

The fair valuation of the independent professional services businesses (IPS) is based upon the historic earnings before interest, taxation, depreciation and amortisation (EBITDA), an appropriate multiple and the surplus net assets of the business at their underlying fair value. The multiple applied in valuing the IPS is from comparable companies sourced from market data, with appropriate adjustments to reflect the difference between the comparable companies and the IPS in respect of growth, margin, size and liquidity.

Fair valuation of the IPS

	30 June 2017	30 June 2016	31 December 2016
	£000	£000	£000
EBITDA at a multiple of 8.3 (30 June 2016: 7.9; 31 December 2016: 8.1)	82,004	73,865	80,028
Surplus net assets	16,730	15,823	9,908
	98,734	89,688	89,936

An increase or decrease of 1 in the multiple would give rise to a £9.9 million change in the fair valuation of the IPS. The adjustment to NAV to reflect the IPS fair value is an increase of 65.99p per share (30 June 2016: 56.48p; 31 December 2016: 62.37p).

Half yearly management report

Performance

Our Net Asset Value total return for the six months to 30 June 2017 was 9.3%, compared to a total return of 5.5% for the FTSE Actuaries All-Share Index. Net revenue per share was 11.37p, 8.4% higher than the corresponding period last year (2016: 10.49p).

Dividend

The board has declared an interim dividend of 5.5p (2016: 5.2p). The dividend will be paid on 8 September 2017 to holders on the record date of 11 August 2017. The current expectation of the directors is that the final dividend will be at least maintained.

Investment trust

The NAV rose 9.3% (with debt at fair value) while the FTSE All-Share Index rose 5.5%.The underlying equity portfolio rose 8.5%. The global economy continued to grow and outside the UK inflation remained muted. This is a benign background for equity investment and is one of the factors behind the continued satisfactory performance of global markets. For UK investors, it was a more testing period, with renewed political uncertainty adding to the continuing murmur of concerns over Brexit and the currency devaluation last year adding inflationary pressure. That said, company results in aggregate came through marginally better than expected.

In absolute terms the holding in Rolls Royce added the most value during the period as its share price began to reflect the long term strengths of the company. The holdings in Watkin Jones (which builds student accommodation) and International Consolidated Airlines (which includes British Airways) were the next largest contributors. The biggest absolute detractor was Royal Dutch Shell as a result of the fall in the oil price. lnterserve and IP Group were also among the largest detractors. In both cases we have maintained the holdings as we believe they should recover in time.

During the period, Henderson Global Investors Limited, which continues to be our fund manager, formally became part of the Janus Henderson Group.

Outlook

Global equity markets have been moving upwards since the spring of 2009, but the global bull run will not continue indefinitely. In the UK, there are signs of a slowdown. Valuations are at the higher end of their long term range so equity investors need to be increasingly careful in stock selection. The companies held in the portfolio in aggregate are generating cash, which is leading to increased dividend payments. With interest rates continuing at historically low levels, and in the absence of alternatives, the income (and income growth) available from equities continues for the time being to make them look a relatively attractive asset class.

Independent professional services

As indicated in the 2016 annual report, we have implemented a strategy within each business line that is focused on organic growth. As part of this strategy we have decided to rename the independent fiduciary services business to Independent Professional Services, or IPS.

Law Debenture's IPS businesses will consistently highlight the unique strengths of our independent service offering, namely the quality of our:

• service;

• people;

• reputation; and

• clients.

The focus on growth will require some time and investment. The 2017 full year results are anticipated to be broadly in line with recent years. However the future growth agenda is already firmly in place and the early indicators are positive.

Revenue, net of cost of sales, which represents legal costs recharged to clients, decreased by 1.8% over the corresponding period last year. Administration costs decreased by 3.6%. Profit before tax increased by 4.7%. Performance in the first half was reasonable across all IPS businesses and we expect this to continue in the second half of the year. The tax charge has increased as a result of changes made by HMRC regarding tax relief of interest, which was highlighted in the 2016 Annual Report.

