The Law Debenture Corporation Annual Report 2022

FY2022 Annual Report · The Law Debenture Corporation

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A N N U A L R E P O R T
2022

The Law Debenture Corporation p.l.c.

Law Debenture is an investment trust and a leading
provider of independent professional services, listed
on the London Stock Exchange.

The Law Debenture Corporation p.l.c.
wins best UK Equity – Active category
in the AJ Bell Fund and Investment
Trust Awards 2022

We are proud to receive such great recognition

from the industry. I am delighted that Law

Debenture continues to offer investors resilience,

long term outperformance and dividend growth

against a background of turbulent global markets.”

Denis Jackson, Chief Executive Officer, Law Debenture

COO and Head of Corporate Secretarial Services Trish

Houston, CFO Hester Scotton and CEO Denis Jackson

at the Investment Week award ceremony.

The Law Debenture Corporation p.l.c.
wins Best Investment Trust for
Income in Shares Awards 2022

This is Law Debenture’s third award win this

year, and one that we are delighted to receive as it

The Law Debenture Corporation p.l.c.: AIC Investment

Trust Awards, UK Equity Income Sector Winner 2022.

The Law Debenture Corporation p.l.c.
named UK Equity Income Investment
Trust of the Year, for the second
year running, at Investment Week’s
Investment Company of the Year
Awards 2022

UK Equity Income Sector
Investment Trust of the Year

This is Law Debenture’s second award win

of 2022, and we are extremely pleased to be

recognised for the quality of our operations and

performance by the investment trust industry

and our peers. Our investment managers, James

Henderson and Laura Foll, seek to deliver

resilience, long term outperformance and

dividend growth to shareholders, and this award is

an acknowledgement of Law Debenture’s ongoing

commitment to these goals.”

represents direct recognition by retail investors of

Hester Scotton, CFO, Law Debenture

our investment managers’ excellent track record

and their continued efforts to offer resilience,
long term outperformance and dividend growth

to shareholders, successfully using the flexibility

provided by the cash flows of our Independent

Professional Services business.”

Trish Houston, COO and Head of Corporate Secretarial

Services, Law Debenture

For more information visit our website:
https://www.lawdebenture.com/investment-trust

lawdebenture.com

A T A G L A N C E

Law Debenture:
has a highly differentiated and unique business model

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Investment
Portfolio

c. 79% of NAV
including IPS and long-term
borrowings at fair value 1

Independent Professional
Services (IPS) business

c. 21% of NAV
including IPS and long-term
borrowings at fair value 1

Managed by James Henderson and Laura Foll

of Janus Henderson

PENSIONS

CORPORATE

OBJECTIVE: LONG-TERM CAPITAL

GROWTH IN REAL TERMS AND STEADILY

INCREASING INCOME

– Focused on long-term returns

– Low ongoing charges ratio at 0.49%2

compared to industry average of 1.04%3

– Contrarian investment style:

• High quality companies with strong

competitive advantage at attractive

valuations

• Out of favour equities standing at

valuation discounts to their long-term

historical average

– Selective, bottom-up approach

– Diversified portfolio by sector

(predominant UK weighting)

The longest

TRUST

SERVICES

established and

A leading

one of the

largest UK

independent

corporate

Range of

outsourced

solutions to

providers of

trustee across

corporates

pension trustee

international

internationally

services

capital markets

INTERNATIONAL PRESENCE:

United Kingdom, New York, Ireland, Hong

Kong, Delaware, Cayman Islands and

Channel Islands

We believe that all divisions have potential

for further growth in expanding markets.

Our plan to achieve this is by increasing our

market share through better leveraging

of technology, our strong relationships

and our brand

Significant, consistent income contribution from IPS gives greater flexibility in stock selection

1 Please refer to page 152 for an explanation of net asset value with debt and IPS at fair value.
2 Calculated based on data held by Law Debenture for the year ended 31 December 2022.
3 Source: Association of Investment Companies (AIC) industry average as at 31 December 2022.

A T A G L A N C E

Financial summary

Net Asset Value – with debt and IPS at fair value1*

Total Net Assets per the statement of financial position

Net Asset Value (NAV) per share at fair value1*

Revenue return per share

Investment Portfolio

Independent professional services

Group revenue return per share

Capital return/(loss) per share

Dividends per share

Share price4

Ongoing charges3*

Gearing3

Premium/(discount)*

31 December 2022
£000

31 December 2021
£000

972,566

799,067

Pence

761.69

24.06

10.38

34.44

(103.17)

30.50

771

0.49%

12%

1.22%

964,493

878,837

Pence

787.83

18.09

10.00

28.09

94.60

29.00

799

0.50%

13%

1.42%

Change

0.84%

(9.08%)

(3.3%)

33.0%

3.8%

22.6%

(209.1%)

5.2%

(3.5%)

For reconciliation of NAV at fair value per the above to published year end NAV please refer to page 36.

Performance

NAV total return2* (with IPS at fair value and debt at par)

NAV total return2* (with IPS and debt at fair value)

FTSE Actuaries All-Share Index Total Return4

Share price total return4*

1 year
%

(6.8)

0.6

0.3

0.4

Change in Retail Price Index5
* Items marked “*” are considered to be alternative performance measures and are described in more detail on page 152.

13.4

3 years
%

5 years
%

10 years
%

16.8

26.0

7.1

37.7

23.5

30.3

39.9

15.5

51.6

29.6

141.5

154.6

88.2

161.2

46.0

1 Please refer to page 36 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 long-term
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, charged at the annual rate of 0.30% of the NAV. There is no performance related element to the fee. Gearing is described in the strategic report on page 33 and in our
alternative performance measures on page 152.

4 Source: Refinitiv.
5 Source: Office for National Statistics.

lawdebenture.com

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Key statistics

for the year ended 31 December 2022

0.4%

Share price total return

(2021: 19.2%)

0.6%1

Growth in Net Asset Value
– including debt and IPS
at fair value total return

(2021: 25.1%)

Total Net Assets per statement of financial position

percentage decrease (9.08%) (2021: increase of 20.9%)

1.04%

8.1%

Average premium in share price versus NAV
(with debt and IPS at fair value)
in 2022

Growth in IPS profit before tax

(2021: 9.1%)

0.49%

Ongoing charges ratio
– compared to industry average of 1.04% (2021: 1.05%)

(2021: 0.50%)

8.2%

5 year compounding annual growth rate
in IPS net profit before tax

5.2%

Proposed increase
in 2022 dividend per share

(2021: 5.5%)

113%

Increase in IPS valuation
from 2017 to 2022

A consistent long-term out-performer

1 Please refer to page 36 for calculation of net asset value.
2 Ongoing charges are calculated based on AIC guidance, using the administrative costs of the investment trust and include the Janus Henderson Investors’ management
fee, charged at the annual rate of 0.30% of the NAV. There is no performance related element to the fee. Gearing is described in the strategic report on page 33 and in our
alternative performance measures on page 152.

A T A G L A N C E

Law Debenture’s investment proposition

A proud
history

134 years of value creation
for shareholders

Strength and
diversity
of income

Consistent
dividend
growth

44 years of increasing or
maintaining dividends to
shareholders (114% increase
in dividend over the
last ten years)

7.91% CAGR of dividend
over the last 10 years

5.2% increase in 2022 DPS

Flexibility and valuation uplift
from IPS + consistent portfolio
outperformance

25% of total 2022 dividend
funded by our Independent
Professional Services business

IPS enables
greater flexibility
in portfolio
holdings

IPS accounts for c.21% of the
2022 NAV but has funded 34% of
dividends over the last 10 years

Investment Portfolio
differentiators:

• Ability to hold zero/low
dividend yield shares
(eg; Ceres, ITM, Herald)

• Ability to avoid high dividend
yield industries in structural
decline (e.g. BAT)

• Ability to invest flexibly overseas
(e.g. Air Products & Chemicals
(purchased in January 2023))

Proven record
delivering
consistent
long-term
outperformance

Outperformance of our
benchmark, the FTSE Actuaries
All-Share Index, by 73% over
ten years (36.1% over five years
and 30.6% over three years)

Low ongoing charges ratio of
0.49% compared to industry
average of 1.04%

IPS has a proven
record of growth
under the
management
team

CAGR of 10.7% in net revenue
and 8.2% in profit before tax
over last five years1

Ambition to grow profits
of IPS by mid to high single
percentage growth

IPS valuation has increased
by 113% between 2017 and 2022
to £201.7m2

UK weighting
(83% portfolio)
has potential to
outperform

UK has lagged global
stock markets in recent years

Around 80% earnings
of the FTSE 100
come from
outside the UK

Significant UK valuation
discount has attracted
M&A activity

Providing real value with a combination of prudent
decisions and responsive services

1 Includes acquisition of the Company Secretarial Services business from Eversheds Sutherland (International) LLP in 2021.
2 Increase in total annual valuation of Independent Professional Services business. For a calculation of this please refer to page 36.

lawdebenture.com

Contents

A T A G L A N C E

C O R P O R A T E G O V E R N A N C E

At a glance

Financial summary and performance

Key statistics

Investment Proposition

S T R A T E G I C R E P O R T

Chairman’s statement

Chief Executive Officer’s review

IPS 5 year performance at a glance

Investment managers’ review

Portfolio by sector and value

Fifteen largest holdings

Classification of investments

Investment Portfolio valuation

Changes in geographical distribution

Company overview

Calculation of net asset value (NAV) per share

Long-term performance record

Risk Management

Viability statement

Section 172(1) Statement

6-7

8-14

17-20

22-23

26-29

30-35

38-42

44-45

46-48

The Board

Directors’ report

Corporate governance report

Nomination Committee report

Audit and Risk Committee report

Directors’ remuneration report

F I N A N C I A L S T A T E M E N T S

58-59

61-65

66-68

69-71

72-74

76-98

Independent auditor’s report

100-110

Group income statement

Statement of comprehensive income

Statement of financial position

Statement of changes in equity

Statements of cash flows

Notes to the accounts

112

113

114-115

116

117-151

C O R P O R A T E I N F O R M A T I O N

Alternative performance measures

152-153

Company advisers and information

Financial calendar

Subsidiary company details

154

155

Environmental, Social and Governance (ESG)

50-57

Notice of Annual General Meeting (AGM)

156-158

Explanatory notes to the Notice

Shareholder notes

AGM venue

159-160

161-162

163

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S T R A T E G I C R E P O R T

Chairman’s statement

Performance

also a great honour to be the recipient of the UK Equity Income

Investment Trust of the Year award for the second year running.

We also came out on top in the UK Equity – Active category at

the AJ Bell Fund and Investment Awards. The triple success

demonstrates the excellent short- and longer-term record of our

investment managers, and the continued resilience, long-term

outperformance and dividend growth offered by our Trust.

Dividend

We retain a proud record of increasing or maintaining our
dividend payments for the 44th year in a row. The current climate

has naturally affected yields from our Investment Portfolio, and

it is likely that the enduring impact of the past year’s difficulties

will continue to affect dividends across capital markets. However,

the consistent and reliable cash flows from our diversified IPS

business have helped ensure that we can continue our strong

dividend record.

Subject to your approval, we propose paying a final dividend of

8.75 pence per ordinary share. The dividend will be paid on 13 April

2023 to holders on the register on the record date of 10 March 2023.

This will provide shareholders with a total dividend of 30.50 pence
per share for 2022, an increase of 5.2% compared with 2021.1 This

represents a dividend yield of 3.7% based on our closing share price

of 827 pence on 24 February 2023. Over the last 10 years, we have

increased the dividend by 114% in aggregate.

Capital structure

In 2022, the Group issued 5.2 million new ordinary shares at a

premium to NAV, to existing and new investors, with net proceeds

of £41.4m to support ongoing investment. Shares were issued at a

premium to NAV to be accretive to existing shareholders.

I am pleased to report that Law Debenture has performed

creditably in the midst of the ongoing global economic

uncertainty. Rising interest rates and inflation, combined with

tumultuous domestic politics and the ongoing war in Ukraine,

have resulted in market volatility and low risk appetite. Despite

these headwinds, the combination of our diversified Portfolio and

another good IPS performance have ensured that Law Debenture

continues to deliver on its commitment to produce capital

growth over the longer term and steadily increasing income to

benefit all our shareholders.

Our Investment Portfolio

Despite recessionary pressures and high inflation, James

Henderson and Laura Foll, our investment managers, continue to

invest in a differentiated selection of high-quality businesses with

competitive advantage and good long-term growth prospects.

We are pleased to report dividend income of £34.4m from the

Portfolio, representing growth of 31% compared to the prior year.

Stocks globally were buffeted over the past year resulting in an

understandable, but disappointing, total capital loss for the year of

£129.6m. Of this, £126.2m is unrealised as it relates to movements

Our benchmark, the FTSE Actuaries All-Share Index, delivered a

in the value of the holdings within Portfolio and is offset by the

0.3% total return, and we are satisfied that the Company’s share

movement of £75m in the fair value of debt and £12.5m in the fair

price total return marginally outperformed this with a total return

value uplift of IPS. However, we are confident that their disciplined

of 0.4% for 2022. The Net Assets Value (‘NAV’) with debt and the

approach of buying at attractive entry point valuations will

independent professional services (‘IPS’) at fair value delivered a

continue to deliver over the longer term for our shareholders. The

return of 0.6%.

The highlight was receiving recognition for all the hard work of

our great team of people from the investment community in

high-margin and revenue flows that IPS generates give James

and Laura the opportunity to explore a more flexible portfolio that

includes both income and growth-focused stocks.

the shape of three awards. At the 2022 Shares Awards, we were

Pages 17 to 20 offer more detailed commentary on the Portfolio

recognised as the Best Investment Trust for Income, and it was

performance with a review from our investment managers.

lawdebenture.com

1 Refer to financial summary on page 2.

Chairman’s statement continued

IPS

Our investment managers are committed to investing in businesses

that have a sustainable business model and carefully take ESG into

Our professional services business, a unique offering that lends

consideration when making investment decisions. For more details

an advantage compared to other UK income funds, has grown

please see page 50.

from strength to strength in recent years with a compound
annual growth in profit before tax of 8.2%2 over the last five years.
The turmoil caused by the ‘mini budget’ brought the pensions

industry into widespread focus, and, while it was undoubtedly a

difficult period, I am proud of how our Trustee business delivered

for clients.

In a year where global uncertainty badly affected capital markets,

the value of IPS for shareholders became more evident. Some of

our businesses benefit from a degree of counter-cyclicality, which

The Board

During the course of 2022, Mark Bridgeman stepped down as

Chair of the Audit and Risk Committee and from the Board, having

served nine years. I would like to thank him for his significant

contribution to the Board and the Company over the years.

Pars Purewal, who joined the Board in December 2021, was

appointed as our new Chair of the Audit and Risk Committee. Pars

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is, in part, why IPS had another year of mid-

high single digit revenue and profit growth.

This is underpinned by our specialist
knowledge and record of providing

excellent client service. The Board is

pleased to see employee engagement

and satisfaction scores improving and

this ongoing investment in talent and

Law Debenture is a rare

proposition: an investment

technology, leaves us confident IPS should

have the potential to sustain mid to high

single digit growth over the medium term.

trust supported by a

wholly owned professional

Environmental, Social and
Governance (ESG)

Those with whom we have worked over

the past few years will likely be aware of

the cultural changes at Law Debenture.

I want to give credit to our Executive

Leadership team who have been

instrumental in creating a working culture

services business. The

whole is greater than

the sum of these parts,

providing a hedge to

market volatility

brings extensive Audit and Risk experience,

having been a Senior Partner and worked

in the PwC Audit Practice for 35 years.

Following Mark’s departure, Clare Askem

has taken over as Workforce Engagement

Director and has already invested time

in hosting listening groups with our staff

to provide feedback to our Executive

Leadership team and the Board.

Looking forward

The beginning of 2023 has brought

some tentative optimism from investors

that inflation and the cost-of-living

crisis will perhaps subside sooner

than first thought. While I welcome a

more optimistic outlook on UK market

valuations, particularly with the more

stable environment that we are now

seeing, there is still some way to go, and

that encompasses our four values: Make Change Happen; Better

Together; Believe It’s Possible and Never Stop Learning.

Our IPS business is built upon the provision of independent

governance services. A central tenet of this work is our
commitment to diversity, and we are delighted that we have

established a balanced gender pay gap position and have strong

female representation both at Board and senior executive level,

with women making up 47% of the senior leadership team. In

2022, we ranked 1st in the Financial Services category of the FTSE

Women Leaders Review – an achievement that we are extremely

it is reasonable to expect much of this year to follow the current

trends. The majority of the Portfolio is invested in UK equities,

although many of the earnings are derived from outside the UK.

James and Laura continue to believe that UK market valuations

are too low and offer some attractive longer-term growth

opportunities with a lot of bad news already priced in.

The Board and our investment managers remain confident

in our future performance, due to the diversified and resilient

nature of our Portfolio and the good growth potential for

IPS. Its services are well sought after and the market share

proud of. Supporting our people is directly beneficial to our clients,

opportunities are considerable.

with improved representation promoting broader perspectives,

experiences, and skillsets.

As an organisation, we believe that long-term growth is

underpinned by sustainability. This presents opportunities for

investment within the Portfolio. The IPS business has a relatively

small carbon-footprint and, over the years, we have taken steps

to further reduce this. As part of our commitment to the ESG

agenda, Law Debenture has voluntarily chosen to adopt the Task

Force on Climate-Related Financial Disclosures (‘TCFD’). This can

be found on page 51.

2 Calculated using the published PBT of the IPS business over the past 5 years.

During these challenging times, our consistent delivery has only

been possible due to the hard work of our talented people and,

on behalf of the Board, I would like to thank them all.

Robert Hingley
Chairman of the Board

27 February 2023

S T R A T E G I C R E P O R T

Chief Executive Officer’s review

James Henderson and Laura Foll have continued to perform

creditably in difficult market conditions. The Group takes great

pride in our long-term record over one, three, five and ten years,

with consistent outperformance of the benchmark, the FTSE

Actuaries All Share Index. James and Laura have a consistent

and proven valuation-driven process which aims to identify

market-leading, high-quality companies that are undervalued

at the point of purchase. It is a testament to the continued

outperformance and the investment team that Law Debenture

has won three prestigious investment trust awards this year.

Our IPS business has shown its fifth consecutive year of middle

to high single digit growth. For 134 years, we have stuck to our

principles of independence, trust and excellence. Our investment

for growth over the last five years has positioned us well for the

future. The acquisition of Eversheds Sutherland (International)

LLP’s Corporate Secretarial Services (‘CSS’) business in 2021 has

strengthened its client offering. I am very proud of our strong

client relationships and approximately two-thirds of our business

is repeated year on year. As we face a complex macro-economic

environment in 2023, our aim is that IPS should continue to

provide an element of counter cyclical revenue that will support

our overall performance. High-quality governance should remain

core to our clients, regardless of the economic cycle.

IPS business net revenues (gross revenue less direct costs

incurred) for the full year 2022 were up 8.6% at £45.2m (2021:

£41.6m) and profit before tax was up 8.1%. The diversification

of our income streams again served us well, but we have had

to compete with the challenging recruitment environment

to retain our people who underpin the quality of service we

deliver. However, we are active in the management of our cost

base and are working hard to ensure

our profit margins are sustainable.

Introduction

2022 has been an encouraging year overall for Law Debenture,

despite the continued macroeconomic uncertainty we have

seen. Markets have been difficult across

the world and the UK saw political volatility

which exacerbated the turbulence

in financial markets. Despite this,

Law Debenture’s performance reflected

well on the Group’s ability to adapt to

a changeable economic climate and

navigate short-term headwinds. Law

Debenture delivered on its two main

objectives; producing some, albeit modest,

share price growth and continuing to

steadily increase income for shareholders.

The sharp jump in inflation and interest

rates and overall challenging economic

environment for businesses has not been

easy for our investment managers to

navigate. The median share price for the

UK was down 18% over the course of the

year and so I am pleased with our total

share price performance, which was very

marginally up. Capital has been preserved

At the core of

Law Debenture’s

financial objectives

are two keys aims;

to achieve long-term

capital growth,

and to steadily

increase income for

our shareholders.

We are proud to have delivered a 114%

increase in dividend over the last ten

years. This is supported by the diversified

nature of IPS, which makes Law

Debenture a unique investment trust.
The flow of income from IPS has funded

around 34% of dividends over that period

and gives James and Laura the flexibility

to invest in a broader and higher-growth

portfolio than many sector peers, helping

to position the equity portfolio for future

longer-term growth.

Corporate trust

Law Debenture was incorporated to

act as a bond trustee in 1889. The role

of a bond trustee is to act as a bridge

between the issuer of a bond and the

in a year when many global stock markets fell sharply and we
had our 44th year of maintaining or increasing dividends.

individual bondholders. Our responsibilities as bond trustee

can vary materially, whether servicing performing or defaulted

bond issues.

lawdebenture.com

Chief Executive Officer’s review continued

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Our leading independent professional services business is built on three pillars:

our pensions, corporate trust and corporate services businesses.

DIVISION

Corporate trust

Pensions

Corporate services

Total

Net revenue
2018
£000

Net revenue
2019
£000

Net revenue
2020
£000

Net revenue
2021
£000

Net revenue
2022
£000

Growth
2021/2022
%

8,362

9,488

11,734

29,584

9,024

10,598

12,167

31,789

10,789

11,479

12,226

34,494

9,771

13,060

18,755

41,586

10,620

14,343

20,206

45,169*

8.7%

9.8%

7.7%

8.6%

*Total net revenue is calculated by reducing segment income of £53,452k by cost of sales of £8,283k.
Corporate services: 2021 includes additional revenue arising from the acquisition of the CSS business from Eversheds Sutherland (International) LLP.

Normal obligations for the bond trustee to support performing

Despite the extremely tough primary market conditions, under

issues include communication to the bondholders of financial

the leadership of Eliot Solarz, we completed some notable

or security data, together with the distribution of covenant

new transactions, including an appointment Trustee for the

information. For this type of work, we are typically paid an

Real Estate Investment Trust, SEGRO plc’s €1.15 billion senior

annual fee throughout the lifetime of the bond. This fee

unsecured Green Bond issue. The proceeds of the issue will

is inflation linked for the majority of our existing book of

principally be used to finance and/or refinance Eligible Green

business. When an amendment to bond documentation is

Projects as outlined in the SEGRO Green Finance Framework,

required, we can also earn additional revenues to complete the

as well as providing funding for general corporate purposes.

necessary changes.

When bonds default, the workflow, risk and revenue profiles

of our role can materially change. A key duty of the bond

Later in the year we were also appointed as Trustee on the

€750 million senior unsecured Green bond issue for the SEGRO

European Logistics Partnership (‘SELP’) joint venture.

trustee is to be the legal creditor of the issuer on behalf of the

Our escrow business continues to build momentum and

bondholders. We never wish our clients to suffer bad fortune,

broaden its diversification of use. During 2022 we were

but our role in such default situations requires material

appointed to a range of roles that included M & A, litigation,

incremental work that, given a favourable outcome, can lead

commercial real estate, sporting events, sales of ships, and to

to significant additional income for the firm. Defaults often

support global trade in commodities.

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 fluctuate. However, such

post issuance work has strong economic countercyclicality

and has produced sound returns for our shareholders

over time.

Highlights
Following a difficult 2021, when we reported a 9.4% decrease

in revenues for the Corporate Trust business, we are pleased

to report revenue growth of 8.7% in 2022, despite challenging

market conditions.

As noted at the half year, the majority of the capital markets

transactions that sit on our books have been built up over many

decades and have contractual inflation-linked fee increases for

our services. These fee increases are applied on each transaction

anniversary. As 2022 progressed and inflation remained at

elevated levels, the more such inflation-linked increases fed

through to our book of business.

Our business is built on trust and independence, our domain

expertise, and our ability to move fast.

Outlook for our corporate trust business
Levels of primary market activity are difficult to predict. Growth

in European primary debt issuance revenues over the past four

years illustrate this well at -14% for 2019, +21% for 2020, +1% for

2021 and -23% for 2022 respectively (source; Dealogic). Our post-

issuance work is equally difficult to predict, but historically has

had a strong economic countercyclicality.

We continue to increase our range of products and broaden and

deepen our relationships with clients, law firms and financial

institutions that underpin activity in this market. We have

hired extra business development resource to help to grow

this business and we are increasingly raising our profile within

the marketplace for our services. Even if year-on-year revenue

growth can be somewhat lumpy, we are confident that, over

time, we can continue to grow this business.

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Chief Executive Officer’s review continued

Case study: National Lottery

Highlights
As I announced in the 2021 Annual Report, Vicky Paramour was

appointed as Managing Director for our Pensions business,

We have worked with Camelot since the inception of

with Sankar Mahalingham heading up the fast-growing

the National Lottery in 1994. Our role as Security Trustee

Pegasus side of the business. 2022 was another strong year for

is designed to protect players from the insolvency of

the operator and requires our daily engagement with

Camelot, with whom we have built a tremendous

relationship. In September 2022 the Gambling

Commission announced that it had awarded the fourth

our Pensions and Pegasus business with growth in revenues

of 9.8%. Over the past five years, compound revenue growth is

a healthy 12%. In our core Trustee business, we were delighted

to add incremental appointments that included names such as

Riverstone, SEI Master Trust and Invesco.

National Lottery Licence to Allwyn. We are delighted

We recognise that revenue growth is driven by investing in

that Allwyn, recognising our long-standing experience

the best people and we remain committed to continuing to

and expertise in this area, selected us to be the

Trustee for their bid and that as such we will

continue our work on the National Lottery for at

least a further 10 years.

Pensions

We are one of the largest independent providers of Pension

Trustees in the UK and, throughout 2022, continued to support

our clients as the pensions landscape evolved.

Our Pegasus offering of outsourced pensions executive

solutions is a leading provider in the UK in a fast-growing

market.

Market dynamics
While many large pension schemes have a professional

trustee appointed to their board, around 50% of schemes in

the UK have not yet appointed a professional trustee – these

are mainly small to medium-sized schemes.

do so. During the year, we continued to invest in our trustee

team both at the director level as well as professional trustees

with a specific focus on broad pension industry and pensions’

management skillsets, to service our increasing portfolio of
smaller to medium sized schemes. We also continued to invest

in regional and international talent. In Manchester, we hired our

first pensions trustees alongside our Pegasus employees to

service a large pool of potential clients based in this region and

we will continue to add to this capability. We also expanded our

capability in Ireland, to cover increasing opportunities in the

Irish market from both local and international companies.

During the year, Pegasus continued to grow, with more full

outsourced pension management wins, alongside interim

resource and project support. Pegasus offers a range of

services from simple pension scheme secretarial services

through to fully outsourced pensions management and

professional sole trustee solutions. After five years, this

business now has revenues of approximately £4m per annum.

We have a broad product range and client base and we see

increasing demand for our expertise to independently support

projects such as GMP equalisation and de-risking. We also

In 2022, the DWP published its consultation on new funding

continue to invest in hiring professionals with buy in, buy out

and investment regulations, with a focus on having a longer-

and wind-down experience which is of value to a growing

term strategy for all pension schemes. Together with the

number of schemes.

new code of practice on funding due to be in force in 2023,

this will push schemes to consider investment strategies and

their “end-game” planning in more detail. We expect that this
will continue the trend of sponsors and schemes to look to

strengthen the level of professional expertise on their pension

Outlook for our Pensions business
The increasing governance burden for UK pensions schemes
means that there are more opportunities for providing

independent professional support to schemes of all sizes.

scheme trustee boards.

For example:

In addition to these regulatory developments, the gilt market

and associated LDI crises in late September and October

2022 further highlighted the need for professionalism, good

governance and the need to react quickly to significant

market events.

The UK regulator will also, in 2023, introduce a single

combined code of practice, focusing on improving governance

and requiring schemes to assess the risks being run in their

schemes. These new requirements will encourage schemes to

identify gaps in governance. Any resulting resourcing issues

may encourage more to outsource.

• The knock-on effects of the LDI crisis in 2022 are likely to give
added impetus to the appointment of professional trustees

• New funding and investment regulations are likely to require
greater support and challenge from trustee boards, including

negotiations with sponsors

• Corporate sponsors will consider to what extent the efficient
processes associated with professional corporate sole trustee

models will ensure value for money while helping schemes

manage their risks

• Schemes moving towards full de-risking solutions are likely to
need to call on greater professional expertise and experience.

lawdebenture.com

Chief Executive Officer’s review continued

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Many sponsors of pension schemes continue to face resourcing

for an IPO, including support post listing. Our clients range

issues, for example where:

• In-house administration is outsourced for the first time

from major Main Market and AIM listed companies, including

investment trusts, to UK operating subsidiaries of top global

brands. Our fees vary between fixed annual fees for specifically

• Succession planning issues become relevant as pension

scoped mandates but can also be time or project-based.

managers and their teams retire

• Increased governance requirements put stress on already

under-resourced teams

Rather than continue to operate with full in-house teams, there

are likely to be an increasing number who will look to outsource

all or part of their functions to third parties. This provides

opportunities for the Pegasus business to grow substantially by

taking on these large, outsourced mandates.

In addition, given the highlighted market dynamics, driving

the increased professionalisation of pension governance and
complex pensions laws that require expert navigation, we believe

that the market for our expanding range of pension governance

services will continue to increase steadily over time.

Corporate services

Corporate Services has four well-diversified constituents:

Corporate Secretarial Services (‘CSS’), our whistleblowing

division, Safecall, Structured Finance Services and Service of

Process. Pleasingly, all businesses grew or maintained their

revenue during the year, although the total increase in revenues,

up 7.7%, was affected by CSS. In the prior year, the CSS result was

for an 11-month period, the acquisition having completed at the

end of January 2021.

Corporate Secretarial Services

CSS – Market dynamics
We operate in three main product areas.

Demand here is often for 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 in based in London.

Interim resourcing: Here we provide immediate access to
qualified governance professionals, whether on-site or remote,

and 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 basis. This team is based in London.

Corporate governance standards are being elevated worldwide

and our evidence is that outsourcing growth trends have

been accelerated by the pandemic. Large in-house company

secretarial departments are typically decreasing in number and

are suffering from underinvestment. We have been offering

solutions in this sector for over twenty years, have critical mass

and are confident of our ability to increase our market share over

time in a growing market.

We continue to strive to provide services to which support

our clients’ needs. In response to changes in legislation, we

have become authorised to act as a verifier for the Register of

Overseas Entities, providing an essential service for overseas

clients and contacts acquiring property in the UK.

CSS – Highlights
Frustratingly, we were unable to expand our client base as much

as we would have liked during the year because the demand for

our products and services in 2022 exceeded our ability to offer

appropriate resourcing, particularly in the interim and corporate

governance services areas.

Managed services: We deliver Global Entity Management
services to over 350 clients, acting as a single point of contact

Increasing our capability with appropriately qualified people is

something that we are continuing to address. We transferred

to ensure that overseas legal entities are kept in good standing

across 46 people at the time of the acquisition in 2021 and, at 2022

for international compliance. 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 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 are

investing heavily here. Our team is based in our London and

Manchester offices.

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,

governance and listing rules support to companies preparing

year end, our headcount in this business was 64. We will continue
to hire and develop the right people, skills, technology and

infrastructure that we require in order to deliver a first-class service.

We have also invested in the leadership of this business. Upon

her return from maternity leave in late summer 2022, our COO

and Executive Director, Trish Houston, took on the responsibility

for the day-to-day running of this growing business. Trish brings

renewed rigour to ensure that this business can grow sustainably

over time and take full advantage of the opportunities that exist

in this growing market.

Despite the capacity constraints referred to above, we added

to our client roster, winning work to support several Investment

Trusts managed by Schroders, as well as the LXI REIT. It is

pleasing too that there have been a number of new clients

on the Managed Service side, including several FTSE 100 and

Fortune 500 groups and FTSE 250 groups on the corporate

governance services side.

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Chief Executive Officer’s review continued

Case Study: Schroder Investment
Management Limited – interim
company secretarial support

Global investment manager, Schroder Investment

Management Limited, part of Schroders plc, which has a

market capitalisation of over £7bn, listed on the London

Stock Exchange and a constituent of the FTSE 100 Index,

was seeking to use a professional services team to provide

interim support to their specialist investment trusts

secretariat team. They selected LawDeb.

LawDeb’s Investment Trust Company Secretarial Services

team, a specialised team within the Corporate Secretarial

Services division, provided interim support to a number of

Schroders’ investment trusts for eight months during 2022.
Our team was seconded to Schroders’ company secretarial

team, predominantly working remotely but also from their

offices on occasion to provide a more integrated

solution. Services included full Board and

Committee support, governance advisory and

corporate and regulatory reporting support.

Whistleblowing: Safecall – Market dynamics
The emerging regulatory frameworks and standards that we

have highlighted for some time now continue to accelerate

throughout the developed world. The whistleblowing concept

is understood and widely discussed, and we are seeing a

growing demand for our products and services. Several 2022

news headlines on a national level were driven by some sort

of whistleblowing activity. Early adopters of independent

whistleblowing services were often larger entities, but

increasingly smaller and mid-sized employers are adopting this

emerging best practice.

Revenues from new clients were again a record and among

the 134 new clients we took on in 2022 were EDF Renewables,

WHSmith, The Entertainer Ltd and CFC Underwriting.

In order to build on our momentum, we will be investing further

across all aspects of the business in 2023. As well as investment

in our technology platform, we will add further capacity to our

operations team, expertly managed by Tim Smith. Moreover, we

will add further headcount to our sales, account management

and marketing initiatives in order to accelerate our growth.

Structured finance services – Market dynamics
This business is based on providing accounting and corporate

administrative services mainly to Special Purpose Vehicles

(‘SPV’s’) and other similar corporate structures. Typical buyers

would include financial institutions that wish to gain risk

exposure to a particular asset type- for example Aircraft Leases

or Mortgages or companies being established as part of a

corporate acquisition. These buyers regularly access third-party

outsource providers to help them with the servicing of the

assets. Boutique asset managers (Private Equity and Hedge

Funds) and challenger banks are growing users of these services

together with overseas businesses acquiring companies in the

jurisdictions we serve.

The competitive landscape is dominated by the larger providers

with long-established relationships. We are a small player in

the sector but, thanks to Mark Filer and his team, receive strong

praise from our clients.

Case study: Keller – a global
whistleblowing partner

“The company has been working with Safecall for a number

of years now for the provision of a speak-up hotline on a

global basis. I only joined the company a couple of years

Unsurprisingly, competition is increasing in this growing market.

ago but have been quickly reassured by the professionalism

As with all of our IPS business, what differentiates us is the

of the team, their common sense approach and timely

quality of our people. All enquiries are dealt with by our highly
trained staff that consists of former police officers. Time and

advice. The training opportunities are also of high quality.

We recently extended the speak-up hotline to our supply

again, the quality of the work that we do for our clients receives

chain and the process has gone smoothly. Very

high praise.

happy overall with the services.”

Whistleblowing: Safecall – Highlights
Yet again we provided a record number of reports to our clients

in 2022, up 20% on 2021. Increasingly, digital channels are being

used to raise and manage issues, so we were delighted to

have rolled out our new client portal during the year. In order

to compete more effectively, we will invest in further digital

capability throughout 2023.

Under new leadership of Joanna Lewis, who joined us at the end

of August 2021, we have expanded our sales team and invested

in an expanded account management set up. Results to date

Silvana Glibota-Vigo, Group Head of Secretariat,

Keller

Structured finance services – Highlights
Despite capital markets new issuance levels being particularly

challenged during 2022, we were delighted to receive repeat

appointments from a number of names operating in the sector.

Quotes for new business and wins were both new records. Our

challenge is to raise our profile with a broader universe of clients.

have been encouraging, with increasing demand from existing

Our paying agency business also grew steadily during the year

clients for our training and investigations offerings. During the

to record levels and we were pleased to see the number of

course of 2023, we will look to expand these offerings.

professional firms referring business to us continuing to increase.

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We are proud to have delivered a 114% increase in dividends per share

over the last ten years with 44 years of increasing or maintaining dividends.

A particular highlight was being asked to take over an

shared service centre in Manchester to support our Accounts

appointment from a competitor on a new innovative protective

Payable, Accounts Receivable and Debtor management

cell company structure for the London insurance markets.

operations. We have grown our HR team, with a new approach

These structures are in their infancy and have been created

to appraisals and objectives, put in place career frameworks to

with the aim of keeping reinsurance in London rather than in

provide visibility and support to our staff as they look to develop

offshore centres.

their roles and rolled out the first two of our “Future Leaders”

Another win, was the appointment to undertake operational

training programmes.

accounting work for one of our CSS clients. We believe that this is

We launched new healthcare and pensions arrangements across

a potential area of growth for our business.

the firm at the start of 2022. We also made a one-off payment

Service of process – Market dynamics
Under the leadership of Anne Hills, this remains our highest

of £1,000 to support our lowest-paid employees navigate the

cost-of-living crisis. We have added expertise in Finance, Risk,

Legal and Compliance, and, under the leadership of Suzy Walls,

volume business. We have well over 50,000 appointments on

boosted our Business Development resource. These investments

our books and typically enter into over 10,000 new appointments

are essential to be able to grow our businesses sustainably. While

each year. Of all of the IPS business, its results are most

we will selectively add resource in these areas in 2023, at this

correlated to levels of global economic activity.

point, from a headcount perspective, we consider much of the

significant incremental investment to have been completed.

Service of process – Highlights
Following an encouraging first half of the year, the surge in

inflation and interest rates and the corresponding slowdowns

Information Technology

reported in GDP growth around the world unsurprisingly made

Our IT capability has radically changed over the past few years.

for a much tougher second half of the year. We ended the year

Thanks to David Williams and his team, we now have a cloud-

essentially flat to 2021. Given the significant reduction in primary

based infrastructure, our employees (circa 300 colleagues) can

capital markets activity (a key source of appointments), we

believe this is a result with which we can be satisfied.

Our upgraded technology, together with our increased

be fully remote or office based as required, and an IT team of 17,

whose proactive role is to deliver new software solutions for our

businesses and clients in a controlled, scalable manner.

headcount, has built capacity. We are more outward looking and

In last year’s Annual Report, we wrote that professional services

better coordinated with our business development and sales

firms’ success will be increasingly defined by their commercial

activities and so well-positioned for future growth.

offerings’ “ease of use”. We made solid progress here in 2022.
Among our accomplishments were delivery of a new client

Outlook – for our corporate services business
We are pleased to have grown revenues in all four businesses in

portal for Safecall, implementation of a new client and supplier

onboarding portal and roll-out of an invoice payment portal

our Corporate Services reporting segment in 2022.

for clients.

It is an important advantage in these sectors to be an integral

Nonetheless , we still have further work to do and will continue to

part of a well-capitalised, 134 year old, listed organisation willing

accelerate our technology improvements. Our main deliverables

to invest for the long term. Many of our competitors are private

in 2023 will include rolling out new modules for our Safecall

equity owned and subject to different operating demands.

clients and establishing an improved workflow management

The markets in which we operate are growing and we believe we

are well placed to exploit future opportunities.

Support functions

infrastructure for our CSS business.

Prospects

Law Debenture is resilient by design. The combination of IPS

Over the last few years, we have made a significant investment

with the Investment Portfolio is a well proven model and I am

in modernising our central support functions. With oversight

cautiously optimistic about the Group’s progress in 2023 and

from our CFO, Hester Scotton, we have now fully embedded our

beyond. I think that IPS is well positioned for medium-term

S T R A T E G I C R E P O R T

Chief Executive Officer’s review continued

growth in line with our mid to high single percentage target. We

continue to look for opportunities to grow IPS through organic

investment and disciplined acquisitions, where appropriate.

We are encouraged by recent senior hires, good new business

momentum and continue to invest to ensure we gain market

share and maintain longer-term growth.

On behalf of the Board, I want to thank my colleagues for

their outstanding dedication to developing Law Debenture’s

client service. I am also very grateful for the continued support

of shareholders.

We are cognisant that 2023 will present challenges but I am

confident that the people, investment and significant actions we

have taken mean that we are well positioned to take advantage

of longer-term growth opportunities and maintain our 44-year

record of maintaining or raising the dividend.

Denis Jackson
Chief Executive Officer

27 February 2023

lawdebenture.com

IPS 5 year performance at a glance

IPS net revenue and PBT – 5 year performance

Department

Pensions

Corporate trust

Corporate services

IPS net revenue

% Revenue growth

Profit before tax

% growth in PBT

2018
£000

9,488

8,362

11,734

2019
£000

2020
£000

2021
£000

5yr Revenue
Variance
£000

5yr Revenue
Variance
%

2022
£000

10,598

11,479

13,060

14,343

9,024

12,167

10,789

12,226

9,771

10,620

18,7551

20,206

29,584

31,789

34,494

41,586

45,1692

21%

4,855

2,258

8,472

15,585

51%

27%

72%

53%

10,481

11,465

12,227

13,340

14,422

3,941

38%

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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 £8.2m from gross revenue of £53.4m.

5 YEAR IPS NET REVENUE

5 YEAR PROFIT BEFORE TAX

£’000s
50,000
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0

£’000s
15,000

14,000

13,000

12,000

11,000

10,000

9,000

8,000

2018

2019

2020

2021

2022

Pensions

Corporate trust

Corporate services

2018

2019

2020
Proﬁt Before tax

2021

2022

Source: Law Debenture as at 31 December 2022.

IPS Valuation

EBITDA

Multiple

31.12.2018
£000

31.12.2019
£000

31.12.2020
£000

31.12.2021
£000

31.12.2022
£000

5yr growth
%

10,424

11,515

13,335

15,369

16,588

8.4

9.2

9.4

10.8

10.5

59%

25%

99%

89%

IPS fair value (excluding net assets)

87,562

105,938

125,349

165,985

174,174

NAV adjustment: total value less net assets already included

78,439

91,860

112,407

135,885

148,376

See page 35 for commentary on the IPS valuation.

IPS EBITDA & APPLIED MULTIPLE

TOTAL IPS FAIR VALUE (excluding net assets)

£’000s

20,000

15,000

10,000

5,000

Multiple x

2018

2019

2020

2021

2022

EBITDA

Multiple

£’000s
200,000
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0

2018

2019

2020

2021

2022

Source: Law Debenture as at 31 December 2022.

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Photo credit: Jason Hawkes

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Investment managers’ review

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Our investment strategy

Over the long term it is our view that the diversification in
our underlying holdings aids consistency of performance

proper attention to companies, investments can be made in
businesses that can produce results, almost regardless of what is

and protects capital. That said, in 2022, as we explore in the

happening in the wider economy. While there are fewer variables

Performance section below, this worked against us to some

and unknowns at the micro level, they do still exist and this is the

degree. There is no common theme to the stocks held other than

reason for long lists and diversification.

they are good at what they do and, we believe, have forward-

thinking, dynamic management teams. They cover a wide variety

of activities. They are all sizes (in market capitalisation terms).

We try and blend the different risk profiles they have within the

Portfolio. For instance, we have conventional energy stocks as

well as alternative energy suppliers.

Unusually for a portfolio that is in the equity income sector,

there are a number of zero dividend-paying shares. The

contribution from the Independent Professional Services

business to the revenue pool means the Portfolio can hold

these shares without affecting the level of income generated

overall. This is a significant advantage Law Debenture has

This diversification does not stop us making strong views about

over other investment trusts in our peer group and means we

an individual company count in the portfolio. It is an approach

have a larger choice of investment opportunities than most

focused on stocks. We believe that, by paying attention to what is

other funds in the income sector. We take advantage of this

happening at companies, value can be added. It is better to do it

freedom by buying some recovery shares before they become

this way rather than having a Portfolio built around large macro-

dividend payers and young, immature companies we believe

economic views. There are too many variables and unknowns

will be significant businesses of the future. It is fundamentally

to have conviction at a macro level. However, if we are paying

important to grow the capital value of the Portfolio if long-

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Alternative Performance Measures

NAV total return (with IPS at fair value and debt at par)1

NAV total return (with debt and IPS at fair value)1

FTSE Actuaries All-Share Index total return2

1 year
%

(6.8)

0.6

0.3

3 years
%

16.8

26.0

7.1

5 years
%

10 years
%

30.3

39.9

15.5

141.5

154.6

88.2

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 long-term borrowings, whereas NAV total return with debt at fair value includes the fair value adjustment (see page 152).

2 Source: Refinitiv Datastream, all references to ‘FTSE All-Share’ and ‘benchmark’ in this review refer to the FTSE Actuaries All-Share Index total return.

term income growth is to be achieved. The recovery and small

illustrated by the table below, the FTSE 100 top 20 made positive

company element of the Portfolio can help to provide long-

returns during the year. It is within the FTSE 100 top 20 that the

term capital growth. When successful small company and

very large oil and resource companies reside. For instance BP,

recovery investments can be recycled into income-producing

Shell and Glencore all made very good share price progress as

investments, underpinning longer-term dividend growth.

a result of the Ukraine war leading to the appreciation of raw

Investment process

Different valuation metrics are used in different sectors. The

investment approach has a valuation filter because the entry

price a stock is bought at matters, as even the best companies

are likely, over time, to mature and decline. The life cycle for

many businesses is getting shorter as the global economy is

competitive, with new entrants always likely to challenge the

established order. Therefore, high valuations are vulnerable

because of the pace of this economic change.

We visit and meet potential investments, looking for companies

that are in a strong competitive position with management

teams that have the qualities needed to grow the business. There

is no blueprint for this other than drive and a degree of flexibility.

material prices. At the same time the rise in the price of oil and

gas has hurt energy using companies and this led to a slowdown

in UK economic activity. In the largest 20 companies in the UK

FTSE 100 index more than 80% of their earnings are derived from

overseas. The smaller quoted companies are more closely tied

to the fortunes of the UK economy. During the year, funds with

a broad list of companies large, medium and small were very

likely to underperform when virtually only a select few very large

international companies could prosper.

Stock attribution

Given the ramifications of the Russia Ukraine war, it is not

surprising that the best performers were oil and resource stocks,

such as BP and Glencore, as well as a manufacturer of defence

The Portfolio turnover is usually around 20% per annum, so a

relatively long-term time horizon is fundamental to the process.

Top five gains

Performance

We always aim to outperform the benchmark over one, three,

five and ten years. Whilst we continue to outperform in the

medium and long term, this last year has been challenging with

the Portfolio declining in value by ~10%. This has been offset by

the fair valuation of debt and the increase in the fair value of

the IPS business. The under-performance of the Portfolio was

driven by holding a larger weighting in smaller size companies

relative to the benchmark. In comparison, the benchmark is

heavily weighted in the largest 20 stocks in the UK market. As

The five largest gains during the year were:

Stock

BAE Systems

Glencore

Rio Tinto

£ Appreciation % Appreciation

8,230,800

5,375,563

3,854,182

3,397,500

43.69%

54.32%

58.74%

18.52%

Standard Chartered

3,281,142

38.80%

Top five losses

Full Year 2022
%

The five largest losses during the year were:

Index

FTSE All-Share

FTSE 100

– FTSE 100 top 20

– FTSE 100 bottom 80

FTSE 250

Numis Smaller Companies Index (excluding Its)

0.34

4.70

15.70

-17.20

-17.39

-17.87

FTSE AIM All-Share

-30.67

Watkin Jones

lawdebenture.com

Stock

£ Depreciation % Depreciation

Accsys Technologies

(10,689,194)

(67.98%)

Ceres Power

(8,842,543)

(67.72%)

Marks & Spencer

(6,752,893)

(47.84%)

IP Group

(6,188,997)

(54.89%)

(5,973,819)

(61.74%)

Investment managers’ review continued

equipment, BAE. The detractors are a mixed group. Accsys, a

an unquoted company, Britishvolt, that intended to manufacture

company that focuses on the sustainable transformation of wood,

batteries for EV cars. Britishvolt had been seen as a landmark

was a large positive contributor in the past. However, it has had

project to boost the country’s production of EV components. The

problems building and commissioning a new plant. Therefore,

project was saved from administration in November 2022 after

although the demand for its products is growing, the growth

securing additional funding, only to re-enter administration in

of the company has been severely held back. It is hoped that

January 2023. We wrote the investment down to zero before the

the new plant will come on stream and the company will again

year end. It illustrates the problems facing the alternative energy

progress. Ceres Power was the largest contributor to the fund

sector and the lack of access to meaningful amounts of capital

in 2020 and considerable profits were taken but, unfortunately,

which will be needed if EV car manufacturing is to flourish in the

we did not sell the entire holding. The share price had got ahead

UK. The only other unquoted investment of note in the Portfolio

of what has actually been achieved and this has unwound. The

is Oxford Science Innovation. This is a company that helps early-

company may play a real role in the move away from fossil fuels

stage businesses that come out of Oxford University. It has been a

with its fuel cell technology. The company appears to be making

successful investment since we invested in it in 2015 with the NAV

progress even if this is happening at a slower pace than investors

up over 60%. The unquoted exposure in the Portfolio will remain

had hoped so, on the share price fall, we are buying back some of

small. The low level of valuations has led to corporate activity,

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the stock we sold.

Portfolio income

The income that was generated by the portfolio rose from

£26.3m in 2021 to £34.4m for 2022, an increase of 31%. There are

several reasons behind this. Some companies returned to paying

dividends having stopped paying during the pandemic. The

level of special dividends was particularly high, the most notable

with companies taking the opportunity to take over quoted

companies. The notable example during the year for the Portfolio

was Euromoney that received a successful cash bid.

The number of stocks in the Portfolio has risen and the Board

has given authority for the maximum number to be 175. This is

because we often start by buying a small holding in developing

companies and adding when they have good projects that need

more capital. This feature of the overall Portfolio differentiates us

from other funds in our sector and, we believe, has added value

being NatWest Bank of £1.2m, and a distribution of capital from

Aviva of £3.4m. There was underlying good repeatable dividend

over time.

growth across our holdings. The reduction of the US holdings

and the increased exposure to the UK has also benefitted

the income account. The dividend yield on the UK market is

substantially higher than other major stock markets. We think

it is likely the dividend growth from the underlying stocks will

continue in 2023.

Portfolio activity

The relative low turnover of stocks and value bias approach has

been behind the activity.

The valuation on US stocks, particularly early on in the year,

looked stretched, so holdings in Applied Materials and
Schlumberger were sold. They are both excellent companies; the

issue was valuation. Applied Materials fell as economic slowdown

concerns surfaced. The fall was substantial and has allowed us to

Economic background

The major event in the global economy during the period

was the upward move in interest rates, as a result of inflation

breaking out everywhere. The catalyst was the Russian attack

on Ukraine, forcing up oil prices as well as agricultural products.

Prices in other products and services responded by increasing

at rates not seen for forty years. However, inflationary pressures

had been building before the Russian attack. The effect of

Covid-related restrictions led to supply issues in many product

areas. The monetary expansion required to alleviate the worst

effects the pandemic had in many areas was always likely to

stimulate inflation.

20 YEAR UK GILT MID YIELD TO MATURITY

buy the stock back towards the end of the year. High valuations

Yield (%)

among the select few companies in favour in the UK meant the

holding in Relx was sold. It has been in the Portfolio for many

years adding considerable value, but the valuation meant we

believed we could recycle into other UK stocks. Among the new

purchases within the Portfolio were Cranswick which produces

and supplies meat products. It has been a consistently successful

company and this is expected to continue. A holding in Castings

was added. It is a UK foundry business that has weathered

recessionary conditions many times. There is a lack of foundry

capacity in the UK, which should mean it will keep performing

well in operational terms and this is not reflected in the valuation.

The Portfolio in recent years has benefited from an exposure to

alternative energy stocks. During the year, we made a purchase in

2
0
0
2

3
0
0
2

4
0
0
2

5
0
0
2

6
0
0
2

7
0
0
2

8
0
0
2

9
0
0
2

0
1
0
2

1
1
0
2

2
1
0
2

3
1
0
2

4
1
0
2

5
1
0
2

6
1
0
2

7
1
0
2

8
1
0
2

9
1
0
2

0
2
0
2

1
2
0
2

2
2
0
2

3
2
0
2

Source: Bloomberg, January 2022.

S T R A T E G I C R E P O R T

Investment managers’ review continued

The upward move in interest rates, as illustrated by the chart

result of share issuances, which brought in £41.4m over the year.

above, after a prolonged period of unnaturally low rates led to

This gives us the ability to remain active net buyers of equity as

a number of foreseeable consequences. Property prices fell,

opportunities present themselves. It will allow us to keep the

as did other alternative asset classes, as investors demanded

Portfolio refreshed.

higher yields. However, the fall in the economy generally has

not so far been as marked as some predicted, the reason

being that, although interest rates were very low, this had not

resulted in high levels of bank borrowing overall in the economy.

The regulations brought in after the banking crisis had made

accessing the low rates difficult for many. Therefore, the rapid

rise in interest rates has slowed the economy, but not brought

about deep recessionary conditions. This can be evidenced in

the UK by the continued low level of unemployment. Inflation, as

well as meaning interest rates rise, has put an upward pressure

on wages, leading to public sector strikes. The debate rages

about how entrenched inflation has become.

