Interim Results

Lowland Investment Co PLC 13 May 2005 LOWLAND INVESTMENT COMPANY PLC Unaudited Interim Results for the half year ended 31 March 2005 Chairman's Statement Review The net asset value per share for the six month period to 31 March 2005 has risen from 592.5p to 693.5p, a rise of 17.0%. This compares with a rise in the FTSE All-Share Index of 8.2%. Over the last twelve months the net asset value has risen by 22.7%, compared with a rise in the FTSE All-Share Index of 11.9%. This strong relative performance is mainly the result of the share price strength of several of our smaller company holdings with gearing also contributing. The recent results from UK companies have, in aggregate, been encouraging in spite of the increases in energy and utility prices. This, coupled with the sound economic backdrop, has been beneficial for equity prices. Our focus on stock picking remains unchanged with the emphasis on low valuations, cash generation and good long term dividend growth prospects. Dividend Earnings per share for the half year are 6.3p, compared to 7.4p in the corresponding period last year. While earnings are down on last year, dividends from the underlying holdings are showing good growth which should come through in the second half of the year. The recommended interim dividend is 7.5p, compared with 7.0p last time, an increase of 7.1%. It is the Board's intention, barring unforeseen circumstances, at least to maintain the final dividend, subject to shareholder approval. The Proposed Reconstruction of Securities Trust of Scotland On 3 March 2005 Perpetual Income and Growth Investment Trust plc (PIGIT) made a hostile bid for the entire issued share capital of Securities Trust of Scotland plc (STS). In response to this bid, the board of STS is proposing a reconstruction of STS. Lowland was invited to participate in the potential reconstruction as one of the roll-over options. The terms negotiated by Lowland mean that any costs incurred by Lowland in connection with its involvement in the reconstruction will be borne by STS or Henderson. Under the proposal new Lowland shares will be issued to those STS shareholders who actively elect to receive Lowland shares and will be issued at a premium of 1.5% to net asset value. Lowland's participation has been structured to ensure existing shareholders' interests are protected in terms of both net asset value and income. The reconstruction is expected to take place before the end of June 2005. - MORE - LOWLAND INVESTMENT COMPANY PLC Unaudited Interim Results for the half year ended 31 March 2005 - 2 - The Board believes that Lowland's participation in the reconstruction will be beneficial for existing shareholders as the issue of new Lowland shares at a premium enhances existing Lowland shareholders' net asset value; there will be a potential reduction in the total expense ratio of Lowland; and a potential improvement in the market liquidity of its shares. Outlook Interest rates appear close to their short term peak and industrial growth, in spite of the high oil price, is still largely intact. Inflation remains subdued and unemployment is at a historically low level. Although retail sales have softened, UK corporate profits growth continues to be reasonable with corporate balance sheets in aggregate remaining strong. Dividend growth can be expected to outpace inflation. The Manager therefore remains positive about future prospects. The emphasis continues to be on holding shares that offer good value and will in time grow their dividends. John Hancox Chairman 13 May 2005 - MORE - LOWLAND INVESTMENT COMPANY PLC Unaudited Interim Results for the half year ended 31 March 2005 - 3 - Statement of Total Return (incorporating the revenue account) for the half year ended 31 March 2005 (Unaudited) (Unaudited) (Audited) Half year ended Half year ended Year ended 31 March 2005 31 March 2004 30 September 2004 Revenue Capital Total Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 --------- -------- -------- --------- -------- -------- -------- -------- -------- Total capital gains on investments - 21,465 21,465 - 9,158 9,158 - 15,146 15,146 Income from fixed asset investments 3,013 - 3,013 2,925 - 2,925 6,549 - 6,549 Other interest receivable and similar income 22 - 22 29 - 29 85 - 85 -------- -------- -------- -------- -------- -------- -------- -------- -------- Gross revenue and capital gains 3,035 21,465 24,500 2,954 9,158 12,112 6,634 15,146 21,780 Management fee (475) - (475) (364) - (364) (787) - (787) Other administrative (111) - (111) (127) - (127) (247) - (247) expenses -------- -------- -------- -------- -------- -------- -------- -------- -------- Net return on ordinary activities before interest payable and taxation 2,449 21,465 23,914 2,463 9,158 11,621 5,600 15,146 20,746 Interest payable (1,110) - (1,110) (916) - (916) (1,964) - (1,964) -------- -------- -------- -------- -------- -------- -------- -------- -------- Net return on ordinary activities before taxation 1,339 21,465 22,804 1,547 9,158 10,705 3,636 15,146 18,782 Taxation on net return on ordinary activities - - - - - - - - - --------- --------- --------- --------- --------- --------- --------- --------- --------- Net return on ordinary activities after taxation 1,339 21,465 22,804 1,547 9,158 10,705 3,636 15,146 18,782 Dividends declared Underprovision - - - (32) - (32) (32) - (32) Interim of 7.5p (2004:7.0p)(1,599) - (1,599) (1,470) - (1,470) (1,470) - (1,470) Final 2004: 11.0p - - - - - - (2,310) - (2,310) -------- -------- -------- -------- -------- -------- -------- -------- -------- (1,599) - (1,599) (1,502) - (1,502) (3,812) - (3,812) -------- -------- -------- -------- -------- -------- -------- -------- -------- Transfer (from)/to (260) 21,465 21,205 45 9,158 9,203 (176) 15,146 14,970 reserves ===== ===== ===== ===== ===== ===== ===== ===== ===== Return per ordinary