Final Results

Lowland Investment Co PLC 08 November 2007 8 November 2007 LOWLAND INVESTMENT COMPANY PLC Unaudited Preliminary Results for the year ended 30 September 2007 Financial Highlights Year ended Year ended Change % 30 September 30 September 2007 2006 Net asset value per ordinary share 1,044.27p 915.68p +14.0 Dividends per ordinary share: Interim paid 9.00p 8.00p +12.5 Final proposed 14.50p 12.75p +13.7 -------- -------- Total 23.50p 20.75p +13.3 -------- --------- Share price per ordinary share 1,091.00p 895.50p +21.8 Revenue return per ordinary share 27.87p 20.77p +34.2 Issued share capital 26,417,427 24,267,954 +8.9 Market capitalisation £288.21m £217.32m +32.6 Gearing 1.4% 9.4% Total Expense Ratio 0.72% 0.76% Extracts from the Chairman's Statement Assets, Revenue Return and Dividends I am pleased to report that during the year to 30 September 2007 the Company's net asset value rose from 915.68p to 1044.27p, an increase of 14.0%. This compares with a rise in the Company's benchmark, the FTSE All-Share Index, of 8.7% over the same period. The revenue return per share for the year was 27.87p, which compares with 20.77p last year. The revenue return benefited from paying down debt. The proposed final dividend is 14.5p making a total of 23.5p for the year, an increase of 13.3% over the 20.75p paid last year. Review I would like to start by thanking our Portfolio Manager, James Henderson, for another year of excellent performance in often difficult market conditions. It has been a good year for equity markets as a result of continued strong corporate profitability. The increases in interest rates have not yet undermined the advance in equities as economic growth has remained robust. The most extraordinary corporate event during the period was the run on Northern Rock. This was the result of the summer liquidity crisis and it is likely to cast its shadow over the banking sector, and possibly also the growth of the UK economy, for some time to come with the potential to affect UK equity markets adversely. - MORE - - 2 - LOWLAND INVESTMENT COMPANY PLC Unaudited Preliminary Results for the year ended 30 September 2007 In the Portfolio Manager's report in the report and accounts, there is an attribution analysis showing where the performance came from during the year. It is the first year in the last five that the smaller companies index has not outperformed the FTSE 100 and value as a theme has not outperformed growth. Therefore, the performance has come from the individual stocks held rather than the strategy settings. The portfolio will keep with the bias towards value and smaller companies as the Board remains of the belief that over the long term these themes will continue to serve the Company well. Over the last ten years Lowland's NAV has increased by 166% while the FTSE All-Share has risen by 35%. Corporate Activity During the year 2.15 million new shares were issued to holders of Greene King Loan Notes who decided to exchange their investment for shares in Lowland. This was a successful exercise for Lowland as it modestly enhanced the net asset value per share, expanded the shareholder base and increased the size of the company by £24.2 million. I would like to welcome the new shareholders. The Board will remain on the lookout for transactions that are genuinely beneficial to existing shareholders. Possible VAT Refund The European Court of Justice has issued a judgement that supports the case made strongly by the Association of Investment Companies, to which the Company belongs, that the management fees payable by investment trust companies should be exempt from value added tax (VAT). The eventual outcome should be a reduction in the Company's future costs and a recovery of some of the VAT borne in past years, including the year under review. Reference to this matter is made in note 21 on page 40 in the report and accounts. Investment Approach The investment style is contrarian and value based. It is UK focused and encompasses companies of all sizes. However, occasionally when there is an opportunity the Portfolio Manager will, in relatively small size, move into a different area in order to make money before returning back to the core. Successful forays over time have been made into South Africa, Ireland and Japan. This year we made an investment in an unquoted US oil company. The investment is made in the same spirit as the other forays with the object of making money and then bringing the money back to the core. It is not the start of a large exposure to unquoted companies. The current