Final Results

Lowland Investment Co PLC 02 November 2005 2 November 2005 LOWLAND INVESTMENT COMPANY PLC Unaudited Preliminary Results for the year ended 30 September 2005 Financial Highlights Unaudited Audited Year ended Year ended 30 September 30 September 2005 2004 Revenue return per ordinary share 18.2p 17.3p Net dividends per ordinary share: Interim paid 7.50p 7.00p Final recommended 11.75p 11.00p -------- -------- Total 19.25p 18.00p Net asset value per ordinary share 774.0p 592.5p Extracts from the Chairman's Statement Review During the year the Company's net asset value rose from 592.5p to 774.0p, an increase of 30.6% compared with a rise of 20.9% in the FTSE All-Share Index over the same period. The strong performance of equity markets is the result of relatively low interest rates, good dividend growth and a sound operating performance in aggregate from companies. The Trust has benefited from the good performance of some of its smaller company holdings and its gearing. The amount of corporate bid activity has been high and Lowland has held a number of the companies that have been acquired. Dividend The earnings per share for the year were 18.2p compared with 17.3p last year, an increase of 5.2%. As foreshadowed in the interim report, dividends from the underlying holdings showed good growth during the second half of the year and we have therefore decided to increase the final dividend to 11.75p per share from the 11.0p paid last year, resulting in a full year dividend of 19.25p, an increase of 6.9%. The gearing the Trust has in place has significantly benefited the capital account but the interest cost has led to a smaller increase in earnings than would otherwise have been the case as the interest charges are all paid from the revenue account. The Board therefore believes it is reasonable to use a small part of the revenue reserve to support the dividend growth. The Board's intention is to continue with the progressive dividend policy. -MORE- - 2 - LOWLAND INVESTMENT COMPANY PLC Unaudited Preliminary Results for the year ended 30 September 2005 Corporate Activity In March, Securities Trust of Scotland, ('STS') invited Lowland to participate in their reconstruction. As a result 2,942,749 new Lowland shares were issued at a small premium to net asset value to STS shareholders who had elected for Lowland shares. This was marginally enhancing for Lowland's net asset value and we are very pleased to welcome the 1,328 new shareholders. The total expense ratio has fallen from 0.9% to 0.8% partially as a result of the share issuance. Investment Philosophy Lowland has always invested predominantly in UK stocks but at times when a good opportunity arose a limited exposure to an overseas market has been put in place. Towards the end of the financial year five Japanese stocks were purchased. These stocks have an average dividend yield of 1.5% and the purchases were funded by yen borrowings at an annual cost of a little under 0.5%. The exercise therefore will be marginally beneficial for the revenue account but the success or otherwise will depend on the stocks chosen coming through with good results. The overwhelming focus of the portfolio is to find and hold sound UK companies that are undervalued and which are expected to grow their dividends in the coming years. If the capital is grown, and there is an emphasis on yielding stocks, the distributions to Lowland shareholders will build. It is important to remember that income growth is achieved through capital growth. Lowland's dividend has grown more than twice as fast as the dividend growth of the FTSE All-Share Index over the past ten years because the net asset value has grown more than twice as fast as the index over the period. Policy We have inserted the words 'predominantly' and 'normally' when describing Lowland's investment policy. Thus, the wording has changed from 'The Company's policy is to invest in a broad spread of different sized companies with not more than half by value coming from the largest 100 UK companies and the balance from small and medium sized companies' to 'The Company's policy is to invest in a broad spread of predominantly UK companies of differing sizes with normally not more than half by value coming from the largest 100 UK companies and the balance from