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Law Debenture Corp (LWDB)

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Tuesday 24 July, 2012

Law Debenture Corp

Half-yearly Report


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

       HALF YEARLY REPORT FOR THE SIX MONTHS TO 30 JUNE 2012 (unaudited)       

The Directors recommend an interim dividend of 4.5p on the ordinary shares for
the six months to 30 June 2012. 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 trust

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 Actuaries 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 and agency solutions, pension trusts, corporate
services (including agent for service of process) whistle blowing services 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
                                                                             
                                           2012        2011              2011
                                                                             
                                          Pence       Pence             Pence
                                                                             
Share price                              376.00      372.80            333.50
                                                                             
NAV per share after proposed             348.31      361.86            323.75
dividend                                                                     
                                                                             
Net revenue return per share:                                                
                                                                             
- Investment trust                         4.78        5.03              8.27
                                                                             
- Independent fiduciary services           3.45        3.55              7.25
                                                                             
Group net revenue return per share         8.23        8.58             15.52
                                                                             
Capital return per share                  21.22       15.05           (19.07)
                                                                             
Dividends per share                        4.50        4.50             13.50
                                                                             

Performance to 30 June 2012

                                       6 months   12 months                  
                                                                             
                                              %           %                  
                                                                             
Share price total return 1                 15.5         4.6                  
                                                                             
NAV total return 1                          8.7         0.1                  
                                                                             
FTSE All-Share Index total return           3.3       (3.1)                  
                                                                             
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 2012 was 8.7%,
compared to a total return of 3.3% for the FTSE Actuaries All-Share Index. Net
revenue per share was 8.23p, a decrease of 4.1% over the corresponding period
last year, as a result of a 5.0% decrease in the investment trust and a 2.8%
decrease in independent fiduciary services.

Dividend

The board has declared an interim dividend of 4.5p (2011: 4.5p). The dividend
will be paid on 13 September 2012 to holders on the record date of 10 August
2012. The current expectation of the directors is that the final dividend will
be maintained.

Investment trust

Equity markets have been volatile but ultimately changed little during the
first six months of the year. The debate still rages between investors who
focus on the macro economic worries and those who look at the reasonable
valuations of companies that are producing good results.

In these market conditions, there are opportunities to be taken. Among the best
relative contributors to the portfolio in the first six months of the year were
two technology based companies, IP Group and BTG. Part of the attraction for
investors in these stocks is that they are not closely connected with the
economic cycle. It has been stocks that are perceived to have cyclical risk
that have detracted from performance. Weir Group would be an example.

Good industrial companies producing competitive products will come through the
economic turbulence. Global trade is set to keep growing in spite of a slowing
in world economic growth and the strong companies will benefit.

Outlook

Dividend cover in the stocks held in the portfolio is at historically high
levels and further dividend growth is anticipated. The gearing in the companies
is low as they continue to be cash generative. We are not using gearing in the
investment trust as uncertainties about the Eurozone and debt problems continue
to persist. The resolution of these difficulties is not in sight. However, when
appropriate, we will consider increasing our exposure to equities.

Independent fiduciary services

Revenues, net of cost of sales, which represent legal costs recharged to
clients, increased by 2.0% and while costs continued to be tightly controlled,
profit before taxation decreased by 0.2%. New appointments in financial
wholesale markets remain at relatively low levels with no sign of any
improvement in the corporate bond and securitisation markets. The outlook in
global financial markets remains uncertain, particularly in Europe, but we
continue to look for new opportunities and control our costs.

