Final Results
Lowland Investment Co PLC
9 November 2001
9 November 2001
LOWLAND INVESTMENT COMPANY PLC
Unaudited Preliminary Results for the year ended 30 September 2001
Financial Highlights
Unaudited Audited
Year ended Year ended Change
30 September 30 September
2001 2000
Earnings per ordinary share 18.18p 14.79p +22.92%
Net dividends per ordinary share:
Interim paid 6.00p 5.50p +9.09%
Final recommended 8.75p 8.50p +2.94%
-------- -------- -----------
Total 14.75p 14.00p +5.36%
Net asset value per ordinary share 466.53p 486.54p (4.11)%
Extracts from the Chairman's Statement
Review
In the first six months of the financial year Lowland's net asset value rose
by 12.3% compared to a fall of 10.5% in the FTSE All-Share Index. However, in
the second six months, the net asset value fell by 14.7% compared to a fall in
the index of 13.7%. For the year as a whole Lowland's net asset value declined
by 4.1%, while the FTSE All-Share was down by 22.7%.
The events of 11 September in New York and Washington changed the outcome of
the year. Prior to this it had been a good year for value and income
orientated investors. The extreme over-valuation of the 'new' economy stocks
had unwound at a time when many 'old' economy stocks were showing reasonable
growth. The Trust had benefited from focusing on companies with sound
prospects that were neglected when Technology, Media and Telecoms (TMT) shares
had most of the attention. The terrorist attack has led to a reassessment of
risk by investors. Stocks in the insurance sector and aerospace sector have
particularly suffered.
Dividend
The earnings per share for the year were 18.18p, an increase of 22.9% over
last year's 14.79p. The recommended final dividend is 8.75p, making 14.75p per
ordinary share for the year, an increase of 5.4%. This compares with dividend
growth from the FTSE All-Share over the period of 2.6%.
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LOWLAND INVESTMENT COMPANY PLC
Unaudited Preliminary Results for the year ended 30 September 2001
Lowland's annual compound dividend growth over the last ten years has been
6.3% compared with the 4.7% from the FTSE All-Share. This has been achieved by
growing the asset value by more than the FTSE All-Share while investing in
higher yielding shares.
Lowland's dividend yield on the share price was 3.4% at the year end, while
the FTSE All-Share was yielding 2.9%. It is one of the Board's objectives to
continue to increase the dividend.
Share Buy Backs
There were no further purchases of the Company's own shares in the second half
of the year, as the discount to net asset value had narrowed with the share
price rising. However, in the first half of the year, 125,000 shares were
purchased by the Company for cancellation at an average price of 413p. This
marginally enhanced the net asset value and compares with a share price of
440p at the year end.
A resolution to renew the authority is included in the Notice of the Annual
General Meeting. There is also a resolution to allot shares up to 5% of the
issued share capital. This would only be used if the shares were trading at a
premium and no natural sellers could be found.
Borrowings
During the year the gearing, being net borrowings as a percentage of net asset
value, was marginally increased from 23.8% to 24.5%. It was decided in June,
as a result of the falls in interest rates, to fix £6,000,000 of these
borrowings for three years at 6.4%. The Board may increase the amount of fixed
borrowings during the coming year but the overall level of gearing is unlikely
to be increased above 30%.
Outlook
The future course of the global economy and domestic interest rates,
particularly in the light of events in the USA, is uncertain. However, there
are opportunities in Lowland's usual investment arena and the Board does not
intend to change the investment policy. In this investment environment the
manager will seek to invest in companies that are likely to make progress in
this difficult time for corporate profits.
Lowland's net asset value has outperformed the FTSE All-Share significantly
over the past three years. James Henderson, the investment manager, and his
immediate colleagues at Henderson Global Investors deserve our thanks and
congratulations.
The Board believes that Lowland, with its relatively low charges, above
average yield and growing dividend, combined with its record of capital
growth, should continue to be a sound long term investment.