exposure to unquoteds is less than 2% of the net asset value. Outlook The caution about the economy that is expressed in the Portfolio Manager's report colours the investment stance. Borrowings have been paid down and we will wait for value to re-emerge before adding significantly to the equity positions. In the meantime the focus will be on companies that have a sound business model capable of coping with a more difficult background. John Hancox Chairman 8 November 2007 - 3 - LOWLAND INVESTMENT COMPANY PLC Unaudited Preliminary Results for the year ended 30 September 2007 Income Statement for the year ended 30 September 2007 Year ended 30 September 2007 Year ended 30 September 2006 Revenue Capital Revenue Capital Return Return Return Return £'000 £'000 Total £'000 £'000 Total £'000 £'000 Gains on investments held at fair value through profit or loss - 27,749 27,749 - 31,441 31,441 Income from investments (note 2) 9,566 - 9,566 8,427 - 8,427 Other interest receivable and similar income (note 3) 160 - 160 87 - 87 -------- -------- -------- --------- --------- --------- Gross revenue and capital gains 9,726 27,749 37,475 8,514 31,441 39,955 Management fee (1,479) - (1,479) (1,262) - (1,262) Other administrative expenses (310) - (310) (303) - (303) --------- --------- --------- --------- --------- --------- Net return on ordinary activities before finance charges and taxation 7,937 27,749 35,686 6,949 31,441 38,390 Finance charges (929) - (929) (1,905) - (1,905) --------- --------- --------- --------- --------- --------- Net return on ordinary activities before taxation 7,008 27,749 34,757 5,044 31,441 36,485 Taxation on net return on ordinary activities (30) - (30) (4) - (4) --------- --------- --------- --------- --------- --------- Net return on ordinary activities after taxation 6,978 27,749 34,727 5,040 31,441 36,481 ===== ===== ===== ===== ===== ===== Return per ordinary share - basic and diluted (note 4) 27.87p 110.82p 138.69p 20.77p 129.56p 150.33p ===== ===== ===== ===== ===== ====== The total columns of this statement represents the income statement of the Company. The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the Association of Investment Companies. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued during the year. The Company had no recognised gains or losses other than those disclosed in the Income Statement and Reconciliation of Movements in Shareholders' Funds. - MORE - - 4 - LOWLAND INVESTMENT COMPANY PLC Unaudited Preliminary Results for the year ended 30 September 2007 Reconciliation of Movements in Shareholders' Funds for the years ended 30 September 2007 and 30 September 2006 Called Up Share Other Share Premium Capital Capital Account Reserves Revenue £'000 £'000 £'000 Reserve £'000 Total £'000 Year ended 30 September 2007 At 30 September 2006 6,067 29,895 180,800 5,455 222,217 Net return on ordinary activities after taxation - - 27,749 6,978 34,727 Final dividend (12.75p) for the year ended 30 September 2006 paid 22 December 2006 (note 5) - - - (3,094) (3,094) Interim dividend (9.0p) for the year ended 30 September 2007 paid 15 June 2007 (note 5) - - - (2,185) (2,185) Issue of 2,149,473 new shares (note 6) 537 23,666 - - 24,203 --------- --------- --------- --------- --------- At 30 September 2007 6,604 53,561 208,549 7,154 275,868 ===== ===== ===== ===== ===== Called Up Share Other Share Premium Capital Capital Account Reserves Revenue £'000 £'000 £'000 Reserve £'000 Total £'000 Year ended 30 September 2006 At 30 September 2005 6,067 29,895 149,527 5,206 190,695 Adjusted to bid valuation - - (168) - (168) Net return on ordinary activities after taxation - - 31,441 5,040 36,481 Final dividend (11.75p) for the year ended 30 September 2005 paid 19 December 2005 (note 5) - - - (2,851) (2,851) Interim dividend (8.0p) for the year ended 30 September 2006 paid 23 June 2006 (note 5) - - - (1,942) (1,942) Write-back of dividends over twelve years old (note 5) - - - 2 2 --------- --------- --------- --------- --------- At 30 September 2006 6,067 29,895 180,800 5,455 222,217 ===== ===== ===== ===== ===== -MORE- - 5 - LOWLAND INVESTMENT COMPANY PLC Unaudited Preliminary Results for the year ended 30 September 2007 Balance Sheet at 30 September 2007 2007 2006 £'000 £'000 Investments held at fair value through profit or loss Listed at market value in the United Kingdom 263,849 219,871 Quoted on AIM 23,879 17,905 Listed at market value overseas 3,258 3,375 Unquoted at directors' valuation 4,618 2,014 ----------- --------- 295,604 243,165 ----------- --------- Current assets Debtors 