LWDB has generated significant outperformance over multiple periods versus its broad UK equity market benchmark and peers in the AIC UK Equity Income sector. Its shareholder total return and fair value NAV total return are the highest in the sector over 10 and 20 years and well above the median over one, three and five years. Five-year DPS growth of 5.2% pa is also well ahead of most peers.

IPS accounts for 16% of NAV but its strong cash generation has funded c 30% of the trust’s dividends over the past 10 years. This provides the portfolio managers with greater freedom to balance the requirements for immediate income with the goal of growing capital values over time. They can avoid higher-yielding stocks they deem unattractive and invest in attractive lower- or non-yielding stocks, with greater growth potential or significant, identifiable recovery potential.

UK equities (90% of the LWDB portfolio) have performed strongly but valuations remain moderate in historical terms and low relative to global averages. This is reflected in a high level of corporate activity. The investment managers see strong opportunities across the market, remaining focused on companies rather than the economy. An attractive UK valuation and a more defensive, value-oriented sector mix compared to overseas markets should mitigate heightened global uncertainty, should this persist. IPS is a well-diversified, resilient and growing business, and is relatively insensitive to short-term economic and market fluctuations.

Highly differentiated and unique business model

LWDB comprises two distinct but complementary parts, each supporting the other, differentiating it from other investment trusts and underpinning its long-term performance. Alongside the investment portfolio, accounting for 84% of net assets, is IPS, a leading provider of independent professional services (16% of net assets). IPS is a highly profitable, resilient, growing and cash-generative business comprising a diversified range of operations and income streams, significantly based on recurring income from structurally supported sectors, and others that provide attractive returns but with increased market sensitivity. As well as creating capital growth for LWDB, it generates income for dividends well above its share of NAV (around one-third of total dividends over the past 10 years). 2025 was the eighth consecutive year of mid- to high-single digit growth in revenue and earnings. Over the past five years, IPS’s net revenues have increased by 67% and underlying profit before income and tax (PBIT) has increased by 37%, reflecting annualised growth of 10.8% and 6.4% respectively. Over the same five-year period, the operational fair value of IPS has increased by around 67%. In turn, being part of the larger LWDB, a well-governed UK 250 company with c £1.4bn in gross assets, is hugely important to IPS when it comes to winning business.

LWDB’s investment portfolio has been managed over many years by James Henderson and Laura Foll of Janus Henderson Investors. Their investment mandate is focused on both income and capital growth, and they highlight the positive impact that IPS has on meeting these goals. They have the flexibility to avoid higher-yielding stocks they deem unattractive and invest in attractive lower- or non-yielding stocks, with greater growth potential or significant, identifiable recovery potential. This provides a wider pool of opportunities from which to build a diversified portfolio and avoids the need to ‘chase yield’. Stock selection is selectively bottom-up with a strong valuation overlay and aims to identify market-leading, high-quality companies that are undervalued at the point of purchase. The portfolio is concentrated in UK stocks (c 90% of the total at end-2025) and is highly diversified (c 150 stocks) to manage risks to capital and aid consistency of performance.

A strong track record and positive outlook

The combination of the well-diversified and resilient IPS business with the portfolio is a well-proven model that has generated strong long-term results. Supported by structural tailwinds and investment, LWDB continues to target medium-term growth in IPS in line with its mid- to high-single-digit medium-term target. UK equities have been strong over the past year, evidence that the quoted sector is not a proxy for the economy, but the investment managers remain positive for the market and see strong stock-specific opportunities for further capital and income growth. The key elements of the LWDB investment case are summarised below and covered in more detail in this report:

• LWDB has generated significant outperformance over multiple time periods versus its broad UK equity market benchmark and its peer group within the AIC UK Equity Income sector. Over the 10 years to 31 December 2025, it has delivered an NAV total return^[1] of 201%, 77pp ahead of the benchmark return of 123%. Over five years it has delivered a 97% NAV total return, 23pp ahead of the benchmark. Compared with the six large-cap peers, LWDB has generated the highest level of share price total return over 10 and 25 years and is one of the strongest performers over one, three and five years, with returns consistently above the median.
• Strong dividend growth. DPS has increased in each of the past 17 years, including through the COVID-19 pandemic, and has been held or increased for 47 consecutive years. Including 6.0% growth in 2025, the five-year average growth rate is 5.2% per year and over 10 years it is 8.2%. Five-year growth for the large-cap peer group is just over 4% but this includes accelerated distributions of capital from Temple Bar. Excluding Temple Bar, the average of the other five large peers is just over 2%. (source: Morningstar). LWDB’s dividend yield of 3.2% is below the narrow peer average of 3.9%, which reflects the managers’ investment strategy of balancing immediate income returns with long-term capital growth, building the asset base from which dividends can grow.
• Consistent IPS growth and profitability. IPS has now delivered eight consecutive years of mid- to high-single-digit underlying growth and continues to invest in its people, technology and platforms to broaden and enhance its offering and deliver a similar level of sustainable growth going forward. Over the same eight-year period, the IPS operational fair value has grown by c 160% or c 11% per year. Accounting for 16% of fair value NAV, the growth of IPS earnings and valuation is important, but so too is the sustainability of its cash earnings contribution and its continued support for the portfolio investment strategy. In this respect, IPS has proven itself to be highly resilient across a range of economic and market cycles and, as with the investment portfolio, diversification and risk spreading is a core strength.
• A continuing opportunity in UK equities. UK equities rose strongly in 2025, outperforming major US indices, in contrast to most of the period since the Brexit vote in 2016. Sentiment towards UK equities has begun to improve but remains fragile. Morningstar data shows a net fund inflow into UK equities at the end of 2025 but outflows for the year as a whole. Meanwhile, although the market has been rising, the level of valuation remains moderate by historical standards and low relative to global equities. For smaller companies this is even more so, and although the valuation opportunity has not yet been fully recognised in the market, low valuations are being increasingly underpinned by a high level of takeover activity. The UK economy faces structural issues and forecasters remain cautious about growth prospects, but 2025 performance shows that the equity market is no proxy for GDP growth. In fact, for the top-100 companies, only around a third of earnings are generated domestically. For small- and mid-cap companies, domestic exposure is much higher, but the portfolio managers see strong opportunities in good-quality, well-managed businesses with strong growth prospects, trading at low valuations that additionally build modest expectations for improvement.
• Potential protection against market volatility. The valuation of UK equities and a more defensive, value-oriented sector mix among large caps compared to overseas markets should provide a defence against heightened global uncertainty. IPS is a well-diversified, resilient and growing business with elements of counter-cyclicality and it is relatively insensitive to short-term economic and market fluctuations.

Strong record of absolute and relative performance

In 2025, LWDB’s NAV total return (cum income with debt at fair value, or NAV) was 28.4%, and was 4.4pp ahead of the broad UK equity market benchmark total return. With debt at par value rather than fair value, the NAV total return was 29.2%. The share price total return was 22%.

On a fair value basis, LWDB has outperformed its benchmark over one, three, five and 10 years to end-2025. In 2026, to the end of February, a little of this outperformance has been given back, with a fair value NAV total return of 8.8% versus 9.7% for the benchmark.

Versus larger peers within the AIC UK Equity Income sector, all with market capitalisations of more than £500m, LWDB has a strong long-term track record. Over 10 and 20 years it is the strongest performer and it is the second or third strongest performer over all other periods.

With debt at fair value, the shares traded, on average, at a small (c 0.3%) premium to NAV during 2025 within a range of +4% to -4%, similar to the three-year average. Over 10 years, the shares have on average traded at a c 4% discount. The current discount premium is 2.8% and LWDB has one of the strongest P/NAV multiples in the UK Equity Income sector.

Reflecting the premium to NAV that was in place during 2025, LWDB was able to satisfy investor demand by issuing c 1.3m new shares to existing and new investors, at an accretive premium to NAV, generating net proceeds of £11.6m to support ongoing investment.