Group income statement

For the six months ended 30 June 2012 (unaudited)

                                 30 June 2012                30 June 2011      
                                                                               
                            Revenue Capital  Total      Revenue Capital  Total 
                                                                               
                               £000    £000    £000        £000    £000    £000
                                                                               
UK dividends                  6,104       -   6,104       6,580       -   6,580
                                                                               
UK special dividends            181       -     181           -       -       -
                                                                               
Overseas dividends            1,221       -   1,221       1,185       -   1,185
                                                                               
Overseas special dividends       48       -      48          51       -      51
                                                                               
Interest from securities        334       -     334         222       -     222
                                                                               
                              7,888       -   7,888       8,038       -   8,038
                                                                               
Interest income                  42       -      42          52       -      52
                                                                               
Independent fiduciary        14,904       -  14,904      14,416       -  14,416
services fees                                                                  
                                                                               
Other income                     58       -      58         175       -     175
                                                                               
Total income                 22,892       -  22,892      22,681       -  22,681
                                                                               
Net gain on investments           -  25,031  25,031           -  17,744  17,744
held at fair value through                                                     
profit or loss                                                                 
                                                                               
Gross income and capital     22,892  25,031  47,923      22,681  17,744  40,425
gains                                                                          
                                                                               
Cost of sales               (1,800)       - (1,800)     (1,615)       - (1,615)
                                                                               
Administrative expenses     (9,314)  (83)   (9,397)     (8,874)  (64)   (8,938)
                                                                               
Operating profit             11,778  24,948 36,726       12,192  17,680  29,872
                                                                               
Finance costs                                                                  
                                                                               
Interest payable            (1,225)       - (1,225)     (1,225)       - (1,225)
                                                                               
Profit before taxation       10,553  24,948 35,501       10,967  17,680  28,647
                                                                               
Taxation                     (876)        -  (876)        (894)       -   (894)
                                                                               
Profit for period             9,677  24,948 34,625       10,073  17,680  27,753
                                                                               
Return per ordinary share      8.23   21.22  29.45         8.58   15.05   23.63
(pence)                                                                        
                                                                               
Diluted return per ordinary    8.23   21.21  29.44         8.57   15.04  23.61 
share (pence)                                                                  
                                                                               

Statement of comprehensive income

For the six months ended 30 June 2012 (unaudited)

                                 30 June 2012                30 June 2011      
                                                                               
                           Revenue  Capital   Total     Revenue Capital   Total
                                                                               
                              £000     £000    £000        £000    £000    £000
                                                                               
Profit for the period        9,677   24,948  34,625      10,073  17,680  27,753
                                                                               
Other comprehensive                                                            
income:                                                                        
                                                                               
Foreign exchange                 -     (29)    (29)           -   (109)   (109)
                                                                               
Total comprehensive income   9,677   24,919  34,596      10,073  17,571  27,644
for the period                                                                 

Group statement of financial position

                                    30 June 201  30 June 2011     31 December
                                              2                          2011
                                                  (unaudited)                
                                    (unaudited)                     (audited)
                                                         £000                
                                           £000                          £000
                                                                             
Assets                                                                       
                                                                             
Non current assets                                                           
                                                                             
Goodwill                                  2,210         2,191           2,218
                                                                             
Property, plant and equipment               300           214             320
                                                                             
Other intangible assets                     429            85             199
                                                                             
Investments held at fair value          446,857       459,133         423,044
through profit or loss                                                       
                                                                             
Deferred tax assets                       1,223           662           1,416
                                                                             
Total non current assets                451,019       462,285         427,197
                                                                             
Current assets                                                               
                                                                             
Trade and other receivables               5,113         4,989           4,940
                                                                             
Other accrued income and prepaid          6,473         5,502           6,246
expenses                                                                     
                                                                             
Cash and cash equivalents                16,381        19,300          18,063
                                                                             
Total current assets                     27,967        29,791          29,249
                                                                             
Total assets                            478,986       492,076         456,446
                                                                             
Current liabilities                                                          
                                                                             
Trade and other payables                 10,585        10,818          11,674
                                                                             
Corporation tax payable                     783         1,109           1,293
                                                                             
Other taxation including social             623           622             559
security                                                                     
                                                                             
Deferred income                           4,184         3,848           3,902
                                                                             
Total current liabilities                16,175        16,397          17,428
                                                                             
Non current liabilities and                                                  
deferred income                                                              
                                                                             