We remain mindful of this difficult economic backdrop, but the

Portfolio is invested in individual companies not in “UK plc”. The

businesses we regularly see are dealing with the cost pressures

and achieving price increases for their products, which is

resulting in a preservation of operating margin.

Portfolio update and gearing

REGIONAL EQUITY INDICES CYCLICAL ADJUSTED PE(X)

Outlook

The intention is to be a net buyer of equities. Investors’ macro

concerns have meant that valuation levels for companies are at

historical lows. This is particularly the case with UK shares. There

are opportunities to add positions for the Portfolio in companies

that fulfil our investment criteria and we will continue to add

to the Portfolio. The purchases will be in a diverse range of

companies, as the testing economic conditions will mean some

companies disappoint expectations. However, the dynamism

and strengths to be found in some UK companies is not being

recognised but, we are confident, it will become so, as some of

the economic concerns are slowly resolved.

James Henderson and Laura Foll
Investment managers

27 February 2023

1999

2003

2007

2011

2015

2019

2023

North America

Europe ex UK

Source: Refinitiv DataStream, Janus Henderson Investors Analysis, as at 10 January 2023.
Notes: Cyclically adjusted PE based on 10 year average earnings. Indices shown are FTSE
All-Share, FTSE World Europe ex UK and FTSE North American.

During the year we reduced the exposure to US stocks by

around £16m and increased the holdings in the UK by about

£40m. The UK market is not only relatively attractive but is on a

cheap valuation, as can be seen in the chart above. The overall

gearing on the portfolio fell from 13.3% to 11.8% by year end as a

lawdebenture.com

Portfolio by sector and value

Portfolio by sector
2022

Portfolio by sector
2021

Oil and gas 10.9%

Basic materials 8.7%

Industrials 21.7%

Consumer goods 7.7%

Health care 8.1%

Oil and gas 10.1%

Basic materials 9.7%

Industrials 20.7%

Consumer goods 7.4%

Health care 7.2%

Consumer services 9.0%

Consumer services 8.8%

Telecommunications 2.0%

Telecommunications 2.6%

Utilities 3.2%

Financials 27.4%

Technology 1.3%

Utilities 4.4%

Financials 27.5%

Technology 1.6%

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Geographical distribution

of portfolio by value
2022

of portfolio by value
2021

United Kingdom 83.2%

North America 5.1%

Europe 10.6%

Japan 1.1%

United Kingdom 82.6%

North America 5.4%

Europe 10.0%

Japan 1.1%

Other Pacific 0.7%

Other 0.2%

S T R A T E G I C R E P O R T

Fifteen largest holdings: investment rationale

as at 31 December 2022

Rank
2022 Company

Shell

Location

% of portfolio

Approx
Market
Cap.

Valuation
2021
£000

Purchases
£000

(Sales)
£000

Appreciation/
(Depreciation)
£000

Valuation
2022
£000

3.27

£113.51bn

20,280

—

8,795

29,075

Shell is a vertically integrated oil & gas company, with a diverse range of businesses including upstream oil & gas, renewables,

chemicals and retail. Within the upstream division, Shell has a significant exposure to natural gas, which, in our view, will serve as a

key transition fuel on the route to de-carbonisation. The fossil fuel business has experienced strong cash generation due to high oil

& gas prices, with this being used to fund the material investment required within the renewables area to facilitate the company’s

transition and provide for cash returns to shareholders via dividends and share buybacks.

3.05

£90.05bn

18,838

—

8,231

27,069

BP is a vertically integrated oil and gas company. Under a new CEO, BP has announced ambitious plans to reach net zero carbon

emissions by 2050 and gradually transition away from fossil fuels towards renewable energy. The cash generation from their oil &

gas business should enable this transition to take place, while also continuing to fund cash returns to shareholders via dividends and

share buybacks.

HSBC

2.52

£129.16bn

19,454

—

2,906

22,360

The company is one of the largest banking and financial services companies in the world serving more than 40m customers around

the globe. It has brought a clearer focus to its business by exiting areas where it lacks clear advantages.

Rio Tinto

2.44

£46.61bn

18,345

—

3,398

21,743

The company focuses on mining aluminum, copper, gold, iron ore, lead, silver, tin, uranium, zinc, diamonds and zircon. It is often the

lowest cost producer which allows it to deal with the volatility of commodity prices.

GlaxoSmithKline

2.24

£69.56bn

26,911

718

—

(7,646)

19,983

The company is a research based pharmaceutical company with a strong R & D pipeline. There is a clearer focus after disposals on the

science of the immune system, human genetics and the use of advanced technologies.

Barclays

2.19

£16.39bn

20,196

2,355

—

(3,053)

19,498

Barclays has a strong retail lending franchise combined with an investment bank. Over time its strong retail franchise should allow

it to generate good returns on capital. However, in the past, these have not consistently come through because of bad debts and

persistently low interest rates. The bad debt provisions appear now to be robust and the direction of interest rates from here is likely

to be upwards. Therefore, the strengths of the bank are expected to come to the fore.

Flutter Entertainment

1.96

£19.89bn

8,812

6,919

—

1,761

17,492

The company offers betting on a wide range of sports as well as online games including bingo and poker. They are growing fast in the

US as gambling opens up in more states. They have a responsible attitude towards their customers.

NatWest

1.93

£24.33bn

14,100

—

3,138

17,238

NatWest is one of the largest commercial and retail lenders in the UK. In recent years it has largely exited its markets business and re-

focussed on its original area of strength (domestic lending). The balance sheet has been steadily improved over the decade since the

financial crisis, leaving the business in a good position to steadily return cash to shareholders via dividends and share buybacks.

Anglo American

1.63

£28.00bn

13,572

—

977

14,549

Anglo American is a diversified mining company with exposure to commodities including copper, iron ore, diamonds and platinum.

It is well positioned to benefit from the need to decarbonise the global economy. For example, it is significantly exposed to copper

where demand is likely to grow driven by its use in electric vehicles as well as renewable energy. Anglo American are also among the

leaders within the mining sector on environmental targets, aiming to be carbon neutral in their own operations by 2040.

10. Direct Line Insurance

1.59

£4.18bn

13,950

3,211

—

(3,004)

14,157

Direct Line is one of the leading motor and home insurers in the UK, with a well-known consumer facing brand. The company is a

disciplined underwriter, with a history of generating good returns in a competitive UK insurance market. The company has recently

warned on its profits as a result of poor underwriting. Management change is underway and we will be reviewing the position.

lawdebenture.com

Fifteen largest holdings: investment rationale continued
as at 31 December 2022

Rank
2022 Company

Location

% of
portfolio

Approx
Market
Cap.

Valuation
2021
£000

Purchases
£000

(Sales)
£000

Appreciation/
(Depreciation)
£000

Valuation
2022
£000

11.

Lloyds Banking Group

1.53

£34.31bn

14,340

—

(717)

13,623

Lloyds is a leading retail and commercial lender in the UK. Its strong market share within UK mortgage lending allowed it to

historically generate good returns versus peers. In the period since the financial crisis, the balance sheet has been gradually

strengthened, which could allow good returns to shareholders via dividends and share buybacks.

12. Morgan Advanced Materials UK

1.5

£0.75bn

13,783

1,071

—

(1,488)

13,366

The company produces advanced materials that provide components used in aerospace, satellites, power generation, the medical

sector and trains. Their strong positions in these sectors is expected to give rise to sustained long term growth.

13.

National Grid

1.47

£27.97bn

14,934

—

(1,218)

(658)

13,058

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.

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14.

Sanofi

France

1.44 £103.68bn

8,559

3,639

—

617

12,815

Sanofi manufactures and develops prescription pharmaceuticals in particular for the treatment of thrombosis and the central nervous

system. They are a leader in oncology medicines, These are all areas of real growth.

15.

Tesco

1.33

£17.13bn

13,488

1,697

—

(3,297)

11,888

Tesco is the largest food retailer in the UK. Its leading market share means it is in a strong position to negotiate volume discounts with

its suppliers, which can in turn be passed onto the end consumer allowing Tesco to maintain a competitive price point. The business

produces substantial free cash flow which can be returned to shareholders via an attractive dividend yield and share buybacks.

2323

S T R A T E G I C R E P O R T

Classification of investments

based on market values as at 31 December 2022

Oil and gas
Alternative energy
Oil & gas producers
Oil equipment services & distribution

Basic materials
Chemicals
Forestry & paper
Mining

Industrials
Aerospace & defence
Construction & materials
Electronic & electrical equipment
General industrials
Industrial engineering
Industrial transportation
Support services

Consumer goods
Automobiles & parts
Food & drug retailers
Food producers
Household goods & home construction
Leisure goods
Personal goods

Health care
Health care equipment & services
Pharmaceuticals & biotechnology

Consumer services
General retailers
Media
Travel & leisure

Telecommunications
Fixed line telecommunications
Mobile telecommunications

Utilities
Electricity
Gas, water & multiutilities

Financials
Banks
Equity investment instruments
Financial services
Life insurance/assurance
Nonlife insurance
Real estate investment trusts

Technology
Advanced medical equipment & technology
Software & computer services
Technology hardware & equipment

Other
Other
Sustainable energy

TOTAL 2022

TOTAL 2021

lawdebenture.com

UK
%

North
America
%

Europe
%

Rest of the
world
%

Total
2022
%

Total
2022
£000

Total
2021
%

Total
2021
£000

0.51
8.16
1.38
10.05

0.88
0.83
4.87
6.58

4.02
4.27
2.79
1.14
2.39
0.62
2.76
17.99

0.35
1.33
0.79
1.83
—
0.70
5.00

1.29
3.23
4.52

2.99
2.06
2.60
7.65

0.91
0.90
1.81

0.61
2.62
3.23

9.49
2.85
4.15
4.08
2.70
1.93
25.20

0.27
—
—
0.27

0.10
0.86
0.96

83.26

82.57

—
0.75
—
0.75

0.33
—
—
0.33

—
—
—
—
2.17
—
—
2.17

0.59
—
—
—
—
—
0.59

—
0.69
0.69

—
—
—
—

—
—
—

—
—
0.08
—
—
—
0.08

—
—
0.50
0.50

—
—
—

5.11

5.41

—
0.01
—
0.01

0.44
—
1.24
1.68

0.38
0.12
0.09
0.11
—
—
0.56
1.26

—
—
0.48
—
0.25
0.19
0.92

0.04
2.70
2.74

—
0.15
1.11
1.26

—
0.17
0.17

—
—
—

0.53
—
0.52
—
0.29
0.51
1.85

—
0.20
0.33
0.53

—
0.15
0.15

10.57

10.00

—
—
—
—

—
—
—
—
—
—
—
—

1.06
—
—
—
—
—
1.06

—
—
—

—
—
—
—

—
—
—

—
—
—
—
—
—
—

—
—
—
—

—
—
—

0.51
8.92
1.38
10.81

1.65
0.83
6.11
8.59

4.4
4.39
2.88
1.25
4.56
0.62
3.32
21.42

2.00
1.33
1.27
1.83
0.25
0.89
7.57

1.33
6.62
7.95

2.99
2.21
3.71
8.91

0.91
1.07
1.98

0.61
2.62
3.23

10.02
2.85
4.75
4.08
2.99
2.44
27.13

0.27
0.20
0.83
1.30

0.10
1.01
1.11

4,542
79,384
12,313
96,239

14,623
7,400
54,417
76,440

39,209
39,199
25,623
11,169
40,597
5,536
29,533
190,866

17,807
11,888
11,375
16,372
2,259
7,988
67,689

11,917
59,068
70,985

26,631
19,706
33,085
79,422

8,124
9,474
17,598

5,369
23,264
28,633

89,121
25,404
42,365
36,359
26,633
21,691
241,573

2,442
1,778
7,394
11,614

913
9,033
9,948

1.24
5.67
3.13
10.04

2.84
0.87
5.93
9.64

3.92
5.15
2.86
1.26
3.98
0.86
2.45
20.48

2.49
1.36
0.55
2.15
0.81
—
7.36

1.53
5.62
7.15

3.92
2.11
2.67
8.70

1.26
1.29
2.55

0.53
3.79
4.32

8.41
3.24
5.80
3.75
2.50
3.36
27.06

0.45
0.76
0.33
1.54

—
—
—

12,330
56,137
31,063
99,530

28,074
8,674
58,793
95,541

38,876
51,143
28,363
12,478
39,518
8,577
24,370
203,325

24,727
13,488
5,512
21,338
8,012
—
73,077

15,163
55,648
70,811

38,889
20,925
26,508
86,322

12,492
12,858
25,350

5,224
37,709
42,933

83,642
32,294
57,565
37,190
24,780
33,372
268,843

4,466
7,519
3,229
15,214

—
—
—

1.06

2.02

100.00

891,005

—

100.00

992,478

The above table excludes bank balances and short-term deposits.

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Investment Portfolio valuation

based on market values as at 31 December 2022

Holding name

Country

Sector

Industry

Shell

HSBC

Rio Tinto

GlaxoSmithKline

Barclays

Flutter Entertainment

NatWest

Anglo American

Direct Line Insurance

Lloyds Banking Group

Morgan Advanced Materials

National Grid

Sanofi

Tesco

Standard Chartered

Aviva

BAE Systems

Glencore

Land Securities

Senior

Herald Investment Trust

Prudential Corp

M & G

Severn Trent

DS Smith

Caterpillar

Oil & Gas

Financials

Basic Materials

Oil & gas producers

Banks

Mining

Health Care

Pharmaceuticals & biotechnology

Financials

Banks

Consumer Services

Travel & leisure

Financials

Basic Materials

Banks

Mining

Financials

Industrials

Utilities

Nonlife insurance

Banks

Electronic & electrical equipment

Gas, water & multiutilities

France

Health Care

Pharmaceuticals & biotechnology

Consumer Goods

Food & Drug Retailers

Financials

Industrials

Banks

Life insurance/assurance

Aerospace & defence

Switzerland Basic Materials

Mining

USA

Financials

Industrials

Financials

Utilities

Industrials

Real estate investment trusts

Aerospace & defence

Equity investment instruments

Life insurance/assurance

Financial services

Gas, water & multiutilities

General industrials

Industrial engineering

Irish Continental Group

Ireland

Consumer Services

Travel & leisure

Japan

USA

Financials

Nonlife insurance

Consumer Goods

Household goods & home construction

Consumer Goods

Automobiles & parts

Industrials

Health Care

Industrials

Industrial engineering

Construction & materials

Support services

Industrial engineering

Pharmaceuticals & biotechnology

Aerospace & defence

Consumer Services

General retailers

Financials

Life insurance/assurance

Consumer Services

General retailers

Telecommunications

Fixed Line Telecommunications

Telecommunications Mobile telecommunications

Oil & Gas

Oil equipment services & distribution

Hiscox

Kingfisher

Toyota Motor Corporation

Cummins

Balfour Beatty

Boku

IMI

Haleon

Rolls Royce

Marks & Spencer

Phoenix Group Holdings

Dunelm

BT Group

Vodafone

Ceres Power

lawdebenture.com

£000

29,075

27,069

22,360

21,743

19,983

19,498

17,492

17,238

14,549

14,157

13,623

13,366

13,058

12,815

11,888

11,737

11, 391

11,128

11,048

11,021

10,682

10,632

10,531

10,332

10,206

10,147

9,900

9,882

9,855

9, 561

9,426

9,412

9,332

9, 317

8,855

8,837

8,797

8,631

8,520

8 ,126

8 ,124

8,003

7,941

3.27

3.05

2.52

2.44

2.24

2.19

1.96

1.93

1.63

1.59

1.53

1.50

1.47

1.44

1.33

1.32

1.28

1.25

1.24

1.20

1.19

1.18

1.16

1.15

1.14

1 . 1 1

1.07

1.06

1.05

0.99

0.97

0.96

0.91

0.90

0.89

Investment Portfolio valuation continued

based on market values as at 31 December 2022

Holding name

Hill & Smith

i3 Energy

Elementis

Hipgnosis Songs Fund

Mondi

ITV

Scottish Oriental Small Co

Cranswick

Gibson Energy

Ibstock

Johnson Service Group

Spectris

Reckitt Benckiser Group

Unilever

Halfords

Hammerson

Accsys Technologies

Chesnara

Standard Life Aberdeen

Jubilee Metals Group

Marshalls

Oxford Sciences Innovation

Country

Sector

Industry

Industrials

Oil & Gas

Industrial engineering

Oil & gas producers

Basic Materials

Chemicals

Financials

Equity investment instruments

Basic Materials

Forestry & paper

Consumer Services

Media

Financials

Equity investment instruments

Consumer Goods

Food producers

Canada

Oil & Gas

Oil & gas producers

Industrials

Construction & materials

Support services

Electronic & electrical equipment

Health Care

Health care equipment & services

Consumer Goods

Personal goods

Consumer Services

General retailers

Financials

Industrials

Financials

Real estate investment trusts

Construction & materials

Life insurance/assurance

Financial services

Basic Materials

Mining

Industrials

Financials

Construction & materials

Financial services

Next Fifteen Communications Group UK

Consumer Services

Media

Bayer AG

Bristol-Myers Squibb

Reach

General Motors

Babcock

Smith & Nephew

Provident Financial

SSE

Kier

IP Group

TT Electronics

VH Global Sustainable Energy

Opportunities

iEnergizer

Germany Health Care

Pharmaceuticals & biotechnology

USA

Health Care

Pharmaceuticals & biotechnology

Consumer Services

Media

Consumer Goods

Automobiles & parts

Industrials

Aerospace & defence

Health Care

Health care equipment & services

Financials

Utilities

Industrials

Financials

Industrials

Other

Financial services

Electricity

Construction & materials

Financial services

Electronic & electrical equipment

Sustainable Energy

Guernsey

Industrials

Support services

Redde Northgate

Industrials

Support services

Grit Real Estate Income Group

Guernsey Financials

Real estate investment trusts

International Distribution Services

Industrials

Industrial transportation

Applied Materials

USA

Technology

Technology hardware & equipment

International Consolidated Airlines

Indus Gas

Ricardo

Consumer Services

Travel & leisure

Oil & Gas

Industrials

Oil & gas producers

Support services

S
T
R
A
T
E
G

R
E
P
O
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T

£000

7,801

7,691

7,650

7,444

7,400

7,328

7,303

7,047

6,700

6,410

6,385

6,379

6,329

6,273

6,241

6,109

6,084

5 ,916

5,689

5,668

5,541

5,533

5,445

5,367

5,351

5,326

5,281

5,210

5,205

5,178

5,135

5,106

5,085

5,074

5,050

5,030

4,803

4,560

4,473

4,427

4,257

4,153

3,999

0.88

0.86

0.84

0.83

0.82

0.79

0.75

0.72

0.7 1

0.70

0.69

0.68

0.66

0.64

0.62

0.61

0.60

0.59

0.58

0.57

0.56

0.54

0 . 5 1

0.50

0.48

0.47

0.45

S T R A T E G I C R E P O R T

Investment Portfolio valuation continued

based on market values as at 31 December 2022

International Personal Finance UK

Holding name

Watkin Jones

AFC Energy

Vertu Motors

Weir Group

Nestle

ITM Power

Surface Transforms

SigmaRoc

ASML

Country

Sector

Industry

£000

Consumer Goods

Household goods & home construction

3,950

Oil & Gas

Financials

Alternative Energy

Financial services

Consumer Services

General retailers

Industrials

Industrial engineering

Switzerland

Consumer Goods

Food producers

Oil & Gas

Oil equipment services & distribution

Consumer Goods

Automobiles & parts

Industrials

Construction & materials

Netherlands

Technology

Technology hardware & equipment

Plant Health Care

USA

Basic Materials

Chemicals

Roche

Bellway

Switzerland

Health Care

Pharmaceuticals & biotechnology

Consumer Goods

Household goods & home construction

Koninklijke DSM

Netherlands

Basic Materials

Chemicals

Castings

Industrials

Construction & materials

Munchener Rueckver

Germany

Financials

Nonlife insurance

UniCredit

Amundi

Italy

France

Financials

Banks

Financial services

Oxford Nanopore Technologies UK

Technology

Advanced Medical Equipment &

Technology

3,946

3,765

3,633

3,335

3,323

3,230

3,101

2,969

2,968

2,907

2,892

2,861

2,719

2,710

2,621

2,548

2,494

2,442

Novo Nordisk

Denmark

Health Care

Pharmaceuticals & biotechnology

2,405

Bawag

Kistos

Airbus SE

SAP

Moncler

LVMH

Austria

Financials

Banks

Oil & Gas

Oil & gas producers

Netherlands

Industrials

Aerospace & defence

Germany

Technology

Software & computer services

Italy

France

Consumer Goods

Personal goods

Consumer Goods

Leisure Goods

Deutsche Boerse

Germany

Financials

Financial services

Safran SA

Cellnex Telecom

Libertine Holdings

Marstons

First Tin

France

Spain

Industrials

Aerospace & defence

Telecommunications

Mobile telecommunications

Other

Sustainable Energy

Consumer Services

Travel & leisure

Basic Materials

Mining

Universal Music Group

Netherlands

Consumer Services

Media

EDP Renovaveis SA

Spain

Other

Sustainable Energy

Renold

Allied Minds

Arkema SA

Gelion

Velocys

Industrials

Financials

Industrial engineering

Financial services

France

Basic Materials

Chemicals

Other

Oil & Gas

Sustainable Energy

Oil equipment services & distribution

Logistics Development Group UK

Industrials

Industrial transportation

Kion Group AG

Sig Combibloc

Danone SA

Germany

Industrials

Construction & materials

Switzerland

Industrials

General industrials

France

Consumer Goods

Food producers

2 ,1 11

1,935

1,789

1,777

1,715

1,701

1,636

1,603

1,471

1,470

1,455

1,410

1,370

1,347

1,294

1,277

1,190

1,166

1,142

1,063

1,047

1,022

1,005

lawdebenture.com

0.44

0.42

0.41

0.37

0.36

0.35

0.33

0.32

0.31

0.30

0.29

0.28

0.27

0.24

0.22

0.20

0.19

0.18

0.17

0.16

0.15

0.14

0.13

0.12

0.11

Investment Portfolio valuation continued

based on market values as at 31 December 2022

Holding name

Allfunds Group

Country

Sector

Other

Industry

Other

Ondine Biomedical Inc.

Canada

Health Care

Pharmaceuticals & biotechnology

ASM International NV

Netherlands

Industrials

Electronic & electrical equipment

Deltic Energy

Tullow Oil

Jackson Financial

Ilika

Harbour Energy

Adidas

USA

Oil & Gas

Financials

Oil & Gas

Oil & gas producers

Financial services

Alternative Energy

Oil & gas producers

Germany

Consumer Goods

Leisure Goods

Longboat Energy

Oil & Gas

Oil & gas producers

Brockhaus Capital Management Germany

Financials

Financial services

Grifols

Sartorius AG

Mirriad Advertising

SIMEC Atlantis Energy

Carclo

Spain

Health Care

Pharmaceuticals & biotechnology

Germany

Health Care

Health care equipment & services

Consumer Services

Media

Utilities

Basic Materials

Electricity

Chemicals

Barryroe Offshore Energy

Ireland

Oil & Gas

Oil & gas producers

LDIC Investments

Financials

Financial services

EuroAPI Sasu

Morses Club

Better Cap

Permanent TSB

France

Health Care

Pharmaceuticals & biotechnology

Ireland

Financials

Financial services

Equity investment instruments

Banks

S
T
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A
T
E
G

R
E
P
O
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£000

915

833

804

793

738

671

596

57 1

558

555

537

510

382

237

235

157

103

100

0.10

0.09

0.08

0.07

0.06

0.04

0.03

0.02

0.01

—

891,005

100.00

In accordance with listing rule 15.6.8, The Law Debenture Corporation p.l.c. announces that it has no investments in other UK listed investment companies that require to be
disclosed.

Changes in geographical distribution

Region**

Valuation
31 December
2021
£000

United Kingdom

828,365

Europe

North America

Japan

99,297

53,665

11,151

Purchases
£000

135,201

30,815

5,182

—

Costs of
acquisition
£000

Sales
proceeds
£000

Appreciation/
(Depreciation)*
£000

Valuation
31 December
2022
£000

(431)

(98)

(16)

—

(91,658)

(32,739)

(21,495)

—

(128,222)

743,255

(4,433)

8,146

(1,725)

92,842

45,482

9,426

992,478

171,198

(545)

(145,892)

(126,234)

891,005

* Please refer to note 2 on page 126.
**’Other’ and ‘Other Pacific’ regions from 2021 have been reclassified according to their location of listing.

100

S T R A T E G I C R E P O R T

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 a unique combination of an Investment Portfolio and an

Independent Professional Services 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.

• reports on workforce engagement as described on page 62 and

our Section 172(1) Statement on pages 46 to 48;

• 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 advisors such as our external

auditors and investment manager on their relationship with the

relevant teams within the business;

• review of diversity and inclusion of the Board and oversight of

the statistics set out in the ESG section on page 54; and

• Board, Committee and individual directors’ performance

Our objective as an investment trust is to achieve long-term

evaluations, the process and outcome of which is set out on

capital growth in real terms and steadily increasing income.

page 93.

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.

Following on from the project to articulate the culture and values

of our business in 2021, we organised another culture week during

2022 to continue to embed, share and celebrate

our values as a business.

We believe the culture of the Company and wider

Group is strong and a contributing factor to us

performing well in challenging market conditions.

Our unique

structure allows

Our strategy – implementation

our investment

Our strategy is centred round the unique

managers to

focus on capital

generation,

while knowing

that historically

approximately

one-third of the

Trust’s income has

combination of the Investment Portfolio and our

IPS business. Whilst overseen by the Board, the

IPS business operates independently from the

Investment Portfolio.

The IPS profits provide a reliable source of

revenue to the investment trust, helping to

smooth out equity peaks and troughs. This

supports the delivery of steadily increasing

income for our shareholders and ensures our

investment managers are not constrained to

choosing stocks on yield. Instead, the investment
managers benefit from increased flexibility in

stock selection supporting the delivery of long-

term capital growth.

been provided by

Our unique structure is also tax efficient as some

the IPS business.

tax relief, arising from excess costs and interest

payments which would otherwise be unutilised,

can be passed from the Investment Portfolio to

the IPS business reducing the tax liability for the

Group and increasing shareholder returns.

The way in which we implemented the investment strategy

during 2022 is described in more detail in the investment

managers’ review on pages 17 to 20.

Performance against KPIs is set out on pages 2 to 29, which

contain tables, charts and data to explain performance both

during the year under review and over the long-term.

To our IPS clients we are trusted, independent

experts who have 134 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 for our shareholders,

clients and our people.

The Board is responsible for ensuring that our

culture is aligned with our purpose, values and

strategy, by promoting, assessing and monitoring

the same. The Board discharges this duty by

reviewing the relevant policies, practices and

behaviours throughout the business including

its own conduct as a Board and individual

directors. The Board endorses the stated purpose

and values and ensures they 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 advisors, are as follows:

• reports on the results of our quarterly eNPS surveys which are

internal and ask staff for feedback on their experience;

lawdebenture.com

Company overview continued

Our business model

Our business model is designed to position the Company for optimal performance in the investment trust sector.

Total Shareholder Return

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INVESTMENT PORTFOLIO

INDEPENDENT PROFESSIONAL SERVICES

(c. 79% of NAV – including IPS
and long-term borrowings at fair value)

(c. 21% of NAV – including IPS
and long-term borrowings at fair value)

• Invests in a diverse equity portfolio

• Earns capital returns and dividends

•

Low ongoing charges

• Trusted provider of independent governance
services, generating recurring revenue.

• Profits provide the investment trust with a
steadily increasing revenue stream.

• Tax efficient

INVESTMENT PORTFOLIO

• The Company’s 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 Investment 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 Company’s Investment Portfolio and performance will deviate

from the comparator index.

INDEPENDENT PROFESSIONAL SERVICES

Operating through a number of wholly owned subsidiary companies, (see note 13 to the 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, the

Channel Islands and the Cayman Islands.

Group employees are employed by L.D.C. Trust Management Limited 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

their time is charged to the trust, forming a part of the ongoing charges.

More details about the performance of the IPS business in 2022 are given in the Chief Executive Officer’s review on pages 8 to 14.

Law Debenture’s shares are intended for private investors in the UK (retail investors), professionally advised private clients

and institutional investors. When choosing an 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.

S T R A T E G I C R E P O R T

Company overview continued

Our strategy – guidelines

The Board sets the investment strategy and actively monitors

scheduled Board meeting. The strategy is reviewed periodically to

both the investment managers’ and Executive Leadership team’s

ensure we deliver on our objective.

adherence through a series of guidelines and parameters in each

Investments

Permitted types of

Restrictions:

investments are:

• Equity Shares

• Cash/Liquid Assets

• Trading is not permitted in suspended shares or short positions

• 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 Investment Portfolio, including gilts and cash

• The value of a new acquisition in any one holding may not exceed 5% of the
total Investment 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

United Kingdom

North America

Continental Europe

Japan

Asia/Pacific

Other (including South America)

Minimum
%

Maximum
%

100

The current regional

parameters are:

Derivatives

Hedging

Stock-lending

Gearing

May be used with prior authorisation of the Board

Currency hedges may be put in place with Board approval to protect against foreign exchange

movements on the capital and income accounts

Up to 30% of the market value of the Investment Portfolio may be lent

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 152 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 Investment Portfolio

Corporate approval Where indicated, the investment manager 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

lawdebenture.com

Company overview continued

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Agreement with the investment
managers

This means selling assets to hold cash so that less than 100% of the

Company’s assets are invested in equities. At 31 December 2022,

our gearing was 12% (2021: 13%) (refer page 152).

Appointed investment managers: James Henderson and Laura

Foll, Janus Henderson Investors.

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 depository (see section on

regulatory compliance in the Directors’ Report, page 61). 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, depository and custody fees,

investment performance data, accounting, company secretary

and back office administration.

The Company continues to have one of the more competitive

fee structures in the UK Equity Income Sector with investment

management fees of 0.30% p.a. of the value of net assets of the

Group (excluding the net assets of IPS), calculated on the basis

adopted in the audited financial statements, and total ongoing

charges of 0.49%.

The Company has four debentures (long dated sterling

denominated financing) details of which are on page 145.

The weighted average interest payable on the Company’s

debentures is 3.961% (2021: 3.966%).

The fair value of long-term borrowings held by the Group is

disclosed in note 20 to the accounts. The methodology of fair

valuing all long-term borrowings is to benchmark the Group

debt against A-rated UK corporate bond yields.

Capital structure

Law Debenture has one class of share – ordinary shares – and

each share has the same rights as every other share.

The Company conducts its affairs so that its ordinary shares

are capable of being recommended by independent financial

advisors to retail investors in accordance with relevant FCA

rules.

We consider our ordinary shares to be mainstream investment

products because they are shares in an investment trust. The

Company intends to continue conducting its affairs for the

foreseeable future so that the ordinary shares can continue to

be categorised as a mainstream investment.

Transparency

No performance fee is paid to the investment manager.

In order to assist shareholders in understanding the nature of

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

the underlying investments they are buying into when investing

in Law Debenture’s shares, we publish our NAV on a daily basis.

We also publish the entire Portfolio monthly – with additional

monthly updates on the composition of the top ten holdings in

the Portfolio.

Future trends and factors

Law Debenture will continue to strive to deliver its business

objectives for both the Investment Portfolio and the IPS

competitive fee arrangements in place, the Board has concluded

business.

that the continued appointment of our existing investment

manager 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

The Chairman’s statement, the CEO’s review and the Investment

managers’ review (all of which form part of this strategic report)

set out the Company’s views on future developments.

Performance and related data

Pages 2 and 17 to 20, which contain performance and related

investment. These funds can be used to increase the size of the

data, form part of this strategic report.

Portfolio. Alternatively, assets from within the Portfolio can be sold

to reduce debt and the Portfolio can even be ‘negatively geared’.

S T R A T E G I C R E P O R T

Company overview continued

Key performance indicators (KPIs) and
alternative performance measures

Law Debenture’s responsibilities as an
institutional shareholder

The KPIs used to measure the progress and performance of the

The Company recognises that, in delivering its objective to

Group are:

• NAV total return per share with IPS and debt at fair value

(combining the capital and income returns of the Group) and

how this compares, over various time intervals, with relevant

indices;

• the discount/premium in share price to NAV; and

produce long-term capital growth and a steadily increasing

income, it must ensure that its investment strategy is delivered

with due emphasis on the need to ensure that investee

companies are acting in accordance with accepted standards of

corporate governance. The Company has therefore adopted the

following policy.

Law Debenture will normally support incumbent management

• the costs and ongoing charges of running the Portfolio as a

and vote in favour of resolutions proposed by the boards of

percentage of its value.

Since the objective of the investment trust is measurable solely in

financial terms, the Board does not consider that it is appropriate
to adopt non-financial KPIs. The financial measures adopted as

KPIs are part of our financial reporting obligations.

NAV total return with IPS and debt at fair value

1 year

0.6%

3 years

26.0%

5 years

39.9%

10 years

154.6%

Premium/(discount)

companies in which it has a shareholding, but will vote against

management or withhold a vote where appropriate.

The Board determines the Company’s investment strategy but

does not issue express instructions to the investment manager

on transactions in particular shares. Where Law Debenture

believes that incumbent management is failing in its duties,

Law Debenture (or on its behalf, the Company’s investment

managers) may enter into dialogue with the company

concerned in an attempt to alter the management’s position.

Where this is not possible, or where incumbent management

declines to alter its behaviour, Law Debenture will consider

voting against resolutions proposed by the management.

Further, if it is deemed necessary or desirable, the Company

would consider acting collectively with other institutional

31 December 2022

31 December 2021

investors to try and achieve a particular goal.

Year end

High for year

Low for year

1.2%

4.5%

(6.6%)

1.4%

5.4%

(4.6%)

Ongoing charges ratio

Year ended 31 December 2022

Year ended 31 December 2021

0.49%

0.50%

Alternative Performance Measures as defined under ESMA

guidelines have been adopted and these are described in detail

on page 152.

Share price and NAV

Investment trusts can trade at a discount (where the share price

is lower than the combined value (NAV) of the underlying assets),

or at a premium (where the share price trades at a higher level

Janus Henderson, on Law Debenture’s behalf, monitors

companies in which Law Debenture is invested, and from time

to time may discuss matters of corporate responsibility with

such companies. Law Debenture’s investment managers have

voting discretion but may notify Law Debenture on occasion

and when appropriate, should matters arise that might lead

the Company to consider intervening, abstaining or voting

against a particular proposal. During the year, the Company

abstained or voted against one or more resolutions at 45

shareholder meetings of investee companies.

The Company will not hold shares in companies whose ethical

and environmental practices are, in its view, likely to damage the

performance of the business to the detriment of its shareholders.

The Company does not believe that conflicts arise between its

duties as an institutional shareholder and the work undertaken

by the IPS business. The investment managers have complete

discretion as to Portfolio decisions and as a matter of policy,

has no access to ‘non-public’ knowledge about any of the

activities of the IPS business.

than the underlying NAV). Investment trust investors need to

Janus Henderson is a signatory to the 2020 UK Stewardship

understand these concepts as well as examine the underlying

Code. As the Company’s investment manager, Janus

portfolio and the way in which it is managed, to decide whether

Henderson makes the day-to-day investment decisions and

or not an investment trust share represents “good value”.

is therefore best placed to engage with Portfolio companies

and discharge stewardship obligations. The Board is of the

lawdebenture.com

Company overview continued

view that becoming a signatory to the Stewardship Code

valuation using a discounted cash flow with an externally

would unnecessarily duplicate the work of the investment

advised WACC and are satisfied it is in range.

manager and therefore continues to rely on Janus Henderson

in this regard.

Valuation of our IPS business

Accounting standards require us to consolidate the income,

costs and taxation of our IPS business into the Group income

statement on page 112. The assets and liabilities of the

business are also consolidated into the Group column of the

statement of financial position on page 113. A segmental

The multiple of 10.5x has been applied to value the business.

The uplift reflects that the IPS business now has five years

of revenue and profit growth. The multiple selected has

decreased since the prior year in line with wider market trends.

The comparable companies used, and their recent performance,

are presented in the table below:

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Revenue
LTM 1
(£m)

LTM EV/
EBITDA
31 December
2022

Net
revenue
CAGR
2018-2022

EBITDA
margin LTM

analysis is provided in note 6 (pages 128 and 129) to these

Company

accounts which shows a detailed breakdown of the split

between the Investment Portfolio, IPS business and

Group charges.

Consolidating the value of the IPS business in this way does

not fully recognise the value created for the shareholder by

the IPS business in the NAV. To address this, from December

2015, the NAV we have published for the Group has included a

fair value for the standalone IPS business.

The current fair value of the IPS business is calculated

based upon maintainable earnings before interest, taxation,

depreciation and amortisation (EBITDA) for 2022, with an

appropriate multiple applied. The EBITDA for the IPS business

for 2022 was £16.6m. This number is reached by taking the

return, including profit attribution on ordinary activities

before interest and taxation of £14.4m from note 6 on page

128 and adding back the depreciation charge for property

plant and equipment of £2.2m, the amortisation of intangible

Law Deb IPS

10.5x

11.0%

35.0%

SEI

Investments

1,827

11.9x

9.4%

28.3%

Company

SS&C

Technologies

4,702

10.1x

15.0%

33.9%

Holding, Inc

EQT Holdings

Limited

Perpetual

Limited

13.2x

6.3%

37.8%

425

6.2x

8.9%

23.7%

1 LTM refers to the trailing 12 months ‘results’ which are publicly available.
Source: Capital IQ.

Of the comparator companies previously presented, the

following were the subject of mergers and acquisitions activity:

Sanne Group plc was subject to a valuation 30x of EBITDA and

assets of £1.0m, and interest on the lease liabilities shown in

Intertrust a valuation at 12-13x of EBITDA.

note 3 on page 126.

The calculation of the IPS valuation and methodology used

are included at note 13 on pages 134 to 137. In determining a

calculated basis for the fair valuation of the IPS business, the

Board has taken appropriate external professional advice.

The multiple applied in valuing the IPS business is based

on comparable companies sourced from market data, with
appropriate adjustments to reflect the difference between

the comparable companies and IPS business in respect of

size, liquidity, margin and growth. A range of multiples is then

provided by the professional valuation firm, from which the

Board selects an appropriate multiple to apply.

The challenge that we faced in this valuation cycle is that

many of our core comparators, have been subject to mergers

and acquisition activity in the past year. As a result of the

premium this builds into the valuations, the companies most

like our IPS business were excluded from the comparator

group. Whilst the group of companies presented in the table

have some likeness to IPS, further work has been required in

producing a multiple reflective of the fair value to attribute

to IPS. Given this, as a cross-check, we have validated the

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, which reduced

the tax charge by £2.06m (2021: £1.89m).

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 aiming

to achieve mid to high single percentage growth in 2023. The

total valuation (including surplus net assets) of the business has

increased by £111m/123% since the first valuation of the business

as at 31 December 2015.

In order to assist investors, the Company restated its historical

NAV in 2015 to include the fair value of the IPS business for the

last ten years. This information is provided in the Annual Report

within the 10-year record on page 37.

S T R A T E G I C R E P O R T

Calculation of net asset value (NAV) per share

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 (£53.4m) and substituted with the calculation of the fair

value and surplus net assets of the business £201m. An adjustment of £25.1m 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 2022 of £972.6m or 761.69 pence per share.

Net asset value (NAV) per Group statement of financial position

Fair valuation of IPS: EBITDA at a multiple of 10.5x (2021: 10.8x)

IPS net assets attributable to IPS valuation

Fair value of IPS business

Removal of IPS net assets included in Group net assets

Fair value uplift for IPS business

Debt fair value adjustment

NAV at fair value

31 December 2022

31 December 2021

£000 Pence per share

799,067

174,174

27,566

201,740

(53,364)

148,376

25,123

972,566

625.81

136.41

21.59

158.00

(41.79)

116.20

19.68

761.69

878,837

165,985

4,041

170,026

(34,141)

135,885

(50,229)

964,493

717.86

135.58

3.30

138.88

(27.89)

111.00

(41.03)

787.83

NAV attributable to IPS

201,740

21%

170,026

18%

See commentary for the breakdown of the assets already included in the NAV per the financial statements.

The ‘results’ NAV at fair value calculated above differs to the ‘published’ NAV at fair value for 30 December 2022 (year end NAV released by

RNS on 3 January 2023). As such, please see below for a reconciliation:

Reconciliation of published NAV to results NAV:

Published NAV cum income with debt at fair value

Reconciliation of shareholders’ funds to net assets:

Published NAV

Results NAV

Subtotal

Revised IPS valuation uplift:

Published NAV (valuation per 30 June 2022)

Results NAV

Subtotal

Revised Fair Value of Debentures:

Published NAV

Results NAV

Subtotal

31 December 2022

Value £000 Pence per share

956,030

748.74

(803,226)

(629.07)

799,067

625.81

(4,159)

(133,964)

(104.92)

148,376

116.20

14,412

(18,840)

25,123

6,283

(14.75)

19.68

Total NAV at fair value per results

972,566

761.69

lawdebenture.com

Long-term performance record

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Net assets per the statement
of financial positions (£m)1

Revenue return (pence)

Capital return (pence)

569.1

574.2

557.3

662.3

748.3

669.4

775.3

727.0

878.8

799.1

16.27

97.18

16.95

18.10

15.96

21.66

21.26

30.68

21.56

28.09

34.44

3.87

(17.47)

89.30

67.10

(71.85)

79.27

(19.06)

94.60

(103.17)

Total (pence)

113.45

20.82

0.63

105.26

88.76

(50.59)

109.95

2.50

122.69

(68.73)

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Revenue return (pence)

Investment Portfolio

Independent professional

services

Group charges

Total (pence)

Dividends (pence)

Share price (pence)1

9.31

6.96

10.08

6.87

11.01

7.09

10.88

7.68

11.61

9.93*

13.23

7.87

22.18

8.54

12.12

9.35

18.09

24.06

10.00

10.38

16.27

16.95

18.10

18.56

21.54

21.10

30.72

21.47

28.09

34.44

—

(2.60)

0.12

0.16

(0.04)

0.09

—

16.27

16.95

18.10

15.96

21.66

21.26

30.68

21.56

28.09

34.44

15.00

15.70

16.20

16.70

17.30

18.90

26.00

27.50

29.00

30.502

529.0

530.0

498.0

530.0

629.0

540.0

650.0

690.0

799.0

771.0

(Discount)/premium (%)1

(2.4)

(2.3)

(5.1)

(11.4)

(6.0)

NAV at fair value (pence)1

541.8

542.3

524.5

598.5

669.5

(12.1)

614.1

(7.4)

3.6

1.4

1.2

702.2

666.2

787.8

761.7

Market capitalisation (£m)1

625.0

627.1

589.3

627.2

744.5

639.3

769.8

817.3

982.1

984.4

1 At 31 December calculated in accordance with AIC methodology, based on performance data held by Law Debenture including fair value of IPS business and long-term

borrowings.

2 Proposed total dividend for 2022.
*This includes 2.72 pence per share of exceptional items including the sale of an unlisted investment, excluding which, normalised earnings per share were 7.21 pence per share.
Note: The 10 year record has been restated (2010-2014) to reflect the fair value of the IPS business and the long-term borrowings.

S T R A T E G I C R E P O R T

Risk management

Our approach to risk

The Group’s risk management and internal control framework

adequacy of the controls in place to appropriately manage

is embedded in everyday operations and subject to regular

those risks to support the delivery of long-term priorities.

enhancements in a continuous risk management process as

Consideration is also given to emerging risks to ensure that

demonstrated in the diagram below to ensure that risks are

the risk management framework is updated to protect the

effectively managed and monitored. Top-down Board-level

business. Where there is insufficient information on the

oversight for the Investment Portfolio and IPS business is

potential risk, ongoing monitoring is put in place.

provided by the Audit and Risk Committee.

The Board recognises that there are certain risks which are

The Executive Risk Committee has responsibility for the oversight

inherent in the Group, such as market risk with respect to its

of operational risk within the IPS business. Detailed, bottom-up

Investment Portfolio, and the controls to mitigate against such

risk identification and management is owned by either individual

risks are paramount to the delivery of our objectives.

business lines where they are specific to that business function, or

centrally if relates to the Shared Services Centre or other central

function. The risk identification and management is supported by

the Group Risk Manager.

During 2022, we launched our incident risk management

reporting system. We ran extensive training and awareness

sessions as we continue to build an open risk-reporting

and no-blame culture to better understand risks across

During the year, the Audit and Risk Committee carried out

our business.

a robust assessment of principal risks to the Group and the

RISK MANAGEMENT PROCESS AND GOVERNANCE OVERVIEW

Internal risk reporting

Parties involved

External reporting

Consolidated Group-level risks

Top-down

• Business area risk registers consolidated to draw
out significant risks

• Principal risks identified, including emerging risks

• Review and agreement of the principal risks
by the Executive Risk Committee

• Review and approval by the Audit and
Risk Committee

• The LDC plc Board

• Group Audit and
Risk Committee

• Executive Risk
Committee

Principal risks

and uncertainties

• A summarised version
of principal risks for

external reporting

• Review and approval
by the Audit and Risk

Committee and the

• Group Risk Manager

Board

Business and functional risk registers

• Continual review and assessment
of business area risk registers and

challenge on mitigating actions, including

consideration of emerging risks, by the

business and Group Risk Manager

• Review and challenge of risks at
Executive Risk Committee meetings

• Group Risk Manager

• Business Units

Bottom-up

Real-time issues and areas of change

• Monitoring of emerging areas of increasing
significance to the Group and establishing

sufficient mitigating actions

lawdebenture.com

Risk management
process

Risk identification

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Risk evaluation
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Risk management continued

The risk assessment process evaluates the probability of the risk

materialising and the financial, strategic or reputational impact

Three Lines of Defence

of the risk using a scoring system approved by the ARC. There

The Group has organised risk management according to the

may be uncertainty in measuring certain risks, but the aim is

three lines of defence model. Roles and responsibilities are

to inform and guide decisions and pinpoint areas which may

described below to show accountability between management

which owns the risks, oversight by the Risk function and

independent assurance provided by Internal Audit.

First line:
Frontline staff
Primary responsibility for management for operational risks and

taking adequate governance and control measures to manage

the risks.

Second line:
Risk and Compliance
Responsible for the design, implementation and effectiveness of

risk management and monitoring of the first line of defence.

Third line:
Internal Audit
To provide risk assurance about the effectiveness of first- and

second-line controls, with a direct reporting line to the Audit and

Risk Committee.

Governing bodies and senior management
The Audit and Risk Committee, the Board and Executive

Leadership sit above the three lines

require more urgent attention.

Those risks which have a higher probability and significant

impact on strategy, reputation or a financials under the risk

scoring system are identified as principal risks on page 42.

Governance

The Group’s risk management and internal control framework

is managed through its governance structure shown in the

diagram above and overseen by the Audit and Risk Committee.

IPS business risks are managed through regular business unit
risk committees and management meetings. The outputs

of these are fed through to the Executive Risk Committee and

then the Audit and Risk Committee for review and to the Board

if appropriate.

Executive Risk Committee

The Executive Risk Committee is made up of the Executive

Leadership team, supported by the Group Risk Manager, and

meets at least quarterly to review business level risks, incidents,

and ensure effective risk management oversight.

The key focus of the Executive Risk Committee is:

• The review of high or out of appetite risks and risk-acceptance

of low risks.

• Internal controls and mitigating actions.

• Emerging risks.

• Escalations from Business Units.

The Executive Risk Committee escalates risk events to the Audit

and Risk Committee, as appropriate. The Group Risk Manager

also speaks directly to the Chair of the Audit and Risk Committee
on any matters arising as required.

The governance framework is continually under review to

ensure that it is fit for purpose with annual reviews of the terms

of reference and oversight across the Group by the Chair of the

Audit and Risk Committee.

S T R A T E G I C R E P O R T

Risk management continued

Categorisation of Group risks

A principal risk is a risk or combination of risks that could seriously affect the performance, future prospects or reputation of Law

Debenture, and represent the top risks of concern. The principal risks of the Group which could impact the achievement of strategic

objectives are split into two categories: Principal Group risks and Emerging risks:

Group risks
The identified Group risks predominantly relate to the Investment Portfolio as that comprises 79% of net asset value and the

concentration risk of the IPS business as whole which represents approximately 21% of our NAV.

Emerging risks
Given our objective to deliver sustainable long-term capital growth, we continually horizon scan for emerging risks which may

impact our ability to deliver to shareholders.

Group risk summary and mitigating actions

Overall risk trend in 2022
We recognise the heightened global geopolitical and macroeconomic risks that impact our global community in the last year and are

conscious of the risk and uncertainty they pose for the Investment Portfolio and IPS business. These macroeconomic risks are a key

driver behind the in-year change in risk profile to many of our principal risks with continuing uncertainty extending into 2023 and are

incorporated into our “changes to risk in 2022” section of the table below.

PRINCIPAL GROUP RISKS CHANGES TO RISK IN 2022

MITIGATING ACTIVITIES

1. Investment Performance and Market Risk

Increased risk

The risk level has increased due

to the war in Ukraine, volatility

of domestic politics and global

economic pressures, all of which

have had an unfavourable impact

on global markets and therefore the

Investment Portfolio. Rising global

inflation runs undermines the value

of investment returns.

• Market risk is an accepted risk given the nature of
the Investment Portfolio. To manage this inherent

risk the Board regularly reviews the investment

managers’ report including risk indicators and has

open dialogue with the investment managers on

their approach and performance.

• The Investment Portfolio is closed ended so it does

not have to sell investments to provide liquidity

to shareholders who wish to sell. This enables our

investment managers to invest for the long-term

and take advantage of any opportunities created

by external factors.

• To mitigate leverage risk, all borrowings require

the prior approval of the Board and gearing levels

are kept under close review by the Board.

• The negotiated covenants in our debt arrangements
are such that the decline in markets would have to

be extreme before any breach occurred.

The risk of the Investment

Portfolio failing to deliver and/

or failing to consider and react

to market conditions to deliver

the publicly stated strategic

objectives to:

• Achieve long-term capital

growth.

• Deliver steadily increasing

income.

• Achieve a rate of return
greater than the FTSE
Actuaries All-Share Index.

Investment performance and

market risk is the largest risk

to which the Group is exposed.

However, this is an accepted

risk and one which the Board

actively adopts as it believes

long-term equity investment

is the fundamental reason

our shareholders invest in

our Company.

Our investment risk includes

market risk, gearing risk, credit

risk and liquidity risk.

lawdebenture.com

Risk management continued

PRINCIPAL GROUP RISKS CHANGES TO RISK IN 2022

MITIGATING ACTIVITIES

2. Cyber, Technology and Systems Risk

We rely on a set of critical IT

systems which are fundamental

Increased risk

Cyber-attack trends and high-profile

cases in the media demonstrates the

increasing frequency and scale of this

risk including trends on increased

“impersonation” scams from bogus

email addresses and ransomware.

to the day-to-day running of

the business. The threat of

unauthorised or malicious

attacks on our IT systems is an

ongoing risk.

Failures in these systems

could lead to reduced revenue,

increased costs, liability claims,

or harm to our reputation or

competitive position. This

includes the systems of Janus

Henderson.

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• The Group is Cyber Essentials Plus certified, the
highest level of certification offered under the

Government-backed, industry-supported Cyber

Essentials scheme which helps organisations

protect themselves against common online

security threats.

• During 2022, we further enhanced our internal
monitoring system (SIEM) to track aspects of IT

cyber security e.g. unusual log-in attempts and

unwanted traffic on our Group website. Cyber

insurance is also in place.

• We conduct regular penetration testing and take

steps to address identified weaknesses.

• We place focus on training our staff about cyber

security risks including phishing testing.

• We adopt a continuous improvement approach to
IT security and continue to invest in cloud-based

technology across the Group.

• Janus Henderson are subject to an independent

annual controls review to ensure there are

no material deficiencies. During the year we

conducted an on- site assessment of Janus

Henderson’s information system and business

continuity/disaster recovery plans and consider

them to be acceptable for our purposes.

3. IPS Concentration Risk

NEW

The unique setup of the

Group as an Investment

Portfolio with the unquoted

IPS business, which

represents 21% of NAV

and accounted for 30% of

revenue return per share
in 2022, creates an illiquid

concentration risk.

Failure to deliver on IPS

strategy could result in a

significant reduction in

valuation of the Group’s

largest asset thereby putting

pressure on our ability to

meet our stated objective

of long-term capital growth,

and to steadily increase

income for our shareholders.

Unchanged

• The IPS business comprises a diversified range of

services with very limited client concentration risk.

The IPS business includes some

counter-cyclical services providing

opportunity for some business lines

• The CEO and COO are accountable for the day-to-

day running and operation of the IPS business with

independent oversight and challenge from the

during market downturn which helps

Non-Executive Directors. The performance of the IPS

protect overall IPS performance;

therefore, concentration risk is broadly

the same year-on-year.

business is reviewed at all regular Board meetings.

• The annual IPS budget is subject to review and

approval by the Board which 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.