Strong commitment to consistent dividend growth

LWDB pays dividends quarterly, in July, October, January and April. Aggregate 2025 DPS increased by 6.0% to 35.5p (2024: 33.5p) and comprised three interim payments of 8.375p and a proposed final payment of 10.375p. It was 1.05x covered by statutory revenue earnings of 37.26p. Portfolio income received increased by 16% to £40.3m, from £34.7m in 2024, driven by net new investment, an increased exposure to higher yielding sectors such as commercial property and infrastructure, as well as underlying dividend growth. The investment managers expect company dividends to increase in 2026 and in line with its policy in previous years, it is the board’s intention for each of the first three interim dividends for 2026 to be equivalent to a quarter of the 2025 dividend, or 8.875p per share.

IPS: Well balanced, sustainable value and cash flow generation

The IPS business has a long history, with its origins dating back to 1889 when Law Debenture was established as a bond trustee. However, after years of steady, successful, but sometimes unambitious performance, IPS was reinvigorated in 2017 under CEO Denis Jackson. Since then, the business has developed a greater strategic focus and has invested significantly, in people, technology and platforms to broaden and enhance its offering and deliver sustainable growth. It has now delivered eight consecutive years of mid- to high-single-digit growth, with revenues more than doubling and attractive margins maintained, while continually investing to support the further development of the business. Over the same eight-year period, the fair value of IPS has increased by 160%.

For investors in LWDB, the growth of IPS earnings and valuation is important, but so too is the sustainability of the IPS cash earnings contribution and its continued support for the portfolio investment strategy. In this respect, IPS has proven itself to be highly resilient across economic and market cycles. Like the portfolio, diversification is a core strength of IPS, across a range of operations and income streams, significantly based on recurring income from structurally supported sectors, and others that provide attractive returns but with increased market sensitivity.

For those less familiar with the range of IPS activities we provide further details later in this report, focusing in this section on the key developments in 2025.

IPS delivered another year of progress, recording its eighth consecutive year of mid- to high-single-digit revenue and underlying profit growth. Net revenues (gross revenue less direct costs incurred) increased by 7.5% to £57.7m (2024:£53.7m), with underlying PBIT of £16.7m. Excluding the impact of £1.0m of non-recurring costs in the prior year, the underlying PBIT of IPS increased 6.1%. Statutory profit before tax (PBT) increased 15.8% to £17.7m.

The Corporate Trust business had another successful year, with net revenues up by 9.3% to £15.9m, building on an already strong performance. Over the past three years, net revenues have increased by an average 12.8% per year and over five years by 7.7% per year, perhaps a better guide to the medium-term growth potential. Activity in debt capital markets is an important driver of revenues and where LWDB acts as the bond trustee, new issuance generates upfront fees but also replenishes the back-book of business from which LWDB earns recurring servicing fees. Following the market dislocation caused by President Trump’s ‘Liberation Day’ tariff announcement in April 2025, European debt capital issuance strengthened steadily and ended the year up 10%. This built on the 20% growth seen in 2024 as the market began to recover from a decade low point in 2023. It remains to be seen what impact the war in Iran will have on issuance. Crucially, while deal flow is important, the majority of revenues (typically around two-thirds and mostly inflation-linked) are recurring in nature, generated from servicing the existing book of business. These are built up over many years and LWDB has continued to win new mandates. When bonds default, post-issuance work generates additional, ad hoc revenues and although these are difficult to predict they have historically been a significant source of counter-cyclical revenues. While the interest rate cycle continued to support corporate bowers over the past year, LWDB has seen weakness in some areas and completed several incremental work streams relating to restructuring projects on behalf of bondholders.

Included within the corporate trust business, escrow services continued to grow steadily across a range of transactions and end-users. A key market development is the Solicitors Regulation Authority (SRA), signalling a shift away from law
firms holding client money.

