Acquisition of company secretarial business

15 December 2020

The Law Debenture Corporation p.l.c.

Acquisition of Eversheds Sutherland International LLP's company secretarial unit of Konexo

A significant step forward in achieving our ambitious growth plans and underpinning our position as a leading governance services firm

The Law Debenture Corporation p.l.c. ("Law Debenture", the "Company" or the "Group") is pleased to announce that its wholly-owned subsidiary Law Debenture Corporate Services Limited ("LDCS") has entered into a binding agreement to acquire the company secretarial unit ("CSS") of Konexo UK, a division of Eversheds Sutherland International LLP ("Eversheds Sutherland") (the "Acquisition").

The Acquisition consists of the company secretarial business and assets. The total consideration for the Acquisition is £20 million, payable in cash.

Highlights:

·    The Acquisition has a compelling strategic rationale for Law Debenture, in line with its stated strategy to grow the independent professional services business ("IPS") by way of high quality and selective external opportunities.

·   This disciplined IPS acquisition, alongside a continued focus on organic growth, should positively support Law Debenture's long-term capital growth and steadily increasing income objectives.

·  For the financial year ended 30 April 2020, CSS recorded revenues of £6.2m and estimated EBITDA of £2.2m. 

·  The Acquisition will further strengthen Law Debenture's position as a leading professional services and governance firm and enhance its customer proposition.

·    The Acquisition complements Law Debenture's existing company secretarial offering, building on our existing sector knowledge and expertise. Law Debenture's accounting and company secretarial offering has shown strong organic growth both in 2019 and year to date in 2020.

·   Andy Casey, Head of CSS, will transfer to Law Debenture. Andy, who is a Chartered Company Secretary with 14 years' industry experience, joined Konexo in 2015 and was promoted to Head of CSS in 2018. Prior to joining Konexo, he spent 9 years with PwC.

·    The company secretarial sector offers long-term structural growth opportunities with favourable regulatory drivers. Demand for governance services is growing strongly for corporates as they face ever-increasing compliance requirements and disclosure obligations.

·   CSS offers significant longer-term revenue synergy opportunities with potential for cross-selling within accounting services.

·  The Acquisition helps strengthen Law Debenture's earnings outlook to facilitate dividend distributions and support long-term capital growth and steadily increasing income objectives.

·   The Acquisition is also expected to be EPS enhancing and accretive to the Group's long-term strategic vision and to value.

Denis Jackson, CEO of Law Debenture, commented:

"The acquisition of CSS is an exciting and value-creating opportunity for Law Debenture and is consistent with our clearly stated strategy. While IPS has a proven record of organic growth over recent years, we have remained alert to opportunities to accelerate our growth.

We are proud to welcome the CSS team to Law Debenture. It is encouraging to see such a long client tenure, often more than 10 years, and we look forward to working with the team at Eversheds Sutherland to ensure a smooth transition of the business. The combination will bring together highly qualified and talented colleagues, allowing us to widen our existing expertise and capabilities to better service our clients.

This is an important step in the continued execution of IPS' strategy that is both strategically and financially compelling with attractive longer-term revenue synergy opportunities."

Key transaction terms and financing

The purchase price for the Acquisition is £20m, to be financed from Law Debenture's own resources.

Under the terms of the Acquisition agreement, Law Debenture has agreed to acquire the business on a cash and debt free basis. For the financial year ended 30 April 2020, CSS recorded revenues of £6.2m, estimated EBITDA of £2.2m.  Completion of the Acquisition is expected by the end of January 2021.

Established for 15 years, CSS is a respected part of the Konexo business with UK and international sector expertise. The transferring team has 55 employees, with 15 based in London, 1 in Hong Kong and the remainder in Manchester. The business services a client base of 480 in more than 100 jurisdictions.

Notice of 2020 Final Results

The Group expects to announce its full year results for the year to 31 December 2020 on Friday, 26th February 2021.

For further information, please contact:

About Law Debenture

Company History:

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 has two distinct areas of business.

Investment Portfolio:

Our portfolio of investments is managed by James Henderson and Laura Foll of Janus Henderson Investors.

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 Total Return through investing in a diversified portfolio of stocks.

Independent Professional Services:

We are a leading provider of independent professional services, built on three excellent foundations: our Pensions, Corporate Trust and Corporate Services businesses.  We operate globally, with offices in the UK, New York, Ireland, Hong Kong, Delaware and the Channel Islands.

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

The Law Debenture Corporation p.l.c. is registered in England at 8th Floor, 100 Bishopsgate, London, EC2N 4AG, company registration number 30397.  The Law Debenture Corporation p.l.c. LEI number - 2138006E39QX7XV6PP21. 

About Eversheds Sutherland

As a global top 10 law practice, Eversheds Sutherland provides legal services to a global client base ranging from small and mid-sized businesses to the largest multinationals, acting for 66 of the FTSE 100, 73 of the Fortune 100 and 119 of the Fortune 200.

With more than 3,000 lawyers, Eversheds Sutherland operates in 68 offices in 32 jurisdictions across Africa, Asia, Europe, the Middle East and the United States. In addition, a network of more than 200 related law firms, including formalised alliances in Latin America, Asia Pacific and Africa, provide support around the globe.