S T R A T E G I C R E P O R T

Risk management continued

Emerging risks and mitigating actions

EMERGING RISKS

CHANGES TO RISK IN 2022

MITIGATING ACTIVITIES

1. ESG Considerations

As ESG becomes an area of

increased focus, we must

consider the impact of ESG

factors adversely affecting

the Group’s reputation and

performance. These can

impact the Group both

directly and indirectly through

our shareholders and other

stakeholders.

There is also a significant

uptick in the ESG regulatory

landscape; we must ensure

that we do not fall behind in

meeting these requirements

including climate and ESG-

related targets.

Unchanged

This risk continues to present

challenges around consistency and

reliability of ESG ratings.

• ESG is considered by our investment managers

when selecting investments. ESG ratings and events

in relation to our Portfolio holdings are regularly

reviewed by the Board and challenged where

necessary.

• Considerable ESG progress has been made in 2022 –
including voting data, voluntary TCFD, defining our

ESG Strategy, and creating an ESG area on our Group

website.

• We continue to engage and monitor with

stakeholders on ESG, in order to identify trends,

patterns and areas of key concern.

PRINCIPAL RISKS REMOVED DURING 2022

During 2022, the ARC performed a robust review of principal risks under the approved principal risk scoring system. At full

year 2022, following our risk assessment process, we present “IPS Concentration Risk” to include the 2021 “IPS risks” including

“Strategic & Financial”, “Change Management” and “ Financial Crime” and emerging risk “Digital Disruptors and Change” . “IPS

Concentration Risk” better represents the Group principal risk using the approved principal risk scale.

“Financial Reporting” risk was removed as the residual risk score fell below the threshold for principal risk reporting following the

Audit and Risk Committee’s robust assessment of principal risks during 2022.

OUR RISK AGENDA 2023

In 2023 we will continue to understand the impact of the UK corporate governance reform and BEIS consultation on the Law

Debenture Group.

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Viability statement

Our business operations
• The Company retains ownership of all assets held by the

The Board has considered the Company’s current financial

Custodian under the terms of formal agreements with the

position and the potential impact of its principal risks and

Custodian and Depositary. This supports our ability to meet

uncertainties, and have a reasonable expectation that the

our Legal and Regulatory requirements and acts as a control to

Company will be able to continue in operation and meet its

both verify the existence our assets and further safeguard the

liabilities as they fall due for a period of three years from the

interests of our Shareholders.

date of this report.

• The Company’s cash is all held with banks approved by

In assessing the viability of the Company of the review period,

the Board. The Company’s cash balance, including money

the Board has considered a number of key factors, including:

market funds, at the 31 December 2022 amounted to £29.8m

Our business model and strategy
• The Board seeks to ensure that the Company delivers

long-term performance. The closed ended nature of the

investment trust creates a stable capital basis which enables

our investment managers’ to take a longer-term view in their

(30 December 2021: £25.5m), with IPS holding a further

£18.7m. Cash is treated as fungible across the Group and it is

deployed on a basis of need. During the course of 2022, there

has been a concerted effort to clear down inter-company

balances and a netting-off agreement has also been put

in place.

construction and management of the Portfolio. This partially

• There is long term borrowing in place comprising of four

mitigates the risk to the Group of potential liquidity issues

debentures:

should shareholders wish to sell their shares, avoiding any

untimely requirements to sell down the Portfolio.

Maturity date

PAR Value

• As an investment trust, we benefit from the unique structure

of a predominantly 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 Company.

Over a three year period, the share-price total return is 37.7%.

The NAV total return with debt at fair value is 26.0% compared

to the FTSE Actuaries All-Index Total Return of 7.1%.

• One of the principal Group risks relates to investment strategy

and market performance. Part of the risk to the Group is 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-19 pandemic 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 recurring, flow of income.

There has been a concerted focus on debtor management

which has enhanced the IPS business’s cashflow over the past

year and improved 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 liquidiate assets,

should the need arise.

• The Company has an ongoing charge of 0.49%. This is the

fourth lowest OCR in the UK Equity Income sector.*

Interest

6.125%

2.54%

3.77%

2.53%

2034

2041

2045

2050

Total

£40m

£20m

£75m

£30m

£165m

Weighted average: 3.966%

The weighted average cost of borrowing based on the debt

at PAR values is 3.966%. Each debenture is subject to a

formal agreement, including financial covenants which the

Company 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%.

• During January 2021, the Company also made arrangements

to put in place a £50m unsecured overdraft facility with

HSBC. Whilst available, this facility is currently not in use but

provides further mitigation of any 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 regular 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

Company’s business model. This assessment has been shared

separately and will be 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 Company and will

continue to actively review the likely impact of these potential

risks. This is set out at page 38.

The political and economic situation has placed a strain on the

* Source: The AIC – https://www.theaic.co.uk/aic/find-compare-investment-companies/advanced-compare?end=2563

lawdebenture.com

Viability statement continued

global and UK economy, bringing with it uncertainty, supply-

The Board and the Executive Leadership team have actively

side inflation and rising interest rates. The IPS business has also

monitored the cash position across the Group throughout the

felt the impact of the competition for talent in the UK market.

year, mindful of our commitment to pay quarterly dividends to

This has resulted in rising salary expectations of both our people

shareholders. As of 31 December 2022, the Group holds cash

and any potential new hires. At present, the Board does not

and cash equivalents of £49.6m (31 December 2021: £35.8m). In

consider this will have an impact on the longer-term viability of

addition to this, the Company has an overdraft facility of £50m to

the Company.

protect against any significant fall of cash inflows.

Balance sheet resilience
As at the 31 December 2022, Law Debenture Corporation held

total investments, including cash and the IPS business, of

£1.14bn (31 December 2021: £1.20bn). 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.

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Section 172(1) Statement

As reported on page 30, the Company’s purpose is to deliver peace of mind for our shareholders, clients and staff through the

combination of our Investment Portfolio and IPS business. Our purpose, values and strategy are inextricably linked and are reflected

in our policies, practices and high standards of business conduct.

The Board is responsible for the overall strategy and overseeing the management of the Group, setting investment principles and

ensuring that the Company is acting in accordance with its legal and regulatory obligations. In discharging its responsibilities, the

Board takes into account the Group’s purpose, values and culture and acts in good faith to promote the long-term success of the

Company, including oversight of stakeholder engagement, feedback from the same as appropriate and ensuring that the Company

fulfils its obligations to its key stakeholders. Those impacted by the Company’s activities and considered key to its operations can be

grouped into the following five main categories:

Clients
of our
IPS business

Shareholders
and potential
investors

THE BOARD

Community
and the
environment

Employees

Suppliers
Our principal service
provider is the
investment manager,
Janus Henderson

Investors.
Other key suppliers
include our joint
corporate brokers,
registrar, depositary,

global custodian
and external auditor.

Case Study: Manchester listening group

In September 2022, the Workforce Engagement Director, Clare Askem, hosted a listening group in our Manchester office with

some of our staff from a cross section of the teams based there. The objective was to provide insight into colleague eNPS scores

and to provide the Executive and the Board with an independent view of potential issues and opportunities.

Feedback from the listening group was discussed with the Chief Operating Officer and was also reported to the Board, along

with other activities undertaken by Clare in her capacity as Workforce Engagement Director, during the year. All feedback was

presented on an anonymous basis.

The Executive Leadership team and Board gained greater insight into Manchester colleagues’ views on the Company’s

remuneration structure and their experience of the team dynamic and style of leadership in that office, adding depth to

knowledge already gleaned from the Group’s previous eNPS surveys.

The Executive Leadership team, with the support of the Board, are taking steps to continue to improve our people’s inclusion in

the matters that affect them the most and to enhance their daily experience of the working environment. Some of the

decisions resulting from workforce engagement, including the Manchester listening group, are set out on page 48.

We are pleased that our first listening group was a success and additional sessions are being planned for 2023.

lawdebenture.com

Section 172(1) Statement continued

Key priorities and main methods of engagement with stakeholders in 2022

STAKEHOLDERS

KE Y PRIORITIES

ENGAGEMENT ACTIVITIES IN 2022

Shareholders and potential investors

Investment from shareholders makes
up the majority of the Company’s
capital, funding the principal investment
activities. Shareholders also hold the
Board accountable to its investment and
governance objectives.

To deliver against our stated
objective to provide long-term
capital growth in real terms and
a steadily increasing income.

To provide a fair, balanced and
understandable representation
of the Company and the Group’s
position, performance, business
model and strategy.

• Consultation with major shareholders
on Directors’ Remuneration Policy*

• Distribution of the Annual and Half Year Reports
• AGM*
• Institutional investor meetings (c.50 held in 2022)*
• Analyst and shareholder meetings
• Individual shareholder meetings
• Quarterly dividends
• Daily NAV publications
• Monthly Factsheets

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Clients

Clients help to create, maintain and
grow demand for our IPS services. Their
feedback is encouraged to help us
continue to improve as a business.

Seek to provide peace of mind
to our clients through delivery of
an excellent service.

• Client care meetings
• Hybrid approach to client events
• Lens photography competition
• Summer networking event
• Annual Pensions Debate

Employees

Our people are key to our IPS operations
and we rely on their support and expertise
to provide excellent services to our clients.

To provide a diverse and
inclusive workplace which
supports our people to grow
their careers in a way that is
both meaningful to them and
promotes the delivery of our
long-term strategy.

• Listening groups with the Workforce Engagement

Director*

• Embedding of culture and values via our annual

culture week*

• Monthly culture carrier awards
• Quarterly eNPS surveys
• Diversity and inclusion strategy and initiatives set

out on pages 54 to 55.

• Monthly all-staff hybrid business updates
• Bi-annual all-staff financial performance updates
• Community groups to bring our people together
• Learning and development training modules
• Team and Company-wide events
• Reports from Business and Department Heads at

Board meetings*

• Delivery of our Emerging Leaders programme

Principal service providers

We rely on our service providers to manage
our Investment Portfolio and provide the
infrastructure and advice to meet our
shareholders’ expectations, service our
client base and remain compliant with legal
and regulatory requirements.

To provide a clear framework
and open communication
channel between us and our
key service providers to facilitate
the best possible investment
outcomes for our shareholders.

• The investment managers attend all Board

meetings*

• Quarterly meetings with custodian and depository
• Quarterly meetings with our corporate broker*
• Annual meeting with our registrar
• Active engagement with large suppliers of the IPS

infrastructure

Community and the environment

We recognise that we are stewards of our
community and the environment and
that investment geared toward these
helps to improve economic stability and
build a more inclusive community. This
in turn contributes to the Company’s
sustainability and subsequently helps
us to deliver on our objective for
our shareholders in light of our key
stakeholders’ interests.

To act responsibly as an
institutional shareholder and
to ensure we have a positive
impact on the Company’s
operations, the community and
our environment.

• Mentoring programme with widening participation
• Charity group supporting two named charities
• Paperless initiative
• Deemed consent for shareholders to receive

electronic communications

• Energy efficient office buildings in London,

Manchester and Sunderland
• Increased recycling in all offices
• Liaising with ESG rating agencies
• Minimal carbon emissions

*Direct engagement with Directors or the Board. All other items are overseen by management and reported to the Board or its committees, where appropriate.

S T R A T E G I C R E P O R T

Section 172(1) Statement continued

Key strategic decisions impacting stakeholders in 2022

Where appropriate, information or feedback received from shareholders and other key stakeholders are routinely reported to the

Board by the Executive Leadership team, the General Counsel, the Company Secretary, IPS Business Heads, the Group Risk, MLRO

and ESG Manager and the investment managers.

During the year, the Board made decisions to deliver against our strategy, whilst considering the different interests of our stakeholder

groups and the impact of key decisions upon them. Each decision taken by the Board is with a view to ensuring that we deliver on

our commitment to our shareholders to deliver long-term capital growth and steadily increasing income. The following provides an

overview of some of the key decisions taken and how integral our stakeholders are in the Board’s decision-making process.

1) REVIEW OF OUR REMUNERATION POLICY

Following feedback received from major shareholders at the start of 2022 and during the triennial review of the Directors’
Remuneration Policy, the Remuneration Committee has proposed changes to the Directors’ Remuneration Policy for approval at
the 2023 AGM. Further details may be found in the Directors’ Remuneration Report on page 76.

2) WORKFORCE ENGAGEMENT OUTCOMES

Workforce engagement activities held during the year are listed on page 47, with details of our first listening group described in
the case study on page 46. Feedback from these activities led or contributed to the following outcomes:

• Revision of our junior staff members’ remuneration packages during the February 2023 pay review cycle

• The implementation and addition of various learning and development courses for our people including manager training,

discovering leadership training and other courses on self-awareness, wellbeing and community. Feedback from staff has been
reported to the Board by the Executive Leadership team.

• A CSS UK team day, which brought our colleagues from the London and Manchester offices together to further support our

collaboration and unity as a business.

3) CONTINUED INVESTMENT IN DELIVERING LONG-TERM IPS REVENUE GROWTH

During the course of 2022, further investment has been made in our technology offering to support our Safecall business. The
new Safecall portal has been well-received by our clients.

We have also appointed Trish Houston to manage our CSS business, in addition to her role as COO, to drive the future growth of
this business.

REVIEW OF IMPACT OF COST OF LIVING AND INFLATIONARY PRESSURES ON STAKEHOLDERS

During the year, the Board held in depth discussions on the impact of the economic climate on the Investment Portfolio and
how the investment managers proposed to manage performance in light of market volatility. The Board was satisfied from
those discussions that the team at Janus Henderson continue to manage the Investment Portfolio appropriately and in the best
interests of shareholders. Further details on the investment manager’s approach can be found in their review on page 17.

The Board will continue to monitor the effects of the economic climate on the market.

5) ENGAGEMENT WITH ESG RATING AGENCIES

Following the ongoing focus on ESG by UK government and regulatory bodies, the Audit and Risk Committee commissioned
engagement with ESG rating agencies to better understand its importance to investors. Those discussions have resulted in
enhanced ESG reporting, which has led to improved ESG scores. This has not only educated the Board on matters which are
important to investors but also adds to the attractiveness of our investment proposition in the long-term. Further details may be
found in the ESG section on page 50.

lawdebenture.com

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Environmental, Social and Governance (ESG)

Group approach to ESG

risks. The team proactively engages with senior management on

key ESG issues and risks, assessing their responses and subsequent

ESG considerations underpin sustainable long-term returns for

actions. We continue to hold the view that active engagement with

our shareholders, as well as promoting behaviours aligned to our

companies like Shell and BP achieves more than divestment, and

corporate purpose and values, as set out on page 7.

our investment rationale on these stocks is detailed on page 22.

ESG factors are integrated into our investment analysis and

The Board regularly reviews quantitative ESG metric reporting

decision-making as it is our view that it delivers a resilient

for the portfolio. The inclusion of this data informs discussion

portfolio and better outcomes for our shareholders, clients,

and debate and allows us to ensure the portfolio continues to

people, the wider community and the environment.

deliver against the commitments made to our shareholders. We

Our IPS colleagues are also afforded peace of mind that they are

part of a team which is fair, ethical and committed to doing the

right thing through our corporate values. They are the building

blocks for a successful and sustainable future and will facilitate

meeting our Group goals alongside our ESG objectives.

What we achieved in 2022

2022 has been a significant year in Law Debenture’s ESG

development:

• Regular ESG Committee meetings; 11 held during the year.

• Launched an ESG-focussed section of our website:

https://www.lawdebenture.com/about-us/esg

• Published our Environmental Policy, available on the above link.

• Published our summary gender pay gap summary:

https://www.lawdebenture.com/news/lawdeb-publishes-

gender-pay-gap-summary

• Published our first voluntary TCFD on pages 51 to 53.

• Agreed employee diversity targets and thresholds.

• Continued engagement with ESG rating providers.

Looking ahead to 2023

In 2023, we are committed to make further change happen by

taking more action and enhancing the availability of our ESG

information in the public domain by:

• Continuing the development of our TCFD disclosures for

2023 year end.

will continue to evolve our approach as ESG data becomes more

available and the asset management industry becomes more

sophisticated and experienced in analysing the ESG impact

of investing.

Environmental

As a business, we are conscious that our decisions impact

the environment. The majority of our staff are employed to

provide services under our IPS business, and so our greatest

consideration in this area is our offices. With this in mind, we

consciously selected offices that reflect these values within our

recent office moves; our London, Manchester and Safecall offices

are each built according to high sustainability standards.

Emissions data (unaudited)
A significant portion of the Group’s carbon emissions arises from

its consumption of energy in maintaining its offices.

As at 31 December

Scope 1

Scope 2

As at 31 December

Scope 1

Scope 2

2022*

—

Tonnes of CO2e

2021

—

2020

—

47.21

138.50

179.65

Tonnes of CO2e per £000 of IPS revenue

2022*

—

2021

—

2020

—

0.0009

0.0028

0.0059

• Increasing our Corporate Social Responsibility initiatives.

* Reduction in CO2e due to renewable energy use at main offices during 2022.

• Adding further content to the ESG section of our website.

ESG considerations when investing

Our investment managers consider ESG factors as part of their

fundamental analysis. The managers focus on material ESG

risks that are likely to have a significant impact on the financial

condition or operating performance of a business, as well as

evaluating a company’s ability to manage these risks.

Over 80% of scope 2 emissions are from UK operations. The Group

does not yet calculate Scope 3 emissions. The following describes

the methodology used to calculate our Scope 2 emissions. Where

available, direct energy bills from office energy consumption are

used. Energy bills are pro-rated where we share office space in the

building. The CO2e of the energy provider is used with this data to

calculate the net emissions impact. During data collection we faced

challenges on obtaining accurate data on energy consumption

at a small number of offices, where we lease a part of an office

The managers’ approach to ESG facilitates investment in

from a larger building and did not successfully receive pro-rated

companies that are actively improving their ESG profiles.

energy usage data. In such cases, an average of Group energy

Companies with weaker ESG risk profiles are not automatically

consumption per employee is used, and the CO2e of the energy

excluded provided they are making progress in mitigating these

provider or, if unavailable, DEFRA conversion factors are used.

lawdebenture.com

Environmental, Social and Governance (ESG) continued

The ratio used “Tonnes of CO2e per £000 of IPS revenue” uses IPS

In addition, we are partially compliant with metrics and targets

revenue from notes to the accounts “6. Segment analysis”. As we are

disclosure b) (disclosures provided are partially compliant because

calculating scope 2 emissions (office space), IPS revenue is used in

Scope 3 emissions are not yet disclosed).

the ratio, as the Portfolio has nil scope 1 and 2 CO2e emissions. The

energy calculations have not been externally audited.

For all remaining TCFD recommendations, we have not provided

fully compliant disclosures in the current period, due to the

The Group does not have defined “net zero emissions” targets.

Group focusing on embedding the ESG Committee and related

None of the entities within the Group (subsidiaries or parent

ESG activities including policies, website, ESG Strategy and

company) meets the streamlined energy and carbon reporting

Implementation Plan, engagement with ESG ratings providers and

(SECR) regulations at an individual level.

regular reporting to the ARC on ESG matters, given that investment

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Greenhouse gas reporting definitions

Carbon greenhouse gas (GHG) usage is calculated and presented

in three categories using The Greenhouse Gas (GHG) Protocol:

Scope 1 - direct GHG emissions from combustion in owned or
controlled boilers, vehicles (nil consumption for Group)

Scope 2 – energy emissions from own consumption of purchased
electricity, heat, steam and cooling – e.g. offices where we are in

control of our energy

Scope 3 - other indirect emissions of wider operational reach
including investments, business travel, supply chain, and office

energy not captured in scope 1 or 2.

LawDeb Lens 2022
– Annual Photography Competition

Law Debenture is pleased to continue to host its annual amateur

photography competition, with entries received from investors,

clients, industry contacts, referral partners as well as staff. Last

year’s competition categories were based upon our long lived

but newly articulated LawDeb values. For 2022 we challenged

entrants with a new set of categories which are equally important

to us, Environmental, Social and Governance (ESG).

In our continuing journey and focus on the importance of ESG we

were confident that these broad categories would yield an exciting

variety of images and styles: this has certainly proven to be the case.

The conversation and consideration of ESG principles this event has

encouraged, internally and externally, has also been pleasing.

With our congratulations to LawDeb Lens 2022 winners announced

in January 2023 and photos shown on pages 51 and 55.

Task Force on Climate-Related Financial
Disclosures (TCFD)

Investment trusts are not required to publish TCFD disclosures until

30 June 2024. However, we are sharing voluntary TCFD disclosures

across three of the 11 TCFD Recommendations available at https://

www.fsb-tcfd.org/recommendations/

Fully compliant disclosures have been provided in respect of:

• Governance – disclosures a) and b); and

• Risk management – disclosure a).

trusts are not in scope for mandatory TCFD in the current period.

Planned actions include a standalone climate risk register to

identify risks and opportunities as well as a TCFD delivery plan, with

progress updates shared with the ARC on a quarterly basis. The

ARC will continue to review the Group’s principal risks including

climate change, at least twice a year. A key focus of the Board,

Executive Leadership and the ESG Committee in the coming year

will therefore be to provide fully compliant disclosures by required

deadline for investment trusts.

The Investment Portfolio is not an ESG fund as there are no sector

exclusions. The Portfolio does not focus solely on promoting

environmental and/or social characteristics (which must also

have good governance practices) and does not have sustainable

investment as its principal objective. Our IPS business is a low

carbon emitter as shown on page 50.

In the table of voluntary TCFD disclosures on pages 52 to 53, we

have presented a view of TCFD across the Investment Portfolio and

the IPS business for greater transparency, as opposed to a single set

of disclosures for the entire Group.

Environmental - Frog on the Run
Photo credit : Phil Symes

S T R A T E G I C R E P O R T

Environmental, Social and Governance (ESG) continued

GOVERNANCE

Disclose the Company’s governance around climate-related risks and opportunities.

Overview to Governance
The Audit and Risk Committee (ARC) reviewed the ESG Strategy and Implementation Plan (the Plan) for the Group and

recommended that the Board approve the Plan in July 2022. The ARC is now monitoring progress against the Plan and updating

the Board accordingly. The ESG Manager will continue to evolve the Plan based on feedback from the ARC and Board taking into

consideration views of shareholders, and voting agencies.

Law Debenture does not currently have climate related goals and targets. However, this will be reviewed during 2023.

Investment Portfolio

IPS Business

Within the Investment Portfolio, climate-related risks and

Climate related risks and opportunities are overseen by our ESG

opportunities are assessed where they are considered to

Committee which reports to the ARC. The ESG Committee is

be material to the investment rationale. This assessment is

made up of a cross-function mix of Law Debenture employees

alongside the fundamental research that is integral to the
investment process.

to drive, create and review Law Debenture's ESG policies for
approval by Executive Leadership and the ARC.

There are no sector exclusions in the Portfolio. Instead, the focus

In line with this approach, climate-related risks are also

is on engaging with companies in order to better understand

considered as part of our ESG risk management procedures.

how climate risks and opportunities are managed. Interactions

In line with the Group's policy for identifying risks and

and engagements with companies are reported to the Board

opportunities, risks are identified through a "bottom up"

on a quarterly basis. These discussions can take place either

approach by Business Units and central functions, including

directly via the investment managers or via Janus Henderson’s

the Shared Services Centre, and are documented, assessed

Governance and Stewardship team.

and monitored in Business Unit risk registers or via the ESG

Committee which oversees the TCFD disclosures and impacts.

Reporting to the ARC and Executive Leadership Team on ESG

matters takes place on at least a quarterly basis.

STRATEGY

Disclose the actual and potential impacts of climate-related risks and opportunities on the company’s businesses, strategy,

and financial planning where such information is material.

Overview to Strategy
In undergoing our financial planning, no climate-related impact to our balance sheet or income statement is expected at present

and therefore no financial adjustments are required. We are working on finalising our strategy including disclosures in relation to

time-related definitions of short, medium and long term time horizons and associated risks and opportunities. The Board does not

currently have any defined timeline agreed for this.

Investment Portfolio

IPS Business

The investment managers are tasked with growing capital and

We are a minor scope 2 emitter; from the energy consumed

income by investing in a diversified portfolio of companies.

in the organisation via our offices. Our head offices use green

There are no specific ESG or carbon-related targets. Within

energy from 100% renewable energy sources.

the Investment Portfolio, the investment managers will seek

to identify material risks and opportunities relevant to each

investment case over a variety of time horizons. For example,

the need to de-carbonise the global economy over the long

term presents investment opportunities in companies working

to deliver this, such as Ceres Power, AFC Energy and ITM Power.

lawdebenture.com

Environmental, Social and Governance (ESG) continued

STRATEGY continued

Investment Portfolio

IPS Business

The investment managers will also seek to assess companies

Legislative change in relation to carbon, including reporting

where there is a risk to earnings from, for example, the need

requirements and taxation implications poses a small risk

to diversify away from fossil fuels. These considerations will

to our business and we must ensure we are able to meet

form a role in assessing the fundamental value of companies

such requirements.

and whether there is an attractive total return opportunity. The

investment managers report to the Board on these discussions

at least quarterly.

RISK MANAGEMENT

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Disclose how the company identifies, assesses, and manages climate-related risks.

Overview to Risk Management
Our approach to risk management includes a review of climate-related risks that has been reported to the ARC during 2022 and

will be presented to the ARC on at least an annual basis going forward. We will evolve this further during 2023 including a review of

the transition risks which may impact the Investment Portfolio and IPS business.

We consider climate risk for the Group to be low and is not considered a principal risk under the Group’s scoring assessment of

principal risks in risk management on page 39. However, ESG considerations, including climate regulatory reporting requirements

such as TCFD, are an emerging risk.

Investment Portfolio

IPS Business

Climate-related risks within the Investment Portfolio are

Climate considerations are reviewed at operational level

predominantly assessed through fundamental analysis.

where feasible. The majority of direct carbon and energy

This includes scheduled company reporting, meetings with

usage is via the office locations. There has been an active

company management and access to third party research.

decision to move into sustainable premises at our two largest

Where appropriate we engage with company management

offices, the London head office and Manchester sites (c.80%

in order to increase climate disclosures and to set clear and

employees), which are both sustainable BREEAM offices.

measurable greenhouse gas reduction targets.

There have been no assets impaired because of climate-

Janus Henderson also produces monthly reports available to

related physical risks; the Group leases its office premises

the investment managers that include a screening for portfolio

companies held with the highest contribution to portfolio

carbon risk.

and does not consider the right-of-use asset (note 22 of the

financial statements) to be impaired by climate risks. Fixed

assets (note 11 of the financial statements) relate to leasehold

improvements, office furniture and equipment, none of

which are affected by climate-change.

METRICS AND TARGETS

Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities.

Overview to Metrics and Targets
As the direct climate risk for Law Debenture is low we have decided not to accelerate the implementation of metrics. The Group is

working on the data collection required for the calculation of Scope 3 analysis for mandatory TCFD reporting.

Investment Portfolio

IPS Business

There are currently no KPIs to assess climate-related risks that

Our current reporting metric is Scope 1 and 2 carbon emissions,

are applied to the Investment Portfolio in aggregate.

which we publish on page 50 using the Greenhouse Gas

Protocol.

S T R A T E G I C R E P O R T

Environmental, Social and Governance (ESG) continued

Social

Diversity and inclusion
Following several senior appointments and promotions over

The Company satisfies all recommendations of the FTSE Women

Leaders and Parker reviews. For more information on the

the last five years the composition of our Board and Executive

progress of our diversity and inclusion objectives please refer to

Leadership team reflects a diverse cross section of gender,

page 71.

ethnicity, age and background. We are proud of the progress

we have made and believe we are reaping the rewards of

genuine diversity of thought. We were particularly pleased to

have been ranked 2nd in the FTSE 250 Rankings for Women on
Boards and in Leadership (and 1st in the Financial Services
sector), in the inaugural report by the FTSE Women Leaders
Review, announced on 22 February 2022. We fully support all the

recommendations in this report.

We have worked hard to create a working culture that supports

and celebrates diversity in the workplace. Our recently published

Gender Pay Gap Summary (https://www.lawdebenture.com/news/

lawdeb-publishes-gender-pay-gap-summary) highlights areas

where we have made excellent progress.

We know that a diverse workforce and inclusive culture directly

benefits our clients. For our Corporate Secretarial Services and

REPORTING ON GENDER IDENTITY OR SEX (unaudited)

As at
31 December

Number of
Board
members

Percentage
of the Board

Number
of senior
positions on
the Board
(CEO, CFO,
SID and
Chair)1

*Number in
executive
management

*Percentage
of executive
management

**Number in
senior
management

**Percentage
of senior
management

Number
in Group
employees

Percentage
of Group
employees

2022

2021

2022

2021

2022

2021

2022

2021

2022

2021

2022

2021

2022

2021

2022

2021

2022

2021

Men

Women

Total

57% 62%

3 43% 38%

8 100% 100%

33% 33%

67% 67%

3 100% 100%

38% 50%

118

81 45% 45%

62% 50%

144

55% 55%

8 100% 100% 262

179 100% 100%

REPORTING ON ETHNIC BACKGROUND

White

British or

other White

(including

minority-

white groups)

Mixed/

Multiple

Ethnic Groups

Asian/Asian
British

Black/African/

86% 88%

3 100% 100%

8 100% 100%

182

126

69% 71%

—

— 0%

—

— 0%

—

— 0%

14% 12%

—

— 0%

—

— 0%

11% 12%

Caribbean/

—

— 0%

—

— 0%

—

— 0%

Black British

Other ethnic

group,

including

Arab

Not specified/

—

— 0%

—

— 0%

—

— 0%

prefer not

—

— 0%

—

— 0%

—

— 0%

to say

Total

8 100% 100%

3 100% 100%

8 100% 100% 262

179 100% 100%

1 At Law Debenture, the role of COO has been defined as a Senior Board position. The CFO is not a Board position but is a member of the executive management.
* Executive management report to the Board.
** Senior managers are any individual with responsibility for planning, directing or controlling an activity of one of the subsidiary companies or a key central business function,

excluding the CEO and the COO. Senior managers report to the executive management.

lawdebenture.com

Environmental, Social and Governance (ESG) continued

Pensions businesses, for example, having our women sit on the

boards of our clients supports the diversity and representation within

our clients’ businesses. For our other services the diversity of thought

we bring ensures innovation and challenge that may otherwise

be missing. There is always more to do but we are committed to

continuing to improve diversity in our workplace.

Over the last 12 months we have held workshops with each of the IPS

business units to understand diversity in their industry, inclusivity in

their teams, as well as their progress and experiences. This insight fed

into the wider diversity and inclusion strategy. We will articulate this

in full in 2023 but a few of the actions undertaken include:

• Ongoing culture initiatives – such as Culture Week 2022 to bring
together colleagues across the business to meet and share ideas.

• Training on unconscious bias.

• Roll-out of LawDeb Landmarks, our career progression framework.

• Actively encouraging women into the recruitment process.

• Offering mentoring via the University of Greenwich, and internships.

• Supporting our nominated charities of the year, the Samaritans and

Marie Curie, via a wide variety of activities.

Social - All in the Round
Photo credit: Simon Lee

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Data collection
Collection of data for the table on page 54 is based on HR system

data and on a voluntary basis where employees are encouraged

to complete at enrolment. Where gaps and missing fields are

identified, targeted emails are sent out on an annual basis for them

to complete.

Human rights and modern slavery
The Group believes in the importance of doing business in ways

that value and respect the human rights of our staff, customers, and

business partners.

The Group will not knowingly engage with companies that use

unlawful child labour or forced labour, nor will it knowingly accept

products or services from suppliers that employ or utilise child

labour or forced labour.

Pursuant to the UK Modern Slavery Act, our Modern Slavery

Statement is published on our website.

Governance

Good governance is central to Law Debenture.

As a FTSE 250 PLC, we comply with the requisite laws and

regulations including the UK Corporate Governance Code and the

Financial Conduct Authority’s Listing Rules – for further details see

our Corporate Governance report on pages 66 to 68.

As an investment trust, we also adhere to the UK Stewardship Code

(the Code) through our investment manager. The Code sets out

investment standards to be applied by institutional investors, asset

managers and service providers.

Governance - He who commands the sea
has command of everything, Themistocles
Photo credit: Charlotte Drake

S T R A T E G I C R E P O R T

Environmental, Social and Governance (ESG) continued

Voting
We delegate stewardship activities to our Investment Manager. As an active manager their preference is to engage with management

and boards to resolve issues of concern rather than to vote against shareholder meeting proposals. In their experience, this approach

is more likely to be effective in influencing company behaviour. However, where they believe proposals are not line with shareholder

interests or where engagement proves unsuccessful, they will vote against.

Law Debenture Voting Summary
During 2022, our Investment Manager voted on behalf of Law Debenture at 174 company meetings, 45 with at least one vote against

management.

% of AGMs with at least
one vote against management

Voting by category

25% of meetings
with at least one vote
against management

75% of meetings
where we did not vote

against management

Source: Janus Henderson using Institutional Shareholder Services (‘ISS’)
categories, 31 December 2022, for the period 1 January 2022 to 31 December 2022.
Note: Some meetings had more than one vote against management.

34% Compensation

28% Director Election

11% Capitalisation

10% Routine Business

5% Corporate Governance

5% Strategic Transactions

3% Social

2% Company Articles

2% Environmental

Notable votes cast
against management proposals:

Notable votes cast
in favour of management proposals:

SigmaRoc
SigmaRoc is a UK and European heavy building materials

Halfords
Halfords is a specialist auto parts and cycling retailer,

company. We voted against the Financial Statements and

as well as offering repair services. We voted against ISS

Statutory Reports as the (former) CFO was granted options

recommendation and in favour of management with

which we deemed to be too large and therefore outside of

regards to their ability to issue shares, as well as their ability

best practice.

Irish Continental
Irish Continental is a ferry company that operates

to issue shares without pre-emptive rights. We voted with
management as in our view the ability of management to

quickly undertake acquisitions should not be impaired (in this

case they bought a business called Axle Group), and we felt

predominantly between Holyhead and Dublin. We voted

that Halfords had acted within the spirit of the current pre-

against the Remuneration Report because the senior

emption rules.

management team were awarded pay rises significantly

above inflation without, in our view, a compelling rationale.

GlaxoSmithKline
GlaxoSmithKline (now GSK) is a global pharmaceutical

Convatec
Convatec is a global medical products company. We

voted against ISS recommendation and in favour of the

Remuneration Report. In our view the current senior

business (which at the time of the shareholder vote also

leadership team are executing well in a challenging operating

owned a consumer healthcare business, now separately listed

backdrop and are outperforming relevant peers. We therefore

called Haleon). We voted against the remuneration policy as it

felt it was in the best interest of shareholders to vote in favour.

included a substantial increase in bonus opportunity which in

our view was outside of best practice.

lawdebenture.com

Environmental, Social and Governance (ESG) continued

IPS as a provider of governance services
From its origins over 130 years ago Law Debenture has diversified

to become a group with a range of governance services, further

details can be found in the Chief Executive Officer’s review found

on pages 8 to 14.

Case Study: Supporting a leading
accountancy firm through their
carbon-reduction commitments

Last year we reported on the work our pension trustees

are doing with large pension funds, such as the M&S

pension scheme, to set net zero targets. After much work

Case Study: Supporting our clients
through Whistleblowing

Safecall works in partnership with companies by giving

their employees and key stakeholders a voice to speak

out on key issues, especially where Social and Governance

considerations are very high on the agenda.

Experienced call handlers take telephone calls and inbound

emails concerning human rights & labour, health & safety,

and modern slavery, alongside issues surrounding anti

bribery & corruption, diversity, cyber security, corporate

behaviour and gender pay gaps; all areas linked to ESG.

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by the ESG committee chaired by LawDeb, the M&S

By putting mechanisms in place to help encourage

pension scheme went on to announce a target of net zero

and embrace a culture of speaking up, organisations

by 2030 for its asset portfolio.

can demonstrate how they promote compliance and

Law Debenture has continued to support the pension

best practice.

industry in driving forward the ESG Agenda. An example

The strength of an organisations’ ethics culture is measured

of a good partnership is between Law Debenture and a

through multiple indicators of employee behaviours. It

leading accountancy firm.

includes reporting misconduct, at various levels within

Together the client and Law Debenture looked at various

an organisation.

industry initiatives on ESG that the pension scheme could

“We always want whistleblowers to speak out. When they

align with, and considered the implications in terms of

speak for the planet, for people, for products, and for good

the investible universe, carbon reduction commitments

governance, organisations can strive to do better and show

and other exclusions. The scheme is now aiming to invest

their commitment for a better future. In turn,

with ESG criteria in mind that include, among others, the

this demonstrates your organisation is an open

following objectives:

and fully transparent business.”

• ensuring at least 70% of financial emissions in materials

Jo Lewis, Safecall Managing Director

are aligned to a net zero pathway or subject to direct

engagement

• reducing carbon emissions by 50% by 2030

Law Debenture ESG Committee
The ESG Committee met 11 times during 2022 and is chaired by

• net zero by 2050

the Group ESG Manager.

• investing less in companies with weak ESG credentials

and more in companies that are ESG leaders.

• excluding from the investible universe

companies that seriously breach the UN Global

Compact.

The Group ESG Manager attends meetings of the Audit and

Risk Committee to oversee ESG matters that have been
delegated. ESG matters relating to strategy are escalated to the

Board for approval.

For 2023, the ESG Committee and Audit and Risk Committee

will continue to drive forward the Group’s commitment to the

environment, social responsibility, corporate governance and

sustainability and take the necessary steps to enhance its

disclosures to investors and the wider market.

This report was approved by the Board of Directors on

27 February 2023 and signed on its behalf by

Law Debenture Corporate Services Limited
Company Secretary

C O R P O R A T E G O V E R N A N C E

The Board

Robert Hingley
Chairman, Independent Non-Executive

Denis Jackson
Chief Executive Officer

Trish Houston
Chief Operating Officer

Director

N R

Appointed to the Board on 1 October 2017

Appointed to the Board on 1 January

Appointed to the Board on 2 September

and appointed Chairman in April 2018.

2018.

2020.

A corporate financier with over 30 years’

Denis joined Law Debenture in July 2017

Trish brings twenty years of experience in

experience, Robert was a partner at

as Chief Commercial Officer. He was

leadership roles in the financial services

Ondra LLP until October 2017. From 2010

previously at Capita plc as director of

industry. Previously, she was a member

until 2015, he was a managing director,

new business enterprise, having been

of the senior management team at

and later senior advisor, at Lazard.

a director at Throgmorton UK Limited

JDX Consulting Limited, where she had

He was previously director-general

(which Capita acquired). Prior to that,

executive responsibility for HR, IT and

of The Takeover Panel from 2007 on

he was regional general manager for

facilities and oversaw the merger of

secondment from Lexicon Partners,

Europe and the United States at Tibra

three businesses. Prior to that, Trish was

where he was vice chairman. Prior to

Trading Europe Limited, a FCA regulated

a partner at Ruffer LLP where she held

joining Lexicon Partners in 2005, he

proprietary trading company, which he

several roles including global head of HR

was co-head of the Global Financial

joined from Citigroup (formerly Salomon

and global head of risk. She was also a

Institutions Group and head of German

Brothers). He spent almost 20 years there

member of the investment management

investment banking at Citigroup

in a variety of roles including in Treasury

team at PricewaterhouseCoopers LLP

Global Capital Markets, which acquired

(both in New York and London), as head

and worked in their offices in the UK,

the investment banking business of

of the finance desk in Hong Kong, head

Australia and Switzerland.

Schroders in 2000. He joined Schroders

of fixed income prime brokerage in New

in 1985 after having qualified as a solicitor

York and ultimately, head of EMEA prime

with Clifford Chance in 1984.

brokerage sales.

Robert is currently the chairman of
Phoenix Spree Deutschland Limited,

Key skills and experience contributed
to the Company include strategy,

Euroclear UK and International Limited

commerce, corporate finance

and chairman of governors at North

and governance and operational

London Collegiate School. He is also

and transactional leadership in

a non-executive director of Marathon

regional organisations.

Key skills and experience contributed to

the Company include operational growth,

risk management, strategy and human

resource management.

Asset Management, a member of the

Takeover Panel and a trustee at the

Bishopsgate Institute.

Key skills and experience contributed to

the Company include strategy, corporate

finance, corporate governance and

mergers and acquisitions.

Key

R Remuneration Committee

N Nomination Committee

A Audit and Risk Committee

Committee Chair

lawdebenture.com

A R N Tim Bond Senior Independent Director

Appointed to the Board on 14 April 2015 — Tim was previously a partner at Odey Asset

Management LLP until March 2022, having joined in 2010 as its head of macroeconomic strategy,

and then subsequently managed Odey’s Odyssey Fund. Before joining Odey, Tim spent 12 years

at Barclays Capital as managing director and head of global asset allocation. Tim was editor and

principal author of Barclays Capital’s Equity Gilt Study and chief advisor to the bank’s RADAR Fund.

Prior to Barclays, Tim worked at Moore Capital and spent 10 years as a strategist and trader for Tokai

Bank Europe, a proprietary trading boutique.

Key skills and experience contributed to the Company include fund management and investment,

strategy, corporate finance, ESG matters and distribution to investors.

A R N Pars Purewal

Independent Non-Executive Director

Appointed to the Board on 16 December 2021 — After a career spanning more than thirty-five years,

Pars retired as a senior partner of PricewaterhouseCoopers (PwC) in June 2019. His experience

included being PwC’s UK Asset Management leader for ten years and finance partner for both asset

and wealth management. He was also chair of the Audit Committee of both Brewin Dolphin Holdings

PLC and Federated Hermes International. He is a Fellow of the ICAEW, board chair of Beyond Food

Foundation, a non-executive director of Finsbury Growth & Income Trust PLC and Royal London

Mutual Insurance Limited.

Key skills and experience contributed to the Company include an in-depth knowledge of the financial

services sector, audit and accounting, fund management, risk management and compliance.

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R A N Claire Finn

Independent Non-Executive Director

Appointed to the Board on 2 September 2019 — Claire’s most recent executive experience was at

Blackrock, where she spent almost 13 years, becoming managing director and head of UK DC, Unit

Linked and Platforms, responsible for strategy, innovation and growth. Previous roles at Blackrock

included director/managing director, head of strategic alliances, director of sales and relationship

management, and vice president of product development. She previously held roles in product

management at Henderson Global Investors (2001 – 2005) and relationship management at Bank of

Tokyo-Mitsubishi, London (1999 – 2001). Claire is currently chair of UBS Asset Management Life Limited

and a non-executive director of Artemis Fund Managers Limited, Sparrows Capital Limited, Octopus

Apollo VCT and Baillie Gifford Shin Nippon Public Limited Company.

Key skills and experience contributed to the Company include investment management, distribution

to retail and institutional investors, strategic innovation and growth in the UK asset management,
pensions and insurance industries and corporate governance.

A R N Clare Askem

Independent Non-Executive Director

Appointed to the Board on 10 June 2021 — Clare has extensive background in strategic

development and in-depth experience in business change and digital transformation. She is also

a non-executive director of Portmeirion Group PLC and IG Design Group plc. Previously, Clare

was managing director of Habitat at Sainsbury plc and was a director on the Sainsbury’s Argos

operating board. Prior to her role at Habitat, Clare held a number of executive positions at Home

Retail Group plc including director of strategic development, chair of the group’s technology

committee and director on the operating board for Homebase. Prior to these roles Clare also held

other executive positions at Dixons Carphone plc.

Key skills and experience contributed to the Company include strategy, corporate transactions and

digital marketing and distribution.

C O R P O R A T E G O V E R N A N C E

lawdebenture.com

Directors’ report

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The Directors present their Annual Report and the audited financial statements for the year ended 31 December 2022. The Company

operates as an investment trust in accordance with sections 1158-1159 of the Corporation Tax Act 2010 as amended (s1158-1159) and

has been approved as such by HM Revenue & Customs. In the opinion of the Directors, the Company has conducted its affairs so as to

enable it to continue to be an approved investment trust under s1158-1159. The Company, which is not a close company, is registered

as an investment company as defined in section 833 of the Companies Act 2006 and operates as such. The Directors consider that the

Group operates as a going concern.

The Corporate Governance report forms part of the Directors’ report.

Essential contracts

Future developments

In the view of the Board, the only contract that is essential to the

Details of future developments are disclosed in the Chairman’s

business of the Group is the investment management agreement

statement on page 7 and the Chief Executive Officer’s review on

with Janus Henderson, details of which are set out in the strategic

page 13 in the strategic report.

report on page 33.

Financial instruments

Regulatory compliance

The Company is subject to continuing obligations applicable to

The Company’s financial instruments, financial risk management

premium listed companies, overseen by the FCA.

objectives and policies arising from its financial instruments and

its exposure to risk are disclosed in note 19 to the Accounts.

Revenue, dividends and reserves

The Group revenue return attributable to shareholders for

the year ended 31 December 2022 was 34.44p per share. The

Directors recommend a final dividend of 8.75p per share, which,

Information required to be disclosed in accordance with Listing

Rule 9.8.4 is included as referenced below:

Rule

9.8.4 (1)

9.8.4 (7)

Detail

Where

Interest capitalised

Note 5, page 127

Allotment of equity securities Note 17, page 138

together with the three interim dividends of 7.25p paid in each

9.8.4 (2-6) (8-14) Not applicable

N/A

of July and October 2022 and January 2023, will produce a total

of 30.5p per share if approved by shareholders at the AGM (2021:

29.0p). The final dividend will be paid on 13 April 2023 to holders

on the register on the record date as at 10 March 2023. After

deduction of the interim and final dividends of £38.9m (2021:

£35.7m), consolidated revenue reserves increased by £4.5m (2021:

increased by £4.4m).

Directors

Under the Alternative Investment Fund Managers Directive

(AIFMD) the Company is required to appoint an “Alternative

Investment Fund Manager” (AIFM), which must be appropriately

regulated by the FCA. The Company has elected to be its own AIFM.

The AIFM is required to provide portfolio management, risk

management, administration, accounting and company secretarial

services to the Company. All of these functions, barring portfolio

management which continues to be delegated to Janus Henderson,

The Directors at the date of this report are listed on pages 58 and

are undertaken by the Company. The Company has appointed

59. All Directors held office throughout the year. Mark Bridgeman

NatWest Trustee and Depositary Services Limited, as depositary

remained a Director of the Company until his retirement at the

under Article 36 of the AIFMD. A fee is payable for this service, being

end of the 2022 AGM.

All Directors are required to stand for re-election every year (or

election at the next AGM following appointment). The list of

candidates, which the Board supports, is set out in the Notice

of AGM. The particular skills and experience that each Director

contributes to the long-term sustainable success of the Company

and the Group may be found on pages 58 and 59.

Directors’ conflicts of interests

0.0225% per annum of the calculated monthly NAV. As part of its

duties, the depositary is responsible for custody of the Company’s

portfolio assets, and has appointed HSBC Bank plc (which has been

the Company’s custodian for many years) as sub-custodian.

AIFMs are obliged to publish certain information for investors and

prospective investors and that information may be found either in

this Annual Report or on the Company’s website at https://www.

lawdebenture.com/investment-trust/shareholder-information/

corporate-governance/the-aifmd.

The Directors have a statutory duty to avoid conflicts of interest.

The AIFMD requires us to report on ‘leverage’. This is slightly

The Board has in place appropriate procedures to deal with

different from gearing (refer to page 152), leverage being any

conflicts and potential conflicts, including an annual review, and

method of borrowing that increases the Company’s exposure,

can confirm that those procedures are operating effectively.

including the borrowing of cash and the use of derivatives. It is

Whether any new conflicts are to be declared is also considered at

expressed as a ratio between the Company’s exposure and its

each Board meeting. Each Director has declared all matters that

NAV and must be calculated on a ‘gross’ and a ‘commitment’

might give rise to a potential conflict of interest and these have

method. Under the gross method, exposure represents the sum

been considered and, where necessary, approved by the Board.

of the Company’s positions after the deduction of sterling cash

C O R P O R A T E G O V E R N A N C E

Directors’ report continued

balances, without taking into account any hedging and netting

As at 27 February 2023, there were no shareholders that had

arrangements. Under the commitment method, exposure is

notified the Company of a beneficial interest of 3% or more

calculated without the deduction of sterling cash balances and

of the issued share capital. Share information as required by

after certain hedging and netting positions are offset against

section 992 of the Companies Act 2006 appears at pages 62

each other. At 31 December 2022, the leverage calculated under

and 138.

the gross method was 0.95, and under the net method was 1.00.

ESG considerations

Workforce engagement

Our people are key to our IPS business, and we rely on their

The Group gives ongoing consideration to ESG factors in both

expertise to provide excellent services to our clients. Employee

the management of the Investment Portfolio and the IPS

wellbeing remained a priority during the year particularly as

business. This is reflected throughout the strategic report on

we continued to support our people in their gradual return to

pages 6 to 57.

the office from remote working arrangements due to Covid-19.

Our energy and carbon emissions are reported in the ESG

During 2022, workforce engagement was conducted through

section on pages 50 to 51.

Repurchase and issue of shares

At the 2022 AGM, the Directors were given power to buy back

up to 18,567,488 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 2023

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 2023 AGM.

The Directors were also given power to allot up to 12,386,583

ordinary shares at the 2022 AGM. From the 2022 AGM to the

27 February 2023 the Company issued a total of 3.7m ordinary

shares under its share issuance programme, launched in

February 2021 and our SAYE scheme. The authority will expire

various methods including:

• Quarterly eNPS surveys.

• Our annual culture week in which our Workforce

Engagement Director participated.

• An employee listening group with our designated Workforce

Engagement Director and other events as set out in the

Section 172(1) Statement on page 46.

The Board also receives cyclical presentations from our

Business and Department Heads at each Board meeting and

holds one Board meeting per year in our Manchester office,

designed to focus on their operations, the wellbeing of staff

based in that region and to track progress on the continued

integration of the CSS business following its acquisition from

Eversheds Sutherland (International) LLP in 2021.

As set out in the Section 172(1) Statement, Clare Askem was

appointed Workforce Engagement Director on 7 April 2022.

at the 2023 AGM at which the Company intends to seek

Some of her responsibilities include:

shareholder approval to renew its powers to issue shares up to

10% of the Company’s share capital in issue at 27 February 2023.

Donations

• Being available to employees to discuss their views on

working conditions and other relevant work-related matters

or concerns.

• Understanding and interpreting the views of the workforce.

The Company made no political or charitable donations during

• Reporting the views of the workforce to the Executive

the year (2021: £nil).

Leadership team and the Board.

Share capital and significant
shareholdings

The Company’s share capital is made up of ordinary shares with

a nominal value of 5p 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 2022, there were 128,172,019

ordinary shares in issue with 128,172,019 voting rights. Note 17

includes details of share capital changes in the year.

• Agreeing an annual calendar of engagement events with the

Company Secretary.

• Providing feedback on existing workforce engagement

mechanisms.

The Board continues to see significant value in having a

Workforce Engagement Director. During the year, Clare Askem

and the Company Secretary agreed a calendar of events

with input from the Executive Leadership team and Human

Resources, to facilitate further Board engagement with our

people throughout the year. This included the hosting of

informal listening groups between Clare Askem and members

of staff without the presence of senior management, the

Executive Leadership teams or other members of the Board,

lawdebenture.com

Directors’ report continued

to encourage candid feedback. The objective of these groups

medium where unable to attend in person. Shareholders

is to gain greater insight into the employee perspective and

engaged with us on the share issuance programme, tax

ways in which their experience of the working environment

efficiencies afforded by the Company’s group structure,

can be enhanced. Information gathered from any engagement

progress on the integration of CSS within the group structure

is reported on an anonymous basis to the Executive

and on stocks selected for the Investment Portfolio. For

Leadership team and/or the Board, as appropriate. The first

the first time we also published a video recording of our

of the listening groups was held in September 2022. The

AGM, in addition to the PowerPoint presentation, on our

outcome of those discussions is disclosed in the Section 172(1)

website for year-round access. Given there has been minimal

Statement on page 48. Given their recent implementation,

engagement at the AGM via the virtual platform, the 2023

the effectiveness of these engagement mechanisms were

AGM will be an in person only meeting. Shareholders may

not reviewed in 2022. Clare works closely with the Company

submit any queries in advance of the AGM if preferred or if

Secretary, Human Resources and the Chief Operating Officer

they are unable to attend.

to fulfil her role.

Disability statement

We have policies in place to ensure that we give full and fair

consideration to applications for employment from disabled

persons, where a disabled person can adequately fulfill the

job’s requirements.

Our views on an inclusive workplace are that we value all

employees for their strengths and we offer employees with

disabilities, whether visible or invisible, an equal opportunity to

succeed, to learn, to be compensated fairly and to advance.

Training, career development and promotion also form part

of our policy for employees that become disabled during their

employment; reasonable adjustments are made to enable their

progression, which will allow them to continue to advance in

their career. 4.2% of our people have declared a disability.

Shareholder relations

In line with governance recommendations, if 20% or more

of the votes cast were against any Board resolution, the

Company would announce what action it intended to take

to consult shareholders’ views and provide a summary of the

outcome. The Board confirms that none of the resolutions put

to shareholders at the AGM in 2022 received votes against,

above 20% of the votes cast.

