REG-Law Debenture Corp: Half-yearly Report

Fri Jul 22, 2011 2:30am EDT

* Reuters is not responsible for the content in this press release.

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

       HALF YEARLY REPORT FOR THE SIX MONTHS TO 30 JUNE 2011 (unaudited)       

The Directors recommend an interim dividend of 4.5p on the ordinary shares for
the six months to 30 June 2011. The report including the unaudited results for
the period was as follows:

Group summary

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

Investment portfolio

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

Our portfolio of investments is managed by Henderson Global Investors Limited
under a contract terminable by either side on six months' notice.

Our objective is to achieve long term capital growth in real terms and steadily
increasing income. The aim is to achieve a higher rate of total return than the
FTSE All-Share Index through investing in a portfolio diversified both
geographically and by industry.

Independent fiduciary services

We are a leading provider of independent fiduciary services. Our activities are
corporate trusts, treasury management and structured finance administration,
pension trusts, corporate services (including agent for service of process)
whistle blowing and board effectiveness services. We have offices in London,
Sunderland, New York, Delaware, Hong Kong, the Channel Islands and the Cayman
Islands.

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

Registered office

Fifth Floor

100 Wood Street

London EC2V 7EX

Telephone: 020 7606 5451

Facsimile: 020 7606 0643

Email: enquiries@lawdeb.com

(Registered in England No 30397)

Financial summary

Highlights

                                        30 June     30 June       31 December
                                                                             
                                           2011        2010              2010
                                                                             
                                          Pence       Pence             Pence
                                                                             
Share price                              372.80      278.20            356.60
                                                                             
NAV per share after proposed             361.86      279.40            342.92
dividend                                                                     
                                                                             
Net revenue return per share:                                                
                                                                             
- Investment portfolio                     5.03        4.32              7.07
                                                                             
- Independent fiduciary services           3.55        2.72              6.19
                                                                             
Group net revenue return per share         8.58        7.04             13.26
                                                                             
Capital return per share                  15.05      (7.71)             58.22
                                                                             
Dividends per share                        4.50        4.20             12.70
                                                                             

Performance to 30 June 2010

                                       6 months   12 months                  
                                                                             
                                              %           %                  
                                                                             
Share price total return 1                  7.1        39.2                  
                                                                             
NAV total return 1                          6.8        34.3                  
                                                                             
FTSE All-Share Index total return           3.0        25.6                  
                                                                             
1 Including reinvestment of                                                  
dividends                                                                    

Basis of preparation

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

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

Half yearly management report

Performance

Our net asset value total return for the six months to 30 June 2011 was 6.8%,
compared to a total return of 3.0% for the FTSE Actuaries All-Share Index. Net
revenue per share was 8.58p, an increase of 21.9% over the corresponding period
last year, as a result of a 16.4% increase in the investment portfolio and a
30.5% increase in independent fiduciary services.

Dividend

The board has declared an interim dividend of 4.5p (2010: 4.2p). The dividend
will be paid on 8 September 2011 to holders on the record date of 5 August
2011. The current expectation of the directors is that the final dividend will
be at least maintained.

Investment portfolio

Equity markets were little changed during the period. They reacted to events as
they unfolded but there was no clear direction. On the one hand, company
profits have been strong, monetary policy has remained accommodative and the
developing world has continued to grow strongly. On the other hand, serious
problems persist: the debt problems of recent years have not been resolved, the
handling of the euro crisis is not encouraging and two rounds of quantitative
easing in the USA do not appear to have had the desired impact on the general
economy.

A feature of the period has been the strength of company performance. Corporate
debt has fallen and strong cash generation is coming through as profitability
increases, driven by well controlled costs and growing sales. Growing profits
combined with a high level of dividend cover have delivered dividend growth in
our portfolio and this is likely to continue. Against this background we have
retained a modest level of gearing, which along with the bias to industrial
companies has led to the outperformance over the period.