small and medium sized companies'. The Board believes that these amendments will give the Manager additional flexibility. Outlook The UK economy is experiencing a number of problems. Retailers are under pressure as sales slow and the rise of the oil price has put an upward pressure on costs. However, the portfolio is geared as there remain good investment opportunities. Lowland does not hold shares in 'UK plc' but in individual companies that, through the hard work of the people in them, are in aggregate producing good results in spite of the economic backdrop. There is underlying strong real dividend growth. This robust performance is expected to continue and encourages your Board to remain positive about the investment opportunities going forward. JPD Hancox Chairman -MORE- - 3 - LOWLAND INVESTMENT COMPANY PLC Unaudited Preliminary Results for the year ended 30 September 2005 Statement of Total Return (incorporating the revenue account) for the year ended 30 September 2005 Unaudited Audited Year ended Year ended 30 September 2005 30 September 2004 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Total capital gains from investments - 40,044 40,044 - 15,146 15,146 Income from fixed asset investments 7,567 - 7,567 6,549 - 6,549 Other interest receivable and similar 86 - 86 85 - 85 income --------- --------- --------- --------- --------- --------- Gross revenue and capital gains 7,653 40,044 47,697 6,634 15,146 21,780 Management fee (1,014) - (1,014) (787) - (787) Other administrative expenses (222) - (222) (247) - (247) --------- --------- --------- --------- --------- --------- Net return on ordinary activities before interest payable and taxation 6,417 40,044 46,461 5,600 15,146 20,746 Interest payable (2,383) - (2,383) (1,964) - (1,964) --------- --------- --------- --------- --------- --------- Net return on ordinary activities before taxation 4,034 40,044 44,078 3,636 15,146 18,782 Taxation on net return on ordinary (22) - (22) - - - activities --------- --------- --------- --------- --------- --------- Net return on ordinary activities after taxation 4,012 40,044 44,056 3,636 15,146 18,782 Dividends - ordinary shares Underprovision in prior year 12 - 12 (32) - (32) Interim paid - 7.5p (2004: 7.0p) (1,599) - (1,599) (1,470) - (1,470) Final proposed - 11.75p (2004: 11.0p) (2,851) - (2,851) (2,310) - (2,310) --------- --------- --------- --------- --------- --------- (4,438) - (4,438) (3,812) - (3,812) --------- --------- --------- --------- --------- --------- Transfer (from)/to reserves (426) 40,044 39,618 (176) 15,146 14,970 ====== ====== ====== ====== ====== ====== Return per ordinary share 18.2p 182.0p 200.2p 17.3p 72.2p 89.5p ===== ===== ===== ====== ====== ====== The revenue columns of this statement represent the profit and loss accounts of the Company. -MORE- - 4 - LOWLAND INVESTMENT COMPANY PLC Unaudited Preliminary Results for the year ended 30 September 2005 Balance Sheet at 30 September 2005 Unaudited Audited 2005 2004 £'000 £'000 Fixed Asset Investments - Listed in United Kingdom 226,497 155,595 - Quoted overseas 12,137 1,975 - Unquoted at directors' valuation 1,264 1,064 ------------ ---------- 239,898 158,634 ----------- ---------- Current Assets Debtors 3,082 1,493 Cash at bank 2,743 2,414 --------- ---------- 5,825 3,907 Creditors: amounts falling due within one year (51,879) (32,105) ----------- ---------- Net current liabilities (46,054) (28,198) ---------- ---------- Total assets less current liabilities 193,844 130,436 Creditors: amounts falling due after more than one year (6,000) (6,000) ------------ ---------- Total net assets 187,844 124,436 ----------- ---------- Capital and reserves Called-up share capital 6,067 5,250 Share premium 29,895 6,922 Other reserves - Capital redemption reserve 1,007 1,007 - Capital reserve - realised 113,485 105,552 - Capital reserve - unrealised 35,035 2,924 Revenue reserve 2,355 2,781 ----------- ---------- Total equity shareholders' funds 187,844 124,436 ----------- ---------- Net asset value per ordinary share 774.0p 592.5p -MORE- - 5 - LOWLAND INVESTMENT COMPANY PLC Unaudited Preliminary Results for the year ended 30 September 2005 Cash Flow Statement For the year ended 30 September 2005 Unaudited Audited 2005 2005 2004 2004 £'000 £'000 £'000 £'000 Net cash inflow from