Final Results

Lowland Investment Co PLC 04 November 2004 3 November 2004 LOWLAND INVESTMENT COMPANY PLC Unaudited Preliminary Results for the year ended 30 September 2004 Financial Highlights Unaudited Audited Year ended Year ended 30 September 30 September 2004 2003 Revenue return per ordinary share 17.3p 15.6p Net dividends per ordinary share: Interim paid 7.0p 6.5p Final recommended 11.0p 10.5p -------- -------- Total 18.0p 17.0p Net asset value per ordinary share 592.5p 520.5p Extracts from the Chairman's Statement Review During the year the Company's net asset value rose from 520.5p per share to 592.5p, an increase of 13.8%. Over the same period, the FTSE All-Share Index increased by 12.0%. The stock market was led upwards by the share prices of larger companies, reflected in a 14.9% rise in the FTSE 250 Index during the year. By contrast, the FTSE Small Cap Index rose by only 6.9%, reflecting relative underperformance by smaller companies, the reverse of last year when smaller companies substantially outperformed their larger counterparts. A limited shift in Lowland's portfolio from smaller to larger companies coupled with the maintenance of a reasonable level of gearing during the year helped counter the underperformance from some small companies. Our longer term performance has also been satisfactory, with an increase in net asset value over the last five years of 27.2% compared with a fall of 19.6% in the FTSE All-Share Index. -MORE- - 2 - LOWLAND INVESTMENT COMPANY PLC Unaudited Preliminary Results for the year ended 30 September 2004 Dividends The revenue per share for the year was 17.3p, compared with 15.6p last year, a rise of 10.9%. The recommended final dividend is 11.0p per share, making a total dividend per ordinary share of 18.0p, an increase of 5.9% from last year's 17.0p. The Board will use part of the relatively large revenue reserve to support the progressive dividend policy. The dividends from the underlying portfolio are growing and the earnings are calculated after taking all costs, including interest charges, to the revenue account. The Board's intention is to continue with the progressive dividend policy. Borrowings During the year the net debt rose from £29.7m to £32.8m, however the gearing at 27.5% was similar to last year's level of 27.7% as the Company's net asset value has increased. The majority of the borrowings remain short term. The portfolio contains relatively mature dividend paying companies which provides a sound asset backing for the gearing. The gearing has added value for Lowland in recent years and it is a major advantage that the Trust has over non-geared Investment Trusts and open ended funds such as Unit Trusts. Over the long term the Board expects that some gearing coupled with investment in well chosen equities will enable Lowland to perform well for its shareholders. The Board, in conjunction with the Investment Manager, regularly reviews the gearing as we are aware of the risks involved. It is the Board's current intention not to be over 30% geared. Outlook Interest rate increases may be nearly over in the UK for this cycle. The housing market is showing signs of cooling and the economic growth rate seems to be falling back. The rise in interest rates has not to date caused economic dislocation. Bad debts for banks have not escalated and unemployment has not increased. The rise in oil prices is a major concern, for not only could it dampen economic growth but it may also exert upward pressure on inflation. However, there are UK companies that are performing well in this testing environment and have improving balance sheets, profits and dividend cover. In addition, many companies are increasing their dividends. Lowland is well placed to benefit with its emphasis on good businesses on modest valuations that are expected to provide growing revenue and capital appreciation. The Board During the year there have been certain changes on the Board. Peter Troughton has become Chairman of the Audit Committee. Tracy Long has been co-opted to the Board and stands for election at the Annual General Meeting. -MORE- - 3 - LOWLAND INVESTMENT COMPANY PLC Unaudited Preliminary Results for the year ended 30 September 2004 I have decided to retire and I am pleased that John Hancox has agreed to become Chairman following the Annual General Meeting. Looking forward, the Board's age profile is well balanced and the continuing Directors have a wide range of relevant experience. Finally, I would like to thank James Henderson and his colleagues for a further successful year. Ian M Trotter Chairman 3 November 2004 -MORE- - 4 - LOWLAND INVESTMENT COMPANY PLC Unaudited Preliminary Results for the year ended 30 September 2004 Statement of Total Return (incorporating the revenue account) for the year ended 30 September 2004 Unaudited Audited Year ended Year ended 30 September 2004 30 September 2003 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Total capital gains from investments - 15,146 15,146 - 24,155 24,155 Income from fixed asset investments 6,549 - 6,549 5,754 - 5,754 Other interest receivable and similar 85 - 85 56 - 56 income --------- --------- --------- --------- --------- --------- Gross revenue and capital gains 6,634 15,146 21,780 5,810 24,155 29,965 Management fee (787) - (787) (713) - (713) Other administrative expenses (247) - (247) (249) - (249) --------- --------- --------- --------- --------- --------- Net return on ordinary activities before interest payable and taxation 5,600 15,146 20,746 4,848 24,155 29,003 Interest payable (1,964) - (1,964) (1,639) - (1,639) --------- --------- --------- --------- --------- --------- Net return on ordinary activities before taxation 3,636 15,146 18,782 3,209 24,155 27,364 Taxation on net return on ordinary - - - - - - activities --------- --------- --------- --------- --------- --------- Net return on ordinary