2,058 1,337 Cash at bank 43 87 ----------- --------- 2,101 1,424 Creditors: amounts falling due within one year (15,837) (16,372) ----------- ----------- Net current liabilities (13,736) (14,948) ----------- ----------- Total assets less current liabilities 281,868 228,217 Creditors: amounts falling due after more than one year (6,000) (6,000) ----------- ----------- Total net assets 275,868 222,217 ====== ====== Capital and reserves Called up share capital 6,604 6,067 Share premium account 53,561 29,895 Other capital reserves 208,549 180,800 Revenue reserve 7,154 5,455 ----------- ----------- Equity shareholders' funds 275,868 222,217 ====== ====== Net asset value per ordinary share 1,044.27p 915.68p ====== ====== -MORE- - 6 - LOWLAND INVESTMENT COMPANY PLC Unaudited Preliminary Results for the year ended 30 September 2007 Cash Flow Statement For the year ended 30 September 2007 2007 2007 2006 2006 £'000 £'000 £'000 £'000 Net cash inflow from operating activities 7,540 7,172 Servicing of finance Interest paid (927) (2,001) ---------- --------- Net cash outflow from servicing of finance (927) (2,001) Taxation Overseas withholding tax recovered - 9 ---------- --------- Net tax recovered - 9 Financial investment Purchase of investments (64,433) (67,785) Sales of investments 64,025 95,690 ---------- ----------- Net cash (outflow)/inflow from financial investment (408) 27,905 Equity dividends paid (5,279) (4,791) ---------- --------- Net cash inflow before financing activities 926 28,294 Financing Issue of shares 566 - Issue expenses paid relating to prior year transaction (60) - Net loans repaid (1,660) (28,519) ----------- ----------- (1,154) (28,519) ---------- ---------- Decrease in cash (228) (225) ---------- ---------- Reconciliation of net cash flow to movement in net debt Decrease in cash as above (228) (225) Net cash outflow from movement in loans 1,660 28,519 Exchange movements 22 241 --------- ---------- Movement in net debt 1,454 28,535 Net debt at 1 October (21,145) (49,680) ---------- ----------- Net debt at 30 September (19,691) (21,145) ---------- ----------- -MORE- - 7 - LOWLAND INVESTMENT COMPANY PLC Unaudited Preliminary Results for the year ended 30 September 2007 1. Accounting policies The accounts have been prepared on a going concern basis and on the historical cost basis of accounting, modified to include the revaluation of fixed asset investments at fair value, and in accordance with the Companies Act 1985, Accounting Standards applicable in the United Kingdom and the Revised Statement of Recommended Practice - 'Financial Statements of Investment Trust Companies' dated December 2005 (the 'Revised SORP'). All of the Company's operations are of a continuing nature. The same accounting policies used for the year ended 30 September 2006 have been applied. 2007 2006 2. Income from investments £'000 £'000 Franked Quoted investments 8,645 8,254 Special dividends (quoted) 101 - Unquoted 43 39 -------- ------- 8,789 8,293 Unfranked Overseas dividend income 374 76 Interest income 403 58 -------- -------- 9,566 8,427 ===== ===== 2007 2006 3. Other interest receivable and similar income £'000 £'000 Deposit interest 133 30 Stock lending fees 17 10 Underwriting commission 10 47 ------- ------- 160 87 ===== ===== 4. Return per ordinary share - basic and diluted The return per ordinary share is based on the net return attributable to the ordinary shares of £34,727,000 (year ended 30 September 2006: £36,481,000) and on 25,039,409 ordinary shares (year ended 30 September 2006: 24,267,954) being the weighted average number of ordinary shares in issue during the year. The return per ordinary share can be further analysed between revenue and capital as below: 2007 2006 £'000 £'000 Net revenue return 6,978 5,040 Net capital return 27,749 31,441 --------- --------- Net total return 34,727 36,481 ===== ===== - MORE - - 8 - LOWLAND INVESTMENT COMPANY PLC Unaudited Preliminary Results for the year ended 30 September 2007 Weighted average number of ordinary shares in issue during the year 25,039,409 24,267,954 Revenue return per ordinary share 27.87p 20.77p Capital return per ordinary share 110.82p 129.56p -------- -------- Total return per ordinary share 138.69p 150.33p ===== ===== The Company does not have any dilutive securities, therefore basic and diluted returns per share are the same. 5. Dividends paid and payable on the ordinary shares Dividends on ordinary shares 2007 2006 Register Date Payment Date £'000 £'000 Write-back of dividends over twelve years (2) old Final dividend (11.75p) for the