Interim Results

Lowland Investment Co PLC 09 May 2007 Page 1 of 8 9 May 2007 LOWLAND INVESTMENT COMPANY PLC Unaudited Report Half Year Ended 31 March 2007 Chairman's Statement Review During the six month period to 31 March 2007 the net asset value per share rose by 14.1 % from 915.7p to 1045.1p. This compares to a rise in our benchmark, the FTSE All-Share Index, of 7.6% over the same period. The relative out-performance is partly the result of the strong share price performance of some of the smaller companies in the portfolio and of our gearing. Borrowings have been reduced during the period, with gearing falling from 9.4% to 0.6% at 31 March 2007. The intention is to reduce the equity exposure further into share price strength and with this in mind the Board has given the manager authority to reduce the equity exposure to below 100%. Investment Activity After the strong performance of the stock market since March 2003 the manager is finding it increasingly hard to identify new investment opportunities which offer good value. Share prices have been bid up by the seeming 'over exuberance' of private equity funds, which have been particularly active in medium sized companies and this is where much of our selling has taken place. Major companies have not been participating so markedly in the share price increases as their size puts most of them beyond the grasp of the private equity bidders. As a result, they are offering better value and it is in this area that several purchases have been made. For instance, we have increased our holdings in BP and HSBC. Selective purchases have also been made in smaller companies which can have greater control over their own destiny and may perform well regardless of the direction of the stock market. These investments are increasingly being found in AIM listed companies, an example being Acertec, a company which is well placed to benefit from UK infrastructure spending. Dividend Earnings per share for the half year are 10.12p, compared with 6.10p in the corresponding period last year. Dividend increases from our portfolio have contributed to this rise in earnings, but the major contribution has been from lower interest costs as a result of our de-gearing. The interim dividend is 9.0p compared with 8.0p last time, an increase of 12.5%. It is the Board's intention, barring unforeseen circumstances, to pay a total dividend of at least 23p for the year, an increase of 10.8% on last year. Offer for Greene King Loan Notes Lowland, along with three other funds, made an offer to Greene King loan note holders to exchange their bonds for new Lowland shares. At the close of the offer on 7 May 2007, 168 individual loan note holders with a value of £24.97 million had elected for Lowland. The new shares will be allotted on 22 May 2007. One of the main attractions for existing Lowland shareholders is that the new shares will be issued at a premium to net asset value. Since Lowland is bearing none of the costs of the issue, this will enhance net asset value per share. It will also bring new long term investors into Lowland who have made a positive choice to become shareholders. In addition it will increase Lowland's size by a manageable amount and bring Lowland to the attention of a wider audience of potential shareholders. This should improve liquidity in dealing in the Company's shares. - MORE - Page 2 of 8 LOWLAND INVESTMENT COMPANY PLC Unaudited Report Half Year ended 31 March 2007 Outlook The increase in interest rates is likely to make the operating environment for many companies increasingly difficult. However, corporate profit margins are currently at a high level, balance sheets are strong and many firms are generating surplus cash. This is a robust position from which to be entering a more difficult period. Our emphasis will remain on seeking out soundly valued companies with above average dividend growth potential. John Hancox Chairman 9 May 2007 - MORE - Page 3 of 8 LOWLAND INVESTMENT COMPANY PLC Unaudited Report Half Year ended 31 March 2007 Income Statement for the half year ended 31 March 2007 (Unaudited) (Unaudited) (Audited) Half year ended Half year ended Year ended 31 March 2007 31 March 2006 30 September 2006 Revenue Capital Revenue Capital Revenue Capital Return Return Total Return Return Total Return Return Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Gains on investments held at fair value through profit or loss - 32,052 32,052 - 29,421 29,421 - 31,441 31,441 Income from investments held at fair value through profit or loss 3,659 - 3,659 3,376 - 3,376 8,427 - 8,427 Other interest 118 - 118 52 - 52 87 - 87 receivable and similar income --------- -------- --------- --------- --------- --------- --------- --------- --------- Gross revenue and 3,777 32,052 35,829 3,428 29,421 32,849 8,514 31,441 39,955 capital gains Management fee (726) - (726) (606) - (606) (1,262) - (1,262) Other administrative (151) - (151) (137) - (137) (303) - (303) expenses --------- -------- --------- --------- --------- --------- --------- --------- --------- Net return on