Over the past five years, net revenues in the Pensions business have increased by an average 7.7% per year. This includes a period of frenetic activity stretching through 2023 and early 2024 resulting from the liability-driven investment crisis that was sparked by the government’s autumn 2022 financial statement. While revenues in the pensions business are significantly recurring in nature, project related work can be more variable, and in that context, the broadly flat performance of net revenues in 2025 marks a normalisation of activity. During the year, LWDB continued to win new mandates for both its traditional pension trustee business and pensions governance operation (formerly known as Pegasus), providing outsourced solutions. LWDB has been adding new capacity in anticipation of what it expects to be a busy 2026, driven by legislative developments and engagement by many fund sponsors on future pensions strategy as they continue to consider the relative merits of continuance or insurance of the liabilities against the background of strong funding positions for many schemes.

Corporate Services is itself a diverse collection of businesses focused on outsourced solutions for corporates internationally, including whistleblowing (Safecall), structured finance services, company secretarial services (CSS) and service of process (SoP). Collectively, net revenues increased by 12.2% in 2025, with a particularly strong performance in H2. Over the past five years, the business’s revenues have more than doubled but this includes the 2021 acquisition of the corporate secretarial services business of Eversheds Sutherland LLP for £20m. The revenue contribution of the acquisition was not disclosed but we estimate it was £6m and that on a like-for-like basis divisional revenues have increased by c 9% per year over the past five years. We believe that the main contributor to this growth has been Safecall. The growth of Safecall has been driven externally by whistleblowing legislation, an increasing recognition that the provision of such services represents best business practice, and internally by investment to enhance its capabilities, functionality and capacity. Revenues increased a further 25% in 2025 after a 24% increase in 2024. Reports to clients reached another new record, up 52%. 70% of all issues are now raised digitally, although in more complex cases, the voice channel is likely to remain preferred by the whistleblower. This is a fast-growing sector and management notes the significant scope for market share gains in the large US market.

Steady growth in the global CSS market is underpinned by increasing regulatory complexity, the rise of corporate governance standards and an increased use of outsourcing. To be able to exploit this demand growth, LWDB has in recent years made significant investment to ensure that it has the right people, skills and systems. That investment has begun to bear fruit with the revenue growth reported in H1 accelerating through the year. For the year, revenues grew faster than the average for IPS and, with the investments made delivering increased efficiency, profit growth was at an even faster rate.

In 2025, Structured finance benefited from modest growth in new market issuance, and against this background, LWDB saw an increase in both revenues and earnings. For now, this is a relatively small part of the IPS business, but one that it seeks to grow by leveraging the quality of its offering.

In SoP, LWDB handles many thousands of appointments in a year, many of which are short duration, with a low level of repeat business relative to LWDB’s other activities. Of the IPS businesses, it has the least recurring revenues and the greatest dependency on global macro-economic factors and deal flow in capital markets. Following a lean period, revenues picked up noticeably in 2024, supported by improved economic and capital markets activity. The market was challenging in the first half of 2025 but picked up in H2, with a 15% y-o-y increase in global investment banking revenues. LWDB says that it participated well against this improving backdrop.

Continuing to build value

LWDB’s statutory NAV includes the accounting net assets of IPS but does not recognise its full value to shareholders. To address this, commencing in 2015 (including retrospective 2014 data), with external professional advice, LWDB has regularly determined a fair value for IPS, which, for the past two years has been based on a forward-looking discounted cash flow (DCF) valuation. It had previously been based on a trailing EBITDA multiple, considering market data for a range of companies that to varying degrees share similar business units, customer bases and market dynamics, but as the range of reasonable comparators continued to shrink the board decided this was no longer a reliable indicator.

The assessed operational fair value of IPS has increased every year since 2017 and in 2025 rose by 7.3% to £209m, with the DCF-derived valuation reflecting an unchanged 10.7x multiple of the underlying EBITDA in the previous 12 months. In the nine-year period since end-2016, the operational fair value has increased by c 160%, an average c 11% per year, of which EBITDA growth accounts for c 60% with the balance reflecting a steady increase in the valuation multiple from a modest 8.1x at the start of the period. A full explanation of the methodology is provided in the annual report, but in our view, taking account of the expected further growth of IPS, the valuation continues to be conservative.