Group income statement

for the six months ended 30 June (unaudited)

	30 June 2017			30 June 2016
	Revenue        £000	Capital £000	Total   £000	Revenue £000	Capital      £000	Total      £000
UK dividends	10,135	-	10,135	9,316	-	9,316
UK special  dividends	743	-	743	888	-	888
Overseas dividends	2,537	-	2,537	1,755	-	1,755
Overseas special dividends	50	-	50	114	-	114
	13,465	-	13,465	12,073	-	12,073
Interest income	47	-	47	110	-	110
Independent professional services fees	14,669	-	14,669	14,166	-	14,166
Other income	220	-	220	194	-	194
Total income	28,401	-	28,401	26,543	-	26,543
Net gain on investments held at fair value through profit or loss	-	46,828	46,828	-	15,803	15,803
Gross income and capital gains	28,401	46,828	75,229	26,543	15,803	42,346
Cost of sales	(1,838)	-	(1,838)	(1,085)	-	(1,085)
Administrative expenses	(10,287)	(178)	(10,465)	(10,278)	(107)	(10,385)
Operating profit	16,276	46,650	62,926	15,180	15,696	30,876
Finance costs
Interest payable	(2,322)	-	(2,322)	(2,690)	-	(2,690)
Profit before taxation	13,954	46,650	60,604	12,490	15,696	28,186
Taxation	(521)	-	(521)	(106)	-	(106)
Profit for  period	13,433	46,650	60,083	12,384	15,696	28,080
Return per ordinary share (pence)	11.37	39.49	50.86	10.49	13.30	23.79
Diluted return per ordinary share (pence)	11.37	39.49	50.86	10.49	13.30	23.79

Statement of comprehensive income

for the six months ended 30 June (unaudited)

	30 June 2017			30 June 2016
	Revenue £000	Capital £000	Total £000	Revenue £000	Capital £000	Total £000
Profit for the period	13,433	46,650	60,083	12,384	15,696	28,080
Foreign exchange on translation of  foreign operations	-	(119)	(119)	-	735	735
Other comprehensive income for the period	-	(119)	(119)	-	735	735
Total comprehensive income for the period	13,433	46,531	59,964	12,384	16,431	28,815

Group statement of financial position

	30 June 2017 (unaudited)     £000	30 June 2016 (unaudited)   £000	31 December 2016 (audited) £000
Assets
Non current assets
Goodwill	1,941	2,350	1,968
Property, plant and equipment	136	204	161
Other intangible assets	145	6	70
Investments held at fair value through profit or loss	735,791	629,225	696,080
Deferred tax assets	1,076	703	1,312
Total non current assets	739,089	632,488	699,591
Current assets
Trade and other receivables	6,910	5,863	6,680
Other accrued income and prepaid expenses	6,068	5,056	4,603
Derivative financial instruments	1,017	-	-
Cash and cash equivalents	94,462	68,239	94,804
Total current assets	108,457	79,158	106,087
Total assets	847,546	711,646	805,678
Liabilities
Current liabilities
Trade and other payables	11,534	11,960	13,346
Corporation tax payable	23	189	-
Other taxation including social security	597	665	444
Deferred income	3,871	4,202	3,826
Derivative financial instruments	-	1,731	2,029
Total current liabilities	16,025	18,747	19,645
Non current liabilities and deferred income
Long term borrowings	114,046	114,002	114,024
Retirement benefit obligations	1,863	972	2,300
Deferred income	4,199	4,747	4,318
Provision for onerous contracts	2,551	-	3,106
Total non current liabilities	122,659	119,721	123,748
Total net assets	708,862	573,178	662,285
Equity
Called up share capital	5,918	5,916	5,917
Share premium	8,753	8,667	8,722
Own shares	(1,034)	(1,467)	(1,197)
Capital redemption	8	8	8
Translation reserve	2,037	1,644	2,156
Capital reserves	655,727	519,345	609,077
Retained earnings	37,453	39,065	37,602
Total equity	708,862	573,178	662,285