Long term borrowings                     39,404        39,378          39,391
                                                                             
Retirement benefit obligations            2,823           561           3,138
                                                                             
Deferred income                           5,765         5,433           5,563
                                                                             
Total non current liabilities            47,992        45,372          48,092
                                                                             
Total net assets                        414,819       430,307         390,926
                                                                             
Equity                                                                       
                                                                             
Called up share capital                   5,905         5,904           5,905
                                                                             
Share premium                             8,106         8,070           8,106
                                                                             
Capital redemption                            8             8               8
                                                                             
Share based payments                        201           201             201
                                                                             
Own shares                              (1,805)       (1,717)         (1,684)
                                                                             
Capital reserves                        371,216       386,346         346,268
                                                                             
Retained earnings                        30,704        31,082          31,609
                                                                             
Translation reserve                         484           413             513
                                                                             
Total equity                            414,819       430,307         390,926

Group statement of cash flows

For the six months ended 30 June 2012

                                          30 June     30 June 31 December
                                                                         
                                            2012         2011        2011
                                      (unaudited) (unaudited)            
                                                                (audited)
                                                                         
                                             £000        £000        £000
                                                                         
Operating activities                                                     
                                                                         
Operating profit before interest           36,726      29,872         260
payable and taxation                                                     
                                                                         
(Gains)/losses on investments            (24,948)    (17,680)      22,398
                                                                         
Foreign exchange                                8          20        (12)
                                                                         
Depreciation of property, plant and            56          63         164
equipment                                                                
                                                                         
Amortisation of intangible assets             109          33          76
                                                                         
(Increase)/decrease in receivables          (400)          37       (658)
                                                                         
(Decrease)/increase in payables             (528)       (548)         442
                                                                         
Transfer to/(from) capital reserves           529        (40)         126
                                                                         
Normal pension contributions in             (315)       (315)       (883)
excess of cost                                                           
                                                                         
Cash generated from operating              11,237      11,442      21,913
activities                                                               
                                                                         
Taxation                                  (1,193)       (695)     (1,548)
                                                                         
Interest paid                             (1,225)     (1,225)     (2,450)
                                                                         
Operating cash flow                         8,819       9,522      17,915
                                                                         
Investing activities                                                     
                                                                         
Acquisition of property, plant and           (36)        (87)       (289)
equipment                                                                
                                                                         
Expenditure on intangible assets            (339)           -       (157)
                                                                         
Purchase of investments                  (20,504)    (20,403)    (96,508)
                                                                         
Sale of investments                        21,120      20,272      92,275
                                                                         
Cash flow from investing activities           241       (218)     (4,679)
                                                                         
Financing activities                                                     
                                                                         
Dividends paid                           (10,582)     (9,984)    (15,270)
                                                                         
Proceeds of increase in share capital           -           4          41
                                                                         
Purchase of own shares                      (121)          77         110
                                                                         
Net cash flow from financing             (10,703)     (9,903)    (15,119)
activities                                                               
                                                                         
Net (decrease) in cash and cash           (1,643)       (599)     (1,883)
equivalents                                                              
                                                                         
Cash and cash equivalents at               18,063      19,953      19,953
beginning of period                                                      
                                                                         
Foreign exchange (losses) on cash and        (39)        (54)         (7)
cash equivalents                                                         
                                                                         
Cash and cash equivalents at end of        16,381      19,300      18,063
period                                                                   
                                                                         
Cash and cash equivalents comprise                                       
                                                                         
Cash and cash equivalents                  16,381      19,300      18,063
                                                                         

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
                                                                                                    
Equity at 1         5,905   8,106 (1,684)          8      201     513      346,268   31,609  390,926
January 2012                                                                                        
                                                                                                    
Net profit              -       -       -          -        -      -        24,948    9,677   34,625
                                                                                                    
Other                                                                                               
comprehensive                                                                                       
income:                                                                                             
                                                                                                    
