Law Debenture Corp. sees 2012 profits soar

By MoneyWeek

published 1 March 2013

in Features

Investment trust group Law Debenture Corp. profits soared in 2012 as the company rebounded the previous year's slump.

Pre-tax profits came to £78.61m last year, compared to loss of £2.19m in 2011.

Net gain on investments held at fair value through profits rose to £59.25m from the previous year's loss of £22.17m.

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The company recommended a final dividend of 9.75p per share, bringing the total for the year up to 14.25, up from 13.5p the year earlier.

"Equity markets rose and good corporate performance led to increased dividends," the company explained in a statement.

"However, uncertainty remained as a result of persistent fiscal deficits, uncertainty over the euro and disappointing rates of recovery following the financial crisis."

While the global economy failed to recovery fast as hoped, the firm saw strong growth in equity markets, particularly in the Far East.

A majority of the group's investments were in the UK where small and medium sized companies outperformed larger companies.

The five largest contributors included IP Group, Smith, Hill & Smith, International Personal Finance and Senior which were the biggest risers by value.

Royal Dutch Shell, BG, GlaxoSmithKline, BP and Cape proved to be the largest fallers by value.

During the period, the company bought and sold Apple at a profit. Law Debenture said it was "unusual for a company to come in and out of the portfolio but consumer electronics is a fluid industry undergoing rapid change and the sale subsequently proved to have been timely".

"We will consider investing in companies of any size so long as they can add value," it said.

"For example, we took a holding in Oxford Catalysts, a small AIM listed company whose technology in the production of clean synthetic fuels could lead to substantial growth in business over coming years."

Looking ahead, the company said it was not convinced the macroeconomic uncertainty of recent years is over and will be taking caution on investments this year.

Shares fell 0.24% to 464.40p at 09:33 Friday.