operating activities 6,028 5,571 Servicing of finance Interest paid (2,437) (2,068) --------- ---------- Net cash outflow from servicing of finance (2,437) (2,068) Taxation UK Income tax recovered - 3 Overseas withholding tax recovered 32 102 --------- ---------- Net tax recovered 32 105 Financial investment Purchase of investments (68,107) (49,548) Sales of investments 39,644 44,833 ----------- ---------- Net cash outflow from financial investment (28,463) (4,715) Equity dividends paid (3,897) (3,675) --------- ---------- Net cash outflow before financing (28,737) (4,782) Financing Issue of shares 11,885 1,745 Net loans drawn down 14,763 5,400 ----------- ----------- 26,648 7,145 ---------- ---------- (Decrease)/increase in cash (2,089) 2,363 ---------- ---------- Reconciliation of net cash flow to movement in net debt (Decrease)/Increase in cash as above (2,089) 2,363 Net cash inflow from increase in loans (14,763) (5,400) Exchange movements (42) (4) ---------- --------- Movement in net debt (16,894) (3,041) Net debt at 1 October (32,786) (29,745) ----------- ---------- Net debt at 30 September (49,680) (32,786) ----------- ---------- -MORE- - 6 - LOWLAND INVESTMENT COMPANY PLC Unaudited Preliminary Results for the year ended 30 September 2005 Top Ten Holdings as at 30 September 2005 Holding % of Portfolio BP 5.7% Royal Dutch Shell 5.2% McAlpine (Alfred) 2.4% GlaxoSmithKline 2.4% Senior 2.0% Lloyds TSB 2.0% Vodafone 1.8% Carclo 1.7% Charter 1.7% British American Tobacco 1.6% The top ten investments by value account for 26.5% (2004: 24.2%) of the total value of fixed asset investments of £239,898,000 (2004: £158,634,000). - MORE - - 7 - LOWLAND INVESTMENT COMPANY PLC Unaudited Preliminary Results for the year ended 30 September 2005 Notes : 1. Share Issue During the year the Company issued 3,267,749 ordinary shares of 25p. The issued share capital is 24,267,954 ordinary shares of 25p. 2. Dividend The recommended final dividend of 11.75p net per ordinary share, subject to approval at the Annual General Meeting, is payable on 19 December 2005 to shareholders on the register of members at the close of business on 18 November 2005. The Company's shares will be quoted ex-dividend on 16 November 2005. 3. Return per Ordinary Share Revenue return per ordinary share is based on the net return on ordinary activities after taxation of £4,012,000 (2004: £3,636,000) and on the weighted average 22,006,318 ordinary shares in issue during the year (2004: 20,983,538). Capital return per ordinary share is based on net capital gains of £40,044,000 (2004: £15,146,000) and on the weighted average 22,006,318 ordinary shares in issue during the year (2004: 20,983,538). 4. Reconciliation of Movement in Shareholders' Funds 2005 2004 £'000 £'000 Net revenue return on ordinary activities after taxation for the year 4,012 3,636 Dividends (4,438) (3,812) --------- --------- (426) (176) Increase in capital reserves 40,044 15,146 Issue of shares 23,790 1,745 --------- --------- Net increase in shareholders' funds 63,408 16,715 Shareholders' funds at 1 October 124,436 107,721 ---------- ---------- Shareholders' funds at 30 September 187,844 124,436 ====== ====== 5. 2005 Accounts The preliminary figures for the year ended 30 September 2005 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. - MORE - - 8 - LOWLAND INVESTMENT COMPANY PLC Unaudited Preliminary Results for the year ended 30 September 2005 6. 2004 Accounts The figures and financial information for the year ended 30 September 2004 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 under either Section 237(2) or 237(3) of the Companies Act 1985. 7. 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. 8. Annual General Meeting The Annual General Meeting will be held on Thursday, 15 December 2005 at 2.30pm at 4 Broadgate, London, EC2M 2DA. For further information please contact: James Henderson Lowland Investment Company plc Telephone: 020 7818 4370 James de Sausmarez Head of Investment Trusts Henderson Global Investors Telephone: 020 7818 3349 Sarah Gibbons-Cook Investor Relations and PR Manager Henderson Global Investors Telephone: 020 7818 3198 - ENDS - This information is provided by RNS The company news service from the London Stock Exchange

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