The 2025 operational fair value of IPS was £202.5m higher than the value reflected in LWDB’s balance sheet on a statutory basis, representing a fair value uplift of 152.1p compared with an uplift of 147.7p at end-H125. The 31 December 2025 NAV per share at fair value, using the now published IPS 2025 results and fair value adjustment, is 1,081p, a little above provisional figure provided at end-FY25, based on the IPS half-year fair value, of 1,078p.

The portfolio: Long-term, bottom-up, diversified and valuation focused

The investment portfolio is managed with the aim of achieving long-term capital growth and a steadily increasing income. There is a strong focus on UK stocks, although there is flexibility to invest in overseas stocks, most usually exercised where a similar company cannot be found in the UK market or the overseas company is cheaper. The UK weighting was 90% at end-2025, remaining at a historically high level, as it is here that the managers continue to find superior value despite concerns about the UK economy. Net new investment in the portfolio of £53m, in part funded by the c £12m of new share issuance, included £57m into the UK equity market. Holdings are spread across large, medium-sized and smaller companies, across a variety of activities, balancing the requirement for immediate income with the potential for capital growth. Around 50% of the portfolio is in the largest (top-100) companies, selected largely with the expectation that they will be sound long-term investments, providing an attractive level of immediate dividend income with less risk. These are typically well-known companies that often feature in the portfolios of LWDB’s sector peers. What differentiates LWDB’s portfolio, underpinned by the IPS cash flow, is its ability to invest in the broader pool of lower- or non-yielding stocks that offer greater total return potential. These may be businesses that offer the prospect of faster long-term growth in sales, earnings and eventually dividends, usually but not always among the small- and mid-cap companies that are significantly overweighted in the portfolio overall compared with the all-market benchmark. The may also be companies with significant, identifiable earnings and dividend recovery potential, many of which are larger companies going through a process of change or reinvention, often under new management teams.

Investment decisions are driven by bottom-up stock selection with a strong valuation overlay. Quite simply, across the broad equity market, the investment managers are seeking to identify well managed, high-quality companies with a strong competitive advantage in their chosen market segments, at attractive prices. With a focus on long-term returns, they are prepared to take a contrarian position and do not shy away from stocks that have fallen out of favour, perhaps because they have disappointed on earnings, have balance sheet issues, or there are concerns over management. Crucially, the managers do not invest on valuation alone and must be able to identify a resolution to whatever the issue may be and a route to growth in revenues, earnings and dividends.

Performance attribution provides proof of LWDB’s corporate strategy

We have already commented on the consistently strong performance of LWDB versus its benchmark and close peers. To underscore the importance of its ability to pursue a flexible stock selection strategy it is interesting to look at the stocks that have significantly contributed to that performance over the past three years.

Five of the top 10 contributors to total return were low- or non-yielding at the point of investment (Rolls-Royce, M&S, Kier, Babcock and Flutter) and would have been difficult to hold in size in a traditional high-yield portfolio.

Marks & Spencer and Rolls-Royce are good examples of the investment managers identifying the turnaround potential of the business, supported by refreshed management teams, before it became recognised in the valuation of the shares. In combination, revaluation and improved earnings drove strong investment returns. Neither was dividend paying at acquisition but Marks & Spencer resumed dividend distributions in late 2023 and Rolls-Royce in 2025. Despite weakness over the past six months due to rising market competition and cautious management earnings guidance, Flutter Entertainment, which pays no dividend, has been a material contributor to performance over three years, driven by strong business growth, particularly in the US market.

True to their risk management and valuation disciplines, the managers have locked in gains in Marks & Spencer, Rolls-Royce, and Flutter through part-sales of the positions.

Diversification of risk

Given the focus on stocks rather than index weightings, diversification of the portfolio holdings, by business activity, market capitalisation and risk profile, is deliberately targeted, to enhance the consistency of performance and protect capital over the long term. There are usually c 150 holdings in the portfolio with a maximum of 175. Further underlining the level of stock diversification within the portfolio, particularly among mid- and small-cap stocks, at the end of December 2025, the top 15 holdings, primarily larger companies, represented 30% of the total portfolio and the other c 135 holdings represented c 70%. Of the largest 15 holdings, 12 were UK top 100 companies alongside Balfour Beatty, a top-250 company, Cummins and Flutter Entertainment, both listed on the New York Stock Exchange (NYSE) with market capitalisations of c $75bn and $15bn respectively.