Activity

The changes to the portfolio have been small. It has been a period in which it
has been best to keep with successful companies and not to be tempted to buy
shares that appear cheap in companies where there are problems to overcome. The
reason is that the world economy is very competitive, which is not helping the
weaker companies, while the strength of global trade is rewarding the truly
competitive.

Management fee

As previously announced, the management fee payable to Henderson from 1 April
2011 is expressed as a percentage of the value of the net assets of the Group,
excluding the net assets of the independent fiduciary services business. The
percentage amount payable is now 0.3% per annum.

Outlook

Law Debenture's portfolio is a collection of companies. It is not a proxy for
the UK economy. The UK companies in the portfolio, it is estimated, have
approximately two-thirds of their profits coming from overseas. This is a
measure of how outward looking they have become. The valuations are modest and
growth prospects real.

Independent fiduciary services

Revenues, net of legal costs recharged to clients, increased by 10.4%.
Administrative costs continued to be tightly controlled and consequently profit
before taxation increased by 28.0%. New appointments in financial wholesale
markets remain at low levels with little sign of any substantial improvement in
the corporate bond and securitisation markets. However, global markets continue
to grow and we have benefited from increased levels of corporate transactions.
The outlook for financial markets remains uncertain, particularly in Europe,
but we continue to look for new opportunities and to control our costs.

Group income statement

For the six months ended 30 June 2011 (unaudited)

                                 30 June 2011                30 June 2010      
                                                                               
                            Revenue Capital  Total      Revenue Capital  Total 
                                                                               
                               £000    £000  £000          £000    £000    £000
                                                                               
UK dividends                  6,580       -   6,580       5,278       -   5,278
                                                                               
Overseas dividends            1,185       -   1,185       1,425       -   1,425
                                                                               
Overseas special dividends       51       -      51          53       -      53
                                                                               
Interest from securities        222       -     222         327       -     327
                                                                               
                              8,038       -   8,038       7,083       -   7,083
                                                                               
Interest income                  52       -      52          50       -      50
                                                                               
Independent fiduciary        14,416       -  14,416      14,489       -  14,489
services fees                                                                  
                                                                               
Other income                    175       -     175         144       -     144
                                                                               
Total income                 22,681       -  22,681      21,766       -  21,766
                                                                               
Net gain/(loss) on                -  17,744 17,744            - (8,962) (8,962)
investments held at fair                                                       
value through profit or                                                        
loss                                                                           
                                                                               
Gross income and capital     22,681  17,744 40,425       21,766 (8,962)  12,804
gains/(losses)                                                                 
                                                                               
Cost of sales               (1,615)       - (1,615)     (2,885)       - (2,885)
                                                                               
Administrative expenses     (8,874)  (64)   (8,938)     (8,627)  (84)   (8,711)
                                                                               
Operating profit             12,192  17,680 29,872       10,254 (9,046)   1,208
                                                                               
Finance costs                                                                  
                                                                               
Interest payable            (1,225)       - (1,225)     (1,234)       - (1,234)
                                                                               
Profit/(loss) before         10,967  17,680 28,647        9,020 (9,046)    (26)
taxation                                                                       
                                                                               
Taxation                     (894)        -  (894)        (754)       -   (754)
                                                                               
Profit/(loss) for the        10,073  17,680 27,753        8,266 (9,046)   (780)
period                                                                         
                                                                               
Return/(loss) per ordinary     8.58   15.05  23.63         7.04  (7.71)  (0.67)
share (pence)                                                                  
                                                                               
Diluted return/(loss) per      8.57   15.04  23.61         7.04  (7.71)  (0.67)
ordinary share (pence)                                                         
                                                                               

Statement of comprehensive income

For the six months ended 30 June 2011 (unaudited)

                                 30 June 2011                30 June 2010      
                                                                               
                           Revenue  Capital   Total     Revenue Capital   Total
                                                                               
                              £000     £000    £000        £000    £000    £000
                                                                               
Profit/(loss) for the       10,073   17,680  27,753       8,266 (9,046)   (780)
period                                                                         
                                                                               