Ian M Trotter
Chairman
8 November 2001
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LOWLAND INVESTMENT COMPANY PLC
Unaudited Preliminary Results for the year ended 30 September 2001
Statement of Total Return (incorporating the revenue account)
for the year ended 30 September 2001
Unaudited Audited
Year ended Year ended
30 September 2001 30 September 2000
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Total capital - (4,720) (4,720) - 2,425 2,425
(losses)/gains from
investments
Income from fixed 6,522 - 6,522 5,715 - 5,715
asset investments
Other interest 84 - 84 119 - 119
receivable and
similar income
--------- --------- --------- --------- --------- ---------
Gross revenue and 6,606 (4,720) 1,886 5,834 2,425 8,259
capital (losses)/
gains
Management fee (745) - (745) (688) - (688)
Other (204) - (204) (249) - (249)
administrative
expenses
--------- --------- --------- --------- --------- ---------
Net return/(loss) 5,657 (4,720) 937 4,897 2,425 7,322
on ordinary
activities
before interest
payable and
taxation
Interest payable (2,073) - (2,073) (1,859) - (1,859)
--------- --------- --------- --------- --------- ---------
Net return/(loss) 3,584 (4,720) (1,136) 3,038 2,425 5,463
on ordinary
activities
before taxation
Taxation on net - - - - - -
return on ordinary
activities
--------- --------- --------- --------- --------- ---------
Net return/(loss) 3,584 (4,720) (1,136) 3,038 2,425 5,463
on ordinary
activities
after taxation
Dividends -
ordinary shares
Over provision in 11 - 11 - - -
prior year
Interim paid - (1,182) - (1,182) (1,101) - (1,101)
6.00p (2000: 5.50p)
Final proposed - (1,723) - (1,723) (1,685) - (1,685)
8.75p (2000: 8.50p)
--------- --------- --------- --------- --------- ---------
(2,894) - (2,894) (2,786) - (2,786)
--------- --------- --------- --------- --------- ---------
Transfer to/(from) 690 (4,720) (4,030) 252 2,425 2,677
reserves
====== ====== ====== ====== ====== ======
Return per ordinary 18.18p (23.95p) (5.77p) 14.79p 11.80p 26.59p
share
====== ====== ====== ====== ====== ======
The revenue columns of this statement represent the revenue accounts of the
Company.
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LOWLAND INVESTMENT COMPANY PLC
Unaudited Preliminary Results for the year ended 30 September 2001
Balance Sheet
at 30 September 2001
Unaudited Audited
2001 2000
£'000 £'000
Fixed Asset Investments
- Listed in United Kingdom 112,182 115,292
- Listed overseas 2,444 4,423
- Unquoted at directors' valuation 759 1,034
---------- ----------
115,385 120,749
---------- ----------
Current Assets
Debtors 1,411 978
Cash at bank 249 152
---------- ----------
1,660 1,130
Creditors: amounts falling due within one year (13,161) (19,446)
---------- ----------
Net current liabilities (11,501) (18,316)
---------- ----------
Total assets less current liabilities 103,884 102,433
Creditors: amounts falling due after more than one year (12,000) (6,000)
---------- ----------
Total net assets 91,884 96,433
---------- ----------
Capital and reserves
Called-up share capital 4,924 4,955
Share premium 778 778
Other reserves 82,803 88,011
Revenue reserve 3,379 2,689
---------- ----------
Total equity shareholders' funds 91,884 96,433
---------- ----------
Net asset value per ordinary share 466.53p 486.54p
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LOWLAND INVESTMENT COMPANY PLC
Unaudited Preliminary Results for the year ended 30 September 2001
Cash Flow Statement
For the year ended 30 September 2001
Unaudited Audited
2001 2001 2000 2000
£'000 £'000 £'000 £'000
Net cash inflow from operating 5,398 4,873
activities
Servicing of finance
Interest paid (1,975) (1,876)
---------- ----------
Net cash outflow from servicing (1,975) (1,876)
of finance
Taxation
UK tax paid (46) -
Overseas tax recovered - 13
---------- ----------
Net tax (paid)/recovered (46) 13
Financial Investment
Purchase of investments (47,905) (42,572)
Sales of investments 48,411 46,369
---------- ----------
Net Cash inflow from financial 506 3,797
investment
Equity dividends paid (2,856) (2,810)
Financing
Purchases of own shares (519) (5,764)
Repayment of short term loan (6,421) 1,521
Drawdown of three year term loan 6,000 -
----------- -----------
(940) (4,243)
---------- ----------
Increase/(decrease) in cash 87 (246)
---------- ----------
Reconciliation of net cash flow
to movement in net debt
Increase/(decrease) in cash as 87 (246)
above
Cash outflow/(inflow) from 421 (1,521)
decrease/(increase) in loans
Exchange movements 10 (18)
--------- ---------
Movement in net debt 518 (1,785)
Net debt at 1 October (22,769) (20,984)
---------- ----------
Net debt at 30 September (22,251) (22,769)
---------- ----------
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LOWLAND INVESTMENT COMPANY PLC
Unaudited Preliminary Results for the year ended 30 September 2001
Notes :
1. Share Buy Backs
During the year the Company made authorised market purchases for
cancellation of 125,000 ordinary shares of 25p.