share (see note 1) 6.3p 101.5p 107.8p 7.4p 43.7p 51.1p 17.3p 72.2p 89.5p The revenue columns of this statement represent the revenue accounts of the Company. - MORE - LOWLAND INVESTMENT COMPANY PLC Unaudited Interim Results for the half year ended 31 March 2005 - 4 - Balance Sheet As at 31 March 2005 (Unaudited) (Unaudited) (Audited) 31 March 2005 31 March 2004 30 September 2004 £'000 £'000 £'000 --------------- --------------- --------------- Fixed assets Investments at market value 185,747 151,361 158,634 Current assets Debtors 1,565 2,372 1,493 Cash at bank and in hand 1,165 67 2,414 ---------- ---------- ---------- 2,730 2,439 3,907 Creditors: amounts falling due within one year (34,592) (29,131) (32,105) ---------- ---------- ---------- Net current liabilities (31,862) (26,692) (28,198) ---------- ---------- ---------- Total assets less current liabilities 153,885 124,669 130,436 Creditors: amounts falling due after more than one (6,000) (6,000) (6,000) year ---------- ---------- ---------- Total net assets 147,885 118,669 124,436 ====== ====== ====== Capital and reserves Called-up share capital 5,331 5,250 5,250 Share premium account 9,085 6,922 6,922 Other reserves 130,948 103,495 109,483 Revenue reserve 2,521 3,002 2,781 ---------- ---------- ---------- Total equity shareholders' funds 147,885 118,669 124,436 ====== ====== ====== Net asset value per share (see note 2) 693.5p 565.1p 592.5p - MORE - LOWLAND INVESTMENT COMPANY PLC Unaudited Interim Results for the half year ended 31 March 2005 - 5 - Cash Flow Statement for the half year ended 31 March 2005 (Unaudited) (Unaudited) (Audited) Half year ended Half year ended Year ended 31 March 2005 31 March 2004 30 September 2004 £'000 £'000 £'000 ------------------ ------------------ ----------------- Net cash inflow from operating activities 1,835 1,888 5,571 Net cash outflow from servicing of finance (1,227) (1,058) (2,068) Net tax recovered 25 102 105 Net cash outflow from financial investment (5,120) (3,703) (4,715) Equity dividends paid (2,310) (2,173) (3,675) ---------- ---------- ---------- Net cash outflow before financing (6,797) (4,944) (4,782) Net cash inflow from financing 5,544 4,957 7,145 ---------- ---------- ---------- (Decrease)/increase in cash (1,253) 13 2,363 ====== ====== ====== Reconciliation of operating revenue to net cash inflow from operating activities Net revenue before interest payable and taxation 2,449 2,463 5,600 (Increase)/decrease in accrued income (503) (525) 96 (Increase)/decrease in other debtors (8) (30) 1 Increase/(decrease) in other creditors 13 (20) 17 Stock dividends included in investment income (112) - (138) Tax on unfranked investment income (4) - (5) ---------- ---------- ---------- Net cash inflow from operating activities 1,835 1,888 5,571 ====== ====== ====== Reconciliation of net cash flow to movement in net debt (Decrease)/increase in cash as above (1,253) 13 2,363 Cash inflow from increase in debt (3,300) (3,213) (5,400) Exchange difference 4 (1) (4) ---------- ---------- ---------- Movement in net debt (4,549) (3,201) (3,041) Net debt at start of period (32,786) (29,745) (29,745) ---------- ---------- ---------- Net debt at end of period (37,335) (32,946) (32,786) ====== ====== ====== Represented by: Cash 1,165 67 2,414 Debt falling due within one year (32,500) (27,013) (29,200) Debt falling due after five years (6,000) (6,000) (6,000) ---------- ---------- ---------- (37,335) (32,946) (32,786) ====== ====== ====== - MORE - LOWLAND INVESTMENT COMPANY PLC Unaudited Interim Results for the half year ended 31 March 2005 - 6 - Notes: 1. Return per ordinary share Revenue return per ordinary share is based on the net return on ordinary activities after taxation of £1,339,000 (half year ended 31 March 2004: £1,547,000 and year ended 30 September 2004: £3,636,000) and on a weighted average number of 21,143,255 ordinary shares in issue during the period (half year ended 31 March 2004: 20,966,872 and year ended 30 September 2004: 20,983,538). Capital return per ordinary share is based on the net capital gains of £21,465,000 (half year ended 31 March 2004: £9,158,000 and year ended 30 September 2004: £15,146,000) and on a weighted average number of 21,143,255 ordinary shares in issue during the period (half year ended 31 March 2004: 20,966,872 and year ended 30 September 2004: 20,983,538). 2. Net asset value per ordinary share The net asset value per ordinary share is based on net assets attributable to ordinary shares of £147,885,000 (31 March 2004: £118,669,000 and 30 September 2004: £124,436,000) and on 21,325,205 ordinary shares in issue at 31 March 2005 (31 March 2004 and 30 September 2004: 21,000,205). 3. Accounts for the year ended 30 September 2004 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 the 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 Section 237(3) of the Companies Act 1985. 4. Issued Share Capital The issued share capital is currently 21,325,205 ordinary shares. The following allotments were made during the period: 7 December 2004, 210,000 shares and 22 February 2005 115,000 shares. 5. Gearing Gearing is defined as the difference between quoted investments and equity shareholders' funds, divided by equity shareholders' funds. 6. Interim Report The Company's Interim Report will be posted to shareholders in May. 7. Dividend An interim dividend of 7.5p per ordinary share has been declared payable on 24 June 2005 to shareholders on the register of members at the close of business on 27 May 2005. The Company's shares will be quoted ex-dividend on 25 May 2005. - ENDS - 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 or Sarah Gibbons-Cook Investor Relations and PR Manager Henderson Global Investors Telephone: 020 7818 3198 This information is provided by RNS The company news service from the London Stock Exchange

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