Shareholders are sent a copy of the Annual Report, which

includes our Notice of AGM, at least 21 clear days before the

AGM. The Company also provides this service to shareholders

in nominee companies where the nominee has made

appropriate arrangements. Details of the 2023 AGM are set

out at pages 156 to 158.

During the latter half of 2022, the Remuneration Committee,

following its triennial review of the Directors’ Remuneration

Policy (the “Policy”), approached the Company’s major

institutional shareholders and proxy voting agencies on

various changes being proposed. We are grateful for the

supportive responses and constructive feedback received

during the consultation and have amended our final

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The Board encourages communication with shareholders

proposals as a result. A resolution to approve the Policy will be

on matters of mutual interest throughout the year. The

put to shareholders at the 2023 AGM. Further details may be

Executive Leadership team has primary responsibility for

found in the Directors’ Remuneration Report on page 76.

managing regular and effective communications with

analysts and institutional investors on various matters such

as operational, financial performance and strategy. The Board

and Committee Chairs are also available upon request to meet

with shareholders and they ensure that the Board/Committee

as a whole have a clear understanding of investors’ views,

taking these into consideration when making decisions,

as appropriate.

The Financial Conduct Authority has determined that the

Company is subject to the Consumer Duty, which is designed

to ensure in scope companies deliver good outcomes for
retail customers. Whilst the Board already actively seeks to

do this pursuant to its obligations under section 172(1) of the

Companies Act 2006, it is early in the process of reviewing

whether any additional actions are required under these

new regulations and will report on its progress for the 2023

The Board recognises the value of the AGM as an opportunity

year-end.

to communicate with shareholders and encourages their

participation. Separate resolutions are put to the AGM on

each issue. The number of votes lodged for and against each

resolution and the number of votes withheld are published

immediately after the AGM to the London Stock Exchange and

on the Company’s website.

The Company’s website has a dedicated shareholder

information section, which includes all Regulatory News

Service announcements, our monthly factsheets about

the Investment Portfolio performance, a financial calendar,

previous copies of our annual and half-yearly reports

and other important shareholder information available

In April 2022, the Board was pleased to have been able to

for download.

engage with shareholders in person during and after its

hybrid AGM. Shareholders were given the opportunity to join

the meeting virtually and engage with the Board via that

Other engagement activities undertaken during 2022 may be

found on page 47 of the Section 172(1) Statement.

C O R P O R A T E G O V E R N A N C E

Directors’ report continued

Other stakeholder relations

Day-to-day relationships with the Company’s key stakeholders

are managed by the Executive Leadership team, the General

Counsel, the Company Secretary and IPS Business Heads and

where appropriate, their activities are reported to the Board. The

Board, directly or through its committees, engages or oversees

engagement.

The Board is given the opportunity to interact with stakeholders

at employee, client and investor focused events held throughout

the year. Further details may be found in the Section 172(1)

Statement found on page 47.

Investment managers – interests held

Directors’ responsibility for financial
reporting

The Directors are responsible for preparing the Annual Report

and the financial statements in accordance with international

accounting standards in conformity with the requirements of the

Companies Act 2006 and other applicable laws and regulations.

Company law requires the Directors to prepare financial

statements for each financial year. Under that law, the Directors

are required to prepare the financial statements in accordance

with international accounting standards in conformity with the

requirements of the Companies Act 2006. Under company law

the Directors must not approve the financial statements unless

they are satisfied that they give a true and fair view of the state

of affairs of the Group and of the profit or loss for the Group for

Laura Foll held 13,650 shares in the Company as at 31 December 2022
(2021: 13,650). James Henderson did not have a beneficial interest

that period. The Directors are also required to prepare financial
statements in accordance with international financial reporting

as at 31 December 2022 (2021: nil), although persons connected

standards adopted pursuant to Regulation (EC) No 1606/2002 as

to him had an interest of 134,000 shares (2021: 134,000 shares). In

it applies in the European Union.

addition, a charity with which James Henderson has non-beneficial

connections owns 117,000 shares (2021: 117,000 shares).

The Company holds no shares in the Janus Henderson Group

or their products. It has been notified that funds managed by

members of the Janus Henderson Group held 263,288 shares in

In preparing these financial statements, the Directors are

required to:

• select suitable accounting policies and then apply them

consistently;

the Company as at 31 December 2022 (2021: 276,612 shares).

• make judgements and accounting estimates that are

Employee participation/issue of shares

Employees are informed of the financial aspects of the Group’s

performance through periodic management meetings. Mindful

of the Company’s paperless initiative, copies of the Annual Report

are available on the Company’s website with physical copies only

being made available upon request. The Company operates a

SAYE scheme in which all UK full-time employees are eligible to

participate after completing a minimum service requirement.

Options outstanding under the SAYE scheme as at 31 December

2022 were:

Date of grant

15 August 2017

15 August 2018

14 August 2019

26 August 2020

1 September 2021

8 September 2022

Number of
option holders

Shares
under option

Exercise
price

3,530

31,788

17,375

47,022

47,498

26,705

594.75p

606.00p

592.00p

539.00p

778.00p

781.00p

Employees are invited to participate in our SAYE scheme annually,

where they are given the opportunity to save up to £500 each

month for a period of five years. After five years, employees may

either withdraw their savings and not buy any of the Company’s

shares or exercise the right to purchase shares at a price that is

fixed at the date they entered into the scheme.

reasonable and prudent;

• state whether they have been prepared in accordance with
international accounting standards in conformity with the

requirements of the Companies Act 2006, subject to any material

departures disclosed and explained in the financial statements;

• state whether they 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, subject to any material departures disclosed and

explained in the financial statements;

• prepare the financial statements on the going concern basis

unless it is inappropriate to presume that the Group will
continue in business; and

• prepare a Directors’ report, a strategic report and Directors’

remuneration report which comply with the requirements of

the Companies Act 2006.

The Directors are responsible for keeping adequate accounting

records that are sufficient to show and explain the Group’s

transactions and disclose with reasonable accuracy at any time, the

financial position of the Group and enable them to ensure that the

financial statements comply with the Companies Act 2006 and, as

regards the financial statements, article 4 of the IAS Regulation.

They are also responsible for safeguarding the assets of the

Group and for taking reasonable steps for the prevention

and detection of fraud and other irregularities. The Directors

are responsible for ensuring that the Annual Report and

financial statements, taken as a whole are fair, balanced and

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Directors’ report continued

understandable and provides the information necessary for

shareholders to assess the Company’s performance, business

model and strategy.

Website publication

The Directors are responsible for ensuring the Company’s Annual

Report and the financial statements are made available on a

website. Financial statements are published on the Group’s

website in accordance with legislation in the United Kingdom

governing the preparation and dissemination of financial

statements, which may vary from legislation in other jurisdictions.

The maintenance and integrity of the Group’s website is the

responsibility of the Directors. The Directors’ responsibility also

extends to the ongoing integrity of the financial statements

contained therein.

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.

Auditors

In the case of each Director in office at the date the Directors’

report is approved:

• so far as each Director is aware, there is no relevant audit

information of which the Group and Company’s auditors are

unaware; and

• they have taken all the steps that they ought to have taken

as a Director in order to make themselves aware of any

relevant audit information and to establish that the Group and

Company’s auditors are aware of that information.

This report was approved by the Board of Directors on

27 February 2023 and signed on its behalf by

Law Debenture Corporate Services Limited
Company Secretary

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C O R P O R A T E G O V E R N A N C E

Corporate governance report

Corporate governance

The Directors are required to report on how the Company has
applied the main and supporting principles in the UK Corporate
Governance Code (the Code), and to confirm that it has complied
with the Code’s provisions or, where this has not been the case,
to provide an explanation. This report relates to the Code as
published in July 2018, a copy of which may be obtained by
visiting www.frc.org.uk. The Financial Reporting Council (FRC) has
recognised that the Board structure of investment companies,
such as Law Debenture, might affect the relevance of some of the
provisions of the Code. The Company has therefore considered
the provisions of the Code that are applicable to it as a FTSE
250 listed investment company. This corporate governance
statement forms part of the Directors’ report and should be read
in conjunction with the strategic report on pages 6 to 57.

The Board has concluded that, as demonstrated by the
disclosures made throughout the strategic and Directors’
reports, the Company has complied with all of the requirements
applicable to it under the Code.

The Board – role and modus operandi

The names and biographies of the Directors at the date of this
report are on pages 58 and 59 of the Annual Report.

The Board is responsible for the overall strategy and
management of the Group, setting investment strategy and
ensuring that the Company is operating in compliance with
statutory and legal obligations. There is a formal schedule of
matters specifically reserved for Board decision, published
on the Company’s website (https://www.lawdebenture.
com/investment-trust/shareholder-information/corporate-
governance/matters-reserved-for-the-board). Matters connected
with strategy and management, structure and capital, financial
reporting and control, the investment trust portfolio, contracts,
stakeholder engagement and shareholder communication,
Board membership and other appointments, remuneration and
corporate governance are reserved for the Board.

In discharging its responsibilities, the Board takes account of
the Group’s purpose, values and culture, aiming to promote
enhanced value for shareholders in both capital and income
terms. The Board sets a cultural tone that encourages openness,
diversity and attention to the needs and views of shareholders
and those who transact with us through our IPS business. The
Chairman also ensures that the interests of the Company’s
institutional and retail shareholders are tabled for discussion, to
further the Board’s understanding of their views and to garner
responses, where appropriate.

The Board operates as a collective decision-making forum. Individual
Directors are required to scrutinise reports produced by the
Executive Leadership team and are encouraged to debate issues in
an open and constructive manner. If one or more Directors cannot
support a decision, a vote will be taken and the views of a dissenting
Director recorded in the minutes. Where appropriate, the Chairman
also holds meetings with the Non-Executive Directors without the
Executive Directors present and vice versa.

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Procedures are in place to enable independent professional advice
to be taken by individual Directors at the Company’s expense. The
Company has made qualifying third party indemnity provisions
for the benefit of its Directors and directors of its wholly owned
subsidiaries, and these remain in force at the date of this report.

The process for the appointment of Directors is set out in the
Nomination Committee report on page 69. The Company may
amend its Articles of Association by special resolution at a
general meeting of its shareholders, at which at least 75% of the
votes cast must be in favour of the resolution.

The Board meets regularly throughout the year. The attendance
records of the Directors at scheduled Board and Committee
meetings during 2022 are set out in the table below.

Board Remuneration Audit and Risk Nomination

Meetings

Attended by:

Denis Jackson

Trish Houston

Robert Hingley

Tim Bond

Mark Bridgeman

Pars Purewal

Claire Finn

Clare Askem

—

Whilst not members of the Board Committees, Denis Jackson

and Trish Houston attend meetings upon invitation. Similarly,

Robert Hingley’s attendance at Audit and Risk Committee

meetings is by invitation only.

Trish Houston was on maternity leave from 22 February 2022 and

resumed attendance at Board meetings from 25 May 2022. Mark

Bridgeman attended all meetings until his retirement from the

Board on 7 April 2022.

Division of responsibilities

Board Chair

The Chair is responsible for the leadership and overall effectiveness
of the Board and individual directors. He sets the agenda for each
meeting with the support of the Company Secretary. The Chair
manages the meeting timetable, promotes open and effective
discussion and challenge at meetings and creates an environment in
which all participants feel comfortable to share their views. He is also
responsible for ensuring that shareholders’ views are understood by
the Board as a whole.

Senior

Independent

Director (‘SID’)

The SID provides a sounding board for the Chair and, if necessary, acts
as an intermediary for the other Non-Executive Directors. The SID is
also available for communication with shareholders where normal
lines of communication via the Chair, CEO or COO are not successful
or where it is considered more appropriate. The SID also leads the
annual appraisal of the Chair and an orderly succession process for the
Chair, working closely with the Nomination Committee in both cases.

Executive
Directors

The Executive Directors are responsible for the leadership and
management of the business within the scope of the authorities
delegated by the Board. They must exercise those authorities to
achieve the strategic objectives set by the Board, implement Board
decisions and ensure that the Group complies with all of its regulatory
and legal obligations. The Executive Directors are also responsible
for communicating the views of the senior management team on
business issues to the Non-Executive Directors of the Board.

Non-Executive

Directors

The Non-Executive Directors help to set the strategy for the business,
offer specialist advice, constructively challenge the Executive Directors
and scrutinise the performance of the Executive Directors in relation
to the delivery of that strategy and their personal objectives, the
implementation of Board decisions and compliance with the Group’s
regulatory and legal obligations.

Corporate governance report continued

The Board – independence

At least half of the Board, excluding the Chairman, must be

independent Non-Executive Directors (NEDs). The Board

can confirm that, as at the date of this report, excluding the

Chairman, four of the six other Directors are independent NEDs.

remains satisfied that its composition and size is sufficient to

ensure that the requirements of the business can be met.

The membership of the Board and its Committees are fully

compliant with Code stipulations. Reports with respect to each

of the Committees may be found on pages 69, 72 and 76.

In assessing Directors’ independence, the Board takes into

The Board does not operate a management engagement

account their tenure on the Board, whether or not a Director

committee; the duties of such a committee are undertaken

is independent of management and any material business or

directly by the Board.

other relationship that could affect or interfere with the exercise

of objective judgement by the Director, or his/her ability to act

in the best interests of the Group. The Board is also satisfied that

each Director dedicates sufficient time to Law Debenture, and

that none of the Directors is ‘overboarded’ (having five or more

listed company roles). The contribution made by each Director

to the Company’s and Group’s long-term success, is described

on pages 58 and 59 of the Annual Report.

The Chairman, Robert Hingley, was independent at

appointment and continued to be independent throughout the

period, in the view of the Board, having no current or previous

connections with the Company or any of its subsidiaries.

The Board is satisfied that Robert Hingley’s other commitments

do not interfere with the discharge of his responsibilities to Law

Debenture, and that he dedicates sufficient time to discharge

his duties as Chairman.

Similarly, the Board is satisfied that Tim Bond, Mark Bridgeman,

Pars Purewal, Claire Finn and Clare Askem were independent

at their respective dates of appointment and that the current

directors of the Company have remained independent,

having no previous connection with the Company or any of

its subsidiaries.

Denis Jackson and Trish Houston, as Executive Directors, are

not independent.

Tim Bond is the Senior Independent Director and is available

to shareholders who have concerns that cannot be addressed

through the Chairman, CEO or COO.

Directors’ remuneration

Details of the Directors’ remuneration appear in the Directors’

Remuneration Report on pages 76 to 98.

Board Committees

The Board has established Nomination, Audit and Risk and

Remuneration Committees, to each of which it has delegated

certain responsibilities. Each Committee has terms of reference,

which are reviewed annually and published on the Company’s

website (www.lawdebenture.com/investment-trust/corporate-

governance). Membership of the Committees is reviewed

annually. Taking account of the position of the Company as an

investment trust, the Board is deliberately kept small and it

believes this is in the best interests of shareholders. The Board

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Accountability and audit, fair balanced
and understandable reporting and
going concern

The statement of Directors’ responsibilities in relation to

the financial statements appears on pages 64 and 65. The
independent auditors’ report appears on pages 100 to 110. The

Directors confirm that the Group and Company are a going

concern as evidenced by the financial statements, which

demonstrate a healthy position, taking into account all known

and future anticipated liabilities, and the Group’s ability to

meet those liabilities. The performance metrics of the Group

remain strong. There are no material uncertainties that call

into question the Company’s ability to continue to be a going

concern for at least 12 months from the date of approval of

the financial statements. The Directors therefore consider it

appropriate to adopt a going concern basis in preparing the

financial statements.

The Audit and Risk Committee has concluded, and the Board

concurs, that the financial statements present a fair, balanced

and understandable assessment of the financial position

and prospects of the Company and the Group. The financial

statements are reviewed by the Audit and Risk Committee,

approved by the Board and signed by the Chairman and CEO. In

the opinion of the Board, the Annual Report, taken as a whole is

fair, balanced and understandable and provides the necessary

information for shareholders to assess the Company’s and Group’s

position and performance, business model and strategy.

Internal controls and risk management
systems

The framework of internal controls underpins the Company’s

risk management framework, enabling it to operate within

the desired risk appetite. The following paragraphs provide a

description of the main features of the internal control and risk

management systems in relation to the financial reporting

process, which fulfil the obligations of the FRC Guidance on

Risk Management, Internal Control and Related Financial

and Business Reporting and the FCA’s Disclosure Guidance

and Transparency Rules. This section should be read in

conjunction with the strategic report, which sets out how the

Directors manage or mitigate the principal risks relating to the

Group’s business.

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Corporate governance report continued

The Board monitors the effectiveness of internal controls on

• review of internal audit reports by the Executive Risk

a continuous basis to ensure that internal control and risk

Committee and the Audit and Risk Committee;

mitigation is incorporated into the day-to-day management

of the organisation, both directly through main Board general

reviews and by the more specific work carried out by the Audit

and Risk Committee. The annual internal audit programme and

system of compliance checks have both been developed using a

risk-based methodology and an evaluation of the existing process

controls. Other mechanisms in place to monitor risk include:

• Board review of the Group’s matrix of key risks and controls

managed by the Group Risk Manager, reporting to an

Executive Risk Committee;

• review of the internal controls of those services, such as

investment management, which have been delegated to

third parties. This review was conducted during the initial

contractual negotiations and on a regular basis, including

regular discussions with the senior management and

compliance staff of Janus Henderson, and the performance of

an on-site independent review of operational controls;

• monitoring by the Board of the investment management
process, including the establishment and maintenance

of investment guidelines, receiving a report from the

• an internal audit function, reporting directly to the Audit and
Risk Committee, which involves business departments and

investment manager on a quarterly basis, the review of all

transactions with the investment manager and regular

business wide processes (including overseas offices) being

reconciliations of the records of the Group with those of the

subject to audit on a regular basis;

depositary and sub-custodian; and

• testing of the FCA regulated business’ systems and controls;

• receipt of frequent and detailed reports about the performance

• testing of the Company’s compliance with its AIFMD

obligations;

• review of reports by the depositary and the sub-custodian;

• periodic reports to the Board by the General Counsel about
legal and regulatory changes, and the steps that the Board

must take to comply; and

of the IPS business, including the overseas subsidiaries.

The systems of internal financial control are designed to provide

reasonable assurance against material misstatement or loss.

By means of the procedures set out above, the Directors have

established a robust process for identifying, evaluating and

monitoring the effectiveness of the internal control systems for

the period. This process has been in place throughout 2022 and is

• review of the reports produced by the external auditors on

reviewed by the Board on a regular basis.

their annual audit work.

We have a robust whistleblowing procedure which allows people

The Board considers that the above measures constitute the

to raise concerns under the Public Interest Disclosure Act 1998

continuing application of the FRC risk guidance and form an

about possible improprieties in matters of financial reporting or

important management tool in the monitoring and control of

other matters. Any concerns which are raised will be subject to

the Group’s operational risks.

An important element of the overall controls remains a

continuous review of the quality and effectiveness of internal

financial controls of the Group. The Board requires that the

Group maintains proper accounting records, so that it can rely

on the financial information it receives to make appropriate

business decisions and also that the Group’s assets are
safeguarded. This includes having data that allows the Board

to consider country and currency exposure and potential

impairment of assets (both financial and non-financial).

Key elements of the systems of internal control continue to be:

• regular qualitative self-assessment of the effectiveness of the
individual controls maintained in the overall internal financial

control framework;

• preparation by management of a comprehensive and
detailed budget, involving annual Board approval and

comparison at Board level of actual results with budgets and

forecasts at every meeting;

• systematic reporting to the Board of matters relating

to litigation, insurance, pensions, taxation, accounting,

counterparty risk and cash management as well as legal,

compliance and company secretarial issues;

lawdebenture.com

proportionate investigation, with appropriate follow up action

as per the policy. There is a clearly defined reporting structure

with colleagues having the option to raise any concerns with

their line manager, the General Counsel and Head of HR or

if those avenues are not appropriate, to the Chairman of the

Audit and Risk Committee. If they do not wish to report to any

of these persons for any reason, they may report their concerns

using our whistleblowing service provided by Safecall, which
is available 24 hours a day. Reports using this channel may be

made anonymously. Further details on risk management may be

found on pages 38 to 42.

Information about share capital

The information that the Company is required to disclose about

its share capital can be found in the Directors’ report (significant

holders) on page 62 and Notice of AGM (total voting rights) on page

162.

This report was approved by the Board of Directors on

27 February 2023 and signed on its behalf by

Law Debenture Corporate Services Limited
Company Secretary

Nomination Committee report

the appointment of his successor. There are job descriptions

in place for NEDs’ roles, and the Board has written terms and

conditions for such appointments, which will be made available

for inspection at the Company’s registered office upon request

to the company secretary, until the conclusion of the 2023 AGM.

Particular care is taken to ensure that NEDs are independent,

have sufficient time to commit to the duties expected of them

and that diversity factors are taken into consideration. No new

NED is appointed without first being interviewed by each

existing NED and comfort is obtained in relation to their other

commitments to ensure they have sufficient time to devote to

the role. The Committee considers using open advertising or the

services of external search firms to recruit new directors. Any

external search firms used are expected to be a signatory to the

standard voluntary code of conduct for executive search firms.

All new Directors undergo an induction process, involving

presentations by the CEO, COO, CFO, General Counsel, each of

the Business Heads and meetings with the investment manager.

The Committee is also responsible for reviewing and applying

the Board’s policy on tenure and succession planning for

members and the Chairman of the Board. I was appointed to

the Board in October 2017 and, in line with the policy and the

recommendations of the Code, I will stand down after nine

years although this period may be extended for a limited time to

facilitate an effective handover.

The Board is committed to achieving and maintaining a diverse

and inclusive membership to ensure optimal decision-making

and to assist in the development and execution of strategy,

for the benefit of its shareholders and other key stakeholders.

The Board’s policies on diversity and inclusion and tenure

and succession planning both embody this principle, which

is considered and applied in the appointment and succession

planning processes.

At the date of this report, the Company is compliant with the

recommendations under the FTSE Women Leaders and Parker

reviews.

Principal activities of the Committee

During the year, the Committee’s principal activities included:

• Recommending the appointment of a new designated Non-

Executive Director for Workforce Engagement to the Board for

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Annual statement by the Chairman
of the Nomination Committee

I am pleased to present the Company’s Nomination Committee

report for the year ending 31 December 2022.

Other than myself as Chair, the members of the Committee who

served during the year were Tim Bond, Mark Bridgeman, Pars

Purewal, Claire Finn and Clare Askem. Details of Committee

meetings and attendance can be found on page 66.

Role and duties
The Committee’s role is to keep under review the structure,

size and composition of the Board and its Committees, to

make recommendations to the Board about adjustments that

are deemed necessary and to ensure effective succession

planning in accordance with legal and corporate governance

requirements.

Key duties
• Identification and nomination of suitable candidates to fill

Board vacancies, with particular regard for the need to develop

a diverse pipeline to the Board and Executive Leadership levels.

• Succession planning for the Board.

approval.

• Making recommendations for the election and re-election of

• Reviewing the Board’s policies on Diversity and Inclusion and

Directors.

Tenure and Succession Planning.

• Ensuring that the Board and its Committees are constituted

• Reviewing the Board’s short, medium and long-term

to comply so far as practicable with legal and regulatory

succession plans.

requirements and the Code.

• Facilitating the internal evaluation of the performance of the

The Nomination Committee ensures that the Board has in

Board, its Committees and each of the directors.

place arrangements for orderly and transparent appointments

to the Board. It is the Board’s policy that meetings be chaired

by a Director other than the Board Chair, when dealing with

• Reviewing each of the directors’ independence and time

commitments.

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Nomination Committee report continued

• Reviewing the composition and constitution of the Board and

its Committees.

• Considering and recommending the re-election of each of the
Directors to the Board, who have subsequently recommended

the same for shareholder approval at the forthcoming AGM.

Board evaluation

Progress on recommendations made following the 2021 internal evaluation of Board and Committee performance:

RECOMMENDATIONS

ACTIONS

Improve time management

Board and Committee Chairs were rated highly in the 2022 internal Board evaluation in relation to

of meetings and further

time management of meetings. It was also acknowledged that the structure and length of meeting

streamline meeting packs

papers had improved. However it was requested that some additional adjustments be considered.

The Chair and Secretary have arranged to discuss this further in Q1 2023.

Continue to enhance

The Board and management have increased their engagement with key stakeholders during the year.

engagement with investors

Details are disclosed in the Section 172(1) Statement on page 46. Engagement activities undertaken

and other key stakeholders

by directors, management and corporate advisors including the investment manager and corporate
brokers are reported to the Board, who have oversight. The Board will continue to review its approach

and engage with stakeholders, as appropriate.

Continue to ensure an

The Board discusses the business of both the Investment Portfolio and IPS business at each scheduled

appropriate balance between

meeting. In addition to the routine quarterly investment management reports, thematic discussions

discussions regarding the

are now scheduled at least twice per year. With regard to the IPS business, in addition to receiving

portfolio and the IPS business

updates from Business Heads, the Board has also been focused on a review of the strategy for IPS,

which is ongoing.

Agree a director training

During the year, the Board received training on the FCA’s Senior Managers and Certification Regime,

schedule

the upcoming changes on audit and corporate governance reform and continue to receive routine

updates on regulatory and governance developments through the external auditor, company

secretary and other corporate advisors. The Board has access to Deloitte Academy, which provides a

wide range of technical briefings and bespoke training. Areas where the Company and its advisors

can continue to support the Board will be assessed each year.

Reassess the Company’s

Throughout the year, the Audit and Risk Committee reviewed the Company’s principal and emerging

principal and emerging risks

risks and will continue to reassess these each year as prescribed in its terms of reference. Further details

can be found in the risk management section of the strategic report on pages 38 to 42.

2022 internal Board evaluation

Under the UK Corporate Governance Code, it is recommended

Board Chair’s performance over the past year. This was followed

that companies conduct externally facilitated board and

by a discussion, led by the Board Chair, with the Non-Executive

committee evaluations every three years. The most recent of

Directors and Executive Directors as separate groups, in the

these was conducted by the Company in 2020 and therefore

absence of the other, and finally a full Board discussion.

an internal Board evaluation was conducted during the

reporting period by an internal questionnaire and facilitated by a

representative of the corporate secretary.

The evaluation focused on the Board and its Committees’

composition, knowledge and behaviours, governance processes

and support, work undertaken during 2022 and priorities for 2023.

For the Board, the questionnaire also focused on: investment,

strategic and governance matters, investor and stakeholder

engagement and major decisions taken during the year. The

Key actions arising from the 2022 internal evaluation were to:

• improve the presentation of forecasts on IPS’ financial

performance to the Board;

• appropriately balance increasing regulatory and governance

requirements relative to the size of the IPS business;

• streamline the criteria for evaluating the Company’s investment

manager; and

• review the effectiveness of ESG oversight and workforce

anonymity of responses was guaranteed throughout the process,

engagement.

to promote candid feedback.

Actions against each of these recommendations is currently

The results were discussed by the Nomination Committee in

underway. The Board will continue to conduct an externally

September 2022 during which the Directors, led by the Senior

facilitated performance evaluation every three years and internal

Independent Director, in the Board Chair’s absence, reviewed the

evaluations in the intervening years.

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Nomination Committee report continued

Based on the outcome of the evaluation and on the basis that

We are proud of the progress we’ve made in becoming a more

they continued to make valuable contributions and exercise

diverse and inclusive Board and workforce, which has resulted in,

judgement and express opinions in an independent manner, the

among other benefits, more independent and diverse thoughts

Board on the recommendation of the Nomination Committee

and solutions, greater debate and challenge on pertinent

has proposed the re-election of the Directors, as set out in the

matters and an integrated approach towards continually

Notice of AGM on pages 156 to 158.

achieving long-term capital growth in real terms and steadily

All Directors are submitted for annual re-election, subject

increasing income for our shareholders.

to continued satisfactory performance, which is assessed as

Whilst we have achieved our diversity targets and those set by

previously described.

Diversity and inclusion

The Board is committed to achieving the objectives set out in its

Diversity and Inclusion Policy, which may be found on our website.

Progress against those objectives are set out below.

OBJECTIVES

PROGRESS

the FTSE Women Leaders and Parker Reviews, we will continue

to regularly evaluate our culture and composition and make

enhancements for the benefit of our shareholders, clients,

people and other key stakeholders, as appropriate. We also

review our succession plans at least annually to ensure we have

the right persons in place to support the group in achieving

its objective.

To continue to adopt a formal, rigorous and

During the year the Board reviewed its Tenure and Succession Planning Policy,

transparent process, taking into account diversity

to ensure it remained fit for purpose. The policy sets out the procedures for the

and inclusion, when considering the appointment

appointment of new Directors and short, medium and long-term succession

of Directors. The Board is committed to using

plans in line with governance best practice. There were no new Board

search firms that access talent from wide and

appointments during 2022.

diverse pools and whose values and approach in

identifying and proposing suitable candidates, are

aligned with the Policy.

To achieve and maintain, with respect to gender

The Company satisfies all recommendations of the FTSE Women Leaders and

and ethnic diversity at Board and Committee

Parker Reviews, namely:

levels, the recommendations of the FTSE Women

Leaders and Parker Reviews, recognising that

unexpected changes in Board composition may

result in temporary periods when this balance is

not achieved.

• 43% of the Directors on the Board are female and 57% male.
• 40% of the members on the Remuneration and Nomination Committees are

female and 60% male.

• There is a 50:50 split between male and female representation on the Audit

and Risk Committee.

• 66.67% of the Executive Leadership team are female and 33.33% male.
• One Director on the Board is from an ethnically diverse background.
• The CFO and COO functions of the Company are held by women.

To be kept updated on the Executive Directors’
progress in ensuring the proportion of direct

The Executive Leadership team presented its annual report on gender and
ethnic diversity across the IPS business including analyses of employee positions

reporting roles to the Board and the Executive

held by women and ethnic minorities and gender pay gaps across all levels of

Management team, held by women and persons

the Group. Further details can be found in the ESG section of the strategic report

from ethnically diverse backgrounds, are

on page 54. Additionally, this year, the Executive Leadership team presented its

compliant with the FTSE Women Leaders and

Diversity, Equity and Inclusion Strategy for the IPS business to the Board, which

Parker Review recommendations.

included employee gender, ethnicity and age targets and thresholds.

To continue to facilitate a culture of inclusivity

Following the 2022 internal Board evaluation, it was found that the culture and

among Board and Committee members and to

dynamic of the Board, Directors’ individual performances and discussions at

encourage active contributions from all Directors,

meetings continued to be effective and in line with the Company’s values as set

recognising that a clear tone and example must

out on page 30 of the strategic report. These and other related matters will be

be set at Board level.

continually reviewed on an annual basis.

This report was approved by the Board of Directors on 27 February 2023 and signed on its behalf by

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Audit and Risk Committee report

macro-economic factors are considered to coming up with the

recommendation for the Board.

Another key area of responsibility for the ARC is the

recommendation of the dividend payments made to

Shareholders. In line with previous years, we recommended that

each of the first three interim dividends were set at a quarter

of the total dividend for the previous year. The ARC has sought

to balance the inflationary pressures faced by our shareholders

with the potential risk of an extended period of recession within

the UK. As a Group, we remain committed to providing our

shareholders with steadily increasing income and, with these

factors in mind, we are recommending the final dividend of

8.75 pence, resulting in a total dividend of 30.5 pence.

From an operational risk perspective, the ARC has spent time in

Manchester understanding the operating model with the Shared

Services Centre, along with the programme of continuous

improvements which is underway. The ARC has also supported

the Executive navigate the fall-out of the Russian invasion

of Ukraine, ensuring that economic restrictions have been

appropriately applied.

Role and duties

Annual statement by the Chairman
of the Audit and Risk Committee

After the Annual General Meeting in April, Mark Bridgeman

The main function of the Audit and Risk Committee is to assist

the Board in the management of the Company’s financial

reporting structure, internal controls and risk management,

external and internal audit and compliance functions. Our key

stepped down as Chair of the Audit and Risk Committee (‘ARC’),

duties are as follows:

having served nine years. On behalf of the ARC, I would like

to thank Mark for his hard work and the support he provided

to the Group. It was a pleasure to work with him during the

handover period.

During my first year as Chair of the ARC for the Law Debenture

Corporation Plc, I have focused on building on my understanding

Financial reporting
• Monitoring the integrity of the financial statements including

the annual and half-yearly reports, preliminary announcements

and any other formal statements or announcements relating to

the Company’s financial performance.

of the Group and supporting the organisation enhance our

• Reviewing and reporting to the Board on significant financial

management of the key Group risks. During the year, we have

reporting issues (if any) and judgements which those

refreshed our assessment of Risk, along with conducting a full

statements contain.

risk review for each of the Business areas.

As part of this, I have reviewed the approach to Internal Audit

• Providing review and challenge where necessary over key areas
of judgement, including the assumptions or qualifications in

and worked with our Head of Internal Audit to introduce an

support of the going concern statement and the Company’s

approach which applies a holistic view of how the Group

long term viability and risks thereto.

mitigates the principal risks. This refreshed approach is more

aligned to the way the business now operates.

The Company is in compliance with the requirements of

I have also ensured that the Group has an appropriate audit

and non-audit services policy to ensure that we have clearly

articulated the oversight and governance we have in place.

During the year, we have also continued to build our relationship

with our auditors, Deloitte LLP, who are in their second year. We

the Statutory Audit Services for Large Companies Market

Investigation (Mandatory Use of Competitive Tender Processes

and Audit Committee Responsibilities) Order 2014 and the

Corporate Governance Code. Under these requirements a tender

for the external audit must be undertaken no later than 2031.

are pleased with how that relationship has developed.

During the prior year, the Company completed the Audit Tender

In terms of significant areas of accounting judgment, the most

significant continues to be the valuation of the IPS business.

Considerable time and attention has been given over to

considering the appropriate methodology and ensuring the

Process which was overseen by the Audit and Risk Committee,

following which Deloitte LLP were appointed as auditors for the

group. The 2021 year-end was the first audited by Deloitte.

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Internal controls and risk management
• Reviewing the adequacy and effectiveness of the risk

management and internal controls framework, through

engagement with the Executive Leadership team, the Head of

Internal Audit and the Risk, MLRO and ESG Manager.

• Advising the Board on the Company’s overall risk appetite,

Company’s and the wider Group’s anti-money laundering

systems and controls.

• Reviewing the Company’s and wider Group’s procedures,

systems and controls for ethical behaviour and the prevention

of fraud, bribery and modern slavery and to receive reports on

non-compliance (if any) and overseeing the implementation of

tolerance and strategy, and the principal and emerging risks

any corrective actions.

the Company is willing to take in order to achieve its long- term

strategy and objectives.

• Reviewing the arrangements in place for Group staff,

contractors and external parties in confidence to raise

• Reviewing the inherent and emerging risks in the business and
the system of internal controls necessary to monitor such risks.

concerns about possible improprieties in matters of financial

reporting or other matters insofar as they may affect the

Where requested by the Board, provide them with assurance

Group (whistleblowing). The Committee ensures that

of the robustness of the management of principal risks.

• Reviewing regular reports from the General Counsel and

these arrangements allow proportionate and independent

investigation of such matters and appropriate follow-up action.

Executive Risk Committee (which is responsible for day-to-day
management of the operational risk within the Group), and

As part of my duties as Committee Chairman, I met regularly
with the audit partner of Deloitte and also with the Chief

other applicable persons on risk and internal control matters

Financial Officer and General Counsel to discuss matters

and the adequacy and effectiveness of the control functions.

of significance.

External audit
• Making recommendations to the Board on the appointment or

reappointment of the external auditors.

• Monitoring the quality, independence and objectivity of
the external auditors, their performance and agreeing

their remuneration.

• Developing and implementing policy on the engagement (or

not) of the external auditor for non-audit services.

Internal audit
• Monitoring the effectiveness of the Head of Internal

Audit’s work and overseeing the implementation of any

corrective actions.

• Approving the internal audit programme in the context of the
Company’s overall risk management system and ensuring it is

aligned to the key risks of the business. The Committee agreed

The Committee considers that, as a chartered accountant,

I am appropriately qualified with relevant experience due to

my extensive career as a senior partner at PwC. Similarly, Tim

Bond satisfies the requirement having spent time as an active

fund manager.

Principal activities of the Committee

During the year, the Committee’s business included:

• Consideration of the Annual Report and financial statements

and of the half yearly report and statements including

consideration of the final and interim dividends.

• Consideration of the principal risks and controls and

general oversight of the Group’s internal control systems

and procedures including in the context of reports by the

depositary, the Company’s obligations as an AIFM and

the heads of business and functions with respect to the

a thematic risk-based internal audit plan for this year which is

IPS business.

directly aligned to the Group principal risks and looks at the

Company as a whole.

• Review of the depositary’s contract and services.

• Ensuring internal audit has sufficient access to perform its

function effectively and in accordance with relevant standards.

• Reviewing reports from the Head of Internal Audit and

• Meetings with the external auditor to discuss the 2021 financial

statements and, in the fourth quarter, to plan the 2022

audit. These meetings included discussions on fees, auditor

independence, key risks, non-audit services and developments

considering any major findings from their work and monitoring

in accounting standards.

management’s responsiveness to internal audit’s findings and

recommendations.

Compliance
• Reviewing regular reports on compliance matters and keeping
under review the adequacy and effectiveness of the Company’s

and the wider Group’s compliance reporting and obligations.

• Reviewing regular reports from the Money Laundering

Reporting Officer and the adequacy and effectiveness of the

• Oversight and recommendation to the Board of the re-

appointment of our external auditor, Deloitte LLP.

• Review and approval of the internal audit programme.

• Consideration of all internal audit reports.

• Review of reports about reconciliations, procedures in place
to prevent fraud and anti-bribery and corruption and anti-

money laundering.

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• Receiving a presentation on the proposed new BEIS rules
regarding audit reform and the changes to assurance.

This provides the opportunity for robust challenge, particularly

in areas where management’s judgement has been required.

Shortly after the year end, the Committee met with the external

auditors in order to inform considerations regarding their

independence, effectiveness and discuss the 2022 financial

statements to ensure that the presentation of the financial

information within is materially correct.

The Committee will also give the auditors an opportunity,

without the Executive Leadership team present, to comment

on the quality and standard of the Executive Leadership team’s

performance generally and during the audit. Similarly, the

Committee will seek the views of the Executive Leadership

team on the effectiveness and performance of the audit team.

There were no matters of concern raised during the period

Risk management, internal control
and internal audit

under review.

The approach to risk management adopted by the Group is set

out in the Principal Risks and Internal Controls section on page

38. The Board as a whole is responsible for the effectiveness of

internal control mechanisms, but it is informed by more specific

work carried out by the Audit and Risk Committee, which

includes the initiation and oversight of any investigations that

may be necessary to address control weaknesses or breaches,

as identified.

In particular, the Committee reviews the adequacy and

effectiveness of the Group’s risk management systems and

processes. The Group Risk Manager reports through the Executive

Risk Committee. The Group Risk Manager also provides reporting

on risk matters each meeting of the Committee.

The internal auditor, who reports to me as Chairman of the Audit

and Risk Committee, presents her annual audit programme to

the Committee for approval each year and attends Committee

meetings, presenting all of her reports including management’s

actions in response to the findings and recommendations.

The internal auditor has the right, should she wish, to meet

separately with the Audit and Risk Committee to raise any

matters of concern that may arise, no concerns were raised

during the reporting period.

The Committee is satisfied that the quality, experience and

expertise of the internal auditor is appropriate for the business.

Non-audit services

Non-audit services provided by the auditor are reviewed by the

Committee to ensure that independence is maintained. Non-

audit fees are shown at note 3 to the accounts. The Committee’s

policy is that non-audit work should be limited to those matters

where the external auditor is most appropriately placed to carry

out the work unless there is a conflict of interest. Consequently,

fees for non-audit services have historically been low and in the

year under review were £65,000 (2021: £29,000).

Significant financial issues relating
to the 2022 accounts

The Code requires us to describe any significant issues

considered in relation to the financial statements and how those

issues were addressed.

The significant issues considered by the Audit and Risk

Committee include the valuation of IPS, oversight of the CSS

impairment review, the existence and valuation of Investments,

discussions around the control environment and the accounting

for Pension Defined Benefit Scheme.

No new significant issues arose during the course of the audit.

During 2022, there was a big focus on embedding the improved

Finance operations, which we invested in heavily during 2021. We

are pleased with the progress made and the improved control

External auditors – assessing effectiveness

environment which has resulted.

One of the most important functions of the Committee is to

monitor the independence and objectivity of the external

auditors, their performance and effectiveness. The Committee

achieves this by an annual formal meeting with the audit

partner to plan that year’s audit. Part of that process requires

the auditor to give the Committee written assessment of

how the audit team identifies and manages the threats to its

independence, along with the description of the safeguards that

it has in place to avoid such threats. This vital part of the audit

The Committee is satisfied that the judgements made by

management are reasonable and that appropriate disclosures

have been included in the accounts. Taken in its entirety, the

Committee was able to conclude 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. That conclusion was

reported to the Board.

process also enables the Committee to examine in detail the

This report was approved by the Board of Directors on

scope of the audit, ensuring that the auditor’s objectives meet

27 February 2023 and signed on its behalf by

the Committee’s own expectations, along with key audit and

accounting matters to be considered that year.

At the conclusion of each audit, the Committee receives a

presentation from the audit partner on the principal findings.

Pars Purewal
Chair, Audit and Risk Committee

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Directors’ remuneration report

PART 1: COMMITTEE CHAIR’S STATEMENT

the proposed changes, and made a number of helpful and
constructive suggestions for the Committee to consider. This
feedback was taken into account as the proposed Policy was
finalised for inclusion in this Report. In particular, having listened
to shareholders, the Committee has substantially reduced
the salary increase for the CEO in 2023 from the level that was
originally proposed, and further strengthened the performance
requirements in the annual bonus.

Restraint in executive director remuneration

In light of the current financial pressures being felt by
shareholders and colleagues, as a matter of principle, the
Committee has continued to take a restrained approach to
executive remuneration.

Based on LDC’s ranking in the FTSE 250, the current base
salaries and variable remuneration for the CEO and COO roles
at LDC are substantially below market levels. However, while
the CEO and COO roles include overseeing the management
and performance of the investment portfolio, and fiduciary
duties for LDC as Board Directors, they have more direct
influence over the financial performance of the IPS business
within LDC. Furthermore, the financial performance metrics for
the incentives applying to the CEO and COO are based on the
growth in IPS profits. The Committee has therefore selected the
FTSE SmallCap as the relevant benchmark to reflect the size of
the IPS business.

The current maximum variable pay levels for both the CEO and the
COO, and the CEO’s base salary (which has remained unchanged
for the last three years) remain below the relevant benchmarks
within the FTSE SmallCap. The Committee has considered these
elements as part of the triennial Policy review, and seeks to align
them closer to the benchmark over the next three years.

Annual performance and bonus outcomes
for 2022

As reflected in both the Chairman’s and the CEO’s statement,
2022 presented a new set of challenges for the organisation
to navigate but the Executive Directors have worked hard
to protect the interests of our shareholders and support our
objective as a business of producing long-term capital growth
and steadily increasing income.

From an economic and operational perspective, 2022 saw rising
inflationary pressures and strong competition for talent in the
marketplace. Under the stewardship of our Executive Leadership
team, there is ongoing progress in creating an environment
which both promotes growth of the IPS business and a strong
corporate culture. We were particularly pleased with the launch
of the ‘Emerging Leaders Programme’, which supports the
development of future leaders of the business, something we
feel is critical to the long-term success of the business.

Dear Shareholder

On behalf of the Remuneration Committee (the Committee), I am
pleased to present the Director’s Remuneration Report for 2022
(the Report).

The Report is in four sections:

• Part 1: Committee Chair’s Statement

• Part 2: Remuneration Committee Responsibilities

• Part 3: Directors Remuneration Policy for 2023 to 2025

• Part 4: Annual Report on Remuneration for 2022

The sections are set out in accordance with the UK Directors’
Remuneration Report Regulations 2013, as amended in 2018
and 2019.

Shareholder support

The Policy that applied for the 2020-22 period was approved by
shareholders at the AGM on 7 April 2020 with 97.65% of votes cast
in favour. The Committee’s implementation of that Policy has also
received strong support at the AGMs in 2021 and 2022, with 97.21%
and 99.23% votes in favour, respectively.

We closely monitor developments in shareholder and voting
agency guidance on remuneration. During 2022, we conducted a
thorough review of the Policy, and consulted major shareholders
and voting agencies on some proposed amendments, in
preparation for the normal triennial vote at the AGM in 2023.
Shareholders who responded were generally supportive of

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Further progress was made in enhancing the infrastructure
of our business. Good progress has been made in further
embedding the Corporate Secretarial Services business (‘CSS’),
which we believe will be accelerated under the leadership of
Trish Houston, our COO, during 2023. The Executive Directors
also responded to the need to invest technology resource in our
whistle-blowing business, Safecall, to enhance our client facing
platform. This project has been completed and well received
by our clients. Having established a Finance shared service
centre in Manchester in 2021, it is satisfying to see that this is
now fully operational. The Committee would like the Executive
Directors to make further progress on articulating the strategy
for growth and investment within the IPS business, along with
further development of the brand and marketing strategy and
plans. This will be a continued area of focus in 2023.

2022 was another year of growth for our IPS business with
revenue growth of 8.6%, an increase in profit before tax of 8.1%
and an increase in earnings per share of 3.8%. The growth in
earnings per share has been diluted due to the issuance of
shares during the year. This builds on the momentum of last
year and is a positive reflection of the efforts of our staff and
the success of our Senior Leadership team. Please refer to the
Chairman’s statement on pages 6 and 7 for further overview of
the financial and operational highlights for 2022.

The Committee evaluated the performance of the Executive
Directors in relation to the financial and non-financial metrics

set out on page 93 of this report. Before approving the
performance outcome, the Committee considered whether
there were any wider performance factors that might require a
downward discretionary adjustment. These included:

• the need to maintain a fair balance between the interests of
different stakeholders, including shareholders, employees
and Executive Directors;

• the desire to encourage and reward the behaviours that

reflect our purpose, values and culture;

After consideration, the Committee decided that these
outcomes were appropriate and consistent for the year and no
discretionary adjustment was required.

Based on this assessment of performance, the Committee
determined that 76.8% of the maximum annual bonus should
be awarded to Executive Directors for 2022. In accordance with
the Policy, fifty percent of the portion of bonus above £100,000
is deferred into shares for three years.

The performance criteria and outcomes are fully explained
in the Report. The Committee has continued to enhance the
level of detail and clarity of information in the Report about
the non-financial performance criteria, and the Committee’s
assessment of this part of the scorecard.

Long-term performance, and LTIP
outcomes for 2020-22

It has been a successful period for the IPS business. Over the
period, revenues in the business have grown from £31.8m at

the end of 2019 to £45.2m at the end of 2022. There has been
significant investment into IPS over the period to protect the
long-term future of the business, but this has been done in a
controlled manner, which has resulted in growth in profit before
tax (PBT), in line with our stated objective of mid-high single
digit growth. During the 3 years, IPS PBT has grown 25%, with a
compound annual growth rate (‘CAGR’) of 7.9%.

Based on this, the total metric-driven outcome for the 2020-22
LTIP cycle was 74% of maximum. Before approving the vesting
outcome the Committee considered whether there were any
wider performance factors that might require a downward
discretionary adjustment. These included:

• the need to maintain a fair balance between the interests of

different stakeholders, including shareholders, employees and
Executive Directors;

• the desire to encourage and reward the behaviours that reflect

our purpose, values and culture;

The Committee also considered whether any adjustment should
be made for ‘windfall gains’ (see below).

After consideration, the Committee decided that these
outcomes were appropriate and consistent for the period and
no discretionary adjustment was required.

The resulting vested shares are subject to a two-year, post-
vesting holding period, in accordance with the Policy.

‘Windfall gains’
The Committee carefully considered whether a downward
adjustment should be made to the LTIP vesting outcome in
2023, which relates to the CEO as the only recipient of LTIP
in 2020. This would take account of the Covid-related stock
market ‘shock’ just prior to the grant in April 2020 – specifically
the impact of this on the number of shares under the award.
Due to the general stock market dip, the LDC share price at
the time of grant was £4.63, compared to £5.98 a year earlier in
April 2019. This resulted in the Chief Executive being granted
29% more shares at the 2020 grant than he would have
received had the share price in April 2020 been the same as in
April 2019.

The Committee considered a number of balancing factors in
assessing whether an adjustment should be made at vesting
for this apparent ‘windfall gain’:

• The dip in the share price just prior to grant was not
a consequence of LDC performance or that of the
management team. It was a global phenomenon resulting
from the Covid ‘shock’.

• The grant size for the CEO in April 2020 was set at 100%
of base salary, which was relatively low for a business of
IPS’s size. Also, the CEO’s base salary of £325,000 was
substantially below market benchmarks. As a consequence,
the overall maximum value of the CEO’s 2020 grant was
£325,000, compared to a CEO median in the FTSE Small Cap
of over £600,000. Therefore, the LTIP grant for the LDC CEO
was, in effect, already set at a substantial discount.

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Directors’ remuneration report

• LDC did not benefit from Government support under the

• There will also be a reduction in the existing Executive

Directors’ pension allowance from 1 January 2023 to 9% of
base salary (from 12% currently), which aligns it with the level
applicable to new employees, and below the level applying
to employees with the same length of service as the two
Executive Directors. The majority of LDC employees have a 9%
employer contribution.

• The Policy also re-positions the CEO’s base salary in stages
over three years, to a level that more fairly reflects market
practice and appropriate internal relativity to other roles in the
Company (see below).

Base salaries
Base salary increases in 2023 for employees in LDC averaged
6%, with the largest percentages going to individuals in lower
paid roles, and where there is need for significant market re-
alignment or to recognise a promotion or change in role.

The CEO’s current base salary (£325k) falls well below CEO
norms, not only in the FTSE 250 (lower quartile of £530k),
but also the FTSE Small Cap (median £466k). The salary has
remained unchanged for the last three years.

The Committee feels that the current CEO salary has fallen so
far out of line with the market that it is not at a fair level, either
relative to others in less senior roles in the company or relative
to other CEOs in the market. This situation is not consistent
with the Company’s values, and does not support motivation,
retention and, when necessary, recruitment of talent. The salary
is also becoming increasingly out of line each year, as market
pay levels rise. Whilst the current economic and cost of living
environment is not an ideal context in which to re-align the
CEO’s base salary, the Committee has concluded that the current
situation is not sustainable.

The Committee therefore plans to re-position the CEO’s base
salary in stages over the three-year policy period, subject to
continued good performance in role:

Stage 1 (2023):

£354k (which comprises 5% general
increase, below the average for LDC
employees, and 3.9% towards repositioning
the salary relative to the market)

Stage 2 (2024):

£400k

Stage 3 (2025):

£450k

A salary of £450k will still be below the current median for FTSE
SmallCap CEOs and this benchmark may rise materially over the
3-year period.

Coronavirus Job Retention Scheme (furlough), nor make any
Covid-related redundancies, and the Company did not cancel
dividends for 2019 or 2020.

• The Executive Directors are granted shares in LDC rather than
IPS and are therefore exposed to broad market risk in their
discretionary awards.

• If there had, instead, been a share price ‘spike’ at the time of
grant, the Committee would not have increased the size of
grant to bring the number of shares awarded back to a ‘normal’
level.

Having considered all the relevant factors, the Committee
concluded that it was not appropriate to make a downward
adjustment to the performance-related LTIP vesting outcome
in 2023.

Proposed Director’s Remuneration Policy
for 2023-25 period

The Committee has undertaken a thorough review of the Policy
in preparation for the triennial AGM vote, including consulting
with major shareholders as set out above, and taking account
of remuneration for other LDC employees. The Committee
concluded that the overall remuneration structure continues
to be suitable for the Company. Where amendments have
been proposed to the Policy, these are intended to: support the
continued growth of the Company over the next three years; to
assist retention and, when necessary, recruitment of talent; and,
to ensure that the Policy includes the features of best practice in
UK executive remuneration.

The key proposed changes to Policy are as follows:

• To increase the weight on financial metrics in the annual bonus
to 60% (from 50% currently), with a corresponding reduction
in the non-financial metrics weighting to 40% (from 50%
currently). This is intended to give additional focus to driving
growth in IPS profits;

• To increase the performance requirements for both annual

bonus and LTIP, with accompanying increases in the maximum
opportunity to bring these closer into line with market
benchmarks:

• For 2023, the IPS profit growth range in the annual bonus will
increase to 5% at threshold and 12% at maximum, from the
previous range of 4% to 9%. In conjunction with this, the Policy
maximum for annual bonus will increase from the current 100%
of base salary to 125% of base salary.

• For the 2023 LTIP grant, the IPS profit growth range will be
4% to 14% (Compound Annual Growth), compared to 4% to
10% for the previous grant in 2022. Also, the percentage of the
award vesting at threshold performance will be reduced to 20%
of maximum, from 25% currently. In conjunction with these
changes, the maximum LTIP grants size will increase from the
current 100% of base salary to 150% of base salary.