ordinary activities before finance charges and 2,900 32,052 34,952 2,685 29,421 32,106 6,949 31,441 38,390 taxation Finance charges (430) - (430) (1,201) - (1,201) (1,905) - (1,905) --------- ---------- --------- --------- --------- --------- --------- --------- --------- Net return on ordinary activities before taxation 2,470 32,052 34,522 1,484 29,421 30,905 5,044 31,441 36,485 Taxation on net return on ordinary activities (13) - (13) (2) - (2) (4) - (4) --------- -------- -------- --------- --------- --------- --------- --------- --------- Net return on ordinary activities after taxation 2,457 32,052 34,509 1,482 29,421 30,903 5,040 31,441 36,481 ===== ===== ===== ===== ===== ===== ===== ===== ===== Return per ordinary share - basic and diluted (note 2) 10.12p 132.08p 142.20p 6.10p 121.20p 127.30p 20.77p 129.56p 150.33p The total columns of this statement represent the Income Statement of the Company. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued during the half year ended 31 March 2007. The Company has no recognised gains or losses other than those recognised in the Income Statement. - MORE - Page 4 of 8 LOWLAND INVESTMENT COMPANY PLC Unaudited Report Half Year ended 31 March 2007 Reconciliation of Movements in Shareholders' funds (Unaudited) Half year ended 31 March 2007 Called up Share share capital premium Other capital Revenue account reserves reserve Total £'000 £'000 £'000 £'000 £'000 At 30 September 2006 6,067 29,895 180,800 5,455 222,217 Net return on ordinary activities after taxation - - 32,052 2,457 34,509 Final dividend (12.75p) for year ended 30 September 2006 - - - (3,094) (3,094) ------------ ------------ ------------ ------------- ----------- At 31 March 2007 6,067 29,895 212,852 4,818 253,632 ======= ======= ======= ======= ====== (Unaudited) Half year ended 31 March 2006 Share Called up premium Other capital Revenue share capital account reserves reserve Total £'000 £'000 £'000 £'000 £'000 At 30 September 2005 6,067 29,895 149,527 5,206 190,695 Adjustment to bid valuation - - (168) - (168) Net return on ordinary activities after taxation - - 29,421 1,482 30,903 Final dividend (11.75p) for year ended 30 September 2005 - - - (2,851) (2,851) Write back of dividends over 12 years - - - 2 2 old ----------- ------------ ---------- ------------ ----------- At 31 March 2006 6,067 29,895 178,780 3,839 218,581 ====== ======= ====== ======= ====== (Audited) Year ended 30 September 2006 Share Called up premium Other capital Revenue share capital account reserves reserve Total £'000 £'000 £'000 £'000 £'000 At 30 September 2005 6,067 29,895 149,527 5,206 190,695 Adjustment to bid valuation - - (168) - (168) Net return on ordinary activities after taxation - - 31,441 5,040 36,481 Final dividend (11.75p) for year ended 30 September 2005 - - - (2,851) (2,851) Interim dividend (8.0p) for year ended 30 September 2006 - - - (1,942) (1,942) Write back of dividends over 12 years - - - 2 2 old ------------ ------------ ------------ ------------ ----------- At 30 September 2006 6,067 29,895 180,800 5,455 222,217 ======= ======= ======= ======= ====== Purchase transaction costs for the half year ended 31 March 2007 were £151,000 (half year ended 31 March 2006: £158,000; year ended 30 September 2006: £368,000). These comprise mainly stamp duty and commission. Sale transaction costs for the half year ended 31 March 2007 were £64,000 (half year ended 31 March 2006: £96,000; year ended 30 September 2006: £146,000). - MORE - Page 5 of 8 LOWLAND INVESTMENT COMPANY PLC Unaudited Report Half Year ended 31 March 2007 Balance Sheet as at 31 March 2007 (Unaudited) (Unaudited) (Audited) 31 March 31 March 30 September 2007 2006 2006 £'000 £'000 £'000 Fixed assets Investments held at fair value through profit or loss 255,092 240,017 243,165 ----------- ----------- ----------- Current assets Debtors 1,697 1,633 1,337 Cash at bank and on deposit 5,504 185 87 ---------- ----------- ----------- 7,201 1,818 1,424 Creditors: amounts falling due within one year (2,661) (17,254) (16,372) ----------- ----------- ----------- Net current assets/(liabilities) 4,540 (15,436) (14,948) ----------- ----------- ----------- Total assets less current liabilities 259,632 224,581 228,217 Creditors: amounts falling due after more than one year (6,000) (6,000) (6,000) ----------- ----------- ----------- Total net assets 253,632 218,581 222,217 ====== ====== ====== Capital and reserves Called up share capital 6,067 6,067 6,067 Share premium account 29,895 29,895 29,895 Other capital reserves 212,852 178,780 180,800 Revenue reserve 4,818 3,839 5,455 ----------- ----------- ----------- Total equity shareholders' funds 253,632 218,581 222,217 ====== ====== ====== Net asset value per ordinary share (note 4) 1045.1p 900.7p 915.7p - MORE - Page 6 of 8 LOWLAND INVESTMENT COMPANY PLC Unaudited Report Half Year ended 31 March 2007 Cash Flow Statement for the half year ended 31 March 2007 (Unaudited) (Unaudited) (Audited) Half year ended Half year ended Year ended 31 March 31 March 30 September 2007 2006 2006 £'000 £'000 £'000 Net cash