Foreign exchange        -       -       -          -        -    (29)            -        -     (29)
                                                                                                    
Total                   -       -       -          -        -    (29)       24,948    9,677   34,596
comprehensive                                                                                       
income for the                                                                                      
period                                                                                              
                                                                                                    
Issue of shares         -       -       -          -        -      -             -        -        -
                                                                                                    
Movement in own         -       -   (121)          -        -      -             -        -    (121)
shares                                                                                              
                                                                                                    
Dividend relating       -       -       -          -        -      -             - (10,582) (10,582)
to 2011                                                                                             
                                                                                                    
Total equity at     5,905   8,106 (1,805)          8      201     484      371,216   30,704  414,819
30 June 2012                                                                                        
                                                                                                    

Group segmental analysis

                               Investment trust    Independent fiduciary            Total            
                                                                services                             
                                                                                                     
                      30 June  30 June   31 Dec 30 June 30 June   31 Dec  30 June 30 June   31 Dec   
                         2012     2011     2011    2012    2011     2011     2012    2011     2011   
                                                                                                     
                         £000     £000     £000    £000    £000     £000     £000    £000     £000   
                                                                                                     
Revenue                                                                                              
                                                                                                     
Segment income          7,888    8,038   14,126  14,904  14,416   30,948   22,792  22,454     45,074 
                                                                                                     
Other income                -       71       76      58     104       18       58    175          94 
                                                                                                     
Cost of sales               -        -        - (1,800) (1,615)  (4,313)  (1,800)  (1,615)   (4,313) 
                                                                                                     
Administration costs    (993)    (958)  (1,915) (8,321) (7,916) (16,728)  (9,314)  (8,874)  (18,643) 
                                                                                                     
                        6,895    7,151   12,287   4,841  4,989     9,925   11,736  12,140     22,212 
                                                                                                     
Interest (net)        (1,279)  (1,245)  (2,566)      96      72      562  (1,183)  (1,173)   (2,004) 
                                                                                                     
Return, including       5,616    5,906    9,721   4,937   5,061   10,487   10,553  10,967     20,208  
profit on ordinary                                                                                   
activities before                                                                                    
taxation                                                                                             
                                                                                                     
Taxation                    -        -        -   (876)   (894)  (1,977)  (876)   (894)     (1,977)  
                                                                                                     
Return, including     5,616    5,906    9,721     4,061   4,167    8,510  9,677   10,073     18,231   
profit attributable                                                                                  
to shareholders                                                                                      
                                                                                                     
Revenue return per     4.78     5.03    8.27      3.45    3.55      7.25     8.23  8.58      15.52    
ordinary share                                                                                       
(pence)                                                                                              
                                                                                                     
Assets                454,766  468,162  434,325  24,220  23,914  22,121   478,986  492,076 456,446   
                                                                                                     
Liabilities          (55,424) (53,635) (57,233) (8,743) (8,134) (8,287)  (64,167) (61,769) (65,520)  
                                                                                                     
Total net assets      399,342  414,527  377,092  15,477  15,780  13,834   414,819  430,307  390,926   

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

Analysis of the investment portfolio                                                 
                                                                                     
By geographical location                                                             
                                                                                     
              Valuation Purchases    Costs of    Sales  Appreciation/ Valuation     %
                                  acquisition proceeds                  30 June      
                     31      £000                      (depreciation)      2012      
               December                  £000     £000                               
                   2011                                          £000      £000      
                                                                                     
                   £000                                                              
                                                                                     
United          274,705    14,641        (65)  (7,737)         18,983   300,527  67.2
Kingdom                                                                              
                                                                                     
North America    27,859     4,639         (7)        -          1,697    34,188   7.7
                                                                                     
Europe           31,263     1,224         (1)  (1,774)          1,303    32,015   7.2
                                                                                     
Japan            12,753         -           -        -            643    13,396   3.0
                                                                                     
Other Pacific    31,973         -           -  (2,807)          2,528    31,694   7.1
                                                                                     