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Trish Houston’s (COO) base salary has increased by 5.4% from
£275,000 to £290,000 for 2023; this is below the average
percentage increase for LDC employees.

colleagues. During 2022, a one-off payment of £1,000 was also
made to our lowest paid people to support them with the cost-
of-living crisis.

In November 2022, Trish was appointed Head of the CSS
business, in addition to her COO role. This has added direct
responsibility for a client facing business to Trish’s role as the
Group COO for LDC. The Committee will consider the impact of
this greater responsibility in the next base salary review in 2024,
taking account of her performance in the role.

Board Chair fee and NED fees for 2023
The Committee reviewed the Board Chair fee of £92,000 and
concluded that this current fee level does not adequately
recognise the role’s time commitment and responsibilities. The
role includes not only overseeing the strategy, management
and performance of the Investment Portfolio, but also
exercising governance oversight of the IPS business within
LDC. The Committee therefore increased the Board Chair fee to
£110,000, to go some way towards recognising the breadth of
responsibility and time requirements of the role.

The Board (excluding the NEDs) reviewed the NED fee rates, and
increased these by £2,400 to £50,000, from £47,600 previously,
taking account of market fee levels for NED roles with similar
levels of time commitment and responsibility. The fees for the
roles of Chair of the Audit Committee and Chair Remuneration
Committee have also been increased to £10,000 from £5,950
taking account of market fee levels for these roles with similar
levels of time commitment and responsibility. The fee for the
Workforce Engagement Director role has been increased to
£6,250 from £5,950.

Wider workforce considerations and
consultation with colleagues

One of our Committee members, Clare Askem, is also the Non-
Executive Director with responsibility for leading Workforce
Engagement. Clare conducts meetings with employee panels,
which include a cross-section of colleagues. These provide an
opportunity for colleagues to raise any issues directly with a non-
Executive Board Director, including asking any questions about
remuneration policy or practice.

In addition, the Remuneration Committee seeks feedback from
the Senior Leadership team which is taken into consideration
when determining remuneration outcomes for Executive
Directors, objective setting and strategic planning.

UK Corporate Governance Code

The Committee regularly monitors how remuneration Policy
and practice meets the requirements of the UK Corporate
Governance Code.

In reviewing the Policy, the Committee has considered the
six principles set out in Provision 40, of the UK Corporate
Governance Code: clarity, simplicity, predictability, alignment
to culture, proportionality, and management of risk. The Policy
section of this report provides further information on how we
have applied these principles.

Total Shareholder Return

The Company has sustained consistent levels of return to
shareholders. £1,000 invested in LDC a decade ago was worth
£2,612 at the end of the 2022, which is more than 1.8 times the
rate of return for the FTSE All-Share Index.

The responsibility for determining the reward practices on a
firm-wide basis lies with the Committee.

Conclusion

The Committee receives regular updates on overall pay and
conditions, including (but not limited to) changes in base pay
and the incentive schemes in operation, pay ratio and diversity
pay data. The Committee also has oversight of the all-employee
share plan which Executive Directors and all other employees
can participate in on the same terms and conditions.

The remuneration outcomes for 2022 reflect good performance
during the year. The proposed Policy amendments are balanced,
proportionate and aligned to shareholders’ interests. I thank
shareholders who assisted the Committee in the consultation
process for their constructive feedback and support for the
proposals.

As in previous years, the Committee has oversight of overall
remuneration for employees across LDC. The average salary
increase for our people in 2023 will be 6%. LDC is committed
to paying all staff at or above the Real Living Wage, which is in
excess of the National Living Wage.

People are key to the long-term success of our business,
particularly in a competitive marketplace for attracting and
retaining talent. This year, we have focused on ensuring that
our all of our people are rewarded appropriately for their
contribution and that our salaries are in line with those on offer
within the market. Those on lower salaries have generally been
granted larger percentage increases in salaries than more senior

I encourage you to vote both for the Directors’ Remuneration
Report for 2022, and for the Directors’ Remuneration Policy for
the 2023-25 period. I also welcome any feedback you may have
during the year.

By order of the Board

Claire Finn
Chair, Remuneration Committee

On behalf of the Remuneration Committee

27 February 2023

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Directors’ remuneration report continued

PART 2: REMUNERATION COMMITTEE RESPONSIBILITIES

Remuneration Committee

REMUNERATION COMMITTEE MEMBERSHIP AND ACTIVITIES DURING 2022

Members

The members of the Committee

C. Finn (Chair)

who served during the year were:

R. Hingley

T. Bond

P. Purewal

C. Askem

Details of Committee meetings

and attendance can be found on

page 66.

Key activities
of the
Committee
during the year
included:

• Overseeing the tri-annual review of the Remuneration Policy with Shareholder Engagement;

• Determining 2022 annual bonus outcomes and payments for the Executive Directors and Senior Managers;

• Preparing the 2022 Annual Remuneration Report;

• Determining salary adjustments for the Executive Directors and Senior Managers;

• Setting performance objectives, annual bonus measures and targets for 2023;

• Reviewing the operation of the annual bonus process;

• Benchmarking pay for the Executive Directors and Senior Managers;

• Determining the total executive pay for 2022, including performance conditions for the LTIP awards in 2023;

• Review of Remuneration Committee Terms of Reference; and

• Reviewing Gender Pay Gap reporting.

Support
provided
to the
Committee

Alvarez & Marsal was appointed by the Committee as independent adviser following a formal selection

process. Alvarez and Marsal is a member of the Remuneration Consultants Group and voluntarily operates

under its Code of Conduct in its dealings with the Committee. Alvarez & Marsal fees charged for the provision

of independent advice to the Committee during the year were £44,643. Other than in relation to advice on

remuneration, Alvarez and Marsal provides no other support to the Company or wider Group. The Committee

is satisfied that Alvarez & Marsal does not have connections with the Group that may impair their objectivity

and independence.

During the year, the Committee also took advice from the CEO and COO, whose attendance at Committee

meetings was by invitation from the Chair, to advise on specific questions raised by the Committee and on

matters relating to the performance and remuneration of the Senior Management and for the wider workforce.

No Director participated in discussions that related directly to their own remuneration.

The Committee’s terms of reference are published on the Company’s website (https://www.lawdebenture. com/

investment-trust/shareholder-information/corporate-governance). The key responsibilities of the Committee

are to:

• undertake a tri-annual review of the Remuneration arrangements for the Executive Directors;

• determine the remuneration policy for Executive Directors and Senior Managers (including the company

secretary) in compliance with legal and governance requirements and in the context of pay conditions across

the workforce, engaging with shareholders thereon;

• determine the individual remuneration packages for Executive Directors and Senior Managers;

• approve the remuneration package of the Board Chairman;

• consider the design of, determine targets for and review outcomes for the annual bonus plan;

• determine the design of, quantum and performance conditions for long-term incentive plans;

• review workforce remuneration and related policies across the Company as a whole;

• review pension arrangements, service contracts and termination payments for Executive Directors; and

• approve the Annual Remuneration Report, ensuring compliance with legal and governance requirements.

Key
responsibilities
of the
Committee

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Directors’ remuneration report continued

PART 3: DIRECTORS REMUNERATION POLICY FOR 2023 TO 2025

Directors’ Remuneration Policy

The Committee is required to put the new Directors’ Remuneration Policy to a binding shareholder vote at the next Annual General
Meeting on 30 March 2023, as the current Policy, that was approved at the 2020 AGM, is approaching the end of its three-year approval
period. This new Policy, set out below, will take effect from the date of that meeting and is intended to apply to remuneration in respect
of 2023-25.

Remuneration principles

In preparation for the review of our Directors’ remuneration policy, the Committee reviewed the reward frameworks for the wider

workforce, alongside our more specific debates on Executive remuneration. From this, we have drawn a unifying set of remuneration

principles that apply equally to Executives and to employees at all levels of our workforce hierarchy.

REMUNERATION PRINCIPLES

Alignment

Our remuneration programmes will align with Law Debenture’s strategic priorities, of delivering

capital growth and steadily increasing income to our shareholders.

Competitiveness

Total remuneration will be competitive but not extravagant for the role taking into account sector,

complexity of responsibility and geography. When setting Executive Director pay, we will consider

both external pay relativity and wider workforce remuneration and conditions.

Pay for performance

There should be no reward for failure, but the Executive Directors should be rewarded for the

performance of the IPS business, which is central to Law Debenture’s business model and

unique identity.

Discretion

The Committee has discretion to adjust the formulaic bonus and the LTIP outcomes to reflect

underlying Company performance. Any adjustments or discretion applied by the Committee will

be fully explained in the following year’s Annual Remuneration Report.

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Committee Process to determine the new Remuneration Policy

The Committee was mindful in its deliberations on the new
Policy of any potential conflicts of interest and sought to
minimise them: through an open and transparent consultation
with the Executive Directors; by seeking independent advice
from its external advisers; and, by undertaking a full shareholder
consultation exercise.

In determining the 2023-25 Directors’ Remuneration Policy, the
Committee:

• Considered the Company’s strategy, how the current Policy

related to and supported this, and assessed what amendments
were required to the Policy to further align it with the strategy;

• Considered feedback from shareholders and investor bodies on

the Directors’ Remuneration Reports over recent years;

• Sought advice from independent remuneration consultants
on the remuneration requirements of the 2018 UK Corporate
Governance Code and current investor priorities and guidelines,
and market best practice in formulating the new Policy;

• Reviewed wider workforce remuneration and incentives to

ensure consistent principles;

• Consulted Executive Directors on the proposed changes to the

Policy; and

• Conducted a full consultation exercise with major shareholders

and investor bodies on the changes.

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Directors’ remuneration report continued

UK Corporate Governance Code Principles

In determining the new Remuneration Policy, the Committee paid attention to Provision 40 of the 2018 UK Corporate Governance Code,

as follows:

FACTOR

HOW OUR NEW REMUNERATION POLICY ALIGNS

Clarity
remuneration arrangements

should be transparent and promote

effective engagement with

shareholders and the workforce.

• Bonus and LTIP performance conditions are based on clear financial and strategic metrics.
There is a clear link between their delivery and reward provided to Executive Directors and
senior managers.

• The LTIP provides annual grants of shares which must be retained for the longer-term to

ensure a focus on sustainable performance. This provides complete clarity of the alignment
of the interests of Executive Directors, Senior Managers and shareholders.

Simplicity
remuneration structures should

avoid complexity and their

rationale and operation should be

easy to understand.

Risk
remuneration arrangements

should ensure reputational

and other risks from excessive

• The remuneration package is simple, with three main components: base salary, annual bonus

with deferral, and LTIP.

• The performance conditions for the annual bonus and LTIP are based on the Company’s key
strategic objectives. This alignment of reward with the delivery of key markers of the success
of the implementation of the strategy ensures simplicity .

The Remuneration Policy includes:

• Compulsory deferral of a substantial proportion of bonus in shares for a material period;

• Aligning the performance conditions with the strategy of the Company;

rewards, and behavioural risks

• Ensuring a focus on long-term sustainable performance through the LTIP; and

that can arise from target-based

incentive plans, are identified and

mitigated.

Predictability
the range of possible values of

rewards to individual Directors

and any other limits or discretions

should be identified and explained

at the time of approving the policy.

Proportionality
the link between individual

awards, the delivery of strategy

and the long-term performance

of the company should be clear.

Outcomes should not reward poor

performance.

Alignment to culture
incentive schemes should drive

behaviours consistent with company

purpose, values and strategy.

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• Ensuring there is enough flexibility to adjust payments through malus and clawback and an

overriding discretion to depart from formulaic outcomes.

These elements mitigate against the risk of target-based incentives by:

• Deferring the value in shares for the long-term which helps ensure that the performance

earning the award was sustainable and thereby discouraging short term behaviours;

• Aligning any reward to the agreed strategy of the Company;

• The LTIP supports a focus on the sustainability of performance over the longer term;

• Reducing the awards or cancelling them if the behaviours giving rise to the awards are

inappropriate; and

• Reducing the awards or cancelling them if it appears that the criteria on which the award

was based do not reflect the underlying performance of the Company.

• The Remuneration Policy sets out clearly the range of values and discretions in respect of the

remuneration of management.

• Annual bonus and LTIP award levels are capped, with a clear calibration to performance

targets.

• The annual bonus and LTIP provide a clear link between the reward provided to management and

the delivery of the strategy through incentivising management to deliver the KPIs.

• The LTIP provides a focus on long-term sustainable performance through the build-up of a

long-term locked in shareholding.

• Both incentive plans allow the Committee to exercise its discretion to override formulaic outcomes.

• Executive Director bonuses are also subject to an aggregate cap based on a percentage of the

general bonus pool to prevent excessive bonuses relative to the wider workforce.

• The annual bonus drives behaviours consistent with the strategy.

• The LTIP drives behaviours consistent with the Company’s purpose and values which are

focused on the long-term future of the business throughout the business cycle.

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Summary of changes to the Directors’ Remuneration Policy

ELEMENT

CURRENT POLICY

PROPOSED CHANGES

RATIONALE

Long-Term
Incentive Plan
(LTIP)

Annual award of performance

Maximum limit of 150% of salary.

Brings the LTIP maximum closer

shares.

Vesting percentage at threshold

Maximum limit of 100% of base

performance reduced to 20% of

salary per annum, vesting after

maximum.

three years, with a 2-year post-

vesting holding requirement.

More stretching performance

requirements (see later section of

25% of the award vests at threshold

the Remuneration Report)

performance.

into line with market norms, but

with an accompanying increase in

performance requirements.

Further drives long-term

sustainable growth of the IPS

business, in line with the strategy.

Enhances the lock-in of critical

talent and long-term alignment

with shareholders

Enables the Company to retain

and, when necessary, recruit

talented executives.

Annual bonus

Awards of up to 100% of base

Awards of up to 125% of base salary.

Brings the annual bonus

salary.

Minimum of 60% of the award is

Minimum of 50% of the award is

based on financial performance

outcomes.

maximum closer into line

with market norms, with an

accompanying increase in

performance requirements.

conditions.

More stretching performance

requirements (see later section of

the Remuneration Report)

Further enhancement of disclosure

of metrics, targets and the

Places greater emphasis on driving

growth in profits.

Improved clarity and transparency

for all stakeholders.

assessment of bonus outcomes.

Enables the Company to retain

and, when necessary, recruit

talented executives.

CEO base salary
positioning

CEO base salary currently

Re-position the base salary in

Current base salary, which has

£325,000, which is substantially

stages over three years, subject

been frozen since 2020, is not at a

below the market median.

to continued good performance

fair level, either relative to others

in role:

£354,000 in 2023

£400,000 in 2024

£450,000 in 2025

in the Company or relative to

FTSE Small Cap CEOs. The current

situation is not consistent with the
Company’s values and does not

support motivation, retention and,

when necessary, recruitment of

talent.

Repositioning the salary in three

stages is a balanced and restrained

approach to this transition.

Pension

Currently 12% of base salary for

Reduce the pension allowance for

Brings the pension allowance for

existing Executive Directors which

both current Executive Directors,

existing Executive Directors in line

is in line with other employees who

and any new appointees, to 9%

with the majority of the workforce.

joined the Company at the same

from the 1 January 2023 .

time as the current incumbents.

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Directors’ remuneration report continued

Remuneration Policy Table

SALARY AND BENEFITS

Purpose

To provide an appropriate level of salary and competitive benefits package to attract and retain individuals of

the required calibre to successfully deliver the business strategy.

Operation and
opportunity

Salary increase percentages for Executive Directors and Senior Managers are determined at the discretion of

Committee but will normally not be higher than those of the wider workforce. Increases may be made above

this level in certain circumstances, including (but not limited to):

• An increase in scale, scope or responsibilities of the role;

• To ensure salaries are market competitive; and

• Where individuals have been recruited or promoted with salaries below the targeted policy level initially and

have become more established in their role.

Benefits may include (but are not limited to) private medical insurance, life insurance cover, disability income

plan, season ticket loans and professional subscriptions.

Other benefits may be introduced from time to time to ensure the benefits package is competitive and reflects

the circumstances of the individual Director, for example relocation allowances.

The Committee may award non- pensionable cash payments in lieu of one or more of these benefits.

Benefits may vary by role and individual circumstance and are reviewed periodically.

None

Denis Jackson’s annual salary was £325k. He also opted to participate in the Company’s health care plan.

Trish Houston’s annual salary was £275k. She also opted to participate in the Company’s health care plan.

The current base salary for the CEO (£325k) is substantially out of line with market norms and does not permit

appropriate internal relativities. The salary will be re-positioned in stages over three years, subject to continued

good performance in role:

£354,000 in 2023

£400,000 in 2024

£450,000 in 2025

His benefits are unchanged in 2023.

Trish Houston’s salary will be increased by 5.4% to £290,000. This increase is below that of the wider workforce.

Her benefits are unchanged in 2023.

To provide funding for retirement at market competitive levels.

Executive Directors may receive pension contributions to a personal Pension scheme and/or cash allowances in

lieu of contributions.

Executive Directors (including current incumbents and new Directors) to receive a contribution of 9% of base

salary in line with the contribution for the majority of the workforce.

None

Denis Jackson received the cash allowance in lieu of contributions equivalent of 12% of salary.

Trish Houston received pension contributions equivalent of 12% of salary.

Denis Jackson’s pension contribution has been reduced to 9%, in line with the majority of the workforce.

Trish Houston’s pension contribution has been reduced to 9%, in line with the majority of the workforce.

Performance
framework

Outcomes for
2022 under
previous policy

Implementation
in 2023

PENSION

Purpose

Operation and
opportunity

Performance
framework

Outcomes for
2022 under
previous policy

Implementation
in 2023

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Remuneration Policy Table continued

ANNUAL BONUS

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Purpose

To incentivise and reward the achievement of annual business objectives to enable successful

implementation of the Group strategy, and to align the interests of Executive Directors with shareholders and

support retention.

Operation and
opportunity

Financial and non-financial objectives, targets and metrics are set at the start of the year.

Maximum individual annual bonus opportunity is 125% of base salary. 60% of maximum (equivalent to 75% of

salary) is payable for financial performance. 40% of maximum (equivalent to 50% of salary) is payable for non-

financial performance.

Half of any bonus earned above £100,000 will be deferred in shares for three years. Dividend equivalents may

accrue on deferred bonus awards and be paid on those shares which vest.

The Plan contains malus and clawback provisions (see below for details).

Performance
framework

The total aggregate annual bonus payment for Executive Directors is capped at 25% of the general bonus pool

for employees.

Performance versus financial and non-financial objectives is assessed at the end of each year to determine

the award.

The financial component of the bonus is calculated on a formulaic basis. Threshold and stretch financial

performance levels of 5% to 12% annual growth in profits are applied, with a pay-out of 20% of maximum at

minimum threshold performance rising to 100% of maximum at stretch performance, calculated on a straight-

line basis.

The Committee assesses performance against strategic objectives and associated targets and metrics to

determine the non-financial component of the bonus to be awarded.

The Committee has discretion to set suitable metrics and targets, and to adjust the formulaic bonus outcome

to reflect underlying Company performance. Any adjustments or discretion applied by the Committee will be

fully explained in the following year’s Remuneration Report.

Denis Jackson is recommended to receive a 76.8% bonus. The basis for award is explained on pages 92 to 94.

Trish Houston is recommended to receive a 76.8% bonus. The basis for award is explained on pages 92 to 94.

The higher maximum bonus in this Policy (125% compared with 100% previously) is accompanied by more

demanding performance requirements. For 2023, the threshold and stretch IPS annual profit growth

percentages are raised to 5% and 12%, respectively, from 4% and 9% for 2022.

To drive sustained long-term performance that supports the creation of shareholder value, and to encourage

and facilitate substantial long-term share ownership.

An award of conditional shares or nil cost-options may be granted annually.

Awards vest after three years, subject to performance and continued employment. Following vesting, an additional

two-year holding period will apply (net of tax), such that shares are not released until five years from grant.

Award levels and performance conditions are reviewed in advance of each grant to ensure they remain appropriate.

Dividend equivalents may accrue on shares held under the Plan and be paid on those shares which vest. These
will be delivered in shares in line with the Investment Association Guidelines.

Outcomes for
2022
under previous
policy

Implementation
in 2023

LTIP

Purpose

Operation and
opportunity

Performance
framework

The award is currently based on financial measures, normally profit-based measures linked to the IPS business.

The Committee has the discretion to set suitable metrics and targets for each grant.

The higher maximum award size in this Policy (150% compared with 100% previously) is accompanied by a

reduction in the vesting percentage at threshold performance (20% compared to 25% previously), and by more

demanding performance requirements.

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Directors’ remuneration report continued

Remuneration Policy Table continued

LTIP continued

Performance
framework
continued

Outcomes for
2022 under
previous policy

The Committee has discretion to adjust the formulaic vesting outcome to reflect underlying Company
performance. Any adjustments or discretion applied by the Committee will be fully explained in the following
year’s Remuneration Report.

For LDC, the use of growth in IPS EPS as a performance metric is likely to cause distortions as the numerator
(IPS profit) relates to only part of LDC’s overall business, but the denominator is the Company’s entire share
capital. This is different from most companies, which measure growth in the EPS of the entire business.
Accordingly, the Committee will use growth in IPS PBT for both existing and future LTIP awards as the metric
for determining the level of vesting over the relevant performance period. In the event that an acquisition is
made for IPS, an appropriate adjustment to starting PBT will be made so as to ensure a like-for-like comparison.

The IPS Profit before Tax Annual Growth percentages at threshold and stretch for the 2022 grant are 4% and
10%, respectively.

Denis Jackson was awarded an LTIP in 2020 which vests in April 2023. Based on the IPS PBT CAGR over the 3
year period of 7.9%, Denis Jackson will receive 74% of the maximum of award.

Trish Houston has no vesting LTIP in relation to the 2020 award.

Implementation
in 2023

The IPS Profit before Tax Annual Growth percentages at threshold and stretch for the 2023 grant are 4% and
14%, respectively, compared to 4% and 10% for 2022 grants.

Denis Jackson will be awarded an LTIP of up to 150%, subject to meeting the performance conditions.

Trish Houston will be awarded an LTIP of up to 150%, subject to meeting the performance conditions.

ALL EMPLOYEE PLANS

Purpose

To encourage share ownership throughout the workforce.

Operation and
opportunity

The Executive Directors are eligible to participate in an HMRC-approved Save As You Earn Share Save Plan
(SAYE) and/or Share Incentive Plan (SIP) on the same basis as all other eligible UK employees. The Committee
intends to maintain and operate these schemes in accordance with scheme rules and HMRC Regulations.

The prevailing HMRC approved limits apply.

Performance
framework

None

SHAREHOLDING REQUIREMENTS

Purpose

To provide alignment between the interests of the Executive Directors and our other shareholders.

Operation and
opportunity

The Executive Directors are required to build and maintain a minimum shareholding of two times base salary.
Executive Directors are required to retain 50% of the post-tax number of vested shares from the Company
incentive plans until the minimum shareholding requirement is met and maintained.

On cessation of employment, Executive Directors are required to retain their minimum shareholding
requirement immediately prior to departure for two years. Where their actual shareholding at departure is
below the minimum shareholding requirement, the Executive Directors’ actual shareholding is required to be
retained on the same terms and for the same periods.

The Company has established a process for monitoring and enforcement of in-role and post-cessation
shareholding requirements.

Performance
framework

None.

Outcomes for
2022 under
previous policy

Denis Jackson currently holds 43,914 shares through his own account, deferred bonus, SAYE and the SIP

against a target of 84,306.

Trish Houston currently holds 7,435 shares on her own account, SAYE and the SIP against a target of 71,336.

Implementation
in 2023

No changes to the policy.

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Consideration of shareholder views

The Remuneration Committee is committed to shareholder

dialogue and engages with shareholders as appropriate to

address any remuneration issues that arise in relation to the

Executive Directors. Shareholders are given the opportunity

to engage with decisions in relation to Executive Director pay

at the AGM. The Chair of the Remuneration Committee is also

open to holding individual meetings with Shareholders, if

requested, as outlined in our S172 Statement on pages 46 to 48.

Differences in remuneration policy
for Executive Directors compared with
other employees

In determining the remuneration arrangements for Executive

Directors, the Committee considers pay and conditions of

other employees across the business and aims to ensure a

consistent approach. To facilitate this, the Committee receives

information on wider workforce remuneration, ensuring a good

understanding of the structure and application of the reward

Any feedback provided is taken into account when developing

policies throughout the Group.

Executive remuneration arrangements, in addition to

guidelines of investor bodies. The Committee continues to

monitor trends and developments in corporate governance

and market practice to ensure the structure of Executive

remuneration remains appropriate and commits to undertake
a shareholder consultation in advance of any material changes

to the remuneration policy, as we have done for the new

proposed Policy.

Minor amendments

The Committee may make minor amendments to the Policy set

out above (for regulatory, exchange control, tax or administrative

purposes or to take account of a change in legislation) without

obtaining shareholder approval for that amendment.

One of the Non-Executive Directors, Clare Askem, has

responsibility for leading engagement with the workforce,

including on remuneration matters. Various methods of

communication (including presentations, email correspondence

and availability for face-to-face meetings) may be utilised for

this engagement.

The Company’s approach to annual salary reviews is consistent

across the Group, with consideration given to the level of

experience, responsibility, individual performance and salary

levels in comparable companies. Pension and principal benefits

are also provided to all employees. All employees are eligible to

participate in an annual bonus scheme with business area-

specific metrics and individual performance taken into account

where appropriate.

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Senior Managers may be eligible to participate in the LTIP

with annual awards up to 100% of salary. Performance

conditions are consistent for all participants, while award

sizes vary by level. Specific cash incentives are also in place

to motivate, reward and retain staff below Board level.

When determining incentive outcomes, the Remuneration

Committee takes account of the Executive Directors’

oversight of the Investment Portfolio, as well as the

performance of the IPS business. For all other employees,

performance is primarily based on the IPS business. All UK

employees are eligible to participate in the Company’s SAYE

and SIP schemes on the same terms.

LDC’s average UK employee headcount in 2022 was more

than 250 employees. As average employee headcount in 2021

was below 250, the regulations do not require the CEO pay

ratio to be disclosed for 2022. If the average UK headcount

for 2023 is above 250, the ratio will be included in the

Remuneration Report for 2023.

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Illustration of total remuneration opportunity

Denis Jackson (CEO)
Remuneration (£000s)

£1,800
£1,600
£1,400
£1,200
£1,000
£800
£600
£400
£200
£0

£875

30%

25%

44%

£388

100%

£1,361

39%

33%

28%

£1,627

49%

27%

24%

Minimum

Target

Maximum Maximum + 50%

share price growth

Trish Houston (COO)
Remuneration (£000s)

£1,800
£1,600
£1,400
£1,200
£1,000
£800
£600
£400
£200
£0

£317

100%

£716

30%
25%

44%

£1,115

39%

33%

28%

£1,332

49%

27%

24%

Minimum

Target

Maximum Maximum + 50%

share price growth

Fixed pay

Annual bonus

LTIP

ELEMENT

ASSUMPTIONS

Total fixed
pay

Base salary:
CEO £354,000,

COO £290,000.

Pension:
9% of salary or cash equivalent.

Benefits:
As disclosed in single figure table on page 95.

Annual
bonus

Minimum: No payout.

On-target: 50% of maximum.

Maximum: 100% of maximum (125% of salary).

LTIP

Minimum: No vesting.

On-target: 50% of maximum.

Maximum: 100% of maximum (150% of salary).

Share price
growth

Calculated based on the impact of 50% share

price appreciation on LTIP.

Policy for Board Chair and Non-Executive Directors

The Non-Executive Directors, including the Board Chair, do not

Non-Executive Directors are not eligible to join the Company’s

have service contracts and are appointed for an indefinite term.

pension scheme or participate in any bonus scheme or share

Non-Executive Directors are not entitled to compensation on

incentive plans. Any reasonable expenses that they incur in the

termination of their Directorship, no matter what the reason for

furtherance of their duties are reimbursed by the Company

termination. The Directors are subject to annual re-election at

(including any tax liability thereon).

the AGM. Non-Executive Directors’ letters of appointment are

available to view at the Company’s registered office.

PURPOSE AND
LINK TO STRATEGY OPERATION

FEE LEVELS

To attract and retain

The Board Chair is paid a single annual all-inclusive fee

Fee levels are disclosed in the Directors’

Non-Executive

for all Board responsibilities.

Directors of the

required calibre

by offering market

competitive fees.

Non-Executive Directors receive a base annual Board

fee. Additional fees may be payable for additional Board

responsibilities such as Chairship of a sub-committee

of the Board or the role of ‘Employee Engagement

Designated NED’.

The Board Chair’s fee is determined by the Committee

(excluding the Board Chair), and fees for Non-Executive

Directors are determined by the Board (excluding

the Non-Executive Directors). Fees are reviewed

periodically, considering time commitment, scope and

responsibilities, and appropriate market data.

Expenses incurred in the performance of non-executive

duties for the Company may be reimbursed or paid for

directly by the Company, including any tax due thereon.

Remuneration Report and reviewed periodically.

Any fee increases may take into account, material

misalignment with the market or a change in the

complexity, responsibility or time commitment

required to fulfil the role. The Board may make

appropriate adjustments to fee levels to ensure

they remain market competitive and fair to the

Director.

The Board may, in exceptional circumstances,

award additional fees to recognise significant

additional responsibilities or time commitment

required of individuals.

The maximum annual aggregate fee for all Non-

Executive Directors will be within any limits set

out in the Company’s Articles of Association.

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Directors’ remuneration report continued

External appointments

It is the Board’s policy to allow the Executive Directors to take up

relation to outside appointments is retained by the Executive

one non-executive position on the board of another company,

Director. During 2022, there were no external appointments held

subject to the prior approval of the Board. Any fee earned in

by the Executive Directors.

How do we safeguard against payments for failure?

SAFEGUARDING REQUIREMENTS

Performance
based pay

A significant portion of remuneration varies with performance – where performance targets are not achieved,
lower or no payments will be made under the plans.

Discretion

The Committee will operate all incentive plans according to the rules and discretions contained therein to
ensure that the implementation of the remuneration policy is fair, both to the individual Director and to the
shareholders. The discretions cover aspects such as (but not limited to):

• selection of participants;

• timing of grant and vesting of awards;

• size of awards (subject to the Policy limits);

• choice of measures, weightings and targets;

• determining level of payout or vesting based on an assessment of performance;

• settlement of awards in cash or shares;

• treatment of awards on termination of employment and change of control;

• adjustment of awards in certain circumstances, e.g. changes in capital structure, demerger, special dividend,

distribution or any other corporate event which may affect the current or future value of an award;

• adjustments to take account of windfall gains on LTIP awards;

• adjustment of performance conditions in exceptional circumstances provided the new targets are fair and
reasonable and neither materially more or less challenging, in the context of exceptional circumstances,
than the original targets; and

• application of malus and/or clawback.

Any such use of discretion will be fully disclosed in the subsequent annual report and may, as appropriate, be
the subject of consultation with the Company’s shareholders.

Malus and
Clawback

Malus is the adjustment of deferred annual bonus awards or unvested LTIP awards, because of the occurrence
of one or more unforeseen circumstance. The adjustment may result in the value being reduced to nil.

Clawback is the recovery of cash payments made under the annual bonus, deferred annual bonus award or
vested LTIP awards as a result of the occurrence of one or more circumstances listed. Clawback may apply
to all or part of a participant’s payment or award and may be effected, among other means, by requiring the
transfer of shares, payment of cash or reduction of awards or bonuses.

The circumstances in which malus and clawback could apply are as follows:

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• gross misconduct;

• misstatement of the financial results;

• error in reporting or calculation;

• serious reputational damage; or

• corporate failure.

Malus applies to deferred annual bonus awards and unvested LTIP awards up to the date of vesting.

Clawback applies to cash annual bonus payments and vested LTIP awards for up to two years from payment
or vesting.

Annual bonus payments and LTIP awards are subject to malus and clawback for up to two years from
payment of the bonus or vesting of shares.

Payments for
loss of office

Payments to past
Directors

There were no payments to former Directors for loss of office.

There were no payments to past Directors during the year.

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Directors’ remuneration report continued

Recruitment policy

When determining the remuneration arrangements of a new

• The Committee will appoint new Executive Directors with a

appointment to the Board, the Committee will seek to apply the

package that is in line with the Remuneration Policy in place

following principles:

• Although we operate in a competitive market for talent, we are
mindful to pay no more than is necessary to attract and retain

high-quality talent;

at the time, as indicated in the table below. In particular, the

maximum level of variable remuneration will be in line with the

limits set out in the Policy table.

Approach on recruitment

ELEMENT

ASSUMPTIONS

Salary

• The base salaries of new appointees will be determined by reference to the individual’s role and responsibilities,

experience and skills, relevant market data and pay and conditions elsewhere in the Company.

• Base salary may be higher or lower than the previous incumbent. Salaries may be set at a lower level initially

with the intention of increasing salaries at a higher than usual rate as the executive gains experience in the role.

Pension

Benefits

• New appointees will be eligible to receive pension contributions (or cash in lieu) in line with the Policy.

• New appointees will be eligible to receive benefits in line with the Policy, including relocation benefits if the

Committee deems it appropriate.

Annual bonus

• The structure described in the Policy table will normally apply to new appointees with the relevant maximum
being pro-rated to reflect the proportion of the year served. The Committee retains the flexibility to determine

that for the first year of appointment any annual incentive award will be subject to such terms as it may

determine.

LTIP

• New appointees will be eligible for awards under the LTIP which will normally be on the same terms as other

executives, as described in the Policy table.

‘Buy-out’ awards

Service contracts

To facilitate recruitment, it may be necessary to ‘buy-out’

Executive Director service contracts can be terminated by not

less than six months’ notice given in writing by either party to

the contract, with no contractual provisions for compensation

payable on early termination of the contract. The Directors are

subject to annual re-election at the AGM. Non-Executive Directors’

contracts are available to view at the Company’s registered office.

remuneration arrangements forfeited on leaving a previous

employer. This will be considered on a case-by-case basis and

may comprise cash or performance and non-performance related

share awards and would be in such form as the Committee

considers appropriate considering all relevant factors such as the

form, performance conditions, expected value, anticipated vesting

and timing of the forfeited remuneration. The Committee’s

intention is that the value awarded would be no more than the

commercial value of the awards forfeited.

For internal promotions, the approach will be consistent with the

policy for external appointees. Where an individual has contractual

commitments made prior to their promotion to Executive Director

level, the Company will continue to honour these arrangements.

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Termination Payments

Executive Directors may receive base salary, pension and benefits

of any sort in the event that for cause an Executive Director’s

during the notice period, which may be paid during a period

employment is summarily terminated. In the event that an

of ‘garden leave’ or ‘payment in lieu of notice’ (PILON) for all or

Executive Director is given notice of termination of employment

part of any period of notice. Payments will normally be made

within twelve months of any change in control of the Company,

in equal monthly instalments until the end of the notice period

he/she will be given not less than twelve month’s written notice

at the discretion of the Company and Executive Directors will

and the same arrangements for receiving salary and benefits

be expected to mitigate their loss. Individuals will be eligible for

during this period will apply as described above.

annual bonus only in respect of periods worked (ie. excluding

any periods of garden leave or PILON) subject to the normal

performance conditions. Further detail on the treatment of

annual bonus and LTIP for leavers is provided in the table below.

The Committee will seek to ensure that there are no unjustified

payments for failure. There are no entitlements to payments

The Committee may authorise payments for statutory

entitlements in the event of termination, reasonable settlement of

potential legal claims, and payment of reasonable reimbursement

of professional fees in connection with such agreements.

PLAN

GOOD LEAVERS1

ALL OTHER LEAVERS

CHANGE OF CONTROL

Annual bonus

• Typically paid at the same time
as continuing employees, to the

• No bonus payable.
• Unvested deferred bonus

• Normally paid immediately on
the effective date of change of

extent that the performance

awards lapse.

conditions are achieved with

pro- rating for the proportion of

the financial year worked, unless

the Committee determines

otherwise.

• Deferred bonus awards will

continue until the normal vesting

date or may vest earlier at the

discretion of the Committee.

LTIP

• Unvested LTIP awards will

typically vest on the normal

• Unvested awards lapse.
• Vested awards will remain subject

vesting date, to the extent that

to any holding period.

the performance conditions are

achieved with pro-rating for the

proportion of the performance

period served, unless the

Committee determines otherwise.
• Vested awards will remain subject

to any post-vesting holding

period.

control, subject to the extent of

achievement of the performance

conditions and pro-rated for

the proportion of the year

served to the date of change of

control, unless the Committee

determines otherwise.

• Deferred bonus awards normally
vest immediately in full on the

effective date of change of

control.

• Unvested LTIP awards will

typically vest immediately in

full on the effective date of

change of control, subject to

the Committee’s assessment

of the achievement of the

performance conditions and

pro-rated for the proportion
of the performance period

served to the date of change of

control, unless the Committee

determines otherwise.

• The post-vesting holding period
applicable to any awards will

end at the time of change

in control.

• Alternatively, awards may be

exchanged for new equivalent

awards in the acquiring

company.

1 The Committee has discretion to determine that an Executive Director is a good leaver. It is the Committee’s intention to only use this discretion in circumstances where there is an

appropriate business case which will be explained in full to shareholders. A good leaver is typically defined as an employee who ceases to hold employment by reason of: death, injury, ill-

health or disability; retirement with the agreement of the Group; redundancy; the participant’s employing Company being transferred to an entity which is not a Group member; transfer of

undertaking; or any other reason at the Committee’s discretion.

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Directors’ remuneration report continued

Part 4: Annual Report on Remuneration for 2022

Performance measures selection for the annual bonus

Performance measures used under the annual bonus are selected annually to reflect the Company’s main short and long-term objectives

and reflect both financial and non-financial priorities. For Executive Directors, performance measures in incentives focus predominantly

on the profitability of the IPS business which is central to Law Debenture’s business model and is the area of the business fully within their

control. The performance targets are set to be stretching but achievable, taking into account a range of internal and external reference

points and having regard to the particular strategic priorities and economic environment.

By their nature, some objectives require a more subjective assessment than others and this is done by the Committee following the

input from the wider Board as appropriate.

STRATEGIC OBJECTIVES

Description

Weighting

IPS financial performance

The Committee reviews financial metrics when assessing the Executive

50%

IPS non-financial
performance

Directors’ delivery against financial performance targets. The metric

used for 2022 was PBT. The Executive Directors’ awards are based on

the performance against agreed thresholds, which can be found in the

table below.

The success of the IPS business is dependent on the effective

50%

leadership and implementation of the right strategy to ensure our

people can provide excellent service to our clients regardless of the

external challenges the business may face. This includes a robust

operational infrastructure, a well embedded risk management

framework and high calibre people.

Engagement with investors, potential investors, market analysts,

clients and the media is considered to be beneficial to our

shareholders as it raises awareness of the unique investment

proposition which is offered by Law Debenture and supports the

future growth of the IPS business.

The Remuneration Committee believe that the efforts made by the

Executive Directors to further enhance the areas outlined above

should be rewarded.

MEASURE

For 2022 the maximum bonus opportunity for the Executive Directors was 100% of salary. Performance conditions were based 50% on

financial metrics and 50% on strategic metrics. Details of the specific measures, weightings and outcome achieved are set out below:

Measure

IPS financial performance - PBT

IPS non-financial performance

Total

Weighting

Threshold
(20% of max.)

Maximum
(100% of max.)

50%

100%

Further details set out below

Actual

8.1%

Outcome
(% of salary)

42.8%

34%

76.8%

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Directors’ remuneration report continued

Remuneration Outcomes for 2022

2022 PERFORMANCE AND PAY OUTCOMES

Performance against Financial Objectives for 2022

Total Annual Bonus for 2022: 76.8% of a potential maximum of 100% of base salary.

The IPS business delivered PBT growth of 8.1% resulting in an award of 42.8% of a 50% maximum

Performance against Non-Financial Objectives for 2022

Key
Performance
Area

People

Max bonus
eligibility
(% of base
salary)

Score
(out of 5)

Bonus
awarded
(% of base

salary) Commentary on objectives set and achievements

4% The Committee set several objectives in the People category,

encompassing culture, succession planning and leadership

training, which were generally achieved or exceeded. Executive

Directors continued to build a performance-driven and inclusive

culture investing in people and training and setting the

business up to succeed for the years to come. The Committee

received positive feedback from employees and senior leaders

in respect of this category.

IPS Business

15%

4.5

13.5% The Committee identified several strategic priorities that were

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important to facilitate continued growth in IPS. Our Safecall

business required technology investment and a new platform,

which was delivered on time and to budget in 2022. The

leadership team has made good progress during the year to

further integrate CSS into the wider Law Debenture business.

Business Development resources and initiatives increased

and delivered cross-selling successes. In IT, operating platform

priorities were addressed successfully. The Finance Shared

Service Centre also made good progress through the year.

ESG

4% We asked the Executive Directors to review developing best

practice for ESG and to implement a strategy for our own

operations. This included engagement with ESG ratings

providers and shareholders to help inform priorities. An ESG

Committee has been established with a cross-section of

employees from across Law Debenture’s operations. The
Audit and Risk Committee approved the ESG strategy and

implementation plan (further details of which are set out in the

ESG section of this report on page 50). We are pleased with the

progress that has been made in this important area.

Strategy,
Brand &
Marketing

25%

2.5

12.5% The Remuneration Committee asked the Executive Directors

to undertake a strategic review of the IPS business with a view

to informing future investment, growth, brand and marketing

plans. While some good progress has been made, there is

further work to do, which will be carried forward in 2023.

Total (of a maximum 50% of base salary)

34%

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Directors’ remuneration report continued

Long Term Incentive Plan

For LDC, the use of growth in IPS EPS as a performance metric is likely to cause distortions as the numerator (IPS profit) relates to only

part of LDC’s overall business, but the denominator is the Company’s entire share capital. This is different from most companies, which

measure growth in the EPS of the entire business. Accordingly, the Committee will use growth in IPS PBT for both existing and future LTIP

awards as the metric for determining the level of vesting over the relevant performance period. In the event that an acquisition is made for

IPS, an appropriate adjustment to starting PBT will be made so as to ensure a like-for-like comparison.

The LTIP award granted to the CEO in 2020 reached the end of its performance period on 31 December 2022. The table below shows the

performance target. The outcome was actual CAGR of 7.9% resulting in a vesting of 74% of the maximum award.

In 2022, both the CEO and the COO were granted LTIP awards at the level of 100% of salary. The award will vest after three years based on

IPS PBT performance, and any vested shares (net of tax) will be subject to a further two-year holding period. The performance targets are

as follows:

3-year PBT CAGR

Below threshold

Threshold

Stretch

2022 PERFORMANCE AND PAY OUTCOMES

Total remuneration 2022

Denis Jackson
Chief Executive Officer

Salary and benefits 31%
Annual bonus 24%
Retirement benefits 3%
Performance Shares 42%

* No long-term incentives or scheme interests vested in 2022 for the COO.

Share ownership

% vesting

IPS 3-year PBT CAGR

25%

100%

Less than 4%

10%

Trish Houston
Chief Operating Officer

Salary and benefits 55%
Annual bonus 39%
Retirement benefits 6%
Performance Shares 0%*

Shareholding is a key means by which the interests of Executive Directors are aligned with those of shareholders.

Denis Jackson1
Chief Executive Officer

£261,423

Actual

Total Policy Requirement

Trish Houston2
Chief Operating Officer

£57,321.69

Current holdings: 33,907 shares3
Two times salary, 84,306 shares4
Total target value3 of £650,000

Current holdings: 7,435 shares3
Two times salary, 71,336 shares4
Total target value3 of £550,000

1 Denis Jackson has 43,343 vesting in 1-4 years time subject to a service condition but not a performance condition.

This holding has been adjusted to reflect tax and NI payable.

2 Trish Houston has 6,977 vesting in 1-4 years time subject to a service condition but not a performance condition.

This holding has been adjusted to reflect tax and NI payable.

3 Includes shares held in own account

4 Calculated based on a close price of 771p as at 31 December 2022.

The value of the shareholdings disclosed have been calculated using the close price as at the 31 December 2022 the time of

acquisition of the shares. For these purposes, shares held in the deferred bonus scheme (on a net of tax/NIC basis), the SIP and SAYE

as at 31 December 2022 have been included as there are no performance conditions to be met. The LTIP awards have not been

factored in.

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Directors’ remuneration report continued

Single total figure of remuneration (audited)

Denis Jackson

Trish Houston2

Year ended

Salary
£000

Benefits3
£000

Bonus4
£000

2022

2021

2022

2021

325

219

245

250

275

211

208

LTIP1
£000

438

—

Pension5
£000

Total
£000

Total Fixed
£000

Total Variable
£000

1,048

638

464

479

361

363

253

271

688

275

211

208

ncludes dividend reinvestment and dividend equivilent. Total number of shares
due to vest is 58,006. Value is based on average share price for the period of
1 October 2022 to 31 December 2022 of 746.86p plus the final dividend of £5,076.

3 Benefits shown relate to provision of health insurance.
4 In accordance with the Policy, half of the portion of the bonus above £100k is

deferred into shares for three years.

2 Trish Houston’s service for 2022 includes a period of maternity leave. The

5 The pension values relate to the cash allowances paid in lieu of pension

remuneration figures in the table are actual earnings for 2022. For 2022, Trish
Houston received pension contributions rather than cash allowances paid in lieu of
pension contributions.

contribution. The amount shown is the value of the allowance received, which
reflects a reduction for the cost of employer’s NIC.

Executive Directors’ shareholdings (audited)

The table below shows the interests of the Executive Directors and connected persons in shares (owned outright or vested) as at

31 December 2022. In the period between 31 December 2022 and 27 February 2023, Denis Jackson’s shareholding has increased by 451

shares, as a result of dividend reinvestment. There have been no changes to Trish Houston’s holding.

Outstanding scheme interests

Shares
owned
outright

13,883

2,9356

Denis Jackson

Trish Houston

Unvested
shares not
subject to
performance1

Unvested
options not
subject to
performance2

Unvested
shares
subject to
performance3

Vested but
unexercised
share options

Total scheme
interests4

Shareholding
guideline
(% of salary)

Current
shareholding
(% of salary)5

Guideline
met

43,343

6,977

5,565

3,856

157,611

67,641

—

62,791

13,768

200%

193%

39%

Includes deferred bonus awards granted under the Deferred Share Plan.

1
2 Includes options awarded under Save As You Earn Share Save Plan.
3 Includes options awarded under the LTIP.

4 Total scheme interests excludes the shares subject to performance conditions.
5 Based on a share price on 31 December 2022 of 771p. Shares owned outright

have been included.

6 Includes person closely associated (‘PCA’) holdings of 734 shares.

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Executive Directors’ interests in shares and option plans (audited)

Interests
held at
1 January
2022

Granted
in the
year

Date of
grant

Market
price at
grant

Vested in
the year

Lapsed/
forfeited
in the
year

Exercised
in the
year

Exercise
price*

Market
price at
date of
exercise

Interests
held at
31 December
2022

Vesting/
first
exercise
date

Scheme

Denis Jackson

1DSP 2019

18,532

—

11.03.19

582

18,532

1DSP 2020

18,166

546

13.03.20 587.19

1DSP 2021

12,884

387

12.03.21 704.66

1DSP 2022

— 11,360

14.03.22

7.991

2LTIP 2020

70,210

— 07.04.20

462.9

2LTIP 2021

45,595

— 01.03.21

712.8

2LTIP 2022

— 41,806

28.02.22

7.991

3SAYE 2020

5,565

— 26.08.20

539

Trish Houston

1DSP 2022

— 6,977

14.03.22

7.991

2LTIP 2021

32,267

— 01.03.21

712.8

2LTIP 2022

— 35,374

28.02.22

7.991

3SAYE 2021

3,856

— 01.09.21

7.78

—

n/a

539

n/a

778

n/a

18,712

13.03.23

13,271

12.03.24

11,360

12.03.25

70,210 07.04.23

45,595 01.03.24

41,806 28.02.25

5,565 26.08.25

6,977

12.03.25

32,267 01.03.24

35,374 28.02.25

3,856 01.09.26

Deferred Share Plan (share grant price is based on the market close on the date of
the grant). Includes dividend reinvestment. DSP 2019 is now owned outright.

2 Long Term Incentive Plan (price at grant is calculated based on a 5 day average close
price up to and including the day before the date of grant). Details of performance
conditions and targets can be found on page 93.

3 Save As You Earn Save Plan (share grant price is based on market close on the date

of the grant).

* Exercise price is based on market price at grant.

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Directors’ remuneration report continued

Total Shareholder Return (TSR) chart and historical remuneration

The graph below compares the value of £1,000 invested in Law Debenture’s shares, including reinvested dividends, with the FTSE All-

Share Total Return Index over the last ten years. This index was selected because it is the index adopted as Law Debenture’s benchmark.

£2,800

£2,600

£2,400

£2,200

£2,000

£1,800

£1,600

£1,400

£1,200

£1,000

£800

£600

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Law Debenture share price total return, assuming
the investment of £1,000 on 31 December 2012 and
the reinvestment of all dividends (excluding
dealing expenses)

FTSE All-Share Index total return, assuming notional
investment of £1,000 into the index on 31 December
2012 and the reinvestment of all income (excluding
dealing expenses)

Notes
1 The graph shows the total shareholder return of a nominal holding of £1,000 of Law Debenture’s shares measured against the total shareholder return of a nominal holding of

£1,000 invested in the FTSE All-Share Index over a 10 year period.

2 Dividends have been reinvested.
3 FTSE All-Share Index is chosen as the comparator in this table because that is the index against which, historically, the Company has reported the performance of the

Investment Portfolio.

Historical remuneration and TSR chart

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Incumbent

C. Banszky C. Banszky C. Banszky

CEO single figure of total

remuneration (£000)

636.9

690.7

677.5

Annual bonus and deferred bonus

awarded (against maximum %)

72.1%

62.0% 100.0%

M. Adams1 T. Fullwood2

C. Banszky M. Adams

180.5

757.8

142.2

344.1

65.1% 100.0%

0.0%

D. Jackson3 D. Jackson3 D. Jackson3 D. Jackson3 D. Jackson3

611.2

643.4

643.0

643.2

1,0484

100.0%

90.9%

85.0%

76.8%

LTIP award due to vest

(against maximum %)

n/a

74%

1 C. Banszky stepped down as CEO on 31 August 2016 and was succeeded by M. Adams on the same date following his appointment to the Board on 4 August 2016.
2 T. Fullwood was appointed interim Chief Executive Officer from 22 October 2017 for a fixed term until retirement at 1 January 2018.
3 D. Jackson was appointed as CEO on 1 January 2018.
4 Includes dividend reinvestment and dividend equivilent. Total number of shares due to vest is 58,006. Value is based on average share price for the period of 1 October 2022

to 31 December 2022 of 746.86p plus the final dividend of £5,076.

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Directors’ remuneration report continued

Percentage change in Director remuneration

The table below shows the percentage change in Director remuneration, comprising salary, taxable benefits and annual bonus, and

comparable data for the average of all UK employees within the Company.

Salary/fees
2022

Taxable
Benefits
2022

n/a

Annual
Bonus
2022

-10%

n/a

Salary/fees
2021

Taxable
Benefits
2021

Annual
Bonus
2021

Salary/fees
2020

Taxable
Benefits
2020

17%

n/a

30%

n/a

Annual
Bonus
2020

-4%

n/a

11%

Denis Jackson (CEO)

Trish Houston (COO)

Katie Thorpe (CFO)1

Robert Hingley (NED)

Robert Laing (NED)2

Mark Bridgeman (NED)3

Tim Bond (NED)

Claire Finn (NED)

Clare Askem (NED)

Pars Purewal (NED)

All other Employees
(excluding directors)4

1 Katie Thorpe resigned from the Board on 11 September 2020 and left Law Debenture in October 2020.
2 Robert Laing retired from the Board in April 2021.
3 Mark Bridgeman retired from the Board in April 2022.
4 For the purposes of this table, all other employees excluding Directors have been taken to mean employees of LDC Trust Management Limited and Safecall Limited.

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Non-Executive Directors’ shareholdings (audited)

The table below shows the interests of the Non-Executive Directors and connected persons in shares (owned outright or vested) as at

31 December 2022. There have been no changes in Directors’ interests in the period between 31 December 2022 and 27 February 2023.

Robert Hingley

Mark Bridgeman1

Tim Bond

Claire Finn

Clare Askem

Pars Purewal2

Shares owned outright

4,870

4,513

—

2,576

—

13,373

1 Retired at the AGM in April 2022. Interests of connected persons in addition to Mark Bridgeman’s beneficial holding – 25,620.
2 Pars Purewal’s shares are held jointly with a connected person.