Group statement of cash flows

	30 June 2017 (unaudited)	30 June 2016 (unaudited)	31 December 2016 (audited)
	£000	£000	£000
Operating activities
Operating profit before interest payable and taxation	62,926	30,876	129,796
(Gains) on investments	(46,650)	(15,696)	(105,428)
Foreign exchange  (gains)	(11)	(102)	(68)
Depreciation of property, plant and equipment	49	58	112
Amortisation of intangible assets	21	10	20
Provision for impairment of goodwill	-	-	418
(Increase)/decrease in receivables	(1,695)	1,042	678
(Decrease)/increase in payables	(1,659)	(644)	1,763
Transfer from capital reserves	(40)	(46)	(157)
Pension contributions in excess of cost	(437)	(428)	(1,300)
Cash generated from operating activities	12,504	15,070	25,834
Taxation	(262)	(302)	(560)
Operating cash flow	12,242	14,768	25,274
Investing activities
Acquisition of property, plant and equipment	(27)	(48)	(53)
Expenditure on intangible assets	(96)	-	(75)
Purchase of investments	(38,385)	(51,132)	(91,494)
Sale of investments	45,442	59,127	122,248
Cash flow from investing activities	6,934	7,947	30,626
Financing activities
Derivative financial instrument	(1,148)	-	(4,775)
Interest paid	(2,888)	(2,690)	(5,542)
Dividends paid	(13,582)	(12,983)	(19,122)
Proceeds of increase in share capital	32	-	56
Purchase of own shares	163	26	296
Net cash flow from financing activities	(17,423)	(15,647)	(29,087)
Net increase in cash and cash equivalents	1,753	7,068	26,813
Cash and cash equivalents at beginning of period	94,804	60,301	60,301
Foreign exchange (losses)/gains on cash and cash equivalents	(2,095)	870	7,690
Cash and cash equivalents at  end of period	94,462	68,239	94,804
Cash and cash equivalents comprise
Cash and cash equivalents	94,462	68,239	94,804

Group statement of changes in equity

	Share capital	Share premium	Own shares	Capital redemption	Translation reserve	Capital reserves	Retained earnings	Total
	£000	£000	£000	£000	£000	£000	£000	£000
Equity at 1 January 2017	5,917	8,722	(1,197)	8	2,156	609,077	37,602	662,285
Profit	-	-	-	-	-	46,650	13,433	60,083
Foreign exchange	-	-	-	-	(119)	-	-	(119)
Total comprehensive income for the period	-	-	-	-	(119)	46,650	13,433	59,964
Issue of shares	1	31	-	-	-	-	-	32
Movement in own shares	-	-	163	-	-	-	-	163
Dividend relating to 2016	-	-	-	-	-	-	(13,582)	(13,582)
Total equity at 30 June 2017	5,918	8,753	(1,034)	8	2,037	655,727	37,453	708,862

Group segmental analysis

	Investment trust			Independent professional services			Group charges			Total
	30 June 2017	30 June 2016	31 Dec 2016	30 June 2017	30 June 2016	31 Dec 2016	30 June 2017	30 June 2016	31 Dec 2016	30 June 2017	30 June 2016	31 Dec 2016
	£000	£000	£000	£000	£000	£000	£000	£000	£000	£000	£000	£000
Revenue
Income	13,465	12,073	20,477	14,669	14,166	30,735	-	-	-	28,134	26,239	51,212
Other income	63	53	74	157	141	151	-	-	-	220	194	225
Cost of sales	-	-	-	(1,838)	(1,085)	(3,565)	-	-	-	(1,838)	(1,085)	(3,565)
Administration costs	(1,661)	(1,327)	(2,739)	(8,626)	(8,951)	(17,573)	-	-	(464)	(10,287)	(10,278)	(20,776)
Provision for onerous contracts	-	-	-	-	-	-	-	-	(3,031)	-	-	(3,031)
	11,867	10,799	17,812	4,362	4,271	9,748	-	-	(3,495)	16,229	15,070	24,065
Interest (net)	(2,280)	(2,479)	(4,964)	5	(101)	(275)	-	-	-	(2,275)	(2,580)	(5,239)
Return, including profit on ordinary activities before taxation	9,587	8,320	12,848	4,367	4,170	9,473	-	-	(3,495)	13,954	12,490	18,826
Taxation	-	-	-	(521)	(106)	(405)	-	-	422	(521)	(106)	17
Return, including profit attributable to shareholders	9,587	8,320	12,848	3,846	4,064	9,068	-	-	(3,073)	13,433	12,384	18,843
Revenue return per ordinary share (pence)	8.11	7.05	10.88	3.26	3.44	7.68	-	-	(2.60)	11.37	10.49	15.96
Assets	784,123	653,711	743,248	63,070	57,935	62,052	353	-	378	847,546	711,646	805,678
Liabilities	(96,025)	(103,546)	(97,230)	(40,108)	(34,922)	(43,057)	(2,551)	-	(3,106)	(138,684)	(138,468)	(143,393)
Total net assets	688,098	550,165	646,018	22,962	23,013	18,995	(2,198)	-	(2,728)	708,862	573,178	662,285