2. Investment Company Status
The Company regained investment company status within the meaning of
Section 266 of the Companies Act 1985 in December 2000. It continued
to conduct its affairs as an investment trust for taxation purposes
under Section 842 of the Income and Corporation Taxes Act 1988. As
such it is necessary to continue to present the accounts in accordance
with the SORP. Under the SORP, the financial performance of the
Company is presented in a statement of total return in which the
revenue column is the profit and loss account of the Company. The
revenue column excludes net profit on disposals of investments of £
7,879,000 (2000: £8,505,000) as calculated by reference to their
carrying amounts at 30 September 2000. The Companies Act and/or FRS3
would ordinarily require this amount to be included in the profit and
loss account. However, in the opinion of the directors, this would be
misleading because it would obscure and distort both the revenue and
capital performance of the Company, and would not show clearly the
revenue profits emerging to be distributable by way of dividend. The
directors therefore consider that these departures from the specific
provisions of Schedule 4 of the Companies Act relating to the form and
content of accounts for companies other than investment companies and
these departures from accounting standards are necessary to give a
true and fair view. The departures have no effect on total return or
on the balance sheet.
3. Dividend
The recommended final dividend of 8.75p net per ordinary share,
subject to approval at the Annual General Meeting, is payable on 19
December 2001 to shareholders on the register of members at the close
of business on 23 November 2001. The Company's shares will be quoted
ex dividend on 21 November 2001.
4. Return per Ordinary Share
Revenue return per ordinary share is based on the net return on
ordinary activities after taxation of £3,584,000 (2000: £3,038,000)
and on the weighted average 19,709,041 ordinary shares in issue during
the year (2000: 20,543,924). Capital return per ordinary share is
based on net capital losses of £4,720,000 (2000: £2,425,000 gain) and
on the weighted average 19,709,041 ordinary shares in issue during the
year (2000: 20,543,924).
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LOWLAND INVESTMENT COMPANY PLC
Unaudited Preliminary Results for the year ended 30 September 2001
5. 2001 Accounts
The preliminary figures for the year ended 30 September 2001 are an
extract from the latest accounts of the Company. These accounts have
not yet been delivered to the Registrar of Companies, nor have the
auditors yet reported on them.
6. 2000 Accounts
The figures and financial information for the year ended 30 September
2000 are extracted from the latest published accounts of the Company
and do not constitute statutory accounts for that year. Those accounts
have been delivered to the Registrar of Companies and included the
report of the auditors which was unqualified and did not contain a
statement either under Section 237(2) or 237(3) of the Companies Act
1985.
7. Annual General Meeting
The Annual General Meeting will be held on Tuesday, 18 December 2001
at 3.30pm at 4 Broadgate, London, EC2M 2DA.
- ENDS -
For further information please contact :
James Henderson
Henderson Global Investors
Telephone: 020 7818 4100
Vicki Staveacre
Henderson Press Office
Telephone: 020 7818 4222
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