Single total figure of remuneration for Non-Executive Directors (audited)

The table below sets out the single figure for the total remuneration received by each Non-Executive Director for the year ended

31 December 2022 and the prior period:

Non-Executive Directors

Robert Hingley

Mark Bridgeman*

Tim Bond

Claire Finn

Clare Askem1

Pars Purewal1

Salary/fees
2022

£90,888

£15,307

£47,030

£52,909

£51,264

Total
2022

£90,888

£15,307

£47,030

£52,909

£51,264

Salary/fees
2021

£87,550

£56,650

£45,320

£49,547

£25,275

£2,092

Total
2021

£87,550

£56,650

£45,320

£49,547

£25,275

£2,092

1 Clare Askem and Pars Purewal were appointed as Workforce Engagement Director and Chair of the Audit and Risk Committee, respectively, at the AGM in April 2022.
* Mark Bridgeman retired from the Board at the AGM in April 2022.

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Directors’ remuneration report continued

Non-Executive Director fees

For 2023, the fees for the Chairman and Non-Executive Directors have been increased as shown below, and explained in the Committee

Chair’s introductory statement.

Fee

Chairman fee

Non-Executive Director base fee

Additional fee for Chairman of Audit Committee

Additional fee for Chairman of Remuneration Committee

Additional fee for oversight of workforce engagement

Relative importance of spend on pay

Fees effective
1 April 2023

Fees effective
1 April 2022

% change

£110,000

£50,000

£10,000

£6,250

£92,000

£47,600

£5,950

20%

68%

The table below shows the Company’s actual expenditure on shareholder distributions (including dividends and share buybacks) and

total employee pay expenditure for the financial years ended 31 December 2020, 31 December 2021 and 31 December 2022.

Total employee pay expenditure1

Total distributed to shareholders2

2020
£000

16,156

32,572

2021
£000

21,4173

35,662

2022
£000

23,995

38,865

% change

12%

1 Total remuneration includes bonuses, employers’ NI and pension costs and is the figure reported at note 3 of the accounts less remuneration of Non-Executive Directors.
2 Amounts distributed to shareholders are the totals of the final and interim dividends in respect of that year. There were no other distributions.
3 Includes salaries and bonuses paid the staff who joined us as part of the acquisition of the Company Secretarial Services business on 1 February 2021.

The number of employees has increased from 239 in 2021 to 260 in 2022, which has led to an increase in employee pay expenditure. The

increase also includes a discretionary increase in individuals’ remuneration. Distribution to shareholders has been subject to an increase for

the current year as explained in the Chairman’s statement on pages 6 and 7.

Statement of shareholder voting at the Company’s AGM

The table below sets out the results of the most recent shareholder votes on the Annual Remuneration Report at the AGM on 7 April

2022. The remuneration policy was last approved by shareholders at the Company’s Annual General Meeting held on 7 April 2020 at the

end of which it received 30,239,120 votes in favour (97.65%), 728,373 votes against (2.35%) and 250,424 votes were withheld. The full policy

is contained in the Company’s annual report and accounts for the year ended 31 December 2019, which may be found at https://www.

lawdebenture.com/investment-trust/shareholder-information/annual-reports-and-half-yearly-reports.

Percentage of votes cast

Number of votes cast

2021 Directors’ Remuneration Report

99.23%

0.77%

28,493,980

1 A vote withheld is not a vote in law and is not counted in the calculation of the proportion of votes cast for and against a resolution.

Implementation of the policy for 2023 has been included in the policy table on page 84.

This report was approved by the Board of Directors on 27 February 2023 and signed on its behalf by

For

Against

For

Against

220,771

Withheld1

67,557

Claire Finn
Chair, Remuneration Committee

lawdebenture.com

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F I N A N C I A L S T A T E M E N T S

Independent auditor’s report

to the Members of The Law Debenture Corporation p.l.c.

Report on the audit of the financial statements

1. Opinion

In our opinion:

• the financial statements of The Law Debenture Corporation p.l.c. (the ‘Company’) and its subsidiaries (the ‘Group’) give a true

and fair view of the state of the Group’s and of the Company’s affairs as at 31 December 2022 and of the Group’s loss for the year

then ended;

• the Group financial statements have been properly prepared in accordance with United Kingdom adopted international
accounting standards and International Financial Reporting Standards (IFRSs) as issued by the International Accounting

Standards Board (IASB);

• the Company financial statements have been properly prepared in accordance with United Kingdom adopted international

accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and

• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements which comprise:

The financial reporting framework that has been applied in their

• the Group income statement;

preparation is applicable law and United Kingdom adopted

international accounting standards and, as regards the Company

• the Group statement of comprehensive income;

financial statements, as applied in accordance with the

provisions of the Companies Act 2006.

• the Group and Company statements of financial position;

• the Group and Company statements of changes in equity;

• the Group and Company cash flow statements; and

• the related notes 1 to 28.

2. Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities

under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of our

report.

We are independent of the Group and the Company in accordance with the ethical requirements that are relevant to our audit of the

financial statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to listed public
interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services

provided to the Group and Company for the year are disclosed in note 3 to the financial statements. We confirm that we have not

provided any non-audit services prohibited by the FRC’s Ethical Standard to the Group or the Company.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

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Independent auditor’s report continued

3. Summary of our audit approach

Key audit matters

The key audit matters that we identified in the current year were:

• valuation and existence of investments; and

• occurrence, accuracy and cut-off of independent professional services fees.

Within this report, key audit matters are identified as follows:

Newly identified

Increased level of risk

Similar level of risk

Decreased level of risk

Materiality

The materiality that we used for the Group financial statements was £8.00m which was determined on
the basis of 1% of net assets.

Scoping

We performed a full scope audit on the Company and specified audit procedures on prescribed balances

performed to component materiality on four of the Company’s subsidiaries which we consider to be

significant components. In addition, we performed audits of specified account balances within a further

two subsidiaries.

Together, this accounts for 100% of the Group’s Investment Portfolio, 96% of the Group’s revenue and

99.2% of the Group’s total assets.

Audit work to respond to the risks of material misstatement identified was performed directly by the

group audit engagement team.

Significant changes

Accounting for the acquisition of Konexo UK’s company secretarial business (“CSS”), including valuation

in our approach

of goodwill and intangible assets, and the associated impairment assessment of those assets, ceased

to be a key audit matter in the current year due to the acquisition accounting in 2021 being deemed

appropriate. We continue to perform procedures over impairment of goodwill recognised in relation to

CSS. However, following the goodwill impairment assessment in the prior period, we have not assessed

this as one of the most significant risks in our current year audit and it is not separately identified in our

report this year.

There were no other significant changes in our approach apart from in relation to these key audit matters.

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4. Conclusions relating to going concern

In auditing the financial statements, we have concluded that the

• evaluating management’s plans for future actions in relation to

directors’ use of the going concern basis of accounting in the

their going concern assessment;

preparation of the financial statements is appropriate.

• assessing the appropriateness of the going concern disclosures

Our evaluation of the directors’ assessment of the Group’s and

in the financial statements; and

Company’s ability to continue to adopt the going concern basis of

accounting included:

• assessing the Directors’ forecasts and considerations regarding

whether they consider it appropriate to adopt the going

concern basis of accounting;

• reviewing management’s going concern and viability papers for

reasonableness.

Based on the work we have performed, we have not identified

any material uncertainties relating to events or conditions that,

individually or collectively, may cast significant doubt on the

• assessing the financing facilities including nature of facilities,

Group’s and Company’s ability to continue as a going concern

repayment terms and covenants;

for a period of at least twelve months from when the financial

• assessing the relevance and reliability of underlying data and

key assumptions, such as cash flows and liquidity assumptions

used in the prepared forecasts;

statements are authorised for issue.

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Independent auditor’s report continued

4. Conclusions relating to going concern continued

In relation to the reporting on how the Group has applied the UK

Our responsibilities and the responsibilities of the directors with

Corporate Governance Code, we have nothing material to add

respect to going concern are described in the relevant sections of

or draw attention to in relation to the directors’ statement in the

this report.

financial statements about whether the directors considered it

appropriate to adopt the going concern basis of accounting.

5. Key audit matters

Key audit matters are those matters that, in our professional

These matters were addressed in the context of our audit of

judgement, were of most significance in our audit of the financial

the financial statements as a whole, and in forming our opinion

statements of the current period and include the most significant

thereon, and we do not provide a separate opinion on these

assessed risks of material misstatement (whether or not due

matters.

to fraud) that we identified. These matters included those

which had the greatest effect on: the overall audit strategy, the

allocation of resources in the audit; and directing the efforts of the

engagement team.

5.1. Valuation and existence of investments

Key audit matter

The investments of the Group of £891.0m (2021: £992.5m) are key to its performance and account for the

description

majority of the total assets, 88.7% at 31 December 2022 (2021: 90.9%).

Quoted investments are valued at their fair value, which is represented by the market bid price. Please

see the accounting policy in note 1 and note 13 .

Investments listed on recognised exchanges are valued at the closing bid price at the year end.

There is a risk that investments within the portfolio may not be actively traded and the prices quoted

may not be reflective of fair value.

Additionally, there is a risk the investment assets recorded may not represent property of the Company.

There is a risk that the investment valuation and investment existence of the Group can be manipulated

by applying an incorrect share price and number of shares owned. This could result in material

misstatement of the net asset value of the Group.

How the scope of our

We have performed the following procedures to test the valuation and existence of investments at

audit responded to the

31 December 2022:

key audit matter

• Obtained an understanding of the relevant controls over valuation and ownership of quoted investments;

• Agreed 100% of the Company’s Investment Portfolio at the year-end to confirmations received directly

from the custodian;

• I ndependently agreed 100% of the bid prices of quoted investments on the investment ledger at year

end to closing bid prices published by an independent pricing source;

• Assessed the liquidity of a sample of the holdings at year-end by comparing the holding size to the

shares traded after the year end to determine if the valuation is reflective of quoted prices in an active

market;

• Evaluated the completeness and appropriateness of disclosures in relation to fair value measurements

and liquidity risk; and

• Made enquiries of the manager and directors regarding their assessment of the portfolio pricing and

liquidity.

Key observations

Based on the work performed we concluded that the valuation and existence of quoted investments is

appropriate.

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Independent auditor’s report continued

5.2. Occurrence, accuracy and cut-off of independent professional services fees

Key audit matter

Independent professional services (“IPS”) revenue consists of fees receivable from the provision of

description

services, and is recognised based on the delivery of performance obligations and an assessment of when

control is transferred to the customer.

The transaction price can be based on one or more principal pricing mechanisms:

• Time at a contracted charge out rate and recoverable expenses

• Annual fixed fees

• Acceptance and appointment fees

• Special fees/out of scope fee

Fees are manually calculated and recorded. The basis of fees vary across the various dividions of IPS,

increasing the relative risk of misstatement. The accounting policy for revenue recognition is detailed in
Note 1 to the financial statements.

Fees of £53.5m were recorded for the year-ended 31 December 2022 (2021: £49.5m).

The fees require the accurate implementation of client contracts, as well as appropriate accounting

treatment in line with IFRS 15 ‘Revenue from contracts with customers’.

There is a fraud risk associated with the accuracy of revenue due to this balance’s importance to

stakeholders and link to long-term incentives. Additionally, inaccurate revenue, recording revenue which

did occur, or recording revenue in the incorrect period could have a significant impact on the Group’s

earnings per share. Given the manual processes involved in accounting for this revenue, we consider it to

be a key audit matter.

How the scope of our

We have performed the following procedures to test the completeness, accuracy and cut-off of

audit responded to the

independent professional services fees for the period:

key audit matter

• We obtained an understanding of the relevant controls over the occurrence, accuracy and cut-off of

IPS fees.

• We independently agreed a sample of fees to signed client agreements, sales invoices and bank

receipts. Where amendments were made to client agreements, we assessed whether these had been

recorded accurately and timely.

• Finally, we reviewed revenue recorded either side of the year-end to assess whether the revenue

has been accounted for in the correct period and assessed for compliance with IFRS 15 for revenue

recognition criteria.

Key observations

Based on our work, independent professional service fees are appropriately recorded.

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6. Our application of materiality

6.1. Materiality

We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic

decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our

audit work and in evaluating the results of our work.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Materiality

£8.0m (2021: £8.49m)

£7.2m (2021: £7.64m)

Group financial statements

Company financial statements

Basis for determining

1% (2021: 1%) of net assets as at the year end.

Parent company materiality equates to 0.90%

materiality

(2021: 0.9%) of net assets, which is capped at 90% of

group materiality.

Rationale for the

Net assets has been chosen as a benchmark as

Company materiality has been capped at 90%

benchmark applied

it is considered the most relevant benchmark for

Group materiality to ensure errors identified in the

investors and is a key driver of shareholder value.

parent entity that may present an aggregate risk

of material misstatement to the Group financial

statements are detected.

NAV £799m

NAV

Group materiality

Group materiality
£8m

Component materiality
range £4m to £6m

Audit Committee
reporting threshold
£0.4m

6.2. Performance materiality

We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and

undetected misstatements exceed the materiality for the financial statements as a whole.

Group financial statements

Company financial statements

Performance materiality

70% (2021: 70%) of Group materiality

70% (2021: 70%) of Company materiality

Basis and rationale for

In determining performance materiality, we considered the following factors:

determining performance

materiality

• our understanding of the entity, its environment and the investment company sector;

• the quality of the entity’s internal controls over financial reporting;

• the nature, volume and size of misstatements (corrected and/or uncorrected) in the previous audit; and

management’s willingness to correct misstatements identified.

6.3. Error reporting threshold

We agreed with the Audit and Risk Committee that we would report to the Committee all audit differences in excess of £0.4m, as well

as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit and Risk

Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements.

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Independent auditor’s report continued

7. An overview of the scope of our audit

7.1.

Identification and scoping of components

The organisation is headquartered and operates principally out of the UK, but also operates overseas subsidiaries in United Kingdom

Ireland, Hong Kong, Cayman Islands, Channel Islands and the United States.

In determining the scope of work to be performed on specific components of the group, we considered each entity with reference to

both quantitative and qualitative factors. Our quantitative assessment was primarily based on each entity’s total assets.and revenue,

though we also considered the overall coverage obtained.

For qualitative assessment current year events and any significant risks or management interest including management’s strategy for

the Group.

Based on that assessment, which is broadly consistent with the prior year, we focused our Group audit scope primarily on the audit

work at the parent and four of the largest subsidiary companies in the group, which were subject to an audit of specified account

balances where the extent of our testing was based on our assessment of the risks of material misstatement and of the materiality of

the Group’s operations in each of those entities.

All other subsidiaries were subject to analytical review procedures.

These five entities represent the principal operating companies and account for 98.7% of the Group’s total assets and 90.1% of the

Group’s revenue. They were also selected to provide an appropriate basis for undertaking audit work to address the risks of material

misstatement identified above. Our audit work at the four subsidiaries was executed at levels of component materiality applicable to

each individual entity which were lower than Group materiality and ranged from £4 million to £5.6 million. Parent company materiality

is set out at section 6 above.

As all of the significant components identified are located in the UK, audit work to respond to the risks of material misstatement

identified was performed directly by the group audit engagement team.

14%

Revenue

Net assets

80%

99%

Full audit scope

Speciﬁed audit procedures

Review at group level

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7.2. Our consideration of the control environment

We identified that the following key IT systems were relevant to the audit:

• Sage Intacct, which is the ERP system used across all components of the Group and is used to record underlying transactions within

the Group;

• BQE Core, which is used for recording key customer data and billing in respect of the IPS business;

• Investment NAV, an in-house tool which is used in recording the NAV of the Investment Portfolio.

We involved IT specialists to obtain and understand controls related to these IT systems.

Furthermore, as noted by the Audit and Risk Committee on page 74, the Group’s finance operations (including its control environment)

has been undergoing a programme of change and improvement during the current year. Therefore, considering the evolving nature of

the overall control environment, we concluded that a fully substantive approach was appropriate in all aspects of the audit for the year

ended 31 December 2022.

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7.3. Our consideration of climate-related risks

In planning our audit, we have considered the potential impact of climate change on the Group’s business and its financial statements.

The Group continues to develop its assessment of the potential impacts of environmental, social and governance (“ESG”) related

risks, including climate change, as outlined on page 50. As a part of our audit, we have obtained management’s climate-related risk

assessment documentation and held discussions with the Group ESG Manager to understand the process of identifying climate-related

risks, the determination of mitigating actions and the impact on the Group’s financial statements. We also reviewed management’s

financial statement disclosures on the impact of climate-related risks on the financial statements (as disclosed on page 117) and

evaluated whether the disclosure was appropriate.

We performed our own qualitative risk assessment of the potential impact of climate change on the Group’s account balances and

classes of transactions, including an assessment of how the potential impacts of climate change affect the financial statements, in

particular judgements and estimates made in the recognition and measurement of assets and liabilities and related disclosures. These

risk assessment procedures did not identify any additional risks of material misstatement.

In addition, we involved our TCFD specialists to assist us in assessing whether the voluntary TCFD disclosures provided were consistent

with the 11 TCFD recommendations. We also considered whether the TCFD disclosures provided were consistent with knowledge of the
Group obtained during the audit.

8. Other information

The other information comprises the information included in the annual report, other than the financial statements and our auditor’s

report thereon. The directors are responsible for the other information contained within the annual report.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our

report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent

with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated.

If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to

a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a

material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

9. Responsibilities of directors

As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the financial

statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is
necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Group’s and the Company’s ability to continue as a

going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the

directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.

10. Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material

misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a

high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material

misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,

they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/

auditorsresponsibilities. This description forms part of our auditor’s report.

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11.

Extent to which the audit was considered capable of detecting irregularities,
including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our

responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our

procedures are capable of detecting irregularities, including fraud is detailed below.

11.1.

Identifying and assessing potential risks related to irregularities

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws

and regulations, we considered the following:

• the nature of the industry and sector, control environment and business performance including the design of the Group’s

remuneration policies, key drivers for directors’ remuneration, bonus levels and performance targets;

• results of our enquiries of management, internal audit, and the Audit and Risk Committee about their own identification and

assessment of the risks of irregularities;

• any matters we identified having obtained and reviewed the Group’s documentation of their policies and procedures relating to:

– identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-

compliance;

– detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;

– the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;

• the matters discussed among the audit engagement team and relevant internal specialists, including tax, valuations, pensions and IT

specialists regarding how and where fraud might occur in the financial statements and any potential indicators of fraud.

As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and

identified the greatest potential for fraud in the following areas:

• valuation and existence of investments; and

• occurrence, accuracy and cut-off of independent professional service fees.

In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management

override.

We also obtained an understanding of the legal and regulatory frameworks that the Group operates in, focusing on provisions of those

laws and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The

key laws and regulations we considered in this context included UK Companies Act, Listing Rules, pensions legislation, tax legislation

and matters regulated by the Financial Conduct Authority (the Group’s lead regulator).

In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but

compliance with which may be fundamental to the Group’s ability to operate or to avoid a material penalty. These included the Group’s

operating licence and regulatory solvency requirements.

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11.2. Audit response to risks identified

As a result of performing the above, we identified (i) valuation and existence of investments and (ii) occurrence, accuracy and cut-off

of independent professional services fees as key audit matters related to the potential risk of fraud. The key audit matters section of

our report explains the matters in more detail and also describes the specific procedures we performed in response to those key audit

matters.

In addition to the above, our procedures to respond to risks identified included the following:

• reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of

relevant laws and regulations described as having a direct effect on the financial statements;

• enquiring of management, the Audit and Risk Committee and in-house legal counsel concerning actual and potential litigation and

claims;

• enquiring of management and the Audit and Risk Committee regarding their identification and assessment of risks of irregularities,

including those that are specific to the entity’s business sector;

• performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material

misstatement due to fraud;

• reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing correspondence

with HMRC, FCA and other regulators globally; and

• in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other

adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and

evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members including

internal specialists, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

12. Opinions on other matters prescribed by the Companies Act 2006

In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the

Companies Act 2006.

In our opinion, based on the work undertaken in the course of the audit:

• the information given in the strategic report and the directors’ report for the financial year for which the financial statements

are prepared is consistent with the financial statements; and

• the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.

In the light of the knowledge and understanding of the Group and the Company and their environment obtained in the course

of the audit, we have not identified any material misstatements in the strategic report or the directors’ report.

108 lawdebenture.com

Independent auditor’s report continued

13. Corporate Governance Statement

The Listing Rules require us to review the directors’ statement in relation to going concern, longer-term viability and that part of

the Corporate Governance Statement relating to the Group’s compliance with the provisions of the UK Corporate Governance Code

specified for our review.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate

Governance Statement is materially consistent with the financial statements and our knowledge obtained during the audit:

• the directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any

material uncertainties identified set out on page 67;

• the directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and why the period

is appropriate set out on page 44;

• the directors’ statement on fair, balanced and understandable set out on page 67;

• the board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 68;

• the section of the annual report that describes the review of effectiveness of risk management and internal control systems

set out on page 68; and

• the section describing the work of the Audit and Risk Committee set out on pages 72 to 74.

14. Matters on which we are required to report by exception

14.1. Adequacy of explanations received and accounting records

Under the Companies Act 2006 we are required to report to you if, in our opinion:

• we have not received all the information and explanations we require for our audit; or

• adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from

branches not visited by us; or

• the Company financial statements are not in agreement with the accounting records and returns.

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We have nothing to report in respect of these matters.

14.2. Directors’ remuneration

Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors’ remuneration have not

been made or the part of the directors’ remuneration report to be audited is not in agreement with the accounting records and returns.

We have nothing to report in respect of these matters.

109

F I N A N C I A L S T A T E M E N T S

Independent auditor’s report continued

15. Other matters which we are required to address

15.1. Auditor tenure

Following the recommendation of the Audit and Risk Committee, we were appointed by the Audit and Risk Committee on 1 October 2021

to audit the financial statements for the year ending 31 December 2021 and subsequent financial periods. The period of total uninterrupted

engagement including previous renewals and reappointments of the firm is 2 years, covering the years ending 31 December 2021 to

31 December 2022.

15.2. Consistency of the audit report with the additional report to the Audit and Risk Committee

Our audit opinion is consistent with the additional report to the Audit and Risk Committee we are required to provide in accordance

with ISAs (UK).

16. Use of our report

This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.

Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to

them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility

to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we

have formed.

As required by the Financial Conduct Authority (FCA) Disclosure Guidance and Transparency Rule (DTR) 4.1.14R, these financial

statements form part of the European Single Electronic Format (ESEF) prepared Annual Financial Report filed on the National Storage

Mechanism of the UK FCA in accordance with the ESEF Regulatory Technical Standard (‘ESEF RTS’). This auditor’s report provides no

assurance over whether the annual financial report has been prepared using the single electronic format specified in the ESEF RTS.

Andrew Partridge (Senior statutory auditor)
For and on behalf of Deloitte LLP

Statutory Auditor

Glasgow, United Kingdom

27 February 2023

110 lawdebenture.com

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111

F I N A N C I A L S T A T E M E N T S

Group income statement

as at 31 December 2022

UK dividends

UK special dividends

Overseas dividends

Total dividend income

Interest income

Independent professional services fees

Other income

Total income

Net (loss)/gain on investments held

value through profit or loss

Total income and capital gains/(losses)

Cost of sales

Administrative expenses

Operating profit/(loss)

Finance costs

Interest payable

Profit/(loss) before taxation

Taxation

Profit/(loss) for the year

Notes

Revenue
£000

29,837

1,176

3,451

Capital
£000

2022

Total
£000

Revenue
£000

Capital
£000

—

29,837

21,426

3,442

—

4,618

3,451

250

4,583

34,464

3,442

37,906

26,259

266

53,452

847

—

266

—

53,452

49,513

847

551

89,029

3,442

92,471

76,323

2021

Total
£000

21,426

250

4,583

26,259

—

49,513

551

76,323

—

(126,234)

—

121,170

89,029

(122,792)

(33,763)

76,323

121,170

197,493

(8,408)

—

(8,408)

(8,037)

—

(8,037)

(34,332)

(1,908)

(36,240)

(31,680)

(2,456)

(34,136)

46,289

(124,700)

(78,411)

36,606

118,714

155,320

(1,636)

(4,908)

(6,544)

(1,319)

(3,958)

(5,277)

44,653

(129,608)

(84,955)

35,287

114,756

150,043

(1,392)

—

(1,392)

(1,210)

—

(1,210)

43,261

(129,608)

(86,347)

34,077

114,756

148,833

Return per ordinary share (pence)

Diluted return per ordinary share (pence)

34.44

34.42

(103.17)

(103.14)

(68.73)

(68.72)

28.09

28.08

94.60

94.57

122.69

122.66

Group statement of comprehensive income

as at 31 December 2022

GROUP

Revenue
£000

Capital
£000

2022

Total
£000

Revenue
£000

Capital
£000

2021

Total
£000

Profit/(loss) for the period

43,261

(129,608)

(86,347)

34,077

114,756

148,833

Foreign exchange on translation of foreign operations

Pension actuarial (losses)/gains

Taxation on pension

Other comprehensive income/(loss) for year

—

(300)

(243)

199

—

199

(300)

—

654

8,500

(1,615)

6,885

—

654

8,500

(1,615)

7,539

Total comprehensive income/(loss) for the year

43,018

(129,409)

(86,391)

40,962

115,410

156,372

All items stated in the statement of comprehensive income will be subsequently classified when specific conditions are met.

112 lawdebenture.com

Statement of financial position

as at 31 December 2022

Assets

Non-current assets

Goodwill

Property, plant and equipment

Right-of-use assets

Other intangible assets

Investments held at fair value through profit or loss

Investments in subsidiary undertakings

Retirement benefit asset

Total non-current assets

Current assets

Trade and other receivables

Contract assets

Cash and cash equivalents

Total current assets

Total assets

Current liabilities

Amounts owed to subsidiary undertakings

Trade and other payables

Lease liability

Corporation tax payable

Other taxation including social security

Contract liabilities

Total current liabilities

Non-current liabilities

Long-term borrowings

Contract liabilities

Deferred tax liability

Lease liability

Total non-current liabilities

Total net assets

Equity

Called up share capital

Share premium

Own shares

Capital redemption

Translation reserve

Capital reserves

Retained earnings

Total equity

Notes

2022
£000

19,036

1,796

5,040

3,417

GROUP

2021
£000

COMPANY

2022
£000

2021
£000

18,973

1,974

5,542

3,516

—

891,005

992,478

890,905

992,378

—

61,368

61,283

7,400

6,577

—

927,694

1,029,060

952,289

1,053,677

19,697

7,182

20,466

6,611

515

769

57,581

583

49,559

35,880

29,825

25,507

76,438

62,957

31,109

83,671

1,004,132

1,092,017

983,398

1,137,348

—

19,815

991

1,256

2,892

5,223

—

29,329

287

925

1,543

5,620

19,603

10,046

—

1,860

87,631

13,447

—

850

30,177

37,704

31,516

101,962

163,909

164,245

124,389

124,586

3,976

1,344

5,659

4,054

1,060

6,117

125

—

125

—

174,888

175,476

124,514

124,711

799,067

878,837

827,368

910,675

6,407

83,022

(3,128)

6,145

41,865

(3,215)

2,855

2,656

6,407

6,145

83,022

41,865

—

662,512

789,423

708,382

835,293

47,391

41,955

29,549

27,364

799,067

878,837

827,368

910,675

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Total equity pence per share

625.81

717.86

As permitted by Section 408 of the Companies Act 2006, the Company has not presented its own income statement, however its loss

for the year was £89,312,000 (2021: profit £151,510,000). Approved and authorised for issue by the Board on 27 February 2023 and signed

on its behalf by:

R. Hingley, Chairman
The Law Debenture Corporation p.l.c. registered number 00030397.

| D. Jackson, Chief Executive Officer

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Group statement of changes in equity

as at 31 December 2022

GROUP

Called
up share
capital
£000

Share
premium
£000

Own
shares
£000

Capital
redemption
£000

Translation
reserve
£000

Capital
reserves
£000

Retained
earnings
£000

Total
£000

Balance at 1 January 2022

6,145

41,865

(3,215)

Profit/(loss) for the period

Foreign exchange

Actuarial gain on pension

scheme (net of tax)

Total comprehensive loss

for the period

Issue of shares

—

262

41,157

Dividend relating to 2021

Dividend relating to 2022

—

2,656

789,423

41,955

878,837

—

(129,608)

43,261

(86,347)

199

2,697

426

3,322

—

(243)

199

(126,911)

43,444

(83,268)

—

41,506

(10,396)

(27,612)

Total equity at

31 December 2022

GROUP

6,407

83,022

(3,128)

2,855

662,512

47,391

799,067

Called
up share
capital
£000

Share
premium
£000

Own
shares
£000

Capital
redemption
£000

Translation
reserve
£000

Capital
reserves
£000

Retained
earnings
£000

Total
£000

Balance at 1 January 2021

5,923

9,277

(1,461)

Profit/(loss) for the period

Foreign exchange

Actuarial gain on pension

scheme (net of tax)

Total comprehensive loss

for the period

Issue of shares

Movement in own shares

Dividend relating to 2020

Dividend relating to 2021

Total equity at

31 December 2021

—

222

32,588

—

(1,754)

—

2,002

674,591

36,654

726,994

—

114,756

34,077

148,833

654

(738)

(8)

—

6,885

654

114,832

40,224

155,710

—

(9,614)

32,810

(1,754)

(9,614)

(25,309)

6,145

41,865

(3,215)

2,656

789,423

41,955

878,837

Capital reserves comprises realised and unrealised gains on investments held at fair value through profit or loss (see note 18).

Please refer to note 8 for details of dividends paid.

114

lawdebenture.com

Statement of changes in equity

as at 31 December 2022

COMPANY

Balance at 1 January 2022

Profit/(loss) for the period

Foreign exchange

Total comprehensive loss

for the period

Issue of shares

Dividend relating to 2021

Dividend relating to 2022

Total equity at

31 December 2022

COMPANY

Balance at 1 January 2021

Profit/(loss) for the period

Total comprehensive profit

for the period

Issue of shares

Dividend relating to 2020

Dividend relating to 2021

Total equity at

31 December 2021

Share
capital
£000

Share
premium
£000

Capital
redemption
£000

Capital
reserves
£000

Retained
earnings
£000

Total
£000

6,145

41,865

—

262

—

41,157

—

835,293

27,364

910,675

(129,608)

40,296

(89,312)

2,697

(103)

2,594

(126,911)

40,193

(86,718)

—

41,419

(10,396)

(27,612)

6,407

83,022

708,382

29,549

827,368

Share
capital
£000

5,923

—

9,277

—

222

32,588

—

6,145

41,865

Share
premium
£000

Capital
redemption
£000

Capital
reserves
£000

Retained
earnings
£000

Total
£000

—

733,189

12,881

761,278

114,756

36,754

151,510

114,756

36,754

151,510

—

32,810

(9,614)

(12,652)

(12,657)

(25,309)

835,293

27,364

910,675

Capital reserves comprises realised and unrealised gains on investments held at fair value through profit or loss (see note 18).

Please refer to note 8 for details of dividends paid.

115

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F I N A N C I A L S T A T E M E N T S

Cash Flow Statement

for the year ended 31 December 2022

Cash flows from operating activities

(before dividends received) and taxation paid

2,249

4,422

Notes

2022
£000

GROUP

2021
£000

Cash dividends received

Taxation paid

Cash generated from operating activities

Investing activities

Acquisition of property, plant and equipment

Acquisition of right of use assets

Expenditure on intangible assets

Cash consideration transferred in relation to acquisition

Purchase of investments (less cost of acquisition)

Sale of investments

Cash flow from investing activities

Financing activities

Interest paid

Dividends paid

Payment of lease liability

COMPANY

2021
£000

(1,534)

42,500

—

2022
£000

(6,157)

47,136

—

37,498

27,550

(307)

(700)

39,047

31,665

40,979

40,966

(151)

(428)

(639)

(1,075)

—

(18,214)

—

(170,653)

(200,096)

(170,653)

(200,096)

145,892

140,440

145,892

140,327

(25,979)

(78,945)

(24,761)

(59,769)

(6,544)

(5,277)

(6,653)

(5,567)

(37,167)

(34,923)

(37,167)

(34,923)

(505)

(371)

—

Proceeds of increase in share capital

41,419

32,810

41,419

32,810

Proceeds of issuance of long-term borrowings

Purchase of own shares

Amounts receivable from intercompany

Intercompany funding

Net cash flow from financing activities

Net increase/(decrease) in cash and cash equivalents

—

(2,710)

10,358

50,000

(1,754)

—

50,000

—

(23,207)

(55,935)

40,485

(14,494)

11,114

25,933

12,318

(6,488)

1,724

(6,485)

Cash and cash equivalents at beginning of period

35,880

41,762

25,507

32,098

Foreign exchange gains/(losses) on cash and cash equivalents

3,321

606

2,594

(106)

Cash and cash equivalents at end of period

49,559

35,880

29,825

25,507

116 lawdebenture.com

Notes to the accounts

for the year end 31 December 2022

1. Summary of significant accounting policies

General information

The Law Debenture Corporation p.l.c. is a public company limited by shares incorporated in the United Kingdom under the Companies
Act 2006 and is registered in England and Wales. These financial statements are presented in sterling, which is the currency of
the primary economic environment in which the Group operates and are rounded to the nearest thousand. Foreign operations
are included. The address of the registered office is given on page 154. The Group’s operations and its principal activities are as an
investment trust and the provider of independent professional services.

Guarantees issued to subsidiaries
For the year ending 31 December 2022 the following subsidiaries of the Company were entitled to exemption from audit under s479A
of the Companies Act 2006 relating to subsidiary companies. The Company has given a statement of guarantee under s479C of the
Companies Act 2006, whereby the Company guarantees all outstanding liabilities to which the respective subsidiary companies are

subject to as at 31 December 2022:

Law Debenture Corporation (Deutschland) Limited

Law Debenture Governance Services Limited

LDC (NCS) Limited

Law Debenture Intermediary Corporation p.l.c.

Country of incorporation

Registered number

04019781

07466833

07384180

01525148

In addition to this, the Company has provided a Letter of Support to the Directors of certain Subsidiaries to confirm its continued
commitment to the subsidiaries.

Basis of preparation

The financial statements of The Law Debenture Corporation p.l.c. and the Group have been prepared in accordance with International
Accounting Standards (IASs) in conformity with the requirements of the Companies Act 2006 and in accordance with International
Financial Reporting Standards (IFRS) as adopted and endorsed by the UK.

The accounts have been prepared under the historical cost basis of accounting, modified to include the revaluation of investment at
fair value.

Climate risks have been considered in the preparation of these financial statements. Following a review of the potential impact of
climate risk on the Company’s financial statements, the Directors are satisfied there is no adjustment required to the carrying value of
assets and liabilities.

Where presentational guidance set out in the Statement of Recommended Practice: Financial Statements of Investment Trust
Companies and Venture Capital Trusts (issued in July 2022) (SORP) is consistent with the requirements of IFRS, the Directors have
sought to prepare the financial statements on a basis compliant with the recommendations of the SORP.

Going concern

The financial statements of The Law Debenture Corporation p.l.c. and the Group have been prepared in accordance with International
Financial Reporting Standards (IFRS).

Where presentational guidance set out in the Statement of Recommended Practice Financial Statements of Investment Trust
Companies and Venture Capital Trusts issued November 2014 and updated in October 2019 (SORP) is consistent with the requirements
of IFRS, the Directors have sought to prepare the financial statements on a basis compliant with the recommendations of the SORP.

The financial statements have been prepared on a going concern basis and under the historical cost basis of accounting, modified to
include the revaluation of investment at fair value.

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 Company.

The assets of the Company 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 Company 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.

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Notes to the accounts continued

for the year end 31 December 2022

1. Summary of significant accounting policies continued

Adoption of new and revised IFRS Standards

The International Accounting Standards Board and IFRS Interpretations Committee (IFRS IC) have issued a number of new accounting

standards, interpretations, and amendments to existing standards and interpretations. There are no IFRSs or IFRS IC interpretations that

are not yet effective that would be expected to have a material impact on the Group.

Fair value

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market

participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation

technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability

if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair

value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except

for share-based payment transactions that are within the scope of IFRS 2, leasing transactions that are within the scope of IFRS 16, and

measurements that have some similarities to fair value but are not fair value, such as net realisable value in IAS 2 or value in use in IAS 36.

Presentation of income statement and statement of comprehensive income

In order to better reflect the activities of an investment trust company and in accordance with the SORP, supplementary information

which analyses the income statement and statement of comprehensive income between items of a revenue and capital nature has

been presented. Additionally, the net revenue is the measure the Directors believe appropriate in assessing the Group’s compliance

with certain requirements set out in Sections 1158-1159 of the Corporation Tax Act 2010.

The allocation of investment trust finance costs and investment management fees between the revenue and the capital columns in the

income statement reflects the expected split of future returns between income and capital. The proportional split is:

• Revenue 25% (2021: 25%)

• Capital 75% (2021: 75%)

Segment reporting

Operating segments are components of an entity about which separate financial information is available that is evaluated regularly by

the Directors in deciding how to allocate resources and in assessing performance. The Group comprises two operating segments; the

Investment Portfolio and independent professional services (IPS) business. This is consistent with internal reporting. We believe these

are distinctive in nature due to their inherent characteristics. The IPS business derives its revenue from providing services to clients. On

the contrary, the Investment Portfolio derives dividend income from investments held. Additionally, it aims to create value for investors

through long-term capital growth. It is these characteristics that we believe distinguishes the group into two clear segments.

Foreign currencies

Transactions recorded in foreign currencies are translated into sterling at the exchange rate ruling on the date of the transaction.

Assets and liabilities denominated in foreign currencies at the reporting date are translated into sterling at the exchange rate ruling at

that date. Gains and losses on translation are included in profit or loss for the period, however exchange gains or losses on investments

held at fair value through profit or loss are included as part of their fair value gain or loss.

The assets and liabilities of overseas subsidiaries are translated at exchange rates prevailing on the reporting date. Income and expenses

of overseas subsidiaries are translated at the average exchange rates for the period. Exchange differences arising from the translation

of net investment in foreign subsidiaries are recognised in the statement of comprehensive income and transferred to the Group’s

translation reserve.

Revenue recognition

The Group generates revenue from the Investment Trust and the IPS business. Revenues are largely generated in the form of dividend

income from the Investment Portfolio of the Investment Trust, and also from delivering professional services to clients from the individual

IPS business comprising, Company Secretarial Services, Corporate Trust, Pensions and Pegasus, Safecall and Service of Process.

Investment Trust

Dividend Income
Dividend income from investments is recognised when the Company’s right to receive payment have been established, typically

on the ex-dividend date in accordance with the Statement of Recommended Practice: Financial Statements of Investment Trust

Companies and Venture Capital Trusts (issued in April 2021) (SORP). Dividend income is recognised as revenue, except where, in the

opinion of the Directors, its nature indicates it should be recognised as capital.

118 lawdebenture.com

Notes to the accounts continued

for the year end 31 December 2022

1. Summary of significant accounting policies continued

Dividend income is accounted for on the basis of income actually receivable, without adjustment for any tax credit attaching to the

dividends, with the exception of overseas dividends which are shown gross of withholding tax.

Where the Company has elected to receive its dividends in the form of additional shares rather than in cash (scrip dividends), the

amount of the cash dividend foregone is recognised as income.

Any excess in the value of the shares received over the amount of the cash dividend foregone is recognised in capital.

Dividend income from investments is recognised when the shareholders’ rights to receive payment have been established.

Independent Professional Services
The Group recognises revenue in accordance with IFRS 15 Revenue from Contracts with Customers and is recognised in any period

based on the delivery of performance obligations and an assessment of when control is transferred to the customer. Revenue

excludes value added tax and includes recoverable expenses incurred which are recoverable from customers. Recoverable expenses

include disbursements expected to be recovered from customers.

There are lots of different types of services offered within each business, however, performance obligations tend to be consistent for

each type of fee charged.

The transaction price is the total amount of consideration to which the Group expects to be entitled to in exchange for transferring

goods or services to a customer. The amount of consideration the Group receives can vary depending on the nature of the service and

customer.

The transaction price can be based on one or more principal pricing mechanisms:

• Time at a contracted charge out rate and recoverable expenses

• Annual fixed fees

• Acceptance and appointment fees

• Special fees / out of scope fee

Revenue is recognised when the Group has satisfied performance obligations by transferring control of services to customers.

Progress is measured in satisfying the performance obligations as follows:

• For time-based arrangements, the output method is used to measure progress and the practical expedient within IFRS 15 is

utilised, allowing revenue to be recognised at the amount which the Group has the right to invoice its customers, since that amount

corresponds directly with the value to the customer of the Group’s performance completed to date.

• Annual fees – For certain contracts, the substance of these performance obligations is to “stand-ready” to serve the customer
and is satisfied over time where value is transferred to the customer over time as the core services are delivered. The output

method is used to measure progress here based on time-lapsed and is recognised on a straight-line basis. For other contracts, the

performance obligations are satisfied throughout the period as the services are provided and revenue is recognised based on time –

elapsed, on a straight-line basis.

• Acceptance and appointment fees – There are contracts where separate performance obligations relating to acceptance fees have
been identified where these are capable of being distinct and the pattern of delivery differs to the remainder of the performance

obligation(s) within the contract. Revenue is recognised at a point in time, for example, upon creation of the Trust or Structure, which

accurately reflects the benefits received by the customer.

• Special fees / out of scope fees – typically relate to additional services provided outside of the scope of the annual contractual
agreements. These services are capable of being distinct and are considered a separate performance obligation. Revenue is

recognised at a point in time, i.e., once the service has been delivered to the client, reflecting the incremental benefits transferred to

the customer.

N
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The Group typically invoice on a monthly, quarterly, or annual basis and payment terms can vary depending on the nature of the

services provided. Where revenue is invoiced in advance of fulfilling the performance obligation, it is deferred, and a contract liability

is recognised. Only when the performance obligations have been satisfied is the revenue released and recognised in the Income

Statement.

For certain contracts with customers, there is a provision for annual transaction price increases, generally in line with local inflation.

These increases do not change the performance obligations, and the increased prices are applied prospectively when revenue is

recognised.

The Group has no material exposure to returns or refunds, nor does it have warranties or other related obligations.

119

Notes to the accounts continued

for the year end 31 December 2022

1. Summary of significant accounting policies continued

Property, plant and equipment and right-of-use assets

All property, plant and equipment are stated at historical cost less depreciation. Historical cost includes expenditure that is directly

attributable to the acquisition of the item. Depreciation is calculated using the straight-line method to allocate the cost over the assets’

estimated useful lives.

Right-of-use assets are measured at cost less accumulated depreciation. The carrying amount is adjusted for any re-measurement of

the lease liability.

Office improvements

over the remaining lease period – rental terms are for fixed periods of between 1 to 10 years

Furniture and equipment

3-10 years

Right-of-use assets

over the remaining lease period – rental terms are for fixed periods of between 1 to 10 years

Business combinations

Acquisitions of subsidiaries and businesses are accounted for using the acquisition method as at the acquisition date, which

is the date on which control is transferred to the Group. The consideration transferred in the acquisition is measured at the

aggregate of fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments

issued by the Group in exchange for control of the acquiree. Any goodwill that arises is tested annually for impairment (refer

to Goodwill section below). Any gain on a bargain purchase is recognised in profit or loss immediately. Acquisition-related

costs are recognised in profit or loss as incurred. Where applicable, any contingent consideration payable is measured at fair

value at the acquisition date. Subsequent changes in fair values are adjusted against the cost of acquisition where they qualify

as measurement period adjustments (which is subject to a maximum of one year). Changes in the fair value of contingent

consideration classified as equity are not recognised.

The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS3

‘Business Combinations’ are recognised at their fair value at the acquisition date, except where a different treatment is

mandated by another standard.

Intangible assets

Computer software
Computer software is capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs

are amortised on a straight-line basis over their estimated useful lives of between three and five years.

IT project costs
IT project costs have been capitalised that relate to the development of new internal software scheduled to be launched in 2022.

It will be amortised on a straight-line basis on the commencement of its use, over the useful economic life of three years.

Goodwill
Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value of

the identifiable assets and liabilities of subsidiaries and businesses at the date of acquisition. Goodwill is initially recognised as

an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill which is recognised

as an asset is tested annually for impairment. An impairment loss is recognised if the carrying amount of an asset or cash-
generating unit (CGU) exceeds its recoverable amount. Any impairment would be recognised in profit or loss and is not

subsequently reversed.

Intangible assets acquired in a business combination
Intangible assets acquired in a business combination and recognised separately to goodwill are initially recognised at their fair

value at the acquisition date and have finite useful lives. Following initial recognition, intangible assets are measured at cost less

accumulated amortisation and accumulated impairment losses (where applicable). The Group does not have intangible assets

with indefinite useful lives.

Customer relationships can arise on the acquisition of subsidiaries and businesses and represent the incremental value

expected to be gained as a result of the existing contracts transferred as part of the acquired business. These assets are

amortised over the length of the average length of the related contracts.

Amortisation is recognised in the income statement on a straight-line basis over their estimated useful lives. The estimated

useful lives for Customer Relationships is eight years.

For the newly acquired intangibles relating to business combinations, please see note 12.

120 lawdebenture.com

Notes to the accounts continued

for the year end 31 December 2022

1. Summary of significant accounting policies continued

Impairment of assets

The Group reviews the carrying amounts of its tangible and intangible assets (including goodwill) on a regular basis, and at a

minimum at each reporting date, to assess whether there is any indication of impairment loss, or whenever events or changes in

circumstances indicate that the carrying amount may not be recoverable. If any such indication exists, then the asset’s recoverable

amount is estimated.

An impairment loss is recognised for the amount by which an asset’s carrying amount exceeds its recoverable amount.

Financial instruments

Financial assets and financial liabilities are recognised in the Group’s statement of financial position when the Group becomes a party

to the contractual provisions of the instrument.

Initial recognition
Financial assets and financial liabilities are initially measured at fair value, except for trade receivables that do not have a significant

financing component which are measured at transaction price. Transaction costs that are directly attributable to the acquisition

or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or

loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.

Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are
recognised immediately in profit or loss.

Classification and subsequent measurement

Financial assets
All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value, depending on the

classification of the financial assets.

Investments
Listed and unlisted investments which comprise the investment trust portfolio, have been classified at fair value through profit or

loss. Purchases and sales of listed and unlisted investments are recognised on the date on which the Group commits to purchase or

sell the investment. Investments are initially recognised at fair value and transaction costs are expensed as incurred. Gains and losses

arising from listed and unlisted investments, as assets at fair value through profit or loss, are included in the income statement in

the period in which they arise. The Group has not taken the option to irrevocably designate any equity securities as fair value through

other comprehensive income. Transaction costs are expensed immediately.

The fair value of listed investments is based on quoted market prices at the reporting date. The quoted market price used is the bid

price. The fair value of unlisted investments is determined by the Directors with reference to the International Private Equity and

Venture Capital Valuation (IPEV) guidelines (December 2018).

Gains and losses on investments and direct transaction costs are analysed within the income statement as capital. All other costs of

the investment trust are treated as revenue items.

Trade receivables
Trade receivables are recognised initially at transaction price and subsequently measured at amortised cost less any provision for

impairment and expected credit losses, to ensure that amounts recognised represent the recoverable amount.

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Inter-company
During the period, the Company entered into a master netting agreement in relation to inter-company payables and receivables. The

Company intends to settle the net inter-company amounts with counter-parties in the current period. The Company and each of its

subsidiaries has a legally enforceable right to offset all assets and liabilities due to/from other group companies and intends to settle

all amounts net.

Impairment of financial assets
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 ageing.

The expected loss rates are based on 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.

121

Notes to the accounts continued

for the year end 31 December 2022

1. Summary of significant accounting policies continued

Financial instruments continued

Derecognition of financial assets
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers

the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.

If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred

asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group

retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the

financial asset and also recognises a collateralised borrowing for the proceeds received.

On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount and the sum of

the consideration received and receivable is recognised in profit or loss.

Financial liabilities
Long-term borrowings are recognised initially at fair value, which are generally the proceeds net of transaction costs incurred. The

difference between the proceeds net of transaction costs and the redemption value will continue to be recognised in the income

statement over the term of the borrowings using the effective interest rate method.

All financial liabilities are measured subsequently at amortised cost using the effective interest method.

Amortised cost and effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income

over the relevant period.

The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal

repayments, plus the cumulative amortisation using the effective interest method of any difference between that initial amount

and the maturity amount, adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortised cost of a

financial asset before adjusting for any loss allowance.

Interest income is recognised using the effective interest method for debt instruments measured subsequently at amortised

cost and at FVTOCI. For financial assets other than purchased or originated credit-impaired financial assets, interest income is

calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for financial assets that

have subsequently become credit-impaired (see below). For financial assets that have subsequently become credit-impaired, interest

income is recognised by applying the effective interest rate to the amortised cost of the financial asset.

If, in subsequent reporting periods, the credit risk on the credit-impaired financial instrument improves so that the financial asset is

no longer credit-impaired, interest income is recognised by applying the effective interest rate to the gross carrying amount of the

financial asset.

Interest income is recognised in profit or loss and is included in the ‘interest receivable and similar income’ line item (note 5).

Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire. The

difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised

in profit or loss.

When the Group exchanges with the existing lender one debt instrument into another one with the substantially different terms,

such exchange is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability.

Similarly, the Group accounts for substantial modification of terms of an existing liability or part of it as an extinguishment of the

original financial liability and the recognition of a new liability. It is assumed that the terms are substantially different if the discounted

present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the

original effective interest rate is at least 10 per cent different from the discounted present value of the remaining cash flows of the

original financial liability. If the modification is not substantial, the difference between: (1) the carrying amount of the liability before

the modification; and (2) the present value of the cash flows after modification is recognised in profit or loss as the modification gain

or loss within other gains and losses.

Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held with banks and other short-term highly liquid investments with

original maturities of three months or less, subject to insignificant changes in fair value.

Share capital
Ordinary shares are classified as equity. The ordinary shares of the Company which have been purchased by the Employee

Share Ownership Trust (ESOT) to provide share based payments to employees are valued at cost and deducted from equity.

122 lawdebenture.com

Notes to the accounts continued

for the year end 31 December 2022

1. Summary of significant accounting policies continued

Financial instruments continued

Taxation
Current tax is based on taxable profit for the year. Taxable profit differs from profit as reported in the income statement because

it excludes items of income or expense which are either never taxable or deductible or are taxable or deductible in other

periods. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the

year end date.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of

assets and liabilities and their carrying amounts in the consolidated financial statements.

Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent

that it is probable that taxable profits will be available against which deductible temporary differences can be utilised.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the

Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse

in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each year end date and reduced to the extent that it is no longer

probable that sufficient taxable profits will be available to recover the asset.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is expected to be settled or

the asset is expected to be realised based on tax rates that have been enacted or substantively enacted at the year end date.

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to do so and presented as a net

number on the face of the balance sheet.

Investment in subsidiaries
Investments in subsidiaries are carried at cost less provision for impairment.

Employee benefits

N
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T
A
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M
E
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S

Pension costs
The Group operates a defined benefit pension plan, which was closed to future accrual on 31 December 2016. The cost

of providing benefits under the plan is determined using the projected unit credit method, with independent actuarial

calculations being carried out at each year end date. Actuarial gains and losses are recognised in full in the period in which they

occur through other comprehensive income.

The asset recognised in the statement of financial position in respect of the defined benefit plan is the present value of the

defined benefit obligation at the year end date less the fair value of the plan assets.

In addition the Group operates defined contribution plans, where the cost recognised is the contributions paid in respect of

the year.

Profit share schemes
The Group recognises provisions in respect of its profit share schemes when contractually obliged or when there is a past

practice that has created a constructive obligation.

Trade receivables
Trade receivables are recognised initially at transaction price and subsequently measured at amortised cost less any provision

for impairment and expected credit losses, to ensure that amounts recognised represent the recoverable amount.

Share based plans
The Group issues equity-settled share-based payments to certain employees. whereby the shares are deferred for a three-year

period. Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the

grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the

Group’s estimate of shares that will eventually vest and adjusted for the effects of non-market-based vesting conditions.

The Group also awards share options to executives. In 2021 the Group introduced a long-term performance incentive plan

(LTIP) to executives in addition to annual bonus following the completion of a required service period and is dependent on the

achievement of corporate performance and individual targets. Options are normally exercisable between 3 to 5 years from the

date of grant for nil consideration. Full details of this plan can be found in the Directors’ remuneration report.

123

Notes to the accounts continued

for the year end 31 December 2022

1. Summary of significant accounting policies continued

Reserves

A description of each of the reserves follows:

Share premium
This reserve represents the difference between the issue price of shares and the nominal value of shares at the date of issue,
net of related issue costs.

Capital redemption
This reserve was created on the cancellation and repayment of the Company’s share capital.

Own shares
This represents the cost of shares purchased by the ESOT.

Capital reserves
The following are dealt with through this reserve:

• gains and losses on realisation of investments; and

• changes in fair value investments which are readily convertible to cash.

Retained earnings
Net revenue profits and losses of the Company and its subsidiaries and the fair value costs of share based payments which are
revenue in nature are dealt with in this reserve.

Translation reserve
This reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries.