UK Gilts         44,491         -           -  (8,802)          (652)    35,037   7.8
                                                                                     
                423,044    20,504        (73) (21,120)         24,502   446,857 100.0

By Sector (excluding cash)                                                     
                                                                               
                                                            As at         As at
                                                                               
                                                          30 June   31 December
                                                                               
                                                             2012          2011
                                                                               
                                                                %             %
                                                                               
Oil & gas                                                    10.2          10.2
                                                                               
Basic materials                                               3.8           3.8
                                                                               
Industrials                                                  22.0          21.5
                                                                               
Consumer goods                                               10.9          10.8
                                                                               
Health care                                                   8.3           7.8
                                                                               
Consumer services                                             5.9           6.2
                                                                               
Telecommunications                                            1.9           2.5
                                                                               
Utilities                                                     4.6           4.6
                                                                               
Financials                                                   11.3           9.6
                                                                               
Technology                                                    2.7           1.4
                                                                               
Pooled equity investments                                    10.6          11.1
                                                                               
UK Gilts                                                      7.8          10.5
                                                                               
                                                            100.0         100.0

Investment portfolio valuation              
                                            
as at 30 June 2012                          
                                            
UK unless otherwise                         
stated.                                     
                                            
Holdings in italics were acquired           
after 31 December 2011                      
                                            
                        £000         %      
                                            
Oil & gas                                   
                                            
Oil & gas producers                         
                                            
BP                    11,180      2.50      
                                            
Royal Dutch Shell     11,125      2.49      
                                            
BG                     4,550      1.02      
                                            
Total (Fra)            1,764      0.39      
                                            
Premier Oil            1,690      0.38      
                                            
                      30,309      6.78      
                                            
Oil equipment &                             
services                                    
                                            
Gibson Energy (Can)    4,076      0.91      
                                            
Cape                   3,686      0.82      
                                            
Schlumberger (USA)     3,311      0.74      
                                            
National Oilwell       2,054      0.46      
Varco (USA)                                 
                                            
Saipem (Ita)           1,096      0.25      
                                            
AMEC                   1,002      0.22      
                                            
                      15,225      3.40      
                                            
Basic materials                             
                                            
Chemicals                                   
                                            
Croda                  3,958      0.89      
                                            
Brenntag (Ger)           864      0.19      
                                            
                       4,822      1.08      
                                            
Forestry & paper                            
                                            
Mondi                  2,720      0.61      
                                            
                       2,720      0.61      
                                            
Mining                 6,793      1.52      
                                            
Rio Tinto                                   
                                            
BHP Billiton           2,709      0.61      
                                            
                       9,502      2.13      
                                            
Industrials                                 
                                            
Construction &                              
materials                                   
                                            
Balfour Beatty         3,619      0.81      
                                            
Marshalls                557      0.12      
                                            
                       4,176      0.93      
                                            
Aerospace & defence                         
                                            
Senior                15,107      3.38      
                                            
Meggitt                5,393      1.21      
                                            
BAE Systems            5,195      1.16      
                                            
Rolls Royce            5,145      1.15      
                                            
Hampson Industries         3         -      
                                            
                      30,843      6.90      
                                            
                        £000         %      
                                            
General industrials                         
                                            
Smith (DS)             6,578      1.47      
                                            
                       6,578      1.47      
                                            
Electronic &                                
electrical                                  
equipment                                   
                                            
Morgan Crucible        5,564      1.25      
                                            
Spectris               4,587      1.03      
                                            
Applied Materials      3,648      0.81      
(USA)                                       
                                            
TT Electronics         2,193      0.49      
                                            
Legrand (Fra)            706      0.16      
                                            
                      16,698      3.74      
                                            
Industrial                                  
engineering                                 
                                            
Hill & Smith           5,872      1.31      
                                            
Cummins (USA)          4,324      0.97      
                                            
Weir Group             3,825      0.86      
                                            
Caterpillar (USA)      2,165      0.48      
                                            
Renold                 1,463      0.33      
                                            
IMI                      831      0.19      
                                            
Severfield-Rowen         375      0.08      
                                            
                      18,855      4.22      
                                            
Industrial                                  
transportation                              
                                            
Kuehne & Nagel           929      0.21      
(Swi)                                       
                                            