During H225, Rio Tinto, Balfour Beatty, Cummins, Lloyds Bank and Aviva replaced Boku, BT Group, Senior, Kingfisher and Kier among the top 15 holdings. While most of these movements reflected relative performance, the ascent of Rio Tinto reflected both share purchases and price appreciation, while positions in BT and, to a lesser extent, Kier were reduced. Despite profit-taking in Rolls-Royce, it remains a top 15 holding and the company continues to perform well.

The February 2026 Factsheet shows quite a bit of change compared with December. Kingfisher, the home improvement and DIY retailer, the engineering companies, IMI and Senior, and new purchase, Relx, were in the top 15 holding, replacing Cummins, Flutter, Aviva and NatWest. The changes were primarily driven by relative performance. In the case of Senior, the confirmation of two potential private equity bidders drove a significant share price increase.

RELX is the former Reed Elsevier, and provides mission-critical information and analytics, with recurring revenue, strong pricing power and high margins, with structural growth from data, software and decision tools. The managers believe this has been overly discounted by investor fears over AI competition and that the shares are attractive.

Also in 2026, a new position has been taken The London Stock Exchange Group. The share price has also fallen over the past year, evidence that it is not so much a play on stock market activity as part of ‘the plumbing’, providing cash-generative market infrastructure, data and analytics, with substantial subscription-like, recurring revenues.

Outside the top 15, the largest new purchases during 2025 included several commercial property owners such as British Land and Segro, while several existing holdings in the sector were increased (including Workspace and Hammerson). The managers point to the apparent disconnect in the sector between property market conditions and listed company valuations. Another area of focus was infrastructure, with new holdings taken in Greencoat UK Wind and HICL. The managers expect the sector to benefit from growth in the renewables and infrastructure markets and expect large discounts to narrow. Meanwhile, both provide attractive dividend yields.

UK valuations continue to attract takeovers

In many cases, corporate activity was the driver of portfolio disposals, with the low relative valuations of many UK companies attracting both trade buyers and financial/private equity. During 2025, LWDB saw takeover offers for industrial chain manufacturer Renold, auto supplier Dowlais, instrumentation equipment producer Spectris, building materials company Epwin and overseas consumer lender International Personal Finance. Among these transactions, the minimum takeover premium was c 25%, with the maximum (Spectris) around 100%. IPF remained in the portfolio at end-2025 pending completion of the takeover, which has now occurred.

In January 2026, insurer Beazley was the subject of an agreed bid from its European peer Zurich, and in February, Schroders agreed a cash takeover by Nuveen, which is owned by Teachers Insurance and Annuity Association of America (TIAA). Both holdings have been sold.

Sector weightings are largely an output

Sector weightings represent an output from stock selection rather than being a target in themselves. The increase in the financial weighting, in H225 in particular, has been driven by the outperformance of the large UK banks. The reduction in the industrials weighting partly reflects profit taking in Rolls-Royce and Babcock. Combining the portfolio ungeared beta of 1.1 at end-2025 with the trust’s net gearing (12% at end-January 2026) indicates likely outperformance in a rising market.

Performance drivers in 2025

LWDB’s market cap positioning, underweight in the largest stocks and overweight in small- and mid-cap stocks, continued to be a headwind for performance in 2025, which was more than offset by positive stock selection across each market cap segment, with some additional benefit from the trust’s gearing.

For the second year in a row, three of the top five absolute contributors to performance were banks, as the sector continued to benefit from a stable UK economy, low loan loss provisions and interest rates falling less quickly than had previously been expected, supporting net interest margins. The managers have taken profits modestly but continue to see the potential for attractive shareholder returns via dividends and share buybacks. Aerospace and defence suppliers Rolls-Royce and Babcock have benefited from rising UK defence spending, coinciding with operational improvements under the stewardship of refreshed management teams. As this has become more fully recognised in their share prices, substantial profits have been taken in both.