Leases

The Group determines at contract inception whether an arrangement contains a lease. Under IFRS 16, a contract is, or contains, a lease if
the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration.

The Group leases various office properties. Rental contracts are typically made for fixed periods of 1 to 10 years and lease terms are
negotiated on an individual basis.

All leases are accounted for by recognising a right-of-use asset and a lease liability except for:

• Leases of low value assets (under £5,000); and

• Leases with a duration of 12 months or less.

Lease liabilities are initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, the Group’s incremental borrowing
rate is used. Generally, the Group uses its incremental borrowing rate as the Group’s borrowing rate which was updated during the
year following the issuance of a further two debentures, lowering the rate to 3.966% (previously 4.589%). Where there has been a lease
modification and/or a new lease arrangement entered into, this rate has been applied.

The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payments made. It is
remeasured when there is a change to future lease payments arising from a change in an index rate, a change in the estimate of
the amount expected to be payable under the residual value guarantee, or as appropriate, changes in the assessment of whether a
purchase or extension option is reasonably certain to be exercised or a termination option is reasonably certain not to be exercised.

Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:

• Lease payments made at or before commencement of the lease;

• Initial direct costs incurred; and

• The amount of any provision recognised where the Group is contractually required to dismantle, remove or restore the leased asset

(typically leasehold dilapidations).

When the Group revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee extension or
termination option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised
term, which are discounted using a revised discount rate. The carrying value of lease liabilities is similarly revised when the variable
element of future lease payments dependent on a rate or index is revised, except the discount rate remains unchanged. In both cases
an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised
over the remaining (revised) lease term. If the carrying amount of the right-of-use asset is adjusted to zero, any further reduction is
recognised in profit or loss.

Further detail on leases is provided in note 22 of the accounts.

124 lawdebenture.com

Notes to the accounts continued

for the year end 31 December 2022

1. Summary of significant accounting policies continued

Dividend distribution

Dividends are recognised when they become legally payable. In the case of interim dividends to equity shareholders, this is when paid.

In the case of final dividends, this is when approved by the shareholders.

Critical accounting judgments and key sources of estimation uncertainty

The preparation of the financial statements requires the exercise of judgement both in application of accounting policies which are set

out below and in the selection of assumptions used in the calculation of estimates. These estimates and judgements are reviewed on

an ongoing basis and are continually evaluated based on historical experience and other factors. However, actual results may differ from

these estimates.

The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting period that may have the

most significant effect on the amounts recognised in the consolidated financial statements are discussed below.

Critical accounting judgements

The following are the critical judgements, apart from those involving estimations (which are presented separately below), that the

directors have made in the process of applying the Group’s accounting policies and that have the most significant effect on the

amounts recognised in financial statements.

Basis of consolidation
The consolidated financial statements incorporate the financial statements of The Law Debenture Corporation p.l.c. and entities

controlled by the Company (its subsidiaries and businesses) made up to the end of the financial period. Management has not

applied the IFRS 10, ‘Consolidated Financial Statements’ investment entity exemption available and therefore the financial

statements of the Law Debenture Corporation p.l.c. and its subsidiaries continue to be consolidated.

The subsidiaries of the Group comprise the IPS trading companies and the IPS business has historically, and continues to be,

managed, and operated as an integrated business within the Group. In addition to the Investment Trust, The Law Debenture

Corporation p.l.c Board plays an active role in the oversight of the IPS business.

A judgement has been made by Management that the Company does not meet the criteria for the investment entity exemption,

on the basis that the IPS business is viewed by management and the Board as a distinct trading group, rather than as a portfolio

investment for the Company. This view is consistent with that held in previous reporting periods and there have been no material

changes to the Group or its operations during the current reporting period.

The company controls an investment if all three of the following elements are present: power over the investee, exposure to

variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is

reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.

The assets, liabilities and contingent liabilities of subsidiaries and businesses are measured at their fair values at the date of

acquisition. Any excess consideration over the fair values of the identifiable net assets acquired is recognised as goodwill.

Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. The

financial statements of subsidiaries are adjusted, where necessary, to ensure the accounting policies used are consistent with

those adopted by the Group.

Key sources of estimation uncertainty

Retirement benefit obligations
The Company’s retirement benefit obligations are covered in note 23. The calculation of retirement benefit obligations is

dependent on material key assumptions including discount rates, mortality rates, inflation rates and national average earnings

inflation. The sensitivity to changes in assumptions and conditions which are significant to the calculation of the asset have been

considered and an illustration of their potential impact is included within note 23.

The cost of providing benefits under the plan is determined using the projected unit credit method, with independent actuarial

calculations being carried out at each year end date. Actuarial gains and losses are recognised in full in the period in which they

occur through other comprehensive income. The asset recognised in the statement of financial position in respect of the defined

benefit plan is the present value of the defined benefit obligation at the year end date less the fair value of the plan assets.

Impairment of goodwill

At each reporting period an assessment is performed in order to determine whether there are any goodwill impairment indicators.

This assessment considers the performance of the IPS business and any significant changes to the markets in which we operate and

involves an estimation of the expected value in use of the assets (or cash generating units (CGU) to which the asset relates).

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E
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125

Notes to the accounts continued

for the year end 31 December 2022

1. Summary of significant accounting policies continued

Key sources of estimation uncertainty continued

Impairment of goodwill continued

The value in use calculation involves an estimation of future cash flows and the selection of appropriate discount rates, both of which

involve considerable judgement. The future cash flows are derived from latest approved forecasts, with the key assumptions being

revenue growth and margins. No additional specific adjustments have been made to the cash flows used in assessing the value in use

of assets. Discount rates are calculated with reference to the the Group’s pre-tax weighted average cost of capital.

There continues to be headroom across all CGUs and as detailed in note 10, sufficient headroom remains even when reasonably

changes to discount and growth rates are applied. However, a high degree of judgement remains in estimating future cash flows.

No impairment indicators were noted in the year ended 31 December 2022.

IPS Valuation

The valuation of the IPS business is an area which requires judgment and estimation. This is discussed in depth on pages 35 and 36.

PwC are employed to provide external advice relating to the multiple used in the valuation of this (i.e. multiple applied to EBITDA),

which is based on comparable companies. This is then cross-checked by management using a discounted cash flow model.

2. Net capital gain/(loss) on investments

Realised gains based on historical cost

Amounts recognised as unreaslised in previous years

Realised gains based on carrying value at previous year end date

Unreaslised (loss)/gain on investments

Net capital gain/(loss) on investments

3. Administrative expenses

Administrative expenses include:

Salaries and Directors’ fees

Social security costs

Other pension costs

Investment management fee*

Depreciation – property, plant and equipment

Depreciation – right-of-use assets

Amortisation – intangible assets

Interest on lease liability

Foreign exchange

Auditors’ remuneration

Other property costs

IT infrastructure

Business development

Professional fees

Other expenses

Administrative expenses

2022
£000

51,984

(36,288)

15,696

(141,930)

(126,234)

2021
£000

55,668

(35,638)

20,030

101,140

121,170

2022
£000

2021
£000

20,137

2,112

1,746

23,995

566

328

931

675

294

660

801

1,163

250

1,156

3,488

34,332

18,369

2,103

1,262

21,734

569

220

858

490

297

405

820

1,326

207

1,663

3,065

31,680

* 25% of the management fee is charged to revenue, and 75% to capital reserves, to better reflect the expected split of future returns between income and capital. Further

details are given in note 1 on page 118.

126 lawdebenture.com

Notes to the accounts continued

for the year end 31 December 2022

3. Administrative expenses

During the year, the Group employed an average of 253 staff (2021: 222). All staff are engaged in the provision of independent

professional services. The Company has no employees.

Details of the terms of the investment management agreement are provided on page 33 of the strategic report.

Administrative expenses charged to capital are transaction costs and foreign exchange differences on the purchase of investments held

at fair value through profit or loss.

A more detailed analysis of the auditors’ remuneration on a worldwide basis is provided below:

Audit services

– fees payable to the Group’s auditors for the audit of its financial statements

– fees payable for the audit of the accounts for subsidiaries of the Company

– audit related regulatory

2022
£000

239

356

660

2021
£000

292

405

A description of the work of the Audit and Risk Committee is set out in the Audit and Risk Committee report on pages 72 to 74 and
includes an explanation of how auditor objectivity and independence is safeguarded when non-audit services are provided by the auditors.

4. Remuneration of Directors (key management personnel)

The remuneration of the Directors, who are the key management personnel of the Group, comprises the following:

Short-term benefits including fees in respect of Directors

Deferred share bonus scheme

Details for each individual Director are shown in the remuneration report on pages 76 to 98.

5. Interest

Interest Income

Interest on bank deposits

Returns on money market funds

Interest Payable

Interest on long-term debt – revenue

Interest on long-term debt – capital

Total

Net interest payable

2022
£000

1,300

110

1,410

2022
£000

111

155

266

N
A
N
C

A
L

S
T
A
T
E
M
E
N
T
S

2021
£000

1,257

1,275

2021
£000

—

(1,636)

(4,908)

(6,544)

(1,319)

(3,958)

(5,277)

(6,278)

(5,277)

127

Notes to the accounts continued

for the year end 31 December 2022

6. Segment analysis

Investment Portfolio

Independent
Professional Services

Total

31 December
2022
£000

31 December
2021
£000

31 December
2022
£000

31 December
2021
£000

31 December
2022
£000

31 December
2021
£000

34,464

26,259

—

34,464

26,259

—

34,464

26,259

847

(125)

(3,522)

31,664

(1,432)

30,232

—

551

(110)

(3,434)

23,266

(1,319)

21,947

—

13,292

25,792

14,368

53,452

—

(8,283)

(30,810)

14,359

14,421

(1,392)

13,317

22,981

13,215

49,513

—

(7,927)

(28,246)

13,340

—

13,340

(1,210)

13,292

25,792

14,368

87,916

847

(8,408)

(34,332)

46,023

(1,370)

44,653

(1,392)

13,317

22,981

13,215

75,772

551

(8,037)

(31,680)

36,606

(1,319)

35,287

(1,210)

Revenue

Dividend income

IPS revenue:

Corporate trust

Corporate services

Pensions

Segment revenue

Other income

Cost of sales

Administration costs

Return before interest and tax

Interest payable (net) (note 5)

Return, including profit on

ordinary activities before taxation

Taxation

Return, including profit attributable

to shareholders

30,232

21,947

13,029

12,130

43,261

34,077

Revenue return per ordinary share

(pence)

Assets

Liabilities

Total net assets

24.06

18.09

922,080

1,020,114

(176,377)

745,703

(175,418)

844,696

10.38

84,640

(31,276)

53,364

10.00

71,903

34.44

28.09

1,006,720

1,092,017

(37,762)

(207,653)

34,141

799,067

(213,180)

878,837

The table below illustrates a breakdown of net revenue per department:

Pensions

Corporate Trust

Corporate Services

Total IPS Income

Gross Revenue

31 December
2022
£

31 December
2021
£

31 December
2022
£

Cost of sales

31 December
2021
£

Net Revenue

31 December
2022
£

31 December
2021
£

14,368

13,292

25,792

53,452

13,215

13,317

22,981

49,513

(25)

(2,672)

(5,586)

(8,283)

(155)

(3,546)

(4,226)

(7,927)

14,343

10,620

20,206

45,169

13,060

9,771

18,755

41,586

For the purposes of reporting segmental performance, the table above presents a split of the revenue column between the Investment

Portfolio, the IPS business and Group charges. Group dividends are paid from the Investment Portfolio segment of revenue reserves.

Geographic location of revenue: 90% 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 is wholly gains and losses relating to investments held at fair value through
profit and loss (2022: loss of £126,234,000; 2021: gain of £121,170,000), administrative expenses (2022: £1,908,000; 2021: £2,456,000), interest

payable (2022: £4,908,000; 2021: £3,958,000) and a capital dividend received of £3,442,000 which corresponds to amounts classified as

capital in nature in accordance with the SORP are shown in the capital column of the income statement on page 112.

Details regarding the segments are included on page 1 – Group summary and in note 1 – Segment reporting on page 118.

128 lawdebenture.com

Notes to the accounts continued

for the year end 31 December 2022

6. Segment analysis continued

Investment Portfolio

Independent Professional Services

31 December
2022
£000

31 December
2021
£000

31 December
2022
£000

31 December
2021
£000

31 December
2022
£000

Total

31 December
2021
£000

Other information

Capital expenditure

Depreciation and amortisation

Depreciation – right-of-use assets

7. Taxation

—

745

1,003

931

4,493

710

858

Taxation based on revenue for the year comprises:

UK Corporation tax at 19.0% (2021: 19.0%)

Foreign tax charge

Total current tax charge

Deferred tax charge

Charge for the year

Taxation

The charge for the year can be reconciled to the profit per the income statement as follows:

Profits before taxation

Tax on ordinary activities at standard rate 19.0% (2021: 19.0%)

Effects of:

Permanent tax adjustments

Higher rates of tax on foreign income

Non-taxable capital (gains)/losses

Tax credit on dividend income

Limit on Group relief for UK interest expense

Prior year under/(over) provision in respect of current tax

Total current tax charge

745

1,003

931

2022
£000

620

431

1,051

341

1,392

2022
£000

(84,955)

(16,141)

(52)

200

23,371

(6,548)

418

(197)

1,051

4,493

710

858

2021
£000

676

318

994

216

1,210

2021
£000

150,043

28,508

(29)

118

(22,879)

(5,032)

308

—

994

N
A
N
C

A
L

S
T
A
T
E
M
E
N
T
S

The Group expects that a substantial portion of its future income will continue to be in the form of dividend receipts and capital gains

and losses, which constitute non-assessable income. On this basis, the Group tax charge is expected to remain significantly different to

the standard UK rate of 19.0%.

129

Notes to the accounts continued

for the year end 31 December 2022

7. Taxation continued

Deferred Tax

The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon during the current and

prior reporting period.

GROUP
Deferred tax assets/(liabilities)

At 31 December 2020

(Charge) to income

(Charge)/credit to other comprehensive income

At 31 December 2021

(Charge) to income

(Charge)/credit to other comprehensive income

At 31 December 2022

Accelerated tax
depreciation
£000

Retirement
benefit
obligations
£000

239

(44)

—

195

(132)

—

532

(172)

(1,615)

(1,255)

(209)

Total
£000

771

(216)

(1,615)

(1,060)

(341)

(1,407)

(1,344)

In accordance with the applicable accounting policy, deferred tax is calculated at the tax rates that are expected to apply to the reversal.
Foreign taxes reflect the current rate, whilst UK taxes are at the enacted rate of 19.0%. A deferred tax asset has not been recognised in

respect of foreign losses of £1,803,555 (2021: £1,416,157) as their usability cannot be predicted with reasonable certainty. There is no expiry

date for these amounts.

The effective tax rate will change from 19% to 25% effective in the 2023 tax year following the legislative changes to the Finance Act 2021.

8. Dividends on ordinary shares

Dividends on ordinary shares comprise the following:

2022 Interims† 21.75p (2021: 20.625p)

2021 Final 8.375p (2020: 8.00p)

Total

† 2022 interim dividends were paid in July 2022, October 2022 and January 2023.

2022
£000

2021
£000

27,612

10,396

38,008

25,309

9,614

34,923

Proposed final dividend for the year ended 31 December 2022

The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a

liability in these financial statements.

Set out below is the total dividend payable in respect of the financial year, which is the basis on which the requirements of Sections
1158-1159 of the Corporation Tax Act 2010 are considered.

2022 Interims† 21.75p (2021: 20.625p)

2022 Final 8.75p (2021: 8.375p)

Total

† 2022 interim dividends were paid in July 2022, October 2022 and January 2023.

2022
£000

27,612

11,295

38,907

2021
£000

25,309

10,374

35,683

On this basis, The Law Debenture Corporation p.l.c. satisfies the requirements of Sections 1158-1159 of the Corporation Tax Act 2010, as an

approved investment trust company.

130 lawdebenture.com

Notes to the accounts continued

for the year end 31 December 2022

9. Net asset value/return per share

NAV per share is calculated based on 127,685,028 (2021: 122,424,129) shares, being the total number of shares on issue of 128,172,019 (2021:

122,915,835), less 486,991 (2021: 491,706) shares, acquired by the ESOT on the open market. The net asset value of £972,566,000 (2021:

£964,493,000) comprises the NAV per the balance sheet of £799,067,000 (2021: £878,837,000) plus the fair value adjustment for the IPS

business of £148,376,000 (2021: £135,885,000), less the fair value adjustment for the debt of £25,123,000 (2021: (£50,229,000)).

Revenue return per share is based on profits attributable of £43,261,000 (2021: £34,077,000).

Capital gain per share is based on capital losses for the year of £129,608,000 (2021: gains £114,756,000).

Total return per share is based on net loss for the year of £86,347,000 (2021: gain £148,833,000).

The calculations of returns per share are based on 125,628,620 (2021: 121,308,792) shares, being the weighted average number of shares

in issue during the year after adjusting for shares owned by the ESOT. In 2022, total revenue and capital diluted returns per share were

calculated using 125,659,676 shares (2021: 121,339,880 shares), being the diluted weighted average number of shares in issue assuming

exercise of options at less than fair value. There were nil (2021: 50,736) antidilutive shares.

10. Goodwill

GROUP

Cost

At 1 January

Additions

Foreign exchange

At 31 December

Provision for impairment

At 1 January

Foreign exchange

At 31 December

2022
£000

2021
£000

19,396

—

113

19,509

423

473

2,329

17,037

19,396

415

423

Net book value at 31 December

19,036

18,973

Impairment testing for cash-generating units containing goodwill

For the purpose of impairment testing, goodwill is allocated to the Group’s cash-generating units, being its operating business units.

That is not the same as our reportable segments disclosed under note 6, with the identified cash-generating units for goodwill being

one level below that of a reportable operating segment. Cash flows at the business unit level are independent from the other cash flows

and this is the lowest level at which goodwill is monitored by the Board. The aggregate carrying amounts of goodwill allocated to each

CGU are as follows:

GROUP

CGU Safecall

CGU Delaware Corporate Services (DCS)

CGU CSS

Total

GROUP

CGU Safecall

CGU Delaware Corporate Services (DCS)

CGU CSS

Total

Balance at
1 January 2022
£000

Business
Combinations
£000

Movements in
exchange rates
£000

Impairment
£000

1,419

517

17,037

18,973

—

Balance at
1 January 2021
£000

Business
Combinations
£000

Movements in
exchange rates
£000

Impairment
£000

1,419

495

—

1,914

—

17,037

—

Balance at
31 December
2022
£000

1,419

580

17,037

19,036

Balance at
31 December
2021
£000

1,419

517

17,037

18,973

131

N
A
N
C

A
L

S
T
A
T
E
M
E
N
T
S

Notes to the accounts continued

for the year end 31 December 2022

10. Goodwill continued

At 31 December 2022 the goodwill in relation to the cash-generating units (“CGU”) was reviewed and tested for impairment. The review

assessed whether the carrying value of the goodwill exceeded its recoverable amount. The recoverable amount of a CGU is the greater

of its value in use and its fair value less costs to sell. The basis of the recoverable amount used in the impairment tests for the CGU’s is

the value in use. In assessing value in use, the net present value of future cash flows, based on management’s financial budgets for

2023, is compared to the recoverable amounts. The methodology applied is in line with those tests performed in the prior period.

For each of the CGUs, the recoverable amount valuations indicated sufficient headroom such that a reasonably possible change to key

assumptions is unlikely to result in an impairment of the related goodwill.

The key quantifiable assumptions applied in the impairment review are set out below:

GROUP

CGU Safecall

CGU DCS

CGU CSS

Discount rate

Discount Rate
2022
%

Discount Rate
2021
%

Short-term
growth rates
2022
%

Short-term
growth rates
2021
%

Terminal
growth rates
2022
%

Terminal
growth rates
2021
%

10.5

8.0

5.0

2.0

2.2

2.0

The discount rate of 10.5% applied to projected cash flows is derived from the Group’s pre-tax weighted average cost of capital. These

rates are reviewed annually.

Terminal growth rates

The calculations include a terminal value based on the projections for the fifth year of the forecasted cash flows, with a growth rate

assumption applied which extrapolates the business into perpetuity. The terminal growth rates are based on long-term inflation rates of

the geographic market in which the CGUs predominantly operate.

Short-term growth rates

The annual impairment test is performed immediately prior to the year end, based on five-year cash flow forecasts using the Board

approved 2023 budget and applying short-term growth rates. Despite strong track record for historical growth rates over the last four

years, short-term growth rates have been applied to each CGU for the purpose of the goodwill impairment testing.

Sensitivity analysis

Sensitivity analysis has been performed for each goodwill asset, applying a reduction in short-term growth rates to 5.0% since there is a

degree of estimation uncertainty in the cash flows associated with each CGU. No impairment results from these changes.

132 lawdebenture.com

Notes to the accounts continued

for the year end 31 December 2022

11. Property, plant and equipment

GROUP

Cost

At 1 January

Additions at cost

Disposals at cost

At 31 December

Accumulated depreciation

At 1 January

Charge

Disposals at cost

At 31 December

NET BOOK VALUE

Office
improvements
£000

Furniture and
equipment
£000

(61)

114

(61)

2,440

—

2,499

466

275

—

741

2022

Total
£000

2,523

151

(61)

2,612

549

328

(61)

816

Office
improvements
£000

Furniture and
equipment
£000

114

—

(31)

102

(31)

1,334

1,106

—

2,440

258

208

—

466

2021

Total
£000

1,448

1,106

(31)

2,523

360

220

(31)

549

Net book value at 31 December

1,757

1,796

—

1,974

The Company holds no property, plant and equipment.

12. Other intangible assets

Computer
Software
£000

IT project
Costs
£000

Customer
Relationships
£000

Intangible
Total
£000

Computer
Software
£000

IT project
Costs
£000

Customer
Relationships
£000

Intangible
Total
£000

2022

2021

1,183

—

(17)

968

578

—

2,963

—

5,114

594

(17)

1,160

—

1,166

1,546

2,979

5,691

1,183

1,138

1,151

121

292

413

340

370

710

1,599

675

2,274

1,108

1,138

567

401

—

968

—

121

—

2,963

—

2,963

—

340

1,727

3,387

—

5,114

1,108

490

1,598

N
A
N
C

A
L

S
T
A
T
E
M
E
N
T
S

GROUP

Cost

At 1 January

Additions at cost

Disposals at cost

At 31 December

Accumulated depreciation

At 1 January

Charge

At 31 December

NET BOOK VALUE

Net book value at 31 December

1,133

2,269

3,417

847

2,623

3,516

133

Notes to the accounts continued

for the year end 31 December 2022

13. Investments

Investments held at fair value through profit or loss

GROUP

Opening cost at 1 January

Gains at 1 January

Opening fair value at 1 January

Investments delisted in the current year

Purchases at cost

Cost of acquisition

Sales – proceeds

– realised gains on sales

Gains/(losses) in the income statement

Closing fair value at 31 December

Closing cost at 31 December

Listed
£000

811,314

176,104

987,418

(1,277)

166,198

(545)

(145,892)

51,984

(173,792)

884,094

880,982

Gains

3,112

(2,800)

Closing fair value at 31 December

884,094

6,911

891,005

Investments held at fair value through profit or loss

COMPANY

Opening cost at 1 January

Gains at 1 January

Opening fair value at 1 January

Investments delisted in the current year

Purchases at cost

Cost of acquisition

Sales – proceeds

– realised gains on sales

Gains/(losses) in the income statement

Closing fair value at 31 December

Closing cost at 31 December

Listed
£000

811,314

176,104

987,418

(1,277)

166,198

(545)

(145,892)

51,984

(173,792)

884,094

880,982

(4,426)

(178,218)

Unlisted
£000

3,431

1,629

5,060

1,277

5,000

—

6,911

9,711

Unlisted
£000

3,331

1,629

4,960

1,277

5,000

—

6,811

9,611

2022

Total
£000

814,745

177,733

Listed
£000

698,413

109,593

992,478

808,006

—

171,198

200,096

(545)

(645)

(145,892)

(140,327)

51,984

891,005

890,693

312

2022

Total
£000

814,645

177,733

51,984

890,905

890,593

312

55,668

64,620

987,418

811,314

176,104

987,418

Listed
£000

703,511

104,495

55,668

64,620

987,418

811,314

176,104

987,418

992,378

808,006

—

171,198

200,096

(545)

(645)

(145,892)

(140,327)

(4,426)

(178,218)

Unlisted
£000

3,547

744

4,291

—

(113)

—

882

5,060

3,431

1,629

5,060

Unlisted
£000

3,333

744

4,077

—

883

4,960

3,331

1,629

2021

Total
£000

701,960

110,337

812,297

—

200,096

(645)

(140,440)

55,668

65,502

992,478

814,745

177,733

992,478

2021

Total
£000

706,844

105,239

812,083

—

200,096

(645)

(140,327)

55,668

65,503

992,378

814,645

177,733

4,960

992,378

Gains

3,112

(2,800)

Closing fair value at 31 December

884,094

6,811

890,905

Listed investments are all traded on active markets and as defined by IFRS 13 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 the underlying net assets of the investments. A purchase of £5m for an unlisted Level 3 investment was

made during the period. Investments have been revalued over time and until they were sold, any unrealised gains/losses were included

in the fair value of the investments.

The Group’s direct interests in unconsolidated structured entities comprise investments in special purpose vehicles, including both

Limited Companies and Public Limited Companies. The investments include both those entities managed by third parties and those

managed by the Group on behalf of its’ members where the Group acts as share Trustee under a Trust Deed Arrangement.

Given the nature of these investments, the Group’s maximum exposure to loss is equal to the carrying value of the investment.

During the year the Group has not provided any non-contractual financial or other support to these entities and has no current

intention of providing any financial or other support. There were no transfers from/to these unconsolidated collective investment

vehicles and limited companies.

The Group earns fees from the provision of corporate services or corporate trust services, details of these are included and reported in

note 6.

134 lawdebenture.com

Notes to the accounts continued

for the year end 31 December 2022

13. Investments continued

Investments in subsidiary undertakings – Company

Cost

At 1 January

Additions in year

At 31 December

2022
£000

2021
£000

61,283

—

61,283

—

61,283

Investments in subsidiaries are measured at cost less impairment. The financial statements consolidate the results and financial position

of the Group, including all subsidiary undertakings, which are listed in this note under section “subsidiaries and related undertakings”.

The cost of subsidiary undertakings includes capital contributions and as a consequence is not comparable to the fair value of the IPS

business.

Fair valuation of the IPS

The fair value of the IPS business relates to all of the wholly owned subsidiaries of the Company, with the exception of Law Debenture

Finance p.l.c. The Directors have chosen to provide a fair valuation of the IPS business, which is not included within the financial
statements, to assist the users of the Annual Report. The fair valuation is used in preparing performance data for the Group. The fair value

is determined using unobservable inputs (including the Group’s own data), which represent Level 3 inputs. The Directors’ estimate of fair

value uses the guidelines and methodologies on valuation published by the International Private Equity and Venture Capital Association.

The fair valuation of 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 IPS is from

comparable companies sourced from market data, with appropriate adjustments to reflect the difference between the comparable

companies and IPS in respect of growth, margin, size and liquidity.

N
A
N
C

A
L

S
T
A
T
E
M
E
N
T
S

Fair valuation of IPS

EBITDA at a multiple of 10.50 (2021: 10.80)

Surplus net assets

Total

2022
£000

174,174

27,566

201,740

2021
£000

165,985

4,041

170,026

An increase or decrease of 1 in the multiple would give rise to a £16.5m change in the fair valuation of the IPS. The adjustment to NAV to

reflect the IPS fair value is an increase of 116.20p per share (2021: 111.00p).

Subsidiaries and related undertakings

The following is a list of all of the subsidiaries within the Law Debenture Group. Each of them is 100% owned within the Group and has

been consolidated in the Group accounts. Subsidiaries held directly by the Company are in bold. Unless indicated, all subsidiaries are

incorporated and have their registered office in the United Kingdom. The addresses of overseas registered companies appear at page

155. All shares issued by Group subsidiaries are ordinary shares. The Company and the Group do not have any significant holdings in any

qualifying undertakings other than the subsidiary undertakings listed below.

L.D. Pension Plan Trustee Limited

Law Debenture Trustees Limited

L.D.C. Trust Management Limited

The Law Debenture Intermediary Corporation p.l.c.

Law Debenture Investment Management Limited

Law Debenture Overseas No. 1 Limited

Law Debenture (Independent Professional Services) Limited

Law Debenture Finance p.l.c.

Beagle Nominees Limited

Law Debenture Securitisation Services Limited

The Law Debenture Trust Corporation p.l.c.

LDPTC Nominees Limited

The Law Debenture Pension Trust Corporation p.l.c.

Law Debenture Governance Services Limited

Pegasus Pensions plc

Safecall Limited

Law Debenture Corporate Services Limited

The Whistleblowing Company Limited

135

Notes to the accounts continued

for the year end 31 December 2022

13. Investments continued

The Sole Trustee plc

LDC Nominee Secretary Limited

The Law Debenture Corporation (Deutschland) Limited

LD (Holdco) Limited

L.D.C. Latvia Limited

LD (Bidco) Limited

Law Debenture Trustee for Charities

Westminster Aviation Holdings Limited

Law Debenture (No. 1 Scheme) Trust Corporation

LDC (DANTC) Limited

Law Debenture (No. 3 Scheme) Pension Trust Corporation

Syngenta Pensions Trustee Limited

The Law Debenture (No. 5) Trust Corporation

The Law Debenture (1996) Pension Trust Corporation

The Law Debenture (BAA) Pension Trust Corporation

The Law Debenture Corporation (HK) Limited
(incorporated/registered office in Hong Kong)

Law Debenture Trust (Asia) Limited
(incorporated/registered office in Hong Kong)

The Law Debenture Trust Corporation (Channel Islands) Limited
(incorporated/registered office in Jersey)

The Law Debenture Trust Corporation (Cayman) Limited
(incorporated/registered office in the Cayman Islands)

Law Debenture Corporate Services Inc.

(incorporated/registered office in the USA)

Law Debenture Holdings Inc.
(incorporated/registered office in the USA)

Delaware Corporate Services Inc.

(incorporated/registered office in the USA)

Law Debenture (Ireland) Limited

(incorporated/registered office in the Republic of Ireland)

Law Debenture Ireland (Trustees) Limited

(incorporated/registered office in the Republic of Ireland)

Law Debenture Holdings (Ireland) Limited
(incorporated/registered office in the Republic of Ireland)

LDI (OCS) Limited

(incorporated/registered office in the Republic of Ireland)

Registered Shareholder Services No.1 Limited

(incorporated/registered office in the Republic of Ireland)

Registered Shareholder Services No.2 Limited

(incorporated/registered office in the Republic of Ireland)

Registered Shareholder Services No.3 Limited

(incorporated/registered office in the Republic of Ireland)

Law Debenture Master Trust Trustees (Ireland) DAC

(incorporated/registered office in the Republic of Ireland)

The Law Debenture (BIS Management) Pension Trust Corporation

The Law Debenture (BIS Retirement) Pension Trust Corporation

The Law Debenture (Intel Old Plan) Pension Trust Corporation

The Law Debenture (SAPP) Pension Trust Corporation

The Law Debenture (JGRP) Pension Trust Corporation

The Law Debenture (JGSPS) Pension Trust Corporation

The Law Debenture (JIC) Pension Trust Corporation

The Law Debenture (KBPP) Pension Trust Corporation

The Law Debenture (KGPP) Pension Trust Corporation

The Law Debenture (Swiss Re GB) Trust Corporation

Law Debenture (GWR) Pension Trust Corporation

The Law Debenture (JGDBS) Pension Trust Corporation

ICI Pensions Trustee Limited

AstraZeneca Pensions Trustee Limited

ICI Specialty Chemicals Pensions Trustee Limited

RTL Shareholder SVC Limited

Billiton SVC Limited

DLC SVC Limited

LDC (NCS) Limited

Terrier Services Limited

L.D.C. Securitisation Director No. 1 Limited

L.D.C. Securitisation Director No. 2 Limited

L.D.C. Securitisation Director No. 3 Limited

L.D.C. Securitisation Director No. 4 Limited

L.D.C. Corporate Director No. 1 Limited

L.D.C. Corporate Director No. 2 Limited

L.D.C. Corporate Director No. 3 Limited

L.D.C. Corporate Director No. 4 Limited

CD Corporate Director No. 1 Limited

136 lawdebenture.com

Notes to the accounts continued

for the year end 31 December 2022

13. Investments continued

Unlisted investments

The Group holds unlisted investments.

Investment trust

The majority of the Investment Portfolio is invested in listed investments. A small minority of investments (approximately 0.6% of the

portfolio) are unlisted comprising a small fund investment and a number of other immaterial unquoted investments.

Quarterly valuations for the small fund investment are received. The Investment Valuation Committee updates the valuation of this

immaterial investment on a six monthly basis. The minutes of the meeting are shared with the auditors on a bi-annual basis.

Other unquoted investment holdings are reviewed on a bi-annual basis to market value and agreed by the Committee members at the

same Investment Valuation Committee meeting.

Independent professional services

As part of the services offered by the Independent Professional Services business, the Group acts as the registered holder of an

immaterial amount of unlisted shares in structured finance companies which are held on trust for discretionary charitable purposes.

The Group has no beneficial interest in those shares or the results of the companies whose shares are held.

The holdings are reviewed on a bi-annual basis at the Investment Valuation Committee meeting but are not revalued as there is no

market rate and the Group has no beneficial or economic interest in those shares.

14. Contract assets, trade and other receivables

The Directors consider that the carrying value approximates to the fair value.

The average credit period on sales of goods is 90 days. No interest is charged on outstanding trade receivables.

The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss provision for

trade receivables. To measure expected credit losses trade receivables are grouped based on similar risk characteristics and ageing.

An expected credit loss (ECL) is recognised against contract assets only when it is considered to be material and there is evidence that the

credit worthiness of a counterparty may render balances irrecoverable. Refer to note 19 for further details on IFRS 9 expected credit losses.

Contract assets arise from the Group’s IPS business which enters into contracts that can take more than one year to complete.

Contract assets: current

Amounts included in contract assets that were recognised as revenue

Trade and other receivables: current

Trade receivables

Other receivables

Prepayments

Amounts receivable from intercompany

15. Cash and cash equivalents

GROUP

COMPANY

2022
£000

7,182

2022
£000

18,186

592

919

—

2021
£000

6,611

2021
£000

18,654

233

1,579

—

19,697

20,466

2022
£000

769

2022
£000

515

—

515

2021
£000

583

2021
£000

552

—

1,094

55,935

57,581

These comprise cash held at bank by the Group (£15.2m) and money market funds with immediate access (£34.3m). The carrying value

of these assets approximates to their fair value. The current breakdown of cash and cash equivalents is: Cash of £15.2m (2021: £35.9m)

and cash equivalents of £34.3m (2021: nil).

N
A
N
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T
A
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M
E
N
T
S

137

Notes to the accounts continued

for the year end 31 December 2022

16. Contract liabilities, trade and other payables

Contract liabilities: Current

Deferred Income

Contract liabilities: Non-current

Deferred Income

GROUP

COMPANY

2022
£000

5,223

2022
£000

3,976

2021
£000

5,620

2021
£000

4,054

2022
£000

125

2021
£000

125

Contract liabilities comprise of deferred income, representing fees billed in advance in respect of services under contract with

customers.

During the year, £5.620m (2021: £4.367m) of the Group’s prior year recorded deferred income was recognised as income.

The allocation of deferred income between current and non current is presented on the basis that the current portion will unwind and

released to revenue within the next twelve months. There were no material items in the current portion of deferred income in 2021

which did not unwind during the year.

Trade and other payables: Current

Trade payables

Dividend payable

Other payables and accruals

GROUP

COMPANY

2022
£000

5,880

9,292

4,643

19,815

2021
£000

8,527

8,450

12,352

2022
£000

—

9,292

754

29,329

10,046

2021
£000

202

8,450

4,795

13,447

Trade and other payables principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period

taken for trade purchases is 30 days.

The Directors consider that the carrying value of trade and other payables approximates to their fair value, due to their age.

17. Called up share capital

Allotted, issued and fully paid share capital – GROUP AND COMPANY

Value

As at 1 January

Issued in year

As at 31 December

As at 1 January

Issued in year

As at 31 December

2022
£000

6,145

262

6,407

2021
£000

5,923

222

6,145

Number

122,915,835

118,454,562

5,256,184

4,461,273

128,172,019

122,915,835

During the year to 31 December 2022, 18,184 shares (2021: 16,068 shares) were allotted under the SAYE scheme for a total consideration

of £108,481 (2021: £218,006) which includes a premium of £107,572 (2021: £217,203). Total issued shares as at 31 December 2022 is

128,172,019 (2021: 122,915,835).

During the year, 26,705 options were granted under the Company’s SAYE scheme. At 31 December 2022, options under the SAYE scheme

exercisable from 2021 to 2026 at prices ranging from 594.75p to 781.00p per share were outstanding in respect of 173,918 ordinary shares

(2021: 176,747 ordinary shares). During 2022, 11,350 options lapsed or were cancelled (2021: 20,718) and 18,184 (2021: 16,068) were exercised.

Further details of options outstanding are given in the Directors’ report on page 61 to 65.

138 lawdebenture.com

Notes to the accounts continued

for the year end 31 December 2022

17. Called up share capital continued

Own shares held – GROUP

Value

Own shares held - cost

2022
£000

2021
£000

3,128

3,215

The own shares held represent the cost of 486,991 (2021: 491,706) ordinary shares of 5p each in the Company, acquired by the ESOT in

the open market. The shares have been acquired to meet the requirements of the Deferred Share Plan. The voting rights relating to the

shares have been waived while the relevant shares remain in trust, in accordance with the Plan rules. The market value of the shares at

31 December 2022 was £3,754,701 (2021: £3,928,731).

18. Capital reserves

GROUP

At 1 January

Transfer on disposal of investments

Net gains on investments

Cost of acquisition

Foreign exchange

Transfers to revenue

Transfers to capital

At 31 December

COMPANY

At 1 January

Transfer on disposal of investments

Net gains on investments

Cost of acquisition

Foreign exchange

Transfers to revenue

Dividends paid from capital

Transfers to capital

At 31 December

19. Financial instruments

Unrealised
appreciation
£000

Realised
reserves
£000

2022

Total
£000

Unrealised
appreciation
£000

166,777

622,646

789,423

(36,288)

(141,930)

(545)

334

—

36,288

15,696

—

(2,829)

2,363

—

(126,234)

(545)

334

(2,829)

2,363

101,949

(35,638)

101,140

(645)

(29)

—

Realised
reserves
£000

572,642

35,638

20,030

—

(5,664)

—

2021

Total
£000

674,591

—

121,170

(645)

(29)

(5,664)

—

(11,652)

674,164

662,512

166,777

622,646

789,423

Unrealised
appreciation
£000

Realised
reserves
£000

2022

Total
£000

Unrealised
appreciation
£000

160,058

675,235

835,293

(36,288)

(141,930)

(545)

334

—

36,288

15,696

—

(126,234)

(545)

334

(2,829)

—

2,363

—

2,363

95,230

(35,638)

101,140

(645)

(29)

—

Realised
reserves
£000

637,959

35,638

20,030

—

(5,664)

(12,728)

—

N
A
N
C

A
L

S
T
A
T
E
M
E
N
T
S

2021

Total
£000

733,189

—

121,170

(645)

(29)

(5,664)

(12,728)

—

(18,371)

726,753

708,382

160,058

675,235

835,293

The Group’s investment objective is to achieve long-term capital growth through investing in a diverse portfolio of investments. In

pursuit of this objective, the Group has the power to deploy the following financial instruments:

• Quoted equities, unlisted equities and fixed interest securities
• Cash and short-term investments and deposits
• Debentures, term loans and bank overdrafts to allow the Group to raise finance
• Derivative transactions to manage any of the risks arising from the use of the above instruments
• Derivative transactions to hedge the net investment in overseas subsidiaries

It remains the Group’s policy that no trading in derivatives is undertaken. Information in respect of the Investment Portfolio is included

on pages 17 to 29. Additionally, there are no net investment hedges in place in 2021 or 2022.

139

Notes to the accounts continued

for the year end 31 December 2022

19. Financial instruments continued

Capital management

The Company is not allowed to retain more than 15% of its income from shares and securities each year and has a policy to increase

dividends. However revenue profits are calculated after all expenses. Distributions will not be made if they inhibit the investment

strategy. This policy on dividends is expected to continue going forwards. The investment strategy of the Company is disclosed on page

30 and includes a ceiling on effective gearing of 50%, with a typical range of 10% net cash to 20% gearing. At 31 December 2022 gearing

was 12% (2021: 13%). Gearing is calculated in line with net gearing guidelines from the AIC.

Capital is represented by the Group’s net assets. The Group and Company held the following categories of financial assets and liabilities

at 31 December 2022:

GROUP

Assets

Financial assets held at fair value through profit or loss:

Equity investments

Financial assets held at amortised cost

Trade and other receivables

Cash and cash equivalents

Total financial assets

Liabilities

Financial liabilities measured at amortised cost

Trade and other payables

Long-term borrowings

Lease liability

Total financial liabilities

COMPANY

Assets
Financial assets held at fair value through profit or loss:

Equity investments

Financial assets held at amortised cost

Trade and other receivables

Cash and cash equivalents

Total financial assets

Liabilities

Financial liabilities measured at amortised cost

Amounts owed to subsidiary undertakings

Trade and other payables

Long-term borrowings

Total financial liabilities

140 lawdebenture.com

2022
£000

2021
£000

891,005

992,478

19,697

49,559

69,256

20,466

35,880

56,346

960,261

1,048,824

19,815

163,909

6,650

190,374

29,329

164,245

6,404

199,978

2022
£000

2021
£000

890,905

992,378

515

29,825

30,340

57,581

25,507

83,088

921,245

1,075,466

19,603

10,046

124,389

154,038

87,631

13,447

124,586

225,664

Notes to the accounts continued

for the year end 31 December 2022

19. Financial instruments continued

The principal risks facing the Group in respect of its financial instruments remain unchanged from 2021 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 Investment Portfolio is exposed to market price fluctuation: if the

valuation at 31 December 2022 fell or rose by 10%, the impact on the Group’s total profit or loss for the year would have been £89.1m

(2021: £99.2m). Corresponding 10% changes in the valuation of the Investment Portfolio on the Company’s total profit or loss for the

year would have been £89.1m (2021: £99.2m). 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:

GROUP

US Dollar

Canadian Dollar

Euro

Danish Krone

Swedish Krona

Swiss Franc

Hong Kong Dollar

Japanese Yen

Total

Investments
£000

Net monetary
assets
£000

Total currency
exposure
£000

Investments
£000

Net monetary
assets
£000

Total currency
exposure
£000

2022

2021

35,552

6,700

64,452

2,405

—

7,237

—

9,426

125,772

7,681

—

3,508

—

976

—

43,233

6,700

67,960

2,405

—

7,237

976

9,426

44,700

6,100

72,600

2,300

1,200

9,600

—

11,200

3,600

—

1,100

—

1,000

—

48,300

6,100

73,700

2,300

1,200

9,600

1,000

11,200

12,165

137,937

147,700

5,700

153,400

The Group US dollar net monetary assets is that held by the US operations of £1.3m (2021: £2m) together with £6.4m (2021: £1.6m) held by

non-US operations.

COMPANY

US Dollar

Canadian Dollar

Euro

Danish Krone

Swedish Krona

Swiss Franc

Japanese Yen

Total

Investments
£000

Net monetary
assets
£000

Total currency
exposure
£000

Investments
£000

Net monetary
(liabilities)
£000

Total currency
exposure
£000

2022

2021

35,552

6,700

64,452

2,405

—

7,237

9,426

125,772

—

35,552

6,700

64,452

2,405

—

7,237

9,426

44,700

6,100

72,600

2,300

1,000

9,600

11,200

100

44,800

—

6,100

72,600

2,300

1,000

9,600

11,200

125,772

147,500

100

147,600

N
A
N
C

A
L

S
T
A
T
E
M
E
N
T
S

141

Notes to the accounts continued

for the year end 31 December 2022

19. Financial instruments continued

The holding in Scottish Oriental Smaller Companies Trust is denominated in sterling but has underlying assets in foreign currencies

equivalent to £7.3m (2021: £7.1m). 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 2022 rose or fell by 10% against sterling, the impact on the Group’s total profit or loss for the year would have been

£14.0m and £11.4m respectively (2021: £17.3m and £14.1m). 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 Investment 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:

Floating rate assets

Sterling
£000

37,351

HK Dollars
£000

US Dollars
£000

976

7,681

Floating rate assets

Sterling
£000

29,700

HK Dollars
£000

US Dollars
£000

1,000

3,600

GROUP

Euro
£000

3,508

GROUP

Euro
£000

1,100

Sterling
£000

14,357

US Dollars
£000

5,780

Sterling
£000

25,000

US Dollars
£000

100

2022

COMPANY

Euro
£000

2,662

2021

COMPANY

Euro
£000

—

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 Investment Portfolio is not directly exposed to interest rate risk.

Fixed rate liabilities

2022
Sterling
£000

GROUP

2021
Sterling
£000

2022
Sterling
£000

163,909

164,200

124,400

Weighted average fixed rate for the year

3.961%

3.966%

3.276%

COMPANY

2021
Sterling
£000

124,200

3.276%

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 £346,000

credit (2021: £314,000 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 short-term

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 £224,000 credit (2021: £233,000 credit). The calculations are based on the balances

at the respective year end dates and are not representative of the year as a whole.

142 lawdebenture.com

Notes to the accounts continued

for the year end 31 December 2022

19. Financial instruments continued

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. 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.

The tables below illustrates the contractual commitments to pay this interest over the time periods outlined as follows:

GROUP
INSTRUMENT

2022

Interest
payable
< 1 year
£000

Interest
payable
1 - 5 years
£000

Interest
payable
5 - 10
years
£000

Interest
payable
> 10 years
£000

Interest
payable
< 1 year
£000

Interest
payable
1 - 5 years
£000

2021

Interest
payable
> 10 years
£000

Interest
payable
5 - 10
years
£000

6.125% guarenteed secured bonds 2034

2,450

9,800

12,250

4,900

2,450

9,800

12,250

7,350

3.77% secured senior notes 2045

2,828

11,310

14,138

36,758

2,828

11,310

14,138

39,585

3.77% secured senior notes 2041

3.77% secured senior notes 2050

508

759

2,032

2,540

4,572

3,036

3,795

13,662

Lease liabilities: undiscounted cash flows

1,259

3,966

2,518

—

508

759

506

2,032

2,540

5,080

3,036

3,795

14,421

4,353

3,385

—

Total Group

7,804

30,144

35,241

59,892

7,050

30,531

36,108

66,436

COMPANY
INSTRUMENT

2022

Interest
payable
< 1 year
£000

Interest
payable
1 - 5 years
£000

Interest
payable
5 - 10
years
£000

Interest
payable
> 10 years
£000

Interest
payable
< 1 year
£000

Interest
payable
1 - 5 years
£000

2021

Interest
payable
> 10 years
£000

Interest
payable
5 - 10
years
£000

3.77% secured senior notes 2045

2,828

11,310

14,138

36,758

2,828

11,310

14,138

39,585

2.54% secured senior notes 2041

2.53% secured senior notes 2050

508

759

2,032

2,540

4,572

3,036

3,795

13,662

508

759

2,032

2,540

5,080

3,036

3,795

14,421

Total Group

4,095

16,378

20,473

54,992

4,095

16,378

20,473

59,086

Credit risk

Is the risk arising from the failure of another party to perform according to the terms of their contract. 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 counter-parties are banks with high credit-ratings assigned by
international credit rating agencies.

The Group’s maximum exposure to credit risk arising from financial assets is £69.3m (2021: £56.3m). The Company’s maximum exposure

to credit risk arising from financial assets is £30.3m (2021: £83.1m).

Outstanding customer receivables are continuously monitored and followed up where required. Specific provisions are made when

there is evidence that the Group will not be able to collect the debts from the customer. The ageing of trade receivables and the

expected credit loss at the reporting date are disclosed on page 144.

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 summary, the Group only transacts with counterparties that it considers to be credit worthy.

N
A
N
C

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S
T
A
T
E
M
E
N
T
S

143

Notes to the accounts continued

for the year end 31 December 2022

19. Financial instruments continued

Trade and other receivables

The ageing profile of the carrying value of trade receivables past due is as follows:

Between 31 and 60 days

Between 61 and 90 days

More than 91 days

Total

IFRS 9 credit loss rates

2022
£000

2,162

1,367

11,640

15,169

GROUP

2021
£000

3,342

2,403

10,941

16,686

COMPANY

2021
£000

—

2022
£000

—

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 based on the Company’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 Company’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 balances 91+ days overdue.

The total specific and credit loss provision at 31 December 2022 is £3,953,000 (2021: £3,314,000).

31 December 2022

Expected loss rate

Gross carrying amount

Expected credit loss provision

Specific provision

Net carrying amount

31 December 2021

Expected loss rate

Gross carrying amount

Expected credit loss provision

Specific provision

Net carrying amount

1-30 days

31-60 days

61-90 days

Current

£000

overdue

£000

overdue

£000

overdue

£000

1.71%

2,634

(45)

—

2,589

2.98%

1,343

(40)

—

5.64%

3,562

(201)

—

3,361

2.94%

3,939

(116)

—

3.75%

2,162

(81)

—

2,081

2.42%

3,342

(81)

—

4.68%

1,367

(64)

—

1,303

4.45%

2,403

(107)

—

1,303

3,823

3,261

2,296

91+ days

overdue

£000

3.59%

11,640

(418)

(3,144)

8,078

4.12%

10,941

(451)

(2,519)

7,971

Total

£000

3.79%

21,365

(809)

(3,144)

17,412

3.62%

21,968

(795)

(2,519)

18,654

Trade and other payables

Due in less than one month

Due in more than one month and less than three months

Total

2022
£000

17,566

—

17,566

GROUP

2021
£000

COMPANY

2022
£000

2021
£000

27,988

10,046

10,860

—

27,988

10,046

10,860

144 lawdebenture.com

Notes to the accounts continued

for the year end 31 December 2022

19. Financial instruments continued

Fair value

The Directors are of the opinion that the fair value of financial assets and liabilities of the Group are not materially different to their

carrying values, with the exception of the long-term borrowings (see note 20). The Group’s basis of fair value calculation on these

long-term borrowings uses quoted prices (unadjusted) in active markets for identical liabilities that the entity can access at the

measurement date. The Group does not make adjustments to quoted prices, only under specific circumstances, for example when a

quoted price does not represent the fair value (i.e. when a significant event takes place between the measurement date and market

closing date).

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.

20. Long-term borrowings

In more than five years
Long-term borrowings are repayable as follows:

Secured

6.125% guaranteed secured bonds 2034

3.77% secured senior notes 2045

2.54% secured senior notes 2041

2.53% secured senior notes 2050

Total

2022
£000

39,520

74,434

19,966

29,989

GROUP

2021
£000

39,659

74,586

20,000

30,000

2022
£000

—

74,434

19,966

29,989

163,909

164,245

124,389

COMPANY

2021
£000

—

74,586

20,000

30,000

124,586

The 6.125% bonds were issued by Law Debenture Finance p.l.c. and guaranteed by the Company. The £40m nominal tranche, which

produced proceeds of £39.1m, is constituted by a trust deed dated 12 October 1999 and the Company’s guarantee is secured by a

floating charge on the undertaking and assets of the Company. The bonds are redeemable at nominal amount on 12 October 2034.

Interest (see note 5) is payable semi-annually in equal instalments on 12 April and 12 October in each year.

The 3.77% notes were issued by the Company. The £75m nominal tranche, which produced proceeds of £74.5m, is constituted by a

note purchase agreement and the notes are secured by a floating charge which ranked pari passu with the charge given as part of the

6.125% bond issue. The notes are redeemable at nominal amount on 25 September 2045. Interest (see note 5) is payable semi-annually

in equal instalments on 25 March and 25 September in each year.

The 2.54% Series A notes were issued by the Company. The £20m nominal tranche, which produced proceeds of £20m, is constituted

by a note purchase agreement dated 2 November 2021 and the notes are secured by a floating charge which ranked pari passu with

the charge given as part of the 6.125% bond issue and with the charge given as part of the 3.77% note issue. The notes are redeemable

at nominal amount on 2 November 2041. Interest is payable semi-annually in equal instalments on 2 May and 2 November in each

year. The first interest payment will be made on 2 May 2022.

The 2.53% Series B notes were issued by the Company. The £30m nominal tranche, which produced proceeds of £30m, is constituted

by a note purchase agreement dated 2 November 2021 and the notes are secured by a floating charge which ranked pari passu with

the charge given as part of the 6.125% bond issue and with the charge given as part of the 3.77% note issue. The notes are redeemable

at nominal amount on 2 November 2050. Interest is payable semi-annually in equal instalments on 2 May and 2 November in each

year. The first interest payment will be made on 2 May 2022.