Other comprehensive                                                            
income:                                                                        
                                                                               
Foreign exchange                 -    (109)   (109)           -     407     407
                                                                               
Total comprehensive income  10,073   17,571  27,644       8,266 (8,639)   (373)
/(loss) for the period                                                         

Group statement of financial position

                                   30 June 2011  30 June 2010     31 December
                                                                        2010
                                     (unaudited)    (unaudited)     (audited)
                                                         
                                                         
                                           £000         £000            £000
                                                                             
Assets                                                                       
                                                                             
Non current assets                                                           
                                                                             
Goodwill                                  2,191         2,266           2,211
                                                                             
Property, plant and equipment               214           268             190
                                                                             
Other intangible assets                      85           110             118
                                                                             
Investments held at fair value          459,133       366,858         441,337
through profit or loss                                                       
                                                                             
Deferred tax assets                         662         1,003             871
                                                                             
Total non current assets                462,285       370,505         444,727
                                                                             
Current assets                                                               
                                                                             
Trade and other receivables               4,989         3,339           6,731
                                                                             
Other accrued income and prepaid          5,502         4,730           3,797
expenses                                                                     
                                                                             
Cash and cash equivalents                19,300        14,954          20,030
                                                                             
Total current assets                     29,791        23,023          30,558
                                                                             
Total assets                            492,076       393,528         475,285
                                                                             
Current liabilities                                                          
                                                                             
Trade and other payables                 10,818         7,967          11,446
                                                                             
Short term borrowings                         -            77              77
                                                                             
Corporation tax payable                   1,109         1,037           1,119
                                                                             
Other taxation including social             622           446             846
security                                                                     
                                                                             
Deferred income                           3,848         4,127           3,714
                                                                             
Total current liabilities                16,397        13,654          17,202
                                                                             
Non current liabilities and                                                  
deferred income                                                              
                                                                             
Long term borrowings                     39,378        39,351          39,364
                                                                             
Retirement benefit obligations              561         1,613             876
                                                                             
Deferred income                           5,433         6,035           5,277
                                                                             
Total non current liabilities            45,372        46,999          45,517
                                                                             
Total net assets                        430,307       332,875         412,566
                                                                             
Equity and liabilities                                                       
                                                                             
Called up share capital                   5,904         5,903           5,904
                                                                             
Share premium                             8,070         8,038           8,066
                                                                             
Capital redemption                            8             8               8
                                                                             
Share based payments                        201           201             201
                                                                             
Own shares                              (1,717)       (1,816)         (1,794)
                                                                             
Capital reserves                        386,346       291,290         368,666
                                                                             
Retained earnings                        31,082        28,424          30,993
                                                                             
Translation reserve                         413           827             522
                                                                             
Total equity                            430,307       332,875         412,566

Group statement of cash flows

For the six months ended 30 June 2011

                                          30 June     30 June 31 December
                                                                         
                                            2011         2010        2010
                                      (unaudited) (unaudited)    (audited)  
                                                                
                                                                         
                                             £000        £000        £000
                                                                         
Operating activities                                                     
                                                                         
Operating profit before interest           29,872       1,208      88,022
payable and taxation                                                     
                                                                         
(Gains)/losses on investments            (17,680)       9,046    (68,330)
                                                                         
Foreign exchange                               20        (82)        (24)
                                                                         
Depreciation of property, plant and            63          67         122
equipment                                                                
                                                                         
Amortisation of intangible assets              33          31          95
                                                                         
Decrease/(increase) in receivables             37         125     (2,334)
                                                                         
(Decrease)/increase in payables             (548)       (369)       2,352
                                                                         
Income gain on OEICs                         (40)       (120)       (347)
                                                                         
Normal pension contributions in             (315)       (315)       (769)
excess of cost                                                           
                                                                         
Cash generated from operating              11,442       9,591      18,787
activities                                                               
                                                                         
Taxation                                    (695)       (535)     (1,325)
                                                                         