Goldenport               469      0.11      
                                            
Autologic                304      0.07      
                                            
Wincanton                196      0.04      
                                            
                       1,898      0.43      
                                            
Support services                            
                                            
Interserve             5,959      1.33      
                                            
Carillion              3,446      0.77      
                                            
Babcock                2,132      0.48      
                                            
SGS (Swi)              1,853      0.41      
                                            
Deutsche Post (Ger)    1,635      0.37      
                                            
Sodexho (Fra)          1,191      0.27      
                                            
Johnson Service        1,058      0.24      
                                            
Adecco (Swi)             857      0.19      
                                            
DKSH (Swi)               605      0.14      
                                            
Augean                   351      0.08      
                                            
                      19,087      4.28      
                                            
                                  £000     %
                                            
Consumer goods                              
                                            
Automobiles & parts                         
                                            
GKN                              8,342  1.87
                                            
Toyota Motor (Jap)               1,748  0.39
                                            
                                10,090  2.26
                                            
Beverages                                   
                                            
Diageo                           6,236  1.40
                                            
Pernod-Ricard (Fra)                870  0.19
                                            
                                 7,106  1.59
                                            
Food producers                              
                                            
Unilever                         3,752  0.84
                                            
Associated British Foods         3,202  0.72
                                            
Nestlé (Swi)                     3,033  0.68
                                            
                                 9,987  2.24
                                            
Household goods & home                      
                                            
construction                                
                                            
Bellway                          3,744  0.84
                                            
Redrow                           2,673  0.60
                                            
Reckitt Benckiser                2,524  0.56
                                            
Essilor (Fra)                    1,035  0.23
                                            
L'Oreal (Fra)                      821  0.18
                                            
                                10,797  2.41
                                            
Tobacco                                     
                                            
British American Tobacco         5,673  1.27
                                            
Imperial Tobacco                 3,682  0.82
                                            
Swedish Match (Swe)              1,269  0.28
                                            
                                10,624  2.37
                                            
Health care                                 
                                            
Health care equipment &                     
services                                    
                                            
Becton Dickinson (USA)           3,573  0.80
                                            
Fresenius (Ger)                  3,049  0.68
                                            
Smith & Nephew                   2,994  0.67
                                            
Fresenius Medical Care (Ger)     1,758  0.39
                                            
                                11,374  2.54
                                            
                                  £000     %
                                            
Pharmaceuticals &                           
biotechnology                               
                                            
GlaxoSmithKline                 10,853  2.43
                                            
BTG                              7,544  1.69
                                            
Novartis (Swi)                   2,474  0.55
                                            
AstraZeneca                      2,138  0.48
                                            
Pfizer (USA)                     1,465  0.33
                                            
Roche (Swi)                      1,433  0.32
                                            
                                25,907  5.80
                                            
Consumer services                           
                                            
Food & drug retailers                       
                                            
Tesco                            2,325  0.52
                                            
                                 2,325  0.52
                                            
General retailers                           
                                            
Dunelm                           4,382  0.98
                                            
Inditex (Spa)                    1,307  0.29
                                            
Findel                             477  0.11
                                            
Topps Tiles                        291  0.07
                                            
                                 6,457  1.45
                                            
Media                                       
                                            
Reed Elsevier                    3,836  0.86
                                            
Pearson                          3,479  0.78
                                            
British Sky Broadcasting         1,741  0.39
                                            
Daily Mail & General Trust       1,480  0.33
                                            
Yell                                19     -
                                            
                                10,555  2.36
                                            
Travel & leisure                            
                                            
Greene King                      3,468  0.77
                                            
Marstons                         2,128  0.48
                                            
International Consolidated       1,315  0.29
Airlines                                    
                                            
                                 6,911  1.54
                                            

                                  £000       %
                                              
Telecommunications                            
                                              