activities after taxation 3,636 15,146 18,782 3,209 24,155 27,364 Dividends - ordinary shares Underprovision in prior year (32) - (32) - - - Interim paid - 7.0p (2003: 6.5p) (1,470) - (1,470) (1,345) - (1,345) Final proposed - 11.0p (2003: 10.5p) (2,310) - (2,310) (2,173) - (2,173) --------- --------- --------- --------- --------- --------- (3,812) - (3,812) (3,518) - (3,518) --------- --------- --------- --------- --------- --------- Transfer (from)/to reserves (176) 15,146 14,970 (309) 24,155 23,846 ====== ====== ====== ====== ====== ====== Return per ordinary share 17.3p 72.2p 89.5p 15.6p 117.4p 133.0p ====== ====== ====== ====== ====== ====== The revenue columns of this statement represent the profit and loss accounts of the Company. -MORE- - 5 - LOWLAND INVESTMENT COMPANY PLC Unaudited Preliminary Results for the year ended 30 September 2004 Balance Sheet at 30 September 2004 Unaudited Audited 2004 2003 £'000 £'000 Fixed Asset Investments - Listed in United Kingdom 155,595 136,229 - Quoted overseas 1,975 470 - Unquoted at directors' valuation 1,064 914 ---------- ---------- 158,634 137,613 ---------- ---------- Current Assets Debtors 1,493 3,078 Cash at bank 2,414 55 ---------- ---------- 3,907 3,133 Creditors: amounts falling due within one year (32,105) (27,025) ---------- ---------- Net current liabilities (28,198) (23,892) ---------- ---------- Total assets less current liabilities 130,436 113,721 Creditors: amounts falling due after more than one year (6,000) (6,000) ---------- ---------- Total net assets 124,436 107,721 ---------- ---------- Capital and reserves Called-up share capital 5,250 5,174 Share premium 6,922 5,253 Other reserves - Capital redemption reserve 1,007 1,007 - Capital reserve - realised 105,552 101,791 - Capital reserve - unrealised 2,924 (8,461) Revenue reserve 2,781 2,957 ---------- ---------- Total equity shareholders' funds 124,436 107,721 ---------- ---------- Net asset value per ordinary share 592.5p 520.5p -MORE- - 6 - LOWLAND INVESTMENT COMPANY PLC Unaudited Preliminary Results for the year ended 30 September 2004 Cash Flow Statement For the year ended 30 September 2004 Unaudited Audited 2004 2004 2003 2003 £'000 £'000 £'000 £'000 Net cash inflow from operating activities 5,571 4,696 Servicing of finance Interest paid (2,068) (1,511) ---------- ---------- Net cash outflow from servicing of finance (2,068) (1,511) Taxation UK Income tax recovered 3 - Overseas withholding tax recovered 102 - ---------- ---------- Net tax paid 105 - Financial investment Purchase of investments (49,548) (54,373) Sales of investments 44,833 48,153 ---------- ---------- Net cash outflow from financial investment (4,715) (6,220) Equity dividends paid (3,675) (3,221) ---------- ---------- Net cash outflow before financing (4,782) (6,256) Financing Issue of shares 1,745 1,226 Net loans drawn down 5,400 4,700 ----------- ----------- 7,145 5,926 ---------- ---------- Increase/(decrease) in cash 2,363 (330) ---------- ---------- Reconciliation of net cash flow to movement in net debt Increase/(decrease) in cash as above 2,363 (330) Net cash inflow from increase in loans (5,400) (4,700) Exchange movements (4) 38 --------- --------- Movement in net debt (3,041) (4,992) Net debt at 1 October (29,745) (24,753) ---------- ---------- Net debt at 30 September (32,786) (29,745) ---------- ---------- -MORE- - 7 - LOWLAND INVESTMENT COMPANY PLC Unaudited Preliminary Results for the year ended 30 September 2004 Top Ten Holdings as at 30 September 2004 Holding % of Portfolio BP 4.8% Renold 2.8% GlaxoSmithKline 2.6% Lloyds TSB 2.5% McAlpine (Alfred) 2.5% Shell 2.3% Standard Chartered 1.8% Tate & Lyle 1.7% Meggitt 1.6% BPB 1.6% - MORE - - 8 - LOWLAND INVESTMENT COMPANY PLC Unaudited Preliminary Results for the year ended 30 September 2004 Notes : 1. Share Issue During the year the Company issued 305,000 ordinary shares of 25p. The issued share capital is 21,000,205. 2. Dividend The recommended final dividend of 11.0p net per ordinary share, subject to approval at the Annual General Meeting, is payable on 17 December 2004 to shareholders on the register of members at the close of business on 19 November 2004. The Company's shares will be quoted ex-dividend on 17 November 2004. 3. Return per Ordinary Share Revenue return per ordinary share is based on the net return on ordinary activities after taxation of £3,636,000 (2003: £3,209,000) and on the weighted average 20,983,538 ordinary shares in issue during the year (2003: 20,579,315). Capital return per ordinary share is based on net capital gains of £15,146,000 (2003: £24,155,000) and on the weighted average 20,983,538 ordinary shares in issue during the year (2003: 20,579,315). 4. 2004 Accounts The preliminary figures for the year ended 30 September 2004 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. 5. 2003 Accounts The figures and financial information for the year ended 30 September 2003 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. 6. Annual Report The Annual Report will be posted to shareholders in November and thereafter copies will be available at the registered office at 4 Broadgate, London EC2M 2DA. 7. Annual General Meeting The Annual General Meeting will be held on Wednesday, 15 December 2004 at 3.00pm at 4 Broadgate, London, EC2M 2DA. By order of the Board Henderson Secretarial Services Ltd -MORE- - 9 - LOWLAND INVESTMENT COMPANY PLC Unaudited Preliminary Results for the year ended 30 September 2004 - ENDS - For further information please contact : James Henderson Lowland Investment Company plc Telephone: 020 7818 4370 Stephen Westwood Head of Investment Trusts Henderson Global Investors Telephone: 020 7818 5517 or Vicki Staveacre Henderson Press Office Telephone: 020 7818 4222 This information is provided by RNS The company news service from the London Stock Exchange

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