Interest paid                             (1,225)     (1,234)     (2,452)
                                                                         
Operating cash flow                         9,522       7,822      15,010
                                                                         
Investing activities                                                     
                                                                         
Acquisition of property, plant and           (87)        (64)        (58)
equipment                                                                
                                                                         
Expenditure on intangible assets                -        (28)        (86)
                                                                         
Purchase of investments                  (20,403)    (20,995)    (36,262)
                                                                         
Sale of investments                        20,272      18,308      36,676
                                                                         
Cash flow from investing activities         (218)     (2,779)         270
                                                                         
Financing activities                                                     
                                                                         
Dividends paid                            (9,984)     (9,378)    (14,308)
                                                                         
Proceeds of increase in share capital           4           -          29
                                                                         
Purchase of own shares                         77         224         246
                                                                         
Net cash flow from financing              (9,903)     (9,154)    (14,033)
activities                                                               
                                                                         
Net (decrease)/increase in cash and         (599)     (4,111)       1,247
cash equivalents                                                         
                                                                         
Cash and cash equivalents at               19,953      18,612      18,612
beginning of period                                                      
                                                                         
Foreign exchange (losses)/gains on           (54)         376          94
cash and cash equivalents                                                
                                                                         
Cash and cash equivalents at end of        19,300      14,877      19,953
period                                                                   
                                                                         
Cash and cash equivalents comprise                                       
                                                                         
Cash and cash equivalents                  19,300      14,954      20,030
                                                                         
Bank overdrafts                                 -        (77)        (77)
                                                                         
                                           19,300      14,877      19,953
                                                                         

Group statement of changes in equity

                    Share   Share     Own    Capital    Share Translation  Capital Retained   Total
                  capital premium  shares redemption    based     reserve reserves earnings        
                                                     payments                                      
                                                                                                   
                     £000    £000    £000       £000     £000        £000     £000     £000    £000
                                                                                                   
Balance at 1        5,904   8,066 (1,794)          8      201     522      368,666   30,993 412,566
January 2011                                                                                       
                                                                                                   
Net profit              -       -       -          -        -      -        17,680   10,073  27,753
                                                                                                   
Other                                                                                              
comprehensive                                                                                      
income:                                                                                            
                                                                                                   
Foreign exchange        -       -       -          -        -    (109)           -        -   (109)
                                                                                                   
Total                   -       -       -          -        -    (109)      17,680   10,073  27,644
comprehensive                                                                                      
income for the                                                                                     
period                                                                                             
                                                                                                   
Issue of shares         -       4       -          -        -      -             -        -       4
                                                                                                   
Movement in own         -       -      77          -        -      -             -        -      77
shares                                                                                             
                                                                                                   
Dividend relating       -       -       -          -        -      -             -  (9,984) (9,984)
to 2010                                                                                            
                                                                                                   
Total equity at     5,904   8,070 (1,717)          8      201     413      386,346   31,082 430,307
30 June 2011                                                                                       
                                                                                                   

Group segmental analysis

                           Investment portfolio    Independent fiduciary            Total            
                                                                services                             
                                                                                                     
                      30 June  30 June   31 Dec 30 June 30 June   31 Dec  30 June 30 June   31 Dec   
                         2011     2010     2010    2011    2010     2010     2011    2010     2010   
                                                                                                     
                         £000     £000     £000    £000    £000     £000     £000    £000     £000   
                                                                                                     
Revenue                                                                                              
                                                                                                     
Segment income          8,038    7,083   12,449  14,416  14,489   30,381   22,454  21,572     42,830 
                                                                                                     
Other income               71       63       87     104      81       31      175    144         118 
                                                                                                     
Cost of sales               -        -        - (1,615) (2,885)  (6,184)  (1,615)  (2,885)   (6,184) 
                                                                                                     
Administration costs    (958)    (867)  (1,679) (7,916) (7,760) (15,689)  (8,874)  (8,627)  (17,368) 
                                                                                                     