Fixed line                                    
telecommunications                            
                                              
BT                               2,536    0.57
                                              
                                 2,536    0.57
                                              
Mobile telecommunications                     
                                              
Vodafone                         3,585    0.80
                                              
Inmarsat                         1,783    0.40
                                              
Ericsson (Swe)                     778    0.17
                                              
                                 6,146    1.37
                                              
Utilities                                     
                                              
Electricity                                   
                                              
Scottish & Southern Energy       4,173    0.93
                                              
Scottish & Southern Energy       2,491    0.56
5.75% 5/2/14                                  
                                              
Iberdrola (Spa)                    489    0.11
                                              
                                 7,153    1.60
                                              
Gas water & multiutilities                    
                                              
National Grid 6.125% 15/4/       5,745    1.29
14                                            
                                              
National Grid                    4,120    0.92
                                              
Severn Trent                     3,359    0.75
                                              
Centrica                           318    0.07
                                              
                                13,542    3.03
                                              
Financials                                    
                                              
Banks                                         
                                              
HSBC                             7,294    1.63
                                              
                                 7,294    1.63
                                              
Nonlife insurance                             
                                              
Amlin                            7,779    1.74
                                              
Hiscox                           5,769    1.29
                                              
Hardy Underwriting Bermuda         510    0.11
                                              
                                14,058    3.14
                                              
Life insurance / assurance                    
                                              
Prudential                       2,212    0.50
                                              
Aviva                            2,140    0.48
                                              
Chesnara                         1,715    0.38
                                              
Irish Life & Permanent               8       -
(Ire)                                         
                                              
                                 6,075    1.36
                                              
Real estate investments &                     
services                                      
                                              
St Modwen Properties             1,685    0.38
                                              
                                 1,685    0.38
                                              
Real estate investment                        
trusts                                        
                                              
Mucklow (A&J) Group              2,940    0.66
                                              
Land securities                  2,375    0.53
                                              
                                 5,315    1.19
                                              
                                  £000       %
                                              
Financial services                            
                                              
IP Group                         7,485    1.68
                                              
Provident Financial              3,341    0.75
                                              
International Personal           2,989    0.67
Finance                                       
                                              
3i                                 986    0.22
                                              
Deutsche Borse (Ger)               826    0.18
                                              
                                15,627    3.50
                                              
Equity investment                             
instruments                                   
                                              
Henderson Japan Capital         11,648    2.61
Growth                                        
                                              
Henderson Asia Pacific          10,717    2.40
Capital Growth                                
                                              
Baillie Gifford Pacific          9,344    2.09
                                              
First State Asia Pacific         8,391    1.88
                                              
Herald Investment Trust          4,071    0.91
                                              
Scottish Oriental Smaller        3,242    0.73
Company Trust                                 
                                              
                                47,413   10.62
                                              
Technology                                    
                                              
Software & computer                           
services                                      
                                              
Microsoft (USA)                  5,849    1.31
                                              
Amadeus IT (Spa)                 1,322    0.30
                                              
Sage                               971    0.22
                                              
                                 8,142    1.83
                                              
Technology hardware &                         
equipment                                     
                                              
Apple (USA)                      3,723    0.83
                                              
                                 3,723    0.83

UK Gilts                                      
                                              
UK Treasury 4.5% 07/03/13      20,059     4.49
                                              
UK Treasury 2.25% 07/03/14     14,978     3.35
                                              
                               35,037     7.84

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

24 July 2012

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 2011 have been filed with the Registrar of Companies.
    The  independent  auditors'  report on the  annual  report
    and  financial  statements  for 2011 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 117,575,226 (30 June 2011: 117,454,638) (31
December 2011: 117,482,050).

Income: average shares during the period 117,565,430 (30 June 2011:
117,449,590) (31 December 2011: 117,459,408).