Having been among the best performers in 2024, in 2025 Flutter Entertainment was the largest individual detractor. Management has reduced forward guidance as legislative change and market growth are developing more slowly than had been expected. The managers took profits on around a quarter of the holding in early 2024 at higher prices, and have retained the remaining holding on the view that the US market provides the potential for material earnings growth over time.

Building materials suppliers Ibstock and Marshalls were significantly affected by subdued UK house building, with a high level of fixed costs adding to the impact on profitability. The managers believe these are fundamentally good businesses and that the operational gearing can work both ways, with any increase in building activity feeding through to a material recovery in earnings. In both cases they have gradually added to the holdings.

Specialist materials producer Morgan Advanced Materials lowered guidance for the current year as a result of
subdued demand in China and Europe. The investment managers believe the shares do not reflect the longer-term
margin potential and used the weakness to add to the holding.

WPP shares were negatively affected by continuing weak organic sales growth, in part due to a lack of confidence on
the part of corporate advertisers, but compounded by the further loss of clients to global peers. Having re-appraised the
investment case, the shares were sold, avoiding further losses.

Current valuation and performance metrics

In Exhibit 3 above we show a comparison of LWDB’s share price total return performance versus its six larger peers within the AIC UK Equity Income sector.

In the table below we show a range of additional data and include the wider list of sector constituents. LWDB ranks first in terms of NAV total return over 10 years and is consistently one of the strongest sector performers. It has one of the highest price to NAV in the group and one of the lowest cost structures. It is on dividend yield where LWDB scores lowly versus peers, but it has the third highest five-year dividend growth. The lower yield reflects the investment strategy of balancing immediate income returns with long-term capital growth, compensated for by much faster dividend growth and well-above average capital growth.

Net gearing is among the highest in the group, which has worked to the trust’s advantage in the rising market of recent years. Gearing is one of the benefits of the investment trust structure and allows the fund to continue to be a net investor during periods of market volatility when the managers may not wish to sell other holdings. As income investors, there is often an immediate ‘carry’ in using borrowings at relatively low rates of interest to invest into higher yielding assets. LWDB has four tranches of long-term debt (par value of £165m), with maturities ranging between 2034 and 2050, at a blended interest rate of c 4.0%. Additionally, during 2025, it put in place a £50m term loan and £50m revolving credit facility (RCF) for a three-year term, with interest charged at the benchmark SONIA overnight rate (currently c 3.75%) plus a margin of 140bp. The RCF is currently undrawn and provides further mitigation against liquidity risk.

Law Debenture’s approach to ESG

LWDB is committed to high standards of governance while embedding environmental and social considerations across the group. At the corporate level, many of the IPS operational areas are built upon the provision of independent governance services and LWDB has a strong commitment to diversity and inclusion. As part of its commitment to the ESG agenda, LWDB has voluntarily chosen to adopt the Task Force on Climate-Related Financial Disclosures.

As one would expect, within the investment portfolio, ESG considerations are an integral part of the investment process and a part of the investment managers’ fundamental analysis. They focus on the ability of companies to identify and manage key ESG issues and risks, especially those that may have a significant impact on their financial or operating performance. The investment team proactively engages with the senior management of companies to identify ESG issues and risks and to monitor progress with measures to address these. The approach to investment is not prescriptive and the managers will consider investment in companies with weaker ESG risk profiles, provided there is a process of improvement underway. At the same time, they are prepared to exit positions where the expected improvements are not delivered. Additionally, the investment managers continue to support companies, in many cases early stage, that provide innovative and immediate ESG benefits. We would particularly highlight investments in the renewable energy and sustainable building materials sectors.

What does IPS do?

Pensions

The pensions business was established more than 50 years ago, initially as a pensions trustee, where LWDB remains the largest, as well as the longest established, independent pension trustee in the UK. The pension trustee business is complemented by its fast-growing pensions governance operation (formerly known as Pegasus), launched in late 2017. Pensions governance provides a broad range of outsourced pensions executive services, from secretarial through to fully outsourced pension scheme management, which are especially relevant to smaller or closed/legacy pensions schemes.