                        7,151    6,279   10,857   4,989  3,925     8,539   12,140    10,204   19,396 
                                                                                                     
Interest (net)        (1,245)  (1,214)  (2,565)      72      30      409 (1,173)    (1,184)  (2,156) 
                                                                                                     
Return, including       5,906    5,065    8,292   5,061   3,955    8,948   10,967     9,020  17,240  
profit on ordinary                                                                                   
activities before                                                                                    
taxation                                                                                             
                                                                                                     
Taxation                    -        -        -   (894)   (754)  (1,679)  (894)     (754)   (1,679)  
                                                                                                     
Return, including     5,906    5,065    8,292    4,167   3,201   7,269   10,073   8,266     15,561   
profit attributable                                                                                  
to shareholders                                                                                      
                                                                                                     
Revenue return per     5.03     4.32   7.07      3.55    2.72       6.19     8.58   7.04    13.26    
ordinary share                                                                                       
(pence)                                                                                              
                                                                                                     
Assets                468,162  370,957  450,287  23,914  22,571  24,998   492,076  393,528 475,285   
                                                                                                     
Liabilities          (53,635) (52,924) (51,665) (8,134) (7,729) (11,054) (61,769) (60,653) (62,719)  
                                                                                                     
Total net assets      414,527  318,033  398,622  15,780  14,842   13,944  430,307 332,875  412,566   

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

Analysis of the investment portfolio                                                 
                                                                                     
By geographical location                                                             
                                                                                     
              Valuation Purchases    Costs of    Sales  Appreciation/ Valuation     %
                                  acquisition proceeds                  30 June      
                     31      £000                      (depreciation)      2011      
               December                  £000     £000                               
                   2010                                          £000      £000      
                                                                                     
                   £000                                                              
                                                                                     
United          313,388    12,304        (55) (15,799)         15,994   325,832  70.9
Kingdom                                                                              
                                                                                     
North America    30,250     6,931         (7)  (3,055)          (217)    33,902   7.4
                                                                                     
Europe           41,450     1,168         (2)  (1,418)          3,353    44,551   9.7
                                                                                     
Japan            18,928         -           -        -          (590)    18,338   4.0
                                                                                     
Other Pacific    37,321         -           -        -          (811)    36,510   8.0
                                                                                     
                441,337    20,403        (64) (20,272)         17,729   459,133 100.0

By Sector (excluding cash)                                                     
                                                                               
                                                            As at         As at
                                                                               
                                                          30 June   31 December
                                                                               
                                                             2011          2010
                                                                               
                                                                %             %
                                                                               
Oil & gas                                                    10.9          10.7
                                                                               
Basic materials                                               3.3           3.2
                                                                               
Industrials                                                  24.6          22.7
                                                                               
Consumer goods                                               12.3          12.6
                                                                               
Health care                                                   8.1           7.4
                                                                               
Consumer services                                             7.6           9.7
                                                                               
Telecommunications                                            2.6           2.8
                                                                               
Utilities                                                     4.5           4.3
                                                                               
Financials                                                   14.0          14.3
                                                                               
Technology                                                    0.6           0.1
                                                                               
Pooled equity investments                                    11.5          12.2
                                                                               
                                                            100.0         100.0

Investment portfolio valuation              
                                            
as at 30 June 2011                          
                                            
UK unless otherwise                         
stated.                                     
                                            
Holdings in italics were acquired           
after 31 December 2010                      
                                            
                        £000         %      
                                            
Oil & gas                                   
                                            
Oil & gas producers                         
                                            
Royal Dutch Shell     15,321      3.34      
                                            
BP                    12,144      2.64      
                                            
BG                     4,946      1.08      
                                            
Total (Fra)            2,212      0.48      
                                            
                      34,623      7.54      
                                            
Saipem (Ita)                                
                                            
Oil equipment &                             
services                                    
                                            
Schlumberger (USA)     5,378      1.17      
                                            
John Wood              3,238      0.71      
                                            
National Oilwell       2,434      0.53      
Varco (USA)                                 
                                            