year ended 30 September 2005 18 November 2005 19 December 2005 - 2,851 Interim dividend (8.0p) for the year ended 30 September 2006 26 May 2006 23 June 2006 - 1,942 Final dividend (12.75p) for the year ended 30 September 2006 17 November 2006 22 December 2006 3,094 - Interim dividend (9.0p) for the year ended 30 September 2007 18 May 2007 15 June 2007 2,185 - -------- ------- 5,279 4,791 ===== ==== The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. Previously dividends were recognised in respect of the period to which they related. The total dividend payable in respect of the financial year, which form the basis of one of the tests under Section 842 of the Income and Corporation Taxes Act 1988, are set out below. 2007 £'000 Revenue available for distribution by way of dividend for the year 6,978 Interim dividend (9.0p) for the year ended 30 September 2007 (2,185) Proposed final (14.5p) for the year ended 30 September 2007 (based on 26,417,427 ordinary shares in issue at 8 November 2007) (3,831) ---------- Undistributed revenue for section 842 purposes* 962 ====== * Undistributed revenue comprises 10.1% of income from investments of £9,566,000 - MORE - - 9 - LOWLAND INVESTMENT COMPANY PLC Unaudited Preliminary Results for the year ended 30 September 2007 6. Called up share capital 2007 2006 £'000 £'000 Authorised 80,000,000 (2006: 80,000,000) ordinary shares of 25p each 20,000 20,000 ====== ====== Allotted, issued and fully paid 26,417,427 (2006: 24,267,954) ordinary shares of 25p each 6,604 6,067 ====== ====== In May 2007 the Company issued 2,149,473 ordinary shares at a price of 1126p to Greene King Loan Note holders. The total consideration received was £24,203,000. All costs relating to the share issue were reimbursed in full by Henderson. 7. Net asset value per ordinary share The net asset value per ordinary share is based on the net assets attributable to ordinary shares of £275,868,000 (2006: £222,217,000) and on 26,417,427 (2006: 24,267,954) shares in issue on 30 September 2007. 8. 2006 Accounts The figures and financial information for the year ended 30 September 2006 are extracted from the latest published accounts, 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 Section 237(2) or Section 237(3) of the Companies Act 1985. 9. 2007 Accounts The preliminary figures for the year ended 30 September 2007 which do not constitute statutory accounts are an extract from the draft accounts of the Company for the year. These accounts have not yet been delivered to the Registrar of Companies, nor have the auditors yet reported on them. 10 Dividend The recommended final dividend of 14.5p per ordinary share, if approved by shareholders, will be paid on 21 December 2007 to holders of ordinary shares on the register of members at close of business on 16 November 2007. The Company's shares will be quoted ex-dividend on 14 October 2007. 11. 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. 12. Annual General Meeting The Annual General Meeting will be held on Wednesday, 19 December 2007 at 11.30 am at 4 Broadgate, London EC2M 2DA. - MORE - - 10 - LOWLAND INVESTMENT COMPANY PLC Unaudited Preliminary Results for the year ended 30 September 2007 Twenty Largest Holdings as at 30 September 2007 Valuation (Depreciation)/ Valuation Appreciation Rank Rank 2006 Purchases Sales 2007 £'000 (2007) (2006) Company £'000 £'000 £'000 £'000 1 (1) BP 9,894 4,181 (569) (170) 13,336 2 (2) Royal Dutch Shell 9,065 2,014 - 993 12,072 3 (7) Senior 4,929 714 (172) 6,240 11,711 4 (12) HSBC 3,654 6,111 - (494) 9,271 5 (*) UK Treasury 5% 07/03/2008 - 7,988 - 24 8,012 6 (*) UK Treasury 7.25% 07/12/2007 - 7,814 - (44) 7,770 7 (4) Vodafone 5,348 - - 2,374 7,722 8 (3) GlaxoSmithKline 5,581 1,438 - (631) 6,388 9 (16) Renold 3,515 - (135) 2,665 6,045 10 (14) Carclo 3,626 - - 1,914 5,540 11 (*) Hill & Smith 3,108 266 - 1,744 5,118 12 (*) Meggitt 2,496 2,305 (325) 600 5,076 13 (6) Royal Bank of Scotland 4,833 1,861 (978) (773) 4,943 14 (8) Diageo 4,038 - - 559 4,597 15 (*) AstraZeneca - 4,912 - (626) 4,286 16 (13) Amlin 3,651 - (152) 680 4,179 17 (15) Chaucer 3,598 - (800) 1,290 4,088 18 (19) Hiscox 3,309 - - 773 4,082 19 (*) Aviva 2,741 1,503 - (196) 4,048 20 (17) Unilever 3,391 - (45) 632 3,978 --------- --------- --------- --------- --------- 76,777 41,107 (3,176) 17,554 132,262 ===== ===== ===== ===== ====== These investments total £132,262,000 or 44.7% of the portfolio. * Not in the top 20 largest investments last year. 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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