The long-term borrowings are stated in the statement of financial position at amortised cost. Including them at a fair value of £138.7m

at 31 December 2022 (2021: £214.4m) would have the effect of increasing the year end NAV by 19.68p (2021: decrease of 41.03p). The

estimated fair value is based on the redemption yield of reference gilts plus a margin derived from the spread of A rated UK corporate

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A
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A
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E
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T
S

bond yields over UK gilt yields (2021: A).

21. Contingent liabilities

The Group is from time to time party to legal proceedings and claims, which arise in the ordinary course of the IPS business. The

Directors do not believe that the outcome of any of these proceedings and claims, either individually or in aggregate, will have a

material adverse effect upon the Group’s financial position.

145

Notes to the accounts continued

for the year end 31 December 2022

21. Contingent liabilities continued

The Company has provided a guarantee to a subsidiary undertaking in respect of the ongoing liabilities of the Group defined benefit

pension scheme (see note 23). The Company has provided surety for the lease of the Group’s main property which is held by a subsidiary

undertaking. The annual rental is currently £871,000 and its full term ends in 2030. The Company guarantees the servicing of the debt

payments required on the 6.125% guaranteed secured bonds 2034 issued by Law Debenture Finance p.l.c. This is accounted for via the

inter-company account between the Company and its subsidiary.

The Company provides letters of support to its subsidiaries when necessary. The Company does not reasonably expect a liability to arise

in relation to these.

22. Leases

Management estimate that the fair value of the Group’s lease obligations approximates their carrying amount.

There are no material future cash flows relating to leases in place as at 31 December 2022 that are not reflected in the minimum lease

payments disclosed below and the Group does not have any leases to which it is contracted but which are not yet reflected in the

minimum lease payments. There are no restrictions nor covenants imposed by any leases to which the Group has entered into. The

Group does not have any leases where payments are variable.

No lease liability is recognised in respect of leases which have a lease term of less than twelve months in duration at the point of
entering into the lease, or where the purchase price of the underlying right-of-use asset is less than £5,000. Where relevant, the total

value of these is immaterial.

The total cash outflow for leases in the year was £778,000 (2021: £1,526,000). This is presented in the Consolidated Cash Flow Statement

as £505,000 (2021: £1,162,000) relating to the principal element of the lease liability payments, with the remaining balance of £274,000

(2021: £364,000).

Right-of-use assets

GROUP

Additional information on the right-of-use assets is as follows:

Office building leases

Total right-of-use assets

Opening balance at 1 January

Adjustment to opening balance

Leases signed in year

Lease extension

Depreciation

Foreign exchange difference

Closing NBV at 31 December

* Adjustment to opening balance as a result of a change in calculation.

Lease liabilities

Amounts payable under leases

Within one year

Between one and five years

After five years

Less: future finance charges

Present value of lease obligations

Less: amounts due for settlement within one year (shown within current liabilities)

Amounts due for settlement after one year (shown within non current liabilities)

146 lawdebenture.com

31 December
2022
£000

31 December
2021
£000

31 December
2022
£000

31 December
2021
£000

5,542

199*

195

(931)

(5)

5,040

5,413

—

938

(858)

5,542

199*

195

(931)

(5)

5,040

5,413

—

938

(858)

5,542

GROUP

Minimum lease payments

31 December
2022
£000

31 December
2021
£000

1,259

3,966

2,518

7,743

(1,093)

6,650

(991)

5,659

439

4,130

3,388

7,957

(1,553)

6,404

(287)

6,117

Notes to the accounts continued

for the year end 31 December 2022

22. Leases continued

Leases signed in the year
During the year the Group signed a three year lease for its new office at Loftus House, Colima Avenue, Sunderland to house our

Safecall business.

On the lease commencement date the Group recognised a right-of-use asset of £91,145 and leasehold liability of £82,859. The right-

of-use asset is recognised at leasehold liability (£82,859), there were nil direct costs plus dilapidation provision estimated costs of

removal and restoring (£8,286).

A new three year lease agreement was entered into for the existing Delaware office premises following expiration of the previous contract.

On the lease commencement date the Group recognised a right-of-use asset of £104,405 and leasehold liability of £94,913. The right-

of-use asset is recognised at leasehold liability (£104,405), there were nil direct costs plus dilapidation provision estimated costs of

removal and restoring (£9,491).

23. Pension commitments

For some employees, the Group operates a funded pension plan providing benefits for its employees based on final pensionable

emoluments. The assets of the plan are held in a separate trustee administered fund. The Company has appointed an independent

sole trustee to oversee the governance of the fund. The plan closed to future accrual of benefits on 31 December 2016 and benefits now

increase broadly in line with inflation.

Under the defined benefit pension plan, each member’s pension at retirement is related to their pensionable service and final

pensionable emoluments. The weighted average duration of the expected benefit payments from the plan is around 20 years. The

defined benefit scheme is operated from a trust, which has assets which are held separately from the Group and is overseen by an

independent sole trustee who ensures the plan’s rules are strictly followed.

These figures were prepared by an independent qualified actuary in accordance with IAS19 (revised), and are based on membership

data as at 31 December 2022. The funding target is for the plan to hold assets equal in value to the accrued benefits based on projected

pensionable emoluments. If there is a shortfall against this target, then the Group and the trustee will agree deficit contributions to

meet this deficit over a period.

There is a risk to the Group that adverse experience could lead to a requirement for the Group to make additional contributions to

reduce any deficit that arises.

Contributions are set based upon funding valuations carried out every three years; the next valuation is due to be carried out as at

31 December 2023. The estimated amount of total employer contributions expected to be paid to the Plan during 2023 is £1.1m (2022

actual: £1.0m).

Actuarial gains and losses are recognised immediately through other comprehensive income.

The major assumptions in the 31 December 2022 disclosure under IAS19 (revised) are shown below and are applied to membership data

supplied at that date. This shows the net pension assets and liabilities.

N
A
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A
L

S
T
A
T
E
M
E
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T
S

Significant actuarial assumptions:

Retail Price Inflation

Consumer Price Inflation*

CPI single equivalent rate

Discount rate

5% limited RPI pension increases in payment

General salary increases

* Relates to dividends unclaimed over 12 years old.

Life expectancy of male/female aged 65 in 2022

Life expectancy of male/female aged 65 in 2040

Weighted average duration

2022

2021

3.20%

3.30%

RPI less 1.0% p.a.

prior to 2030, RPI less

0.1% p.a. thereafter

2.60%

4.80%

n/a

2022
years

2.70%

2.00%

n/a

2021
years

23.2/25.3

23.3/25.4

24.7/26.8

24.9/26.9

13.8

17.9

147

Notes to the accounts continued

for the year end 31 December 2022

23. Pension commitments continued

The amounts recognised in the income statement are as follows:

Interest expense/(income)

Total expense/(income) recognised in the income statement

The amounts recognised outside the income statement are as follows:

Remeasurements

(Gain)/loss recognised outside the income statement

The current allocation of plan assets is as follows:

Equities

Corporate bonds

LDI

Pensioner annuities

Diversified growth funds

Infrastructure

Cash/other

Total

2022
£000

100

300

Allocation %

2022

£000

13,500

4,500

9,700

500

3,600

6,800

6,900

Allocation %

2021
£000

100

(8,500)

2021

£000

29,500

5,600

13,900

700

8,600

6,200

3,800

100

45,500

100

68,300

• The Plan holds a number of pensioner annuities which have been valued consistently with the defined benefit obligation using

membership data as at 1 January 2023.

• At the time of writing, the value of the JP Morgan infrastructure fund on 31 December 2022 is unavailable. Therefore, the value of

£6.8m used is at an effective date of 1 October 2022.

• The Plan's non-annuity assets are invested in pooled funds, which are not themselves quoted. However the pooled funds are invested

in assets with prices quoted and traded on public exchanges. The exception to this is the JP Morgan infrastructure fund, where

underlying investments are not quoted.

Movement in present value of defined benefit obligation

Opening defined benefit obligation at 1 January

Interest on obligation

Benefits paid

Actuarial losses/(gains) due to:

Experience (gain)/loss

Changes in financial assumptions (gain)/loss

Changes in demographic assumptions (gain)/loss

Closing defined benefit obligation at 31 December

Movement in fair value of plan assets

Opening fair value of plan assets at 1 January

Interest on assets

Contributions by the employer

Benefits paid

Actual returns net of interest

Closing fair value of plan assets at 31 December

148 lawdebenture.com

2022
£000

61,700

1,200

(2,800)

2,400

(24,100)

(300)

38,100

2021
£000

65,800

900

(2,600)

2,300

(3,500)

(1,200)

61,700

2022
£000

2021
£000

68,300

63,000

1,300

1,000

(2,800)

(22,300)

45,500

800

1,000

(2,600)

6,100

68,300

Notes to the accounts continued

for the year end 31 December 2022

23. Pension commitments continued

The pension plan is exposed to investment risk (the movement of the discount rate used against the value of the plans assets), interest

rate risk (decreases/increases in the discount rate which will increase/decrease the defined benefit obligation) and longevity risk

(changes in the estimation of mortality rates of members).

Movement in the net defined benefit liability

Opening net defined benefit liability/(asset) at 1 January

(Income)/expense charged to profit and loss

Employer contributions

Amount recognised outside of profit and loss

Closing net defined benefit (asset)/liability at 31 December

Amounts recognised in statement of financial position

Present value of defined benefit obligation

Fair value of plan assets

(Surplus)/deficit

Effect of asset ceiling

Net defined benefit (asset)/liability

2022
£000

(6,600)

(100)

(1,000)

300

(7,400)

2021
£000

2,800

100

(1,000)

(8,500)

(6,600)

2022
£000

2021
£000

38,100

61,700

(45,500)

(68,300)

(7,400)

(6,600)

—

(7,400)

(6,600)

Over the year to 31 December 2022, the balance sheet improved from a surplus of £6.6m to a surplus of £7.4m. The Directors have

confirmed the entitlement to recognise the defined benefit asset with our Actuarial Advisors. This improvement is driven by:

• an significant increase in the discount rate during the year, which decreases the value of the pension obligations;

• changes to the mortality assumptions used to value the liability, which results in a decrease of the value of the pension obligations;

• investment returns on assets being higher than anticipated; and

• deficit reduction contributions paid by the Company of £1.0m during the year.

This was partially offset by:

• actual inflation being higher than that expected at the previous year end;

• an increase in expectations of future inflation, which increases the value of the pension obligations; and

• updated membership data.

Defined benefit scheme
The calculation of the defined benefit scheme assets and obligations is sensitive to the assumptions used.

N
A
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A
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S
T
A
T
E
M
E
N
T
S

The sensitivity to changes in assumptions and conditions which are significant to the calculation of the asset have been considered and

the following is an illustration of the potential impact.

Discount rate +0.1%

RPI Inflation assumptions +0.1%

Life expectancy at 65 +1 year

RPI/CPI gap 0.1% increase in wedge between RPI and CPI at all durations

Increase/(decrease)
in defined benefit obligations

at 31 December
2022
£ million

at 31 December
2021
£ million

0.5

1.0

0.5

(1.1)

0.8

2.8

(0.3)

149

Notes to the accounts continued

for the year end 31 December 2022

24. 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:

Dividends from subsidiaries

Interest on intercompany balances charged by subsidiaries

Management charges from subsidiaries

The ultimate parent entity is The Law Debenture Corporation p.l.c.

2022
£000

9,638

2,559

850

2021
£000

14,950

2,559

700

The key management personnel are the Directors of the Company. Details of their compensation are included in note 4 to the accounts

and in Part 2 of the Remuneration Report on pages 76 to 98. Key management personnel costs inclusive of employers national

insurance are £1,572,684 (2021: £1,438,456).

25. Movement in borrowings

Under IAS 7, the movement in borrowings in the year are as follows:

GROUP

Long-term borrowings

6.125% guaranteed secured bonds 2034

2.54% secured senior notes 2041

3.77% secured senior notes 2045

2.53% secured senior notes 2050

COMPANY

Long-term borrowings

3.77% secured senior notes 2045

2.54% secured senior notes 2041

2.53% secured senior notes 2050

31 December
2022
£000

Non-cash items
movement
£000

31 December
2021
£000

Non-cash items
movement
£000

31 December
2020
£000

39,520

19,966

74,434

29,989

163,909

74,434

19,966

29,989

124,389

(139)

(34)

(152)

(11)

(336)

(152)

(34)

(11)

(197)

39,659

20,000

74,586

30,000

164,245

74,586

20,000

30,000

124,586

—

39,632

—

74,569

—

114,201

74,569

—

74,569

The Group had no short-term borrowings in 2022 (2021: nil).

150 lawdebenture.com

Notes to the accounts continued

for the year end 31 December 2022

26. Distributable reserves

After paying the final dividend, the Company has retained earnings to pay 0.5 years of dividend payments at the current level. After

paying the final dividend, the Group has retained earnings to pay 0.9 years of dividends at the current level. The Company has realised

capital reserves of £726,754,000 (2021: £675,235,000) which would allow 18.7 (2021: 18.9) years of dividend payments at the current

level. The Group has realised capital reserves of £674,165,000 (2021: £622,646,000) which would allow 17.3 (2021: 17.4) years of dividend

payments at the current level.

27. Stock lending revenue

At 31 December 2022 the total value of securities on loan by the Company for stock lending purposes was £109,391,986 (2021:

£42,858,000). The maximum aggregate value of securities on loan at any one time during the year ended 31 December 2022 was

£197,631,719 (2021: £74,924,000).

Revenue derived from stock lending in 2022 is £626,099 (2021: £551,000).

28. Note to the statement of Cash Flows

Total (loss)/return before taxation

Adjust for non-cash flow items:

Adjust for loss/(gains) on investments

Movement in amortised cost of borrowings

Depreciation of property, plant and equipment

Depreciation of right-of-use assets

Amortisation of intangible assets

Decrease/(increase) in receivables

(Decrease)/increase in payables

(Decrease)/increase in deferred income

Normal pension contributions in excess of cost

(Decrease)/increase in other taxation payable

GROUP

2021
£000

2022
£000

COMPANY

2022
£000

2021
£000

(78,411)

155,320

(82,659)

157,077

126,234

(121,170)

126,234

(121,170)

(336)

328

931

675

198

—

220

858

490

(197)

—

(4,419)

860

(9,604)

1,920

(4,269)

(475)

(1,123)

1,330

—

(940)

—

1,010

—

2,139

2,920

—

Dividends receivable

(37,498)

(27,550)

(47,136)

(42,500)

Cash flows from operating activities

(before dividends received and taxation paid)

2,249

4,422

(6,157)

(1,534)

N
A
N
C

A
L

S
T
A
T
E
M
E
N
T
S

151

C O R P O R A T E I N F O R M A T I O N

Alternative performance measures

Alternative performance measures are numerical measures of the Company’s current, historical or future performance, financial position

or cash flows, other than financial measures defined or specified in the financial framework that the Company has chosen to apply

(International Financial Reporting Standards and the AIC SORP). The Directors use these measures as a means of assessing the Company’s

performance. The measures are particularly relevant for investment trusts and are widely used across the investment trust sector.

Net Asset Value per ordinary share

The value of the Company’s assets (i.e. investments (see note 13)) and cash at bank (see Statement of Financial Position) less any

liabilities (i.e. long-term borrowings (see note 20)) for which the Company is responsible, divided by the number of shares in issue (see

note 8). The aggregate NAV is also referred to as total shareholders’ funds in the Statement of Financial Position. In Law Debenture’s

case, the published NAV will include adjustments to reflect the fair value of the IPS business and the Company’s long-term debt. There

is a detailed summary of the NAV, including a description of how it is calculated, on page 36 of the Annual Report. From 1 July 2022, the

NAV per ordinary share is published daily. Prior to that it was published weekly and immediately after each month end.

The change in NAV per share (see total return below) over one, three, five and ten years, as shown at page 2, is calculated by taking total

return over the respective period and dividing by the opening NAV at the start of each period.

Net Asset Value with debt at fair value

The Group’s debt (long-term borrowings, further details can be found in note 20 on page 145) is valued in the Statement of Financial

Position (page 113) at amortised cost, which is materially equivalent to the repayment value of the debt on the assumption that it is held

to maturity. This is often referred to as ‘Debt at Par’. The current fair value of the debt, which assumes it is repaid under current market

conditions, is referred to as ‘Debt at Fair Value’. This fair value is detailed in note 20 on page 145. The difference between the fair and par

values of the debt is subtracted from or added to the Statement of Financial Position to derive the NAV with debt at fair value (see note

9 on page 131). The NAV with debt at fair value at 31 December 2022 was £972,566,000 (761.69 pence per ordinary share) and the NAV

with debt at par was £947,443,000 (742.02 pence per ordinary share).

Discount or Premium

The amount by which the market price per share of an investment trust is either higher (premium) or lower (discount) than the NAV per

share, expressed as a percentage of the NAV per ordinary share.

NAV per share
with debt and IPS
at fair value
pence

NAV per share
with debt
at par value
pence

Share price
pence

Premium/
(discount) to
fair value NAV

Premium/
(discount) to
par value NAV

761.69

787.83

742.02

828.86

771

799

1.2%

1.4%

3.9%

(3.6%)

At 31 December 2022

At 31 December 2021

Gearing/(Net cash)

Net gearing is calculated by dividing total borrowings less cash and cash equivalents by adjusted shareholders’ funds, expressed as a

percentage.

Borrowings (at PAR)

Statement of financial position

Cash and cash equivalents

Statement of financial position

Borrowings less cash

Net assets per Balance Sheet

Fair value uplift for IPS business

Debt fair value adjustment

Adjusted shareholders’ funds

Net gearing

152 lawdebenture.com

Page 36

2022
£000

163,909

(49,559)

114,350

799,067

148,376

25,123

972,566

12%

2021
£000

164,245

(35,880)

128,365

878,837

135,885

(50,229)

964,493

13%

(a)

(b)

(a/b)

Alternative performance measures continued

We have reviewed our approach to the calculation of gearing. We believe that it is appropriate to show net gearing in relation to

shareholders’ funds as it represents the amount of debt funding on the Investment Portfolio.

Ongoing charges

The ongoing charge ratio has been calculated in accordance with guidance issued by the AIC. It represents the total investment

management fee and other applicable administrative expenses expressed as a percentage of the average net asset values with debt at

fair value throughout the year.

Management fee revenue expense

Other attributable administration costs

Administration costs

Management fee capital expense

Ongoing charge

Average net assets1

Ongoing charge ratio

1 Calculated using the average month-end net asset value with debt at fair value.

Revenue earnings per share

2022
£000

566

2,448

3,014

1,697

4,711

2021
£000

569

2,220

2,789

1,706

4,495

959,711

0.49%

893,572

0.50%

The revenue earnings per share is the revenue return for the year (see Income Statement) divided by the weighted average number of

ordinary shares in issue during the year (see note 9 on page 131).

NAV total return

The total return is the return on the share price or NAV with debt at fair value taking into account both the rise and fall of NAVs/share

prices and dividends paid to shareholders. Any dividends received by a shareholder are assumed to have been reinvested in either

additional shares (for share price total return) or the Company’s assets (for NAV with debt at fair value total return). Dividends paid and

payable are set out in note 8 on page 130.

NAV/Share price per share at 31 December 2021 (pence)

NAV/Share price per share at 31 December 2022 (pence)

Change in the year (%)

Impact of dividends reinvested1 (%)

Total return for the year (%)

NAV per share
with debt at
fair value

Share price

787.83

761.69

(3.3%)

3.9%

0.6%

799

771

(3.5%)

3.9%

0.4%

1 The impact of dividends reinvested is calculated by calculating the total NAV/share price return for the year without the impact of re-invested dividends and comparing this to the

total return including the impact of re-invested dividends.

Yield

The yield is the annual dividend expressed as a percentage of the year end share price.

C
O
R
P
O
R
A
T
E

N
F
O
R
M
A
T
I

O
N

Annual dividend (pence)

Share price1 (pence)

Yield (%)

1 Based on the closing share price as at 31 December 2022.

2022
£000

30.5

771

4.0%

2021
£000

29.0

799

3.6%

153

C O R P O R A T E I N F O R M A T I O N

Company advisers and information

Registered office

8th Floor, 100 Bishopsgate, London, EC2N 4AG

T: 020 7606 5451

F: 020 7606 0643

W: www.lawdebenture.com

(Registered in England – No. 00030397)

Investment managers

Joint brokers

J.P. Morgan Securities PLC

25 Bank Street, London E14 5JP

Peel Hunt LLP

100 Liverpool Street, London EC2M 2AT

AIC

A member of the Association of Investment

James Henderson and Laura Foll are joint managers. They also

Companies

manage Lowland Investment Company plc, Henderson Opportunities

Trust plc and the Henderson UK Equity Income & Growth Fund.

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

Shareholder information

Investment trust status
The Company carries on business as an investment trust

Debenture’s portfolio in 1994 and took over lead responsibility for

company as defined in Sections 1158-1159 of the Corporation Tax

management of the portfolio in June 2003.

Act 2010.

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 became involved with Law Debenture’s portfolio

in September 2011 and became joint portfolio manager in 2020.

Company share information
Information about the Company can be found on its website

www.lawdebenture.com. The market price of its ordinary shares

is also published daily in the Financial Times.

Alternative Investment Fund Manager

The Law Debenture Corporation p.l.c.

Investment Portfolio manager

Janus Henderson Global Investors

201 Bishopsgate, London EC2M 3AE

Auditors

Deloitte LLP, 110 Queen Street, Glasgow, G1 3BX

Depositary

Registrars
Our registrars, Computershare Investor Services PLC, operate a

dedicated telephone service for Law Debenture shareholders

– 0370 707 1129. Shareholders can use this number to access

holding balances, dividend payment details, share price data, or

to request that a form be sent to their registered address.

Share dealing
Computershare Investor Services PLC offers shareholders a share

dealing service via the internet or by post.

Internet dealing: The fee for this service will be 1.4% of the value

of each transaction (subject to a minimum of £40).

Website address: www.computershare.com/dealing/uk

Registry Postal Share Dealing Service: The fee for this service will

NatWest Trustee and Depositary Services Limited

be 1.4% of the value of each transaction (subject to a minimum of

250 Bishopsgate, London EC2M 4AA

£40). Forms can be found at: www.computershare.com/dealing/uk

or requested by calling: 0370 703 0084.

The service is available only to those shareholders who hold their

shares on the register (i.e. it is not available to those who hold

their shares via a nominee).

Shareholders using the internet service will need their

Shareholder Reference Number (SRN) and post code to

complete their trade. The SRN can be found printed on your

proxy card.

Global custodian

HSBC Bank plc (under delegation by the depositary)

8 Canada Square, London E14 5HQ

Registrar

Computershare Investor Services PLC

The Pavilions, Bridgwater Road, Bristol BS99 6ZZ

T: 0370 707 1129

154 lawdebenture.com

Financial calendar

Dividend and interest payments

Ordinary shares:

Three interim dividends

Final dividend

Announced in May, September and December

Paid July, October and January

Announced in February

Paid April

6.125% guaranteed secured notes

Paid April and October

3.77% senior secured notes

Paid March and September

2.54% series A senior secured notes

Paid May and November

2.53% series B senior secured notes

Paid May and November

Group results:

Half year results

Full year results

Report and accounts

Announced in July

Announced in February

Published in March

Annual General Meeting

Held each year in March/April

Factsheets

Published monthly on the Company’s website

Payment methods for dividends

Dividends and interest can be paid to shareholders by means of BACS. Mandate forms for this purpose are available on request from the

Company’s registrars.

Subsidiary company details

Subsidiary companies not incorporated in the United Kingdom, as listed on pages 135 and 136, are registered at the following addresses:

Companies registered in Hong Kong

Suite 1301, 13/F Ruttonjee House, Ruttonjee Centre,

11 Duddell Street, Central, Hong Kong

Companies registered in the Republic of Ireland

38/39 Fitzwilliam Square West, Dublin 2, Ireland

Companies registered in USA
other than Delaware Corporate Services

801 2nd Avenue, Suite 403, New York,

NY 10017, USA

Companies registered in USA -
Delaware Corporate Services

919 N Market St, Suite 725, Wilmington,

DE 19801, USA

Company registered in Jersey

3rd Floor, IFC 5, Castle Street, St. Helier, Jersey JE2 3BY

Company registered in Cayman Islands

Governors Square, Suite 5-204, 23 Lime Tree Bay Avenue, Grand Cayman,

Cayman Islands, KY1-1108

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Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN that the 133rd Annual General Meeting of the Company will be held in-person at the offices of The Law

Debenture Corporation p.l.c., 8th Floor, 100 Bishopsgate, London, EC2N 4AG on 30 March 2023 at 11.00am to transact the following

business:

Ordinary resolutions

To consider and, if thought fit, to pass the following resolutions which will be proposed as ordinary resolutions:

To receive the report of the Directors, the strategic report and the audited accounts and the auditor’s report for the

year ended 31 December 2022.

To approve the Directors’ remuneration policy.

3. To approve the Directors’ remuneration report for the year ended 31 December 2022.

4. To declare a final dividend of 8.75p per share in respect of the year ended 31 December 2022.

5. To re-elect Denis Jackson as a Director.

6. To re-elect Trish Houston as a Director.

7. To re-elect Robert Hingley as a Director.

8. To re-elect Tim Bond as a Director.

9. To re-elect Pars Purewal as a Director.

10. To re-elect Claire Finn as a Director.

11. To re-elect Clare Askem as a Director.

12.

To re-appoint Deloitte LLP as auditors of the Company to hold office until the conclusion of the next general meeting

at which the accounts of the Company are laid.

13. To authorise the Audit and Risk Committee to determine the auditor’s remuneration.

14. General authority to allot shares.

THAT:

(a) in substitution for all existing authorities (but without prejudice to any allotments made pursuant to the terms of such

authorities), the Directors be generally and unconditionally authorised pursuant to and in accordance with section 551 of

the Companies Act 2006 (the ‘Act’) to exercise for the period ending on the date of the Company’s next Annual General

Meeting (‘AGM’), all the powers of the Company to allot shares in the Company or to grant rights to subscribe for or to

convert any security into shares in the Company up to an aggregate nominal amount (within the meaning of sections

551(3) and (6) of the Act) of £642,922.70 (representing 12,858,454 ordinary shares) (or, if less, the number representing 10%

of the total ordinary shares in issue (excluding treasury shares) as at the date of passing of this resolution); and

(b) the Company may during such period make offers or agreements which would or might require the making of

allotments of equity securities or relevant securities as the case may be after the expiry of such period.

15. Amendment to the rules of The Law Debenture Corporation p.l.c. Long-Term Incentive Plan.

THAT current rule 3.2 of The Law Debenture Corporation p.l.c. Long Term Incentive Plan be deleted in its entirety and that the

following new rule 3.2 be and is hereby approved:

Rule 3.2:

“An Award must not be granted to an Eligible Employee if the result of granting the Award would be that, at the proposed

Award Date, the Market Value of the Plan Shares subject to that Award, when aggregated with the Market Value of the Plan

Shares subject to any other Award granted to them in the same Financial Year, would exceed:

in relation to a Financial Year up to and including the Financial Year ending on 31 December 2022, 100% of their Annual

Remuneration; or

in relation to a Financial Year commencing on or after 1 January 2023, the higher of 100% of their Annual Remuneration or

the limit included in the Directors’ Remuneration Policy.

156
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Notice of Annual General Meeting continued

The limit as set out in this Rule 3.2 shall not apply to Buy-Out Awards.

For the purpose of this Rule 3.2:

1. Annual Remuneration means the higher of:

(a) basic salary paid by the Group expressed as an annual rate as at the Award Date; and

(b) basic salary paid by the Group for the period of 12 months ending on the last day of the month immediately

preceding the month in which the Award Date occurs.

2. Financial Year means the financial year of the Company.

The Market Value of Plan Shares subject to an Award shall be measured as an average over the five Dealing Days ending
on the date on which the Award was granted or, if the Board so determines for the purpose of the grant of the Award, on

the date on which that Award was granted.

Where a payment of salary is made in a currency other than sterling, the payment shall be treated as equal to the equivalent

amount of sterling determined by using any rate of exchange which the Board may reasonably select.”

Special resolutions

To consider and, if thought fit, to pass the following resolutions which will be proposed as special resolutions:

16. Disapplication of statutory pre-emption rights.

THAT if resolution 14 is passed, the Directors be authorised to allot equity securities (as defined in the Act) for cash under the

authority given by that resolution and/or to sell ordinary shares held by the Company as treasury shares for cash as if section

561 of the Act did not apply to any such allotment or sale, such authority to be limited to:

(a) the allotment of equity securities or sale of treasury shares in connection with a rights issue, open offer or other issue

or offer to ordinary shareholders in proportion (as nearly as possible) to their existing holding of shares (but subject to

such exclusions as the Directors may deem necessary or appropriate to deal with fractional entitlements, record dates or

legal, regulatory or practical problems arising in any overseas territory, the requirements of any regulatory body or stock

exchange or any other matter); and

(b) the allotment of equity securities or sale of treasury shares (otherwise than under paragraph (a) above up to a nominal

amount of £642,922.70 (representing 12,858,454 ordinary shares),

such authority to expire at the next AGM of the Company (or, if earlier, at the close of business on 28 June 2024) but, in

each case, prior to its expiry the Company may make offers, and enter into agreements, which would, or might, require

equity securities to be allotted (and treasury shares to be sold) after the authority expires and the Directors may allot equity

securities (and sell treasury shares) under any such offer or agreement as if the authority had not expired.

17. Additional authority to disapply pre-emption rights for acquisitions or specified capital investment.

THAT, if resolution 14 is passed, the Directors be authorised in addition to any authority granted under resolution 16 to allot

equity securities (as defined in the Act) for cash under the authority given by that resolution and/or to sell ordinary shares

held by the Company as treasury shares for cash as if section 561 of the Act did not apply to any such allotment or sale, such

authority to be:

(a) limited to the allotment of equity securities or sale of treasury shares up to a nominal amount of £642,922.70 (representing

12,858,454 ordinary shares); and

(b) used only for the purposes of financing (or refinancing, if the authority is to be used within six months of the original

transaction) a transaction which the Directors of the Company determine to be an acquisition or other capital investment

of a kind contemplated by the Statement of Principles on disapplying Pre-Emption Rights most recently published by

the Pre-Emption Group prior to the date of this notice,

such authority to expire at the next AGM of the Company (or, if earlier, at the close of business on 28 June 2024) but, in

each case, prior to its expiry the Company may make offers, and enter into agreements, which would, or might, require

equity securities to be allotted (and treasury shares to be sold) after the authority expires and the Directors may allot equity

securities (and sell treasury shares) under any such offer or agreement as if the authority had not expired.

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Notice of Annual General Meeting continued

18. General authority to buy back shares.

THAT the Company be and is generally and unconditionally authorised in accordance with sections 693 and 701 of the Act

to make market purchases (within the meaning of section 693(4) of the Act) of any of its issued ordinary shares of 5p each in

the capital of the Company, in such manner and upon such terms as the Directors of the Company may from time to time

determine, provided always that:

(a) the maximum aggregate number of shares that may be purchased is 19,274,822;

(b) the minimum price which may be paid for a share shall be 5p;

(c)

the maximum price which may be paid for a share shall be an amount equal to 105% of the average of the middle market

quotations (as derived from the London Stock Exchange Daily Official List) for the shares for the five business days

immediately preceding the day on which the share is purchased; and

(d) unless previously revoked, renewed or varied, the authority hereby conferred shall expire on the date of the Company’s

next AGM provided that a contract of purchase may be made before such expiry which will or may be executed wholly or

partly thereafter, and a purchase of shares may be made in pursuance of any such contract.

19. Authority to convene a general meeting – notice.

THAT a general meeting of the Company, other than an AGM, may be called on not less than 14 clear days’ notice.

This Notice was approved by the Board of Directors on 27 February 2023 and signed on its behalf by

Law Debenture Corporate Services Limited
Company Secretary

Registered No. 00030397

Registered office:

8th Floor

100 Bishopsgate

London EC2N 4AG

158158 lawdebenture.com

Explanatory notes to the Notice

The Notice of the Annual General Meeting (the ‘Notice’) to be

The biographical details for each Director are set out on pages

held on 30 March 2023 (the ‘Meeting’) is set out on pages 156 to

58 and 59 of the 2022 Annual Report.

158. The following notes provide an explanation as to why the

resolutions set out in the Notice are being put to shareholders.

In proposing the re-election of the Directors, the Chairman

confirms that, following the internal performance evaluation

Resolution 1
Under the Companies Act 2006 (the ‘Act’), the Directors are

(described on pages 70 and 71 of the 2022 Annual Report),

each individual continues to make an effective and valuable

required to present the annual accounts and reports of the

contribution to the Board and demonstrates commitment to

Company to shareholders at a general meeting. These are

their role. Accordingly, the Board recommends their re-election.

contained in the Company’s Annual Report and financial

statements for the year ended 31 December 2022 (the ‘2022

Annual Report’), which was sent to shareholders on 6 March

2023.

Resolution 2
The Act requires quoted companies to present to their

shareholders a Directors’ remuneration policy (the ‘Policy’) for

approval at least every three years. The Policy was last approved

by shareholders at the AGM held on 7 April 2020. During the

past year, the Board’s Remuneration Committee reviewed and

amended the Policy to ensure that it was appropriate, market

competitive and aligned with the Group’s strategic goals and

financial key performance indicators as well as developments

Resolution 12
The Company’s auditors must offer themselves for appointment

at each AGM at which accounts are presented. Accordingly, the

Board, on the recommendation of the Audit and Risk Committee,

recommends the re-appointment of Deloitte LLP as the

Company’s auditors.

Resolution 13
This resolution, if passed, will authorise the Audit and Risk

Committee to agree the remuneration of Deloitte LLP for their

services as auditors.

Resolution 14
Under the Act, Directors may not allot shares in the Company

in UK corporate governance best practice. Following a robust

(or grant certain rights over shares) without the authority of

and objective review, and taking account of the views of

shareholders in a general meeting (other than pursuant to an

shareholders, the proposed Policy is set out on pages 81 to 91

employee share scheme). In certain circumstances this could be

of the 2022 Annual Report for approval. This should be read

unduly restrictive. The Directors’ existing authority to allot ordinary

in conjunction with the Remuneration Committee Chair’s

shares, which was granted at the AGM of the Company held on

introductory statement to the Directors’ remuneration report on

7 April 2022, will expire at the end of this year’s AGM.

pages 76 to 79 of the 2022 Annual Report.

Resolution 3
In accordance with the provisions of the Act, the Company’s

The Investment Association’s Share Capital Management

Guidelines and the Pre-Emption Group Principles permit,

and regard as routine, an authority to allot up to two-thirds

Report on Directors’ remuneration is being put to an annual

of a company’s existing issued share capital. Subject to the

shareholder vote by ordinary resolution. This resolution is an

passing of this resolution, which will be proposed as an ordinary

advisory vote, as provided by law, meaning that the Directors’

resolution, the Directors will be authorised, in place of all existing

entitlements to remuneration are not conditional upon the

authorities, to allot shares (pursuant to section 551 of the Act) up

resolution being passed. The report is set out in full on pages 76

to an aggregate nominal amount of £642,922.70 (representing

to 98 of the 2022 Annual Report.

Resolution 4
The Board proposes a final dividend of 8.75 pence per share in
respect of the year ended 31 December 2022. If approved, the

recommended final dividend will be paid on 13 April 2023 to

12,858,454 ordinary shares), representing approximately ten

per cent of the nominal value of the issued ordinary shares

on 27 February 2023 (being the last practicable date prior to
the publication of this document). As at 27 February 2023, the

Company did not hold any shares in treasury.

all ordinary shareholders who are on the register of members

The authority conferred will expire (unless previously revoked,

on 10 March 2023. The shares will be marked ex-dividend on

varied or renewed) at the end of the next AGM. However, the

9 March 2023.

Resolutions 5 – 11
Under the Company’s Articles of Association (the ‘Articles’), one

third of the Directors must retire from office by rotation at each

AGM and may offer themselves for re-election (this does not

include Directors appointed to the Board since the last AGM).

The 2018 UK Corporate Governance Code recommends that

Company may make an offer or agreement prior to the expiry of

this authority which would or might require shares to be allotted

after the expiry of this authority – in this case, the Directors

will be permitted to allot securities pursuant to such offer or

agreement as if this authority had not expired.

Resolution 15
Resolution 15 seeks to approve the proposed amendment to

all directors of premium listed companies should be subject

rule 3.2 of The Law Debenture Corporation p.l.c. Long Term

to annual re-election, so Denis Jackson, Trish Houston, Robert

Incentive Plan (‘the Plan’) to amend the maximum value

Hingley, Tim Bond, Pars Purewal, Claire Finn and Clare Askem

of awards an eligible employee can receive in any financial

will retire from office and offer themselves for re-election.

year commencing on and after 1 January 2023 to the higher

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Explanatory notes to the Notice continued

of 100% of base salary or the limit included in the Directors’

The maximum price which may be paid for each share must

Remuneration Policy. This amendment is being proposed

not be more than 105% of the average of the mid-market values

to ensure that the rules of the Plan are consistent with the

of the Ordinary Shares for the five business days before the

Directors’ Remuneration Policy. The exception to this limit for

purchase is made. The minimum price which may be paid for

buy-out awards will remain unchanged.

each ordinary share is 5p.

Resolution 16
Unless they are given an appropriate authority by shareholders,

The Directors are committed to managing the Company’s

capital effectively and do not intend to exercise such

if the Directors wish to allot any shares for cash or grant

authority at present. Purchases would only be made after

rights over shares (other than pursuant to an employee share

considering the effect on earnings per share and the benefits

scheme) they must first offer them to existing shareholders in

for shareholders generally.

proportion to their existing holdings. These are known as pre-

emption rights. The existing disapplication of these statutory

pre-emption rights, which was granted at the AGM held on

7 April 2022, will expire at the end of this year’s AGM.

Resolution 16 seeks approval to disapply the pre-emption rights,

by allowing Directors to allot equity securities (including a sale

of treasury shares) for cash: (i) in connection with rights issues

and other preemptive issues in favour of existing shareholders in

proportion to their existing holdings (subject to certain exclusions);

(ii) by way of an open offer or other issue of securities in favour

This authority shall expire at the AGM to be held in 2024 when a

resolution to renew the authority will be proposed.

Resolution 19
The Act requires that all general meetings must be held on

at least 21 clear days’ notice. Notwithstanding the notice
provisions in the Articles, a general meeting (other than an

AGM) may be held on at least 14 clear days’ notice where:

• the Company makes an electronic means of voting available
to all shareholders for the meeting. This condition is met by

of existing shareholders in proportion to their existing holdings

the Company providing the facility for shareholders to appoint

(subject to certain exclusions); and (iii) to persons other than existing

a proxy via an online shareholder portal operated by our

shareholders up to an aggregate nominal amount of £642,922.70

Registrars; and

(representing 12,858,454 ordinary shares), being no more than

ten per cent of the issued ordinary share capital in issue on the

27 February 2023, in each case without the equity securities first

being offered to the existing shareholders in proportion to their

existing holdings.

Resolution 17
Resolution 17 seeks an additional and separate approval to

disapply pre-emption rights by allowing Directors to allot equity

securities (or sell treasury shares) for cash, of up to a further

ten per cent of the total ordinary share capital, representing up

to an aggregate nominal amount of £642,922.70 (representing

• the shareholders pass a special resolution reducing the period

of notice to not less than 14 days either at the immediately

preceding AGM or a general meeting held since that AGM.

It is not the Company’s intention to use the shorter notice

period as a matter of routine but only when the flexibility is

merited by the business of the meeting and is thought to be in

the interests of shareholders as a whole. If given, this approval

will be effective until the end of the AGM to be held in 2024.

Recommendation
Full details of the above resolutions are contained in the Notice.

12,858,454 ordinary shares), as at 27 February 2023, without such

The Directors consider that all the resolutions to be proposed

equity securities first being offered to the existing shareholders

at the Meeting are in the best interests of the Company and its

in proportion to their holdings, where the allotment is to

finance an acquisition or capital investment, and/or refinance a

transaction of that nature entered into within six months of the

members as a whole. The Directors unanimously recommend

that shareholders vote in favour of all the resolutions, as they
intend to do in respect of their own beneficial holdings.

original transaction.

The Directors confirm that they will only allot securities (or sell

treasury shares for cash) pursuant to this authority where that

If you are in any doubt about the contents of this document,

you should immediately consult your stockbroker, bank

manager, solicitor, accountant or other independent

allotment is in connection with an acquisition or specified capital

financial adviser authorised under the Financial Services and

investment (as described in the Pre-Emption Group’s Statement

Markets Act 2000, or if outside the United Kingdom, another

of Principles) which is announced at the same time as the

appropriately authorised financial adviser, without delay.

allotment, or which has taken place in the preceding six-month

period and is disclosed in the announcement of that allotment.

Resolution 18
Resolution 18 is a special resolution that will grant the Company

authority to make market purchases of up to 19,274,822 shares,

If you have sold or otherwise transferred all of your shares in

the Company you should immediately send this document,

together with the accompanying form of proxy, to the

stockbroker, bank or other agent through whom the sale

or transfer was effected, for transmission to the purchaser

representing 14.99% of the issued ordinary share capital as

or transferee.

at the date of the Notice. Any shares bought back will either

be cancelled or placed into treasury at the determination of

the Directors.

160 lawdebenture.com

Shareholder notes

The following notes explain your general rights as a shareholder

• your unique pin code; or

and your right to attend and vote at the Meeting or to appoint

someone else to vote on your behalf.

To be entitled to attend and vote at the meeting (and for the

purpose of the determination by the Company of the number

of votes they may cast), shareholders must be registered in the

Tuesday, 28 March 2023 (or, in the event of any adjournment,

close of business on the date which is 48 hours before the

time of the adjourned meeting). Changes to the register of

members after the relevant deadline shall be disregarded in

determining the rights of any person to attend and vote at the

meeting. In the case of joint holders of a share, the vote of the

senior who tenders a vote, whether in person or by proxy, shall

(d) in the case of shares held through CREST, via the CREST

system (see notes 8-11 on pages 161 and 162).

4. Any person to whom this Notice is sent who is a person

nominated under Section 146 of the Companies Act 2006 (the

'Act') to enjoy information rights (a ‘Nominated Person’) may,

under an agreement between him/her and the shareholder by

whom he/she was nominated, have a right to be appointed (or

to have someone else appointed) as a proxy for the meeting.

If a Nominated Person has no such proxy appointment right

or does not wish to exercise it, he/she may, under any such

agreement, have a right to give instructions to the shareholder

as to the exercise of voting rights.

be accepted to the exclusion of the votes of the other joint

5. The statement of the rights of shareholders in relation to

holders and for this purpose seniority is determined by the

order in which the names stand in the register of members in

the appointment of proxies in notes 2 and 8 do not apply to
Nominated Persons. The rights described in these paragraphs

respect of the share.

can only be exercised by shareholders of the Company.

Shareholders are entitled to appoint a proxy to exercise all or

6. A vote withheld is not a vote in law, which means that the vote

part of their rights to attend, and to speak and vote on their

will not be counted in the calculation of votes for or against the

behalf at the meeting. A shareholder may appoint more than

resolution. If no voting indication is given, your proxy will vote

one proxy in relation to the meeting provided that each proxy

or abstain from voting at his/her discretion. Your proxy will vote

is appointed to exercise the rights attached to a different

(or abstain from voting) as he/she thinks fit in relation to any

ordinary share or ordinary shares held by that shareholder. A

other matter which is put before the meeting.

proxy need not be a shareholder of the Company. A form of

proxy, which accompanies this Notice, may be used to make

such appointment and give proxy instructions. If you do not

have a form of proxy and believe that you should have one, or

if you require additional forms, please contact the Company's

registrar, whose contact details are provided above.

If you return more than one proxy appointment (except where

multiple proxies have been appointed), either by paper or

electronic communication, that appointment received last by

the Registrar before the latest time for the receipt of proxies

will take precedence. You are advised to read the terms and

conditions of use carefully. Electronic communication facilities

3. Dispatch instructions: To be valid, any form of proxy and any

are open to all shareholders and those who use them will not

power of attorney or other authority under which it is executed

be disadvantaged.

(or a duly certified copy of any such power or authority), must

be returned by no later than 11:00 am on Tuesday, 28 March

2023 through any one of the following methods:

8. The return of a completed form of proxy, electronic filing or any

CREST proxy instruction (as described in note 10 below) will not

prevent a shareholder from attending the meeting and voting

(a) by post at Computershare Investor Services PLC, The Pavilions,

in person if he/she wishes to do so.

Bridgwater Road, Bristol, BS99 6ZY, United Kingdom

(Tel: 0370 707 1129 if dialling from the UK and

+44 370 707 1129 if dialling from abroad); or

(b) by hand or courier (during normal business hours only) to

the Company’s UK registrar at: Computershare Investor

Services PLC, The Pavilions, Bridgwater Road, Bristol,

BS13 8AE, United Kingdom

CREST members who wish to appoint a proxy or proxies
through the CREST electronic proxy appointment service

may do so for the meeting (and any adjournment of the

meeting) by using the procedures described in the CREST

Manual (available from https://www.euroclear.com/site/public/

EUI). CREST personal members or other CREST sponsored

members, and those CREST members who have appointed

a service provider/(s), should refer to their CREST sponsor

(Tel: 0370 707 1129 if dialling from the UK and

or voting service provider/(s), who will be able to take the

+44 370 707 1129 if dialling from abroad); or

appropriate action on their behalf.

10. In order for a proxy appointment or instruction made by

registrar at www.investorcentre.co.uk/eproxy, where the
following details, which can be found on your proxy card or

means of CREST to be valid, the appropriate CREST message
(a ‘CREST Proxy Instruction’) must be properly authenticated

in an email received from Computershare, will be required:

in accordance with Euroclear UK & International Limited’s

• the meeting control number;

specifications and must contain the information required

for such instructions, as described in the CREST Manual. The

• your shareholder reference number; and

message must be transmitted so as to be received by the

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Shareholder notes continued

issuer’s agent by 11:00 am on Tuesday, 28 March 2023. For this

527 or 528 of the Act. Where the Company is required to

purpose, the time of receipt will be taken to mean the time

place a statement on a website under Section 527 of the Act,

(as determined by the timestamp applied to the message by

it must forward the statement to the Company’s auditor

the CREST application host) from which the issuer’s agent

not later than the time when it makes the statement

is able to retrieve the message by enquiry to CREST in the

available on the website. Business which may be dealt with

manner prescribed by CREST. After this time, any change of

at the meeting for the relevant financial year includes any

instructions to proxies appointed through CREST should be

statement that the Company has been required to publish

communicated to the appointee through other means.

on a website under Section 527 of the Act.

11. CREST members and, where applicable, their CREST sponsors,

15. Any shareholder attending the meeting has the right to ask

or voting service providers should note that Euroclear UK

questions. The Company must answer any such question

& International Limited does not make available special

relating to the business being dealt with at the meeting, but

procedures in CREST for any particular message. Normal

no such answer need be given if: (a) to do so would interfere

system timings and limitations will, therefore, apply in relation

unduly with the preparation for the meeting or involve the

to the input of CREST Proxy Instructions. It is the responsibility

disclosure of confidential information; (b) the answer has

of the CREST member concerned to take (or, if the CREST

already been given on a website in the form of an answer

member is a CREST personal member, or sponsored member,

to a question; or (c) it is undesirable in the interests of the

or has appointed a voting service provider, to procure that his

Company or the good order of the meeting that the question

CREST sponsor or voting service provider takes such action

be answered.

as shall be necessary to ensure that a message is transmitted

by means of the CREST system by any particular time. In this

connection, CREST members and, where applicable, their

CREST sponsors or voting system providers are referred, in

particular, to those sections of the CREST Manual concerning

Registered shareholders may submit their questions to the

Directors in advance of the meeting by sending an email to

the Company Secretary at TSU.cosec@lawdeb.com and the

Company will answer these in due course.

practical limitations of the CREST system and timings. The

16. The following documents are available for inspection during

Company may treat a CREST Proxy Instruction as invalid

normal business hours from Monday, 6 March 2023 until the

in the circumstances set out in Regulation 35(5)(a) of the

conclusion of the AGM at the Company’s registered office and

Uncertificated Securities Regulations 2001.

may also be inspected at the AGM venue from 10.30 am on the

12. Any corporation which is a member can appoint one or more

day of the AGM until its conclusion:

corporate representative(s) who may exercise, on its behalf,

(a) copies of the Directors’ letters of appointment and service

all its powers as a member provided that no more than one

contracts; and

corporate representative exercises powers in relation to the

same shares.

13. As at 27 February 2023 (being the latest practicable business

day prior to the publication of this Notice), the Company had

an issued share capital of 128,584,541 ordinary shares, carrying

one vote each and no restrictions and no special 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. Therefore, the total voting rights in

(b) a copy of the Articles of Association of the Company.

A copy of the 2022 Annual Report and financial statements

(including the Notice of AGM) will be available for viewing

at the Financial Conduct Authority’s National Storage

Mechanism, from the mailing date of this Notice.

17. You may not use any electronic address provided in either this

Notice or any related documents (including the form of proxy)
to communicate with the Company for any purposes other

the Company is 128,584,541.

than those expressly stated.

14. Under Section 527 of the Act, shareholders meeting the

18. Personal data provided by shareholders at or in relation to the

threshold requirements set out in that section have the right

to require the Company to publish, on a website, a statement

setting out any matter relating to:

(i) the audit of the Company’s financial statements (including

the auditor’s report and the conduct of the audit), which

are to be laid before the meeting; or

(ii) any circumstances connected with an auditor of the

Company ceasing to hold office since the previous

meeting at which annual accounts and reports were laid in

accordance with Section 437 of the Act. The Company may

not require the shareholders requesting any such website

publication to pay its expenses in complying with Sections

162162 lawdebenture.com

meeting will be processed in line with the Company’s privacy

policy. Detailed information on how the Company processes

your personal data and what your rights are under applicable

data privacy laws can be accessed on the Company’s website

at https://www.lawdebenture.com/privacy-and-cookie-policy.

A copy of this Notice and other information required by section

311A of the Act, can be found on the Company’s website at

https://www.lawdebenture.com/investment-trust/shareholder-

information/corporate-governance/agm.

B
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C
K

L
A
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E

T R E E T

N R
Shoreditch
E
High Street
SCLATER ST

G R E

BETHN A L

H
G
HI
H
C
T
DI
E
R
O
H
S

Annual General Meeting venue

T
S
D

P P OL

PRIMROSE
ST

The offices of The Law Debenture Corporation p.l.c., 8th Floor, 100 Bishopsgate, London EC2N 4AG.

Liverpool
Street

E
T
A
G
S
P
O
H
BIS

LONDON WALL

WORMWOOD

Moorgate

E
T
A
G
R
O
O
M

A R T IL

ER Y L A N E

T
S
D
A
O

O PSGATE

BISH

Y AXE

R
A

T. M

V
I
S

I
T

LEA DENHALL STREET

T . B O T O L

H S
W H I T

E’S

Aldgate

N
O
R

E
S

A L D
Fenchurch
Street

L H I G

H S T

Aldgate

East

N
S

E
L
L

T
R
E
E
T

OL D B
E A D N E E D L E

S T

CORN H I L L

’

Bank of
England

POULTRY

LOM

D ST

GRACECHURCH
STREET

FENCH U R C H

Bank

Cannon
Street

Monument

EASTCHEAP

Tower
Gateway

Tower
Hill

T OW E R

H I L L

RAILWAY

UNDERGROUND

BUSES

PARKING

Liverpool Street
(Central, Circle, Hammersmith

You may select the 149, 35,

There is limited meter parking

47 or 388 bus services from

in business hours near the

& City and Metropolitan lines)

London Bridge or the 26 or 8

venue. Parking is available at

Monument
(Circle and District lines)

London
Bank
(Central, Northern, Waterloo &
Bridge
City

City lines and Docklands Light

Railway)

London Bridge
(Northern and Jubilee lines)

London
Bridge

bus services from St. Paul’s to

Wormwood Street, which is

directly across from the venue.

You may also take the 205

Tower

from Old Street or the 43 or 133

bus services from Moorgate

to Liverpool Street, which is a

5-minute walk from the venue.

City Hall

R
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W
O
T

E
G
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RI
B

C
O
R
P
O
R
A
T
E

N
F
O
R
M
A
T
I

O
N

S
T

Broadgate or London Finsbury

Square. There is also multi-

KATHARIN

storey parking at Aldersgate

E’S
Car Park near London Wall.
W

St. Katharine

163163

K
R
A
W
H
T
U
O
S

E
G
D
I
R
B

mile include:

N
Main line stations within one
O
D
N
O
L

• Liverpool Street

E
G
D
I
R
B

• London Bridge

• Farringdon

Southwark
• Fenchurch Street
Cathedral

• Cannon Street

• Blackfriars

• Holborn Viaduct

EET
R
T
S

The Law Debenture Corporation p.l.c. 8th Floor, 100 Bishopsgate, London, EC2N 4AG

Tel: 020 7606 5451 | www.lawdebenture.com