Gibson Energy (Can)    2,243      0.49      
                                            
Saipem (Ita)           1,242      0.27      
                                            
Diamond Offshore       1,096      0.24      
Drilling (USA)                              
                                            
                      15,631      3.41      
                                            
Basic materials                             
                                            
Chemicals                                   
                                            
Croda                  3,772      0.82      
                                            
Asahi Kasei (Jap)      1,663      0.36      
                                            
Brenntag (Ger)           881      0.19      
                                            
                       6,316      1.37      
                                            
Forestry & paper                            
                                            
Mondi                  3,723      0.81      
                                            
                       3,723      0.81      
                                            
Mining                                      
                                            
BHP Billiton           4,902      1.07      
                                            
                       4,902      1.07      
                                            
Industrials                                 
                                            
Construction &                              
materials                                   
                                            
Balfour Beatty         2,975      0.65      
                                            
CRH (Ire)              1,770      0.39      
                                            
Marshalls                674      0.15      
                                            
                       5,419      1.19      
                                            
Aerospace & defence                         
                                            
Senior                17,185      3.74      
                                            
Meggitt                6,005      1.31      
                                            
Rolls Royce            4,512      0.98      
                                            
BAE Systems            3,185      0.69      
                                            
Hampson Industries       255      0.06      
                                            
                      31,142      6.78      
                                            
                        £000         %      
                                            
General industrials                         
                                            
Smith (DS)             4,642      1.01      
                                            
Smiths                 1,800      0.39      
                                            
3M (USA)               1,476      0.32      
                                            
Siemens (Ger)          1,109      0.24      
                                            
                       9,027      1.96      
                                            
Electronic &                                
electrical                                  
equipment                                   
                                            
Morgan Crucible        7,846      1.71      
                                            
Applied Materials      4,052      0.88      
(USA)                                       
                                            
Spectris               3,184      0.69      
                                            
TT Electronics         2,900      0.63      
                                            
Legrand (Fra)            785      0.17      
                                            
                      18,767      4.08      
                                            
Industrial                                  
engineering                                 
                                            
Weir Group             6,378      1.39      
                                            
Hill & Smith           6,033      1.31      
                                            
Cummins (USA)          5,154      1.12      
                                            
Caterpillar (USA)      2,652      0.58      
                                            
Renold                 1,516      0.33      
                                            
ABB (Swi)              1,129      0.25      
                                            
Severfield-Rowen         543      0.12      
                                            
                      23,405      5.10      
                                            
Industrial                                  
transportation                              
                                            
Kuehne & Nagel         2,016      0.44      
(Swi)                                       
                                            