The growth of the business is underpinned by the demand for high-quality expertise to navigate a constant flow of regulatory developments and complexity, increasing the burden on trustees and in-house pensions teams. There is also room for market share growth, although LWDB is already the largest independent trustee in the UK, with a market share of no more than 5%. While many large pension schemes have a professional trustee appointed to their board, around 50% of schemes in the UK (mainly small- to medium-sized companies) have not yet appointed a professional trustee.

The Pensions Bill presented to Parliament in June 2025 has been accompanied by wide-ranging announcements covering defined benefit, defined contribution and local government pension schemes. With many defined benefit pension schemes seeing an improved funding position, there is increased interest in buy-in and buy-out strategies as well as corporate sponsors working with trustees to consider the viability of running schemes in surplus on a long-term basis.

Corporate trust

LWDB’s corporate trust business is the UK’s leading independent (ie non-bank with no financial involvement in transactions) corporate bond trustee, with many decades of experience and deep market connections, operating internationally to provide trustee services to a broad range of debt issuance markets. As a trustee it acts as bridge between the issuer of a bond and the individual bondholders. Its normal obligations for performing issues usually include communications to the bond holders of financial or security data together with the distribution and/or receipt of covenant information for which it typically receives an annual, inflation-linked fee over the life of the bond. However, for defaulting issues its responsibilities can be very different. A key duty of the bond trustee is to be the legal creditor of the issuer on behalf of bond holders and this usually requires material incremental work that, given a successful outcome, can generate significant additional revenues over a period of several years. LWDB is seeking to leverage its independence to broaden and deepen its relationships with clients, law firms and financial institutions and to raise its market profile.

As an established business, with a strong reputation and solid, liquid balance sheet, LWDB is well-placed to offer escrow services, which allow two parties to transfer an asset through a trusted third-party that ensures all conditions of the transaction are met prior to completion. LWDB’s escrow services offering continues to build momentum and broaden its offering. It is increasingly used to support corporate M&A transactions, corporate disposals, litigation, global trading and property transactions, but the range of applications is wide.

Corporate Services

The Corporate Services business comprises a broad range of activities that further enhance the diversification of IPS. The key activities are:

• Corporate secretarial services, the demand for which is underpinned by the worldwide efforts of law-makers and regulators to continually raise the bar for corporate governance standards. Within this business, managed services provides global entity management services to more than 350 clients, acting as a single point of contact to ensure that overseas legal entities are kept in good order with respect to compliance and corporate records; corporate governance services provides a complete range of board and committee support from full outsourced company secretarial support to attending and minuting meetings, board evaluations and governance reviews; and interim resourcing provides immediate access to qualified governance professionals, whether on-site or remote, full time or part time, as required by the client.
• Structured finance provides accounting and administrative services to special service vehicles and other corporate structures set up to acquire assets. Typical buyers would include financial institutions such as boutique asset managers, hedge funds or challenger banks wishing to gain risk exposure to a particular asset type, for example aircraft leases or mortgages, or companies being established as part of a corporate acquisition. The UK securitisation market is one of the largest and most developed securitisation markets in Europe and an important source of finance for UK businesses. LWDB is a relatively small player in this market, which is dominated by the larger providers with long-established relationships. LWDB is therefore seeking to leverage the acknowledged quality of its offering by raising its profile with a broader universe of clients.
• Specialist external whistleblowing services via Safecall, which, as with many other IPS businesses, has the benefit of structural tailwinds, from an acceleration of the emerging regulatory frameworks and standards. Early adopters were often larger entities, but smaller and mid-sized employers are increasingly seeing the value of an independent and trusted partner to deliver this service, where Safecall is positioned as a premium provider of a high-quality product.
• Service of process, where LWDB acts as local agent for third parties all over the world that are not otherwise represented in that jurisdiction. It is a high-volume business, with well over 50,000 appointments on the books at any one time, but given the short-term nature of many of these, SoP has the lowest recurring contractual revenue base of all the IPS businesses and is one of the most sensitive to global macroeconomic trends. It nonetheless generates highly attractive returns for LWDB over time.