The capital element of the income statement is wholly attributable to the investment trust.

Analysis of the investment portfolio By geographical location
	Valuation 31 December 2016 £000	Purchases £000	Costs of acquisition £000	Sales proceeds £000	Appreciation /(depreciation) £000	Valuation 30 June 2017 £000	%
United Kingdom	492,710	24,371	(81)	(20,037)	31,115	528,078	71.8
North America	84,975	2,247	(3)	(15,564)	4,464	76,119	10.3
Europe	55,244	10,943	(15)	(9,841)	6,268	62,599	8.5
Japan	14,366	-	-	-	(1,041)	13,325	1.8
Other Pacific	35,140	-	-	-	5,427	40,567	5.5
Other	13,645	824	(1)	-	635	15,103	2.1
	696,080	38,385	(100)	(45,442)	46,868	735,791	100.0

By sector (excluding cash)
	As at               30 June                    2017	As at 31 December 2016
	%	%
Oil & gas	8.3	9.7
Basic materials	6.4	6.7
Industrials	30.0	29.5
Consumer goods	6.9	7.7
Health care	8.4	8.3
Consumer services	7.9	7.5
Telecommunications	0.7	0.7
Utilities	1.6	1.8
Financials	27.5	25.4
Technology	2.3	2.7
	100.0	100.0