BBA Aviation           1,630      0.35      
                                            
Goldenport               788      0.17      
                                            
Wincanton                558      0.12      
                                            
Autologic                352      0.08      
                                            
                       5,344      1.16      
                                            
Support services                            
                                            
Interserve             6,859      1.49      
                                            
Carillion              4,693      1.02      
                                            
SGS (Swi)              1,824      0.40      
                                            
Deutsche Post (Ger)    1,723      0.38      
                                            
Sodexho (Fra)          1,365      0.30      
                                            
Johnson Service        1,363      0.30      
                                            
Babcock                  988      0.22      
                                            
Adecco (Swi)             797      0.17      
                                            
Augean                   295      0.06      
                                            
                      19,907      4.34      
                                            
                                  £000     %
                                            
Consumer goods                              
                                            
Automobiles & parts                         
                                            
GKN                             10,705  2.33
                                            
Toyota Motor (Jap)               1,752  0.38
                                            
Bridgestone (Jap)                1,067  0.23
                                            
                                13,524  2.94
                                            
Beverages                                   
                                            
Diageo                           5,474  1.19
                                            
Pernod-Ricard (Fra)                783  0.17
                                            
                                 6,257  1.36
                                            
Food producers                              
                                            
Nestlé (Swi)                     3,657  0.80
                                            
Unilever                         3,507  0.76
                                            
Associated British Foods         3,246  0.71
                                            
Dairy Crest                        740  0.16
                                            
Uniq                                64  0.01
                                            
                                11,214  2.44
                                            
Household goods                             
                                            
Bellway                          3,575  0.78
                                            
Redrow                           2,752  0.60
                                            
Reckitt Benckiser                2,575  0.56
                                            
Essilor (Fra)                    1,488  0.32
                                            
                                10,390  2.26
                                            
Leisure goods                               
                                            
Harvard International              156  0.03
                                            
                                   156  0.03
                                            
Tobacco                                     
                                            
British American Tobacco         8,193  1.78
                                            
Imperial Tobacco                 5,693  1.24
                                            
Swedish Match (Swe)              1,311  0.29
                                            
                                15,197  3.31
                                            
Health care                                 
                                            
Health care equipment &                     
services                                    
                                            
Fresenius (Ger)                  4,501  0.98
                                            
Becton Dickinson (USA)           4,025  0.88
                                            
Smith & Nephew                   3,125  0.68
                                            
Fresenius Medical Care (Ger)     2,267  0.49
                                            
                                13,918  3.03
                                            
                                  £000     %
                                            
Pharmaceuticals &                           
biotechnology                               
                                            
GlaxoSmithKline                 10,672  2.32
                                            
AstraZeneca                      4,660  1.01
                                            
Shire                            3,888  0.85
                                            
Novartis (Swi)                   2,645  0.58
                                            
Roche (Swi)                      1,351  0.29
                                            
                                23,216  5.05
                                            
Consumer services                           
                                            
Food & drug retailers                       
                                            
Tesco                            4,823  1.05
                                            
Sainsbury                        1,646  0.36
                                            
                                 6,469  1.41
                                            
General retailers                           
                                            
Dunelm                           3,501  0.76
                                            
Inditex (Spa)                    1,781  0.39
                                            
Lawson (Jap)                     1,300  0.28
                                            
Findel                           1,196  0.26
                                            
Topps Tiles                        428  0.09
                                            
                                 8,206  1.78
                                            
Media                                       
                                            
Reed Elsevier                    4,245  0.92
                                            
Pearson                          3,234  0.70
                                            
Daily Mail & General Trust       2,090  0.46
                                            
Toppan Printing (Jap)              862  0.19
                                            
Yell                                72  0.02
                                            
                                10,503  2.29
                                            
Travel & leisure                            
                                            
Greene King                      2,826  0.62
                                            
Carnival                         2,507  0.55
                                            
Marstons                         2,085  0.45
                                            
International Consolidated       1,459  0.32
Airlines                                    
                                            
Carnival (USA)                     849  0.18
                                            
                                 9,726  2.12
                                            

                                 £000        %
                                              
Telecommunications                            
                                              
Fixed line                                    
telecommunications                            
                                              
BT                              2,619     0.58
                                              
Cable & Wireless Worldwide        461     0.10
                                              
Cable & Wireless                  405     0.09
Communications                                
                                              
                                3,485     0.77
                                              
Mobile telecommunications                     
                                              