inflow from operating activities 2,319 2,374 7,172 Net cash outflow from servicing of finance (439) (1,120) (2,001) Total tax recovered - 2 9 Net cash inflow from purchases and sales of investments 21,827 31,306 27,905 Equity dividends paid (3,094) (2,849) (4,791) Cash placed on deposit (5,401) - - ---------- ---------- ----------- Net cash inflow before financing 15,212 29,713 28,294 Net cash outflow from financing (15,177) (29,828) (28,519) ---------- ----------- ------------ Increase/(decrease) in cash 35 (115) (225) ====== ====== ====== Reconciliation of operating revenue to net cash flow from operating activities Total return before finance charges and taxation 34,952 32,106 38,390 Less: capital return before finance charges and taxation (32,052) (29,421) (31,441) ---------- ---------- ------------ Net revenue return before finance charges and taxation 2,900 2,685 6,949 (Increase)/decrease in accrued income (578) (371) 167 Decrease/(increase) in other debtors 14 14 (22) (Decrease)/increase in creditors (4) 50 90 Overseas withholding tax (13) (4) (12) ---------- ---------- ------------ Net cash inflow from operating activities 2,319 2,374 7,172 ====== ====== ====== Reconciliation of net cash flow to movement in net debt Increase/(decrease) in cash as above 35 (115) (225) Cash outflow from repayment of loans 15,177 29,828 28,519 Cash outflow from liquid resources 5,401 - - Exchange movements 36 182 241 ---------- ---------- ------------ 20,649 29,895 28,535 Net debt at beginning of the period (21,145) (49,680) (49,680) ---------- ---------- ------------ Net debt at the end of the period (496) (19,785) (21,145) ====== ====== ====== Represented by: Cash at bank less bank overdrafts 5,504 185 79 Debt falling due within one year - (13,970) (15,224) Debt falling due after more than one year (6,000) (6,000) (6,000) ---------- ---------- ------------ (496) (19,785) (21,145) ====== ====== ====== - MORE - Page 7 of 8 LOWLAND INVESTMENT COMPANY PLC Unaudited Report Half Year ended 31 March 2007 Notes to the Financial Statements 1. Accounting policies The accounts have been prepared under the historical cost convention, modified to include the revaluation of investments and in accordance with applicable Accounting Standards and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies' ('SORP' dated December 2005). All of the Company's operations are of a continuing nature. 2. Return per ordinary share (Unaudited) (Unaudited) (Audited) Half year ended Half year ended Year ended 31 March 31 March 30 September 2007 2006 2006 £'000 £'000 £'000 The return per ordinary share is based on the following figures: Revenue return 2,457 1,482 5,040 Capital return 32,052 29,421 31,441 ---------- ----------- ----------- Total 34,509 30,903 36,481 ====== ====== ====== Weighted average number of ordinary shares in 24,267,954 24,267,954 24,267,954 issue for each period Revenue return per ordinary share 10.12p 6.10p 20.77p Capital return per ordinary share 132.08p 121.20p 129.56p ---------- ----------- ----------- Total 142.20p 127.30p 150.33p ====== ====== ====== 3. Expenses All expenses are charged wholly to revenue. Expenses which are incidental to the purchase or sale of a fixed asset investment are included in the cost or deducted from the proceeds of sale of the investment. 4. Net asset value per ordinary share The net asset value per ordinary share is based on the net assets attributable to the ordinary shares of £253,632,000 (31 March 2006: £218,581,000; 30 September 2006: £222,217,000) and on 24,267,954 ordinary shares (31 March 2006: 24,267,954; 30 September 2006: 24,267,954) being the number of ordinary shares in issue at the end of each period. 5. Interim dividend An interim dividend of 9.0p has been declared and will be paid on 15 June 2007 to shareholders on the register on 18 May 2007. The ex-dividend date is 16 May 2007. - MORE - Page 8 of 8 LOWLAND INVESTMENT COMPANY PLC Unaudited Report Half Year ended 31 March 2007 6. Accounts for the year ended 30 September 2006 The figures and financial information for the year ended 30 September 2006 are an extract from the latest published accounts of the Company. They do not constitute statutory accounts for that year. These 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. Gearing Gearing is defined as the difference between investments and equity shareholders' funds divided by equity shareholders' funds. 8. Unaudited Report Half Year ended 31 March 2007 The unaudited report half year ended 31 March 2007 will be posted to shareholders in May and will be available from the Registered Office at 4 Broadgate, London, EC2M 2DA thereafter. - ENDS - For further information please contact: James Henderson Fund Manager, Tel: 020 7818 4370 James de Sausmarez Head of Investment Trusts, Henderson Global Investors, Tel: 020 7818 3349 Sarah Gibbons-Cook Investor Relations and PR Manager, Henderson Global Investors, Tel: 020 7818 3198 This information is provided by RNS The company news service from the London Stock Exchange

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