Investment portfolio valuation
as at 30 June 2017
UK unless otherwise stated.
Holdings in italics were acquired since 31 December 2016
	£'000	%
Oil & gas
Oil & gas producers
Royal Dutch Shell	22,688	3.08
BP	14,170	1.93
Indus Gas	6,349	0.86
Total (Fra)	2,060	0.28
Premier Oil	612	0.08
Providence Resources	524	0.07
	46,403	6.30
Oil equipment & services
Cape	4,675	0.64
Gibson Energy (Can)	4,603	0.63
Schlumberger (USA)	4,055	0.55
National Oilwell Varco (USA)	1,268	0.17
Now (USA)	154	0.02
Gibson Energy (Can)
	14,755	2.01
Basic materials
Chemicals
Croda	6,563	0.90
Elementis	6,228	0.85
Velocys	3,879	0.53
Carclo	2,200	0.30
Linde (Ger)	1,460	0.20
	20,330	2.78
Forestry & paper
Mondi	8,052	1.09
	8,052	1.09
Mining
Rio Tinto	12,158	1.65
BHP Billiton	6,465	0.88
	18,623	2.53
Industrials
Construction & materials
Marshalls	10,050	1.37
Ibstock	5,640	0.77
Accsys Technologies	5,549	0.75
Balfour Beatty	5,445	0.74
	26,684	3.63
Aerospace & defence
Rolls Royce	16,929	2.30
Senior	13,473	1.83
BAE Systems	11,403	1.55
Embraer (Bra)	4,817	0.65
Meggitt	4,769	0.66
Lockheed Martin (USA)	4,274	0.58
	55,665	7.57
General industrials
Smith(DS)	10,478	1.42
	10,478	1.42
Electronic & electrical equipment
Spectris	11,354	1.54
Morgan Advanced Materials	8,496	1.15
Applied Materials (USA)	6,359	0.86
TT Electronics	2,802	0.38
XP Power	2,305	0.31
Legrand (Fra)	1,928	0.26
Philips Electronics (Net)	1,534	0.21
Philips Lighting (Net)	1,388	0.19
	36,166	4.90
Industrial engineering
Hill & Smith	10,833	1.47
Cummins (USA)	7,493	1.02
Caterpillar (USA)	7,445	1.01
Deere (USA)	5,618	0.77
IMI	5,224	0.71
Ceres Power	3,686	0.50
Weir Group	3,462	0.47
Renold	3,213	0.44
Severfield	642	0.09
	47,616	6.48
Industrial transportation
Eddie Stobart Logistics	4,710	0.64
AP Moller-Maersk (Den)	1,703	0.23
Wincanton	1,183	0.16
	7,596	1.03
Support services
Johnson Service	12,039	1.64
Interserve	6,144	0.84
Carillion	5,315	0.72
Babcock	4,366	0.59
Deutsche Post (Ger)	3,519	0.48
SGS (Swi)	2,331	0.32
Sodexo (Fra)	1,765	0.25
Augean	626	0.09
	36,105	4.93
Consumer goods
Automobiles & parts
GKN	14,739	2.00
Toyota Motor (Jap)	6,535	0.89
General Motors (USA)	6,050	0.82
	27,324	3.71
Beverages
Pernod-Ricard (Fra)	1,932	0.26
	1,932	0.26
Food producers
Unilever	3,116	0.42
Nestlé (Swi)	2,957	0.40
	6,073	0.82
Household goods & home construction
Watkin Jones	8,613	1.17
L'Oreal (Fra)	1,792	0.24
	10,405	1.41
Tobacco
Imperial Brands	5,173	0.70
	5,173	0.70
Health care
Health care equipment & services
Becton Dickinson (USA)	9,011	1.22
Smith & Nephew	6,227	0.85
Fresenius (Ger)	5,822	0.80
Spire Healthcare	5,661	0.77
Fresenius Medical Care (Ger)	2,891	0.39
	29,612	4.03
Pharmaceuticals & biotechnology
GlaxoSmithKline	12,259	1.67
AstraZeneca	5,135	0.70
Pfizer (USA)	3,879	0.53
Johnson & Johnson (USA)	3,564	0.49
Novartis (Swi)	3,047	0.41
Roche (Swi)	2,260	0.31
Novo-Nordisk (Den)	1,811	0.25
	31,955	4.36
Consumer services
General retailers
Dunelm	3,910	0.53
Inditex (Spa)	1,724	0.23
Findel	1,099	0.15
Topps Tiles	619	0.08
	7,352	0.99
Media
Relx	12,450	1.69
Sky	5,467	0.74
Pearson	3,630	0.49
Daily Mail & General Trust	3,435	0.47
Publicis Groupe (Fra)	1,557	0.21
	26,539	3.60
Travel & leisure
International Consolidated Airlines	9,295	1.26
Carnival	5,080	0.69
Irish Continental (Ire)	4,302	0.58
Fastjet	3,395	0.46
Marstons	2,656	0.36
	24,728	3.35
Telecommunications
Mobile telecommunications
Inmarsat	2,789	0.38
Vodafone	2,177	0.30
	4,966	0.68
Utilities
Electricity
SSE	4,359	0.59
	4,359	0.59
Gas, water & multiutilities
National Grid	5,321	0.72
Severn Trent	2,181	0.30
	7,502	1.02
Financials
Banks
HSBC	18,765	2.55
Standard Chartered	10,770	1.46
Barclays	4,054	0.55
ING Group (Net)	1,867	0.25
UBS (Swi)	1,410	0.19
Societe Generale (Fra)	1,350	0.18
	38,216	5.18
Nonlife insurance
Hiscox	11,913	1.62
RSA Insurance	9,233	1.25
	21,146	2.87
Life insurance/assurance
Prudential	12,922	1.76
Aviva	4,129	0.56
Chesnara	4,008	0.55
Standard Life	2,992	0.41
Allianz (Ger)	1,399	0.19
Permanent TSB (Ire)	10	-
	25,460	3.47
Real estate investments & services
St Modwen Properties	6,628	0.90
	6,628	0.90
Real estate investment trusts
Land Securities	3,763	0.51
Mucklow (A&J) Group	3,750	0.51
Pacific Industrial & Logistics	2,217	0.30
	9,730	1.32
Financial services
IP Group	7,967	1.08
Provident Financial	6,691	0.91
Oxford Sciences Innovation (unlisted)	3,597	0.49
International Personal Finance	2,864	0.39
Amundi (Fra)	2,183	0.30
Deutsche Börse (Ger)	2,127	0.29
	25,429	3.46
Equity investment instruments
Baillie Gifford Pacific	17,825	2.42
Stewart Investors Asia Pacific	15,184	2.06
Templeton Emerging Markets Investment Trust	10,286	1.40
Herald Investment Trust	8,458	1.15
Scottish Oriental Smaller Company Trust	7,558	1.03
Schroder Japan Growth Fund (Jap)	6,790	0.92
Syncona	4,916	0.67
Foresight Solar	3,368	0.46
Better Capital (2012)	1,350	0.18
	75,735	10.29
Technology
Software & computer services
Microsoft (USA)	9,020	1.23
SAP (Ger)	2,292	0.31
Amadeus IT (Spa)	2,135	0.29
	13,447	1.83
Technology hardware & equipment
Apple (USA)	3,326	0.45
	3,326	0.45