Vodafone                        6,302     1.37
                                              
Inmarsat                        2,017     0.44
                                              
                                8,319     1.81
                                              
Utilities                                     
                                              
Electricity                                   
                                              
Scottish & Southern Energy      4,179     0.91
                                              
Scottish & Southern Energy      2,530     0.55
5.75% 5/2/14                                  
                                              
Iberdrola (Spa)                   922     0.20
                                              
                                7,631     1.66
                                              
Gas water & multiutilities                    
                                              
National Grid 6.125% 15/4/      5,820     1.27
14                                            
                                              
National Grid                   3,430     0.75
                                              
Severn Trent                    2,991     0.65
                                              
Centrica                          808     0.18
                                              
                               13,049     2.85
                                              
Financials                                    
                                              
Banks                                         
                                              
HSBC                           11,120     2.42
                                              
Banco Santander (Spa)           2,471     0.55
                                              
Barclays                        1,795     0.39
                                              
BNP Paribas (Fra)               1,254     0.27
                                              
UBS (Swi)                         808     0.18
                                              
                               17,448     3.81
                                              
Nonlife insurance                             
                                              
Hiscox                          5,650     1.23
                                              
Amlin                           4,873     1.06
                                              
Chubb (USA)                     2,925     0.64
                                              
Hardy Underwriting Bermuda        500     0.11
                                              
Chaucer                           405     0.09
                                              
                               14,353     3.13
                                              
                                 £000        %
                                              
Life insurance / assurance                    
                                              
Aviva                           3,446     0.75
                                              
Prudential                      3,190     0.69
                                              
Chesnara                        2,337     0.51
                                              
Irish Life & Permanent             10        -
(Ire)                                         
                                              
                                8,983     1.95
                                              
Real estate investments &                     
services                                      
                                              
St Modwen Properties            1,847     0.40
                                              
                                1,847     0.40
                                              
Real estate investment                        
trusts                                        
                                              
Great Portland Estate           3,052     0.66
                                              
Land Securities                 2,741     0.60
                                              
Mucklow (A&J) Group             2,482     0.54
                                              
Segro                           2,018     0.44
                                              
                               10,293     2.24
                                              
Financial services                            
                                              
IP Group                        2,871     0.63
                                              
International Personal          2,758     0.60
Finance                                       
                                              
Provident Financial             2,647     0.58
                                              
Intermediate Capital Group      1,449     0.32
                                              
Deutsche Börse (Ger)            1,136     0.25
                                              
                               10,861     2.38
                                              
Equity investment                             
instruments                                   
                                              
Henderson Asia Pacific         12,369     2.69
Capital Growth                                
                                              
Henderson Japan Capital        11,694     2.55
Growth                                        
                                              
Baillie Gifford Pacific         9,497     2.07
                                              
First State Asia Pacific        8,594     1.87
                                              
Scottish Oriental Smaller       6,050     1.32
Company Trust                                 
                                              
Herald Investment Trust         4,475     0.97
                                              
                               52,679    11.47
                                              
Technology                                    
                                              
Software & computer                           
services                                      
                                              
Microsoft (USA)                 1,618     0.35
                                              
Amadeus (Spa)                   1,270     0.28
                                              
                                2,888     0.63
                                              

Principal risks and uncertainties

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

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

Related party transactions

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

Directors' responsibility statement

We confirm that to the best of our knowledge:

  * the condensed set of financial statements has been prepared in accordance
    with IAS 34 Interim Financial Reporting as adopted by the EU;
   
  * the half yearly report includes a fair review of the information required
    by:
   
 a. DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of
    important events that have occurred during the first six months of the
    financial year and their impact on the condensed set of financial
    statements; and a description of the principal risks and uncertainties for
    the remaining six months of the year; and
   
 b. DTR 4.2.8R of the Disclosure and Transparency Rules, being related party
    transactions that have taken place in the first six months of the current
    financial year and that have materially affected the financial position or
    performance of the entity during that period.
   
On behalf of the board

Douglas McDougall

22 July 2011

Notes

 1. The financial information presented herein does not amount to full
    statutory accounts within the meaning of Section 435 of the Companies Act
    2006  and has neither been audited nor reviewed pursuant to guidance issued
    by the Auditing Practices Board. The annual report and financial statement
    for 2010 have been filed with the Registrar of Companies.
    The  independent  auditors'  report on the  annual  report
    and  financial  statements  for 2010 was unqualified, did not include a
    reference to any matters to which the auditor drew attention by way of
    emphasis without qualifying the report, and did not contain a statement
    under section 498(2) or (3) of the Companies Act 2006.
   
 2. The calculations of NAV and earnings per share are based on:
   
NAV: shares at end of the period 117,454,638 (30 June 2010: 117,366,193) (31
December 2010: 117,399,342).

Income: average shares during the period 117,449,590 (30 June 2010:
117,356,194) (31 December 2010: 117,366,347).



END
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