Principal risks and uncertainties

The principal risks of the Corporation relate to the investment activities and include market price risk, foreign currency risk, liquidity risk, interest rate risk and credit risk. These are explained in the notes to the annual accounts for the year ended 31 December 2016. In the view of the board these risks are as applicable to the remaining six months of the financial year as they were to the period under review.

The principal risks of the independent professional services business arise during the course of defaults, potential defaults and restructurings where we have been appointed to provide services. To mitigate these risks we work closely with our legal advisers and, where appropriate, financial advisers, both in the set up phase to ensure that we have as many protections as practicable, and at all other stages whether or not there is a danger of default.

Related party transactions

There have been no related party transactions during the period which have materially affected the financial position or performance of the group. During the period transactions between the Corporation and its subsidiaries have been eliminated on consolidation. Details of related party transactions are given in the notes to the annual accounts.

Directors' responsibility statement

We confirm that to the best of our knowledge:

·     the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and gives a true and fair view of the assets, liabilities, financial position and profit of the group as required by DTR 4.2.4R;

·     the half yearly report includes a fair review of the information required by:

(a)        DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b)        DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period.

On behalf of the board

Christopher Smith

25 July 2017  

Basis of preparation

The results for the period have been prepared in accordance with International Financial Reporting Standards (IAS 34 - Interim financial reporting). 

The financial resources available are expected to meet the needs of the group for the

foreseeable future. The financial statements have therefore been prepared on a going concern basis.

There have been no changes to the group's accounting policies during the period.

Notes

1.   The financial information presented herein does not amount to full statutory accounts within the meaning of Section 435 of the Companies Act 2006 and has neither been audited nor reviewed pursuant to guidance issued by the Auditing Practices Board. The annual report and financial statements for 2016 have been filed with the Registrar of Companies. The  independent  auditors'  report on the  annual  report and  financial  statements  for 2016 was unqualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report, and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

2.   The calculations of NAV and earnings per share are based on:

NAV: shares at end of the period 118,152,259 (30 June 2016: 118,043,941; 31 December 2016: 118,111,845). Income: average shares during the period 118,134,437 (30 June 2016: 118,041,246; 31 December 2016: 118,063,495).

3.   Listed investments are all traded on active markets and as defined by IFRS 7 are level 1 financial instruments. As such they are valued at unadjusted quoted bid prices. Unlisted investments are Level 3 financial instruments. They are valued by the directors using unobservable inputs including underlying net assets of the instruments.

 

END

 

 

IR LLFEDDLISFID